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No Irreparable Harm Where Plaintiff Delays Seeking Injunction

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Real-Time Reporters, P.C. v. Sonntag Reporting Servs., Ltd., No. 13 C 5348, Slip Op. (N.D. Ill. Der-Yeghiayan, J.).

Judge Der-Yeghiayan denied plaintiff Real-Time Reporters’ (“RTR”) preliminary injunction motion in this Lanham Act matter involving RTR’s REAL-TIME REPORTERS trademark.  Defendant Sontag Reporting Services (“SRS”) use of the name “Chicago-area Realtime Reporters” alleged infringed RTR’s REAL-TIME REPORTERS trademark. 

RTR’s slow actions belied its claims of irreparable harm.  RTR allegedly learned of SRS’s use of the mark in April 2013, but did not sue until late July 2013, did not seek a temporary restraining order and waited almost a month before filing the instant motion for preliminary injunction. 

The Court also held that in light of the Supreme Court’s eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) decision, it was unclear that the presumption of irreparable harm in trademark cases remained. 

Regarding RTR’s likelihood of success, the Court held that RTR’s REAL-TIME REPORTERS mark appeared to be generic.

Balancing the harms favored SRS because it would be harmed by an injunction, while RTR had already shown it would not be significantly harmed by its delay in filing suit and its delay in seeking a preliminary injunction.

Benefits of Parallel District Court Litigation and Patent Office Review

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I wrote this article for IP Law360.  I am cross-posting it here with permission — thank you Law360 — because inter partes review (“IPR”) is increasingly a valuable strategy for patent defendants in Chicago, as it is for defendnats across the country.

Inter partes review has become a popular, powerful tool for patent defendants. In many cases, it allows the defendant to get the expensive district court litigation stayed in favor of the Patent Trial and Appeal Board’s more focused and more economical validity review. The IPR proceeding must be completed within 12 months of the PTAB instituting the IPR, with a possible six-month extension for cause. That is half, or less, the lifespan of a typical district court litigation, and the cost is far less than half of defending a patent litigation.

The statistics show that most, but not all, district courts stay related litigation in the face of an IPR, particularly after an IPR is instituted. District courts have granted stays approximately 72 percent of the times they are sought. So, most litigants will get a stay, but 28 percent will be left with parallel district court and PTAB proceedings.

You can often confidently predict whether your stay will be granted based upon your judge’s history with stay motions. But even if your judge typically grants a stay pending an IPR, there is always some risk that the judge denies the stay in your case because of the particular facts of your case or a changing philosophy. So, when considering an IPR, it is important to consider whether the advantages from parallel PTAB and district court proceedings outweigh the risks, typically the added cost. Here are several benefits to adding a parallel IPR to your district court litigation:

1. Early Claim Construction

The PTAB’s decision instituting an IPR comes with an initial claim construction ruling. It is not the PTAB’s final claim construction, and it is not controlling on the district court. In fact, even the final PTAB claim construction is not binding upon the district, at least, because the PTAB’s claim construction standard — the broadest reasonable construction — is broader than the district court’s ordinary and customary meaning standard. But a noncontrolling claim construction is still powerful.

Additionally, the PTAB’s administrative law judges have uniformly excellent credentials and experience. That generally has led to claim constructions that evidence a deep understanding of the technology and the relevant case law. So, even if they may be broader than the appropriate district court construction, they are likely to be clear and true to the technology. So, if you are confident in your claim construction positions, particularly where you have two or three potentially dispositive arguments that are well supported by the intrinsic and extrinsic evidence, the PTAB’s initial claim construction may be exceptionally valuable.

Of course, the PTAB’s constructions do not bind the district court, but any litigator who has been in a later filed patent case knows that it is very difficult to argue against a non-controlling, prior construction, even when a different court or judge issued the construction. So, both parties are forced to argue from the PTAB’s initial constructions as a starting point, as opposed to being able to argue for any position they want. That can be a powerful tool to focus the claim construction process. Finally, while you may likely get a broader construction than you would from the district court, that at least opens up invalidity arguments for you and in many cases it may not matter where you believe even a broad construction will prove that you do not infringe.

