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

HyperQuest, Inc. v. N'Site Solutions, Inc., No. 08 C 483, 2008 WL 1968554 (N.D. Ill. May 1, 2008) (Shadur, Sen. J.).

Judge Shadur dismissed plaintiff's copyright infringement case for lack of subject matter jurisdiction. Plaintiff argued that it was the exclusive licensee of the copyright. But the Court held that plaintiff's license was nonexclusive because licensor retained various rights, including, the rights to:

• Make derivative works;
  
• Reproduce the work; and
  
• Sell the copyrighted software.

But the Court's adoption of defendants' reply was its most notable feature:

To that end [defendants’] Reply addressed fully every aspect of [plaintiff’s] attempt to characterize itself as an exclusive licensee . . . and it completely scotched HQ's position. Because the Reply has covered the waterfront so thoroughly and persuasively, this Court finds it unnecessary to reiterate the analysis there piece by piece-instead it simply adopts [defendants’] presentation as proffered in the Reply.

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Biopolymer Eng'ing, Inc. v. Biorigin, No. O7 C 4234, 2008 WL 927984 (N.D. Ill. Apr. 4, 2008) (Shadur, J.).

Judge Shadur, on the Court's own motion, struck the portions of defendant Biorigin's Answer that denied plaintiff's claims because plaintiff misspelled Biorigin – spelling it “Biorgin” instead of “Biorigin.” The Court noted that a denial based upon misspelling was an argument “only a patent lawyer could love.” And the Court explained that, despite plaintiff's misspelling, Biorigin understood that it was the intended target of plaintiff's complaint.

The Court also struck Biorigin's lack of personal jurisdiction, insufficient service and insufficient process affirmative defenses. The Court held that by filing a counterclaim, Biorigin affirmatively invoked the Court's jurisdiction, forfeiting these affirmative defenses.

As to Biorigin's lack of standing affirmative defense, the Court noted that it was pled on information and belief and required that Biorigin, should it find facts to support its defense, file a motion with such facts as quickly as possible because standing should be addressed as early as possible.

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Blawg Review #150 is up at Trust Matters by Charlie Green, co-author of The Trusted Advisor and creator of the Carnival of Trust, which I will be hosting on the first Monday of May.  This week's review links to the Blog's follow-up post about whether photographs of copyrighted Thomas & Friends toy trains are derivative works -- click here for the post.

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Schrock v. Learning Curve Int’l, Inc., No. 04 C 6927, __ F.Supp.2d __ (N.D. Ill. Jan. 29, 2008) (Shadur, J.).*

In February, I posted about Judge Shadur's opinion in this case holding that plaintiff's photographs of defendants' copyright Thomas & Friends toy trains were derivative works and, therefore, could not be registered with the Copyright Office without defendants' express permission -- click here for the post.  Professor Rebecca Tushnet of my alma mater, the Georgetown University Law Center, at the 43(B)log has posted about the case also.  Tushnet questions why the creator of an authorized derivative work should be prevented from registering that work:

What I don’t understand is why authority to register ought to matter. The derivative works – accepting for the moment that this is what they were – were made with the permission of the copyright owner in the original works. That is all that ought to be required. Of course there is a potential problem of blocking copyrights – but other cases have avoided this by finding no derivative work at all where a translation from two dimensions to three, or three to two, has taken place.

It does seem reasonable that the authorized creator of a derivative work should have the right to register the copyright, leaving any rights held by the underlying copyright owner to be controlled by contract.  Of course, requiring that the right to register be expressly granted also leaves the rights to the contract between the parties, just with a different default.

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Schrock v. Learning Curve Int’l, Inc., No. 04 C 6927, Slip Op. (N.D. Ill. Jan. 29, 2008) (Shadur, J.).*

Judge Shadur granted defendants’ motion for summary judgment of non-infringement and dismissed plaintiff’s related state law claims. Plaintiff took a series of photographs of defendants’ Thomas & Friend toy trains, each pursuant to a provision that defendants could only use the photographs for two years. Plaintiff argued that defendants infringed plaintiff’s copyrights by using the photographs after the two years were up. 

But the Court held that plaintiff had no copyright. The photographs were derivative works based upon defendant’s copyrighted Thomas & Friends train engines and cars. The party making a derivative work must have the copyright holder’s permission to copyright the derivative work. While plaintiff had the right to make the derivative works, plaintiff was not granted the right to copyright them. Plaintiff, therefore, had no copyright. And because plaintiff’s state law claims were based on supplemental jurisdiction, they were dismissed without prejudice.

The Court also noted that President Abraham Lincoln, a month before his assassination, signed the bill making photographs copyrightable for the first time.

*  Click here for a copy of the opinion.

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Garcia v. City of Chicago, No. 07 C 5828, Slip Op. (N.D. Ill. Dec. 10, 2007) (Shadur, J.).

