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

The trade secret dispute between Interbake Foods and BoDeans Wafer (previously posted 2/5/07) reached a settlement. See Interbake Foods, LLC v. BoDeans Wafer Co., LLC, 2007 WL 869051 (N.D. Iowa 3/20/07).

The parties entered into a settlement agreement and then filed a joint motion for permanent injunction and retention of jurisdiction. The court granted the motion. Under the terms of the order, the preliminary injunction previously granted is converted into a permanent injunction. The court will maintain jurisdiction for one year to enforce compliance with the settlement agreement.

• Email This
• Print
• Comments
• Trackbacks

The District Court of Minnesota required production of trade secret documents subject to protective order in Kia Motors America, Inc. v. Autoworks Distributing, 2007 WL 844674 (D. Minn. 3/19/07).

Kia brought suit against Autoworks for trademark infringement. Kia sought information regarding Autoworks' suppliers to determine if the goods sold by Autoworks were counterfeit. Autoworks refused, claiming this information is a trade secret.

The court required disclosure but also issued a protective order limiting disclosure of the information to just Kia's litigation attorneys. The court ordered that Kia's general outside counsel and in-house corporate counsel could not have access to the information.  

The court issued a stern warning against wrongful disclosure: If the suppliers suddenly stop doing business with Autoworks or change the nature of the business relationship, the court will presume that Kia's litigation attorneys made a wrongful disclosure. The court reserved the right to impose sanctions and attorney's fees for such conduct.  

• Email This
• Print
• Comments
• Trackbacks

The Eastern District of Arkansas denied motions for sanctions and attorney fees in Mail Boxes Etc., Inc. v. PBC Services, Inc., 2007 WL 841664 (E.D. Ark. 3/15/07).

On February 7, 2006, Mail Boxes brought suit against the defendants for trademark infringement and breach of a noncompete agreement. The court granted a temporary restraining order, and the defendants had to cease business operations. The court also ordered the trial to be consolidated with the preliminary injunction proceedings to begin March 20, 2006.

The defendants were parties in a California lawsuit (Morgate) against Mail Boxes that had been ongoing for several years and involved hundreds of parties. The court agreed to let the defendants assert their Morgate claims as counterclaims in the Arkansas trademark case. Mail Boxes chose not to try Morgate in Arkansas, and it voluntarily dismissed the Arkansas claims.

The defendants promptly moved to execute on the bond. They also moved for attorney fees of just under $300,000 (for a case that lasted 38 days) and moved for sanctions pursuant to 28 U.S.C. § 1927. After a lengthy recitation of the dispute, the court allowed the defendants to execute $19,990.51 against the bond, but denied the motions for attorney fees and sanctions.

• Email This
• Print
• Comments
• Trackbacks

The patent infringement case involving Iridex v. Synergetics ( previously posted 2/24/07) is gearing up for trial, scheduled to begin April 16, 2007. The Eastern District of Missouri decided a number of pretrial motions in a pair of orders, 2007 WL 776120 and 2007 WL 781254.

The court granted Iridex's motion for summary judgment on the non-patent counterclaims and all validity defenses, except as to obviousness.  Finding issues of fact on this defense, Synergetics will be allowed to present the obviousness defense to the jury. The court also declined Synergetics' motions for discovery because it submitted discovery after the deadline established by the Court.

Most importantly, the court ordered production of expert draft reports. Synergetics' expert witnesses testified that Synergetics' attorneys prepared the first drafts of their reports. Then the witnesses and attorneys exchanged revisions. The court held these drafts and correspondences are discoverable and ordered Synergetics to produce them. The court also required the attorneys to provide a declaration explaining the chronology of the drafts, which Iridex can use during cross examination.

• Email This
• Print
• Comments
• Trackbacks

The District Court of Minnesota agreed with the patent owner's interpretation of claims in Donaldson Co., Inc. v. Baldwin Filters, Inc., 2007 WL 748399 (D. Minn. 3/8/07).

