Leapers, Inc. v. SMTS, LLC et al

Filing 26

OPINION AND ORDER granting in part and denying in part 15 Motion to Dismiss; granting in part and denying in part 20 Amended Motion to Dismiss, Dismissing Count III of the Complaint with prejudice and converting the Motion Hearing to a Status Conference on 10/7/2014 at 2:00 pm . Signed by District Judge Robert H. Cleland. (LWag)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

LEAPERS, INC.,
Plaintiff,
Case No. 14-CV-12290

v.
SMTS, LCC d/b/a Tuff zone, TRARMS, INC.,
and SUN OPTICS USA,
Defendants.
/

OPINION AND ORDER DENYING IN PART, AND
GRANTING IN PART DEFENDANTS’ MOTIONS TO DISMISS
Pending before the court are a Joint Motion to Dismiss, filed by Defendants
SMTC, LLC (“SMTC”) and Trarms, Inc. (“Trarms”) (Dkt. # 15) and an Amended Motion
to Dismiss filed by Defendant Sun Optics USA (“Sun Optics”) (Dkt. # 20). Having
reviewed the briefs, the court concludes a hearing is unnecessary. See E.D. Mich. LR
7.1(f)(2). For the reasons stated below, the court will grant the motions in part and deny
the motions in part.
I. BACKGROUND
Plaintiff Leapers, Inc. (“Leapers”) is “in the business of supplying shooting,
hunting and outdoor gear.” (Compl. ¶ 15, Dkt. # 1.) Leapers asserts that it “owns
common law trade dress rights in the distinctive scalloping design applied to the
adjustment knobs and bells of its rifle scopes and/or sights” (Id. ¶ 17) and that it “is the
owner of Michigan state registration number M12557" for the marks.” (Id. ¶ 18.) The
Complaint alleges that the marks are “distinctive and non-functional.” (Id. ¶ 20.)

According to Leapers, its “marks have become distinctive and famous and are widely
recognized by the general consuming public of the United States as a designation for
the source of the goods of Leapers.” (Id. ¶ 24.) Leapers alleges that “Defendants have
manufactured, produced, advertised and/or sold products bearing” its marks without
permission. (Id. ¶¶ 24–25.)
On June 10, 2014 Leapers filed a complaint bringing seven causes of action: (I)
False Designation of Origin or Sponsorship Under 15 U.S.C. § 1125(a); (II) Trade Dress
Infringement Under 15 U.S.C. § 1125(a); (III) Trademark Dilution Under 15 U.S.C. §
1125(c); (IV) Common Law Trademark Infringement; (V) Unfair Competition; (VI)
Infringement Under M.C.L.A 429.42; and (VII) Violation of the Michigan Consumer
Protection Act. Defendants timely filed the instant motions seeking to dismiss the
complaint for failure to state a claim.
II. STANDARD
When ruling on a motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), the court must construe the complaint in a light most favorable to the plaintiff
and accept all the factual allegations as true. Tackett v. M&G Polymers, USA, LLC, 561
F.3d 478, 488 (6th Cir. 2009) (citing Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir.
2009)). In doing so, “the court must draw all reasonable inferences in favor of the
plaintiff.” Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). Yet, the court
“need not accept as true legal conclusions or unwarranted factual inferences.” Id.
(quoting Gregory v. Shelby Cnty., 220 F.3d 433, 466 (6th Cir. 2000)). Although a
heightened fact pleading of specifics is not required, “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for
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relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Though decidedly generous, this standard of review does require more than the
bare assertion of legal conclusions.
[A] plaintiff’s obligation to provide the “grounds” of his “entitle[ment] to relief”
requires more than labels and conclusions, and a formulaic recitation of a
cause of action’s elements will not do. Factual allegations must be enough
to raise a right to relief above the speculative level on the assumption that all
the complaint’s allegations are true.

