Zest Anchors, LLC v. Biomet 3i, LLC

Filing 41

OPINION AND ORDER re: 23 MOTION to Dismiss Am. Compl. (ECF No. 21). filed by Biomet 3i, LLC. For all of these reasons, Defendant's motion to dismiss is DENIED. The Clerk of Court is respectfully directed to CLOSE the motion pending at Dkt. 23. By separate order, the Court will order the parties to appear for an initial pretrial conference. SO ORDERED (Signed by Judge Jennifer L. Rochon on 8/30/2024) (ks)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ZEST ANCHORS, LLC d/b/a ZEST
DENTAL SOLUTIONS,
Plaintiff,
-against-

Case No. 1:23-cv-07232 (JLR)
OPINION AND ORDER

BIOMET 3i, LLC d/b/a ZIMVIE,
Defendant.

JENNIFER L. ROCHON, United States District Judge:
This case involves a dispute about the alleged use of certain trademarks associated with
dental products. Zest Anchors, LLC d/b/a Zest Dental Solutions (“Plaintiff”) sues its former
distributor, Biomet 3i, LLC d/b/a Zimvie (“Defendant”), for breach of their distribution
agreement (the “Distribution Agreement”). 1 Dkt. 21 (“Am. Compl.” or the “Amended
Complaint”). Defendant now moves to dismiss. Dkts. 24 (“Br.”), 31 (“Reply”). For the
following reasons, Defendant’s motion to dismiss is DENIED.

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The Distribution Agreement is filed under seal at Dkt. 9-1. See Dkt. 12 (order granting request
to file Distribution Agreement under seal because it “contains sensitive competitive business
information” outweighing the presumption of public access). The parties have referred to and
quoted certain parts of the Distribution Agreement publicly, and confirmed during oral argument
that those aspects of the Distribution Agreement which are critical to the resolution of this
motion need not remain under seal. The Court therefore similarly refers to and quotes from the
now-public provisions of the Distribution Agreement. However, other provisions of the
Distribution Agreement, which are not at issue here, still contain proprietary business
information outweighing the presumption of public access and therefore remain under seal at this
time.

BACKGROUND 2
I.

Factual Background
A. Plaintiff’s Products
Plaintiff manufactures denture-attachment products, that is, hardware that dentists use to

affix removable dentures to patients’ jaws. Am. Compl. ¶ 1. Plaintiff’s “LOCATOR®” line,
which is at issue here, is a suite of denture-attachment products. Id. ¶¶ 2, 18. A depiction of the
LOCATOR® line is below:

Id. ¶ 2.

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The facts stated herein are taken from the Amended Complaint and accepted as true for the
purpose of resolving Defendant’s motion to dismiss. See DiFolco v. MSNBC Cable L.L.C., 622
F.3d 104, 110-11 (2d Cir. 2010). The Court also considers the Distribution Agreement, which
the parties agree is “integral” to the Amended Complaint. See Clark v. Hanley, 89 F.4th 78, 93
(2d Cir. 2023) (in considering a Rule 12(b)(6) motion, “district courts may review only a narrow
universe of materials, which includes facts stated on the face of the complaint, documents
appended to the complaint or incorporated in the complaint by reference, matters of which
judicial notice may be taken, as well as documents not expressly incorporated by reference in the
complaint that are nevertheless ‘integral’ to the complaint.” (brackets, further quotation marks,
ellipsis, and citation omitted)); Br. at 10-11 (Defendant asserting that the “Distribution
Agreement is integral to the [Amended Complaint]”); Opp. at 5 n.4 (Plaintiff agreeing that the
Distribution Agreement is “integral to the Amended Complaint” and therefore “properly before
this Court”). Additionally, the Court considers Plaintiff’s seven trademark registrations,
incorporated by reference into the Second Amended Complaint. Am. Compl. ¶ 24 (identifying
Plaintiff’s seven trademarks by registration number and features).

