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

Capitol Indemnity Corp. v. Elston Self Serv. Wholesale Grocs., Inc., No. 04 C 6536, 2008 WL 696919 (N.D. Ill. Mar. 13, 2008) (Pallmeyer, J.).

Judge Pallmeyer held that the advertising injury claim in plaintiff Capitol Indemnity's ("CI") insurance policy required that it defend defendants the "Elston Grocery" defendants in the underlying trademark infringement, unfair competition and Illinois Deceptive Trade Practices Act ("IDTPA") claims. In the underlying litigation, Lorillard Tobacco accused Elston Grocery of selling counterfeit Newport cigarettes using Newport cigarette advertisements.

The advertising injury clause covered infringement of "copyright, title, or slogan" and "[m]isappropriation of advertising ideas." The Court held that "title" does not mean just the title of a work, but also encompasses, among other things, trademarks and names. CI, therefore, had a duty to defend Elston Grocery against Lorillard's trademark infringement claims. A duty to defend was also created by the trademark infringement claims because they accused Elston Grocery of misappropriating Lorillard's advertising ideas – its trademarks and advertisements.

CI argued that there was an exclusion for allegedly intentional acts. But the Court held the exclusion did not apply, even though Lorillard pled intent, because intent was not required for trademark infringement.

Additionally, it did not matter that the policy covered only compensatory damages. Lorillard sought punitive damages, but they would only be awarded if compensatory damages were awarded. So, the punitive damages exclusion did not alter CI's duty to defend.

Finally, the Court declined to rule on indemnity because Lorillard's claims had not been finally resolved. An indemnity ruling regarding an ongoing case was inappropriate because it would be an advisory opinion.

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CardioNet, Inc. v. LifeWatch Corp., No. 07 C 6625, 2008 WL 567223 (N.D. Ill. Feb. 27, 2008) (Conlon, J.).

Judge Conlon granted in part defendants’ (collectively, “LifeWatch”) motion to dismiss plaintiff CardioNet’s state law claims as preempted by the Illinois Trade Secrets Act (“ITSA”). CardioNet alleged that LifeWatch improperly obtained one of CardioNet’s prescription-only MCOT remote heart monitoring devices by getting a false prescription for it. LifeWatch then tested the MCOT by, among other things, simulating a heart attack. Based upon the tests, LifeWatch gathered allegedly trade secret information from the MCOT.

The Court held that CardioNet’s conversion claim was preempted to the extent it was based upon gathering trade secret information from the MCOT because conversion of trade secrets is a restatement of misappropriation. But the claim was not preempted as it related to conversion of the MCOT device.

Similarly, CardioNet’s fraud claim was preempted to the extent the alleged fraud was acquiring the trade secret or confidential information, but the claim was not preempted to the extent the alleged fraud was acquiring the MCOT device.

CardioNet’s intentional interference with contract claim was not preempted. The alleged wrong was not the alleged misappropriation, but interference with the contract signed by the patient to get the MCOT.

Finally, CardioNet’s unfair competition claim was preempted. The alleged unfair competition was possession and use of the alleged trade secret information taken from the MCOT, the same acts forming the trade secret claim.

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Flentye v. Kathrein, __ F. Supp.2d __, 2007 WL 1175576 (N.D. Ill. Apr. 18, 2007) (Filip, J.).

Judge Filip denied defendants' motions to dismiss, except as to plaintiffs' claim for punitive damages for intentional infliction of emotional distress, because Illinois law does not allow punitives for IIED.  Plaintiffs (collectively "Flentye") promoted apartment rental services , including some properties owned by Flentye, using their family name, Flentye.  Defendants competed with Flentye promoting similar apartments, some of which were owned by defendant Kathrein LLC.  Flentye brought suit against defendants alleging violations of the Anti-Cybersquatting Consumer Protection Act ("ACPA"), Lanham Act unfair competition and related state law claims.  Flentye alleges that defendants lost a dispute before the UDRP and were forced to return certain domain names to Flentye, including timflentye.com, flentye.com and flentyeproperties.com.  Flentye alleged that defendants then registered new domain name timflentye-not.com and used it to direct traffic to defendants' competing websites.  Flentye also alleged that defendants improperly used the term "Flentye" in its meta tags (key words embedded into a site's source code to director search engines to the site) to direct users seeking information regarding Flentye to defendants sites. 

Defendants first argued that Flentye failed to plead its veil-piercing claims and that, therefore, corporate defendant Kathrein LLC should be dismissed because there were not sufficient allegations against it without a veil-piercing theory.  But the Court held that notice pleading was sufficient for a veil-piercing argument and that Flentye met the notice standard.  It was sufficient that Flentye pled that individual defendant Kathrein  created defendant Kathrein LLC "for the sole purpose of holding title to local real estate through which [Kathrein] operates Lee Street Management" and that in the caption Kathrein LLC was identified as "d/b/a Lee Street Management."  The Court noted that while these allegations might not be sufficient to prove that the veil was pierced, they were sufficient for Fed. R. Civ. P. 8(a) notice pleading.  The Court also noted that a claim of corporate veil-piercing did not require Fed. R. Civ. P. 9(b) heightened pleading.

Similarly, Kathrein LLC argued that the ACPA claim should be dismissed against it because Flentye made no specific allegations regarding Kathrein LLC's use of the domain name at issue or its intent to profit from the domain allegedly including Flentye's mark.  But the Court held that the allegations that Kathrein LLC acted as the alter ego of Kathrein and that Kathrein and Kathrein LLC registered the domain names at issue as a group were sufficient to state a claim.

Defendants argued that Flentye's Lanham Act claim should be dismissed because of numerous "bold disclaimers" on defendants' websites that the site was run by Kathrein.  But because screen shots of the site were not included in or referenced by the complaint, the Court refused to consider them on a Rule 12(b)(6) motion to dismiss.

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MPC Containment Sys., Ltd. v. Moreland, No. 05 C 6973, 2006 WL 2331148 (N.D. Ill. Aug. 10, 2006) (Aspen, J.).

Judge Aspen granted defendants’ Rule 12(b)(6) motion to dismiss plaintiff’s Lanham Act unfair competition claim for failure to meet the Rule 9(b) heightened pleading requirements.  Plaintiff’s bare allegation that the individual defendants made misrepresentations to a single customer did not satisfy Rule 9(b)’s heightened pleading requirements. 

Plaintiff failed to allege when the misrepresentations were made, alleging only that they were made during the individual defendants’s employment with plaintiff, a period of at least twenty years. The Court also held that plaintiff failed to allege that the communications were “commercial advertising or promotion,” as required by the Lanham Act § 43(a)(1)(B), because plaintiff never stated how the misrepresentations were communicated. Finally, the Court warned in a footnote that “allegations based ‘on information and belief’ generally do not satisfy the particularity requirements of Rule 9(b).”

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