throughout the United States in specialty retailer Stores, toy stores,
and gift stores.
Ty, a Delaware corporation with its principal place of business in
Westmont, Illinois, sells a line of plush bean bag animals under the mark
BEANIE BABIES ("Beanie Babies"). Each Beanie Baby has a character name
that is printed on the tag attached to the toy. The character name is
followed by the symbol TM. These character names function as trademarks,
distinguishing Ty's plush bean bag animals from plush bean bag animals
sold by other companies.
Warner is the founder, President and Chief Executive Officer (CEO) of
Ty. He is also Ty's sole shareholder. Warner is responsible for
overseeing all aspects of Beanie Baby development, marketing and sales.
Warner personally authorizes, directs and approves the final design and
name of each Beanie Baby. He personally participates in the process of
naming the Beanie Babies. He is the principal decision-maker and has the
"final say" in the naming process.
Ty also makes a plush bean bag camel. Ty's plush bean bag camel is also
named Niles ("Ty's Niles the camel"). Ty has used the name NILES in
association with its bean bag camel in interstate commerce. Ty promoted
and advertised Ty's Niles the camel through various media, including but
not limited to catalogs and the internet. Ty's internet website has been
visited billions of times by consumers. Ty has achieved widespread sales
of Ty's Niles the camel throughout the United States in specialty
retailer stores, toy stores and gift stores.
Warner participated, authorized and approved the final design and name
of Ty's Niles the camel. He personally promoted, offered for sale and
sold Ty's Niles the camel.
Ty publishes materials, in association with the commercial promotion,
advertising, offer for sale and sale of the Beanie Babies, in which it
represents that it is the owner of the trademarks used as character names
for its Beanie Babies, including the use of NILES as a trademark for a
plush bean bag camel. Warner, as the principal decision-maker in the
promotion, advertising, offers for sale and sales of Beanie Babies,
including Ty's Niles the camel, has approved and authorized Ty's
On March 22, 2000, Peaceable Planet filed an application to register
Peaceable Planet's NILES trademark with the United States Patent and
Trademark Office ("PTO"). On January 23, 2001, the PTO published
Peaceable Planet's NILES trademark for opposition. On May 23, 2001, Ty
filed, with the PTO, a Notice of Opposition to the registration of
Peaceable Planet's NILES trademark.
Ty received a written cease and desist letter from Peaceable Planet,
including notification of Peaceable Planet's Niles the camel and
Peaceable Planet's NILES trademark no later than March 2000. Despite this
notice of Peaceable Planet's product and trademark in the name Niles, Ty
and Warner continue to use the name as a trademark in interstate
commerce. Peaceable Planet has not granted Ty a license or permission to
use the name in commerce.
Ty has been sued by Imperial Toy Corporation ("Imperial") for
infringement of Imperial's trademark ROARY for a bean bag animal and
involved in other trademark disputes concerning the character names Ty
has used for its Beanie Babies. Ty has also asserted alleged violations
of its alleged rights in trademarks and copyrights relating to products
in its Beanie Babies line.
Warner has moved, pursuant to Rule 12(b)(6), to dismiss the
that Peaceable Planet has failed to state a claim against him because it
has not pled the "special showing" required to pursue an infringement
claim against an individual based on the acts of a corporation.
In Dangler v. Imperial Machine Co., 11 F.2d 945, 947 (1926), the
Seventh Circuit held that, absent some "special showing", the officers of
a corporation are not liable for the infringements of the corporation,
even though such infringements were committed under their direction, if
they acted within the scope of their duties. The "special showing"
required to pursue an infringement claim against an individual based on
the acts of a corporation is the following:
It is when the officer acts willfully and knowingly — that
is, when he personally participates in the manufacture or
sale of the infringing article (acts other than as an
officer), or when he uses the corporation as an instrument to
carry out his own willful and deliberate infringements, or
when he knowingly uses an irresponsible corporation with the
purpose of avoiding personal liability — that officers are
held jointly with the company. The foregoing are by no means
cited as the only instances when the officers may be held
liable, but they are sufficient for the present case.
