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  Qualcomm Judge Drops Sanctions Against Lawyers

  Posted: April 20th, 2010, 3:11pm EDT

  On January 7, 2008, the United States Magistrate Judge Barbara Major issued a sanctions order against Qualcomm and certain in-house and outside counsel for discovery misconduct. Specifically, the Court ordered that Qualcomm pay $8.5 million in opposing counsel’s fees for withholding critical documents during discovery, and Qualcomm’s attorneys further were referred to the California State Bar for an appropriate investigation. On March 5, 2008, United States District Judge Rudi M. Brewster vacated the sanctions against the attorneys and remanded to Judge Major to investigate. Roughly fifteen months later, at untold cost to the attorneys involved, a massive discovery effort came to a close. On April 2, 2010, Judge Major issued an order declining to impose sanctions against the attorneys. In her order, the Judge states that although there was a “massive discovery failure” resulting from “significant mistakes, oversights, and miscommunication,” the attorneys made significant attempts to comply with their discovery obligations. Judge Major enumerates the errors that gave rise to the discovery failures, indicating that an “incredible breakdown in communication” was the fundamental problem. No attorneys, in-house or otherwise, ever met in person with the Qualcomm employees who were likely to be important witnesses. Nor did outside counsel make any attempts to understand how and where data was stored on Qualcomm’s computer network. Finally, there was no single attorney responsible for discovery, resulting in the finger-pointing that occurred among the legal counsel when it came time to defend the discovery process. In the end, the Judge reasoned that these failures were exacerbated by the lack of candor on the part of Qualcomm employees to such a degree as to foil any good faith attempts by the attorneys to meet their discovery obligations. And although the attorney sanctions were dropped, the cost in time and money for all parties involved should serve as a warning to all in-house counsel, corporate leadership and litigators: effective communication is fundamental to any discovery process. Without it, millions of dollars, thousands of hours, and whole careers are at risk.
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  Court Grants Preliminary Injunction in Trademark Infringement Case

  Posted: April 20th, 2010, 3:09pm EDT

  In Lettuce Entertain You Enterprises, Inc. v. Leila Sophia AR, LLC d/b/a Lettuce Mix, No. 09 CV 2582, Slip Op. (N. D. Ill. 2010), Lettuce Entertain You Enterprises, Inc. (“LEYE”) obtained a preliminary injunction against Leila Sophia AR, LLC d/b/a Lettuce Mix (“Sophia”). LEYE owns a group of federally registered marks for restaurant services utilizing the word “lettuce.” Sophia opened a restaurant named “Lettuce Mix” several blocks away from one of LEYE’s restaurants. In March, 2009, LEYE sent a cease and desist letter to Sophia requesting that Sophia remove the sign. Sophia, through counsel, refused to remove the sign and defended its use of the name. In April, 2009, LEYE filed a complaint alleging, among other things, federal and common law infringement of LEYE’s marks. Sophia thereafter covered its “Lettuce mix” sign with a banner that read “Let us be” with “Name pending…” below in a smaller font. Images of lettuce heads appeared on the banner. A preliminary injunction is an exercise of potentially very far-reaching power. To obtain a preliminary injunction, a plaintiff typically must demonstrate (1) that its case has some likelihood of success on the merits; (2) that no adequate remedy at law exists; and (3) that it will suffer irreparable harm if the injunction is not granted. The movant must show that it has a “better than negligible” chance of success on the merits. The court will adopt a sliding scale approach and take into consideration the irreparable harm an injunction would cause the nonmoving party and any consequences to the public from denying or granting the injunction. The court determined the word “lettuce,” as used by LEYE, was not generic because it refers to the types of services LEYE provides and that LEYE would have a better than negligible chance of showing that its group of marks is protectable. Sophia’s use of the word “lettuce” in “Lettuce mix” is substantially similar to LEYE’s use of “lettuce” in its marks because both are being used in connection with providing restaurant services and because “Lettuce mix” appropriates the salient feature of LEYE’s family of marks: the use of “lettuce” as a pun for “let us.” The court therefore found that the two marks are substantially similar. Further analyzing the factors, the court found that LEYE established a likelihood of success on the merits. Sophia raised a fair use defense that the court struck down. To prevail on its fair use defense, Sophia had to show (1) that it is not using Lettuce mix” as a service mark; (2) that it is using the mark in good faith merely to describe their services, and (3) that the mark is in fact descriptive of its services. The court did not find that Sophia’s use of the mark qualified as a fair use. Concluding its analysis, the court determined that LEYE had no adequate remedy at law, that the balance of the harms weighed in favor of LEYE, and that the public interest was served by enjoining Sophia’s use of the mark to prevent a likelihood of confusion among consumers. If you think someone is improperly using your brand or trademark, you should contact counsel experienced with protection of intellectual property.
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  Supreme Court Paves Way for More Class Action Lawsuits

  Posted: April 2nd, 2010, 4:25pm EDT

  In a decision released on March 31, 2010, the Supreme Court ruled that claims under New York law that could not have been brought as a class action in state court would not be barred if brought in federal court against Allstate Insurance Co, organized under the laws of another state, on behalf of a class of New York residents. Shady Grove Orthopedic Assoc. P.A. v. Allstate Ins. Co., No. 08-1008. Shady Grove’s individual claim was valued at approximately $500. (Shady Grove had claimed that Allstate routinely delayed payment to medical providers and refused to pay interest on those delayed claims.) The value of the case and the cost to defend it as a class action all the way to the Supreme Court likely cost Allstate hundreds of thousands if not a million dollars, and Allstate was on the losing end of the case in Washington, D.C. The Supreme Court majority held that the while the state class action rule would have barred Shady Grove from litigating anything other than its $500.00 claim, this had no bearing on the Federal Class Action Rule, Fed R. Civ P. 23, which did not by its terms bar the purely state law claims from being brought in federal court as a putative class action. Class action suits are protracted, complex and expensive. The case has been sent back to the federal courts in New York for further proceedings. In light of this decision, companies with out-of-state customers should evaluate their business practices with counsel experienced in class action litigation to take steps to avoid the situation in which Allstate now finds itself.