New Decisions

April 16, 2015

Indiana Trade Secret Law: Think Tank’s Information Was Not a Trade Secret as a Matter of Law

Indianapolis, Indiana – The Court of Appeals of Indiana affirmed the directed verdict of Special Judge William E. Alexa of Porter Superior Court. Writing for the Indiana appellate court, Judge John Baker concluded that the trial court had not erred in ruling that Defendants’ information was insufficiently private to constitute trade secrets.

Appellant-Plaintiff Think Tank Software Development Corporation, d/b/a Think Tank Networking Technologies Group and Think Tank Information Systems (“Think Tank”) is engaged in computer-related business activities, including systems and network engineering, problem solving, systems design, implementation, sales, client training, and computer maintenance. During 2001 and 2002, multiple employees left Think Tank and joined its competitor, Chester, Inc.

In 2002, Think Tank sued Chester as well as former Think Tank employees Mike Heinhold, John Mario, Joel Parker, Thomas Guelinas, Jon Meyer, Daniel Curry, Eric M. Wojciechoswki, Michael Gee, Philip Ryan Turner and Carl Zuhl alleging: 1) breach of the covenant not to compete, 2) breach of the confidentiality clause, 3) breach of the agreement not to solicit its employees for other work, 3) tortious interference with contracts, 4) misappropriation of trade secrets, 5) tortious interference with business relationships, 6) unjust enrichment, and 7) defamation. Think Tank also included a claim for unfair competition against Chester.

After much litigation, including two prior appeals to the Indiana Court of Appeals, this Indiana trade secret lawsuit was again heard by the trial court on the remaining claims: misappropriation of trade secrets, tortious interference with contracts, and breach of the covenant not to compete and confidentiality provisions.

The most interesting of the claims in this lawsuit is Think Tank’s assertion of misappropriation of trade secrets. Defendants moved for a directed verdict on that count, as well as all other claims against them. The trial court granted the directed verdict on Think Tank’s claim for misappropriation of trade secrets, reasoning that, “[it] is a question of law for the Court relative to what is and what is not a trade secret. Plaintiff has failed to show that the information obtained was ever, in law, a trade secret.”

Shortly after this ruling, Think Tank sought review a third time from the Indiana Court of Appeals. It claimed that its trade secrets included: 1) the nature and design of its technical solutions; 2) the design of its customers’ computer systems; 3) pricing; and 4) customer identities. Think Tank further argued that the trial court could not determine as a matter of law whether information was a trade secret under Indiana Code section 24-2-3-2, which defines a trade secret as:

information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The Indiana appellate court declined to address Think Tank’s argument whether a trial court could determine as a matter of law whether information was a trade secret under Indiana law. However, it concluded that Think Tank had failed in its burden to avoid the directed verdict: “as a matter of law, Think Tank failed to produce enough evidence to allow a reasonable fact finder to determine that the proffered information was trade secrets.” Specifically, it found that Think Tank failed to show that any of the information alleged to be trade secrets was not generally known to or ascertainable by the public.

The appellate court agreed with the Indiana trial court that: 1) the computer certifications and intellectual capital that Think Tank possessed was readily available information; 2) knowledge of customers’ computer systems and current or future needs was readily ascertainable, as such information belonged to the customers in question; and 3) pricing information did not constitute a trade secret, as it too was readily available from the customers. Thus, the information was not a trade secret.

The Indiana appellate court continued that Think Tank appeared not to be trying to protect its trade secrets, but instead to prevent competition. Such a goal, the court said, might be effectuated by a non-competition agreement. However, the use of Indiana legislation designed to protect trade secrets could not properly be stretched to hinder the use of information that appeared to be generally known or readily obtained from another source.

April 15, 2015

Patent Law: EFF Busts Podcasting Patent, Invalidating Key Claims at Patent Office

By Overhauser Law Offices, LLC

San Francisco, California – The U.S. Patent and Trademark Office (“USPTO”) invalidated key claims in the so-called “podcasting patent” last week after a petition for review from the Electronic Frontier Foundation (“EFF”). This decision significantly curtails the ability of a patent troll to threaten podcasters big and small.

