Communico, Ltd. v. Decisionwise, Inc.
Filing
30
ORDER denying 16 Motion to Dismiss. Please see attached Ruling & Order for details. Signed by Judge Robert N. Chatigny on 3/28/18. (Jones, P.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
COMMUNICO, LTD.
:
Plaintiff,
v.
DECISIONWISE, INC.,
Defendant.
:
:
:
:
:
:
:
:
:
Case No. 3:14-CV-1887 (RNC)
RULING AND ORDER
Plaintiff Communico, Ltd., brings this suit against
defendant DecisionWise, Inc., alleging trademark infringement and
unfair competition in violation of the Lanham Act and the
Connecticut Unfair Trade Practices Act (“CUTPA”).
DecisionWise
moves to dismiss the complaint under Rule 12(b)(2) for lack of
personal jurisdiction and Rule 12(b)(6) for failure to state a
plausible claim.
For reasons that follow, the motion is denied.
I. Background
The complaint and other documents subject to judicial notice
show the following.1
Communico is a Connecticut company that
1
In considering a motion to dismiss, a court “may consider
any written instrument attached to the complaint, statements or
documents incorporated into the complaint by reference, . . . and
documents possessed by or known to the plaintiff and upon which
it relied in bringing the suit.” ATSI Commc’ns, Inc. v. Shaar
Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (citation omitted).
Because DecisionWise has challenged personal jurisdiction, it is
also proper to take judicial notice of affidavits submitted by
the parties. See Whitaker v. American Telecasting, Inc., 261
F.3d 196, 208 (2d Cir. 2001).
1
provides employee-training programs in the fields of customer
relations, communication skills, leadership development, employee
engagement and coaching.
Since 1986, Communico has used the
trademark “MAGIC” in connection with course materials and
educational services.2
Communico registered the marks “MAGIC”
and “THE MAGIC OF CUSTOMER RELATIONS” with the U.S. Patent and
Trademark Office (“PTO”) in March 2011.
On its website,
Communico advertises a book written by the company’s President
and Senior Vice President entitled “How to Talk to Customers:
Create a Great Impression Every Time with MAGIC.”3
DecisionWise is a Utah company.4
Like Communico, it
provides employee-training programs in the fields of customer
relations and communication skills.
In November 2013,
DecisionWise began using the marks “MAGIC” and “Engagement Magic”
in connection with employee-training programs and advertising
materials.
See Larkin Decl. (ECF No. 23).
In September 2014,
DecisionWise registered the mark “Engagement Magic” with the PTO.
At least one Communico customer has mistakenly believed that
2
“MAGIC” stands for Make A Great Impression on the
Customer.
3
Communico’s website is located at
http://www.communicoltd.com/.
4
DecisionWise operated as a Utah corporation through
December 31, 2014. For reasons unrelated to this action,
DecisionWise converted to an LLC on January 1, 2015. Maylett
Decl. ¶ 2.
2
DecisionWise's marketing communications containing the MAGIC
trademark originated from Communico, or that Communico and
DecisionWise were somehow affiliated.
DecisionWise operates and maintains a website that displays
the infringing MAGIC trademark.5
The website includes a contact
button that provides a toll-free telephone number, a local
telephone number, an email address, and a contact form that
permits users to contact DecisionWise directly.
Users can sign
up for an email newsletter, which is sent by DecisionWise to
subscribers on a regular basis.
Users also can sign up for live
webinars and view recordings of past webinars provided by
DecisionWise employees.
In the fall of 2014, DecisionWise published a book entitled
“MAGIC: Five Keys to Unlock the Power of Employee Engagement”
(the “infringing book”).
Though DecisionWise does not directly
take orders for or ship the infringing book, its website
advertises the book for sale via a third-party link to
Amazon.com.
The book is also available for sale at Barnes &
Noble, which has locations throughout the United States,
including Connecticut.6
5
DecisionWise's website is located at http://www.decisionwise.com.
