Judge Filip's Cases Reassigned

While Judge Filip heads to Washington as Deputy Attorney General, the Northern District has reassigned his cases — click here for the Executive Committee’s Order. At least the following IP cases have been reassigned:

Judge Andersen

1:07-cv-05666             Dicam, Inc. v. United States Cellular

Judge Dow

1:07-cv-02883             Kids Hope USA, Inc. v. Kids Hope United

Judge Kennelly

1:06-cv-05611             Liquid Dynamics Corporation v. Vaughn Co.

Judge Zagel

1:07-cv-03339             Borg Warner Inc. et al. v. Hilite International, Inc. et al.

N.D. Ill. 2008 Joint Trial Call

Prior Standing Ruling is Preclusive Absent License Revisions

Abbott Labs. V. Church & Dwight, Inc., No. 07 C 3428, 2007 WL 3120007 (N.D. Ill. Oct. 23, 2007) (Kennelly, J.).

Judge Kennelly denied defendant Church & Dwight’s (“C&D”) 28 U.S.C. Section 1404(a) motion to transfer this patent case to the District of New Jersey, where a related case between the parties was pending, and granted C&D’s motion to dismiss a claim that the New Jersey Court previously dismissed for lack of standing. In New Jersey, C&D sued plaintiff Abbott Laboratories (“Abbott”) alleging infringement of patents covering lateral flow immunology devices, and pregnancy and ovulation testing methods. Abbott counterclaimed alleging infringement of three patents, including U.S. Patent No. 6,534,320 (the “’320 patent”). The New Jersey Court ultimately dismissed Abbott’s counterclaim, holding that Abbott was a nonexclusive licensee of the ‘320 patent and, therefore, lacked standing. The New Jersey Court also held that standing could not be cured by Abbott’s effort to involuntarily join its licensor Inverness pursuant to Fed. R. Civ. P. 19.  Based upon the New Jersey Court’s ruling, this Court held that issue preclusion prevented Abbott from re-litigating its standing to sue. Unless Abbott revised its license agreement with Inverness, giving Abbott additional rights, the New Jersey Court’s ruling was preclusive. The Court, therefore, dismissed Abbott’s ‘320 patent infringement claim.

The Court denied C&D’s motion to transfer the case to New Jersey. The Court gave Abbott’s choice of forum deference. And the Court gave little weight to the parties’ ongoing New Jersey patent suit because the New Jersey Court dismissed Abbott’s counterclaims before making any substantive rulings. The New Jersey Court, therefore, would not have been in a better position to decide any issues in the case. 

JMOL Not for Harmonizing Jury Verdicts

Bryant v. Gordon, __F.Supp.2d__, 2007 WL 2440208 (N.D. Ill. August 30, 2007) (Kennelly, Jr.).*

Judge Kennelly denied defendants James Gordon’s (“Gordon”) and Mach 1’s motions for judgment as a matter of law (“JMOL”) and entered an injunction against Gordon’s and Mach 1’s continued use of the copyrighted pictures at issue – pictures of a parachutist and a sniper used in motivational posters. Gordon and Mach 1 argued that the jury’s verdict that Gordon and Mach 1 infringed plaintiff’s copyrights was inconsistent with the jury’s verdict that defendant John Urtis (“Urtis”) – who took the infringing sniper photo – did not infringe plaintiff’s copyright. But the Court held that JMOL cannot be used to harmonize jury verdicts. Furthermore, the Court held that the infringement verdicts were supported by the facts.

Because of a threat of continued infringement, the Court granted a permanent injunction against Gordon and Mach 1. But the Court held that it could not issue the injunction against Urtis because the jury’s verdict was in Urtis’s favor. The Court did, however, caution Urtis not to aid the other defendants in violating their injunction.

* For more on this case, click here in the Blog’s archives.

