Simoniz, USA Inc. v. Dollar Shave Club, Inc.
Filing
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ORDER granting 13 Motion to Dismiss. Signed by Judge Victor A. Bolden on 12/9/2016. (Williams, C)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
SIMONIZ USA , INC.
Plaintiff,
v.
DOLLAR SHAVE CLUB, INC.
Defendant.
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No. 3:16-cv-00688 (VAB)
RULING ON DEFENDANT’S MOTION TO DISMISS
Plaintiff, Simoniz USA, Inc. (―Simoniz‖), brought this action against Defendant, Dollar
Shave Club, Inc. (―Dollar Shave Club‖ or ―DSC‖) seeking a declaratory judgment and injunctive
relief. Dollar Shave Club now moves to dismiss Simoniz‘s Complaint under Fed. R. Civ. P.
12(b)(1) for lack of subject matter jurisdiction. For the reasons outlined below, Dollar Shave
Club‘s Motion to Dismiss is GRANTED.
I.
FACTUAL BACKGROUND
This action arises out of a trademark dispute between two U.S.-based companies:
Simoniz, a company that sells cleaning products, and Dollar Shave Club, a company that sells
personal care products. Compl. ¶¶ 8, 11, ECF No. 1.
In November 2015, Simoniz filed an application with the European Union Intellectual
Property Office (―EUIPO‖) seeking to register the trademark ―DOLLAR CLEAN CLUB‖ for
use in the European Union (―E.U.‖) in connection with its cleaning supplies. EUTM File
Information at 1, Def. Ex. D, ECF No. 13-5. At that time, Dollar Shave Club‘s ―DOLLAR
SHAVE CLUB‖ trademark was already registered in both the E.U. and the U.S. DSC EU
Registration, Def. Ex. B, ECF No. 13-3; DSC US Registration, Def. Ex. A, ECF No. 13-2. In
January 2016, after receiving notice of Simoniz‘s E.U. application, Dollar Shave Club filed a
formal opposition, citing concerns about the potential for confusion between the DOLLAR
CLEAN CLUB label and the similarly named DOLLAR SHAVE CLUB brand. Id. Around two
months later, in March 2016, Simoniz applied to register its DOLLAR CLEAN CLUB trademark
in the U.S. and created a website featuring this mark. Simoniz US Registration Application, Pl.
Ex. C, ECF No. 23-3; Gorra Dec. ¶ 2, ECF No. 23-6.
In response to Dollar Shave Club‘s opposition to the E.U. registration application,
Simoniz‘s attorney reached out to Dollar Shave Club, and in April 2016 the parties spoke over
the phone about the opposition. Bouwer Dec. ¶ 3, ECF No. 13-13. On the call, Dollar Shave
Club explained to Simoniz that it was concerned about the potential for confusion between the
brands of the two companies, as some of the products sold by Simoniz could be seen as
overlapping with the products sold by Dollar Shave Club. Id. Simoniz disagreed, insisting that
the products were different and that confusion was unlikely. Id. On April 22, 2016, after the
call, Simoniz sent a follow-up e-mail to Dollar Shave Club providing them with a link to
Simoniz‘s ―Dollar Clean Club‖ product website, www.dollarclean.com, and requesting in writing
that Dollar Shave Club withdraw its opposition to Simoniz‘s E.U. application. 4/22/2016 Email, Def. Ex. H, ECF No. 13-9.
