West Virginia Business Litigation Lawyer & Attorney : Law Office of Jeffrey V. Mehalic : Charleston, Huntington, Parkersburg

    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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