I.M. Wilson v. Otvetstvennostyou "Grichko"

• Decision Date: 12 July 2022
• Docket Number: Civil Action 18-5194
• Parties: I.M. WILSON, INC., Plaintiff, v. OTVETSTVENNOSTYOU “GRICHKO” et al., Defendants[1]
• Court: U.S. District Court — Eastern District of Pennsylvania

I.M. WILSON, INC., Plaintiff,
v.
OTVETSTVENNOSTYOU “GRICHKO” et al., Defendants^[1]

Civil Action No. 18-5194

United States District Court, E.D. Pennsylvania

July 12, 2022

MEMORANDUM

GENE E.K. PRATTER, UNITED STATES DISTRICT JUDGE

The pas de deux—a dance for two—is the centerpiece of many ballets. In its modern form, the pas de deux follows a standard structure: The pair enters, and the two dance together, with the danseur supporting the danseuse in a series of lifts and poses. Each then performs a solo variation, with the danseur showing off pirouettes and leaps before the danseuse demonstrates her balance and strength in pointe work. The pair then reunites in a powerful finale. At its core, the pew de deux is about partnership—the conflict and coordination between two dancers.^[2]

This case features a pas de deux disrupted. Grishko handmakes ballet shoes in Russia. For nearly 30 years, Grishko partnered with I.M. Wilson, its exclusive distributor in the United States, to sell its handmade shoes under the GRISHKO trademark. With Grishko's permission, I.M. Wilson registered the GRISHKO trademark with the United States Patent and Trademark Office, and I.M. Wilson spent significant money promoting the mark in the United States. But then the business relationship deteriorated, and Grishko revoked the distribution agreement.

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Their dance abruptly ended, Grishko and I.M. Wilson now fight over who had ownership of the GRISHKO mark when the music stopped. I.M. Wilson asserts that Grishko permanently gave it the rights to the mark in exchange for promoting the mark in the United States. Grishko says that it did no such thing; I.M. Wilson was supposed to sign the trademark over to Grishko once their distribution agreement terminated. If I.M. Wilson is right, then it owns the mark and may sell its new made-in-China ballet shoes under the GRISHKO mark. If Grishko is right, then I.M. Wilson is liable for holding the mark hostage.

Both Grishko and I.M. Wilson have moved for summary judgment. Each insists that it was the victor in the split, pointing to the evidence in the record that supports its narrative. But the facts are not nearly so certain. The jury, not this Court, must sort through the evidence and decide who is the true owner of the GRISHKO mark. The Court thus denies each party's motion for summary judgment in primary part.

Background

I. The parties sign an exclusive distribution agreement

Irene Wilson, a former ballet dancer, decided that she wanted to start a business importing Russian products into the United States. On a tour of Russia in 1990, she met Nikolay Grishko. Mr. Grishko and his team of cobblers had been handmaking pointe shoes in the Soviet Union for several years. Though Mr. Grishko had been selling 3,000 to 4,000 pairs of ballet slippers in the Soviet Union, Europe, and Japan each month, he did not yet have a ballet business presence in the United States. Seeing a business opportunity, Ms. Wilson and Mr. Grishko agreed to start a partnership. Through his collective Kooperativ Tanyets, Mr. Grishko would produce the pointe shoes, and Ms. Wilson would market and sell the shoes in the United States through her company I.M. Wilson.

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The two companies signed a distribution agreement in April 1990. Under the agreement, Tanyets would provide “ballet shoes, toe shoes and such other footwear” to I.M. Wilson to sell in the United States. Doc. No, 230-6, at 272. In turn, I.M. Wilson would “promotfe] [and] market[]” the goods. Id. at 279. And I.M. Wilson would have an exclusive license in the GRISHKO mark:

XV. License

The Seller hereby grants the Buyer an exclusive right, for the duration of this Agreement, to use the name "Grishko” in connection with the sale of the Goods in the United States. In consideration of such right, the Buyer shall pay the Seller a royalty equal to 10% of the value of each shipment of Goods

Id. The agreement would last for one year, and would automatically renew unless a party provided at least 90-days' notice prior to the renewal. For the length of the agreement and for one year after, Tanyets could not “sell or otherwise supply to any other purchaser in the United States the Goods set forth in Appendix I hereto”—ballet slippers and three models of pointe shoes, one of which remains in production today—“or any Goods that are substitutes therefor.” Id.

Two years later, in 1992, after the Soviet Union fell, Tanyets became Grishko, Inc., a private company. I.M. Wilson and Grishko, Inc. re-executed the distribution agreement, substituting Grishko, Inc. for Tanyets. The substance of the distribution agreement remained the same.

