Former Chairman's Stock Transfers to Wife Are Set Aside as Fraudulent

The Arkansas Court of Appeals affirmed the setting aside of a fraudulent stock transfer in Laird v. Weigh Systems South II, Inc., No. 06-890 (4/25/07).

 

In April 2004, Weigh Systems won a large monetary judgment against James Laird, its former chairman. In late 2002 and early 2003, Laird transferred stock to his wife Donna. Weigh Systems filed suit claiming this transfer was made with intent to defraud creditors. See A.C.A. § 4-59-204(a)(1). The jury agreed and entered a verdict for Weigh Systems.

 

The Court of Appeals affirmed, finding there was substantial evidence for the jury to reach its decision. The court also noted that transfers to close family members of debtors are heavily scrutinized.

Neighbors Take Property by Adverse Possession

The Arkansas Court of Appeals affirmed a finding of adverse possession in Boyd v. Roberts, No. 06-1050 (4/25/07). This boundary dispute had already incurred one appeal. See Roberts v. Boyd, 94 Ark.App. 345 (2006).

 

The Boyds purchased their property in 1981; it had a fence that separated property to the east, which the Roberts purchased in 1990. In 2002 the Boyds surveyed their property and found their boundary extended up to 96 feet inside the Roberts side of the fence. The Boyds sold the property to Winningham in 2004, who began tearing down the fence until he was enjoined by the trial court. After the Roberts v. Boyd decision, the trial court held the Roberts had adversely possessed the disputed property.

 

The Court of Appeals based its decision on the fact that the Roberts tended to the disputed tract of land. They spread fertilizer and planted grass as an exhibit of ownership. The court agreed that the Roberts satisfied all elements of adverse possession and affirmed the trial court's ruling.  

Tags:

Arkansas Supreme Court Dismisses Appeal for Lack of Jurisdiction, Clerk's Failure to Disseminate Trial Court's Ruling Does Not Excuse Parties' Lack of Diligence

In a cautionary tale about keeping track of the status of a case that is under consideration by the trial court, the Arkansas Supreme Court dismissed Sloan v. Arkansas Rural Medical Practice Loan and Scholarship Board for lack of appellate jurisdiction.

This appellate practice decision arose out of a contractual dispute between the Board, which provides scholarships to doctors who agree to practice in rural counties after graduation, and two of the Board's scholarship recipients. The scholarship recipients lost before the Board and in front of University of Arkansas President Alan Sugg; they then appealed to Pulaski County Circuit Court, where Circuit Judge Marion Humphrey ruled.

On June 23, 2006, the trial court issued an order holding, in effect, for the Scholarship Board.

On July 24, 2006, of course, the 30-day period of Rule 4(a) of the Arkansas Rules of Civil Appellate Procedure--Civil passed. Without a timely notice of appeal there is no appellate jurisdiction and no appeal.

On September 21, 2006, however, the Sloans filed a motion to extend their time to file the appeal, which the court granted; the notice of appeal followed on September 29, 2006. The Arkansas Supreme Court found that the motion was erroneous and the notice late, and dismissed.

The Sloans attempted to avoid their appellate fate by arguing that they didn't know about the June order because the clerk failed to disseminate it. The Court gave short shrift to this argument:

[The] Sloans filed a motion requesting that the circuit court extend the time for filing the notice of appeal because the clerk’s office had “failed to disseminate the order” to the Sloans. This bare allegation is the only evidence in the record used to assert grounds for an extension under Rule 4(b)(3). This conclusion and self-serving allegation falls far short of establishing the diligence required of the Sloans and their attorneys so they may acquire any help or benefit from Rule 4(b)(3).

There are two other interesting appellate practice points in this opinion:

  • The Sloans filed an affidavit in the Supreme Court detailing their diligence in checking the circuit court's docket, but the Court held that  the affidavit was outside the record. The Court also pointedly asked: "Even if this court could consider these affidavits, it raises the question of why, if the two affiants were closely monitoring the progress of this case and its appeal, did the Sloans fail to discover when it was filed and wait almost three months to request an extension for their appeal?"
  • The Sloans had filed a motion to dismiss the appeal; it is unclear whether the motion was intended to avoid a dismissal by published opinion or to gain an opportunity to save the appeal below. In any event, the Court denied the motion, reasoning that it could not dismiss an appeal that it had never acquired appellate jurisdiction of in the first place.

