Hallmark Cards v. Monitor Clipper Partners

Hallmark Cards, Inc. (Hallmark), hired Monitor Company Group, L.P. (Monitor), to compile research on the greeting cards market. Monitor transmitted confidential market research it had prepared for Hallmark to a private equity firm called Monitor Clipper Partners, LLC (Clipper), the defendant in this litigation. Clipper used this information to purchase and subsequently manage a competitor of Hallmark’s called Recycled Paper Greetings, Inc. (RPG). Hallmark sued Monitor for breaching its contractual obligations and Clipper for misappropriating Hallmark’s trade secrets in violation of the Missouri Uniform Trade Secrets Act, Mo. Rev. Stat. § 417.450 et seq. (MUTSA). Hallmark settled with Monitor for $16.6 million; its case against Clipper proceeded to trial, where a jury awarded Hallmark $21.3 million in compensatory damages and $10 million in punitive damages. After the verdict, Clipper moved for judgment as a matter of law and alternatively to alter or amend the judgment, asserting (1) that the evidence did not support the verdict, (2) that the jury award gave Hallmark a double recovery because Hallmark had already settled with Monitor for the same injury, and (3) that the assessment of punitive damages against Clipper violated Missouri law and the Due Process Clause of the Constitution. The district court denied these motions, and we affirm.

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Technomarine SA v. Giftports, Inc.

Appeal from a September 10, 2012, order of the United States District Court for the Southern District of New York (Batts, J.), granting the Defendant‐Appellee’s motion to dismiss.  We consider whether an earlier litigation between the parties resolving, inter alia, claims of trademark infringement, bars the present suit over similar conduct occurring after the date of the settlement agreement that concluded the first litigation.  We determine that Plaintiff‐Appellant’s claims arising after the first litigation are not barred by res judicata.  Nonetheless, we affirm the order of the district court on the basis of its alternate holding that Plaintiff‐Appellant failed to state a claim on which relief may be granted.  Further, we affirm the district court’s denial of Plaintiff‐Appellant’s request for leave to amend its complaint a second time because Plaintiff‐Appellant failed to indicate how further amendment would permit it to cure the deficiencies in the First Amended Complaint. AFFIRMED.

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Lexmark Int’l, Inc. v. Static Control Components, Inc.

Held: Static Control has adequately pleaded the elements of a Lanham Act cause of action for false advertising. Pp. 6–22.

(a) The question here is whether Static Control falls within the class of plaintiffs that Congress authorized to sue under §1125(a). To decide that question, this Court must determine the provision’s meaning, using traditional principles of statutory interpretation. It is misleading to label this a “prudential standing” question. Lexmark bases its “prudential standing” arguments on Associated General Contractors, but that case rested on statutory considerations: The Court sought to “ascertain,” as a statutory-interpretation matter, the “scope of the private remedy created by” Congress in §4 of the Clayton Act, and the “class of persons who [could] maintain a privatedamages action under” that legislatively conferred cause of action, 459 U. S., at 529, 532. And while this Court may have placed the “zone of interests” test that Static Control relies on under the “prudential” rubric in the past, see, e.g., Elk Grove Unified School Dist. v. Newdow, 542 U. S. 1, 12, it does not belong there any more than Associated General Contractors does. Rather, whether a plaintiff comes within the zone of interests requires the Court to determine, usingtraditional statutory-interpretation tools, whether a legislatively conferred cause of action encompasses a particular plaintiff ’s claim. See, e. g., Steel Co. v. Citizens for Better Environment, 523 U. S. 83, 97, and n. 2. Pp. 6–9.

(b) The §1125(a) cause of action extends to plaintiffs who fall within the zone of interests protected by that statute and whose injurywas proximately caused by a violation of that statute. Pp. 10–18.

(1) A statutory cause of action is presumed to extend only toplaintiffs whose interests “fall within the zone of interests protectedby the law invoked.” Allen v. Wright, 468 U. S. 737, 751. “[T]hebreadth of [that] zone . . . varies according to the provisions of law atissue.” Bennett v. Spear, 520 U. S. 154, 163. The Lanham Act includes a detailed statement of its purposes, including, as relevant here, “protect[ing] persons engaged in [commerce within the controlof Congress] against unfair competition,” 15 U. S. C. §1127; and “unfair competition” was understood at common law to be concernedwith injuries to business reputation and present and future sales.Thus, to come within the zone of interests in a §1125(a) falseadvertising suit, a plaintiff must allege an injury to a commercial interest in reputation or sales. Pp. 10–13.

