MECHANICAL PLASTICS v. TITAL TECHNOLOGIES, 92 Civ. 5123 (CLB).

• Decision Date: 17 June 1993
• Docket Number: No. 92 Civ. 5123 (CLB).,92 Civ. 5123 (CLB).
• Citation: 823 F. Supp. 1137
• Parties: MECHANICAL PLASTICS CORP., Plaintiff, v. TITAL TECHNOLOGIES, INC., Petersen Products, Inc. and Danish Import, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

823 F. Supp. 1137

MECHANICAL PLASTICS CORP., Plaintiff, v. TITAL TECHNOLOGIES, INC., Petersen Products, Inc. and Danish Import, Inc., Defendants.

No. 92 Civ. 5123 (CLB).

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

June 17, 1993.

Howard Aronson and Mark Ingber, Lackenbach, Siegel, Marzullo, Aronson & Greenspan, P.C., Scarsdale, NY, for plaintiff.

Edward B. Hunter, Nolte, Nolte & Hunter, P.C., Jericho, NY, Robert L. Kelly, Dykema Gossett, Bloomfield Hills, MI, for defendants.

MEMORANDUM & ORDER

BRIEANT, District Judge.

At the July 15, 1992 preliminary injunction hearing in this action to enjoin a trademark violation, the plaintiff and the defendants consented to a consolidated trial on the merits, to be held in October, 1992. See Transcript (document no. 26), pp. 13-17. Nevertheless, on September 30, 1992, defendant Titan Technologies, Inc. ("Titan") filed this motion for partial summary judgment (document no. 20), pursuant to F.R.Civ.P. Rules 56 and 54(b), on its counterclaim that one of the trademarks asserted by the plaintiff in this trademark infringement litigation is invalid because it is functional. By the Answer and Counterclaims dated October 19, 1992, and filed October 26, 1992 (document no. 29), defendants Petersen Products, Inc. and Danish Import, Inc. are deemed to join in the motion. The parties all have filed numerous supplemental papers, before and after the motion was heard on November 10, 1992.

Immediately following the hearing, the parties requested that the Court hold the motion in abeyance while they attempted to settle the litigation. On February 1, 1993, a letter brief (document no. 38), dated January 28, 1993, from plaintiff Mechanical Plastics Corp. ("Mechanical Plastics") was filed in response to Titan's January 25, 1993 letter (document no. 37), and Supplemental Affidavit (document no. 36). The motion was fully submitted for decision as of February 1, 1993. On March 17, 1993, the counsel for the plaintiff telephoned chambers to advise that they were considering filing still more papers. By letter dated March 18, 1993, the plaintiff informed the Court that it had decided not to file additional documents lest our decision be delayed. The matter is now ripe for decision, and is resolved as follows.

PROCEDURAL AND FACTUAL BACKGROUND

Plaintiff Mechanical Plastics filed this action on July 9, 1992, charging the defendants with four counts: (I) false designation of origin and trademark infringement, in violation of the Lanham Act, 15 U.S.C. §§ 1125(a)(1) and (2); (II) trafficking in counterfeit goods, in violation of the Lanham Act, 15 U.S.C. §§ 1114(1)(a) and (b); (III) state trademark infringement; and (IV) unfair competition, and dilution, in violation of New York General Business Law § 368-d. This Court is asked to exercise its supplemental jurisdiction over the pendent New York State claims. The plaintiff seeks a permanent injunction, an accounting of the defendants' profits, and monetary damages.

The facts set forth below are either conceded, or assumed for the purpose of the motion. Plaintiff Mechanical Plastics is "engaged in the business of manufacturing, promoting and selling plastic screw anchors, under various trademarks including the trademark `Toggler.'" Complaint ¶ 8. The plaintiff claims to own two registered trademarks consisting of a representation of the side-view silhouette of a particular screw anchor (the "Toggler"). The plaintiff has identified these two trademarks throughout its papers as "Trademark A" (issued U.S. Reg. No. 1,248,999 on August 23, 1983) and "Trademark B" (issued U.S. Reg. No. 1,510,979 on November 1, 1988). Complaint ¶¶ 10, 12. The validity of Trademark A has not been challenged by the defendants.

Defendant Titan has filed a counterclaim seeking a declaratory judgment that Titan's product does not infringe either Trademark A or Trademark B. The defendants contend that what the plaintiff has designated as Trademark B is not a valid trademark. Trademark B has not been used continuously and exclusively for the five year statutory period, pursuant to 15 U.S.C. § 1065. The defendants seek to have this Court order the United States Patent and Trademark Office to cancel the mark administratively, pursuant to 15 U.S.C. § 1064 and 15 U.S.C. § 1119. In Titan's Answer, filed on August 31, 1992, the defendants allege that "Trademark B" is not a trademark, and cannot function as such, thus it cannot be infringed. See document no. 14. The defendants claim that "the configuration of the goods depicted in Exhibit B does not function as a trademark and is incapable of having good will attendant therewith." Answer (document no. 14), ¶ 11. The defendants assert that "the configuration of the goods is totally functional" and that the "basic utilitarian design features ... leave no acceptable alternative designs for competitive products." Answer (document no. 14), ¶¶ 48, 49. The defendants assert that Mechanical Plastics' design features are essential because they "affect the cost and quality of the anchor." Answer (document no. 14), ¶ 50. See also Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 n. 10, 102 S.Ct. 2182, 2187 n. 10, 72 L.Ed.2d 606 (1982).

