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Last updated - July 1, 2012

3:09-cv-02390-F
M3Girl Designs LLC v. Blue Brownies LLC et al


DAY 1 : Monday, June 18, 2012

Preliminaries
At 8:48am, Judge Royal Furgeson declared the m3 girl v Blue Brownies trial to be in session. The subject of allowing previously sealed sales records to be admitted was discussed. (Since this was pre-trial sparring being discussed, I have no idea what exactly was the issue.) The judge asked Hemingway (Plaintiff) where he got his information and there was a reference made to it being hearsay evidence. To Hanor (Defendant) the judge commented that the custodian of records usually testifies.

Hemingway then expressed concerns about some of the juror instructions. One was removed as being redundant and a couple of other instructions were discussed. The judge then said that the jury pool was 37 people and that they would be seated in the gallery in numerical order. At 9:15am the first members of the jury entered the courtroom, four at a time. There were two delays as the bailiff announced that he had misplaced a couple of jurors. By 9:27 all 37 jurors were seated in the courtroom.

Judge Royal Furgeson then went into a lengthy statement about jury duty and the history of jury by trial in England and in the United States. At the end of the twenty minute statement, he closed by saying that there is no liberty without justice.

The attorneys for both sides were told to introduce themselves and the clients. Rocky Little was acting as co-counsel for Defendants. Heminway was sole counsel for Plaintiffs. Hemingway then gave a brief opening background of m3 girl designs and told the prospective jurors that “M3” stood for Maddie, Margo and Mom. According to Hemingway, m3 girl designs was founded in 2006 to make jewelry for kids. In the past seven years it has been very successful, making over $5 million. He claimed the company had acquired a tremendous amount of consumer recognition.

Hanor then made a brief opening statement to the jurors. He stated that the jewelry was bottle caps, magnets and washers. One could put them on a variety of things. He claimed that Blue Brownies was less than 1% of the bottle cap jewelry market. He admitted that m3 girl designs had developed a great marketing plan using a New York firm. Their sales soared in 2008 and then dropped like a rock in 2010. m3 girl designs had less than 10% of the market and had sent out over 30 cease and desist letters to competitors. He closed by stating the trial was not about the artwork in the bottle caps.

The judge then estimated that jury questioning would take about 1 to 1 ½ hours and wanted to know if any of the jury pool needed a restroom break. Just about everyone raised their hand. After the judge stopped laughing, a fifteen minute break was announced.

Jury Selection
Jury questioning began with what is typical for jury selection. Did any of the jurors know the Plaintiffs, the Defendants, the attorneys, witnesses, etc. A few of the jurors remembered having seen m3 girl designs on the television show, Shark Tank. A few of the jurors had bought bottle cap jewelry in the past. Had anyone in the jury pool ever worked in the “intellectual property” field or ever studied intellectual property? Had any of the pool ever filed a lawsuit or have been sued? Been a witness at a trial or served on a jury before?

Hemingway was then allowed to make a statement and ask general questions. He said he has represented m3 girl designs for 4 years. He then made some statements about mom, Diane Bradshaw. Some people have seen m3 girl designs on Shark Tank and some have purchased its jewelry. He asked if there were any jurors who felt that there were too many lawsuits filed in the US. About five raised their hands. How many felt damage awards were too high? About five raised their hands. Did anyone work at home and sell on the internet? About seven raised their hands. He then asked if they all understood that a civil trial was decided on a “preponderance of evidence” as opposed to “beyond a reasonable doubt” as in criminal trials. He claimed that the Plaintiffs had to do was to have one little grain of salt more that the defendants. Did anyone have a problem with that? No hands. Who believed that the American economy was in good shape? No hands. Was Wall Street to blame? A lot of hands. Lack of regulations? A lot of hands. Who felt we had too many regulations? No hands. Did any believe that there should not be restrictions on the actions of Wall Street? No hands. Did anyone believe that intellectual property should not be protected? No hands

Hanor asked a few questions about occupations and educational backgrounds of some of the jurors. The judge then asked the jury about the time frame of the trial. The trial was expected to go until the following Tuesday, 8 days from then, and wanted to know if that would be a hardship for anyone. After the preliminary questioning, about nine of the jurors were called forward for additional questions that while not off the record, were asked to the side in a quiet session with the judge and both attorneys. The attorneys were then given 30 minutes to write down their choices and challenges. Then the chosen twelve were called forward by their number and seated. The rest were excused. A lunch break until 2pm was announced, giving all about 1½ hours to get something to eat. The judge announced he expected the day's testimony to take them to 5:30pm.

