Quan v. Ty, Inc., No. 17 C 5683, Slip Op. (N.D. Ill. Mar. 20, 2019) (Kennelly, J.).

Judge Kennelly denied defendant Ty’s Fed. R. Civ. P. 56 motion for summary judgment as to equitable estoppel and abandonment regarding plaintiffs’ patent and copyright infringement claims regarding a plush seal that Ty marketed as “Wiggy.”

Of particular note, the Court held as follows:

  • The fact that Ty eventually learned of plaintiffs’ copyrights, at least when the Chinese government seized a shipment of Ty’s goods, does not mean that Ty knew about the alleged rights at the time of manufacture. The Court held that no reasonable jury could have found that Ty knew of plaintiffs’ alleged copyright interests during the relevant period.
  • Plaintiffs had a question of fact as to whether they had knowledge of the infringing conduct, which is required for equitable estoppel, because of the first sale doctrine. During the relevant period, Ty’s sales were protected by plaintiffs’ sale of the accused product to Ty.
  • While manufacturing the toys at issue and placing a tag on them with Ty’s copyright notice was “arguably consistent” with an intent to abandon plaintiffs’ copyrights, it was not the only consistent read. Plaintiffs’ argument that their limited English fluency limited their understanding of the legal implications of the copyright notice, was plausible and consistent with a lack of intent to abandon. Plaintiffs’ explanation that Ty’s copyright notice was added as a concession without any understanding of a loss of plaintiffs’ rights was also plausible.
  • While plaintiffs’ response addressed the equitable estoppel defense as to its patent claim in a single sentence referencing patent exhaustion, that was enough. As with the first sale doctrine, patent exhaustion protected Ty’s sales during the relevant period. As such, there could be no summary judgment of equitable estoppel as to the patent claims.