Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Shen Wei (USA), Inc. v. Ansell Healthcare Prods., Inc., No. 05 C 6003, Slip Op. (N.D. Ill. May 29, 2008) (Guzman, J.).

Judge Guzman construed the disputed claim terms from plaintiff's patent for a skin-enhancing glove. The parties disputed two terms: dehydrated and dry. Defendants argued dehydrated meant removal of all water, while plaintiffs argued it meant removal of water, but not necessarily all water. Judge Holderman construed dehydrated as used in a related patent in an earlier suit between the parties, consistent with plaintiff's proposed construction.* Because Ansell advanced the same construction in the present suit that it lost in the earlier suit before Judge Holderman, the Court held that collateral estoppel, or issue preclusion, prevented Ansell from arguing against plaintiff's construction. The Court also noted that Judge Holderman's construction was correct.

The Court construed "dry" in a similar fashion to mean removal of water, but not necessarily all water, based upon the prosecution history.

* I was involved in the briefing before Judge Holderman, but I am not involved in the current case.

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Am. Fam. Mutual Ins. Co. v. Roth, No. 05 C 3839 & 3869, 2008 WL 168693 (N.D. Ill. Jan. 15, 2008) (Guzman, J.).

Judge Guzman adopted Magistrate Judge Cole’s Report and Reconsideration in full, holding defendants in contempt for violating the Court’s injunctions requiring that defendants return various customer information taken from plaintiff, defendant’s former employer – click here for more on the prior opinions in the Blog’s archives. It was defendants’ responsibility to ensure that defendants’ former counsel, who had copies of relevant documents, comply with the injunction by turning the documents over to plaintiff. The fact that defendants did not have direct control over their former counsel’s copies did not matter.

Additionally, the Court held that it did not matter that plaintiff did not originally make a “big deal” out of defendant’s non-compliance. Defendants argued that they presumed there was no need to comply with the Court’s injunctions because nobody was making a “big deal” about the return of the materials. That presumption was flawed. Neither party moved to modify either the preliminary injunction or the amended preliminary injunction. Thus, defendants had a duty to comply with the Court’s injunctions as written.

Practice Tip: Do not fall in to the trap of believing that substantial compliance with a court order is sufficient. While that could be true in some cases, you should always contact the court if you have a problem complying with an order. Compliance with orders is one case where the adage that you are better off asking forgiveness than asking permission does not hold true.

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Palantir.net, Inc. v. Palantir Techs., Inc., No. 07 C 4271, Min. Order (N.D. Ill. Nov. 27, 2007) (Guzman, J.).*

Judge Guzman granted defendant's motion to transfer this Lanham Act case to the Northern District of California ("N.D. Cal.") pursuant to 28 U.S.C. Section 1404(a).  Defendant's principal place of business was in the N.D. Cal. and defendant had an earlier-filed case against plaintiff pending in the N.D. Cal.  The Court, therefore, held that the convenience of the parties and the witnesses, as well as the interests of justice, were best served by transferring the case to the N.D. Cal.

*  Click here for a copy of the case.

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Jewel Am., Inc. v. Combine Int’l., Inc., No. 07 C 3596, 2007 WL 4300589 (N.D. Ill. Nov. 30, 2007) (Guzman, J.).

Judge Guzman denied defendants’ 28 U.S.C. § 1404(a) motion to transfer this copyright case to the Eastern District of Michigan. Plaintiff argued that its choice of forum should be given deference because its relevant subsidiary was an Illinois entity with its place of business and all of its operations in Illinois. But the Court looked to the residence of the named plaintiff, not the plaintiff’s subsidiary. Because the named plaintiff was a New York entity, plaintiff’s chosen forum was not given deference. Further, the situs of material events was Michigan. Defendants were Michigan entities and the alleged infringement and related planning occurred in Michigan. The Court discounted the location of documents because, “[i]n this age of faxing, scanning and overnight courier services, however, the location of documentary evidence is largely irrelevant.”

No party identified a third party witness that would be required to testify. And convenience of the parties tipped slightly to plaintiff whose subsidiary’s business would be disrupted if its main employees and key witnesses had to travel from Illinois to Michigan for court proceedings and depositions. Based upon these factors, the Court held that defendants had not shown that the Eastern District of Michigan was clearly more convenient and denied the motion.