Finally, in many courts you may get to the conclusion of the IPR process and the PTAB’s final claim constructions, which still are not binding upon the district court, but necessarily carry more weight than the initial constructions.

2. Fees

Parallel proceedings necessarily add cost for both parties, but it can often be especially painful for plaintiffs being represented on contingent fee agreements. Generally, contingent fee counsel does not want to handle PTAB proceedings on a contingent fee because there is no direct monetary upside to IPRs. Of course, more and more plaintiff’s counsel are working possible IPRs into their fee arrangements, but it remains an added cost.

Furthermore, while the PTAB has been relatively liberal in granting nonpatent barred litigation counsel pro hac vice admission, the PTAB still requires that a party’s lead counsel be patent barred. So, if your opponent’s counsel does not have any registered patent attorneys, the IPR adds extra fees for the counsel that must be hired to lead the IPR. Regardless of the patent holder’s attorney’s fee arrangement, dual proceedings add time and complexity to the patent holder’s case. There is a cost to someone in the extra time, whether or not the plaintiff pays it directly.

3. Increased Risk

Most patent litigation is settled because of a combination of high costs and significant uncertainty in the outcome. When faced with more than $1 million in attorneys fees and a risk, even a small one, of losing a seven- or eight-figure sum at trial, it is often hard for an accused infringer to stay in a suit just because they are confident that they do not infringe and/or that the asserted patents are invalid. Typically, the plaintiff does not have a similar risk profile. There is certainly a cost to prosecuting a patent litigation, but it is often born by counsel in the form of a contingent fee. Especially in nonpracticing entity cases, defendants have very few opportunities to create counter-balancing risk for the plaintiff. Plaintiffs know that because invalidity and inequitable conduct are fact-intensive and generally battles of experts, they are hard to win on summary judgment.

That means the defendant often has to take those defenses to trial in order to win, along with all of the expense of litigating a case through trial. IPRs, however, are different. They are faster, as detailed above, promising a ruling within one year of the IPR’s institution. And the PTAB has routinely invalidated the challenged claims. As of early this year, approximately 84 percent of IPR petitions are being instituted. Of those cases, 264 out of 274 challenged claims that went to trial were invalidated — more than 95 percent.

Those are staggering numbers, which is likely what has led some in the plaintiff’s bar to call the PTAB judicial panels “roving patent death squads.” Of course, sophisticated plaintiffs are aware of these statistics and are resolving cases that include IPRs quickly. One indication of this is that, the 41 percent of IPRs settle before the PTAB issues a decision regarding institution of the proceedings, indicating that seeking an IPR is strong leverage for a patent defendant.

While virtually every patent defendant that seeks an IPR would prefer that their district court litigation be stayed pending the IPR, there is real value in adding an IPR proceeding to your district court litigation, even without a stay.

7th Cir. Judicial Conference: Northern District Judges Offer Practice Tips

Posted in Legal Seminars, Uncategorized

With a hat tip to the Chicago Daily Law Bulletin’s coverage of the 7th Circuit Judicial Conference, Northern District Judges Durkin, St. Eve, and Tharp offered several valuable practice tips for litigating before federal courts, that apply as well for IP litigators as for any litigator.

Judge Durkin:

  • Reduce litigation costs.  For example, there is no need to appear for brief status conferences, when you can appear by phone and cut out significant travel costs.
  • Think carefully before filing summary judgment motions.  They are a “huge expense” and counsel have no reason not to file them. 
  • Consider consenting to trial before a magistrate judge.  Magistrate judges can offer faster times to trial because they do not have to focus on the constitutional right to a speed trial in criminal matters.  He explains “[y]ou get great judges.  Same law.  Same juries.”

Judge St. Eve:

  • It is important to cooperate with opposing counsel.  “Be nice.  It’s not that hard.”

Judge Tharp

  • Look at the judge’s website.  Ignorance of the judge’s procedures and requirements does not start counsel off well with the judge.
  • Instead of starting a brief with a recitation of each pleading and ruling, offer a “pithy, short, concise” statement of the issue to be decided.

Court Sua Sponte Orders Production of Evidence and a Hearing on a Copyright Issue

Posted in Local Rules, Uncategorized

Flava Works, Inc. v. Momient, No. 11 C 6306, Slip Op. (N.D. Ill. Apr. 1, 2013) (Shadur, Sen. J.).

