NRRM, LLC v. Kingstar Holdings, LLC et al

Filing 27

MEMORANDUM AND ORDER (See Full Order) IT IS HEREBY ORDERED that Defendants' motion to dismiss Plaintiff's complaint (ECF No. 11 ) is DENIED. Signed by Magistrate Judge Patricia L. Cohen on 10/30/17. (EAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
NRRM, LLC d/b/a/ CARSHIELD,
Plaintiff,
vs.
KINGSTAR HOLDINGS, LLC, et al.,
Defendants.

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) Case No. 4:17cv01665 PLC
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MEMORANDUM AND ORDER
This matter is before the Court on the motion to dismiss filed by Defendants Kingstar
Holdings, LLC and Caresure LLC.1 (ECF No. 11). Plaintiff NRRM, LLC filed a memorandum
in opposition to Defendants’ motion to dismiss. (ECF No. 15), and Defendants filed a reply brief
in support of the motion (ECF No. 20).
I.

Factual and Procedural Background
The facts, as alleged in the complaint, are as follows: Plaintiff markets and sells vehicle

service contracts under the marks CARSHIELD and CARSHIELD.COM (collectively,
“CarShield marks”). (ECF No. 1 at ¶¶ 2-3). On November 29, 2016 and January 31, 2017, the
United States Patent and Trademark Office (PTO) issued to Plaintiff the standard character
marks “CARSHIELD.COM” and “CARSHIELD” for “[v]ehicle service contracts on vehicles
manufactured by others for mechanical breakdown servicing.”2 (Id. at ¶¶ 18-19; ECF Nos. 1-3,

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The parties have consented to the jurisdiction of the undersigned pursuant to 28 U.S.C. §
636(c).
2
On June 30, 2016, Plaintiff filed with the PTO applications to register the word mark
“CARSHIELD FIELD” for “[p]romoting business, sports, and entertainment events of others”
and for baseball cards, drinking glasses and cups, and clothing. (ECF Nos. 1 at ¶¶ 20-32, 1-5, 16).
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1-4). Plaintiff has continuously used various CarShield marks since April 2016 and has devoted
substantial resources to marketing, advertising, and promoting those marks. (ECF No. 1 at ¶¶
23-24).
Like Plaintiff, Defendants market and sell vehicle services contracts. (Id. at ¶1). On
November 2 and November 4, 2016, Defendants filed with the PTO applications to register the
word mark “CARSURE” and an associated design mark (collectively, “CarSure marks”). (Id. at
¶28, 29; ECF Nos. 1-7, 1-8). Defendants began using the CarSure marks in its marketing and
advertising in early 2017. (ECF No. 1 at ¶ 30).
On June 14, 2017, Plaintiff filed its complaint alleging: (1) trademark infringement
under the Lanham Trademark Act of 1986, 15 U.S.C. § 1114; (2) trademark infringement and
unfair competition under the Lanham Trademark Act, 15 U.S.C. § 1125(a); and (3) trademark
infringement and unfair competition under Mo. Rev. Stat. §§ 417.005-417.066 and Missouri
common law. (ECF No. 1). In response, Defendants filed a Rule 12(b)(6) motion to dismiss
Plaintiff’s complaint for failure to state a claim upon which relief can be granted. (ECF No. 11).
In support of their motion to dismiss, Defendants assert that Plaintiff “has not alleged sufficient
facts to establish there is a likelihood of confusion between the parties’ respective marks.” (ECF
No. 12 at 2). Plaintiff responds that the issue of likelihood of confusion is a question of fact that
cannot be determined on a motion to dismiss. (ECF No. 15). Plaintiff further argues that, even if
a motion to dismiss were an appropriate vehicle for resolving the likelihood of confusion,
Plaintiff alleged sufficient facts to state a claim for relief. (Id.).
II.

