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

The District Court of Minnesota stayed most of a case based on patent infringement in Card Technology Corp. v. DataCard Corp., 2007 WL 551615 (D. Minn. 2/21/07).

Card Technology ("CTC") and DataCard hold various patents for smart card technology (credit cards that include personal information). CTC filed suit in November 2005 for infringement of 3 of its patents; DataCard counterclaimed for infringement of 2 of its patents as well as a claim for tortious interference with prospective business advantage. In October 2006, the USPTO granted CTC's request to reexamine DataCard's patents, and CTC moved the court to stay the case.

The court noted the majority rule that patent litigation is typically stayed during a reexamination by the USPTO.  With trial not scheduled until April 2008, the court stayed the case as to DataCard's patent counterclaims. However, the court did not stay the case as to the tortious interference counterclaim.

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The Eighth Circuit affirmed a substantial judgment based on breach of a trademark license and noncompete contract in Matrix Group Limited, Inc. v. Rawlings Sporting Goods Co., 2007 WL 506659 (8th Cir. 2/20/07).

Matrix sells bags for sporting equipment. Matrix negotiated an exclusive trademark license with Rawlings to use Rawlings' trademarks on sports bags. The contract also contained a noncompete provision where Rawlings would not compete with Matrix. K2 purchased Rawlings and Worth, a competitor to Matrix. K2 then consolidated parts of the sales forces of Rawlings and Worth.

Matrix filed suit claiming Rawlings breached the noncompete provisions of the license contract and that K2 tortiously interfered with that contract. The jury awarded Matrix $6 million against Rawlings and $2.5 million against K2. The Eighth Circuit affirmed the entire award.

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The Western District of Missouri rejected the primary jurisdiction doctrine in Just Enterprises, Inc. v. (888) Justice, Inc., 2007 WL 465635 (W.D. Mo. 2/8/07).

Just Enterprises has a federal trademark registration for 1-800-JUSTICE for legal referral services. Justice, Inc. uses the marks "212 Justice" and "888 Justice" for similar services. It operates two websites: www.212justice.com and www.888justice.com.

Justice petitioned the TTAB to cancel Just Enterprises' mark as merely descriptive. Before the TTAB decided the matter, Just Enterprises filed the lawsuit. Justice moved to stay the case pending a determination by the TTAB by invoking the primary jurisdiction doctrine.

The Eighth Circuit has not considered whether judicial proceedings should be stayed pending a TTAB determination via the primary jurisdiction doctrine. While courts are split on this issue, the majority of courts will not stay judicial proceedings under these circumstances. The Western District of Missouri joined the majority and declined to stay the case.

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The Judicial Panel on Multidistrict Litigation held that centralization was not warranted in In re Movie Artwork Copyright Litigation, 2007 WL 473683 (2/7/07).

The litigation involves cases in California, Missouri and New York for copyright infringement and trademark infringement. Two of the defendants moved to centralize the litigation in California. The panel denied the transfer because the cases were too individualized.

This case is another example that intellectual property litigation usually involves issues that are unique between the parties. As a result, intellectual property litigation typically is not suited for multidistrict litigation or class action litigation.

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The Eastern District of Missouri again granted default judgment in a copyright infringement dispute in Interscope Records v. Gallion, 2007 WL 433376 (E.D. Mo. 2/6/07).

Interscope Records filed this suit for infringement of its sound recordings via Gallion's online media distribution system. Gallion never filed an answer or responsive pleading. The facts are identical to a recent case involving Warner Brothers Records (previously posted).

The court granted statutory damages of $750 per work for a total of $3,000. The court also indicated it would award costs but required Interscope to submit proper documentation.

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The Eastern District of Missouri granted summary judgment to the parent company for the subsidiary's alleged patent infringement in Iridex Corp. v. Synergetics USA, Inc., 2007 WL 326441 (E.D. Mo. 1/31/07).

