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Last month, I wrote about Mylan's lawsuit against the Pittsburgh Post-Gazette and two of its reporters for misappropriation of trade secrets, conversion, and other claims, based on articles that have not been favorable to Mylan. Based on PG's response to the lawsuit, Mylan may get more of a fight than it expected.

First, PG removed the case to the Northern District of West Virginia, even though diversity of citizenship does not exist. But PG argues that Mylan, which is a Pennsylvania corporation and is the parent of Mylan Pharmaceuticals, Inc., "has no standing to sue for or recover damages" because the plaintiffs' claims are "based on damage to property that is owned by MPI." Because Mylan's ownership of Mylan Pharmaceutical's stock is not the same as ownership of its property, Mylan is not a proper party and without it in the litigation, diversity exists and federal jurisdiction is proper.

In all likelihood, Mylan will move to remand, but  PG's argument about whether Mylan is simply a plaintiff in order to defeat diversity and keep the case in Monongalia County, where it has a large manufacturing presence, is interesting. There is also the possibility that if the court would grant the motion to remand and the state court would grant PG's motion to dismiss Mylan, PG could again remove the case on the grounds that diversity exists. But that's nothing but speculation at this point.

PG has also moved to dismiss the complaint under Federal Rule 12(b)(6) on the grounds that Mylan has no standing to assert its claims. This is how PG sees Mylan's claims:

In sum, the Post-Gazette did nothing wrong whatsoever -- not in obtaining information for publication, and not in publishing. All of its conduct is fully protected under well-settled legal principles under the First Amendment to the United States Constitution, Article III, Section 7 of the Constitution of the State of West Virginia, and common law.

Mylan's effort to circumvent these principles and to impose liability on the Post-Gazette for constitutionally protected conduct is doomed to fail. This fact makes all the more evident that Mylan's suit is aimed, not at the meritless effort of holding the Post-Gazette liable, but at attempting to uncover the Post-Gazette's sources of information. Upon learning that the Post-Gazette had obtained information about Mylan's internal investigation, Mylan undertook a feverish hunt to uncover the sources, but the effort was unavailing. Only then did Mylan launch this suit, with the express purpose of obtaining an order "compelling the identity of all persons delivering the Documents to the Post-Gazette or Reporter-Defendants." (Emphasis added.)

In a footnote, PG describes Mylan's decision to file in state court as a "cynical appeal to local interests [] manifested , for instance, in the wholly gratuitous allegation that Mylan provides "jobs for thousands of West Virginia citizens."

PG's motion to dismiss is based on the argument in its notice of removal that Mylan is separate from Mylan Pharmaceuticals and has no standing independently to seek any damages from the defendants and therefore is not a proper party.

PG filed its answer to the complaint, but responds only to the allegations made by Mylan Pharmaceuticals, consistent with its position that Mylan is not a proper party. This post by Robert MacMillan in Reuters' MediaFile blog says that PG countersued Mylan, but I can't find any counterclaim in the answer or any separate pleading listed in the docket. I have contacted Fritz Byers', PG's counsel, and asked about a counterclaim, but haven't heard from him yet.

Patricia Sabatini and Len Boselovic, PG reporters whom Mylan also sued, have separate counsel and have filed motions to dismiss and answers that are patterned on PG's pleadings.

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It's fair to say that the Pittsburgh Post-Gazette and two of its reporters, Patricia Sabatini and Len Boselovic, have been an aggravation, to put it mildly, to generic drug manufacturer Mylan Inc. for some time. But it looks like the Post-Gazette's July 26 story written by Sabatini and Boselovic was Mylan's tipping point.

In that story, entitled "Mylan workers overrode drug quality controls," the Post-Gazette reported that, according to a confidential internal memo obtained by the paper, "the company discovered that workers were routinely overriding computer-generated warnings about potential problems with the medications they were producing."

But the Post-Gazette's story, which also had a sidebar entitled "Mylan's 'red screen' timeline," apparently put enough pressure on Mylan to issue a press release on July 26 -- the same date as the Post-Gazette's article -- in which Mylan criticized the article and stated that its quality control processes were working. 

