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

Employees accessed computer files of their employer, and they later set up their own competing firm. This was the situation in Ervin & Smith Advertising v. BTM, Inc., 2009 U.S. Dist. LEXIS 8096 (Feb. 3, 2009) and Lasco Foods, Inc. v. Hall and Shaw Sales, 2009 U.S. Dist. LEXIS 4241 (E.D. Mo. Jan. 22, 2009). Both former employers brought claims under the Computer Fraud and Abuse Act, and the former employees moved to dismiss.

 

In Ervin, the court recognized that employees exceed their authorization when they access files for personal gain and denied the motion to dismiss. However, in Lasco, the former employer failed to allege that the former employees exceeded their authorized access. The court granted the motion to dismiss.

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Two employees accessed computer files of their employer, and they later set up their own competing firm. This was the situation in Lasco Foods, Inc. v. Hall and Shaw Sales, 2009 U.S. Dist. LEXIS 4241 (E.D. Mo. Jan. 22, 2009).

 

The former employer brought a number of claims, including violations of the Stored Wire and Electronic Communications Act, as well as the Computer Fraud and Abuse Act. The gist of the argument was that the defendants exceeded their authorized access to Lasco's computer system. However, Lasco failed to allege that the former employees exceeded their authorized access. The court dismissed both claims.

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A couple of interesting issues with trademark and copyright management are going on with Apple's OS X operating system. InformationWeek reports that Psystar has moved to dismiss Apple's copyright infringement claim based on the system, arguing that Apple failed to register a copyright for OS X .

 

Meanwhile, on the trademark front, Apple has filed a trademark application for OS X without the Mac prefix. Apparently the move is part of a promotional campaign to focus on Apple's technology products other than computers.

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An interesting issue about music distribution over P2P networks is working its way to the Eighth Circuit. See Capitol Records, Inc. v. Thomas, 2008 U.S. Dist. LEXIS 106225 (D. Minn. Dec. 23, 2008).

 

This case appeared to be a routine copyright infringement case. Plaintiffs sued defendant for downloading and distributing 24 songs over Kazaa.  The jury awarded statutory damages of $9,250 per song. A year later, the court vacated the verdict because the jury instruction said actual dissemination is not required. Although some courts support this view, the Eighth Circuit requires actual dissemination for violation of the distribution right, 17 U.S.C. § 106(3).

 

Plaintiffs requested certification for an interlocutory appeal, but the court denied the request. The court ordered a new trial and also hinted it considers the damage award in the first trial to be unconstitutional. The case involves 5 amicus parties, and the United States has intervened. Expect this one to go to the Eighth Circuit later this year.

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An odd dispute over a school newspaper name occurred in St. Louis Univ. v. Meyer, 2008 U.S. Dist. LEXIS 104032 (E.D. Mo. Dec. 24, 2008).

 

The school newspaper at St. Louis University is "The University News." In 2007, circumstances arose where the paper may have to break away from the university. In anticipation of this event, a professor registered a corporation. The corporate name consisted of "The University News" along with the paper's slogan, A Student Voice Serving St. Louis University Since 1921." The corporation never printed or sold anything, and the professor dissolved it when the university decided to retain the paper. The university still sued him for trademark infringement and other claims.

 

The district court granted summary judgment, finding the professor's use did not amount to trademark use that can be remedied through the Lanham Act. One count still remains--a claim based on a state statute that creates a cause of action for misuse of a benevolent society name. However, the university is only pursuing injunctive relief under this claim, which would now appear to be a moot request.

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A unique procedural twist was highlighted in TMT Mftg., Inc. v. Illowa Resource Develop, Inc., 2008 U.S. Dist. LEXIS 94060 (S.D. Iowa 11/14/08).TMT filed suit for, among other things, patent infringement and copyright infringement. TMT did not have a patent or a copyright registration, and Illowa moved to dismiss these claims. The district court granted dismissal as to the patent claim but not to the copyright claim.

 

The Eighth Circuit has adopted the rule that a copyright owner can seek injunctive relief without first registering the copyright. See Olan Mills v. Linn Photo Co., 23 F.3d 1345 (8th Cir. 1994). Because TMT's prayer only requested injunctive relief for the copyright infringement claim, the court denied the motion to dismiss as to this claim.

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An Arkansas trademark infringement complaint was recently filed. Bad Boy Bad Boy, Inc. v. Bad Boy Enterprises, LLC, No. 08-050 (E.D. Ark., filed 9/12/08). Bad Boy Inc. sells lawnmowers, while  Bad Boy Enterprises sells all terrain vehicles that are primarily used for hunting and related outdoor travel. According to the Complaint, both companies own federal trademark registrations for variations of "Bad Boy," and Plaintiff's last application was denied based on confusion with Defendant's registrations. The Complaint seeks damages, an injunction, and cancellation of Defendant's marks.

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The Eastern District of Arkansas denied a motion to dismiss or transfer in Agri-Process Innovations, Inc. v. Greenline Industries, LLC, 2008 WL 4126909 (E.D. Ark. 9/4/08).

 

Agri-Process Innovations (API) designs and sells biodiesel plants. They worked on several projects with Greenline Industries, but after a falling out, API filed a lawsuit in Arkansas state court. Greenline responded by filing suit in California for trade secret misappropriation, false advertising, and declaration to establish copyright ownership.

 

The California court deferred to the Eastern District of Arkansas to determine which court is the appropriate form. Judge Miller found no red flags to depart from the first-filed rule, and the dispute will proceed in Arkansas.

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It's deja vu all over again in the Eighth Circuit to determine what intellectual property rights professional sports players have in their statistics. This time, CBS has filed a declaratory judgment against the NFL Players Association. See CBS Interactive Inc., v. National Football League Players Association (D. Minn., filed 9/3/08).

 

CBS Interactive is a leader in fantasy sports. In the past, CBS Interactive paid the NFLPA licensing fees to use in NFL statistics in its fantasy games. Last year the Eighth Circuit determined that any right of publicity in statistics is trumped by First Amendment concerns. See C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P. (previously posted 10/16/07). The NFLPA is no stranger to the CBC case; they participated as an amicus in the Eighth Circuit and on the unsuccessful petition for writ of certiorari to the Supreme Court. And since Minnesota is in the Eighth Circuit, CBC will be controlling law.

 

According to the Complaint, the NFLPA demands licensing fees for use of NFL statistics. Moreover, it has stated that any party who challenges the NFLPA's claimed rights to the statistics will be excluded from the fantasy football market. The Complaint seeks a declaration that any right of publicity is superseded by the First Amendment and preempted by the Copyright Act. For good measure, the Complaint also asserts a a claim for monopolization and attempted monopolization in violation of 15 U.S.C. § 2.

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The District Court of Minnesota has determined that keyword advertising is "use in commerce" for purposes of trademark infringement. Hysitron Inc. v. MTS Systems Corp., 2008 WL 3161969 (D. Minn. 8/1/08).

 

MTS purchased the term "hysitron" to generate a sponsored link through Google, and Hysitron filed suit. The Eighth Circuit has not determined if sponsored link advertising constitutes "use in commerce." The court sided with the majority of courts and found that sponsored link advertising is "use in commerce."   

 

Of course, the use in commerce issue is pedagogical unless the plaintiff can show likelihood of confusion. Here, the court agreed with Hysitron that additional discovery is needed to determine likelihood of confusion.

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Defendant's motion to dismiss was denied in Ellis v. Black, 2008 WL 3539524 (W.D. Ark. 8/11/08)(previously posted 6/2/08).This is a copyright infringement case based on plaintiff's Relocation Guide Mountain Home, Arkansas. Black moved to dismiss claiming the work lacked the requisite originality for copyright protection. The court easily rejected this argument, citing well established authority that compilations of facts can receive copyright protection.

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The District Court of Minnesota granted summary judgment based on laces in Roederer v. J. Garcia Carrion, S.A., 2008 WL 2901609 (D. Minn. 7/23/08).

 

Roederer, which produces the famous Cristal champagne, filed suit for trademark infringement and dilution based on the defendants' selling Cristalino wine. Cristalino had been sold in the U.S. since 1993. The document records of an unrelated USPTO proceeding showed that Roederer's attorneys obtained an affidavit in 1995 that alerted them to the sale of Cristalino. 

 

Roederer did not file this suit until 2002, providing no rational basis for the delay. The court found the delay was inexcusable and would the defendants would incur prejudice if the suit proceeded. The court granted summary judgment to the defendants.

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On several occasions, we have posted about Rotoworks Int'l Ltd. v. Grassworks USA, LLC (most recently posted here 11/21/07). The case has concluded in a very favorable judgment for Rotoworks.The jury awarded a total of $578,545.66 for trademark infringement. The court then found this was an exceptional case and awarded attorney's fees of $191,699.30. (See judgment here). Finding the case exceptional was not particularly difficult, given the court had to impose sanctions pursuant to Rule 11 (See order granting sanctions here).  

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Microsoft has filed a lawsuit alleging trademark infringement and copyright infringement. See Microsoft Corp. v. Delta Computer Experts, LLC, No. 08-0168 (E.D. Ark., filed 6/9/08). According to the complaint, defendants distributed unauthorized copies of Microsoft software like Word and Power Point. Microsoft is seeking an extensive array of damages.

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We previously posted (10/16/07) the Eighth Circuit's decision in C.B.C Distribution and Marketing, Inc. v. MLB Advanced Media, L.P., holding that use of baseball players' names and statistics in fantasy games did not violate the players' rights of publicity. Yesterday the U.S. Supreme Court denied certiorari to review the case. This decision will remain the controlling law in the Eighth Circuit, and it will be interesting to see how other circuits treat this issue.

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A copyright infringement lawsuit has been filed over a relocation guide. Ellis v. Black, No. 08-3025 (W.D. Ark., filed 5/30/08). According to the complaint, Ellis owns the copyright to Relocation Guide Mountain Home, Arkansas. Ellis temporarily gave Black permission to use the guide, but Black has continued to use the guide. The complaint was not accompanied with a motion for preliminary injunction.

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The District Court of Minnesota denied a preliminary injunction based on trade secret misappropriation and false advertising in Benefit Resource, Inc. v. Apprize Technology Solutions, Inc., 2008 WL 2080977 (D. Minn. 5/15/08).

 

BRI owns a software product called UBenefit. In 2005, BRI hired Apprize to market UBenefit. In 2007, Apprize developed a competing software called E.A.S.E. and hired away one of BRI's key employees. Apprize then terminated its relationship with BRI and sent an email to UBenefit users that UBenefit will begin reporting information to a Minnesota HMO. BRI then filed this lawsuit.

 

The court denied the preliminary injunction, focusing on BRI's failure to show likelihood of success. The crux of its trade secret claim was an inference that trade secrets had been misappropriated. The court did not find evidence to justify this inference. As to the false advertising claim, there was no evidence that future communications would be disseminated to UBenefit users.