Donaldson alleged patent infringement of three patents (here, here and here) by Baldwin. At the claim construction stage of the litigation, Baldwin sought to limit the scope of all three patents with restrictive interpretations of the claims.

The parties agreed that extrinsic evidence would not be needed to evaluate the claims. After evaluating the intrinsic evidence, the court found that Baldwin's interpretations had no support. The case will proceed with Donaldson's interpretation of the claims.

• Email This
• Print
• Comments
• Trackbacks

The Eastern District of Missouri granted another default judgment for copyright infringement in Arista Records v. Shernet Showers, 2007 WL 735612 (E.D. Mo. 3/8/07). Previous posts on the other default judgments are available here and here.

Like the other cases, Arista brought suit for the defendant's use of an online media distribution system. The defendant never answered or filed a responsive pleading. The court entered default judgment and awarded statutory damages of $7,500.

• Email This
• Print
• Comments
• Trackbacks

The Northern District of Iowa had some sharp criticism of the attorneys involved a patent infringement case. See  Highway Equipment Co., Inc. v. Cives Corp., 2007 WL 689766 (N.D. Iowa 3/7/07.

Highway Equipment had filed a declaratory action against Cives for a declaration of noninfringement. The court's lengthy opinion defined the scope of the patent claims at issue. Frustrated with the attorneys, the court provided a stern warning:

It is the opinion of the court that in their written and oral submissions, the parties wasted time posturing to one another about ultimate issues of infringement and invalidity. As a consequence, the parties left the court to sort out difficult issues of claim construction without adequate argument or briefing.

 

It is important to note that many of the attorneys in this case are from large firms in Chicago and Pittsburgh. This case serves as a helpful reminder that litigation tactics that are common in other locales are often ineffective in the court that has jurisdiction over the case.

• Email This
• Print
• Comments
• Trackbacks

The Western District of Arkansas granted a preliminary injunction based on trademark infringement and trade dress infringement in Rotoworks Int'l Ltd. v. Grassworks USA, LLC, 2007 WL 703747 (W.D. Ark. 3/5/07).

Rotoworks, a New Zealand company, sells weed wipers called Rotowipers. All Rotowipers are painted aqua. The defendants were exclusive distributors of Rotowipers in the U.S. However, the defendants began selling their own weed wipers instead of the Rotowipers. The defendants' wipers were designed just like Rotowipers and painted aqua. The defendants told their customers that the Arkansas-made wipers would better suit their needs, which dissuaded them from purchasing Rotowipers.

The court had no trouble in issuing the preliminary injunction under these circumstances, and the court only required a $5,000 bond.

• Email This
• Print
• Comments
• Trackbacks

The District Court of Minnesota granted a motion to strike an expert witness report in Cardiac Science, Inc. v. Koninklijke Philips Electronics N.V., 2007 WL 685137 (D. Minn. 3/2/07).

This is the latest round of the 4-year old patent infringement case involving Cardiac Science and Koninklijke Philips.  Cardiac Science wanted to change experts. In late 2006 the court entered an order that permitted the change but imposed some limitations. The biggest limitation was that the new expert could not offer opinions that were contradictory or inconsistent with the first expert' s opinions.

The new expert's report provided opinions that were new and contradictory to the original expert's opinions. The court struck these opinions as violating the 2006 order.

• Email This
• Print
• Comments
• Trackbacks

The District Court of South Dakota held that copyright infringement is not subject to heightened pleading requirements in Craft & Associates, Inc. v. College America, Inc., 2007 WL 675621 (D.S.D. 2/28/07).

College America ("CA") provides services for colleges. They entered into an oral contract with Craft where Craft provided marketing materials. After a few years CA quit paying and claimed ownership in the marketing materials. Craft filed suit claiming breach of contract, unjust enrichment, and copyright infringement. CA moved to dismiss claiming preemption and that Craft failed to allege with specificity the infringing acts.

