Unjust Enrichment Claim Based Upon Non-US Acts Not Preempted by Copyright Act

Posted on December 30, 2009 by R. David Donoghue

Zimnicki v. Neo-Neon Int'l, Ltd., No. 06 C 4879 (N.D. Ill. Nov. 9, 2009) (Norgle, J.)

Judge Norgle denied defendant Neo-Neon International's ("Neo-Neon") Fed. R. Civ. P. 12(c) motion for judgment on the pleadings regarding plaintiff's unjust enrichment claim in this copyright dispute.  Plaintiff sued Neo-Neon and others for alleged infringement of plaintiff's copyrighted decorative holiday lighting products.  Plaintiff also asserted an unjust enrichment claim against Neo-Neon alleging that Neo-Neon profited from making, using and selling products based upon plaintiff's designs.  The unjust enrichment claim met the first prong of the preemption test because plaintiff admitted the designs at issue were copyrighted.  But the second prong was not met.  Neo-Neon's accused acts occurred outside the US, in China.  Because the alleged acts were extraterritorial, they did not fall within the exclusive rights granted to copyright holders pursuant to §106.  This was true even though the same acts in the US would presumably have been covered and, therefore, preempted.

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No Antisuit Injunction When Suits Assert Different Countries' Intellectual Property

Posted on September 18, 2009 by R. David Donoghue

Zimnicki v. Neo-Neon Int'l., Ltd., No. 06 C 4879, Slip Op. (N.D. Ill. Jul. 30, 2009) (Norgle, J.).

Judge Norgle denied plaintiff's motion for an antisuit injunction.  Plaintiff filed copyright, trademark and unjust enrichment claims against defendant based upon the alleged use of plaintiff's North Pole Village brand and decorative holiday lighting products.  Defendant then filed a declaratory judgment action in China seeking a determination that defendant, who filed Chinese copyrights on designs similar to those covered by plaintiff's US copyrights in suit, owned the disputed designs.  The Court explained that there is a circuit split on the standard for antisuit injunctions that the Seventh Circuit had not weighed in on.  The First, Second, Third, Sixth and District of Columbia take the "conservative approach" requiring that the foreign action to be enjoined would prevent US jurisdiction or threaten a vital US policy, and that the domestic interests outweigh concerns of international comity.  The Fifth and Ninth Circuits take the "liberal" approach which requires only that the injunction is "necessary to prevent duplicative and vexatious foreign litigation and to avoid inconsistent judgments."

Because the Seventh Circuit has not chosen an approach, most district courts in the circuit follow the more "lax" liberal approach.  But in this case, the Court did not need to make that determination because plaintiff's claim did not meet either standard because the issues in suit were not the same.  Plaintiff's instant suit asserted its US intellectual property.  Defendant's Chinese suit, on the other hand, sought a declaratory judgment that defendant owned its Chinese intellectual property, not plaintiff.  Because the Chinese suit would not make determinations about plaintiff's US intellectual property, neither litigation's outcome would be dispositive of the other.  Furthermore, plaintiff did not present evidence that the relevant Chinese intellectual property laws were the same or similar to the US Copyright or Lanham Acts.

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