a portable inflator for use with such a system.” (PI. Compl. Ex. A). The adjustable inflation system
isused to automatically inflate mattresses fora predetermined time, or untila predetermined pressure
is achieved in the mattress. Aero Products is the exclusive licensee of the °726 patent and has the
right to enforce the patent against infringers. Aero Products also owns the federally registered
trademark, ONE TOUCH. The trademark is for inflatable mattresses with adjustable inflation
control.

Intex Recreation is a subsidiary of Intex Corporation. Intex Recreation is involved in the
marketing sale of the allegedly infringing product. The intexcorp.com website is marked with

“Copyright 2001 Intex Recreation Corp”. Quality Trading, a California Corporation, operates

websites located at www. qualitytrading,com, www qualityinflatables.com (qualityinflatables.com”),

and www.portablebeds.com,

The Complaint alleges that Intex Recreation, Quality Trading, and Wal-Mart have used and
continue to use the ONE TOUCH mark in the advertising, offer, and sale of inflatable mattresses
with the adjustable inflation control technology, Plaintiffs allege that Defendants have created the
impression that the inflatable mattresses originate with, or are sponsored by, licensed by, connected
with, or are otherwise endorsed by Aero Products. Plaintiffs also allege Intex Recreation and Quality
Trading have advertised inflatable air mattresses having inflation contro! in the Northern District
of Illinois via their respective websites using the ONE TOUCH mark. Furthermore, Intex sells
inflatable air mattresses having adjustable inflation control and embodying technology protected by
the ‘726 Patent to Wal-Mart and Quality Trading.

According to the counterclaim, Chaffee is also the owner of United States Patent No.

5,267,363 (“the ‘363 patent”), entitled “Pneumatic Support System”. (Answer & Countercl. 7.)

4.


Therefore, the ONE TOUCH mark cannot be cancelled on the basis that it is merely descriptive.
Park 'N Fly, 469 U.S. at 205. However, pursuant to § 1065, an incontestable mark may be cancelled
if it is, or has become, the generic term for the good or service. “Whether a term is generic or can
be trademarked is a question of fact.” Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277, 300
(7th Cir. 1998). Likewise, in this case, when the mark became, or if it has become, generic is a
question of fact and, therefore, not appropriate for consideration on a motion to dismiss, Moreover,
as Plaintiffs have acknowledged, “[t]heoretically, a set of facts could exist to support a claim that
the ONE TOUCH mark is generic.” (Reply Supp. Pls.’ Mot. Dismiss at 10.) Therefore, dismissal
of Intex Recreation’s Third Claim for Relief is denied. See Strasburger, 143 F.3d at 359 (noting that
dismissal is proper only when it appears beyond doubt that a plaintiff can prove no set of facts to
support the allegations in his claim).
(CLUS.
For the reasons stated above, Plaintiffs’ Motion to Dismiss is denied with respect to Intex

Recreation’s Second and Third Claims for Relief.

IT IS SO ORDERED.

John W. Darrah, Judge
ite States District Court

Date: 1 2003

9-


concrete steps taken with the intent to conduct such activity. ... Whether an actual controversy
exists upon particular facts is a question of law... .” BP Chem. Ltd. v. Union Carbide Corp.,4 F.3d
975, 978 (Fed. Cir. 1993). In determining whether an actual controversy exists in a patent case, the
court focuses on whether the declaratory defendant’s conduct rose to a level that indicates its intent
to enforce its patent. Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 888 (Fed. Cir. 1992). While an
express threat of litigation is not required, a declaratory plaintiff must show “‘more than the nervous
state of mind of a possible infringer.’” Vanguard Research, Inc. v. Peat, Inc., 304 F.3d 1249, (Fed.
Cir. 2002). If there is no express charge of infringement, the court will consider the “totality of the
circumstances” in determining whether the declaratory plaintiff has a reasonable apprehension of
suit. Shell Oil Co., 970 F.2d at 888. The declaratory plaintiff must be engaged in the actual making,
selling, or using activity or have made meaningful preparation for such activity. Arrowhead Indus.
Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988).

