Opinion
CIVIL 6:22-CV-00994-ADA-JCM
05-09-2023
THE FESTIVE FARM CO., Plaintiff, v. BE CREATIONS AND DESIGNS, INC., Defendant.
HONORABLE ALAN D ALBRIGHT, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
JEFFREY C. MANSKE UNITED STATES MAGISTRATE JUDGE
This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C. § 636(b)(1)(C), Fed.R.Civ.P. 72(b), and Rules 1(f) and 4(b) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges. Before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint (ECF No. 14), Defendant's Motion to Dismiss Plaintiff's First Amended Complaint (ECF No. 17), and the attendant responses and replies thereto. For the following reasons, the undersigned RECOMMENDS Defendant's Motion to Dismiss Plaintiff's Complaint be DENIED AS MOOT and Defendant's Motion to Dismiss Plaintiff's First Amended Complaint be GRANTED IN PART AND DENIED IN PART.
I. BACKGROUND
The Festive Farm Co., a Texas corporation, sued Defendant BE Creations and Designs, Inc., a Georgia corporation, for common law trade dress infringement, common law contributory trade dress infringement, unfair competition under the Lanham Act, copyright infringement, indirect copyright infringement, and common law misappropriation. Pl.'s Am. Compl. (ECF No. 6) at 18, 19, 22, 26, 27.
Plaintiff sells, among other things, steel ornaments depicting a cardinal or an elephant, each with a “story card” and a gift bag. Id. at 6. Plaintiff alleges that the combination of the steel ornament, the story card, and the packaging constitutes a trade dress. Id. at 7. Plaintiff also asserts that it owns the copyright to the story cards it includes with its ornaments. Id. at 23. It claims that it obtained the copyright through an oral transfer that occurred before the filing of this suit. Pl.'s Resp. at 5-6 (ECF No. 18). A written memorialization of this transfer occurred after the filing of this suit. Id. at 6.
Plaintiff asserts that from 2017 to 2021, it obtained the steel ornaments it needed from Defendant and that Defendant was aware that Plaintiff packaged the ornaments it provided with a story card and gift bag. Pl.'s Am. Compl. at 10. Plaintiff also asserts that Defendant had access to the copyrighted story cards. Id. at 24. In April of 2021, Defendant ceased supplying Plaintiff with steel ornaments, and Plaintiff found another supplier. Id. at 10. Plaintiff claims that in December 2021, Defendant began selling steel ornaments depicting an elephant or a cardinal with story cards that has remarkably similar language and design to those sold by Plaintiff. Id. at 13. Plaintiff asserts that this merchandise infringes on its alleged trade dress. Id. at 13.
Plaintiff sued Defendant for injunctive relief and actual and exemplary damages. Id. at 29, 30. Defendant filed a Motion to Dismiss. Def.'s Mot. to Dismiss. Plaintiff responded by filing an Amended Complaint. Pl.'s Am. Compl. Defendant filed a Motion to Dismiss Plaintiff's Amended Complaint. Both of Defendant's Motions to Dismiss are currently before the Court.
II. LEGAL STANDARDS
Upon motion or sua sponte, a court may dismiss an action that fails to state a claim upon which relief may be granted. FED. R. CIV. P. 12(b)(6); Carroll v. Fort James Corp., 470 F.3d 1171, 1177 (5th Cir. 2006). To survive Rule 8, a nonmovant must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “The court's task is to determine whether the plaintiff has stated a legally cognizable claim that is plausible, not to evaluate the plaintiff's likelihood of success.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). The Court begins by identifying which allegations are well-pleaded facts and which are legal conclusions or elemental recitations, accepting as true the former and rejecting the latter. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court need not blindly accept every allegation of fact; properly pleaded allegations of fact amount to more than just conclusory allegations or legal conclusions “masquerading as factual conclusions.” Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002). The Court then determines whether the accepted allegations state a plausible claim to relief. Id. at 379.
“Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555. “The court accepts all well-pleaded facts as true, viewing them in the light most favorable to the [nonmovant].” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quotation marks omitted). “A claim has facial plausibility when the [nonmovant] pleads factual content that allows the court to draw the reasonable inference that the [movant] is liable for the misconduct alleged.” Ashcroft, 556 U.S. at 678. “The plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. For purposes of Rule 12(b)(6), “pleadings” include the complaint, its attachments, and documents referred to in the complaint and central to a plaintiff's claims. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-499 (5th Cir. 2000).