Twombly, 550 U.S. at 555 (citing Fed. R. Civ. P. 8(a)). Further, the complaint must
“give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which
it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957) abrogated on other grounds by
Twombly, 550 U.S. 544. In application, a “complaint must contain either direct or
inferential allegations respecting all material elements to sustain a recovery under some
viable legal theory.” Eidson v. State of Tenn. Dep’t of Children’s Servs., 510 F.3d 631,
634 (6th Cir. 2007) (citation omitted). Therefore, “to survive a motion to dismiss, the
plaintiff must allege facts that, if accepted as true, are sufficient to raise a right to relief
above the speculative level and to state a claim to relief that is plausible on its face.”
Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (citations and internal
quotation omitted). A court cannot grant a motion to dismiss under Rule 12(b)(6) based
upon its disbelief of a complaint’s well-pled factual allegations. Twombly, 550 U.S. at
556.

III. DISCUSSION
A.False Designation of Origin
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A plaintiff pursuing a claim under Section 43(a) of the Lanham Act for false
designation of origin (15 U.S.C. § 1125(a)) must establish that “(1) the false designation
must have a substantial economic effect on interstate commerce; and (2) the false
designation must create a likelihood of confusion.” Johnson v. Jones, 149 F.3d 494,
502 (6th Cir. 1998). Defendants both proceed to cite the standard, articulated in
American Council of Certified Podiatric Physicians and Surgeons v. American Bd. of
Podiatric Surgery, Inc., 185 F.3d 606 (6th Cir. 1999), for false or misleading advertising.
See SMTC Br. at 4-5 (Dkt. # 15); Sun Optics Br. at 3-4 (Dkt. # 20). While Defendants
accurately state the law for a false advertising claim, it is not helpful in considering
Plaintiff’s false designation of origin claim. The Complaint adequately alleges the
substantial effect Defendants’ alleged infringement has on interstate commerce and that
the assertedly “distinctive scalloping” is likely to create confusion in the public.
Consequently the motions to dismiss Count I must be denied.
B.Trade Dress Infringement
Section 43(a) of the Lanham Act protects unregistered “trade dress.”
Abercrombie & Fitch Stores, Inc. v. American Eagle Outfitters, Inc., 280 F.3d 619, 629
(6th Cir. 2002). At issue is whether Leapers’ mark is protectable. In order to state a
claim for trade dress infringement, “a plaintiff must prove that its allegedly infringed
product design (1) is nonfunctional, (2) has acquired secondary meaning, and (3) is
confusingly similar to the allegedly infringing product design.” Groeneveld Transp.
Efficiency, Inc. v. Lubecore Int'l, Inc., 730 F.3d 494, 503 (6th Cir. 2013). These
standards also apply to Counts IV, V, VI, and VII. See Homeowners Group, Inc. v.

