Single Source, Inc. v. Harvey, No. 07 C 1201, 2008 WL 927902 (N.D. Ill. Apr. 7, 2008) (Der-Yeghiayan, J.).
Judge Der-Yeghiayan denied defendants’ summary judgment motion. Defendant Harvey was employed by plaintiff Single Source (“SS”) as, among other things, its Sales Director. When Harvey was promoted to the Sales Director position he signed a confidentiality agreement which required that Harvey maintain the secrecy of SS’s trade secrets and only use them for SS’s benefit. SS alleged that Harvey became disgruntled and took a position with defendant Food Marketing Concepts (“FMC”). Before giving SS notice and leaving SS’s employ, Harvey allegedly solicited SS’s customers for FMC and used an SS expense account to pursue customers for FMC. Defendants argued that because Harvey was not an SS officer or director he did not owe SS a duty of loyalty. The Court, however, held that an employee owes it employer a duty not to compete with the employer or solicit the employer’s customers before terminating the employment. The Court also held that the parties’ competing evidence regarding whether Harvey had actually solicited SS’s customers prior to ending his employment with SS created a material question of fact.
Practice Tip: You must respond to Local Rule 56.1 statements of material facts. The Court noted that defendants did not respond to SS’s statement of additional facts. Because of that, the Court deemed each additional material fact admitted. The Court did not identify whether its decision turned on any of these admitted facts, but it is easy to imagine the circumstance in which the case could have turned on an inadvertently admitted fact.

Continue Reading Employee Owes Current Employer Duty of Loyalty

FM Indus., Inc. v. Citicorp Credit Servs., Inc., No. 07 C 1794, 2008 WL 717792 (N.D. Ill. Mar. 17, 2008) (Conlon, J.).
Judge Conlon granted Citicorp defendants and denied defendant Gelfand summary judgment of copyright infringement. Plaintiff FM Industries (“FMI”) alleged that Gelfand infringed FMI’s copyright in its TUCANS debt-collection software by continuing to use it after Gelfand’s license expired. Gelfand argued that FMI could not prove ownership of the copyright because it could not produce the written assignment. But the Court held that FMI’s deposition testimony was sufficient to create a material question of fact and, therefore, denied summary judgment.
Citicorp was accused of encouraging and inducing its outside attorneys to use the TUCANS software after their licenses expired. But at least in part because FMI failed to respond to Citicorp’s Local Rule 56.1 statements or to submit its own responsive statements of fact, the Court accepted as true Citicorp’s evidence that it told its outside attorneys to stop using TUCANS before licenses expired and that Citicorp was unaware that the attorneys continued using TUCANS.
Practice Tip: I cannot say it enough: you must strictly comply with Local Rule 56.1 Click here to read about other opinions considering Local Rule 56.1

Continue Reading Summary Judgment for Failure to Comply with Local Rule 56.1

Murata Mfg. Co., Ltd. v. Bel Fuse, Inc., No. 03 C 2934, Order (N.D. Ill. Mar. 5, 2008) (Gottschall, J.).*
Judge Gottschall denied plaintiffs’ summary judgment motion without prejudice for failure to comply with both Local Rule 56.1 and the Court’s Standing Order — the Standing Order further explained that each short, numbered statement of fact required by Local Rule 56.1 should contain one fact and no attorney argument. Despite Local Rule 56.1’s clear requirements and the Standing Order’s directive to strictly comply with Local Rule 56.1, the Court held that nearly one-third of plaintiff’s 145 statements of fact did not comply with the rules:
Many were long;
One contained no facts;
Several focused on an expert’s methodology instead of his results; and
The rest contained inferences, argument, or legal conclusions.
The Court explained that the case’s complexity required strict adherence to Local Rule 56.1:
The court simply does not possess the resources to comb through the parties’ statements of fact in an attempt to sift out usable fact from impermissible argument or inference. … The Standing Order and LR 56.1 are composed in plain English and their meaning is clear; the court properly expects experienced and sophisticated attorneys to adhere to them strictly, particularly given the complex and sophisticated nature of this litigation.
The Court, therefore, used its discretion to deny plaintiff’s summary judgment motion without prejudice for not complying with Local Rule 56.1 and the Standing Order.
Practice Tip: I write this tip frequently, but it merits repetition.** Strict compliance with Local Rule 56.1 is difficult, time consuming, and it goes against many lawyers’ natures to write facts devoid of argument. But strict compliance is the best, and maybe only, way to win, or defeat, summary judgment in the Northern District. And if you write your Rule 56 statements well, you make the Court’s job easier, which can only help your case.
* Click here to read more about this case in the Blog’s archives and here for the order.
** Click here to read about other Local Rule 56.1 opinions.

