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denying motion to dismiss contributory trademark infringement counterclaim where the pleading alleged that German company was using confusingly similar marks to the claimant's protected marks in connection with U.S. clothing sales through a third-party online store, and company admitted to knowing third party was offering the allegedly infringing clothes for sale in the U.S.
Summary of this case from Cortec Corp. v. Corpac GmbH & Co. KGOpinion
11 Civ. 5967 (DAB)
09-19-2012
PEEK & CLOPPENBURG KG, Plaintiff, v. REVUE, LLC, Defendant. REVUE, LLC, Counterclaim-Plaintiff/Defendant, v. PEEK & CLOPPENBERG KG, Counterclaim-Defendant/Plaintiff. And DRESS-FOR-LESS GMBH Third-Party Defendant.
MEMORANDUM AND ORDER DEBORAH A. BATTS, United States District Judge.
On August 25, 2011, Plaintiff/Counterclaim-Defendant filed a Complaint for Declaratory Judgment pursuant to 28 U.S.C. §§ 2201-2202 and 15 U.S.C. § 1051 et seq., requesting this Court to declare that using the marks REVIEW and REVIEW NEVER ESTABLISHED in connection with the sale of clothing and accessories does not infringe upon Defendant/Counterclaim-Plaintiff's trademark rights.
On Sept. 19, 2011, Defendant/Counterclaim-Plaintiff filed an Answer and Counterclaim-Action, seeking recovery under 15 U.S.C. § 1114 (The Lanham Act) and New York State common law for trademark infringement and unfair competition. The matter is now before the Court on Counterclaim-Defendant's Motion to Dismiss the Counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For reasons that follow, Counterclaim-Defendant's Motion is DENIED. I. BACKGROUND
The following facts, drawn from the Counterclaim, are assumed true for purposes of the Motion to Dismiss. Familiarity with the facts is assumed, and the facts are set out here only in as much detail as is required for resolution of the instant Motion.
Plaintiff/Counterclaim-Defendant Peek and Cloppenberg KG ("P&C") is an entity formed under the laws of Germany with a principal place of business in Dusseldorf, Germany, and is in the business of clothing retail and distribution. (Countercl. ¶ 3.) It develops and sells numerous brands of clothing, including the two at issue called "REVIEW" and "REVIEW NEVER ESTABLISHED" (the "P&C Brands"). (Countercl. ¶ 16.) The P&C Brands are registered trademarks abroad but not in the United States. (Countercl. ¶ 20.) Third Party Defendant dress-for-less GMBH ("dress-for-less") operates an online clothing retail store at the website www.haburi.com, which has served consumers in many countries, including the United States, and which sells the P&C Brands. (Countercl. ¶¶ 4, 26, 27.)
Defendant/Counterclaim-Plaintiff Revue, LLC ("Revue") is a New York company that manufactures and distributes clothing with its principle place of business in New York, New York. (Countercl. ¶ 5.) Revue's average annual sales exceed nine million dollars per year. (Countercl. ¶ 14.) In March 1998 it registered the REVUE trademark, U.S. Trademark Registration No. 2,313,003, and since continuously and exclusively has held the mark. (Countercl. ¶ 10.) According to Revue, this mark represents "substantial and highly valuable goodwill," which distinguishes it from other apparel in the minds of United States retailers. (Countercl. ¶¶ 13, 12.)
Since 2000, P&C has filed at least two applications to the United States Patent and Trademark Office (the "PTO") to register its REVIEW brands. (Countercl. ¶ 21.) The PTO rejected P&C's applications in part because P&C's proposed trademarks are similar to the DEVUE mark. (Countercl. ¶ 21.) In October 2010, P&C contacted Revue seeking consent to use the P&C Brands in the United States, but Revue denied consent. (Countercl. ¶¶ 23, 25.) Around that same time, P&C was in negotiations with retailers to bring the REVIEW and REVIEW NEVER ESTABLISHED brands to the United States. (Countercl. ¶ 24.)
The specific dates alleged are inconsistent. Compare Countercl. ¶ 15 with Countercl. ¶ 21.
Revue alleges that, during this time, dress-for-less was selling the P&C Brands to American consumers through www.haburi.com. (Countercl. ¶ 27.) These products were supplied by P&C. (Countercl. ¶ 26.) P&C has also been advertising and promoting its brands in the United States directly. (Countercl. ¶ 16.)
