Project Strategies Corp. v. National Communications Corp.

948 F. Supp. 218, 41 U.S.P.Q. 2d (BNA) 1673, 1996 U.S. Dist. LEXIS 18845, 1996 WL 732084
CourtDistrict Court, E.D. New York
DecidedDecember 19, 1996
DocketCV-94-4925
StatusPublished
Cited by13 cases

This text of 948 F. Supp. 218 (Project Strategies Corp. v. National Communications Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Project Strategies Corp. v. National Communications Corp., 948 F. Supp. 218, 41 U.S.P.Q. 2d (BNA) 1673, 1996 U.S. Dist. LEXIS 18845, 1996 WL 732084 (E.D.N.Y. 1996).

Opinion

MEMORANDUM AND ORDER

GLASSER, District Judge:

This case has been before the court on several occasions as will hereafter be detailed and on this last occasion was tried to the *220 court, without a .jury, and on which the plaintiff sought a permanent injunction; damages for claimed violations of § 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) and for contempt, findings on which have previously been made. The defendants allege and seek damages for patent mismarking pursuant to 35 U.S.C. § 292(a) and in addition, claims that the alleged mismarking renders the plaintiffs hands unclean and is a defense to the plaintiffs claims for relief.

By way of brief background the plaintiff (“PSC”) and the defendants (“NCC” collectively) sell gloves designed with teat-like protrusions on the palm surface for brushing a pet’s hair. PSC marketed the product by a nationwide direct sales campaign which included television and print advertising and store displays. NCC subsequently undertook to market a similar pet glove trumpeting it as the pet glove “As Seen on TV.”

On October 21, 1994 PSC sought to enjoin NCC from representing its product as one “As Seen on TV,” relying upon § 43(a) of the Lanham Act. Following expedited discovery and a hearing on October 28, 1994, a temporary restraining order (“T.R.O.”) was issued enjoining NCC from thus continuing to represent its product. That order was extended indefinitely upon consent of the parties on November 22,1994.

Notwithstanding that restraining order, NCC advertised its product in a television commercial in December, 1994 with the “As Seen on TV” legend displayed on its product package. PSC moved for an order holding NCC in contempt which was granted on June 13, 1995 with the determination of appropriate sanctions to be decided at a later date.

NCC thereafter moved pursuant to Rule, 60(b) of the Federal Rules of Civil Procedure to vacate the restraining order basing its claim for that relief upon the expenditure of $275,000 on television advertising through June 21,1995. In a Memorandum and Order dated October 27, 1995, familiarity with which is presumed, NCC’s motion was denied and the case was set down for trial.

The issues to be tried, as identified by the plaintiff, are: (1) its entitlement to a permanent injunction; (2) the damages to which it is entitled pursuant to § 43(a) of the Lanham Act and by virtue of the court’s finding that the defendant was in contempt for violating the T.R.O. issued by the court. The issues, as identified by the defendants, are: (1) the standing of the plaintiff to maintain the action; (2) the plaintiff’s unclean hands attributable to a claim of patent mismarking; (3) the wilfulness of the defendants as affecting damages. At the conclusion of the trial, the court makes the following findings of fact and conclusions of law.

The evidence presented during the course of this bench trial focused primarily on the issue of damages and on the defendants’ claim of patent mismarking and unclean hands. Very little evidence was adduced pertaining to the plaintiff’s claim of entitlement to a permanent injunction. The reason for that is surely explained by the prior determinations made by this court in granting the T.R.O. and in denying the defendants’ application to vacate it. In the Memorandum and Order dated October 27, 1995, the court held that the plaintiff developed the market for the “Purebred Pet Mitt,” conducted a national promotional campaign of television commercials, print advertising and point of purchase displays. Through October 27, 1995, the court found that PSC spent approximately $3 million dollars in advertising and its packaging sought to capitalize on its extensive advertising by featuring on it the legend “As Seen on TV.” The court also found that the defendants began marketing a similar product it called the “Miracle Pet Brush” and included the legend “As Seen on TV” on its packaging. The court found that NCC was misrepresenting its product as the one seen on TV when it had not, in fact, so advertised it. By so doing, the court found that PSC was exposed to irreparable harm, that it had a likelihood of success on the merits and was entitled to the issuance of a T.R.O. enjoining NCC from advertising its product using the phrase “As Seen on TV” or from making other representations which were similarly misleading. The findings made then as justification for the issuance of the T.R.O. order remain undisturbed. The consent of the parties extending the operative effect of the T.R.O. indefinitely, transformed that order for all *221 intents and purposes into a preliminary injunction. The evidence received during the course of the proceedings culminating in the bench trial required no repetition upon trial and are deemed part of the trial record. See Rule 65(a)(2), Federal Rules of Civil Procedure. For the reasons stated and the facts found upon which the T.R.O. was issued, that order is now made permanent and NCC is hereby permanently enjoined from advertising its product using the legend “As Seen on TV” or from making other representations concerning its product which would be similarly misleading and calculated to deceive consumers as to any relationship between its product and the plaintiffs.

Damages

The parties stipulated that the defendants realized gross sales in the amount of $370,144, resulting from their advertising which the court found was contemptuous in that it was in flagrant violation of its previously issued T.R.O. (Stip. Facts 17). The defendants undertook to establish their cost of the goods then sold and the costs they incurred in advertising those goods on television. That undertaking depended for its success upon two principal exhibits which were received in evidence as DX-G and DX-H which were the subjects of extended colloquy. DX-G purportedly reflected a schedule of advertising of the defendants’ Miracle Pet Brush. DX-H purportedly reflected a summary of advertising costs. The summaries were received in evidence but not as proof of the fact that the payments had actually, been made (Tr. 175) without production of the documents, viz., canceled checks, which would be the relevant and probative documents upon which the summary was bottomed, Fed.R.Ev. 1006; (Tr. 179, 190-91). Mark Kravits, the Vice-President for Advertising of NCC and America Direct Marketing, testified that all the checks representing payment for advertising purchased were turned over to the plaintiff. (Tr. 190). In addition, the plaintiff introduced into evidence, PX-50, checks that were delivered to the plaintiff during discovery. None of the checks included in that exhibit were canceled. (Tr. 200). Mr. Kravits testified that if payment had in fact been made for an advertising expense it would be substantiated by a canceled check. (Tr. 199). Although all documents relating in any way to the advertising of the pet gloves sold by defendants were requested for production (PX-47, request 12), no canceled checks were produced.

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948 F. Supp. 218, 41 U.S.P.Q. 2d (BNA) 1673, 1996 U.S. Dist. LEXIS 18845, 1996 WL 732084, Counsel Stack Legal Research, https://law.counselstack.com/opinion/project-strategies-corp-v-national-communications-corp-nyed-1996.