Arkansas Supreme Court Holds Federal Arbitration Act Requires Proof of Actual Receipt in Credit Card Agreement Amendment-by-Mail Case

Interpreting the Federal Arbitration Act, the Arkansas Supreme Court reversed and remanded the confirmation of an arbitration award in Betsy R. Danner v. MBNA America Bank, N.A., No. 06-1429. The case calls into question the practice of amending credit card agreements (and by extension, many types of consumer contracts such as insurance policies) by mail.

The holding suggests that summary  confirmation of arbitration awards based on such amendments-by-mail is never appropriate when the consumer claims not to have received the amendment, or not to have agreed to the amendment.

Under Section 12 of the FAA, a party to an arbitration award has ninety days to challenge the validity of an award. Under Section 9 of the FAA the winner of arbitration can apply for an order confirming the judgment.

The plaintiff, Danner, held an MBNA credit card. After she agreed to the original card agreement, MBNA claims to have mailed an amendment to the agreement containing an arbitration clause, mandating that disputes regarding payments be decided by the National Arbitration Forum.

After Danner defaulted on her credit card payments, MBNA submitted a claim to the NAF. The arbitrator found for MBNA and issued an award on August 31, 2005. MBNA filed for confirmation of the award on December 13, 2005. Danner then contested the award, claiming not to have ever received or agreed to the arbitration clause:

Danner contends that she was not required to file a petition to set aside the arbitration award within three months of the filing or delivery of the award because she disputes entering into an arbitration agreement, she did not participate in the arbitration, and MBNA failed to provide proof that she had actually received notice of the award.


(emphasis supplied).

The Arkansas Supreme Court, following a First Circuit case, held that a material issue of fact existed as to whether there was a valid arbitration agreement between the parties, and reversed and remanded for such a determination.

Special Masters Jesson and Newburns' Latest Report in Lake View Released

Special Masters (and former Arkansas Supreme Court Justices) Bradley D. Jesson and David Newbern, appointed as special masters in the ongoing Lake View School District No. 25 v. Huckabee school-funding litigation (selective index here), have released their latest report, filed after this year's legislative session. The report is here.

United States Supreme Court Reviews Eighth Circuit's Ruling on the Federal Officer Removal Opinion

The United States Supreme Court heard oral argument (transcript here) yesterday in Watson v. Philip Morris Companies, Inc., No. 05-1284. From the invaluable SCOTUSblog, the argument preview is here and the blog coverage roundup is here. This is a case about federal removal jurisdiction; a good description of the case and question presented is from this Washington Post article (which is quoted in a post at the Mass Tort Blog):

The cigarette case, Watson v. Philip Morris (05-1284), comes from Arkansas, where consumers alleged that the company had violated the state's deceptive-advertising law with claims about its "light" cigarettes. Similar class-action lawsuits have been filed around the country.

But Phillip Morris, whose parent company is now known as Altria Group Inc., was successful in having the case transferred to federal courts, saying that its advertising is regulated by the Federal Trade Commission, and that made it a "person acting under" a federal officer.

The Bush administration said it disagreed with the U.S. Court of Appeals for the 8th Circuit ruling upholding the lower court's decision. Nevertheless, Solicitor General Paul D. Clement had recommended the Supreme Court not take the case, saying it did not warrant the court's review.

Those who sued said the move to federal court denies the right of states to be the primary forum for adjudicating state laws.

The Eighth Circuit opinion affirms the unpublished opinion of United States District Judge G. Thomas Eisele for the Eastern District of Arkansas . The case originated in Pulaski County Circuit Court, Sixth Division (Pulaski County Circuit Judge Tim Fox, presiding).

Local coverage seems somewhat limited: Channel 7.

Lawsuit Involving Mitch Mustain Email Bringing a Lot of Attention to Arkansas

John David Terry filed suit against the University of Arkansas primarily based upon events regarding Mitch Mustain and the Teresa Prewett email. The lawsuit has already received plenty of press from national and local media, including Sports Illustrated, the Arkansas Democrat Gazette, and the Times Record

 

The entire lawsuit is available here in pdf format.