Courtroom Layout
The jury box was designed to hold 14 jurors but this trial had no alternates so two seats were empty. All three attorneys had laptop computers. The courtroom has a state-of-the-art audio-visual arrangement that allows access to the internet and permits each side to display documents on a very large projection screen. The screen is much like the type used years ago for slide projectors and home movies. The access allows for highlighting and enlarging displays just as one can do on any computer. Two tripod display boards were available for the attorneys to use for displays to the jury. If it were not for excellent air conditioning, this trial would not have taken place in the summer in Dallas, Texas. Hot, hot, hot, and did I mention humid, humid, humid?

I was sitting on the aisle for the best view and better acoustics. When Diane Bradshaw returned from lunch, if looks could kill, I would be a zombie right now. Maddie was less obvious about her dislike of me. Mommy Dearest glared hate.

Let The Trial Begin
At a few minutes past 2pm, the jury was sworn in. Copies of the preliminary instructions for the jury were passed out. These are not to be confused with the jury instructions they would receive when they begin deliberations. These preliminary instructions concerned testimony, evidence and juror conduct. The judge told the jury that they and they alone determine the facts. That they the jury could consider direct and circumstantial evidence. That trademarks, trade dress, functionality, secondary meaning, and dilution under Texas law, and counter claims of false advertising, all would become clear as the trial continued. They would hear opinions from expert witnesses as well as from depositions.

The jurors were cautioned as to their conduct. They were not to discuss the case, even with other jurors, until deliberations began. They were not to read about the case and they were not to do any research on their own into the case or the parties involved. Ignore publicity and no internet. It was emphasized, almost beaten to death, that NO, NO, NO internet was to be used by the jurors to seek information about the case or the parties. They were not to form any opinion until all the evidence was in. Opening statements were not to be considered evidence.

Time 2:15pm Begin Opening Statement by D Scott Hemingway for the Plaintiffs.

m3 girl designs had created a specific trade dress. It was the mainstay of their business. The business was started with $300 of seed money from Maddie and Mom matched it. It was an extension of a 2nd grade school project. Maddie got hooked on business in grade school. (D Scott Hemingway was noticeably nervous and his voice reflected it. His lack of confidence in what he was saying was evident. It could not have been because he had an audience, the jury, because he has tried a lot of cases.)

Hemingway then puts a display on the tripod for the jury and also projects it on the screen. He then goes into a convoluted description of the trade dress that is being claimed by the Plaintiffs. (Convoluted because, as you will read, the “five factors” claimed in the trade dress are so minimal, so distorted in description, and so obviously nothing more than typical features of bottle cap jewelry, that the only way the Plaintiffs can make a case is to distort, or try to distort, the physical features of a routine bottle cap necklace.) In pleadings Heminway describes the trade dress as being:

a slim chocker necklace (colored/white fabric), an attachment having a metallic sheen tied in a knot at the front of the chocker necklace, a bottlecap with outwardly projecting ridges and internal surface exposed (e.g., showing internal artwork) and a raised projection on the top surface of the bottle cap. m3 girl designs is not claiming trade dress protection to the interchangeable or magnetic functionality of the jewelry.
(I do not have the exact photographs and samples used on the display board but I have similar ones that were submitted by Plaintiffs in pleadings. Bear in mind that m3 girl designs is only claiming trade dress in the choker bottle cap necklace and not in any other necklace or any other method of using bottle cap jewelry. Trade dress is considered to encompass the entire look and feel of a product and/or its packaging.)
It is well established that trade dress can be protected under federal law. The design or packaging of a product may acquire a distinctiveness which serves to identify the product with its manufacturer or source; and a design or package which acquires this secondary meaning, assuming other requisites are met, is a trade dress which may not be used in a manner likely to cause confusion as to the origin, sponsorship, or approval of the goods. In these respects protection for trade dress exists to promote competition.

TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 US 23 - Supreme Court 2001

(One very well known example of trade dress is the Hershey Kiss chocolate candy. Not only is the wrappers distinctive and bring to mind the Kiss, but the shape of the chocolate itself is distinctive. The Hershey Kiss candy design and its packaging, individually, qualify as trade dress.)


m3 girl designs

Blue Brownies

Hemingway then went over the various features of the claimed trade dress. A slim chocker necklace made of colored or white fabric. An attachment having a metallic sheen tied in a knot at the front of the chocker necklace. (The "attachment having a metallic sheen" is nothing more than a zinc washer but no one for the Plaintiffs would admit that. Notice the fabricated wording by the Plaintiffs.) Hemingway then noted that the choker had to be attached to the "attachment" by a knot. (If you look at the top necklace in the right side picture you will see the all important "knot". Except, that if you also look at the other choker necklaces, the "knot" and the "attachment" and the "projection" cannot be seen when the choker is worn. Attributes that cannot be seen cannot be legitimately claimed as trade dress. But do not try to tell the Plaintiffs that little point.)

Hemingway then told the jury to note the ridges of the bottle cap were pointed outward. He claimed that it was not just a bottle cap. One had to take in the whole package. The Plaintiffs simply did not want people to exactly copy what there were claiming as their trade dress.

At this point, Hemingway attempted to introduce "evidence" that the Defendants had already admitted that the Plaintiffs had a lawful trade dress claim. To support this assertion, Hemingway displayed paragraphs from the Second Amended Complaint Response filed by the Defendants where the response admitted the trade dress claims made by the Plaintiffs.

Objection Hanor immediately objected and pointed out to the court that the response had been corrected in a subsequent filing because the paragraphs shown were obviously typographical errors.. Hanor claimed that the Plaintiffs were improperly attempting to influence the jury with what was obviously typos. Judge Royal Furgeson stated the dispute would be resolved that evening. Move on. (The next morning, before court, the judge flatly told Hemingway that we was not going to allow him to continue with his attempt to use flawed pleadings to discredit the Defendants. Hemingway looked visibly frustrated.)

Hemingway told the jury that trade dress does not cover changed designs but that all of the designs from Blue Brownies were identical to those sold by the Plaintiffs although he did allow that the chokers might be smaller. The Defendants started their business in 2009. He then shows the registered trademark SNAP CAPS that belonged to the Plaintiffs. Then he displays CLICK IT CAPS from the web site belonging to the Defendants. Interrogatory responses from the Defendants show that the Defendants knew of m3 girl designs in 2008. Charlotte Liles, a former co-defendant, had been a buyer. He then reiterated, "knew".

Hemingway went into how large the market was for bottle cap jewelry as it applied to the Plaintiffs. In 2006, they had sales of $4,500. In 2007, while in just nine stores, they had sales of $10,000. In 2008, sales increased to $650,000. And they were monitoring the marketplace. In 2008, the Plaintiffs sent out four cease and desist letters. (What was pointed out later was that not one of the four C&D letters sent out in 2008 asserted any trade dress claims.) Their first substantial year was 2009 with sales of $2.5 million. They had gone international. In 2010, sales dropped to $1.6 million, sales dropped in 2011 to $321,000 and were a mere $75,000 so far in 2012.

Hemingway then asked, why have a trademark and trade dress? They help consumers, they help businesses and limit unfair competition. He then shows examples of highly recognizable trademarks. The golden arches of McDonald's. Coke Bottles. Hershey Kisses, commenting that there have been plenty of lawsuits involving the KISSES trademark. (Actually, there have not been any that we could locate that involved Hershey Kisses. While Hershey Chocolate has been into federal court a number of times none involved Kisses.)

Mouse ears from Disney. Campbell's Soup, described as a smaller company than Disney. The Honeywell thermostat. Chula and its wooden cap. He then again went over the trade dress components: a fabric choker, a metallic looking object, bottle cap with the edges facing outward and a projection on the back of the bottle cap. Their claims included trade dress infringement, dilution under state law, trademark infringement, palming off and unfair competition. He then display portions of the 3rd Amended Answer, containing typographical errors, again asserting that the Defendants had acknowledged that the trade dress claims made by the Plaintiffs were valid. (Hemingway was verbally sanctioned by the judge the following morning for this conduct). He then claims all of this showed a likelihood of confusion and bad faith intent. (His voice showed his nervousness.) He repeated that the Defendants had admitted the validity of the trade dress claims (Again focusing on the obvious typographical errors. When you do not have a case you try to fabricate an issue wherever you can) and described bottle cap jewelry as an impluse purchase item.

