Project Consulting Services, Inc. v. NVI, L.L.C. et al

Filing 52

ORDER AND REASONS DENYING 45 Motion to Strike, 47 MOTION to Dismiss for Failure to State a Claim. Signed by Judge Sarah S. Vance on 4/8/2016. (my)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PROJECT CONSULTING
SERVICES, INC.

CIVIL ACTION

VERSUS

NO: 15-1652

NVI, LLC and PIPELINE SAFETY,
LLC d/b/a PIPELINE SAFETY AND
COMPLIANCE

SECTION: R

ORDER AND REASONS
Plaintiff Project Consulting Services, LLC ("Project Consulting") moves
the Court to dismiss defendant Pipeline Safety, LLC's ("Pipeline Safety")
counterclaim under Federal Rule of Civil Procedure 12(b)(6).1

Project

Consulting also moves to strike affirmative defenses raised by Pipeline Safety
and defendant NVI, LLC under Federal Rule of Civil Procedure 12(f).2 For the
following reasons, the Court denies both motions.

I.

BACKGROUND
This is a trademark infringement and unfair competition case. Plaintiff

Project Consulting is an engineering firm that provides design engineering,

1

R. Doc. 47.

2

R. Doc. 45.

project engineering, construction management, inspection, traceability, and
records management services for companies in the oil and gas industry.3 Since
1992, Project Consulting has delivered its goods and services under the marks
PROJECT CONSULTING SERVICES and PCS.4 Project Consulting owns nine
federal trademark registrations protecting its PROJECT CONSULTING
SERVICES and PCS-related marks (the "PCS Marks").5
Defendant NVI provides non-destructive testing, inspection, stress
relieving, mechanical integrity, and project management services.6 According
to Project Consulting, NVI established defendant Pipeline Safety in or around
2010 to provide traceability and records management services.7 After its
formation, Pipeline Safety allegedly began trading under the name "Pipeline
Safety and Compliance."8 According to Project Consulting, customers and
vendors inevitably shorten this name to "PSC"--an abbreviation that, Project
Consulting contends, is confusingly similar to Project Consulting's PCS

3

R. Doc. 37 at 2.

4

Id. at 3.

5

Id. at 3-6.

6

Id. at 6; see also R. Doc. 39 at 4 (NVI, LLC's answer, admitting plaintiff's
allegation).
7

Id. at 7.

8

Id.
2

Marks.9 Project Consulting alleges that NVI and Pipeline Safety adopted the
"Pipeline Safety and Compliance" or "PSC" name in an intentional effort to
trade on Project Consulting's goodwill in the engineering and construction
industries.10 On April 17, 2015, Project Consulting sent defendants a cease and
desist letter, but defendants continued their alleged misconduct.11
On May 18, 2015, Project Consulting filed this lawsuit against NVI and
Pipeline Safety.12 In its Second Amended Complaint, Project Consulting
alleges trademark infringement and false designation of origin under the
Lanham Act.13 NVI and Pipeline Safety each filed an answer, in which each
defendant asserts five affirmative defenses.14 Pipeline Safety also filed a
counterclaim seeking cancellation of Project Consulting's federal registration
of four of the PCS Marks.15 According to Pipeline Safety, the PCS Marks are
not entitled to trademark protection because they are merely descriptive of

9

Id.

10

Id. at 7-8.

11

Id. at 8.

12

R. Doc. 1.

13

R. Doc. 37.

14

R. Docs. 38, 39.

15

R. Doc. 44.
3

Project Consulting's goods and services and have not attained secondary
meaning.
Project Consulting moves to dismiss Pipeline Safety's counterclaim
under Federal Rule of Civil Procedure 12(b)(6).16 Project Consulting also
moves to strike three of defendants' affirmative defenses on the grounds that
they are inadequately pleaded and inject redundant and immaterial issues.17

II.

LEGAL STANDARD
A.

Motion to Dismiss

To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead
enough facts to "state a claim to relief that is plausible on its face." Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A claim is facially plausible "when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged." Id. A court must accept all
well-pleaded facts as true and must draw all reasonable inferences in favor of
the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239 (5th Cir.

16

R. Doc. 47.

17

R. Doc. 45.
4

2009). But the Court is not bound to accept as true legal conclusions couched
as factual allegations. Iqbal, 556 U.S. at 678.
A legally sufficient complaint need not contain detailed factual
allegations, but it must go beyond labels, legal conclusions, or formulaic
recitations of the elements of a cause of action. Id. In other words, the face of
the complaint must contain enough factual matter to raise a reasonable
expectation that discovery will reveal evidence of each element of the plaintiff's
claim. Lormand, 565 F.3d at 257. If there are insufficient factual allegations
to raise a right to relief above the speculative level, or if it is apparent from the
face of the complaint that there is an insuperable bar to relief, the claim must
be dismissed. Twombly, 550 U.S. at 555.
B.

