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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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` 08 C 4741
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` Judge George M. Marovich
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`ALEKS RECHANIK,
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`Plaintiff,
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`v.
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`MICROSOFT CORPORATION,
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`Defendant.
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`MEMORANDUM OPINION AND ORDER
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`Plaintiff Aleks Rechanik (“Rechanik”) has filed an amended complaint against defendant
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`Microsoft Corporation (“Microsoft”). Before the Court are several motions, including
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`defendant’s motion to dismiss.
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`I.
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`Background
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`The Court takes as true the allegations in plaintiff’s amended complaint. In addition, the
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`Court takes judicial notice of the Seventh Circuit’s decision in the case of Microsoft Corp. v.
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`Rechanik, Case No. 06-4343, 2007 WL 2859800 (7th Cir. Sept. 20, 2007).1
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`Plaintiff’s filing his amended complaint against Microsoft did not mark the first time
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`these parties litigated against each other. Microsoft has sued plaintiff at least two times before,
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`once in Ohio and once at the Northern District of Illinois. The Northern District of Illinois case
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`resulted in a judgment against Rechanik, and he appealed to the Seventh Circuit. Here is what
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`the Seventh Circuit had to say about the case:
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`1The Court may take judicial notice of documents such as judicial decisions without
`converting a motion to dismiss into a motion for summary judgment. See General Elec. Cap.
`Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1081 (7th Cir. 1997).
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`Case: 1:08-cv-04741 Document #: 57 Filed: 03/17/09 Page 2 of 8 PageID #:480
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`Rechanik is in the business of selling low-priced computer software,
`including software produced by Microsoft. One of the ways that he is able to
`keep prices low is by purchasing software at the lowest possible price without
`asking questions about whether it is counterfeit. Microsoft first caught on to
`Rechanik’s business practices in 1999 and sent a cease-and-desist letter to
`Rechanik and his Ohio corporation, Altim International Trading Co., asking that
`they stop distributing counterfeit products. Microsoft sued them when they failed
`to comply, and a district court in Ohio awarded Microsoft $980,000 in damages
`plus attorneys’ fees and entered a permanent injunction prohibiting Rechanik and
`Altim from infringing Microsoft’s copyrights. Microsoft Corp. v. Rechanik, No.
`1:99CV0965 (N.D. Ohio Mar. 3, 2000).
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`Rechanik quickly regrouped in Illinois and opened another software sales
`business, Era Soft. Rechanik is Era Soft’s sole shareholder and officer, and is one
`of its two employees. Microsoft sent investigators to purchase purported
`Microsoft software from Era Soft and soon learned that Rechanik was once again
`infringing its copyrights and selling counterfeit Microsoft products, so it sent
`Rechanik and Era Soft a cease-and-desist letter. When they continued to sell
`counterfeits, Microsoft brought suit . . .
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`* * *
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`We agree with the district court’s determination, which we review de novo
`[internal citation omitted], that Microsoft was entitled to summary judgment
`because it presented overwhelming and unrefuted evidence that Rechanik was
`personally liable for infringing Microsoft’s copyrights and trademarks. An
`individual can be jointly liable for a company’s infringing conduct. See Softel,
`Inc. v. Dragon Med. & Scientific Commc’ns, Inc., 118 F.3d 995, 971 (2d Cir.
`1997) (individual liability for a company’s copyright infringement); Chanel, Inc.
`v. Italian Activewear of Fla., 931 F.2d 1472, 1427 (11th Cir. 1991) (same for
`trademark infringement).
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`Microsoft’s evidence–including Rechanik’s own tetimony and the
`declarations of Microsoft’s investigators and the Microsoft employee who
`examined Era Soft’s counterfeits–established that Era Soft violated Microsoft’s
`exclusive right as the copyright holder to authrorize the manufacture and
`distribution of its products. See 17 U.S.C. § 106(3); Salton, Inc. v. Philips
`Domestic Appliances & Pers. Care B.V., 391 F.3d 871, 875 (7th Cir. 2004). And
`Microsoft’s undisputed evidence showed that Rechanik intentionally encouraged
`Era Soft’s infringement; thus he is personally liable as a contributor. See Metro-
`Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930, 125 S.Ct. 2764,
`162 L.Ed. 781 (2005); Matthew Bender & Co. v. West Publ’g Co., 158 F.3d 693,
`706 (2d Cir. 1998). Although Rechanik now argues that he did not know that the
`products were counterfeit, he admitted at his deposition that he purchased the
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`-2-
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`Case: 1:08-cv-04741 Document #: 57 Filed: 03/17/09 Page 3 of 8 PageID #:481
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`products from unauthorized distributors, did not ask whether they were authentic,
`and did not examine them to satisfy himself that they were not counterfeit. At
`best, Rechanik’s ‘ostrich-like’ business practices amount to willful blindness,
`which is sufficient to show he had the intent necessary to be a contributory
`infringer. See In re Aimster Copyright Litig., 334 F.3d 650, 655 (7th Cir. 2003).
