Loggerhead Tools, LLC v. Sears Holdings Corporation

Filing 363

MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 9/20/2016. (bg, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LOGGERHEAD TOOLS, LLC,
Plaintiff,
v.
SEARS HOLDINGS CORPORATION
and APEX TOOL GROUP, LLC,
Defendants.

)
)
)
)
)
)
)
)
)
)

Case No. 12-cv-9033
Judge John W. Darrah

MEMORANDUM OPINION AND ORDER
Plaintiff, LoggerHead Tools, LLC, filed a Second Amended Complaint (“SAC”) against
Defendants Sears Holdings Corporation (“Sears”) and Apex Tool Group, LLC, alleging, inter
alia, claims based on Sears’ use of internet trademarks: trademark infringement pursuant to the
Lanham Act, Count V; false designation of origin pursuant to the Lanham Act, Count VI;
trademark infringement and unfair competition pursuant to the Illinois Consumer Fraud and
Deceptive Business Practices Act (“ICFA”), Count VIII; trademark infringement and unfair
competition pursuant to the Uniform Deceptive Trade Practices Act (“UDTPA”), Count IX;
Illinois common-law trademark infringement, Count X; Illinois common-law unfair competition,
Count XIV; and trademark dilution pursuant to the Lanham Act, Count XVII. Sears filed a
Motion for Summary Judgment [258]. For the reasons set forth more fully below, Sears’ Motion
for Summary Judgment [258] is granted.
LOCAL RULE 56.1
Local Rule 56.1(a)(3) requires the moving party to provide “a statement of material facts
as to which the party contends there is no genuine issue for trial.” Ammons v.

Aramark Uniform Servs., 368 F.3d 809, 817 (7th Cir. 2004). Local Rule 56.1(b)(3) requires the
nonmoving party to admit or deny every factual statement proffered by the moving party and to
concisely designate any material facts that establish a genuine dispute for trial. See Schrott v.
Bristol-Myers Squibb Co., 403 F.3d 940, 944 (7th Cir. 2005). A nonmovant’s “mere
disagreement with the movant’s asserted facts is inadequate if made without reference to specific
supporting material.” Smith v. Lamz, 321 F.3d 680, 683 (7th Cir. 2003). In the case of any
disagreement, the nonmoving party must reference affidavits, parts of the record, and other
materials that support his stance. Local Rule 56.1(b)(3)(B). To the extent that a response to a
statement of material fact provides only extraneous or argumentative information, this response
will not constitute a proper denial of the fact, and the fact is admitted. See Graziano v.
Vill. of Oak Park, 401 F. Supp. 2d 918, 936 (N.D. Ill. 2005). Similarly, to the extent that a
statement of fact contains a legal conclusion or otherwise unsupported statement, including a fact
that relies upon inadmissible hearsay, such a fact is disregarded. Eisenstadt v. Centel Corp., 113
F.3d 738, 742 (7th Cir. 1997). Pursuant to Local Rule 56.1(b)(3)(C), the nonmovant may submit
additional statements of material facts that “require the denial of summary judgment.”
BACKGROUND
Plaintiff is an Illinois limited-liability company with its principal place of business in
Illinois. (DSOF ¶ 1.) Sears is a Delaware corporation with its principal place of business in
Illinois. (Id. ¶ 2.) Sears began retailing LoggerHead’s Bionic Wrench in 2009. (Id. ¶ 4.) On
July 14, 2009, Dan Brown, the President of LoggerHead, signed a Universal Terms and
Conditions Agreement (“UTC”) with Sears. (Id. ¶ 8.) The UTC states:
Seller [LoggerHead] authorizes Company [Sears] and each Authorized Reseller
with respect to Company-Branded Merchandise and Company-Branded Outlet to
directly and [i]ndirectly sell Merchandise through all promotional, advertising,
distribution channels, and other methods of sale anywhere in the world including
2

