Wigs for Kids, Inc. v. Wigs 4 Kids of Michigan, Inc. dba Wigs 4 Kids Wellness Center & Salon et al
Filing
32
ORDER Denying 19 Motion to Dismiss - Signed by District Judge Nancy G. Edmunds. (LBar)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Case No. 17-11471
WIGS FOR KIDS,INC.,
Honorable Nancy G. Edmunds
Plaintiff,
v.
WIGS 4 KIDS OF MICHIGAN, INC.
d/b/a WIGS 4 KIDS WELLNESS CENTER
& SALON, et al.,
Defendants.
/
ORDER DENYING DEFENDANTS' MOTION TO DISMISS [19]
Plaintiff, Wigs for Kids, Inc., filed a four-count complaint against Defendant alleging
(1) federal trademark infringement under 15 U.S.C. §1114 of the Lanham Act; (2) federal
unfair competition under 15 U.S.C. §1125(a) of the Lanham Act; (3) trademark infringement
and unfair competition under Michigan common law; and (4) unfair and deceptive trade
practices under MCL §445.901-922 of the Michigan Consumer Protection Act. Defendant,
Wigs 4 Kids of Michigan , Inc., moves to dismiss the complaint for failure to state a claim
upon which relief can be granted.
I.
Facts
A. Plaintiff's Complaint
In deciding motions for judgment on the pleadings under Fed. R. Civ. P. Rule 12(c),
the Court looks to the face of the complaint and any supporting exhibits for the facts upon
which to evaluate the motion. The following are the facts as alleged in Plaintiff's Complaint.
Plaintiff is a non-profit charitable organization that incorporated on October 19, 1993, in
Ohio. Plaintiff operates nationally under the name Wigs For Kids, Inc, a name Plaintiff has
used continuously since 1993. The organization collects monetary and hair donations in
order to create custom-made real hair wigs for children suffering from hair loss, at no cost
to them. Plaintiff reports helping 125-150 children annually.
Defendant, independent of Plaintiff, incorporated under the same name in the State
of Michigan almost a decade later. On December 15, 2003, only a couple months after the
original filing, Defendant amended their filling to change names from Wigs For Kids, Inc.,
to Wigs 4 Kids of Michigan, Inc., and has used the name "Wigs 4 Kids" continuously since
December 2003. Defendants' Michigan based non-profit works to provide free wigs to
children suffering from hair loss due to cancer, or other disease/illness. (Pl. Complaint, Dkt.
1 at 4.) Defendant claims to provide wigs to approximately 300 children in Michigan each
year. (D. Mtn. to Dismiss, Dkt. 19, at 11.)
In 2004, Plaintiff contacted Defendants requesting they change their name because
of the similarity and likelihood of confusion between the two names. Defendants responded
they would not change their name but were prepared to confine their operations to within
the State of Michigan. (Pl. Complaint, Dkt. 1 at 4.) No further action was taken at that time.
Then in September 2012, the similarity in the companies' two names caused actual
confusion between the companies when a potential donor for Plaintiff, inadvertently
directed a donation, to Defendant. Plaintiff states Plaintiff never recovered the sizable
donation after the misdirection.
The most recent confusion arose in February 2016. Oxnard Cats Entertainment LLC
("Oxnard") contacted Plaintiff about filming a segment for a television production of "Total
2
Divas." (Pl. Complaint, Dkt. 1, at 6.) Oxnard planned to film Daniel Bryan ("Bryan") a
retiring WWE Wrestling Association wrestler as he cut and donated his 'famous' hair to
Plaintiff. Bryan did have his hair cut, and Oxnard did record it.
Plaintiff asserts Defendant then gave an interview to Ryan Satin ("Satin") the founder
and editor in chief of the blog "Pro Wrestling Sheet" about the donation. Plaintiff asserts
Defendants misrepresented that Defendants were the recipients of Bryan's hair. This led
to a cascade of blogs and websites picking up the story including Wikipedia.org, reporting
in error Defendant received Bryan's hair and not mentioning Plaintiff.
