Remedies Archives - IP UPDATE

Jury Trial on Legal Issue Denied, But No Harm Done

by Keval Amin | Aug 29, 2024 | Trade Secrets

The US Court of Appeals for the Seventh Circuit affirmed a district court’s denial of a jury trial, concluding it was harmless error because the defendant would have been entitled to a directed verdict regardless. Overwell Harvest Ltd. v. Trading Techs. Int’l, Inc., Case No. 23-2150 (7th Cir. Aug. 12, 2024) (Kirsch, Pryor, Kolar, JJ.)

Overwell Harvest was established to invest in Neurensic, a company specializing in market surveillance technology. Despite Overwell’s investment of millions of dollars, Neurensic faced significant financial distress, leading its management to pursue a sale. Neurensic’s CEO and COO accepted an offer from Trading Technologies, which subsequently hired former Neurensic employees with the CEO and COO’s approval. Prior to the sale, Overwell submitted a competing bid, to which Trading Technologies responded by raising its offer. Neurensic chose to accept Trading Technologies’ offer.

Overwell sued Trading Technologies for aiding and abetting breaches of fiduciary duties by Neurensic’s leadership. The district court dismissed Overwell’s jury demand and ruled that the claim was equitable despite the damages sought. In a bench trial, the district court ruled in favor of Trading Technologies, determining that Overwell waived its claims that Trading Technologies had aided and abetted breaches of fiduciary duty by Neurensic’s leadership. The district court’s decision was based on Overwell’s failure to advance arguments concerning improper notice to shareholders regarding the vote on Trading Technologies’ offer. Overwell appealed.

The Seventh Circuit decided that Overwell had a Seventh Amendment right to a jury trial because the case involved legal relief in addition to equitable relief. While the Court agreed that Overwell’s claim for aiding and abetting breaches of fiduciary duty under Delaware law was historically equitable, the request for compensatory and punitive damages constituted legal relief. The Court emphasized that even if a claim is equitable, the pursuit of legal relief (such as money damages) entitles a party to a jury trial. The Seventh Circuit determined that the district court erred by denying Overwell this right because determining legal relief is traditionally the role of a jury.

The Seventh Circuit concluded that this error was harmless, however, because under Delaware law Trading Technologies would have been entitled to a directed verdict. The Court explained that a directed verdict is appropriate when no reasonable jury could find for the losing party based on the evidence, viewing the record in the light most favorable to the losing party.

The Seventh Circuit rejected Overwell’s breach of fiduciary duty claims, finding that the alleged breaches lacked merit under the Delaware standard for aiding and abetting fiduciary breaches. First, the Court held that Overwell failed to show that Trading Technologies knowingly participated in a fiduciary breach, as the continued servicing of Neurensic’s customers by former employees benefitted Neurensic, not Trading Technologies.

Second, the Seventh Circuit determined that Overwell’s claim of blocking competitive bids could not succeed as Neurensic still held its most valuable asset – its source code – and could have repossessed its servers. Trading Technologies’ negotiation tactics were permissible under Delaware law, which allows [...]

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Mandamus Denied: Need to Show Abuse of Discretion in Addition to Prejudice from Delay

by Sarah P. Hogarth | Jan 15, 2020 | Trade Secrets

Addressing an emergency request for a writ of mandamus to compel discovery of electronically stored information, the US Court of Appeals for the Sixth Circuit declined to set aside a district court’s denial of a request to create forensic images of all the defendant’s business and personal computers and cell phones. In re FCA US LLC, Case No. 19-1923 (6th Cir. 2019) (per curiam).

FCA filed trade-secret misappropriation and other claims against Patrea Bullock, a lawyer who formerly served as outside counsel to FCA. According to FCA, while serving as defense counsel, Bullock had access to extensive confidential and proprietary information belonging to FCA, including its “defense playbook.” After she resigned from her law firm, but before returning her computer, Bullock downloaded her files from the laptop onto several USB drives. Thereafter, she opened her own law firm representing plaintiffs against automobile manufacturers, including FCA. During discovery, Bullock produced 1,345 documents in response to FCA’s requests for the documents she had taken FCA, however, moved to compel a forensic image of all of Bullock’s business and personal laptops and cell phones so an expert could investigate what documents Bullock took.

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When It’s All In the Family: Reverse Confusion Not a Basis for Broad Trademark Remedies

by Mary Hallerman | Jan 8, 2020 | Trademarks

Addressing reverse confusion and scope of available remedies, the US Court of Appeals for the Seventh Circuit upheld a district court’s refusal to award infringing profits and a broad permanent injunction after a jury found infringement. Fabick, Inc. v. JFTCO, Inc., Case Nos. 19-1760; -0072 (7th Cir. Dec. 9, 2019) (Flaum, J.)

This trademark dispute originates with a family feud. John Fabick, founder of the John Fabick Tractor Company, purchased two Caterpillar equipment dealerships intending for his son, Joe, to operate the dealerships. At the time, the John Fabick Tractor Company had used the mark FABICK in connection with its business. Joe later founded FABCO, which sold Caterpillar equipment and related goods. Eventually, one of Joe’s sons, Jeré, took over FABCO.

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