Gabriel Fuentes has been appointed as the Northern District of Illinois’ newest magistrate judge. Before going to Northwestern Law, Fuentes was a journalist for the Los Angeles Times and Chicago Tribune. After law school, he served as an assistant U.S. Attorney before becoming a partner at Jenner & Block, where he handles antitrust criminal defense and civil cases. Judge Fuentes was “looking for a chance to focus my career back on public and government service,” and “was very humbled” to have been selected.

Welcome to the Northern District bench Judge Fuentes.

Mon Ros Int’l. for General Trading & Contracting, W.L.L. v. Anesthesia USA, Inc., No. 17 C 7365, Slip Op. (N.D. Ill. Jan. 8, 2019) (Castillo, C.J.).

Chief Judge Castillo granted in part plaintiff Mon Ros’ contempt motion in this Lanham Act trademark case involving Mon Ros’ ANESTHESIA marks for use with contact lenses.

The Court previously entered a temporary restraining order (TRO) and then a permanent injunction preventing defendants from selling contact lenses using the ANESTHESIA marks and from claiming ownership over the marks.

Of particular note, the Court held as follows:

  • The Court was “troubled” by evidence that defendants used their resources to run a competing contact lens business, instead of paying the final judgment.
  • The Court was also “troubled” that defendants were offering to sell contact lenses into the United States using Mon Ros’ AZURE and AMARILLO marks.
  • The Court was also “disturb[ed]” by defendants’ argument / admission that they sold counterfeit ANESTHESIA products after the injunctions were entered into the U.S., but that there was no issue because those products “never set foot on U.S. soil.”
  • Defendants’ “specious” arguments were made worse by defendants’ failure to provide evidence to challenge Mon Ros’ claims that defendants:
    • had resources to at least partially satisfy the judgment against defendants;
    • had falsified assets in federal tax returns; and
    • continued U.S. online counterfeit product sales.
  • The Court held that the TRO and permanent injunctions set out a clear command not to sell or promote counterfeit products using Mon Ros’ marks, that defendants violated the command, having infringed Mon Ros’ trademarks and failed to pay the judgment, that those violations were significant, and that defendants failed to reasonably and diligently comply with the injunctions.

Having held that defendants violated the injunctions, the Court ordered as follows:

  • Defendants were to produce all documents going back to January 1, 2017, related to:
    • Anyone defendants did business with or transferred assets to;
    • All accounting records, banking records and tax returns;
    • All documents relating to any trademark filings;
    • All documents relating to manufacture, sale or purchase of contact lenses, regardless of what trademark they may be sold under; and
    • All documents related to the individual defendant’s international travel over the last two years.
  • Mon Ros was allowed to serve, and defendants were required to respond to, requests for production, requests for admission, and no more than twenty five interrogatories. Individual defendant was also ordered to sit for a deposition by Mon Ros.
  • Within forty days of the order, defendants were also required to:
    • File a sworn affidavit stating the steps taken to comply with the Court’s order and his discovery obligations, including a narrative explaining what was done with revenues from selling certain contact lenses, to the extent they were in fact sold. The affidavit must also state that defendants have produced all responsive documents and, to the extent that some documents are not in their custody or control, state where those documents could be found.

Mon Ros’ other requested sanctions were denied without prejudice to be sought after any further evidence of non-compliance. The Court also noted that it would not incarcerate the individual defendant absent ongoing violations because doing so would be only punish for past violations, not stop current non-compliance.

Finally, the Court noted that Mon Ros failed to follow Local Rule 37.1 which required filing a notice of motion or order to show cause, instead of a motion for contempt. In the interests of justice, the Court still addressed the motion, but the Court warned Mon Ros to follow Local Rule 37.1 strictly to the extent that it filed another related motion.

Lothan Van Hook DeStefano Arch. LLC v. SB Yen Mgm’t. Group, Inc., No. 18 C 275, Slip Op. (N.D. Ill. Dec. 10, 2018) (Lee, J.).

Judge Lee denied defendants’ Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction, but granted defendants’ motion to compel mediation and arbitration, and stayed this architectural copyright case pending such proceedings.