On March 28, 2016, Plaintiff, through counsel, sent a cease and desist letter
demanding that Defendants "no longer use the trade name or trademark 'Wigs 4 Kids' or
any variation." (Dkt. 1-10, at 2.) Plaintiff states "Defendants refused to halt the use and
promotion of their infringing Service Mark in connection with the identical goods and
services, and continues to solicit donations, offer, advertise, promote such goods and
services under their Service Mark as of the date of filing of this Complaint (as shown in
Exhibit I)." (Pl. Complaint ¶37, Dkt. 1, at 7.) Exhibit I shows a single page screen-shot of
the Defendants' website. Notably in large letters in the center of the screen the site states
"We gratefully accept hair donations from around the world!" (Dkt. 1-11, at 1.)
B. Registered Marks.
Concurrent with these events both Plaintiff and Defendant have sought to register their
name and trademarks in different arenas and at varied times. In April 1999, before
Defendant came into existence, Plaintiff received a United States Service Mark Registration
2,238,775 for the name "WIGS FOR KIDS" and design in International Class 40 which was
active until January 2006, a logo trademark.
3
In February 2004, Defendants unsuccessfully filed an application for the name "Wigs
4 Kids, Helping the Self-Esteem of Children" and design in International Class 35, however
after failing to adequately reply to the United States Service Mark Office in December 2004,
the application was abandoned in July 2005.
Also in February 2004, Plaintiff applied again to trademark its logo. In January 2007
Plaintiff finally received the United States Trademark Registration 3,197,277 for the name
and design for "WIGS FOR KIDS" in International Class 26, a logo trademark. This
trademark became incontestable pursuant to 15 U.S.C. § 1065 on February 24, 2012.
A month after Plaintiff received the trademark registration, Defendants filed in
February 2007, United State Trademark Application for the name "Wigs 4 Kids Helping the
Self-Esteem of Children 1-587-772-6656" and design in International Class 26. The United
States Patent and Trademark Office rejected this application on the basis of likelihood of
confusion with Plaintiff's already registered marks. Defendant failed to respond to an office
action in June 2007 and Defendant officially abandoned the application in January 2008.
In August 2007, Defendants registered in the State of Michigan the service mark
#M07651 "Wigs 4 Kids" listing October 2003 as the date of first use in Michigan and the
United States.
In 2010, Defendant filed Certificates of Assumed Names with the Michigan
Department of Licensing and Regulatory Affairs for the name "Wigs 4 Kids Wellness Center
& Salon and Wigs for Kids Solon." Defendant renewed the filing in 2015. (Dkt. 19, at 12.)
Shortly after the press mix up with Bryan, Plaintiff filed in March 2016 for a standard
character mark. In October 2016 Plaintiff received United States Trademark Registration
5,063,365 for "WIGS FOR KIDS" standard character mark in International Class 26.
4
C. Defendant's Motion to Dismiss
Defendant has filed its motion for judgment on the pleadings pursuant to Fed. R. Civ.
P. Rule 12(c) contending its use of "Wigs 4 Kids" does not infringe but is allowable due to
prior use, genericness, unclean hands, and that the complaint is time-barred. Defendant
claims because Plaintiff has knowingly co-existed with Defendant for the last fourteen
years, Plaintiff should not be permitted to proceed with any of its claims.
II.
Legal Standard
Through its present motion, Defendant seeks dismissal of each of the claims asserted
in Plaintiff’s complaint under Fed. R. Civ. P. 12(c), motion for judgment on the pleadings.
Such motions are reviewed under the same standard as a motion to dismiss, Fed. R. Civ.
P. 12(b)(6). Heinrich v. Waiting Angels Adoption Servs., Inc., 668 F.3d 393, 403 (6th Cir.
2012).
When determining whether Plaintiff’s claims are subject to dismissal under Rule
12(b)(6) the complaint is reviewed for failure to state a claim, the Court must construe the
complaint in a light most favorable to Plaintiff and accept all well-pleaded factual allegations
as true. League of United Latin American Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir.
