Video Gaming Technologies, Inc. v. Castle Hill Studios LLC et al

Filing 56

OPINION AND ORDER by Chief Judge Gregory K Frizzell ; denying 29 Motion to Dismiss for Failure to State a Claim (kjp, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA

VIDEO GAMING TECHNOLOGIES, INC.,
Plaintiff,
v.
CASTLE HILL STUDIOS LLC
(d/b/a CASTLE HILL GAMING);
CASTLE HILL HOLDING LLC
(d/b/a CASTLE HILL GAMING); and
IRONWORKS DEVELOPMENT, LLC
(d/b/a CASTLE HILL GAMING),
Defendants.

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Case No. 17-CV-454-GKF-JFJ

OPINION AND ORDER
This matter comes before the court on the Motion to Dismiss Complaint [Doc. #29] of
Defendants Castle Hill Studios LLC (d/b/a Castle Hill Gaming), Castle Hill Holding LLC (d/b/a
Castle Hill Gaming), and Ironworks Development, LLC (d/b/a Castle Hill Gaming).1 For the
reasons set forth below, the motion is denied.
I.

Background
This matters relates to the development, manufacture, and distribution of class II bingo-

based player terminals.2 The allegations of VGT’s Complaint are summarized as follows:

1

2

For ease of reference, this court will refer to the defendants, collectively, as “Castle Hill Gaming.”

The Indian Gaming Regulatory Act, which regulates the operation of gaming by Indian tribes,
defines three separate classes of games: (1) class I gaming, which includes social games and
traditional forms of tribal gaming; (2) class II gaming, which includes bingo and, if played in the
same location, pull-tabs, lotto, punch boards and tip-jars; and (3) class III gaming, which includes
any form of gaming not included in class I or class II. 25 U.S.C. § 2703. See also Diamond Game
Enters., Inc. v. Reno, 230 F.3d 365, 367 (D.C. Cir. 2000).

VGT is a developer, manufacturer and distributor of class II bingo-based player terminals
in North America, and owns more than two hundred (200) federal trademark registrations and
applications in connection with its class II bingo-based games (collectively, “VGT Marks”).
VGT’s class II game terminals are three (3) reel mechanical games. VGT also possesses common
law rights to the trade dress in connection with its three-reel mechanical games, including the
following package features: game cabinet, game play sound, award sound, bingo play and pays,
red screen free spins, and themes (collectively, “VGT Trade Dress”). In addition to the VGT
Marks and VGT Trade Dress, VGT owns trade secrets relating to the development and operation
of the three-reel mechanical games, including secrets related to the math underlying the games,
the specifics of the manner in which the bingo game is played, and the source code used to operate
the games (collectively, “VGT Trade Secrets”).
Castle Hill is operated by former VGT employees, including VGT’s former vice president
of engineering, director of software, and treasurer/director of operations/director of hardware
development, who are currently members of Castle Hill’s executive team. Additionally, twelve
other VGT employees have left VGT to work for Castle Hill.
Although Castle Hill originally manufactured class III games, sometime between March
2015 and June 2016, Castle Hill began developing and offering class II games that closely
resembled VGT’s class II games. Since March 2015, Castle Hill has launched at least twenty-four
(24) class II bingo-based games that use features including three mechanical reels and the same
cabinet as used by VGT’s three-reel mechanical games, and incorporate marks and themes
confusingly similar to the VGT Marks and themes. Further, Castle Hill has utilized the VGT Trade
Secrets in the development of Castle Hill’s games.

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Based on these allegations, the Complaint asserts six counts: (1) federal trademark
infringement in violation of the Lanham Act (specifically, 15 U.S.C. § 1114); (2) unfair
competition and trade dress infringement for product packaging in violation of the Lanham Act
(specifically, 15 U.S.C. § 1125(a)); (3) unfair competition, trade dress infringement, and trademark
infringement in violation of the Oklahoma Deceptive Practices Act (78 O.S. §§ 51-56); (4) unfair
competition, trade dress infringement, and trademark infringement under common law; (5)
misappropriation of trade secrets in violation of the Oklahoma Uniform Trade Secrets Act (78 O.S.
§§ 85-94); and (6) misappropriation of confidential business information in violation of common
law. See [Doc. #2]. Castle Hill moves to dismiss all counts. See [Docs. ## 29-30].
II.

Documents Considered
In support of its motion to dismiss, Castle Hill asks the court to consider over 2,600 pages

of documents, most of which are records of the United States Patent and Trademark Office
(“USPTO”). Castle Hill requests that the court take judicial notice of the USPTO records pursuant
to Fed. R. Evid. 201. See [Doc. #30, pp. 14-15]. Additionally, VGT’s Complaint attaches six (6)
exhibits, which are referenced in VGT’s Complaint. Thus, prior to considering whether the claims
are adequately pled, the court will first determine the threshold issue of what documents it will
consider in ruling on Castle Hill’s motion.
In the Tenth Circuit, when considering a Rule 12(b)(6) motion to dismiss, the court may
consider “not only the complaint, but also the attached exhibits . . . .” Commonwealth Prop.
Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194, 1201 (10th Cir. 2011). This
is because, pursuant to Fed. R. Civ. P. 10, “[a] copy of a written instrument that is an exhibit to a
pleading is a part of the pleading for all purposes.” Fed. R. Civ. P. 10(c). The court may also
consider documents incorporated into the complaint by reference.

