Kason Industries, Inc. v. Kkt, Inc.

First MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM Plaintiff's Amended Complaint In Part with Brief In Support

N.D. Ga.June 6, 2017

1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA NEWNAN DIVISION KASON INDUSTRIES, INC. ) ) Plaintiff, ) v. ) Civil Action No. ) 3:17-cv-00026-TCB KKT, INC. d/b/a LOCKWOOD ) MANUFACTURING COMPANY, ) ) ALLPOINTS FOODSERVICE PARTS ) AND SUPPLIES, LLC, ) d/b/a ALLPOINTS HOLDINGS INC., ) ) DIVERSIFIED FOODSERVICE ) SUPPLY, LLC, ) ) D.S.I. PARTS, INC., ) ) FACTORY DIRECT ) WORLDWIDE, LLC, ) d/b/a FDW PARTS, ) ) FRANKLIN MACHINE ) PRODUCTS. INC., ) ) KKT, INC. d/b/a LOCKWOOD ) MANUFACTURING ) COMPANY, and ) ) TUNDRA RESTAURANT ) SUPPLY, LLC, ) ) Defendants. ) Case 3:17-cv-00026-TCB Document 20 Filed 06/06/17 Page 1 of 5 2 DEFENDANTS ALLPOINTS FOODSERVICE PARTS AND SUPPLIES, LLC; DIVERSIFIED FOODSERVICE SUPPLY, LLC; D.S.I. PARTS, INC.; FACTORY DIRECT WORLDWIDE, LLC; FRANKLIN MACHINE PRODUCTS, INC.; AND TUNDRA RESTAURANT SUPPLY, LLC’S MOTION TO DISMISS IN PART PLAINTIFF’S AMENDED COMPLAINT Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants Diversified Foodservice Supply, LLC, AllPoints Foodservice Parts and Supplies, LLC, d/b/a AllPoints Holdings, Inc., Factory Direct Worldwide, LLC, d/b/a FDW Parts, Franklin Machine Products, Inc., D.S.I. Parts, Inc., and Tundra Restaurant Supply, LLC (together, “Defendants” or “Diversified Defendants”). In support of their motion, Defendants state as follows and further submit a Memorandum of Support of their Motion to Dismiss: The claims alleged in Counts III and VI of Plaintiff Kason Industries, Inc.’s first amended complaint (Dkt. No. 8) fail to meet Supreme Court pleading standards. Plaintiff’s claims for Federal Trademark Dilution and Common Law Unjust Enrichment must be dismissed because: (1) Plaintiff has failed to plead facts sufficient to support a plausible claim for dilution of its marks, (2) Plaintiff’s claim for common law unjust enrichment is not recognized as a separate tort under Georgia law, and (3) Plaintiff has not, and cannot allege that it properly marked or provided actual notice of its allegedly protected refrigerator door hinges and latches as required by federal statute; and (4) having failed to plead Case 3:17-cv-00026-TCB Document 20 Filed 06/06/17 Page 2 of 5 3 facts sufficient to plausibly claim actual notice of its registered trade dress as required by statute, Plaintiff’s allegations of willfulness cannot be supported. In the absence of any plausible allegation of willful action by the Defendants, injunctive relief is also unavailable as a remedy. Dated: June 6, 2017 Respectfully submitted, /s/ Lawrence K. Nodine Lawrence K. Nodine Georgia Bar No. 545250 Email: nodinel@ballardspahr.com Chittam U. Thakore Georgia Bar No. 890965 Email: thakorec@ballardspahr.com BALLARD SPAHR LLP 999 Peachtree Street, Suite 1000 Atlanta, GA 30309 Telephone: (678) 420-9300 Facsimile: (678) 420-9301 /s/ David S. Kerr David S. Kerr (pro hac vice admission pending) BERG HILL GREENLEAF RUSCITTI, LLP 1712 Pearl St. Boulder, CO 80302 Telephone: (303) 402-1600 Email: dsk@bhgrlaw.com Attorneys for Diversified Defendants Case 3:17-cv-00026-TCB Document 20 Filed 06/06/17 Page 3 of 5 4 CERTIFICATE OF COMPLIANCE WITH TYPEFACE REQUIREMENTS Pursuant to LR 7.1D, I hereby certify the foregoing has been prepared using 13-point Book Antigua, as approved by LR 5.1B. /s/ Lawrence K. Nodine Lawrence K. Nodine Georgia Bar No. 545250 nodinel@ballardspahr.com BALLARD SPAHR LLP Attorney for Diversified Defendants Case 3:17-cv-00026-TCB Document 20 Filed 06/06/17 Page 4 of 5 5 CERTIFICATE OF SERVICE I hereby certify that on June 6, 2017, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will automatically send email notification of such filing to the following attorneys of record: Jessica S. Sachs David P. Utykanski HARNESS, DICKEY & PIERCE P.L.C. 5445 Corporate Drive, Suite 200 Troy, MI 48098 jsachs@hdp.com davidu@hdp.com Attorneys for Defendant KKT, Inc. Ann Fort Robert Kohse Eversheds Sutherland, LLP 999 Peachtree, N.E. Suite 2300 Atlanta, GA 30309-3996 annfort@eversheds-sutherland.com robkohse@eversheds-sutherland.com Attorneys for Plaintiff /s/ Lawrence K. Nodine Lawrence K. Nodine Georgia Bar No. 545250 nodinel@ballardspahr.com BALLARD SPAHR LLP Attorney for Diversified Defendants Case 3:17-cv-00026-TCB Document 20 Filed 06/06/17 Page 5 of 5 1 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA NEWNAN DIVISION KASON INDUSTRIES, INC. ) ) Plaintiff, ) v. ) Civil Action No. ) 3:17-cv-00026-TCB KKT, INC. et al., ) ) Defendants. ) MEMORANDUM OF LAW IN SUPPORT OF DIVERSIFIED DEFENDANTS’ MOTION TO DISMISS IN PART PLAINTIFF’S AMENDED COMPLAINT PRELIMINARY STATEMENT Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants Diversified Foodservice Supply, LLC, AllPoints Foodservice Parts and Supplies, LLC, d/b/a AllPoints Holdings, Inc., Factory Direct Worldwide, LLC, d/b/a FDW Parts, Franklin Machine Products, Inc., D.S.I. Parts, Inc., and Tundra Restaurant Supply, LLC (together, “Defendants” or “Diversified Defendants”) respectfully submits this memorandum of law in support of its motion to dismiss with prejudice Counts III and VI (Federal Trademark Dilution, Common Law Unjust Enrichment) of the First Amended Complaint (“FAC”) as well as the claim for pre-suit damages, willfulness, and injunctive relief filed by Plaintiff Kason Industries, Inc. (“Kason” or “Plaintiff”) (Dkt. No. 8). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 1 of 28 2 INTRODUCTION This lawsuit boils down to a dispute over a series of trademarks. These trademarks include both traditional word marks directed to the name of Plaintiff’s business. (FAC ¶ 31). It also includes a lesser known type of non- traditional trademark sometimes referred to as a “product configuration trademark” or “trade dress.” Plaintiff’s non-traditional marks include door hinges and latches designed for use with commercial refrigeration equipment. (FAC ¶ 31). Despite a total of 183 paragraphs spread out over its 76 page FAC, Plaintiff has failed to allege sufficient legal and factual support for its claims, and they should be dismissed. First, Plaintiff has failed to plead facts sufficient to support a plausible claim for dilution of its marks. A federal claim for dilution requires far more than the facts pled in Plaintiff’s FAC. A viable dilution claim exists only for those few truly famous marks. The case law illustrates that Plaintiff’s trademarks come nowhere close to meeting this very high standard. Plaintiff’s FAC contradicts its own claims when it repeatedly concedes that it operates only within a small niche market and not the general consuming public of the United States as required by statute. Plaintiff must plead sufficient facts to show that its dilution Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 2 of 28 3 claim is facially plausible. This, they have not done and cannot do. Plaintiff’s federal claim for dilution should be dismissed with prejudice. Second, Plaintiff’s claim for common law unjust enrichment is not recognized as a separate tort under Georgia law. This claim is legally defective and should also be dismissed with prejudice. Third, Plaintiff does not, and cannot, allege that it properly marked or provided actual notice of its registered trade dress as required by federal statute. Plaintiff’s failure to provide actual notice of its registered trade dress forecloses recovery of all pre-suit damages as a matter of law. Fourth, having failed to plead facts sufficient to plausibly claim actual notice of its registered trade dress as required by statute, Plaintiff’s allegations of willfulness cannot be supported. In the absence of any plausible allegation of willful action by Defendants, injunctive relief is also unavailable as a remedy. ARGUMENT I. STANDARDS GOVERNING A RULE 12(b)(6) MOTION TO DISMISS Rule 12(b)(6) mandates dismissal of a complaint that “fails to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Dismissal is appropriate where, as here, Plaintiff has failed to offer sufficient factual allegations to make its asserted claims plausible on their face. See Ashcroft v. Iqbal, Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 3 of 28 4 129 S. Ct. 1937, 1949 (2009). The non-moving party must provide “more than labels and conclusions” and “a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). II. PLAINTIFF FAILS TO STATE A CLAIM FOR FEDERAL TRADEMARK DILUTION A. PLAINTIFF DOES NOT OWN A FAMOUS MARK Plaintiff has not pled the requisite amount of fame and its federal dilution claim should be dismissed. To survive a 12(b)(6) challenge, Plaintiff must “plead enough facts to show that its dilution claim is facially plausible.” Heller Inc. v. Design Within Reach, Inc., No. 09-cv-1909, 2009 WL 2486054, at *10 (S.D.N.Y. Aug. 14, 2009) (citing Twombly, 550 U.S. at 570). Conclusory allegations of a mark’s “fame” are insufficient to withstand a motion to dismiss. Urban Group Exercise Consultants, Ltd. v. Dick’s Sporting Goods, Inc., No. 12-cv-3599, 2013 WL 866867, at *7 (S.D.N.Y. Mar. 8, 2013). Accordingly, since the adoption of the Trademark Dilution Revision Act of 20061 (the “TDRA”), courts have routinely dismissed federal dilution claims where the complaint alleges only niche fame or otherwise fails to sufficiently plead the fame element. See e.g., Luv N’ Care, Ltd. v. Regent Baby Products Corp., No. 10-cv-9492, 2012 WL 78042, at *4 (S.D.N.Y. Jan. 11, 2012) 1 Cf. Heller Inc., 2009 WL 2486054, at *3 (explaining that Congress enacted the TDRA “to replace” the FTDA). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 4 of 28 5 (conclusory allegations that alleged trademarks and trade dress were “widely known throughout the United States and worldwide” and “famous” lacked any factual reference to the trademarks and trade dress in suit, and were thus inadequate to plead the requirement of fame).2 2 See also Boston Granite Exchange Inc. v. Greater Boston Granite, LLC, No. 11-cv- 11898, 2012 WL 3776449, at *5 (D. Mass. Aug. 29, 2012) (finding allegation that mark was known to buyers of natural stone in the northeastern U.S. inadequate and dismissing on a 12(b)(6) motion); Helios Intern. S.A.R.L. v. Cantamessa USA, Inc., No. 12-cv-8205, 2013 WL 3943267, at *10 (S.D. N.Y. July 31, 2013); Urban Group Exercise Consultants, Ltd. v. Dick’s Sporting Goods, Inc., 2013 WL 866867 (S.D.N.Y. Mar. 8, 2013) (dismissing with prejudice claim that trade dress of an exercise trampoline was “famous” and diluted; allegations of sales and adverting fall short of that required to show that the mark was “widely recognized by the general public”); Boarding School Review, LLC v. Delta Career Educ. Corp., No. 11- cv-8921, 2013 WL 6670584 (S.D.N.Y. Mar. 29, 2013) (dismissing dilution claim for failure to plead sufficient facts to make it plausible that the marks are “famous”); Mike