Judge Shadur sua sponte struck certain denials in defendant’s answer. The Court held that it was improper to deny those allegations for which defendant stated it lacked sufficient information or belief to respond and, therefore, struck them from the answer. Additionally, the Court noted that defendants had not provided the Court with courtesy copies pursuant to Local Rule 5.2(e).

Practice tip: Courtesy copies often get lost in the administrative shuffle after a complex filing. But there are few things more important than providing the Court with easy access to your papers.

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Dicam, Inc. v. United States Cellular Corp., No. 07 C 5472, Slip. Op. (N.D. Ill. Sep. 28, 2007) (Shadur, J.).*

Judge Shadur sua sponte ordered plaintiff Dicam to dismiss all parties but defendant United States Cellular (“U.S. Cellular”) and one of its five co-defendants. Dicam’s Complaint alleged patent infringement of telephones sold by U.S. Cellular and manufactured by the other five defendants. The Court could find “no legitimate reason” for brining what it believed were five separate suits as one. The Court explained that if Dicam had filed the suits separately, the Court would not have consolidated them pursuant to Local Rule 40.4, although they might have qualified for coordinated discovery. The Court, therefore, ordered Dicam to dismiss four of the five suppliers, without prejudice to refile separate cases against those suppliers. Dicam has since dismissed all but one of the four suppliers and refiled separate cases against each of the four suppliers with U.S. Cellular named as a co-defendant in each case.

* Click here for a copy of the opinion.

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Meyer Intellectual Props. Ltd. V. Bodum, Inc., __ F.Supp.2d __, 2007 WL 2110931 (N.D. Ill. Jul. 24, 2007) (Shadur, J.).

Judge Shadur granted plaintiff’s motion for attorneys’ fees and costs related to a motion discovery dispute won by plaintiff, but modified its original award based upon defendant’s explanations (you can read more about this case in the Blog’s archives). The Court explained that the relevant Federal Rule, Fed. R. Civ. P. 37(a)(4)(A), could be paraphrased as “loser pays,” unless the Court finds the losing parties actions or lack of actions were justified or that other circumstances make a fee award unjust. The Court held that defendant’s explanation warranted reducing the original award by 50%. While the Court did not detail the explanation, this case identifies the broad discretion courts have in determining whether to award attorneys’ fees and costs, as well as the size of those awards.

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Meyer Intellectual Props. Ltd. V. Bodum, Inc., No. 06 C 6329, Slip Op. (N.D. Ill. Jul. 24, 2007) (Shadur, J.).*

Judge Shadur denied defendant’s motion to amend its answer adding an equitable estoppel defense. The Court noted that amendments were usually “generously” allowed, but defendant provided no justification for not including equitable estoppel in its original answer. Defendant argued that it required investigation to discover its equitable estoppel defense, but the Court noted that the information defendant relied upon was in defendant’s possession. So, there was no reason that defendant could not have conducted its investigation before filing its answer.

*  A copy of the Opinion is available here.

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Playboy Enters. Int'l., Inc. v. 3E Trading, LLC, No. 07 C 1111, Slip Op. (N.D. Ill. Apr. 30, 2007) (Shadur, J.).*

Judge Shadur struck defendant's answer sua sponte, with leave to file an amended answer.  Plaintiff Playboy Enterprises International ("Playboy") alleged in its Complaint that the parties entered a series of agreements (the "Agreements") pursuant to which defendant 3E Trading ("3E") was licensed to use various Playboy trademarks in connection with the sale of specifically defined categories of products -- for example money clips, lamps, glassware and bar accessories.  But Playboy contended that 3E continued selling the previously licensed products after the Agreements expired.  3E answered the Complaint (here is a copy of the Answer), as many defendants do, with numerous blanket denials and Fed. R. Civ. P 8(b) statements that 3E lacked sufficient knowledge or information to admit or deny the allegations.  The Court identified numerous paragraphs that it did not believe could be denied for lack of information with the good faith required by Fed. R. Civ. P. 11(b).  For example, the Court held that 3E must have had some knowledge by virtue of its entry into the Agreements as to at least some of the statements made in paragraphs 6 and 7 identifying certain marks allegedly owned by Playboy and the fact that the marks were valuable.  The Court did not identify all of the deficiencies it found, but warned that answers such as this one "tend to defeat the entire purpose of notice pleading."  The Court required, as noted above, that 3E amend its answer and required that 3E's counsel:  1) not charge 3E for amending the Answer; and 2) copy the Court on a letter to 3E explaining that they will not be charged for the amended Answer.

This may not be a stiff penalty, but it is both exceedingly rare and embarrassing for counsel.  It presents an important practice tip:  answer complaints thoroughly, parsing your admissions and denials with extreme care.  While you must be careful not to admit things improperly, it is also risky to make blanket denials regarding facts that should be in your possession.

*Because this opinion is not on Westlaw yet, you can read a copy here.

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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.

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