Gerffert Co. v. Dean

• Decision Date: 29 August 2014
• Docket Number: No. 09–CV–266 PKC.,09–CV–266 PKC.
• Citation: 41 F.Supp.3d 201
• Parties: The GERFFERT COMPANY, INC. & Stephen Panigel, Plaintiffs, v. James DEAN, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

41 F.Supp.3d 201

The GERFFERT COMPANY, INC. & Stephen Panigel, Plaintiffs

v.James DEAN, et al., Defendants.

No. 09–CV–266 PKC.

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

Signed Aug. 29, 2014.

John A. Demaro, Jonathan C. Sullivan, Matthew Didora, Ruskin Moscou Faltischek, P.C., Uniondale, NY, for Plaintiffs.

Courtney Elizabeth Scott, Tressler LLP, New York, NY, Jacqueline A. Criswell, James K. Borcia, Nikolai Guerra, Tressler LLP, Chicago, IL, Michael Paul Kandler, Goldberg Segalla LLP, White Plains, NY, for Defendants.

MEMORANDUM & ORDER

PAMELA K. CHEN, District Judge.

Editor's Note: The preceding image contains the reference for footnote¹ The main question raised by Defendants' summary judgment motion is: were The Gerffert Company, Inc.'s catalogs² for religious products, featuring the iconic artwork of Fratelli Bonella,³ protectable trade dress infringed upon by William J. Hirten Co., LLC's catalogs⁴ for the same product line? Because the Court answers this question in the negative, it grants summary judgment in favor of Defendants on Plaintiffs' federal Lanham Act claim, and declines to exercise supplemental jurisdiction over their state-law claims.⁵

I. Background⁶

A. The Facts⁷

Plaintiff The Gerffert Company, Inc. (“Gerffert”), during the time period relevant to this lawsuit, was a New York distributor of Catholic-themed religious products, including prayer cards and framed prints. (Dkt. No. 335–1 (“Panigel Decl.”) ¶ 3.) As of 1984, Gerffert's owner and president was Plaintiff Stephen Panigel (“Panigel”). (Id. ¶¶ 3, 11.) Defendant James Dean (“Dean”) was first employed by Gerffert, from 1988 to 2005, as an independent sales representative⁸ and then, beginning in 2005, as an actual employee. (Defs.' 56.1 ¶ 64.) Defendant Fratelli Bonella (“Bonella”), an Italian company, produces religious artwork. (Id. ¶ 1.) Since 2005, Bonella's owners have been Defendant Andrea Bonella (“Andrea”) and three other members of the Bonella family. (Id. )

For approximately five decades, between the late 1950s and May 2007, Gerffert served as the sole distributor of Bonella artwork in the United States.⁹ (Id. ¶ 2.) In particular, Gerffert developed and sold products that incorporated Bonella artwork (“Bonella-related products”). (Id. ¶ 70; Panigel Decl. ¶¶ 25–27.) According to Panigel, Gerffert also devised a “unique numbering system” for Bonella-related products, consisting of (i) a “series” identifier for the type of product (e.g., “81” for prints in 10–inch by 12–inch walnut frames; “800” for English-language laminated holy cards; “M” for non-gold micro-perforated prayer cards; “FM” for magnetic framed prints; “KC” for key chains) followed by (ii) a three-digit “image” number for the Bonella artwork.¹⁰ (Panigel Decl. ¶¶ 3, 29, 32, 34, 40, 43, 45, 47–48.)

In terms of Gerffert's marketing, Plaintiffs allege, but do not provide any evidence to establish, that Gerffert, in general, spent “in the millions of dollars” on “publicity and promotion of [its] products and services.” (Dkt. No. 1 (“Compl.”) ¶¶ 112, 115.) Plaintiffs further allege that such marketing entailed “the use of catalogs, membership in trade groups and appearances at annual trade shows and conventions” by Gerffert, without indicating what portion of its advertising expenditures went toward catalogs for Bonella-related products.¹¹ (Id. ¶ 114.)

Gerffert incorporated certain basic elements consistently throughout its catalogs for Bonella-related products: a decorative cover; general descriptions of the products in the series, including their dimensions and composition, atop every page; individual photographs for the products, arranged in rows on a solid background; and a series identifier and image number below each photograph. (See Defs.' Ex. 4, at Ex. K; Pls.' Ex. L; Pls.' Ex. O; Pls.' Ex. EE.)

But, in other ways, these catalogs also varied widely in their designs. First, one of these catalogs had a cover that bore the Gerffert and Bonella logos, reproduced below, and the Bonella slogan (“The World's Very Best”) (Pls.' Ex. EE); another only bore on its cover the Bonella logo and slogan, with no reference to Gerffert (Pls.' Ex. O); a different one had a cover that only bore the Gerffert logo, but referenced “The Bonella Line” (Defs.' Ex. 4, at Ex. K); and a fourth had a cover that only bore the Gerffert logo, with no reference to Bonella (Pls.' Ex. L).

Second, two catalogs had copyright stamps for Bonella, not Gerffert, at the bottom of every page (Pls.' Ex. O; Pls.' Ex. EE); another had a disclaimer of copyrights belonging to Bonella and Gerffert beneath the table of contents (Defs.' Ex. 4, at Ex. K); and one attributed no copyrights to Bonella whatsoever (Pls.' Ex. L).

