Focus Products Group International, LLC v. Kartri Sales Company, Inc.

Background

The plaintiffs manufacture and sell hookless shower curtains with rings integrated into the curtain. They claimed that Kartri Sales Company, Inc. and Marquis Mills International, Inc. manufactured, sold, and distributed confusingly similar products under the “Ezy Hang” name. The claims involved three utility patents, a stayed design-patent claim, the HOOKLESS® and EZ-ON trademarks, trade dress, and unfair competition under federal and New York law.

The court had already granted summary judgment to plaintiffs on infringement of the three utility patents: the ’248, ’609, and ’088 patents. The design-patent claim was stayed while the Patent and Trademark Office reexamined that patent. The bench trial therefore addressed willfulness and damages for the utility-patent infringement, trademark and trade-dress claims, unfair-competition claims, several defenses and counterclaims, injunctive relief, and the basis for later fee and interest awards.

Standing, Ownership, and Validity

The court found that plaintiffs owned the HOOKLESS® trademark and that the mark was valid. It also interpreted the 2012 licensing agreement involving Carnation Home Fashions, Inc. and concluded that plaintiffs’ predecessor owned the EZ-ON mark and that Carnation was required to assign rights in it. The court therefore found that plaintiffs had standing to pursue the EZ-ON claims.

The court found the EZ-ON mark valid and denied Marquis’s counterclaim seeking to invalidate it. It also found that the claimed trade dress was not functional or generic and could be protected if plaintiffs established acquired distinctiveness. The court concluded that the evidence—including advertising, sales, market share, consumer inquiries, copying by competitors, and the length and exclusivity of use—showed that the trade dress had acquired that distinctiveness.

The court determined that the defendants’ products and plaintiffs’ products were highly similar and competed in closely related markets. Applying the likelihood-of-confusion factors used in trademark cases, the court found a likelihood of confusion for the HOOKLESS® mark as to Kartri, and for the EZ-ON mark and trade dress as to both defendants. The court also found bad faith, including defendants’ continued sales after receiving notice of the asserted rights and their failure to obtain a competent infringement analysis.

Liability and Defenses

The court found both defendants liable for infringing and unfairly competing with the EZ-ON trademark and trade dress under federal law, and for unfair competition with those rights under New York law. It found Kartri liable for infringing and unfairly competing with the HOOKLESS® trademark under federal law, and for unfair competition with that mark under New York law.

The court denied Marquis’s counterclaim that it had not infringed the EZ-ON mark. It also denied all listed affirmative defenses: lack of statutory standing, failure to join Carnation as an indispensable party, non-infringement of the EZ-ON mark, invalidity of the EZ-ON mark, non-infringement of the trade dress, and invalidity of the trade dress. The court had previously determined that defendants infringed the three utility patents and stated that no liability issue remained for those patents. The design-patent claim remained stayed.

Damages

The court used an infringement period from October 16, 2013, through November 15, 2018, for calculating damages. It awarded plaintiffs $970,324 in lost profits for utility-patent and trade-dress infringement. It also awarded a $53,907 reasonable royalty for the portion of infringing sales not included in the lost-profit calculation.

The court found that both defendants’ infringement was willful beginning February 27, 2015, after Focus sent a cease-and-desist letter. It trebled the damages for the later portion of the infringement period. The final enhanced lost-profit award was $2,783,687, and the final enhanced reasonable-royalty award was $154,649, for a total award of $2,938,337.

The court declined to award disgorgement of defendants’ profits. It concluded that the lost-profit and royalty awards sufficiently addressed compensation, unjust enrichment, and deterrence, while a profit award could not be calculated reliably from the record. The court also denied a reasonable royalty for EZ-ON trademark infringement because plaintiffs had not provided a sufficiently reliable basis for calculating that royalty.

Injunctive Relief and Further Proceedings

The court entered a permanent injunction against both defendants barring further infringement or unfair competition involving the EZ-ON mark and trade dress. It also enjoined Kartri from further infringement or unfair competition involving the HOOKLESS® mark. The injunction covered manufacturing, selling, advertising, or otherwise commercializing the Ezy Hang product, as well as branding or advertising products in a way that suggested an affiliation with plaintiffs’ marks or trade dress.

The court did not decide attorneys’ fees or prejudgment and post-judgment interest in this opinion. It ordered plaintiffs to submit a briefing opening those issues, followed by defendants’ opposition and plaintiffs’ reply. The opinion’s conclusion describes the trebling period as beginning March 1, 2015, while the court’s findings and damages analysis generally describe it as beginning February 27, 2015; the opinion does not explain that difference.