Castro v. Entrepreneur Media, Inc.
Filing
74
REPLY to Response to Motion, filed by Entrepreneur Media, Inc., re 62 MOTION to Dismiss filed by Entrepreneur Media, Inc. (Barry, Jennifer)
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
DANIEL R. CASTRO,
Plaintiff,
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v.
ENTREPRENEUR MEDIA, INC.,
Defendant.
ENTREPRENEUR MEDIA, INC.,
Counterclaimant,
v.
DANIEL R. CASTRO,
Counterdefendant.
Cause No. 1-10-CV-000695-LY-AWA
Hon. Lee Yeakel
DEFENDANT ENTREPRENEUR MEDIA, INC.’S
REPLY IN SUPPORT OF ITS MOTION TO DISMISS
UNDER FEDERAL RULES OF CIVIL PROCEDURE 12(B)(1) AND 12(B)(6)
I.
INTRODUCTION
Castro’s opposition briefs do not provide any grounds for his claims to survive dismissal,
as they rely on mistaken interpretations of the law, and the mistaken concept that the Court is
required to accept as true the numerous legal conclusions that Castro pled in his Second
Amended Complaint (“SAC”). The Supreme Court has established that legal conclusions and
bare allegations of the elements of a claim are not accepted as true and cannot save an otherwise
deficient claim. Castro’s voluminous “new, never before pled facts” are, in actuality, just legal
conclusions of the most fundamental sort, including allegations that his mark is not being used in
a deceptive manner, and that it is not likely to cause confusion. This need not, and should not, be
accepted as true for purposes of this Motion, and thus Castro’s claims fail and should be
dismissed.
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Castro also misreads and misapplies the Lanham Act in seeking to overcome the Motion
to Dismiss. Several of his claims are based on a defense that does not apply to him. The
Lanham Act provides a defense to incontestability if the alleged infringer has used and registered
its mark prior to the registration of the incontestable mark. Castro began use, and secured his
registration, long after EMI’s registrations issued and became incontestable. Therefore this
defense is completely inapplicable. Castro similarly misapplies the Lanham Act’s fair use
defense in claiming that his trademark, ENTREPRENEUROLOGY, is a “descriptor” that he
should be permitted to use in a “descriptive manner.” Castro has already claimed that his
trademark is a fanciful, coined mark with no meaning, so he is precluded by his own arguments
from now claiming that it can be used in a fair use sense to describe anything. This defense is
thus also not applicable to any of Castro’s claims.
Castro’s opposition briefs also fail to adequately address the numerous admissions he has
made, admissions that doom his claims to dismissal. Castro admits in the SAC that he was not at
all injured by EMI’s purported misrepresentations, because he is an “experienced litigation
attorney,” and therefore was not deceived. This admission precludes him from bringing an
unclean hands claim, because injury is a required element of that claim. Castro also admits in his
opposition briefs that EMI’s registrations are incontestable, and that he is barred from arguing
that those marks are descriptive. Since he does not have any defense to the incontestable status
of those registrations, despite his mistaken efforts to apply those defenses to his claims, his
incontestability and descriptiveness claims must fail.
For these reasons, EMI’s Motion to Dismiss should be granted, and all of Castro’s claims
should be dismissed. Since Castro has already had two opportunities to amend – and any further
attempts to amend would be futile – the claims should be dismissed without leave to amend.
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II.
ARGUMENT
A.
Castro Has Not Alleged, and Cannot Allege, Any Set of Facts under which
the Lanham Act Restricts Non-Deceptive Commercial Speech in Violation of
the First Amendment.
Despite the fact that this Court already dismissed an essentially identical claim, Castro
continues to assert that two sections of the Lanham Act are unconstitutional as applied to the
facts of this case. Specifically, Castro argues that (i) there is confusion about whether his claim
is facial, and thus EMI’s arguments and the Court’s prior ruling do not apply since the claim is
as-applied, and (ii) the claim in the SAC is new and different because he has added multiple
pages of “new allegations” which must be accepted as true. See Castro’s Response to EMI’s
Motion to Dismiss, First Amendment Claim (Dkt #66) (“First Am. Opp.”) at 5-6. In its dismissal
of Castro’s previous First Amendment claim, this Court correctly recognized the nature of
Castro’s purported challenge (as-applied rather than facial), and rejected Castro’s as-applied
challenge to 15 U.S.C. §§ 1065 and 1115(b). See Order Granting Motion to Dismiss (Dkt #36)
(“Order”) at 5 (“Castro claims that portions of the Lanham Act are unconstitutional as applied
. . . Specifically, Castro challenges Title 15 United States Code sections 1065 and 1115(b).”).
Thus, as to Castro’s first argument, there is no confusion about the nature of his claim, which the
Court has already dismissed.
