Opinion
No. 97-C-3742
March 6, 2000
MEMORANDUM OPINION AND ORDER
A dispute between a marketing firm and its former Chief Operating Officer has resulted in this seven-count unfair competition case. On May 21, 1997, Plaintiff PS Promotions, Inc. ("PS") filed this lawsuit against its former COO, Kenneth Stern ("Stern"), and Stern's new business Stern Hall, Inc. ("Stern Hall"). In Count I against Stern and Count II against Stern Hall, PS alleges false designation of origin and false advertising in violation of Section 43(a) of the Lanham Act. Similarly, Counts III and IV allege that Stern and Stern Hall violated the Illinois Trade Secrets Act, and Counts V and VI allege violations of the Consumer Fraud and Deceptive Business Practices Act. Finally, Count VII alleges that Stern committed common law conversion when he took certain materials with him at the time of his departure from PS.
Defendants have moved for summary judgment on all counts. Stern and Stern Hall argue that Plaintiff's claims fail as a matter of law because Defendants did not falsely designate any materials, because Plaintiff cannot establish a likelihood of confusion, and because none of the materials at issue involve trade secrets. With respect to the conversion claim against Stern, Stern contends that Plaintiff gave him the materials at issue and never requested their return until after this lawsuit was initiated. For the reasons set forth below, the court grants summary judgment with respect to Counts I and II and dismisses the remaining state law claims for lack of subject matter jurisdiction.
FACTUAL BACKGROUND
The following facts are taken from Defendants' Local Rule 12(M) Statement of Undisputed Facts ("Defs.' 12(M) Stmt."), Plaintiff's Response to Defendants' Local Rule 12(M) Statement of Undisputed Facts ("Pl.'s Resp."), Plaintiff's Statement Pursuant to Local Rule 12(N) ("Pl.'s 12(N) Stmt."), Defendants' Response to Plaintiff's Local Rule 12(N) Statement ("Defs.' Resp."), Defendants' Appendix in Support of Defendants' Motion for Summary Judgment ("Defs.' App."), Appendix in Support of Plaintiff's Memorandum in Response to Defendants' Motion for Summary Judgment ("Pl.'s App."), and Defendants' Supplemental Appendix in Support of Defendants' Motion for Summary Judgment ("Defs.' Supp. App."). PS is a Michigan corporation licensed to do business in Chicago, Illinois. (Defs.' 12(M) Stmt. ¶ 1.) PS considers itself to be a leader in the "events marketing industry." PS builds and executes marketing programs such as promotional concert tours and entertainment events affiliated with a particular client's products. (Stanley Aff. ¶ 1-2; Greifer Dep., at 7; Pl.'s App. Ex. B.) In the course of conducting its business, PS sometimes drafts or produces proposals, client presentations, video tapes, case studies, and final reports. (Pl.'s 12(N) Stmt. ¶ 52, Stanley Dep., at 112-14.) Paul Stanley ("Stanley"), the owner and president of PS, (Defs.' 12(M) Stmt. ¶ 2), describes final reports as "confidential reports we put together for our clients that summarize their entire [marketing] program, show all the different parts of what we delivered in the program . . . [and] all of the results of the given program." (Stanley Dep., at 112.)
The court notes that what Plaintiff has referred to as "Plaintiff's Response to Defendants' Local Rule 12(M) Statement of Undisputed Facts," would more properly be called Plaintiff's Statement Pursuant to Local Rule 12(N), as it is in response to Defendants' Statement pursuant to Local Rule 12(M). Likewise, what Plaintiff has incorrectly referred to as "Plaintiff's Statement Pursuant to Local Rule 12(N)," would more properly be called Plaintiff's Statement of Additional Facts pursuant to Local Rule 12(N)(3)(b). The court notes, further, that the Local Rules have been amended, effective September 1, 1999, reflecting that the requirements of Local Rules 12(M) and 12(N) are now found in Local Rule 56.1. The amendments did not alter the substance of the requirements.
In June 1989, Stanley hired Stern as Chief Operating Officer of PS under a three-year employment contract. (Stanley Aff. ¶ 6.) Initially, Stern was responsible for the "day-to-day operation of the business systems and accounting." (Pl.'s 12(N) Stmt. ¶ 44, citing Stern Dep., at 31.) According to Stern, his role eventually expanded to include creative work as well. (Defs.' Resp. ¶ 44, citing Stern Dep., at 31-2.) Stern was not subject to a non-competition agreement, but he admits he authored an employee handbook that contained a paragraph that protects the confidentiality of PS documents and property. (Stern. Aff. ¶ 4, Stern Dep., at 67-70.) Specifically, this paragraph states:
Beach Boys Snackin' USA was the name given by another advertising agency to Borden Snacks' "sponsorship of the Beach Boys 1991 summer concert tour in the United States. [The] video tape . . . was prepared to give Borden's upper management an update on how the promotion was doing at that particular point in time." (Defs.' 12(M) Stmt. ¶ 23, Pl.'s Resp. ¶ 23.) An August 1998 article published in Promo Magazine described the Borden Snackin' USA event strategy, sponsors, and results. (Promo Article, Ex. B to Pl.'s 12(N) Stmt.) Stern claims he himself created and produced the Snackin' USA tape during his tenure with PS, (Stern Dep., at 131), but Plaintiff disagrees that Stern was solely responsible for the project. (Pl.'s Resp. ¶ 23.)