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The LOCATOR® suite includes four primary components: (1) a LOCATOR®
“attachment,” which is an anchor fixed to a patient’s jaw, and includes a screw-like implant;
(2) a gold LOCATOR® “abutment,” which is a stud that sits on an attachment and features a
triangular design on its top; (3) a round, colored-nylon LOCATOR® “insert,” which snaps over
an abutment; and (4) a LOCATOR® “housing,” which is a metal cap that sits in a denture and
holds an insert, thereby permitting the insert to connect the denture and the abutment. Id. ¶ 20.
The LOCATOR® suite components are depicted below:

Id.
The LOCATOR® products come in a range of retention strengths and functions with
implants installed at various angles. Id. ¶ 22. The color shades of the inserts and the component
of the LOCATOR® suite are each associated with a different combination of retention strengths
and permissible angulation. Id. An example advertisement image featuring Plaintiff’s
LOCATOR® inserts is below:

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Id. ¶ 27.
Plaintiff has seven relevant trademarks registered with the U.S. Patent and Trademark
Office (the “USPTO”) covering the LOCATOR® insert colors. Id. ¶ 24; Dkt. 30-2. As an
illustrative example, the USPTO trademark registration of one of Plaintiff’s federally registered
trademarks, bearing Registration Number 4,622,637, is depicted below:

Dkt. 30-2 at 2. Plaintiff’s other six USPTO trademark registrations are similar but cover inserts
bearing colors other than blue. Id. at 4, 6, 8, 10, 12, 14.
B. The Distribution Agreement
Defendant sells denture attachments and other dental products. Am. Compl. ¶ 29.
Defendant distributed Plaintiff’s products for many years as an authorized distributor, including
by selling Plaintiff’s products as part of a collection of dental products that Defendant called
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“OverdenSURE.” Id. ¶¶ 29-31, 40. The parties entered into the Distribution Agreement, their
most recent distribution agreement, on September 2, 2016. Id. ¶ 33. Per the Distribution
Agreement, Plaintiff granted to Defendant and its affiliates “a non-exclusive, nontransferable,
limited, terminable license . . . to (a) use the Trademarks solely in connection with the
advertising and promotion of Products obtained from [Plaintiff] hereunder; and (b) market,
distribute and resell packaged Products purchased from [Plaintiff] hereunder.” Distribution
Agreement § 2.1. The Distribution Agreement defines “Trademarks” as “the marks set forth on
Exhibit B” attached to the Distribution Agreement. Id. § 1. Exhibit B, in turn, is depicted
below:

Id. at Ex. B.

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Section 6.2 of the Distribution Agreement provides that Defendant “will use the
Trademarks only in the manner specified by” Plaintiff. Id. § 6.2. It further states that Defendant
“agrees to apply a proper notation in connection with all uses of the Trademarks in order to
acknowledge the proper ownership of the Trademarks. Such notation shall acknowledge that the
applicable Trademarks are registered trademark[s] of [Plaintiff] in the form as [Plaintiff] may
instruct [Defendant] from time to time.” Id. Section 6.2 finally provides that Defendant shall
ensure that the Trademarks are used in a manner consistent with Plaintiff’s trademark usage
guidelines and all requirements of applicable laws and regulation. Id.
In Section 7.2 of the Distribution Agreement, Plaintiff represented and warranted to
Defendant, among other things, that “no third party has asserted and there is no threatened or
pending claim” which “challenges the validity of” Plaintiff’s interest in the Trademarks. Id.
§ 7.2.
Section 13.5 of the Distribution Agreement provides that, upon termination, “all rights
granted to [Defendant] hereunder shall cease and [Defendant] shall refrain from further use of
the Trademarks.” Id. § 13.5. The Distribution Agreement also states in another provision that
“[a]ll of the terms and provisions of this Agreement intended to be observed and performed by
the parties after the termination hereof, including [Section 13.5,] shall survive such termination
and continue thereafter in full force and effect in accordance with their terms.” Id. § 17.5.
In February 2020, anticipating the expiration of the Distribution Agreement, the parties
began to negotiate the terms of a new distribution agreement. Am. Compl. ¶ 41. On August 31,
2021, days before the Distribution Agreement expired, the parties reached an agreement in
principle that would have entitled Defendant to discounts on LOCATOR® products in exchange

