Arkansas Business Litigation Lawyer & Attorney : Allen Law Firm : Serving Little Rock, Fort Smith, North Little Rock

The District Court of Minnesota denied a preliminary injunction in Gregerson v. Vilana Financial, Inc., 2006 WL 3227762 (D. Minn. 11/7/06).

Vilana asserted trademark infringement claims against Gregerson for using Vilana's trademarks as a link and in subject lines on his websites www.cgstock.com and www.phototour.minneapolis.mn.us. Gregerson also used the trademarks as metatags on these sites.

Although trademark disputes involving metatags are relatively common, this case is unique because the parties sell entirely different products. Gregerson sells photographs, but Vilana provides financial services. The court found that Vilana could not show likelihood of success and denied the injunction.

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The District Court of Minnesota denied a preliminary injunction against a former employee in Unisource Worldwide, Inc. v. Schroeder, 2006 WL 3030887 (D. Minn. 10/23/06).

Unisource claimed breach of a noncompete agreement and trade secret misappropriation by Schroeder after he joined a competing firm. The parties' employment arrangement was altered by several letter agreements, but they never reduced the arrangement into one cohesive contract.

The court found no likelihood of success because Unisource could not establish that the noncompete agreement was still in effect, and Unisource could not provide evidence of trade secret misappropriation. The court also found that any harm could be remedied with monetary damages.

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The District Court of Minnesota will award attorney's fees to the successful copyright defendant in Norwood Operating Co. v. Beacon Promotions, Inc., 2006 WL 3103154 (D. Minn. 10/31/06).

Norwood brought suit against Beacon for copyright infringement and trade secret misappropriation regarding Beacon's catalogs. After granting summary judgment to Beacon, the court found that Beacon's copyright claims were legally and factually unreasonable.

The court will award attorney's fees pursuant to the Copyright Act and has requested additional documentation on a reasonable hourly rate. This decision follows a growing trend among courts to award attorney's fees to successful copyright defendants.

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The District Court of Minnesota kept trade secret documents sealed in an access to judicial records case. See Cardiac Pacemakers, Inc. v. Aspen II Holding Co., Inc., 2006 WL 3079410 (D.Minn. 10/24/06).

Cardiac and Aspen were involved in a trade secret dispute and by agreement of the parties, the court entered a protective order. The court granted partial summary judgment to Cardiac; the briefs and supporting documents remained under seal. The parties settled the dispute, and the court dismissed all claims .

Public Citizen, a consumer advocacy organization, moved to intervene to unseal the summary judgment briefs and supporting documents. Its argument was based on the common law right of access to judicial records. See Webster Groves Sch. Dist. v. Pulitzer Publ'g Co., 898 F.2d 1371 (8th Cir. 1990).

After conducting an in camera review of documents containing trade secrets, the court found there was no reasonable alternative to keeping these documents sealed. However, the court held that the summary judgment briefs would be unsealed in their entirety. 

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The Eastern District of Missouri denied a preliminary injunction in American Equity Mortgage, Inc. v. First Option Mortgage LLC, 2006 WL 3032417 (E.D. Mo. 10/23/06).

First Option opened a branch in Indianapolis by hiring away 7 of American Equity's employees, even though all these employees had signed noncompete agreements. American filed suit against First Option claiming tortious interference with these contracts.

The court found no likelihood of success because the employees themselves contacted First Option to seek new employment. The court also found lack of irreparable harm in that Americna Equity has a long history of not enforcing its noncompete agreements.

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J. Michael Cormack v. Candice Settle-Bashears, et. al., No. 06-2069.

In a decision implicating Arkansas state-constitutional takings jurisprudence, the United States Court of Appeals for the Eighth Circuit affirmed United States District Judge Judge Robert T. Dawson in a section 1983 case involving the City of Van Buren's application of a city ordinance prohibiting the sale of fireworks within the city limits to land newly-annexed by the city.

