Indiana Intellectual Property Law News

June 6, 2013

Southern District of Indiana Dismisses Declaratory Judgment Suit

Indianapolis, Ind. — The Southern District of Indiana has dismissed a declaratory judgment suit filed by ZPS America, LLC of Marion County, Ind. (“ZPS”) holding that it was an impermissible attempt to secure its preferred forum in anticipation of litigation that Hammond Enterprises, Inc. of Pittsburg, Calif. (“Hammond”) had promised to initiate imminently.

ZPS manufactures the Mori-Say TMZ 642 CNC machine (“TMZ machine”), a high-precision lathe that can be configured to manufacture various precision parts. In early 2009, after discussing its requirements, Hammond purchased two TMZ machines from ZPS. Accounts vary regarding whether the TMZ machines ever performed as had been promised. Attempts were made by the parties and their attorneys to resolve the issues with the machines but settlement discussions broke down in June 2012.

On June 4, 2012, Hammond’s lawyer sent ZPS a letter stating that the machines had been misrepresented and that Hammond was only interested in “hearing back from you…that ZPS is prepared to make arrangements to accept the return of both machines. If we do not hear from you by Friday, June 15 [2012], that you are prepared to accept their return, we have been authorized to file a lawsuit against ZPS and will proceed to do so.”

On June 14, 2012, one day before the deadline in Hammond’s letter, ZPS filed suit against Hammond in Marion Circuit Court, an Indiana state court. Its complaint was for damages and declaratory judgment. It asked that the court declare that Hammond had accepted the machines and was not entitled to revoke that acceptance; its damages claim arose from nonpayment by Hammond of amounts due for filter systems that had been purchased for the TMZ machines. Notice of that suit was served on June 26, 2012.

On July 10, 2012, Hammond filed a lawsuit against ZPS in the Northern District of California, seeking damages based on claims for negligent misrepresentation, revocation of acceptance, breach of contract, breach of express warranty, and breach of implied warranty. On July 12, 2012, Hammond served ZPS with a summons and complaint. On that same day, Hammond removed the action filed by ZPS in state court to the Southern District of Indiana, asserting diversity jurisdiction.

Hammond argued to the Indiana federal court that it should exercise its discretion to dismiss the complaint on the grounds that ZPS “raced to the courthouse” to deprive Hammond, the “natural plaintiff,” of the forum of its choosing.

The Indiana federal court held that ZPS’ declaratory judgment action was impermissible, as it had been filed in anticipation of litigation, beating Hammond to the courthouse by filing the day before the deadline to settle that had been set by Hammond. The court further held that the additional state-law claim for breach of contract that ZPS had asserted did not secure a place for it in the Indiana court.

The court cited three reasons for its decision: (1) the fact that a plaintiff filed a declaratory judgment action first does not give it a right to choose the forum; (2) the plaintiff’s additional claims for affirmative or coercive relief may be filed as counterclaims in the second-filed action; and (3) the plaintiff should not be rewarded for filing a declaratory judgment action as a pre-emptive strike. The court declined to exercise jurisdiction over the matter and dismissed the case without prejudice.

Practice Tip:

Declaratory judgment actions are frequently filed in intellectual-property matters, especially patent litigation. Such a suit allows the potential defendant not only to choose its own forum, to the extent that the forum is consistent with jurisdictional restrictions, but also to remove an ever-present cloud of potential litigation and potential damages for patent infringement that may be continuing to accrue.

The Declaratory Judgment Act provides that “any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” A federal district court may, in its discretion, decline to hear a case brought under the Act, even if the court has subject matter jurisdiction.

In general, if two actions are pending in two different courts that concern the same general claims, the case filed first takes priority. However, the Seventh Circuit has never adhered to a rigid first-to-file rule. In addition, courts generally give priority to the coercive action (such as an action for damages or an injunction) over the declaratory judgment action, regardless of which case was filed first.

