Hoenig Developments, Inc. v. Dial Industries, Inc.

213 F. Supp. 3d 895, 2016 U.S. Dist. LEXIS 134240, 2016 WL 5476280
CourtDistrict Court, E.D. Michigan
DecidedSeptember 29, 2016
DocketCase No. 13-CV-15138
StatusPublished

This text of 213 F. Supp. 3d 895 (Hoenig Developments, Inc. v. Dial Industries, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hoenig Developments, Inc. v. Dial Industries, Inc., 213 F. Supp. 3d 895, 2016 U.S. Dist. LEXIS 134240, 2016 WL 5476280 (E.D. Mich. 2016).

Opinion

ORDER REGARDING THE PARTIES’ MOTIONS FOR SUMMARY JUDGMENT [Doc. Nos. 54, 55]

Denise Page Hood, Chief Judge

I. INTRODUCTION

On December 18, 2013, Plaintiffs Hoenig Developments, Inc. (“Hoenig, Inc.”) and Hoenig Developments, LLC (“Hoenig, LLC”) filed a five-count Complaint against Defendant. The Complaint included the following claims: (1) Count I—Trademark Infringement Pursuant to 15 U.S.C. § 1125(a); (2) Count II—Breach of Contract; (3) Count III—Quantum Meruit/Un-just Enrichment; (4) Count IV—Cancellation of Trademark; and, (5) Count V— Request for Accounting. On January 21, 2016, Defendant filed a Motion for Summary Judgment. [Doc. No. 54] On January 22, 2016, Plaintiffs filed a Motion for Partial Summary Judgment (limited to Count I—Trademark Infringement). [Doc. No. 55] Both motions have been fully briefed, and a hearing on the motions was held on May 11, 2016. For the reasons that follow, the Court denies Defendant’s Motion for Summary Judgment and grants Plaintiffs’ Motion for Partial Summary Judgment.

II. BACKGROUND

Peter Hoenig and Shanna Hoenig, husband and wife, formed Hoenig, Inc., a Canadian corporation, in 1996. Peter and Shanna are and have been the only shareholders of Hoenig, Inc. The Hoenigs also used “H2R Essentials” as an assumed marketing name for Hoenig, Inc. Doc. No. 55, Ex. 3, at 58-59. In 2011, the Hoenigs formed Hoenig, LLC shortly before they moved to the United States. Peter and Shanna Hoenig are and have been the only members of Hoenig, LLC. Defendant is a manufacturer and distributer of housewares, and it sells products to major retailers and big-box stores throughout the world. Jan Macho is the President of Defendant, and his son, John Macho, is Vice President of Defendant.

In the late 1990s, Peter Hoenig invented a spring-loaded drawer organizer device, and he applied for arid received a patent for the drawer organizer device (the “Hoe-nig Patent”) from the United States Patent and Trademark Office (“USPTO”). Doc. No. 55, Ex. 5. Peter Hoenig assigned his rights in the Hoenig Patent to Hoenig, Inc., and Hoenig, Inc. later assigned its rights in the Hoenig Patent to Hoenig, LLC. Doc. No. 55, Ex. 6. In early 2000, Peter Hoenig designed and created the first drawer organizer device mold, which included the term “DREAM DRAWER” on it. Doc. No. 55, Ex. 1 at 16; Ex. 8; Ex. 38. The Hoenigs developed marketing materials for the drawer organizer, including a video presentation using the term “Dream Drawer,” in connection with its patented drawer organizer to help sell the product. Doc. No. 55, Ex. 3 at 104-05; Ex. 9. In 2001-02, the Hoenigs, often using marketing materials with the name H2R Essentials, solicited various major retailers and plastic goods manufacturers to mass produce the drawer organizer and to design and manufacture packaging for the drawer organizer. The entities solicited included Rubbermaid, Sterilite, Hudson Bay, Lowe’s, Home Depot, Victoria’s Secret, Organize It, The Container Store, Bed Bath & Beyond, Royal Group Technologies, Ltd., Akro-Mils, Brookstone, and Tupperware. Plaintiffs have produced written correspondence with most of those en[899]*899tities with respect to their solicitations. Plaintiffs referred to the drawer organizer as the “Dream Drawer” in most of their solicitations. Doc. No. 55, Ex. 10-16.