2007). However, “the tenet that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678,
129 S. Ct. 1937, 1949 (2009).
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement
to relief requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
5
555, 127 S. Ct. 1955, 1964-65 (2007) (internal quotation marks, alteration, and citations
omitted). Courts are not required to accept as true legal conclusions couched as factual
allegations. Id. Factual allegations, accepted as true, “must be enough to raise a right to
relief above the speculative level,” and to “state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 555, 570, 127 S. Ct. at 1965, 1974. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556
U.S. at 678, 129 S. Ct. at 1949.
The Supreme Court has emphasized that this plausibility standard “is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” Iqbal, 556 U.S. at 678, 129 S. Ct. at 1949. “[W]here the well-pleaded
facts do not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged — but it has not shown — that the pleader is entitled to relief.” Iqbal,
556 U.S. at 679, 129 S. Ct. at 1950 (internal quotation marks, alteration, and citation
omitted). If a plaintiff does "not nudge[] [her] claims across the line from conceivable to
plausible, [her] complaint must be dismissed." Twombly, 550 U.S. at 570, 127 S. Ct. at
1974.
III.
Analysis
Plaintiff's complaint centers around the fact they hold the federally registered
trademark for "Wigs For Kids" and Defendants' alleged infringement on that mark.
Defendants acknowledge Plaintiff currently holds a registered trademark but asserts, in this
instance, an infringement never occurred. Under the Lanham Act, registration of a
trademark is prima facie evidence of the registrant's exclusive right to the mark. 15 U.S.C.
6
§1115(a); Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189 (1985). Nonetheless,
Defendant argues, a series of affirmative defenses as support of Defendant's motion to
dismiss including, prior use, genericness, unclean hands, and that the complaint is timebarred.
A. Affirmative Defenses
Where "an affirmative defense is raised in a motion to dismiss, the test is whether the
complaint includes allegations of fact that effectively vitiate the ability to recover." Basile
v. Merrill Lynch, 551 F. Supp. 580, 591 (S.D.Ohio 1982). "While dismissal is proper only
if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief, dismissal is also proper if the complaint fails to allege an
element necessary for relief or if an affirmative defense or other bar to relief is apparent
from the face of the complaint." United States Sec. & Exch. Comm'n v. Ackman, No. 1312520, 2015 WL 13039637, at *10 (E.D. Mich. May 12, 2015)(J. Edmunds)(internal
quotation marks, alteration, and citations omitted). A 12(b) motion to dismiss based upon
an affirmative defense can be granted only where the defense appears clearly on the face
of the complaint. Basile, 551 F. Supp. at 591.
1. Prior Use
Federal registration of a trademark is prima facie evidence of the mark's validity and
of the registrant's exclusive ownership of and right to use the mark. 15 U.S.C. § 1057(b).
However, federal registration does not preclude an alleged infringer from providing any
legal or equitable defense that might have been asserted prior to registration. 15 U.S.C.
§ 1115(a). One such defense is continuous, good-faith prior use. The Lanham Act, 15
U.S.C. § 1115(b)(5) provides for a prior-use defense to an infringement claim where:
7
[T]he mark whose use by a party is charged as an infringement was
adopted without knowledge of the registrant's prior use and has been
continuously used by such party or those in privity with him from a date
prior to (A) the date of constructive use of the mark established pursuant
to section 1057(c) of this title, (B) the registration of the mark under this
chapter if the application for registration is filed before the effective date
of the Trademark Law Revision Act of 1988, or (C) publication of the
registered mark under subsection c of section 1062 of this title: Provided
however, that this defense or defect shall apply only for the area in
which such continuous prior use is proved.
15 U.S.C. § 1115(b)(5). A party charged with infringement will not be liable if it proves it
adopted and continuously used the mark prior to its registration without knowledge of the
registrant's prior use. Id. When true, the non-registrant is permitted to use the mark free
from interference within the area in which it continuously and in good faith used the mark
prior to its registration. Id.
It is undisputed that Plaintiff obtained federal registration for the "Wigs For Kids" mark.
With it, Plaintiff, acquired presumptively exclusive nationwide trademark rights to the "Wigs
For Kids" mark as of the date of registration, except against those with pre-existing
common law rights to the mark. Defendant claims it has such a common law right in the
state of Michigan.