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`* * *
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`As for Microsoft’s trademark claim, the undisputed evidence leads us to
`the same conclusion. The logos and labeling on Era Soft’s counterfeit software
`closely resembled Microsoft’s marks, so Era Soft’s products were likely to
`confuse consumers. See e.g., Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145,
`148 (4th Cir. 1987) (“Where one produces counterfeit goods in an apparent
`attempt to capitalize upon the popularity of, and demand for, another’s product,
`there is a presumption of a likelihood of confusion.”). And the same evidence
`that supports the conclusion that Rechanik is liable as a contributor to copyright
`infringement also supports the conclusion that Rechanik is liable as a contributor
`to Era Soft’s trademark infringement. The uncontroverted evidence shows that he
`caused Era Soft to sell the software knowing that these products infringed on
`Microsoft’s marks, see Inwood Labs, Inc. v. Ives Labs., Inc. 456 U.S. 844, 854,
`102 S.Ct. 2182, 72 L.Ed.2d 606 (1982); David Berg & Co. v. Gatto Int’l Trading
`Co., 884 F.2d 306, 311 (7th Cir. 1989), or at least was willfully blind to the
`infringement, see Hard Rock Café Licensing Corp. v. Concession Servs., 955 F.2d
`1143, 1149 (7th Cir. 1992).
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`* * *
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`Rechanik argues that summary judgment was not warranted because his
`counsel gave him poor advice and conspired with Microsoft’s counsel, but
`Rechanik offers no evidence to support that allegation. In any event, we will not
`reverse a district court’s judgment in a civil case because a litigant’s counsel
`provided ineffective assistance. See Stanciel v. Gramley, 267 F.3d 575, 581 (7th
`Cir. 2001). We thus agree with the district court that Microsoft is entitled to
`summary judgment against Rechanik.
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`Microsoft Corp. v. Rechanik, Case No. 06-4343, 2007 WL 2859800 (7th Cir. Sept. 20, 2007),
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`cert. denied, 128 S.Ct. 2429 (May 12, 2008).
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`On August 20, 2008, nearly a year after the Seventh Circuit issued its opinion and a few
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`months after the Supreme Court denied plaintiff’s petition for certiorari, plaintiff filed a
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`-3-
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`Case: 1:08-cv-04741 Document #: 57 Filed: 03/17/09 Page 4 of 8 PageID #:482
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`complaint against Microsoft. After Microsoft moved to dismiss, plaintiff filed an amended
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`complaint.
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`Plaintiff’s amended complaint approaches incomprehensibility. The bulk of the amended
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`complaint is an attack on the prior judgment. In the amended complaint, plaintiff asserts that he
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`is “seeking relief from Judgment and Permanent Injunction” and that “[t]his is a lawsuit seeking
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`lawful Relief and other Recovery by ‘Plaintiff’, because in a previous court has failed to properly
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`assess the lawsuit, submitted by the ‘MS’ [Microsoft] and to determine the absolute lack of legal
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`basis for it by the ‘MS’, as well as to assess false, is not confirmed by any document, ignored
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`and has not been able to assess the impact of illegal ‘MS’ to ex-consuls other hand, the facts
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`conspiracy between ‘MS’ and ex-consul’s opposite side, was not able to see cases of fraud upon
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`the Court’s.” (Amended Compl. at 1, 2).
