Jurisdiction and Venue

June 25, 2014

Indiana Trademark Law: Personal Jurisdiction Cannot be Based on Alter-Ego Theory

Indianapolis, Indiana – In the matter of American Petroleum Institute v. Bullseye Automotive Products, et al., Indiana trademark litigators Paul B. Overhauser and John M. Bradshaw of Overhauser Law Offices, attorneys for Carlos Silva, petitioned the court to dismiss Silva for lack of personal jurisdiction. District Judge Tanya Walton Pratt granted the motion to dismiss.

In July 2013, Indiana trademark attorneys for American Petroleum Institute (“API”) of Washington, D.C. sued in the Southern District of Indiana alleging that Bullseye Automotive Products Inc. and Bullseye Lubricants Inc., both of Chicago, Illinois (collectively, “Bullseye”), and Carlos Silva of Chicago Ridge, Illinois infringed registered API “Starburst” and “Donut” trademarks, Registration Nos. 1864428, 1868779, and 1872999.

The Bullseye entities are Illinois corporations that bottle and sell motor oil. Defendant Silva is the sole incorporator and shareholder of the Bullseye entities. Plaintiff API is a trade association for the petroleum and natural-gas industry.

API brought various claims against Bullseye and Silva as an individual, including trademark infringement and trademark dilution. It claimed that Bullseye’s labeling infringed on its “Starburst” and “Donut” certification marks. While Bullseye did not contest jurisdiction in Indiana, trademark lawyers for Silva asked the court to dismiss the claims against him for lack of personal jurisdiction.

API countered that the exercise of personal jurisdiction over Silva in Indiana was proper, contending that Silva personally directed the allegedly infringing activities, that he exercised complete control over Bullseye and that he and Bullseye were essentially the same entity for jurisdictional purposes. API made no argument that Silva personally had sufficient contacts with Indiana to permit an Indiana court to exercise personal jurisdiction.

The court rejected API’s “alter-ego” theory of personal jurisdiction, stating that this argument pertained to liability, not jurisdiction. Even if the court determined that Silva were the alter ego of Bullseye, a finding that the court explicitly declined to make, such potential for liability for corporate acts was held to be irrelevant to the question of personal jurisdiction. In so ruling, the court stated that it was refusing to disregard the corporate form and bypass the protections it offers, citing the longstanding rule that a “corporation exists separately from its shareholders, officers, directors and related corporations….”

The court then analyzed whether it would be appropriate to exercise personal jurisdiction over Silva based on his personal contacts with the state of Indiana. It concluded that Silva as an individual had not purposefully availed himself of the privilege of conducting activities within Indiana such that he would reasonably anticipate being haled into an Indiana court. Finding that the minimum contacts necessary had not been established, the court held that exercising personal jurisdiction over Silva would offend due process and the “traditional notions of fair play and substantial justice” and dismissed Silva from the lawsuit.

Practice Tip: Many of the arguments API made – for example, that Silva personally selected the text and design for Bullseye’s labels, that he personally negotiated with suppliers and that he oversaw production – do not support an “alter ego” theory. Activities such as these must necessarily be carried out by the sole shareholder of a small corporation. To find that a small corporation is the alter ego of a sole shareholder merely because that shareholder acts on behalf of the company would violate the basic principles of corporation law.

Paul B. Overhauser, Managing Partner of Overhauser Law Offices, also recently prevailed on the issue of personal jurisdiction in the Seventh Circuit in another lawsuit alleging trademark infringement.

May 28, 2014

Indiana Patent Law: Anchor Fails to Meet its Burden to Support Transfer of Indiana Patent Infringement Litigation

By Overhauser Law Offices, LLC

Fort Wayne, Indiana – Magistrate Judge Roger Cosbey of the Northern District of Indiana denied the motion for transfer filed by patent attorneys for Anchor Packaging, Inc. of St. Louis, Missouri (“Anchor”). Anchor sought a transfer of the declaratory judgment action filed by Mullinix Packages, Inc. of Fort Wayne, Indiana (“Mullinix”) to the Eastern District of Missouri where Anchor has a related, but later-filed infringement suit pending against Mullinix. Both patent infringement lawsuits pertain to the alleged infringement by Mullinix of Patent Nos. D679,587; D675,919 and D570,681, which were issued by the U.S. Patent Office.

Anchor and Mullinix are competitors in the commercial packaging industry. Prior to 2010, Anchor had been the primary supplier of mashed potato containers to Bob Evans Farms, Inc., a position now assumed by Mullinix. According to Mullinix, mashed potato container sales peak dramatically during the fourth quarter of the year and Mullinix’s ability to meet Bob Evans’s demand for containers during this period is critical to maintaining a successful relationship. It was around this time that patent lawyers for Anchor demanded that Mullinix cease and desist selling a tray that Anchor asserted was of a substantially similar design as trays claimed in three of Anchor’s patents.

