ABRO Industries, Inc. v. 1 New Trade, Inc.
3:14-cv-01984
N.D. Ind.Oct 30, 2017Background
- ABRO, manufacturer of automotive cleaners, sued 1NEW Trade, Zorin, Babenchik, and Fishkin for copyright infringement relating to Carb & Choke Cleaner packaging; defendants counterclaimed for breach of fiduciary duty, breach of contract, and tortious interference. 1NEW/Quest claims were previously dismissed.
- Longstanding business relationships existed: Zorin and Babenchik worked with ABRO in Russia since the 1990s; parties dispute whether arrangements were commission-based or profit‑sharing and whether partnerships (and thus fiduciary duties) existed.
- ABRO registered certain textual and photographic elements with the Copyright Office long after publication; the Office refused registration of the overall label layout but allowed registration of text and photo elements.
- ABRO alleged 1NEW’s product packaging copied ABRO’s label; defendants argued the labels and individual elements were not substantially similar and sought summary judgment on infringement.
- ABRO also warned/sought to block defendants’ China‑based suppliers from dealing with 1NEW; defendants alleged tortious interference and that ABRO’s threats exceeded legitimate IP protection.
- On cross-motions for summary judgment, the court held no actionable copyright infringement, denied ABRO summary relief on most counterclaims, dismissed claims against Baranay personally, and awarded defendants attorney’s fees on the copyright claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity / presumption of copyright | ABRO relied on Copyright Office registrations to support validity | Defendants argued registrations were untimely and ABRO failed to produce deposit materials during discovery | Court declined to afford presumption of validity (registrations were untimely and deposit material absent) |
| Copyrightability of overall label | ABRO: label layout is a protectable compilation | Defendants: overall layout is unoriginal/common and not protectable | Court: label as whole not copyrightable (layout/common elements) |
| Copyrightability of label elements (photo, name, text) | ABRO: photo, product name, instructions/warnings are protectable | Defendants: name is short/unprotectable; text/warnings are functional/factual | Court: photograph and instructions/warnings are copyrightable; product name not copyrightable |
| Substantial similarity / infringement | ABRO: defendants’ label substantially similar to protectable elements | Defendants: images and texts materially differ; overlaps are unavoidable functional expressions | Court: no substantial similarity for photograph or text; defendants entitled to judgment on infringement; defendants awarded fees |
| Breach of fiduciary duty (Zorin/Babenchik) | ABRO: no partnership or fiduciary duty existed | Zorin/Babenchik: conduct, profit‑sharing, guarantees, and joint marketing created partnership | Court: genuine factual disputes about partnership/profits; denied summary judgment on fiduciary claims |
| Breach of contract (Zorin/Babenchik) | ABRO: oral agreements unenforceable under Statute of Frauds; contracts terminable at will | Defendants: promissory estoppel and written materials (some withheld) save claims; factual termination/notice disputes | Court: Statute of Frauds may be avoided by promissory estoppel; factual disputes remain; denied summary judgment |
| Tortious interference (Zorin/1NEW) | ABRO: actions justified to protect IP and litigation privilege shields its conduct | Defendants: ABRO exceeded IP protection, threatened suppliers, filed suit to interfere; privilege not absolute where bad faith | Court: factual disputes on knowledge, motive, and justification; denied ABRO summary judgment on Zorin/1NEW claims but granted it for Babenchik’s (no evidence he had relationships) |
| Personal liability of Baranay | ABRO (Baranay): acted within corporate role so no personal liability | Zorin/Babenchik: Baranay acted maliciously/illegally to injure them | Court: as president acting within scope, Baranay not personally liable; granted summary judgment for Baranay |
Key Cases Cited
- Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991) (originality requirement for copyright)
- Schrock v. Learning Curve Int’l, Inc., 586 F.3d 513 (7th Cir.) (photographic works and low threshold for originality)
- Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) (attorney’s fees discretion in copyright cases)
- Klinger v. Conan Doyle Estate, Ltd., 761 F.3d 789 (7th Cir.) (factors for awarding fees to prevailing defendant)
- Assessment Tech. of Wis., LLC v. WIREdata, Inc., 361 F.3d 434 (7th Cir.) (strong presumption in favor of fee awards to prevailing defendants in copyright suits)
- Waldridge v. Am. Hoechst Corp., 24 F.3d 918 (7th Cir.) (summary judgment role and credibility determinations)