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

Brief in Support of 20 Motion to Dismiss

W.D. Wis.December 20, 2016

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 RENEWED BRIEF IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT 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 DIAMOND V. MILLS, INC. Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 1 of 29 i Table of Contents I. Background ............................................................................................................ 1 II. Legal Standard ....................................................................................................... 6 III. Foremost 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 Foremost’s claims pleaded in Counts I-V. .......................................... 8 A. Foremost’s Amended Complaint lacks allegations of a protectable interest in the NUTRITEK mark for use on goods for animal consumption. ................................................... 9 1. Foremost’s registered NUTRITEK trademark does not cover use on goods for animal consumption. ......................... 9 2. Foremost does not have a common law protectable interest in the NUTRITEK mark for use on goods for animal consumption. ..................................................................... 12 B. Foremost’s Amended Complaint lacks allegations of likelihood of confusion. ............................................................................ 14 1. The parties use the marks on dissimilar products. ............................. 15 2. There are no allegations the parties sell or market their respective products in the same channels of trade or to similar customers. ............................................................ 17 3. There are no allegations to show Plaintiff’s NUTRITEK mark is strong. ............................................................... 18 4. There are no allegations to support a finding of consumer confusion, actual or otherwise. .......................................... 18 5 Diamond V has not attempted to pass off its goods as Foremost’s goods. .......................................................................... 19 6. Allegations that the marks look and sound the same are insufficient to meet the likelihood of confusion element of each of the claims in Counts I-V. ...................................... 19 IV. Count V for Common Law Unfair Competition should be dismissed for lack of the essential element of an intent to deceive. ..................................... 21 V. Count VII for Registration Cancellation should be dismissed because 15 U.S.C. § 1119 does not provide an independent cause of action that can be brought offensively. .................................................. 21 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. . 25 VII. Summary ............................................................................................................. 25 Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 2 of 29 1 Defendant Diamond V Mills, Inc. (“Diamond V”) moves to dismiss the Amended Complaint of Plaintiff Foremost Farms USA, Cooperative (“Foremost”) pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim for which relief can be granted. Foremost’s Amended Complaint fails to correct the deficiencies of its original pleading. Once again, Foremost provides nothing more than conclusory allegations to support its claims of trademark infringement and related causes of action. The Amended Complaint makes clear that the parties market and sell their products for fundamentally different purposes to distinct sets of customers. Foremost sells its NUTRITEK product for use in human food products, specifically infant formula and specialty dairy products. (Dkt. 16 ¶ 49-51, 59.) Diamond V, on the other hand, sells its NUTRITEK product for use in animal feed products. (Dkt. 16, ¶ 5.) None of the non- conclusory allegations in Foremost’s Amended Complaint plausibly suggest that there is a likelihood of confusion arising from Diamond V’s use of its NUTRITEK mark in this distinctive manner. For these and other reasons discussed below, Foremost’s Amended Complaint must be dismissed. I. Background Foremost is a farmer’s cooperative of dairy farmers formed in 1995 and based in Wisconsin that sells dairy products for human consumption around the world. (Dkt. 16 ¶ 1-2, 24.) Foremost “uses over six billion pounds of milk a year to manufacture cheese, dairy ingredients, butter, and fluid products.” (Dkt. 16 ¶ 29.) Foremost’s predecessor acquired Western Condensing and its whey processing operations. (Dkt. 16 ¶ 21.) Foremost’s predecessors began using the NUTRITEK mark for its partially demineralized dried whey product in 1961. (Dkt. 16 ¶ 31, 33.) Foremost Dairies (Foremost’s predecessor) registered the NUTRITEK mark with the United States Patent and Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 3 of 29 2 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. 