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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 1 of 168
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`
`FOCUS PRODUCTS GROUP INTERNATIONAL, LLC,
`ZAHNER DESIGN GROUP LTD., HOOKLESS SYSTEMS
`OF NORTH AMERICA,INC., SURE FIT HOME
`PRODUCTS, LLC, SURE FIT HOME DECOR HOLDINGS
`CORP., and SF HOME DECOR,LLC,
`Plaintiffs,
`
`-y-
`
`KARTRI SALES CO., INC., and MARQUIS MILLS
`INTERNATIONAL,INC.,
`
`Defendants.
`
`
`PAUL A. ENGELMAYER,District Judge:
`
`15 Civ, 10154 (PAB)
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`OPINION & ORDER
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`This decision sets out the Court’s findings of fact and conclusions of law pursuantto
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`Federal Rule of Civil Procedure 52 following a six-day benchtrial in this case.
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`Plaintiffs manufacture, sell, and distribute shower curtains with hookless rings that are
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`coplanar with the curtain. These products have obtained considerable acclaim and commercial
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`traction within the hospitality industry, insofar as they enable shower curtains to be put up more
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`quickly and easily than conventional shower curtains that attach by means of hooks. Plaintiffs
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`claim that defendants have manufactured, sold, and distributed confusingly similar shower
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`curtains, and thus have infringed plaintiffs’ utility and design patents, infringed plaintiffs’
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`trademarks and trade dress, and engaged in unfair competition under the Lanham Act and New
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`York law. Plaintiffs further claim that defendants’ infringements were willful, warranting
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`enhanced damages. Defendants deny these claims and advancea host of affirmative defenses.
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`During lengthy pretrial litigation, the Court conducted a Markman hearing, resolved
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`many pretrial motions, and entered summary judgmentfor plaintiffs on their utility patent
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 2 of 168
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`infringement claims. Trial was held on June 27-29 and July 26-28, 2022. The Court received
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`testimony from 14 witnesses. Asto six, called by plaintiffs,’ the Court received direct testimony
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`by affidavit, followed by live cross and redirect examination.’ As to nine, the Court heard
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`testimony in wholly live form.’ The Court also received testimony, in the form of deposition
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`excerpts, from five witnesses,’ and received hundreds of exhibits.> »
`The findings offact that follow are based on the Court’s review of the entire trial record.
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`Where based in whole or in part on a witness’s testimony, the Court’s findingsreflect credibility
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`determinations based on the Court’s assessment of, inter alia, the relevant witness or witnesses’
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`experience, knowledge, and demeanor.
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`' The Court here lists witnesses by the party who presentedtheir direct testimony. A number of
`witnesses appeared on both sides’ witness lists, but, at the Court’s direction for economy’s sake,
`testified on only one party’s case, with unrestricted cross-examination.
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`* These were: Stacy Dubinski, Ryan Erickson, David Kreilein, Charles Kuehne, David Zahner,
`and Adrian Whipple. Their affidavits are filed at Dkts. 455-2 (“Dubinski Aff”); 455-1
`(“Erickson Aff.”); 455-3 (“Kreilein Aff.”); 455-4 (“Kuehne Aff.”); 473-1 (“Zahner Aff”); and
`473-2 (Whipple Aff”).
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`3 These were: Robert Burbank, Sandra Kemp, and John Elmore, called by plaintiffs; and
`Samantha Dolph, Karen Goskowski, Patricia Kubus, David Middleberg, Joseph Ranieri, and
`Graham Rogers, called by defendants.
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`* Forplaintiffs, these were Goskowski, see Dkt. 455-6 (“Goskowski Dep. Tr.”); Kubus, see Dkt.
`455-7 (“Kubus Dep. Tr.”); Lawrence Mayer, see Dict. 455-5 (“Mayer Dep. Tr.”); Middleberg,
`see Dkt. 455-8 (“Middleberg Dep. Tr.”); and Ranieri, see Dkt. 455-9 (“Ranieri Dep. Tr.”). For
`defendants, this was Mayer.
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`5 Citations herein to “PTX”refer to a plaintiff exhibit; “DTX”to a defendant exhibit; “Tr.” to the
`trial transcript; and “Dep.” to deposition designations of the person indicated. The Court has
`reviewed the parties’ most recent proposed findings of fact and conclusionsof law, see Dkts.