Judge Shadur, after reading plaintiff FlavaWorks’ answer to defendant’s copyright counterclaims, sua sponte ordered FlavaWorks to produce a copy of the Commission Work Agreement that FlavaWorks alleged assigned all rights in the videos and photographs at issue to FlavaWorks.  The Court reasoned that deciding the issue of whether the Agreement transferred defendant’s rights in his works to FlavaWorks would move a case forward that had otherwise been largely a series of “procedural skirmishes.”  To the extent that there was not sufficient documentary evidence to establish the necessary facts, the Court asked the parties to submit a brief statement regarding how the issue could be effectively brought before the Court.

 

 

CLE: Loyola University Program on Patents, Innovation & Freedom to Use Ideas

Posted in Legal Seminars, Uncategorized

On Thursday, April 11 at Loyola University Law School, the Loyola University Chicago Law Journal is putting on a program called:  Patents, Innovation & Freedom to Use Ideas.  Click here for the program brochure.  The program has an interesting mix of theoretical and practical discussions.  Among the more interesting topics are:

  • Chief Judge Holderman discussing Innovations to Improve Juror Understanding in Patent Trials
  • Emory University’s Professor Timothy Holbrook (a former Chicagoan), Boston University’s Professor Michael Mueur (who has written interesting articles regarding the costs of NPE suits); and University of San Diego Professor Ted Sichelman discussing Shortcomings in the Patent System.

This looks like an excellent program.

Is There a Fox in the Henhouse: Inhouse Counsel and Protective Orders

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Autotech Techs. Ltd. Partnership v. Automationdirect.com, Inc. 237 F.RD. 405 (N.D. Ill. 2006). (Cole, Mag. J.).

In this impressively detailed opinion, Magistrate Judge Cole grants defendant’s motion for a protective order limiting plaintiff’s in-house counsel’s access to sensitive customer information and communications.  The parties faced a common problem, they had agreed that customer information, including customer identities and communications, would be limited to attorneys’ eyes only, but could not agree as to whether plaintiff’s in-house counsel could access the information.  Plaintiff argued that its in-house counsel played a lead role in the case and, therefore, required access to the information.  Defendant argued that in-house counsel were corporate decision makers, in addition to counselors, and would not be able to separate the knowledge of defendant’s customers they would be exposed to when performing business-related functions.

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Reconstruing Claims

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Cummins-Allison Corp. v. Glory Ltd., __ F.Supp.2d __, 2006 WL 2931999 (N.D. Ill. Oct. 13, 2006) (Kendall, J.).

Judge Kendall performed a very thorough claim construction in this opinion, but what is most interesting about it is the procedural history.  The Court (with another judge presiding) initially construed the claims at issue in March 2005, without holding a Markman hearing.  Plaintiff then sought reconsideration regarding one of the patents at issue and defendant sought reconsideration regarding the other.  The Court ultimately granted both motions and held a Markman hearing, which is the basis of this opinion.   

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The Lanham Act is Going to the Dogs

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Gail Green Licensing & Design Ltd. v. Accord, Inc., No. 05 C 5303, 2006 WL 2873202 (N.D. Ill. Oct. 5, 2006) (St. Eve, J.).

Judge St. Eve dismissed plaintiffs’s Lanham Act false advertising claim, but refused to dismiss plaintiffs’s breach of contract claim, among others.  Both claims are based upon defendants’s receipt of plaintiffs’s copyrighted designs for pet clothing and accessories pursuant to a Non-Disclosure and Confidentiality Agreement (the "NDA") and defendants’s subsequent alleged sale of  goods based upon plaintiffs’s copyrighted designs.

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Northern District of Illinois Jury Instructions

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Crafting proposed jury instructions is one of the first steps when preparing for trial.  And one of the first steps in drafting those instructions is looking for pattern or sample instructions that the court has previously used or endorsed.  In order to help speed that process, I am adding a new Blog feature.  I have gathered the jury instructions that each of the Northern District judges identify on their respective  web pages as either form or model instructions.  Most have general civil instructions and a few have specific sample instructions for various types of IP suits.

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