RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, 2007 WL 495254 (N.D. Ill. Feb. 14, 2007) (Coar, J.).
The Chicago Sun-Times is reporting that a jury returned a $21.5M verdict, including $8M in punitive damages, Monday for plaintiff RRK Holding Co. (“RRK”) in its Illinois Trade Secret Act (“ITSA”) suit against defendant Sears, Roebuck & Co. (“Sears”). RRK alleged that, pursuant to a nondisclosure agreement, it disclosed to Sears its plans for a next generation “combination tool” which consisted of a rotary saw, also called a spiral saw, which could be converted into a plunge router. But after negotiations broke down over price, Sears allegedly took RRK’s plans and used them to make Sears’s Craftsman “All-in-One” tool. Sears has said it will appeal the verdict. The Court’s docket has not been updated yet with a verdict form or jury instructions, but I will post them when they become available, likely next week.
For more on this case, click here for the Blog’s archives.

Continue Reading Jury Returns $21.5M Trade Secret Verdict

Am Fam. Mutual Ins., Co. v. Roth, No. 05 C 3839, 2007 WL 2410074 (N.D. Ill. Aug. 16, 2007) (Cole, Mag. J.).
Judge Cole granted in part plaintiff’s motion to strike evidence and bar its use. The documents at issue were commission statements including plaintiff’s customer information. The Court previously ordered defendants to return to plaintiff all documents in its possession including plaintiff’s customer information in this trade secret matter. After that order, defendants filed the commission statements, including customer information, with the clerk as an exhibit to another document. The Court held that filing of the commission statements was public disclosure which violated the Court’s order that defendants not retain or disclose such information. But the Court held that plaintiff’s preferred sanction for retaining and filing the documents, barring their use as evidence at trial, was not proportional with defendants’ wrong in keeping the document and filing them publicly with the Court.

Continue Reading Striking Evidence Too Strong a Remedy for Wrongly Retained Evidence

UTStarcom, Inc. v. Starent Networks, Corp., No. 07 C 2582, Min. Order (N.D. Ill. Aug. 16, 2007) (Lindberg, J.).
Judge Lindberg denied defendants’ motion to dismiss plaintiff’s state law claims and its claim seeking assignment of defendants’ patents to plaintiffs. The Court held that the claim seeking assignment of defendants patents to plaintiff was an invalidity contention. Plaintiff claimed that it had invented defendants’ patented inventions before defendants. While plaintiff did not use the correct terms, it met the notice pleading standards. Additionally, plaintiff’s state law trade secret and tortious interference claims were sufficiently related to the patent claims to come within the Court’s supplemental jurisdiction.
The Court refused to consider plaintiff’s requests for additional discovery because it was made orally in court and in plaintiff’s responsive pleading, but never as a written motion as required by Fed. R. Civ. P. 7(b)(1).

Continue Reading Notice Pleading Does Not Require Correct Claim Name

Fast Food Gourmet, Inc. v. Little Lady Foods, Inc., No. 05 C 6022, 2007 WL 2156665 (N.D. Ill. Jul. 26, 2007) (Cole, M.J.)
Judge Cole granted in part defendant Little Lady Foods’ (“LLF”) Fed. R. Civ. P. 37 motion to bar evidence of allegedly late-identified trade secrets. Plaintiff Fast Food Gourmet (“FFG”) originally identified four trade secret elements of its process for making thin crust frozen pizza. FFG’s Vice President of Operations Crause identified four additional elements during his deposition. And FFG later identified two additional elements. LLF argued that FFG should be limited to the first four elements because FFG never updated its interrogatory responses to include the six additional elements. The Court held that the four additional elements disclosed during the deposition had “otherwise been made known” pursuant to Fed. R. Civ. P. 26(e) and, therefore, were not required to be added to FFG’s interrogatory responses. The Court excluded the other two elements. FFG argued that it had identified the elements by identifying documents containing the elements in its interrogatory responses pursuant to Fed. R. Civ. P. 33(d). But the Court held that the documents FFG identified only identified the two elements sporadically, and in connection with elements that were not trade secrets. This, combined with Crause’s testimony that he had identified all of the trade secret elements, made FFG’s Rule 33(d) statements insufficient.
Practice Tip: Rule 33(d) is often seen as a simple escape from answering cumbersome or difficult interrogatories. Of course, it is also often warranted. But when you use Rule 33(d), make sure to identify the correct documents, and make sure the identified documents fully support your position.

