MAXINE M. CHESNEY, District Judge.
Before the Court are three motions to dismiss plaintiffs' First Amended Complaint ("FAC"): (1) defendants TTC Business Solutions, LLC ("TTC") and Matthew Swyers' ("Swyers") (collectively, "TTC Defendants") Motion to Dismiss, filed April 18, 2018; (2) defendants The Trademark Company, LLC ("Trademark LLC") and The Trademark Company, PLLC's ("Trademark PLLC") (collectively, "Trademark Defendants") Motion to Dismiss, filed May 4, 2018; and (3) defendant United States Patent and Trademark Office's ("USPTO") Motion to Dismiss, filed June 15, 2018. The motions have been fully briefed. Having read and considered the papers filed in support of and in opposition to the motions, the Court rules as follows.
Plaintiffs allege that TTC operates a website known as "TTC Business Solutions" (
Plaintiffs allege that Trademark PLLC, which operates or has operated a website known as "The Trademark Company," is a law firm that "provide[s] legal services in trademark related matters" (
Plaintiffs allege that the USPTO, which "governs the conduct of U.S. state licensed attorneys and registered patent attorneys" practicing before it (
On April 4, 2018, plaintiffs filed their FAC, asserting therein six Claims for Relief: (1) "Declaratory Relief"; (2) "False Advertising and Unfair Competition [under] the Lanham Act, 15 U.S.C. § 1125(a)"; (3) "California Unfair Competition in Violation of Cal. Bus. & Prof. Code § 17200 et seq."; (4) "California False & Misleading Advertising [under] Cal. Bus. & Prof. Code § 17500 et seq.; (5) "Violation of Substantive Due Process [under] U.S. Constitution amend. V"; and (6) "Violation of Equal Protection [under] U.S. Constitution amend. V."
The instant motions followed.
Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure "can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."
In analyzing a motion to dismiss, a district court must accept as true all material allegations in the complaint, and construe them in the light most favorable to the nonmoving party.
In their respective motions, defendants argue that each of plaintiffs' claims is subject to dismissal.
The Lanham Act prohibits any "false or misleading description of fact, or false or misleading representation of fact, which . . . in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another's goods, services, or commercial activities."
In the Second Claim for Relief, asserted against defendants TTC, Trademark LLC, and Swyers only, plaintiffs allege that TTC and Trademark LLC, in violation of the Lanham Act, have "made false and misleading descriptions and representations of fact" in "commercial advertisements or promotions." (
The TTC Defendants and the Trademark Defendants argue that plaintiffs have failed to allege sufficient facts to establish each plaintiff was injured by the alleged Lanham Act violations, and, consequently, that plaintiffs lack Article III standing.
"In a false advertising suit, a plaintiff establishes Article III injury if some consumers who bought the defendant's product under a mistaken belief fostered by the defendant would have otherwise bought the plaintiff's product."
Here, plaintiffs allege that LegalForce RAPC "compete[s]" with TTC and Trademark LLC (
By contrast, plaintiffs do not allege that LegalForce competes with TTC or Trademark LLC, and do not allege any facts to support a finding that LegalForce has lost revenue or otherwise been harmed by any alleged violation of the Lanham Act by TTC or Trademark LLC. Consequently, plaintiffs have failed to allege any facts to support a finding that LegalForce has standing to pursue the Lanham Act claim.
Accordingly, the Lanham Act claim is subject to dismissal to the extent alleged on behalf of LegalForce.
The Trademark Defendants argue that plaintiffs have failed to allege sufficient facts to support a finding that the Court has personal jurisdiction over either of them.
Where, as here, a party asserts more than one cause of action, "the court must have in personam jurisdiction over the defendant with respect to each claim."
The plaintiff, as the party "seeking to invoke federal jurisdiction," has the burden of establishing a court's jurisdiction over each defendant.
In support of a finding of general jurisdiction, plaintiffs allege the following: "This Court has general personal jurisdiction over Matthew Swyers and the Swyers' Entities because they have at least 1,622 customers in the State of California for trademark filing matters, which is more than in any other state." (
With respect to specific jurisdiction, the FAC asserts two separate theories, neither of which, as discussed below, the Court finds sufficient.