While the cease-and-desist letter sent by Anchor’s patent counsel indicated that Anchor’s “interest is a resolution of this matter and not litigation,” Mullinix filed a complaint for declaratory judgment in the Northern District of Indiana shortly thereafter. Several weeks later, Anchor responded by filing a complaint for patent infringement in the Eastern District of Missouri.

In this opinion, Magistrate Judge Roger Cosbey, writing for the Northern District of Indiana, addresses Anchor’s motion to transfer Mullinix’s Indiana complaint for declaratory judgment for patent non-infringement to Missouri.

Anchor argued that the case should be transferred because (1) Mullinix filed its declaratory judgment action in anticipation of Anchor’s infringement suit, (2) a critical non-party witness is outside this Court’s subpoena power, but within the range of the Eastern District of Missouri, and (3) the Eastern District of Missouri is a more convenient forum.

The court evaluated Anchor’s request for transfer under § 1404(a) under precedent set by the Seventh Circuit. Under § 1404(a), a court may transfer a case if the moving party shows that: (1) venue was proper in the transferor district, (2) venue and jurisdiction would be proper in the transferee district, and (3) the transfer will serve in the convenience of the parties and the witnesses as well as the interests of justice.

As neither party disputed that both the Indiana and Missouri courts have jurisdiction and are proper venues, the court focused its analysis on the third factor. As the party requesting transfer, Anchor has the burden to show that the Eastern District of Missouri would be “clearly more convenient” than the Northern District of Indiana. In evaluating convenience, the factors to consider are: “(1) the plaintiff’s choice of forum, (2) the situs of the material events, (3) the relative ease of access to sources of proof, (4) the convenience of the parties, and (5) the convenience of the witnesses.”

The first factor, the plaintiff’s choice of forum, was held to be neutral. In general, a plaintiff’s choice of forum is entitled to substantial deference, particularly where the chosen forum is the plaintiff’s home forum. However, the court found that this factor did not weigh in either direction. In this case, there are two plaintiffs in two different fora. As a result, one of them will necessarily be disturbed.

The evaluation of the situs of the material events weighed against transfer. In patent infringement actions “the situs of the injury is the location, or locations, at which the infringing activity directly impacts on the interests of the patentee.” Mullinix is headquartered in Fort Wayne, Indiana, which is in the Northern District of Indiana, and keeps its documents pertaining to the accused infringing products in Fort Wayne. Additionally, two of the individuals who worked on the accused infringing products work and reside within the district.

For similar reasons, the court held the third factor, relative ease of access to sources of proof, to weigh against transfer.

The court briefly addressed the fourth factor, the convenience of the parties, noting that there was no way to avoid inconveniencing either one party or the other. In such a circumstance, the court held that “when the inconvenience of the alternative venues is comparable there is no[] basis for a change of venue; the tie is awarded to the plaintiff[.]”

Finally, the court addressed the fifth factor, the convenience of non-party witnesses, noting that this element was “often considered the most important factor in the transfer analysis.” The court noted with some displeasure that the parties had perhaps been disingenuous in arguing this factor. After a discussion of the evidence that had been submitted, it concluded that the parties had failed to provide it with much enlightenment on the subject and, as a result, the court was largely left to speculate about the convenience of non-party witnesses. The court thus held that this analysis-of-transfer factor was neutral.

In sum, it was found that the convenience factors did not support transfer.

The court also evaluated the interests-of-justice inquiry. On the whole, these factors – the speed to trial, familiarity with the applicable law, desirability of resolving controversies and relation of each community to the controversy – also weighed against transfer.

Finally, the court addressed the first-filed analysis under Federal Circuit precedent, which governs declaratory judgment actions in patent cases. Given that no “sound reason” for transfer had been found in the earlier analysis, court dismissed the first-filed analysis as “ancillary” and largely non-dispositive.

Practice Tip #1: The first-to-file rule is a doctrine of federal comity that generally favors pursuing only the first-filed action when multiple lawsuits involving the same claims are filed in different jurisdictions. It was designed to avoid conflicting decisions and promote judicial efficiency. Finding an exception to the first-to-file rule requires a “sound reason that would make it unjust or inefficient to continue the first-filed action.”

Practice Tip #2: A court may also consider the extent to which a declaratory judgment action is anticipatory and motivated by forum shopping. However, the Federal Circuit has repeatedly held that a finding that a filing was anticipatory does not in itself constitute sufficient legal reason to transfer or dismiss the first-filed case.

May 16, 2014

Indiana Trademark Law: Seventh Circuit Holds Indiana Court Lacked Personal Jurisdiction Over RAP4

By Overhauser Law Offices, LLC

Chicago, Illinois – Indiana trademark attorney Paul B. Overhauser, on behalf of K.T. Tran and Real Action Paintball, Inc., a California corporation (collectively “RAP4”), argued before the United States Court of Appeals for the Seventh Circuit that the trademark infringement suit brought in the Northern District of Indiana by Advanced Tactical Ordnance Systems, LLC, an Indiana corporation (“ATO”), was not properly before the Indiana court, as it lacked personal jurisdiction over RAP4. The Seventh Circuit agreed and instructed the district court to dismiss the complaint.

