Zimnicki v. General Foam Plastics Corp., No. 09 C 2132, Slip Op. (N.D. Ill. Mar. 24, 2010) (Grady, J.).
Judge Grady denied defendants’ motion to dismiss or, in the alternative, to join a necessary party pursuant to Fed. R. Civ. P. 19 in this copyright case involving holiday decorations including “decorative deer” designs. In an earlier-filed, ongoing litigation defendant Neo-Neon claimed that it owned the copyrights-in-suit and argued in the alternative, that the designs are generic. As an initial matter, the Court held that dismissal was not appropriate, even if Neo-Neon was a required party, because defendants did not attempt to show that Neo-Neon could not be joined.
Defendants did argue that their failure to join Neo-Neon would subject defendants to multiple or inconsistent obligations. While a theoretical interest in a litigation would not require joinder, Neo-Neon’s actual claimed interest in the copyright was more than theoretical. The Court had discretion to require joinder based upon that claim.
But the Court did not require joinder. Neo-Neon was determining its interests in a parallel proceeding in the Northern District – click here for more on that case. And while the ownership dispute generally put defendants in risk of multiple obligations, circumstances mitigated that concern. In addition to claiming ownership, Neo-Neon claimed the copyrights were generic. And there was no indication that Neo-Neon intended to use any interest it acquired to enforce the copyrights-in-suit.

Continue Reading Party Claiming Copyright Ownership Not a Rule 19 Necessary Party

Lyons Partnership, L.P. v. Welle, No. 08 C 2909, Slip Op. (N.D. Ill. Feb. 22, 2010) (Grady, Sen. J.).
Jude Grady denied defendants’ motion to set aside the Court’s Fed. R. Civ. P. 55(c) default judgment in this case alleging that defendants violated plaintiff’s intellectual property rights in children’s characters Hello Kitty, Bob the Builder and Thomas the Tank Engine, among others. While the defendants acted diligently after default was entered, they did not act diligently prior to the default. Defendants’ “cash flow” problems were not an excuse for failing to appear pro se. Additionally, the defendants did not identify a meritorious defense. Bare denials from defendants’ answer were not sufficient.

Continue Reading Bare Denials Not Sufficient to Reverse Default Judgment

Foboha GMBH v. Gram Tech., Inc., No. 08 C 969, 2008 WL 4619795 (N.D. Ill. Oct. 15, 2008) (Grady, J.).
Judge Grady denied defendants’ (collectively “Gram”) Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiffs’ (collectively “Foboha”) Lanham Act unfair competition and related state law claims. Foboha alleged that Gram made false and misleading statements about Gram’s patent and about Foboha’s alleged infringement of the patent. In particular, Gram allegedly claimed that its technology was patented while its application was still being processed and that Gram made false statements about the status of the reexamination filed by Foboha. The Court held that Foboha’s claims were governed by Fed. R. Civ. P. 9(b)’s heightened pleading requirements because they were based upon Gram’s allegedly false and misleading statements. And at least for the statements allegedly made about the patent during reexam, Foboha met the heightened standard by explaining what statements were made, when and where they were made, who made them and how they were made.
The Court did, however, hold that Gram’s direct communications, in person or in letters to individuals, did not constitute commercial advertising and, therefore, did not constitute Lanham Act unfair competition. But Gram’s statements on its website and press releases could constitute commercial advertising.

Continue Reading Individual Communications of Infringement are Not Lanham Act Unfair Competition

