Bruce Kirby, Inc. et al v. LaserPerformance (Europe) Limited et al

Filing 366

ORDER GRANTING MOTION TO DISMISS. For the reasons stated in the attached order, I will grant without prejudice defendants' motion to dismiss (Doc. # 341 ) Claims III, IV, V, VI, VII, and VIII as to all defendants. If GSL wishes to file a carefully drafted second amended complaint with respect to its Lanham Act or CUTPA claims, it may do so by August 27, 2018. It is so ordered. Signed by Judge Jeffrey A. Meyer on 7/27/2018. (Zuckier, Chana)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

BRUCE KIRBY, INC., et al.,
Plaintiffs,
v.

No. 3:13-cv-00297 (JAM)

LASERPERFORMANCE (EUROPE)
LIMITED, et al.,
Defendants.

ORDER GRANTING MOTION TO DISMISS
Plaintiff Global Sailing Limited (GSL) has filed this lawsuit against five defendants for
breach of contract, for violations of the Lanham Act, and for violations of the Connecticut Unfair
Trade Practices Act (CUTPA). Defendants have moved to dismiss the Lanham Act and CUTPA
claims. For the reasons set forth below, I will grant the motion to dismiss.
BACKGROUND
The somewhat convoluted facts of this case are set forth at length in my earlier ruling on the
parties’ cross-motions for summary judgment as to a related action filed in 2013 (“the 2013
action”). See Bruce Kirby, Inc. v. Laserperformance (Europe) Ltd., No. 3:13-cv-00297; Bruce
Kirby, Inc. v. Laserperformance (Europe) Ltd., 2016 WL 4275576, at *1 (D. Conn. 2016). The
2013 action principally involved claims by Bruce Kirby and his eponymous company, Bruce Kirby,
Inc., against certain companies that build and sell sailboats that he designed. The instant suit filed
by GSL has been consolidated with the 2013 action.
In 1969, Bruce Kirby designed a small sailboat that became very popular for racing
competitions. During the early 1980s, Bruce Kirby and his company entered into an agreement,
called the “Head Agreement,” with two international sailing bodies to regulate the manufacture,

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sale, and registration of sailboats using the Bruce Kirby sailboat design and sold under the brand
name “Laser.” Kirby and his company likewise entered into contracts called “Builder Agreements”
with sailboat builders to build the sailboats in conformity with the Head Agreement. The successors
in interest to two of the Builder Agreements with Kirby and his company were Laserperformance
(Europe) Limited (“LPE”) and Quarter Moon, Inc. (“QMI”).
The parties got into a dispute about payment of royalties, and Kirby and his company
purported to terminate the Builder Agreements with LPI and QMI in 2012. Then Kirby and his
company filed the 2013 action for breach of contract, for infringement and counterfeiting of the
BRUCE KIRBY trademark under the Lanham Act, for unfair trade practices under CUTPA, and
for misappropriation of the name and likeness of Bruce Kirby.
Kirby and his company’s claims in the 2013 action were complicated by uncertainty about
whether they had standing to maintain their claims. This arose from the fact that in 2008, Bruce
Kirby and his company sold to GSL his interest in the Kirby Sailboat design as well as all contract
rights under the Head Agreement and Builder Agreements. In a prior ruling, I concluded that this
sale transferred to GSL all of Kirby’s and his company’s contractual rights and intellectual property
rights relating to the design of the Kirby Sailboat, subject to GSL’s later licensing back of the
intellectual property rights to Kirby and his company. See Bruce Kirby, Inc. v. Laserperformance
(Europe) Ltd., 2016 WL 4275576, at *3–*6.1 This led me to conclude that Kirby did not have
standing to assert claims for rights that he had sold to GSL, and I granted summary judgment
against Kirby and his company for lack of standing. Id. at *7.