The plaintiff had a long-term lease for a fireworks stand on his property and when the city cited him for continuing to operate the stand after annexation, he sued in federal court, claiming that the application of the ordinance amounted to a regulatory taking. (He also appealed the citation, which case is still pending before an Arkansas District Court.)

Among the arguments on appeal was whether or not the "inadequate remedy" exception articulated in Williamson Planning Commission v. Hamilton Bank, 472 U.S. 172 (1985), applied. The exception, would have allowed Cormack to pursue his remedies in federal court without exhausting his state remedy (the remedy being an inverse condemnation action in state court.) The exception applies only when the state-law condemnation procedures are inadequate, and Cormack contended that "Arkansas has no remedy which would adequately compensate him for the taking," apparently arguing that the Arkansas courts are insufficient in their protection private property rights. The Eighth Circuit held that no such showing had been made and affirmed.

The court noted that the federal constitution provides "the federal baseline" for constitutional protection and noted that there was nothing in the record indicating that the Arkansas courts fail to provide this baseline of protection.

The Arkansas constitution declares "acquiring, possessing and protecting property" to be a fundamental right. Ark. Const. art. 2 sec. 2. Its analogue to the takings clause contains language unique among the fifty states: "The right of property is before and higher any constitutional sanction; and private property shall not be taken, appropriated or damaged for public use, without just compensation therefor." Ark. Const. art. 2 sec. 22 (emphasis supplied).

The Arkansas Supreme Court has not decided if these state-constitutional provisions provide a greater degree of protection for private property rights than the Takings Clause of the United States Constitution.

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The Arkansas Court of Appeals issued an unpublished opinion that that illustrates how powerful the abuse of discretion standard of review is for the appellee: Beverley Enterprises - Arkansas, Inc. v. Mike Jarrett, as Administrator of the Estate of Sylvia Jarrett, CA 06-330.

The corporate appellant in this nursing-home malpractice case filed its answer thirty days late and appealed from the trial court's grant of default judgment. The appellant acknowledged that it had been properly served, as its agent for service forwarded service of process to its legal department and the legal department verified receipt.

Despite valid service and possession of the complaint, the appellant argued "it was 'unaware' of the lawsuit because the complaint was misplaced by appellant's clerical help and was never received by appellant's in-house counsel," and that this constituted "excusable neglect" under Rule 55(c)(1) of the Arkansas Rules of Civil Procedure.

The Court of Appeals disagreed and affirmed in an unpublished opinion. Incorporating the standard of review -- grants of default judgment are reviewed under an abuse of discretion standard --the Court, through Judge Pittman, reasoned that "although appellant's legal department may indeed have been busy, the trial properly could have viewed this as a negligent failure to secure adequate help rather than as an instance of excusable neglect." (emphasis added).

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The Eastern District of Missouri encountered a high-profile case regarding baseball statistics in C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P., 443 F.Supp.2d 1077 (E.D. Mo. 2006).  

CBC operates a fantasy baseball game using Major League Baseball players' names and statistics. The players, through Major League Baseball Players' Association, brought claims for right of publicity and copyright infringement. The court found that CBC's use of the players' names and statistics did not indicate sponsorship by the players, and in a thorough opinion, the court held that: (1) CBC did not violate the players' right of publicity; (2) First Amendment concerns took precedence over right of publicity; and (3) the players' right of publicity was not preempted under the Copyright Act. 

This was the expected (if not popular) result, and the case has been appealed. The Eighth Circuit should weigh in on the scope of right of publicity and express preemption. Note that the court recently addressed conflict preemption in Davidson & Associates v. Jung, 422 F.3d 630 (8th Cir. 2005).

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Mean Gene Okerlund of wrestling fame was the center of a trademark dispute in Hot Stuff Foods, LLC v. Mean Gene's Enterprises, Inc., __F.Supp.2d__ 2006 WL 3788813 (D.S.D. 12/13/06). This is a long and unusual opinion where the court ruled for Okerlund on the trademark issues but ruled for Hot Stuff on its unfair compeition claim.