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The Western District of Arkansas dismissed a trademark case for lack of jurisdiction in Flexible Staffing Services, Inc. v. Integro Employment Services, Inc., 2008 WL 1928827 (W.D. Ark. 4/29/08) (previously posted 1/23/08). Integro filed an Arkansas state trademark case against one of FSS's affiliates in Northwest Arkansas. The district court held the federal action was really a response to the state action raising a federal defense. The court held it had no jurisdiction over the dispute and dismissed the federal action.

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The Arkansas Court of Appeals affirmed a preliminary injunction in Freeman v. Brown Hiller, Inc., No. 07-717 (4/2/08).

 

Freeman was an insurance agent for BHC. She signed a limited noncompete agreement that prohibited her from soliciting BHC customers for a period of 2 years after her employment ended. The contract also had a provision prohibiting disclosure of trade secrets. The agreement did not contain a geographic limitation. Freeman resigned and immediately went to work for a competitor. Before resigning she accessed, copied and deleted 300 of BHC's computer files.

 

The trial court granted the preliminary injunction for breach of the noncompete agreement but not for trade secret misappropriation. On appeal, Freeman argued the agreement was really an unenforceable covenant not to compete masquerading as a nondisclosure agreement. The court of appeals rejected this argument and affirmed the preliminary injunction.

 

Although Freeman copied an deleted 300 computer files, BHC did not bring a claim for Computer Trespass or Computer Fraud, which is the focus of this recent Arkansas Lawyer article-- Beyond Trade Secrets: Protecting Business Information in Arkansas.

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Candy Bouquet has filed a trademark infringement action against one of its former franchisees. Candy Bouquet International, Inc. v. McClendon, No. 08-340 (E.D. Ark., filed 4/ 17/08). According to the complaint, McClendon owned three Candy Boutique franchises. After violating the terms of her franchise agreements, Candy Bouquet terminated the agreements. The complaint alleges McClendon is still using Candy Bouquet's trademarks and trade secrets, although the complaint has no count for trade secret misappropriation.

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LaserAim has filed a declaratory judgment action in LaserAim Tools, Inc. v. SDA Manufacturing, LLC, No. 08-329 (E.D. Ark., filed 4/9/08). The complaint alleges that LaserAim had developed products that SDA should have disclosed in its application. The lawsuit seeks a declaration that SDA's patent is invalid.

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Vestcom has filed a declaratory judgment of no patent infringement in Vestcom International, Inc. v. Information Planning and Management Service, Inc., No. 08-276 (E.D. Ark., filed 4/2/08). Vestcom provides shelf strips to Sears. According to the complaint, IPMS told Sears it holds a patent on the strips. Vestcom alleges that IPMS's patent is invalid and that its strips do not infringe the patent.

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The Eastern District of Missouri granted a temporary restraining order based on trademark infringement in Sensient Technologies Corp. v. SensoryFlavors, Inc., 2008 WL 762092 (E.D. Mo. 3/21/08).

 

Sensient Technologies is the corporate umbrella that used to be Universal Foods Corporation. One of Sensient's companies is Sensient Flavors. SensoryFlavors is a competitor that was formed by Charles Nicolais, the former head of Sensient Colors, Inc., which is another of Sensient's subsidiaries.  Defendants argued they came up with the name SensoryFlavors without copying Sensient Flavors.

 

The court easily granted the TRO and only required a $25,000 bond. This case is a good reminder that trademark infringement turns on likelihood of confusion; it does not matter how the infringing mark was created.

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The district court of South Dakota denied a preliminary injunction in Universal Underwriters Ins. Co. v. Schmidt, 2008 WL 631197 (D.S.D. 3/6/08).

 

Schmidt was an employee of Universal selling property, casualty and life insurance products to automobile dealers. He signed a noncompete agreement that prohibited him from selling these products for 2 years after his employment. During his employment with Universal, Schmidt began selling finance products to automobile dealers. He quit his job with Universal and opened his own business selling these other finance products.

 

The court construed the noncompete agreement narrowly, finding that Schmidt's actions were not prohibited by the contract. The court indicated Universal might incur some harm because of Schmidt's business but concluded any such harm would not be irreparable. After 3 months of discovery and briefing, the court denied the preliminary injunction.

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The Western District of Missouri dismissed a declaratory action claiming no trademark infringement in Sustainable Community Development, LLC v. EMRO USA, Inc., 2008 WL 495603 (W.D. Mo. 2/20/08).

 

The parties have an interesting history. SCD filed suit in 2005, which the parties eventually settled. In August 2007, EMRO sent a cease and desist letter alleging trademark violations. Instead of responding, SCD filed this action in Missouri. One day after receiving service, EMRO filed suit in Texas and moved to dismiss this case. The court held that this lawsuit was a preemptive strike suit for declaratory relief. See Northwest Airlines, Inc. v. American Airlines, Inc., 989 F.2d 1002 (8th Cir. 1993). The court dismissed this case, and the parties' dispute will proceed in the Texas lawsuit.  

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A pro se plaintiff obtained judgment for copyright infringement and anticircumvention violations in Gregerson v. Vilana Financial, Inc., 2008 WL 451060 (D. Minn. 2/15/08) (previously posted here 9/12/07 and here 1/31/07).

 

Vilana copied two of Gregerson's photographs, and the court had previously granted him summary judgment as to copyright infringement liability. After a bench trial, the court awarded him damages of  $9,462 on the copyright infringement claims. The more important issue was anticircumvention. Vilana removed a digital watermark from one of the photographs. The court held this was an anticircumvention violation, see 17 U.S.C. § 1202(b)(1), and awarded Gregerson statutory damages of $10,000. In reaching this conclusion, the court based its analysis on IG Group, Ltd. v. Wiesner Publishing, LLC, 409 F.Supp.2d 587 (D.N.J. 2006).

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eBay filed a patent infringement lawsuit in the Western District of Arkansas. eBay, Inc. v. IDT Corp., No. 08-4015 (filed 2/20/08). According to the Complaint, eBay holds the patent for a long distance telephone communication system. The Complaint alleges IDT is infringing this patent, particularly through its PennyTalk calling cards.

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The Southern District of Iowa entered judgment after jury trial in a trade secret misappropriation case. C Plus Northwest, Inc. v. DeGroot, 2008 WL 391271 (S.D. Iowa 2/14/08).

 

The facts of the case are not particularly exceptional. Mr. Sjogren owned C Plus; defendants were key employees. Defendants than formed a new company, diverted C Plus customers to their new company, and left C Plus with substantial liabilities. The jury awarded Sjogren and C Plus total damages of $1.295 million to C Plus and Sjogren. The court remitted the award to $752,000 to C Plus and denied individual damages to Sjogren. 

 

The exceptional aspect of this case was the court's  praise of the attorneys' professionalism: "The parties were represented well at trial, and the hard work and professionalism exhibited by counsel for both sides was apparent to the Court, as well as to the jurors." Id. at * 1.

 

 

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The Eastern District of Arkansas denied cross motions for summary judgment in Otto Dental Supply, Inc. v. Kerr Corp., 2008 WL 410630 (E.D. Ark. 2/13/08).

 

For 25 years, Otto Dental was an authorized dealer of Kerr, using Kerr's trademarks to market and sell its goods. In 2004, Kerr imposed a purchasing requirement on its dealers. When Otto could not meet the requirement, Kerr terminated the relationship. Otto argues the parties formed a franchise under the Arkansas Franchise Practices Act, and Kerr violated the act. See A.C.A. § 4-72-201, et seq. Kerr argues the parties did not create a franchise.

 

Both parties moved for summary judgment, but the court determined that the jury must decide whether the parties created a franchise.

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The long-standing trade secret dispute between R.K. Enterprises and Pro-Comp Management (previously posted 1/10/07) has finally come to an end on the third appeal. True to form, it took two published opinions to end the case. See Pro-Comp Management, Inc. v. R.K. Enterprises, LLC, No. 07-648 (1/24/08) and R.K. Enterprises, LLC v. Pro-Comp Management, Inc., No. 07-741 (1/24/08).

 

Recap of the first two appeals

In 2004, the trial court let R.K. Enterprises choose if it wanted judgment on the conversion claim or trade secrets claim. They chose conversion, and the court awarded damages of $262,303. The supreme court reversed and said the Arkansas Trade Secrets Act (ATSA) is the exclusive remedy. On remand, the trial court ruled the damages were too speculative for the ATSA. The supreme court again reversed and said the trial court may consider the general law of unjust enrichment in awarding damages under the ATSA.

 

Trial court proceedings the third time around

With the case back for a third determination of damages, the trial court awarded damages of . . . wait for it . . . $262, 303. The trial court did not grant attorney's fees or prejudgment interest. Both parties appealed again.

 

And on appeal a final time

The supreme court affirmed the judgment in all respects. The amount of unjust enrichment was not definite so as to qualify for prejudgment interest, and R.K. Enterprises had already failed to obtain a ruling on its motion for attorney's fees prior to the second appeal. After 4 years of postjudgment litigation and 4 published opinions, the parties find themselves right where they started in 2004.

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Late last year, the Eighth Circuit ruled that use of professional sports statistics in fantasy games is protected by the First Amendment. See C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P., 505 F.3d 818 (8th Cir. 2007) (previously posted 10/16/07). The ramifications from this opinion are now taking effect. The Sports Law Blog reports that ESPN is now seeking a major reduction in digital rights fees that it pays to MLB Advanced Media. As the deal currently stands, ESPN believes it is paying licensing fees for use of the statistics in fantasy games.

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A declaratory action alleging no trademark infringement was filed yesterday in the Western District of Arkansas. Flexible Staffing Services, Inc. v. Integro Employment Services, Inc., No. 08-5018 (W.D. Ark., filed 1/22/08).

 

Flexible Staffing Services (FSS) is a nationwide firm providing temporary staffing services. FSS operates in 10 states by setting up local affiliates that use variations of the FSS name. Integro offers a competing service in northwest Arkansas. Integro claimed trademark rights to "flexible staffing" and filed a state trademark infringement action against the FSS affiliate in northwest Arkansas (but did not sue FSS).

 

FSS filed this action to declare that the terms "flexible" and "staffing" are generic for the temporary staffing services industry. Because it is not a party to the state lawsuit, FSS claims the federal lawsuit is necessary to fully defend its rights.  

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The Eastern District of Arkansas dismissed a copyright infringement case based on sovereign immunity in InfoMath, Inc. v. University of Arkansas, 2007 WL 4562878 (E.D. Ark. 12/21/07).