On April 28, 2016, Dollar Shave Club responded to Simoniz‘s e-mail, explaining that,
based on its review of Simoniz‘s Dollar Clean Club website, Dollar Shave Club still believed
that confusion between the brands was likely. 4/28/2016 E-Mail, Def. Ex. I, ECF No. 13-10. At
the conclusion of its e-mail, Dollar Shave Club demanded that Simoniz ―immediately withdraw
its trademark applications for DOLLAR CLEAN CLUB in the US and Europe and agree in
writing to cease all use of the mark DOLLAR CLEAN CLUB‖ in exchange for Dollar Shave
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Club withdrawing its opposition filing. Id. Simoniz responded with a letter, dated May 4, 2016,
declining these demands and recommending that the principals of the two companies arrange a
meeting. Simoniz May 2016 Letter, Def. Ex. J, ECF No. 13-11. That same day, before any
meeting between the companies had been arranged, Simoniz filed this lawsuit seeking a
declaratory judgment from this Court stating that the Simoniz‘s use of the ―DOLLAR CLEAN
CLUB‖ trademark in the U.S. does not infringe U.S. law. Def. Mem. in Supp. at 5.
After the complaint was filed, Dollar Shave Club took a closer look at Simoniz‘s Dollar
Clean Club website and found that the website was not fully operational. See Brunon Dec., ECF
No. 13-16. None of the cleaning products offered on the website appeared to actually use the
DOLLAR CLEAN CLUB mark — the website initially did not feature this mark at all, and when
Dollar Shave Club brought this to Simoniz‘s attention, the website was later edited to include
images of a DOLLAR CLEAN CLUB logo superimposed on the images of the featured cleaning
products. Bouwer Dec. ¶¶ 7-8; Bouwer Dec. Ex. A. The specific DOLLAR CLEAN CLUB
product that was featured in Simoniz‘s U.S. trademark application was not included on this
website; no terms of service, terms of use or privacy policy were featured; and none of the links
to ―Dollar Clean Club‖ social media pages actually led to any of the listed pages. Brunon Dec.
¶¶ 11-12.
In order to determine whether the ―Dollar Clean Club‖ trademark was actually being
used, Dollar Shave Club attempted to order one of the products offered on the website. Id. The
10% shipping discount advertised on the website was not applied to the order, and the payment
for the order was routed to a personal PayPal account in the name of ―William Gorra,‖ the
President of Simoniz. Id. at ¶¶ 15-16. The product was never delivered, and the payment was
ultimately returned. Id. at ¶ 18.
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II.
STANDARD OF REVIEW
Fed. R. Civ. P. 12(b)(1) allows for the dismissal of a complaint ―when the district court
lacks the statutory or constitutional authority to adjudicate it.‖ Makarova v. United States, 201
F.3d 110, 113 (2d Cir. 2000). Under the Declaratory Judgment Act, this Court has authority to
issue a declaratory judgment ―[i]n a case of actual controversy within this jurisdiction.‖ 28
U.S.C. § 2201(a). Dismissal of a declaratory judgment action for lack of subject matter
jurisdiction is appropriate where there is no ―actual controversy‖ between the parties. See Nike,
Inc. v. Already, LLC, 663 F.3d 89, 94 (2d Cir. 2011), aff'd, 133 S. Ct. 721 (2013) (affirming
dismissal of intellectual property declaratory judgment action for failure to meet ―case or
controversy‖ requirement); Indigodental GMBH & Co. KG v. Ivoclar Vivadent, Inc., No. 08 Civ.
7657 (RJS), 2008 WL 5262694 (S.D.N.Y. Dec. 10, 2008) (dismissing declaratory judgment
action for lack of actual controversy); Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d
697, 700–01 (2d Cir. 2000) (―If subject matter jurisdiction is lacking, the action must be
dismissed‖).
To constitute an ―actual controversy‖ for purposes of a declaratory judgment action, there
must be a ―substantial controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment.‖ MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 127 (2007) (citing Maryland Casualty Co. v. Pacific Coal & Oil
Co., 312 U.S. 270, 273 (1941)). Before the Supreme Court‘s ruling in MedImmune, a plaintiff
needed to establish a ―reasonable apprehension of imminent suit‖ in order to demonstrate an
―actual controversy‖ for declaratory judgment purposes. Bruce Winston Gem Corp. v. Harry
Winston, Inc., No. 09 Civ. 7352 (JGK), 2010 WL 3629592 at *4 (S.D.N.Y. Sept. 16, 2010). The
Supreme Court in MedImmune eliminated this ―imminent suit‖ requirement, but left intact the
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body of case law requiring that, in the trademark infringement context, a declaratory judgment
plaintiff must meet the ―immediacy and reality‖ requirement by showing that it actually had
―sufficient intent and apparent ability‖ to use the allegedly infringing trademark. Id. (citing
Starter Corp. v. Converse, Inc., 84 F.3d 592, 595-596 (2d Cir. 1996); AARP v. 200 Kelsey
Assocs., LLC, No. 06 Civ. 81, 2009 WL 47499 at *7 (S.D.N.Y. Jan. 8, 2009)). The plaintiff‘s
intent and ability to use the mark must be more than a ―vague or general desire.‖ Starter, 84
F.3d at 596.
