Zany Toys, LLC v. Pearl Enters., LLC
| Decision Date | 23 May 2014 |
| Docket Number | Civil Action No. 13-5262 (JAP) (TJB) |
| Parties | ZANY TOYS, LLC, Plaintiff, v. PEARL ENTERPRISES, LLC, Defendant. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
This matter comes before the Court upon a Motion for Preliminary Injunction by Plaintiff Zany Toys, LLC ("Zany Toys" or "Plaintiff") [ECF No. 8]. Defendant Pearl Enterprises, LLC ("Pearl" or "Defendant") opposes the Motion, and has also filed its own Motion to Dismiss Counts II and V of Plaintiff's Amended Complaint [ECF No. 24]. The Court has considered the parties' submissions and held oral argument on March 28, 2014. The Court issues its findings of fact and conclusions of law on Zany Toys' Motion as required by Federal Rule of Civil Procedure 52. For the reasons set forth below, the Court will deny Plaintiff's Motion for a Preliminary Injunction, and grant Defendant's Motion to Dismiss Counts II and V.
A. Zany Toys and its Marks
Zany Toys is engaged in the business of researching, developing, marketing and selling novelty products, toys and game things. See Declaration of Amy Tiernan ("Tiernan Decl.") ¶ 31.As early as July 23, 2010, Plaintiff has been using the trademarks and "NO!" (the "Marks") in interstate commerce in connection with a talking electronic press-down toy and talking toys. See Am. Compl. ¶¶ 1-2.
The Marks were initially conceived by Amy Tiernan and Robert V. Tiernan, Jr. (together, the "Tiernans"), individuals who are now the owners/principals of Zany Toys. The Tiernans had the idea to create THE NO! BUTTON product starting in about 2003, and spent several years researching and developing the product. See Tiernan Decl. ¶¶ 7, 12-15. The Tiernans originally conceived the Marks without the exclamation point; however, early in the development process and before offering the product for sale, the Tiernans realized that the mark could be accidentally read as "ON" instead of "NO" as it appears on the product. In order to avoid this misunderstanding, the Tiernans added an exclamation point to the Marks and to the product, to make clear that the word is "NO" rather than "ON." See Second Declaration of Amy Tiernan ("Second Tiernan Decl.") ¶¶ 13-15. Rather than changing the Marks, the exclamation point worked to clarify the Marks. Id. at ¶¶ 16-17.
On or about August 13, 2007, the Tiernans registered the domain name "thenobutton.com." Tiernan Decl. ¶ 18. This domain name does not contain an exclamation point because of limitations of the domain name registration system and rules, which do not permit exclamation points. Second Tiernan Decl. ¶ 18. On or about July 27, 2007, the Tiernans began to refer to their product as "The No Button" in written communications with designers, consultants, business partners, and friends and family. Tiernan Decl. at ¶ 19. Around that time, they also began communicating with companies for ordering prototypes. They received the first samples of the products to consider for marketing in 2008. These first versions of THE NO! BUTTON were keychains that incorporated THE NO! BUTTON, but the Tiernans eventuallydecided to go forward with THE NO! BUTTON in its currently marketed form as a talking electronic press-down toy. Id. at ¶¶ 21-24. On June 5, 2008, the Tiernans filed a federal trademark Application Serial No. 77491387 for "NO BUTTON" for "talking electronic press-down toy" and "talking toys" in Class 28. The United States Patent & Trademark Office (the "USPTO") issued a refusal. The Tiernans were acting pro se and were uncertain as how to respond to this refusal and allowed the application to be abandoned. They allege that they maintained a bona fide intent to use their mark in commerce. See id. at ¶ 25; Am. Compl. ¶ 24.
Between May and July 2010, the Tiernans finalized and approved the final version of THE NO! BUTTON and began manufacturing and marketing activities for the product. Tiernan Decl. ¶ 26. The THE NO! BUTTON product is a press-down toy, which is marketed with Id. at ¶ 54. In July 2010, the Tiernans began selling the product directly from their website, and their first wholesale sale to a retailer occurred on July 23, 2010. Id. at ¶¶ 29-30. On September 20, 2010, the Tiernans formed Zany Toys, and conveyed the rights to the Marks and other ancillary rights to Zany Toys. Zany Toys has been the owner of the Marks since September 20, 2010.