16 ¶ 36 & Dkt. 1-1, Ex. A to Complaint1 (emphasis added).) Foremost continued to use the NUTRITEK mark for the sale of its demineralized dried whey product, which is processed to remove the minerals from whole whey, leaving a sweet dairy whey in a powder form. (Dkt. 16 ¶ 37, 40, 43-44.) Foremost sells its NUTRITEK demineralized dried whey in bulk to manufacturers and customers2 who combine it with other ingredients to make foods such as infant formula and specialty dairy products. (Dkt. 16 ¶ 49-51, 59.) Foremost alleges it also sells its NUTRITEK demineralized dried whey to “manufacturers and customers” to be combined with other ingredients to produce “animal feed” (Dkt. 16 ¶ 53-54), but fails to identify those animal feed products or a single feed manufacturer to whom it claims to sell its NUTRITEK demineralized dried whey. Diamond V is an Iowa company that develops and sells ingredients and supplements for animal feed. (Dkt. 16 ¶ 5-6.) According to the Amended Complaint3, Diamond V began using the NUTRITEK mark as an ingredient for animal feed in 2014 or 2015. (Dkt. 16 ¶ 62.) Diamond V’s products include “a dairy cow feed supplement under the name NUTRITEK.” (Dkt. 16 ¶ 5.) Diamond V’s “NUTRITEK ingredient consists of functional metabolites and fermentation compounds” that can be “blended with other material to produce animal feed.” (Dkt. 16 ¶¶ 63-65.) Diamond V registered the NUTRITEK mark with the United States Patent 1 The Amended Complaint states that “[a] copy of the registration is attached as Exhibit A”, but there are no attachments to the Amended Complaint, Docket 16. It is presumed Plaintiff intended to attach the same Exhibits attached to the original Complaint. 2 While Plaintiff vaguely alleges that its product is sold to “ultimately consumers”, the Amended Complaint makes clear that Plaintiff sells its NUTRITEK dried whey product at a wholesale level, only in bulk, to manufacturers to be blended with other products to make dairy products which are then sold by someone else to the ultimate consumer. (Dkt. 16 ¶ 49-51, 59.) 3 All facts are taken from the Amended 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). Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 4 of 29 3 and Trademark Office for “animal feed supplements, in Class 5”, receiving Registration No. 4,728,885 (“’885 Registration”) on April 28, 2015. (Dkt. 16 ¶ 71, Dkt. 1-2, Ex. B to original Complaint.) The new allegations in the Amended Complaint are just as vague and conclusory as the allegations in the original Complaint. The Amended Complaint still fails to identify facts-as opposed to conclusions-to support a claim that the parties’ NUTRITEK products compete or are related, or that the parties sell their NUTRITEK products to the same customers, in the same channels of trade, or using the same marketing channels. All that is known from the Amended Complaint is that Foremost sells a NUTRITEK demineralized dried whey to “manufacturers and customers” for use in making infant formula and specialty dairy products and Diamond V sells a NUTRITEK feed supplement for use in dairy cow feed. (Dkt. 16 ¶ 49-51, 5.) While Foremost alleges its NUTRITEK demineralized dried whey is sold and marketed as well for “animal feed products” (Dkt. 16 ¶¶ 46-47), it fails to identify what type of feed it is used in, identify customers who purchase it for use in animal feed products, or identify marketing channels in which Foremost markets its NUTRITEK demineralized dried whey for animal feed. Foremost was able to identify the type of animal feed Diamond V’s NUTRITEK is marketed and sold for-“dairy cow feed supplement” (Dkt. 16 ¶ 5), yet Foremost is unable to identify the type of animal feed for which its NUTRITEK product is sold and marketed. The silence in the Amended Complaint is deafening. Foremost also fails to provide any allegations to support a conclusion that the parties compete for customers or that there is any overlap in their customer bases. Instead, Foremost makes the conclusory allegations that “Diamond V’s NUTRITEK mark … is used to market and sell products to overlapping manufacturers, customers and consumers to the manufacturers, Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 5 of 29 4 customers and consumers of Foremost Farm ….” (Dkt. 16, ¶ 72.) Yet, the Amended Complaint only identifies Foremost’s customers as manufacturers of infant formula and specialty dairy products and only identifies Diamond V’s customers as manufacturers of dairy cow feed supplements. While Foremost alleges it sells its NUTRITEK demineralized dried whey to “manufacturers” and “customers” of animal feed, Foremost does not identify the type of animal feed manufacturer in even a general manner, although it did