III. DISCUSSION
A. Defendant's Motion to Dismiss Plaintiff's Original Complaint is moot.
Plaintiff's Amended Complaint renders the original complaint of no legal effect because the amended complaint does not refer to, adopt, or incorporate by reference the original complaint. King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994). Generally, an amended complaint renders pending motions moot. See Cedillo v. Standard Oil Co. of Tex., 261 F.2d 443 (5th Cir. 1958) (holding that the district court erred in granting an abandoned motion to dismiss). Plaintiff filed an Amended Complaint in response to Defendant's First Motion to Dismiss. Pl.'s Am. Compl. Defendant then filed a Motion to Dismiss the Amended Complaint. Def.'s Mot. to Dismiss Am. Compl. Accordingly, Defendant's Motion to Dismiss Plaintiff's Original Complaint should be denied as moot.
B. Defendant's Motion to Dismiss Plaintiff's Counts I - III should be denied.
Plaintiff sues Defendant for common law trade dress infringement (Count I), common law contributory trade dress infringement (Count II), and unfair competition under the Lanham Act (Count III). Pl.'s Am. Compl. at 18, 19, 22. Defendant argues that the Court should dismiss Plaintiff's trade dress claims for failing to adequately define the alleged trade dress. Def's Mot. to Dismiss Pl.'s Am. Compl. at 7. Defendant argues that the elements Plaintiff describes in the First Amended Complaint insufficiently identify specific design features and fail to provide clarity to the scope of Plaintiff's claimed trade dress. Id. at 12-13.
Trade dress refers to a product's total image or overall appearance and includes, but is not limited to, such features as size, shape, color combinations, texture, graphics, or even a particular sales technique. Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 251 (5th Cir. 2010). When alleging a trade dress claim, a plaintiff must clearly identify the discrete elements of the trade dress that it wishes to protect. Test Masters Educ. Services, Inc. v. State Farm Lloyds, 791 F.3d 561, 565 (5th Cir. 2015). In Yeti Coolers, LLC v. Imagen Brands, LLC, the Court found that while some articulated elements of the plaintiff's trade dress were vague and unspecific, others clearly visible in the accompanying images were sufficiently specific at the pleadings stage. YETI Coolers, LLC v. Imagen Brands, LLC, No. 1:16-CV-00578-RP, 2017 WL 2199012, at *4 (W.D. Tex. May 18, 2017). The sufficiently specific elements of the trade dress included a “style line” at the bottom of the cup, the color contrasts and combinations, and the taper in the side wall, all of which were visible in the plaintiff's images. Id. The Fifth Circuit in Yeti Coolers, LLC v. JDS Industries, Inc. found that similar pleadings to those in Imagen Brands were enough for the Court to evaluate the plausibility of the plaintiff's claim and provide the defendant with fair notice of the grounds of the claim. YETI Coolers, LLC v. JDS Indus., Inc., 300 F.Supp.3d 899, 911 (W.D. Tex. 2018).
Here, Plaintiff identifies several specific elements of its trade dress, including the raw stainless-steel ornament, the logo's appearance and placement on the card, and the stylized text's placement. Pl.'s Am. Compl. at 7. Plaintiff also includes images embodying the trade dress components. Id. at 8-9, 11-12. The combination of specific elements that are clearly visible in the accompanying images (i.e., the raw stainless-steel ornament, the logo's appearance and placement on the card, and the stylized text's placement) are similar to those pled in Imagen Brands and JDS Industries (i.e., a “style line” at the bottom of the cup, the color contrasts and combinations, and the taper in the side wall). Accordingly, Plaintiff satisfies the Imagen Brands and JDS Industries standard and Defendant's Motion to Dismiss Plaintiff's Counts I-III should be denied.
C. Defendant's Motion to Dismiss Plaintiff's Counts IV - V should be denied.
Plaintiff also sues Defendant for copyright infringement (Count IV) and indirect copyright infringement (Count V). Pl.'s Am. Compl. at 23, 26. Defendant argues that the Court should dismiss Plaintiff's copyright claims for lack of standing because Plaintiff did not have a written assignment when it filed suit. Def's Mot. to Dismiss Pl.'s Am. Compl. at 17.
To establish a claim for copyright, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. Feist Publications, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991). Defendant only challenges the first element. Def's Mot. to Dismiss Pl.'s Am. Compl. at 16-17. “The legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that particular right committed while he or she is the owner of it.” 17 U.S.C. § 501(b). Ownership “vests initially in the author or authors of the work” but “may be transferred in whole or in part by any means of conveyance or by operation of law.” 17 U.S.C. §201 (a), (d). “A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.” 17 U.S.C. § 204(a).