The basic rule governing common law trademark ownership is priority of use. See
United Drug Co. v. Theodore Rectamus Co., 248 U.S. 90, 100 (1918). Ownership of
service marks is obtained by actual use. Allard Enterprises v. Advanced Programming
Resources, Inc., 249 F.3d 564, 571 (6th Cir. 2001)(citation omitted). "The first to use a
mark in the sale of goods or services is the 'senior user' of the mark and gains common law
rights to the mark in the geographic area in which the mark is used." Id. at 572. Rights to
an unregistered trademark reach only to territory in which the mark is known and
8
recognized. Hanover Star Milling CO. v. Metcalf, 240 U.S. 403, 415-16 (1916)(the TeaRose case).
It is undisputed that Plaintiff first adopted and began using the "Wigs for Kids" mark
a decade before Defendant and is therefore the senior user. A senior user cannot prevent
the use of a similar mark by a good-faith, junior user if the junior use was the first to use the
mark in a location remote from the senior user's territory. Where a senior user enters a
remote market, they do so subject to the trademark rights already acquired, in good faith,
by another user. See Rectanus, 248 U.S. 90; Hanover Star, 240 U.S. 403. This is known
as the Tea-Rose / Rectanus doctrine and governs territorial rights in unregistered
trademarks and permits a junior user to enjoin a senior user's infringing use "in an area
where the senior user has no established trade, and hence no reputation and no good will."
Natural Footwear, 760 F.2d at 1392.
Central to the Tea Rose-Rectanus doctrine is that the remote junior user's adoption
and use of the contested mark be (1) in good faith and (2) in a remote area. A senior user
may assert superior rights against an innocent junior user only in areas where the senior
user has developed a reputation, but may assert superior rights as against a non-innocent
junior user regardless of the area in which the junior user employs the mark.
There appears to be a genuine factual dispute over whether or to what extent
Plaintiff's mark may be limited by Defendant's common law right, if at all. Plaintiff's
complaint avers that as early as December 2003, Defendant began to use the "Wigs 4 Kids
of Michigan" name, but this is well after Plaintiff's start in 1999, when Plaintiff already held
a registered logo trademark. As pled, Plaintiff's complaint asserts Defendant had at least
constructive knowledge of Plaintiff's name within months of its formation.
9
Whether
Defendant adopted the name in good faith therefore is not sufficiently addressed in the
facts available. Plaintiff's complaint further asserts that as early as 2004, Plaintiff contacted
Defendant and thus knew of Defendant's usage of the similar name. What is not clear at
all on the face of the complaint or the attached documents is the territorial reach of
Plaintiff's rights to use the mark at the time Defendant began, nor the remoteness of the
geographical area (if any) which Defendant occupied. If Plaintiff's territory is determined
to have been limited, than a more detailed determination of the territorial reach of
Defendant's activities is necessary to determine the extent of Defendant's claimed common
law rights to use the mark. The facts available do not allow this Court to determine what
common law rights if any Defendant held prior to Plaintiff's registering the federal
trademark.
2. Genericness
A trademark infringement claim under the Lanham Act has three elements, including
whether the use of the challenged mark is likely to cause confusion among consumers.
Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr., 109 F.3d 275, 280 (6th
Cir. 1997). However a court will not reach this element at all until persuaded that the mark
is sufficiently distinctive to warrant protection as a trademark. Courts considering whether
a mark is sufficiently distinctive to warrant trademark protection evaluate the mark based
on a hierarchy of classifications with increasing distinctiveness: (1) generic; (2) descriptive
(3) suggestive; (4) arbitrary; or (5) fanciful. "Suggestive, arbitrary and fanciful marks are
inherently distinctive and are protectable so long as the putative owner has actually used
the mark.
Merely descriptive marks are not inherently distinctive, but can become
protectable by developing a secondary meaning. Generic marks, on the other hand,
10
receive no protection. " Trumblebus Inc. v. Cranmer, 399 F.3d 754, 761-62 (6th Cir. 2005).
If the mark is generic "no incontestable rights shall be acquired." 15 U.S.C. §1065(4).