First, plaintiffs allege, "the Swyers' Entities . . . have minimum contacts with the State of California" because "[t]he Swyers Entities purposefully directed their advertisements or promotions at consumers in California." (
Second, plaintiffs allege, the Trademark Defendants are subject to jurisdiction in this district because each is an "alter ego" of Swyers.
Under California law,
Accordingly, the Lanham Act claim is subject to dismissal to the extent it is alleged against the Trademark Defendants.
Plaintiffs allege that Swyers is liable for any Lanham Act violation by TTC or Trademark LLC, on the basis that TTC and Trademark LCC are "alter egos" of Swyers. (See FAC ¶¶ 18, 19.) The TTC Defendants argue that the FAC lacks sufficient facts to support a finding that either such entity is an alter ego of Swyers.
As discussed above, plaintiffs have failed to allege sufficient facts to support a finding that Trademark LLC, one of the Trademark Defendants, is an alter ego of Swyers. Additionally, plaintiffs fail to allege sufficient facts to support a finding that TTC is an alter ego of Swyers, as the sole facts alleged in support of such assertion are that Swyers is the "owner" of TTC (see FAC ¶ 17) and that he "prepar[es] and fil[es]" trademark applications "through TTC" (see FAC ¶ 9). See Katzir's Floor & Home Design, 394 F.3d at 1149.
Accordingly, the Lanham Act claim is subject to dismissal to the extent it is alleged against Swyers.
The Court next considers whether, as to each challenged statement and act on which the Lanham Act claim is based, plaintiffs have sufficiently alleged a claim.
Plaintiffs allege the following statement, contained in "[a]d copy," is "misleading": "#1 in Trademark Registrations." (See FAC ¶ 32.a.) According to plaintiffs, neither TTC nor Trademark LLC has "the largest trademark prosecution practice." (See id.)
The TTC Defendants and the Trademark Defendants argue that plaintiffs, to the extent their claim is based on such statement, have failed to comply with Rule 9(b). In response, plaintiffs contend Rule 9(b) does not apply. Where a claim "sound[s] in fraud," however, even where fraud is not a "necessary element" of the subject cause of action, the plaintiff must comply with Rule 9(b).
Plaintiffs do not contend they have complied with Rule 9(b), and they plainly have not, as plaintiffs fail to identify who made the challenged statement, fail to identify the nature of the "ad copy" in which the statement is assertedly found, and fail to state when such advertisement was broadcast or otherwise made available to the public.
The TTC Defendants and the Trademark Defendants further argue that the challenged statement is non-actionable puffery. "[P]uffery in advertisements" constitutes "either vague or highly subjective" assertions, for example, an advertisement that "states in general terms that one product is superior."
Accordingly, to the extent the Lanham Act claim is based on "#1 in Trademark Registrations," the claim is subject to dismissal.
Plaintiffs allege the following statement, contained in "[a]d copy," is "false and misleading": "Created by former USPTO Attorneys." (
The TTC Defendants and the Trademark Defendants argue that plaintiffs have not complied with Rule 9(b). Again, plaintiffs do not argue they have so complied, but, rather, argue Rule 9(b) does not apply, which argument, the Court, for the reasons stated above, finds unpersuasive. Further, plaintiffs have not complied with Rule 9(b), as they fail to identify who made the challenged statement, fail to identify the nature of the "ad copy" in which the statement is assertedly found, and fail to state when such advertisement was broadcast or otherwise made available to the public.
Accordingly, to the extent the Lanham Act claim is based on "Created by former USPTO Attorneys," the claim is subject to dismissal.
Plaintiffs allege the following statement, located on TTC's website, is "false" and "highly misleading": "Trusted by over 100,000 businesses since 2003." (
The TTC Defendants and the Trademark Defendants argue plaintiffs have not complied with Rule 9(b). Again, plaintiffs do not argue they have so complied, but, rather, argue Rule 9(b) does not apply, which argument, the Court, for the reasons stated above, again finds unpersuasive. Further, plaintiffs have not complied with Rule 9(b), as they fail to identify where on the TTC website the statement is located, particularly whether the statement is located in a section different from or otherwise apart from any reference to Trademark PLLC having been created in 2003, and fail to allege when the statement was made.