via telephone, print, television, radio, and the worldwide web (“Distribution
Channels”). Seller grants to Company and each Authorized Reseller (with respect
to Company-Branded Merchandise) and Company-Branded Outlet a
nonexclusive, nontransferable, royalty free license to use, with the right to
sublicense, trademarks, service marks, trade names, trade dress, copyrights and
rights of publicity associated with Merchandise owned or licensed by Seller for
the limited purpose of Company, and each Authorized Reseller (with respect to
Company-Branded Merchandise) and Company-Branded Outlet, marketing
promoting, or selling Merchandise through any Distribution Channel.
(Id. ¶ 9.)
LEGAL STANDARD
Summary judgment is appropriate when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56. Courts deciding summary judgment motions must view facts “in the light most
favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts.” Scott v.
Harris, 550 U.S. 372, 380 (2007). A genuine dispute as to any material fact exists if “the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party has the initial
burden of establishing that there is no genuine dispute as to any material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this burden, “[t]he nonmoving
party must point to specific facts showing that there is a genuine issue for trial.” Stephens v.
Erickson, 569 F.3d 779, 786 (7th Cir. 2009). Factual disputes do “not preclude summary
judgment when the dispute does not involve a material fact.” Burton v. Downey, 805 F.3d 776,
783 (7th Cir. 2015). The evidence must be such “that a reasonable jury could return a verdict for
the nonmoving party.” Pugh v. City of Attica, Ind., 259 F.3d 619, 625 (7th Cir. 2001) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

3

ANALYSIS
Defendant argues that all of Plaintiff’s allegations are based on the use of internet
keyword advertisements. Plaintiff stipulates to the dismissal of its trademark infringement claim
under the Lanham Act, Count V; false designation of origin claim, Count VI; trademark
infringement claim under Illinois common law, Count X; and trademark dilution claim, Count
XVII. Plaintiff, however, argues that its remaining claims under the ICFA, Count VIII; UDTPA,
Count IX; and Illinois common-law unfair competition, Count XIV, are not only based in its
internet trademark allegations but also based in allegations directed to counts that are not the
subject of this Motion. Specifically, Plaintiff argues that these remaining claims were also based
on allegations directed to Plaintiff’s claims for product design trademark infringement, Count
XV; packaging trade dress infringement, Count XVI; false advertising, Count VII; Illinois
common-law unfair competition, Count XIV; and fraud, Count XI.
Sears argues that Plaintiff’s remaining claims fail to reference allegations directed to
product design infringement, packaging trade dress infringement, Illinois common-law unfair
competition, and fraud. And although Sears concedes that these remaining claims sufficiently
referenced Plaintiff’s false advertising allegations, Sears argues that Plaintiff’s remaining claims
should nevertheless be dismissed because, as argued in a different motion for summary
judgment, Plaintiff’s false advertising claims are meritless. This Memorandum Opinion and
Order will address the Counts to the extent that they are based on internet trademark claims. To
the extent that the Counts are based on issues that are resolved in other summary judgment
rulings, those Memorandum Opinion and Orders will control.

4

Counts VIII & IX
In Counts VIII and IX, Plaintiff alleges that Sears has violated the ICFA and the UDTPA
respectively. Plaintiff argues that Sears failed to address these claims because they are based on
internet trademark allegations and based on allegations directed to product design infringement,
packaging trade dress infringement, false advertising, Illinois common-law unfair competition,
and fraud. Sears argues that the allegations contained within Plaintiff’s ICFA and UDTPA
claims plainly show that they are solely based on the use of internet trademarks and false
advertising.
In Count VIII, Plaintiff alleges:
140. LoggerHead realleges and incorporates paragraphs 1-139 as though set forth
fully herein.
141. Sears’ unauthorized, intentional, and willful use of LoggerHead’s Bionic
Wrench Mark to promote, advertise, market and/or sell their goods and services in
Illinois constitutes unfair competition within the meaning of the Illinois Consumer
Fraud and Deceptive Business Practices Act.
142. Sears’ use of “Bionic Wrench” in connection with the sales and promotion of
its goods through its advertising online with Google, Yahoo, and Bing, and
through its purchase and use of LoggerHead’s Bionic Wrench Mark in search
engine advertising programs constitutes unfair competition and is likely to cause
confusion among consumers as to the affiliation, connection, association and/or
origin, sponsorship, or approval of Sears’ goods by or with LoggerHead in
violation of § 510 et seq.
143. Sears’ actions contributed to consumer confusion in other ways as well,
including copying LoggerHead’s commercials, issuing a false press release that
misleadingly suggests that the Craftsman Max Axess Locking Wrench is made in
America, and falsely stating that the Craftsman Max Axess has a “unique design,”
among other unlawful acts as alleged herein.
144. Notwithstanding Sears’ actual knowledge of LoggerHead’s ownership and
prior use of the Bionic Wrench Mark, Sears has willfully and in bad faith
continued to use LoggerHead’s Mark in commerce without authorization to
promote sale of its goods.