Summer Associates Not Worth $185/hour

Top Tobacco, L.P. v. North Atlantic Op. Co., No. 08 C 950, 2007 WL 2688452 (N.D. Ill. Sep. 6, 2007) (Kennelly, J.).

Judge Kennelly previously granted defendant summary judgment on all claims in this trademark infringement case regarding plaintiff’s “TOP and “Fresh-Top Canister” marks and awarded defendant’s attorneys’ fees pursuant to 15 U.S.C. § 1117(a).* The Court reduced the rates charged by defendant’s counsel Kirkland & Ellis’ summer associates from $185 to $125, more in line with paralegal rates. The Court acknowledged that Kirkland & Ellis’s attorneys showed skill “commensurate with its… high rates,”** but reduced Kirkland & Ellis’s rates because that skill did not result in the time savings (as required by the Seventh Circuit). Kirkland & Ellis billed roughly 30% more hours than plaintiff’s counsel. The Court, therefore, reduced Kirkland & Ellis’s rates to those charged by plaintiff’s counsel.

Click here to read more about this case and related cases in the Blog’s archives.

** Having worked with Kirkland & Ellis’s lead counsel on this matter, Paul Garcia, I can confirm the Court’s praise.

Amended Complaint Must Have New Substantive Allegations

Tillman v. New Line Cinema, No. 05 C 910, 2007 WL 2323302 (N.D. Ill. Aug. 9, 2007) (Kennelly, J.)

Judge Kennelly denied plaintiff’s motion for leave to file a second amended complaint, despite noting that Fed. R. Civ. P. 15A) requires that leave to amend be given “freely.” Plaintiff alleged that defendants collectively had access to his screen play “Kharisma Heart of Gold” about his experience with a sick child requiring heart surgery, stole it, produced it and released it as the movie “John Q.” Plaintiff filed his first complaint pro se alleging copyright infringement. Plaintiff then hired counsel and filed an amended complaint alleging copyright infringement and numerous other tort claims arising out of the alleged theft of plaintiff’s screen play. Various defendants filed motions to dismiss the amended complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) and for failure to state a claim regarding the non-copyright claims pursuant to Fed. R. Civ. P. 12(b)(6). Plaintiff did not respond to that complaint, but filed a motion for leave to file a second amended complaint. The Court* granted the motion to dismiss the individual defendants for lack of personal jurisdiction and the non-copyright claims against the remaining defendants. The Court also denied plaintiff leave to file its second amended complaint because it was futile. Plaintiff, again proceeding pro se, then sought leave to file a new second amended complaint. But the Court held that plaintiff’s current second amended complaint had no substantive changes from plaintiff’s original second amended complaint. The second amended complaint, therefore, was still futile. Additionally, the second amended complaint attempted to reassert claims against the individual defendants, who had been dismissed from the suit for lack of personal jurisdiction. Because the Court lacked personal jurisdiction, plaintiff could not draw the individual defendants back into the suit. 

* The case was originally before Judge Norberg, who decided the original motions to dismiss and motion for leave to file the second amended complaint, and has since been transferred to Judge Kennelly who heard this motion.

Late Requested 56(f) Cannot Save Summary Judgment

Hickory Farms, Inc. v. Snackmasters, Inc., No. 05 C 4541, 2007 WL 1576124 (N.D. Ill. May 29, 2007) (Kennelly, J.).

Judge Kennelly denied plaintiff’s motion for reconsideration of the Court’s decision that plaintiff’s "Beef Stick" and "Turkey Stick" marks were generic and the Court’s cancellation of the Beef Stick mark (you can read more about that opinion in the Blog’s archives). The Court denied plaintiff’s argument that it should be given more time, pursuant to Fed. R. Civ. P. 56(f) to conduct a survey to show that the marks are not generic. But the Court reasoned that plaintiff was free to conduct such a survey in the fourteen months of discovery leading up to defendant’s summary judgment motion. Furthermore, in its responsive briefing plaintiff specifically stated that plaintiff would “not seek to delay the briefing of this matter with its own survey at this time.” Instead, plaintiff suggested that it would conduct a survey if the Court denied defendant’s summary judgment motion. The Court held that after these statements, plaintiff’s current request to perform a survey was almost “frivolous.”