Because the contract claim required an additional element over the copyright claim, the court held the contract claim was not preempted. However, the unjust enrichment claim was preempted. The court noted that, while some district courts have required heightened pleading, neither the Copyright Act nor the Federal Rules of Civil Procedure impose such a requirement. The court denied the motion to dismiss for failure to plead with specificity.

• Email This
• Print
• Comments
• Trackbacks

The Court of Appeals for the D.C. Circuit agreed that confidentiality agreements were too broad so as to violate labor laws in Cintas Corp. v. NLRB, 2007 WL 776875 (D.C. Cir. 3/16/07).

Cintas is a major corporation employing about 27,000 people. The issue in this case was sections of the handbook titled "Cintas Culture." Two sections came under scrutiny: (1) all information concerning the company is confidential; and (2) employees may be sanctioned for violating a confidence or for the unauthorized release of confidential information.

The union UNITE filed unfair labor practice charges with the NLRB. They claimed the policy was so broad that it violated 29 U.S.C. § 158(a)(1), which prohibits employer interference with employees' rights to discuss terms and conditions of their employment with others. The NLRB agreed and ordered Cintas to amend the language of the handbook.

The Court of Appeals affirmed the decision; Cintas will have to amend its handbook to make sure its confidentiality requirements do not violate federal labor law.

• Email This
• Print
• Comments
• Trackbacks

Determining the patent owner was the central dispute in Biopolymer Engineering, Inc. v. Immunocorp, 2007 WL 627859 (D. Minn. 2/27/07).

Biopolymer sued Immunocorp for patent infringement regarding two patents (here and here). Immunocorp moved to dismiss claiming Immudyne owned the patent. Biopolymer moved for summary judgment that it was the patent owner.

The patents have a long history. Byron Donzis originally obtained the patents in 1996 and 1997. Donzis originally licensed the patents to Immudyne in 1997. Donzis then licensed the patents to Biopolymer in 1999. Biopolymer asserts this agreement was a complete assignment of the patents. Immudyne sued Donzis in Texas in 1999 and won summary judgment. Donzis then assigned the patents to PSA Inc. The Texas court then ordered Donzis to assign his legal ownership in the patents to Immudyne as satisfaction of judgment.

The court found that Donzis did not have any legal title when the Texas court ordered assignment. The court held that Biopolymer is the proper patentee and denied the motion to dismiss. However, the court also denied Biopolymer's motion for summary judgment because it just sought to establish ownership of the patents--the motion did not go to any of Biopolymer's claims.

• Email This
• Print
• Comments
• Trackbacks

The District Court of South Dakota went through some procedural gymnastics to grant a plaintiff's motion to dismiss in Hurco Technologies, Inc. v. E.H. Wachs Co., 2007 WL 614054 (D.S.D. 2/22/07).

Wachs sued Hurco in Illinois in 2005 claiming patent infringement. Hurco moved to dismiss and filed a declaratory action in South Dakota. Wachs then entered into a covenant not to sue Hurco, but the covenant only covered some of Hurco's products. Then the case gets weird:

• Wachs moved to dismiss the lawsuit based on the first-filed rule but then withdraws it.
• Wachs files a motion to dismiss for lack of jurisdiction based on the covenant not to sue.
• The Illinois action is dismissed for lack of prosecution.
• Hurco moves to dismiss its complaint without prejudice and to dismiss the counterclaims with prejudice.

The court agreed with Hurco that the covenant not to sue did not eliminate the controversy between the parties. The court dismissed Wachs's motion to dismiss but granted Hurco's motion to dismiss. In the rare situation of cross motions to dismiss, the defendant's was denied, but the plaintiff's was granted.

• Email This
• Print
• Comments
• Trackbacks

Minnesota Public Utilties Commission v. FCC, No. 05-1069. The Eighth Circuit affirms the FCC's decision to preempt Minnesota's regulation of Voiceover Internet Protocol in this consolidated review. The FCC's decision was based, not on a classification of VoIP as a "telecommunications service" versus an "information provider," but on an application of the "impossibility exception" of 42 U.S.C. sec. 152(b) : the FCC determined that it was impossible or impractical to separate the intra- from the interstate aspects of VoIP.

