Blank v. Pollack

• Decision Date: 09 February 1996
• Docket Number: No. 95-CV-0392.,95-CV-0392.
• Citation: 916 F. Supp. 165
• Parties: Jay L. BLANK, Plaintiff, v. Edward P. POLLACK; E.P. Distribution; and John Does 1 Through 10, Defendant.
• Court: U.S. District Court — Northern District of New York

916 F. Supp. 165

Jay L. BLANK, Plaintiff, v. Edward P. POLLACK; E.P. Distribution; and John Does 1 Through 10, Defendant.

No. 95-CV-0392.

United States District Court, N.D. New York.

February 9, 1996.

COPYRIGHT MATERIAL OMITTED

Berger Law Office, New York City (Andrew Berger, of counsel), for plaintiff.

Harris Beach & Wilcox, LLP, Albany, NY (Joel L. Lindy, of counsel), for defendant.

MEMORANDUM-DECISION & ORDER

McAVOY, Chief Judge.

I. INTRODUCTION

Plaintiff, JAY L. BLANK, commenced this action by service of a summons and complaint on March 23, 1995. The plaintiff sets forth no less than thirteen claims, the facts relating to which are set forth below. The defendants, EDWARD P. POLLACK; E.P. DISTRIBUTION; and JOHN DOES 1 THROUGH 10, now seek to have this court dismiss all claims, with the exception of the seventh (Breach of express contract), tenth (Breach of implied contract), and eleventh (Unjust enrichment). The plaintiff has cross-moved against the defendants for summary judgment as to the fifth (Patent mis-marking) and thirteenth (Misappropriation of trade secret) claims.

II. BACKGROUND

This case involves an uncommon area of Lanham Act protection, the alleged false designation of origin of the designer or creator of a product, rather than the more typical false designation of the manufacturer of a product. The defendant Pollack claims to have been active in the field of "window crank design" for several years.¹ He has acquired a patent for an early design of a window crank, U.S. Patent No. 5,201,241. He also claims to have developed another design for a crank. This crank folds down so that the handle will not interfere with any drawn window blinds or shades. It is the defendant Pollack's claim that he and the company, co-defendant E.P. Distribution, Inc., developed a design for the folding window crank, began to solicit bids for manufacturing the window crank, and learned that he would need to make changes to the prototype, all prior to the involvement of the plaintiff.

The plaintiff alleges that he first met the defendant Pollack in December 1992. At that time he allegedly learned of the defendant Pollack's efforts to design a folding window crank, inspected drawings of the crank, and advised the defendant Pollack that his design was unmarketable. It seems that the design required too many parts, and thus, would have a prohibitively high production cost.

Sometime in March 1993, the defendant Pollack, allegedly representing the company, solicited the services of the plaintiff to help design and create a prototype of the crank. The plaintiff is a machinist with no prior history relating to window cranks. The plaintiff made drawings of a three part window crank. Apparently, there was an oral agreement between the parties that the plaintiff would provide the defendants with a prototype and the drawings, after the defendants sent the plaintiff a letter promising to compensate him with a per unit remuneration and stock in an as yet to be formed company. The letter was sent by the defendants' attorney on April 5, 1993, but the exact terms were to be negotiated at an unspecified later date. The plaintiff, at the time unrepresented by counsel, then sent the drawings to the defendants.

The defendants allege that at all times the plaintiff knew that the plaintiff's drawings and prototype would be used for manufacture and distribution to the public. The plaintiff did, in fact, produce a prototype, and the company began to manufacture the units. However, the parties never negotiated an agreement, and, as alleged by the plaintiff, the plaintiff has never received compensation for the drawings.

The defendants then published a brochure advertising the window crank. The company's brochure stated that the crank was patented, allegedly under the mistaken good faith belief that the crank was covered by the defendant Pollack's prior patent. After a period of distribution, the company's attorney advised the defendants that such an interpretation of the scope of the prior patent may not be correct, and that any references to the patent should be removed from the brochure. The defendants removed reference to a specific patent number, but retained language suggesting that the folding window crank was patented.