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Commonwealth Prop.

Advocates, LLC, 680 F.3d at 1201. Here, plaintiff’s 6 exhibits are both attached to and referenced
in the Complaint. Thus, the court will consider the 6 exhibits attached to VGT’s Complaint.
Castle Hill attaches twenty (20) exhibits to its motion to dismiss, as well as a declaration
of Dale Jensen. Exhibits 1, 2, 16, and 20 consist of USPTO filings of VGT and its parent company,
Aristocrat Technologies, Inc. Only exhibit 16 relates to a trademark cited as relevant to the dispute
in VGT’s Complaint—“Countin’ Cash.” The marks that are the subject of exhibits 1, 2, and 20
are not referenced in VGT’s Complaint.
Exhibit 19 is USPTO filings of Castle Hill, and relates to marks that allegedly infringe the
VGT Marks identified in the Complaint—specifically, “New Money,” “Double Hotness,”
“Genie’s Gems,” “Mr. Martini,” “Mr. Martini Vegas Baby,” “Nugget Mountain,” “Arctic Cash,”
“Arctic Ice,” “Dublin Your Luck,” “Coin Slinger,” “Aces and Hogs,” “Amazing Ca$h,” “10,000
Diamonds,” “20,000 Diamonds,” “Captain Bacon,” and “Amazing Cherry.”
Exhibits 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 14, 15, 17, and 18 are primarily composed of USPTO
filings of third-parties, but also include spreadsheets created by Dale Jensen, Castle Hill’s attorney,
purportedly intended to “aid to explain in a summary fashion information about the trademarks
lists in the pages after each exhibit’s spreadsheet.” [Doc. #30-1]. These exhibits are not referenced
in the Complaint.
Federal Rule of Civil Procedure 12(d) applies when a party requests the court to consider
matters outside of the pleadings. Rule 12(d) provides:
If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are
presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56. All parties must be given a reasonable
opportunity to present all the material that is pertinent to the motion.
No conversion is required, however, “if [the court] takes ‘judicial notice of its own files and
records, as well as facts which are a matter of public record.’” Rose v. Utah State Bar, 471 F.
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App’x 818, 820 (10th Cir. 2012) (quoting Tal v. Hogan, 453 F.3d 1244, 1265 n.24 (10th Cir.
2006)). Pursuant to Fed. R. Evid. 201, a court “may judicially notice a fact that is not subject to
reasonable dispute.” Fed. R. Evid. 201(b). “When presented with a Rule 12(b)(6) motion, the
district court has broad discretion in determining whether to accept materials beyond the
pleadings.” Brokers Choice of Am., Inc. v. NBC Universal, Inc., 861 F.3d 1081, 1103 (10th Cir.
2017).
With regard to the USPTO documents, the court first notes that situations may exist when
judicial notice of USPTO documents would be proper. See Anderson v. Kimberly-Clark Corp.,
570 F. App’x 927, 932 n.3 (Fed. Cir. 2014) (as relates to patent documents). However, the court
must consider the purpose for which judicial notice is sought. For example, although the court
may take judicial notice of the authenticity and existence of public documents, judicial notice of
the substantive validity of those public documents is improper. See Tal, 453 F.3d at 1265 n.24
(noting that, although a court may take judicial notice of matters of public record, “‘[t]he
documents may only be considered to show their contents, not to prove the truth of matters asserted
therein’”) (quoting Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002)).
See also Port-A-Pour, Inc. v. Peak Innovations, Inc., No. 13-cv-01511-WYD-BNB, 2015 WL
292913, at *3 (D. Colo. Jan. 20, 2015) (“I also agree . . . that a court may take notice only of the
authenticity and existence of public documents, not the validity of their contents.”); VirtualAgility,
Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1312-13 (Fed. Cir. 2014).
Here, Castle Hill requests that the court take judicial notice of exhibits 3, 4, 5, 6, 7, 8, 9,
10, 11, 14, 15, 17, and 18 to demonstrate that VGT’s trademarks and themes are ubiquitous in the
industry such that there is no likelihood of confusion. See [Doc. #30, pp. 15-20]. In essence,
Castle Hill is seeking an evidentiary ruling on the substantive merits of the claims. However, the

