Indiana Intellectual Property Law News

January 31, 2011

Dataflow Systems, Inc. Sues Arrival Star S.A. and Melvino Technologies Limited, Seeking Declaratory Judgment on Vehicle Tracking Patents

Indianapolis, IN – Patent lawyers for Dataflow Systems, Inc. of Indianapolis, IN, filed a declaratory judgment suit seeking a ruling that the company has not violated certain patents held by Defendants Arrival Star S.A. or Melvino Technologies Limited.

The lawsuit concerns several patents, issued by the U.S. Patent Office, which cover “vehicle tracking and status messaging systems,” typically used in the shipping industry.

The complaint alleges that, early in 2011, the Defendants sent a letter to the Plaintiff asserting patent infringement and proposing a “highly favorable” license. The letter gave a two-week period for reply and threatened that the Defendants would “proceed accordingly here in the court system” if the deadline was not met. The day before the deadline, Plaintiff’s counsel responded, saying their analysis was not complete and promising a substantial reply early the next month, February. Defendants’ counsel then insisted on a reasonable settlement offer by February 1st or else litigation would be brought in the U.S. and Canada. Plaintiffs soon filed for declaratory relief and allege that none of their products include all the limitations of any of the asserted patents’ claims. They further allege that the Defendants, in bad faith, did not perform a pre-suit investigation into infringement.

The patents at issue are: Patent No. 6,486,801, BASE STATION APPARATUS AND METHOD FOR MONITORING TRAVEL OF A MOBILE VEHICLE; Patent No. 6,714,859, SYSTEM AND METHOD FOR AN ADVANCE NOTIFICATION SYSTEM FOR MONITORING AND REPORTING PROXIMITY OF A VEHICLE; Patent No. 6,317,060, BASE STATION SYSTEM AND METHOD FOR MONITORING TRAVEL OF MOBILE VEHICLES AND COMMUNICATING NOTIFICATION MESSAGES; Patent No. 6,748,320, ADVANCE NOTIFICATION SYSTEMS AND METHODS UTILIZING A COMPUTER NETWORK; Patent No. 6,952,645, SYSTEM AND METHOD FOR ACTIVATION OF AN ADVANCE NOTIFICATION SYSTEM FOR MONITORING AND REPORTING STATUS OF VEHICLE TRAVEL; Patent No. 7,030,781, NOTIFICATION SYSTEM AND METHOD THAT INFORMS A PARTY OF VEHICLE DELAY; and Patent No. 7,400,970, SYSTEM AND METHOD FOR AN ADVANCE NOTIFICATION SYSTEM FOR MONITORING AND REPORTING PROXIMITY OF A VEHICLE.
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January 29, 2011

148 Trademark Registrations Issued to Indiana Companies in January, 2011

By Overhauser Law Offices, LLC

The US Trademark Office issued the following 148 trademark registrations to persons and businesses in Indiana in January, 2011, based on applications filed by Indiana Trademark Attorneys:

	Reg. Number	Mark	Click to View
1	3,912,455	LINCOLN DURATIONGUARANTEE	View
2	3,911,120	THE ANGIE’S LIST BIG DEAL	View
3	3,911,107	{Detail}	View
4	3,910,954	ACA	View
5	3,910,777	ZESCO.COM	View

January 28, 2011

Indiana Patent Attorneys Obtain 105 Patents for Indiana Companies in January, 2011

By Overhauser Law Offices, LLC

Indiana patent attorneys obtained issuance of the following 105 patents from the US Patent Office to persons and businesses in Indiana in January, 2011:

	PAT. NO.	Title
1	D631,530	Fluid control handle
2	D631,396	Race car
3	7,877,303	System and methods for tracking the relative interests of the parties to an insurance policy
4	7,875,787	Apparatus and method for visualization of music using note extraction
5	7,875,780	Inbred corn line LLD20BM

January 27, 2011

Seventh Circuit Affirms Dismissal of Non-Exclusive Licensee’s Copyright Infringement Suit and Award of Attorney’s Fees

