Foremost Farms USA, Cooperative v. Diamond V Mills, Inc.

Brief in Reply

W.D. Wis.January 20, 2017

1 IN THE UNITED STATED DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN FOREMOST FARMS USA, COOPERATIVE, Plaintiff, v. DIAMOND V MILLS, INC., Defendant. No.: 3:16-CV-551 DEFENDANT DIAMOND V MILLS, INC.’S REPLY BRIEF MARK L. ZAIGER JASON R. SYTSMA DANA L. OXLEY SHUTTLEWORTH & INGERSOLL, PLC 115 3rd Street SE, Suite 500 P.O. Box 2107 Cedar Rapids, IA 52406-2107 Phone: 319-365-9461 Fax: 319-365-8443 E-mail: mlz@shuttleworthlaw.com jrs@shuttleworthlaw.com dlo@shuttleworthlaw.com and JEFFREY A. SIMMONS FOLEY & LARDNER, LLP 150 East Gilman Street, Suite 5000 Madison, WI 53703-1482 Phone: 608-258-4267 Fax: 608-258-4258 E-mail: jsimmons@foley.com ATTORNEYS FOR DEFENDANT DIAMOND V MILLS, INC. Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 1 of 18 2 Pursuant to Federal Rules of Civil Procedure 12(b)(6), Defendant, Diamond V Mills, Inc. (“Diamond V”), provides this Reply Brief in support of its Motion to Dismiss Plaintiff’s Amended Complaint. Table of Contents I. Introduction ........................................................................................................................ 2 II. Foremost Farms improperly attempts to avoid addressing the conclusory nature of its Amended Complaint by arguing that the Court should give it a chance to support its claims with discovery. ............................. 3 A. The Amended Complaint fails to allege facts to support its claim that its trademark rights extend to use on animal feed products. .................. 4 B. Likelihood of confusion requires pleading facts to support more than one of the seven factors. ........................................................................ 7 C. The differences between animal and human consumption are relevant to the likelihood of confusion analysis. .................................................... 10 III. The limited documents attached to Diamond V’s Motion to Dismiss are the promotional brochures taken directly from Foremost Farms’ own website as specifically referenced in its Amended Complaint. ............................................................................................... 12 IV. A cancellation claim under 15 U.S.C. § 1119 requires a pending action involving the registration sought to be cancelled. ..................................... 14 V. Conclusion ......................................................................................................................... 18 I. Introduction That the fact-intensive nature of the likelihood of confusion test for a trademark infringement claim “ordinarily does not lend itself to a motion to dismiss,” My Health, Inc. v. Gen. Elec. Co., No. 15-CV-80-JDP, 2015 WL 9474293, at *5 (W.D. Wis. Dec. 28, 2015) (emphasis added), necessarily means that sometimes it does. This is an extraordinary case. Plaintiff alleges that consumers are likely to confuse Foremost Farm’s Nutritek whey product for human consumption with Diamond V’s Nutritek nutritional supplements for animal consumption. Yet, Foremost Farm’s Resistance to Diamond V’s Motion to Dismiss is as conclusory as the allegations contained in its Amended Complaint. A critical consideration of the actual allegations made in the Amended Complaint makes clear that Foremost Farms alleged Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 2 of 18 3 nothing “’more than labels and conclusions, and a formulaic recitation of the elements of a cause of action,’” which this Court has made clear “will not do.” Id. at *2 (quoting Twombly, 550 U.S. at 555). Rather, “’[f]actual allegations must be enough to raise a right to relief above the speculative level.’” Id. Foremost Farms essentially argues that it is sufficient to state a claim for trademark infringement by alleging that two companies use the same word to sell powder-type products in similar sized bags to wholesale manufacturers to make edible products. This fails to rise above the speculative level, and Foremost Farm’s Amended Complaint should be dismissed.1 II. Foremost Farms improperly attempts to avoid addressing the conclusory nature of its Amended Complaint by arguing that the Court should give it a chance to support its claims with discovery. Diamond V merely asks-and the pleading Rules require-that Foremost Farms plead sufficient facts about its own use of the NUTRITEK mark to give Diamond V fair notice of its claims. Foremost Farms does not need discovery to obtain facts about its own product to plead in its Amended Complaint. “Abstract recitations of the elements of a cause of action and ‘naked assertion[s]’ devoid of ‘further factual enhancement’ are insufficient to satisfy the pleading requirements of Rule 8.” Glob. Total Office Ltd. P'ship v. Glob. Allies, LLC, No. 10 C 1896, 2011 WL 3205487, at *1 (N.D. Ill. July 28, 2011) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)). Foremost Farms pleaded its allegations so broadly and with such generalizations as to plead nothing more than the elements of its claims. For instance, that the parties both “interface” with the dairy industry (Dkt. 24 at 6, 23) is the type of conclusory argument that means nothing. Under this theory, manufacturers of conveyer belts sold to farmers to use in their 1 Foremost Farms requests as an alternative to dismissal that it be given leave to amend its Amended Complaint. (Dkt. 24 at 34.) While Rule 15 gives a plaintiff an opportunity to amend its complaint “once as a matter of course before being served with a responsive pleading,” Foster v. DeLuca, 545 F.3d 582, 583-84 (7th Cir. 2008) (quoting Fed. R. Civ. P. 15(a), Foremost Farms has already amended its Complaint in response to Diamond V’s first Motion to Dismiss, which was based on the same deficiencies noted in its Renewed Motion to Dismiss. Foremost Farms took advantage of Rule 15 and has still failed to make more than conclusory allegations to support its Amended Complaint. Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 3 of 18 4 dairy barns to feed cows could not use the word NUTRITEK because the conveyer belt is sold to dairy farmers, and therefore the manufacturer “interfaces” with the same industry as Foremost Farms. But this misses the point. Foremost Farms interfaces with the dairy industry because it is the dairy industry-it sells products from the dairy industry. Diamond V only interfaces with the dairy industry to the extent it sells its feed product to dairy farmers to feed their cows. The broad assertion that both parties “interface” with the dairy industry is just as conclusory as the allegations in its Amended Complaint. Diamond V adequately addressed the numerous deficiencies in Foremost Farms’ Amended Complaint in its opening brief, and addresses only some of the misleading arguments contained in Foremost Farms’ Resistance. A. The Amended Complaint fails to allege facts to support its claim that its trademark rights extend to use on animal feed products. Here, Foremost Farms alleges two theories: First, it has common law rights based on use of the Nutritek mark on products for animal consumption. Second, even though its federal registration is limited to whey for human consumption, it naturally extends to cover products for animal consumption. With respect to Foremost Farms’ allegations of a common law right to use the NUTRITEK mark on products for animal consumption, which is an allegation separate and distinct from its rights under its federal registration for whey for human consumption, Foremost Farms identifies paragraphs 53-56 and 59 of its Amended Complaint. Paragraph 56 can be ignored, as it is an unadorned conclusory statement that “Foremost Farms has acquired common law trademark rights.” See Uncommon, LLC v. Spigen, Inc., No. 15 C 10897, 2016 WL 3997597, at *4 (N.D. Ill. July 26, 2016) (“[A] party's status as a ‘senior user’ is a legal conclusion requiring factual proof. Simply alleging that you are the ‘senior user’ of the mark - Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 4 of 18 5 without facts to explain the conclusion − is not enough.”). Paragraph 54 is likewise of no assistance, alleging only that Foremost Farms’ NUTRITEK product “can be blended with other ingredients to produce animal feed.” (Dkt. 16 ¶ 54, emphasis added.) That the product “can be” mixed with other ingredients to make animal feed is not an allegation that it is actually used for animal consumption. This leaves only paragraphs 53, 55, and 59, which vaguely allege that Foremost Farms has “continuously sold its NUTRITEK dried whey to manufacturers,” etc., of animal feed products since 1995; that the NUTRITEK dried whey has been used in products for animal consumption since 1995; and that the NUTRITEK packaging does not change when it is sold for human consumption or for animal consumption. Common law protection under the Lanham Act requires bona fide use of a mark in the ordinary course of trade in interstate commerce. 