TimesLines, Inc v. Facebook, Inc.

Filing 176

MEMORANDUM by Facebook, Inc. in support of motion to strike 175 Plaintiff's Jury Demand (Attachments: # 1 Exhibit A)(Willsey, Peter)

Exhibit A

Page 1
Not Reported in F.Supp.2d, 2009 WL 2579232 (N.D.Ill.)
(Cite as: 2009 WL 2579232 (N.D.Ill.))

Only the Westlaw citation is currently available.
United States District Court,
N.D. Illinois,
Eastern Division.
SPSS INC., Plaintiff,
v.
Norman H. NIE and C. Hadlai Hull, Defendants.
Norman H. Nie, Counterplaintiff,
v.
SPSS Inc., Counterdefendant.
No. 08 C 66.
Aug. 19, 2009.
West KeySummaryJury 230

14(1.2)

230 Jury
230II Right to Trial by Jury
230k14 Particular Actions and Proceedings
230k14(1.2) k. Antitrust and Trade Regulation Cases. Most Cited Cases
The founder of a corporation was not entitled to a
jury trial in his trademark infringement claim against
the corporation as his demand for monetary damages
was based on a claim of unjust enrichment, an equitable claim that did not entitle him to a jury trial. The
founder had stepped down as the chairman of the
corporation's board following disagreements over
property rights to trademarks of a software program.
U.S.C.A. Const.Amend. 7.
Robert J. Kriss, Daniel Kelly Storino, Edward H.
Williams, Thomas Vangel Panoff, Mayer Brown LLP,
Chicago, IL, for Plaintiff.
Jeanine M. Donohue, Luther M. Orton, Snyder Miller
& Orton LLP, San Francisco, CA, Jennifer A. Waters,

Peter Vincent Baugher, William Butler Berndt,
Schopf & Weiss LLP, Chicago, IL, for Defendants.
MEMORANDUM OPINION AND ORDER
JOHN W. DARRAH, District Judge.
*1 Plaintiff, SPSS Inc., (“SPSS” or “the Company”), brought suit against Defendants, Norman H.
Nie and C. Hadlai Hull, seeking declaratory relief
regarding Plaintiff's right to use certain trademarks,
which, though registered to Defendants, had been used
by Plaintiff for over thirty years. Defendants filed a
counterclaim under the Lanham Act, alleging trademark infringement and seeking both injunctive and
monetary relief.FN1 Before the Court is Plaintiff's motion to strike Defendant Nie's jury demand on the
Counterclaim.
FN1. Although both Hull and Nie participated in the filing of the Counterclaim, the
Amended Counterclaim was filed only on
behalf of Nie. Thus, Nie is the only Counterplaintiff in the case.
BACKGROUND
The following background is taken from the allegations in the Complaint and the Counterclaim. This
section does not constitute findings of the Court.
SPSS is a leading worldwide provider of predictive analytics software and solutions. Defendants Nie
and Hull are the founders of SPSS and the developers
of the “Statistical Package for the Social Sciences”
software (the “SPSS software”), the software for
which SPSS is named. Nie and Hull began work on the
SPSS software while at Stanford in 1968 and continued work on it after moving to the University of
Chicago shortly thereafter. In 1975, Nie and Hull
formed SPSS, becoming its sole shareholders and
executive officers, with Nie becoming Chief Executive Officer.

© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.

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Not Reported in F.Supp.2d, 2009 WL 2579232 (N.D.Ill.)
(Cite as: 2009 WL 2579232 (N.D.Ill.))

