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ZIP DEE, INC. v. DOMETIC CORP.

May 30, 1996

ZIP DEE, INC., Plaintiff,
v.
DOMETIC CORPORATION, Defendant.



The opinion of the court was delivered by: SHADUR

 During this action's three-year life (by sheer chance this opinion has been dictated on its third anniversary, though it is being transcribed a few days later), the proceedings have been marked by extraordinary bitterness. Even more regrettably, the obvious bad blood between the parties has extended to their counsel as well. That has in turn contributed to the numerous calls made on this Court, first to resolve legal issues and then, as the litigants almost invariably ask, to reconsider rulings at the instance of the loser. *fn1"

 Among the earlier rulings in the case was one contained in this Court's extended September 29, 1995 opinion (the "Opinion," 900 F. Supp. 1004), which denied for the most part Zip Dee's motion to strike Dometic's Twelfth Affirmative Defense ("AD 12")--a defense based on the claim that Zip Dee had engaged in inequitable conduct in the course of acquiring its trademark for the overall configuration of its slatted awning cover for recreational vehicles. Until that time Dometic had been on the wrong side of nearly every issue in the case--so much so that this Court's October 11, 1995 memorandum opinion and order, in the course of rejecting Zip Dee's request for reconsideration of the Opinion, said (slip op. at 1-2):

 
It may be that Zip Dee is so taken aback at losing on any issue in this litigation (for the most part it has been the prevailing party in the opinions and rulings that this Court has been called upon to issue in this bitterly contested lawsuit) that it believes that this Court must have made a mistake: It said "motion denied" when it really meant to say "motion granted." Or perhaps Zip Dee is exhibiting the litigation strategy that this Court decried in Quaker Alloy Casting Co. v. Gulfco Inds., Inc., 123 F.R.D. 282, 288 (N.D. Ill. 1988):
 
This Court's opinions are not intended as mere first drafts, subject to revision and reconsideration at a litigant's pleasure. Motions such as this reflect a fundamental misunderstanding of the limited appropriateness of motions for reconsideration. *fn2"

 On April 8, 1996--more than six months after issuance of the Opinion and, far more significantly, more than two years after it had first filed AD 12 as part of its Second Amended Answer--Dometic filed its motion for leave to file its Fifth Amended Answer and Counterclaim, the motion now under consideration. Yet in principal part the proposed Counterclaim draws from the very same well as Dometic's long-asserted AD 12--indeed, Dometic's Motion at 1 expressly acknowledges that "this counterclaim is based on the same facts as those already presented in Dometic's Twelfth Affirmative Defense ('AD 12') ...." *fn3"

 What does Dometic say to justify its delay in a situation in which for over two years it has concededly been in possession of at least substantially all (if not in fact all) of the facts required to file that claim? Its initial motion was conspicuously silent on that score. Then after Zip Dee had filed its memorandum in opposition, Dometic's R. Mem. 7-8 has offered this purported justification:

 
Zip Dee assumes that "Dometic has known all along" the facts on which it bases its counterclaim and that Dometic could have brought its claim earlier in this action. Zip Dee Brief at 10. That is not the case. It was not until Dometic was conducting its U.S. Patent Office prior art search for utility patents relating to Zip Dee's trademarked slatted metal cover (in the course of preparing its recent Motion For Partial Summary Judgment On Trademark Infringement Claims) that Dometic discovered the compelling grounds for Dometic's counterclaim - the overwhelming proof that the alleged trademark was functional and well-known to be so. Dometic's motion makes absolutely clear that no reasonable person would have thought that a slatted metal cover could serve as an exclusive and proprietary trademark. Accordingly, Dometic cannot be faulted for bringing its counterclaim at this time because it only recently discovered the compelling grounds for the claim.

 But that is extraordinarily unpersuasive, so much so that it appears to border on the disingenuous--if indeed it has not crossed that border. Dometic seeks to obscure the already-quoted contention that was contained in its own motion, which in the course of stressing its position that little delay will be occasioned by the current injection of its claim (in the same vein, Dometic's Motion at 2 said that it "anticipates a very limited amount of discovery unique to the proposed counterclaim") confessed that the Counterclaim is based on the same facts on which Dometic originally presented AD 12 more than two years earlier. *fn4"

 But there is more. In the course of upholding AD 12 over Zip Dee's objections, Opinion at 1009 identified three essential elements of the inequitable conduct defense. In so doing, Opinion at 1009 n.8 referred to a number of cases that set out not only the three factors to which this Court had referred but also the factors of (1) reasonable reliance on the misrepresentation constituting the inequitable conduct and (2) damages proximately resulting from such reliance. Then Opinion, id. went on to say (emphasis added):

 
There is no reason, however, why the final two requirements need to be included. As discussed later, the reliance requirement is subsumed by the test for materiality. And proof of damages flowing from the reliance is completely irrelevant to an inequitable conduct defense.

 That means that an affirmative defense based on such inequitable conduct may make the trademark procured through that conduct unenforceable without any need to prove detrimental reliance and consequent damages.

 By sharp contrast, of course, a sine qua non for Dometic's proposed Counterclaim is its proof of injury--of damages--flowing from Zip Dee's asserted misconduct. And as might be expected, each of Dometic's proffered claims (Counterclaim P88 in Count I, Counterclaim P92 in Count II, Counterclaim P96 in Count III and Counterclaim P100 in Count IV) alleges "injury to its [Dometic's] business and property, including but not limited to the costs and expenses of this action." *fn5" That difference really puts the lie to Dometic's effort to portray the Counterclaim as involving no real impact on the litigation in terms of the scope of required discovery, the scope of the required evidentiary presentation and (relatedly) the consequent delay involved. What Dometic seeks to gloss over with its contention that the proposed Counterclaim would call for little ...


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