ANELLO FENCE, LLC v. VCA SONS, INC. et al
Filing
155
OPINION. Signed by Judge John Michael Vazquez on 1/28/2019. (dam, )
Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ANELLO FENCE, LLC,
Plaintiff
Civil Action No. 13-3074 (JMV) (JBC)
V.
OPINION
VCA SONS, INC. d/b/a FREEDOM
FENCE, et a!.,
Defendants.
John Michael Vazciuez, U.S.D.J.
This trademark case arises out of a family dispute over the use of the last name “Anello”
in competing outdoor fencing businesses in northern New Jersey. D.E. 1. Plaintiff Anello Fence,
LLC, is owned by S. Steven Anello. Defendant VCA Sons, Inc. (“VCA”) d/b/a Freedom Fence,
is owned by Steven’s cousins: Vincenzo Anello, Jr.; Salvatore Anello; Christopher Anello; and
Anthony Anello. Plaintiff sued for trademark infringement, contributory trademark infringement,
misrepresentation, false designation of origin, false advertising, unfair competition, unjust
enrichment, and tortious interference.
D.E. 1.
Defendant VCA has counterclaimed for
cancellation of trademark registration, false advertising, cybersquatting, and unfair competition.
D.E. 59.
Currently pending before this Court are three motions: (1) Defendant VCA’s motion for
summary judgment on Plaintiffs Counts I and II (Sections 32(a) and 43(a) of the Lanham Act, 15
U.S.C.
§
1125), D.E. 133; (2) Defendant VCA’s motion for summary judgment’ on the remaining
counts, D.E. 134; and (3) Defendant VCA’s motion in limine to preclude the testimony of
Plaintiffs damages expert, Gary Rosen, D.E. 135. After the initial briefing, Plaintiff requested
leave to supplement the record with certain additional arbitration awards. D.E. 149. The Court
reviewed all submissions,2 and considered the motions without oral argument pursuant to Fed. R.
Civ. P. 78(5) and L. Civ. R. 78.1(5). For the reasons that follow, Plaintiffs request to supplement
the record is granted, Defendant VCA’s motions for summary judgment are granted, and
Defendant VCA’s motion in limine is denied as moot.
I.
BACKGROUND & PROCEDURAL HISTORY3
This case centers on a family dispute among cousins who operate competing fencing
businesses. In 1963, brothers Emilio Anello, Sr. and Joseph Anello started Anello Brothers, Inc.,
a fencing company in northern New Jersey. Oleski SOMF
¶ 8.
Their younger brother, Vincenzo
Anello, Sr., joined the business in 1971. Id. Steven, the owner of Plaintiff Anello Fence, is the
son of Emilio Sr., and the nephew of Vincenzo Sr. McDaniel SOMF
¶J
3-5. The owners of
Defendant entitles this motion as a “motion to dismiss” both in its caption and preliminary
statement. D.E. 134-1 at 1. However, Defendant then states that it “seeks summary judgment”
and cites to the relevant summary judgment standard. Id. at 5. Summary judgment is also
requested in the conclusion. Id. at 17. Plaintiff also opposes the motion on summary judgment
grounds. The Court therefore construes Defendant’s motion as one for summary judgment.
Defendant submitted briefs from two separate counsel. Defendant’s briefs in support of its
motions for summary judgment are referred to as “Oleske Br.,” D.E. 133, and “McDaniel Br.,”
D.E. 134-1. Plaintiffs combined opposition is referred to as “P1. Opp’n,” D.E. 139. Defendant’s
replies are referred to as “Oleske Reply,” D.E. 144, and “McDaniel Reply,” D.E. 142.
2
To the extent that the facts are not in dispute, the Court cites to Plaintiffs Complaint (“Compl.”),
D.E. 1, and Defendant’s statements of material facts (“Oleske SOMF” and “McDaniel SOMF”),
D.E. 133 at 6-8; D.E. 134-17. The Court also cites to Plaintiffs response and counter statement
of facts (“P1. RESP”), D.E.140-1, Defendant’s response to Plaintiffs counter statement of facts
(“Def. RESP”), D.E. 142-1, and underlying exhibits at times. The Court also borrows from factual
recounts given in prior opinions issued by the Court in this case.
2
Defendant VCA, Vincenzo Anello, Jr.; Salvatore Anello; Christopher Anello; and Anthony
Anello, are the sons of Vincenzo Sr. and the cousins of Steven. Id. at 7; Oleske SOMF ¶ 7. Plaintiff
Anello Fence is in Morris County, New Jersey and is a “fence contractor that sells, installs,
maintains and manufactures both residential and commercial fences[.]” Oleske SOMF
¶J 2-3.
Defendant VCA offers similar products and services and is located within a mile of Plaintiff. Id.
¶ 10, 44.
Some of the above-mentioned individuals and entities are no strangers to litigation amongst
themselves. Plaintiff references a number of prior adjudications in efforts to bolster its present
claims. Since Plaintiff relies so heavily on these prior adjudications, primarily in arguing issue
preclusion, the Court examined them. Because Plaintiff often mischaracterized the nature and
outcome of these prior adjudications, the Court includes an accurate description of these prior
matters. The Court also borrows from the factual accounts detailed in these prior adjudications to
shed light on the events surrounding and leading up to the present case.4
The first matter began in 2003. See D.E. 140-3, Ex. A. After Joseph retired from Anello
Brothers, the relationship between Emilio Sr. and Vincenzo Sr. began to deteriorate as their sons
entered the business. D.E. 140-4, Ex. G at 2. The two brothers could not agree on the roles of
their respective sons. Id. In 2003, the brothers decided that only one son each could work at
Anello Brothers. Id. As a result, three of Vincenzo Sr.’s sons departed and started VCA Sons
(which stands for Vincenzo and Catherine Anello’s sons). Id.; Oleske SOMF
¶ 1-2.
As will be discussed, the Court finds that the cited matters actually hinder, not help, Plaintiffs
cause. Because Plaintiff submitted the information in support of its opposition, the Court knows
of no legal impediment to considering the matters as they ultimately undercut Plaintiffs
arguments.
‘
3
following the creation of VCA in 2003, Ernilio Sr., acting individually and on behalf of
Anello Brothers, filed a verified complaint against Vincenzo Sr., VCA, and Salvatore. D.E. 1403, Ex. A. Essentially, Emilio Sr. believed that Vincenzo Sr. was steering business away from
Anello Brothers and to his sons at VCA. D.E. 140-4, Ex.G. at 3. Therefore, he requested an order
to show cause with temporary restraints to, among other things: (a) terminate Vincenzo Sr.’s
employment at Anello Brothers; (b) require Vincenzo Sr., Salvatore, and VCA to turn over all
Anello Brothers confidential business information and property; and (c) bar VCA from using the
Anello name in conducting its business. D.E. 140-3, Ex. A at 2. Vincenzo Sr., VCA, and Salvatore
did not file an opposition to this emergent request. Id.
Plaintiff alleges that this 2003 litigation “resulted in the issuance of an injunction, dated
December 8, 2003, enjoining those defendants from using the ‘Anello’ name.” P1. Opp’n at 6.
Plaintiff is mistaken as to the scope of the order. The December 8, 2003 court order (“2003 Order”)
clearly grants “temporary relief.
.
.
pending a hearing on Plaintiffs application for a preliminary
injunction.” D.E. 140-3, Ex. A at 2. The 2003 Order is not a preliminary injunction, permanent
injunction, or final judgment. Rather, it appears that the actual outcome of the litigation was an
order requiring that Anello Brothers be sold to a third party or liquidated and dissolved by
December 31, 2005. D.E. 140-4, Ex. G at 3.
The next cited litigation began in 2011 (the “2011 Lawsuits”). See D.E. 140-4, Ex. G. By
way of background, in 2005, Steven decided to move to Florida with his family, intending at the
time to permanently relocate. Oleske SOMF
¶ 6.
In the years prior, he had also started his own
New Jersey fencing company, A Decorative Fence Company. D.E. 140-4, Ex. G at 2. However,
given his move to Florida, he decided to sell his business. Oleske SOMF
¶ 6.
