Design Ideas Ltd v. Meijer, Inc. et al

Filing 232

OPINION entered by Judge Sue E. Myerscough on 7/23/2018. Defendants' Motion for Summary Judgment on All Undecided Claims, d/e 168 and Plaintiff's Motion for Partial Summary Judgment, d/e 189 are DENIED. This case is set for a Final Pr etrial Conference on October 29, 2018 at 3:00 p.m. in Courtroom I in Springfield before Judge Sue E. Myerscough and for Jury Trial on November 13, 2018 at 9:00 a.m. Motions in Limine are due on or before October 1, 2018. Proposed Final Pretrial Order on or before October 15, 2018. The parties shall advise the Court, on or before October 15, 2018, whether they will consent to Magistrate Judge Jonathan E. Hawley conducting the jury impanelment. (SEE WRITTEN OPINION) (MAS, ilcd)

E-FILED

Monday, 23 July, 2018 05:15:53 PM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
DESIGN IDEAS, LTD., an Illinois
Corporation,
Plaintiff,
v.
MEIJER, INC., a Michigan
Corporation; WHITMOR, INC.,
a Delaware corporation; and
THE TJX COMPANIES, INC.,
a Delaware corporation,
Defendants.

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No. 15-cv-03093

OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
This cause is before the Court on the Motion for Summary
Judgment on All Undecided Claims (d/e 168) filed by Defendants
Meijer, Inc. and Whitmor, Inc., and the Motion for Partial Summary
Judgment (d/e 189) filed by Plaintiff Design Ideas, Ltd. Because
genuine issues of material fact remain, the Motions for Summary
Judgment are DENIED.

Page 1 of 36

I. BACKGROUND
Plaintiff originally filed suit in March 2015 against Defendants
Meijer, Inc. (Meijer), Whitmor, Inc. (Whitmor), and The TJX
Companies, Inc. (TJX). In November 2015, Plaintiff filed a First
Amended Complaint1 asserting copyright infringement under the
Copyright Act of 1976, 17 U.S.C. § 101, et seq., unfair competition
under the U.S. Trademark Act, 15 U.S.C. § 1051, et seq. (Lanham
Act) and violations of the Digital Millennium Copyright Act, 17
U.S.C. § 1201, et seq. (DMCA). The First Amended Complaint also
contains state law claims asserting unfair competition, violations of
the Illinois Deceptive Trade Practices Act, 815 ILCS 510/1, the
Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS
505/2, and breach of contract.2
A few weeks before Plaintiff filed this action, Meijer, Whitmor,
and TJX filed a lawsuit in the Western District of Michigan seeking
a declaratory judgment that they did not violate the Lanham Act,
the Copyright Act, or the DMCA. In June 2015, the Court enjoined

The First Amended Complaint contains Counts I through IV and Counts VI
through X. It does not contain a Count V.
1

In May 2016, the Court dismissed Counts II and VI relating to the alleged
infringement of Plaintiff’s DOODLES magnets. Opinion (d/e 99).
2

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the defendants from prosecuting that declaratory judgment action.
Opinion (d/e 12) (Mills, J.).
In August 2016, the Court granted partial summary judgment
on liability in favor of Plaintiff on Plaintiff’s copyright claims in
Count I. Opinion (d/e 115). In December 2016, Plaintiff and
Defendant TJX filed a Stipulation of Voluntary Dismissal.
Defendants Meijer and Whitmor (collectively referred to as
Defendants) have now filed a motion for summary judgment on all
remaining claims: Count III, Federal Unfair Competition Under the
Lanham Act; Count IV, violation of the DMCA; Count VII, common
law unfair competition; Count VIII, violation of the Illinois Deceptive
Trade Practices Act; Count IX, violation of the Illinois Consumer
Fraud and Deceptive Business Practices Act; and Count X against
Meijer for breach of the 2007 Settlement Agreement. Defendants
also seek summary judgment that the only recovery to which
Plaintiff is entitled on Count I is Defendants’ profits from the sale of
CANARY CLIPS in 2013 until Defendants stopped selling CANARY
CLIPS in August 2014, which total $14,095.64.
Plaintiff seeks summary judgment on Count III, the trademark
claim, and Count IV, the DMCA claim. Although Plaintiff asserts in
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its reply that Plaintiff is entitled to summary judgment on Counts
VII, VIII, and IX, Plaintiff has forfeited that argument by not raising
the claims in its motion for summary judgment and memorandum
in support thereof. See Narducci v. Moore, 572 F.3d 313, 324 (7th
Cir. 2009) (“[T]he district court is entitled to find that an argument
raised for the first time in a reply brief is forfeited.”).
II. FACTS
Despite the cross-motions for summary judgment, the parties
dispute many of the facts in this case. Moreover, Plaintiff failed to
strictly comply with Local Rule 7.1(D)(1)(b) and (2)(b), which require
including as exhibits all relevant documentary evidence and
providing citations for the documentary evidence that supports
each fact or disputed fact. Plaintiff has, however, supplied much of
the missing documentary evidence in its reply. Therefore, the Court
will disregard only those “facts” for which the Court could not find
documentary support or which did not contain a citation to the
document evidence unless Defendants nonetheless admitted the
fact.
Plaintiff is in the business of creating, manufacturing, and
distributing decorative gift items and housewares. One such item is
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the SPARROWCLIP, which is a clothespin with a bird design on top.
Plaintiff claims to own intellectual property rights in both the
SPARROWCLIPS design and the trademark. From February 2009
through May 2016, Plaintiff sold its SPARROWCLIPS to over 750
customers with sales over $615,000.
Between May and August 2012, Meijer placed five orders for
SPARROWCLIPS from Plaintiff. At some point, Defendants became
interested in manufacturing a bird clip. Meijer admits it purchased
retail quantities of SPARROWCLIPS from Plaintiff and that it hired
Whitmor to produce the copies.3 The parties dispute whether Meijer
directed Whitmor to directly copy Plaintiff’s SPARROWCLIPS.
In September 2012, Whitmor sent a set of Plaintiff’s
original SPARROWCLIPS that Whitmor purchased from The
Container Store to a Chinese manufacturer, Sunny Living.
Whitmor asked Sunny Living if it had a mold of the goods and
sought pricing. Sunny Living had a mold producing exact
duplicates of SPARROWCLIPS. The Sunny Living factory had
only used the mold to manufacture bird clips that were

