Francis S. Denney, Inc. v. I.S. Laboratories, Inc.

758 F. Supp. 140, 19 U.S.P.Q. 2d (BNA) 1153, 1990 U.S. Dist. LEXIS 16949, 1990 WL 267409
District Court, S.D. New York·Decided December 13, 1990·No. No. 90 Civ. 1330 (KTD)·Published·Cited by 2 cases

Opinion

MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, District Judge:

Plaintiff, Francis Denney, Inc. (“Den-ney”) brought this action, under the Lan-ham Act, 15 U.S.C. §§ 1114(1) and 1125(a), as well as New York statutory and common law for trademark infringement and unfair competition. Denney moved, by Order to Show Cause, for a preliminary injunction against defendants I.S. Labs and its principal H. Allen Lightman. After a hearing was conducted in this matter, I rendered an opinion on April 6, 1990, 737 F.Supp. 247, in which I preliminarily enjoined Lightman from replicating the trade dress and name identification of a line of moisturizers and skin-care cosmetic products, known as the IRMA SHORELL line, which was developed and produced in contravention to Denney’s trademark. I will not repeat all of the facts from that opinion, but, those facts and findings abide here. Denney now moves to dismiss Light-man’s counterclaims or, in the alternative, for partial summary judgment on the issue of liability, seeking also entry of a permanent injunction.

FACTS

The original IRMA SHORELL skin-care line was created by Dr. I. Daniel Shorell in the early 1960’s. Dr. Shorell registered the products under the trademark IRMA SHO-RELL, his daughter’s name. Irma Shorell, Inc. and Shorell Products Corp. were formed in the early 1960's solely to market the IRMA SHORELL line. Both corporations were controlled by Lightman, Irma Shorell’s husband. Lightman was also primarily responsible for marketing and designing the packaging of products. The record from the hearing for a preliminary injunction indicates that the trademarked packaging is widely associated with the SHORELL name.

Pursuant to an Agreement for Purchase and Sale of Assets, dated June 19, 1985, Lightman and his wife, Irma Shorell, and corporations controlled by them, sold the IRMA SHORELL trademark, IRMA SHO-RELL business assets, and all of the goodwill attendant to the IRMA SHORELL name to the New York corporation of Alfin Fragrances, Inc. (“Alfin”), its heirs and assigns. Exh. 6 and Sched. A annexed to Devlin Affid. On July 31, 1987, Denney acquired all ownership rights to the IRMA SHORELL trademark and product line from Alfin pursuant to a written agreement.

Between August 1987 and October 1989, Lightman and I.S. Labs were Denney customers, purchasing Denney’s SHORELL products for resale. Plaintiff’s Memorandum in Support of Preliminary Injunction at 7. Sometime in 1989, Lightman began developing and marketing a line of products under the name I.S. Labs in competition with Denney. Purportedly, Lightman conceived his own line of skin-care products because Denney, inter alia, allegedly failed to respond to various complaints Lightman had regarding late or defective shipments of product and failure to timely cure or credit losses incurred by Lightman at the time. Instead of maintaining a relationship with Denney, Lightman undertook to develop his own line of products in competition with Denney’s line.

Soon after Lightman developed his own line of products, Denney began receiving telephone calls from its customers who claimed to have received several confusing mailings, referring to the new company, I.S. Labs. Lightman had sent the materials to Denney customers, gleaned from customer lists which Alfin had previously sold Denney, and had signed them as “Presi[143] dent of I.S.” The materials solicited sales of a new Lightman line of products strikingly similar in appearance to the SHO-RELL line.

On April 6, 1990, Lightman was preliminarily enjoined from replicating the trade dress and name identification of a line of moisturizers and skin-care cosmetic products, known as the IRMA SHORELL line which he developed and produced in contravention to Denney’s trademark. He was also enjoined from violating Denney’s ownership rights in the goodwill attendant to the SHORELL product.

DISCUSSION

Denney seeks partial summary judgment and a permanent injunction. Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. All doubts are to be resolved against the movant and all favorable inferences are to be drawn in favor of the party against whom judgment is sought. Branko International, Inc. v. Saudi Arabian Airlines, 704 F.Supp. 386, 389 (S.D.N.Y.1989), aff’d without op., 880 F.2d 1318 (2d Cir.1989). Moreover, the standard for a permanent injunction is essentially the same as for a preliminary injunction, except that for a permanent injunction a plaintiff must demonstrate actual success on the merits. ER Holdings, Inc. v. Norton Company, 735 F.Supp. 1094 (D.Mass.1990). The record in this matter is complete on the issue of liability.

With regard to trademark and trade dress infringement, my previous findings make clear that Lightman’s products were confusingly similar to the trademarks which Lightman had sold to Denney’s predecessor, Alfin. Lightman’s contention that Denney never held trademarks or rights in the trademarks since Alfin, the intermediary company, sold rights to Den-ney makes little sense.1 Simply because Lightman was not a signatory to the Alfin-Denney agreement does not mean that Lightman gets a reversion of the trademarks. Once a trademark is alienated with no reservation of rights in the future, as is the case here, reversion rights do not miraculously come into play. Lightman’s contention that he never alienated his rights in the advertising that he developed in the 1960’s for the SHORELL line also defies logic. Whatever rights Lightman thought he was secretly reserving to himself must fall to an objective reading of the contract. Exploiting advertising in the same trade dress as was alienated in the Lightman-Alfin contract is improper. Lightman must be enjoined permanently from producing a line of products confusingly similar to Denney’s SHORELL line. Furthermore, Lightman’s problems with the quality of certain SHORELL product shipments from Denney in 1989 does not give him license to exploit the very same trademarks, trade dress, and advertising alienated by him in 1985. Thus, no question of fact remains at this juncture with respect to Lightman’s liability for trademark and trade dress infringements.

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Francis S. Denney, Inc. v. I.S. Laboratories, Inc., 758 F. Supp. 140, 19 U.S.P.Q. 2d (BNA) 1153, 1990 U.S. Dist. LEXIS 16949, 1990 WL 267409 (S.D.N.Y. 1990).

758 F. Supp. 140 (Francis S. Denney, Inc. v. I.S. Laboratories, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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