The Court also held that plaintiff’s evidence of its advertising investment and market share had not effect on the Court’s ruling that the marks were generic. A company’s marketing and advertising expenditures cannot make a mark less generic. Additionally, the fact that there is another generic term (summer sausage) for beef sticks and turkey sticks does not mean that beef stick and turkey stick cannot also be generic.

Practice Tip:  If you think you need evidence to survive summary judgment make your Rule 56(f) motion before or with your response brief.  Do not wait for a motion for reconsideration.

Claim Construction Cannot be Expanded Based Upon Language in an Unrelated Patent

Rowe Int'l Corp. v. Ecast, Inc., No. 06 C 2703, 2007 WL 1498958 (N.D. Ill. May 17, 2007) (Kennelly, J.).*

Judge Kennelly issued this claim construction opinion construing the claims of eight patents related to computer jukeboxes and computer jukebox networks.  Of particular note, the Court construed "song selection means" in USPN 5,355,302 (the "'302 patent") as a keyboard separate from a display for generating a signal representing a song selected from the set of songs stored in the jukebox.  Plaintiffs sought a construction that would include a visual touchscreen, arguing that the Court should consider the following language from an unrelated patent by the same patentee (the "'398 patent"), that was not part of the patent in suit or its prosecution history:  "song selection means displayed on said visual screen."  Plaintiffs argued that this language showed that "song selection means" could include on-screen displays.  But the Court held that considering the language was not permissible and that, even if it were, the language only showed that the inventors were capable of claiming an on-screen display, but chose not to in the '302 patent.

*  You can read more about this case in the Blog's archives.

Progeny Patents Conveyed by Blanket Assignment of Parent

Rowe Int'l Corp. v. Ecast, Inc., No. 06 C 2703, 2007 WL 1438370 (N.D. Ill. May 14, 2007) (Kennelly, J.).*

Judge Kennelly denied defendants' motion to dismiss plaintiffs' patent infringement complaint for lack of standing.  As to two patents that were not expressly assigned to plaintiffs before the suit was filed (the "Progeny Patents"), the Court used Illinois contract law to interpret the following blanket provision in the assignment agreement regarding the parent patent, which assigned the parent application and any improvements or related applications:

any and all other applications . . . which the undersigned may file . . . on said invention or improvements, and in any and all Letters Patent of the United States and foreign countries, which may be obtained on any of said applications . . . .

The Court held that this provision was unambiguous.  Pursuant to this provision, the inventors assigned plaintiffs any related patents or improvements to the original application.  Because the Progeny Patents were related to the parent patent, they were assigned to plaintiffs.  And, therefore, plaintiffs had standing to file suit.  Additionally, the Court noted that the express assignment of the Progeny Patents that plaintiffs received post-filing did not retroactively confer standing upon plaintiffs for this suit.

*  You can read more about this case in the Blog's archives.

Lanham Act Case Deemed Exceptional Because of Weak Claims and Litigation Conduct

Top Tobacco, L.P. v. North Atl. Operating Co., No. 06 C 950, 2007 WL 118527 (N.D. Ill. Jan. 4, 2007) (Kennelly, J.).

