Arkansas Business Litigation Blog

Arkansas Trademark Infringement Lawsuit Filed Over Bad Boy Name

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Wed, 17 Sep 2008 15:40:38 -0600

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.

First-Filed Rule Keeps Interesting Intellectual Property Case in Arkansas

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Tue, 09 Sep 2008 14:26:14 -0600

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.

CBS Files Suit For Use of NFL Player Statistics in Fantasy Football

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Fri, 05 Sep 2008 14:36:50 -0600

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.

District Court Within Eighth Circuit Finds That Sponsored Link Advertising is Use in Commerce

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Thu, 28 Aug 2008 09:48:11 -0600

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.

Arkansas Copyright Case Will Proceed; Motion to Dismiss Denied

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Wed, 27 Aug 2008 11:20:54 -0600

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.

Cristal Loses Trademark Infringement Case Because of Laches

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Tue, 26 Aug 2008 16:10:02 -0600

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.

Rotoworks Wins Substantial Judgment in Arkansas Trademark Case

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Thu, 21 Aug 2008 16:37:51 -0600

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).

U.S. District Court for the Western District of Arkansas Holds Stranded Airline Passenger Has Tort Claims Under State Law

bcwhite@allenlawfirmpc.com (Brooks White) — Wed, 30 Jul 2008 09:21:49 -0600

In Ray v. American Airlines, Inc., 2008 WL 2323923 (June 2, 2008), the United States District Court for the Western District of Arkansas, Judge Robert Dawson, held that an airline passenger who was allegedly confined against her will on the plane, under "deplorable conditions" while the plane waited on the tarmac for approximately 11 hours, has claims under state law for the torts of false imprisonment, outrage, and negligence.

In so holding, the court first rejected defendant's argument that Ray's state law claims were preempted by the federal Airline Deregulation Act of 1978 and the Federal Aviation Act of 1958. In rejecting the argument that the claims were preempted under the former act, the court looked to prior Supreme Court precedent interpreting the preemption provision of the Act stating that states are prohibited from enacting or enforcing a law which "ha[s] the force and effect of law related to a price, route, or service of an air carrier." The court, looking to the case law of other circuits, most notably the Ninth Circuit in Charas v. Trans World Airlines, 160 F.3d 1259 (9th Cir. 1998) ultimately concluded that the word "service" was not intended by Congress to preempt all state claims for tortious acts of air carriers.

The court also rejected American's claim that the state law claims were preempted under the Federal Aviation Act of 1958. In so holding, the court concluded that there were currently no federal regulations in place which governed the conduct of air carriers toward passengers when planes are stranded on the ground. While acknowledging the defendant's allegation that the Department of Transportation is currently considering whether such regulation in this area is needed, the court held that the claims were not preempted because no regulations currently exist.

Turning to the substance of Ray's state law claims, the court first held that Ray sufficiently stated a claim for false imprisonment under either Arkansas or Texas law. In short, the court concluded that she sufficiently alleged false imprisonment because she alleged that American refused to let her off the plane and that American misrepresented the reasons for confining the passengers on the plane. The court also held that Ray sufficiently stated a claim for outrage under either Arkansas or Texas law, stating that "under these circumstances, a jury could find that the Defendant's actions are so extreme and outrageous as to be 'beyond all possible bounds of decency, and utterly intolerable in a civilized community.'" Finally, the court upheld Ray's negligence claim, rejecting American's argument that under state law, no cause of action for negligence lies for breach of contractual duties.

Arkansas Supreme Court Rejects Eastern District's Prempro Decision; Affirms Certification of Nationwide Class Action

charris@allenlawfirmpc.com (Christian Harris) — Mon, 30 Jun 2008 09:42:12 -0600

In a powerful example of Arkansas's "liberalized" class-action procedure, the Arkansas Supreme Court affirmed Miller County Circuit Court Judge James Scott Hudson's certification of a nationwide product-liability class action. General Motors Corporation v. Boyd Bryant, et al., No. 07-437. In so doing, the Court expressly rejected the reasoning of a recent federal decision out of the Eastern District of Arkansas, In Re Prempro Products Liability Litigation, 230 F.R.D. 555 (E.D. Ark. 2005) (Wilson, J.).

