JOHN ANTOON II, United States District Judge.
Plaintiffs Spiral Direct, Inc. (`Spiral U.S.') and Spiral Direct, LTD. (`Spiral U.K.') (collectively, `Plaintiffs') filed a seven-count complaint against Defendant Basic Sports Apparel, Inc. ("BSA") arising from a dispute over the trademark `Spiral' on certain clothing. (See Am. Compl., Doc. 16). BSA moves to dismiss the Complaint, or, in the alternative, for a more definite statement of Counts Six and Seven. (Doc. 27). After considering the motion to dismiss, the alternative motion, and Plaintiffs' response (Doc. 35), I conclude that the motions must be denied.
Plaintiffs are related companies with overlapping management and are in the business of manufacturing and distributing "Gothic" style clothing bearing the mark "Spiral" in a distinctive script ("Plaintiffs' mark"). (Am. Compl. at 3). Spiral U.K.'s immediate predecessor-in-interest is Spiral Design Partnership, which began selling clothing in the U.S. in 1993, and over the internet in 1997. (Id. at 3-4). In 1999, Spiral U.K. wholly acquired its predecessor. (Id.).
On January 22, 2015, Plaintiffs received a cease and desist letter from BSA's attorney. (Am. Compl. at 4). The letter informed Plaintiffs that on January 19, 1999, the United States Patent and Trademark Office ("USPTO") issued BSA a trademark under U.S. Registration No. 2,218,515 for the mark "Spiral" on various items of clothing ("BSA mark"). (Id.). In its registration application, BSA stated that it first used the mark on June 15, 1997. (Id.). The letter further claimed that Plaintiffs' "actions constitute trademark infringement and unfair competition under both state and federal law, including the Lanham Act," (Ex. C to Am. Compl., Doc. 16-3), and requested that Plaintiffs "discontinue any and all use of the [i]nfringing [t]rademark with the marketing, sale, distribution, or identification of products or services," (id.). It further stated that "my client has instructed me to file suit unless you respond promptly and appropriately to this demand." (Id.).
BSA owns and operates a business that manufactures clothing for sporting retailers that is sold under the trademarks of those third-party retailers. (Id. at 5). Plaintiffs allege that "BSA may manufacture a few [goods bearing the BSA mark, but] only ... by using the remaining fabric from a particular job order." (Id.). BSA "does no publicity, marketing, or advertising" for any goods bearing the BSA mark, and only sells a "very limited quantity of a very limited number of items ... set forth in (their trademark registration]." (Id.). Plaintiffs allege that at the time BSA applied for its trademark, it should have known that Plaintiffs' predecessor was using Plaintiffs' mark in commerce in the United States as early as 1993. (Id.). For that reason and others, Plaintiffs allege that BSA fraudulently obtained its trademark from the USPTO.
Under these circumstances, Plaintiffs sued BSA for (i) declaratory judgment of non-infringement under the Lanham Act (Count 1); (ii) declaratory judgment that BSA's claims are barred by the doctrine of laches (Count 2); (iii) declaratory judgment of invalidity of BSA's registered
Generally, "(a) pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ.P. 8(a)(2). "[D]etailed factual allegations" are not required, but "[a] pleading that offers `labels and conclusions' or `a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. lqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). At the motion to dismiss stage, a court must evaluate all plausible inferences derived from the facts of the complaint in favor of the plaintiff. Whitwam v. JetCard Plus, Inc., 34 F.Supp.3d 1257, 1259 (S.D.Fla.2014). One caveat to the general pleading standard of Rule 8 is that "[i]n alleging fraud.... a party must state with particularity the circumstances constituting fraud." Fed. R. Civ.P. 9(b). In considering a motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6), a court limits its "consideration to the well-pleaded factual allegations, documents central to or referenced in the complaint, and matters judicially noticed." La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir.2004).