Judge Kennelly granted defendants' motion for attorneys' fees and granted in part their bill of costs.  In January, Judge the Court granted summary judgment for defendants on plaintiff's trademark, unfair competition and dilution claims (read more about that decision in the Blog's archives).  The Court ruled that no reasonable jury could find that consumers were confused between plaintiffs' TOP mark and defendants' "Fresh-Top Canister" mark.  Defendants then filed the instant bill of costs and motion for attorneys' fees arguing that the case was exceptional.  The Court held the case exceptional for three reasons.  First, the Court found that plaintiffs' infringement and dilution claims were "exceptionally weak" stating that "a simple look at the canisters as they appeared on store shelves shows the virtual impossibility that consumers would be confused . . . ."  The Court disregarded plaintiffs' purported evidence of actual confusion, which it presented for the first time in its response to the motion for attorneys' fees.  Second, plaintiffs argued before the PTO that other "top" marks in the tobacco classification were narrow.  But before the Court plaintiffs took the "diametrically opposite" position, arguing that their TOP mark should enjoy broad protection.  Third, the Court found defendant Top Tobacco's chairman Donald Levin's testimony that the two products looked identical because they were both cans of tobacco "absurd."  The Court analogized Levin's argument to the position that all the books on library shelves are identical because they are all books, without regard to their titles, jacket designs or colors.

Taken together, the Court held that these three elements made the case exception and awarded defendants' reasonable attorneys fees.  But the Court cautioned defendants that its fee petition should exercise "billing judgment" and that billed time should be organized by activity as opposed to date or timekeeper.  The Court also noted that it would not wade through an unreasonable petition to make it reasonable. 

Finally, the Court reviewed defendants bill of costs.  Of particular note on the bill of costs, the Court only awarded transcription costs, not videography costs, for depositions with one exception.  In the one instance where there was specific evidence, beyond arguments that video testimony was value for impeachment purposes, of the need for video of the deposition, both transcription and video costs were awarded.

Parties Can Depict Legally Owned Articles for Sale Despite Lacking Rights to Reproduce the Items

Bryant v. Gordon, __ F. Supp.2d __, 2007 WL 461326 (N.D. Ill. Feb. 8, 2007) (Kennelly, J).

This opinion replaces Judge Kennelly's February 8, 2007 opinion.  The result is not altered, the Court granted summary judgment for defendants, Gordon and Mach 1 LLC ("Mach 1"), on plaintiff's, Bryant, claims of copyright infringement based upon copyrighted goods Mach 1 purchased free of encumbrances in a bankruptcy auction.  The only substantive change appears to be a statement that to the extent that Mach 1 acquired merchandise from the asset sale, Mach 1 was likely entitled to to depict that merchandise for advertising purposes, including on the internet.  But the Court stops short of holding that the goods depicted on Mach 1's internet site were all acquired from the asset sale.

Violation of Permanent Injunction Results in Order to Comply and Potential Fines

Bobak Sausage Co. v. Bobak Orland Park, Inc., No. 06 C 4747, 2007 WL 846505 (N.D. Ill. Jar. 19, 2007) (Kennelly, J.).

After an evidentiary hearing, Judge Kennelly held defendants in contempt for violating the stipulated permanent injunction entered by the Court and ordered defendants to comply with the injunction within three weeks or face daily fines.  Plaintiff Bobak Sausage Co. ("Bobak's") makes and sells meat products and operates a related restaurant in Chicago.  Bobak's founder, Frank Bobak, transferred ownership of Bobak's to his sons.  In early 2006, Bobak's reorganized, which led to two of the sons owning Bobak's and a third owning a grocery store that Bobak's had been building.  As part of the reorganization, Bobak's granted two entities rights to use Bobak's trademarks at retail locations for a six month period.  After the six month period ended, Bobak's filed suit against defendants (including the third son and the licensed retail locations) for, among other things, trademark infringement based upon the continued use of the Bobak's marks.  The parties settled that dispute based at least in part upon a stipulated permanent injunction, which the Court entered, which set various limits on what marks each defendant could use, requirements that the defendants remove and change their signage and requirements that defendants use disclaimers that they were not affiliated with Bobak's. 

But defendants did not  comply with the injunction.  The Court held that defendants did not replace their signage as required.  Additionally, instead of posting permanent signs at entry points to their establishments including disclaimers that the establishment did not sell Bobak's products, defendants placed sheets of paper at exit points which the Court held were intended to suggest that defendants were the "true inheritor of the Bobak tradition" and which only added the disclaimer as an afterthought.  Based upon these findings, the Court gave defendants three weeks to comply with the injunction, including ordering and paying for deposits on new, compliant signage.