`494, 500; exhibits; and pertinentletters, see Dkts. 454, 475, 480, 481. Unless otherwise
`indicated, where the Court cites testimony here, it has credited that testimony.
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 3 of 168
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`For the reasons that follow, the Court finds for plaintiffs on all claimstried;® dismisses
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`defendants’ counterclaims and affirmative defenses; awardsplaintiffs lost profits and reasonable
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`royalty damages of $2,938,337, which reflects the trebling of certain damages; and commissions
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`briefing on pre- and post-judgment interest and attorneys’ fees.
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`I.
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`Findings of Fact
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`A.
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`The Parties and Other Relevant Entities
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`Plaintiff Focus Products Group International, LLC (“Focus Products”) was a limited
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`liability company organized underthe laws of, and with its principal place of business in,
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`Illinois. Kreilein Aff. ¢ 3; PTX 88. On March 6, 2017, Focus changed its name to Sure Fit
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`Home Décor, LLC (“Sure Fit Home Décor”), also a plaintiff here. Kreilein Aff. { 6; PTX 88 at
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`3. Plaintiff Sure Fit Décor Holdings Corp. (“SFD Holdings”) is a Delaware corporation with a
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`principal place of business in New York City. Kreilein Aff 410. Plaintiff SF Home Décor LLC
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`(“SF Home Décor”) is a subsidiary of SFD Holdings and a Delawarelimited liability company
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`with its principal place of business in Pennsylvania. fd. 99. Plaintiff Sure Fit Home Products,
`LLC (“SF Home Products”) is a subsidiary of SF Home Décor and a Delaware limited liability
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`company with a principal place of business in Pennsylvania. See PTX 416. Non-party
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`Hollander Sleep Products acquired the Sure Fit entities in 2021. See Dkt. 494 at 3. However,the
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`Sure Fit entities continue to exist. fd.
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`Plaintiffs Zahner Design Group, Ltd. (“ZDG”) and Hookless Systems of North America
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`(“HSNA”) are affiliated New York corporations each with a principal place of business in New
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`6 Plaintiffs’ design patent infringement claim was nottried. As explained below, the parties
`agreedto stay litigation on that claim pending the outcome of a reexamination of that patent’s
`validity by the United States Patent and Trademark Office (“PTO”).
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 4 of 168
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`York. Dkt. 323 “JPTO”) at 12. Non-party David Zahner, who invented the hookless shower
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`rings forming the basis of this intellectual property dispute, wholly owns ZDG and HSNA.! id.
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`Non-party Arcs and Angles, Inc. (“A&A Inc.”) was a corporation registered and with its
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`principal place of business in New York.’ Non-party Arcs & Angles, LLC (“A&A LLC”) was a
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`limited liability company. On July 9, 2004, HSNA exclusively licensedits rights in the hookless
`showerring patents to A&A Inc, PTX 387 at bl 4. On December 22, 2010, A&A Inc. assigned |
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`those rights to A&A LLC. Jd. at 23-24. On October 10, 2012, Focus acquired A&A LLC and
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`its intellectual property rights. Id. at 28-29; see also Dkt. 297 at 3 (“SJ Op.”).
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`Defendant Kartri Sales Company,Inc. (“Kartri”) is a Pennsylvania corporation with its
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`principal place of business in Forest City, Pennsylvania. JPTO at 12; Tr. at 626.
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`Defendant Marquis Mills International, Inc. (“Marquis”) was a New Jersey corporation
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`with its principal place of business in New Jersey that went out of business in 2020. JPTO at 12;
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`Tr. at 576. Marquis manufactured and solid the accused shower curtains to Kartri, which sold
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`these to resellers, mostly in the hospitality market. Middleberg Dep. Tr. at 96; Kubus Dep.Tr. at
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`14-15.
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`Non-party Carnation HomeFashions, Inc. (“Carnation”) once owned the EZ-ON Mark
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`pertinent to the trademark infringementclaimshere.
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`Non-party Star Linen, Inc. (“Star Linen”) is a company that resells Kartri’s products to
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`the hospitality and healthcare industries. Tr. at 549. Middleberg worked in acquisitions for both
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`Marquis and Star Linen. Jd.
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`? The Court will refer to all plaintiffs collectively as “plaintiffs,” to Focus Products andall its
`successorentities by the shorthand “Focus,” andto all the Sure Fit entities as “Sure Fit.”