P&C filed the original Complaint on August 25, 2011 seeking a declaratory judgment that its REVIEW and REVIEW NEVER ESTABLISHED brands do not infringe on the REVUE mark. Revue filed its Answer and Counterclaim on September, 19 2011, claiming direct infringement by both P&C and dress-for-less under the Lanham Act and New York State common law, contributory liability by P&C for supplying dress-for-less, and dilution claims against P&C. Revue seeks damages and a preliminary injunction. In the instant Motion, D&C moves for the court to dismiss the counterclaim for failure to state a claim or, in the alternative, to compel Revue to provide a more definite statement. II. Discussion
Neither P&C nor dress-for-less has filed a Motion to Dismiss Revue's claims against dress-for-less; therefore, this Court will not discuss those claims.
In its Motion to Dismiss, P&C makes no mention of Revue's dilution claim, so this Court will not address it. --------
A. Legal Standard for Motion to Dismiss
For a complaint to survive a motion brought pursuant to Rule 12(b)(6), the plaintiff must have pleaded "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility," the Supreme Court has explained,
[W]hen the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. 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. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'"Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556-57). "[A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotation marks omitted). "In keeping with these principles," the Supreme Court Stated.
[A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.Iqbal, 556 U.S. at 679.
In considering a Motion under Rule 12(b)(6), the Court must accept as true all factual allegations set forth in the complaint and draw all reasonable inferences in favor of the plaintiff. See Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n.1 (2002); Blue Tree Hotels Inv. (Canada) Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004). However, this principle is "inapplicable to legal conclusions," Iqbal, 556 U.S. at 678, which, like the complaint's "labels and conclusions," Twombly, 550 U.S. at 555, are disregarded. Nor should a court "accept [as] true a legal conclusion couched as a factual allegation." Id. at 555.
"In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco v.MSNBC Cable LLC, 622 F.3d 104, 111 (2d Cir. 2010) (citing Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002). Wayden v. County of Nassau, 180 F.3d 42, 54 (2d Cir. 1999)). Additionally, "[w]here a document is not incorporated by reference, the court may never[the]less consider it where the complaint relies heavily upon its terms and effect, thereby rendering the document integral to the complaint." DiFolco, 622 F.3d at 111 (internal quotations and citations omitted). However, though such evidence may be considered when attached to or incorporated into the Complaint, the Court's function is "not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient." Id. (citation omitted).
B. Revue's Lanham Act Infringement Claims Against P&C
1. Trademark infringement standard
Section 32 of the Lanham Act prohibits infringement of registered trademarks and is codified as 15 U.S.C. § 1114. It provides:
any person who shall, without consent of the registrant, use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; shall be liable in a civil action by the registrant.Lanham Act, 15 USC § 1114(1)(a) (2005). Thus, Revue must allege plausibly that its mark is protested, that P&C used REVIEW and REVIEW NEVER ESTABLISHED in commerce, and that there exists a likelihood of confusion with the REVUE mark. Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97, 114 (2d Cir. 2009); Rescuecom Corp. v. Google Inc., 562 F.3d 123, 128 (2d Cir. 2009). The parties do not dispute the validity of Revue's mark, and the Court will not discuss this element further.
2. Use in Commerce
Revue alleges that P&C used its REVIEW and REVIEW NEVER ESTABLISHED brands in U.S. commerce in three ways: (1) P&C supplied dress-for-less with REVIEW and REVIEW NEVER ESTABLISHED clothes, which then sold them in the United States; (2) P&C advertised and promoted the P&C Brands in the United States; and (3) P&C negotiated with retailers to sell those brands in the United States.
With respect to the first alleged use, Revue does not allege that P&C sold the P&C Brands directly to U.S. consumers, but rather that it supplied its brands to dress-for-less and it knew or should have known that dress-for-less was selling to U.S. consumers. (Countercl. ¶ 18.) The relevant authority is scarce, but what authority exists indicates this kind of allegedly- infringing activity more appropriately is covered by contributory liability than direct infringement. Cf. R.F.M.A.S. v. Mimi So, 619 F. Supp. 2d 39, 69 (S.D.N.Y. 2009)(granting summary judgment finding there was no direct infringement by a co-defendant who did not make actual sales in the United States). In its memorandum in opposition, Revue cites no contrary authority; instead it merely tries to reframe P&C's actions as a "coordinated and synergistic effort to expand its presence in the U.S. market." (Def. Opp'n to Mot. to Dismiss at 10.) Beside being factual allegations outside the pleadings, these assertions similarly lack support in law. If this were the sole basis for Revue's use in commerce allegation, its counterclaim would fail. However, this is not the case.
