Indiana Intellectual Property Law News

April 1, 2013

Indiana Court of Appeals Holds that Forfeiture for Fraud in the Form of Copyright Infringement Requires Nexus Between Fraud and Forfeited Property

Indianapolis, Ind. – The Indiana Court of Appeals granted Indiana’s petition for rehearing and reaffirmed its January ruling in favor of defendant Michael Curtis that a conviction for fraud in the form of copyright infringement was, by itself, an insufficient predicate for forfeiture.

Curtis was charged with four counts of Class D felony fraud for selling pirated movies out of his truck. He pleaded guilty to one count of fraud, which was entered as a misdemeanor, and the remaining charges were dropped. The state also filed a complaint for forfeiture of Curtis’s truck under Indiana Code § 34-24-1-1(a)(1)(B) (2009), which allows the seizure of vehicles “if they are used . . . to transport . . . stolen [IC §35-43-4-2] or converted property.” The trial court granted the forfeiture.

The Indiana Court of Appeals reversed the decision, holding that fraud in the form of copyright infringement was neither garden-variety theft nor conversion and, thus, was not within the scope of the forfeiture statute. We blogged about that decision here.

The state asked for and was granted a rehearing. It argued that Yao v. State, 975 N.E.2d 1273 (Ind. 2012), required a different outcome. The appellate court disagreed, stating that, while Yao “might support the proposition that pirated movies constitute stolen property,” it failed to answer the question of forfeiture. On that issue, the court looked to Katner v. State, 655 N.E.2d 345 (Ind. 1995).

In Katner, the Indiana Supreme Court reversed the forfeiture of a vehicle predicated on an empty container in the possession of the driver that was found to have cocaine residue. There, the trial court had ordered the defendant’s vehicle forfeited under a statute allowing forfeiture where a vehicle was used to transport a “controlled substance for the purpose of. . . [p]ossession of cocaine.” The Court held that the state had not met its burden under the forfeiture provision to show a nexus between the property to be forfeited and the underlying offense.

The appellate court in this case held that such a nexus analysis was also appropriate for the forfeiture provision which applies to stolen or converted property. As the state had apparently had not shown a nexus between the use of the truck and the sales of the pirated movies, the court affirmed its earlier decision.

Practice Tip: It looks like Curtis can keep his truck. However, in the January decision, the appellate court suggested that legislation would likely be required to allow forfeiture in cases involving copyright infringement. In contrast, this current decision seems to hold that, should the required nexus between property and copyright infringement be proven at trial, a forfeiture statute could be used to seize property involved in that infringement.
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March 27, 2013

Robert Payne Sues Northern Tool & Equipment et al. for Trademark Infringement, False Advertising and Breach of Contract

By Overhauser Law Offices, LLC

Hammond, Ind. – Robert Payne (“Payne”) d/b/a Paynes Products, Paynes Forks and Payne Tools of LaPorte, Ind. sued Northern Tool & Equipment Company, Inc. and Northern Tool & Equipment Catalog Company, Inc. (collectively, “Northern Tool”) of Burnsville, Minn. for alleged violations of Payne’s intellectual property rights, false advertising and breach of contract.

Payne alleges a prior business relationship with Northern Tool in which Northern Tool sold Payne’s products in Northern Tool’s stores, via its catalogs and via the Internet pursuant to various agreements between the parties. Around October 2012, Northern Tool apparently informed Payne that it was terminating the agreements. Payne alleges that, despite this, Northern Tool continues to advertise Payne’s products and has been fulfilling orders with products made by Northern Tool.

The plaintiff complains of trademark infringement, palming off, false advertising and false designation of origin under Section 43 of the Lanham Act as a result of Northern Tool allegedly continuing to advertise and sell imitation Paynes products.

Payne further complains of “Unfair Competition by Infringement of Common-Law Rights,” listing as his authority Indiana Code §§24-2-1-13 and 24-2-1-14. Payne has also asserted a claim for breach of contract against Northern Tool for failure to disgorge “excessive funds” to Payne.

Finally, the complaint lists as separate counts one of the remedies sought – an injunction – and a count demanding a jury trial. We have blogged in the past about this method of pleading here.