Then, on July 28, Mylan issued another press release, in which it reported that representatives of the FDA visited its plant on July 27 and  have "determined that the baseless accusations in the article were unfounded." (The press release did not explain how a regulatory agency can determine, based on a site visit that lasted no more than one day, that allegations made in an article based on weeks of reporting, were "baseless" and "unfounded.")  But that wasn't the end of Mylan's reaction.

Last Wednesday, Mylan filed a lawsuit against the Post-Gazette, Sabatini, Boselovic, and several John Does in the Circuit Court of Monongalia County, West Virginia. Mylan Pharmaceuticals, Inc v. PG Publishing Co., Civil Action No. 09-C-592 (August 19, 2009). Here is the complaint, in which Mylan alleged that:

The Post-Gazette's Article [on July 26], and a series of articles that followed, are sensational and misleading articles based on improperly obtained and misconstrued confidential, proprietary and/or privileged internal documents. The articles mischaracterized facts relating to an internal Mylan procedure, creating the false appearance of significant quality and regulatory issues at Mylan's Morgantown, W. Va., plant when no such issues existed.

But another paragraph suggests the real reason for the lawsuit:

The sensationalized misuse of the Documents caused harm to Mylan and its shareholders, evidenced by substantial market volatility, a decrease in its stock price, and the resulting decrease in market capitalization, all of which occurred on the second largest trading day in Mylan's history.

Mylan has asserted claims for detinue (wrongful detention of Mylan's property such as the documents), misappropriation of trade secrets, conversion ("Defendants intentionally dispossessed or intermeddled with Mylan's property interest in the Documents and trade secrets by obtaining them and using the confidential, proprietary and/or privileged information therein."), and trespass to chattels ("This use of the Documents and trade secrets by Defendants caused harm to Mylan through the dispossession and dissemination of the information contained therein and the loss of Mylan's property interest in the confidential, proprietary and/or privileged Documents and trade secrets."), and seeks compensatory and punitive damages.

Here are the Post-Gazette's story and Mylan's press release on the lawsuit.

Jim Edwards at BNET Pharma Blog wrote this post last week, which suggests that the the real motivation behind the lawsuit may have been the drop in Mylan's stock price (mentioned in the complaint) and and its relationship to Mylan CEO Coury's compensation (not mentioned in the complaint). Also as noted by Edwards, there may have been an element of payback in Mylan's lawsuit, as the Post-Gazette's reporting about Mylan COO Heather Bresch's fictitious MBA caused quite a stir in Morgantown last year. But before you start worrying too much about the effect of the MBA scandal on Bresch's career, take a look at Mylan's July 29 press release, in which it announced that she has been promoted to president of the company.

Here's another post by Edwards from August 17 in which he questioned whether Coury had libeled Sabatini and Boselovic by describing their reporting as "baseless" and "biased," even though the FDA's report of its investigation was consistent with what they reported.

My own impression, based, admittedly, on limited facts and reporting, is that the lawsuit is Mylan's attempt to get the Post-Gazette generally and Sabatini and Boselovic specifically to curtail their coverage of Mylan, which Myland may have achieved, at least temporarily. I don't know what the Post-Gazette's policy is, but I'd be surprised if Sabatini and Boselovic are allowed to write about Mylan -- regardless of the issue -- during the pendency of the lawsuit.

Plus, the lawsuit enables Mylan to focus on the Post-Gazette and its reporters while the issues that prompted the story in the first place become secondary.

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A lawsuit filed last month in federal court for the Northern District of West Virginia involves the two logos shown at the right and the similarities, or lack thereof, between them. 

At the far right, obviously, is the logo for Reese's Peanut Butter Cups, which are made by the Hershey Company, the well-known candy manufacturer. 

The logo to the near right is that of Reese's Nursery and Landscaping, located in Ranson, West Virginia and operated by Reese Clabaugh.

Here is the complaint filed on March 19, 2009, in which Hershey's alleges causes of action for federal trademark infringement, federal false designation of origin, federal trademark dilution, and unfair competition.  Hershey Co. v. Reese's Nursery and Landscaping, Civil Action No. 3:09-CV-00017 (N. D. W. Va. 2009).