6
At the time the complaint was filed, DecisionWise’s
website also contained a third-party link to purchase the book
from Barnes & Noble’s website.
3
DecisionWise does not have any employees or property in
Connecticut, does not file a tax return in Connecticut, and, as
of 2015, had no ongoing business relationships with Connecticut
clients.
See Maylett Decl. (ECF No. 17-3).
Through its website
and other services, however, DecisionWise has done business with
Connecticut residents.
DecisionWise, which provides services for
approximately 150 to 200 organizations per year, received
approximately $13,600 from two Connecticut companies in 2011 for
conducting employee surveys.
In addition, at least one
Connecticut resident purchased the infringing book via a thirdparty link on DecisionWise's website, at least one Connecticut
resident has participated in one of DecisionWise's webinars, and
Connecticut residents regularly receive DecisionWise's marketing
communications and email solicitations.
Communico brought the present suit after an exchange of
letters and phone calls during which the parties were unable to
resolve disputes about the use of the “MAGIC” marks.
The
complaint alleges that DecisionWise’s use of the “MAGIC” marks
constitutes trademark infringement, false designation of origin,
and unfair competition under the Lanham Act and CUTPA.
Communico
seeks to enjoin DecisionWise from using the marks, an order
directing DecisionWise to recall products containing the marks,
and damages stemming from DecisionWise’s past use of the marks.
4
II. Motion to Dismiss for Lack of Personal Jurisdiction
On a motion to dismiss for lack of personal jurisdiction
under Rule 12(b)(2), the plaintiff bears the burden of
establishing that the court has jurisdiction over the defendant.
Whitaker, 261 F.3d at 208.
“[T]he nature of the plaintiff's
obligation varies depending on the procedural posture of the
litigation.”
Ball v. Metallurgie Hoboken-Overpelt, S.A., 902
F.2d 194, 197 (2d Cir. 1990).
Before discovery and in the
absence of a “full-blown evidentiary hearing,” a plaintiff “need
persuade the court only that its factual allegations constitute a
prima facie showing of jurisdiction.”
Dorchester Fin. Sec., Inc.
v. Banco BRJ, S.A., 722 F.3d 81, 85 (2d Cir. 2013) (quoting Ball,
902 F.2d at 197).
“A plaintiff can make this showing through his
own affidavits and supporting materials . . . containing an
averment of facts that, if credited . . ., would suffice to
establish jurisdiction over the defendant.”
Whitaker, 261 F.3d
at 208 (citations, quotations, and brackets omitted).
“Where the
issue is addressed on affidavits, all allegations are construed
in the light most favorable to the plaintiff and doubts are
resolved in the plaintiff’s favor.”
Id. (quotations and brackets
omitted).
When, as here, a nonresident defendant challenges personal
jurisdiction in a federal question case, “the Court must engage
in a two-step analysis.”
Chloe v. Queen Bee of Beverly Hills,
5
LLC, 616 F.3d 158, 163 (2d Cir. 2010).
forum state's long-arm statute.”
Id.
“First, we apply the
“If the long-arm statute
permits personal jurisdiction, the second step is to analyze
whether personal jurisdiction comports with the Due Process
Clause of the United States Constitution.”
Id. at 164.
A. Connecticut’s Long-Arm Statute
The long-arm statute that applies to nonresident LLCs7
provides:
[A] court may exercise personal jurisdiction over [a
nonresident LLC] who in person or through an agent: (1)
Transacts any business within the state; (2) commits a
tortious act within the state . . .; [or] (3) commits a
tortious act outside the state causing injury to person
or property within the state . . . if such person or
agent . . . expects or should reasonably expect the act
to have consequences in the state and derives
substantial revenue from interstate or international
commerce . . .
Conn. Gen. Stat. § 52-59b(a).
Because the statute was modeled on
New York Civil Practice Law § 302, Connecticut courts “find
pertinent the judicial interpretation given to that New York
statute.”