The intellectual property assets that were sold to GSL were “all intellectual property rights owned by the Sellers, in
whole or in part, or licensed to the Sellers relating to the Kirby Sailboat . . . (I) patents; (II) trademarks, service marks,
trade names, service names, brand names, trade dress rights, logos, Internet domain names and corporate names . . .;
(III) copyrights and registrations and applications therefor[ ] . . . including but not limited to the construction manual;
(IV) vessel hull designs for the Kirby Sailboat; (V) rights in confidential information used by the Sellers; and (VI) rights
under agreements entered into between the Sellers and third parties relating to the Kirby Sailboat.” Bruce Kirby, Inc. v.
Laserperformance (Europe) Ltd., 2016 WL 4275576, at *3.
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Following a motion for clarification, I ruled that—apart from the transfer of intellectual
property rights relating to the Kirby Sailboat—Kirby and his company had not sold the BRUCE
KIRBY trademark to GSL. Doc. #312 at 3–4. This in turn led me to advise the parties in the 2013
action that I would now reconsider my grant of summary judgment as to the non-contract based
claims relating to the BRUCE KIRBY trademark. By simultaneous filing today, I am issuing a
supplemental ruling on the motion by LPE and QMI for summary judgment. This supplemental
ruling concludes in large part that genuine fact issues remain as to the Kirby plaintiffs’ claims for a
violation of the Lanham Act and for misappropriation of likeness against QMI.
GSL was named as a counterclaim defendant in the 2013 action. After I ruled that the Kirby
plaintiffs did not have standing to allege their contractual causes of action arising from the Builder
Agreements, GSL sought leave to amend its pleading to allege these contractual causes of action
against LPE and QMI. I denied that motion as untimely, Doc. #312 at 2–3, and GSL then followed
with the instant lawsuit (which has now been consolidated with the 2013 action).
The instant lawsuit names five defendants: LPE, QMI, Laserperformance LLC (“LP”),
Farzad Rastegar, and Dory Ventures LLC (“Dory”). Rastegar and Dory are alleged to control and
dictate the building and sales activities of LPE, LP, and QMI.
The instant lawsuit includes eight counts that collectively allege three kinds of claims:
contract claims for breach of the Builder Agreements, intellectual property claims for violation of
the Lanham Act, and unfair trade practice claims in violation of CUTPA. Specifically, Claim I
alleges a breach of contract claim against LPE, and Claim II alleges a breach of contract claim
against QMI. These contract claims are not at issue in the pending motion to dismiss.
Claims III, IV, and V allege violations of the Lanham Act by all five defendants (all based
on actions by LP, LPE, and QMI that were allegedly controlled by Rastegar and Dory). The
amended complaint alleges in relevant part that “LP is assisting LPE selling Kirby Sailboats in the
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United States, which is outside the territories originally authorized in the Builders Agreement,” and
that “LP was never authorized to sell Kirby Sailboats anywhere in the world at any time,” and “LPE
has never been authorized to sell Kirby Sailboats in the United States.” Doc. #327 at 11 (¶ 41). The
amended complaint further alleges that “LPE and QMI are building, selling, and/or manufacturing
Kirby Sailboats, as well as using components, each despite having no authorization to do so.” Ibid.
(¶ 42).
In addition, the amended complaint alleges that “the Kirby Sailboats being built by LP, LPE
and/or QMI since the termination of the Builders Agreement are not properly licensed,” and that
“LP, LPE and QMI, actively and repeatedly misrepresent to the public that the boats being sold are
properly licensed Kirby Sailboats when they are not, thereby deceiving the public.” Ibid. (¶ 43). On
this basis, the amended complaint alleges that “LP, LPE and QMI are making false designation of
origin and/or descriptions of fact which are ‘likely to cause confusion, or to cause mistake, or to
deceive as to the affiliation, connection or association . . . or as to the origin, sponsorship, or
approval of . . . goods, services or commercial activities . . .’” and that “[t]hese actions violate
Section 43A of the Lanham Act.” Ibid. (¶¶ 43 & 44).2
Claims V, VI, and VII allege CUTPA violations by all five defendants. The CUTPA claims
are alleged in skeletal form and largely based on the same factual allegations that support the
Lanham Act claims.
DISCUSSION
The background principles governing a Rule 12(b)(6) motion to dismiss are well established.
The Court must accept as true all factual matters alleged in a complaint, although a complaint may
not survive unless the facts it recites are enough to state plausible grounds for relief. See, e.g.,

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The foregoing allegations are drawn from Count III of the amended complaint which alleges a cause of action against
LPE, LP, and QMI. Claims IV and V merely incorporate the same allegations against Rastegar and Dory, respectively,
and further allege that they controlled and dictated the actions of LPE, LP, and QMI. Doc. #327 at 12-13 (¶¶ 46–51).

