Zip Dee, Inc. v. Dometic Corp., 93 C 3200.

• Decision Date: 19 May 1995
• Docket Number: No. 93 C 3200.,93 C 3200.
• Citation: Zip Dee, Inc. v. Dometic Corp., 886 F.Supp. 1427 (N.D. Ill. 1995)
• Parties: ZIP DEE, INC., Plaintiff, v. The DOMETIC CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Illinois

886 F. Supp. 1427

ZIP DEE, INC., Plaintiff, v. The DOMETIC CORPORATION, Defendant.

No. 93 C 3200.

United States District Court, N.D. Illinois, Eastern Division.

May 19, 1995.

COPYRIGHT MATERIAL OMITTED

Harry M. Levy, James J. Hill, Emrich & Dithmar, Chicago, IL, for plaintiff.

William G. McGuinness, Fried, Frank, Harris, Shriver & Jacobson, New York City, Peter V. Baugher, Schopf & Weiss, Chicago, IL, for defendant.

MEMORANDUM OPINION AND ORDER

SHADUR, Senior District Judge.

Zip Dee, Inc. ("Zip Dee") has sued The Dometic Corporation ("Dometic") in a dual effort (1) to prevent Dometic from continuing to manufacture recreational vehicle awnings similar to Zip Dee's own and (2) to recover damages for asserted past violations of Zip Dee's rights. As the owner and holder of both a patent and a registered trademark, Zip Dee advances claims under both patent law (35 U.S.C. §§ 281, 284, 285) and trademark law (15 U.S.C. §§ 1052 et seq.).

In what was originally submitted to this Court as a proposed motion for partial summary judgment under Fed.R.Civ.P. ("Rule") 56, Dometic claims that Zip Dee's trademark claims are barred under the doctrine of claim preclusion¹ in light of prior litigation between the parties (more accurately, between Zip Dee and Dometic's predecessor in interest). This Court advised the parties that because such a motion really does not qualify as one "for a summary judgment ... as to ... any part" of Zip Dee's claims within the contemplation of Rule 56(b), Dometic's self-styled Rule 56 motion would instead be considered as a motion to narrow the issues under Rule 16. For the reasons stated in this memorandum opinion and order, Dometic's motion is denied.

Facts²

Zip Dee has been engaged in the business of manufacturing and distributing metal awnings for recreational vehicles since 1964. At first Zip Dee constructed its awnings out of a single sheet of flexible metal — a process that was patented in 1967. Since 1969, however, Zip Dee has fabricated its awnings using a series of metal slats that look much like individual Venetian blinds, so that the awnings could be rolled up and stored. Dometic concedes that Zip Dee's 1967 patent was broad enough to cover even Zip Dee's later multi-slatted design (D.Mem. 2-3).³

Before the expiration of its patent Zip Dee was the exclusive supplier of recreational vehicle awnings with slatted metal covers. In addition, Zip Dee was the only manufacturer of such awnings that would "bright dip" both the awning cover and its arms, giving the awnings a bright and shiny "mirror-like" finish. But within a year after Zip Dee's patent expired in 1983, A & E Systems, Inc. ("A & E") entered the field and began production of its own metal awnings with slatted metal covers and a mirror-like appearance.

On March 17, 1986 Zip Dee sued A & E in the United States District Court for the Central District of California, alleging in pertinent part that A & E had violated the Lanham Act, infringed Zip Dee's patent and engaged in common law unfair competition. Zip Dee's claims challenged A & E's practice of finishing its Model 9000 patio awning and its Elite window awning (collectively "prejudgment awnings") with mirror-like finishes similar to that employed by Zip Dee.

Following a jury verdict in Zip Dee's favor, the California court entered judgment for Zip Dee on its trade dress and patent claims in April 1988. That court then issued an injunction preventing A & E from further violating Zip Dee's trade dress⁴ (D. Ex. 9). Dometic, which then acquired A & E in 1988, understood the injunction as forbidding only the production of awnings with a "mirror-like bright shiny finish." Consequently Dometic believed that it had complied with the terms of the injunction when it removed the offending finish from its awnings but continued to produce awnings employing the metal slatted design ("post-judgment awnings"). Zip Dee disagreed and in May 1989 commenced a contempt proceeding against Dometic in the California District Court, claiming violation of the 1988 injunction.

In the contempt proceeding Zip Dee claimed that Dometic had continued to violate the injunction by producing awnings that, while no longer bright, shiny or mirror-like, nonetheless resembled the overall form and shape of Zip Dee's awnings. However, the California court ruled in Dometic's favor, holding that "the design similarity was not violative of the injunction" (D. Ex. 15 at 7). That ruling was affirmed as part of the rulings contained in an unpublished order by the Court of Appeals for the Federal Circuit (Zip Dee, Inc. v. A & E Sys., Inc., Nos. 90-1519 & 91-1010, 1991 WL 80084, 1991 U.S.App. LEXIS 10713 (Fed.Cir. May 17, 1991)).

