Justia Civil Procedure Opinion Summaries

Neu Cloud, a joint venture between IBM, TeamSun, and Zhuangyan Hao, alleged that IBM misappropriated its trade secrets. Neu Cloud claimed that IBM used confidential customer information, obtained through special bids submitted by Neu Cloud, to benefit a competing joint venture, INSPUR Power. This alleged misappropriation occurred between 2015 and 2018, leading to a significant decline in Neu Cloud's business.Neu Cloud initially filed a lawsuit in New York state court, asserting state-law claims such as unfair competition and breach of contract. The New York Supreme Court dismissed the state complaint on various grounds, including timeliness and lack of personal jurisdiction over IBM China. Shortly after, Neu Cloud filed a federal lawsuit in the United States District Court for the Southern District of New York, asserting a single cause of action under the Defend Trade Secrets Act (DTSA). The district court dismissed the federal complaint, ruling that the DTSA claim was both untimely and inadequately pleaded, and that there was no personal jurisdiction over IBM China.On appeal, the United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed the district court's dismissal, but on the alternative ground of res judicata. The Second Circuit held that the New York Supreme Court's prior judgment barred Neu Cloud from asserting its DTSA claim in federal court. The court concluded that the state and federal claims arose from the same series of transactions and that the state court was competent to adjudicate the DTSA claim. Therefore, the judgment of the district court was affirmed on the basis of res judicata. View "Beijing Neu Cloud v. IBM Corp." on Justia Law

Koss Corporation (Koss) owns several patents related to wireless earphones. Koss filed a patent infringement lawsuit against Bose Corporation (Bose) in the Western District of Texas, alleging infringement of three patents. Bose challenged the venue and also filed for inter partes review (IPR) of the patents with the Patent Trial and Appeal Board (PTAB). Concurrently, Bose sought a declaratory judgment of noninfringement in the District of Massachusetts. The Texas court dismissed Koss's case for improper venue, leading Koss to file counterclaims in Massachusetts. The Massachusetts court stayed the case pending the IPR outcomes.In parallel, Koss's infringement action against Plantronics, Inc. was transferred to the Northern District of California. Plantronics moved to dismiss the case, arguing that the patents were invalid under 35 U.S.C. § 101. The California court agreed, invalidating all claims of the patents. Koss amended its complaint but eventually stipulated to dismiss the case with prejudice, without appealing the invalidation order.The United States Court of Appeals for the Federal Circuit reviewed the PTAB's decisions on the IPRs. However, since the California court had already invalidated all claims of the patents and Koss did not appeal this decision, the Federal Circuit found the appeals moot. The court held that the invalidation order from the California court was final and precluded any further action on the patents, leading to the dismissal of the appeals. View "KOSS CORPORATION v. BOSE CORPORATION " on Justia Law

Backertop Licensing LLC and Lori LaPray appealed the U.S. District Court of Delaware’s orders requiring LaPray to appear in-person for testimony regarding potential fraud and imposing monetary sanctions for her failure to appear. The District Court identified potential misconduct in numerous related patent cases involving IP Edge and Mavexar, which allegedly created shell LLCs, assigned patents for little consideration, and directed litigation without disclosing their ongoing rights. The court was concerned that this arrangement concealed the real parties in interest and potentially perpetrated fraud on the court.The District Court ordered LaPray, the sole owner of Backertop, to produce documents and appear in-person to address these concerns. LaPray moved to set aside the order, citing travel difficulties and requesting to appear telephonically, which the court denied. The court rescheduled the hearing to accommodate her schedule but maintained the requirement for in-person testimony to assess her credibility. LaPray did not attend the rescheduled hearing, leading the court to hold her in civil contempt and impose a daily fine until she appeared.The United States Court of Appeals for the Federal Circuit reviewed the case. The court held that the District Court’s orders were within its inherent authority and not an abuse of discretion. The court found that Federal Rule of Civil Procedure 45, which limits the geographic range of subpoenas, did not apply to the court’s sua sponte orders. The court affirmed the District Court’s orders, emphasizing the necessity of in-person testimony to investigate potential misconduct and assess credibility. The monetary sanctions for LaPray’s failure to appear were also upheld. View "BACKERTOP LICENSING LLC v. CANARY CONNECT, INC. " on Justia Law

The case revolves around a dispute over the estate of Dr. Lester Frank Sumrall, who founded a church that grew into a global evangelical empire, LeSEA, Inc. After his death, his son and grandson, Lester Sumrall, claimed they should have inherited part of his estate, including copyrights to his works and his right of publicity. They alleged that LeSEA, now controlled by other family members, had wrongfully taken ownership of these assets.The case was initially heard in the United States District Court for the Northern District of Indiana. The district court dismissed the claims brought by Lester Sumrall and the Lester Sumrall Family Trust against LeSEA and its affiliates, ruling in favor of LeSEA on all counts. The court found that the copyright claims were untimely and that LeSEA owned the copyright to a particular photograph, the "Traveler Photo," taken by Lester Sumrall. The court also dismissed various state law claims for damages under the doctrine of laches, citing inexcusable delay in asserting rights and prejudice to the adverse party.Upon appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The appellate court agreed that the copyright claims were untimely and that LeSEA owned the copyright to the Traveler Photo. The court also upheld the application of laches to the state law claims, noting that laches is equally applicable in suits at law in Indiana. Finally, the court dismissed the claim for LeSEA's alleged use of Dr. Sumrall's right of publicity, as the Trust failed to plead the required half-ownership. View "Sumrall v. LeSEA, Inc." on Justia Law

