Opinion
Civil Action No. 21-61756-Civ-Scola
2021-10-19
COLE-PARMER INSTRUMENT COMPANY LLC, Plaintiff, v. PROFESSIONAL LABORATORIES, INC., Defendant.
Aaron Stenzler Weiss, Charles Martin Rosenberg, Carlton Fields, P.A., Miami, FL, Janine A. Carlan, Pro Hac Vice, Michael A. Grow, Pro Hac Vice, Arent Fox LLP, Washington, DC, Zachary D. Smith, Pro Hac Vice, Arent Fox, LLP, for Plaintiff. Lydia B. Cannizzo, Cannizzo & Chamberlin, PA, Cooper City, FL, for Defendant.
Aaron Stenzler Weiss, Charles Martin Rosenberg, Carlton Fields, P.A., Miami, FL, Janine A. Carlan, Pro Hac Vice, Michael A. Grow, Pro Hac Vice, Arent Fox LLP, Washington, DC, Zachary D. Smith, Pro Hac Vice, Arent Fox, LLP, for Plaintiff.
Lydia B. Cannizzo, Cannizzo & Chamberlin, PA, Cooper City, FL, for Defendant.
Order on Motion to Dismiss
Robert N. Scola, Jr., United States District Judge
This matter is before the Court on the Defendant Professional Laboratories, Inc.’s ("Pro Lab") motion to dismiss. (ECF No. 11.) The Plaintiff ("Cole-Parmer") filed an opposition to the motion (ECF No. 13), and while Pro Lab had an opportunity to file a reply brief, it did not. After consideration of the parties’ briefing and the relevant legal authorities, the Court denies the motion. (ECF No. 11 .)
1. Background
Cole-Parmer is a manufacturer and distributor of a host of environmental products, including devices used to test air quality. (ECF No. 1 at ¶¶ 10, 14.) Cole-Parmer owns trademarks to "Zefon" and "Air-O-Cell" (the "Marks"), which are used in connection with Cole-Parmer's "air monitoring, sampling and testing devices." (Id. at ¶¶ 2, 11–12.) Cole-Parmer has long used the Marks in connection with the advertising and sale of these air testing devices throughout the United States, in a manner that has caused the public to associate the Marks with high-quality goods sold by Cole-Parmer. (Id. at ¶¶ 15–17.) Indeed, Cole-Parmer alleges that the Marks have become well-known and famous among the public as distinctive indicators of Cole-Parmer's goods. (Id. at ¶ 18.)
In particular, Cole-Parmer uses the Air-O-Cell mark in connection with a mold spore collection device, and devices (or cassettes) bearing the Air-O-Cell mark are used in laboratories across the country. (Id. at ¶ 24.) The Air-O-Cell cassettes are intended for single use, as once a mold test has been conducted, the collection media inside the cassette has been contaminated and reuse could lead to unreliable results. (Id. at ¶ 26.) These cassettes display the Air-O-Cell mark on a paper label, and the cassettes also display the Zefon mark etched on the physical cassette. (Id. at ¶¶ 27, 31.) Cole-Parmer sells these testing cassettes to end-users as well as to laboratories, which then sell to end-users. (Id. at ¶ 30.)
Around 2010, Cole-Parmer agreed to create private-labelled cassettes for Pro Lab. (Id. at ¶ 32.) These cassettes displayed the Pro Lab label, but the cassettes still carried the Air-O-Cell mark on a paper label, as well as the Zefon mark etched in the cassette. (Id. at ¶¶ 31–32.) In 2019, Cole-Parmer stopped selling private-label cassettes to Pro Lab. (Id. at ¶ 33.)
In 2020, Cole-Parmer learned that Pro Lab had begun reusing Cole-Parmer's cassettes, which when reused begun to yield poor test results. (Id. at ¶ 34.) These reused cassettes no longer bore the paper label with the Air-O-Cell mark, although the Zefon mark was still etched into the cassette until July 2021, when Pro Lab began to remove the Zefon mark. (Id. at ¶¶ 35–36.) Pro Lab's reused cassettes lack the collection media that Cole-Parmer uses in its cassettes, which renders the reused cassettes an inferior product. (Id. at ¶ 37.) Moreover, Cole-Parmer has received complaints from third parties who believed that Pro Lab's reused cassettes were genuine original devices from Cole-Parmer. (Id. at ¶ 38.)
