General Elec. Co. v. Speicher

• Decision Date: 14 March 1988
• Docket Number: Civ. No. F 87-98.
• Citation: 681 F. Supp. 1337
• Parties: GENERAL ELECTRIC COMPANY and Carboloy, Inc., Plaintiffs, v. Robert SPEICHER; and Speicher, Inc., Defendants.
• Court: U.S. District Court — Northern District of Indiana

681 F. Supp. 1337

GENERAL ELECTRIC COMPANY and Carboloy, Inc., Plaintiffs, v. Robert SPEICHER; and Speicher, Inc., Defendants.

Civ. No. F 87-98.

United States District Court, N.D. Indiana, Fort Wayne Division.

March 14, 1988.

Reed Silliman, Fort Wayne, Ind., Donald Welsh and A. Sidney Katz, Chicago, Ill., Arthur E. Bahr, Hudson Falls, N.Y., for plaintiffs.

Albert Jeffers, George Pappas, Fort Wayne, Ind., for defendants.

MEMORANDUM AND ORDER

ALLEN SHARP, Chief Judge.

Plaintiffs have moved this court, pursuant to Fed.R.Civ.P. 52(b), to reconsider its order of January 21, 1988. See General Electric v. Speicher, 676 F.Supp. 1421, (N.D.Ind.1988). This court has scrutinized plaintiffs' memorandum in support of said motion. For reasons set forth below, plaintiffs' motion is hereby DENIED.

Plaintiffs challenge this court's ruling on the wrongful seizure claim, on plaintiffs' 15 U.S.C. § 1114(a) claim, on this court's decision not to award damages, and on the award of costs to defendants. These challenges will each be considered separately.

I.

This court found that plaintiff, General Electric conducted a wrongful seizure on May 1, 1987. Plaintiffs advance several arguments to support their request for reconsideration of this decision.

Initially, plaintiffs contend that, contrary to this court's finding, the items seized were within the scope of the seizure order. The seizure order directed the Marshal to seize "all cutting inserts marked with the number `570' and all ... boxes ... bearing any simulation, reproduction, counterfeit, copy or colorable imitation of any of General Electric's trademarks" and "all simulations, reproductions, counterfeits, copies or colorable imitations of General Electric's trademarks, including any and all cutting inserts bearing reproductions of any of General Electric's trademarks including the designation 570" (emphasis added). Plaintiffs claim that the seizure of cutting inserts bearing numbers 866, 395, 879, 999, 516, 515, 883, 370, 350 and 905 was properly within the scope of the order because these all are common law trademarks of General Electric. It is unclear whether the items seized were genuine G.E. inserts (which would be beyond the scope of the order because it only permitted seizure of counterfeit items). Even if the items were reproductions of G.E. products, plaintiff should certainly be aware, due to its apparently thorough knowledge of 15 U.S.C. § 1116(d) which it has used on at least two prior occasions,¹ that this section only applies to registered trademarks. Copies of common law trademarks are not covered by this section. Although this court specifically permitted the seizure of all cutting inserts marked with the number "570," this was clearly an exception, which in retrospect, should not have been included. The statute is crystal clear:

(B) As used in this subsection the term "counterfeit mark" means —

(i) a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered.

It also specifically states that its provisions apply only in civil actions arising under 15 U.S.C. § 1114(1)(a) or 36 U.S.C. § 380 (use of Olympic symbols, emblems, trademarks and names). Section 1114 applies only to registered trademarks. The actual wording of the order is undoubtedly ambiguous. But this does not alter the fact that ex parte seizures under § 1116(d) are an available remedy only in the case of counterfeit, registered trademarks. This court reiterates its admonition that plaintiffs who request ex parte seizures assume the risks of their wrongful acts. It is not enough that they acted in good faith; if defendants are harmed, plaintiffs must be held responsible. Plaintiffs state that "it would be contrary to the spirit and purpose of 15 U.S.C. § 1116 to accuse plaintiffs of a wrongful seizure merely because no counterfeit goods per se were seized on May 1, 1988." This court absolutely disagrees with such reasoning. The spirit and purpose of 15 U.S.C. § 1116 is certainly not to give plaintiffs in civil trademark infringement suits unlimited power to commit acts which would otherwise be contrary to defendant's fundamental rights. The use of this remedy should be severely restricted to only the most egregious instances of counterfeiting.

