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Monthly Archives: April 2013

“spaced relationship” held to be sufficiently definite

Biosig Instruments v. Nautilus, Case No. 2012-1289, Slip Op. (Fed. Cir. Apr. 26, 2013)

Biosig sued Nautilus for infringement of U.S. Pat. No. 5,337,753.  Claim 1 of the ‘753 patent was held to be invalid for indefiniteness by the trial court because the term “spaced relationship” was indefinite as a matter of law.  While the the trial court held that the term was amenable to construction, it determined that it was “insolubly ambiguous.”  The Federal Circuit reversed.

In particular, the Federal Circuit determined that the problems raised by the trial court dealt with breadth, and not definiteness.  For example, the trial court could not determine if 1 inch, or 1/2 inch would satisfy the claim term.  However, the Federal Circuit determined that the intrinsic record contained inherent parameters that would help a skilled artisan understand the boundaries of the term.

Plaintiff Caught in Egregious “Fraud on the Court” / No Attorneys’ Fees for Unrepresented Defendant

Flava Works v. Momient, Case No. 11-CV-6306, Slip Op. (N.D. Ill. Apr. 16, 2013)(Shadur)

Frequent mass copyright plaintiff Flava Works filed suit for copyright infringement against Lee Momient, who is apparently a former “model” and present competing purveyor of (as the Court described it) “truly hardcore pornographic materials.”  In his answer, Momient asserted an affirmative defense that he, and not Flava Works, owned the contested materials.  In response, Flava Works produced a “commission work agreement” with Momient’s signature on it that established Flava Works ownership of the materials.  While the Court initially accepted this document, Momient apparently proved to the Court’s satisfaction that the agreement was indisputably a forgery.

Interestingly, at least as of the time of this opinion, the main sanction envisioned by the Court is dismissing Flava Works suit with prejudice.  As Mr. Momient is unrepresented, he cannot recover attorneys’ fees.  However, the Court did leave open the possibility of investigating Flava Works attorney, and noted that attorney client privilege would not stop such an inquiry.

An interesting development for sure.

2nd District Applies Blue Pencil to Save Overbroad Non-Compete Agreement

Saddlers Row v. Michael Dainton, Case No. 2-12-1941, Slip Op. (Ill. App. 2nd Dist. Apr. 23-2013)(Mullen)

In this case, Saddlers Row had employed Michael Dainton – a master saddler.  As a condition of his employment, Dainton executed a non-compete agreement that prohibited him from working for a competitor for two years within 75 miles of Saddlers Row.  After working for Saddlers Row for a number of years, Dainton went to work for a competitor a mere 7 miles away.  Saddlers Row sued.

The trial court had determined that Saddlers Row had a legitimate business interest in its near permanent relationships with its customers, and that the two year term was reasonable.  However, the trial court struck the non-compete due to the 75 mile radius being blatantly excessive.  The trial court also refused to modify the non-compete, so as not to encourage employers from attempting to impose overly large areas where employees could not compete in the future.  Accordingly, the trial court refused to enter a preliminary injunction.

The appellate court overturned as it determined the trial court abused its discretion in not modifying the geographic area of the non-compete to make it enforceable.  On remand, the trial court was ordered to enter a preliminary injunction against Dainton.

One important factor that the appellate court considered was that Dainton understood and had agreed to the provision when he entered Saddlers Row’s employ.  In addition, Dainton was not fired, but rather decided to leave Saddlers Row to go work for a competitor that he knew was within the geographic range of his non-compete.

Motion to Strike Expert Opinions Granted-in-Part / Denied-in-Part

McDavid v. Nike USA, 8-CV-6854, Slip Op. (N.D. Ill. Apr. 23, 2013)(Holderman)

Nike challenged supplemental expert reports submitted by McDavid.  In particular, Nike alleged that McDavid’s expert attempted to add a new theory of infringement.  Nike asserted that McDavid had a duty to disclose this theory of infringement under Rule 26(e)(1), and the Court agreed.  However, McDavid countered that it had disclosed the new theory of infringement with respect to a different, but related, patent.  The Court found that this was not sufficient, and, as the new theory of infringement would have been prejudicial to Nike, who would not have sufficient time to prepare its defense, struck the new expert report.

Nike also challenged McDavid’s supplemental report on damages, which sought to switch from an entire market value theory to a theory based on only part of the Nike’s sales of the infringing product.  McDavid argued that the law surrounding when a patentee could base a reasonable royalty on the entire market value of a product had changed after the Federal Circuit’s Uniloc decision.  Somewhat surprisingly, the Court disagreed, and instead, found that Uniloc was perfectly consistent with Lucent and other cases discussing access to the entire market value.