Zartolas v. Nisenfeld, 184 Conn. 471, 474, 440 A.2d
179, 180-81 (1981).
Communico contends that personal jurisdiction over
DecisionWise is provided by subsection (a)(2) or (a)(3) of the
7
The parties assume, and I agree, that Conn. Gen. Stat. §
52-59b, which applies to nonresident partnerships, also applies
to LLCs. See Marlin Firearms, Co. v. Wild W. Guns, LLC, No.
3:09-CV-921 RNC, 2013 WL 2405510, at *2 (D. Conn. May 31, 2013)
(collecting cases holding that LLCs are subject to § 52-59b, not
§ 33-929(f), which applies to foreign corporations).
6
long-arm statute based on its sale of the infringing book to
Connecticut residents.
As mentioned, DecisionWise advertises the
infringing book on its website, which provides a link to buy the
book on Amazon.com., and also appears to have a distribution
arrangement with Barnes & Noble.8
According to Communico, at
least one Connecticut resident has purchased the infringing book
after clicking on the link and discovery may reveal additional
purchases.
Viewing the record in a light most favorable to Communico, I
agree that Communico has established a prima facie case under
subsection (a)(2) of the long-arm statute based on an in-state
tort.
Trademark infringement is considered a “tort” for purposes
of determining long-arm jurisdiction.
See Am. Wholesalers
Underwriting, Ltd. v. Am. Wholesale Ins. Grp., Inc., 312 F. Supp.
2d 247, 253 (D. Conn. 2004).
A trademark infringement “claim is
said to arise . . . where the passing off occurs, i.e., where the
deceived customer buys the defendant’s product in the belief that
he is buying the plaintiff’s.” Id. (quotations omitted).
The
sale of an infringing product in a forum, even by a third-party
distributor, may constitute a tort in the forum by the defendant
if the distributor is acting as the defendant’s “agent.”
8
See
According to DecisionWise, the publisher of the infringing
book “has arranged for distribution of the Book through a variety
of outlets, including Amazon.com and Barnes & Noble.” Maylett
Decl. ¶ 14.
7
Conn. Gen. Stat. § 52-59b(a).
Courts have given the term “agent”
in the long-arm statute a broad interpretation, finding the
requisite agency relationship when the defendant has entered into
an agreement with a distributor contemplating that the infringing
product would be sold in the forum.
See Evergreen Media
Holdings, LLC v. Warren, 105 F. Supp. 3d 192, 198 (D. Conn. 2015)
(citing Dan–Dee Int'l, Ltd. v. KMart Corp., No. 99CIV.11689(DC),
2000 WL 1346865, at *4 (S.D.N.Y. Sept. 19, 2000); Blakeman v. The
Walt Disney Co., 613 F. Supp. 2d 288, 302 (E.D.N.Y. 2009);
Editorial Musical Latino Americana, S.A. v. Mar Int'l Records,
Inc., 829 F. Supp. 62, 64–65 (S.D.N.Y. 1993); Lipton v. The
Nature Co., 781 F. Supp. 1032, 1035–36 (S.D.N.Y. 1992)).
The record permits an inference that DecisionWise undertook
to sell the book in Connecticut through Amazon and Barnes &
Noble, both national retailers.
See Evergreen, 105 F. Supp. 3d
at 198 (finding jurisdiction under § 52-59b(a)(2) when
plaintiff’s copyright infringement claim was based on sale of
allegedly infringing book in Connecticut through distribution
arrangement with Barnes & Noble); Dan-Dee Int'l, 2000 WL 1346865,
at *4 (finding defendant “must have expected that the [infringing
products] would be sold in New York” by Kmart because defendant
“certainly knew or should have known that Kmart was a national
chain with stores in New York”).
Though Communico has not
established the nature of the relationship between DecisionWise
8
and its distributors, “[a]t this stage in the proceedings, when
the Court lacks evidence detailing the nature of [DecisionWise]'s
arrangements with its distributors and the extent of its
involvement in the Connecticut sales, [Commmunico] is entitled to
the benefit of the doubt in making [its] prima facie case that
[Decisionwise] was sufficiently involved in the allegedly
tortious sales to be reached by Connecticut’s long-arm statute.”
