Kelly-Brown et al v. Winfrey et al
Filing
57
OPINION AND ORDER. For the reasons in this opinion and order, the Defendants' motion to dismiss the federal claims is GRANTED. The Court declines to exercise supplemental jurisdiction over Plaintiffs' state and common law claims and dismiss es those claims without prejudice. The Clerk of Court is directed to terminate this motion (Dkt. No. 51) and close this case. Re: 51 MOTION to Dismiss filed by Estee Lauder Companies, Inc., Clinique Laboratories, LLC, Hearst Corporation, Wells Fargo & Company, Chico's FAS, Inc., Oprah Winfrey, Harpo, Inc., Hearst Communications, Inc., Harpo productions, inc. (Signed by Judge Paul A. Crotty on 3/6/2012) (rjm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------- x
SIMONE KELLY-BROWN and
:
OWN YOUR POWER
:
COMMUNICATIONS, INC.
:
:
Plaintiffs,
:
:
- against :
:
OPRAH WINFREY, et al.,
:
:
Defendants.
:
---------------------------------------------------- x
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: March 6, 2012
:
11 Civ. 7875 (PAC)
OPINION AND ORDER
HONORABLE PAUL A. CROTTY, United States District Judge:
Plaintiffs Simone Kelly-Brown and Own Your Power Communications, Inc.
(“Plaintiffs”) bring this action against Oprah Winfrey (“Oprah”), Harpo Productions, Inc.,
Harpo, Inc., Hearst Corporation, Hearst Communications, Inc., Wells Fargo & Company,
Clinique Laboratories, LLC, Chico’s FAS, Inc. Estee Lauder Companies, Inc, ABC Companies
(1-100), and John Does (1-100) (collectively, the “Defendants”), under sections 32 and 43 of
the Lanham Act, New Jersey State law, and common law. Plaintiffs allege that Defendants
unlawfully used Plaintiffs’ trademark phrase “Own Your Power” (the “Phrase”) on the cover of
the O Magazine and in promoting a related O Magazine event.
Defendants move to dismiss Plaintiffs’ complaint in its entirety, pursuant to Federal
Rule of Civil Procedure 12(b)(6). For the reasons that follow, the Court dismisses Plaintiffs’
federal claims and declines to exercise supplemental jurisdiction over the state law and
common law claims.
BACKGROUND
Since 1996, Plaintiffs have provided “a personal brand of self-awareness and
motivational communications services nationally.” (Compl. ¶ 2.) On May 27, 2008, Plaintiffs
registered the “Own Your Power” trademark with the United States Patent and Trademark
Office. (Id. Ex. A.)
On September 13, 2010, the October 2010 O Magazine (the “Magazine”) was
distributed. (Id. ¶ 24.) The cover of the Magazine depicted, inter alia, the trademark “O,”
followed by “The Oprah Magazine,” a photograph of Oprah, and the headline Phrase “Own
Your Power,” which was surrounded by the phrases: “Unlock Your Inner Superstar”; “The
2010 O Power List”; “Tap Into Your Strength”; “Focus Your Energy”; and “Let Your Best Self
Shine.” (Id. Ex. D.)
The Magazine promoted an “Own Your Power event” (the “Event”), to be held on
September 16, 2010, which was described as “a lively panel discussion about power featuring
some of the notables from this issue’s Power List.” (Id. ¶¶ 11, 27; Ex. E.) The Event was
promoted as being sponsored “In Partnership With” Chico’s, Wells Fargo, and Clinique. (Id. ¶
27; Ex. E.)
The Magazine and/or the Event was thereafter referred to on one episode of The Oprah
Winfrey Show; in the December 2010 edition of the O Magazine; on affiliated websites,
including www.oprah.com and www.omagazine.info; and on Harpo and Hearst
Communications’ Twitter and Facebook accounts. (Id. ¶¶ 11, 44, 73, 74; Exs. E, K, M.)