A graphic designer, Cynthia Foss, filed a lawsuit against Marvic, Inc., Brady-Built, Inc., and Charter Communications, alleging copyright infringement. Foss claimed that Marvic and Brady-Built used a marketing brochure she created without her permission. She also sought a declaratory judgment that Charter Communications was not eligible for the Digital Millennium Copyright Act's safe-harbor defense.Previously, Foss had filed a similar lawsuit against Marvic alone, which was dismissed because she had not registered her copyright before filing the suit. This dismissal was affirmed by the First Circuit Court of Appeals. In the current case, the District Court dismissed Foss's copyright infringement claim against Marvic and Brady-Built on the grounds of claim preclusion, citing the dismissal of her earlier lawsuit. The court also dismissed her claim against Charter Communications for lack of jurisdiction and failure to state a plausible claim.The United States Court of Appeals for the First Circuit vacated the dismissal of the copyright infringement claim against Marvic and Brady-Built. The court found that the dismissal of Foss's earlier lawsuit was not a "final judgment on the merits" for claim preclusion purposes. However, the court affirmed the dismissal of Foss's claim against Charter Communications for lack of jurisdiction. The court also vacated the District Court's alternative merits-based dismissal of Foss's claim against Charter Communications. The case was remanded for further proceedings. View "Foss v. Marvic" on Justia Law

The case involves Creative Games Studio LLC and Ricardo Bach Cater, who sued Daniel Alves for alleged breach of contract, breach of the implied covenant of good faith and fair dealing, constructive fraud, and deceit. The plaintiffs, who are co-founders of Creative Games Studio, a company that develops board games for online sale, accused Alves of collaborating with a competitor and using the company's funds and intellectual property for the competitor's benefit. Alves, a Brazilian citizen, was also a co-founder of the company. The plaintiffs filed the lawsuit in Montana, where the company is based.The District Court of the Thirteenth Judicial District, Yellowstone County, dismissed the case due to lack of personal jurisdiction over Alves. The court determined that exercising jurisdiction over Alves would not comply with constitutional requirements. Alves had moved to dismiss the complaint under M. R. Civ. P. 12(b)(2) for lack of personal jurisdiction or under the doctrine of forum non-conveniens.The Supreme Court of the State of Montana affirmed the lower court's decision. The court found that Alves did not consent to jurisdiction and that subjecting him to the jurisdiction of Montana courts would not comply with due process. The court noted that Alves' only connection to Montana was the fact that one of the plaintiffs resided there and established the company in the state. The court concluded that the plaintiffs failed to show that Alves either availed himself of the privileges of Montana law or that their claims arose out of Alves's actions in Montana. View "Creative Games v Alves" on Justia Law

This case involves Packet Intelligence LLC ("Packet") and NetScout Systems, Inc. and NetScout Systems Texas, LLC (collectively, "NetScout"). Packet had sued NetScout for patent infringement. The U.S. District Court for the Eastern District of Texas found that NetScout had willfully infringed Packet's patents and awarded Packet damages, enhanced damages for willful infringement, and an ongoing royalty. NetScout appealed this decision.In a previous appeal, the United States Court of Appeals for the Federal Circuit had reversed the district court's award of pre-suit damages and vacated the court's enhancement of that award. The court affirmed the district court's judgment in all other respects and remanded the case to the district court. On remand, the district court denied NetScout's motion to dismiss or stay the case and entered an amended final judgment. The amended judgment reduced the enhanced damages and reset the ongoing royalty rate.Meanwhile, the Patent Trial and Appeal Board ("Board") found all of the patent claims asserted by Packet in this case unpatentable as obvious. Packet appealed the Board's final written decisions. The Federal Circuit coordinated those appeals so they would be considered by the same panel deciding this appeal.The United States Court of Appeals for the Federal Circuit vacated the district court’s amended final judgment and remanded the case with instructions to dismiss the case as moot. The court held that Packet’s infringement judgment was not final before the Board’s unpatentability determinations were affirmed. Therefore, the court was compelled to order that Packet’s patent infringement claims be dismissed as moot. View "PACKET INTELLIGENCE LLC v. NETSCOUT SYSTEMS, INC. " on Justia Law

