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B&G PLASTICS, INC. v. EASTERN CREATIVE INDUSTRIES

February 18, 2004.

B&G PLASTICS, INC., Plaintiff, -against- EASTERN CREATIVE INDUSTRIES, INC., Defendant


The opinion of the court was delivered by: JAMES FRANCIS, Magistrate Judge

MEMORANDUM AND ORDER

This is a patent infringement case involving two corporations engaged in the production and sale of pre-knotted neckties. The parties submitted a Joint Pre-Trial Order to the Honorable Richard M. Berman on September 15, 2003, listing their trial exhibits and including the direct testimony of their trial witnesses. Each party subsequently submitted a motion in limine to exclude portions of witness testimony and various documents. The defendant, Eastern Creative Industries, Inc. ("Eastern"), has moved to exclude nine of the plaintiff's exhibits and to strike a portion of the testimony of the president of B&G Plastics, Inc. ("B&G"), Chester Kolton. (Defendant Eastern's Motion to Not Admit Into Evidence Nine of Plaintiff's Exhibits and to Strike a Portion of the Testimony of Chester Kolton ("Def. Motion")). The plaintiff has cross-moved to exclude testimony of Eastern's president, John Najarian. (Plaintiff's Cross Motion in Limine to Exclude John Najarian's Hearsay and Opinion Trial Testimony ("Pl. Motion")). For the following reasons, both motions are denied. Page 2

Background

  The plaintiff and defendant are both New Jersey corporations that produce and sell pre-knotted ties and the hangers that display those ties. On February 6, 1998, B&G filed a complaint against Eastern, alleging patent infringement of U.S. Patent No. 5,556,014 ("the `014 patent"), and tortious interference with business relations. (Complaint ("Compl."), ¶¶ 6, 16). The `014 patent was issued to B&G on September 17, 1996, and is entitled "Hanger Composite for Display of Neckties with Preformed Knots." (United States Patent Number 5,556,014, attached as Exh. 1 to Compl.). B&G claimed that a competing hanger marketed by Eastern infringed the `014 patent. B&G argued that Eastern had modified one of its clips to enable that clip to be used with a B&G hanger. The plaintiff claimed that using this modified clip with a B&G hanger constituted direct infringement of the `014 patent. In a Report and Recommendation that was later adopted by Judge Berman, I found that there were disputed issues of material fact with regard to the validity of the `014 patent, and recommended against granting summary judgment on that issue. B&G Plastics, Inc. v. Eastern Creative Industries, Inc., 269 F. Supp.2d 450, 471 (S.D.N.Y. 2003).

  B&G's summary judgment motion for tortious interference with business relations related to a different set of patents. The defendant owns two patents, U.S. Patent No. 4,337,539 ("the `539 patent") and U.S. Design Patent No. 267,289 ("the `289 patent"). B&G Plastics, 269 F. Supp.2d at 465. The plaintiff's claim Page 3 involved a series of communications initiated by Eastern regarding its `289 and `539 patents, which it believed were being infringed by B&G. In March 1995, the defendant came to believe that B&G was manufacturing and selling a neck-tie support clip that infringed the `289 and `539 patents. Id. at 466. After seeking the advice of counsel, Eastern sent a letter dated March 29, 1995 ("the March letter"), informing B&G that its clip "appears to be substantially identical" to the clip covered by the `289 and `539 patents. Id. The letter further stated that if B&G continued to make or sell the infringing article, it and others involved "will all be named as party defendants." Id. The defendant provided a copy of this letter to Steinberg Neckwear, a customer of both B&G and Eastern, on April 3, 1995. Id.

  In response to Eastern's letter, B&G sought opinion of its own patent counsel and was informed that the B&G clip did not infringe Eastern's patents, and furthermore that the `289 patent was invalid and therefore B&G was unable to infringe it. Id. at 467. B&G's counsel then shared this information with Eastern's attorney by letter on April 11, 1995. Id. Despite the opinion of its counsel that there was no infringement, B&G decided to issue a "hold harmless" letter to its customers on April 13, 1995 (the "hold harmless letter"). This letter informed customers that B&G would take responsibility for paying "any and all monetary damages" that could potentially arise if a judgment were entered against B&G "for infringement of [the `539 or `289 patents]." Id.

