Alticor Inc. v. Nutrisystem, Inc. et al
Filing
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OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ALTICOR, INC.,
Plaintiff,
File No. 1:12-CV-256
v.
HON. ROBERT HOLMES BELL
NUTRISYSTEM, INC., and
NUTRI/SYSTEM IPHC, INC.,
Defendants.
/
OPINION
This action for declaratory judgment is before the Court on Defendants Nutrisystem,
Inc. and Nutri/System IPHC, Inc.’s motion to dismiss for lack of subject matter jurisdiction.
(Dkt. No. 14.) For the reasons that follow, Defendants’ motion will be denied.
I.
Plaintiff Alticor, Inc. filed this action against Defendants Nutrisystem, Inc. and
Nutri/System IPHC, Inc. (collectively, “Nutrisystem”) seeking a declaration that Alticor’s
use and registration of the NUTRILITE mark in connection with goods and services related
to health and nutrition, does not violate Defendants’ alleged rights in the NUTRISYSTEM
mark, and in particular does not constitute trademark infringement, trademark dilution, or
unfair competition with respect to any rights of Defendants. (Dkt. No. 1, Compl. ¶ 3.)
Defendants have moved to dismiss this action for lack of subject matter jurisdiction
pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Defendants contend that
there is no actual case or controversy sufficient to give this Court subject matter jurisdiction.
Defendants contend that Plaintiff filed this action in an attempt to obtain an advisory opinion
as to a hypothetical situation that does not actually exist.
Where a 12(b)(1) motion attacks the factual basis for jurisdiction, the plaintiff bears
the burden of proving that jurisdiction exists. DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th
Cir. 2004). To satisfy the case-or-controversy requirement of the Declaratory Judgment Act
and Article III of the United States Constitution,1 the dispute at issue must be “definite and
concrete, touching the legal relations of parties having adverse legal interests,” and it must
be a “real and substantial” controversy admitting of “specific relief through a decree of a
conclusive character, as distinguished from an opinion advising what the law would be upon
a hypothetical state of facts.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)
(quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937)). The question for the
Court is “whether the facts alleged, under all the circumstances, show that there is a
substantial controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment.” Id. (quoting Md.
Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). Although MedImmune
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The Declaratory Judgment Act provides that, “[i]n a case of actual controversy within
its jurisdiction . . . any court of the United States . . . may declare the rights and other legal
relations of any interested party seeking such declaration, whether or not further relief is or
could be sought.” 28 U.S.C. § 2201(a). The phrase “case of actual controversy” in the Act
refers to the type of “Cases” and “Controversies” that are justiciable under Article III of the
United States Constitution. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).
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eliminated the
“reasonable apprehension of suit” test for determining subject matter
jurisdiction in declaratory judgment actions, 549 U.S. at 132 n.11, apprehension of suit is still
a valid consideration. “[F]ollowing MedImmune, proving a reasonable apprehension of suit
is one of multiple ways that a declaratory judgment plaintiff can satisfy the more general
all-the-circumstances test to establish that an action presents a justiciable Article III
controversy.” Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1336 (Fed. Cir. 2008).
There is no dispute that this action was prompted by a March 6, 2012, letter from
Defendants’ attorneys to Plaintiff. The letter claims, among other things, that Alticor’s “use
and registration” of the NUTRILITE mark in connection with goods and services related to
weight loss “infringes” Nutrisystem’s rights in its NUTRISYSTEM mark “in violation of the
Trademark Act of 1946 (the ‘Lanham Act’), 15 U.S.C. §§ 1051, et seq., as well as various
other federal and state laws governing trademarks, unfair competition, and deceptive trade
practices.” (Dkt. No. 1, Compl. ¶¶ 24-26, Ex. O.)2 The March 6 letter further “demands”
2
The March 6, 2012, letter states in relevant part:
Recently, Nutrisystem learned that you have filed the following trademark
applications containing the term NUTRILITE for various goods and services
related to weight loss . . . Our client believes that your use of a very similar
mark for very similar goods and services will result in confusion amongst
consumers with respect to the source of such goods. Accordingly, the use and
registration of your NUTRILITE mark infringes Nutrisystem’s rights in the
Mark in violation of the Trademark Act of 1946 (the “Lanham Act”), 15
U.S.C. §§ 1051, et seq., as well as various other federal and state laws
governing trademarks, unfair competition and deceptive trade practices.
(continued...)