Okerlund entered into an endorsement contract with Hot Stuff that permitted Hot Stuff to market Mean Gene's Burgers and Mean Gene's Pizzas. Hot Stuff entered into contracts with more than 200 licensees and franchisees operating under these brand names and received two federal trademark registrations for Mean Gene's Burgers. Okerlund terminated the contract in 2006 and then sent letters to the franchisees to bring them to his new company. Hot Stuff promptly filed suit.

The court ruled for Okerlund on the trademark claims. The court canceled Hot Stuff's Mean Gene trademarks and found Hot Stuff does not have common law rights in these marks. However, the court ruled for Hot Stuff on the unfair competition claim and entered an injunction against Mean Gene from using the marks until his royalty term expired under the contract.

This brings about the unusual result where (for a limited time) the trademark owner cannot use the trademark, but the party that does not own the trademark has exclusive use. This case serves as a helpful reminder that parties have extensive freedom in structuring intellectual property rights in their contractual agreements. 

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The District Court of Minnesota found that 3M did not commit fraud on the USPTO in obtaining a trademark on the color blue. 3M Co. v. Intertape Polymer Group, Inc., 423 F.Supp.2d 958 (D. Minn. 2006).

3M sued Intertape for trademark infringement. Intertape asserted numerous defenses, including a claim that 3M committed fraud by representing to the USPTO that it had "substantially exclusive" use of the blue tape mark. At the time, there were 10 other users of the mark, but 3M commanded 85% - 93% of the market share. In rejecting Intertape's argument, the court relied on the TTAB's ruling that a party claiming fraud on the USPTO is under a heavy burden. Marshall Field & Co. v. Mrs. Fields Cookies, 25 U.S.P.Q.2d 1321 (TTAB 1992). The phrase "substantially exclusive" was also the exact phrase the TTAB found not fraudulent. Id.

This case will be interesting to watch as it proceeds to trial. The court denied Intertape's motion for summary judgment because issues of fact exist. The following issues will proceed to trial: functionality, secondary meaning, estoppel by acquiescence, and laches.

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The District Court of Minnesota held Solvay's false advertising claim was not barred by laches in Solvay Pharmaceuticals, Inc. v. Global Pharmaceuticals, 419 F.Supp.2d 1133 (D. Minn. 2006).

Solvay sold pancreatic enzyme supplements, which are used to treat cystic fibrosis patients. Global offered its supplements as a generic equivalent or a generic alternative to Solvay's products, which Solvay claims were false statements. Global raised its laches defense claiming undue delay and prejudice because Solvay learned of Global's products in late 1988 but did not file suit until 2003.

The court rejected the laches defense because Solvay brought suit within the 5-year limitations period, spent that time testing Global's products, and Global did not suffer prejudice from Solvay's actions.

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The Northern District of Iowa held a copyright defendant can proceed with defenses of copyright misuse and unclean hands in International Motor Contest Ass'n, Inc. v. Staley, 434 F.Supp.2d 650 (N.D. Iowa 2006).

IMCA claimed copyright infringement of its contest rules and regulations. Staley raised the affirmative defenses of copyright misuse and unclean hands. IMCA moved to strike these defenses, claiming the Eighth Circuit does not recognize them. In denying the motion the court observed that, while the Eighth Circuit has never substantively considered these defenses, the Eighth Circuit has never refused to observe these defenses.

These defenses are generally accepted defenses to a copyright infringement suit, even though some circuits like the Eighth Circuit have not yet substantively recognized them. No circuit has ever refused to recognize these defenses.

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The Minnesota District Court encountered the rare issue of trademark prosecution history estoppel in Eniva Corp. v. Global Water Solutions, Inc., 440 F.Supp.2d 1042 (D. Minn. 2006).

