Cinebarre, LLC v. Movie Grill Concepts XV, LLC
Filing
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ORDER denying in its entirety 22 Motion to Dismiss Plaintiff's Amended Complaint. Signed by Senior Judge Graham Mullen on 07/13/2015. (jlk)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CINEBARRE, LLC,
Plaintiff,
v.
MOVIE GRILL CONCEPTS XV, LLC;
MOVIE GRILL CONCEPTS
TRADEMARK HOLDINGS, LLC,
Defendants.
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CIVIL ACTION NO. 3:13-cv-00618
ORDER
THIS MATTER is before the Court on Defendants’ Motion to Dismiss Plaintiff’s
Amended Complaint (Doc. No. 22), Plaintiff’s Response (Doc. No. 24), and Defendant’s Reply
(Doc. No. 26). For the reasons stated herein, that motion is DENIED.
I. BACKGROUND
Plaintiff Cinebarre, LLC operates movie theaters across the United States. These theaters
are based upon a “novel concept” in that they offer spacious seating, a variety of food prepared on
site, and an eating surface positioned in front of the seating so that patrons may consume food and
drink while viewing a movie. (See Amended Complaint (hereinafter “Complaint”), Doc. No. 15 at
3). The Complaint alleges that, since 2007, Plaintiff has marketed its movie theaters under the
trademark “EAT. DRINK. WATCH MOVIES.”, which was registered as U.S. Trademark No.
3,349,828 on December 4, 2007. (See Exh. A to Compl., Doc. No. 15-1). It further alleges that the
mark is widely recognized within the business community as the brand identifier for Plaintiff’s
movie theaters, and that consumers have come to recognize the mark as being associated with
Plaintiff.
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As alleged in the Complaint, Defendants also operate movie theaters—which also serve
food and drink to patrons while they watch movies—with one such location operating in Charlotte.
Defendants use similar marks to brand their services, namely “SMG: EAT DRINK MOVIES” and
“EAT DRINK MOVIES.” (Compl. at 5). Plaintiff alleges that Defendants began using these marks
with full knowledge of Cinebarre’s mark, and that Defendants’ owner, Brian Schultz, directly
modeled Defendants’ movie theaters after Cinebarre’s concept. (Id.) More specifically, the
Complaint alleges that in 2002, Mr. Schultz contacted Plaintiff’s predecessor-in-interest
expressing interest in operating a franchise. (Id.) Plaintiff’s predecessor-in-interest ended those
discussions when it learned that Mr. Schultz had attempted to bribe one of its employees to allow
him access to the kitchen so that he could take pictures; it concluded that the franchise overture
was merely a ruse to learn more about its business model. (Id.)
Finally, the Complaint alleges that Defendants selected these “virtually identical” marks to
cause confusion, mistake, and deception as to the source, origin, and authenticity of Defendants’
services and goods. (Compl. at 11). It also alleges that, when Defendants attempted to register the
“EAT DRINK MOVIES” mark, the U.S. Patent and Trademark Office (“USPTO”) initially
refused registration on the basis of likelihood of confusion with Plaintiff’s trademark. (Compl. at
6). Defendants began using these marks after March 2009.
Plaintiff’s Amended Complaint, filed June 5, 2014, alleges claims for (1) federal trademark
infringement; (2) common law trademark infringement; (3) North Carolina Unfair and Deceptive
Trade Practices; (4) common law unfair competition; (5) federal unfair competition/false
advertising; (6) cancellation of U.S. Trademark Registration No. 4,336,460 (Defendants’ “EAT
DRINK MOVIES” mark); and (7) cancellation of U.S. Trademark Registration No. 4,204,415
(Defendants’ “SMG: EAT DRINK MOVIES” mark).
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II. LEGAL STANDARD
When faced with a Rule 12(b)(6) motion to dismiss, courts are instructed to “accept as true
all well-pleaded allegations and . . . view the complaint in a light most favorable to the plaintiff.”
Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). After “assum[ing] the veracity”
of these factual allegations, the court is to “determine whether they plausibly give rise to an
entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Thus, a “complaint may proceed
even if it strikes a savvy judge that actual proof of [the facts alleged] is improbable, and ‘that a
recovery is very remote and unlikely.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). However, the court “need not accept as
true unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore Mkts., Inc.
v. J.D. Assocs. LLP, 213 F.3d 175, 180 (4th Cir. 2000).