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that Alticor withdraw its applications for NUTRILITE and “refrain from beginning or
continuing all use of the mark” by March 15, 2012, or Nutrisystem will “assume” that Alticor
does not wish to “settle this matter amicably.” (Id.) Alticor contends that in light of the
March 6 letter, Alticor has a reasonable apprehension of being sued by Defendants for
trademark infringement, trademark dilution, and related claims. (Compl. ¶ 31.)
Defendants contend that the March 6 letter does not assert that Plaintiff is infringing
Nutrisytem’s marks, nor does it threaten litigation for trademark infringement. Furthermore,
Defendants contend that they could not make such a claim because actual use is required for
a trademark infringement action, and the March 6 letter was only directed at the registration
of marks that had not yet been used. See Holiday Inns, Inc. v. 800 Reservation, Inc., 86 F.3d
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(...continued)
Your use and registration of NUTRILITE for similar goods and services
distributed though a cooperative independent business owners’ network, are
likely to cause or have caused dilution of the famous and distinctive qualities
of the Mark. Your actions are likely to tarnish or have tarnished our client’s
reputation by association with a wide range of consumer products not
emanating from a weight loss company.
In light of the above, Nutrisystem demands that you withdraw your
applications for NUTRILITE and refrain from beginning or continuing all use
of the mark. We hope that having been apprised of the foregoing, you will
agree to our client’s request and resolve this matter amicably.
If we do not hear from you or your counsel by March 15, 2012, we will assume
that you do not wish to settle this matter amicably. Please note that the current
offer to resolve this matter amicably is for settlement purposes only and
without prejudice to any of Nutrisystem’s rights.
(Compl. Ex. O.)
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619, 625 (6th Cir. 1996) (holding that use of the protected mark is a prerequisite to a
trademark infringement action).
Defendants’ contentions are belied by the plain language of the letter. The letter is
directed not only to Alticor’s registration of the mark, but also to its continued use of the
mark. The letter expresses not only concern that Alticor’s use of the mark will cause future
dilution of Nutrisystem’s mark, or tarnishing of Nutrisystem’s reputation, but also concern
that Alticor had already caused dilution or tarnishing. Alticor has presented evidence that
the NUTRILITE mark has been used on weight management products since the 1960s
(Compl. Exs. J-N), and that its new registrations were for new marks consisting of
NUTRILITE plus additional words and phrases (Compl. Ex. G). Thus, Alticor could
reasonably interpret the March 6 letter as a threat to bring a trademark infringement action.
Although Nutrisystem contends that it was unaware of Alticor’s use of the NUTRILITE mark
prior to or at the time of the March 6 letter, the apprehension of suit is judged from the
perspective of the party being threatened. “In the trademark context, in determining ‘if the
threat perceived by the plaintiff is real and reasonable,’ the court focuses ‘upon the position
and perceptions of the plaintiff’ and ‘[t]he acts of the defendant [are] . . . examined in view
of their likely impact on competition and the risks imposed upon the plaintiff.’” Young v.
Vannerson, 612 F. Supp. 2d 829, 840 (S.D. Tex. 2009) (quoting Chesebrough-Pond’s v.
Faberge, 666 F.2d 393, 396 (9th Cir. 1982)). There is nothing in the record to suggest that
Alticor should have known that Nutrisystem was unaware of Alticor’s historic use of the
NUTRILITE mark.
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It is generally undisputed that a charge of infringement, and even conduct or action
short of an actual charge of infringement, is sufficient to establish the existence of a case or
a controversy. Goodrich-Gulf Chems., Inc. v. Phillips Petroleum Co., 376 F.2d 1015, 1018
(6th Cir. 1967). Indeed, an accusation of trademark infringement has been characterized as
“the hallmark of an actual controversy.” See Green Edge Enter., LLC v. Rubber Mulch Etc.,
LLC, 620 F.3d 1287, 1302 (Fed. Cir. 2010) (“Green Edge and International Mulch have both
accused Rubber Mulch of infringing a valid trademark, which is the hallmark of an actual
controversy.”).
Moreover, there is nothing in the record to suggest that Nutrisystem has retracted or
abandoned the claims made in the March 6 letter. Defendants have not conceded either the
invalidity of their mark or the lack of infringement by Plaintiff. See Green Edge Enter., 620
F.3d at 1302 (“Because neither Green Edge nor International Mulch has conceded either
invalidity or lack of infringement of its trademark, a case or controversy exists.”).
The Court is satisfied that, under all the circumstances, there is a substantial
controversy between parties having adverse legal interests of sufficient immediacy and reality
to warrant the issuance of a declaratory judgment. See MedImmune, 549 U.S. at 127.
Accordingly, the Court will deny Defendants’ motion to dismiss.
An order consistent with this opinion will be entered.
Dated: October 9, 2012
/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE
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