ALLISON TRANSMISSION, INC. v. FLEETPRIDE, INC.

Filing 68

ORDER ON MOTION TO DISMISS COUNTERCLAIMS - The Court GRANTS in part and DENIES in part Plaintiff Allison Transmission, Inc.' 52 Motion to Dismiss Fleetpride's Counterclaims. Counterclaims I and II are hereby DISMISSED. The Court also S TRIKES Fleetpride's affirmative defenses, Dkt. No. 47 , 74-76, regarding invalidity of the TES 296 mark under 15 U.S.C. § 1064, sua sponte. Furthermore, Fleetpride's 49 Motion for Bifurcated or Phase Discovery is DENIED as moot. (See Order.) Signed by Judge Larry J. McKinney on 7/14/2017. (GSO)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

ALLISON TRANSMISSION, INC.,
Plaintiff,
vs.
FLEETPRIDE, INC., and
BP LUBRICANTS USA INC.,
Respondents.

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No. 1:16-cv-02455-LJM-MJD

ORDER ON MOTION TO DISMISS COUNTERCLAIMS
This matter comes before the Court on Plaintiff Allison Transmission, Inc.’s
(“Allison’s”), Motion to Dismiss Counterclaims (the “Motion”). Dkt. No. 52. Allison argues
that Defendant Fleetpride, Inc. (“Fleetpride”), lacks standing to support its counterclaims
to invalidate a certification mark owned by Allison. Id. at ¶¶ 1-2. Allison also seeks to
dismiss Fleetpride’s counterclaim seeking declaratory judgment for non-infringement
because it is duplicative of Allison’s infringement claim in its Second Amended Complaint.
Id. at ¶ 3. For the foregoing reasons, the Court GRANTS in part and DENIES in part
Allison’s Motion.
I. BACKGROUND
Allison began manufacturing automatic transmissions for commercial vehicles
approximately seventy years ago and has since developed a reputation for building high
quality, reliable automatic transmissions. Dkt. No. 43, ¶ 8. In order to protect the rights
to its name, Allison obtained federal registration for standard character trademarks in
“ALLISON” and “ALLISON TRANSMISSIONS” (the “Allison Standard Character Marks”).

Id.

Allison also registered five design marks for use in relation to its automatic

transmission products, all of which incorporated at least one of the Allison Standard
Character Marks. Id.
In 1999, Allison developed a new transmission fluid certification standard, TES
295, which it used to indicate which transmission fluids worked best with its transmissions.
Id. at ¶¶ 11-12. In connection with this new certification standard, Allison registered for a
standard character, certification mark in “TES 295” (the “TES 295 Standard Character
Mark”) and two design marks, both of which include the TES 295 Standard Character
Mark and at least one of the Allison Standard Character Marks (collectively with the TES
295 Standard Character Mark, the “TES 295 Marks”). Id. at ¶ 12. Before obtaining a
license to use the TES 295 Marks, Allison requires each licensee to first demonstrate that
its transmission fluid meets Allison’s strict requirements for obtaining TES 295
certification. Id. at ¶ 15.
In May 2015, Allison learned that Fleetpride was marketing and selling
transmission fluid known as “Primatech TES295,” and that Fleetpride’s packaging of
Primatech TES295 incorporated the TES 295 Standard Character Mark, as well as the
Allison Standard Character Marks. Id. at ¶ 20. As an example, Allison attached Exhibit
C to its Second Amended Complaint, which depicts a Fleetpride transmission fluid
container label (the “Primatech Label”) that states the product is “suitable for use in Allison
Transmissions for extended drain” and lists its product number as “PTATF-TES295-G.”
Id. at Ex. C. Although Allison requested that Fleetpride cease and desist its use of
Allison’s marks, Fleetpride refused, believing that its use of Allison’s marks was a non-