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Home Marketing Specialists, Inc., 931 F.2d 1100, 1005 n.1 (6th Cir. 1991). The third
element is not at issue.
Defendants argue that the Complaint insufficiently describes Leapers’ marks.
Defendants rely heavily on Mike Vaughn Custom Sports, Inc. v. Piku, No. 12-13083,
2014 WL 1673827 (E.D. Mich. Apr. 25, 2014). In Mike Vaughn, the court dismissed the
plaintiff’s Lanham Act claims for failing to specifically allege features composing the
trade dress. Id. at *6. The plaintiff had alleged in a conclusory manner that “it
developed a ‘signature trade dress feature’ for its ‘goalie pads,’ ‘goalie catch glove,’ and
‘other of its products’ and that these products feature ‘non-functional elements.’” Id. at
*7. The plaintiff “attached photographs comparing its products and the defendants’
allegedly infringing products.” Id. at *8.
In dismissing the trade dress infringement claim, the court explained that it could
not “distill from the images what the plaintiff claims as protected trade dress.” Id. In
contrast with Mike Vaughn, Leapers has described its marks as a “distinctive scalloping
design applied to the adjustment knobs and bells of its rifle scopes and/or sights.”
Compl. ¶ 17. Leapers uses those words to describes its mark in its trademark
registration with the state of Michigan. The complaint in Mike Vaughn contained no
such description. The “scalloping” is identifiable in the photographs attached to the
complaint in this action, unlike the Mike Vaughn photographs, which left the court to
speculate as to the distinctive elements. Leapers has identified its trade dress.
Defendants further argue that the grooves in the knobs, dials, and bell of a rifle
scope are provided to facilitate gripping, for example by gloved hands, and are thus
functional, precluding the finding of a protectable mark: “It is obvious that the grooves in
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the knobs and bell (the eyepiece) permit hunters to grip and turn them effectively while
wearing gloves during hunting . . . .” Doc # 16, Pg ID 167.
Defendants acknowledge that “[f]unctionality is a factual determination.” Ferrari
S.P.A. v. Roberts, 944 F.2d 1235, 1246 (6th Cir. 1991). Nevertheless, Defendants
claim that Leapers did not plead non-functionality with sufficient particularity. It is true
that Leapers ultimately will have “the burden of proving that the matter sought to be
protected is not functional,” 15 U.S.C. § 1125(a)(3). Although the court will be keen to
learn how Plaintiff’s “scalloping” design is no more than decoration, that it is neither in
any way “essential to the use or purpose of the article,” nor a feature that significantly
“affects the cost or quality of the article.” Inwood Laboratories, Inc. v. Ives Laboratories,
Inc., 456 U.S. 844, 850 n. 10 (1982), at the pleadings stage a simple, and illustrated,
assertion of non-functionality shall be sufficient.
Mike Vaughn is distinguishable in this regard. The court noted that the plaintiff’s
own “description of the graphics describe the design as functional, concluding that the
plaintiff designed the graphics to provide ‘increased durability’ and ‘superior
performance,’” thus undermining the bare allegation of non-functionality. Mike Vaughn,
2014 WL 1673827 at *8.
Finally, defendants argue that Leapers’ marks have not established secondary
meaning. “To establish secondary meaning, a manufacturer must show that, in the
minds of the public, the primary significance of a product feature or term is to identify
the source of the product rather than the product itself.” Groeneveld Transport
Efficiency, Inc. v. Lubecore Intern., Inc., 730 F.3d 494, 528 (6th Cir. 2013) (quoting
Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 851 n.11 (1982). The
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Sixth Circuit employs a seven factor test to determine whether a trade dress
has acquired secondary meaning: 1) direct consumer testimony, (2) consumer surveys,
(3) exclusivity, length, and manner of use, (4) amount and manner of advertising, (5)
amount of sales and number of customers, (6) established place in the market, and (7)
proof of intentional copying. Id. at 528 (quoting General Motors Corp. v. Lanard Toys,
Inc., 468 F.3d 405, 418 (6th Cir. 2006)). The Complaint discusses Leapers’ efforts over
the past twenty years in advertising and otherwise developing its marks. (Compl. ¶¶ 15,
22). This is sufficient to state a claim and allow discovery as to this fact-specific inquiry.
C.Trademark Dilution
Trade-dress dilution is actionable under § 43(c) of the Lanham Act which allows
owners of famous marks to obtain injunctions against infringers. 5 U.S.C. § 1125(c)(1).
For the purposes of the statute,