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Telewizja Polska USA, Inc. v. Echostar Satellite Corp., No. 04 C 3293, Slip Op. (N.D. Ill. Oct. 30, 2007) (Guzman, J.). 

Judge Guzman adopted Magistrate Judge Keys’s Report and Recommendation in its entirety, awarding plaintiff all of the approximately $800,000 in attorney’s fees and costs plaintiff sought pursuant to the fee-shifting provision in the parties’ agreement and Fed. R. Civ. P. 54(d). At trial, plaintiff sought approximately $2.8M for its breach of contract claim and approximately $5.8M for its unjust enrichment claim – the claims were plead in the alternative. The jury awarded plaintiff approximately $1.4M on the breach of contract claim. The jury also awarded defendant $1 in compensatory damages and approximately $18,000 in punitive damages on defendant’s defamation counterclaim. Defendant argued that plaintiff was not the prevailing party, as required by Rule 54(d) and, therefore, should not be awarded its fees and costs or, at least, should be awarded a reduced amount.

But the Court held that plaintiff prevailed by winning one of its major claims, even though the contract claim was worth less than the unjust enrichment claim, based upon plaintiff’s analysis. Additionally, the $1.4M jury award based upon a $7M demand was sufficient to be considered prevailing. The Court noted that parties have been considered prevailing when a jury awarded even 10% of plaintiff’s demand. The Court also suggested that the outcome might have been different if plaintiff had lost on the claim which created the Court’s federal question jurisdiction. But in this case, jurisdiction was based upon diversity. Finally, the Court denied defendant’s request to reduce counsel’s hours or rates because defendant previously agreed not to challenge the reasonableness of the fees. 

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Kammin v. Smartpros, Ltd., No. 07 C 2665, 2007 WL 3046128 (N.D. Ill. Oct. 9, 2007) (Guzman, J.)

Judge Guzman transferred this copyright case to the Southern District of New York pursuant to 28 U.S.C. Section 1404. While plaintiff’s choice of forum is usually given significant weight, no party was a resident of the Northern District – both parties were New York residents. Furthermore, the non-party witnesses were closer to New York. And New York had a significant interest in deciding a case between its citizens regarding a dispute arising within New York.

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Abbott Labs v. Baxter Healthcare Corp., No. 04 C 0836, 2007 WL 2875503 (N.D. Ill. Sep. 28, 2004) (Guzman, J.).

Judge Guzman granted plaintiff Abbott Laboratories’ (“Abbott”) Fed. R. Civ. P. 15(a) motion to amend its Complaint dismissing claims regarding its U.S. Patent No. 6,444,859 (the “’859 patent”). After the Federal Circuit held the parent of the ‘859 patent invalid, Abbott Labs v. Baxter Pharm. Prods., 471 F.3d 1363 (Fed. Cir. 2006), Abbott gave defendant Baxter Healthcare (“Baxter”) a covenant not to sue Baxter on the ‘859 patent (“Covenant”). Abbott, therefore, sought leave to dismiss its claims regarding the ‘859 patent. But Baxter argued that the claims should not be dismissed because the Covenant excluded any reissue or reexamination of the ‘859 patent, thereby creating an actual controversy. The Court held that Abbott’s potential suit based upon its potential reissue or reexam of the ‘859 patent did not create a current controversy. The Court, therefore, allowed Abbott to amend its Complaint dismissing claims regarding the ‘859 patent. 

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Shen-Wei (USA), Inc. v. Ansell Healthcare Prods., Inc., No. 05 C 6003, 2007 WL 2903184 (N.D. Ill. Sep. 28, 2007) (Guzman, J.).

Judge Guzman denied defendant’s motion for summary judgment of invalidity pursuant to 35 U.S.C. § 102(b). Defendant argued that plaintiffs sold medical gloves embodying the claims of their patent, U.S. Patent No. 6, 953,582 (the “’582 patent”), to a glove with a coating of a skin-soothing substance in July 1999, approximately two years before the ‘582 patent’s July 1, 2001 critical date. Furthermore, plaintiffs admitted that they sold patented gloves as early as July 1999 by failing to cite any contradictory evidence in their responses to defendant’s Local Rule 56.1 statement.

