Indiana Intellectual Property Law News

March 8, 2013

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

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

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

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

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

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

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

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

March 8, 2013

Biomet Sues Bonutti Skeletal Innovations Seeking Declaratory Judgment of Non-Infringement and Invalidity of Patents

By Overhauser Law Offices, LLC

South Bend, IN – Biomet, Inc. of Warsaw, Indiana has filed a declaratory judgment suit against Bonutti Skeletal Innovations LLC of Frisco, Texas in the Northern District of Indiana, asking the court to enter a judgment of non-infringement and invalidity of fifteen Bonutti patents.

Biomet is a privately held company that designs, manufactures and markets products used primarily by musculoskeletal medical specialists in surgical and non-surgical therapy. Dr. Peter Bonutti is an orthopedic surgeon listed as an inventor or co-inventor on over 150 U.S. patents, including the patents-in-suit. Biomet entered into a licensing agreement with Dr. Bonutti, via his research and/or patent-holding company MarcTec, LLC, in 2006.

Since September 2012, Bonutti Skeletal has initiated a series of patent-infringement lawsuits against medical-device manufacturers, including Depuy, Inc.; Zimmer, Inc.; Smith & Nephew, Inc.; Wright Medical Group, Inc.; ConforMIS, Inc.; Arthrex, Inc.; Linvatec Corporation and ConMed Corporation. In each of these suits, Bonutti Skeletal has asserted infringement of Bonutti patents against products similar to those produced by Biomet.

In January 2013, Bonutti informed Biomet that it believed that Biomet was infringing upon Bonutti patents; it demanded a settlement to license these patents shortly thereafter. On that basis, Biomet seeks a judgment under the Declaratory Judgment Act, stating that an actual and justiciable controversy exists.

Patent attorneys for Biomet listed fifteen Bonutti patents in their complaint. Biomet asks for declarations that there was no infringement by Biomet of any of the fifteen Bonutti patents and of invalidity of all of the patents, a finding that the case is exceptional and an award of attorneys’ fees and costs pursuant to that finding.

The patents-in-suit, all issued by the U.S. Patent and Trademark Office are:

• 5,921,986: “Bone suture”

• 6,638,279: “Method of positioning body tissue relative to a bone”

• 8,147,514: “Apparatus and method for securing a portion of a body”

• 7,087,073: “Method of securing body tissue”

• 6,702,821: “Instrumentation for minimally invasive joint replacement and methods for using same”

• 7,806,896: “Knee arthroplasty method”

• 7,708,740: “Method for total knee arthroplasty and resecting bone in situ”

• 7,806,897: “Knee arthroplasty and preservation of the quadriceps mechanism”

• 8,133,229: “Knee arthroplasty method”

• 7,828,852: “Inlaid articular implant”

• 7,931,690: “Method of resurfacing an articular surface of a bone”

• 7,070,557: “Tissue graft material and method of making”

• 6,423,063: “Changing relationship between bones”

• 6,099,531: “Changing relationship between bones”

• 7,104,996: “Method of performing surgery”

Practice Tip #1: It is common for those who consider themselves likely to become defendants in patent-infringement litigation to proactively seek a declaratory judgment of non-infringement. Such a suit allows the potential defendant not only to choose their own forum, to the extent that it is consistent with jurisdictional restrictions, but also to remove an ever-present cloud of potential litigation and potential damages that may be continuing to accrue.

Practice Tip #2: The standard for an actual controversy under the Declaratory Judgment Act was most recently addressed by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). We blogged recently about another action for declaratory judgment involving Genentech here.

March 8, 2013

Mid-West Metal Products Sues Yuntek International for Declaratory Judgment of Patent Noninfringement and Intervening Rights

By Overhauser Law Offices, LLC

Indianapolis, IN – Patent lawyers for Mid-West Metal Products Company, Inc. d/b/a Midwest Homes for Pets of Muncie, IN sued Yuntek International, Inc. of Hayward, CA seeking a declaratory judgment of noninfringement and intervening rights regarding Yuntek’s “Pet Tent,” Patent No. 6,715,446, issued by the U.S. Patent and Trademark Office.