“We’re grateful for all the support of our challenge to this patent. Today is a big victory for the podcasting community” said EFF Staff Attorney Daniel Nazer, who also holds the Mark Cuban Chair to Eliminate Stupid Patents. “We’re glad the Patent Office recognized what we all knew: ‘podcasting’ had been around for many years and this company does not own it.”

The “podcasting patent” became big news in 2013, when a company called Personal Audio, LLC, began demanding licensing fees from podcasters including comedian Adam Carolla and three major television networks. Personal Audio doesn’t do podcasting itself, but instead used its patent to claim infringement and collect payouts from actual creators.

In petitions filed with Patent Office, EFF showed that Personal Audio did not invent anything new before it filed its patent application, and, in fact, other people were podcasting for years previously. Earlier examples of podcasting include Internet pioneer Carl Malamud‘s “Geek of the Week” online radio show and online broadcasts by CNN and the Canadian Broadcasting Corporation (CBC).

“We have a lot to celebrate here,” said EFF Staff Attorney Vera Ranieri. “But unfortunately, our work to protect podcasting is not done. Personal Audio continues to seek patents related to podcasting. We will continue to fight for podcasters, and we hope the Patent Office does not give them any more weapons to shake down small podcasters.”

EFF partnered with attorneys working pro bono and the Cyberlaw Clinic at Harvard‘s Berkman Center for Internet and Society to craft the petition for review with the USPTO.

This edited article was provided by the Electronic Frontier Foundation, a nonprofit group which advocates for innovators and users of technology. The article has been licensed under the Creative Commons Attribution License.

This should not be taken as legal advice specific to any individual network operator. If you want such advice, please consult a copyright attorney.

April 13, 2015

Indiana Copyright Litigation: Court Grants Plaintiff’s Motion to Dismiss Copyright Lawsuit

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Indiana copyright attorneys for Redwall Live Corporation (“Redwall”) of Indianapolis, Indiana asked the Southern District of Indiana to dismiss Redwall’s own copyright litigation. Redwall’s complaint alleged that ESG Security, Inc. (“ESG”), also of Indianapolis, Indiana, infringed the logo that Redwall had designed for ESG. That logo has been registered by the U.S. Copyright Office. The court dismissed the complaint in its entirety. Redwall will be permitted to refile the non-copyright counts in Indiana state court but the copyright count was dismissed with prejudice.

Redwall is a consulting and design-services firm engaged in the business of strategic branding and advertising. Its services include developing a clear message and a unique visual image as well as developing brand value for its clients.

In its 2013 complaint against ESG, Redwall stated that it had been hired by ESG to reinvent ESG’s brand. As part of this project, it created a new logo design for ESG, which was copyrighted under Registration No. VA 1-874-872. Redwall asserted that ESG had failed to pay Redwall in full for the work done and that ESG nonetheless had continued to use Redwall’s copyrighted logo on a variety of items. Indiana copyright lawyers for Redwall sued for copyright infringement under federal law, as well as breach of contract and unjust enrichment under Indiana state law.

Redwall later decided that pursuing the copyright portion of the claim was not worth the expense. As the Judge Sarah Evans Barker put it, they concluded that “the game is not worth the candle.” Copyright attorneys for Redwall asked the court to dismiss the copyright complaint without prejudice. Attorneys for ESG asked the court instead to dismiss Redwall’s copyright claim with prejudice.

In evaluating Redwall’s motion to dismiss, the court cited its discretion to attach conditions to the dismissal of a lawsuit – “the quid for the quo of allowing the plaintiff to dismiss his suit without being prevented by the doctrine of res judicata from bringing the same suit again.” The court noted that Redwall seemed to have added a less-than-robust copyright claim as leverage to obtain its true goal of payment under its contract with ESG. Judge Barker concluded that to allow Redwall to withdraw that copyright claim without any res judicata consequences would reward that gamesmanship. The court determined that, as a proper exercise of its discretion, it would dismiss Redwall’s copyright claim with prejudice but permit Redwall’s remaining state-law claims to be refiled in state court.