There is no evidence of Gerffert's success in generating sales from Bonella-related products, except for Panigel's inapposite statement that its sales from all product lines “eventually reach[ed] over $5,000,000.00 annually.” (Panigel Decl. ¶ 50.) The evidence, in fact, belies such success. Starting in and around 2000, although Gerffert continued to send out its catalogs for Bonella-related products to customers,¹² Gerffert's sales of these products declined. For instance:

• Panigel acknowledges that there was growing concern among the Bonella family about Gerffert's “falling sales” of Bonella-related products, beginning in “about January 2000.” (Id. ¶ 52 (emphasis added); see also Compl. ¶ 27 (same).)

• In July 2004, the Bonella family stated, in a letter to Panigel, that “the survival of Fratelli Bonella itself is in danger,” citing the fact that “the business is not increasing but strongly decreasing ” and that, since 1995, Bonella had “lost 70% of [its] profitability in [the] USA.” (Pls.' Ex. Q (emphasis added).) According to this letter, with annual sales of $1.2 million in 2003, Gerffert's line of Bonella-related products failed to generate any profit; and, with annual sales of $876,000 in 2002 and projected annual sales of $900,000 in 2004, respectively, the product line actually lost money. (Id. )

• In an e-mail later that month, the Bonella family stated that “the time of the big monthly orders [of Bonella-related products] is over” and that they, along with Gerffert, needed a “way to substitute the decrease in our traditional products.” (Pls.' Ex. S (emphasis added).)

• In May 2007, Panigel e-mailed the Bonella family, stating that he had endeavored to “salvage the situation” with respect to “sales of the Bonella line” which needed to be improved. (Compl., at Ex. C, at ECF 52.)

In August 2007, against this backdrop of declining, and increasingly unprofitable, sales in Bonella-related products by Gerffert, a new company, William J. Hirten Company, LLC (“New Hirten”), was created by Andrea, Dean, and Defendant Dolores King (“King”).¹³ (Defs.' 56.1 ¶ 42; Defs.' Ex. R1–15 ¶ 18.) According to Panigel, New Hirten began selling, and immediately replaced Gerffert as the sole distributor of, these products.¹⁴ (See Panigel Decl. ¶ 76 (stating that, although Bonella “used New Hirten as its exclusive distributor in the United States” as of August 2007, Gerffert remained a “valid, existing entity ready, willing, and able to distribute Fratelli Bonella artwork”).) Indeed, in November 2007, Panigel formally instructed Bonella to bill and ship any future orders of Bonella artwork to New Hirten, instead of Gerffert. (Defs.' 56.1 ¶¶ 50–51.)

Like Gerffert, New Hirten catered to institutional customers, i.e., other religious product companies, and not individual customers. (Id. ¶ 96.) Panigel states, without any evidence to support the statement, that, from the perspective of former Gerffert customers, “placing an order for [a Bonella-related] product from New Hirten was the same as placing an order with Gerffert,” implying that customers invariably confused the two companies. (Panigel Decl. ¶ 48.) On the contrary, in November 2007, Panigel confessed that certain Gerffert customers had asked him whether, after “many years of buying from Gerffert,” they should now buy Bonella-related products from the “new company,” i.e., New Hirten, and that he specifically assured them “it was O.K.” (Defs.' Ex. 1, at Ex. I (emphasis added); see also Defs.' Ex. 4 ¶ 40 (“During Gerffert's winding up process, Gerffert employees also directed customers to New Hirten if Gerffert was out of stock of a particular Bonella item.”).) Moreover, in January 2008, New Hirten sent a letter to all potential customers, identifying itself as the “new distributor of the Bonella line” and indicating that “much of the stock available to you now was out of stock by the previous distributor,” i.e., Gerffert. (Defs.' Ex. 4, at Ex. E (emphasis added); see also Defs.' 56.1 ¶ 92 (same).)

After its January 2008 letter, New Hirten began sending out catalogs for Bonella-related products to potential customers. (Defs.' 56.1 ¶ 93.) New Hirten's catalogs not only contained similar, if not the same, products as Gerffert's catalogs, but also a nearly-identical spread of product descriptions, photographs,¹⁵ and series identifiers and image numbers.¹⁶ (Panigel Decl. ¶¶ 79–84; see Pls.' Ex. BB; Pls.' Ex. CC; Pls.' Ex. DD; Pls.' Ex. FF.) As an example, the laminated holy cards catalogs for New Hirten and Gerffert, reproduced at the beginning of this decision, both have:

• a cover which bears the Bonella logo and colorful photographs of holy cards featuring Bonella artwork;

• a table of contents listing three series of holy cards with similar bulleted text (e.g., “800 Series —English Text”; “700 Series —Spanish Text”; “Overall Size—2 ½' x 4 ½” '; “All Laminated Cards Are Packed 25 Per Poly Bag”; “All of the above Series are not available as paper prayer cards ”) and a photograph next to each series; and

• product pages with (i) the same descriptions at the top (i.e., “Everlasting Laminated Holy Cards”; “Crystal Clear”; “Hard Lamination”; “2 ½' x 4 ½' ”; “With Prayers In Full Color”), (ii) nearly-identical photographs of the fronts and backs of every holy card in each series and

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