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Morningware, Inc v. Hearthware Home Products

August 27, 2012

MORNINGWARE, INC., PLAINTIFF,
v.
HEARTHWARE HOME PRODUCTS, INC., DEFENDANT.
IBC-HEARTHWARE, INC. D/B/A HEARTHWARE HOME PRODUCTS, INC., PLAINTIFF,
v.
MORNINGWARE, INC., DEFENDANT.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge:

Consolidated

MEMORANDUM OPINION AND ORDER

On July 20, 2009, Plaintiff Morningware, Inc. ("Morningware"), filed its Complaint against Hearthware Home Products, Inc. ("Hearthware"), alleging that Hearthware had commercially disparaged Morningware's counter-top oven, had committed the common-law tort of unfair competition, and had violated the Deceptive Trade Practices Act of Illinois, as well as the unfair-competition and product-disparagement provisions of the federal Lanham Act. (R. 1.) Separately, Hearthware brought an action against Morningware alleging that the latter had infringed U.S. Patent No. 6,201,217 ("the '217 Patent"). (IBC-Hearthware, Inc. v. Morningware, Inc., No. 09-CV-4903 (N.D. Ill.) (R. 1).) The Court consolidated both cases on August 26, 2009. (Id. (R. 19).) Morningware filed an Amended Complaint on November 4, 2011. (R. 244, First Am. Compl. ("Complaint").) Before the Court are the following:

1) Morningware's motion for summary judgment on Counts I through V of its First Amended Complaint (R. 279);

2) Hearthware's cross-motion for summary judgment on Counts I through V of Morningware's First Amended Complaint (R. 317);

3) Morningware's motion to strike the affidavit of James H. Nelems (R. 308); and

4) Morningware's motion to exclude the Vanderhart Rebuttal Report and Documents Produced After the Close of Discovery (R. 309).*fn1 For the following reasons, the Court denies Morningware's motion for summary judgment; denies Hearthware's cross-motion for summary judgment; grants Morningware's motion to strike Mr. Nelems' affidavit; and denies, without prejudice, Morningware's motion to exclude Dr. Vanderhart's rebuttal report and documents produced after the close of discovery.

BACKGROUND

I. Northern District of Illinois Local Rule 56.1

"For litigants appearing in the Northern District of Illinois, the Rule 56.1 statement is a critical, and required, component of a litigant's response to a motion for summary judgment.

The purpose of the local rule is to make the summary judgment process less burdensome on district courts, by requiring the parties to nail down the relevant facts and the way they propose to support them." Sojka v. Bovis Lend Lease, Inc., 686 F.3d 394, 398 (7th Cir. 2012). Local Rule 56.1 assists the Court by "organizing the evidence, identifying undisputed facts, and demonstrating precisely how each side propose[s] to prove a disputed fact with admissible evidence." Bordelon v. Chi. Sch. Reform Bd. of Trs., 233 F.3d 524, 527 (7th Cir. 2000). "The Rule is designed, in part, to aid the district court, 'which does not have the advantage of the parties' familiarity with the record and often cannot afford to spend the time combing the record to locate the relevant information,' in determining whether a trial is necessary." Delapaz v. Richardson, 634 F.3d 895, 899 (7th Cir. 2011) (citation omitted).

Local Rule 56.1(a)(3) requires the moving party to provide "a statement of material facts as to which the moving party contends there is no genuine issue." Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009). "The opposing party is required to file 'a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon.'" Id. (citing N.D. Ill. R. 56.1(b)(3)(B)). Pursuant to the Local Rules, the Court will not consider any additional facts proposed in the nonmoving party's Local Rule 56.1(b)(3)(B) response, but must rely on the non-movant's Local Rule 56.1(b)(3)(C) statement of additional facts. See Ciomber v. Coop. Plus, Inc., 527 F.3d 635, 643 (7th Cir. 2008). The Court disregards Rule 56.1 statements and responses that do not cite to specific portions of the record, as well as those that contain factual or legal argument. See Cracco, 559 F.3d at 632 ("When a responding party's statement fails to dispute the facts set forth in the moving party's statement in the manner dictated by the rule, those facts are deemed admitted for purposes of the motion."); Cady v. Sheahan, 467 F.3d 1057, 1060 (7th Cir. 2006) ("statement of material facts did [] not comply with Rule 56.1 as it failed to adequately cite the record and was filled with irrelevant information, legal arguments, and conjecture"); Bordelon, 233 F.3d at 528 (the requirements for responses under Local Rule 56.1 are "not satisfied by evasive denials that do not fairly meet the substance of the material facts asserted"); Cichon v. Exelon Generation Co., L.L.C., 401 F.3d 803, 809-10 (7th Cir. 2005) ("A district court does not abuse its discretion when, in imposing a penalty for a litigant's non-compliance with Local Rule 56.1, the court chooses to ignore and not consider the additional facts that a litigant has proposed.").

