Hallmark Cards subsidiary prevails in trademark suit

A subsidiary of a Kansas City company known primarily for its greeting cards has prevailed in a suit filed against it by a New Jersey jewelry wholesaler, which claimed the wholesaler owned the rights to the phrases “Hallmark Diamonds” and “Hallmark Rings.”

On Sept. 27, U.S. District Judge Greg Kays granted summary judgment to Hallmark Licensing, a subsidiary of Hallmark Cards, ruling it had the rights to those marks, not the plaintiff in the suit, Hallmark Industries Inc.

Kays also enjoined the jewelry company from using the marks.

The New Jersey company sued the Missouri company in 2017 for trademark infringement. It also sought judicial review of a decision by the Trademark Trial and Appeal Board in favor of Hallmark Licensing, which brought a counterclaim of infringement in response.

The jewelry wholesaler alleged that it exclusively owned several U.S. trademarks for the use of the word “HALLMARK” in connection with jewelry.

The Hallmark Industries lawsuit alleged that the prior owner of the marks, Diastar Inc., purchased them for $1.8 million in 1988 from Hallmark Jewelry and assigned them to other individuals associated with Hallmark Industries before Diastar entered bankruptcy proceedings in 2012. Those individuals then reassigned the marks to Hallmark Industries itself, the lawsuit alleged.

Hallmark Licensing disputed that, arguing that it bought the rights to the marks in a foreclosure sale following Diastar’s bankruptcy.

In his Sept. 27 order, Kays sided with Hallmark Licensing. He found the Missouri company owns the “HALLMARK DIAMONDS” and “HALLMARK RINGS” marks because it purchased them in a lawful foreclosure sale in 2014.

Kays ruled that Hallmark Licensing’s rights to the marks at issue “are superior to any rights held by Plaintiff.”

On the plaintiff’s additional claims of false representation and common-law unfair competition, Kays found for Hallmark Licensing.

Kays also ruled for Hallmark Licensing on its counterclaim.

He said in order for Hallmark Licensing to prevail, it needed to show it owns a protectable trademark and that Hallmark Industries used a similar mark that is likely to lead to confusion as to the source of their goods or the involvement or association of Hallmark Licensing.

He said Hallmark Licensing set out four factors in its brief showing Hallmark Industries’ use of the marks was likely to cause confusion.

“In its responsive briefing, Plaintiff did not contest any of this analysis, instead ‘doubling down’ on its claim that it owns the HALLMARK DIAMONDS and HALLMARK RINGS marks,” he said. “By failing to contest Defendant’s analysis, Plaintiff has conceded the likelihood of confusion issue.”

Kays found Hallmark Licensing was entitled to summary judgment on the counterclaim and enjoined Hallmark Industries from using any mark including the word “HALLMARK.”

Eugene Kublanovsky, an attorney from Montclair, New Jersey, represented Hallmark Industries. John Aisenbrey of Stinson in Kansas City represented Hallmark Licensing. Neither side could be reached for comment on the ruling.

The case is Hallmark Industries Inc. v. Hallmark Licensing LLC, 4:18-cv-0236.