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Competitive Edge, Inc. v. Staples

March 29, 2010

COMPETITIVE EDGE, INC., AND DAVID M. GREENSPON, PLAINTIFFS,
v.
STAPLES, INC. AND STAPLES THE OFFICE SUPERSTORE EAST, INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiffs Competitive Edge, Inc. ("Competitive Edge") and David M. Greenspon ("Greenspon") (collectively "Plaintiffs") filed suit against Defendants Staples, Inc. and Staples the Office Superstore East, Inc. (collectively "Staples") for design patent infringement and trade dress infringement. Specifically, Plaintiffs claim infringement of U.S. Design Patent No. D530,734 ("the '734 patent") pursuant to 35 U.S.C. § 271 (Count I). Plaintiffs also claim infringement of Plaintiffs' purported trade dress in connection with the AdVantage Bubble Calculator (Count II), pursuant to 15 U.S.C. § 1125(a). Staples now moves for summary judgment on both counts on grounds of non-infringement. For the reasons stated below, the Motion for Summary Judgment on non-infringement of the '734 patent is granted and the Motion for Summary Judgment on non-infringement of the alleged trade dress is granted. Staples's Motion to Strike Competitive Edge's Rule 56.1 Statements is denied. Staples's Motion to Exclude the Testimony of Dr. Eldon Little is granted.

STATEMENT OF UNDISPUTED FACTS*fn1

I. Staples's Motion to Strike Plaintiffs' Rule 56.1 Statements

Staples has moved to strike those portions of Plaintiffs' 56.1 statements that exceed forty facts in violation of Local Rule 56.1. (R. 76 at 2.) District courts are "entitled to expect" that parties will strictly comply with the Rule. See Ammons v. Aramark Uniform Servs., Inc., 368 F.3d 809, 817 (7th Cir. 2004) (citing Bordelon v. Chi. Sch. Reform Bd. of Trustees, 233 F.3d 524, 527 (7th Cir. 2000)).

Local Rule 56.1 allows a party opposing summary judgment to file a response including no more than "40 separately-numbered statements of additional facts." L.R. 56.1(3)(C). The Court does not find that each and every separate sentence that Staples has labeled as separate fact does, in fact, constitute a separate "statement[] of additional fact[]" for the purposes of L.R. 56.1; some, as argued by Plaintiffs, represent only attempts to present complex information in an understandable and readable format. (See R. 80 at 6.) However, even a lenient review shows that Plaintiffs have clearly submitted more than forty separate statements of fact in both of their Rule 56.1 statements. While this is a technical violation of Local Rule 56.1, the Court's review of the multi-fact paragraphs reveals that for the most part the facts within each paragraph are logically connected, are supported by reference to the same materials, and are thus compliant "with the spirit if not the letter of the Local Rule." Portis v. City of Chicago, 510 F. Supp. 2d 461, 463 (N.D. Ill. 2007). Staples's Motion to Strike is therefore denied.

Plaintiffs' lengthy responses to Staples's proposed statements of undisputed facts, which often go far beyond merely disputing the fact at issue and introduce new and independent facts, violate both the letter and the spirit of Local Rule 56.1. The Court has disregarded any new facts improperly raised in Plaintiffs' responses to Staples's Local Rule 56.1 statements rather than properly raised in Plaintiffs' own statement of additional facts. See Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643-44 (7th Cir. 2008) (district court properly refused to consider responses consisting of "extremely long, argumentative paragraphs" that both disputed the moving party's statements of fact and presented new facts).

II. The Parties

Competitive Edge, a distributor of advertising specialties and promotional products, is an Indiana corporation with its principal place of business in Des Moines, Iowa. (CE TD 56.1 Resp. ¶¶ 1, 2.) Competitive Edge doing business as AdVantage Industries ("AdVantage") is a supplier of advertising and promotional products. (CE TD 56.1 Resp. ¶ 2.) Greenspon is the founder, sole owner, President, sales manager, and secretary of Competitive Edge. (CE TD 56.1 Resp. ¶ 3.)

Staples is an office supply chain with retail stores in Chicago as well as throughout the United States and Canada, a catalog and internet presence, and a contract business that serves medium-sized businesses and organizations. (CE DP 56.1 Resp. ¶ 5; CE TD 56.1 Resp. ¶¶ 4, 9.) Staples's business includes the sale of customizable products. (Staples TD 56.1 Reply ¶ 10.)

III. Competitive Edge's Bubble Calculator

Greenspon owns the '734 patent, which is entitled "Calculator." (CE DP 56.1 Resp. ¶ 10.) Greenspon has neither licensed nor assigned the rights in the '734 Patent to any other party. (CE DP 56.1 Resp. ¶ 11.) A representative drawing from the '734 patent is depicted below.

All features of the design in the '734 patent are depicted using solid, unbroken lines; there are no broken lines used in the figures of the patent. (CE DP 56.1 Resp. ¶ 27.) Among other features, the '734 patent depicts a removable I.D. plate and shows the plate in place on the calculator design when assembled. (CE DP 56.1 Resp. ¶ 25.) The patent also shows a recessed display screen, that is, a screen whose surface sits below the overall surface of the calculator's face. (CE DP 56.1 Resp. ¶ 54.) The patent shows a particular arrangement of function keys. (CE DP 56.1 Resp. ¶ 56.)