Hemingway then turned to "functionality". The different parts of the choker bottle cap necklace were not functional. One does not have to us m3 girls designs choker necklaces. (The Plaintiffs were trying very hard to claim that the attachment - the zinc washer - and the projection - the magnet - served no function.) He stated that Blue Brownies offers non-bottle cap productions on their web site. And to top it off, the US Patent Office said the various aspects of the choker bottle cap jewelry were non-functional. He displays on the screen the response from the Patent Office, #1201269, Claim #12, "the bottle cap design does not functionally relate". (While this was part of the rejection letter from the Patent Office, the statement was in reference to a patent claim for software, not for the choker necklace.)

Trade dress must be policed, Hemingway asserted. Between 2006 and 2008, the Plaintiffs had located four cases of infringement. (None of the four cases involved trade dress claims but replied on copyright infringement claims). The first significant infringer was Blue Brownies. The Plaintiffs are not litigation happy as evidenced by the 31 cease and desist letters sent out. Most stopped on their own while a few hired an attorney. In some cases they had to send out a second cease and desist letter. Only Blue Brownies refused to stop. (Hemingway's voice showed that he was way too nervous as though he either was not confident or that he was not telling the truth.) Damages are significant but it is about stopping the infringement. The market is contracting and it is all the fault of Blue Brownies that the Plaintiffs are suffering. Hemingway then repeats the earlier false claims that the Defendants have admitted in the filings that the Plaintiffs had a valid trade dress claim.
End Of Opening Statement By Plaintiffs.

Time 3:15pm Court orders a ten minute break.

Time 3:30pm Begin Opening Statement by Charles Hanor for the Defendants.

Charles Hanor began by apologizing for the typographical errors in the filings. America has a free-market system. Competition is a good thing. But competition should be fair. One example of trade dress is the copper-top battery. Coke bottles are another but it is the package itself, not the product. At issue in court is a craft item made from tights, a ½ inch washer, the tights are tied to the washer and the attached to the magnet which hold the bottle cap to the washer. It is a washer necklace. The washer and the magnet are 100% functional. The product configuration must have secondary meaning. Hanor then gave a Hershey Kiss as an example of secondary meaning.

Some products clearly are not protectable. Examples are shredded wheat and cheerios. There are identical products to these in the market place. . Again, it is the product in these examples, not the packaging. Trademark law does not stop someone from competition. Patent Office applications were abandoned. Two sets of claims were sent by the Plaintiffs to the Patent Office in one application. The Patent office only allows one claim per application. The first claim was identical to the trade dress claims and the second claim was for a software program. When the Plaintiffs had to choose, they kept the software application and the rejection letter read earlier was concerning the jewelry as it applied to the software program, not as jewelry.

The Dudtes [pronounced "Doot" as in "boot"] live in Arkansas. They are not wealthy. They did craft projects in September 2008. They were making two items: bottle cap magnets and chokers. Blue Brownies also sells longer necklaces. Hanor then compared the products and the names used. Holding a bottle cap magnet in one hand and a choker washer on it other, close to the microphone, he put them together and apart several times. Sounds like CLICK-IT. They began selling on the internet in October 2008. They got their materials for the bottle cap magnets from places like Hobby Lobby, Michael's and off of eBay. In January 2009, they started their web site.

Blue Brownies used CLICK-IT for about a year. Look at the cease and desist letter they received. There is no mention of trade dress. There was no mention of trade dress until 2011. Something like the choker necklace is only protectable with a patent. A patent must be functional. Blue Brownies stopped using CLICK-IT after receiving the letter.

But when is the choker necklace trade dress? Is it trade dress if the parts are sold separately? Interchangeable magnetic jewelry is not a new idea. There is an old patent on the idea. Hanor then displays the CAPSTERS book on the screen.

In 2005 this book was sold nationwide. The Plaintiffs have inferred that they sold their product in 2006 but they did not until 2007. This is based upon the information they provided in their patent application. Invoices provided by the Plaintiffs show their first sales in 2008. Before that they were selling "lap desks". Hanor then holds up another book on how to make bottle cap jewelry and necklaces. (He did stutter a little bit at this point). Novelty is not a requirement for trade dress. He then went back to the Patent Office ruling and the rejection letter. The Plaintiffs would have you believe that no one is out there selling bottle cap jewelry as necklaces, like on Etsy ---"

Objection Counsel is suggesting the jury look at the internet. Not at all. Just referencing it. The judge repeats to the jury that no internet is allowed.