―[A] district court possesses discretion in deciding whether to entertain a declaratory
judgment action.‖ Gianni Sports Ltd. v. Metallica, No. 00 Civ. 0937 (MBM), 2000 WL 1773511
at *4 (S.D.N.Y. Dec. 4, 2000) (citing Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995)). In
order to survive a motion to dismiss, the plaintiff seeking the declaratory judgment bears the
burden of proving by a preponderance of the evidence that subject matter jurisdiction exists.
Makarova, 201 F.3d at 113. ―[W]here jurisdictional facts are disputed, the Court has the power
and the obligation to consider matters outside the pleadings, such as affidavits, documents, and
testimony, to determine whether jurisdiction exists.‖ Bruce Winston Gem Corp., 2010 WL
3629592 at *1; Makarova, 201 F.3d at 113 (―In resolving a motion to dismiss for lack of subject
matter jurisdiction under Rule 12(b)(1), a district court…may refer to evidence outside the
pleadings‖).
III.
DISCUSSION
Dollar Shave Club argues that dismissal of Simoniz‘s declaratory judgment action is
appropriate because there is no ―substantial controversy‖ between the parties of sufficient
―immediacy and reality‖ as required to confer subject matter jurisdiction. Def. Mem. in Supp. at
13. Specifically, Dollar Shave Club argues that the filing of an opposition in a foreign trademark
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proceeding and an e-mail containing ―cease and desist‖ language do not constitute an actual
substantial controversy between the parties as a matter of law. Id. Dollar Shave Club also
argues that Simoniz has failed to show sufficient ―definite intent and apparent ability‖ to actually
use the allegedly infringing mark in commerce, as required to show immediacy and reality for
declaratory judgment purposes. Id. at 19-20.
a.
Substantial Controversy
The conflict between the parties over Simoniz‘s DOLLAR CLEAN CLUB trademark has
its roots in a trademark proceeding abroad. Although Simoniz‘s complaint makes no reference
to the foreign proceeding and rests only on the ―cease and desist letter‖ sent by Dollar Shave
Club in April 2016, it is undisputed that Dollar Shave Club‘s letter was sent in response to
Simoniz‘s repeated requests that Dollar Shave Club withdraw its opposition in that European
proceeding. However, while Dollar Shave Club did not formally threaten any trademark
infringement claim on the part of Simoniz, it did include a demand at the conclusion of its letter
that Simoniz stop using the mark in the U.S. as well as in the E.U. Although Dollar Shave
Club‘s opposition to the Simoniz trademark application in Europe does not constitute a
―substantial controversy‖ for declaratory judgment purposes, its demand that Simoniz cease all
use of the contested trademark may rise to this level.
i. Opposition to Trademark Registration
Several cases in this Circuit have already determined that a contested trademark
registration proceeding is not sufficient to constitute an ―actual controversy‖ for declaratory
judgment purposes. See Avon Products, Inc. v. Moroccanoil, Inc., No. 12 Civ. 4507 (GBD),
2013 WL 795652 (S.D.N.Y. Mar. 4, 2013) (dismissing declaratory judgment action for lack of
substantial controversy where ―cease and desist‖ letter was in connection with Canadian
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trademark proceeding); Vina Casa Tamaya S.A. v. Oakville Hills Cellar, Inc., 784 F.Supp.2d 391
(S.D.N.Y. 2011) (dismissing declaratory judgment action for lack of substantial controversy
where defendants objected to plaintiff‘s registration of trademark and refused settlement offers
that allowed plaintiff to continue using the mark). This is true even when the contested
trademark proceeding is based in the U.S. Id.