On July 28, 2011, Plaintiffs filed this action in the District of New Jersey, asserting a
barrage of claims under sections 32 and 43 of the Lanham Act (15 U.S.C. §§ 1114, 1125), for:
trademark counterfeiting; trademark infringement; reverse confusion; false designation of
2
origin and unfair competition; contributory trademark infringement; and vicarious trademark
infringement. Plaintiffs also assert claims under New Jersey State law and common law for:
trafficking in counterfeit marks; common law misappropriation; unfair competition; common
law trademark infringement; common law civil conspiracy; interference with prospective
business and/or economic advantage; and a violation of the consumer fraud act.
On September 23, 2011, Defendants moved to transfer the case to the Southern District
of New York, or, in the alternative, to dismiss the case. On November 3, 2011, District Court
Judge Stanley R. Chesler granted Defendants’ motion to transfer, and the matter was
transferred to this Court. On January 13, 2012, Defendants renewed their motion to dismiss
before this Court.
LEGAL STANDARD
“To 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.’” Ashcroft v. Iqbal, 129
S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
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.” Id.
“[T]hreadbare recitals of the elements of the cause of action, supported by mere conclusory
statements, do not suffice.” Id.
In ruling on this motion, the Court considers the complaint and the exhibits attached to
the complaint, which are integral to the complaint and which Plaintiff clearly relied upon in
drafting the complaint. See Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007).
3
DISCUSSION
Defendants argue that Plaintiffs’ claims should be dismissed because: (1) Plaintiffs
failed to allege that any defendant other than Hearst Communications was involved in the
alleged infringement; (2) the First Amendment protects Defendants’ speech; (3) Defendants
did not make a trademark use of the Phrase; (4) Defendants’ use of the Phrase constitutes fair
use; (5) Plaintiffs have not stated a claim for trademark counterfeiting; and (6) the state and
common law claims are purely derivative.
The Court first addresses Plaintiffs’ Lanham Act claims since they are the critical
components in the Plaintiffs’ complaint.
A. Plaintiffs’ Lanham Act Claims
Plaintiffs assert claims under the sections 32 and 43 of the Lanham Act for: trademark
counterfeiting; trademark infringement; reverse confusion; false designation of origin and
unfair competition; contributory trademark infringement; and vicarious trademark
infringement. Defendants argue, inter alia, the fair use defense bars Plaintiffs’ claims.
1. Fair Use1
The fair use defense allows use of protected marks in descriptive ways, provided it does
not identify the source or origin of the goods. The Lanham Act codifies this defense: “the use
of the name, term, or device charged to be an infringement is a use, otherwise than as a mark,
. . . which is descriptive of and used fairly and in good faith only to describe goods or services
of [a] party, or their geographic origin.” 15 U.S.C. § 1115(b)(4).2 The fair use defense
1
2
A court can consider whether the fair use defense applies on a motion to dismiss. See e.g., Arnold v.
ABC, Inc., No. 06 Civ. 1747, 2007 WL 210330 (S.D.N.Y. Jan. 29, 2007) (granting motion to dismiss
on fair use grounds).
While fair use is an express defense “to claims under 15 U.S.C. § 1114, [ ] courts have extended it to
claims under 15 U.S.C. § 1125 as well.” Arnold, 2007 WL 210330, at *2 n.5 (citing cases).
4
requires that the Defendants show that their use of the Phrase was “(1) other than as a mark, (2)
in a descriptive sense, and (3) in good faith.” EMI Catalogue P’ship v. Hill, Holliday,
Connors, Cosmopulos Inc., 228 F.3d 56, 64 (2d Cir. 2000).
a. Non-Trademark Use
A trademark use involves an indication of the source or origin of the goods. See
Dessert Beauty, Inc. v. Fox, 568 F. Supp. 2d 416, 424 (S.D.N.Y. 2008). A “non-trademark use
of [a] phrase” is evident where “the source of the defendants’ product is clearly identified by
the prominent display of the defendants’ own trademarks.” Cosmetically Sealed Indus., Inc. v.
Chesebrough-Pond’s USA Co., 125 F.3d 28, 30-31 (2d Cir. 1997). The fact that a phrase is
used in a descriptive sense, as analyzed below, also suggests a non-trademark use. See id.