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effect of the information contained in the third-party USPTO filings on VGTs claims in this
litigation is subject to “reasonable dispute” and therefore is not the proper subject of judicial
notice.3 See Port-A-Pour, Inc., 2015 WL 292913, at *3; VirtualAgility, Inc., 759 F.3d at 1312-13.
Nor make the court such an evidentiary ruling without converting Castle Hill’s motion to dismiss
into a motion for summary judgment. See Navajo Nation v. Urban Outfitters, Inc., 935 F. Supp.
2d 1147, 1157 (D.N.M. 2013) (refusing to consider USPTO records, reasoning “[o]ther portions
of those same [USPTO] records may support Plaintiffs’ interpretation of the file histories, and thus
the evidentiary value of the materials submitted by Defendants is subject to ‘reasonable dispute,’
and thus not best suited for judicial notice. This evidentiary consideration is exactly the type of
analysis suitable for summary judgment, not a motion to dismiss.”); Midwest Innovative Prods.,
LLC v. Kinamor, Inc., No. 16-CV-11005, 2017 WL 2362571, at *2 (N.D. Ill. May 31, 2017)
(refusing to take judicial notice of USPTO documents for use in comparing plaintiff’s product to
allegedly infringing product, as such inquiry was typically resolved at motion for summary
judgment stage); Facebook, Inc. v. Teachbook.com, LLC, 819 F. Supp. 2d 764, 771-73 (N.D. Ill.
2011); ContourMed Inc. v. Am. Breast Care L.P., No. H-15-2769, 2016 WL 1059531 (S.D. Tex.
Mar. 17, 2016).
This court will not convert Castle Hill’s motion to dismiss to a motion for summary
judgment. Accordingly, the court will not consider exhibits 3, 4, 5, 6, 7, 8, 9, 10, 11, 14, 15, 17,
and 18.4

3

Nor are the spreadsheets prepared by Castle Hill’s counsel the proper subject of judicial notice,
as the summaries are not a matter of public record. Cf. Tal, 453 F.3d at 1264 n.24.
4

Exhibits 12 and 13 were not submitted to the court and, therefore, are not considered.
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For the same reasons, the court will not consider exhibits 1, 2, and 20 to Castle Hill’s
motion. The exhibits are neither referenced in VGT’s Complaint nor the proper subject of judicial
notice as the effect of the records on VGT’s claims may be reasonably disputed by VGT.
In contrast, exhibit 16 relates to a trademark that is referred to in the Complaint. However,
the trademark history is not referred to in the Complaint. Further, the exhibit is not central to the
plaintiff’s claim and therefore is not incorporated by reference into the Complaint. See GFF Corp.
v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997) (“Notwithstanding
these general principles, if a plaintiff does not incorporate by reference or attach a document to its
complaint, but the document is referred to in the complaint and is central to the plaintiff’s claim,
a defendant may submit an indisputably authentic copy to the court to be considered on a motion
to dismiss.”) (emphasis added). Exhibit 16 is an examiner’s amendment, not the trademark issued
to VGF or even the entirety of the application itself. Further, VGT asserts common law claims,
which are independent of the federal trademark statutes. Although the exhibit may have some
evidentiary value later in the proceedings, the exhibit is not of the type of document generally
considered at the motion to dismiss stage (like the governing contract in a breach of contract
claim). Because the trademark history is not referred to in VGF’s Complaint and the examiner’s
amendment is not central to VGT’s claims, exhibit 16 is not incorporated by reference into VGT’s
Complaint.
Castle Hill, however, requests that the court take judicial notice of the USPTO document
in exhibit 16 for the purposes of establishing that VGT has disclaimed the word “cash.” See [Doc.
#30, p. 10]. The court may not notice public records for the truth of the matter asserted. See Tal,
453 F.3d at 1265 n.24. Thus, exhibit 16 is not the proper subject of judicial notice for the reasons
requested by Castle Hill, and the court will not consider it.

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The court also declines to consider exhibit 19, USPTO filings of Castle Hill. Although the
filings relate to allegedly infringing marks, the trademark history is not referred to in the
Complaint, nor is the trademark history of the marks central to VGT’s claims. Further, the court
declines to take judicial notice of the documents for the truth of the matter asserted as requested
by Castle Hill. See [Doc. #30, p. 11].
Based on the foregoing, the court will not consider any matter outside the pleadings5, and
will consider Castle Hill’s motion as a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).
III.

Motion to Dismiss Standard
Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a claim that “fail[s] to

state a claim upon which relief can be granted.” “To survive a motion to dismiss under Rule
12(b)(6), a plaintiff must plead sufficient factual allegations ‘to state a claim to relief that is
plausible on its face.’” Brokers’ Choice of Am., Inc., 861 F.3d at 1104 (quoting Bell Atl. 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. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “Mere
‘labels and conclusions’ and ‘a formulaic recitation of the elements of a cause of action’ are
insufficient.” Estate of Lockett ex rel. Lockett v. Fallin, 841 F.3d 1098, 1107 (10th Cir. 2016)
(quoting Twombly, 550 U.S. at 555). “Dismissal is appropriate if the law simply affords no relief.”
Commonwealth Prop. Advocates, LLC, 680 F.3d at 1202.

5

Because the court will not consider any exhibits to Castle Hill’s motion to dismiss, the declaration
of Dale Jensen, which relates to the retrieval of the USPTO documents and the methodology
utilized to create the summaries, is rendered moot.
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IV.