In Topp-Cola Co. v. Coca-Cola Co., the Second Circuit dismissed a declaratory judgment
action that was based on the defendant‘s opposition to the plaintiff‘s application for trademark
registration in Puerto Rico, reversing the lower court‘s denial of the defendant‘s motion to
dismiss. 314 F.2d 124 (2d Cir. 1963). The court found that ―no useful purpose would be served
by an adjudication in the district court of the plaintiff‘s right to registration in Puerto Rico or the
defendant‘s right to oppose such registration[,]‖ stating that ―[t]he Declaratory Judgments Act
may not be used simply to remove a controversy from a forum where it properly belongs‖ and
concluding that ―the district court abused its discretion in accepting jurisdiction over this
controversy.‖ Id. at 126-127. Accordingly, to the extent that the instant declaratory judgment
action seeks to resolve disagreements regarding Simoniz‘s E.U. trademark application, the Court
finds that this particular controversy is best resolved by the European trademark office
responsible for that registration, not by this Court.
ii. “Cease and Desist” Demand
The trademark dispute here does not end with Dollar Shave Club‘s formal opposition to
Simoniz‘s European trademark registration. On April 28, 2016 Dollar Shave Club sent an e-mail
to Simoniz including a specific demand that Simoniz ―cease all use of the mark,‖ followed by
language that ―DSC expressly reserves the right to assert any other factual or legal positions as
additional facts come to light.‖ 4/28/2016 E-mail, Def. Ex. I, ECF No. 13-10. Simoniz argues
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that this ―cease and desist letter‖ alone is sufficient to confer this Court with subject matter
jurisdiction. Pl. Mem. in Opp. at 4-6. Although the letter does not explicitly threaten any legal
action, Simoniz argues that Dollar Shave Club‘s letter amounts to a claim of trademark
infringement under the Lanham Act because the language used by Dollar Shave Club closely
mirrors the statutory language for a trademark infringement claim. Id.
A ―cease and desist‖ letter issued in connection with a trademark registration application
does not necessarily state a substantial controversy sufficient for a declaratory judgment action,
particularly where it does not contest the use of the trademark. In Vina Casa Tamaya, another
district court in this Circuit found that a declaratory judgment plaintiff failed to show an ―actual
controversy‖ where the defendant‘s ―cease-and-desist letter demanded simply that [plaintiff]
abandon its pending trademark application‖ and did not make any demands regarding use of the
mark. 784 F.Supp.2d at 395.
Here, Dollar Shave Club‘s letter did include a demand regarding Simoniz‘s use of the
mark, making this dispute more analogous to the dispute in Sammon v. Hachette Filipacchi
Presse than the one in Vina Casa Tamaya. In Sammon, the defendant‘s cease-and-desist letter
was sent in response to a trademark registration application but also included language
demanding that plaintiffs ―‗cease all use‘ of the mark[.]‖ 15-cv-00194 (VM)(SN), 2016 WL
1599492 at *3 (S.D.N.Y. Apr. 20, 2016). The court concluded that there was a substantial
controversy sufficient to confer subject matter jurisdiction, finding that, ―even assuming that the
cease and desist letter did not threaten suit, the letter at least established that the parties have
‗adverse legal interests‘ over the use of the mark sufficient to establish a case or controversy.‖
Id.