Plaintiff’s Additional Statement of Undisputed Fact No. 9 (Pl. Opp. at 50, d/e
178) does not cite any evidentiary support, but Defendants admitted it anyway.
3

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shipped to Japan and never shipped bird clips from that mold
to the United States.
Sunny Living asked Whitmor what colors Meijer wanted
for the copies of the SPARROWCLIPS. Whitmor instructed
Sunny Living to copy the colors used in Plaintiff’s
SPARROWCLIPS sold at The Container Store. Defendants did
not inquire whether Plaintiff had authorized that mold or
attempt to learn the origin of the Sunny Living mold.
In January and May 2013, Whitmor imported retail
quantities of “Canary Plastic Clothespins”—CANARY CLIPS—
from China. Whitmor also offered CANARY CLIPS to Target
and TJX.
Defendants sold CANARY CLIPS in a plastic bag with a
header card. When Meijer and Whitmor sold CANARY CLIPS,
Meijer included its tradename, Wholesale Merchandisers, Inc..
and Whitmor included its name, Whitmor, on the packaging.
Neither Meijer nor Whitmor provided any identifying
information on the CANARY CLIP itself. The information
provided by Meijer and Whitmor on the packaging was meant

Page 6 of 36

for and applied to the packaging for the CANARY CLIPS, not
the clip itself.
Plaintiff sold SPARROWCLIPS in various types of
packaging, including a plastic box and a plastic bag with a
header card. Plaintiff’s packaging for SPARROWCLIPS
contains both the name SPARROWCLIPS and its source,
Design Ideas: “SPARROWCLIPS, DESIGN IDEAS © 2008
Design Ideas Ltd.” or SPARROWCLIPS, DESIGN IDEAS” and
“© 2011 Design Ideas Ltd.” The fonts, background designs,
and background colors on the header cards used by
Defendants and Plaintiff are different.
In addition, Plaintiff’s SPARROWCLIPS have imbedded on
each individual clip the author’s name and Plaintiff’s
tradename: “p.waiwiriya for design ideas.” This information
was not imbedded in the CANARY CLIPS.
Defendants contend, and Plaintiff disputes, that Whitmor’s
Vice President, Scott Felsenthal, reached out to outside counsel to
ensure that its own distribution of the clips was appropriate. The
parties also dispute that, based on counsel’s response, Felsenthal
expanded his search to include a search of copyright registration
Page 7 of 36

and that he did not find registrations related to the SPARROWCLIPS
design or bird clips or clips. Whitmor never contacted Plaintiff to
ask whether SPARROWCLIPS were trademarked or copyrighted.
Defendants stopped selling CANARY CLIPS around August
2014, shortly after receiving Plaintiff’s cease and desist letters.
Meijer’s profits on the sale of CANARY CLIPS did not exceed
$4,809.78. Whitmor’s profits on the sale of CANARY CLIPS did not
exceed $9,285.86.
Plaintiff submitted a copyright application to the U.S.
Copyright Office for the SPARROWCLIPS on April 4, 2013. The
Copyright Office issued a registration certificate on May 29, 2013.
On February 5, 2016, Plaintiff filed an application to register
the mark “SPARROWCLIPS.” On September 13, 2016, the United
States Patent and Trademark Office (PTO) issued a trademark
registration for SPARROWCLIPS.
Plaintiff filed its application for registration under Section 2(f)
of the Lanham Act, certifying that the SPARROWCLIPS had
acquired distinctiveness based on five years of continuous use in
commerce. In the application, Plaintiff stated:

Page 8 of 36

Applicant believes its SPARROWCLIPS mark is inherently
distinctive. The bird design on the goods is not of any
particular type of bird, and the mark is unitary.
Nonetheless, Applicant submits herewith a 2(f) claim for
SPARROW, since it has used the mark since 2008, as
well as a disclaimer of CLIPS. However, if the Examining
Attorney believes either or both are not necessary,
applicant requests the Examining Attorney to delete them
from the application. Thank you kindly.
The examining attorney reviewing the SPARROWCLIPS application
did not delete the Section 2(f) claim from the SPARROWCLIPS
application. In the PTO’s Trademark Snap Shot Publication
Stylesheet, the field titled “Section 2F In Part” is marked “YES.”
The Registration Certificate states: “SEC. 2(F) As to ‘SPARROW.’”
The following facts pertain to Plaintiff’s breach of contract
claim. In 2007, Plaintiff and Meijer entered into a Settlement
Agreement to resolve a controversy between the parties related to
another line of Plaintiff’s products. Meijer denied in the Agreement
that it infringed Plaintiff’s products. The Agreement required that
Plaintiff purchase merchandise identified in an attachment to the
Agreement totaling $250,753 and to purchase additional
merchandise totaling $1,000,000 by September 30, 2009. The
parties agree that Meijer satisfied all of its purchase obligations
under the Agreement.
Page 9 of 36

