Card Tech Int'l, LLLP v. Provenzano, Case No. CV 11-2434 DSF (PLAx)
| Decision Date | 07 June 2012 |
| Docket Number | Case No. CV 11-2434 DSF (PLAx) |
| Court | U.S. District Court — Central District of California |
| Parties | CARD TECH INTERNATIONAL, LLLP, a Maine Limited Liability Limited Partnership, Plaintiff, v. SHARYN PROVENZANO a.k.a. SHARYN PROVENZANO, an individual, and PRODEEN, INC. Defendants. |
A trial by the Court was held January 10-13, 2012.
The Court ordered that counsel for Card Tech International LLLP (Card Tech) submit Card Tech's proposed Findings of Fact and Conclusions of Law to counsel for Defendants Sharyn Nappi a.k.a. Sharyn Provenzano and Prodeen, Inc. (referred to jointly and severally as Provenzano except as otherwise indicated). Apparently because of defense counsel's trial schedule, he was unable to provide timely comments. Card Tech lodged its [Proposed] Findings of Fact and Conclusions of Law on February 23, 2012. On February 27, 2012, Provenzano lodged Defendants and Counterclaimants' [Proposed] Findings of Fact andConclusions of Law On March 12, 2012, Provenzano lodged her Opposition to Card Tech's Proposed Findings of Fact and Conclusions of Law, and Card Tech lodged its Objections to Defendants' [Proposed] Findings of Fact and Conclusions of Law. Although the Court has reviewed and considered all of these documents, and has made some additions, deletions, and changes based on its detailed review of the transcript and the documentary evidence and its own recollection of the trial and assessment of the credibility of the witnesses, where Provenzano has not objected to paragraphs of Card Tech's [Proposed] Findings of Fact and Conclusions of Law, the Court generally accepts those findings as accurate, and has not sought or cited to further support in the record. The Court has included proposed Findings of Fact and Conclusions of Law proposed by Provenzano, to the extent relevant and not contradicted by the evidence. The deletion of a proposed finding or conclusion does not necessarily mean that the Court disagrees with the proposed finding or conclusion. The Court may simply have determined that the finding was not necessary to its determination.
1. This Court has subject matter jurisdiction pursuant to the Trademark Act of 1946, as amended (the Lanham Act), 15 U.S.C. § 1125(a) and § 1125(d). Also, the Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332: the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs and there is complete diversity of citizenship between the parties. The Court has supplemental jurisdiction over the state-law claims. 28 U.S.C. § 1367.
2. Venue is proper in this district as the defendants reside here.
3. Card Tech is a Maine limited liability limited partnership, with its principal place of business in Maine.
4. At the time of trial, the employees of Card Tech were Norman Farrar, his son Stephen Farrar, and one other person. Norman Farrar is a principal of Card Tech. 5. Provenzano is an individual residing in Acton, California.
6. Prodeen, Inc. is a California corporation with its principal place of business in California. Provenzano directs the conduct of Prodeen. From 2003 through 2010 there were no other employees of Prodeen. Tr. 1/12/12 at p. 162:1118. There is no evidence of any other employees of Prodeen since 2010.
7. Card Tech is, and since March 2010 has been, in the business of selling technical cleaning products. Technical cleaning products are used to clean the slots of credit card machines, bill readers, slot machines, key cards, and similar magnetic card readers. It is a niche business. Individual technical cleaning products are very inexpensive. Tr. 1/12/12 at p. 161:8-9.
8. In the late 1990s Norman Farrar was a principal of a company named Enefco, which decided to go into the card cleaning products business. Farrar met Provenzano at a trade show and eventually hired her as Enefco's first sales manager for the card cleaning business. Provenzano worked from her home in Acton, California, and was in charge of sales and market development. Farrar worked well with Provenzano and thought she was talented.
9. In or around 2003, Farrar sold his company. The new owners "released" Provenzano she was terminated. Tr. 1/10/12 at p. 42:24-25, Tr. 1/11/12 at pp. 179:22-180:1.
10. In 2003 Provenzano began marketing and selling technical cleaning products. In or around March 2006, Provenzano established Prodeen, Inc. dba Proven Products, which sold cleaning cards. Tr. 1/11/12 at pp. 180:14-181:6. Provenzano owns all of the stock of Prodeen, Exhibit 75, and directs the conduct of Prodeen.