Defendant Yuntek alleged that Midwest had infringed its patented Pet Tent and had sent multiple “cease and desist” letters to Midwest. In its complaint, Midwest asserts that there exists an actual and continuing justiciable controversy between the parties, as contemplated under the Declaratory Judgment Act 28 U.S.C. §§2201 et seq., and has brought the matter to the Southern District of Indiana for resolution.

The patent for the Pet Tent, issued in 2004, was reexamined by the U.S. Patent and Trademark Office (“USPTO”). In this reexamination, certain claims were canceled and others were substantively amended. New claims were also added.

At issue is the alleged infringement of the patent-in-suit prior to the issuance by the USPTO of the Ex Parte Reexamination Certificate as well as the Inter Partes Reexamination Certificate. Midwest asks the court to declare that it does not infringe and did not infringe any valid claim of the patent prior to the issuance of the Ex Parte Reexamination Certificate, at least on the basis of intervening rights. It claims similar noninfringement prior to the issuance of the Inter Partes Reexamination Certificate.

Midwest also asks the court for a judgment that it is entitled to absolute and equitable intervening rights under each of the Reexamination Certificates pursuant to 35 U.S.C. §252. Finally, Midwest asks the court to enjoin Yuntek from pursuing or threatening litigation related to the Pet Tent patent for the time period prior to the issuance of the two Reexamination Certificates, for a declaration that the case is exceptional and for attorneys’ fees pursuant to that declaration.

Practice Tip: The Federal Circuit recently considered whether intervening rights apply where claims were neither amended nor added during reexamination. (See, Marine Polymer Technologies, Inc. v. HemCon, Inc.) It held that the doctrine of intervening rights applied only where claims had been amended or added.

March 7, 2013

DirecTV Sues Roger York, Dianna York and Marty’s Pub for Use of Residential Satellite Service in a Commercial Establishment

By Overhauser Law Offices, LLC

Indianapolis, IN – Intellectual property lawyers for DirecTV, LLC sued Roger York, Dianna York and D.L.Y., Inc. d/b/a Marty’s Pub of Converse, IN alleging the commercial use of satellite programming sold at the residential rate.

This suit was brought under the Cable Communications Policy Act of 1984, 47 U.S.C. §521, et seq., and 47 U.S.C. §605. It alleges that Roger York and Dianna York, in their capacity as owners, and individuals with close control over internal operating procedures, of Marty’s Pub willfully and unlawfully used a residential subscription to DirecTV in a commercial establishment.

The three-count complaint cites three causes of action. Count One: Damages for Violations of Cable Communications Policy Act under 47 U.S.C. §605(e)(3)(c); Count Two: Damages for Violations of 18 U.S.C. §2511; and Count Three: Civil Conversion.

DirecTV asks for the following: a declaration that the defendants’ use of DirecTV was a violation of §2511, that such violations were willful and for the purpose of commercial advantage; an injunction against further violations; statutory damages under 18 U.S.C. §2511; statutory damages under 47 U.S.C. §605; punitive damages and costs and interest.

Practice Tip: As part of its complaint, DirecTV claims that its goodwill and reputation have been usurped. It will be interesting to see what evidence it offers as proof that, as a result of allegedly receiving a lower monthly fee for the programming provided to the defendants – a circumstance presumably known to few other than the Yorks – its goodwill or reputation have been impacted.

March 5, 2013

Court Refuses to Quash or Modify Subpoena Designed to Identify Alleged Infringer of Copyrighted Movie

By Overhauser Law Offices, LLC

Indianapolis, IN – The Southern District of Indiana ruled in favor of Plaintiff Patrick Collins, Inc. by denying the motion of pro se Defendant John Doe No. 7 to quash or modify Plaintiff’s subpoena.

