Military Order of the Purple Heart Service Foundation, Inc. v. Others First, Inc.
Filing
35
MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 12/28/12. (bmhs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MILITARY ORDER OF THE PURPLE
HEART SERVICE FOUNDATION, INC.,
:
:
Plaintiff/Counter Defendant,
:
v.
:
OTHERS FIRST, INC.,
:
Civil Action No. GLR-12-1483
Defendant/Counter Claimant,
:
and
:
CHARITY FUNDING, INC.,
:
Defendant.
:
MEMORANDUM OPINION
THIS
MATTER
is
before
the
Court
on
Plaintiff/Counter
Defendant Military Order of the Purple Heart Service Foundation,
Inc.’s (“Service Foundation”) Motion to Dismiss Defendant/Counter
Claimant Others First, Inc.’s (“Others First”) Counterclaim Counts
IV through VI.
(ECF No. 28).
The issues have been fully briefed
and the Motion is ripe for disposition.
See Local Rule 105.6 (D.Md. 2011).
No hearing is necessary.
For the reasons that follow,
the Motion to Dismiss will be granted.
Counterclaim Counts IV and
V will be dismissed without prejudice.
Counterclaim Count VI will
be voluntarily dismissed.
BACKGROUND1
I.
Military Order of the Purple Heart of the United States of
America,
Inc.
(“Military
Order”)
is
a
federally
chartered
membership organization of Purple Heart medal recipients.
U.S.C. §§ 140501, 140503 (2012).
See 36
The Service Foundation is the
exclusive fundraiser for the Military Order, and owner of United
States Trademark Registration No. 4,015,788 for the Purple Heart
mark.
The
Service
Foundation
uses
the
mark
in
its
various
charitable fundraising activities, including the Purple Heart Car
Donation Program.
Others
First,
a
501(c)(3)
non-profit
charitable
organization, also operates a car donation program for military
veterans named Cars Helping Veterans.
for
the
benefit
of
Purple Heart medal.
all
veterans,
This program raises funds
including
recipients
of
the
To facilitate this campaign, Others First’s
website indicates that the car donations benefit “Purple Heart
Veterans,” and utilizes depictions of the Purple Heart medal.
Prior
to
this
action,
the
Service
Foundation
instructed
Others First to cease and desist its use of the Purple Heart mark.
On May 16, 2012, the Service Foundation commenced the pending
action against Others First.2
1
On August 27, 2012, the Service
Unless otherwise noted, the facts are taken from the Service
Foundation’s First Amended Complaint (ECF No. 14), and Others
First’s Answer and Counterclaim to Plaintiff’s First Amended
Complaint (ECF No. 22).
2
Foundation filed an Amended Complaint, which adds Charity Funding
as a Defendant and alleges, inter alia, trademark infringement.
On September 20, 2012, Others First filed an Answer and six-count
Counterclaim
seeking
cancellation
of
United
States
Trademark
Registration No. 4,015,788 on various bases.
On
October
11,
2012,
the
Service
Foundation
moved,
under
Federal Rule of Civil Procedure 12(b)(6), to dismiss Counterclaim
Counts IV through VI.3
Others First filed a Response on October
25, 2012, and the Service Foundation filed a Reply on November 8,
2012.
(See ECF Nos. 33-34).
II.
A.
DISCUSSION
Standard of Review
To survive a Federal Rule of Civil Procedure 12(b)(6) motion,
the
complaint
must
allege
facts
that,
when
accepted
“state a claim to relief that is plausible on its face.”
as
true,
Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly,
omitted).
2
550
U.S.
544,
570
(2007))
(internal
quotation
marks
A claim is plausible on its face when “the plaintiff
The Service Foundation also filed a complaint with Google to
enforce its trademark of the Purple Heart term.
As a result,
Google removed Cars Helping Veterans from its keyword advertising
and metatags, and banned Others First from using the term and
depiction of the medal.
3
Counterclaim Count VI sought cancellation of the Service
Foundation’s pending trademark application, filed on June 11, 2012
(Serial No. 85,648,473). Others First voluntarily dismissed this
Count, however, due to a preliminary denial of the application on
September 27, 2012.
