WILLIAM S. DUFFEY, Jr., District Judge.
This matter is before the Court on the Defendants' Motion to Dismiss Plaintiff Websters Chalk Paint Powder, LLC's ("Plaintiff") Complaint for lack of personal jurisdiction over Defendant Lisa Rickert ("Rickert") and Defendant Annie Sloan Interiors Limited ("ASI"), and for failure to state a claim against all Defendants [21], and on Plaintiff's Motion to Strike the Defendants' Reply as untimely [24].
Plaintiff is a limited liability company based in Georgia that manufactures, distributes, and sells a "specially-formulated powder," or a paint additive, that can be mixed with other paints. Am. Compl. at 2. Defendant ASI is a foreign corporation organized under the laws of the United Kingdom with its principal place of business in Oxford, United Kingdom. ASI manufactures decorative paint, and sells its products to an exclusive distributor in the United States. ASI is the owner and licensor of the registered trademarks "ANNIE SLOAN®" and "CHALK PAINT®." The decorative paints marketed and sold under the "CHALK PAINT®" brand are specifically designed for furniture, but they can also be used on walls, floors, and in paintings.
Defendant Jolie Design & Décor, Inc. ("JDD") is a corporation organized under the laws of Louisiana with its principal place of business in New Orleans, Louisiana. Defendant Annie Sloan Unfolded ("ASU") is the assumed corporate name of JDD. JDD is the exclusive licensee and distributor of ANNIE SLOAN®" products and the "CHALK PAINT®" brand in the United States. JDD sublicenses the use of "CHALK PAINT®" and "ANNIE SLOAN®" to retail sellers in the United States.
Defendant Rickert is a Louisiana citizen. Rickert is a founder of JDD and serves as one of its corporate officers. Defendant Chalk It Up Norcross, LLC ("CIUN") is a limited liability company based in Norcross, Georgia. CIUN is a retailer that sells the "CHALK PAINT®" brand of decorative paint, and other "ANNIE SLOAN®" products, as a sub-licensee of JDD.
Plaintiff alleges that it is the owner of a common-law trademark entitled "WEBSTERS CHALK PAINT POWDER." In 2010 and 2011, Annie Sloan, the founder of Defendant ASI, filed a trademark application with the United States Patent and Trademark Office ("USPTO") to register the "CHALK PAINT®" brand. The USPTO initially denied these applications as "merely descriptive," requesting ASI to provide additional information regarding whether the term "CHALK PAINT®" had a particular meaning in the industry or whether it was considered a term of art within the industry. On June 26, 2012, ASI responded to the USPTO's requests for additional information, and stated:
On October 30, 2012, the USPTO granted ASI's application, No. 4232734, to register the "CHALK PAINT®" mark, and subsequently in the same year, granted ASI's application, No. 4322847, for a stylized version of the "CHALK PAINT®" mark.
On July 5, 2012, Plaintiff submitted a trademark application to the USPTO to register "WEBSTERS CHALK PAINT POWDER," and requested the USPTO to cancel ASI's registration for the "CHALK PAINT®" mark. ASI opposed Plaintiff's application. To date, the USPTO has not acted on Plaintiff's application. A comparison of Plaintiff's logo and ASI's logo, containing the "CHALK PAINT®" mark is illustrated below:
On May 14, 2012, Debbie Hayes, the brand compliance manager of ASU, sent a letter to Plaintiff stating that ASI was the owner of the "CHALK PAINT®" mark, and that Plaintiff's use of ASI's trademark in its circular logo, and to market and sell its products, violated federal and international trademark laws. On June 8, 2012, ASI's counsel sent Plaintiff a letter demanding that Plaintiff cease use of the "CHALK PAINT®" mark in connection with the sale of its products. On June 22, 2012, Plaintiff's counsel wrote a letter to ASI's counsel, and stated that "CHALK PAINT®" had not acquired distinctiveness in the home decorating industry, and that Plaintiff's continued use of the term to market its product did not pose a risk of confusion with ASI's registered trademark.
At some point after these communications with Plaintiff, ASI notified Etsy, an online marketplace for arts and crafts, that Plaintiff's online storefront on Etsy's website violated ASI's trademark rights. Etsy investigated ASI's claim, determined that Plaintiff's online storefront violated Etsy's Copyright and Intellectual Property policy, and removed a portion of Plaintiff's online content from its website. ASI also informed Facebook that Plaintiff's business page violated ASI's trademark rights in the "CHALK PAINT®" brand. Facebook also investigated ASI's claim, and removed Plaintiff's business page because it determined that Plaintiff's business page violated Facebook's Statement of Rights and Responsibilities.