Motion to Strike

Federal Rule of Civil Procedure 12(f) allows the court to strike "from any
pleading any insufficient defense or any redundant, immaterial, impertinent,
or scandalous matter." Fed. R. Civ. P. 12(f). A motion to strike under Rule
12(f) "is a drastic remedy to be resorted to only when required for the purposes
of justice." Augustus v. Bd. of Pub. Instruction of Escambia Cnty., Fla., 306
F.2d 862, 868 (5th Cir. 1962); see also Kaiser Aluminum & Chem. Sales, Inc.
v. Avondale Shipyards, Inc., 677 F.2d 1045, 1057 (5th Cir. 1982) ("[M]otions
to strike a defense are generally disfavored."); Synergy Mgmt., LLC v. Lego
5

Juris A/S, No. 07–5892, 2008 WL 4758634, at *1 (E.D. La. Oct. 24, 2008)
("[M]otions to strike made under Rule 12(f) are viewed with disfavor by the
federal courts, and are infrequently granted."). Even when motions to strike
are well-founded, they are not to be granted "in the absence of a showing of
prejudice to the moving party." Abene v. Jaybar, 802 F. Supp. 2d 716, 723
(E.D. La.2011).

III. DISCUSSION
A.

Project Consulting's Motion to Dismiss Pipeline Safety's
Counterclaim

In its counterclaim, Pipeline Safety seeks cancellation of Project
Consulting's registration of four of the PCS Marks. According to Pipeline
Safety, the challenged PCS Marks are "descriptive" marks that, having failed
to acquire secondary meaning, are not entitled to trademark protection.18
Project Consulting moves to the dismiss for failure to state a claim.
In any lawsuit involving a registered trademark, a district court has the
power to cancel the registration of marks that are not legally protectable. 15
U.S.C. § 1119 ("In any action involving a registered mark the court may . . .
order the cancellation of registrations. . . ."); Nola Spice Designs, L.L.C. v.

18

R. Doc. 44 at 2-3.
6

Haydel Enterps., Inc., 783 F.3d 527, 537 (5th Cir. 2015). To be protectable, "a
mark must be capable of distinguishing the applicant's goods from those of
others, or stated another way, a mark must be distinctive." Test Masters Educ.
Servs., Inc. v. Singh, 428 F.3d 559, 566 (5th Cir. 2005) (quoting Sugar
Busters, LLC v. Brennan, 177 F.3d 258, 267–68 (5th Cir. 1999)). A mark is
inherently distinctive "if its intrinsic nature serves to identify a particular
source" of a product. Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205,
210 (2000). In the context of word marks, marks that are "arbitrary,"
("Camel" cigarettes), "fanciful" ("Kodak" film), or "suggestive" ("Tide" laundry
detergent) are inherently distinctive and entitled to protection. Test Masters,
428 F.3d at 566 (citing Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763,
768 (1992)).
"Descriptive" marks, by contrast, are not inherently distinctive. Nola
Spice, 783 F.3d at 537. A descriptive mark "identifies a characteristic or
quality of an article or service, such as its color, odor, function, dimensions, or
ingredients." Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 241
(5th Cir. 2010) (quoting Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698
F.2d 786, 790 (5th Cir. 1983), abrogated on other grounds, KP Permanent
Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004)). As the Fifth
Circuit has explained, "[e]xamples of descriptive marks would include 'Alo'
7

with reference to products containing gel of the aloe vera . . . and 'Vision
Center' in reference to a business offering optical goods and services."
Zatarains, 698 F.2d at 790. Because descriptive marks do not inherently
identify a product's source, they are protectable as trademarks only if they
have acquired "secondary meaning." Test Masters, 428 F.3d at 566. A
descriptive mark acquires secondary meaning "when, in the minds of the
public, the primary significance of the mark is to identify the source of the
product rather than the product itself." Nola Spice, 783 F.3d at 543 ; see also
Zatarains, 698 F.2d at 795. While Project Consulting's registration of the
challenged marks with the Patent and Trade Office constitutes prima facie
evidence of their validity, Pipeline Services may rebut this presumption by
establishing that the marks are not inherently distinctive. Amazing Spaces,
608 F.3d at 237.
In its counterclaim, Pipeline Services alleges that Project Consulting's
registration of four of the PCS Marks should be cancelled because the marks
are descriptive marks that have not acquired secondary meaning. Project
Consulting raises two arguments for dismissal. First, Project Consulting
argues that Pipeline Safety has failed to allege sufficient facts to support