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`8 See Arcs & Angles, Inc. v. Carnation Home Fashions, Inc., No. 09 Civ. 1467 (JPO) (FM)
`(S.D.N.Y. Feb. 18, 2009), Dkt. 1 4] 1.
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 5 of 168
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`Non-party Ramtex is a manufacturer of hospitality products based in Shaoxing, China. It
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`assisted Marquis in manufacturing the accused shower curtains. Middleberg Dep. Tr. at 46-47.
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`Non-party Pong Hsu (“Pong”) is an individual employed by Ramtex in 2012 and 2013.
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`/ed. at 58.
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`Pong had formerly worked for Waytex, a manufacturer that supplied the HOOKLESS®product
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`to Focus and its predecessor A&A LLC. Pong had been a “part of [Focus’s] product
`development team and... manufacturing team.” Tr. at 554,
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`B.
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`Witnesses
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`Plaintiffs’ witnesses were Burbank, Sure Fit’s CEO; Dubinski, who from 2018 to May
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`2022 held leadership roles in marketing and branding for Sure Fit Home Décor and Hollander
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`Sleep; Erickson, Sure Fit’s vice president of mass-marketretail sales; Kemp, Focus’s former
`senior vice president ofhospitality; Kreilein, Focus’s former executive vice president; Kuehne,
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`Focus’s former CFO; Whipple, Sure Fit’s CFO; Zahner; and Elmore, a damages expert.
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`Defendants’ witnesses were Dolph, Kartri’s sales operations manager; Goskowski,
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`Kartri’s co-owner and president; Kubus, Kartri’s co-owner and president of sales and marketing;
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`Mayer, Carnation’s former owner; Middleberg, Marquis’s director of global operations and
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`president of Star Linen; Ranieri, Marquis’s owner; and Rogers, a damages expert.”
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`? The Court found plaintiffs’ witnesses consistently credible and relevant. The Court found the
`testimony of Kemp, who between 2008 and 2020 occupied a series of positions germane to this
`controversy, particularly illuminating and has drawn on it heavily. In 2008, Kemp was Focus’s
`director of operations, overseeing the retail and hospitality distribution channels, and a member
`of the team that acquired Arcs & Angles Inc., which then held the intellectual property at issue.
`Tr. at 212-14, In late 2010 or January 2011, Kemp took charge of Focus’s hospitality business.
`id. at 214. From then until her 2020 retirement, Kemp served, sequentially, as vice president,
`senior vice president, and general manager of Focus and its successorentities.
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 6 of 168
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`Cc.
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`The Intellectual Property in Dispute
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`1.
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`The Patents
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`ZDG ownsthe four patents at issue—one design patent and three utility patents. Zahner
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`Aff. ff 2-3.
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`Thefirst is Design Patent No, D746,078, entitled “Shower Curtain” (the “*078 Patent” or
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`“Design Patent”). It covers the design of the shower curtain ring that is worked into the shower
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`curtain at the curtain’s upper edge.
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`[Et lookslike this:
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`
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`FIG. 1
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`The second patent is Utility Patent No. 6,494,248, entitled “Suspended Materials Having
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`External Slits,” (the “‘248 Patent”). PTX 3 at 1. The ‘248 Patent’s abstract describes it as
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`“openings each havinga slit therein for attachment to a fixed rod, .. . reinforced with rings
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`having projecting flanges . .. [which] make[] it easier to open up the ring” and thus “facilitate
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`the placement of [a shower] curtain upenthe fixed rod.” fd It looks like this:
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 7 of 168
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`The °248 Patent
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`See id. at 5.
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`The third and fourth patents are Utility Patent Nos. 7,296,609, entitled “Hanging
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`Products” (the “‘609 Patent”), PTX 4 at 1, and 8,235,088, entitled “Hanging Products,” (the
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`“088 Patent”), PTX 5 at 1. The abstracts for these patents describe them as“[h]anging
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`products” with “an opening for suspending the item from a rod,” where each opening is
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`strengthened “with a ring having a gap,” and the ring contains “a movable memberfor opening
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`and closing the gap.” PTX 4 at 1; PTX 5 at 1.
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`Relevanthere, the ‘248 Patent claimed an “approximately horizontal component,”that is,
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`a slit, when the showercurtain “is hanging from the rod,” Dkt 148-2 at 13; the ‘609 Patent
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`claimed a ring that included “a projecting edge, said projecting edge being an edge which
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`projects from [the] outer circumference of” the shower curtain ring, and that “projecting edge .. .
