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Wesley Corp. v. Zoom T.V. Products, LLC

United States District Court, E.D. Michigan, Southern Division

May 17, 2018

WESLEY CORPORATION, et al., Plaintiffs,
v.
ZOOM T.V. PRODUCTS, LLC, et al., Defendants.

          OPINION AND ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

          ROBERT H. CLELAND UNITED STATES DISTRICT JUDGE.

         Nearly three years ago, Plaintiffs brought suit against Defendant Zoom TV Products (“Zoom TV”) for patent infringement and breach of contract. That case settled a year later, but its saga was not yet complete; now before the court is Plaintiffs' action against Zoom TV and its marketing affiliate, Defendant Ideavillage Products Corporation (“Ideavillage”), for breach of the settlement agreement and trademark and patent infringement. Defendants and Plaintiffs have filed cross motions for summary judgment. (Dkt. ##61, 62.) The motions are fully briefed, and the court has determined that a hearing is unnecessary. E.D. Mich. L.R. 7.1(f)(2). For the following reasons, Defendants' motion will be granted, and Plaintiffs' motion will be denied.

         I. BACKGROUND

         Contrary to the court's scheduling order (Dkt. #33), neither motion begins with a statement of material facts.[1] The court, therefore, relies on the complaint to set forth the factual background of this case.

         Plaintiff David Hanson invented a product that allows users to create stuffed food-most especially, stuffed hamburgers. He obtained a patent for his efforts, which was assigned to his company, Plaintiff Wesley Corporation. (Dkt. #1-3.) Wesley Corporation also owns the federally-registered trademark “STUFZ, ” which it uses in the distribution and sales of Hanson's product. (Dkt. #1-2; Hanson Decl., Dkt. #68 Pg. ID 1254.)

         In June 2015, Plaintiffs brought suit against Zoom TV. Plaintiffs alleged that they had entered into a licensing agreement with Zoom TV whereby Zoom TV would have the right to manufacture and sell the “Stufz” food maker-and use the “Stufz” mark- while paying royalties. See Wesley Corp. v. Zoom TV Prods., 15-12449 (Cleland, J.). According to Plaintiffs, after the licensing agreement was amended to account for Plaintiffs' new product (“Stufz Sliders”), Zoom TV breached the agreement. Plaintiffs sought to hold Zoom TV liable for patent infringement and breach of contract.

         That case ended in a settlement agreement dated July 22, 2016. (Dkt. #1-1.) Relevant here, the agreement provided that Zoom TV and Ideavillage would “immediately cease all sales, advertising and promotion of Stufz and/or Stufz Sliders products (the ‘Products'), [including] any website activities and/or advertisement.” (Dkt. #1-1 Pg. ID 14.) The agreement further provided that those products that had already been sold to third parties-and for which a royalty had been paid-“shall remain in the marketplace and not subject to the foregoing as WESLEY's rights have been exhausted on those particularly [sic] products based on the royalty paid.” (Id.) The agreement also contemplated the existence of “any molds, tools, or other materials designed to manufacture the Products.” (Id.) According to the agreement, “[t]o the extent that such Tooling exists, ZOOM and IDEA VILLAGE shall advise third-party Well-Bra[i]n, to either deal with WESLEY exclusively or promptly destroy all Tools and provide a certificate of destruction if such Tooling is or has been destroyed.” (Id. at Pg. ID 14-15.)

         But the settlement agreement was not the end of the matter. Plaintiffs filed suit in January 2017, alleging that Zoom TV and Ideavillage have breached the terms of the settlement agreement and infringed on Plaintiffs' patent and trademarks. In particular, Plaintiffs allege that Defendants breached the agreement by continuing to sell, advertise, and promote “Stufz” products via “buystufz.com, ” a website Defendants owned and controlled. And, Plaintiffs say, the continued use of the website constitutes trademark infringement. Plaintiffs further claim that Defendants also took no action to destroy tooling used to make the Stufz products.

         II. STANDARD

         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “In deciding a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party's favor.” Sagan v. United States, 342 F.3d 493, 497 (6th Cir. 2003).

         The movant has the initial burden of showing the absence of a genuine dispute as to a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the nonmovant, who must put forth enough evidence to show that there exists “a genuine issue for trial.” Horton v. Potter, 369 F.3d 906, 909 (6th Cir. 2004) (citation omitted). It is the parties' responsibility to support their factual assertions by citation to the record; the court is under no obligation to search for materials in the record uncited by the parties. Fed.R.Civ.P. 56(c).

         III. DISCUSSION

         Defendants move for summary judgment as to all of Plaintiffs' claims. According to Defendants, there is no evidence that they breached the terms of the settlement agreement. As to Plaintiffs' allegations of patent and trademark infringement, Defendants say that these claims were released by the settlement agreement, and that these allegations similarly lack supporting evidence. Plaintiffs both respond and move for summary judgment on the basis that screenshots of Defendant's website “buystufz.com” show that Defendants continued marketing of Plaintiffs' products without permission.

         A. Breach of the ...


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