In a lawsuit originally styled “Patrick Collins, Inc. v. John Does 1 – 13,” Patrick Collins, Inc. of Canoga Park, California (“Patrick Collins”), alleged direct and contributory infringement by 13 then-unidentified individuals including John Doe No. 7. The suit was filed by copyright attorney Paul Nicoletti.

By motion, Dustin Hillman (“Hillman”), identifying himself only as “John Doe 7,” asked the court to quash or modify the subpoena seeking to compel his internet service provider to provide his real name to the Plaintiff, stating that “such actions violate right to privacy and the disclosure of such matters may result in wrongful or unjust incrimination.”

Hillman attached for the court’s review an article which concluded that a common approach for identifying users infringing copyright law using BitTorrent (via the Internet) was not conclusive. He then asked the court to require Plaintiff to provide further information about its methods of identifying defendants and proof of the reliability of those methods. “Hardly a day goes by,” said Hillman, “that the news does not contain a story where a computer system containing highly confidential data has been hacked, spoofed and infected by malware.” He asked for the subpoena to be quashed or modified on these grounds.

The court was not persuaded. It discussed those situations under FRCP 45(c)(3)(A) where a court must quash or modify a subpoena and then those situations under FRCP 45(c)(3)(B) where a court may quash or modify a subpoena. Citing the Malibu Media litigation, a similar matter which we blogged about here, the court then noted that the burden of establishing the grounds to quash a subpoena is borne by the party seeking to quash it. Hillman, it said, had made an argument denying liability based on the possibility that his IP address may have been used by someone else. Such an objection was an argument on the merits of the case and was “irrelevant and premature” in the discovery phase of the litigation.

Hillman also asked the court to require the Plaintiff to disclose its “shake down methods” of collection, how much it had collected from alleged copyright infringers, the percentage of cases settled without trial and the total costs incurred by the Plaintiff. The court was not moved by this request, either, stating that no evidence of abusive settlement tactics had been presented to the court.

Hillman’s identity was deemed “relevant information that is reasonably calculated to lead to the discovery of admissible evidence” and Hillman’s motion to quash or modify the subpoena was denied.

Practice Tip: Patrick Collins, Inc. has filed quite a few suits, including another case naming over 1,000 John Doe defendants. The company has been called a “copyright troll” on more than one occasion. The actions of companies such as Patrick Collins and Malibu Media have been called “extortionate” and, in at least one case, a class action suit has been filed against these “trolls.”

March 5, 2013

Malibu Media Sues Seventeen “John Doe” Defendants for Copyright Infringement

By Overhauser Law Offices, LLC

Indianapolis, IN – Plaintiff Malibu Media, LLC of Los Angeles, CA has sued seventeen “John Does” for copyright infringement in separate complaints filed in both the Southern District of Indiana and the Northern District of Indiana.

Paul Nicoletti, a copyright attorney, has filed seventeen nearly identical suits in Indiana federal court on behalf of Malibu Media. The “John Does” allegedly used the BitTorrent file-sharing protocol to illegally download, copy and distribute elements of various works of copyrighted material.

We have previously blogged about Malibu Media here. We have also blogged about some of the other copyright-infringement litigation filed by Paul Nicoletti here.

Malibu Media seeks a permanent injunction against infringing activities; an order by the court to remove infringing materials from all computers of each defendant; an award of statutory damages of $150,000 per infringed work – which would total over $1 million for many defendants – and reasonable attorneys’ fees and costs.

Practice Tip: The BitTorrent protocol is a decentralized method that allows users to distribute data via the Internet, and has become an extremely popular method for unlawful copying, reproducing and distributing files in violation of the copyright laws. While the copyright infringements committed with BitTorrent once consisted mostly of music copyright violations, the adult entertainment industry has increasingly been filing suit against infringers who have used BitTorrent-based technology.

