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

Amari Co. v. Burgess, No. 07 C 1425, ___ F.Supp.2d ___, 2008 WL 656072 (N.D. Ill. May 7, 2008) (Ashman, Mag. J.).

Judge Ashman denied plaintiff Amari Co.’s motion for a protective order to prevent defendants’ alleged intimidation of Amari's non-party witnesses in this Racketeering Influenced and Corrupt Organization Act ("RICO"). Amari argued, among other things,* that defendants were intimidating ex-employees of former defendant International Profits Associates ("IPA"), which was run by defendants, by threatening to enforce confidentiality agreements signed by all IPA employees.

The Court held that it could not grant Amari its requested relief for two reasons. First, to be effective the injunction would have had to enjoin non-party IPA from suing its ex-employees to enforce the agreements. The Court could not enjoin IPA without proof it was working in concert with defendants or that IPA was defendants’ alter ego.  And before enjoining IPA, IPA would have to be given notice of the motion and an opportunity to respond.

Second, Amari sought a blanket injunction from enforcing the agreements against IPA’s ex-employees, but did not allege that the agreement was unenforceable. While confidentiality agreements cannot be used to hide a company's potential impropriety, they can be used to protect proprietary information. Without identification of specific ex-employees allegedly threatened with a suit, the Court could not determine whether IPA might have been using the confidentiality agreement for enforceable or unenforceable ends. And if Amari identified a specific individual, it could subpoena them, removing the need for an injunction.

*Amari alleged other forms of intimidation, but they are not related to IP and are, therefore, not discussed in this post.

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Huthwaite, Inc. v. Randstad General Partner (US), L.L.C., No. 06 C 1548, 2006 WL 3065470 (N.D. Ill. Oct. 24, 2006) (Lefkow, J.).

Plaintiff, a corporate sales training services provider, contacted defendant, an employment services provider, to discuss improving defendant's sales training offerings.  Plaintiff told defendant that it knew defendant's current training materials incorporated techniques from plaintiff's copyrighted books -- "SPIN Selling" and "Major Account Sales Strategy" -- but assured defendant that it would not file a copyright infringement suit.  As discussions between the parties progressed, plaintiff asked to review defendant's training materials and promised defendant that it would not bring a copyright suit if the materials contained plaintiff's copyrighted information.   Defendant ultimately gave plaintiff its training materials, but only after signing a nondisclosure agreement requiring that the documents not be used for, among other things, filing a copyright infringement suit.  Two days after receiving defendant's documents, plaintiff filed a copyright infringement suit.  In response, defendant filed fraud and breach of contract counterclaims alleging that plaintiff was engaged in a broad scheme to leverage its copyrights be gaining the trust of potential infringers through marketing discussions and that the suit breached the nondisclosure agreement between the parties.

Judge Lefkow dismissed the fraud claim because in Illinois promissory fraud claims require pleading a scheme to defraud.  The Court held that the allegations did not rise to the level of a scheme because -- although plaintiff's filing two days after receiving defendant's training materials was a strong suggestion that it never intended to honor its promise not to sue -- defendant was aware of the risk that plaintiff would file suit and plaintiff's specific misrepresentations were not sufficiently egregious.

The breach of contract claim, however, was not dismissed because the use of defendant's training materials provided pursuant to the nondisclosure agreement would likely have been required to file an infringement suit (plaintiff's original suggestion that its techniques were being used was not sufficient to show copyright infringement because copyright does not protect techniques or ideas).

The Court also dismissed defendant's lack of standing affirmative defense based on an allegation that plaintiff lacked a sufficient ownership interest in the copyrights.  The Court noted that plaintiff has the burden to prove standing and that standing was best resolved by a motion to dismiss, rather than as a defense.

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