Compak Co LLC v. Johnson, et al

Filing 196

MEMORANDUM Opinion Signed by the Honorable John F. Grady on 4/28/2011. Mailed notice(cdh, )

03-7427.111-RSK

April 27, 2011

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
THE COMPAK COMPANIES, LLC
Plaintiff,
v.
JIMMIE L. JOHNSON, RON BOWEN,
BRUCE CARLSON, PATPAK, INC.,
DUOTECH HOLDINGS, INC., DUOTECH
PACKAGING, LLC, OLMARC PACKAGING
COMPANY, and URBAN MINISTRIES,
INC.,
Defendants.

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No. 03 C 7427

MEMORANDUM OPINION
This court has conducted a ten-day bench trial.

Our findings

of fact and conclusions of law are set forth below.

See Fed. R.

Civ. P. 52(a).
FINDINGS OF FACT
1.

Sometime

in

or

before

1992

Jimmie

Johnson

invented

a

“compartmental communion container” designed to hold a communion
wafer and sacramental wine or juice in separate compartments.

(PX

3.)
2.

Johnson applied to patent his invention on April 7, 1992. (PX

3 (U.S. Patent No. 5,246,106 (the “‘106 patent”).)
3.

On July 9, 1992 Johnson sold his rights to the invention “and

any invention related thereto,” including the patent application,

-2to a company called Compak International, Inc.
4.

The USPTO approved Johnson’s application and issued the ‘106

patent on September 21, 1993.
5.

(See PX 4.)1

(PX 3.)

Between 1994 and 1998 Johnson applied for and received three

additional patents covering dual-lid containers: U.S. Patent Nos.
5,456,351 (the ‘351 patent) (PX 9), 5,584,388 (the “‘388 patent”)
(PX 10), and 5,746,312 (the “‘312 patent”) (PX 11) (collectively,
the “Subsequent Patents”).

Johnson later purported to assign the

Subsequent Patents to PatPak, Inc., another company that Johnson
had founded.
6.

Sometime in the mid-1990's Compak began leasing a machine

custom-designed to manufacture its communion-cup product (the “CP11" machine).

A German company, Klockner Medipak, Inc., owned the

machine.
7.

The CP-11 machine was housed in a facility owned by defendant

Olmarc Packaging Company (“Olmarc”).

Olmarc operated the CP-11

machine, billed Compak’s customers, collected payments, and then
deducted labor and raw material charges, and its commission, before
remitting the money to Compak.
8.

In 1998 BMJ

Partners

(PX 139.)
(“BMJ”)

made

the

first

of three

investments in Compak. JoeAnn McClandon, the CEO of plaintiff The
Compak Companies, LLC (“TCC”), is one of BMJ’s general partners.
9.

McClandon was aware as early as 1997 that Compak was marketing

its communion-cup product under the trade name, “Celebration Cup.”

1/

Throughout this case, and without any objection by the defendants, the
plaintiff has referred to Compak Corporation ("Compak") — a company that Jimmie
Johnson founded — as the "Buyer" under the July 1992 Bill of Sale. We conclude,
then, that Compak and Compak International, Inc. are the same entity.

-310.

In 1999, Compak and Urban Ministries, Inc. (“UMI”) executed

an agreement authorizing UMI to distribute the Celebration Cup. (PX
122.)

Thereafter, UMI’s “Communion Source” division distributed

the product.
11.

Communion

Source

registered

the

domain

names

“communionsource.com” and “celebrationcup.com” in or around 2000.
The websites were “linked” at the time that they were registered —
visitors to celebrationcup.com were automatically redirected to
communionsource.com.

The evidence at trial supports the inference

that the websites were linked at all times relevant to this
lawsuit.
12.

Defendant Bruce Carlson testified that he learned about

Compak in 2000 from Kenneth Binkley, his son’s dentist. Binkley is
a cousin of defendant Ron Bowen, who was then a principal of
Compak.
13.

In a rambling “Proposal” that Carlson submitted to Compak in

January 2001 Carlson described himself as the head of a nebulous
“consortium”

of

investors/entrepreneurs.

(PX

75.)

proposed, in effect, to take over Compak’s operations.
14.

Carlson
(Id.)

At some point in or around April or May 2001 Carlson began

referring to his “group” as “Duo-Tech,” although he had not yet
formed a separate legal entity with that name.

(See, e.g., PX 78

(email from Carlson to Binkley attaching a “Duo-Tech” business
plan).)
15.

Carlson and Compak discussed several “areas of cooperation”

during the first four months of 2001.

(PX 86.)

Among other

proposals,

retaining

Duo-Tech

manufacture

the

parties

Compak’s

discussed:

communion-cup

(a)

product;

and

to

(b) licensing

-4Compak’s patents to Duo-Tech to develop non-religious uses for the
patented

container.

(Id.;

see

also

PX

78

at

DUO00451-53

(describing existing and potential uses for the container).) Among
the products that Duo-Tech was interested in pursuing was a “12Hour Mouthwash.”
16.

(PX 78 at DUO00452.)

Compak was having substantial financial difficulty in May

2001, and Carlson’s contemporaneous emails and faxes confirm that
he was aware of that fact.
17.

Carlson executed a confidentiality agreement with Compak on

May 11, 2001. (PX 33.)
18.

On June 8, 2001 Compak and “Duo-Tech” executed a “Memorandum

of Understanding” giving Duo-Tech, in exchange for “value received
of

$1.00,”

“non-exclusive

rights

.

.

.

to

market,

sell,

manufacture, and distribute all products” utilizing the ‘106, ‘351,
‘388, and ‘312 patents.

(PX 34.)

The parties executed an

“Addendum” on June 14, 2001 that modified the agreement to, among
other things, expressly bind Compak, Duo-Tech, and their “assigns
or successors.” (PX 35.)
19.
to

While Carlson was negotiating with Compak, he was also trying
forge

Marchetti.

a

relationship
On

June

27,

with
2001

Olmarc

and

Carlson

its

sent

principal,

Marchetti

a

Ken
fax

disparaging Compak’s business — “they (individually or as a group)
are not competent enough to make a success of the unique and
exciting profitable process they have available for the world” —
and declaring the company insolvent.

(PX 38 at DUO003929 (“they

[Compak] are so mired in debt (and even their internal, unaudited
financial statements show this) that they can do nothing except
fail.”).)

-520.

On July 10, 2001 Duo-Tech and Compak executed an agreement

superceding the parties’ June agreement.
License Agreement.”).)
specific

royalty

fee

(PX 159 (the “July

The agreement contained a table listing a
per

unit

sold

for

each

of

two

product

categories (“A” (“[f]ood-related products”) and “B” (“[a]ll other
products”)), and then a separate “Communion Cup Royalty Rate.” The
Communion Cup Royalty rate was a percentage of “Gross Profit” for
each communion-cup sold: 35% in 2001, and then decreasing 5% each
year until 2005.

(Id. at § 4.)

The agreement defined “Gross

Profit” as “the difference between the Cost of Manufacturing and
the

Net

Sale

Price.”

(Id.)

(Although

the

terms

“Cost

of

Manufacturing” and “Net Sale Price” were capitalized, they were not
defined.) The last column of the table is labeled “Minimum Royalty
Fee Due Annually**,” and shows increasing minimums over time: $0 in
2001, $500,000 in 2002, $750,000 in 2003, $1,000,000 in 2004, and
$1,500,000 in 2005 and every year thereafter for the life of the
patents.

(Id.)

The asterisks refer to the following language:

“Annual payment must not be less than this amount regardless of
units sold.” (Id.)

In addition, Compak “designate[d] Duo-Tech as

a manufacturing agent of Compak for Communion Cups.” (Id. at § 6.)
Compak agreed to “provide the machinery,” and Duo-Tech agreed to
“pay

for

payments.

manufacturing
(Id.)

runs,”

invoice

customers,

and

collect

Duo-Tech would then pay Compak “the difference

between the cost of the manufactured product and the collected
charge to the customer,” less an unspecified “administration and
inventory transaction fee” not to “exceed ten percent of the cost
of the manufactured products sold.”

(Id.)

Section 6 further

provided that “Duo-Tech will have the right to manufacture its own
products, using Compak’s machinery, but must give priority in the
manufacturing schedule to Compak’s orders.”

(Id.) Johnson and

Carlson executed the agreement, on behalf of Compak and Duo-Tech,
respectively, below the following language: “this Agreement becomes

-6a complete and binding Contract upon its acceptance as signified by
the signatures below, whether made in person or by facsimile, on
this day of July 10, 2001.”
21.

Carlson incorporated defendant Duo Tech Holdings, Inc. on

July 23, 2001.
22.

(Id. at p. 2.)

(PX 158.)

In or before July 2001 Carlson attempted to obtain a license

from Oxyfresh Worldwide, Inc. (“Oxyfresh”), the company that owned
the patent that Duo-Tech intended to utilize for its proposed mouth
rinse product.
23.

(PX 96.)

Carlson proposed to Compak a substantially revised license in

August 2001, ostensibly to assuage concerns that Oxyfresh had
raised about the July License Agreement. (See PX 36 (email stating
that Oxyfresh and other potential partners “need to see real
legalese.”).)
24.

On August 21, 2001 Carlson faxed to Compak a draft of a

proposed license agreement between Compak and Duo Tech Holdings,
prepared by Duo Tech’s counsel. (PX 41; see also PX 42 (email dated
August 21, 2001 from Carlson’s attorney to Carlson attaching a file
named “License Agreement - Final.PDF,” which appears to be the same
agreement that Carlson faxed to Compak).)
25.

