Eli Manning (Craig Lassig/Newscom)
A federal judge seemed inclined on Friday to keep a memorabilia dealer’s lawsuit against the New York Giants in federal court based on a subset of claims alleging that the franchise stole marketing ideas from him.
Plaintiff Eric Inselberg—whose lawsuit is mostly concerned with alleged passing off of bogus memorabilia by the Giants that landed him in criminal trouble—also is contending that the team misappropriated a wireless marketing concept he invented.
The team and other defendants argue those claims trigger federal jurisdiction as a matter of patent law, but Inselberg insists those issues are peripheral, instead characterizing the counts as common-law matters of unjust enrichment, quantum meruit, unfair competition and idea misappropriation.
In a two-hour hearing in Newark, U.S. Magistrate Judge Mark Falk heard arguments from both sides and didn’t immediately rule, but spent much of that time challenging Brian Brook of Clinton Brook & Peed in New York, who argued for Inselberg.
“To say this has nothing to do with patents just ignores the pleading,” Falk said in court. “The complaint refers to patents over and over again,” he added, reading passages from the document aloud.
In a January complaint originally filed in Bergen County Superior Court, Inselberg, a former team business associate, claimed he regularly bought official jerseys and other items from team equipment managers Joseph Skiba, Edward Skiba and Ed Wagner Jr., and resold the items through his sports memorabilia business. Some items, worn in games, commanded a premium price.
He claims the managers—at the direction of players, chiefly quarterback Eli Manning—doctored some items to appear game-worn when they weren’t, and later lied about it to federal agents conducting a nationwide investigation into fraudulent game-worn gear.
The ruse eventually led to federal mail fraud charges against Inselberg, which were dropped but yielded millions in lost business, legal fees and other damages, he alleges.
The patent-related accusations stem from an in-stadium wireless fan-participation program called “Tapt-In” that Inselberg allegedly invented and pitched to team officials in a 2010 marketing presentation.
Inselberg obtained 25 patents in connection with the program but allowed them to lapse when his team contacts stopped communicating. He claims the team nonetheless stole his idea and implemented many of the technologies at MetLife Stadium.
The patents currently are held by a limited liability company of which Inselberg is majority owner, Brook said in court.
None of the complaint’s 16 counts are for patent infringement, but the Giants in late February removed the case to federal court, claiming the Tapt-In issues are governed by the Patent Act.
McCarter & English partner William O’Shaughnessy, counsel to the team and its principals, said Inselberg’s “right to relief necessarily depends on resolution of a substantial question of federal patent law.”
The next month, Inselberg moved for remand, claiming a lack of Patent Act jurisdiction since he no longer holds the Tapt-In patents—a necessarily element of that statutory claim.
“It is inconceivable that the Removing Defendants, being represented by sophisticated intellectual property counsel, were unaware of this rudimentary principle,” wrote Brook and co-counsel Michael Kasanoff, a Red Bank solo.
Idea misappropriation is based on tort principles and “does not arise under the patent laws even when the misappropriated idea itself has been patented,” they added.
U.S. District Judge William Martini, who’s presiding over the case, referred the jurisdiction issue to Falk, who on Friday seemed largely unreceptive to the case for remand.
Inselberg’s lawyers didn’t go out of their way to skirt the existence of patents, and “if anything [the complaint] over-includes” references to patents, Brook argued.
Inselberg isn’t attempting to enforce a patent and in fact doesn’t even hold the patents any longer, Brook said.
He argued that the protection of ideas is not completely preempted by patent law. The elements of the claims turn on misappropriation of an idea that should’ve remained confidential, and use of the idea without giving Inselberg credit—not whether the idea was patented, he added.
But that interpretation “would completely eviscerate the value of a patent” because other parties, not just the patentholder, could claim ownership of the intellectual property, Falk said.
“Putting aside any of the case law or anything, that just doesn’t fly,” he added.
Falk also said there’s no case authority for the notion that these kinds of claims don’t involve significant federal law issues.
“You haven’t cited one case…that is anywhere near factually analogous to this case,” the judge said, adding that he and his law clerk conducted “substantial research” and came up empty.
O’Shaughnessy faced far fewer challenges from the judge.
“They keep saying they’re not suing for patent infringement, but they are,” O’Shaughnessy said.
“While the patents are still in force, you have one and only one remedy”—a patent infringement claim, he added. “You don’t have to connect the dots here.”
Under Brook’s interpretation, a patentholder could avoid complex federal litigation by assigning the patent to someone else and lodging state law claims in state court, O’Shaughnessy argued.
Brook acknowledged, as he has all along, that Inselberg won’t be able to prosecute patent claims because he no longer holds the patents.
Falk assured Brook he would remand the case if the patent-related counts were voluntarily dismissed.
After the hearing, Brook said it’s not a question of favoring one forum over another—a federal appellate court might review the case years from now and determine that there was no federal jurisdiction in the first place. “Then everything gets undone.”
He declined to say whether he and Kasanoff will withdraw the claims at issue if Falk denies the remand motion.
O’Shaughnessy declined comment.
Attorneys for the other defendants appeared but didn’t argue. Among them were Israel Dahan of Cadwalader, Wickersham & Taft in New York, for Manning; Gerald Krovatin of Krovatin Klingeman in Newark, for the Skibas; and Kevin O’Connor of Lum, Drasco & Positan in Roseland, for Wagner.
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