Articles Posted in Federal Jurisdiction

Indianapolis, Indiana – Attorney and Photographer Richard N. Bell of McCordsville, Indiana filed suit in the Southern District of Indiana alleging that Defendant, Halcyon Business Publications, Inc., of New York infringed his “Indianapolis Photo” which has been registered with the United States Copyright Office as Registration No. VA0001785115. After review of the Defendant’s Motion to Dismiss for Lack of Jurisdiction which was filed on December 29, 2017 the court granted the Motion to Dismiss on May 24, 2018.

Bell, who has brought many similar lawsuits for infringement of his Indianapolis Photo, initially filed this case on November 29, 2017 alleging violations of the Lanham Act and copyright infringement. Halcyon claimed that the Court lacked personal jurisdiction over the company as they do not maintain any offices in the state, have no employees in the state, and have no assets in the state of Indiana. They did admHalcyon-BlogPhoto-300x66it that they hired one Indiana resident as an independent contractor to write for their publication, but that contractor did not write the article that utilized the Indianapolis Photo. Further, the total amounts of advertising sold to Indiana companies by Halcyon amounted to 3.26% and 4.55% in 2016 and 2017, respectively, and Indiana subscribers to the publication comprised less than 3% of their total subscribers.

Here, the Court must only look at whether the personal jurisdiction is consistent with the Federal Due Process Clause as Indiana’s long-arm statute is analyzed under this issue. For this, a defendant must have “minimum contacts” with the forum state and purposefully avail themselves “of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws.” Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 109 (1987). This allows a defendant to reasonably anticipate being brought into a forum in a foreign jurisdiction.

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Fort Wayne, Indiana – Attorneys for Plaintiff, Vera Bradley Designs, Inc., of Roanoke, Indiana filed suit in theDenny-BlogPhoto-300x64 Northern District of Indiana alleging that Defendant, Austin Devin 2 Denny Boys, LLC,  infringed multiple trademarks of the Plaintiff. Overhauser Law Offices, LLC represented the Defendant Austin Devin 2 Denny Boys LLC and Darlene Nicholas, who filed a Motion to Dismiss for improper venue and prevailed on July 30, 2018.

Plaintiff currently holds more than 900 copyright registrations, 35 federal trademark registrations, and has 17 pending federal trademark applications. The Plaintiff alleged in its complaint that the Defendants operate eBay accounts that they use to sell counterfeit Vera Bradley items and these acts infringe Vera Bradley’s trademarks and copyrights. All Defendants were sent cease and desist letters on behalf of the Plaintiff via counsel on July 26, 2017. On August 1, 2017, all Defendants party to the Motion to Dismiss responded through counsel and agreed to stop selling the counterfeit items, however, the Plaintiff alleged they did not cease their activities and filed suit.

The Defendants moved to dismiss Vera Bradley’s Complaint and claimed that because a substantial part of the events leading to the Plaintiff’s claims did not occur in the Northern District of Indiana, venue was improper. Further, Defendant Nicholas, claimed that the Court did not have personal jurisdiction over her. The Plaintiff countered that there were five specific instances in which the counterfeit merchandise was purchased by its employees within the Northern District of Indiana from the Defendants. They also claimed that venue was proper because they suffered harm in the District. As to Defendant Nicholas, the Court held that the Plaintiff did not give any persuasive argument as to how the Northern or Southern District Courts of Indiana could have general or specific personal jurisdiction over her in this case as she resides in Florida. Therefore, the Court was unable to transfer the case to the Southern District of Indiana, which may have been a proper venue for the other Defendants involved.

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Indianapolis, Indiana  – Stone Basket Innovations, LLC of Austin, Texas, filed a patent infringement lawsuit in the Eastern District of Texas which was transferred to the Southern District of Indiana alleging that Cook Medical, LLC of Bloomington, Indiana, infringed Patent No. 6,551,327 (“‘327 Patent”), Endoscopic Stone Extraction Device with Improved Basket, issued by the US Patent Office.Stonebasket-BlogPhoto-300x204

The initial Complaint for this case was filed on April 8, 2015. Defendant served their invalidity contentions in October 2015 and deposed the ‘327 patent’s inventor in January of 2016. During the deposition, the inventor stated in regards to an addition to overcome an examiner’s rejection, “I realize there is nothing novel about it.” Defendant then petitioned the U.S. Patent and Trademark Office for inter partes review (IPR) of all the claims. The District Court case was stayed pending the outcome of the petition for an IPR based off a joint motion.