As to his second argument, Castro has not alleged any new facts in the SAC that would
change the Court’s prior analysis. Instead, Castro has simply alleged extensive legal analysis in
an attempt to get around that prior ruling. As this Court recognized, the Lanham Act does not
prohibit or limit the use of words in a non-trademark sense, and only regulates commercial
speech that is misleading or deceptive, as deceptive speech is not entitled to First Amendment
protection. See Order at 5-7; see also Central Hudson Gas & Electric Corp. v. Public Serv.
Comm’n of New York, 447 U.S. 557, 566 (1980) (“For commercial speech to come within [the
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First Amendment], it at least must concern lawful activity and not be misleading.”). Thus, the
Lanham Act will only act as a restriction on speech where such speech is misleading or
deceptive, i.e., likely to cause confusion. In the SAC, Castro agrees, acknowledging that “[i]t is
true that the First Amendment does not protect commercial speech that is deliberately deceptive,
false or misleading.” Yet Castro proceeds to argue that “the undisputed facts show that this type
of speech is not at issue here.” SAC ¶ 7.191 (internal cites omitted).
There are two problems with this argument. First, while the facts pled in Castro’s
complaint are entitled to a presumption of truth for the purposes of this motion, legal
conclusions are not. On a motion to dismiss, the court is “not bound to accept as true a legal
conclusion couched as factual allegation.” Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937,
1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). The only new
materials that Castro has added in his SAC are several pages of legal citations and conclusions,
which Castro argues are “factual allegations” that the Court must accept as true for this motion.1
For example, Castro argues in his opposition that he has alleged the following “facts”: that his
mark is not being used in a deceptive manner, and that it is not likely to cause confusion. First
Am. Opp. at 7 (referencing SAC ¶¶ 7.53-7.63, 7.136-7.140, 7.191). Whether use is deceptive
and whether there is a likelihood of confusion are legal conclusions, not facts. If the law
required such allegations to be accepted as true, then no motion to dismiss would ever succeed –
1
Castro makes a related argument that EMI is essentially seeking summary judgment rather than
a 12(b)(6) dismissal because EMI is seeking dismissal on the merits rather than based solely on
the sufficiency of the factual allegations. First Am. Opp. at 1-4. Castro once again relies
solely on Jones v. Greninger, 188 F.3d 322 (5th Cir. 1999) to support this proposition, even
though he previously made this identical argument in opposition to EMI’s earlier motion to
dismiss, and EMI pointed out in its reply that this case did not stand for that proposition and in
fact never even mentions any standard for a motion to dismiss. Reply in Support of Motion to
Dismiss (Dkt #33) at 12. This position is both unsupported by any case law and is meritless.
Claims are dismissed under Rule 12(b)(6) for failure to state a claim, an inquiry that is not
limited to factual allegations.
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a plaintiff could allege, in a breach of contract complaint, that “the contract was breached”
without alleging a single fact about how it was breached, and the defendant would not be able to
seek dismissal of this claim for failure to state a claim because the “factual allegation” of the
breach would have to be accepted as true. This argument, moreover, runs afoul of the Supreme
Court’s directive that a formulaic recitation of elements and legal conclusions are not entitled to
the presumption of truth and thus are not sufficient to plead a cognizable claim. Iqbal, 129 S. Ct.
at 1949. Accordingly, Castro’s additional materials in the SAC are not entitled to a presumption
of truth and do not rescue his First Amendment claim from dismissal.
Second, Castro’s entire opposition argument is circular and misses the point of EMI’s
argument for dismissal. Castro’s argument essentially is: “My trademark is commercial speech
that is not deceptive, so it would be unconstitutional to apply the Lanham Act because my
commercial speech is protected by the First Amendment (because it is not deceptive).” This
argument completely ignores the one key element that is the entire basis for EMI’s infringement
claims: is Castro’s commercial speech deceptive? If it is deceptive, then the First Amendment
does not apply. If it is not deceptive, then the Lanham Act does not apply, and any constitutional
inquiry is moot. There is thus no factual scenario under which both (a) Castro’s speech is
entitled to First Amendment protection, and (b) the Lanham Act applies and restricts Castro’s
speech. Since Castro cannot allege any facts under which he would be entitled to relief on his
First Amendment claim, this claim is properly dismissed under Rule 12(b)(6).
B.
Castro Has Again Failed to State a Claim for Unclean Hands.
Castro’s unclean hands claim is a transparent attempt to recast his antitrust claim (which
the Court rejected and Castro has now abandoned) as unclean hands. In his First Amended
Complaint, Castro never mentioned that there were any “misrepresentations of fact and law” in
the cease-and-desist letter that EMI sent in September 2010. Instead, Castro based his antitrust
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and unclean hands claims on the mere fact that EMI sent the letter at all. Since the Court
rejected this argument, Castro now, for the first time, claims that the letter contains
misrepresentations.2 See Order at 10 (recognizing that EMI’s efforts to protect its trademark
rights is not improper conduct); Castro’s Response to EMI’s Motion to Dismiss, Unclean Hands
and Incontestable Status Claims (Dkt #65) (“Unclean Hands Opp.”) at 1. This recycled claim
still fails and must be dismissed.
