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

MPC Containment Sys., Ltd. v. Moreland, No. 05 C 6973, 2008 WL 2875007 (N.D. Ill. Jul. 23, 2008) (Aspen, Sen. J.).*

Judge Aspen granted in part and denied in part defendants’ summary judgment motion regarding plaintiffs’ copyright, Lanham Act, trade secret and related state law claims.** Plaintiffs and defendants both design, manufacture and sell flexible fuel storage tanks. Corporate defendant MIL was formed by at least individual defendants John and Lawrence, both of whom previously worked for plaintiffs in various capacities and later worked for MIL in direct competition with plaintiffs over, at least, a United States Air Force contract.

Trade Secret Misappropriation

The Court held that plaintiffs’ pricing and warranty provisions were not trade secrets and, therefore, granted summary judgment in defendants’ favor. But the Court held that there was a question of fact as to whether plaintiffs’ tank designs were trade secrets. Additionally, the Court noted that the question of whether sufficient efforts were used to maintain secrecy of the alleged trade secrets was a question of fact for jurors in all, but the most extreme cases. Because plaintiffs identified several precautions taken to protect their trade secrets, the Court denied summary judgment. The fact that tank designs were provided to plaintiffs’ independent contractors without confidentiality did not warrant summary judgment for defendants. There are circumstances where independent contractors have independent, professional duties of confidentiality regardless of whether agreements were signed.

Copyright Infringement

Defendants argued that plaintiffs’ copyrighted fuel tank drawings were not original, as required for copyright ownership, because defendant John authored the drawings, not plaintiffs. The Court held that there was a question of fact as to the ownership because the parties disputed John’s employment status when he made the drawings. If John was an employee, plaintiffs owned the copyrights based upon the work for hire doctrine.

The Court also found a question of fact as to the degree of creativity employed in making plaintiffs’ drawings. A comparison of plaintiffs’ drawings and defendants’ drawings, which defendants alleged plaintiffs copied, left a question of fact as to whether plaintiffs’ drawings showed sufficient differences to rise to the level of creativity.

Compute Fraud and Abuse Act (“CFAA”)

The Court granted defendants summary judgment as to CFAA § 1030(a)(4) because plaintiffs did not respond to defendants’ claims and, therefore, waived their defenses. But the Court found questions of fact as to the two other charged sections of the CFAA, §§ 1030 (a)(2)(c) and (a)(5). First, there was a question of fact as to whether defendant John was authorized to access the documents he allegedly misappropriated. While John may have received the documents at issue during the normal course of his employment with plaintiffs, there was a dispute as to whether John exceeded his authorization by allegedly breaching his duty of loyalty to plaintiffs.

Additionally, there was a question of fact as to whether John passively received all accused documents by email or “accessed” the documents pursuant to the CFAA actively by email or otherwise.

Illinois Deceptive Trade Practices Act (“IDTPA”)

The IDTPA only provides for injunctive relief, not monetary damages. As a result, the IDTPA only addresses ongoing harms. The Court, therefore, granted defendants’ summary judgment as to defendants’ past acts. The Court also explained that it would not grant an IDTPA injunction to eliminate an existing commercial advantage, as courts sometimes do in trade secrets cases.
 

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Republic Tobacco L.P. v. North Atlantic Trading Co., No. 06 C 2738, 2007 WL 1424093 (N.D. Ill. May 10, 2007) (Der-Yeghiayan, J.).*

