Wenger S.A. v. OLIVET INTERNATIONAL INC.

Background

Wenger S.A. owns the “SwissGear” word mark and a logo depicting a silver cross inside a rounded red square. Olivet manufactured goods using the “SwissTech” word mark and a logo depicting a silver cross inside a rounded red rectangle. Wenger sued Olivet for trademark infringement.

The case previously included Galaxy Brands, which the opinion identifies as SwissTech’s intellectual-property licensing company, and SwissTech IP Co. The opinion refers to the various SwissTech-related parties collectively as “SwissTech.” Wenger and SwissTech settled their dispute in September 2023, but Wenger’s claims against Olivet continued. In January 2024, the court granted Olivet’s earlier motion for partial summary judgment in part and set a trial for June 2024.

A few weeks before trial, Olivet moved for leave to amend its answer and for summary judgment. Olivet argued that Wenger’s settlement with SwissTech also resolved Wenger’s claim against Olivet because the agreement supposedly gave Olivet consent to use the marks.

Rule 408 and the proposed amendment

The court evaluated futility under the summary-judgment standard because the parties had fully briefed the issue and presented the relevant evidence. An amendment is futile when it could not succeed even if allowed.

The court concluded that the proposed amendment was futile. Federal Rule of Evidence 408 generally prevents a party from using settlement negotiations or settlement agreements to prove or disprove the validity or amount of a disputed claim. Although the rule permits settlement evidence for another purpose, the court found that Olivet’s proposed use was not a permissible different purpose. Olivet was asserting consent, not estoppel by acquiescence, and the court noted that Olivet could not have relied on the settlement because it occurred after the allegedly infringing conduct.

The court also rejected Olivet’s apparent effort to enforce the settlement as a third-party beneficiary. Under New York law, a third-party beneficiary must show that the contracting parties intended to benefit that person and that the benefit was sufficiently immediate rather than incidental. The court held that Olivet was not an intended beneficiary. The settlement’s sell-off clause referred to SwissTech’s licensing relationship with Walmart and did not mention Olivet or contractors. The agreement separately excluded Olivet from its release, and the court found that this language undermined any argument that the parties intended to benefit Olivet.

The court further held that the settlement could not be read as giving Wenger’s consent to Olivet’s use of the marks. Because Olivet had no right to enforce the sell-off clause, the agreement remained a settlement representation that Rule 408 made inadmissible for the proposed purpose.

Whether the settled and disputed claims were sufficiently related

The court rejected Olivet’s argument that Rule 408 did not apply because Wenger’s claim against Olivet differed from the claim Wenger settled with SwissTech. Although SwissTech was the licensor and Olivet was the manufacturer, the court held that both disputes arose from the same transaction and that the claims were sufficiently related for Rule 408 to apply. The court emphasized that allowing one defendant to use another defendant’s settlement agreement in the same multiparty case could undermine the value of settlements.

The court also rejected Olivet’s argument that Wenger waived its objection to the settlement agreement by referring to the agreement in a pretrial stipulation. The court found no indication that Wenger would introduce the agreement at trial and said Olivet could seek relief later if Wenger opened the door to its admission.

Undue delay

The court independently denied leave to amend because Olivet was not diligent. The scheduling order required amendments within 75 days after discovery began, and the deadline for summary-judgment motions was October 2023. Olivet learned of the settlement in September 2023, asked Wenger for a copy in January 2024, and did not move to compel production until May 2024, shortly before the June trial. The court concluded that Olivet should have sought the court’s intervention earlier and that its delay supported denial of the amendment.

Attorney’s fees and disposition

Wenger requested fees for responding to Olivet’s motion. The court denied that request because, although Olivet’s motion failed, its arguments were not frivolous and there was no evidence of bad faith.

Judge Arun Subramanian’s conclusion states that Olivet’s motion for leave to amend its answer was DENIED and directs the Clerk to close Docket 326. The opinion does not separately state a final disposition of the summary-judgment motion mentioned in the background. The court also directed that viewing of the opinion be restricted to the court and the parties while the parties proposed redactions for public release.