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A Chicago federal jury heard much of the evidence in the trademark battle between the maker of Beanie Babies and the creator of their computer screen-cleaning counterparts, Screenie Beanies. But the Windy City panel was denied the chance to render a verdict when U.S. District Judge Charles R. Norgle entered a judgment as a matter of law for the beanie faction, and awarded it $700,000 in damages. Now another federal jury may hear the case because, on Dec. 22, the 7th U.S. Circuit Court of Appeals ruled that Norgle erred when he declined to admit evidence indicating that the Beanie’s creator might have tampered with a witness. Ty Inc. v. Softbelly’s Inc., No. 03-1592. Ty Inc., the maker of Beanie Babies — those soft, floppy toys filled with beanlike materials — sued Softbelly’s Inc. for infringing on its trademark. Softbelly’s made Screenie Beanies, a product similar to a Beanie Baby, but with a chamois belly for cleaning computer screens. Addressing Softbelly’s argument that “beanie” had become generic, 7th Circuit Judge Richard Posner wrote that “because ‘beanies’ is so much shorter and punchier than the alternatives that have emerged so far for designating the product, such as ‘plush beanbag animals,’ Ty may be fighting a losing war to keep its ‘Beanies’ trademark from becoming a generic term. But it won this battle.” But Ty had not won the war. Reversing Norgle’s award and remanding for a retrial — or possibly even the punitive sanction of dismissal — Posner and two colleagues unanimously concluded that Norgle erred when he excluded potential proof of Ty’s alleged witness tampering. A Softbelly’s witness, Harold Nizamian, a competitor of Ty’s for whom Ty founder and Chief Executive Officer Ty Warner had worked before forming his own business, was slated to testify that the term “beanie” had been in use since 1988 and had become generic. After a reported conversation with Warner on the eve of trial, Nizamian abruptly refused to testify. When Softbelly’s trial counsel attempted to question Warner about the conversation, Ty objected, and Norgle sustained the objection. Calling witness tampering “extremely serious misconduct,” the 7th Circuit said, “An attempt by a litigant to persuade a witness not to testify is properly admissible against him as an indication of his own belief that his claim is weak or unfounded or false.” Ordering the remand, the 7th Circuit also invoked Circuit Rule 36, meaning that the rematch of Beanies vs. Screenies will be staged before a different trial judge.

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