Courts also depart from the first-to-file rule if, as was true in this case, the declaratory judgment action is filed in anticipation of litigation by the other party. Here, rather than responding to Hammond regarding its letter, which contained a plain declaration of intent to file suit with a deadline for a response, ZPS filed suit. Only after securing a favorable forum did ZPS offer to negotiate a settlement. It was this conduct that the court held justified a dismissal of the declaratory judgment action as an improper anticipatory filing.

June 4, 2013

169 Trademark Registrations Issued to Indiana Companies in May, 2013

By Overhauser Law Offices, LLC

The US Trademark Office issued the following trademark registrations to persons and businesses in Indiana in May, 2013, based on applications filed by Indiana Trademark Attorneys:

	Reg. Number	Mark	Click to View
1	4332704	IRIS	View
2	4342755	INTERACTION MOBILIZER	View
3	4344545	IDREADER	View
4	4342700	JOIN THE ASSASSIN NATION	View
5	4342671	RALSTON’S DRAFTHOUSE	View
6	4342670		View
7	4342628	WHERE DATA MEETS DESIGN	View
8	4342547		View
9	4342402	AIR DRIVE	View
10	4342246	ROCKREVOLT	View

June 3, 2013

Patent Office Issues 121 Patents To Indiana Citizens in May, 2013

By Overhauser Law Offices, LLC

The US Patent Office issued the following 121 patent registrations to persons and businesses in Indiana in May, 2013, based on applications filed by Indiana Patent Attorneys:

	PAT. NO.	Title
1	D683,434	Faucet body
2	D683,432	Faucet
3	D683,431	Faucet
4	D683,430	Faucet
5	D683,429	Faucet cover
6	D683,428	Faucet
7	D683,350	Necklace web key
8	8,452,953	Insulin pump programming software for selectively modifying configuration data
9	8,452,570	Systems and apparatuses for testing blood glucose measurement engines
10	8,452,545	Method and system for determining the difference between pre-prandial and post-prandial blood glucose values

May 29, 2013

Dan’s Comp Sues Ian Smith for Trademark Infringement in Facebook Advertisement

By Overhauser Law Offices, LLC

Evansville, Ind. — Trademark lawyers for XP Innovation, LLC d/b/a Dan’s Comp (“Dan’s Comp”) of Mt. Vernon, Ind. sued Ian Smith (“Smith”) of Massillon, Ohio alleging that he infringed various trademarks owned by Dan’s Comp, Registration Nos. 2,176,911, 2,176,580, 2,607,447, 3,853,112, 3,940,083, 3,957,948, 4,074,705 and 4,101,708, which have been registered with the U.S. Trademark Office.

Dan’s Comp owns and operates one of the world’s largest BMX bicycle stores. It also owns related trademarks registered in connection with sales of bicycles and bicycle-related goods. These marks include “Dan’s,” “Dan’s Competition,” “Dan’s BMX” and “high speed mail order.” Dan’s Comp also owns trademarks to “Dan’s Comp” with a lightning-bolt graphic and to the same lightning-bolt graphic and a similar lightning-bolt graphic as separate marks.

In its complaint, Dan’s Comp alleged that it uses its marks in connection with bicycles and bicycle-related goods and services in all fifty states, the District of Columbia, and throughout the world. It further claimed that it spends tens of thousands of dollars each year to advertise and promote the Dan’s Comp marks and the associated goods and services in the United States and throughout the world. It asserts that, as a result of its use of the Dan’s Comp marks, the marks have developed significant goodwill in the market.

This lawsuit pertains to an advertisement that Dan’s Comp claims that Smith placed on Facebook.com. The advertisement read “Free Bike From Dans [sic] Comp.” Users who clicked on the advertisement were redirected to a survey website, which was alleged to have been designed to appear as if it were affiliated with Dan’s Comp through the unauthorized use of the Dan’s Comp marks. Users were prompted to answer survey questions regarding their buying habits in relation to Dan’s Comp goods and services.