But plaintiffs argued that the ‘582 had a right to the filing date of its parent, U.S. Patent No. 6,274,154 (the “’154 patent”). The ‘154 patent only disclosed coating a glove with aloe vera. But plaintiffs argued that the ‘154 patent inherently disclosed skin-soothing substances other than aloe vera. Plaintiffs supported its arguments with testimony from the inventor and plaintiffs’ expert.

Because, among other reasons, defendant failed to support its denials of inherency with any facts, the Court deemed admitted, at least, structural inherency and inherency of theory. Because defendant admitted inherent disclosure, plaintiffs’ ‘582 patent had the critical date of its parent ‘154 patent – April 7, 1998. Plaintiffs’ admitted July 1999 sales of patented gloves, therefore, were not an on-sale bar.

Practice tip: When making or responding to Local Rule 56.1 statements, always support your statements or responses with evidence.

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Coilcraft, Inc. v. Inductor Warehouse, Inc., No. 98 C 0140, 2007 WL 2728754 (N.D. Ill. Sep. 13, 2007) (Guzman, J.).

Judge Guzman conducted a Fed. R. Civ. P. 72 de novo review of Magistrate Judge Cole’s report which recommended that the Court hold defendant in contempt for violating the Court’s permanent injunction limiting defendant’s use of plaintiff’s Coilcraft mark (click here for further discussion in the Blog’s archive). The Court adopted Judge Cole’s Report in its entirety and gave plaintiff fourteen days to submit a proposed order and proof of its attorneys' fees and costs related to this motion. The Court also held that Judge Cole was not required to hold an evidentiary hearing before issuing the Report because there were no genuine issues of material fact. The dispute was governed by the language of the Court’s injunction which was not disputed. And the only issue was whether defendant’s advertisements, the contents of which were not disputed, violated the injunction – a matter of law.

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Sunstar, Inc. v. Alberto-Culver Co., No. 01 CV 736 & 5825, 2007 WL 2410069 (N.D. Ill. Aug. 22, 2007) (Guzman, J.).

Judge Guzman denied defendants’ Fed. R. Civ. P. 59 motion for a new trial and Fed. R. Civ. P. 50(b) motion for judgment as a matter of law and granted plaintiff’s motion for a permanent injunction, among other things assigning all trademarks at issue to plaintiff and enjoining defendants from using plaintiff’s trademarks. The Court held that the jury’s verdict of a breach of contract without a damages award was not inconsistent and, therefore, did not warrant a new trial. The jury was free to find that the contract was breached and to award nominal damages. But because plaintiff did not argue for nominal damages an award of no damages was warranted. Defendants also argued that the jury’s verdict was not supported by the evidence because plaintiff’s survey was not sufficient proof actual confusion. But the Court held that plaintiff’s breach-by-infringement claim only required proof of likely confusion. The jury could have considered the survey sufficient to prove likely confusion. Furthermore, plaintiff introduced fact evidence in addition to the survey which supported the jury’s findings, including the similarity of the marks at issue and the sale of similar products using the marks in the same areas as plaintiff’s trademarked products.

Finally, the Court enjoined defendants from, among other things using plaintiff’s trademarks and required that defendants assign any interest in the marks at issue to plaintiffs. Defendants argued that the Court could not require assignment of the marks to plaintiff because plaintiff never sought transfer of the marks in its complaint. But the Court held that plaintiff was seeking equitable relief that was appropriate in light of the jury’s verdict.

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Sitrick v. Freehand Sys., Inc., No. 02 C 1568, 2007 WL 2298362 (N.D. Ill. Aug. 3, 2007) (Guzman, J.).

Judge Guzman denied plaintiff’s motion to amend the Court’s final order dismissing plaintiff’s patent infringement case with prejudice pursuant to Fed. R. Civ. P. 41(a)(1). Plaintiff sought to amend the order to include the terms of the parties’ settlement agreement because in Lynch v. SamataMason, Inc., 279 F.3d 487, 489 (7th Cir. 2006), the Seventh Circuit held that a court only maintains ancillary jurisdiction to enforce settlement agreements if the dismissal order contains (not just by incorporation) the terms of the agreement. But the Court denied the motion for two reasons. First, the Court’s original order was a nullity because it was issued after the parties filed their unconditional stipulation of dismissal pursuant to Fed. R. Civ. P. 41(a)(1) which immediately ended the Court’s jurisdiction. Second, because the amendment was not clerical, sought within one year of entry of the order or otherwise justified, Fed. R. Civ. P. 60 prevented the Court from amending the order.

