SourceOne Global Partners LLC v. KGK Synergize, Inc., No. 08 C 7403, Slip Op. (N.D. Ill. Jul. 21, 2009) (Schenkier, Mag J.).
Judge Schenkier dismissed declaratory judgment defendant/counter-plaintiff KGK Synergize’s ("KGK") patent, trademark, Lanham Act and related state law claims against declaratory judgment plaintiff/counter-defendant SourceOne’s President for failure to meet the Twombly/Iqbal pleading standards.* The Court held that KGK had not sufficiently pled allegations to support the factors in the veil piercing analysis, in particular:
- Allegations of episodes of "subpar record keeping" was not sufficient to prove SourceOne’s failure to observe corporate formalities;
- Conclusory statements that SourceOne’s corporate officers were allegedly not given autonomy to make decisions were not sufficient to show that officers or directors were non-functioning;
- The President and his family borrowing against a home equity loan to support SourceOne was not sufficient to show SourceOne was a "mere ‘dummy or sham.’"; and
- the allegation that the President exerted significant control over SourceOne and personified the company was not sufficient to show a failure to maintain arm’s-length relationships among related entities.
The Court also held that KGK’s direct patent infringement claims against the President did not meet the Twombly/Iqbal pleading standards. KGK’s only allegations about the President were conclusory and tied to SourceOne’s alleged infringing actions. KGK did not plead sufficient facts about the President independent of SourceOne to support direct patent infringement claims.
* For more on the application of the Twombly pleading standards to patent cases, click here in the Blog’s archives.