II. The Parties Failed to Comply with Local Rule 56.1

The parites' Local Rule 56.1 statements and responses contain significant problems. Several of Morningware's "statements of material facts," for example, are either unsupported by citations to the evidence, or they are not statements of fact at all, but rather legal argument or legal conclusions. (See R. 280, Morningware's Local Rule 56.1(a)(3) Statement of Facts in Support of its Mot. for Summ. J. ("Morningware's SOF") ¶¶ 7, 25, 27-41, 47, 49, 52-53.) In addition, most of Hearthware's Local Rule 56.1(b)(3)(C) additional statements of material fact suffer from the same problems. (See, e.g., R. 298, Hearthware's Local Rule 56.1 Statement of Additional Material Facts That Require Denial of Morningware's Mot. for Summ. J. ("Hearthware's Add'l SOF") ¶¶ 7-28, 30-37.) As explained above, the purpose of Local Rule 56.1 statements is to identify the relevant admissible evidence supporting the material facts, not to make factual or legal arguments. See Cady, 467 F.3d at 1060; see also Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec, 529 F.3d 371, 382 n.2 (7th Cir. 2008) ("It is inappropriate to make legal arguments in a Rule 56.1 statement of facts."). As such, the Court will not deem these "facts" as true unless the opposing party admits them.

Moreover, Hearthware's Local Rule 56.1(b)(3)(B) responses to Morningware's Local Rule 56.1(a)(3) statement of facts largely fail to comply with the Local Rule 56.1. Specifically, Local Rule 56.1(b)(3)(B) requires the opposing party "to file 'a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon.'" Cracco, 559 F.3d at 632 (quoting N.D. Ill. R. 56.1(b)(3)(B)). Hearthware's responses do not cite specific, or even general, portions of the record or other evidence in support of its denials of Morningware's statements of fact. Instead, Hearthware states, in the majority of its denials, that because "Hearthware does not have personal knowledge of the facts presented," it denies the particular statement of fact. While such a response is permissible in an answer to a complaint, see Fed. R. Civ. P. 8(b)(5), it is an insufficient response to a Rule 56.1 statement of fact. See N.D. Ill. R. 56.1(b)(3)(B); Cracco, 559 F.3d at 632. As such, for the particular statements of fact that contain such a response from Hearthware, the Court deems Morningware's statements of fact as admitted for the purposes of its motion. See Cracco, 559 F.3d at 632; see also Sojka,686 F.3d at 398 ("The obligation set forth in Local Rule 56.1 'is not a mere formality.' Rather, '[i]t follows from the obligation imposed by Fed. R. Civ. P. 56(e) on the party opposing summary judgment to identify specific facts that establish a genuine issue for trial.'") (quoting Delapaz v. Richardson, 634 F.3d 895, 899 (7th Cir. 2011) (internal citations omitted)).*fn2

The parties also failed to cite to the Rule 56.1 Statements of Fact in their respective memoranda of law, and instead cited to the record directly. In memoranda of law in support of, or in opposition to, summary judgment, parties should cite to the specific statement(s) of fact in support of the argument, not to the record directly. See LaSalvia v. City of Evanston, 806 F. Supp. 2d 1043, 1046 (N.D. Ill. 2011) (citing Malec v. Sanford, 191 F.R.D. 581, 586 (N.D. Ill. 2000) (citations in the fact section should be to the 56.1(a) or (b) statement of facts only)).