(See Def. – Countercl. Pl.’s [“Def.”] Opp’n
to Mot. to Dismiss at 1 n. 1, ECF No. 33).
3
pleads
factual
content
that
reasonable
inference
that
misconduct
alleged.”
Id.
allows
the
the
court
defendant
(citing
is
Twombly,
to
draw
the
for
the
liable
550
U.S.
at
556).
Legal conclusions or conclusory statements do not suffice and are
not entitled to the assumption of truth.
U.S. at 555).
Id. (citing Twombly, 550
Thus, the Court “must determine whether it is
plausible that the factual allegations in the complaint are enough
to raise a right to relief above the speculative level.”
Monroe
v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir. 2009)
(quoting
Andrew
v.
Clark,
561
F.3d
261,
266
(4th
Cir.
2009))
(internal quotation marks omitted).
In determining whether to dismiss, the Court must examine the
complaint as a whole, consider the factual allegations in the
complaint as true, and construe the factual allegations in the
light most favorable to the plaintiff.
Lambeth v. Bd. of Comm'rs
of Davidson Cnty., 407 F.3d 266, 268 (4th Cir. 2005); Albright v.
Oliver, 510 U.S. 266, 268 (1994).
Moreover, Others First’s allegation of fraud is subject to a
heightened pleading standard under Federal Rule of Civil Procedure
9(b), which requires the circumstances constituting fraud to be
pled
“with
factual
particularity.”
allegations
that
Specifically,
demonstrate
Rule
“the
9(b)
time,
requires
place,
and
contents of the false representations, as well as the identity of
the
person
making
the
misrepresentation
4
and
what
he
obtained
thereby.”
Harrison v. Westinghouse Savannah River Co., 176 F.3d
776, 784 (4th Cir. 1999) (internal quotation marks and citation
omitted).
alleged
Although Rule 9(b) permits knowledge and intent to be
generally,
the
pleadings
must
include
“sufficient
underlying facts from which a court may reasonably infer that a
party acted with the requisite state of mind.”
Exergen Corp. v.
Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009).
B.
Analysis
The Counterclaim Counts subject to the pending Motion seek
the
cancellation
of
the
Service
Foundation’s
United
States
Trademark Registration No. 4,015,788 on the bases of fraudulent
procurement (Count IV) and violation of the Sherman Act § 2 (Count
V).
Both Counts will be dismissed without prejudice.
1.
Fraudulent Procurement (Count IV)
In Count IV, Others First alleges that the Service Foundation
committed
fraud
before
the
United
States
Patent
and
Trademark
Office (“PTO”) when it applied to register the Purple Heart mark.
Specifically,
made
a
Others
First
fraudulent
alleges
that
misrepresentation
the
in
Service
its
Foundation
registration
application by declaring that no other person or entity had a
right to use the mark.
“[A] trademark is obtained fraudulently .
. . only if the applicant or registrant knowingly makes a false,
material
representation
with
the
intent
to
deceive
In re Bose Corp., 580 F.3d 1240, 1245 (Fed. Cir. 2009).
5
the
PTO.”
To survive a motion to dismiss of this Count, Others First must
establish that:
(1) there was in fact another use of the same or a
confusingly similar mark at the time the oath was signed;
(2) the other user had legal rights superior to [the
Service Foundation’s]; (3) [the Service Foundation] knew
that the other user had [superior rights in the mark];
and that (4) [the Service Foundation], in failing to
disclose these facts to the [PTO], intended to procure a
registration to which it was not entitled.
Intellimedia
Sports,
Inc.
v.
Intellimedia
Corp.,
43
U.S.P.Q.2d
1203, 1206 (T.T.A.B. 1997).
The Service Foundation avers that Others First failed to meet
the Rule 9(b) pleading standard because Others First failed to
allege
sufficient
underlying
facts
to
support
a
reasonable
inference that the Service Foundation acted with the requisite
state of mind.
(Pl. – Counter Def.’s [“Pl.”] Mot. to Dismiss at
4, ECF No. 29).
