Solaia Technology, LLC v. Specialty Publishing Co.

Case Date: 03/31/2005
Court: 1st District Appellate
Docket No: 1-03-3089 Rel

SECOND DIVISION
March 31, 2005

No. 1-03-3089

SOLAIA TECHNOLOGY, LLC, NIRO,
SCAVONE, HALLER & NIRO, LTD., and
RAYMOND P. NIRO,

                         Plaintiffs-Appellants,

                                        v.

SPECIALTY PUBLISHING COMPANY, PEGGY
SMEDLEY, and JOHN BUELL,

                         Defendants-Appellees,

(John Doe,

                         Defendant).

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Appeal from the
Circuit Court of
Cook County.










Honorable
Paddy H. McNamara,
Judge Presiding.


PRESIDING JUSTICE BURKE delivered the opinion of the court:

Plaintiffs Solaia Technology, LLC (Solaia), the law firm of Niro, Scavone, Haller, & Niro, Ltd., and Raymond Niro (collectively, "plaintiffs") appeal from an order of the circuit court dismissing with prejudice their claims of defamation per se and tortious interference with prospective economic advantage against defendants Specialty Publishing Company, Peggy Smedley, John Buell and John Doe. On appeal, plaintiffs contend that the trial court erred (1) in dismissing their claim for defamation pursuant to section 2-615 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2002)) and section 2-619(a)(9) of the Code (735 ILCS 5/2-619(a)(9)) West 2002)) because the statements made by defendants fell within the category of statements recognized as defamatory per se, defendants cannot claim the fair report privilege and, alternatively, plaintiffs' allegations of malice defeated any claim of the fair report privilege and (2) in dismissing their claim for tortious interference with prospective economic advantage pursuant to section 2-615 of the Code because plaintiffs adequately pleaded the elements of their claim. For the reasons set forth below, we affirm in part, reverse in part, and remand the cause for further proceedings.
 

STATEMENT OF FACTS

Solaia owns United States Patent No. 5,038,318 (the '318 patent) and its sole business involves the licensing and enforcement of its patent. The '318 patent "relates to a system for communicating real-time data between a programmable logic controller (PLC) and a program operating in a central controller." According to plaintiffs, the '318 patent's technology has "broad application in the manufacturing industry and is used by virtually every manufacturing company that uses a network of PLCs and a computer for control of a manufacturing operation."

On January 21, 2003, plaintiffs filed a complaint against Specialty Publishing Company, a corporation that publishes Start Magazine (Start); Smedley, the editorial director of Start; Buell, an editor of Start; and John Doe, an author of a letter published in Start. Plaintiffs alleged that certain statements published in various articles of Start defamed plaintiffs per se, constituted tortious interference with prospective economic advantage and, with respect to Raymond Niro, constituted a false light invasion of privacy. One article upon which the complaint was based was printed in Start's April 2002 issue. The article, entitled "Chaos in Manufacturing," first explained that the "OPC Foundation" was founded by a group of companies that, in 1996, developed and released a common standard interface for communication between process control devices used in manufacturing. The article also noted that this standard became very successful and was adopted by hundreds of products. The article further stated:

"Clearly, on the surface, the goal of this group was to enable the staunchest of competitors to play nice in the sandbox and develop an elusive open [i.e., nonproprietary] standard. In the end, an open standard would mean less expense for vendors and more solutions for users.

Thus, came the birth of what is known as the OPC Foundation today. It all seemed so perfect. ***. Sharing data and information that was once was proprietary. Innocent enough. And it was, in the beginning.

*** [L]ast year, *** a lawsuit was filed against world-class manufacturers, BMW, Jefferson Smurfit, Clorox, and Konica. ***

Solaia *** filed the lawsuit alleging that all three end user manufacturers are violating a patent that it purchased from Schneider Electric's Automation Business [(Schneider)]. Schneider sold the rights to its patent to Solaia ***. Now Solaia, aided by the legal firm of Niro, Scavone, Haller & Niro, Chicago, Illinois is on a legal campaign targeting manufacturers who might be infringing on its patent.

But that's not all. ***[T]hree end user companies filed counter lawsuits against their supplier, Rockwell Automation [(Rockwell)]. The suits claim that Rockwell will not indemnify them for use of the technology that Rockwell sold them.

***

[Nonpublishable material under Supreme Court Rule 23 removed here]. The manufacturing mob is baying for blood, and many companies blame Schneider. In fact, just about everyone Start spoke with either on or off the record within the manufacturing community is furious over Schneider's initial actions. Their anger is only being fanned by Solaia's lawsuits against leading manufacturers.

***

*** Schneider allegedly did not publicly reveal that it had a patent. And what seems to be in dispute today is why Schneider did not reveal it had a patent on technology that might be incorporated in the OPC standard?

***

Attorneys from Niro, Scavone, Haller & Niro reiterate that they are just following the law and that its clients should not be punished for taking advantage of the rules.

***

It seems that new patents are issued monthly, if not weekly, granting more and more patents. Some argue that the U.S. Patent And [sic] Trademark Office is not supposed to issue patents on ideas, however, many contend that is what it is doing with software patents. The end result is having a chilling effect on the software industry as more and more companies file lawsuits to defend these so-called patents.

***

Watergate spawned campaign-finance reform, perhaps the Solaia lawsuits will spawn patent reform."

