Articles Posted in Criminal IP

Indianapolis, Indiana – Plaintiff Heartland Consumer Products LLC of Carmel, Indiana filed an intellectual property lawsuit in the Southern District of Indiana alleging trademark and trade dress infringement, trademark dilution and unfair competition under the Lanham Act, as well as related wrongdoing under the Indiana State Trademark Act, the common law of the State of Indiana and the Indiana Crime Victims Act.  The intellectual property at issue pertains to Splenda®, a Heartland trademark under which it offers sucralose, a low-calorie sweetener.

Defendants in the litigation are Dunkin’ Brands, Inc. and Dunkin’ Donuts Franchised Restaurants LLC of Canton, Massachusetts.  They are accused of “deceiving customers into believing the Dunkin’ Donuts restaurants carry Splenda® Brand Sweetener,” by both tacitly and affirmatively misrepresenting that the non-Splenda sucralose product that the Dunkin’ Defendants offer is, in fact, Heartland’s Splenda.  Plaintiff contends that consumers were confused about whether the sweetener that the Dunkin’ Defendants offered was Splenda and that some have complained that adding the other sweetener to their Dunkin’ Donuts products imparted a “funny taste.”

Defendants discontinued their agreement to purchase and offer Heartland’s Splenda in April 2016.  According to the Indiana complaint, following that decision, Defendants began offering sweetener in yellow packets similar to the single-serving packets in which Splenda is offered to the public.  Plaintiff contends that, when asked, Defendants in a “clear majority of stores affirmatively represented, through their agents or employees, that non-Splenda® sucralose sweetener was instead Splenda® Brand Sweetener.”  Plaintiff further contends that Dunkin’ Defendants are misappropriating Plaintiff’s trademarked “Sweet Swaps®” by the use of a similar term “Smart Swaps.”

In this complaint, filed by Indiana trademark attorneys for Plaintiff, the following causes of action are alleged:

  • Count I: Common Law Trademark Infringement and Trademark Infringement under 15 U.S.C. § 1114(1)
  • Count II: False Designation of Origin under 15 U.S.C. § 1125(a)
  • Count III: Unfair Competition
  • Count IV: Trademark Dilution under 15 U.S.C. § 1125(c)
  • Count V: Trademark Dilution under I.C. 24-2-1-13.5
  • Count VII [sic]: Preliminary and Permanent Injunctive Relief
  • Count VIII: Corrective Advertising Damages

Plaintiff states that the following registered trademarks and pending trademark applications are implicated in this trademark lawsuit:

Mark Registration Number
SPLENDA 1544079
SPLENDA 3346910
SPLENDA – Design plus words, etc. 4172135
SPLENDA – Design plus words, etc. 4165028
SPLENDA – Design plus words, etc. 4301712
SPLENDA – Design plus words, etc. 4172136
SPLENDA – Design plus words, etc. 4165029
SPLENDA – Design plus words, etc. 4122311
SPLENDA – Design plus words, etc. 4187229
SPLENDA – Design plus words, etc. 4202774
SPLENDA – Design plus words, etc. 4230392
SPLENDA – Design plus words, etc. 4238101
SPLENDA – Design plus words, etc. 4106164
SPLENDA LIVING 4664653
CUANDO PIENSES EN AZUCAR, USA SPLENDA 4744600
Pending Applications Serial Number
THINK SUGAR, USE SPLENDA 86865337
SWEET SWAPS Splenda 87012521
SPLENDA ZERO 87010504

Plaintiff seeks damages, including punitive damages, as well as injunctive relief, costs and attorneys’ fees.

The case was assigned to District Judge Sarah Evans Barker and Magistrate Judge Mark J. Dinsmore in the Southern District of Indiana and assigned Case No. 1:16-cv-03045-SEB-MJD.

 

Chicago, Illinois – The Seventh Circuit ruled in the ongoing intellectual property litigation between Plaintiff Lightspeed Media Corp. and Defendants Anthony Smith et al.

