Ann Arbor T-Shirt Company LLC v. Popularity Products LLC et al
Filing
23
OPINION and ORDER Granting Defendants' 8 Motion to Dismiss. Signed by District Judge Linda V. Parker. (RLou)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ANN ARBOR T-SHIRT COMPANY, LLC
Plaintiff,
v.
Civil Case No. 15-cv-13647
Honorable Linda V. Parker
LIFEGUARD LICENSING CORP. and
POPULARITY PRODUCTS, LLC,
Defendants.
__________________________________/
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS
On October 16, 2015, Plaintiff Ann Arbor T-Shirt Company (“Ann Arbor TShirt”) filed this declaratory judgment action against Defendants pursuant to the
Declaratory Judgment Act, 28 U.S.C. §§ 2201-02. This lawsuit arises from Ann
Arbor T-Shirt’s use of “LIFEGUARD” on clothing apparel, which Defendant
Lifeguard Licensing Corporation (“Lifeguard Corp.”) has contended violates
Lifeguard Corp.’s federal trademarks for the use of “LIFEGUARD.” Lifeguard
Corp. licenses its LIFEGUARD trademarks to other entities, such as Defendant
Popularity Products, LLC (“Popularity”), which is the exclusive licensee of one or
more of Lifeguard Corp.’s trademarks. In its Complaint, Ann Arbor T-Shirt seeks
a declaration that: (I) LIFEGUARD is a generic mark and therefore cancellable;
(II) Ann Arbor T-Shirt’s use of LIFEGUARD is fair or descriptive such that Ann
Arbor T-Shirt is not violating the Lanham Act by using the mark, 15 U.S.C.
§ 1115(b)(4); and (III) the use of LIFEGUARD is a functional use which does not
violate the Lanham Act, 15 U.S.C. § 1115(b)(8).
Presently before the Court is Defendants’ motion to dismiss, filed pursuant
to Federal Rule of Civil Procedure 12(b) on November 25, 2015. (ECF No. 8.)
The motion has been fully briefed. (ECF Nos. 14, 19.) Finding the facts and legal
arguments sufficiently developed in the parties’ briefs, the Court is dispensing with
oral argument with respect to Defendants’ motion pursuant to Eastern District of
Michigan Local Rule 7.1(f).
I.
Defendants’ Arguments for Dismissal
In the motion to dismiss, Lifeguard Corp. argues that the Court lacks
personal jurisdiction over it because it has insufficient contacts with the State of
Michigan. Popularity contends that Ann Arbor T-Shirt’s Complaint fails to state a
claim against it because Popularity is only a licensee and not an owner of the
LIFEGUARD marks. In their reply brief, Defendants assert that Ann Arbor TShirt’s action is an improper anticipatory declaratory judgment action and that this
further serves as a basis to dismiss the Complaint.
“[I]t is well-settled that a party may not raise new issues for the first time in
a reply brief.” Resolution Trust Corp. v. Townsend Assoc. Ltd. P’ship, 840 F.
Supp. 1127, 1142 n. 15 (E.D. Mich. 1993) (citing United States v. Jerkins, 871
2
F.2d 598 (6th Cir. 1989)); see also United States v. Galaviz, 645 F.3d 347, 362 (6th
Cir. 2011) (“We do not usually entertain new arguments raised for the first time in
a reply brief.”) (citing United States v. Campbell, 279 F.3d 392, 401 (6th
Cir.2002)); 16AA Charles Alan Wright et al., Fed. Prac. & Proc. Juris. § 3974.3.
Therefore, the Court will not consider the argument for dismissal raised by
Defendants for the first time in their reply brief.
II.
