Less than three months after being tapped for trial, Dallas lawyers with Munsch Hardt Kopf & Harr obtained a full defense verdict for Michaels Stores in a lawsuit accusing the arts and crafts retail company of infringing a small business’ paint-by-numbers art kit and unfair competition.
A federal jury in Dallas’ Northern District of Texas delivered its verdict Thursday after about two hours of deliberation, Munsch Hardt shareholder Jamil Alibhai said. The trial lasted four days in Judge David C. Godbey’s court.
The plaintiffs requested damages of about $412,000 and asked that the damages be trebled for a total of about $1.2 million, Alibhai said.
Florida-based online-only retailer ATC Media, otherwise known as Masterpiece by Numbers, sued Texas-based Michaels after it started selling a paint-by-numbers kit following a meeting between the companies about a possible collaboration that didn’t come to fruition.
In business since 2017, Masterpiece by Numbers contacted Michaels in the summer of 2020 to pitch the company on an affiliate agreement. The Florida company’s customers had expressed wishes for frames to display their artwork, according to the petition, and the small business sought an agreement that would allow them to provide affiliate codes for Michaels’ frames in exchange for a commission.
The companies met in the fall of 2020. Michaels had provided a mutual non-disclosure agreement that limited confidential information to purposes of determining whether the companies would collaborate, according to the petition. Masterpiece by Numbers said it shared future product ideas, features, packaging and marketing information.
Communication after the meeting fizzled, Masterpiece by Numbers said.
In early 2022, Masterpiece by Numbers learned Michaels had begun selling a competitive kit called ‘Masterpiece Paint by Number Kit.’ The Michaels kit included two framed linen canvas panels, acrylic paint pots, and a paintbrush set packaged in a wide rectangular box and sold for $29.99.
Before meeting with Masterpiece by Numbers, Michaels sold a paint-by-numbers kit, including rolled canvas sheets, for $14.99. That kit did not contain “masterpiece” in its name.
But the Masterpiece Paint by Number Kit was already in the works in early 2020, Alibhai told The Texas Lawbook after the trial, and showing the internal, ongoing development of the product was key to the defense win.
The $14.99 kit was doing well at the time and Michaels had conducted a consumer survey to inform the creation of another version, Alibhai said. The woman who worked on the Michaels product was one of the company’s main witnesses, he said.
“They weren’t aware of the plaintiffs’ name, they weren’t aware of the finished product,” Alibhai said. “They were just trying to differentiate something they were already selling from their next product offering.”
Plaintiff lawyers with Harper & Bates did not respond to The Lawbook’s request for comment.
Jurors asked to see the box of Michaels’ product and a trial board comparing the two products side-by-side during their deliberations, Alibhai said.
Michaels had obtained a judgment as a matter of law on the plaintiffs’ federal trademark, trade secret and breach of contract claims, leaving the jury to decide on just the common law trademark claim and unfair competition question, Alibhai said.
Alibhai and associate Jordan Curry hurried to prepare for the June 3 trial after they were hired March 22, they said. They took over the case from lawyers with Dentons US. It might be the shortest span of time between getting hired and going to trial they’ve experienced in their careers, Alibhai said.
Masterpiece by Numbers was represented by Scott Harper, Shannon Bates and Jordyn Hendrix of Harper & Bates.
The case is 3:22-cv-01416 in the U.S. District Court Northern District of Texas Dallas Division.