(2) A statutory cause of action is also presumed to be limited toplaintiffs whose injuries are proximately caused by violations of the statute. See, e.g., Holmes v. Securities Investor Protection Corporation, 503 U. S. 258, 268–270. This requirement generally bars suitsfor alleged harm that is “too remote” from the defendant’s unlawfulconduct, such as when the harm is purely derivative of “misfortunes visited upon a third person by the defendant’s acts.” Id., at 268–269. In a sense, all commercial injuries from false advertising are derivative of those suffered by consumers deceived by the advertising. But since the Lanham Act authorizes suit only for commercial injuries, the intervening consumer-deception step is not fatal to the proximate-cause showing the statute requires. Cf. Bridge v. Phoenix Bond §1125(a) ordinarily must show that its economic or reputational injury flows directly from the deception wrought by the defendant’s advertising; and that occurs when deception of consumers causes them to withhold trade from the plaintiff. Pp. 13–15. (3) Direct application of the zone-of-interests test and the proximate-cause requirement supplies the relevant limits on who may sue under §1125(a). These principles provide better guidance than themultifactor balancing test urged by Lexmark, the direct-competitortest, or the reasonable-interest test applied by the Sixth Circuit.Pp. 15–18.

(c) Under these principles, Static Control comes within the class ofplaintiffs authorized to sue under §1125(a). Its alleged injuries—lostsales and damage to its business reputation—fall within the zone ofinterests protected by the Act, and Static Control sufficiently allegedthat its injuries were proximately caused by Lexmark’s misrepresentations. Pp. 18–22.

697 F. 3d 387, affirmed. SCALIA, J., delivered the opinion for a unanimous Court.

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Hornady Manufacturing Co. v. Doubletap

Plaintiff–Appellant Hornady Manufacturing Company, Inc., appeals from a district court order granting summary judgment to Defendant–Appellee DoubleTap, Inc., on Hornady’s trademark infringement claims. Our jurisdiction arises under 28 U.S.C. § 1291, and we affirm.

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1-800 Contacts v. Lens.com, et al

The Lanham Act, 15 U.S.C. §§ 1051–1127, prohibits the infringement of trademarks (used to identify products) and service marks (used to identify services). It was enacted in 1946, but because it speaks in general terms it can be applied to technologies unimagined at the time of enactment. One such technology, the Internet, has created a number of challenging issues. The case before us concerns Internet search engines, which present advertisers with new means of targeting prospective customers and therefore new possibilities for claims under the Lanham Act. The dispute arises out of advertising through AdWords, a program offered by the Internet search engine Google. An advertiser using AdWords pays Google to feature one of its ads onscreen whenever a designated term, known as a keyword, is used in a Google search. We must resolve whether the Lanham Act was violated by an advertiser’s use of keywords that resembled a competitor’s service mark. For the most part, we hold that there was no violation. Plaintiff 1-800 Contacts, Inc. (1-800) dominates the retail market for replacement contact lenses. It owns the federally registered service mark 1800CONTACTS. Defendant Lens.com, Inc. is one of 1-800’s competitors. To police the use of its mark, 1-800 enters different variations of the mark into Google searches and monitors what search results are displayed. When 1-800 found that several searches generated paid ads for Lens.com’s websites, it concluded that Lens.com had reserved the mark as a keyword. After attempting to resolve the situation informally, 1-800 sued Lens.com for service-mark infringement. Its primary claim was that Lens.com itself had infringed the 1800CONTACTS mark by purchasing keywords resembling the mark. According to 1-800, this conduct had directed potential customers for 1-800 to Lens.com by creating what is known as “initial-interest confusion,” which can be actionable under the Lanham Act. As the case progressed, 1-800 supplemented its claim of direct infringement by alleging that certain third-party marketers hired by Lens.com, known as affiliates, had also purchased keywords resembling the mark and that at least one affiliate was using the mark in the text of its online ads. 1- 800 sought to hold Lens.com secondarily liable for its affiliates’ conduct. The theories of secondary liability, which will be discussed more fully below, were common-law agency and contributory infringement. The district court awarded summary judgment to Lens.com on all claims. On the direct-liability claim and most of the secondary-liability claims, the court ruled that 1-800 had raised no genuine issue of fact regarding the likelihood of initial-interest confusion. On the remaining secondary-liability claims—which concerned the use of 1-800’s mark in the content of ads displayed on Google’ssite—the court ruled that 1-800’s evidence was insufficient to hold Lens.com liable for any misconduct of its affiliates. 1-800 appeals the summary judgment. To the extent that the court based summary judgment on the ground that no likelihood of confusion existed, we affirm. Traditional analysis and actual marketplace data reveal that the keyword use by Lens.com and its affiliates was highly unlikely to divert consumers. As for the remaining secondary-liability claims, we affirm the denial of liability under agency law because the affiliates, even if agents (or more precisely, subagents) of Lens.com, lacked authority to include 1-800’s mark in ads for Lens.com. But we reverse the denial of liability for contributory infringement because the evidence could support a reasonable finding that Lens.com did not take reasonable steps to halt the display of 1-800’s marks in affiliate ads once it learned of such display. Also, we affirm the discovery sanction challenged by Lens.com on crossappeal (but decline to award 1-800 its attorney fees for defending the sanction in this court), and we affirm the denial of Lens.com’s district-court motion for attorney fees.

