Global Tech Led, LLC v. Hilumz International Corp. et al

Filing 62

OPINION AND ORDER granting 24 Motion to Dismiss 8 Defendants' Counterclaims and Third-Party Claims; granting 60 Defendants' Renewed Motion for Leave to File Amended Answer and Counterclaims; denying without prejudice as moot 6 D efendants' Motion for Preliminary Injunction; and denying without prejudice as moot 51 Defendants' Motion for Expedited Hearing on Motion for Preliminary Injunction. See Opinion and Order for details. Signed by Judge John E. Steele on 5/31/2016. (KP)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
GLOBAL TECH LED, LLC, a
Florida limited liability
company,
Plaintiff,
v.

Case No: 2:15-cv-553-FtM-29CM

HILUMZ INTERNATIONAL CORP.,
a
Georgia
corporation,
HILUMZ,
LLC,
a
Georgia
limited liability company,
and HILUMZ USA, LLC, a
Georgia limited liability
company,
Defendants/Third
Party Plaintiffs
JEFFREY J. NEWMAN, GARY K.
MART, GARY K. MART and
JEFFREY J. NEWMAN,
Third Party Defendants.
ORDER
This matter comes before the Court on the Motion to Dismiss
Counterclaims and Third-Party Claims (Doc. #24) filed by Plaintiff
and Third-Party Defendants on December 11, 2015.

Defendants filed

a Response in Opposition (Doc. #37) on January 8, 2016.

For the

reasons set forth below, the Motion to Dismiss is granted, and
Defendants’ Amended Counterclaims and Third-Party Claims (Doc. #8)
is dismissed without prejudice to amend.

I.
This case involves a patent dispute between two business
partners-turned-competitors

in

the

LED

lighting

industry.

On

September 15, 2015, Plaintiff Global Tech LED, LLC (Global Tech)
filed a one-count Complaint (Doc. #1) against Defendants HiLumz
International

Corp.,

HiLumz,

LLC,

and

HiLumz

USA,

LLC

(collectively, Defendants) seeking injunctive relief and money
damages.

The Complaint alleges that Defendants have manufactured,

distributed, sold, used, and/or offered for sale LED products (the
Accused Products) that infringe, literally and under the doctrine
of equivalents, claims of United States Patent No. 9.091,424 (the
‘424 Patent), in which Global Tech has all ownership rights.
Defendants filed an Amended Answer, Affirmative Defenses,
Counterclaims, and Third Party Claims (Doc. #8) on November 2,
2015 in which they deny the allegations of infringement, assert
five affirmative defenses, and plead counterclaims and third-party
claims for false advertising under Section 1125(a) of the Lanham
Act, 15 U.S.C. §§ 1051 et seq., unfair competition under Florida
common law, and deceptive and unfair trade practices under the
Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla.
Stat. § 501.201 et seq.

The third-party claims are pled against

Gary K. Mart (Mart) and Jeffrey J. Newman (Newman), who are
managing members of Global Tech and the inventors of the LED lamp
product for which the ‘424 Patent issued.

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In support of their

claims, Defendants point to numerous “false” statements allegedly
made about Global Tech’s patent rights and Defendants’ business.
Defendants request declaratory relief, preliminary and permanent
injunctive relief, money damages, and attorneys’ fees.
Global Tech, Mart, and Newman (Plaintiffs, for brevity) have
moved

to

dismiss

the

counterclaims

and

third-party

claims.

Plaintiffs argue that Defendants have failed to state a claim under
the Lanham Act because, inter alia, the alleged statements were
not “false or misleading statements of fact”; were not “commercial
in nature”; or could not have injured Defendants.

Plaintiffs

contend that the unfair competition common-law claim fails for the
same reasons the Lanham Act claim fails.

Regarding the FDUTPA

claim, Plaintiffs assert that Defendants have not alleged that
they are “consumers” or that the deceptive act or unfair practice
has caused “actual damages.”
Defendants
Plaintiffs

oppose

are

the

conflating

Motion

to

Defendants’

Dismiss
burden

and
of

argue

that

adequately

pleading their claims with the burden of proof that applies on
summary judgment.