The Settlement Agreement also required Meijer “not [to]
purchase, order, create, manufacture, sell, or distribute any other
goods identical or substantially the same as Design Ideas’ . . . (iii)
containing any Design Ideas intellectual property or [] use any
Design Ideas intellectual property, or (iv) use any Design Ideas
intellectual property . . . except as provided herein” Agreement
¶ 2(b) (d/e 172-14). Plaintiff alleges that Meijer breached this
section of the Agreement with its conduct related to its infringing
CANARY CLIPS.
Paragraph 8 of the Agreement provided: “The parties hereby
agree to cooperate with each other in furtherance of the purpose,
terms[,] and provisions of this Agreement[.]” Agreement ¶ 8 (d/e
172-14). Plaintiff contends that Paragraph 8 requires Meijer to
further the purposes of the Agreement and that a major purpose of
the Agreement was “ongoing, future sales, which is shown by the
express terms [of the Agreement] . . .” Defs. SOF ¶ 145 (d/e 169);
Pl. Resp. at 5 (d/e 178).
Plaintiff claims, and Defendants deny, that Meijer threatened
Plaintiff with a loss of business should Plaintiff continue to defend
its intellectual rights in the SPARROWCLIPS. Plaintiff further
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claims, and Defendants deny, that Meijer actualized the threat as
shown by the lost sales after Plaintiff refused to drop the instant
enforcement and that Meijer instructed Meijer’s buyers to cease
business with Plaintiff. The parties do agree, however, that, in
2015, after the present lawsuit was filed, Meijer stopped product
development efforts with Plaintiff and only agreed to continue
purchasing three product programs that were already in place.
III. LEGAL STANDARD
Summary judgment is proper if the movant shows that no
genuine dispute exists as to any material fact and that the movant
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
The movant bears the initial responsibility of informing the court of
the basis for the motion and identifying the evidence the movant
believes demonstrates the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). No
genuine issue of material fact exists if a reasonable jury could not
find in favor of the nonmoving party. Brewer v. Bd. of Trs. of the
Univ. of Ill., 479 F.3d 908, 915 (7th Cir. 2007). When ruling on a
motion for summary judgment, the court must consider the facts in
the light most favorable to the nonmoving party, drawing all
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reasonable inferences in the nonmoving party's favor. Blasius v.
Angel Auto., Inc., 839 F.3d 639, 644 (7th Cir. 2016).
In this case, the parties filed cross-motions for summary
judgment pursuant to Rule 56 of the Federal Rules of Civil
Procedure. Therefore, this Court must view all facts and draw all
reasonable inferences in the light most favorable to the Plaintiff
when reviewing Defendants’ Motion and in the light most favorable
to the Defendants when reviewing Plaintiff=s Motion. See
Gazarkiewicz v. Town of Kingsford Heights, Ind., 359 F.3d 933, 939
(7th Cir. 2004).
IV. ANALYSIS
A.

Defendants are Not Entitled to Summary Judgment on
Damages in Count I
As noted above, this Court previously found that Defendants

infringed on Plaintiff’s valid copyright. Defendants now seek
summary judgment on Plaintiff’s allowable recovery for copyright
infringement.
Pursuant to Section 504(a) of the Copyright Act, an infringer of
a copyright is liable for either (1) the copyright owner’s actual
damages and any additional profit of the infringer or (2) statutory
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damages. 17 U.S.C. § 504(a). Plaintiff does not seek statutory
damages or attorney’s fees for copyright infringement under 17
U.S.C. § 504. Pl. Opp. at 68 (d/e 178); see also 17 U.S.C. § 412(2)
(providing that statutory damages under Section 504 are only
available where the copyrighted work was registered prior to the
commencement of the infringement unless the registration is made
within three months after the first publication of the work). The Act
provides as follows regarding actual damages and profits:
The copyright owner is entitled to recover the actual
damages suffered by him or her as a result of the
infringement, and any profits of the infringer that are
attributable to the infringement and are not taken into
account in computing the actual damages. In
establishing the infringer's profits, the copyright owner is
required to present proof only of the infringer's gross
revenue, and the infringer is required to prove his or her
deductible expenses and the elements of profit
attributable to factors other than the copyrighted work.
17 U.S.C. § 504(b).
Defendants argue that Plaintiff cannot recover actual damages
because Plaintiff has not identified any lost sales and Plaintiff’s
theory of actual damages lacks any legal or evidentiary support.
According to Defendants, Plaintiff is only entitled to Defendants’

