Ohio Art Co. v. Lewis Galoob Toys, Inc.

• Decision Date: 20 July 1992
• Docket Number: No. 92 C 947.,92 C 947.
• Citation: 799 F. Supp. 870
• Parties: OHIO ART COMPANY, Plaintiff, v. LEWIS GALOOB TOYS, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

799 F. Supp. 870

OHIO ART COMPANY, Plaintiff, v. LEWIS GALOOB TOYS, INC., et al., Defendants.

No. 92 C 947.

United States District Court, N.D. Illinois, E.D.

July 20, 1992.

Robert J. Schneider, Michelele C. Burke, Margaret Duncan, Paula J. Krasny, Anne R. Pramaggiore, McDermott, Will & Emery, Chicago, Ill., for plaintiff.

Martin R. Glick, M. Patricia Thayer, Deborah A. Kemp, Howard, Rice, Nemerovski, Canady, Robertson & Falk, San Francisco, Cal., Walter C. Greenough, Schiff, Harden & Waite, Chicago, Ill., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SHADUR, Senior District Judge.

Ohio Art Company ("Ohio Art") has sued three defendants—Lewis Galoob Toys, Inc. ("Galoob"), GALCO International Toys, N.V. ("GALCO") and Vaughn Associates, Inc. ("Vaughn")—in a multi-count Complaint charging defendants with violations of Ohio Art's intellectual property rights. This Court has conducted an evidentiary hearing occupying several trial days (the "Hearing") to consider Ohio Art's motion for preliminary injunctive relief. In accordance with Fed.R.Civ.P. ("Rule") 65 and the requirements of Rule 52(a), what are set forth here are the findings of fact ("Findings") and conclusions of law ("Conclusions") that constitute the grounds of this Court's action on that motion.

To the extent (if any) that the Findings as stated may be deemed conclusions of law, they shall also be considered Conclusions. In the same way, to the extent (if any) that matters later expressed as Conclusions may be deemed findings of fact, they shall also be considered Findings. In both those respects, see Miller v. Fenton, 474 U.S. 104, 113-14, 106 S.Ct. 445, 451-52, 88 L.Ed.2d 405 (1985).

Findings of Fact

Parties

1. Ohio Art is a corporation organized and existing under the laws of Ohio with its principal place of business at 1 Toy Street, Bryan, Ohio 43506. Ohio Art is in the business of manufacturing and marketing toys and games, including the Etch A Sketch drawing toy.¹

2. Galoob is a corporation organized and existing under the laws of California with its principal place of business at 500 Forbes Boulevard, South San Francisco, California 94080. Galoob is also in the business of manufacturing and marketing toys and games, including the Pocket Play Doodle It drawing toy.

3. GALCO is a corporation organized and existing under the laws of the Netherlands Antilles with its principal place of business at 701-8 South Tower World Finance Center, Harbour City, Tsimshatsui, Kowloon, Hong Kong 201. GALCO is a subsidiary of Galoob.

4. Vaughn is a corporation organized and existing under the laws of Illinois with its principal place of business at 1011 East Touhy Avenue, Suite 235, Des Plaines, Illinois 60018.

Pending Claims and Motions

5. On February 6, 1992 Ohio Art filed a five-count Complaint alleging trademark, service mark and collective membership mark infringement under 15 U.S.C. § 1114² (Count I); false designation of origin under Lanham Act § 43(a), Section 1125(a) (Count II); violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and Deceptive Trade Practices Act (Count III); violation of the Illinois Trademark Act (Count IV); and common law unfair competition and infringement of common law trademarks and trade dress (Count V).

6. All defendants have denied the substantive allegations of the Complaint and have asserted seven affirmative defenses: inexcusable delay in bringing suit; functionality of Ohio Art's mark; descriptiveness of Ohio Art's mark and lack of secondary meaning; estoppel; material misrepresentations to the Patent and Trademark Office ("PTO") by Ohio Art in procuring the registration of the mark at issue; inequitable conduct before the PTO by Ohio Art; and attempted unlawful extension of patent protection. All defendants also filed a counterclaim against Ohio Art for trademark misuse under Section 1120 (First Claim for Relief) and for cancellation of Ohio Art's Trademark No. 1,587,707 (the "Mark") under Section 1119 (Second Claim for Relief).

7. Simultaneously with its filing of the Complaint, Ohio Art filed a motion for preliminary injunction to enjoin defendants from marketing Doodle It. Shortly thereafter defendants filed a motion for summary judgment on all of Ohio Art's claims. Following extensive briefing and the submission of affidavits by the parties on both motions, this Court held the four-day evidentiary Hearing referred to earlier. Both sides have since submitted post-Hearing proposed Findings and Conclusions.

