IP Law Daily New York school gym partition suit continues against manufacturers and inspectors
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Monday, September 19, 2016

New York school gym partition suit continues against manufacturers and inspectors

By Jody Coultas, J.D.

Gym Door Repairs, Inc. (GDRI) and Safepath Systems LLC (SPS) stated, in part, copyright and trademark infringement claims against nineteen defendants that allegedly illegally inspected, maintained, or repaired safety systems for SPS’s electrically operated folding partitions, according to the federal district court in New York City. The court dismissed patent infringement claims against all defendants. Civil conspiracy and tortious interference claims were also dismissed in part (Gym Door Repairs, Inc. v. Young Equipment Sales, Inc., September 15, 2016, Koeltl, J.).

All New York public and private schools are required to install and maintain safety devices on all electrically operated partition doors to stop the forward and stacking motion of the doors when a body or other object is present. GDRI manufacturers the Safe Path System, a safety device used on electrically operated doors in all New York schools between 2003 and 2012. In 2009, GDRI filed complaints with the offices of New York’s Governor and Attorney General, the Mayor of New York City, and to the Senate and Assembly that the Path Systems had not been installed in all schools and that those that had been installed were not being properly inspected and maintained.

Carl Thurnau, the Director of the Office of Facilities Planning for the New York State Department of Education (NYSED), then changed the official interpretation of law regarding safety devices to allow "any competent person" to work on Safe Path Systems instead of solely the manufacturer’s authorized and trained technicians. YES Service and Repairs Corporation was then formed and started to perform maintenance and repair work on the Safe Path Systems.

Patent claims. The court held that GDRI and SPS failed to state either direct or induced patent infringement. GDRI alleged that Young Equipment Sales, Inc. and YES Service and Repairs Corporation, Total Gym Repairs, Inc., Guardian Gym Equipment, and Tri-State Folding Partitions, Inc. directly infringed U.S. Patent No. 5,244,030 (the ‘030 patent) by repairing the patented Safe Path Systems, and that the other defendants induced infringement of the patent. The defendants argued that GDRI and SPS failed to attach written documentation of the transfer of the patent to either GDRI or SPS. The ‘030 patent holder and Safe Path Systems inventor, Stephen Cole, submitted an affidavit and attached a "Patent Assignment" seemingly assigning the ‘030 patent to GDRI on August 1, 2008. While GDRI had standing, the evidence supporting the claims for patent infringement was insufficient.

GDRI and SPS were unable to state direct infringement claims against the defendants, according to the court. Under the doctrine of permissible repair, repairs and maintenance performed on a patented item do not constitute infringement. Although the doctrine is an affirmative defense, a complaint is subject to dismissal for failure to state a claim when an affirmative defense clearly appears on the face of the complaint. The doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item. GDRI alleged that schools contacted or serviced by various defendants purchased the Safe Path Systems, and that those products were then repaired by the alleged direct infringers at the behest of the alleged inducing infringers. These allegations could not support an infringement claim. Finally, allegations against Total Gym were dismissed as the company was incorporated two years after the ‘030 patent expired.

Because the direct infringement claims were dismissed, the claim for induced infringement also failed and were dismissed without prejudice by the court.

Copyright claims. The motion to dismiss the copyright claims for lack of standing was dismissed by the court. The complaint alleged that the "Plaintiffs are and at all relevant times have been the owner of the exclusive rights under the United States Copyright Act of the copyrighted Manufacturer Materials, which are the subject of valid Certificates of Registration issued by the Register of Copyrights." To the extent defendants argued that GDRI failed to allege an unbroken chain of title to the rights at issue, it was unnecessary for the complaint to include such detail.

GDRI and SPS stated direct copyright infringement claims against Young Equipment Sales, Inc., YES Service and Repairs Corporation, Total Gym, Bellmore Public Schools, Guardian Gym Equipment, Tri-State Folding Partitions, Inc., and the Eastern Suffolk Board of Cooperative Educational Services, according to the court. Young and the other defendants allegedly using the plaintiffs’ Manufacturer Materials either to prepare bid materials or conduct repairs on the Safe Path Systems, or allegedly made unauthorized copies of the Manufacturer Materials to submit bids. The allegations were sufficient to state a claim. There was no issue of the claims being time barred, and the defendants’ claim of fair use could not be decided on this motion to dismiss.