On October 18, 2013, Plaintiff filed a six (6) count Amended Complaint
On October 31, 2013, the Defendants moved to dismiss the Amended Complaint. The Defendants argue that the claims against Defendants Rickert and ASI should be dismissed for lack of personal jurisdiction. The Defendants also argue that the Amended Complaint should be dismissed because it fails to state a claim upon which relief can be granted.
On December 3, 2013, Plaintiff moved to strike Defendants' Reply to Plaintiff's Response to the Motion to Dismiss for failure to file a reply within fourteen (14) days after service of the responsive pleading as required by Local Rule 7.1(C).
A plaintiff must allege sufficient facts in its complaint to make out a prima facie case of personal jurisdiction over a defendant.
A district court has personal jurisdiction over a nonresident defendant if the exercise of jurisdiction (1) is permitted under the state's long-arm statute and (2) does not violate the Due Process Clause of the Fourteenth Amendment.
To satisfy the constitutional requirement, the defendant must have "fair warning" of litigation in Georgia by establishing "minimum contacts" with the state.
Georgia's long-arm statute confers personal jurisdiction over non-resident defendants under six circumstances.
A nonresident defendant's "mail, telephone calls, and other `intangible acts'" that occur outside of Georgia must be examined to determine "whether it can fairly be said that the nonresident has transacted any business within Georgia."
To satisfy the constitutional requirements for the exercise of personal jurisdiction, a defendant must have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'"
"Due process contemplates two types of jurisdiction over the person: general and specific jurisdiction."
Jurisdiction must also comport with "traditional notions of fair play and substantial justice," which requires consideration of: "(a) the burden on the defendant, (b) the forum State's interest in adjudicating the dispute, (c) the plaintiff's interest in obtaining convenient and effective relief, (d) the interstate justice system's interest in obtaining the most efficient resolution of controversies, and (e) the shared interest of the several States in furthering fundamental substantive social policies."
The Amended Complaint alleges that "Defendant[] Lisa Rickert and/or [JDD] d/b/a [ASU] "contract[s] with retailers in this District, earn[s] income, sell[s] ASI products, market[s], advertise[s], and impos[es] restrictions on local retailers/stockists in this District." Am. Compl. at ¶ 17. Defendants argue that the Court does not have personal jurisdiction over Rickert because the acts alleged in the Complaint are conducted in Rickert's capacity as a corporate officer of JDD and ASU.
The "fiduciary shield" doctrine prohibits courts from exercising personal jurisdiction over a nonresident individual based solely upon acts taken in his or her capacity as a corporate officer.
Georgia courts have found that nonresident corporate officers "transact business" in Georgia under the long-arm statute when they personally negotiate the terms of an agreement within the State.
While the Amended Complaint alleges that Defendant "Rickert and/or [JDD] d/b/a [ASU] contracts with retailers" in Georgia and "impos[es] restrictions" on those retailers that sell ASI's products in Georgia, it does not allege any facts to support that Defendant Rickert personally participated in the negotiations or committed an intentional act in Georgia to show that she was a primary participant in the negotiations or the execution of the contracts. On its face, the Amended Complaint does not distinguish between the actions of Rickert or JDD and ASU. There are no facts in the Complaint that suggest Rickert personally participated in a business transaction in Georgia.
The Court concludes that the Amended Complaint fails to allege facts to demonstrate that Rickert was "personally and intimately involved in drafting and negotiating the contracts" with retailers based in Georgia.
In its Response to the Motion to Dismiss, Plaintiff appears to suggest that the Court should apply the alter ego theory to find that personal jurisdiction can be exercised over Defendant Rickert. Under Georgia law, "[t]o establish the alter ego doctrine it must be shown (1) that the stockholders' disregard of the corporate entity made it a mere instrumentality for the transaction of their own affairs; (2) that there is such unity of interest and ownership that the separate personalities of the corporation and the owners no longer exist; and (3) to adhere to the doctrine of corporate entity would promote injustice or protect fraud."
To justify piercing the corporate veil, "`the plaintiff must show [that] the owner abused the corporate form by disregarding the separateness of legal entities by commingling [funds] on an interchangeable or joint basis or confusing the otherwise separate properties, records, or control.'"