Legal Standard
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal

sufficiency of a complaint. Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to

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dismiss for failure to state a claim, “a complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plaintiff
need not provide specific facts in support of its allegations, Erickson v. Pardus, 551 U.S. 89, 93
(2007) (per curiam), but “must include sufficient factual information to provide the ‘grounds' on
which the claim rests, and to raise a right to relief above a speculative level.” Schaaf v.
Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008) (citing Twombly, 550 U.S. at 555
& n.3). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the
elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S.
at 555).
On a motion to dismiss, the Court accepts as true all of the factual allegations contained
in the complaint, even if it appears that “actual proof of those facts is improbable,” Twombly,
550 U.S. at 556, and “draw[s] all reasonable inferences in favor of the nonmoving party.” Torti
v. Hoag, 868 F.3d 666, 671 (8th Cir. 2017) (quotation omitted). In addressing a motion to
dismiss, “[t]he court may consider the pleadings themselves, materials embraced by the
pleadings, exhibits attached to the pleadings, and matters of public record.” Mills v. City of
Grand Forks, 614 F.3d 495, 498 (8th Cir. 2010) (citing Porous Media Corp. v. Pall Corp., 186
F.3d 1077, 1079 (8th Cir. 1999)).
III.

Discussion
Defendants argue that Plaintiff fails to allege sufficient facts to state a claim for

trademark infringement or unfair competition. More specifically, Defendants maintain that
Plaintiff’s allegations do not establish a likelihood of confusion between the parties’ marks.
To prevail on a claim of trademark infringement, “a plaintiff must show that it has a

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valid, protectible mark and that there is a likelihood of confusion between its mark and the
defendant’s mark.” B&B Hardware, Inc. v. Hargis Indus., Inc., 569 F.3d 383, 389 (8th Cir.
2009). See also 15 U.S.C. § 1114(1); 15 U.S.C. § 1125(a)(1)(A); Sensient Techs. Corp. v.
SensoryEffects Flavor Co., 636 F. Supp. 2d 891, 898 (E.D.Mo. 2009) (affirmed by 613 F.3d 754
(8th Cir. 2010) (trademark infringement claims pursuant to Missouri law “substantially overlap”
with the Lanham Act). Likelihood of confusion exists when a defendant’s use of a mark is likely
to confuse, deceive, or cause mistake among an appreciable number of ordinary buyers as to the
source of or association between the parties’ products or services. See Duluth News-Tribune v.
Mesabi Pub. Co., 84 F.3d 1093, 1096 (8th Cir. 1996).
“[L]ikelihood of confusion is a factual question.” ConAgra, Inc. v. George A. Hormel, &
Co., 990 F.2d 368, 371 (8th Cir. 1993). When evaluating the likelihood of confusion, courts
consider the following six factors:
1) the strength of the plaintiff’s mark; 2) the similarity between the plaintiff’s
and defendant’s marks; 3) the degree to which the allegedly infringing product
competes with the plaintiff’s goods; 4) the alleged infringer’s intent to confuse
the public; 5) the degree of care reasonably expected of potential customers;
and 6) evidence of actual confusion.
Roederer v. J. Garcia Carrion, S.A., 569 F.3d 855, 860 (8th Cir. 2009). These factors do not
operate as a precise test, but instead represent the type of considerations a court should examine
when determining likelihood of confusion.

Duluth News-Tribune, 84 F.3d at 1096.

Accordingly, the Court considers each factor in turn.
A. Strength
Defendants argue that Plaintiff’s CarShield marks are “generic and weak” because and
use of the word “car” in the automotive service industry is non-distinctive and Plaintiff did not
register any associated logos, arrangements, or colors.

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(ECF No. 12 at 3).

Additionally,

Defendant notes that Plaintiff did not allege marketplace recognition of its mark. (Id. at 5).
“A strong and distinctive trademark is entitled to greater protection than a weak or
commonplace one.” Frosty Treats Inc. v. Sony Computer Ent. Am. Inc., 426 F.3d 1001, 1008
(8th Cir. 2005) (quoting SquirtCo. v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980)).
“Two relevant measurements of a mark’s strength are its conceptual strength and its commercial
strength.” Lovely Skin, Inc. v. Ishtar Skin Care Prods., LLC, 745 F.3d 877, 888 (8th Cir. 2014)
(citation omitted).