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infringing, fair use. Id. at ¶¶ 21, 24. Fleetpride continues to employ Allison’s marks in
relation to its transmission fluid products. Id. at ¶ 27.
Allison alleges that “Fleetpride’s adoption and continued use” of the Allison
Standard Character Marks and the TES 295 Standard Character Mark infringes on all of
Allison’s trademark rights because Fleetpride’s use of its marks falsely suggests that
Fleetpride’s transmission fluid is certified or sponsored by Allison, or is otherwise affiliated
with Allison. Id. at ¶¶ 28-38. As such, Allison claims that Fleetpride’s use of its marks
constitutes trademark infringement, unfair competition, and a false description of goods
in violation of the Lanham Act and common law. Id. at ¶¶ 39-66.
On April 26, 2017, in response to Allison’s Second Amended Complaint, Fleetpride
filed its Answer and Counterclaim, in which it asserts three counterclaims against Allison
(the “Counterclaims”). Dkt. No. 47.

In Counterclaims I and II, Fleetpride seeks to

invalidate Allison’s TES 295 Marks, in accordance with 15 U.S.C. § 1064. Id. at ¶¶ 95137. Fleetpride similarly alleges as affirmative defenses that the TES 295 Marks are
invalid. Id. at ¶¶ 74-76. Fleetpride asserts that invalidation of the TES 295 Marks is
appropriate because Allison improperly produced and marketed an automatic
transmission fluid using the TES 295 Marks and because Allison discriminately refused
to certify products meeting the TES 295 certification standards. Id. at ¶¶ 74-76, 95-137.
Additionally, in Counterclaim III, Fleetpride requests declaratory judgment that it
has not infringed upon any of Allison’s marks. Id. at ¶¶ 138-142. In support of this
counterclaim, Fleetpride attached the label it currently uses for its private label automatic
transmission fluids, now branded as “OTR” (the “OTR Label”). Id. at ¶ 138; Ex. 8. The
front of the OTR Label states that OTR is “suitable for use in Allison Transmissions for

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extended drain.” Id. at Ex. 8. The back of the OTR Label further indicates that OTR is
“suitable for use in applications where the OEM specifies a fluid providing performance
capability comparable to Allison TES 295® specification” but notes that OTR “is not
certified by Allison Transmission under the TES 295® specification.” Id. Unlike the
Primatech Label, the product number on the OTR Label, “PTATF-SSP-G,” does not
include any reference to “TES 295.” Id.
Allison seeks to dismiss the Counterclaims, pursuant to Federal Rules of Civil
Procedure (the “Rules”) 12(b)(1) and 12(b)(6). Dkt. No. 52. Specifically, Allison asserts
that Fleetpride lacks sufficient standing to seek invalidation of the TES 295 Marks in
Counterclaims I and II because Fleetpride never sought TES 295 certification. Dkt. No.
53 at 2-6. Furthermore, Allison argues that Counterclaim III should be dismissed under
Rule 12(b)(6) because Fleetpride’s claim of non-infringement serves “no useful purpose”
in light of Allison’s initial claim of infringement. Id. at 6-7.
II. COUNTERCLAIMS I AND II: INVALIDATION UNDER 15 U.S.C. §§ 1064(3) & (5)
With respect to Counterclaims I and II, Allison argues that Fleetpride lacks standing
under 15 U.S.C. §§ 1064(3) and 1064(5)(B) & (D). Dkt. No. 53 at 2-6. In response,
Fleetpride asserts that it has sufficient standing to invalidate the TES 295 Marks because
Allison first asserted its claims against Fleetpride for infringement of those marks. Dkt.
No. 56 at 7-8.
A motion to dismiss for lack of standing constitutes a challenge to the Court’s
subject matter jurisdiction under Rule 12(b)(1). See Scanlan v. Eisenberg, 669 F.3d 838,
841 (7th Cir. 2012). When ruling on a motion to dismiss under Rule 12(b)(1), the Court
must accept “as true all facts alleged in the well-pleaded complaint and [draw] all

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reasonable inferences in favor of the plaintiff.”

Id.