[E]mployees may not make or take copies of any PS documents with them in any form. They are the copyrighted property of PS. This includes, but is not limited to, any proposals, contracts, business plans, final reports, [and] videos. . . . Former employees may not contact PS clients to develop business for themselves or any employer.
(Ex. C, Stern. Dep., at 69.) PS claims this paragraph rises to the level of a confidentiality agreement, which bound Stern to its provisions. (Pl.'s 12(N) Stmt. ¶¶ 45-6.) PS has not alleged a breach of contract claim against Stern, however.
Stern remained with PS until the expiration of his contract in May 1992, when Stanley chose not to renew it. Stanley testified that his reasons for this decision were his belief that Stern had mishandled money, that clients did not want to deal with Stern, and that Stern was "making a play for some of [PS's] clients." (Stanley Dep., at 22, Stanley Aff. ¶ 8.) On May 27, the day of Stern's dismissal, Stanley told Stern not to return to his office. (Defs.' Resp. ¶ 49.) Shortly thereafter, Stanley and his secretary packed Stern's personal belongings into a box and turned them over to Stern's wife. (Stanley Aff. ¶ 8, Stern Dep., at 121.) Stern claims two video tapes were included in the box, one titled "ABC Family Fun Fair" and the other titled "Beach Boys Snackin' USA Tape." (Stern Dep., at 121, Defs.' 12(M) Stmt. ¶ 26.) Stanley, however, claims he and his secretary checked all of the items in the box and swears they did not include the two video tapes; thus, PS argues Stern stole the tapes. (Stanley Aff. ¶ 9.) Stanley also claims he took an inventory of PS's materials a short time after Stern's departure and discovered various proposals, presentations, and final reports were missing, and concluded that Stern stole these items as well. (Pl.'s 12(N) Stmt. ¶¶ 51-3.)
The ABC Family Fun Fair video presents a marketing event that Defendants describe as a "live musical stage show, featuring costumed characters from ABC's Saturday morning cartoon line-up that appeared at regional shopping malls and state fairs in 40 markets in the United States." (Defs.' 12(M) Stmt. ¶ 21.) Plaintiff disputes this description of the ABC Family Fun Fair, but does not provide an alternate description. (Pl.'s Resp. ¶ 21.) It is undisputed that PS received the ABC Family Fun Fair video from ABC Television who prepared the tape. (Pl.'s 12(N) Stmt. ¶ 22, Defs.' Resp. ¶ 22.)
PS claims that Stanley requested in a letter that Stern return these alleged missing items, but that Stern refused. (Pl.'s 12(N) Stmt. ¶ 53.) PS also claims "Stanley has evidence which leads him to believe that Stern took the missing materials with him, without PS's permission, when he left PS's employment." (Pl.'s 12(N) Stmt. ¶ 53, citing Stanley Aff. ¶ 9.) PS does not describe or provide any of this alleged evidence, however.
The court notes that the letter Plaintiff points to was written on the day after Stern's termination, and asks Stern to return "any company property which is currently in your possession, custody, or control." (Ex. F to Pl.'s 12(N) Stmt.) (emphasis added.) It is apparent this letter was written prior to Stanley's packing Stern's office and Stanley's subsequent inventory of PS materials. The court also notes that, if the video tapes were included in the box of possessions Stanley packed, the language of this letter might have led Stern to conclude that his possession of those items was permissible. Because the court will not consider Plaintiff's common law conversion claim, it need not reach the issue of whether Stanley's general request for return of PS materials (without any specific reference to items identified later as missing) is sufficient to support such a claim under Illinois law. Nor is this court called upon to address any allegation that Stern's alleged removal of company property constitutes a breach of contract.
In late 1992, after his departure from PS, Stern launched his own marketing business performing many of the same services that PS provides for its clients. (Defs.' 12(M) Stmt. ¶ 6.) In 1993, Stern entered into a business partnership with Dee Hall ("Hall") and changed the name of the company to Stern Hall. ( Id.)
Stanley claims he soon began hearing "rumors in the industry that Defendants were (i) using PS's materials to solicit clients, and (ii) attempting to `pass off' PS's events and promotions as their own and that Stern used a PS proposal in order to make a presentation to Kraft." (Stanley Aff. ¶ 10.) The only evidence Stanley points to for support of these allegations, however, is a vague reference to "a woman" from Kraft whose name he cannot recall. (Stanley Dep., at 49, 54.)