15 U.S.C. §§ 1125, 1127; see also Specht v. Google Inc., 758 F. Supp. 2d 570, 586 (N.D. Ill. 2010) ((explaining use means “‘use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of [the adopter of the mark]”, quoting Johnny Blastoff, Inc. v. Los Angeles Rams Football Co., 188 F.3d 427, 433 (7th Cir.1999)), aff'd, 747 F.3d 929 (7th Cir. 2014). As here where Foremost Farms did not file a registration for its whey for animal consumption, the allegation of “continuous sales” does not meet the requirements for the type of use in interstate commerce that puts consumers or other producers on notice. In Zazu Designs, the Seventh Circuit held that “[a] few bottles sold over the counter in Hinsdale, and a few more mailed to friends in Texas and Florida, neither link the Zazú mark with zhd's product in the minds of consumers nor put other producers on notice.” Zazu Designs v. L'Oreal, S.A., 979 F.2d 499, 503 (7th Cir. 1992). As the Seventh Circuit explained, “use sufficient to register a mark that soon is widely distributed is not necessarily Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 5 of 18 6 enough to acquire rights in the absence of registration. … Liberality in registering marks is not problematic, because the registration gives notice to latecomers, which token use alone does not. Firms need only search the register before embarking on development.” Id. While Zazu Designs is a case involving summary judgment, it provides the demarcation of what is required to establish common law rights to enforce a trademark when a registration is not filed. It also demonstrates that Foremost Farms’ conclusory allegations that it has sold its NUTRITEK product since 1995 to “manufacturers, customers, and ultimately consumers”-without any additional factual allegations to show it has made the types of sales that put consumers or other producers on notice of its use in the animal feed industry-is insufficient to state a claim. Foremost Farms amended its complaint in response to Diamond V’s initial Motion to Dismiss, which raised these exact same deficiencies. It would have been simple for Foremost Farms to identify even generally who its customers are for its own NUTRITEK whey animal product, a general level of sales that exceed a few random sales, or some facts to support the conclusory allegations that it has sold its NUTRITEK product for use for animal feed in sufficient quantities or in a sufficiently public manner to acquire the alleged common law rights. Foremost Farms’ failure to do so is telling. In the same way, Foremost Farms provides only conclusory allegations to support its claims that products for animal consumption are closely related, or similar, to the goods covered by its federal registration for NUTRITEK. Foremost Farms argues only that it “alleged that Foremost’s dried whey product and Diamond V’s metabolite product are used in the same manner for the same purpose, namely as ingredients to be blended with other ingredients to form edible products.” (Resistance at 9 (emphasis added).) This could not be more conclusory. Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 6 of 18 7 Foremost Farms recognizes that the protections of its registered trademark extends only to “[c]losely related products” (Resistance at 8, citing CAE, Inc. v. Clean Air Eng'g, Inc., 267 F.3d 660, 679 (7th Cir. 2001)), but presents no allegations to support such a conclusion-only that its powder substance, sold in a large bulk bag, can be mixed with other ingredients to create an edible product. Under Foremost Farms’ theory, it could bring claims against any manufacturer of any product that is edible merely because both products are edible. Pleaded broadly enough, all products are related. This is clearly not the pleading standard. B. Likelihood of confusion requires pleading facts to support more than one of the seven factors. That Foremost Farms says its allegations to support the factors considered in determining a likelihood of confusion are not conclusory does not make it so. While the likelihood of confusion test is a balancing test, there must be something to balance. Cases that deny motions to dismiss do so only after considering whether enough of the factors have been pleaded with facts to support a likelihood of confusion. See, e.g., Top Tobacco v. Fantasia Distribution Inc., 101 F. Supp. 3d 783, 789-792 (N.D. Ill. 2015) (denying motion to dismiss only after considering facts pleaded to support each of the seven factors). If the standard was as Foremost Farms asserts, then there would be no need to even address the pleaded facts to support each of the factors. Foremost Farms attempts to distinguish Top Tobacco by arguing that just because the court considered and found four of the seven factors properly pleaded to support denying a motion to dismiss does not “support that a single, particularly important factor, such as similarity of the