As a threshold matter, the equitable doctrine of unclean hands only applies when the
party asserting the doctrine has been injured by the inequitable conduct of the opposing party.
Positive Black Talk Inc. v. Cash Money Records Inc., 394 F.3d 357, 379 (5th Cir. 2004) (denying
unclean hands defense for lack of injury); Petro Franchise Sys., LLC v. All Am. Props, Inc., 607
F. Supp. 2d 781, 799 (W.D. Tex. 2009) (For unclean hands to apply, “[a]t the minimum, [the]
conduct must have injured [the party seeking relief]”). Nowhere in Castro’s complaint does he
allege that he was injured by EMI’s conduct in sending the cease-and-desist letter. See SAC
¶¶ 5.101-5.121, 7.129-7.143.
Indeed, to the contrary, Castro admits that, since he is an
“experienced litigation attorney,” he “spotted” EMI’s purported deception and was thus not
affected by the alleged false representations. SAC ¶ 5.90. Since an unclean hands defense
requires that the party seeking relief have suffered an injury, and Castro has not alleged any
2
Each of the cases cited by Castro for the proposition that “even a single misrepresentation of
fact is sufficient to bar the owner of a trademark from obtaining the injunctive relief it seeks” is
either (1) factually inapposite, see Worden v. California Fig Syrup Co., 187 U.S. 516, 528-34
(1903) (unclean hands applies where plaintiff makes a material misrepresentation about the
nature of its goods); Strey v. Devines, Inc., 217 F.2d 187, 190 (7th Cir. 1965) (“It is well
established that a court of equity may deny relief for infringement of a trade-mark where
plaintiff misrepresents the nature of his product.”) (emphasis added), or (2) requires that the
alleged misrepresentation be related to the equity sought by the party (which requirement, as
shown above, Castro does not meet), see Fuddruckers, Inc. v. Doc’s Brothers, Inc., 826 F.2d
837, 847 (9th Cir. 1987) (“To prevail, the defendant must demonstrate that the plaintiff's
conduct is inequitable and that the conduct relates to the subject matter of its claims.”).
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injury resulting from EMI’s conduct, he has failed to state a claim upon which relief can be
granted.3
Castro’s unclean hands claim is premised on two purported misrepresentations: (1) EMI’s
cease-and-desist letter alleged a violation of the Anticybersquatting Consumer Protection Act
(“ACPA”) in spite of the fact that no reasonable litigant could expect to prevail on the merits of
such claim, and (2) EMI misrepresented the holding of EMI v. Smith. Unclean Hands Opp. at 25. As discussed above, the Court is not required to accept as true Castro’s legal conclusion that
EMI’s statements were “misrepresentations,” Iqbal, 129 S. Ct. at 1949, and indeed, there was
nothing false or misleading about those statements. Instead, Castro has simply misstated the
applicable law and the contents of the letter.
First, Castro’s “no reasonable litigant” contention is based on the repeated assertion that
his ownership of a federal registration would bar EMI’s ACPA claim. Unclean Hands Opp. at 3
(federal registration “would defeat any claim brought under the ACPA,” and “gave Castro the
right to register the domain name”). Under the ACPA, however, “the trademark or other
intellectual property rights of the person, if any, in the domain name” is merely a “factor” “in
determining whether a person has a bad faith intent . . .,” not an absolute bar as Castro asserts.
15 USC § 1125(d)(1)(B)(i)(I).4
Thus, there was nothing false about EMI’s assertion that
Castro’s registration and use of his domain name may violate the ACPA, since Castro’s
registration is not determinative. Similarly, EMI’s demand that Castro cease use of the domain
3
Castro failed to meet this pleading requirement in spite of the fact that this Court directed the
parties to the Petro Franchise Systems case in its discussion of the equitable unclean hands
doctrine in its previous order. See Order at 12. This offers further proof that any further
amendment by Castro would be futile, and this Court should dismiss his claims without
granting leave to amend.
4
It is possible that Castro is confusing the ACPA with the federal dilution statute. The dilution
statute does provide that a federal registration is a “complete bar” to a dilution claim.
15 U.S.C. § 1125(c)(6). The ACPA contains no such language, however.
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name was not based solely on a violation of the ACPA, but also on “trademark infringement,
dilution, unfair competition, deceptive acts and practices, and misappropriation . . .” See SAC,
Exh. 11 (EMI’s demand letter). This is not a false statement; it is EMI’s belief, as evidenced by
its counterclaims in this lawsuit, that Castro’s trademark and domain name infringe EMI’s rights.
Thus, as there was nothing false or misleading about the statements in EMI’s letter, no
misrepresentation occurred.