However, the Court also found that new sales data, only available since the expert’s last opinion was offered, could have necessitated the change, and accordingly allowed McDavid’s updated report on damages into evidence.

The Changing Face of Torrent Litigation

By Konrad Sherinian

Mass copyright litigation (torrent litigation, file sharing litigation, what have you) is a hot topic right now – hundreds of these suits have already been filed this year in Illinois courts, with many of them naming tens or hundreds of defendants.  Unlike most lawsuits, where the defendants are companies or wealthy individuals, the defendants in mass copyright lawsuits are ordinary people.  Various Internet sources post advice for people who are faced with one of these lawsuits – and in many cases, following that advice can lead to disastrous results.

In particular, the tactics of mass copyright plaintiffs (referred to elsewhere colloquially as “copyright trolls”) are changing.  In the past, many Doe defendants simply ignored subpoena letters from their Internet Service Providers.  The Does reasoned that even if the copyright plaintiff has their information, they could just ignore the plaintiff’s attempt to settle with them, and the copyright plaintiff would eventually give up.  Given the enormous amount of unlicensed copying that occurs via P2P file sharing networks (primarily BitTorrent), and the large number of defendants that copyright holders have been pursuing, this tactic was quite successful for a time.  In fact, until recently, most mass copyright plaintiffs would pursue very few (if any) Does that refused to respond to settlement demands.  So it should not be a surprise that many out-of-date sources, and even a few out-of-date attorneys, still feel that this is the appropriate response to a subpoena letter from your ISP.  Be aware, the situation has markedly changed.  Copyright plaintiffs are now regularly pursuing default judgments against Doe defendants that ignore the cases against them.

A default judgment is a legal judgment by the Court that is entered when a party refuses to answer claims brought against them in Court, or refuses to participate in litigation advanced against them.  A default judgment has the same force and effect as a normal judgment, with a few exceptions.  As judges view a party’s refusal to participate in litigation as tantamount to contempt, a plaintiff will normally obtain a judgment for whatever amount s/he asks for (normally the maximum).

A few examples of recent default judgments in file sharing cases follow:

1) The Southern District of Indiana recently granted a default judgment of $151,425 against a BitTorrent defendant.  See CP Productions v. Gerald Glover, Case No. 12-CV-808 (S. D. Ind. Mar. 26, 2013).

2) The Northern District of Illinois recently granted a default judgment of $1,500,000 (1.5 million dollars) against a BitTorrent defendant.  See Flava Works v. Kywan Fisher, Case No. 12-CV-1888 (N.D. Ill. Oct. 30, 2012).  See also Flava Works v. Cormelian Brown, Case No. 12-CV-5088 (N.D. Ill. Oct. 19, 2012)(another $1,500,000 default judgment).

3) The Southern District of Florida recently granted a default judgment of $153,770.  See AF Holdings v. Darryl Lessere, Case No. 12-CV-22156 (S.D. Fla. Oct. 9, 2012).

There are numerous other examples, almost all within the past eight months.  The lesson of these is simple – if you ignore a subpoena letter from your ISP, the plaintiff is very likely to pursue a default judgment against you, and YOU can be hit with a very large judgment.  Make no mistakes about it – the copyright plaintiffs listed above will pursue their judgments against the named individuals – wages will be garnished, cars will be repossessed, houses will be taken, and lives will be shattered.  If you receive a subpoena letter from your ISP, DO NOT IGNORE IT.

Another tactic that worked extremely well in the past, but is no longer as effective as it once was, is the tactic of filing a motion to quash the plaintiff’s subpoena to a Doe’s ISP based on improper joinder.  Many judges will routinely grant these motions, and, if granted, all Does but one will be dismissed from the case, and all of the outstanding subpoenas (except against the remaining Doe) will be quashed.  The dismissals are without prejudice; meaning that the copyright plaintiff can file suit against that Doe again.  That is exactly what mass copyright plaintiffs are now doing.  See  https://illinoisiplitigation.wordpress.com/2013/02/12/doe-files-motion-to-quash-subpoena-ends-up-in-suit-alone-against-malibu-media/.  Trying to file a boiler plate motion to sever (and quash the ISP subpoena) is no longer a winning tactic.

At least one mass copyright plaintiff – Malibu Media – apparently  became frustrated with the delays that severance motions had on their cases, and has started to file cases against individual Does.  This effectively takes the entire tactic of filing a motion to sever (and thereby quash the subpoena to the ISP) off the table.  A few examples that have been filed in the Northern District of Illinois in the past few days are 2013-CV-2427; 2013-CV-2505, and 2013-CV-2507.