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AngioDynamics, Inc. v. Biolitec AG

This is an expedited appeal from the grant of a preliminary injunction barring defendants Biolitec AG ("BAG"), Biolitec, Inc. ("BI"), Biomed Technology Holdings, Ltd., and Wolfgang Neuberger from completing a merger between the Germanbased BAG and its Austrian subsidiary, and from the denial of defendants' motion for reconsideration. BI, which is a U.S.-based BAG subsidiary, sold medical equipment to plaintiff AngioDynamics, Inc. ("ADI"), and agreed to indemnify ADI for any patent infringement claims. Such claims were brought against ADI by the patent-holders and ADI settled the claims. In a separate lawsuit in New York, ADI obtained a $23 million judgment (including interest) against BI under the indemnification clause. Attempting to secure payment on that judgment, ADI sued defendants in this case in Massachusetts on claims including corporate veil-piercing and violation of the Massachusetts Uniform Fraudulent Transfers Act ("MUFTA"), Mass. Gen. Laws ch. 109A, § 5. ADI alleged that BAG looted BI of more than $18 million to render BI judgment-proof and to move BI's assets beyond reach.

On August 29, 2012, the district court granted ADI a temporary restraining order which, among other things, barred defendants from "carry[ing] out the proposed 'downstream merger' of Biolitec AG with its Austrian subsidiary" and from "transfer[ring] any ownership interest [they] hold[] in any other defendant." ADI alleged that the merger would place the company's assets out of its reach, as American judgments are unenforceable in Austria. Following the merger, the Austrian company would hold all assets and liabilities previously held by BAG. On September 13, 2012, the court issued a preliminary injunction with the same terms as the temporary restraining order. The court denied defendants' motion for reconsideration on December 14, 2012, see AngioDynamics, Inc.  v. Biolitec AG, No. 09-cv-30181-MAP, 2012 WL 6569272 (D. Mass. Dec. 14, 2012), and defendants have appealed.

Our review of the grant of injunctive relief is for abuse of discretion, and we review legal questions de novo. See KG Urban Enters., LLC v. Patrick, 693 F.3d 1, 14 (1st Cir. 2012).

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Klein-Becker USA v. Englert

Klein-Becker USA and Klein-Becker IP Holdings (collectively “Klein-Becker”) sued Patrick Englert and Mr. Finest, Inc., for trademark infringement, copyright infringement, false advertising, and unfair competition under the Lanham Act; false advertising under the Utah Truth in Advertising Act; unfair competition under the Utah Unfair Practices Act; fraud; civil conspiracy; and intentional interference with existing and prospective business relations. Mr. Englert was sanctioned several times for failing to comply with court orders and discovery schedules.1 The third and final sanction resulted in the entry of default judgment for Klein-Becker on all remaining claims. A bench trial determined damages.

Mr. Englert appeals the district court’s entry of default judgment against him, determination of his personal liability and the amount of damages owed, grant of a permanent injunction, denial of a jury trial, and refusal to allow Mr. Englert to call a certain witness. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

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New Rules Compel Firms to Track E-Mails

The Associated Press
Friday, December 1, 2006; 6:25 AM

WASHINGTON -- U.S. companies will need to keep track of all the e-mails, instant messages and other electronic documents generated by their employees thanks to new federal rules that go into effect Friday, legal experts say.

The rules, approved by the Supreme Court in April, require companies and other entities involved in federal litigation to produce "electronically stored information" as part of the discovery process, when evidence is shared by both sides before a trial.

The change makes it more important for companies to know what electronic information they have and where. Under the new rules, an information technology employee who routinely copies over a backup computer tape could be committing the equivalent of "virtual shredding," said Alvin F. Lindsay, a partner at Hogan & Hartson LLP and expert on technology and litigation.

James Wright, director of electronic discovery at Halliburton Co., said that large companies are likely to face higher costs from organizing their data to comply with the rules. In addition to e-mail, companies will need to know about things more difficult to track, like digital photos of work sites on employee cell phones and information on removable memory cards, he said.

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Why Incorporate?

Why Incorporate?

Operating a business without incorporating exposes all of one’s personal assets to liability. The primary reason to incorporate a business is to prevent personal liability for business debts and claims. After incorporation, claims against a business may only be paid from the business. By incorporating, a business publicly declares that the personal assets and funds of owners and investors are off-limits to creditors and anyone else who may have a legal claim against the business. By limiting liability, it is hoped that more people will invest in businesses and own businesses.

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