Judge Der-Yeghiayan granted plaintiff/counter-defendant Republic Tobacco’s (“Republic”) motion for summary judgment on defendant/counter-plaintiff North Atlantic Trading’s (“North Atlantic”) counterclaims and granted North Atlantic’s motion for summary judgment as to each of Republic’s claims. Republic brought claims against North Atlantic for Lanham Act false advertising, violation of the Illinois Uniform Deceptive Trade Practices Act (“IDTPA”) and other state law claims, all arising out of an allegedly “false and misleading” presentation entitled “Cigarette Paper Review” (“CPR”) which North Atlantic allegedly gave to various Republic customers. The CPR allegedly criticized Republic, saying among other things that Republic’s cigarette rolling papers were the same as North Atlantic’s and that Republic’s Chairman Donald Levin had “lied” about the composition of Republic’s cigarette papers. North Atlantic filed counterclaims alleging Lanham Act false advertising, violation of the IDTPA and other state law claims, all arising out of Republic’s alleged sales of orange cigarette papers similar in color and size to North Atlantic’s orange Zig-Zag papers, for the purpose of confusing or deceiving consumers.

Because Republic could not establish that the statements in the CPR were literally false, as opposed to just misleading, and because many of the statements were subject to innocent constructions, Republic could not prove its false advertising or IDTPA claims. 

Republic sought summary judgment of all of North Atlantic’s claims because, among other reasons, the license agreement governing North Atlantic’s use of the Zig-Zag marks and cigarette papers did not allow North Atlantic to bring its counterclaims. Republic argued that the licensor of the Zig-Zag marks, Bollore, had the right and duty to bring the suit and, if at all, North Atlantic could only bring the counterclaims after North Atlantic notified Bollore of the counterclaims and Bollore had decided not to file them. North Atlantic argued that Bollore was aware of the suit and had not attempted to stop North Atlantic from prosecuting its counterclaims, but provided no evidence that it ever provided Bollore notice of Republic’s alleged infringement, as required by the agreement. The agreement required that either party notify the other of any infringements, and provided Bollore sole discretion to prosecute infringements. North Atlantic was allowed to pursue infringers “which Bollore determines not to commence or diligently pursue . . . .” Because North Atlantic did not provide evidence to counter Republic’s Local Rule 56.1 statement of material fact that Bollore never gave North Atlantic consent to bring the counterclaims, the Court deemed that fact admitted. The Court, therefore, granted Republic summary judgment on North Atlantic’s counterclaims because Bollore never consented to North Atlantic’s filing of them, as required by the agreement. 

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Days Inns Worldwide, Inc. v. Lincoln Park Hotels, Inc., No. 06 C 2960, 2007 WL 1455798 (N.D. Ill. May 16, 2007) (Der-Yeghiayan, J.)

Judge Der-Yeghiayan granted in part defendants' motion for reconsideration of the Court's award of plaintiff's attorneys fees' and costs for preparing summary judgment motions.  Plaintiff owns various marks relating to its Days Inn chain (the "Days Inn Marks").  Plaintiff licensed defendants Lincoln Park Hotels, Inc. and Richard Erlich (collectively "LPH") to use the Days Inn Marks in connection with the operation of a hotel in Chicago's Lincoln Park neighborhood.  In 2005, LPH sold the hotel to defendant Gold Coast Investors ("GCI") without informing plaintiff, in violation of the parties' license agreement.  GCI continued operating the hotel using the Days Inn Marks without licensing the rights to the marks from plaintiff.  As a result, plaintiff brought this suit against defendants alleging that, among other things, GCI infringed plaintiff's Days Inn Marks and LPH contributorily infringed plaintiff's Days Inn Marks by selling the hotel to GCI with the knowledge that GCI intended to continue using the Days Inn Marks and without informing plaintiff of the sale or removing the Days Inn Marks from the hotel, as required in the parties' license agreement.  In February, the Court granted plaintiff's summary judgment motion on twelve of fifteen counts and dismissed the remaining three counts as moot (you can find discussion of that opinion in the Blog's archives).  The Court also awarded plaintiff its attorneys' fees, approximately $150,000, for preparing its summary judgment motion.  Defendants moved the Court to reconsider, arguing that the Court should have required the parties to meet to resolve the attorneys fees dispute pursuant to  Local Rule 54.3 before ruling on the fees and that the Court should specifically apportion the fees between defendants.  The Court held that it was not required to follow the Local Rule 54.3 procedure in this case because defendants did not object to plaintiff's requests for fees made in its summary judgment briefing and because additional briefing required by the rule would not have benefited the Court because of its intimate knowledge of the case.  The Court did, however, apportion the fees that it was able to identify as only applicable to one group of defendants.  And the Court awarded an additional $35,000 of fees and costs that had not been presented in the initial motion.