The Amended Complaint fails to allege facts that would justify piercing the corporate veil in this case. The only argument that Plaintiff has presented, and which merits any discussion, is that "One website states that L. Rickert—not ASU or JDD—`now has an amazing team of Staffers and Retailers who inspire her every day as she unfolds Annie Sloan as a brand to be reckoned with.'" Pl.'s Resp. to Mot. to Dismiss at 5. A reference to a corporate officer in the first person, as opposed to the corporation, is insufficient to find that the corporate officer was acting outside the corporate form.
The remaining allegations in Plaintiff's Response do not support the alter ego theory. For example, Plaintiff argues that ASU is the alter ego of Rickert because ASU is not registered to do business in Louisiana. Louisiana law, however, permits a corporation to conduct business under an assumed name, and ASU is not required to register with the Secretary of State under Louisiana law.
The Court concludes that Plaintiff has failed to show a prima facie case that personal jurisdiction can be exercised over Defendant Rickert under Georgia's long-arm statute. Because Plaintiff has failed to prove the existence of personal jurisdiction under Georgia's long-arm statute, the Court does not need to decide whether the exercise of jurisdiction, if it existed under the long-arm statute, which it does not, would be proper under the Due Process Clause.
The Amended Complaint states that ASI is subject to personal jurisdiction under Georgia's long-arm statute because "it transacts business, through [Rickert] and/or [JDD] d/b/a [ASU], with retailers in this District, and earns revenue and pays taxes on those goods sold in this District." Am. Compl. at ¶ 16. Defendants have submitted an affidavit from one of ASI's owners that asserts: (1) ASI does not own or lease any property in Georgia; (2) ASI does not have any employees or independent contractors working within the state of Georgia; (3) ASI does not have any contractual dealings with any retailers of the "CHALK PAINT®" brand in the United States, (4) ASI has not entered into any contracts with persons within Georgia, (5) ASI does not have control over which local retailers in a particular state conduct business with JDD; (6) ASI does not target any direct-mail advertising to Georgia residents; and (7) ASI's contract with JDD specifically disclaims any agency relationship between the two entities. Manuel Aff. at ¶¶ 5-16.
The Manuel affidavit shifts the burden to the Plaintiff to demonstrate the existence of personal jurisdiction over ASI. Plaintiff, however, has not contested the Manuel Affidavit, and Plaintiff has thus failed to rebut any of its assertions. The Amended Complaint and Plaintiff's Response to the Defendants' Motion to Dismiss fails to acknowledge that the Eleventh Circuit requires the term "transact business" to be "interpreted literally," and requires the defendant to have "purposefully done some act or consummated some transaction in [Georgia] . . ."
Plaintiff's arguments regarding why personal jurisdiction should be exercised over ASI are largely based on ASI's relationship with JDD, or on the fact that ASI delivered products into the stream of commerce that were ultimately sold in Georgia. For instance, Plaintiff insists that JDD is merely acting on behalf of ASI as its agent because a document entitled "Retail Distribution Agreement" [RDA] states that retailers "must agree with ASI's values and business policies, which are non-negotiable. Additionally, [ASU], [JDD], and the stockists agree to form an `advertising cooperative' in which all parties agree to pool contributions to share the cost of advertising ASI's products in the U.S." Pl.'s Resp. to Mot. to Dismiss at 8.
The RDA is an agreement "entered into by and between [JDD]" and the retailers.
Plaintiff next argues that the Court can exercise personal jurisdiction over ASI because its founder, Annie Sloan, conducted a workshop on painting in Georgia and autographed books for the audience. A nonresident corporation is not subject to personal jurisdiction simply because its founder entered Georgia in a personal capacity.
Plaintiff also asserts that the Court can exercise personal jurisdiction over ASI because its website provides a link to ASU's website, and when that link is accessed through ASI's website, consumers in Georgia can purchase ASI's products. It is undisputed that ASI does not directly sell its products to people within Georgia through its website. ASI merely advertises its products on its website, and directs viewers to visit its U.S. based distributor's website to purchase ASI's products. The long-arm statute does not permit the Court to exercise personal jurisdiction over ASI based on the operation of a passive website that provides information about its distributor.
The Court also concludes that the exercise of personal jurisdiction over ASI would not comport with the Due Process Clause. This is a classic "stream of commerce" case that involves an upstream manufacturer that delivers its products through distributors and retailers in the United States, and the product ends up in the forum state to become the subject of a potential cause of action. ASI licenses its products to JDD in the United States. JDD does not conduct its business under the direction and guidance of ASI. ASI "has no control over which local retailers in a particular state conduct business with [JDD]." Manuel Aff. at ¶ 12. These are the only facts that can be gleaned from the Amended Complaint to analyze whether the Court can exercise personal jurisdiction over ASI, and they are insufficient to confer specific jurisdiction under the Due Process Clause.