In short, the defendants argue: (1) that the entire complaint should be dismissed as against defendants Pollack and E.P. Distribution, because no such company exists; (2) that counts one and two of the complaint should be dismissed, because there is no valid claim or material factual issue as to an alleged "false designation of origin" claim pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) that counts three and four of the complaint should be dismissed, because there is no valid claim or material factual issue as to an alleged "false advertising" claim pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (4) that the defendants are entitled to summary judgment as to count five of the complaint, because there is no factual issue as to an alleged violation of 35 U.S.C. § 292, for making a false statement that the window crank at issue was protected by a patent; (5) that count six, plaintiff's common law unfair trade practices claim should be dismissed, essentially for failing to set forth, and/or raise a factual issue as to the elements of such a claim, i.e., secondary meaning; (6) that the plaintiff's eighth count, for fraud, should be dismissed for failing to state a claim; and that the court should dismiss counts nine, twelve, and thirteen of the complaint, because the window crank design does not constitute a trade secret or a novel idea, protectible as a property right.

The plaintiff, as expected, argues that the defendants' motion should be denied in its entirety. Broken down, the plaintiff argues: (1) that at no time prior to the April 5, 1993 letter. on which he bases his many of his claims, did the entity "E.P. Distribution, Inc." exists, and the parties stipulated to a name change; (2) that counts one and two should not be dismissed because the claim is for reverse passing off, not false designation of origin; (3) that counts three and four raise a factual issue as to false advertising; (4) that the plaintiff raises a factual issue as to false marking; (5) that count six should not be dismissed, because of customer confusion; (6) that the fraud claim is properly pleaded; (7) that the defendants' motion for summary judgment should be denied, and the plaintiff's cross-motion for summary judgment as to count nine, trade secret violation, should be granted; (8) that counts twelve and thirteen, conversion and misappropriation, should not be dismissed.

III. DISCUSSION

A. Standard For A Motion to Dismiss And For Summary Judgment

On a dismissal motion for failure to state a claim the general rule is that the allegations in a plaintiff's complaint are deemed to be true and must be liberally construed in the light most favorable to the plaintiff. Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir.1984), cert. denied, 470 U.S. 1084, 105 S.Ct. 1845, 85 L.Ed.2d 144 (1985). A complaint should not be dismissed unless it appears beyond a reasonable doubt that the plaintiff cannot in any way establish a set of facts to sustain her claim which would permit relief. Hughes v. Rowe, 449 U.S. 5, 10, 101 S.Ct. 173, 176, 66 L.Ed.2d 163 (1980); Bass v. Jackson, 790 F.2d 260, 262 (2d Cir.1986).

If on a motion made pursuant to Rule 12(b)(6) "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided for in Rule 56 ..." Fed.R.Civ.P. 12(b)(6). A motion for summary judgment should be granted "if the pleadings ... together with the affidavits, if any, show that there is no genuine issue as to any material fact ..." Fed.R.Civ.P. 56(c). There must be more than a "metaphysical doubt as to the material facts." Delaware & Hudson R. Co. v. Conrail, 902 F.2d 174, 178 (2d Cir.1990), quoting, Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). All ambiguities must be weighed in favor of the nonmoving party. Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir.1989). "Only when reasonable minds could not differ as to the import of the evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.1991), cert. denied, 502 U.S. 849, 112 S.Ct. 152, 116 L.Ed.2d 117 (1991). The parties to this motion have submitted affidavits with exhibits to the Court. Thus, the Court will treat this motion as one for summary judgment pursuant to Rule 56 and apply the foregoing standard.

B. Dismissal Based On Alleged Impropriety Of Caption

The defendants argue, without citing to any authority, that the court should dismiss the complaint as against defendants Pollack and E.P. Distribution, Inc., because of an improper designation of the name of the company in the case caption, and because any dealings with the plaintiff allegedly were by the defendant Pollack on behalf of the company.

It is clear to the court that discussions occurred between the parties prior to the formation of the company, E.P. Distribution, Inc., on May 14, 1993. Moreover, the April 5, 1993, letter from the defendant Pollack's attorney to the plaintiff expressly states "that Edward Pollack, Jr. proposes to compensate you for your participation in the schematic engineering and development of the proto-type", and mentions the "corporation to be set up for distribution." Clearly, the defendant Pollack cannot represent an entity not yet in existence, unless he acts as a promoter. If Pollack was acting as a promoter of the corporation, it is a basic tenet of the law of corporations that a promoter is liable for any contracts entered into on behalf of the corporation, unless the parties agree otherwise,² or the promoter is discharged by a novation.³ No such facts have been...