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IF Merchandise, LLC v. Kangaroo Manufacturing, Inc.

United States District Court, D. Connecticut

September 11, 2019

IF MERCHANDISE, LLC Plaintiff,
v.
KANGAROO MANUFACTURING, INC. Defendant.

          MEMORANDUM OF DECISION DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [DKT. 43], GRANTING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [DKT. 44], AND DENYING MOTION TO STRIKE [DKT. 51]

          HON. VANESSA L. BRYANT UNITED STATES DISTRICT JUDGE.

         Before the Court are cross motions for summary judgment filed by Plaintiff and Counterclaim Defendant IF Merchandise LLC (“IF Merchandise”) and Defendant and Counterclaimant Kangaroo Manufacturing, Inc. (“Kangaroo”) (collectively the “Parties”). This case arises out of a settlement agreement executed by the Parties on November 10, 2016 (the “Settlement Agreement”). It resolved a lawsuit in which Kangaroo alleged trademark infringement by IF Merchandise. IF Merchandise now sues Kangaroo for alleged breaches of the Settlement Agreement, breach of the California Business & Professional Code and making false and malicious copyright complaints against IF Merchandise with Amazon.com (“Amazon”). IF Merchandise seeks damages as well as declaratory relief. Kangaroo counterclaims asserting copyright infringement and breach of contract. It claims IF Merchandise published its copyrighted images of emoji beach balls on Amazon and that this infringement violated the Settlement Agreement. Kangaroo seeks declaratory relief in addition to monetary damages. For the reasons set forth below, the Court GRANTS summary judgment for Kangaroo on each of IF Merchandise's ten counts. The Court GRANTS summary judgment for IF Merchandise on Counts Two and Three of Kangaroo's Counterclaim, asserting breach of contract and copyright infringement, and dismisses Count One, requesting declaratory relief.

         I. Background

         IF Merchandise is a New York limited liability company with its principal place of business in Monroe, New York. [Dkt. 1 (Compl.) ¶ 1]. Kangaroo is a Florida corporation with its principal office in Tempe, Arizona. Id. ¶ 2. Both parties sell merchandise on Amazon.

         In January 2016, Kangaroo filed a lawsuit against IF Merchandise in the Central District of California alleging copyright infringement related to the parties' sales listings on Amazon. [Dkt. 43-1 (Plf.'s Rule 56(a)(1) Statement) ¶ 1; Dkt. 44-3 (Settlement Agreement)]. The parties resolved that lawsuit by way of the Settlement Agreement dated November 2016. [Dkt. 43-1 ¶ 1; Dkt. 44-18 (Def.'s Rule 56(a)(1) Statement) ¶ 2; Dkt. 44-3]. The Settlement Agreement contains a forum selection provision stating that any and all actions arising under it will be filed and maintained in the United States District Court for the District of Connecticut. Id. ¶ 9.

         The pertinent provision of the Settlement Agreement is entitled “Conflict Resolution and Avoidance.” [Dkt. 44-3 ¶ 1]. The first paragraph of that section states:

Kangaroo prefers that similar products sold both by Kangaroo and by IF Merchandise should not be offered for sale on the same web page initiated by Kangaroo on Amazon.com. By “similar products”, this means similar looking hats, duckies, or curtains, or the like, but not products in the same general category such as collectibles, or baby dolls, or furniture or the like. The parties have agreed to endeavor affirmatively to avoid this issue. By “initiated by Kangaroo” is meant that Kangaroo had an Amazon.com web page with the name “Kangaroo” at the top of the web page at the left describing the product being offered by Kangaroo. This will be referred to as a “Kangaroo web page” on Amazon.com. Similarly, the same concept applies to an “IF Merchandise web page”.

Id.

         The section proceeds to set out four “future scenarios” and steps for dealing with those scenarios. Id. ¶¶ 1.A.-1.C. None of these scenarios pertain to copyright infringement. Under the first and second scenarios, either Kangaroo or IF Merchandise has an existing Amazon product detail page, or web page, for a product and the other party decides to sell the same or similar product. Id. ¶¶ 1.A., 1.B. In such a scenario, the second party “must take affirmative steps with Amazon.com to avoid having the same or similar product being offered on the IF Merchandise [or Kangaroo] web page.” Id. ¶¶ 1.A.a., 1.B.a. If the second party “is unable to convince Amazon.com to avoid having” the second party's product on the first party's web page, the second party will notify the first party and the two will attempt “to persuade Amazon.com to keep the respective products on separate web pages.” Id. ¶¶ 1.A.b., 1.B.b. If the parties are still unsuccessful, the section establishes that “[n]either party is obligated to refrain from selling the same or similar product on Amazon.com.” Id. ¶¶ 1.A.c., 1.B.c.

