Avon Products, Inc. v. Moroccanoil, Inc.

Filing 23

MEMORANDUM DECISION AND ORDER granting 9 Motion to Dismiss for Lack of Jurisdiction. Defendant moves to dismiss the Complaint for lack of subject matter jurisdiction pursuant to Fed. R. Civ. Proc. 12(b)(1), or alternatively asks this Court to exerc ise its discretion to decline jurisdiction over this matter pursuant to the Declaratory Judgment Act. Defendant's Motion to Dismiss the Complaint pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction (Doc. Entry No.9) is GRANTED. The Clerk of the Court is directed to close this case. (Signed by Judge George B. Daniels on 3/4/2013) (ja)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------­ -­ -----­ ---­ -----­ -----X
AVON PRODUCTS, INC,
Plaintiff,
MEMORANDUM
DECISION AND ORDER
12 Civ. 4507 (GBD)

-against-

MOROCCANOIL, INC,
Defendant.

-x

GEORGE B. DANIELS, District Judge:
Plaintiff Avon Products, Inc. brings this action, pursuant to the Declaratory Judgment
Act, 28 U.S.C § 2201 et seq., against Defendant Moroccanoil, Inc., seeking a declaratory
judgment that (1) "Avon's use of the term 'Moroccan Argan Oil' to indicate that its products ...
contain argan oil originating from Morocco constitutes a fair use within the meaning of Section
33(b)(4) of the Lanham Act, 15 U.S.C. § 1115(b)(4)," and "does not constitute infringement,
dilution or unfair competition with respect to any rights claimed by [Defendant] under the
Lanham Act, 15 U.S.C. §§ 1501 et seq.; and (2) "Avon's use of 'Moroccan Argan Oil' to
indicate that its products contain argan oil from Morocco does not violate the common law of the
State of New York relating to trademark infringement, unfair competition, and trademark
dilution with respect to any common law rights claimed by [Defendant]." CompI. at 9.
Defendant moves to dismiss the Complaint for lack of subject matter jurisdiction pursuant to
Fed. R. Civ. Proc. 12(b)(1), or alternatively asks this Court to exercise its discretion to decline
jurisdiction over this matter pursuant to the Declaratory Judgment Act.

BACKGROUND
Plaintiff, a New York corporation, is an international manufacturer and distributer of
beauty, household and personal care products. CompI. 'til, 6. Defendant, a California

corporation, is a manufacturer and distributor ofhaircare and skincare products to retailers and
salons located throughout the United States. Id.

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2.

On or around November 18, 2011, Plaintiff filed a Canadian trademark application (the
"646 Application"), for the word mark ADY ANCE TECHNIQUES 360 NOURlSH
MOROCCAN ARGAN OIL for hair care products. Mem. of Law in Supp. ofDef.'s Mot. to
Dismiss Pl.'s Compl. ("Def. Mem.") at 1. Subsequently, California counsel for Moroccanoil,
Inc. sent a "To Whom It May Concern" letter dated April 5, 2012 to Plaintiffs counsel in
Ontario, with a copy to Plaintiffs New York headquarters. Compl., Ex. C. The letter informed
Plaintiff of Defendant' s Canadian Trademark Registration No. TMA734460 for
MOROCCANOIL, and Canadian Application Nos. 1504613, 1504815, 1504614, 1505587, and
1505386, each for use with hair care products. Id. The letter explained that Defendant had
become aware of the '646 Application, and believed that the applied for mark "is confusingly
similar to the Morrocanoil Trademarks." ld.
The letter further stated that:
The term MOROCCAN ARGAN OIL within the mark applied for is nothing
more than a rearrangement of the MOROCCANOIL mark with the term "argan"
inserted in the middle. Moreover, the '646 Application states that the mark will
be used the marks on "hair care preparations" which are the same goods sold by
Moroccanoil. As a result, use of the mark applied for in the '646 Application has
a strong likelihood of causing customer confusion as to the source or affiliation of
the products and will dilute the distinctiveness ofthe Moroccanoil Trademarks.

Id. The letter then requested that Plaintiff abandon the '646 Application and cease use of the
applied for marks in commerce. Id. The letter advised that Defendant was prepared to file a
Notice of Opposition to the '646 Application in the Canadian Intellectual Property Office
("CIPO") if Plaintiff did not abandon the Canadian application. rd.

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The letter also stated that Moroccanoil "desire[ d] to avoid legal action" and requested
that Defendant "contact the undersigned within five (5) days ... to confinn that [it has] ceased
and will pennanently cease any further use ofthe ADVANCE TECHNIQUES 360 NOCRISH
MOROCCAN ARGAN OIL mark and that [it] intend[s] to expressly abandon the '646
Application." Id. The letter did not mention any U.S. infringement or any other activity by
Plaintiff outside of Canada, except to state in an introductory paragraph that "[t]he Morrocanoil
Trademarks symbolize substantial goodwill and consumer recognition, which have been
developed by Morrocanoil tlu'ough extensive advertising, promotion, educational endeavors and
distribution efforts in Canada and worldwide". Id.
On May 22,2012, Pascal Lauzon, an attorney in Montreal, Canada who had represented
Moroccanoil Israel and Moroccanoil Canada in various matters in Canada, called Anastasios
Kouros, an Avon in-house attorney with whom he went to law school in Canada, at Avon's
global headquarters in New York. Kouros Decl.

