R. David Donoghue is a patent trial attorney and partner with Holland & Knight’s Intellectual Property Group in Chicago. A trusted counselor to his retail and supply chain clients, Dave routinely speaks to groups of all sizes on an array of intellectual property topics.
Lex Machina recently published its comprehensive 2017 patent litigation year in review. As usual, it is full of fascinating data and charts, which I commend for your consideration.
Most of us in the space know the biggest takeaways already — patent litigation is down, way down in all forums. District court patent litigation waned to its lowest point since 2011. That is no doubt in large part due to the corrective actions taken by Congress (the America Invents Act) and the courts, principally the Supreme Court, in the form of Alice (software patent ability), Octane Fitness (the exceptional standard for attorney’s fees awards), and Lexmark (patent exhaustion), among others.
TC Heartland has also had a major impact on where cases are filed since the Court’s ruling last spring. E.D. Texas filings are down nearly 50% since the venue ruling, while Delaware filings are up 70% during the same time. Central California, Northern California and New Jersey also show more modest increases, along with a variety of other districts that have considerably smaller patent dockets. Looking at the statistics another way, since TC Heartland only 13% of cases were filed in East Texas (down from 33%), with 23% filed in Delaware (up from 13%), and the remaining 63% filed in the other districts (up from 54%). Of course, with 13% of the filings, East Texas remains an important patent district, but it is no longer the powerhouse that it was and I would expect it to continue to slip as Delaware, California, Chicago and other courts continue to see larger percentages of the filings.
PTAB proceedings have also fallen off considerably. Some of that is no doubt related to the reduced district court litigation filed in 2017. But the Oil States cases awaiting the Supreme Court determination of the constitutionality of the proceedings is also certainly having a major impact. The Oil States decision will have a major impact upon the patent world, in terms of patent dispute proceedings and in terms of relative patent value.
The Northern District, along with the Chicago Bar Association and in conjunction with the Women’s Bar Association of Illinois and the Black Women Lawyers’ Association, are sponsoring a free program, “May it Please the Court:” Symposium on Women Lawyers in the Courtroom.
It is being held from 12:30-5:15pm CT on April 12, 2018, at the Northern District Courthouse, 219 S. Dearborn Street, Chicago.
The program is focused on discussing and promoting strategies for empowering women lawyers as lead counsel and trial counsel. The following topics will be addressed:
The Studies: A discussion of the studies “If Not Now, When? Achieving Equality for Women Attorneys in the Courtroom and in ADR” and “The Participation of Women Lawyers as Lead Counsel and Trial Counsel in Litigation.”
In-House Counsel: Corporations are positioning women as leaders on trial teams and promoting strategies to further increase women lawyer participation in their matters.
The Next Generation of Women Trial Lawyers: Tips and strategies to gain trial experience in order to become lead trial counsel.
Managing Partners: Best practices to increase the number of women in the courtroom.
A View from the Bench: Judicial observations on the benefits of women as trial counsel and what can be done to increase the number women trying cases.
You can registerhere and see the brochure here. Northern District judges on the panel include, Chief Judge Castillo, Judge Durkin, Judge Ellis, Judge Pallmeyer, and Judge St. Eve.
VitalGo, Inc. v. Kreg Therapeutics, Inc., No. 16 C 5577, Slip Op. (N.D. Ill. Dec. 21, 2017) (Dow, J.).
Judge Dow granted in part defendants’ (collectively “Kreg”) Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s (collectively “VitalGo”) claims and Fed. R. Civ. P. 12(f) motion to strike portions of its complaint in this copyright and Lanham Act suit involving VitalGo’s Total Lift Beds and Catalyst Beds. The Court also denied Kreg’s motion to stay discovery pending resolution of its motion.
Motion to Strike
The Court struck those allegations in VitalGo’s complaint that had “no apparent relevance” to its Catalyst Bed-related complaints, but did relate solely to legal theories previously dismissed from suit. Allowing VitalGo’s unrelated allegations to remain would “confuse” the issues and prejudice Kreg. The Court did, however, refuse to strike paragraphs related to the prior claims that provided context regarding the parties’ relationship, the TOTAL LIFT BED marks at issue, and VitalGo’s copyrighted works.
Motion to Dismiss
Fed. R. Civ. P. 12(g)
Kreg’s motion was not barred pursuant to Rule 12(g) by the filing of its earlier motion to dismiss for two reasons:
The claims made in the instant motion were not available to Kreg until after the Court ruled on the initial motion to dismiss because they are premised upon the removal of the stricken allegations, which were struck based only upon the Court’s order dismissing certain claims.
The Seventh Circuit has held that Rule 12(g)(2) does not bar a successive motion to dismiss.
Judicial estoppel did not bar Kreg’s motion. Kreg’s prior arguments were focused upon legal defenses, as opposed to the sufficiency of VitalGo’s allegations. The Court also had not previously decided whether Rule 9(b) applied to the allegations.