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for an exclusivity provision prohibiting Defendant from creating, marketing, or selling products
that competed with Plaintiff’s LOCATOR® products for a period of five years. Id. ¶ 42.
By its terms, the Distribution Agreement terminated on September 2, 2021. Am. Compl.
¶ 6. But after termination of the Distribution Agreement, and “in reliance on” the August 31,
2021 agreement in principle, Plaintiff allowed Defendant to continue marketing and selling its
products that were stockpiled in Defendant’s inventory on an interim basis. Id. ¶ 46.
C. Defendant’s Arrangement with Terrats
While the parties were negotiating terms for a new distribution agreement, Defendant had
already “secretly negotiated a separate term sheet with a Spanish company,” Terrats Medical
Sociedad Limitada (“Terrats”), which manufactures “a knock-off product suite called DESSLoc
that not only competes unfairly with LOCATOR® but uses the entire look and feel of the
LOCATOR® product suite . . . to do so.” Id. ¶ 43. Under that arrangement, Terrats would
supply Defendant with “knock-off” LOCATOR® products and Defendant would distribute those
products. Id. ¶ 44. In October 2021, Defendant executed an agreement with Terrats to sell
Terrats’s DESSLoc product suite. Id. ¶ 48.
On December 2, 2021, Plaintiff and Defendant abandoned discussions of a continued
distribution agreement. Id. ¶ 49.
D. Defendant’s Alleged Breach
After Plaintiff and Defendant failed to reach agreement on a new distribution agreement,
Defendant “immediately transitioned to marketing and selling Terrats’s DESSLoc knock-offs,”
using Plaintiff’s trademarks. Id. ¶ 50. As depicted below, Terrats’s products use inserts with
colors that purportedly correspond to the same retention strength and angulations as Plaintiff’s
LOCATOR® inserts:

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Id. Defendant began offering the DESSLoc products “as part of the same ‘OverdenSURE’
collection in which it previously offered [Plaintiff]’s authentic LOCATOR® inserts.” Id. ¶ 52.
Plaintiff alleges that through this offering, Defendant distributed the DESSLoc products by using
Plaintiff’s trademarks in violation of the terms of the Distribution Agreement. Id. ¶¶ 52-55.
II.

Procedural Background
A. The California Action
On February 18, 2022, Plaintiff commenced a trademark, trade-dress, and unfair-

competition action against Terrats in the United States District Court for the Southern District of
California (the “California Court”), Zest Anchors, LLC v. Geryon Ventures, LLC, No. 22-cv00230 (S.D. Cal.) (the “California Action”). ECF No. 1. 3 Terrats’s agent, representative, and
distributor in the United States, Geryon Ventures, LLC (“Geryon”), was also named as a
defendant in the California Action. See Am. Compl. ¶ 51. On March 7, 2022, Plaintiff moved
for a preliminary injunction prohibiting Terrats and Geryon (collectively, “DESS”) from

3

Citations to the docket in the California Action use “ECF No.” while citations to the docket in
the present action use “Dkt.” The California Action was also brought by “Zest IP Holdings,
LLC.” Plaintiff represents that “Zest IP Holdings, LLC” is its affiliate. Opp. at 4 n.2. For ease
of reference, the Court refers to Plaintiff and Zest IP Holdings, LLC collectively as “Plaintiff”
when discussing the California Action.