so for Diamond V’s NUTRITEK product. Again, the silence in the Amended Complaint is deafening. If the parties actually sold to competing customers, Foremost could easily have said so in the Amended Complaint. Likewise, Foremost makes the conclusory allegation that “the channels of trade used by Foremost Farms and Diamond V are overlapping. Both Foremost Farms and Diamond V interface with manufacturers, customers, and consumers in the dairy industry and the animal feed industry.” (Dkt. 16 ¶ 82 (emphasis added).) That the parties “interface” with manufacturers in the dairy industry and the animal feed industry does not establish how either party markets and sells its respective NUTRITEK products within those industries. This is particularly true in this case where Foremost makes products created by the dairy industry, whereas Diamond V makes products for farmers in the dairy industry to feed to their dairy cows. In its plainest terms, Diamond V produces and sells feed supplements that go into feed for dairy cows, while Foremost takes the milk produced by dairy cows and produces and sells dairy products, including dried whey. The Amended Complaint is equally vague about the parties’ marketing channels. The only marketing actually identified by Foremost-“informational brochures” available on its website (Dkt. 16 ¶¶ 46, 81)-reveals that Foremost does not market its NUTRITEK product to the animal feed industry. (See Declaration of Jason Sytsma, and Exs. B-E, copies of NUTRITEK Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 6 of 29 5 brochures contained on Foremost’s website.)4 Rather, the NUTRITEK brochures are clearly marketed for human consumption, touting Foremost’s NUTRITEK demineralized dried whey for use in infant formula, soups and dry mixes, drinks and salad dressings, ice cream and frozen desserts, and fillings. (Id.) No brochure was found on Foremost’s website referring to NUTRITEK for use as, or related to, animal feed. (Declaration of Jason Sytsma.) Although Foremost has brochures for “feed grade” products, none of those brochures refer to Foremost’s NUTRITEK demineralized dried whey. (Declaration of Jason Sytsma & Exs. E-F.) Foremost’s 2015 Sustainability Overview, another brochure available from Foremost’s website, reveals that Foremost itself uses a different brand name when marketing and selling its dried whey for animal feed. Foremost’s “portfolio of brands” includes “Nutritek® (reduced mineral whey)” and a separate brand for animal feed: “Lacto-G® (feed grade whey)”. (Ex. A to Declaration of Jason Sytsma.) Foremost’s artful pleading-that it markets its NUTRITEK product through brochures available on its website-does not provide an allegation relevant to the issue of whether the parties market their respective NUTRITEK products to similar or overlapping customers or in overlapping channels of trade. While Foremost markets its NUTRITEK demineralized dried whey on its website for infant formula and specialty dairy products, consistent with the brochures located on Foremost’s website, Foremost does not market its NUTRITEK product for use in or related to animal feed on its website. 4 Documents referred to in a Complaint that are central to the Plaintiff’s claims may be considered by the Court in addressing a Rule 12(b)(6) Motion to Dismiss without turning the motion into one for summary judgment. See Hecker v. Deere & Co., 556 F.3d 575, 582-83 (7th Cir. 2009) (explaining the Seventh Circuit’s “liberal … approach” to allowing the consideration of documents referred to in a complaint that are central to the Plaintiff’s claim); see also City of Sterling Heights Police & Fire Ret. Sys. v. Kohl's Corp., No. 13-C-1159, 2015 WL 1478565, at *4-5 (E.D. Wis. Mar. 31, 2015) (concluding that a document contained on a website was publicly available). Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 7 of 29 6 Finally, Foremost also fails to allege how Foremost’s NUTRITEK demineralized dried whey competes with or is related to the functional metabolites and fermentation compounds sold under Diamond V’s NUTRITEK mark. Are the products blended with other ingredients to make the same type of animal feed? Do they provide the same function so that a manufacturer would choose between the parties’ respective NUTRITEK products? The Amended Complaint does not say. The Amended Complaint provides no allegations that the products compete or are related other than to allege vaguely that both are sold to be blended with other ingredients to make some type of animal feed. The same could be said of any substance suitable for human or animal consumption. Foremost’s Amended Complaint includes the same claims as its original Complaint: 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). Each Count should be dismissed for the following reasons. 