II. I.M. Wilson registers the trademarks

Shortly after the parties re-executed the distribution agreement, Ms. Wilson decided that she did not want to be a mere exclusive licensee. I.M. Wilson would be investing significant resources into promoting the mark, so Ms. Wilson wanted to own the mark. According to I.M. Wilson, Ms. Wilson requested permanent ownership, and Mr. Grishko agreed. Mr. Grishko disputes this. He does not recall ever discussing ownership of the mark with Ms. Wilson. And he insists that he never agreed that I.M. Wilson would own the mark, much less permanently. But, he

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says, he did agree that I.M, Wilson should register the GRISHKO mark with the United States Patent and Trademark Office (or USPTO).

Four months later, in July 1992, I.M. Wilson filed an application with the USPTO. The USPTO rejected the application. The mark “suggest[ed] a connection with Nikolai Grishko, a renowned manufacturer of dancing shoes in Russia,” but I.M. Wilson had not submitted proof that it had Mr. Grishko's permission to register the mark in the United States, Doc, No. 13-3, at 35. Under the USPTO's guidelines, if a domestic applicant seeks to register a mark used by a foreign manufacturer in a foreign county, the domestic applicant must provide proof that it has the right to register the mark in the United States. See Trademark Manual of Examining Procedure § 1201.06(a). To do so, the domestic applicant can show that (1) the foreign manufacturer consented to the domestic distributor registering the mark in the distributor's name, (2) the foreign manufacturer agreed or acknowledged in writing that the domestic distributor owns the mark in the United States, or (3) the foreign owner assigned its ownership of the mark to the domestic distributor. Id.

To prove it had the right to register the GRISHKO mark, I.M. Wilson submitted an August 5, 1992 letter from Mr. Grishko stating, “I agree that I. M. Wilson, Inc. is the owner of the Trademark, GRISHKO, and its goodwill in the Unites [sic] States of America. I further consent to the use of my name in that trademark.” Doc. No. 230-7, at 240. Mr. Grishko did not draft this text, but the parties cannot remember who did—it could have been I.M. Wilson, its counsel, or the USPTO. Either way, Mr. Grishko placed the text given to him on Grishko Inc. letterhead and signed and stamped it.

The USPTO accepted this registration letter, but once again rejected the application because Mr. Grishko had not expressly consented to registration of his name. So I.M. Wilson

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submitted another letter from Mr. Grishko, dated March 30, 1993. This letter stated, “In addition to the consent to I. M. Wilson, Inc. that I previously granted on August 5, 1992,1 hereby grant I.Wilson, Inc. [sic] the right to register the trademark GRISHKO in the U.S. [P]atent and [T]rademark [O]ffice.” Doc. No. 230-7, at 234. The USPTO then granted registration and listed the mark in I.M. Wilson's name.

Later, in 1999, Mr. Grishko filed applications of his own with the USPTO, seeking to register GRISHKO and NIKOLAY GRISHKO as marks. Pointing to I.M. Wilson's existing registrations, the USPTO rejected Mr. Grishko's applications.

In 2003, I.M. Wilson's registration lapsed, as it had forgotten, and, hence, failed, to file the required declaration that it continued to use the mark in commerce. 15 U.S.C. § 1058. I.M. Wilson refiled its trademark application, which the USPTO once again granted. I.M. Wilson then filed six more applications to use the GRISHKO mark on additional goods and services. For four of these registrations, I.M. Wilson filed affidavits of incontestability, certifying that the mark has been used continuously for at least five years and that no court has ruled against I.M. Wilson's right to use the mark. 15 U.S.C. § 1065. I.M. Wilson also filed the GRISHKO mark with U.S. Customs and Border Protection.

III. The parties sell shoes together for nearly 30 years

From the 1990s until the 2010s, the dance continued, and business grew significantly. Grishko became the largest manufacturer of ballet shoes in Russia, and established name recognition throughout the world. In the United States, I.M. Wilson developed a network of over 400 retailers selling GRISHKO shoes.

I.M. Wilson also ran its own website, “grishko.com,” through which it sold GRISHKO shoes. I.M. Wilson placed regular advertisements in dance magazines, and it paid $100,000 each year as a sponsor of a prominent youth ballet competition. I.M. Wilson posted on social media

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pages and hosted a photo contest for young dancers. I.M. Wilson also ran a brick-and-mortar store in New York City. Though the store operated at a loss, I.M. Wilson maintained it because its owners believed the store operation benefitted marketing. I.M. Wilson also attends trade shows and visits retailers. I.M. Wilson estimates, without documentation, that it spent millions in advertising and promotion. Other than placing sporadic advertisements in dance magazines, Grishko did little advertising of its own in the United States.

IV. The relationship sours

Then the partnership stumbled. Mr. Grishko thought that I.M. Wilson was not doing enough to promote and sell GRISHKO products. So in the 2010s, Grishko introduced a new...