Defendants argue that they used the Phrase in its descriptive sense and not to indicate
the source or origin of the goods (the Magazine and the Event). The source of the Magazine
was clearly identified by the prominent, and distinctive “O” trademark followed by “The
Oprah Magazine.” See id.; see also Packman v. Chicago Tribune Co., 267 F.3d 628, 639 (7th
Cir. 2001) (“the Tribune’s distinctive masthead, which appears prominently on the front page .
. . identifies the source of the product.”) The fact that Oprah herself is pictured on the cover of
the Magazine further identifies the source of the goods. See Arnold v. ABC, Inc., No. 06 Civ.
1747, 2007 WL 210330, at *3 (S.D.N.Y. Jan. 29, 2007) (holding that defendants did not make
a trademark use of the phrase “what’s your problem?” when the “identity of the show” was
“clearly evidenced by the prominent display of the show’s title, ABC’s own famous and
recognizable trademark, and large photos of the show’s three stars.”) The prominent display of
Magazine’s trademark “O” also identifies the Phrase as a headline that, along with the other
text on the cover, describes the contents of the Magazine. See Packman, 267 F.3d at 639 (“The
5
tribune’s use of its well-known masthead also identifies the phrase as a newspaper headline . . .
and not as a Tribune trademark.”)
The O Magazine was also identified as the source of the Event, and the Phrase served to
describe the Event’s theme. Promotional materials identified the Event as: “O, The Oprah
Magazine[’s] . . . first-ever own your power event in celebration of the October issue cover
story,” which involved “a lively panel discussion about power featuring some notables from
this issue’s Power list.” (Compl. Ex. E.) Since the promotional materials clearly identified
The O Magazine as the source of the Event, the Defendants’ use of the Phrase in relation to the
Event was not a trademark use. See Arnold, 2007 WL 210330, at *3 (holding that defendants’
use of a phrase was not a trademark use where “[o]n both the advertisements and the website,
the identity of the show” was clearly evident).
Plaintiffs argue, however, that Defendants used the Phrase as a trademark, as
demonstrated by the fact that: (1) Defendants filed trademark registrations for other phrases;
and (2) Defendants “combined their trademarked ‘O’” with the Own Your Power trademark to
create a “single source identifier.” (Pl. Opp. 11-12.) Plaintiffs’ first argument is untenable.
The fact that Defendants registered other marks, even other phrases, does not mean that their
use of any other particular phrase necessarily constitutes a trademark use. To the contrary, the
fact that the Defendants obtained and prominently displayed their own trademark on the same
page as the Phrase is evidence of non-trademark use. See Cosmetically Sealed, 125 F.3d at 30.
Plaintiffs’ second argument is also without merit, because the fact that Plaintiffs’ and
Defendants’ marks are used in conjunction with each other does not alter the above analysis,
where defendants’ trademark or reputation is well known, clearly displayed, and used to
indicator of the source of the product. See B & L Sales Assocs. v. H. Daroff & Sons, Inc., 421
6
F.2d 352, 353 (2d Cir. 1970) (holding that the trademark phrase “Come on Strong” was not
used as a source identifier in the advertisement “Come on Strong with Botany 500,” because
given “defendant’s reputation as a well-known manufacturer of [Botany 500] men’s suits, it is
inconceivable that these [advertising] materials were intended to attribute the source of the
goods to anyone other than defendant.”)3 As discussed above, Defendants’ prominent display
of their trademark, along with a photograph of Oprah, clearly identified the source of the
products. Accordingly, Defendants’ use of the Phrase, even in conjunction with their
trademark, did not constitute a trademark use. See id.; Arnold, 2007 WL 210330, at *3.
Defendants argue that “trademark use is a threshold requirement for a Lanham Act
claim” and, therefore, their non-trademark use alone warrants dismissal. The Second Circuit
has recognized that “‘use” must be decided as a threshold matter,” in analyzing trademark
infringement claims, because “no such activity is actionable under the Lanham Act absent the
‘use’ of a trademark.” 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 412 (2d Cir.
2005). The Court finds that Defendants’ use of the phrase was other than as a mark. But there
are other reasons why the Lanham Act claims fail, and the Court addresses each of them in
turn.