11. As of the beginning of 2010, Provenzano marketed and sold technical cleaning products under the trademarks and trade dress PROVEN PRODUCTS, a stylized V symbol, PRESAT with a water droplet symbol, PRESAT with a rippled water image, DIAMOND TECHNOLOGY, a "magnifying glass and dollar bill"image, an orange area on the left side and images of certain machines in certain layouts, CLEAN SWAB, EASY WIPES, EASY CLEAN CARD, and EASY SWAB, and the slogan "The Results Are Obvious"; and utilized a website. Tr. 1/10/12 at pp. 64:15-70:10; Tr. 1/11/12 at pp. 181:12-22, 183:1-185:6, Exhibit 26. On June 10, 2008, trademark registration number 3443482 was issued to Provenzano for the mark PRESAT. See Exhibit 93-2.
12. There is nothing about the layout or overall appearance of the trade dress, both packaging and website, that enables the package or website, respectively, to function. The "V"-shaped Proven Products logo, and the Diamond Technology logo with its three overlapping diamonds, are wholly nonfunctional; the water drop design and the rippled water designs, the magnifying glass and dollar bill images, and the slogan, are wholly non-functional for cleaning cards. The content of the website can be arranged differently; the package can have a different appearance. Neither the appearance of the packaging nor the website provides a benefit apart from identifying the source of the product. Neither the layout of the website nor the layout or color of the packaging describes the products. The particular arrangement of the depictions and instructions, and the overall visual impression created by Card Tech's website and packaging, is not essential to use of the products Card Tech sells. Moreover, there are numerous ways to design a website or product packaging for cleaning card products. See Exhibit 26. Therefore, protecting Card Tech's trade dress will not impair competition in the industry.
13. In 2006 Farrar reconnected with and provided some assistance to Provenzano. He was impressed with the package design she used. At about the time that Farrar's "non-compete" agreement with Enefco was about to end, Farrar and Provenzano began negotiating for Card Tech's purchase of Provenzano's business. Card Tech was established to purchase the assets of Proven Productsfrom Prodeen. TR. 1/10/12 at p. 46:5-19. Prior to entering into the Asset Purchase Agreement, Farrar wanted Provenzano to be sure she would be happy in her new role. Tr. 1/10/12 at pp. 44:8 -56:15; see Exhibit 21.
14. On March 8, 2010, Provenzano and Card Tech entered into an Asset Purchase Agreement. Exhibit 75. The signatories for the seller are Prodeen, Inc. and Provenzano. Pursuant to that Agreement, Provenzano sold to Card Tech and Card Tech bought from Provenzano the business assets including, among other things:
• All inventory;
• All right, title and interest in and to all of the trademarks, trade names, dbas and assumed names used to any extent in the operation of the business or otherwise related thereto;
• All business records, including but not limited to all customer and supplier lists;
• The internet websites: www.4cleaningcard.com and www.presat.com, including the content and all rights necessary to access, operate and use those websites, and the domain names related to the business;
• All goodwill of the business.
Exhibit 75 at 1.1. Card Tech understood it was purchasing all trademarks, trade names, business records, customers, promotional material, and goodwill. Tr. 1/10/12 at pp. 62:23-70:21. Provenzano understood she was selling to Card Tech all of the trademarks, trade names, and dbas, assumed names, the art work for the packaging and all business records. Tr. 1/12/12 at pp. 3:24-4:4, 5:13-17, 6:22-24. Provenzano executed a separate written assignment of the PRESAT trademark. Exhibit 93.
15. In the Agreement, Provenzano represented that there were no undisclosed liabilities, and that she had disclosed to Card Tech all material facts. Exhibit 75 at 8.11, 8.17. 16. Acquiring all of Provenzano's intellectual property was important to Card Tech. Card Tech considered the name, the packaging and the website important to have. Tr. 1/10/12 at pp. 51:7-21, 57:20-58:14.
17. Provenzano's packaging was attractive and desirable to Card Tech. No other competitors were using a design similar to the Provenzano packaging that Card Tech purchased. Tr. 1/10/12 at p. 68:23-25. It was important to Card Tech to go into the market with a known product and trade name. Tr. 1/10/12 at pp. 51:15-18, 58:1-4.
18. The purchase price to be paid by Card Tech to Provenzano is $253,315.36, payable $205,795.36 at closing and $47,520.00 paid over two years. Card Tech paid $205,795.36 at closing and executed a promissory note for $47,520.00. It appears that the $205,795.36 was for the inventory, and the $47,520.00 was for the goodwill and all of the other assets. Tr. 1/10/12 at p. 73:21-23; 1/12/12 at p. 14:14-23. The Agreement itself states that there was an allocation of the purchase price set forth in Schedule 7, Exhibit 75 at 7, but no schedules were provided to the Court. Card Tech has paid $23,760.00 on the promissory note. The last payment Card Tech made on the promissory note was the February 2011 payment. Tr. 1/11/12 at p. 107:15-17. The amount unpaid on the note is $23,760.00.
19. Card Tech contends that Provenzano did not...
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