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GARY FONG, INC. v. HALTON

March 21, 2001

GARY FONG, INC., PLAINTIFF,
v.
TERESA C. HALTON AND PETER HALTON, DEFENDANTS.



The opinion of the court was delivered by: Jenkins, District Judge.

ORDER GRANTING SUMMARY JUDGMENT

Before the Court is defendants Teresa Halton and Peter Halton's ("Defendants") Motion to Dismiss the Complaint or, in the Alternative Motion for Summary Judgment. This motion requires the Court to consider whether plaintiff Gary Fong, Inc.'s ("Plaintiff") Complaint is barred by the doctrine of res judicata. The Court hereby GRANTS Defendants' motion for summary judgment because Plaintiff should have raised the current causes of action for false designation of origin and common law trademark infringement with respect to the domain name "storybook.com" in a previously litigated action.

FACTUAL BACKGROUND

Plaintiff filed its Second Amended Complaint ("SAC") in a prior action, Gary Fong, Inc. v. Teresa C. Halton and Peter C. Halton, CV 98-9034 ABC and CV 98-7769 ABC, on March 28, 2000 in the Central District of California. The SAC asserted the following claims against Defendant Teresa Halton:

1) a claim seeking the cancellation of a trademark registration;
2) a claim for violation of the Lanham Act, 15 U.S.C. § 1125 (a);

3) a claim alleging a breach of fiduciary duty;

4) a claim for breach of an oral agreement; and

5) a claim for copyright infringement.

Plaintiff also asserted the Lanham Act claim against Defendant Peter Halton. This previous suit dealt with both Defendants' alleged infringement of Plaintiff's service mark, "Storybook Studio." The parties submitted a joint pretrial order on June 29, 2000. The court signed the Pretrial Order on July 10, 2000. The Pretrial Order asserted the same claims as the SAC.

The matter was tried before a jury from July 19 through July 26, 2000. The jury returned a special verdict on July 26, 2000 in favor of Plaintiff. Plaintiff was awarded $105,446.16 in compensatory damages from Defendants, jointly and severally, for infringement of the service mark "Storybook Studio." Plaintiff was also awarded $64,518.48 in compensatory damages from Defendant Teresa Halton for fraudulent procurement of service mark registration and breach of oral agreement with respect to the service mark "Storybook Studio."

On August 10, 2000 the court asked for briefing on Defendants' objections to Plaintiff's injunctive and declaratory relief requests. Both parties filed briefs on this issue. The relevant motion for resolution was Plaintiff's motion to amend the Pretrial Order to clarify Plaintiff was seeking to hold Defendants liable for infringing not only the "Storybook Studio" service mark, but also the "Storybook" service mark. Plaintiff argued the claim regarding the "Storybook" service mark was disclosed in the Pretrial Order by its breach of fiduciary duty claim. Specifically, Plaintiff asserted Defendants were on notice of a service mark claim regarding "Storybook" because the fiduciary duty claim relied on Defendants' registration of the "storybook.com" website.

The court disagreed stating,

[e]ven viewed in the most liberal sense possible, the statement that "Defendants' registration of the domain name storybook.com" violated T. Halton's fiduciary duty to Plaintiff fails to encompass the legal theory that Defendants infringed on Plaintiff's service mark in violation of federal law. Furthermore, the PTO [Pretrial Order] expressly asserts a claim for service mark infringement that did not list "Storybook" as a ...

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