3
The cases Plaintiffs cite from the Seventh Circuit are inapposite. In Sands, Taylor & Wood Co. v.
Quaker Oats Co., 978 F.2d 947 (7th Cir. 1992), the Seventh Circuit found that “Thirst Aid” as used in
the advertisement “Gatorade is Thirst Aid” was used in a trademark sense because “‘Thirst Aid’
appeared more prominently than ‘Gatorade’ in advertisements and [ ] the rhyming quality of the two
words created a ‘memorable slogan . . . uniquely associated’ with defendant’s ‘Gatorade’ product.”
Packman, 267 F.3d at 640 (quoting Sands, Taylor & Wood, 978 F.2d at 954). In Packman v. Chicago
Tribune Co, the court distinguished its holding in Sands, Taylor & Wood from a situation involving a
newspaper’s use of a trademark phrase in a headline, which the Seventh Circuit held was not a
trademark use, because the masthead, not the headline, fostered the association between the product
and the source, and the combined masthead and headline did not create a memorable slogan (even
though the headline itself was a slogan). 267 F.3d at 640. Here, the combined marks did not create a
memorable slogan, and the Defendants’ marks served to foster an association between the products
(the Magazine and the Event) and the source (the Defendants).
7
b. Descriptive Use
The Lanham Act requirement that the mark be used “to describe the goods,” 15 U.S.C.
§ 1115(b)(4), “has not been narrowly confined,” but rather “permits use of words or images
that are used . . . in their ‘descriptive sense.’” Cosmetically Sealed, 125 F.3d at 30 (quoting
Car-Freshener Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267, 269 (2d Cir. 1995)). A mark is
descriptive where “used to describe the ingredients, quality or composition of a product, not
the source of the product.” JA Apparel Corp. v. Abbound, No. 07 Civ. 7787 (THK), 2008 WL
2329533, at *19 (S.D.N.Y. June 5, 2008) (internal quotation omitted); see also Car-Freshener,
70 F.3d at 270 (holding that defendant’s use of a pine-tree shape was not as a mark, but rather
to describe: (1) the car freshener’s pine sent; and (2) the Christmas season—the time of year
that defendant sold its product). Additionally, a mark is used in a descriptive sense where it
“describes an action the allege infringer hopes consumer will make of its product.” EMI
Catalogue, 228 F.3d at 64-65. A “descriptive use is often evident in the manner of use, such as
the ‘physical nature of the use in terms of size, location, and other characteristics in
comparison with the appearance and other descriptive matter or other trademarks.” Dessert
Beauty, 568 F. Supp. 2d at 426 (quoting EMI Catalogue, 228 F.3d at 65).
In Cosmetically Sealed, the Second Circuit held that even though “the words ‘Seal it
with a Kiss’ do not describe a characteristic of defendants’ [lipstick], they surely are used in
their ‘descriptive sense’—to describe an action that the sellers hope consumers will take, using
their product.” 125 F.3d at 30. Here, the Phrase “Own Your Power” describes both the
Magazine’s contents, and an action that Defendants hope that O Magazine readers will take,
after reading the Magazine. See id.; see also B&L Sales Assocs., 421 F.2d at 254 (holding that
it “is quite obvious that the phrase ‘Come on Strong’ was intended only to describe the manner
8
in which [defendant’s] clothing would assist the purchaser in projecting a commanding,
confident, ‘strong’ image to his friends and admirers, and no intent to use the phrase in a
trademark sense can be inferred from these promotional materials.”). Likewise, the Phrase
describes the theme of the Event, explaining both that (1) the Event is “in celebration of the
October issue cover story”; and (2) involve a “discussion about power featuring some notables
from this issue’s Power list.” (Compl. Ex. E (the Event’s promotional materials).)