Defendant argues that Plaintiff's registered trademark is generic and not capable of
distinction - that "Wigs for Kids" is primarily a descriptive term, identifies a type of
product/service the parties provide and does not designate the source company / producer
of the wigs. As such, Defendant claims Plaintiff's mark is not due protection. Plaintiff
responds that the fact they hold a federal registered trademark constitutes a presumption
against genericness.
In the Sixth Circuit, "the test for whether a term is generic and therefore ineligible for
trademark protection is 'whether the public perceives the term primarily as the designation
of the article.' " T. Marzetti Co. v. Roskam Baking Co., 680 F.3d 629, 633-34 (6th Cir.
2012)(citing Gen. COnference Corp. of Seventh-Day Adventists v. McGill, 617 F.3d 402,
413 (6th Cir. 2010)). "If a mark is primarily associated with a type of product rather than
with the producer, it is generic." Nartron Corp., 305 F.3d at 404.
The mark at issue, "Wigs for Kids" is a descriptive term. The company provides real
hair wigs for children just as the name describes. The question the Court will be tasked
with resolving when ruling on the merits of this case, then, is whether the mark is a "merely
descriptive" term, in which case, as a registered trademark it is entitled to protection, or a
"common descriptive" term in which case it is generic, and its registration may be subject
to cancellation.
Whether to classify a particular mark as generic, as opposed to descriptive, is a
factual determination. The Lanham Act creates the presumption that a plaintiff with a
registered trademark does not have a merely descriptive or generic trademark.
11
A
defendant may overcome this presumption with proof of descriptiveness or genericness,
but the burden is on the defendant to make such a showing. For a motion on the
pleadings, the fact that Plaintiff has the registered trademark and with it a presumption
against genericness is enough to proceed with the claim. This Court does not reach the
issue of whether Defendant's selections from the internet illustrating other uses of similar
marks are appropriate evidence to consider for a motion to dismiss, because even with
such materials, the presumption of protectability that accompanies the U.S. Patent and
Trademark Office approval of the Trademark is not overcome.
3. Time-Barred Complaint
Defendant's motion to dismiss includes arguments that the complaint is time-barred,
by the doctrine of laches and other applicable statutes of limitations. Defendants argue
Plaintiff delayed too long in bringing their infringement claim. Defendants correctly assert
that the complaint on its face states Plaintiff knew of Defendants' existence and allegedly
infringing activity as early as 2004. The complaint details interactions between the two
companies in 2004, 2007, and 2012. (Dkt. 1, at 5-6.) Defendant claims therefore Plaintiff's
failure to file this case until 2016 is barred by the doctrine of laches, the claim under the
Michigan Consumer Protection Act, is barred by the six year statute of limitations, and the
common law infringement claims are barred by Michigan's three-year statute of limitations
for tort.
Plaintiff's response to all the time-barred arguments is two fold. First under a theory
of progressive encroachment, that Defendant's activities have changed significantly from
local in character to national and second, that the damages sought pertain to Defendant's
12
activities beginning in 2016 and therefore their claims are only a year old and do not trigger
any of the time-barred arguments.
Under the Lanham Act, there is no statue of limitations however the Sixth Circuit
applies the doctrine of laches to determine if a claim is time-barred. Audi AG v. D'Amato,
469 F.3d 534, 545 (6th Cir. 2006). The Sixth Circuit states that while laches "precludes a
plaintiff from recovering damages, it does not bar injunctive relief." Kellogg Company V.
Exxon Corporation, 209 F.3d 562, 568-69 (6th Cir. 2000). Thus the doctrine would only
defend against any claims for damages, not injunctive relief.
The Sixth Circuit has stated that a party arguing under the doctrine of laches requires
proof that the party seeking to enforce its trademark rights has unreasonably delayed
pursuing litigation and, as a result, materially prejudiced the alleged infringer. Id.; Narton
Corp. v. STMicroelectronics, 305 F.3d 397, 408 (6th Cir. 2002). Implicit in a finding of
laches for trademark infringement, is the presumption that an underlying claim for
infringement existed and that Plaintiff delayed too long. Any delay attributable to Plaintiff
must be measured from the time at which Plaintiff knew that the infringement ripened into
a provable claim. Plaintiff's response under the doctrine of progressive encroachment
provides some latitude in the timing of its bringing a trademark infringement suit, waiting
until the likelihood of confusion is severe. It is an offensive countermeasure to Defendant's
claim of laches in trademark infringement, and requires the Court perform a fact based
likelihood of confusion analysis, based on factors such as whether Defendant has brought
itself more squarely into competition with Plaintiff. Kellogg Co. v. Exxon Corp., 209 F.3d
562, 572 (6th Cir. 2000). Such an analysis is fact intensive and cannot be determined on
the available facts.