In late 1996 or early 1997, Stanley claims that he noticed a Stern Hall brochure on a conference table while he was making a presentation to American Home Products, at their offices in New Jersey, and that although he only "had an opportunity to glance at the brochure," he saw that it "contained a document appearing to be a Case Study on PS's ABC Family Fun Fair" promotion. (Stanley Aff. ¶ 11.) Stanley admits that he did not "look at that document long enough or in detail to really know what it said about ABC Family Fun Fair." (Stanley Dep., at 70.) In an attempt to confirm his suspicions that Stern Hall was using PS materials to promote itself, Stanley arranged to have one of PS's employees, Rick Sullivan ("Sullivan"), meet with Stern to discuss a fictional project, instructing him not to disclose that he was a PS employee. (Pl.'s 12(M) Stmt. ¶ 12, Defs.' Resp. ¶ 12.) Sullivan even told Stern that he represented a client who "had a fitness television program and was looking to create a live event out of that show that would be appropriate for its sponsors to participate in with retail tie-ins." (Defs.' 12(M) Stmt. ¶ 17, Pl.'s Resp. ¶ 17, Sullivan Dep., at 13.) Stern agreed to meet with Sullivan in late March 1997 and discuss the fabricated project. (Sullivan Dep., at 7-8.) At this meeting, Stern gave Sullivan a Stern Hall marketing brochure and showed him the ABC Family Fun Fair and Borden Snackin' USA video tapes, which depicted marketing events Stern worked on while employed by PS, events similar to the type in which Sullivan claimed an interest. (Defs.' Resp. ¶ 66; Sullivan e-mail, Defs.' Supp. App. Ex. 3.)
PS claims it always puts its name on either the packaging or the video tapes themselves. (Pl.'s 12(N) Stmt. ¶¶ 65-7.) Because the tapes Stern showed Sullivan did not identify PS, Plaintiff claims Defendants must have altered them "by removing all labels and other indications of PS origin and ownership" and erasing the name plate from the beginning of the Borden Snackin' USA video itself. Stern denies altering the tapes in any way; he believes no version of the ABC or Borden tapes ever included a reference to PS. (Defs.' 12(M) Stmt. ¶ 24, Defs.' Resp. ¶ 67, Stern Dep., at 133.) In fact, according to Stern, trailers or name slates identifying the production company are not generally included on video tapes "because it doesn't make any sense to have that up there when you're showing it to somebody. It's a useless piece of information." (Stern Dep., at 133.) Plaintiff further claims that during the meeting Stern told Sullivan he had worked for PS, but did not specifically disclose that the videos were produced by or for PS or that PS rather than Stern Hall created either event. (Sullivan e-mail, Defs.' Supp. App. Ex. 3.) Stern insists that he did tell Sullivan he had worked on the two promotions while previously employed at another event marketing company, although he did not identify PS by name in that context. (Defs.' 12(M) Stmt. ¶ 20, Stern Dep., at 126.) In an e-mail message that Sullivan wrote to Stanley shortly after the meeting, Sullivan observed that Stern had not held the promotional programs out as the work of Stern Hall. (Sullivan e-mail, Defs.' Supp. App. Ex. 3.) Specifically, Sullivan stated:
The court notes that the Beach Boys Snackin' USA video tape produced by Defendants did not contain a trailer or name slate referencing PS. The copy of the tape that was provided by Plaintiff is identical to the one provided by Defendants, except that it does contain a name slate and label that specifically identifies PS. (Beach Boys Snackin' USA video tape, Ex. I to Pl.'s 12(N) Stmt. ( filed under seal), Beach Boys Seminar Update, Ex. J to Pl.'s 12(N) Stmt. ( filed under seal).)
I met with Ken Stern this morning. Our meeting lasted about one hour and fifteen minutes. Ken started off by saying he worked in advertising in Detroit, primarily in healthcare. He then was recruited by PS Productions [sic] to come to Chicago and run its programs. . . . He showed a video about ABC Family Fun Fair. PS Productions [sic] was not listed in the credits, at least as far as I could see. . . . He essentially said the same kinds of things that would describe a PS program without going into really detailed information. He showed a video on Borden's Presents the Beach Boys. . . . Just to be clear, the only time he stated PS Productions [sic] was when he said that he was recruited by PS to come to Chicago and run its programs. On the same note, he never directly said that these programs were the work of Stern Hall (he also never said directly that they were the work of PS). Essentially, he used the examples above to present Stern Hall to me.
( Id.) Moreover, the marketing brochure Sullivan received contained a profile of each of Stern Hall's principals. For Stern, the profile revealed that prior to his founding Stern Hall, "he served as Chief Operating Officer of a major Chicago-based event marketing company . . . [whose] clients included Proctor and Gamble, Seagrams, Borden Snacks, Kellogg's, and ABC TV." (Stern Hall Marketing Brochure, Defs.' App. Ex. 7.)
Shortly after the meeting, Sullivan wrote to Stern requesting more information concerning the ABC program. (Sullivan Facsimile, Defs.' App. Ex. 14.) In this correspondence, Sullivan maintained the fiction that he represented a television client. He told Stern:
I was impressed by the ABC Family Fun Fair project, and my client is intrigued. It seems that it has a direct relevance to the ideas we're throwing around here, and the other agencies that my client has contacted do not have any programs tied directly to a television property. . . . My client is currently on location filming our upcoming season. I had an initial conversation with him in follow-up to our meeting, however, I didn't explain it as well as you do (there was so much stuff!). If you get a few minutes, please send me a top-line on this project, i.e. what exactly were the elements and how did the third-party sponsors benefit.