By Overhauser Law Offices, LLC

Chicago, IL – The Seventh Circuit Court of Appeals affirmed the dismissal of a copyright infringement suit. Lawyers for HyperQuest, Inc., of Buffalo Grove, Illinois, filed a suit against N’Site, Inc. and Unitrin Direct Insurance Company alleging copyright infringement of copyrighted software used to process insurance claims. The software, eDoc, had been registered by the US Copyright Office. Although the license agreement used the phrase “exclusive licenses,” the trial court concluded that the specific words in the license granted only a non-exclusive license. Thus, the trial court determined that HyperQuest did not have standing to bring the lawsuit and dismissed the case. The district court also ordered HyperQuest to pay N’Site and Unitrin’s attorney’s fees of $134,958.42 for defending the copyright infringement suit. The plaintiff appealed, but the Court of Appeals, decided that the Copyright Act limits who can sue for infringement of a copyright to “the legal or beneficial owner of an exclusive right under a copyright” and affirmed the district court’s dismissal. The Court of Appeals also affirmed the award of attorney’s fees to N’Site and Unitrin.

Practice Tips: When making a license agreement for the use copyrighted material, attorneys should carefully review whether the terms of the agreement reflect the parties’ intentions. Even if an agreement uses the phrase “exclusive license,” the terms of the agreement must reflect actually exclusivity for the licensee to bring a copyright infringement suit.

Plaintiffs should carefully consider whether to file a Copyright infringement suit. The Copyright Act is one of the few laws that allows a prevailing defendant to collect attorneys fees from the plaintiff if the suit is unsuccessful.

The Court’s Opinion is below.
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January 21, 2011

Consulting Engineer Sues, Claiming He Is Co-Inventor of Suros Surgical Patent Worth Millions

By Overhauser Law Offices, LLC

Indianapolis, IN – Patent lawyers for plaintiff Schwindt, claim the defendants Miller and Mark omitted Schwindt as an inventor on a patent application, that turned out to be worth millions. All three were early founders and investors in Suros Sugical Systems, an Indianapolis medical device manufacturer founded in 2000. Suros grew quickly, and was acquired for $240 million by Hologic in 2006.

Plaintiff Schwindt did some outside engineering consulting for Suros. He claims his contributions (suggesting a pneumatic control, a pressure switch and a pneumatic circuit manifold for a biopsy device) elevate him to the status of an “inventor” of the system on which he worked. Suros applied for and was issued several patents, including 6,758,824, although Schwindt was not named an “inventor” on the applications filed by Suros.

Schwindt later started his own company, Tissue Extraction Devices, and filed for his own patent applications for the same invention. This led to an interference proceeding, which remains pending. According to the complaint, in that proceeding, “the USPTO suggested that it is the district court and not the Office that is in the best position to fashion an equitable remedy to fit the facts in cases [such as this one] where inequitable conduct is established.” In contrast, Suros claims in the interference that Schwindt simply followed instructions to fabricate a circuit board and console for Suros’s device using off-the-shelf components and had no involvement in the biopsy device’s development.

Notwithstanding the ongoing interference proceeding, in the present suit, Schwindt asks the Court to declare him a co-inventor of the patents issued to Suros.

Practice Tip: This case highlights the importance of having clear intellectual property rights agreements when utilizing outside consultants. Even though a company may pay an outside firm to assist with developing a product, unless the agreement specifically calls for the assignment of inventions, the consultant will own the right to any resulting inventions, not the company commissioning the work.

It will be interesting to see how the Court addresses jurisdictional issues. The Complaint asserts claims for fraud/deception, unjust enrichment, and “accounting,” which are all state law claims that do not appear to invoke Federal jurisdiction. The only claim alleged to justify federal jurisdiction is that for declaratory judgment that the plaintiff is a co-inventor of the patents. However, patent ownership issues usually arise under state law. Jim Arnold Corp. v. Hydrotech Systems, Inc., 109 F.3d 1567 (Fed. Cir. 1197), cert. denied sum nom., 118 S. Ct. 338 (1997).

The complaint and more information about this suit is below.

January 20, 2011

Bald Spot Racing sues BSCI for Patent Infringement of Vehicle Seat Inserts

By Overhauser Law Offices, LLC

Indianapolis, IN – Patent lawyers for Bald Spot Racing, LLC of Indianapolis, IN have filed a patent infringement suit alleging BSCI, Inc. of Mooresville, NC infringed patent no. 6,733,710 VEHICLE PASSENGER RESTRAINT AND METHOD OF PRODUCING SAME, which has been issued by the US Patent Office. Despite the title of the patent, its single claim is limited to a method for making a car seat that is custom formed to a specific driver.