Attorneys for Lightspeed Media Corp. have filed numerous lawsuits nationwide in an apparent attempt to extract quick settlements from individual users who would rather avoid litigating their pornography consumption in open court. After pushback from Defendants and their internet service providers, as well as the imposition of sanctions by the Central District of California in a similar case, the attorneys began to voluntarily dismiss some of the cases.

The litigation against Defendant Smith was one such dismissed lawsuit. After the dismissal, Smith filed a motion for attorney’s fees. The Southern District of Illinois found that the Lightspeed lawsuit had been frivolous, baseless, and “smacked of bullying pretense,” and imposed sanctions of $261,025.11, jointly and severally, against three lawyers for Lightspeed: Paul Hansmeier, John Steele, and Paul Duffy.

Much legal wrangling ensued. While pleading to the court an inability to pay the sanctions, Steele withdrew over $300,000 from an account that he shared with his wife. Hansmeier withdrew a similar amount from one of his accounts. Each of these transfers was apparently an attempt to conceal the funds from the court and Smith. Other actions, also apparent attempts to conceal the funds, were also taken by the attorneys. Following these actions, Hansmeier filed for bankruptcy and Duffy passed away.

The Seventh Circuit was asked to consider the appropriateness of the sanction against the three attorneys. It declined to hear the matter as to Duffy, stating that because he was deceased he was “beyond [their] jurisdiction.” The appeals court dismissed the appeal as to Hansmeier, noting that, in a liquidation proceeding under Chapter 7 of the bankruptcy code, “only the trustee [of the bankruptcy estate] has standing to prosecute or defend a claim belonging to the estate.”

After a review of multiple instances of discovery misconduct, the appellate court held that the district court had acted within its discretion in imposing a discovery sanction against Steele for what it called a “pattern of vexatious and obstructive conduct” and “obviously egregious behavior.”

The appellate court then turned to the matter of the contempt sanction against Steele. Steele argued that the sanction was in fact criminal in nature, not civil. Thus, he contended, the district court had failed to abide by the enhanced procedural safeguards required for such a sanction.

The Seventh Circuit agreed. It held that, while “civil contempt may be imposed if proven by clear and convincing evidence, and without the full criminal procedural process,” imposing criminal contempt required more. Specifically, it required that the contemnor be “afforded the protections that the Constitution requires of such criminal proceedings.”

The appellate court also held that the fine, as ordered by the district court, was not “designed either to compel the contemnor into compliance with an existing court order or to compensate the complainant for losses sustained as a result of the contumacy,” as was appropriate for a finding of civil contempt. Instead, the sanctions that had been levied against Steele were punitive in nature, and “meant to vindicate the authority of the court.” Thus, they were properly deemed criminal sanctions.

Concluding that the procedures required under the Constitution for criminal contempt had not been applied, the Seventh Circuit vacated the contempt sanction.

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Indianapolis, Indiana – Indiana trademark attorneys for Countrymark Refining and Logistics, LLC of Indianapolis, Indiana filed a trademark lawsuit against Coop Fuels Inc. of Morrisville, North Carolina. The complaint asserts direct and contributory trademark infringement, false designation of origin, and unfair competition arising under the Lanham Act as well as claims under Indiana law.

At issue are two trademarks owned by Countrymark, U.S. Registration Nos. 2,657,529 and 2,679,308 for the CO-OP trademark, which have been registered with the U. S. Patent and Trademark Office.

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Defendant Coop Fuels is alleged to have infringed these trademarks by using “coop” to market its competing products.

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Additionally, Countrymark contends that Coop Fuels has also knowingly induced and materially contributed to its retail partners’ unauthorized adoption and use of Countrymark’s trademarks.