         Under the third scenario, “[b]oth Kangaroo and IF Merchandise are presently selling the same or similar products on the same web pages at this time[, ]” in which case “IF Merchandise will take immediate steps to have Amazon.com move its products from the Kangaroo Product Detail Pages.” Id. ¶ 1.C. The Settlement Agreement does not contain a corresponding requirement under the third scenario that Kangaroo take immediate steps to have Amazon.com move its products from IF Merchandise's Product Detail Pages. Under the fourth scenario, if “Kangaroo and IF Merchandise are present on the same web page initiated by a third party” “neither Kangaroo or IF Merchandise will be obligated to leave that web page.” Id. ¶ 1.D.

         The Settlement Agreement provides that it will be governed and construed in accordance with the laws of the State of California and contains an entirety clause specifying that it is “a complete statement of the entire agreement and understanding of the Parties with respect to the subject matter[.]” Id. at 19.

         In June 2017, Kangaroo discovered that several product detail pages for non-Kangaroo products on Amazon were using Kangaroo's copyrighted photographs of its emoji beach balls. These included a product detail page selling inflatable emoji beach balls made by an organization using the brand name “Assortmart” and assigned Amazon Standard Identification Number (“ASIN”) B06XB5LD52 (hereinafter the “Assortmart Emoji Beach Ball Product Page”). See [Dkt. 44-18 ¶¶ 4, 5]. It is not alleged that Kangaroo and IF Merchandise products were present on the same web page.

         On July 3, 2017, counsel for Kangaroo, David Schnider, notified Amazon of the use of Kangaroo's copyrighted images on non-Kangaroo product detail pages. See [Dkt. 44-18 ¶ 6; Dkt. 44-8 (Schnider Emails to Amazon)]. Attorney Schnider followed-up with additional information and documentation of Kangaroo's copyright to bolster the complaint. See [Dkt. 44-9 (Schnider Emails to Amazon); Dkt. 44-6 (Kangaroo Certificate of Registration No. VA 2-016-327); Dkt. 44-4 (Assortmart Emoji Beach Ball Product Page)]. Amazon acknowledged the complaint and said it would take down the listing but failed to take prompt action to block it. See [Dkt. 44-7 (Amazon Receipt of Complaint Email)].

         Another attorney for Kangaroo, Ray K. Harris, representing the company in litigation against Amazon regarding the sale of counterfeit goods, wrote to Amazon's counsel requesting assistance with removal of the infringing images (the “Harris Email”). [Dkt. 44-18 ¶ 8; Dkt. 44-19 (Harris Complaint to Amazon)]. Amazon thereafter deactivated the relevant listings, including the Assortmart Emoji Beach Ball Product Page, and sent a take-down notice to all sellers listed under the pages. Id. ¶ 9; see also [Dkt. 44-4; Dkt. 43-5 (7/12/2017 Amazon.com Email)].

         On July 12, 2017, IF Merchandise received an email from Amazon notifying it that Amazon had placed a block on sales by IF Merchandise of the product on the Assortmart Emoji Beach Ball Product Page in response to a complaint filed by Ray K. Harris (the “Amazon Takedown Email”). [Dkt. 43-1 ¶ 4; Dkt. 43-5]. The Amazon Takedown Email notified IF Merchandise that the Harris Email alleged that the Assortmart Emoji Beach Ball Product Page was infringing Copyright Registration Nos. VA 2-016-327 and VA 2-000-209 and Trademark Nos. 4, 897, 428, 5, 132, 898, 4, 936, 937, 4, 9080, 760, and 5, 132, 866. [Dkt. 43-5 at 1; Dkt. 43-1 ¶ 5]. Amazon directed IF Merchandise to contact the copyright owners directly so that they might contact Amazon and request removal of the block upon resolution. [Dkt. 43-5 at 1; Dkt. 43-1 ¶ 6]. The complaint does not allege Amazon's notice stated Kangaroo and IF Merchandise's products were present on the same web page.

