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

Several record companies filed a lawsuit in the Eastern District of Arkansas against unnamed defendants. Arista Records, LLC v. Does 1 - 10, No. 07-0782 (filed 8/28/07). The complaint alleges copyright infringement by various defendants identified only by their computer ISP numbers. According to the complaint, the defendants used an online media distribution system to copy and distribute songs. The lead plaintiff is Arista Records, and the lawsuit largely mirrors a string of default judgments for identical claims in Missouri (most recent post here 4/23/07).

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The Eighth Circuit reversed summary judgment on a unique insurance coverage question in Farm Bureau Mut. Ins. Co. v. Wilcox, No. 06-3982 (8/28/07).

Wilcox owned a rental property insured by Farm Bureau for fire and other perils. The tenants moved out in June 2004. In November 2004, Wilcox discovered a running faucet which caused extensive damage, and he submitted a claim. Farm Bureau filed this action seeking a declaration that coverage did not apply.

In Minnesota, fire insurance policies must provide a statutory minimum coverage. The insurer is not liable if the premises were vacant for 60 days or more. See Minn. Stat. § 65A.01, subd. 3. Insurers are able to provide more coverage if they want. Id. The Farm Bureau policy at issue had two provisions affecting vacancy. One provided that coverage was excluded for vandalism or malicious mischief if the premises were vacant for 30 days or more ("Vandalism Provision"). The other provided that, unless limited elsewhere in the policy, no coverage would apply to premises that were vacant for 180 days or more ("Vacancy Provision").

Wilcox only raised the Vandalism Provision to the district court; he did not find the Vacancy Provision. The district court held that the 60-day vacancy provision of the Minnesota statute applied and granted summary judgment to Farm Bureau. In an uncharacteristic move, Wilcox prevailed by raising a new argument on appeal.  

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The Eighth Circuit reversed the district court's sentencing of Tom Coughlin in U.S. v. Coughlin, No. 06-3294 (8/28/07). The details of the scandal were previously posted on April 12, 2007. The district court imposed a sentence of no imprisonment and 5 years' probation, of which 27 months is home detention. The government filed this appeal.

Coughlin is an obese man and suffers from a number of illnesses related to his obesity, including diabetes. Dr. Joel Carver testified at the sentencing hearing that Coughlin should not go to prison for medical reasons. A summary of the testimony is available here by the Northwest Arkansas Times.  However, Dr. Carver admitted he never visited a prison, has no idea how prisons operate, and has no knowledge of prison conditions.

The Eighth Circuit was not impressed with Dr. Carver's testimony and found that Coughlin does not suffer an extraordinary physical ailment. The Eighth Circuit also reversed the district court for only considering mitigating factors involving Coughlin's family ties and charitable donations. On remand, the district court must consider the seriousness of the offense, adequate deterrence, and other factors evaluating the nature of Coughlin's crimes.

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The Eastern District of Missouri denied a motion to transfer in Meridian Enterprises Corp. v. Bank of America Corp., JNR, Inc., 2007 WL 2363518 (E.D. Mo. 8/16/07).

Meridian Enterprises owns a patent for an incentive program through use of credit. Meridian filed suit against Bank of America (BOA) for patent infringement. While BOA is a Nevada corporation with primary offices in California, Meridian claims BOA offered infringing incentive programs to Missouri residents. BOA filed a motion to dismiss for lack of jurisdiction and motion to transfer.

The court denied the motion, mainly because BOA operates a highly interactive website promoting its services. This website is marketed to and accessed by Missouri residents. The court concluded that both jurisdiction and venue are proper in Missouri.

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The Eighth Circuit affirmed a preliminary injunction in Doe v. South Iron R-1 Sch. Dist., 2007 WL 2363216 (8th Cir. 8/21/07).

The South Iron R-1 School District permitted Gideons International to distribute bibles to fifth graders. The Gideons distributed these bibles on school grounds during the school day. Parents of fifth graders filed this lawsuit alleging violation of the Establishment Clause. The district court agreed a granted a preliminary injunction to prevent further distribution of the bibles.

The school district then adopted a content-neutral policy for distribution of materials to students. This policy would allow the Gideons to distribute bibles and allow other groups to distribute materials. The Eighth Circuit affirmed the injunction as to the old policy, but declined to make a decision as to the constitutionality of the new policy.

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The lawsuit involving Mitch Mustain (previously posted here on 4/26/07 and here 6/05/07) has come to an end at the trial court level. Judge Lindsay dismissed the remainder of the lawsuit and, according to the Northwest Arkansas Times, stated "Quite frankly, this is none of this court's business." In addition to the dismissal, Judge Lindsay ordered the plaintiff to pay the University of Arkansas attorney's fees of $1,000.

The case is still not over. The plaintiff announced his intention to appeal the ruling.

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In a bizarre history of events, the Eastern District of Missouri denied a motion for leave to file an answer and counterclaim in Maritz Inc. v. C/Base, Inc., 2007 WL 2302511 (E.D. Mo. 8/7/07).

Maritz originally filed the patent infringement lawsuit on May 10, 2006. Swift failed to timely answer and then received an extension until July 10, 2006. Swift missed this deadline but filed a motion to dismiss on August 7, 2006. The motion was denied, and Swift's answer was due February 20, 2007. Swift missed this deadline and filed a motion for leave to file an answer on May 25, 2007.

