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Aktieselskabet AF 21. November 2001 v. Fame Jeans

June 7, 2007

AKTIESELSKABET AF 21. NOVEMBER 2001, PLAINTIFF,
v.
FAME JEANS, INC., DEFENDANT.



The opinion of the court was delivered by: Royce C. Lamberth, United States District Judge,

MEMORANDUM OPINION

This matter comes before the Court on the defendant's Motion to Dismiss [25] the plaintiff's Amended Complaint [20]. The Court has considered the defendant's motion, the plaintiff's opposition thereto, the defendant's reply, the plaintiff's surreply, and the applicable law. For the reasons set forth below, the defendant's motion is hereby GRANTED.

BACKGROUND

Since 1990, Bestseller A/S, a Danish clothing company, has used several variations of the "Jack and Jones" trademark outside the United States and has registered them in over thirty countries. (Pl.'s Am. Compl. 1-7). Plaintiff Aktieselskabet af 21. November 2001 ("Bestseller"), a wholly-owned Bestseller A/S affiliate, presently holds its rights and interests in these trademarks. (Pl.'s Am. Compl. 1-2.)

On January 9, 2004, defendant Fame Jeans, Inc. ("Fame Jeans"), a Canadian clothing company, filed an intent-to-use application with the United States Patent and Trademark Office ("USPTO") under 15 U.S.C. § 1051(b) ("Section 1(b)") to register the "Jack and Jones" mark for use on certain clothing items*fn1 in the United States. (Mem. Supp. Def's Renewed Mot. to Dismiss 2.) On December 6, 2004, Bestseller applied under 15 U.S.C. § 1126(e) ("Section 44(e)") to register the "Jack and Jones" mark for use on a nearly-identical set of clothing items. (Pl.'s Am. Compl. 10). Bestseller also opposed Fame Jeans's application before the Trademark Trial and Appeal Board ("TTAB") pursuant to 15 U.S.C. § 1063(a), claiming the close resemblance between the mark for which Fame Jeans had applied and its own previously used and applied-for mark would likely cause confusion in the marketplace.*fn2 Aktieselskabet AF 21. November 2001 v. Fame Jeans, Inc., 77 U.S.P.Q.2d 1861, 1863 (T.T.A.B. 2006). Because the parties agreed they sought to register identical marks for use on identical or highly similar products, their dispute centered on who could claim superior rights to register the mark for use in the United States. Id. at 1862-63.

On January 30, 2006, the TTAB issued a Decision that granted Fame Jeans's motion for summary judgment, denied Bestseller's cross-motion, and dismissed Bestseller's Opposition with prejudice. Id. at 1863, 1864. Specifically, the TTAB found no genuine issue as to priority of use between the parties because Bestseller did not claim it had used the mark in the United States, and under 15 U.S.C. § 1057(c) ("Section 7(c)"), Fame Jeans could rely on its earlier application date as a constructive use date. Id. at 1864. According to the TTAB, Bestseller's use of the mark abroad was irrelevant to trademark right priority, which depends only on priority of use in the United States. Id. (citing 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 29.02 (4th ed. 2005)). Finally, the TTAB noted that Bestseller did not claim that its mark was "famous" under the Paris Convention. Id. Because Bestseller could not, as a matter of law, establish priority, the TTAB dismissed its Opposition with prejudice. Id.

On March 30, 2006, Bestseller filed a complaint [1] in this Court pursuant to 15 U.S.C. § 1071(b)(1) seeking, inter alia, vacation of the TTAB's January 30, 2006 Decision, denial of Fame Jeans's registration application, and judgment that Bestseller is entitled to register the "Jack and Jones" mark. (Pl.'s Compl. 5.) On July 13, 2006, Fame Jeans filed a motion [9] and accompanying memorandum of law seeking dismissal of Bestseller's complaint for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). Bestseller subsequently filed an opposition [16], and Fame Jeans replied [18].

