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Fuhu, Inc., Fuhu Holdings, Inc v. Toys "R" Us

October 19, 2012

FUHU, INC., FUHU HOLDINGS, INC.,
PLAINTIFFS,
v.
TOYS "R" US, INC., TOYS "R" US -DELAWARE, INC., DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matter before the Court is the Ex Parte Application for Temporary Restraining Order and Order to Show Cause for Issuance of Preliminary Injunction filed by Plaintiffs Fuhu, Inc. and Fuhu Holdings, Inc. ("Fuhu"). (ECF No. 11). Also before the Court are the Motion to Exclude the Declaration of William Bleuel (ECF No. 35) and Motion to Strike the Reply Declaration of James Mitchell (ECF No. 83) filed by Defendants Toys "R" Us, Inc. and Toys "R" Us - Delaware, Inc. ("TRU").

BACKGROUND

On September 24, 2012, Plaintiffs initiated this action by filing a Complaint against Defendants, asserting the following claims for relief: breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, trade secret misappropriation, conversion, false designation of origin, trade dress infringement, trademark infringement, common law trademark infringement, common law trade dress infringement, false advertising, unfair competition, common law unfair competition, unjust enrichment, and replevin. (ECF No. 1).

Plaintiffs allege that "Fuhu, Inc., is the creator of NABI, the world's first full-featured Android tablet made especially for kids." Id. at 2. Plaintiffs met with TRU, a large toy retailer, several times in September and October 2011 to discuss the NABI product including business strategy, marketing, and rollout plans. On September 28, 2011, the parties signed a non-disclosure agreement ("NDA") which states, in relevant part:

1. Each party acknowledges that all of the information provided to the other party (the "Receiving Party") is confidential, proprietary and a trade secret of the party disclosing such information (the "Disclosing Party")....

4. The Receiving Party's obligation regarding the Confidential Information shall not apply to Confidential Information, which ...

a. was already known to the Receiving Party prior to disclosure of it to the Receiving Party by the Disclosing Party...

d. was known to the public or generally available to the public prior to the date of disclosure by the Disclosing Party; ...

f. is independently developed by the Receiving Party....

8.... If the Receiving Party breaches this Agreement or discloses any Confidential Information other than as permitted by this Agreement, the Disclosing Party shall suffer immediate and irreparable harm for which money damages shall not constitute a full and adequate remedy.... (ECF No. 50). On October 29, 2011, the parties signed an exclusive distribution agreement ("Exclusivity Agreement") under which TRU would be the exclusive distributor of NABI. Under the terms of the Exclusivity Agreement, TRU agreed to place orders for 10,000 NABI tablets by December 31, 2011, and to place orders for 500,000 more NABI tablets throughout 2012. TRU also agreed to undertake specific marketing and merchandising actions to support the NABI sales in their stores. In January 2012, Plaintiffs terminated the Exclusivity Agreement with Defendants.

Plaintiffs allege that "on September 10, 2012, TRU announced with great fanfare its 'proprietary' tablet for children, TABEO." (ECF No. 1 at 2). Plaintiffs allege that "[t]he TABEO product and related marketing bear a striking and not coincidental similarity to Fuhu's NABI product and the collateral proprietary information that Fuhu disclosed to TRU under strict confidentiality. TRU used Fuhu's trade secrets and confidential information to start selling TABEO, which systematically attempts to replicate the NABI experience ...." Id. at 4. Plaintiffs allege that "TABEO not only is confusingly similar to NABI's iconic butterfly shape reflected in the Nabi trademarks and trade dress, but also TRU's advertising and promotional materials are derived from the business plan Fuhu shared with TRU on a basis of strict confidentiality." Id. Plaintiffs allege that "TRU has used and continues to use Fuhu's confidential information, trade secrets, and other intellectual property [regarding NABI] to prepare, market, and sell TABEO." Id.

On September 25, 2012, Plaintiffs filed an Ex Parte Motion for Temporary Restraining Order and Order to Show Cause for Issuance of Preliminary Injunction. (ECF No. 11). Plaintiffs seek a temporary restraining order enjoining Defendants:

(1) from taking pre-orders from consumers for: (i) the TABEO product (or ... the functional equivalent ...) or (ii) the TABEO product's bumper with flared corners (or ... the functional equivalent ...);

(2) from selling to consumers or otherwise delivering to consumers (i) the TABEO product (or ... the functional equivalent ...) or (ii) the TABEO product's bumper with flared ...


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