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`The Court has attempted to decipher plaintiff’s amended complaint. In Count I, plaintiff
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`asserts that Microsoft did not have a legal basis for its prior suit. Here, plaintiff takes issue with
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`some of the evidence that was presented. Specifically, Rechanik appears to argue that the
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`investigators who testified that he had sold counterfeit software were not qualified to determine
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`whether the software was counterfeit. In Count III, plaintiff appears to be asserting that
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`Microsoft abused the legal process by issuing a Citation to Discover Assets. In Count IV,
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`Rechanik asserts that he lost the prior case because his lawyer was helping Microsoft. In Count
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`V, Rechanik asserts that Microsoft breached a settlement agreement reached in the 1999 Ohio
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`case when it filed suit in the Northern District of Illinois. In Count VI, plaintiff asserts that by
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`litigating the prior case, Microsoft sought to obtain more than the Copyright Act granted it.
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`-4-
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`Case: 1:08-cv-04741 Document #: 57 Filed: 03/17/09 Page 5 of 8 PageID #:483
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`In addition to the attacks on the prior judgment, plaintiff asserts a claim under the
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`Racketeer Influenced and Corrupt Practices Act, 18 U.S.C. § 1962. Plaintiff asserts that
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`Microsoft is a “huge” corporation that has filed more than 50 cases that are similar to the case
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`Microsoft filed against Rechanik. Rechanik complains that the people Microsoft sues lack the
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`resources to defend themselves, whereas Microsoft has a “huge” legal department and outside
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`counsel. As to predicate acts, Rechanik seems to be alleging that in the prior case, Microsoft
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`claimed to have sent Rechanik cease-and-desist letters which he never actually received. In
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`addition, Rechanik seems to be alleging that he received telephone calls from Microsoft that
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`were stressful to him.
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`II.
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`Standard on a motion to dismiss
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`The Court may dismiss a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil
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`Procedure if the plaintiff fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P.
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`12(b)(6). In considering a motion to dismiss, the Court accepts as true all well-pleaded factual
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`allegations and draws all reasonable inferences in the plaintiff’s favor. McCullah v. Gadert, 344
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`F.3d 655, 657 (7th Cir. 2003). Under the notice-pleading requirements of the Federal Rules of
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`Civil Procedure, a complaint must “give the defendant fair notice of what the . . . claim is and the
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`grounds upon which it rests.” Bell Atlantic Corp. v. Twombley, 127 S.Ct. 1955, 1964 (2007)
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`(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint need not provide detailed
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`factual allegations, but mere conclusions and a “formulaic recitation of the elements of a cause
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`of action” will not suffice. Bell Atlantic, 127 S.Ct. at 1964-1965. A complaint must include
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`enough factual allegations to “raise a right to relief above a speculative level.” Bell Atlantic, 127
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`S.Ct. at 1965. “After Bell Atlantic, it is no longer sufficient for a complaint ‘to avoid foreclosing
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`-5-
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`Case: 1:08-cv-04741 Document #: 57 Filed: 03/17/09 Page 6 of 8 PageID #:484
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`possible bases for relief; it must actually suggest that the plaintiff has a right to relief, by
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`providing allegations that raise a right to relief above the speculative level.’” Tamayo v.
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`Blagojevich, 526 F.3d 1074, 1084 (7th Cir. 2008) (quoting Equal Employment Opportunity
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`Comm’n v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007)).
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`III. Discussion
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`A.
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`Plaintiff’s motion of unauthorized practice
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`The Court first considers plaintiff’s Motion of Unauthorized Practice [of] Law. In this
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`motion, plaintiff asserts that attorneys Eric Brandfonbrener and Todd Church violated the local
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`rules of this Court by failing to file individual attorney appearances on behalf of Microsoft and
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`by failing to include their ARDC numbers on their appearances. The charges are simply false.
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`Each attorney filed an appearance on October 16, 2008 (some four months before plaintiff filed
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`his motion), and each included his ARDC number on his appearance. Accordingly, plaintiff’s
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`motion is denied.
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`B.
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`Defendant’s motion to dismiss
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`Having lost his appeal at the Seventh Circuit and having had his petition for certiorari
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`denied by the Supreme Court, plaintiff filed another suit to attack the earlier judgment. Five of
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`plaintiff’s six counts are attacks on the prior judgment. In Counts I, III, IV, V, and VI, plaintiff
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`attacks the evidence used to support the prior judgment, attacks the result, attacks Microsoft’s
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`attempt to enforce the judgment and makes arguments rejected by the courts in that litigation.