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`[is] provided next to said slit,” Dkt, 148-3 at 15; and the ‘088 Patent similarly claimed “a
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`projecting edge, said projecting edge being an edge whichprojects from [the] outer
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`circumference of” the showercurtain ring, Dkt. 148-4 at 15. ZDG has exclusively licensed each
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`of these patents to Focus Products and Sure Fit throughits affiliate HSNA. See PTX 89: Kreilein
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 8 of 168
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`Aff. 14. Sure Fit sells shower curtains incorporating the patented inventions in the hospitality
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`industry throughout the United States.
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`In its summary judgment decision on April 16, 2020, the Court held that defendants had
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`infringed plaintiffs’ three utility patents. See SJ Op.
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`2.
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`The EZ-ON Trademark and HOOKLESS® Trademark
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`The design patent and utility patents are incorporated into shower curtains and sold under
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`the HOOKLESS® Trademark (“Hookless Mark”) and the EZ-ON Trademark (““EZ-ON Mark”)
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`(collectively, the “Marks”). The HOOKLESS® Markis registered with the PTO. It was
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`registered to its inventor Zahner’s company ZDG,initially under U.S. Trademark Registration
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`number 2,355,554 (Principal Register), and then under the numbers 2,381,995 (Supplemental
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`Register) and 4,127,283 (Principal Register). See PTXs 84, 86, 520. The EZ-ON Mark was not
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`registered with the PTO as of the date this suit was filed. On September 26, 2017—-within
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`defendants’ challenged conduct—it was registered to ZDG on the Principal Register under U.S.
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`Trademark Registration number 5,296,144.!° PTX 113.
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`Plaintiffs’ HOOKLESS® product, as soid in curtains, lookslikethis:
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`Plaintiffs’ EZ-ON product, sold by Carnation pursuant to a sublicensing agreement with
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`Focus, lookslike this:
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`'0 The Court will refer to the EZ-ON Mark as “EZ-ON,” not “EZ-ON®.”
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 9 of 168
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`PTX 270 excerpt (EZ-ON showercurtain product, as sold by Carnation).
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`3.
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`Plaintiffs’ Trade Dress
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`Plaintiffs claim that they have trade dress rights in the overall appearance of shower
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`curtains sold under the HOOKLESS® and EZ-ON brands (the “Trade Dress”), Plaintiffs
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`circumscribe the scope oftheir claimed trade dress by four factors:
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`(1) a showercurtain wherein the curtain lacks any hooksprotruding above the upper
`edge ofthe curtain, so that Plaintiffs’ shower curtain provides the visual appearance
`of an essentially “neat” and “orderly” upper edge;
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`(2) and wherein the shower curtain has a row of rings along the upper portion of
`the shower curtain, those rings being attached to the material of the shower curtain
`such that the bottom surface of each ring (on one or both sides ofthe showercurtain)
`is essentially co-planar with the material of the shower curtain, also providing an
`essentially “neat” and “orderly” appearance;
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`(3) wherein each ring includesa slit or gap in the ring;
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`(4) and wherein the shower curtain’s rings or pairs of rings, and the associatedslits
`or gaps, are each fixed in place on the showercurtain and provide an organized and
`symmetrical repeating visual pattern along the top width of the shower curtain.
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`Dkt. 148 €9 104-105; see also Erickson Aff. { 28 (quoting same).
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`The claimed Trade Dress,plaintiffs clarified at trial, does not reach all shower curtains
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`that do not contain hooks above their upper edge. It does not, for example, reach the Zenna
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 10 of 168
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`Home Quik Hang Peva showercurtain, which contains rings partially embedded in the curtain’s
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`upper edge andpartially jutting out above the edge, Erickson Aff. € 31, and lookslikethis:
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`Partial screenshot of Dkt. 303-7. The protruding rings, plaintiffs explain, put the Zenna design
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`outside of the first element of plaintiffs’ Trade Dress—“lack[ing] any hooks protruding above
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`the upper edge of the curtain.” Erickson Aff. 7 34.