[Nonpublishable material under Supreme Court Rule 23 removed here].

The January 2003 issue also contained an article entitled "Conspiracy of a Shakedown." The article stated:

"Rockwell, Milwaukee, Wis., turned the tables on Solaia Technology, Chicago, Ill., Schneider Automation, North Andover, Mass., and attorney Raymond Niro, Niro, Scavone, Haller & Niro, Chicago, Ill., filing a lawsuit charging the aforementioned with unfair business practices.

On Dec. 10, 2002, Rockwell filed a lawsuit *** claiming that Solaia, Schneider, and Niro's law firm have conspired in violation of antitrust laws to 'shakedown' Rockwell's customers with baseless patent infringement claims.

***

*** [Rockwell's suit alleges that], as part of the plan to injure Rockwell and disrupt competition, the 'conspirators' have made, 'baseless threats and allegations against manufacturing entities that those manufacturers are infringing the ['318 patent] by, among other things, using Rockwell-Allen-Bradley products; have overstated in a reckless and misleading fashion the scope, applicability and importance of the '318 patent to suppliers and users of industrial automation equipment in general; and have instituted repetitive, baseless, sham patent infringement litigation against those manufacturers.'

***

Rockwell filed its complaint under the federal antitrust laws: the Sherman Antitrust Act, the Clayton Act, and Lanham Act.

The Sherman Antitrust Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade. *** The Sherman Act also makes it a crime to monopolize or conspire with any other person or persons to monopolize any part of trade or commerce." (Emphasis added.)

On February 20, 2003, defendants Specialty Publishing Company, Smedley and Buell (hereinafter collectively "defendants") filed a combined motion to dismiss plaintiffs' complaint pursuant to section 2-619.1 of the Code (735 ILCS 5/2-619.1 (West 2002)), arguing that all claims in the complaint should be dismissed pursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West 2002)) for failure to state a cause of action and that "portion[s] of plaintiffs' complaint" should be dismissed pursuant to section 2-619(a)(9) of the Code (735 ILCS 5/2-619(a)(9) (West 2002)) because the title "Conspiracy of a Shakedown," even if actionable, was subject to the fair report privilege.

On May 21, the trial court dismissed plaintiffs' tortious interference claim and false light invasion of privacy claim pursuant to section 2-615 of the Code for failure to state a cause of action.(1) The trial court also dismissed plaintiffs' defamation per se count, finding that the alleged statements did not support claims for defamation per sebecause each of the statements were either susceptible of innocent construction, protected as expressions of opinion and/or "a fair abridgment of the litigation." Plaintiffs filed a motion for reconsideration and for leave to file an amended complaint. On May 29, the trial court denied plaintiffs' motion for reconsideration, but granted the motion for leave to file an amended complaint with respect to the claim of tortious interference with prospective economic advantage.

Plaintiffs subsequently filed an amended complaint containing claims for defamation, false light of invasion of privacy and tortious interference with prospective economic advantage. On July 10, defendants filed a motion to dismiss the amended complaint, arguing that the defamation and false light invasion of privacy claims had merely been repleaded without changes and that those counts should be dismissed with prejudice. Defendants also argued that the tortious interference claim should be dismissed for failure to state a cause of action. On October 2, the trial court dismissed plaintiffs' amended complaint with prejudice. [Nonpublishable material under Supreme Court Rule 23 removed here]. This appeal followed.
 

ANALYSIS

[Nonpublishable material under Supreme Court Rule 23 removed here].

With respect to the title "Conspiracy of a Shakedown," we first briefly note that, contrary to the statement in the special concurrence to this opinion that we have not addressed plaintiffs' argument that the title is "defamatory on its face," defendants do not argue in their brief before this court that this statement is not defamatory, and conceded, during oral argument before this court, that they are not so arguing on appeal. Instead, defendants maintain only that the statement, contrary to plaintiffs' argument, is protected by the fair report privilege because the title "Conspiracy of a Shakedown" is a fair and accurate summary of the complaint filed in the Rockwell lawsuit and that plaintiffs' allegations of malice do not defeat the privilege.

In the trial court, defendants moved to dismiss plaintiffs' defamation count with respect to the statement pursuant to section 2-619 of the Code,(2) arguing that they were protected by the fair report privilege. Dismissal pursuant to section 2-619(a)(9) is proper if "the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim." 735 ILCS 5/2-619(a)(9) (West 2000). Thus, the movant, while admitting to the legal sufficiency of the complaint, asserts that an affirmative defense or other matter avoids or defeats the claim. Tepper v. Copley Press, Inc., 308 Ill. App. 3d 713, 716, 721 N.E.2d 669 (1999). "Affirmative matter must be supported by affidavit, unless apparent on the face of the pleading attacked [citation], and, in ruling on the motion, the trial court must interpret all pleadings and supporting documents in the light most favorable to the nonmoving party." Borowiec v. Gateway 2000, Inc., 209 Ill. 2d 376, 383, 808 N.E.2d 957 (2004). This court reviews a trial court's decision to grant a section 2-619 motion to dismiss de novo. Borowiec, 209 Ill. 2d at 383; Tepper, 308 Ill. App. 3d at 717. The question of whether a publication is privileged under the fair report privilege is generally a question of law, particularly where there is no dispute about the content of the document on which the publication is based. 50 Am. Jur. 2d Libel & Slander