It is when the officer acts willfully and knowingly--that is, when he personally

Participates in the manufacture or sale of the infringing article (acts other than as

an officer), or when he uses the corporation as an instrument to carry out his own

willful and deliberate infringements, or when he knowingly uses an irresponsible

corporation with the purpose of avoiding personal liability--that officers are held

jointly with the company. The foregoing are by no means cited as the only

instances when the officers may be held liable, but they are sufficient for the

present case.

Dangler, 11 F.2d at 947.

Dangler is still the law of the Seventh Circuit and has been applied to trademark and
patent cases. See, e.g., Panther Pumps & Equip. Co., Inc. v. Hydrocraft, Inc., 468 F.2d 225 (7th
Cir.1972); Drink Group, Inc. v. Gulfstream Communications, Inc., 7 F.Supp.2d 1009
(N.D.111.1998); Cooper Indus. Inc. v. Juno Lighting Inc., 1 U.S.P.Q.2d 1313 (N.D_II1.1986).

In addition to the factors in Dangler, a plaintiff can meet the "special showing"
requirement by pleading that the defendant was “the founder, president, and majority shareholder
of [the defendant corporation] and the 'moving force! behind [the defendant corporation's] alleged
infringing activities" and had " ‘willfully and deliberately induced, aided and abetted the past and
continuing infringement.' " Cooper Indus., 1 U.S.P.Q.2d at 1314. The "special showing" is also
made in situations where the defendant "paid for nearly all the outstanding stock, ... [and] lent
[the defendant corporation] substantial sums when it was in need of money." Adventures in Good
Eating v. Best Places to Eat, 131 F.2d 809, 813 (7th Cir.1942).

Courts have held that plaintiffs have failed to meet the "special showing" requirement
when the individual defendant has done nothing beyond the scope of his duties as officer and the

corporation “was not organized to permit [the individual defendant] to profit from infringement

or hide his personal liability under a corporate shell" so that the alleged infringement was not


client privilege due to disclosure to a third party.

It is so ordered.

Ly CA

7 Wayne R. Andersen
United States District Judge

Dated: _( Nemo (4, 2643



211029, at *6 (N.D.IIl. Aug. 21, 1992) (recognizing that a corporate officer is individually liable
for trademark infringement when he “performs the act or does the things that the patent or
trademark law protects against");Cooper Indus., Inc. v. Juno Lighting, Inc., 1 U.S.P.Q.2d 1313
(N.D.II.1986), aff'd, 1987 WL 38103 (Fed.Cir.1987) (complaint sufficiently alleged personal
liability where it alleged that the individual defendant was the founder, president, and majority
shareholder of the company and the moving force behind the infringing activities and that his
part in the infringing actions was willful).

For these reasons, Ms. Greiner’s motion to dismiss is denied.

Il. CCC’s Objections To Magistrate Judge Nolan’s Ruling

Defendant/Counter-plaintiff CCC has filed limited objections to Magistrate Judge
Nolan’s April 24, 2003 ruling. Magistrate Judge Nolan’s order is reviewed by this Court under
the “clearly erroneous” or “contrary to law” standard. Fed.R.Civ.P. 72(a); 28 U.S.C. §
636(b)(1)(A). The Seventh Circuit has explained the standard as follows:

The district court’s view of any discovery-related decisions made by the

magistrate judge is governed by Rule 72(a) of the Federal Rules of Civil

Procedure, which provides: ‘The district court to whom the case is assigned shall

consider such objections and shall modify or set aside any portion of the

magistrate judge’s order found to be clearly erroneous of contrary to law.’
Fed.R.Civ.P. 72(a); see also 28 U.S.C. § 636(b)(1). The clear error standard means that the
district court can overturn the magistrate judge’s ruling only if the district court is left with the
definite and firm conviction that a mistake has been made.

In its objections, CCC first seeks a vacation of Magistrate Judge Nolan’s findings that the

sales of activated carbon cloth by CCC qualify as prior art under the Patent Act and that these

sales, along with the inventor’s prior knowledge of a product known as the 3M Silver Protector



willful. Powder Power Tool, 230 F.2d at 414.

Contrary to Greiner’s assertions, we find that CCC has alleged the "special showing"
required to pursue an infringement claim against Greiner based on the allegedly infringing acts of
FYEO. The Counterclaim alleges that Greiner is the co-founder and President of FYEO who
“may be doing business with respect to infringing products . . . either directly or through the
control of FYEO.” It is further alleged that Ms. Greiner personally imported, manufactured, and
offered the allegedly infringing product for sale. Moreover, it is claimed that Ms. Greiner
personally appeared on the QVC promoting the allegedly infringing product and the QVC
website advertises the product as the “Silver Safekeeper by Lori Greiner.“

These allegations could support the inference that Greiner "personally participates in the
manufacture or sale of the infringing article (acts other than as an officer), ... uses the corporation
as an instrument to carry out his own willful and deliberate infringements, or ... knowingly uses
an irresponsible corporation with the purpose of avoiding personal liability." See Dangler, 11
F.2d at 947.