After the IPR was instituted in September 2016, Plaintiff offered to license the ‘327 patent to Defendant for $150,000.00. Negotiations fell through and the settlement did not occur. Plaintiff then filed a motion requesting an adverse judgment in the IPR proceeding in December 2016 and moved to dismiss the District Court case with prejudice, both of which were granted.

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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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Evansville, Indiana – In the matter of Berry Plastics Corporation v. Intertape Polymer Corporation, Judge Richard L. Young of the Southern District of Indiana ruled on Defendant Intertape’s motion to reconsider the court’s conclusion of patent invalidity on the grounds of obviousness.

This Indiana patent litigation, filed in January 2010, sought a declaratory judgment of non-infringement of U.S. Patent No. 7,476,416 (the “‘416 patent”). Plaintiff Berry Plastics Corp. sued competitor Intertape Polymer Corp., which owns the ‘416 patent.

In the complaint, Berry asked the federal court to rule that it had not infringed the patent-in-suit, titled Process for Preparing Adhesive Using Planetary Extruder. In the alternative, it asked that the court rule that the patent was invalid and unenforceable. Among the reasons cited for this proposed conclusion were assertions that Intertape had engaged in improper conduct before the U.S. Patent and Trademark Office and that the patent was invalid as obvious.

The court held a jury trial in November 2014. The jury found, inter alia, that the ‘416 patent was not obvious. After the trial, the court heard additional argument on the issue of the validity of the patent and ruled for Berry, holding that the patent-in-suit was invalid as obvious.

In this recent entry, the court rules on Intertape’s motion to reconsider on the grounds that the court had ruled too broadly, inadvertently invalidating the entire patent instead of addressing only the asserted claims presented at trial. The court held that it was permitted under Fed. R. Civ. P. 54(b) to modify its previous order (“[A]ny order or other decision … that adjudicates fewer than all the claims …does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims …. “). It also concluded that, under Fed. R. Civ. P. 50, it had the authority to enter judgment against a party after a jury trial as long as “a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.”

The court first held that certain dependent claims had not been challenged as invalid at trial and, consequently, the court had no jurisdiction to rule on the validity of those claims. On these claims, it granted the motion to reconsider.

Regarding those dependent claims that had been asserted at trial, the court evaluated the evidence and testimony presented and concluded that the dependent claims added no patentable subject matter but were instead simply obvious selections of prior art used in an ordinary way. Consequently, the court denied Intertape’s motion to reconsider.

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Washington D. C. – The United States Senate Judiciary Committee approved S. 1890, the Defend Trade Secrets Act (“DTSA”). If enacted, the bill would create a private cause of action in the federal courts for trade secret misappropriation.

Under Indiana’s Access to Public Records Act, a trade secret is defined as:

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

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

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

The proposed legislation uses a similar definition:

[T]he term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if —

(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.

The DTSA would be the civil counterpart to the Economic Espionage Act of 1996, a criminal statute that uses the same definition of “trade secret” as the DTSA.

This would be the first time that individuals would have a private, federal right of action for theft of trade secrets. Presently, those seeking redress in civil court for theft of trade secrets must resort to claims based on state law or seek to have a claim for injunctive relief filed by the Attorney General.

The DTSA, if enacted, would address the current patchwork of state laws protecting trade secrets. While those state statutes are similar, with many states having enacted some form of the Uniform Trade Secrets Act (“UTSA”), they are not identical.

The DTSA does not preempt any other law. Thus, where a state’s law governing trade secrets is more generous, a plaintiff retains the ability to sue under that state law also, either in state court or as a pendant claim in a federal lawsuit.

