United States District Court, E.D. New York
Milbank Tweed Hadley & McCloy, LLP Attorneys for the
Plaintiff Christopher J. Gaspar, Esq., Mark C. Scarsi, Esq.,
Ashlee Lin, Esq., Kristin L. Yohannan, Esq., Ryan N.
Hagglund, Esq., Nathaniel T. Browand, Esq., of Counsel
& Rees LLP Attorneys for the Defendants Steelite
International U.S.A., Inc., Steven Lefkowitz, and Anthony
DeLosReyes Howard Shipley, Esq.John G. Ebken, Esq., Thomas L.
Allen, Esq., Paul Eastgate, Esq., Peter G. Siachos, Esq., of
& Singer Attorneys for the Defendants David M.
Rabinowitz, Esq., Shari Ann Alexander, Esq., Of Counsel
MEMORANDUM OF DECISION AND ORDER
D. SPATT UNITED STATES DISTRICT JUDGE.
action centers on whether certain dishes obtained trade dress
protections under the Lanham Act or New York State law, and
whether two parties ever entered into an exclusive
distribution contract for those dishes.
Plaintiff Oneida Group, Inc. (the “Plaintiff” or
“Oneida”) brought this action against the
Defendants Steelite International U.S.A. Inc.
(“Steelite”), Tablewerks Inc.
(“Tablewerks”), Richard Erwin
(“Erwin”), Steven Lefkowitz
(“Lefkowitz”), and Anthony DeLosReyes
(“DeLosReyes”) (collectively, the
“Defendants”). Oneida sought damages and
injunctive relief, alleging trade dress infringement under
the Lanham Act, 15 U.S.C. § 1125(a) and New York common
law; unfair competition under New York common law; trade
secret misappropriation in violation of the Defend Trade
Secrets Act (“DTSA”), 18 U.S.C. § 1836; New
York state common law pertaining to misappropriation of trade
secrets; Ohio state laws pertaining to misappropriation of
trade secrets, Ohio Rev. Code § 1333.61 et
seq.; breach of contract, and tortious interference with
initially moved for a temporary restraining order, a
preliminary injunction, and expedited discovery. The Court
referred Oneida's motion to Magistrate Judge A. Kathleen
Tomlinson for a report and recommendation (an
“R&R”). Judge Tomlinson did an outstanding
job under these very expeditious circumstances. On February
28, 2017, Judge Tomlinson issued an R&R recommending that
the Court issue a temporary restraining order pending
resolution of Oneida's motion for a preliminary
injunction. Judge Tomlinson followed up her initial R&R
with a full written opinion on March 14, 2017. Following that
ruling, the Court held a five day hearing from April 10, 2017
through April 14, 2017 to resolve Oneida's motion for a
decision is rendered following a five day preliminary
injunction hearing, and the benefit of multiple memoranda
from each party. For the following reasons, Oneida's
motion for a preliminary injunction is denied; the temporary
restraining order is vacated; and Oneida's motion for
expedited discovery is granted.
Court will not engage in a detailed recitation of all of the
evidence presented over the course of the five day hearing.
Knowledge of the underlying facts is presumed. The Court
notes that the hearing transcript (“Tr.”) spans
over nine hundred pages, and dozens of exhibits were entered
into evidence. However, for the purposes of the instant
motion, the Court will review the relevant portions of the
testimony presented during the hearing.
The Plaintiff's Case
Byron (“Byron”) is the President of Food Service
and International at Oneida. Byron testified that Oneida has
been in business for over a century. It sells tabletop
products, including dinnerware, drinkware, flatware and
banquetware. As to dinnerware, one of its most promoted lines
is the Sant' Andrea line including the Botticelli design
and the Nexus design. Byron leads a team of approximately
twenty-six sales persons.
Court notes that later testimony revealed that these plates
are manufactured by Royal Porcelain in Thailand. Royal
Porcelain makes the plates and sells them to Tablewerks.
