Holmes Group v. Vornado Air Circulation Systems, 99-1499-WEB.
| Citation | 93 F.Supp.2d 1140 |
| Decision Date | 08 March 2000 |
| Docket Number | No. 99-1499-WEB.,99-1499-WEB. |
| Parties | The HOLMES GROUP, INC., Plaintiff, v. VORNADO AIR CIRCULATION SYSTEMS, INC., Defendant. |
| Court | United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas |
Jay F. Fowler, Jim H. Goering, Timothy B. Mustaine, Foulston & Siefkin L.L.P., Wichita, KS, James W. Dabney, Pennie & Edmonds LLP, New York City, for Plaintiff.
Kent A. Meyerhoff, Fleeson, Gooing, Coulson & Kitch, L.L.C., Edward L. Brown, Jr., Wichita, KS, Jeffrey D. Karceski, Lisa A. Dunner, Peter W. Gowdey, Lynn E. Eccleston, Samuel P. Burkholder, Pillsbury, Madison & Sutro, L.L.P., Washington, DC, for Defendant.
Plaintiff Holmes Group Inc. filed this action seeking, among other things, a declaratory judgment holding that Holmes' sale of its fan and heater products does not infringe any valid or enforceable "trade dress" claimed by defendant Vornado under 15 U.S.C. §§ 1501 et seq. The matter is now before the court on Holmes' motion for summary judgment on its first cause of action seeking the aforementioned relief. Holmes argues it is entitled to summary judgment by virtue of the collateral estoppel effect of previous litigation involving defendant Vornado and another fan manufacturer. The court heard preliminary arguments from the parties relating to this issue at a hearing on January 3, 2000, and concludes that further argument would not assist in deciding the questions presented.
1. Holmes is a manufacturer of branded consumer household products. Holmes manufactures and sells a wide variety of household fan and heater products in U.S. interstate commerce, including the Holmes® Model HAOF-90 BlizzardTM Oscillating Power Table Fan; the Holmes® Model HFH 298 Power AccutempTM Bedroom Heater; and the Holmes® Model HFH 299 Power Heater.
2. Defendant Vornado is a competitor of Holmes in the U.S. fan and heater business. Vornado sells household fan and heater products, some of which incorporate arcuate vane structures exemplified in Exhibits 11 and 12 of the declaration of James W. Dabney.
3. On or about November 26, 1999, Vornado lodged a complaint with an administrative agency in Washington, D.C., known as the International Trade Commission (the "ITC"). In its ITC complaint, Vornado claimed to be the owner of a "trade dress" comprised of a "spiral grill design" embodied in certain Vornado fan and heater products, and asserted that Holmes' sale of the Holmes products essentially infringed that trade dress in alleged violation of 15 U.S.C. § 1125(a).
4. In its answer in this action dated December 30, 1999, defendant interposed an affirmative defense which substantially repeated the trade dress allegations contained in the ITC complaint. Defendant's answer in this action alleges that the spiral grill design embodied in certain Vornado fan and heater products constitutes nonfunctional trade dress and that Holmes' sale of the Holmes Products infringes that trade dress in violation of 15 U.S.C. § 1125(a).
5. The trade dress which defendant has accused Holmes of infringing in this action and in the ITC complaint, exemplified by the grill structure incorporated in the Vornado Model 550G "compact" fan depicted in Exhibit 5 to defendant's ITC complaint, is the exact same mechanical configuration which the Tenth Circuit has explicitly held "cannot be protected as trade dress" in Vornado I.
6. On November 6, 1992, Vornado commenced an action in this court entitled Vornado Air Circulation Systems, Inc. v. Duracraft Corp., Civ. Action No. 92-1453-WEB (D.Kan.). Vornado's complaint asserted that the aforementioned "spiral grill design", which Vornado then referred to as the "Patented AirTensityTM Grill", constituted non-functional trade dress subject to regulation and injunction under 15 U.S.C. § 1125(a).
7. On July 5, 1995, the Tenth Circuit rendered a judgment reported at 58 F.3d 1498 which rejected defendant's trade dress claim and concluded:
Vornado included the arcuate grill van structure as an element of its patent claims and described the configuration as providing an "optimum air flow." Then, after the first patent issued and Vornado subsequently found evidence that other grill structures worked as well or better than the spiral grill, Vornado did not repudiate or disclaim in any way the grill element of its patent. Instead, Vornado sought and received a reissued patent that expanded its claims with respect to the grill.