In September 1976, Nie and Hull executed an
agreement (the “License Agreement”) with SPSS th at
granted SPSS the exclusive right to use the trademarks
“SPSS” and “Statistical Package for the Social
Sciences” (the “Trademarks”), royalty free, subject to
the terms and conditions of the License Agreement.
The License Agreement recognized that the Trademarks were and remained the sole property of Nie and
Hull. The SPSS Board of Directors approved the
agreement in September 1977. Days alter executing
the License Agreement in 1976, Nie and Hull applied
to register the Trademarks in their names as owners
with the United States Patent and Trademark Office
(“USPTO”). The USPTO granted registration of the
Trademarks to Nie and Hull in April 1978.
In 1993, SPSS became a publicly held company.
The previous year, 1992, Nie had stepped down from
his position as CEO. However, he stayed on as
Chairman of the Board of Directors and was later
hired as an outside consultant by the Company. In the
years following Nie's departure from the CEO position, Nie found himself increasingly at odds with the
Company's management and other board members on
the direction of the company. The Company terminated Nie's consultant agreement at the end of 2005.
In May 2007, the Company approached Nie and
asked him to execute a trademark assignment, transferring his ownership of the Trademarks to the Company. In October 2007, Nie informed the Company
that he would not agree to the proposed trademark
assignment as written but would consider other offers.
(Under the proposed assignment, Nie would have
received only ten dollars for assigning his rights.)
Around the same time, Nie, having been reminded of
the existence of the License Agreement (which he had
previously forgotten), began to assert what he considered to be his rights under that agreement. Specifically, Nie began requesting information regarding the
Company's activities, The Company initially provided
Ni e with the information he requested but later balked

at providing more detailed information concerning the
identity of sub-licensees of the Trademarks and technical information regarding soon-to-be-announced
software. Nie and the Company then briefly exchanged offers aimed at settling the dispute. However,
no agreed level of compensation for Nie's rights to the
Trademarks could be reached. On January 3, 2008,
Nie tendered his resignation as Chairman and member
of the SPSS Board of Directors. The same day, SPSS
filed the instant suit.
ANALYSIS
*2 The question before the Court is whether Nie is
entitled to a jury trial on his Counterclaim. The Seventh Amendment provides “[i]n suits at common
law, where the value in controversy shall exceed
twenty dollars, the right of trial by jury shall be preserved.” The Supreme Court has explained that “the
phrase ‘suits at common law’ refers to suits in which
legal rights are to be ascertained and determined, in
contradistinction to those where equitable rights alone
are recognized, and equitable remedies are administered.” Chauffeurs, Teamsters and Helpers, Local
No. 391 v. Terry, 494 U.S. 558, 564, 110 S.Ct. 1339,
108 L.Ed.2d 519 (1990) (quoting Parsons v. Bedford,
4 Cranch 433, 8 U.S. 433, 447, 2 L.Ed. 670 (1830)
(internal quotations and modifications omitted)).
Thus, Nie's right to a jury depends on whether his
claims against SPSS are legal or equitable.
Nie seeks the following relief in his Counterclaim: (1) an injunction, preventing Plaintiffs use of
the Trademarks; (2) the destruction of all labels,
packaging, advertising, etc, bearing the Trademarks;
(3) an accounting of Plaintiff's profits; (4) treble his
actual damages; and (5) costs and attorney's fees. Of
these remedies, the first two are clearly equitable. See
America's MoneyLine, Inc. v. Coleman, 360 F.3d 782,
786 (7th Cir.2004) (injunctive relief is an equitable
remedy). The last claim, the request for costs and
attorney's fees, does not entitle Nie to a jury trial.

Emmpresa Cubana Del Tabaco v.

© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.

Cul-

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Not Reported in F.Supp.2d, 2009 WL 2579232 (N.D.Ill.)
(Cite as: 2009 WL 2579232 (N.D.Ill.))
bro Corporation and General Cigar Co.,
Inc., 123 F.Supp. 2d 203, 211 ( S.D.N.Y. 2000)
(Emmpresa ) (“a claim for attorneys' fees and costs
under the Lanham Act does not entitle a party to a
trial by jury”). Thus, the only claims that might
sound in law rather than equity are Nie's demand for
(3) an accounting of Plaintiff's profits and (4) treble
his actual damages.
SPSS argues that Nie's demand for a monetary
award is purely equitable. The basis for the remedy
Nie seeks, SPPS argues, is unjust enrichment, an
equitable claim, rather than compensation, which is a
legal remedy. Indeed, Nie has repeatedly framed his
monetary claims in terms of unjust enrichment. Nie
claimed in his response to Plaintiff's motion for
summary judgment that he is “entitled to money
damages under a theory of unjust enrichment.” (Nie's
Resp. Mem., filed December 16, 2008, at 21.) Nie
argued that he can “obtain damages to prevent the
Company from being unjustly enriched for its continued unauthorized use of the SPSS trademarks and
name.” Id.
Furthermore, to the extent that Nie seeks monetary damages on a claim other than unjust enrichment,
he has not set out a viable theory in support thereof.
Nie was not in competition with SPSS, or even in the
same line of business. Thus, he cannot argue that he
suffered actual damage, in the form of lost profits
from diversion of sales. Neither can Nie claim damages on a breach of contract theory since the License
Agreement was royalty-free. In his response, Nie
argues that he is seeking actual damages, as measured
by a reasonable royalty rate, and an accounting of the
Company's profits. Nie asserts that both of these are
legal claims. However, Nie still does not advance a
theory as to how he suffered actual damages. Rather,
Nie's entire demand for monetary relief boils down to
the theory that the Company was profiting unjustly
from its unauthorized use of trademarks owned by
Nie.