2. Legal Standard
When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept all allegations as true, construing them in the light most favorable to the plaintiff. Pielage v. McConnell , 516 F.3d 1282, 1284 (11th Cir. 2008). A pleading need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "[T]he pleading standard Rule 8 announces does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quotation omitted). A plaintiff must articulate "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Thus, a pleading that offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action" will not survive dismissal. See Twombly , 550 U.S. at 555, 127 S.Ct. 1955. " Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.
Yet, where the allegations "possess enough heft" to suggest a plausible entitlement to relief, the case may proceed. See Twombly , 550 U.S. at 557, 127 S.Ct. 1955. "[T]he standard ‘simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence’ of the required element." Rivell v. Private Health Care Sys., Inc. , 520 F.3d 1308, 1309 (11th Cir. 2008). "And, of course, a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’ " Twombly , 550 U.S. at 556, 127 S.Ct. 1955.
Moreover, at the motion-to-dismiss stage, "the court limits its consideration to the pleadings and exhibits attached thereto." Grossman v. Nationsbank, N.A. , 225 F.3d 1228, 1231 (11th Cir. 2000). If the moving party offers material beyond the pleadings, then "[t]he court has discretion as to whether to accept" such material. Christy v. Sheriff of Palm Beach Cnty., Fla. , 288 F. App'x 658, 664 (11th Cir. 2008). If the court accepts and considers material outside the pleadings, the court must convert the motion into one for summary judgment and give all parties notice of the conversion. See id.
3. Discussion
As an initial matter, the Court declines to convert Pro Lab's motion to dismiss into one for summary judgment. Pro Lab attached multiple exhibits to its motion, including an affidavit from its founder and CEO, a disclaimer that appears on the reused cassettes, and documents related to a patent that Pro Lab is seeking for an air sampling cassette. (ECF Nos. 11-1, 11-2, 11-3.) Conversion to summary judgment is inappropriate, as Cole-Parmer has not yet had an opportunity to conduct fact discovery in this matter, and Pro Lab's affidavit introduces new facts that are disputed. See Rodriguez v. Accurate Painting of Nw. Fla., Inc. , No. 3:20cv5920-TKW-HTC, 2021 WL 4078037, at *2 (N.D. Fla. Jan. 12, 2021) (declining to convert a motion to dismiss into a motion for summary judgment where the plaintiff "has not yet had any opportunity to conduct any discovery on the matters asserted in the affidavit"). The Court understands that Pro Lab, like most defendants, vigorously disagrees with the facts as asserted in the complaint, but the parties will have the opportunity to vindicate their view of the case once fact discovery is completed.
Having decided not to convert the motion to dismiss into one for summary judgment, there is little for the Court to do but deny Pro Lab's motion. Pro Lab's motion relies in large part on standards that are not applicable to motions to dismiss. For example, Pro Lab argues that Cole-Parmer's complaint must "demonstrate" certain facts, and Pro Lab spends much of its motion attempting to contest the veracity of Cole-Parmer's allegations rather than challenge the legal sufficiency of those allegations. (ECF No. 11.) Needless to say, such strategy fails on a motion to dismiss. Nonetheless, the Court will address each cause of action briefly. A. Count I – Trademark Counterfeiting
Cole-Parmer's first cause of action is for trademark counterfeiting under 15 U.S.C. § 1114(1)(b). To state a claim under Section 1114(1)(b), a plaintiff must allege that: (1) the defendants counterfeited a registered mark and applied such counterfeit mark to labels, signs, or advertisements used in commerce and (2) such use is likely to cause confusion, mistake, or deception among the consuming public. See 15 U.S.C. § 1114(1)(b) ; Flip Face U.S.A., LLC v. Alexandria Moulding, Inc. , No. 1:15-CV-883-MHC, 2017 WL 10928327, at *7 (N.D. Ga. Mar. 9, 2017). A counterfeit mark is " ‘a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.’ " Bentley Motors Ltd. Corp. v. McEntegart , 976 F. Supp. 2d 1297, 1312 (M.D. Fla. 2013) (quoting 15 U.S.C. § 1127 ).
Cole-Parmer adequately alleges trademark counterfeiting, as Cole-Parmer alleges that Pro Lab reused cassettes in commerce that were identical to, or substantially indistinguishable from, Cole-Parmer's cassettes, as the reused cassettes still bore the Zefon mark until at least July 2021. (ECF No. 1 at ¶¶ 35–36, 44, 46.) Moreover, Cole-Parmer alleged that Pro Lab's counterfeit cassettes were likely to cause confusion, as Cole-Parmer alleged actual confusion. (ECF No. 1 at ¶ 38.)