Additionally, although, in light of plaintiffs' allegation that the statement is or was located somewhere on TTC's website, the Court reasonably can infer that plaintiffs are alleging the statement was made by TTC, plaintiffs fail to allege any facts to support a finding that Trademark LLC also made or can otherwise be held liable for the statement. To the extent plaintiffs may be basing this part of their Lanham Act claim against Trademark LLC on the theory that both Trademark LLC and TTC are "alter egos" of Swyers, plaintiffs, as discussed above, fail to allege sufficient facts to support a finding that Trademark LCC is an alter ego of Swyers. Further, to the extent the FAC can be interpreted as alleging that Trademark LCC and TTC are alter egos of each other, the FAC, as the Trademark Defendants correctly observe, fails to include any factual allegations to support such conclusion.
Accordingly, to the extent the Lanham Act claim is based on "Trusted by over 100,000 businesses since 2003," the claim is subject to dismissal.
Plaintiffs allege the following statement, located on the TTC website, is "false and misleading": "As featured in Time, Yahoo! Finance, and CNNMoney.com." (See FAC ¶ 32.d.) According to plaintiffs, TTC "has never been featured on these websites." (See id.)
The TTC Defendants and the Trademark Defendants argue plaintiffs have not complied with Rule 9(b). Again, plaintiffs do not argue they have so complied, but, rather, argue Rule 9(b) does not apply, which argument, the Court, for the reasons stated above, once again finds unpersuasive. Moreover, plaintiffs have not complied with Rule 9(b), as they fail to identify where on the TTC website the statement is located, particularly whether the statement is located in a section different from or otherwise apart from any reference to previous websites operated by other entities, as well as when the statement was made. Additionally, for the reasons stated above with respect to "Trusted . . . Since 2003," plaintiffs fail to allege any facts to support a finding that Trademark LLC can be held liable for such statement.
Accordingly, to the extent the Lanham Act claim is based on "As featured in Time, Yahoo! Finance, and CNNMoney.com," the claim is subject to dismissal.
Plaintiffs allege that TTC and Trademark LLC "are among the largest purchasers of online advertising (including Google and Bing) for trademark filing-related search terms/keywords" (see FAC ¶ 34), and that said entities "purchase[] advertisements whenever consumers perform online search[es] of terms related to the practice of trademark filing, including `trademark attorney' and `trademark lawyers'[,] with copy that misleads consumers into believing that they will be represented by attorneys or at least will provide the services by lawful means" (see FAC ¶ 35). According to plaintiffs, TTC and Trademark LLC also "make[] false comparisons directly by purchasing keywords that include the term `Trademarkia,' the website through which [LegalForce RAPC] perform[s] only attorney-led trademark filing services, and falsely comparing it with the unauthorized practice of law services of TTC [and Trademark LLC]." (
The TTC Defendants and the Trademark Defendants argue plaintiffs have not complied with Rule 9(b). Again, plaintiffs do not argue they have so complied, but, rather, argue Rule 9(b) does not apply, which argument, the Court, for the reasons stated above, finds unpersuasive. Further, plaintiffs have not complied with Rule 9(b), as they fail to identify the "copy" in the "advertisements . . . that misleads consumers" (
Further, to the extent the claim is based on a theory that consumers who, after performing an internet search using terms such as "trademark attorney, "trademark lawyers," or "Trademarkia" in an effort to locate an attorney, ended up viewing TTC's website, such a claim, to be cognizable under the Lanham Act, would require a showing that TTC's website was "likely to mislead consumers" into believing TTC was affiliated with an attorney.
Accordingly, to the extent the Lanham Act claim is based on the use of keywords, the claim is subject to dismissal.
Plaintiffs allege the "design" of TTC's website has "substantially the same logo, look, feel, and trade dress" as Trademark PLLC's website, which entity, as noted, is a law firm. (
The TTC Defendants and the Trademark Defendants argue that plaintiffs fail to allege facts to support a finding that the design of TTC's website is likely to cause confusion on the part of consumers, in light of plaintiffs' acknowledgement that TTC's website states TTC "is not a law firm," that "its trademark filing service is not a legal service," and that it "may not perform services performed by an attorney." (
Accordingly, to the extent the Lanham Act claim is based on the design of TTC's website, the claim is subject to dismissal.
The Lanham Act is subject to dismissal in its entirety.
In the Fifth Claim for Relief, plaintiffs allege that the USPTO has deprived LegalForce RAPC of due process. Specifically, plaintiffs allege, the USPTO has deprived LegalForce RAPC of its "right to engage in [its] chosen occupation," which is "practicing trademark law." (
The USPTO argues that plaintiffs' factual allegations are insufficient to state a due process deprivation claim. As discussed below, the Court agrees.