Namely, the Service Foundation avers that Others
First
show
failed
Foundation’s
to
knowledge
facts
of
sufficient
the
to
statement’s
support
the
falsity,
Service
intent
to
deceive the PTO, belief that it had deceived the PTO, or disbelief
in the statement made in the declaration.
(Id.)
Others First
counters that this Count was pled with sufficient particularity.
The Court finds that Other First’s allegations of fraudulent
procurement fail to meet the Rule 9(b) particularity standard.
a
preliminary
matter,
Others
First
does
not
allege
As
anything
related to superior rights, as required by element two above.
Moreover, each of the allegations related to knowledge and intent
6
are
conclusory,
application,
the
merely
stating
Service
that,
Foundation
had
at
the
a
time
“willful
of
the
intent
to
deceive” the PTO, and that the declaration was “knowingly false”
because the Service Foundation “had knowledge that other third
parties and charitable organizations currently use and have used
the
term
‘Purple
fundraising[.]”
Heart’
in
connection
with
charitable
(Def.’s Countercl. ¶¶ 51-52).
Although Rule 9(b) permits knowledge and intent to be alleged
generally, Others First is still required to assert underlying
facts that permit the Court to infer the requisite state of mind.
Exergen Corp., 575 F.3d at 1327.
As previously stated, there are
no factual allegations in this Count that the Service Foundation
believed a third party had superior rights in the mark or that it
had no reasonable basis to believe that no other person or entity
had a right to use the mark.
U.S.P.Q.2d at 1206.
that
would
See Intellimedia Sports, Inc., 43
Others First also fails to allege any facts
illustrate
how
the
Service
Foundation
allegedly
acquired this knowledge of third party mark usage.
As
a
result,
the
Service
Foundation’s
Counterclaim Count IV is granted.
prejudice.
7
Motion
to
Dismiss
This Count is dismissed without
2.
Violation of the Sherman Act § 2 (Count V)
In
Count
Others
“misuse
Foundation’s
V,
First
of
the
alleges
trademark[],
that
the
acts
Service
of
unfair
competition, and anticompetitive behavior” constitute a violation
of the Sherman Act § 2.
(Def.’s Countercl. ¶ 57).
Section 2 prohibits monopolization and attempts to monopolize
the
relevant
market.
15
U.S.C.
§
2
(2012).
To
state
a
monopolization claim, a plaintiff must show “(1) possession of
monopoly power in the relevant market, and (2) willful maintenance
of that power.”
E.I. du Pont de Nemours & Co. v. Kolon Indust.,
Inc.,
435,
637
F.3d
Moreover,
to
plaintiff
must
conduct;
(2)
state
450
a
(4th
claim
for
demonstrate:
with
specific
Cir.
2011)
attempted
“(1)
the
intent
to
dangerous probability of success.”
use
(citation
omitted).
monopolization,
of
a
anticompetitive
monopolize;
and
(3)
a
Id. at 441; see also Spectrum
Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993).
The
Service
Foundation
argues
that
Others
First
fails
to
state a monopolization claim in Count V because it failed (1) to
define a relevant product market, and (2) to establish that the
Service Foundation has monopoly power.
The Court will address
each of these arguments in turn.
a.
As
a
Relevant Product Market
threshold
matter,
in
alleging
monopolization
or
attempted monopolization under Section 2, Others First must define
8
the relevant market.
this
definition,
Kolon Indust., 637 F.3d at 441.
it
must
establish
the
relevant
geographic market subject to monopolization.
To complete
product
and
Id. (citing Consul,
Ltd. v. Transco Energy Co., 805 F.2d 490, 493 (4th Cir. 1986); RCM
Supply Co. v. Hunter Douglas, Inc., 686 F.2d 1074, 1076 (4th Cir.
1982)).
The parties disagree on whether Others First properly
alleged a relevant product market.
A
relevant
product
interchangeability
of
market
use
is
or
the
defined
as
“the
cross-elasticity
between the product itself and substitutes for it.”
reasonable
of
demand
Brown Shoe
Co. v. United States, 370 U.S. 294, 325 (1962); see also United
States v. E.I. du Pont de Nemours & Co. (“du Pont”), 351 U.S. 377,
394-95
(1956).