*3 Other courts facing similar facts have concluded that a party claiming unjust enrichment in a
trademark infringement case is not entitled to a jury
trial. See e.g. Emmpresa., 123 F.Supp. 2d 203 (
S.D.N.Y. 2000) (plaintiff; a Cuban cigar company,
which was unable to directly compete with defendant
in the United States due to the embargo, was not entitled to a jury trial on its trademark infringement
claim seeking disgorgement of profits on a theory of
unjust enrichment because the claim was equitable);
American Cyanamid Co. v. Sterling Drug, Inc., 649
F.Supp. 784 (D.N.J.1986) (plaintiff seeking to recover
defendant's unjust profits was not entitled to a jury
trial because the claim was equitable); Gibson Guitar
Corp. v. Paul Reed Smith, LP, 325 F.Supp.2d 841
(M.D.Tenn.2004) (same); Ringling Bros.-Barnum &
Bailey Combined Shows, Inc. v. Utah Division of
Travel Development, 955 F.Supp. 598, 605
(E.D.Va.1997) (trademark-infringement plaintiff was
not entitled to a jury trial where it had no evidence of
actual damages).
In response, Nie argues that the simple fact that he
seeks a money judgment is dispositive of the jury
issue. As demonstrated by the above-cited cases, that
is not so. Nie goes on to argue that he is entitled to
actual damages as measured by a reasonable royalty
rate. Nie cites several cases, supporting the position
that a reasonable royalty rate is a proper measure of
damages. Nie quotes the Seventh Circuits statement
that “the district court ought to begin with the one
measure of actual damages that, if ascertained with
reasonable certainty, could be said to reflect the actual
loss of [plaintiff]-the cost of a reasonable royalty.”
Sands, Taylor & Wood Co. v. Quaker Oats Co., 34
F.3d 1340, 1350 (7th Cir.1994). However, this argument presupposes that Nie suffered actual damages
which need to be measured. As noted above, Nie has
not demonstrated how he was damaged by the Company's use of the Trademark.

© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.

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Not Reported in F.Supp.2d, 2009 WL 2579232 (N.D.Ill.)
(Cite as: 2009 WL 2579232 (N.D.Ill.))
Nie also asserts that another remedy he seeks, an
accounting of the Company's profits, is a legal claim,
properly decided before a jury. Nie argues that an
accounting of profits is a legal claim because it acts as
a surrogate for damages. However, as discussed
above, Nie has not developed a theory as to how he
suffered actual damages. Rather, to the extent he is
entitled to a monetary judgment, it is due to the
Company's alleged unjust enrichment, Nie cannot
grant himself the right to a jury trial simply by labeling his claim an accounting of profits. See Dairy
Queen, Inc. v. Wood, 369 U.S. 469, 478, 82 S.Ct. 894,
8 L.Ed.2d 44 (1962) (“the constitutional right to trial
by jury cannot be made to depend upon the choice of
words used in the pleadings”).
CONCLUSION
For the foregoing reasons, Plaintiff's motion to
strike Defendant's jury demand is granted.
N.D.Ill.,2009.
SPSS, Inc. v. Nie
Not Reported in F.Supp.2d, 2009 WL 2579232
(N.D.Ill.)
END OF DOCUMENT

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