Even if we discount entirely Vornado's extensive advertising campaign emphasizing the importance of the "AirTensity Grill," this patent history on its face obviates any need for a remand on the question of inventive significance. We simply take Vornado at its word. Because the "Patented AirTensity Grill" is a significant inventive element of Vornado's patented fans, it cannot be protected as trade dress.
The Tenth Circuit opinion reversed this court's initial ruling in favor of Vornado. See Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 1994 WL 1064319 (D.Kan., Mar.4, 1994).
8. On January 8, 1996, the Supreme Court of the United States denied a petition by Vornado for review of the Tenth Circuit's Vornado I decision. This court subsequently entered final judgment dismissing with prejudice, on the merits, the trade dress claim which Vornado had asserted in Vornado I, and awarded costs against Vornado.
9. In Vornado I, the Tenth Circuit specifically considered and decided the issue of whether the arcuate or "spiral" grill configuration embodied in Vornado fan and heater products was eligible for protection as trade dress under 15 U.S.C. § 1125(a). By its complaint in the ITC and its affirmative defense in this action, defendant seeks to re-litigate the very same issue, which was actually, necessarily, and finally decided adversely to defendant in Vornado I.
The standards and procedures for summary judgment are well established and will not be fully repeated here. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In essence, summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Id.
Holmes argues that under the doctrine of collateral estoppel the judgment in Vornado I bars Vornado from asserting in this action that the configuration of its "AirTensity Grill" qualifies for trade dress protection under 15 U.S.C. § 1125(a). As such, Holmes contends it is entitled to summary judgment on its claim for a declaratory judgment of non-infringement. In response, Vornado contends that collateral estoppel should not be applied because there has been a fundamental change in the controlling law, and because application of the doctrine in this case would be unfair to Vornado.
The federal courts have traditionally adhered to the doctrine of collateral estoppel. Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). Under that doctrine, "once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case." Id. The doctrine furthers several important interests: it relieves parties of the cost and vexation of multiple lawsuits, it conserves judicial resources, and, by preventing inconsistent decisions, it encourages reliance on adjudication. Id. The Supreme Court has recently reaffirmed the benefits of collateral estoppel and has applied it in contexts not recognized at common law. For example, the Court has eliminated the requirement of "mutuality" of parties and has permitted a litigant not a party to a federal case to assert the doctrine "offensively" in a new federal suit against the party who lost on the issue in the first case. Id. at 94-95, 101 S.Ct. 411.
The elements of collateral estoppel are clearly satisfied in this case.1 The only real question is whether the doctrine should not be applied because of a change in the law since Vornado I. It is well established that an intervening change in the law can be a sufficient basis for declining to apply collateral estoppel. See e.g., Montana v. United States, 440 U.S. 147, 155, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979); Spradling v. City of Tulsa, 198 F.3d 1219, 1223 (10th Cir.2000); Bingaman v. Dept. Of Treasury, 127 F.3d 1431, 1437 (Fed.Cir. 1997) ().
Vornado contends this "change in the law" exception is met because in Midwest Industries, Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed.Cir.1999), the Federal Circuit expressly rejected the Tenth Circuit's Vornado I holding, ruling instead that a claim for trade dress protection was not barred by the fact that a product configuration had been claimed as a significant inventive element of a patent. Id. at 1364. As part of its ruling in that case, the Federal Circuit abandoned its prior practice of applying regional circuit law on questions involving the relationship between patent law and other federal law rights, and said that "[h]enceforth, will apply our own law to such questions." Id. at 1359. This alteration is potentially significant in the instant case, because Vornado has asserted a counterclaim alleging infringement of Vornado's patent. Under 28 U.S.C. § 1295(a)(1), the Federal Circuit has exclusive jurisdiction over an appeal from a final judgment of a district court if the district court's jurisdiction is based in whole or in part on a patent claim....
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Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.
...alleging patent infringement. The District Court granted petitioner the declaratory judgment and injunction it sought. 93 F. Supp. 2d 1140 (Kan. 2000). The court explained that the collateralestoppel effect of Vornado I precluded respondent from relitigating its claim of trade-dress rights ......