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

Brief in Support of 13 Motion to Dismiss

W.D. Wis.November 16, 2016

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 BRIEF IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S COMPLAINT Pursuant to Federal Rules of Civil Procedure 12(b)(6), Defendant, Diamond V Mills, Inc. (“Diamond V”), provides this Brief in support of its Motion to Dismiss Plaintiff’s Complaint. Table of Contents I. Background .......................................................................................................................... 2 II. Legal Standard ..................................................................................................................... 3 III. Plaintiff failed to plead facts to support a finding that its NUTRITEK mark is entitled to protection with respect to use on goods for animal consumption or that there is a likelihood of confusion, both of which are required elements of Plaintiff’s claims pleaded in Counts I-V. .......................................................... 4 A. Plaintiff’s Complaint lacks allegations of a protectable interest in NUTRITEK for use on goods for animal consumption. ................................................................................................ 6 B. Plaintiff’s complaint lacks allegations of likelihood of confusion. ......................... 9 IV. Common Law Unfair Competition (Count V) should be dismissed for lack of the essential element of an intent to deceive. ................................... 14 V. Count VII for Registration Cancellation should be dismissed for failure to state a claim, where 15 U.S.C. § 1119 does not provide an independent cause of action that can be brought offensively. ......................................................................................... 15 VI. To the extent the Court dismisses Counts I-V and VII, it should also dismiss Count VI for state law unjust enrichment for lack of jurisdiction. ....................................................................................................... 17 VII. Summary ........................................................................................................................... 17 Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 1 of 19 2 I. Background Plaintiff, Foremost Farms USA, Cooperative (“Foremost”) is a farmer’s cooperative of dairy farmers formed in 1995 and based in Wisconsin that sells dairy products for human consumption, allegedly around the world. (Dkt. 1 ¶ 1-2, 21.) Foremost “uses over six billion pounds of milk a year to manufacture cheese, dairy ingredients, butter, and fluid products.” (Dkt. 1 ¶ 23.) Foremost’s predecessor acquired Western Condensing and its whey processing operations. (Dkt. 1 ¶ 18.) Foremost’s predecessors began using the NUTRITEK mark for its partially demineralized dried whey product in 1961. (Dkt. 1 ¶ 25, 27.) Foremost Dairies (Foremost’s predecessor) registered the NUTRITEK mark with the United States Patent and Trademark Office for “partially demineralized dried whey for human consumption, in Class 46”, receiving Registration No. 747,696 (‘696 Registration”) on April 2, 1963. (Dkt. 1 ¶ 30 & Dkt. 1- 1, Ex. A to Complaint.) Foremost continued to use the NUTRITEK mark for the sale of its dried whey product. (Dkt. 1 ¶ 32, 35.) The NUTRITEK dried whey can be used in producing infant formula comparable to human milk and specialty dairy products comparable to skim milk. (Dkt. 1 ¶ 37-40.) Although Foremost alleges that its NUTRITEK dried whey “is suitable for a number of uses and is purchased by various types of customers” (Dkt. 1 ¶ 36), Foremost failed to identify any of its customers, individually or by customer “type,” as alleged in the Complaint. Diamond V is an Iowa company that develops and sells ingredients and supplements for animal feed. (Dkt. 1 ¶ 5-6.) According to the Complaint1, Diamond V began using the NUTRITEK mark as an ingredient for animal feed in 2014 or 2015. (Dkt. 1 ¶ 47.) Diamond V’s 1 All facts are taken from the Complaint for purposes of this Motion to Dismiss. See Parus v. Cator, No. 05-C-0063- C, 2005 WL 1458770, at *2 (W.D. Wis. June 17, 2005) (“In considering a motion to dismiss, a court must accept as true all well-pleaded factual allegations in the complaint, drawing all reasonable inferences in favor of the plaintiff.”). Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 2 of 19 3 “NUTRITEK ingredient consists of functional metabolites and fermentation compounds” that can be “blended with other material to produce animal feed.” (Dkt. 1 ¶ 48, 50.) Diamond V registered the NUTRITEK mark with the United States Patent and Trademark Office for “animal feed supplements, in Class 5”, receiving Registration No. 4,728,885 (“’885 Registration”) on April 28, 2015. (Dkt. 1 ¶ 54, Dkt. 1-2, Ex. B to Complaint.) On August 5, 2016, Foremost brought a Complaint against Diamond V, alleging claims for Trademark Infringement under the Lanham Act (Count I), Common Law Trademark Infringement under state law (Count II), False Designation under the Lanham Act (Count III), Unfair Competition under the Lanham Act (Count IV), Common Law Unfair Competition (Count V), Unjust Enrichment (Count VI), and Registration Cancellation (Count VII). II. Legal Standard Rule 12(b)(6) allows a defendant to seek dismissal of a pleading for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “[T]o survive a 12(b)(6) motion to dismiss, a complaint must allege facts that ‘state a claim to relief that is plausible on its face.’” Fuqua v. SVOX AG, 754 F.3d 397, 400 (7th Cir. 2014) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[T]he plaintiff must give enough details about the subject-matter of the case to present a story that holds together.” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (citing Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir.2010)). “The required level of factual specificity rises with the complexity of the claim.” McCauley, 671 F.3d at 616-17 (quoting Swanson, 614 F.3d at 405 (“A more complex case ... will require more detail, both to give the opposing party notice of what the case is all about and to show how, in the plaintiff's mind at least, the dots should be connected.”). Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 3 of 19 4 While factual allegations in the Complaint must be construed as true, “conclusory allegations merely reciting the elements of the claim are not entitled to this presumption of truth.” McCauley, 671 F.3d at 616. After assuming the veracity of the pleaded facts (as opposed to pleaded conclusory allegations), “the court must assess whether those factual assertions ‘plausibly give rise to an entitlement to relief.’” Fuqua, 754 F.3d at 400 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). “A claim has facial plausibility when the plaintiff [has pleaded] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). It is insufficient to “plead[] facts that are ‘merely consistent with’ a defendant's liability.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). “[L]abels and conclusions or a formulaic recitation of the elements of a cause of action” are also insufficient to state a claim. Iqbal, 556 U.S. at 678; see also Brooks v. Ross, 578 F.3d 574, 581-82 (7th Cir. 2009) (holding that allegations that the defendants “knowingly, intentionally[,] and maliciously prosecute[d]” him in retaliation for his exercise of constitutionally protected rights was “nothing more” than a “formulaic recitation of the cause of action,” where remaining allegations were just as consistent with a lawful investigation as an illegal conspiracy). III. Plaintiff failed to plead facts to support a finding that its NUTRITEK mark is entitled to protection with respect to use on goods for animal consumption or that there is a likelihood of confusion, both of which are required elements of Plaintiff’s claims pleaded in Counts I-V. Each of Plaintiff’s Counts I-V includes, as requirements of the respective claim, that the Plaintiff’s mark is protectable and that a likelihood of confusion exists. Counts I and II allege trademark infringement, both of which require plaintiff to prove “(1) [its] mark is protectable, and (2) the defendant's use of the mark is likely to cause confusion among consumers.” Packman v. Chicago Tribune Co., 267 F.3d 628, 638 (7th Cir. 2001) (citing Eli Lilly & Co. v. Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 4 of 19 5 Natural Answers, Inc., 233 F.3d 456, 461 (7th Cir. 2000)); see also Mil-Mar Shoe Co. v. Shonac Corp., 75 F.3d 1153, 1156-57 (7th Cir. 1996) (applying federal law to Wisconsin common law trademark infringement claim). For Count III, “a plaintiff making a claim of false designation of origin [under 15 U.S.C. § 1125] must show that the mark is entitled to protection as a trademark and that the false designation of origin creates a likelihood of confusion.” Rust Env't & Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1214 (7th Cir. 1997) (internal citations omitted). Similarly, unfair competition claims under § 1125, as alleged in Count IV, are analyzed using the same legal standards as a claim