Vintage Filings Legal Blog

Pro-Pharmaceuticals today announced that the Superior Court of Suffolk County in Massachusetts formally issued its judgment yesterday dismissing the trade secret lawsuit prosecuted by Prospect Therapeutics against the Company and its former Chief Executive Officer, David Platt, Ph.D.

Boston attorney Joan Griffin, who with Chris Robertson of Seyfarth Shaw represented the Company and Dr. Platt at trial said, “Unfortunately, even meritless claims against intellectual property can be difficult to extinguish, creating an unwarranted cloud over a strong company with promising new technology. The post-trial dismissal of this case is the right result.”

Jonathan Guest, of Greenberg Traurig, corporate counsel to the Company which provided intellectual property support to the trial team, praised the high quality and cost-efficiency of Ms. Griffin’s and Mr. Robertson’s trial preparation and presentation. He commented that “this was an important victory for a company that desires to devote resources to its drug development program.”

“Putting this lawsuit behind us is a significant event,” said Theodore Zucconi, Ph.D., Chief Executive Officer, Pro-Pharmaceuticals. “This decision enables us to forge ahead with the commercialization of DAVANAT through partnerships with pharmaceutical companies, and gaining FDA approval for DAVANAT. We believe DAVANAT will dramatically improve the quality of life for cancer patients.”

On May 15, 2009, Prospect announced that it was liquidating and had assigned all of its assets for the benefit of creditors. In response, the Company moved to dismiss the lawsuit on various grounds, including failure to prosecute. At a post trial hearing on July 14, 2009, in a ruling from the bench, the Court allowed the Company’s motion to dismiss.

The U.S. District Court of Northern District of Texas has dismissed a lawsuit against American Traffic Solutions (ATS) claiming that photo enforcement vendors operating in Texas must first obtain a private investigators’ license. In his favorable ruling, Senior U.S. District Judge A. Joe Fish said the plaintiffs, Steven Bell, Alexis Monrreal and Jacqueline Monrreal, failed to state a legal claim because private citizens may not rely on the Texas private investigators licensing law to impose civil liability or to obtain an injunction.

“Our position has always been that this was a frivolous lawsuit and we are very pleased Judge Fish agreed,” said George Hittner, General Counsel and Vice President of Governmental Relations for ATS. “From coast to coast, courts continue to uphold the legality and constitutionality of red-light camera safety programs, negating the habitual and tired claims by opponents.

“The plaintiffs’ lawsuit was an ill-conceived attempt to exonerate those who violated traffic laws by running red lights. We are pleased that the plaintiffs failed in their attempt to prevent municipalities from enforcing the very laws that protect innocent lives. Communities continue to use red-light camera programs throughout the United States because they are a proven, effective public safety tool. This decision merely demonstrates that the best way to avoid paying a fine for violating traffic laws is to obey the law and stop on red,” Hittner concluded.

The federal lawsuit was brought by Texas plaintiffs who violated red-light traffic laws and sought a return of payment for their traffic tickets and an injunction prohibiting ATS from operating a red-light camera system in Texas. The lawsuit claimed photo enforcement vendors operating in Texas must first obtain a private investigators’ license, a claim that the Private Security Bureau of the Texas Department of Public Safety, the state agency statutorily authorized to regulate private investigators’ licenses, denied. ATS worked with outside counsel Haynes and Boone to help secure the decision.

JAKKS Pacific announced that the US Court of Appeals for the Second Circuit unanimously affirmed the judgment of the United States District Court for the Southern District of New York (Karas, J.), dismissing in its entirety WWE’s federal action against JAKKS and certain of its officers.

Jack Friedman, the Company’s Chairman and Co-Chief Executive Officer, stated: “We are pleased that both the Federal District Court and the Court of Appeals for the Second Circuit have dismissed WWE’s federal claims.”

On May 20, 2009, US District Judge Virginia Hernandez Covington dismissed, with prejudice, the lawsuit styled United States of America ex rel., Greg Westfall and Suzanne Westfall vs. Axiom Worldwide, Inc., Axiom Worldwide, LLC, James J. Gibson, Jr., Nicholas Exarhos, Timothy Exarhos, Peer Review Network, Inc. The details below were distributed by Axiom this past week.  The lawsuit, filed by Greg and Suzanne Westfall on behalf of the United States under the federal False Claims Act, had been pending in the United States District Court for the Middle District of Florida, Tampa Division, since 2006. Lawsuits filed under the False Claims Act are commonly referred to as “qui tam” suits.

