Pado, Inc. v. SG Trademark Holding Co.

527 F.Supp.3d 332

PADO, INC. and Homelec Korea Co., Ltd., Plaintiffs,

v.SG TRADEMARK HOLDING CO. LLC, Wieder and Friedman Enterprises Inc., Moshe Friedman a/k/a/ Coy West, Herschel Friedman, ABC Corporations 1-10, and John Does 1-10, Defendants.

SG Trademark Holding Co. LLC and Wieder and Friedman Enterprises Inc., Counterclaimants,

v.Pado, Inc., Homelec Korea Co., Ltd., Steven Lee, ABC Corporations 1-10, and John Does 1-10, Counterclaim-Defendants.

19-CV-6614 (RPK) (RER)

United States District Court, E.D. New York.

Signed March 22, 2021

Natalie Christine Clayton, Alston & Bird LLP, Alan Bruce Clement, Harral Straat Tenney, Rory Jeffrey Radding, Locke Lord LLP, New York, NY, Holly Saporito, Kristin Adams, Pro Hac Vice, Jason Demian Rosenberg, Pro Hac Vice, Alston & Bird LLP, Atlanta, GA, for Plaintiff/Counterclaim-Defendant Pado, Inc.

Harral Straat Tenney, Alan Bruce Clement, Locke Lord LLP, New York, NY, for Plaintiff/Counterclaim-Defendant Homelec Korea Co., Ltd.

Richard S. Mandaro, Amster, Rothstein & Bernstein, Mark Berkowitz, Tarter Krinsky & Drogin LLP, New York, NY, for Counterclaimant Wieder and Friedman Enterprises Inc.

Mark Berkowitz, Tuvia Rotberg, Sandra Adele Hudak, Tarter Krinsky & Drogin LLP, Richard S. Mandaro, Amster, Rothstein & Bernstein, New York, NY, for Defendants/Counterclaimant SG Trademark Holding Co. LLC, Coy West, Herschel Friedman.

Mark Berkowitz, Tarter Krinsky & Drogin LLP, Richard S. Mandaro, Amster, Rothstein & Bernstein, New York, NY, for Defendant Moshe Friedman.

Natalie Christine Clayton, Alston & Bird LLP, Harral Straat Tenney, Locke Lord LLP, New York, NY, Holly Saporito, Pro Hac Vice, Kristin Adams, Pro Hac Vice, Jason Demian Rosenberg, Pro Hac Vice, Alston & Bird LLP, Atlanta, GA, for Counterclaim-Defendant Steven Lee.

MEMORANDUM AND ORDER

RACHEL P. KOVNER, United States District Judge:

This opinion arises out of a bare-knuckled intellectual property dispute between two makers of handheld massage devices. The plaintiff-manufacturers of the "Purewave" massage device first filed suit alleging that the makers of the competing "Mighty Bliss" device were infringing their patent, copyright, and trademark rights. But then the lawsuit took a turn: the defendants apparently noticed that plaintiffs had never obtained federal registration of the trademark "Purewave." Indeed, the similar trademark "Purwave" (without the first "e") was registered to a different company, Sigma Instruments, Inc. After plaintiffs filed their suit, defendants bought the "Purwave" mark from Sigma Instruments. Armed with that mark, defendants have filed counterclaims against plaintiffs, alleging that the Purewave devices infringe their recently acquired mark. Plaintiffs, for their part, have amended their complaint to seek cancellation of the defendants’ Purwave mark, a declaratory judgment that plaintiffs have not infringed the Purwave mark, and other relief.

Plaintiffs now seek summary judgment on the claims and counterclaims relating to defendants’ Purwave mark. They argue that defendants never actually acquired rights to the Purwave mark because Sigma Instruments had abandoned the mark before selling it to defendants. See Pls.’ Mem. of L. in Supp. of Partial Summ. J. at 6, 8-9 ("Pls.’ Br.") (Dkt. #64-1). Once abandoned, a federally registered trademark "returns to the public domain and may, in principle, be appropriated for use by other actors in the marketplace." ITC Ltd. v. Punchgini, Inc. , 482 F.3d 135, 147 (2d Cir. 2007).

Unfortunately for plaintiffs, the record is equivocal about whether the Purwave mark had been abandoned before its sale. Abandonment of a mark under 15 U.S.C. § 1127 requires both "non-use of the [mark] by the legal owner" and "no intent by that person or entity to resume use in the reasonably foreseeable future." Cross Commerce Media, Inc. v. Collective, Inc. , 841 F.3d 155, 169 (2d Cir. 2016). Sigma Instruments does appear to have stopped using the Purwave mark in the years before the company sold it. But the record is mixed as to whether Sigma Instruments intended to resume using the mark in the reasonably foreseeable future, during the period before the mark's sale. Because a reasonable jury could come out either way on that issue, plaintiffs’ abandonment theory presents a jury question, and their motion for partial summary judgment is denied.

FACTUAL BACKGROUND

I. The Parties

The parties in this case make handheld massage devices. Plaintiff Pado, Inc. has sold such devices under the brand "Purewave" since 2015. Pls. 56.1 ¶ 5.^* Pado asserts common law trademark rights in the Purewave mark, see id. ¶ 38, but the United States Patent and Trademark Office ("USPTO") has thus far denied requests by Pado and its predecessor-in-interest to federally register the Purewave mark, see id. ¶¶ 13-16. The agency has relied on a "likelihood of confusion with" the similar "Purwave" mark. See ibid. Co-plaintiff Homelec Korea Co., Ltd. ("Homelec") licenses to Pado a massager-related patent that is used in the Purewave devices. Id. ¶¶ 3-4.