'13.

Plaintiff claims that during that call, Mr.

Lauzon said that "his client objected to Avon's use of the tenn 'Moroccan Argan Oil' and to
resolve the matter to the satisfaction of his client, Avon would have to refrain from using that
tenn." Id.

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6. Mr. Kouros replied that he did not handle trademark matters for Avon and was

therefore not very familiar with the issue, but would infonn A von's corporate trademark counsel.
Lauzon Decl.

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9. Defendant claims that the phone conversation only addressed the Canadian

Trademark Application, and neither party mentioned infringement, threatened court action, nor
mentioned activity or issues outside of Canada. Id.

'110.

On June 6,2012, Plaintiff filed the Complaint in this matter. The Complaint alleges that
Avon "is set to launch the advertising and sale in the United States of its ... haircare products
displaying the tenn 'Moroccan Argan Oil'" and has a "reasonable apprehension that once it

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begins selling the products ... [Defendant] will file suit against Avon." Compi. ,r~ 28,24. On
June 28,2012, Moroccanoil Israel and Moroccanoil Canada filed a Statement of Opposition with
the CIPO in Canada against the Plaintiffs Canadian Trademark Application.

LEGAL STANDARD
Subject Matter Jurisdiction Standard
A case may be properly dismissed for lack of subject matter jurisdiction pursuant to Rule
12(b)(1) "when the district court lacks the statutory or constitutional authority to adjudicate it."
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). "When considering a motion to
dismiss for lack of subject matter jurisdiction or failure to state a cause of action, a court must
accept as tme all material factual allegations in the complaint. But, when the question to be
considered is one involving the jurisdiction of a federal court, jurisdiction must be shown
affinnatively, and that showing is not made by drawing from the pleadings inferences favorable
to the party asserting it." Shipping Fin. Servs. Corp. v. Drakos, 140 F. 3d 129, 131 (2d Cir.
1998) (internal citation omitted). In determining subject matter jurisdiction, a court "may refer
to evidence outside the pleadings." Makarova, 201 F.3d at 113. A plaintiff asserting subject
matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists."
Id.
The Declaratory Judgment Act
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). "[T]he phrase 'case of actual controversy' in the Act refers to the
type of 'Cases' and 'Controversies' that are justiciable under Article III." MedImmune, Inc v.

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Genentech, Inc ..1 549 U.S. 118,127 (2007) (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227,
240 (1937)). As a result of this constitutional limit on judicial power, a federal court lacks
subject matter jurisdiction over an action unless it presents an actual case or controversy. ~
Jackson & Son, Inc. v. Coffee, Sugar & Cocoa Exchange, Inc., 24 F.3d 427, 431 (2d Cir. 1994)
(citations omitted).
A declaratory judgment action satisfies Article Ill's case or controversy requirement
when it involves a dispute that is "definite and concrete, touching the legal relations of parties
having adverse legal interests," which calls for "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." Medlmmune, Inc., 549 U.S. at 126 (internal citations omitted). To demonstrate
that there is a case or controversy, a plaintiff has the burden of establishing that the totality of the
circumstances demonstrates a "substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality" to warrant the issuance of a declaratory judgment.
Id, at 127. While a plaintiff need not demonstrate that defendant's conduct creates a real and
reasonable apprehension of liability, "the threat of litigation remains relevant in determining
whether an actual controversy exists." Nike, Inc. v. Already, LLC, 663 F.3d 89, 96 (2d Cir.
2011) (citing Medlmmune, 549 U.S. at 128.).

II.

There is No Case or Controversy Sufficient to \Varrant Issuance of a Declaratory
Judgment
Plaintiff argues that the "totality of the circumstances" demonstrates a controversy over

whether "Avon's use of the descriptor 'Moroccan Argan Oil' in the United States ... infringers
on] MI's purported trademark rights and/or [whether] Morrocanoil's mark is invalid." Pl.'s.
Memo of Law in Opp. To Def.'s Mot. to Dismiss ("Pl.'s Memo") at 1

Plaintiff contends that

(1) Defendant's letter, (2) the phone conversation between counsel for Plaintiff and Defendant