Evergreen, 105 F. Supp. 3d at 198.
Even if Communico cannot establish an agency relationship,
and all of DecisionWise’s allegedly tortious conduct occurred
outside Connecticut (i.e., where DecisionWise or its publisher
supplied the infringing book to Amazon or Barnes & Noble),
Commmunico can establish personal jurisdiction under subsection
(a)(3) of the long-arm statute based on an in-state injury.
“[T]he situs of a commercial injury is generally where the
plaintiff experiences a loss of business . . . .”
F. Supp. 3d at 199 (citations omitted).
Evergreen, 105
A customer who buys the
infringing book when it is offered for sale in Connecticut may be
deceived into thinking she is buying a Communico product.
See
id. (finding in-state injury when consumers may be diverted from
purchasing legitimate copies of copyrighted book).
The other
requirements of subsection (a)(3) are also satisfied.
DecisionWise could have anticipated that the infringing book
would be sold in Connecticut and it has continued to sell the
9
book after receiving letters from Communico requesting that it
refrain from using the MAGIC marks.9
Communico has made a prima
facie showing that DecisionWise “derives substantial revenue from
interstate or international commerce.”
52-59b(a)(3)(B).
Conn Gen. Stat. §
As mentioned, DecisionWise holds itself out as
an international business performing services for 150 to 200
businesses per year.
B. Due Process
Though Connecticut’s long-arm statute and “constitutional
due process are not coextensive,” cases where personal
jurisdiction is permitted under the statute but prohibited by due
process are “rare.”
See Licci ex rel. Licci v. Lebanese Canadian
Bank, SAL, 732 F.3d 161, 170 (2d Cir. 2013) (discussing New York
statute).
The due process “analysis has two related components:
the ‘minimum contacts’ inquiry and the ‘reasonableness’ inquiry.”
Chloe, 616 F.3d at 164.
Communico has made a prima facie showing
that exercising personal jurisdiction over Decisionwise in this
case comports with due process.
i. Minimum Contacts
The principal question in the minimum contacts inquiry is
9
See Mor-Dall Enterprises, Inc. v. Dark Horse Distillery,
LLC, 16 F. Supp. 3d 874, 880 (W.D. Mich. 2014) (“Post-complaint
behavior by a defendant, when the cause of action is for a
continuous tort such as trademark infringement, can be relevant
to a personal jurisdiction inquiry.” (citing Beverly Hills Fan
Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1563 (Fed. Cir.
1994)).
10
“whether the defendant has sufficient contacts with the forum
state to justify the court's exercise of personal jurisdiction.”
Id.
This involves “evaluat[ing] the quality and nature of the
defendant's contacts with the forum state under a totality of the
circumstances test.”
Best Van Lines, Inc. v. Walker, 490 F.3d
239, 242 (2d Cir. 2007).
When the claim arises out of the
defendant's contacts with the forum, specific jurisdiction exists
if the defendant purposefully availed itself of the privilege of
doing business in the forum and could foresee being haled into
court there.”
Bank Brussels Lambert v. Fiddler Gonzalez &
Rodriguez, 305 F.3d 120, 127 (2d Cir. 2002) (quotations
omitted).10
Communico contends that DecisionWise could have foreseen
being haled into court in Connecticut in view of its website and
its arrangements with Amazon and Barnes & Noble.
DecisionWise
argues that even if that is so, Communico has not shown that
DecisionWise “purposefully availed” itself of the privilege of
doing business in Connecticut, relying on J. McIntyre Mach., Ltd.
v. Nicastro, 564 U.S. 873 (2011).
10
I disagree.