13
Plaintiff's response to Defendant's time-barred arguments are premised on the
following paragraphs in the complaint:
32.
Upon information and belief, Defendant Varney gave an interview to Satin
wherein Varney misrepresented that Defendants were the recipient of Bryan's
hair and that they were contacted by a producer for "Total Divas".
33.
Upon information and belief, during the interview Satin made multiple
references to Defendants' organization as the recipient of the hair donation by
Bryan to which Defendant Varney, made no attempt to correct Satin's mistake.
36.
On March 28, 2016, Plaintiff through counsel, sent a cease and desist letter.
. . .to Defendants detailing the actual confusion and harm to Plaintiff from
Defendants actions resulting from the similarity of the Registered Marks with
Defendants' name and Service Mark "Wigs 4 Kids" as it relates to identical
services.
37.
Thereafter, Defendants refused to halt the use and promotion of their infringing
Service Mark in connection with the identical goods and services, and
continues to solicit donations, offer, advertise, promote such goods and
services under their Service Mark as of the date of filing of this Complaint. (as
shown in Exhibit I).
(Pl. Complaint, Dkt. 1, at 6-7.) Based on these allegations, Plaintiff further contents that
"[Plaintiff] was confronted with a minor potential infringer that, until 2016, seemed to be
honoring its word that it was strictly limiting itself to one geographic area - Michigan. In
2016. . . .it came to [Plaintiff's] attention - as the result of [Defendant] misrepresenting itself
to a national media source, following an instance of actual confusion - that [Defendant] was
both not limiting itself to Michigan, and fomenting confusion over important donations." (Pl.
Rsp. Motion to Dismiss; Dkt. 22 at 20.)
Plaintiff's allegations are sufficient at this stage in the pleadings to state a claim that
the change in 2016, brought the two companies more squarely into competition. Plaintiff's
contact with Defendant at various times prior to 2016 could be efforts to address activity
Plaintiff deemed to be infringing without immediately resorting to litigation and escalating
14
the situation. Moreover as alleged, Plaintiff describes escalating behavior, on the part of
Defendants, culminating in a national interview where Defendant escalated the confusion
between the companies. Defendants' assertion that the facts surrounding the Satin
interview are different than what is portrayed in Plaintiff's complaint, cannot be considered
at this stage of the proceedings. On facts that the actions in 2016 precipitated the
infringement , none of the time-barred defenses apply. The doctrine of laches will not
apply, nor would the three year statute of limitation for the common law infringement claim,
or the six year statute of limitations for the Michigan Consumer Protection Act apply. As
presented in Plaintiff's complaint, Plaintiff states claims that are not time-barred.
4. Doctrine of Unclean Hands Bars Injunctive Relief
Defendants argues that Plaintiff's claims fail under the doctrine of unclean hands. The
concept of unclean hands may be employed by a court to deny injunctive relief where the
party applying for such relief is guilty of conduct involving fraud, deceit, unconscionability,
or bad faith related to the matter at issue and to the other party's detriment. See Precision
Instrument Mfg. Co. v. Auto. Maint. Mach.Co., 324 U.S. 806, 814 (1945). "Any willful act
concerning the cause of action which rightfully can be said to transgress equitable
standards of conduct is sufficient cause for the invocation" of the unclean hands doctrine.
Id. at 815. According to Defendant, "Plaintiff only applied for a character trademark for the
purpose of forcing Defendant [ ] out of its long-established Michigan territory." (Dkt. 19, at
29.)