marks, cannot carry the day.” (Dkt. 24 at 13 n.3.) If the similarity of the marks is all that is needed-which is all that is pleaded with any specificity here-then there would be no need to even consider any of the other factors. If that were true, once a party obtains a registered Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 7 of 18 8 trademark for a particular word, that word would be off limits for any other purpose. That clearly is not the law. “Because a trademark is a source identifier, not a property right, the use of a competitor's mark that does not cause confusion as to source is permissible.” S Indus., Inc. v. Stone Age Equip., Inc., 12 F. Supp. 2d 796, 812 (N.D. Ill. 1998) (internal citations and marks omitted); see also Libman Co. v. Vining Indus., Inc., 69 F.3d 1360, 1362 (7th Cir. 1995). Diamond V is not asking this court to weigh the factors. Diamond V is asking this Court to consider that Foremost Farms failed to allege actual facts-as opposed to broad generalizations and conclusions-to support any of the seven balancing factors other than the similarity of the marks. For the reasons identified in Diamond V’s opening brief, Foremost Farms’ attempt to establish each of the likelihood of confusion factors falls far short. Foremost Farms’ Resistance includes the same generalizations as its Amended Complaint that, when stated broadly enough, could be argued to support virtually any claim. For instance, Foremost Farms’ refusal to identify its own customers beyond “manufacturers, customers, and ultimately consumers of animal feed products” makes it impossible to assess the degree of customer care, one of the likelihood of confusion factors. “To assess properly the degree of consumer care, the court must consider both parties' potential consumers ….” CAE, Inc. v. Clean Air Eng'g, Inc., 267 F.3d 660, 682 (7th Cir. 2001). Pleaded broadly enough, all product manufacturers have the same customers. But the Amended Complaint does not allow the Court to assess the level of care that would be used by the parties’ respective customers without some identification. Likewise, that both parties sell their products “in large bags” with a similar NUTRITEK word on the bag does not support the factors of “concurrent use” or that the products sold in those bags are “marketed and sold in overlapping industries.” (Dkt. 24 at 21.) Concurrent use Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 8 of 18 9 “assesses ‘whether there is a relationship in use, promotion, distribution, or sales between the goods or services of the parties.’” CAE, Inc., 267 F.3d at 681 (quoting Forum, 903 F.2d at 442). Concurrent use overlaps when, for example, “the parties sold their products in the same stores, advertised in the same magazines, and targeted the same general audience.” CAE, Inc., 267 F.3d at 681 (citing Ty, Inc., 237 F.3d at 901). That the products are allegedly packaged similarly- especially when there is no allegation that they could be sold next to each other or even in the same store-is simply irrelevant to whether there is a concurrent use or overlapping marketing and sales. The marketing channels factor, which “requires an analysis of the parties’ predominant customers and their marketing approaches, … becomes particularly important where the other factors are not helpful, because it ‘is very significant in illuminating what actually happens in the marketplace.’” Therma-Scan, Inc. v. Thermoscan, Inc., 295 F.3d 623, 636-37 (6th Cir. 2002) (quoting Homeowners Group, Inc. v. Home Mkting Specs., 931 F.2d 1100, 1110 (6th Cir. 1991)). Foremost Farms did plead that it markets its NUTRITEK product in promotional brochures on its website. However, Foremost Farms now asks the Court to ignore those allegations once Diamond V showed that the promotional brochures it specifically referenced in its Amended Complaint do not market its NUTRITEK product for animal feed products, as alleged in its Amended Complaint. The promotional brochures should be considered by the Court, as addressed infra. The point is, the plaintiff must allege some facts to support more than one of the factors to establish a likelihood of confusion. “[T]he court's role at the motion to dismiss stage is limited to assessing whether [Foremost Farms] has pleaded facts that plausibly could result in a successful outcome on the likelihood of confusion element of its claim.” Slep-Tone Entm't Corp. Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 9 of 18 10 v. Coyne, 41 F. Supp. 3d 707, 715 (N.D. Ill. 2014). As pleaded, the only available information is that both parties sell a powdered product in a large bag bearing the name NUTRITEK to some vague manufacturer who then mixes the product with another product to make something edible. These are not sufficient allegations from which “the court [can] assess whether those factual assertions ‘plausibly give rise to an entitlement to relief.’” Fuqua v. SVOX AG, 754 F.3d 397, 400 (7th Cir. 2014); see also Brooks v. Ross, 578 F.3d 574, 581-82 (7th Cir. 2009) (a formulaic recitation of the cause of action that is just as consistent with lawful conduct fails to state a claim for relief); cf. Slep-Tone Entm't Corp., 41 F. Supp. 3d at 717 (“[A]lthough the complaint does not allege facts pertinent to three of the seven factors, it has pleaded enough to plausibly suggest that Slep-Tone could prevail on the likelihood of confusion test.”). C. The differences between animal and human consumption are relevant to the likelihood of confusion analysis. Diamond V does not argue that animal and human consumption can never be related or create a likelihood of confusion as a matter of law. Rather, Diamond V’s point is that it is not enough to merely allege that one party sells its products for human consumption and the other sells for animal consumption, and a fortiori, the two are therefore sufficiently related. That, however, is all that Foremost Farms has alleged. Something more is required to allege related use or similarity of products.2 Further, the cases cited by Foremost Farms involving goods for animal and human consumption are clearly inapplicable to the relevant standard involved in this case. Two of the cases cited by Foremost Farms involve well-known or famous marks, which are entitled to 2 Diamond V’s citation to McCarthy in its opening brief included a typographical error; the quoted passage is contained in Section 24:6 instead of 24:3 of the Trademark treatise. See 4 McCarthy on Trademarks and Unfair Competition § 24:6 (4th ed.) (Related means the “marks as used are ‘related’ in the minds of the consuming public.”). Foremost Farms has not alleged how the parties’ respective products are used other than to reiterate they are both packaged in large bags sold to vague manufacturers to be mixed with other ingredients to make edible products. Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 10 of 18 11 greater protection. See Grey v. Campbell Soup Co., 650 F. Supp. 1166, 1172 (C.D. Cal. 1986), aff'd, 830 F.2d 197 (9th Cir. 1987) (“GODIVA accordingly is an arbitrary, fanciful and strong mark and, as a matter of law, is afforded broad ambit of protection from infringing uses.”); Recot, Inc. v. Becton, 214 F.3d 1322, 1327 (Fed. Cir. 2000) (“Famous marks [Frito-Lay] thus enjoy a wide latitude of legal protection.”). Foremost Farms’ allegations that the products are similar because they both involve edible products, even for animal consumption, are simply “‘naked assertion[s]’ devoid of ‘further factual enhancement’ [that] are insufficient to satisfy the pleading requirements of Rule 8.” Glob. Total Office Ltd. P'ship, 2011 WL 3205487, at *1 (quoting Iqbal, 129 S. Ct. at 1949). The V.I.P. Foods case cited by Foremost Farms actually supports Diamond V’s point. The Court only found a likelihood of confusion based on a consideration of a number of the relevant factors, including: the similarity of the marks and their logos, the parties used identical chains of marketing and distribution by selling in the same retail grocery stores, and the limited degree of care used by retail consumers of both products. Even in that case, the Court noted it was important to distinguish between animal food for pets and animal food for farm animals, given that pet food is purchased at a grocery store (along with human food) and kept in the house near human food, whereas as farm animal feed is not purchased at the same stores as human food or stored in the house near human food. See V.I.P. Foods, Inc. v. Vulcan Pet, Inc., No. 78-C-581- C, 1980 WL 30228, at *2 (N.D. Okla. July 29, 1980), rev'd, 675 F.2d 1106 (10th Cir. 1982) (“[I]t is important here to note the distinction between animal food meant for household pets and animal food meant for other animals such as farm animals.”). That Foremost Farms sells its product for human consumption, and Diamond V sells its product for animal consumption, without more, is insufficient to support the conclusion that the Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 11 of 18 12 parties’ respective products are closely related (for purposes of extending Foremost Farms’ registered trademark protection) or similar (for purposes of analyzing the likelihood of confusion). III. The limited documents