Genesis Strategies, Inc. v. Pitney Bowes, Inc.

50 F.Supp.3d 59

111 U.S.P.Q.2d 1050

GENESIS STRATEGIES, INC., Plaintiff

v.PITNEY BOWES, INC., and ICSN, Inc., Defendants.

Civil Action No. 11–12270–TSH.

United States District Court, D. Massachusetts.

Signed May 16, 2014.

Timothy J. Perry, Perry, Krumsiek & Dolan LLP, Boston, MA, for Plaintiff.

Alexandra Capachietti, Mark Schonfeld, Burns & Levinson LLP, Boston, MA, Katherine Young Fergus, Spruce Law LLC, Andover, MA, for Defendants.

MEMORANDUM OF DECISION ON DEFENDANTS PITNEY BOWES, INC. AND ICSN, INC.'S MOTION FOR SUMMARY JUDGMENT (Docket No. 54)

HILLMAN, District Judge.

Introduction

Plaintiff Genesis Strategies (“Genesis” or “Plaintiff”) filed a complaint against Pitney Bowes, Inc. (“Pitney Bowes”) and ICSN, Inc. (“ICSN”) (collectively “Defendants”) seeking monetary damages from Pitney Bowes for trade dress infringement (Count I), violation of M.G.L. c. 93A sec. 11 (Count II), and fraudulent misrepresentation (Count V); and from ICSN for trade dress infringement (Count III), and unfair trade practices in violation of M.G.L. c. 93A sec. 11 (Count IV). Defendants have moved for summary judgment on all counts. For the reasons set forth below, the motion is granted in part and denied in part.

Facts

Genesis is an aftermarket retailer that sells styluses, stylus pens, and stylus holders through various websites. In January 2006, Genesis' President, James Boudreau (“Boudreau”), created the stylus holder at issue in this litigation. The new stylus holder had three unique features: 1) an oval-shaped backplate; 2) a wineglass shape; and 3) a curved spine.

Between August 2009 and October 2009, Pitney Bowes and Plaintiff engaged in discussions regarding purchasing stylus holders. Plaintiff contends that Pitney Bowes represented that it would order from the Plaintiff between 15,000 and 18,000 units a year from Pitney Bowes, for the next three years, at a price of about $7 per holder.

On February 11, 2010, Pitney Bowes ordered fifty stylus holders online from Plaintiff. On that same date, Ryan Maddern, a product manager at Pitney Bowes, emailed Ezra Shim from ICSN asking him to source a stylus holder “similar to” Plaintiff's stylus holder. Ezra Shim then emailed Arbil Cai, another ICSN employee, among others, informing them of the need to source the stylus holder for Pitney Bowes. In March 2010, Pitney Bowes ordered 5,278 stylus holders from Plaintiff. On March 8, 2010, Kevin Lee from ICSN emailed Kevin Ko, also from ICSN, stating that ICSN had probably found a manufacturer who could produce the requested stylus holder.

After going back and forth with the potential manufacturer regarding the exact details, the manufacturer emailed Kevin Ko on March 12, 2010 with a request for a “custom sample to avoid any mistakes.” On March 15, 2010, the manufacturer ordered two stylus holders from Plaintiff, from which they made a mold to create their own stylus holders. Thereafter, Pitney Bowes ordered stylus holders from ICSN at around $1.50 per holder and placed no further orders with Plaintiff.

Discussion

Standard of Review

Summary judgment is appropriate when “there is no genuine issue as to any material fact” and thus “the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). An issue is “genuine” when the evidence is such that a reasonable fact-finder could resolve the point in favor of the non-moving party, and a fact is “material” when it might affect the outcome of the suit under the applicable law. Morris v. Gov't Dev. Bank, 27 F.3d 746, 748 (1st Cir.1994). The moving party is responsible for “identifying those portions [of the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). It can meet its burden either by “offering evidence to disprove an element of the plaintiff's case or by demonstrating an ‘absence of evidence to support the non-moving party's case.’ ” Rakes v. U.S., 352 F.Supp.2d 47, 52 (D.Mass.2005) (quoting Celotex, 477 U.S. at 325, 106 S.Ct. 2548 ). The non-moving party bears the burden of placing at least one material fact into dispute after the moving party shows the absence of any disputed material fact. Mendes v. Medtronic, Inc., 18 F.3d 13, 15 (1st Cir.1994) (discussing Celotex, 477 U.S. at 325, 106 S.Ct. 2548 ). When ruling on a motion for summary judgment, the court must construe the facts in the light most favorable to the nonmoving party. Benoit v. Tech. Mfg. Corp., 331 F.3d 166, 173 (1st Cir.2003).