Second, Castro claims that “EMI misrepresented the Ninth Circuit’s opinion in EMI v.
Smith by claiming that the Ninth Circuit had already ruled in its favor on a case with similar
facts.” Such a characterization of EMI’s reference to the Ninth Circuit’s decision in its demand
letter is plainly wrong. EMI stated in its letter that “a Federal Court recently ruled that ‘the mark
ENTREPRENEUR is a strong, distinctive mark, deserving of significant protection,’ which
ruling was upheld by the Ninth Circuit.” See SAC, Exh. 11. There is nothing in that letter to
even suggest that the Ninth Circuit’s ruling involved a case “with similar facts” to the subject
suit. In fact, the reference in that letter to the Ninth Circuit’s decision is fully supported by the
court decisions (also attached to that letter) and therefore, contrary to Castro’s assertion, contains
no misrepresentations. See Entrepreneur Media, Inc. v. Smith, No. CV 98-3607 FMC (CTx),
2004 U.S. Dist. LEXIS 24078, at *9-10, 13 (C.D. Cal. June 23, 2004); Entrepreneur Media, Inc.
v. Smith, 101 Fed. Appx. 212, 2004 U.S. App. LEXIS 11567 (9th Cir. 2004).
Once again, Castro has failed to plead any facts to support his legal conclusion that EMI
included misrepresentations in its demand letter. And once again, the Court is not required to
accept as true Castro’s misplaced and inaccurate legal conclusion that the statements in EMI’s
letter included misrepresentations. Accordingly, since Castro has failed to allege any facts to
support the required elements of an unconscionable act or injury, his unclean hands claim should
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be dismissed.
C.
Castro Misconstrues the Defenses Available to Incontestability.
In his opposition, Castro admits that EMI’s federal registrations are incontestable.
Unclean Hands Opp. at 5 (“Castro has always acknowledged [that the USPTO had granted EMI
‘incontestable’ status]”). His argument is based entirely on the premise that this status can be
nullified by certain defenses. This is generally true, as the Lanham Act sets forth nine different
circumstances under which the conclusive evidence provided by incontestable status can be
rebutted. 15 U.S.C. § 1115(b)(1)-(9). Castro’s subsequent arguments, however, do not fall
under any of those recognized defenses.
First, Castro completely misconstrues the statute in arguing that, because he is the
“senior user” of his trademark, he can assert the defense found at 15 U.S.C. § 1115(b)(6).
Unclean Hands Opp. at 8-9. That section provides that a federal registration that pre-dates the
incontestable registration can act as a defense to the incontestable status. 15 U.S.C. § 1115(b)(6)
(“That the mark whose use is charged as an infringement was registered and used prior to the
registration under this Act . . . of the registered mark of the registrant”). Castro’s registration did
not issue until August 2009, and Castro’s first use of his ENTREPRENEUROLOGY mark was
January 2009. SAC ¶ 5.6, Exh. 1. EMI’s incontestable registrations were registered in 1987,
1999 and 2001, with first use dates of 1978, 1992 and 1991, respectively. See Answer and
Counterclaims (Dkt #38) at 14-15. Clearly, Castro’s registration and use are not prior to the
registration and first use dates of EMI’s registered marks, as required by § 1115(b)(6).
Accordingly, this defense is not available to Castro.5
5
Castro also erroneously argues that he can use the § 1115(b)(6) defense because his mark is
inherently distinctive. Unclean Hands Opp. at 8. Section 1115(b)(6) contains no reference to
inherent distinctiveness, so this argument is baseless.
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Second, Castro argues that he can overcome the incontestable status of EMI’s
registrations based on his “unclean hands” claim. Unclean Hands Opp. at 6-7. Unclean hands is
not one of the enumerated equitable defenses in § 1115(b)(9). The Fifth Circuit, moreover, has
limited the applicability of unclean hands to an incontestability challenge, stating that only when
“the origin or source of goods distributed under the subject mark is misrepresented” can unclean
hands be asserted as a defense to incontestable status under § 1115(b)(3). Exxon Corp. v.
Oxxford Clothes, 109 F.3d 1070, 1079 n.11 (5th Cir. 1997).6 Castro’s unfounded unclean hands
allegations do not have anything to do with any alleged misrepresentation by EMI of the origin
or source of its goods/services, so Castro cannot take advantage of the unclean hands defense
under § 1115(b)(3).
Third, Castro argues that he can take advantage of the fair use defense found in
§ 1115(b)(4). The defense provides that “the use of the [mark] charged to be an infringement is
a use, otherwise than as a mark, . . . of a term or device which is descriptive of and used fairly
and in good faith only to describe the goods or services of such party . . . .” 15 U.S.C.