Iridex holds a patent for a fiber optic connector system used in medical lasers. Iridex claimed  Synergetics infringed its patent by selling Synergetics' connector system. The court held issues of fact were present on these claims and denied summary judgment.

Iridex also sued Synergetics USA, the parent company of Synergetics. In granting summary judgment for Synergetics USA, the court held there was no evidence of inducement of infringement. See 35 U.S.C. § 271(b). The court also held the companies were treated separately so as to preclude piercing the corporate veil.

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The Western District of Arkansas denied all claims based on trademark infringement by both parties in Arkansas Trophy Hunters Ass'n, Inc. v. Texas Trophy Hunters Ass'n, Ltd., 2007 WL 410930 (W.D. Ark. 2/5/07).

This is an odd dispute over rights to use the phrase "Arkansas Trophy Hunters Association." TTHA began using the phrase in 2005 when they decided to expand into Arkansas. The USPTO denied their federal trademark applications, but in 2006 they received two Arkansas state trademark registrations. ATHA had been using the phrase since 2003, but they had never applied for a federal or Arkansas state trademark. 

The court held the phrase is merely descriptive and not capable of trademark protection. The court dismissed all claims by the parties. It did not cancel TTHA's Arkansas trademark registration because ATHA had failed to make this request in its pleadings.

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"Rule 54(b) has caused problems for lawyers and judges alike" is the reporter's modest comment in the notes to the 2001 amendment. Wilson & Associates, Inc. v. Vimy Ridge Municipal Water Improvement District 139, illustrates the problem of failing to obtain dismissals for all defendants in an action, especially "John Doe" defendants. The water improvement district Wilkins and several other defendants, including "John Doe(s) and Jane Doe(s)," for delinquent assessments. The trial court granted summary judgment as to Wilkins. The record did not dispose of several of the defendants including the John Doe defendants. The Arkansas Supreme Court dismissed for lack of a final order: "This Court has specifically held that where John Doe claims have not been determined, dismissal on the basis of Rule 54(b) is appropriate."

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The Eastern District of Arkansas denied a preliminary injunction in Sobba v. Elmen, 2007 WL 283140 (E.D. Ark. 1/30/07).

The case involved Cupids, which is a lingerie and adult novelty store with locations in Central Arkansas. It has received a lot of publicity through promotions with the Buzz radio station. The Cupids stores are owned by Sobba and Elmen in a peculiar way. The two Little Rock stores and Hot Springs store are each owned by a separate corporation. Sobba and Elmen jointly own each of these corporations. They advertised all 3 stores as a collective, but they never registered the Cupids trademark or created a written agreement involving intellectual property rights.

Elmen claims the parties agreed to divide up the state of Arkansas. He opened a new store in Conway in 2006 and planned to open another store in Jacksonville this year. Sobba filed suit to prevent the Jacksonville opening claiming trademark infringement and breach of fiduciary duty. Sobba's argument was greatly damaged by the fact that he unsuccessfully tried to open his own store in Fayetteville.

The court easily denied the preliminary injunction. This case could produce some interesting results. At present, it involves 3 corporations, 2 LLCs and 2 owners, but no trademark registrations and no intellectual property agreements.

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The District Court of Minnesota granted partial summary judgment in a copyright case involving illicit labels in Microsoft Corp. v. Ion Technologies Corp., 2007 WL 188577 (D. Minn. 1/24/07).

Microsoft issues certificates of authenticity (COAs) so its customers know they are receiving genuine Microsoft software. Microsoft had successfully sued Ion Technologies and its owner, Paul Martin, for trademark infringement and copyright infringement for selling false COAs. See 2003 WL 21356084. The parties entered into a settlement agreement in late 2004, but Ion continued to sell COAs.