The new proposed agreement abandoned the July License

Agreement’s “manufacturing agent” provision: Duo Tech Holdings
would have no obligation to manufacture products for Compak, nor
any right to use the CP-11 machine for its own products.

Royalties

for all products utilizing the patents would be calculated in the
same manner, as a percentage of “Net Income” — 35% for exclusive
products and 25% for non-exclusive products.

The “Minimum Royalty

Fee Due Annually” was replaced by a “Royalty Threshold:” $250,000
from the date of execution through the end of 2002, $500,000 for

-72003, $750,000 for 2004, and $1 million for each year thereafter.
If DuoTech failed to meet the Royalty Threshold in a given year,
Compak would have the right to terminate the license (subject to
DuoTech’s right to make up the royalty shortfall by April 1 of the
subsequent year).
26.
a

On August 28, 2001 Duo Tech Holdings’ attorney sent Ron Bowen

document

circulated

showing
a

week

changes
earlier.

to

the

draft

Johnson

and

that

Duo

PatPak

Tech

had

Corporation,

ostensibly the licensee of the ‘351, ‘388, and ‘312 patents, were
added as parties.

The draft also curtailed the scope of Duo Tech’s

right to designate products “exclusive” by excluding communion cup
products.

Most significantly, from TCC’s perspective, the royalty

calculation

was

revised

substantially:

instead

of

25%

(non-

exclusive) or 35% (exclusive) of Net Income, the revised draft
provided

for

3%

(non-exclusive)

or

7%

(exclusive)

of

“Gross

Income,” with no “Royalty Thresholds.”
27.

On August 29, 2001 Carlson (signing on behalf of Duo Tech

Holdings) and Johnson (signing on his own behalf and on behalf of
Compak and PatPak) executed the revised license agreement.

(DX 22

(the “August License Agreement”).)2
28.

DuoTech Holdings did not manufacture or sell any products

utilizing the licensed patents in 2001 or 2002.
29.
owned

In June 2002 Compak filed for bankruptcy.
subsidiary,

Communion

several months later.

Packaging

Company

Compak’s wholly(“CPC”),

filed

The bankruptcy court consolidated the two

2/
Jimmy Johnson testified that he relied on Ron Bowen's representation
that the final agreement contained substantially higher royalty percentages and
a minimum royalty requirement. Even if we thought that Mr. Johnson's testimony
was credible — and we do not — it is irrelevant.
Before trial TCC expressly
stated that it was not pursuing a claim against the defendants based on actual
fraud, and reaffirmed its choice during its closing argument.

-8cases.
30.

Carlson knew that Compak had declared bankruptcy, was aware

of its reorganization plan, and at least initially monitored events
in the bankruptcy proceeding.
31.

(See PX 49 and PX 51.)

Throughout 2002, while Bowen was still Compak’s president, he

was also working for Carlson.

(See PX 51 (Carlson email to

Marchetti, dated July 29, 2002, stating that Bowen “is a member of
our Team and a friend”); see also id. (“We need some answers and we
need to get them before we continue to allow Ron to represent
us.”).)

Other documents indicate that Bowen held, or else it was

contemplated that he would hold, high-level positions at one or
more Duo Tech entities. (See PX 57 (an undated document purporting
to show that Bowen owned a stake in an unspecified “Holding
Company” and “LLC,” and identifying Bowen as the “President” of the
“LLC.”); PX 50 (email from Carlson to “Kim,” dated September 11,
2002, attaching a document entitled “Who DuoTech Is,” which lists
Ron Bowen as the “President of Compak and the DuoTech COO”).)3
32.

Carlson purported to sever ties with Bowen in August 2002.

(See PX 58 (email from Carlson to Bowen, dated August 15, 2002).)
But he continued to hold Bowen out as a Duo Tech executive, and
continued to communicate with him about the company, after that
date.

(See PX 50 (identifying Bowen as “DuoTech COO” on September

11, 2002); PX 52 (identifying Bowen as “President of DuoTech” on
November 27, 2002); PX 119 (December 18, 2002 email asking Judy
Smith, an individual Carlson identified as Bowen’s secretary, to
3/

Whether the terms “Holding Company” and “DuoTech” refer to DuoTech
Holdings — the company that licensed Compak’s dual-lid patents — is unclear.
Carlson testified that these were different companies formed to utilize different
intellectual property to make different products.
We have our doubts about
Carlson’s credibility generally, but his testimony on these matters is not
implausible and there is no evidence in the record contradicting it. Carlson’s
correspondence discloses several witnesses who may have relevant information, but
TCC only called Carlson to testify and did not depose anyone.

-9deliver a message to Bowen imploring him to play a more active role
in “DuoTech”); see also PX 82 (July 26, 2003 email from Carlson to
Bowen and others at “duotech.biz” email addresses).)
33.

On February 11, 2003 Compak and CPC filed a “Motion to Set

Bid Procedures for Sale of Business Property Pursuant to Sec. 363
of

the

U.S.

Bankruptcy

Code,”

attaching

an

unexecuted

Asset

Purchase Agreement between the debtors and a stalking-horse bidder,
Nationwide Truck Lines. (PX 112.) The proposed purchase price was
$750,000 for the “Compak Assets,” a term defined to include (among
other things) the ‘106 patent, as well as “all of Compak’s right,
title and interest in and under all Leases, Contracts and Permits,
which are being assigned to and assumed by Purchaser.” (Id.)
34.

On February 25, 2003 the bankruptcy court entered an order

establishing bid procedures for the § 363 sale.

(PX 54.)

The

order attached a list of the debtors’ assets, which interested
parties could bid for by individual lot or in total.
Ex. A.)

(Id. at ¶ 2,

Those assets included the ‘106 patent, “[c]ontracts

rights, if any,” “[l]icensing agreements, including PatPak, Inc.,”
and “[a]ny and all other identifiable assets.”
35.

(Id. at Ex. A.)

On March 5, 2003, the debtors filed a motion to sell their

assets “free and clear of liens and encumbrances in accordance with
[the Nationwide Truck Lines agreement] or for such other bid as is
submitted” at the § 363 sale hearing.
36.

(PX 55.)

On March 18, 2003, in response to a motion that Klockner had

filed, the bankruptcy court clarified that the CP-11 machine was
not part of the debtors’ estate and therefore not for sale at the
§ 363 hearing.

Prior to the sale hearing, which was conducted on

March 19, 2003, Nationwide Truck Lines withdrew its bid.
(Transcript of Proceedings of 363 Sale) at 5.)

(PX 114

-1037.

There were lengthy discussions at the sale hearing about what

patents Compak did or did not own, with unhelpful and confusing
commentary by Jimmie Johnson.

(Id. at 23-28, 31-36.)

It is clear,

however, that Johnson believed at that time that Compak did not own
the ‘312, 351, and ‘388 patents.
38.

BMJ’s $180,000 bid for all the debtors’ assets was the

highest bid received at the hearing.
39.

(Id. at 48-49.)

McClandon testified that at the sale hearing she and her

attorney spoke with an attorney for Klockner and expressed interest
in

purchasing

the

CP-11

machine.

According

to

McClandon,

Klockner’s attorney told her that Klockner would sell the machine
for $150,000.
40.

On March 25, 2003, the bankruptcy court entered an order

approving the sale of the debtors’ “Business Assets” to BMJ “free
and

clear

of

all

liens,

claims,

encumbrances

including rights of set off and recoupment.”

and

interests,

(PX 59 at ¶ G.)

The

order defined “Business Assets” as “substantially all of [the
debtors’] business real and personal property, excluding bankruptcy
causes of action and related claims and cash.”
41.

(Id. at ¶ 6.)

On March 25, 2003 Compak, CPC, and BMJ executed an Assignment

of Patent Rights, transferring to BMJ all of the debtors’ right,
title, and interest in the ‘106 patent, certain foreign patent
applications, and “a proposed U.S. Patent Application for multicompartment packaging (Docket C-285).”
42.

On March 26, 2003 Jimmie Johnson executed a “Bill of Sale,”

transferring to BMJ “all of Seller’s right, title and interest in
and to all of the personal property of the Seller, tangible and
intangible, wherever located, including without limitation all of
Seller’s business as a going concern, goodwill, choses in action,”

-11etc.
43.

(PX 60 at DUO003132.)
BMJ carried on Compak’s former business immediately after the

sale, and for a short period of time thereafter, before assigning
Compak’s assets to the newly-formed TCC.
44.

McClandon retained Bowen as a consultant after the sale, and

in that capacity he continued to handle day-to-day operations, as
he had during Compak’s bankruptcy.

(See PX 146 (fax from Bowen to

BMJ’s payroll person regarding payments in connection with his
“temporary consulting contract”); see also PX 144, 145, 150, 151,
153, 154 (reports submitted by Bowen to McClandon concerning
customer payments and related issues).) Bowen’s agreement with BMJ
did not have a specific termination date.
45.

Bowen did not disclose that he was affiliated with Carlson,

nor was McClandon aware of the August License Agreement.
46.

Olmarc orally agreed to perform for BMJ/TCC the same services

it performed for Compak prior to, and during, Compak’s bankruptcy.
The

general

terms

of

that

arrangement

were

set

forth

in

an

unexecuted Memorandum of Understanding between Olmarc and CPC. (PX
143.)
47.

Without paying or executing any agreement with Klockner,

BMJ/TCC directed Olmarc to manufacture communion cups using the CP11 machine.

Olmarc began manufacturing communion cups for BMJ/TCC

in or around April 2003.
48.