Oneida would place orders for the Sant' Andrea dishes
with Tablewerks, and Tablewerks sold the dishes to Oneida.
testified that customers recognize these two plates by the
patterns on the plates. The plates are premier dinnerware and
considered to be luxury brands. The customers of the Oneida
Sant' Andrea line are hotels, cruise lines and fine
dining establishments, including Royal Caribbean Cruise Line,
Hilton hotels, Hyatt Hotels, and Garden Bringer. The plates
are primarily not sold directly to the customers by Oneida.
The plates are typically sold by Oneida through dealers and
distributors, but in some situations, Oneida will sell
directly to an end user.
testified that she has been in personal contact with most of
these ultimate customers, and that there is a lot of
confusion in the market due to the current situation. There
are twenty-six members in Oneida's sales team and fifteen
people are in the Sant' Andrea products group.
is the number one product in Oneida's sales. The
Botticelli pattern was launched in the market fifteen or
sixteen years ago. It is its largest product and it
consummates eight million dollars in Oneida's total sales
of sixteen million dollars. The Oneida sales for fiscal year
2014 was $16, 175, 000 and $16.6 million for the year 2015.
In 2016, the Sant' Andrea dinnerware represented close to
15% of the total Oneida food service sales.
introduced in evidence was the Oneida Food Service Cost
Structure (Pl.'s Ex. 61). The investment in the Sant'
Andrea line was approximately $48 million dollars over a
period of nineteen years. The average annual investment was
in excess of $2.5 million dollars.
2016, Oneida paid $2, 109, 715 in commissions. This money is
paid to sales agents as commissions to promote Oneida's
products. The Sant' Andrea products represent 16% of the
Oneida total food service sales. In addition to dinnerware,
Oneida also supplies knives, forks, spoons, glassware and
banquetware. However, the sale of dinnerware drives the sales
of other food service products. Oneida had investments of
approximately $1, 380, 000 with Royal Porcelain, the
manufacturer of the Sant' Andrea products, for tooling
Oneida furnishes dinnerware catalogs to explain its line and
promote sales of its products. Oneida printed these catalogs
every year for the last nineteen years. The catalogs include
the Botticelli dinnerware. Oneida also issues printed sales
promotional material for a television line. The Sant'
Andrea Botticelli dinnerware won an award in February 2014.
In addition, another award was given to the Sant' Andrea
Botticelli design from the Club and Resort Company.
December 13, 2016, Byron received a letter from Steelite
related to its acquisition of Tablewerks. (Pl.'s Ex. 2).
The letter stated that:
Steelite [had] acquired substantially all assets,
intellectual property, and other rights of Tablewerks . . . .
Please be advised that . . . Steelite intends to
self-distribute all product produced by Royal Porcelain under
the Royal Porcelain back-stamp. While we are advised that
there is no contractual relationship between [Oneida] and/or
its affiliates , on the one hand, and Tablewerks and/or
Royal Porcelain on the other, in an effort to facilitate a
seamless transition, Steelite is prepared to accommodate
[Oneida] . . . .
(Id.) Steelite's CEO went on to say that
Steelite would fulfill all existing purchase orders, and
honor the current pricing terms, not object to Oneida's
sale of its current Royal Porcelain inventory; respect
Oneida's intellectual property such as the
“Sant' Andrea” name and back-stamp; and asked
that Oneida similarly honor Steelite's intellectual
property. (Id.). The letter ended by stating that
Steelite was “open to any dialogue concerning the
[matter] . . . .” (Id.).
was a “shock” to Byron. Within twenty-four hours
of the receipt of this letter, Oneida started receiving
customer questions and experienced customer confusion. In
response, Byron sent an e-mail to Oneida's dealers,
distributors and end users. (Defs.' Ex. G). In this
communication to its customers, Oneida advised them that
Tablewerks had been purchased by “another smaller
supplier, ” but that “[e]ven prior to this event,
Oneida had been working on a transition of both design and
manufacturing capability due to what we saw as the diminished
innovation and protected design portfolio being
offered.” (Id.). Byron described a “very
minor adjustment to our supply chain . . . with zero
disruption to product or services . . . .”
the Steelite December 13, 2016 letter, in February and March
2017, Oneida's sales decreased over one million dollars.
