Der-Yeghiayan

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Nova Design Build, Inc. v. Grace Hotels, LLC., No. 08 C 2855, 2008 WL 4450305 (N.D. Ill. Sep. 30, 2008) (Der-Yeghiayan, J.).
Judge Der-Yeghiayan denied defendants’ motion to dismiss plaintiffs’ copyright infringement and related state law claims. Plaintiffs claimed that they developed plans for a Holiday Inn Express hotel defendants planned to build, and that defendants infringed the copyrights in plaintiffs’ plans by revising them with another firm and using them without plaintiffs’ permission. The Court held that plaintiffs’ copyright claim was sufficiently pled. Plaintiffs alleged ownership of a copyright, attaching the copyright registration, and that defendants infringed the copyright. Defendants’ argument that plaintiffs’ plan were a derivative work were beyond the pleadings and, therefore, not appropriate for a Fed. R. Civ. P. 12(b)(6) motion.
Similarly, defendants’ argument that plaintiffs, as authors of a derivative work, lacked standing to bring their copyright suit also was beyond the scope of a Rule 12(b) motion to dismiss. Furthermore, it was not ripe for decision because defendants made the argument for the first time on reply.
The Court also held that defendants’ arguments as to plaintiffs’ state law claims were beyond the complaint and, therefore, not sufficient for a motion to dismiss.
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Continue Reading Court Does Not Consider Facts Beyond Complaint in Rule 12(b) Motions

The Seventh Circuit instituted a Commission to study the implementation of the ABA Jury Project. The Northern District was heavily represented on the Commission. The following Northern District Judges were members of the Commission: Bucklo, Brown, Coar, Darrah, Denlow, Der-Yeghiayan, Gottschall, Holderman, Kennelly, Lefkow, Moran, Schenkier, St. Eve, and Zagel. The Commission recently published its report — click here to read it. The report describes a two phase analysis. In the first phase, district judges tested the following seven ABA Principles:
1. Twelve-Person Juries;
2. Jury Selection Questionnaires;
3. Preliminary Substantive Jury Instructions;
4. Trial Time Limits;
5. Juror Questions;
6. Interim Trial Statements by Counsel; and
7. Enhanced Jury Deliberations.
Other Principles, such as juror notebooks and allowing jurors to take notes, were already in such widespread use that they were not tested. Click here for the Phase One Project manual detailing the principles, the rationales and authority behind them, and suggested procedures. Phase One resulted in questionnaires from 22 participating federal trial judges, 74 participating attorneys and 303 jurors from 38 trials that used one or more of the seven Principles. Based upon the analysis of Phase One results and questionnaires, the Commission focused Phase Two on the following four Principles:
1. Juror Questions;
2. Interim Trial Statements by Counsel;
3. Twelve-Person Juries; and
4. Preliminary Substantive Jury Instructions.
These Principles were chosen because of Phase One popularity (78% of jurors reported that being able to ask questions increased their satisfaction with the process) and because of a desire to study the Principles more. Click here for the Phase Two manual.
In Phase Two, 108 jurors from 12 trials employing one or more of the Phase Two Principles filled out questionnaires. In addition, 12 attorneys and 4 district judges that participated also filled out questionnaires. The results are interesting, but more importantly create the opportunity to powerfully impact the trial system across the Seventh Circuit in ways that benefit all of the stakeholders in the trial process — the litigants, the jurors, the judge and the judge’s chambers, and the litigators.
All four of the Phase Two Principles showed significant benefits to the trial process. 83% of jurors reported an increased understanding of the facts when allowed to ask written questions through a judge — the questions were reworded to meet evidentiary rules. And 75% of judges and 65% of attorneys thought the questions benefited jurors. Similarly, preliminary substantive jury instructions were found to improve trials by jurors (80%), judges (85%) and attorneys (70%). And the same was true for interim statements to the jury — jurors (80%) and judges (85%). Finally, twelve-person juries were found not to harm efficiency, while increasing juror diversity.
Each of the four Phase Two Principles, as well as several of the additional three Phase One Principles deserve more attention and analysis. So, over the next several weeks I will provide follow up posts discussing the findings of those Principles in greater detail. I will start with the idea of juror questions, which I find particularly important, later this week or early next.
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Continue Reading Seventh Circuit American Jury Project

