Telebrands Corp. v. Newmetro Design, LLC

TELEBRANDS CORP., Plaintiff, v. NEWMETRO DESIGN, LLC, Defendant.

Cv. No. 16-1981 (WHW-CLW)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

November 10, 2016

NOT FOR PUBLICATION

OPINION

Walls, Senior District Judge

This is a dispute over the ownership of intellectual property rights in two, practically identical microwave steam cleaning products. Plaintiff Telebrands Corp. ("Telebrands"), marketer of a product known as the "ANGRY MAMA," brings various federal and state law claims against Defendant-Counterclaimant NewMetro Design, LLC ("New Metro") for trademark, trade dress, and copyright infringement; unfair competition; and fraud on the United States Patent and Trademark Office. New Metro, marketer of a product known as the "ANGRY-MAMA," brings various federal and state law counterclaims against Telebrands for trademark, trade dress, and copyright infringement and unfair competition, as well as a claim opposing Telebrands' federal trademark applications. Both parties also seek declaratory judgments of non-infringement for their own products.

Plaintiff Telebrands seeks a preliminary injunction under Fed. R. Civ. P. 65(a) enjoining New Metro from infringing Telebrands' copyrights and trademarks and engaging in unfair competition. New Metro seeks a preliminary injunction enjoining Telebrands from infringing New Metro's copyrights and trademarks and engaging in unfair competition. The Court held oral argument on October 25, 2016. Both Parties' motions for preliminary injunction are denied.

FACTUAL AND PROCEDURAL HISTORY

I. The Parties and the ANGRY MAMA/ANGRY-MAMA products

Plaintiff Telebrands, a New Jersey corporation with its principal place of business in Fairfield, New Jersey, is a direct marketing company that markets and sells "a wide variety of consumer products" through direct response advertising, catalogue, mail order, internet sales, and national retail stores. Complaint, ECF No. 1 ¶¶ 2, 8. Telebrands markets and sells a microwave steam cleaning product known as the ANGRY MAMA, described by Telebrands as a "microwaveable character that is filled with water and vinegar to make cleaning the microwave easier." Id. ¶ 9. Upon being microwaved, the product emits steam that "softens stains and particles in the microwave to make microwave cleaning easier." Id.

Defendant-Counterclaimant New Metro, a Pennsylvania limited liability company with its principal place of business in Duncansville, Pennsylvania, markets and sells a microwave steam cleaning product known as the "ANGRY-MAMA," described by New Metro as a "plastic microwaveable device that is filled with water and vinegar and heated in the microwave." Def. Answer and Counterclaims, ECF No. 13 ¶¶ 1, 7.¹ Upon being microwaved, the product emits steam that "softens particles and allows for easier cleaning of the microwave." Id.

The two products are essentially identical. See ECF No. 1 ¶ 11 (description and photograph of ANGRY MAMA product); ECF No. 13 ¶ 7 (description and photograph of ANGRY-MAMA product). As both Parties claim, the products resemble an "angry woman,"with a blue,² roughly cylindrical body styled to resemble a floral-printed dress accessorized with a pearl necklace; arms held akimbo; a scowling face; and a circular red hair style with holes on top for steam to escape.³ See ECF No. 1 ¶ 11 (describing appearance as the Telebrands product trade dress); ECF No. 13 ¶ 7.

The ANGRY MAMA and ANGRY-MAMA were initially developed and manufactured as a single product by the Hong Kong-based company Daka Research, Inc. ("Daka"), which is not a party in this action. ECF No. 1 ¶ 9; ECF No. 13 ¶ 23. Telebrands and New Metro agree about several basic facts regarding Daka and the history of the ANGRY MAMA/ANGRY-MAMA product: (a) Daka developed the product, at least in part, in 2014; (b) Daka initially manufactured the product for New Metro to sell in the United States; (c) Daka eventually began manufacturing the product for Telebrands to sell in the United States; (d) Daka informed New Metro that it no longer had permission to sell the product in the United States because Telebrands had exclusive rights to the product; and (e) New Metro continued to sell the product.

The remaining facts, including when and whether Daka marketed the product in the United States on its own, whether Daka ever held United States intellectual property rights in the product, and whether Daka assigned or licensed these rights to either Party, are highly disputed.

II. Daka's development and alleged marketing of the ANGRY MAMA/ANGRY-MAMA product

According to Telebrands, Daka developed and created the ANGRY MAMA product "[a]t least as early as 2014." ECF No. 1 ¶ 9. Telebrands alleges that, in September 2014, Daka began marketing and offering the product for sale to customers in the United States, including Defendant-Counterclaimant New Metro. Id. ¶ 10. As example, on September 22, 2014, Daka allegedly uploaded a video advertising the product to Youtube. Reply Decl. Jesse Chow in Supp. P. Mot. Prelim. Injunction ("Chow Declaration 2"), ECF No. 30 ¶ 4; see also ECF No. 30 Ex. B (undated screenshot of "Angry Mama" video, with 3,459 views and note "Uploaded on Sep 22, 2014"). At least as early as February 2015, Telebrands claims that Daka began using the word mark "ANGRY MAMA" on its website in connection with the product. ECF No. 1 ¶ 14.