After the issuance of the Temporary Restraining Order, some
sales have come back, but overall, Oneida sales are still
attended a NAFEM trade show (the “trade show”)
from February 9, 2017 to February 11, 2017, in Miami,
Florida, . At the trade show, Steelite had a booth and
presented the full line of Sant' Andrea products, with a
place card that stated “supply will be available in
Spring.” Byron was questioned as to the effect on
Oneida's business if Steelite is able to sell these
Sant' Andrea products made by Royal Porcelain as
Steelite's own products. Byron responded:
A. I believe this truly would have a devastating effect on
the business. This dinnerware is the leading category, in
importance, to our customers. The Sant' Andrea one is the
most prominent brand and luxury line. If that were
compromised, the rest of the categories and brands that we
sell will be at risk.
Q. Would you describe this as a major impact? Or some other
type of impact; minor impact?
A. Oh, truly a devastating impact. It's a very serious
business issue, which is why we reallocated all of our
Q. Has it been a disruption to Oneida's business since
A. Absolutely. In nearly every way possible. Every function
has been impacted.
Q. Which functions do you mean?
A. Sales team, redirecting our time, customer service calls,
product supply focused on finding a new alternative of supply
that we thought was a staple part of our business. The entire
leadership team has actually gone off the other two
businesses to focus solely on food service for a vast
majority of their projects.
(Tr. at 137-38).
reiterated that Oneida ordered its products through
Tablewerks who had a relationship with Royal Porcelain, the
manufacturer. Never before has Oneida had a one million
dollar drop off in sales of Sant' Andrea products. Oneida
had a mutually exclusive relationship with Tablewerks for
cross-examination, Byron testified that she started working
for Oneida in July 2016. Previously, she worked for a food
service business which didn't involve dinnerware. After
receipt of the Steelite letter, there was dialogue between
Oneida and Steelite and a mediation in an attempt to resolve
their problem. Also, Steelite continued to supply products to
Oneida for a short period of time.
brought out that the Oneida sales of Sant' Andrea
products prior to the Steelite takeover were $17.7 million in
2012; $16.9 million in 2013; and $15.2 million in 2014.
Further, even prior to the Steelite letter, Oneida was
investigating the development of a product similar to
Botticelli but at a lower cost, and from an alternative
manufacturer in China. Oneida had been in contact with Royal
Caribbean Cruise Line about supplying the cruise line with
those “Botticellilike” products. Oneida has
received one or two samples of this new product, and the
project is still ongoing. After Byron received the Steelite
letter, another group at Oneida began investigating potential
alternative sources of supply.
was also asked about Oneida's purported
“contract” with Tablewerks. It was brought out
that the only signature on Plaintiff's Exhibit 6 entitled
“Business Requirements For All Vendors Of Oneida,
” is on a page captioned “Code of Conduct.”
There is no signature by Tablewerks on the page captioned
“Vendor/Supplier Acknowledgment Form.” The
document further stated that “if a vendor fails to sign
and return these forms, they (Oneida) will not continue doing
business with Oneida Limited.” These were two different
has continued to supply products to Oneida. At the time of
the acquisition, Oneida's Sant' Andrea inventory was
expected to last two to five months.
of the video deposition testimony of Daniel Hoffman
(“Hoffman”) were read into the record. Hoffman
started working for Marriott International in 1997 and is
still an employee of that organization. He is the Director of
the Food and Beverage Program and oversees sixteen hotels.
Hoffman works with contractors and vendors. Hoffman testified
that Marriot began purchasing Botticelli in 2001, and began
purchasing Nexus in 2009. In his opinion, both products are
unique, recognizable and immensely popular. Although Hoffman
believed that the Botticelli design is distinctive, he
admitted that it was similar in some ways to a product
offered by Tuxton, a competitor of Oneida.
had stated in his original declaration, that was submitted to
the Court in support of Oneida's motion and relied upon
by Judge Tomlinson, that Botticelli and Nexus were
“synonymous” with Oneida. However, in his
deposition, Hoffman amended his declaration to say that
Botticelli and Nexus are “marketed by” Oneida.