In 2006, Steven
sold A Decorative Fence to VCA and began full-time employment in Florida as a law enforcement
4
officer. D.E. 140-4, Ex. G at 2; Oleske SOMF, Ex. A at 50
¶J
18-23. Part of his sale of A
Decorative fence included a restrictive covenant prohibiting him from returning to the northern
New Jersey fencing industry for a certain period. D.E. 140-4, Ex. G at 3.
Shortly before Thanksgiving 2006, Emilio Sr. unilaterally closed Anello Brothers. Id.;
McDaniel SOMF
¶
17. Upon this closing, Steven returned to New Jersey and formed Plaintiff
Anello fence on or about March 15, 2007. D.E. 140-4, Ex. G at 3; Compi.
¶
19. Steven alleges
that he used the name “Anello” in “Anello Fence, LLC” because it was his last name and he felt
that the name was well known in the fencing industry. Oleske SOMF
¶
11. In April 2007, Steven
paid VCA $30,000 to void his restrictive covenant. D.E. 140-4, Ex. G at 3.
On November 17, 2009, Anello fence secured a trademark on the Supplemental Register
of the United States Patent and Trademark Office (‘P10”) for its logo “ANELLO FENCE” (Reg.
No. 3,713,566) in stylized lettering, with a triangle partially fonning the letter A. McDaniel SOMF
¶
18; D.E. 134-6, Ex. D at 12. The registration claimed first use of the mark in March 2007.
McDaniel SOMF
¶
18. The mark was subsequently cancelled on June 24, 2016. D.E. 134-6, Ex.
D at 2. Therefore, it is not in dispute in this action.
On July 22, 2010, Anello fence applied to register “ANELLO” on the Principal Register.
Id.
¶
19; D.E. 134-7, Ex. E at 27. It claimed first use in April 1963. Id. As noted, Anello Fence
had only been in business since 2007; Anello Brothers had been in business from 1963 until it
closed in 2006. The examiner refused registration as the mark was “merely a surname.” McDaniel
SOMF ¶ 20. On November 16, 2010. Anello Fence amended its application, alleging that the mark
had “become distinctive of the goods/services through applicant’s substantially exclusive and
continuous ttse in commerce for at least the five years immediately before the date of this
statement.” Id. (emphasis added). At the time, and as noted, Plaintiff Anello fence had only been
5
in business for a little over three and a half years. See Compl.
¶
19. Nonetheless, on July 5, 2011,
the examiner issued Anello Fence the service mark ANELLO (Reg. No. 3,988,606) on the
Principal Register. McDaniel SOMF
¶ 21;
D.E. 134-7, Ex. E.
On March 21, 2013, Anello Fence applied to register “ANELLO FENCE” on the Principal
Register as well. D.E. 134-8, Ex. F at 2. Again, Plaintiff claimed first use in April 1963. Id. at 5.
Also, on its application, Plaintiff again asserted that “[tjhe mark has become distinctive of the
goods/services through the applicant’s substantially exclusive and continuous use in commerce.
for at least the five years immediately before the date of this statement.” Id. at 3 3-34. By this
time, Anello Fence had been in operation for over five years. See Compl.
¶
19. On October 29,
2013, the examiner issued Anello Fence the service mark ANELLO FENCE (Reg. No. 4,425,251)
in stylized lettering, with a triangle partially forming the letter “A” on the Principal Register. D.E.
134-8, Ex. Fat 2.
In the meantime, in Spring of 2011, Anello Brothers
defunct” since 2006, see D.E. 140-4, Ex. H. at 4
—
--
which had been “essentially
held a shareholders’ meeting. D.E. 140-4, Ex.
G at 3. At the shareholders’ meeting, Emilio Jr. joined with Vincenzo Sr. to oust Emilio Sr. from
his position as president of the company. Id. The remaining shareholders then decided to re-open
Anello Brothers (also doing business as Anello Brothers Fence Company, id. at 6 n. 5) over Emilio
Sr.’s objection. Id. at 3.
Upon this re-opening, Steven, acting individually and on behalf of Plaintiff Anello Fence,
sued the principals of Anello Brothers in April 2011 to prevent them from using the Anello name,
asserting that he had spent much money developing and enhancing the goodwill of the name after
Anello Brothers’ 2006 closing. Id.; see also D.E. 140-3, Ex. C. Plaintiff correctly notes that this
action produced an order to show cause with temporary restraints (“2011 Order”), enjoining Anello
6
Brothers from “using the name ‘Anello’ in the operation or advertisement of any fence company.”
P1. Opp’n at 6-7; see D.E. 140-3, Ex. C at 1-2. However, the 2011 Order with temporary restraints
did not materialize into a preliminary injunction, permanent injunction, or final judgment. See
D.E. 140-4, Ex. G at 3-4. Instead, the case was consolidated with two other actions between the
parties, the 2011 Lawsuits, and the parties agreed to binding arbitration to settle the matters. Id.
The 2011 Lawsuits resulted in a series of arbitration decisions by Arbitrator Edwin Stem,
a retired New Jersey Appellate Division Judge. Plaintiff claims that these arbitration decisions
“preclude[] Defendant from asserting any right to use the ‘Anello’ name in any manner, business
or trade name, or advertisement in the fencing industry.” P1. Opp’n at 7. All of the arbitration
decisions listed the same named parties: Steven, Vincenzo Sr., Catherine (Vincenzo Sr.’s wife),
and Emilio Sr. D.E. 140-4, Ex. G, H, I; D.E. 149, Ex. A, B. Neither VCA nor any of its principals
were parties to any of the arbitrations or subject to the decisions.
The October 14, 2015 arbitration award (“first Arbitration Award”) primarily involved a
dispute between Steven, Vincenzo Sr., and Ernilio Sr., who were all seeking different relief. See
D.E. 140-4, Ex. G., at 4. Stem first acknowledged that Steven sought a permanent restraining
order precluding any other person or entity (except himself) from using the Anello name in the
fence business. Id. Stem noted that Vincenzo Sr. sought to use the name given his years of
operation of Anello Brothers and the goodwill and reputation he built. Id. Stem further observed
that Emilio Sr. sought liquidation and dissolution of Anello Brothers and the sale of all assets and
inventory. Id.
Stem first ruled that Emilio Sr. and Vincenzo Sr. were each entitled to 50% of the value, if
any, of Anello Brothers. Id. at 6. Critically, Stem expressly stated that he could not “address the
trademark issue, as it is a federal question beyond the jurisdiction of the arbitration of this state
7
action and is pending in federal court.” Id. at 15. The pending federal action referred to is the
current matter. Stem further noted that Anello Brothers “was closed in November 2006, and
Steven’s father [Ernilio Sr.], then corporate president, had no objection to Steven’s use of the
Anello name.” Id. Yet, there was no indication of an assignment of Anello Brothers to Steven.
Id. Additionally, Stem continued, Emilio Sr. was not the only owner of Anello Brothers at the
time. Id. As Stem explained, Vincenzo Sr. was also a 50% owner and had worked in the business
his entire adult life, enhancing the name Anello and its goodwill. Id. Therefore, Stem ruled that
he would not “preclude Vincenzo [Sr.] from using the name Anello Brothers or Anello Brothers
Fence Company, if he wishes to use it while Steven operates the Anello Fence Company.” Id. at
16. Stem found “no incompatibility in the respective use of those names,” Id., but noted that “the
federal court may have jurisdiction and authority to consider and address this issue incident to the
trademark litigation,” Id. at 16, n. 12.
Stem then continued to rule in his First Arbitration Award that “[i]f Vincenzo [Sr.] wants
to use the name Anello Brothers,” then “Steven is entitled to compensation for costs and expenses
undertaken by him in obtaining, promoting and enhancing the Anello name after Anello Brothers
closed in 2006,” requiring Vincenzo Sr. to “reimburse Steven for his counsel fees in connection
with the [2011 Order] and the order dissolving the corporation shall be vacated.” Id. at 15. Stem
also concluded that as to the other defendants in 2011 Lawsuits, “Steven did not sustain his burden
in proving independent claims.” Id. at 16, n. 14 (emphasis added).