Defendants contend they have pled the elements

of their three claims with sufficient particularity and thus
Plaintiffs’ Motion to Dismiss should be denied.

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II.
Rule 8(a) of the Federal Rules of Civil Procedure requires a
complaint to contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.” 1
8(a)(2).

Fed. R. Civ. P.

In evaluating a Rule 12(b)(6) motion seeking to dismiss

a complaint for failing to comply with Rule 8(a), the Court must
accept

as

true

all

factual

allegations

in

the

complaint

and

“construe them in the light most favorable to the plaintiff.”
Baloco ex rel. Tapia v. Drummond Co., 640 F.3d 1338, 1345 (11th
Cir. 2011).

However, mere “[l]egal conclusions without adequate

factual support are entitled to no assumption of truth.”
v.

Berzain,

654

F.3d

1148,

1153

(11th

Cir.

2011)

Mamani

(citations

omitted).
To avoid dismissal under Rule 12(b)(6), the complaint must
contain sufficient factual allegations to “raise a right to relief
above the speculative level.”

Bell Atl. Corp. v. Twombly, 550

1

Some courts apply Rule 9(b)’s heightened pleading requirements
to determine the sufficiency of a Lanham Act claim “grounded in
fraud.”
E.g., EcoDisc Tech. AG v. DVD Format/Logo Licensing
Corp., 711 F. Supp. 2d 1074, 1085 (C.D. Cal. 2010). Neither the
Eleventh Circuit nor any Judge in this District appears to have
taken a stance on that issue. In a related context, this Court
has previously noted its disagreement with the conclusion of the
majority of courts in this district that Rule 9(b)’s requirements
apply to FDUTPA claims. Nationwide Mut. Co. v. Ft. Myers Total
Rehab Ctr., Inc., 657 F. Supp. 2d 1279, 1290 (M.D. Fla. 2009).
However, as Plaintiffs have not argued that Rule 9(b)’s heightened
pleading standard applies here, the Court applies Rule 8(a)’s
“short and plain statement” requirement.

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U.S. 544, 555 (2007).

To do so requires “enough facts to state a

claim to relief that is plausible on its face.”

Id. at 570.

This

plausibility pleading obligation demands “more than labels and
conclusions, and a formulaic recitation of the elements of a cause
of action will not do.”

Id. at 555 (citation omitted); see also

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“Threadbare recitals
of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.”); Chaparro v. Carnival Corp., 693
F.3d 1333, 1337 (11th Cir. 2012) (“Factual allegations that are
merely consistent with a defendant’s liability fall short of being
facially plausible.” (citation omitted)).

Instead, the complaint

must contain enough factual allegations as to the material elements
of each claim to permit the Court to determine - or at least infer
- that those elements are satisfied, or, in layman’s terms, that
the

plaintiff

has

suffered

defendant may be liable.

a

redressable

harm

for

which

the

See Roe v. Aware Woman Ctr. for Choice,

Inc., 253 F.3d 678, 683 (11th Cir. 2001).
III.
The Court agrees that Defendants’ counterclaims/third-party
claims must be dismissed.

The glaring problem is not, however,

Defendants’ inability as a matter of law to state claims under the
Lanham Act for false advertising, Florida common law, or FDUTPA.
The Court need not address those arguments, since Defendants’
failure to sufficiently allege injury is fatal to all three claims.

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The

Supreme

analytical

Court

framework

recently

for

articulated

determining

a

“the

party's

appropriate
standing

to

maintain an action for false advertising under the Lanham Act.”
Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct.
1377,

1387

(2014).