8

cancellation of the challenged marks.19 "Threadbare recitals of a cause of
action's elements" are insufficient to withstand a motion to dismiss. Iqbal, 556
U.S. at 663. Pipeline Safety, however, rests its claim on allegations of fact
about the words of the PCS marks and the products and services to which the
marks are applied. It alleges, for instance, that Project Consulting provides
goods and services under its marks--engineering and project services, data
collection, construction management software, etc.--that are properly
characterized as "project consulting services."20 It further alleges that the
marks have not attained secondary meaning because purchasers do not
associate the marks with Project Consulting alone.21 Based on these factual
allegations, Pipeline Safety has sufficiently pleaded a claim for cancellation of
Project Consulting's registration of the challenged PCS Marks.22 See Aureflam
19

R. Doc. 47-1 at 8-10.

20

R. Doc. 44 at 2.

21

Id. at 3.

22

This holds true for the PCS Marks that employ the words "project consulting
services," as well as the marks that use the letters "PCS." In its counterclaim, Pipeline
Safety alleges that "PCS" is "simply the acronym for project consulting services . . . [and]
merely describe the characteristics and types of goods and services provided under the
marks. . . ." R. Doc. 44 at 3. Taking this allegation as true, and drawing all reasonable
inferences in Pipeline Safety's favor, the counterclaim sufficiently pleads a claim for
cancellation of the marks containing an abbreviation of the allegedly descriptive term.
See Society of Fin. Examiners v. Nat'l Ass'n of Certified Fraud Examiners Inc., 41 F.3d
223, 227 n. 5 (5th Cir. 1995) ("[I]f the full name is generic, an abbreviation is treated
similarly."); see also J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition § 7:11 (4th ed.) ("If a series of letters is merely a recognizable abbreviation
9

Corp. v. Pho Hoa Phat I, Inc., 375 F. Supp. 2d 950, 953 (N.D. Cal. 2005)
(denying motion to dismiss trademark cancellation claim when claimant
provided factual allegations concerning the meaning of the allegedly generic
term).
Project Consulting's second argument, which it also raises in its motion
to strike, is that Pipeline Safety made a judicial admission in an earlier brief
that precludes its argument that the PCS Marks are descriptive in nature.23 In
an earlier version of its counterclaim, Pipeline Safety alleged that the
challenged PCS Marks were either descriptive or generic. After Project
Consulting moved to dismiss, Pipeline Safety argued in opposition that
"Project Consulting Services' marks . . . tell consumers nothing of who Project
Consulting Services is or even what it does."24
Contrary to Project Consulting's assertion, this statement does not
constitute a judicial admission that the PCS marks are not descriptive. To
qualify as a judicial admission, a statement must be "deliberate, clear, and
unequivocal." Heritage Bank v. Redcom Laboratories, Inc., 250 F.3d 319, 329

for a descriptive or generic term, the abbreviation is also classified as descriptive or
generic.").
23

R. Doc. 47-1 at 6.

24

R. Doc. 19 at 1.
10

(5th Cir. 2001). The statement in Pipeline Safety's brief does not meet this
standard.

Although Pipeline Safety asserted that the PCS Marks "tell

consumers nothing" about Project Consulting's services, it argued in the same
brief that the PCS Marks are descriptive, lacking in secondary meaning, and
not entitled to trademark protection.25 In addition, Pipeline Safety has since
amended its counterclaim. Although it has removed its allegation that the PCS
Marks are generic, Pipeline Safety continues to claim that the challenged
marks are merely descriptive of Project Consulting's goods and services.
Under these circumstances, Pipeline Safety's claim that PCS Marks "tell
consumers nothing" does not constitute an "deliberate, clear, and
unequivocal" admission against the position that Pipeline Safety has taken
throughout this lawsuit--that the PCS Marks are descriptive and not entitled
to trademark protection. Id.; see also United States v. Chavez-Hernandez, 671
F.3d 494, 501 (5th Cir. 2012) ("[F]or a statement of counsel to qualify as a
judicial admission it must be made intentionally as a waiver, releasing the
opponent from proof of fact."); Mar. Madness Athletic Ass'n, L.L.C. v. Netfire,
Inc., 310 F. Supp. 2d 786, 811 (N.D. Tex. 2003), judgment entered, No.
3:00-CV-0398-R, 2003 WL 22173299 (N.D. Tex. Sept. 18, 2003), and aff'd
25