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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Mastafa v. Chevron Corp., 770 F.3d 170, 177 (2d Cir.
2014). Although this “plausibility” requirement is “not akin to a probability requirement,” it “asks
for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.
Because the focus must be on what facts a complaint alleges, a court is “not bound to accept as true
a legal conclusion couched as a factual allegation” or “to accept as true allegations that are wholly
conclusory.” Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014). In short, my role in reviewing a
motion to dismiss under Rule 12(b)(6) is to determine if the complaint—apart from any of its
conclusory allegations—alleges enough facts to state a plausible claim for relief.
Lanham Act Claims
The Lanham Act authorizes a civil action arising from the use of any false statements in
connection with certain commercial transactions:
(1) Any person who, on or in connection with any goods or services, or any container for
goods, uses in commerce any word, term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or misleading description of fact, or false
or misleading representation of fact, which—
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the
affiliation, connection, or association of such person with another person, or as
to the origin, sponsorship, or approval of his or her goods, services, or
commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature,
characteristics, qualities, or geographic origin of his or her or another person’s
goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be
damaged by such act.
15 U.S.C. § 1125(a)(1).
As the Supreme Court has noted, this statute “thus creates two distinct bases of liability:
false association, § 1125(a)(1)(A), and false advertising, § 1125(a)(1)(B).” Lexmark Int’l, Inc. v.
Static Control Components, Inc., 134 S. Ct. 1377, 1384 (2014). The Second Circuit has observed
that claims for false designation of origin and false advertising cannot be “combine[d] into a
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generalized unfair competition claim,” because they “are distinct and require separate
consideration.” Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 277 F.3d 253, 259 (2d
Cir. 2002) (citation omitted).
To the extent that a plaintiff may proceed under § 1125(a)(1)(A) for false designation, a
plaintiff must establish that plaintiff has rights to a protected trademark (or trade dress), even if the
trademark is not formally registered. See ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 154 (2d Cir.
2007). A trademark is defined by law to mean “any word, name, symbol, or device, or any
combination thereof” used by any person “to identify and distinguish his or her goods, including a
unique product, from those manufactured or sold by others and to indicate the source of the goods,
even if that source is unknown.” 15 U.S.C. § 1127. Although GSL adverts to its rights in general to
the Kirby Sailboat, the amended complaint does not allege any trademark for which GSL has rights
that have been violated by any false designation of origin or other false statement. Accordingly, the
amended complaint fails to allege plausible grounds for relief under § 1125(a)(1)(A).
GSL argues in its briefing that it owns a copyright in the Kirby sailboat design. But the
amended complaint fails to allege that GSL has a copyright to the Kirby sailboat design. In any
event, it is far from clear that GSL could maintain a claim under the Lanham Act based on a
copyright violation. “[T]he Supreme Court has held that the Lanham Act protects only ‘the producer
of . . . tangible goods that are offered for sale, and not . . . the author of any idea, concept, or
communication embodied in those goods,’” and therefore “[t]he failure to credit the true author of a
copyrighted work is not a false designation of origin, but a violation of copyright.” Freeplay Music,
Inc. v. Cox Radio, Inc., 409 F. Supp. 2d 259, 263 (S.D.N.Y. 2005) (Lynch, J.) (quoting Dastar
Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 33 (2003)).
GSL next argues that the amended complaint asserts claims for false advertising under the
Lanham Act, which applies to misrepresentations by means of “commercial advertising or
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promotion.” 15 U.S.C. § 1125(a)(1)(B). The amended complaint, however, neither cites this specific
provision of the Lanham Act nor refers at all to “commercial advertising or promotion.” The only
reference in the amended complaint to “advertising” is within a preliminary jurisdictional allegation
stating with no elaboration that defendants “have advertised in Connecticut.” Doc. #327 at 4 (¶ 2).
The portion of the amended complaint that actually purports to charge a violation of the
Lanham Act alleges that defendants “actively and repeatedly misrepresent to the public that the
boats being sold are properly licensed Kirby Sailboats when they are not, thereby deceiving the
public.” Id. at 11 (¶ 43). Because of course anyone may make statements to the public that do not
necessarily or likely constitute “commercial advertising or promotion,” this allegation does not
suffice to allege a plausible violation of the Lanham Act’s prohibition against false commercial
advertising. See Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48, 57 (2d Cir.
2002) (noting that the term “commercial advertising or promotion” does not extend to all forms of
“commercial speech” and that “the touchstone of whether a defendant’s actions may be considered
‘commercial advertising or promotion’ under the Lanham Act is that the contested representations
are part of an organized campaign to penetrate the relevant market”).
Nor does the amended complaint describe any detail about the wording or appearance of any
allegedly false advertising. The amended complaint is likewise lacking in any allegation that false
advertising specifically caused “an injury to a commercial interest in reputation or sales.” Lexmark,
134 S. Ct. at 1390.
In short, the amended complaint does not adequately allege a plausible Lanham Act claim,
either for false designation or false advertising. The amended complaint otherwise fails to give fair
notice to defendants of what GSL contends they did wrong that make them liable under the Lanham
Act. Accordingly, I will dismiss GSL’s Lanham Act claims.