The party invoking the Court’s

jurisdiction bears the burden of establishing that the Court has proper jurisdiction of the
case. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). The Court may view any
evidence submitted beyond the jurisdictional allegations within a complaint to determine
whether the Court has subject matter jurisdiction over a claim. See Apex Digital, Inc. v.
Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009).
When a motion to dismiss challenges a plaintiff’s standing, the plaintiff bears the
burden of demonstrating it has: “(1) suffered an injury in fact, (2) that is fairly traceable to
the challenged conduct of the defendant, and (3) that is likely to be redressed by a
favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). “To
establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally
protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not
conjectural or hypothetical.’” Id. at 1548 (quoting Lujan, 504 U.S. at 560).
Under 15 U.S.C. § 1064, “any person who believes that he is or will be damaged
… by the registration of a mark” may seek to cancel the registration of that mark under
certain conditions. Such a damaged entity may seek to cancel a mark’s registration at
any time if the registered mark’s “registration was obtained fraudulently or contrary to the
provisions of [15 U.S.C. §] 1054 … or of subsection (a), (b), or (c) of [15 U.S.C. §] 1052.”
15 U.S.C. § 1064(3). “[I]n the case of a certification mark,” one may also seek to cancel
the registered mark if
the registrant (A) does not control, or is not able legitimately to exercise
control over, the use of such mark, or (B) engages in the production or
marketing of any goods or services to which the certification mark is applied,
or (C) permits the use of the certification mark for purposes other than to
certify, or (D) discriminately refuses to certify or to continue to certify the

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goods or services of any person who maintains the standards or conditions
which such mark certifies.
15 U.S.C. § 1064(5).
While Fleetpride seeks to invalidate the TES 295 Marks, pursuant to 15 U.S.C. §§
1064(3) and 1604(5)(B) & (D) 1, Dkt. No. 47, ¶¶ 95-137, Allison asserts that Fleetpride
lacks standing because it has not sustained the kind of damage necessary to invalidate
a certification mark. Dkt. No. 53 at 2-6. The Court agrees.
Fleetpride must have statutory standing in addition to having constitutional
standing to properly bring a claim against Allison to invalidate the TES 295 Marks under
15 U.S.C. § 1064. Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377,
1386 (2014). In order words, Fleetpride must fall “within the class of plaintiffs whom
Congress has authorized to sue” under 15 U.S.C. § 1064 and must have “a cause of
action under the statute” to bring its claims for invalidation. Id. at 1387. While few courts
have examined the requirements for statutory standing to seek invalidation of certification
marks, those that have done so determined that under 15 U.S.C. § 1064(5), the claimant
must have sought and been refused certification under that mark to meet the statute’s
damage requirement. See Am. Angus Ass’n v. Sysco Corp., 865 F. Supp. 1180, 1182
(W.D.N.C. 1993); Am. Auto. Ass’n v. Nat’l Auto. Ass’n, Inc., 127 U.S.P.Q. 423, 1960 WL

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Under 15 U.S.C. § 1054, certification marks may be registered and entitled to the same
protections as all other trademarks, unless such certification marks are “used so as to
represent falsely that the owner or a user thereof makes or sells the goods or performs
the services on or in connection with which such mark is used.” As such, this condition
illustrates the same requirement as 15 U.S.C. § 1064(5)(B), which prohibits a certification
mark owner from marketing any goods using its certification mark. 15 U.S.C. §
1064(5)(B). Moreover, Fleetpride has not otherwise distinguished its claims under 15
U.S.C. § 1064(3), which incorporates the requirements of 15 U.S.C. § 1054, and its claims
under 15 U.S.C. §1064(5)(B) in any way. Therefore, the Court will analyze Fleetpride’s
claims under 15 U.S.C. §§ 1064(3) and 1064(5)(B) using the same standard.
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7644 at *5 (T.T.A.B. 1960) (“AAA”); see also, 3 J. THOMAS MCCARTHY, MCCARTHY