RELEVANT FACTS

The Court now turns to the facts relevant to Counts I-V of Morningware's Complaint. Hearthware is a corporation organized under Illinois law, with its principal place of business at 1795 North Butterfield Road, Libertyville, Illinois. (Hearthware's Add'l SOF ¶ 2.) Morningware is a corporation organized under Illinois law, with its principal place of business at 1699 Wall Street, Mount Prospect, Illinois. (Id. ¶ 3.) Morningware has only one employee. (Id. ¶ 29.) The Court has subject matter jurisdiction pursuant to 15 U.S.C. § 1121(a), 28 U.S.C. §§ 1331, 1338(b), and 1367(a). (Id. ¶ 4.) Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) and (c). (Id. ¶ 6.)

Morningware owns United States Trademark Registration No. 3,802,040, which issued on June 15, 2010, for "MORNINGWARE." (Morningware's SOF ¶ 4.) The registration is for use in small electric kitchen appliances--namely, infrared wave-producing convection ovens. (Id.) It has used this mark since at least 2002. (Id. ¶ 5.) Morningware markets, advertises, and sells counter-top electronic ovens in the United States, primarily via the internet, through its website at www.morningware.com, and through retail. (Id. ¶¶ 1-2.) Morningware also has promoted its Morningware Halogen/Halo Oven at tradeshows and through infomercials and catalogs. (Id. ¶ 3.) Since at least January 2009, Morningware has used the designation "Halo" to identify its counter-top electronic ovens. (Id. ¶ 6.) Morningware has not given Hearthware permission to use the terms "Morningware" or "Halo." (Id. ¶ 8.)

Hearthware has participated in "pay-per-click" ("PPC") internet advertising through various search engine providers. (Id. ¶ 9.) Specifically, Hearthware purchased the keywords "Morningware" and "Morning Ware" from the Google, Yahoo!, and MSN search engines from October 14, 2008 through July 7, 2009. (Id. ¶ 10.) Hearthware uses keyword advertising with Yahoo! and Bing, through which Hearthware pays to have its ads displayed when a user searches for a word or phrase that Hearthware defines. (Id. ¶¶ 11-12.) Through this type of advertising, when a user searches the term "morningware," Hearthware's ad appears at the top of the search results. (Id. ¶ 13.) The ad contains a link to Hearthware's website, www.mynuwaveoven.com, and states that "[t]he Real NuWave® Oven Pro Why Buy an Imitation? 90-Day Gty." (Id. ¶¶ 13, 48.) When a user clicks on Hearthware's ad, the user is directed to Hearthware's website. (Id. ¶ 13.)

Hearthware has purchased or bid on the following keywords: morningware, morning ware, by morningware, halo oven by morningware, morningware halo oven, morningware halo oven reviews, halogen oven by morningware, morningware oven, morning ware oven, morningware halogen oven, morningware infrared oven, morning ware infrared oven, morningware infrared halogen oven, morningware convection oven, morningware reviews, morningware HO1200, morningware com, oven by morningware, halo trainer, halo halogen oven, halo infrared oven, halo convection oven, halo countertop oven, halo oven reviews. (Id. ¶ 14.) Hearthware has initiated approximately ten "campaigns" for Google AdWords, which included ads that Hearthware created to display when a user searches keywords that Hearthware bid on. (Id. ¶¶ 15-16.)

Before April 1, 2011, Hearthware lumped all of its AdWords campaigns under a single "Campaign No. 1." (Id. ¶ 17.) Hearthware used the "Morningware" mark and "Halo" in Campaign No. 1. (Id.) On April 1, 2011, Mr. David Kaplan began working at Hearthware. (Id. ¶ 18.) At some point thereafter, at Mr. Kaplan's direction, Hearthware began employing a "competitor campaign," which included using the "Morningware" mark and the "Halo" designation. (Id. ¶ 19.) Hearthware stopped this campaign when its counsel instructed Mr. Kaplan to do so. (Id. ¶ 20.) When it purchased these keywords, Hearthware knew that Morningware was a direct competitor. (Id. ¶ 21.)

Hearthware's purchase and use of keywords is in "interstate commerce." (Id. ΒΆ 26.) Hearthware bid on a total of twenty-five keywords that incorporated the "Morningware" and/or "Halo" designations, and Hearthware chose to bid on those specific keywords with the intent that the search engines ...


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