Page 13 of 36

profits on the sale of CANARY CLIPS, which the parties agree do not
exceed $9,285.86 for Whitmor and $4,809.78 for Meijer.4
Plaintiff asserts that it seeks the greater of its losses or
Defendants’ profits. Plaintiff has submitted evidence purporting to
show that Meijer threatened Plaintiff with a loss of business if
Plaintiff continued to defend its intellectual rights in
SPARROWCLIPS and, when Plaintiff refused to stop enforcing its
rights, Meijer actualized this threat. Plaintiff argues that had
Defendants not filed an anticipatory suit in Michigan, Plaintiff
would not have filed this litigation. Plaintiff asserts that it lost two
years of profits (approximately $500,000) from selling nonSPARROWCLIPS product to Meijer because of the SPARROWCLIPS
infringement.
Actual damages are intended to compensate the copyright
owner for the harm suffered by the infringing activity. See On Davis
v. The Gap, Inc., 246 F.3d 152, 159 (2d Cir. 2001). The measure of
recovery for actual damages suffered by the copyright owner is

Plaintiff’s expert also identified as damages profits earned by third parties.
Defendants assert that Plaintiff is not entitled to recover from Defendants
profits earned by third parties. Def. Mem. at 33 (d/e 171), citing Frank Music
Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 519 (9th Cir. 1985).
Plaintiff does not respond to this argument and, therefore, forfeits the issue.
4

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“usually determined by the loss in the fair market value of the
copyright, measured by the profits lost due to the infringement or
by the value or the use of the copyrighted material to the
infringers.” McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d
557, 566 (7th Cir. 2003). Moreover, because copyright infringement
is a statutory tort (Taylor v. Meirick, 712 F.2d 1112, 1117 (7th Cir.
1983)), a party seeking actual damages must show causation.
Ocean Atl. Woodland Corp. v. DRH Cambridge Homes, Inc., 262 F.
Supp. 2d 923, 927 (N.D. Ill. 2003).
Plaintiff’s actual damages theory is unique. Plaintiff seeks as
damages all lost profits Plaintiff expected to earn from its
relationship with Meijer. Despite the uniqueness of the theory, the
Court will allow Plaintiff to pursue it.
The term “actual damages” is broadly construed in favor of the
victim of infringement. On Davis, 246 F.3d at 164. In addition,
courts have allowed a party to obtain as damages the profits related
to the sale of non-infringing goods.
For example, in Bucklaw v. Hawkins, Ash, Baptie & Co., LLP,
329 F.3d 923, 933 (7th Cir. 2003), the Seventh Circuit noted that
“the purpose of allowing suit for the infringer’s lost profits is to
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make infringement worthless to the infringer” and that “[t]his will
sometimes require tracing those profits into another product, as
where it is bundled with the infringing product”. The Bucklaw
court gave as an example a defendant who copies a copyrighted
book verbatim and gives the book away for free to anyone who
purchases a $25 bookmark that cost the defendant 10 cents to
make and had a market value of 50 cents. Id. In such case, to hold
that the defendant’s profits from the infringement would be zero
would be to “approve a formula for evading copyright law.” Id. In
addition, one court has found that a plaintiff’s lost sales on noninfringed works may be recovered as “actual damages” where the
non-infringed works were marketed as part of the line of
merchandise that included the infringed copyrighted work. Sunset
Lamp Corp. v. Alsy Corp., 749 F. Supp. 520, 521 (S.D.N.Y. 1990).
Here, the trier of fact could conclude that Plaintiff’s actual
damages from the infringement include the loss of business with
Meijer. Therefore, Defendant is not entitled to summary judgment
on damages.
Defendants also argue that, even if Plaintiff’s theory of
damages is viable, Plaintiff cannot support the theory with
Page 16 of 36

admissible evidence. Defendants assert that Plaintiff witness on
damages only identified the lost business with Meijer as a theory of
contract damages while the other Rule 30(b)(6) witness merely
offered speculative and conclusory opinion testimony. Defendants
further argue that they have filed a motion to exclude Plaintiff’s
expert’s testimony. By separate Opinion, entered simultaneously
with this Opinion, the Court has found Plaintiff’s expert witness’s
testimony is admissible. Therefore, Defendants are not entitled to
summary judgment on the ground that Plaintiff cannot support its
actual damages theory with admissible evidence.
B.

Neither Party is Entitled to Summary Judgment on Count
III, Trademark Infringement
In Count III, brought pursuant to 15 U.S.C. § 1125(a) of the

Lanham Act5, Plaintiff asserts that Defendants’ use of the name
“CANARY CLIPS” on Defendants’ bird clothespin product infringes
on Plaintiff’s rights in in its SPARROWCLIPS trademark. To

Plaintiff filed this lawsuit in March 2015. Registration of the mark was issued
in September 2016. The Amended Complaint, filed in November 2015, alleges
a violation of 15 U.S.C. § 1125(a) of the Lanham Act, which applies to
unregistered marks. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763,
768 (1992) (noting that Section 1125 protects qualifying unregistered marks).
Section 1114(a) protects registered marks. 15 U.S.C. § 1114; see also General
Elec. Co. v. Speicher, 877 F.2d 531, 535 (7th Cir. 1989). The parties appear to
agree that the mark is registered.
5