On August 30, 2006, Bestseller moved to amend its complaint [19] and filed both a memorandum of law accompanying the motion [20] and an amended complaint [20]. Fame Jeans then renewed its motion to dismiss [25] and submitted a supporting memorandum of law [25]. On October 10, 2006, the Court granted Bestseller leave to amend [26], dismissed Fame Jeans's original motion as moot, and ordered Fame Jeans's renewed motion deemed timely filed. Bestseller renewed its opposition [28] on October 13, 2006, and Fame Jeans replied [30] on November 2. Finally, on March 27, 2007, Bestseller sought permission to file a surreply [32] and filed both a surreply [32] and accompanying memorandum of law [32].

DISCUSSION

I. Legal Standard under Rule 12(b)(6).

Defendant has moved to dismiss plaintiff's amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Def.'s Renewed Mot. to Dismiss 1.) Hence, the Court must determine whether the challenged complaint adequately states a claim on which relief may be granted. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982). As a general matter, the Federal Rules require only that a plaintiff provide "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. Pro. 8(a)(2)). Further, in measuring a complaint against this standard, the court must construe all allegations therein and draw all reasonable inferences in the complainant's favor. Scheuer, 416 U.S. at 23; U.S. ex rel. Harris v. Bernad, 275 F. Supp. 1, 5 (D.D.C. 2003). Indeed, until quite recently, courts adhered to the rule that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46 (emphasis added).

This term, however, in an antitrust case brought under the Sherman Act, the U.S. Supreme Court readdressed pleading requirements under the Federal Rules. See Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955 (2007). While a complaint need not plead "detailed factual allegations," the factual allegations it does include "must be enough to raise a right to relief above the speculative level." Id. at 1964-65. As the Court observed, Federal Rule of Civil Procedure 8(a)(2) requires a "showing" that the pleader is entitled to relief, a substantive threshold not achieved by conclusory assertions. Id. at 1965 n. 3. Though such assertions may provide a defendant with the requisite "fair notice" of the nature of a plaintiff's claim, only factual allegations can clarify the "grounds" on which that claim rests. Id. Though the Twombly plaintiffs' complaint included factual details of the defendants' independent non-competitive conduct, it failed to allege any facts compelling the inference that this conduct arose from an agreement among the defendants not to compete. Id. at 1965. The Court ultimately affirmed the district court's dismissal of the complaint, holding that plaintiffs had "not nudged their claims across the line from conceivable to plausible." Id. at 1974.

Although the plaintiffs agreed, in theory, with the need for plausibility, they argued their complaint satisfied Conley's "no set of facts" standard. Id. at 1968. Because conspiracy was one possible explanation for the defendants' parallel conduct, the plaintiffs were owed an opportunity to discover and prove a supportive "'set of facts . . . which would entitle [them] to relief.'" Id. But the Court declared this reading of Conley was too literal. Id. Indeed, such a rule would permit "a wholly conclusory statement of claim [to] survive a motion to dismiss whenever the pleadings left open the possibility that a plaintiff might later establish some 'set of [undisclosed] facts' to support recovery." Id. (alteration in original). Rather, Conley's phrasing was but "an incomplete, negative gloss on an accepted pleading standard: once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Id. at 1969.

II. Analysis under Rule 12(b)(6).

In Count I of its amended complaint, Bestseller seeks reversal of the TTAB's decision dismissing its Opposition, asserting that 1) Bestseller's later-in-time application under Section 44(e) takes priority over Fame Jeans's application under Section 1(b); 2) "Bestseller has superior equitable claims to register 'Jack & Jones' in the United States based on its longstanding and widespread use of the mark, in contrast with Fame Jeans, which has never used the mark anywhere;" and 3) Bestseller intends to submit new evidence not presented to the TTAB. (Pl.'s Am. Compl. 13.) In Count II, Bestseller contends Fame Jeans's application was void ab initio because Fame Jeans lacked a bona fide intention to use the mark when it applied for registration. (Pl.'s Am. Compl. 14.) In Count III, Bestseller asserts a claim for misrepresentation based on Fame Jeans's alleged false statements in its application to the USPTO. (Pl.'s Am. Compl. 14-15.)

The Court must now test whether Bestseller has adequately pled any or all of these claims.