In this lawsuit, Indiana trademark lawyers for Countrymark list the following allegations of wrongdoing:

• Count I: Infringement of Federally Registered Marks – 15 U.S.C. § 1114
• Count II: False Designation of Origin and Unfair Competition – 15 U.S.C. § 1125(a)
• Count III: Contributory Trademark Infringement
• Count IV: Common Law Unfair Competition
• Count V: Deception – Indiana Code § 35-43-5-3(a)(6)
• Count VI: Conversion – Indiana Code § 35-43-4-3

• Count VII: Indiana Crime Victim’s Relief Act- Indiana Code § 35-24-3-1

Countrymark asks the federal court for injunctive relief, actual and treble damages, attorneys’ fees and costs.

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Evansville, Indiana – An Indiana trademark attorney for Plaintiff Kimball International, Inc. (“Kimball”) of Jasper, Indiana filed an intellectual property lawsuit in the Southern District of Indiana.

Defendant COA, Inc. d/b/a Coaster Company of America (“Coaster”) of Santa Fe Springs, California is accused of infringing Kimball’s Trademark KIMBALL, Reg. No. 1,180,193, which has been registered with the U.S. Patent and Trademark Office, by using the trademark without authorization.

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In addition to direct trademark infringement, Kimball asserts counts of contributory trademark infringement, false designation of origin, unfair competition arising under the Lanham Act as well as violations of the statutes and common law of the State of Indiana.

In particular, Kimball asserts that some of Coaster’s retail partners have infringed the KIMBALL trademark at Coaster’s behest, including retail giant Sears. As an example of this alleged contributory infringement, Kimball cites Bradley Home Furnishings’ website, which Kimball states features an unauthorized “Kimball Bedroom Collection” that originated from Defendant Coaster:

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Kimball indicates in the complaint that it first informed Defendant less than a month before this lawsuit was filed that it believed it held superior rights to the KIMBALL trademark but states that Coaster “continues its unlawful use of the KIMBALL Mark and continues to encourage, induce, and materially contribute to its retail partners’ unlawful use of the KIMBALL Mark.”

In this litigation, filed by an Indiana trademark lawyer for Kimball, the following counts are alleged:

• Count I: Infringement of Federally Registered Marks – 15 U.S.C. § 1114
• Count II: False Designation of Origin – 15 U.S.C. § 1125(a)
• Count III: Contributory Trademark Infringement
• Count IV: Common Law Unfair Competition
• Count V: Deception – Indiana Code § 35-43-5-3(a)(6)
• Count VI: Conversion – Indiana Code § 35-43-4-3

• Count VII: Indiana Crime Victim’s Relief Act – Indiana Code § 35-24-3-1

Among other remedies, Kimball seeks equitable relief, actual and treble damages, costs and attorneys’ fees.

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In 2008, a new federal law creating stricter penalties for criminals who engaged in intellectual property theft was enacted to keep pace with globalization, e-commerce, and technology advances.

Fast forward to 2016: Technological advances continue at an even faster pace, dramatically 

 

 

Intellectual Property Theft 101

 

Intellectual property can be an idea, an invention, a design, a business process, or even a creative expression.  All are protectable under the law.

 

Once stolen, intellectual property can generate a great deal of money for the thieves.  But there are other consequences. Intellectual property theft, which includes theft of trade secrets, the trafficking of counterfeit goods, and digital piracy, results in billions of dollars in lost profits annually. Failure to protect the nation’s intellectual property undermines confidence in the economy, removes opportunities for growth, erodes America’s technological advantage, and disrupts fairness and competitiveness in the marketplace.

 

Some intellectual property thefts pose a more far-reaching and serious threat to the U.S. than economic loss to the rights holders. These thefts can also put public safety at risk through the sale of counterfeit pharmaceuticals,
electrical components, and aircraft and automobile parts, as well as through the funding of other kinds of crime.