B. Popularity and Sale of THE NO! BUTTON
THE NO! BUTTON product is available through retailers such as Learning Express Stores, iParty, AC Moore, and Hallmark Stores, and online through digital stores such as amazon.com and eBay.com. Zany Toys has shipped this product to every one of the 50 states, and internationally. Plaintiff has enjoyed great success in the marketplace. From its launch date on July 23, 2010, Zany Toys sold 1,596 units of the product in 2010. In 2011, it sold 69,260 units. In 2012, it sold 204,644 units. As of September 2013, Zany Toys sold 85,838 units.Additionally, Zany Toys have furnished demonstration units to retailers who sell Plaintiff's products for use as display units to allow potential customers to try the product. In 2010, since the date of launching the product, Zany Toys furnished 23 units. In 2011, it furnished 703 units, and in 2012 it furnished 782 units. As of September 2013, it had furnished 139 units to retailers in 2013. THE NO! BUTTON product is the primary source of income for Zany Toys. In total, from July 23, 2010 to September 30, 2013, Plaintiff has sold over 360,000 units of its THE NO! BUTTON product, amounting to an excess of $4 million in sales. Second Tiernan Decl. ¶ 27.
On September 28, 2010, Zany Toys created the "The No Button" page on the social networking site Facebook. As of September 2013, this Facebook page has 229 so-called "Likes." THE NO! BUTTON product has been used as part of a video presentation during the 2012 Emmy Awards ceremony, which as many as 13.2 million viewers watch, and used by the New York Giants football coach Tom Coughlin in an interview as part of a National Football League video. These references and uses of THE NO! BUTTON product were unsolicited and gratuitous. Zany Toys' product has also been used and/or featured on other television shows. See Tiernan Decl. at ¶¶ 41-51.
C. Pearl's Conduct
On January 3, 2013, an individual acting on behalf of JR Trading Co., Mr. Yaakov Feingold, placed an order for 100 units of Plaintiff's THE NO! BUTTON product. See Am. Compl. ¶ 68; Tiernan Decl. ¶ 64, Ex. F. The email address associated with the order was yyfeingold@yeshivanet.com. See Am. Compl. ¶ 69; Tiernan Decl. at ¶ 65, Ex. F. On the same day, January 3, 2013, Pearl filed federal trademark Application Serial No. 85815112 for the mark THE NO BUTTON! for a "talking electronic press-down toy" in Class 28 based on § 1(b) intent to use. As such, Defendant filed no date of first use.
This filing occurred less than one hour after JR Trading placed its order with Zany Toys. See Am. Compl. ¶ 70; Tiernan Decl. ¶ 72. The address provided for Pearl on its Application Serial No. 85815112 is the same mailing address provided for JR Trading Co. See Tiernan Decl. ¶ 75. The correspondent identified for the application used the same email address as the one used for the January 3, 2013 order placed with Zany Toys, to wit: yyfeingold@yeshivanet.com. Id. at 72, Ex. H. Accordingly, at the very least, an individual using the same personal email address that placed an order for 100 units of THE NO! BUTTON product from Zany Toys for JR Trading also filed Application Serial No. 85815112 in the name of Pearl. Since January 3, 2013, JR Trading Co. has placed five additional orders from with Zany Toys, purchasing a total of 3,300 units of THE NO! BUTTON product. The last date that JR Trading Co. placed an order with Zany Toys was June 26, 2013.
On or about August 1, 2013, Zany Toys identified a product sold by Pearl on the website Rakuten.com. The product image showed Zany Toys' THE NO! BUTTON product, as indicated by Zany Toys' superimposed "N" and "O" logo on the product. The manufacturer, however, is identified as Pearl Enterprises, LLC. See Tiernan Decl. ¶¶ 81-82, Ex. I. The advertisement uses language identical to that which Zany Toys uses to advertise, market, and sell its THE NO! BUTTON product (the "advertising story"); in other words, the marketing story that Zany Toys created regarding the founding of the product and a description of the product appear in an advertisement for Pearl's product, accompanying an image of Zany Toys' product. See id. Today, this advertisement still exists, but it now uses a different image that does not show the superimposed "N" and "O" logo of Zany Toys, and does not use the advertising story that Zany Toys utilizes. See Declaration of Yaakov Feingold ("Feingold Decl") Ex. C. Zany Toys alleges that Pearl offered for sale and sold (as a reseller) these approximately 3,300 units of THE NO!BUTTON product during the six-month period that Mr. Feingold was buying product from Zany Toys, and thereafter continued to advertise the genuine THE NO! BUTTON product but fulfilled orders placed with Pearl's own product. Zany Toys alleges that Pearl's product looks nearly identical to its own and recites ten different versions of "No" like its own, but that Pearl's product has poorer quality voice recordings, does not have appropriate safety warnings on its packaging, does not include batteries, lacks a screw to keep the cover secure, and costs more. See Am. Compl. ¶¶ 54-61, 79-94; Tiernan Decl. ¶¶ 81-105.
On September 3, 2013, Zany Toys filed a Complaint against Pearl. Zany Toys amended its Complaint on October 4, 2013. Plaintiff's Amended Complaint makes five claims: (1) trademark infringement under 15 U.S.C. § 1125(a); (2) design and sound recording copyright infringement under 17...
To continue reading
Request your trial