But she started it

Today’s lesson is to watch what you say, and how you say it… even when you say it through your lawyer.

Artyarns is seeking a declaratory judgment against Tilli Tomas (or rather, the people behind it, since Tilli Tomas is a business name) because of alleged threats that Tilli Tomas made against Artyarns’s business.

The source of the dispute? Yarns with bling. You know, the ones that command high prices.

The lawsuit, filed last month, alleges that Tilli Tomas (purveyor of various beaded yarns, such as Rock Star) started it by sending a letter (via its lawyer) to Artyarns, threatening to commence suit against Artyarns unless Artyarns stopped selling its own beaded silk yarn. (Memo to Artyarns: ditch the frames. Thanks.) The letter claimed that Artyarns had wrongfully duplicated Tilli Tomas beaded silk yarn designs in 2006 and/or 2007, and that Artyarns had committed acts of unfair competition by contacting Tilli Tomas’s supplier of beaded silk yarn and obtaining samples of that yarn in 2005. The letter also apparently claimed that the Artyarns beaded silk yarns were inferior to the Tilli Tomas yarns. These claims, naturally, are denied by Artyarns. Artyarns wants a declaration that Tilli Tomas has no protectable rights in the configuration, construction, or appearance of beaded silk yarns, and that Artyarns has not engaged in unfair competition.

An aside: lawsuits of this nature (seeking relief in the form of a declaration that the plaintiff isn’t doing anything wrong, contrary to allegations made by the defendant outside of a lawsuit) aren’t unheard of; and in countries where declaratory judgment actions are a known risk, like the United States, the wording of a letter to a competitor setting out one’s rights is very important: flatly threatening a lawsuit for infringement of rights may be sufficient basis for the competitor to sue you, first, claiming the opposite. Strategically, this puts the would-be plaintiff on the defensive, and gives the competitor more control over the course of the action. Sometimes it’s difficult to avoid this ultimatum in a cease-and-desist letter; you’d either have to bank on the competitor not starting that declaratory judgment action, or start a lawsuit yourself, but delay serving the complaint and try to negotiate a settlement quickly.

The “beaded silk yarn designs” reference, I think, was meant to refer to the design of the yarn itself rather than pattern designs. In a nutshell, Tilli Tomas appears to think its luxury niche product was being copied, and didn’t like it.

Artyarns’s complaint explains that beaded yarns and fabrics have been known for decades, and notes the existence of yarns from companies such as Anny Blatt and Crystal Palace Yarns. While it doesn’t directly address the allegation that Artyarns had somehow unfairly contacted Tilli Tomas’s supplier (one would think such contact would only be unfair if Artyarns secured the supplier’s identity in circumstances involving confidentiality or non-compete obligations), the complaint does explain that Artyarns had started working on a beaded yarn product by contacting potential suppliers as early as July 2004. I don’t know when Tilli Tomas’s products first launched, but the domain name was registered in December 2004, and the earliest Internet mention of Tilli Tomas at TNNA that I could find was only January 2006, although they were certainly out before then: sometime in 2005, certainly.

Artyarns is not seeking damages in this lawsuit; what they want is a declaration that they didn’t do anything wrong. The allegations of unfair competition and inferior quality were made in a letter from legal counsel, so they were not actually made publicly by Tilli Tomas (as far as I know… I was tipped off to search for a lawsuit because of a passing comment from a retailer who observed that Tilli Tomas was upset about the Artyarns yarn, and had taken it to their attorneys). Naturally, starting this lawsuit causes these allegations to be made public via Artyarns’s complaint, but that’s unavoidable (especially when I get hold of it); absent further information, this doesn’t seem to be a case for unfair competition or some kind of misrepresentation on Tilli Tomas’s part.

I personally wouldn’t expect this lawsuit to go all the way to trial. In Artyarns’s place, I’d be hoping to settle with a written agreement from Tilli Tomas that my business was engaged in legitimate competition, and that Tilli Tomas wouldn’t ever attempt to seek any legal remedy against me involving beaded yarns, or any yarn’s appearance, for that matter. After all, with far more dye artisans and distributors of yarns than there are producers, duplication of yarn types is inevitable: consider Artyarns’s Regal Silk, and the subsequent release of very similar, but not identical, Debbie Bliss Pure Silk.

