Effective December 1, 2018, the Northern District’s Mandatory Initial Discovery Pilot (“MIDP”) no longer requires that a defendant answer along with filing a Fed. R. Civ. P. 12 motion to dismiss, including fed. R. Civ. P. 12(b)(6) motions to dismiss for failure to state a claim. For the first eighteen months of the MIDP – the MIDP went into effect June 1, 2017 – parties were required to answer even if they filed a Rule 12 motion, unless the motion was based upon jurisdiction or immunity defenses. This triggered the MIDP’s early discovery requirements, which can be significant. Those requirements can be onerous, especially if one or more claims upon which the discovery is done are later dismissed. In my experience, Northern District judges often agreed to the parties’ request to stay the MIDP disclosures pending the outcome of a motion to dismiss. This rule change codifies that practice and should make it even more widespread. This rule change should make early motions to dismiss much more cost-effective for defendants as a resolution strategy, while still furthering the goals of early information exchange. And as the Court noted in its announcement of the rule change, it will also give the Federal Judicial Center good data for evaluating the two versions of the MIDP, as we will have eighteen months under the original rule and, now, eighteen months under the revised rule – the duration of the pilot program.
Document Requests Must be Proportional to the Needs of the Case
Lawson Prods., Inc. v. Midwest Motor Supply Co. d/b/a Kimball Midwest, No. 17 C 1250, Slip Op. (N.D. Ill Nov., 27, 2018) (Gilbert, Mag. J.).
Magistrate Judge Gilbert denied the parties’ motions to compel discovery on the eve of fact discovery closing in this Lanham Act case. As an initial matter, the Court reminded the parties that the discovery standard is no longer that a request be reasonably calculated to lead to discovery of admissible evidence. As of December 1, 2015, Fed. R. Civ. P. 26(b)(1) requires discovery be relevant to a party’s claim or defense and that it be proportional to the needs of the case. Requests that are reasonably calculated to lead to discovery of admissible evidence may fall outside the new standard, as they did in this instance.
Plaintiff Lawson Products (“Lawson”) sought discovery regarding products sold by defendant Kimball, but not manufactured by them that used a black and yellow color scheme similar to the one at issue in the case. Kimball countered that it had no additional documents and that, in any event, the requests were unduly burdensome in light of a stipulation that Kimball had provided that the black and yellow color scheme was not exclusive to Kimball. In light of Kimball’s stipulation, the requests were unduly burdensome. Furthermore, based upon Kimball’s assertion that it had no further documents, the stipulation was more than Lawson would get from Kimball responding to the document request without any additional documents.
The Court also denied Kimball’s motion to compel. While Lawson “dribbled” out its information during discovery, it claims to have produced all responsive documents in its possession. And while its interrogatory responses may have provided only “minimally responsive” information, Lawson asserts it has no more information. Forcing an additional round of supplementation would be unduly burdensome at this point in the case. The Court also denied Kimball’s request for an order barring Lawson from offering any information beyond what it has produced to date. The Court noted that this request may have been the true aim of the motion to compel, but that it was premature. Should Kimball later prove that Lawson was not forthcoming in its discovery responses, the Court can address the issue when it arises.
Laches Cuts Lanham Act Jury Award in Half
Illinois Tamale Co. v. El-Greg, Inc., No. 16 C 5387, Slip Op. (N.D. Ill. Dec. 14, 2018) (Kennelly, J.).
After a jury trial on plaintiff Illinois Tamale’s Lanham Act claims regarding its PIZZA PUFFS marks and state breach of contract claims the jury returned an award to Illinois Tamale on all claims and a willfulness finding as to each Lanham Act claim. Pursuant to the parties’ agreement, the Court relied upon the trial record and an additional, brief bench trial on defendant El-Greg’s laches claim regarding Illinois Tamale’s Lanham Act claim. The Court held that the laches claim did not warrant dismissing Illinois Tamale’s claims, but did reduce the award on the Lanham Act claim by half, from $80,000 to $40,000 based on Illinois Tamale’s delay in bringing suit.
Of particular note, the Court held as follows:
- Illinois Tamale had knowledge of El-Greg’s infringement at least as early as August 2011 when it sent El-Greg a cease and desist letter related to the PIZZA PUFF marks.
- Because the Lanham Act does not have its own statute of limitations, the Court looks to the most applicable state statute. The Court held that was the three year period for the Illinois Consumer Fraud and Deceptive Business Practices Act, not the five year period for fraud claims, as Illinois Tamale argued.
- Having delayed three years, there was a rebuttable presumption of delay.