Sometime in or around May 2003 Korber Medipak purchased

Klockner.
49.

McClandon testified she was actively attempting to purchase

the CP-11 machine in April and May 2003.

Although we generally

-12found McClandon to be a credible witness, we are not persuaded that
she

pursued

suggested.

the

CP-11

machine

as

urgently

as

her

testimony

She testified that in May 2003 Marchetti effectively

sabotaged her negotiations with Klockner by asserting a lien
against the machine.

Even accepting that premise, it is not clear

why TCC failed to purchase the machine in April 2003.

McClandon

testified that her attorney at that time, Russell Green, handled
the negotiations with Klockner.

But TCC did not call him to

testify.
50.

Carlson testified that he first learned of the bankruptcy

sale in mid-July 2003, when, over lunch with Ken Marchetti, he
asked:

“whatever

Compak]?”

happened

to

that

communion

company

[i.e.,

We have significant doubts about this testimony.

Bowen

and Marchetti — members of Carlson’s self-described “team” — had
been working with BMJ/TCC for nearly four months at that point:
Bowen was serving as BMJ’s/TCC’s consultant, and Marchetti was
manufacturing

communion

cups

for

BMJ/TCC.

Carlson

further

testified that Marchetti told him that the person or entity that
purchased Compak’s assets — Carlson could not recall if Marchetti
had mentioned McClandon by name — was not using the CP-11 machine.
Marchetti had no reason to lie to Carlson about the work he was
performing for BMJ/TCC using the CP-11 machine.
51.

According to Carlson, he contacted Klockner on the same day

that he learned from Marchetti that Compak had sold its assets.
Carlson was put in touch with Matthias Otto, who had recently
joined Klockner after the sale to Korber.
$150,000 for the machine.

Carlson offered him

On July 25, 2003, Klockner and Carlson

executed an option agreement to purchase the machine for $150,000
on or before August 29, 2003.

(DX 5.)

52. After executing the agreement Otto and Carlson agreed that the

-13machine should be shut down for inspection, and to insure that the
machine was not damaged before Carlson paid Klockner.

(See DX 21

at BMJ 03122.)
53.
the

McClandon learned from Marchetti that Carlson had purchased
machine.

Carlson.

At

Marchetti’s

suggestion,

McClandon

contacted

Both Carlson and McClandon testified that this initial

conversation

was

cordial,

substance of what was said.

although

they

disagree

about

the

Regardless, the relationship quickly

soured after Carlson learned that McClandon had contacted Otto.
Carlson left McClandon a voice mail message in which he told her
that

she

could

not

use

the

machine

and

would

“never”

make

communion-cups again.
54.

McClandon notified TCC’s customers, UMI and Lifeway, that

someone else had claimed an interest in the machine and that TCC
intended to fill existing orders with the completed cups it had in
stock.
55.

Olmarc refused to ship the products.

Carlson also contacted UMI and Lifeway, and persuaded them to

do business with Duo Tech.

Carlson’s correspondence with Lifeway

contains some arguably improper statements about McClandon and TCC,
and a statement that TCC regards as indicating that Marchetti
and/or Bowen were disclosing information about TCC to Carlson.
(See PX 65 (August 13, 2003 email to Lifeway) and PX 68 (August 12,
2003 email to Lifeway).)
56.

Olmarc paid the $150,000 purchase price to Korber, on

Carlson’s behalf, before the option expired on August 29, 2003.
57.

On

September

17,

2003,

Carlson

executed

an

agreement

purporting to sell the machine to DuoTech Packaging in exchange for
$150,000 payable to Olmarc.

(DX 4 at § 2.)

Carlson testified that

-14he purchased it back from DuoTech Packaging, and resold it to his
son-in-law, Rick Alverado, sometime before the end of 2003.
Alverado has owned the machine since that time, and leases the
machine to defendant DuoTech Packaging, LLC (an affiliate of
DuoTech Holdings).
58.

On September 9, 2003, DuoTech Packaging filed an adversary

complaint in the bankruptcy court asking the court to declare who
owned the licensor’s rights under the August License Agreement and
requesting leave to deposit anticipated royalty payments with the
clerk of the court pending the court’s ruling. The complaint named
Compak, its bankruptcy trustee, BMJ, PatPak, and Jimmie Johnson as
defendants.
59.

Sometime in the fall of 2003 Olmarc began manufacturing

communion cups for Duo Tech Packaging using the CP-11 machine.
60.

Compak filed this lawsuit on October 21, 2003.

61.

After discussions with several vendors in the fall and winter

of 2003, TCC ordered a machine in January 2004 from a German
company, Hassia.
62.

Duo Tech began selling “generic” communion cups to UMI

sometime in 2003.

There was some suggestion during the testimony

of Harriet Barry, Communion Source’s general manager at that time,
that DuoTech may have sold existing Celebration Cup inventory to
UMI in 2003.

(Cf. supra, ¶ 54.)

But her recollection was not

sufficiently clear to establish that fact.
63.

DuoTech

Packaging

filed

its

first

“Quarterly

Royalty

Statement” with the clerk of the bankruptcy court on October 29,
2004.

DuoTech Packaging, LLC v. Leibowitz, Adversary Proc. No. 03

A 3898 (Bankr. N.D. Ill. 2003) (Quarterly Royalty Statement (DKT #

-1526)).
64.

On November 1, 2005, BMJ’s counsel sent a letter to DuoTech’s

counsel demanding an accounting “[p]ursuant to § 4(b) of the
purported license” (i.e., the August License Agreement). (PX 102.)
Whether there was any further correspondence between BMJ’s counsel
and DuoTech’s counsel is unclear (the lawyers representing the
parties at trial did not represent the parties in 2005).

But it is

clear that DuoTech did not comply with the request.
65.

In April 2006, UMI sold its Communion Source division to

Communion, LLC.

(PX 157.)

Communion, LLC was formed specifically

to purchase Communion Source and is owned (according to Carlson) by
his children, his son-in-law (Rick Alverado), and others.

Carlson

signed the Asset Purchase Agreement on Communion, LLC’s behalf as
its “manager,” and on DuoTech Packaging’s behalf with respect to a
provision terminating a “DuoTech Packaging Distributor Agreement”
between DuoTech Packaging
Carlson

also

signed

on

and UMI.
his

own

(Id. at § 1(d), 12-13.)

behalf

as

the

guarantor

of

Communion, LLC’s obligations under a promissory note that it
executed as part of the sale.

(Id. at ¶ 2(b), 13.)

DuoTech

Packaging made the payment that Communion, LLC owed at closing with
a check signed by Carlson.
66.

As part of the sale Communion, LLC acquired the domain names

“communionsource.com” and “celebrationcup.com.”

(Id. at Schedule

1(a)(4).)
67.

Between 2006 and 2008 Duo Tech Packaging sold communion cups

to Communion, LLC.

After initially denying that he knew what

Communion,

with

LLC

did

the

purchased

cups

—

an

incredible

statement — Carlson effectively admitted that he knew that the
company resold them.

-1668.

TCC’s new communion-cup machine was finally installed and

ready to begin production sometime in 2006.
machine was approximately $3 million.

The total cost of the

While TCC was unable to

manufacture communion cups between July 2003 and sometime in 2006,
due to the lack of a machine, it did do some limited advertising
during

this

time

period.

“Celebration Cup.”

It

also

registered

the

trademark

After 2006, TCC spent significantly more money

promoting the Celebration Cup in print ads, on the Internet, on
television,

and

at

trade

conventions.

However, none

of

the

Celebration Cup promotional materials that TCC introduced at trial
contained an “®” or otherwise indicated that “Celebration Cup” was
a registered trademark.
69.

In or around August 2007 Carlson removed the CP-11 machine

from

Olmarc’s

problems.

premises

Carlson

because

testified

Olmarc

at

was

length

having

financial

concerning

technical

problems with raw materials, and with the machine itself, after he
removed the machine.
70.

His testimony was essentially unrebutted.

On November 29, 2007, the bankruptcy court approved a

settlement between the DuoTech defendants and the trustees of the
Compak

and

Johnson

bankruptcy

estates

pursuant

to

which

the

defendants acquired any rights the trustees had, may have had, or
claimed to have in the ‘351, ‘388, and ‘312 patents.

(DX 1.)

The

defendants outbid TCC for those rights.
71.

DuoTech Packaging last deposited royalty payments with the

clerk of the bankruptcy court on November 4, 2008.

That deposit

represented royalties for sales during the fourth quarter of 2007
and the first quarter of 2008.

Carlson testified that he stopped

paying

has

royalties

because

he

been

unable

to

manufacture

merchantable communion cups since the first quarter of 2008 and has
not made any communion-cup sales since that time.

-1772.

Cavanaugh Company, one of Duo Tech Packaging’s raw-material

vendors, shipped 19,980,000 communion wafers to “DuoTech, LLC” in
2008.

(PX 178.)

It shipped 1,065,000 wafers in 2009, and 900,000

wafers in 2010, some or all of which were sent to an entity called
Kingdom Minded.

(Id.)

According to Carlson, Kingdom Minded was

slated to take over communion-cup manufacturing in 2009 and has
spent “a lot of money” trying to repair the CP-11 machine.

Rick

Alverado, Carlson’s son-in-law, is affiliated with Kingdom Minded.
73.

Cavanaugh Company double-billed Kingdom Minded for new wafer

purchases in 2009 and applied the payments to DuoTech’s outstanding
balance.
74.