Greg Westfall is a former independent sales representative for Axiom Worldwide, and Suzanne Westfall, his wife, served as his assistant. In their complaint, the Westfalls alleged that Axiom’s DRX devices are mechanical traction devices, and that Axiom and others devised a sales scheme to promote the sale of the Axiom products by knowingly, falsely, and fraudulently using misleading representations to physicians which they knew would cause physicians to submit false and fraudulent claims for payment to Medicare and other federal healthcare programs for services rendered with Axiom’s devices.

The Westfalls filed their original sealed complaint on April 5, 2006. A search warrant was executed upon Axiom’s corporate headquarters on March 8, 2007 and the case was subsequently unsealed. Later that year, on August 3, 2007, the United States declined to intervene in the lawsuit. As a result, Axiom Worldwide filed a motion on February 19, 2008 to dismiss the complaint with prejudice. The very next day, the Westfalls and their attorneys filed a motion to amend their original complaint, which was granted. On March 31, 2008, the Westfalls filed their first amended complaint with the Court. In response to the content of the Westfall’s amended complaint, Axiom again filed a motion to dismiss on June 10, 2008.

On March 20, 2009, the court dismissed the first amended complaint without prejudice, noting: “Reading the first amended complaint carefully, this court was not able to connect with any certainty the numerous allegations with the individual defendants.” On April 6, 2009, the Westfalls filed a second amended complaint containing nineteen counts against the defendants. Once again and in response to the content of the Westfalls’ second amended complaint, Axiom filed a motion to dismiss, and on May 20, 2009, the Court granted Axiom’s motion to dismiss with prejudice. In legal terms, a dismissal without prejudice allows for re-filing the complaint in the future. This means that the action is dismissed, but the possibility remains open that the plaintiff may file another complaint. A dismissal with prejudice closes the case, unless the Court’s decision is appealed to the Eleventh Circuit Court of Appeal and the decision is reversed.

The Court’s order noted that qui tam suits “are motivated primarily by prospects of monetary reward, rather than public good” and “raise a high risk of abusive litigation.” In reaching its decision the Court stated, “[i]n an abundance of caution and fairness, this Court allowed Relators [the Westfalls] to amend their complaint to comply with Rule 9(b) as to these bare allegations. Though given ample opportunity, Relators failed to comply with Rule 9(b) and this Court’s Order . . . . Even if this Court were to take judicial notice, as requested by Relators, of the CPT codes and their meanings, this Court could not allow counts one through four and counts nine through eighteen to stand. This is because Relators have provided no reliable basis to support the allegations that claims submitted by these physicians were false.” In regard to counts five through eight, the Court states, “The same analysis applies with equal force…, which concern false records. The breadth of the allegations concerning false records is of particular concern to this court…This vague allegation cannot carry the day in an FCA case concerning false records.” The Court continued, “[t]he allegations concerning conspiracy . . . are merely legal conclusions masquerading as factual allegations, which do not survive the motion to dismiss. . . . The stringent standards imposed by Rule 9(b) safeguard a defendant’s reputation from the injury which can result from fraud allegations. Rule 9(b)’s requirements also rebuff ‘fraud actions in which all of the facts are learned through discovery after the complaint is filed.”

In its conclusion, the Court wrote, “[t]his court roundly refuses to open the door to discovery and litigation when, after three attempts, Relators failed to file a complaint in compliance with Rule 9(b) of the Federal Rules of Civil Procedure. Thus, upon due consideration, this Court dismisses this case with prejudice.”

Metabolic Research announced that it has entered into a Settlement Agreement with David P. Summers.  Under the terms of the Settlement Agreement, Mr. Summers and MTBR agreed to dismiss the claims filed against each other with prejudice and Mr. Summers resigned as a Director and Chief Executive Officer of MTBR and his employment agreement was terminated.