The Eighth Circuit upheld this determination, and also held that the New York State Public Service Commission's claim that the FCC's ruling would preempt "fixed" VoIP was not ripe for review. (hat tip to the invaluable Howard Bashman)

The opinion contains a three-page, "oversimplified" description of VoIP service, which is reprinted after the jump.

• Email This
• Print
• Comments
• Trackbacks

Hanners v. Giant Oil Co. of Arkansas, Inc., No 06-800, is another "Rule 54(b) dismissal-with-instructions-on-abstracting" opinion released on March 15, 2007. In this case the culprit was not undismissed John Doe defendants, but an unruled-upon counterclaim.

The Court also admonished the parties to abstract the arguments presented at an admittedly relevant hearing, rather than reproducing them verbatim in the addendum:

In the case at bar, the abstract submitted contains the following statement:

Since the case on appeal involves an appeal from a summary judgment and an order granting Appellee’s motion for attorney fees, neither of which includes a transcript of testimony, there will be no abstract of testimony in this case.

Although there was no testimony presented at the hearing on summary judgment or the hearing on attorney fees, transcripts of both of those hearings are included in the Addendum to this Brief. Arguments of counsel are not abstracted, but are included in the Addendum. The trial court’s ruling at the summary judgment hearing held February 3, 2006, is abstracted below along with the trial court’s ruling from the bench at the attorney fee hearing held July 6, 2006, for the convenience of the Court.

The Court did not find this arrangement to be convenient:

[I]nstead of abstracting the transcript of these hearings as required by Rule 4-2(a)(5), Hanners has included a copy of each transcript in the addendum. This does not comply with Rule 4-2(a)(5). See Simons v. Marshall, ___ Ark. ___, ___ S.W.3d ___
(Mar. 1, 2007) (per curiam).

Although this abstracting decision is distinguishable from Vimy Ridge Muni. Water Imp. Dist. v. Ryles (the Ryles appellant considered the unabstracted hearing "necessary to an understanding of all questions presented to the Court for decision,") Judge Crabtree's advice still holds:

"If you argue it, abstract it." Terry Crabtree, Abstracting the Record, 21 U. Ark. Little Rock 1, 10 (1998).

• Email This
• Print
• Comments
• Trackbacks (1)

The Arkansas Supreme Court has released Administrative Order 19: Access to Court Records. Among other things, Section V on remote access is of interest to modern practitioners:

A. Courts should endeavor to make at least the following information, when available in electronic form, remotely accessible to the public, unless public access is restricted pursuant to section VII:

(1) litigant/party/attorney indexes to cases filed with the court;

(2) listings of case filings, including the names of the parties;

(3) the register of actions or docket sheets;

(4) calendars or dockets of court proceedings, including case numbers and captions,

date and time of hearings, and location of hearings;

(5) judgments, orders, or decrees.

B. Remote access to information beyond this list is left to the discretion of the court.

• Email This
• Print
• Comments
• Trackbacks

The question was:

Whether the conscious indifference standard announced by this court in Shepard v. Washington County, 331 Ark. 480, 962 S.W.3d 779 (1998) affords greater protection to pre-trial detainees than the federal deliberate indifference standard.

• Email This
• Print
• Comments
• Trackbacks

[W]e note that [appellant] has failed to abstract the February 7, 2006 hearing before the circuit court on the summary judgment motion. [Appellant] explains in its abstractors' notes that it did not abstract the hearing because there are no colloquies between the circuit court and counsel as are necessary to an understanding of the questions presented on appeal. We disagree.

Vimy Ridge Muni. Water Imp. Dist. No. 139 v. Ryles, No. 06-1028.