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There are, however, several facts distinguishing this case from the controversy in
Sammon. Unlike Dollar Shave Club, the defendant company in Sammon explicitly threatened
litigation in the context of settlement discussions, and unlike this case, the plaintiff in Sammon
made substantial use of the trademark in question before the complaint was filed. Nonetheless,
because the ―cease-and-desist‖ language reflected in Dollar Shave Club‘s April 2016 e-mail
directly addresses Simoniz‘s use of the contested mark, the ―cease-and-desist‖ letter may be
sufficient to demonstrate a ―substantial controversy‖ between the parties regarding Simoniz‘s use
of the DOLLAR CLEAN CLUB mark in the U.S.
b.
Immediacy and Reality
A ―substantial controversy‖ alone, however, is not sufficient to confer subject matter
jurisdiction for purposes of a declaratory judgment action. Bruce Winston Gem Corp., 2010 WL
3629592 at *4. The broader context of this controversy must also support a finding of
―immediacy and reality‖ sufficient to justify the Court‘s involvement. Id. In order to meet this
standard, the plaintiff must show both ―definite intent and apparent ability‖ to use the trademark
in question. GMA Accessories, Inc. v. Idea Nuova, Inc., 157 F. Supp. 2d 234, 244 (S.D.N.Y.
2000). ―The ‗definite intent and apparent ability‘ standard was created to prevent parties with
merely a ‗vague and unspecific desire to use a mark‘ from seeking an opinion addressing
hypothetical facts.‖ Gianni Sports Ltd., 2000 WL 1773511 at *3 (citing Golden Gulf Corp. v.
Jordache Enter., Inc., 896 F.Supp. 337, 340 (S.D.N.Y. 1995)).
The facts here do not suggest that Simoniz actually possessed a ―definite intent and
apparent ability‖ to make use of the trademark in the U.S., when it initiated this declaratory
judgment action. Simoniz‘s only basis for its alleged intent and ability to use the DOLLAR
CLEAN CLUB trademark is its creation and maintenance of a website, www.dollarclean.com, a
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website created after Dollar Shave Club filed its opposition in the European trademark
proceeding. Pl. Mem. in Opp. at 10. Dollar Shave Club has submitted detailed screen shots
depicting the state of the website at the time the complaint was filed, and although the website
was accessible to the public, it was not functional. See Brunon Dec., ECF No. 13-16. Only three
products were offered for sale on the website, none of which appeared to have actually been
manufactured with a ―DOLLAR CLEAN CLUB‖ logo, and an attempt to order products
revealed that it was impossible to actually place an order through the website. Id. Simoniz does
not dispute any of these documented irregularities in its website; instead, it argues that the
securing of a domain name and the activation of a website, together with its registration of the
trademark, is sufficient to demonstrate imminent intent and use for purposes of an ―actual case of
controversy.‖ Pl. Mem. in Opp. at 12.
In support of its argument, Simoniz relies on a Southern District of New York case,
Menashe v. Secret Catalogue, Inc., in which the court found ―definite intent and apparent ability‖
for purposes of a declaratory judgment action based, in part, on the plaintiff‘s maintenance of a
website featuring the disputed trademark. No. 05 Civ. 239 (HB), 2005 WL 1580799 (S.D.N.Y.
Jul. 7, 2005). Simoniz‘s reliance on Menashe, however, is misplaced. There, plaintiffs
demonstrated ―definite intent and apparent ability‖ through much more extensive actions than
those evidenced here. In addition to registering a domain name, retaining a web-designer, and
filing an application for registration of its trademark, the Menashe plaintiffs ―paid for the
production of and received four hundred samples of their product, as well as eight final articles
that would serve as prototypes and have engaged in activities including interviews and photo
shoots to promote their lingerie line.‖ Menashe, 2005 WL 1580799, at *6. Based on its
conclusion that ―Plaintiffs have clearly demonstrated ‗substantial steps‘ towards a launch of their
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lingerie line and ‗meaningful preparation‘ toward production as required by the case law[,]‖ the
court denied the defendant‘s motion to dismiss. Id. No such ―substantial steps‖ existed here.