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infringing on Plaintiff’s “Insert Color Marks” and the “LOCATOR® Trade Dress.” ECF
No. 15. 4 The California Court granted in part and denied in part Plaintiff’s motion, enjoining
DESS from “[u]sing in any way, including in connection with the promotion, marketing,
advertising, and sale of products or services, [Plaintiff]’s LOCATOR® product suite trade dress
or any trade dress that is a colorable imitation thereof, or confusingly similar thereto,” and from
“[i]mporting into the United States any products that use the LOCATOR® product suite trade
dress or trade dress that is a colorable imitation thereof, or confusingly similar thereto.” Zest
Anchors, LLC v. Geryon Ventures, LLC, 615 F. Supp. 3d 1206, 1243 (S.D. Cal. 2022) (“Zest I”),
rev’d in part, Nos. 22-55704 et al., 2023 WL 2783175 (9th Cir. Apr. 5, 2023) (“Zest II”). The
California Court did not grant Plaintiff its requested injunction with respect to the Insert Color
Marks, concluding that those marks had “utilitarian functionality” and therefore Plaintiff was not
likely to succeed on the merits on its trademark infringement claims. Id. at 1232.
While an appeal of Zest I was still pending, Defendant moved to intervene in the
California Action on August 29, 2022, which the California Court granted on September 23,
2022. ECF Nos. 69, 80. Shortly thereafter, Defendant asserted counterclaims against Plaintiff in
the California Action, including for declaratory judgment of invalidity of Plaintiff’s “Insert Color

4

As relevant in the California Action, Plaintiff’s “Color Marks” cover “the use of six specific
colors (whether used individually or in groups of three) to denote retention strength without
regard to their specific corresponding retention strengths.” Zest Anchors, LLC v. Geryon
Ventures, LLC, Nos. 22-55704 et al., 2023 WL 2783175, at *1 n.1 (9th Cir. Apr. 5, 2023)
(emphasis omitted). Plaintiff’s claimed trade dress in the California Action was “the use of all
six specific insert colors in a product suite, with the same colors corresponding to the same
retention strengths as in the Trade Dress, along with a gold, trilobate-shaped abutment head.” Id.
at *2.

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Marks” and a petition to cancel the trademark registrations of the “Insert Color Marks.” ECF
No. 81 at 40-43 ¶¶ 74-80, 87-93. 5
On April 4, 2023, the Ninth Circuit reversed in part the California Court’s preliminaryinjunction decision, holding that the California Court “erred in determining that the Color Marks
have utilitarian functionality” and ordering the California Court to also assess “aesthetic
functionality” on remand. Zest II, 2023 WL 2783175, at *2. However, the Ninth Circuit
affirmed “the district court’s order granting [Plaintiff] a preliminary injunction against DESS’s
use of the Trade Dress.” Id.
Shortly after Zest II, Plaintiff added a claim against Defendant in the California Action
for breach of the Distribution Agreement. Dkt. 150 ¶¶ 160-169. However, on May 25, 2023,
Defendant – citing the New York forum-selection clause in Section 17.6 of the Distribution
Agreement – demanded that Plaintiff file a separate lawsuit in New York to enforce its rights
based on the Distribution Agreement. Am. Compl. ¶¶ 62-63. The present action then
commenced, as further detailed below.
On February 2, 2024, Plaintiff, DESS, and Defendant notified the California Court that
they had reached settlements in principle with respect to all claims in the California Action.
Dkts. 188-189. On April 4, 2024, the California Court dismissed with prejudice all claims in the
California Action. Dkt. 195.