RAP4 and ATO are competitors in the “irritant projectile” market. Unlike the more familiar game of paintball, in which a paint-filled sphere is shot at opponents as part of a war game, these irritant projectiles are used by the police and military to intervene in hostile situations where lethal force is unnecessary. While paintballs are filled with paint, irritant projectiles use capsaicin, the active ingredient in pepper spray. Irritant projectiles, thus, allow law enforcement personnel to use less-than-lethal force from a distance.

Among the many issues in this lawsuit, including assertions by ATO of trade-dress infringement, unfair competition and misappropriation of trade secrets, were allegations that RAP4 had infringed the trademarked term “PEPPERBALL,” to which ATO claimed ownership. That trademark, Registration No. 2716025, was issued in 1999 by the U.S. Trademark Office to a non-party to this suit.

The trouble began when another company, non-party PepperBall Technologies, Inc. (“PTI”), began to have financial problems. PTI had also been a competitor in the irritant-projectile market. To address its difficulties, PTI held a foreclosure sale, the validity of which was hotly contested. ATO claimed that it had purchased PTI’s trademarks – including “PEPPERBALL” – and other property during this foreclosure sale.

During the time that PTI ceased its operations and was attempting to convey its assets, RAP4 was contacted by an executive of non-party APON, a company which had manufactured some of PTI’s irritant projectiles. He asked if RAP4 was interested in acquiring irritant projectiles from APON.

RAP4 agreed to purchase irritant projectiles from APON. After having negotiated this access to APON’s machinery, recipes, and materials – which had had at one time been used by PepperBall Technologies Inc. – RAP4 announced this fact to the people on its e-mail list. Specifically, it stated in its e-mail that it had acquired access to, “machinery, recipes, and materials once used by PepperBall Technologies Inc.” It was this language to which ATO, which claimed to be the successor in interest to PTI, particularly objected.

ATO sent a cease-and-desist letter to RAP4. In response, RAP4 added a disclaimer that it was not affiliated with PTI. ATO then sued in the Northern District of Indiana. It claimed several different theories of recovery, including intentional violations of the Lanham Act, 15 U.S.C. § 1111 et seq., common law trademark infringement and unfair competition, trade dress infringement, and misappropriation of trade secrets.

Of particular interest to the Seventh Circuit in addressing this Indiana trademark litigation was the issue of personal jurisdiction over RAP4 in the Northern District of Indiana. RAP4 contested that such jurisdiction over it was lacking. ATO countered that RAP4 had sufficient contacts, including a “blast e-mail” announcement from RAP4 that would suffice for jurisdiction in Indiana, stating that “many [RAP4 customers] are located here in the state of Illinois. I mean, state of Indiana.” It also contended that RAP4 regularly e-mailed customers or potential customers from all over the United States, including Indiana, and that RAP4 had made at least one sale to an Indiana resident.

ATO conceded that it lacked general jurisdiction. Thus, the Seventh Circuit turned to an analysis of specific jurisdiction. “For a State to exercise jurisdiction consistent with due process, the defendant’s suit-related conduct must create a substantial connection with the forum State,” noted the appellate court. Moreover, the relation between the defendant and the forum “must arise out of contacts that the ‘defendant himself’ creates with the forum.”

In determining that personal jurisdiction existed, the Indiana district court had relied on several facts: “first, [RAP4] fulfilled several orders of the allegedly infringing projectiles for purchasers in Indiana; second, it knew that Advanced Tactical was an Indiana company and could foresee that the misleading emails and sales would harm Advanced Tactical in Indiana; third, it sent at least two misleading email blasts to a list that included Indiana residents; fourth, it had an interactive website available to residents of Indiana; and finally, it put customers on its email list when they made a purchase, thereby giving the company some economic advantage.”

The Seventh Circuit held that these facts were insufficient to support specific jurisdiction. The only Indiana sales that would have been relevant were those that related to RAP4’s allegedly unlawful activity. ATO failed to meet its burden of proof of any such Indiana sales. Similarly, the court held that any effects that were purportedly felt in Indiana by ATO did not support specific jurisdiction. Instead, the relation between RAP4 and the Indiana forum “must arise out of contacts that the defendant himself creates with the forum State.”

Further, neither RAP4’s e-mail communications nor its website were held to create specific jurisdiction. If such contacts were sufficient, the court held, there would be no limiting principle on personal jurisdiction and a plaintiff could sue almost any defendant with an Internet presence or which utilized e-mail in almost any forum in the United States or the world. To find jurisdiction on such vanishingly small contacts would offend the long-held and traditional “notions of fair play and substantial justice.”

