D'Pergo Custom Guitars, Inc. v. Sweetwater Sound, Inc.

Filing 43

ORDER granting in part 27 Motion to Amend 1 Complaint; denying as moot 21 Motion for Judgment on the Pleadings; denying as moot 31 Motion for Judicial Notice. So Ordered by Judge Landya B. McCafferty.(gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
D’Pergo Custom Guitars, Inc.
v.

Civil No. 17-cv-747-LM
Opinion No. 2018 DNH 169

Sweetwater Sound, Inc.
O R D E R
Before the court are three pending motions.

First,

plaintiff D’Pergo Custom Guitars, Inc. (“D’Pergo”) moves to
amend its complaint to add two claims based on its registered
trademark.

Second, defendant Sweetwater Sound, Inc.

(“Sweetwater”) moves for judgment on the original pleadings, on
the narrow ground that D’Pergo is not entitled to statutory
damages or attorney’s fees on its claim for copyright
infringement.

Third, Sweetwater moves for judicial notice of

certain facts for purposes of its objection to D’Pergo’s motion
to amend.

On August 17, 2018, the court held a status

conference via telephone.

For the following reasons, D’Pergo’s

motion to amend the complaint is granted in part; Sweetwater’s
motion for judgment on the pleadings is denied as moot; and
Sweetwater’s motion for judicial notice is denied as moot.
BACKGROUND
The following facts are taken from D’Pergo’s original
complaint, unless otherwise noted.

D’Pergo manufactures and

sells custom guitars.

In 2003, D’Pergo created a photograph

showing a number of its unique guitar necks, which it then
published on its website.

Sweetwater is a retailer that sells

musical instruments, including guitars, through its website.
D’Pergo alleges that Sweetwater obtained the photograph and
published it on Sweetwater’s own website.

Specifically,

Sweetwater posted the photograph in its online “Electric Guitar
Buying Guide,” a printout of which D’Pergo has attached to both
its original and proposed amended complaints.
18-24; doc. no. 27-4.

See doc. no. 1 at

D’Pergo brought this action in December

2017, initially raising a claim for copyright infringement
(Count I), an unfair competition claim under the New Hampshire
Consumer Protection Act (“CPA”) (Count II), and a deceptive
business practices claim under the CPA (Count III).
DISCUSSION
The court begins by examining D’Pergo’s motion to amend.
D’Pergo moves to amend its complaint to add two new claims and
factual allegations related to those claims.

Proposed Count IV

is for false designation of origin and unfair competition (15
U.S.C. § 1125(a)(1)), and proposed Count V is for trademark
infringement (15 U.S.C. § 1114(1)(a)).

These claims relate to

Sweetwater’s alleged infringement of D’Pergo’s federally

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registered trademark, which is a distinctive design for its
guitar necks:

Doc. nos. 27-5 at 2, 27-6 at 2 (resized from originals).

For

both claims, D’Pergo alleges that Sweetwater’s display of
D’Pergo’s trademark in the photograph is likely to cause
confusion and mislead consumers into believing that Sweetwater’s
goods are affiliated or connected with D’Pergo.
Under Rule 15(a) of the Federal Rules of Civil Procedure, a
party may generally amend its pleading “only with the opposing
party's written consent or the court's leave,” which should be
“freely give[n] . . . when justice so requires.”
P. 15(a)(2).

Fed. R. Civ.

Nevertheless, “a district court may deny leave to

amend when the request is characterized by undue delay, bad
faith, futility, or the absence of due diligence on the movant's
part.”

Sykes v. RBS Citizens, N.A., 2 F. Supp. 3d 128, 133

(D.N.H. 2014).
3

“A proposed amendment to a complaint is futile if, as
amended, the complaint . . . fails to state a claim.”
(internal quotation marks omitted).

Id.