A. Count I: Request for Reversal Under Section 21 of Lanham Act

When a "party to an opposition proceeding . . . is dissatisfied with the [TTAB's] decision," the Lanham Act permits that party to appeal to the United States Court of Appeals for the Federal Circuit or to bring a civil action in federal district court. 15 U.S.C. § 1071(a), (b) (2007). In the latter case, the district court acts as an appellate court to the TTAB and applies a hybrid standard of review, affording deferential treatment to the TTAB's factual findings but confronting legal questions de novo. Mitchell Cosmetics SARL v. Pramil S.R.L. (Esapharma), No. 04-1557, 2005 WL 2373371, at *2 (D.D.C. Aug. 29, 2005) (citing Material Supply Int'l, Inc. v. Sunmatch Indus. Co., 146 F.3d 983, 989-90 (D.C. Cir. 1998)). Though the district court may consider new evidence, it may not entertain claims or legal theories not presented to the TTAB. Gold Seal Co. v. Weeks, 129 F. Supp. 928, 937 (D.D.C. 1955) (citing Lucke v. Coe, 69 F.2d 372 (D.C. Cir. 1934); Cherry-Burrell Corp. v. Coe, 143 F.2d 372 (D.C. Cir. 1944)). When, as here, an adverse party resides in a foreign country, jurisdiction lies with the United States District Court for the District of Columbia. 15 U.S.C. § 1071(b)(4). Thus, this Court's jurisdiction is proper as to those legal theories Bestseller argued before the TTAB.

Bestseller's complaint alludes to three alternative bases for reversal of the TTAB's adverse priority finding: 1) as a matter of law, absent actual use in the United States by either applicant, a Section 44(e) application takes priority over a previously filed Section 1(b) application; 2) when Fame Jeans applied, Bestseller had already acquired superior common law rights in the "Jack & Jones" mark through use in commerce in the United States; and/or 3) Bestseller's use of the "Jack & Jones" mark abroad had rendered that mark "famous" before Fame Jeans filed its application. (See Pl.'s Am. Compl. 2-15.) The complaint also pleads "superior equitable claims" and "new evidence" as grounds for review. (Pl.'s Am. Compl. 13.) The Court will examine each theory in turn.

1. Priority

a. Priority as a Matter of Law under Section 44(e)

Bestseller's complaint asserts: Fame Jeans applied under Section 1(b) to register the "Jack & Jones" mark on January 9, 2004, (Pl.'s Compl. 10); Bestseller applied under Section 44(e) to register the "Jack & Jones" mark on December 6, 2004, (id.); and "[b]ased on its application under Section 44(e), Bestseller has priority to the Jack & Jones mark over Fame Jeans's application, which was filed under Section 1(b)," (id. at 13). These allegations state a basis on which this Court can vacate the TTAB's decision only if, as a matter of law, a Section 44(e) applicant may gain priority over an earlier-in-time Section 1(b) applicant.

"Use in commerce" has long been the sine qua non of trademark rights. See, e.g., 15 U.S.C. § 1051 (2007) (permitting trademark registration on the principal register based on "use[] in commerce" or "a bona fide intention . . . to use in commerce"); Trade-Mark Cases, 100 U.S. 82, 94 (1879) ("At common law, the exclusive right to [a trademark] grows out of its use, and not its mere adoption."); In re Application of Gorham Mfg. Co., 41 App. D.C. 263, 265 (D.C. Cir. 1913) ("[t]rademarks were recognized by the common law and are acquired by use"). Here, however, both plaintiff and defendant applied to register the "Jack & Jones" mark under statutory exceptions to this general rule. (Pl.'s Compl. 10.)

As amended in 1988, Lanham Act Section 1 offers U.S. applicants two options for trademark registration. 15 U.S.C. § 1051 (2007). Section 1(a) provides for registration when the applicant submits a verified statement specifying that "the mark is in use in commerce" and that "no other person has the right to use such mark[, or one so similar as to cause confusion in the marketplace,] in commerce." Id. § 1051(a). Section 1(b), however, provides that "[a] person who has a bona fide intention . . . to use a trademark in commerce may request registration of its trademark." Id. § 1051(b)(1) (emphasis added). In this latter case, the USPTO will publish the application for opposition, and unless an opponent succeeds, will issue a notice of allowance to the applicant. Id. ...


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