Practice Tip: The occasional typographic error is no stranger to many types of documents, even legal documents. However, there comes a point where such errors erode credibility and hinder readability. This complaint had obvious errors on every page and probably in more paragraphs than not. Such drafting does not endear the lawyer to the judge – or the client – and should be avoided.
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March 27, 2013

John Bauer Sues Wildgame Innovations for Patent Infringement for Sale of Knock-off Game Calls

By Overhauser Law Offices, LLC

Evansville, Ind. – John Bauer of Vanderburgh County, Ind. filed a patent infringement suit alleging that Wildgame Innovations, LLC of Broussard, La. infringed Patent No. 7,241,195 (the “‘195 Patent”) which has been issued by the U.S. Patent Office.

Bauer is listed as the owner of the ‘195 Patent entitled “Game Call Striker.” Patent attorneys for Bauer filed suit in the Southern District of Indiana alleging that Wildgame has been, and still is, infringing the ‘195 Patent by making, using, selling, offering for sale, and/or importing “knock-off” game calls and inducing others to do likewise. One example of a knock-off, contends Bauer, is Wildgame’s “Run-n-Gun” game call.

Bauer alleges that Wildgame’s infringement has been, and continues to be, intentional, willful, deliberate and with conscious disregard for his intellectual property rights. He seeks a declaration that the ‘195 Patent has been infringed; an accounting of all of Wildgame’s gains, profits, and advantages realized from its alleged infringement of the ‘195 Patent; lost profits and a reasonable royalty for the allegedly infringing activity; an injunction against further infringement; costs; attorneys’ fees and pre-judgment interest. Bauer also asks the court for a determination that Wildgame infringed in a willful, intentional, and deliberate manner and for treble damages pursuant to that finding.

Practice Tip: According to a recent survey conducted by the American Intellectual Property Law Association, even a “small” patent-infringement lawsuit (one with less than $1 million at risk) has a median litigation cost of $650,000 – and that is separate from any damages that might have to be paid at the conclusion of the litigation. If you are unsure whether a product you are launching might infringe on another’s patent, consider having your patent attorney conduct a “freedom-to-operate” (FTO) search beforehand.

March 25, 2013

Novelty Sues Margaret Rothschild for Declaratory Judgment of Non-Infringement and Unenforceability of “Mohawk Monkey”

By Overhauser Law Offices, LLC

Indianapolis, Ind. – Patent attorneys for Novelty, Inc. of Greenfield, Ind. filed a declaratory judgment suit against Margaret Rothschild of Sherman Oaks, Calif. seeking a judgment that Novelty’s “Mohawk Monkey” does not infringe Rothschild’s Design Patent No. D501,897 (the “‘897 Patent”) which has been issued by the U.S. Patent Office.

Novelty specializes in the distribution and sale of toys and novelty items. One of its products is a plush toy sold under the name “Mohawk Monkey.” Rothschild, via a patent attorney, contacted Novelty in March 2013 and asserted that the Mohawk Monkey infringed her patent. She insisted that Novelty cease all sales of its Mohawk Monkey and demanded payment for damages caused by the alleged infringement. Rothschild indicated that a refusal to comply would be met with vigorous litigation.

In its declaratory judgment action, filed in the Southern District of Indiana, Novelty asserts that its Mohawk Monkey is significantly different from the design claimed in Rothschild’s ‘897 Patent and that an ordinary observer would not be deceived. Novelty asks for a declaration that its Mohawk Monkey does not infringe the ‘897 Patent, a declaration that the Patent is unenforceable and/or invalid, a finding that the case is exceptional and, pursuant to that finding, an award to Novelty of its reasonable attorneys’ fees.

Practice Tip: Design-patent litigation seems to be increasingly “fashionable.” The expected players, such as technology innovators, are seeking protection for their goods under design-patent protection as they traditionally have. (See, e.g., Apple Inc. v. Samsung Electronics Co., Ltd.) However, other less-traditional users of design patents are also beginning to see the value of a design patent in protecting their intellectual property. For example, the fashion industry has historically found little use for design patents, as the time needed to obtain such a patent usually exceeds the relatively short lifespan of various fashions, which typically change season to season. However, that is changing. (See, for example, the dispute between Spanx and Yummie Tummie.) In addition, as a result of the recent America Invents Act, individuals with grievances are no longer limited to filing suit; they can now also ask the Patent Office whether patents in dispute are valid. The central provisions of the Act went into effect on March 16, 2013.