The motions to dismiss the claims of contributory copyright infringement against the remaining defendants were granted by the court. GDRI and SPS alleged that the remaining defendants induced infringement by allowing the direct infringers to service the Safe Path Systems and hijack bids to service the Safe Path Systems. However, the allegations were insufficient.

Trademark claims. Claims that Young Equipment Sales, Inc., YES Service and Repairs Corporation, Guardian Gym Equipment, Tri-State Folding Partitions, Inc., and Total Gym directly infringed the trademarks by representing falsely to their customers that they were authorized by Safe Path to install and repair the Safe Path System were sufficient, according to the court. The invocation of the doctrine of nominative fair use by the defendants raised factual questions that could not be resolved at this stage. The claims were sufficient at this stage to show infringement by the defendants. Guardian and Tri-State made no argument as to why the allegations were insufficient.

Carl Thurnau, the Director of the Office of Facilities Planning for the New York State Department of Education, was granted dismissal of trademark infringement and unfair competition claims by the court.GDRI alleged that the direct infringers used the marks without permission to bid on contracts, and that Thurnau "induced" the alleged violations by engaging in unfair and deceptive acts in furtherance of the conspiracy. However, there were no allegations that Thurnau knew that the alleged direct infringers were infringing on the marks or that he took any action to encourage trademark infringement.

GDRI and SPS were unable to state induced infringement claims against the New York State School Facilities Association or the School Facilities Management Institute, according to the court. There were no allegations of any affirmative steps taken by either defendant to foster the alleged infringement.

The New York City Department of Education (NYCDOE) was granted dismissal of the contributory infringement claims by the court. There were no allegations that the NYCDOE used the trademarks to sell goods or services, only that the NYCDOE allowed its general contractors to subcontract with other vendors. There were also no plausible allegations that the NYCDOE’s actions led to a likelihood of consumer confusion.

The Eastern Suffolk Board of Cooperative Educational Services (ESBOCES) and Nassau Board of Cooperative Educational Services were granted dismissal of the trademark infringement and unfair competition claims by the court. The complaint alleged that ESBOCES knowingly allowed the Young defendants to use its furniture catalog bid to engage in deceptive acts, including infringement. However, the evidence did not support this claim.

Bellmore Public Schools’ motion to dismiss the trademark infringement and unfair competition claims was granted by the court. The complaint alleged that Bellmore induced violations of the Lanham Act, New York General Business Law, and New York common law by engaging in unfair and deceptive acts in furtherance of a conspiracy to drive GDRI and SPS out of business. To establish such a claim, a plaintiff must allege "a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement." Bellmore is not a manufacturer, distributor, or supplier that violated the trademarks, and there were no factual allegation as to how Bellmore induced anyone else to infringe the trademarks.

Tortious interference claims. The motions to dismiss the claims of tortious interference with prospective economic advantage brought by the New York City Department of Education, Eastern Suffolk Board of Cooperative Educational Services, Nassau Board of Cooperative Educational Services, Bellmore Public Schools, the New York State School Facilities Association, and the School Facilities Management Institute were granted by the court. The motions to dismiss such claims brought by the other defendants were denied.

Conspiracy claims. The motions to dismiss the claims of civil conspiracy brought by the NYCDOE, the New York State School Facilities Association, the School Facilities Management Institute, Total Gym, Eastern Suffolk Board of Cooperative Educational Services, Nassau Board of Cooperative Educational Services, Bellmore Public Schools, and the Guardian/Tri-State defendants were granted by the court. The remaining defendants’ motions to dismiss were denied.

The case is No. 15-cv-4244 (JGK).

Attorneys: Eric Su (FordHarrison LLP) and Katherine Jane Daniels (Katherine Daniels LLC) for Gym Door Repairs, Inc. and Safepath Systems LLC. Patrick McCormick (Campolo, Middleton & Associates, LLP) for Young Equipment Sales, Inc. and Yes Service and Repairs Corp.

Companies: Gym Door Repairs, Inc.; Safepath Systems LLC; Young Equipment Sales, Inc.; Yes Service and Repairs Corp.

MainStory: TopStory Patent Copyright Trademark NewYorkNews

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