- El-Greg’s failure to respond to the cease and desist coupled with its continued sale of product using the accused marks was “tantamount to a rejection” of Illinois Tamale’s demand.
- Illinois Tamale offered no justification for its delay.
Regarding El-Greg’s allegations of harm based upon Illinois Tamale’s delay, the Court held as follows:
- There is no evidence that El-Greg significantly invested in marketing or product development.
- El-Greg’s claim that it was harmed because Illinois Tamale’s PIZZA PUFFS mark became incontestable during the delay period had facial appeal, but failed. El-Greg offered no persuasive evidence that it could have succeeded in defeating the mark before it became incontestable.
- El-Greg’s argument that the delay allowed damages to accumulate was supported by the evidence. El-Greg changed its marketing seven months after suit was filed. There is no reason to believe El-Greg would not have acted similarly, had it been sued earlier.
The Court also held that El-Greg’s willful infringement did not prevent its laches claim based upon an unclean hands theory.
While the Court found El-Greg’s laches defense meritorious, Illinois Tamale’s delay was not so extreme as to warrant wiping out all of the damages. The Court, therefore, halved the damages based upon a consideration of pre-suit versus post-suit damages.
CLE: John Marshall “Patent Wars” Presentation
John Marshall’s Center for Intellectual Property, Information & Privacy is hosting Minnesota Law Professor Thomas Cotter to discuss topics from his book Patent Wars on Wednesday, February 27, 2019 beginning at 1:15. Cotter’s talk promises to focus upon the unknown impact of the patent monopoly on innovation and key issues in current patent debates. Here is part of John Marshall’s description of the event:
In Patent Wars, Professor Thomas F. Cotter, one of America’s leading patent law scholars, offers an accessible, lively, and up-to-date examination of the current state of patent law, showing how patents affect everything from the food we eat to the cars we drive to the devices that entertain and inform us. Beginning with a general overview of patent law and litigation, the talk addresses such issues as the patentability of genes, medical procedures, software, and business methods; the impact of drug patents and international treaties on the price of health care; trolls; and the smartphone wars. Taking into account both the benefits and costs that patents impose on society, Cotter highlights the key issues in current debates and explores what still remains unknown about the effect of patents on innovation.
John Marshall is offering 1.5 hours of CLE credit. Register here.
IPLAC Annual Federal Judiciary Dinner
The Intellectual Property Law Association of Chicago (IPLAC) is hosting its 124th annual dinner honoring the federal judiciary on Friday, November 9, 2018 at the Standard Club, in Chicago. The evening will begin with a cocktail reception at 5:30 p.m., followed by dinner at 6:30 p.m. IPLAC will honor Federal Circuit Chief Judge Sharon Prost with its Distinguished Judicial Service Award. Sponsorships, tables and individual tickets are available.
This is a great event. I hope to see you there.
Former Employee Interview No Basis for Disqualification Without Privileged Information
Freeman Equip., Inc. v. Caterpillar, Inc., No. 16 C 9172, Slip Op. (N.D. Ill. Mar. 13, 2017) (Bucklo, J.).
Judge Bucklo denied defendant Caterpillar’s motion to disqualify plaintiff Freeman Equipment’s (“Freeman”) counsel in this patent case involving final drive guard assemblies.
Caterpillar sought disqualification for two reasons: 1) counsel’s allegedly improper interview of a former Caterpillar employee; and 2) counsel’s alleged prior representation of Caterpillar as local counsel in a patent litigation and as counsel in at least one other matter. The accounts of counsel’s interview of the former employee did not suggest that counsel sought or received any privileged information. In fact, the interview only garnered information that was otherwise publicly available about Caterpillar’s practices. Counsel did not ask about specific patent applications, just Caterpillar’s general patenting process. And to the extent that Caterpillar’s arguments that its general patenting process was irrelevant to the case at hand, discussing irrelevant matters with a former employee would not warrant the extreme result of disqualification.
Caterpillar’s more than six month delay in addressing counsel’s prior representation was problematic. Furthermore, Caterpillar offered no evidence regarding the prior case or cases which would have allowed the Court to make the required factual reconstruction of the prior matters’ scope. Speculation of what might have been disclosed was insufficient basis for the analysis. Without an ability to perform that initial step of the disqualification analysis, the Court could not disqualify counsel.
Evidence of Inter Partes Reexam is Likely Unduly Prejudicial
Kolcraft Enters., Inc. v. Chicco USA, Inc., No. 09 C 3339, Slip Op. (N.D. Ill. Jul. 17, 2018) (Chang, J.).
