Opinion
Civil No. CV 03-1120-JE
March 16, 2004
Abby R. Michels, The DuBoff Law Group, LLC, Portland, OR, Attorneys for Plaintiff.
Jere M. Webb, David L. Silverman, Stoel Rives LLP, Portland, OR, Attorneys for Plaintiff.
Craig J. Madson, Madson Metcalf, Salt Lake City, UT, Attorneys for Defendants.
FINDINGS AND RECOMMENDATION
INTRODUCTION
Plaintiff Carol Rogers, dba Quick Check Cashing Service, brings this action against defendant Quik Check Financial, Inc., a Utah Corporation. Defendant moves for dismissal pursuant to Fed.R.Civ.P. 12(b)(6).
I recommend denying the motion.
BACKGROUND
Defendant's motion to dismiss asserts that plaintiff's first amended complaint fails to state a claim. However, at the hearing to consider the motion, I granted plaintiff's oral motion for leave to file a second amended complaint. Plaintiff has subsequently filed a second amended complaint, and I construe defendant's motion to dismiss as challenging the sufficiency of this latter complaint.
Though defendant has submitted additional documents in support of the motion to dismiss, I have considered only the second amended complaint in analyzing the motion. The following allegations of that complaint are accepted as true.
On or about August of 1994, plaintiff registered the mark "Quick Check Cashing Service" with the Oregon Secretary of State's Corporate Division (Corporate Division). Plaintiff thereafter used the name as a common law service mark in interstate commerce for her business located in Klamath Falls, Oregon.
On July 24, 1998, defendant registered the mark "Quik Check Financial, Inc." with the State's Corporate Division. Before registering with the State, defendant knew of plaintiff's prior use of the mark "Quick Check Cashing Service" through market research, plaintiff's local advertising, observation, or word-of-mouth.
On January 14, 1999, defendant applied to register the trademark "Quik Check" on the Principal Federal Register. Defendant was aware that any false statements knowingly made in conjunction with the registration could be punishable by fine, imprisonment, and/or rendering invalid the application or registration. Defendant represented that it knew of no other person, firm, corporation or association that had the right to use the trademark in commerce, either in identical form or in a manner that would likely cause confusion, mistake or deception. Since defendant had knowledge of plaintiff's prior use of the mark "Quick Check Cashing Service," defendant's registration of the "Quick Check" mark with the Principal Federal Register was a misrepresentation.
In December of 1999, plaintiff began to receive complaints from the consuming public regarding defendant's "Quik Check" advertisements in Klamath Falls, Oregon. The public was confused about whether the advertisements referred to plaintiff's or defendant's business. Plaintiff informed the State of Oregon Department of Consumer and Business Services, Division of Finance and Corporate Securities (the Department) of this confusion. To curb further confusion, the Department contacted the defendant, who agreed to use the name "Postdate-A-Check" instead of "Quik Check" or "Quik Check Financial, Inc." in the Klamath Falls area.
In January 2000, defendant completed the federal registration process for the name "Quik Check," and that name was registered as a trademark with the United States Patent and Trademark Office. In a letter dated June 2, 2003, defendant demanded that plaintiff not use the term "Quick Check" in conjunction with lending services. Plaintiff responded by reminding defendant of its 1999 agreement to not use the mark "Quik Check" in the Klamath Falls area.
Defendant continues to use the "Quik Check" mark in Southern Oregon and in interstate commerce.
CLAIMS
Plaintiff seeks a declaratory judgement pursuant to 28 U.S.C. § 2201 and Fed.R.Civ.P. 57. Plaintiff asks the court to declare that it has a common law trademark right to the mark "Quick Check Cashing Service," that defendant's use of the mark "Quik Check" in Oregon is likely to cause, or in fact has caused, confusion in the marketplace, and that defendant is liable for trademark infringement and/or unfair competition under 15 U.S.C § 1125(a). In addition, plaintiff asserts that she is entitled to receive attorneys fees, costs, and an accounting of all defendant's sales under the name "Quik Check" and/or "Quik Check Financial, Inc.," under 15 U.S.C. § 1117(a), because of misrepresentations defendant made in procuring the federal registration.
STANDARD
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a claim. "A claim may be dismissed only if `it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). In deciding a motion to dismiss, all material allegations and reasonable inferences of the complaint are accepted as true. Id. As a result, dismissal is proper only where there is an absence of sufficient facts alleged to support a cognizable legal theory. Id.