BSA argues that Plaintiffs' First Amended Complaint is a "shotgun pleading." The purpose of the rule against shotgun pleadings is to ensure that a complaint gives "defendants adequate notice of the claims against them and the grounds upon which each claim rests." Weiland v. Palm Beach Cty. Sheriffs Office, 792 F.3d 1313, 1323 (11th Cir.2015). The Eleventh Circuit condemns the practice of incorporating all preceding allegations in each successive count because it "lead[s] to a situation where most of the counts (i.e., all but the first) contain irrelevant factual allegations and legal conclusions." Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305 F.3d 1293, 1295 (11th Cir.2002). Here, although Plaintiffs incorporate paragraphs 1 through 37 in each of their seven counts, "(t]he allegations of each count are not rolled into every successive count on down the line." Weiland, 792 F.3d at 1324. Plaintiffs' re-alleging of paragraphs 1 through 37 in each count is permissible so long as it does not "materially increase[] the burden of understanding the factual allegations underlying each count." Id. Paragraphs 1 through 37 of the Complaint set forth the background allegations of Plaintiffs' claims and are not so voluminous, overlapping, or confusing that they materially increase the burden of understanding the grounds upon which Plaintiffs' claims rest. Therefore, BSA's motion must be denied on this ground.
Regarding Plaintiffs' claim for a declaration of non-infringement, BSA argues
Times Newspapers, Ltd. v. Times Publ'g Co., No. 92-1435-CIV-T-15(A), 1993 WL 120614, at *3 (M.D.Fla. Jan. 13, 1993). Where a plaintiff holds only a common law trademark, as Plaintiffs allege that they do, "the scope of protection accorded [their] mark is coextensive only with the territory throughout which it is known and from which it has drawn its trade." Tana v. Dantanna's, 611 F.3d 767, 780 (11th Cir.2010).
Plaintiffs have sufficiently pleaded each of the three elements of the "prior use" defense. As to the first element, Plaintiffs allege they "have been selling and offering for [sale] some or all of the [goods bearing the Spiral mark] in the [U.S.] under one or more of [their common law trademarks] since at least as early as 1993" — six years before BSA was issued its registered trademark in 1999. (Am. Compl. at 3-4). This satisfies the requirement that Plaintiffs obtained the trademark before BSA. Further, the allegation that Plaintiffs sold their products in the United States can reasonably be construed to mean that the geographic scope of their common law trademark extends to each state in which BSA sells the goods at issue. Finding otherwise would require a factual determination that cannot be made at this stage.
As to the second element, Plaintiffs allege that they "have been using one or more of their [trademarks] in the [U.S.] since at least 1993." (Id. at 10 (emphasis added)). Accepted as true, Plaintiffs' "use" of their trademark since 1993 can be reasonably understood as continuous use. And finally, Plaintiffs sufficiently allege that they were selling the same goods at issue.
In Count Two, Plaintiffs seek a declaration that BSA's infringement claims
Plaintiffs have sufficiently pleaded laches. As to the first element of "delay," Plaintiffs allege that BSA's claims of infringement were asserted "twenty-two ... years after [Plaintiffs] first commenced use of [their common law trademarks] in the [U.S.], and ... eighteen ... years after BSA allegedly began use of [its registered trademark]." (Am. Compl. at 10). As to the second element of "inexcusable delay," Plaintiffs allege that "[BSA] knew, or should have known, that Plaintiffs were using their [common law trademarks] in the [U.S.] long before [BSA] first started using its [registered trademark] and long before [BSA] sent the [cease and desist letter]." (Id. at 11). Finally, as to the third element of "undue prejudice," Plaintiffs allege that they "have been using [their common law trademarks] in the United States since 1993[;]" have "enjoyed uninterrupted use over that [twenty-two] year period[;]" and "have come to rely on their ability to use [their trademark] ... without interference from BSA." (Id. at 10). It is reasonable to infer that Plaintiffs' longtime reliance on their previously unchallenged trademark caused them undue prejudice. (See id. at 11 ("[BSA's] inexcusable delay in failing to assert its purported rights in [their registered trademark] against [Plaintiffs] has caused, and continues to cause, prejudice and damage to the [Plaintiffs]."). Therefore, BSA's motion fails on this ground.
