Breach of Contract

September 13, 2013

Steak n Shake Sues for Trademark Infringement

Denver, Colorado — Intellectual property lawyers for Steak n Shake Enterprises, Inc. and Steak n Shake, LLC of Indianapolis, Indiana (collectively “Steak n Shake”) sued in the United States District Court for the District of Colorado alleging that Globex Company, LLC; Springfield Downs, LLC; Christopher Baerns; Larry Baerns; Kathryn Baerns and Control, LLC, all of Colorado, are infringing the “Steak n Shake” marks, which have been registered by the U.S. Trademark Office.

Non-party Steak n Shake Operations, Inc., Steak n Shake Enterprises’ parent company, has continuously operated Steak n Shake restaurants specializing in burgers and milkshakes since 1934. There are currently 415 company-owned Steak n Shake restaurants in 15 states across the country. In addition, Steak n Shake Enterprises grants franchises to establish and operate Steak n Shake restaurants pursuant to written franchise agreements with Steak n Shake Enterprises, and written license agreements with Steak n Shake, LLC. There are currently 100 franchised Steak n Shake restaurants operating in 23 states, including Colorado. Steak n Shake asserts that the Steak n Shake trademarks, and the products and services offered in association with those marks, have been extensively promoted throughout the United States for many years.

This action against Defendants arose subsequent to the termination of franchise and license agreements between Plaintiffs Steak n Shake Enterprises, Inc., as franchisor, and Steak n Shake, LLC, as licensor, and Defendants as franchisees, licensees and/or guarantors. Steak n Shake contends that Defendants materially breached their obligations under the franchise and license agreements and failed to cure such breaches. As a result, Steak n Shake terminated the agreements.

Steak n Shake alleges that, notwithstanding the termination of the franchise and license agreements, Defendants continue to use the Steak n Shake name and marks in connection with the operation of competitive restaurants at the same locations as their former franchised Steak n Shake restaurants, and to hold their restaurants out to the public as authentic Steak n Shake restaurants.

In the complaint, trademark attorneys for Steak n Shake assert the following:

· Count I – Trademark Infringement

· Count II – Unfair Competition

· Count III – Breach of Contract – Specific Performance

· Count IV – Breach of Contract – Damages

· Count V – Breach of Guaranty – Damages

Steak n Shake seeks the following relief against Defendants, jointly and severally: preliminary and permanent injunctive relief enjoining Defendants’ trademark infringement and unfair competition, and ordering Defendants to perform their post-termination obligations under their franchise and license agreements and area development agreement, including their noncompetition covenants; recovery of the amounts owed to them by Defendants, including the damages each has sustained by reason of Defendants’ breaches and the resulting termination of the franchise and license agreements and area development agreement; and an award of the attorneys’ fees and costs incurred by Steak n Shake.

Practice Tip: Franchise agreements typically require the franchisee to cease using all of the franchise marks, as well as return all items bearing the franchise marks, in the event the franchise agreement is terminated. Failure to comply promptly with these provisions can lead to liability for trademark infringement, among other claims.

August 15, 2013

Consumer Health Information Sues Amylin and Eli Lilly for Copyright Infringement of Patient Education Materials

By Overhauser Law Offices, LLC

Indianapolis, Indiana — Copyright lawyers for Consumer Health Information Corp. (“CHIC”) of Virginia sued Amylin Pharmaceuticals, Inc. and Amylin Pharmaceuticals, LLC (collectively, “Amylin”), both of Los Angeles, California and Eli Lilly & Co. (“Lilly”) of Indianapolis, Indiana (collectively, “Defendants”) alleging copyright infringement of works that CHIC created for Defendants’ use.

CHIC is an entity with expertise in patient engagement and patient-adherence strategies, health literacy and patient education program development for prescription drugs, over-the-counter products and medical devices.

Amylin and Lilly are primarily engaged in the research, development, manufacture, marketing and sale of pharmaceutical medicines and devices. In 2005, as part of a joint venture, they introduced the pharmaceutical drug Byetta to the marketplace. Byetta is an injectable prescription medicine that may improve blood-sugar control in adults with type 2 diabetes mellitus. As part of this joint venture, CHIC asserts that Amylin and Lilly agreed to share in the costs incurred and profits derived from Byetta.