Communico argues that the Court has general jurisdiction
over DecisionWise. I disagree. General jurisdiction exists only
when a defendant’s contacts with the forum state “are so
‘continuous and systematic’ as to render [the defendant]
essentially at home in the forum State.’” Licci, 732 F.3d at
170. Based on the existing record, even construed most
generously to Communico, DecisionWise is not “at home” in
Connecticut.
11
In Nicastro, the Supreme Court ruled that a New Jersey court
could not exercise personal jurisdiction over the foreign
manufacturer of a machine that caused an injury in New Jersey.
Id. at 888.
A distributor had agreed to sell the machine in the
United States (but no particular state), up to four machines
ended up in New Jersey, and some of the defendant’s employees had
attended trade shows in the United States but never in New
Jersey.
Id. at 886.
A plurality of the Court stated that the
exercise of jurisdiction did not comport with due process because
a “defendant's transmission of goods permits the exercise of
jurisdiction only where the defendant can be said to have
targeted the forum; as a general rule, it is not enough that the
defendant might have predicted that its goods will reach the
forum State.”
Id. at 882.
Justice Breyer’s
concurrence, which
is generally considered to be the controlling opinion,11 rejected
a strict “targeting” rule in favor of the traditional “purposeful
availment” rule.
See id. at 888 (Breyer, J., concurring).
Applying precedent for that rule, the concurrence noted that
there was no evidence of a “regular course” of sales in New
Jersey or “‘something more’ such as special state-related design,
11
Most courts have found that “Justice Breyer's concurring
opinion ‘furnished the narrowest grounds for the decision and
controls.’” In re Chinese-Manufactured Drywall Prod. Liab.
Litig., 753 F.3d 521, 541 (5th Cir. 2014) (quoting Marks v.
United States, 430 U.S. 188, 193 (1977)) (citing AFTG-TG, LLC v.
Nuvoton Tech. Corp., 689 F.3d 1358 (Fed. Cir. 2012)).
12
advertising, advice, or marketing.”
Id.
(discussing Asahi Metal
Industry Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102
(1987)).
Nicastro does not answer the questions posed in this
case.12
Unlike the plaintiff in Nicastro, Communico has not
alleged that DecisionWise merely placed its goods in the stream
of commerce with the expectation that they might end up in
Connecticut.
According to Communico, DecisionWise has “targeted
the world” by advertising its products for sale on its website,
see id. at 889, sending subscribers marketing communications, and
hosting interactive webinars.
In addition, DecisionWise has a
distribution agreement with Barnes & Noble that may contemplate
sales in Connecticut, where numerous Barnes & Noble stores are
located.
If DecisionWise were to sell the infringing book to a
Connecticut resident directly through its own website, the
purposeful availment rule would be satisfied.
See Chloe, 616
F.3d at 171 (“[B]y offering bags for sale to New York consumers
on the [defendant’s] website and by selling bags — including at
least one counterfeit [plaintiff’s] bag — to New York consumers,
12
Justice Breyer noted that the case did not answer the
exact questions posed here. See id. at 890 (“[W]hat do those
standards mean when a company targets the world by selling
products from its Web site? And does it matter if, instead of
shipping the products directly, a company consigns the products
through an intermediary (say, Amazon.com) who then receives and
fulfills the orders?”).
13
[defendant] has purposefully availed himself of the privilege of
conducting activities within the forum State . . . .” (quotations
and brackets omitted)).
The same would be true if DecisionWise
or its agents were personally involved in sales via Amazon.
See
EnviroCare Techs., LLC v. Simanovsky, No. 11-CV-3458 JS ETB, 2012
WL 2001443, at *3 (E.D.N.Y. June 4, 2012) (personal jurisdiction
appropriate when defendants operated Amazon and eBay accounts
selling infringing products, with at least one sale to New York
resident); accord McGraw-Hill Glob. Educ. Holdings, LLC v.
Mathrani, No. 16CV8530, 2017 WL 6343627, at *4 (S.D.N.Y. Dec. 12,
2017).
That the infringing books are sold by Barnes & Noble and
third-parties on Amazon complicates the issue but does not
preclude a finding of purposeful availment.