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ASI's minimum contacts with Georgia that are alleged in the Amended Complaint are even weaker than the minimum contacts alleged in
The law governing motions to dismiss pursuant to Rule 12(b)(6) is well-settled. Dismissal of a complaint is appropriate "when, on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action."
In considering a motion to dismiss, the Court accepts the plaintiff's allegations as true and considers the allegations in the complaint in the light most favorable to the plaintiff.
To state a claim for relief that is plausible, the plaintiff must plead factual content that "allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Plaintiff seeks a declaration that "CHALK PAINT®" is merely a descriptive, generic term, and is thus not inherently distinctive, allowing it to be protected under federal trademark law. This argument is principally based on Plaintiff's opinion that "CHALK PAINT®" "is the generic name for paint that includes chalk as an ingredient and/or that dries to a flat, chalky finish." Am. Compl. at ¶ 34. Plaintiff further argues that "CHALK PAINT®" is a term of art in the arts and crafts industry "that also describes a paint commonly made from limestone, or similar natural substances and that dries to a flat, chalky finish."
Under Section 7(b) of the Lanham Act, a certificate of registration issued by the USPTO is "prima facie evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce or in connection with the goods and services specified in the certificate." 15 U.S.C. § 1057(b). A registered trademark is strongly presumed to be valid.
There is no dispute that ASI has obtained two trademark registrations from the USPTO for the "CHALK PAINT®" brand. Registration of the mark provides the Defendants with a "presumption that the mark is not merely descriptive or generic, or, if merely descriptive, is accorded secondary meaning. This presumption may, of course, be overcome by proof of descriptiveness, or by proof of genericness."
Plaintiff contends that it has offered sufficient proof that the "CHALK PAINT®" mark is generic because the USPTO initially rejected ASI's application because it found the term to be "merely descriptive." This fact is not relevant because the applications to register "CHALK PAINT®" in standard character and stylized forms were ultimately approved by the USPTO.
Even if the Court assumes that "CHALK PAINT" is a generic term that merely describes the nature and ingredients of paint products, the Plaintiff acknowledges that ASI's application was approved based on the claim that ASI's "use in commerce of the CHALK PAINT mark has been substantially exclusive and continuous" to constitute "acquired distinctiveness" in the paint industry. Resp. to Mot. to Dismiss at 10 (referencing ASI's Section 2(f) Declaration filed in connection with the successful registration of the "CHALK PAINT®" mark). In other words, Plaintiff acknowledges that ASI's claim to the "CHALK PAINT®" mark is based on acquired distinctiveness, "by becoming associated in the minds of the public with the products and services offered by the proprietor of the mark. . ."
The Amended Complaint fails to allege facts to support that "CHALK PAINT®" has not acquired distinctiveness by becoming associated with ASI's brand name or products. "Whether a name has attained secondary meaning depends on the length and nature of the name's use, the nature and extent of advertising and promotion of the name, the efforts of the proprietor to promote a conscious connection between the name and the business, and the degree of actual recognition by the public that the name designates the proprietor's product or service."
Federal Rule of Civil Procedure 9(b) requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally."
The particularity requirement "serves an important purpose in fraud actions by alerting defendants to the precise misconduct with which they are charged and protecting defendants against spurious charges of immoral and fraudulent behavior."
Under 15 U.S.C. §1120, any person who registers a trademark "by a false statement or fraudulent declaration or representation" may be liable in a civil action. 15 U.S.C. §1120. Under 15 U.S.C. §1064(3), a party may petition to cancel a registered trademark if the "registration was obtained fraudulently." 15 U.S.C. § 1064(3). "Fraud occurs when an applicant knowingly makes false, material representations of fact in connection with an application for a registered mark."
To establish a prima facie case of fraud, a party must show that: (1) the challenged statement was a false representation regarding a material fact; (2) the registrant knew the representation was false; (3) the registrant intended to deceive the USPTO; (4) the USPTO reasonably relied on the misrepresentation; and (5) the party suffered damages proximately resulting from such reliance.
Plaintiff argues that "upon information and belief, ASI knew that the term chalk paint had a significance and was a term of art in the paint industry when ASI filed its June 26, 2012 response to the USPTO's December 27, 2011 office action." Am. Compl. at ¶ 52. This conclusory claim is based on conjecture and speculation. The Amended Complaint does not allege any facts to show that "chalk paint" was a "term of art" in the paint industry, and it does not allege any facts to suggest that ASI knew that "chalk paint" was a "term of art."