In its copyright complaint, CHIC’s intellectual-property counsel states that, after the launch of Byetta, Defendants experienced poor sales as a result of poor patient compliance. CHIC asserts that patients had a difficult time understanding the materials that came with their medication and, thus, had a difficult time administering the drug properly. Many patients stopped taking Byetta because of these difficulties. As a result, patients stopped re-filling their Byetta prescriptions and sales of Byetta were poor.

CHIC contends that, in November 2005, Amylin and Lilly contacted CHIC to develop a strategy to improve the sales of Byetta by improving patients’ understanding of how to use the medication and by motivating patients to stay in treatment. A contract for the work was proposed by CHIC but not immediately approved by Defendants. Amylin and Lilly provided additional related projects to CHIC between December 2005 and mid-March 2006 and CHIC indicates in its complaint that it completed these projects.

CHIC asserts that, by mid-March 2006, it still had not been paid. It threatened to stop work until its proposal was approved and payment for all past work on the patient-education project was received. In response, Amylin and Lilly partially approved CHIC’s proposal. They, however, apparently demanded that a different version be signed and insisted that CHIC agree to Defendants’ terms, as outlined in their Master Service Agreement (“MSA”), regarding the assignment of copyrights.

The complaint states that, by this time, CHIC had expended significant time and expenses in furtherance of the Byetta project. CHIC claims that it was in jeopardy of imminent financial ruin if Amylin and Lilly did not pay for the services already rendered and that Defendants refused payment unless and until CHIC signed Defendants’ MSA. CHIC contends that it had little choice but to execute the MSA, which it did in March 2006.

In Section 4(a) of the MSA, the parties purported to designate CHIC’s creation of the patient-education materials as works made for hire under 17 U.S.C. § 101 and, in turn, CHIC purported to assign its interest in the work-for-hire copyrights to Defendants.

CHIC contends, however, that the patient education materials which it created did not qualify as works for hire, stating that the patient education materials were not “instructional texts” or “textbook materials.” Moreover, it states that the materials were not used and were not designed to be used in “systematic instructional activity” or as part of a “curriculum.” Finally, it asserts that the materials were not part of a teaching method established by an educational institution or the government. Rather, it claims that the materials were prepared for general readership for use in marketing a pharmaceutical product commercially, both nationally and internationally. It concludes that, because the patient education materials did not qualify as works for hire, CHIC did not transfer any copyright interests to Defendants through section 4 of the MSA.

CHIC continues its assertions by claiming that, throughout the last seven years, Defendants have copied and used CHIC’s works in an effort to derive profits from the marketing and sale of Byetta. Defendants have earned gross profits in excess of several billions of dollars from the allegedly unauthorized use, copying, and publication of CHIC’s works. As such, CHIC contents that Defendants’ profits gained from the use, copy, and publication of CHIC’s works rightfully belong to CHIC.

In the complaint, copyright attorneys for CHIC allege a single cause of action: copyright infringement. CHIC asks the court for damages, attorneys’ fees, costs of court, and pre-judgment and post-judgment interest.

Practice Tip: What seems to have begun as a garden-variety contract dispute has been transformed into a copyright case which will presumably turn in no small part on the term of art “work made for hire.”

Under 17 U.S.C. § 101, a “work made for hire” is (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an “instructional text” is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities.

May 3, 2013

District Court Dismisses Two Counts in Konecranes’ Suit Against Industrial Crane Service

By Overhauser Law Offices, LLC

Indianapolis, Ind. — The Southern District of Indiana has dismissed two of four claims by Konecranes, Inc. of Pascagoula, Miss. against Industrial Crane Service, Inc. of Pascagoula, Miss. and Brian Scott Davis of Marion County, Ind.

Plaintiff Konecranes, Inc. (“Konecranes”) provides lifting equipment and services to various clientele including manufacturing and process industries, shipyards, ports and terminals. To serve its customers, Konecranes enters into agreements with subcontractors to assist it in the performance of the maintenance agreements it has entered into.

