Image: Cult Gaia

Neither Cult Gaia nor Steve Madden invented the 80-year old Japanese bamboo picnic bag but that has not stopped the buzzy young Instagram brand and the accessories giant (and its namesake founder) from fighting over it in court for the past year. As of this week, Cult Gaia has been handed a preliminary loss, with the court shooting down the counterclaims made by founder Jasmin Larian’s legal entity, Jasmin Larian LLC, asserting that Mr. Steve Madden, himself, infringed Cult Gaia’s Ark bag trade dress, and engaged in unfair competition and deceptive business practices in the process.

In a decision issued on Wednesday, Judge Robert W. Sweet of the U.S. District Court for the Southern District of New York dismissed all of Cult Gaia’s counterclaims against Steve Madden, the individual, determining that Jasmin Larian LLC failed to make its case that simply counter-suing the Steve Madden brand is not enough, but that company’s founder should be charged in his personal capacity, as well.

Tossing out Jasmin Larian LLC’s claims, Judge Sweet held that Steve Madden cannot be sued in his individual capacity simply because he maintains the title of “creative and design chief,” which Larian argued in an earlier filing “imparts more information than that of the title of President or CEO … and makes clear that Madden is the company’s chief product designer, who is ultimately responsible for the company’s product designs, including the infringing design at issue in this litigation.”

Moreover, Judge Sweet held that in lieu of proof that Mr. Madden “has any personal involvement in the design and sale” of the bag at issue, statements from the company that its success can largely be attributed to Mr. “Madden and his role as [the brand’s] chief designer” are not sufficient to “establish his personal liability.”

In response to a slew of “naked assertions” and “conclusory allegations” that Jasmin Larian LLC made in its answer about Mr. Madden’s actual involvement in the company’s efforts to “willfully, intentionally, and in bad faith … trade off and benefit from Cult Gaia’s [Ark bag],” the judge held that “Cult Gaia has not met its burden of plausibly alleging that Madden is individual liable for the infringement of the Ark bag.”

As a result, he dismissed the trade dress infringement and unfair competition claims that Cult Gaia lodged against Mr. Madden, as well as the deceptive business practices claim.

Why exactly – from a strategy standpoint – would Cult Gaia attempt to include Mr. Madden in the suit? Money, of course. It is rather well-established that naming an individual(s) in his personal capacity in a lawsuit against a company is a way to get the defendants to more swiftly agree to settle a case in order to avoid potential personal liability. In other words, Larian’s legal counsel was seemingly willing to bet that Steve Madden, the individual (and maybe even the company as a whole) would be more likely to settle the case early on – and either drop its initial declaratory judgment filing or pay a sum to Jasmin Larian LLC to get it to drop the counterclaims – to avoid having Mr. Madden exposed.

While that (potential) play did not pan out, Cult Gaia’s counterclaims against the Steve Madden company remain in play, as does Steve Madden’s original declaratory judgment action, which it filed in March 2018 after Jasmin Larian LLC threatened to file a trade dress infringement suit against Steve Madden for making and selling a lookalike bag.

* The case is Steve Madden, Ltd., vs. Jasmin Larian, LLC, 1:18-cv-02043 (SDNY).