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Overseas Direct Import Co., Ltd v. Family Dollar Stores Inc.

March 13, 2013


The opinion of the court was delivered by: John G. Koeltl, District Judge:


This is a case primarily about alleged infringements of trademarks and copyrights in the packaging for men's thermal underwear. The plaintiff, Overseas Direct Import Co., Ltd. ("ODI"), brought this lawsuit against the defendants, Family Dollar Stores Inc. ("FDS") and Prestige Global Co., Ltd. ("Prestige"). The plaintiff alleges primarily that the defendants have infringed the plaintiff's intellectual property rights in certain marks and artwork for packaging for men's thermal underwear. FDS has filed a counterclaim for breach of contract in which it contends that ODI failed to pay for certain duties assessed by United States Customs ("Customs") that FDS was obligated to assume. The defendants now move for partial summary judgment.


The standard for granting summary judgment is well established. "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "[T]he trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo v. Prudential Residential Servs. Ltd. P'ship, 22 F.3d 1219, 1224 (2d Cir. 1994). The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The substantive law governing the case will identify the material facts and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

In determining whether summary judgment is appropriate, the Court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also Gallo, 22 F.3d at 1223. Summary judgment is improper if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the non-moving party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir. 1994).

If the moving party meets its burden, the burden shifts to the nonmoving party to bring forward "specific facts showing a genuine issue for trial." Ovesen v. Mitsubishi Heavy Indus. of Am., Inc., No. 04 Civ. 2849, 2012 WL 677953, at *1 (S.D.N.Y. Mar. 1, 2012) (citation omitted). The non-moving party must produce evidence in the record and "may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible." Ying Jing Gan v. City of N.Y., 996 F.2d 522, 532 (2d Cir. 1993); see also Scotto v. Almenas, 143 F.3d 105, 114--15 (2d Cir. 1998) (collecting cases); Ovesen, 2012 WL 677953, at *1; see also Pelayo v. Port Auth., No. 09 Civ. 8879 (JGK), 2012 WL 4460798, at *1-2 (S.D.N.Y. Sept. 27, 2012).


The following facts are undisputed unless otherwise noted.


The defendant, FDS, operates retail stores that sell, among other items, men's thermal underwear. (Defs.' Rule 56.1 Statement ("56.1 Stmt.") ¶ 1.) The plaintiff, ODI, operates a business that merchandises products for other companies. (Lewis Decl., Ex. E ("M. Kassin Dep.") at 15-17.) FDS began purchasing packages of men's thermal underwear from ODI in or about 1996.

(56.1 Stmt. ¶ 4.) Between 2004 and 2010, several vendors supplied FDS with packages of men's thermal underwear, including ODI and Prestige. (56.1 Stmt. ¶ 3.) In 2008, FDS ceased using ODI as a vendor. (56.1 Stmt. ¶ 16; M. Kassin Dep. at 152.)


The gravamen of ODI's primary claims is that FDS and Prestige violated ODI's intellectual property rights in packaging for men's thermal underwear. ODI claims that its "package always contained ODI's trademarks, trade dress, and copyrightable subject matter." (Pl.'s Counterstatement to Defs.' Rule 56.1 Statement of Material Facts ("Counterstmt.") ¶ 5.)

In 2003, ODI changed the mark on its thermal underwear packages from "Rugged Territory" to "Rugged Wilderness," and updated the "Trees Design" on its men's thermal underwear packages. (56.1 Stmt. ¶¶ 6-7; M. Kassin Dep. at 35.) ODI claims that it continues to use the "Rugged Territory" mark on packages sold to other customers. (Counterstmt. ¶ 8; see Kassin Decl. ¶ 5.) However, in his deposition, Michael Kassin admitted that ODI ceased offering "Rugged Territory" packaging once ODI switched to "Rugged Wilderness" packaging. (M. Kassin Dep. at 38, 75.) In 2003, FDS ceased using the "Rugged Territory" mark on the packages of men's thermal underwear sold in its stores.

(56.1 Stmt. ¶ 19.)