In

addition

to

establishing

Article

III

standing, 2 a party asserting a claim under the Lanham Act must also
show that it “has a cause of action under the statute,” which is
sometimes
standing.” 3
both

that

protected

(inaccurately)
Id. at 1387.
its

interests

under

Section

referred

to

as

having

“statutory

To do so requires the movant to show
fall

within

1125(a)

the

–

“zone

namely

of

interests”

commercial

and

reputational interests - and that the injuries asserted were
proximately caused by the Lanham Act violation.
In

order

to

survive

a

motion

to

Id. at 1388-91.

dismiss,

a

Lanham

Act

plaintiff must therefore “plead . . . an injury to a commercial
interest in sales or business reputation proximately caused by the

2

For purposes of this Opinion and Order only, the Court presumes
without deciding that Defendants have Article III standing to
assert their claims.
3

The Lexmark Court observed that it has “on occasion referred to
this inquiry as ‘statutory standing’ and treated it as effectively
jurisdictional” but clarified that such label “is misleading.”
Lexmark, 134 S. Ct. at 1388 n.4 (internal citations omitted); see
also City of Miami v. Bank of Am. Corp., 800 F.3d 1262, 1276 (11th
Cir.
2015)
(“[T]he
Supreme
Court's
recent
opinion
in Lexmark (interpreting the Lanham Act) discarded the labels
‘prudential standing’ and ‘statutory standing,’ and clarified that
the inquiry was really a question of statutory interpretation, and
not standing at all.”).

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defendant's misrepresentations.”

Id. at 1390.

Ultimately, the

Lexmark Court concluded that the defendant had so pled, where the
counterclaim alleged that the plaintiff’s misrepresentations about
its own products and the defendant’s products “proximately caused
and were likely to cause injury to [defendant] by diverting sales
from [defendant] to [plaintiff], and had substantially injured
[defendant’s] business reputation by leading consumers and others
in the trade to believe that [defendant] is engaged in illegal
conduct.”

Id. at 1384.

In contrast, the counterclaims and third-party claims at
issue

here

reputational

contain

no

injury,

misrepresentations

such

nor

and

allegations

plead

that

a

causal

injury.

In

of

commercial

link
fact,

between
nothing

or
the
in

Defendants’ pleading indicates that Defendants have ever been
injured.

Rather, Defendants allege only that Global Tech’s

“patent infringement lawsuit is a sham, filed for the purpose of
inciting anti-competitive rhetoric, scaring away HiLumz customers,
and stealing the business for itself,” (Doc. #8, ¶ 23), and that
Plaintiffs’ “false advertisements are actually deceiving, or have
a tendency or capacity to deceive, a substantial portion of the
intended audience.”

(Id. ¶ 42.)

To conclude, based on these

allegations, that Defendants have pled what Lexmark requires would
require

too

generous

an

inferential

leap.

Neither

an

anticompetitive purpose nor consumer deception establishes injury.

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Indeed, a party asserting a claim of false advertising under the
Lanham Act must specifically allege and prove both that the false
or misleading statement “actually deceives or is likely to deceive
a substantial segment of the intended audience” and that “the
statement results in actual or probable injury.”
Corp.

v.

Exzec,

Inc.,

(citation omitted).

182

F.3d

1340,

1348

Zenith Elecs.

(Fed.

Cir.

1999)

The Court thus dismisses Defendants’ Lanham

Act counterclaim/third-party claim without prejudice to amend.
The Eleventh Circuit has held that “[t]he success of [a
plaintiff’s] state unfair competition and FDUTPA claims is tied to
the

federal

Lanham

advertising.”

Act

claims

for

infringement

and

false

Sovereign Military Hospitaller Order of Saint John

of Jerusalem of Rhodes & of Malta v. Fla. Priory of Knights
Hospitallers of Sovereign Order of Saint John of Jerusalem, Knights
of Malta, Ecumenical Order, 702 F.3d 1279, 1296 (11th Cir. 2012);
see also Suntree Techs., Inc. v. Ecosense Int'l, Inc., 693 F.3d
1338, 1345 (11th Cir. 2012) (agreeing that “the legal analysis is
the same for all three”); Spiral Direct, Inc. v. Basic Sports
Apparel, Inc., --- F. Supp. 3d ---, No. 615CV641ORL28TBS, 2015 WL
9450575, at *5 (M.D. Fla. Nov. 24, 2015) (applying Lexmark analysis
to Florida unfair competition and FDUPTA claims).
the

Court

will

also

dismiss

Defendants’

Accordingly,

common-law

competition and FDUTPA claims without prejudice to amend.

