HSK LLC v. United States Olympic Committee, The
Filing
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ORDER granting 34 Motion for Extension of Time to File Response/Reply ; granting 18 Motion to Dismiss for Lack of Jurisdiction; denying as moot 26 Motion to Strike Pleading. (Written Opinion) Signed by Judge Wilhelmina M. Wright on 04/04/2017. (TJB)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
HSK, LLC d/b/a Zerorez MN,
Case No. 16-cv-2641 (WMW/KMM)
Plaintiff,
v.
United States Olympic Committee, The
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS AND
GRANTING PLAINTIFF’S MOTION
FOR AN EXTENSION OF TIME
Defendant.
In this declaratory-judgment action against Defendant The United States Olympic
Committee (USOC), Plaintiff HSK, LLC d/b/a Zerorez MN (Zerorez) seeks a declaration
that it may use its corporate social media accounts to discuss the Olympic Games without
violating USOC’s trademark rights. USOC moves to dismiss for lack of subject-matter
jurisdiction, asserting that a concrete dispute does not exist between the parties.
(Dkt. 18.)
Also before the Court are USOC’s motion to strike Zerorez’s untimely
responsive brief, (Dkt. 26), and Zerorez’s motion for an extension of time to file its
responsive brief, (Dkt. 34), both of which are related to Zerorez’s untimely filing of its
response to USOC’s motion to dismiss. Because Zerorez’s late filing was the result of
excusable neglect, Zerorez’s motion for an extension of time is granted and USOC’s
motion to strike Zerorez’s responsive brief is denied as moot. And because there is no
concrete dispute between Zerorez and USOC over the use of Olympics-related
trademarks, USOC’s motion to dismiss for lack of subject-matter jurisdiction is granted.
BACKGROUND
Zerorez initiated this lawsuit the day before the 2016 Olympic Games commenced
in Rio de Janeiro, Brazil. Zerorez alleges that it had planned to discuss the 2016 Olympic
Games through Zerorez’s corporate social media accounts. But USOC’s U.S. Olympic
and Paralympic Brand Usage Guidelines provide that “commercial entities [other than
official Team USA sponsors] may not post about the Games on their corporate social
media accounts. This includes the use of USOC trademarks in hashtags such as
#RIO2016 or #TeamUSA.”
The Brand Usage Guidelines also state that “[f]ederal
law . . . allows the USOC to file a lawsuit against any entity using USOC trademarks,
imagery or terminology for commercial purposes without express written consent.”
Zerorez alleges that USOC warned other commercial entities against posting comments
about the Olympics through their social media accounts in advance of the 2016 Olympic
Games. And certain media outlets, including The Guardian and ESPN, reported in July
2016 that USOC was threatening to enforce its trademark rights against businesses that
are not official Team USA sponsors. Rather than risking legal action from USOC,
Zerorez, which is not an official sponsor of Team USA, refrained from discussing the
Olympics through its corporate social media accounts and filed this declaratory-judgment
action. Zerorez seeks a determination of its rights to discuss on social media the 2016
Olympic Games and future Olympic events.
Specifically, Zerorez seeks a ruling that its proposed social media posts about the
Olympics would not violate USOC’s trademark rights or USOC’s rights under the Ted
Stevens Olympic and Amateur Sports Act, 36 U.S.C. § 220506. Zerorez also seeks
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declarations that USOC cannot preclude businesses that are not official Team USA
sponsors from discussing the Olympics on social media and that, among other actions,
USOC has “exaggerated the strength of its legal rights.”
In support of its motion to dismiss Zerorez’s claims for lack of subject-matter
jurisdiction, USOC argues that there is no concrete dispute between the parties because
Zerorez has not alleged that USOC threatened to enforce its trademark rights against
Zerorez. USOC also contends that the declaratory relief Zerorez seeks is not sufficiently
specific to support the Court’s exercise of declaratory-judgment jurisdiction.
Because Zerorez filed its opposition to USOC’s motion one month late, USOC
moved to strike Zerorez’s untimely responsive brief. Zerorez responded with a motion to
extend the time to file its responsive brief under Federal Rule of Civil Procedure 6(b)(1).
ANALYSIS
I.
USOC’s Motion to Strike and Zerorez’s Motion for an Extension of Time
USOC moves to strike Zerorez’s brief in response to USOC’s motion to dismiss
because the brief was filed approximately one month late. After USOC moved to strike
Zerorez’s responsive brief, Zerorez moved for an extension of time to file its responsive
brief. Counsel for Zerorez attests that he miscalculated the filing deadline and that he
prepared and filed the brief as soon as he realized his error.
