Fabick, Inc. v. FABCO Equipment, Inc. et al

Filing 88

ORDER granting 42 , Defendant JFTCO, Inc.'s motion to dismiss plaintiff's ACPA count, denying 58 Plaintiff Fabick, Inc.'s motion to amend the pleadings. Plaintiff is directed to file a second amended complaint consistent with this court's order by June 14, 2017. Defendants' answers are due by June 28, 2017. Signed by District Judge William M. Conley on 6/7/2017. (voc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
FABICK, INC.,
Plaintiff,
v.
FABCO EQUIPMENT, INC., and
JFTCO, INC.,

OPINION AND ORDER
16-cv-172-wmc

Defendants.
In this case, plaintiff Fabick, Inc., asserts a claim of trademark infringement and
other related claims against defendants FABCO Equipment, Inc., and JFTCO, Inc.
Before the court is a motion to dismiss plaintiff’s claim against defendant JFTCO for
violation of the Anticybersquatting Consumer Protection Act (“ACPA”), 15 U.S.C. §
1125(d), on the basis that the allegations fail to meet the requirements of Rules 8 and
12(b)(6). (Dkt. #42.) For the reasons that follow, the court will grant that motion.
Also before the court is plaintiff’s more recently-filed motion for leave to amend its
complaint to add a claim of civil conspiracy against defendants. Finding plaintiff unduly
delayed in moving to amend its complaint, the court will deny that motion.

ALLEGATIONS OF FACT 1
A. Background
The Fabick family has been involved in the business of selling construction and
agricultural equipment since 1917. In 1982, Joseph Fabick, Sr., acquired two pre-existing
In resolving a motion to dismiss under Rule 12(b)(6), the court takes all of the factual
allegations in the complaint as true and draws all inferences in plaintiff’s favor. Killingsworth v.
HSBC Bank Nev., 507 F.3d 614, 618 (7th Cir. 2007).
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Caterpillar (“CAT”) dealerships serving Wisconsin and the Upper Peninsula of Michigan.
Those dealerships were ultimately merged to become defendant FABCO Equipment, Inc.
FABCO is in the business of selling and renting equipment and technology used in the
construction, agriculture and related industries.

Defendant JFTCO acquired certain

assets of FABCO on or about July 1, 2015.
Plaintiff

Fabick,

Inc.,

was

complementary business to FABCO.

originally

created

in

December

1993

as

a

Fabick is in the business of spray-on bedliners,

sealants and coatings.
B. Fabick’s Trademark, Service Mark and Domain Name
At its founding, FABCO owned 100% of Fabick’s stock and shared its customer
lists, marketing personnel and product services representatives to build Fabick’s business.
On March 25, 1994, Fabick filed a trademark application for the mark “FABICK,” and
on April 11, 1994, Fabick filed a service mark application for the mark “FABICK.” The
USPTO granted the service mark on August 22, 1995, and the trademark on January 14,
1997.
On

December

4,

1995,

Fabick

also

registered

the

domain

name

“www.fabick.com.” Shortly after that registration, John Fabick Tractor Company, a CAT
dealer operating in Missouri and parts of Illinois, and an affiliate of defendant JFTCO,
also sought to register the domain name “www.fabick.com.”

Upon learning that the

name was already registered to Fabick, John Fabick Tractor Company approached
defendant FABCO as the then controlling owner of plaintiff Fabick to procure Fabick’s
domain name registration, but FABCO refused.
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On December 31, 1997, FABCO and Joseph Fabick, Sr., sold 100% of the stock in
Fabick to Jay Fabick (Joseph Fabick’s son).
C. Registration of Competing Domain Names
In July 2015, FABCO rebranded its name to “FABICK CAT.” A web search for
FABICK CAT reveals a domain name for “fabickcat.com.”
name remains “fabick.com.”

Plaintiff Fabick’s domain

JFTCO, or one of its affiliates, have also registered the

following domain names: www.fabickcat.com, registered on February 17, 2004;
www.fabicktrucks.com,

registered

on

February

www.fabickusedequipment.com, registered on May 31, 2013.

19,

2013;

and

Plaintiff further alleges

that in July of 2015, “the websites associated with these domain names were updated to
expand the locations from Missouri and parts of Illinois to also include locations in
Wisconsin and the U.P.” (Am. Compl. (dkt. #32) ¶ 46.)
Material to ACPA claim, plaintiff alleges that
•

The domain name “fabickcat.com” was adopted long after the FABICK
marks were registered and became distinctive.

•

The domain names are confusingly similar.

•

JFTCO has a short history of providing goods and services under the
“FABICK CAT” brand name, and only entered the Wisconsin market in or
around July 2015.