Continue Reading Interrogatory Responses Supplemented by Deposition Testimony

Fast Food Gourmet, Inc. v. Little Lady Foods, Inc., No. 05 C 6022, 2007 WL 1673563 (N.D. Ill. Jun. 8, 2007) (Cole, J.).
Judge Cole denied plaintiff Fast Food Gourmet, Inc.’s (“FFGI”) motion to compel responses to interrogatories, in this trade secret case involving frozen pizzas (you can read more about this case in the Blog’s archives). FFGI served defendants with an interrogatory seeking information regarding which brands of frozen pizza (aside from the accused DiGiorno Thin Crispy Crust Pizza) defendants baked in the ovens which were allegedly part of FFGI’s trade secret crust-making process for stone hearth oven, thin crust, frozen pizzas. Defendants objected to the interrogatory, which led to a meet and confer between the parties on February 15, 2007, two weeks before the close of fact discovery on March 1. The meet and confer did not resolve the dispute. On April 1, FFGI submitted its expert reports and then, six weeks after the close of discovery, FFGI moved to compel responses to the interrogatories. But FFGI failed to notice the motion until more than one month later on May 18. The Court noted that, while it had discretion to grant the motion, motions to compel filed after the close of fact discovery are generally held to be untimely unless accompanied by a “reasonable and persuasive justification” for the delay. FFGI, however, provided no justification for its delay.
But the Court ultimately denied FFGI’s motion not because it was untimely, but because the evidence lacked evidentiary value. FFGI assured the Court that it would not seek any other discovery after receiving the interrogatory responses. FFGI had also repeatedly taken the position that its trade secrets crust-making process involved the combination of various elements and processes including the ovens that were the focus of FFGI’s interrogatories, but that the ovens alone were not a trade secret. The interrogatory responses alone , therefore, were of no value. They would necessarily require additional discovery to be relevant to the case. For example, it was not enough to know which other pizzas were baked in the ovens. FFGI would need to know how each pizza baked in the oven was prepared in order to determine whether the pizzas were made using the FFGI trade secrets. That would require additional fact discovery, but fact discovery was already closed. The Court, therefore, denied FFGI’s motion to compel.
Practice tip: File your discovery motions on or before the close of discovery. And always explain to the Court why you need documents or interrogatory responses, particularly if you are seeking them after the close of discovery.

Continue Reading Delayed Filing Leads to Half-Baked Motion to Compel

Am. Hardware Manufs. Assoc. v. Reed Elsevier Inc., No. 03 C 9421, 2007 WL 1521185 (N.D. Ill. May 14, 2007) (Moran, J.).
Judge Moran denied in part plaintiff’s motion to strike defendants’ confidentiality designations regarding the deposition of defendants’ former CEO. Defendants designated as “Highly Confidential,” among other portions of the deposition, those portions in which one of defendants’ customer contracts (the “Contract”) was discussed. Defendants argued that the terms of the Contract were trade secrets and, therefore, should be given the strongest confidentiality protection available pursuant to the parties’ Protective Order. Magistrate Judge Mason previously reviewed the designation, held that the Contract was not likely trade secret and reduced the related designations to “Confidential.” Judge Moran agreed with Judge Mason, rejecting the argument that the Contract was a trade secret as “conclusory and vague.” And Judge Moran agreed that the Contract warranted a “Confidential” designation. Judge Moran also explained that while the deposition and related documents would be protected by the Protective Order during discovery, they would not when the Court ruled on dispositive motion or held trial, quoting the Seventh Circuit:
“Secrecy is fine at the discovery stage, before the material enters the judicial record” those documents that “influence or underpin the judicial decision are open to public inspection unless they meet the definition of trade secrets or other categories of bona fide long-term confidentiality.” Baxter Int’l, Inc. v. Abbott Labs., 297 F.3d 544, 545 (7th Cir. 2002). Thus, at the summary judgment, trial or appellate stage, documents that have previously been deemed confidential may not retain such a designation. See Little v. Mitsubishi Motor Mfg. of Am. Inc., 2006 WL 1554317, at *3 (C.D. Ill. 2006).