Plaintiffs also claim their taking of photographs was not outside the scope of the order. The order was very specific in what it covered. It did not say anything about photographs. Plaintiffs argue, however, that courts have supported and even encouraged the taking of photographs in criminal searches under the "plain view" doctrine. United States v. Espinoza, 641 F.2d 153 (4th Cir.) cert. denied 454 U.S. 841, 102 S.Ct. 153, 70 L.Ed.2d 125 (1981); United States v. Waxman, 572 F.Supp. 1136, 1150 (E.D.Pa.1983) aff'd w/o opinion 745 F.2d 49 (3rd Cir.1984). This court is aware of such cases. However, those were criminal searches. This case can be distinguished in that it involves a civil action governed by a narrow statute. The plaintiff in § 1116(d) seizures has control over that which it wishes to search and seize. Plaintiffs could have easily requested that photographs be taken. This court must again stress the importance of limiting § 1116(d) seizures. If a plaintiff wishes to take pictures during its search, it should ask the court's permission. That is a small thing to require balanced against the need to protect defendants from potentially wrongful searches. Plaintiffs in § 1116(d) search and seizure requests should specify whether or not pictures or any other kind of image preservation methods are to be used. In this particular case, this court finds that the photographs were not wrongful. In the future, however, this court will require that a plaintiff specifically request permission to take pictures.

Plaintiffs also point out that this court mistakenly condemned plaintiffs' retention of the items seized because this court signed a Substitute Custodial order on April 30, 1987. This court admits its mistake. Plaintiffs were certainly acting with authority when their counsel retained the fruits of the search and seizure. Although this court regrets its decision to sign the Substitute Custodial Order and will certainly not make that mistake again, it cannot say that plaintiff acted wrongfully in retaining the evidence which it seized.

Defendants, however, in their "Memorandum in Opposition to Plaintiffs' Motion for Reconsideration and to Amend Judgment and Plaintiffs' Request for a Hearing," claim that the Substitute Custodial Order was not carried out properly. Defendants cite the affidavit of Morgan Cherry² dated February 4, 1988 to support its contention that the Substitute Custodial Order was violated. Cherry apparently kept negatives and copies of the photographs taken during the search. Cherry is president of M. Morgan Cherry & Associates of Alexandria, Virginia, a firm which specializes in investigations of patent and copyright infringement. Cherry was retained by plaintiffs' counsel to assist in the execution of the May 1, 1987, seizure. This court agrees with defendants that the retention of the negatives and copies of the photographs by Cherry was improper. It is extremely important that anything seized under the authority of § 1116(d) be properly held in custody, normally by the court, but in this case by the firm of Baker, Daniels & Shoaff.

In their "Reply Memorandum in Support of Their Motion for Reconsideration and to Amend Judgment," plaintiffs assert that Cherry's retention of the negatives and copies of photographs was proper because Cherry is an agent of Baker, Daniels & Shoaff. Whether or not there was a legitimate agency, do plaintiffs seriously contend that any of their agents are entitled to access to defendants' materials and documents, some of which may contain sensitive business information? This court cannot agree. It was improper, absent court approval, for any of the seized items to be held by anyone other than the authorized custodian. Further, as this court has learned, substitute custodial orders should be issued only in the most extenuating circumstances. Courts should retain custody of items seized if at all possible. The reason for the requirement that all materials seized be held in court custody is to protect defendants' property and any of defendants' legitimate business information which may be confidential. See Joint Statement on Trademark Counterfeiting Legislation, Senate Comm. on the Judiciary, S.R. 98-526, 98th Cong., 2d Sess. XX-XXX-XXX, reprinted in 1984 U.S.Code Cong. & Admin.News 3182/3627, (hereinafter "Joint Statement").

In a second circuit opinion written by Judge Winter just two months ago, the subject of wrongful searches was addressed. Judge Winter emphasized that a search must be confined to the terms and limitations of the authorizing warrant. United States v. Matias, 836 F.2d 744, 747 (2d Cir.1988). He also stated that items seized outside the scope of a valid warrant will ordinarily result in suppression not invalidation of the entire search. Id.; Andresen v. Maryland, 427 U.S. 463, 482 n. 11, 96 S.Ct. 2737, 2749 n. 11, 49 L.Ed.2d 627 (1976); United States v. Dunloy, 584 F.2d 6, 11 n. 4 (2d Cir.1978). Judge Winter, however was focusing on suppression of evidence seized. That is not the case here. Admissibility of evidence is not at issue. This court is being asked to interpret a statutory provision. Criminal search and seizure law is certainly relevant but this court must look to the plain meaning of the statute and its legislative history for primary guidance in interpreting such a provision where no case law is available. See, e.g., In re McVey Trucking Co., 812 F.2d 311, 324-327 (7th Cir.1987).

The nature of the action governed by the statute must...