•

“JFTCO has acted in bad faith with the intent to profit from the good will
of Fabick’s domain name and registered Marks. In so doing, JFTCO has
confused actual and possible customers as to the source of goods and
services, and otherwise usurping the good will of Fabick’s domain name and
registered Marks.”

(Am. Compl. (dkt. #32) ¶ 69.)

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OPINION
I. Motion to Dismiss
A. Standard of Review for APCA Claim
Federal Rules of Civil Procedure 8 requires that the plaintiff make a “short a plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). To survive a motion to dismiss, a plaintiff must allege “sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). In effect, this means that the complaint must: (1) indicate “factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged”; and (2) “raise a right to relief above the speculative level.” Twombly,
550 U.S. at 556. When evaluating the sufficiency of the complaint, the court construes
the allegations in the light most favorable to the non-moving party, accepting well-pled
facts as true, and drawing all inferences in that party’s favor. See Cincinnati Life Ins. Co. v.
Beyrer, 722 F.3d. 939, 946 (7th Cir. 2013).
A motion to dismiss under Rule 12(b)(6) is designed to test the complaint’s legal
sufficiency. See Fed. R. Civ. P. 12(b)(6). Dismissal is only warranted if no recourse
could be granted under any set of facts consistent with the allegations. Twombly, 550
U.S. at 563; Iqbal, 556 U.S. at 662. As this court has previously emphasized, the motion
to dismiss phase of the proceedings “is not an opportunity for the court to find facts or
weigh evidence.”

My Health, Inc. v. Gen. Elec. Co., No. 15-CV-80-JDP, 2015 WL

9474293, at *2 (W.D. Wis. Dec. 28, 2015).

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To state a claim under the ACPA against defendant JFTCO, plaintiff must allege
that: “(1) [the mark] is a distinctive or famous mark entitled to protection; (2)
defendants’ domain names are “identical or confusingly similar to” plaintiff’s mark; and
(3) defendants registered the domain names with the bad faith intent to profit from
them.” Land’s End v. Remy, 447 F. Supp. 2d 941, 947 (W.D. Wis. 2006) (citing 15
U.S.C. § 1125(d)(1)(A)).

Here, JFTCO contends that plaintiff has failed to allege

adequately the third of these elements. As described in defendant’s opening brief, this
element “cannot be equated with ‘bad faith’ in other contexts (such as trademark
infringement).” Flat Rate Movers Ltd. v. FlatRate Moving & Storage, Inc., 104 F. Supp. 3d
371, 382 (S.D.N.Y. 2015) (quoting Sporty’s Farm L.L.C. v. Sportsman’s Mkt., Inc., 202
F.3d 489, 499 n.13 (2d Cir. 2000)). Instead, it requires a showing that “the defendant’s
use of the domain name is an attempt to profit specifically from ‘squatting’ on the
domain name with bad faith, rather than simply . . . another aspect of the alleged
trademark infringement.” Id. (internal citation and quotation marks omitted).
The ACPA itself provides guidance on how to assess this element, setting forth
factors “a court may consider” that indicates the absence of bad faith (the first four
below) or the existence of bad faith (the remaining five):
(I) the trademark or other intellectual property rights of the
person, if any, in the domain name;
(II) the extent to which the domain name consists of the legal
name of the person or a name that is otherwise commonly
used to identify that person;
(III) the person’s prior use, if any, of the domain name in
connection with the bona fide offering of any goods or
services;
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(IV) the person’s bona fide noncommercial or fair use of the
mark in a site accessible under the domain name;
(V) the person’s intent to divert consumers from the mark
owner’s online location to a site accessible under the domain
name that could harm the goodwill represented by the mark,
either for commercial gain or with the intent to tarnish or
disparage the mark, by creating a likelihood of confusion as to
the source, sponsorship, affiliation, or endorsement of the
site;
(VI) the person’s offer to transfer, sell, or otherwise assign the
domain name to the mark owner or any third party for
financial gain without having used, or having an intent to use,
the domain name in the bona fide offering of any goods or
services, or the person's prior conduct indicating a pattern of
such conduct;
(VII) the person’s provision of material and misleading false
contact information when applying for the registration of the
domain name, the person's intentional failure to maintain
accurate contact information, or the person's prior conduct
indicating a pattern of such conduct;
(VIII) the person’s registration or acquisition of multiple
domain names which the person knows are identical or
confusingly similar to marks of others that are distinctive at
the time of registration of such domain names, or dilutive of
famous marks of others that are famous at the time of
registration of such domain names, without regard to the
goods or services of the parties; and
(IX) the extent to which the mark incorporated in the
person’s domain name registration is or is not distinctive and
famous within the meaning of subsection (c) of this section.
15 U.S.C. § 1125(d)(1)(B)(i).
B. Application of Standard
Defendant JFTCO contends that the four factors indicating an absence of bad
faith all weigh in defendant’s favor and that plaintiff has failed to allege facts showing

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bad faith under the other factors. (Def.’s Opening Br. (dkt. #43) 5-6.) In opposition to
defendant’s motion, plaintiff challenges defendant’s reference to the factors, implicitly
arguing that such an approach requires a review of the merits.