ON

TRADEMARKS AND UNFAIR COMPETITION § 20:61 (4th ed. 2017) (citing AAA, 1960 WL 7644)
(“Standing to cancel under [the] grounds [set forth in 15 U.S.C. § 1064(5)] exists for
persons who were refused certification after meeting the prescribed standards or
conditions of the certifier.”).
In AAA, the Trademark Trial and Appeal Board (“TTAB”) concluded that 15 U.S.C.
§ 1064’s damage requirement with regard to certification mark challenges contemplates
entities that “have been refused certification by [a certifier] after meeting the prescribed
standards or conditions.” AAA, 1960 WL 7644 at *5. The Board further determined that
damage merely “resulting from the competition that exists between … any two concerns
rendering similar services within the same territory … cannot serve as ground for
cancelation under [15 U.S.C. § 1064]”. Id.
The court in Sysco followed the TTAB’s decision in AAA and concluded that a
defendant that had not sought and been refused a license to use a certification mark lacks
standing to bring a counterclaim to cancel that certification mark’s registration. 865 F.
Supp. at 1181-82. Additionally, the Sysco court rejected the broad “real interest” test
promulgated in Selva & Sons, Inc. v. Nina Footwear, Inc., 705 F.2d 1316, 1325 (Fed. Cir.
1983), in favor of the test set forth in AAA. Sysco, 865 F. Supp. at 1182. The Sysco court
“further note[d] that while an attack on the [certification] mark may give [the d]efendants
leverage in the underlying infringement action, that does not constitute ‘belief in damage’
so as to give [them] standing to challenge the mark.” Id. (citation omitted).
While Fleetpride does not refute that it failed to seek TES 295 certification, it argues
that it still has standing to bring Counterclaims I and II because Allison first sued it for

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infringement. Dkt. No. 56 at 7-8. In support of this position, Fleetpride cites several
cases, including Already, LLC v. Nike, Inc., 568 U.S. 85, 91-92 (2013). Id. at 7. In
Already, the Supreme Court concluded that a defendant in a trademark infringement suit
“had standing to file its counterclaim because [the plaintiff] was allegedly pressing an
invalid trademark to halt [the defendant’s] legitimate business activity.” 568 U.S. at 92.
However, neither Already nor any of the other cases cited by Fleetpride specifically
addresses an entity’s standing to invalidate a certification mark. Therefore, none of these
cases contradict the rule set forth in AAA regarding proper standing to invalidate
certification marks under 15 U.S.C. § 1064.
Because Fleetpride has not been damaged as contemplated by 15 U.S.C. § 1064
by seeking and being refused certification under the TES 295 standard, see AAA, 1960
WL 7644 at *5, it is not within the class authorized to sue to invalidate a certification mark
under this statute. See Lexmark, 134 S. Ct. at 1387. Therefore, Fleetpride lacks statutory
standing to seek invalidation of the TES 295 Marks, and Counterclaims I and II are hereby
DISMISSED.
Just as Fleetpride lacks standing to support Counterclaims I and II seeking
invalidation, Fleetpride also cannot support is affirmative defenses claiming the TES 295
Marks are invalid. Fleetpride cannot prove that it was “damaged” by the TES 295 Marks.
Therefore, Fleetpride cannot prove all of the necessary elements of its affirmative
defenses under 15 U.S.C § 1064.