Tia Owen, Chief Operating Officer, also announced the appointment of Robert Bakker and KC Quintana to serve on MTBR’s Board of Directors until the next annual stockholders’ meeting. Mr. Bakker also has been named President and Chief Executive Officer of MTBR.

Mr. Quintana developed the current MTBR marketing program and has personally enrolled all of the company’s star athlete spokespeople. Mr. Bakker, while serving as Vice President of National Sales for MTBR, developed General Nutrition Centers (GNC) as a retail outlet for the company products. He will continue to manage the GNC account in addition to his new duties.

Owen stated, “With the addition of Robert Bakker and KC Quintana to the management team, we believe that we are now well positioned to build our Stemulite™ brand of nutritional supplements into a recognized fitness product line as a healthy alternative to steroids.”

The Sun Communication Group, which specializes in law firm public relations for small and mid-sized law firms, launched the SCG Legal PR Network, a web-based network of journalists and attorneys that allows journalists to submit queries for legal-expert comments for stories.

SCG Legal PR Network is inviting all journalists—international, national and local media—to submit queries for legal sources. These queries, along with the journalists’ contact information, are distributed to our database of legal experts.

Another feature of the SCG Legal PR Network is that journalists will be able to search a list of select attorneys and legal experts for high-priority stories.

Attorney members of the network receive journalists’ queries for legal sources on a weekly or daily basis, depending on the urgency of journalists’ deadlines.

All legal experts are welcome to join, including attorneys, associates, partners, solo practitioners, legal consultants, general counsel, law professors and judges. The service is open to all legal professionals to obtain press exposure and gain credibility easily and affordably. The network also features additional benefits for attorneys to advance their practices such as monthly forums with journalists and editors.

I love to see when patent litigation ends up in a licensing agreement, which is the ideal scenario to any patent dispute.  Ronald A. Katz Technology Licensing, L.P. announced today that, as a part of the settlement of patent litigation, Huntington Bancshares, a $55 billion regional bank holding company headquartered in Columbus, Ohio, has purchased a license under the patent portfolio.

The nonexclusive license covers services offered by Huntington Bancshares Incorporated in the “Financial Services Call Processing” and “Automated Securities Transactions” Fields of Use including customer service delivered through automated systems and live agents. Other terms of the license were not disclosed.

The patents held by Ronald A. Katz Technology Licensing, L.P. cover a wide range of interactive technology including automated forms of: customer service, prescription refill services, securities trading, merchandising, prepaid services, telephone conferences, registration, home shopping, as well as functions involved in securing information from databases by telephone, interactive cable transactions, and various other uses of toll free and local numbers.

A Huntington Bancshares representative stated, “Huntington is proud to offer our customers secure, quick and convenient services over the phone, 24 hours a day, utilizing state of the art technology. Our local and toll free customer service lines facilitate easy customer access to services such as PIN change, funds transfer and the ordering of replacement statements, any time of the day or night. The company is pleased to have purchased this important license.”

Ronald A. Katz stated, “We welcome Huntington Bancshares Incorporated to the large and diverse group of financial services companies who have purchased license rights under this portfolio.”

“We are extremely pleased with the defense verdict in this case and are gratified that this Cleveland jury has joined many other juries across the country that have already heard and rejected similar claims. The jury’s finding that the defendants did not distribute a product with a marketing defect confirms what these companies have been saying all along. This is an industry that has always worked to ensure the safety of welders, and is proud of its history of providing appropriate warnings and safety information with its products.

“Just as important as this verdict is the overall trajectory this litigation has taken over the past several years. This litigation has been marked by numerous dismissals, and there is an ongoing and sharp decline in the number of pending lawsuits. In the past three years, plaintiffs have moved to dismiss more than 4,000 cases in the MDL, upwards of 80% of their claims, and the total number of pending welding fume cases has dropped by over two thirds.

“In addition, plaintiffs have been forced to dismiss five trial-ready cases due to evidence of fraud, three of which plaintiffs themselves had selected for trial in the MDL.

“Welding consumable manufacturers have been unfairly targeted in these lawsuits and will continue to defend themselves vigorously against these baseless claims.”