Industrial Crane Service, Inc. (“ICS”) has served as a subcontractor for Konecranes, although ICS and Konecranes also compete for customers to enter into maintenance agreements with them directly.

Brian Scott Davis (“Davis”) was employed at Konecranes as a Service Manager. During that employment, he and Konecranes entered into a noncompetition and confidentiality agreement, which contained provisions to keep certain Konecranes information confidential. Davis and ICS both worked for Konecranes on various maintenance and service contracts with Nucor Sheet Metal Group (“Nucor”) and Steel Dynamics Incorporated (“SDI”).

In May 2012, Davis resigned from Konecranes and began working for ICS. Since Davis began working for ICS, Nucor has cancelled purchase orders with Konecranes and SDI did not renew an existing purchase order with Konecranes. Instead, both have contracted with ICS to perform the work. Konecranes also alleged that Davis and ICS have been actively soliciting other customers to change their crane maintenance provider from Konecranes to ICS.

In response to the activities of Davis and ICS, Konecranes sued for injunctive relief and damages, asserting claims for: (1) breach of contract, (2) breach of fiduciary duty and/or duty of loyalty, (3) tortious interference with contractual relationships and (4) unfair competition. Davis and ICS moved to dismiss the claims for tortious interference with contractual relationships and unfair competition.

The court granted the motion on both counts. On the claim of tortious interference with contractual relationships, the court found that the plaintiff had “pled itself out of court” by admitting in its pleadings that an element of its claim was not present. Under Indiana law, the elements of a claim for tortious interference with a contract are: (1) the existence of a valid and enforceable contract; (2) defendant’s knowledge of the existence of the contract; (3) defendant’s intentional inducement of breach of the contract; (4) the absence of justification; and (5) damages resulting from defendant’s wrongful inducement of the breach.

While Konecranes did allege the element of “absence of justification” in its complaint, it also alleged that Davis and ICS had induced Nucor, SDI and others to break their contracts with Konecranes, or not renew them, so that ICS could gain their business. The court held that this amounted to an acknowledgement that the actions of Davis and ICS were motivated at least in part by a legitimate business interest — their own desire to secure new customers. The court held that this constituted justification under Indiana law. Having admitted in its pleadings that it lacked an element of this claim, Konecranes was barred from pursuing it.

On the claim of unfair competition, the court cited the Indiana Uniform Trade Secret Act, Ind. Code § 24-2-3-1(b) and (c) (the “IUTSA”) which “‘abolishes…causes of action for theft or misuse of confidential, proprietary, or otherwise secret information falling short of trade secret status….” It held that, under the facts of the case, Konecranes’ unfair competition claim was preempted by the IUTSA and not cognizable under Indiana law.

Practice Tip: As the court notes, while the claim under unfair competition failed, Konecranes may still pursue claims for misappropriation of information or ideas that are protected by contract. This is a good reminder to those whose practice of law includes shielding sensitive information from disclosure: if you want it protected, get it in writing.

April 25, 2013

American Professional Nursing Resources Sues Medical Staffing Worldwide for Various Unfair Trade Practices

By Overhauser Law Offices, LLC

Indianapolis, Ind. — Trademark lawyers for American Professional Nursing Resources, LLC (“APNR”) and Doyle Silvers (“Silvers”) of La Fontaine, Ind. sued Medical Staffing Worldwide, LLC (“MSW”) of Marion, Ind. et al. for use of APNR’s trademark and trade secrets; for breach of contract and fiduciary duty; for tortious interference with contracts and for violation of § 43(a) of the Lanham Act.

In March 2004, Silvers formed APNR, a global recruitment company that assists domestic employers in recruiting foreign medical professionals by providing domestic screening, training tools and foreign processing facilities. APNR and Silvers recruited Larry Myers (“Myers”), Tom Reto (“Reto”), Jon Marler (“Marler”), Dan Hasslinger (“Hasslinger”) and James Greg Bowers (“Bowers”) to develop APNR into a fully operational business. Benny Spensieri (“Spensieri”), who signed a Non-Disclosure Agreement (“NDA”), was also recruited. Myers, Reto, Marler, Hasslinger, Bowers and Spensieri agreed to maintain the secrecy of APNR’s confidential, proprietary and trade-secret information.