On October 16 or 17, 2014, according to Telebrands, an "agent" of New Metro met with Daka in Hong Kong and learned about the ANGRY MAMA product. Daka allegedly provided New Metro's agent with samples of the product and marketing materials featuring the trademarks and product trade dress. ECF No. 1 ¶ 1; Decl. Jesse Chow in Supp. P. Mot. Prelim. Injunction ("Chow Declaration 1"), ECF No. 12-3 ¶ 6. New Metro disputes this account of events and claims that the "agent" who met with Daka in Hong Kong in 2014, Howard Locker, was actually a sales agent working on commission for Daka, not a representative of New Metro. ECF No. 22 at 19; Decl. Howard Locker in Supp. Def. Opp. Mot. P. Injunction ("Locker Declaration"), ECF No. 22-4. New Metro further claims that Locker did not receive marketing materials or product samples at the meeting. ECF No. 22 at 19; ECF No. 22-4 ¶ 5.

In March 2015, Daka operated a booth at the International Housewares Show in Chicago, Illinois. At this trade show, Telebrands claims that Daka distributed ANGRY MAMA productsand marketing materials featuring the product trade dress and trademarks to consumers, including representatives from New Metro. Id. ¶¶ 18, 22; ECF No. 12-3 ¶ 8. New Metro claims, however, that the International Housewares Show was not open to the consumer public, ECF No. 22 at 15-16; that Jesse Chow, the Business Development Director of Daka, distributed no marketing materials and displayed only a single prototype of the product, which was "obscured among his other numerous products on display," id. at 16; Decl. Gary Fallowes in Supp. Def. Opp. Mot. P. Injunction ("Fallowes Declaration"); ECF No. 22-2 ¶¶ 14-17; and that New Metro was the only company at the International Housewares Show to "notice" the prototype of the ANGRY MAMA product. ECF No. 22 at 16; ECF No. 22-2 ¶ 16.

III.New Metro's purchase, marketing, and sale of the ANGRY-MAMA product

The Parties agree that, soon after the International Housewares Show, New Metro contacted Daka and placed an order for the manufacture of ANGRY-MAMA products. ECF No. 1 ¶ 23; ECF No. 22-2 ¶¶ 8, 18. New Metro claims that it ordered the products to its "own manufacturing specifications," ECF No. 22-2 ¶¶ 8, 18, and alleges that it designed (a) the product's blue and red color scheme, (b) the packaging, and (c) the "Steam Design," a logo featured on ANGRY-MAMA packaging that consists of the word "ANGRY-mama," with "ANGRY" written in uppercase font, "mama" written in lowercase font, and a simple, graphical representation of a cloud of steam rising from the "A" in "ANGRY." Id. ¶¶ 8-10; ECF No. 13 ¶ 12-13 (picture of "Steam Design"); see also ECF No. 22-2 Ex. D (NewMetro Design, LLC document dated March 27, 2015 featuring Steam Design, mock-ups of three color variations of ANGRY-MAMA product, and Pantone color specifications); ECF No. 22-2 Ex. E (May 5-14, 2015 email chain between Howard Locker, Jesse Chow, and Gary Fallowes, the owner and founder of New Metro, discussing coloration and materials of ANGRY-MAMA product). NewMetro received U.S. Copyright Registration No. VA 2-001-024 for the Steam Design on April 22, 2016. ECF No. 22-2 ¶ 11; see also ECF No. 22-2 Ex. F. (Certificate of Registration). The ANGRY-MAMA packaging that New Metro allegedly designed bears the name "NewMetro" but not the name "Daka." ECF No. 22-2 ¶ 12.

New Metro states that it began marketing ANGRY-MAMA products in the United States on or about March 23, 2015, after the International Housewares Show but several months before Telebrands began marketing its ANGRY MAMA products. ECF No. 13 ¶¶ 8, 24, 37-38; see also ECF No. 22-2 Ex. A (March 24-26, 2015 emails from New Metro manager Bob Trinque to redacted recipients advertising ANGRY-MAMA products). New Metro allegedly sold its first ANGRY-MAMA products to U.S. customers in April 2015. ECF No. 13 ¶ 9; see also ECF No. 22-2 Ex. C (April 1-June 18, 2015 invoices for ANGRY-MAMA products).

New Metro claims that it was the first U.S. company to which Daka sold ANGRY MAMA/ANGRY-MAMA products, that Daka "actively encouraged" New Metro to sell ANGRY-MAMA products in the United States, ECF No. 13 ¶¶ 32-33; ECF No. 22-2 ¶ 20, and that Daka did not sell the products to any other U.S. company until April 2015. ECF No. 13 ¶ 32. New Metro claims that, by May 11, 2015, five additional U.S. companies, not including Telebrands, had expressed "interest" to Daka in ANGRY-MAMA products, and that Daka eventually began manufacturing the products for companies other than New Metro. ECF No. 22 at 5. In response to a complaint from New Metro about these other companies, Daka allegedly...