Thus, at this juncture, assuming all well-pleaded facts to be true and drawing all
inferences in favor of CCC, we find that the allegations in the Counterclaim are sufficient to state
a claim for personal liability against Ms. Greiner for the alleged infringement. See Peaceable
Planet, Inc. v. Ty, Inc., 185 F. Supp.2d 893 (N.D. Ill. 2002) (corporate officer can be personally
liable when he personally participates in the manufacture or sale of the allegedly infringing
article); Sethness-Greenleaf, Inc. v. Green River Corp., 1994 WL 67830, at *7 (N.D.Ill. Feb. 11,
1994) (noting that a corporate officer who personally participates in the infringing activity is

personally liable for the infringement); Sparks Tune-Up Ctrs., Inc. v. Panchevre, 1992 WL



nondispositive order for clear error, a district court may only properly consider the evidence that
was before the magistrate judge at the time of the order. See SmithKline Beecham Corp. v.
Apotex Corp., 2000 U.S. Dist. LEXIS 13607 at *7 (N.D. Ill., Sept. 12, 2000). “If we were to
permit the introduction of new evidence at this stage, we would essentially be conducting an
impermissible de novo review of the order.” Jd. In this case, since there is no evidence that this
new evidence was ever submitted to Magistrate Judge Nolan, it is not properly before us on the
appeal of Magistrate Judge Nolan’s order. However, because this new evidence could be
relevant to deciding this important issue, we remand this case to Magistrate Judge Nolan for
reconsideration of this issue in light of Mr. Schneider’s deposition testimony.

For these reasons, we deny CCC’s objection to Magistrate Judge Nolan’s April 24, 2003
order on the issue of “prior art” and “materiality.” We remand this case to Magistrate Judge
Nolan for reconsideration of the issue of the attorney client privilege waiver due to disclosure of
documents to a third party, in light of Mr. Schneider’s deposition testimony.

CONCLUSION

For the reasons stated above, Counterclaim Defendant Lori Greiner’s Motion to Dismiss
the Counterclaim (#29) is denied. Defendant/Counterclaim plaintiff Calgon Carbon
Corporation’s limited objection to Magistrate Judge Nolan’s order regarding plaintiff's motion to
compel documents (#90) is denied as moot on the issue of prior art and materiality, and the case

is remanded to Magistrate Judge Nolan for reconsideration of the issue of waiver of the attorney-


Minute Of gr FoFm (06/97)
SI

United States District Court, Northern District of Illinois

Name of Assigned Jud; Sitting Judge if Oth
or Magistrate Judge Wayne R. Andersen than Asigned Judge
CASE NUMBER 2C 7345 DATE 6/19/2003
CASE For Your Ease Only, Inc. vs. Calgon Carbon Corporation et al
TITLE

[ln the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented]

MOTION:

DOCKET ENTRY:

(1) a Filed motion of [ use listing in “Motion” box above.]

(2) oO Brief in support of motion due

(3) Oo Answer brief to motion due___. Reply to answer brief due

(4) QO Ruling/Hearingon set for___att

(5) Oo Status hearing[held/continued to] [set for/re-set for]on__setfor__—_at.

(6) Oo Pretrial conference[held/continued to} [set for/re-set for]on__——s set for_——s at.
am oa Trialfset for/re-set for] on_at

(8) Qo (Bench/Jury trial] [Hearing] held/continued to__—_at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) OLocal Rule 41.1 OFRCP41(a)(1) CO FRCP41(a\(2).

ao) {Other docket entry) Enter MEMORANDUM, OPINION AND ORDER: Lori Greiner’s
motion to dismiss the counterclaim [29-1] is denied. Calgon’s limited objection to Magistrate Judge
Nolan’s order regarding plaintiff’s motion to compel documents [90-1] is denied as moot. The case
is remanded to Magistrate Judge Nolan for reconsideration of the issue of waiver of the attorney-
client privilege due to disclosure to a third party.

(il) Wf [For further detail see order attached to the original minute order.]

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Strips, would have been material to the decision of the PTO to grant the “628 patent. CCC
allegedly withheld certain prior art documents from the Patent and Trademark Office (“PTO”)
during the prosecution of its patent-in-suit. Magistrate Judge Nolan found that certain documents
in CCC’s possession prior to filing the patent application were material to the patentability of the
claims. However, Magistrate Judge Nolan found that there was conflicting evidence of CCC’s
intent to conceal this art from the PTO and, therefore, the Magistrate Judge reserved a final
ruling on the issue of fraud.

Despite the Magistrate Judge’s clear indication that “its findings on these issues are not
final,” CCC objects to certain aspects of Magistrate Judge Nolan’s non-final findings on the issue
of fraud. During a May 15, 2003 appearance before this Court, we ruled that the Magistrate
Judge’s findings on “prior art” and “materiality” are non-final and non-binding for the purposes
of future litigation of these issues. Therefore, this objection to the Magistrate Judge’s ruling is
denied as moot.

