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Toys v. Pearl Enters.

Summarized by: 

Date Filed: 05-23-2014
Case #: 13-5262 (JAP) (TJB)
United States District Court for the District of New Jersey
Full Text Opinion: http://docs.justia.com/cases/federal/district-courts/new-jersey/njdce/3:2013cv05262/293796/46/0.pdf
LexisNxis Link: 2014 U.S. Dist. LEXIS 70852
Westlaw Link:

Trademarks: When the re-sale of a product does not involve the actual “use” of a trademark, the re-sale of the product does not constitute trademark infringement.

Opinion (Pisano): Plaintiff Zany Toys, LLC and Defendant Pearl Enterprises, LLC are toy developers and manufacturers. In 2010, Zany Toys, LLC trademarked and began using “THE NO! BUTTON” and “NO!” in relation with the production and distribution of electronic talking toys. In 2013, Pearl Enterprises, LLC purchased 3,300 units of “THE NO! BUTTON” product from Zany Toys, LLC. Pearl Enterprises, LLC re-sold the 3,300 units of “THE NO! BUTTON” product through its website. Once those units were sold, Pearl Enterprises, LLC continued to advertise “THE NO! BUTTON” product but filled orders with a similar toy their company developed. Zany Toys, LLC filed suit against Pearl Enterprises, LLC for trademark infringement. During trial, Zany Toys, LLC asked the Court for a preliminary injunction. For a court to grant Zany Toys, LLC preliminary injunction, Zany Toys, LLC must produce evidence to establish the elements of trademark infringement. Zany Toys, LLC must prove that the trademark is a “valid and legally protectable mark; it owns the mark; and (3) the Defendant's use of the mark to identify goods or services causes a likelihood of confusion." Pearl Enterprises, LLC attempted to trademark a similar product, which demonstrates Pearl Enterprises, LLC’s acknowledgement of the original trademark’s validity. Therefore, the Court held that the trademark was distinctive and thus legally recognizable. The second element was also met because a party can assert ownership rights in accordance with a legally recognizable trademark. However, the third element was not met because although Pearl Enterprises evidently infringed upon the ownership rights of Zany Toys, LLC, they did not “actually ‘use’ the trademark” in the advertisement of the product. Therefore, the Court DENIED Zany Toys, LLC’s request for preliminary injunction.