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Gencor Pacific, Inc. v. Federal Labs., Corp., No. 07 C 168, 2007 WL 2298367 (N.D. Ill. Aug. 3, 2007) (Guzman, J.).

Judge Guzman granted defendants’ Fed. R. Civ. P. 12(b)(3) motion to dismiss for lack of venue. Plaintiff Gencor Pacific (“Gencor”) and defendant Federal Laboratories (“Fedlabs”) both distribute products including caralluma powder. Gencor alleged that Fedlabs infringed Gencor’s copyrights, engaged in unfair competition and other related state law claims by using various Gencor studies and literature to promote Fedlabs’s products. Gencor also alleged that Fedlabs’s Chairman defendant Jeffery Taub left a defamatory voicemail message for an Illinois-based Gencor distributor. Because defendants are all New York residents, venue was only proper in the Northern District if a substantial part of the events at issue occurred in Illinois. Gencor argued that the Illinois voicemail and various Fedlabs mailings to Illinois residents including the copyrighted studies constituted a substantial part of the events at issue. In support of its contentions, Gencor submitted only a transcript of the alleged voicemail. Gencor did not submit any mailings that had been sent to Northern District residents or a declaration stating that the voicemail had been received at a Northern District telephone number. The Court held that Gencor’s unsupported “bare allegations” did not meet Gencor’s burden of proving that venue was proper.

Practice tip: You must support factual allegations with evidence. Local Rule 56.1 forces parties to follow this advice for summary judgment motions (although many fail to follow the rule). But the requirement, although unwritten, is no less important for other motions. If you are ever not sure whether an allegation requires evidentiary support, err on the side of providing the support. I have never seen an argument lost because a party unnecessarily supported its factual allegations.

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Illinois Tool Works, Inc. v. Chester Bros. Mach. Prods., Inc., No. 05 C 5002, 2007 WL 2278448 (N.D. Ill. Aug. 6, 2007) (Guzman, J.).

Judge Guzman granted in part plaintiff’s Fed. R. Civ. P. 41(a)(2) motion to dismiss, dismissing the case with prejudice but awarding defendant’s costs. The Court also denied defendant’s motion for attorneys fees. After sending several cease and desist letters, plaintiff Illinois Tool Works (“ITW”) filed suit against Chester Brothers Machined Products (“Chester”) alleging that Chester infringed plaintiff’s trademark in the color orange used with pneumatic nailers and staplers. ITW amended its complaint after Chester served ITW with a Fed. R. Civ. P. 11 motion explaining that Chester did not sell pneumatic nailers. Chester answered the amended complaint and the case proceeded. But during discovery one of ITW’s customers began selling orange pneumatic nailers. As a result, ITW amended its trademark registration to exclude pneumatic nailers and filed the instant motion. The Court agreed to dismiss the claims with prejudice, but held that costs were justified because Chester had not engaged in litigation misconduct. The Court, however, denied defendant’s motion for attorneys fees because Chester never explicitly told ITW that it did not manufacture pneumatic nailers and because ITW’s claims survived Chester’s motion to dismiss.

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After Hours Formalwear, Inc. v. Tuxedos, Inc., No. 06 C 2460, 2007 WL 404005 (N.D. Ill. Jan. 29, 2007) (Guzman, J.).

Judge Guzman denied plaintiff's Fed. R. Civ. P. 12(b)(6) motion to dismiss certain of defendants' tortious interference and antitrust claims.  Plaintiff, After Hours Formalwear ("AHF"), controls at least 50% of Chicago's formalwear market.  AHF acquired a group of formalwear stores operating under the mark "Modern Tuxedo" and converted them to its AHF mark.  Shortly thereafter, defendants, including Tuxedos, Inc., (collectively "Tuxedos") renamed its stores, "Formally Modern Tuxedo."  This renaming led to AHF's suit against Tuxedos for trademark infringement and unfair competition.  Tuxedos responded with counterclaims alleging tortious interference of various kinds, and both federal and state antitrust violations.  Basically, Tuxedos alleged that AHF was using baseless trademark infringement claims to harass Tuxedos' customers and push Tuxedos out of the market.