Analysis
As previously stated, VGT’s Complaint asserts six causes of action, all of which Castle

Hill moves to dismiss. The court will separately consider each cause of action.
A. Federal Trademark Infringement in Violation of 15 U.S.C. § 1114
Castle Hill argues that VGT’s federal trademark infringement claim fails because there is
no likelihood of confusion, due to two primary reasons: (1) Castle Hill’s marks are not similar to
VGT’s, and the common words and themes between them are ubiquitous in the industry, and (2)
VGT admits its consumers are “sophisticated professionals,” unlikely to be confused by any
similarities between the marks. The court is not persuaded that dismissal is appropriate based on
either argument at this stage of the litigation.
The federal trademark infringement statute, 15 U.S.C. § 1114, imposes civil liability for
the use in commerce of any counterfeit, copy or imitation of a registered mark, when such use is
likely to cause confusion in the marketplace.6 See 15 U.S.C. § 1114(1)(a). “Likelihood of
confusion forms the gravamen for a trademark infringement action.” King of the Mountain Sports,
Inc. v. Chrysler Corp., 185 F.3d 1084, 1089 (10th Cir. 1999). The Tenth Circuit considers six
“nonexhaustive factors” to determine the likelihood of confusion between two marks: “(1) the
degree of similarity between the marks; (2) the intent of the alleged infringer in adopting its mark;
(3) evidence of actual confusion; (4) similarity of products and manner of marketing; (5) the degree
of care likely to be exercised by purchasers; and (6) the strength or weakness of the marks.” Sally
Beauty Co., Inc. v. Beautyco, Inc., 304 F.3d 964, 972 (10th Cir. 2002).

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Pursuant to statute, “trademark” “include[s] any word, name, symbol, or device, or any
combination thereof . . . used by a person . . . to identify and distinguish his or her goods, including
a unique product, from those manufactured or sold by others and to indicate the source of the
goods, even if that source is unknown.” 15 U.S.C. § 1127.
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Although Castle Hill asserts that “[i]n some instances . . . the question of whether a
likelihood of confusion exists can be determined at the pleading stage and based on a consideration
of less than all of the factors,” [Doc. #30, p. 15], the court is not persuaded in this instance. Castle
Hill cites no Tenth Circuit authority for the proposition that dismissal of a trademark infringement
claim may be appropriate at the motion to dismiss stage based on consideration of less than all of
the factors. Rather, the Tenth Circuit has concluded “[n]o one factor is dispositive, and the final
determination of likelihood of confusion must be based on consideration of all relevant factors.”
Heartsprings, Inc. v. Heartspring, Inc., 143 F.3d 550, 554 (10th Cir. 1998) (emphasis in original).
See also King of the Mountain Sports, Inc., 185 F.3d at 1090 (“‘All of the factors are interrelated,
and no one factor is dispositive.’”) (quoting Universal Money Ctrs., Inc. v. Am. Tel. & Tel. Co., 22
F.3d 1527, 1530 (10th Cir. 1994)); Sally Beauty Co., Inc., 304 F.3d at 972 (same).
Further, in the Tenth Circuit, likelihood of confusion is a question of fact. Sally Beauty
Co., Inc., 304 F.3d at 972; Heartsprings, Inc., 143 F.3d at 553; Vail Assocs., Inc. v. Ved-Tel-Co.,
516 F.3d 853, 857 (10th Cir. 2008). Thus, in Tenth Circuit trademark cases, “courts have been
careful to prevent 12(b)(6) motions from becoming premature summary judgment motions.”
Advanced Baseball Acad., LLC v. Google, Inc., No. 14-2461-CM, 2015 WL 1440656, at *4 (D.
Kan. Mar. 30, 2015) (citing Cottrell, Ltd. v. Biotrol Int’l, Inc., 191 F.3d 1248, 1252 (10th Cir.
1999; Navajo Nation v. Urban Outfitters, Inc., 935 F. Supp. 2d 1147, 1156-58 (D.N.M. 2013)).
See also Adams v. Grand Slam Club, No. 12-CV-2938-WJM-BNB, 2014 WL 103782 (D. Colo.
Jan. 10, 2014) (concluding likelihood of consumer confusion “is a question of fact and should not
be determined conclusively on a motion to dismiss”). Accordingly, this court will consider only
whether VGT has sufficiently pled allegations regarding the likelihood of consumer confusion so
as to state a plausible claim for federal trademark infringement.

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Castle Hill urges the court to determine that VGT has failed to plead a plausible trademark
infringement claim based on the marks themselves, because “Castle Hill’s marks simply do not
look or sound anything like VGT’s.” [Doc. #30]. However, “[t]he degree of similarity between
marks rests on sight, sound, and meaning. The[e] court must determine whether the allegedly
infringing mark will confuse the public when singly presented, rather than when presented side by
side with the protected trademark.” Sally Beauty Co., Inc., 304 F.3d at 972 (internal citations
omitted). See also Heartsprings, Inc., 143 F.3d at 555 (“[B]ecause we must consider the parties’
trademarks in their entirety as they are experienced by consumers in the marketplace, we are not
free to focus solely on name similarity.”).
Castle Hill further argues that VGT’s federal trademark claim must fail because VGT
admitted that its consumers are sophisticated professionals, unlikely to be confused between the
marks. [Doc. #30, pp. 21-22]. As previously stated, consumer sophistication is just one of six
factors considered by the court to determine likelihood of confusion. Because no one factor is
dispositive, any alleged consumer sophistication would not be fatal to VGT’s claim. See Sally
Beauty Co., Inc., 304 F.3d at 972. Further, this court has declined to take judicial notice of the
records in which VGT purportedly admitted consumer sophistication.7
VGT alleges that it has an exclusive right to use twenty (20) federally registered trademarks
in its computer software or firmware for games. [Doc. #2, ¶ 19]. VGT further alleges that more
than half of Castle Hill’s class II games incorporate trademarks that are confusingly similar to the