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Defendant also brought counterclaims against Plaintiff in the California Action for declaratory
judgment of invalidity of Plaintiff’s LOCATOR® trade dress, ECF No. 81 at 41-42 ¶¶ 81-86,
declaratory judgment of non-infringement of Plaintiff’s Insert Color Marks, id. at 43-44 ¶¶ 94100, declaratory judgment of non-infringement of trade dress, id. at 44-45 ¶¶ 101-107, two
counts of false advertising based on a press release of Plaintiff’s not at issue here, id. at 45-47
¶¶ 108-125, and intentional interference with prospective economic advantage, id. at 48 ¶¶ 126132.
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B. The Present Action
Plaintiff brought this action in New York state court on July 13, 2023, Dkt. 1-1, and
Defendant removed the case to this Court on August 15, 2023, Dkt. 1. Defendant filed its first
motion to dismiss on August 22, 2023, Dkt. 5, which the Court denied as moot after Plaintiff
filed the Amended Complaint, Dkt. 26. Defendant then filed the instant motion to dismiss on
September 19, 2023, Br., which Plaintiff opposed on October 17, 2023, Dkt. 29 (“Opp.”).
Defendant filed a reply in support of its motion on November 7, 2023. Reply. The Court heard
oral argument on the motion on August 27, 2024. See Dkt. 34.
LEGAL STANDARD
To survive a motion to dismiss under Federal Rule of Civil Procedure (“Rule”) 12(b)(6),
a pleading 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 Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). The Court accepts as true all non-conclusory allegations of
fact and draws all reasonable inferences in the nonmovant’s favor. Francis v. Kings Park
Manor, Inc., 992 F.3d 67, 72 (2d Cir. 2021) (en banc). But a court need not “accept as true a
legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550
U.S. at 555). A pleading must allege “more than a sheer possibility that a [party] has acted
unlawfully” and more than “facts that are ‘merely consistent with’ a [party’s] liability.” Id.
(quoting Twombly, 550 U.S. at 557). Determining whether a pleading states a claim is “a
context-specific task that requires the reviewing court to draw on its judicial experience and
common sense.” Id. at 679. “[T]he court’s task is to assess the legal feasibility of the
[allegations]; it is not to assess the weight of the evidence that might be offered on either
side.” Lynch v. City of New York, 952 F.3d 67, 75 (2d Cir. 2020).

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DISCUSSION
Plaintiff brings two causes of action, both for breach of contract. First, Plaintiff alleges
that Defendant breached Section 6.2 of the Distribution Agreement because it did not “use the
Trademarks only in the manner specified by” Plaintiff when Defendant used Plaintiff’s
trademarks to market knock-offs of Plaintiff’s products while purporting to negotiate a renewed
distribution agreement with Plaintiff. Am. Compl. ¶¶ 64, 67-75. Second, Plaintiff alleges that
Defendant breached Section 13.5 of the Distribution Agreement because Defendant continued to
use Plaintiff’s trademarks to market and sell knock-offs of Plaintiff’s products after termination
of the Distribution Agreement. Id. ¶¶ 76-85. Plaintiff’s two breach-of-contract causes of action,
therefore, allege breaches that occurred (1) during the course of the Distribution Agreement and
(2) after termination of the Distribution Agreement. Defendant moves to dismiss both causes of
action.
I.

Applicable Law6
There are four elements to a claim for breach of contract under New York law. Those

elements are: “[1] the existence of a contract, [2] the plaintiff’s performance thereunder, [3] the
defendant’s breach thereof, and [4] resulting damages.” Russo v. Estée Lauder Corp., 856 F.
Supp. 2d 437, 460 (E.D.N.Y. 2012) (quoting Harris v. Seward Park Hous. Corp., 913 N.Y.S.2d
161, 162 (1st Dep’t 2010)); accord 34-06 73, LLC v. Seneca Ins. Co., 198 N.E.3d 1282, 1287
(N.Y. 2022); Martinez v. Agway Energy Servs., LLC, 88 F.4th 401, 409 (2d Cir. 2023).
At the motion-to-dismiss stage, the Court may interpret a contract properly before it, but
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New York law governs the Distribution Agreement, which contains a New York choice-of-law
clause. Distribution Agreement § 17.6. The parties also cite cases applying New York law in
their briefs. See, e.g., Br. at 11; Opp. at 12. Under New York choice-of-law rules, such “implied
consent” is “sufficient to establish choice of law.” Alphonse Hotel Corp. v. Tran, 828 F.3d 146,
152 (2d Cir. 2016) (citation omitted).