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`Similarly, plaintiffs disavow that their claimed Trade Dress covers products by Croydex,
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`which include hooks preinstalled on the showercurtain to facilitate the installation of the shower
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`curtain. Jd. §36. Also outside the parameters of the claimed Trade Dress is a showercurtain
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`named “InterDesign”that, lacking hooks,is affixed to the shower rod by buckles that hang from
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`the rod and snap onto the shower curtain below. See PTX 132; see also PTX 131 (Brown design,
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`similar). So, too, are a Pierce productthat uses clips that protrude above the curtain’s upper
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`edge, see PTX 133; a Fields design that functions like a pull-down window shade and does not
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`rely on hooksor rings, see PTX 129; and a Giumarra hooklessspiral-notebook-like design in
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`which rings, perpendicular to the curtain’s surface and protruding above its edge, are threaded
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`“10
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 11 of 168
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`onto the rod, see PTX 130. Plaintiffs state that their Trade Dress does not constrain those non-
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`hooked shower curtain designs, which have been sold commercially by Focus’s competitors. !!
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`As Ericksontestified, plaintiffs’ claimed Trade Dress leaves room for various forms of
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`shower curtain designs that enable easier installation than installing hooks. Tr. at 176 (“Croydex
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`and Zenna have pre-installed rings, .. . or a mechanism to suspend or hang orput that shower
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`curtain on the shower curtain rod.”).!*
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`4,
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`Defendants’ Accused Ezy Hang Product
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`The product accused of infringementhere is the shower curtain ring and corresponding
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`curtains defendants have manufactured and sold under the unregistered “Ezy Hang” mark.
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`Marquis manufactures and sells the accused curtain to Kartri. Kartri brands the accused curtains
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`as “Ezy Hang”and resells them to distributors and end users in the hospitality market. The
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`accused products look like this:
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`PTX26, Kartri's Accused Product No.1 (excerpt ofimage).
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`"| The Zenna design has been commercialized by Maytex Mills, Erickson Aff. 33. The
`Croydex design has been commercialized by QK Supplies in the United Kingdom,id. 4 37.
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`' Someof Zahner’s own designsfall outside Focus’s claimed Trade Dress. For example,
`Figures 15, 16, and 17 of the ‘248 Patent protrude abovethe curtain’s upper edge. See PTX 134.
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`il
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 12 of 168
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`PTX 27 Karti's Accused Product No. 2 (excerpt ofimage),
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`D.
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`Kartri’s and Marquis’s Businesses and Relationship
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`Kartri was founded in 1975 and incorporated in 1979. Tr. at 626-28. It is operated by—
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`and its nameis derived from the first names of—Karen Goskowski and Patricia (“Trish”) Kubus,
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`sisters who in 2005 took over Kartri from their father. fd. at 630, 633-34. Kartri manufactures
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`the Ezy Hang product in its facility in Forest City, Pennsylvania, and through a contractorin
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`Mexico and stores that supply in an Arizona warehouse. Jd. at 656-57.
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`Marquis is an importer and supplies to Kartri. PTX 297 (“Elmore Rep.”) 31. The two
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`entities had a longstanding businessrelationship predating the chalienged conduct. See Tr. at
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`551. Marquis sourcesits products, inter alia, from Ramtex in China. Id. at 589. Marquis
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`provided fully finished curtains to Kartri.
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`fd. at 712. Kartri would manufacture more
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`individualized headers—the top part of the curtain containing the rings. See id. at 642-43. Until
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`the challenged conduct began, Marquis and Kartri manufactured and soldtraditional, hooked
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`shower curtains. They then sought to compete with Focus’s HOOKLESS® product in the
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`hospitality market, which had significantly shifted the hospitality market “in the direction of
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`hook-free curtains,” id. at 660, and in which Focus had established a dominant market share, see,
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`e.g., id. at 472, 511, 743. This set the stage for the parties’ commercial—and now legal—battle.
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`E.
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`Plaintiffs’ Claims, Defendants’ Counterclaims, and Rulings Narrowing
`the Issues to Be Tried
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`© 12
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 13 of 168
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`Plaintiffs’ claims are in five categories: (1) against both defendants, for infringement of
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`plaintiffs’ utility and design patents under 35 U.S.C. §§ 101 ef seg.; (2) against both defendants,
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`for infringement of and unfair competition with plaintiffs’ EZ-ON Trademark andtrade dress
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`under 15 U.S.C. § 1125(a); (3) against Kartri, for infringement of and unfair competition with
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`plaintiffs’ HOOKLESS® Mark under 15 U.S.C. § 1125(a); (4) against both defendants, for
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`unfair competition with plaintiffs’ EZ-ON Mark and Trade Dress under New York law; and
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`(5) against Kartri, for unfair competition with plaintiffs’ HOOKLESS® Mark under New York
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`law. Plaintiffs seek damages on the patent infringement claims andall infringement and unfair
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`competition claims as they relate to the EZ-ON Mark and the Trade Dress, but not on the
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`infringement claims relating to the HOOKLESS® Mark. Plaintiffs seek injunctive relief on their
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`Lanham Act and unfair competition claims, attorneys’ fees, and pre- and post-judgmentinterest.