At the conclusion of the survey, users were prompted to enter their email addresses and mobile phone numbers. Immediately afterward, a text message containing an “offer” was sent to each user’s mobile number. Various offers included an “Amazing Facts Mobile Alert” for $9.99 per month and a membership to the “Mobile Tunez Club,” also for $9.99 per month. The text message also included a PIN number that was to be entered on the website addressed “http://surveysallday.com/bmx/winner.php” in a box on a page entitled “SCORE YOUR BIKE.” Apparently, entry of the four-digit pin would register the user for the service described in the text message. It is further claimed that no free bicycles were provided to any users. Allegedly, thousands of individuals entered their personal information on the survey website.

May 28, 2013

Patent Office Finalizes “After Consideration” Pilot Rules

By Overhauser Law Offices, LLC

Washington, D.C. — Indiana inventors can now take advantage of new Patent Office procedure by having their patent attorneys file the appropriate paperwork. The USPTO launched the After Final Consideration Pilot 2.0 (AFCP 2.0) on May 19, 2013. Designed to be more efficient and effective than the AFCP, AFCP 2.0 is part of the USPTO’s on-going efforts towards compact prosecution and increased collaboration between examiners and stakeholders.

“Compact prosecution remains one of our top goals,” said Teresa Stanek Rea, Acting Under Secretary of Commerce for Intellectual Property and Acting Director of the USPTO. “As with the original AFCP pilot, the new AFCP 2.0 pilot allows additional flexibility for applicants and examiners to work together and provides even greater opportunity for communication after final than the original pilot.”

Like AFCP, AFCP 2.0 authorizes additional time for examiners to search and/or consider responses after final rejection. Under AFCP 2.0, examiners will also use the additional time to schedule and conduct an interview to discuss the results of their search and/or consideration with you, if your response does not place the application in condition for allowance. In this way, you will benefit from the additional search and consideration afforded by the pilot, even when the results do not lead to allowance.

In addition, the procedure for obtaining consideration under AFCP 2.0 has been revised. The revised procedure focuses the pilot on review of proposed claim amendments and allows the USPTO to better evaluate the pilot.

To be eligible for consideration under AFCP 2.0, Indiana patent applicants must file a response under 37 CFR §1.116, which includes a request for consideration under the pilot (Form PTO/SB/434) and an amendment to at least one independent claim that does not broaden the scope of the independent claim in any aspect. A notice published in the Federal Register at 78 Fed. Reg. 29117 has a complete description of how to request consideration under AFCP 2.0. As was the case with the AFCP, examiners will continue to use their professional judgment to decide whether the response can be fully considered under AFCP 2.0. This will include determining whether any additional search is required and can be completed within the allotted time, in order to determine whether the application can be allowed.

May 24, 2013

Automated Products Sues Norco for Infringement of Patented Roof-Support Rafters

By Overhauser Law Offices, LLC

South Bend, Ind. – Patent lawyers for Automated Products International, LLC (“API”) of LaGrange, Ind. sued alleging that Norco Industries, Inc. (“Norco”) of Elkhart, Ind. infringed Patent No. 7,134,711 (the “‘711 Patent”) which has been issued by the U.S. Patent Office.

The ‘711 Patent is directed to recreational-vehicle roof-support rafters. API alleges that Norco has been and is currently infringing the patent. API also asserts that through continuous marking of its products, it has provided “constructive notice of [Norco’s] infringement.”

API seeks a judgment declaring that Norco has infringed the ‘711 Patent; damages equal to at least a reasonable royalty; treble damages upon a finding of willful and deliberate infringement; attorneys’ fees upon a finding that the case is exceptional; and an injunction.