Plaintiffs allege in Count Three that BSA abandoned its trademark. "Under the Lanham Act, a trademark is deemed abandoned, and thus no longer valid, `[w]hen its use has been discontinued with intent not to resume such use.'" Nat. Answers. Inc. v. SmithKline Beecham Corp., 529 F.3d 1325, 1329 (11th Cir. 2008) (quoting 15 U.S.C. § 1127). There is prima facie evidence that the trademark is abandoned where a trademark is unused for three years. Id. at 1329-30. Here, Plaintiffs allege that "BSA owns and operates a clothing business in El Paso, [Texas] manufacturing private-label[] clothing... to be sold under the trademarks of various [sporting goods] retailers" and that it produces goods under its own trademark "only sporadically, if at all, by using the remaining fabric from a particular job order." (Am. Compl. at 5). "[I]f and to the extent that it sells any [goods under its trademark], BSA only sells a very limited quantity [and] number of items listed in the description [of its trademark registration]." (Id.). Further, "BSA does not use, and has not used, [its registered trademark] on all of the [the goods] listed in its [trademark registration]." (Id. (emphasis in original)). Accepted as true, it is reasonable to infer that BSA's inconsistent manufacturing practices have left large enough gaps in its production of goods to constitute abandonment under the Lanham Act. Therefore, BSA's motion is due to be denied on this ground,
In Count Four, Plaintiffs allege that BSA committed fraud on the USPTO.
Fraud in obtaining a trademark occurs "when an applicant knowingly makes false, material representations of fact in connection with an application" or in a verified declaration. Metro Traffic Control. Inc. v. Shadow Network Inc., 104 F.3d 336, 340 (Fed.Cir.1997). In stating a claim of fraud, Federal Rule of Civil Procedure 9(b) requires that a complaint set forth (1) precisely what statements were made, (2) the time and place of each statement and the person responsible for the same, (3) the content of such statements and how they misled the plaintiff, and (4) what the defendants gained through the fraud. Ziemba v. Cascade Int'l. Inc., 256 F.3d 1194, 1202 (11th Cir.2001).
Plaintiffs sufficiently state a claim for fraud. The Complaint references BSA's application for a registered trademark, wherein the vice president of BSA stated that "to the best of his knowledge and belief, no other person, firm, corporation or association has the right to use the... mark in commerce either, in the identical form thereof or in such near resemblance thereto as to be likely, when used on or in connection with the goods or services of such other person, to cause confusion, or to cause mistake, or to deceive," (Ex. B to Am. Compl., Doc. 16-4, at 4). Plaintiffs allege, however, that Plaintiffs were selling and distributing their trademarked products in the United States in 1993 and over the internet in 1997, (Am. Compl. at 3-4), and that several years passed before BSA applied for its registered trademark with the USPTO in 1999, (Id. at 4). Plaintiffs further allege that BSA knew or should have known at the time it filed its application that Plaintiffs, through their predecessor, were already using the Spiral trademark in commerce in the United States. (Id. at 6). Paragraphs 18-23 of the Complaint further allege that BSA does not make and sell products bearing the BSA mark to the extent represented in the application.
BSA argues that because the Lanham Act does not provide a statute of limitations for actions of fraud, the court must look to the analogous state limitations period. (Mot. to Dismiss at 11 (citing Beauty Time, Inc. v. VU Skin Systems, Inc., 118 F.3d 140, 143 (3d Cir.1997) (applying Pennsylvania's two-year statute of
BSA alleges that Plaintiffs' final three claims for unfair competition under federal and Florida law should be dismissed because: (i) Spiral U.S. does not have standing to bring the claims, (ii) the claims are pled insufficiently, (iii) the claims are barred by the statute of limitations and laches, and (iv) there is insufficient factual detail in Counts Six and Seven. BSA alternatively seeks a more definite statement as to Counts Six and Seven. As a preliminary matter, the analysis for unfair competition and trademark infringement under the Lanham Act (Count 5), the Florida Deceptive and Unfair Trade Practice Act (Count 6), and Florida common law (Count 7) is the same. Suntree Techs., Inc. v. Ecosense Int'l, Inc., 693 F.3d 1338, 1345 (11th Cir. 2012). Therefore, the analysis in this section applies to each of Counts Five through Seven unless noted otherwise.