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establish its trademark infringement claim, Plaintiff must prove
that (1) the SPARROWCLIPS mark is valid and protectable; and (2)
the relevant group of buyers is likely to confuse Defendants’
product with Plaintiff’s product. See H-D Michigan, Inc. v. Top
Quality Serv., Inc., 496 F.3d 755, 759 (7th Cir. 2007).
The parties dispute whether the SPARROWCLIPS mark is a
valid mark. Defendants assert the SPARROWCLIPS mark is
descriptive while Plaintiff asserts that the mark is suggestive. The
parties also dispute whether Defendants’ use of CANARY CLIPS was
likely to cause confusion.
The classification of a mark and whether consumers are likely
to be confused about the origin of a defendant’s products are
questions of fact. See Packman v. Chi. Tribune Co., 267 F.3d 628,
637 (7th Cir. 2001). This Court may award summary judgment “if
the evidence is so one-sided that there can be no doubt about how
the question should be answered.” Door Sys., Inc. v. Pro-Line Door
Sys., Inc., 83 F.3d 169, 171 (7th Cir. 1996). The Court finds that
summary judgment on these issues is not warranted.
A trademark is a word, name, symbol, or device, or any
combination thereof, used by a person to identify and distinguish
Page 18 of 36

his goods from those of others and to indicate the source of those
goods. See 15 U.S.C. § 1127. To be registered, the “mark must be
capable of distinguishing the applicant’s goods from those of
others.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768
(1992) (citing 15 U.S.C. § 1052). Marks are classified as generic,
descriptive, suggestive, arbitrary, or fanciful. Id. These categories
are defined as follows:
A mark is generic if it is a common description of
products and refers to the genus of which the particular
product is a species. A mark is descriptive if it describes
the product's features, qualities, or ingredients in
ordinary language or describes the use to which the
product is put. A mark is suggestive if it merely suggests
the features of the product, requiring the purchaser to
use imagination, thought, and perception to reach a
conclusion as to the nature of the goods. An arbitrary
mark applies a common word in an unfamiliar way. A
fanciful mark is not a real word at all, but is invented for
its use as a mark.
Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d
337, 344 (2d Cir. 1999).
Generic marks are not protected and are not registerable as
trademarks. Two Pesos, 505 U.S. at 768. Suggestive, arbitrary,
and fanciful marks are deemed inherently distinctive and are
entitled to protection under the Lanham Act. Id.
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A descriptive mark is not inherently distinctive but can
acquire distinctiveness—and be registered—if “‘it has become
distinctive of the applicant’s goods in commerce.’” Id. at 769
(quoting 15 U.S.C. § 1052(e), (f)6); see also Sand Hill Advisors, LLC
v. Sand Hill Advisors, LLC, 680 F. Supp. 2d 1107, 1116 (N.D. Cal.
2010) (an applicant may register a descriptive mark under section
1052(f), referred to as “Section 2(f)”, if the applicant can show at
least five years of substantially exclusive and continuous use).
“This acquired distinctiveness is generally called ‘secondary
meaning.’” Two Pesos, 505 U.S. at 769.
Secondary meaning occurs when, “in the minds of the public,
the primary significance of a [mark] is to identify the source of the
product rather than the product itself.” Wal-Mart Stores, Inc. v.
Samara Bros., Inc., 529 U.S. 205, 211 (2000) (quoting Inwood
Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n.11 (1982)). The
factors considered when determining whether secondary meaning

Section 1052(f), referred to as Section 2(f) provides: “The Director may accept
as prima facie evidence that the mark has become distinctive, as used on or in
connection with the applicant's goods in commerce, proof of substantially
exclusive and continuous use thereof as a mark by the applicant in commerce
for the five years before the date on which the claim of distinctiveness is made.”
15 U.S.C. § 1052(f).
6

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exists include (1) direct consumer testimony; (2) consumer surveys;
(3) exclusivity, length, and manner of use; (4) the amount and
manner of advertising; (5) the sales volume; (6) established place in
the market; and (7) proof of intentional copying. Echo Travel, Inc.
v. Travel Assocs., Inc., 870 F.2d 1264, 1267 (7th Cir. 1989)
(referring to the first two factors as direct evidence factors and the
remaining factors as circumstantial evidence factors); Box
Acquisitions, LLC v. Box Packaging Prods., LLC, 32 F.Supp.3d 927,
936 (N.D. Ill. 2014).
This Court must first address any presumption that applies
because the SPARROWCLIPS mark is registered. Registration
under the Lanham Act affords the registrant a rebuttable
presumption of validity. 15 U.S.C. § 1115(a). The presumption
evaporates, however, if evidence of invalidity is presented. GeorgiaPacific Consumer Prods. LP v. Kimberly-Clark Corp., 647 F.3d 723,
727 (7th Cir. 2011); Custom Vehicles, Inc. v. Forest River, Inc., 476
F.3d 481, 486 (7th Cir. 2007) (presumption is “easily rebuttable”).

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Defendants have not presented such evidence, instead arguing
that Plaintiff cannot rely on the presumption because the alleged
infringement occurred before the mark was registered.7
A plaintiff is afforded one of two presumptions once a mark is
registered: (1) that the registered trademark is not merely
descriptive or generic; or (2) if descriptive, that the mark is accorded
secondary meaning. Packman, 267 F.3d at 639. When the PTO
registers a mark without first requiring the applicant to prove
secondary meaning, the owner of the mark is entitled to the
presumption that the registered trademark is inherently distinctive.
Lane Capital, 192 F.3d at 345. When an applicant relies on Section
2(f) during the prosecution of a mark, it is presumed the mark is
descriptive. See Cold War Museum, Inc. v. Cold War Air Museum,