Practice Tip: Filing a copyright lawsuit can be perilous, as the plaintiff may later be unable to dismiss that litigation without incurring liability for the defendant’s attorney fees. As the Seventh Circuit held in Riviera Distribs., Inc. v. Jones, a voluntary dismissal of a copyright claim by the plaintiff – if that claim is dismissed with prejudice – is sufficient to trigger the duty of the plaintiff to pay the attorney’s fees incurred defending against the allegations of copyright infringement: “[Defendant] Midwest obtained a favorable judgment. That this came about when [Plaintiff] Riviera threw in the towel does not make Midwest less the victor than it would have been had the judge granted summary judgment or a jury returned a verdict in its favor. Riviera sued; Midwest won; no more is required.” Similarly here, ESG qualifies as a “prevailing party” under the Copyright Act and is thus presumptively entitled to attorneys’ fees for the litigation of that claim under 17 U.S.C. § 505.

March 23, 2015

Copyright Law: Jury Finds “Blurred Lines” Infringes Copyright; Awards $7.3 Million

By Overhauser Law Offices, LLC

Los Angeles, California – The eight-person jury in the highly publicized trial over the song “Blurred Lines” concluded that Pharrell Williams and Robin Thicke had infringed the copyright of Marvin Gaye’s “Got to Give It Up” and awarded almost $7.4 million to Gaye’s family.

The 2013 smash hit “Blurred Lines” has been the subject of copyright infringement litigation for about a year and a half. The family of Gaye, who was known at the peak of his career as the Prince of Motown, privately approached Williams and Thicke with allegations of copyright infringement. Nona and Frankie Gaye, two of Gaye’s children, contended that “Blurred Lines” infringed Gaye’s 1977 hit “Got to Give It Up.” Copyright attorneys for Williams and Thicke responded by filing a lawsuit under the Declaratory Judgment Act, asking the U.S. District Court for the Central District of California to declare that they had not infringed. The Gaye family countersued, asking for more than $25 million for the copyright infringement that was alleged.

Over the eight-day trial, copyright lawyers for Thicke and Williams emphasized two points in particular. First, they argued, any protection under copyright law extended only to the compositional elements in the sheet music for “Got to Give It Up.” Other elements of “Blurred Lines,” such as the percussion and the singing, they contended, were not protected by the copyright issued by the U.S. Copyright Office.

March 18, 2015

Member Of Megaupload Conspiracy Pleads Guilty to Copyright Infringement Charges and is Sentenced to One Year in U.S. Prison

By Overhauser Law Offices, LLC

A computer programmer for the Mega copyright piracy conspiracy, Andrus Nomm, 36, of Estonia, pleaded guilty recently in connection with his involvement with Megaupload.com and associated piracy websites. He was sentenced to a year and a day in federal prison for conspiring to commit felony copyright infringement.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement. U.S. District Judge Liam O’Grady of the Eastern District of Virginia accepted the guilty plea and imposed the sentence.

“This conviction is a significant step forward in the largest criminal copyright case in U.S. history,” said Assistant Attorney General Caldwell. “The Mega conspirators are charged with massive worldwide online piracy of movies, music and other copyrighted U.S. works. We intend to see to it that all those responsible are held accountable for illegally enriching themselves by stealing the creative work of U.S. artists and creators.”

March 16, 2015

Indiana Trade Secret Law: Court Declines to Enter Protective Order Stipulated by Parties

By Overhauser Law Offices, LLC

Fort Wayne, Indiana – In the matter of CCT Enterprises, LLC v. Kriss USA, Inc., trade secret lawyers for the parties agreed to a protective order and submitted it to the court pursuant to Federal Rule of Civil Procedure 26(c). United States Magistrate Judge Susan Collins of the Northern District of Indiana denied the parties’ request for a protective order, holding that the proposed order was overly broad and, thus, invalid.

