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Marvellous Day Elec. (S.Z.) Co., Ltd. v. Ace Hardware Corp.

United States District Court, N.D. Illinois, Eastern Division

October 2, 2012

MARVELLOUS DAY ELECTRIC (S.Z.) CO., LTD., Plaintiff,
v.
ACE HARDWARE CORPORATION, Defendant. Marvellous Day Electric (S.Z.) Co., Ltd., Plaintiff/Counterdefendant, and Hsin-Wei Wu, Counterdefendant,
v.
Holiday Bright Lights, Inc. and Richard Martini, Defendants/Counterplaintiffs.

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David L. Newman, Greenberg Traurig, LLP, Judith L. Grubner, Steven N. Malitz, Arnstein & Lehr, LLP, Chicago, IL, for Plaintiff.

Robert P. Greenspoon, Michael R. La Porte, William W. Flachsbart, Flachsbart & Greenspoon, LLC, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

JOHN J. THARP, JR., District Judge.

Plaintiff Marvellous Day Electric (S.Z.) Co., Ltd. (" Marvellous Day" ) filed two separate lawsuits— No. 11 C 8756 against Ace Hardware Corp. (" Ace" ), and No. 11 C 8768 against Holiday Bright Lights, Inc. (" HBL" ) and Richard Martini— alleging patent infringement, false patent marking, and violations of the Lanham Act, Illinois

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Uniform Deceptive Trade Practices Act (" UDTPA" ), and Illinois Consumer Fraud and Deceptive Business Practices Act (" Consumer Fraud Act" ). Ace and HBL move to dismiss all counts other than Marvellous Day's claims of patent infringement. Martini, an officer of HBL, moves to dismiss all counts pending against him.

Besides the defendants' motions to dismiss, three other motions are pending in each case. The defendants each move to stay Marvellous Day's patent infringement claims pending reexamination of the relevant patent by the U.S. Patent and Trademark Office (" USPTO" ). Defendants HBL and Martini also move for an entry of default against Counterdefendant Hsin-Wei Wu. Finally, Marvellous Day moves for leave to file instanter a consolidated surreply to each of the defendants' motions.

For the reasons stated below, the Court grants defendants' motions to dismiss all of Marvellous Day's claims other than the patent infringement claims. The Court further grants the defendants' motion to stay the patent infringement claims pending the USPTO's reexamination. The Court denies the defendants' motion for entry of default against Wu. And the Court grants Marvellous Day's motion for leave to file a consolidated surreply; the Court considered Marvellous Day's surreply in deciding the preceding motions.

BACKGROUND[1]

This litigation relates to LED light bulbs used in Christmas light strands. Prior to March 1, 2010, Wu invented a new ornamental design for an LED light bulb. Wu applied for and obtained a United States design patent, Number D627, 494 (the " '494 Patent" ), issued on November 16, 2010. Marvellous Day owns all rights to the '494 Patent, including the right to sue for infringement. Using the design of the '494 Patent, Marvellous Day manufactured and sold ornamental LED string lights, which HBL, under the control of Martini, imported into the United States. HBL sold the lights to Ace, which in turn sold them to American consumers through its Ace Hardware stores.

Marvellous Day's lights were advertised as being " always lit." [2] According to Marvellous Day, " always lit" means that when an individual LED bulb in a string of lights is damaged or burned out the remaining lights will remain lighted and the individual bulb can be replaced without extinguishing the remaining lights. Therefore, " always lit" light bulbs are easily replaceable.

Beginning sometime in 2011, HBL, under Martini's direction, began making, using, offering to sell, or selling within the United States LED light sets which used the same ornamental feature of the '494 Patent, but which were not produced by Marvellous Day. HBL sold these allegedly infringing lights to Ace and to other customers, and Ace in turn sold the allegedly infringing lights to consumers. Ace and HBL advertised and sold these lights as " always lit." The new lights, however, are not replaceable when the bulbs are broken and burned out, and Marvellous Day alleges

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that they are therefore not " always lit." [3] Marvellous Day alleges that the defendants' use of the " always lit" term amounts to a false or misleading description of fact which misrepresents the nature, characteristics, or qualities of the LED bulbs. Marvellous Day claims that these actions violate the Lanham Act (15 U.S.C. § 1125(a)), the UDTPA (815 ILCS § 510), and the Consumer Fraud Act (815 ILCS § 505).

Marvellous Day also asserts claims against Ace (only) for falsely advertising, without obtaining Marvellous Day's consent, that the allegedly infringing LED bulb is " patented." Marvellous Day contends that Ace used the term " patented" with the intent of deceiving and inducing the public to believe that the bulbs were made or offered for sale with the consent of the patentee. It claims that this constitutes a False Patent Marking in violation of 35 U.S.C. § 292 and that, if Ace's allegedly infringing bulbs do not violate the ' 494 Patent, then Ace's use of the term " patented" is a false or misleading description of fact.[4] Marvellous Day also alleges that Ace intended to deceive and induce consumers to believe that the bulbs were made or offered for sale by or with the consent of the patentee. Ace's use of the word " patented" allegedly violates the Lanham Act, the UDTPA, and the Consumer Fraud Act.

Shortly after Marvellous Day filed these lawsuits, HBL requested that the USPTO reexamine the validity of the '494 Patent. The USPTO granted the reexamination, and is now in the process of determining whether prior art invalidates the patent. The parties agree that if the USPTO invalidates the ' 494 Patent, Marvellous Day's patent infringement claims will be eliminated. If the USPTO upholds the patent, however, the patent infringement claims will proceed.

DISCUSSION

I. Motions to Dismiss

A. " Always Lit" False Advertising Claims

1. Lanham Act

The Court first examines Marvellous Day's claim that the defendants violated the Lanham Act [5] by falsely advertising and selling string lights as " always lit." Even accepting as true Marvellous Day's allegations that " always lit" means that individual light ...


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