Tags:

Missouri Trade Secret Case Headed for Trial

The Eastern District of Missouri held that numerous issues of fact exist in the trade secret misappropriation case Insituform Technologies, Inc. v. Reynolds, Inc., 2007 WL 1198889 (E.D. Mo. 4/19/07).

 

The dispute began when Robert Vance left Insituform to join Reynolds, Inc. Insituform filed suit against Vance and Reynolds for trade secret misappropriation and related torts. Both parties moved for summary judgment. The court sharply criticized these motions given the numerous factual disputes and denied both motions. 

United States District Judge George Howard, Jr. Passes Away

Arkansas lost one of its greatest citizens, and the Arkansas legal community one of its most honorable members, with the passing of United States District Judge George Howard, Jr. on Saturday, May 21, 2007.

Judge Howard's passing has been covered, among other places, in the Los Angeles Times, the Long Beach Press-Telegram, Fox 13 News in Memphis, as well as in the Arkansas Business News, Springdale Morning News, Today's THV, and KATV-7.

Lawmakers quickly introduced a bill to rename the federal building and United States Courthouse in Pine Bluff in honor of Judge Howard.

Pulaski County Circuit Judge Marion Humprhey Upholds Check-Cashing Fine

Pulaski County Circuit Judge Marion Humphrey has upheld the Arkansas State Board of Collection Agencies' decision to fine a Fordyce resident $1.3 million for operating a string of unlicensed check cashing stores. Baxter Bulletin story here.

Arkansas Abstracting Rule Considered by Eighth Circuit

The Eighth Circuit considered Arkansas's unique practice of abstracting the record on appeal today, holding that "[t]he Arkansas abstracting rule is a procedural bar to federal habeas review." Clay v. Norris, No. 06-1157.

No Personal Jurisdiction in Patent Case, but Court Grants Discovery Period

The Eastern District of Missouri granted a 30-day discovery period in Golden Trade, S.R.L. v. EV. R, Inc., 2007 WL 1125699 (E.D. Mo. 4/16/07).

 

Golden Trade filed a patent infringement action against EV. R, who promptly moved to dismiss for lack of personal jurisdiction. The court agreed with EV. R, finding that the Complaint failed to establish jurisdiction. Golden Trade could not establish that EV. R distribute any infringing items to Missouri, and EV.R only has minimal contacts with Missouri.  

 

Rather than grant the motion to dismiss, the court granted Golden Trade a thirty-day discovery period on the issue of jurisdiction. The court denied the motion to dismiss without prejudice for refiling after the jurisdictional discovery period.

Tags:

Preliminary Injunction Denied in Restaurant Trademark Dispute

The Eastern District of Missouri denied a preliminary injunction based on breach of contract and trademark infringement in Noodles Development, L.P. v. Ninth Street Partners, LLP, 2007 WL 1115216 (E.D. Mo. 4/13/07).

 

Noodles Development (N.D.) is the franchisor of the Nothing but Noodles restaurant chains. Defendants are franchisees. When their contracts expired, they continued running noodle-themed restaurants called Ninth Street Noodles. They later changed the restaurants to Ninth Street Cafe and quit using a noodle theme.

 

After a strange preliminary injunction hearing that began November 17, 2006 but did not end until January 8, 2007, the court denied the preliminary injunction. The court found N.D. could not show irreparable harm because the defendants had returned all N.D.'s operating manuals and quit operating noodle-themed restaurants. However, the court noted that the merits of the case appear to strongly favor N.D.

Capitol Records Gets Copyright Default Judgment

The string of copyright default judgments in Missouri for the use of an online media distribution system (previously posted 3/29/07) continued in Capitol Records v. Crego, 2007 WL 1125698 (E.D. Mo. 4/16/07). This time the plaintiff was Capitol Records, obtaining a judgment of $3,750 for infringement of 5 songs.

Tags:

Attorney-Client Privilege Applies (For Now) in Patent Dispute

The attorney-client privilege was asserted in a peculiar way in a patent infringement lawsuit. Isensee v. Ho Sports Co., Inc., 2007 WL 1118274 (D. Minn. 4/13/07).

 

Isensee sued HO Sports for patent infringement and moved to compel production of various documents. The products complained of were sold by H.O. Sports. In a clever transaction, HO Sports acquired the assets off H.O. Sports, but did not purchase the business. However, HO still claimed attorney-client privilege for various documents created by H.O. Sports.