In December 2002, ODI filed a trademark application for "Rugged Wilderness." (56.1 Stmt. ¶ 14; Lewis Decl., Ex. J.; M. Kassin Dep. at 31.) In 2003, counsel prosecuting ODI's trademark application for "Rugged Wilderness" informed Michael Kassin of ODI that the Patent and Trademark Office had issued a Notice of Allowance for "Rugged Wilderness" and required submission of a "Statement of Use" with a filing fee and specimen of the trademarked product for final approval. (Lewis Decl., Ex. S.) The trademark for "Rugged Wilderness" issued in 2005. (56.1 Stmt. ¶ 15; M. Kassin Dep. at 31.)

The defendants contend that FDS ceased using the "Rugged Wilderness" mark in 2007. (56.1 Stmt. ¶ 20.) There is evidence that in 2007 FDS began displaying the "Highland Outfitters" mark on its men's thermal underwear packages. (M. Kassin Dep. at 68; Kassin Decl., Ex. J at FD 001813.) Mr. Dromms of FDS testified that when he began working at FDS the men's thermal underwear packages bore the name, "Rugged Wilderness," and when he left FDS the packages bore the name, "Highland Outfitters." (Lewis Decl., Ex. B ("Dromms Dep.") at 29.)

On April 30, 2010, ODI filed applications seeking to register copyrights for the "Tree Design for Rugged Territory," and "Tree Design for Rugged Wilderness," ("Tree Designs") listing ODI as the author of all rights in the works. (56.1 Stmt. ¶¶ 54, 55.) Although ODI denies that the "Tree Design for Rugged Wilderness," was identified as a "work made for hire," the copyright registration form plainly identifies it as a "work made for hire." (Lewis Decl., Ex. K.)

Noel Foronda created the Tree Designs for ODI and executed an assignment August 28, 2012 that states as follows:

ODI instructed the Artist to make a drawing of the artworks and package designs entitled "Tree Design for Rugged Territory," and "Tree Design for Rugged Wilderness . . . which are original Works of Art. . . . [T]he Works were specifically commissioned by ODI, and drawn by the Artist for ODI, pursuant to specific instructions given to the Artist by ODI on precisely how and in what manner to draw the scenes and artwork in the Works . . . [T]his Assignment confirms the agreements made between the Artist and ODI in 1996 and 2003 to transfer ownership of the above copyrights in the art works and package designs identified above from the Artist to ODI, and further confirms that ODI was authorized to register the copyrights in ODI's name, and further confirms that ODI was authorized to file claims to enforce the copyrights, and further confirms that the Artist did sell, assign, and transfer to ODI all ownership rights, title and interest in and to the Works at the time they were created by the Artist; and to copyrights for said Works; and the right to sue for past, present, and future infringement of said Works; and WHEREAS payment was made from ODI to the Artist at the time the Works were created by the Artist, at which time all ownership rights were transferred to ODI. (Kassin Decl., Ex. B ("Foronda Assignment").) ODI denies that Mr. Foronda was not an employee of ODI and denies that he was an independent contractor. (Counterstmt. ¶¶ 58-59). However, Michael Kassin testified in his deposition that Mr. Foronda "was a freelance designer . . . [h]e was never a direct employee of ODI," and testified that ODI and Mr. Foronda collaborated on the name, "Rugged Wilderness." (M. Kassin Dep. at 35.) Mr. Kassin further testified that aside from the Foronda Assignment there was no document, contract, or other agreement signed by Mr. Foronda and ODI when the works were created assigning to ODI the rights to the "Rugged Territory" and "Rugged Wilderness" marks and Tree Designs. (M. Kassin Dep. at 100.) Mr. Kassin testified that in 1996, when Mr. Foronda completed the works there was "an unspoken understanding about the prior agreements without any specific discussion of the terms." (Supp. Lewis Decl., Ex. X ("Kassin Dep. II") at 23, 33.) Mr. Kassin also testified that it was assumed that ownership of the works would transfer on payment. (Kassin Dep. II at 34.)


Prestige and FDS have had a business relationship since the 1980s. (56.1 Stmt. ¶ 10.) In 2005, FDS began purchasing men's thermal underwear from Prestige. (56.1. Stmt. ¶ 10.) By 2006, FDS was splitting its men's thermal underwear supply "[p]retty close to 50/50" between Prestige and ODI. (Dromms Dep. at 18.) This split continued until 2008. (56.1 Stmt. ¶ 40.) Mr. Dromms of FDS testified that FDS used more than one vendor to supply its men's thermal underwear line because

[Men's thermal underwear is a] [h]uge commodity business for [FDS], and the liability that would have involved for [FDS] . . . to have the proverbial all the eggs in one basket would have been challenging . . . if a program like this disappeared, if a factory had shuttered down, if a factory had flooded, if there was a fire, any of those type of things you tend to hear in this business, we would have had a season that would have been lost.

