Springboards to Education Inc v. Kipp Foundation
Filing
80
MEMORANDUM OPINION AND ORDER granting in part and denying in part 61 Motion to Dismiss and 63 Motion to Dismiss. (Ordered by Senior Judge A. Joe Fish on 6/29/2018) (ran)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
SPRINGBOARDS TO EDUCATION,
INC.,
Plaintiff,
VS.
KIPP FOUNDATION, ET AL.,
Defendants.
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CIVIL ACTION NO.
3:16-CV-2436-G
MEMORANDUM OPINION AND ORDER
Before the court are two motions: (1) the motion of the defendant KIPP
Foundation to dismiss the claims of the plaintiff Springboards to Education, Inc.
(“Springboards”) against it under Federal Rule of Civil Procedure 12(b)(6) (docket
entry 61), and (2) the motion of the defendants KIPP, Inc. and KIPP Texas Schools
to dismiss Springboards’s claims with prejudice pursuant to Federal Rule of Civil
Procedure 41(b), or alternatively to dismiss the claims under Rule 12(b)(6) (docket
entry 63). For the reasons stated below, KIPP Foundation’s motion and KIPP, Inc.
and KIPP Texas Schools’ motion are both granted in part and denied in part.
I. BACKGROUND
A full recitation of the factual background of this case is provided in the
court’s memorandum opinion and order issued on September 7, 2017. See generally
Memorandum Opinion and Order (docket entry 55). In that order, the court
dismissed with prejudice the plaintiff’s state law claims against KIPP, Inc. because the
plaintiff failed to demonstrate that the court had subject matter jurisdiction over
those claims. Id. at 10. The court then dismissed the remainder of the plaintiff’s
claims without prejudice, affording the plaintiff an opportunity to amend its
complaint to cure the deficiencies contained therein. Id. at 12. The court specified
that the issue with Springboards’s previous complaint was that while Springboards
referred to the individual defendants collectively and indiscriminately, compliance
with Rule 8(a) requires plaintiffs to “attribute specific acts of infringement to each
defendant.” Id. On September 22, 2017, in conformity with this court’s order,
Springboards filed a new amended complaint. Second Amended Complaint (docket
entry 56).
On October 20, 2017, one defendant, the KIPP Foundation, filed a renewed
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), contending
that “[a]gain, [Springboards] fails to distinguish the alleged acts of infringement that
it seeks to attribute to each defendant.” Defendant KIPP Foundation’s Rule
12(b)(6) Motion to Dismiss Plaintiff’s Second Amended Complaint; Defendant KIPP
Foundation’s Brief in Support of Its Motion to Dismiss Under Rule 12(b)(6) (“KIPP
Foundation’s Brief”) at 2 (docket entry 62). On the same day, the remaining two
defendants, KIPP Inc. and KIPP Texas Schools, filed a similar motion to dismiss,
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maintaining that the amended complaint is “premised entirely on conclusory
allegations and implausible speculation.” KIPP, Inc. and KIPP Texas Schools’
Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant to Federal Rules
of Civil Procedure 12(b)(6) and 41(b); KIPP, Inc. and KIPP Texas Schools’ Brief in
Support of their Motion to Dismiss Plaintiff’s Second Amended Complaint Pursuant
to Federal Rules of Civil Procedure 12(b)(6) and 41(b) (“KIPP, Inc. and KIPP Texas
Schools’ Brief”) at 2 (docket entry 64).
On November 10, 2017, Springboards filed two separate responses to address
each of the pending motions to dismiss. Plaintiff’s Response to Defendant KIPP, Inc.
and KIPP Texas Schools’ Motion to Dismiss Plaintiff’s Second Amended Complaint
Pursuant to Federal Rules of Civil Procedure 12(b)(6) and 41(b) and Brief in Support
(“Springboards’s Response to KIPP, Inc. and KIPP Texas Schools’ Motion”) (docket
entry 65); Plaintiff’s Response to Defendant KIPP Foundation’s Motion to Dismiss
Under Rule 12(b)(6) and Brief in Support (“Springboards’s Response to KIPP
Foundation’s Motion”) (docket entry 66). Thereafter, on December 4, 2017, KIPP
Foundation filed its reply, and KIPP, Inc. and KIPP Texas Schools filed their reply.