Applicable Standards of Review
Lifeguard Corp.’s request for dismissal for lack of personal jurisdiction is
brought pursuant to Federal Rule of Civil Procedure 12(b)(2). The plaintiff bears
the burden of establishing the existence of personal jurisdiction. Air Prods. &
Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) (citing
Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989)). The
district court may address a Rule 12(b)(2) motion on the parties’ submissions or
permit limited discovery and hold an evidentiary hearing. Id. When, as here, the
court does not conduct an evidentiary hearing and relies only on written
submissions and affidavits to resolve the motion, “ ‘the plaintiff need only make a
prima facie showing of jurisdiction. In this situation, [the court] will not consider
facts proffered by the defendant that conflict with those offered by the plaintiff,
and [it] will construe the facts in a light most favorable to the nonmoving party.’ ”
Indah v. SEC, 661 F.3d 914, 920 (6th Cir. 2011) (quoting Bird v. Parsons, 289
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F.3d 865, 871 (6th Cir. 2002)). Additionally, in this situation, the burden on the
plaintiff is “relatively slight.” Air Prods. & Controls, 503 F.3d at 549 (citing Am.
Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988)).
Popularity’s request for dismissal for failure to state a claim upon which
relief may be granted is brought pursuant to Federal Rule of Civil Procedure
12(b)(6). A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency
of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125,
1134 (6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading
must contain a “short and plain statement of the claim showing that the pleader is
entitled to relief.” To survive a motion to dismiss, a complaint need not contain
“detailed factual allegations,” but it must contain more than “labels and
conclusions” or “a formulaic recitation of the elements of a cause of action . . ..”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not
“suffice if it tenders ‘naked assertions’ devoid of ‘further factual enhancement.’ ”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).
As the Supreme Court provided in Iqbal and Twombly, “[t]o survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’ ” Id. (quoting Twombly,
550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
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liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The
plausibility standard “does not impose a probability requirement at the pleading
stage; it simply calls for enough facts to raise a reasonable expectation that
discovery will reveal evidence of illegal [conduct].” Twombly, 550 U.S. at 556.
In deciding whether the plaintiff has set forth a “plausible” claim, the court
must accept the factual allegations in the complaint as true. Erickson v. Pardus,
551 U.S. 89, 94 (2007). This presumption, however, is not applicable to legal
conclusions. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. (citing Twombly, 550 U.S. at 555).
III.
Background
Ann Arbor T-Shirt is a Michigan limited liability company with its principal
place of business in Ann Arbor, Michigan. (ECF No. 1 ¶ 1.) Jerry Kozak and
Richard Winowiecki own Ann Arbor T-Shirt. (ECF No. 16-4 ¶ 11.) Ann Arbor TShirt is in the business of manufacturing and selling t-shirts and other apparel.
(ECF No. 1 ¶ 10.) Ann Arbor T-Shirt sells its merchandise online through
Amazon.com, as well as through its own website. (Id. ¶¶ 11, 12.) Since at least
September 2013, Ann Arbor T-Shirt has sold t-shirts with “Lifeguard” visibly
printed on the front. (Id. ¶ 17.)
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Lifeguard Corp. is a Delaware limited liability corporation with its sole
office in New York City, New York. (Id. ¶ 2; see also ECF No. 10 ¶ 2.) Lifeguard
Corp. owns federal trademark registrations for LIFEGUARD. (ECF No. 1 ¶ 24.)
Lifeguard Corp. does not perform operational functions; instead, it licenses its
LIFEGUARD marks to other companies which sell “LIFEGUARD” products. (Id.
¶¶ 25-26; ECF No. 10 ¶¶ 3-4.) None of Lifeguard Corp.’s licensees are located in
Michigan and, to the recollection of its owner Reuben Azrak, it has never signed a
contract with a company located or based in Michigan. (ECF. No. 10 ¶¶ 6.)
Lifeguard also does not maintain property, employees, or assets in Michigan, and
has never initiated litigation in Michigan. (Id. ¶¶ 7, 8.) Lifeguard Corp.’s sole
employee works out of its New York City office. (Id. ¶ 5.)