For this reason, the Court strikes Fleetpride’s

affirmative defenses regarding invalidity, Dkt. No. 47, ¶¶ 74-76, sua sponte. 2

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On May 17, 2017, Fleetpride filed its Motion for Bifurcated or Phased Discovery in order
to conduct discovery relating to invalidity before any discovery regarding infringement and
damages. Dkt. No. 49. Because the Court is dismissing Counterclaims I and II and is
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III. COUNTERCLAIM III: NON-INFRINGEMENT
In Counterclaim III, Fleetpride requests declaratory judgment stating that its
automatic transmission fluid labels do not infringe upon any of Allison’s marks. Dkt. No.
47, ¶¶ 138-142. However, Allison argues that the Court should dismiss Counterclaim III,
pursuant to Rule 12(b)(6), because Fleetpride’s claim for non-infringement is duplicative
of Allison’s affirmative claim against Fleetpride for infringement. Dkt. No. 53 at 6-7.
Under Rule 12(b)(6), the Court must accept as true all well-pleaded factual
allegations and draw all reasonable inferences in favor of the plaintiff. See Esekiel v.
Michel, 66 F.3d 894, 897 (7th Cir. 1995). Documents central to the complaint and referred
to in it, as well as information that is properly the subject of judicial notice may also be
considered. See Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013) (citing Geinosky
v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012) (further citation omitted)).
Under the Supreme Court’s directive in Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007), to survive a defendant’s motion to dismiss for failure to state a claim upon
which relief may be granted, a plaintiff must provide the grounds for its entitlement to relief
with more than mere labels, conclusions, or a formulaic recitation of the elements of a
cause of action. Id. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). The
“allegations must be enough to raise a right to relief above the speculative level.”

Id.

The touchstone is whether the complaint gives the defendant “fair notice of what the …
claim is and the grounds upon which it rests.” Id. (quoting Conley v. Gibson, 355 U.S. 41,

striking Fleetpride’s affirmative defenses relating to invalidity, Fleetpride’s Motion for
Bifurcated or Phased Discovery is DENIED as moot.
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47 (1957)). Legal conclusions or conclusory allegations are insufficient to state a claim
for relief. McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011).
When considering whether a defendant’s product infringes upon a plaintiff’s
intellectual property, the defendant “has a right to know whether [its] product … infringes
any valid claim” in relation to that intellectual property. Kalo Inoculant Co. v. Funk Bros.
Seed Co., 161 F.2d 981, 991 (7th Cir. 1947), rev’d on other grounds, 333 U.S. 127 (1948).
See also, May v. Carriage, Inc., 688 F. Supp. 408, 414 (N.D. Ind 1988). Thus, a defendant
may counterclaim for declaratory judgement as to non-infringement in order to ensure
that all potential issues or claims of infringement between the parties are resolved in a
single action. 10B MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE § 2761 (4th ed.
2017) (citing Kalo, 161 F.2d at 991). However, “[w]here the substantive suit would resolve
the issues raised by the declaratory judgment” counterclaim, dismissal of that
counterclaim is appropriate because, without any further uncertainty or anticipation of
litigation, “the declaratory judgment action serves no useful purpose.” Sarkis’ Café, Inc.
v. Sarks in the Park, LLC, 55 F. Supp. 3d 1034, 1038 (N.D. Ill. 2014) (internal quotations
omitted).
Although Allison asserts that Fleetpride’s claim for non-infringement is a “mere
duplicate” of its infringement claim, Dkt. No. 53 at 6, Counterclaim III is not duplicative of
Allison’s affirmative claim for infringement. In its Second Amended Complaint, Allison
indicates that it first learned of Fleetpride’s alleged infringement in May 2015, when it
“became aware that Fleetpride was marketing and selling transmission oil under the name
PRIMATECH TES 295 and prominently using various versions of [the Allison Standard
Character Marks and the TES 295 Standard Character Mark] within its product numbers