The Seventh Circuit remanded the case to the Indiana district court with instructions to vacate the judgment and dismiss the complaint for lack of personal jurisdiction.

Practice Tip #1: RAP4’s references to “Pepperball Technologies, Inc.” could not as a matter of law constitute trademark infringement, counterfeiting or false advertising. Instead, RAP4’s use of its competitor’s name is a merely a wholly permissible nominative use of that mark. As a matter of law, a “nominative use of a mark – where the only word reasonably available to describe a particular thing is pressed into service – lies outside the strictures of trademark law.”

Practice Tip #2: Personal jurisdiction is an essential element of federal court jurisdiction, without which the court is powerless to adjudicate the matter before it. However, a defendant’s argument that personal jurisdiction does not exist can easily be waived inadvertently by the incautious litigant. In this case, an evidentiary hearing regarding personal jurisdiction was conducted in December 2012. It was only by careful preservation of this argument by trademark counsel for RAP4 while litigating in the district court that the appellate court was able to hear RAP4’s claim and reverse the district court.

Practice Tip #3: This case was successfully argued before the Seventh Circuit by Paul B. Overhauser, Managing Partner of Overhauser Law Offices.

February 27, 2014

James Dean, Inc.’s Indiana Trademark Infringement Litigation Against Twitter Removed to Federal Court

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Illinois and Missouri trademark attorneys for James Dean, Inc. of Indiana sued in Indiana state court alleging that Twitter, Inc. of California infringed the trademark James Dean, which has been issued by the U.S. Trademark Office by allowing the registration of the Twitter handle @JamesDean. The case was removed from the Superior Court of the County of Hamilton, Indiana to the Southern District of Indiana.

Plaintiff James Dean, Inc. filed a trademark complaint against Twitter, as well as the fictitious persons, John Doe Defendants 1-5 Company, in an Indiana state court. In the complaint, Plaintiff alleged that it is the exclusive owner of the name, likeness, voice, right of publicity and endorsement, worldwide trademarks, copyrights, and other intellectual property including but not limited to visual and aural depictions, artifacts, memorabilia, and life-story rights, and/or trade dress of the late movie star James Dean.

James Dean, Inc. further alleges that Twitter has allowed the registration and operation of a Twitter account, using the handle @JamesDean, located at https://twitter.com/JamesDean, which is purportedly in violation of Plaintiff’s rights.

In the complaint, filed by an Indiana trademark lawyer, James Dean, Inc. asserted nine causes of action against Twitter:

• Count I – Trademark Infringement Under Section 32(1) or 3(A) of the Lanham Act;
• Count II – False Endorsement Under Lanham Act § 43(A);
• Count III – Indiana State Statutory Right of Publicity;
• Count IV – Common Law Right of Publicity;
• Count V – Common Law Unfair Competition;
• Count VI – Unjust Enrichment;
• Count VII – Conversion;
• Count VIII – Deception; and
• Count IX – Indiana Crime Victims’ Act.

For relief, James Dean, Inc. sought damages, including treble damages, costs, and attorney’s fees as set out in the Indiana Right of Publicity Statute, Lanham Act and other statutes. In addition, Plaintiff seeks injunctive relief.

Twitter removed the action pursuant to 28 U.S.C. § 1331 (federal-question jurisdiction) and 28 U.S.C. § 1332 (diversity-of-citizenship jurisdiction). To support the former basis for federal jurisdiction, Twitter noted federal questions inherent in the filing of a claim under the Lanham Act. Twitter also claimed supplemental jurisdiction for the remaining claims under Indiana law.

To support the latter basis for jurisdiction in an Indiana federal court, Twitter asserted that the two prongs for diversity-of-citizenship jurisdiction were met. First, James Dean, Inc. is a citizen of Indiana, as it has alleged that it is incorporated under the laws of the State of Indiana with its principal place of business in Indiana, while Twitter claims to be a citizen of two states: Delaware and California. Second, while Twitter “strongly contests liability and does not believe Plaintiff is entitled to any relief whatsoever,” it indicated that, were liability to be found, the amount in controversy could exceed $75,000, given that James Dean, Inc. is suing for “all damages” allowed by the applicable statutes, which can include actual damages, treble damages, punitive damages, statutory damages and attorneys’ fees.

Practice Tip:

James Dean was born on February 8, 1931, in Marion, Indiana. He grew up in Fairmount, Indiana, about 60 miles northeast of Indianapolis. Dean starred in East of Eden, Rebel Without a Cause and Giant, receiving two Academy Award nominations for Best Actor.

In 1955, Dean died in an automobile accident. As a result of the nearly 60 years that have passed since his death, it is unlikely that those who follow @JamesDean believe that the tweets have been written by James Dean himself. Nonetheless, celebrity licensing agency CMG Worldwide, based out of Carmel, Indiana, is attempting to recover the James Dean Twitter account.