a mark is famous if it is widely recognized by the general consuming public
of the United States as a designation of source of the goods or services of
the mark's owner. In determining whether a mark possesses the requisite
degree of recognition, the court may consider all relevant factors, including
the following:
(i) The duration, extent, and geographic reach of advertising and publicity of
the mark, whether advertised or publicized by the owner or third parties.
(ii) The amount, volume, and geographic extent of sales of goods or services
offered under the mark.
(iii) The extent of actual recognition of the mark.
(iv) Whether the mark was registered under the Act of March 3, 1881, or the
Act of February 20, 1905, or on the principal register.
15 U.S.C. § 1125(c)(2)(A).
“Under a dilution theory, a plaintiff's trade dress is protected against the kind of
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imitation that cheapens the genuine product by flooding the market with a mass of
low-quality replicas, even if consumers do not ultimately confuse the fake with the real
thing.” Groeneveld Transp. Efficiency, Inc. v. Lubecore Int'l, Inc., 730 F.3d 494, 519
(6th Cir. 2013).
In evaluating fame, courts have deemed famous such well-known brands as
Audi, Victoria’s Secret, Nissan, Nike, Rolex,and Pepsi. See Audi AG v. D'Amato, 469
F.3d 534 (6th Cir. 2006); V Secret Catalogue, Inc. v. Moseley, 558 F. Supp. 2d 734
(W.D. Ky. 2008); Nissan Motor Co., Ltd. v. Nissan Computer Corp., 2007 WL 4938219
(C.D. Cal. Sept. 20, 2007); Nike, Inc. v. Nikepal Int'l, Inc., 2007 WL 2782030 (E.D. Cal.
Sept. 18, 2007); Rolex Watch, U.S.A., Inc. v. Canner, 645 F. Supp. 484 (S.D.Fla.1986);
Pepsico, Inc. v. # 1 Wholesale, LLC, 2007 WL 2142294 (N.D.Ga. 2007). In the context
of trade dress, “the iconic . . . classic Hershey's bar” design was found to be famous
and distinctive. Hershey Co. v. Art Van Furniture, Inc., 2008 WL 4724756 (E.D. Mich.
Oct. 24, 2008).
All of these brands are instantly recognizable nationwide by the population in
general. In contrast, “niche fame” is insufficient to obtain protection against trademark
dilution. Quicken Loans, Inc. v. Nationwide Biweekly Admin., Inc., 2014 WL 505576, at
*5 (E.D. Mich. Feb. 7, 2014). The language “general consuming public,” added to the §
1125(c)(2)(A) in 2006, “eliminates any possibility that niche fame . . . can justify a basis
for finding a mark famous.” Id.; see also Mike Vaughn, 2014 WL 1673827, at *9 (“There
is no cause of action for trade dress dilution for products based on ‘niche fame, i.e.
fame limited to a particular channel of trade, segment of industry or service, or
geographic region.’”).
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As such, the Sixth Circuit found that the design of a grease pump was not
famous. Groeneveld, 730 F.3d at 519. Similarly, the well-known red-dripping wax seal
on Maker’s Mark whisky bottles was found not to be famous, notwithstanding the validity
of the mark. Maker’s Mark Distillery, Inc. v. Diageo North America, Inc., 703 F. Supp.
2d 671, 699–700 (W.D. Ky. 2010), aff’d 679 F.3d 410 (6th Cir. 2012).1 Other examples
of non-famous marks include the Texas Longhorns logo, MENSA, and Quicken Loans.
See id. at 699; Quicken Loans, 2014 WL 505576, at *5.
Assuming arguendo that Leapers is famous within the firearms community, it is
implausible that Leapers can support its conclusory assertion that Leapers’ “marks have
become distinctive and famous and are widely recognized by the general consuming
public of the United States.” (Compl. ¶ 24.) Leapers’ recitation of the elements of a
trade dress dilution cause of action are simply insufficient to survive the motion to
dismiss.
IV. CONCLUSION
IT IS ORDERED that the Joint Motion to Dismiss (Dkt. # 15) and the Amended
Motion to Dismiss (Dkt. # 20) are GRANTED IN PART AND DENIED IN PART. They
are GRANTED in that Count III of the complaint is DISMISSED WITH PREJUDICE. It is
DENIED in all other respects,

1

Maker's Mark was affirmed on other grounds, but “Maker's Mark [did] not appeal
the district court's adverse ruling on its dilution claim,” 679 F.3d at 419, which is fitting
given that Maker's Mark is best undiluted.
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IT IS FURTHER ORDERED that the court will convert the motion hearing to
a Status Conference on October 7, 2014 at 2:00pm.

s/Robert H. Cleland
\ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: October 3, 2014

I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, October 3, 2014, by electronic and/or ordinary mail.
s/Lisa Wagner
Case Manager and Deputy Clerk
[phone]
S:\Cleland\JUDGE'S DESK\C2 ORDERS\14-12290.LEAPERS.MotiontoDismiss.ml.RHC.wpd

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