Throughout its motion, Pro Lab appears to argue that its use of the cassettes was not commercial as it does not sell the cassettes. Pro Lab contends that home inspectors pay Pro Lab for testing services and then Pro Lab gives the inspectors a choice of testing cassettes, including the cassettes at issue. (See ECF No. 11 at 3.) However, this is a factual dispute that cannot be resolved at the motion-to-dismiss stage. In any event, the "use in commerce" requirement may be met where the trademark is used in an effort to "promote and advertise" products or services. See N. Am. Med. Corp. v. Axiom Worldwide, Inc. , 522 F.3d 1211, 1218–19 (11th Cir. 2008). Here, Cole-Parmer adequately alleged that Pro Lab reused cassettes bearing the Zefon mark and distributed those cassettes into the market. (ECF No. 1 at ¶ 20.)
Pro Lab complains that it did not counterfeit any mark, arguing that it did not physically copy any marks and that it used its own mark on the reused cassettes. (ECF No. 11 at 7.) However, Cole-Parmer alleged that Pro Lab's reused cassettes still bore the Zefon mark, and Pro Lab has pointed to no authority holding that counterfeiting requiring the actual copying of or alteration to a protected mark. Pro Lab also argues that Cole-Parmer failed to allege that Pro Lab intended to use a counterfeit mark, but intent is not a required element. See Bentley , 976 F. Supp. 2d at 1312 (noting that intent is "unnecessary to establish trademark counterfeiting in violation of § 1114.") (quoting Nike Inc. v. Variety Wholesalers, Inc. , 274 F. Supp. 2d 1352, 1367 (S.D. Ga. 2003) ). Intent is only relevant where a plaintiff is seeking treble damages under Section 1117(b). See Babbit Elecs., Inc. v. Dynascan Corp. , 828 F. Supp. 944, 957 (S.D. Fla. 1993).
For these reasons, Cole-Parmer has adequately alleged trademark counterfeiting. B. Count II – Trademark Infringement
In its arguments to each cause of action, Pro Lab complains that Cole-Parmer incorporated earlier allegations by reference in the complaint. (See ECF No. 11 at 7.) However, such incorporation of allegations into each specific count is permissible when doing so does not cause confusion or otherwise fail to put the defendant on notice of the claims against it. See Aknin v. Experian Info. Sols., Inc. , No. 17-22341-Civ, 2017 WL 4410815, at *2 (S.D. Fla. Oct. 3, 2017) (Scola, J.). Here, Cole-Parmer's incorporation of earlier allegations does not render the complaint confusing or otherwise fail to give Pro Lab notice of the claims against it.
Cole-Parmer's second cause of action is for trademark infringement under 15 U.S.C. § 1114(1)(a). To state a claim for trademark infringement, a plaintiff must allege that: (1) the mark at issue has priority, (2) the defendant used the mark in commerce, and (3) the defendant's mark is likely to cause consumer confusion. See PetMed Express, Inc. v. MedPets.com, Inc. , 336 F. Supp. 2d 1213, 1217 (S.D. Fla. 2004) (Cohn, J.). Cole-Parmer alleges, in detail, that the Marks have priority, that Pro Lab introduced the allegedly infringing goods into commerce, and that Pro Lab's allegedly infringing cassettes are likely to confuse. (ECF No. 1 at ¶¶ 3, 20–21, 38, 51.)
Pro Lab appears to argue that this claim is barred under the first-sale doctrine. (ECF No. 11 at 17–19.) It is a fundamental principle of the Lanham Act that a trademark owner's rights are exhausted after the first sale of the trademarked product. See Davidoff & CIE, S.A. v. PLD Intern. Corp. , 263 F.3d 1297, 1301–02 (11th Cir. 2001). Otherwise, the marketplace would be "shaded by a legal cloud," and commercial resale markets would be obliterated as trademark rights would follow products indefinitely. Cf. Impression Prods., Inc. v. Lexmark Intern., Inc. , ––– U.S. ––––, 137 S.Ct. 1523, 1534, 198 L.Ed.2d 1 (2017) (discussing the first-sale doctrine in the patent context).
But there is an exception to the first-sale doctrine. The Eleventh Circuit has held that trademark infringement can lie where a reseller creates a "materially different" trademarked good, as the resale of "materially different products that have the same trademark may confuse consumers and erode consumer goodwill toward the mark." Davidoff , 263 F.3d at 1302.