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`Plaintiff “cannot use a new suit to contend that the disposition of the first was mistaken.”
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`Hudson v. Hedge, 27 F.3d 274, 276 (7th Cir. 1994) (citing Federated Dep’t Stores v Moitie, 452
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`U.S. 394 (1981)). Accordingly, Counts I, III, IV, V and VI are dismissed with prejudice.
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`-6-
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`Case: 1:08-cv-04741 Document #: 57 Filed: 03/17/09 Page 7 of 8 PageID #:485
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`The Court dismisses with prejudice Count II, plaintiff’s RICO claim, for a similar reason.
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`In this claim, plaintiff seems to allege that Microsoft has engaged in a scheme of filing dozens of
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`cases against small companies and individuals who lack the resources to defend themselves.
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`One of those cases was the case Microsoft filed against Rechanik (and, in fact, won). As
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`predicate acts, plaintiff alleges that Microsoft failed to send him letters that it claimed to send
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`and made phone calls to him that caused him stress. Essentially, plaintiff is alleging that
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`Microsoft’s prior case against him was part of a RICO scheme to defraud plaintiff. Were
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`plaintiff to prevail on his RICO claim, it would nullify rights won by Microsoft in the prior
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`claim. So, while Count II is not technically a compulsory counterclaim, it is a claim that should
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`have been brought in the prior suit. See Rudell v. Comprehensive Accounting Corp., 802 F.2d
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`926, 928 (7th Cir. 1986) (“Both precedent and policy require that res judicata bar a
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`counterclaim when its prosecution would nullify rights established by the prior action. Judicial
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`economy is not the only basis for the doctrine of res judicata. Res judicata also preserves the
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`integrity of judgments and protects those who rely on them.”) (quoting Martino v. McDonald’s
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`System, Inc., 598 F.2d 1079, 1085 (7th Cir. 1979)). Accordingly, the Court concludes that Count
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`II is barred by res judicata.
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`For these reasons, the Court dismisses Count II with prejudice.2
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`2Even if plaintiff’s RICO claim were not barred, the Court would still dismiss the RICO
`claim with prejudice. As defendant points out, plaintiff has failed to meet the heightened
`pleading standard of Rule 9(b) of the Federal Rules of Civil Prodedure. Plaintiff’s complaint
`“must, at a minimum, describe the predicate acts with some specificity and state the time, place,
`and content of the alleged communications perpetrating the fraud.” Goren v. New Vision Int’l,
`Inc., 156 F.3d 721, 726 (7th Cir. 1998). Plaintiff has not done so, and his claim should be
`dismissed for this reason.
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`The Court also notes that it does not see any way for the plaintiff to amend his complaint
`to state a claim under RICO. Congress passed RICO to “eradicate organized, long-term criminal
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`-7-
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`Case: 1:08-cv-04741 Document #: 57 Filed: 03/17/09 Page 8 of 8 PageID #:486
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`IV. Conclusion
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`For the reasons set out above, the Court grants defendant’s motion to dismiss. The Court
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`hereby dismisses with prejudice Counts I, II, III, IV, V and VI. Case dismissed.
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`All other pending motions are denied as moot.
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`ENTER:
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`George M. Marovich
`United States District Judge
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`DATED: March 17, 2009
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`activity.” Midwest Grinding Co., Inc. v. Spitz, 976 F.2d 1016, 1019 (7th Cir. 1992). Despite
`“widespread abuse” of civil RICO, RICO “has not federalized every state common-law cause of
`action available to remedy business deals gone sour.” Midwest Grinding, 976 F.2d at 1025.
`“Rather, it is a unique cause of action that is concerned with eradicating organized, long-term,
`habitual criminal activity.” Gamboa v. Velez, 457 F.3d 703, 705 (7th Cir. 2006). Nothing that
`plaintiff has alleged suggests long-term criminal activity. The Court fails to see how filing
`lawsuits constitutes fraud. One suspects that if the lawsuits were fraudulent, Microsoft would
`not be winning any of the lawsuits. One suspects that if the lawsuits were frivolous, Microsoft
`would be sanctioned by the Courts in which the suits were filed. The Court fails to see how the
`alleged conduct could ever support a RICO claim.
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`-8-