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K&M International, Inc. v. Rhode Island Novelty, Inc.

United States District Court, D. Rhode Island

March 20, 2017



          WILLIAM E. SMITH, Chief Judge.

         Before the Court is Plaintiff K&M International, Inc.'s (“K&M”) Motion for Partial Summary Judgment seeking judgment as a matter of law on two of the seven counts alleged in its First Amended Complaint against Defendant Rhode Island Novelty, Inc. (“RINCO”). (Pl.'s Mot. for Partial Summ. J. 1, ECF No. 28.) For the reasons that follow, K&M's motion is GRANTED IN PART and DENIED IN PART.

         I. Background

         K&M and RINCO are both designers and distributors of toys that are sold throughout the country in gift shops and concession stands located on the premises of zoos, museums, and aquariums. (Pl.'s Statement of Undisputed Facts (“SUF”) ¶¶ 1, 2, ECF No. 30; Nowak Aff. ¶ 8, ECF No. 42-2.) The toys include plush animals and polyvinyl chloride (“PVC”) animal figures. (SUF ¶¶ 1, 2.) The instant litigation is not the first time these parties have tangled over Plaintiff's copyrights for its plush toys. In 2006, K&M sued RINCO for trademark and copyright infringement, alleging that RINCO had infringed K&M's “WILD REPUBLIC” trademark when RINCO used “WILD ADVENTURES” in connection with its toy products. (See CA No. 06-159ML Am. Compl. ¶¶ 2-3, ECF No. 19.) The parties ultimately settled this litigation and signed a confidential settlement agreement. (CA No. 14-428S Am. Compl. ¶ 3, ECF No. 18.)

         Since the first round of litigation, K&M and RINCO have continued to develop their product lines, including new plush toy animals and PVC toys. K&M has registered copyrights for its designs of at least four new plush toys (a pink hippopotamus, a penguin chick, a river otter, and a harbor seal) and has continued to use its “WILD REPUBLIC” trademark. (Pl.'s SUF ¶¶ 3, 5, 25.) RINCO has acquired designs for at least four of the same animals and has been marketing and selling these new plush toys. (Labsan Aff. ¶¶ 25-30, ECF No. 42-3.) In addition, RINCO has produced several sets of toys using “ADVENTURE PLANET” as a trademark and brand name, and has also used the terms “wild” and “wildlife” on the packaging and in the marketing of some of these toys. (Id. ¶¶ 7, 9, 11.)

         In 2014, K&M initiated the present litigation against RINCO, alleging that RINCO has: (1) breached the 2007 settlement agreement by using the word “wild” in marketing and selling its toy products; (2) infringed K&M's trademarks and copyrights; (3) engaged in common law unfair competition; and (4) benefitted from unjust enrichment as a result. (Am. Compl., ECF No. 18.) K&M is moving for summary judgment on two of the seven counts brought against RINCO: copyright infringement with respect to K&M's registered copyrights for the pink hippopotamus, penguin chick, river otter, and harbor seal (count I) and breach of contract (count VI). (Mem. in Supp. of Pl.'s Mot. for Partial Summ. J. (“Pl.'s Mem.”) 1, ECF No. 29.)

         II. Standard of Review

         “Summary judgment is proper only if the record, read favorably to the non-moving party, reflects no genuine issues of material fact and the undisputed facts indicate that the movant is entitled to judgment as a matter of law.” T-Peg, Inc. v. Vermont Timber Works, Inc., 459 F.3d 97, 111 (1st Cir. 2006) (quoting Hadfield v. McDonough, 407 F.3d 11, 15 (1st Cir. 2005) (citing Fed.R.Civ.P. 56(c))). “[A] party seeking summary judgment [must] make a preliminary showing that no genuine issue of material fact exists. Once the movant has made this showing, the nonmovant must contradict the showing by pointing to specific facts demonstrating that there is, indeed, a trialworthy issue.” Nat'l Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir. 1995) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). “To satisfy the criterion of trialworthiness, and thereby forestall summary judgment, an issue must be ‘genuine, ' that is, the evidence relevant to the issue, viewed in the light most flattering to the party opposing the motion . . . must be sufficiently open-ended to permit a rational factfinder to resolve the issue in favor of either side.” Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)) (other citations omitted). As the First Circuit has stated, “[t]he evidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve . . . .” Id. (quoting Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181 (1st Cir. 1989)). A material fact is one that “has the capacity to sway the outcome of the litigation under the applicable law.” Id. (citing Liberty Lobby, 477 U.S. at 248) (other citations omitted).