(Id.) Stern claims that in response to Sullivan's request, Stern compiled three-page case studies on both the ABC and Borden events, based on his memory and in-depth involvement in the promotions. (Defs.' 12(M) Stmt. ¶ 29.) Plaintiff disputes this. In PS's view, "recreating these detailed case studies from memory would be impossible" after five years, and Stern must have used PS's Final Reports to create them instead. Plaintiff has no evidence to support this claim, however. (Pl.'s Resp. ¶ 29, Pl.'s 12(N) Stmt. ¶ 81.) Plaintiff further claims that Stern sent these case studies to potential and existing clients as part of a standard package of promotional materials, but has no evidence to support this other than Stanley's vague recollection of the materials he saw on American Home Products' conference table. (Pl.'s 12(N) Stmt. ¶ 80.)
In response to Plaintiff's request for "all documents" relating to "any marketing, advertising, or promotional material," Stern Hall produced only the ABC and Borden videos. (Pl.'s 12(N) Stmt. ¶¶ 71-3.) Plaintiff concludes that Stern Hall does not possess any other type of videos and because Hall mentioned in her testimony that Stern Hall might use videos and other promotional materials to solicit clients, she was admitting that Stern Hall routinely used the ABC and Borden videos to promote itself. ( Id.) The court does not share this conclusion. Hall testified specifically that she has never shown any potential customer anything relating to ABC or Borden, nor was she aware that anyone else had. (Hall Dep., at 69.)
During discovery, Defendants produced a Stern Hall marketing brochure that was slightly different from the one that Stern provided to Sullivan, as well as a Company Profile. These materials contained Stern's and Hall's profiles and a section titled "Partial List of Experience," just as the brochure Stern gave to Sullivan had. In addition to the experience identified in the brochure given to Sullivan, this brochure listed several other clients Stern worked with while he was at PS, but whom he has not worked with during his tenure at Stern Hall. (Pl.'s 12(N) Stmt. ¶ 88; Defs.' Resp. ¶ 88.) Defendants claim the section is intended to describe the experience of the company's principals, which it accurately depicts. The court notes that the newer marketing brochure differs from the one given to Sullivan in that it no longer lists ABC or Borden under the "Experience" category. (Defs.' Resp. ¶ 89.) After reviewing all of the materials Sullivan received from Stern, PS filed this law suit.
DISCUSSION
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Thomas Betts Corp. v. Panduit Corp., 138 F.3d 277, 291 (7th Cir. 1998) (citing FED. R. CIV. P. 56(c)); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) and cases cited therein.) All reasonable inferences are drawn from the record in the light most favorable to the non-moving party. Thomas Betts Corp., 138 F.3d at 291. "Only disputes that could affect the outcome of the suit under governing law will preclude an entry of judgment for the moving party." Id.
Before addressing Plaintiff's claims against Defendants Stern and Stern Hall, the court pauses to point out what is not at issue here. First, Stern repeatedly refers to a separate state court claim he has pending against PS regarding PS's alleged failure to pay his 1992 performance bonus. (Defs.' 12(M) Stmt. ¶¶ 5-11.) Although this issue is undoubtedly important to Mr. Stern, it has no relevance to the case before this court. Nor is this court concerned about Plaintiff's motivations for filing this lawsuit, a matter of considerable interest to the Defendants. This court is only concerned with the merits of Plaintiff's claims and will not delve further into what might or might not be Plaintiff's motivations. (Defs.' 12(M) Stmt. ¶¶ 8-11, 16, 33-8.)
A. Count I II, Section 43(a) of the Lanham Act
Counts I and II assert claims against Stern and Stern Hall, respectively, under both the theories of liability of the Lanham Act, 15 U.S.C. § 1125(a): (1) false designation of origin § 43(a)(1)(A), and (2) false advertising § 43(a)(1)(B). The court will address each of these claims in turn.
Section 43(a) of the Lanham Act provides that: "Any person who, on or in connection with any goods or services, or any container of goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which — (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act." 15 U.S.C. § 1125(a).
1. False Designation of Origin
To establish a prima facie false designation of origin claim, Plaintiff must establish that: (i) Defendants used a false designation of origin or false description or representation in connection with goods or services, (ii) Defendants caused such goods or services to enter into commerce, and (iii) Plaintiff believes it will be damaged as a result. Web Printing Controls Co., Inc. v. Oxy-Dry Corp., 906 F.2d 1202, 1204 (7th Cir. 1990). To satisfy the third element, actual confusion is not necessary. Rather, Plaintiff need only show that there is a likelihood that consumers will be confused by the false representation. Id.
False designation of origin claims take two basic forms, "passing off" claims and "reverse passing off" claims. "Passing off" involves "the selling of a good or service of one's own creation under the name or mark of another." Web Printing Controls, 906 F.2d at 1203, n. 1 ( quoting Smith v. Montoro, 648 F.2d 602, 604-5 (9th Cir. 1981)). "Reverse passing off" occurs "when a person removes or obliterates the original trademark, without authorization, before reselling goods produced by someone else." Id. In simpler terms, reverse passing off occurs when someone receives credit for something produced by another. Once a Lanham Act violation is established, Plaintiff must meet a higher standard in order to recover monetary damages, as PS seeks to do here. Web Printing Controls, 906 F.2d at 1204-5. Plaintiff must then demonstrate it has been damaged by "actual consumer reliance on the misleading statements," such as "a loss of sales, profits, or present value (goodwill)." Id. (internal quotations omitted).