March 22, 2013

Royal Purple Sues Liqui Moly GmbH for Trademark Infringement for Selling Purple Lubricants

By Overhauser Law Offices, LLC

Indianapolis, IN – Trademark lawyers for Royal Purple, LLC of Indianapolis, Indiana sued Liqui Moly GmbH of Ulm, Germany in the Southern District of Indiana alleging trademark infringement for selling purple automotive lubricants.

At the center of this litigation is the right to use the color purple. Royal Purple claims it has sold lubricants for more than 20 years and has trademarked the color purple. It owns several federal trademark registrations for the color purple as applied to lubricating oils for automotive, industrial and household uses. Among the trademarks are U.S. Registration Nos. 2,691,774; 2,953,996 and 3,819,988 which cover the following:

It also owns multiple trademarks incorporating the word “purple” as applied to various goods. These trademarks are registered with the US Trademark Office. Purple was chosen for its association with royalty. (Historically, purple dye was so expensive to produce that it was used only by royalty.) Royal Purple’s purple-identified lubricant products are sold in over 20,000 retailers in the United States and Royal Purple claims a strong secondary meaning and substantial goodwill in its trademark as a result of this use.

Liqui Moly sells Liqui Moly and Lubra Moly brand motor oil, both of which have packaging that is supposedly purple prior to sale. Royal Purple alleges that Liqui Moly’s use of the color purple in conjunction with the sale of motor oil is likely confuse consumers. According to Liqui Moly’s website, its products are sold in a variety of different containers:

Royal Purple also alleges that Liqui Moly’s use is a purposeful attempt to trade upon Royal Purple’s trademark and that Liqui Moly’s use will dilute the “distinctive quality” Royal Purple’s trademarks. Finally, it alleges that Liqui Moly’s use removes from Royal Purple its ability to control the quality of products and services provided under Royal Purple’s trademark, by placing them partially under the control of Liqui Moly, an unrelated third party.

The federal claims include trademark infringement, unfair competition and dilution under the Lanham Act; Royal Purple has also alleged dilution, trademark infringement, unfair competition and unjust enrichment under Indiana common law. Royal Purple seeks a preliminary and permanent injunction, the destruction of all allegedly infringing inventory, treble damages, costs and attorneys’ fees.

Practice Tip: Color can serve as a useful identifier of the source of goods to consumers. The courts, however, have had to draw some narrow lines to balance the various interests. On the one hand, companies often invest significant amounts of money in promoting their brands and color is frequently a component of that promotion. On the other hand, there are a limited number of colors – and an even more limited number of colors that are pleasing and appropriate for any given type of product – and courts are wary of providing a monopoly on any given color to any one company. After all, if such a monopoly is first provided to one company, all too soon the entire spectrum may be spoken for.
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March 15, 2013

Klipsch and Audio Products International Sue Monoprice for Patent, Trade-Dress and Copyright Infringement

By Overhauser Law Offices, LLC

Indianapolis, Ind. – Klipsch Group, Inc. (“Klipsch”) and Audio Products International Corp. (“API”), both of Indianapolis, Ind., have sued Monoprice, Inc. (“Monoprice”) of Rancho Cucamonga, Calif. alleging patent infringement, trade dress infringement, unfair competition and copyright infringement.

In an eight-count complaint, intellectual property attorneys for Klipsch and its subsidiary API allege that Monoprice has been engaged in manufacturing, importing, selling and/or offering to sell a system entitled “5.1 Hi-Fi Home Theatre Satellite Speakers & Subwoofer” which is a less expensive “knock-off” of plaintiffs’ “ENERGY® TAKE CLASSIC™ 5.1” (“Energy Take Classic 5.1”) home theater system.

Count I of the complaint alleges the infringement of API’s Patent No. 6,725,967 (“Low distortion loudspeaker cone suspension“; also called the “‘967 Patent”) which was issued by the U.S. Patent Office in 2004.

The system has apparently been well received, garnering positive reviews and selling well. In Count II, “Trade Dress Infringement and Unfair Competition,” it is alleged that API has continuously promoted the Energy Take Classic 5.1 system and its predecessors and that, as a result of the commercial success of the systems, the systems’ trade dress has acquired secondary meaning among relevant consumers as an identifier of the source of the Energy Take Classic 5.1 system. The complaint further alleges that Monoprice’s conduct is causing confusion among consumers as to the affiliation of Monoprice with API and as to the origin of Monoprice’s goods.