Bryant sued GM on behalf of a nationwide class alleging that "some 4,000,000 pickup trucks and sport utility vehicles were equipped with defectively designed brakes."

The defect alleged is that a faulty "high force spring clip" causes the parking breaks in the vehicles to "self-energize" and wear out too soon. " Bryant alleged that GM discovered the problem in 2000 and fixed it in 2001, but didn't tell dealers about the defect until 2003. Bryant also alleged that a recall conducted by GM in 2005 was underinclusive because it didn't include trucks and SUVs with automatic transmissions. Bryant's causes of action were breach of express warranty, breach of implied warranty of merchantability, violation of the Magnuson-Moss Warranty Act, unjust enrichment, and fraudulent concealment.

The circuit court certified the following class:

“Owners” or “subsequent owners” of 1999-2002 1500 Series pickups and utilities originally equipped with an automatic transmission and a PBR 210x30 Drum-in-Hat parking brake system utilizing a high-force spring clip retainer, that registered his vehicle in any state in the United States.

On appeal, GM challenged predominance, superiority, and the preciseness of the class definition. GM argued that the individual issues in the case, namely, the substantive law of warranty, breach, and so forth, would consume the inquiry such that the common questions involving the spring clip did not predominate. "Our inquiry," the Court stated, "is whether there is a predominating question that can be answered before determining any individual issues."

We hold that there is. Whether or not the class vehicles contain a defectively designed parking-brake system and whether or not General Motors concealed that defect are predominating questions. That various states’ laws may be required in determining the allegations . . . does not defeat predominance in the instant case.

Arkansas class-action law does not require a "rigorous analysis" to support certification, and it also bars consideration of any parts of the merits of the underlying case. These two rules combined to defeat GM's argument. The meat of the holding is a powerful rejection of contrary federal and state precedent:

As already stated, there are clearly common questions concerning General Motors’s alleged wrongdoing that will have to be resolved for all class members, and we view any potential choice-of-law determination and application as being similar to a determination of individual issues, which cannot defeat certification. Other courts may disagree. See, e.g., In re Prempro Prods. Liab. Litig., 230 F.R.D. 555 (E.D. Ark. 2005) (observing that when class certification is sought in a case based on common-law claims, the question of which law governs is crucial in making a class-certification decision); Washington Mut. Bank, FA v. Superior Court, 24 Cal. 4th 906, 926, 15 P.3d 1071, 1085, 103 Cal. Rptr. 2d 320, 335 (2001) (noting its favor in adopting the type of burdens articulated in federal decisions and holding that “a class action proponent must credibly demonstrate, through a thorough analysis of the applicable state laws, that state law variations will not swamp common issues and defeat predominance”); Beegal v. Park West Gallery, 394 N.J. Super. 98, 925 A.2d 684 (2007) (holding that a class-action motion court has a duty to conduct a choice-of-law analysis before deciding whether the predominance element is satisfied and that, although conflict-of-law issues do not per se foreclose certification of a multistate class, a thorough analysis of state laws is particularly important where a possibility exists that common issues could be subsumed by substantive conflicts in state laws; but, advising that a trial court should undertake a rigorous analysis to determine if the requirements of the class-certification rule have been met); Compaq Computer Corp. v. Lapray, 135 S.W.3d 657, 672 (Tex. 2004) (holding that “when ruling on motions for class certifications, trial courts must conduct an extensive choice of law analysis before they can determine predominance, superiority, cohesiveness, and even manageability”; but, also requiring that its courts perform a rigorous analysis before ruling on class certification to determine whether all prerequisites to certification have been met). However, those decisions do not bind this court, nor do they dictate that were we to permit a choice-of-law analysis after class certification, such a decision would be erroneous.

While the decision re-affirms Arkansas's unique approach to class actions, it should be noted that this case was presumably filed before the effective date of the Class Action Fairness Act of 2005, or CAFA.