attached to Diamond V’s Motion to Dismiss are the promotional brochures taken directly from Foremost Farms’ own website as specifically referenced in its Amended Complaint. “’[D]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [its] claim.’” Eastland Music Grp., LLC v. Lionsgate Entm't, Inc., No. 11 C 8224, 2012 WL 2953188, at *2 (N.D. Ill. July 19, 2012) (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993) and considering Defendant’s movie and its packaging since it was central to Plaintiff’s infringement claim), aff'd, 707 F.3d 869 (7th Cir. 2013). The Court should consider the promotional brochures contained on Plaintiff’s own website, which are specifically referenced in Plaintiff’s Amended Complaint. Foremost Farms’ reliance on My Health is clearly misplaced as that case is easily distinguishable and actually supports Diamond V’s position that the promotional brochures specifically referenced in Foremost Farms’ own Amended Complaint are proper materials to consider on its Motion to Dismiss. There are two bases for considering documents not attached to a Complaint: judicial notice and reference in the complaint. The issue in the My Health case was whether the Court could take judicial notice of archived webpages from the defendant’s website that were obtained by a third-party, Internet Archive, who would have to authenticate the process for obtaining the archived webpages. My Health, Inc., 2015 WL 9474293, at *4 (refusing to take judicial notice of archived documents that require authentication where “[t]he Seventh Circuit has approved of requiring a ‘knowledgeable’ Internet Archive employee to Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 12 of 18 13 authenticate Wayback Machine submissions before a court considers them”). Diamond V is not asking this Court to take judicial notice of the documents, and the third-party authentication of archived pages of defendant’s website retrieved using Wayback Machine software is simply not at issue here. Having referenced its own promotional brochures available on its website, Foremost Farms can hardly complain about an authentication issue. This Court also rejected the offered archived pages from the Defendant’s website in the My Health case because the “complaint does not reference the archived screenshots on which GE now relies.” Id. at *4. That is not an issue here. The promotional brochures taken from Foremost Farms’ own website fit within the exception to the rule excluding outside evidence from consideration on a Motion to Dismiss for “references to specific, undisputed documents- for example, a contract.” Id. at *4. The limited documents attached to Diamond V’s Motion to Dismiss are exactly that-the specific, undisputed documents-“informational brochures … on its website”-that Foremost Farms referenced in its Amended Complaint. (See Dkt. 16 ¶ 46.) The only allegation of a similarity in marketing between the parties’ NUTRITEK products contained in the Amended Complaint is that “Foremost Farms and Diamond V use similar marketing and promotional techniques. Both market their NUTRITEK products in promotional brochures and on their websites.” (Dkt. 16, ¶ 81.) The documents attached to Diamond V’s Motion to Dismiss are the “promotional brochures” obtained from Foremost Farm’s current website, as specifically referenced in its Amended Complaint. Because this is the only allegation of any specificity, beyond the conclusory allegations that the parties both “market” their NUTRITEK products, Diamond V located the referenced promotional brochures on Foremost Farms’ website. In its Resistance, Foremost Farms has not challenged the authenticity of the brochure taken from its own website, or offered any rebuttal documents from Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 13 of 18 14 its website, arguing only that the documents are extraneous to the Amended Complaint. (Dkt. 24 at 6 (complaining only that Diamond V “cherry-picked excerpts from Foremost’s website”).) Foremost Farms attempts to rebut Diamond V’s reliance on the promotional brochures by arguing that “Obviously, Foremost may market NUTRITEK in any number of ways for any number of purposes. Pointing to one of those ways fails to establish that Foremost does not market NUTRITEK for a different a purpose in a different way.” (Dkt. 24 at 7 n. 1, see also Dkt. 24 at 17-18.) This argument proves Diamond V’s point about the conclusory nature of Foremost Farms’ Amended Complaint. While Foremost Farms could market its NUTRITEK product in different ways for animal feed than for human consumption, the ONLY marketing identified in Diamond V’s Amended