Magistrate Judge Collins first noted that Rule 26(c) allows the court to enter a protective order for good cause shown. For material to be protected, it “must give the holder an economic advantage and threaten a competitive injury…business information whose release harms the holder only because the information is embarrassing or reveals weaknesses does not qualify for trade secret protection.”

In the parties’ proposed order, no categories of material were provided to restrict what discovery materials would be treated as confidential. Instead, it allowed either party “in good faith” to deem any discovery materials to be confidential. Magistrate Judge Collins held that this was overbroad and that a protective order must extend only to “properly demarcated categor[ies] of legitimately confidential information.” Moreover, a mere assertion of harm to a litigant’s competitive position would not suffice but rather “the motion must explain how.” Consequently, the court held that because a showing of good cause had not been made, the proposed protective order could not issue.

The court also noted that the proposed order provided that it would continue to be binding after the conclusion of the litigation, thus implying that the court would retain jurisdiction after the lawsuit had been resolved. The court refused to enter an order that would have such an effect. Instead, it suggested that the parties should agree contractually among themselves for the return of sensitive documents.

March 11, 2015

Indiana Intellectual Property Law: Patent Infringement Allegations of Pro Se Plaintiff Dismissed

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Judge Sarah Evans Barker of the Southern District of Indiana dismissed the patent infringement claims asserted in the amended complaint of pro se Plaintiff Dennis Lee Maxberry against ITT Technical Institute (“ITT”). Also included in Maxberry’s amended complaint were claims for copyright infringement, deprivation of disabled veterans’ benefits, sabotage of Maxberry’s bachelor’s degree, stalking, sabotage of Maxberry’s employment opportunities, RICO liability against ITT and the State of Wisconsin, malicious prosecution of intellectual property actions against Maxberry, violations of various executive orders relating to Maxberry’s service in the military, violations of the Higher Education Act, and violations of a number of Maxberry’s constitutional rights.

The parties in this patent infringement litigation are Defendant ITT, an Indiana-based for-profit higher education company, and Maxberry of West Allis, Wisconsin, who had previously been enrolled in an M.B.A. graduate course at ITT. In April 2014, Maxberry, acting as his own patent attorney, sued Defendant ITT alleging multiple harms, which the court summarized as follows:

It appears that Plaintiff accuses Defendant of stealing his federal student loan money, failing to award him grades for the classes that he completed, and applying money from his educational loans towards tuition payments even after he withdrew from school. Plaintiff also accuses Defendant of “being unconscious to the plaintiff by arbitrating the contract,” searching his person or property “without a warrant and without probable cause,” using excessive force upon him, failing to provide him with “needed medical care,” “false credit testimony, mayhem on property, defamation, false imcriminalization [sic], malicious prosecution, conspiracy, and/or any other claim that may be supported by the allegations of this complaint.” Plaintiff’s Complaint makes reference to 28 U.S.C. § 1983, 1985, and 1986, “Title IX, and Section 504 of the 1973 Rehabilitation Act,” the “False claim act,” and avers that “[t]he criminal proceeding by the defendants … [is] still pending,” but that Plaintiff “was innocent.”

The court dismissed Maxberry’s initial complaint on two grounds. First, Judge Barker noted that the Plaintiff was asking the Southern District of Indiana, a federal court, to review the rulings of a Wisconsin state court. Such a review, which would in effect place the Indiana federal court in the position of acting as a Wisconsin appellate court, was impermissible under the Rooker-Feldman doctrine. The court further found that the assertions in the complaint were “cast in such an incoherent and confusing manner that they must be dismissed under [Federal Rule of Civil Procedure 8(a)] based on Plaintiff’s failure to give Defendant (as well as the Court) fair notice of what they actually are.”

The court allowed Maxberry to file an amended complaint, which ITT moved to dismiss. In this complaint, Maxberry again made multiple claims, including five claims involving patent 8,632,592, for an “expandable vertebral body replacement device and method.” Maxberry asserted that this patent encompassed a cure for cancer, an automotive window-locking device, as well as a type of computer display equipment.