Subject-Matter Jurisdiction

Noting the complexity of determining whether a claim was based in contract or copyright, the Court noted that the Seventh Circuit had squarely addressed the present situation in Nova Design Build, Inc. v. Grace Hotels, LLC, 652 F.3d 814, 816 (7th Cir. 2011), holding that the issue comes down to whether there is truly a dispute over validity and infringement (a copyright claim) or ownership (a contract claim). Where there is a copyright claim, the federal courts have jurisdiction, even if ownership is also challenged by a party. Because plaintiffs sought an injunction to prevent further copyright infringement, the Court had subject-matter jurisdiction.

Mediation & Arbitration

The agreement at issue required that the parties engage in mediation before taking any contractual dispute to arbitration, unless the parties mutually agreed otherwise. Because the mediation and arbitration clause included all claims “arising out of or relating to” the agreement, it included contractual ownership disputes and copyright infringement claims arising from the plans that were made and exchanged pursuant to the agreement. And when claims subject to arbitration are intertwined with claims against non-parties, courts favor staying the district court action pending arbitration. That was especially true here where all of the parties and claims were interrelated, even if they were not all subject to mediation and arbitration. The Court therefore, compelled mediation and arbitration, and stayed the district court case pending those proceedings.

Perfect Brow Art, Inc. v. Glitzy Brows, No. 18 C 4594, Slip Op. (N.D. Ill. Nov. 15, 2018) (Guzman, J.).

Judge Guzman granted defendants’ (collectively “Glitzy Brows”) Fed. R. Civ. P. 12(b)(2) motion to dismiss plaintiff Perfect Brow Art’s first amended complaint for lack of personal jurisdiction in this Lanham Act trademark, trade dress, false designation of origin and unfair competition case involving brow threading.

Of particular note, the Court held as follows:

  • Aside from the parties’ employment agreement, the only relevant evidence Perfect Brow Art submitted was the Illinois choice of law provision in the agreement, which did contain any jurisdictional limitations or agreement beyond the choice of law.
  • Glitzy Brows submitted undisputed evidence that they had not been to or worked in Illinois and that none of the alleged contractual breaches or thefts were committed in Illinois.

In light of new case law and an uptick in patent filings, and in particular cease & desist letters, I am presenting a Strafford live webinar titled, “Patent Infringement Letters: New Considerations and Best Practices for Senders and Recipients.” The program is being held on Thursday, May 16, from 12:00pm-1:30pm CT. If you follow the link in the prior sentence to register, you will receive a 50% discount on the program as a loyal blog reader.

My co-panelist is Nathan Burnette of Stoel Rives. We will discuss patent demand / licensing letters from both sides, providing strategies both for preparing them and responding to them, or not responding depending upon the circumstances. The presentation will conclude with a live Q&A session to make sure we address your particular issues.

If you have questions ahead of the program or thoughts on what should be addressed, please contact me via the blog or email.

On Thursday, April 18, 2019, beginning at 6:00pm, with registration open at 5:30pm and networking following the program, the Intellectual Property Law Association of Chicago’s (IPLAC) Young Members Committee is hosting a panel discussion hitting on the biggest emerging technologies – artificial intelligence, autonomous vehicles and blockchain. Ice Miller’s Shyla Jones is moderating an impressive panel, including:

  • Catherine Klima – Intellectual Property Counsel, Continental Automotive Systems;
  • David Cades – Senior Managing Scientist, Exponent;
  • Dennis Garcia – Assistant General Counsel, Microsoft; and
  • Nelson Rosario – Principal, Smolinski Rosario Law.

The event is being held at McAndrews, Held & Malloy, 500 W. Madison, 35th floor. The event is $20 for IPLAC members and $30 for non-members. Please click here to register for this event. Registration must be complete by April 16, 2019.

On Thursday, April 4, 2019, beginning at 5:15pm, with registration open at 4:45pm, the Intellectual Property Law Association of Chicago (IPLAC) is hosting a panel discussion on blockchain technology, with a focus on the value of developing and patenting blockchain and the impact of blockchain technology as it is currently being used, including the VAKT Consortium.  The panel is being moderated by Bo An, Risk Management, Federal Reserve Bank of Chicago. Panel members include:

  • Sarah Duda, Esq., Assistant General Counsel, Cboe Global Markets
  • Ted Tian, Esq., Master Agreements Negotiator, BP America, Inc.
  • Mark Fields, Partner, Alsop Louie Partners
  • Matthew Kelly, Esq., Managing Director and Chief Intellectual Property Counsel, CME Group

The event is being held at DePaul University College of Law, 25 E. Jackson Blvd., Room 341. The event is free to IPLAC members, but advanced registration is required here or contact Billie Hinnen.

