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

Here are several stories and updates, as well as a new IP blog:

• At Patently-O, Dennis Crouch covers the Federal Circuit decision in the appeal from the Northern District of Illinois case SourceOne Global Partners, LLC v. KGK Synergize, Inc. -- Click here for Crouch's post on the appeal and here for my post on the underlying decision.
   
• The latest installment of Doug Lichtman's IP Colloquium is available -- click here to listen.  Lichtman and his guests from Microsoft, Paramount Pictures and MySpace discuss the protection of content in the digital age.  As always, it is an excellent listen and CLE credit is available.
   
• Seattle Trademark Lawyer Michael Atkins has another great post up about Olympic trademarks, this time featuring an article that ran in the Chicago Tribune (here) and LA Times (here) quoting both Atkins and me.
   
• California attorney and mediator Erica Bristol has started the IP Watchtower blog.  The blog covers all facets of intellectual property and the initial posts suggest it will be a great read.  I have added it to my feed reader.

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SourceOne Global Partners LLC v. KGK Synergize, Inc., No. 08 C 7403, Slip Op. (N.D. Ill. Jul. 21, 2009) (Schenkier, Mag J.).

Judge Schenkier dismissed declaratory judgment defendant/counter-plaintiff KGK Synergize's ("KGK") patent, trademark, Lanham Act and related state law claims against declaratory judgment plaintiff/counter-defendant SourceOne's President for failure to meet the Twombly/Iqbal pleading standards.*  The Court held that KGK had not sufficiently pled allegations to support the factors in the veil piercing analysis, in particular:

• Allegations of episodes of "subpar record keeping" was not sufficient to prove SourceOne's failure to observe corporate formalities;
   
• Conclusory statements that SourceOne's corporate officers were allegedly not given autonomy to make decisions were not sufficient to show that officers or directors were non-functioning;
   
• The President and his family borrowing against a home equity loan to support SourceOne was not sufficient to show SourceOne was a "mere 'dummy or sham.'"; and
   
• the allegation that the President exerted significant control over SourceOne and personified the company was not sufficient to show a failure to maintain arm's-length relationships among related entities.

The Court also held that KGK's direct patent infringement claims against the President did not meet the Twombly/Iqbal pleading standards.  KGK's only allegations about the President were conclusory and tied to SourceOne's alleged infringing actions.  KGK did not plead sufficient facts about the President independent of SourceOne to support direct patent infringement claims.

*  For more on the application of the Twombly pleading standards to patent cases, click here in the Blog's archives.

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SourceOne Global Partners,  LLC v. KGK Synergize, Inc., No. 08 C 7403, Slip Op. (N.D. Ill. May 13, 2009) (Schenkier, Mag. J.).

Judge Schenkier denied declaratory judgment defendant KGK's motion to dismiss plaintiff SourceOne's declaratory judgment claims of noninfringement and invalidity of KGK's patents.  KGK allegedly asserted its patents against SourceOne's cholesterol fighting drug Cholesstrinol.  KGK argued that the Court lacked subject matter jurisdiction because SourceOne did not, and could not name the co-owner of KGK's patent, the United States government.  The Court held that it had subject matter jurisdiction over SourceOne's patent declaratory judgment claims, reasoning that otherwise the government's co-ownership of a patent would strip accused infringers of ever seeking declaratory actions.

The Court also held that, while the government was a required party pursuant to Fed. R. Civ. P. 19(a), the Rule 19(b) factors weighed in favor of allowing SourceOne's case to proceed despite its inability to join the government.  The Court held that allowing KGK to prevent a declaratory suit because it was not possible to name the government would give KGK too much power as a patent holder:

The approach urged by KGK (and the Government) would allow KGK to threaten legal action against SourceOne (or others) with impunity.  For those who gave into those threats, KGK would receive the benefit of the patent (a cessation of the alleged infringing conduct and perhaps compensation) without the need to do anything more.  For those who might rear up and seek a judicial resolution, KGK could retreat behind the Government's cloak of immunity and prevent the infringement or validity of the '125 Patent from ever being tested in court.

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