On December 18, 2016, Judge Stem issued a Third Supplemental Arbitration Award,5
addressing the counsel fees that the First Arbitration Award provided to Steven “as compensation
Plaintiff does not rely on, or cite to, the other supplemental awards other than those discussed
herein.
$
for vacating the [2011 temporary] injunction.” D.E. 140-4, Ex. H at 1. Steven, who was awarded
counsel fees, and Vincenzo Sr., who was ordered to pay such fees, were the relevant parties to this
Third Supplemental Arbitration Award. Stern, however, made clear the following:
Vincenzo [Sr.] also makes arguments addressed to the propriety of
the trademark application and statements made by Steven in the
course of the state and federal proceedings. The parties have agreed
from the beginning of the arbitration that issues relating to the
trademark and federal action cannot be part of this arbitration
which flows from settlement of the State cottrt action. Through a
letter from Mr. [Mark] Ingber, [legal counsel to Steven,] Steven
insists that the trademark proceedings preclude commercial use of
the Anello name by his uncle and uncle’s immediate family. Suffice
it to say, however, that the parties before me agree that challenges
to the trademark and its impact remain for resolution in federal
court.
Id. at 4 (emphases added). Stern repeatedly noted that his decision could be impacted by the
pending federal court action. See id. at 5 (“Steven deserves compensation for having to give up
rights he secured, at least rights he secured in the short term before the federal court speaks as to
the permanency and scope of those rights.”); see also id. at 7 n. 3 (“This award again recognizes
the fact that federal litigation is pending, and that it may impact parts of my award.”).
On June 2, 2016, Stern issued a Fifth Supplemental Arbitration Award after Vincenzo Sr.
formally advised that he elected not to pay Steven the amount awarded for costs and expenses
undertaken by Steven to enhance the name after Anello Brothers’ 2006 closure. D.E. 140-5, Ex. I
at 1. Stem then visited two signs for Freedom Fence to determine whether they were promoting
Anello as a trade name. Id. Stem concluded that the first sign did not display Anello at all and
the second sign displayed Anello boldly under the letters “V” and “C” but concluded that the sign
need not be taken down because it was difficult to see from the street. Id. at 1-2. Stern then opined
that it would be prudent for Vincenzo Sr. to “make clear that Anello refers to use of a family name
9
only” in any future public display of the name. Id. at 2. Stem concluded that he “believe[d] this
decision terminates the [state court] proceedings as between Steven and Vincenzo [Sr.]” Id.6
As noted, the pending federal trademark action referenced in the foregoing arbitration
awards is the matter before the Court. Plaintiff filed its Complaint on May 14, 2013 against VCA,
Clipper Magazine, Inc. (“Clipper”), and Shopper’s Guide, LLC (“Shopper”), alleging seven
counts: (I) trademark infringement under the Section 32(a) of the Lanham Act, 15 U.S.C.
§
1114(1)(a), against all Defendants; (II) misrepresentation, false designation of origin, false
advertising, and unfair competition under Section 43(a) of the Lanham Act, 15 U.S.C.
§ 1125(a),
against all Defendants; (III) contributory and/or vicarious trademark infringement against
Defendants Clipper and Shopper; (IV) common law false advertising and unfair competition
against all Defendants; (V) unfair competition under N.J.S.A.
§ 56:4-1 against all Defendants; (VI)
unjust enrichment against all Defendants; and (VII) tortious interference against all Defendants.
D.E. 1. Defendant Clipper was later dismissed with prejudice from this action pursuant to a
consent order. D.E. 24. The Court stayed Plaintiffs later motion for default judgment against
After the initial briefing, Plaintiff requested permission to supplement the record with two
additional supplemental arbitration awards. D.E. 149. VCA objected. D.E. 150. The Court
grants Plaintiffs request, but finds that the additional submissions do not aid Plaintiffs case. In
the Tenth Supplemental Arbitration Award, Steven and Anello fence were awarded two telephone
numbers over the objection of Vincenzo Sr. and Anello Brothers (non-parties to the current action).
D.E. 149, Ex. A at 1-2. In the Eleventh Supplemental Arbitration Award, Steven and Anello fence
were awarded the option to purchase one of Anello Brother’s phone numbers (since Anello
Brothers has been dissolved), but not VCA’s fax number. D.E. 149, Ex. A at 3-4. Again, both of
these supplemental arbitration decisions stem from the 2011 Lawsuits and prior arbitration awards
discussed above, where Stem explained that he does not have jurisdiction over the federal
trademark issue. The Court finds that Plaintiffs argument regarding the relevancy of these
documents is misguided.
6
10
Shopper until the issue of the ownership and validity of the ANELLO mark had been litigated on
the merits.7 D.E. 53.
Defendant VCA answered Plaintiffs Complaint on July 3, 2013, and asserted twelve
counterclaims/third-party claims on behalf of Defendant VCA and third-party plaintiff Anello
Brothers, against counterclaim/third-party defendants Anello fence, Steven, and Mark Ingber,
Esq. (Steven’s attorney) (collectively “CC Defendants”), alleging (I) false or fraudulent trademark
registration under 15 U.S.C.
§ 1120 against all CC Defendants; (II) cancellation of trademark
registrations against Steven and Anello Fence; (III) false advertising under Section 34(a) of the
Lanham Act, 15 U.S.C.
15 U.S.C.
§ 1125, against Steven and Anello fence; (IV) reverse passing-off under
§ 1125(a), against Steven and Anello Fence; (V) cybersquatting under 15 U.S.C. §
1125(d), against Steven and Anello Fence; (VI) common law trademark infringement against
Steven and Anello Fence; (VII) unfair competition under N.J.S.A.
§ 56:4-I and 56:4-2, against
Steven and Anello Fence; (VIII) unlawful interference with prospective economic advantage
against Steven and Anello Fence; (IX) fraud as to all CC Defendants; (X) unjust enrichment as to
Steven and Anello Fence; (XI) tortious interference with contract as to all CC Defendants; and
(XII) malicious abuse of process against all CC Defendants. D.E. 13.
On August 6, 2013, Plaintiff moved to dismiss the counterclaims/third-party claims. D.E.
18. On March 14, 2014, Judge Cecchi adopted Judge Clark’s Report and Recommendation, D.E.
45, and dismissed third-party plaintiff Anello Brothers from the action as they were improperly
joined without a motion to intervene. D.E. 50. Judge Cecchi then ordered VCA to submit an
Thus, in this decision, the Court is referring to VCA when it uses the term Defendant without
any further clarification.
11
amended answer including only the counterclaims relevant to VCA
—
not Anello Brothers
—
as this
distinction was unclear in the original Answer. D.E. 52.
Rather than filing an amended answer, on March 27, 2014, VCA applied for an order to
show cause with temporary restraints allowing VCA to include the phrase “Third Generation
Family Owned & operated Business by Salvatore Anello, Vincenzo Anello, Jr., Christopher
Anello, and Anthony Anello” in its advertising during the pendency of the action. D.E. 55. On
April 11, 2014, Judge Cecchi denied this application, reasoning that VCA’s “only justification for
emergent relief is that ‘[a]s a result of this litigation, Clipper Magazine, Inc. and Shopper’s Guide,
LLC have refused to run advertisements for Freedom fence which reference, in any way,
[Christopher] or [Christopher’s] brothers’ full names,” but “[t]his matter has been pending for
nearly a year” and Defendants submission “contains no statement as to why the requested relief
has suddenly become emergent, necessitating a procedure other than by notice of motion.” D.E.
57 at 1-2.
Defendant VCA then filed an Amended Answer on May 6, 2014, alleging the following
counterclaims: (I) cancellation of trademark registration; (II) false advertising under Section 43(a)
of the Lanham Act, 15 U.S.C.
§ 1125; (III) cybersquatting pursuant to 15 U.S.C. § 1125(d); and
(IV) unfair competition under N.J.S.A.
§ 56:4-1 and 56:4-2. D.E. 59. Former third-party
defendant Mark Ingber, Esq. was not included, and he was dismissed as a party in this case. See
D.E. 59; D.E. 100 at 3 n. 3.
