Callanetics Mgmt. Co. v. Pinckney, Case No. 13-cv-4359

CALLANETICS MANAGEMENT COMPANY, INC., Plaintiff, v. ELIZABETH B. PINCKNEY, Executor of the Estate of Callan Pinckneyand CALLAN PRODUCTIONS CORPORATION, Defendants.

ELIZABETH B. PINCKNEY, Executor of the Estate of Callan Pinckneyand CALLAN PRODUCTIONS CORPORATION, Counter-Plaintiffs, v. CALLANETICS MANAGEMENT COMPANY, INC. and PATRICIA KLEIN, Counter-Defendants.

Case No. 13-cv-4359

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

Date: December 11, 2013

Judge John W. Darrah

MEMORANDUM OPINION AND ORDER

On June 13, 2013, Callanetics Management Company, Inc. ("CMC") filed suit against Elizabeth B. Pinckney, as the executor of the Estate of Callan Pinckney and Callan Productions Corporation ("Callan Productions"), seeking declarations that Pinckney's Federal Trademark and Service Mark Registrations are to be cancelled by the United States Patent and Trademark Office (the "PTO") and further seeking a declaration of CMC's right to license copyrighted works.

Pinckney and Callan Productions filed an Answer and a Counterclaim against CMC and another individual, Patricia Klein¹, amending it on July 19, 2013. Pinckney and Callan Productions assert claims of trademark infringement, false designation of origin, cybersquatting, copyright infringement, violation of the Illinois Uniform Deceptive Trade Practices Act, and infringement of the right of publicity under Georgia common law against CMC and Klein. CMC moves for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c), on the premise that Counter-Plaintiffs' claims are barred by either the doctrine of laches, the applicable statute of limitations, or both. This Motion has been fully briefed. For the reasons provided below, CMC's Motion is denied.

BACKGROUND

The following facts are drawn from the Verified Complaint and are accepted as true for purposes of this Motion. See Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 633 (7th Cir. 2007).

Callan Pinckney was a resident of Georgia; she died on March 1, 2012. (Am. Counterclaim ¶ 1.) Counter-Plaintiff Elizabeth Pinckney was Callan Pinckney's sister-in-law and is the executor of Callan Pinckney's estate. (Id. ¶ 2.) The Estate wholly owns Counter-Plaintiff Callan Productions. (Id. ¶ 3.) Counter-Defendant CMC is an Illinois corporation. (Id. ¶ 4.) The president and sole employee of CMC is Counter-Defendant Patricia Klein, an Illinois resident. (Id. ¶ 5.)

Callan Pinckney developed an exercise method she dubbed "Callanetics" by combining her first name with the suffix "-etics." (Id. ¶¶ 9, 12.) Callan Pinckney starred in and published several books and videos relating to the Callanetics exercise method. (Id. ¶ 10.) Counter-Plaintiffs own several registered copyrighted works. (Id.) The Estate also owns two federally registered trademarks: U.S. Registration No. 1,416,973, used in connection with "educational services, namely, conducting courses in physical fitness and exercise" in International Class 41, and U.S. registration No. 3,323,109, for "exercise videos" in International Class 9 and "exercise books" in International Class 16. (Id. ¶ 11.)

Callan Pinckney entered into agreements with Metro-Goldwin-Mayer Studios, Inc. ("MGM"), under which MGM published certain copyrighted works in VHS format, under the Callanetics trademark. (Id. ¶ 13.) She also contracted with book publishers to publish some of her copyrighted works under and in connection with the Callanetics trademark. (Id. ¶ 14.) Some of these videos and books are still being sold. (Id. ¶¶ 13-14.)

The Estate asserts it controls all rights of publicity and privacy relating to Callan Pinckney, and did not authorize Counter-Defendants to use her likeness or endorsement. (Id. ¶ 16.) It further contends Counter-Defendants used the registered marks without authorization or license. (Id. ¶ 15.)

The company Callanetics Franchising Corporation ("Callanetics Franchising") was incorporated in the early nineties to manage the franchising of the Callanetics business. (Id. ¶ 17.) Callanetics Franchising engaged Counter-Defendants to take over management duties of the Callanetics franchises and granted CMC the option to purchase Callanetics Franchising's assets. (Id. ¶ 18.) Callanetics Franchising was dissolved on February 1, 1999. (Id. ¶ 19.)

On May 23, 2003, Callan Pinckney's attorney, Marc Bailin, wrote a letter to Klein that purportedly authorized CMC to "negotiate and subject to our prior approval, enter into any written agreements regarding the use of the Callanetics' trade name in connection with the production or marketing of any new Callanetics Exercise videos or media productions relatedthereto." (Id. ¶ 20.) Bailin was not authorized by Callan Pinckney to send this letter to CMC. (Id. ¶ 21.) The letter provided that Callan Pinckney had to approve of any marketing and service agreement entered into with CMC; however, Callan Pinckney never approved of any such agreement. (Id. ¶ 22.)