Plaintiffs’ arguments to the contrary—that the Phrase does not describe the contents of
the Magazine; that it is “vastly more prominent and visually distinctive” from other text on the
cover—are to no avail. The manner in which the Defendants used the Phrase on the cover of
the Magazine demonstrates that it served in a descriptive capacity. The Magazine blocks off
the trademark “O” in a red box on the upper left hand corner. The Phrase, however, is not
blocked off, but rather is placed in the middle of text encouraging readers to: “Unlock Your
Inner Superstar,” “Tap Into Your Strength”; “Focus Your Energy”; and “Let Your Best Self
Shine.” (Compl. Ex. D.) While Plaintiffs’ Phrase is more prominently displayed than these
other phrases, that is because it capsulizes the other phrases, and thus the Magazine’s contents.
Accordingly, the Court finds the Defendants used the Phrase in a descriptive sense.
c. Bad Faith
As to bad faith, a court considers whether a “defendant in adopting its mark intended to
capitalize on plaintiff’s good will;” and “the overall context in which the mark appear and the
totality of factors that could cause consumer confusion.” EMI Catalogue, 228 F.3d at 66.
Plaintiffs’ argue that Defendants’ bad faith is evidenced by the fact that they knew of
and failed to remove the alleged infringing mark. (Pl. Opp. 13-14.) Failure to completely
abandon use of a trademark, however, even after receipt of a cease and desist letter, standing
9
alone “‘is insufficient to support an allegation of bad faith’ as a matter of law.” Dessert
Beauty, 568 F. Supp. 2d at 426 (quoting Something Old, Something New, Inc. v. QVC, Inc.,
No. 98 Civ. 7450(SAS),1999 WL 1125063, at *7 (S.D.N.Y. Dec. 8, 1999). Similarly, failure
to conduct an official trademark search, or consult with counsel does not satisfy the bad faith
requirement. See Savin Corp. v. Savin Grp., 391 F.3d 439, 460 (2d Cir. 2004); Car-Freshener,
70 F.3d at 270 (Defendant “was fully entitled to use a pine-tree shape descriptively
notwithstanding [plaintiff’s] use of a tree shape as a mark, the fact that it did so without
consulting counsel has no tendency to show bad faith.”)
Plaintiffs have not alleged facts to plausibly suggest that Defendants intended to
capitalize on Plaintiffs’ good will or that there was a likelihood of consumer confusion. The
appearance of the Phrase as used by Plaintiffs and Defendants, and the context in which the
Phrase is used differs significantly. Plaintiffs depict the Phrase in all lowercase blue letters,
which are not italicized, followed by a trademark; Defendants depict the Phrase in italics, in
white ink on the Magazine and black and pink ink for the Event, mixing capital and lower case
letters, and printed in a noticeably different font. (Compare Compl. Exs. D, E, with Ex. N.)
Plaintiffs use the Phrase, inter alia, to sell “motivational communication services” including an
annual “Retreat and other conferences.” (Compl. ¶¶ 17-21.) Defendants used the Phrase, inter
alia, to sell a print magazine. Moreover, as discussed above, Defendants used the Phrase in a
descriptive manner, while prominently displaying the trademark “O” and photographs of
Oprah, which attributes the source of the products to the Defendants. Indeed, “the display of
defendant’s own name or trademark in conjunction with the mark it allegedly infringes is
evidence of good faith.” EMI Catalogue, 228 F.3d at 67.
10
Furthermore, “[s]o long as the defendants in good faith are using the phrase in its
descriptive sense and prominently identifying the product with the defendants’ marks, the
defendants incurs no liability simply because the materials containing the descriptive phrase
are so widely disseminated as to form some degree of association in the public’s mind between
the phrase and the product.” Cosmetically Sealed, 125 F.3d at 31. That “is a risk the plaintiff
took in selecting as its mark a phrase that was not only descriptive but readily recognized by
consumers.” Id.
The Court finds that Defendants used the Phrase in good faith. Accordingly, the
Defendants’ use of the Phrase constitutes fair use under 15 U.S.C. § 1115(b).
2. Trademark Infringement and False Designation of Origin
Fair use is a defense to federal trademark infringement and false designation of origin
claims under 15 U.S.C. §§ 1114 and 1125. See Car-Freshner Corp., 70 F.3d 268 (affirming
dismissal of trademark infringement claims and false designation of origin claims on fair use
grounds). Having found Defendants’ use of the Phrase constitutes fair use, the Court dismisses
Plaintiffs’ trademark infringement and false designation of origin claims (Counts Two and
Four).