Unfair Competition Claims Sounding in Fraud
While district courts in the Seventh Circuit split on whether Rule 9(b) pleading is required for unfair competition Lanham Act and related state law claims, the Court held that Rule 9(b) heightened pleading was required as to VitalGo’s claims because they sounded in fraud. Because VitalGo gave “the headline of the newspaper story, but not its ‘first paragraph,’” the claims were dismissed.
Trademark & Copyright Infringement
VitalGo sufficiently pled its infringement claims by pleading ownership, knowledge and infringement for copyright, and ownership and likelihood of confusion as to VitalGo’s trademarks.
Kolcraft Enters., Inc. v. Artsana USA, Inc. d/b/a Chico USA, Inc., No. 13 C 4863, Slip Op. (N.D. Ill. Nov. 14, 2017) (Ellis, J.).
Judge Ellis construed the claims in this patent dispute involving infant play gyms.
Of particular note, the Court held as follows:
No construction was necessary for — connector(s); to couple; fastener(s); first fastener; positionable; and several other connector-related phrases.
The Court construed “pivotally coupled” to mean “each connector is linked, connected or fastened to the floor mat by a fixed pivot element, such as a shaft or pin, about which the connector pin turns, rotates or moves about. A pivot coupling is different than a coupling that is fixed.” The parties agreed as to the first clause. The Court imported the remainder of the limitation from plaintiff’s statements during a related Inter Partes Review regarding coupling.
The first and second connector terms did not require construction and were not means plus function terms. The Court did hold that the first connectors and second connectors must be distinct from each other, but not necessarily separate.
The Court construed “movable coupled” to mean “each leg of the play gym can be moved relative to the hub while the first end of each leg is linked, connected, or fastened to the hub.”
The Court construed “play gym” to mean “a structure or apparatus which is capable of suspending an object over a defined area.”
Topsteptrader, LLC v. OneUp Trader, LLC, No. 17 C 4412, Slip Op. (N.D. Ill. Jun. 28, 2017) (Leinenweber, J.).
Judge Leinenweber denied plaintiff Topsteptrader’s motion for a temporary restraining order (“TRO”) seeking to enjoin defendant OneUp Trader from continuing to operate its website and its business, principally because Topsteptrader did not meet its burden to show likelihood of confusion in this copyright case.
As an initial matter, the Court considered the TRO only as to Topsteptrader’s breach of contract claim because at the initial hearing on the TRO, Topsteptrader stated that while the copyright claim was still pending, it was not part of the TRO. The relevance of any copying allegations was limited to alleged breach of Topsteptrader’s website terms of service.
Whether there was even an enforceable contract between the parties based upon the terms of service was heavily disputed between the parties. OneUp Trader allegedly clicked to accept the terms of service in 2015, but allegedly did not copy until 2017. Topsteptrader, however, did not produce the 2015 terms of service, instead asking the Court to accept that the terms had not changed between 2015 and the present terms that were put into evidence. Additionally, the relevant portion of the agreement was a non-compete clause without the necessary temporal or geographic limitations. There were, therefore, significant questions about the term’s enforceability. Because the relevant terms are likely unenforceable, there was no likelihood of success on the merits.
Because Topsteptrader’s claimed breach was based upon copying of publicly available information, the alleged injury is disconnected from the breach of contract. It, therefore, cannot be a basis for awarding a TRO.
The balance of harms favors OneUp Trader who would lose the ability to conduct its business. That risk, when balanced against Topsteptrader’s lack of likelihood of success on the merits and lack of irreparable harm, favors OneUp Trader.
Direct Fitness Sol’ns., LLC v. Direct Fitness Sol’ns., LLC, No. 17 C 5316, Slip Op. (N.D. Ill. Nov. 16, 2017) (Bucklo, J.).
Judge Bucklo granted defendant’s Fed. R. Civ. P. 12(b) motion to dismiss for lack of personal jurisdiction and to find this trademark case exceptional.
The Court held that it lacked personal jurisdiction for at least the following reasons:
Plaintiff did not dispute that defendant did not have a place of business in Illinois and that its fitness business was located in Florida.
Plaintiff’s identified sales of fitness equipment in Illinois were actually to a third party in Missouri that resold to defendant. The sale to an intermediary in Illinois did not create personal jurisdiction over defendant.
There was no evidence that defendant “aimed” its activities at plaintiff or Illinois. The only evidence of alleged “aiming” was plaintiff’s unsupported belief.
The Court held that defendant was the prevailing party even though defendant’s successful result was procedural, not substantive, and plaintiff was free to refile in Florida. Plaintiff’s unsupported jurisdictional allegations and theories alone did not make the case exceptional. But those deficiencies, combined with plaintiff’s “distinctively coercive pre-litigation tactics” created an inference that plaintiff filed in Illinois not because it believed there was jurisdiction, but because plaintiff saw “defendant as easy prey, susceptible to quick settlement if threatened with litigation.” That inference was reinforced by plaintiff’s “flimsy” response to the instant motion. The Court gave defendant two weeks to submit a proposed order itemizing its fees and providing supporting evidence.