Under pre-Nicastro
precedent in this Circuit, exercising personal jurisdiction over
DecisionWise is proper if its relationship with Amazon and Barnes
& Noble shows an “attempt to serve” the Connecticut market.
See
Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 243 (2d Cir.
1999).13
Relying on these precedents even after Nicastro, courts
13
In Kernan, the Court of Appeals ruled that a New York
court could exercise jurisdiction over a Japanese manufacturer of
machines that had an “exclusive sales rights” agreement with a
Pennsylvania distributor whereby the distributor would sell the
machines “in North America and throughout the world.” Id. The
court stated the agreement “serves as evidence of [the Japanese
corporation]'s attempt to serve the New York market, albeit
indirectly.” Id.
14
have found that although the sale of a defendant’s product by a
third-party distributor is alone insufficient to establish
personal jurisdiction, it can be established when a defendant has
advertised its product over the internet, a third-party
distributor has sold the product in the forum state, and an
agreement between the defendant and the distributor contemplated
sales in the forum state.14
As other courts have recognized, “to
allow a defendant to escape personal jurisdiction in a particular
forum simply because its interactive website redirects customers
to a third-party vendor’s site to complete a sale would undermine
the ‘traditional notions of fair play and substantial justice’
that protect both plaintiffs and defendants.”
Mor-Dall
Enterprises, 16 F. Supp. 3d at 880.
Construing the record in a light most favorable to
Communico, Communico may be able to show that DecisionWise has
attempted to serve the Connecticut market through its
distribution arrangements with Amazon and Barnes & Noble.
As
noted above, the exact nature of these arrangements is unclear at
the moment.
And the volume of sales of the infringing book in
14
Compare Evergreen Media, 105 F. Supp. 3d at 201 (finding
minimum contacts based on sale of copyright-infringing book by
Barnes & Noble in Connecticut), with Ikeda v. J. Sisters 57,
Inc., No. 14-CV-3570 ER, 2015 WL 4096255, at *2 (S.D.N.Y. July 6,
2015) (declining to exercise personal jurisdiction when defendant
had agreement with U.S. distributor but “neither sold products
over the internet to customers in the United States nor entered
into any contract to perform services in New York State”).
15
Connecticut is also unknown.
Communico may ultimately fail to
show a “regular course” of sales or conduct by DecisionWise
evincing an attempt to serve the Connecticut market.
But
Communico’s allegations are sufficient to establish a prima facie
case of minimum contacts.15
ii. Reasonableness
Once a plaintiff makes a threshold showing of minimum
contacts, the defendant may defeat jurisdiction by presenting a
“compelling case that the presence of some other considerations
would render jurisdiction unreasonable.”
Rudzewicz, 471 U.S. 462, 477 (1985).
Burger King Corp. v.
The principal question is
“whether the assertion of personal jurisdiction comports with
‘traditional notions of fair play and substantial justice.’”
Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567
(2d Cir. 1996) (quoting Int’l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945)).
Factors to consider include: “(1) the burden
that the exercise of jurisdiction will impose on the defendant;
(2) the interests of the forum state in adjudicating the case;
15
DecisionWise contends that Communico employees
“manufactured” contacts between DecisionWise and Connecticut. If
discovery reveals that the only contacts between DecisionWise and
Connecticut were manufactured by Communico, exercising personal
jurisdiction may not comport with due process. See Edberg v.
Neogen Corp., 17 F. Supp. 2d 104, 112 (D. Conn. 1998) (declining
to exercise jurisdiction when “the acts of [plaintiff] brought
the infringing product into the forum, not [defendant]'s
promotion, advertising, or sales activities”).
16
(3) the plaintiff's interest in obtaining convenient and
effective relief; (4) the interstate judicial system's interest
in obtaining the most efficient resolution of the controversy;
and (5) the shared interest of the states in furthering
substantive social policies.”