Arkansas Court of Appeals Upholds Dismissal of Breach of Sales Contract Based On Forum Selection Clause; Counterclaim for Equitable Value of Use of Property Did Not Waive Clause

charris@allenlawfirmpc.com (Christian Harris) — Mon, 30 Jun 2008 09:38:35 -0600

The Arkansas Court of Appeals affirmed Sebastian County Circuit Judge James O. Cox's dismissal based on a forum-selection clause in New Life Beauty Center, Inc.'s v. Palomar Medical Technologies, LLC. New Life sued Palomar for breach of a sales contract, apparently medical equipment. The one-page sales contract did not have a forum-selection clause, but the contract incorporated another document, "Palomar Medical's Terms and Conditions . . . as stated on reverse or attached hereto." The forum-selection clause was in the Terms and Conditions.

New Life argued that it never received the Terms and Conditions, but the Court of Appeals held that because the sales contract incorporated the terms and conditions:

New Life was . . . charged with knowledge that there were in fact additional terms to the agreement, and those terms are construed together with the rest of the writings in determining the intention of the parties. Whether New Life had actual knowledge of the Terms and Conditions or not, it is bound by them because one is bound by law to know the contents of papers that he signs.

New Life also argued that Palomar waived the forum-selection clause because it asserted a counterclaim. The counterclaim asked the trial court to award Palomar an amount reflecting the value of the use of the equipment, if New Life successfully had the contract rescinded. Asserting a permissive counterclaim waives the right to enforce a forum-selection clause, but asserting a compulsory counterclaim does not. The Court of Appeals held that Palomar's counterclaim, being "inextricably bound to the same transaction from which the claim arose," was compulsory.

Variances in State Laws Have no Effect on Arkansas Class Action Certification

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Fri, 20 Jun 2008 09:02:12 -0600

The Arkansas Supreme Court handed out a big decision on Arkansas class action law: General Motors Corp. v. Bryant, No. 07-437 (6/19/08).

The claim is that General Motors sold trucks and SUVs with a defective parking brake system. The class involves 4 million consumers in all 50 states bringing claims for breach of express warranty, implied warranty, and the Magnuson-Moss Warranty Act. GM argued the variances in state law would prevent certification, but the trial court disagreed and certified the class.

The supreme court affirmed, holding class certification should be decided before addressing the choice of law issue. The court noted other courts that have reached the opposite conclusion, including In re Prempro Prods. Liab. Litig., 230 555 (E.D. Ark. 2005). The court reasoned that placing the choice of law determination ahead of the certification issue would cause the trial court to undergo a rigorous certification analysis, which is not a requirement under Arkansas class action law.

The court also rejected the argument that the pled claims would require numerous individual factual determinations. The court held that as long as one common issue existed, that issue could be certified and tried first. Individual issues would then be tried in later proceedings.

Microsoft Files Arkansas Trademark and Copyright Infringement Case

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Wed, 11 Jun 2008 09:18:01 -0600

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.

Arkansas Deceptive Trade Practices Act Cannot Apply to the Practice of Law

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Fri, 06 Jun 2008 07:50:53 -0600

The Arkansas Supreme Court affirmed dismissal in Preston v. Stoops, No. 07-805 (6/5/08). Stoops filed a lawsuit on behalf of Preston in Pulaski County. The case was dismissed because Stoops, an Oklahoma attorney, was not licensed to practice in Arkansas. Preston filed this action, claiming violation of the Arkansas Deceptive Trade Practices Act, Ark. Code Ann. § 4-88-101, et seq. Preston also included a count for breach of the covenant of good faith as a tort. The trial court dismissed both claims.

Addressing the ADTPA claim, the supreme court held that oversight and control of the practice of law is the exclusive authority of the judiciary. Any action by the General Assembly to control the practice of law would violate the separation-of-powers doctrine. The court did not go so far as to say parties cannot use the ADTPA to circumvent traditional causes of action, a position advocated in 29 U. Ark. Little Rock L. Rev. 283 (2007).