AHF argued that Tuxedos' federal antitrust claim was insufficient because it alleged damage only to Tuxedo, not to consumers or competition generally as required by the statute.  But the Court held that damage to competition and consumers was sufficiently pled based upon Tuxedos' allegations that AHF's alleged anticompetitive activities targeted not only Tuxedos, but other formalwear providers as well.  Furthermore, the counterclaims included allegations that formalwear consumers were being harmed by the allegedly anticompetitive acts.  The Court further held that conclusory allegations of harm were sufficient, without ruling on whether Tuxedos' allegations were conclusory, because the Sherman Act does not have a heightened pleading standard.

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Shen Wei (USA) Inc. v. Sempermed, Inc., No. 05 C 6004, 2007 WL 328846 (N.D. Ill. Jan. 30, 2007) (Guzman, J.).

Judge Guzman granted defendant leave to amend its answer adding inequitable conduct affirmative defenses and counterclaims alleging that plaintiffs failed to disclose their prior art sale of a medical glove embodying their invention, but not regarding the existence and sale of a third party's glove of which plaintiffs were allegedly aware.  The Court held that defendant's affirmative defense and counterclaim met the Fed. R. Civ. P. 9(b) standard with respect to plaintiffs' alleged sale of their own product more than one year before their priority date because, although defendant did identify the person who intended to deceive the USPTO, it was reasonable to conclude that the inventor was charged with the intent.  With regards to the sale of the third party, Ostar, glove defendant only alleged that plaintiffs generally knew of the glove and its materiality, but failed to disclose it.  Defendant did not plead with sufficient specificity:  who knew about the Ostar glove, what they knew, when they knew it, whether the failure to disclose was intentional or why the Ostar glove was material. 

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American Fam. Mutual Insur. Co. v. Roth, No. 05 C 3839, 2007 WL 63983 (N.D. Ill. Jan. 10, 2007) (Cole, Mag. J.).

Judge Cole recommended denying defendants' motion to modify Judge Guzman's preliminary injunction for lack of jurisdiction.  Judge Guzman, following Judge Cole's recommendation, issued a preliminary injunction to prevent defendants from using a list of confidential information regarding plaintiff's policy holders.  Defendants ultimately appealed the preliminary injunction and then filed a motion to clarify seeking modifications to the injunction  equivalent to what they were asking to be overturned on appeal.  After an exhaustive analysis of the procedural rules, the Court recommended denying the motion to modify for lack of jurisdiction because once defendants appealed the injunction, the district court loses jurisdiction over the appealed issues.

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Underwriters Labs. Inc. v. Hydrofilm L.P., No. 05 C 5509, 2006 WL 2494748 (N.D. Ill. Aug. 23, 2006) (Guzman, J.).

Although this opinion deals solely with non-IP issues, it is interesting because it addresses how corporate websites fit into a personal jurisdiction analysis.  Judge Guzman held that while the Court had subject matter jurisdiction over plaintiff's declaratory judgment claims (based upon defendants's voluntary withdrawal without prejudice of a related suit against plaintiff), the Court lacked personal jurisdiction over the defendants. 

Defendants' sole contacts with Illinois were:  1) two contracts signed with plaintiff that were purportedly "made" in Illinois; and 2) a website that can be accessed from anywhere with an internet connection, including in Illinois.  These contacts were insufficient to confer general jurisdiction.  The Court noted that contracts alone cannot create general jurisdiction, and further held, after a survey of cases from other jurisdictions, that a website cannot create general jurisdiction. Otherwise, the Court noted, a website would create general jurisdiction "over any defendant in any state for any cause of action."

The Court also held that it did not have specific jurisdiction.  The website alone did not create specific jurisdiction because the case was not related to the website.  Without more, contracts with an Illinois party did not create personal jurisdiction.  The Court also noted that, while the contract purported to be "made" in Illinois, defendants dealt exclusively with plaintiff's New York office and had no direct business contacts with plaintiff in Illinois.

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