for trademark infringement under § 1114. See CAE, Inc. v. Clean Air Eng'g, Inc., 267 F.3d 660, 673-74 (7th Cir. 2001) (“To prevail on either claim, a plaintiff must establish that (1) its mark is protectable and (2) the defendant's use of the mark is likely to cause confusion among consumers.”). To the extent Plaintiff’s unfair competition claim is premised on false designation of origin, it too is governed by the same standard as a claim for trademark infringement. See Nat'l Football League Properties, Inc. v. ProStyle, Inc., 16 F. Supp. 2d 1012, 1014 (E.D. Wis. 1998) (“[T]he same legal standards govern an unfair competition claim for confusion caused by false suggestion of sponsorship and a claim for trademark infringement.”) (citing Smith Fiberglass Prods., Inc. v. Ameron, Inc., 7 F.3d 1327 (7th Cir. 1993)). Finally, with respect to Count V, “[c]ommon law trademark infringement is a branch of the law of unfair competition, and the principles used in both actions are substantially similar.” First Wis. Nat. Bank of Milwaukee v. Wichman, 270 N.W.2d 168, 171 (Wis. 1978). Each of Counts I through V should be dismissed under the standard set out in Iqbal and Twombly. Although a plaintiff need not provide “detailed” facts in support of its allegations, the pleading requirements of Federal Rule of Civil Procedure 8 “demand[] more than an unadorned, Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 5 of 19 6 the-defendant-unlawfully-harmed-me accusation,” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555), which is all that is offered in Plaintiff’s Complaint. A. Plaintiff’s complaint lacks allegations of a protectable interest in NUTRITEK for use on goods for animal consumption. Trademark infringement of Plaintiffs’ registered or common law trademark under 15 U.S .C. §§ 1114(a) and 1125(a) requires Plaintiff to prove “(1) [its] mark is protectable, and (2) the defendant's use of the mark is likely to cause confusion among consumers.” See Packman, 267 F.3d at 638; Mil-Mar Shoe Co. v. Shonac Corp., 75 F.3d 1153, 1156-57. Generally, a mark is protectable if it is capable of distinguishing the mark holder’s goods or services from those of others and the mark has been used in interstate commerce. See Platinum Home Mortg. Corp. v. Platinum Fin. Grp., Inc., 149 F.3d 722, 726 (7th Cir. 1998). Plaintiff has a federal registration for NUTRITEK. The Lanham Act, however, provides only that: a mark registered on the principal register ... shall be prima facie evidence of the validity of the registered mark ... and of the registrant's exclusive right to use the mark in commerce on or in connection with the goods or services specified in the registration subject to any conditions or limitations stated therein …. Packman, 267 F.3d at 638-39 (quoting 15 U.S.C. § 1115(a) (emphasis added)). Thus, The Plaintiff’s ’696 Registration only provides prima facie evidence that Plaintiff has a protectable interest in the mark “in connection with the goods or services specified in the registration.” § 1115(a). Thus, according to the Complaint, Plaintiffs’ ‘696 Registration is only conclusive evidence of Plaintiff’s right to use the NUTRITEK mark with respect to “partially dehydrated whey for human consumption” in Class 46. (Dkt. 1-1, Ex. A (emphasis added).) While the ‘696 Registration could be extended to cover “related goods”, see McGraw- Edison Co. v. Walt Disney Prods., 787 F.2d 1163, 1169 (7th Cir. 1986) (“[T]he rights of an owner Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 6 of 19 7 of a registered trademark ... extend to any goods related in the minds of consumers in the sense that a single producer is likely to put out both goods.”), the Complaint is completely silent on the relatedness of the Plaintiff’s and Defendant’s goods. Thus, for Plaintiff to state a claim of infringement of its registered trademark under § 1114, Plaintiff must establish that animal feed supplements are related to partially dehydrated whey for human consumption. Yet, the Complaint makes no such allegation. Furthermore, “[a]nimal products have not generally been considered ‘related’ to human [products] for trademark purposes.” Bioglan Inc. v. Bioglan Labs. Ltd., No. SACV 96-799 AHS EEX, 1997 WL 732340, at *10 (C.D. Cal. June 4, 1997). [DOES THIS ARGUMENT BELONG WITH ELEMENT 2?] Numerous cases recognize that products prepared primarily for human consumption are “so distinct” from products prepared for animal consumption, that the identical mark can be registered for one group of products despite the prior use of the mark for the other. See Fort Dodge