III. DISCUSSION
A. Trademark Infringement
The argument central to Defendants’ motion to dismiss is that the Complaint fails to “allege
any specific facts explaining how a consumer could plausibly be confused as to the source or
sponsorship of Cinebarre’s and Studio Movie Grill’s movie theaters . . . .” (Doc. No. 22-1 at 7).
The elements of a claim for trademark infringement in the Fourth Circuit are as follows:
To prove trademark infringement, [the plaintiff] must show (1) that it owns a valid
and protectable mark; (2) that [the defendant] uses a “re-production, counterfeit,
copy, or colorable imitation” of that mark in commerce and without [the plaintiff’s]
consent; and (3) that [the defendant’s] use is likely to cause confusion.
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Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 259 (4th Cir. 2007)
(quoting 15 U.S.C. § 1114(1)(a)). While Defendants expressly contest the first element,1 their
arguments clearly focus on the third.2
As to likelihood of confusion, the Fourth Circuit has identified “several nonexclusive
factors to consider” when making such a determination:
(1) The strength or distinctiveness of the plaintiff’s mark; (2) the similarity of the
two marks; (3) the similarity of the goods or services the marks identify; (4) the
similarity of the facilities the two parties use in their businesses; (5) the similarity
of the advertising used by the two parties; (6) the defendant’s intent; and (7) actual
confusion.
Louis Vuitton, 507 F.3d at 259 (citing Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1527 (4th
Cir. 1984)). These factors “are not always weighted equally, and not all factors are relevant in
every case.” Id. Importantly, the Court of Appeals has noted that “the likelihood of consumer
confusion is an ‘inherently factual’ issue that depends on the unique facts and circumstances of
each case.” Anheuser-Busch, Inc. v. L&L Wings, Inc., 962 F.2d 316 (4th Cir. 1992) (citing Levi
Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1365 n.5 (9th Cir. 1985)).
Rather than engage in an exhaustive review of the Complaint, the Court will simply note
that the Complaint alleges sufficient facts to demonstrate a plausible likelihood of confusion, and
to state a claim for trademark infringement. While Defendants argue that the common nature of
the words comprising Cinebarre’s trademark renders the mark weak, Plaintiff notes that, with a
certificate of registration from the USPTO, “the registrant obtains prima facie evidence that its
Plaintiff argues not only that its “EAT. DRINK. WATCH MOVIES.” trademark is valid and protectable, but that it
is “incontestable.” See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 929 (4th Cir.
1995) (“Incontestability is ‘conclusive evidence of the validity of the registered mark and of the registration of the
mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the mark in
commerce.’” (quoting 15 U.S.C. § 1115(b))).
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Plaintiff argues that, as to the second element, the Complaint “plainly satisfies the use-in-commerce and absenceof-consent criteria, and Defendants do not, and cannot, allege otherwise.” (Doc. No. 24 at 6). Again, Defendants’
arguments in favor of dismissal do not appear to focus on this element.
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mark is not generic in the eyes of the relevant public, see 15 U.S.C. § 1064(3), and that its mark is
not “merely” descriptive, but at a minimum is descriptive and has obtained secondary meaning,
see 15 U.S.C. § 1052(e).” America Online, Inc. v. AT&T Corp., 243 F.3d 812, 816 (4th Cir. 2001).
Otherwise, the Complaint alleges that the marks are strikingly similar in that they use
nearly the same sequence of words in substantially the same manner. The parties are engaged in
basically the exact same service—operating movie theaters where patrons and eat and drink while
watching movies—using the same basic type of facility. And while the Complaint does not appear
to assert instances of actual confusion, it does allege facts intimating an intent to cause confusion
on the part Mr. Shultz, who allegedly modeled Defendants’ theaters directly after Plaintiff’s.
Defendants vehemently deny these allegations, but they are taken as true at the pleading stage.