The court disagrees.

Considering plaintiff’s allegations in light of the statutory factors for alleging bad faith
under the ACPA is not inherently suspect.

The factors described above inform that

element of the ACPA claim. The court is not requiring any proof of that element at the
pleading stage, but simply is considering what minimal allegations are necessary to
sustain that element in the face of a motion to dismiss. See In re Bill of Lading & Processing
Sys. Patent Litig., 681 F.3d 1323, 1337 (Fed. Cir. 2012) (“Determining whether a
complaint states a plausible claim for relief is a very context-specific task. Thus, the
district court was required to analyze the facts plead in the amended complaints and all
documents attached thereto with reference to the elements of a cause of action for
contributory infringement to determine whether R+L's claims of contributory
infringement were in fact plausible.” (internal citation and quotation marks omitted)).
For the purpose of deciding defendant’s motion, therefore, the court solely considers
whether plaintiff has alleged sufficient facts to support a finding of bad faith intent to
profit.
In opposition to defendant’s motion, plaintiff identifies only the following
allegations:
•

“JFTCO’s affiliate unsuccessfully attempted to procure the www.fabick.com
domain name and then went on to register confusingly similar marks
anyway, including domain names that solely use the mark ‘FABICK’
instead of ‘FABICK CAT.’”

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•

“JFTCO expanded its use of the ‘fabick’ domain names to include soliciting
customers in Wisconsin and the U.P.”

(Pl.’s Opp’n (dkt. #46) 4.)

From this alone, plaintiff argues that bad faith can

reasonably be inferred under the ACPA, just as it was by the Fourth Circuit Court of
Appeals in Harrods, Ltd. v. Sixty Internet Domain Names, 302 F.3d 214 (4th Cir. 2002). In
Harrods, the district court found that there was sufficient evidence with respect to fiftyfour of the domain names to support a finding of bad faith intent to profit. Plaintiff
points to a particular statement in the Fourth Circuit’s affirmance that “if a concurrent
user registers a domain name with the intent of expanding its use of the shared mark
beyond its geographically restricted area, then the domain name is registered in bad faith
as outlined in the ACPA.” Id. at 234.
In its reply, defendant distinguishes Harrods on several credible bases.

Most

persuasive, plaintiff’s allegations here do not support a reasonable inference that the
domain name was registered with the intent to expand its use into Wisconsin and the
U.P. for two core reasons. First, the www.fabickcat.com domain was registered more than
ten years before JFTCO’s use of the Fabick tradename in Wisconsin or the U.P., and
therefore any inference that it was registered with the intent of expanding its business
into these new territories is not reasonable. Second, and more critically, plaintiff and
defendants are not competitors (unlike the parties in Harrods), and therefore any intent
to expand use of the shared mark into Wisconsin or the U.P. does not give rise to a
reasonable inference that defendants intend to profit off of the domain name in bad faith.
See Harrods, 302 F.3d at 239 (the ACPA is not intended to reach legitimate concurrent
users, like Delta Airlines and Delta Faucets); cf. Flentye v. Kathrein, 485 F. Supp. 2d 903,
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915 (N.D. Ill. 2007) (finding allegations sufficient where defendant was direct
competitor).
Therefore, construing the facts in the light most favorable to plaintiff, accepting all
well-pled facts as true and drawing all reasonable inferences in plaintiff’s favor, the court
finds that plaintiff has failed to allege bad faith intent to profit, a required element of its
APCA claim. See Fennick v. Sams, No. 2:11-CV-01107, 2012 WL 27336, at *4 (S.D.
Ohio Jan. 5, 2012), report and recommendation adopted, No. 2:11-CV-01107, 2012 WL
628503 (S.D. Ohio Feb. 27, 2012) (dismissing APCA claim where defendant failed to
plead sufficient facts to support an inference of bad faith, and specifically noting that
defendant’s use of the domain name appears to be “in connection with a legitimate
business for purposes of selling services.”); Nau Holdings, LLC v. Dlorah, Inc., No.
CIVA08CV02743CMABNB, 2010 WL 447393, at *6 (D. Colo. Feb. 3, 2010)
(reviewing § 1125(d)(1)(B) factors and dismissing the claim on the pleadings).
II. Motion for Leave to Amend Complaint
Also before the court is plaintiff’s motion to amend its complaint to add a claim of
civil conspiracy against both defendants. Materially, plaintiff alleges that “[o]ne or more
of the Defendants conspired together, and with John Fabick Tractor Company, to
commit the wrongful acts set forth in this Second Amended Complaint, including, but
not limited to, the development of the ‘FABICK’ brand, and the plan to use and market
the brand in infringement of Fabick’s registered Marks and common law trademark

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rights, and the actual use of the brand in commerce.” (Pl.’s Proposed 2d Am. Compl.
(dkt. #58-1) ¶ 129.) 2
Typically, leave to amend should be “freely” given.