Vaughn Custom Sports, Inc. v. Piku, 15 F. Supp. 3d 735 (E.D. Mich. 2014) (dismissing dilution claim with prejudice under Rule 12(b)(6) because plaintiff failed to properly allege fame beyond recognition in a niche ice hockey sports market); Leapers, Inc. v. SMTC, LLC, No. 14-cv-12290, 2014 WL 4964376, at *5 (E.D. Mich. Oct. 3, 2014) (dismissing dilution claim with prejudice under Rule 12(b)(6) because plaintiff failed to properly allege fame in product trade dress beyond recognition in a niche market of sporting rifle scopes); Heller Inc., 2009 WL 2486054, at *3 (dismissing under 12(b)(6) plaintiff’s federal dilution claim and holding that plaintiff must plead enough facts to show that its dilution claim is facially plausible and that it had not alleged sufficient facts to suggest that its alleged product plausibly had achieved the required level of fame to warrant protection); Brain Pharma, LLC v. Scalini, 858 F. Supp. 2d 1349, 1357 (S.D. Fla. 2012) (dismissing federal dilution claim where plaintiff made only conclusory allegations of fame—“Plaintiff’s mere allegation that the BPI mark is famous is insufficient to state a trademark dilution claim”). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 5 of 28 6 In order to plead trademark dilution under the TDRA, a trademark owner must plausibly allege four elements: (1) that the mark is famous; (2) that the defendant is making use of the mark in commerce; (3) that such use began after the mark became famous; and (4) that there is a likelihood of dilution. See Pepsico, Inc. v. #1 Wholesale, LLC, No. 07-cv-367, 2007 WL 2142294, at *4 (N.D. Ga. July 20, 2007). The TDRA also provides that a mark is famous only “if it is widely recognized by the general consuming public of the United States.” 15 U.S.C. §1125(c)(2)(A). Because of the potential for overreaching, Congress intended fame in the dilution context to be construed narrowly. Unique Sports Prod., Inc. v. Babolat VS, 403 F. Supp. 2d 1229, 1244 (N.D. Ga. 2005). Under this strict construction, Plaintiff’s marks must be truly famous before they can come under the protection of federal antidilution laws. Id. at 1243–44. (citing Michael Caruso & Co., Inc. v. Estefan Enterprises, 994 F. Supp. 1454, 1463 (S.D. Fla. 1998), aff’d 166 F.3d 353 (11th Cir. 1998). The threshold of true fame, however, is exceptionally high. Courts generally have limited “famous marks to those that have had multi- million dollar advertising budgets, generate hundreds of millions of dollars in sales annually, and are universally recognized by the general public.” Heller Inc., 2009 WL 2486054, at *3; see also It’s a 10, Inc. v. Beauty Elite Group, Inc., No. 13-cv- Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 6 of 28 7 60154, 2013 WL 6834804, at *8 (S.D. Fla. Dec. 23, 2013) (“[A] party claiming dilution must establish that its mark is practically a household name, of the likes of such giants of branding as EXXON, KODAK and COCA-COLA.”). Plaintiff has not pled one fact relevant to fame, such as, the size and scope of the advertising campaigns that promote it marks, sales of products under the Kason name, sales of its allegedly trademarked refrigerator latches and hinges, the specific duration and extent of Plaintiff’s use of its alleged product configurations, or the degree of recognition of its marks by the general consuming public. Plaintiff also fails to allege that it has any social media presence or followers or that its name and refrigerator door latches and hinges have been featured in any popular media, such as television, movies, national magazines, and other mass media outlets. Plaintiff provides no independent market studies, surveys, or valuations of its marks. Finally, Plaintiff fails to plead with specificity when each of its marks became famous so as to provide a definite time when Defendants’ dilution allegedly began. (FAC ¶ 155). To illustrate Plaintiff’s deficient pleadings: Of the 183 individual paragraphs in the 79-page amended complaint, only two even attempted to factually allege consumer recognition. These allegations— referencing only three of the five refrigerator door latches at issue—conclude Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 7 of 28 8 simply that consumers have come to recognize their “appearance.” (FAC ¶¶ 70, 91). This is not an allegation but a “naked assertion” devoid of “further factual enhancement.” Bell Atl. Corp., at 557. Plaintiff does not allege that its marks are recognized by the general consuming public of the United Sates as required by statute, nor does it offer facts that could reasonably support such an inference. See Pharma, LLC v. Scalini, 858 F. Supp. 2d 1349, 1357 (S.D. Fla. 2012) (dismissing federal dilution claim where plaintiff made only conclusory allegations of fame— “Plaintiff’s mere allegation that the BPI mark is famous is insufficient to state a trademark dilution claim.”). Again, of the 183 individual paragraphs in the 79-page FAC, only one related to sales and advertising. This single reference claims that “as a result of Kason’s longstanding and substantial use, and significant advertising expenditures and sales success, the Kason Marks have developed significant goodwill and have become famous.” (FAC ¶ 154). Again, this is not an allegation of fame. This is a bald assertion. As illustrated by the cases herein, a passing reference to “substantial use,” “significant advertising expenditures,” and “sales success” devoid