The supreme court dodged the good faith issue. In Country Corner Food & Drug, Inc. v. First State Bank, 332 Ark. 645 (1998), the court held that breach of duty of good faith could not be a separate tort. There has been a dispute over whether Country Corner precludes a separate cause of action for breach of contract. The supreme court did not decide this issue because Preston pled his claim as a tort.

Summary Judgment Reversed in Another MBNA America Case

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Thu, 05 Jun 2008 08:35:55 -0600

This time the case is Helton v. MBNA America Bank, N.A., No. 07-759 (6/4/08), another MBNA America arbitration case that follows Danner v. MBNA, (previously posted 4/27/07), MBNA v. Blanks (previously posted 9/19/07) and MBNA v. Gilbert (previously posted 10/31/07).

This time MBNA obtained an arbitration award against Helton based upon the arbitration provision in the amendment to the cardholder agreement and filed a petition in Cross County Circuit Court to confirm the award. Helton claimed he never agreed to arbitration and submitted an affidavit to that effect to oppose MBNA's motion for summary judgment. The trial court granted summary judgment to MBNA.

The court of appeals reversed, holding that the affidavit created an issue of fact that precluded summary judgment.

Arkansas Has Jurisdiction Over Virginia Resident

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Thu, 05 Jun 2008 07:45:58 -0600

The Arkansas Court of Appeals reversed dismissal for lack of personal jurisdiction in Roberts v. Bendos, No. 07-903 (6/4/08).

Bendos lives in Virginia; she hired Roberts to pursue a wrongful death action on behalf of her sister's estate in Saline County. After Roberts procured a favorable result, Bendos refused to pay him. After Roberts filed suit, the trial court dismissed the case for lack of personal jurisdiction.

The court of appeals easily reversed. Not only had Bendos traveled to Arkansas on numerous occasions, the lawsuit was the only significant asset of her sister's estate. Bendos cannot avail herself of the laws of Arkansas to obtain an asset and then claim no personal jurisdiction.

U.S. Supreme Court Denies Certiorari in Baseball Statistics Right of Publicity Case

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Tue, 03 Jun 2008 09:03:59 -0600

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.

Mountain Home Relocation Guide Subject of Arkansas Copyright Lawsuit

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Mon, 02 Jun 2008 15:21:28 -0600

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.

Benefit Resource Fails to Get Preliminary Injunction for Trade Secret Misappropriation and False Advertising

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Mon, 02 Jun 2008 09:52:03 -0600

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.

Insurer Cannot Recover Attorney's Fees Under a Unilateral Reservation of Rights

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Sun, 01 Jun 2008 09:26:24 -0600

The Arkansas Supreme Court accepted certification of a question from the United States District Court for the Eastern District of Arkansas in Medical Liability Mut. Ins. Co. v. Alan Curtis Enterprises, Inc., No. 07-991 (5/29/08). The question is whether an insurer, once it has received judgment it has no duty to defend the insured, may the insurer recover attorney's fees in defending the lawsuit based solely on its reservation of rights?

The supreme court noted the majority rule would allow the insurer to recover attorney's fees. However, the policy in Arkansas is that attorney's fees are not recoverable unless expressly permitted by rule or statute. The court held an insurer may not recover attorney's fees based on a unilateral reservation of rights.

Rule 11 Sanctions Imposed for Frivolous Motion to Set Aside Judgment

kmlemley@allenlawfirmpc.com (Kevin Lemley) — Fri, 30 May 2008 09:35:49 -0600

The Arkansas Supreme Court affirmed the granting of Rule 11 sanctions in Reeve v. Carroll County, No. 07-1239 (5/29/08). During a hearing on a motion to dismiss, the parties reached settlement. They read the terms of the settlement into the record, and no one objected. The trial court entered an order based on the settlement. However, 17 days later, plaintiffs filed a motion to set aside the order. They argued the order contained erroneous findings that had not been agreed upon.

The trial court granted Rule 11 sanctions, and the supreme court affirmed. The opinion is not clear as to the amount of sanctions, but it is clear that plaintiffs' attorney was sanctioned.