Plaintiffs argue that this Court lacks subject matter jurisdiction over Intex Recreation’s
Second Claim for Relief because there is no actual controversy. Specifically, Plaintiffs argue that
no actual controversy exists because they have not acted in a way that indicates that they intend to
enforce the ‘363 patent, and Intex Recreation fails to assert any present activity that is potentially
infringing.

There is an actual controversy sufficient for subject matter jurisdiction under § 2201. Intex
Recreation has a reasonable apprehension of suit. There have been actions by Aero in the past which
indicate its willingness to enforce its patent rights, Aero has threatened litigation with regard to air
mattresses sold by Intex Recreation based upon United States Patent No. 4, 977, 633 (“the ‘633

patent”), the parent of the '726 and ‘363 patents. The ‘726 and ‘363 patents are similar and have the

6-


Aero Products is also the exclusive licensee of the ‘363 patent. (/d. ]7.) The ‘363 patent describes
a pneumatic support system that is similar to the one described in the ‘726 patent. (/d. J 8.) The
counterclaim also alleges that “[t]he [c]omplaint alleges that [Intex Recreation], and others, have
infringed the ‘726 Patent and the ONE TOUCH trademark.” (/d. 6.) The counterclaim alleges that
Intex Recreation has a reasonable apprehension that Plaintiffs may claim that it has infringed the
“363 patent.

The counterclaim alleges that the ‘726 patent is invalid, that Intex Recreation has not
infringed the ‘363 patent, and that the ONE TOUCH trademark is invalid because the mark is
descriptive and generic.

DISCUSSION
Second Claim for Relief

The Declaratory Judgment Act provides that “[i]n a case of actual controversy within its
jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party seeking such declaration, whether
or not further relief is or could be sought.” 28 U.S.C. § 2201 (2003). A declaratory judgment is
appropriate when it “will clarify and settle the disputed legal relationships and afford relief from the
uncertainty and controversy that created the issues”. Nucor Corp. v. Aceros y Maquilas de
Occidente, S.A. de C.V., 28 F.3d 572, 578 (7th Cir. 1994) (citing Tempco Elec. Heater Corp. v.
Omega Eng’g, Inc., 819 F.2d 746, 749 (7th Cir 1987).

Ina patent case, an actual controversy exists if there is “(1) an explicit threat or other action
by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that

it will face an infringement suit, and (2) present activity which could constitute infringement or

-5-


“A generic term is one that refers to the genus of which the particular product is a species.”
Park ‘N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 193 (1984). Generic terms cannot be
registered and registered marks may be cancelled at any time if they have become the generic term
for a good or service. Park ‘N Fly, 469 U.S. at 193 (citing 15 U.S.C. § 1052, 1064(3)). Marks that
are “descriptive”, that is, they describe the qualities or characteristics of a good or service, may be
registered only if it is shown that the mark has acquired “secondary meaning”, which means that the
mark “has become distinctive of the applicant’s goods in commerce.” 15 U.S.C. § 1052(e), (f).

Section 15 of the Lanham Act provides that, absent certain exceptions, “the right of the
registrant to use [a mark registered on the principal register} in commerce for the goods or services
on or in connection with which such registered mark has been in continuous use for five consecutive
years subsequent to the date of such registration and is still in use in commerce, shall be
incontestable.” 15 U.S.C. § 1065 (2002). The acquisition of incontestability means that the mark
“may be enforced, without proof of secondary meaning, even if it is a descriptive name for the
qualities or characteristics of a good or service.” TE-TA-MA Truth Found.-Family of URI, Inc. v.
World Church of the Creator, 297 F.3d 662, 664 (7th Cir. 2002). However, § 15 of the Lanham Act
also provides that “no incontestable right shall be acquired in a mark which is the generic name for
the goods or services or a portion thereof. . . for which it is registered.” § 1065(4). This is also the
case if the mark becomes generic over time. 15 U.S.C. § 1064(3). Incontestable marks cannot be
cancelled on the basis that they are merely descriptive. Park ‘N Fly, 469 U.S. at 205 (“We conclude
that the holder of a registered mark may rely on incontestability to enjoin infringement and that such
an action may not be defended on the grounds that the mark is merely descriptive.”).