Genender Int’l, Inc. v. Skagen Designs, Ltd., No. 07 C 5993, Slip Op. (N.D. Ill. Apr. 14, 2008) (Grady, J.).
Judge Grady denied defendant Skagen’s Fed. R. Civ. P. 12(b)(3) motion to dismiss plaintiff Genender’s declaratory judgment (“DJ”) case. The Court also granted in part Skagen’s Fed. R. Civ. P. 12(b)(6) motion to dismiss, dismissing Genender’s tortious interference claim. Skagen argued that Genender’s DJ suit should be dismissed in favor of Skagen’s later-filed suit for design patent and trade dress infringement filed in the District of Nevada. Skagen argued that dismissal was required by the Seventh Circuit’s standard as set forth in Tempco Elec. Heater Corp. v. Omega Eng., Inc., 819 F.2d 746 (7th Cir. 1987). The Court, however, held that Federal Circuit law controlled because of the design patent claims. And the Federal Circuit explicitly rejected Tempco in Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931 (Fed. Cir. 1993) (abrogated on other grounds). Instead, the Federal Circuit required that Skagen provide a “sound reason” that proceeding with the DJ would be unjust or inefficient. Skagen provided no such reason and, in fact, Skagen’s counsel agreed at argument that it did not matter whether the case was tried in the Northern District or in the District of Nevada.
The Court dismissed without prejudice Genender’s tortious interference claim. Genender alleged that Skagen interfered with Genender’s business relationship with customer Sears by copying Sears personnel on cease and desist letters. But the claim was deficient because Genender did not allege that it lost any Sears business because of Skagen’s actions.

Continue Reading Federal Circuit Controls Patent DJ Jurisdiction

RTC Indus., Inc. v. Haddon, No. 06 C 5734, 2007 WL 2743583 (N.D. Ill. Sep. 10, 2007) (Grady, J.).
Judge Grady denied defendant’s Fed. R. Civ. P. 12(c) motion for judgment on the pleadings. The Court held that plaintiff’s breach of fiduciary duty claim was not preempted by the Illinois Trade Secret Act. Plaintiff alleged that defendant (plaintiff’s employee) violated his fiduciary duty to plaintiff (his employer at the time) by disclosing to third party DCI Marketing (“DCI”) that a DCI employee had accepted an offer to work for plaintiff. The Court held that the alleged acts would breach defendant’s fiduciary duty regardless of whether the hiring decision was confidential. The breach of fiduciary duty claim, therefore, was not preempted.
The Court also held that the non-complete clause defendant signed as a condition of employment was enforceable even though it lacked a geographic restriction. There was a two year time restriction and an “activity” restriction – defendant was only prevented from taking a job with a competitor that would either result in actual or threatened use of plaintiff’s confidential information.

Continue Reading Trade Secret Act Does Not Preempt Breach of Fiduciary Duty Claims

Johnson v. Wright, No. 05 C 3943, 2007 WL 1079063 (N.D. Ill. Apr. 5, 2007) (Grady, J.).

Judge Grady denied defendants’ Fed. R. Civ. P. 12(b)(1) motion to dismiss plaintiff’s amended complaint for lack of subject matter jurisdiction.  Defendants, record companies and related individuals, were accused of infringing plaintiff Syl Johnson’s copyright in his

Avery Dennison Corp. v. Naimo, No. 06 C 3390, 2006 WL 3343762 (N.D. Ill. Nov. 16, 2006) (Grady, J.).

In this trade secret dispute, Judge Grady dismissed plaintiff’s breach of contract claim alleging defendant’s breach of the parties’ Employment Agreement because the Separation Agreement the parties subsequently signed included an integration clause.  When defendant began his employment with plaintiff he signed an Employment Agreement which required that, among other things, defendant not compete with plaintiff for twelve months after his employment ended and that defendant never use plaintiff’s proprietary information for the benefit of anyone besides plaintiff.  When defendant later stopped working for plaintiff, the parties signed a Separation Agreement with a similar proprietary information clause and a strong integration clause, but apparently without a similar non-compete clause. 

Continue Reading Integration Clauses At Work

Kennelsource, Inc. v. Barking Hound Village, LLC, No. 05 C 1788, 2006 WL 2578975 (N.D. Ill. Sept. 5, 2006) (Grady, J.)

Judge Grady dismissed plaintiff’s complaint with prejudice for lack of personal jurisdiction.  Plaintiff alleged that defendants, several Georgia and Texas entities and individuals, worked together or at each other’s direction to steal plaintiff’s pet-care business management software and to infringe plaintiff’s copyrights for the software.

Continue Reading Doggone It – Court Lacks Personal Jurisdiction Over Alleged Pirates of Pooch Software