Simpson Strong-Tie Company Inc. v. MiTek Inc.

Background

Simpson Strong-Tie Company Inc. and MiTek Inc. manufacture and sell competing structural connectors. Simpson uses product names in its marketing materials, and MiTek uses product names and reference numbers in its own catalogs, packaging, websites, mobile application, and other sales materials. Simpson claimed that MiTek’s use of Simpson product names and reference numbers falsely implied equivalence between the companies’ products or caused MiTek’s products to be treated as Simpson’s products.

Simpson asserted five claims: false advertising under the federal Lanham Act; false advertising under California Business and Professions Code section 17500; passing off under the Lanham Act; unfair competition under California Business and Professions Code section 17200; and copyright infringement. MiTek denied the claims and counterclaimed for breach of the parties’ 2014 settlement agreement, arguing that Simpson had released the claims asserted in this action.

Motions and Legal Standards

Simpson moved for summary judgment on all of its claims, MiTek’s affirmative defenses, and MiTek’s breach-of-contract counterclaim. MiTek moved for summary judgment that Simpson’s noncopyright claims were barred by laches or claim preclusion, and also cross-moved for summary judgment on the copyright claim and its settlement-agreement counterclaim.

Summary judgment is appropriate when there is no genuine dispute about a material fact and the moving party is entitled to judgment under the law. A factual dispute is material if it could affect the outcome, and genuine if either side could reasonably prevail on it.

Laches

Laches is an equitable defense based on unreasonable delay that prejudiced the defendant. MiTek argued that Simpson knew about similar product nomenclature and reference numbers as early as the 1990s and unreasonably delayed filing suit. MiTek did not provide sufficient evidence of either evidentiary prejudice, such as lost or degraded evidence, or expectations-based prejudice, such as investments made because Simpson did not sue earlier. The court therefore denied MiTek’s motion for summary judgment on the laches defense.

Simpson also sought summary judgment rejecting the laches defense. The court found factual disputes about whether Simpson’s delay was unreasonable and whether other considerations, including willfulness, unclean hands, or the public interest, affected the defense. The court also was not persuaded that MiTek could not, as a matter of law, show prejudice from a prospective injunction. It therefore denied Simpson’s motion on the laches defense as well.

Settlement-Agreement Counterclaim

MiTek argued that the 2014 settlement agreement released the claims Simpson brought in this action. Simpson argued that the release was limited to the trademark claims involved in the earlier litigation.

The court concluded as a matter of law that the release covered only the trademark-related claims from the earlier litigation. Simpson’s current false-advertising, passing-off, unfair-competition, and copyright claims were not asserted in that earlier action, and the settlement agreement did not extend the release to them. The court held that Simpson did not breach the settlement agreement by bringing this action. It denied MiTek’s motion and granted Simpson’s motion as to MiTek’s breach-of-contract counterclaim.

Claim Preclusion

Claim preclusion can bar a later case when an earlier case involved the same claim, ended in a final judgment on the merits, and involved the same parties or their legal equivalents. The earlier litigation ended with a stipulated dismissal with prejudice, but the court explained that a settlement can limit the preclusive effect of that dismissal according to the settlement’s terms.

The court concluded that the earlier settlement resolved only the trademark-related claims asserted in that earlier litigation. The current action does not concern the same disputed trademarks or the same allegations, and MiTek did not show meaningful overlap in the evidence or the same underlying group of facts. The court therefore denied MiTek’s motion for summary judgment based on claim preclusion.

False Advertising and Passing Off

Simpson argued that MiTek’s use of Simpson product numbers as reference numbers falsely implied that the companies’ connectors were equivalent. MiTek disputed that the reference numbers conveyed one clear message of equivalence and disputed Simpson’s evidence concerning deception, materiality, and injury. The court found that these issues required resolution of disputed facts and denied Simpson’s motion for summary judgment on the federal and California false-advertising claims.

Simpson also argued that MiTek’s use of product names identical to Simpson’s product names amounted to passing off or false designation of origin. Simpson presented some evidence that the names identified Simpson as the source and that consumers were actually confused, but MiTek disputed that evidence. The court found factual disputes concerning the required elements and denied Simpson’s motion for summary judgment on the passing-off claims.

Copyright Claim

The parties agreed that Simpson owned copyrights in new material in its 2017–18 and 2019–20 Wood Construction Connectors catalogs, which were derivative works. Simpson limited its infringement claim to the Alphabetical Product Index in those catalogs and alleged that MiTek copied the indexes in its Reference Number Index pages and Conversion Guide.

The court explained that copyright protection requires a valid copyright and copying of original elements. Simpson did not claim copyright protection for the alphabetical arrangement itself. The court concluded that factual disputes remained about which product names, if any, contained enough creativity and originality to be protected. It also found a factual dispute about the extent of MiTek’s copying of any protectable material. Accordingly, neither party was entitled to summary judgment on the copyright claim.

Other Affirmative Defenses and Disposition

Simpson also moved for summary judgment on MiTek’s other affirmative defenses, including statute-of-limitations defenses and defenses based on the Lanham Act, the Copyright Act, estoppel, acquiescence, and waiver. The court found Simpson’s arguments insufficiently developed and denied Simpson’s motion as to those defenses.

The court granted Simpson’s motion for summary judgment as to MiTek’s counterclaim for breach of the 2014 settlement agreement. It denied the remainder of Simpson’s motion and denied MiTek’s motion for summary judgment. The order left the disputed underlying claims and defenses unresolved at this stage.