 

In 2000, InfoMath contracted with the University of Arkansas at Little Rock to provide an internet based pre-calculus course. UALR dissolved the contract in 2001 but continued to use the course materials; InfoMath claims it owns the copyright in the course materials. The Arkansas Claims Commission ("ACC") awarded InfoMath $15,000 for the balance of the contract. Unhappy with the result, InfoMath brought this suit against the university and two individual employees.

 

InfoMath argued that the Copyright Remedy Clarification Act ("CRCA") abrogated Eleventh Amendment Immunity. This is a troublesome argument because the Supreme Court has already struck down as unconstitutional the CRCA's companion statutes, the Patent Remedy Act and Trademark Remedy Clarification Act. Numerous lower courts have already held the CRCA is unconstitutional. The district court sided with the great weight of authority and held that the CRCA is unconstitutional.

 

InfoMath's final argument was that the ACC's award was insufficient and violated the Fourteenth Amendment. The court disagreed and noted that, while InfoMath sought additional relief, the award was not so inadequate that it violated the Fourteenth Amendment.

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The District Court of Minnesota granted a preliminary injunction based on trademark infringement and trademark dilution in J&B Wholesale Distributing, Inc. v. Redux Beverages, LLC, 2007 WL 4563457 (D. Minn. 12/20/07).

 

J&B sells steaks and other meat products under the trademark No Name. It owns several trademark registrations for "No Name" and has sales over $26 million. Redux sold Cocaine energy drinks, but the FDA caused them to quit using the word "cocaine." Redux renamed its energy drinks No Name.  

 

Although the companies are not direct competitors, the court held the products are closely related enough to create confusion. The court found that J&B was likely to succeed on both claims and would suffer irreparable harm without the injunction. J&B was required to post a $50,000 bond.

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The District Court of Minnesota granted a preliminary injunction based on trademark infringement and false advertising in Fitger's On-The-Lake, LLC v. The Fitger Company, LLC, 2007 WL 4531502 (D. Minn. 12/19/07).

 

Fitger's has operated a brewery in Minnesota since the 1880's, and it holds a number of trademarks that have now become famous. The current location is a full resort spa complete with a hotel, restaurants and ample shopping. The defendant Douglas Donnelly claims he is related to August Fitger, the original brewmaster for Fitger's. Donnelly believes this entitles him to set up businesses using Fitger's trademarks and making false statements that his companies are the "official Fitger beer" operated "since 1881." He even filed fraudulent trademark applications with the USPTO.

 

Despite Donnelly's novel argument, ancestry cannot confer trademark rights. The court granted the preliminary injunction both on grounds of trademark infringement and false advertising.

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The District Court of Nebraska denied a motion to dismiss for lack of personal jurisdiction in Denenberg v. Djordjevic, 2007 WL 4525011 (D. Neb. 12/18/07).

 

Dr. Steven Denenberg is a plastic surgeon in Omaha, Nebraska. Like many in his profession, he posts before/after photographs on his website to promote his work. Denenberg obtained a copyright registration. Dr. Borko Djordjevic, a competing surgeon in California, copied  over 30 pairs of these photos and posted them on his websites as examples of his own work. Denenberg filed suit for copyright infringement, and Djordjevic moved to dismiss for lack of personal jurisdiction.

 

The court easily denied the motion to dismiss. Djordjevic used the photos to solicit clients in Nebraska. Moreover, he knew he had not performed the surgeries and publishing the photos on his website would cause harm to Denenberg in Nebraska.

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The Western District of Arkansas denied plaintiff's motion to dismiss the counterclaim in Lewis & Clark Outdoors, Inc. v. Mahco, Inc., 2007 WL 4510364 (W.D. Ark. 12/18/07) (previously posted 5/1/07).

 

Mahco has counterclaimed against Lewis & Clark Outfitters (LCO) for trademark infringement. Mahco has admitted it no longer uses the "Lewis & Clark" mark, and LCO moved to dismiss on grounds of abandonment. To abandon a trademark, the owner has to cease use and show an intent not to resume use. The court denied the motion because all that LCO established is that Mahco no longer uses the mark; no evidence has been submitted regarding Mahco's intent.

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A trademark infringement dispute involving university merchandise has taken an interesting turn. See Lloyd Sales Co., Inc. v. The Game, LLC, No. 07-1198 (E.D. Ark., filed 12/18/07). The Game sells merchandise of various universities by placing university logos on its own 3-bar logo. Lloyd Sales provides similar goods for the University of Arkansas and filed this suit to declare its use of a similar 3-bar pattern is not trademark infringement.

 

It is unclear what this lawsuit is meant to accomplish because The Game has already filed suit against Lloyd Sales in Georgia. See The Game, LLC v. Lloyd Sales Co., Inc., No. 07-2498 (N.D. Ga., filed 10/10/07). In that case, Lloyd Sales has filed a motion to dismiss for lack of jurisdiction, or alternatively, to transfer the case to Arkansas. The motion was submitted to United States District Court Judge Charles A. Pannell yesterday.

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The Western District of Missouri granted a preliminary injunction based on trademark infringement in Community of Christ Copyright Corp. v. Miller, 2007 WL 4333192 (W.D. Mo. 12/7/07).

 

Community of Christ holds federal trademark registrations for "RLDS" and "Reorganized Church of Jesus Christ of Latter Day Saints." Defendants' church is named South Restoration Branch, but they advertised themselves as members of RLDS. The court easily granted the preliminary injunction and rejected the defendants' fair use defense. Contrary to some public opinion, use of trademarks for worshiping God are not automatically fair use.

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The Eighth Circuit affirmed summary judgment, to both parties, in a unique case involving a noncompete agreement. See Guardian Fiberglass, Inc. v. Whit Davis Lumber Co., __F.3d__ (12/12/07). This is a long post because this brief opinion brings out some interesting points regarding noncompete agreements.  

The Parties and the Contract

Guardian Fiberglass holds a dominant market position in the insulation products market. Whit Davis Lumber is a lumber company in central Arkansas that sold insulation but never provided installation services to its customers. Guardian ran a program to assist companies like Whit Davis in providing installation services. The parties entered into a contract where Guardian shared information with Whit Davis, including a notebook containing extensive information about providing insulation services. Whit Davis agreed to purchase insulation exclusively from Guardian.

Additionally, the contract had a noncompete clause. If Whit Davis terminated the contract, it would not provide installation services for 2 years after termination. If Guardian terminated the contract, the noncompete provision would not apply. Note that the noncompete agreement only applied to installation services; it did not affect Whit Davis's other business operations.

The parties performed under the contract from 1998 - 2004, and Whit Davis purchased $2.2 million of insulation products from Guardian during this period. Then Whit Davis started purchasing insulation from other suppliers in breach of the contract. Guardian then terminated the contract and brought suit for breach of contract and breach of the noncompete agreement.

The District Court Opinion

The district court granted summary judgment to Whit Davis on the noncompete claim, holding that Guardian did not have a protectable interest to enforce the noncompete agreement. (Note: Michigan law applied, but its law of noncompete agreements is essentially the same as Arkansas) The district court also granted partial summary judgment to Guardian on the breach of contract claim.

The Eighth Circuit Decision

The Eighth Circuit affirmed. First, the court held the noncompete does nothing to protect Guardian's goodwill because Whit Davis never used the Guardian name to promote its installation services. Second, the information Guardian provided was not a trade secret. The court described the information as ordinary knowledge.

Continue Reading...

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The District Court of Minnesota transferred a copyright infringement case to the Northern District of Texas (Dallas division) in RMC Publications, Inc. v. Doulos PM Training, 2007 WL 4287670 (D. Minn. 12/4/07).

 

Gary Rechtfertig offers project management courses in Texas. He used exam-simulation software under a license from RMC Publications. However, he made illegal copies and violated the terms of the license, which amounts to copyright infringement. RMC filed this action in Minnesota.

 

Rechtfertig's only contacts with Minnesota were buying the software and negotiating with RMC's sales agents. The court held that Minnesota had neither personal jurisdiction over Rechtfertig nor was it the proper venue for the suit. The court transferred the case to the Northern District of Texas.

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The Arkansas Court of Appeals dismissed the appeal for failure to timely file the record in Murphy v. Michelle Smith Designs, No. 07-251 (12/5/07).

 

Murphy sold the assets of his embroidery business to Smith. He agreed to work for her as a manager and signed a noncompete agreement that he would not compete against her for 2 years after his employment ended. However, he opened a competing business immediately after his employment ended.

 

Smith obtained a preliminary injunction to prohibit Murphy from operating a competing business. After the trial was delayed, the trial court refused to dissolve the preliminary injunction on January 23, 2007. Murphy appealed that order and filed the record with the clerk on March 9, 2007. When a party appeals a refusal to modify a preliminary injunction in Arkansas, the record must be filed with the clerk within 30 days of the entry of the order. See Ark. R. App. P.--Civ. 5(a). In this case, Murphy had to file the record by February 22, 2007. The court dismissed the appeal for lack of jurisdiction.

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The Eastern District of Missouri permitted the subpoena of an internet service provider (ISP) in UMG Recordings, Inc. v. Does 1 - 24, 2007 WL 4205768 (E.D. Mo. 11/26/07).

 

UMG and other record companies brought this copyright infringement lawsuit against unknown infringers. Plaintiffs had the Internet Protocol (IP) addresses of the defendants. Charter Communications is the defendants' ISP, which maintains subscriber contact information in activity logs. These logs are kept for a short time and then permanently destroyed. The plaintiffs sought permission to subpoena Charter to match the IP addresses with the defendants' individual names.

 

The court granted the request, largely because the information is not available elsewhere, and the case cannot proceed without identifying the defendants.

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The Eastern District of Missouri denied summary judgment in St. Louis Cardinals, LLC v. Lewis, 2007 WL 4205798 (E.D. Mo. 11/26/07).

 

Douglas Lewis has attempted to obtain federal trademark registrations based on the St. Louis Cardinals' trademarks, such as this application for "Go Cards." He also obtained a number of state registrations. The Cardinals filed this action for trademark infringement, and  Lewis moved for summary judgment. In a one-page opinion, the court denied the motion without comment. It is likely the Cardinals will file their own motion for summary judgment before the trial.

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The District Court of North Dakota granted a temporary restraining order based on trade secret misappropriation in CDI Energy Services, Inc. v. West River Pumps, Inc., 2007 WL 4180581 (D.N.D. 11/20/07).

 

CDI Energy sells oilfield supplies and provides services to oil companies. The industry is specific an individualized, requiring detailed customer information. Three employees ran CDI's branch in Dickinson, North Dakota. On October 16, 2007, these employees resigned and opened West River Pumps, Inc. They took with them all CDI's customer information, and almost all CDI's customers transferred their business to West River.

 

The defendants chose October 16 because this was a time of year when CDI's customers had increased business. When the defendants resigned, CDI had no employees in Dickinson to meets its customers' needs. The customers had to transfer their business to West River to ensure their needs were met.