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Allied Ins. Co. v. Bach, No. 05 C 5945, 2007 WL 627635 (N.D. Ill. Feb. 27, 2007) (Leinenweber, J.).

Judge Leinenweber granted declaratory judgment defendants/counter-plaintiffs (collectively "defendants") summary judgment DJ plaintiff/counter-defendant's ("plaintiff") duty to defend defendants against Lanham Act and related state law claims.  Defendants were sued by third party Acushnet which accused defendants of willful and intentional violation of Acushnet's marks related to its Titlest Pro VI golf ball based upon defendants' alleged marketing of counterfeit golf balls.  Defendants sought defense and indemnification from plaintiff, their insurer.  Defendants' insurance policy covered, among other things, defendants' infringement of third party marks or copyrights in defendants' advertising so long as the infringement was not done with knowledge or intent of the infringement.  Although the Complaint charges defendants' with willful and intentional violations of the marks, the Lanham Act provides claims without regard to intent.  Because not all of Acushnet's claims require intent, plaintiff has a duty to defend defendants' against the suit.  The Court did note, however, that should Acushnet prove that defendants' acts were willful and intentional, plaintiff would have no duty to indemnify.

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Days Inns Worldwide, Inc. v. Lincoln Park Hotels, Inc., No. 06 C 2960, 2007 WL 551570 (N.D. Ill. Feb. 22, 2007) (Der-Yeghiayan, J.)

Judge Der-Yeghiayan granted plaintiff summary judgment on its trademark infringement and Illinois Deceptive Trade Practices Act ("IDTPA") claims, among others.  Plaintiff owns various marks relating to its Days Inn chain (the "Days Inn Marks").  Plaintiff licensed defendants Lincoln Park Hotels, Inc. and Richard Erlich (collectively "LPH") to use the Days Inn Marks in connection with the operation of a hotel in Chicago's Lincoln Park neighborhood.  In 2005, LPH sold the hotel to defendant Gold Coast Investors ("GCI") without informing plaintiff, in violation of the parties' license agreement.  GCI continued operating the hotel using the Days Inn Marks without licensing the rights to the marks from plaintiff.  As a result, plaintiff brought the instant action against defendants alleging that, among other things, GCI infringed plaintiff's Days Inn Marks and LPH contributorily infringed plaintiff's Days Inn Marks by selling the hotel to GCI with the knowledge that GCI intended to continue using the Days Inn Marks and without informing plaintiff of the sale or removing the Days Inn Marks from the hotel, as required in the parties' license agreement. 

Defendants did not challenge plaintiff's evidence on its trademark, IDTPA or other related state law claims and, it appears, did not fully respond to plaintiff's Local Rule 56.1 statement.  In fact, defendants' only defense was LPH's argument that they were not liable because the alleged infringement and related acts occurred after LPH sold the hotel to GCI.  But the Court denied this defense because LPH did not challenge plaintiff's statement of fact paragraph 37 which stated that at the time of sale LPH was aware that GCI intended to operate the hotel using the Days Inn Marks.  Paragraph 37 also stated that LPH neither removed the Days Inn Marks from the hotel themselves,  nor obligated GCI to remove them.  The Court held that LPH's actions as detailed in, at least, paragraph 37 "far surpass[ed]" the "willful blindness standard of contributory infringement.

Practice tip:  Make sure that you fully respond to each issue raised in every paragraph of your opponent's Local Rule 56.1 statements of material fact. 

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