 

HO has taken inconsistent positions in this action, which the court expressly noted. To avoid liability, HO claims it was not the successor of H.O. but just purchased assets. To claim attorney-client privilege, HO claims it is the successor of H.O.

 

The magistrate judge granted the motion to compel without addressing the merits of the privilege arguments. His decision was that the sale of assets cannot convey the privilege. The district court showed disapproval with HO Sports but reassigned the matter to the magistrate judge to consider the merits of the privilege arguments.

Tags:

Bayer Must Pay $8.5 Million in Attorney's Fees and Costs for Patent Misconduct

The Eastern District of Missouri awarded attorney's fees and costs of $8.5 million in a patent infringement suit. Monsanto Co. v. Bayer Cropscience, N.V., 2007 WL 1098504 (E.D. Mo. 4/12/07).

 

Monsanto filed a declaratory action against Bayer, claiming its products did not infringe Bayer's patents. As the litigation progressed, it was revealed that Bayer had concealed information from the USPTO in procuring the patents. The court held a 3-day inequitable conduct hearing, describing Bayer's conduct as: 

[t]he orchestration of deceit, of purposeful misrepresentation of material fact, of intentional nondisclosure of material information, and submission of false material information, with intent to deceive and mislead the United Sates Patent Office Examiner.

 

The found this was an exceptional case where attorney's fees could be awarded under the Patent Act. See 35 U.S.C. § 285. The court awarded $8.5 million in attorney's fees and costs, which was just below the $9 million that Monsanto requested.

Tags:

Protective Order Denied in Arkansas Trademark Case

The Western District of Arkansas denied a protective order in Rotoworks Intern. Ltd. v. Grass USA, LLC, 2007 WL 1106108 (W.D. Ark. 4/11/07) (previously posted 3/5/07).

 

Rotoworks subpoenaed telephone records from Defendants. Defendants moved for a protective order asking that the records be restricted to plaintiff's counsel's use only and that plaintiff's counsel be prohibited from contacting customers. Defendants claimed the phone records are trade secrets.

 

In a brief order, Judge Hendren found that Defendants failed to present any evidence that the telephone records were trade secrets and denied the requested protective order.

Trademark Settlement Enforced Without a Signed Contract

The Eastern District of Missouri enforced a settlement agreement in Enterprise Rent-a-Car Co. v. U-Haul Int'l, Inc., 2007 WL 1063528 (E.D. Mo. 4/9/07).

 

Enterprise brought suit against U-Haul for trademark infringement. The parties agreed to a settlement and notified the court. However, they could never agree on the final terms. The lawyers exchanged numerous drafts, but the parties never executed a signed version. Enterprise then moved for the court to enforce the unsigned settlement agreement.

 

U-Haul's main argument was that its lawyers did not have the authority to agree to terms of the settlement. The court rejected this argument because the record was clear their lawyers had the authority. Judging from the various correspondences regarding the settlement, the court found that the parties mutually accepted the terms of the unsigned agreement and granted Enterprise's motion to enforce the agreement.

Tags:

Preliminary Injunction Granted for Eccentric Copyright Author

The Eastern District of Missouri granted a preliminary injunction based on copyright infringement in Icke v. Adams, 2007 WL 1063426 (E.D. Mo. 4/5/07).

 

David Icke is a British author obsessed with the Illuminati and an interdimensional race that secretly rules the world. Royal Adams approached Icke to provide printing services for Icke's books in the United States. Adams never acquired exclusive publishing rights or any rights to Icke's copyrights in the books. However, Adams set up a large distribution system of Icke's books without Icke's permission.

 

The court granted an extensive preliminary injunction. The court ordered Adams to immediately turn over all his profits from the venture and to provide Icke with access to all documents and electronic media relating to the infringement.

Bikini Calendars Engage in Trademark Dispute

Bennett Productions filed a lawsuit claiming trademark infringement and trade dress infringement against a local photographer (Case No. 07-6020, filed 4/5/07). Bennett Productions markets Bikini Destinations, a popular line of videos, television shows and calendars.