CMG, which also represents such celebrity images as Marilyn Monroe, Jackie Robinson and Babe Ruth, has attempted “on numerous occasions” to make Twitter take action to block and identify owners of various unauthorized accounts. Those accounts could give the impression, it says, that the users have permission from the estates of the celebrities or CMG and “result in immeasurable and irreparable damage.”

Finally, most of the James Dean trademarks that were registered by the U.S. Trademark Office have been either abandoned or cancelled. It will be interesting to see to what degree this fact influences the court, should liability be established and a calculation of damages be appropriate.

February 10, 2014

Swag Merchandising and Musical Group Devo Sue for Trademark Infringement

By Overhauser Law Offices, LLC

Indianapolis, Indiana – An Indiana trademark attorney for Swag Merchandising, Inc. and Devo Inc., both of California, sued in Hamilton Superior Court alleging that Your Fantasy Warehouse, Inc. d/b/a T.V. Store Online and Fred Hajjar, both of Commerce Township, Michigan, infringed Devo’s Trademarks, Registration Nos. 3161662 and 3167516, which have been registered by the U.S. Trademark Office. The case has been removed from Indiana state court to the Southern District of Indiana.

Swag claims that it owns the exclusive right to license the various trademarks, copyrights and individual and collective rights of publicity of the musical group Devo. The group is best known for the song “Whip It,” which hit number 14 on the Billboard chart in 1980. Swag indicates that it licenses the Devo intellectual property to third parties around the globe.

T.V. Store Online is in the business of manufacturing, marketing and distributing apparel and memorabilia featuring classic and current television programming, movies and/or music. T.V. Store Online and Hajjar have been accused of manufacturing, producing, marketing, advertising and/or retailing a product known as “Energy Dome Hats.” Plaintiffs assert that these Energy Dome Hats are commonly associated with Devo but have not been licensed by Plaintiffs to Defendants. Plaintiffs further claim that consumers coming into contact with Defendants’ product would “immediately recognize the same as being associated with, sponsored by and/or endorsed by” the ’80s group.

In the complaint, filed by an Indiana trademark attorney, Plaintiffs assert the following:

• I: Violation of 15 U.S.C. §1125(a) of the Lanham Act
• II: Trademark Infringement – 15 U.S.C. §1114 and Common Law
• III: Counterfeiting
• IV: Dilution – 15 U.S.C. §1125(c) and New York General Business Law §360-1
• V: Common Law Unfair Competition
• VI: Statutory Right of Publicity [NB: under Indiana law]
• VII: Right of Publicity Infringement Under California Civil Code §3344
• VIII: Common Law Right of Publicity
• IX: Conversion [NB: under Indiana law]
• X: Deception [NB: under Indiana law]
• XI: Indiana Crime Victims Act

Plaintiffs ask for an injunction; the surrender of infringing materials; damages, including treble damages; costs and fees. An Indiana intellectual property lawyer for Defendants removed the case to federal court, although he noted that the removal was not a concession that the Southern District of Indiana was the proper venue for the California Plaintiffs or the Michigan Defendants.

Practice Tip:

This is at least the third case filed by Theodore Minch about which we have blogged. In at least two prior cases, LeeWay Media Group, LLC v. Laurence Joachim et al. and Leon Isaac Kennedy v. GoDaddy et al., Mr. Minch has filed in an Indiana court despite none of the parties having any connection to Indiana.

It can be surmised that perhaps the choice of Indiana as a forum might have been driven by an attempt to increase damages. I.C. §§ 35-43-4-3 and 35-43-5-3(a)(6) are criminal statutes, claimed in the complaint in conjunction with an attempt to parlay the accusation into an award for damages, costs and attorneys’ fees. The Indiana Court of Appeals has discussed “theft” and “conversion” as they pertain to takings of intellectual property in several recent cases (see, for example, here and here) and has made it clear that criminal statutes often apply differently to an unlawful taking of intellectual property.

November 13, 2013

Endotach’s Patent Infringement Lawsuit Against Cook Medical Dismissed for Lack of Standing

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Endotach LLC of Plano, Texas sued Cook Medical Inc. of Bloomington, Indiana alleging infringement of Endovascular Bypass Graft, U.S. Patent No. 5,122,154 (the “‘154 patent”) and Endovascular Stent with Secure Mounting Means, U.S. Patent No. 5,593,417 (the “‘417 patent”; collectively, the “Rhodes patents”) issued by the U.S. Patent Office. Endotach filed its complaint in the Northern District of Florida. The case was transferred to the Southern District of Indiana upon Cook’s request.

The patents at issue, both of which were issued in the 1990s, were granted to Dr. Valentine Rhodes, an award-winning surgeon who practiced in the field of vascular medicine for over 30 years. The patents are directed to intraluminal and endovascular grafts for placement within a blood vessel, duct or lumen to hold it open. As it pertains to this lawsuit, the patents-in-suit are used for revascularization of aneurysms or stenosis occurring in blood vessels which includes anchoring projections to aid in securing the graft in place within the blood vessel.