Practice Tip: The law of the “reasonable royalty” has been in transition recently. The “25% rule,” an approach that allocated 25% of the profits from an infringement to the patentee and the remaining 75% to the infringer, has been abandoned. Long used in federal courts to establish a reasonable royalty as compensation for patent infringement under § 284 of the Patent Act, it was rejected by the Federal Circuit in 2011. In its ruling in Uniloc v. Microsoft, the court held: “the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation. Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.”
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May 23, 2013

Keystone Management and Lockridge Sue Alleging Copyright Infringement of Architectural Work

By Overhauser Law Offices, LLC

Indianapolis, Ind. — Copyright lawyers for Keystone Management Systems, Inc. f/k/a Keystone Builders Resource Group, Inc. (“Keystone Management”) and Lockridge Homes-Indianapolis, LLC (“Lockridge”), both of Richmond, Va., filed a copyright infringement lawsuit alleging William Clyde Moore, Jr. (“Moore”) and Carol Cooper (“Cooper”), d/b/a DrafTech, both of Indianapolis, Ind., infringed the copyrighted work “Birkshire II” (architectural work: 1-396-233; and technical drawings: VA 1-396-224), which is registered with the U.S. Copyright Office.

Keystone Management is in the business of creating, designing, producing, distributing and marketing original architectural working drawings, architectural works and related technical drawings (“the Keystone Designs”). Lockridge is in the business of constructing, marketing and selling distinctive single-family residential homes. Keystone Management has granted to Lockridge the right to use the Keystone Designs.

Moore allegedly asked to purchase one of the Keystone Designs but no agreement was reached. He also allegedly discussed various home plans with Lockridge for the purpose of constructing a single-family home on his property. As a part of this discussion, Lockridge provided Moore with a rendering of the floor plan for the Birkshire II design. Moore then allegedly provided these plans to Cooper for the purpose of constructing a home in the Birkshire II design. Construction is either underway or completed.

Keystone Management and Lockridge sued in the Southern District of Indiana. They list two counts in their complaint: copyright infringement and unjust enrichment. They seek an injunction; impoundment and destruction of any homes built from the Keystone Designs; for damages up to $150,000 for each infringement; costs and fees.

We have blogged about similar cases here, here and here.

Practice Tip #1: Copyright protection extends to any architectural work created on or after December 1, 1990, but architectural designs embodied in buildings constructed prior to that date are not eligible for copyright protection.

Practice Tip #2: The second claim, for unjust enrichment, is preempted by The Copyright Act.
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May 22, 2013

J & J Sports Sues Five Restaurants for Unauthorized Interception and Broadcast of Championship Fight

By Overhauser Law Offices, LLC

Indianapolis, Ind. — Intellectual property lawyers for J & J Sports Productions, Inc. (“J&J Sports”) of Campbell, Calif. have sued five Indianapolis restaurants and their owners in the Southern District of Indiana for illegally displaying the 2011 World Boxing Organization Welterweight Championship Fight.

J & J Sports was granted exclusive nationwide commercial rights to the closed-circuit distribution of the “Manny Pacquiao v. Shane Mosley, WBO World Welterweight Championship Fight” Program (“the Program”), which was telecast nationwide on Saturday, May 7, 2011.

In five separate but similar complaints, J&J Sports has alleged such wrongful acts as interception, reception, publication, divulgence, display, exhibition, and tortious conversion of the Program. The claims have been made both against the restaurants and as personal liability claims against the owners. The five restaurants that have been sued are: Fandango’s Night Club, La Favorita Mexican Restaurant, El Rey Del Taco Mexican Restaurant, Taqueria Night Club and Costa Brava Mexican Restaurant. Of these, at least one, Fandango’s Night Club, has been sued before under similar circumstances.

Each group of defendants has been accused of violating 47 U.S.C. § 605 and 47 U.S.C. § 553. Each complaint also lists a count of conversion. Among its assertions of wrongdoing, J&J Sports has alleged interception under 47 U.S.C. 605, which is a different cause of action from copyright infringement. The interception claim has a two-year statute of limitations, which explains why the complaints were filed on May 6, 2013.

The complaints seek statutory damages of $100,000 for each violation of 47 U.S.C. § 605; $10,000 for each violation of 47 U.S.C. § 553; $50,000 for each willful violation of 47 U.S.C. § 553; costs and attorney fees.

In 2011, J&J Sports filed 708 lawsuits. We have blogged before about J&J Sports here, here and here.