KIPP Foundation’s Reply Brief in Support of its Motion to Dismiss under Rule
12(b)(6) (docket entry 71); KIPP, Inc. and KIPP Texas Schools’ Reply Brief (docket
entry 72). The motions are now ripe for decision.
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II. ANALYSIS
A. Legal Standard
1. Rule 41(b)
Federal Rule of Civil Procedure 41(b) provides, “if the plaintiff fails to
prosecute or to comply with these rules or a court order, a defendant may move to
dismiss the action or any claim against it.” Rule 41(b) authorizes a district court to
“dismiss an action sua sponte . . . for failure to comply with a court order.” Jone Jones
Collection, Inc. v. Good Price Mart, Inc., No. 3:09-CV-2463-G, 2010 WL 2403727, at
*2 (N.D. Tex. June 15, 2010) (Fish, Senior J.); see also Long v. Simmons, 77 F.3d 878,
879 (5th Cir. 1996). “Unless the dismissal order states otherwise,” a dismissal under
Rule 41(b) “operates as an adjudication on the merits.” F ED. R. CIV. P. 41(b). Before
an action can be dismissed with prejudice under Rule 41(b), two “requisite” factors
must be present and a third “aggravating” factor usually should be present. Sealed
Appellant v. Sealed Appellee, 452 F.3d 415, 417-18 (5th Cir. 2006).
First, a dismissal with prejudice under Rule 41(b) is appropriate “only on a
showing of a clear record of delay or contumacious conduct by the plaintiff.” Id. at
417. A clear record of delay exists when there have been “‘significant periods of total
inactivity’” that persist “for longer than just a few months.” Millan v. USAA General
Indemnity Company, 546 F.3d 321, 327 (5th Cir. 2008); see also Rogers v. Kroger
Company, 669 F.2d 317, 321 (5th Cir. 1982) (“The decisions of this court affirming
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Rule 41(b) dismissals with prejudice involve egregious and sometimes outrageous
delays.”). A clear record of contumacious conduct exists when the plaintiff has
deliberately exhibited a “stubborn resistance to authority.” Millan, 546 F.3d at 327
(“‘[I]t is not a party’s negligence -- regardless of how careless, inconsiderate, or
understandably exasperating -- that makes conduct contumacious . . . .’”); McGowan
v. Faulkner Concrete Pipe Company, 659 F.2d 554, 558 (5th Cir. 1981) (equating
“contumacious conduct” with “willful misconduct”).
Although the decision to dismiss under Rule 41(b) is committed to the district
court’s discretion, its discretion to dismiss with prejudice has been confined to a
narrow range of circumstances. See Raborn v. Inpatient Management Partners Inc., 278
Fed. App’x 402, 407 (5th Cir. 2008) (per curiam) (“Because [a dismissal with
prejudice] forever deprives the litigant of the opportunity to pursue her claim, we
have more closely managed the district court’s discretion under Rule 41(b) than in
other contexts.”); Berry v. CIGNA/RSI-CIGNA, 975 F.2d 1188, 1191 (5th Cir. 1992)
(“[T]his Court has limited the district court’s discretion in dismissing cases with
prejudice.”). For example, it is usually an abuse of discretion to dismiss an action
with prejudice “where a plaintiff has failed only to comply with a few court orders or
rules.” Berry, 975 F.2d at 1191-92 n.6 (citing cases); Callip v. Harris County Child
Welfare Department, 757 F.2d 1513, 1520-21 (5th Cir. 1985) (per curiam) (collecting
cases in support of the conclusion that “noncompliance with two or three orders or
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rules of the district court” typically does not establish a clear record of delay or
contumacious conduct); Burden v. Yates, 644 F.2d 503, 504-05 (5th Cir. 1981)
(reversing the district court’s order of dismissal under Rule 41(b), even though the
plaintiff had “failed to obey the clear directives of the district court” on three
separate occasions, where the “failure to comply with the court order was more a
matter of negligence than purposeful delay or contumaciousness”). Dismissal with
prejudice is appropriate only in “cases where the plaintiff’s conduct has threatened
the integrity of the judicial process, . . . leaving the court no choice but to deny that
plaintiff its benefits.” Rogers, 669 F.2d at 321.
Second, even where there is a clear record of delay or contumacious conduct
by the plaintiff, the court must also make an explicit determination that lesser
sanctions would not serve the best interests of justice. Sealed Appellant, 452 F.3d at
417; see also Callip, 757 F.2d at 1521 (“[W]e cannot affirm a dismissal unless the
district court expressly considered alternative sanctions and determined that they
would not be sufficient . . . or the record reveals that the district court employed
lesser sanctions prior to dismissal . . . that in fact proved to be futile.”).