Evidence of a plaintiff’s advertising expenditures and revenues over time are

relevant factors in evaluating a mark’s strength. See id.
In its complaint, Plaintiff alleges that it devoted substantial resources to “building the
CARSHIELD brand in the vehicle service contract market” and to the “marketing, advertising,
and promotion of the CARSHIELD Marks in connection with selling vehicle services contracts.”
(ECF No. 1 at ¶¶ 3, 24). Plaintiff states that it displays the CarShield marks on its website,
www.carshield.com, and uses the mark in print, television, and radio advertisements. (Id. at ¶¶
25-26).

Exhibits attached to Defendants’ motion to dismiss contain a photograph of the

CarShield mark on the baseball stadium where the River City Rascals play and an online
advertisement for CarShield with a photograph of Mike Ditka, “Hall of Famer & Coach.” (ECF
No. 12-2).
In ruling on a motion to dismiss, the Court accepts all factual allegations and draws all
reasonable inferences in favor of the Plaintiff. Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir.
2009). Based on Plaintiff’s allegations relating to the advertising, marketing, and promotion of
its CarShield marks, the Court may reasonably infer that the mark enjoys a degree of commercial
strength. Therefore, Plaintiff alleged sufficient facts to make the strength of its mark plausible.3

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In support of their argument that the weakness of the CarShield mark weighs against a
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B. Similarity
Defendants contend that Plaintiff fails to plead sufficient facts to establish a similarity
between the marks. (ECF No. 12 at 5-8). “The use of identical, even dominant, words in
common does not automatically mean that two marks are similar.” General Mills, Inc. v.
Kellogg Co., 824 F.2d 622, 627 (8th Cir. 1987). “Rather, in analyzing the similarities of sight,
sound, and meaning between two marks, a court must look to the overall impression created by
the marks and not merely compare individual features.” Id.
In its complaint, Plaintiff states that the CarShield and CarSure marks are “confusingly
similar” and therefore “likely to cause confusion among consumers as to the source of the
vehicle services advertised and sold.” (ECF No. 1 at ¶¶ 31-34). Specifically, Plaintiff alleged
that the marks are similar in: (1) “appearance, as both begin with the word ‘car’ followed by a
word beginning with ‘s,’ are displayed as one word with the ‘C’ and the ‘S’ capitalized, and use
similar shades of blue”; (2) “sound, as both begin with the word ‘car’ followed by a word that
begins with a ‘sh’ sound”; and (3) “meaning, as both marks suggest a sense of security and
protection relating to a consumer’s vehicle.” (Id. at ¶ 33). Having identified similarities in the
marks’ appearances, sounds, and meanings, the Plaintiff sufficiently alleged similarity between
the parties’ marks.