The complaint alleges that the ONE TOUCH mark is incontestable. (Compl. ¥ 45.)

-8-


4
‘Minwle Order Porm (06/97)

United States District Court, Northern District of Illinois

nvr Magia due John W. Darrah “than Amigued Judge
CASE NUMBER 02 C 2590 DATE 1/16/2003
CASE AERO PRODUCTS INTERNATIONAL vs, INTEX RECREATION CORP.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
| DOCKET ENTRY:
| qd) a Filed motion of [ use listing in “Motion” box above.)
(2) a Brief in support of motion due ____-
(3) a Answer brief to motion due. . Reply to answer briefdue___.
(4) Qo Ruling/Hearing on setfor_ sat.
(5) Q Status hearing[held/continued to] [set for/re-set for]on__——ssetfor at.
(()) oO Pretrial conference[held/continued to] [set for/re-set for]on___—setfor__—s—sat_—
(7) QO Trialset for/re-set for]on___at
(8) o [Bench/Jury trial] [Hearing] held/continued to__at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}

CUFRCP4(m) C)Local Rule 41.1 CFRCP41(a)\(1) OO FRCP41(a)(2).

ao) =f [Other docket entry] Status hearing held. Enter Memorandum Opinion And Order. Plaintiffs’
motion to dismiss is denied with respect to Intex Recreation’s second and third claims for relief.
Plaintiff's answer to counterclaim to be filed by 2/14/03. Time to file amended pleadings is extended to
2/14/03.

(il) @ [For further detail see order attached to the original minute order.]

‘No notices required, advised in open court,
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same inventor. The present action alleges infringement of the ‘726 patent, which is a continuation-
in-part of the ‘363 patent. Aero’s complaint does not specifically allege the manner in which Intex
Recreation’s activities are allegedly infringing the ‘726 patent. Rather, the complaint alleges that:

29. Intex markets and sells at least one line of inflatable mattresses with adjustable

inflation control under the terms “Control-Rest” and “Fast-Fill Airbed.”
ee

33. Intex has infringed, and is now directly infringing, inducing infringement by

others, and/or contributorily infringing one or more claims of the ‘726 patent within

this District and elsewhere within the United States through its import, sale, and

offers to sell the air mattresses identified in paragraph 29, which incorporate the

protected technology of the ‘726 patent.

(Compl. 7 29, 33.) These allegations make it unclear whether the conduct that is allegedly infringing
the ‘726 patent would not also infringe the ‘363 patent given the similarity of the two patents. Thus,
Intex Recreation has a reasonable apprehension of suit.

The second element of the test has also been established. Both the complaint and the
counterclaim allege that Intex Recreation markets and sells lines of allegedly infringing inflatable
mattresses with adjustable inflation control. Therefore, Plaintiffs’ motion to dismiss the second
claim for relief is denied.

Third Claim for Relief

Plaintiffs argue that the Third Claim for Relief should be dismissed because Intex Recreation
can prove no set of facts which would entitle it to relief. Specifically, Plaintiffs argue that the ONE
TOUCH mark is incontestable and, therefore, cannot be “descriptive and generic” and subject to
cancellation.

The counterclaim alleges that the ONE TOUCH mark is descriptive and generic and,

therefore, should be cancelled. (Answer & Countercl. J 19, 20,)


LEGAL STANDARD

When considering a motion to dismiss, well-pleaded allegations in the complaint are accepted
as true. Turner/Ozanne v. Hyman/Power, 111 F.3d 1312, 1319 (7th Cir. 1997). Any ambiguities
in the complaint are construed in favor of the plaintiff. Kelly v. Crosfield Catalysts, 135 F.3d 1202,
1205 (7th Cir. 1998), Dismissal is proper only when it appears beyond doubt that Plaintiff can prove
no set of facts to support the allegations in his or her claim. Strasburger v. Board of Education, 143
F.3d 351, 359 (7th Cir. 1998).

