Spin Master Ltd. v. Alan Yuan's Store

325 F. Supp. 3d 413
CourtDistrict Court, S.D. Illinois
DecidedJune 29, 2018
Docket17cv7422(DLC)
StatusPublished
Cited by59 cases

This text of 325 F. Supp. 3d 413 (Spin Master Ltd. v. Alan Yuan's Store) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Spin Master Ltd. v. Alan Yuan's Store, 325 F. Supp. 3d 413 (S.D. Ill. 2018).

Opinion

DENISE COTE, District Judge:

Spin Master Ltd. and Spin Master Inc., part of a multinational toy company, brought this suit against sixty-seven individuals and/or businesses located in China. Plaintiffs claim that defendants infringed their federal trademark and copyright rights by willfully designing, manufacturing, and selling counterfeit copies of their original work, the "Flutterbye Fairy" line of toys. They also bring an unfair competition claim under New York state law. Since the filing of this action on September 28, 2017, claims against thirty-five of the defendants have been dismissed. Plaintiffs have moved for summary judgment on all claims against all thirty-two remaining defendants. For the following reasons, the plaintiffs' motion is granted.

BACKGROUND

The following describes the evidence *418submitted by the plaintiffs.1 Plaintiffs Spin Master Ltd. and Spin Master, Inc. (collectively "Spin") design, manufacture, and sell "Flutterbye Fairy," a line of hand-held children's toys that are designed to look like fairies and marketed and sold under the "Spin Master Products" line. Spin is part of a large multinational toy and entertainment company, Spin Master Products, which designs and sells toys, including the Flutterbye Fairy toys and other products for children.

Spin sells various models of the Flutterbye Fairy toys, but each model commonly consists of a thin female human figure with arms outstretched in a "flying" pose, a small ornate dress, short haircut, and mechanically movable wings around the figure's midsection. Each model of the toy employs a vibrant, two-color scheme that is present in each of the models' features, and different models of the toy gain their distinct look through use of different color pairings and minor stylistic variations in the figure's hair styles, dresses, and wings.

Spin obtained U.S. Trademark Registration No. 4,499,249 for the "FLUTTERBYE" mark, and U.S. Trademark Registration No. 3,743,669 for the "FLUTTERBYE FAIRY" mark, each for a variety of goods in Class 28, Games and Sporting Goods. The "FLUTTERBYE" mark has been in constructive use since at least as early as December 19, 2012, and the "FLUTTERBY FAIRY" mark has been in use since at least as early as June 26, 2008. The marks have been continuously in use in connection with Spin Master Products since those dates. Spin has also obtained multiple registrations for U.S. copyrights related to its products.2

Spin sells its Spin Master Products, including the Flutterbye Fairy line, throughout the United States and the world both through the Spin Master Products website, and through major retailers and other online marketplaces, including Wal-Mart, Toys-R-Us, Target, Kohl's and Amazon.com. The retail cost of a Flutterbye Fairy toy, depending on the particular size and design, is between $25 and $50. The toys have been commercially successful since their introduction in 2013.

Three online marketplace platforms-Alibaba.com, Aliexpress.com, and DHgate (together, the "Digital Marketplaces")-allow third-party merchants to advertise and sell wholesale and retail products from China to consumers worldwide, including consumers in New York and the rest of the United States. The Digital Marketplaces have seen rapid growth in the past few years, and have generated hundreds of billions of dollars in sales worldwide, with a large portion of these sales being made to U.S. customers.

The Digital Marketplaces are rife with sales of counterfeit or infringing items. It *419is the policy of Alibaba.com and Aliexpress.com not to terminate the accounts of merchants who reportedly sell infringing goods until the sites have received four infringement complaints about a particular merchant. Digital Marketplaces require minimal identifying information from merchants. Shipments of goods are often carried out using third party services; these shipments do not contain detailed identifying information from the merchants. By omitting detailed identifying information, individual merchants are able to create multiple accounts on the Digital Marketplaces to sell inventory. The Digital Marketplaces have thus garnered widespread attention in the international news media for failing to adequately monitor and exclude merchants of infringing and counterfeit products.

Prior to filing this action, Spin investigated, using the services of an investigative firm, third-party merchants offering to sell products infringing upon Spin's marks or copyrighted works on the Digital Marketplaces. That investigation identified the defendants named in the complaint as selling counterfeit products through their storefronts on the Digital Marketplaces using or bearing the Flutterbye Fairy toy marks or copyrighted materials without plaintiffs' permission. None of the defendants are, or ever have been, authorized distributors or licensees of the Flutterbye Fairy line of products.

The defendants sell nearly identical products to Spin's, with small but noticeable differences. Many of the defendants' items vary from the authentic products in their packaging, labelling, and/or product coloring. For example, the DHgate storefront of one defendant, Shenzhen CBP Technology Co., LTD, doing business as "Cbpbrucelam", advertises a "Flying Fairy" toy. This item is a female figurine with outstretched arms, a short haircut of blue and purple hair, a small ornate dress, and mechanically movable wings around the figure's midsection. This item appears to be designed to look like part of the Spin's product line but closer inspection confirms that there are differences between the "Flying Fairy" and Spin's Flutterbye Fairy, which confirm that Cbpbrucelam's product is a counterfeit. Those differences include variation in the dexterity of the figurine's bent arms, noticeable variation in the figurine's coloring, the shape of the item's packaging, and a lack of warning labels on the defendant's product. Some defendants sold their products using the words "flutter" and "fairy" in the titles. Some defendants appear to have replicated the look-images, colors, and shape-of packaging material from Spin's authentic products.

As part of its investigation, Spin contacted each of the defendants, requesting to place a bulk order for the counterfeit products. Each defendant was able to provide shipping to a New York address. Each defendant has previously offered or is currently still offering to sell counterfeit goods through their Digital Marketplace storefronts, with some of the defendants having already made shipments to New York containing allegedly counterfeit products. The prices of the defendants' merchandise are significantly lower than the prices of Spin's products as sold through the Spin Master Products website or other licensed retailers. Many of the defendants do not sell individual products: bulk orders are necessary.

PROCEDURAL HISTORY

Spin brought this suit claiming trademark counterfeiting and infringement and copyright infringement on September 28, 2017. The complaint named sixty-seven defendants. On the day the case was opened, this Court entered a temporary restraining *420

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Bluebook (online)
325 F. Supp. 3d 413, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spin-master-ltd-v-alan-yuans-store-ilsd-2018.