Personified, LLC v. Sales Consultants of Cary, LLC, No. 08 C 3123, 2008 WL 3200842 (N.D. Ill. Aug. 8, 2008) (Der-Yeghiayan, J.)
Judge Der-Yeghiayan granted declaratory judgment (“DJ”) defendant Sales Consultants of Cary’s (“SCC”) Fed. R. Civ. P. 12(b)(6) motion to dismiss DJ plaintiff Personified’s trademark case in favor of SCC’s later-filed District of North Carolina action. Shortly after its parent registered the trademark “Personified,” Personified began using the name and allegedly received a cease and desist letter from SCC who offered staffing services using the name “Personified.” SCC’s letter allegedly demanded that Personified immediately change its name and pay SCC damages. In response, Personified filed this suit seeking a declaratory judgment that it had not violated trademark laws or engaged in unfair competition. SCC countersued in the District of North Carolina several days later.
The Court had federal question jurisdiction because of the Lanham Act issues. Personified was the first to file, but the Court noted that the Seventh Circuit did not strictly follow the first-to-file rule. And the Court exercised its “wide discretion,” declining to exercise jurisdiction over the declaratory action. SCC was the natural plaintiff. Instead of filing suit after receiving the cease and desist letter, Personified could have gone to SCC to resolve the dispute. Additionally, Personified was already preparing a motion to transfer the North Carolina action to the Northern District. The Court also denied a motion to stay its ruling pending a decision by the District of North Carolina. If the North Carolina Court transferred the case to the Northern District, Personified would not face substantial hardship by having to replead its DJ claim.
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Continue Reading No Declaratory Judgment Jurisdiction Because Defendant is Natural Plaintiff

Nilssen v. MagneTek, Inc., No. 05 C 2933, 2008 WL 1774984 (N.D. Ill. Apr. 16, 2008) (Der-Yeghiayan, J.).
Judge Der-Yeghiayan confirmed an arbitration award and denied plaintiff’s motion to vacate it. The arbitrator awarded plaintiffs (collectively “Nilssen”) approximately $23M for defendant Magnetek’s patent infringement. MagneTek argued that the Court lacked jurisdiction because the arbitration agreement did not expressly confer the right to confirm the arbitration award. But the Court held that the Seventh Circuit only required that the right to confirm be inferred from the arbitration agreement. While the arbitration agreement did not explicitly allow confirmation, the parties evidenced their intent to allow confirmation:
The parties’ American Arbitration Association (“AAA”) submission provided for confirmation;
The parties agreed to be bound by the AAA’s Commercial Arbitration Rules which provide for court confirmation; and
MagneTek’s post-arbitration press release said that the parties conducted binding arbitration which was not subject to appeal.
MagneTek also argued that certain prior art patents were new evidence which required vacating the award. But the Court held that MagneTek was aware of the patents during the arbitration. In fact, at least one patent was marked as an exhibit in the arbitration. Furthermore, MagneTek’s post-arbitration prior art search could have been performed before the arbitration. And the Court would not reward MagneTek’s late search with a second shot at invalidity.
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Continue Reading Evidence Must Be Newly Discovered to Vacate Arbitration Award

In addition to the new regional IP blogs, here are several new legal resources:
* Startup guru Guy Kawasaki has started the Alltop project which categorizes blogs by subject matter and aggregates blog content for each subject on a single page. The law Alltop site is excellent, although I would suggest adding the Chicago IP Litigation Blog. It is like having someone else set up and update feed readers for you. This is how Alltop describes itself:
We help you explore your passions by collecting stories from “all the top” sites on the web. We’ve grouped these collections — “aggregations” — into individual Alltop sites based on topics such as environment, photography, science, celebrity gossip, fashion, gaming, sports, politics, automobiles, and Macintosh. At each Alltop site, we display the latest five stories from thirty or more sites on a single page — we call this “single-page aggregation.”
* The Patent Appeal Tracer follows patent cases from filing of a Federal Circuit appeal, after many of the regional IP blogs stop following them, until an opinion issues, when Patently-O and others take over. It is an interesting idea and a well written blog. As an example of what they do, check out this recent post on the Federal Circuit appeal of Northern District case Ball Aerosol and Specialty Container, Inc. v. Limited Brands, Inc., No. 05 C 3684 (N.D. Ill.) (Der-Yeghiayan, J.) — click here or here for coverage of the case in the Blog’s archives.
[UPDATE]: The Chicago IP Litigation Blog has been added to Alltop’s law page. Thanks Guy. Now, if I could just get Kawasakied.
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Continue Reading New Legal Resources