The case revolves around SnapRays, a Utah-based company that designs, markets, and sells electrical outlet covers with integrated guide lights, safety lights, motion sensor lights, and USB charging technology, and Lighting Defense Group (LDG), an Arizona-based company that owns a patent related to a cover for an electrical receptacle. LDG submitted an Amazon Patent Evaluation Express (APEX) Agreement alleging that certain SnapPower products sold on Amazon.com infringed its patent. SnapPower subsequently filed an action for declaratory judgment of noninfringement.The United States District Court for the District of Utah dismissed SnapPower's complaint for lack of personal jurisdiction over LDG. The court concluded that LDG lacked sufficient contacts with Utah for it to exercise specific personal jurisdiction. It found that LDG's allegations of infringement were directed toward Amazon in Washington, where the APEX Agreement was sent, and not at SnapPower in Utah. The court also noted that under Federal Circuit law, principles of fair play and substantial justice support a finding that LDG is not subject to specific personal jurisdiction in Utah.The United States Court of Appeals for the Federal Circuit reversed the lower court's decision. The appellate court concluded that LDG purposefully directed extra-judicial patent enforcement activities at SnapPower in Utah, thereby satisfying the requirements for specific personal jurisdiction. The court found that LDG's submission of the APEX Agreement to Amazon, which identified SnapPower's listings as allegedly infringing, was an intentional action aimed at affecting SnapPower's sales and activities in Utah. The court also rejected LDG's argument that the assertion of specific personal jurisdiction over it in Utah would be unfair and unreasonable. The case was remanded for further proceedings. View "SNAPRAYS v. LIGHTING DEFENSE GROUP " on Justia Law

The case revolves around a dispute between Jalmar Araujo and Framboise Holdings Inc. over the registration of the standard character mark #TODECACHO. Araujo filed a U.S. Trademark Application to register #TODECACHO for hair combs. Framboise opposed the registration, claiming that it would likely cause confusion with its #TODECACHO design mark, which it had been using in connection with various hair products since March 24, 2017. Framboise also had a pending trademark application for the same mark.The United States Patent and Trademark Office Trademark Trial and Appeal Board (the Board) granted Framboise an extension to submit its case in chief. Araujo opposed this extension and the late submission of a declaration by Adrian Extrakt, Director of Framboise. However, the Board granted the extension, finding that the delay was minimal and that Framboise had met the applicable good cause standard. The Board then relied on the Extrakt declaration to support Framboise's claim of prior use of the #TODECACHO design mark.The Board found that Framboise had met its burden to establish prior use by a preponderance of the evidence. It found that the Extrakt declaration alone was sufficient to prove prior use because it was clear, convincing, and uncontradicted. Having found an earlier priority date for Framboise, the Board found a likelihood of confusion between the two marks, sustained the opposition, and refused registration of Araujo’s mark.On appeal, the United States Court of Appeals for the Federal Circuit affirmed the Board's decision. The court found that the Board did not abuse its discretion in granting the extension and that the Board's finding that Framboise established prior use of the #TODECACHO design mark was supported by substantial evidence. View "ARAUJO v. FRAMBOISE HOLDINGS INC. " on Justia Law

The case involves a dispute between GeLab Cosmetics LLC, a New Jersey-based online nail polish retailer, and Zhuhai Aobo Cosmetics, a China-based nail polish manufacturer. The founders of GeLab, Xingwang Chen and Shijian Li, are both Chinese citizens. The dispute centers around the ownership of GeLab and allegations of trade secret theft. According to Chen, he and Li founded GeLab with Chen owning 60% and Li 40%. They entered a joint venture with Zhuhai, which was supposed to invest in GeLab for an 80% ownership stake. However, Chen alleges that Zhuhai never sent the money and instead began using low-quality materials for GeLab's products, selling knock-off versions under its own brand, and fraudulently claiming majority ownership of GeLab. Zhuhai, on the other hand, asserts that Chen was its employee and that it owns 80% of GeLab.The dispute first began in China, where Li sued Chen for embezzlement. Chen then sued Li, Zhuhai, and Zhuhai's owners in New Jersey state court, alleging that he had a 60% controlling interest in GeLab and that Zhuhai had no ownership interest. The state defendants counterclaimed, seeking a declaratory judgment that Zhuhai owns 80% of GeLab. GeLab then filed a second action in New Jersey against Li alone. The state court consolidated the two cases.While the New Jersey proceedings were ongoing, GeLab filed a federal lawsuit in the U.S. District Court for the Northern District of Illinois against Zhuhai and its owners, alleging violations of the federal Defend Trade Secrets Act and the Illinois Trade Secrets Act. The defendants responded that Zhuhai owns GeLab and that it cannot steal trade secrets from itself. The district court stayed the federal case, citing the doctrine of Colorado River Water Conservation District v. United States, reasoning that judicial economy favors waiting for the New Jersey court to determine who owns the company. GeLab appealed the stay.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision to stay the proceedings. The court found that the federal and state cases were parallel as they involved substantially the same parties litigating substantially the same issues. The court also found that exceptional circumstances warranted abstention, with at least seven factors supporting the district court's decision. These factors included the inconvenience of the federal forum, the desirability of avoiding piecemeal litigation, the order in which jurisdiction was obtained by the concurrent fora, the source of governing law, the adequacy of state-court action to protect the federal plaintiff's rights, the relative progress of state and federal proceedings, and the availability of concurrent jurisdiction. View "GeLab Cosmetics LLC v. Zhuhai Aobo Cosmetics Co., Ltd." on Justia Law