 

Within its intellectual property rights violations program, the FBI prioritizes its investigations and focuses the majority of its resources on cases involving theft of trade secrets, counterfeit goods that pose a threat to human health and safety, and copyright and infringement matters with a nexus to national security or organized crime or that pose a significant economic impact.

 

Along with its partners at the National Intellectual Property Rights Coordination Center, the FBI also participates in several intelligence-driven national initiatives, including:

 


Operation Chain Reaction, which focuses on counterfeit products entering the U.S. government supply chain that pose a threat to human health and safety or national security;


Operation Engine Newity, which addresses counterfeit automotive parts that threaten safety, including airbags, brake pads, and steering systems; and


Operation Apothecary, which focuses on counterfeit pharmaceuticals that pose a safety threat.

 

increasing the threat posed by criminals who steal trade secrets, produce and/or traffic in counterfeit products, and infringe on copyrights. One important factor in this increase is the global expansion of online marketplaces, which aids international and domestic criminal organizations in trafficking in counterfeit goods.

The Department of Justice recently announced a new strategy that involves partnering more closely with businesses in an effort to combat these types of crimes more effectively. According to Attorney General Loretta Lynch, “Through this new approach, we intend to provide information and resources to individuals and companies that will help them identify and disrupt attempts on their intellectual property, extend greater protection to American commerce as a whole, and safeguard the health and safety of individual Americans.” The Federal Bureau of Investigations (“FBI”), working with its investigative partners at the National Intellectual Property Rights Coordination Center (“NIPRCC”), will play an integral part in this strategy.

The FBI has already been collaborating for years with brand owners, copyright holders, and trademark holders because in an effort to prevent the harm that intellectual property theft causes: legitimate businesses lose billions of dollars in revenue and suffer damaged reputations, consumer prices go up, the U.S. and global economies are robbed of jobs and tax revenue, product safety is reduced, and sometimes lives are even put at risk. The FBI’s efforts with these businesses to date have involved shared information, aggressive criminal initiatives based on current or emerging trends, and investigations.

The FBI has now begun expanding its efforts to work with third-party entities, such as online marketplaces, payment service providers, and advertisers, that may inadvertently enable the activities of criminals.

Third-party online marketplaces draw consumers to their sites with competitive pricing and a sense of security, but criminal counterfeiters exploit these marketplaces to gain an appearance of legitimacy, access to far-reaching advertising, and efficient sales transactions.

Payment service providers, such as credit card payment processors and related payment alternatives, also give counterfeiters the appearance of legitimacy when they provide payment options that consumers mistakenly interpret to mean that the businesses they service are legitimate.

Online advertising systems and platforms enable website owners to outsource the process of monetizing their website traffic. Criminals have begun exploiting advertising as an alternative revenue stream, drawing traffic to their sites by offering counterfeit products for sale or pirated digital content for download.

The FBI finds that there are significant benefits to working with these third-party entities. According to David Farquhar, who heads up the FBI’s Intellectual Property and Cyber-Enabled Crimes Unit at the NIPRCC, “We’re not only broadening awareness of the crime problem, we can also obtain information about crime trends, get investigative leads that will help us identify criminals, and collect evidence of criminal activity.” Farquhar added that the FBI will assist these companies with refining their own analytical tools and techniques for uncovering fraud.

Also new in its approach to intellectual property theft is an enhanced relationship between the FBI’s criminal and counterintelligence personnel when working theft of trade secrets cases. A trade secrets case worked under the counterintelligence program, which occurs when the involvement of state-sponsored actors is suspected, will be referred to a criminal squad if no state sponsorship is found. And when criminal investigators begin to suspect the involvement of a state sponsor, the case will be referred to the counterintelligence squad.

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Indianapolis, Indiana – Indiana trademark attorneys for Plaintiff Indy Founders LLC d/b/a Verge of Indianapolis, Indiana filed a trademark infringement lawsuit with the court in the Southern District of Indiana. The lawsuit alleges that Vox Media, Inc. and The Verge Group LLC (“TVG”) infringed the VERGE trademark, Registration No. 4,153,192, which has been registered by the U.S. Patent and Trademark Office.