Allied Van Lines, Inc. v. iMove, Inc., No. 17 C 8021, Slip Op. (N.D. Ill. Jan. 25, 2018) (Kocoras, J.).
Judge Kocoras granted plaintiff Allied Van Lines’ Fed. R. Civ. P. 55(b)(2) motion for entry of default judgment against defendant iMove in this Lanham Act and Anticybersquatting Consumer Protection Act (“ACPA”) case regarding Allied Van Lines’ IMOVE marks.
The Court accepted Allied Van Lines’ allegations as true because iMove failed to respond to the complaint, including at least the following:
The IMOVE marks were incontestable.
Allied Van Lines spent considerable resources building goodwill for its IMOVE marks.
iMove’s services directly compete with Allied Van Lines’ services.
iMove’s accused marks are similar in appearance, sound and meaning to the IMOVE marks.
iMove’s use of the marks was knowing and willful.
Based upon these and other findings of facts, the Court held that iMove’s acts violated the Lanham Act and the ACPA, awarding Allied Van Lines $2M for Lanham Act violations and $100k for violations of the ACPA. The Court also awarded $100k as exemplary and punitive damages for the state law claims, and awarded pre and post-judgment interest, as well as a permanent injunction.
BillingNetwork Patent, Inc. v. Modernizing Medicine, Inc., No. 17 C 5636, Slip Op. (N.D. Ill. Nov. 6, 2017) (Castillo, C.J.).
Judge Castillo granted defendant Modernizing Medicine’s Fed. R. Civ. P. 12(b)(3) motion to dismiss for lack of proper venue in this patent case.
Of particular note, the Court held as follows:
For purposes of the venue statute, 28 U.S.C. § 1400, Modernizing Medicine only “resided” in its state of incorporation — Delaware.
Modernizing Medicine’s registration to do business in Illinois was insufficient to meet the regular and established place of business test.
Modernizing Medicine’s five work-from-home employees similarly did not make Illinois a regular and established place of business because the employees’ respective homes were not places “of the defendant” as required by the statute. It may have been different if Modernizing Medicine owned or leased any of the homes for the employees, or listed or advertised any of the homes as a place of business.
While it appeared that jurisdiction and venue would be proper in Delaware, the Court declined to exercise its discretion to transfer the case instead of dismissing it because BillingNetwork Patent did not ask for transfer.
Pressure Specialist, Inc. v. Next Gen Mfg., Inc., No. 17 C 6582, Slip Op. (N.D. Ill. Jan. 24, 2018) (St. Eve, J.).
Judge St. Eve denied defendant’s Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s patent claims related to a gas regulator for paintball guns.
Defendant argued that the claims should be dismissed because plaintiff had not and could not allege that defendant’s accused regulator included the required guide sleeve. The Court followed precedent suggesting that where claim construction was required to decide a Rule 12 motion, the motion should be dismissed. Because granting the motion would have required claim construction, the motion was denied. Additionally, the Court declined to consider pictures of the relevant devices in defendants papers because they were outside of the complaint, which is the Court’s focus on a Rule 12 motion.
Flava Works, Inc. v. Gunter d/b/amyVidster.com, et al., No. 17 C 1171, Slip Op. (N.D. Ill. Jan. 30, 2018) (Gettleman, J.).
Judge Gettleman granted in part defendants’ (collectively “myVidster.com”) Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s copyright, Lanham Act and related state law claims in this dispute regarding plaintiff’s adult entertainment website, videos and related products that myVidster.com allegedly allows to be collected behind its paywall website.
Of particular note, the Court held as follows:
Plaintiff may have had a valid copyright claim. In an earlier iteration of the case, the Court held that a myVidster.com user that placed a video on the website was the infringer, not myVidster.com. However, plaintiff alleged that by backing up videos to the cloud, myVidster.com made a separate, infringing copy of plaintiff’s works. To the extent that were proven true, plaintiff could have a valid copyright claim.
While the Court had previously held that bookmarking a video was not contributory infringement, plaintiff’s new complaint alleged contributory infringement based upon users downloading videos that had already been uploaded. In that case, plaintiff pled a sufficient contributory infringement claim.
Because nothing in the complaint “plausibly suggests” myVidster.com profited from the alleged activity, there was no vicarious copyright infringement.
The Court dismissed the inducement claims because they did not identify a single infringed work, and an underlying infringement is required for vicarious liability.
Plaintiff’s Lanham Act trademark infringement and unfair competition were “woefully deficient.” The claims did not identify a single mark that myVidster.com allegedly used, nor did they claim use of any mark in commerce.
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