On August 12, 2014, Plaintiff moved to dismiss the counterclaims in Defendant’s
Amended Answer. D.E. 70-2. On January 27, 2016, Judge Cecchi granted this motion in part and
denied it in part. D.E. 100, 101. Judge Cecchi granted the motion to dismiss as to Steven,
12
dismissing him as a third-party defendant to the action, but denied the motion as to Anello fence.
Id. The remaining parties
—
Anello Fence, VCA, and Shopper
—
then conducted discovery.
On March 26, 2018, VCA moved for summary judgment. D.E. 133, 134. Jerald Oleske,
Esq. submitted a brief on VCA’s behalf as to the first two counts in the Complaint (violations of
Sections 32(a) and 43(a) of the Lanham Act), D.E. 133, and Jay McDaniel, Esq. submitted a brief
on VCA’s behalf that also addresses the remaining counts and counterclaims/third-party claims,
D.E. 134-1. Plaintiff filed a single opposition, D.E. 140, to which VCA’s attorneys separately
replied, D.E. 142, 144. VCA also filed a motion in timine on March 26, 2018, seeking to preclude
the expert testimony of Plaintiffs damages expert, Gary Rosen. D.E. 135-1. Plaintiff opposed
this motion, D.E. 139, and VCA replied, D.E. 141.
II.
SUMMARY JUDGMENT STANDARD
A moving party is entitled to summary judgment where “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(a). A fact in dispute is material when it “might affect the outcome of the suit
under the governing law” and is genuine “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).
Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary
judgment. Id. “In considering a motion for summary judgment, a district court may not make
credibility determinations or engage in any weighing of the evidence; instead, the nonmoving
party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.”
Marino v. Indtts. Crating Co., 35$ f.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at
255)). In other words, a court’s role in deciding a motion for summary judgment is not to evaluate
13
the evidence and decide the truth of the matter but rather “to determine whether there is a genuine
issue for trial.” Anderson, 477 U.S. at 249.
A party moving for summary judgment has the initial burden of showing the basis for its
motion and must demonstrate that there is an absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). After the moving party adequately supports its motion,
the burden shifts to the nonmoving party to “go beyond the pleadings and by [his] own affidavits,
or by the depositions, answers to intenogatories, and admissions on file, designate specific facts
showing that there is a genuine issue for trial.” Id. at 324 (internal quotation marks omitted). To
withstand a properly supported motion for summary judgment, the nonmoving party must identify
specific facts and affirmative evidence that contradict the moving party. Anderson, 477 U.S. at
250. “[I]f the non-movant’s evidence is merely ‘colorable’ or is ‘not significantly probative,’ the
court may grant summary judgment.” Messa v. Omaha Prop. & Cas. Ins. Co., 122 F. Supp. 2d
523, 528 (D.N.J. 2000) (quoting Anderson, 477 U.S. at 249-50)).
Ultimately, there is “no genuine issue as to any material fact” if a party “fails to make a
showing sufficient to establish the existence of an element essential to that party’s case.” Celotex
Corp., 477 U.S. at 322. “If reasonable minds could differ as to the
import of
the evidence,”
however, summary judgment is not appropriate. See Anderson, 477 U.S. at 250-51.
14
Ill. ANALYSIS
Issue Preclusion/Collateral Estoppel
Citing the 2003 Order, the 201 1 Order, and the arbitration rulings, Plaintiff primarily
argues that VCA is not entitled to summary judgm ent because of issue preclusion. For the reasons
that follow, issue preclusion (also commonly referred to as collateral estoppel) is not applicable.8
“[A] federal court, in determining the collateral estoppel effect of a state court proceeding,
should apply the law of the state where the.
.
.
proceeding took place[.]” Taylor v. S.T Good Ins.,
Inc., No. 10-4258, 2012 WL 83650, at *3 (D.N.J. Jan. 11, 2012) (quoting Anela v. City of
Wildwood, 790 F.2d 1063, 1068 (3d Cir. 1987)). Here, all former proceedings took place in New
Jersey, therefore the Court applies New Jersey issue preclusion law.9
Under New Jersey law, the party asserting the doctrine of issue preclusion must show the
following:
8
Moreover, the Court is dismayed at Plaintiffs representations concerning the contents and effects
of the 2003 Order, the 2011 Order, and the arbitration awards. Plaintiffs representations are, to
say the least, not accurate.
As to the arbitration awards, Plaintiff has not provided proof that any of the awards were
confirmed by a court of competent jurisdiction. However, pursuant to New Jersey law, it is not
clear whether the awards must be confirmed before issue preclusion applies. See, e.g., Rasmussen
v. Vineland Bc!. of Edttc., 2014 WL 7236525, at *8 (N.J. Super. Ct. App. Div. Dec. 22, 2014)
(“[Plaintiff] argues that the arbitrator’s decision should not be given preclusive effect because it
was not reviewed. He misunderstands the exception. The issue is whether judicial review was
available, not whether it was in fact sought.”). On the other hand, when a state arbitration decision
has not been confirmed, federal courts have applied federal preclusion law and award the decisions
no preclusive effect. See, e.g., Kisbi Lees Meclz. LLC v. Pinnacle Insulation, Inc., No. 11-5093,
2012 WL 4442768, at *5 (D.N.J. Sept. 24, 2012) (analyzing the preclusive effect of an
unconfirmed arbitration award in a state law breach of contract action and recognizing that
“unconfirmed arbitration awards are not entitled to recognition under the Full Faith and Credit
Statute, [2$ U.S.C. § 173$].”).
Here, even if the arbitration awards were confirmed, the Court finds that they do not result
in a finding of issue preclusion. As a result, the Court notes the foregoing issue concerning
confirmation but does not rule on it.
‘
15
(1) the issue to be precluded is identical to the issue decided in the
prior proceeding; (2) the issue was actually litigated in the prior
proceeding; (3) the court in the prior proceeding issued a final
judgment on the merits; (4) the determination of the issue was
essential to the prior judgment; and (5) the party against whom the
doctrine is asserted was a party to or in privity with a party to the
earlier proceeding.
fields v. City of Salem Hous. Auth., 710 F. App’x 567, 571 (3d Cir. 2017) (quoting Olivieri v.
Ylif. Carpet, Inc., 186 N.J. 511, 521 (2006)). Nevertheless, even when the requirements of issue
preclusion are otherwise met, “the doctrine, which has its roots in equity, will not be applied when
it is unfair to do so.” Olivieri, 186 N.J. at 52 1-22.
In certain circumstances, New Jersey permits issue preclusion to be asserted by a person
who was not a party (or in in privity with the party) to the earlier action. Defensive issue preclusion
“‘permits a defendant who was not a party to an action involving a common plaintiff to use a
finding of fact from the prior action to preclude litigation of the issue in a pending case.”
Ivashenko v. Katelyn Court Co., 401 N.J. Super. 99, 109 (App. Div. 200$) (quoting Konieczny v.
Ivficciche, 305 NJ.Sttper. 375, 385 (App.Div.1997)). New Jersey also recognizes offensive issue
preclusion
—
in which a plaintiff who was not a party to the earlier action uses the doctrine against
a defendant who was a party in the earlier matter but its application is much more restrained than
—
defensive issue preclusion. Kortenhaus v. Eli Lily & Co., 228 N.J. Super 162, 164-655 (citing
Park-lane Hosie,iy Co. v. Shore, 439 U.S. 322, 326 (1979)). See also Perry v. Tuzzio, 288 N.J.
Super. 223, 232, 672 A.2d 213, 217 (App. Div. 1996) (“Although we recognize that mutuality of
estoppel is not an absolute prerequisite, the doctrine will not be applied to a non-party where the
economy of resorting to the doctrine is substantially outweighed by considerations of fairness,
particularly where the doctrine is invoked offensively rather than defensively.”)
16
Here, the parties to the earlier adjudications often varied from the present case. Plaintiff,
however, completely fails to address privity. The New Jersey Supreme Court has “described the
concept of privity as being “necessarily imprecise.” Allen v. V& A Bros., 208 N.J. 114, 139 (2011)
(quoting Zirger v. Gen. Accid. Ins. Co., 144 N.J. 327, 338 (1996)). “[lIt is merely a word used to
say that the relationship between the one who is a party on the record and another is close enough
to include that other within the resjttdicata.” Id. “In general, a relationship is considered ‘close
enough’ only when the party is a virtual representative of the non-party, or when the non-party
actually controls the litigation.” Id. (internal quotations and alterations omitted).