Indy Founders is in the business of creating and offering online publications and websites, as well as similar services, for startup technology entrepreneurs, investors, and collaborators. It states that it holds a federal registration on VERGE as a trademark and that the VERGE trademark has been used since at least as early as January 2011.

Defendant Vox Media is a partner and owner of Defendant TVG. Plaintiff asserts that Defendants are engaged in a business similar to Plaintiff’s and that Defendants use the VERGE trademark in connection with their business, THE VERGE, and in their business’ domain name, http://www.theverge.com/. Plaintiffs contend that Defendants’ use of THE VERGE to identify their goods and services is unlawful.

In this Indiana trademark lawsuit, filed with the court by trademark lawyers for Plaintiff, the following claims are made:

• Count I: Trademark Infringement
• Count II: False Designation Of Origin
• Count III: Unfair Competition
• Count IV: Declaratory Judgment
• Count V: Indiana Crime Victims Act [Forgery under IC §35-43-5-2]
• Count VI: Preliminary and Permanent Injunctive Relief

• Count VII: Corrective Advertising

Indy Founders seeks a declaratory judgment, equitable relief, actual damages, treble damages, costs and attorneys’ fees.

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Internet-related crime, like any other crime, should be reported to appropriate law enforcement investigative authorities at the local, state, federal, or international levels, depending on the scope of the crime. Citizens who are aware of federal crimes should report them to local offices of federal law enforcement.

A guide to reporting intellectual property crime:

Type of Crime

Appropriate federal investigative law enforcement agencies 

Copyright piracy (e.g.,
software, movie, sound recordings)

Trademark counterfeiting

Theft of trade secrets/Economic Espionage

The U.S. Department of Justice has also produced a guide, “Reporting Intellectual Property Crime: A Guide for Victims of Counterfeiting, Copyright Infringement, and Theft of Trade Secrets,” available as a PDF file. This guide is contained in Appendix C of the Report of the Department of Justice’s Intellectual Property Task Force (October 2004). The guide also contains the following checklists for reporting intellectual property crime to law enforcement:

Checklist for Reporting a Copyright Infringement or Counterfeit Trademark Offense (PDF)

Checklist for Reporting a Theft of Trade Secrets Offense (PDF)

Other government initiatives to combat cybercrime include:

National Intellectual Property Rights Coordination Center

The IPR Coordination Center’s responsibilities include:

• Coordinating U.S. government domestic and international law enforcement activities involving IPR issues.
• Serving as a collection point for intelligence provided by private industry, as well as a channel for law enforcement to obtain cooperation from private industry (in specific law enforcement situations).
• Integrating domestic and international law enforcement intelligence with private industry information relating to IPR crime, and disseminating IPR intelligence for appropriate investigative and tactical use.
• Developing enhanced investigative, intelligence and interdiction capabilities.

• Serving as a point of contact regarding IPR law enforcement related issues.

The STOP Initiative (www.stopfakes.gov)

The stopfakes.gov website provides information to consumers and businesses on intellectual property, including information on how to report trade in fake goods.

Those with specific information regarding intellectual property crime can submit an IPR Coordination Center Complaint Referral Form.

Washington, D.C. – The U.S. Marshals are currently auctioning approximately 4,711 bottles of wine, deemed authentic, that belonged to Rudy Kurniawan, the man convicted of fraud in federal court in 2013 for producing and selling millions of dollars of counterfeit wine.

The wine is being sold in two online auctions, one that started November 24 and one that started December 1 at www.txauction.com. The auctions close on December 8 and December 15, respectively.

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“It may sound ironic that we are selling wine that belonged to a convicted wine counterfeiter,” said Assistant Program Manager Jason Martinez of the U.S. Marshals Service Asset Forfeiture Division, “but we are duty-bound to recoup as much value from the sale of these authentic wines as possible to compensate those who were victims of his fraud.”

