Ill. Tamale Co. v. El-Greg, Inc.
| Decision Date | 13 September 2019 |
| Docket Number | Case No. 16 C 5387 |
| Parties | ILLINOIS TAMALE CO., Plaintiff, v. EL-GREG, INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
CORRECTED MEMORANDUM OPINION AND ORDER
Illinois Tamale Co., which owns the registered trademark "Pizza Puffs," among other "puffs" trademarks, brought this lawsuit in May 2016 against El-Greg, Inc. Illinois Tamale and El-Greg are Chicago-based businesses that manufacture and sell competing versions of a frozen, hand-held stuffed sandwich filled with meat, cheese, and sauce. This lawsuit concerns El-Greg's use of the product names "Pizza Pies™ (Puffs),"1 "Chili Cheese Puff," and "Veggie Pizza Puff," among others, as well as similarities between the parties' slogans and packaging. Illinois Tamale asserted claims for trademark and trade dress infringement, unfair competition, and false advertising under the Lanham Act and state law. Illinois Tamale also asserted a state law breach of contract claim, alleging that El-Greg breached a prior settlement agreement in which it agreed not to use "Pizza Puff," alone or in combination with other words, to market, advertise, or identify its goods. The Court denied both parties' motions for partialsummary judgment. See Illinois Tamale Co. v. El-Greg, Inc., No. 16 C 5387, 2018 WL 1534971 (N.D. Ill. Mar. 29, 2018).
In October 2018, the case was tried before a jury, which found in favor of Illinois Tamale and against El-Greg on all claims. The jury also made a finding of willfulness on each of the Lanham Act claims. It awarded Illinois Tamale $100,000 on the breach of contract claim. Because El-Greg asserted a laches defense to the Lanham Act claims, which the parties agreed the Court would adjudicate after the jury trial, the Court directed the jury to provide two sets of damages awards for those claims: one for the entire infringement period and another for the infringement period post-dating the filing of the lawsuit. After a bench trial held on November 7, 2018, the Court concluded that El-Greg had established its defense of laches and that, as a consequence, Illinois Tamale should not be able to recover "damages and profits that predate the filing of suit." See Illinois Tamale Co. v. El-Greg, Inc., No. 16 C 5387, 2018 WL 6590558, at *3 (N.D. Ill. Dec. 14, 2018) ("Laches Order"). The Court, therefore, adopted the jury's damages award for the infringement period post-dating the filing of the lawsuit: $10,000 for Illinois Tamale's lost profits and $30,000 for El-Greg's profits resulting from the Lanham Act violations. The Court directed the clerk to enter judgment in favor of Illinois Tamale on all of its claims against El-Greg, awarding Illinois Tamale damages in the total amount of $140,000. See id.
Both parties challenge the judgment. El-Greg has moved under Federal Rule of Civil Procedure 50(b) for judgment as a matter of law on all claims. In the alternative, El-Greg has moved under Rule 59(a) for a new trial on all claims. In that motion, El-Greg has made an alternative request for a remittitur of the damages award on thebreach of contract claim. Illinois Tamale, for its part, has moved under Rule 50(b) for judgment as a matter of law concerning the jury's award of El-Greg's profits on the Lanham Act claims. In the alternative, Illinois Tamale has moved under Rule 59(a) for a new trial on that award. Illinois Tamale has also moved under Rule 59(e) to alter or amend the Court's judgment on El-Greg's laches defense. Finally, Illinois Tamale has moved for a permanent injunction; enhancement of damages, a declaration of exceptional case, and attorneys' fees under 15 U.S.C. § 1117(a); and sanctions under 28 U.S.C. § 1927. The Court addresses each request in turn.
A. Evidence at trial
1. Illinois Tamale's products
Illinois Tamale's owner Warren Shabaz (W. Shabaz, to distinguish him from Adam Shabaz) testified that he created a tortilla-wrapped, deep-fried pizza product in or around 1976. He decided to call the product a Pizza Puff and trademarked the term Pizza Puffs in 1976. He testified that Illinois Tamale began selling Pizza Puffs "to the masses" in Chicago in 1976 and has used the trademark (which is also registered) continuously since then. Oct. 22, 2018 Trial Tr. at 66:10-11, 71:20-72:8. W. Shabaz testified that in the late 1970s and early 1980s, Illinois Tamale expanded its sales to the East Coast and began making and selling other "puffs" products, including a Pepperoni Puff, a Taco Beef Puff, and a Sloppy Joe Puff. He said that Illinois Tamale has advertised its puffs products together, such as by listing them as a group on price sheets for customers, since the 1980s. Illinois Tamale currently sells twelve puffs products, W. Shabaz testified, and it has trademarked each of them.