In
other
words,
“the
question
is
whether
two
products can be used for the same purpose, and, if so, whether and
to what extent purchasers are willing to substitute one for the
other.”
Smith & Johnson, Inc. v. Hedaya Home Fashions, Inc., No.
96 Civ. 5821 MBM, 1996 WL 737194, at *5 (S.D.N.Y. Dec. 26, 1996).
Although courts “hesitate to grant motions to dismiss for failure
to plead a relevant product market[,]” there is “no absolute rule
against
the
dismissal”
of
such
claims
on
that
basis.
Kolon
Indust., 637 F.3d at 443 (quoting Todd v. Exxon Corp., 275 F.3d
191, 199-200 (2d Cir. 2001)) (citations omitted).
In
relevant
its
Opposition,
product
market
Others
is
First
“charitable
9
avers
that
fundraising
the
alleged
for
wounded
veterans,
including
recipients
of
the
Purple
Heart
medal.”
(Def.’s Opp’n to Mot. to Dismiss [“Def.’s Opp’n”] at 7 n.4).
In
response, the Service Foundation correctly notes that a trademark
does not define its own relevant product market.
See du Pont, 351
U.S. at 393; see also Generac Corp. v. Caterpillar, Inc., 172 F.3d
971, 977 (7th Cir. 1999) (“Product markets are not defined in
terms of one trademark or another; trademarks simply identify the
origin of a product.
ever
argued
gasoline
that
are
Not even the most zealous antitrust hawk has
Amoco
three
gasoline,
separate
Mobil
markets[.]”);
gasoline,
Sheridan
and
v.
Shell
Marathon
Petroleum Co., 530 F.3d 590, 595 (7th Cir. 2008) (“Marathon does
of
course
have
a
‘monopoly’
of
Marathon
franchises.
But
‘Marathon’ is not a market; it is a trademark; and a trademark
does not confer a monopoly; all it does is prevent a competitor
from attaching the same name to his product.”); Queen City Pizza,
Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 438 (3d Cir. 1997)
(“Here, the dough, tomato sauce, and paper cups that meet Domino’s
Pizza,
Inc.
standards
and
are
used
by
Domino’s
stores
are
interchangeable with dough, sauce and cups available from other
suppliers and used by other pizza companies.”).
In
limited
constitute
unavailable.
a
circumstances,
separate
market
however,
when
a
single
reasonable
brand
may
substitutes
are
See Eastman Kodak Co. v. Image Technical Servs.,
Inc., 504 U.S. 451, 481-82 (1992).
10
This circumstance is not pled
in the pending case.
allege
the
absence
To the contrary, Others First fails to
or
presence
of
reasonably
interchangeable
products, or other facts that would indicate why the market should
be limited in the manner alleged in the Counterclaim.
Although Others First attempts to remedy this deficiency by
arguing
that
consumers
making
charitable
donations
“wish
to
contribute directly to veterans who have been awarded medals, such
as the Purple Heart, for exceptional military service” (see Def.’s
Opp’n
at
preference,
7
n.4),
not
the
the
argument
absence
of
merely
identifies
reasonable
a
consumer
alternatives.
See,
e.g., Global Discount Travel Servs., LLC v. Trans World Airlines,
Inc., 960 F.Supp. 701, 704-06 (S.D.N.Y. 1997) (“The plaintiff’s
argument is analogous to a contention that a consumer is ‘locked
into’ Pepsi because she prefers the taste, or NBC because she
prefers
‘Friends,’
‘Seinfeld,’
and
‘E.R.’”).
Moreover,
this
argument supports a market definition that does not necessarily
require the use of the Purple Heart term because the Purple Heart
medal may be reasonably interchangeable with other medals that are
awarded for exceptional military service.
In fact, this argument
presents the Purple Heart medal as one of several options.