Third, even where both of those requirements are satisfied, at least one of the
following “aggravating factors” usually must be present to justify dismissal with
prejudice under Rule 41(b): “(1) the delay was caused by the plaintiff, as opposed to
her attorney; (2) the defendant suffered actual prejudice; or (3) the delay was caused
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by intentional conduct.” Raborn, 278 Fed. App’x at 404-05; see also Sealed Appellant,
452 F.3d at 418 (“We have stated that aggravating factors must ‘usually’ be found;
we have not said they must ‘always’ be found.”).
2. Rule 12(b)(6)
“To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead
‘enough facts to state a claim to relief that is plausible on its face.’” In re Katrina
Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atlantic
Corporation v. Twombly, 550 U.S. 544, 570 (2007)), cert. denied, 552 U.S. 1182
(2008). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555
(internal quotation marks, brackets, and citation omitted). “Factual allegations must
be enough to raise a right to relief above the speculative level, on the assumption that
all the allegations in the complaint are true (even if doubtful in fact).” In re Katrina
Canal, 495 F.3d at 205 (quoting Twombly, 550 U.S. at 555) (internal quotation
marks omitted). “The court accepts all well-pleaded facts as true, viewing them in
the light most favorable to the plaintiff.” Id. (quoting Martin K. Eby Construction
Company, Inc. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004))
(internal quotation marks omitted).
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The Supreme Court has prescribed a “two-pronged approach” to determine
whether a complaint fails to state a claim under Rule 12(b)(6). See Ashcroft v. Iqbal,
556 U.S. 662, 678-79 (2009). The court must “begin by identifying the pleadings
that, because they are no more than conclusions, are not entitled to the assumption
of truth.” Id. at 679. The court should then assume the veracity of any well-pleaded
allegations and “determine whether they plausibly give rise to an entitlement of
relief.” Id. The plausibility principle does not convert the Rule 8(a)(2) notice
pleading standard to a “probability requirement,” but “a sheer possibility that a
defendant has acted unlawfully” will not defeat a motion to dismiss. Id. at 678. The
plaintiff must “plead[] factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. “[W]here the
well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged -- but it has not ‘show[n]’ -- ‘that the pleader
is entitled to relief.’” Id. at 679 (alteration in original) (quoting FED. R. CIV. P.
8(a)(2)). The court, drawing on its judicial experience and common sense, must
undertake the “context-specific task” of determining whether the plaintiff’s
allegations “nudge” its claims “across the line from conceivable to plausible.” See id.
at 679, 683.
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3. The Lanham Act
The Lanham Act imposes liability on “any person who, on or in connection
with any goods . . . uses in commerce any word, term, name, . . . or any false
designation of origin, false or misleading description of fact, or false or misleading
representation of fact, which . . . is likely to cause confusion, or to cause mistake, or
to deceive as to the affiliation . . . .” 15 U.S.C. § 1125(a)(1)(A); T & L Computer
Systems, Inc. v. Stanford, 155 F. Supp. 2d 815, 817 (N.D. Tex. 2001) (Fish, J.).
Claims for trademark counterfeiting, trademark infringement, and false designation -like the ones brought by Springboards in this case -- require the plaintiff to establish
commercial use of its mark. 15 U.S.C. §§ 1114, 1125; see Full Sail, Inc. v. Dauben,
Inc., No. 3:08-CV-0446-G, 2008 WL 2434313, at *3 (N.D. Tex. June 17, 2008)
(Fish, Senior J.). For a trademark dilution claim, the Lanham Act specifically
excludes “[a]ny noncommercial use of a mark.” 15 U.S.C. § 1125(c)(3)(C). Hence,
for a plaintiff’s trademark dilution claim to survive a motion to dismiss, the plaintiff
must plausibly assert commercial use.
To prevail on a claim of trademark infringement under 15 U.S.C.