“Therefore, review for

futility is identical to review under Federal Rule of Civil
Procedure 12(b)(6),” id., whereby the court accepts the factual
allegations in the complaint as true, construes reasonable
inferences in the plaintiff's favor, and “determine[s] whether
the factual allegations in the plaintiff's complaint set forth a
plausible claim upon which relief may be granted,” Foley v.
Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014)
(internal quotation marks omitted).

A claim is facially

plausible “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009).
Sweetwater makes six arguments in objecting to D’Pergo’s
motion to amend.

First, it contends that any claim based on

D’Pergo’s trademark is futile because D’Pergo alleges that in
2006, it stopped using the photograph on its website.

In

Sweetwater’s view, this allegation establishes that D’Pergo
abandoned its trademark.

But as D’Pergo points out, there is a

distinction between D’Pergo’s continued use of the photograph,
and D’Pergo’s continued use of its trademark.

It is the latter

that is relevant for purposes of assessing abandonment.
4

See 3

McCarthy on Trademarks & Unfair Competition § 17:9 (5th ed.)
(“[L]ack of actual usage of a symbol as a ‘trademark’ can result
in a loss of legal rights. This loss is known as ‘abandonment.’”
(emphasis added)).

Because the complaint does not establish

that D’Pergo abandoned its trademark in that sense, Sweetwater’s
argument fails.

And regardless, abandonment presents a question

of fact that the court cannot resolve at this juncture.

See

Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387, 1390
(Fed. Cir. 2010).
Second, Sweetwater claims that it removed the photograph
from its Buying Guide on January 6, 2016, months prior to the
date of registration for D’Pergo’s trademark (August 23, 2016).
This fact is derived not from the complaint, however, but from a
declaration that Sweetwater has submitted with its objection.
Because the court may not consider that fact in evaluating the
futility of D’Pergo’s motion, and must instead confine its
analysis to the complaint, Sweetwater’s argument fails.1

See

In response to Sweetwater’s request for admissions, D’Pergo
conceded that it does not yet have evidence that Sweetwater
continued to use the photograph after January 6, 2016. See doc.
no. 31-2 at 3. Sweetwater relies on this admission to ask the
court to take judicial notice of the broader proposition that
Sweetwater actually removed the photograph on that date.
D’Pergo’s admission does not establish that proposition, and it
certainly does not meet the high standard required for judicial
notice. See United States v. Bello, 194 F.3d 18, 23 (1st Cir.
1999) (stating that a “high degree of indisputability is an
essential prerequisite” to judicial notice).
1

5

Foley, 772 F.3d at 71.

By the same token, the court may not

consider Sweetwater’s claim that it had no actual or
constructive notice of D’Pergo’s trademark application or
registration while the photograph was posted in its Buying
Guide.
Third, Sweetwater alleges that D’Pergo “committed a fraud
on the USPTO” because D’Pergo averred in its trademark
application that it sold necks for electric guitars, when in
fact it does not.

Doc. no. 30-1 at 9.

For this argument, it

suffices to say that an allegation of fraudulent
misrepresentation presents questions of fact that the court
cannot resolve in Sweetwater’s favor at this time.

See

generally MPC Franchise, LLC v. Tarntino, 826 F.3d 653 (2d Cir.
2016) (discussing standard for claim that trademark registration
was procured through fraud).
Fourth, Sweetwater asserts that its “functional and/or
aesthetic use” of the photograph in its Buying Guide cannot
support a claim for trademark infringement or unfair
competition.

Doc. no. 30-1 at 13.

To be sure, D’Pergo’s

theories of liability based on Sweetwater’s use of the
photograph may present unique issues not present in more
prototypical cases of trademark infringement or unfair
competition, and such issues may become the subject of
subsequent motion practice.

But both parties present their
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arguments in brief fashion, largely bereft of relevant case law.
The court is not in a position to resolve the nuanced questions
alluded to, but not fully developed, by Sweetwater, and
therefore declines to address this argument at present.

