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Spacesaver Corp. v. Marvel Group

June 1, 2009

SPACESAVER CORPORATION, PLAINTIFF,
v.
THE MARVEL GROUP, INC., DEFENDANT.



The opinion of the court was delivered by: Stephen L. Crocker Magistrate Judge

OPINION and ORDER

This is the third lawsuit plaintiff has filed against defendant in this court since last year involving plaintiff's claim that defendant is making and selling a weapons cabinet copied from plaintiff. (According to defendant, plaintiff initiated a fourth proceeding before the National Arbitration Forum, which since has been dismissed.) The first two lawsuits were claims for patent infringement (case nos. 08-354 and 09-58), but plaintiff dismissed both after defendant raised a defense that it was immune from suit because all of its sales are to the federal government. 28 U.S.C. § 1498(a) (when patented invention "is used or manufactured by or for the United States . . . the owner's remedy shall be by action against the United States in the United States Court of Federal Claims").

Plaintiff is taking several new tacks in this case. Plaintiff's first amended complaint asserts a total of seven new federal and state law theories: (1) trademark; (2) unfair competition; (3) cyberpiracy; (4) deceptive trade practices; (5) tortious interference with a business relationship; (6) misappropriation; and (7) "Duty of Loyalty/Aiding and Abetting/Civil Conspiracy." Defendant has moved to dismiss for failure to state a claim the claims for deceptive trade practices, tortious interference with a business relationship, misappropriation and "duty of loyalty/aiding and abetting/civil conspiracy." Dkt. 21.*fn1

Jurisdiction is present for the federal claims under 28 U.S.C. § 1331 and for the state law claims under 28 U.S.C. § 1367 because they arise out facts related to the federal law claims. Diversity jurisdiction under 28 U.S.C. § 1332 may exist as well because plaintiff alleges that it is a citizen of Wisconsin and defendant is a citizen of Illinois and Delaware. However, it fails to allege whether the amount in controversy is greater than $75,000.

Plaintiff's allegations can be summarized as follows: Plaintiff has developed a new weapons rack system known as the UNIVERSAL Weapons Rack, which has been registered with the trademark office. Plaintiff has devoted "significant time, resources and know-how" to market and sell the rack. The mark UNIVERSAL and the name UNIVERSAL Weapons Rack "have developed special significance as originating with and being synonymous with Spacesaver." One of plaintiff's largest customers for the rack is the United States military, which has assigned the rack a "national stock number" to show that it has been approved as meeting military requirements.

Space Concepts, Inc. had a contract with plaintiff to sell, install and service the racks. Although plaintiff terminated the contract for cause in 2005, the contract included a provision that prohibited Space Concepts from selling plaintiff's products or sharing plaintiff's confidential information after the contract's termination. In violation of the contract, Space Concepts sold to defendant plaintiff's UNIVERSAL rack and confidential information, which defendant used to copy and sell the UNIVERSAL rack.

Defendant engaged in conduct intended to confuse plaintiff's customers into believing that defendant's weapons rack was the UNIVERSAL rack, such as adopting "an almost identical" website domain name, using the same product numbers as plaintiff and adopting the same advertising. In addition, defendant misrepresented to the military that its products were "equivalent" to plaintiff's. Defendant's actions have damaged plaintiff's reputation and goodwill.

As explained below, I agree with defendant that plaintiff's allegations do not state a claim upon which relief may be granted for tortious interference with a contract, misappropriation aiding and abetting a breach of a duty of loyalty or a violation of the Wisconsin Deceptive Trade Practices Act. However, because the pleading deficiencies for plaintiff's tortious interference claim may be cured, I will give plaintiff an opportunity to amend its complaint with respect to that claim.