Since 2004, Competitive Edge and AdVantage Industries (a division of Competitive Edge) have supplied and distributed a product called The "Original" Silicone Bubble Calculator. (CE TD 56.1 Resp. ¶ 15; Staples TD 56.1 Resp. ¶ 1.) This calculator is also known as The AdVantage Bubble Calculator. (CE TD 56.1 Resp. ¶16.) Competitive Edge stamps the back of the calculator with "AdVantage Industries" and "patent pending." (Staples TD 56.1 Reply ¶ 3.) A representative example of the AdVantage Bubble Calculator is depicted below.

Competitive Edge offers the AdVantage Bubble Calculator for sale at bulk pricing. (CE TD 56.1 Resp. ¶ 41.) The purchasers of the AdVantage Bubble Calculator are customers of distributors and bulk buyers of promotional products. (CE DP 56.1 Resp. ¶ 34.) The standard available colors of the AdVantage Bubble Calculator are subject to change with changing trends and tastes in color. (CE TD 56.1 Resp. ¶¶ 46, 47.) The calculators are always sold with a color scheme in which the keys and other parts of the calculator body are "the same bright, whimsical color, with only the numbers and symbols on the keys and/or the decoration panel being a different color." (CE TD 56.1 Resp. ¶ 12.) Purchasers are able to order the calculator customized with their corporate logo or in a specific color, and Competitive Edge will customize the calculator in "any color." (CE TD 56.1 Resp. ¶¶ 42, 48.)

Competitive Edge has spent approximately $400,000 on advertising materials, such as catalogs, that include depictions of the AdVantage Bubble Calculator. (Staples TD 56.1 Resp. ¶ 38.)

The AdVantage Bubble Calculator is "not a huge selling product" and Competitive Edge does not contend that its sales revenues are probative of its trade dress in the calculator having acquired secondary meaning. (CE TD 56.1 Resp. ¶¶ 39, 64.)

Distributors of the product often assign a product number to the calculator that is different from the product number that AdVantage uses. (CE TD 56.1 Resp. ¶ 40.)

IV. Staples's Calculators

Staples once imported a product called "Staples Brand Bubble Calculator" from China. (CE DP 56.1 Resp. ¶ 14; CE TD 56.1 Resp. ¶ 18.) The Staples Brand Bubble Calculator was "strikingly similar" to the design disclosed in the '734 Patent. (Staples DP 56.1 Reply ¶ 36.) Sales of the Staples Brand Bubble Calculator were "very strong" in the 2006 summer season. ((Staples DP 56.1 Reply ¶ 13.)

Greenspon notified Staples through a posting on Staples's website that Competitive Edge owns the '734 Patent and noted infringement concerns. (CE DP 56.1 Resp. ¶ 15.) Staples then entered into a license agreement with Competitive Edge with respect to the calculators that Staples had ordered prior to receiving notification of the patent claims. (CE DP 56.1 Resp. ¶ 16.) Under the license agreement, Staples agreed to pay $200,000 "in consideration of the settlement of all possible legal and equitable claims." (Id.) The license agreement further authorized Staples to "manufacture, make, produce, import, develop, market, distribute, lease, transfer, convey, dispose of, and sell" a number of Staples Brand Bubble Calculators. (Id.) The current suit does not include any claims related to unlicensed sales of the Staples Brand Bubble Calculator. (CE DP 56.1 Resp. ¶ 13.)

In response to the dispute regarding the Staples Brand Bubble Calculator, Staples worked with designers and intellectual property counsel to create a new calculator product. (CE DP 56.1 Resp. ¶ 20.) The project was referred to internally as "Bubble Calculator -- next generation of bubble." (Staples TD 56.1 Reply ¶ 32.) During this design process, Staples's outside counsel advised Staples that "the more you get away from the scalloped shape of the buttons, the safer you will be" with respect to avoiding infringement of the '734 patent. (Staples DP 56.1 Reply ¶ 17.) Counsel further advised that "the most significant design change you can make is to alter the scalloped shape of the buttons, such as by flattening the top surface of the buttons...." (Staples DP 56.1 Reply ¶ 19.)

Staples eventually began to import and sell a calculator called the Staples Brand Pillow Top Calculator (the "Pillow Top Calculator"), although the degree of connection between the "next generation of bubble" project and the Pillow Top Calculator is disputed. (CE TD 56.1 Resp. ¶¶ 6, 23; Staples TD 56.1 Reply ¶ 32.) Staples also has used Pillow Top Calculators for promotional and marketing purposes. (CE DP 56.1 Resp. ¶ 6; CE TD 56.1 Resp. ¶ 43.) Staples's Pillow Top Calculator is depicted below.

In addition to the Pillow Top Calculator, Staples continues to sell its remaining inventory of the Staples Brand Bubble Calculator. In at least two retail stores the Pillow Top Calculator and Staples Brand Bubble Calculators have been found mixed in the same sales bin without external packaging. (Staples DP 56.1 Reply ¶ 21, 24.)