Since 2008, Lifeguard Corp. has licensed LIFEGUARD trademarks to
Popularity. (Id. ¶ 10.) Popularity is a Virginia limited liability corporation,
headquartered in Brooklyn, New York. (ECF No. 11 ¶ 2; see also ECF No. 1 ¶ 4.)
Pursuant to the License Agreement between Lifeguard Corp. and Popularity,
Lifeguard Corp. remains the sole owner of all rights, title, and interest in the
LIFEGUARD trademarks. (ECF No. 10, citing Ex. A ¶ 8.3.)
On September 25, 2012, counsel for Lifeguard Corp., Gerry Grunsfeld of the
Brooklyn, New York law firm of Lazar Grunsfeld Elnadav LLP, sent a letter via
regular and electronic mail to Ann Arbor T-Shirt, charging Ann Arbor T-Shirt with
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infringing Lifeguard Corp.’s trademarks. (ECF No. 1 ¶ 31, citing Ex. A.) Mr.
Grunsfeld wrote that Lifeguard Corp. would not sue Ann Arbor T-Shirt if Ann
Arbor T-Shirt complied with the following demands by specified deadlines: (1)
remove all listings of infringing LIFEGUARD apparel from internet websites Ann
Arbor T-Shirt controls, including its Amazon.com page; (2) permanently stop
selling all LIFEGAURD apparel and destroy any remaining inventory; (3) pay
Lifeguard Corp. a settlement of $20,000; and (4) notify Lifeguard Corp.’s counsel
in writing that the first and second demands had been completed. (Id., Ex. A.)
On September 30, 2015, counsel for Ann Arbor T-Shirt, Thomas P. Heed of
The Heed Law Group, responded in writing to Mr. Grunsfeld’s letter. (ECF No. 92.) Mr. Heed contends in his correspondence that the LIFEGUARD mark is
unenforceable and cancellable. (Id.) Mr. Heed further indicates that Ann Arbor TShirt will vigorously defend against any attempt to enforce the marks. He closes
by stating that Ann Arbor T-Shirt therefore will not be complying with Lifeguard
Corp.’s demands, but would be amenable to reaching an amicable solution. (Id.)
Sometime prior to October 12, 2015, Mr. Grunsfeld and Mr. Heed spoke by
telephone to assess whether the parties could resolve their dispute without
litigation. (See ECF No. 18-1 ¶ 3.) During that conversation, Mr. Heed believed
he offered for Ann Arbor T-Shirt to sub-license the LIFEGUARD marks from
Defendants. (ECF No. 16 ¶ 4.) Mr. Grunsfeld, however, understood Mr. Heed to
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be offering for Ann Arbor T-Shirt to purchase LIFEGUARD product from
Popularity. (ECF No. 18-1 ¶ 4.) This misunderstanding was revealed during a
subsequent telephone call on October 12, 2015 between Mr. Grunsfeld, Mr. Heed,
and Benjamin Tebele, one of Popularity’s principals. (Id.) According to
Defendants, Mr. Tebele advised Mr. Heed during this call that a sub-license was
not an option and that the only option was for Ann Arbor T-Shirt to purchase
licensed LIFEGUARD apparel from Popularity. (Id. ¶ 5.) Mr. Heed then
requested that Popularity send him a catalogue and term sheet to forward to his
client. (Id.) Ann Arbor T-Shirt received Popularity’s product catalogue, including
pricing, on October 15, 2015. (ECF No. 16 ¶ 4.)
There were no further communications between the parties until Ann Arbor
T-Shirt served Defendants with this lawsuit, which it filed on October 16, 2015.
(ECF No. 18-1 ¶ 6.) On October 27, 2015, Lifeguard Corp. and Popularity filed a
separate lawsuit in the District Court for the Southern District of New York against
Ann Arbor T-Shirt and its owners, Mr. Kozak and Mr. Winowiecki, alleging
violations of the Lanham Act. (ECF. No. 16-4.) As indicated earlier, Lifeguard
Corp. and Popularity filed the pending motion to dismiss on November 25, 2015.
IV.