Next, Revue alleges that P&C advertised and promoted its REVIEW and REVIEW NEVER ESTABLISHED brands in the United States, thus using the marks in commerce. (Countercl. ¶¶ 16, 36.) This assertion is based on two P&C admissions in its Complaint. P&C claims it "promotes its stores and brands in the United states and worldwide over the Internet using famous American actors." (Compl. ¶ 8.) P&C also writes, "Clothing and accessories bearing the REVIEW and REVIEW NEVER ESTABLISHED mark currently are sold in stores in 23 countries and are also promoted to consumers in the United States and worldwide over the Internet." (Compl. ¶ 13.) Based on those two admissions, Revue has "plausible grounds to infer" that P&C advertised REVIEW and REVIEW NEVER ESTABLISHED in the United States. Twombly, 550 U.S. at 556. Thus, Revue's assertions sufficiently allege use in commerce. Miller Brewing Co. v. Carling O'Keefe Breweries of Canada, Ltd., 452 F. Supp. 429 (W.D.N.Y. 1978)(finding defendant's television commercials in the United States alone constituted use in commerce). By running the advertising campaigns in the United States, P&C used the mark in commerce, even if it did not ship the goods itself.
P&C relies heavily on a case from the District Court of the District of Columbia, Guantanamera Cigar Co. v. Corporacion Habanos, S.A., 672 F. Supp. 2d 106 (D.D.C. 2009), for the proposition that advertising alone does not constitute use in commerce. Counterclaim Defendant's reliance on the Guantanamera case is misplaced. That case concerned advertisements in foreign magazines that happened to make their way into the United States. Here, the advertisements were directed at U.S. markets specifically. Moreover, in reaching the conclusion that advertising alone does not constitute use in commerce, the court relied on cases involving service marks. Id. at 109-10. In contrast, this Circuit has recognized that different standards for use in commerce apply to service marks and trademarks. Patsy's Italian Restaurant, Inc. v. Banas, 658 F.3d 254, 267-68 (2d Cir. 2011).
Finally, Revue alleges that P&C used its marks in commerce by negotiating with U.S. retailers to bring the REVIEW and REVIEW NEVER ESTABLISHED brands to the United States. (Countercl. ¶ 24.) However, the cases it relies upon all involve misrepresentation or palming-off by defendants. See Sublime Prods., Inc. v. Gerber Prods., Inc., 579 F. Supp. 248 (S.D.N.Y. 1984); see also Harrison Servs., Inc. v. Marqino, 291 F. Supp. 319 (S.D.N.Y. 1968). Here, the facts alleged indicate that Counterclaim Defendants negotiated with retailers to distribute their own goods pending a favorable outcome on their declaratory judgment action in this Court. In light of those facts. Revue's legal conclusions that P&C is attempting to palm-off its brands as the REVUE mark would, without more, be insufficient to state a claim. Though some of P&C's alleged conduct eventually may be proven to be infringing. Revue has not shown that simply engaging in business negotiations constitutes use in commerce. Given that trademark protection exists to safeguard consumers, it makes little sense to label standard business negotiations "use in commerce."
Because Revue has alleged specific facts in its pleadings from which the Court plausibly can infer that P&C was using the REVIEW and REVIEW NEVER ESTABLISHED brands in commerce, the Court finds the use in commerce clement satisfied, though solely with regard to the advertising activity alleged.
3. Likelihood of Confusion
Revue alleges that the P&C's Brands are confusingly similar to its own REVUE mark. Indeed, the PTO rejected P&C's trademark registration application, citing a "likelihood of confusion" between REVUE and REVIEW due to their "similar sound, appearance and commercial impression." (Countercl. ¶¶ 15, 21.) Such a pleading as to the likelihood of confusion certainly survives a motion to dismiss. See DC Comics Inc. v. Reel Fantasy, Inc., 696 F.2d 24, 26 (2d Cir. 1982) ("[A] likelihood of confusion is a question of fact as to the probable or actual actions and reactions of prospective purchasers of the goods or services of the parties.") (quoting Am. Intern. Group, Inc. v. London Am. Intern. Corp., 664 F.2d 348, 351 (2d Cir. 1981)).