Labs., Inc. v. Haeussler, 234 F.2d 506, 5-0708 (C.C.P.A. 1956) (affirming registration application for use of mark for multivitamin and mineral products intended for human consumption despite prior use of identical mark on veterinarian products intended for animal use). “[I]t has been the consistent practice of the Patent Office and the courts to regard foods and medicinal preparations designed for animal use as distinct from corresponding preparations for human beings ….” Fort Dodge Labs., Inc. v, 234 F.2d at 507-08 (citing Kellogg Co. v. Bremner Bros., 45 U.S.P.Q. 446 (1940); Pabst-Ett Corp. v. Dr. W. J. Ross Co., 45 U.S.P.Q. 532 (1940); Horlick's Malted Milk Corp. v. Horlick, 143 F.2d 32 (7th Cir. 1944); General Mills, Inc., v. Freed, 89 F.2d 664 (CCPA 1937); Dr. Salsbury's Laboratories v. Enrich Products Co., Inc., 51 U.S.P.Q. 300 (1941); Whitehall Pharmacal Co. v. Wagner, 83 U.S.P.Q. 529 (1949); Sharpe & Dohme, Inc., v. Brookfield Laboratories, 85 U.S.P.Q. 82 (1950); Myers v. Polk Miller Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 7 of 19 8 Products Corp., 201 F.2d 373 (CCPA 1953); In re Myers, 201 F.2d 379 (CCPA 1953); and Ex parte The Herrman-McLean Co., 98 U.S.P.Q. 455 (1953)). That Plaintiff has a protectable interest in the mark for goods for human consumption does not, without more, support a claim of trademark infringement from Diamond V’s use of the NUTRITEK mark on goods for animal consumption. Plaintiff also alleges infringement of its common law trademark rights in NUTRITEK for use in connection with animal supplements. Plaintiff, however, has provided only a single conclusory statement that “NUTRITEK dried whey is also used in products for animal consumption.” (Dkt. 1 ¶ 42.) In trademark law, it is the actual use in commerce of the mark that gives the mark holder the right to exclude others from using the mark. To acquire such rights, the mark-not just the product-must be used in commerce. The Lanham Act defines “use in commerce” to “mean[]the bona fide use of a mark in the ordinary course of trade,” such that “a mark shall be deemed to be in use in commerce--(1) on goods when--(A) it is placed in any manner on the goods or their containers …, and (B) the goods are sold or transported in commerce.” 15 U.S.C. § 1127. To establish rights to a trademark, plaintiff “must show first, adoption, and second, ‘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].’” Johnny Blastoff, Inc. v. Los Angeles Rams Football Co., 188 F.3d 427, 433-34 (7th Cir. 1999) (quoting New West Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1200 (9th Cir. 1979)). Plaintiffs’ simple allegation that dried whey has been used in animal products does not meet the requirement that the NUTRITEK mark (not the product) must be used in a sufficiently public way to identify the goods in an appropriate segment of the public as Plaintiff’s goods. There are no allegations: that the NUTRITEK mark is used with the dried whey when the whey Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 8 of 19 9 is used in products or animal consumption, that the NUTRITEK marked dried whey is sold or transported in commerce, or that the NUTRITEK mark is associated with goods for animal consumption in a public manner at all. Plaintiff has failed to allege facts to support a conclusion that it has acquired a common law right to use the NUTRITEK mark on goods for animal consumption. B. Plaintiff’s Complaint lacks allegations of likelihood of confusion. For each of Plaintiff’s Counts I-V, “the central issue is the likelihood of consumers in the relevant market confusing the infringer’s mark with that of the complainant.” Smith Fiberglass Prod., Inc. v. Ameron, Inc., 7 F.3d 1327, 1329 (7th Cir. 1993). “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). The Seventh Circuit considers seven factors in assessing the likelihood of confusion: “(1) similarity between the marks in appearance and suggestion; (2) similarity of the products; (3) area and manner of concurrent use; (4) degree of care likely to be exercised by consumers; (5) strength of complainant's mark; (6) actual confusion; and, (7) intent of defendant ‘to palm-off his product as that of another.’” Smith Fiberglass Prod., Inc. v. Ameron, Inc., 7 F.3d 1327, 1329 (7th Cir. 1993). While these individual factors are factual in nature, whether a given set of facts could amount to a likelihood of confusion is a legal issue. See CAE, Inc., 267 F.3d at 677 (“[T]he question of whether likelihood of confusion exists may be resolved [as a legal matter] ‘if the evidence is so one-sided that there can be no doubt about how the question should be answered.’” (quoting Door Sys., Inc. v. Pro-Line Door Sys., Inc., 83 F.3d 169, 173 (7th Cir. Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 9 of 19 10 1996), which affirmed summary judgment for the defendant when there was “no reasonable likelihood that any significant number of consumers could mistake the defendant for the plaintiff”). “The plaintiff must prove [and plead] a ‘likelihood’ of confusion, not a mere ‘possibility’ of confusion.” Knaack Mfg. Co. v. Rally Asscessories, Inc., 955 F. Supp. 991, 1000 (N.D. Ill. 1997) (citing August Storck K.G. v. Nabisco, Inc., 59 F.3d 616, 619 (7th Cir. 1995)). Further, “[t]he likelihood of confusion must be assessed ‘with reference to the realities of consumer behavior in the relevant market.’” S Indus., Inc., 12 F. Supp. 2d at 812 (quoting Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 381 (7th Cir. 1996)). Here, there are no allegations about consumer behavior or the relevant market from which such a determination could be made. As pleaded, the Complaint fails to establish a likelihood of confusion from Diamond V’s use of its NUTRITEK mark. With respect to the second factor considered by the Seventh Circuit, Plaintiff’s dried whey product for human consumption and Defendant’s animal feed supplements are dissimilar products. “In the spectrum of similarity [of the products], the case law has created three categories of products, listed in order of descending similarity: 1) competitive, 2) noncompetitive but related, and 3) noncompetitive and nonrelated.” Munsters Corp. v. Matsui America, Inc., 730 F. Supp. 790, 798 (N.D. Ill. 1989) (emphasis added), aff'd 909 F.2d 250 (7th Cir. 1990); see also Planet Hollywood (Region IV), Inc. v. Hollywood Casino Corp., 80 F. Supp. 2d 815, 880 (N.D. Ill. 1999), opinion clarified on other grounds, No. 96 C 4660, 1999 WL 1186802 (N.D. Ill. Dec. 9, 1999). Products falling in the third category-noncompetitive and nonrelated-are not considered similar for purposes of creating a likelihood of confusion. See Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 958 (7th Cir. 1992) (“Modern trademark law prohibits use Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 10 of 19 11 of a senior user's mark not only on products that are in direct competition with those of the senior user but also on products that are considered to be ‘closely related’ to the senior user's.”); Planet Hollywood, 80 F. Supp. 2d at 881 (“[E]ven if products or services are not competitive, this factor still may auger in favor of a finding of likely confusion if the products or services are closely ‘related.’” (citing Sands, 978 F.2d at 958); Munsters Corp., 730 F. Supp. at 798 (recognizing that “[a] likelihood of confusion may exist for competitive products and for noncompetitive but related products,” the first two categories). Absent a showing that the products are either competitive or closely related, the second factor weighs against a likelihood of confusion “for the evident reason that consumers would not be likely to believe that the source of one product or service is also the source of the other.” Planet Hollywood., 80 F. Supp. 2d at 881. The Complaint includes no allegations that the parties compete or that the parties use their respective NUTRITEK mark on goods that are closely related. Diamond V’s NUTRITEK mark is used on functional metabolites and fermentation compounds that are used in animal feed supplements. (Dkt. 1 ¶ 47-48.) The only non-conclusory allegations in the Complaint state that Plaintiff uses its NUTRITEK mark with its dried whey that is used in infant formula and specialty dairy products similar to skim milk. (Dkt. 1 ¶¶ 39-40.) While the Complaint makes the conclusory allegation that Plaintiff’s “NUTRITEK dried whey is also used in products for animal consumption” (Dkt. 1 ¶ 42), it does not identify any specific animal feed product its dried whey is used in, how much NUTRITEK dried whey is used in animal feed product, the consumers who use the NUTRITEK dried whey for animal feed products, or whether it even markets the dried whey using the NUTRITEK mark for use in animal feed products. The allegations in the Complaint are insufficient to show that Diamond V’s NUTRITEK animal feed supplements are “closely related” to any products sold or marketed by Plaintiff, and the second “likelihood of Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 11 of 19 12 confusion” factor is unsupported. See Planet Hollywood, 80 F. Supp. 2d at 882 (granting summary judgment and finding “that the