Dangler, 11 F.2d at 947. Dangler is still the law of the Seventh Circuit
and has been applied to trademark and patent cases. See, e.g., Panther
Pumps & Equip. Co., Inc. v. Hydrocraft, Inc., 468 F.2d 225 (7th Cir.
1972); Powder Power Tool Corp. v. Powder Actuated Tool Co., 230 F.2d 409
(7th Cir. 1956); Drink Group, Inc. v. Gulfstream Communications, Inc.,
7 F. Supp.2d 1009 (N.D. Ill. 1998); Cooper Indus. Inc. v. Juno Lighting
Inc., 1 U.S.P.Q.2d 1313 (N.D. Ill. 1986).
In addition to the factors in Dangler, a plaintiff can meet the
"special showing" requirement by pleading that the defendant was "the
founder, president, and majority shareholder of [the defendant
corporation] and the `moving force' behind [the defendant corporation's]
alleged infringing activities" and had "`willfully and deliberately
induced, aided and abetted the past and continuing infringement.'" Cooper
Indus., 1 U.S.P.Q.2d at 1314. The "special showing" is also made in
situations where the defendant "paid for nearly all the outstanding
stock, . . . [and] lent [the defendant corporation] substantial sums when
it was in need of money." Adventures in Good Eating, Inc. v. Best Places
to Eat, Inc., 131 F.2d 809, 813 (7th Cir. 1942).
Courts have held that plaintiffs have failed to meet the "special
showing" requirement when the individual defendant has done nothing
beyond the scope of his duties as officer and the corporation "was not
organized to permit [the individual defendant] to profit from
infringement or hide his personal liability under a corporate shell" so
that the alleged infringement was not willful. Powder Power Tool, 230
F.2d at 414.
Warner argues that Peaceable Planet has failed to make the "special
showing" because it has not alleged that he acted outside the scope of
his duties as an officer of Ty, its allegations of intentional
infringement are not supported by sufficient facts, and it has not
alleged that he organized the company solely to infringe its trademarks.
Peaceable Planet has alleged the "special showing" required to pursue
an infringement claim against Warner based on the allegedly infringing
acts of Ty. The complaint alleges that Warner is the founder, president,
CEO and sole shareholder of Ty. The complaint further alleges that
Warner: (1) "is responsible for overseeing" the development, marketing
and sales of Beanie Babies; (2) "personally participates" in the design
and naming of
all Beanie Babies, including Ty's Niles the camel; (3) "approves, directs
and approves the final design" of Beanie Babies, including naming Beanie
Babies; (4) "approve[s] and authorize[s]" Ty's actions; and (5)
"personally promote[s], offer[s] for sale, and [sells] Ty's Niles the
camel." The complaint also alleges that Ty continued to use the mark NILES
in interstate commerce after receiving Peaceable Planet's cease and desist
These allegations support the inferences that Warner "personally
participates in the manufacture or sale of the infringing article (acts
other than as an officer), . . . uses the corporation as an instrument to
carry out his own willful and deliberate infringements, or . . .
knowingly uses an irresponsible corporation with the purpose of avoiding
personal liability." Dangler, 11 F.2d at 947.
Moreover, this language is sufficient to plead that Warner allegedly
intentionally infringes Peaceable Planet's NILES trademark. "[Peaceable
Planet] is under no obligation to plead further facts that [it] believes
supports [its] claims." Cook v. Winfrey, 141 F.3d 322, 328 (7th Cir.
1998). Complaints "serve to put . . . defendant[s] on notice." Toth v.
USX Corp., 883 F.2d 1297, 1298 (7th Cir. 1989). The allegations in the
complaint are sufficient to place Warner on notice of the intentional
infringement claim being asserted against him. Therefore, Warner's Motion
to Dismiss is denied.
For the reasons stated above, Defendant H. Ty Warner's Motion to
Dismiss [14-1] is denied.
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