7

Even if judicial notice was taken of the relevant records, the court is not persuaded that a statement
of VGT’s parent company in a document submitted to the USPTO would constitute a binding
judicial admission in this action. See Universal Motor Oils Co., Inc. v. Amoco Oil Co., No. CIV89-1662-T, 1990 WL 86178, at *9 (D. Kan. May 24, 1990) (statement in ex parte proceeding
before USPTO not binding admission in district court case), modified by Universal Motor Oils
Co., Inc. v. Amoco Oil Co., 743 F. Supp. 1484 (D. Kan. 1990).
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VGT Marks, and the exhibits illustrate the manner of display of the trademarks in their entirety as
experienced by consumers in the marketplace. [Doc. #2, ¶ 72]. Implicit in the Complaint’s
allegations is that many of the VGT Marks share at least one common word or structure. [Doc.
#2, ¶¶ 68-70; Doc. #2-4]. Addi tionally, VGT asserts that Castle Hill intentionally used the
confusingly similar marks “to lead [players] to believe, incorrectly, that [Castle Hill’s] games were
developed by VGT, with the goal of enticing players to play [Castle Hill’s] games,” [Doc. #2, ¶
82], and that Castle Hill seeks the placement of the infringing games near VGT’s games in casinos
in order to increase the likelihood of consumer confusion. [Doc. #2, ¶ 87]. Further, VGT alleges
that Castle Hill uses identical marketing channels in direct competition with VGT, and that the
games utilizing the infringing marks appear in the same casinos, often near each other. [Doc. #2,
¶¶ 84-85]. Castle Hill’s use of the infringing marks is also alleged to have resulted in actual
confusion. [Doc. #2, ¶ 90]. The court is persuaded that these allegations are sufficient to plead
likelihood of confusion and state a plausible claim for trademark infringement in violation of 15
U.S.C. § 1114.8
B.

Unfair Competition and Trade Dress Infringement in Violation of
15 U.S.C. § 1125

To the extent that the Complaint’s trade dress claim is based on VGT’s themes, Castle Hill
makes a similar argument for dismissal of the trade dress claim as that made with regard to the

8

The court is not persuaded by the cases cited by Castle Hill in its reply in support of its assertion
that VGT’s allegations of likelihood of consumer confusion are insufficient, as the courts in those
cases were not considering a motion to dismiss. See [Doc. #46, pp. 4-5 (citing Water-Pik, Inc. v.
Med-Sys., Inc., 726 F.3d 1136 (10th Cir. 2013) (motion for summary judgment); Gen. Motors
Corp. v. Urban Gorilla, LLC, 500 F.3d 1222 (10th Cir. 2007) (motion for preliminary injunction);
Estee Lauder, Inc. v. The Gap, Inc., 108 F.3d 1503 (2d Cir. 1997) (permanent injunction)]. Further,
Castle Hill’s arguments in its motion generally relate to ubiquity and rely on matters outside the
pleadings, which the court declines to consider.
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trademark infringement claim—Castle Hill argues the claim should be dismissed because Castle
Hill’s themes are not similar to VGT’s and, further, the themes are ubiquitous on slot machines.
With respect to VFT’s features, Castle Hill asserts that the features are functional and therefore
are not subject to federal trade dress protection. The court will first consider Castle Hill’s
arguments regarding VGT’s themes.
“The trade dress of a product is its overall image and appearance, and may include features
such as size, shape, color or color combinations, texture, graphics, and even particular sales
techniques.” Sally Beauty Co., Inc., 304 F.3d at 977. “To establish a claim of trade dress
infringement, a plaintiff must show: (1) The trade dress is inherently distinctive or has become
distinctive through secondary meaning; (2) There is a likelihood of confusion among consumers
as to the source of the competing products; and (3) The trade dress is nonfunctional.” Gen. Motors
Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1227 (10th Cir. 2007).
As with trademark infringement, in the Tenth Circuit, likelihood of confusion in the trade
dress infringement inquiry is a question of fact, determined on the basis of the same six factors
applied to trademark infringement claims.

Id.