Trade Dress Infringement (Counts I & III)

The Lanham Act provides protection for trade dress, 15 U.S.C. § 1125(a), which is defined by the courts as “the design and appearance of a product together with the elements making up the overall image that serves to identify the product presented to the consumer.” Yankee Candle v. Bridgewater Candle, 259 F.3d 25, 37 (1st Cir.2001). In order for trade dress to be protected under the Lanham Act, a plaintiff must prove that the trade dress was used in commerce, is nonfunctional, and is distinctive. Id.

1. Use in Commerce

Neither party disputes that the product design for which Plaintiff is seeking protection was used in commerce.

2. Functionality

In order to receive protection, a trade dress must be non-functional. I.P. Lund Trading v. Kohler, 163 F.3d 27, 36 (1st Cir.1998). The burden of proving non-functionality rests on the party seeking protection. Id. at 37–38. Functionality can be achieved through the determination that either the design was essential to the use or purpose of the device, or that the design affects the cost or quality of the device. TrafFix Devices v. Marketing Displays, 532 U.S. 23, 31–34, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001). The fact that the trade dress contains elements that are functional does not preclude protection under the Lanham Act if the combination of all the elements is not functional. I.P. Lund, 163 F.3d at 38.

Plaintiff claims entitlement to trade dress protection for three features of its stylus: the “wineglass” shape, the oval-shaped backplate, and the curved spine of the holder. Plaintiff asserts both a functional and a non-functional use for each of these three features.

a. Wineglass Shape

For the wineglass shape, Plaintiff explains that the holder must be narrower at the bottom than at the top so that stylus does not “flop around a lot.” They also note that from a design standpoint, the wineglass shape is “more pleasing to the eye” than other stylus holders, and that it designed its holder at the request of customers who were seeking a product more pleasing to the eye. Plaintiff alleges that the inside of the stylus holder is functional, but the wineglass shape on the outside is designed for aesthetic purposes only.¹

While Defendants assert that comparing the outside and the inside of the stylus holder is “nonsensical,” there is evidence on the record that a stylus holder can be narrower at the bottom and wider at the top without a wineglass shape on the outside. The wineglass shape on the outside does not affect the essential use of the stylus holder or the cost or quality of the stylus holder. Therefore, Plaintiff has raised a question of fact regarding the functionality of the wineglass shape.

b. Oval–Shaped Backplate

Boudreau notes in his deposition that at the time he designed his stylus holder, there was another stylus holder already on the market which was “square, blocky, and egalitarian.” He states that he created his own holder to be more “cosmetically pleasing since it was going to be in commercial and retail environments.” He created a backplate that had more “curves and round features” and increased the size of the backplate in order to obtain a greater amount of surface area for screw holes and to make it easier to attach the stylus holder to a surface. Plaintiff therefore asserts both functional and non-functional uses for the enlarged backplate with an oval shape.

While the enlarged surface is certainly a functional aspect of Plaintiff's stylus holder, there is nothing to indicate that the oval shape itself is functional. An oval shape does not make the product more efficient, nor does it affect the cost or quality of the holder. Therefore, the question of functionality in regards to the oval-shaped backplate should be submitted to a fact finder.

c. Curved Spine

Plaintiff does attribute a functional aspect to the curved spine. The spine has the ability to hide the tether, which is not a feature on other stylus holders. Plaintiff claims, however, that hiding the tether is for aesthetic reasons. This raises a question of fact as to the functionality of the curved spine.

d. Overall Design

While there may be some functional aspects of the design, the Court needs to determine if the overall design is functional. Plaintiff relies on I.P. Lund Trading which held that a design can still be protected under trade dress when it contains functional features, so long as the combination of the features is not functional. 163 F.3d at 37.² Defendants rely on Wal–Mart v. Samara Brothers, which determined that trade dress can never be inherently distinctive; rather the trade dress holder must show secondary meaning. 529 U.S. 205, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000). The holding, however, does not go to the functionality of the trade dress, but rather to the third element, distinctiveness. Defendants also quote a Massachusetts District Court case which states that when “all the component parts of a product design are functional, it is semantic trickery to say that there is still some sort of separate ‘overall appearance’ which is non-functional.” Straumann Co. v. Lifecore Biomedical Inc., 278 F.Supp.2d 130, 134 (D.Mass.2003) (internal quotations omitted). Since Defendant has not shown that all of the component parts of the product design are functional, Plaintiff has demonstrated there is a question of fact as to the functionality of the overall design.

3. Distinctiveness

A trademark can be distinctive either...