Indeed, where a declaratory judgment action is based on trademark infringement and a
party ―has not secured—or attempted to secure—the central components of the formula
ordinarily required for production, the case or controversy standard is unlikely to be satisfied.‖
AARP v. 200 Kelsey Associates, LLC, No. 06 CIV. 81 (SCR), 2009 WL 47499, at *8 (S.D.N.Y.
Jan. 8, 2009). ―Where, however, a party has produced prototypes or samples of the allegedly
infringing products, begun soliciting—and advertising to—potential customers, or otherwise
invested significant sums of money in preparation for producing the goods, the case or
controversy requirement is likely to be satisfied.‖ Id. at *9. Here, Simoniz has made some steps
towards demonstrating use of its disputed trademark by securing a website and preparing the
basic framework for the mark to be used in commerce; however, the controversy between the
parties regarding Simoniz‘s use of the contested trademark in the U.S. does not appear to have
been ―immediate or real‖ at the time this action was filed.
―Plaintiff bears the burden of proving the Court‘s jurisdiction by a preponderance of the
evidence.‖ Makarova, 201 F.3d at 113. Simoniz has not established that it had a ―definite intent
and apparent ability‖ to use the trademark in the U.S. at the time it requested a declaratory
judgment. In the absence of any imminent use of the allegedly infringing mark in the U.S., the
parties‘ dispute appears to lie solely with Simoniz‘s registration application in Europe, which is
not sufficient to confer subject matter jurisdiction on this Court. Accordingly, Simoniz has failed
to establish an ―actual case of controversy‖ as required to survive a motion to dismiss, and this
Court lacks subject matter jurisdiction to resolve this particular trademark dispute.
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c.
Discretionary Dismissal
In addition to Dollar Shave Club‘s arguments regarding the lack of subject matter
jurisdiction, Dollar Shave Club urges this Court to exercise its discretion to dismiss the action,
arguing that, given that the dispute is fundamentally about a foreign trademark proceeding, the
exercise of jurisdiction would be inappropriate. Def. Mem. in Supp. 23-25. When faced with a
potentially actionable declaratory judgment action, district courts have been vested with
―discretion in the first instance, because facts bearing on the usefulness of the declaratory
judgment remedy, and the fitness of the case for resolution, are peculiarly within their grasp.‖
MedImmune, Inc., 549 U.S. at 136.
The Court agrees with Dollar Shave Club that the exercise of jurisdiction would not be
appropriate in this case. District courts are instructed to entertain a declaratory judgment action
―(1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in
issue; and (2) when it will terminate and afford relief from uncertainty, insecurity, and
controversy giving rise to the proceeding.‖ Continental Cas. Co. v. Coastal Sav. Bank, 977 F.2d
734, 737 (2d Cir. 1992); see also Broadview Chem. Corp. v. Loctite Corp., 417 F.2d 998, 1001
(2d Cir. 1969) (―if either of these objectives can be achieved the action should be entertained‖).
As discussed above, this particular trademark dispute originated in a foreign trademark
registration proceeding. Considering the lack of immediacy surrounding the parties‘
disagreements about Simoniz‘s use of the contested trademark in the U.S., the Court concludes
that the rights of the parties would best be resolved through the ongoing E.U. trademark
proceeding rather than through a declaratory judgment proceeding in the District of Connecticut.
See Crane v. Poetic Prod. Ltd., 351 F. App'x 516 (2d Cir. 2009) (affirming the district court‘s
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decision to decline the exercise of jurisdiction over declaratory judgment action regarding
copyright issue where European courts could effectively resolve the parties‘ dispute).
Accordingly, assuming arguendo that the Court does have subject matter jurisdiction
over this dispute, the Court nevertheless declines to exercise jurisdiction in this declaratory
judgment action, and the case is properly dismissed.
IV.
CONCLUSION
Dollar Shave Club‘s Motion to Dismiss is GRANTED. The Clerk of Court is directed to
close this case.
SO ORDERED this 9th day of December at Bridgeport, Connecticut.
/s/ Victor A. Bolden
VICTOR A. BOLDEN
UNITED STATES DISTRICT JUDGE
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