 

Erick David Blair, a successful photographer in Heber Springs, Arkansas, markets his own bikini calendar. The Complaint alleges that Mr. Blair's calendar infringes Bennett's Bikini Destination trademarks.

Tags:

And Another Claim for Copyright Infringement of an Architectural Work

The Sater Group filed a lawsuit in the Western District of Arkansas (Case No. 07-5054, filed 3/23/07) claiming a single count for copyright infringement. The Complaint alleges that Lester Hall Builders of Little Rock infringed the Sater Group's copyright in a home design.   

Tags:

Company Accuses Former Employees of Copyright Infringement, Trade Secret Misappropriation, and Other Torts

Illumination Station and Berman Industries filed a lawsuit against two former employees in the Western District of Arkansas (Case No. 07-3007, filed 2/28/07). The Complaint alleges claims for copyright infringement, trade secret misappropriation, and related torts.

 

Berman provides copyrighted lamp designs to Illumination Station ("IS"). The Complaint alleges that the former IS employees copied these designs and took IS trade secrets to open a new company, Grandview Gallery. The defendants have not yet filed an Answer.

Architectural Firm Claims Copyright Infringement of House Design

Scholz Design filed a copyright infringement action in the Eastern District of Arkansas (Case No. 07-00111, filed 2/23/07). The Complaint states that Scholz owns the copyright to an architectural design called the Masco Design. The Complaint alleges that two homeowners infringed the copyright by building a house using the design. Scholz anticipates adding the architect who designed the home as a defendant once the architect is identified.  

Tags:

Arkansas to Host Dispute Over Moon Pie Trademark

Chattanooga Bakery, Inc., owner of the famed "Moon Pie" trademark has filed a trademark infringement lawsuit in the Eastern District of Arkansas (Case No. 07-00061, filed 1/25/07). 

 

The defendant is the Moon Pie Cafe in Bryant, Arkansas, which has received warm reviews in local newspapers. The Complaint seeks a preliminary injunction, but no such motion accompanied the Complaint.

Tags:

Arkansas Company Files Preemptive Patent Lawsuit

enVision Marketing Group, an Arkansas corporation, filed a preemptive patent infringement lawsuit against the Swiss power giant Habasit AG in the Eastern District of Arkansas (Case No. 07-0048, filed 1/22/07).

 

According to the Complaint, Habasit accused enVision of infringing Habasit's patent for a conveyor belt. The Complaints seeks a declaration that enVision is not infringing the patent and that various claims within the patent are invalid. enVision has requested a jury trial.

Tags:

University of Arkansas Files Trademark Infringement Action

The University of Arkansas filed a trademark infringement action in the Western District of Arkansas against two Florida corporations, Concordia Investment Partners and Armadillo Distribution (Case No. 07-05021, filed 2/5/07). According to the Complaint, the defendants infringed University of Arkansas trademarks by selling guitars with several variations of the word "Razorback."

 

Defendants filed an Answer claiming that the guitars were made in tribute to Dimebag Darrell Abbott, who was known for wearing a razorblade on stage (like these). Defendants counterclaimed against the University of Arkansas for trademark infringement, claiming they have priority to the word "Razorback" for guitars.

 

The case is currently scheduled for a bench trial in Fayetteville before Judge Hendren on January 28, 2008.

Tags:

Arbitration Agreement Enforced Pursuant to Federal Arbitration Act

The Arkansas Supreme Court affirmed a confirmation of arbitration award in The Ruth R. Remmel Revocable Trust v. Regions Financial Corp., No. 06-616 (4/12/07).

 

In 2001, the Remmels family sold Rebsamen Insurance to Regions Bank. The contract contained an arbitration provision. In 2003, the Remmels brought suit against Regions and two officers of Rebsamen for conspiring to sell Rebsamen below market value. The claim alleged numerous torts and statutory violations. Under the Arkansas Arbitration Act, these claims would not be arbitrable. See A.C.A. § 16-108-201(b)(2).

 

The trial court determined that because the contract involved interstate commerce, the Federal Arbitration Act applied, which made all claims arbitrable. See 9 U.S.C. § 2. The trial court compelled arbitration, which was conducted by the American Arbitration Association. The arbitrator ruled in favor of Regions, and the trial court dismissed the Remmels' complaint on grounds of claim and issue preclusion.