In December 2004, the Anti-counterfeiting Amendments Act of 2004 took effect. That law makes it illegal in some circumstances to knowingly traffic in an illicit label affixed to a copy of a computer program. See 18 U.S.C. § 2318. On the Section 2318 claim, the court granted partial summary judgment to Microsoft as to Ion but declined to extend personal liability to Martin. The court also granted partial summary judgment to Microsoft against both Ion and Martin for violation of the 2004 settlement agreement.

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The Eastern District of Missouri denied the defendants' motion for summary judgment on the patent  infringement claim in Green Edge Enterprises, LLC v. Rubber Mulch Etc., LLC, 2007 WL 118919 (E.D. Mo. 1/10/07).

Green Edge holds a patent for making synthetic wood chips out of rubber particles. Green Edge licenses the patent to International Mulch, who sells the chips using the trademark "Rubberific Mulch." The defendants sell rubber chips and moved for summary judgment claiming the patent is invalid. The court denied the motion, and the patent infringement claim will proceed to trial.

Green Edge has also asserted claims for trademark infringement and unfair competition that were not addressed in the summary judgment motion. The defendants have counterclaimed for unfair competition and breach of contract. All these issues will be presented at trial.

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The Eighth Circuit affirmed a $2 million dollar judgment based on trade secret misappropriation and breach of confidentiality agreements in Synergetics, Inc. v. Hurst, 2007 WL 313585 (8th Cir. 2/5/07).

Synergetics sells laser equipment for eye surgery procedures. Messrs. Hurst and McGowan held high-level sales positions with Synergetics. Both Hurst and McGowan signed confidentiality agreements that prohibited them from using Synergetics' confidential information during or after their employment. 

Hurst and McGowan formed a competing company during their employment. They constructed equipment using Synergetics' confidential designs and contacted Synergetics' customers about the new company, which they opened 2 weeks after terminating their employment. The court was not hard pressed to affirm the judgment of $1,759,165 actual damages and $293,194.16 punitive damages per defendant.

Hurst and McGowan presented a novel argument regarding confidentiality agreements. They argued these agreements cannot be enforceable unless they have time and geographic limitations like noncompete agreements. The court rejected this argument because these limitations have never been required in confidentiality agreements. This case reflects the growing trend of limited noncompete agreements to protect confidential information and avoid the pitfalls of noncompete agreements.

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The Eastern District of Missouri granted a temporary restraining order based on a noncompete agreement in U.S. Bank Nat'l Ass'n v. Meyer, 2007 WL 188406 (E.D. Mo. 1/23/07).

Meyer was a former Senior Portfolio Manager with U.S. Bank. He signed a noncompete agreement that prohibited him from soliciting U.S. Bank customers and from accepting business from these customers. In an extremely brief opinion, the court granted the TRO, and the case quickly settled.

This case is important because it presents a limited noncompete agreement. This limited agreement only prohibited Meyer from doing business with existing U.S. Bank customers; it did not prohibit his employment at a competing bank. These limited noncompete agreements are a growing trend to avoid courts' general dislike for noncompete agreements that prohibit employment.

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The District Court of Minnesota granted a preliminary injunction on false advertising claims in Medtox Scientific, Inc. v. Tamarac Medical, Inc., 2007 WL 37793 (D. Minn. 1/4/07).

Esca Tech has a current patent application pending for towel and soap products for removing led from the skin. Esca Tech granted Defendant Tamarac the exclusive license to use and sell these products. Medtox is a laboratory testing company that sometimes uses the products covered in the patent application.

Even though no patent has issued, Tamarac made representations to customers that it was the only company that had the rights to use the products because of the patent application. The court found these statements were false because the application itself did not grant any rights to Tamarac, and the court granted a preliminary injunction for Medtox.

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After granting partial summary judgment on some patent infringement claims, the District Court of Minnesota denied summary judgment on the remaining claims in Fargo Electronics, Inc. v. Iris, Ltd., Inc., 2006 WL 3839931 (D. Minn. 12/29/06).