Next, CCC seeks a reversal of the Magistrate Judge’s finding that the attorney-client and
work-product privileges have been waived by the disclosure of certain information to the other
co-defendants in the case, Product Concepts Company (“PCC”) and its President, Mark
Schneider prior to the filing of this lawsuit. CCC disclosed these documents to Mark Schneider,
the President of PCC. Magistrate Judge Nolan found that the documents which CCC disclosed
to Mr. Schneider prior to the initiation of this lawsuit were not privileged. CCC objects to this
ruling.

In its objections, CCC attempts to introduce new evidence in support of its position. This

new evidence is the deposition testimony of Mark Schneider. In reviewing a magistrate judge’s


then filed a counterclaim for infringement of the ‘628 patent against FYEO and Lori Greiner
individually.
DISCUSSION

I. Greiner’s Motion To Dismiss

When considering a motion to dismiss, all well-pleaded allegations in the complaint or
counterclaim are accepted as true. Turner/Ozane v. Hyman/Power, \11 F.3d 1312, 1319 (7" Cir.
1997). Any ambiguities in the complaint are construed in favor of the plaintiff. Kelley v.
Crosfield Catalysts, 135 F.3d 1202, 1205 (7" 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. Bd. of Educ., 143 F.3d 351, 359 (7" Cir. 1998).

Ms. Greiner has moved, pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss the counterclaim
against her, arguing that CCC has not set forth allegations sufficient to implicate her individually.
Specifically, Greiner argues that CCC has failed to plead the “special showing” required to
pursue an infringement claim against an individual based on the acts of a corporation. We
disagree.

The Seventh Circuit, in the seminal case of Dangler v. Imperial Machine Co., 11 F.2d
945, 947 (1926), discussed whether corporate officers could be held personally liable for
infringement by their corporations. The Seventh Circuit held that, absent some "special
showing", the officers of a corporation are not liable for the infringements of the corporation,
even though such infringements were committed under their direction, if they acted within the
scope of their duties. The "special showing" required to pursue an infringement claim against an

individual based on the acts of a corporation is the following:



privilege issue in light of new evidence.
BACKGROUND

This is an action relating to U.S. Patent No. 6,412,628 (“the ‘628 patent”) owned by
defendant/counter-plaintiff Calgon Carbon Corporation (“CCC”). The ‘628 patent claims an
“Apparatus For Preventing The Formation Of Metal Tarnish,” and employs a carbon-based
technology to prevent tarnish from forming on items such as jewelry. A variety of consumer
products are sold by CCC employing the technology claimed in the ‘628 patent, in particular
jewelry boxes marketed under the “PreZerve” trademark.

Plaintiff/counter-defendant, For Your Ease Only, Inc. (“FYEO”) markets and sells a
product known as the “Silver SafeKeeper,” an anti-tarnish jewelry box which is currently at issue
in this litigation. Both CCC and FYEO have marketed their products using the services of the
QVC Shopping Network (“QVC”), which is carried by numerous cable outlets throughout the
country, and which maintains a website on which the products it markets can be purchased.
FYEO’s co-founder and President, Lori Greiner, has personally appeared on QVC television to
promote the sale of FYEO’s Silver Safekeeper products, and FYEO’s Silver Safekeeper products
are all advertised on the QVC website as the “Silver Safekeeper by Lori Greiner.”

After becoming aware of the Silver Safekeeper product, CCC launched an investigation
and became concerned that the product would infringe the technology claimed in the ‘628 patent.

CCC informed both FYEO and QVC of its concerns. FYEO later filed suit in this Court seeking
a declaratory judgment of noninfringement and invalidity of the ‘628 patent, along with a claim

for tortious interference with contractual relations based on CCC’s discussions with QVC. CCC


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FOR YOUR EASE ONLY, INC.,
Plaintiff,
Vv.

CALGON CARBON CORPORATION, a
Delaware corporation, PRODUCT
CONCEPTS COMPANY, a corporation,
and MARK SCHEIDER, an individual,

Case No, 02 C 7345

Wayne R. Andersen

Defendants. District Judge

CALGON CARBON CORPORATION, a
Delaware corporation,

1 TRE
DOCKETES
Counterclaim Plaintiff, JUN 2 0 2003

Vv.
FOR YOUR EASE ONLY, INC., an Illinois

corporation, and LORI GREINER, an
individual,

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Counterclaim Defendants.

MEMORANDUM, OPINION AND ORDER

This case is before the Court on the motion of Counterclaim Defendant Lori Greiner to
dismiss the Counterclaims asserted against her. This case is also before the Court on
defendant/counter-plaintiff Calgon Carbon Corporation’s (“CCC”) limited objections to
Magistrate Judge Nolan’s ruling on plaintiffs motion to compel documents. For the following
reasons, we deny Greiner’s motion to dismiss. We deny in part CCC’s limited objections to
Magistrate Judge Nolan’s ruling on the issues of “prior art” and “materiality,” and remand the

case back to Magistrate Judge Nolan for reconsideration of the waiver of the attorney-client o

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