The single independent claim of the patent is:

1. A method of producing a restraint for a passenger of a vehicle comprising the steps of:
placing an enclosure of flexible plastic within a vehicle;

placing a passenger of the vehicle atop and adjacent said enclosure while in said vehicle;
allowing said flexible plastic to form around the passenger forming a plastic restraint;
removing the passenger from the vehicle;
causing the plastic restraint to harden;
removing the plastic restraint from the vehicle; scanning said plastic restraint to profile said plastic restraint; and, shaping solid plastic in accordance with the profile of the plastic restraint producing a passenger restraint.

This case has been assigned to Judge Jane E. Magnus-Stinson and Magistrate Judge Tim A. Baker in the Southern District of Indiana, and assigned case no. 1:11-CV-00095-JMS-TAB.

Practice Tip: The complaint alleges upon “information and belief” that the defendant “sold or offered for sale seat inserts for a racecar within this judicial district that were made by the defendant using a process protected by the patent . . .” An intriguing issue in this case is likely to be whether the defendant is subject to personal jurisdiction in Indiana if it did not actually practice the method in Indiana, and has no other contacts with Indiana. Personal jurisdiction could be more likely if there was an actual sale of a product of a seat insert to a customer in Indiana that was made using the patented method. It is not unusual for a patent owner to purchase one of the defendant’s products in the State where the patent owner plans to file suit, and then to reference that sale in the complaint to improve the odds so of acquiring personal jurisdiction over the defendant. The complaint here does not reference such a purchase.

January 14, 2011

Osmundson Mfg. sues CFC Distributors, Inc. for Federal Trademark Infringement

By Overhauser Law Offices, LLC

Fort Wayne, IN -Trademark lawyers for Osmundson Mfg. Co. of Perry, IA have filed a trademark infringement suit against CFC Distributors, Inc., of Wabash County, IN for infringement of the mark TURBO, which has been registered by the US Trademark Office. The plaintiff claims that the defendant is selling similar products and is using the trademark in connection with the sale of its products. This case has been assigned to Judge Rudy Lozano and Magistrate Judge Roger Cosbey of the Northern District of Indiana, and assigned case no. 1:10-cv-00021-RL-RBC.

Because Overhauser Law Offices, the publisher of this blog represents a party in this case, a commentary about this case is not provided.

January 13, 2011

Truth Publishing Company, Inc. sues Kristopher C. Campbell, d/b/a I.C.U. MUG SHOTS for copyright infringement of news publications

By Overhauser Law Offices, LLC

South Bend; IN – Copyright lawyers for Truth Publishing Company, Inc. of Elkhart, IN filed a copyright infringement suit alleging Kristopher C. Campbell d/b/a I.C.U. MUG SHOTS of Elkhart, IN infringed allegedly copyrighted news stories.

According to the complaint, Truth Publishing, is the publisher of the daily Elkhart Truth newspaper. The newspaper includes stories regarding criminal activities. The Defendant ICU Mug Shots (ICU stands for Indiana Criminals Uncovered) publishes mug shots of arrested persons accompanied by news stories about particular arrests. These publications sell for $1.50. It is alleged that the stories ICU Mugshots included with its publication stories about particular arrests that were quoted verbatim from The Elkhart Truth.

This case has been assigned to Judge Jon E. DeGuilio and Magistrate Judge Christopher A. Nuechterlein in the Northern District of Indiana, and assigned case no. 3:11-cv-00017-JD-CAN.

Practice Tip: The complaint does not allege that any of the allegedly infringed news stories have been registered with the Copyright Office. Instead, the complaint only alleges, for each story, that “Truth Publishing has timely applied for copyright registration of the [particular] story and paid the appropriate fee to the Copyright Office.” However, the Copyright Act. 17 U.S.C. § 411(a) states that ”no action for copyright infringement may be brought until the work that is the subject of such action has first been registered in the Copyright Office, or at least an attempt to register has been made and refused by the Copyright Office.” Given that the Plaintiff does not allege either registration or a refusal to register by the Copyright Office, the complaint may be subject to dismissal.

