Idea Nuova has alleged, however, that its ROOM IN A BOX mark is
"famous" and "distinctive." (Am.Ans.¶¶ 85, 99). In addition, Idea
Nuova has alleged that GMA's manufacture and sale of inflatable furniture
under names allegedly similar to Idea Nuova's ROOM IN A BOX began after
Idea Nuova "adopted and used the ROOM IN A BOX trademark" and that GMA
"wilfully intended to trade on Idea Nuova's reputation and/or to cause
dilution of Idea's Nuova's famous" mark. (Am.Ans.¶¶ 89, 99). Although
Idea Nuova's ultimate ability to prevail on its FTDA claim is
questionable, at this early stage Idea Nuova has pleaded the elements of
E. Section 37 of the Lanham Act
Idea Nuova seeks to "cancel" GMA's "Room In a Box" trademark
application and GMA's "Room on the Run" trademark registration pursuant to
§ 37 of the Lanham Act, 15 U.S.C. § 1119. GMA first argues that
Section 37 is inapplicable to its pending trademark application. I
Section 37 provides in relevant part: "[i]n any action involving a
registered mark the court may determine the right to registration, order
the cancelation of registrations, in whole or in part, restore canceled
registrations, and otherwise rectify the register with respect to the
registrations of any party to the action." 15 U.S.C. § 1119. Thus, by
its terms, § 37 contemplates an action involving a registered
trademark. See id.; see also In re Falchi, No. 97 B 43080, 1998 WL
274679, at *7 (Bankr.S.D.N.Y. May 27, 1998) ("to obtain an order
cancelling a trademark registration under § 37 . . . plaintiff must
allege a controversy as to the validity of or interference with a
registered trademark"); Universal Sewing Machine Co. v. Standard Sewing
Equip. Corp., 185 F. Supp. 257, 260 (S.D.N.Y. 1960) (Section 37 assumes
an action involving a registered mark). Idea Nuova cites no authority for
the proposition that § 37 permits a district court to cancel a
pending trademark application.*fn5 Accordingly, Idea Nuova's § 37
claim to "cancel" GMA's as yet unregistered trademark, "Room in a Box,"
GMA next argues that there is no other justiciable controversy between
the parties involving GMA's registered trademark, Room on the Run, and
that the Court therefore lacks subject matter jurisdiction to entertain
an action for the mark's cancellation. Section 37 "assume[s] a properly
instituted and otherwise jurisdictionally supported action involving a
registered trademark." Moog Controls, Inc. v. Moog, Inc., 923 F. Supp. 427,
431 (W.D.N.Y. 1996). Thus, a party cannot seek cancellation offensively
and rely solely upon that claim for federal jurisdiction. Id. Here,
however, Idea Nuova claims that GMA's use of the Room on the Run
trademark infringes Idea Nuova's ROOM IN A BOX mark in violation of
§ 39(a) of the Lanham Act. There exists an independent basis for
federal jurisdiction "involving" GMA's registered trademark;
accordingly, GMA's second argument is rejected. As GMA does not challenge
Idea Nuova's standing to seek cancellation of GMA's trademark or its
purported basis for doing so, I need not and do not reach these issues.
See, e.g., Cunningham v. Laser Golf Corp., 222 F.3d 943, 945 (Fed. Cir.
F. Sections 35(a) and 38 of the Lanham Act
Idea Nuova asserts a claim pursuant to Sections 35(a) and 38 of the
Lanham Act, 15 U.S.C. § 1117 (a) and 1120, entitled "fraudulent
trademark registration application." (Am.Ans.¶¶ 109-110). The claim
seeks "damages as a result of GMA's improper federal trademark
registration applications" and attorneys' fees. The amended counterclaims
do not make clear whether Idea Nuova is referring to GMA's registered
trademark, "Room on the Run," or pending trademark application, "Room in
1. Section 35(a)
"Section 35(a) of the Lanham Act governs claims for monetary relief
and attorney fees made by plaintiffs who have successfully established a
trademark violation." International Star Class Yacht Racing Ass'n v.
Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 752 (2d Cir. 1996). The
statute provides in relevant part: "the plaintiff shall be entitled,
. . . subject to the principles of equity, to recover (1) defendant's
profits, (2) any damages sustained by the plaintiff, and (3) the costs of
the action. . . ." 15 U.S.C. § 1117 (a). In addition, the court may
award reasonable attorneys' fees to the prevailing party in "exceptional
cases." See id.; International Star, 80 F.3d at 752. GMA contends that
Idea Nuova's Section 35(a) claim must be dismissed because (1) Section
35(a) is inapplicable to unregistered marks, and (2) Idea Nuova does not
state a claim under § 1125(a).