March 2, 2013

The US Patent Office issued the following 160 patents to persons and businesses in Indiana in February, 2013, based on applications filed by Indiana Patent Attorneys:

By Overhauser Law Offices, LLC

Indiana patent attorneys obtained issuance of the following 160 patents from the US Patent Office to persons and businesses in Indiana in February, 2013:

	PAT. NO.	Title
1	D676,952	Fan
2	D676,939	Faucet handle
3	D676,938	Faucet handle
4	D676,937	Faucet handle
5	D676,936	Faucet handle
6	D676,932	Faucet handle
7	D676,931	Faucet handle
8	D676,927	Handheld showerhead
9	8,386,090	System and method for wireless remote operation of an accessory associated with a vehicle
10	8,385,708	Apparatus for the collection and transmission of electromagnetic radiation

March 1, 2013

137 Trademark Registrations Issued to Indiana Companies in February, 2013

By Overhauser Law Offices, LLC

The US Trademark Office issued the following 137 trademark registrations to persons and businesses in Indiana in February, 2013, based on applications filed by Indiana Trademark Attorneys:

	Reg. Number	Mark	Click to View
1	4289474	BRINGING SAFETY TO PEOPLE	View
2	4294335	VINO VAN GOGH	View
3	4296699	CHICAGO BLUE	View
4	4295760	TOP SELECTS	View
5	4295717	GENTLEMAN’S RULE	View
6	4295564	SCEPTERMAX	View
7	4295456	·MARIAN UNIVERSITY · KNIGHTS MU	View
8	4295450	ARTZY GIRLZ	View
9	4295233	FIBERGLASS FREAKS	View
10	4295158	SPECIALIZED TRUST STRATEGY (STS)	View

February 28, 2013

Eli Lilly Sues Accord Healthcare Again for Infringement of Patented ALIMTA

By Overhauser Law Offices, LLC

Indianapolis, IN – Eli Lilly and Company of Indianapolis, Indiana filed an additional patent infringement suit in the Southern District of Indiana alleging that Accord Healthcare, Inc., USA of Durham, North Carolina will infringe U.S. Patent No. 7,772,209 (the “‘209 patent”) which has been issued by the U.S. Patent Office if relief is not afforded by the court.

In a complaint that was almost identical to a previous complaint filed in January 2012, patent attorneys for Eli Lilly and Company (“Lilly”) initiated an additional lawsuit against Accord Healthcare, Inc., USA (“Accord”) for attempting to gain FDA approval to manufacture and sell a generic version of Lilly’s ALIMTA, a drug that is used in the treatment in certain types of lung cancer. ALIMTA is protected by the ‘209 patent.

This is the second suit by Lilly against Accord involving the ‘209 patent. This suit was initiated after Accord filed an Abbreviated New Drug Application (“ANDA”) with the FDA for a product that competes with Lilly’s ALIMTA, which is an “Antifolate Combination Therapies” product. The complaint from 2012 alleged intent to infringe by, among other activities, the production and sale of Accord’s “Pemetrexed Disodium for Injection,” a generic version of ALIMTA, in 100 mg/vial and 500 mg/vial products. The current complaint alleged intent to infringe with a “Pemetrexed Disodium for Injection” product in a 1000 mg/vial strength. As part of its ANDA filing, Accord alleged that the claims of the ‘209 patent are invalid and/or not infringed by Accord’s product.

Eli Lilly has sued alleging infringement of the patented ALIMTA before:

· Eli Lilly Sues Apotex Inc. for Patent Infringement of ALIMTA

· Eli Lilly and Company Sues Accord Healthcare for Patent Infringement of Lung Cancer Drug ALIMTA

· Lilly Wins Patent Infringement Suit Regarding Chemotherapy Drug

· Eli Lilly Company Sues APP Pharmaceuticals LLC for Patent Infringement of Chemotherapy Drug

Lilly seeks a judgment that Accord has infringed and/or will infringe, actively induce infringement of, and/or contribute to infringement by others of the ‘209 patent; a judgment ordering that Accord delay virtually all activities pertaining to its ANDA product until after the ‘209 patent has expired; a preliminary and permanent injunction against activity that infringes upon the ‘209 patent; a declaratory judgment of infringement; a declaration that the case is exceptional and an award of attorneys’ fees pursuant to such a declaration; and Lilly’s costs and expenses.