§ 1114(1)(a), a plaintiff must prove (1) it is the owner of a valid and protectable or
registerable mark, and (2) that the defendant’s use of the mark creates a likelihood of
confusion. Full Sail, Inc., 2008 WL 2434313, at *3. Additionally, “the elements of
trademark infringement and false designation of origin are identical, and the same
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evidence will establish both claims.” VPI Holding Company v. Success Resources USA
LLC, No. 3:12-CV-3785-N, 2014 WL 12584331, at *3 (N.D. Tex. Dec. 2, 2014)
(Godbey, J.). To state a claim for trademark counterfeiting under 15 U.S.C.
§ 1114(1), a plaintiff must allege that (1) defendants committed a trademark
infringement in violation of 15 U.S.C. § 1114(1)(a), and (2) intentionally used the
trademark knowing it was a counterfeit, as the term is defined in 15 U.S.C. § 1116.
See Haggar Clothing Company v. Sai Lakshmi Industries Private Limited, No. 3:09-CV0802-M, 2009 WL 2868443, at *5 (N.D. Tex. Sept. 3, 2009) (Lynn, J.). To recover
under the federal anti-dilution statute, the plaintiff must demonstrate that (1) its
mark is famous or distinctive, (2) the defendant adopted its mark after the mark
became famous or distinctive, and (3) the defendant caused dilution of the plaintiff’s
mark. Full Sail, Inc., 2008 WL 2434313, at *4.
B. Application
1. The Motion to Dismiss Springboards’s Claims
with Prejudice Pursuant to Rule 41(b)
KIPP, Inc. and KIPP Texas Schools contend that Springboards has failed to
“attribute specific acts of infringement to each defendant” pursuant to Rule 8(a). See
Memorandum Opinion and Order at 12; KIPP, Inc. and KIPP Texas Schools’ Brief at
4. According to KIPP, Inc. and KIPP Texas Schools, Springboards’s new complaint
does not provide specific allegations to each defendant despite the court’s previous
order; instead, KIPP, Inc. and KIPP Texas Schools argue, Springboards continues to
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refer to all three defendants collectively. KIPP, Inc. and KIPP Texas Schools’ Brief at
4.
After assessing Springboards’s new complaint, the court concludes that
Springboards has satisfied its obligation under Rule 8(a) by properly pleading specific
acts of infringement by each defendant. Indeed, Springboards provides a list of the
acts of infringement allegedly committed by the KIPP Foundation, KIPP, Inc., and
KIPP Texas Schools. Second Amended Complaint ¶¶ 48-50. Accordingly,
Springboards has met the standard under Rule 8(a) and has complied with the
court’s directive. While the defendants maintain that Springboards’s general use of
“KIPP Defendants” violates Rule 8(a), KIPP, Inc. and KIPP Texas Schools’ Brief at 4,
the court concludes that this collective treatment is permissible in light of the new
complaint’s itemization specific to each defendant. Because Springboards filed its
new complaint by the court’s deadline and has satisfied the conditions imposed on it,
the court concludes that the factors necessary to dismiss with prejudice pursuant to
Rule 41(b) have not been met. For that reason, the court denies the motion to
dismiss Springboards’s claims with prejudice.
2. The Motions to Dismiss Springboards’s
Federal Claims (Counts 1-4)
Springboards asserts four separate causes of action against KIPP Foundation,
KIPP, Inc., and KIPP Texas Schools under the Lanham Act: (1) trademark
counterfeiting under 15 U.S.C. § 1114, (2) trademark infringement under 15 U.S.C.
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§ 1114, (3) false designations of origin, false description under 15 U.S.C. § 1125(a),
and (4) trademark dilution under 15 U.S.C. § 1125(c). See Second Amended
Complaint ¶¶ 66-111.
KIPP Foundation, KIPP Texas Schools, and KIPP, Inc. (collectively, the “KIPP
defendants”) assert that Springboards’s federal claims should be dismissed pursuant
to Federal Rule of Civil Procedure 12(b)(6) for four primary reasons. KIPP
Foundation’s Brief at 2; KIPP, Inc. and KIPP Texas Schools’ Brief at 2. First, the
KIPP Defendants assert that Springboards has failed to state a claim under the
Lanham Act because its claims do not involve a commercial use of a trademark. KIPP,
Inc. and KIPP Texas Schools’ Brief at 6. Second, the KIPP defendants maintain that
Springboards has failed to allege any confusion or injury as a result of the defendants’
use of Springboards’s mark. Id. at 11. Third, the KIPP defendants insist that
Springboards has failed to demonstrate that its marks are either “famous” or
“distinctive.” Id. at 12-13. Finally, the KIPP defendants urge the court to dismiss
Springboards’s trademark counterfeit claim because Springboards has not asserted
that the parties use the marks for the same goods or services. Id. at 14. For the
reasons stated below, the court concludes that these arguments are unpersuasive and
denies the motions to dismiss Springboards’s federal claims.