Id. (citing Asahi, 480 U.S. at
113-14).
DecisionWise argues that it should not be subjected to
personal jurisdiction because it is a small organization located
in far-away Utah, making it burdensome to litigate the case in
Connecticut.
In addition, Decisionwise argues that it would be
more efficient and more consistent with the shared interests of
the states for the matter to be adjudicated before the Trademark
Trial and Appeal Board (“TTAB”) or in the District of Utah.
DecisionWise’s arguments are unpersuasive.
The record shows
that DecisionWise has done business in Connecticut in the past
and has consulting operations in Europe, Africa and the Middle
East.
The conveniences of current technology and modes of
transportation ease the burden of litigation in a distant
forum.16
There is no reason to think Utah has a stronger
interest in adjudicating this dispute than Connecticut, where
16
See Bank Brussels, 305 F.3d at 129-30 (“Even if forcing
the defendant to litigate in a forum relatively distant from its
home base were found to be a burden, the argument would provide
defendant only weak support, if any, because ‘the conveniences of
modern communication and transportation ease what would have been
a serious burden only a few decades ago.’” (quoting Metro. Life
Ins., 84 F.3d at 574)).
17
Communico has operated for over thirty years and has built its
MAGIC brand.
And DecisionWise has not explained why it would be
more efficient to litigate the case in Utah, where Communico
would be forced to travel, or before the TTAB, which does not
have jurisdiction to adjudicate all the claims at issue.
See
generally B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct.
1293, 1300-01 (2015) (discussing TTAB jurisdiction and
procedures).
III. Motion to Dismiss for Failure to State a Claim
A complaint must plead “enough facts to state a claim to
relief that is plausible on its face,” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007), and “allow[] the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
On a motion to dismiss for failure to state a claim, as with a
motion to dismiss for lack of personal jurisdiction, all factual
allegations are accepted as true and viewed in the light most
favorable to the plaintiff.
Id.
DecisionWise argues that Communico has failed to state a
plausible claim because its use of the MAGIC mark in the title of
the infringing book is protected by the First Amendment.17
17
DecisionWise’s arguments have addressed only Communico’s
claims related to the infringing book. Though defense counsel
suggested at oral argument that DecisionWise’s other uses of the
MAGIC marks might be protected by the First Amendment,
DecisionWise has not explained how these other uses - mostly in
18
DecisionWise’s reliance on the First Amendment raises a
substantial issue.
On the present record, however, it does not
appear that DecisionWise’s use of the mark is protected by the
First Amendment as a matter of law.
In general, to establish a trademark infringement claim a
plaintiff must show “that it has a valid mark entitled to
protection and that the defendant's use of it is likely to cause
confusion.”
Arrow Fastener Co. v. Stanley Works, 59 F.3d 384,
390 (2d Cir. 1995) (quotation omitted).18
For purposes of this
motion, DecisionWise has assumed that Communico’s registered
marks are valid.
To determine the likelihood of confusion,
courts consider the “Polaroid factors”: “(1) the strength of the
mark; (2) the degree of similarity between the two marks; (3) the
proximity of the products; (4) the likelihood that the prior
owner will ‘bridge the gap’ . . .; (5) actual confusion; (6) the
defendant's good faith in adopting its mark; (7) the quality of
the defendant's product; and (8) the sophistication of the
advertising its commercial products - are “expressive works”
entitled to the same First Amendment protections as literary
titles. See generally Brown v. Entm't Merchants Ass'n, 564 U.S.
786, 790 (2011) (discussing content considered expressive).
18
Communico has brought claims under both 15 U.S.C. § 1114,
which protects against the unauthorized use of registered marks,
and 15 U.S.C. § 1125, which protects against a “false designation
of origin,” including coverage for unregistered marks. The
showing required to establish either type of claim is essentially
the same. See Pirone v. MacMillan, Inc., 894 F.2d 579, 584–85
(2d Cir. 1990).
19
buyers.”