This small paragraph of dicta raises a recurring issue in Arkansas appellate practice:

The Court has reiterated many times, of course, that it is "resolute and consistent in holding that all material information must be included in the abstract and that we will not be placed in the position of having seven justices scour the one record for absent information.” Baptist Health v. Murphy, 365 Ark. 115, ___ S.W.3d ___ (February 2, 2006).

An appellant often faces the choice of whether to include seemingly uninportant information in the abstract. In making this decision, one might empathize with the observation of Professor Watkins and Judge Marshall:

Abstracting poses something of a Hobson's Choice for lawyers. If the appellant's attorney omits something from the abstract, the appellate court will not reach the issue. Consequently, the tendency is for the attorney to abstract virtually everything in the record, even material of marginal relevance to the issues on appeal.

John J. Watkins & Price Marshall, A Modest Proposal: Simpify Arkansas Appellate Procedure by Abolishing the Abstracting Requirement, 53 Ark. L. Rev. 37, 45-46 (2000).  As this week's decision demonstrates, the dilemma persists despite the Court's softening of the old practice of summary affirmance. E.g., MacNeil v. Lillard, 79 Ark. App. 69, 71, 86 S.W.3d 389, 390 (2002) ("[T]he court must now allow rebriefing before summarily affirming [in light of] [t]he modification of the abstracting rules set out in In Re: Modification of the Abstracting System, 345 Ark. Appx. 626 (2001)).

Ultimately, it seems that Judge Crabtree’s advice continues to hold true: "If you argue it, abstract it." Terry Crabtree, Abstracting the Record, 21 U. Ark. Little Rock 1, 10 (1998).

• Email This
• Print
• Comments
• Trackbacks

In Summerville v. Thrower, et al., No. 06-501, the Arkansas Supreme Court struck down a provision of the Arkansas Civil Justice Reform Act on separation of powers grounds.

The provision, Arkansas Code Annotated section 16-114-209(b), is part of Arkansas’s "tort reform" statute, the Arkansas Civil Justice Reform Act. Section 209(b) requires a medical malpractice plaintiff to file, within thirty days of the filing of the complaint, an affidavit signed by a medical expert in the same specialty as the defendant averring that the defendant breached the standard of care.

The Court struck down the provision on separation of powers grounds. The Arkansas Supreme Court has plenary authority under Amendment 80 to the Arkansas Constitution over rules of pleading, practice and procedure. ARCP 3 states that the only requirement for initiating a civil lawsuit is the filing of the complaint. The Court held that Section 209(b) added a procedural requirement (file an affidavit within 30 days) to the requirement for filing medical malpractice suits. The Court held that this addition was an impermissible legislative intrusion into the judiciary's domain.

The opinion, oddly enough, does not contain the phrase "separation of powers," although it is clearly a separation of powers holding. Also, the rest of the Civil Justice Reform act remains untouched by the decision.

The text of the statute is after the jump.

• Email This
• Print
• Comments
• Trackbacks

The Arkansas Court of Appeals affirmed judgment entered on an oral contract in Hodges v. John F. Jenkins Contracting, Inc., No. 06-591 (3/7/07).

The parties negotiated for Jenkins to remove 80,000 cubic yards of dirt from Hodges' land and Hodges to pay $2 per cubic yard. A written contract was never created. Jenkins claimed the parties had an oral contract; Hodges claimed the parties had never reached an agreement. The jury agreed with Jenkins, and the court entered judgment on the verdict.

Hodges appealed claiming the contract fell under the statute of frauds as either a contract for the sale of land or the sale of goods in excess of $500. The court disagreed, holding that the contract was one for services, and the statute of frauds did not apply. The court noted that, if the contract had been Jenkins paying Hodges to acquire the dirt, it would have been a contract for goods in excess of $500.

• Email This
• Print
• Comments
• Trackbacks

The District Court of Minnesota granted summary judgment on a counterclaim for copyright infringement in Piper Jaffray & Co. v. SunGard Systems Int'l, Inc., 2007 WL 541679 (D. Minn. 2/16/07).