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must “resolve any contractual ambiguities in favor of the plaintiff.” Subaru Distribs. Corp. v.
Subaru of Am., Inc., 425 F.3d 119, 122 (2d Cir. 2005); accord Oppenheimer & Co. v. Trans
Energy, Inc., 946 F. Supp. 2d 343, 347 (S.D.N.Y. 2013). “Whether contract terms are
unambiguous presents ‘a question of law that is resolved by reference to the contract alone.’”
Martinez, 88 F.4th at 409 (quoting O’Neil v. Ret. Plan for Salaried Emps. of RKO Gen., Inc., 37
F.3d 55, 59 (2d Cir. 1994)); see Brad H. v. City of New York, 951 N.E.2d 743, 746 (N.Y. 2011)
(a court must assess ambiguity “within the four corners of the document”). “Ambiguity in a
contract arises . . . where [the contract’s] terms are subject to more than one reasonable
interpretation.” Universal Am. Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 37 N.E.3d 78,
80 (N.Y. 2015) (quotation marks and citation omitted); see also Chesapeake Energy Corp. v.
Bank of N.Y. Mellon Tr. Co., 773 F.3d 110, 114 (2d Cir. 2014).
In interpreting a contractual provision, “courts should consider the entire contract, not
isolated words.” W2001Z/15 CPW Realty, LLC v. Lexington Ins. Co., 9 N.Y.S.3d 18, 19 (1st
Dep’t 2015). Courts are to give the “words and phrases in a contract . . . their plain meaning”
and construe the contract “so as to give full meaning and effect to all of its provisions.”
Chesapeake, 773 F.3d at 114 (brackets and citation omitted). Finally, “[i]t is axiomatic under
New York law . . . that the fundamental objective of contract interpretation is to give effect to the
expressed intentions of the parties.” Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d
63, 69 (2d Cir. 2011) (brackets, quotation marks, and citation omitted).
II.

Analysis
Defendant argues that Plaintiff’s two breach-of-contract causes of action “are predicated

on [Defendant]’s allegedly improper ‘use’ of certain ‘Trademarks’ that are defined and governed
by [the] Distribution Agreement,” but that Plaintiff fails to “plausibly allege that [Defendant]
used these Trademarks.” Br. at 1. Defendant asserts that the term “Trademarks” is
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unambiguously limited to only “those manifestations” or images set forth on Exhibit B, id. at 12
(capitalization omitted), and because Plaintiff alleges that Defendant used similar (but not
identical) images to “those manifestations,” Plaintiff does not and cannot allege that Defendant
used Plaintiff’s Trademarks in violation of the Distribution Agreement, id. at 1-2; see id. at 6
(“Nowhere does [Plaintiff] allege that [Defendant] ever used the actual retention insert images or
specific colors as ‘set forth on Exhibit B.’”).
For its part, Plaintiff asserts that the “plain and unambiguous term ‘Trademarks,’ as used
throughout the Distribution Agreement, incorporates the Insert Color Trademarks, i.e., the
‘marks’ that Zest registered with the USPTO and were depicted in Exhibit B.” Opp. at 11.
Based on this reading, Plaintiff asserts that it adequately alleged that Defendant used the
Trademarks in violation of the Distribution Agreement.
For a defendant to prevail on a motion to dismiss for a breach of contract, the contract
must unambiguously support the defendant’s position. See Novartis Pharma AG v. Incyte Corp.,
520 F. Supp. 3d 514, 525 (S.D.N.Y. 2021) (“On a motion to dismiss, ‘a district court may
dismiss a breach of contract claim only if the terms of the contract are unambiguous.’”
(quoting Orchard Hill Master Fund Ltd. v. SBA Commc’ns Corp., 830 F.3d 152, 156 (2d Cir.
2016))); see also Eternity Glob. Master Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y., 375 F.3d
168, 178 (2d Cir. 2004) (“[I]f a contract is ambiguous as applied to a particular set of facts, a
court has insufficient data to dismiss a complaint for failure to state a claim.”). Courts are not
“‘obliged to accept the allegations of the complaint as to how to construe’ a contract,” but they
“‘should resolve any contractual ambiguities in favor of the plaintiff’ on a motion to
dismiss.” Maniolos v. United States, 741 F. Supp. 2d 555, 567 (S.D.N.Y. 2010) (quoting Subaru
Distrib. Corp. v. Subaru of Am., Inc., 425 F.3d 119, 122 (2d Cir. 2005)). Motions to dismiss