I. Deceptive Trade Practices

Plaintiff's amended complaint includes a claim for "deceptive trade practices," but it does not identify a particular law that defendant allegedly violated. Defendant criticizes plaintiff for doing this, saying that plaintiff failed to provide "fair notice" of its claim. However, plaintiff is correct that the notice required by Fed. R. Civ. P. 8(a)(2) does not extend to legal theories, as the court of appeals has held many times. Jogi v. Voges, 480 F.3d 822, 826 (7th Cir. 2007) ( "It is established, however, that complaints need not plead legal theories."); Simpson v. Nickel, 450 F.3d 303, 305 (7th Cir.2006) ("One pleads 'claims' (which is to say, grievances) rather than legal theories."); Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th Cir. 1999) ("The courts keep reminding plaintiffs that they . . . don't have to plead legal theories."); Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7th Cir. 1992) ("[T]he complaint need not identify a legal theory, and specifying an incorrect theory is not fatal.") If a defendant is uncertain about the scope of the plaintiff's legal theories, the proper response is to serve contention interrogatories, not move for a more definite statement under Fed. R. Civ. P. 12(e) as defendant suggests. Vidimos, Inc. v. Laser Lab Ltd., 99 F.3d 217, 222 (7th Cir. 1996).

Thus, defendant hedged its bets when it decided unilaterally to "assign" a legal theory to this claim under the Wisconsin Deceptive Trade Practices Act, Wis. Stat. § 100.18, and then argue that plaintiff fails to state a claim under that statute. In its opposition brief, plaintiff confirms that it is asserting a claim under § 100.18, but says that it has claims under other laws as well, such as the Illinois Deceptive Trade Practices Act (on the ground that defendant's principal place of business is in Illinois). Because § 100.18 is the only law defendant addresses in its briefs, I do not consider whether plaintiff may state a claim under any other law prohibiting deceptive trade practices.

Wisconsin courts divide a claim under Wis. Stat. § 100.18(1) into three elements: (1) the defendant made a representation to "the public" with the intent to induce an obligation, (2) the representation was "untrue, deceptive or misleading," and (3) the representation materially caused a pecuniary loss to the plaintiff. Novell v. Migliaccio, 2008 WI 44, ¶ 49, 309 Wis. 2d 132, 749 N.W.2d 544. In this case, plaintiff says that it has satisfied these elements for pleading purposes by alleging that defendant misled the federal government and other unspecified "customers" into believing that its products were actually those of plaintiff and that defendant's misrepresentations caused plaintiff "irreparable harm and damages" in an unspecified amount.

An immediate red flag raised by plaintiff's allegations is that they involve misrepresentations made to third parties-plaintiff does not allege that defendant made any misrepresentations to plaintiff. Under common law fraud, this omission undoubtedly would be fatal to its claim. Kaloti Enterprises, Inc. v. Kellogg Sales Co., 2005 WI 111, ¶ 12, 283 Wis. 2d 555, 699 N.W.2d 205 (element of claim for intentional misrepresentation is that "the plaintiff believed the statement to be true and relied on it to his/her detriment") (emphasis added). The elements of a claim under Wis. Stat. § 100.18, as stated by the Wisconsin Supreme Court, are not so straightforward. They do not explicitly require a misrepresentation to the plaintiff, only to "the public." Further, the supreme court has recognized that elements for a common law fraud claim and a claim under § 100.18 are not identical. K & S Tool & Die Corp. v. Perfection Machinery Sales, Inc., 2007 WI 70, ¶26, 301 Wis. 2d 109, 124, 732 N.W.2d 792, 800 (2007).

However, in the case law involving private enforcement of Wis. Stat. § 100.18, it appears that both the parties and the courts have assumed that the relevant question is whether the plaintiff is a member of "the public" for the purpose of the statute, not whether the defendant made statements to nonparties who might qualify as members of the public. E.g., K & S, 2007 WI 70, at ¶ 25 (framing question as whether the "plaintiff is a member of 'the public.'"); Kailin v. Armstrong, 2002 WI App 70, ¶ 44, 252 Wis. 2d 676, 643 N.W.2d 132 (same); Bonn v. Haubrich , 123 Wis. 2d 168, 174, 366 N.W.2d 503 (Ct. App. 1985); (same); State v. Automatic Merchandisers. of America, Inc., 64 Wis. 2d 659, 663, 221 N.W.2d 683 (1974) (same); see also Waukesha County, Wisconsin v. Nationwide Life Insurance Co., 2007 WL 902243, *1 (W.D. Wis. 2007) (dismissing claim under ยง 100.18 because "plaintiff's ongoing relationship with defendants means that plaintiff is not a member ...


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