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CUTPA Claims
CUTPA prohibits the use of “unfair or deceptive acts or practices in the conduct of any trade
or commerce.” Conn. Gen. Stat. § 42–110b(a). The statute “provides a private cause of action to
[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of
the use or employment of a [prohibited] method, act or practice.” Harris v. Bradley Mem’l Hosp. &
Health Ctr., Inc., 296 Conn. 315, 351 (2010). CUTPA claims can be based on either an “actual
deceptive practice” or an unfair practice—that is, a “practice amounting to a violation of public
policy.” Ulbrich v. Groth, 310 Conn. 375, 409 (2013).
Connecticut law has long recognized three factors that determine whether a particular
business practice violates CUTPA:
(1) [W]hether the practice, without necessarily having been previously considered unlawful,
offends public policy as it has been established by statutes, the common law, or otherwise—
in other words, it is within at least the penumbra of some common law, statutory, or other
established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or
unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other
businesspersons].
Artie’s Auto Body, Inc. v. Hartford Fire Ins. Co., 317 Conn. 602, 609 n.9 (2015). There is no
requirement, however, that all three criteria be met “to support a finding of unfairness” for purposes
of a CUTPA claim. Ibid.
The amended complaint quite cursorily and confusingly alleges that “[t]he acts of LP, LPE
and QMI as more specifically contained in paragraph 32 above, which are in violation of 15 U.S.C.
§ 1114, also violate Section 110b of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. §
42b-110b, resulting in damage and ascertainable loss to GSL.” Doc. #327 at 13 (¶ 53).3 To the
extent that this rests on an allegation of the violation of the Lanham Act, the CUTPA claims cannot
survive for the same reasons I have explained that the Lanham Act claims must be dismissed.

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Although GSL confusingly refers to 15 U.S.C. § 1114, GSL did not actually bring a claim under this Lanham Act
provision, which protects against trademark infringement of registered trademarks.

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Alternatively, to the extent that the CUTPA claims rest on allegations in Paragraph 32 of the
amended complaint concerning a breach of contract, a CUTPA claim may not rest merely on
allegations of breach of contract. “A simple breach of contract cannot constitute a violation of the
Connecticut Unfair Trade Practices Act. There must be significant aggravating circumstances.”
Boulevard Assocs. v. Sovereign Hotels, Inc., 72 F.3d 1029, 1040 (2d Cir. 1995) (internal citation
omitted). GSL here has not alleged any significant aggravating circumstances beyond the
allegations that fall short of stating a plausible Lanham Act claim.
CONCLUSION
For the reasons stated above, I will grant without prejudice defendants’ motion to dismiss
(Doc. #341) Claims III, IV, V, VI, VII, and VIII as to all defendants. If GSL wishes to file a
carefully drafted second amended complaint with respect to its Lanham Act or CUTPA claims, it
may do so by August 27, 2018.
It is so ordered.
Dated at New Haven this 27th day of July, 2018.
/s/Jeffrey Alker Meyer
Jeffrey Alker Meyer
United States District Judge

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