Plaintiff seeks to use issue preclusion against Defendant VCA. VCA was a party to the
2003 Order so privity is not an issue. See D.E. 140-3, Ex. A. However, neither Steven nor Anello
Fence were parties to the action. Plaintiff has not produced any evidence that he was in privity
with the plaintiff (his father) in that action. Therefore, Plaintiff appears to be arguing some form
of non-mutual, offensive issue preclusion. Yet, Plaintiff advances no argument as to why the more
heightened standard for granting non-mutual, offensive issue preclusion as to the 2003 Order is
met in that case. In fact, Plaintiff does not even address the issue of offensive issue preclusion.
As a result, the 2003 Order does not result in issue preclusion.
One of VCA’s owners, Christopher, was party to the 2011 Order, therefore Defendant VCA
is potentially in privily with him. See D.E. 140-3, Ex. C. Yet, without further information, the
Court cannot conclusively find that VCA was in fact in privity with Christopher. As a result,
Plaintiffs argument fails on privity grounds as to the 2011 Order.
As noted, the arbitration (and resulting decisions) involved Steven, Vincenzo Sr., Catherine
(Vincenzo Sr.’s wife), and Emilio Sr. VCA was not involved and neither were VCA’s owners.
The record does not indicate that Catherine or Emilio Sr. were affiliated with VCA.
17
As to
Vincenzo Sr.’s affiliation with VCA, the record does not indicate that he ever worked for VCA or
represented the company in any way. Again, as the party asserting issue preclusion, Plaintiff bears
the burden of showing its applicability, and Plaintiff fails to submit any sufficient evidence from
which the Court could conclude that VCA was in privity Vincenzo Sr. or Catherine. Plaintiffs
argument fails for this reason.
Plaintiffs issue preclusion assertion fails for additional reasons. First, the 2003 Order was
only a temporary restraining order. D.E. 140-3, Ex. A at 2 (the order granted “temporary relief.
pending a hearing on Plaintiffs application for a preliminary injunction”). There is no evidence
of an injunction (either preliminary or pennanent), as Plaintiff claims, P1. Opp’n at 6, and no
evidence of a final judgment. There is no evidence that the pertinent issues were fully litigated
before the temporary restraints were issued. Instead, based on the subsequent arbitration decisions,
it appears that the parties settled the dispute on tenns without any restraints. D.E. 140-4, Ex. G at
3. Therefore, Plaintiff fails to establish a final judgment as to the 2003 Order, much less that the
disputed issues were essential to that judgment. The 2011 Order suffers from the same infirmities
as the 2003 Order. The 2011 Order was, again, only a temporary restraining order. D.E. 140-3,
Ex. C.
There is no evidence that it materialized into a preliminary injunction, permanent
injunction, or final judgment. The evidence indicates that this action was consolidated with other
pending litigation between the family members (the 2011 Lawsuits) and sent to arbitration. See
DE. 140-4, Ex. G at 3-4. Plaintiff again fails to establish a final judgment, much less that the
disputed issues were essential to that judgment.
Most significantly, the arbitration decisions do not warrant collateral estoppel because they
did not involve the disputed issues in this case. As a result, and by definition, they could not have
been necessary to the arbitrator’s decisions. Judge Stem took great pains to expressly emphasize
18
that he was not deciding the federal trademark issue, as it was beyond the scope of his authority,
and that a later adjudication by the federal court could impact his rulings. E.g., D.E. 140-4, Ex. G
at 15; (“It is agreed that I cannot address the trademark issue, as it is a federal question beyond the
jurisdiction of the arbitration of this state action and is pending in federal court.”); D.E. 140-4, Ex.
H at 4 (“The parties have agreed from the beginning of the arbitration that issues relating to the
trademark and federal action cannot be part of this arbitration which flows from settlement of the
State Court action”); Id. (“Suffice it to say, however, that the parties before me agree that
challenges to the trademark and its impact remain for resolution in federal court.”); Id. at 7 n. 3
(“This award again recognizes the fact that federal litigation is pending, and that it may impact
parts of my award.”). The Court therefore finds it remarkable that Plaintiff now argues that “the
arguments now raised by Defendant are identical to the issues decided as part of the 2003, 2011,
and 2012 lawsuits, as well as the Arbitration Award,” and that “these issues were fully litigated in
numerous cases and in arbitration by all parties involved in the instant action.” P1. Opp’n at 8-9.
The federal trademark issue clearly was never litigated in any of these prior adjudications. To the
contrary, the parties were warned that later adjudication of this issue could impact the arbitration
rulings.
Moreover, aside from the federal trademark issues, Judge Stern acknowledged that “Steven
did not sustain his burden in proving [his] independent claims.” D.E. 140-4, Ex. G at 16 n. 14.
Judge Stern also did not enjoin Vincenzo Sr. from using the name “Anello” in Anello Brothers,
but instead required Vincenzo Sr. to compensate Steven for certain costs, fees, and expenses. Id.
at 15; D.E. 140-5, Ex. I at 1. Even in making these rulings as to who could use the Anello name,
Judge Stern again noted that “the federal court may have jurisdiction and authority to consider and
address this issue incident to the trademark litigation.” D.E. 140-4, Ex. G at 16 n. 12.
19
for the foregoing reasons, the Court finds that issue preclusion is not applicable. Plaintiff
does not demonstrate that the correct parties or their privies existed in prior adjudications. Plaintiff
does not explain why non-mutual offensive issue preclusion applies. Plaintiff does not show that
identical issues pending before the Court were raised, actually litigated, and necessary to any prior
judgment.
Trademark Infringement
Plaintiff alleges trademark infringement under the Section 32(a) of the Lanham Act, 15
U.S.C.
§ 11 14(1)(a), and misrepresentation, false designation of origin, false advertising, and
unfair competition under Section 43(a) of the Lanharn Act, 15 U.S.C.
§ 1125(a). Compi. ¶J 71-
8$. “The law of trademark protects trademark owners in the exclusive use of their marks when
use by another would be likely to cause confusion.” fisons Horticitititre, Inc. v. Vigoro Inthts.,
Inc., 30 f.3d 466, 472 (3d Cir.1994) (internal citations omitted). Trademark infringement occurs
when “(1) the marks are valid and legally protectable; (2) the marks are owned by the plaintiff;
and (3) the defendant’s use of the marks to identify goods or services is likely to create confusion
concerning the origin of the goods or services.” Parks LLC v. Tyson foods, mc, 863 F.3d 220 (3d
Cir. 2017) (quoting ford Motor Co. v. Summit Motor Prod., Inc., 930 f.2d 277, 291 (3d Cir.
1991)).
A “trademark” under the statute
includes any word, name, symbol, or device, or any combination
thereof-- (1) used by a person, or (2) which a person has a bona fide
intention to use in commerce and applies to register on the Principal
Register established by this chapter, to identify and distinguish his
or her goods, including a unique product, from those manufactured
or sold by others and to indicate the source of the goods, even if that
source is unknown.
20
15 U.S.C.
§ 1127. However, a trademark can be refused registration on the Principal Register for
numerous reasons, including if it is “merely descriptive or deceptively misdescriptive” of
applicant’s goods, or if it is “primarily merely a surname.” 15 U.S.C. §sS 1052(e)(1), (e)(4).
“A valid and legally protectable mark must be ‘distinctive,’ which may be shown in two
ways.” Parks LLC v. Tyson Foods, mc, 863 F.3d 220, 230 (3d Cir. 2017). First, “[s]orne marks
are, by their very nature, considered distinctive.” Id. (citing 2 McCarthy on Trademarks
§ 11:2).