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`Defendants have raised affirmative defenses of lack of statutory standing, failure to join
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`an indispensable party, non-infringementofplaintiffs’ EZ-ON Mark, invalidity of plaintiffs’ EZ-
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`ON Mark, non-infringementofplaintiffs’ trade dress, and invalidity of plaintiffs’ trade dress.
`Rulings on summatyjudgment and on motionsin limine pruned the issues to be tried:
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`e
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`Inan April 16, 2020 decision, the Court granted summary judgmentto plaintiffs on
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`the claim that defendants infringed the utility patents (*248, ‘609, and ‘088), leaving
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`unresolved whetherthe infringements were willful. See Dkts. 297 at 31; 312."
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`3 The Court also granted summary judgmentfor plaintiffs on (1) Kartri’s first counterclaim
`alleging tortious interference and monopolization; (2) Marquis’s first counterclaim alleging non-
`infringementofthe utility patents; (3) Marquis’s fourth counterclaim alleging invalidity of the
`‘248 patent; (4) Marquis’s fifth counterclaim alleging invalidity of the ‘609 patent; (5) Marquis’s
`sixth counterclaim alleging invalidity of the ‘088 patent; (6) Marquis’s eighth counterclaim
`alleging patent misuse; and (7) Marquis’s tenth counterclaim alleging the invalidity of the
`HOOKLESS® trademark. See Dkt. 297 at 32.
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`13
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 14 of 168
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`The parties later agreed to stay plaintiffs’ claim that defendants infringedthe fourth,
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`design patent (‘078)-~and with it, Marquis’s first counterclaim alleging non-
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`infringement of that patent, and seventh counterclaim alleging the ‘078 patent’s
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`invalidity—inlight of reexamination proceedings initiated by Kartri at the PTO as to
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`that patent. See PF at 4, 7-8.
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`in a January 4, 2021 decision, the Court ruled that plaintiffs’ trade dress is non-
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`functional, see Dkt. 312 at 7-8, thereby establishing that element of plaintiffs’ trade
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`dress infringement claim."
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`Accordingly, the following claims were left for resolutionattrial:
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`On plaintiffs’ claims that both defendants infringed the EZ-ON Trademark underthe
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`Lanham Act and engaged in unfair competition with that Mark under the Lanham Act
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`and New Yorkstate law,the issues of liability, damages, and injunctive relief:
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`Onplaintiffs’ claim that Kartri infringed the HOOKLESS® Mark under the Lanham
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`Act and engaged in unfair competition with that Mark under the Lanham Act and
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`New Yorkstate law, the issues of liability and injunctive relief;
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`On May 14, 2021, the Court dismissed defendants’ affirmative defense that plaintiffs lack
`patent standing. Dkt. 365. And on August 5 and November 23, 2021, in bench rulingsresolving
`motions in limine, the Court precluded as abandonedorforfeited, these affirmative defenses:
`(1) nominative fair use and descriptive fair use of plaintiffs’ trademarks; (2) equitable estoppel
`and unclean hands; and (3)all other affirmative defenses not timely raised. See Dkts, 412, 436.
`The parties have dismissed, on consent, Marquis’s third counterclaim alleging patent invalidity
`for alleged lack of inventorship, and its second counterclaim alleging the non-infringement of the
`HOOKLESS® trademark. See Dkt. 297 at 31; PF at 7; Dkt. 412 (benchruling resolving
`plaintiffs’ motionsin limine), 436 (bench ruling resolving defendants’ motionsin limine).
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`14
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 15 of 168
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`e
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`Onplaintiffs’ claim that defendants infringed plaintiffs’ trade dress under the Lanham
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`Act and engaged in unfair competition under the Lanham Act and New Yorkstate
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`law, the issues ofliability, damages, and injunctive relief;
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`e On defendants’ infringement of the ‘248, ‘609, and ‘088 patents, the issue whether
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`defendants’ infringement was willful, and the tabulation of damages; and
`Onail claims, the issue ofreasonable attorneys’ fees, to be briefed and decided in
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`e
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`post-trial proceedings.