§ 1115(b)(4). This section applies “only in actions involving descriptive terms” to “prevent[] a
markholder from ‘appropriating a descriptive term for his exclusive use and so prevent others
from accurately describing a characteristic of their goods.” Sugar Busters LLC v. Brennan, 177
F.3d 258, 270-71 (5th Cir. 1999) (quoting Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185
6
The only authority Castro cites in support of his unclean hands claim being an available defense
to incontestability is Pyrodyne Corp. v. Pyrotronics Corp., 847 F.2d 1398, 1402 (9th Cir.
1988). Pyrodyne simply holds that some equitable defenses are available in defending an
infringement action, even when an incontestable registration is involved. It says nothing about
unclean hands being an appropriate equitable defense to challenge the incontestable status of a
registration under § 1115(b)(9), and indeed the case did not even involve an unclean hands
defense, as the defendant was only asserting laches and estoppel. Id. at 1401-02. Castro thus
has cited no authority to support his claim that unclean hands can be used to challenge
incontestability, and his position is prohibited by the Fifth Circuit’s holding in Exxon.
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(5th Cir. 1980)). Castro’s trademark, however, is ENTREPRENEUROLOGY, which, according
to Castro, is a coined term used by him as a fanciful trademark to identify his services. SAC
¶ 7.185. It is not a term which has a dictionary meaning and thus cannot be used to describe a
type or the characteristics of particular goods or services.
As such his trademark
ENTREPRENEUROLOGY cannot qualify for the fair use defense under § 1115(b)(4).
Finally, Castro seeks to challenge the incontestable status of EMI’s registration through
the genericness provision of § 1064(3) of the Lanham Act. That section permits the cancellation
of a registration “if the registered mark becomes the generic name for the goods or services, or a
portion thereof, for which it is registered.” 15 U.S.C. § 1064(3). As discussed below in Section
E, Castro’s claim that EMI’s mark is generic fails and should be dismissed, so this defense is
also inapplicable.
Castro has admitted that EMI’s registrations are incontestable, and thus he has no basis to
challenge that status in this action. Accordingly, his claim seeking a declaration that those
registrations are not incontestable should be dismissed.
D.
“Entrepreneur” Does Not State the General Name of EMI’s Products, and
the Ninth Circuit Has Already Determined That it is Not Generic.
Castro’s only substantive argument to support his genericness claim is that there is a
“huge split in the Circuits as to when a word has become generic when it comes to magazines.”
Castro’s Response to EMI’s Motion to Dismiss, Descriptive Use and Genericness Claims (Dkt
#69) (“Genericness Opp.”) at 5. Not only is this a mischaracterization of the law on this issue,
and setting aside the fact that the decisions of other circuit cases are not binding on this Court,
those other circuit decisions do not affect the analysis here, because the Fifth Circuit has already
clearly spoken on the subject of genericness. The Fifth Circuit has expressly held that a mark is
only generic if it “refers to ‘a particular genus or class of which an individual article or service is
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but a member.’” Soweco, 617 F.2d at 1183. EMI’s ENTREPRENEUR magazine title does not
refer to a particular genus or class, like “magazine” or “monthly” or “guide.” Nor is it the name
of a trade or industry, or the name of a class of magazines. It therefore is not generic and does
not fall within the unusual category of magazine titles that may be deemed generic.
Looking to other circuits, the Second Circuit did find the title CONSUMER
ELECTRONICS MONTHLY to be generic. However, that holding was based on unusual facts,
involving a trade magazine directed to industry personnel. See CES Publ’g Co. v. St. Regis
Publ’ns, 531 F.2d 11 (2d Cir. 1975). Indeed, the Second Circuit noted this difference, observing
that “periodicals must depend principally on their titles to convey their character. Courts have
been reluctant to find a magazine title generic, perhaps in part because the magazines in such
cases were not literally the class the title designated but were about that class.” Id. at 14. The
court then went on to distinguish the facts of the case before it, noting that “[t]hese decisions did
not present, however, the case of the trade magazine, whose title may be a word which names not
only the class of goods but a class of magazines devoted to displaying and discussing those
goods.” Id.
Subsequent courts have recognized these unusual facts and distinguished the Second
Circuit’s holding in CES Publishing from cases involving more traditional magazines with titles
that do not denote a class of magazines. See, e.g., Salt Water Sportsman, Inc. v. B.A.S.S., Inc.,
No. 87-1144-Z, 1987 U.S. Dist. LEXIS 5249, at *8-10 (D. Mass. June 8, 1987) (finding
magazine title SALT WATER SPORTSMAN descriptive rather than generic and noting that
“[t]he trade magazine cases constitute a limited exception to the general rule that magazine titles
will not be found to be generic.”); Am. Assoc. for Advancement of Sci. v. Hearst Corp., 498 F.
Supp. 244, 256 (D.D.C. 1980) (finding magazine title SCIENCE to be descriptive rather than
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generic and noting that the “[CES Publ’g] case was atypical of cases involving magazine titles”);
cf. Reese Publ’g Co. v. Hampton Int’l Comms., Inc., 620 F.2d 7 (2d Cir. 1980) (finding magazine
title VIDEO BUYER’S GUIDE generic because it met the requirement in CES Publishing that
the name not only be a class of goods but also a class of magazines). Thus, there is no circuit
split on this issue, but instead a refined approach for specific types of magazine titles.