2. El-Greg's products
El-Greg's co-owner Gregory Lereno (Mr. Lereno, to distinguish him from Maria Lereno) testified that he and his mother founded El-Greg in 1986 as a frozen pizza company. According to Mr. Lereno, someone asked him in or around 1989 to make a product similar to Illinois Tamale's Pizza Puff. He conceded that at the time, Illinois Tamale was the only company "selling this kind of product." Oct. 22, 2018 Trial Tr. at 111:10-11, 112:2-4. Mr. Lereno testified that El-Greg made a similar product and that while choosing a name for it, he knew that Illinois Tamale owned the Pizza Puffs trademark. El-Greg called its product a "Pizza Pie" and began selling it in 1989. El-Greg, Mr. Lereno testified, later introduced other products, including a beef Pizza Pie, also in 1989; a Spinach Puff in 1990; a Chili Cheese Puff in 2006; a Deluxe Beef Puff in 2010; and, at some point, a Veggie Pizza Pie.
3. Illinois Tamale's 2002 lawsuit against El-Greg
Oct. 22, 2018 Trial Tr. at 82:15-23 (quoting Pl. Ex. 11).
4. The accused Restaurant Depot label
The jury heard testimony that Illinois Tamale sells Pizza Puffs and El-Greg sells Pizza Pies to a national wholesale supplier called Restaurant Depot. El-Greg sells only three Pizza Pies varieties to Restaurant Depot: original (pork), beef, and halal. In late 2008 or early 2009, Restaurant Depot asked its suppliers to create new labels for their products. According to Ms. Lereno, Restaurant Depot made this request because its suppliers had been providing products in plain boxes and customers were having trouble identifying their contents. Adam Shabaz (A. Shabaz), Illinois Tamale's CFO, and Mr. Lereno both testified that Restaurant Depot asked that the labels include the product's picture, brand name, quantity, and weight.
A. Shabaz testified that Illinois Tamale created a new label for Pizza Puffs as soon as possible and began selling newly labeled boxes to Restaurant Depot in August 2009. The following photograph depicts Illinois Tamale's new label:
Image materials not available for display.
Illinois Tamale Opp. to Rule 50 Mot., Ex. D.
The jury heard testimony that El-Greg did not complete a new label until approximately May 2010. Mr. Lereno testified that he asked Restaurant Depot for guidance on how to create the label, and Restaurant Depot suggested that he look at other labels in the store. Based on this advice, Mr. Lereno testified, he and Ms. Lereno collected several new labels from Restaurant Depot, including Illinois Tamale's; sent them to a designer; and asked the designer to create something similar for El-Greg. The following photograph depicts El-Greg's new label:
Image materials not available for display.
Illinois Tamale Opp. to Rule 50 Mot., Ex. E.
At trial, Ms. Lereno agreed that El-Greg's new label "was very similar to" Illinois Tamale's. Oct. 23, 2018 Trial Tr. at 292:15-17. She conceded, for example, that the font on El-Greg's label is identical to that on Illinois Tamale's. She further testified that although El-Greg had not previously used the slogan "Makers of the Original Puffs," El-Greg put it on the new label after seeing the slogan "Makers of the Original Pizza Puff" on Illinois Tamale's label. Mr. Lereno testified that El-Greg added the word "puffs" inparentheses to its product name, even though it had not previously called its Pizza Pie products "puffs." According to Mr. Lereno, El-Greg added the word "puffs" to its product name to indicate that "the product cooks and puffs up." Id. at 165:19-25.
A. Shabaz testified when he first saw El-Greg's new label, he "thought it was virtually a copy of" Illinois Tamale's. Oct. 24, 2018 Trial Tr. at 487:19. He further testified that in 2011, Illinois Tamale sent El-Greg a cease-and-desist letter concerning the label. Illinois Tamale sent another cease-and-desist letter in December 2015, and it filed this lawsuit in May 2016. Mr. Lereno testified that approximately seven months later, El-Greg removed the word "puffs" from its Restaurant Depot labels.
5. Expert testimony on likelihood of confusion and family of marks
Illinois Tamale's survey expert, Thomas Maronick, testified that he conducted two surveys relevant to Illinois Tamale's claims. One survey tested whether there is a likelihood of confusion when people see the...
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