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 Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 8 of 29 7 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.”). While factual allegations in the Amended 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. 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). Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 9 of 29 8 III. Foremost 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 Foremost’s claims pleaded in Counts I-V. Each of Foremost’s Counts I-V includes, as requirements of the respective claim, that the Foremost’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). 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 Foremost’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). 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 Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 10 of 29 9 pleading requirements of Federal Rule of Civil Procedure 8 “demand[] more than an unadorned, 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 Amended Complaint. A. Foremost’s Amended Complaint lacks allegations of a protectable interest in the NUTRITEK mark for use on goods for animal consumption. Trademark infringement of Foremost’s registered or common law trademark under 15 U.S.C. §§ 1114(a) and 1125(a) requires Foremost 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 (7th Cir. 1996). 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). 1. Foremost’s registered NUTRITEK trademark does not cover use on goods for animal consumption. Foremost has a federal registration for the NUTRITEK mark. 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 …. 15 U.S.C. § 1115(a) (emphasis added); see also Packman, 267 F.3d at 638-39. Thus, according to the Complaint, Foremost's ‘696 Registration is only conclusive evidence of Foremost’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 “closely related goods”, see McGraw-Edison Co. v. Walt Disney Prods., 787 F.2d 1163, 1169 (7th Cir. 1986) (“[T]he rights of Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 11 of 29 10 an owner 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.”); Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 958 (7th Cir. 1992) (“A closely related product is one which would reasonably be thought by the buying public to come from the same source, or thought to be affiliated with, connected with, or sponsored by, the trademark owner.” (internal marks omitted)), the original Complaint was completely silent on the relatedness of Foremost’s and Diamond V’s goods sold under the NUTRITEK mark. Foremost attempted to address this deficiency in its Amended Complaint by alleging that “powder ingredients” for human food products are “related” to ingredients for animal feed because powder ingredients can be mixed with other ingredients to make both human and animal food. (Dkt. 16 ¶ 58.)5 This is not the test. “’Related’ does not mean that there is necessarily any physical relationship between the goods or services identified by the conflicting marks. Rather, it means that the marks as used are ‘related’ in the mind of the consuming public.” 4 McCarthy on Trademarks and Unfair Competition § 24:3 (4th ed.) (emphasis added). “Goods are related if consumers would use them in conjunction with each other.” S Indus., Inc. v. Stone Age Equipment, Inc., 12 F. Supp. 2d 796, 814 (N.D. Ill. 1998) (emphasis added) (“It is beyond dispute that consumers do not, for example, use tennis rackets, golf balls, basketballs, or bicycles in connection with climbing shoes or shoes designed for traversing river beds.”); S Indus. v. Hobbico, Inc., 940 F. Supp. 210, 212 (N.D.Ill.1996) (dismissing S Industries' complaint because the sporting goods listed in its registrations are “entirely different goods” than the defendants' fishing tackle floats); S Indus., 5 Paragraph 58 is Foremost’s only attempt to address the relatedness of the parties’ NUTRITEK products. Yet, ¶ 58 does not even reference Foremost’s NUTRITEK product, only giving as an “example” that “Foremost’s dried whey is a white powder that can be mixed with other ingredients to make human infant formula[] … [and] can also be mixed with other ingredients to make animal feed.” Foremost’s use of the term “dried whey” instead of “NUTRITEK” is telling. That Foremost has a dried whey product that “can be mixed with other ingredients to make animal feed” does not establish that Foremost’s NUTRITEK product is in fact mixed with other ingredients to make animal feed. Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 12 of 29 11 Inc. v. GMI Holdings, Inc., No. 96-C-2232, 1998 WL 67627 at *7 (N.D. Ill. 1998) (finding S Industries' garage door locks unrelated to defendant's garage door openers). Considering the non-conclusory allegations in the Amended Complaint, Foremost has only identify its NUTRITEK mark as associated with a demineralized dried whey product used to make infant formula or specialty dairy products, both for human consumption. (Dkt. 16 ¶¶ 49- 50.) Foremost could just as easily have identified the type of animal feed for which its NUTRITEK product is used, similar to the way Foremost identified infant formula and specialty dairy products for human consumption. Instead, Foremost makes only conclusory allegations that it “sells its NUTRITEK dried whey product to various customers, including but not limited to … manufacturers, customers and ultimately consumers of animal feed products.” (Dkt. 16 ¶ 47.) This is not the type of factual allegation that would allow “the court to draw the reasonable inference” that Diamond V “is liable for the misconduct alleged,” i.e., trademark infringement from its use of the NUTRITEK mark for its “animal feed ingredient consist[ing] of functional metabolites and fermentation compounds”, which are used as a dairy cow feed supplement as alleged in the Amended Complaint, Dkt. 16 ¶ 5, 63. See Iqbal, 556 U.S. at 678. Foremost’s vague and conclusory allegations fail to meet the Iqbal standard. Iqbal, 556 U.S. at 678 (It is insufficient to “plead[] facts that are ‘merely consistent with’ a defendant's liability.”) (quoting Twombly, 550 U.S. at 557). Foremost’s Amended Complaint does not plausibly suggest anything more than that it sells and markets its NUTRITEK dried whey product for use in dairy products for human consumption while Diamond V sells and markets its NUTRITEK functional metabolites and fermentation compounds for use in animal feed. However, “[a]nimal products have not generally been considered ‘related’ to human [products] for trademark purposes.” Bioglan Inc. v. Bioglan Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 13 of 29 12 Labs. Ltd., No. SACV 96-799 AHS EEX, 1997 WL 732340, at *10 (C.D. Cal. June 4, 1997). 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, as was done for the parties’ respective NUTRITEK marks. See Fort Dodge Labs., Inc. v. Haeussler, 234 F.2d 506, 507-08 (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 ….” Id. 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 (C.C.P.A. 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 Products Corp., 201 F.2d 373 (C.C.P.A. 1953); In re Myers, 201 F.2d 379 (C.C.P.A. 1953); and Ex parte The Herrman-McLean Co., 98 U.S.P.Q. 455 (1953)). That Foremost has a protectable interest in the NUTRITEK 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. Count I should be dismissed. 2. Foremost does not have a common law protectable interest in the NUTRITEK mark for use on goods for animal consumption. Foremost also alleges infringement of its common law trademark rights in NUTRITEK for use in connection with animal supplements. In its Amended Complaint, Foremost has still Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 14 of 29 13 provided only conclusory statements that “NUTRITEK dried whey is suitable for blending the powder with other ingredients for … animal consumption” (Dkt. 16 ¶ 45, 54) and that it markets and sells “its NUTRITEK dried whey product to … manufacturers, customers and ultimately consumers of animal feed products” (Dkt. 16 ¶ 46-47.) The only specific allegation about Foremost’s marketing is its assertion that it “distributes informational brochures about its NUTRITEK product and markets its NUTRITEK product on its website.” (Dkt. 16 ¶ 46; see also ¶ 81.) Foremost is careful not to allege that it distributes information about the NUTRITEK mark on its website specifically for use in animal feed, because it does not do so. As Foremost has identified, the intended use of its NUTRITEK demineralized dried whey is for infant formula and specialty dairy products. Nothing in the Amended Complaint or Foremost’s website plausibly suggests that Foremost actually markets its NUTRITEK product for use in animal feed. (See Declaration of Jason Sytsma.) 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)). Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 15 of 29 14 Foremost’s simple allegations that dried whey has been used in “animal feed products” (see, e.g., Dkt. 16 ¶ 28) and that NUTRITEK is marketed on its website (Dkt. 16 ¶ 46, 81)- without also identifying that NUTRITEK is marketed specifically for use in animal feed-does not meet the requirement that the NUTRITEK mark must be used in a sufficiently public way to identify the specific goods in an appropriate segment of the public as Foremost’s goods. The “appropriate segment of the public” for Foremost’s NUTRITEK goods are manufacturers and consumers of infant formula and specialty dairy products, whereas the “appropriate segment of the public” for Diamond V’s NUTRITEK product are feed mills and dairy farmers. Foremost 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. Counts II through V should be dismissed. B. Foremost’s Amended 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 Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 16 of 29 15 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. 