Quickutz Responds to Spellbinders Suit

Friday (January 15th) was the deadline for Quickutz to file a response to the patent infringement suit filed against them by fellow die manufacturer Spellbinders. The company beat the deadline and filed a lengthy response in Federal court disputing most of the allegations made in the Spellbinders filing.

Quickutz’s 136 page filing included 124 pages of exhibits. The response is complex and aggressive, including both affirmative defenses and counter claims by Quickutz. Among the several counter claims is a challenge to the validity of the patent on which the lawsuit is based.

Key to the challenge are exhibits provided in the filing that appear to show that PMA Photometals of Arizona, Inc. sold dies covered under the patent to Quickutz before certain dates covered by the disputed patent. Also apparently held to be key by Quickutz is a statement included in the exhibits from J. Michael Dywan, president of PMA Photometals. Dywan’s statement is filed in support of several of Quickutz’s contentions that they say make the patent invalid. Despite the fact he is listed as a co-inventer on the contested patent, Dwyan does not own any interest in the patent – it is wholly owned by Spellbinders’ CEO Jeffrey James Caron.

Dywan is currently setting up a new business to compete with both Quickutz and Spellbinders selling dies similar to theirs. His company PMA Photometals, which has previously produced metal dies for both Quickutz and Spellbinders, has just formed a new division called Dies Direct that will be producing the dies and selling them. Dies Direct will be exhibiting at CHA-Winter in Anaheim.

Legal filings by both sides in the past several weeks make it seem unlikely that this case will be settled out of court like Quickutz’s last litigation was, meaning litigation could drag on for some time. Papers included in filings regarding Quickutz’s response deadline being extended last week hinted that the two companies were in negotiations over this issue for months before the lawsuit’s filing and were unable to reach a settlement.

The dispute has also gotten highly contentious since the court action started. In correspondence copies filed with the court as exhibits in the deadline extension request, Spellbinders’ attorney mentions alleged actions against his client that he says they are referring to criminal authorities. The response filing by Quickutz alleges that Spellbinders “improperly” requested that their financial services company freeze the assets of Quickutz’s that they held while Spellbinders waited for court rulings in the patent case. After this request was made, Quickutz alleges, the financial company cut off their line of operating credit.

Quickutz will not be exhibiting at CHA-Winter 2010. Spellbinders will be at the show, in booth #4069.

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Quickutz Sued By Spellbinders

Quickutz has become the target of legal action for the second time this year, this time from competitor Spellbinders.

Spellbinders and its CEO James Jeffrey Caron filed a lawsuit in US District Court for Arizona on Monday, alleging patent violations by several Quickutz products. The patent in question is U.S. Patent No. 7,469,634 which is called “Apertured Media Embellishing Template and System and Method using Same.” Caron owns the patent, and Spellbinders has the exclusive license to manufacture products covered by it. The suit alleges that Quickutz’s cookie-cutter dies, nesting-shapes dies, and the circle-cutting dies sold with the Letter Press Combo Kit are all in violation of the patent:

QuicKutz manufactures, advertises, offers for sale, and sells dies, including the cookie-cutter dies and various other nesting-shapes dies sold under QuicKutz’s QUICKUTZ brand and circle-cutting dies sold as part of the Letter Press Combo Kit sold under QuicKutz’s LIFESTYLE CRAFTS brand, that are covered by one or more claims of the ’634 Patent, either literally or under the doctrine of equivalents.

Spellbinders is asking that the court order that Quickutz cease manufacturing, advertising, and selling the products that they say infringe on their patent. They are also asking:

  • Damages that amount to at least a reasonable royalty
  • For all infringing products to be recalled and either destroyed or turned over to Spellbinders
  • A three-fold penalty on the damage amount due to the infringement being “willful”
  • Costs, Attorney’s Fees, and pre- and post-judgement interest on assessed damages

Quickutz will have 21 days after they are served with the suit (which may not have happened yet) to file a response with the court.

A representative for Spellbinders declined to comment on the pending litigation to Scrapbook Update, except to say that “the matter will be resolved through the federal court system.” Quickutz has not responded to a request for comment.

It’s been a long year for Quickutz. They were sued on July 15th by a Hong Kong-based supplier, Bai-Win Mercantile, who alleged that the company was over $700,000 behind in paying its bills. The two companies apparently settled out of court in September, and jointly requested the court to dismiss the case.

In addition to the lawsuit over their bills, there have been other signs of trouble for Quickutz. They are not currently on the list of exhibitors for CHA-Winter 2010 in Anaheim, and their business registration with the State of Utah Department of Commerce was expired for over two-and-a-half months before being renewed in early December. Some retailers have been reporting to Scrapbook Update that they are encountering significant delays in receiving product ordered from the company.

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Quickutz Lawsuit Dismissed

Quickutz has apparently settled the lawsuit filed against it by supplier Bai-Win in July alleging unpaid bills and fraud. The lawsuit had alleged Quickutz owed $700,000 in unpaid bills to Bai-Win, which had been supplying Quickutz since 2006.

According to court filings in August, the companies were engaged at the time in settlement talks, and Quickutz’s deadline to respond to the lawsuit was extended by the court until August 25th at the request of both companies to provide more time for the negotiations.

On September 22nd, Bai-Win and Quickutz filed a joint motion with the court requesting the dismissal of the case. The dismissal was granted the same day by U.S. District Court Judge Clark Waddoups, with each company ordered to pay their own court and attorney costs.

No terms of a settlement were disclosed in court filings.

Quickutz Granted Extension For Lawsuit Response

According to an order signed August 24th by the judge in the case, Quickutz has been granted the requested extension to respond to the lawsuit filed against them by supplier Bai-Win. The extension had been jointly requested by Quickutz and Bai-Win, because the companies said they were in settlement talks and needed more time to continue those negotiations.

The extension order gives Quickutz through September 4th (Friday) to file a defense to the suit or to reach a settlement with Bai-Winn.

Quickutz In Settlement Talks Over Lawsuit

According to a motion filed today in United States District Court, Quickutz is in settlement talks with the supplier who filed suit against them on July 15th, alleging Quickutz owed them over $700,000 and had committed fraud in their business dealings.

Today’s motion to extend the time that Quickutz has to respond to the lawsuit was filed jointly by Bai-Win and Quickutz, stating that the companies “are currently engaged in settlement discussions, and the parties are hopeful that such discussions may lead to a resolution of this matter and an early dismissal of this case.” Currently Quickutz has until August 25th (Tuesday) to respond to the lawsuit. The motion to extend by the companies asks for the deadline to be extended until Friday, September 4th to provide more time for a settlement to be reached.

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