Complaint is through promotional brochures on its website. That allegation has proven to be false, leaving the Amended Complaint to assert only that the parties “use similar marketing and promotional techniques” without giving Diamond V any notice of how it markets and promotes its NUTRITEK product in a way that could be confusingly similar to the way Foremost Farms markets and promotes its NUTRITEK product. IV. A cancellation claim under 15 U.S.C. § 1119 requires a pending action involving the registration sought to be cancelled. The cases cited by Foremost Farms do not detract from the plain language of the statute, which states: “[i]n any action involving a registered mark the court may determine the right to registration [or] order the cancelation of registrations”. 15 U.S.C. § 1119 (emphasis added). “This language specifies that cancellation may only be sought if there is already an ongoing action that involves a registered mark.” Airs Aromatics, LLC v. Opinion Victoria's Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 599 (9th Cir. 2014) (emphasis added). There are two prerequisites to bringing a § 1119 cancellation claim: (1) an existing case, (2) involving the Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 14 of 18 15 registered trademark sought to be cancelled. Neither exists in this case with respect to Diamond V’s ‘885 Registration. Foremost Farms relies primarily on the Seventh Circuit case of Central Manufacturing, Inc. v. Brett, 492 F.3d 876 (7th Cir. 2007). However, that case supports Diamond V’s position. The Seventh Circuit affirmed the district court’s cancellation of the plaintiff’s registration once the plaintiff’s own registration was shown to be invalid. Plaintiff’s registered trademark was “involved in the action” as required by § 1119 because plaintiff asserted that defendant’s actions infringed on plaintiff’s registered trademark. Id. at 883 (explaining that the defendant overcame the presumption of validity attached to the registered trademark by exposing plaintiff’s failure to make bona fide use of the mark, which invalidated plaintiff’s registration). It is also worth noting that the Seventh Circuit reviewed the district court’s cancellation for abuse of discretion, given the way the issue came to it on appeal. Id. The Court’s statement that “[w]here … a registrant’s asserted rights to a mark are shown to be invalid, cancellation is not merely appropriate, it is the best course,” Id. at 883 (emphasis added), must also be considered in context.3 The Court noted the litigiousness of the particular plaintiff with respect to what amounted to improper use of the federal registration system. Id. (“Stoller has repeatedly sought ways to get around trademark law's prohibition on the stockpiling of unused marks, and this case is no different.”). The case in no way addresses the issue raised by Diamond V-whether a plaintiff may bring an offensive claim for cancellation of the defendant’s registered trademark supported only by claims that the defendant’s use of a trademark infringed on the plaintiff’s registered trademark. 3 See also, Anna B. Folgers, The Seventh Circuit’s Approach to Deterring the Trademark Troll: Say Goodbye to Your Registration and Pay the Costs of the Litigation, 3 Seventh Circuit Rev. 452 (2007), at http://www.kentlaw.edu/7cr/v3-1/folgers.pdf. (explaining the litigious history of Stollar, the plaintiff in the Central Manufacturing case-that he, or one of his corporate entities have been involved in at least 49 cases in the N.D. of Illinois alone and at least 47 of them purport to involve trademark infringement). Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 15 of 18 16 A number of the other cases cited by Foremost Farms likewise involved counterclaims for cancellation, asserting cancellation as a defense to a claim of infringement of a registered trademark that was “involved” in the action as the basis for the plaintiff’s assertion of trademark infringement. See, e.g., Specht v. Google Inc., 747 F.3d 929, 935-36 (7th Cir. 2014) (affirming cancellation of plaintiff’s registered trademark brought as a counterclaim after it was shown to be abandoned through the litigated infringement claims); Apex Colors, Inc. v. Chemworld Int'l Ltd., Inc., No. 2:14-CV-273-PRC, 2015 WL 5311403, at *4 (N.D. Ind. Sept. 10, 2015) (“Like in Specht, this case ‘involves’ [plaintiff’s] registered MegaSpecks trademark because Count V of Apex's Amended Complaint alleges that Defendants infringed Apex's MegaSpecks trademark in violation of 15 U.S.C. § 1114.”). While the IMH Allegro BV case from the Central District of California