Loufrani v. Wal-Mart Stores, Inc., No. 09 C 3062, Slip. Op. (N.D. Ill. Nov. 12, 2009) (Kendall, J.).
Judge Kendall denied counterclaim defendants’ (collectively "Smiley Company") Fed. R. Civ. P. 12(b)(6) motion to dismiss counterclaim plaintiff Wal-Mart’s Lanham Act and related state law declaratory judgment claims related to Smiley Company’s potential use of Wal-Mart’s Mr. Smiley Mark, from Wal-Mart’s well-known roll back campaign, after the Trademark Trial and Appeal Board ("TTAB") held that Smiley Company’s mark was not distinctive and that the mark would create a likelihood of confusion with Wal-Mart’s Mr. Smiley Mark.
First, the Court held that Wal-Mart had plead sufficient facts to establish a controversy existed warranting Wal-Mart’s declaratory judgment claims. All of Wal-Mart’s claims related to likelihood of confusion. And the parties had developed "clear positions" on likelihood of confusion through their TTAB proceedings. Furthermore, Smiley Company had already raised numerous claims against Wal-Mart, evidencing an actual controversy. The Court also noted that this case was not like Geisha v. Tuccilli, 552 F. Supp. 2d 1002 (N.D. Ill. 2007) (click here and here to read more about the case in the Blog’s archives). In that case, the Court held there was no controversy, but declaratory judgment defendant had never used its mark and if he did use it by opening a restaurant, it would have been easy for declaratory judgment plaintiff to identify the use and alleged infringement. Smiley Company, however, admitted to using its mark internationally since the 1970s. Furthermore, Geisha was a summary judgment decision where the parties and the Court had the benefit of discovery.
Smiley Corp. also argued that the Court should only address its appeal of the TTAB decision and not Wal-Mart’s broader claims. The Court, however, held that a district court is free to decide infringement and likelihood of confusion issues as part of reviewing a TTAB decision. The TTAB review instituted by Smiley Company was both an appeal and a new action which allowed the Court to address new issues and to admit new evidence.
Finally, Wal-Mart’s Illinois Consumer Fraud and Deceptive Business Practices Act claim was not insufficient for failing to plead actual damages. While actual damages were required, they could not exist in a declaratory judgment claim seeking to prevent future acts and, therefore, future damages.