Hershey claims that the landscaping company's logo "infringes and dilutes the well-known trade dress of Hershey's REESE'S line of products."

There is some similarity between the lettering of the two logos, and although the nursery's logo shown above is in black (or dark brown) and white, it has also used a logo where "Reese's " and the image of the tree were in orange and yellow. 

But where is the possibility of any risk of confusion, which is an essential part of demonstrating infringement?  Hershey's manufactures and sells a variety of candy products; Reese's nursery provides lawn care and landscaping services, and sells lawn and garden products.  I don't see how someone can confuse the two in such a way that Hershey's is harmed. 

Doug Rothschild at Cobalt LLP's blog wrote this post about the complaint, in which he noted that, perhaps in response to the lawsuit, the nursery has changed the colors of its logo, but questioned how much damage Hershey's has actually suffered.

And take a look at Martin Schwimmer's The Trademark Blog, which has the nursery's original logo and some interesting comments about the case. 

All in all, this lawsuit makes me think that Reese Clabaugh isn't the only one shoveling manure.

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According to Womble Carlyle's Trade Secrets Blog, Mobile (Alabama) County Circuit Judge Robert Smith has upheld a $192 million verdict against chemical manufacturers Ineos Phenol and Ineos Americas LLC for their theft of trade secrets owned by Dr. Sven Peter Mannsfeld.

Mannsfeld  filed suit in 2006 after learning in 2004 that his idea, which recycles hazardous waste into building products for making tires and other items, had been patented by the defendants, who listed their employees as the inventors.  Mannsfeld is retired as the president of Degussa Corporation, a multinational chemical manufacturer now known as Evonik Degussa, which had a plant next to Ineos' in a Mobile-area industrial park.

The verdict, which was returned last October following a two-week trial, consisted of $25 million for "historic" damages and $167 million in future damages through 2005. 

Judge Smith entered his order last Friday, and the defendants have 42 days to appeal to the Alabama Supreme Court.  They have denied any theft of Mannsfeld's idea and will appeal.

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This is an update to my post about the lawsuit filed in June 2007 by two documentary film makers from Huntington, West Virginia against Warner Bros. Pictures and other defendants, which alleged that their documentary, "Ashes to Glory" was unfairly used in the movie "We Are Marshall." 

Deborah Novak and John Witek  alleged 24 specific similarities between their work and the movie.  They sued for copyright infringement, breach of contract, fraud, and unfair trade practices.

The United States District Court for the Central District of California disagreed, though, and on October 20, granted the defendants' motion for summary judgment against all of the plaintiffs' claims.  Novak v. Warner Bros. Pictures LLC, Civil Action No. 07-CV-04000 (C. D. Cal. 2007).

Judge Gary Alan Feess concluded that the plaintiffs were unable to prove that the two works are "substantially similar," which is required in order to establish a claim for copyright infringement:

Though the two works tell the story of the November 14, 1970 air plane crash, that event, and the events that preceded and followed, are all matters of public record which cannot be copyrighted.  Copyright protects only an author's original expression and not historical facts or events which means, as noted by the Supreme Court that "the fact/expression dichotomy limits severely the scope of protection in fact-based works."  Feist Publications, Inc. v. Rural Tele. Serv. Co., 499 U.S. 340, 340 (1991).  Here, Plaintiffs have created and produced a fact-based narrative that recounts, in an historically accurate way, what happened before and after the 1970 air plane crash.  Defendants, on the other hand, have produced a dramatic recreation of the events that, though based on the historical record including the documentary, does not appropriate Plaintiffs' expressive elements and makes no pretense of being historically accurate.  Thus, even though the two works have the same story as their subject, they are not "substantially similar" as that phrase is used in copyright jurisprudence.

The court also rejected the plaintiffs' breach of contract claim, on the grounds that after failing to reach an agreement with Thunder Road Film Productions for an option or purchase of the rights to "Ashes to Glory," the plaintiffs contacted other production companies.  The court reasoned that if  the plaintiffs knew they didn't have an agreement with Thunder Road, "plaintiffs cannot now, with the success of 'We Are Marshall' itself an historical fact, revive a claim that they never believed they had in the first place."