Practice tip:  If you agree to an injunction, you must be prepared to abide by it.

Failure to Object at a Deposition Waives Privilege

Rowe Int'l. Corp. v. Ecast, Inc., __ F. Supp.2d __, 2007 WL 831772 (N.D. Ill. Mar. 19, 2007) (Kennelly, J.).

Judge Kennelly held that plaintiff Arachnid waived its privilege as to a limited scope of information and held that Arachnid's related uses of the information did not rise to the level of the crime-fraud exception, even if they may have been inequitable conduct.  Arachnid filed a motion seeking the return of three inadvertently produced, privileged "patent reports."  Defendants filed a cross-motion to compel production of privileged materials arguing that Arachnid waived the privilege as to the three documents and that the crime-fraud exception destroyed the privilege to the extent it was not waived.  The Court agreed that the patent reports were inadvertently produced, but still held the privilege was waived on a limited scope of information.  In 1999, a former Arachnid employee testified that he learned from Arachnid's attorneys that "the only way we would receive [one of] the patent[s-in-suit] was if we included that information."  While a former employee cannot waive the privilege, Arachnid's attorneys attended the deposition in question and failed to object to the question or the answer.  Additionally, Arachnid later turned the transcript over to the PTO during prosecution of a subsequent application and to defendants during production in the instant case.  These actions combined to waive the privilege as to the specific information discussed by the ex-employee, the inclusion of figure 2 in the patent.

The Court then held that the crime-fraud exception did not apply.  Defendants argued that Arachnid's counsel's statements to the PTO during examination that a prior art reference identified as Sidi was "fundamentally different" from the examined invention was fraudulent because the inadvertently disclosed patent reports showed that counsel believed the Sidi reference anticipated some or all of Arachnid's application.  But the Court held that hold attorney argument to that high a standard would chill legal representation.  For example, the Court noted that defendants' requested standard would prevent a criminal defense attorney from warning his client that he would surely be convicted, but then arguing to the jury that the government had not proven its case beyond a reasonable doubt.

"Beef Stick" and "Turkey Stick" Are Generic Marks

Hickory Farms, Inc. v. Snackmasters, Inc., No. 05 C 4541, 2007 WL 772919 (N.D. Ill. Mar. 8, 2007) (Kennelly, J.).

Judge Kennelly held that plaintiff's "Beef Stick" and "Turkey Stick" marks were generic and canceled the Beef Stick mark, plaintiff had already let its "Turkey Stick" registration lapse.  Plaintiff alleged that defendant infringed its marks by marketing defendant's beef and turkey snacks in stick forms and labeling them "Beef Sticks" and "Turkey Sticks," respectively.  But defendant countered with evidence that numerous companies use the terms to refer to meat products sold sell in stick form.  For example, Trader Joe's, Flat Iron, Jimmy Dean, Slim Jim and Tombstone all sell meat stick products using the marks.  The Court held that the terms were generic because they name a class of goods -- meat packaged in a stick form.  The Court also noted that "it [was] difficult to imagine what else a seller would call a beef or turkey product packaged in stick form."

Court Denies Summary Judgment Because A Jury Could Go Either Way on the Issue of Copying

Bryant v. Gordon, No. 05 C 3066, 2007 WL 461326 (N.D. Ill. Feb. 8, 2007) (Kennelly, J).