Practice Tip #1: The FDA’s ANDA process for generic drugs has been abbreviated such that, in general, the generic drug seeking approval does not require pre-clinical (animal and in vitro) testing. Instead, the process focuses on establishing that the product is bioequivalent to the “innovator” drug that has already undergone the full approval process. The statute that created the abbreviated process, however, had also created some interesting jurisdictional issues with respect to declaratory judgments. For an interesting look at some of the issues, see here.

February 28, 2013

Lilly Sues Genentech to Invalidate Cabilly Patents

By Overhauser Law Offices, LLC

San Jose, CA – Lilly of Indianapolis, Indiana filed a declaratory judgment suit against Genentech asking the U.S. District Court, Northern District of California to invalidate Genentech’s recombinant-antibody patents.

This suit, filed by patent attorneys for Eli Lilly & Company (“Lilly”) and its subsidiary ImClone Systems LLC, of Delaware, included as defendants both Genentech, Inc. (“Genentech”) and City of Hope National Medical Center (“City of Hope”).

Genentech, also known as “Genetic Engineering Technology, Inc.” is a wholly owned subsidiary of F. Hoffmann-La Roche Holding AG engaged in biotechnology research.

It has won numerous awards as an employer and corporate citizen, including earning the number-one spot on Fortune Magazine’s “100 Best Companies To Work For” in 2006.

City of Hope is a private, not-for-profit clinical research center, hospital and graduate medical school located in Duarte, California.

The suit involves two patents held by Genentech: 6,331,415: “Methods of producing immunoglobulins, vectors and transformed host cells for use therein” (“Cabilly II”) and 7,923,221: “Methods of making antibody heavy and light chains having specificity for a desired antigen,” (“Cabilly III”), together known as the “Cabilly patents” after one of the inventors. They have been issued by the U.S. Patent Office.

At issue is the drug Erbitux (cetuximab), made by Lilly’s ImClone unit. Genentech claims that the drug, approved in the U.S. to treat colon cancer and tumors of the head and neck, infringes the Cabilly patents through the unlicensed use of a patented process and various patented starting materials.

Despite that Lilly already has a non-exclusive license to the Cabilly patents, it filed a declaratory judgment action. It asserts that it has no obligation to pay royalties on the sale of Erbitux, arguing that the Cabilly patents are invalid and unenforceable, and, further, not infringed by Lilly. It alleges that Cabilly patents are invalid for, among other reasons, lack of inventorship, inequitable conduct and violation of 35 U.S.C. § 135(c) (which relates to the filing of settlement agreements with the PTO in interference actions). Lilly also alleges that Genentech deceived the U.S. Patent Office into issuing the Cabilly patents.

Lilly seeks a declaratory judgment that the Cabilly patents are invalid and unenforceable, and are not implicated in the manufacture of Erbitux.

Practice Tip: The Cabilly patents have a potentially broad scope and could confront any manufacturer of recombinant antibodies. Genentech has been quoted as stating that the patents broadly cover the co-expression of immunoglobulin heavy and light genes in a single host cell, and are not limited by the type of antibody or host cell. Genentech has also been quoted as stating that the Cabilly II patent is “the backbone of recombinant antibody production in the biotech industry.” Given Genentech’s history of actively litigating this family of patents (see, e.g., MedImmune, Inc. v. Genentech, Inc, et al., which was litigated to the U.S. Supreme Court), and the purported broad scope of the Cabilly patents, it seems that litigation regarding these patents may continue for quite some time.