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should be denied where the agreements do not unambiguously support the defendant’s
interpretation. See Jackson v. Harvest Cap. Credit Corp., No. 17-cv-05276 (JFK), 2018 WL
2041389, at *4 (S.D.N.Y. Apr. 30, 2018) (denying motion to dismiss because “the contractual
language is not unambiguous so as to clearly support [the defendant]’s arguments”).
That legal standard is decisive here. It is true that the Distribution Agreement granted
Defendant rights to use the Trademarks, that the Trademarks shown on Exhibit B contain
drawings of the LOCATOR® inserts, and that the Distribution Agreement did not explicitly
reference Plaintiff’s trademark registrations that protect the colors as applied to the surface of the
particular goods. See Distribution Agreement at Ex. B; see generally id. However, based on its
review of the entire Distribution Agreement, the Court does not agree with Defendant that
“Trademarks” unambiguously refers only to those “manifestations” or drawings set forth on
Exhibit B as opposed to also Plaintiff’s registered trademark rights. See W2001Z/15 CPW
Realty, 9 N.Y.S.3d at 19 (courts should consider the entire integrated agreement when
interpreting a contractual provision).
First, the rights licensed to Defendant clearly were rights to use trademarks owned by
Plaintiff. The Distribution Agreement gave Defendant the right to use Plaintiff’s “Trademarks,”
defined as “the marks set forth on Exhibit B.” Distribution Agreement § 1 (emphasis added).
The term “mark” is a common shortening of the term “trademark.” See, e.g., Kelly-Brown v.
Winfrey, 717 F.3d 295, 304 (2d Cir. 2013) (“[T]he Lanham Act protects marks from two kinds of
confusion.” (emphasis added)); Star Indus., Inc. v. Bacardi & Co., 412 F.3d 373, 381 (2d Cir.
2005) (“To succeed in a Lanham Act suit for trademark infringement, a plaintiff has two
obstacles to overcome: the plaintiff must prove that its mark is entitled to protection and, even
more important, that the defendant’s use of its own mark will likely cause confusion with

15

plaintiff’s mark.” (brackets and citation omitted; emphasis added)). Exhibit B is therefore
appropriately entitled “Trademarks.” See Distribution Agreement at Ex. B. Several provisions
of the Distribution Agreement refer to Plaintiff’s rights and ownership in the Trademarks. See,
e.g., id. § 6.1 (Defendant “shall not contest [Plaintiff]’s right and title in and to the Trademarks,”
and “[a]ny and all goodwill arising from [Defendant’s] use of the Trademarks shall inure solely
to the benefit of” Plaintiff); id. § 7.2 (Plaintiff “represents and warrants” that it “owns or holds
valid and enforceable rights to use and license” the applicable “intellectual property,” including
the “Trademarks”). Most importantly, Section 6.2 provides that Defendant “agrees to apply a
proper notation in connection with all uses of the Trademarks in order to acknowledge the proper
ownership of the Trademarks. Such notation shall acknowledge that the applicable Trademarks
are registered trademark[s] of [Plaintiff].” Id. § 6.2 (emphasis added). Section 6.2 would be
rendered surplusage if the “Trademarks” referenced in the Agreement did not include the
trademarks “registered” by Plaintiff and instead only referred to drawings on Exhibit B that were
not registered by Plaintiff.
Moreover, the recitals of the Distribution Agreement set forth the purpose of that
contract – that Plaintiff “desires to grant to [Defendant], and [Defendant] desires to obtain from
[Plaintiff] a non-exclusive, non-transferable license to market and distribute the Products, and to
purchase from [Plaintiff] the Products.” Id. at 1. To most effectively carry out that goal, it
makes sense that Plaintiff would license to Defendant the right to use its broader registered
trademark rights for those trademarks associated with its products, because without being
granted such rights, Defendant could not have been a licensed distributor of Plaintiff’s products
that included its registered Trademarks. In other words, if Plaintiff did not license its registered
trademarks to Defendant, but rather just the specific “manifestations on Exhibit B,” then