 

The court had no trouble issuing the temporary restraining order, finding CDI had established likelihood of success and irreparable harm on its trade secrets claim. CDI was not required to post a bond.

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The Eastern District of Missouri transferred a case involving trade secret misappropriation and breach of a Missouri noncompete agreement in Buckeye Int'l, Inc. v. Unisource Worldwide, Inc., 2007 WL 4178615 (E.D. Mo. 11/19/07).

 

The dispute centered around Craig Sasso. Sasso was a salesman and then manager for Buckeye International's facility in Georgia. He signed a noncompete agreement that was limited to his sales area. Unisource Worldwide hired Sasso, and he began selling products in Georgia. Buckeye filed this suit in Missouri. Unisource filed suit in Georgia and moved to transfer the Missouri case to Georgia.

 

The court transferred the case to Georgia because the witnesses and documents regarding this dispute are located in Georgia. Additionally, the dispute at issue is Sasso's contact of customers in Georgia. Although these are not the typical red flags stated by the Eighth Circuit, the court felt these were compelling circumstances to supersede the first-filed rule.

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The Western District of Arkansas dismissed some of the counts in the counterclaim in Cook v. Illumination Station, Inc., 2007 WL 4166215 (W.D. Ark. 11/20/07) (most recently posted 8/1/07).

 

Cook based her claim for fraud and deceptive trade practices on an employment contract which turned up during the litigation. Cook claimed her signature on this contract was forged. The court held the fraud claim must fail because Cook could not establish detrimental reliance if she did not know about the signature. The deceptive trade practices claim failed because that law protects consumers; it does not regulate the conduct of litigants.

 

Both sides have now dismissed some of the other side's claims. (Cook's dismissal of various claims previously posted 6/15/07)

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Nelson Design Group (NDG) filed an architectural design copyright infringement lawsuit in the Eastern District of Arkansas. Nelson Design Group, LLC v. Puckett, No. 07-177 (filed 11/21/07). Puckett is a former employee of NDG. According to the Complaint, Puckett copied NDG's designs and gave them to defendants. The defendants used these designs to build houses in Jonesboro, Arkansas. 

 

The Complaint alleges eight counts of copyright infringement and breach of Puckett's employment contract. The Complaint is accompanied by a motion for preliminary injunction but does not include a count for computer fraud.

 

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The Western District of Arkansas found the defendant in civil contempt for violating a court order in Rotoworks Int'l Ltd. v. Grassworks USA, LLC, 2007 WL 3444261 (W.D. Ark. 11/8/07). The most interesting part of the ruling came from the court's frustration with the attorneys, which was already evident in the last order (previously posted 9/12/07).

 

The final straw came when the parties sent letters to the court without first getting permission to do so.  Aside from suffering service defects, these letters were "presumptuous and inappropriate." The court stated:

This is not the first time that personal feuding between the attorneys has disrupted the orderly progress of this case and wasted judicial resources, and the Court will have no more of such conduct

The court then stated it may hold a hearing to examine the conduct of the attorneys and concluded with this directive:

It may be that, after such a hearing, it will be appropriate to refer the entire matter to the Arkansas Supreme Court on Professional Conduct for a review of the conduct of the attorneys throughout the case. In the meantime, the Court will insist that the attorneys focus their efforts and energies on the issues which affect their respective clients, and cease bickering among themselves.  

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The Eastern District of Arkansas imposed sanctions in Kashlan v. TCBY Systems, LLC, 2007 WL 3309123 (E.D. Ark 11/6/07).

 

Kashlan sued TCBY for breach of contract and trademark infringement. Kashlan refused to comply with discovery requests and provided inadequate information to others. The Court was clearly most disturbed by Kashlan's counsel refusing to communicate with TCBY's counsel regarding discovery issues:

The Court notes that the majority of these discovery issues could have and should have been resolved without court intervention if Kashlan's counsel had taken the time to communicate. That Plaintiff's counsel refused to engage in any discussions regarding discovery, thereby necessitating the filing of a motion, supports an award of sanctions.

The Court will award reasonable expenses, including attorney's fees. Kashlan's counsel will be responsible for paying the expenses.  

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A recent trademark infringement case featured the seldom-used counterclaim-in-reply. Feed Management Systems, Inc. v. Brill, 2007 WL 3156282 (D. Minn. 10/30/07).

 

Feed Management filed suit for breach of contract and related claims. With permission from the court, Brill filed a counterclaim for trademark infringement after the deadline to amend pleadings. Feed Management filed a counterclaim-in-reply for trademark infringement, which Brill moved to dismiss as not permitted under Fed. R. Civ. P. 7(a).

 

The court stated a counterclaim-in-reply is a proper pleading if it is a compulsory reply to the counterclaim. The court determined that Feed Management's counterclaim-in-reply for trademark infringement was a compulsory reply to Brill's counterclaim and permitted the pleading.

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Coulson Oil has filed a declaratory action of no trademark infringement in the Eastern District of Arkansas. See Coulson Oil Co., Inc. v. Deweese Enterprises, Inc., No. 07-1102 (filed 11/9/07).

 

According to the Complaint, Coulson Oil operates gas stations under the trademark "SuperStop" (picture below, obviously a few years old from the gas prices). Deweese obtained a federal trademark registration in 1982 for "Super Stop." The Complaint alleges that Coulson obtained trademark rights in Arkansas before Deweese obtained its registration.

 

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Lindsey Management filed a trademark infringement action in the Eastern District of Arkansas. See Lindsey Management Co., Inc. v. The Links at Northcreek, LLC, No. 07-1076 (filed 11/1/07).

 

The main defendant is Hayden Properties, LLC, an Oregon company. The Complaint states that Hayden owns The Links at Northcreek, LLC. The dispute arises over an apartment community in Mississippi called The Links at Northcreek. Lindsey Management owns a federal trademark for "The Links" as applied to residential real estate development services.  

 

Two issues look interesting from reading the Complaint. First, it is unclear how Arkansas has jurisdiction over these defendants. The Complaint just makes a conclusory allegation that defendants conduct business and commit trademark infringement in Arkansas. Second, the word "links" seems to be common for apartments. A quick Google search shows one here in Georgia and one here in North Carolina; neither of these are Lindsey properties.

 

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Several plaintiffs have filed a lawsuit for copyright infringement and Lanham Act claims against Thomas Simon. See Baca v. Simon, No. 07-4447 (E.D.N.Y., filed 10/24/07) (view full text of the complaint here).

 

What makes this case so remarkable is that everything occurred in Second Life. Simon copied various items that the plaintiffs create and sell in Second Life. The lawsuit has received nationwide attention (coverage at the Patry Copyright Blog and Second Life Blogger). This should be a straightforward copyright infringement case.  

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The District Court of Minnesota refused to dismiss part of an architectural design copyright infringement complaint in U.S. Home Construction v. R.A. Kot Homes, Inc., 2007 WL 3037321 (D. Minn. 10/16/07).

 

Plaintiff owns two copyright registrations for an architectural design called the Remington. Defendant built a home that allegedly copied this design. Plaintiff filed a copyright infringement suit and asked for reputational damages but did not include a Lanham Act claim for unfair competition.

 

Defendant moved to dismiss the part of the complaint seeking reputational damages. The court rejected this argument and cited several cases that have permitted copyright owners to recover reputational damages. The court's opinion suggests Plaintiff will have additional remedies if it files an under the Lanham Act.

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The Central District of California granted a preliminary injunction in Ticketmaster, LLC v. RMG Technologies, Inc., No. 07-2534 (10/16/07; full text of order here).

 

Ticketmaster sells tickets for entertainment and sports events to the public. Access to its website is governed by specific Terms of Use, which prohibit the use of automated software. Ticketmaster has had some negative press recently when its events sell out in a matter of minutes. Tickets to these events then appear on websites such as StubHub at prices significantly above their face value (or they are offered for free with a $500 coffee mug). The problem comes from software that permits its users to infiltrate the Ticketmaster system and purchase bulk quantities of tickets.  

 

RMG is one such software provider that designs a software specifically tailored to elude the policing controls in force by Ticketmaster. The software is run through RMG's computer system.  RMG's customers log in to RMG's system and then use the software to purchase bulk tickets. Ticketmaster filed suit primarily for copyright infringement, violation of the Digital Millennium Copyright Act, violation of the Computer Fraud and Abuse Act, and breach of contract.

 

The court anchored its decision on two main points: (1) Ticketmaster owns a copyright in its website; (2) visitors to the website are granted a nonexclusive license to use the website under the conditions set out in the Terms of Use. The court held that RMG itself violated the Terms of Use and caused its customers to violate the Terms of Use. As a result, Ticketmaster showed a likelihood of success on all its causes of action.

 

As to irreparable harm, Ticketmaster received some help from the Arkansas Attorney General. The court observed that public outcry over the unavailability of Hannah Montana tickets caused the Attorneys General of Arkansas and Missouri to initiate investigations. The court held that RMG was causing extensive damage to Ticketmaster's goodwill, which amounts to irreparable harm. Ticketmaster was required to post a $300,000 bond.   

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The Eighth Circuit issued its much anticipated opinion in a dispute regarding the use of professional baseball statistics in fantasy games. C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P., No. 06-3357/3358 (10/16/07). This was an important case, with amici briefs filed by the NFL, NBA, NHL, NASCAR, PGA and WNBA. The district court opinion was previously posted here (1/18/07).

 

CBC operates a fantasy baseball game using Major League Baseball players' names and statistics. In previous years, CBC licensed the names and statistics from the Major League Baseball Players Association. This dispute arose when MLBPA refused to renew the license but CBC continued to use the names and statistics in its games. The MLBPA brought claims under the Missouri right of publicity statute. The district court concluded that CBC did not violate the statute, that first amendment concerns trumped the statute, and that the statute was not preempted by the Copyright Act.

 

The Eighth Circuit affirmed on first amendment grounds. The right of publicity statute at issue only requires (1) the defendant use the plaintiff's name as a symbol of his identity (2) without consent (3) and with the intent to obtain a commercial advantage. The court held that CBC's use of the players' names and statistics satisfied these elements. However, state law rights of publicity must be balanced against first amendment considerations. Zacchini v. Scripps-Howard Broad., 433 U.S. 562 (1977).

 

Discussed more after the break, the court found that first amendment concerns trump the right of publicity statute. This determination made the preemption issue moot, and the court declined to address preemption.

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The Northern District of Iowa refused to compel production of customer names in J. Lloyd Int'l, Inc. v. Imperial Toy Corp., 2007 WL 2934903 (N.D. Iowa 10/5/07).

 

J. Lloyd filed a trademark infringement action against Imperial Toy. In discovery, J. Lloyd requested the names of Imperial Toy's manufacturers and customers. Imperial Toy objected, and J. Lloyd filed a motion to compel. The court denied the motion, noting that the names of the defendant's customers are rarely if ever revealed in litigation.