Fargo makes printers and ink ribbons. Fargo holds 2 patents for sensor technology that allow its printers to identify the ink ribbon being used (the 519 patent and the 625 patent). In earlier proceedings, the court granted partial summary judgment to Iris because it found the claims of the 519 patent were invalid.

Iris also moved for summary judgment on the 625 patent on the same arguments. The court disagreed and held the claims of the 625 patent are valid. The case will proceed to trial later this year.  

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The Eastern District of Missouri declared a patent invalid in Leggett & Platt, Inc. v. Vutek, Inc., 2006 WL 3813677 (E.D. Mo. 12/26/06).

Vutek holds 2 patents regarding printing technology: one for a radiation source and one for maintaining the gap between the printer and the surface. Leggett & Platt obtained a patent for using cold UV lamps. Leggett & Platt brought suit against Vutek for patent infringement, claiming that Vutek infringed 7 claims of its patent.

The court found the claims were invalid for anticipation and obviousness under the prior Vutek patents. The court also found the claims were invalid for indefiniteness. This case is a good example of the risks involved in patent litigation. 

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The Southern District of Iowa denied a preliminary injunction in a complex case involving trademark infringement and trade secret misappropriation in Outcomes Pharmaceutical Health Care, L.C. v. Nat'l Community Pharmacists Ass'n, 2006 WL 3782905 (S.D. Iowa 12/22/06).

Outcomes provides medication therapy management (MTM) services, which consist of advising patients on how to get the most out of their medications. Outcomes used the term "Encounter" to identify its services. NCPA and the other defendants contracted with Outcomes to provide MTM services. During this time, Outcomes provided defendants with several documents Outcomes used in its business. After the contract expired, the defendants began offering their own MTM services, and they also used the term "Encounter."

The court conduced a 3-day hearing before denying the preliminary injunction. On the trade secret claim, the court found some likelihood of success but that Outcomes failed to establish irreparable harm.

On the trademark claim, the court found that "Encounter" as used by Outcomes is generic because "encounter" is used throughout the medical industry to describe a meeting between a patient and a medical professional. The court also mad alternate findings that Outcomes failed to establish secondary meaning, and there was no likelihood of confusion caused by the defendants' use.

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The Eastern District of Missouri found the trademark owner was a necessary party to a trademark infringement dispute between nonexclusive licensees in Lion Petroleum of Missouri, Inc. v. Millennium Super Stop, LLC, 2006 WL 3792611 (E.D. Mo. 12/21/06).

This is a peculiar case where both Lion Petroleum and Consolidated Energy are nonexclusive licensees of ConocoPhillips. Pursuant to its license, Lion contracted with Millennium to provide fuel products which Millennium would sell under the ConocoPhillips trademarks. Millennium quit making payments to Lion and began selling unbranded fuel products supplied by Consolidated Energy. Lion promptly sued both parties for trademark infringement and various contract theories.

The court held that ConocoPhillips was a necessary party and must be added to the lawsuit, which follows the general rule that the trademark owner must be a party to a trademark infringement suit. Once added, the issues between Lion and Consolidated Energy will likely be determined by the the scope of their contracts with ConocoPhillips.

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On February 1, 2007, the Arkansas Court of Appeals issued the first two opinions written by newly-elected Judge Brian S. Miller. The first, Ward v. Hickory Springs Mfg. Co. et al., No. CA 06-515, came on appeal from the Worker's Compensation Commission. The second, James v. Arkansas Dept. of Health and Human Serv's. No. CA 06-696, was a termination-of parental-rights case on appeal from Crittenden County Circuit Court. Ward was designation for publication, while James was not.

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February 1, 2007 marked an auspicious day for newly-elected Court of Appeals Judge Sarah J. Heffley, with the issuance of her first two written opinions. The cases are Schumann v. State, No. CACR 06-603, a lesser-included offense case, and Gifford v. Tuggle, No. CA 06-601, a modification of child custody case. Both are unpublished opinions and both were decided by the same three-judge panel: Judges Heffley, Marshall, and Hart.