         The following day, IF Merchandise counsel David Fink sent a letter to Attorney Harris requesting withdrawal of the complaint referenced in the Amazon Takedown Email, claiming that, among other things, it violated the terms of the Settlement Agreement. [Dkt. 43-1 ¶ 8; Dkt. 43-6 (7/13/2017 Ltr. to R. Harris)]. Attorney Harris did not respond to the letter. [Dkt. 43-1 ¶ 9]. Attorney Fink also contacted Kangaroo counsel David Schnider, who confirmed on July 14, 2017 that Kangaroo had submitted a complaint regarding the Assortmart Emoji Beach Ball Product Page for copyright infringement of its copyright numbers VA 2-000-209 and VA 2-016-327. [Dkt. 44-10 (7/14/2017 Fink, Schnider Emails) at 1-4]. Attorney Fink asked Attorney Schnider why the additional copyright and trademark numbers were listed in the Amazon Takedown Email IF Merchandise had received. Id. at 3. In a July 17, 2017 email response, Attorney Schneider explained that, while Attorney Harris's complaint to Amazon listed other copyright and trademark registration numbers in connection with other complaints, Kangaroo reported unauthorized use by the Assortmart Emoji Beach Ball Product Page of images registered under only the two copyright numbers. Id. at 1-2. Attorney Fink responded to Attorney Schnider the same day requesting Kangaroo's counsel contact Amazon and “clarify the situation that has resulted in my client los[ing] his rights to sell on amazon.com.” Id. at 1.

         On July 23, 2017, IF Merchandise filed the instant lawsuit alleging that Kangaroo violated the Settlement Agreement by failing to contact IF Merchandise prior to lodging the complaint with Amazon and by failing to contact IF Merchandise after lodging the complaint despite IF Merchandise's attempts to initiate communication. [Dkt. 1 at ¶¶ 27, 31]. The Complaint also alleges violation of California Business & Professional Code §§ 17200 et seq. and seven counts of making false and malicious copyright complaints to Amazon in violation of Copyright Statutes and Trademark Statutes, citing each of the seven copyright and trademark registration numbers included in the July 13, 2017 Amazon Takedown Email. [Dkt. 1 at ¶¶ 34-58]. IF Merchandise seeks a declaratory judgment, as well as damages for lost profits and damage to reputation and attorney's fees and costs. Id. at 9.

         Kangaroo filed a Counterclaim seeking a judgment declaring that Kangaroo abided by the terms of the Settlement Agreement and that IF Merchandise improperly utilized Kangaroo's copyrighted materials. [Dkt. 9 (An. & Countercl.) at ¶¶ 13-16]. The Counterclaim further alleges that IF Merchandise breached the Settlement Agreement by violating Kangaroo's intellectual property and infringed Kanagroo's copyrights by displaying images of and distributing counterfeit emoji beach balls. Id. ¶ 17-30.

         II. Standard of Review

         Summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of proving that no factual issues exist. Vivenzio v. City of Syracuse, 611 F.3d 98, 106 (2d Cir. 2010). “In determining whether that burden has been met, the court is required to resolve all ambiguities and credit all factual inferences that could be drawn in favor of the party against whom summary judgment is sought. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). “If there is any evidence in the record that could reasonably support a jury's verdict for the nonmoving party, summary judgment must be denied.” Am. Property Assurance Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 315-16 (2d Cir. 2006) (quotation omitted). In addition, the court should not weigh evidence or assess the credibility of witnesses” on a motion for summary judgment, as “these determinations are within the sole province of the jury.” Hayes v. New York City Dep't of Corr., 84 F.3d 614, 619 (2d Cir. 1996).

         “A party opposing summary judgment ‘cannot defeat the motion by relying on the allegations in [her] pleading, or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible.' At the summary judgment stage of the proceeding, [p]laintiffs are required to present admissible evidence in support of their allegations; allegations alone, without evidence to back them up, are not sufficient.” Welch-Rubin v. Sandals Corp., No. 3:03-cv-481, 2004 WL 2472280, at *1 (D. Conn. Oct. 20, 2004) (quoting Gottlieb v. County of Orange, 84 F.3d 511, 518 (2d Cir.1996). “Summary judgment cannot be defeated by the presentation . . . of but a ‘scintilla of evidence' supporting [a] claim.” Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 726 (2d Cir. 2010) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986)).

         III. Discussion

         The parties have filed cross motions for summary judgment, each seeking judgment on all claims and counterclaims. The Court now considers the parties' arguments.

         A. Copyright ...


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