The only excuse Swift offered for missing the deadlines was that it was engaged in settlement negotiations. The court was not pleased, stating: "based on counsel's representations, Swift's failure to timely file was based on a willful violation of the Court's rules." The motion was denied, and a default judgment will soon be entered.  

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The District Court of Minnesota granted a preliminary injunction in MSP Corp. v. Westech Instruments, Inc., 2007 WL 2253473 (D. Minn. 8/6/07).

MSP is a particle technology company that makes devices for various industries. In the pharmaceutical industry, an impactor is a device to measure and test medical inhalers. A consortium of 15 pharmaceutical companies (the "Consortium") hired MSP to design a new impactor. MSP created the next generation impactor. This impactor has a specific blue color and puzzle design, but MSP did not register the trademarks or trade dress. 

Westech Instruments began marketing its own impactor that it called "next generation." This impactor was also blue. Moreover, Westech made statements on its website that its impactor was sponsored by the Consortium. MSP brought suit for trademark infringement, false advertising, and trade dress infringement.

The court agreed with MSP on the trademark infringement and false advertising claims. However, the court found that MSP was unlikely to succeed on its trade dress claims. The court granted the preliminary injunction as to the trademark and false  advertising claims, requiring a $100,000 bond.

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The District Court of Minnesota granted a preliminary injunction based on patent infringement in Quantronix, Inc. v. Data Trak Technologies, Inc., 2007 WL 2249133 (D. Minn. 8/1/07).

Quantronix holds 3 patents for technologies to measure and weigh packages. In the industry, this is referred to as "dimensioning." These technologies help companies quickly and accurately measure the size and weight of packages.  Data Trak is a competing firm that sells a dimensioning device which Quantronix claims incorporates its patented technologies. The district court agreed and granted the preliminary injunction but did require a bond.

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The District Court of Minnesota denied a motion to dismiss in MTS Systems Corp. v. Hysitron Inc., 2007 WL 2159490 (D. Minn. 7/25/07).

MTS filed a patent infringement lawsuit against Hysitron. The court issued a pretrial order requiring claim charts Hysitron argued that MTS's claim charts were deficient and moved for dismissal. The motion was based on Rule 11 and the lesser-used  Rule 37(b)(2)(C), which provides for dismissal if a party intentionally disobeys a court order to provide or permit discovery. The basis under both rules was that MTS violated the court order by providing deficient claim charts.

The court observed that Rule 37(b)(2)(C) dismissal is only appropriate for serious discovery abuses such as lying and destroying evidence. The court also noted that Hysitron failed to provide its own claim chart, which was also a violation of the order. The motion to dismiss was denied.

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The Eastern District of Missouri denied a motion for temporary restraining order based on a noncompete agreement in Tank Tech, Inc. v. Neal, 2007 WL 2137817 (E.D. Mo. 7/23/07).

Tank Tech repairs storage tanks used in the petroleum industry. Neal was a foreman that signed a noncompete agreement. Shortly before joining a competitor, Neal emailed company information to his personal email account. Tank Tech filed this suit for breach of the noncompete agreement.

The court denied the TRO because Tank Tech failed to establish the elements of trade secrets under Missouri law. Even if Tank Tech had overcome this hurdle, the noncompete agreement is subject to a reasonableness challenge: the agreement applies for 5 years and covers the entire continental United States.   

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The District Court of Minnesota denied a motion to transfer or dismiss in Travel Tags, Inc. v. Performance Printing Corp., 2007 WL 2122662 (D. Minn. 7/19/07).

Travel Tags owns a patent for a process for making lenticular cards. On July 11, 2006, Travel Tags filed a patent infringement lawsuit against Performance Printing, a Texas company. Travel Tags did not serve the lawsuit, and the parties entered into licensing negotiations with. On November 1, 2006, Travel Tags served the lawsuit, but Performance Printing also filed a declaratory action in Texas.

Performance Printing moved to dismiss for lack of jurisdiction or to transfer the case to Texas. The court denied the motion but Performance Printing can raise the jurisdiction issue again after completing discovery.

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The defendants have filed a significant counterclaim in the Arkansas trade secret case Illumination Station v. Cook (previously posted here on 4/13/07 and here on 6/15/07).

The defendants filed an answer and counterclaim which raises no less than 40 affirmative defenses and numerous causes of action. The counterclaim makes three general allegations:   (1) plaintiffs forged an employment contract which plaintiffs used to defeat defendants' motion to dismiss. Defendants maintain they were never employees of plaintiffs; (2) plaintiffs failed to pay defendants for sales made while defendants were associated with plaintiffs; and (3) plaintiffs wrongfully induced defendants to sever their relationship with plaintiffs.

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The District Court of Minnesota granted in part and denied in part a preliminary injunction in Novus Franchising, Inc. v. Oksendahl , 2007 WL 2084143 (D. Minn. 7/17/07).

Novus specializes in auto glass repair and has over 250 franchisees, including Oksendahl. The franchise contract prohibits franchisees from competing with Novus for 2 years after the expiration of the contract. It also prohibits use of Novus trademarks after expiration. When Oksendahl's franchise expired, he continued to operate a competing business.

The court granted a partial injunction against Oksendahl prohibiting him from using Novus trademarks. However, the court determined that Novus failed to show irreparable harm on the noncompete claim. Oksendahl can operate the competing business while the case proceeds.

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