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and its advertising.” Dkt. No. 43, ¶ 20. Allison notes that Fleetpride’s counsel assured
Allison that Fleetpride would change its product labeling to avoid using Allison’s marks,
but Allison alleges that Fleetpride failed to make sure changes and instead continued to
use Allison’s marks on its product advertising and packaging. Id. at ¶¶ 22-27. Allison
further alleges that Fleetpride’s continued prominent use of the Allison Standard
Character Marks and the TES 295 Standard Character Mark “in its product numbers as
displayed on Fleetpride’s product packaging, product catalogs, advertising and marketing
materials,” as well as “Fleetpride’s statement that its products are ‘Suitable for Use in
Allison Transmissions for Extended Drain,’” constitutes infringement of Allison’s marks.
Id. at ¶¶ 29-36. To demonstrate Fleetpride’s infringement, Allison attached photographs
of the Primatech Label as “one example of Fleetpride’s infringing activities.” Id. at 29, Ex.
C.
However, in support of Counterclaim III, Fleetpride discussed and attached the
OTR Label, which it “currently uses to identify and sell its private label automatic
transmission fluids.” Dkt. No. 47, ¶ 138; Ex. 8. While the OTR Label states that it is
“suitable for use in Allison Transmissions for extended drain,” just like the Primatech
Label, Dkt. No. 43, Ex. C; Dkt. No. 47, Ex. 8, there are key distinctions between these two
labels. First, unlike the Primatech Label, the product number on the OTR Label is
“PTATF-SSP-G” and does not incorporate the words “TES 295.” Dkt. No. 47, Ex. 8. The
OTR Label also includes a disclaimer, stating that the product is “suitable for use in
applications where the OEM specifies a fluid providing performance capability
comparable to Allison TES 295® specification” but that it “is not certified by Allison

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Transmission under the TES 295® specification.” Id. No such disclaimer is found on the
Primatech Label attached to Allison’s Second Amended Complaint. Dkt. No. 43, Ex. C.
In light of these differences between the Primatech Label presented by Allison and
the OTR Label provided by Fleetpride, the Court cannot conclude that Counterclaim III is
merely duplicative of Allison’s claim of infringement. Although Allison states that the
Primatech Label is only “one example” of Fleetpride’s infringing behavior, Dkt. No. 43, ¶
29, it does not reference any other instances in which it believed Fleetpride infringed upon
its marks.

Allison also specifically alleges that Fleetpride’s product numbers that

incorporated the “TES 295” characters infringed on their marks, id., but the OTR Label’s
product numbers do not include such characters. Dkt. No. 47, Ex. 8. Therefore, while
one of these labels may be found to infringe upon one or more of Allison’s marks, it is
possible that the other label could be non-infringing. Without the opportunity to address
both of these potentially infringing product labels, Fleetpride could potentially be left open
to future litigation regarding its use of the same trademarks at issue here. As such,
Counterclaim III serves a useful purpose by addressing questions of infringement not
clearly addressed by Allison’s affirmative claim for infringement. Therefore, the Court
denies Allison’s motion to dismiss as it relates to Counterclaim III.

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IV. CONCLUSION
For the reasons stated herein, the Court GRANTS in part and DENIES in part
Plaintiff Allison Transmission, Inc.’ Motion to Dismiss Fleetpride’s Counterclaims. Dkt.
No. 52. Counterclaims I and II are hereby DISMISSED. The Court also STRIKES
Fleetpride’s affirmative defenses, Dkt. No. 47, ¶¶ 74-76, regarding invalidity of the TES
296 mark under 15 U.S.C. § 1064, sua sponte. Furthermore, Fleetpride’s Motion for
Bifurcated or Phase Discovery, Dkt. No. 49, is DENIED as moot.
IT IS SO ORDERED this 14th day of July, 2017.

________________________________
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana

Distribution attached.

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Distribution:
David A. W. Wong
BARNES & THORNBURG LLP (Indianapolis)
[e-mail]
Deborah Pollack-Milgate
BARNES & THORNBURG LLP (Indianapolis)
[e-mail]
Caitlin R. Byczko
BARNES & THORNBURG LLP (Indianapolis)
[e-mail]
Linda R. Stahl
CARTER SCHOLER PLLC
[e-mail]
Stacey Cho Hernandez
CARTER SCHOLER PLLC
[e-mail]
Donald M. Snemis
ICE MILLER LLP
[e-mail]
Joshua J. Bennett
LAW OFFICES OF CARTER SCHOLER ARNOTT & MOCKLER, PLLC
[e-mail]
Crystal Spivey Wildeman
WOODEN & MCLAUGHLIN LLP (Evansville)
[e-mail]

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