SunGard, a global software developer, entered  into a software license with Piper for use of SunGard's Global Trader software. The agreement was amended to include additional software products. The contract included two standard limited liability clauses: (1) Neither party shall be liable for incidental, indirect, consequential, or punitive damages; and (2) Any tort liability is limited to the license fees paid by Piper.

SunGard terminated the contract citing failure by Piper to pay fees, and Piper filed this lawsuit claiming breach of contract. SunGard counterclaimed for copyright infringement for Piper's continued use of software products after the contract was terminated. SunGard sought Piper's profits.

The court agreed with Piper that the copyright infringement claim arose of the contract. The court found that Piper's profits were not direct damages to SunGard, and applying the limited liability provisions of the contract, the court held Piper could not be liable for copyright infringement. Parties have extensive freedom to structure intellectual property rights via contract and can sometimes contract themselves out of an intellectual property claim.

• Email This
• Print
• Comments
• Trackbacks

The Arkansas Supreme Court affirmed a judgment enforcing restrictive covenants in Cochran v. Bentley, No. 06-743 (3/1/07).

On December 16, 1940, a restrictive covenant was recorded for the subdivision Denison Heights, where the parties live. That covenant provided that no structure shall be erected on a lot other than a detached single family dwelling. Although the restrictive covenant was recorded, it was not contained in the Cochrans' deed when they purchased the property. In 2003, the Cochrans built a 30-foot tall "shop building." 

The court held that the restrictive covenant was not ambiguous and there had not been a change in conditions sufficient to warrant invalidation. Most of all, the court rejected the Cochrans' defenses of waiver and estoppel because the Cochrans testified they still would have built the shop even if they had known about the restrictive covenant.

• Email This
• Print
• Comments
• Trackbacks

The Arkansas Supreme Court affirmed judgment for two timber companies in Fordyce Bank & Trust Co. v. Bean Timberland, Inc., Case No. 06-734 (3/1/07).

Fordyce Bank provided several loans to Bean Timberland to purchase timber. Bean Timberland gave Fordyce Bank a security interest in the timber as well as proceeds, and the bank made the appropriate filings with the Secretary of State. However, Bean sold Timber to Potlatch Corp. and Idaho Timber Corp. without remitting the funds to Fordyce Bank.

Fordyce Bank brought suit against all 3 parties. At the bench trial, Potlatch and Idaho presented extensive evidence that they purchased the timber in the usual manner for the industry. The court agreed and held they were buyers in the ordinary course of business and took the timber free of Fordyce Bank's security interest. See § 4-9-320(a).  On appeal, Fordyce Bank argued that the cut wood was not inventory and not subject to the buyer in the ordinary course exception.

The court disagreed, finding that cut timber is inventory by process of elimination.  The parties agreed that timber, once cut, becomes a good. See Comment to A.C.A. §  4-9-501. The court concluded that, because cut timber does not fit into any of the other categories of goods in A.C.A. §  4-9-102, then cut timber must be inventory. The court affirmed the judgment and held the buyer in the ordinary course rule applies to cut timber.

• Email This
• Print
• Comments
• Trackbacks

The Western District of Arkansas denied a temporary restraining order based on false advertising and trademark infringement in Trott's WoodProducts, Inc. v. American Cabinet Doors & More, Inc., 2007 WL 625920 (W.D. Ark. 2/27/07).

Trott's took pictures of its cabinets to use in promotional materials. American Cabinet acquired these pictures from one of Trott's former employees and used the photographs in their own sales brochures. Trott's claimed false advertising and trademark infringement but failed to assert a claim for copyright infringement.

The court found no false advertising claim because there was no evidence consumers were deceived by the photographs. In fact, only a trained professional can distinguish the cabinets of one company from another. The court also found the cabinets themselves were generic and could not qualify for trademark protection. The court easily denied the TRO.

Trott's had the right idea but brought the wrong claims. The photographs are copyrightable, and Trott's likely would have been successful had it registered copyrights and asserted copyright infringement.

• Email This
• Print
• Comments
• Trackbacks