These “inherently distinctive marks include ones that are arbitrary or fanciful, such as APPLE for
computers or SHELL for gasoline.” Id. (citing 2 McCarthy on Trademarks
§ 11:11). They also
include marks that “are suggestive of a product’s function but not descriptive such as PENGUIN
for freezers or SAMSON for weight training machines.” Id. (citing 2 McCarthy on Trademarks
§
11:62). “On the other hand, marks that are merely descriptive of the product are not inherently
distinctive and secondary meaning must be proven before such a name will be protectable.” Id.
(citing 2 McCarthy on Trademarks
§ 11:2); see also Commerce Nat’l Ins. Servs., Inc. e. Commerce
Ins. Agency, Inc., 214 f.3d 432, 43$ (3d Cir. 2000). Further, “[t]rademarks based on the surname
of a founder are not inherently distinctive.” Parks, $63 F.3d at 231 (citing Doeblers’Pennsylvania
Hybrids, Inc. v. Doebler, 442 f.3d $12, $27 n.17 (3d Cir. 2006), as amended (May 5, 2006)).
Generic names are not eligible for trademark protection. Id. at 230 n. 16.
As to secondary meaning, the Third Circuit has observed that “[s]econdary meaning exists
when the mark is interpreted by the consuming public to be not only an identification of the product
or services, but also a representation of the origin of those products or services.” Id. at 231 (quoting
Commerce Nat’l, 214 F.3d at 43$) (internal quotations omitted).
The Circuit provided the
following factors to assess secondary meaning:
(1) the extent of sales and advertising leading to buyer association;
(2) length of use; (3) exclusivity of use; (4) the fact of copying; (5)
21
customer surveys; (6) customer testimony; (7) the use of the mark
in trade journals; (8) the size of the company; (9) the number of
sales; (10) the number of customers; and, (11) actual confusion.
Id. (quoting Commerce Nat’t, 214 F.3d at 438).
Registering a trademark does not mean that it is a valid trade mark. See Matat v. Tam, 137
S. Ct. 1744, 1753 (2017) (citing 15 U.S.C.
§ 1057(b)) (explaining that registration is simply “prima
facie evidence” of a valid trademark). Federal registration does, however, “confer[] important
legal rights and benefits on trademark owners who register their marks.” Id. (quoting B & B
Hardware, Inc. v. Hargis Inthts., Inc., 135 S. Ct. 1293, 1317 (2015)).
For example, federal
registration on the Principal Register:
(1) serves as constructive notice of the registrant’s claim of
ownership of the mark; (2) is prima facie evidence of the validity of
the registered mark and of the registration of the mark, of the
owner’s ownership of the mark, and of the owner’s exclusive right to
use the registered mark in commerce on or in connection with the
goods or services specified in the certificate; and (3) can make a
mark incontestable once a mark has been registered for five years.
Id. (quoting 15 U.S.C.
§ 1072, 1057(b), 1065, 1115(b)) (internal citations and quotations
omitted). Registration on the Principal Register also “enables the trademark holder to stop the
importation into the United States of articles bearing an infringing mark.”
McCarthy
Id. (quoting 3
§ 19:9) (internal quotations omitted).
Here, Plaintiff’s two trademarks
(4,425,251)
—
—
ANELLO (3,988,606) and ANELLO FENCE
are registered on the Principal Register.’° D.E. 134-7, Ex. E; D.E. 134-8, Ex. F.
This is prima fade evidence that the marks are valid. Plaintiff contends that the only defenses
available to Defendant are those under 15 U.S.C. 1115(5).
‘
P1. Opp’n at 10, 19.
The Court
As noted above, Plaintiffs other trademark, ANELLO FENCE (3,713,566), was registered on
the Supplemental Register but has since been cancelled, see D.E. 134-6, Ex. D at 2, so it is not
subject to this dispute.
22
disagrees Section 1115(b) only applies when a mark has become incontestable under Section
1065. See 15 U.S.C.
§ 1115(b) (“To the extent that the right to use the registered mark has become
incontestable under section 1065 of this title, the registration.
defenses
. . . .“).
. .
shall be subject to the following
Here, Plaintiffs marks (2011, 2013) were within the five-year contestability
window when the litigation was commenced in 2013. See D.E. 1. As a result, Defendants may
raise any legal or equitable ground to challenge the validity of the trademarks.
Defendants argue that the trademarks are not valid because they were procured through
fraud, specifically material misrepresentation. Oleske Br. at 14-16. Fraudulent procurement of a
trademark is a ground for cancellation of both a contestable and incontestable mark. 15 U.S.C.
§
1064(3), 1065. The Third Circuit recognizes that
[t]he Lanham Act provides that a third party may petition for
cancellation of a registered trademark if the registration was
procured by fraud, a showing that must be made by clear and
convincing evidence that the applicant or registrant knowingly made
a false, material representation with the intent to deceive the PTO.
Covertech fabricating, Inc., $55 F.3d 163, 174-75 (3d Cir 2017) (internal quotations, citations,
and alterations omitted) (citing 15 U.S.C. §5S 1064(3), 1120; In reBose Corp., 580 F.3d 1240, 1245
(Fed. Cir. 2009); Marshak v. Treadwelt, 240 F.3d 184, 196 (3d Cir. 2001)); see also Am. Cruise
Lines, Inc. v. HMSAm. Queen Steamboat Co. LLC, 223 F. Supp. 3d 207, 214 (D. Del. 2016) (“To
prove fraudulent procurement generally, a complainant must show, by clear and convincing
evidence, that the registrant knowingly made false, material representations of fact in connection
with an application for a registered mark
.
. .
and [that] the registrant had a purpose or intent to
deceive the PTO.”) (internal quotations and alterations omitted). Further, the “intent to deceive
can be inferred from indirect or circumstantial evidence, indicating that the registrant actually
knew or believed that someone else had a right to the mark.” Covertech, $55 F.3d at 175 (internal
23
quotations and citations omitted) (citing In reBose Corp., 580 F.3d at 1245; Mars/zak, 240 F.3d at
196).
In Covertech, the plaintiff, a manufacturer of protective packaging and reflective
insulation, entered into an agreement with the defendant distributer whereby the defendant was the
exclusive distributor of the plaintiffs “rFOIL” products, including “ULTRA”
—
one of the
plaintiffs specialty products within this umbrella brand. Id. at 168-69. Plaintiff had a United
States trademark for rFOIL, and a Canadian trademark for ULTRA. Id. The exclusive distribution
agreement subsequently broke down. Id. The defendant
—
without notice to, or permission from,
the plaintiff— then petitioned for a United States trademark of ULTRA and eventually obtained it.
Id. After a one-week bench trial, the district court cancelled defendant’s registration based on a
finding of fraud on the PTO. Id. at 169, 174.
The Third Circuit affirmed the decision. Id. at 174-75. At trial, the defendant’s President,
Michael Boulding indicated that “he believed no other person, firm, corporation, or association
ha[d] the right to use the mark.” Id. at 175. The Third Circuit found that the district court was
“entirely justified” in finding such testimony not credible “[i]n light of Mr. Boulding’s prior
interactions with [the plaintiff], [as] he must have known or believed that [the plaintiff] had a right
to use the mark.” Id. The Covertech court noted that at the time of Boulding’s statement, the
defendant was aware that the plaintiff had registered the mark “ULTA” in Canada and continued
to sell ULTRA in the United States.
Id.
The Circuit also noted two other intentional
misrepresentations that Boulding made to the PTO, but did not evaluate them because this single
statement was enough to establish that the defendant obtained registration of the ULTRA mark
through fraud. Id. at 175 n. 5.
24
Here, the Court finds that there is no genuine dispute of material fact precluding a finding
that Steven Anello procured the trademarks ANELLO (3,988,606) and ANELLO FENCE
(4,425,251) through fraud. First, as to ANELLO, Anello Fence, through Steven, applied to register
“ANELLO” on the PTO Principal Register on July 22, 2010. D.E. 134-7, Ex. E at 27. Steven
claimed first use in April 1963. Id. The examiner refused registration as the mark was “merely a
surname.” McDaniel SOMF ¶ 20. On November 16, 2010, Anello Fence amended its application
to allege that the mark had “become distinctive of the goods/services through applicant’s
substantially exclusive and continuous use in commerce for at least the five years immediately
before the date of this statement.” Id.