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 Accessories, 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)). The focus is on consumers. Thus, “[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. 1. The parties use the marks on dissimilar products. With respect to the second factor considered by the Seventh Circuit, Foremost’s dried whey product for human consumption and Defendant’s dairy cow 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) Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 17 of 29 16 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) (recognizing that trademark protection extends to non-competitive products if they 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, but not for the third). Absent a showing that the products are either competitive or closely related, the second factor cannot support a finding of 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 Amended 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, namely dairy cow feed. (Dkt. 16 ¶ 5, 62-63.) The only non- conclusory allegations in the Amended Complaint state that Foremost uses its NUTRITEK mark with its dried whey that is used in infant formula and specialty dairy products similar to skim Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 18 of 29 17 milk. (Dkt. 16 ¶¶ 49-50.) While the Amended Complaint makes the conclusory allegations that Foremost’s NUTRITEK dried whey is “suitable for use,” sold, and marketed for use in products for animal consumption (Dkt. 16 ¶¶ 45-47), it does not identify any specific animal feed product its NUTRITEK 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 through what channels it 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 NUTRITEK products sold or marketed by Foremost, and the second “likelihood of confusion” factor is unsupported. See Sullivan v. CBS Corp., 385 F.3d 772, 778-79 (7th Cir. 2004) (concluding that music CDs containing the soundtrack from the “Survivor” television series are not closely related products as music CDs sold by the rock band, “Survivor” where the CDs are sold in different sections of a music store and the TV series soundtrack did not suggest its music was from an eponymous band); 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”). 2. There are no allegations the parties sell or market their respective products in the same channels of trade or to similar customers. 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. Foremost makes no allegations about where or how it sells its NUTRITEK dried whey product. The only allegation about its marketing of the NUTRITEK product is through brochures distributed on its website (Dkt. 16 ¶¶ 46, 81), but as has been shown, those NUTRITEK brochures do not market the NUTRITEK product for use in animal feed. (Declaration of Jason Sytsma and Exhibits.) Nor Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 19 of 29 18 does Foremost identify the markets in which it sells the NUTRITEK product or the channels of distribution it uses. The Complaint makes no identification of Foremost’s customers, either by name, trade, or even industry, other than the infant formula and specialty dairy products industries. Diamond V’s NUTRITEK animal feed supplement is not alleged to be sold to those same customers or even within the same industries. Foremost’s allegations make clear it sells its NUTRITEK demineralized dried whey at the wholesale level, but it makes no allegations about the sophistication of its wholesale customers or factors they might consider in making their purchases. 3. There are no allegations to show Plaintiff’s NUTRITEK mark is strong. With respect to the strength of Plaintiff’s mark (the fifth factor), Foremost alleges only that its “Foremost name” (Dkt. 16 ¶ 30) is known, and its dairy products are sold, around the world. The strength of the Foremost name is irrelevant, however, where Foremost is suing for infringement of its NUTRITEK mark. Foremost 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 allegedly used since 1961, with no additional facts of the extent of its use. (Dkt. 16 ¶¶ 31-41.) Foremost has alleged no facts from which could be found that its NUTRITEK mark is strong. 