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`The following defenses and counterclaims werealso left for resolution at trial:
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`e The defense that plaintiffs lack standing to bring its claim that defendants infringed
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`the EZ-ON Mark,in light of non-party Carnation’s alleged ownership of the
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`intellectual property at issue here, and the related defense that plaintiffs failed to join
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`Carnation as an indispensable party;
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`e Marquis’s ninth counterclaim alleging invalidity of the EZ-ON Mark;
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`e Marquis’s second counterclaim alleging non-infringement of the EZ-ON Mark;
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`e Marquis’s eleventh counterclaim alleging invalidity of plaintiffs’ Trade Dress; and
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`e Marquis’s second counterclaim alieging non-infringementofplaintiffs’ ‘Trade Dress.
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`F.
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`History, Ownership, and Licensing of the Intellectual Property at Issue
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`1.
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`1992-1997; Zahner’s Invention, the ‘232 Patent, Early
`Commercialization Efforts, and “Game-Chang|ing|]” Success
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`In or about 1992, Zahner conceived of inventing a hookless shower curtain ring. Zahner
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`Aff. YJ 5-6, 68; see also id. § 69 (“I began experimenting with various shower curtain designs.
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`My goal wasto create a design that was both easy to install and aesthetically attractive.”).
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`Developing the invention involved manual labor, experimentation with rudimentary materials,
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`and refinements by trial and error. Jd. [4] 70-72. On May 18, 1992, Zahnerfiled an application
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 16 of 168
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`to patent his invention with the PTO. PTX 303. On February 16, 1993, the PTO granted the
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`application, underthe original ‘232 Patent. Id.
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`For three or four years, Zahner attempted to commercialize his invention by meeting with
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`investors and manufacturers. Those efforts failed. Zahner Aff. 4§ 77-82. In June 1996, Zahner
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`joined forces with John Benis and Teddy Marcus to form HSNA. /d. {ff 83-84. Benis supplied
`capital; Marcus was HSNA’s marketing and sales expert.
`/d@. 4/85. As of that time, Zahner
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`testified, the idea of a curtain that attached without hooks was novel: “{N]o one had ever seen
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`anything like that before. .
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`.
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`. It [had been] just, you know, shower curtains with hooks.” Tr. at
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`121. By 1997, that three-person team, operating as HSNA,was seeking to market Zahner’s
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`hookless shower curtain technology. Zahner Aff {§] 86-88.
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`At some time between 1997 and 1999, Marcus pitched Zahner’s technology to Kartri. Jd.
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`4 89; Tr. at 724-25, Then a small company, Kartri declined. Zahner Aff. § 91; Tr. at 725-26.
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`After approximately a year ofrefining and pitching the product, and having spent $250,000 in
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`research and development, Zahner Aff. [§ 94, 99, HSNA madeits first sale to Gracious Home, a
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`retail store in New York City, id. 7 103.
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`Zahner’s product soon swept the hospitality market, until then dominated by traditional
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`hooked curtains. Focus’s Dubinski termed it “revolutionary” and “a game changer.” Dubinski
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`Aff.
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`12. The design was “innovative,”neat, and “unique,” id, J 12, 20; it saved hospitality
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`providersinstallation time and reduced workers’ compensation claims from injuries sustained
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`installing hooked curtains, which required effort and balance. Kartri’s Kubus acknowledged that
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`HOOKLESS® was “known in the industry... . [I]t saves the housekeeper time and money to
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`put this product up. It’s just known.
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`[Zahner has] donereally well in that marketing direction.”
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`Kubus Dep. Tr. at 52-53.
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 17 of 168
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`The Court found illuminating two videos of live demonstrations of the HOOKLESS®
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`products’ ease ofinstallation. These showed ZDG’s Marcusinstalling the HOOKLESS® curtain
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`on the telemarketing channel QVC. In each, Marcus snaps into place, with ease and in about 10
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`seconds, a HOOKLESS® curtain on a rod. See PTXs 471, 472 (video exhibits). The symmetric
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`placementof the curtain’s slits—connecting pairs of adjacent rings—ensured that the curtain
`billowed uniformly across the curtain rod. As installed, the curtain had a “‘neat” appearance
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`consistent with plaintiffs’ claimed trade dress. The video demonstrations made apparent the
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`efficacy of the HOOKLESS®productrelative to conventional shower curtains, andits appeal to
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`hotel and motel chains that must install and remove shower curtains in bulk daily.
