Dallas-based Michaels Stores Inc., represented by Munsch Hardt Kopf & Harr, received a jury verdict in its favor after being sued for trademark infringement and related claims.
Munsch Hardt shareholder and intellectual property attorney Jamil N. Alibhai, lead counsel at trial, said at one point the plaintiffs sought a share of profits they estimated at $9million.
By the time the case got to trial on June 3, the plaintiffs asked the jury for $412,000 compensatory damages plus punitive damages for a total of about $1.2 million, Alibhai said.
The lawsuit was brought in 2022 by Florida-based ATC Media LLC, a company represented by Scott L. Harper of the Harper & Bates firm in Dallas. ATC Media claims to be anindustry leader in paint-by-numbers kits.
Harper did not respond to a request for comment.
Michaels was initially represented by Dallas-based Dentons US LLP but Michaels parted ways with Dentons eight weeks before trial, according to the court docket.
ATC Media, in its first amended complaint, alleged that, due to customer demand for frames to display their artwork, ATC Media, doing business as Masterpiece By Numbers,discussed an affiliate agreement with Michaels.
“MBN would provide their customers with an affiliate code to purchase Michaels’ frames and MBN would receive a commission based on these referrals,” the plaintiff’s complaintstated.
The business relationship did not materialize, but within the next calendar year Michaels brought to market a directly competitive paint-by-numbers product.
ATC Media alleged the Michael’s product incorporated features the parties discussed in confidence, had a similar price point as MBN’s kits, and the name brand, MasterpiecePaint By Number Kit, “is confusingly similar to MBN’s MASTERPIECE BY NUMBERS trademark and trade name.,” the complaint said.
Alibhai said the Munsch Hardt team was able to convincingly rebut the allegations because Michaels had been in development on its own paint-by-numbers product monthsbefore it met with ATC Media principles Nance Goulding and James Leon.
Michaels introduced a paint-by-numbers product in March 2020, right when the COVID 19 pandemic started, on the belief that there was renewed interest by the public for artsand crafts activities during stay-at-home orders.
“Immediately after the launch of that first paint-by-number kits, in April of 2020 started looking at other types of painting kits and did that over the next few months,” Alibhai said.
Development included a consumer survey in June 2020. The result was the product that ATM Media later challenged, but Michaels did not meet with ATC Media until November2020, Alibhai said.
The documentation on this research and development was presented to the jury. In addition, Michaels’ product development manager, Erica Harpers, and other Michaelsemployees she worked with, testified about their work in the months preceding the ATC Media meeting, Alibhai said.
At the trial’s conclusion, Alibhai made a motion for a directed verdict on three claims. U.S. District Judge David C. Godbey then granted judgment as a matter of law on thefederal trademark infringement, misappropriation of trade secrets and breach of contract claims.
The jury decided in Michaels’ favor federal and state common law trademark and unfair competition claims, according tothe charge of the court.
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