Continue Reading Summary Judgment Denied for Failure to Comply with LR 56.1

Here is some recent Northern District news:
Judge Coar recently updated his case management procedures (click here to read them) to state that pursuant to Local Rule 5.2(e), parties are no longer to provide courtesy copies of electronically filed papers to Judge Coar’s chambers, except for papers pertaining to Fed. R. Civ. P. 56 or Local Rule 56.1 (summary judgment papers).
Magistrate Judges Brown (Eastern Division — Chicago) and Mahoney (Western Division — Rockford) are both up for reappointment in early 2008. Pursuant to federal law, the Court has established a citizen’s panel to consider their reappointments. Members of the bar, as well as the general public, are requested to forward comments regarding the reappointments no later than January 18, 2008, to:
Magistrate Judge Advisory Panel
c/o Mr. Michael W. Dobbins
Clerk of Court
U.S. District Court
219 South Dearborn St. — Rm. 2050
Chicago, IL 60604

Continue Reading Northern District News

Gencor Pacific, Inc. v. Federal Labs., Corp., No. 07 C 168, 2007 WL 2298367 (N.D. Ill. Aug. 3, 2007) (Guzman, J.).
Judge Guzman granted defendants’ Fed. R. Civ. P. 12(b)(3) motion to dismiss for lack of venue. Plaintiff Gencor Pacific (“Gencor”) and defendant Federal Laboratories (“Fedlabs”) both distribute products including caralluma powder. Gencor alleged that Fedlabs infringed Gencor’s copyrights, engaged in unfair competition and other related state law claims by using various Gencor studies and literature to promote Fedlabs’s products. Gencor also alleged that Fedlabs’s Chairman defendant Jeffery Taub left a defamatory voicemail message for an Illinois-based Gencor distributor. Because defendants are all New York residents, venue was only proper in the Northern District if a substantial part of the events at issue occurred in Illinois. Gencor argued that the Illinois voicemail and various Fedlabs mailings to Illinois residents including the copyrighted studies constituted a substantial part of the events at issue. In support of its contentions, Gencor submitted only a transcript of the alleged voicemail. Gencor did not submit any mailings that had been sent to Northern District residents or a declaration stating that the voicemail had been received at a Northern District telephone number. The Court held that Gencor’s unsupported “bare allegations” did not meet Gencor’s burden of proving that venue was proper.
Practice tip: You must support factual allegations with evidence. Local Rule 56.1 forces parties to follow this advice for summary judgment motions (although many fail to follow the rule). But the requirement, although unwritten, is no less important for other motions. If you are ever not sure whether an allegation requires evidentiary support, err on the side of providing the support. I have never seen an argument lost because a party unnecessarily supported its factual allegations.

Continue Reading Unwritten LR 56.1: Evidentiary Support is Not Just for Summary Judgment

DJ Photog. v. Wibert, Inc., No. 06 C 2215, Slip Op. (N.D. Ill. Jul. 11, 2007) (Zagel, J.).*
Judge Zagel dismissed plaintiff’s copyright infringement claim, held that its quantum meruit claim was preempted by the Copyright Act and, therefore, entered judgment in the case in favor of defendants. Plaintiff DJ Photography argued that defendants infringed its copyrights in pictures of a burial vault and mourners at a graveside service. But in their Local Rule 56.1 Statement of Undisputed Facts, defendants stated that the copyrights asserted were both registered by an individual, Donald Johnson, not DJ Photography. Because DJ Photography did not dispute that Johnson owned the copyrights, the Court held that DJ Photography could not prove ownership of the copyrights and, because it did not own the copyrights, DJ Photography lacked standing to bring the suit. The Court also held that the quantum meruit claim was preempted by the Copyright Act.
* Because the opinion has not been published electronically, you can read a copy of it here.