The court dismissed these “facially implausible” patent infringement claims with prejudice. Judge Barker noted that, not only was it wildly improbable that a single patent covered all of the asserted functions, but the records of the U.S. Patent and Trademark Office showed that the patent-in-suit was not registered to Maxberry.

The court also dismissed Maxberry’s other claims but granted him leave to reformulate those claims in a more understandable form and resubmit them.

February 27, 2015

Copyright Law: Federal Circuit Upholds $540,000 in Royalties for USPS Copyright Infringement

By Overhauser Law Offices, LLC

Washington, D.C. – The United States Court of Appeals for the Federal Circuit affirmed a royalty award in Gaylord v. United States for copyright infringement committed by the United States Postal Service.

Frank Gaylord, a World War II veteran and renowned sculptor, created The Column, consisting of nineteen stainless steel statues depicting a squad of soldiers on patrol. This work, completed and dedicated in 1995, formed a central part of the Korean War Veterans Memorial located on the National Mall in Washington, D.C. For his efforts in creating the work, Gaylord was paid $775,000.

Shortly after the completion of the work, an amateur photographer named John Alli visited the Memorial during a heavy snowstorm and photographed The Column. In 2002, the United States Postal Service decided to issue a stamp to commemorate the upcoming fiftieth anniversary of the Korean War armistice. It settled on Alli’s photo of The Column for the stamp face and paid Alli a one-time fee for the right to use his photo. The Postal Service made no payment to Gaylord.

Gaylord sued for copyright infringement. The United States Court of Federal Claims acted as the trial court in the litigation. Twice prior to the instant appeal, an appeal was made to the Federal Circuit, first in 2010 and again in 2012. In Gaylord I, the Federal Circuit held that the government was liable to Gaylord for copyright infringement. Upon remand, the Court of Federal Claims awarded Gaylord a total of $5,000 to compensate for the infringement of his copyright. This award was vacated by the Federal Circuit in Gaylord II and the lawsuit remanded with instructions to “determine the fair market value of a license for Mr. Gaylord’s work based on a hypothetical negotiation with the government.”

Upon remand, the trial court split the calculations of damages for the infringement into three categories: (1) stamps used to send mail; (2) commercial merchandise featuring an image of the stamp; and (3) unused stamps purchased by collectors. The parties agreed that no damages would be paid for stamps used to send mail and that a royalty of 10% of revenues would be appropriate for commercial merchandise featuring the copyrighted work.

The only disputed issue was the appropriate measure of copyright infringement damages for the stamps purchased by collectors. The lower court determined that the Postal Service received $5.4 million in revenue, which was deemed “almost pure profit,” from these sales. It then found that an appropriate copyright royalty would be 10%, or $540,000.

At issue in this latest appeal, Gaylord III, is whether this royalty was appropriate. The Federal Circuit applied the “hypothetical negotiation” analysis in reviewing the Court of Federal Claims’ award to Gaylord, stating that “actual damages for copyright infringement may be based on a reasonable royalty representing the fair market value of a license covering the defendant’s use.” Determining that “fair market value,” in turn could be done employing a valuation tool used in the context of patent infringement litigation: a hypothetical negotiation that would determine “the reasonable license fee on which a willing buyer and a willing seller would have agreed for the use taken by the infringer.”

The Federal Circuit held that the lower court neither committed clear error nor abused its discretion in arriving at a 10% royalty rate affirmed the award of $540,000.

February 23, 2015

Trademark Law: Supreme Court Resolves Circuit Split – Trademark Tacking is a Jury Issue

By Overhauser Law Offices, LLC

Washington, D.C. – The United States Supreme Court held that in those cases in which summary disposition by the court is inappropriate, and where a jury has been empaneled, trademark tacking for purpose of determining priority is a question of fact for the jury to decide.