The relief offered under the DTSA contains such remedies as monetary damages, including royalty payments, reimbursement of actual losses caused by the defendant and trebling of a monetary award where punitive damages are found to be appropriate. Injunctive relief and attorneys’ fees may also be recoverable.

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Indianapolis, Indiana – An Indiana copyright lawyer for Defendant Wrightspeed, Inc. of San Jose California filed a notice of removal in the Southern District of Indiana on the basis of both federal-question jurisdiction and diversity-of-citizenship jurisdiction.

Plaintiff Precision Rings, Inc. of Indianapolis, Indiana had filed its lawsuit in Marion County Superior Court seeking declaratory relief, injunctive relief, unspecified damages and attorney’s fees. Among Plaintiff’s contentions was the breach of a nondisclosure agreement. Included in this alleged breach was the misappropriation of Plaintiff’s trade secrets, which involved the use or disclosure by Defendant of certain copyrighted drawings that Plaintiff had registered with the U.S. Copyright Office.

Defendant Wrightspeed contended that federal-question jurisdiction was proper and asked that the federal court in the Southern District of Indiana hear and decide all further matters in the litigation. Defendant asserted that the complaint arose under copyright law because Plaintiff’s complaint included a claim that would require construction of the Copyright Act. Consequently, subject matter jurisdiction rested exclusively in federal court.

Defendant Wrightspeed also asserted that diversity-of-citizenship jurisdiction was a proper basis for the Indiana federal court to hear the litigation. The parties were completely diverse, it stated, with Plaintiff being a citizen of Indiana and Defendant being a citizen of both Delaware and California. Defendant contended further that, considering the potential damages, fees and costs, the amount at stake was well in excess of the $75,000 threshold necessary for diversity-of-citizenship jurisdiction.

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Fort Wayne, Indiana – District Judge Jon E. DeGuilio of the United States District Court for the Northern District of Indiana transferred a lawsuit alleging copyright to the Southern District of Indiana, citing a lack of venue in the Northern District.

In this litigation, Angela E. Brooks-Nwenga, acting pro se, alleges that The Mind Trust, United Way of Central Indiana, Central Indiana Education Alliance, Phalen Leadership Academies and Indianapolis Public Schools, all of Indianapolis, Indiana, infringed her copyright work, “Transitioning Into Responsible Students.” Among the wrongdoings asserted are infringement involving Defendants’ use of “Bridges To Success Education School Model” and “Phalen Leadership Academies School Model”

This copyright lawsuit was filed in the Northern District of Indiana, with Brooks-Nwenga acting as her own copyright attorney. The court ordered Plaintiff to show cause why the litigation should not be transferred to the Southern District of Indiana. Brooks-Nwenga argued to the court that she lived in Fort Wayne, Indiana, but the court was not persuaded by this, noting that the statute governing venue in a federal lawsuit, 28 U.S.C. § 1391(b), provides that:

a civil action may be brought in:

(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;

(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or

(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action.

None of these criteria applied to this litigation. Brooks-Nwenga also contended that her prior litigation in the Southern District of Indiana had been excessively delayed and that her lawsuit had not received a fair and unbiased hearing. The court was similarly unswayed by this argument, stating that the court would “not hear appeals from other district courts.”

Finally, the court noted that, while venue in the Northern District was improper, “a substantial part, if not all, of the events or omissions giving rise to Ms. Brooks-Ngwenya’s claim seem to have occurred in the Southern District of Indiana.” Consequently, the court ordered the litigation transferred.

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Evansville, Indiana – Responding to a complaint filed in Indiana state court by Indiana copyright attorneys, a defense lawyer filed a motion to remove the lawsuit to a federal court in the Southern District of Indiana – Evansville Division.

Plaintiff Professional Transportation, Inc. of Evansville, Indiana (“PTI”) is the former employer of Defendant Robert Warmka of Savage, Minnesota. Warmka worked for PTI from September 2012 to December 2013. PTI contends that this employment was governed in part by a trade-secrets agreement. Subsequent to leaving employment with PTI, Warmka began employment with Minnesota Coaches Inc. (“MCI”) d/b/a Crew Motion, a competitor of PTI.