On July 5, 2011, the examiner issued Anello Fence the
service mark ANELLO on the Principal Register. McDaniel SOMF ¶21; D.E. 134-7, Ex. E.
The representation of “substantially exclusive and continuous use in commerce for at least
the five years immediately before the date of this statement” is demonstrably false. Moreover,
Steven’s claimed basis for the representation was due to an assignment from Anello Brothers. In
its Complaint, Plaintiff asserted that in 2006, Emilio Sr. “retired, and all rights to the business and
the ‘ANELLO’ mark were transferred to the Plaintiff.” Compl.
¶
19. However, this allegation is
not only patently false, but Steven also admitted that it was untrue during his deposition.
It is undisputed that Anello Fence had been in business for less than four years at the time
of the representation in November 2010. See Compl.
¶
19. Steven started Anello Fence in 2007
so there is no doubt that he was aware of when he began the business. Before that, Steven had
another fence company, A Decorative Fence, which he sold to VCA in approximately 2006. After
selling A Decorative Fence, Steven moved to Florida and became a full-time law enforcement
officer. When he moved to Florida, Steven did not intend to return to New Jersey. Then, upon
returning to New Jersey, Steven paid $30,000 to VCA to be released from his restrictive covenant
25
that he had agreed to when he sold A Decorative Fence.
Thus, when Steven made the
representation on November 16, 2010 concerning five years of continuous use, the representation
was false as to Anello Fence (which had been in business less than four years).11 Nevertheless, in
its Complaint, Plaintiff asserted that it had continuous use since 1963 due to its relationship with
Anello Brothers.12
The Court finds that Steven’s claimed first use in 1963, in both the ANELLO (3,988,606)
and ANELLO FENCE (4,425,251) marks’ applications, is a knowingly false statement sufficient
to cancel both marks’ registrations. There is no genuine dispute of material fact on the issue to
deny summary judgment. Both the ANELLO and ANELLO FENCE marks’ applications claimed
first use in 1963. D.E. 134-7, Ex. E at 27; D.E. 134-8, Ex. F at 5. As noted, Steven’s justification
for first use in 1963 is that “{i]n 2006, S. Steven Anello’s father retired, and all rights to [Anello
Brothers] and the ‘ANELLO’ mark were transferred to the Plaintiff” Compl.
¶ 19.
It is true that
Anello Brothers opened in 1963 and built up goodwill in the northern New Jersey fencing industry
until Emilio Sr., Steven’s father, unilaterally closed the business in 2006. Oleski SOMF
¶
8,
“The Court recognizes that at the time Plaintiff applied for the ANELLO FENCE mark (March
21, 2013, D.E. 134-7, Ex. E at 2) Anello Fence had in fact been in business for over five years,
making this statement (which was also included in the ANELLO FENCE application, see Id. at
33-34) accurate as to that point. However, the statements also claimed that use was “substantially
exclusive” in both applications, yet the record indicates that Steven knew that his cousins were
competing with him in the northern New Jersey fencing industry during both of these relevant time
periods and using the Anello name. See D.E. 140-4, Ex. G at 3 (explaining that Steven paid his
cousins $30,000 to void a restrictive covenant that otherwise would have prevented him from
competing with his cousins in the northern New Jersey fencing industry). Therefore, the record
seems to indicate that this “substantially exclusive” assertion also potentially amounts to fraud in
both applications, but the Court does not rule on this issue as it finds that VCA’s claim of first use
in 1963 is sufficient to cancel both registrations.
12
Plaintiffs argument as to an assignment from Anello Brothers also does not address the time
between Anello Brothers closing in Thanksgiving 2006 and the start of Anello fence the
following spring.
26
McDaniel SOMF ¶ 4, 17; D.E. 140-4, Ex. G at 3. However, Steven was never an owner of Anello
Brothers. Therefore, for Steven to entitled to take advantage of Anello Brothers’ goodwill, Anello
Brothers must have assigned it to him, as Steven alleges. Compl.
¶
18.
“Formal assignments of trade names are not required, because the law presumes that when
a business is conveyed, its trade name and goodwill are also conveyed.”
Colonial Elec. &
Plumbing Sttpply of Hammonton, LLC v. Colonial Elec. Supply, Ltd., No. 05-5408, 2007 WL
4571105, at *5 (D.N.J. Dec. 27, 2007) (internal citations omitted). However, “[i]f there is no
documentary evidence of an assignment, it may be proven by the clear and uncontradicted oral
testimony of a person in a position to have actual knowledge.” Id. (internal citations omitted).
Yet, courts “must be cautious in scenarios that do not involve clear written documents of
assignment” and must “[r]equir[e] strong evidence to establish an assignment.
.
.
to prevent parties
from using self-serving testimony to gain ownership of trademarks.” Id.
Here, Steven never received an assignment of Anello Brothers’ trade name or goodwill.
first, the business was never conveyed to him,13 so assignment of the trade name and goodwill is
not assumed. To the contrary, in Spring 2011, Anello Brothers (which had been “essentially
defunct” for a little over five years) held a shareholder meeting, where Emilio Jr. joined with
13
The Court also notes that any assignment in gross, or naked assignment, whereby Plaintiff was
assigned the name without its goodwill, would not support Plaintiffs argument that the trademark
is valid. “A purported assignment of a trademark without goodwill is an invalid assignment in
gross.” InterState Net Bank v. NetB@nk, Inc., 348 F. Supp. 2d 340, 349 (D.N.J. 2004) (internal
quotations omitted). The assignment of a mark without its goodwill is also referred to as a naked
assignment. See, e.g., Zinn v. Sitgttra, No. 35-3572, 2006 WL 2135811, *6 (D.N.J. July 28, 2006).
Such assignments are prohibited because “[u]se of the mark by the assignee in connection with a
different goodwill and different product would result in a fraud on the purchasing public who
reasonably assume that the mark signifies the same thing, whether used by one person or another.”
InterState Net Bank, 348 F. Supp. 2d at 349. Thus, even if there was a genuine issue of material
fact as to the assignment, the trademark would nevertheless be invalid because it is undisputed that
the actual Anello Brothers business was not transferred along with the mark.
27
Vincenzo Sr. to (1) oust Ernilio Sr. from his position as president, and (2) re-open the business.
D.E. 140-4, Ex. G at 3. Therefore, there is no evidence that Anello Brothers was conveyed to
Steven or Anello fence.
Although Steven claims that his father, Emilio Sr., the former President of Anello Brothers,
assigned the business’ rights to him, Compi.
¶ 19, there is no evidence of this. The closest the
record comes to an assignment is that Emilio Sr. knew of, and had no objection to, Steven’s use
of the Anello name after Anello Brothers’ closure in 2006. D.E. 140-4, Ex. G at 15. Steven has
presented no authority that a mere lack of objection equates to an assignment. Moreover, Ernilio
Sr. was not even a majority shareholder of Anello Brothers at the time. Id. This is far from a valid
assignment of Anello Brothers’ goodwill and trade name.
Critically, by the time of his deposition, Steven admitted that there had not been an
assignment from Anello Brothers. Steven admitted that he did not receive “any type of permission
to use the name Anello” in his fence company from Anello Brothers. D.E. 134-9, Ex. G at 10-11,
¶J 25-5. Instead, he claimed that the Anello name had been “abandoned”4 and that “[a]nyone of
the brothers” could have used and trademarked the name before he chose to do so. Id. at 52-3,
23-25.
¶J
Therefore, by his own admission, the record indicates that Steven did not receive an
assignment.
In sum, the foregoing evidence shows that Steven made a materially false
misrepresentation with intent to deceive the PTO in claiming his continuous use of the marks
ANELLO and ANELLO FENCE since 1963. The Court recognizes that such a finding is relatively
Even the abandonment argument appears to be erroneous. Instead, as noted, Anello Brothers
was idle between 2006 and 2011. Judge Stem ruled that Vincenzo Sr. could use “Anello Brothers”
provided he paid for part of Steven’s counsel fees in bringing the 2011 action. D.E. 140-4, Ex. 6
at 16.