(Dromms Dep. at 18-19.)

Michael Kassin of ODI testified that ODI did not know that FDS used another supplier of men's thermal underwear besides ODI. (56.1 Stmt. ¶ 41; M. Kassin Dep. at 133-34.) However, Mr. Dromms testified that FDS sent ODI a package of men's thermal underwear in an effort to match ODI's packaging to Prestige's packaging as part of a "consistency focus" that began in 2006. (Dromms Dep. at 38-39.) E-mails between David Kassin of ODI and Amber Mills of FDS reference an "other vendor who is also doing [the] program," and, as part of an effort to ensure consistency between suppliers, compares the sizes of the other vendor's men's thermal underwear to that provided by ODI. (Lewis Decl., Ex. P at FD 0001804.) E-mails between David Kassin and Mr. Dromms of FDS demonstrate that FDS compared ODI's price quotes for men's thermal underwear to those of the "other supplier." (Lewis Decl., Ex. Q at FD 0003005.) Mr. Dromms testified in his deposition that ODI and FDS discussed ODI's prices relative to that of another supplier. (Dromms Dep. at 22-23.)

ODI contends that in 2005 FDS began purchasing from Prestige copies of ODI's packages of men's thermal underwear bearing ODI's trademarks, trade dress, and copyrightable material. (Counterstmt. ¶ 10.) The parties agree that FDS instructed Prestige regarding what marks and designs to place on the packages of men's thermal underwear that Prestige produced for FDS. (Counterstmt. ¶ 11.) Mr. Jacobs of Prestige testified that FDS gave it "product to copy." (Kassin Decl., Ex. H ("Jacobs Dep.") at 77-78.) Mr. Jacobs further testified that, as a matter of course, Prestige did not "do any checking into" whether it was copying a design that it should not be copying, unless there is a "recognizable copyright issue, such as a Nike swish." (Jacobs Dep. at 78.) He testified that FDS retained final approval of Prestige's packaging designs. (Jacobs Dep. at 79.)

The defendants claim that the products Prestige supplied to ODI did not contain the "Rugged Territory" or "Rugged Wilderness" trademarks, but instead contained the FDS mark "Highland Outfitters," as demonstrated by the images of the packages Prestige provided to FDS. (56.1 Stmt. ¶ 12; see Lewis Decl., Exs. T & U.) ODI denies this and states that "[b]etween 2003 and 2007, ODI's package, and the package copied by Prestige, had the trademark RUGGED WILDERNESS." (Counterstmt. ¶ 12 (citing Kassin Decl. ¶ 3).) However, the only evidence it offers in support of this claim is the Declaration of Michael Kassin stating that FDS "was duplicating ODI's packaging, including the trademark 'RUGGED WILDERNESS,' during 2003 to 2008 through other vendors [including] . . . Prestige Global from 2005 to 2008." (Kassin Decl. ¶ 3.) In his deposition, Mr. Kassin testified that the only basis for his assertion that Prestige infringed on ODI's intellectual property rights is a single package that ODI's investigator picked up from an FDS store, which bore the name "Highland Outfitters." (M. Kassin Dep. at 198-99.)

It is undisputed that the Prestige packages contained the second "Trees Design." (Counterstmt. ¶ 13.) However, there are no packages, photographic evidence, or any statements from Prestige or FDS that indicate that Prestige ever used the "Rugged Territory" or "Rugged Wilderness" trademarks. ODI does not dispute that it never notified Prestige of its "Rugged Wilderness" trademark registration, and that no other evidence suggests that Prestige had actual knowledge of ODI's trademark. (Counterstmt. ¶¶ 37-38.)

In 2008, FDS ceased using ODI as a vendor due to the price of its men's thermal underwear and the conflict relating to improperly assessed Customs duties, which is the basis for its counterclaim. (56.1 Stmt. ΒΆ 53; ...

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