Silvers provided Myers, Reto, Marler, Hasslinger, Bowers and Spensieri with confidential, proprietary and trade-secret information of APNR including its business plan, business model, financial information, and methods and techniques for global recruitment, immigration, screening and training of foreign medical professionals.

In the summer of 2012, Myers, Reto, Marler, Hasslinger, and Bowers reserved the business name “Medical Staffing Worldwide, LLC.” Using that name, they formed a company that allegedly had the same business plan, business model and financial projections as APNR and that used identical methods and techniques for global recruitment, immigration, screening, and training of foreign medical professionals as APNR. MSW also began using APNR’s trademark, “The Future of Medical Staffing,” which APNR had used since 2005.

APNR and Silvers filed suit alleging breach of contract, breach of fiduciary duty, misappropriation of trade secrets, tortious interference with contracts and violation of § 43(a) of the Lanham Act. They ask for actual, consequential and punitive damages; attorneys’ fees; costs; and pre-judgment and post-judgment interest.

Practice Tip: Indiana considers non-compete agreements to be in restraint of trade and, thus, construes them narrowly. In other states, there has also been a growing trend, fueled in no small part by states’ difficulties in paying increasing unemployment benefits, to limit via legislation the enforceability of non-compete agreements. Among the states that have considered such limitations are Maryland, New Jersey, Minnesota, Massachusetts and Virginia.

March 27, 2013

Robert Payne Sues Northern Tool & Equipment et al. for Trademark Infringement, False Advertising and Breach of Contract

By Overhauser Law Offices, LLC

Hammond, Ind. – Robert Payne (“Payne”) d/b/a Paynes Products, Paynes Forks and Payne Tools of LaPorte, Ind. sued Northern Tool & Equipment Company, Inc. and Northern Tool & Equipment Catalog Company, Inc. (collectively, “Northern Tool”) of Burnsville, Minn. for alleged violations of Payne’s intellectual property rights, false advertising and breach of contract.

Payne alleges a prior business relationship with Northern Tool in which Northern Tool sold Payne’s products in Northern Tool’s stores, via its catalogs and via the Internet pursuant to various agreements between the parties. Around October 2012, Northern Tool apparently informed Payne that it was terminating the agreements. Payne alleges that, despite this, Northern Tool continues to advertise Payne’s products and has been fulfilling orders with products made by Northern Tool.

The plaintiff complains of trademark infringement, palming off, false advertising and false designation of origin under Section 43 of the Lanham Act as a result of Northern Tool allegedly continuing to advertise and sell imitation Paynes products.

Payne further complains of “Unfair Competition by Infringement of Common-Law Rights,” listing as his authority Indiana Code §§24-2-1-13 and 24-2-1-14. Payne has also asserted a claim for breach of contract against Northern Tool for failure to disgorge “excessive funds” to Payne.

Finally, the complaint lists as separate counts one of the remedies sought – an injunction – and a count demanding a jury trial. We have blogged in the past about this method of pleading here.

Practice Tip: The occasional typographic error is no stranger to many types of documents, even legal documents. However, there comes a point where such errors erode credibility and hinder readability. This complaint had obvious errors on every page and probably in more paragraphs than not. Such drafting does not endear the lawyer to the judge – or the client – and should be avoided.
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March 8, 2013

Continuation of At-Will Employment Held to be Adequate Consideration for Noncompetition Agreement

By Overhauser Law Offices, LLC

Indianapolis, IN – The Indiana Court of Appeals has reversed the decision of the Marion Superior Court to deny injunctive relief to Clark Sales & Service, Inc. (“Clark”) of Indianapolis, Indiana in its suit against John D. Smith (“Smith”) and Ferguson Enterprises, Inc. (“Ferguson”) of Newport News, Virginia.