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a. Statutory Standing
The Supreme Court has determined that a plaintiff may bring a cause of action
under the Lanham Act when the injury falls within the zone of interest, and the
defendant proximately caused the alleged injury. Lexmark International, Inc. v. Static
Control Components, Inc., __ U.S. __, 134 S. Ct. 1377, 1388, 1390 (2014). Thus, to
bring a claim under the Lanham Act, a plaintiff must allege “an injury to a
commercial interest in sales or business reputation proximately caused by the
defendant’s misrepresentations.” Id. at 1395; see also I Love Omni, LLC v. Omnitrition
International, Inc., No. 3:16-CV-2410-G, 2017 WL 3086035, at *5 (N.D. Tex. Jul. 20,
2017) (Fish, Senior J.). After reviewing Springboards’s latest complaint, the court
concludes that Springboards has satisfied these criteria.
i. The Zone-of-Interest Test
A plaintiff may bring a cause of action when the plaintiff’s interests “fall within
the zone of interests protected by the law invoked.” Lexmark International, Inc., 134 S.
Ct. at 1388. The Lanham Act is designed to “regulate commerce within the control
of Congress by making actionable the deceptive and misleading use of marks in such
commerce.” 15 U.S.C. § 1127. Therefore, a plaintiff falls within the zone of interest
as a result of an “injury to a commercial interest in reputation or sales.” Lexmark
International, Inc., 134 S. Ct. at 1390. This court has previously determined that
when a competitor is “inducing customers to switch from a competitor,” the zone-of-
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interest injury has occurred. See MCW, Inc. v. Badbusinessbureau.com, L.L.C., No.
3:02-CV-2727-G, 2004 WL 833595, at *13 (N.D. Tex. April 19, 2004) (Fish, Chief
J.) (citing Logan v. Burgers Ozark Country Cured Hams, Inc., 263 F.3d 447, 461 (5th
Cir. 2001)).
From the new complaint, it appears that KIPP defendants’ use of the plaintiff’s
marks is directly preventing KIPP schools from purchasing similar goods and services
from Springboards. The educational institutions are undoubtedly Springboards’s
targeted clientele. The KIPP defendants’ use of Springboards’s mark on similar goods
and services is directly inducing KIPP schools to switch to a competing service
provided internally. Springboards asserts that these schools are creating seemingly
identical services while using Springboards’s marks as opposed to purchasing the
products from Springboards. Second Amended Complaint ¶¶ 42-43. Because
Springboards has made factual allegations asserting a commercial injury,
Springboards has sufficiently pleaded that it falls within the zone of interest for the
Lanham Act.
ii. The Proximate Cause Requirement
A statutory cause of action is limited to plaintiffs whose injuries are
proximately caused by violations of the statute. Lexmark International, Inc., 134 S.Ct.
at 1390. Hence, to survive a motion to dismiss, Springboards must aver that its
injuries were proximately caused by each of the KIPP defendants’ violations of the
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statute. For a trademark counterfeit and infringement cause of action under 15
U.S.C. § 1114, Springboards must allege that its injuries directly resulted from each
of the KIPP defendants’ unauthorized use of its mark. For a false designation and
trademark dilution cause of action under 15 U.S.C. § 1125, Springboards must plead
that its economic or reputational injury ensued from the defendants’ deception. See,
Lexmark International Inc., at 1390. Springboards claims that by using its registered
marks, the KIPP defendants have damaged Springboards’s reputation because they
provide inferior products that lack the customization Springboards offers. Second
Amended Complaint ¶¶ 56-57. Both Springboards’s alleged loss of profits and
reputational injury stem from the KIPP defendants’ use of the registered marks in the
form of lost potential customers and inferior products. Id. Accordingly, Springboards
has sufficiently alleged that its injured reputation and loss of profits were proximately
caused by the defendants’ violations. Second Amended Complaint ¶¶ 42-43, 56-57.