14
2$
rare at the summary judgment stage, but Steven has pointed to no evidence demonstrating that his
material misrepresentations were the result of a mistake or mere negligence. Indeed, he admitted
to a contrary view at his deposition. As noted, Steven’s primary response was issue preclusion,
which the Court has rejected. Thus, the Court agrees with Defendant that there is no genuine issue
of material fact precluding a finding that Steven procured the ANELLO (3,988,606) and ANELLO
FENCE (4,425,251) trademarks through fraud. The Court orders that these marks be cancelled
accordingly.
VCA also argues that it had priority of use as to the name Anello. McDaniel Br. at 12.
“The first use test is generally proper for unregistered trademarks, taking account of the wellestablished common law principle of ‘first-in-time, first-in-right’ that rewards actual and
continuous use in commerce as between market competitors.” Covertech Fabricating, Inc., 855
F.3d at 170 (citing Ford Motor Co., 930 F.2d at 292).
“With respect to ownership of an
unregistered mark, the first party to adopt a mark can assert ownership so long as it continuously
uses the mark in commerce.” Commerce iVat. Ins. Servs., Inc. v. Commerce Ins. Agency, Inc., 214
F.3d 432, 438 (3d Cir. 2000) (quoting ford Motor Co., 930 f.2d at 292). The rule is long
established. Columbia Mill Co
use of the mark.
.
.
Alcorn, 150 U.S. 460, 463-64 (1893) (“the exclusive right to the
is founded on priority of appropriation; that is to say, the claimant of the trade
mark must have been the first to use or employ the same on like articles of production.”). Notably,
the prior mark need not be registered to successfully assert ownership through prior use. Santana
Prod., Inc. v. Compression Polymers, Inc., 8 F.3d 152, 155 (3d Cir. 1993) (“{AJ party’s right to
use a trademark is not dependent on its registration”). Therefore, a later user of a mark has no
right to exclusive use or ownership of the mark against a prior user who continuously used that
mark in the industry. Commerce Nat. Ins. Servs., Inc., 214 F.3d at 438; see also Grttelle v. Molly-
29
‘Es Dolt Outfitters, 94 F.2d 172, 176 (3d Cir. 1937) (holding that defendants had no exclusive right
to use certain marks “in view of the prior use of these trade-marks” by plaintiff). Because the later
user has no exclusive right to the mark, prior use provides grounds for cancellation of the later
mark. Blanchard Importing & Distrib. Co. v. Charles Gitman & Son, Inc., 353 F.2d 400, 401 (1st
Cir. 1965) (“As between conflicting claimants, it is well settled that the right to use the same mark
is based on priority of appropriation and that prior use of a trademark is a valid ground for
cancellation.” (citing Catfornia Piece Dye Works v. Caflfornia Hand Prints, 159 F.2d 871
(C.C.P.A. 1947)) (internal citations omitted)); see also Countiy floors, Inc. v. P’ship Composed
of Gepner & ford, 930 F.2d 1056, 1066 (3d Cir. 1991) (explaining that “[c]ancellation of the
registration depended on resolution of disputed factual issues concerning prior use, scope of that
use, and the possibilities of concurrent registration” and remanding the case to resolve these
disputed factual issues); Nat. footwear Ltd. v. Hart Schaffner & Marx & Roots, Inc., 577 F. Supp.
128, 133 (D.N.J. 1983) (“right to cancellation not limited to prior use of technical trademark; any
prior use of a name or word is sufficient where the prior user is injured by the registration” (citing
Btanchard Importing & Distrib. Co., 353 F.2d at 401)).
Here, Defendant VCA opened in 2003 and indicates that it has been using the name Anello
in its advertisements since that period. McDaniel SOMF
15, 16. Of course, it is this very use
that Plaintiff now claims is trademark infringement. Compl.
¶J 46, 48.
not open until 2007, Compl.
¶
Plaintiff Anello Fence did
19— four years after Defendant began using the name. In fact, after
VCA opened and before Steven started Anello Fence, Steven sold his other fence company, A
Decorative Fence, to VCA. D.E. 140-4, Ex. G at 2. Plaintiff does not offer any evidence to dispute
VCA’s continuous use of the Anello name since 2003. The only response that Plaintiff provides
30
as to VCA’s continuous and prior use is that the 2003 Order prohibited VCA from using the name
Anello. P1. Opp’n at 16-17. For the reasons discussed as to issue preclusion, the Court disagrees.
While not necessary to the Court’s decision, the Court also finds Plaintiffs argument to
strain credulity. Steven knew that Defendant had been operating since 2003 and Steven in fact
sold his own fencing business, A Decorative Fence, to Defendant when Steven moved to Florida
to become a police officer. D.E. 140-4, Ex. G at 2. Steven then paid Defendant $30,000 upon his
return to New Jersey so that Defendant would not enforce its restrictive covenant (included in its
purchase of A Decorative Fence) against him. Id. at 3. The Court finds it incredible for Steven to
now claim that he was not aware of Defendant’s prior use of Anello. However, whether Steven
knew or not is secondary to fact that there is no evidence disputing that Defendant did use the
Anello name before Plaintiff did. As a result, there is no genuine issue of material fact, and the
first-in-time, first-in-right doctrine applies to give Defendant superior rights to those of Plaintiff’5
Because the ANELLO and ANELLO FENCE marks are
not
valid, Defendant argues that
the remaining causes of action also fail as a matter of law because they all rely on the validity of
the marks. McDaniel Br. at 14-15. In response, Plaintiff indicates that certain causes of action,
such as New Jersey’s unfair competition law and tortious interference may address conduct beyond
trademark infringement. P1. Opp’n at 19-20. While this may be accurate as a legal proposition,
Plaintiffs analysis nevertheless indicates that its claims are all based on trademark infringement)6
15
The Court finds the foregoing issues to be dispositive as to trademark infringement. As a
result, the Court does not reach the parties’ remaining arguments, including those regarding
secondary meaning, likelihood of confusion, or fair use.
16
Plaintiff argues the following:
Here, it is undisputed that Plaintiff owns the ANELLO marks,
thereby satisfying the second element of a Lanham Act violation. As
set forth in greater detail in Section II-IV, supra, Defendant has
31
Id. The closest Plaintiff comes to a non-infringement argument is its allegation of malicious
conduct, based on alleged violations of 2003 Order, the 2011 Order, and the arbitration awards.
Id. The Court has already found these assertions to be without merit. As a result, the Court grants
Defendant VCA summary judgment on the remaining counts.
Motions in Limine
Defendant VCA filed a motion in limine seeking to preclude the expert testimony of Gary
B. Rosen. D.E. 135. Because the Court is granting summary judgment, the Court finds this motion
to be moot and denies it accordingly.’7
failed to establish as a matter of law that Plaintiffs marks are not
valid and legally protectable. Moreover, as detailed in Sections 1,
11(B), III-IV, sitpra, Defendant’s use of the name “Anello” is
malicious as it is in violation of numerous Court Orders and the
Arbitration Award. Finally, as discussed in Section 11(B), supra,
Plaintiff has provided evidence of numerous examples of customer
confusion.
Id. (internal citations omitted).
‘
Additionally, it is the Court’s practice that motions in limine are timely only after the Court’s
final pretrial order is entered. No final pretrial order has been entered in this matter.
32
III. CONCLUSION
For the reasons set forth above, Defendant VCA’s motions for summary judgment, D.E.
133, 134, are granted. Pursuant to 15 U.S.C.
§
1119, the Court orders the Director of the United
States Patent and Trademark Office to cancel the Registrations ANELLO (Reg. No. 3,988,606)
and ANELLO FENCE (Reg. No. 4,425,251). Plaintiffs request to supplement the record, D.E.
149, is granted, but does not alter the Court’s analysis. Defendant VCA’s motion in limine, D.E.
135, is denied as moot. The parties are to address within 14 days, in writing and on the docket,
how, if at all, the Court’s Opinion and Order impacts Defendant’s pending counterclaims as well
as Plaintiffs claims against Defendant Shopper’s Guide, LLC. An appropriate Order accompanies
this Opinion.
Date: January 28, 2019
John Michael Vazquez,
33
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