BSA argues that because only Spiral U.K. owns the common law trademark at issue, Spiral U.S. does not have standing to bring the claims for unfair competition. Generally speaking, section § 1125(a) "affords relief to any plaintiff who shows the requisite injury from defendant's infringing conduct, without regard to any ownership interest the plaintiff may have in the trademark." See Kroma Makeup EU, Ltd. v. Boldface Licensing + Branding, Inc., No. 6:14-cv-1551-Orl-40GJK, 2015 WL 1708757, at *6 (M.D.Fla. Apr. 15, 2015). Therefore, contrary to BSA's position, the fact that Spiral U.S. does not own the trademark or hold an exclusive license is not determinative.
To have standing to bring a claim under the Lanham Act, a plaintiff must have both constitutional and statutory standing. Lexmark Int'l, Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 1387-88, 188 L.Ed.2d 392
Here, Spiral U.S. falls within the zone of interests protected by the Lanham Act and also sufficiently pleads that its injuries were proximately caused by the infringing conduct of BSA. Spiral U.K. manufactures and distributes goods bearing its trademark to Spiral U.S., which then sells those goods to purchasers in the United States. (Am. Compl. at 3). Spiral U.S. may also sell the goods to third parties within the U.S. (Id.). Moreover, Spiral U.S. and the trademark's owner, Spiral U.K., are "related companies having overlapping management." (Id.). From these facts alone, it is clear that Spiral U.S. has a cognizable commercial interest in the reputation or sales of the products bearing Plaintiffs' mark.
As to proximate cause, Plaintiffs and BSA both sell their products in the United States under similar Spiral trademarks. (Id. at 12). BSA's cease and desist letter stated that Plaintiffs "were engaged in federal trademark infringement and unfair competition, resulting in actual confusion, loss of good will, [and] damage to reputation." (Id. at 12-13). Mirroring the proximate causation allegations set forth in BSA's cease and desist letter, Plaintiffs simply counter that due to their prior use of the Spiral trademark, Plaintiffs are the superior trademark owner and that BSA's "continued use of [its mark] appears to have been utilized with the intent to cause confusion, mistake, and deception, which has caused and will continue to cause material and irreparable harm to [Plaintiffs' common law trademark]." (Id. at 13). These allegations are sufficient to assert that the alleged harm Spiral U.S. suffers is not too remote from BSA's alleged infringement. See Kroma, 2015 WL 1708757, at *4 ("At the pleadings stage, general factual allegations which show that a plaintiff has standing are sufficient to meet [the] burden."). Therefore, Plaintiffs have standing to bring their claims.
BSA argues that Plaintiffs fail to sufficiently plead that they have "prior use" common law trademark rights. Specifically, BSA argues that Plaintiffs do not sufficiently allege that they have engaged in continuous use of their trademarks in each of the states or territories in which they sell their goods and Plaintiffs have not alleged facts showing a likelihood of confusion or actual harm. As to the first contention, I discussed above that Plaintiffs have sufficiently pled their continuous use of their common law trademark. See supra section III.B. That discussion likewise applies to Counts Five through Seven.
As to BSA's second contention, viewing the allegations of the Complaint as a whole Plaintiffs sufficiently allege a likelihood of confusion or actual harm. To establish a prima facie case of unfair competition under § 1125(a), Plaintiffs must show that BSA "made unauthorized use of [Plaintiffs' enforceable trademark right] such that consumers were likely to confuse the two." Custom Mfg. & Eng'g, Inc. v. Midway Servs., Inc., 508 F.3d 641, 647 (11th Cir.2007) (internal quotation and citation omitted). Drawing all plausible inferences in favor of Plaintiffs, BSA's use of the Spiral trademarks in the manufacturing, distributing, and selling of various items of clothing in overlapping geographical markets "could conceivably cause confusion" in customers. See Axelrod v. Heyburn, Civ. No. 09-5627, 2010 WL 1816245, at *2 (D.N.J. May 3, 2010) (finding sufficient factual allegations to survive a motion to dismiss where a defendant's "use of [a trademarked name on its website] could conceivably cause confusion as to whether the [defendant's website] was affiliated with the [plaintiffs company]"); see also Humboldt Wholesale, Inc. v. Humboldt Nation Distribution, LLC, No. C-11-4144 EMC, 2012 WL 2572065, at *5 (N.D.Cal. July 2, 2012) (noting that the important inquiry is not actual confusion but "whether customers are likely to be confused about the source or sponsorship of products"). Therefore, BSA's motion on this ground fails.