Eniva sued Global Water for trademark infringement. Global Water moved for summary judgment based on the defense of prosecution history estoppel, which is not an absolute rule in trademark law. Under this argument, Global Water claimed that Eniva made statements to the USPTO in obtaining its trademark registration that contradicted its position in the present litigation.

The court declined to adopt the prosecution history estoppel rule at the summary judgment stage but held that Global Water may raise the defense at trial. Prosecution history estoppel is well-established in patent law, and it would be an appropriate doctrine in the trademark context.

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The Eastern District of Missouri denied a motion for preliminary injunction based in part on trademark infringement in Furminator, Inc. v. Ontel Products Corp., 429 F.Supp.2d 1153 (E.D. Mo. 2006).

Furminator sought trademark protection for “DeShedding” as applied to shaving devices for removing the loose undercoat of pets. The court found “DeShedding” was generic in this context. The court went on to find that, even if “DeShedding” was descriptive, Furminator failed to establish secondary meaning.

By addressing secondary meaning even after finding the proposed mark was generic, the court followed the approach taken in Frosty Treats, Inc. v. Sony Computer Entertainment Am., Inc., 426 F.3d 1001 (8th Cir. 2005). This is an effective approach because the demarcation between generic marks and descriptive marks is not always clear.

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The Eighth Circuit granted a new trial because the district court improperly permitted expert testimony in Rottlund Co. v. Pinnacle Corp., 452 F.3d 726 (8th Cir. 2006).

Rottlund owned copyrights in various architectural designs and brought suit against Pinnacle for copyright infringement. The district court granted partial summary judgment to Rottlund that it owned valid copyrights. Pinnacle had access to the designs, and the ideas in Pinnacle's designs were substantially similar to the ideas in Rottlund's design.

The only issue for the jury was similarity of expression between the two designs. The district court erred by permitting Pinnacle to present expert testimony. While expert testimony can be used to establish similarity of ideas, it cannot be used to establish similarity of expression.

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The Eastern District of Missouri dismissed a trademark lawsuit based on the exception to the first-filed rule in Eveready Battery Co., Inc. v. L.P.I. Consumer Products, Inc., 2006 WL 3391086 (E.D. Mo. 11/22/06).

L.P.I. accused Eveready of trademark infringement, and the parties entered into settlement negotiations. During the negotiations, Eveready filed a declaratory action in Missouri. They did not serve L.P.I. and continued to negotiate. More than a month later, L.P.I. filed suit in Florida, then Eveready served the previously-filed Missouri action. The court found these tactics amounted to the "red flags" identified by the Eighth Circuit to create an exception to the first-filed rule.

While the court cautions against using the declaratory action in this fashion, the declaratory action remains an effective tool, particularly in trademark litigation. See Mid-State Aftermarket Body Parts, Inc. v. MQVP, Inc., 361 F.Supp.2d 896 (E.D. Ark. 2005) (rev'd on other grounds).

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The Minnesota District Court granted a permanent injunction for cybersquatting and trademark infringement claims in Faegre & Benson, LLP v. Purdy, 447 F.Supp.2d 1008 (D. Minn. 2006).

Purdy, an anti-abortion activist, registered numerous domain names that incorporated a variation of the law firm name Faegre & Benson, such as www.faegre-benson.com (now inactive). On these websites, Purdy published graphic abortion-related images and forceful anti-abortion statements.

Purdy offered to stop his conduct only if the law firm agreed to quit donating money to Planned Parenthood or if the law firm would agree to donate money to anti-abortion organizations. The court found Purdy had engaged in cybersquatting and trademark infringement and granted Faegre & Benson a permanent injunction against Purdy.

The court's decision was an easy one considering Purdy had already done the same thing to a number of famous companies such as Coca-Cola and McDonald's in Coca-Cola v. Purdy, 382 F.3d 774 (8th Cir. 2004).

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The District Court of Minnesota granted summary judgment to the defendants in Woods v. Pro Video Productions, Inc., 447 F.Supp.2d 1022 (D.Minn. 2006).