3. Reverse Confusion
Plaintiffs’ claim for “reverse confusion” does not present “a new claim, but rather an
alternative theory of liability for [trademark] infringement under the Lanham Act.”
Birmingham v. Mizuno USA, Inc., No. 5:09–CV–0566 (GTS/GHL), 2011 WL 1299356, at *17
n.20 (N.D.N.Y. Mar. 31, 2011); see also Fitzpatrick v. Sony-BMG Music Entm’t, Inc., No. 07
Civ. 2933, 2010 WL 3377800, at *1 n.3 (S.D.N.Y. Aug. 24, 2010) (describing reverse
confusion as a “theory of trademark infringement”); Trouble v. Wet Seal, Inc., 179 F.Supp.2d
11
291, 296 (S.D.N.Y.2001) (noting that “allegations of forward confusion and reverse confusion
do not form distinct claims—they are alternative theories that can be used separately or
together in a trademark infringement claim under the Lanham Act”). Since Plaintiffs’
trademark infringement claim fails, its reverse confusion theory of liability fails as well.
Moreover, even without the fair use defense, a “reverse confusion” theory of trademark
infringement liability would still fail. As stated above a trademark “‘use’ must be decided as a
threshold matter [in a trademark infringement claim] because, while any number of activities
may be ‘in commerce’ or create a likelihood of confusion, no such activity is actionable under
the Lanham Act absent the ‘use’ of a trademark.” 1-800 Contacts, Inc. v. WhenU.Com,
Inc., 414 F.3d 400, 412 (2d Cir. 2005). Plaintiffs failed to allege Defendants made a trademark
use of the Phrase, as discussed above. Accordingly, the Court would not have occasion to
reach the ‘confusion’ prong—reverse or forward—of a trademark liability claim because
Plaintiffs’ allegations of trademark use are inadequate. See id. at 406 (since defendant did “not
‘use’ [plaintiff’s] trademarks, we need not and do not address the issue of likelihood of
confusion”).
Having failed to state a claim for trademark infringement, Plaintiffs’ reverse confusion
claim fails, and Count Three is dismissed.
4. Contributory and Vicarious Liability
Plaintiffs seek to hold each Defendant liable for contributory and vicarious liability.
Both contributory trademark infringement and vicarious trademark infringement are predicated
upon the existence of a direct infringement. See Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93,
103 (2d Cir. 2010)(describing “contributory trademark infringement” as “culpably facilitating
the infringing conduct”); Gucci Am., Inc. v. Frontline Processing Corp., 721 F.Supp.2d 228,
12
247 (S.D.N.Y.2010)(holding that vicarious trademark infringement “requires a finding that the
defendant and the infringer have an apparent or actual partnership, have authority to bind one
another in transactions with third parties or exercise joint ownership or control over the
infringing product.” (quoting Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc., 955
F.2d 1143, 1150 (7th Cir. 1992)). Since Plaintiffs have not adequately alleged that any
Defendant committed direct trademark infringement, as discussed above, their contributory
liability and vicarious liability claims, under 15 U.S.C. §§ 1114 and 1125, fail.4
Similarly, Plaintiffs’ argument that each Defendant is liable based on an alleged
partnership or agency relationship fails because there is no predicate Lanham Act violation to
attribute to any purported partner or agent of any Defendant. In any event, Plaintiffs failed to
adequately allege that a partnership or agency relationship existed between the Defendants.
a. Partnership
While the Event was promoted as “In Partnership” with Chico’s, Wells Fargo, and
Clinique, simply “calling an organization a partnership does not make it one.” Kidz Cloz, Inc.
v. Officially For Kids, Inc., 320 F. Supp. 2d 164, 174 (S.D.N.Y. 2004) (quoting Kosower v.