To the extent that this Court looks outside the Fifth Circuit for persuasive authority, it
should prefer the reasoning of a circuit court that specifically considered whether EMI’s mark
was generic as to EMI’s goods and services, rather than circuit cases with inapposite facts. See
Smith, 279 F.3d at 1141 n.2 (“‘ENTREPRENEUR’ does not state the general name of EMI’s
product—a magazine—and therefore does not fit within the generic category.”). Of note, the
Ninth Circuit considered, and declined to follow, the Second Circuit case relied upon by Castro.
See id. (providing CES Publ’g as a negative citation).
In addition, EMI owns three ENTREPRENEUR trademarks, which cover printed
publications, a website, and educational services. Castro completely ignores the latter two uses
in his genericness argument, and instead focuses solely on the ENTREPRENEUR mark as used
in connection with printed publications. Therefore his genericness claim must be dismissed as to
EMI’s use of the ENTREPRENEUR trademark as a website and for educational services as well.
Since Castro has not, and cannot, allege any facts showing that the ENTREPRENEUR
trademark is used to identify a class of magazines under Fifth Circuit law, this Court should
dismiss his cancellation claim based on genericness for failure to state a claim upon which relief
can be granted.
E.
Castro’s Request for a Declaration That He Be Permitted to Use
“Entrepreneur” and “Entrepreneurology” in a Non-Trademark Sense
Should Be Dismissed.
Castro’s SAC seeks a declaration that Castro be permitted to use both the word
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“entrepreneur” and the mark ENTREPRENEUROLOGY “merely to describe his goods and
services.”
SAC ¶ 7.67.
Castro now admits in his opposition, however, that the Court
“understandably dismissed [the ‘entrepreneur’ claim] for lack of case or controversy.”
Genericness Opp. at 2. Since Castro has conceded that this portion of his claim was already
properly dismissed, it should be dismissed again.
The second portion of this claim is simply nonsensical, as Castro is asking this Court to
declare the impossible. There is no way that Castro’s trademark ENTREPRENEUROLOGY,
which Castro claims is a coined term and hence a fanciful mark, can be used as a “descriptor.” It
is a word that has no meaning other than as a trademark. This would be like PepsiCo arguing
that, should it lose its trademark rights, it could still describe its soda as “pepsi” (e.g., “Our sodas
are refreshing and pepsi”), or Nike seeking to describe its shoes as “nike” (e.g., “Our shoes are
light, durable, and nike.”). These words have no meaning that can describe the goods; they serve
only as source identifiers since they are not real words. Castro has already admitted that his
mark is a fanciful trademark that he created, so he cannot now transform it into a “descriptor”
simply by calling it so.
SAC ¶¶ 5.7-5.9, 5.110, 7.8, 7.12-7.25.
Since this claim seeks a
declaration that cannot occur, it should be dismissed for failing to state a claim.
F.
Castro Cannot Attack EMI’s Registrations as Descriptive.
Castro admits that EMI’s registrations are incontestable and for that reason Castro is
barred from arguing that EMI’s marks are descriptive. Castro’s Response to EMI’s Motion to
Dismiss, Descriptiveness and ACPA Claims (Dkt #68) (“ACPA Opp.”) at 1. In his opposition to
EMI’s motion to dismiss his request for cancellation on descriptiveness grounds, Castro’s only
argument is that his claim was pled in the alternative, in the event that he can prove that EMI’s
registrations are not incontestable. Since Castro’s purported defenses to incontestability fail for
the reasons stated in Sections C, D and E above, he will necessarily fail in his efforts to prove in
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the alternative that EMI’s registrations are not incontestable, with the result that his
descriptiveness claim should therefore fail as well, and should be dismissed.
G.
Castro’s Declaratory Relief Claim under the ACPA Fails because There Is
No Case or Controversy.
Castro argues that EMI is asking the Court to “take its word for it” that it will not bring a
claim against Castro under the ACPA, to trick this Court into dismissing Castro’s declaratory
relief claim so that EMI can “re-file in a more friendly jurisdiction.” ACPA Opp. at 7. EMI
does not need the Court to take its word for it, as EMI has already filed its counterclaims in this
lawsuit, and did not include a claim under the ACPA. See Counterclaims (Dkt #38). The ACPA
claim was a compulsory counterclaim, so EMI cannot re-file this claim in another jurisdiction
(nor would this make any sense, since EMI has filed multiple counterclaims already in this
jurisdiction). There is no risk of an ACPA lawsuit in this or any other jurisdiction, so Castro has
no right to a declaration on this claim. His declaratory relief claim (SAC Claim VII.I at 39-42)
should therefore be dismissed.7
H.