Woods is a filmmaker who had worked with Pro Video on numerous projects. From 1997 – 2002, Woods and Pro Video worked to get contracts from the State of Minnesota and the Federal Aviation Administration (FAA) to produce documentaries for enhanced safety. Woods created numerous copyrightable documents during this time period. However, most of the information was factual, and the copyright was limited to selection and arrangement.

 
In 2002, the parties had a falling out. Pro Video used the documents to generate the documentary for the FAA. However, Pro Video only copied factual elements and other non-copyrightable elements.

 
While Woods did have a copyright, and Pro Video did use the documents, the court found that Pro Video did not copy any of the copyrightable expression. This case is an example that copyrighted works often contain copyrightable and non-copyrightable elements; only the copyrightable elements will receive protection.

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This is a long post, but the trade secret misappropriation case between R.K. Enterprise and Pro-Comp Management is setting several important precedents regarding damages under the Arkansas Trade Secrets Act (ATSA).

The trial court originally held that Pro-Comp misappropriated R.K.’s trade secrets, but the trial court permitted R.K. to decide whether it wanted remedies under the Arkansas Trade Secret Act or companion tort claims. Judgment of $262,303.00 was entered on the tort claims.

The Arkansas Supreme Court reversed, holding that the ATSA preempts or displaces tort causes of action. R.K. Enterprise v. Pro-Comp Management, 356 Ark. 565 (2004). By doing so the court joined the clear majority of jurisdictions with similar statutes. The case was reversed for a determination of damages pursuant to the ATSA only.

On remand, the trial court found that damages were too speculative for either actual losses or unjust enrichment. The court entered judgment for R.K., holding that Pro-Comp could not establish damages under the ATSA. In its determination, the court relied on Brown v. Ruallam, 73 Ark.App. 296 (2001) that the court could not look to the general law of unjust enrichment when determining unjust enrichment under the ATSA.

Pro-Comp appealed, and the Supreme Court reversed Brown, holding that a trial court may look to the general law of unjust enrichment when deciding an ATSA case. Pro-Comp Management, Inc. v. R.K. Enterprises, LLC, 366 Ark. 463 (2006). The court affirmed the ruling of no damages for actual loss but reversed for a consideration of unjust enrichment pursuant to the reversal of Brown. Id.

While this case has produced some important rules for Arkansas trade secret law, the parties may end up exactly where they started in 2004.

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In an unusual case, the Eighth Circuit granted summary judgment to the defendant because the copyright owner obtained the wrong registration in Action Tapes, Inc. v. Mattson, 462 F.3d 1010 (8th Cir. 2006).

Action Tapes makes graphic embroidery designs and embeds the design in disk-like memory cards. The memory cards are placed into a computer-run sewing machine, which then stitches the design on the memory card. Action Tapes obtained a copyright registration, but the registration was for a work of visual art, not a computer program.

Kelly Mattson owned a sewing machine supply store and was renting out Action Tapes memory cards without permission. If the cards are not computer programs, Mattson is protected under the first sale doctrine. If the cards are computer programs, Mattson would violate the Computer Software Rental Amendments Act of 1990. The Eighth Circuit held that, because Action Tapes did not register the cards as a computer program, they could not bring the lawsuit.

What is more intriguing is that the district court found the memory cards were not computer programs. Because it affirmed on other grounds, the Eighth Circuit did not address this question, but it may have to later if Action Tapes obtains a proper registration and re-files.  

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The Eighth Circuit affirmed summary judgment denying trademark protection for "Brick Oven" as applied to frozen pizzas. Schwan's IP, LLC v. Kraft Pizza Co., 460 F.3d 971 (8th Cir. 2006).

In March 2003, Schwan's labeled its Freschetta brand pizzas as Freschetta Brick Oven pizzas. Later in 2003, Kraft labeled its Tombstone brand pizzas as Tombstone Brick Oven pizzas. Schwan's filed a lawsuit claiming trademark infringement.