Judge Chang sua sponte notified the parties of the Court’s inclination to exclude any evidence of an inter partes reexam of the patent-in-suit as unduly prejudicial pursuant to Fed. R. Evid. 403, although both parties appeared to want to use portions of the reexam for their respective cases. The Court reasoned as follows, requiring that the parties be prepared to discussion the issue at the upcoming pretrial conference:
- Evidence of the reexam would consume substantial trial time;
- There was a “significant danger” that the reexam could confuse the jury;
- There was “substantial risk” that the jury would defer to the reexam and use its analysis instead of performing its own invalidity analysis;
- The reexam claim construction standard is different from the district court standard;
- The reexam issues appear to have little relevance, in particular because the patent is presumed valid; and
- The Federal Circuit has repeatedly warned against the value of reexams to establish good faith belief in invalidity.
So, while, as the Court previously noted, the reexam may have some relevance to willfulness arguments, that “little probative value” would “pale” compared to the time required to present the evidence and the confusion it could cause.
Unjust Enrichment Fails Where Plaintiff Fosters its Own Injury for Litigation Reward
LimeCoral, Ltd. v. CareerBuilder, LLC, No. 15 C 7484, Slip Op. (N.D. Ill. Mar. 9, 2017) (Der-Yeghiayan, J.).
Judge Der-Yeghiayan granted defendant CareerBuilder’s Fed. R. Civ. P. 56 motion for summary judgment as to plaintiff LimeCoral’s copyright, breach of contract and unjust enrichment claims. The Court also denied LimeCoral’s Rule 56 motion for partial summary judgment.
The Court held that the parties’ actions after the end of their contract created an implied nonexclusive license benefiting CareerBuilder. It was undisputed that: 1) the parties entered into a written agreement for the creation of copyrighted works; 2) LimeCoral delivered the works; and 3) LimeCoral understood that CareerBuilder would use the copyrighted works in its business. In fact, the agreement, even allowed CareerBuilder to create derivative works based upon LimeCoral’s copyrighted works. The fact that LimeCoral refused to transfer the copyright ownership to CareerBuilder was irrelevant. The Seventh Circuit has held that the implied nonexclusive license does not transfer ownership, instead just allowing for use of the works. Based upon the implied license, CareerBuilder could not be held to infringe the licensed works.
LimeCoral’s alleged oral agreements were based upon “vague assertions” and did not match up with the undisputed facts regarding LimeCoral’s pattern of conduct. For example, while the oral agreements required renewal fee payments, based upon the evidence no such payments were either made or requested.
Finally, CareerBuilder was not unjustly enriched. The undisputed evidence showed that CareerBuilder paid for what it used and complied with its understanding of its relationship with LimeCoral. Additionally, the equities did not support benefiting a party that took “steps to foster the creation of its own legal injuries in order to obtain a financial reward in litigation.
John Marshall CLE – Standard Essential Patents
John Marshall is hosting a seminar on October 6, 2018 from 9:00am until 4:30pm CT on a hot and growing topic in US patent law – Standard Essential Patents. Register here. Here is John Marshall’s explanation of the program:
The development and licensing of Standard Essential Patents (SEPs) underpin so many aspects of modern life—from wireless telephony to Wi-Fi to connected cars and the internet of things—that it is very easy to underappreciate the complexity of the rules and practices that govern SEP. As the speed at which technologies converge increases, more and more sectors are adopting standards-based technologies for connectivity and interoperability. It is more important than ever for licensors and licensees to know the facts and necessary behaviors required to navigate the risks. Pulling together technology management, intellectual property, business, economics, and politics, this is one of the most interdisciplinary fields of law.
The program includes an excellent line up, including:
- Graham Bell, Director Cubicibuc Limited
- David L. Cohen, President David L. Cohen, P.C./Kidon IP Corporation
- Randall R. Rader (ret.), Federal Circuit
Seminar topics include:
- Standard-Setting: Origins, Benefits, and Challenges
- Standard Setting Organizations (SSOs) and the Patent Wars
- SEP landscape
- Royalties and Injunctions
- Panel Discussion: Trends and Predictions
CLE: Advertising Law 101
The Intellectual Property Law Association of Chicago is hosting what is promised to be a lively and informative presentation on advertising law basics presented by Nerissa Coyle McGinn of Loeb & Loeb, LLP. The presentation will be held on October 17, 2018 from noon to 1:15pm CT at the offices of K&L Gates, 70 W. Madison, Suite 3300. Registration is $20 for IPLAC members, $25 for non-members, $15 for students, and includes lunch.
