Court Considers Which Party Stepped out of Line in Ballet Shoe Dispute
We’ve blogged before about international licensing disputes and the need for certified legal document translation services in such matters. In the case below, a U.S. based company’s business dealings with a Russian ballet shoe manufacturer turned sour, resulting in complex litigation and the filing of numerous claims and counterclaims. Discussed below is a recent ruling on a set of counterclaims asserted by the defendant, some of which proved to be successful and some of which did not.
Legal Translation for English/ Russian/ Czech Contract Disputes
The plaintiff is a Pennsylvania corporation engaged in the business of selling dance-related products, including ballet and “pointe” shoes. Defendants/counter-plaintiffs are Russian and Czech companies that manufactured and sold ballet shoes under the name “Grishko.” In the early 1990’s, the plaintiffs entered into a partnership agreement with the defendants whereby the plaintiffs agreed to distribute “Grishsko” branded products in the United States pursuant to an exclusive licensing agreement.
In 2016, the defendants terminated the licensing agreement. In 2018, upon the expiration of the parties’ exclusivity agreement, the defendants began selling its products to U.S. customers directly. Thereafter, plaintiffs filed suit against the defendants, and the defendants counter-claimed.
Parties Enter Trademark and Licensing Agreement
The parties’ business relationship began in April of 1990 when the parties signed an exclusive trademark and licensing agreement and another similar agreement in 1992. According to the agreement, Grishko agreed to sell, and plaintiff agreed to buy, ballet shoes and other related dance products. Grishko granted the plaintiffs an exclusive right to use the name “Grishko” for the sale of its products in the United States in exchange for a 10% royalty on each shipment.
Defendant alleges that during the course of finalizing their 1992 agreement, the plaintiff suggested that the defendant register “Grishko” as a trademark with the United States Patent and Trademark Office (USPTO). Accordingly, Mr. Grishko signed an agreement that had been presented to him in English and stated: “I agree that I.M. Wilson, Inc. is the owner of the Trademark, GRISHKO and its goodwill in the United States of America. I further consent to the use of my name in that trademark.” The agreement does not mention the model marks and Grishko’s trade dress. (According to Dictionary.com, “trade dress” is protected under trademark law and consists of elements that are not functional, such as product packaging or the décor of a business.)
The USPTO rejected the August 1992 filing, and Mr. Grishko signed another document, also written in English, in March 1993 which stated: “In addition to the consent to I.M. Wilson, Inc. that I previously granted on August 5, 1992, I hereby grant I. [sic] Wilson, Inc. the right to register the trademark GRISHKO in the U.S. patent and trademark office.” The plaintiff then used these agreements, along with other registrations, to obtain seven federal trademarks incorporating the “Grishko” name.
The defendant claimed that he did not understand or intend to transfer ownership of the “Grishko” trademark to the plaintiff.
Plaintiff Files Suit/ Defendants File Counterclaims
After the defendants began selling its products in the U.S., the plaintiff filed a complaint and a motion for preliminary injunction, which was initially granted and then vacated. In response, the defendants filed a total of 13 counterclaims against the plaintiff and its individual officers which the plaintiffs/counter-claim defendants moved to dismiss. The counterclaims related to allegations concerning the following: 1) the Lanham Act and common law claims regarding the plaintiff’s use of disputed trademarks; 2) claims related to the parties’ licensing agreement; and 3) claims related to the plaintiff’s conduct and statements made during the course of the litigation.
Plaintiffs Move to Dismiss Defendants’ Counterclaims.
Part of the defendants’ counterclaims stem from their allegation that the plaintiff wrongfully stopped operating as the defendant’s exclusive licensee, becoming a “non-exclusive” distributor of the “Grishko” branded ballet shoes in the United States. The defendants allege that they demanded that the plaintiffs assign its trademark and trade dress registrations back to Grishko, but that the corporate plaintiff refused. After the defendants discontinued sales through the plaintiff, the defendants allege that the plaintiff began using a third-party Chinese manufacturer to produce its ballet shoes and labeling them as “Made in China Grishko Pointe Shoes,” causing consumer confusion.
In response, the plaintiffs claimed that the defendants did not legally own the disputed trademarks and trade dress according to the document the defendants signed conveying ownership of the “Grishko” mark to the plaintiffs.
Court Issues Mixed Ruling on Plaintiffs’ Motion to Dismiss Counterclaims
As to the trademark dispute, the court found that there was too much ambiguity regarding the purported transfer of the disputed trademarks and model marks and that the defendant had pled sufficient facts to challenge the enforceability of the parties’ 1992 agreement. Specifically, the court held that the alleged conveyance of the disputed model marks did not necessarily also include the defendant’s “goodwill,” finding a distinction between house mark goodwill and product mark goodwill. Accordingly, the court denied the plaintiffs’ motion to dismiss the defendants’ trademark infringement claims against the corporate plaintiff but did agree to dismiss the claims against several individual plaintiffs as a result of the defendants’ failure to establish sufficient personal involvement of those plaintiffs.
The court also found that the defendants had sufficiently alleged a claim for false designation of origin, finding that the plaintiffs’ customers were likely to be confused as to whether the ballet shoes were manufactured by Grishko in Russia or were in fact made in China.
The court did agree to dismiss certain claims against the plaintiffs, however, such as the defendants’ claim for breach of fiduciary duty and the defendants’ claim for breach of contract against one of the individual plaintiffs. The court held that the defendants’ breach of fiduciary duty claim was barred by the statute of limitations.
The court further found that the defendant had failed to state a counterclaim for defamation. The court found that “[o]pining on the quality of the ballet shoes does not go to the honesty and fairness of Grishko’s dealings.” Similarly, the court rejected the defendant’s claim for defamation per se.
Based on the foregoing, the court granted in part and denied in part the plaintiff/counter-claim defendants’ motions to dismiss the defendants’ counterclaims. The court also denied the defendant/counter-plaintiffs’ request to file a fourth amended counterclaim. The case is Wilson v. Otvetstvennostyou “Grichko,” Court No. 18-5194, decided on November 12, 2020 in the United States District Court for the Eastern District of Pennsylvania.
Legal translations company All Language Alliance, Inc. provides legal document translation services from and to Russian, Czech, Traditional Chinese, Korean, French, German, Italian, Simplified Chinese, Portuguese, Spanish, and other foreign languages to English; deposition interpreters for on-site and Zoom depositions in Mandarin Chinese, Korean, German, Italian, Hungarian, and other foreign languages, and linguistic expert witness services by linguistics experts in various foreign languages and cultures.
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