The Court recognizes the inconsistency Defendant highlights in Plaintiff's argument
as pled. On the one hand Plaintiff claims to hold all common law rights in the "Wigs For
Kids" trademark. (Pl. Complaint ¶42, Dkt. 1, at 8; "Plaintiff is the owner of the Registered
15
Marks and all common law rights in the "Wigs For Kids" trademark.") However, Plaintiff's
argument addressing progressive encroachment suggests there does exist a territory within
which Defendant might have operated, namely Michigan, without triggering Plaintiff's
enforcement of that right. Nonetheless, the two facts can co-exist and do not create a clear
case of unclean hands. The Sixth Circuit has stated, "[f]raud or unclean hands are not to
be lightly inferred. They must be established by 'clear, unequivocal and convincing'
evidence." Kearney & Trecker Corp. v. Cincinnati Milacron Inc., 562 F>2d 365, 371 (6th
Cir. 1977)(quoting Shnadig Corp. v. Gaines Mfg. Co., 494 F.2d 383, 392 (6th Cir. 1974)).
Additional facts are necessary to reach this conclusion and they are not part of the record
this Court considers for a motion to dismiss. Accordingly, the Court holds based on the
facts pled, there are insufficient facts for Defendant's unclean hands defense as a valid
basis for a motion to dismiss.
B. Four Counts
Since Defendants' affirmative defenses are insufficient at this stage of the
proceedings, the Court now examines the four counts to be certain Plaintiff has sufficiently
stated claims for relief. Plaintiff must have pled sufficient facts to meet all the necessary
elements for each count in order to proceed.
1. Trademark Infringement under 15 U.S.C. §1114 of the Lanham Act
Plaintiff's complaint alleges Defendant violated Section 32 of the Lanham Act, 15
U.S.C. §1114. The Lanham Act provides uniform, comprehensive federal law to govern
questions of registered trademarks used in and affecting interstate commerce. "A party
proves trademark infringement by showing (1) that it owns a trademark, (2) that the
infringer used the mark in commerce without authorization, and (3) that the use of the
16
alleged infringing trademark is likely to cause confusion among consumers." Coach, Inc.
v. Goodfellow, 717 F.3d 498, 502 (6th Cir. 2013). The touchstone of liability under §1114
is the last factor, whether the defendant's use of the disputed mark is likely to cause
confusion. Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr., 109 F.3d
275, 280 (6th Cir. 1997). When determining whether a likelihood of confusion exists, the
Court examines and weighs eight fact-intensive factors, called the Frisch factors. See, e.g.,
Frisch's Restaurants, Inc. v. Elby's Big Boy, Inc., 670 F.2d 642, 648 (6th Cir. 1982); Gibson
Guitar Corp. v. Paul Reed Smith Guitars, LP, 423 F.3d 539, 548 (6th Cir. 2005).
As pled, Plaintiff has alleged that it owns a trademark, that Defendant has infringed
on that mark without authorization, and that the infringing mark has already caused several
instances of confusion. The first confusion point when the potential donor made a mistaken
donation in September 2012. (Dkt. 1, at 6.) Second, when the media surrounding Bryan's
hair donation wrongly identified Defendant as the recipient. These allegations are sufficient
at this stage in the pleadings to state a claim for trademark infringement. Therefore
Defendant's Motion to Dismiss Count One for trademark infringement under 15 U.S.C. §
1114(1) of the Lanham Act is denied.
2. Federal Unfair Competition under 15 U.S.C. §1125(a) of the Lanham Act
Plaintiff's second count is for unfair competition under the Lanham Act. Section 43(a)
of the Lanham Act, 15 U.S.C. § 1125(a), provides:
(1) Any person who, on or in connection with any goods or services. . . .uses
in commerce any word, term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or misleading description of
fact, or false or misleading representation of fact, which (A) is likely to cause confusion, or to cause mistake, or to deceive as to the
affiliation, connection or association of such person without another person,
17
or as to the origin, sponsorship, or approval of his or her goods, servies, or
commercial activities by another person, or
(B) in commercial advertising or promotion misrepresents the nature,
characteristics, qualities, or geographic origin of his or her or another
person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or
is likely to be damaged by such act.