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The Eastern District of Arkansas declined to stay proceedings pending a reexamination by the USPTO in Monsanto v. Kyle, 2007 WL 2904143 (E.D. Ark. 10/3/07).

 

Monsanto's patent is being reexamined, and Kyle requested a stay of the court proceedings. The court easily declined this request. The case has been ongoing since November 2004, discovery (which was extensive) has concluded, dispositive motions have been filed and decided, and trial is scheduled for mid-November 2007. A stay would not simplify the issues at trial and would cause prejudice to Monsanto.

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The District Court of Minnesota refused to unseal documents containing trade secrets and private information in In re Guidant Corp. Implantable Defibrillators Products Liability Litigation, 2007 WL 2914517 (D. Minn. 10/3/07).

 

The lawsuit involves defibrillators produced by Guidant Corp., which recently merged with Boston Scientific.  The parties had agreed to keep certain documents under seal. Bloomberg moved to intervene and to unseal documents that had been attached to summary judgment motions. The parties agreed to unseal some of the documents but objected to unsealing documents that contained trade secrets of the defendants or private information of the plaintiff. 

 

The court refused to unseal any documents containing trade secrets or private information, which constituted the bulk of the requested documents. The remaining documents will be unsealed.

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The Southern District of Iowa denied a preliminary injunction for patent infringement in Titan Tire Corp. v. Case New Holland, Inc., 2007 WL 2914513 (S.D. Iowa 10/3/07).

 

Titan Tire is the licensee of a patent held by Goodyear and brought suit against Case New Holland. The motion for preliminary injunction was denied, but what makes this case interesting is that Titan Tire satisfied all the elements of a preliminary injunction except likelihood of success. CNH established a substantial question of validity by showing the patent is likely obvious when compared to the prior art. That alone was enough to defeat the preliminary injunction.

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Trade secrets must be produced, subject to protective order, in Fair Isaac Corp. v. Equifax, Inc., 2007 WL 2791168 (D. Minn. 9/25/07).

 

Fair Isaac brought suit for false advertising, trade secret misappropriation and related unfair competition claims against Equifax, Experian, and other defendants. The thrust of the complaint is that defendants copied Fair Isaac's algorithms and software used to generate credit scores. In discovery, Fair Isaac sought the algorithm and software used by defendants to generate credit scores. The defendants objected to this discovery claiming the algorithms and software are trade secrets.

 

The court agreed the algorithms and software are trade secrets but that defendants must produce them to Fair Isaac. A protective order prevents Fair Isaac or its experts from using the information for any purposes other than the litigation. Any violation of the protective order is punishable by appropriate sanctions.

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The Southern District of Iowa granted summary judgment on the copyright infringement claim in Rouse v. Walter & Associates, LLC, 2007 WL 2745615 (S.D. Iowa 9/20/07).

 

This case involves a dispute over who owns a particular computer software. Plaintiffs were two professors at Iowa State University. Previously they had developed a software for measuring the quality of beef in live cattle before they were taken to slaughter. They asked a third professor at ISU to develop a new software. ISU then license the software to Walter & Associates. Plaintiffs brought suit claiming they owned the copyright to the software.

 

In a thorough opinion, the court found that ISU owns the copyright in the software, not the plaintiffs. The software was created in the course of the third professor's employment, and ISU was considered the author of the software. There was no written agreement transferring ownership to the plaintiffs, and the court granted summary judgment to defendants.

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The District Court of Minnesota granted partial summary judgment in Wildlife Research Center, Inc. v. HME Products, LCC, 2007 WL 2746840 (D.Minn. 9/18/07).

 

Wildlife Research Center holds a patent for a hanging device that attracts game. The device uses a scented wick that is protected from moisture. HME sold a similar device but left its wick completely exposed to moisture. HME argued that WRC's patent only covered devices that completely protected the wick from moisture. Both parties moved for summary judgment.

 

The court found that WRC's patent covers devices that substantially protect the wick and that HME's device infringed the patent. The case will proceed to determine damages and any defenses HME may have.

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An Arkansas trademark infringement action was filed in the Eastern District of Arkansas. Thirty Eight Street, Inc. v. Bajrang, LLC, No. 07-920 (E.D. Ark., filed 10/2/07). Plaintiffs operate a chain of hotels under the trademarks Best Value Inn and America's Best Value Inn. According to the Complaint, Bajrang was a licensee operating a hotel in Helena, Arkansas. Plaintiffs terminated the license on February 14, 2007, but Bajrang continues to operate a hotel using Plaintiffs' trademarks. Plaintiffs did not file a motion for preliminary injunction.

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Lewis & Clark Outfitters filed a trademark infringement action against L.C. Industries (Case No. 07-, Western District of Arkansas, filed 9/26/07). The Complaint alleges that L.C. Industries has infringed Lewis & Clark's numerous trademark registrations and fraudulently obtained registrations for "Lewis N. Clark" from the USPTO. The Complaint also states that the companies communicated with each other in 2000 about trademark issues, but L.C. Industries recently threatened to file a lawsuit against Lewis & Clark.

 

This case could have an interesting twist. Earlier this year, Lewis & Clark filed a trademark infringement action against Mahco, Inc. (previously posted 5/1/07) L.C. Industries also filed a trademark infringement lawsuit against Mahco in the Northern District of Illinois (filed 2/5/07, see Justia docket summary here).  

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The Eastern District of Arkansas granted a motion to dismiss based on res judicata in B & B Hardware, Inc. v. Hargis Industries, Inc., 2007 WL 2711647 (E.D. Ark. 9/13/07).

 

The parties have a long and unique history that is important to understand the case. B&B Hardware sells  a variety of fasteners in various industries under the mark "Sealtight." Hargis sells fasteners exclusively used for portable buildings under the trademark "Sealtite." B & B received a federal trademark registration, and the parties engaged in lengthy TTAB proceedings when Hargis tried to register its mark. In 1997, B & B filed suit for trademark infringement.

 

The jury returned a verdict for Hargis, finding that Sealtight was merely descriptive, and that judgment was affirmed in B & B Hardware, Inc. v. Hargis Industries, Inc., 252 F.3d 1010 (8th Cir. 2001). Hargis did not petition to cancel "Sealtight." In 2006, "Sealtight" became incontestable, which eliminated the merely descriptive defense. B & B filed the instant action, and Hargis moved to dismiss on grounds of res judicata.

 

The court agreed with Hargis that incontestability alone does not create an exception to res judicata. The court held that while incontestability affects a trademark's validity, it has no bearing on a trademark's strength, and that the only recognized exception to res judicata for trademark infringement is a significant increase in strength over a significant amount of time. See Test Masters Educational Services v. Singh, 428 F.3d 559 (5th Cir. 2005). B & B failed to establish either of these two factors, and the court dismissed the complaint.  

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The Northern District of Iowa issued Rule 11 sanctions in Ideal Instruments, Inc. v. Rivard Instruments, Inc., 2007 WL 2710846 (N.D. Iowa 9/19/07). The court's decision to impose sanctions was previously posted 7/10/07. The court imposed sanctions of $50,000 in attorney's fees and $12,937.56 in expenses, to be paid jointly by Rivard Instruments and its counsel. Plaintiffs asked for a total of $180,893 in attorney's fees and expenses.

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The Northern District of Iowa denied a motion for temporary restraining order but will schedule a hearing on the motion for preliminary injunction in FastServers, Inc. v. TLDS, LLC, 2007 WL 2611820 (N.D. Iowa 9/6/07).

 

FastServers claims that TLDS took an internal passwords database, which contained client information, from their internal computer network. TLDS then posted some of this information on its website. FastServers moved for a temporary restraining order based on trade secret misappropriation and interference with business relationships. 

 

Rule 65 requires that a motion for TRO must be supported by an affidavit or verified complaint, which FastServers failed to do. The court denied the motion for TRO but will set the matter for a hearing on the motion for preliminary injunction.

 

FastServers also failed to assert a claim for violation of the Computer Fraud & Abuse Act, even though it alleges the information was taken directly from its internal computer network. It will be interesting to see if this claim gets added.  

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The Western District of Missouri dismissed a copyright infringement claim in Scarborough v. Johnson, 2007 WL 2609815 (W.D. Mo. 9/5/07). It is well settled that the plaintiff must file the application for copyright before bringing a copyright infringement lawsuit. Scarborough never filed his application for copyright, and the court easily dismissed the claim.

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The District Court of South Dakota granted a temporary restraining order based on trade secret misappropriation in Poet Plant Management, LLC v. Simpson, 2007 WL 2493514 (D.S.D. 8/29/07).

 

The opinion is brief, but Simpson is a former employee of Poet Plant Management (PPM). He is currently employed by Ethanex. PPM claimed Simpson would intentionally or unintentionally disclose its trade secrets and confidential information to Ethanex, which would cause irreparable harm to PPM.

 

The district court granted the temporary restraining order, requiring a $20,000 bond by PPM. A hearing on the preliminary/permanent injunction is scheduled for September 25, 2007, and the court has expedited discovery to accommodate the hearing.

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Judge Hendren refused to decide a discovery dispute in Rotoworks Int'l Ltd. v. Grassworks USA, LLC, 2007 WL 2582190 (W.D. Ark. 9/4/07) (last posted here 9/6/07). After an award of sanctions was entered, the case has continued its downward spiral, with the exasperation evident in the tone of the court's opinion:

 

The Court has read the submissions of the parties, which amount to literally hundreds of pages, much of it devoted to bickering about who has done what to whom, or failed to do it, or might do it in the future. None of this is particularly helpful to the Court in trying to resolve whether there is some discoverable piece of information about which plaintiff has inquired, and about which one or more defendants has failed to permit discovery. Nor does it advance the preparation of this case for trial; in the Court's view, the case is being delayed by the acrimonious turn discovery has taken.

The Court declines to sort through the masses of material submitted to it in connection with the pending motions and try to separate the legitimate issues from the bickering of the parties. It is the responsibility of the parties to present a concise motion to the Court setting forth matters that are really, truly, in dispute.

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The District Court of Minnesota granted summary judgment on a number of claims in Gregerson v. Vilana Financial, Inc., 2007 WL 2509718 (D. Minn. 8/31/07) (previously posted 1/31/07).

 

Vilana copied two of Gregerson's photographs in various advertisements. Gregerson created websites where he discussed Vilana's copying of the photographs and made unflattering statements about Vilana. Gregerson filed suit for copyright infringement, while Vilana filed a counterclaim for trademark infringement, cybersquatting, deceptive trade practices, and other claims.

 

The court easily granted summary judgment on the copyright claim. A comparison of the photographs showed they were identical. The court also granted summary judgment against the trademark and cybersquatting counterclaims, finding that Gregerson just made a descriptive use of Vilana's trademarks in his metatags.