Because Springboards has satisfied the zone-of-interest test and the proximate cause
requirement, Springboards has properly asserted that its federal claims fall within the
Lanham Act.
b. Commercial Use
The KIPP defendants argue that Springboards has not established that its
claims arise from a commercial use as required by the Lanham Act. KIPP, Inc. and
KIPP Texas Schools’ Brief at 6. KIPP, Inc. and KIPP Texas Schools insist that their
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Facebook advertisements cannot constitute commercial use because they contained
“no links to commercial sites.” Id. at 9. As support, KIPP, Inc and KIPP Texas
Schools submit a recent decision in the Southern District of Texas that granted
summary judgment against Springboards in a similar suit (docket entry 73). In that
case, the court granted summary judgment in favor of the defendant -- Houston
Independent School District -- because Springboards provided insufficient evidence
to demonstrate commercial use. Springboards to Education, Inc. v. Houston Independent
School District, 285 F. Supp. 3d 989, 995 (S.D. Tex. 2018). However, the Southern
District of Texas previously concluded that Springboards had sufficiently pleaded
assertions alleging commercial use and denied the motion to dismiss. Springboards to
Education, Inc. v. Houston Independent School District, No. H-16-2625, 2017 WL
7201938, at *3 (S.D. Tex. Sept. 20, 2017). Similarly, this court concludes that
Springboards has provided adequate factual allegations to assert a commercial use,
and this issue will be better resolved at trial or through summary judgment. Because
Springboards has sufficiently asserted a commercial injury, this court concludes that
Springboards has met its standard of “stat[ing] a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570.
c. Likelihood of Confusion
KIPP, Inc and KIPP Texas Schools contend that Springboards has failed to
allege any confusion or injury as a result of the defendants’ use of the mark. KIPP,
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Inc. and KIPP Texas Schools’ Brief at 11. As discussed above, Springboards has
properly alleged an injury. As to confusion, KIPP, Inc. and KIPP Texas Schools argue
that because Springboards is a corporation as opposed to an educational institution,
the goods are “unrelated as a matter of law.” KIPP, Inc. and KIPP Texas Schools’
Brief at 12 (quoting MCW, Inc., 2004 WL 833595, at *16).
To prevail on a Lanham Act claim for trademark counterfeiting, trademark
infringement, or false designations of origin, a plaintiff must show the defendants’ use
of the mark is “likely to cause confusion.” 15 U.S.C. §§ 1114(1)(a), 1125(a)(1).
The Fifth Circuit has provided a nonexhaustive list of factors to consider as
indications of confusion: (1) the type of mark allegedly infringed, (2) the similarity
between the two marks, (3) the similarity of products or services, (4) the identity of
the retail outlets and purchasers, (5) the identity of the advertising media used, (6)
the defendant’s intent, and (7) any evidence of actual confusion. Westchester Media v.
PRL USA Holdings, Inc., 214 F.3d 658, 664 (5th Cir. 2000). This court can find a
likelihood of confusion even without a positive finding on a majority of these factors.
ADT, LLC v. Capital Connect, Inc., 145 F. Supp. 3d 671, 687 (N.D. Tex. 2015) (Fish,
Senior J.). The court concludes that Springboards has alleged several instances of
sources of confusion between Springboards’s goods and those of the KIPP
defendants. Springboards has pleaded that both Springboards and the KIPP
defendants use marks identical or similar to “Millionaire Reader,” “Million Dollar
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Reader,” and “Millionaire’s Reading Club.” Second Amended Complaint ¶¶ 22, 42,
43. In addition, Springboards has asserted that the parties provide similar
educational services while employing a similar mark to “Read a Million Words.” Id.
¶ 54. The court concludes that Springboards has plausibly pleaded a likelihood of
confusion between the KIPP defendants’ goods and its own. For these reasons the
court denies the motions to dismiss the plaintiff’s trademark infringement claim and
false designations of origin and false description claim.
d. Famous or Distinctive Mark
KIPP, Inc. and KIPP Texas Schools assert that the court should dismiss
Springboards’s trademark dilution claim because the Second Amended Complaint
fails to demonstrate how Springboards’s marks are either “famous” or “distinctive.”
KIPP, Inc. and KIPP Texas Schools’ Brief at 12. The defendants posit that
Springboards’s trademarks consist of generic phrases related to reading a millions
words. Id. at 13.
But the Fifth Circuit has previously concluded that “registration is prima facie
proof that [a] registered mark is distinctive.” Test Masters Educational Services, Inc. v.