The court held that "brick oven" is a type of pizza that is too generic for trademark protection because commentators, retailers, newspapers and restaurants all use the term "brick oven" to identify pizzas cooked in a brick oven. This was a straightforward decision; usually a firm cannot claim a trademark in a phrase that has become common in the industry.

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The Arkansas Court of Appeals issued a single opinion today: In The Matter of the Untimely Passing of Terry Crabtree.

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The Eighth Circuit reversed a grant of summary judgment on trademark infringement and false advertising claims in Mid-State Aftermarket Body Parts, Inc. v. MQVP, Inc., 466 F.3d 630 (8th. Cir. 2006).

MQVP designed a system for assuring quality in automotive parts and tracing the sales history of each part. They received three federal service mark registrations. Mid-State, a distributor of aftermarket auto parts, advertised they had "MQVP parts available." The district court granted summary judgment to Mid-State primarily on grounds that (a) MQVP used its service marks to identify goods; and (b) Mid-State's use was a certification mark use that could not be protected by a service mark registration.

The Eighth Circuit reversed, holding that service marks may be used to identify goods associated with the services, and a service mark owner is entitled to protection against certification mark use.

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The Eighth Circuit did not take sides on a circuit split on false advertising standing in American Ass'n of Orthodontists v. Yellow Book USA, 434 F.3d 1100 (8th Cir. 2006). The AAO is a national trade organization of orthodontists. They sued Yellow Book for false advertising because Yellow Book lists general dentists under the heading "Dentists-Orthodontists."

The circuits are split as to the proper test for standing for a false advertising claim: (1) some circuits hold only a competitor may have false advertising standing; (2) other circuits apply a more flexible multi-factor tests that permits noncompetitor standing. The Eighth Circuit noted the split but declined to select a test because the AAO would fail to establish standing under either test.

One of the tests presented by the Eighth Circuit was crafted by Justice Alito in a pair of decisions: Joint Stock Society v. UDV North America, Inc., 266 F.3d 164 (3rd Cir. 2001) and Conte Bros. Automotive, Inc. v. Quaker State Slick-50, Inc., 165 F.3d 221 (3rd Cir. 1998). This test has been adopted in the Fifth Circuit and recently by the Northern District of Georgia in a suit involving McDonald's.

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Cybersquatting is a claim for trademarks wrongfully used in domain names. The plaintiff must show the defendant:

(i) has a bad faith intent to profit from that mark; and

(ii) registers, traffics in, or uses a domain name that--

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark.

See 15 U.S.C. § 1125(d).

In determining whether the defendant has a bad faith intent, a court may consider any factors. The statute provides a non-exhaustive list of 9 factors. 

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False advertising is controlled by the Lanham Act, which provides a cause of action when the defendant:  

in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods services, or commercial activities.

See 15 U.S.C. § 1125(a)(1)(B). Note that this is a provision for commercial harm; consumers do not have standing under this provision.

A five-factor test is used to establish false advertising: (1) a false statement of fact about the defendant's own product or another's product; (2) the statement actually deceived or has the tendency  to deceive a substantial segment of the defendant's audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement. See American Italian Pasta Co. v. New World Pasta Co., 371 F.3d 387 (8th Cir. 2004).

False advertising comes in two forms: (1) literally false factual commercial claims; and (2) literally true or ambiguous factual claims which implicitly convey a false impression, are misleading in context, or are likely to deceive consumers. Id.

Puffery is an exception and consists of: (1) exaggerated statements of bluster or boast upon which no reasonable consumer would rely; and (2) vague or highly subjective claims of product superiority, including bald assertions of superiority. Id.

Arkansas False Advertising Law: Arkansas does not have a false advertising statute comparable to this provision of the Lanham Act.

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Trademarks are typically grouped into four categories: (1) generic; (2) descriptive; (3) suggestive; or (4) arbitrary or fanciful.