Communion, LLC was involuntarily dissolved by the Illinois

Secretary of State in September 2008, and reformed ten days later
under the same name.

(PX 158.) Carlson testified that he is not

the

“new”

manager

of

the

Communion,

involuntarily dissolved in March 2010.

LLC,

which

was

itself

The Illinois Secretary of

State’s office indicates that Communion, LLC and DuoTech Packaging
had or have the same “principal office” and the same registered
agent, Andrew J. Cohen.

Mr. Cohen is also the registered agent of

Kingdom Minded, Inc., and one of the two attorneys who represented
Carlson at trial.

According to Carlson, his children and his son-

in-law still own Communion, LLC.
75.

Sometime in early 2009 Robert Johnson, McClandon’s son and

TCC’s

CEO,

attempted

“celebrationcup.com.”
already

registered

to

register

the

domain

name

He then learned that Communion Source had
that

domain

name.

When

he

entered

“www.celebrationcup.com” into the address bar of his Internet
browser

he

was

automatically

“www.communionsource.com.”

and

seamlessly

redirected

to

That website purported to offer the

-18Chasid Cup for sale.
76.

Robert Johnson testified that the Internet screenshots

identified as PX 105, which McClandon printed in February 2011,
essentially depict the website he saw in 2009. The website states,
“We are the exclusive distributors of Chasid Cup®, Pre-filled
Communion Cups and Wafers.

Often compared to, Remembrance® Cup

and/or Celebration Cup®.” (PX 105.) And under the heading “News,”
the

following

statement

backordered.

Our

appears:

manufacturer

“04.17.09
is

Chasid

executing

Cups

their

are

yearly

maintenance on their machine. Also, Easter has depleted our stock.
We look forward to getting more Chasid Cups within 2-3 weeks.”
(Id. (emphasis in original).)
77.

Carlson’s representation that there have not been any

“Royalty Sales” since the first quarter of 2008 is suspicious in
light of: (1) sheer number of communion wafers that Duo Tech and
Kingdom Minded purchased between 2008 and 2010; (2) Carlson’s
disingenuous attempts to disassociate himself from Kingdom Minded
and Communion, LLC; and (3) the statements on communionsource.com.
Moreover, it is difficult to understand why Lifeway — Duo Tech’s
other customer besides the family-owned Communion, LLC — would be
willing to wait out the defendants’ manufacturing troubles.

By

Carlson’s estimate, Lifeway’s patience has cost it millions of
dollars. These reservations about Carlson’s testimony raise the
possibility that in fact there were royalty sales during the period
in question.

But they do not carry the day for the plaintiff by

proving that there were such sales.

This was the plaintiff’s

burden. Carlson testified unequivocally that there were no royalty
sales, and plaintiff has failed to establish that there were.
in

fact

Lifeway

did

receive

shipments

of

merchantable

If

cups,

plaintiff should have been able to prove that by calling witnesses
from Lifeway.

As far as Carlson’s testimony about the need to use

-19millions of wafers in unsuccessful attempts to make the machine
operate properly, plaintiff offered only the testimony of Jimmie
Johnson that, during the time he was familiar with the machine, the
machine could make sealed cups without a wafer. But that testimony
does not establish that Carlson, five years later, was not using
wafers during machine testing and maintenance without producing any
merchantable cups.
As the defendants pointed out, a complete saleable communioncup requires not only wafers but juice.

Carlson testified without

contradiction that during the relevant time period he did not
order, or have on hand, a substantial amount of juice.

Plaintiff

did not prove any deliveries of juice to the defendant during the
relevant time and, without that proof, the substantial deliveries
of wafers are not probative.

In fact, taking Carlson’s testimony

at face value, the lack of juice corroborates his testimony that
the wafers were not used to make saleable cups.
Conclusions of Law
A.

Count
I
(Constructive
Infringement)

Trust)

and

Count

II

(Patent

On June 1, 2009 we granted the defendants’ motion for summary
judgment on Counts I and II of TCC’s original complaint.
repled

those

claims

in

its

preserve its appeal rights.

Amended

Complaint,

presumably

TCC
to

During the trial we heard evidence

relevant to certain findings that we made in our earlier decision,
but nothing that would warrant a different outcome.

TCC indicated

before trial that it might move for reconsideration, but it has not
filed such a motion and it did not discuss Counts I and II in its
closing argument.

We will not revisit our earlier rulings under

these circumstances.

See Santamarina v. Sears, Roebuck & Co., 466

-20F.3d 570, 572 (7th Cir. 2006) (The law of the case doctrine
authorizes reconsideration “if there is a compelling reason, such
as a change in, or clarification of, law that makes clear that the
earlier ruling was erroneous.”).
B.

Count III (Breach of Contract Against Olmarc)
Olmarc

filed

a

notice

of

creditors on October 17, 2008.

assignment

for

the

benefit

of

So, not surprisingly, Olmarc did

not respond to the Amended Complaint that TCC filed a year and a
half later.

TCC, which never formally moved for an order of

default, stated during opening statements that the trial would
serve as a prove-up hearing with respect to Olmarc and Ron Bowen,
another absent defendant.

McClandon testified that Olmarc agreed

to continue providing services to TCC on terms comparable to those
that had governed Olmarc’s relationship with Compak.

But the

parties never executed a written agreement, nor was there any
evidence that Olmarc orally agreed to provide services for a
specific time period.

See Mid-West Energy Consultants, Inc. v.

Covenant Home, Inc., 815 N.E.2d 911, 915 (Ill. App. 2004) (“A
contract of indefinite duration such as the one here is not deemed
perpetual and, thus, is terminable at will.”).

TCC has failed to

show that Olmarc breached the parties’ oral agreement when it
stopped working for TCC and started working for the defendants.
TCC’s

Amended

Complaint

also

alleges

that

Olmarc

improperly

withheld reserve-account funds and raw materials when the parties

-21ended their relationship. McClandon alluded to this dispute during
her testimony, but she did not (nor did anybody else) testify
concerning:

(1)

the

total

amount

of

money

that

Olmarc

was

withholding at that time (in or around July/August 2003); and (2)
what raw materials Olmarc allegedly refused to turn over. Olmarc’s
inventory of finished products received more attention during the
trial, (see, e.g., PX 141), but not in connection with TCC’s claims
against Olmarc. Whether TCC had a claim to those products superior
to Olmarc’s is unclear.

TCC has not proven Olmarc’s liability or

any damages

its

caused

by

conduct.

Indeed,

TCC

effectively

abandoned its claims against Olmarc (including its claim for
tortious interference) in its closing argument.
C.

Count IV (Tortious Interference with Contract and Prospective
Economic Advantage)
Although Count IV is styled as tortious interference with

contract and prospective economic advantage, TCC has effectively
abandoned the former claim.4 The elements of tortious interference
with prospective economic advantage are: “(1) plaintiff must have
a reasonable expectation of entering a valid business relationship;
(2) defendant must purposely interfere and defeat this legitimate
expectancy;

and

(3)

defendant’s

actions

must

cause

harm

to

plaintiff.”

A-Abart Elec. Supply, Inc. v. Emerson Elec. Co., 956

4/
Defendants devoted a substantial portion of their closing argument to
attacking TCC’s claim for tortious interference with contract.
But it was
apparent from TCC’s closing argument that it was no longer pursing that claim.

-22F.2d 1399, 1404 (7th Cir. 1992) (citation and internal quotation
marks omitted).

Courts sometimes add, as a distinct element, “the

defendant’s knowledge of the plaintiff’s expectancy.” Botvinick v.
Rush University Medical Center, 574 F.3d 414, 417 (7th Cir. 2009).
During

closing

arguments

TCC

argued

that

it

reasonably

expected to continue its business relationships with UMI and
Lifeway.5

“A ‘reasonable expectation’ requires more than the hope

or opportunity of a future business relationship.”
Systems Engineering,

Inc.

Corp., 520 F.Supp.2d 1012,

v.

International

Business

Business Machines,

1022 (N.D. Ill. 2007) (citing Anderson

v. Vanden Dorpel, 667 N.E.2d 1296, 1300 (1996)).

UMI and Lifeway

were Compak customers who continued purchasing communion cups from
TCC after the bankruptcy sale.

It was reasonable for TCC to expect

that this would continue. Until Carlson purchased the machine, TCC
was the only source for the product.

It is true that TCC was

operating under a cloud during the first four months after the
bankruptcy sale. Olmarc had agreed to operate the CP-11 machine to
manufacture products for TCC, but Klockner owned the machine before
and after the bankruptcy sale.

5/

TCC took a substantial risk

Defendants dismissed this argument as "new" during their closing
argument. It is true that TCC did not expressly articulate this theory in its
complaint, which focused primarily on TCC's relationship with Olmarc.
(Am.
Compl. ¶ 71 ("DuoTech persuaded Olmarc to cease manufacturing Cups for TCC, and
to instead manufacture Cups for DuoTech exclusively.").)
But TCC’s tortious
interference claim, as pled in the complaint, is at least implicitly based on its
inability to sell products to its customers. (Id. at ¶ 103 (“As a direct and
proximate result of these defendants’ conduct, TCC was injured, suffering lost
sales and profits and damage to its goodwill during its critical start-up
phase.”).)

-23operating the business without purchasing the machine outright, or
else entering into a formal agreement with Klockner to use it.

It

seems likely that TCC and Klockner would have worked something out
but for Carlson’s appearance on the scene. TCC needed the machine,
and Klockner wanted to sell it.
Carlson was aware of TCC’s expectancy, see supra ¶ 55, and
plainly interfered with it: he contacted TCC’s customers and
persuaded them to do business with DuoTech rather than TCC.