Accordingly, the court will not make any

determination as to the actual likelihood of confusion at this motion to dismiss stage, and will
consider only whether VGT alleges a plausible claim for trade dress infringement. See Kimray,
Inc. v. Norriseal-Wellmark, Inc., No. CIV-16-1167-D, 2017 WL 1906941 (W.D. Okla. May 8,
2017) (“The extent to which [defendant’s] design and marketing of its valves may cause confusion
are topics the parties will explore during discovery.”).
In support of its trade dress infringement claim, VGT identifies sixteen (16) themes that it
claims constitutes its protected trade dress, and, for thirteen of those themes, attaches an illustrative
exhibit of the theme. [Doc. #2, ¶ 34; Doc. #2-3; Doc. #2-4]. For three of these themes (“Crazy

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Bill,” “Mr. Money Bags,” and “Polar High Roller”), the Complaint then identifies the elements of
the themes that are “nearly identical,” including details as to the colors used, graphics, and
prominence of certain elements.9 [Doc. #2, ¶¶ 68-71]. In light of the number of component parts,
it is at least plausible that the overall scheme or “themes” are inherently distinctive.
VGT further alleges that themes are a factor in a player’s decision to choose a game and,
because of this, VGT has used the trade dress in its advertising and promotional materials. [Doc.
#2, ¶¶ 35-37]. As a result of the advertising and other unsolicited publicity, VGT alleges that the
trade dress themes have acquired recognition among the public and are associated with VGT’s
products and services. [Doc. #2, ¶ 39]. However, VGT alleges that Castle Hill has marketed their
infringing goods in identical marketing channels in direct competition with VGT’s products, and
Castle Hill seeks to place their games near VGT’s games in order to increase the likelihood that
players will confuse VGT games with Castle Hill games. [Doc. #2, ¶¶ 83-87]. Taken together,
the court is persuaded it is at least plausible that the themes have acquired a secondary meaning,
and of consumer confusion based on the themes.
Castle Hill also argues that the claim of trade dress infringement is invalid because features,
such as the game cabinet, game play sound, award sound, bingo play and pays, and red screen free
spins are functional and, therefore, not protectable as trade dress.

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In its reply, Castle Hill objects to VGT’s reference to more than a dozen themes, and argues that
the Complaint “expects Castle Hill and this Court to guess the games and the elements of those
games that VGT alleges are unique and distinctive for trade dress purposes.” [Doc. #46, pp. 3-4].
However, as mentioned above, the Complaint identifies the themes allegedly infringed on by
Castle Hill and, based on the allegations as to the objectionable elements of the “Crazy Bill,” “Mr.
Money Bags,” and “Polar High Roller” themes, the court may infer that the same elements are
objectionable in all themes (colors used, graphics, and prominence of certain elements). Further,
Castle Hill has not cited, nor has the court identified, any case law holding that it is inappropriate
for a complaint to include allegations as to several different trade dresses.
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Pursuant to the federal trade dress statute, “[i]n a civil action for trade dress infringement .
. . the person who asserts trade dress protection has the burden of proving that the matter sought
to be protected is not functional.” 15 U.S.C. § 1125(a)(3). Trade dress is functional “‘if it is
essential to the use or purpose of the article or if it affects the cost or quality of the article.’”
TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 32 (2001) (quoting Qualitex Co. v.
Jacobson Prods. Co., Inc., 514 U.S. 159, 165 (1995)). Further, “a functional feature is one the
‘exclusive use of [which] would put competitors at a significant non-reputation-related
disadvantage.’” TrafFix Devices, Inc., 532 U.S. at 32 (quoting Qualitex Co., 514 U.S. at 165).
However, “[f]unctionality is a question of fact, and depends on the totality of the evidence.”
Value Eng’g, Inc. v. Rexnord Corp., 278 F.3d 1268, 1273 (Fed. Cir. 2002) (internal citations
omitted). Thus, at this time, the court will only determine whether the Complaint includes
sufficient factual allegations to state a plausible claim for federal trade dress infringement.
In support of its trade dress infringement claim, VGT alleges that individual trade dress
features, including the game cabinet, game play sound, award sound, bingo play and pays, and red
screen free spins, are distinctive. [Doc. #2, ¶¶ 22 and 28]. VGT further asserts that its choices
with regard to each individual feature was arbitrary. Id. at ¶¶ 23-27. The individual features are
alleged to make noises or provide visual cues that indicate to customers that the games are
manufactured by VGT. Id. at ¶¶ 23-27. For each individual feature, the Complaint alleges that
alternative designs exist.10 Id. Further, the Complaint alleges that the combination of the

10

Defendants argue that the availability of alternative designs is irrelevant in light of the United
States Supreme Court’s ruling in TrafFix. [Doc. #30, pp. 24-25]. In TrafFix, the Supreme Court
declined to consider alternative design possibilities where functionality had been established
because the asserted feature was essential to the use of the item—the feature “[wa]s the reason the
device work[ed].” TrafFix, 532 U.S. at 34. Although the breadth of the TrafFix decision has not
been addressed by the Tenth Circuit, the court is not persuaded that the Tenth Circuit would
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individual trade dress features is inherently distinctive, and that consumers identify VGT’s 3-reel
mechanical games by the VGT Trade Dress. Id. at ¶¶ 29 and 39.
Additionally, VGT has alleged that its trade dress features are inherently distinctive and/or
acquired a secondary meaning. The Complaint identifies the specific features at issue, and asserts
that the combination of the individual features is “inherently distinctive because it is unique and
does not describe the 3-Reel Mechanical Games.” [Doc. #2, ¶¶ 22-28]. Further, the Complaint
alleges that consumers often identify VGT’s class II games based on the VGT Trade Dress, and
seek to play the games due to the Trade Dress. [Doc. #2, ¶¶ 29-31]. Finally, for the reasons
discussed herein, the Complaint includes sufficient allegations to nudge its claims toward a
plausible assertion of consumer confusion. Based on these allegations as well as the exhibits to
the Complaint, the court is persuaded that the Complaint contains sufficient factual allegations to
state an at least plausible claim for federal trade dress infringement.