(Tr. at 258).
Gebhardt (“Gebhardt”) also testified by
deposition. He is presently employed by Oneida, which was
founded in 1850 and incorporated in 1980. From 2003, Gebhardt
was the Oneida Senior Vice President of Design and
testified that Oneida owns the Sant' Andrea trademark,
and that Queensberry Hunt designed the Botticelli and Nexus
patterns. However, Gebhardt said that Oneida had collaborated
on the designs.
The Defendants' Case
Miles (“Miles”) is the CEO of Steelite. He has
been an employee of Steelite since November 1996. Miles held
various positions with the company and became CEO in June
2016. Steelite is an international manufacturer, designer and
producer of tableware products and trades actively in one
hundred forty countries. The company, in the tableware
industry and food service business, sells to hotels and
restaurants. Steelite believes transparency in manufacturing
is imperative with regard to the identity of a product's
manufacturer, namely, to tell customers where the item is
manufactured. Miles said that is why Steelite purchases
products directly from manufacturers.
also testified that Royal Porcelain was founded thirty-five
years ago, based in Thailand, about sixty-three miles north
of Bangkok, employs almost a thousand people, and is the
preeminent manufacturer of porcelain products and especially
food service products. Tablewerks was also the sole importer
and distributor of Royal Porcelain food service products in
the United States. Steelite is an exclusive distributor for
several other factories, so that Tablewerks and Steelite were
into evidence were two United States Design Patents for
Botticelli with the inventors listed as David Queensberry
(“Queensberry”), Martin Hunt and John Horler-who
are all members of the Queensberry Hunt design team. Both
patents were assigned to Tablewerks by an agreement with
Queensberry Hunt. One of the patents expired during
Steelite's due diligence. There are also pending
copyright applications for the designs that Oneida marketed
as Botticelli and Nexus.
summer of 2016, Steelite acquired all the assets of
Tablewerks for the sum of $10 million dollars, including the
exclusive distribution rights of Tablewerks in the United
States. There was also a distribution license between
Steelite and Royal Porcelain in which Steelite acquired the
exclusive distribution rights for all Royal Porcelain
products in the United States relating to the food service
business. There was a transfer of the intellectual property
in “Belisa, ” which Oneida had marketed as
Botticelli, from Tablewerks to Steelite. Based on these two
patents and the agreements, Miles stated that Steelite
acquired all the intellectual property rights held by
Tablewerks. Miles stated that going forward,
“Steelite” and “Royal Porcelain”
would be stamped on the dishes and packages of the products
previously known as Botticelli and Nexus.
December 13, 2016, the day after its acquisition of
Tablewerks was completed, Steelite informed Oneida by letter
of its purchase of Tablewerks and advised Oneida that it was
open to any dialogue concerning this matter. Further,
Steelite agreed not to use Oneida's trade names and also
agreed not to show Oneida's former products before the
NRA show in May 2017.
Steelite supplied three months of product to Oneida. Steelite
initially sold to Oneida $550, 000 worth of product and
additional orders for $650, 000, $38, 000, $20, 000 and one
small order. Also, after this law suit commenced, Oneida
placed additional orders and Steelite filled them. As a
result of this litigation, Steelite has not attempted to sell
its products to any company other than Oneida.
avers that is has been unable to sell and distribute Royal
Porcelain products, for which it paid $10 million dollars to
acquire distribution rights.
cross-examination, Miles testified that the actual purchase
price of Tablewerks was more than $12 million dollars.
Steelite doesn't typically register trade dress or file
copyright applications for its products.
future, Steelite intends to sell the Botticelli product as
Belisa, and the Nexus product as Vortex, to prior Oneida
customers. Steelite has already contacted those customers.
However, its operation has been barred by the provisions of
the Temporary Restraining Order dated March 14, 2017.
Distribution and License Agreement, in evidence as Defs.'
Ex. JJ, Royal Porcelain represents that it has trade dress
rights to its products which it assigned to Steelite.