Hana Financial, Inc. and Hana Bank both provide financial services to individuals in the United States. Hana Bank was established in 1971 under the name Korea Investment Financial Corporation. It adopted the name “Hana Bank” for use in Korea in 1991. It began advertising in the United States as “Hana Overseas Korean Club” in 1994. This name was changed to “Hana World Center” in 2000. In 2002, it began banking under the name “Hana Bank” in the United States.

Hana Financial began using its name in 1995 in the United States. In 2007, it sued Hana Bank for trademark infringement. Hana Bank defended against this claim by invoking the tacking doctrine, under which a trademark user may make limited modifications to its trademark while retaining the priority provided by the initial trademark. The jury held for Hana Bank. On appeal, the Court of Appeals for the Ninth Circuit affirmed, concluding that tacking was a “highly fact-sensitive inquiry” that was properly the province of the jury.

Hana Financial appealed the issue of trademark tacking to the U.S. Supreme Court. In its opinion, the Court noted that lower courts have held that two marks may be tacked when they are considered to be “legal equivalents,” i.e., they “create the same, continuing commercial impression.” That “commercial impression,” in turn, “must be viewed through the eyes of a consumer.” Such an evaluation – designed to capture the impression which a trademark makes upon an ordinary consumer – “falls comfortably within the ken of a jury.”

The Court unanimously affirmed the Ninth Circuit, holding that “when a jury is to be empaneled and when the facts warrant neither summary judgment nor judgment as a matter of law, tacking is a question for the jury.”

February 19, 2015

Indiana Trademark Law: Court Strikes Response Brief Due to Untimely, Overlong Filing

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Judge Tanya Walton Pratt (pictured) of the Southern District of Indiana struck a response brief in the matter of Wine & Canvas Development, LLC. v. Theodore Weisser, Christopher Muylle, YN Canvas CA, LLC and Art Uncorked, noting that the brief was both late and longer than permitted.

In 2011, Wine & Canvas Development, LLC (“Wine & Canvas”) sued Muylle and others alleging the wrongful use of Wine and Canvas trademarks as well as the breach of non-competition agreements. Muylle counterclaimed against Wine and Canvas asserting abuse of process. In November 2014, after a four-day trial, the jury found for Muylle on all claims and awarded him $270,000.

After the conclusion of the trial, the Indiana trademark lawyer for Muylle petitioned the court for attorneys’ fees under § 1117(a) of the Lanham act, which provides that the court may award reasonable attorney fees to the prevailing party in “exceptional cases.” Muylle, via his trademark attorney, contended that this case was properly deemed exceptional as a result of the jury’s finding of abuse of process by Wine & Canvas. Muylle also noted that “the Court previously determined that ‘Wine & Canvas, Mr. Scott, [Ms. McCracken], and Mr. McCracken have flooded the Court with filings which has increased the work expended on the case and Wine & Canvas has filed numerous claims that the Court has found to be without merit.’ … And the Court has already sanctioned the Plaintiff not once but three times for failing to comply with discovery or court rules.” Muylle asked for $175,882.68 in attorneys’ fees.

Wine & Canvas asked for an extension of time to respond to this request, to January 15, 2015, which the court granted. Wine & Canvas subsequently requested an additional extension of time to file its response, specifically asking for a new deadline of January 19, 2015. The court granted this request, also.

Wine & Canvas filed its response brief on January 20, 2015. Muylle’s trademark attorney asked the court to strike that brief. The court noted that “[Wine & Canvas’] counsel’s repeated disregard for and supposed ignorance of the rules is no excuse, and an apology does not allow counsel to continue to disregard the rules and court orders” and admonished the trademark lawyer for Wine & Canvas for failing to meet his filing deadlines.

The court also noted that, in addition to the untimeliness of the filing, the 40-page brief was also overlong in violation of Local Rule 7-1(e)(1), which limits the length of response briefs to 35 pages.

Consequently, the court granted the motion to strike Wine & Canvas’ response brief. The court, however, also granted Wine & Canvas leave to file a belated response to Muylle’s petition for attorneys’ fees.