See

United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (“It is
not enough merely to mention a possible argument in the most
skeletal way, leaving the court to do counsel's work . . . .”).
Sweetwater is free to raise this argument in the future.
Fifth, Sweetwater contends that D’Pergo’s delay justifies
denial of the motion, because D’Pergo waited nearly two years
from the date of registration, and approximately eight months
from the date it filed the complaint, to raise the trademark
claims.

The court is not persuaded.

D’Pergo filed its motion

one day after the applicable deadline, which is excusable given
that the deadline was on a Sunday.

See doc. no. 17 at 2.

And

based on the present record, the court cannot infer from
D’Pergo’s delay any bad faith or dilatory motive: discovery is
not scheduled to be completed until 2019; the claims appear to
have a similar factual nexus to those in the original complaint;
and the motion practice that has occurred with respect to the
original complaint has been fairly minor in scope.

See Febus-

Cruz v. Sauri-Santiago, 652 F. Supp. 2d 166, 168-69 (D.P.R.
2009).

Furthermore, because the court resolves Sweetwater’s

pending motion for judgment on the pleadings in this order, no
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prejudice accrues to Sweetwater based on the resources it
already expended in prosecuting that motion.
Turning to the issue raised in that motion, Sweetwater’s
sixth argument is that D’Pergo cannot obtain statutory damages
or attorney’s fees under the Copyright Act.

See 17 U.S.C. §§

504-05 (describing remedies under Copyright Act).

Sweetwater

therefore contends that the amended complaint is futile to the
extent that it seeks that requested relief.

The legal basis for

Sweetwater’s argument is 17 U.S.C. § 412, which “bars recovery
of statutory damages under section 504 and attorneys’ fees under
section 505 by copyright owners who failed to register the work
before the alleged infringement began.”

Latin Am. Music Co. v.

Am. Society of Composers, Authors & Publishers (ASCAP), 642 F.3d
87, 90 (1st Cir. 2011).
The court agrees with Sweetwater.

In the proposed amended

complaint, D’Pergo alleges that the photograph has an effective
registration date of July 7, 2015.

The publication date of the

Buying Guide, however, is May 22, 2013—more than two years
before the registration date.

Thus, because the infringement

commenced prior to registration, D’Pergo is barred from
recovering statutory damages or attorney’s fees.

See id.

D’Pergo counters that Sweetwater’s argument is premised on
an impermissible inference—that the date displayed in the byline

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of the Buying Guide is the date on which Sweetwater published
the Buying Guide and, therefore, the photograph.

D’Pergo

contends that the court’s deferential standard of review
precludes the court from drawing that inference.
D’Pergo’s argument is unpersuasive.

While a court must

draw all reasonable inferences in the non-moving party’s favor,
it need not accept unreasonable inferences or ignore the clear
import of an attached exhibit.

Here, D’Pergo offers no contrary

inference that can be drawn from the date displayed in the
byline of the Buying Guide.

The only reasonable inference is

that Sweetwater published the Buying Guide, and consequently the
photograph, on that date.

Accordingly, D’Pergo’s request for

statutory damages and attorney’s fees under the Copyright Act is
futile, and D’Pergo’s motion to amend will be denied to that
extent.

Except to that limited extent, however, the court

grants D’Pergo’s motion.
Because the court is granting D’Pergo’s motion to amend,
Sweetwater’s motion for judgment on the original pleadings is
denied as moot.

Similarly, having rejected Sweetwater’s

arguments in support of its objection to the motion to amend,
the court need not further address whether judicial notice of
certain facts would be appropriate.

Therefore, Sweetwater’s

motion for judicial notice is denied as moot.

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CONCLUSION
For the foregoing reasons, D’Pergo’s motion to amend (doc.
no. 27) is granted in part.

D’Pergo shall file its amended

complaint, except that D’Pergo may not seek statutory damages or
attorney’s fees under the Copyright Act.

Sweetwater’s motion

for judgment on the pleadings (doc. no. 21) and motion for
judicial notice (doc. no. 31) are denied as moot.
SO ORDERED.
__________________________
Landya McCafferty
United States District Judge
August 20, 2018
cc:

Counsel of Record

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