16

Defendant would have been using Plaintiff’s registered trademarks without permission
throughout the time that Defendant marketed and sold Plaintiff’s products that included its
registered trademarks. Such a reading of the Distribution Agreement appears contrary to the
parties’ intent and is commercially unreasonable. See Lockheed Martin, 639 F.3d at 69 (“[T]he
fundamental objective of contract interpretation is to give effect to the expressed intentions of the
parties.” (citation omitted)); NCCMI, Inc. v. Bersin Props., LLC, 208 N.Y.S.3d 27, 33 (1st Dep’t
2024) (“[A contract should not be interpreted to produce a result that is absurd, commercially
unreasonable[,] or contrary to the reasonable expectations of the parties.” (citation omitted));
Luver Plumbing & Heating, Inc. v. Mo’s Plumbing & Heating, 43 N.Y.S.3d 267, 269 (1st Dep’t
2016) (same).
Therefore, at this juncture, the Court finds that the term “Trademarks” is not
unambiguously limited to those manifestations or drawings of the colored inserts depicted on
Exhibit B. Defendant’s sole argument in its motion to dismiss is that the Amended Complaint
“does not plausibly allege that the Distribution Agreement prohibits use of any ‘Trademarks’”
because the term “Trademarks” covers only those manifestations “set forth on Exhibit B.” Br. at
16. Because the Distribution Agreement does not “unambiguously foreclose Plaintiff’s
interpretation,” the Court denies Defendant’s motion to dismiss. See Oppenheimer, 946 F. Supp.
2d at 350; Orchard Hill, 830 F.3d at 156 (“At the motion to dismiss stage, a district court may
dismiss a breach of contract claim only if the terms of the contract are unambiguous.”); Carlton
Grp., Ltd. v. Mirabella SG SpA, No. 16-cv-06649 (LGS), 2017 WL 3530370, at *4-5 (S.D.N.Y.
Aug. 16, 2017) (denying motion to dismiss because the agreements did “not unambiguously
support [the defendant]’s position”); Greer v. Mehiel, No. 15-cv-06119 (AJN), 2017 U.S. Dist.
LEXIS 136402, at *17 (S.D.N.Y. Aug. 23, 2017) (holding that “[i]t is enough, for purposes of

17

resolving the motion to dismiss, to hold that the provision does not unambiguously” support the
defendant’s construction).
Defendant asserts in its reply brief that “even if the defined term ‘Trademarks’ could be
read to encompass Zest’s trademark registrations, the [Amended Complaint] fails to allege
anywhere that [Defendant] has used these trademark registrations.” Reply at 6. This argument
also fails. As a threshold matter, arguments raised for the first time on reply need not be
considered by the Court. See Shunock v. Apple, Inc., --- F. Supp. 3d ----, 2024 WL 3090166, at
*11 (S.D.N.Y. June 21, 2024). Moreover, the Amended Complaint does allege, in several
places, that Defendant improperly used Plaintiff’s trademarks. See, e.g., Am. Compl. ¶ 44
(“[Defendant] used [Plaintiff]’s Insert Color Trademarks to develop its version of Terrats’s
knock-offs without [Plaintiff]’s knowledge or permission, in breach of its obligation to use the
Insert Color Trademarks ‘only in the manner specified by [Plaintiff]’”); id. ¶ 52 (“[Defendant]
began actively using the Insert Color Trademarks by offering Terrats’s knock-off LOCATOR®
inserts to its substantial audience of denture attachment purchasers”); id. ¶ 54 (“[Defendant]
distributed these marketing materials to purchasers throughout the United States, using the Insert
Color Trademarks to encourage the purchase of [Defendant]’s LOCATOR® knock-offs
directedly from [Defendant]’s website”).
CONCLUSION
For all of these reasons, Defendant’s motion to dismiss is DENIED. The Clerk of Court
is respectfully directed to CLOSE the motion pending at Dkt. 23. By separate order, the Court

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will order the parties to appear for an initial pretrial conference.
Dated: August 30, 2024
New York, New York
SO ORDERED.

JENNIFER L. ROCHON
United States District Judge

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