Upon the death of Dr. Rhodes, the patents-in-suit passed as part of his estate. Dr. Rhodes’ Will bequeathed all “tangible personal property” to his wife, Brenda Rhodes (“Mrs. Rhodes”). However, there was no specific bequest of the Rhodes patents or mention of any intangible property. The Will’s residuary clause bequeathed “all the residue of [Dr. Rhodes’] estate, real and personal” to a Trust (the “Rhodes Trust”). Upon Dr. Rhodes’ death, his two daughters and Mrs. Rhodes became Co-Trustees of the Trust.

In November 2009, Mrs. Rhodes executed a document entitled “Exclusive License Agreement,” listing herself as the “patent owner.” The agreement purported to transfer an exclusive license on the ‘417 patent to Acacia Patent Acquisition LLC. That license was later assigned to Endotach and amended to include the ‘154 patent.

Endotach sued Cook in July 2012 asserting infringement of one or more claims in each of the patents-in-suit. In that complaint, it asserted that Mrs. Rhodes owned the patents-in-suit and that, as a result of the exclusive license Mrs. Rhodes had granted, Endotach had the right to enforce the patents against all infringers.

Cook moved to dismiss the lawsuit for lack of subject matter jurisdiction arguing that Endotach did not have standing to bring suit. On July 12, 2013, presumably in response to the motion, an “amendment” to the exclusive licensing agreement transferred an exclusive license on the Rhodes patents to Endotach from the Rhodes Trust. It was signed by Mrs. Rhodes and the other Co-Trustees.

In this opinion, Senior Judge Larry J. McKinney addressed Cook’s contention that Endotach did not have standing to sue. The court concluded that Endotach did lack standing as Mrs. Rhodes did not have any individual property interest in the Rhodes patents at the time that she purported to convey an exclusive license. The court dismissed Endotach’s lawsuit without prejudice.

Practice Tip #1: The principle of standing that is important in this case is whether or not Endotach had any legal rights and interests to the Rhodes patents at the time it filed suit. While there are some exceptions, in general, a plaintiff may not sue to assert rights held by third parties.

Practice Tip #2: Apparently realizing that the earlier effort to convey the license might be successfully challenged (as it was) and the case dismissed as a result (as it was), an additional complaint was filed on July 16, 2013, shortly after a new attempt was made to convey to Endotach an exclusive license to the patents-in-suit, this time by the Rhodes Trust. See here.

July 8, 2013

Southern District of Indiana Dismisses Wine & Canvas’ Suit for Lack of Personal Jurisdiction

By Overhauser Law Offices, LLC

Indianapolis, Indiana — The Southern District of Indiana denied a motion by Wine & Canvas Development, LLC for default judgment and instead dismissed claims against Rachael Roberts and all defendants for lack of personal jurisdiction. The suit alleged that Rachael Roberts, Avraham Levi, and Las Vegas Bungee, Inc. d/b/a Design & Wine of Las Vegas, Nevada, infringed Wine & Canvas’ trademark, Registration No. 4,185,017, which has been registered with the U.S. Trademark Office.

Wine & Canvas Development, LLC (“Wine & Canvas”), filed this action in Indiana state court alleging that defendants Rachel Roberts, Avraham Levi, and Las Vegas Bungee, Inc., d/b/a Design and Wine (“Design and Wine”) (collectively, the “defendants”) violated the Lanham Act by infringing on Wine & Canvas’ trademark through the use of the Design & Wine Las Vegas website. Roberts unilaterally removed the action to federal court in November 2012.

Wine & Canvas moved for default judgment January 16, 2013, after defendants failed to respond to its complaint. Two days later, Roberts moved to dismiss for lack of personal jurisdiction. Roberts attested that she is married to Levi, that they are the sole owners of Design and Wine, that they have one store, that it is located in Las Vegas and that they have never done business in Indiana. She further attested that they have never contacted a business in Indiana, have never offered or sold any franchises in Indiana, have no bank accounts in Indiana, have no employees in Indiana, have no affiliates in Indiana, have not sold any services or gift certificates in Indiana and have never purposefully targeted any residents of Indiana.

In response to Roberts’ motion, Wine & Canvas moved to strike her affidavit. It argued that her affidavit was insufficient because she had not attested to her personal knowledge or her competence. It also claimed that Roberts’ earlier removal of the case to federal court prevented her from claiming a lack of personal jurisdiction. Finally, it argued that her motions were filed only on her own behalf, and not also on behalf of the other two defendants.

The court was not persuaded by Wine & Canvas’ arguments. It held that Roberts’ affidavit was sufficient, because, as a corporate officer of Design and Wine, she was presumed to have personal knowledge of the acts of that business. It next held that Roberts’ earlier motion to remove the case to federal court did not prevent her from successfully arguing a lack of personal jurisdiction. Finally, although Roberts filed her motion on her own behalf, not on behalf of the other two defendants, the motion challenged the court’s personal jurisdiction and contains common attestations regarding the defendants’ business activities. The court decided sua sponte to raise the issue of personal jurisdiction regarding the non-moving defendants and held that it lacked such jurisdiction. The court dismissed the matter without prejudice.