The defendants also assert, as an affirmative defense, the equitable doctrine of "unclean hands." The defendants claim that the design features of Trademark B were the "subject matter of United States Letters Patent 3,651,734 a product patent which issued to the plaintiff on March 28, 1972 and which expired on March 28, 1989." Answer (document no. 14), ¶ 52. The defendants allege that the plaintiff's attempt to assert its registered Trademark B unlawfully "constitutes an attempt to extend its monopoly under U.S. Patent 3,651,734." Answer (document no. 14), ¶ 53. The Answer and Counterclaims dated October 19, 1992, and filed October 26, 1992 by defendants Petersen Products, Inc. and Danish Import, Inc. essentially are to the same effect as the Titan Answer. See document no. 29.

In addition to the counterclaim seeking a declaratory judgment, the defendants allege two counts of unfair competition against the plaintiff. The first, on the theory of tortious interference, is based on warning letters sent by plaintiff Mechanical Plastics' counsel to the defendants' customers. The defendants allege that the plaintiff caused its own counsel to make several misrepresentations including, inter alia, that the "Longhorn" anchor sold by defendants infringes certain Japanese patents held by Mechanical Plastics. The second is based on a theory of "trademark misuse." The defendants allege that the plaintiff tried impermissibly to extend the grant of its patent monopoly, based on the '734 patent, by claiming trademark protection for the identical functional elements of the Toggler plastic wall anchor which were protected by the patent until it expired, on March 28, 1989.

The now-expired patent referred to, United States Patent No. 3,651,734 ("the '734 patent"), was the first of many patents in this very crowded field of art assigned to Mechanical Plastics by inventor Thomas W. McSherry during — and after — the time that he worked for Mechanical Plastics designing plastic wall anchors to hold screws. In late 1974 or early 1975, inventor McSherry had been fired from Mechanical Plastics. See Mechanical Plastics Corp. v. Thaw, 197 U.S.P.Q. (B.N.A.) 651 (N.Y.Sup.Ct.1977). Soon thereafter, Mr. McSherry had been rehired as an "exclusive consultant," until terminated again on June 3, 1991. At some time in the early to mid-1980s, Mr. McSherry began designing plastic wall anchors for the Rawlplug Company, a competitor of Mechanical Plastics, for whom Mr. McSherry was, at that time, employed as exclusive consultant. Judge Knapp, of this district, noted that McSherry was trying to "invent around" his own patent, which he previously had assigned to Mechanical Plastics. Mechanical Plastic Corp. v. The Rawlplug Co., 14 U.S.P.Q.2d (B.N.A.) 1058, 1989 WL 149285 (S.D.N.Y.1989). Mr. McSherry is now the principal of defendant Titan.

Plaintiff alleges, and defendants do not deny, that Mr. McSherry was terminated on June 3, 1991, "because of evidence which had arisen which indicated that Mr. McSherry's son had been soliciting business from one of plaintiff's largest customers for an anchor, the specifications of which exactly matched those specified by the customer to the plaintiff and conveyed to Mr. McSherry `... in trust and under contract ...' for product development." Plaintiff's Memorandum in Opposition to Defendant Titan's Motion for Partial Summary Judgment, filed November 4, 1992 (document no. 30), at p. 9, citing Declaration of Nathaniel Garfield, filed November 4, 1992 (document no. 32), ¶ 22.

Mechanical Plastics, Nathaniel Garfield, Mr. McSherry, and his one-time colleague, Louis Giannuzzi, have been involved in litigation over these patented and trademarked screw anchors for more than a decade. This litigation has produced the following published opinions: McSherry v. Giannuzzi, 717 F.Supp. 238 (S.D.N.Y.), appeal denied, 889 F.2d 1098 (Fed.Cir.1989); Mechanical Plastics Corp. v. Unifast Indus., Inc., 657 F.Supp. 502 (E.D.N.Y.1987), aff'd, 846 F.2d 78 (Fed.Cir.1988) (Table, Text in WESTLAW); Mechanical Plastics Corp. v. Unifast Indus., Inc., 610 F.Supp. 1073 (E.D.N.Y. 1985); McSherry v. Giannuzzi, 227 U.S.P.Q. (B.N.A.) 868 (Bd. of Pat.App. & Int. 1985), aff'd, 790 F.2d 95 (Fed.Cir.1986) (Table, Text in WESTLAW); and two New York State Court cases, Mechanical Plastics Corp. v. Rawlplug Co., 119 A.D.2d 641, 501 N.Y.S.2d 85 (1986); Mechanical Plastics Corp. v. Thaw, 197 U.S.P.Q. (B.N.A.) 651 (N.Y.Sup. Ct.1977).

During all relevant times when Trademark B was applied for, first examined and rejected, and subsequently published and registered, Thomas W. McSherry was the "exclusive consultant" to Mechanical Plastics. McSherry Affidavit, filed September 30, 1992 (documents no. 20 and 23), ¶ 7, at p. 4. In his sworn affidavit,...