5

145. LoggerHead is entitled to injunctive relief to prevent Sears from using the
name and Mark “Bionic Wrench” or similar Mark in connection with the
advertising and/or sale of its products or services and/or compensatory and
statutory damages, punitive damages, plus costs and attorneys’ fees.
(SAC ¶¶ 140-45.) In Count IX, Plaintiff alleges:
146. LoggerHead realleges and incorporates paragraphs 1-145 as though set forth
fully herein.
147. Sears’ unauthorized, intentional, and willful use of LoggerHead’s Mark
Bionic Wrench to promote, advertise, market and/or sell their goods and services
in Illinois constitutes unfair competition within the meaning of the Illinois
Deceptive Trade Practices Act.
148. Sears’ use of “Bionic Wrench” in connection with the sales and promotion of
its goods through its advertising online with Google, Yahoo, and Bing, and
through its purchase and use of LoggerHead’s Mark in search engine advertising
programs constitutes unfair competition and is likely to cause confusion among
consumers as to the affiliation, connection, association and/or origin, sponsorship,
or approval of Sears’ goods by or with LoggerHead in violation of § 510 et seq.
149. Sears’ actions contributed to consumer confusion in other ways as well,
including copying LoggerHead’s commercials, issuing a false press release that
misleadingly suggests that the Craftsman Max Axess Locking Wrench is made in
America, and falsely stating that the Craftsman Max Axess has a “unique design,”
among other unlawful acts as alleged herein.
150. Notwithstanding Sears’ actual knowledge of LoggerHead’s ownership and
prior use of the Bionic Wrench Mark, Sears has willfully continued to use
LoggerHead’s Mark in commerce without authorization to promote sale of its
goods in violation of § 510 et seq.
151. LoggerHead is entitled to injunctive relief to prevent Sears from using the
name and Mark “Bionic Wrench” or similar mark in connection with the
advertising and/or sale of its products or services, plus costs and attorneys’ fees.
(SAC, ¶¶ 146-151).
The allegations in each Count emphasize Sears’ use of Plaintiff’s trademark in online
advertisement, alleges that the use of Plaintiff’s trademark causes confusion, and focuses on
Sears’ specific advertisement methods. The plain language has references to product design,
packaging trade dress, or fraud. While these allegations do contain the phrase “unfair
6

competition,” each claim states that Sears’ use of trademarks “constitutes unfair competition
within the meaning of the [Act].” (Id. at ¶¶ 141, 147.) Additionally, each Count asks for relief
in the form of an injunction preventing Sears from using LoggerHead’s marks. Counts VIII and
IX are clearly based on the use of LoggerHead’s marks.
Plaintiff has stipulated to the dismissal of the Counts that are solely based on use of
trademarks. Additionally, Plaintiff did not respond to any of the internet trademark arguments
made by Sears. “[A] district court need not scour the record to determine whether there exists a
genuine issue of fact to preclude summary judgment. Instead, the court can rely upon the nonmoving party to show such a dispute if one exists.” L.S. Heath & Son, Inc. v.
AT & T Info. Sys., Inc., 9 F.3d 561, 567 (7th Cir. 1993) abrogated on other grounds by
Lexmark Intern., Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014). Furthermore, a
party waives a claim when they do not cite both legal authority and supporting factual evidence.
Gross v. Town of Cicero, Ill., 619 F.3d 697, 708 (7th Cir. 2010); Moreland v. Dieter, 395 F.3d
747, 759 (7th Cir. 2005).
In responding to a summary judgment motion, the nonmoving party must “set forth
specific facts showing a genuine issue for trial.” Fed. R. Civ. P. 56(e). “Failure to set forth any
evidence or to develop any arguments in opposition to the moving party’s summary judgment
motion results in waiver of the nonmoving party’s arguments and an abandonment of [her]
claims.” De v. City of Chicago, 912 F. Supp. 2d 709, 734 (N.D. Ill. 2012) (citing Palmer v.
Marion Cnty., 327 F.3d 588, 597-98 (7th Cir. 2003) (deeming plaintiff’s negligence claim
abandoned because he failed to delineate it in his brief to the district court in opposition to
summary judgment); Laborers’ Int’l Union v. Caruso, 197 F.3d 1195, 1197 (7th Cir. 2003)
(stating that arguments not presented to the district court in response to a summary judgment