There is still plenty that can be done when you receive a subpoena letter from your ISP.  Quite frankly, many of the mass copyright infringement cases that are filed are legally tenuous, and all of them can be defended if necessary.  The following is the start of an action plan you may consider if you receive a subpoena letter from your ISP:

1) Act Quickly:  You need to act prior to the date when your ISP hands your information over to the mass copyright plaintiff.  Unless you are extremely poor, plaintiff’s will expect more once they have your information.  In particular, given the resources available on the Internet, a plaintiff can quickly and inexpensively determine if you rent or own, who your employer is, about what your salary is, and, in some cases, even what kind of car you drive.  In addition, many of the attorneys that bring mass copyright infringement cases represent numerous clients, and almost all of these cases are brought on a contingent fee, meaning that the attorney does not get paid until s/he recovers money from various defendants.  The cost of obtaining personal information about Does is very high – it requires a successful subpoena on an ISP, which can take many months.  Once they have your information with regards to potentially copying one client’s content, there is little to prevent them from using that information to bring a claim for a second client – and without having to spend the money necessary to obtain your information a second time.

2)Obtain Representation:  A skilled attorney can explain your options to you, keep your identity secret, and help you formulate the right option as to how to proceed with the case.  And, if you select an attorney who regularly deals with these matters, he or she will likely be skilled in presenting your case in the best light possible, which may compel the plaintiff to drop the case, or settle for less money.

3) Have your Attorney Seek a Demand:  Once you know what the copyright plaintiff wants, you can figure out the right way to proceed with the case.  If the demand is low enough, consider paying it or negotiating further.  If it is crazy, your attorney can advise you whether your case can be won.  While litigating a copyright case can be quite expensive, if you prevail, the copyright plaintiff may be forced to pay your attorneys’ fees.

There is no doubt that a subpoena letter from your ISP is stressful, and most families would rather not deal with this stress.  However, ignoring it will only make a bad situation far worse, and attempting to address it using some of the outdated tactics described above can be almost as bad.

The author is the managing partner of the Law Offices of Konrad Sherinian, LLC, a boutique intellectual property and commercial litigation law firm in the Western suburbs of Chicago.  The Law Offices of Konrad Sherinian, LLC is one of the leading mass copyright defense firms in the United States, and Mr. Sherinian has personally defended numerous Doe defendants from accusations of copyright infringement due to their alleged participation in file sharing.  

The Law Offices of Konrad Sherinan, LLC

Non-Compete Agreement Found Unenforceable

Fisher/Unitech v. Computer Aided Technology et al., 13-CV-2090, Slip Op. (N.D. Ill. Apr. 9, 2013)(Tharp)

In this case, Fisher/Unitech sought to enforce a non-compete agreement against a former salesman who had left to join Computer Aided Technology.  The Court ultimately determined that Fisher/Unitech had no legitimate business interest to protect, as all of the allegedly confidential information that it sought to protect from disclosure involved training and experience that its salesman had obtained by working at Fisher/Unitech.  As this was “generalized knowledge and experience” it was not actual trade secrets, and could not comprise a legitimate business interest.

Interestingly, the Court also pointed out that the non-compete agreement was “clearly overbroad.”  In particular, the Court attacked the geographic restriction, which would have included territory that Fisher/Unitech did not compete in, as well as the fact that it covered “generalized knowledge and expertise.”  Also interestingly, the Court did not view the fact that the employee in question apparently admitted to misappropriating true trade secrets as  a sufficiently bad act to enforce the non-compete.

Facebook’s Motion for Summary Judgment Denied

Timelines v. Facebook, 11-CV-6867, Slip Op. (N.D. Ill. Apr. 1, 2013)(Darrah)

Back in 2011, Timelines sued Facebook for trademark infringement based on Facebook’s new timeline feature.  Facebook moved for summary judgment, and Judge Darrah has now denied Facebook’s motion – this case is set for trial on April 22, 2013.

In particular, Facebook attempted to establish that Timelines mark was (1) generic, (2) merely descriptive without any showing of secondary meaning, (3) fair use, and (4) non-use of “timelines” as a trademark.  The Court rejected all of these defenses.  Highlights are:

  • The Court indicated that the Timelines’ registered mark is entitled to a presumption of validity.
  • Facebook’s survey, which showed that 68% of respondents felt that “Timelines” was generic, was insufficient to establish genericness at summary judgment.
  • Timelines has more than a thousand users, which can indicate a sizable group for which the mark would indicate a source.
  • Timelines also contended that its mark was merely suggestive, and the Court found this to be an issue of fact.
  • The Court also determined that Facebook did not establish, as a matter of law, that it not use the term “Timelines” as a trademark, and therefore, Facebook’s non-use and fair use defenses failed at the summary judgment stage.

The trial should make for an interesting show.