In sum, Others First fails to allege facts that, if proven,
would
show
that
“charitable
fundraising
for
wounded
veterans,
including recipients of the Purple Heart medal” is, indeed, the
relevant product market.
For this reason, Count V must fail.
11
See, e.g., Kolon Indust., 637 F.3d at 443 (quoting Todd, 275 F.3d
at 200) (“Cases on which dismissal on the pleadings is appropriate
frequently involve . . . [a] failure even to attempt a plausible
explanation as to why a market should be limited in a particular
way.”);
Smith
&
Johnson,
Inc.,
1996
WL
737194,
at
*6
(“A
plaintiff’s failure to define its market by reference to the rule
of reasonable interchangeability is, standing alone, valid grounds
for dismissal.”).
b.
Monopoly Power
Others First’s failure to properly allege a relevant product
market alone precludes the progression of this Count.
The Court
finds, however, that Others First also fails to show that the
Service Foundation achieved, or had a dangerous probability of
achieving, monopoly power.
Monopoly power occurs when “a product is controlled by one
interest, without substitutes available in the market.”
351 U.S. at 394.
du Pont,
“[P]ossession of monopoly power in the relevant
market” is the first element of a monopolization claim.
Kolon
Indust., 637 F.3d at 450.
Similarly, an attempted monopolization
claim
showing
of
would
gain
requires
a
a
dangerous
monopoly
probability
Foundation
market.
Kolon Indust., 637 F.3d at 441; see also Spectrum Sports,
12
in
the
the
Service
Inc., 506 U.S. at 456.
power
that
relevant
Others
First
alleges
that
the
Service
Foundation:
(1)
demanded that Others First cease use of the Purple Heart term and
medal depiction after registering the mark (Def.’s Countercl. ¶
28), (2) filed complaints with this Court and Google regarding
Others
First’s
deliberately
“asserted
use
of
misrepresented
fraudulently
trademark
mark
the
(id.
¶¶
validity
procured
entities[.]” (id. ¶ 57).
the
the
32-33),
and
and
(3)
of
its
scope
Registration
against
other
Moreover, Others First alleges that, if
registration
is
permitted
to
stand,
several
charitable organizations will be inhibited from raising funds on
behalf
of
Purple
Heart
recipients
and
other
wounded
veterans.
(Id. ¶¶ 36-38, 57).
These allegations, however, fail to show monopolization, or
attempted
monopolization,
because
they
merely
recapitulate
Service Foundation’s enforcement of its current trademark.
the
See,
e.g., du Pont, 351 U.S. at 393 (stating, in dicta, the “power that
.
.
.
automobile
trademarked
or
products
soft-drink
is
not
manufacturers
the
power
that
have
makes
over
an
their
illegal
monopoly.”); Nat’l Bd. for Certification in Occupational Therapy,
Inc. v. Am. Occupational Therapy Ass’n, 24 F.Supp.2d 494, 508
(D.Md. 1998) (“Enforcement of [the] registered trademark . . .
does
not
amount
to
evidence
of
.
.
.
willful
acquisition
of
monopoly power.”); Car-Freshner Corp. v. Auto Aid Mfg. Corp., 438
F.Supp. 82, 88 (N.D.N.Y. 1977) (“The Court merely holds that the
13
plaintiffs’ efforts to register and protect the trademark in issue
did not constitute an unlawful attempt to monopolize in violation
of
15
U.S.C.
§
2.”).
Therefore,
the
alleged
trademark
enforcement, absent more, does not illustrate that the Service
Foundation achieved, or had a dangerous probability of achieving,
monopoly power.
As a result, the Service Foundation’s Motion to Dismiss Count
V is granted.
This Count is dismissed without prejudice.
III. CONCLUSION
For
the
reasons
stated
GRANTED.
(ECF No. 28).
DISMISSED
without
the
Motion
to
Dismiss
is
Counterclaim Counts IV and V are hereby
prejudice.
VOLUNTARILY DISMISSED.
above,
Counterclaim
Count
VI
is
hereby
A separate Order follows.
Entered this 28th day of December, 2012
/s/
____________________________
George L. Russell, III
United States District Judge
14
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