If plying yarns with beads had been a new concept, never seen before, then beaded yarn itself might have been suitable subject matter for a patent (some new, inventive way of combining the beads with the yarn might be patentable, but I don’t think we’ve seen that here). The yarn’s beaded ornamentation might even be suitable subject matter for a design patent, but again, that ornamentation must have been new. In either case, though, it seems that it would be the actual manufacturer of the yarn — not the dye artist — who would have been the party entitled to seek that protection (although that right could be assigned to someone else).

It’s also conceivable that a range of yarns with a very particular ornamental appearance, in the colour or arrangement of the beads, might become sufficiently distinctive of a particular distributor that it could be the subject of trade dress protection (think of it as having trademark rights in the yarn’s appearance) — although as the Artyarn complaint indicates, the letter it received did not particularize what trade dress rights Tilli Tomas thinks it might have, and besides, the Artyarns yarn has different construction and different-sized beads.

A copy of the complaint, filed May 15, 2007, is available here.

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14 Responses to But she started it

  1. Kathleen says:

    Sheesh. I see the tt/ay conflict splayed routinely. Usually tho, the tt-ite is just a tad arrogant, believes their own hype, hasn’t shopped the market and sincerely believe that if they haven’t done it, it hasn’t been done -if not that they did whatever thing first (poor shopping).

    Regarding tt, it looks like amateur hour from here. I hate it when little kids somehow end up with enough money to have the wherewithall to make other people’s lives miserable. Grow up!

  2. j. says:

    First off, I admire the moxie of AY in challenging TT to put its money where its mouth is. Of course, I’m biased, because obviously some lawyers got paid in the process ;-) .

    And not that I would have wound up doing the same thing; I work in a different legal climate here, where declaratory judgment actions aren’t so popular. If the only communication I had received was the letter described in that complaint, I probably wouldn’t have seriously considered spending the money bringing such an action unless I knew that (i) TT was telling others that I was infringing its rights (making this an action for trade libel or false and misleading statements), or (ii) TT was on the verge of bringing suit itself, and not merely threatening.

    Assuming that TT was convinced that it had enforceable rights and wouldn’t stand for any competition, well, sending a C&D presenting an ultimatum is pretty much the only first step, short of suing straight away (and why do that if you can negotiate a settlement without the expense of a pending lawsuit?). An alternative form of letter would have been a “just so you know, we have trade dress rights in our yarn” or a “if you don’t stop, I’m going to take it to my lawyer” (rather than going to the lawyer straight away) letter, which doesn’t convey the sort of immediacy that convinces a potential defendant to negotiate.

    As a further alternative, if TT was convinced that it possessed trade dress rights, it could have also tried to obtain a trademark registration first, and then presented their ultimatum once successful; however, that takes time, and TT probably wouldn’t want AY to become any more established in the market in the meantime. As it is now, if TT applied for a registration, I wouldn’t be surprised to see AY oppose it at the appropriate time.

    I assume that TT’s lawyers did warn about potential blowback. Maybe TT thought they’d gamble that AY had less money to spend than TT on a legal dispute… the thing is, if a company has committed substantial resources to a product, they’re not likely to give it up without a fight.

    And I wonder if TT tried an alternate route to shut down AY’s dealings in beaded silk at its source — by contacting AY’s supplier. If they think they have trade dress rights in dyed, beaded silk yarn, well… wouldn’t they assume the same thing with undyed, beaded silk yarn?

    If TT is really serious about protecting its products this way, I’d expect to see them expend more effort in future towards prevention, rather than cure (by C&D letters or lawsuits): trademark applications for their business name and yarn names (by contrast, AY got a trademark registration for ARTYARNS); attempts to get design patents or trademark registrations for the design of some of their future yarns; marking their products with proprietary notices, however nebulous those claims may be. But in a case like this, it seems that the best course would be to engage in good ol’ fashioned competition (if there really was an infringement of rights, then TT could always claim damages because of price depression).