Pro Lab relies on Nitro Leisure Prods., L.L.C. v. Acushnet Co. , a case from the Federal Circuit, and Champion Spark Plug Co. v. Sanders . (ECF No. 11 at 17–19 (discussing Nitro Leisure Prods., L.L.C. v. Acushnet Co. , 341 F.3d 1356 (Fed. Cir. 2003) ) and Champion Spark Plug Co. v. Sanders , 331 U.S. 125, 67 S.Ct. 1136, 91 L.Ed. 1386 (1947).) In Nitro , the Federal Circuit, applying Eleventh Circuit law and discussing Davidoff , held that consumers were unlikely to be confused, at the preliminary injunction stage, where an alleged infringer resold used goods bearing the plaintiff's trademark. See Nitro , 341 F.3d at 1362–63. The court reasoned that "customers have a different expectation" when buying a used good, and they may not expect the same quality from a used good bearing a trademark as when they purchase a new good bearing the same trademark. Id. Given such differing expectations, the court in Nitro held that consumers are less likely to be confused by a reseller's use of a protected mark because of their lowered expectation in the quality of the resold used good. Id. Similarly, Champion recognized that "inferiority is expected in most second-hand articles" and held that as long as the trademark owner is not associated with the inferiority of the resold product, there is no infringement if one resells used and refurbished articles bearing a protected mark. See Champion , 331 U.S. at 129–30, 67 S.Ct. 1136.
But in all, Nitro and Champion do not upend the exception set out in Davidoff . Rather, Nitro only suggested that the "materially different" test may require a higher burden in the context of the resale of used goods as opposed to the resale of unused goods. See id. Similarly, Champion recognized that, in some circumstances, sale of a materially different used good, even if refurbished, can constitute infringement. See Champion , 331 U.S. at 129, 67 S.Ct. 1136 ("Cases may be imagined where the reconditioning or repair would be so extensive or so basic that it would be a misnomer to call the article by its original name, even though the words ‘used’ or ‘repaired’ were added.").
Here, Pro Lab is accused of, and readily admits, that it resold Cole-Parmer's cassettes. Cole-Parmer adequately alleged that the reused cassettes are materially different, as while the cassettes bore the Zefon mark until at least July 2021, the cassettes used a different collection media and may have had a compromised structural integrity, both of which can cause unreliable test results. (ECF No. 1 at ¶¶ 26, 34–40.) Whether Pro Lab's reused cassettes are actually inferior in such a manner as to be legally materially different is a question of fact that cannot be decided on a motion to dismiss. For present purposes, Cole-Parmer has adequately alleged trademark infringement.
It is unclear to what extent Pro Lab argues that the first-sale doctrine also bars the rest of Cole-Parmer's claims. (ECF No. 17–19 (discussing Nitro and Champion under a section labelled "Key Case and Summary Argument for the Granting of Defendant Pro-Lab's Motion to Dismiss").) However, for the same reasons set out as to the trademark infringement claim, the first-sale doctrine does not require dismissal as this stage.
C. Count III – False Designation of Origin and Unfair Competition
Cole-Parmer's third cause of action is for false designation of origin and unfair competition under 15 U.S.C. § 1125(a). To state a claim under 15 U.S.C. § 1125(a), a plaintiff need only effectively plead the same elements as a trademark infringement claim, namely, that (1) it has a valid, protectable mark and (2) the defendants’ use of the mark in commerce is "likely to cause confusion, or to cause mistake, or to deceive." TracFone Wireless, Inc. v. SND Cellular, Inc. , 715 F. Supp. 2d 1246, 1254–55 (S.D. Fla. 2010) (Graham, J.); see also Suntree Techs., Inc. v. Ecosense Intern., Inc. , 693 F.3d 1338, 1347–48 (11th Cir. 2012). For the same reasons as above, Cole-Parmer adequately pled facts concerning Pro Lab's alleged use of lab cassettes that bore the Zefon mark and contained materially different test collection media.