Hanor continues. Buying the parts and snapping them together to make trade dress? The CAPSTER book is still available in stores and on Amazon.

Objection Counsel is again suggesting the jury look at the internet. The judge repeats to the jury that no internet is allowed.

Many companies are selling bottle cap jewelry. If so many are selling bottle cap jewelry then how is it exclusive to the Plaintiffs? m3 girl designs had a great marketing plan. A business started by a 10-year old. Did she start the business in 2006? There is no evidence to support that. Did she run the busniess? Or did Mommy? Advertising about the Bradshaw Girls starts in 2009 and spending on advertising seems to have started after they signed with the Kline Group and an advertising agency.

The Plaintiffs claimed that Blue Brownies was "significant competition". In 2009, they made $36,000 compared to the $2.5 million made by m3 girl designs. In 2010, they made $23,000 while m3 girl designs made $1.6 million. In 2011 they made $3,500 while m3 girl designs made $321,000. What caused the drop in revenue? Bottle cap jewelry is a fad and the fad dies. The Defendants will be showing proof that m3 girl designs has no valid trademark infringement claims nor have they a valid trade dress claim. End Of Opening Statement By Defendants.

Time 4:06pm First witness for the Plaintiffs: Diane Bradshaw.

Diane Bradshaw was sworn in and seated. Hemingway had her briefly go through her background. She graduated from SMU with a degree in Physcoyogy. She had been a manager for an apparel company and then a regional manager, a buyer, opened stores and re-merchandised the stores. She was working in New York City and moved back to Dallas in 2000. She then started talking about Maddie and the school Maddie attended. (There seemed to be an over emphasis on the school and how good it was.) The Second Grade had a business project every year. The faculty had a "Stationary Sale" where the kids sold articles to the parents. Kids would apply for jobs and Maddie was selected to be the business manager. Diane Bradshaw described Maddie as an over-achiever and hard worker.

After the "stationary sale", Maddie came home and announced that she wanted to start a business. The first business was selling bottled water during their twice yearly yard sales. Together they calculated the cost of the water and cookies and priced them accordingly. Later, Maddie began custom decorating "lap desks" with fabric and other artwork. Maddie went to the library to read up on how to start a business for kids.

When Maddie was in the Fifth Grade (2007) she got some left over bottle caps from a relative who had an old Coke machine in the basement. That is when she came up with the necklace designs. According to Diane Bradshaw, this was "late 2006". Everyone was so excited and soon all of Maddie's friends wanted one. They sold some in 2006. They took about 50 to a nearby Learning Express store and showed them to the manager. The manager was sweet and accepted 50 of the choker necklaces on consignment. The store sold all of them in one day. The began working as fast as they could, the three of them. In 2006, they were selling them locally in just three stores. The were getting orders and they were selling fast in the Dallas, Plano and Frisco stores.

They expanded in 2007 to nine stores. Then the Kline Group called them about representing their line and getting it into the Dallas Markeplace, which was higher boutique children's apparel and accessories. Kline told them that their product was their "best selling" item in late 2007.

Objection Hearsay. Sustained.

They met with the Kline Group who was very excited about their product.

Objection Hearsay. Sustained.

The end result of this was that they signed a contract with the Kline Group and provided them with product information. Hemingway had Exhibit 3D shown on the projection screen. She repeated that the m3 girl designs time frame was they began selling the choker necklaces in 2006. Kline Group started putting their product in advertising brochures. Hemingway then asked her for her understanding of the Kline Group procedures......

Objection The witness is not qualified to testify about their procedures. She was being asked about "her understanding" of their procedures. Allowed.

Their company was added to a database and their sales surged. She started hiring people. The choker necklace was 99% of their business. (This 99% claim is incomprehensible. Their web site shows a small variety of choker necklaces and hundreds of different design bottle cap necklaces.) They were an immediate hit and everyone wanted to meet Maddie. They had close to 12 press articles and television shows.

Objection Most of these were after the cutoff date of January 2009. Sustained.

Time 4:47pm Court is adjourned until 9am Tuesday morning.

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