Counts III through VII [NB: this should have been “III through VIII”; “Count III” was enumerated as a separate count twice in the complaint], all pertain to copyright infringement. More specifically, it is alleged that Monoprice has violated the copyrights of:

· the Energy Take Classic 5.1 Home Theatre System as a whole

· the Energy Take Classic 5.1 Satellite Speaker

· the Energy Take Classic 5.1 Center Channel Speaker

· the Energy Take Classic 5.1 Subwoofer Speaker

· the Energy Take Classic 5.1 Subwoofer Backplate

· the Energy Take Classic 5.1 Owner’s Manual

The complaint lists 14 separate requests for relief [NB: these appear, upon first count, as 13; however “request for relief” letter “k” is listed twice]. Among these are requests for judgments against Monoprice for infringement of the ‘967 Patent, trade-dress infringement, unfair competition and copyright infringement. API seeks compensatory damages and, for willful and deliberate wrongdoing by Monoprice, statutory damages up to treble the actual amount found or assessed by the court. API also asks the court to enjoin infringing behavior by Monoprice. Finally, it asks for attorneys’ fees, costs and expenses.

Practice Tip: There is certainly some overlap between design-patent infringement and copyright infringement. However, the multiple counts of copyright infringement for speakers and similar “original work[s] of authorship” – all of the applications for which were filed on February 22, 2013 – attempt to proceed under copyright law against alleged infringements that seem more appropriately considered to be a matter of design-patent law. Proceeding under copyright law, however, does have two significant advantages: a liberal filing period and a substantially longer period of protection. Many products are brought to market without having filed for a design patent. If the application for such a patent is not filed within one year of the public offering or sale of the products, the statutory bar under 35 U.S.C. § 102 will prevent the design patent from being issued. Copyright has no such strict application deadline. Additionally, the 14-year life of design-patent protection is in stark contrast to the protection available under copyright law to a corporation for a work-for-hire, which can extend over 100 years.

March 12, 2013

Ladder Manufacturer Ameriwood et al. Sue Wing Enterprises Alleging Infringement

By Overhauser Law Offices, LLC

Indianapolis, Ind. – Plaintiffs Cosco Management, Inc. (“Cosco”) and Dorel Juvenile Group, Inc. (“Dorel”) of Columbus, Ind. along with Ameriwood Industries, Inc. (“Ameriwood”) of Wright City, Mo. filed a patent infringement suit alleging Wing Enterprises, Inc. (“Wing”) and Wing Enterprises, Inc. d/b/a Little Giant Ladders (“Little Giant”) of Springville, Utah have been infringing and continue to infringe certain claims of Patent No. 6,427,805 (the “‘805 Patent”), entitled “Folding step stool,” which has been issued by the U.S. Patent Office.

The plaintiffs assert that the defendants’ Flip-N-Lite step ladder infringes upon various claims of its ‘805 patent. That patent was issued in 2002 and was initially assigned to Cosco. Cosco licensed the patent exclusively to Dorel which, in turn, assigned those exclusive rights to Ameriwood.

Plaintiffs state that both Wing and Little Giant, by their allegedly infringing activities, have caused Cosco, Dorel and Ameriwood irreparable harm for which there is no adequate remedy at law. Plaintiffs assert that this conduct has been willful.

Plaintiffs ask for a permanent injunction against activity found to infringe the ‘805 patent, an order directing the destruction of all equipment used in the alleged infringement, damages up to triple the amount of the actual damages, costs and reasonable attorneys’ fees.

Practice Tip: It is unclear why Wing Enterprises, Inc. is listed as a defendant twice – once as Wing Enterprises, Inc. and again as Little Giant Ladders, an assumed business name. Various jurisdictions have held that it is acceptable to sue under an assumed name. For example, under Texas case law, one can sue an individual under his real or assumed name if he has filed an assumed name certificate and conducts business under that assumed name. See Employees Loan Co. v. Templeton, 109 S.W.2d 774, 778 (Tex. Civ. App. 1937). However, listing one party twice, whether as a plaintiff or a defendant, is traditionally viewed as unnecessarily duplicative.

March 8, 2013

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

By Overhauser Law Offices, LLC

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.