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Ganz v. SM Kids LLC

United States District Court, D. Delaware

August 26, 2019

GANZ, Plaintiff;
SM KIDS, LLC, Defendant.

          David E. Moore, Bindu A. Palapura, Stephanie O'Byrne, and Jennifer Penberthy Buckley, POTTER ANDERSON & CORROON LLP, Wilmington, DE; David A. Perez, Zachary E. Davidson, and Christian W. Marcelo, PERKINS COIE LLP, Seattle, WA, attorneys for Plaintiff.

          Patricia A. Winston and Kathleen A. Murphy, MORRIS JAMES LLP, Wilmington, DE; John M. Magliery, DAVIS WRIGHT TREMAINE LLP, New York, NY; Cyrus E. Ansari, DAVIS WRIGHT TREMAINE LLP, Seattle, WA, attorneys for Defendant.



         Currently pending before the Court are Plaintiffs Motion for Summary Judgment and Defendant's Cross-Motion for Summary Judgment. (D.I. 55, 65). The Parties have fully briefed the issues. (D.I. 56, 65, 69). After full consideration of the briefing, I will grant Plaintiffs motion and deny Defendant's cross-motion.

         I. BACKGROUND

         Plaintiff Ganz filed this suit against Defendant SM Kids, LLC on August 31, 2018 alleging various contract and trademark infringement claims. (D.I. 1). Defendant counterclaimed for declaratory judgment. (D.I. 5). On May 17, 2019, the Parties stipulated to seek solely declaratory and equitable relief and "agree[d] that the Court may determine the Parties' rights and obligations under the Coexistence Agreement as a matter of law or as a trier of fact." (D.I. 47, ¶ 3). As part of this agreement, Plaintiff dismissed with prejudice all claims except for its breach of contract claim and Defendant dismissed all counterclaims except for its declaratory judgment claim. (Id., ¶¶ 1-2). The Parties also dismissed all claims for damages. (Id.) The Parties have now submitted competing motions for summary judgment, subject to their agreement that I may decide any remaining factual issues as the trier of fact.

         The relevant facts are as follows. In 2001, Plaintiff and Defendant's predecessor-in-interest, Steven Silvers, entered into the Coexistence Agreement. (See D.I. 47-1). Defendant agrees that it is bound by the Coexistence Agreement. The Coexistence Agreement was intended to resolve a legal dispute over each party's respective use of and trademarking of marks with the word "Googles." (D.I. 56 at 2; D.I. 65 at 8). The Parties dispute the meaning of the Coexistence Agreement. Paragraph 2.1 of the Coexistence Agreement states:

Silvers shall have the right to use the Silvers' Mark in connection with the extraterrestrial character depicted in Exhibit A to this Agreement, and subject to the following:
(a) Silvers shall expressly abandon Serial No. 75/547, 007 and not seek to register at the [sic] either the federal or the state level any mark containing, or confusingly similar to, "GOOGLES" for PLUSH TOYS, but Silvers will not abandon any other "Googles" marks he holds or will hold in the future that relate to goods other than plush toys.
(b) Silvers shall not use the GOOGLES word on or in connection with any product, image or character without also using the character depicted in Exhibit A to this Agreement. If there is not room for the design portion of the Silvers' Mark along with the term "Googles," Silvers may use the word only, so long as use is not made in connection with a plush toy.
(c) Silvers shall never manufacture, distribute, market and/or sell any characters that resemble Ganz's current line of plush toys, or such plush toys that Ganz may add to the GOOGLES line in the future.
(d) Silvers and/or any assigns, persons, corporation(s), entities, heirs or legal representatives that Silvers designates to use the Silvers' Mark may use the Silvers' Mark on any such items that shall be marketed and distributed by Silvers, or by any other such designated entity of his or his assigns, heirs, or legal representatives, as long as the Silvers' Mark is used with the design logo and not just the word mark "Googles," except as set forth herein.
(e) Except as otherwise specified in this Agreement, Silvers is not prevented from creating other aliens or alien-themed merchandise utilizing the Silvers' Mark. Silvers may continue to use the terms "The Googles Family," "The Googles from Goo," "" and any other terms currently being used or created for the alien-themed property and merchandise. Silvers may use the term "Googles" for purposes such as titles to books, movies, features, music, music titles and web sites relating to the alien-themed property.

(D.I. 47-1 ¶ 2.1). The Coexistence Agreement defines the "Silvers' Mark" as "the GOOGLES and Design Mark as represented in Serial No. 75/547, 007.[1] (D.I. 47-1 ¶ 1.4). The "Silvers' Mark" has been reproduced below. (Image Omitted) U.S. Trademark Application Serial No. 75/547, 007 (filed Sept. 2, 1998) (abandoned June 11, 2001). Exhibit A to the Coexistence Agreement has been reproduced below.

         (Image Omitted)

         (D.I. 47-1 at 8).

         Plaintiff manufactures and sells toys and gifts, primarily in the United States and Canada. (D.I. 56 at 6). Plaintiff began selling a line of plush toys called "GOOGLES" in 1988. (Id.).

         Plaintiff has continually used the GOOGLES word mark for its plush toys ever since. (Id.). In 1998, Plaintiff applied to register its GOOGLES mark for use with plush toys, and the application was granted in 2002. U.S. Trademark Reg. No. 2, 554, 518. Plaintiff has expanded its use of the GOOGLES mark to include the Webkinz website, "an online world where children can adopt and play with various virtual pets, including virtual pet-Googles." (D.I. 56 at 7).

         Silvers created characters and published a book called Googles and the Planet of Goo in 1996. (Id.). The characters were aliens/extraterrestrials and looked like the character included in Exhibit A of the Coexistence Agreement (pictured above). In 1997, Silvers' company, the Googles Children's Workshop, was granted a trademark registration for the GOOGLES (design mark)[2] for children's books. U.S. Trademark Registration No. 2, 087, 590. The Parties agree that the mark was assigned to Silvers individually in 1999. (D.I. 5 ¶ 10; D.I. 56 at 7).

         On September 1998, Silvers filed an intent-to-use application to register the Silvers' Mark for "plush toy figurines, plastic toy figurines." U.S. Trademark Application Serial No. 75/547, 007. Plaintiff filed its trademark application for use of its GOOGLES mark on October 19, 1998 and opposed Silvers' application. U.S. Trademark Reg. No. 2, 554, 518; (D.I. 56 at 8). Plaintiff and Silvers settled their disagreement with the Coexistence Agreement, and Silvers abandoned his trademark application for the Silvers' Mark for plush toys. (D.I. 56 at 8); U.S. Trademark Application Serial No. 75/547, 007.


         A. Summary Judgment

         "The court shall grant summary judgment if 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). The moving party has the initial burden of proving the absence of a genuinely disputed material fact relative to the claims in question. Celotex Corp. v. Catrett,477 U.S. 317, 330 (1986). Material facts are those "that could affect the outcome" of the proceeding, and "a dispute about a material fact is 'genuine' if the evidence is sufficient to permit a reasonable jury to return a verdict for the nonmoving party." Lamont v. New Jersey,637 F.3d 177, 181 (3d Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248 (1986)). When determining whether a genuine issue of material fact exists, [3] the court must view the evidence in the light ...

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