BSA argues that Plaintiffs claim of unfair competition in Count Five is barred by the doctrine of laches. As noted earlier, there are three elements to the defense of laches: "(1) a delay in asserting a right or a claim; (2) that the delay was not excusable; and (3) that there was undue prejudice to the party against whom the claim is asserted." Kason, 120 F.3d at 1203. Because laches is a fact-intensive affirmative defense, some courts consider it an "unsuitable basis for dismissal at the pleading stage." Pronman v. Styles, No. 12-80674-CIV, 2013 WL 3894978, at *5 (S.D.Fla. July 26, 2013). However, if the complaint on its face shows that the doctrine of laches bars relief, it "is subject to dismissal under Rule 12(b)(6)." Gwynn v. Rabco Leasing, Inc., No. 8:09-CV-2093-T-23TGW, 2010 WL 1408412, at *2 (M.D.Fla. Apr. 2, 2010) (citing Cottone v. Jenne, 326 F.3d 1352, 1357 (11th Cir. 2003)).
Delay in bringing a claim is correctly
Based on the facts alleged in the Complaint, it cannot be said that Plaintiffs delayed in bringing their claim; that if any delay existed, it was unreasonable; or that BSA was prejudiced by such delay. Plaintiffs allege "BSA does no publicity, marketing, or advertising for any of [its goods] bearing [the BSA mark]; BSA has "not used [its trademark] on all of [its goods]" and "only sells a very limited quantity [and] number of items listed in [its registration]." (Am. Compl. at 5 (emphasis omitted)). Based on these allegations, it is reasonable to infer that Plaintiffs were not aware of BSA or that they had a claim for infringement until they received BSA's cease and desist letter on January 22, 2015 — six months before they filed the instant action. It could also readily be inferred that BSA waited sixteen years to send its cease and desist letter because it recently became "more squarely in competition" with Plaintiffs, which could excuse any delay in Plaintiffs claim. Therefore, BSA's motion on this ground must fail.
Similar to its laches argument, BSA also argues that Plaintiffs' FDUTPA claim in Count Six is barred by the statute of limitations. The limitations period for a FDUTPA claim begins to run when Plaintiffs suffer actual damages. Sundance Apartments I, Inc. v. Gen. Elec. Capital Corp., 581 F.Supp.2d 1215, 1223 (S.D.Fla. 2008). In its motion, BSA fails to provide a date that Plaintiffs first suffered actual damages. Moreover, while Plaintiffs allege that they suffered "irreparable harm," they, too, fail to state when such harm was first experienced. Because both parties failed to allege a date that the claim accrued, the motion must be denied on this ground.
As discussed above, the analysis for a claim of unfair competition and trademark infringement under the Lanham Act is substantially similar to that under FDUTPA and Florida common law. Because I earlier determined that Count Five was sufficiently pled, and Counts Six and Seven incorporate the allegations of Count Five, the motion to dismiss Counts Six and Seven must also be denied.
BSA alternatively seeks a more definite statement of Counts Six and Seven. A motion for more definite statement is proper only "if a pleading ... is so vague or ambiguous that a party cannot reasonably prepare a response." Fed. R. Civ. P. 12(e). Furthermore, a motion for more definite statement is disfavored under the law and is "not to be used as a substitute for discovery." Coughlin v.
In accordance with the foregoing, BSA's Motion to Dismiss Amended Complaint (Doc. 27) is