While the contempt proceeding was under advisement (on August 8, 1990) Zip Dee filed an application with the United States Patent and Trademark Office ("Trademark Office") for a trademark covering the "overall configuration of a slatted cover for an awning on a recreational vehicle" (D. Ex. 17). Finding that description to be "functional" and not "inherently distinctive" (D. Ex. 18 at 1-2), the Trademark Office initially refused to issue the trademark. Zip Dee then submitted an amended application, asserting that the nonfunctionality of the awning had been addressed and resolved in Zip Dee's favor at the 1988 trial (D. Ex. 20 at 2). That led to the Trademark Office's ultimate issuance of the trademark to Zip Dee in 1992.

Claim Preclusion

Dometic urges this Court to bar Zip Dee from claiming trademark rights in the metal slatted awning design presently employed by both parties in their awnings. Dometic, preferring to concentrate on the trees rather than the forest, points out that the metal slats now at issue have the same configuration as A & E had used in manufacturing the pre-judgment awnings. From that Dometic reasons that the current action involves the same "cause of action" for claim preclusion purposes as that litigated in California. In response, Zip Dee begs the question somewhat — by referring to Dometic's post-judgment awnings as merely "new products" (ZD Mem. 6), it assumes away one aspect of the central inquiry. Nevertheless Zip Dee ultimately prevails on the claim preclusion issue in light of the applicable standards.

Because the California litigation involved a federal court judgment in a federal question case (see D. Ex. 7 at 1-2), federal law governs the claim preclusion effects of that prior judgment as applied to the case at bar (Hudson v. Hedge, 27 F.3d 274, 276 (7th Cir.1994)).⁵ Claim preclusion prevents a party from litigating claims that either were or could have been raised in an earlier action (Hawxhurst v. Pettibone Corp., 40 F.3d 175, 180 (7th Cir.1994)). Preclusion of such claims ensures the finality of judgments in order to encourage reliance on judicial decisions, to prevent vexatious litigation and to free courts to decide other disputes (Doe v. Allied-Signal, Inc., 985 F.2d 908, 913 (7th Cir.1993)).

Where as here a plaintiff has won in the first litigation, claim preclusion (or more precisely, the doctrine of merger) applies to prevent the successful plaintiff from bringing another action on the original claim or any part thereof (Restatement (Second) of Judgments ("Restatement") § 18(1) (1982)).⁶ For the doctrine to apply there must be (1) a final judgment on the merits in a prior action, (2) identity of the cause of action in the earlier and later suits and (3) identity of parties or privies in the two suits (Hawxhurst, 40 F.3d at 180). Because the first and third of those elements are plainly present in this case, the only disputed requirement is whether there is a sufficient identity between the present suit and the California litigation to call for application of the doctrine.

Doe, 985 F.2d at 913-14 (citations omitted) succinctly sets out the "same transaction test" for determining the identity of causes of action for claim preclusion purposes:

Under the same transaction test, a cause of action consists of a "single core of operative facts" giving rise to a remedy. The inquiry, focusing on the facts of a situation, is intended to discover whether the plaintiff could have raised the issue in the first suit. "Once a transaction has caused injury, all claims arising from that transaction must be brought in one suit or lost." A plaintiff may not avoid an earlier judgment on the merits by merely concocting a new legal theory. We have rejected invitations drawing on state res judicata principles to narrow the breadth of claim preclusion by altering the same transaction test.

As the party seeking to invoke claim preclusion, Dometic has the burden of establishing that the cause of action in this case involves the same "core of operative facts" as the California litigation (Foster v. Hallco Mfg. Co., 947 F.2d 469, 480 (Fed.Cir.1991)). Thus Dometic must show that the two causes of action "are based on the same, or nearly the same, factual allegations" (Herrmann v. Cencom Cable Assocs., Inc., 999 F.2d 223, 226 (7th Cir.1993)). Immaterial differences will not distinguish two causes of action for purposes of applying claim preclusion — the distinguishing facts must be outcome-determinative (Herzog v. Kroner, No. 90 C 3799, 1990 WL 114059, at *1, 1990 U.S.Dist. LEXIS 10033, at *2 (N.D.Ill. July 31)); (Magnus Elecs., Inc. v. Argentine Republic, 637 F.Supp. 487, 491 (N.D.Ill.1986), aff'd as to res judicata but rev'd in part on other grounds, 830 F.2d 1396 (7th Cir.1987)). Restatement § 24(2) sets up the hurdle that Dometic must clear:

What factual grouping constitutes a "transaction", and what groupings constitute a "series", are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.

Zip Dee and Dometic predictably...