Federal Rule of Civil Procedure 6(b)(1) permits a district court to extend the time
for a party to act “on a motion made after the time has expired if the party failed to act
because of excusable neglect.” Four factors inform this decision: (1) the possibility of
prejudice to the opposing party; (2) the length of delay and the possible impact of the
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delay on judicial proceedings; (3) the party’s reasons for delay, including whether the
delay was within the party’s “reasonable control”; and (4) whether the party acted in
good faith. Chorosevic v. MetLife Choices, 600 F.3d 934, 946 (8th Cir. 2010) (internal
quotation marks omitted). Miscalculation of a filing deadline can constitute excusable
neglect, even though failure to comply with a deadline is within the party’s own control.
See Sugarbaker v. SSM Health Care, 187 F.3d 853, 856 (8th Cir. 1999).
Here, each factor weighs in favor of granting Zerorez’s motion.
USOC
experienced no prejudice, and these proceedings were not delayed as USOC had ample
time to file its reply brief in advance of the hearing. Although the miscalculation clearly
was within Zerorez’s control and Zerorez’s counsel should have exercised greater care in
calculating the filing deadline, the late filing is excusable. Nothing in the record indicates
that the late filing was made in bad faith.
Consequently, Zerorez’s motion for an
extension of time to file its responsive brief is granted.
USOC’s motion to strike
therefore is denied as moot, and the Court considers the arguments raised in Zerorez’s
opposition brief in deciding USOC’s motion to dismiss.
II.
USOC’s Motion to Dismiss for Lack of Subject-Matter Jurisdiction
USOC seeks dismissal of Zerorez’s claims for lack of subject-matter jurisdiction
on the ground that there is no case or controversy between the parties. Under Article III
of the United States Constitution, the jurisdiction of federal courts extends only to actual
cases and controversies. U.S. Const. art. III, § 2, cl. 1; Neighborhood Transp. Network,
Inc. v. Pena, 42 F.3d 1169, 1172 (8th Cir. 1994). When deciding a motion to dismiss for
lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), a
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district court “must distinguish between a ‘facial attack’ and a ‘factual attack.’ ” Osborn
v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). When a facial attack is asserted,
the court looks only at the pleadings to determine whether the plaintiff’s allegations
provide a sufficient basis for subject-matter jurisdiction; the non-moving party receives
the same protections as if the court were deciding a motion under Federal Rule of Civil
Procedure 12(b)(6). Id.; accord Branson Label, Inc. v. City of Branson, Mo., 793 F.3d
910, 914 (8th Cir. 2015). But when a factual attack is asserted, the court considers
matters outside the pleadings, and the non-moving party does not benefit from
Rule 12(b)(6) safeguards. Osborn, 918 F.2d at 729 n.6; accord Branson Label, 793 F.3d
at 914-15.
Here, USOC asserts a facial challenge to the Court’s subject-matter
jurisdiction. Even if Zerorez’s allegations are true, USOC argues, no controversy exists
between the parties to satisfy the requirements of Article III or the Declaratory Judgment
Act. Accordingly, when deciding this motion, the Court accepts the factual allegations in
the complaint as true and draws all reasonable inferences in favor of Zerorez.1
The Declaratory Judgment Act limits the issuance of declaratory judgments to
cases involving an “actual controversy.” 28 U.S.C. § 2201(a). This requirement “refers
to the type of ‘Cases’ and ‘Controversies’ that are justiciable under Article III.”
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). In this context, an actual
controversy requires a concrete dispute between parties with adverse legal interests, and
the plaintiff must seek “specific relief through a decree of a conclusive character, as
1
Contrary to Zerorez’s assertion, jurisdictional discovery and an evidentiary
hearing are not necessary before the Court decides this facial challenge to subject-matter
jurisdiction because materials outside the pleadings are not considered.
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distinguished from an opinion advising what the law would be upon a hypothetical state
of facts.” Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241 (1937); accord Maytag
Corp. v. Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., 687
F.3d 1076, 1081 (8th Cir. 2012). The burden of establishing the existence of an actual
controversy rests with the party seeking a declaratory judgment. Cardinal Chem. Co. v.
Morton Int’l, Inc., 508 U.S. 83, 95 (1993).
