Judge dismisses Zebra companies from intellectual property lawsuit for failure to state claim

By Scott Holland | Jun 7, 2019

ST. LOUIS – A federal judge has agreed to dismiss an intellectual property lawsuit.

In an opinion issued May 30, Judge Henry Edward Autrey of the U.S. District Court for the Eastern District of Missouri granted defendant Zebra Technologies Corp., Zebra Technologies International and ZIH Corp.'s motion to dismiss the suit on the grounds of failure to state a claim and dismissed the suit.

In the late 1990s, the ruling states Jim Riley of Riley, Barnard & O’Connell Business Products sought help in developing self-laminating patient identification wristbands from plaintiff Ward Kraft, a leading commercial printer.

In March 1999, Standard Register Co. threatened to sue RBO in relation to its wristbands. RBO went to court seeking a declaration it didn’t infringe the patent and that a Standard Register patent was invalid and unenforceable. Standard Register filed patent infringement counterclaims against RBO and Ward Kraft.

As the three companies agreed to end litigation in August 2000, other parties like Rile, Laser Band and the Avery Dennison Corp. signed deals governing product rights going forward, including Laser Band and Ward Kraft entering into a license agreement on Aug. 11, 2000, under which Ward Kraft paid royalties to Laser Band for the right to market certain wristbands.

In 2012, Laser Band was sold to the Zebra defendants. On July 9, 2018, the Zebra defendants and Laser Band sued Ward Kraft and primary distributor Typenex Medical in federal court in Chicago, alleging violation of Laser Band’s intellectual property rights. Ward Kraft maintained all the products in dispute were covered under the licensing agreement from 2000, under which it paid millions of dollars in royalties to Laser Band, and that as a Laser Band corporate successor, Zebra isn’t allowed to sue.

The ruling states Ward Kraft alleged the Zebra defendants were obligated to honor Laser Band’s covenant not to sue, and further that any action to enforce the licensing agreement was supposed to be the exclusive province of federal courts in the Eastern District of Missouri.

Autrey said the Zebra entities moved for dismissal because it said Ward Kraft didn’t offer sufficient details that Zebra is legally a Laser Band successor and obligated to honor the terms of the 2000 agreement.

According to Autrey, Ward Kraft’s complaint was “completely conclusory” in alleging the 2012 acquisition forced Zebra to undertake all of Laser Band’s existing obligations, or that all the corporate entities — Zebra Technologies Corp., Zebra Technologies International LLC and/or ZIH Corp — are affiliated.

Ward Kraft “then alleges that the products named in the Northern District of Illinois lawsuit fall within the definition of a Combo Form as defined in the agreement between Laser Band and (Ward Kraft), and that all 12 counts asserted by Laser Band and Zebra in the Northern District of Illinois lawsuit are based upon an intellectual property (or other right, and therefore all of the counts asserted by Laser Band and Zebra fall within the covenant not to sue that Laser Band granted to (Ward Kraft) in the Agreement,” Autrey wrote.

However, Autrey said, Ward Kraft gave “no facts to support the conclusions” of Zebra’s obligations, meaning its allegations don’t raise a plausible complaint.

Autrey dismissed the complaint against the Zebra entities, giving Ward Kraft 14 days to file an amended complaint to correct its pleadings.

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