Castro Cannot Base His Remaining Declaratory Relief Claims on EMI’s
Demand Letter.
Castro argues that, simply because EMI sent him a demand letter, he has the right to
bring his various declaratory relief claims. Castro’s Response to EMI’s Motion to Dismiss,
12(b)(1) Claims (Dkt #67) (“12(b)(1) Opp.”) at 1. This is not the correct legal inquiry for
whether a declaratory relief claim is appropriate. Instead, courts will examine whether there is a
“real and substantial [dispute], [that] admit[s] of specific relief through a decree of a conclusive
character.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).
7
Castro also points to EMI’s request in its counterclaims’ prayer for relief for an injunction
barring Castro from owning or using his domain name. ACPA Opp. at 7 fn.3. That request is
based on EMI’s counterclaims for infringement and dilution, not on the ACPA, so this prayer
provides no support for Castro’s declaratory relief claim under the ACPA.
15
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1.
Senior User
Castro argues that he needs a declaration that he is the “senior user” of his
ENTREPRENEUROLOGY trademark so that he can take advantage of the defense to
incontestability provided by § 1115(b)(6). 12(b)(1) Opp. at 2. As discussed in Section C above,
however, Castro has misread that statute. The defense in § 1115(b)(6) applies only to a federal
registration and use that pre-date the incontestable registration being asserted.
Castro’s
registration and use do not pre-date EMI’s incontestable registrations. Accordingly, this defense
is unavailable to Castro, and there is no need for the Court to make any declaration regarding his
purported priority rights. Furthermore, as EMI pointed out in its Motion to Dismiss, Castro’s
declaratory relief claim asks the Court to give an advisory opinion on Castro’s seniority as to the
world in general, which is improper and should be rejected. See Section II.H.2 at 15.
2.
Standard Character Mark
Castro argues for a declaration that his standard character mark permits him to use any
stylization for his ENTREPRENEUROLOGY marks. Once again, Castro misconstrues the law
regarding this type of registration. Nothing in the Lanham Act, Code of Federal Regulations, or
Trademark Manual of Examining Procedure gives Castro “the right” to use any stylizations. A
standard character mark simply means that the applicant is “seek[ing] to register words . . .
without claim to any particular font style, size, or color.” 37 C.F.R. § 2.52(a). The declaration
from this Court which Castro seeks, on the other hand, would give him the unfettered right to use
any stylization, without regard to the rights of others in the marketplace. Accordingly, this claim
by Castro is not an appropriate use of the declaratory relief process, and should be dismissed.
Castro apparently recognized the impropriety of this claim, as he attempts to retreat from
this position in his opposition, claiming that he “never asked for a global ruling on his right to
use fonts, styles, designs, capitalization and colors that do not yet exist.” 12(b)(1) Opp. at 5.
16
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This is incorrect.
See SAC Claim VII.C (seeking “JUDICIAL DECLARATION THAT
CASTRO’S OWNERSHIP OF THE TRADEMARK REGISTRATION NUMBER 3,663,282
AS A “STANDARD CHARACTER MARK” ALLOWS HIM TO USE ANY VARIATION OF
THAT MARK WITHOUT REGARD TO ANY PARTICULAR FONT, STYLE, SIZE,
CAPITALIZATION, COLOR, OR PUNCTUATION.”) (emphasis added).
3.
Registration Properly Granted
Castro argues that, because EMI has challenged the validity of Castro’s registration, he is
entitled to a declaration that the registration was properly granted by the PTO. There is a world
of difference, however, between a request to cancel based on specific grounds of infringement
and dilution (i.e., EMI’s counterclaim) and a sweeping declaration that, as to the entire world,
Castro’s registration was properly granted. There are numerous grounds on which a registration
can be attacked, including fraud, abandonment, descriptiveness, genericness, prior rights,
functionality, infringement, and dilution. 15 U.S.C. § 1064. A declaration from this Court that
Castro’s registration was properly granted would eliminate all of those grounds as to anyone and
everyone, not just EMI. Such a request by Castro thus grossly exceeds the purpose and scope of
declaratory relief and for that reason should be dismissed.
4.
Specific Elements of Infringement Claim
In defense of his declaratory relief claim that his marks are inherently distinctive, Castro
makes the completely inaccurate statement that “[a] declaration of law that Castro’s trademark is
inherently distinctive would dispose of this entire lawsuit.” 12(b)(1) Opp. at 7. Castro is mixing
up the elements of a trademark infringement claim in making this statement. To prevail on an
infringement claim, a plaintiff must establish two elements: the trademark is valid and
protectable, and there is a likelihood of confusion between the plaintiff’s mark and the
defendant’s mark. Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 235-36 (5th Cir.
