Leventhal & Assoc., Inc. v. Thomson Cent. Ohio

• Decision Date: 04 June 1998
• Docket Number: No. 97APE08-1011.,97APE08-1011.
• Citation: 714 NE 2d 418,128 Ohio App.3d 188
• Parties: LEVENTHAL & ASSOCIATES, INC., Appellant, v. THOMSON CENTRAL OHIO, Appellee.
• Court: Ohio Court of Appeals

128 Ohio App.3d 188

714 NE 2d 418

LEVENTHAL & ASSOCIATES, INC., Appellant, v. THOMSON CENTRAL OHIO, Appellee.

No. 97APE08-1011.

Court of Appeals of Ohio, Tenth District, Franklin County.

Decided June 4, 1998.

COPYRIGHT MATERIAL OMITTED

Eric J. Wittenberg Co., L.P.A., and Eric J. Wittenberg, for appellant.

Porter, Wright, Morris & Arthur and Thomas A. Young, for appellee.

PETREE, Judge.

Plaintiff, Leventhal and Associates, Inc., appeals from a decision of the Franklin County Court of Common Pleas granting summary judgment in favor of defendant, Thomson Central Ohio. Plaintiff sets forth four assignments of error, as follows:

"I. The trial court erred in granting appellee's motion for summary judgment; therefore, the summary judgment should be overruled and the case remanded.

"II. Count one of the appellant's complaint is based on a cause of action under common law deceptive trade practices and R.C. 4165.02, not on misappropriation of trade secrets, thus the trial court erred by applying the wrong legal standard and summary judgment should be overruled and the case remanded.

"III. The trial court erred in finding that appellee did not engage in acts of unfair competition; therefore, summary judgment should be overruled.

"IV. The trial court ignored count three of appellant's complaint; therefore, summary judgment should be overruled, and should be remanded to trial on the merits."

Since 1983, plaintiff has published a children's magazine called Kids Connection. Kids Connection is published three or four times a year and is distributed free of charge in five or six central Ohio counties. In Franklin County, it is distributed primarily through the Columbus Public Schools, Columbus Metropolitan Libraries, and Columbus recreation centers. Outside Franklin County, it is distributed primarily through sponsors and advertisers. There are no paid subscribers to Kids Connection.

Kids Connection is financed entirely by advertisers and sponsors. An advertiser pays for an advertisement and, in exchange, receives copies of the magazine for distribution to its customers and/or employees. A sponsor pays a larger sum of money than an advertiser and, in exchange, is featured more prominently in the magazine. Specifically, a sponsor is featured, by name and logo, on the cover, in the table of contents, and on the top of the page that it sponsors. A sponsor receives large quantities of the magazine for distribution.

Kids Connection is targeted at children ages five through twelve and is composed of creative materials submitted by children in the central Ohio area. Kids Connection also includes a calendar of upcoming children's events in the community.

Defendant is a division of Thomson Newspapers, Inc., which is part of Thomson Enterprises, a multinational company. Thomson Newspapers, Inc. publishes both daily and weekly newspapers, numerous magazines, and other publications. Sharon Whalen is the Vice-President of defendant's Business Development Division and is primarily responsible for developing new publications within central Ohio.

In September 1995, Whalen began surveying the central Ohio area to develop new publications for defendant. Defendant was particularly interested in entering the specialty publishing area. In November 1995, Thomson Target Media, a product development division of Thomson Newspapers, Inc., informed Whalen of a children's magazine called Curiocity For Kids, which Thomson Target Media had developed and which Thomson Newspapers, Inc. had begun publishing in Wisconsin. In December 1995, Whalen met with representatives of Thomson Target Media to explore the possibility of defendant's publishing a similar magazine in the central Ohio area. At that meeting, Whalen and the Thomson Target Media representatives discussed the concept of financing the magazine through underwriters.

In December 1995, Whalen and her staff began conducting market research in the central Ohio area to determine whether there existed enough community support and advertising interest to support a children's magazine. This market research did not uncover the existence of Kids Connection or any other children's publication in the central Ohio area.