20% of top brand marketers sent additional emails to subscribers after confirming an unsubscribe request, Return Path discovered with its new research study titled Keeping the Subscriber Experience Positive After “Unsubscribe Me.” 11%  of the companies studied emailed subscribers more than 10 days after confirming an unsubscribe request – a violation of the federal CAN-SPAM Act. Marketers risk impacting their overall email reputation with spam complaints if they have a faulty email unsubscribe process, not to mention potential lawsuits.

Return Path, an e-mail deliverability and reputation management company, conducted the study by unsubscribing from the email lists of 45 companies from the retail, consumer goods, travel, and media/entertainment industries. Return Path originally subscribed to these email lists to conduct its Subscriber Experiences study.

“We conducted the Subscriber Experiences and Unsubscribe Experiences studies, because we were concerned that marketers were having issues with two very important points of contact with their email subscribers – at the beginning and the end of the relationship,” said Bonnie Malone, Director of Strategic Services. “Unfortunately, the studies confirmed our concerns. Marketers often fail to optimize the beginning and end of the email marketing cycle, even though this interaction with their customers is a key factor in their email sending reputation. If marketers don’t immediately honor an unsubscribe request, they risk consumers clicking the “Report Spam” button, which ultimately and negatively impacts their email reputation, determining whether or not their emails are delivered to all their subscribers’ inboxes.”

When consumers unsubscribe from email marketing, they could potentially be enticed to remain subscribed but with less frequency. However, the overwhelming majority of marketers studied missed out on keeping consumers subscribed to less frequent mailings. Only two companies out of the 45 studied offered options for subscribers to change the frequency they received email or the ability to opt out of some of the marketers’ emails.

“Marketers work very hard to design compelling email marketing campaigns, but can’t neglect to evaluate the entire email experience for subscribers – including when those customers decide to unsubscribe,” Malone said. “While email marketing may have a small influence compared to the overall digital and traditional marketing campaign reach, email is a very direct, one-to-one interaction with customers and potential customers. Even a single negative email experience can lead to a poor overall brand image for consumers.”

Return Path’s study also revealed that most marketers have not designed their unsubscribe procedures to accommodate consumers who simply want to change their email address – yet remain subscribed. Only 11% of companies allowed subscribers to change their email address on the unsubscribe landing page. When email change of address (ECOA) is not included as part of the unsubscribe process, consumers are forced to manually unsubscribe from one address and resubscribe with a new email address.

“Instead of placing barriers in front of consumers who simply want to change their email address, marketers should make it simple and easy to stay subscribed while changing email addresses,” Malone said.

What typically happens after a patent lawsuit?  I’ve seen literally thousands of patent infringement lawsuits comes across my desk, and it never ceases to amaze me how they ALL seem to have the same result: a licensing agreement. It seems to me that the lawsuits would be able to be avoided entirely if, prior to launching a service, these companies would have hired a solid patent attorney to research if any infringement was taking place.  A recent case study for this process happened this week:

Public Service Enterprise Group (PSEG), an energy company with 2.1 million electric and 1.7 million natural gas customers located throughout New Jersey, headquartered in Newark, N.J., and Ronald A. Katz Technology Licensing, L.P., headquartered in Los Angeles, announced this week the settlement of patent litigation between the parties. As part of the settlement, PSEG has agreed to pay an undisclosed sum for a nonexclusive license under a comprehensive portfolio of patents that Katz owns relating to interactive voice applications.

The nonexclusive license covers services offered by Public Service Enterprise Group in the “Energy and Utility Services” Field of Use, including customer service provided via automated systems and live agents. Other terms of the license were not disclosed.

The patents held by Ronald A. Katz Technology Licensing, L.P. cover a wide range of interactive technology including automated forms of: customer service, prescription refill services, securities trading, merchandising, prepaid services, telephone conferences, registration, home shopping, as well as functions involved in securing information from databases by telephone, interactive cable transactions, and various other uses of toll free and local numbers.

Ronald A. Katz stated, “We welcome Public Service Enterprise Group to the large group of energy and utility companies who have purchased license rights under this portfolio.”

Mr. Katz is the named inventor on a large number of patents primarily in the fields of telecommunications and computing. He also formed Telecredit, Inc., the nation’s first on-line real time credit and check cashing authorization system, and was awarded a patent as co-inventor of that technology.