17
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2010). To establish the first element, the plaintiff must show that its mark is either inherently
distinctive, or has acquired distinctiveness. Id. at 237. If the plaintiff’s mark is found to be not
distinctive, then that finding would indeed dispose of th[e] entire lawsuit” since the mark would
not be protectable.
That is not what Castro is asking for, however. Castro, the (counter)defendant in the
infringement claims, seeks a declaration that his allegedly infringing mark is inherently
distinctive. The distinctiveness of the defendant’s mark is in no way dispositive of anything. At
most, it is simply relevant to one of the factors the fact finder will analyze in determining a
likelihood of confusion.8 Accordingly, it is improper and unnecessary for the Court to provide a
declaration on this limited and discrete issue. See MedImmune, 549 U.S. at 127 (declaratory
relief claim must “admit of specific relief through a decree of a conclusive character.”).
Castro is similarly mistaken in his argument that his intent to deceive (about which he
seeks a declaration) is not a digit of confusion, because “deception has nothing to do with
infringement.” 12(b)(1) Opp. at 10. First, the defendant’s intent is expressly listed by the Fifth
Circuit as a digit of confusion. Xtreme Lashes, 576 F.3d at 227 (“We examine the following
nonexhaustive ‘digits of confusion’ in evaluating likelihood of confusion: . . . (6) defendant’s
intent; . . .”); see also Elvis Presley Enters. v. Capece, 141 F.3d 188, 203 (5th Cir. 1998) (“intent
to confuse the public” is a factor to be weighed). Second, the Lanham Act expressly states that
infringement includes “use in commerce [of] any reproduction, counterfeit, copy, or colorable
imitation of a registered mark in connection with the sale, offering for sale, distribution, or
8
Specifically, the distinctiveness of Castro’s mark could potentially be taken into account when
comparing the marks to determine their similarity (which is one of the digits of confusion).
See Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 227 (5th Cir. 2009) (digits
include “mark similarity”). Tellingly, Castro cites to no cases that hold that if a defendant’s
trademark is inherently distinctive, the defendant prevails, because no such case exists.
18
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advertising of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive . . . .” 15 U.S.C. § 1114(a) (emphasis added). This
intent, however, like all of the other digits, is just one of many factors considered in an
infringement claim. Therefore, because Castro’s intent by itself is not dispositive of “specific
relief through a decree of conclusive character,” MedImmune, 549 U.S. at 127, such a request by
Castro for declaratory relief on the issue of intent to deceive should be denied.
Finally, as to Castro’s two remaining claims for declaratory relief (i.e., seeking a finding
of no likelihood of confusion and a dismissal of EMI’s cancellation proceeding), such claims are
completely subsumed by EMI’s Lanham Act and common law counterclaims. The pivotal issue
in both such counterclaims is the likelihood of confusion and, depending on whether such
confusion and hence trademark infringement is found to exist or not, then EMI’s cancellation
proceeding will either move forward or be dismissed. These two remaining claims by Castro are
accordingly duplicative and unnecessary. Castro is estopped from arguing otherwise, as he has
already taken the position, in his motion to dismiss EMI’s declaratory relief counterclaim, that
“courts [should] dismiss declaratory judgment claims that are duplicitous [sic] of statutory and
common law claims that are already pending before the court.” Castro’s Rule 12(b)(1) Motion to
Dismiss EMI’s Declaratory Judgment Act Claims (Dkt #45) at 1-2.9 Accordingly, these two
claims should also be dismissed.
III.
CONCLUSION
For the foregoing reasons, EMI requests that all of Castro’s claims be dismissed without
leave to amend.
Dated: August 17, 2011
9
Respectfully submitted,
As noted in EMI’s opposition to that motion, Castro misapplied this holding to EMI’s
counterclaim, which is not duplicative of EMI’s other claims.
19
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By:
/s/ Jennifer L. Barry
William G. Barber
Texas Bar No. 01713050
PIRKEY BARBER LLP
600 Congress Avenue, Suite 2120
Austin, TX 78701
(512) 322-5200 / (512) 322-5201 Fax
Perry J. Viscounty (Admitted Pro Hac Vice)
Latham & Watkins LLP
650 Town Center Drive, 20th Floor
Costa Mesa, CA 92626
(714) 540-1235 / (714) 755-8290 Fax
Jennifer L. Barry (Admitted Pro Hac Vice)
Latham & Watkins LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
(619) 236-1234 / (619) 696-7419 Fax
Attorneys for Defendant/Counterclaimant
ENTREPRENEUR MEDIA, INC.
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SD\799191.2
CERTIFICATE OF SERVICE
I hereby certify the on August 17, 2011, I electronically filed the foregoing with the Clerk
of Court using the CM/ECF system which will send notification of such filing to the following:
Daniel R. Castro
CASTRO & BAKER, LLP
7800 Shoal Creek Blvd., Suite 100N
Austin, TX 78757
/s/ Jennifer L. Barry
Jennifer L. Barry
21
SD\799191.2
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