Singh, 428 F.3d 559, 567 (5th Cir. 2005), cert denied, 547 U.S. 1055 (2006). This
presumption can be overcome by showing that the mark is merely descriptive; if the
presumption is rebutted, Springboards must then prove that its mark also possesses
secondary meaning. Id. A secondary meaning occurs when “in the minds of the
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public, the primary significance of a [mark] is to identify the source of the product
rather than the product itself.” Id. at 566 (quoting Wal-Mart Stores, Inc. v. Samara
Brothers, Inc., 529 U.S. 205, 211 (2000)). Springboards asserts that its marks,
published on advertisements and promotional goods, have acquired notable
recognition for the Springboards brand and the successful educational programs it
offers. Second Amended Complaint ¶¶ 26-29. Because Springboards has alleged that
its marks are registered, and asserted that its marks possess a secondary meaning, the
court denies the motions to dismiss the plaintiff’s trademark dilution claim.
e. Same Goods or Services
KIPP, Inc. and KIPP Texas Schools urge the court to dismiss Springboards’s
trademark counterfeiting claim because Springboards has failed to allege that the
parties use the counterfeit marks for the same goods or services. KIPP, Inc. and KIPP
Texas Schools’ Brief at 14. KIPP, Inc. and KIPP Texas Schools have asked the court
to interpret the Lanham Act’s definition of “counterfeit” pursuant to 15 U.S.C.
§ 1116(d)(1)(B) to encompass only marks on the “same goods or services” as those
covered by the plaintiff’s registration. Playboy Enterprises, Inc. v, Universal Tel-A-Talk,
Inc., No CIV. A. 96-CV-6961, 1998 WL 288423, at *4 (E.D. Pa. June 3, 1998)
(dismissing trademark counterfeit claim because mark was not used for the same
goods). This court, however, has not previously adopted the stringent interpretation
that KIPP, Inc. and KIPP Texas Schools advocate. The Lanham Act defines
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“counterfeit” as “a spurious mark which is identical with, or substantially
indistinguishable from, a registered mark.” 15 U.S.C. § 1127. This court has
interpreted a trademark counterfeit claim to operate as a trademark infringement
with the addition of a defendant’s intention to use the plaintiff’s trademark, knowing
it was a counterfeit. See Haggar Clothing Company, 2009 WL 2868443, at *5.
Regardless, even if the court were to adopt the definition urged by KIPP, Inc.
and KIPP Texas Schools, the court would nonetheless conclude that Springboards
had satisfied the definition. Springboards asserts that because it provides educational
services and “programs for educators to use in schools,” the parties’ services are
equivalent. Second Amended Complaint ¶ 14; Springboards’s Response to KIPP, Inc.
and KIPP Texas Schools’ Motion at 20. Springboards has shown that its trademarks
apply to not only to the goods but also to the services it provides. Second Amended
Complaint ¶ 22. Because both Springboards and the KIPP defendants provide
educational services that promote strengthening students’ reading abilities in
connection with the registered marks, at this stage, Springboards has satisfied the
criteria of demonstrating the “same goods or services” using the marks.
Although not addressed by the KIPP defendants, Springboards has also
properly asserted that the defendants “acted intentionally, knowing the mark . . .
used was counterfeit.” See Grand Time Corporation v. Watch Factory Corporation, No.
3:08-CV-1770-K, 2011 WL 2412960, at *7 (N.D. Tex. June 10, 2011) (Kinkeade, J.)
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(dismissing plaintiff’s summary judgment for trademark counterfeiting because the
plaintiff failed to demonstrate that the defendant acted intentionally). Springboards
asserts that the KIPP defendants were aware of Springboards’s services and programs
before using similar marks. Second Amended Complaint ¶¶ 59, 63, 75. Accordingly,
the court denies the motions to dismiss Springboards’s trademark counterfeit claim.
3. The Motion to Dismiss Springboards’s
State Claims (Counts 5-8)
Springboards asserts four state law claims against the defendants: (1) Texas
Anti-Dilution Statute -- Texas Business & Commercial Code § 16.103, (2) common
law trademark infringement, (3) common law unfair competition, and (4) conspiracy.
Second Amended Complaint ¶¶ 112-148. For the reasons stated below, the motions
to dismiss the trademark claims (counts 5-7) are denied, and the motions to dismiss
the conspiracy claim (count 8) are granted.
a. State Law Trademark Claims (Counts 5-7)
Asserting a claim under the Texas Anti-Dilution Statute implicates the same
standards as the Lanmark Act under 15 U.S.C. §§ 1114, 1125. See Sport Supply
Group, Inc. v. Columbia Casualty Company, 335 F.3d 453, 461 (5th Cir. 2003).