of any factual support does not come close to what is required to plead fame. See e.g., SMJ Group, Inc. v. 417 Lafayette Restaurant LLC, No. 06-cv-1774, 2006 WL 2516519, at *4 Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 8 of 28 9 (S.D.N.Y. Aug. 30, 2006) (“Neither continuous use of a mark nor a high volume of sales is sufficient to establish a claim for dilution.”). The case law is especially illustrative as to the level of sales and advertising that must be established to be considered truly famous. The discrepancy between Plaintiff’s claims and the law is only magnified when comparing truly famous marks side-by-side with Plaintiff’s alleged marks.3 For example:  Mattel’s HOT WHEELS mark has been found famous as a result of $350 million spent on advertising and three billion HOT WHEELS products sold. Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 635 (9th Cir. 2008);  VISA mark is famous with more than $1 billion yearly spent on advertising and with sales involving VISA cards accepted at 6.3 million locations and exceeding $1 trillion in 2006. Visa Int'l. Servo Ass'n V. JSL Corp., 533 F. Supp. 2d 1089, 1097 (D. Nev. 2007); 3 See also Anheuser-Busch Inc. v. Andy’s Sportswear Inc., No. 96-cv-2783, 1996 WL 657219 (N.D. Cal. Aug. 28, 1996) (finding the mark BUDWEISER famous); Audi AG v. D’Amato, 469 F.3d 534 (6th Cir. 2006) (finding the mark AUDI famous); Nissan Motor Co., Ltd. v. Nissan Computer Corp., No. 99-cv-12980, 2007 WL 4938219 (C.D. Cal. Sept. 20, 2007) (finding the mark NISSAN famous); Rolex Watch, U.S.A., Inc. v. Canner, 645 F. Supp. 484 (S.D. Fla. 1986) (finding the mark ROLEX famous). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 9 of 28 10  NIKE mark is famous with over $100 million annually spent on advertising and over 180 million pairs of NIKE shoes sold per year in the U.S., generating $5 billion in sales. Nike, Inc. V. Nikepal Int’l, Inc., No. 2:05- cv-1468, 2007 WL 2782030, at *6 (E.D. Cal. Sept. 18, 2007);  HERSHEY’S chocolate bar trade dress is famous from “tens of millions of dollars annually” spent on promotion, decades of advertising, an “historical presence,” and “iconic status.” Hershey CO. v. Art Van Furniture, Inc., No. 08-cv-14463, 2008 WL 4724756, at *13, 36 (E.D. Mich. Oct. 24, 2008);  VICTORIA’S SECRET mark is famous with nearly $500 million yearly spent on advertising and over one thousand VICTORIA’S SECRET stores in U.S., generating nearly $5 billion in revenues. V Secret Catalogue, Inc. v. Moseley, 558 F. Supp. 2d 734, 744 (W.D. Ky. 2008);  And finally this Court found the mark PEPSI to be famous. Pepsico, Inc. v. # 1 Wholesale, LLC, No. 07-cv-0367, 2007 WL 2142294 (N.D. Ga. July 20, 2007). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 10 of 28 11 It is clear that Plaintiff’s allegations of fame do not pass the eye test. Plaintiff does not begin to establish that the Kason name or its refrigerator door latches and hinges have accumulated the “cultural heft” to transform them into household names/designs that are instantly recognizable among the general public of the United States. B. RECOGNITION OF PLAINTIFF’S MARKS EXTENDS ONLY TO A NICHE MARKET Plaintiff has failed to show that its alleged marks are recognized beyond their niche market, which is insufficient to support a dilution claim as a matter of law. While many courts, including this one, rejected the notion that a mark could be famous within a niche market prior to the adoption of the TDRA in 20064, Congress adopted this revised statute to specifically prevent “dilution claims based on ‘niche’ fame, i.e. fame limited to a particular channel of trade, segment of industry or service, or geographic region.” Dan-Foam A/S v. Brand Named Beds, LLC, 500 F. Supp. 2d 296, 307 n.90 (S.D.N.Y. 2007) (internal citations and quotation marks omitted). 4 See e.g. Golden Bear Intern., Inc. v. Bear U.S.A., Inc., 969 F. Supp. 742, 749 (N.D.Ga.1996) (although “Golden Bear” mark is distinctive in particular market, it “certainly does not rise to the level of marks such as Exxon, Kodak, and Coca– Cola which have been found to be generally famous”). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 11 of 28 12 The decision in Bd. of Regents, Univ. of Tex. Sys. v. KST Elec., Ltd., is instructive on this point. There, the University of Texas (“UT”) sued KST Electronics for diluting its LONGHORNS mark. 550 F. Supp. 2d 657 (W.D. Tex. 2008). The court granted summary judgment in favor of KST on UT’s dilution claim, finding that the LONGHORNS mark was not famous. The court held that despite evidence that: 1) LONGHORN games were nationally televised on a regular basis (on stations such as ABC and ESPN); 2) the LONGHORN football team had recently played in the “highest rated college football game” in nearly two decades, and the highest rated in the history of the Bowl Championship Series, which attracted over 35 million viewers; 3) LONGHORN football players had ten times been featured “solely or as a part of the cover of Sports Illustrated” from 1963 to 2006; 4) UT likely held “the record for most royalties” from merchandising “in a single year;” 5) Forbes had recently rated the LONGHORN college football program as the “second most valuable in the country;” and 6) retail sales of UT products (in stores such as Wal-Mart and Target) had totaled nearly $400 million in a recent year, the LONGHORN mark was not famous under the TDRA. 550 F. Supp. 2d at 677-78. Regarding its