Hallmark v. Dickens is a case in the Eastern District of New York, in which the judge affirmed a magistrate judge’s recommendation in favor of Hallmark Greeting Cards against a company called Dickens Incorporated.
It all started when Hallmark culled some greeting cards — 73 trailers’ worth — because they had become obsolete or didn’t measure up to current Hallmark standards in other ways. The company made an agreement with a paper recycler called North Star to reduce the cards to pulp, and then sell the resulting paper products.
However, North Star instead sold the cards to a third party, and they eventually made their way to Dickens Incorporated. Dickens then resold the cards on the market.
Hallmark claimed that their trademark had been infringed and diluted by the infusion of these outdated cards into the market. Dickens countered by citing the first sale doctrine, which allows purchasers to do whatever they want with the goods they own.
In her report and recommendation (the R&R), the magistrate judge found that the first sale doctrine did not apply because the cards in question were never offered for sale in the market — they were offered for destruction. Hallmark chose that fate for the cards in order to control the quality and integrity of its trademark. The magistrate went on to note that the price paid for the cards ($10/ton) is reflective of commodity pricing, not a retail-ready product. That is, these were priced to be used for pulp.
Hallmark also had its own size and goodwill going for it. As a “famous” trademark, it is entitled to anti-dilution protection against the blurring or tarnishment of the owner’s trademark by preventing the sale of inferior products. To this, the defense argued that the cards were not inferior products, they were genuine Hallmark greeting cards. The magistrate judge disagreed, saying that the cards are not genuine because Hallmark had deemed them unfit for sale.
The district court didn’t find any errors in the magistrate judge’s R&R, and accepted it in its entirety.
This was a straightforward matter, but it helps to clarify the law surrounding gray goods. Gray goods might be protected under the first sale doctrine, if they were genuine and purchased for sale (and then could be re-sold). In contrast, these were not gray goods, because they were sold to be destroyed, rather than for consumer use — that is, Hallmark had made clear they were scrap goods, not genuine.
As the owner of the copyright and trademark in those goods, Hallmark was allowed to control their destruction. Hallmark may deal in sentimental birthday and holiday cards, but it has the right not to be sentimental about throwing them away.
Mark S. Kaufman
Kaufman & Kahn
kaufman@kaufmankahn.com
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