Defendants also cite Baig v. Coca-Cola Co., 607 F. App’x 557 (7th Cir. 2015)
for the proposition that Section 2(f) of the Lanham Act does not apply in suits
to establish liability for infringement. This Court finds that Baig does not
stand for Defendants’ broad proposition. In Baig, the plaintiff attempted to
show that his unregistered mark had acquired distinctiveness because he used
it for more than five years. Id. at 560. The Seventh Circuit noted that the
Section 2(f) allows the PTO to presume a mark has acquired distinctiveness
after five years of use, but the presumption applies only to applications to
register a mark. Id. In cases of infringement, courts consider several other
factors, not just the length and manner of use. Id. Here, Plaintiff is not
attempting to apply any presumption under Section 2(f) but seeks to apply the
presumptions afforded to registered trademarks.
7

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Inc., 586 F.3d 1352, 1358 (Fed. Cir. 2009); Boden Prods., Inc. v.
Doric Foods Corp., 552 F. Supp. 493, 498 (N.D. Ill. 1982) (finding of
distinctiveness under Section 2(f) from the PTO creates a
presumption that the mark has attained secondary meaning); 2 J.
Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition, § 11.43 (5th ed. 2018) (“The presumption to which a
§ 2(f) registration is entitled is not that the designation is inherently
distinctive, but that it had acquired secondary meaning as of the
date of registration”).
Here, Plaintiff admitted filing its application for registration
under Section 2(f) of the Lanham Act. Def. SOF ¶ 44 at 10 (d/e
169); Pl. Resp. at 5 (d/e 178). Moreover, the registration documents
show that Plaintiff submitted evidence of secondary meaning with
the request that the examining attorney delete that evidence if the
attorney believed it unnecessary. The examining attorney did not
delete that evidence. Additionally, the registration certificate
reflects registration under Section 2(f). See Registration Certificate
(d/e 169-15) (noting “SEC 2(F) As to ‘SPARROW’” and that “[n]o
claim is made to the exclusive right to use the following apart from
the mark as shown: ‘CLIPS’”).
Page 23 of 36

Consequently, the Court finds that, at most, Plaintiff would be
entitled to a presumption that the mark is descriptive and was
accorded secondary meaning. Plaintiff is not, however, entitled to
such a presumption in this case because the alleged infringement
occurred before registration.
When the PTO does “not accept a mark as inherently
distinctive” but accepts “proof of acquired secondary meaning under
§ 2(f), ‘the timing of the effectiveness of that presumption is
crucial.’” Minn. Specialty Corps., Inc. v. Minn. Wild Hockey Club,
LP, No. 00-2317, 2002 WL 1763999, at *5 (D. Minn. July 26, 2002)
(quoting Aromatique, Inc. v. Gold Seal, 28 F.3d 863, 870 (8th Cir.
1994)). In cases involving a presumption that a mark acquired
secondary meaning, the presumption is effective only as of the date
of the registration. Id; Bay State Sav. Bank v. Baystate Fin. Servs.,
LLC, 484 F.Supp.2d 205, 214 (D. Mass. 2007) (mark entitled to
presumption of secondary meaning only as of the date the marks
were registered); see also, e.g., Homemakers Home & Health Servs.,
Inc. v. Chi. Home For the Friendless, 484 F.2d 625, 629 (7th Cir.
1973) (the subsequent acquisition of secondary meaning cannot
retroactively establish the registrability of a mark).
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Here, because the alleged infringement occurred in 2013 and
2014, and the SPARROWCLIPS mark was not registered until 2016,
the presumption does not apply. That is, a finding that a mark
acquired distinctiveness in 2016 says nothing about the acquired
distinctiveness of the mark in 2013 and 2014 when the alleged
infringement occurred.
Without the presumption, Plaintiff has the burden of proving
validity. Questions of fact remain whether SPARROWCLIPS is
inherently distinctive or has acquired secondary meaning.
Although Plaintiff has not presented evidence of consumer
testimony or consumer surveys, “such evidence is not strictly
required to establish secondary meaning.” Burford v. Accounting
Practices Sales, Inc., 786 F.3d 582, 590 (7th Cir. 2015). Plaintiff
has presented evidence of Plaintiff’s longstanding use of
SPARROWCLIPS as a trademark and hundreds of thousands of
dollars in sales. Plaintiff features SPARROWCLIPS in its annual
catalogues and at trade shows. Moreover, Plaintiff has presented
evidence that, taken in the light most favorable to Plaintiff, suggests
intentional copying of Plaintiff’s mark. While the evidence may not
be particularly strong, secondary meaning is a question of fact and
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the Court finds the evidence sufficient to withstand Defendants’
motion for summary judgment.
In addition, neither party is entitled to summary judgment on
the likelihood of confusion element of the trademark claim. Plaintiff
asserts that the undisputed facts show that Defendants’ use of the
CANARY CLIPS mark to sell infringing knock-off products is likely
to cause consumer confusion with Plaintiff’s SPARROWCLIPS and
is, therefore, infringing. Defendants argue that Plaintiff has failed
to create a triable issue of fact.
Likelihood of confusion is a question of fact. Sorensen v. WD40 Co., 792 F.3d 712, 726 (7th Cir. 2015). The factors considered
include:
(1) the similarity between the marks in appearance and
suggestion; (2) the similarity of the products; (3) the area
and manner of concurrent use; (4) the degree of care
likely to be exercised by consumers; (5) the strength of
the plaintiff's mark; (6) any evidence of actual confusion;
and (7) the intent of the defendant to “palm off” his
product as that of another.
Id. at 726. Evidence of actual confusion is not required, although it
is entitled to substantial weight if available. CAE, Inc. v. Clean Air
Eng’g, Inc., 267 F.3d 660, 685 (7th Cir. 2001).