In 1998, Smith began working for Clark, a company that sells and services appliances in the builder-distributor market in Indiana. In 2004, after one of its high-level managers left Clark for a competitive position at another company, Clark had Smith and various other employees sign a written employment agreement containing both a confidentiality clause and a noncompetition agreement.

Smith resigned his position at Clark on April 13, 2012 but, before doing so, he took copies of Clark’s sales records from 2010 and 2011, including customer and builder contact information, the price of materials sold and Clark’s costs and profit margins. On April 18, 2012, he accepted an offer of employment with Ferguson, a nearby competitor. In his new position, he solicited business from various Clark customers.

Attorneys for plaintiff Clark sued to enforce the confidentiality and noncompetition provisions of the agreement entered into with Smith. The trial court granted Clark’s non-disclosure request and ordered the confidential documents to be returned but it denied Clark’s request for an injunction to enforce the noncompetition portion of the employment agreement. The trial court noted that there had been no incentive for Smith to agree to the noncompetition provision in the form of, for example, the commencement of a new job or a pay raise. It held that, as a result, the noncompetition agreement failed for lack of consideration.

Clark filed an interlocutory appeal. In a memorandum decision, the Indiana Court of Appeals found that the trial court had abused its discretion by denying the injunction and reversed the decision. The appellate court held that Indiana law, as enunciated by the Indiana Supreme Court, was that an employer’s promise to continue an employee’s at-will employment was sufficient consideration to support the employee executing a new employment contract with a noncompetition agreement. No raise or other additional incentive was required.

The appellate court remanded the matter to the trial court for further proceedings regarding the reasonableness of the noncompetition agreement.

Practice Tip: Covenants not to compete are in restraint of trade and are not favored by the law. If a court applying Indiana law finds that portions of a noncompetition agreement are unreasonable, it may not modify the restrictions to make them reasonable. Doing so would subject the parties to an agreement they had not made. The court may, however, employ the “blue pencil” rule to “cross out” portions deemed unreasonable while leaving any separable and reasonable portions intact.

August 7, 2012

Wine & Canvas Litigation Narrowed and Clarified by Court

By Overhauser Law Offices, LLC

Indianapolis, IN – The Southern District of Indiana dismissed multiple claims by Plaintiff Wine & Canvas in its trademark infringement suit against YN Canvas, et al.

Wine & Canvas organizes parties where guests can take a painting class while enjoying cocktails. Anthony Scott (“Scott”), one of the founders of Wine & Canvas, sued multiple defendants. He alleged that he entered into a business venture wherein he would license the Wine & Canvas business model to Christopher Muylle (“Muylle”) and Theodore Weisser (“Weisser”) for use in San Francisco, both to operate a new Wine & Canvas location and to license others to operate under the Wine & Canvas name and business model. Instead, Scott alleged, the defendants breached that agreement, appropriated the Wine & Canvas model and proceeded without Scott as YN Canvas CA, LLC (“YN Canvas”). Defendants, in turn, alleged that they breached no agreement but instead merely parted ways, changing their business name to “Art Uncorked,” when Wine & Canvas insisted on a new agreement with additional terms that were unfavorable to the defendants.

Plaintiff Wine & Canvas Development, LLC (“Wine & Canvas”), via its attorneys, sued multiple defendants: (1) YN Canvas, a Nevada limited liability company with its principal place of business in California; (2) www.art-uncorked.com, the corporate website for Art Uncorked; (3) Weisser, an officer of YN Canvas; and (4) Muylle, an officer of YN Canvas (collectively, “defendants”). [NB: Art Uncorked was also named as a defendant but, as that was merely the new name of YN Canvas, which had already been named as a defendant, the court chose to refer to both by the one name, “YN Canvas.”]

The eleven-count complaint was originally filed in Hamilton County Circuit Court and included claims for trademark infringement, false designation of origin, trademark dilution, sales of counterfeit items/services, unfair competition, declaratory judgment, civil action under the Indiana Crime Victims Act, breach of contract, fraud, permanent injunctive relief, and request for writ of attachment. It was removed to the Southern District of Indiana as its Lanham Act issues provided federal question jurisdiction. We previously blogged about that element of this case here.