“[A]

plaintiff must show not merely that the defendant has succeeded in
ending the relationship or interfering with the expectancy, but
‘purposeful interference’ — that the defendant has committed some
impropriety in doing so.”

Dowd & Dowd, Ltd. v. Gleason, 693 N.E.2d

358, 371 (Ill. 1998) (citing Restatement (Second) of Torts § 766B,
cmt. a (1979)).

The element of purposeful interference overlaps

what is sometimes called the “competitor’s privilege,” A-Abart, 956
F.2d at 1405, a term that creates confusion about which party has
the burden of proof. See, e.g., Cromeens, Holloman, Sibert, Inc v.
AB

Volvo,

349

F.3d

376,

398-99

(7th

Cir.

2003);

see

also

Restatement (Second) of Torts § 768(1) (“Competition as Proper or
Improper Interference”).6

6/

But whether we consider the propriety of

The Restatement itself expressly declines to decide who has the burden
of proof. See Restatement (Second) of Torts § 768 cmt. a (1979) ("[T]his Section
speaks of an interference that is improper or not, rather than of a specific
privilege because there is no consensus that engaging in competition is an
affirmative defense to be raised and proved by the defendant or is instead simply
not improper conduct inconsistent with the American system of free enterprise.").

-24Carlson’s actions as an element of TCC’s claim or an affirmative
defense, we are not persuaded that he acted improperly.
First, Carlson’s comments in his correspondence with Lifeway
do not add anything to TCC’s claim, even assuming they were
“improper.” TCC could not produce communion cups once Carlson(with
Klockner’s blessing) ordered the machine shut down in July or
August 2003, whether or not Lifeway credited Carlson’s statements
about McClandon. During closing arguments TCC effectively conceded
that Carlson did not act improperly when he purchased the machine.
It argued, however, that he improperly refused to share it.

TCC

cites Fishman v. Wirtz, Nos. 74 C 2814 and No. 78 C 3621, 1981 WL
2153 (N.D. Ill. Oct. 28, 1981) to supports its theory, a case which
awarded damages for tortious interference with prospective economic
advantage on loosely analogous facts.

We will discuss instead our

Court of Appeals’ thorough decision affirming the district court in
part and reversing it in part.
F.2d 520 (7th Cir. 1986).

See Fishman v. Estate of Wirtz, 807

In 1972 Chicago Professional Basketball

Corporation (“Chicago Basketball”) agreed to sell the Chicago Bulls
to Illinois Basketball, Inc. (“IBI”) for $3.25 million, subject to
the NBA’s approval.

Id. at 526.

At the same time, Chicago

Basketball rejected a competing bid for the team from Chicago
Professional Sports Corporation (“CSPC”).

Id.

Arthur Wirtz, a

principal of Chicago Stadium Corporation (“CSC”), which owned
Chicago Stadium, was also a principal of CSPC.

Id. at 525.

CSPC

-25refused to lease Chicago Stadium to IBI, and lobbied the NBA’s
Board of Governors to reject the sale to IBI on that basis.
527-28.

CSPC succeeded: the Board of Governors rejected IBI’s bid

to acquire the Bulls and later approved a sale to CSPC.
529.

Id. at

Id. at

The district court held that CSPC’s actions violated the

Sherman Antitrust Act, which formed the basis for its ruling that
CSPC was liable for tortious interference with prospective economic
advantage.

Id. at 546; see also id. at 547 (defendants lost their

“competitor’s

privilege”

to

interfere

prohibited by the Sherman Act).

by

resorting

to

means

Our Court of Appeals, with Judge

Easterbrook dissenting, affirmed both rulings as to liability. Id.
at 562.7
TCC argues that the CP-11 machine is analogous to Chicago
Stadium, which our Court of Appeals concluded was an “essential
facility.”

“The so-called ‘essential facilities doctrine’ imposes

upon a firm controlling an essential facility — that is, a facility
that cannot reasonably be duplicated and to which it is necessary
if one wants to compete — the obligation to make the facility
available to competitors on nondiscriminatory terms.” Id. at 539.
There are several problems with TCC’s argument. First, the Fishman
Court, including the dissent, exhaustively discussed Sherman Act
precedent

7/

in

reviewing

the

district

court’s

rulings.

That

The portions of the district court’s order that our Court of Appeals
reversed are not directly relevant to this case.

-26discussion was integral to the Court’s ruling that the defendants
“competed unlawfully.”

Id. at 546-47.

TCC did not allege a

Sherman Act violation nor seek to prove one at trial, and only
superficially addressed the subject in closing argument.

Deciding

complex questions of antitrust law on such a scant record is a
recipe for error.

But even without the benefit of a more complete

record we conclude that Fishman is distinguishable.

Both the

majority and the dissent recognized that the essential facilities
doctrine

must

have

some

limits,

otherwise

plaintiffs

could

piggyback on their competitors’ efforts with no discernable benefit
to competition or consumers. Relying on testimony that a new arena
would have

cost

$19

million

to construct,

the

Fishman Court

concluded that “[t]he Chicago Stadium was not duplicable without an
expenditure that would have been unreasonable in light of the size
of the transaction such duplication would have facilitated.”
Fishman,

807

dissenting)

F.2d

at

540;

(“Antitrust

law

cf.

id.

does

at

not

574

(Easterbrook,

relieve

each

J.,

would-be

competitor of the need to build its own production facilities, if
the market will support more than one.”).

The $3 million TCC paid

to build a new machine seems like an impressive figure, but there
is no evidence in the record suggesting that TCC cannot recoup its
investment.

We assume the opposite is true: McClandon is plainly

a sophisticated business person.
TCC

also

argues

that,

as

parties

to

the

same

license

-27agreement, TCC and the defendants owed each other a duty of care
that would not otherwise pertain to competitors.8

“The Illinois

courts have stated that every contract implies good faith and fair
dealing between the parties to it.

However, under Illinois law,

the covenant of good faith and fair dealing has never been an
independent source of duties for parties to a contract . . . .
Instead, the covenant guides the construction of explicit terms in
an agreement.”

Beraha v. Baxter Health Care Corp., 956 F.2d 1436,

1443 (7th Cir. 1992) (citations omitted); see also id. at 1445
(“[T]he implied covenant of good faith and fair dealing does not
create ‘an enforceable legal duty to be nice or to behave decently
in a general way.”)(quoting Zick v. Verson Allsteel Press Co., 623
F.Supp.

927,

929

(N.D.

Ill.

1985)).

The

exclusive

license

agreement in Beraha did not explicitly require the licensee to
develop a product using the licensed invention, or “to exert any
specified level of effort” towards that end.

Id. at 1441.

The

Beraha court, construing Illinois law, concluded that the implied
covenant of good faith and fair dealing required the licensee “to
exercise the discretion afforded to it by the license agreement in
a

manner

parties.”

consistent

with

Id. at 1445.

the

reasonable

of

the

It then remanded the case for the fact-

finder to make that determination.
8/

expectation

Id. (“The jury should be

We will assume for sake of this discussion that it is appropriate to
judge Carlson’s actions against the standard imposed by the covenant of good
faith and fair dealing, even though it was far from clear in 2003 that TCC and
DuoTech Holdings were parties to the same agreement.

-28allowed to hear the evidence regarding what Baxter did to develop
the Beraha needle and then determine if Baxter reasonably exercised
its

discretion

under

the

circumstances

and

reasonable expectations of the parties.”).

in

light

of

the

There is no provision

in the August License Agreement dealing with the CP-11 machine, and
therefore no provision we can construe to require the defendants to
share it.
Defendants are entitled to judgment on Count IV of TCC’s
Amended Complaint.9
D.

Count V (Requesting a Declaratory Judgment that TCC Owns the
‘351, ‘388, and ‘312 Patents)
Before addressing the parties’ arguments we will briefly

discuss Count V’s unusual procedural history.

In Count I of its

original complaint TCC asked us to impose a constructive trust
requiring Johnson and/or the other defendants to transfer to TCC
“legal title” to the Subsequent Patents. Count II alleged that the
defendants were infringing those same patents.

We granted the

defendants’ motion to refer Counts I and II to the bankruptcy court
because

we

concluded

that

they

were

“related

to”

Compak’s

9/
TCC also named Ron Bowen as a defendant in Count IV.
Bowen last
appeared in this case in March 2006. At that time the bankruptcy court vacated
the order of default that it had entered against him. When TCC filed its Amended
Complaint four years later, it served Bowen’s former attorney, who had withdrawn
as his counsel in March 2004.
We have serious doubts about whether this was
valid service of process. Regardless, TCC did not prove Bowen’s liability or
any damages caused by his conduct. TCC’s suspicion that Bowen may have disclosed
information about TCC’s business to Carlson is insufficient. TCC’s theory of its
damages for tortious interference — claiming that it is entitled to an additional
4% royalty on reported sales because the defendants “gave themselves” an
exclusive license — is dubious even as applied to the DuoTech defendants. It is
nonsensical as applied to Bowen.

-29bankruptcy.

See The Compak Co., LLC v. Johnson, No. 03 C 7427,

2004 WL 2034083, *3 (N.D. Ill. Sept. 2, 2004).

We received the

bankruptcy court’s proposed findings of fact and conclusions of law
approximately four years later.

The Compak Co. v. Johnson, Case

No. 08 C 4665 (N.D. Ill. 2008) (Findings of Fact and Conclusions of
Law, filed Aug. 15, 2008, DKT #1).

