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Gsc Technologies Corporation v. Umbra

April 11, 2011

GSC TECHNOLOGIES CORPORATION, PLAINTIFF,
v.
UMBRA, LLC, AND UMBRA, INC., DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

Presently before this Court are Plaintiff GSC Technologies Corporation's ("GSC") Motion for Judgment on the Pleadings seeking dismissal of Defendants' counterclaims (Docket No. 23) and Defendants Umbra, LLC and Umbra, Inc.'s (collectively, "Umbra") Motion to Amend their Answer (Docket No. 31). For the following reasons, Plaintiff's motion is denied and Defendants' motion is granted.

As an initial matter, this Court will grant Umbra's Motion to Amend its Answer. District courts have broad discretion to grant a party leave to amend its pleadings and the federal rules dictate that courts "freely give leave when justice so requires." Fed. R. Civ. P. 15 (a)(2); see also Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); Ellis v. Chao, 336 F.3d 114, 127 (2d Cir. 2003). GSC argues that Umbra's proposed amended answer (Docket No. 32-2) is a futile re-pleading of insufficient facts and does not cure the alleged deficiencies in Umbra's counterclaims. Nonetheless, GSC has addressed Umbra's proposed amended answer and it is therefore not prejudiced by this Court considering the amended pleading at this time. Moreover, this Court finds that Umbra's proposed amendments are not futile. Accordingly, for the sake of efficiency and expediency, and given the lack of prejudice, this Court will grant leave to amend and resolve GSC's Motion for Judgment on the Pleadings as against the amended answer (Docket No. 32-2).

II. BACKGROUND

A. GSC's Complaint

GSC manufactures folding tables and chairs and injection-molded housewares. (Complaint, Docket No. 1, ¶ 10.) On December 29, 1998, Karim Rashid filed a patent application for a design entitled "Chair." (Complaint, ¶ 11.) The United States Patent and Trademark Office later issued design patent 417,795 (the "Rashid patent") to Umbra, as Mr. Rashid's assignee. (Complaint, ¶ 11.) Umbra marketed and continues to market what it views as the embodiment of the Rashid patent: a stackable chair with tubular, steel legs ("the OH chair"). (Complaint, ¶ 12.)

In 2006, the parties litigated Umbra's claim that GSC was manufacturing a chair - known as the AHHA chair - that infringed the Rashid patent. (Complaint, ¶ 14.) The suit settled after GSC agreed to redesign the chair. (Complaint, ¶ 15.) In particular, GSC agreed to reduce the area of the holes in the AHHA chair by 40%, and Umbra agreed to a redesign of the AHHA chair that included a hole in the seat, which GSC maintained was functional for stacking and comfort purposes. (Complaint, ¶ 15.)

After this settlement, GSC designed another chair - the V-16 GSC Chair - that GSC maintains does not infringe the Rashid patent. (Complaint, ¶¶ 16, 24.) This chair allegedly required GSC to invest in changing the AHHA mold or make a new mold to accommodate the V-16 GSC chair design. (Complaint, ¶ 18.) The V-16 GSC Chair has a reduced area of holes, as demanded in the settlement, and does not have arm holes, which the OH and AHHA chairs do. (Complaint, ¶¶ 16, 25, and Exhibits A, B, and C.*fn1 ) Umbra has advised GSC, however, that it believes that the V-16 GSC Chair infringes its Rashid patent. (Complaint, ¶¶ 17-27 and Exhibit D.)

Consequently, GSC filed this suit on July 18, 2007, seeking a declaratory judgment "that any manufacture, sale, offer for sale, and distribution of the V-16 GSC Chair in the United States, and any importation thereof into the United States, does not infringe the '795 Rashid Patent" and related relief pursuant to 35 U.S.C. § 285. (Complaint, ¶ 29.) GSC also seeks attorney's fees and injunctive relief prohibiting Umbra from falsely alleging that the V-16 GSC chair infringes the Rashid patent. (Complaint, Wherefore Clause, ¶¶ B, C.)

B. Umbra's Counterclaims

Umbra designs, produces, and sells home products. (Amended Answer, Docket 32-2, ¶ 45.) It owns the Rashid patent, which is presently valid and in force, and it has sold the OH chair throughout the United States and elsewhere. (Amended Answer, ¶¶ 46, 48, 49.)

Referencing the prior litigation discussed above, Umbra maintains that the settlement agreement resolving that case contemplated that GSC would design, market, and sell only one chair using the mold used for the AHHA chair, and the design for that chair was specifically negotiated and then memorialized in the settlement agreement. (Amended Answer, ¶¶ 54, 55.) According to Umbra, the V-16 GSC chair is different than the chair design negotiated in the settlement agreement. (Amended Answer, ¶ 58.)

Umbra alleges that GSC's plan to market the V-16 GSC chair constitutes anticipatory breach of contract, because GSC's production, marketing, or sale of any chair, other than the one described in the settlement agreement, is a breach. (Amended Answer, ΒΆΒΆ56-61.) Umbra also asserts causes of action for breach of contract relating to attorney's fees, trade ...


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