 

The Supreme Court affirmed on two grounds. First, the arbitration provision covered the Remmels' claims, which showed the parties intended to arbitrate any such disputes. Second, the Remmels failed to object to the scope of the arbitration, which waived any objection they may have  had.

Not So Fast--Supreme Court Clarifies Fiduciary Duty in Wal-Mart Case

The Arkansas Supreme Court reversed a 12(b)(6) dismissal in Wal-Mart Stores, Inc. v. Coughlin, No. 06-315 (4/12/07).

 

Wal-Mart's dispute with Tom Coughlin is well-chronicled by Arkansas Business. Coughlin misappropriated hundreds of thousands of dollars from Wal-Mart. Without disclosing these misappropriations, he entered into a Retirement Agreement with Wal-Mart. Under the agreement, the parties released each other from all claims that existed or that may exist. Wal-Mart sued to void the agreement and to claim fraudulent inducement, but the trial court granted Coughlin's motion to dismiss.

 

The Supreme Court reversed, holding that Wal-Mart properly stated a claim. The court cited a number of state and federal cases stating that a fiduciary owes a duty of full disclosure when entering into a mutual release with the corporation. The court made it clear that this decision did not create new law:

 

We emphasize, however, that this duty of a fiduciary to disclose is embraced within the obligation of a fiduciary to act towards his corporation in good faith, which has long been the law in Arkansas. Stated differently, we are not adopting a new principle of fiduciary law by our holding today but simply giving voice to an obvious element of the fiduciary's duty of good faith.

Court of Appeals Decides Issue of First Impression for Homeowner's Insurance

The Court of Appeals held that babysitting can qualify as a business pursuit in Zulpo v. Farm Bureau Mut. Ins. Co. of Arkansas, Inc., No. 06-787.

 

Ms. Zulpo babysitted 1-year old Jeron McGrew in her home for $100 per week. One day, she left the child in care of Mr. Zulpo. Jeron died, and the lawsuit that followed presented an issue of first impression in Arkansas:

Whether providing full-time child-care services for compensation in one's home, on a regular basis, comes within a "business-pursuits" exclusion in a homeowner's insurance policy.

 

The Court of Appeals agreed that it does and affirmed the grant of summary judgment to Farm Bureau. After noting the split in authority among jurisdictions, the court based its decision that Ms. Zulpo was engaged in a business pursuit on the facts that she offers child care services in her home 5 days per week and routinely advertises her child care services.

Tags:

Sua Sponte Grant of Summary Judgment to Defendant Reversed, Even Though Plaintiff Moved for Summary Judgment

The Court of Appeals reversed a sua sponte grant of summary judgment in 2200 Commercial Street Warehousing, LLC v. Hastings Development Co., Inc., No. 06-312 (4/11/07).

 

This case involved a dispute over whether an easement was conveyed with the sale of property. 2200 Commercial claimed there was an easement and moved for summary judgment. Hastings resisted the motion but did not cross move for summary judgment. The trial court sua sponte granted summary to Hastings.

 

The Court of Appeals reversed, finding that 2200 Commercial was not on notice that it needed to meet proof with proof in response to a motion for summary judgment. The fact that 2200 Commercial itself moved for summary judgment on the same issue was not enough notice for Hastings. The court noted that, if another defendant had moved for summary judgment, the sua sponte summary judgment to Hastings would have been appropriate.

Preliminary Injunction Denied in Patent/False Advertising Case

The Northern District of Iowa denied a preliminary injunction in Ideal Instruments, Inc. v. Rivard Instruments, Inc. 2007 WL 915174 (N.D. Iowa 3/28/07).

 

The case began as a patent infringement suit when Ideal sued Rivard, claiming infringement of its patent for a detectable heavy duty needle. In the livestock industry, a "detectable" needles prevent broken needles that are occasionally left in livestock from making their way through the food processing system.

 

In an interesting defense, Rivard filed a counterclaim for false advertising, claiming that Ideal's needles are not detectable as advertised, and sought a preliminary injunction. This claim was based on an admission by Ideal that some of its needles were made with a non-detectable alloy. Ideal had corrected the problem, and there was no evidence that a needle had found its way into a consumer's food. The court found Rivard failed to establish likelihood of success or irreparable harm and denied the preliminary injunction.

