Al Infinity LLC v. Crown Cell Inc.

Background

Al Infinity LLC, described in the opinion as the most recent owner of the Altec Lansing trademark, sued Crown Cell, Inc., its founder Herschel Spalter, and its employee Isser Boyarsky. The lawsuit arose from defendants’ sale of two models of speakers bearing the Altec Lansing trademark.

Al Infinity asserted five causes of action: (1) federal trademark counterfeiting under 15 U.S.C. § 1114; (2) federal trademark infringement under 15 U.S.C. § 1125(a); (3) injury to business reputation and state anti-dilution; (4) deceptive trade practices; and (5) common-law unfair competition.

The speakers were purchased by Crown Cell from Westview Industries, Inc. in 2016 and 2017. Westview had purchased them from Fenda or an affiliate of Fenda. Defendants bought 10,456 units and ultimately sold 6,705 of them through Amazon.com and Walmart.com. After Al Infinity sent a cease-and-desist letter, Crown Cell stopped selling the speakers.

Earlier Summary-Judgment Ruling

After discovery, defendants moved for summary judgment on the federal counterfeiting claim, and Al Infinity cross-moved for summary judgment on all of its claims. In an August 9, 2023 Memorandum and Order, the court denied Al Infinity’s motion and granted defendants’ motion on the counterfeiting claim.

The court found that Al Infinity had not presented evidence establishing that the speakers were counterfeit. Defendants presented evidence that Al Infinity’s predecessors had agreements with Fenda affiliates and Westview showing that, at least at one point, those entities were authorized to make, supply, or sell Altec Lansing products. The court also found no evidence showing when any authorization ended. Because Al Infinity did not show that the authorization had been withdrawn, the court concluded that the speakers had not been shown to be counterfeit.

The court then explained that proof that the speakers were counterfeit was necessary to Al Infinity’s four remaining claims. It gave Al Infinity 14 days to challenge the court’s legal reasoning, while stating that Al Infinity could not simply reargue the finding that the record failed to establish counterfeiting.

Additional Submissions

Al Infinity argued that the remaining claims should continue because the speakers were sold by a former licensee after the governing license expired and because continued use of a trademark by a former licensee can constitute infringement. The court responded that it did not disagree with the second legal point, but found that the record did not establish the first point. The court offered Al Infinity another opportunity to submit evidence that Fenda was a former licensee and that the goods were not genuine.

Al Infinity submitted a supplemental factual statement, declaration, and legal memorandum. The court found that these submissions did not provide evidence that Fenda or Westview was a former licensee. Instead, Al Infinity attempted to reargue whether Fenda had ever been authorized to sell Altec Lansing products. The court had already decided that issue and had expressly barred its reargument.

The court also rejected Al Infinity’s new arguments that Fenda may have been authorized to manufacture the speakers but not sell them to Westview, that the entities named in the manufacturing agreements were not sufficiently connected to Fenda, and that the court improperly relied on allegations from an earlier unrelated lawsuit. The court stated that the earlier order did not rely on those allegations and that the record evidence supported its finding that Fenda was authorized to supply the speakers.

Ruling

The court applied Rule 56, which permits summary judgment when there is no genuine dispute about an important fact and the moving party is entitled to judgment under the law. It held that all four remaining claims failed because the speakers had not been shown to be non-genuine or counterfeit. The court therefore granted summary judgment for defendants on all causes of action.

The court directed the Clerk of Court to terminate the motion pending at ECF No. 89, enter judgment for defendants dismissing the complaint, and close the case.