The logo area of the Pillow Top Calculator is not removable, and Staples never imprints the calculator with any other logo than that of Staples. (CE DP 56.1 Resp. ¶ 30; CE TD 56.1 Resp. ¶ 43.) The display screen of the Pillow Top Calculator does not sit below the overall surface of the calculator's face. (CE DP 56.1 Resp. ¶ 55.) At least some Pillow Top calculators have the same functional-key layout as that shown in the '734 patent. (CE DP 56.1 Resp. ¶ 57.)

Both the design of the '734 patent and the Pillow Top Calculator have buttons that are part of a continuous contoured surface. (Staples DP 56.1 Reply ¶ 2.) Both have keys that are convex, with the highest point of each key at the center of the key. (Staples DP 56.1 Reply ¶ 3.) Both share a color scheme consisting of one solid color for the body of the calculator, excepting any visible logo, with a separate color used to mark the numbers on the keys. (Staples DP 56.1 Reply ¶ 7.) The area of the Pillow Top Calculator on which Staples's logo is displayed is the same part of the calculator as the area in which the '734 patent's removable I.D. plate is affixed. (Staples DP 56.1 Reply ¶ 9.)

In addition to the Pillow Top Calculator, Staples continues to sell its remaining inventory of the Staples Brand Bubble Calculator. In at least two retail stores the Pillow Top Calculator and Staples Brand Bubble Calculators have been found mixed in the same sales bin without external packaging. (Staples DP 56.1 Reply ¶ 21, 24.)

U.S. Design Patent No. D559,891 ("the '891 patent") was issued on January 15, 2008 with rights under the patent assigned to Staples. (CE DP 56.1 Resp. ¶ 19.) Competitive Edge disputes that the Pillow Top Calculator design is the same design as that protected by the '891 patent; Competitive Edge's expert, Dr. Eldon Little, testified that the design in the patent is not the design of the Pillow Top Calculator. (CE DP 56.1 Resp. ¶ 19; Staples DP 56.1 Reply ¶ 38.) A representative drawing from the '891 patent is depicted below.

STANDARD OF REVIEW

Summary judgment is proper when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether a genuine issue of fact exists, the Court must view the evidence and draw all reasonable inferences in favor of the party opposing the motion. See Bennington v. Caterpillar, Inc.,275 F.3d 654, 658 (7th Cir. 2001); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, the Court will "limit its analysis of facts on summary judgment to evidence that is properly identified and supported in the parties' [Local Rule 56.1] statement." Bordelon v. Chicago Sch. Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). Where a proposed statement of fact is supported by the record and not adequately rebutted, the court will accept that statement as true for purposes of summary judgment. Adequate rebuttal requires a citation to specific support in the record; an unsubstantiated denial is not adequate. See Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001); Drake v. Minnesota Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir. 1998) ("Rule 56 demands something more specific than the bald assertion of the general truth of a particular matter[;] rather it requires affidavits that cite specific concrete facts establishing the existence of the truth of the matter asserted.").

DISCUSSION

I. Staples's Motion to Exclude the Expert Testimony of Plaintiffs' Expert

Dr. Eldon Little ("Little") conducted a survey and an experiment supporting Plaintiffs' claims of patent and trade dress infringement, and prepared an expert report that Plaintiffs seek to admit into evidence. The survey consisted of asking respondents, who were primarily college students, to compare the Staples Pillow Top calculator to the '734 patented design and then with Competitive Edge's Bubble Calculator, and to answer five questions about the comparisons. (See R. 82, Pl. Reply Br. at 10-11.) Little created the survey, which was administered by Mr. Gary Lynn ("Lynn") and Mr. Hosein Fallah. (Lynn Dep. 57: 22-58: 14.) The experiment was a classroom experiment designed by Little in order to simulate the purchasing situation in which prospective consumers of the two calculators might find themselves. (See R. 82, Pl. Reply Br. at 13.) Little created and administered the experiment.

Whether scientific expert testimony is admissible is determined by reference to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). See Ervin v. Johnson & Johnson, Inc., 492 F.3d 901, 904 (7th Cir. 2007). Plaintiffs, as the proponent of Little's testimony, bear the burden of proof with respect to whether the admissibility requirements are met. See Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 704 (7th Cir. 2009).

Rule 702 assigns the trial judge "the task of ensuring that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand." Daubert, 492 F.3d at 597. The focus of this decision "must be solely on principles and methodology, not on the conclusions that they generate." Daubert, 492 F.3d at 595. The Seventh Circuit has developed a three-step analysis for determining the admissibility of expert testimony under Rule 702. See Ervin, 492 F.3d at 904. First, "the witness must be qualified 'as an expert by knowledge, skill experience, training, or education.'" Id. (quoting Fed.R.Evid. 702). Second, "the expert's reasoning or methodologies underlying the testimony must be scientifically reliable." Id. Third, the expert's testimony must be relevant, that is, it must "assist the trier of fact to understand the evidence or to determine a fact in issue." Id.

Little's proposed testimony is based on the data collected from the survey and experiment described above. The admissibility of the survey and experiment is therefore dispositive ...


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