Patent Insurance Coverage--Get Ready for More Like This

The District Court of Minnesota settle a patent insurance coverage dispute in Carlson Marketing Group, Inc. v. Royal Indemnity Co., 2007 WL 951683 (D. Minn. 3/28/07).

 

From 1997 - 2003, Carlson purchased several layers of insurance coverage from Royal Indemnity (now purchased by Arrowhead) and National Union. Each policy had its own limitations and exclusions. In 2002, Carlson was sued by Maritz  and Meridian Enterprises for patent infringement. Both insurers denied coverage, and Carlton ultimately settled both suits. Carlton then filed the present suit against both insurers.

 

All three parties filed motions for partial summary judgment, which were all granted in part and denied in part. Carlson was largely successful from this result, although National Union successfully argued that $5 million of the $16 million Meridian settlement was covered by its policy.

 

This case presents a new trend in intellectual property litigation. As more companies procure insurance for patents, trademarks, and copyrights, more insurance coverage disputes will arise. Cases like this one could become the norm rather than the exception. It is also important to note that no less than 16 lawyers are listed in the case syllabus.

More Summary Judgment Issues Decided in Rubber Mulch Case

Some additional summary judgment issues were decided in Green Edge Enterprises, LLC v. Rubber Mulch Etc., LLC (previously posted 2/18/07) in a pair of orders. See 2007 WL 957343 (E.D. Mo. 3/28/07) and 2007 WL 957349 (E.D. Mo. 3/28/07).

 

Green Edge claimed it was entitled to summary judgment on Rubber Mulch's breach of contract counterclaim because Rubber Mulch had not disclosed damages. The court denied this motion because both parties have caused delays in the litigation, which has now been ongoing for 5 years.

 

Meanwhile, Rubber Mulch had asserted counterclaims against International Mulch (IM). Rubber Mulch sought a declaration that it was not infringing IM's Rubberific Mulch trademark, or alternatively, that the mark was invalid. IM successfully argued that Rubber Mulch failed to establish a course of conduct that brought it into conflict with IM, which is one of the factors to establish a case or controversy to make a declaratory action available.  The court granted summary judgment to IM.  

Trade Secrets: Wal-Mart Granted Gag Order Against Former Employee

In a nationally-watched case involving trade secrets, Wal-Mart obtained a temporary restraining order against former Wal-Mart engineer Bruce Gabbard. The trade secrets at issue are those surrounding Wal-Mart's "Project Red" security system. Coverage by ArkansasBusiness.com, SmartMoney.com, ArkansasOnline.com.

An Order Denying Intervention By Right But Granting Permissive Intervention Is Not An Appealable Order

"In this case, for the first time, we are faced with the question of whether a trial court order granting permissive intervention, but denying intervention as a matter of right, is immediately appealable. It is not." Duffield v. Benton County Stone Co., No. 06-1329.

The Court acknowledged that an interlocutory appeal normally lies against an order denying intervention as of right under Rule 2(a)(2) of the Appellate Rules of Appellate Procedure--Civil. This is because such is an order determines the outcome of the action as to the party attempting to intervene. In Duffield, however, the Court held that when the intervening party is granted permissive intervention in the same breath as it is denied intervention by right, the party's arguments as to intervention by right can be addressed on direct appeal after the outcome in the trial court.

Since the order was not appealable, the Court held it lacked appellate jurisdiction and dismissed. An interesting note on this case is that the parties did not recognize the jurisdictional problem, which the Court raised sua sponte.

More on the Court's analysis after the jump.

Continue Reading...

Preliminary Injunction Granted in Arkansas Trademark Case

Another preliminary injunction was granted in an Arkansas trademark case. Tempur-Pedic Int'l, Inc. v. Waste to Charity, Inc., 2007 WL 951879 (W.D. Ark. 3/28/07).

 

Tempur-Pedic is a well-known manufacturer of mattresses, pillows and cushions. In 2005, Tempur-Pedic sought to make a donation to victims of Hurricane Katrina. It donated $15 million of merchandise to Waste to Charity (WTC) to distribute to the victims. Rather than give the merchandise to the victims, WTC sold them for a profit.