Judge Kennelly granted summary judgment for defendants, Gordon and Mach 1 LLC ("Mach 1"), on plaintiff's, Bryant, claims of copyright infringement based upon copyrighted goods Mach 1 purchased free of encumbrances in a bankruptcy auction.  Because Bryant had notice that copies of posters including his copyrighted photograph of U.S. Army snipers in Ghillie suits (the "Bryant photo") would be sold at the auction and he did not object, he had no claim of infringement for those copies.  The Court denied summary judgment for both Bryant and defendants on their cross-motions for summary judgment regarding infringement of a picture taken by defendant, Urtis, (the "Urtis photo") which allegedly copied the Bryant photo.  The Court held that the Bryant photo was copyrightable based upon Bryant's choice of composition, lighting, camera angle and other factors, but denied summary judgment as to whether the Urtis photo copied the Bryant photo.  The Court noted that both photos were "taken from the same angle, perspective, and with the same scene and terrain."  There were differences between the photos, but the Court could not say as a matter of law that the differences would be sufficiently obvious to an ordinary person.  The Court, therefore, held that a reasonable jury could find that the Urtis photo copied the Bryant photo or that it did not and denied summary judgment.

If You Risk Not Using a Survey in a Trademark Case, Explain Your Reasoning

Top Tobacco, L.P. v. North Atl. Operating Co., No. 06 C 950, 2007 WL 118527 (N.D. Ill. Jan. 4, 2007) (Kennelly, J.).

Judge Kennelly granted summary judgment for defendants on plaintiff's trademark, unfair competition and dilution claims.  Plaintiffs, Top Tobacco and Republic Tobacco ( collectively "Top Tobacco ") own various trademarks associating the word "top" or a picture of a toy top with tobacco products.  Both Top Tobacco and defendant, North Atlantic Operating and National Tobacco Company ("National Tobacco"), are large players in the "make your own" and "roll your own" cigarette market.  Top Tobacco alleged that its Top marks were infringed and diluted by National Tobacco's use of its "Fresh-Top Canister" mark.  The Court granted summary judgment of non-infringement because it ruled that no reasonable jury could find that consumers were confused between Top Tobacco's TOP mark and National Tobacco's "Fresh-Top Canister" mark.  The Court held that they were visually distinct and cited Top Tobacco's remarks to the USPTO during prosecution of its marks that its TOP marks were visually distinct from marks relating to lids, as does the National Tobacco mark.  Additionally, the Court noted that Top Tobacco had chosen not to present a consumer survey to show actual confusion and did not explain why no survey was done.

The Court also granted summary judgment for National Tobacco on the dilution claim because it held that the TOP marks were not famous.  Top Tobacco argued that the marks were famous within the smoking market.  But the Court held that the relative weakness of the marks, the vast number of similar marks held by others and Top Tobacco's admission during prosecution that the marks were weak collectively would not allow a finding that the TOP marks were famous.

 

But the most interesting part of the opinion was in a footnote.  The Court explained that the "Fresh-Top Canister" mark appears below a registered design of a Zouave and in a footnote explains:

A Zouave is a soldier in a particular French infantry unit that originated in Algeria in 1831.  According to legend, while fighting in the 1854-55 Siege of Sevastopol during the Crimean War, an unlucky Zouave had his clay pipe broken by a bullet.  Determined to smoke anyway, the Zouave rolled tobacco in a piece of paper torn from his bag of gunpowder.  The cigarette was born.  The French expression "faire le zouave" can be translated roughly as "to play the fool." . . . apt descriptor for the person who apparently first decided to smoke a cigarette.

Court to Counsel: Play Nice

Martin Eng. Co. v. CVP Group, Inc., No. 06 C 4687, 2006 WL 3541777 (N.D. Ill. Dec. 7, 2006) (Cole, J.).

Judge Cole granted defendant's motion for a 21 day extension to respond to written discovery requests.  Plaintiff refused to agree to the extension (for discovery due eight months prior to the close of fact discovery) and filed a written objection to defendant's motion citing a "pattern of dilatory conduct."  As examples of the pattern, plaintiff identified two items.  First, that it took defendant two weeks to respond to plaintiff's settlement offer, and only then after repeated calls from plaintiff.  And second, that defendant's Rule 26 disclosures were served nearly two weeks late.  The Court made clear that it did not condone a party ignoring the Court's deadlines or delay more generally, but noted that "not all delays are the same."