In order to establish whether the two works are substantially similar, the court engaged in a very thorough comparison of their styles of presentation, content, characters, and plot.  But simply because the producers of "We Are Marshall" were aware of and had seen "Ashes to Glory"  does mean that the defendants infringed on the plaintiffs' copyright or breached an implied contract. 

Here are posts from The Hollywood Reporter, Esq. Blog and the Movie Blog, both of which conclude that Judge Feess got it right.

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    A complaint filed last month in the Circuit Court of Kanawha County, West Virginia raises an interesting question: if an employee has not signed a non-compete or non-solicitation agreement, can her former employer sue her for going to work for a competitor and taking some of her former employer’s clients with her?  That’s the issue presented by Job Squad, Inc. v. Champion Industries, Inc., Civil Action No. 08-C-1123 (June 10, 2008).  Here are the complaint and the answer and counterclaim, courtesy of the plaintiff’s counsel, Lisa Kerr. 

    Job Squad, Inc. is a non-profit community rehabilitation program, which operates a presort mail service in Charleston, West Virginia.  Rhonda Copen was employed by Job Squad, Inc. until she resigned on March 26, 2008 and went to work for Champion Industries, Inc.  Champion is a printing and office stationery company, which operates several businesses, including The Herald-Dispatch, the Huntington, West Virginia daily newspaper.

    Shortly after Copen began work for Champion, at least two of Job Squad’s customers, BB&T and TicketMaster, terminated their accounts and moved to Champion. 

    Job Squad has alleged in its complaint that Copen and Champion  misappropriated its confidential financial information in violation of West Virginia Code §§ 47-22-2 and 47-22-3, which deal with trade secrets, and have monopolized or attempted to monopolize the commercial mailing business within West Virginia in violation of West Virginia Code § 47-18-4.  Job Squad has also alleged that Copen and Champion tortiously interfered with its business relationships.

    In addition to compensatory and punitive damages, Job Squad has also asked for a preliminary injunction that would require Copen and Champion to cease and desist from competing with Job Squad in the presort mail business; providing presort mail services to Job Squad's current or former customers; using Job Squad’s confidential information; and communicating with its employees or customers.

    Job Squad did not allege that the defendants violated any non-compete agreement or non-solicitation agreement, and that may be the crux of their defense.  Copen and Champion have denied any liability to Job Squad, and have asserted a counterclaim for tortious interference with Champion’s existing and/or expected contractual and business relationships with its customers. 

    The Trade Secrets Vault blog from the Franklin Pierce Law Center wrote about the lawsuit in this post earlier this month.

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    For the second time in about two weeks, drug manufacturer AstraZeneca Pharmaceuticals LP has sued Mylan Pharmaceuticals Inc., alleging infringement by Mylan on its patent for cholesterol drug Crestor.  Here is the complaint, which was filed in United States District Court for the Northern District of West Virginia on December 28, 2007, and assigned to Chief Judge Irene M. Keeley. AstraZeneca Pharmaceuticals LP, et al. v. Mylan Laboratories, Inc., Civil Action No. 1:07-CV-00177.

    In the action, AstraZeneca alleges that Mylan has infringed on its patent for Crestor, which is used to treat high cholesterol, by seeking FDA approval for rosuvastatin calcium tablets, which is the generic version of Crestor.  According to the complaint, Mylan’s position before the FDA is that AstraZeneca’s patent for Crestor is invalid and unenforceable.  Among other relief, AstraZeneca asks that “the effective date of any FDA approval of the Mylan Rosuvastatin Calcium Tablets shall be no earlier than the expiration date of the ‘314 patent….”