likelihood of confusion, Defendant relies on Frosty Treats Inc. v. Sony Computer Entertainment
Am. Inc., 426 F.3d 1001, 1008 (8th Cir. 2005) and Progressive Distribution Servs., Inc. v. United
Parcel Serv., Inc., 856 F.3d 416 (6th Cir. 2017). However, those cases are inapposite because the
courts decided them on summary judgment. In contrast to the summary judgment procedure, for
Rule 12(b)(6) motions, courts must “construe the complaint liberally in the light most favorable
to the plaintiff,” Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008), and, therefore,
“few trademark cases are resolved on motions to dismiss.” Moresource, Inc., No. 4:13-CV-235
DDN, 2013 WL 2338406 at *4 (E.D.Mo. May 29, 2013) (quoting Tecumseh Poultry LLC v.
Perdue Holdings, Inc., No. 4:12-CV-3032, 2012 WL 3018255 at *4 (D. Neb. July 24, 2012)).
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C. Competition
Defendants do not challenge Plaintiff’s showing that the parties directly compete with
each other. “Where products are wholly unrelated, this factor weighs against a finding that
confusion is likely. Where products are related, however, it is reasonable for consumers to think
that the products come from the same source, and confusion, therefore, is more likely.” Kemp v.
Bumble Bee Seafoods, Inc., 398 F.3d 1049, 1056 (8th Cir. 2005) (citing Anheuser-Busch, Inc. v.
Balducci Publications, 28 F.3d 769, 774 (8th Cir. 1994)).
In its complaint, Plaintiff states that Defendants’ vehicle services contracts directly
compete with those sold by Plaintiff and “the contracts are sold through overlapping channels of
trade, such as through print advertisements and online.” (ECF No. at ¶ 31). Plaintiff’s factual
allegations are sufficient to show that the parties’ services are in competition with each other.
D. Intent
Defendants argue that Plaintiff’s complaint fails to plead facts sufficient to establish that
Defendants intended to “pass off” its services as those of Plaintiff. (ECF No. 12 at 8-9).
Defendants suggest that, because Plaintiff “used the term ‘CARSHIELD’ for only the briefest of
time before claiming trademark infringement,” Plaintiff cannot demonstrate that its mark had
achieved sufficient visual or commercial strength to support a plausible claim of bad intent.
(ECF No. 12 at 9).
“While proof of bad intent is not required for success in an infringement or unfair
competition, ‘the absence of such intent is a factor to be considered.’” Sensient Techs., 613 F.3d
at 766 (quoting Frosty Treats, 426 F.3d at 1008). “Knowledge of another’s product and an intent
to compete with that product is not . . . equivalent to an intent by a new entrant to a market to
mislead and to cause consumer confusion.” Id. (quoting Luigino’s, Inc. v. Stouffer Corp., 170

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F.3d 827, 830 (8th Cir. 1999)).

However, “[a]n inference of an intent to trade upon the

plaintiff’s good will arises if the defendants, with knowledge of plaintiff’s mark, chose a mark
similar to that mark from the infinite number of possible marks.”

Aveda Corp. v. Evita

Marketing, Inc., 706 F.Supp. 1419, 1429 (D. Minn. 1989) (citing Fleischmann Distilling Corp. v.
Maier Brewing Co., 314 F.2d 149 (9th Cir.) (cert. denied, 374 U.S. 830 (1963)).
In regard to bad intent, Plaintiff alleges that “CarSure [] has convinced consumers who
believe they are contacting NRRM or CarShield to buy one of Defendants’ contracts instead.”
(ECF No. 1 at ¶ 36). Plaintiff further states: “Defendants knowingly, willfully, intentionally,
and maliciously” use the confusingly similar CarSure marks in its advertisements and on its
website “to exploit the commercial value of the CARSHIELD Marks and falsely suggest that
Defendants’ vehicle services contracts originate from or are sponsored or endorsed by NRRM.”
(Id. at ¶ 38).
As previously stated, when considering a motion to dismiss, the Court accepts as true all
factual allegations in the complaint and draws all reasonable inferences in favor of the
nonmoving party. Torti, 868 F.3d at 671. Plaintiff’s allegation that Defendants intended to
exploit the commercial value of Plaintiff’s Carshield marks and took advantage of consumer
confusion by persuading callers intending to contact Plaintiff to purchase Defendants’ contracts
instead, states a plausible claim that Defendants intended to “pass off” its services as those of
Plaintiff. 4

