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.