Gutowitz, No. 00 Civ. 9011, 2001 WL 1488440, *6, (S.D.N.Y. Nov. 21, 2001).) Rather, “[t]o
demonstrate the existence of a partnership, a plaintiff must prove four elements: (1) the parties’
sharing of profits and losses; (2) the parties’ joint control and management of the business; (3)
the contribution by each party of property, financial resources, effort, skill, or knowledge to the
4
Moreover, Plaintiffs’ claims against Estee Lauder fail on the additional ground that“[a]s a general
rule, ‘a parent corporation . . . is not liable for the acts of its subsidiaries.’” In re IndyMac MortgageBacked Sec. Litig., 718 F.Supp.2d 495, 508 & n.97 (S.D.N.Y. 2010) (quoting United States v.
Bestfoods, 524 U.S. 51, 61 (1998)). Plaintiffs only allegation against Estee Lauder is that it whollyowned defendant Clinique, which is insufficient to state a claim. (See Compl. ¶ 6.)
13
business; and (4) the parties’ intention to be partners.” Id. at 171. Plaintiffs’ conclusory
allegations are insufficient to show that the Defendants shared profits and losses or exercised
joint control and management over the Magazine and Event. While Plaintiffs claim that the
Defendants used “collective efforts,” “[m]any companies seek to cooperate with each other and
reach agreements to implement such cooperation. However, most of these agreements do not
create [partnerships].” N. Am. Knitting Mills, Inc. v. Int’l Women’s Apparel, Inc., No. 99 Civ.
4643, 2000 WL 1290608, at *2 (S.D.N.Y. Sept. 11, 2000) (quoting US Airways Grp. v. British
Airways PLC, 989 F.Supp. 482, 493 (S.D.N.Y.1997)).
Plaintiffs’ partnership by estoppels argument fails. Under New Jersey Law, a
“purported partner is liable to a person to whom the representation is made, if that person,
relying on the representation, enters into a transaction with the actual or purported
partnership.” N.J.S.A. 42:1A-20 (emphasis added).5 Since Plaintiffs have not alleged that
they entered into any transaction with the purported partnership or with any Defendant, their
estoppels argument fails. Cf. Stochastic Decisions, Inc. v. DiDomenico, 995 F.2d 1158, 1169
(2d Cir. 1993) (rejecting partner by estoppel argument where plaintiff did not give “credit” to
defendant). Having failed to adequately allege the existence of a partnership relationship,
Plaintiffs’ claims premised on partnership law fail.
b. Agency
Plaintiffs also claim that an “apparent agency” relationship existed between the
Defendants. Apparent authority “arises from the ‘written or spoken words or any other
conduct of the principal which, reasonably interpreted, causes [a] third person to believe that
5
New York has a similar law, whereby a partner by estoppel “is liable to any such person to whom [a
representation of partner status] has been made, who has, on the faith of such representation, given
credit to the actual or apparent partnership . . . .” N.Y. Partnership Law. § 27 (emphasis added).
14
the principal consents to have [an] act done on his behalf by the person purporting to act for
him.’” Minskoff v. Am. Exp. Travel Related Servs. Co., Inc., 98 F.3d 703, 708 (2d Cir. 1996)
(quoting Restatement (Second) of Agency § 27.) To state claim based on an apparent agency
relationship, “[t]here must be proof of reliance and change of position.” Marfia v. T.C. Ziraat
Bankasi, New York Branch, 100 F.3d 243, 251 (2d Cir. 1996); see also Dinaco, Inc. v. Time
Warner, Inc., 346 F.3d 64, (2d Cir. 2003) (affirming dismissal because “to hold [defendant]
liable under a theory of apparent authority, [plaintiff] must show that it reasonably believed
that [the purported agent] entered into the agreement with [plaintiff] on behalf of [defendant]
and not on its own behalf.”). Plaintiffs have not alleged that they relied upon or changed their
position based on the representation that the Defendants were acting “In Partnership,” or that
Plaintiffs entered into any transaction with any Defendant. Accordingly, Plaintiffs’ claims
premised upon an apparent agency relationship fail.
In sum, Plaintiffs have not stated a claim for contributory or vicarious liability, and
their attempts to premise their claims on partnership or agency law fail. Accordingly, the
Court dismisses Counts Five and Six.