    On December 11, AstraZeneca had filed suit against seven generic drug manufacturers, including Mylan, in United States District Court in Delaware, alleging their infringement of its Crestor patent.  AstraZeneca’s complaint against Mylan is virtually identical to its West Virginia filing.  AstraZeneca Pharmaceuticals LP, et al. v. Mylan Pharmaceuticals Inc., Civil Action No. 1:07-CV-00805.  The other generics manufacturers named (in separate complaints) are Sun Pharmaceuticals Industries, Ltd., Sandoz Inc., Par Pharmaceutical Inc., Apotex Inc., Aurobindo Pharma Ltd., and Cobalt Pharmaceuticals Inc.

    In other Mylan litigation, Judge Keeley has denied the motion to dismiss filed by Eliot Disner in Mylan's legal malpractice lawsuit against him.  Here is Judge Keeley's order, which was entered on December 21, 2007.  On the same day, she also entered an order staying the case, based on a pending arbitration that may affect its outcome.  She has given the parties until March 3, 2008 to report on the status of the arbitration.  For some background on Mylan's claims against Disner, here is my post from last  August.

    Finally, one more item of interest about Mylan, which does not involve litigation (yet).  Mylan's chief operating officer, Heather Bresch, is accused of receiving an MBA from West Virginia University without satisfying the degree requirements when she was in the program nearly a decade ago.  Bresch, who is the daughter of West Virginia Governor Joe Manchin, was named COO in October, at which point the Pittsburgh Post-Gazette called WVU to verify her academic credentials.  According to the Post Gazette, which first reported on the situation on December 21, WVU initially said that Bresch did not have an MBA, then reversed its position a few days later, and explained that the discrepancy in its records was caused by the College of Business and Economics’ failure to transfer records for almost half her course work to the Office of Admissions and Records.

    As reported by the Post-Gazette, earlier this week, WVU Provost Gerald Lang named a three person panel to determine whether he did anything wrong in determining that Bresch had earned an MBA.  And today, the Post-Gazette published this editorial, which questions whether an out-of-state panel may have more credibility in investigating the allegations about Bresch's degree.

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    In the Saturday Gazette-Mail (Charleston, West Virginia), Tom Searls has a nice recap on Camden-Clark Memorial Hospital's appeal to the Supreme Court of Appeals from a $6.5 million verdict in a medical malpractice trial.  I wrote yesterday that the Court rejected the petition by a vote of 3-2.

    Also in the paper is an article on Marshall University's decision to start disciplining students who are accused of downloading songs illegally.  Marshall's decision was apparently prompted by the lawsuits filed by some record companies against two students, which I wrote about earlier today.  Although 20 Marshall students received pre-litigation settlement letters from the Recording Industry Association of America (RIAA) in February, and nine more received them last month, Marshall had not previously taken any disciplinary action.  According to Stephen Hensley, the dean of student affairs, who is quoted in the article, the students' use of Marshall's network to download and/or distribute the songs violates the university's code of conduct and carries the risk of disciplinary action.

    Marshall needs to be careful in how it proceeds.  It has an interest in upholding its code of conduct and giving students a disincentive from engaging in similar conduct, but it cannot and should not rely solely on the RIAA's allegations against a student as the basis for any disciplinary action.  As noted in a 2005 post in the blog, Ars Technica,

But the RIAA has been wrong before, as it was in its 2003 suit against Sarah Seabury Ward, a sixty-something sculptor who was accused of downloading gangsta rap. The suit was eventually withdrawn, but the case (and others like it, including one against a dead grandmother) does shed some doubt on the RIAA's ability to correctly identify the infringing party.   With Santangelo's case now headed for trial, a judge's ruling may provide more clarity about what the RIAA can and cannot do in its war on musical piracy.

    There is also an equal protection issue.  It isn't clear from the Gazette-Mail article whether Marshall is going to discipline only the two students who have been sued or the nine who received the RIAA's pre-litigation settlement letters.  But if it's going to act against the nine who received the letters last month, what's it going to do about the 20 students who received the letters in February?   Dean Hensley's explanation that, "We were new at it then, and we're not so new at it now," isn't very reassuring. 

