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AERO PRODUCTS INTERNATIONAL v. INTEX RECREATION CORP.

January 16, 2003

AERO PRODUCTS INTERNATIONAL, INC., A FLORIDA CORPORATION, AND ROBERT B. CHAFFEE, AN INDIVIDUAL, PLAINTIFFS,
v.
INTEX RECREATION CORPORATION, A CALIFORNIA CORPORATION; QUALITY TRADING, INC., A CALIFORNIA CORPORATION; WAL-MART STORES, INC., A DELAWARE CORPORATION, DEFENDANTS. INTEX RECREATION CORPORATION, A CALIFORNIA CORPORATION, COUNTER-PLAINTIFF, V. AERO PRODUCTS INTERNATIONAL, INC., A FLORIDA CORPORATION, AND ROBERT B. CHAFFEE, AN INDIVIDUAL, COUNTER-DEFENDANTS.



The opinion of the court was delivered by: John W. Darrah, Judge, United States District Court.

MEMORANDUM OPINION AND ORDER

Plaintiffs, Aero Products International, Inc. ("Aero Products") and Robert B. Chaffee ("Chaffee"), filed suit against Defendants, Intex Corporation ("Intex"), Intex Recreation Corporation ("Intex Recreation"), Quality Trading Incorporated ("Quality Trading"), and Wal-Mart Stores Incorporated ("Wal-Mart"), alleging: patent infringement under 35 U.S.C. § 271; federal trademark infringement under sections 31(1) and 43(a) of the Lanham Act, 15 U.S.C. § 1114 (1) and 1125(a); a violation of the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS § 510 et seq.; a violation of the Illinois Consumer Fraud and Deceptive Business Practice Act 815 ILCS § 505 et seq.; and a violation of common law unfair competition.

The remaining Defendants*fn1 then moved to dismiss for lack of jurisdiction and for improper venue and also to change venue. In a Memorandum Opinion and Order dated September 19, 2002, the Court dismissed Intex Corporation for lack of personal jurisdiction and denied the Defendants' motions in all other respects.

Intex Recreation, Quality Trading, and Wal-Mart (collectively "Defendants") then filed an answer and a counterclaim against Aero Products and Chaffee (collectively "Plaintiffs"), seeking a declaratory judgment of patent invalidity ("First Claim for Relief"), patent non-infringement ("Second Claim for Relief"), and that the ONE TOUCH trademark is generic and descriptive and that the federal trademark registration of such mark be cancelled ("Third Claim for Relief"). Plaintiffs move, pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6), to dismiss the Second and Third Claims for Relief. For the reasons that follow, Plaintiffs' Motion to Dismiss the Second and Third Claims for Relief is denied.

LEGAL STANDARD

When considering a motion to dismiss, well-pleaded allegations in the complaint are accepted as true. Turner/Ozanne v. Hyman/Power, 111 F.3d 1312, 1319 (7th Cir. 1997). Any ambiguities in the complaint are construed in favor of the plaintiff. Kelly v. Crosfield Catalysts, 135 F.3d 1202, 1205 (7th Cir. 1998). Dismissal is proper only when it appears beyond doubt that Plaintiff can prove no set of facts to support the allegations in his or her claim. Strasburger v. Board of Education, 143 F.3d 351, 359 (7th Cir. 1998).

"Although the Federal Rules of Civil Procedure do not require a plaintiff `to set out in detail the facts upon which he bases his claim,' . . . he must `set out sufficient factual matter to outline the elements of his cause of action or claim, proof of which is essential to his recovery.'" Benson v. Cady, 761 F.2d 335, 338 (7th Cir. 1985) (internal citation omitted). A complaint will not avoid dismissal if it contains "bare legal conclusions" absent facts outlining the basis of the claims. Perkins v. Silverstein, 939 F.2d 463, 467 (7th Cir. 1991).

The court "may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). The district court must review the complaint liberally, taking as true all well-pleaded allegations and the inferences that may be drawn from them. See Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir. 1999).

BACKGROUND

Chaffee is the inventor and owner of United States Patent No. 5,367,726 ("'726 Patent"). The patent is for a "pneumatic support system," which is a "portable, inflatable support system, and a portable inflator for use with such a system." (Pl. Compl. Ex. A). The adjustable inflation system is used to automatically inflate mattresses for a predetermined time, or until a predetermined pressure is achieved in the mattress. Aero Products is the exclusive licensee of the '726 patent and has the right to enforce the patent against infringers. Aero Products also owns the federally registered trademark, ONE TOUCH. The trademark is for inflatable mattresses with adjustable inflation control.

Intex Recreation is a subsidiary of Intex Corporation. Intex Recreation is involved in the marketing sale of the allegedly infringing product. The intexcorp.com website is marked with "Copyright 2001 Intex Recreation Corp". Quality Trading, a California corporation, operates websites located at www.qualitytrading.com. www.qualityinflatables.com (qualityinflatables.com"), and www.portablebeds.com.

The Complaint alleges that Intex Recreation, Quality Trading, and Wal-Mart have used and continue to use the ONE TOUCH mark in the advertising, offer, and sale of inflatable mattresses with the adjustable inflation control technology. Plaintiffs allege that Defendants have created the impression that the inflatable mattresses originate with, or are sponsored by, licensed by, connected with, or are otherwise endorsed by Aero Products. Plaintiffs also allege Intex Recreation and Quality Trading have advertised inflatable air mattresses having inflation control in the Northern District of Illinois via their respective websites using the ONE TOUCH mark. Furthermore, Intex sells inflatable air mattresses having adjustable inflation control and embodying technology protected by the '726 Patent to Wal-Mart and Quality Trading.

According to the counterclaim, Chaffee is also the owner of United States Patent No. 5,267,363 ("the '363 patent"), entitled "Pneumatic Support System". (Answer & Countercl. ¶ 7.) Aero Products is also the exclusive licensee of the '363 patent. (Id. ¶ 7.) The '363 patent describes a pneumatic support system that is similar to the one described in the '726 patent. (Id. ¶ 8.) The counterclaim also alleges that "[t]he [c]omplaint alleges that [Intex Recreation], and others, have infringed the '726 Patent and the ONE TOUCH trademark." (Id. ¶ 6.) The counterclaim alleges that Intex Recreation has a reasonable apprehension that Plaintiffs may claim that it has infringed the '363 patent.

The counterclaim alleges that the '726 patent is invalid, that Intex Recreation has not infringed the '363 patent, and that the ONE TOUCH trademark is invalid ...


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