5. Trademark Counterfeiting
The Lanham Act defines a “counterfeit” mark as “a spurious mark which is identical
with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127. An alleged
counterfeit mark “must be compared with the registered mark as it appears on actual
merchandise to an average purchaser.” Colgate-Palmolive Co. v. J.M.D. All-Star Import and
Export Inc., 486 F. Supp. 2d 286, 289 (S.D.N.Y. 2007); see also GTFM, Inc. v. Solid Clothing
Inc., No. 01 Civ. 2629(DLC), 2002 WL 1933729, at *2 (S.D.N.Y. Aug.21, 2002) (“There is
nothing in the [Lanham] Act [ ] which states that to determine whether a defendant is engaged
15
in counterfeiting, one compares plaintiff’s and defendant’s marks in the abstract, without
considering how they appear to consumers in the marketplace.”). Moreover, “it cannot be
enough that one word used in the allegedly offending mark is the same, with no reference to
font, color, typeface, or context.” GMA Accessories, Inc. v. BOP, LLC, 765 F.Supp.2d 457,
472 (S.D.N.Y. 2011).
By comparing Defendants’ use of the Phrase to Plaintiffs’ use of the Phrase, it becomes
abundantly clear that Plaintiffs have not stated a claim for trademark counterfeiting. As
discussed above, Plaintiffs depict the Phrase in non-italicized lowercase blue letters, followed
by a trademark; Defendants depict the Phrase in italics, in either white ink or a combination of
black and pink ink, varying between capital and lower case letters, and printed in a noticeably
different font. (Compare Compl. Exs. D, E, with Ex. N.) Plaintiffs do not use the Phrase with
respect to merchandizing a print Magazine; and Defendants do not use the Phrase to market
personal services or retreats. GMA Accessories, 765 F.Supp.2d at 472 (holding that where
plaintiff “makes no allegation that the products upon which the allegedly counterfeit mark was
used were similar in any way to products it produces” that “there is no deceptive suggestion of
an erroneous origin” to state a counterfeiting claim.) Since the “the appearance of the [mark]
as used by [defendants], both in itself and in how it appeared on [defendants’ product], is not
identical with or substantially indistinguishable from [plaintiffs’] use of the [mark],” Plaintiffs’
trademark counterfeiting claim fails. GTFM, 2002 WL 1933729, at *2. Accordingly, the
Court dismisses Count One.
6. First Amendment Concerns
Having disposed of all of Plaintiffs’ federal claims, the Court does not reach
Defendants’ First Amendment argument.
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B. State Law And Common Law Claims
Neither party sufficiently addressed Plaintiffs’ state law and common law claims
(Counts Seven through Thirteen). Defendants argue that these claims are “analogous or
derivative” to the federal claims, but devote only two paragraphs to this argument, and provide
no specific analysis. (Def. Br. 28-29.) In their opposition, Plaintiffs do not address
Defendants’ argument or, in general, the merits of their state law and common law claims.
“[A] district court ‘may decline to exercise supplemental jurisdiction’ if it ‘has
dismissed all claims over which it has original jurisdiction.’” Kolari v. New York Presbyterian
Hosp., 455 F.3d 118, 122 (2d Cir. 2006) (quoting 28 U.S.C. § 1367(c)(3)). Thus, “if the
federal claims are dismissed before trial . . . the state claims should be dismissed as well,”
based on considerations of judicial economy, convenience, fairness, and comity. CarnegieMellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988) (quoting Mine Workers v. Gibbs, 383
U.S. 715, 726 (1966)).
The Court has federal jurisdiction over this case based on the existence of a federal
question, under 28 U.S.C. § 1331, and federal trademark claims, under 28 U.S.C. § 1338, but it
has dismissed the federal claims. Accordingly, the Court declines supplemental jurisdiction
over the state and common law claims and dismisses those claims without prejudice.
CONCLUSION
For the reasons above, the Defendants’ motion to dismiss the federal claims is
GRANTED. The Court declines to exercise supplemental jurisdiction over Plaintiffs’ state and
common law claims and dismisses those claims without prejudice.
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