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Plaintiff has presented evidence, taken in the light most
favorable to Plaintiff, regarding the similarity of the marks. the
similarity of the products, and the area and manner of concurrent
use. While the evidence may not be particularly strong, the Court
finds the evidence sufficient to warrant sending the issue to the
jury.
Lastly, Defendants argue that, even if a triable issue of fact
remains on liability, Defendants are entitled to summary judgment
because Plaintiff’s only allowable recovery on the trademark
infringement claims is duplicative of its allowable recovery for
copyright infringement—Defendants’ profits. However, Plaintiff
seeks attorney’s fees, and Defendant has not established that
Plaintiff cannot satisfy the “exceptional case” standard required to
obtain an attorney’s fees award. Therefore, the Court will not
dismiss Count III on that basis.

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C.

Neither Party is Entitled to Summary Judgment on the
DMCA Claims8
In the First Amended Complaint, Plaintiff alleges that

Defendants violated Sections 1202(a)(1) and 1202(b)(3) of the DMCA
by distributing identical SPARROWCLIPS copies called CANARY
CLIPS that falsified the title, owner, and copyright notice. Both
parties seek summary judgment on the DMCA claims.
As is relevant here, the DMCA provides that no person shall
knowingly provide copyright management information that is false
with the intent to induce, enable, facilitate, or conceal infringement.
17 U.S.C. § 1202(a)(1). The statute also prohibits distributing
copies of work knowing that copyright management information has
been removed or altered and “knowing, or with respect to civil
remedies under section 1203, having reasonable grounds to know,
that it will induce, enable, facilitate, or conceal an infringement of
any right under [federal copyright law.]” 17 U.S.C. § 1201(b)(3).
The Act defines copyright management information to include
eight categories of “information conveyed in connection with copies
As Defendants note, courts have disagreed whether the DMCA applies to
copyright management information on non-digital media. Def. Mem. at 58 n.8
(citing cases). As Defendants do not raise this ground as a means of defeating
Plaintiff’s claim, the Court will not address the issue.
8

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* * * of a work, including in digital form . . .” 17 U.S.C. § 1202(c).
The categories of information include the title and other information
identifying the work; the name of, or other identifying information,
about the author of a work; and the name of, and other identifying
information about, the copyright owner of the work. Id.
Plaintiff claims that Defendants violated the DMCA by
distributing their CANARY CLIPS, which infringed Plaintiff’s
SPARROWCLIPS. Plaintiff asserts that Defendants distributed the
CANARY CLIPS without the correct copyright management
information—meaning without Plaintiff’s copyright management
information—and with false copyright management information—
meaning with Defendants’ copyright management information.
The Court finds that questions of fact preclude summary
judgment to either party on the DMCA claims. Defendants have
presented evidence that they found a wholly separate source for
their bird clips and distributed them with Defendants’ own
copyright management information. Plaintiff has presented evidence
that Defendants deliberately sought to copy and distribute
Plaintiff’s bird clip without Plaintiff’s copyright management
information. These are issues of fact for the trier of fact to resolve.
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See, e.g., Asberg v. Francesca’s Collections, Inc., No. 17-cv-115,
2018 WL 1583037, at *8 (S.D.N.Y. March 27, 2018) (on motion to
dismiss a DMCA claim, drawing a distinction between using a
technological process to replicate the plaintiff’s product and
packaging without the plaintiff’s copyright management
information—which may constitute a violation—and creating the
products entirely anew based on inspiration from the product
samples).
Defendants further argue that Plaintiff’s only recovery
under the DMCA is duplicative of its copyright claim—
Defendants’ profits. Defendants assert that Plaintiff cannot
recover statutory damages or attorneys’ fees under the DMCA
because Plaintiff did not register the copyright prior to the
alleged violations.
Section 1203(c) of the DMCA provides that a person who
commits a violation of Section 1202 is liable either for the
actual damages and additional profits of the violator or
statutory damages. 17 U.S.C. § 1203(c). Section 1203(b)
authorizes a court to award reasonable attorney’s fees to the

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prevailing party in the court’s discretion. 17 U.S.C.
§ 1203(b)(5).
Defendants argue that, because the DMCA is part of Title
17 pertaining to Copyrights, Section 412 of the Copyright Act
applies to bar statutory damages and attorney’s fees where the
copyright is not registered at the time of the alleged violation.
Section 412 provides that statutory damages and
attorney’s fees as provided by Sections 504 and 505 shall not
be granted if the copyright is not registered at the time of the
alleged infringement:
In any action under this title, other than an action
brought for a violation of the rights of the author under
section 106A(a), an action for infringement of the
copyright of a work that has been preregistered under
section 408(f) before the commencement of the
infringement and that has an effective date of registration
not later than the earlier of 3 months after the first
publication of the work or 1 month after the copyright
owner has learned of the infringement, or an action
instituted under section 411(c), no award of statutory
damages or of attorney's fees, as provided by sections
504 and 505, shall be made for—
(1) any infringement of copyright in an unpublished work
commenced before the effective date of its registration; or
(2) any infringement of copyright commenced after first
publication of the work and before the effective date of its
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registration, unless such registration is made within
three months after the first publication of the work.
17 U.S.C.A. § 412; see also 17 U.S.C. § 504 (providing that an
infringer of copyright is liable for actual damages and any
additional profits or statutory damages); 17 U.S.C. § 505 (providing
that, “[i]n any civil action under this title,” the court may award
reasonable attorney’s fees to the prevailing party).
Here, Plaintiff does not seek statutory damages and attorney’s
fees under Sections 504 and 505 but seeks them under Section
1203. A plain reading of Section 412 demonstrates that the statute
applies only to statutory damages and attorney’s fees sought under
Sections 504 and 505. Section 412 says nothing about registration
prior to the infringement as a prerequisite of receiving statutory
damages and attorney’s fees sought under Section 1203. See, e.g.,
Glynn v. Cigar Store, Inc., No. 18-cf-00031-MMC, 2018 WL
3145683, at *5 (N.D. Cal. June 27, 2018) (finding, without any
discussion of the applicability of Section 412 to the DMCA, that the
plaintiff was entitled to statutory damages and attorney’s fees for
his DMCA claims but not for his copyright infringement claims).

