Fausett v. Pansy Ellen, Inc.

Fausett v. Pansy Ellen, Inc.

Opinion

 [**1228]  ORDER

Rarely does the court confront a patent case that does not involve highly technical scientific and engineering issues. In this action, however, the court considers claims noteworthy both for their straightforward nature and the eloquence and clarity of their treatment by counsel. After carefully reviewing the briefs, affidavits, depositions, and colorful exhibits submitted in conjunction with defendant's motion for summary judgment, the court will grant in part and deny in part defendant's motion.

I. FACTUAL BACKGROUND

In the spring of 1985 plaintiffs Kirk A. Fausett and Linda S. Fausett (the "Fausetts") designed a hammock that, when hung [**1229]  in the corner of a child's room, forms a storage pouch for dolls and stuffed animals. The Fausetts organized their own company, plaintiff Premarq, Inc. ("Premarq"), which manufactured and sold the product under the trademark "Teddy Bed" beginning in the summer of 1985. The Teddy Bed produced limited sales in 1985, but its proceeds soared to nearly $ 1 million during 1986 and over $ 2 million in both 1987 and 1988. On September 20, 1985, the Fausetts applied for a patent for  [*2]  the Teddy Bed. Although their initial application was rejected, the United States Patent and Trademark Office issued plaintiffs a patent on May 12, 1987 (United States Patent No. 4,664,266) (the " '266 patent").

Defendant Pansy Ellen Products, Inc. ("Pansy Ellen") began development of a similar storage hammock known as the "Pet Net" during early 1987. A company in Taiwan manufactured 10,000 Pet Net hammocks for Pansy Ellen, which were offered for sale at a trade show during October 1987. When Pansy Ellen learned of the '266 patent, defendant unsuccessfully attempted to obtain a licensing agreement from plaintiffs, who subsequently filed this action for patent infringement and other claims during December 1987. Pansy Ellen never sold any Pet Net hammocks to customers in the United States, but later sold its entire inventory to foreign customers (500 to a German customer during May 1988 and the remaining 9500 to a Canadian customer during August 1988).

After this lawsuit commenced, Pansy Ellen began development of a second storage hammock known as the "Pet Pouch." Defendant designed the Pet Pouch in an effort to develop a product that would compete with the Teddy Bed without the patent [*3]  infringement problems presented by the Pet Net. Like the Teddy Bed and the Pet Net, the Pet Pouch, when hung in the corner of a room, forms a storage pouch for dolls and stuffed animals. However, unlike the Teddy Bed and the Pet Net, which are triangular, the Pet Pouch is a trapezoid-shaped hammock. The Pet Pouch also uses a different color pattern along the hammock border.

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