With respect to Count I, the

bankruptcy court concluded that “[t]he imposition of a constructive
trust to transfer legal title to the plaintiff is needless because
Compak, had, and continues to have, legal title to the patents.”
Id. at Conclusions of Law (Count I) ¶ 3.

As TCC pointed out, this

was a puzzling conclusion: if Compak (the bankruptcy debtor) held
the patents, then a constructive trust was not “needless” from
TCC’s perspective.

We remanded the case to the bankruptcy court

“to clarify which party it believes currently owns the patents and
why.”

(Minute Entry, dated November 25, 2008, DKT #84.)

On

remand, the bankruptcy court revised its conclusion to state that
a

constructive

defendants

ever

trust

was

had

legal

bankruptcies were filed.”

unnecessary
title

to

because
the

“none

patents

of

the

before

the

The Compak Co., Case No. 08 C 4665

(Supplement to Order, filed May 6, 2009, DKT #7, at 2).

In lieu of

answering the question that we posed in our order, which the
bankruptcy court deemed inessential to its ruling, the court
referred us to its order approving the bankruptcy trustees’ sale to
DuoTech.

(Id.)

As we noted in our June 1, 2009 opinion, the

-30bankruptcy court’s order did not resolve what property (if any) the
bankruptcy

trustees

still

owned.

The

Johnson,415 B.R. 334, 345 (N.D. Ill. 2009).

Compak

Co.,

LLC

v.

At the same time, we

expressed our expectation that the bankruptcy court would resolve
the matter in the still pending interpleader action.

Id.

When

that did not happen, TCC amended it complaint in this case to
request

a

Patents.

declaratory

judgment

that

it

owned

the

Subsequent

The defendants did not move to refer Count V to the

bankruptcy court, did not object when TCC asked us to confirm that
the referral to the bankruptcy court had been withdrawn, and
litigated the ownership question at trial. We conclude, then, that
Count V is properly before us.
We previously concluded that the Subsequent Patents were
related to Johnson’s original invention within the meaning of the
1992 Bill of Sale.

Id. at 344.

Those patents were assigned by

operation of law to Compak as the USPTO issued them, meaning that:
(1) Johnson’s purported assignment to PatPak was a nullity; and (2)
the Subsequent Patents were part of Compak’s estate when it filed
for bankruptcy.

Id. at 344-45.

Of course, at the time of the

bankruptcy sale — six years before our ruling — the bidders were
operating

under

the

Subsequent Patents.

assumption

that

Compak

did

not

own

the

That was Compak’s position at that time, as

reflected in its motion to sell its property and in Johnson’s
statements at the sale hearing. Only the ‘106 patent was expressly

-31identified as being for sale, but that does not mean that it was
the only patent sold.

The assets listed in the bankruptcy court’s

order approving the bid procedures included a catch-all category,
“[a]ny and all other identifiable assets.”

As Compak’s counsel

explained to the bidders at the sale hearing, “[a]ll of the assets
means all of the assets.”

(PX 114 at 15.)

The bankruptcy court’s

order approving the sale refers to “substantially all” of the
debtors’ assets, “excluding bankruptcy causes of action and related
claims and cash.”

(PX 59 at ¶ 6.)

Read in conjunction with the

court’s order approving bid procedures, we conclude that the word
“substantially”

does

not

exclude

anything

causes of action and related claims and cash.”

besides

“bankruptcy

Indeed, in another

paragraph of its order the bankruptcy court noted that BMJ “bid at
the auction for all the assets of the Debtors,” and that its bid
was the “highest and best bid with no other bidders offering to
purchase all the assets for any greater amount.”
(emphasis added).)

(PX 59 at ¶ 10

Consistent with the bankruptcy court’s orders,

Compak executed a bill of sale transferring its personal property
to BMJ in the broadest possible terms.

(PX 60.)

The separate

“Assignment of Patent Rights” that Johnson executed only refers to
the ‘106 patent, but again, that is consistent with what the
parties understood Compak owned at that time.

(PX 61.)

BMJ bought

more than that.
Finally, we are not persuaded by defendants’ argument that TCC

-32admitted that it did not own the patents by bidding in 2007 for
whatever rights the trustees “may” have had or “claimed” to have.
(DX 1.)

Before our ruling today, it was unclear who owned the

Subsequent Patents and the parties did well to hedge their bets.
But they did so at the risk that the trustees did not own what they
“claimed” to own.

See, e.g., Matter of Chicago, Rock Island and

Pacific R. Co., 865 F.2d 807, 811, 816 (7th Cir. 1988).

We

conclude that TCC is entitled to a declaratory judgment that it
owns the Subsequent Patents.
E.

Count VII (Fraudulent Conveyance)
TCC argues that the August License Agreement constituted a

fraudulent conveyance under 740 ILCS 160/5, which provides in
pertinent part,
160/5.
Transfer
or obligation
fraudulent
as
creditor--Claim arising before or after transfer

to

§ 5. (a) A transfer made or obligation incurred by a
debtor is fraudulent as to a creditor, whether the
creditor’s claim arose before or after the transfer was
made or the obligation was incurred, if the debtor made
the transfer or incurred the obligation:
[. . .]
(2) without receiving a reasonably equivalent value in
exchange for the transfer or obligation, and the debtor:
(A) was engaged or was about to engage in a business or
a transaction for which the remaining assets of the
debtor were unreasonably small in relation to the
business or transaction; or
(B) intended to incur, or believed or reasonably should
have believed that he would incur, debts beyond his
ability to pay as they became due.

-33740 ILCS 160/5. Compak’s trustee no longer has the exclusive right
to

pursue

fraudulent-conveyance

claims.

See

11

U.S.C.

§

546(a)(limiting the trustee’s right to bring a claim under 11
U.S.C. § 544 to the earlier of two years from the date of filing or
the termination of the bankruptcy case); Klingman v. Levinson, 158
B.R. 109, 113 (N.D. Ill. 1993) (“The trustee’s exclusive right to
maintain a fraudulent conveyance cause of action expires and
creditors may step in (or resume actions) when the trustee no
longer has a viable cause of action.”).10

Nevertheless, defendants

argue that the bankruptcy court’s sale order, which authorized the
sale

of

Compak’s

assets

“free

and

clear

of

liens,

claims,

encumbrances, and interests of any kind,” extinguished BMJ’s claim
against the defendants. This is not an obvious application of that
provision.

See, e.g., Environmental Barrier Co., LLC v. Slurry

Systems, Inc., No. 06 C 0212, 2006 WL 2853830, *11 (N.D. Ill. Sept.
29, 2006) (“[T]he purpose of the ‘free and clear of claims’
language in the Bankruptcy Court’s Order is to permit an assignee
to acquire an asset without being subject to pre-petition unsecured
claims associated with that asset.”).

Defendants have not cited

any

relevant

relevant

case

Bankruptcy Code.

law,

or

even

the

This argument is waived.

section

of

the

See United States v.

Useni, 516 F.3d 634, 658 (7th Cir. 2008) (“We have repeatedly

10/

Defendants have not objected to TCC’s standing to pursue a claim that
originally belonged to BMJ.

-34warned that perfunctory and undeveloped arguments, and arguments
that

are

unsupported

by

pertinent

authority,

are

waived.”)

(citation and internal quotation marks omitted).
1.

Whether the July License Agreement Was Binding

TCC uses the July License Agreement as a baseline to establish
what contract rights Compak gave up when it executed the August
License Agreement.

See In re Joy Recovery Technology Corp., 286

B.R. 54, 75 (N.D. Ill. Bankr. 2002) (The reasonably-equivalentvalue inquiry “focuses on what did the debtor give up and what did
it receive that could benefit creditors.”).

We previously held

that the July License Agreement was binding, noting that “the
document is complete on its face and expressly states that it
‘becomes a complete and binding Contract upon its acceptance as
signified by the signatures below.’”

Compak, 415 B.R. at 338.

Defendants have not persuaded us to change our mind.

First,

Carlson’s testimony that he believed the agreement was non-binding
is neither credible nor relevant.

See Hampton v. Ford Motor Co.,

561 F.3d 709, 714 (7th Cir. 2009) (“Illinois follows the objective
theory of intent, whereby the court looks first to the written
agreement and not to the parties’ subjective understandings.”).
Confining our inquiry to the contract itself, we do not read the
capitalized but undefined terms to indicate that the parties did
not intend to be bound, or else that the agreement is too vague to
enforce.

“Cost of Manufacturing” is not a difficult concept to

-35understand and apply.
License

(We note in this connection that the August

Agreement

does

not

define

“Person,”

“Control,

“Controlling,” or “Controlled,” and yet no one has suggested that
the

agreement

was

provisional

or

unenforceably

vague.)

The

parties’ failure to specify an “administration and transaction fee”
is a more substantive omission, but the agreement did indicate a
range

(capping

the

fee

at

manufactured product sold”).

“ten

percent

of

the

cost

of

the

If the August License Agreement had

not superceded the July License Agreement, we do not believe that
the lack of a specific administration/transaction fee would have
prevented enforcement of the parties’ express intent to be bound by
the July License Agreement.

Finally, we reject the defendants’

contention that the July Agreement was not binding because DuoTech
Holdings had not yet been formed.
frivolous.