When a copyright owner’s work desires to file an infringement suit but does not have a registration, it is advisable to include a request for special handling and pay a special handling fee (currently $480) to expedite processing of the application. This can reduce the time to obtain a registration from several months to a few days.
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January 5, 2011

Hillenbrand, Batesville Casket Company win ban of knockoff coffins from Mexico from the U.S. International Trade Commission

By Overhauser Law Offices, LLC

Batesville, IN – Patent attorneys for Batesville-based Hillenbrand Inc., and its subsidiary Batesville Casket Company, the largest U.S. maker of coffins, have won an order to ban imports of knockoff caskets from Mexico in a patent infringement decision.

The U.S. International Trade Commission (USITC) in Washington said Monday that Ataudes Aguilares, a Mexican company, will be barred from importing caskets with patented memorabilia compartments and ornamental corner pieces. Batesville has patented caskets with memorabilia compartments, which is a drawer where family members can put personal mementos, Batesville said in its complaint. The patented ornamental corner pieces allow funeral directors to easily change the pieces quickly and easily. The four patents for the caskets with memorabilia compartments, U.S. Patent Numbers 5,611,124; 5,727,291; 6,836,936; 6,976,294; and, and the parent for the quick change corner attachment, Number 7,340,810, are registered with the US Patent Office. Batesville has also patented the specialty coffins in Canada and Mexico.
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January 4, 2011

25% Rule of Thumb for Patent Royalty Damages Rejected By Court of Appeals for the Federal Circuit

By Overhauser Law Offices, LLC

Washington DC – The “25% Rule” has often been used by damages experts in assessing damages in patent infringement cases. The rule states that in determining a base royalty rate in a hypothetical negotiation, a starting point is to consider that a reasonably royalty would be 25% of the marginal profits that would be realized by using the patented improvement. USE OF THE 25 PER CENT RULE IN VALUING IP, 37 les Nouvelles 123, 123 (Dec. 2002). On January 4, 2011, the Court of Appeals for the Federal Circuit resoundingly rejected this theory in Uniloc USA v. Microsoft. The Court stated:

“This court now holds as a matter of Federal Circuit law that 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.”

This has been a much-anticipated case, because the jury had awarded Uniloc damages of $388 million – a huge amount by any measure.

Practice Note: Although this case did not originate in Indiana, appeals in all patent infringement litigation are made to the Court of Appeals for the Federal Circuit. Thus, this ruling impacts patent infringement cases in every State, including Indiana.

This opinon is also notable because it comments on other important subjects in patent law, such as:

The Entire Market Value Rule – “The entire market value rule allows a patentee to assess damages based on the entire market value of the accused product only where the patented feature creates the ‘basis for customer demand’ or ‘substantially create[s] the value of the component parts. . . This case provides a good example of the danger of admitting consideration of the entire market value of the accused where the patented component does not create the basis for customer demand.”

Standard of Review of Jury Verdicts The Court ruled that de novo review applies in cases where “the parties conceded that under one claim construction there was infringement and under the other there was none, and were arguing only over which claim construction was appropriate.” In contrast, if “the claim construction itself is not contested, but the application of that claim construction to the accused device is,” the substantial evidence standard governs

Willful Infringement. A court can “treble” damages and award attorneys fees when “willful infringement” occurred. The Court stated, “If the accused infringer’s position is susceptible to a reasonable conclusion of no infringement, the first prong of Seagate cannot be met.” Slip Op. at 32. Particularly obtuse is the court’s triple-negative articulation of the factual holding: “Uniloc has not presented any evidence at trial or on appeal showing why Microsoft, at the time it began infringement, could not have reasonably determined that [Microsoft’s algorithms] did not meet the “licensee unique ID generating means,” “licensee unique ID,” or “registration system”/”mode switching means” limitations.”

Clear and Convincing Standard for Proving Patent Invalidity. Microsoft had vigorously argued that patent invalidity need only be shown by a preponderance of the evidence as opposed to clear and convincing evidence . However, the Court did not rule in Microsoft’s favor, stating, “Until changed by the Supreme Court or this court sitting en ban, this is still the law.”

Given the amount of damages at issue, the case is likely to be appealed to the U.S. Supreme Court.

The opinion appears below