restaurant services offered by Planet Hollywood are not closely related to the casino services offered by Hollywood Casino”). There are no fact allegations to support the third and fourth factors of the test: area and manner of concurrent use or degree of care afforded by customers. Plaintiff makes no allegations about where or how it sells its NUTRITEK dried whey product or where or how (or even if) it markets its NUTRITEK products. Nor does Plaintiff allege the markets in which it sells or the channels of distribution it uses. The Complaint makes no identification of Plaintiff’s customers, either by name, trade, or even industry. Plaintiff does not allege whether it sells its NUTRITEK products at the wholesale or retail level. If the NUTRITEK dried whey products are used in infant formula and specialty dairy products as alleged, it might be presumed the NUTRITEK products are sold at wholesale to companies that make baby formula and specialty dairy products. Diamond V’s NUTRITEK animal feed supplement is most logically not sold to those same customers or even within the same industry; Plaintiff has offered no allegations from which it could be so concluded. Plaintiff has certainly failed to allege any facts about the degree of care used by its customers, where it has failed to even generally identify its customers, let alone their level of sophistication or factors they might consider in making their purchases. With respect to the strength of Plaintiff’s mark (the fifth factor), Plaintiff alleges only that its “Foremost name” (Dkt. 1 ¶ 24) is known, and its dairy products are sold, around the world. The strength of the Foremost name is irrelevant, however, where Plaintiff is suing for infringement of its NUTRITEK mark. Plaintiff makes no similar representation about the strength of its NUTRITEK mark. The allegations about the NUTRITEK mark allege only that Foremost acquired it from Western Condensing related to its dried whey products, which it has Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 12 of 19 13 allegedly used since 1961, with no additional facts of the extent of its use. (Dkt. 1 ¶¶ 25-35.) With respect to its use in commerce, Plaintiff states only that its NUTRITEK dried whey “is suitable for a number of uses and is purchased by various types of consumers.” (Dkt. 1 ¶ 36.) Plaintiff has alleged no facts from which could be found that its NUTRITEK mark is strong. The Complaint includes no allegations of confusion, actual or otherwise, to support the sixth factor. With respect to the last factor of defendant’s intent to trade on plaintiff’s goodwill, the Complaint makes clear that Diamond V clearly associates its NUTRITEK products with its own Diamond V logo (Dkt. 1 ¶ 51), which demonstrates a lack of any intent to pass off its NUTRITEK product as sourced from Plaintiff. Diamond V’s use of its own name on its product with the allegedly infringing word “demonstrates [defendant’s] intent to promote itself as the source,” not Plaintiff. Packman, 267 F.3d at 644 (granting summary judgment on passing off claim where defendant’s use of trademarked phrase appeared directly below defendant’s own name). Of the seven factors considered by the Seventh Circuit, the Complaint alleges facts only with respect to the first factor: the similarity between the marks in appearance. The allegations that the parties use a similar mark are insufficient to state a claim for trademark infringement, without more. See Smith Fiberglass Prod., Inc. v. Ameron, Inc., 7 F.3d 1327, 1331 (7th Cir. 1993) (affirming summary judgment where “mere similarity of the marks and the strength of Smith's mark do not suggest that confusion is likely”); cf. Top Tobacco v. Fantasia Distribution Inc., 101 F. Supp. 3d 783, 791-92 (N.D. Ill. 2015) (denying motion to dismiss trademark infringement claim where “Plaintiffs alleged facts pertaining to at least four of the seven factors considered in a likelihood of confusion claim”). Plaintiff makes no allegations to support a conclusion that any of the other factors exist. Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 13 of 19 14 On this Complaint, Plaintiff has alleged only that it owns a registered trademark to the NUTRIREK mark, which it (or its predecessor) has used since 1961 on its dried whey product, and that the dried whey is used in infant formula and specialty dairy products for human consumption. It alleges that Diamond V uses a similar NUTRITEK mark-for which Diamond V has also received a federal registration-on ingredients used in animal feed supplements. These facts are just as consistent with a proper use of Diamond V’s own registered trademark for NUTRITEK, and Counts I-V should be dismissed for failure to state a claim. See Brooks, 578 F.3d at 581-82 (affirming dismissal of claim where allegations were just as consistent with a lawful investigation as an illegal conspiracy). IV. Common Law Unfair Competition (Count V) should be dismissed for lack of the essential element of an intent to deceive. Count V should also be dismissed for lack of any allegation that Diamond V intended to mislead or deceive the public. An unfair competition claim under Wisconsin state law “requires evidence that the defendant intended to mislead or deceive the public into believing that its product was associated with that of the plaintiff.” Mil-Mar Shoe Co. v. Shonac Corp., 75 F.3d 1153, 1155 (7th Cir. 1996). There are no allegations in the Complaint that Diamond V has attempted to mislead or deceive the public. To the contrary, the Complaint reveals that Diamond V prominently displays its own Diamond V logo with its NUTRITEK mark. (Dkt. 1 ¶ 51.) “[A] plaintiff can plead itself out of court by pleading facts that show it has no legal claim.” Anago Franchising, Inc. v. IMTN, Inc., 477 F. App'x 383, 385 (7th Cir. 2012). Plaintiff has done so here, and the common law unfair competition claims fails as a matter of law for this separate reason, in addition to failing from a lack of a likelihood of confusion. See Packman, 267 F.3d at 644 (affirming summary judgment and noting that defendant’s use of trademarked phrase appeared directly below defendant’s own name revealed a lack of intent to deceive). Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 14 of 19 15 V. Count VII for Registration Cancellation should be dismissed for failure to state a claim, where 15 U.S.C. § 1119 does not provide an independent cause of action that can be brought offensively. Count VII seeks cancellation of Diamond V’s ‘885 Registration pursuant to 15 U.S.C. § 1119 on the basis that Plaintiff is “the superior user of the NUTRITEK mark and has priority over Diamond V.” (Dkt. 1 ¶ 99.) Plaintiff’s complaint belongs in the United States Patent and Trademark Office (USPTO), not in this Court. The USPTO has sole jurisdiction to register federal trademarks. See 15 U.S.C. § 1051, et seq. Trademarks are unique intellectual property rights that depend not on federal registration of the trademark but on the owner’s use of the trademark in commerce. Congress devised a scheme under which a person can register his trademark in the USPTO’s principal register. However, the USPTO’s grant of a federal registration does not give the registration holder substantive rights to use, and to exclude others from using, the trademark. To the contrary, rights to a trademark are based on underlying use of the trademark in commerce, not receipt of a federal registration. See C & N Corp. v. Kane, 953 F. Supp. 2d 903, 913 (E.D. Wis. 2013) (“[T]rademark rights derive from the use of a mark in commerce and not from mere registration of the mark.”) (citing Sands,, 978 F.2d at 954), aff'd, 756 F.3d 1024 (7th Cir. 2014)); see also 15 U.S.C. § 1051(a)(1). “Unlike the registration of a patent, a trademark registration itself does not create the underlying right to exclude. Nor is a trademark created by registration.” San Juan Prods., Inc. v. San Juan Pools, Inc., 849 F.2d 468, 474 (10th Cir. 1988). Congress laid out a carefully planned regime for challenging the registration of a federal trademark as part of the “meticulously detailed” remedies provided in the Lanham Act. See generally Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 719 (1967) (describing remedial scheme contained in Lanham Act). Section 1064 allows “any person who Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 15 of 19 16 believes that he is or will be damaged” to file a petition to cancel a federally registered trademark in the USPTO. 