Personal Jurisdiction - Lifeguard Corp.
When a federal court’s jurisdiction is premised on a federal question, as is
the case here, “personal jurisdiction over a defendant exists ‘if the defendant is
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amenable to service of process under the forum state’s long-arm statute and if the
exercise of personal jurisdiction would not deny the defendant due process.’ ”
Bird, 289 F.3d at 871 (quoting Mich. Coalition of Radioactive Material Users, Inc.
v. Griepentrog, 954 F.2d 1174, 1176 (6th Cir. 1992) (brackets omitted). “Under
Michigan’s long-arm statute, the state’s jurisdiction extends to the limits imposed
by federal constitutional due process requirements and thus, the two questions
become one. Mich. Coalition of Radioactive Material Users, 954 F.2d at 1176
(citing Chandler v. Barclays Bank PLC, 898 F.2d 1148, 1150-51 (6th Cir. 1990)).
“Due process requires that a defendant have ‘minimum contacts . . . with the
forum State . . . such that he should reasonably anticipate being haled into court
there.’ ” Schneider v. Hardesty, 669 F.3d 693, 701 (6th Cir. 2012) (quoting WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980)). This requirement
ensures that the exercise of jurisdiction does not “offend traditional notions of fair
play and substantial justice.” Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945);
Schneider, 669 F.3d at 701. “Depending on the type of minimum contacts in a
case, personal jurisdiction can either be specific or general.” Air Products &
Controls, 503 F.3d at 549-50 (citing Reynolds v. Int’l Amateur Athletic Fed’n, 23
F.3d 1110, 1116 (6th Cir. 1994)).
General jurisdiction requires the defendant to have “continuous, substantial,
and systematic” contacts with the forum State. Daimler AG v. Bauman, -- U.S. --,
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134 S. Ct. 746, 769 (2014). As the Supreme Court has articulated, the defendant’s
“affiliations with the State [must be] so ‘continuous and systematic’ as to render
[the defendant] essentially at home in the forum State.” Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. --, 131 S. Ct. 2846, 2851 (2011). Ann Arbor
T-Shirt contends that Lifeguard Corp.’s statements in complaints filed in other
lawsuits establish that it has sufficient contacts with Michigan to subject it to
general jurisdiction. Specifically, in those pleadings, Lifeguard Corp. alleges that
it sells, advertises, licenses, and promotes clothing and accessories bearing the
LIFEGUARD trademarks. See, e.g., Compl., Lifeguard Licensing Corp. v. Cauley,
No. 1:15-cv-08461 (S.D.N.Y. filed Oct. 27, 2015), ECF No. 1 ¶ 14. Noting that
Lifeguard Corp. fails to mention any geographic area in those statements, Ann
Arbor T-Shirt urges the Court to find that the activity is conducted in Michigan.
As an initial matter, Lifeguard Corp.’s statements do not establish that it
conducts any activities in Michigan, specifically. Moreover, even if some of these
activities were conducted in Michigan, the statements do not establish-- and Ann
Arbor T-Shirt offers nothing to show-- that Lifeguard Corp.’s contacts with the
forum are “continuous, substantial, and systematic.” See Goodyear, 131 S. Ct. at
2856 (rejecting “sprawling view” of general jurisdiction urged by the plaintiff in
which “any substantial manufacturer or seller of goods would be amenable to suit,
on any claim for relief, wherever its products are distributed.”); Johnston v.
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Multidata Sys. Int’l Corp., 523 F.3d 602, 611-614 (5th Cir. 2008) (illustrating “just
how difficult it is to establish general jurisdiction” and holding that general
jurisdiction was lacking over the defendants, including a defendant that maintained
no business in the forum, despite the fact that over a five year period it sold
$140,000 worth of goods and service-related contracts to customers in the forum,
representing 3% of its business, its employees periodically traveled to the forum,
and its advertisements in national publications reached the forum).