To determine whether an “actual controversy” exists in the declaratory-judgment
context, district courts consider “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.” MedImmune, 549 U.S. at 127 (quoting Md. Cas. Co. v. Pac. Coal & Oil Co.,
312 U.S. 270, 273 (1941)). Prior to MedImmune, the United States Court of Appeals for
the Federal Circuit required a declaratory-judgment plaintiff seeking to establish
jurisdiction in a patent case to demonstrate that it had a “reasonable apprehension” of an
infringement lawsuit and that it was taking concrete steps to conduct activity that could
constitute infringement.2 See Benitec Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340,
2
Although many of the cases addressing subject-matter jurisdiction to issue a
declaratory judgment in the intellectual-property context involve allegations of patent
infringement, other courts have applied those precedents in trademark-infringement
cases. See, e.g., Aegis Food Testing Labs., Inc. v. Aegis Scis. Corp., 913 F. Supp. 2d 742,
744-76 (D.S.D. 2012) (applying MedImmune); Geisha, LLC v. Tuccillo, 525 F. Supp. 2d
1002, 1010 (N.D. Ill. 2007) (stating that, “in declaratory judgment actions relating to
trademarks, the Seventh Circuit has looked to patent infringement cases for the
requirements for establishing an actual controversy”). Because the United States Court
of Appeals for the Eighth Circuit relies on Federal Circuit precedent for persuasive
guidance on patent issues, U.S. Water Servs., Inc. v. ChemTreat, Inc., 794 F.3d 966, 970
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1343 (Fed. Cir. 2007). Although MedImmune now requires courts to examine all the
circumstances when analyzing whether an actual controversy exists between the parties, a
reasonable apprehension of suit remains one way for a declaratory-judgment plaintiff to
demonstrate that a justiciable controversy exists. U.S. Water Servs., Inc. v. ChemTreat,
Inc., 794 F.3d 966, 973 (8th Cir. 2015); accord Prasco, LLC v. Medicis Pharm. Corp.,
537 F.3d 1329, 1336 (Fed. Cir. 2008). Whether the declaratory-judgment plaintiff has
engaged in potentially infringing activity or meaningful preparation for potentially
infringing activity also is “an important element in the totality of the circumstances [that]
must be considered in determining whether a declaratory judgment is appropriate.”
Prasco, 537 F.3d at 1336 n.4 (internal quotation marks omitted).
When analyzing
whether an actual controversy exists between the parties, other relevant circumstances
include prior litigious conduct and the defendant’s refusal to give assurances that it will
not enforce its intellectual property rights. Id. at 1341.
To assess whether a declaratory-judgment plaintiff had a reasonable apprehension
of a patent- or trademark-infringement lawsuit, courts often consider the extent and
nature of communications between the parties, including whether the patent or trademark
holder indicated that it might resort to litigation.
Typically, a patent or trademark
holder’s direct statement of intent to enforce its intellectual property rights is indicative
of an actual controversy. See, e.g., ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345,
(8th Cir. 2015), and because other courts have relied heavily on patent cases in the
context of declaratory-judgment actions related to trademark rights, the Court considers
Federal Circuit authority persuasive as to the standard for establishing jurisdiction in a
declaratory-judgment lawsuit over trademark rights.
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1348-49 (Fed. Cir. 2011) (finding patent holder’s statement that it would “act vigorously
to protect its rights” against the letter’s recipient indicative of an actual controversy);
Green Edge Ents., LLC v. Rubber Mulch Etc., LLC, 620 F.3d 1287, 1301 (Fed. Cir. 2010)
(stating that “a threat of suit in the form of a cease and desist letter, in addition to other
litigious conduct, is sufficient to confer declaratory judgment jurisdiction”). But when
the tenor of the direct communications is not threatening, such communications between
the parties do not necessarily establish an “actual controversy.” See, e.g., Purely Driven
Prods., LLC v. Chillovino, LLC, 171 F. Supp. 3d 1016, 1019 (C.D. Cal. 2016)
(concluding that no controversy existed when defendants opposed plaintiffs’ application
to register their trademark but had not threatened an infringement action against the
declaratory-judgment plaintiffs); World Religious Relief v. Gospel Music Channel, 563 F.
Supp. 2d 714, 716-17 (E.D. Mich. 2008) (concluding that no controversy existed when
declaratory-judgment plaintiff “became unnecessarily defensive” and misinterpreted
trademark holder’s non-threatening statements in an attempt to create jurisdiction).
The mutuality of the perceived controversy also is relevant when analyzing
whether an “actual controversy” exists.
For example, in Edmunds Holding Co. v.
Autobytel Inc., 598 F. Supp. 2d 606 (D. Del. 2009), the district court concluded that an
actual controversy did not exist between the parties despite the declaratory-judgment
defendant’s history of bringing patent-infringement claims against other infringers and
the defendant’s general expression of its intent to enforce its patent rights. In reaching
this conclusion, the Edmunds court primarily relied on the absence of any allegation that
the defendant believed the plaintiff to be infringing the defendant’s patent. Id. at 610.