Id. at 6 (arguing that Pipeline Services has adequately alleged that Project
Consulting's marks are either "generic or descriptive and lacking in secondary
meaning").
11

sub nom. 120 F. App'x 540 (5th Cir. 2005) (refusing to treat statement that
"can be construed to mean different things" as a conclusive judicial
admission).
Moreover, it is "well-established that trial judges are given broad
discretion to relieve parties from the consequences of judicial admissions in
appropriate cases." Kiln Underwriting Ltd. v. Jesuit High Sch. of New
Orleans, No. CIV.A. 06-4350, 2008 WL 4724390, at *12 (E.D. La. Oct. 24,
2008) (quoting Electric Mobility Corp. v. Bourns Sensors/Controls, Inc., 87
F. Supp. 2d 394, 406 (D.N.J. 2000)). This is such a case. Even if Pipeline
Safety's statement could be interpreted as a judicial admission, the statement
appeared in a brief that Pipeline Safety filed at an early stage of this litigation
and that is now moot because the parties amended their pleadings. Its earlier
statement notwithstanding, Pipeline Safety's live pleadings plausibly allege
that the challenged PCS Marks are descriptive. And Project Consulting has not
shown that it was prejudiced by Pipeline Safety's earlier assertion. Thus, the
Court finds it inappropriate to resolve an important issue of trademark validity
on the basis of a single sentence in an opposition brief. See id. ("Litigation is
not a game of 'gotcha,' and the Court declines to resolve a hotly contested
coverage issued based on an honest mistake."). The Court therefore finds that
Pipeline Safety's claim that the challenged PCS Marks are descriptive is not
12

barred by any supposed admission of non-descriptiveness.

Project

Consulting's motion to dismiss Pipeline Safety's counterclaim is denied.
B.

Project Consulting's Motion to Strike Affirmative
Defenses

Project Consulting also moves to strike certain affirmative defenses from
answers filed by defendants Pipeline Safety and NVI. Specifically, Project
Consulting asks the Court to strike the second, third, and fifth affirmative
defenses pleaded by each defendant. In both defendants' answers, the second
affirmative defense is that four of Project Consulting's PCS Marks are not
protectable because they are descriptive marks that have not acquired
secondary meaning. The allegations in the answers are nearly identical to the
allegations in Pipeline Safety's counterclaim--as are Project Consulting's
arguments for why the defenses are insufficient.26 Project Consulting's
arguments therefore fail for the reasons discussed above, and its motion to
strike the second affirmative defense is denied. Thus, the only remaining issue
is whether the Court should strike each defendant's third affirmative defense
(no likelihood of confusion) and/or fifth affirmative defense (no entitlement
to Pipeline Safety's and NVI's profits).

26

Compare R. Doc. 44 at 2-3 with R. Doc. 38 at 10-11; R. Doc. 39 at 39 at 9.
13

Although Federal Rule of Civil Procedure 12(f) allows the Court to strike
affirmative defenses, such motions are disfavored and should not be granted
"in the absence of a showing of prejudice to the moving party." Abene, 802 F.
Supp. 2d at 723 (citing 5C Charles Alan Wright & Arthur R. Miller, Federal
Practice & Procedure § 1381 (3d ed. 2004)). Project Consulting argues that
the third and fifth affirmative defenses do not actually assert defenses but,
rather, repeat defendants' denials of the allegations in Project Consulting's
complaint. Whatever the merits of this argument, Project Consulting has not
shown that it would be prejudiced by denial of its motion to strike the
challenged defenses. Project Consulting vaguely suggests that if the defenses
are not stricken, it will be forced to engage in "unnecessary discovery."27 But
according to Project Consulting's argument--that the defenses are redundant
denials of the allegations in its complaint--the challenged portions of
defendants' answers go to elements of Project Consulting's own claims, on
which the parties are already required to engage in discovery. Absent some
plausible showing of prejudice, Project Consulting's motion to strike
affirmative defenses three and five must be denied. See id. (denying motion
to strike defenses because plaintiff failed to show prejudice).

27

R. Doc. 45-1 at 11, 12.
14

IV.

CONCLUSION
For the foregoing reasons, Project Consulting's motion to dismiss

Pipeline Service's counterclaim is DENIED. Project Consulting's motion to
strike defendants' affirmative defenses is DENIED.

8th
New Orleans, Louisiana, this ___ day of April, 2016.

_______________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

15