Defendants SG Trademark Holding Co., LLC ("SG") and Wieder and Friedman Enterprises, Inc. ("Wieder") (together, "the Corporate Defendants") sell the competing massager labeled "Mighty Bliss." See id. ¶¶ 8-9, 12. In December 2019, the Corporate Defendants entered into an agreement to buy the Purwave mark from non-party Sigma Instruments, Inc. See id. ¶ 40; see Defs. 56.1 ¶ 7. The core dispute relevant to the plaintiffs’ summary judgment motion is whether the Corporate Defendants purchased a valid mark in that transaction, or whether Sigma Instruments had abandoned the Purwave mark before December 2019 and therefore had no exclusive right to convey. The question of whether Sigma Instruments had abandoned the Purwave mark depends, in turn, on whether Sigma Instruments had stopped using the mark and whether, if so, the company intended to resume use of the mark in the reasonably foreseeable future. See Cross Commerce Media , 841 F.3d at 169. Facts relevant to that question are set out below.

II. Sigma Instruments and Its Use of the Purwave Mark

Non-party Sigma Instruments primarily sells "chiropractic and orthopedic adjusting instruments." Decl. of Richard Mandaro ("Mandaro Decl."), Exs. 1-2 at 21:15-16 ("Crunick Tr.") (Dkt. #76-3, #76-4). According to the company's CEO, John Crunick, Sigma began to explore the creation of a health and beauty division—the Purwave division—around 2013. Id. 21:5-22:6, 37:21-38:10. To that end, Sigma developed a device to treat "muscle points on the face" through percussive force and to "apply creams to the face." Id. 42:5-44:3; see Defs. 56.1 ¶¶ 29-30. Sigma applied to register the Purwave mark with the USPTO in January 2015, and the registration was issued in March 2016. Defs. 56.1 ¶¶ 58, 61. Sigma was listed as the owner of that mark until December 2019. See id. ¶¶ 7-8.

Sigma manufactured and sold about 20 to 40 Purwave devices between late 2014 and 2016. See Defs. 56.1 ¶ 32; Crunick Tr. 327:11-328:20. There is some conflicting evidence about when Sigma made its last sale. Plaintiffs allege that Sigma has not sold a Purwave device in the United States since January 2014, see Pls. 56.1 ¶ 42, while the Corporate Defendants allege that at least 25 Purwave devices "were manufactured and sold in the U.S. in late 2014 through 2016," Defs. 56.1 ¶ 32. There appears to be no evidence that Sigma sold any Purwave devices after 2016, although Sigma may not have retained complete records of its Purwave sales. See Crunick Tr. 328:19-329:6; see also id. 329:7-14.

Sigma engaged or attempted to engage with potential partners in both domestic and international markets through at least 2016, and showed the device at trade shows as late as 2017. See Defs. 56.1 ¶¶ 37-40, 42. Sigma also provided a Purwave device to a salon in Pennsylvania for demonstrations between December 2015 and mid-2016, see id. ¶ 35, and in September 2016, Sigma unsuccessfully pitched a partnership to the Seattle device division of a major cosmetics company, see id. ¶ 49. Mr. Crunick demonstrated the Purwave device at a trade show in Florida in August 2016 and at several international trade shows in 2016 and 2017. See id. ¶¶ 36-37. In addition, Mr. Crunick testified that, in 2017, Sigma "tried like hell" to develop a relationship with a domestic franchise called "Massage Envy," id. ¶ 42, although those efforts did not bear fruit, see Crunick Tr. 141:7-143:5. Mr. Crunick also testified that he gave a Purwave device to a potential distributor in Italy in 2017. See id. 278:10-281:24.

To the extent feasible, Sigma has continued to provide limited support services to customers with in-market Purwave devices, sometimes for a fee. There is some evidence that Mr. Crunick provided "training and support" to the owner of a Purwave device at a salon in Florida until about mid-2018. Defs. 56.1 ¶ 44; see Crunick. Tr. 213:2-215:11. Sigma has also provided key codes for the Purwave devices to preexisting customers on several occasions, including as recently as December 2019. See Defs. 56.1 ¶¶ 51-53, 56. More specifically, emails show that Sigma responded to requests from one customer in the United Kingdom for key codes in October 2016, to another request by the same customer for machine maintenance in May 2018, and to requests from customers in the Netherlands in September 2018 and December 2019. See ibid. ; see also Mandaro Decl., Exs. 38-40 (Dkt. #76-40, #76-41, #76-42) (emails). Sigma may also have reformatted "serial tags" on a Purwave product for a customer in Italy in March 2017, although the record only reflects that such tags were requested, and Mr. Crunick testified that he could not recall whether the tags were sent. See Defs. 56.1 ¶ 40; Crunick Tr. 282:9-283:8. In April 2018, Mr. Crunick sent Purwave device training videos to a foreign distributor. See Defs. 56.1 ¶ 43. And Mr. Crunick testified that sometime around May 2020, he communicated on Facebook with a customer in Amsterdam who was having...