490 B.R. 487
Bankr. D. Del.2013Background
- bankruptcy court oversees adversary against Chicago Newspaper Liquidation Corp. Liquidating Trust for alleged Iqraa Front-Backpack intellectual property claims; the Liquidating Trust moved to dismiss as time-barred, insufficiently pled, and not served.
- Plan confirmed in 2011 with Liquidating Trust formed to resolve disputed claims and wind down estate; prepetition and administrative bar dates were set governing claims filing.
- Plaintiff alleges misappropriation of design for Iqraa Front-Backpack (circa 2002–2008) and that STMG vendors copied the design in 2008; plaintiff had not obtained a patent or copyright ownership.
- Plaintiff previously litigated related matters against the same defendant in state and federal courts, which were stayed or dismissed.
- The court denied in part and granted in part the motion to dismiss, ultimately dismissing the complaint with prejudice for lack of plausible claims while denying time-bar dismissal without prejudice pending further showing on bar-date notice.
- Court noted due process concerns regarding known vs. unknown creditor status and lack of evidence on proof of claim timing; due process requires resolution of notice before time-bar can be applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the claims are time-barred by bar dates | Khatib asserts lack of notice to bar dates. | Bar dates require notice; claims filed post-date are barred. | Not time-barred at this stage; due process requires factual showing of creditor status before bar. |
| Whether the copyright claim is plausibly pled | Iqraa design is a protectable copyright. | Design is utilitarian; not a copyrightable work; plaintiff lacks ownership. | Plaintiff's copyright claim dismissed as not plausible. |
| Whether the patent claim is plausibly pled | Patent infringement alleged by owner. | Plaintiff does not own a patent; lacks standing to sue. | Patent claim dismissed for lack of standing. |
| Whether other claims (unfair competition, trade secrets, unjust enrichment, common law) are plausibly pled or preempted | Claims support relief. | Preempted or contradicted by federal IP law; claims not plausible. | All remaining claims dismissed as plausibly pled but nonviable under law; preemption and lack of facts. |
Key Cases Cited
- In re Grossman’s Inc., 607 F.3d 114 (3d Cir. 2010) (due process and notice for claims bar dates; known vs unknown creditors)
- In re Smidth & Co., 413 B.R. 161 (Bankr.D.Del. 2009) (rule 3003(c)(3); bar dates and notice procedures)
- New Century I, 450 B.R. 504 (Bankr.D.Del. 2011) (bankruptcy bar-date notice and preemption context)
- New Century II, 465 B.R. 38 (Bankr.D.Del. 2012) (preemption and rights in IP claims in bankruptcy context)
- Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (U.S. 1989) (federal law preemption of state trade/secretes claims; general preemption principle)
- Pfizer Inc. v. Elan Pharm. Research Corp., 812 F. Supp. 1352 (D. Del. 1993) (standing to sue for patent infringement requires title owner during infringement)
- U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383 (3d Cir. 2002) (standard for misappropriation and IP preemption context)