“Although the Federal Rules of Civil Procedure do not require a plaintiff ‘to set out in detail
the facts upon which he bases his claim,’. . . he must ‘set out sufficient factual matter to outline the

*” Benson v.

elements of his cause of action or claim, proof of which is essential to his recovery.
Cady, 761 F.2d 335, 338 (7th Cir. 1985) (internal citation omitted). A complaint will not avoid
dismissal if it contains “bare legal conclusions” absent facts outlining the basis of the claims.
Perkins v. Silverstein, 939 F.2d 463, 467 (7th Cir. 1991).

The court “may properly look beyond the jurisdictional allegations of the complaint and view
whatever evidence has been submitted on the issue to determine whether in fact subject matter
jurisdiction exists.” Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). The district
court must review the complaint liberally, taking as true all well-pleaded allegations and the
inferences that may be drawn from them. See Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir.
1999).

BACKGROUND

Chaffee is the inventor and owner of United States Patent No. 5,367,726 (“726 Patent”).

The patent is for a “pneumatic support system,” which is a “portable, inflatable support system, and

3.


(“Intex Recreation”), Quality Trading Incorporated (“Quality Trading”), and Wal-Mart Stores
Incorporated (“Wal-Mart”), alleging: patent infringement under 35 U.S.C. § 271; federal trademark
infringement under sections 31(1) and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a);
a violation of the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS § 510 et seq.; aviolation
of the Illinois Consumer Fraud and Deceptive Business Practice Act, 815 ILCS § 505 et seq.; and
a violation of common law unfair competition.

The remaining Defendants' then moved to dismiss for lack of jurisdiction and for improper
venue and also to change venue. In a Memorandum Opinion and Order dated September 19, 2002,
the Court dismissed Intex Corporation for lack of personal jurisdiction and denied the Defendants’
motions in all other respects.

Intex Recreation, Quality Trading, and Wal-Mart (collectively “Defendants”) then filed an
answer and a counterclaim against Aero Products and Chaffee (collectively “Plaintiffs”), seeking a
declaratory judgment of patent invalidity (“First Claim for Relief’), patent non-infringement
(“Second Claim for Relief’), and that the ONE TOUCH trademark is generic and descriptive and
that the federal trademark registration of such mark be cancelled (“Third Claim for Relief’).
Plaintiffs move, pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6), to dismiss the Second
and Third Claims for Relief. For the reasons that follow, Plaintiffs’ Motion to Dismiss the Second

and Third Claims for Relief is denied.

‘Plaintiffs have dismissed Defendants Intex Plastics Corp., Intex Properties Corp., and IPC
Corinth Division Inc., pursuant to Federal Rule of Civil Procedure 41(a)(1)(i).

-2-


IN THE UNITED STATES DISTRICT COURT

DOCKETED

FOR THE NORTHERN DISTRICT OF ILLINOIS JAN 2 1 2003
EASTERN DIVISION

AERO PRODUCTS INTERNATIONAL, )
INC., a Florida corporation, and )
ROBERT B. CHAFFEE, an Individual, )

Plaintiffs,
v.

INTEX RECREATION
CORPORATION, a California
corporation; QUALITY TRADING,
INC., a California corporation;
WAL-MART STORES, INC.,

a Delaware corporation,

Defendants.

INTEX RECREATION
CORPORATION, a California
corporation,

Counter-Plaintiff,

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

vy. )
)
AERO PRODUCTS INTERNATIONAL, )
INC., a Florida corporation, and )
ROBERT B. CHAFFEE, an individual, )
)

Counter-Defendants. )

Case No. 02 C 2590

Hon. John W. Darrah

MEMORANDUM OPINION AND ORDER

Plaintiffs, Aero Products International, Inc. (“Aero Products”) and Robert B. Chaffee

(“Chaffee”), filed suit against Defendants, Intex Corporation (“Intex”), Intex Recreation Corporation

D