Practice Tip #1: While all defendants typically must consent to removal under 28 U.S.C. § 1441, failure to do so is a procedural defect that must be raised (here, by Wine & Canvas) within thirty days. Wine & Canvas did not object to Roberts’ unilateral removal and, hence, the issue was waived.

Practice Tip #2: Courts have held that the mere existence of nationally accessible websites is a poor foundation on which to base personal jurisdiction. Here, a holding that accepted Wine & Canvas’ argument would result in personal jurisdiction in Internet-related cases in every forum in the country. That, in turn, would go against the grain of the Supreme Court’s jurisprudence which has stressed that, although technological advances may alter the analysis of personal jurisdiction, those advances may not eviscerate the constitutional limits on a state’s power to exercise jurisdiction over nonresident defendants.

January 29, 2013

Southern District of Indiana Denies All Summary Judgment Motions Regarding Family of Corn Oil Extraction Patents

By Overhauser Law Offices, LLC

Indianapolis, IN – The Southern District of Indiana has denied all summary judgment motions of both plaintiff CleanTech and all defendants in this multi-district litigation involving patents issued by the US Patent Office.

GreenShift Corp. and its subsidiary GS CleanTech Corp. (“CleanTech”) have brought a series of suits alleging infringement of their family of patented methods of extracting corn oil from byproducts of ethanol manufacturing. This multi-district litigation, In re Method of Processing Ethanol Byproducts and Related Subsystems (‘858) Patent Litigation, consolidates 11 separate actions in multiple states involving several similar patents in the Southern District of Indiana.

The defendants are: Big River Resources Galva, LLC; Big River Resources West Burlington, LLC; Cardinal Ethanol, LLC; ICM, Inc.; LincolnLand Agri-Energy, LLC; David J. Vander Griend; Iroquois Bio-Energy Co., LLC; Al-Corn Clean Fuel; Blue Flint Ethanol, LLC; ACE Ethanol, LLC; Lincolnway Energy, LLC; United Wisconsin Grain Producers, LLC; Bushmills Ethanol, Inc.; Chippewa Valley Ethanol Co.; Heartland Corn Products and Adkins Energy, LLC.

The initial litigation alleged infringement of one patent, U.S. Patent No. 7,601,858 (the “‘858 patent”), which was issued on October 13, 2009. CleanTech sued GEA Westfalia Separator, Inc. (not a party in this matter) and others alleging infringement of that patent shortly after its issuance.

Allegations of infringement of three additional patents, U.S. Patent Nos., 8,008,516 (the “‘516 patent”), 8,008,517 (the “‘517 patent”) and 8,283,484 (the “‘484 patent”; collectively known, together with the ‘858 patent, as the “‘858 patent family”) were later added. The patents in the ‘858 family share an identical specification and have substantially similar claim terms. As such, the court concluded that the construction of the ‘858 patent applied to all of the asserted claims in the other patents in the ‘858 family.

CleanTech’s patented methods recover corn oil by evaporating, concentrating and mechanically separating thin stillage (“stillage”), a byproduct of ethanol produced from corn, into two components: corn oil and a post-recovery syrup (“syrup”) with most of its corn oil removed. In the patents, the term “substantially oil free” (and the essentially identical term “substantially free of oil”) had been used to describe the syrup after the patented process had removed the corn oil.

The defendants argued that this language required that, to infringe upon the patented processing, a removal process must remove almost all of the corn oil from the syrup. The defendants moved for a finding on summary judgment that they had not infringed, arguing that the patented process did not include one which did not render the processed syrup “substantially oil free.” The court disagreed that this was the proper construction of the term.

Defendants also asked the court to construe “substantially oil free” to require that at least 95% of the oil from the unprocessed stillage be removed by the patented oil-removal process, thus rendering any less efficient process non-infringing. While the court agreed that a comparison between the oil levels in the input stillage and the output syrup was appropriate when considering the term, it declined to limit the protection afforded by the patent to this, or any, specific percentage and held that the term “substantially oil free” was to be interpreted according to its ordinary meaning.

In addressing the issue, the court discussed the language of the various patents and noted that, across the entire ‘858 patent family, the term “substantially oil free” had been found in only two substantially similar claims. Further, the one reference found in the specification had been parenthetical — “[r]ecombining the syrup (which is substantially free of oil) from the centrifuge…” — and, according to the court, “almost an afterthought.”

In sum, on this issue, the court found that none of the claims in the ‘858 patent family required that the post-oil-recovery syrup be substantially free of oil and concluded, instead, that the ‘858 patent family merely disclosed that the post-oil-recovery syrup was “substantially free of oil.” The court held that the primary focus of the invention was not the amount of oil that remained in the syrup but, instead, on the recovery of oil.