The parties came to the court with several motions. After a detailed discussion on personal jurisdiction, the court held that it could exercise specific jurisdiction over both Weisser and YN Canvas and denied the motion to dismiss for lack of personal jurisdiction as to them. The motion to dismiss the website as a defendant was granted, with the court finding that, “[b]ased on common sense and Indiana precedent, it is obvious to this Court that a website alone is not an entity capable of being sued.”

The court declined to discuss jurisdiction regarding “Art Uncorked,” finding that it was merely the new name of YN Canvas and, as such, it need not be considered separately. Any references to YN Canvas would also apply to Art Uncorked.

The court then moved to the defendants’ 12(b)(6) motions to dismiss for failure to state a claim. Two counts – trademark infringement under 15 U.S.C. § 1114(1)(a) and use of a counterfeit mark under 15 U.S.C. § 1116(d) – were dismissed. Each of those claims required a registered mark, which Wine & Canvas conceded it did not have. However, the court dismissed the counts without prejudice, as the registration of the marks is pending.

The court next moved to two “counts” – permanent injunction and attachment – and dismissed them summarily as inappropriate pleading. “Because these remedies are based on causes of actions in other counts within the Wine & Canvas’s complaint and are included within the Wine & Canvas’s prayer for relief,” the court held, “it is unnecessary to dedicate a separate count for each specific remedy.”

Defendants next asked the court to dismiss the claim of fraud for failure to meet the heightened standard required for pleading fraud. As no time frame or location of the alleged fraud had been included in the plaintiff’s complaint, the court dismissed the fraud claim without prejudice.

Finally, as with the “counts” for permanent injunction and attachment noted earlier, the court addressed another “count” by Wine & Canvas seeking a declaratory judgment. Ruling here on the defendants’ motion to strike, the court cited Federal Rule of Civil Procedure 12(f) allowing a court to strike “redundant, immaterial, impertinent, or scandalous matter” from any pleading and, again, held that the “count” was redundant, as appropriate remedies would be addressed in the adjudication of the substantive claims, and granted the defendants’ motion to strike.

Practice Tip #1: The decision to sue a website is a curious one and seems to be the modern-day equivalent of suing a book. It is notable that this has, however, happened. See, e.g., here. On the one hand, it is an attorney’s duty to pursue zealously his clients’ interests and, at times, that leads to maintaining a cause of action that is not a “sure thing.” On the other hand, the law is unambiguous that a website is neither a real person nor a legal entity capable of being sued and, thus, it would have been wiser to omit this “defendant.”

Practice Tip #2: The decision to include various remedies that a party is seeking as separate causes of action is also curious but, instead of zealous advocacy run amok, it merely seems to reflect improper drafting.
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May 29, 2012

Northern District Court Dismisses Copyright Infringement Claim in Suit Over RV Sales Agreement and Design

By Overhauser Law Offices, LLC

Fort Wayne; IN – The Northern District of Indiana has granted a partial summary judgment for Forks RV of Shipshewana, Indiana that dismisses copyright infringement claims in a dispute over a recreational vehicle sales agreement and design. Copyright attorneys for Amy and James Ortega had filed a lawsuit against Forks RV of Shipshewana, Indiana alleging that Fork breached a sales distribution agreement and also alleged copyright infringement over Fork’s use of Ortega’s designs for a custom RV. The court summarily dismissed the copyright infringement claim because Ortega had not registered his designs with the U.S. Copyright Office. The court noted “The Copyright Act states that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” 17 U.S.C. § 411(a).

The court, however, denied summary judgment on the breach of contract claim relating to the distribution and/or sales agreement. The court found that there was a genuine dispute of material fact, and therefore, summary judgment would be inappropriate.

Practice Tip: Copyright attorneys for Fork had requested attorney’s fees in defending the copyright infringement claim. The court granted this request, noting that . There is a strong presumption that the “prevailing party” in a copyright infringement case is entitled to recover attorney’s fees in the 7th Circuit, and that a copyright registration must be obtained before pursing an infringement claim (in most instances). Thus, plaintiffs must take care to register their copyrights before filing a copyright infringement suit, at the peril of being liable for the defendant’s attorney’s fees.

