Source: http://il.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180723_0000344.CIL.htm/qx
Timestamp: 2019-04-19 17:21:51+00:00

Document:
This cause is before the Court on the Motion for Summary Judgment on All Undecided Claims (d/e 168) filed by Defendants Meijer, Inc. and Whitmor, Inc., and the Motion for Partial Summary Judgment (d/e 189) filed by Plaintiff Design Ideas, Ltd. Because genuine issues of material fact remain, the Motions for Summary Judgment are DENIED.
Plaintiff originally filed suit in March 2015 against Defendants Meijer, Inc. (Meijer), Whitmor, Inc. (Whitmor), and The TJX Companies, Inc. (TJX). In November 2015, Plaintiff filed a First Amended Complaint asserting copyright infringement under the Copyright Act of 1976, 17 U.S.C. § 101, et seq., unfair competition under the U.S. Trademark Act, 15 U.S.C. § 1051, et seq. (Lanham Act) and violations of the Digital Millennium Copyright Act, 17 U.S.C. § 1201, et seq. (DMCA). The First Amended Complaint also contains state law claims asserting unfair competition, violations of the Illinois Deceptive Trade Practices Act, 815 ILCS 510/1, the Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/2, and breach of contract.
A few weeks before Plaintiff filed this action, Meijer, Whitmor, and TJX filed a lawsuit in the Western District of Michigan seeking a declaratory judgment that they did not violate the Lanham Act, the Copyright Act, or the DMCA. In June 2015, the Court enjoined the defendants from prosecuting that declaratory judgment action. Opinion (d/e 12) (Mills, J.).
In August 2016, the Court granted partial summary judgment on liability in favor of Plaintiff on Plaintiff's copyright claims in Count I. Opinion (d/e 115). In December 2016, Plaintiff and Defendant TJX filed a Stipulation of Voluntary Dismissal.
Defendants Meijer and Whitmor (collectively referred to as Defendants) have now filed a motion for summary judgment on all remaining claims: Count III, Federal Unfair Competition Under the Lanham Act; Count IV, violation of the DMCA; Count VII, common law unfair competition; Count VIII, violation of the Illinois Deceptive Trade Practices Act; Count IX, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act; and Count X against Meijer for breach of the 2007 Settlement Agreement. Defendants also seek summary judgment that the only recovery to which Plaintiff is entitled on Count I is Defendants' profits from the sale of CANARY CLIPS in 2013 until Defendants stopped selling CANARY CLIPS in August 2014, which total $14, 095.64.
Plaintiff seeks summary judgment on Count III, the trademark claim, and Count IV, the DMCA claim. Although Plaintiff asserts in its reply that Plaintiff is entitled to summary judgment on Counts VII, VIII, and IX, Plaintiff has forfeited that argument by not raising the claims in its motion for summary judgment and memorandum in support thereof. See Narducci v. Moore, 572 F.3d 313, 324 (7th Cir. 2009) (“[T]he district court is entitled to find that an argument raised for the first time in a reply brief is forfeited.”).
Despite the cross-motions for summary judgment, the parties dispute many of the facts in this case. Moreover, Plaintiff failed to strictly comply with Local Rule 7.1(D)(1)(b) and (2)(b), which require including as exhibits all relevant documentary evidence and providing citations for the documentary evidence that supports each fact or disputed fact. Plaintiff has, however, supplied much of the missing documentary evidence in its reply. Therefore, the Court will disregard only those “facts” for which the Court could not find documentary support or which did not contain a citation to the document evidence unless Defendants nonetheless admitted the fact.
Plaintiff is in the business of creating, manufacturing, and distributing decorative gift items and housewares. One such item is the SPARROWCLIP, which is a clothespin with a bird design on top. Plaintiff claims to own intellectual property rights in both the SPARROWCLIPS design and the trademark. From February 2009 through May 2016, Plaintiff sold its SPARROWCLIPS to over 750 customers with sales over $615, 000.
Between May and August 2012, Meijer placed five orders for SPARROWCLIPS from Plaintiff. At some point, Defendants became interested in manufacturing a bird clip. Meijer admits it purchased retail quantities of SPARROWCLIPS from Plaintiff and that it hired Whitmor to produce the copies. The parties dispute whether Meijer directed Whitmor to directly copy Plaintiff's SPARROWCLIPS.
In September 2012, Whitmor sent a set of Plaintiff's original SPARROWCLIPS that Whitmor purchased from The Container Store to a Chinese manufacturer, Sunny Living. Whitmor asked Sunny Living if it had a mold of the goods and sought pricing. Sunny Living had a mold producing exact duplicates of SPARROWCLIPS. The Sunny Living factory had only used the mold to manufacture bird clips that were shipped to Japan and never shipped bird clips from that mold to the United States.
Sunny Living asked Whitmor what colors Meijer wanted for the copies of the SPARROWCLIPS. Whitmor instructed Sunny Living to copy the colors used in Plaintiff's SPARROWCLIPS sold at The Container Store. Defendants did not inquire whether Plaintiff had authorized that mold or attempt to learn the origin of the Sunny Living mold.
In January and May 2013, Whitmor imported retail quantities of “Canary Plastic Clothespins”-CANARY CLIPS- from China. Whitmor also offered CANARY CLIPS to Target and TJX.
Defendants sold CANARY CLIPS in a plastic bag with a header card. When Meijer and Whitmor sold CANARY CLIPS, Meijer included its tradename, Wholesale Merchandisers, Inc.. and Whitmor included its name, Whitmor, on the packaging. Neither Meijer nor Whitmor provided any identifying information on the CANARY CLIP itself. The information provided by Meijer and Whitmor on the packaging was meant for and applied to the packaging for the CANARY CLIPS, not the clip itself.