15 U.S.C. § 1125(a)(1). The Sixth Circuit uses the same test to decide whether there has
been trademark infringement, unfair competition or false designation of origin: the likelihood
of confusion between the two marks. Audi AG v. D'Amato, 469 F.3d 534, 542 (6th Cir.
2006)(citing Two Pesos v. Taco Cabana, 505 U.S. 763, 780 (1992)).
Plaintiff's complaint alleges that the infringing materials has already caused and
continues to cause confusion. Further, Plaintiff's complaint alleges "Defendants have
advertised and utilized the Registered Marks without Plaintiff's permission, with the intent
to create an association and affiliation with Plaintiff and to trade-off the goodwill of the
Registered Marks." (Pl. Complaint ¶ 52, Dkt. 1, at 9.) The Court holds that as pled the
facts support Plaintiff's claim for unfair competition.
3. Trademark infringement/unfair competition under Michigan common law
Because Plaintiff's common law infringement, and unfair competition claims are
analyzed similarly to an infringement action brought under the Lanham Act, this Court
denies Defendant's motion to dismiss this claim for the same reasons outlined in denying
Defendant's motion to dismiss the infringement action under the Lanham Act.
4. Unfair and deceptive trade practices under MCL §445.901-922 of the Michigan
Consumer Protection Act
18
The Michigan Consumer Protection Act ("MCPA") prohibits "[u]nfair, unconscionable,
or deceptive methods, acts, or practices in the conduct of trade or commerce." M.C.L.
§445.903(1). The MCPA defines "trade or commerce" as "the advertising, solicitation,
offering for sale or rent, sale, lease, or distribution of a service or property." M.C.L.
§445.902(d).
Defendants' motion to dismiss argues "the MCPA does not apply to transactions
intended primarily for business or commercial, rather than personal, purposes." (D. Motion
to Dismiss, Dkt. 19, at 30)(citing Zine v. Chrysler Corp., 236 Mich.App. 261, 271 (1999)).
"While it is true that the legislature used the word 'person' to describe who may be plaintiff
as well as who may be a defendant, it is also true that had the legislature intended to allow
only individuals to sue under the MCPA, it could have easily used the term 'individual' to
limit the potential plaintiffs under M.C.L. §445.911(1) and (2). . . .the Court concludes that
business competitors have standing under the MCPA because it must presume that the
legislature intended the meaning expressed in the statute." PFlorists' Transworld Delivery,
Inc. v. LFleurop-Interflora, 261 F.Supp.2d 837, 849 (E.D.M.I. April 10, 2003)(J. Hood)(citing
Action Auto Glass, 134 F.Supp.2d at 903 (W.D.Mich. 2001).
The court in Action Auto Glass stated "[b]y its terms, the definition of 'trade or
commerce' focuses on 'the conduct of a business providing [consumer] goods, property,
or service,' rather than upon the occurrence of a specific transaction between the plaintiff
and the defendant." Action Auto Glass v. Auto Glass Specialists, 134 F.Supp.2d 897, 901
(W.D.Mich. 2001)(citing M.C.L. §445.902(d)). "There is no requirement that consumer
goods be sold or purchased in order to constitute 'trade and commerce.'" Id. It is enough
19
that a defendant "in the business of providing consumer goods or services" is alleged to
have engaged in false or misleading advertising. Id.
The allegations relative to Plaintiff's claim under the MCPA is that the business in
which the parties are engaged involve "trade and commerce;" and Defendants' actions
constituted and comprised violations of the MPCA. The similarity in the Plaintiff's and
Defendants' businesses suggest the potential for confusion for consumers. The issues
arise as a result of the two companies' advertising and marketings and offering of goods
and services of a personal nature. Thus Plaintiff has met its burden to state a claim in the
pleading and Defendants' motion to dismiss this count is denied.
IV.
Conclusion
The Court, based on the above detailed reasons, DENIES Defendants' motion to
dismiss.
SO ORDERED.
s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: December 21, 2017
20
I hereby certify that a copy of the foregoing document was served upon counsel of
record on December 21, 2017, by electronic and/or ordinary mail.
s/ Lisa C. Bartlett
Case Manager
21
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?