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In support of its position, Defendants cite the Eighth Circuit’s decision in Luigino’s, Inc. v.
Stouffer Corp., 170 F.3d 827 (8th Cir. 1999). In affirming summary judgment for the defendant,
the Luigino’s court found that evidence that a consultant advised the defendant against using the
name “Lean ’N Tasty” because the defendant’s low-fat, frozen entrees “might be compared with
Lean Cuisine entrees,” did not establish an intent to “pass off” its products as the plaintiff’s. Id.
at 831. Unlike Luigino’s, which was decided on a motion for summary judgment, the instant
case is before the Court on a motion to dismiss. The inquiry under Rule 12(b)(6) is the adequacy
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E. Consumers’ degree of care
Defendants contend that Plaintiff fails to plead sufficient facts to establish the degree of
care exercised by purchasers of vehicle services contracts. (ECF No. 12 at 10). “[T]he kind of
product, its costs and the conditions of purchase are important factors in considering whether the
degree of care exercised by the purchaser can eliminate the likelihood of confusion which would
otherwise exist[].” Lovely Skin, Inc., 745 F.3d at 889 (quoting SquirtCo., 628 F.2d at 1091).
Where products are expensive, consumers are likely to exercise greater care in making
purchases, thus reducing the likelihood of confusion. See id. A defendant’s “distribution
methods” are also relevant. See Duluth News-Tribune, 84 F.3d at 1099.
Plaintiff’s complaint alleges that both parties sell vehicle services contracts, and they do
so “through overlapping channels of trade, such as through print advertisements and online.”
(ECF No. 1 at 31). Defendant responds that confusion is unlikely because “[t]he relatively high
cost of automotive service contracts (at least compared with everyday consumer goods) makes it
less likely that confusion will occur” because purchasers will “employ careful consideration
before spending a relatively large sum of money.” (ECF No. 12 at 11). The extent of the
similarities in the costs, conditions of purchase, and distribution is a factual dispute that is not
appropriate for resolution on a motion to dismiss. See e.g., JS IP, LLC v. LIV Ventures, Inc.,
Case No. 8:11CV424, 2012 WL 2871794 at *9 (D. Neb. July 12, 2012).
F. Actual confusion
Defendants argue that Plaintiff insufficiently alleged actual incidents of confusion. (ECF
No. 12 at 9). “Although such incidents are proof of the likelihood of confusion, the plaintiff is
not required to bring forth incidents of actual confusion to succeed in an infringement case.”

of the pleadings, and not the sufficiency of the evidence.
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Sensient Tech., 613 F.3d at 768 (citing SquirtCo. v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.
1980)). See also Moresource, Inc., 2013 WL 2338406 at *3. In analyzing this factor, weight is
given to “the number and extent of instances of actual confusion.” Duluth News–Tribune, 84
F.3d at 1098.
In its complaint, Plaintiff states that “Defendants’ use of the CARSURE Marks has
caused actual confusion among consumers as to the source of vehicle contracts sold by [Plaintiff]
and those sold by Defendants.” (ECF No. 1 at ¶ 34). In support of this allegation, Plaintiff
included a consumer’s comment on an online article reflecting that consumer’s confusion
between the two companies. (Id. at ¶ 35). Plaintiff further alleged that consumers who report
complaints on third-party websites relating to the marketing practices and/or products of vehicle
services contract companies “sometimes mistake [Plaintiff] as the source of contracts and
advertisements that actually come from Defendants[.]” (Id. at ¶ 37).
Defendants contend that “a single hearsay alleged instance of confusion” did not create a
plausible claim of actual confusion. However, Plaintiff alleged more than a single incident of
actual confusion. Furthermore, Defendants again urge the Court to consider the adequacy of the
evidence, rather than the adequacy of the pleadings. Contrary to Defendants’ argument, the
Court finds that Plaintiff pleaded factual allegations sufficient to show that incidents of actual
confusion may have occurred.
IV.

Conclusion
For the reasons stated herein, the Court holds that Plaintiff alleged sufficient facts to

establish a plausible claim for trademark infringement and unfair competition under the Lanham
Act and Missouri law. Accordingly, after careful consideration,

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IT IS HEREBY ORDERED that Defendants’ motion to dismiss Plaintiff’s complaint
(ECF No. 11) is DENIED.

PATRICIA L. COHEN
UNITED STATES MAGISTRATE JUDGE
Dated this 30th day of October, 2017

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