Additionally, the defendants (except Adkins) asked the court to revisit an earlier construction of the term “substantially oil,” as applied to the corn oil captured, asking that it be held to mean that the oil must be nearly pure. Defendant Cardinal further argued that the “substantially oil” term should be construed to mean nearly 100% pure, with only trace amounts of contaminants. The court declined to readdress the construction of this term.

The court also denied CleanTech’s motions for summary judgment against various defendants.

Finally, the court acknowledged that, since receiving the parties’ summary judgment motions, it had allowed CleanTech to amend its complaints against each defendant such that nearly all patents in the ‘858 family were asserted against each defendant. Consequently, all summary judgment motions were denied without prejudice and with leave to re-file them to address the amended complaint.

Practice Tip #1: Multi-district litigation affords consistency and judicial economy, as well as allowing plaintiffs and defendants to concentrate their efforts in one forum. However, lawsuits that are not settled before trial must later be remanded to the transferring court and to a judge who has had little opportunity to become familiar with the issues.

Practice Tip #2: In this case, CleanTech filed suit almost immediately after the issuance of the first of the patents in the ‘858 family. Thus, damages are limited to a reasonable royalty upon a showing that an infringer had actual notice of the published patent application and that the patent was subsequently issued on essentially the same claims. As such, if a patent is filed in anticipation of litigation, it is wise to provide such notice immediately upon publication of the patent application.

November 12, 2012

Three Rivers Alleges Trademark Infringement against Parker Compound Bows re: Tomahawk Bows Mark

By Overhauser Law Offices, LLC

Fort Wayne, IN – Three Rivers Archery Supply, Inc. of Ashley, Indiana, along with Dale and Sandra Karch, have filed a trademark infringement suit against Parker Compound Bows, Inc. of Virginia. The suit alleges infringement of the mark TOMAHAWK BOWS, Registration No. 3, 156,258 issued by the US Trademark Office. The plaintiff claims that Parker has been distributing crossbows using the name TOMAHAWK, which infringes their products and could be confusing to the public.”

Practice Tip: The complaint does not appear to allege sufficient facts that would give the court personal jurisdiction over the defendant Parker. It merely alleges, “On information and belief, Parker has been conducting continuous and systematic business by marketing and selling infringing bows and related materials and equipment within the State of Indiana and within the Northern District of Indiana.” It is also curious that the TOMAHAWK registration is owned by Dale and Sandra Karch individually, yet the complaint alleges that they do not sell bows – only Three Rivers Archery is alleged to sell bows.

November 9, 2012

Indiana Court Transfers Warsaw Orthopedic Patent Infringement Case to California

By Overhauser Law Offices, LLC

South Bend, IN. The Northern District of Indiana has granted Defendant, NuVasive, Inc.’s request to transfer the patent infringement suit filed by Plaintiff, Warsaw Orthopedic, Inc., to the Southern District of California for the convenience of the parties and witnesses, and in the interest of judicial economy.

Warsaw Orthopedic, Inc. owns the three patents at issue and has various license arrangements to make, import, and sell products under these patents. On August 17, 2012, Warsaw and its licensees brought suit in the Northern District of Indiana against NuVasive, Inc. alleging infringements of the three patents in the manufacture and sale of medical devices and procedures used in spinal surgery. NuVasive filed their motion for transfer on September 4, 2012, arguing that transfer to Southern District of California would be more convenient for the parties, witnesses and in the interest of justice because of the similarity to a pending patent infringement case. NuVasive is also a party to a case in California involving thirteen patents related to medical devices and procedures used in spinal surgery, which is being litigated in three phases. The first phase concluded on September 20, 2011 and phase two has begun the discovery process. Although venue is proper in both Indiana and California because NuVasive has the requisite minimum contacts to Indiana yet has established the business in California, the court ultimately determined that in the interest of justice and for the conveniences of the parties and witnesses, transfer of the instant case to California is proper. The court determined that a stronger relationship exists between the current events and the California case and that the California court is already familiar with the parties and related issues so no undue time would need to be expensed. Furthermore, evidence to Warsaw’s earlier willingness to consent to transfer in exchange for incorporation into phase two of the California case demonstrated the seemingly tenuous relationship to Indiana and carried significant weight in the court’s analysis. Also, the alleged infringement predominately occurred in California and more non-party witnesses are located in California, with none residing in Indiana. Therefore, NuVasive’s motion for transfer to the Southern District of California was granted.

Practice Tip: Pursuant to 28 U.S.C. § 1404 et seq., Granting transfer is solely within the discretion of the court and Federal district courts may transfer any civil action to any other district for convenience of parties and witnesses and in the interest of justice if venue is proper in both courts. Thus separate analysis of venue, convenience of witnesses and parties and interest of justice must be undertaken.