Practice Tip: All of these lawsuits were filed on the eve of the two-year anniversary of the program that the defendants are alleged to have illegally broadcast. When Congress passed the Cable Communication Act, a statute of limitations was not included. Some federal courts have determined that a two-year statute of limitation is appropriate while other federal courts have used a three-year statute of limitations.

Overhauser Law Offices, the publisher of this website, has represented several hundred persons and businesses accused of infringing satellite signals.

May 20, 2013

U.S. Supreme Court Rules Against Indiana Farmer in “Roundup Ready” Soybean Patent Decision

By Overhauser Law Offices, LLC

Washington D.C. — The U.S. Supreme Court has ruled that “patent exhaustion” does not bar an infringement claim against Indiana farmer Vernon Bowman for reproducing patented seeds by planting and harvesting second generation seeds without the patent holder’s permission. Bowman v. Monsanto Co., U.S., No 11-796, 5/13/2013. Monsanto produces and sells patented soybean seed that is genetically altered to resist its “RoundUp” herbicide. Bowman is a farmer who purchased soybean for planting from a grain elevator, expecting that most of the grain elevator soybean would be Monsanto’s herbicide-resistant soybean. In the subsequent patent infringement brought by Monsanto, Bowman argued that Monsanto’s sale of its seed that he ultimately purchased from the grain elevator exhausted any patent rights in the seed. The argument was rejected by both the District Court and the Federal Circuit, and the Supreme Court agreed to review the case.

Patent Exhaustion Only for Sold Article

Under the patent exhaustion doctrine, an authorized sale of a patented product cuts off the patent owner’s right to control of that product, because the sale of that product fulfills the patent law by providing a reward to the patentee. However, this limitation on patent rights applies only to the particular article sold. If the purchaser could make and sell endless copies, the patent would effectively protect just a single sale.

In this case, the patent exhaustion doctrine provides Bowman with the right to use the purchased product in several different ways without Monsanto’s permission, including resale, human consumption or animal consumption of the product. However, it does not permit Bowman to make additional patented soybeans without Monsanto’s permission.

Bowman contended that his use of the purchased seed was covered by the patent exhaustion doctrine because that is the normal way farmers use seed, and that Monsanto seeks an impermissible exception to the exhaustion doctrine for patented seeds and other self-replicating technologies.

The Court rejected the argument, pointing out that it is Bowman who seeks an unprecedented exception to the well-settled rule that the exhaustion doctrine does not extend to the right to make a new product.

May 17, 2013

Purdue University Celebrates Innovation

By Overhauser Law Offices, LLC

Lafayette, Ind. — Purdue University students are creating and patenting products while pursuing their degrees. Purdue is celebrating the inventiveness of five of those students: Julia Alspaugh, Zachary Amodt, Sean Connell, Andrew Glassman and Anne Dye Zakrajsek.

Julia Alspaugh, a mechanical engineer in her second year as a master’s student, researches biomedicine. She says, “I see mechanical engineering as a broad field that analyzes the world’s processes and how the machinery and technology that makes them work can be simplified and improved.”

Julia is part of a large, interdisciplinary team seeking numerous patents related to the use of novel, resorbable biomaterials to create fixation devices for next-generation orthopedic devices, such as the plates, pins and screws used to set broken limbs or repair damaged tissues and joints.

“These devices would provide support while the bone and joint healed, for example, then degrade within a few years without leaving any foreign or potentially toxic materials in the body,” she explains. “It’s a similar concept to the dissolving stitches now used in many dental surgeries, but on a larger and more complex scale.”

For Julia, the most surprising thing she’s encountered in the patent process is unrelated to engineering or biomedicine. “Learning how to make sure what we are working on is novel and patentable has been more challenging than expected,” she says. “It may be an awesome new technology, but we also have to keep in mind its marketability. It requires communication between many different people with different interests and ways of doing things.”

Zachary Amodt dropped out of school to join the military after September 11, 2001. Ten years later, he returned and is now holding a provisional patent inspired by his experience as a combat medic in war zones all over the world.