PTI filed this copyright lawsuit in Vanderburgh Superior Court alleging that Warmka infringed its intellectual property by his use of Plaintiff’s copyrighted driver’s manual within MCI’s driver’s manual. PTI contends that multiple sections of PTI’s manual were reproduced nearly verbatim in MCI’s manual. PTI claims that this manual was filed with the U.S. Copyright Office “on or before 2012.” Plaintiff further contends that Defendant appropriated Plaintiff’s confidential material and trade secrets in violation of a trade secret agreement executed by both parties in 2012.

In this lawsuit, filed by Indiana copyright lawyers, the following counts are asserted:

• Count I: Indiana Trade Secret Violation
• Count II: Unfair Competition

• Count III: Copyright Infringement

Plaintiff alleges loss of business and profits and seeks injunctive relief and monetary damages.

Copyright attorneys for Warmka filed a notice of removal, stating that federal subject-matter jurisdiction was proper on the basis of both federal-question jurisdiction and diversity-of-citizenship jurisdiction.

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Indianapolis, Indiana – The Southern District of Indiana has granted a motion by Defendant The Celebrity Café.com, Inc. (“Celebrity”) to dismiss the copyright infringement complaint filed by Larry G. Philpot of Indianapolis, Indiana. The court also granted Philpot’s motion to amend his complaint.

Plaintiff Philpot is a professional photographer who photographs concert events across the country. He copyrights his photographs and licenses them to others. In December 2014, Philpot sued Celebrity of Oceanside, New York asserting that it had infringed his copyrights by posting two photographs that Philpot had registered with the U.S. Copyright Office. The photos at issue are a 2009 photograph of Willie Nelson and a 2013 photo of Kid Rock.

An Indiana copyright attorney for Defendant Celebrity moved to dismiss the complaint on the grounds that Defendant was not subject to personal jurisdiction in Indiana and that the Southern District of Indiana was an improper venue. A short time later, Philpot asked the court’s permission to amend his complaint to include additional defendants. By this order, the court granted both parties’ requests.

On the issue of jurisdiction, the court held that Philpot had failed to meet his burden to demonstrate the necessary minimum contacts between Celebrity and the State of Indiana. The court found Celebrity to be a New York business that “is not registered to do business in Indiana. It does not have any offices, paid employees, members, agents, or operations in Indiana. Celebrity has no telephone or fax listings in Indiana. It also has no bank accounts in Indiana, has never paid taxes in Indiana, and does not own, lease, or control any property or assets in Indiana. Dominick Miserandino, Celebrity’s sole member, has been to Indiana only twice in his life….”

Moreover, the court held that Celebrity’s use of its website, which it had owned and operated from January 2003 to December 3, 2014, was insufficient to confer jurisdiction upon an Indiana court. Quoting the Seventh Circuit, it stated:

Courts should be careful in resolving questions about personal jurisdiction involving online contacts to ensure that a defendant is not haled into court simply because the defendant owns or operates a website that is accessible in the forum state, even if that site is interactive. Beyond simply operating an interactive website that is accessible from the forum state, a defendant must in some way target the forum state’s market. If the defendant merely operates a website, even a highly interactive website, that is accessible from, but does not target, the forum state, then the defendant may not be haled into court in that state without offending the Constitution.

be2 LLC v. Ivanov, 642 F.3d 555, 558-59 (7th Cir. 2011) (citations and quotation marks omitted).

The court noted that, while it might appear that advertisements on Celebrity’s webpages were targeting Indiana residents due to Indiana-specific content, those advertisements were not the result of Celebrity’s actions to target Indiana. Instead, the advertisements were shown as a result of internet “cookies” that tracked the location of internet end users and then selected and displayed location-specific content from third parties, including content that was specific to Indiana.

Thus, an exercise of personal jurisdiction over Celebrity in Indiana was found to be improper. For similar reasons, venue in the Southern District of Indiana was also held to be improper. The court did, however, permit Philpot to amend his complaint, finding that his request to do so had been timely filed.

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