Fed. R. Civ. P. 15(a)(2).

Notwithstanding this “liberal attitude towards the amendment of pleadings, courts in
their sound discretion may deny a proposed amendment if the moving party has unduly
delayed in filing the motion, if the opposing party would suffer undue prejudice, or if the
pleading is futile.”

Soltys v. Costello, 520 F.3d 737, 743 (7th Cir. 2008) (internal

quotation omitted).
Under Wisconsin law, “[a] civil conspiracy is ‘a combination of two or more
persons by some concerted action to accomplish some unlawful purpose or to accomplish
by unlawful means some purpose not in itself unlawful.’”

Thomas ex rel. Gramling v.

Mallett, 2005 WI 129, ¶ 168, 285 Wis. 2d 236, 701 N.W.2d 523 (quoting Onderdonk v.
Lamb, 79 Wis. 2d 241, 246, 255 N.W.2d 507, 509 (1977)). “To state a cause of action
for civil conspiracy, the complaint must allege: (1) the formation and operation of the
conspiracy; (2) the wrongful act or acts done pursuant thereto; and (3) the damage
resulting from such act or acts.” Onderdonk, 79 Wis. 2d at 246, 255 N.W.2d at 510.
Under Wisconsin law, a claim for civil conspiracy also requires an underlying tort
to be actionable. Segall v. Hurwitz, 114 Wis. 2d 471, 482, 339 N.W.2d 333, 339 (Ct.
App. 1983) (“It is the tort, and each tort, not the conspiracy, that is actionable.”); see also

Plaintiff also alleges a claim based on the underlying ACPA count, but in light of the court’s
dismissal of that claim, the court need not consider this specific allegation.

2

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Taurus IP v. DaimlerChrysler Corp., 519 F. Supp. 2d 905, 924 (W.D. Wis. 2007)
(examining Wisconsin law and noting “a civil conspiracy requires an underlying tort”).
As plaintiff acknowledges in its reply brief, this proposed claim is “more of a
theory of relief than an entirely new cause of action.” (Pl.’s Reply (dkt. #78) 7.) In light
of the fact that plaintiff asserts trademark infringement claims against both defendants -unlike the ACPA claim which was solely asserted against defendant JFTCO -- it is not at
all clear what plaintiff achieves by its proposed amendment. Regardless of whether leave
is granted, plaintiff may pursue its theory that the infringement was planned as part of
the July 2015 purchase of FABCO’s assets, including its intellectual property, by JFTCO.
While one could argue that the limited impact of this proposed new claim undercuts a
finding that defendants would be prejudiced by its addition, a conspiracy claim would
further complicate what should be a straightforward question of trademark infringement
as to each of the defendants.
The court however need not wade into whether the amendment would be futile or
whether defendants would be prejudiced by the amendment because plaintiff unduly
delayed seeking leave to add a new claim. Plaintiff’s brief in support of its motion is a
prime example of a party burying the lead in hopes of obfuscating the timing problem
underlying its motion. Plaintiff harps on defendants’ alleged failure to produce the entire
Asset Purchase Agreement, but as is clear from defendants’ opposition brief and
supporting materials, plaintiff received discovery central to its new allegations relating to
the transition of the FABICK CAT name beginning in early December 2016 and received
an unredacted copy of the APA -- including the schedule related to trademarks and other
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intellectual property -- on December 9, 2016. Despite this, plaintiff did not seek leave to
add this claim until April 2017. In light of the procedural posture of this case, with
dispositive motions due June 9, 2017, the court will deny plaintiff’s leave to amend,
although it notes that nothing about this decision limits plaintiff’s ability to rely on the
allegations in its proposed second amended complaint to prove its trademark
infringement claims.

ORDER
IT IS ORDERED that:
1) Defendant JFTCO, Inc.’s motion to dismiss plaintiff’s ACPA count (dkt.
#42) is GRANTED.
2) Plaintiff Fabick, Inc.’s motion to amend the pleadings (dkt. #58) is
DENIED.
3) Plaintiff is directed to file an second amended complaint consistent with
this court’s order by June 14, 2017. Defendants’ answers are due by June
28, 2017.
Entered this 7th day of May, 2017.
BY THE COURT:

/s/
__________________________________
WILLIAM M. CONLEY
District Judge

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