A generic mark is the common name or nature of an article and is never entitled to trademark protection.

A descriptive mark conveys an immediate idea of the ingredients, qualities or characteristics of the goods. Descriptive marks can receive protection only if they have acquired secondary meaning, which means consumers associate only one source with the descriptive term. Even if the mark has acquired secondary meaning, competitors can use the mark in its ordinary descriptive sense.

Suggestive marks require imagination, thought, and perception to reach a conclusion as to the nature of the goods. These marks receive protection without establishing secondary meaning.

Fanciful marks are terms that are made up (like Kodak) or used in an arbitrary fashion for the goods they identify (like Apple). These marks also receive protection without establishing secondary meaning.

See Frosty Treats Inc. v. Sony Computer Entertainment America, Inc., 426 F.3d 1001 (8th Cir. 2005). These categories do not have hard boundaries, and it is not always clear in which category a particular trademark should fall.

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The Lanham Act provides a cause of action for trademark infringement. This cause of action exists for both registered marks (15 U.S.C. § 1114(1)) and unregistered marks (15 U.S.C. § 1125(a)). To establish trademark infringement, the plaintiff must show: (1) a valid trademark; (2) likelihood of confusion from the defendant's use; and (3) resulting damages.

Likelihood of confusion is the hallmark of trademark infringement. The Eighth Circuit uses a 6-factor test to determine likelihood of confusion: (1) the strength of the owner's mark; (2) the similarity of the owner's mark and the alleged infringer's mark; (3) the degree to which the products compete with each other; (4) the alleged infringer's intent to pass off its goods as those of the trademark owner; (5) incidents of actual confusion; and (6) the type of product, its costs and conditions of purchase. See Kemp v. Bumble Bee Seafoods, Inc., 398 F.3d 1049 (8th Cir. 2005).

• These factors guide the analysis, but courts are not bound to a rigid application of the factors. No one factor controls, and different factors may be entitled to more weight in different cases.

Arkansas Trademark Law: Trademark cases are usually filed in federal court, but Arkansas has a trademark statute comparable to the Lanham Act. See A.C.A. 4-71-201, et seq.

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Copyright infringement involves two basic elements: (1) ownership of a valid copyright; and (2) copying of original elements. See Rottlund Co. v. Pinnacle Corp., 452 F.3d 726 (8th Cir. 2006).

Copying is established by (1) direct evidence (which is rarely available); or (2) by showing the alleged infringer had access to the copyrighted materials and that substantial similarity of ideas and expression exist between the allegedly infringing materials and the copyrighted work. Id.

Similarity of ideas is evaluated extrinsically, focusing on the objective similarities of the works. Expert testimony may be introduced to establish similarity of ideas. Id. If the ideas are substantially similar, then similarity of expression is evaluated using an intrinsic test depending on the response of the ordinary, reasonable person to the forms of expression. Expert testimony cannot be used for this part of the test. Id.

Arkansas law: The federal Copyright Act is the sole authority for copyright law. See 17 U.S.C. § 101, et seq. However, copyright issues can unfold in state causes of action. See Arkansas Democrat-Gazette, Inc. v. Brantley, 359 Ark. 75 (2005).

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Trade secrets are governed by state law.  In Arkansas, the Arkansas Trade Secrets Act (ATSA) is the controlling statutory scheme.  See A.C.A. § 4-75-601, et seq.  Arkansas courts also supplement these provisions with common law principles.  A trade secret misappropriation claim consists of two elements:  (1) a valid trade secret; and (2) misappropriation by the defendant.

1.     Existence of a Trade Secret

A trade secret is defined by statute as:

(4)  information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(A)  Derives independent  economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(B)  Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

In addition to the statute, courts consider a six-factor analysis in determining whether information qualifies as a trade secret:  (1) the extent to which the information is known outside the business; (2) the extent to which the information is known by employees and others involved in the business; (3) the extent of measures taken by the company to guard the secrecy of the information; (4) the value of the information to the company and to its competitors; (5) the amount of effort or money expended by the owner in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.  Tyson Foods, Inc. v. ConAgra, Inc., 349 Ark. 469 (2002).

