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Kevin Trudeau and Direct Response Associates LLC v. Lanoue

March 2, 2006

KEVIN TRUDEAU AND DIRECT RESPONSE ASSOCIATES LLC, PLAINTIFFS,
v.
GEORGE LANOUE ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Plaintiffs' motion for summary judgment, Defendants' motion for summary judgment, and Plaintiffs' motion to strike. For the reasons stated below, we deny Defendants' motion for summary judgment and grant Plaintiffs' motion to strike. We also grant in part and deny in part Plaintiffs' motion for summary judgment.

BACKGROUND

Plaintiffs Kevin Trudeau ("Trudeau") and Direct Response Associates LLC allege that Trudeau is a widely-published author and has appeared on or produced hundreds of infomercials. Plaintiffs contend that, due to Trudeau's notoriety, the names "Trudeau" and "Kevin Trudeau" have become to be associated with the products that Plaintiffs create and distribute and that Trudeau's name has significant value. Plaintiffs allege that Defendants used the domain names "trudeau.com" and "kevintrudeau.com" on the internet to sell and promote products and that Plaintiffs have not given permission to Defendants to use the trademarks. According to Plaintiffs, on the Trudeau.com website there is even a picture of Trudeau and the phrase "as seen on TV." Defendants have also allegedly registered a variety of other names associated with Trudeau such as "trudeau.us" and "trudeau.biz."

Plaintiffs brought the instant action and include in their amended complaint a trademark infringement claim under 15 U.S.C. § 1125 of the Lanham Act (Count I), a cybersquatting claim alleging a violation of 15 U.S.C. § 1125(d) of the Anticybersquatting Consumer Protection Act (Count II), a cyberpiracy claim alleging a violation of 15 U.S.C. § 1129 ("Section 1129") (Count III), a claim alleging a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS § 505/1 et seq. ("CFDBPA") (Count IV), a claim alleging a violation of the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS § 501/1 et seq. ("UDTPA") (Count V), a claim alleging a violation of the Illinois Right of Publicity Act, 765 ILCS 1175/1 et seq.("Publicity Act") (Count VI), a common law trademark infringement claim (Count VII), and a common law unfair competition claim (Count VIII). Defendants have asserted a fraudulent misrepresentation counterclaim, a negligent misrepresentation counterclaim, and an acquiescence counterclaim.

Plaintiffs have moved for summary judgment on the counterclaims and Defendants have moved for summary judgment on Plaintiffs' claims.

LEGAL STANDARD

Summary judgment is appropriate when the record, viewed in the light most favorable to the non-moving party, reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A "genuine issue" in the context of a motion for summary judgment is not simply a "metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Insolia v. Philip Morris, Inc., 216 F.3d 596, 599 (7th Cir. 2000). The court must consider the record as a whole, in a light most favorable to the non-moving party, and draw all reasonable inferences that favor the non-moving party. Anderson, 477 U.S. at 255.

DISCUSSION

I. Plaintiffs' Motion to Strike

Plaintiffs contend that Defendants did not contest the strength and protectability of Plaintiffs' trademark in Defendants' memorandum in support of summary judgment and that Defendants first introduced such an argument in their reply brief. A party may not introduce novel arguments in its reply brief. See Aliwoli v. Gilmore, 127 F.3d 632, 635 (7th Cir.1997)(quoting United States v. Feinberg, 89 F.3d 333, 340-41 (7th Cir.1996) for statement that "[t]he reply brief is not the appropriate vehicle for presenting new arguments or legal theories to the court."). In the instant action, Defendants contend that their arguments in their reply concerning the strength and protectability of Plaintiffs' trademark were simply responding to arguments made by Plaintiffs. However, Defendants go far beyond the scope of any arguments presented in Plaintiffs' answer brief. There is also no mention of Defendants' position questioning the strength and protectability of Plaintiffs' trademark in Defendants' memorandum in support of their motion for summary judgment other than in a footnote in which Defendants indicated that they do not waive Plaintiffs' burden to demonstrate that they possess a protectable trademark. (D SJ Mem. 5 n.4). Yet in Defendants' reply brief, Defendants have included an entire section arguing that Plaintiffs do no have protectable trademarks. (Reply 4-5). Defendants' introduction of the new argument in its reply brief was improper since it denied Plaintiffs an adequate opportunity to respond to the argument. Therefore, we grant Plaintiffs' motion to strike and strike section III of Defendants' reply brief to Defendants' motion for summary judgment.

II. Defendants' Motion for Summary Judgment

A. Trademark Claims and Related Analyses (Counts I, IV, V, VII, and VIII)

Defendants argue that Plaintiffs authorized Defendants to use Plaintiffs' products and trademarks. Defendants also argue that there is no likelihood of confusion among consumers and that Defendants are protected from liability by the first-sale doctrine.

1. Authorization to Use Trademarks

Defendants contend that they were impliedly authorized by Plaintiffs to sell Trudeau products. Pursuant to Local Rule 56.1, Plaintiffs admit that Defendant George Lanoue ("Lanoue") and Trudeau have known each other for ten years. ( R D SF 1). Defendants contend in their statement of facts that Lanoue and Trudeau have had business relations for ten years and that Lanoue has purchased and distributed Trudeau's products. (D SF 2). Plaintiffs admit that Lanoue and Trudeau had a business relationship for ten years but state that they ceased selling Trudeau products to Lanoue in September 2004. ( R D SF 2). Defendants also argue that George Lanoue presented a joint venture proposal to Trudeau, that Lanoue proposed selling to Trudeau Lanoue's business, and that Trudeau encouraged Lanoue to do what he wanted to do on the internet. (D SF 55-57). Trudeau denies that he ever told any of Defendants that they could register or use any part of his name or the name of a product that he created. ( R SF 57). Trudeau also denies that he ever encouraged Defendants to engage in any of the activities that are the subject of this suit. ( R SF 58).

Defendants also contend that Trudeau met with Lanoue in 1997 in San Jose, California, and discussed "www.trudea.com" with Trudeau. (D SF 62-64). Trudeau claims that he does not recall meeting with Lanoue and that no such discussion took place. ( R SF 62-64). Trudeau does admit that he knew about Defendants' usage of the domain name "www.trudeau.com" for at least five years prior to complaining about its usage. ( R SF 59). However, that admission is not sufficient evidence to enable the court to infer as a matter of law that Plaintiffs impliedly authorized Defendants to use Trudeau's name. Whether such an inference is reasonable must be left to the trier of fact.

2. Likelihood of Confusion

Defendants argue that there is not a likelihood that their actions caused confusion among consumers. For a trademark infringement claim, a plaintiff is required to show a "likelihood of confusion as to source, affiliation, connection or sponsorship of goods or services among the relevant class of customers and potential customers." Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 957 (7th Cir. 1992). The determination of whether there is a "likelihood of confusion is a question of fact as to the probable or actual actions and reactions of prospective purchasers of the goods or services of the parties." McGraw-Edison Co. v. Walt Disney Productions, 787 F.2d 1163, 1167-68 (7th Cir. 1986); see also S Industries, Inc. v. ...


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