interpret TrafFix as holding that alternative designs are always irrelevant to functionality in a trade
dress inquiry. See Value Eng’g, Inc., 278 F.3d at 1273 (“[W]e conclude that the Court merely
noted that once a product feature is found functional based on other considerations there is no need
to consider the availability of alternative designs, because the feature cannot be given trade dress
protection merely because there are alternative designs available. But that does not mean that the
availability of alternative designs cannot be a legitimate source of evidence to determine whether
a feature is functional in the first place.”) (internal citations omitted); McAirlaids, Inc. v. KimberlyClark Corp., 756 F.3d 307, 312 (4th Cir. 2014) (“Thus, TrafFix did not alter our precedents that
look to the availability of alternative designs when considering, as an initial matter, whether a
design affects product quality or is merely ornamental.”); Christian Louboutin S.A. v. Yves Saint
Laurent Am. Holding, Inc., 696 F.3d 206 (2d Cir. 2012); Millennium Labs., Inc. v. Ameritox, Ltd.,
817 F.3d 1123 (9th Cir. 2015).
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C.

Unfair Competition, Trade Dress Infringement, and Trademark Infringement
in Violation of the Oklahoma Deceptive Practices Act (78 O.S. §§ 51-56) and
Common Law

For the reasons set forth above, the Complaint also states a plausible claim for unfair
competition, trade dress infringement, and trademark infringement in violation of the Oklahoma
Deceptive Practices Act, 78 O.S. §§ 51-56, and Oklahoma common law. See Two Men & A Truck
Int’l, Inc. v. Two Men & A Truck Movers, No. 12-CV-00632-R, 2013 WL 12073228 (W.D. Okla.
Jan. 14, 2013) (same standards of proof apply to ODPA claims and Oklahoma common law claims
as Lanham Act claims). See also Brunswick Corp. v. Spinit Reel Co., 832 F.2d 513, 527 (10th Cir.
1987) (“Thus we hold that Section 53(a)(1) of the Oklahoma Act . . . requires the same standards
of proof as does an action under Section 43(a) of the Lanham Act.”); Kimray, Inc., 2017 WL
1906941, at *4 (“A claim under § 53(A) is treated analogously to [plaintiff’s] Lanham Act claims
and governed by the same standard.”); Trotter v. Am. Modern Select Ins. Co., 220 F. Supp. 3d
1266, 1269 n.4 (W.D. Okla. 2016) (“The Tenth Circuit held in Brunswick Corp. that passing off
does not require intent to deceive, but rather ‘requires the same standards of proof as does an action
under Section 43(a) of the Lanham Act.’”).11
D.

Misappropriation of Trade Secrets in Violation of the Oklahoma Uniform
Trade Secrets Act (78 O.S. §§ 85-94)

The Oklahoma Uniform Trade Secrets Act (“OUTSA”) prohibits the misappropriation of
trade secrets. See 78 O.S. §§ 85-94. The OUTSA defines “trade secret” as information that
“derives independent economic value, actual or potential, from not being generally known to, and
not being readily ascertainable by proper means by, other persons who can obtain economic value

11

The parties do not dispute that the same standard applies to the Oklahoma state law unfair
competition claims, as the Lanham Act claims. See [Doc. #30, p. 13, p. 21 n.3, 26 n.5; Doc. #35,
p. 17, p. 27 n.13].
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from its disclosure or use,” provided that the information “is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.” 78 O.S. § 86(4). “Misappropriation”
means:
a.

acquisition of a trade secret of another by a person who knows or has reason
to know that the trade secret was acquired by improper means; or

b.

disclosure or use of a trade secret of another without express or implied
consent by a person who:
(1)

used improper means to acquire knowledge of the trade secret; or

(2)

at the time of disclosure or use, knew or had reason to know that his
knowledge of the trade secret was:
(a)

(b)

acquired under circumstances giving rise to a duty to
maintain its secrecy or limit its use; or

(c)

c.

derived from or through a person who had utilized improper
means to acquire it; or

derived from or through a person who owed a duty to the
person seeking relief to maintain its secrecy or limit its use;
or

before a material change of his position, knew or had reason to know that it
was a trade secret and that knowledge of it had been acquired by accident
or mistake.

78 O.S. § 86(2). To state a claim for misappropriation of trade secrets under the OUTSA, VGT
must allege “(i) the existence of a trade secret, (ii) misappropriation of the secret by [Castle Hill],
and (iii) use of the secret to [VGT’s] detriment.” MTG Guarnieri Mfg., Inc. v. Clouatre, 239 P.3d
202, 209 (Okla. Civ. App. 2010).
Castle Hill argues that VGT does not define its trade secrets with sufficient specificity to
satisfy the Twombly standard and therefore dismissal is warranted. However, the court is not
persuaded.