         III. Discussion

         A. Breach of Contract Claim As part of the 2007 Settlement Agreement, RINCO agreed that it would “not use as a trademark or brand name the terms “WILD” and “REPUBLIC, ” either as a word or syllable, alone or as part of a composite mark, word, symbol or design element, in connection with the marketing, promotion, manufacture, distribution and/or sale of toy products anywhere in the world.” (Pl.'s Mem. 10; 2007 Settlement Agreement ¶ 3(h), Malbin Decl. Ex. 14, ECF No. 33-4 (filed under seal).)

         K&M argues that RINCO breached the 2007 Settlement Agreement by using the term “wild” in two separate ways: first, by marketing and distributing toy products with logos “prominently” reflecting the term “wild” on the packaging, and second, by marketing toy lines “identified by names containing the term ‘wild.'” (Pl.'s Mem. 10.) K&M contends that both of these uses constitute use as a brand name because each logo or name on toy packaging is a symbol that identifies RINCO's products. (Id. at 12.) K&M also argues that these uses of the term “wild” constitute use as a trademark within the definition applied by the Lanham Act, 15 U.S.C. § 1127. (Id. at 13, 15.)

         For its part, RINCO argues that it has not used the term “wild” as either a brand name or trademark, but instead as a generic, descriptive term of its products and alongside its Adventure Planet trademark and brand name. (Def.'s Mem. in Supp. of Obj. (“Def.'s Mem.”) 1, 5, 15, ECF No. 42-1.) According to RINCO, paragraph 3(h) of the 2007 Settlement Agreement specifically prohibited the use of the term as a brand name or trademark but not from using the terms “wild” and “republic” as descriptive terms. (Id. at 13-14.) RINCO also asserts that the plain meaning of paragraph 3(h) prohibits it from using the terms “wild” and “republic” together as a brand name or trademark, but not separately, and that it could not have breached the 2007 Settlement Agreement because it has not used these terms together. (Id. at 1, 5, 9.) RINCO contends that any determination regarding the placement, use, and context of its use of the term “wild” is too fact-specific to undertake at this summary judgment stage of the litigation. (Id. at 11.)

         “To succeed on a breach of contract claim under Rhode Island law, a plaintiff must prove that (1) an agreement existed between the parties, (2) the defendant breached the agreement, and (3) the breach caused (4) damages to the plaintiff.” Barkan v. Dunkin' Donuts, Inc., 627 F.3d 34, 39 (1st Cir. 2010) (citing Petrarca v. Fid. & Cas. Ins. Co., 884 A.2d 406, 410 (R.I. 2005) (additional citations omitted)). There is no dispute that the 2007 Settlement Agreement exists as a contract between the parties and that this agreement is governed by Rhode Island law. (Pl.'s Mem. 10; Def.'s Mem. 10.)

         When the Rhode Island Supreme Court reviews the terms of a settlement agreement, it applies its general rules of contract construction. Furtado v. Goncalves, 63 A.3d 533, 537 (R.I. 2013) (citing Rivera v. Gagnon, 847 A.2d 280, 282, 284 (R.I. 2004)). “[T]he existence of ambiguity vel non in a contract is an issue of law to be determined by the [C]ourt.” Id. (quoting Derderian v. Essex Insurance Co., 44 A.3d 122, 127 (R.I. 2012) (additional quotations omitted)). It is well settled that “[a]n ambiguity in a contract cannot be resolved on summary judgment.” Garden City Treatment Ctr., Inc. v. ...

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