Although Plaintiff uses the uses the term "passing off," its claim is actually one of "reverse passing off." PS does not allege that Defendants attached the PS name to Defendants' own product. On the contrary, PS alleges that Defendants attempted to pass off PS events as Stern Hall events by falsely designating their origin in three ways: (1) presenting PS video promotions as Stern's own, (2) copying PS information into Stern Hall case studies, and (3) falsely listing PS's clientele in the Stern Hall materials. The court considers these acts separately.
a. False Designation of Origin
(i) The Video Tapes
Plaintiff alleges that Defendants stole PS's ABC and Borden video tapes, removed or erased any indication of PS origin from them, and showed them to Sullivan as well as other clients. Plaintiff presented two copies of the Borden video to the court as evidence to support its reverse passing off claim. Examination of the two videos reveals that the copy produced by PS identifies PS both on the label and in a name slate viewed during the first few seconds the video is played, while the copy produced in discovery by Defendants does not. In the court's view, whether the labels were affixed or not is of little significance to the determination of whether the video presentations can support a false designation of origin claim. Conversely, what is of critical import are the facts and circumstances in which the video tapes were presented. The evidence that is most revealing as to what transpired during the Stern/Sullivan meeting is an e-mail written the same day from Sullivan to Stanley. (Sullivan e-mail, Defs.' Supp. App. Ex. 3.) As described above, Sullivan reported that Stern told him he had worked in advertising until being recruited to work for PS. The ABC Family Fun Fair video that Stern showed Sullivan did not identify PS. According to Sullivan, Stern described his own work as including "the same kinds of things that would describe a PS program without going into really detailed information." ( Id.) Stern showed Sullivan the Beach Boys tape without mentioning PS but, Sullivan pointed out, "he never directly said that these programs were the work of Stern Hall (he also never said directly that they were the work of PS). Essentially, he used the examples above to present Stern Hall to me." ( Id.)
The ABC tapes were not presented to the court, presumably because they were not produced or created by PS in the first place and did not contain labels identifying PS as the originator.
The Sullivan e-mail supports Defendants' position that Stern's presentation of the video tapes was not improper. At the outset of their meeting, Stern briefed Sullivan on his experience and plainly stated that he had come to Chicago to work for PS Promotions. The e-mail also shows that Stern did not affirmatively represent the videos as programs of Stern Hall. Rather, the e-mail describes Stern's presentation of the videos as merely an effort to show the type and quality of work Stern Hall could provide to Sullivan as a prospective client. Whether the materials in question were made at Stern Hall or PS Promotions made no difference for this purpose. The court holds that the presentation of the video tapes and facts surrounding such presentation fail to establish a false designation of origin claim.
(ii) Copying of the Case Studies
As its second basis for a reverse passing off claim, Plaintiff alleges that Defendants copied PS information into Stern Hall case studies describing the results of the ABC and Borden promotions and disseminated this information to potential clients, including Sullivan. The record reflects that Stern did create case studies describing the Borden and ABC promotions and provided them to Sullivan without indication that any source other than Stern Hall was involved as the originator. (Defs.' 12(M) ¶ 31.) Stern testified that he prepared the case studies based on his memory and involvement with the subject promotions. Stanley insists that Stern must have used a PS case study, removing PS's name and inserting Stern's own name in its place. (Supp. App., Ex. 5, 114:15-22). In support of this contention, Plaintiff has provided a PS case study it claims that Stern must have copied.
The court's own comparison of the two documents does not support Plaintiff's claim. Far from Plaintiff's allegation that the Stern case study is a copy of the PS Promotion study, the two case studies vary considerably. The information provided is similar in certain ways, but the phrasing and verbiage are dissimilar, and the format is quite different. For example, the PS Promotion case study describes the event as "a live musical stage show featuring costumed characters representing the ABC Saturday cartoon line-up [to] target major shopping malls with a minimum of one million square feet where parents and children are easily attracted." The Stern Hall case study describes the event as "a traveling show featuring Saturday morning programming cartoon characters to appear at regional malls, state fairs and festivals in 40 markets." The two case studies differ in other details, as well. The "Case History" section of PS's case study states that the target audience is 2-11 year old children; Stern's case study, on the other hand, states that the target is "Children 6-11." Likewise, PS's "Case History" section states that the promotion reached 40 markets. The fact that the subject matter described in the two case studies is the same (ABC Family Fun Fair) is not sufficient to support a false designation of origin claim. The court thus finds, as a matter of law, that with respect to Plaintiff's claim that Defendants copied PS case studies to create the Stern Hall case studies, Defendants did not falsely designate the origin of PS's services
(iii) False Listing of PS Clientele in Stern Hall Promotional Materials
Lastly, Plaintiff alleges Defendants falsely designated the origin of PS event/promotions by listing PS's clients as Stern Hall clients in their marketing brochures, company profile, and case studies (collectively "Promotional Materials"). In one marketing brochure, under the heading "Partial List of Experience," Stern Hall listed the following clients: ABC Television, Alberto Culver, Borden, Cobra Electronics, Fisher-Price, Louis Rich and Proctor and Gamble. In a second marketing brochure, under the identical heading "Partial List of Experience," Stern Hall listed several other companies, namely, Armour Swift Eckrich, Bravo Card, City of Chicago, Fruitopia, Kellogg's, Kraft Foods, Oscar Mayer Foods and U.S. Robotics. Additionally, the Stern Hall case studies for Borden Snackin' USA and ABC Family Fun Fair listed ABC TV and Borden Snack Foods as Stern Hall clients. The Stern Hall logo appears prominently on the top of each page of these case studies.