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unfair

Anticipating Defendants will amend their claims, the Court
additionally observes that “a properly pled and proven consumer
claim for damages under FDUTPA requires proof of . . . actual
damages.”
2013)

Soper v. Tire Kingdom, Inc., 124 So. 3d 804, 806 (Fla.

(citation

and

internal

alteration

omitted).

“For

the

purpose of recovery under FDUTPA, ‘actual damages’ do not include
consequential
profits.”

damages,

precluding

recovery

of

future

lost

Siever v. BWGaskets, Inc., 669 F. Supp. 2d 1286, 1294

(M.D. Fla. 2009); see also Rodriguez v. Recovery Performance &
Marine, LLC, 38 So. 3d 178, 180 (Fla. 3d DCA 2010) (“[U]nder
FDUTPA, the term ‘actual damages’ does not include special or
consequential damages.”).

Thus, allegations of harm that give

rise to damages under the Lanham Act or Florida common law may not
support damages under FDUPTA. 4
Because the Court is dismissing Defendants’ counterclaims and
third-party claims, it will also deny without prejudice as moot
Defendants’ Motion for Preliminary Injunction (Doc. #6) and Motion

4

It appears to be an open question under Florida law whether the
2001 version of FDUTPA permits a claim for damages to be asserted
against a competitor. The Eleventh Circuit interpreted a previous
version of FDUTPA as “not apply[ing] to suits between competitors.”
M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1494 (11th
Cir. 1990).
However, at least two Florida District Courts of
Appeals have recently concluded that FDUTPA actions for damages
are not limited to non-competitor “consumers.”
Bailey v. St.
Louis, --- So. 3d. --- No. 2D13-612, 2016 WL 403168, at *7 (Fla.
2d DCA Feb. 3, 2016); Caribbean Cruise Line, Inc. v. Better Bus.
Bureau of Palm Beach Cty., Inc., 169 So. 3d 164, 169 (Fla. 4th DCA
2015).

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for Expedited Hearing on Motion for Preliminary Injunction (Doc.
#51).

In the interests of expedition, the Court will grant

Defendants’ May 10, 2016 Renewed Motion for Leave to File Amended
Answer and Counterclaims (Doc. #60), which “seeks leave of court
to amend [the] counterclaims for the purpose of expanding [the]
unenforceability defense to include a claim based on inequitable
conduct.”

The Court has not determined whether that claim, as

proposed (Doc. #60-1), is adequately pled.
to

pursue

it,

the

Court

recommends

Should Defendants wish

they

review

the

Federal

Circuit’s discussion on the pleading standard for a claim of
“inequitable conduct” found in Exergen Corp. v. Wal-Mart Stores,
Inc., 575 F.3d 1312 (Fed. Cir. 2009).
ORDERED:
1.

Plaintiffs' Motion to Dismiss Defendants’ Counterclaims

and Third-Party Claims (Doc. #24) is GRANTED, and Defendants’
Counterclaims

and

Third-Party

Claims

(Doc.

#8)

is

dismissed

without prejudice to amend.
2.

Defendants’ Renewed Motion for Leave to File Amended

Answer and Counterclaims (Doc. #60) is GRANTED.
3.

Defendants’ Motion for Preliminary Injunction (Doc. #6)

is denied without prejudice as moot.

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4.

Defendants’ Motion for Expedited Hearing on Motion for

Preliminary Injunction (Doc. #51) is denied without prejudice as
moot.
DONE and ORDERED at Fort Myers, Florida, this 31st day of
May, 2016.

Copies:
Counsel of Record

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