Plaintiff sold SPARROWCLIPS in various types of packaging, including a plastic box and a plastic bag with a header card. Plaintiff's packaging for SPARROWCLIPS contains both the name SPARROWCLIPS and its source, Design Ideas: “SPARROWCLIPS, DESIGN IDEAS © 2008 Design Ideas Ltd.” or SPARROWCLIPS, DESIGN IDEAS” and “© 2011 Design Ideas Ltd.” The fonts, background designs, and background colors on the header cards used by Defendants and Plaintiff are different.
In addition, Plaintiff's SPARROWCLIPS have imbedded on each individual clip the author's name and Plaintiff's tradename: “p.waiwiriya for design ideas.” This information was not imbedded in the CANARY CLIPS.
Defendants contend, and Plaintiff disputes, that Whitmor's Vice President, Scott Felsenthal, reached out to outside counsel to ensure that its own distribution of the clips was appropriate. The parties also dispute that, based on counsel's response, Felsenthal expanded his search to include a search of copyright registration and that he did not find registrations related to the SPARROWCLIPS design or bird clips or clips. Whitmor never contacted Plaintiff to ask whether SPARROWCLIPS were trademarked or copyrighted.
Defendants stopped selling CANARY CLIPS around August 2014, shortly after receiving Plaintiff's cease and desist letters. Meijer's profits on the sale of CANARY CLIPS did not exceed $4, 809.78. Whitmor's profits on the sale of CANARY CLIPS did not exceed $9, 285.86.
Plaintiff submitted a copyright application to the U.S. Copyright Office for the SPARROWCLIPS on April 4, 2013. The Copyright Office issued a registration certificate on May 29, 2013.
On February 5, 2016, Plaintiff filed an application to register the mark “SPARROWCLIPS.” On September 13, 2016, the United States Patent and Trademark Office (PTO) issued a trademark registration for SPARROWCLIPS.
Applicant believes its SPARROWCLIPS mark is inherently distinctive. The bird design on the goods is not of any particular type of bird, and the mark is unitary. Nonetheless, Applicant submits herewith a 2(f) claim for SPARROW, since it has used the mark since 2008, as well as a disclaimer of CLIPS. However, if the Examining Attorney believes either or both are not necessary, applicant requests the Examining Attorney to delete them from the application. Thank you kindly.
The examining attorney reviewing the SPARROWCLIPS application did not delete the Section 2(f) claim from the SPARROWCLIPS application. In the PTO's Trademark Snap Shot Publication Stylesheet, the field titled “Section 2F In Part” is marked “YES.” The Registration Certificate states: “SEC. 2(F) As to ‘SPARROW.'” The following facts pertain to Plaintiff's breach of contract claim. In 2007, Plaintiff and Meijer entered into a Settlement Agreement to resolve a controversy between the parties related to another line of Plaintiff's products. Meijer denied in the Agreement that it infringed Plaintiff's products. The Agreement required that Plaintiff purchase merchandise identified in an attachment to the Agreement totaling $250, 753 and to purchase additional merchandise totaling $1, 000, 000 by September 30, 2009. The parties agree that Meijer satisfied all of its purchase obligations under the Agreement.
The Settlement Agreement also required Meijer “not [to] purchase, order, create, manufacture, sell, or distribute any other goods identical or substantially the same as Design Ideas' . . . (iii) containing any Design Ideas intellectual property or  use any Design Ideas intellectual property, or (iv) use any Design Ideas intellectual property . . . except as provided herein” Agreement ¶ 2(b) (d/e 172-14). Plaintiff alleges that Meijer breached this section of the Agreement with its conduct related to its infringing CANARY CLIPS.
Paragraph 8 of the Agreement provided: “The parties hereby agree to cooperate with each other in furtherance of the purpose, terms[, ] and provisions of this Agreement[.]” Agreement ¶ 8 (d/e 172-14). Plaintiff contends that Paragraph 8 requires Meijer to further the purposes of the Agreement and that a major purpose of the Agreement was “ongoing, future sales, which is shown by the express terms [of the Agreement] . . .” Defs. SOF ¶ 145 (d/e 169); Pl. Resp. at 5 (d/e 178).
Plaintiff claims, and Defendants deny, that Meijer threatened Plaintiff with a loss of business should Plaintiff continue to defend its intellectual rights in the SPARROWCLIPS. Plaintiff further claims, and Defendants deny, that Meijer actualized the threat as shown by the lost sales after Plaintiff refused to drop the instant enforcement and that Meijer instructed Meijer's buyers to cease business with Plaintiff. The parties do agree, however, that, in 2015, after the present lawsuit was filed, Meijer stopped product development efforts with Plaintiff and only agreed to continue purchasing three product programs that were already in place.
Summary judgment is proper if the movant shows that no genuine dispute exists as to any material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The movant bears the initial responsibility of informing the court of the basis for the motion and identifying the evidence the movant believes demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). No. genuine issue of material fact exists if a reasonable jury could not find in favor of the nonmoving party. Brewer v. Bd. of Trs. of the Univ. of Ill., 479 F.3d 908, 915 (7th Cir. 2007). When ruling on a motion for summary judgment, the court must consider the facts in the light most favorable to the nonmoving party, drawing all reasonable inferences in the nonmoving party's favor. Blasius v. Angel Auto., Inc., 839 F.3d 639, 644 (7th Cir. 2016).

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