The Amended Complaint further asserts that "the evidence will show that ASI knew that its products containing the mark, `alone' were not `exclusive[ly] and continuous[ly] use[d] in commerce for at least five years immediately before the date . . .' of its Section 2(f) Declaration." Am. Compl. at ¶ 53. In other words, Plaintiff expects (or maybe hopes) that it will uncover evidence of fraud during discovery, but acknowledges that it currently does not have any evidence that ASI made a fraudulent representation to the USPTO. This is precisely the type of litigation behavior that Rule 9(b) was designed to prevent.
The Amended Complaint fails to allege that ASI knowingly made a material misrepresentation in connection with the registration of the "CHALK PAINT®" mark. It also fails to allege any facts that ASI intended to deceive the USPTO. Plaintiff's fraud claim further fails to comply with the requirements of specificity and particularity demanded by Rule 9(b) of the Federal Rules of Civil Procedure.
In its Response to the Motion to Dismiss, Plaintiff, for the first time, raises additional arguments to support its fraud claims. These arguments are not based on facts alleged in the Amended Complaint. The arguments raised in the Plaintiff's Response are not relevant to the current dispute, and even if they were relevant, they are not properly before the Court and the Court will not consider them.
The Defendants' Motion to Dismiss Plaintiff's fraud claims is granted, and Count II and III of the Amended Complaint are dismissed.
Section 43(a) of the Lanham Act prohibits unfair trade practices involving infringement of trade dress, service marks, or trademarks, even if the mark has not been registered.
Regarding the second element, the Eleventh Circuit considers seven factors in assessing whether or not the "likelihood of confusion" exists: "(1) the type of mark (in short, whether the `relationship between the name and the service or good it describes' is such that the chosen name qualifies as generic, descriptive, suggestive, or arbitrary); (2) the similarity of the marks (based on `the overall impressions that the marks create, including the sound, appearance, and manner in which they are used'); (3) the similarity of the goods (`whether the products are the kind that the public attributes to a single source'); (4) the similarity of the parties' retail outlets, trade channels, and customers (`consider[ing] where, how, and to whom the parties' products are sold'); (5) the similarity of advertising media (examining `each party's method of advertising' to determine `whether there is likely to be significant enough overlap' in the respective target audiences such `that a possibility of confusion could result'); (6) the defendant's intent (determining whether the defendant had a `conscious intent to capitalize on [the plaintiff's] business reputation,' was `intentionally blind,' or otherwise manifested `improper intent'); and (7) actual confusion (that is, whether there is evidence that consumers were actually confused)."
The Amended Complaint fails to allege that Plaintiff adopted the "CHALK PAINT®" mark before ASI's use of the mark in connection with the marketing and sale of its paint additive powder. The Amended Complaint acknowledges that ASI has used the term "CHALK PAINT®" from at least October 2003," but it does not specify when or how Plaintiff adopted the use of "CHALK PAINT®" to market and sell its products. Plaintiff alleges that ASI authorized the use of ASI's new logo in April, 2013, implying that Plaintiff's logo was created before April, 2013. Plaintiff, however, does not specify in its Amended Complaint when it created the "WEBSTERS CHALK PAINT POWDER" logo.
To the extent Plaintiff claims it was entitled to place an ordinary geometric shape in its logo before ASI adopted its new logo in April, 2013, "circles, ovals, squares etc., even when not used as background for other marks, are regarded as nondistinctive and protectable only upon proof of secondary meaning."
Plaintiff has failed to allege that the geometric shape of its logo is protectable because it acquired a secondary meaning, and the Amended Complaint does not allege facts that suggest Plaintiff had prior rights to the "CHALK PAINT®" mark. The Complaint also fails to address any of the seven factors identified by the Eleventh Circuit to determine whether ASI's registered mark is confusingly similar to plaintiff's claimed mark. The Defendants' Motion to Dismiss Plaintiff's Lanham Act claim for trademark infringement is granted.
On December 3, 2013, Plaintiff moved to strike the Defendants' Reply to its Response to the Motion to Dismiss. Plaintiff argues that the Reply was untimely under Local Rule 7.1C because it was not filed within fourteen (14) days after service of Plaintiff's Response to the Motion to Dismiss.
Rule 6(d) of the Federal Rules of Civil Procedure provides a party with an additional three days to respond when electronic service is made.
Accordingly, for the foregoing reasons,
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.