  3. Amie says:

    Or this outright copying:

    http://www.gourmetnews.com/index.php?p=article&id=gn200706vc6I51

    …could someone pass the Bingham Hill cheese please?

  4. knitress says:

    Fascinating.

    I can’t see that TT has any way of proving an unfair competition claim. But of course I’m an economist, and we tend to like competition. As legal strategy, do you think it made any sense for TT to send the original C&D letter? My own advice to TT would have been that they might be unhappy but they really don’t have a leg to stand on here, and trying to stop Artyarns would just dump mud on TT itself.

  5. Jocelyn says:

    There are two food-related incidents that I can think of which might have caused some consternation on the part of the original chef: 1) Jean-Georges Vongerichten created (by accident, btw) the Molten Chocolate Cake which is now on hundreds of menus. I also recall a dust-up about Daniel Boulud’s fish wrapped in paper-thin potato slices and sauteed. That one was also knocked off by a lot of other chefs. My husband and I still joke about the first time I made that one, but that’s a story for another day!

  6. j. says:

    Jocelyn: Interesting — especially the recipe aspect! I recall there was a chef who was allegedly pushing for stronger protection for recipes, since a list of ingredients and the unwritten preparation instructions aren’t original enough for copyright protection, and ingredients and preparation steps for most dishes isn’t inventive enough for patent protection.

    Strangely, a quick google only turns up reports of this chef’s call to arms by noted open/free source bloggers (e.g., FSFE, and picked up by Boing Boing), so I’m wondering why a firsthand report isn’t showing up. Either I didn’t look hard enough, or…

    Anyway–contrary to the assertions made by one interviewee in that article (second page), the appearance of restaurants *has* been protectable in the U.S. under trade dress laws, although it’s not easy. Possibly the restaurants that succeeded in proving trade dress rights were chains. But I haven’t heard of anyone trying to extend this to their menus and recipes (although some companies may have trademark rights in the names they apply to their McFood items).

    In the case of this restaurant, I wonder if she has some kind of argument about an unwritten non-compete agreement or a fiduciary duty — the plaintiff says that she taught the defendant (implied obligation not to set up a competing restaurant in the same region? I’m not certain what the industry practice is) how to make her version of caesar salad, and she allegedly told him he couldn’t use it elsewhere (non-compete or non-disclosure?). But that’s a long way from trade dress in the restaurant or menu selections, because that’s publicly available information.

    In another foodie-related incident, a cheesemaker was held liable for misappropriating trade secrets (I think that’s the “intellectual property” referred to in the article), but he seems to have had a written confidentiality and non-compete agreement.

  7. Shannon says:

    Egads. That’s all I have to say to that.

  8. Jocelyn says:

    This article sounds surprisingly similar to the TT/Artyarns situation but in a totally different industry: http://www.nytimes.com/2007/06/27/nyregion/27pearl.html?em&ex=1183089600&en=b7b15e890bde5f89&ei=5087

  9. violet says:

    Wow. Looks like Tilli Thomas is getting itself into the mudhole yet again. After the price-fixing fiasco, you’d think they’d want to imporove their image rather than be all bitchity about such a non-exclusive product. (I remember seeing beaded yarns a *long* time before TT ever put out their “luxury” product. I wonder if they’ll cease-and-desist any of the spinners who make silk & bead yarns, or if this is some kind of indignant foot-stomping against companies only…?)

  10. Carol says:

    Another day in the dog-eat-dog world of yarn.

  11. Lynne E. says:

    Googling produces a Tilli Thomas “Rock Star” price of $38 for 100-150 yards, and an Artyarns “Beaded Silk” price of $33.85 for 100 yards. Geez.

  12. julie says:

    well, maybe this is something only an attorney would love – but kudos on a fascinating post!

  13. Wannietta says:

    What I don’t understand is why they don’t make reality shows out of fascinating (yet admittedly obscure) entanglements like this!

  14. Susan P says:

    Wow! I’m a writer and am currently dealing with issues of what constitutes legal work product, but I had no idea the same issue applies to yarn.

    Blessings!