Additionally, Cole-Parmer represents that its claim under Section 1125(a) is for reverse passing off, which occurs where "one ‘misrepresents someone else's goods or services as his own.’ " New Vision Eye Ctr., LLC v. Fla. Eye Inst., PA , No. 09-14441-CIV, 2010 WL 11602458, at *2 (S.D. Fla. Mar. 23, 2010) (Moore, J.) (quoting Dastar Corp. v. Twentieth Century Fox Film Corp. , 539 U.S. 23, 28 n.1, 123 S.Ct. 2041, 156 L.Ed.2d 18 (2003) ). To state a claim for reverse passing off, a plaintiff must allege that "(1) the good or service originated with the plaintiff; (2) the defendant falsely designated the origin of the good or service; (3) the false designation is likely to cause consumer confusion; [and] (4) the plaintiff was harmed by the defendant's false designation." Id.
Cole-Parmer adequately alleged the elements of false designation of origin. Cole-Parmer pled that: it originated the cassettes bearing the Zefon mark; Pro Lab re-distributed used cassettes bearing the Zefon mark, designating the cassettes as its own; actual consumer confusion ensued; and Cole-Parmer was harmed. (ECF No. 1 at ¶¶ 11, 15–17, 20, 34–36, 38, 40, 59–63.) For these reasons, the Court denies Pro Lab's motion to dismiss Count III.
D. Count IV – Trade Name and Trademark Dilution
Cole-Parmer's fourth cause of action is for trade name and trademark dilution under Fla. Stat. § 495.151. To state a claim under Fla. Stat. § 495.151, a plaintiff must allege that: (1) the mark at issue is "famous"; (2) the defendant used the mark after it became famous; (3) the defendant's use was commercial; and (4) the defendant's use has "likely caused dilution." Fla. Intern. Univ. Brd. of Trustees v. Fla. Nat'l Univ., Inc. , 91 F. Supp. 3d 1265, 1286 (S.D. Fla. Mar. 4, 2015) (Williams, J.). Cole-Parmer has alleged these elements, pleading that the Zefon mark is famous and is associated with high quality goods from Cole-Parmer (ECF No. 1 at ¶ 17.) Moreover, Cole-Parmer alleges that Pro Lab used the cassettes bearing the Zefon mark after the Marks became famous and that Pro Lab used such cassettes in commerce. (Id. at ¶¶ 17, 20, 67.) Last, Cole-Parmer alleged dilution as it pled that laboratories were confused as to the source and quality of the allegedly infringing cassettes, so as to impair the value of the genuine article. (Id. at ¶¶ 34–37, 69.) For these reasons, the Court denies Pro Lab's motion to dismiss Count IV.
E. Count V – Florida Unfair Competition and Deceptive Trade Practices
Cole-Parmer's fifth cause of action is brought under the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. 501.204. To state a claim under the FDUTPA, a plaintiff must allege "(1) a deceptive act or unfair practice, (2) causation, and (3) actual damages." State v. Beach Blvd Auto. Inc. , 139 So.3d 380, 393 (Fla. 1st DCA 2014). Cole-Parmer alleged that Pro Lab redistributed used cassettes bearing the Zefon mark in a manner that is misleading to consumers and that is unfair to Cole-Parmer's legitimate business. (ECF No. 1 at ¶¶ 34–40, 73–75.) Moreover, Cole-Parmer has adequately alleged causation and damages, as Cole-Parmer has pled that actual confusion has resulted, causing damage to Cole-Parmer's reputation and goodwill. (Id. at ¶¶ 38, 73, 75.) For these reasons, the Court denies Pro Lab's motion to dismiss Count V.
F. Count VI and VII–Common Law Trademark Infringement and Unfair Competition
Cole-Parmer's sixth cause of action is for common law trademark infringement, and the seventh cause of action asserted is for common law unfair competition. The standards to state these claims are the same as those required for federal trademark infringement and unfair competition. See Suntree , 693 F.3d at 1345 (holding that the legal analysis is the same for violations of the Lanham Act and common law infringement and unfair competition). Therefore, for the reasons set out above, Cole-Parmer has adequately stated a claim for common law trademark infringement and unfair competition.
4. Conclusion
As stated above, it is clear that Pro Lab disagrees with Cole-Parmer's allegations. Such disagreement alone is not sufficient to succeed on a motion to dismiss. Moreover, while the vitality of resale markets depends on application of the first-sale doctrine, resellers are not free to actively confuse consumers and harm trademark owners. At the motion-to-dismiss stage, Cole-Parmer has adequately stated its claims and alleged that consumers were confused and that Pro Lab caused it harm. For the reasons stated above, the Court denies the Defendant's motion to dismiss. (ECF No. 11 .)
Done and ordered in Miami, Florida, on October 19, 2021.