1:19-cv-00925
D. Del.Oct 18, 2019Background
- Family Inada (Japanese manufacturer) designed and manufactured the original DREAMWAVE massage chair; FIUS served as its exclusive U.S. distributor from 2008–2018 and routinely used the Inada name and branding.
- FIUS's CEO Clifford Levin proposed the DREAMWAVE name for U.S. sales; FIUS filed for and obtained U.S. federal registration of DREAMWAVE in 2014 without telling Family Inada.
- In 2016 Family Inada circulated an Agreement of Intellectual Property Rights to distributors requiring assignment of distributor-filed marks upon termination; FIUS refused to sign and stalled negotiations.
- Evidence showed FIUS used an intermediary (Kagano) as a double agent, developed a competing chair sourced from another manufacturer (Project X/KT), and launched it under the DREAMWAVE mark at CES 2019.
- Family Inada sued in May 2019 and moved for a preliminary injunction to enjoin FIUS’s use of the DREAMWAVE mark and related branding and domain names.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ownership of DREAMWAVE mark | Family Inada — as manufacturer, presumption of ownership; Covertech factors predominantly favor Family Inada (first affix, control, name on packaging, customers look to it) | FIUS — created the mark and has a federal registration in its name (2014) | Court applied Covertech; 4 of 6 factors favor Family Inada; Family Inada has a reasonable probability of prevailing on ownership |
| Irreparable harm | Family Inada — loss of control over reputation, goodwill, and customer confusion from FIUS selling non-Inada chairs under DREAMWAVE | FIUS — contested harm implicitly but offered no persuasive contrary evidence at hearing | Court: Family Inada made a clear showing of irreparable harm (loss of reputation/goodwill); injunction warranted |
| Balance of equities and public interest | Family Inada — equities and public interest (prevent confusion; deter bad faith conduct) favor injunction | FIUS — did not meaningfully contest equities or public interest | Court: Both equities and public interest weigh for Family Inada |
| Bond requirement | Family Inada — requested waiver of bond | FIUS — did not request a bond or show hardship from waiver | Court: Waived bond requirement under Rule 65(c) |
Key Cases Cited
- Covertech Fabricating, Inc. v. TVM Building Products, Inc., 855 F.3d 163 (3d Cir. 2017) (when manufacturer and distributor dispute ownership, presumption favors manufacturer; six-factor test)
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (U.S. 2008) (preliminary injunction standard: likelihood of success and irreparable harm)
- Reilly v. City of Harrisburg, 858 F.3d 173 (3d Cir. 2017) (reasonable probability standard for preliminary injunction)
- Groupe SEB USA, Inc. v. Euro Pro Operating LLC, 774 F.3d 192 (3d Cir. 2014) (irreparable-harm analysis in trademark cases; drawing reasonable inferences)
- Perring Pharm., Inc. v. Watson Pharm., Inc., 765 F.3d 205 (3d Cir. 2014) (no presumption of irreparable harm in trademark disputes)
- Dresser Indus., Inc. v. Heraeus Engelhard Vacuum, Inc., 395 F.2d 457 (3d Cir. 1968) (trademark identifies origin; passing off is wrongful)
- Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187 (3d Cir. 1990) (public interest favors preventing consumer deception)
- Temple Univ. v. White, 941 F.2d 201 (3d Cir. 1991) (factors for waiving preliminary injunction bond)