 

However, the court refused to grant summary judgment on the deceptive trade practices and related claims. There was evidence in the record that Gregerson made statements that Vilana is a thief, actively engaged in predatory lending, and a member of the Russian mafia. These issues and the damages on the copyright claim must be resolved at trial.

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The District Court of Minnesota dismissed trade secret claims and refused to permit amended pleading to add a computer fraud claim in Boston Scientific, Inc. v. Ev3, Inc., 2007 WL 2493117 (D. Minn. 8/29/07).

 

Boston Scientific originally filed a patent infringement claim against Ev3. Discovery revealed that Ev3 obtained trade secret documents related to the patent at issue, and Boston Scientific was permitted to amend the complaint to add a claim for trade secret misappropriation. The trade secret claim later expanded to include numerous documents unrelated to the patent claim. Ev3 moved to dismiss the trade secret claim for lack of supplemental jurisdiction.

 

The court held that when the trade secret claim added issues beyond the patent claim, it ceased to have a common nucleus of operative facts with the patent claim. The court dismissed the trade secret claim for lack of supplemental jurisdiction.

 

Boston Scientific also asked the court for leave to amend the trade secret claim as a violation of the Computer Fraud and Abuse Act. The court declined this request because the request did not meet the formal procedure required by the court, and the deadline for amending pleadings had already passed.

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A corrective order was entered in MTS Systems Corp. v. Hysitron, Inc. (previously posted 8/6/07). The earlier opinion incorrectly stated that Hysitron failed to provide its own claim chart. Hysitron did provide its claim chart in accordance with the pretrial order. The court entered a corrective order removing the statement about Hysitron's claim chart from the opinion.

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Two important orders were entered in the Arkansas trademark case Rotoworks Int'l Ltd. v. Grassworks USA, LLC, No. 07-5009 (W.D. Ark.) (previously posted here 4/19/07 and here 3/27/07). The Court granted partial summary judgment on Rotoworks' cybersquatting claims. (See order here). Grassworks must transfer the domain name www.rotowiper.com to Rotoworks by September 11, 2007.

 

The Court also granted Rotoworks' motion for sanctions. In a lengthy opinion (here) the Court found that Grassworks had no basis for filing its counterclaim. Moreover, the opinion highlights misconduct by Grassworks' attorney. The attorney continued to claim information was confidential despite numerous rulings to the contrary. The attorney even attempted to designate depositions as confidential, threatening to take action Rotoworks once Grassworks appealed the rulings.

 

The Court was clearly frustrated with Grassworks' and its attorney's conduct. The Court ordered Grassworks to pay Rotoworks' attorney's fees and expenses associated with the counterclaim and the motion for sanctions. The Court also assessed a sanction of $1,000 against Grassworks' attorney.

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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 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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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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The District Court of Minnesota dismissed a declaratory action under an exception to the first-filed rule in ABC Teacher's Outlet, Inc. v. School Specialty, Inc., 2007 WL 2028903 (D. Minn. 7/17/07).

 

This case actually began on March 25, 2002 when School Specialty sent a cease and desist letter to ABC Teacher's Outlet (ABC) accusing it of trademark infringement. ABC responded, but School Specialty never replied. Several years later, on November 14, 2006, and January 5, 2007, School Specialty sent additional letters threatening to file a lawsuit.

 

ABC filed a declaratory action in Minnesota on January 11, 2007, and served School Specialty on February 21. School Specialty filed suit in Wisconsin on February 6 and served ABC on February 21. The court dismissed this case as an exception to the first-filed rule because (1) the claim was for declaratory relief and (2) ABC knew of School Specialty's intent to sue.

 

The court surprisingly gave no weight to the fact that School Specialty waited 5 years before actually filing the lawsuit. ABC should win on a laches defense whether Wisconsin or Minnesota ultimately hears the case.

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The Eighth Circuit affirmed a grant of judgment as a matter of law in SL Montevideo Technology, Inc. v. Eaton Aerospace, LLC, 2007 WL 2002543 (8th Cir. 2007).

 

SL Montevideo brought suit against Eaton Aerospace for trade secret misappropriation and breach of a nondisclosure agreement regarding an airplane motor. SL Montevideo could not establish the information was a trade secret, so it relied on the contract claim on appeal. The Eighth Circuit affirmed, noting that SL Montevideo somehow chose to structure the nondisclosure agreement as having a trade secret requirement:

To be sure, agreements such as the Proprietary Information Agreement (PIA) may protect broader categories of information than trade secrets. But the PIA's exclusions limited its protection to information having the same characteristics of secrecy and novelty as trade secret.

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The District Court of Minnesota granted a temporary restraining order in Wells Fargo Investments, LLC v. Bengtson, 2007 WL 2007997 (D. Minn. 7/9/07).

 

Wells Fargo hired Bengtson in their wealth management department. Part of the employment contract contained a non-solicitation and a nondisclosure agreement. Bengtson left Wells Fargo to join Merrill Lynch. He immediately began soliciting Wells Fargo clients and disclosing information to Merrill Lynch. Wells Fargo brought suit for breach of contract and trade secret misappropriation.

 

The court had no trouble granting the TRO, but its take on Bengtson's defense is interesting. Bengtson argued that Wells Fargo should be barred by the doctrine of unclean hands because they encouraged him to bring over client lists when they hired him from Piper Jaffray. The court rejected this argument, holding that Wells Fargo must have been guilty of unconscionable conduct in their employment contract with Bengtson for unclean hands to apply.

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It is never a good sign when the court's opinion begins "This troubled matter comes before the Court . . . " but that is what happened in Master Craft Tool Co., LLC v. Stanley Works, 2007 WL 2008685 (D. Minn. 7/6/07).

 

Master Craft filed suit against Stanley Works on behalf of other plaintiffs. Prior to the lawsuit, the other plaintiffs assigned to Master Craft their right to file suit against Stanley. The lawsuit was filed in 2004. The other plaintiffs terminated the contract in July 2005, but Master Craft dismissed the claims with prejudice in October 2005. The other plaintiffs wanted to revoke the dismissal and proceed with the litigation.

 

The court refused, noting that standing must be determined at the beginning of the lawsuit. Steger v. Franco, 228 F.3d 889, 892 (8th Cir. 2000). Thus, the other plaintiffs lost their standing when the lawsuit was filed. The later termination of their agreement with Master Craft had no effect on standing.

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British multinational Codian filed a patent infringement lawsuit in the Western District of Arkansas. Codian Ltd. v. Polycom, Inc., No. 07-4063 (filed 7/6/07)(See Complaint here). Codian owns two patents for videoconferencing technology (here and here). The complaint alleges that Polycom is selling products that infringe these patents.

 

Both companies are large multinationals with headquarters outside Arkansas. However, the sales complained of were made to the University of Arkansas and the "Government of the State of Arkansas."

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The Northern District of Iowa imposed Rule 11 sanctions in Ideal Instruments, Inc. v. Rivard Instruments, Inc., 2007 WL 1953147 (N.D. Iowa 7/3/07). The denial of Rivard's motion for preliminary injunction was previously posted 4/12/07.

 

Ideal moved for Rule 11 sanctions, and, in a thorough opinion, the court reluctantly imposed sanctions. Rivard based its motion for preliminary injunction on the expert testimony of Dr. Hoff. Ideal conducted several depositions of Dr. Hoff, and it became obvious that Dr. Hoff's test results were incredible. The court found that any reasonable inquiry would have revealed the inaccuracies in his tests.

 

Ideal also relied on a metallurgical expert whose testimony was provided to supplement Dr. Hoff's testimony. The court was troubled by this testimony but did not find it so utterly lacking any merit as that of Dr. Hoff. Therefore, the court awarded sanctions in the amount of: (1) all Ideal's reasonable fees and costs through February 2, 2007; and (2) half Ideal's reasonable fees and costs after February 2, 2007.

 

The sanctions were awarded against Ideal, its primary counsel and its local counsel. The court expressed its regret in the ruling: "The court cannot adequately express its disappointment that it has been necessary to impose sanctions upon any party or attorney appearing before it."

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The District Court of South Dakota quashed a subpoena in Pinnacle Pizza Company, Inc. v. Little Caesar Enterprises, Inc., 2007 WL 1960585 (D.S.D. 7/3/07).

 

Pinnacle Pizza is a franchisee of Little Caesar's Pizza. Pinnacle claimed it invented the slogan "Hot n' Ready" and that Little Caesar's wrongfully used their slogan. James Fischer, Pinnacle's president, revealed in his deposition that he hired an attorney to perform a trademark search. When asked the results of the search, Fischer replied, the attorney opined that "Hot n' Ready was too generic to receive trademark protection. Pinnacle's counsel never objected to this line of questioning.  

 

Little Caesar's issued a subpoena to depose the attorney. The court agreed with Pinnacle that Fischer had made an inadvertent disclosure of a statement protected by attorney-client privilege. The court adopted the five factors from Hydraflow, Inc. v. Enidine Inc., 145 F.R.D. 626 (W.D.N.Y. 1993) and held that Pinnacle did not waive the privilege through the inadvertent disclosure.

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The District Court of Minnesota granted summary judgment in Questar Data Systems, Inc. v. Service Management Group, Inc., 2007 WL 1847259 (D. Minn. 6/25/07).

 

Questar Data and SMG are competitors in the customer satisfaction research and consulting business. This case began in a separate lawsuit in Missouri. Brian Wunder left SMG to join Questar, and he sued SMG for severance payments. SMG counterclaimed against Wunder for breach of employment agreement and trade secret misappropriation.

 

As part of the Missouri suit, SMG issued a subpoena to Questar that sought confidential information. Questar resisted, but a Minnesota court compelled compliance. After Questar complied with the subpoena, SMG voluntarily dismissed its counterclaims against Wunder.

 

Questar brought this suit claiming abuse of process, interference with contract, and unfair competition in issuing the subpoena. However, Questar could not show any evidence that SMG acted in bad faith in issuing the subpoena. The court granted summary judgment to SMG.

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The District Court of Minnesota granted a partial preliminary injunction in H.B. Fuller Co. v. Mooney, 2007 WL 1827240 (D. Minn. 6/22/07).

 

H.B. Fuller is an adhesive manufacturer that operates in 34 countries. Mooney, a strategic manager, signed a noncompete agreement. However, he took a job at Coim USA, one of H.B Fuller's competitors. Mooney took with him customer files and copied thousands of computer files. Fuller filed suit for breach of the noncompete agreement and trade secret misappropriation.

