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NATIONWIDE TARPS INC. v. MIDWEST CANVAS CORP.

October 16, 2002

NATIONWIDE TARPS, INC. D/B/A NTI GLOBAL, A NEW YORK CORPORATION, PLAINTIFF,
V.
MIDWEST CANVAS CORPORATION, AN ILLINOIS CORPORATION, DEFENDANT



The opinion of the court was delivered by: David N. Hurd, District Judge

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

Plaintiff Nationwide Tarps, Inc. ("NTI") commenced the instant action against Defendant Midwest Canvas Corporation ("MCC") asserting claims for violations of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). MCC asserts counterclaims for a violation of section 43(a) of the Lanham Act, defamation, prima facie tort, and unfair competition and trade deception.

NTI has made a motion seeking (1) partial summary judgment on its Lanham Act claims; (2) a preliminary injunction precluding MCC from making certain representations concerning its product; (3) a temporary injunction requiring MCC to recall certain of its products and place them in the possession of a third party to prevent continued damage to NTI and to ensure a source of payment of any damages awarded to NTI; and (4) summary judgment dismissing MCC's counterclaims. MCC opposes.

Oral argument was heard on November 30, 2001, in Albany, New York. Decision was reserved.

II. FACTS
NTI and MCC are in the business of selling concrete insulating blankets. Concrete insulating blankets are often used for cold weather concreting. Because concrete may not properly cure in low temperatures, during periods of rapid temperature change, or in other adverse weather conditions, concrete insulating blankets are used to hold in the heat of hydration produced by the curing concrete.
Generally speaking, there are two different types of insulation — mass insulation and reflective insulation. (See Pl.'s Resp. 7.1 Statement at ¶¶ 23, 25.) Mass. insulation restricts the flow of heat through the product's mass. See 61 Fed. Reg. 13659 at n. 4. Reflective insulation restricts heat by reflecting back radiant heat and, thus, is installed facing an air space. See id.; Pl.'s Resp. 7.1 Statement at ¶ 25. A measurement of insulation's effectiveness is expressed as a "thermal resistance" value or "R" value. See, e.g., 16 C.F.R. § 460.5 ("R-value measures resistance to heat flow."). The higher the R value, the better the product's insulating ability. See, e.g., 16 C.F.R. § 460.12(c).
While NTI and MCC sell some similar products, unlike NTI, MCC sells an insulating blanket, known as its Space Age blanket, that has one or more layers of heat reflective metal foil or aluminized-coated woven polyethylene. MCC began selling its Space Age blankets in or about 1994. MCC claimed, and continues to claim, that its Space Age blankets have rather high R values. Beginning in approximately 1996, MCC placed a product label on certain of its blankets indicating that the Space Age blanket had an R value of 6.32 with the "Reflective Side Down to Concrete." (Oct. 12, 2001, Handwerker Aff. at Ex. GH-6 ("Handwerker Aff.".)) MCC's product literature in or about 1998 stated that its R values were tested with a 3 inch air space. Id. at Ex. GH-5. MCC's 2000 product literature states that "Space Age . . . with reflective aluminum test out to an R=6.93 using 3" air spaces." Id. at Ex. GH-4. In 2001, MCC's advertising literature provided that "[t]he products were tested for their effective ability to radiate, convect and conduct heat by facing the products towards a three-inch airspace." Id. at GH-3. Since approximately August 2001, MCC has placed a product label on its blankets stating that the product was tested "toward a three-inch air space." Id. at GH-7 and GH-8.
In December 2000, NTI commenced the instant action contending that MCC's statements regarding the R value of its products are false and, therefore, violate section 43(a) of the Lanham Act. In January 2001, NTI sent letters to its customers and potential customers, including MCC's customers, stating, in part, as follows:
NTI Global is concerned that your business may be affected by a dispute between NTI and Midwest Canvas concerning the insulating blankets manufactured by Midwest. The purpose of this letter is to insure that you have notice of the following:
NTI Global has entered into a Federal lawsuit against Midwest Canvas. This lawsuit alleges that Midwest Canvas has intentionally misrepresented the "R" value of their insulating blankets. NTI has and will vigorously pursue this action;
As a part of the Federal legal action, NTI will strongly pursue efforts to correct the false reputation within the marketplace which Midwest has created for its insulating blankets through their misrepresentations; and
NTI's efforts to correct the market may have a negative affect on your business in the event you continue to use the alleged "R" values provided by Midwest. NTI expects that their efforts will lead to publicity directed to construction companies, trade organizations and state governments concerning the misrepresentations made by Midwest.

(Answer at Ex. A.)

In March 2001, MCC filed its Answer to NTI's Complaint. In the Answer, MCC denied that it violated the Lanham Act and asserted counterclaims for defamation, a violation of section 43(a) the Lanham Act, prima facie tort, and unfair competition and trade deception based on NTI's January 2001 letter.
III. SUMMARY JUDGMENT STANDARD
A moving party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The ultimate inquiry is whether a reasonable jury could find for the nonmoving party based on the evidence presented, the legitimate inferences that could be drawn from that evidence in favor of the nonmoving party, and the applicable burden of proof. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). In determining a motion for summary judgment, all inferences to be drawn from the facts contained in the exhibits and depositions "must be viewed in the light most favorable to the party opposing the motion." United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); Hawkins v. Steingut, 829 F.2d 317, 319 (2d Cir. 1987). Nevertheless, "the litigant opposing summary judgment `may not rest upon mere conclusory allegations or denials' as a vehicle for obtaining a trial." Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980) (quoting SEC v. Research Automation Corp., 585 F.2d 31, 33 (2d Cir. 1978)).
IV. DISCUSSION

A. NTI's Motion for Summary Judgment on its Lanham Act Claims

Any person who, on or in connection with any goods or services . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . . (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial ...

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