decision, the court stated: Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 12 of 28 13 Reading through the evidence, it is not at all clear that if one is not a college football fan (or, to a much lesser extent, college baseball or basketball fan) would [sic] recognize the [logo] as being associated with UT, as all of the evidence relates to the use of the logo in sporting events. The Court is well aware that NCAA college football is a popular sport—the Court counts itself as a more than casual fan of Saturday afternoon football in the Fall—but this hardly equals a presence with the general consuming public (nearly the entire population of the United States). Simply because UT athletics have achieved a level of national prominence does not necessarily mean that the longhorn logo is so ubiquitous and well-known to stand toe- to-toe with Buick or KODAK. Id. at 678. If, after marshalling all of that evidence, the LONGHORN mark could not show it was anything other than a niche mark, Plaintiff’s chance of clearing that same legal hurdle is simply not plausible. For example, Plaintiff does not allege that it sells any products under its marks to the general consuming public, which, as the court in Bd. of Regents noted, would encompass “nearly the entire population of the United States.” 550 F.Supp.2d at 657. Instead, Plaintiff repeatedly admits that it operates only in the “commercial refrigeration and restaurant equipment hardware” market. Specifically, Plaintiff’s verified FAC states:  “Since the 1920’s, Kason has been and continues to be engaged in the business of developing refrigeration and restaurant equipment hardware in the United States.” (FAC ¶ 19). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 13 of 28 14  “Kason is headquartered in Newnan, Georgia . . . [and has] become a leading manufacturer of commercial refrigeration and restaurant equipment hardware in the United States.” (FAC ¶ 20).  “The commercial refrigeration and restaurant equipment hardware industry into which Kason sells its products . . . .” (FAC ¶ 21).  “In around 1957, Kason began selling a latch for use in commercial refrigeration and restaurant equipment . . . .” (FAC ¶ 23).  “Kason, AllPoints, Diversified, DSI Parts, FDW Parts, FMP, and Tundra are direct and indirect competitors in the commercial restaurant equipment industry, at least for the sales of replacement restaurant equipment parts. Kason and KKT are indirect competitors in the commercial restaurant equipment industry, at least for the sales of latches.” (FAC ¶ 120).  “Defendants are trading off of Kason’s reputation and goodwill as a leading innovator in the field of restaurant equipment components symbolized by Kason’s Marks.” (FAC ¶ 126).  “Defendants gain a competitive advantage in influencing purchasers of restaurant equipment bearing the Kason’s Marks and also unfairly gain a potential foothold in the market with customers . . . .” (FAC ¶ 126).  “ . . . Defendants will unfairly gain entry into the market for restaurant equipment products bearing the Kason Marks, including selling related replacement parts in the future, as well as the aftermarket for repairs . . . .” (FAC ¶ 127). Plaintiff’s repeated contentions concerning its association with the “commercial refrigeration and restaurant equipment hardware” industry underscore the fact that Plaintiff exists only in a niche market segment—namely Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 14 of 28 15 restaurants and businesses involved in commercial refrigeration. Thus, while Plaintiff’s marks may be recognized within this limited industry segment, no matter its actual size, it has still failed to plead that they are recognized outside this niche market as required by law. See Luv N' Care, Ltd., 841 F. Supp. 2d at 759 (noting that the standard for fame under the TDRA is whether a mark is recognized not merely by “a large segment of the population” but by the “general consuming public of the United States”) Plaintiff’s FAC further concedes that the refrigeration and restaurant equipment hardware industry into which its sells its products includes only two customers. (FAC ¶ 21) Specifically, Plaintiff’s verified FAC admits:  “The commercial refrigeration and restaurant equipment hardware industry into which Kason sells its products includes at least two types of customers: original equipment manufacturers (“OEMs”) and replacement hardware distributors. OEMs purchase and incorporate certain hardware, such as a door latch or door hinge, into the final products that they manufacture, such as commercial refrigerators and other restaurant equipment purchased by end-user customers. Replacement hardware distributors sell hardware components, such as individual door latches and door hinges, to equipment owners, such as restaurants or repair companies, who need to replace the original hardware.” Id. (emphasis added). Plaintiff’s admission that its entire market is limited to only two distinct customer groups is clearly contradictory to its claims of widespread fame. Again, Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 15 of 28 16 under federal law the degree of fame required for antidilution protection must exist in the general marketplace; niche market fame is irrelevant. See e.g., Leapers, Inc. v. SMTC, LLC, No. 14-cv-12290, 2014 WL 4964376, at *5 (E.D. Mich. Oct. 3, 2014) (dismissing dilution claim with prejudice under Rule 12(b)(6) because plaintiff failed to properly