 

The court partially granted the preliminary injunction. Mooney is enjoined from disclosing information about Fuller's customers or strategies, but he is permitted to continue his employment at Coim USA. Moreover, the court based the injunction on the noncompete agreement claim; the court found that H.B. Fuller failed to show a likelihood of success on the trade secret claim. The preliminary injunction only has an initial term of 3 months and still commanded a $40,000 bond.

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A new patent infringement lawsuit was filed in the Eastern District of Arkansas. MidSouth Metal Products, Inc. v. O.D. Funk Manufacturing, Inc., No. 07-602 (filed 6/29/07). See full complaint here.

 

MidSouth owns a patent for a metal framing system. The complaint alleges a single claim of patent infringement against O.D. Funk Manufacturing, a North Little Rock company. The complaint was not accompanied with a motion for preliminary injunction.

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The District Court of Nebraska quashed a subpoena to depose an expert witness in Intervet, Inc. v. Merial Limited, 2007 WL 1797643 (D. Neb. 6/20/07).

 

This case features a long-running patent infringement dispute between Merial Limited and Intervet. The initial case was filed in Georgia but later dismissed on procedural grounds. The current action is in the District of Columbia.

 

In the Georgia case, Intervet retained Dr. Fernando Osorio as an expert witness. Dr. Osorio never testified, but Intervet did present his declaration at the preliminary injunction stage. In the D.C. action, Intervet has retained another expert whose opinion differs from that offered in Dr. Osorio's declaration.

 

Because Intervet has not retained Dr. Osorio for the present case, the court concluded it would be unnecessarily time consuming and costly for him to comply with the subpoena. However, the court noted his declaration was a public record that Merial is welcome to use to examine or cross-examine witnesses in the D.C. action.

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The Eastern District of Missouri compelled production of the parent company's financial documents in Orthoarm, Inc. v. Forestadent USA, Inc., 2007 WL 1796214 (E.D. Mo. 6/19/07).

 

Orthoarm filed this patent infringement action against Forestadent USA. Orthoarm submitted discovery requests seeking financial documents of Forestadent Germany, Forestadent USA's parent company. Forestadent USA refused to produce the documents, claiming it did not have control of its parent company's financial documents.

 

The district court disagreed and issued an order compelling production of these documents. Guiding the court's analysis was the fact that the owners of Forestadent Germany are the officers and directors of Forestadent USA.

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The District Court of Minnesota denied a motion for preliminary injunction based on patent infringement in Torspo Hockey Int'l, Inc. v. Kor Hockey Ltd., 2007 WL 1752725 (D. Minn. 6/18/07).

 

Kor Hockey owns a patent for its hockey skate design. Torspo Hockey initiated the lawsuit by seeking a declaration that its competing skate design does not infringe Kor's patent. Kor then counterclaimed and moved for a preliminary injunction. The court denied the motion largely in part because Kor only identified an arch shape in the skate as a point of novelty. The court observed that Torspo will likely prove that the arch shape is not novel.

 

This case also featured a new ripple resulting from eBay, Inc. v. MercExchange, LLC, 126 S.Ct. 1837 (2006), which held that irreparable harm cannot be presumed when evaluating permanent injunctions (detailed coverage at PatentlyO). The court held that eBay applies with equal force to preliminary injunctions and determined that Kor failed to establish irreparable harm.

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The District Court of Minnesota denied a motion to transfer in EcoWater Systems, LLC v. Hague Quality Water Int'l, 2007 WL 1725761 (D. Minn. 6/13/07).

 

EcoWater filed this false advertising lawsuit against Hague. Hague filed a motion to dismiss, or alternatively, to transfer the case to Ohio. Its main argument was that it did not have sufficient contacts in Minnesota to grant jurisdiction to Minnesota courts.

 

The court quickly dismissed these arguments. Deposition transcripts of Hague's 30(b)(6) witnesses demonstrated significant contacts with Minnesota, and the allegedly false statements were transmitted to Minnesota consumers.

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The Western District of Missouri denied a motion to dismiss in Spurgeon v. Scantlin, 2007 WL 1704937 (W.D. Mo. 6/11/07).

 

This case centers around the alternative-metal group Puddle of Mudd. Patrick Spurgeon filed this suit claiming that, in 1999, he and Puddle of Mudd front-man Wesley Scantlin co-authored 2 songs. In August 2001, Puddle of Mudd released an album with a song substantially similar to the disputed songs.

 

The lawsuit was styled as a declaratory action of co-ownership rather than one for copyright infringement. Spurgeon argued this imposed the 5-year statute of limitations rather than the standard 3-year period for copyright cases. The district court rejected this argument and held the 3-year limitations period would apply. The court denied the motion to dismiss but hinted that Puddle of Mudd will likely win this case at the summary judgment stage.

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The Eastern District of Missouri granted a motion to remand in American Ass'n of Orthodontists v. Yellow Book USA, Inc., 2007 WL 1687259 (E.D. Mo. 6/8/07). This is the second round of litigation between these parties. In the first case, the AAO's false advertising claims were dismissed for lack of standing (previously posted 1/10/07).

 

The AAO has once again sued Yellow Book for listing dentists under the heading "Dentists-Orthodontists." This time, the AAO brought a state court claim alleging violation of Missouri deceptive advertising statutes. The state court removed the case to federal court on the basis of diversity of citizenship jurisdiction, although the AAO primarily seeks an injunction.

 

The district court remanded the case because Yellow Book's calculations of the value of the injunction were too speculative. The court noted that Yellow Book has a motion to dismiss pending, which must be taken up by the state court on remand. The case will likely be dismissed on grounds of claim preclusion and issue preclusion. It serves as a great example to include state law claims in federal intellectual property lawsuits.

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The Western District of Arkansas dismissed some of the counts in Illumination Station, Inc. v. Cook, 2007 WL 1624458 (W.D. Ark. 6/4/07) (previously posted on 4/13/07).

 

Illumination Station filed suit against defendants claiming trade secret misappropriation and 7 other counts. Defendants moved to dismiss 5 of the counts based on preemption. Their argument was based on R.K. Enterprises, LLC v. Pro-Comp Management, Inc., 356 Ark. 565 (2004) (previously posted 1/10/07), holding that the Arkansas Trade Secret Act preempts tort causes of action.

 

The court granted the motion to dismiss as to the counts for conversion and an accounting. Although the court denied the motion as to the remaining counts, the court granted the defendants leave to file a reply to the motion to dismiss.

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The District Court of Minnesota granted in part and denied in part a preliminary injunction based on copyright infringement in DF Institute, Inc. v. Marketshare Eds, 2007 WL 1589525 (D. Minn. 6/1/07).

 

This case involved Kaplan Professional Schools, the real estate exam branch of exam-preparation giant Kaplan. In 2006, Peggy McNamara enrolled in two of Kaplan's courses regarding the Minnesota real estate salesperson exam. In January 2007, McNamara opened her own company, Marketshare, which provided materials for passing the same exam. Kaplan immediately filed this suit, claiming the Marketshare course materials infringe Kaplan's copyrights.

 

After a thoughtful analysis, the court concluded that the bulk of Kaplan's material consists of noncopyrightable elements, such as statements of law and facts that students must learn. However, the court did find that Kaplan's hypothetical questions and answers are copyrightable expression. The court granted the preliminary injunction, but only as to these hypotheticals and answers, which represent a small percentage of the Kaplan course materials. The court denied the remainder of the motion.

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The District Court of Minnesota declined to stay a patent infringement case pending re-examination by the USPTO in Ecolab, Inc. v. FMC Corp., 2007 WL 1582677 (D. Minn. 5/30/07).

 

Ecolab filed this action against FMC in April 2005. In late 2006, Ecolab discovered prior art that it claims the USPTO failed to consider. Ecolab told FMC, but the parties filed cross motions for summary judgment rather than report the finding to the USPTO. The motions were denied, and a trial scheduled beginning July 2, 2007. In April 2007, Ecolab requested re-examination from the USPTO and moved the court to stay the proceedings pending the re-examination.

 

The court denied the request on two grounds. First, Ecolab requested the stay solely for a tactical advantage, as evidenced by its decision to continue litigating for 5 months after learning of the prior art. Second, a stay would only delay the proceedings and cause prejudice to FMC.

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Chanel filed a trademark infringement lawsuit in the Western District of Arkansas: Chanel v. Jacobia, No. 07-3021 (filed 5/23/07). According to the Complaint, two business partners sold counterfeit and infringing items on the website chicboutique4u.com (now inactive). One of the partners is an Arkansas resident, and the goods were distributed in Arkansas. The Complaint seeks monetary damages and injunctive relief.

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Windchimes by Russco has filed a copyright infringement lawsuit against Yi Qiang Glass Crafts Co., Ltd., a Chinese company, and their American affiliates in the Eastern District of Arkansas. See Case No. 07-056, filed 5/11/07 (full Complaint here). According to the Complaint, Russco obtained copyright registrations for two wind chime designs. Yi Quiang infringed these designs in China and then sold the infringing wind chimes in the United States, including Arkansas.

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The Eastern District of Arkansas compelled production of personnel files in Nuckles v. Wal-Mart Stores, Inc.,  2007 WL 1381651 (E.D. Ark. 5/10/07).

 

Nuckles, a photographer, filed a copyright infringement claim against Wal-Mart for copying of her professional photographs. The court ordered that Wal-Mart must produce personnel files on 12 employees, subject to two conditions. First, all medical and personal information must be redacted. Second, the parties must enter into a confidentiality order. This case could get interesting and is currently scheduled for a jury trial in August.

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Anheuser-Busch filed a trademark infringement complaint against USA Bai Wei Group, Inc. in Pulaski County Circuit Court, Case No. 07-5817, filed 5/4/07. See full complaint here. According to the Complaint, "Bai Wei" is the pronunciation of the Chinese language trademark for Budweiser. USA Bai Wei has made extensive sales through China without Anheuser-Busch's permission.

 

The Complaint was filed in Arkansas because USA Bai Wei registered as an Arkansas corporation. However, it is unclear why the case was filed in state court rather than federal court. The Complaint seeks millions of dollars in damages including a revocation of Bai Wei's corporate charter.  

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As predicted, the copyright infringement claims are picking up against YouTube and Google. In the past two months, the companies have been hit with two lawsuits. Viacom filed its suit in March, representing a handful of plaintiffs. See Viacom v. YouTube (S.D.N.Y., filed 3/13/07). Eric Goldman of the Technology & Marketing Blog provides his analysis here.  

 

Earlier this month, a European soccer leagued dialed it up a notch by filing a class action on behalf of all copyright owners whose works were infringes on YouTube. See Football Ass'n Premier League  v. YouTube (S.D.N.Y., filed 5/4/07). Eric Goldman again provides an excellent analysis.

 

The law is unsettled on both cases. Google could feel it is time to establish a precedent, and these cases could produce some important opinions.

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The Eastern District of Missouri denied a request for expedited discovery in Interface Security Systems, LLC v. May, 2007 WL 1300394 (E.D. Mo. 5/2/07).