In 2008, Counter-Defendants began negotiating with Callan Pinckney about the license of the Callanetics mark, as well as Callan Pinckney's name and likeness; however, no agreement was executed because the parties were unable to agree to final terms. (Id. ¶¶ 26-27.) Despite this, Counter-Defendants reproduce and sell the copyrighted works, sell products and services with the Callanetics mark and in connection with the name and likeness of Callan Pinckney. (Id. ¶ 27.) Counter-Defendants also registered and use the domain name callanetics.com. (Id. ¶ 28.) Callan Pinckney has never received a royalty or any other payment for the use of her intellectual property by Counter-Defendants. (Id. ¶ 39.)

Based on these facts, Counter-Plaintiffs allege six counts against CMC and Klein: (I) trademark infringement, (II) false designation of origin, (III) cybersquatting, (IV) violation of the Illinois Uniform Deceptive Trade Practices Act, (V) copyright infringement, and (VI) infringement of the right to publicity under Georgia common law. CMC moves for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c), on the basis that each claim against CMC is barred by the applicable statute of limitations or the doctrine of laches.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(c) provides that a party may move for judgment on the pleadings after a complaint and answer have been filed. Dismissal under Rule 12(c) is appropriate where "it appears beyond doubt that the plaintiff cannot prove any facts that wouldsupport his claim for relief." Hayes v. City of Chicago, 670 F.3d 810, 813 (7th Cir. 2012) (quoting Thomas v. Guardsmark, Inc., 381 F.3d 701, 704 (7th Cir. 2004)).

A court reviewing a Rule 12(c) motion applies the same standard used to review a Rule 12(b)(6) motion. Pisciotta, 499 F.3d at 632. Detailed factual allegations are not required, but the claim alleged must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Id. (citations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007). "A complaint that invokes a recognized legal theory and contains plausible allegations on the material issues cannot be dismissed." Intercon Solutions, Inc. v. Basel Action Network, Case No. 12 C 6814, 2013 WL 4552782, at *24 (N.D. Ill. Aug. 28, 2013) (citing Richards v. Mitcheff, 696 F.3d 635, 647 (7th Cir. 2012)).

While a complaint does not have to anticipate an affirmative defense, such as statute of limitations or laches, to survive a motion to dismiss, dismissal is appropriate where the plaintiff "effectively pleads herself out of court by alleging facts that are sufficient to establish the defense." Hollander v. Brown, 457 F.3d 688, 691 n.1 (7th Cir. 2006).

ANALYSIS

The Pleadings

In ruling on a motion for judgment on the pleadings, a court may consider the pleadings alone. Northern Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452 (7th Cir. 1998). The pleadings include "the complaint, the answer, and any written instruments attached as exhibits." Id. Under Fed. R. Civ. P. 10(c), these written instruments, which include affidavits, letters, and contracts, are considered part of the pleadings, provided they are attached to the pleadings. Id. A motion, however, is not a pleading; therefore, some of the exhibitsattached to CMC's motion for judgment on the pleadings must be excluded from this analysis. Fed. R. Civ. P. 7(a), 12(d). Exhibits 1, 2, and 3 of the Motion, while not properly part of the "pleadings," may be judicially noticed as matters of public record without converting this motion into a summary judgment motion. See Palay v. United States, 349 F.3d 418, 425 n.5 (7th Cir. 2003) (citation omitted). However, Exhibit 4, a sworn declaration from Counter-Defendant Patricia Klein filed in conjunction with the motion, must be excluded. ²

Statute of Limitations and Laches Defenses

Lanham Act Claims and Deceptive Trade Practices Act Claim

Counts I, II, and III of the Amended Counterclaim allege violations of the Lanham Act. "The Lanham Act does not set a statute of limitations . . . but the Seventh Circuit explained in Hot Wax that courts should refer 'to analogous state statutes of limitations to determine whether a presumption of laches should apply.'" Clever Ideas, Inc. v. Citicorp Diners Club, Inc., Case No. 02 C 5096, 2003 WL 21982141, at *13 (N.D. Ill. 2003) (quoting Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 819 (7th Cir. 1999)). The three-year statute of limitations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/10(a)(e), is applicable to Counts I, II, and III of the Amended Counterclaim.

"The doctrine of laches is derived from the maxim that those who sleep on their rights, lose them." Clever Ideas, 2003 WL 21982141, at *11 (internal quotation and citations omitted). The applicability of the laches defense is at the discretion of the court, which must look at all thefacts and...