Id. (citing Polaroid Corp. v. Polarad Elecs. Corp., 287
F.2d 492, 495 (2d Cir. 1961)).19
In the case of an artistic work, the protections of the
Lanham Act apply “only where the public interest in avoiding
consumer confusion outweighs the public interest in free
expression.”
1989).
Rogers v. Grimaldi, 875 F.2d 994, 999 (2d Cir.
“[L]iterary titles do not violate the Lanham Act ‘unless
the title has no artistic relevance to the underlying work
whatsoever, or, if it has some artistic relevance, unless the
title explicitly misleads as to the source or the content of the
work.’”
Twin Peaks Prods., Inc. v. Publications Int'l, Ltd., 996
F.2d 1366, 1379 (2d Cir. 1993) (quoting Rogers, 875 F.2d at 999).
DecisionWise’s use of the MAGIC mark in the title of the
infringing book has some artistic relevance.
As the Ninth
Circuit has explained, the requisite “level of relevance merely
must be above zero.”
See E.S.S. Entm't 2000, Inc. v. Rock Star
Videos, Inc., 547 F.3d 1095, 1100 (9th Cir. 2008) (applying
Rogers test); see also Twin Peaks, 996 F.2d at 1379 (“In this
case, there would seem little question that the title is of some
19
The likelihood of confusion is a “factual question,
centering on the probable reactions of prospective purchasers of
the parties’ goods.” Pirone, 894 F.2d at 584 (quotation
omitted). A claim may be dismissed as a matter of law only where
the plaintiff “cannot possibly show confusion as to source or
sponsorship.” Id. In other words, claims “may be dismissed as a
matter of law where the court is satisfied that the products or
marks are so dissimilar that no question of fact is presented.”
Id. (quotation omitted).
20
artistic relevance to the book.”).
The issue, then, is whether
Communico can show that the use of the MAGIC mark in the title of
the book explicitly misleads as to the source of the book.
To determine whether a title “explicitly misleads,” courts
apply the Polaroid factors, keeping in mind that the “likelihood
of confusion must be particularly compelling to outweigh the
[defendant’s] First Amendment interest.”
1379.
Twin Peaks, 996 F.2d at
Addressing those factors, the parties’ marks are similar,
the parties use the marks in connection with similar products,
and it seems that at least one Communico customer has actually
been confused as to the source of the infringing book.
Though
none of these factors is dispositive, see, e.g., Rogers, 875 F.3d
at 1011 (evidence of actual confusion alone is insufficient),
they weigh in favor of finding that the infringing book’s title
explicitly misleads as to the source of the book.
The record with regard to the other factors does not enable
DecisionWise to prevail as a matter of law.
DecisionWise
principally argues that Communico’s MAGIC mark is weak.
It cites
hundreds of other similar trademarks registered in the same
international classes and other books with similar names.
However, the probative value of this evidence is limited because
the international classes and book genres to which DecisionWise
21
refers are broad.20
“The likelihood of confusion test is a fact-intensive
analysis that ordinarily does not lend itself to a motion to
dismiss.”
See Merck & Co. v. Mediplan Health Consulting, Inc.,
425 F. Supp. 2d 402, 412 (S.D.N.Y. 2006).
exception.
This case is no
DecisionWise may be able to show that the likelihood
of confusion does not outweigh its First Amendment interest.
But
such a finding cannot be made on the present record.
IV. Conclusion
Accordingly, the motion to dismiss (ECF No. 15) is hereby
denied.
So ordered this 28th day of March 2018.
/s/
Robert N. Chatigny
United States District Judge
20
Class 16 includes “paper, cardboard and certain goods
made of those materials.” See Nice Agreement Tenth Edition,
https://www.uspto.gov/trademark/trademark-updates-and-announcemen
ts/nice-agreement-tenth-edition-general-remarks-class. Class 41
includes “services rendered by persons or institutions in the
development of the mental faculties of persons or animals, as
well as services intended to entertain or to engage the
attention.” Id.
22
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