Zebra Techs. Corp. v. Tpenex Medical, LLC, No. 18 C 4711, Slip Op. (N.D. Ill. Dec. 13, 2018) (Ellis, J.).

Judge Ellis granted defendants’ motion to stay this patent and Lanham Act case pending an earlier case defendants filed in the Eastern District of Missouri against plaintiffs (collectively “Zebra”) involving a covenant not to sue in an agreement involving plaintiff Laser Band and defendant Ward Kraft.

Of particular note, the Court held as follows:

  • Zebra was not prejudiced by a stay:
    • It had already delayed as long as two years in bringing suit;
    • It had not sought a preliminary injunction; and
    • Money damages would be adequate to compensate Zebra should it eventually succeed on its claims.
  •  A stay had the potential to simplify the issues before the Court because a determination as to the effect and scope of the covenant not to sue was a threshold issue for the instant patent and Lanham Act claims, at least as to certain of the parties and potentially all of them.
  • A stay would reduce the litigation burden on the parties and the Court. The effect and scope of the covenant was a threshold issue for Zebra’s twelve count complaint asserting 199 patent claims. The Court further detailed the potential burden and complexity of the case noting that Zebra’s initial infringement contentions were 182 pages.
  • The fact that the E.D. Missouri action may, at best, only resolve a subset of the claims in the instant case did not prevent a stay.

Flair Airlines, Ltd. v. Gregor LLC, No. 18 C 2023, Slip Op. (N.D. Ill. Sep. 17, 2018) (Guzman, J.).

Judge Guzman granted in part plaintiff’s Fed. R. Civ. P. 12(b)(6) motion to dismiss certain of defendants’ counterclaims in this case involving Lanham Act trademark infringement and deceptive trade practices, copyright and related state law claims.

This post only addresses the motion as to declaratory judgment copyright ownership claims, not the related state note claims because they do not add anything of interest related to intellectual property issues. The Court granted the motion to dismiss as to the DJ copyright ownership claim because defendants’ allegation of plaintiff’s continued use of the copyrighted material did not create a controversy regarding copyright ownership. Having dismissed the claim, the Court did not need to reach plaintiff’s argument that a limited liability corporation could not own copyright, absent a written agreement regarding transfer. The Court also was not required to address whether defendants’ claim was deficient for not specifically identifying the copyright’s authors or what the copyrighted works were with particularity. Because defendants did not sufficiently plead an ownership controversy, the claim was dismissed.

Kapoor v. National Rifle Association of Am., No. 18 C 4252, Slip Op. (N.D. Ill. Oct. 23, 2018) (Lee, J.).

Judge Lee granted in part defendant National Rifle Association’s (“NRA”) Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction or, in the alternative to transfer to the Eastern District of Virginia pursuant to 28 U.S.C. §1404(a) in this copyright dispute involving plaintiff Kappor’s Chicago-based Cloud Gate sculpture, commonly known as the Bean.

The Court acknowledged that the Bean was located in Chicago and that the alleged infringing video of the Bean was necessarily taken in Chicago. But the NRA claimed that it received the footage from a third party that was not the NRA’s agent. Kapoor argued that the third party was the NRA’s agent, but the Court could not determine that issue without discovery and factual analysis. Furthermore, other portions of the alleged infringement, for example distribution and decisions regarding the alleged infringement occurred outside of Chicago in the E.D. Virginia.

But the Court did not need to reach the agency issue because the Court held that transfer was appropriate pursuant to §1404(a), for at least the following reasons:

  • As a London resident, Kapoor did not have a particular connection to Illinois, except the location of his statue.
  • The NRA is headquartered in the E.D. Virginia, its witnesses live and work nearby, and its documents are largely there.
  • There were no non-party witnesses to consider.
  • The E.D. Virginia typically resolves cases faster than the N.D. Illinois.
  • While Illinois may have an interest in the Bean and while it is a popular tourist attraction in the N.D. Illinois, Kapoor offered no support for the proposition that such general public interests outweighed the NRA’s interest in its First Amendment right to advocate for the Second Amendment.
  • Aside from the location of the Bean, the only factor weighing in Kapoor’s favor was his choice of forum. But that held little weight because he had no other significant connection to the N.D. Illinois.