Continue Reading Contract Terms are Not Trade Secret

Papa John’s Int’l, Inc. v. Rezko, No. 04 C 3131, 2007 WL 1521472 (N.D. Ill. May 21, 2006) (Moran, J.).
Relying on its prior opinion, which included a detailed analysis of the Complaint and notice pleading standards (you can read discussion of that opinion in the Blog’s archives), the Court denied defendants’ various Fed. R. Civ. P. 12(b)(6) motions to dismiss plaintiff’s trade secret and trademark infringement claims. Defendants argued that plaintiff did not sufficiently which defendants were alleged to have performed the acts at issue. But the Court reasoned that defendants had notice of plaintiff’s claims and that notice is all the Federal Rules require. The Court pointed out that it had “covered much of this same ground in much greater detail” in its prior opinion and cautioned that “this case will not go away for any defendant by a motion to dismiss . . . .”

Continue Reading Court Says Case Will Not Be Resolved by Rule 12(b)(6)

Stafford Trading, Inc. v. Lovely, No. 05 C 4868, 2007 WL 1512417 (N.D. Ill. May 21, 2007) (Coar, J.).
Judge Coar granted in part declaratory judgment plaintiffs’ (collectively “Stafford”) motion to dismiss and denied Stafford’s summary judgment motion. The Court dismissed defendants’ fraud and unjust enrichment counterclaims after holding that they were preempted by the Illinois Trade Secret Act. The Court also dismissed defendants’ fraudulent concealment. The material fact that Stafford allegedly failed to disclose was the opinion that Stafford owned the RIVAS electronic options trading platform outright. But the Court held that an allegedly withheld opinion could not support a fraudulent concealment claim.
The Court’s summary judgment decision turned largely upon whether RIVAS was a computer program protected by copyright or a “methodology” protected as a trade secret. The Court held that it had insufficient evidence to make the determination. Furthermore, neither party briefed the issue of what effect the copyright/methodology would have upon defendants’ alleged oral contract between the parties which allegedly made the parties co-owners of RIVAS. The Court denied summary judgment as to defendants’ breach of contract counterclaim because the existence of an oral contracts and its terms were both disputed facts. Finally, the Court denied summary judgment as to defendants’ trade secret counterclaim because, whether RIVAS was determined to be protected by copyright or trade secret, the parties disputed whether defendants employed sufficient means to protect RIVAS’s secrecy.

Continue Reading Insufficient Facts to Determine Whether Computer Program was Protected by Copyright or Trade Secret

RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, 2007 WL 495254 (N.D. Ill. Feb. 14, 2007) (Coar, J.).

Judge Coar denied defendant summary judgment on plaintiff’s trade secret and breach of contract (nondisclosure agreement) claims. The Court also granted defendant summary judgment on plaintiff’s unjust enrichment claim holding that because it was based upon the trade secret misappropriation allegations it was preempted by the Illinois Trade Secret Act (“ITSA”). Plaintiff alleged that, pursuant to a nondisclosure agreement, it disclosed to defendant its plans for its “combination tool” which consisted of a rotary saw, also called a spiral saw, which could be converted into a plunge router. But after negotiations broke down over price, defendant allegedly disclosed the idea to its Canadian subsidiary, which then allegedly disclosed the idea to another party, Choon Nang Electrical Appliance Manufacturing Ltd. (“Choon Nang”), that obtained a British design patent on the combination tool and produced it for defendant. Continue Reading Conflicting Testimony Creates Questions of Fact in Trade Secrets Case

Papa John’s Int’l, Inc. v. Rezko, __ F. Supp.2d __, 2006 WL 1843121 (N.D. Ill. June 29, 2006) (Moran, J.).

In partially granting Rezko’s Motion to Dismiss, Judge Moran looked at notice pleading standards across a variety of intellectual property and addressed the individual defendant’s personal liability for the acts of his company.Continue Reading Notice Pleading Standards and Personal Liability for Corporate Officers