In mid-January 1996, Whalen learned of the Kids Connection publication and the fact that it was for sale. Whalen obtained a copy of Kids Connection at a branch of the Columbus Metropolitan Library. She arranged a meeting with Aaron Leventhal, plaintiff's president, on January 31, 1996 to discuss the possibility of purchasing Kids Connection. During the course of this meeting, Whalen did not mention that defendant was in the process of developing a competing children's publication. Leventhal explained to Whalen how he operated Kids Connection, including the use of sponsors to underwrite the magazine. Leventhal gave Whalen several items to take with her for review, including back issues of Kids Connection and advertising rate sheets. These same materials had been given to other potential purchasers. Whalen was not asked to treat the materials as confidential, nor was she requested to sign a confidentiality agreement. Whalen was informed that the purchase price of Kids Connection was $30,000. Whalen told Leventhal she would discuss the matter with her boss and get back with him as quickly as possible.

Sometime between the January 31, 1996 meeting and February 8, 1996, Whalen met with her boss and discussed the possibility of purchasing Kids Connection. Defendant decided against the purchase for financial reasons. Thereafter, Whalen communicated this decision to Leventhal by letter dated February 8, 1996. This letter did not mention that defendant was in the process of developing a competing publication. The Kids Connection materials were returned to Leventhal.

In April 1996, defendant produced and distributed promotional materials that described the content of and proposed distribution system for a children's magazine called Columbus Curiocity For Kids, set forth advertising specifications and rates, and listed underwriting opportunities that were available with respect to the publication. These promotional materials were distributed to a very limited number of persons who had been targeted as potential advertisers for Columbus Curiocity For Kids. Defendant also produced and distributed a prototype edition of Columbus Curiocity For Kids to small focus groups of parents and children. According to Whalen, the model for the prototype edition of Columbus Curiocity For Kids was Thomson Newspapers, Inc.'s Wisconsin Curiocity For Kids, not Kids Connection.

The promotional materials referenced above stated that Columbus Curiocity For Kids was "Columbus' only magazine for kids!" Within forty-eight hours after Whalen became aware of the potential problem associated with using that statement, she eliminated the problem by ordering revised promotional materials that did not contain that wording.

Based on focus group results, defendant went ahead with publication of Columbus Curiocity For Kids. The first issue was distributed in June 1996. The magazine is published monthly and is targeted at children ages six through twelve. Half of the contents of Columbus Curiocity For Kids is submitted by children in the central Ohio area; the other half is provided by Thomson Target Media. Included in Columbus Curiocity For Kids is a calendar of upcoming events for children, as well as software reviews and cooking and sports sections. Columbus Curiocity For Kids is sponsored by advertisers and underwriters. The names and logos of the underwriters are not displayed on the cover of the magazine. The magazine is sold through paid subscriptions.

On May 3, 1996, plaintiff filed a three-count verified complaint for injunctive relief and money damages alleging (1) that defendant used Kids Connection as a model in publishing Columbus Curiocity For Kids, and that such action constituted an appropriation of the product designed by plaintiff and unfair competition with plaintiff; (2) that defendant committed a deceptive trade practice under R.C. 4165.02 in that it "palmed off" Columbus Curiocity For Kids as one of plaintiff's publications and/or created a likelihood of confusion as to whether Columbus Curiocity For Kids is produced or sponsored by or affiliated with plaintiff; and (3) that Whalen acted knowingly and intentionally in misrepresenting the purpose of her meeting with Leventhal with the intention of inducing Leventhal to surrender information relative to the publication and sale of Kids Connection.

On the same day, plaintiff filed a motion for a temporary retraining order, preliminary injunction, and permanent injunction. On May 13, 1996, the parties filed an "Agreed Temporary Restraining Order," restraining defendant from advertising or promoting Columbus Curiocity For Kids as being "The only publication for kids in Central Ohio" or "Columbus' only magazine for kids." A hearing before a magistrate was scheduled for June 28, 1996 on plaintiff's motion for preliminary injunction.

After the June 28, 1996 hearing, the magistrate filed a written decision denying plaintiff's motion for preliminary injunction. The magistrate's decision characterized plaintiff's verified complaint as one for misappropriation of trade secrets as well as common-law and statutory deceptive trade practices. The magistrate's decision was adopted by the trial court by entry dated August 21, 1996.

Defendant filed a motion for summary judgment on February 7, 1997, supported by the transcript of the testimony from the June 28, 1996 hearing on plaintiff's motion for preliminary injunction. In its motion, defendant argued that plaintiff failed to demonstrate genuine issues of material fact as to plaintiffs causes of action for misappropriation of trade secrets in violation of R.C. 1333.51 and 1333.61 and deceptive trade practices under the common law and R.C. 4165.02 and that, accordingly, it was entitled to judgment as a...