4. There are no allegations to support a finding of consumer confusion, actual or otherwise. The Amended Complaint includes no non-conclusory allegations of confusion, actual or otherwise, to support the sixth factor. Foremost makes only the boilerplate allegations that the NUTRITEK marks are identical, “used in overlapping channels of trade”, and “is used to market and sell products to overlapping manufacturers, customers and consumers … and thus causes Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 20 of 29 19 confusion or mistake as to Foremost Farms’ sponsorship or affiliation with Diamond V’s products.” (Dkt. 16 ¶ 72.) Yet the only allegation about “channels of trade” identified by Foremost asserts that both parties market their NUTRITEK products on their websites. (Dkt. 16, ¶¶ 46, 81.) Websites, without more allegations as to how the websites are used, could not be “overlapping channels of trade,” or every product in the world would be considered as related products. Likewise, the only “manufacturers” identified are infant formula and specialty dairy manufacturers as customers of Foremost compared to feed mills and dairy farmers as customers of Diamond V. These cannot be considered overlapping customers by any stretch of the imagination. 5. Diamond V has not attempted to pass off its goods as Foremost’s goods. 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. 16 ¶ 68), which demonstrates a lack of any intent to pass off its NUTRITEK product as sourced from Foremost. 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 Foremost. 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). 6. Allegations that the marks look and sound the same are insufficient to meet the likelihood of confusion element of each of the claims in Counts I-V. 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. Even though the parties’ respective NUTRITEK marks use the same letters and sound the same phonetically, the Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 21 of 29 20 Seventh Circuit has made clear that the Court must “make the comparison ‘in light of what happens in the marketplace and not merely by looking at the two marks side-by-side.’” Sullivan, 385 F.3d at 777-78 (quoting Ty, Inc. v. The Jones Group, Inc., 237 F.3d 891, 898 (7th Cir. 2001) and considering how the “Survivor” mark appeared in reference to the television series in a trademark action brought by the owner of the rock band “Survivor”, who had a federal registration to the “Survivor” mark). Thus, even this factor does not weigh heavily in favor of Foremost’s claims where the Foremost logo is used next to its NUTRITEK mark (Dkt. 16 ¶ 41), and Diamond V’s logo appears next to its NUTRITEK mark (Dkt. 16 ¶ 68). Further, stylistic similarities are insufficient to make two marks similar in appearance “if the public does not usually encounter the two marks together.” Sullivan, 385 F.3d at 777-78. Foremost does not allege that the NUTRITEK marks are ever seen together in commerce. The allegations that the parties use a mark that is similar in spelling and pronunciation 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”). Foremost makes no allegations to support a conclusion that any of the other factors exist. On this Amended Complaint, Foremost has alleged only that it owns a registered trademark to a NUTRITEK mark, which it uses on its demineralized dried whey product, and that the demineralized dried whey is used in infant formula and specialty dairy products for Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 22 of 29 21 human consumption. It alleges that Diamond V uses a NUTRITEK mark-for which Diamond V has also received a federal registration-on ingredients used in animal feed supplements, specifically dairy cow feed. 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. Count V for Common Law Unfair Competition 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., 75 F.3d at 1155. There are no allegations in the Amended Complaint that Diamond V has attempted to mislead or deceive the public. To the contrary, the Amended Complaint reveals that Diamond V prominently displays its own Diamond V logo with its NUTRITEK mark. (Dkt. 16 ¶ 68.) “[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). Foremost has done so here, and the common law unfair competition claim 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). V. Count VII for Registration Cancellation should be dismissed because 15 U.S.C. § 1119 does not provide an independent cause of action that can be brought offensively. Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 23 of 29 22 Count VII seeks cancellation of Diamond V’s ‘885 Registration pursuant to 15 U.S.C. § 1119 on the basis that Foremost is “the superior user of the NUTRITEK mark and has priority over Diamond V.” (Dkt. 16 ¶ 124.) Foremost’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. 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 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 in limited circumstances, i.e., “[i]n any action involving a registered mark.” 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; it does not indicate Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 24 of 29 23 that a cancellation claim is available as an independent cause of action.” Airs Aromatics, LLC, 744 F.3d at 599 (emphasis added). 