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Balijewel, Inc. v. John Hardy Limited

September 24, 2008

BALIJEWEL, INC., PLAINTIFF,
v.
JOHN HARDY LIMITED, DEFENDANT, AND JOHN HARDY LIMITED COUNTERCLAIM-PLAINTIFF,
v.
BALIJEWEL, INC., COUNTERCLAIM-DEFENDANT, AND CHRISTINA TOBIN AND KETUT DENI AYASA THIRD PARTY DEFENDANTS.



The opinion of the court was delivered by: Judge Joan B. Gottschall

Magistrate Judge Nan R. Nolan

MEMORANDUM OPINION AND ORDER

Plaintiff and counterclaim defendant BaliJewel, Inc. ("BaliJewel") has filed an amended complaint against defendant and counterclaim plaintiff John Hardy Limited ("John Hardy") seeking a declaratory judgment that it has not infringed John Hardy's copyright in violation of 28 U.S.C. § 1338 and § 2201 (Count I); alleging malicious interference with business relations in violation of Section 43(a) of the Lanham Act, 15 U.S.C. §1125(a) (Count II); and Illinois common law tortious interference with business relationships (Count III).

Presently before the court is John Hardy's motion to dismiss Counts II and III of BaliJewel's amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). John Hardy also seeks sanctions against BaliJewel and its counsel under 28 U.S.C. § 1927. For the reasons set forth below, John Hardy's motion to dismiss Counts II and III of BaliJewel's complaint is granted and its motion for sanctions pursuant to 28 U.S.C. § 1927 is denied.

I. BACKGROUND

BaliJewel and John Hardy are both manufacturers and distributors of jewelry inspired by Indonesian folk arts. In early 2007, BaliJewel marketed its jewelry via a website, http://balijewel.com, maintained by WA Digital ("WA Digital"), an Indonesian internet service provider ("ISP"). On May 21, 2007, John Hardy's Indonesian counsel, Dyah Ersita & Partners ("Ersita"), contacted WA Digital and informed it that BaliJewel's website was being employed to engage in acts of infringement of John Hardy's various copyrights under Indonesian law. The website was consequently taken down on May 24, 2007. WA Digital objected to Ersita's claims of infringement, whereupon Ersita replied, repeating its allegation that the content of the website in question infringed John Hardy's copyrights.

In the interim, BaliJewel set up a website for its products via a new ISP, Bluehost Inc. of Orem, Utah ("Bluehost"). On May 28, 2007, Bluehost likewise received an email from Ersita, asserting that the contents of Bluehost's BaliJewel website infringed Hardy's copyrights; the BaliJewel website was subsequently removed. BaliJewel then informed Bluehost that its jewelry did not infringe Hardy's or any other party's copyright and the BaliJewel website was subsequently restored. However, on June 2, 2007, Bluehost received an email and letter from John Hardy's New York counsel, Fross Zelnick Lehrman & Zissu, P.C., repeating the allegations of copyright infringement. Specifically, the letter alleged:

The website, which we understand is owned by BaliJewel, Inc. ("Balijewel"), is advertising and selling "knock-off" jewelry that infringes our client's registered copyrights. A chart showing the relevant BaliJewel products, the John Hardy products they copy, and the U.S. registration number for each such John Hardy product, is attached hereto.."

Amended Compl. Ex D.

BaliJewel reiterated its assurances that its products did not infringe, and Bluehost continues to host the website. BaliJewel then filed the instant suit.

II. ANALYSIS

To survive a motion to dismiss under 12(b)(6), "the complaint need only contain a'short and plain statement of the claim showing that the pleader is entitled to relief.'" Equal Employment Opportunity Comm'n v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Fed. R. Civ. P. 8(a)(2)). The complaint "must describe the claim in sufficient detail to give the defendant'fair notice of what the. claim is and the grounds upon which it rests'. [and] its allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a'speculative level'; if they do not, the plaintiff pleads itself out of court." Concentra, 496 F.3d at 776 (quoting Bell Atlantic Corp. v. Twombly,---U.S.----, 127 S.Ct. 1955, 1964, 1973 n.14 (2007)).

The gravamen of BaliJewel's amended Counts II and III is that the letters sent to WA Digital and to Bluehost, warning them of potential copyright infringement by the BaliJewel products advertised on their respective websites, constitute tortious interference with BaliJewel's business relationships with both ISPs. Count II alleges malicious interference in violation of Section 43(a) of the Lanham Act, 15 U.S.C. §1125(a), which states, in relevant part:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading ...


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