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    The Charleston (West Virginia) Gazette reported yesterday that record companies, including Sony BMG Music Entertainment and Warner Bros. Records, Inc., have filed lawsuits against two Marshall University students for copyright infringements based on the students’ alleged illegal file sharing. The plaintiffs allege that on January 18, 2007, Tristan Hicks downloaded and/or distributed 487 songs, and on January 19, 2007, Jonathan P. Shrewsberry downloaded and/or distributed 240 songs. 

    The plaintiffs seek an injunction against each defendant prohibiting any further infringement of copyrighted materials and requiring the destruction of all such recordings, statutory damages for each infringement of each copyrighted recording, and costs and attorney’s fees.  Here are the complaints against Shrewsberry and Hicks, which were filed on September 18.

    Apparently, the Recording Industry Association of America (RIAA) sent pre-litigation settlement letters to Shrewsberry and Hicks.  According to the RIAA, those letters give “students the opportunity to resolve copyright infringement claims (www.p2plawsuits.com) against them at a discounted rate before a formal lawsuit is filed.  Each pre-litigation settlement letter informs the school of a forthcoming copyright infringement suit against one of its students or personnel and requests that university administrators forward the letter to the appropriate network user.”  

    The RIAA sent out 403 letters to 22 universities this week, and filed 24 copyright infringement lawsuits, including presumably those against Shrewsberry and Hicks.  As of March 2007, Marshall was on the RIAA’s list of the top 25 universities to receive copyright infringement complaints.

    I realize that what Shrewsberry and Hicks are alleged to have done violates the recording companies' copyrights, and I am not condoning their conduct.  But I have always felt that the RIAA lawsuits are a misguided effort to enforce its members' copyrights.  And I'm not alone.  Here's what the Electronic Frontier Foundation has to say about the RIAA's approach.

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    When a law firm uses a company’s trademark and logo in its advertisements, has the law firm infringed or misappropriated the company’s intellectual property?   That is the issue, among others, raised in a lawsuit filed by Genesis HealthCare, which operates skilled nursing centers and assisted living facilities in several states, including West Virginia, against McHugh Fuller Law Group, a law firm with offices in Hattiesburg, Mississippi and Charleston, West Virginia.  The case was filed in the Southern District of West Virginia on August 3, 2007, and has been assigned to the Honorable Joseph R. Goodwin.  Genesis HealthCare Corporation v. McHugh Fuller Law Group, Civil Action No. 2:07-CV-00481.

    The basis for Genesis' claims is that McHugh Fuller operates a website entitled www.genesisconcerns.com, which discusses nursing home abuse cases and points out that several Genesis facilities have a history of substandard care, as shown by various state inspections.  The site also describes various injuries sustained by nursing home abuse victims.

    Genesis moved for a preliminary injunction against McHugh Fuller in order to have the website taken down, but failed to include a verified complaint with its motion, which caused the Court to deny Genesis' request for an injunction.  Genesis then refiled its motion for a preliminary injunction with a verified complaint. 

    Genesis' more recent filings allege violations of the Federal Trademark Act ("the Lanham Act") and the federal Anticybersquatting Consumer Protection Act, and a state law claim for statutory dilution.   McHugh Fuller has responded in opposition to the motion and has answered the complaint.  The Court has not rescheduled a hearing on the motion for a preliminary injunction.

    I would like to hear from others with experience in intellectual property litigation as to whether Genesis is likely to prevail in its claims against McHugh Fuller. 

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    Just as there are patent trolls, I have learned, thanks to legal marketing consultant  Larry Bodine, that there are domain trolls, whose business is registering domain names in which someone has shown an interest, but has not purchased, then offering the names for sale, usually at exorbitant prices.  Larry warns that you should not check for the availability of a domain name through sites like www.whois.com, but to use your Web browser or to Google the name to find out if it's available. 

    Larry Seltzer, a columnist at www.eWeek.com, wrote about the practice last year, and identified an entity called Chesterton Holdings, which is a domain squatter (a more polite term for domain troll), and described how Chesterton acquired domain names.  I also came across an outfit called Internet REIT, which is a very sophisticated domain squatter.  According to John Cook, who writes a blog for the online Seattle Post-Intelligencer, Internet REIT has bought up 400,000 domain names.  So don't be surprised if the one you want is among them.
   

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