In or around September 2002, Defendant was introduced to the Hoenigs by the owner of Organize It. Prior to the meeting, John Macho emailed Shanna Hoenig that he was “looking forward to meeting you and seeing your Dream Drawer Organizer next week.” Doc. No. 55, Ex. 17. John Macho learned that the Hoenigs previously had marketed the drawer organizer as the Dream Drawer to retailers and manufacturers. Doc. No. 55, Ex. 7 at 192-94.

On December 17, 2002, Defendant and Hoenig, Inc. executed a licensing agreement (the “License Agreement”). Doc. No. 55, Ex. 18. Under the License Agreement, Hoenig, Inc. granted Defendant an exclusive license to manufacture, market and sell the “Invention.” Id. at ¶ 1. “Invention” is defined in the License Agreement as “certain trademarks, patents and proprietary and confidential information ... relating to the Dream Drawer” owned, possessed or controlled by Hoenig, Inc. Id. at Preamble, ¶ 1. In exchange, the License Agreement required that Defendant, among other things: (1) pay Hoenig, Inc. royalties in the amount of 10% of the net sales of Invention products (Id. at ¶ 4); and (2) provide Hoenig, Inc. quarterly sales reports showing the amount of sales of Invention products. Id. at ¶ 8. The License Agreement also provided that Defendant would be in default if Defendant failed to pay Hoenig, Inc. the royalties required under the License Agreement. Id. at ¶ 4. Hoenig, Inc. assigned the License Agreement to Hoenig, LLC in 2011.

The Hoenigs and Defendant worked together to develop a mold to mass produce the drawer organizer. Hoenig, Inc. sent Defendant CAD drawings that included the name “Dream Drawer-™” on the drawi organizer. Doc. No. 55, Ex. 7 at 235; Ex.8. In a communication dated February 12, 2003, Peter Hoenig advised Defendant that the name “Dream Drawer” on the product “is an important design feature that we feel should remain for Brand name recognition and patent reasons. Dial Industries will be the only source for a ‘Dream Drawer.’ ” Doc. No. 55, Ex. 20. Defendant agreed. Doc. No. 55, Ex. 7 at 244-45. In the third quarter of 2003, Defendant began manufacturing and distributing a drawer organizer under the name “Dream Drawer.” That “Dream Drawer” contained protected design elements controlled by the Hoenig Patent and was designed to be used in a bedroom dresser drawer.

By 2006, the Dream Drawer organizer was Defendant’s best-selling product, Doc. No. 55, Ex 7 at 157-58, Ex. 21, and it was sold at many of the world’s largest retailers, including Target, Lowe’s, Home Depot, T.J. Maxx, Bed Bath & Beyond, and The Container Store. Doc. No. 55, Ex. 21. Defendant identified the drawer organizer in its sales reports as the “1600” (the “1600 Organizer”). Defendant pays Hoenig a royalty for sales of the 1600 Organizer. Doc. No. 55, Ex. 7 at 256. Defendant states that, from the first sale in third-quarter 2003 to date, Defendant has paid to Plaintiffs all sums due and owing for the sale of the bedroom drawer divider device (the 1600 Organizer).

Defendant later began selling a “kitchen version” of the original Dream Drawer organizer. The “kitchen version,” sold as the “Dream Drawer 2,” contains protected design elements controlled by the Hoenig Patent, and is identified internally by Defendant as the “1601” (the “1601 Organizer”). Doc. No. 55, Ex. 7 at 263-64. Defendant pays Hoenig a royalty for sales of the 1601 Organizer. Id. at 264. Defendant states that, from the first sale of the 1601 Organizer in third-quarter 2006 to date, it [900]*900has paid to Plaintiffs all sums due and owing for the sale of the kitchen drawer divider device (the 1601 Organizer).

Since May 2009, Defendant has sold a wood drawer organizer it identifies on sales reports as the “1602” (the “1602 Organizer”). Id. at 267. The 1602 Organizer has the name “Dream Drawer” and the word “original” on it, and the product packaging includes the Hoenig Patent number. Doc. No. 55, Ex. 22; Ex. 28. Defendant has never paid Hoenig any royalties for sales of the 1602 Organizer. Doc. No. 55, Ex. 7 at 267.

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213 F. Supp. 3d 895, 2016 U.S. Dist. LEXIS 134240, 2016 WL 5476280, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hoenig-developments-inc-v-dial-industries-inc-mied-2016.