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The Eastern District of Arkansas dismissed a copyright infringement lawsuit in Vintage Verandah, Inc. v. Mastercraft Int'l, Inc., 2006 WL 3735975 (E.D. Ark. 12/15/06).

Mastercraft sold a monkey-shaped lamp called Bubba Monkey. The Bubba Monkey was designed by one Ms. Briggs, who assigned her rights to Mastercraft. Vintage asserted joint ownership in the lamp, claiming its former employee Mr. Pike (now deceased) helped design the lamp. Vintage also brought a claim for trade dress infringement.

After a thorough analysis of copyright authorship, the court found that Vintage failed to prove that Mr. Pike made original contributions to the lamp or that Ms. Briggs intended him to be a joint author. The court also found that Vintage failed to establish secondary meaning for its trade dress claim and dismissed both claims.

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The District Court of North Dakota issues a temporary restraining order based on trademark infringement in Northwest Airlines, Inc. v. Bauer, 2006 WL 3733295 (D.ND. 12/15/06).

Northwest Airlines periodically distributes discount coupons called e-Certificates. Customers can gift the e-Certificates to others but cannot sell them. Without permission, Bauer sold e-Certificates on the website www.northwestdiscountcoupons.com (now inactive). Northwest purchased some certificates from this website, which were used in support of its motion.

In a clear-cut decision, the court found likelihood of success on the trademark infringement claim and issued a temporary restraining order for Northwest.

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High technology in the ice cream sandwich industry was displayed in Interbake Foods, LLC v. Tomasiello, 2006 WL 3302678 (N.D. Iowa 11/13/06).

Interbake owns a 95% share of the wafer market (a wafer is the sandwich part of an ice cream sandwich). Interbake takes great steps to preserve its recipes, formulas, and processes as trade secrets. Tomasiello was an upper level manger for Interbake and had access to all the secrets. He signed a Code of Conduct prohibiting him from disclosing these secrets, but he was not required to sign a noncompete agreement.

BoDeans is a successful ice cream cone company that entered the wafer market in 2006. BoDeans hired Tomasiello in October 2006. Just before he left, Tomasiello accessed numerous computer files at Interbake containing trade secrets and confidential information. However, Interbake could not show Tomasiello was using its trade secrets at BoDeans.

In a split ruling, the court enjoined Tomasiello and BoDeans from misappropriating Interbake's trade secrets but did not enjoin his employment with BoDeans. More importantly, the court ordered both defendants to preserve all electronic data they have relating in any way to BoDeans' recruitment of Tomasiello.

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The Eastern District of Missouri granted default judgment in Warner Bros. Records, Inc. v. Heller, 2006 WL 3803705 (E.D. Mo. 11/13/06).

Warner Brothers Records brought suit for copyright infringement for Heller's use of an online media distribution system to download and distribute 10 of Warner Brothers' sound recordings. Heller never filed an answer or otherwise defended the lawsuit.

The court granted default judgment and awarded statutory damages of $750 per work (the statutory minimum) for a total of $7,500.

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The Western District of Arkansas denied a preliminary injunction for breach of a noncompete agreement and trade secret misappropriation in Rare Valley Resources, Inc. v. Kinetic Technologies, LLC, 2006 WL 3096682 (W.D. Ark. 10/31/06).

Rare Valley and Kinetic both sell veterinary products. They entered into an agreement where Kinetic distributed Rare Valley's products, which included a noncompete agreement for 2 years after the venture terminated. However, the noncompete agreement was limited to the Aloe products, not veterinary products in general.

Rare Valley waited almost 6 months after filing the complaint to move for a preliminary injunction, which the court found as strong evidence against irreparable harm. The court also found no likelihood of success for either the noncompete claim or the trade secret misappropriation claim.

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