April 4, 2012

Continued Use of Trademark By Successor Company Relevant to “Piercing the Corporate Veil” and Successor Liability for Breach of Contract

By Overhauser Law Offices, LLC

Indianapolis, IN – The Indiana Court of Appeals has held that a successor company’s continued use of a trademark created a genuine issue of fact as to whether the successor should be liable for a breach of contract by its predecessor. Attorneys for Zeise & Sons Excavating, Inc. of Crown Point,Indiana had sued Boyer Construction Group Corporation (“Group”) of Highland, Indiana in the Lake County Superior Court for breach of contract and had argued that Group should be liable for the breach by its predecessor company, Boyer Construction Corporation (“Corporation”), under theories of breaching the corporate veil of an alter ego corporation. Zeise also argued that Group should be liable under a theory of successor liability. The contract in question involved construction of a retail development. It was undisputed that Zeise had performed all of its obligations under the contract and that Corporation had failed to pay as provided by the contract. The Lake County Superior court had granted Group a partial summary judgment in favor of Group, finding neither of Zeise’s theories created liability for Group.

The Court of Appeals reversed the summary judgment. The court noted that a decision to pierce to corporate veil requires a fact-sensitive inquiry. The court noted that Zeise had presented numerous facts to support piercing the corporate veil, including continued use of trademarks, logos and website address. In addition, the Court of Appeals found that continued use of trademarks, logos and website address created issues of material fact regarding Ziese’s successor liability claim. The court, however, declined to issue a summary judgment in favor of Ziese. Rather, the court found that Ziese raised a genuine question of a material fact and therefore summary judgment was not appropriate. The case has been remanded for trial.

Practice Tip: When a company sells its assets to another company, it is important to remember intellectual property such as trademarks, patents and copyrights. Failure to document an assignment or license can result the “piercing the corporate veil,” and personal liability of the business owners.

January 27, 2012

Lioness Vizions, LLC Sues Rhasha and Mikel Hoosier for Copyright Infringement in Dispute Between Co-authors of Book

By Overhauser Law Offices, LLC

Indianapolis, IN – Copyright attorneys for Lioness Vizions, LLC, Angentia Childs of Indianapolis, Indiana and Delina Hill-Brooker of Powder Springs, Georgia filed a copyright infringement suit in the Southern District of Indiana alleging that Rhasha and Mikel Hoosier of Gahanna, Ohio, Reign Media Group and Romantic Media Group of the State of Ohio infringed the copyrighted work Revealing & Healing: 3 Women’s Stories of Survival. The plaintiffs also allege other claims based on the operation of a limited liability company that marketed and sold the book.

The complaint describes how Ms. Childs, Ms. Hill-Brooker and Ms. Hoosier wrote a book together, which is the allegedly copyrighted work. Because they could not find a publisher, the three women formed a limited liability company, Lioness Vizions LLC, to publish, market and sell their book. The complaint states that the three women assigned their copyright to the company. The complaint states that in August 2010, Ms. Hoosier resigned from company and then dissolved the company without the authorization of the two other women. The complaint alleges that Ms. Hoosier, however, went on to market and sell the book on her own and formed another company to sell the book. The complaint states that Ms. Hoosier has appeared on radio shows and done other promotional activities to sell the book and has not shared the profits with the other co-authors. The complaint makes claims of wrongful dissolution for Lioness Vizions LLC, copyright infringement, right of publicity infringement, breach of operating agreement, breach of fiduciary duty, civil theft, tortuous interference with existing or potential business relationships, and unfair competition. Copyright attorneys are seeking an injunction, damages, return of all copies of the book, an order reinstating Lioness Vizions LLC, disgorgement of profits,

Practice Tip: It is interesting to note that the Plaintiffs claim venue is proper in Indiana because “solicitation of the Plaintiffs took place” in Indiana. Lioness Vizions LLC was registered as an Ohio limited liability company.
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