 

Tempur-Pedic styled its claim as one for breach of contract and fraud rather than trademark infringement. The court still had no trouble in granting the preliminary injunction, but it did require Tempur-Pedic to post a $500,000 bond.

Merger Causes Problems for Trademark Contracts

Summary judgment was granted in part and denied in part in Northern PCS Services, LLC v. Sprint Nextel Corp., 2007 WL 951546 (D. Minn. 3/27/07).

 

In 1994, several Sprint-related entities formed a joint venture called Sprint PCS to develop a national wireless telecommunications network. Sprint contracted urban service areas to affiliates, including Northern PCS. Sprint entered into management contracts that stated that no entity of Sprint will compete with the affiliates in their respective service areas during the term of the contracts. The agreements also gave the affiliates licenses to use Sprint's trademarks.

 

In 2005, Sprint merged with Nextel, who already had a national network. The newly-formed Sprint Nextel sold Nextel wireless products under the Sprint trademarks, but they never restructured the affiliates' contracts. Various affiliates sued, and Northern PCS brought this action in Minnesota.

 

The court granted in part and denied in part Sprint Nextel's motion for summary judgment. The primary claim is breach of the management contract, and the court denied summary judgment on this claim. This case is a good example that an intellectual property audit is highly beneficial when firms seek to merge.

Tags:

Former Employer Fails to State Claim Under Computer Fraud and Abuse Act

The District Court of Minnesota granted a motion to dismiss for failure to state a claim under the Computer Fraud and Abuse Act (CFAA) in Cenveo Corp. v. CelumSolutions Software GMBH & Co., 2007 WL 951550 (D. Minn. 3/27/07).

 

Wilker was an employee at Cenveo for 10 years, then left to join CelumSolutions (CS). Cenveo filed suit claiming that Wilker gave CS access to Cenveo's computer systems in violation of the CFAA. The complaint included 10 other counts, including trade secret misappropriation.

 

The court granted the motion to dismiss on the CFAA claim because Cenveo only pled that Wilker wrongfully and intentionally accessed its computer system. However, Cenveo failed to plead damages as required by the CFAA, and the CFAA claim was dismissed with prejudice.

Preliminary Injunction Denied for Copying Database Entries

The District Court of Minnesota denied a preliminary injunction based on copyright infringement in Windgate Software, LLC v. Minnesota Computers, Inc., 2007 WL 951668 (D. Minn. 3/27/07).

 

Windgate manages a database called RISC Analysis that manages thousands of replacement parts for various IBM products. Windgate obtained a copyright for the database. Minnesota Computers buys and sells IBM parts. Minnesota copied some of the part numbers and descriptions from Windgate's database and posted them on the Minnesota Computers site.

 

The court denied the preliminary injunction on two main grounds. First, MC did not copy any copyrightable elements of the database, so Windgate could not establish likelihood of success. Second, Windgate only presented evidence of commercial harm; it could not establish the requisite irreparable harm.

Underinsured Motorist Statute Only Applies to Insureds

The Arkansas Court of Appeals affirmed summary judgment based on A.C.A. § 23-89-209(a) in Nash v. American Nat. Prop. & Cas. Co., No. 06-611 (4/4/07).

 

Nash was a passenger in a car insured by American National. He was injured in an accident, and American National paid Nash $50,000 under liability coverage. The policy contained a clause that allowed American National to reduce the amount of underinsured coverage by the amount of liability coverage payments.

 

The underinsured coverage clause only provided $50,000 of coverage. Applying the reduction clause, American National claimed it owed nothing else to Nash. Nash argued that A.C.A. § 23-89-209(a) prevented this type of reduction clause. The trial court disagreed and granted summary judgment to American National.

 

In affirming, the court noted that this statute is a procedure for insureds--defined in the statute as the person purchasing the insurance-- to accept or decline underinsured coverage. The statute does not apply to passengers; to do so would grant a benefit to the passenger, who was not a party to the insurance transaction.

Tags:

You Can't Protect an Idea

The Eastern District of Missouri granted summary judgment on claims for copyright infringement and patent infringement in Clark v. Crues, 2007 WL 906702 (3/23/07).

 

Clark was a ninth grade teacher in St. Louis. He created a program called the Out of Area Program, which provided disciplinary procedures for students who were found outside of designated areas. He gave the program to some teachers who made use of