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.’ ” Id. at 599 (quoting Nike, 663 F.3d at 98 and citing Ditri, 954 F.2d at 873; Windsurfing, 828 F.2d at 758). 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); see also Thomas & Betts Corp. v. Panduit Corp., 48 F. Supp.2d 1088, 1093 (N.D. Ill. 1999) (“Section 1119 … does not create an independent cause of action ….”). As explained by the Second Circuit in Nike, “[o]ther 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). Thus, a cancellation claim arises as a counterclaim to a claim of infringement. The owner of a registered trademark sues another for trademark infringement, and the defendant counterclaims on the basis that the plaintiff’s trademark registration is invalid, seeking cancellation of the registered trademark as a defensive counterclaim to the plaintiff’s infringement action. See, e.g., Already, LLC v. Nike, Inc., 133 S.Ct. 721, 729-30 (2013) (affirming Second Circuit’s dismissal of defendant Already’s trademark cancellation counterclaim under § 1119 as moot where plaintiff Nike dismissed its infringement claims with prejudice on the basis that the validity of Nike’s registered trademark was no longer at issue since Nike dismissed its infringement claims with prejudice). Here, Diamond V’s federal registration is not involved in the controversy; only Foremost’s mark is involved. Foremost has alleged that Diamond V’s action of using the NUTRITEK mark in commerce for Diamond V’s product infringes on Foremost’s registered Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 25 of 29 24 trademark. That controversy does not depend on the validity of Diamond V’s own registered NUTRITEK mark, which is limited to animal feed supplements. It is important to recognize that 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). Thus, Diamond V’s receipt of a registered trademark does not result in infringement. It is Diamond V’s use of the mark-with or without the registration-that Foremost is challenging as infringing on Foremost’s registered trademark. Further, Foremost has not claimed that it has been damaged by Diamond V’s receipt of a registered trademark by bringing an action for damages under 15 U.S.C. § 1120. Foremost’s amendment to its Complaint to add an allegation that “[r]esolving the validity of Diamond V’s NUTRITEK mark in this matter is efficient and will result in cost-savings to the parties” is irrelevant to whether a cancellation claim is available as an offensive claim. In Nike, the Supreme Court explained that Already, the defendant, had “standing to file its counterclaim because Nike allegedly pressed an invalid trademark to halt Already’s legitimate business activity.” Nike, 133 S.Ct. at 727. Thus, the Supreme Court has recognized a party can properly seek cancellation of a trademark registration if the registration holder uses the allegedly invalid registration to “halt [the party’s] legitimate business activity.” Id. Here, Diamond V is not, and Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 26 of 29 25 has never, attempted to use its own registration to stop Foremost from using Foremost’s own NUTRITEK mark. Rather, Foremost asserts that Diamond V’s use of the NUTRITEK mark-which is independent of Diamond V’s ‘885 Registration-is infringing on Foremost’s ‘696 Registration. Thus, it is Foremost’s ‘696 Registration that is at issue in this controversy, not Diamond V’s ‘885 Registration. Foremost’s only basis for challenging Diamond V’s ‘885 Registration is Foremost’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. Foremost 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. 16 ¶ 11.) To the extent the Court dismisses the Lanham Act claims, this jurisdictional prerequisite disappears, and this Court would lack jurisdiction over the single remaining state law claim. VII. Summary Foremost’s Amended 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. Foremost alleges that Diamond V is using the NUTRITEK mark for functional metabolites and fermentation compounds that are used in dairy cow feed supplements, for which Diamond V received a federal trademark registration in 2015. Other allegations in the Amended Complaint are entirely conclusory. The Amended Complaint is wholly devoid of those facts that would be Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 27 of 29 26 needed to establish: (1) that Foremost 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 both (or either) of 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 authorize 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. Dated this 20th day of December, 2016. /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 #: 21 Filed: 12/20/16 Page 28 of 29 27 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 December 20, 2016 by: Electronic filing /s/ Paula Pohlpeter Case: 3:16-cv-00551-jdp Document #: 21 Filed: 12/20/16 Page 29 of 29