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April 2014

Gordon & Rees Chicago Team Wins Defamation Appeal

On March 14, Gordon & Rees Chicago partner Paul Gamboa and associate Brian Roth won an appeal for their clients, a prominent Washington, D.C., intellectual property law firm and three of its individual attorneys. In its 36-page opinion in Stoller v. Johnson, et al., the Illinois Court of Appeals for the First District affirmed the Circuit Court of Cook County’s June 2013 order granting summary judgment for the defendants.

Plaintiff Leo Stoller registered hundreds of trademarks with the U.S. Patent and Trademark Office from the mid-1990s through 2005, and he initiated more than 50 lawsuits during that time in the U.S. District Court for the Northern District of Illinois against companies that allegedly infringed upon his marks. In several of the cases, Stoller was the subject of scathing orders, and he eventually was deemed a vexatious litigant in both the Northern District of Illinois and the Court of Appeals for the Seventh Circuit. In one such suit, Central Manufacturing Co. v. Pure Fishing, Inc., the court dismissed Stoller’s case with prejudice and entered a default judgment against him in his capacity as a counter-defendant as a sanction for his improper conduct in the litigation. Pure Fishing was represented by Lance Johnson of the law firm of Roylance, Abrams, Berdo & Goodman, LLP.

Following the victory by Pure Fishing, Johnson authored an article about Stoller, published for the Intellectual Property Law Section of the State Bar of California, which opened with the lines:

Leo Stoller is a trademark terrorist who should be in jail. His scheme relied on serial false oaths, falsified evidence, and false testimony by two co-conspirators in support of extortion by false allegations of trademark infringement. He extorted settlement fees and obtained new trademark registrations from innocent business owners by assignment on the promise of an uncontrolled license back to allow the victims to continue operating their businesses. Exploiting weaknesses in multiple aspects of the TM registration system, Stoller acquired new trademark registrations by fraud, perjury and false specimens of use. It's amazing that he wasn't wearing federal orange years ago.

Thereafter, Stoller sued Johnson, two of his partners, and their law firm for defamation, conspiracy to defame, aiding and abetting, and intentional infliction of emotional distress. Stoller sought more than $100 million from the defendants based upon alleged compensatory damages and loss of reputation within the intellectual property community.

In moving for summary judgment, the defendants argued that the allegedly defamatory statements made by Johnson in the article were fair abridgments of the court orders issued in several of Stoller’s unsuccessful trademark infringement lawsuits, and therefore shielded by the “fair report” privilege. This privilege applies where the allegedly defamatory statement is accurate, complete, or otherwise a fair abridgment of an official proceeding. In this connection, provided that the “sting” of the allegedly defamatory statement is the same as the “sting” in the official report, the abridgement of the proceeding will be deemed “fair,” and no claim for defamation may lie.

After considering the defendants’ exhaustive cataloging of Stoller’s lawsuits and detailing of the many opinions authored by various judges in the Northern District of Illinois and the U.S. Court of Appeals for the Seventh Circuit, the Cook County trial court and the appellate court agreed with the defendants’ position that Johnson’s article was a “fair report” of the previous opinions. Both courts found further that the lack of an actionable defamation claim resulted in the remaining causes of action to also fail as a matter of law.

To read the trial court opinion, click here.

To read the appellate court opinion, click here.

Paul Gamboa
Brian Roth