Finally, the statements on which Ann Arbor T-Shirt relies, when read along
with the other factual assertions made by Lifeguard Corp in those complaints, do
not contradict Lifeguard Corp.’s claims that it has no contact of any type with
Michigan and does not directly sell LIFEGUARD apparel, but relies on its
licensees, such as Popularity, to do so. (ECF No. 10 ¶¶ 4, 9.) Contacts in the
forum resulting from the “unilateral activity” of another party or person are
insufficient to support the exercise of general personal jurisdiction over a
defendant.1 Burger King Corp. v. Rudzewicz, 471 US. 462, 475 (1985) (“The
purposeful availment requirement ensures that a defendant will not be haled into a
For the same reason, the Court also rejects Ann Arbor T-Shirt’s additional basis
for asserting general jurisdiction over Lifeguard Corp.-- that is, that Lifeguard
Corp. “is amenable to personal jurisdiction in any jurisdiction in which its licensee
is selling goods that were specified by Lifeguard Licensing and constitute an
improper, functional use of a federal trademark.” (See ECF No. 14 at Pg ID 7677.)
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jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the
unilateral activity of another party or a third person.”).
“ ‘[S]pecific jurisdiction is confined to adjudication of issues deriving from,
or connected with, the very controversy that establishes jurisdiction.’ ” Indah, 661
F.3d at 920 (quoting Goodyear, 131 S. Ct. at 2851). In other words, “[w]hen the
cause of action at issue ‘arises out of or relates to’ [the defendant’s] contacts [with
the forum], a court may properly assert personal jurisdiction, even if those contacts
are ‘isolated and sporadic.’ ” Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.,
148 F3d 1355, 1359 (Fed. Cir. 1998) (quoting Burger King, 471 U.S. at 472-73).
The Sixth Circuit has identified three requirements which must be satisfied to
exercise specific jurisdiction:
First, the defendant must purposefully avail himself of the privilege of
acting in the forum state or causing a consequence in the forum state.
Second, the cause of action must arise from the defendant’s activities
there. Finally, the acts of the defendant or consequences caused by the
defendant must have a substantial enough connection with the forum
state to make the exercise of jurisdiction over the defendant
reasonable.
Beydoun v. Wataniya Rest. Holding, Q.S.C., 768 F.3d 499, 505 (6th Cir. 2014)
(quoting Southern Machine Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th
Cir. 1968)).
To support the exercise of specific jurisdiction over Lifeguard Corp., Ann
Arbor T-Shirt relies on the cease and desist or “demand” letter sent by Lifeguard
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Corp.’s counsel, Mr. Grunsfeld, on September 25, 2015. Ann Arbor T-Shirt argues
the letter foreseeably caused it to cease making and selling its Lifeguard apparel,
which it claims it had a right to do. Even if the Court were to assume that this
activity satisfied the first and second criteria of the Mohasco Industries’ test, courts
have uniformly held that such letters, alone, are insufficient “to make the exercise
of jurisdiction over the defendant reasonable.” See, e.g., Calphalon Corp. v.
Rowlette, 228 F.3d 718, 723 (6th Cir. 2000) (letter outlining possible claims
against the defendant found insufficient to establish purposeful availment);
Campbell Pet Co. v. Miale, 542 F.3d 879, 885 (Fed. Cir. 2008) (“As the district
court correctly noted, we have fashioned a rule, as part of the ‘reasonable and fair’
portion of the due process inquiry in personal jurisdiction cases, that, without
more, a patentee’s act of sending letters to another state claiming infringement and
threatening litigation is not sufficient to confer personal jurisdiction in that state.”);
Red Wing Shoe, 148 F.3d at 1360-62 (same); Indus Trade & Tech., LLC v. Stone
Mart Corp., No. 2:11-cv-637, 2011 WL 6256937, at 4* (S.D. Ohio Dec. 14, 2011)
(unpublished opinion) (citing cases supporting the conclusion that the defendant’s
cease and desist letters to the plaintiff concerning the plaintiff’s use of the
defendant’s trademark were insufficient to confer specific personal jurisdiction).