7

motion are waived); Donelson v. City of Chi., 272 F.Supp.2d 717, 726 (N.D. Ill. 2003) (finding
that the plaintiff abandoned her claim because she provided no legal argument in support of her
claim and because she made no serious effort to respond to the defendant's arguments);
Oak Brook Hotel Co. v. Teachers Ins. & Annuity Ass’n of Am., 846 F. Supp. 634, 641 (N.D. Ill.
1994) (treating the plaintiff’s failure to defend a particular claim in response to the defendant's
motion for summary judgment as an abandonment of the claim)).
Sears’ Motion for Summary Judgment [259] is granted as to Counts VIII and IX to the
extent that those Counts allege internet trademark violations. To the extent that those Counts are
not based on internet trademark violations, those issues are resolved in the rulings on
Defendants’ other summary judgment motions.
Count XIV
In Count XIV, Plaintiff alleges that Sears engaged in unfair competition under Illinois
common law. Specifically, Plaintiff alleges:
178. LoggerHead realleges and incorporates paragraphs 1-177 as though set forth
fully herein.
179. As alleged herein, Sears’ [sic] willfully and maliciously engaged in a
comprehensive scheme of unfair competition against LoggerHead. Sears
misappropriated LoggerHead’s Bionic Wrench and associated intellectual
property in violation of federal, state, and common law.
180. As alleged herein, Sears’ scheme of false advertising and copying of
LoggerHead’s product has caused customer confusion to LoggerHead’s
detriment.
181. As alleged herein, Sears engaged in the unauthorized, improper, and
unlawful use of LoggerHead’s property for a purpose other than that for which it
was intended.
182. As alleged herein, LoggerHead has suffered damages as a direct and
proximate result of Sears’ unfair competition, and is therefore entitled to the best
measure of the value of being deprived of the exclusive use of its property.

8

183. As alleged herein, LoggerHead created the Bionic Wrench through extensive
time, labor, skill, and money.
184. As alleged herein, Sears’ use of a knock-off version of the Bionic Wrench to
directly compete against LoggerHead’s Bionic Wrench has given Sears a special
competitive advantage because it was burdened with little or none of the expense
incurred by LoggerHead in the creation of the Bionic Wrench.
185. As alleged herein, Sears’ unfair competition has caused commercial damage
to LoggerHead.
(SAC, ¶¶ 178-185.)
Plaintiff argues that this Count does not mention its internet trademark claims and that the
Count’s scope is much broader. In Illinois, common-law unfair competition “encompasses a
broad spectrum of law,” and there is not “an Illinois case [that] definitively sets forth the
elements of a common law unfair competition claim for all factual scenarios.”
Zenith Electronics Corp. v. Exzec, Inc., No. 93 C 5041, 1997 WL 798907 at *14 (N.D. Ill. Dec.
24, 1997). In LG Elecs. v. Whirlpool Corp., No. 08 C 242, 2010 WL 3521785 (N.D. Ill. Sept. 1,
2010), the court found that “[b]y pleading a broad claim for common law unfair competition that
is without defined elements, [Plaintiff] left open various ways in which it could characterize its
claim. . . . Accordingly, permitting [Plaintiff] to pursue its claim at this late stage in the litigation
would be highly prejudicial to [Defendant].” LG Elecs., 2010 WL 3521785, at * 3. Here,
Plaintiff similarly left many ways in which it could characterize this broad claim; allowing
Plaintiff to characterize this claim as being based on product design infringement, packaging
trade dress infringement, or fraud without adequate notice of such allegations would be unfair to
Sears. Further, claims of design infringement, product trade dress infringement, and fraud are
addressed in other Memorandum Opinion and Orders. Sears concedes that this Count is based
on allegations contained within the false advertising claims, which are also addressed in a
separate Memorandum Opinion and Order.
9

Additionally, as discussed above, Plaintiff did not respond to any of the internet
trademark arguments made by Sears and the “[f]ailure to set forth any evidence or to develop any
arguments in opposition to the moving party’s summary judgment motion results in waiver of the
nonmoving party’s arguments and an abandonment of [her] claims.” De, 912 F. Supp. 2d at 734.
Sears’ Motion for Summary Judgment [259] is granted as to Count XIV.
Counts V, VI, X, XVII
Plaintiff stipulates to the dismissal of its trademark infringement claim under the Lanham
Act, Count V; false designation of origin claim under the Lanham Act, Count VI; trademark
infringement claim under Illinois common law, Count X; and trademark dilution claim under the
Lanham Act, Count XVII. Sears’ Motion for Summary Judgment [258] is granted as to Counts
V, VI, X, and XVII.
CONCLUSION
Sears’ Motion for Summary Judgment [258] is granted. Judgment is entered for
Defendant Sears on Counts V, VI, VIII, IX, XIV, and XVII.

Date:

September 20, 2016

/s/
JOHN W. DARRAH
United States District Court Judge

10