Carlson

signed

the

This argument is borderline
July

License

Agreement

corporate, rather than an individual, capacity.

in

a

After Carlson

formed DuoTech Holdings on July 23, 2001, he sought to renegotiate
the July License Agreement to appease OxyFresh, eventually signing
the August License Agreement in his capacity as DuoTech Holdings’
president.
other

(PX 36; DX 22.)

vendors,

and

By shopping the license around to

renegotiating

ratified the contract.

its

terms,

DuoTech

Holdings

Tin Cup Pass Ltd. Partnership v. Daniels,

553 N.E.2d 82, 85 (Ill. App. 1990); see also 1A Fletcher Cyc. Corp.
§ 211 (“[U]nequivocal acts signifying that the contract has been

-36recognized as a corporate obligation will suffice” to bind the
corporation) (collecting authorities).
2.

Reasonably Equivalent Value

“The issue of whether a debtor received reasonable equivalent
value is a question of fact that must be evaluated as of the date
of the transaction.”

In re Joy Recovery, 286 B.R. at 75.

“Unlike

contract law, nominal consideration is inadequate to satisfy the
reasonable equivalent value standard.
of

fraudulent

conveyance

law

is

Moreover, since the purpose
to

protect

creditors,

the

determination of value is looked at from the vantage point of the
debtor’s creditors.”

Id. (citations omitted).

During its closing

argument TCC explicitly agreed with defendants’ position that the
July License Agreement’s “Minimum Royalty Fee Due Annually” was not
a minimum royalty guarantee.

It emphasized instead the difference

between the royalty rates in the two agreements.

Under the July

License Agreement, DuoTech Holdings agreed to pay a royalty of 35%
of

“Gross

Profit”

for

communion-cup

sales

decreasing percentages in subsequent years.11

in

2001,

and then

Under the August

License Agreement DuoTech Holdings agreed to pay 3% of its “Gross
Income” for non-exclusive products and 7% of “Gross Income” for
exclusive products.

“Gross Income” means “the result equal to the

receipts from Royalty Sales for an Applicable Product during a

11/

During closing arguments neither side addressed the difference between
the royalty rates for non-communion cup products, so we will not address it here.

-37quarter.”

(DX 22 at 3.)

Using sales records that the defendants

generated two or more years later, TCC created a demonstrative
exhibit purporting to show that Compak (and by extension, its
creditors) would have been substantially better off under the July
License Agreement.

DuoTech Holdings would not have had unfettered

discretion to determine its “Costs of Manufacturing” under the July
License Agreement, see Beraha, 956 F.2d at 1444-45, so its profits
after 2003 are at least arguably relevant.
But ultimately, TCC’s analysis does not establish that Compak
failed to receive reasonably equivalent value for executing the
August License Agreement.

Cf. In re Joy Recovery, 286 B.R. at 75

(“Courts will not look with hindsight at a transaction because such
an approach could transform fraudulent conveyance law into an
insurance policy for creditors.”).
the

July

License

Agreement’s

The most reliable evidence of

value

“as

of

the

date

of

the

transaction,” id., would be evidence of the parties’ performance
under that agreement.

But the July License Agreement was in place

less than two months before the parties executed the superceding
August agreement, and there is no evidence that the defendants made
any sales during that time period. In essence, the parties swapped
one executory contract for another.

Trying to compare the two,

neither of which required DuoTech Holdings to make any up-front

-38payments,

is

inherently

speculative.12

Cf.

In

re

Wellington

Apartment, LLC, 350 B.R. 213, 245 (Bankr. E.D. Va. 2006) (“debtor
received nothing of value for the transfer of its $1,615,000"); In
re McCook Metals, L.L.C., 319 B.R. 570, 589 (Bankr. N.D. Ill. 2005)
(finding no reasonably equivalent value in exchange of $11.1
million asset for a $7,826,959 note); In re Joy Recovery, 286 B.R.
at

(“However

the

transaction is

viewed,

Joy

did

not

receive

anything for the $1.8 million paid ultimately to Chang — no
treasury stock, and no loan commitment.”).

It is unclear how the

July License

provision

Agreement’s

machine-sharing

would

have

worked in practice. Assuming that there was excess capacity to run
the machine after filling Compak’s orders — something about which
there is no evidence — it is not clear to whom DuoTech Holdings
would have sold its own products.

There is scant evidence in the

record that anyone was interested in purchasing communion cups
other than Compak’s then-existing customers (and we presume that
Compak would not have shared those sales with DuoTech Holdings).
So, we have no evidence that DuoTech Holdings sold communion cups
under the July License Agreement, or even that such sales were
likely

to

occur.

And

as

the

defendants

point

out,

if

the

agreements were to be compared with the benefit of hindsight, then
we must account for the fact that the defendants did not make any
12/

This issue might be less problematic for TCC if there had been some
evidence, independent of the July License Agreement, that the August License
Agreement’s royalty rate (3% of “Gross Income”) was below the market rate for
products of this kind. But there was none.

-39sales in 2001 and 2002.

There is no difference between 30% and 3%

of $0, and defendants’ failure to pay the minimum royalty amount in
2002 would have extinguished the July License Agreement.

That

would not have made Compak’s creditors meaningfully better off.
We conclude that the defendants are entitled to judgment on
Count VII.
F.

Count VIII (Breach of Contract)
Before trial the defendants moved to exclude "undisclosed

damages." See Fed. R. Civ. P. 26(a)(1)(A)(ii) (requiring litigants
to disclose their damages "computation"); 26(e)(1)(A) (requiring
litigants to update their Rule 26(a) disclosures); and 37(c)
(barring the use at trial of information not disclosed pursuant to
Rule 26(a) and (e) “unless the failure was substantially justified
or is harmless.”); see also Salgado by Salgado v. General Motors
Corp., 150 F.3d 735, 742 (7th Cir. 1998) ("[T]he sanction of
exclusion is automatic and mandatory unless the sanctioned party
can show that its violation of Rule 26(a) was either justified or
harmless.").

At closing argument TCC indicated for the first time

that it was seeking $33,164.08 in compensatory damages for breach
of

contract,

broken

down

into

three

categories:

(1)

unpaid

royalties based upon invoices that Communion, LLC assumed in the
Communion Source sale ($5,343.84); (2) unpaid royalties based upon
Communion, LLC’s purported sales of inventory it acquired from UMI
in the same transaction ($1,969.98); and (3) unpaid royalties based

-40upon Communion, LLC’s sales of communion cups that it purchased
from the defendants ($25,850.26).
accounts

for

the

bulk

of

The third category, which

TCC’s

claimed

damages,

is

a

straightforward computation based on the August License Agreement.
Carlson admitted during the trial that TCC is entitled to royalties
based on those sales, he only denies that DuoTech Holdings failed
to pay them.

Cf. Robinson v. Champaign Unit 4 School Dist., No.

10-3351, 2011 WL 817442, *5 (7th Cir. Mar. 9, 2011) (slip op.)
(indicating

that

a

detailed

damages

computation

may

not

be

necessary when the defendant is able to make the computation
itself).

The first two categories of damages are perhaps less

obvious, but still based upon the August License Agreement and
other documents in defendants’ possession.

We conclude that TCC’s

failure to update its Rule 26(a) disclosures to include this
information was harmless.
1.

Under

Unpaid Royalties
Communion, LLC
the

August

for

License

Royalty

Agreement

Sales

by

DuoTech

and/or

to

Holdings

is

required to pay TCC a royalty for all “Royalty Sales,” defined as
“all sales of Applicable Products by DUO-TECH or an Affiliate
thereof.”

(DX 22 at ¶¶ 1, 4.)

As defined in the August License

Agreement, “Affiliate” “means with respect to any Person (the
“Specified Person”), any Person other than the Specified Person
directly or indirectly Controlling, Controlled by or under direct
or indirect common Control with, the Specified Person.”

(Id. at ¶

-411.)

At least during the three years that Carlson was Communion,

LLC’s manager — 2006 to approximately the fall of 2008 — Communion,
LLC was DuoTech Holdings’ “Affiliate.”

Consequently, Communion,

LLC’s sales during this time period were “Royalty Sales” and
DuoTech Holdings should have paid royalties to TCC for those sales.
After initially denying that he knew what Communion, LLC did with
the communion cups that it purchased from DuoTech Packaging,
Carlson admitted that Communion, LLC resold the cups and further
claimed that DuoTech Holdings had paid royalties for those sales.
Carlson’s about-face tends to undermine his credibility on this
point, but we do not think this goes far enough to establish a
breach of contract.

TCC asks us to assume that for every sale to

Communion, LLC there was a corresponding resale, that Communion,
LLC charged the same prices as UMI (or else charged more), and that
— contrary to Carlson’s representation — the defendants did not pay
royalties for any of those sales.

This is simply too much

guesswork to support either liability or damages.13

TCC seemed to

suggest during closing arguments that the defendants had the burden
to show that they paid all the royalties that were due.
2.

Not so.

DuoTech Holdings’ Refusal to Open its Books and Records
for Inspection

13/
TCC's argument that there are unpaid royalties associated with the
"open invoices" that were part of the Communion Source sale stands on a different
footing, inasmuch as it is not strictly based on presumed sales by Communion,
LLC. But TCC has not demonstrated that royalties were not paid in connection
with those invoices.
TCC’s demonstrative exhibit is conclusory, and based in
part on an exhibit that was not introduced into evidence.

-42We are not persuaded that TCC has proven a breach of contract
based upon the defendants’ refusal to open its books and records
for inspection in response to two separate requests in 2005 and
2007.

Before we issued our opinion in 2009 granting defendants’

motion for partial summary judgment, it was unclear which party was
entitled to claim the licensor’s rights under the August License
Agreement, including the right to inspect DuoTech Holdings’ books
and records.

(DX 22 at § 4c.)