2.     Misappropriation by the Defendant

Misappropriation is defined as:

(A)  Acquisition of a trade secret of another by a person who knows or who has reason to know that the trade secret was acquired by improper means; or

(B)  Disclosure or use of a trade secret of another without express or implied consent by a person who:

(i)  used improper means to acquire knowledge of the trade secret; or

(ii)  at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was:

(a)  derived from or through a person who had utilized improper means to acquire it;

(b)  acquired under circumstances giving rise to a duty to maintain its secrecy or limits its use; or

(c)  derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limits its use; or

(iii)  Before material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

The main point is that the trade secret owner has a cause of action against both (1) the party who wrongfully  uses the trade secret; and (2) the party who wrongfully acquires the trade secret.

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Trade dress is the total image of a product, the overall impression created. To establish a claim for trade dress infringement, the plaintiff must show:

(1) the trade dress is inherently distinctive or has acquired distinctiveness through secondary meaning;

(2) the trade dress is nonfunctional; and

(3) imitation of the trade dress would result in likelihood of confusion in consumer's minds as to the source of the product.

Gateway, Inc. v. Companion Products, Inc., 384 F.3d 503 (8th Cir. 2004).

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Patent infringement involves a two-step process. First, the the meaning and scope of the asserted patent claims must be determined. Second, the properly construed claims are compared to the accused product or process. See Aquatex Industries, Inc. v. Techniche Solutions, 419 F.3d 1374 (Fed. Cir. 2005).

The doctrine of equivalents extends patent infringement to insubstantial alterations that were not captured in drafting the original patent claim but which could be created through trivial changes. An element in the accused product is equivalent to a claim limitation if the differences between the two are insubstantial. Id.

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Noncompete agreements are typically referred to as covenants not to compete. These agreements come in two forms: (1) prohibit an employee from competing with the former employer for an amount of time after the employment is terminated; or (2) prohibit the seller of a business from competing with the buyer for an amount of time after the sale. Arkansas law is more favorable to the second form than the first. See Hyde v. CM Vending Co., Inc., 288 Ark. 218 (1986).

Arkansas law has three requirements for noncompete agreements to be enforceable: (1) there must be a valid interest to protect; (2) the geographical restriction must not be overly broad; and (3) a reasonable time limit must be imposed. See Statco Wireless, LLC v. Southwestern Bell Wireless, LLC, 80 Ark.App. 284 (2003).  

Arkansas is not a blue pencil state--if one provision of the noncompete agreement fails, then the entire agreement fails. See Rector-Philips-Morse, Inc. v. Vroman, 253 Ark. 750 (1973).

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Federal Law

A preliminary injunction is an order to stop a party from engaging in certain conduct while the litigation is pending; it can only issue after notice and a hearing. A temporary restraining order can accomplish the same result without notice or a hearing in certain circumstances. See Fed. R. Civ. P. 65.

The Eighth Circuit uses a four-factor test in determining whether a party is entitled to a preliminary injunction: (1) the probability that the movant will succeed on the merits; (2) the threat of irreparable harm; (3) the balance between the harm and the injury that granting the injunction will inflict on the parties, and (4) the public interest. Dataphase Sys. Inc. v. CL Sys., Inc., 640 F.2d 109 (8th Cir. 1981).

Most intellectual property violations can qualify as irreparable harm. As a result, intellectual property litigation often involves a motion for preliminary injunction or temporary restraining order.

Arkansas Law

The Arkansas rule differs in two significant respects. First, Arkansas does not distinguish between a preliminary injunction and a temporary restraining order. See Ark. R. Civ. P. 65. Second, the only factors considered are likelihood of success and irreparable harm. See id.; W.E. Long Co. v. Holsum Baking Co., 307 Ark. 345 (1991).

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