To establish a due process deprivation claim based on the theory that the government has deprived a plaintiff of its "right to engage in the occupation of [its] choice," a plaintiff "must show, first, that [it is] unable to pursue an occupation in the [chosen field], and second, that this inability is due to actions that were clearly arbitrary and unreasonable."
Here, as the USPTO points out, plaintiffs fail to allege any facts to support a finding that LegalForce RAPC, as result of the asserted differential treatment, is "unable to pursue" the practice of trademark law.
Accordingly, plaintiffs' due process deprivation claim is subject to dismissal.
In the Sixth Claim for Relief, plaintiffs allege that the USPTO has deprived LegalForce RAPC of equal protection of the law. According to plaintiffs, the USPTO has violated the Equal Protection Clause by applying to LegalForce RAPC, but not to TTC or Trademark LLC, "regulations governing how to practice before the USPTO with respect to filing trademarks" (see FAC ¶ 129), even though LegalForce RAPC, TTC and Trademark LLC all "provide the same types of services" (
The USPTO argues that plaintiffs' factual allegations are insufficient to state a due process deprivation claim. As discussed below, the Court agrees.
To state an equal protection deprivation claim based on "selectivity in enforcement" of a government rule, the plaintiff must establish "the selection was deliberately based upon an unjustifiable standard such as race, religion, or other arbitrary classification."
Accordingly, plaintiffs' due process deprivation claim is subject to dismissal.
In the First Claim for Relief, titled "Declaratory Judgment," plaintiffs include a federal claim that an "actual controversy" exists with regard to whether the USPTO has engaged in the "disparate enforcement of USPTO regulations on the practice of law." (See FAC ¶ 81.) Plaintiffs seek a declaration to resolve such asserted controversy. As set forth above, however, plaintiffs have failed to state a claim that the USPTO has engaged in any type of actionable disparate enforcement. Moreover, where, as here, a claim for declaratory judgment "seeks a declaration of defendants' liability for . . . other causes of action, the claim is merely duplicative and [is] properly dismissed." See Swartz, 476 F.3d at 765-66.
Accordingly, to the extent alleged against the USPTO, plaintiff's claim for declaratory judgment is subject to dismissal.
Plaintiffs' Third Claim for Relief, titled "California Unfair Competition in Violation of Cal. Bus. & Prof. Code § 17200 et seq.," asserted against all defendants other than the USPTO, is based in part on the same conduct on which plaintiffs base their Lanham Act claim. (See FAC ¶¶ 94, 98.a, 98.b., 98.h, 99, 100, 101.e.) To the extent so based, plaintiffs' § 17200 claim is subject to dismissal for the reasons stated above with respect to their Lanham Act claim.
Plaintiffs' Fourth Claim for Relief, titled "California False & Misleading Advertising; Cal. Bus. & Prof. Code § 17500 et seq.," asserted against defendants TTC, Trademark LLC, and Swyers only, is based on the same conduct on which plaintiffs base their Lanham Act claim (see FAC ¶¶ 107, 110-111), and, consequently, is subject to dismissal for the reasons stated above with respect to their Lanham Act claim.
In the First Claim for Relief, titled "Declaratory Judgment," plaintiffs include a claim asserting they are entitled to resolution of the "controversy" as to whether TTC and Trademark LLC are "engaged in the unauthorized practice of law." (
To the extent the First and Third Claims for Relief are based on such alleged conduct, the Court, given the dismissal of plaintiffs' federal claims and the early stage of the proceedings, declines to exercise supplemental jurisdiction.
Accordingly, such claims, as included in the First and Third Claims for Relief, will be dismissed pursuant to § 1367(c)(3), without prejudice to refiling in state court, or, if plaintiffs elect to amend their federal claims, without prejudice to refiling in this action.
For the reasons stated above, defendants' motions to dismiss are hereby GRANTED and the First Amended Complaint is DISMISSED in its entirety. Plaintiffs are hereby afforded leave to amend for purposes of curing the deficiencies identified above.
Lastly, in light of the above, the Case Management Conference is hereby CONTINUED from July 27, 2018, to October 12, 2018, at 10:30 a.m. A Joint Case Management Statement shall be filed no later than October 5, 2018.