Plaintiff argues that these listings are misleading in that the undisputed evidence shows that ABC Television, Alberto Culver, Borden, Cobra Electronics, Fisher-Price, Louis Rich, Kraft Foods, Kellog's, U.S. Robotics, and Proctor and Gamble were all PS clients and have never been clients of Stern Hall. Attempting to explain away the allegation that the client listing was misleading, Stern notes that the Stern Hall brochures disclose that Stern Hall was formed in 1992. Thus, according to Defendants, "it was clear the ABC Family Fun Fair and Borden Snackin' USA promotions [which predate the formation of Stern Hall] were not Stern Hall promotions." (Memorandum of Law in Support of Defendants' Motion for Summary Judgment ("Defs. Memo"), at 9.) In further support of its argument, Defendant points to Ken Stern's personal biography in the Stern Hall brochure which stated: "Prior to founding Stern Hall in 1992, he served as Chief Operating Officer of a major Chicago based event marketing company where he was responsible for creative business development and account services." (Stern Hall Brochure, Ex. H. to Pl.'s App.) Equipped with this information, Defendants argue, someone reviewing the brochures as a whole would have known that the ABC Family Fun Fair and the Borden Snackin' USA promotions were promotions that Stern had worked on at a prior event marketing company. (Defs.' Memo, at 9.)
The court is not persuaded that disclosure of the founding date for Stern Hall is sufficient to dispel the reasonable overall impression created by the marketing brochures: that Stern Hall created and executed events/promotions actually created and executed by PS. There is at least a dispute of fact as to whether Defendant falsely designated the origin of the PS marketing event promotions by listing PS clients in Stern Hall brochures. Plaintiff's reverse passing off claim for the listing of PS clients survives Defendants' summary judgment motion as to the first element of the prima facie case.
2. Substantial Impact on Interstate Commerce
Not only must Plaintiff satisfy the issue of false designation of origin, Plaintiff must also show that the offending materials have a substantial impact on interstate commerce. Thompson Tank Mfg. Co. v. Thompson, 693 F.2d 991, 992-93 (7th Cir. 1982); see also Oil Express Nat'l, Inc. v. Burgstone, No. 96 C 4816, 1996 WL 666698, *4-5 (N.D.Ill. Nov. 14, 1996). Defendants argue that Plaintiff cannot meet its burden on this element. With respect to the video tapes and case studies, Defendants point out that there is "no evidence that the video tapes or case studies were given to anyone, other than Sullivan." (Reply Memorandum of Law in Support of Defendants' Motion for Summary Judgment, at 10-11.) This court agrees that, absent evidence that the videotapes or case studies were shown to any bona fide potential client, Plaintiff cannot demonstrate any impact in commerce from these materials.
In Defendants' view, the court need not reach the question of whether the marketing brochures have a substantial impact upon interstate commerce because the brochures do not support a false designation of origin claim. Id. Because the court has concluded there is a dispute of material fact on this issue, it will consider the interstate commerce issue, as well. The central authority relied on by Defendants is a district court decision, Sweet v. City of Chicago, 953 F. Supp. 225 (N.D.Ill. 1996). In Sweet, the authors of a guidebook entitled "Eat Your Art Out, Chicago" brought a trademark action against the City of Chicago, alleging that the City's "Eat Your Art Out" art fair violated section 43(a) of the Lanham Act by creating a false impression that the plaintiffs created, endorsed, or were affiliated with the City of Chicago's Art Fair. 953 F. Supp. at 226. The City contended that the Lanham Act claim should be dismissed because the plaintiffs had not alleged that their common-law mark was used in interstate commerce and that the art fair was anything "other than a purely local event." Id. at 230. With little explanation, the court dismissed the Lanham Act claim because "the complaint [did] not adequately allege that the alleged infringement affect[ed] interstate commerce." Id.
In this court's view, the Sweet decision is of little help to Defendants. Simply put, the cases are factually inapposite. As Plaintiff points out, "the ABC Family Fun Fair and Borden Snackin' USA tours, which were PS promotions conducted in at least 40 and 68 markets, respectively, throughout the USA." (Plaintiff's Memorandum in Response to Defendants' Motion for Summary Judgment, at 14.) Unlike the City art fair involved in Sweet, Defendants' acts could certainly have had a substantial impact on interstate commerce because PS provides event marketing services throughout the entire United States. The term "in commerce" refers to the impact on interstate commerce, and does not mean "that an infringer is immune" from liability "so long as he keeps his infringement within the confines of a state." Oil Express Nat'l, at *4. Defendants' false designations of origin arguably cramp PS's ability to conduct its interstate business. The court holds the Plaintiff satisfies the element of impact on interstate commerce.