Products in Issue and Their Trade Dress

8. Since 1960 Ohio Art has marketed Etch A Sketch in basically the same configuration: a rectangular (7" × 5") grey opaque drawing screen encased in a nearly rectangular (9¾" × 8" × 1") plastic frame with two round knobs protruding from the plastic, located at the lower corners of the frame outside of the drawing screen but inside the outer borders of the frame.

9. Since at least 1973 Etch A Sketch has been and is currently sold almost exclusively in its "traditional red" color with white knobs (there is a more expensive gold model sold in certain upscale stores). Imprinted on the product are the Ohio Art logo, the product name (Magic Etch A Sketch) and the slogan "Making Creativity Fun®." Ohio Art's logo featured on the product is a plain unadorned rectangle containing a world globe encircled with a band labeled "Ohio Art."

10. Etch A Sketch is sold in a pyramid-shaped box covered with shrink wrap plastic that displays the entire front of the toy itself through the clear-plastic-covered open front of the box. As for the sides of the box, they are in the traditional red Etch A Sketch color marked with yellow horizontal lines. Also on the sides of the box are the Ohio Art logo, the Etch A Sketch product name and photographs depicting the toy. In this instance the Ohio Art logo is a red square with a white border and the words "Ohio Art The World of Toys" imprinted in yellow. As for the back of the box, it is bright yellow with a border of the traditional red Etch A Sketch color marked with yellow horizontal lines. It displays the Etch A Sketch product name, a large photograph depicting the toy and two Ohio Art logos. One of the logos is like that appearing on the toy itself (see Finding 9), while the other is like that appearing on the sides of the box and described in this Finding. Neither logo includes the Mark's simple configuration of a rectangle within a rectangle with two small circles at the lower corners between the rectangles (see Finding 18 and Finding 29 n. 7).

11. In mid-1990 independent inventors presented Galoob with a new idea for a product called Lite Mite—a portable, low cost activity toy. Impressed with the idea and with its sales force's reaction to the toy, Galoob decided to develop a full line of similar easy-to-carry toys. At its request an outside design firm created a style setting the tone for what would become its Pocket Play line. Doodle It and Line Shines were the next two products introduced into the line, each having a design consistent with that developed for the other products in the Pocket Play line. As a result of the success of the first three products, in 1992 Galoob added Power Doodle It and Mini Doodle It to its line of portable products.

12. At the time that Doodle It was being developed, Galoob was aware that the Grandjean patent on Etch A Sketch had expired and that the Clark patent was about to expire.³ It did not know of Ohio Art's configuration trademark registration of the Mark, however, until it received a letter from Ohio Art in February 1991. Notice of that Mark did not appear on Ohio Art's packaging until some time in 1991.

13. Galoob began marketing Doodle It in late 1990. Doodle It has a squarish frame (measuring 5.3" × 5.5") with rounded corners and a nearly square drawing screen measuring 3.75" × 3.3". Its control knobs extend outward from the frame at its lower corners, where they are nearly flush with the upper surface of the frame.

14. Doodle It is marketed in bold eye-catching colors: neon orange with bright blue knobs; hot pink with neon lime green knobs; bright blue with neon orange knobs; and neon lime green with hot pink knobs. Doodle It is packaged in a blister pack, with the toy being mounted on cardboard approximately double the size of the toy itself. Its packaging is consistent with the packaging of the other Pocket Play line products, which are color-coded by price (bright blue, pink and orange). Doodle It's cardboard mounting has a front in bright blue with a narrow border of alternating neon orange and bright blue, and it prominently displays Galoob's name and logo, the product line name, the product name and a photograph depicting the toy in operation. As for the back of the cardboard mounting, it is white in color and also displays the Galoob name and logo, the product line name and the product name. Also featured there are graphics illustrating how to operate Doodle It and depicting two other Pocket Play products, Mini Lites and Line Shines. Designed to be hung from a rack, the cardboard mounting has a "J hook" at the top. Doodle It's knobs are exposed and can be manipulated without breaking the blister package, which is labeled "Try Me." Doodle It is typically sold at about half the price of Etch A Sketch.

15. Doodle It and Etch A Sketch use the same basic action mechanism. Each toy's interior apparatus comprises four pulleys and two cords connected to a pair of crossed rods, set perpendicularly to one another, which move a stylus in vertical and horizontal directions across a screen dusted with a fine powder. That movement of the stylus across the screen creates dark line drawings.

16. Some 32 years after Ohio Art first began marketing Etch A Sketch and more than a year after Galoob began selling Doodle It and had achieved sales of 600,000 units in the United States, Ohio Art introduced a new product—Travel Etch A Sketch—at the New York Toy...