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DAVID WHITE INSTRUMENTS, LLC v. TLZ

May 14, 2003

DAVID WHITE INSTRUMENTS, LLC, F/K/A DAVID WHITE FORMATION, LLC, PLAINTIFF,
v.
TLZ, INC., D/B/A TOOLZ, INC.; AND TOOLZ LIMITED, DEFENDANTS.



The opinion of the court was delivered by: John W. Darrah, Judge United States District Court

MEMORANDUM OPINION AND ORDER

Plaintiff, David White Instruments, LLC ("Plaintiff"), filed a seven-count complaint against Defendants, TLZ, Inc., doing business as Toolz, Inc., and Toolz Limited (collectively "Defendants"), alleging patent infringement (Count I); trade dress infringement under the Lanham Act, 15 U.S.C. § 1125 (a) (Count II); violations of the Illinois Uniform Deceptive Trade Practices Act, 815 Ill. Comp. Stat. 510/1 et seq. (Count III), the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1 et seq. (Count IV), and the Illinois Trade Secrets Act, 765 Ill. Comp. Stat. 1065 (Count VII); unfair competition under Illinois law (Count V); and breach of contract (Count VI).

Defendant, Toolz Limited ("Toolz"), moves, pursuant to Federal Rule of Civil Procedure 12(b)(2), to dismiss the complaint for lack of personal jurisdiction. Defendant, TLZ, Inc. ("TLZ"), moves, pursuant to Rule 12(b)(6), to dismiss Counts II, III, IV, V, and VI of the complaint. For the reasons that follow, Toolz Limited's Motion to Dismiss Pursuant to Rule 12(b)(2) is granted; and TLZ's Motion to Dismiss Pursuant to Rule 12(b)(6) is denied.

LEGAL STANDARD

When considering a motion to dismiss, well-pleaded allegations in the complaint are accepted as true. Turner/Ozanne v. Hyman/Power, 111 F.3d 1312, 1319 (7th Cir. 1997). Any ambiguities in the complaint are construed in favor of the plaintiff. Kelly v. Crosfield Catalysts, 135 F.3d 1202, 1205 (7th Cir. 1998): Dismissal is proper only when it appears beyond doubt that Plaintiff can prove no set of facts to support the allegations in his or her claim. Strasburger v. Board of Education, 143 F.3d 351, 359 (7th Cir. 1998).

"Although the Federal Rules of Civil Procedure do not require a plaintiff `to set out in detail the facts upon which he bases his claim,' . . . he must `set out sufficient factual matter to outline the elements of his cause of action or claim, proof of which is essential to his recovery.'" Benson v. Cady, 761 F.2d 335, 338 (7th Cir. 1985) (internal citation omitted). A complaint will not avoid dismissal if it contains "bare legal conclusions" absent facts outlining the basis of the claims. Perkins v. Silverstein, 939 F.2d 463, 467 (7th Cir. 1991).

BACKGROUND

For purposes of these Motions to Dismiss, the following allegations are taken as true.

Plaintiff is a limited liability company organized under Illinois law with its principal place of business in Bradley, Illinois. TLZ is a California corporation with its principal place of business in California. Toolz is a corporation organized under Chinese law with its principal place of business in Hong Kong.

Plaintiff is among the leading suppliers of optical and laser instruments and related accessories to the building and construction industries in the United States. The "David White" name is associated with reliable, high-quality instruments. Until May 2002, David White, LLC was the company supplying the "David White" line of instruments.

On April 29, 2002, David White, LLC assigned to American National Bank and Trust Company of Chicago ("AND") U.S. Design Patent No. D440,506 ("the `506 patent"), which was issued on April 17, 2001. The `506 patent claims a design for an "optical automatic level." The design claimed in the `506 patent provides a "unique overall aesthetic impression". Plaintiff sells automatic levels embodying the `506 patent in the "AL8" product line.

Since 1984, David White, LLC manufactured and sold manual levels and level-transits nationally under the name "Meridian". The "Meridian" line has a unique and distinctive overall appearance and design. Due to David White, LLC's advertising and promotion of the instruments and the unique and distinctive appearance of the "Meridian" line, "a relevant segment of the general public" associates the "Meridian" line with Plaintiff and the "David White" name.

On May 24, 2002, Plaintiff and ANB, a secured creditor-in-possession of the assets of David White, LLC, executed a Bill of Sale ("Bill of Sale") under which Plaintiff purchased substantially all of the assets of David White, LLC pursuant to an Article 9 of the Uniform Commercial Code ("UCC") sale ("the Article 9 Sale"). Plaintiff spent significant amounts of money to obtain these assets due to the substantial goodwill that developed over many years in the "David White" mark and the unique and distinctive instrument design.

Under the Bill of Sale (which is attached as Exhibit A to the complaint), Plaintiff purchased, among other things, David White, LLC's "intangible assets", including:

(a) patents, trademarks, trade secrets, trade names, names, brands, methods of doing business and other intellectual property and all goodwill associated with any of the foregoing; (b) drawings, service manuals, prints, designs, developments and product drawings; (c) telephone and facsimile numbers (to the extent of [David White, LLC's] interest therein); (d) [David White, LLC's] website and e-mail addresses; (e) customer lists and (t) all of [David White, LLC's] interest as licensor in licenses, and all rights to payment which accrue in the future under licensing agreements, arising out of any of the foregoing. . . .
(Compl. Ex. A ¶ 2.) Plaintiff also purchased "jail causes of action, including commercial tort claims, arising out of or related to the Assets, including rights to enforce the items in 2 above (but excluding causes of action to enforce those assets excluded by G below). . . ." (Id. ¶ 5.) On May 24, 2003, ANB assigned the `506 patent to Plaintiff.

Plaintiffs trade secrets include, among other things, detailed sales analyses, customer lists and information regarding the design, manufacture, and costing of "David White" products. These trade secrets are not generally known and cannot be learned from inspection of Plaintiffs products or any public information. Plaintiff ...


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