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D.

Defendants are Not Entitled to Summary Judgment on the
State Law Claims, Counts VII, VIII, and IX
Defendants also sought summary judgment on the state law

claims in Counts VII, VIII, and IX, which depend on proof of
trademark infringement. Because the Court finds that questions of
fact remain whether Defendants infringed on Plaintiff’s trademark,
Defendants are not entitled to summary judgment on Counts VII,
VIII, and IX.
E.

Meijer is Not Entitled to Summary Judgment on Plaintiff’s
Breach of Contract Claim
Meijer seeks summary judgment on Plaintiff’s breach of

contract claim. Meijer asserts that Plaintiff’s breach of contract
claim based solely on the alleged copyright infringement is
preempted by the Copyright Act. Meijer further asserts that the
breach of contract claim based on the alleged trademark
infringement fails because Plaintiff failed to prove that
SPARROWCLIPS is a protectable mark. Finally, Meijer argues that
Plaintiff’s breach of contract claim based on Meijer’s termination of
the parties’ business relationship fails as a matter of law.
The Copyright Act preempts actions that are equivalent to
copyright infringement claims. 17 U.S.C. § 301. Breach of contract
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claims are usually not preempted. ProCD, Inc. v. Zeidenberg, 86
F.3d 1447, 1454 (7th Cir. 1996) (“[C]ourts usually read preemption
clauses to leave private contracts unaffected.”). Rights created by
contract are generally not equivalent to any of the exclusive rights
within the general scope of copyright. See id. at 1455.
In ProCD, the Seventh Circuit cited National Car Rental
System, Inc. v. Computer Associates, Inc., 991 F.2d 426, 432-33
(8th Cir. 1993) for the proposition that some applications of
contract law could come within the domain of Section 301(a).
ProCD, 86 F.3d at 1455. Several district courts within the Seventh
Circuit have held that breach of contract claims are preempted if
the allegations of the breach are based on nothing more than the
act of infringement. Higher Gear Grp., Inc. v. Rockenbach
Chevrolet Sales, Inc., 223 F. Supp. 2d 953, 958 (N.D. Ill. 2002)
(citing Nat’l Car Rental, 991 F.2d at 432-33).
Here, however, Plaintiff claims that Meijer breached the
Settlement Agreement provision that prohibited Meijer from using
any of Plaintiff’s intellectual property, except as provided by the
Agreement. Agreement ¶ 2. This claim is not preempted because it
contains the additional promise that Meijer will only use intellectual
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property as provided in the Agreement. Moreover, Plaintiff’s claim
that Meijer breached the Settlement Agreement by infringing on
Plaintiff’s trademark remains, as the Court found questions of fact
remain whether Plaintiff’s trademark is valid.
That leaves Plaintiff’s claims that Meijer breached the contract
by threatening to stop doing business with Plaintiff if Plaintiff
defended its intellectual property rights and by following through on
that threat. Plaintiff asserts that Meijer’s conduct violated the
provision of the Settlement Agreement that required the parties to
cooperate in furtherance of the purpose, terms, and provisions of
the Agreement. See Agreement ¶ 8. This claim may proceed. A
reasonable trier of fact could find that a purpose of the Agreement
was to protect Plaintiff’s intellectual property and that Meijer, by
threatening Plaintiff for defending its intellectual property, breached
that provision of the Agreement.
V. CONCLUSION
For the reasons stated, Defendants’ Motion for Summary
Judgment on All Undecided Claims (d/e 168) and Plaintiff’s Motion
for Partial Summary Judgment (d/e 189) are DENIED. This case is
set for a Final Pretrial Conference on October 29, 2018 at 3:00 p.m.
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in Courtroom I in Springfield before Judge Sue E. Myerscough and
for Jury Trial on November 13, 2018 at 9:00 a.m. Except as stated
herein, the parties shall comply with Local Rule 16.1(E) and (F) and
the Court’s Standing Order on Final Pretrial Conferences, Exhibits,
and Jury Instructions. Motions in limine are due on or before
October 1, 2018. Responses to Motions in limine are due within 14
days of the filing of the motion in limine. The parties shall file the
proposed Final Pretrial Order on or before October 15, 2018. The
parties shall advise the Court, on or before October 15, 2018,
whether they will consent to Magistrate Judge Jonathan E. Hawley
conducting the jury impanelment.
ENTERED: July 23, 2018
FOR THE COURT:
s/Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE

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