DISCUSSION
Defendant moves to dismiss on the basis that the plaintiff's complaint fails to state a claim for (1) trademark infringement, and (2) misrepresentation in the federal trademark registration application. 1. Trademark InfringementDefendant asserts that plaintiff cannot state a claim for trademark infringement because her complaint refers to her mark as "Quick Check" instead of "Quick Check Cashing Service." Defendant asserts that plaintiff never used "Quick Check" in interstate commerce and therefore has no rights to that mark. However, in her second amended complaint, plaintiff consistently refers to her mark in its entirety. This amendment largely remedies any potential defect in the trademark infringement claim in the earlier complaint.
The trademark protections set forth in the Lanham Act, 15 U.S.C. § 1051-1127, are intended to avoid confusion in the marketplace by allowing a trademark owner to prevent others "from duping consumers into buying a product they mistakenly believe is sponsored by the trademark owner." Mattel, Inc. v. Walking Mountain Productions, 353 F.3d 792, 806 (9th Cir. 2003) (internal citations omitted). To assess whether there has been an infringement, courts apply a "likelihood of confusion" test that examines whether a defendant's use of a plaintiff's trademark by the defendant is likely to cause confusion or mistake concerning the "affiliation, connection, or association of the two products." Id. at 806-07 (internal citations omitted) (internal quotations omitted). "[T]he greater the similarity between the two marks at issue, the greater the likelihood of confusion."GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1206 (9th Cir. 2000). In order to prevail on a trademark infringement claim under the Lanham Act, a plaintiff must establish that the defendant is using a mark that is "confusingly similar" to the plaintiff's protectable trademark. Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036, 1040 (9th Cir. 2003).
Plaintiff's and defendant's marks are similar, and it appears that both businesses provide check cashing services. Plaintiff alleges that she began to receive phone calls from the public shortly after defendant began to advertise as "Quik Check" in the Klamath Falls area, and alleges that the callers expressed confusion as to whether defendant's advertisements were authorized or sponsored by plaintiff. Accepting these allegations in her second amended complaint as true, plaintiff's claim of trademark infringement under 15 U.S.C § 1125(a) is sufficiently plead.
2. Misrepresentation
Plaintiff's claim for attorney's fees, costs, and entitlement to recover the value of defendant's sales turns on whether plaintiff can establish that defendant procured its federal registration of the mark "Quik Check" through misrepresentation. Accordingly, this claim is subject to the heightened pleading requirements of Fed.R.Civ.P. 9(b), which provides that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally." Fed.R.Civ.P. 9(b).
In the context of a claim of misrepresentation in the procurement of a federal trademark, Rule 9 requires that a plaintiff allege particular facts which, if proven, would establish that:
(1) there was in fact another use of the same or a confusingly similar mark at the time the oath was signed; (2) the other user had legal rights superior to applicant's; (3) applicant knew that the other user had rights in the mark superior to applicant's, and either believed that a likelihood of confusion would result from applicant's use of its mark or had no reasonable basis for believing otherwise; and that (4) applicant, in failing to disclose these facts to the Patent and Trademark Office, intended to procure a registration to which it was not entitled.Intellimedia Sports Inc. v. Intellimedia Corp, 43 U.S.P.Q.2d 1203, 1206 (TTAB 1997) (internal citations omitted).
Plaintiff's second amended complaint satisfies the requirements for pleading fraudulent procurement of a trademark. Plaintiff's allegations of prior use of the mark "Quick Check Cashing Service" satisfy the first requirement. The allegation that plaintiff's mark was registered four years prior to defendant's state registration and 6 years prior to defendant's federal registration satisfies the requirement that plaintiff allege superior legal rights. Plaintiff's allegation that defendant was aware of plaintiff's prior use of the mark "Quick Check Cashing Service" through market research, local advertising by plaintiff, observation and assessment of the competition in the Klamath Falls area by defendant, and/or word of mouth, satisfies the third requirement. The fourth requirement is satisfied because, if the other allegations are established, a trier of fact could conclude that defendant intended to procure a trademark registration to which it was not entitled.
CONCLUSION
Defendant's motion to dismiss (#6) should be DENIED.
SCHEDULING ORDER
The above Findings and Recommendation are referred to a United States District Judge for review. Objections, if any, are due April 1, 2004. If no objections are filed, review of the Findings and Recommendation will go under advisement on that date.
A party may respond to another party's objections within 10 days after service of a copy of the objection. If objections are filed, review of the Findings and Recommendation will go under advisement upon receipt of the response, or the latest date for filing a response.