15 U.S.C. § 1064. An action in the USPTO is the “primary vehicle for cancellation” of a registered trademark. Airs Aromatics, LLC v. Opinion Victoria's Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 599 (9th Cir. 2014) (citing McCarthy on Trademarks and Unfair Competition § 30:110 (4th ed.)); see also Windsurfing Int'l Inc. v. AMF Inc., 828 F.2d 755, 758 (Fed. Cir. 1987) (discussing 15 U.S.C. § 1064); Nike, Inc. v. Already, LLC, 663 F.3d 89, 98- 99 (2d Cir. 2011), aff’d 133 S.Ct. 721 (2013); Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873 (3d Cir. 1992) (“[A] petition to the Patent and Trademark Office is the primary means of securing a cancellation, and … § 1119 provides no independent basis for jurisdiction”). Congress separately gave federal district courts limited jurisdiction to cancel a federally registered trademark “[i]n any action involving a registered mark.” 15 U.S.C. § 1119 (emphasis added). Every circuit court to have specifically addressed the issue of the validity of an offensive claim to cancel a registration under § 1119 agrees that a cancellation claim is not “available as an independent cause of action.” Airs Aromatics, 744 F.3d at 599. As “each circuit to directly address this statutory language has held[,] . . . it ‘creates a remedy for trademark infringement rather than an independent basis for federal jurisdiction.’ ” Airs Aromatics, LLC, 744 F.3d at 599 (quoting Nike, 663 F.3d at 98 and citing Ditri, 954 F.2d at 873; Windsurfing, 828 F.2d at 758). As explained by a sister district court within the Seventh Circuit, “Section 1119 … does not create an independent cause of action, but ‘merely defines certain available remedies.’” Thomas & Betts Corp. v. Panduit Corp., 48 F. Supp.2d 1088, 1093 (N.D. Ill. 1999). Simply put, “a party cannot seek cancellation offensively.” GMA Accessories, Inc. v. Idea Nuova, Inc., 157 F. Supp. 2d 234, 241 (S.D.N.Y. 2000). Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 16 of 19 17 As explained by the Second Circuit in Nike, “Other courts ‘have held that, by its plain terms, [§ 1119] requires that a controversy as to the validity of or interference with a registered mark exist before a district court has jurisdiction to grant the cancellation remedy....’” Nike, Inc., 663 F.3d at 98 (citations omitted). Here, Diamond V’s federal registration is not involved in the controversy. Diamond V is not asserting that Plaintiff has infringed on its ‘885 Registration. Rather, Plaintiff asserts that Diamond V’s use of the NUTRITEK mark-which is independent of Diamond V’s ‘885 Registration-is infringing on Plaintiff’s ‘696 Registration. Thus, it is Plaintiff’s registration that is at issue, not Diamond V’s registration. Plaintiff’s only basis for challenging Diamond V’s ‘885 Registration is Plaintiff’s alleged superior use. This claim belongs in the USPTO, not as an independent offensive claim in a federal lawsuit. Count VII should be dismissed for failure to state a claim. VI. To the extent the Court dismisses Counts I-V and VII, it should also dismiss Count VI for state law unjust enrichment for lack of jurisdiction. Plaintiff alleges this Court has jurisdiction over its state law claims pursuant to 28 U.S.C. § 1367 because the state law claims “are so related to the claims arising under” the Lanham Act. (Dkt. 1 ¶ 11.) To the extent the Court dismissed the Lanham Act claims, this jurisdictional prerequisite disappears, and this Court would lack jurisdiction over the single remaining state law claim. VII. Summary Plaintiff’s Complaint essentially alleges that it (or its predecessor) has used the NUTRITEK mark for goods for human consumption, including infant formula and specialty dairy products, since 1961, and that it has had a federal registration for the trademark since 1963. Plaintiff alleges that Diamond V is using the NUTRITEK mark for functional metabolites and fermentation compounds that are used in animal feed supplements, for which Diamond V Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 17 of 19 18 received a federal trademark registration in 2015. The other allegations in the Complaint are entirely conclusory. The Complaint is wholly devoid of those facts that would be needed to establish: (1) that Plaintiff has common law trademark rights to the NUTRITEK mark for goods for animal consumption, or (2) that Diamond V’s use of the NUTRITEK mark has, or is likely to, cause confusion. For these reasons, Counts I through V-all of which require these two legal elements-should be dismissed. Count V should also be dismissed for failure to allege facts to establish Diamond V intended to mislead the public. Count VII for cancellation of Diamond V’s registered trademark should be dismissed, as 15 U.S.C. § 1119 does not provide for an offensive independent claim of cancellation. Finally, if the Court dismisses the Lanham Act claims, it should also dismiss the state law claim brought in Count VI for lack of jurisdiction. /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 Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 18 of 19 19 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 November 16, 2016 by: Electronic filing /s/ Paula Pohlpeter Case: 3:16-cv-00551-jdp Document #: 14 Filed: 11/16/16 Page 19 of 19