Here, Plaintiff claims that a transfer of copyright occurred orally before Plaintiff sued and the written memorialization occurred after Plaintiff sued. See Pl.'s Am. Compl. at Ex. C; Def's Mot. to Dismiss Pl.'s Am. Compl. at 17. Courts have held that a writing memorializing an earlier oral agreement between a copyright owner and transferee, signed by both parties, cures defects in standing, even if executed after the filing of a suit challenging the copyright. Wood v. B L Bldg. Co., No. CIV.A.H-03-713, 2004 WL 5866352, at *5 (S.D. Tex. June 22, 2004); Emerald City Mgmt., LLC v. Kahn, No. 4:14-CV-358, 2016 WL 98751, at *16 (E.D. Tex. Jan. 8, 2016) (finding that the majority of courts hold that memorialization of an assignment that occurred before the alleged copyright infringement may occur after the commencement of a lawsuit). Accordingly, Plaintiff's written memorialization provides standing, and Defendant's Motion to Dismiss Counts IV and V should be denied.
D. Defendant's Motion to Dismiss Plaintiff's Count VI should be granted.
Finally, Plaintiff sues Defendant for common law misappropriation (Count VI). Pl.'s Am. Compl. at 27. Defendant argues that the Court should dismiss Count VI because misappropriation of trademark, including trade dress, is not a valid claim under Texas Law. Def's Mot. to Dismiss Pl.'s Am. Compl. at 19.
District courts within the Fifth Circuit have consistently rejected trademark misappropriation claims. Pennell v. Triton Media, LLC, No. A-12-CA-706-SS, 2013 WL 12131202, at *3 (W.D. Tex. Jan. 10, 2013) (standard trademark claim “does not come within the scope of the common law misappropriation tort.”); Jim S. Adler, P.C. v. Angel L. Reyes & Associates PC, No. 3:19-CV-2027-K-BN, 2020 WL 5099596, at *13 (N.D. Tex. Aug. 7, 2020), report and recommendation adopted, No. 3:19-CV-2027-K-BN, 2020 WL 5094678 (N.D. Tex. Aug. 29, 2020) (recommending dismissal of claims for misappropriation of name, likeness, and business opportunity because the “facts and allegations in the complaint are more akin to a claim for misappropriation of a trademark and, thus, precluded as a matter of law.”); Opportune LLP v. Oportun, Inc., No. CV H-18-7, 2018 WL 8755511, at *3 (S.D. Tex. Apr. 24, 2018) (dismissing a misappropriation claim because plaintiff alleged no misappropriation other than that of the plaintiff's trademarks); Buc-ee's, Ltd. v. Shepherd Retail, Inc, No. 15-CV-3704, 2017 WL 6387799, at *13 (S.D. Tex. July 21, 2017), R.& R. adopted in relevant part sub nom. Buc-ee's, Ltd. v. Panjwani, No. 4:15-CV-03704, 2017 WL 4221461 (S.D. Tex. Sept. 21, 2017) (recommending dismissal of a misappropriation claim because plaintiff's “misappropriation of a trademark claim under Texas common law is not a valid theory of recovery under Texas law.”).
Plaintiff does not contend that trademark misappropriation is a valid theory of recovery under Texas Law but instead argues that its claims fall under general common law misappropriation. Pl.'s Resp. at 19. Plaintiff asserts that while its misappropriation claim references the trade dress, it also references “products” and “merchandise.” Id. at 19. While paragraph 72 of the Plaintiff's First Amended Complaint mentions products, the paragraph does not mention specific products and focuses instead on the trade dress. Pl.'s Am. Compl. at 27. Because Plaintiff's claim of common law misappropriation more closely resembles a claim for trademark misappropriation, Defendant's Motion to Dismiss Count VI should be granted.
IV. CONCLUSION
For the foregoing reasons, the undersigned RECOMMENDS Defendant's Motion to Dismiss Plaintiff's Complaint (ECF No. 14) be DENIED AS MOOT and Defendant's Motion to Dismiss Plaintiff's First Amended Complaint (ECF No. 17) be GRANTED IN PART AND DENIED IN PART. Consistent with the discussion above, Counts I-V should remain and Count VI should be dismissed.
V. OBJECTIONS
The parties may wish to file objections to this Report and Recommendation. Parties filing objections must specifically identify those findings or recommendations to which they object. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report. See 28 U.S.C. § 636(b)(1)(C); Thomas v Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc). Except upon grounds of plain error, failing to object shall further bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas, 474 U.S. at 150-53; Douglass, 79 F.3d at 1415. SIGNED this 9th day of May 2023.