 

Interface filed a lawsuit claiming false advertising but did not move for a preliminary injunction. Interface filed a motion for expedited discovery, stating it would move for a preliminary injunction and that expedited discovery would assist that motion.  This was a strange request that essentially shows Interface has not incurred irreparable harm, which is the hallmark of preliminary injunctive relief. The court denied the request for expedited discovery and could not resist an illustrative commentary:

This is most analogous to the famous character of Wimpy from an episode of the Popeye cartoon series . . . To satisfy his addiction Wimpy was always willing to "gladly pay you Tuesday for a hamburger today." It was a special group which yielded to his melodic chant. This Court opts not to be a member of a special group today.

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The District Court of Minnesota granted partial summary judgment in Cosi, Inc. v. WK Holdings, LLC, 2007 WL 1288028 (5/1/07).

 

Cosi is a chain of sandwich restaurants with locations in 16 states.  Bill Kozlak opened Kozy's Steaks and Seafood, a fine dining restaurant in Minnesota. Because Cosi and Kozy are pronounced the same, Cosi filed suit for trademark infringement and dilution. Kozy moved for summary judgment on the dilution claim and the claim for attorney's fees.

 

The court agreed that Cosi is not a famous trademark as required to establish a dilution claim. The court also agreed that Mr. Kozlak did not act willfully and deliberately by adopting the trademark Kozy's from his last name. The court granted summary judgment as to the dilution claim and the claim for attorney's fees.  

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The Eastern District of Missouri granted summary judgment on patent infringement and breach of contract in Monsanto Co. v. Vanderhoof, 2007 WL 1240258 (E.D. Mo. 4/27/07).

 

Monsanto holds a patent on soybean seed technology that makes the seeds resistant to Roundup. The seeds are aptly named Roundup Ready. Monsanto licenses the patent to soybean farmers for a term of one year. The farmer cannot plant Roundup Ready seeds in subsequent years or plant seeds from soybeans produced from Roundup Ready seeds.

 

Vanderhoof entered into a license for the 2003 season, but he planted Roundup Ready seeds in 2004 and 2005. The court had no trouble finding these acts amounted to patent infringement and breach of the license agreement. Monsanto has additional claims against Vanderhoof that were not subject to the summary judgment motion.

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The Eastern District of Missouri denied a motion to enforce a settlement agreement in BP Products North Am., Inc. v. Wallis Petroleum, L.C., 2007 WL 1240261 (E.D. Mo. 4/27/07). This was the opposite result on the same issue in Enterprise Rent-a-Car Co. v. U-Haul Int'l, Inc. (previously posted 4/19/07).

 

Wallis purchased a gas station from BP but refused to remove the sign bearing the AMOCO trademark. BP filed suit for trademark infringement, and the parties entered into settlement negotiations. The parties exchanged drafts of settlement agreements but never executed one. When the negotiations reached an impasse, BP filed this suit.

 

The court found that the parties never reached a meeting of the minds as to a settlement agreement. Although the parties exchanged settlement drafts, several material terms remained in dispute. A pretrial order will issue shortly.

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The Eastern District of Missouri partially granted a Rule 56(f) request for additional discovery in Synergetics, Inc. v. Peregrine Surgical, Ltd., 2007 WL 1231685 (E.D. Mo. 4/25/07).

 

Synergetics filed suit against Peregrine claiming patent infringement of one of Synergetics' patents for eye surgery. Peregrine pled noninfringement and filed a motion for summary judgment. In its reply on the motion for summary judgment, Peregrine added defenses of inequitable conduct. Synergetics filed a Rule 56(f) request for additional discovery on all arguments.

 

The court denied the request as to the noninfringement argument originally raised in the motion because Synergetics had ample notice of this argument. The court did grant the motion as to the newly-raised inequitable conduct argument.

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Yesterday the Supreme Court issued two patent opinions. In Microsoft Corp. v. AT&T Corp., 550 U.S. __ (2007), the Court held patent infringement liability does not extend to software installed in computers overseas (detailed coverage at PatentlyO).  In KSR Int'l v. Teleflex, Inc., 550 U.S. __ (2007), the Court rejected the Federal Circuit's teaching, suggestion, or motivation (TSM) test to evaluate obviousness (detailed coverage at PatentlyO).  

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Cellularvision Technology filed a patent infringement lawsuit against Alltel in Florida, but the case has now been transferred to Arkansas. The Complaint accuses Alltel of infringing six patents. Cellularvision is a frequent patent plaintiff in the federal court system and partners with a division of Speedus, which maintains a large portfolio of patent infringement cases.

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Lewis & Clark Outfitters filed a trademark infringement lawsuit against Mahco, Inc. (Case No. 07-05075, Western District Arkansas,  filed 4/24/07). The Complaint alleges that officers and owners of Mahco were former customers and vendors of Lewis & Clark. Mahco began using a Lewis & Clark trademark (seen here) and has filed for a federal trademark. The Complaint does not request a preliminary injunction.

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The District Court of Minnesota denied cross motions for summary judgment in the ongoing patent infringement suit between Biopolymer and Immudyne (previously posted 3/22//07). See Biopolymer Engineering, Inc. v. Immudyne, Inc., 2007 WL 1178541 (D. Minn. 4/20/07).

 

In October 2005, Immudyne filed a declaratory action in Texas to define rights in the patents at issue. About two months later, Biopolymer filed the present action claiming patent infringement. Immudyne filed a motion for summary judgment claiming it had a license in the disputed patents. Alternatively, Immudyne moved the court to stay this action in favor of the Texas action under Colorado River abstention. Biopolymer countered with its own summary judgment motion.

 

The court quickly rejected both motions for summary judgment and focused its analysis on the motion to stay. The court found exceptional circumstances did not exist to merit a stay. Immudyne contributed to this conclusion by actively participating in discovery and moving the Minnesota case forward. More importantly, the Texas case deals with state law of contract interpretation while the Minnesota case deals with federal patent law.

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Arkansas photographer Erick Blair is involved in another intellectual property dispute over bikini photographs (See previous post 4/18/07) in Blair v. World Tropics Productions, 2007 WL 1175045 (W.D. Ark. 4/19/07).

 

Blair sued the various business entities that comprise Hawaiian Tropic, the popular tanning-product company that sponsors Miss Hawaiian Tropic contests across the globe. Hawaiian Tropic would hire Blair to take photographs of models at various Miss Hawaiian Tropic events. Hawaiian Tropic paid his expenses, but they never issued him a W2 or provided employee benefits. While at these events, Blair took pictures of the models when they were not competing.

 

After the events, Blair would send all the images to Hawaiian Tropics on computer disk. Blair claimed they had an oral agreement that Hawaiian Tropics could used the photographs in calendars if they provided him a photographer's credit and that he would own the copyright. Hawaiian Tropics claims they own the photographs because Blair is a Hawaiian Tropics employe. Alternatively, Hawaiian Tropics  claims they had a license to use the photographs as they chose and published a number of the photographs in calendars without giving Blair credit. He filed suit for copyright infringement and both parties moved for summary judgment.  

 

The court denied the motions for summary judgment. The court held that Blair was not an employee of Hawaiian Tropics and owns the copyright to the photographs. As to the existence of a license, the court held that an issue of fact existed for the jury to determine.

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The Eastern District of Missouri denied a motion for protective order in Monsanto Co. v. Genetic Technology Limited, 2007 WL 1174851 (E.D. Mo. 4/20/07).

 

Monsanto filed a declaratory action against the Australian company GTG claiming it did not infringe GT G's patents. GT moved to dismiss for lack of jurisdiction, and the parties engaged in limited discovery. Monsanto sent a request seeking all documents where GT asserted a party needed a license to use the patented technology. GT refused to answer, and the court granted Monsanto's motion to compel.

 

After GT produced documents, Monsanto realized they had only produced documents that specifically used the phrase "needs a license." When Monsanto confronted GT with this issue, GT moved for a protective order. The court denied the request, holding that GT was giving too literal an interpretation to the document request.

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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. 

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.   

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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.

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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.  

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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.

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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.

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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.

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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.

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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.

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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.  

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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.

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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.

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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.

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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.

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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.

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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 the program. Clark was terminated. He promptly filed suit against the school, school district and various teachers claiming they infringed his patent and copyright in the program.

 

The court easily granted summary judgment. While Clark had filed for a patent, he never received one. Moreover, his program was just an idea, which precluded copyright protection. The court granted summary judgment on all counts.

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The Eastern District of Missouri found a patent defendant in contempt in Litecubes, LLC v. Northern Light Products, Inc., 2007 WL 892459 (E.D. Mo. 3/21/07).

 

On October 7, 2005, the jury returned a verdict for Litecubes on its patent infringement claim against Northern Light (d/b/a GlowProducts). The court accordingly entered a permanent injunction, but Northern Light started selling a similar product.

 

Litecubes moved for sanctions, providing an expert report that the new product infringed the patent and violated the permanent injunction. The court held that the proper proceeding was a contempt proceeding. Northern Light did not contest the expert report. The court held Northern Light in contempt of the injunction and imposed a fine of $5,000 per day while the infringing product is being sold.

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The District Court of Minnesota ruled on several motions in limine and dismissed one claim in a major trade secrets case. See CardioVention, Inc. v. Medtronic, Inc., 2007 WL 853472 (D. Minn. 3/20/07).

 

CardioVention brought suit against Medtronic for trade secret misappropriation, unfair competition, and breach of contract. Medtronic filed 15 motions in limine and a motion to dismiss the unfair competition claim. The court dismissed the unfair competition claim because it is duplicative of the trade secret claim.

 

The court also made various rulings on the motions in limine, most importantly the court permitted testimony by CardioVention's expert. The case is currently in trial, which began March 19 and is scheduled to proceed through April 13.

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The District Court of South Dakota held a joint Markman hearing to discern the scope of patent claims in Larson Manf. Co. of South Dakota, Inc. v. Aluminart Products Ltd., 2007 WL 858421 (D.S.D. 3/20/07) and  Larson Manf. Co. of South Dakota, Inc. v. Andersen Corp., 2007 WL 858617 (D.S.D. 3/20/07).

 

Larson brought suit against Andersen and Aluminart for patent infringement of Larson's patent for ventilated doors. The cases were set for hearing in 2004 to determine the scope of the patent claims, but the cases were stayed pending a reexamination at the USPTO.

 

The key dispute here were the terms "weather stripping" and "slidably engages." The court rejected the defendants' construction of these phrases, finding that "weather stripping" means a sealing material added to a fabric and that "slidably engages" means to engage by sliding. These favorable interpretations will significantly help Larson in these long-standing patent disputes.

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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.

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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.  

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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.

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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.

 

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

 

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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.

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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.

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