Continue Reading Ownership is a Copyright Prerequisite

Republic Tobacco L.P. v. North Atlantic Trading Co., No. 06 C 2738, 2007 WL 1424093 (N.D. Ill. May 10, 2007) (Der-Yeghiayan, J.).*
Judge Der-Yeghiayan granted plaintiff/counter-defendant Republic Tobacco’s (“Republic”) motion for summary judgment on defendant/counter-plaintiff North Atlantic Trading’s (“North Atlantic”) counterclaims and granted North Atlantic’s motion for summary judgment as to each of Republic’s claims. Republic brought claims against North Atlantic for Lanham Act false advertising, violation of the Illinois Uniform Deceptive Trade Practices Act (“IDTPA”) and other state law claims, all arising out of an allegedly “false and misleading” presentation entitled “Cigarette Paper Review” (“CPR”) which North Atlantic allegedly gave to various Republic customers. The CPR allegedly criticized Republic, saying among other things that Republic’s cigarette rolling papers were the same as North Atlantic’s and that Republic’s Chairman Donald Levin had “lied” about the composition of Republic’s cigarette papers. North Atlantic filed counterclaims alleging Lanham Act false advertising, violation of the IDTPA and other state law claims, all arising out of Republic’s alleged sales of orange cigarette papers similar in color and size to North Atlantic’s orange Zig-Zag papers, for the purpose of confusing or deceiving consumers.
Because Republic could not establish that the statements in the CPR were literally false, as opposed to just misleading, and because many of the statements were subject to innocent constructions, Republic could not prove its false advertising or IDTPA claims.
Republic sought summary judgment of all of North Atlantic’s claims because, among other reasons, the license agreement governing North Atlantic’s use of the Zig-Zag marks and cigarette papers did not allow North Atlantic to bring its counterclaims. Republic argued that the licensor of the Zig-Zag marks, Bollore, had the right and duty to bring the suit and, if at all, North Atlantic could only bring the counterclaims after North Atlantic notified Bollore of the counterclaims and Bollore had decided not to file them. North Atlantic argued that Bollore was aware of the suit and had not attempted to stop North Atlantic from prosecuting its counterclaims, but provided no evidence that it ever provided Bollore notice of Republic’s alleged infringement, as required by the agreement. The agreement required that either party notify the other of any infringements, and provided Bollore sole discretion to prosecute infringements. North Atlantic was allowed to pursue infringers “which Bollore determines not to commence or diligently pursue . . . .” Because North Atlantic did not provide evidence to counter Republic’s Local Rule 56.1 statement of material fact that Bollore never gave North Atlantic consent to bring the counterclaims, the Court deemed that fact admitted. The Court, therefore, granted Republic summary judgment on North Atlantic’s counterclaims because Bollore never consented to North Atlantic’s filing of them, as required by the agreement.
* More on a similar case between the parties can be read in the Blog’s archives.

Continue Reading Parties’ Claims Go Up in Smoke For Lack of Literal Falsity

PSN Illinois, LLC v. Ivoclar Vivadent, Inc., No. 04 C 7232, 2006 WL 3523760 (N.D. Ill. Dec. 7, 2006) (Kendall, J.).
Judge Kendall denied plaintiff’s Fed. R. Civ. P. 59 motion for reconsideration of the Court’s prior ruling (discussed in the Blog’s archives) construing the claims of the patent at issue and granting summary judgment of noninfringement on behalf of defendant Ivoclar Vivadent, Inc. (“Ivoclar”). The Court denied plaintiff’s motion for reconsideration because it considered each of plaintiff’s reconsideration arguments in its original Opinion granting summary judgment. But the Court spent some time on one of plaintiff’s claim construction arguments regarding a patent related to porcelain veneers. On reconsideration, plaintiff argued for a different construction of “ready for mounting.” In its original papers plaintiff did not argue for the proposed construction, although it did propose it in its Local Rule 56.1 Additional Statement of Material Facts. The Court held that because claim construction is a matter of law, proposed constructions are not material facts and, therefore, cannot be put in LR 56.1 statements. The Court noted its obligation pursuant to LR 56.1 to disregard legal arguments and conclusions placed in statements of fact. The Court did, however, go on to consider plaintiff’s construction and explain why the Court’s original construction was correct.
Practice tip: Think carefully about what goes into your LR 56.1 statements of material fact. Do not put arguments in your statements of fact. And by all means, do not put arguments in your statements of fact and then omit those arguments from your brief. The Court will disregard them, and you will be out of luck.

Continue Reading Claim Construction Cannot Be Argued in LR 56.1 Statements

Days Inns Worldwide, Inc. v. Lincoln Park Hotels, Inc., No. 06 C 2960, 2007 WL 551570 (N.D. Ill. Feb. 22, 2007) (Der-Yeghiayan, J.)

Judge Der-Yeghiayan granted plaintiff summary judgment on its trademark infringement and Illinois Deceptive Trade Practices Act ("IDTPA") claims, among others.  Plaintiff owns various marks relating to its Days Inn chain (the "Days Inn Marks").  Plaintiff licensed defendants Lincoln Park Hotels, Inc. and Richard Erlich (collectively "LPH") to use the Days Inn Marks in connection with the operation of a hotel in Chicago’s Lincoln Park neighborhood.  In 2005, LPH sold the hotel to defendant Gold Coast Investors ("GCI") without informing plaintiff, in violation of the parties’ license agreement.  GCI continued operating the hotel using the Days Inn Marks without licensing the rights to the marks from plaintiff.  As a result, plaintiff brought the instant action against defendants alleging that, among other things, GCI infringed plaintiff’s Days Inn Marks and LPH contributorily infringed plaintiff’s Days Inn Marks by selling the hotel to GCI with the knowledge that GCI intended to continue using the Days Inn Marks and without informing plaintiff of the sale or removing the Days Inn Marks from the hotel, as required in the parties’ license agreement. 

Continue Reading Seller is Liable for Contributory Infringement Becase Seller Knew Buyer Intended to Use the Property in an Infringing Manner

Zeidler v. A&W Restaurants, Inc., No. 03 C 5063, 2006 WL 1898056 (N.D. Ill. July 6, 2006) (Anderson, J.).

Zeidler is worth mentioning despite the absence of intellectual property issues because it makes a point that many practitioners miss:  disregarding Local Rule 56.1 Statements of Fact or slapping one together at the last minute