allowed a cancellation claim by a plaintiff, it did so only as a corollary to a claim under 15 U.S.C. § 1120. See MIH Allegro BV v. Fang, No. LACV1406510JAKASX, 2015 WL 12655399, at *5 (C.D. Cal. Jan. 12, 2015) (“[I]f Plaintiff's § 1120 claim is insufficiently pleaded, it follows that judgment must be granted in favor of Defendant as to the § 1119 claims as well.”). Diamond V asserts that allowing a Section 1119 claim as part of a Section 1120 claim violates the first element of a Section 1119 claim-that there already be an existing action. Nonetheless, the IMH Allegro case does explain the need for the second element: that the validity of the registration sought to be cancelled is “involved” in the pending action. Section 1120 provides a cause of action for damages to any person injured by a false or fraudulently obtained trademark registration against any person who procures a trademark registration from the USPTO by a false or fraudulent application. 15 U.S.C. § 1120. Under Section 1120, the validity of the defendant’s registered trademark is therefore directly involved Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 16 of 18 17 in the case-if it was obtained by fraud or false means sufficient to create damage to the plaintiff, its validity is necessarily adjudicate as part of that determination. In other words, a successful plaintiff on a § 1120 claim has necessarily established the invalidity of the defendant’s registered trademark, bringing into play the purpose of the district court’s concurrent jurisdiction. Thus, MIH Allegro does not assist Foremost Farms, which did not bring a § 1120 damages claim based on Diamond V’s receipt of a registered trademark. The same is true of a defendant asserting cancellation as a counterclaim, as explained by the Supreme Court in the Nike case. The defendant has “standing to file its [§ 1119 cancellation] counterclaim because Nike allegedly pressed an invalid trademark to halt Already’s legitimate business activity.” Already, LLC v. Nike, Inc., 133 S.Ct. 721, 727 (2013). But Foremost Farms did not bring a claim asserting it has been damaged by Diamond V’s receipt of its registered trademark under § 1120 or that Diamond V has pressed an invalid trademark to halt Foremost Farms’ activity. Rather, it brought a trademark infringement claim, asserting that Diamond V’s use of the NUTRITEK mark in commerce infringes Foremost Farms’ own registered trademark. It is Foremost Farms’ registered trademark that is “involved” in this action, not Diamond V’s registered trademark. Finally, Foremost Farms’ reliance on the Sixth Circuit case of CFE Racing Prod., Inc. v. BMF Wheels, Inc., 793 F.3d 571 (6th Cir. 2015) is misplaced, where the Plaintiffs’ ability to bring the claim was not at issue and the validity of the defendant’s registered trademark was instructed to the jury. The Sixth Circuit reversed denial of the cancellation claim on the basis that the validity of the Defendant’s trademark had been explicitly decided by the jury. Thus, the issue asserted here-that Foremost Farms cannot bring an offensive claim for cancellation-was not at issue, or decided, by the Sixth Circuit. To the extent the CFE Racing case addressed the Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 17 of 18 18 standard for a cancellation claim, it is also inapposite because it improperly cited cases involving cancellation claims brought under 15 U.S.C. § 1064 before the Trademark Trial and Appeals Board rather than under § 1119. See CFE Racing, 793 F.3d at 593 (citing Coach House Rest. v. Coach & Six Rests., 934 F.2d 1551, 1557 (11th Cir. 1991)). V. Conclusion For the foregoing reasons, the Court should dismiss Plaintiff’s Amended Complaint. /s/ Dana L. Oxley MARK L. ZAIGER JASON R. SYTSMA DANA L. OXLEY SHUTTLEWORTH & INGERSOLL, P.L.C. 115 Third Street SE, Ste. 500 PO Box 2107 Cedar Rapids, IA 52401-2107 Phone: 319-365-9461 Fax: 319-365-8443 Email: mlz@shuttleworthlaw.com jrs@shuttleworthlaw.com dlo@shuttleworthlaw.com and JEFFREY A. SIMMONS FOLEY & LARDNER LLP 150 East Gilman Street, Suite 5000 Madison, WI 53703-1482 Phone: 608-258-4267 Fax: 608-258-4258 Email: JSimmons@foley.com ATTORNEYS FOR DEFENDANT Copy To: Anthony A. Tomaselli Anita Marie Boor Quarles & Brady LLP 33 West Main Street, Suite 90 Madison, WI 52703-309 aat@quarles.com anita.boor@quarles.com CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of this document was served upon counsel of record for each party to the action in compliance with FRCP 5 on January 20, 2017 by: Electronic filing /s/ Paula Pohlpeter Case: 3:16-cv-00551-jdp Document #: 31 Filed: 01/20/17 Page 18 of 18