◊ VRP Law-The Intellectual Property and Employment Law Blog.
Provided by Vihar R. Patel and Sponsored by Enterprise Law Group, LLPArchive for September, 2009
Motions to Dismiss and the new Plausibility Standard under Rule 8!
The Supreme Court extended and changed the requirements for pleading a cause of action under Rule 8. In Twombly, the Court first applied the plausibility standard to a claim for antitrust violations by telecommunications providers. The Court, stated merely reciting that the telecommunications providers had entered into a contract, combination or conspiracy to prevent competition was insufficient to make the Plaintiffs’ claim plausible.
In Ashcroft, the Court applied the plausibility standard to a Plaintiff’s complaint of discriminatory treatment of detainees by the Immigration and Naturalization Officers. The Court stated that merely asserting conclusory allegations that Ashcroft was the principal architect of invidious discrimination and that Mueller was instrumental in adopting the policy was insufficient to meet the plausibility standard.
The Court went to on to reiterate that we must still accept all well plead allegations as true, but essentially, stated that we are not required to accept legal conclusory allegations, unless there are facts that turn the conceivable into the plausible. However you interpret Twombly or Ashcroft, it is clear that a Defendant’s motion to dismiss in Federal court has greater teeth and district court judges are now empowered to dispose of claims they find incredible.
It also seems that the plausibility standard is not limited to Antitrust complaints.
See. Ashcroft
The Antitrust side of IP Litigation
Antitrust counterclaims are once again viable options for defendants involved in Intellectual Property (IP) litigation. Often a Plaintiff is utilizing a patent infringement suit as a method of interfering with the business relationship of a competitor.
However, if the patent was obtained by knowing and willful fraud or the lawsuit is a sham for interfering with competitors’ business relationships, then the patent may be invalid and subject the Plaintiff to an antitrust violation. Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177 (1975); In re Independent Service Organizations Antitrust Litigation, 203 F.3d 1322, 1326 (Fed. Cir. 2000); and Hazelquist v. Guchi Moochie Tackle Co., 2004 U.S. Dist. Lexis 13991 (W.D. Wash. May 12, 2004).
The risk of an antitrust violation and counterclaim is not limited to sham patent litigation. Plaintiffs attempting to utilize trademark infringement suits to maintain a monopoly (price control) or restrict competition face a similar risk of an antitrust violation. In Marketing Displays, Inc. v. TrafFix Devices, Inc., 200 F.3d 929, (6th Cir. 1999), the court permitted an antitrust counterclaim against a plaintiff asserting trade dress infringement after the expiration of patent.
If the litigation is objectively baseless in the sense that no reasonable litigant could expect success on the merits, then it may be the basis for a antitrust violation. Professional Real Estate Investments, Inc. , v. Columbia Pictures Industries, Inc. , 508 U.S. 49, 60 (1993). However, this does not mean that a product’s different qualities cannot be protected simultaneously, or successively by more than one statutory means for protection of intellectual property. Kohler Co. v. Moen, Inc. , 12 F.2d 632, 638-39, (7th Cir. 1993).
Understanding the nuances of the scope of intellectual property protection that can be obtained for a product is crucial to your ability to protect your market and your investments.
Tricky Settlement Agreements in Seventh Circuit…
If you are a litigator in Illinois, the Seventh Circuit decisions in Lynch, Shapo, and Blue Cross have just made your job a lot more difficult. Especially, if your practice involves business, employment or intellectual property matters, where settlement agreements often contain a payment plan for royalties, profits, backpay or future earnings.
It used to be that based on Kokkonen you could simply enter a dismissal order with prejudice that allowed the court to retain jurisdiction to enforce the settlement agreement. However, based on the 7th Circuit’s recent rulings in Lynch, Shapo, and Blue Cross entering such an order will deprive the court of jurisdiction to enforce the settlement agreement.
In which case, your client may be standing outside the courtroom trying to find a way back in by filing a new lawsuit for a breach of contract. The other common alternative is to enter a dismissal order without prejudice to allow the court to retain jurisdiction to enforce the settlement agreement.
Unfortunately, entering such an order may deprive your client of the res judicata effect of a dismissal order that is with prejudice. In this scenario, your client will be back in the courtroom defending against claims that it believed were resolved, and may have helped fund its opponent’s lawsuit.
Understanding how the drafting of settlement agreements has changed in light of the US Supreme Court’s decision in Kokkonen and the Seventh Circuit’s decisions in Lynch, Shapo, and Blue Cross is crucial to properly representing your client’s interests.
Amendments to Trademark Rules of Practice
The USPTO has adopted some new rules of practice that will impact the way attorneys can register your business name or logo for trademark or servicemark registration. The following is a summary of some of the new Amendments:
1) an application under section 1 or section 44 must be in English to receive a filing date;
2) if more than one good or item is specified within a particular class of goods or services in section 1 (a) application, then only 1 date of use is required (as long as the corresponding good or item is provided); and
3) the filing of an amendment to allege use does not extend the deadline to respond to an Office Action, an appeal to the Trademark Trial and Appeals Board (“TTAB”) or a Petition to the Director.
These and other Amendments will have both a substantive and procedural impact on the registration of a trade or service mark. For the exact language and additional amendments, please see attached: Amendments to Trademark Practice with USPTO
If you have any additional questions or concerns, then please feel free to contact me.