Defendants argue at length that its marks could not possibly cause confusion as to the
source or sponsorship of the movie theaters, because the marks either expressly include, or are
nearly always paired with “Studio Movie Grill,” or its abbreviation “SMG”. But the inclusion of
one’s business name does not automatically negate any plausible confusion on the part of the
average consumer, who may only remember or be familiar with the combination and sequence of
words in Plaintiff’s “EAT. DRINK. WATCH MOVIES.” mark. Otherwise, the exhibits to
Plaintiff’s Complaint demonstrate that SMG does not always, as a matter of course, pair its name
with the phrase “EAT DRINK MOVIES.” (See Doc. No. 15-5). The extent to which SMG includes
its name with these marks, and the extent to which Defendants’ use of these marks causes
confusion anyway, are topics the parties may explore during discovery. For these reasons, the
Court finds that the Complaint alleges sufficient facts to demonstrate a plausible likelihood of
confusion as to the source or sponsorship of Defendants’ movie theaters, and that it states a claim
for trademark infringement.
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B. Common Law Trademark Infringement, Common Law Unfair Competition, Federal
Unfair Completion/False Advertising
Defendants note that plausible likelihood of confusion is also an element of common law
trademark infringement, common law unfair competition, and federal unfair competition/false
advertising, and argue that those claims should be dismissed for failing to satisfy this element. The
Court having found that the complaint does allege a plausible likelihood of confusion, Defendants’
motion as to these counts will also be denied.
C. North Carolina Unfair and Deceptive Trade Practices
Defendants also move to dismiss Plaintiff’s claim under North Carolina’s Unfair and
Deceptive Trade Practices Act (“UDTPA”), which prohibits “unfair methods of competition in or
affecting commerce, and unfair or deceptive acts or practices in or affecting commerce . . . .” N.C.
Gen. Stat. § 75-1.1. To establish such a claim, a Plaintiff must show: (1) the defendant committed
an unfair or deceptive act or practice; (2) the act in question was in or affected commerce; and (3)
the act proximately caused injury to the plaintiff. Bob Timberlake Collection, Inc. v. Edwards, 626
S.E.2d 315, 322 (N.C. App. 2006). “An act or practice is unfair if it is ‘immoral, unethical,
oppressive, unscrupulous, or substantially injurious to consumers.’” Id. (citing Marshall v. Miller,
276 S.E.2d 397, 403 (N.C. 1981)). “An act or practice is deceptive if it ‘has the capacity or
tendency to deceive.’” Id.
Having carefully reviewed the complaint, the Court finds that it states a plausible claim
under the North Carolina UDTPA. Plaintiff alleges that Defendants are copying its mark with an
intent to cause confusion among consumers, and that as a result of these practices, it has incurred
damages, embarrassment, and injury to reputation. Defendants’ motion as to this claim will be
denied as well.
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D. Cancellation of U.S. Trademarks
Finally, Defendants move to dismiss Plaintiff’s claims for the cancellation of their marks.
Plaintiff asserts these claims based on (1) priority use and (2) fraud on the USPTO. Indeed, the
Complaint demonstrates that Plaintiff filed its trademark application on November 21, 2005, and
alleges that it has used the mark at least since June 2007. Defendants, on the other hand, did not
apply for their marks until March 2011 and May 2012, and the Complaint alleges that they did not
begin using these marks until March 2009. Thus, the Complaint alleges facts sufficient to
demonstrate prior use. See Emergency One, Inc. v. Am. Fire Eagle Engine Co., 332 F.3d 264, 268
(4th Cir. 2003) (“The first user, then, to appropriate and use a particular mark—the ‘senior’ user—
generally has priority to use the mark to the exclusion of any subsequent—or junior—users.”); see
also 15 U.S.C. § 1057.
The Complaint further alleges that Defendants falsely represented to the USPTO that no
corporation “has the right to use the mark in commerce, either in the identical form thereof or in
such near resemblance thereto as to be likely . . . to cause confusion, or to cause mistake, or to be
deceived.” (Compl. ¶¶ 84, 95). Defendants appear to challenge these allegations only on the
grounds that Plaintiff has failed to establish a plausible likelihood of confusion. (See Doc. No. 221 at 27). Because the Court has already concluded that Plaintiff has met this burden, Defendants’
motion as to these counts will be denied.
IV. ORDER
THEREFORE, for the foregoing reasons, Defendants’ Motion to Dismiss Plaintiff’s
Amended Complaint (Doc. No. 22) is DENIED in its entirety.
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SO ORDERED.
Signed: July 13, 2015
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