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regarding that letter; and (3) a number of suits filed by Plaintiff against other parties for
infringement ofMoroccanoil's United States trademarks, demonstrate that this substantial
controversy exists. None of these circumstances demonstrate that Defendant has accused
Plaintiff of infringing on Defendant's U.S. trademarks, nor that Defendant intends to take action
to enforce its U.S. trademarks against Plaintiff. Thus, there is no substantial controversy
sufficient to warrant the issuance of a declaratory judgment.
Plaintiff bases its argument that there is a controversy regarding Defendant's U.S.
trademarks primarily on the fact that Defendant's letter regarding the '646 Application was sent
from "a California company and a California law firm, and it talks about worldwide rights."
Oral Arg. Tr. at 19: 18-19, Sept. 12, 2012. Plaintiff thus argues that the "letter was intended to
and in fact, was interpreted ... as a demand that extended beyond Canada to the United States."
at 19:22-23. Plaintiff argues that the letter and follow-up conversation between counsel
demonstrate that there is a dispute over Plaintiffs potential infringement of Defendant's U.S.
trademarks, and that the "separate dispute confined to the registration and validity of Canadian
trademarks is irrelevant to this motion." Pl.'s Memo at 10.
Plaintiffs interpretation of Defendant's letter and counsel's subsequent telephone
conversation is not supported in fact. Defendant's letter specifically and directly addresses a
single Canadian trademark application, and requests that Plaintiff cease use ofthe Canadian
trademarks denoted in the letter. No U.S. trademarks were mentioned in the letter or during the
follow-up call. None of the circumstances that Plaintiff highlights including the fact that (1) the
letter was sent from a law firm within the United States; (2) a copy of the letter was sent to
Avon's New York headquarters; and (3) Avon's counsel who discussed the letter with his
Canadian law school classmate, was in the United States, demonstrate that Defendant eonsidered

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Plaintiff to be potentially infringing on its U.S. trademarks or that Defendant was objecting to
any activity by Plaintiff in the United States.
Even if the letter and subsequent conversation between counsel could be construed as
signaling Defendant's potential objection to Plaintiffs future actions within the United States,
Plaintiff has not alleged that Defendant actually claimed that Plaintiff was violating its U.S.
trademarks. Plaintiff has presented no legal authority to support its position that a controversy
could exist prior to a specific claim by a U.S. trademark holder that Plaintiff has either violated,
or by some potential impending action stands to violate, Defendant's U.S. trademark rights. In
each case Plaintiff cites, the defendant made an outright claim that Plaintiff was either infringing,
or with pending action would infringe, on the U.S. trademark at issue. l The present dispute over
Canadian trademark rights is to be decided by the Canadian Courts.
Absent such a claim of U.S. infringement, there is no "substantial controversy, between
parties having adverse legal interests, of sufficient immediacy and reality" so as to warrant the
issuance ofa declaratory judgment. MedImmune, Inc., 549 U.S at 127; See Prasco v. Medicis
Pharmaceutical Corp., 537 F.3d 1329, 1340 (Fed. Cir. 2008) (dismissing declaratory judgment
action where defendants had not accused plaintiff of infringement, asserted any rights to the
patent at issue, nor taken any actions implying such claims).

1 See , ~, EnviroGLAS Products, Inc. v. EnviroGLAS Products, LLC., 705 F. Supp. 2d 560
(N.D. Tex. 2010) (case and controversy existed where defendant sent letters demanding that plaintiff
cease and desist further infringement of defendant's U.S. trademark and patents); Blue Athletic, Inc. v.
Nordstrom, Inc., No. 2010 DNH 116,2010 WL 2836303 (D.N.H. July 19,2010) (case and controversy
existed where defendant sent plaintiff two cease and desist letters which set out a prima facie case of
infringement of defendant's U.S. trademark and defendant filed formal opposition against plaintiffs
application for trademark registration with the U.S. Patent and Trademark Office on the grounds that
plaintiffs mark would infringe on its own mark); HIS IP, Inc. v. Champion Window Mfg. & Suppl Co.,
510 F. Supp. 2d 948 (M.D. Fla. 2007) (case and controversy existed where defendant filed a cancellation
petition in the federal U.S. Trademark Trial and Appeal Board for cancellation of plaintiff s U.S.
trademarks, filed an opposition to plaintiffs pending U.S. trademark application, and sent correspondence
to plaintiff suggesting it would sue if its concerns could not be settled on an amicable basis).

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Plaintiffs argument that Defendant's prosecution of infringement actions in the United
States against other parties demonstrates a current U.S. trademark infringement dispute between
Plaintiff and Defendant also fails. Prior actions against other infringers do not give rise to an
actual controversy with a non-party. Indigodental GMBH&: Co. JG v. Ivoclar Vivadent Inc..
No. 08 Civ. 7657,2008 WL 5262694 at *3 (S.D.N.Y. 2008) (holding that defendant's
enforcement of a patent against other parties did not create an actual controversy between
plaintiff and defendant absent any threat to enforce the patent against plaintiff). There is
presently no case or controversy over which this Court has subject matter jurisdiction.
CONCLUSION
Defendant's Motion to Dismiss the Complaint pursuant to Fed. R. Civ. P. 12(b)(1) for
lack of subject matter jurisdiction (Doc. Entry No.9) is GRANTED. The Clerk of the Court is
directed to close this case.
Dated: March 4,2013
New York, New York

SO ORDERED:

q)Ji~ BY~

@OR

B. DANIELS
United States District Judge

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