Monday, April 07, 2008

Seventh Circuit Vacates Google's Judgment Against Stoller Companies

The U.S. Court of Appeals for the Seventh Circuit has vacated the March 15, 2007 judgment entered by the Chicago federal district court in Google's RICO lawsuit against Leo Stoller's companies, Central Mfg. Inc. and Stealth Industries, Inc. The appellate court ruled (here) that the lower court had erred in denying Leo Stoller's motion to intervene (TTABlogged here), and it returned the case to the district court for reconsideration of Stoller's motion.

Leo Stoller

The appellate court began by noting that "Leo Stoller is a familiar litigant, to say the least."

"As we have previously remarked, litigation is central to his business strategy: he claims a superior right to countless trademarks and then seeks to thwart genuine users from registering their marks or threatens litigation if he is not paid a 'licensing fee.'"

When Stoller went after Google by claiming prior rights in the GOOGLE mark, Google fought back by bringing a RICO action against the two companies, seeking to stop the harassment. (TTABlogged here). Despite referring to Leo Stoller throughout its complaint, however, Google chose not to include Stoller as a named defendant. Stoller moved to intervene, contending that "as the former sole shareholder of the 'corporate' defendants and the person Google alleged was responsible for their unlawful conduct, he had a substantial interest in the lawsuit."

The appellate court observed that Google "really wanted to stop Stoller" and that Stoller seemed to be the "real defendant" in the case. Moreover, it was not entirely clear whether Google's claim fell within or without Stoller's Chapter 7 bankruptcy estate.

The 7th Circuit therefore vacated the district court judgment and remanded the case to the district court for reconsideration of Stoller's motion to intervene:

"We will leave for the district court to resolve in the first instance whether 'Central Mfg. Inc.' and 'Stealth Industries, Inc.' are entities that are subject to suit, whether and under what circumstances Google’s suit in its present form can proceed without Stoller if they are not, and whether any of the unlawful conduct Google alleges gave rise to a claim that even involves the Chapter 7 estate."

But it was not all milk and honey for Mr. Stoller. The appellate court reminded him of an unpaid fine:

"We remind Stoller, however, that he remains subject to the order we entered pursuant to Support Systems Int'l, Inc. v. Mack, 45 F.3d 185, 186 (7th Cir. 1995), directing that all federal courts in this circuit return unfiled any papers he submits directly or indirectly unless and until he pays a $10,000 fine we imposed against him in August 2007. See Google, Inc. v. Central Manufacturing, Inc., Nos. 07‐1569, 07‐1612 & 07‐1651 (7th Cir. Aug. 23, 2007). At this point Stoller has a motion to intervene, but if on remand this litigation continues and the district court allows Stoller to intervene, he will have to pay the outstanding sanction or, as a practical matter, face certain default."

TTABlog comment: So the Leo Stoller saga continues. As reported here, one of his entities recently filed an trademark application to register the mark STEALTH for a boatload of goods. Now Leo is back in the Chicago federal court. Someday, Mel Brooks will make a movie of this, starring Paul Giamatti as Leo Stoller.

Text Copyright John L. Welch 2008.


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