517 F.3d 494 (7th Cir. 2008), 07-1452, Ty Inc. v. Softbelly's, Inc.

Docket Nº:07-1452, 07-1519, 07-1782, 07-1793, 07-2401.
Citation:517 F.3d 494, 85 U.S.P.Q.2d 2002
Party Name:TY INC., Plaintiff-Appellee, Cross-Appellant, v. SOFTBELLY'S, INC., et al., Defendants-Appellants, Cross-Appellees.
Case Date:February 22, 2008
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 494

517 F.3d 494 (7th Cir. 2008)

85 U.S.P.Q.2d 2002

TY INC., Plaintiff-Appellee, Cross-Appellant,

v.

SOFTBELLY'S, INC., et al., Defendants-Appellants, Cross-Appellees.

Nos. 07-1452, 07-1519, 07-1782, 07-1793, 07-2401.

United States Court of Appeals, Seventh Circuit.

Feb. 22, 2008

Argued Jan. 14, 2008.

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 00 C 5230-Joan Humphrey Lefkow, Judge.

Page 495

[Copyrighted Material Omitted]

Page 496

James P. White (argued), Louise T. Walsh, Welsh & Katz, Chicago, IL, for Plaintiff-Appellee/Cross-Appellant.

Andrew M. Hale (argued), Rock Fusco, Chicago, IL, for Defendants-Appellants/Cross-Appellees.

Before POSNER, KANNE, and WILLIAMS, Circuit Judges.

POSNER, Circuit Judge.

Ty Inc., the manufacturer of "Beanie Babies," years ago brought this suit for trademark infringement under the Lanham Act against Softbelly's, Inc., and some other defendants that need not be discussed separately. Softbelly's manufactures a product that looks and feels very much like "Beanie Babies," which it calls "Screenie Beanies." They differ from Ty's product mainly in having chamois bellies and being sold to the public through computer stores for wiping computer screens: hence the chamois.

The case was tried to a jury back in 2002, but rather than allow it to render a verdict the judge entered judgment for Ty as a matter of law. Later he entered a final judgment awarding Ty both injunctive relief and $713,000 in damages. Softbelly's moved under Fed.R.Civ.P. 60(b)(3) to vacate the judgment in favor of Ty on the ground that Ty Warner, the owner of Ty Inc., had tampered with a prospective witness for Softbelly's. The judge denied the motion.

We reversed. 353 F.3d 528 (7th Cir. 2003). We ruled that Softbelly's was entitled to a new trial on liability because the judge had erroneously excluded potentially important evidence that "Beanies" or "Beanie Babies" had become a generic mark and because he should not have taken the issue of likelihood of confusion from the jury, but that if Ty again prevailed it would be entitled to the $713,000 in damages awarded at the first trial. We also directed the district court to conduct an evidentiary hearing on the charge of witness tampering.

On remand, the case was retried (a different judge presiding). The jury found trademark infringement. The judge entered an injunction forbidding Softbelly's "to sell plush products in connection with the trademarks 'Screenie Beanies' and/or 'The Screenie Beanies Collection,' and/or any other trademark confusingly similar to Ty's BEANIE BABIES TM, THE BEANIE BABIES COLLECTION TM, and/or BEANIE(S) TRADEMARKS t." But the judge awarded Ty no damages, holding that forfeiture of the $713,000 in damages to which Ty would otherwise have been entitled by virtue of our ruling in the first appeal was the right sanction for what she found to have been Warner's improper conduct toward the prospective witness. But she awarded Ty the attorneys' fees that it had incurred in proving Softbelly's' trademark infringement, on the ground that the infringement had been willful.

Softbelly's has appealed, seeking yet another new trial on liability and asking that the award of attorneys' fees be vacated. Ty has cross-appealed, seeking vacation of the sanction and thus restoration of the $713,000 in damages that the district judge ordered forfeited. But Ty does not object to our subtracting $78,000 from the restored damages, that being the amount of attorneys' fees that Softbelly's incurred in litigating the issue of Warner's misconduct. Ty had asked for $315,000 in prejudgment interest on the damages award, and so contends that the sanction is really more than $1 million. We need not decide whether, if the sanction should be vacated, Ty is entitled to that interest, an issue that the district judge did not reach and that the parties have not briefed.

Page 497

The sanctions issue is unconnected to the trademark issues, and as it is the most difficult issue in the case, we address it first. At the first trial, Softbelly's planned to call as one of its witnesses Harold Nizamian, a competitor of Ty for whom Ty Warner had worked before forming his own business. Nizamian was prepared to testify that as early as 1988, before Ty began selling "Beanie Babies," the word "beanie" was being used in the trade names of other manufacturers of plush beanbag animals and indeed that the word had become generic, and so could not be a trademark. On the Friday before the Monday on which the trial began, Softbelly's' lawyer deposed Ty Warner and in the course of the deposition revealed that Nizamian would be testifying that "beanies" was a generic term. On Monday, when the lawyer called Nizamian to schedule his testimony, Nizamian said that Warner had telephoned him and that he was no longer willing to testify.

...

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