Therefore, the Court finds that likelihood of confusion element satisfied by the pleadings. Because Revue has pleaded adequately all the elements of the claim, P&C's Motion to Dismiss the direct infringement claim under the Lanham Act is DENIED.
C. Revue's Contributory Infringement Claim Against P&C
Contributory infringement claims require a manufacturer (1) intentionally induce another to infringe or (2) continue to supply an infringer when they know or have reason to know of the infringing activity. Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 104 (2d Cir. 2010) (hereinafter "Tiffany"). Here, P&C supplied dress-for-less with its REVIEW and REVIEW NEVER ESTABLISHED brand clothes. (Countercl. ¶ 35.) It also admits knowing that dress-for-less offered these clothes for sale in the United States. (Countercl. ¶ 26; Compl. ¶ 20.)
P&C argues the Tiffany decision requires that P&C know of dress-for-less's specific infringing sales as opposed to knowing generally that dress-for-less sold the P&C Brands to U.S. consumers. However, Tiffany concerned a contributory infringement case against eBay for hosting sales of Tiffany jewelry. Tiffany, 600 F.3d at 104-10. In requiring a higher standard of awareness of the infringing activity, the Second Circuit considered the difficulties that an online auction host has in ascertaining which Tiffany-branded products were authentic and which were counterfeit when Tiffany only made general allegations of counterfeiting. Id. at 105-09. These same difficulties do not apply for a manufacturer who directly supplies goods to third party retailers.
If, as Revue alleges, P&C supplied its brands to dress-for- less knowing they would be sold in the United States, the Court reasonably can infer contributory liability. Therefore, the Motion to Dismiss Revue's contributory infringement claim is DENIED.
D. Revue's Trademark Infringement and Unfair Competition Claims Under New York State Law
The legal standards for trademark infringement and unfair competition under New York State law are largely the same as under the Lanham Act, with the added requirement of bad faith intent for unfair competition claims. Fendi Adele S.R.L. v. Burlington Coat Factory Warehouse Corp., 689 F. Supp. 2d 585, 598 (S.D.N.Y 2010); Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 425 F. Suppp. 2d 402, 410 n.6 (S.D.N.Y. 2006). Bad faith can be found when the junior user has prior knowledge of the senior's mark and the marks are so close as to infer copying. United States Polo Ass'n, Inc. v. PRL USA Holdings, Inc., 800 F. Supp. 2d 515, 536 (S.D.N.Y. 2011). And, allegations of willful conduct or conscious awareness may be sufficient. Pearson Educ., Inc. v. Kumar, 721 F. Supp. 2d 166, 192 (S.D.N.Y. 2010). At this stage, Revue has pled that P&C and dress-for-less knew of Revue's mark and continued to infringe. This is enough to survive a Motion to Dismiss, so P&C's motion is DENIED.
E. P&C's Motion for a More Definite Statement
P&C has moved for a more definite statement from Revue. A motion for a more definite statement is generally disfavored. Greater New York Auto Dealers Ass'n v. Environmental Systems Testing, Inc., 211 F.R.D. 71, 76 (E.D.N.Y. 2002). It is only granted if the complaint is so unintelligible that the defendant does not know what claims to prepare a defense against, and not for a lack of specificity. Kelly v. L.L. Cool J., 145 F.R.D. 32, 35 (S.D.N.Y. 1992), aff'd 23 F.3d 398 (2d Cir. 1994). Revue's counterclaim explicitly states the causes of action and claims against P&C, so a motion for a more definite statement is not appropriate. P&C's Motion is DENIED. III. Conclusion
The Court finds that the Counterclaim states a facially plausible claim for Federal direct and contributory trademark infringement, contributory liability, and for New York State trademark infringement and unfair competition. Counterclaim Defendant's Motion to Dismiss is DENIED in its entirety.
Plaintiff/Counterclaim-Defendant is directed to serve and file an Answer to the Counterclaim in this matter within thirty (30) days of the date of this Order. See FED. R. CIV. P. 12(a)(4) (providing that when a court denies a Motion filed pursuant to Rule 12, "the responsive pleading must be served within 14 days after notice of the court's action" unless the Court sets a different time). SO ORDERED.
Dated: New York, New York
September 19, 2012
/s/_________
Deborah A. Batts
United States District Judge