Further, the Fifth Circuit has previously held that “[an] unfair competition action
under Texas common law presents essentially ‘no difference in issues than those
under federal trademark infringement actions.’” Amazing Spaces, Inc. v. Metro Mini
Storage, 608 F.3d 225, 235 n.7 (5th Cir. 2010) (quoting Horseshoe Bay Resort Sales
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Company v. Lake Lyndon B. Johnson Improvement Corporation, 53 S.W.3d 799, 806 n.3
(Tex. App. -- San Antonio 2001, pet. denied)). For the reasons stated above,
Springboards has sufficiently pleaded its Texas Anti-Dilution Statute claim, common
law trademark infringement claim, and unfair competition claim. Hence, the court
denies the motions to dismiss these claims.
b. Conspiracy Claim (Count 8)
The KIPP defendants assert that Springboards’s conspiracy claim should be
dismissed on four grounds: (1) Springboards has failed to demonstrate an underlying
tort, (2) Springboards has failed to allege an underlying harm, (3) Springboards has
failed to plead sufficient grounds to prove a “meeting of the minds,” and (4)
Springboards has failed to provide any factual allegations supporting an overt act.
KIPP Foundation’s Brief at 2-8; KIPP, Inc. and KIPP Texas Schools’ Brief at 16.
Because the court concluded above that Springboards has pleaded facts sufficient to
prove unfair competition, a common law tort, the KIPP defendants’ first argument is
rejected. Further, because the court concluded above that sufficient factual
allegations support the presence of an injury, the second ground is rejected as well.
To sufficiently plead the existence of a “meeting of the minds,” the plaintiff
must allege “a preconceived plan or a time and place at which [the defendants] had a
meeting of the minds regarding the object of the conspiracy.” I Love Omni, LLC v.
Omnitrition International, Inc., No 3:16-CV-2410-G, 2017 WL 1281130, at *3 (N.D.
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Tex. Apr. 6, 2017) (Fish, Senior J.) (quoting Samsung Electronics America, Inc. v. Yang
Kun Chung, No. 3:15-CV-4108-D, 2017 WL 635031, at *13 (N.D. Tex. Feb. 16,
2017) (Fitzwater, J.)). Further, the plaintiff must allege factual allegations
“connecting the actions of [the defendants] to a preconceived plan” of the underlying
tort -- unfair competition. Id.
In support of its conspiracy claim against the KIPP defendants, Springboards
alleges that:
[O]ne or more of the KIPP Defendants learned about
Springboards to Education’s Read a Million Words ® Campaign
by attending one or more of the conferences attended by
Springboards to Education, through its partner, Teach for
America, and/or through public knowledge of Springboards to
Education’s Campaign.
Second Amended Complaint ¶ 38. The only factual assertion Springboards presents
to support this claim is the knowledge that individual teachers hired by Teach for
America work for institutions such as the KIPP schools, and allegedly participate in
the “share curriculum programming.” Id. ¶ 41. Springboards also asserts that the
marriage between the co-founder of Teach for America and the CEO of the KIPP
Foundation demonstrates the alleged conspiracy. Id. But this court has previously
held that simply working together is insufficient to amount to conspiracy. See I Love
Omni, LLC, 2017 WL 1281130, at *3. And, further, merely referencing the existence
of a pre-existing personal relationship does not suffice to plead conspiracy.
Accordingly, Springboards has not provided sufficient “factual content [to] allow[]
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the court to draw the reasonable inference that the defendant[s][are] liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. For this reason, the motions to dismiss
the plaintiff’s conspiracy claim are granted.
III. CONCLUSION
For the reasons stated above, the KIPP Foundation’s motion is GRANTED in
part and DENIED in part, and KIPP, Inc. and KIPP Texas Schools’ motion is
GRANTED in part and DENIED in part. Springboard’s conspiracy claims against
KIPP Foundation, KIPP, Inc., and KIPP Texas Schools are DISMISSED. In all other
respects, the motions to dismiss Springboards’s Second Amended Complaint are
DENIED.
SO ORDERED.
June 29, 2018.
___________________________________
A. JOE FISH
Senior United States District Judge
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