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In Red Wing Shoe, the Federal Circuit explained why it was unreasonable to
base specific jurisdiction on a property owner’s activities demanding recourse from
an infringer:
[E]ven though cease-and-desist letters alone are often
substantially related to the cause of action (thus providing minimum
contacts), the “minimum requirements inherent in the concept of ‘fair
play and substantial justice’ . . . defeat the reasonableness of
jurisdiction.” [Burger King, 471 U.S. at 477-78]. Principles of fair
play and substantial justice afford a patentee sufficient latitude to
inform others of its patent rights without subjecting itself to
jurisdiction in a foreign forum. A patentee should not subject itself to
personal jurisdiction in a forum solely by informing a party who
happens to be located there of suspected infringement. Grounding
personal jurisdiction on such contacts alone would not comport with
principles of fairness.
148 F.3d at 1360-61 (additional citation omitted); see also Starline Optical Corp.
v. Caldwell, 598 F. Supp. 1023, 1027 (D.N.J. 1984) (“were the dispatch of noticeof-infringement letters to operate as a waiver of objection to in personam
jurisdiction, the result would be a chilling effect on assertion of legal rights by
holders of copyrights, patents, and trademarks.”). The Federal Circuit further held
in Red Wing Shoe that “an offer for a license within a cease-and-desist letter does
not somehow convert that letter into something more than it was already.” 138
F.3d at 1361. The court reasoned that “[a]n offer to license is more closely akin to
an offer for settlement of a disputed claim rather than an arms-length negotiation in
anticipation of a long-term continuing business relationship.” Id. As the court
additionally reasoned, “[t]reating such hybrid cease-and-desist letters differently
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would also be contrary to fair play and substantial justice by providing
disincentives for the initiating of settlement negotiations.” Id.
For these reasons, the Court concludes that Lifeguard Corp.’s contacts with
Michigan to instruct Ann Arbor T-Shirt to cease using the LIFEGUARD marks
and/or to threaten litigation if Ann Arbor T-Shirt continued using those marks are
insufficient, on their own, to establish personal jurisdiction over Lifeguard Corp.
In other words, the Court holds that the exercise of personal jurisdiction over
Lifeguard Corp. “would not comport with principles of fairness.”
Therefore, the Court is granting Lifeguard Corp.’s motion to dismiss based
on a lack of personal jurisdiction.
V.
Failure to State a Claim - Popularity Products
In the first claim of its Complaint, Ann Arbor T-Shirt asks the Court to
cancel the LIFEGUARD marks pursuant to the Lanham Act, 15 U.S.C. § 1119.
Section 1119 provides in relevant part:
In any action involving a registered mark the court may
determine the right to registration, order the cancelation of
registrations, in whole or in part, restore canceled registrations, and
otherwise rectify the register with respect to the registrations of any
party to the action. . . .
15 U.S.C. § 1119 (emphasis added). Those courts addressing the issue of whether
anyone but the owner of a trademark is a proper defendant in an action to cancel a
trademark have held uniformly that the statute requires the action to proceed only
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against the current owner of the mark. See, e.g., Van Well Nursery, Inc. v. Mony
Life Ins. Co., 421 F. Supp. 2d 1321, 1332 (E.D. Wash. 2006) (“[Section 1119 of
the Lanham Act] suggests that a complaint for trademark cancellation should
proceed against the party who currently owns the trademark”); Iowa Health Sys. v.
Trinity Health Corp., 177 F. Supp. 2d 897, 911 (N.D. Iowa 2001) (finding that “the
owner of the ... mark [is] thus the only proper [defendant on] a claim for
cancellation of the mark”); Informix Software, Inc. v. Oracle Corp., 927 F. Supp.
1283, 1286 (N.D. Cal. 1996) (“Thus, the Court finds that an exclusive licensee of a
trademark is not a proper defendant in a suit for cancellation of that trademark.