3. Likelihood of Confusion
The last element to be satisfied for the false designation of origin claim is that Plaintiff is likely to be damaged as a result of Defendants' wrongdoing. To establish this element, a plaintiff must show a "likelihood of confusion," characterized as the "keystone" of a Lanham Act violation. Sands, Taylor Wood Co. v. Quaker Oats Co., 978 F.2d 947, 957 (7th Cir. 1992). The court recognizes that proof of actual confusion among consumers is not necessary. In Web Printing Controls Co., Inc. v. Oxy-Dry Corp., 906 F.2d 1202, 1204 (7th Cir. 1990), the Seventh Circuit reversed the district court's determination that in order to prove a violation of the Lanham Act where damages are sought, proof of injury caused by actual confusion is necessary. The Court of Appeals explained:
It seems to us that the district court confused a Lanham Act violation with a Lanham Act remedy. It confused the elements necessary to justify a certain remedy for that breach. It mixed two stages of inquiry — violation of the law; remedies for the violation — that should be kept separate.906 F.2d at 1204. Although plaintiff in Web had no evidence of actual confusion, the trial court's findings established that that there was ample evidence of a likelihood of confusion. Id. at 1204 n. 2. Under Web Printing, PS is not required to prove actual confusion or to offer evidence of its damages at the summary judgment stage. To establish a Lanham Act violation, however, PS bears the burden of showing that there is a dispute of fact on the issue of likelihood of confusion. A showing of the possibility of confusion will not suffice. Rust Environment Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1215 (7th Cir. 1997).
In determining whether confusion is likely, courts consider seven factors: "(1) similarity between the marks in appearance and suggestion; (2) similarity of the products; (3) area and manner of concurrent use; (4) degree of care likely to be exercised by consumers; (5) strength of complainant's mark; (6) actual confusion; and (7) intent of defendant to `palm-off his product as that of another.'" Rust, 131 F.3d at 1216, citing Smith Fiberglass Products, Inc. v. Ameron, Inc., 7 F.3d 1327, 1329 (7th Cir. 1993). This determination is made "with reference to the realities of consumer behavior in the relevant market." Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 381 (7th Cir. 1996).
Having enunciated this test, the court notes that two of the seven factors have no relevance here. PS does not assert that Stern has improperly capitalized on its mark or its trade dress. The court will therefore not consider (1) the similarity between the parties' marks or (5) the strength of PS's mark. As to the remaining factors, however, an analysis is in order.
(2) Similarity of the Products and (3) Area and Manner of Concurrent Use
Both PS and Stern Hall compete in the events marketing field and both offer similar services. These facts tend to militate in favor of a finding of likelihood of confusion. The court notes, however, the Seventh Circuit's caution that "none of the seven factors alone are dispositive, and the weight accorded to each factor will vary from case to case." Smith Fiberglass, 7 F.3d at 1329.
(4) Degree of Care Likely to be Exercised by Consumers
Where consumers are sophisticated, deliberative buyers, confusion is less likely. See Smith Fiberglass, 7 F.3d at 1330 (finding consumers purchasing conductive pipe sophisticated and discriminating and thus not likely to be confused). In this case, because the relevant market of consumers is composed of large national and inter-national corporations which the court considers sophisticated buyers of promotional services, the court finds it most unlikely that these potential consumers would be confused in their purchasing decision based on the information regarding Stern Hall's client list. Rust Environment Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1216 (7th Cir. 1997) (affirming a finding that confusion what unlikely where "the relevant market of consumers is composed of sophisticated buyers of services in a highly specialized technical field.") This factor strongly detracts from a finding of confusion.
(6) Actual Confusion
The Seventh Circuit has stated that actual confusion is one of the most important factors in establishing a likelihood of confusion. Ziebart Int'l Corp. v. After Market Assocs., Inc., 802 F.2d 220, 226 (7th Cir. 1986)). Plaintiff has adduced zero evidence with respect to actual confusion. In its complaint, Plaintiff has forwarded only the bald allegation that the "public has been, and is likely to continue to be, deceived and confused." (Complaint ¶ 20, 25.) Similarly, and equally unavailing, Plaintiff asserts its response brief that "Defendants have created a likelihood that potential clients and the marketplace will be confused as to the origin of PS's promotions by disseminating Stern Hall promotional materials which list, as clients of Stern Hall, companies for which Stern Hall never performed work." (Memorandum in Response to Defendants' Motion for Summary Judgment, at 15.) Plaintiff has provided no evidence that suggests its business was in fact diverted when confused consumers mistakenly purchased the Defendant's services while intending to purchase those of the Plaintiff. Nor has Plaintiff offered any other evidence-for example, results of a consumer survey, expert testimony concerning purchasing of advertising or promotion services, or even the opinion testimony of Plaintiff's own clients. In short, Plaintiff has offered no evidence of actual confusion.
