Maui Jim, Inc. v. SmartBuy Guru Enterprises et al
1:16-cv-09788
N.D. Ill.Jan 23, 2018Background
- Maui Jim, a Hawaii-headquartered sunglasses maker, sued SmartBuyGlasses (online retailer) for trademark/copyright infringement, false advertising, dilution, and related claims, alleging SmartBuyGlasses sold counterfeit or altered Maui Jim prescription sunglasses.
- SmartBuyGlasses counterclaimed alleging UDTPA (unfair competition), Illinois Consumer Fraud Act (CFA), trade disparagement, trademark misuse, unjust enrichment (alternative), and declaratory judgments of noninfringement/invalidity.
- SmartBuyGlasses admits it sold Maui Jim frames with non‑Maui Jim prescription lenses but says frames and non‑prescription lenses were genuine and customers were informed.
- Maui Jim moved to dismiss multiple counterclaims under Rule 12(b)(6)/12(c), arguing among other things absolute litigation privilege, lack of Illinois nexus for state statutory claims, and that trademark misuse is not an affirmative claim.
- The court granted in part and denied in part: dismissed UDTPA, CFA, and trade disparagement (Counts I–III) without prejudice for privilege and lack of Illinois connection; struck declaratory judgment counts (IV–VI) as redundant; dismissed trademark misuse (Count VII) with prejudice; and denied dismissal of unjust enrichment (Count VIII).
Issues
| Issue | Plaintiff's Argument (Maui Jim) | Defendant's Argument (SmartBuyGlasses) | Held |
|---|---|---|---|
| Whether statements made in Maui Jim’s complaint bar counterclaims (litigation privilege) | Filing and pleadings are absolutely privileged — cannot form basis for UDTPA/CFA/disparagement claims | Privilege is limited primarily to defamation/related torts and should not bar statutory/unfair competition claims | Court: Absolute litigation privilege bars claims based on statements made in the complaint; such counterclaims dismissed to the extent they rest on litigation statements |
| Whether UDTPA/CFA/disparagement claims satisfy Illinois nexus requirement | Maui Jim: counterclaims lack primary and substantial connection to Illinois; many SmartBuy entities foreign | SmartBuy: press release and complaint relate to an Illinois proceeding and likely originated from Illinois | Court: SmartBuyGlasses failed to plead sufficient facts tying alleged deceptive acts to Illinois; Counts I–III dismissed without prejudice |
| Whether trademark misuse is a cognizable affirmative claim | Maui Jim: trademark misuse is only an affirmative defense, not a stand‑alone claim | SmartBuy: courts are split; ask to defer decision to summary judgment | Court: Trademark misuse cannot be pleaded as an affirmative cause of action; Count VII dismissed with prejudice |
| Whether unjust enrichment counterclaim survives | Maui Jim: claim fails for lack of alleged benefit retained or unjustness; also derivative of dismissed claims | SmartBuy: pleads that Maui Jim benefited by suppressing competition/pricing and disparaged SmartBuy, causing marketplace harm | Court: Unjust enrichment adequately pleaded with plausible link between benefit retained and SmartBuy’s detriment; Count VIII survives |
| Whether declaratory judgment counterclaims are proper | Maui Jim: court should decline or strike because claims duplicate issues already before court | SmartBuy: seeks clarity on copyright/trademark invalidity and noninfringement | Court: Counts IV–VI strikeable as redundant/opposite of complaint or duplicative of affirmative defenses; stricken without prejudice |
Key Cases Cited
- Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901 (7th Cir.) (pleading-stage standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading plausibility standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading plausibility and Twombly standard)
- Steffes v. Stepan Co., 144 F.3d 1070 (7th Cir.) (litigation privilege overview)
- Havoco of Am., Ltd. v. Hollobow, 702 F.2d 643 (7th Cir.) (limits on wrongful‑filing causes; malicious prosecution/abuse of process)
- Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100 (Ill.) (Illinois statutes require acts to occur primarily and substantially in Illinois)
- Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403 (Ill.) (elements of Consumer Fraud Act claim)
- Cleary v. Philip Morris Inc., 656 F.3d 511 (7th Cir.) (unjust enrichment elements and connection to related claims)
- Raintree Homes, Inc. v. Vill. of Long Grove, 209 Ill. 2d 248 (Ill.) (measure of recovery for unjust enrichment)
- Tempco Elec. Heater Corp. v. Omega Eng’g, Inc., 819 F.2d 746 (7th Cir.) (discretion to decline declaratory judgment actions)