Plaintiff's objection to the extension ignored defendant's justification for its request.  Defendant's counsel, a solo practitioner, was involved in another case in the Northern District in which Judge Kocoras had recently ordered that fact discovery close a few weeks after defendant's responses were do in this case, requiring that defendant's counsel devote "significant time" to the other case.

Based on defendant's explanation, the Court stated that "the request was reasonable, and the plaintiff's response (and ensuing written objection) quite the opposite and needlessly required the expenditure of time that could have been more profitably utilized."  The Court also noted general concerns among some of the Northern District judges regarding "the needless conflict involved in the day-to-day interactions among lawyers" citing articles by Judge Gettleman, We Can Do Better, 25 LITIGATION 3 (Summer 1999), Judge Kennelly, From Lawyer To Judge, 2001 LITIGATION 3 (Summer 2001), and Judge Shadur, Hardball Litigators, 20 LITIGATION 21 (1993).  Unfortunately, the articles are no longer available online, but you may be able to get copies from the ABA here.

N.D. Ill. New Joint Trial Call

Judges Bucklo, Coar, Gettleman, Kennelly and Lefkow are instituting a joint trial call in 2007 (the N.D. Ill.'s statement about it is here).  Each judge is contributing cases to the call, apparently at the judge's discretion.  The cases in the call will be tried in order by one of the five judges, although not necessarily the judge originally assigned the case.  Each trial is expected to last no longer than five days and the attorneys and parties for a case on the call are expected to be ready for trial, including producing witnesses, on 48 hours notice.  I suspect that the five day trial limit will remove the typical patent case, although plenty of trade secret, trademark and copyright cases could end up on the joint call.  The judges on the call also intend to use suggestions from the Seventh Circuit Bar Association Jury Project Commission to speed the trials (more on the Commission's recommendations here).

This practice will make the Northern District, at least for some cases assigned to the participating judges, more like the Eastern District of Virginia, which randomly assigns judges to each new motion or trial throughout a proceeding.  It may also make it harder to delay a trial, turning up the heat on pre-voir dire settlement negotiations.

Federal Notice Pleading for State Claims and Not-So-Automatic Bankruptcy Stays

C/F Int’l., Inc. v. Payne, No. 06 C 1329, 2006 WL 22290992 (N.D. Ill. Aug. 3, 2006) (Kennelly, J.).

Plaintiff filed suit to enforce a copyright infringement and breach of contract judgment against individual defendant Payne, his wife and two companies run by Payne after Payne allegedly transferred both personal and corporate assets to his wife. Judge Kennelly denied defendants’ motions to dismiss and for judgment on the pleadings, and deferred ruling on defendants’ motion to stay based on one defendant’s Chapter 7 bankruptcy proceeding.

The Court further noted that it previously dismissed defendants’ summary judgment motion for failure to comply with Local Rule 56.1(a).  Once again, the folly of disregarding Local Rule 56.1 is illustrated. When filing for summary judgment in the Northern District of Illinois, you must submit Statements of Material Facts and you must do it according to Local Rule 56.1. Otherwise, you will likely lose the motion without regard to the merits of the case.

For the most part, this case has little to do with intellectual property issues. It does, however, provide a couple of interesting rulings. First, plaintiff’s fraudulent transfer claims, which are presumably brought pursuant to the Illinois Uniform Fraudulent Transfer Act, 740 ILCS 160/1, are held to federal notice pleading requirements as opposed to Illinois’s more elaborate fact pleading. Second, although one of the corporate defendants is in bankruptcy, the Court did not automatically stay the claims as to that defendant. Instead, the Court deferred ruling on the stay motion until further discovery can shed light upon the bankrupt defendant’s specific role in the allegedly fraudulent transfers.