Ball Aerosol and Specialty Container, Inc. v. Limited Brands, Inc., No. 05 C 3684, 2008 WL 839993 (N.D. Ill. Mar. 27, 2008) (Der-Yeghiayan, J.).
Judge Der-Yeghiayan denied defendants’ (collectively “Limited Brands”) motion for reconsideration regarding the Court’s claim construction opinion and its summary judgment opinions of infringement, validity and damages – click here to read more about those opinions in the Blog’s archives. The Court previously construed the claims of plaintiff Ball Aerosol’s (“BASC”) patent covers a candle tine. The Court granted BASC summary judgment of infringement and validity, pre-KSR. When KSR revised the obviousness standard, the Court sua sponte ordered supplemental briefing regarding obviousness in light of KSR. Based upon that briefing, the Court again granted summary judgment of validity. The Court then granted BASC summary judgment on damages awarding it 20% royalties and finding Limited Brand’s infringement willful.
The Court held that its original claim construction, validity and infringement holdings were correct and that Limited Brands had been given ample opportunities to defend itself. The Court also denied Limited Brands’ argument that reasonable royalties could not be decided on summary judgment. Limited Brands’ Seventh Amendment right to a jury trial regarding damages had not been violated. There is no right to a jury without a material question of fact.
The Court also held that while its initial grant of summary judgment of willfulness was made before the Federal Circuits’ decision In Re Seagate, the undisputed facts also warranted summary judgment of willfulness pursuant to Seagate’s objective recklessness standard. Limited Brands was aware of BASC’s patent both before the suit was filed and before it began making the infringing candle tin. In fact, Limited Brands had extensive discussions with BASC regarding BASC’s specifications for candle tins. Furthermore, Limited Brand’s main defense – advice of counsel – was negated because Limited Brands did not disclose its opinion by the Court’s deadline for doing so.
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Continue Reading Pre-KSR & Pre-Seagate Decisions Upheld Pursuant to New Law

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.
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Continue Reading Employee Owes Current Employer Duty of Loyalty

The Chicago Tribune is reporting that a trademark suit between well-known Southern California chain Roscoe’s House of Chicken ‘n Waffles (“Roscoe’s”) against new Chicago restaurant Rosscoe’s House of Chicken and Waffles (“Rosscoe’s Chicago”) was at least partially resolved the day after it was filed when Rosscoe’sChicago agreed to change its name to Chicago’s Home of Chicken and Waffles.
The restaurants had no affiliation with each other, but had numerous similarities, beyond just the names:
Both use a cartoon chicken and a waffle as logos; and
Both have drinks called “Sun Rise” and “Sunset”.
Those involved in an early hearing yesterday appeared to have a sense of humor about the dispute. After the hearing, Rosscoe’s Chicago’s owner Darnell Johnson was quoted as saying “I’m happy as a chicken eating waffles.” And during the hearing, Judge Der-Yeghiayan summed up the case’s status this way: “I see that both parties understand the issues and facts of life and none of the parties are waffling on the issue.” Roscoe’s, however, did state that it intended to pursue damages for the period before Rosscoe’s Chicago’s name change.
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Continue Reading Roscoe’s Chicken & Waffles: Tasty Trademark Disputed Headed for Fast Resolution

Strom v. Strom Closures, Inc., No. 06 C 7051, 2008 WL 489363 (N.D. Ill. Feb. 20, 2008) (Der-Yeghiayan, J.).
Judge Der-Yeghiayan granted plaintiff Victoria Strom’s (“Strom”) motion to dismiss defendants’ (collectively “SCI”) counterclaims. SCI filed an earlier suit charging Strom with patent infringement. The parties settled that suit pursuant to a Settlement Agreement (“Agreement”). SCI alleged that Strom breached the Agreement and was once again, therefore, infringing SCI’s patents. But the Court held that once a district court dismisses a case with prejudice, it cannot reopen the case for enforcement of a related agreement without independent jurisdiction. SCI’s appropriate claim was for breach of the Agreement, not patent infringement. Because breach of the Agreement was a state law claim and because there was no diversity (SCI pled that all parties were Illinois residents), the Court lacked jurisdiction. Finally, the Court held that there was not supplemental jurisdiction based upon Strom’s federal employment claims. Strom’s claims and the breach of the Agreement were not sufficiently related.
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Continue Reading Breached Settlement Does Not Create Patent Jurisdiction