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Norfolk, Virginia – District Judge Rebecca Beach Smith of the Eastern District of Virginia sentenced copyright infringer to prison.

Rocky P. Ouprasith, 23, of Charlotte, North Carolina, was sentenced recently to 36 months in prison for reproducing and distributing without permission millions of infringing digital copies of copyrighted works, including copies of popular songs and albums before they were commercially available. Ouprasith was also sentenced to two years of supervised release, ordered to pay restitution in the amount of $45,288.62, and to forfeit $50,851.05.

This case represents the first criminal copyright infringement sentence imposed for a cyberlocker operator in the United States.

“Ouprasith operated the second largest online file sharing site in the United States, averaging nearly 4.5 million visits per month and resulting in an estimated collective loss of more than $10 million per month to the rightful owners,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “I believe this sentence reflects the seriousness of the crime and will promote greater respect for the law and property rights of others.”

“HSI is responsible for enforcing federal regulations that exist to protect American businesses from unfair trade practices and intellectual property theft,” said Clark E. Settles, Special Agent in Charge of U.S. Immigration and Customs Enforcement‘s Homeland Security Investigations (“HSI”). “Online piracy has a serious financial impact to business, which is felt at every level of a transaction – from the producer to the point-of-sales clerk.”

Ouprasith pleaded guilty on Aug. 21, 2015. According to court documents, between May 2011 and October 2014, Ouprasith operated RockDizMusic.com, a website originally hosted on servers in France and later in Canada, from which Internet users could find and download infringing digital copies of popular copyrighted songs and albums. Ouprasith admitted that he obtained digital copies of copyrighted songs and albums from online sources, and that he encouraged and solicited others, referred to as “affiliates,” to upload digital copies of copyrighted songs and albums to websites, including RockDizFile.com, that were hosted on servers in Russia, France and the Netherlands, and that hosted hyperlinks to content being offered for download on RockDizMusic.com. Ouprasith further admitted that to encourage such activity, he agreed to pay the affiliates based on the number of downloads from his website.

According to the Recording Industry Association of America, in 2013, RockDizFile.com was the second-largest online file sharing website specializing in the reproduction and distribution of infringing copies of copyrighted music in the United States. Ouprasith admitted that in 2013 and 2014, he either ignored or pretended to take remedial action in response to complaints from copyright holders and their representatives that the website contained links to infringing copies protected songs and albums.

In October 2014, federal law enforcement authorities shut down RockDizMusic.com and RockDizFile.com, and law enforcement authorities in the Netherlands and France seized file-hosting servers utilized by Ouprasith.

According to court documents, the market value of Ouprasith’s illegally pirated material was more than $6 million.

This sentencing is related to the many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (“IP Task Force”). The IP Task Force supports prosecution priorities, promotes innovation through heightened civil enforcement, enhances coordination among federal, state, and local law enforcement partners, and focuses on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders.

Practice Tip: To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.

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Washington, D.C. – The Justice Department has announced a new approach to combat intellectual property crimes. Grants to state and local law enforcement agencies totaling more than $3.2 million were also announced.

Attorney General Loretta E. Lynch stated recently that the Justice Department will launch a new collaborative strategy to partner more closely with businesses in intellectual property enforcement efforts. Additionally, over $3.2 million will be awarded to ten jurisdictions to support state and local task forces in the training, prevention, enforcement and prosecution of intellectual property theft and infringement crimes.

“The digital age has revolutionized how we share information, store data, make purchases and develop products, requiring law enforcement to strengthen our defenses against cybercrime – one of my top priorities as Attorney General,” said Attorney General Lynch. “High-profile instances of hacking – even against large companies like Sony and Target – have demonstrated the seriousness of the threat all businesses face and have underscored the potential for sophisticated adversaries to inflict real and lasting harm.”

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