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Texas Jury Clears Michaels In Paint-By-Number TM Suit

Jun 7, 2024

Arts and crafts retailer Michaels Stores Inc. did not infringe a paint-by-number company's trademarks to create a competing product, a Texas federal jury determined.

The jury found Thursday that Michaels did not infringe ATC Media's "Masterpiece Paint by Numbers" mark, nor did it unfairly compete with the paint-by-number company, according to the answers written in the court's charge to the jury.

Jamil Alibhai of Munsch Hardt Kopf & Harr PC, counsel for Michaels, applauded the verdict, telling Law360 Friday, "I am proud of the Munsch Hardt team's efforts to prepare and represent the best interests of Michaels Stores, as well as this outcome."

Counsel for ATC Media did not immediately respond to a request for comment.

The jury's verdict comes after ATC Media sued Michaels in 2022, saying the arts and crafts giant had released its own paint-by-number kits with the allegedly infringing branding "Masterpiece Paint by Number" printed on its packaging. Paint-by-number kits instruct users to paint a picture by identifying where different colors go with corresponding numbers.

Opening arguments in the trial came Monday when ATC Media's attorney, Scott Harper of Harper & Bates LLP, told the jury, "The gist of this case is about art, and not about art for art's sake, but art for profit."

The paint-by-number company opened up shop in 2017, seeing a desire in the market for higher-end kits. ATC Media's sales rose rapidly after COVID-19 forced customers to adopt homebound hobbies, Harper said.

ATC Media met with Michaels executives in late 2020 to discuss a possible business agreement under which ATC could give customers an affiliate code to purchase frames for their pictures. During that meeting, Harper said, both parties were subject to a nondisclosure agreement, and ATC shared significant confidential information about its business, such as its marketing tactics.

In late 2021, Michaels began selling a competing product with confusingly similar branding, he said. ATC Media saw its sales drop drastically, Harper said, and launched the suit after finding out about the competing product.

But just because Michaels was selling a paint-by-number kit that had similar branding doesn't mean that the arts and crafts store stole trade secrets or ripped off ATC's marks, Alibhai told the jury. Details matter in this case, he said.

Michaels has sold paint-by-number kits for quite some time, he said, and was already planning on releasing a kit with the word "masterpiece" well before the meeting with ATC Media occurred. The company had developed a new line of paint-by-numbers kits that "catered to customers with a higher degree of artistic skill," and research for the product began in earnest in 2020, according to a brief filed by Michaels.

ATC Media's sales likely dropped because people "stopped painting or making sourdough" or doing whatever else they did to keep themselves busy during the COVID-19 lockdown, Alibhai said.

"This is not about art for profit, this is about litigation for profit," he said.

The word "masterpiece" is commonly used when talking about art, such as referring to a great artist's significant works, he said. Additionally, many paint-by-number kits contain the words "paint-by-number" on their branding to tell the customer what's in the box.

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