This was one of the subjects of

defendants’ pending interpleader action.

The parties to that

lawsuit (including TCC) were not required to accept defendants’
representation that they were accurately reporting royalties — they
could have requested discovery to verify the deposited amounts.
Defendants did not breach the August License Agreement by refusing
to permit TCC to examine their books and records at a time when the
parties were litigating whether TCC was a party to that agreement.
We conclude that the defendants are entitled to judgment on
Count VIII.
G.

Count X (Accounting)
Shortly before trial the defendants moved to dismiss TCC’s

accounting claim, and we took its motion under advisement. “An
equitable accounting is an adjustment of the accounts of the
parties and a rendering of the balance ascertained to be due.”
Drake Enterprises, Inc. v. Colloid Environmental Technologies Co.,
No. 08 C 6753, 2009 WL 1789355, *2 (N.D. Ill. June 24, 2009)

-43(citation and internal quotation marks omitted).

The plaintiff

must show “the absence of an adequate remedy at law and one of the
following: (1) a breach of fiduciary relationship between the
parties; (2) a need for discovery; (3) fraud; or (4) the existence
of mutual accounts which are of a complex nature.”
and internal quotation marks omitted).

Id.

(citation

“Although an accounting

cause of action was traditionally utilized as a means of obtaining
access to relevant records, the need for a party to pursue an
accounting cause of action in order to obtain such access has been
greatly minimized in light of the modern federal discovery rules.”
Id. (quoting Didion Milling, Inc. v. Agro Distribution, LLC, Case
No. 05-C-227, 2007 WL 702808, at *11 (E.D. Wis. March 2, 2007)
(internal quotation marks omitted).
We agree with defendants that TCC has an adequate remedy at
law: damages for breach of contract.

See id. at *3 (dismissing a

claim for an equitable accounting where the defendants also alleged
breach of contract); see also 3Com Corp. v. Electronics Recovery
Specialists,
2000)(same).14

Inc.,

104

F.Supp.2d

932,

941-42

(N.D.

Ill.

There is nothing that TCC might discover by way of

an accounting that it could not have discovered by filing timely
discovery requests.

See 3Com, 104 F.Supp.2d at 942 (noting that

the plaintiff was no worse off after the court dismissed its

14/
Both Drake and 3com recognize exceptions that would permit a plaintiff
to pursue both breach of contract and an equitable accounting, but those
exceptions do not apply here.

-44accounting

claim

because

“the

information

it

seeks

in

the

accounting claim will likely be revealed during the discovery phase
of this case.”).

TCC’s legal remedy did not become inadequate

simply because it elected not to conduct discovery after filing its
Amended Complaint.

Defendants’ motion to dismiss TCC’s accounting

claim is granted.
H.

Count XI, XII, XIII (Unfair Competition)
We discussed the elements of a claim for unfair competition in

our opinion denying the defendants’ motion for summary judgment:
“[T]o prove a claim pursuant to 15 U.S.C. § 1125(a), a
plaintiff must show (1) that its trademark may be
protected and (2) that the relevant group of buyers is
likely to confuse the alleged infringer’s products or
services with those of plaintiff.” H-D Michigan, Inc. V.
Top Quality Service, Inc., 496 F.3d 755, 759 (7th Cir.
2007) (citation and internal quotation marks omitted);
see also Sullivan v. CBS Corp., 385 F.3d 772, 775-76 (7th
Cir. 2004). TCC’s trademark registration is “prima facie
evidence of the validity of the registered mark and of
the registration of the mark, of [its] ownership of the
mark, and of [its] exclusive right to use the registered
mark in commerce on or in connection with the goods or
services specified in the registration.”
15 U.S.C. §
1115(a).
Furthermore, it creates a “rebuttable
presumption of use as of the filing date.” Zazu Designs
v. L’Oreal, S.A., 979 F.2d 499, 504 (7th Cir. 1992)
(citing Rolley, Inc. v. Younghusband, 204 F.2d 209, 211
(9th Cir. 1953)).
Compak Companies, LLC v. Johnson, No. 03 C 7427, 2011 WL 686263, *3
(N.D. Ill. Feb. 17, 2011).

TCC’s claim is not based on the

similarity of the marks, “Celebration Cup” and “Chasid Cup,” as
used by the parties in connection with their substantially similar
communion-cup products.

It is instead based on the alleged use of

-45“celebrationcup.com” to sell Chasid Cups.
never

owned

the

rights

“celebrationcup.com.”
sold

its

rights

to

to,

nor

But the defendants have

used,

the

domain

name

UMI registered the domain name and later
Communion,

LLC.

We

have

concluded

that

Communion, LLC and DuoTech Holdings were “Affiliates” as that term
is defined in the August License Agreement, at least during the
time that Carlson was Communion, LLC’s manager.
time

period

the

evidence

is

insufficient

to

But even for that
establish

that

Communion, LLC was Carlson’s alter ego.

If Communion, LLC used

“celebrationcup.com”

cups

to

sell

communion

supplied

by

the

defendants, and this created a likelihood of confusion, then
Communion, LLC is the infringer.

Mishawaka Rubber & Woolen Mfg.

Co. v. S.S. Kresge Co., 316 U.S. 203 (1942), a case that TCC cited
during closing arguments, does not support the relief that TCC
requests.

In that case the defendant sold goods bearing a symbol

that was confusingly similar to the plaintiff’s mark.

Id. at 204.

Here, there is no evidence that these defendants ever used the name
“Celebration Cup” to sell their product.

Cf. id. at 205 (“Whether

there was [] an infringement as to entitle the petitioner to the
remedies provided by the federal trade-mark laws is [] not open
here.”).

This is fatal to all three counts alleging unfair

competition, which are based on direct trademark infringement.
TCC raised a contributory infringement theory for the first
time at closing argument.

See Inwood Laboratories, Inc. v. Ives

-46Laboratories, Inc., 456 U.S. 844, 854 (1982) (“[I]f a manufacturer
or distributor . . . continues to supply its product to one whom it
knows or has reason to know is engaging in trademark infringement,
the manufacturer or distributor is contributorially responsible for
any harm done as a result of the deceit.”).15

“When an issue not

raised by the pleadings is tried by the parties’ express or implied
consent, it must be treated in all respects as if raised in the
pleadings.”

Fed. R. Civ. P. 15(b).

“The test for such consent is

whether the opposing party had a fair opportunity to defend and
whether he could have presented additional evidence had he known
sooner the substance of the amendment.”

Matter of Prescott, 805

F.2d 719, 725 (7th Cir. 1986) (citation and internal quotation
marks omitted).

During the trial defendants repeatedly emphasized

the fact that Communion, LLC (and not the defendants) purchased the
rights to celebrationcup.com, while admitting that Carlson was
affiliated with, and DuoTech Packaging sold communion cups to,
Communion,

LLC.

This

opened

the

door

to

TCC’s

contributory

infringement theory, as defendants must have anticipated.

And we

doubt that they would have defended the case any differently if TCC

15/

TCC cited a copyright case to support its argument, Broadcast Music,
Inc. v. Fox Amusement Co., Inc., 551 F.Supp. 104 (N.D. Ill. 1982). We assume
that TCC is relying the portion of the court’s opinion addressing the personal
liability of two officers for copyright infringement committed by the corporate
defendant. Id. at 108. This is vicarious rather than contributory infringement,
and Broadcast Music does not accurately reflect the standard for vicarious
trademark infringement.
See Hard Rock Cafe Licensing Corp. v. Concession
Services, Inc., 955 F.2d 1143, 1150 (7th Cir. 1992). Even under the standard
articulated in Broadcast Music, there is not enough evidence concerning Carlson’s
role at Communion, LLC to hold him vicariously liable for its actions.

-47had formally

amended

its

complaint

prior

to

trial

to

allege

contributory infringement. They were hoping to capitalize on TCC’s
failure to conduct discovery: putting on more evidence would have
only given TCC’s counsel more to work with.
defendants

implicitly

consented

to

try

We conclude that the
TCC’s

contributory

infringement claim, but that TCC failed to prove the claim.

The

only evidence concerning Communion, LLC’s use of the website dates
from 2009, more than a year after DuoTech Packaging’s last reported
sale to Communion, LLC.
Communion,

LLC

sold

There was no evidence at trial that
any

communion-cups

through

either

“communionsource.com” or “celebrationcup.com” in 2006, 2007, or
2008.

Mishawaka

trademark

owner

articulates
once

the

a

policy

plaintiff

has

strongly
proven

favoring

the

infringement,

Mishawaka, 316 U.S. at 206-207, but it does not shift the entire
burden of proving unfair competition to the defendant.

Even

assuming that the evidence supported a finding that Communion, LLC
committed unfair competition, TCC did not prove any damages or
sales

for

responsible.

which

the

defendants

could

be

contributorially

Cf. 15 U.S.C.A. § 1117 (“In assessing profits the

plaintiff shall be required to prove defendant’s sales only;
defendant must prove all elements of cost or deduction claimed.”).
We conclude that defendants are entitled to judgment on Counts
XI, XII, and XIII.

-48CONCLUSION
The defendants are entitled to judgment on Counts III, IV,
VII, VIII, XI, XII, and XIII of TCC’s Amended Complaint.

TCC is

entitled to a declaratory judgment on Count V of its Amended
Complaint.

Defendants’ motion to dismiss Count X of TCC’s Amended

Complaint (176) is granted.

Count X is dismissed with prejudice.

DATE:

April 28, 2011

ENTER:

___________________________________________
John F. Grady, United States District Judge