allege fame in product trade dress beyond recognition in a niche market of sporting rifle scopes). A non-famous mark does not invoke the antidilution statute, and the analysis ends there. Plaintiff has failed to properly allege fame in it marks beyond recognition in the small niche market segment of commercial refrigeration and restaurant equipment hardware and its claim should be dismissed with prejudice. C. PLAINTIFF’S DILUTION CLAIM CANNOT BE CURED Plaintiff’s dilution claim cannot be cured, and any request to further amend its complaint should be denied as futile. “Where the plaintiff is unable to demonstrate that [it] would be able to amend [their] complaint in a manner which would survive dismissal, opportunity to replead is rightfully denied.” Boarding School Review, LLC v. Delta Career Educ. Corp., No. 14-cv-12290, 2013 WL 6670584 (S.D.N.Y. Oct. 3, 2013) (dismissing plaintiff’s trademark dilution claims Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 16 of 28 17 with prejudice and denying leave to amend complaint finding that it would be futile). As a matter of fact, law, and more importantly commonsense, another 79 pages of pleadings will never turn this: into this: . No amended pleading will change the fact that Plaintiff admittedly operates in a niche market. More importantly, Plaintiff cannot plausibly claim that its marks are recognized outside this niche market, let alone by the entire consuming public of the United States. See Supra. No amendment can take back Plaintiff’s verified admission that its customer base is limited to two types of customers and not the entire United States consumer market as required by law. See Supra. Plaintiff’s dilution claim is unsupportable and any attempt to cure it would be futile. D. DISMISSAL WITH PREJUDICE IS APPROPRIATE Plaintiff’s marks are not famous and its dilution claim should be dismissed with prejudice. “[D]ilution fame is an either/or proposition—fame either does or does not exist.” Palm Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 1375 (Fed. Cir. 2005). In Savin Corp. v. Savin Group, the Second Circuit emphasized this principle when it noted that the element of federal dilution law that “most narrows the universe” of viable claimants is the Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 17 of 28 18 requirement that “the senior mark be truly famous before a court will afford the owner of the mark the vast protections” of the federal antidilution statue. 391 F.3d 439, 449 (2d Cir. 2004). The Second Circuit justified early determinations of dilution fame, stating: “[W]here it is possible for a district court to determine in the first instance the issue of the famousness of a senior mark, the court would be well advised to do so. Indeed, this will often obviate the costly litigation of potentially much thornier issues, such as whether actual blurring or tarnishing of the senior mark has in fact occurred . . . .” Id. at 449. Where the fame of a mark is “at all in doubt,” federal antidilution law does not apply. Bd. of Regents, 550 F. Supp. 2d at 678-79. Here, the fame of Plaintiff’s marks is most certainly “in doubt” and this claim should be dismissed with prejudice. III. PLAINTIFF FAILS TO STATE A CLAIM FOR COMMON LAW UNJUST ENRICHMENT Plaintiff’s claim for unjust enrichment fails as a matter of law because no such claim exists under Georgia law. Plaintiff alleges that “Defendants [are] being unjustly enriched through their unauthorized use of the Kason Marks,” (FAC ¶ 179), and that, as a result, “Defendants also have retained revenues obtained by its use of the confusingly similar Kason Marks to which they were not equitably or legally entitled.” (FAC¶ 181). Plaintiff also alleges that “[a]s the Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 18 of 28 19 direct and proximate result of Defendants’ deliberate and intentional infringement, Plaintiff continues to suffer injury.”5 (Id. ¶ 183). Despite these allegations of harm stemming from Defendants’ alleged actions, Plaintiff’s unjust enrichment claim is not legally recognized under the laws of Georgia and should be dismissed with prejudice. A “claim for unjust enrichment is not a tort, but an alternative theory of recovery if a contract claim fails.” Tidikis v. Network for Med. Commc’ns & Research LLC, 247 Ga. App. 807, 811, 619 S.E.2d 481, 485 (2005). Here, as in Tidikis, Plaintiff is “apparently treating the unjust enrichment claim like a [separate] tort.” Id. at 810, 619 S.E.2d at 485. Because Plaintiff asserts unjust enrichment as a separate tort claim, (FAC ¶ 177-183), and not as an alternative theory of recovery for any failed contract, this count must be dismissed. Somerson v. McMahon, 956 F. Supp. 5 Plaintiff’s unjust enrichment claim may also be dismissed—or alternatively struck—as being merely a recasting of its trademark and consumer fraud claims. See e.g., Kusek v. Family Circle, Inc., 894 F. Supp. 522, 528 (D. Mass. 1995) (finding a claim for unjust enrichment redundant where it repleaded a trademark infringement claim as a claim for equitable relief and another claim of “coopt” redundant as merely a recasting of claims for trademark infringement and/or for consumer fraud); see also Delta Air Lines, Inc. v. Network Consulting Assocs., Inc., No. 8:14-cv-948-T-24, 2014 WL 4347839, at *10 (M.D. Fla. Sept. 2, 2014) (dismissing the plaintiff’s unjust enrichment claim and noting that the plaintiff may pursue damages under the Lanham Act in the form of the defendants’ profits under a theory of unjust enrichment) (citing Babbit Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161, 1182 (11th Cir. 1994) (awarding profits under the Lanham Act and stating that “an accounting of profits is proper under a theory of unjust enrichment”). Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 19 of 28 20 2d 1345, 1357 (N.D. Ga. 2012) (citing Wachovia Ins. Servs., Inc. v. Fallon, 299 Ga. App. 440, 449, 682 S.E.2d 657 (2009)); Valencia v. Universal City Studios LLC, No. 1:14-cv-00528, 2014 WL 7240526, at *5 (N.D. Ga. Dec. 18, 2014) (dismissing unjust enrichment claim in suit alleging false advertising and unfair competition under 15 U.S.C. § 1125(a), deceptive trade practices under O.C.G.A. § 10-1-372, and trademark dilution related to trade dress). IV. PLAINTIFF FAILS TO STATE A CLAIM FOR PRE-SUIT DAMAGES, WILLFULNESS, OR INJUNCTIVE RELIEF Plaintiff admits it did not comply with the notice requirements of 15 U.S.C. § 1111, thus foreclosing any entitlement to pre-suit damages, a finding of willfulness, and injunctive relief. Plaintiff alleges various Lanham Act violations of seven different refrigerator door latch and hinge configurations, (FAC ¶ 31), under both 15 U.S.C. § 1114 and § 1125(a). However, because all of the product configurations it asserts are registered, Plaintiff’s ability to recover damages is limited by federal statue. Specifically, Plaintiff may not recover damages under the Lanham Act unless Plaintiff has provided Defendants with actual notice that its refrigerator door latch and hinge configurations are registered with the U.S. Patent and Trademark Office. 15 U.S.C. § 1111. Compliance with this statute can be through “actual notice of the registration” or by marking a statutory notice on Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 20 of 28 21 the actual refrigerator door latches and hinges used in commerce. Id. Section 29 provides, in pertinent part: [A] registrant of a mark registered in the Patent and Trademark Office, may give notice that his mark is registered by displaying with the mark the words “Registered in U.S. Patent and Trademark Office” or “Reg. U.S. Pat. & Tm. Off.” or the letter R enclosed within a circle, thus ®; and in any suit for infringement under this chapter by such a registrant failing to give such notice of registration, no profits and no damages shall be recovered under the provisions of this chapter unless the defendant had actual notice of the registration. Id. (emphasis added). The purpose of 15 U.S.C. § 1111 is to ensure that an infringer had notice that the mark was a registered trademark before holding such a person liable for infringement. AGSouth Genetics, LLC v. Georgia Farm Servs., LLC, No. 1:09-cv-186, 2013 WL 5774698, at *9 (M.D. Ga. Oct. 24, 2013). This marking standard is especially important with respect to trade dress, like Plaintiff’s refrigerator latches and hinges. As the Supreme Court noted in Wal-Mart Stores, Inc. v. Samara Bros., Inc., while the Lanham Act protects marks that consumers are likely to rely upon in distinguishing goods, “almost invariably, even the most unusual of product designs . . . is intended not to identify the source” of the product “but to render the product itself more useful or more appealing. 529 U.S. 205, 213 (2000). Most people, even sophisticated professionals, do not assume or even have any awareness that consumer Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 21 of 28 22 products such as refrigerator door latches and hinges could be trademarks. Therefore, Plaintiff’s recovery of profits or damages is limited to that period after which each individual Defendant had “actual notice” of each specific refrigerator latch and/or hinge registration. Coach, Inc. v. Asia Pacific Trading Co., Inc., 676 F. Supp. 2d 914, 924-25 (C.D. Cal. 2009). Plaintiff’s verified complaint makes no allegation that it placed any statutory marking symbols on its refrigerator door latches or hinges as required by 15 U.S.C. § 1111. Of the numerous product images provided in the FAC, not a single one shows any statutory markings that would have put the Defendants on notice of their registered status. (See e.g., FAC ¶¶ 23, 26, 38-39, 58, 60, 62, 65, 69, 73, 75, 79, 89, 99, 101, 106, 110 and 115). Such evidence constitutes an admission that Plaintiff failed to statutorily mark its refrigerator door latches and hinges as required by 15 U.S.C. § 1111, thus depriving Defendants of actual notice, a necessary prerequisite to willful or deliberate infringement. As a result, Plaintiff’s claims for pre-suit damages should be dismissed as a matter or law. See e.g., GTFM, Inc. v. Solid Clothing, Inc., 215 F. Supp. 2d 273, 306 (S.D.N.Y. 2002) (holding that plaintiff could not recover any pre-suit profits and damages because it failed to display statutory notice of the registration on its apparel); OTR Wheel Eng’g, Inc. v. W. Worldwide Servs., Inc., Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 22 of 28 23 No. 14-cv-085, 2016 WL 236231, at *3 (E.D. Wash. Jan. 20, 2016) (no entitlement to pre-suit profits or damages under Lanham Act claim where plaintiff failed to statutorily mark its trade dress). Plaintiff also fails to plead sufficient facts to show that any one of the individual Diversified Defendants had “actual notice” of each refrigerator latch and/or hinge registration under 15 U.S.C. § 1111 through other means. Plaintiff’s