(7) Intent of Defendant
The last factor in the likelihood of confusion analysis considers whether the defendant had the intent to palm-off his product as that of another. If a defendant willfully appropriates the mark of another, a court is more inclined to find likelihood of confusion. Rust Environment Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1218 (7th Cir. 1997). Here again, the court finds the record devoid of any evidence regarding Defendants' intent. For purposes of this motion, the court assumes that Stern Hall intended for potential clients to believe it had substantive marketing experience and had provided services to customers who were in fact PS's clients. Nevertheless, there is no evidence that Defendants' listing of PS's clientele was intended to confuse consumers as to the origin of either party's services. This factor does not support a finding of likelihood of confusion.
Looking at all the factors as a whole, the court finds that Plaintiff's showing on "likelihood of confusion" inadequate. The factors which lend support to a finding of confusion are only marginally persuasive, and do not rise to the level of a "likelihood." See Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Ltd. Partnership, 34 F.3d 410, 414 (7th Cir. 1994) ("while confusion is possible and may even have been desired, confusion must be likely"). The cornerstone of a Lanham Act claim is confusion, and Plaintiff has not demonstrated how the public would be confused as between PS and Stern Hall. Without some showing of this sort, there is not a sufficient showing of a likelihood of confusion to maintain a false designation of origin claim under Section 43(a). See Libman Co. v. Vining Indus., Inc., 69 F.3d 1360, 1361 (7th Cir. 1995).
B. False Advertising
Not only does Plaintiff assert recovery pursuant to § 43(a)(1)(A) for false designation of origin, Plaintiff also asserts that Defendants have violated § 43(a)(1)(B) which prohibits false advertising. Defendants do not address Plaintiff's false advertising claim in either their original memorandum in support of their motion for summary judgment or their reply brief. Defendants only argue that "[s]ince PS has not plead[ed] a claim for false advertising, Stern need not respond to PS's substantive arguments on this same issue." (Defendants' Reply Memorandum of Law in Support of Defendants' Motion for Summary Judgment, at 12.) A claim under 43(a) encompasses both false designation of origin claims and false advertising claims. Accordingly, the court will proceed and analyze Plaintiff's complaint under the latter theory, as well. Two Pesos, Inc., v. Taco Cabana, Inc., 505 U.S. 763, 777, 112 S.Ct. 2753, 2762 (1992).
To prevail under the false advertising theory, Plaintiff must demonstrate Defendants "(1) made a false or misleading statement, (2) that actually deceives or is likely to deceive a substantial segment of the advertisement's audience, (3) on a subject material to the decision to purchase the goods [or service], (4) touting goods [or services] entering interstate commerce, (5) and that results in actual or probable injury to the plaintiff." B. Sanfield, Inc. v. Finlay Fine Jewelry Corp., 168 F.3d 967, 971 (7th Cir. 1999). A statement is false under the Lanham Act if it is literally false, but also if it is literally true or ambiguous but conveys a false impression, is misleading or is likely to deceive consumers. Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 821 (7th Cir. 1999). When a statement is actually false, a plaintiff need not show the statement either actually deceived or was likely to do so. However, when the statement is literally true or ambiguous, the plaintiff must prove the statement is misleading by producing evidence of actual consumer confusion. B. Sanfield, 168 F.3d at 971.
As discussed above, the court finds nothing "false or misleading" with respect to the video tapes or the alleged copying of the case summary materials. Moreover, Plaintiff has offered no evidence that these materials were ever shown to any actual or potential client. Plaintiff argues that Defendants have engaged in false advertising by distributing promotional materials which list PS clients as Stern Hall clients. Defendants' listing of PS clients under its "Partial List of Experience" is not a literally false statement, for Stern indeed had personally worked on projects for these clients. To the extent that Defendants' list of clients can be construed as literally true or ambiguous and conveying a false impression, Plaintiff can prevail only by demonstrating a likelihood of confusion. For all the reasons described above, PS has not shown that there is a dispute of material fact on this issue. In words more particular to the false advertising cause of action, Plaintiff has not met its burden of showing that Stern Hall's client list deceives or is likely to deceive a substantial segment of the advertisement's audience. The court grants Defendants' summary judgment with respect to Plaintiff's false advertisement claim.
B. Counts III, IV, V, VI, and VII
In Counts III and IV, Plaintiff alleges that Stern and Stern Hall violated the Illinois Trade Secrets Act. Counts V and VI allege violations of the Illinois Consumer Fraud and Deceptive Business Practices Act. Count VII alleges that Stern committed common law conversion. All five of these counts present only state law claims. Having granted Defendants' motion for summary judgment on Counts I and II, which provided this court with federal jurisdiction, the court declines to exercise supplemental jurisdiction over Plaintiff's state law claims. 28 U.S.C. § 1367(c)(3); United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130 (1966). Without addressing the merits of Plaintiff's state law claims, the court dismisses these claims without prejudice.
CONCLUSION
For the reasons mentioned above, the court grants summary judgment with respect to Count I and II. The court dismisses Counts III, IV, V, VI, and VII without prejudice.