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The Complaint alleges that a trade secret existed in the following: (1) the math underlying
VGT’s class II games, which dictates the probabilities of winning, payouts, and volatility of each
game; (2) the specifics of the manner in which the bingo game is played in the class II games; and
(3) the source code used to operate the class II games, which are essentially instructions used to
control all aspects of VGT’s games. [Doc. #2, ¶¶ 41-43]. The trade secrets are alleged to be
“confidential and never . . . shared with the public,” and “integral to [VGT’s] business operations.”
[Doc. #2, ¶ 44]. The Complaint further alleges that “[t]he VGT Trade Secrets possess independent
economic value by virtue of not being generally known to, nor readily ascertainable through
legitimate means by, other persons who could benefit financially from their disclosure or use.”
[Doc. #2, ¶ 45].

The specific manner in which the VGT Trade Secrets possess independent

economic value by virtue of not being generally known is implicit throughout the Complaint—
nondisclosure protects VGT against the manufacture of infringing machines by its competitors.
Further, with regard to efforts to maintain secrecy, the Complaint alleges that VGT: (1)
restricted access to the Trade Secrets and other confidential information; (2) restricted access to
computer networks that contained the Trade Secrets and other confidential information; (3)
required employees to sign employment agreements that included nondisclosure provisions; and
(4) required employees to attend presentations related to the protection of trade secrets. [Doc. #2,
¶ 46]. Based on these allegations, the court concludes that the Complaint includes sufficient factual
allegations of a trade secret. See Pre-Paid Legal Servs., Inc. v. Cahill, 171 F. Supp. 3d 1219, 122728 (E.D. Okla. 2016) (allegations that defendant misappropriated a trade secret from which
plaintiff derived independent economic value were sufficient for trade secret, and concluding that
whether the asserted trade secret in fact qualified as a “trade secret” was not properly before the
court at the motion to dismiss stage). See also Cobalt Flux, Inc. v. Positive Gaming AS, No. 08-

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CV-185-TS, 2008 WL 4534182, at *3 (D. Utah Oct. 6, 2008) (“There is no heightened pleading
standard for trade secrets claims. A plaintiff is not expected to plead its trade secrets in detail
because such disclosure would amount to an effective surrender of the trade secret. The usual
notice pleading requirements under Rule 8 apply.”) (footnotes omitted).
The court will next consider whether the Complaint includes sufficient factual averments
that Castle Hill misappropriated the VGT Trade Secrets to VGT’s detriment. The Complaint
alleges that, during their employment with VGT, former VGT employees had access to VGT Trade
Secrets. [Doc. #2, ¶ 95]. The employees were allegedly required to sign employment agreements
which included nondisclosure agreements and attend training regarding trade secrets, [Doc. #2, ¶¶
46-47, 97]. Thus, the Complaint asserts that the employees were aware that the Trade Secrets were
confidential and proprietary, and should not be shared outside VGT. [Doc. #2, ¶ 96]. The former
VGT employees subsequently left VGT for Castle Hill, and the Complaint alleges that the former
VGT employees shared the VGT Trade Secrets with Castle Hill to enable Castle Hill to
development the infringing games. [Doc. #2, ¶ 98]. As a result, the Complaint alleges that VGT
has been placed in a weakened competitive position and that Castle Hill has acquired an unfair
competitive edge. [Doc. #2, ¶ 100]. These allegations sufficiently assert that former VGT
Employees acquired VGT Trade Secrets under circumstances giving rise to a duty to maintain
secrecy, and that the former employees subsequently used the VGT Trade Secrets without VGT’s
consent and to VGT’s detriment. Accordingly, the court concludes that the Complaint states a
plausible claim for misappropriation of trade secrets in violation of the OUTSA.
E.

Misappropriation of Confidential Business Information in Violation of
Oklahoma Common Law

Oklahoma recognizes the common law tort of misappropriation of confidential business
information. Am. Biomedical Grp., Inc. v. Techtrol, Inc., 374 P.3d 820, 825 (Okla. 2016). Both
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trade secrets and confidential business information require a substantial element of secrecy.

Id.

Further, the information must be procured by improper means. ABC Coating Co., Inc. v. J. Harris
& Sons Ltd., 747 P.2d 266, 270 (Okla. 1986).
Castle Hill asserts that the Complaint’s common law claim for misappropriation of
confidential business information “fails for the same reason VGT’s trade secrets claim fails.”
[Doc. # 30, p. 29 n.8]. For the same reasons discussed above, the court is not persuaded. The
court concludes that Complaint includes sufficient factual averments that Castle Hill acquired
VGT’s confidential business information by improper means to VGT’s resultant harm and
therefore states a plausible claim for misappropriation of confidential business information in
violation of Oklahoma common law.
V.

Conclusion
WHEREFORE, the motion to dismiss is denied.
DATED this 3rd day of January, 2018.

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