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Without an allegation of infringement, “the controversy exists in the mind of only one
side, which makes it speculative (as opposed to real) and one-sided (as opposed to
between the parties).” Id.; see also Trippe Mfg. Co. v. Am. Power Conversion Corp., 46
F.3d 624, 627 (7th Cir. 1995) (stating that “apprehension [of suit] alone, if not inspired
by defendant’s actions, does not give rise to an actual controversy”) (internal quotation
marks omitted).
Relying on Dr. Reddy’s Laboratories, Ltd. v. aaiPharma Inc., No. 01 Civ. 10102,
2002 WL 31059289 (S.D.N.Y. Sept. 13, 2002), Zerorez contends that USOC’s broad
warnings against infringement, which were publicized by certain media outlets, made it
reasonable for Zerorez to believe that it could become the target of an infringement
lawsuit. In Dr. Reddy’s Laboratories, the district court concluded that a drug patent
holder’s nationally published statements that it might commence legal action against
generic drug makers supported the existence of an actual controversy between the patent
holder and the manufacturers of generic versions of the patented drug. Id. at *7. In
reaching that conclusion, the district court determined that “threats of infringement suits
against an entire product industry can create reasonable apprehension among all
individual members of that industry.”
Id.
Zerorez urges this Court to accept the
reasoning of Dr. Reddy’s Laboratories and apply it to the circumstances here. The Court
declines to do so. If news reports of USOC’s letters to other companies warning that
only official sponsors of Team USA are permitted to use USOC’s trademarks on their
corporate social media channels create an actual controversy between USOC and
Zerorez, a company with which USOC never communicated before this lawsuit, then any
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company that is not an official sponsor of Team USA could bring a declaratory-judgment
action against USOC by asserting the same facts. Such a conclusion would eviscerate the
actual-controversy requirement.
No actual controversy between Zerorez and USOC is established from the totality
of circumstances presented here. Zerorez does not allege that USOC ever communicated
directly with Zerorez regarding USOC’s trademark rights; nor does Zerorez allege that
there is a history of trademark litigation (or any litigation) between the parties. Instead,
Zerorez contends that the combination of three elements—USOC’s Brand Usage
Guidelines, written communications notifying other businesses that their use of USOC’s
trademarks without permission is prohibited, and USOC’s track record of commencing
trademark litigation—creates an actual controversy between USOC and Zerorez. And
Zerorez asserts that media reports published during the weeks prior to the Olympics
demonstrate that USOC was threatening to take legal action against business owners that
infringe its trademarks on social media. Those media reports do not create an actual
controversy, even if they made Zerorez reluctant to post comments about the Olympics
through its corporate social media accounts.
Importantly, USOC never threatened
litigation against Zerorez. As in Edmunds, Zerorez’s concern that it might become the
target of a trademark-infringement lawsuit is speculative and one-sided. It is not based
on the existence of a concrete dispute between the parties.
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Because the totality of the circumstances alleged does not establish that an actual
controversy exists between Zerorez and USOC, the Court grants USOC’s motion to
dismiss for lack of subject-matter jurisdiction.3
3
Zerorez also argues that the Court should exercise jurisdiction under the
Minnesota Declaratory Judgment Act. But Zerorez cites no authority for its assertion that
the Minnesota Declaratory Judgment Act broadens this Court’s subject-matter
jurisdiction. And other courts in this District have rejected the same argument advanced
by Zerorez here. E.g., Carlson Holdings, Inc. v. NAFCO Ins. Co., 205 F. Supp. 2d 1069,
1075 (D. Minn. 2001) (“Carlson, however, has not given the Court any authority for the
proposition that the Minnesota Declaratory Judgment Act grants courts broader
jurisdiction to hear cases than the Federal Declaratory Judgment Act. Nor has Carlson
offered any authority for the proposition that the Minnesota act should be applied when a
federal court does not have subject matter jurisdiction under the Federal act. The Court,
therefore, will not evaluate its subject matter jurisdiction under the Minnesota
Declaratory Judgment Act.”). As the reasoning of Carlson Holdings is persuasive, the
Court declines to consider its jurisdiction under the Minnesota Declaratory Judgment Act.
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ORDER
Based on the foregoing analysis and all the files, records and proceedings herein,
IT IS HEREBY ORDERED:
1.
Defendant The United States Olympic Committee’s motion to dismiss,
(Dkt. 18), is GRANTED;
2.
Plaintiff HSK, LLC d/b/a Zerorez MN’s motion for an extension of time,
(Dkt. 34), is GRANTED; and
3.
Defendant The United States Olympic Committee’s motion to strike,
(Dkt. 26), is DENIED AS MOOT.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: April 4, 2017
s/Wilhelmina M. Wright
Wilhelmina M. Wright
United States District Judge
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