FAC concludes that Defendants should have known that Plaintiff’s unmarked products were registered trademarks because it had a business relationship with some Defendants.6 (FAC ¶ 157). Such claims are a conclusion and a hope, not a factual allegation. “Should have known” is not “actual notice” of a registered trade dress under the law. As the Supreme Court in Wal-Mart Stores, Inc., cautioned, assuming a general awareness that product designs, such as Plaintiff’s refrigerator latches and hinges, could even be protected as trademarks is not reasonable , 529 U.S. 205 at 213, and certainly insufficient to make a plausible claim of “actual notice” under 15 U.S.C. § 1111. Other attempts to argue that “actual notice” of unmarked trade dress can be simply imputed to a defendant based on a general business 6 Notably, Plaintiff’s FAC makes no allegation that it had any business relationship with either Defendant Factory Direct Worldwide, LLC (d/b/a FDW Parts) or Defendant D.S. I. Parts, Inc. Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 23 of 28 24 relationship have been rejected by other courts. See e.g., Coach, Inc. v. Asia Pac. Trading Co., 676 F. Supp. 2d 914, 924 (C.D. Cal. 2009) (“[F]amiliarity with the appearance of Plaintiffs’ products prior to service of the complaint . . . does not remotely indicate . . . prior notice of Plaintiffs’. . . registrations, which is what § 1111 requires.”). Alternatively, Plaintiff alleges that it provided “actual notice” through the mere presence of its refrigerator door latches and hinges in the marketplace. (FAC ¶ 157). Again, this claim is not a factual allegation, nor does it serve as “actual notice” under 15 U.S.C. § 1111. This unsupported allegation is especially implausible in light of Plaintiff’s failure to statutorily mark its refrigerator latches and hinges. See Supra. Regardless, participation in the marketplace, and even direct knowledge of a competitor’s product, is not sufficient to support a plausible claim of actual notice under 15 U.S.C. § 1111. See e.g., Kransco Mfg. Inc. v. Hayes Specialties Corp., 77 F.3d 503 (Fed. Cir. 1996) (unpublished) (participating in a market where a protected product exists is not sufficient to prove actual notice under 15 U.S.C. § 1111); National Products, Inc. v. Arkon Resources, Inc., No. 15-cv-1553, 2016 WL 7212533, at *3 (W.D. Wash. Dec. 13, 2016) (finding that defendant who, despite specific knowledge that plaintiff’s product was subject to an expiring design Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 24 of 28 25 patent, went so far as to create a competitive product based on that design did not meet the actual notice standard under 15 U.S.C. § 1111). Moreover, since Plaintiff’s unsupported claims of actual notice are not plausible, its general allegations of Defendants’ knowledge, (FAC ¶ 157), also fail to provide a plausible inference of willful or deliberate infringement. Defendants are not aware of any precedential case where a court has found willfulness, or granted injunctive relief for that matter, absent actual notice under 15 U.S.C. § 1111. Having failed to plead that Defendants had actual notice of its registered trade dress as required by statute, Plaintiff’s claims of willfulness and request for injunctive relief fail as a matter of law and should be dismissed. CONCLUSION For the foregoing reasons, Defendants respectfully request that the Court GRANT Diversified Defendants’ Motion to Dismiss In Part Plaintiff’s Amended Complaint and award them such further relief, including costs and attorneys’ fees, as the Court deems just and equitable. Dated: June 6, 2017 Respectfully submitted, /s/ Lawrence K. Nodine Lawrence K. Nodine Georgia Bar No. 545250 Email: nodinel@ballardspahr.com Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 25 of 28 26 Chittam U. Thakore Georgia Bar No. 890965 Email: thakorec@ballardspahr.com BALLARD SPAHR LLP 999 Peachtree Street, Suite 1000 Atlanta, GA 30309 Telephone: (678) 420-9300 Facsimile: (678) 420-9301 /s/ David S. Kerr David S. Kerr (pro hac vice admission pending) BERG HILL GREENLEAF RUSCITTI, LLP 1712 Pearl St. Boulder, CO 80302 Telephone: (303) 402-1600 Email: dsk@bhgrlaw.com Attorney for Diversified Defendants Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 26 of 28 27 CERTIFICATE OF COMPLIANCE WITH TYPEFACE REQUIREMENTS Pursuant to LR 7.1D, I hereby certify the foregoing has been prepared using 13-point Book Antigua, as approved by LR 5.1B. /s/ Lawrence K. Nodine Lawrence K. Nodine Georgia Bar No. 545250 nodinel@ballardspahr.com BALLARD SPAHR LLP Attorney for Diversified Defendants Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 27 of 28 28 CERTIFICATE OF SERVICE I hereby certify that on June 6, 2017, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will automatically send email notification of such filing to the following attorneys of record: Jessica S. Sachs David P. Utykanski HARNESS, DICKEY & PIERCE P.L.C. 5445 Corporate Drive, Suite 200 Troy, MI 48098 jsachs@hdp.com davidu@hdp.com Attorneys for Defendant KKT, Inc. Ann Fort Robert Kohse EVERSHEDS SUTHERLAND, LLP 999 Peachtree, N.E. Suite 2300 Atlanta, GA 30309-3996 annfort@eversheds-sutherland.com robkohse@eversheds-sutherland.com Attorneys for Plaintiff /s/ Lawrence K. Nodine Lawrence K. Nodine Georgia Bar No. 545250 nodinel@ballardspahr.com BALLARD SPAHR LLP Attorney for Diversified Defendants Case 3:17-cv-00026-TCB Document 20-1 Filed 06/06/17 Page 28 of 28