  After receiving the opinion of B&G's counsel, Eastern obtained Page 4 a second patent counsel, who advised it that B&G's clips did not likely infringe on Eastern's patents. Id. After hearing this, Eastern stopped pursuing an infringement claim against B&G. Eastern also claimed that it advised Joseph Steinberg of Steinberg Neckwear that it would not be bringing any infringement action against B&G. Id.

  Although it was satisfied that B&G's clips did not infringe its patents, Eastern still believed that other companies were infringing. Eastern therefore sent a letter to all of its customers on June 16, 1995 ("the June letter"), stating that "[i]t is our understanding that one or more companies are selling pretied neckties having a knot support assembly which copies and infringes on the patented knot support assembly of the ['539] patent." Id. The letter went on to state that Eastern was "aware of another pre-tied necktie available in the market-place having a different knot support assembly which does not infringe on the ['539] patent." Id. According to Eastern, this last paragraph was included to "cover [] the units sold by B&G Plastics and reduce [] the likelihood of a claim being asserted against [Eastern] by B&G that [Eastern's] notice letter implies that all third-party units infringe on [its] patent." Id.*fn1

  In its summary judgment motion, B&G claimed that the `289 patent was invalid and that its business relationship with Steinberg Neckwear was compromised when Eastern shared a copy of Page 5 the infringement letter with Steinberg. B&G asserted that Eastern made the allegations in bad faith and that the letters constituted tortious interference. Id. Additionally, B&G asserted that after receiving the June letter from Eastern, customers would assume that the infringing goods were made by B&G because of the hold harmless letter B&G had issued to its customers earlier. Id. In considering this claim, I found that there was not sufficient evidence from which a reasonable jury could conclude that Eastern had alleged patent infringement in bad faith. Without bad faith, a requirement for a claim of tortious interference, B&G could not support this claim. The plaintiff's motion for summary judgment on the tortious interference claim was therefore denied. Id. at 468-71.

  Eastern, in turn, moved for summary judgment with respect to B&G's patent infringement claim and the tortious interference claim. The defendant claimed that there was no direct infringement of the `014 patent because of the existence of an implied license. Because the validity of the `014 patent was a threshold consideration for determining Eastern's motion — i.e., if the `014 patent was found to be invalid, it would follow as a matter of law that Eastern's use of its own clip with B&G's hanger did not infringe it — summary judgment was denied on this claim. Id. at 471. Finally, I found that B&G was not able to demonstrate that Eastern had acted in bad faith in informing the industry of potential infringement of its patent, nor was it able to show that it suffered any damages as a result. Id. at 470-71. Accordingly, Page 6 the defendant's motion for summary judgment on the tortious interference claim was granted. Id. at 471. Discussion

  The purpose of a motion in limine is to allow the trial court to rule in advance of trial on the admissibility and relevance of certain anticipated evidence. See Luce v. United States, 469 U.S. 38, 41 n.4 (1984); Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir. 1996); United States v. Paredes, 176 F. Supp.2d 192, 193 (S.D.N.Y. 2001). Evidence should be excluded on a motion in limine only when the evidence is clearly inadmissible on all potential grounds. See Baxter Diagnostics, Inc. v. Novatek Medical, Inc., No. 94 Civ. 5220, 1998 WL 665138, at *3 (S.D.N.Y. Sept. 25, 1998). To be admissible, evidence must be both relevant and reliable. Evidence "having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence" is relevant. Fed.R.Evid. 401; see Amorgianos v. National Railroad Passenger Corp., 303 F.3d 256, 265 (2d Cir. 2002).

  A. Defendant's Motions

  1. Chester Kolton's Testimony

  The defendant first moves to strike some of the testimony of Chester Kolton on the ground that it is no longer relevant to the case. The defendant has identified several portions of Mr. Kolton's testimony that allegedly relate solely to the tortious interference claim that was previously dismissed. Eastern reasons that it would be "an unnecessary burden" to "have to ...


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