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`2,
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`The HSNA-A&A License Agreement and Its Chain of Transfers
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`On March 2, 1999, ZDG licensed all of its patent, trademark, and trade dress rights (the
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`“Intellectual Property Rights”) to HSNA. DTX 89.
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`On June 6, 2000, ZDG registered the Hookless Mark with the PTO,turning HSNA’s
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`common law rights in the previously unregistered Hookless Mark into the rights under the
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`Lanham Act accorded to a registered trademark. PTX 84. On May 31, 2004, HSNAlicensedits
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`intellectual property rights to Arcs and Angles, Inc. PTX 387 (SHSNA-A&ALicense
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`Agreement”) at 1; Zahner Aff. 9337. On May 16, 2008, Arcs & Angles, Inc. was acquired by
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`Arcs & Angles Holdings, LLC, which owned Focus. PTX 268; Zahner Aff. J] 345--346, Tr.at
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`214. Kemp, Focus’s then-director of operations, id. at 212-13, testified that Arcs & Angles
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`Holding, LLC acquired “all the assets, the inventory, open receivable records, everything,” id. at
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`214, Focus thus controlled Arcs & Angles Holdings, LLC, Arcs & Angles, Inc., and the
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`Intellectual Property Rights associated with Zahner’s invention.
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`On December 14, 2010, Focus transferred the Intellectual Property Rights to Arcs &
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`Angles, LLC. PTX 387 at 23-24, Zahner executed the amendment to the HSNA-A&A License
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 18 of 168
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`Agreement on HSNA’s behalf. /d.; Zahner Aff. J] 347-348. On October 10, 2012, Focus
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`transferred the Intellectual Property rights to itself, that is, Focus Products Group International
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`LLC. PTX 387 at 28-29; Zahner Aff. {7 350-351. This amendment to the HSNA-A&A License
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`Agreement was executed by Zahner. PTX 387 at 29; Zahner Aff. 9 352; Kreilein Aff. { 4.
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`On March 6, 2017, Focus was renamed Sure Fit Home Décor LLC. PTX 88 at 3;
`Kreilein Aff. {] 5-6. On July 13, 2017, Sure Fit Home Décor soldits license in the Intellectual
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`Property Rights to SF Home Décor LLC. PTX 89; Kreilein Aff. {§[ 8-9. There were no further
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`transfers of the Hookless Trademark and the Trade Dress orrelevant licensing agreements, °
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`3.
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`The EZ-ON Trademark, Plaintiffs’ Dispute with Carnation, and the
`Carnation Licensing Agreement
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`The parties dispute whether the unregistered EZ-ON Mark was amongtheIntellectual
`Property Rights subject to the series oftransfers above. The history ofthat mark is complicated,
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`on the one hand, by a course of dealings between ZDG and A&A,and on the other, third party
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`Carnation, which had originally owned and used that then-unregistered mark. The Court here
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`sets out the facts bearing on the ownership of the EZ-ON Mark. These are context for the
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`Court’s finding, infra, that, by the time Kartri’s sales of the accused products began in 2013,
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`plaintiffs, not Carnation, owned the EZ~ON Mark.
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`The EZ-ON Mark was undisputedly originally used and commercialized by Carnation.
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`Until 2008, ZDG and A&A had produced hookless shower curtains under their FLEX-ON
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`Trademark, registered with the PTO under the number 2,948,547 (the “FLEX-ON Mark”). See
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`PTX 532. Carnation’s owner and president, Lawrence Mayer,testified that Carnation had sold
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`hookless shower curtain products under the unregistered EZ-ON Mark since 2009. Mayer Dep.
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`'S ZDG has entered into license agreements with other companies that are not at issue here. See,
`e.g., Tr. at 124 (Zahner, testifying about license agreement with On The Right Track).
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`Case 1:15-cv-10154-PAE Document 501 Filed 12/22/22 Page 19 of 168
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`Tr. at 15, 33. In fact, a letter adduced in discovery establishes that Carnation’s use of this mark
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`dated back to at least to 2008. See PTX