Indeed, the owner of the trademark is the only proper defendant.”); Int’l
Watchman, Inc. v. The NATO Strap Co., No. 1:13-cv-1986, 2014 WL 1333351, at
*2 (N.D. Ohio Mar. 28, 2014) (unpublished opinion) (relying on Iowa Health
Systems and Informix Software to conclude that the counterclaimants claims for
cancellation of trademarks must be dismissed against the owner of the entity that
owns the marks).
In some instances, courts have found an exclusive licensee’s interest in a
mark sufficient to confer standing upon it to bring a trademark infringement action.
See Bliss Clearing Niagra, Inc. v. Midwest Brake Bond Co., 339 F. Supp. 2d 944,
959 (W.D. Mich. 2004) (citing cases). Nevertheless, standing to assert an action to
enforce a mark is not equivalent to being the proper defendant in an action to
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cancel a mark. See Informix Software, 927 F. Supp. at 1286 (acknowledging
“hornbook trademark law that an exclusive licensee stands in the shoes of the
trademark owner, and can sue for infringement on behalf of the owner[,]” but
rejecting the obverse as true: that the licensee can defend the trademark’s
registration). As the District Court for the Northern District of California
analogized in Informix Software: “A tenant can sue an intruder for trespass even
though he does not own the house he rents, but an action to quiet title to the house
would have to proceed directly against the property owner.” Id. Moreover, the
view that an exclusive licensee can sue for infringement represents a minority
view. 6 McCarthy on Trademarks and Unfair Competition § 32:3 (4th ed.). The
majority view is that the only party with “standing to seek the special evidentiary
advantages and remedies accorded a federally registered trademark” is the federal
registrant (which embraces the legal representatives, predecessors, successors, and
assigns of such registrant). Id. In any event, even if an “exclusive licensee” has
standing to bring a trademark infringement action and can defend an action
seeking to cancel the registration, Popularity is not an “exclusive licensee” (see,
e.g., ECF No. 18, Ex. 4 at 1) and the considerations for analyzing when a
licensee’s rights are sufficient to confer standing weigh against finding that it is a
proper party to Ann Arbor T-Shirt’s claim. See Bliss Clearing Niagra, 339 F.
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Supp. 2d at 959-60. Lifeguard Corp. retains all rights in the marks and has granted
Popularity limited rights in the marks. (See ECF No. 18, Ex. 6.)
For these reasons, the Court concludes that Popularity is not a proper
defendant with respect to Count I of Ann Arbor T-Shirt’s Complaint.
In Counts II and III of the Complaint, Ann Arbor T-Shirt asks the Court to
declare that its use of “Lifeguard” is descriptive or fair (Count II) or functional
(Count III) and therefore not infringing of Lifeguard Corp.’s trademarks. These
are defenses to infringement pursuant to the Lanham Act, 15 U.S.C. § 1115(b)(4),
(8). If Popularity lacks standing to bring an infringement action to enforce the
LIFEGUARD marks and is not a proper party to Ann Arbor T-Shirt’s claim to
cancel those marks, it appears obvious that it is not a proper defendant in a
prophylactic declaratory judgment action seeking a ruling on the defenses it would
raise in an infringement action. The Court therefore also finds that Counts II and
III fail to state a claim against Popularity on which relief may be granted.
VI.
Conclusion
In summary, the Court holds that it lacks personal jurisdiction over
Lifeguard Corp. As such, the Court is dismissing without prejudice Ann Arbor TShirt’s claims against it. The Court concludes that Ann Arbor T-Shirt fails to state
a claim upon which relief may be granted against Popularity in Counts I, II, and III
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of the Complaint. Therefore, the Court is dismissing with prejudice Ann Arbor TShirt’s claims against this defendant.
Accordingly,
IT IS ORDERED that Defendants’ Motion to Dismiss is GRANTED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: April 5, 2016
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, April 5, 2016, by electronic and/or U.S.
First Class mail.
s/ Richard Loury
Case Manager
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