By its terms, Section 35(a) applies to violations of § 1125(a)
— the section of the Lanham Act that provides protection for
unregistered marks — accordingly, GMA's first argument is
rejected. GMA's second argument is rejected as well, as I have previously
held that Idea Nuova's claim for violations of Section 43(a) of the
Lanham Act, 15 U.S.C. § 1125 (a), survives the motion to dismiss.
Moreover, Idea Nuova has alleged that GMA intentionally created confusion
to deceive prospective purchasers. This allegation, if true, could
support a claim under Section 35(a).*fn6 See International Star, 80
F.3d at 754 (citing Restatement (Third) of Unfair Competition § 37
cmt. e (1995)); United Greeks, Inc. v. Klein, No. 00 Civ. 0002, 2000 WL
554196, at *2 (N.D.N.Y. May 2, 2000). Accordingly, GMA's motion to
dismiss Idea Nuova's Section 35(a) claim is denied.
2. Section 38
Idea Nuova also purports to bring its claim for attorneys' fees and
damages pursuant to Section 38 of the Lanham Act. Section 38 provides in
Any person who shall procure registration in the
Patent and Trademark Office of a mark by a false or
fraudulent declaration or representation, oral or in
writing, or by any false means, shall be liable in a
civil action by any person injured thereby for any
damages sustained in consequence thereof.
15 U.S.C. § 1120.
To the extent Idea Nuova is alleging a claim based on GMA's suspended
"Room In A Box" trademark application, the claim must fail; by its terms
Section 38, 15 U.S.C. § 1120, does not apply to trademark
applications that have not been registered. See Bernard v. Commerce Drug
Co., 774 F. Supp. 103, 109 (E.D.N.Y. 1991), aff'd, 964 F.2d 1338 (2d
Cir. 1992). To the extent Idea Nuova's claim is instead based
on GMA's registered "Room on the Run" trademark, it fares no better.
First, attorneys' fees are ordinarily not recoverable under § 38.
See Havana Club Holding, S.A. v. Galleon, S.A., No. 96 Civ. 9655, 1998 WL
150983, at *2 (S.D.N.Y. Mar. 31, 1998) (citing Blue Bell, Inc. v.
Jaymar-Ruby, Inc., 497 F.2d 433, 439 (2d Cir. 1974)). Although it is
possible "fees could be awarded in a case where an absolutely false
registration was fraudulently obtained solely for the purpose of
instituting completely vexatious litigation," Idea Nuova has failed to
plead that GMA filed a trademark application "solely . . . to facilitate
meritless litigation." Havana Club, 1998 WL 150983, at *2 (granting
motion to dismiss § 38 claim) (internal quotation marks and citation
Second, a claim for fraudulent registration under § 38, like any
fraud claim, must comply with the heightened pleading standards of
Fed.R.Civ.P. 9(b). See Havana Club, 1998 WL 150983, at *3 n. 8; see
also Fed.R.Civ.P. 9(b) ("[i]n all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be stated with
particularity"). The heightened pleading requirements apply to each
element of the fraud claim. See Havana Club, 1998 WL 150983, at *3.
Here, Idea Nuova has failed to plead its claim with the requisite degree
In support of its claim, Idea Nuova points to paragraph 97 of its
amended counterclaims, which states:
Upon information and belief, plaintiff GMA knowingly
and intentionally made false and fraudulent
representations in its trademark applications that,
inter alia, it was the owner of the "Room in A Box"
mark and the "Room on the Run" mark and that no other
person or entity has the right to use those marks in
commerce or other marks likely to cause confusion or
to cause mistake, or to deceive.
(Am.Ans. P. 97). In general, a party pleading fraud may not do so on
"information and belief." An exception to this general rule exists when
the facts underlying the fraud are peculiarly in the other party's
knowledge. Even then, however, the party pleading fraud "bears the burden
of alleging the facts upon which [its] belief is founded." Weaver v.
Chrysler Corp., 172 F.R.D. 96, 101 (S.D.N.Y. 1997) (citing DiVittorio v.
Equidyne Extractive Indus., Inc., 822 F.2d 1242 (2d Cir. 1987)). Idea
Nuova has failed to show that the exception applies in this case.
In addition, Idea Nuova has failed to plead two elements of its fraud
claim — causation and damages — at all, much less with
particularity; that is, it has failed to plead how it was injured as a
result of GMA's allegedly false statement on its Room on the Run
application. See, e.g. Havana Club, 1998 WL 150983, at *3. Indeed, Idea
Nuova has not even made the conclusory allegation that it lost sales due
to the statement. Accordingly, GMA's motion to dismiss Idea Nuova's
§ 38 claim is granted.
G. Declaratory Judgment
Idea Nuova seeks a declaration pursuant to 28 U.S.C. § 2201 that
GMA's use of the ROOM IN A BOX mark "in connection with the sale of
inflatable furniture . . . would constitute an infringement of defendant
Idea Nuova's trademark." (Am. Ans.¶ 112). GMA moves to dismiss the
claim pursuant to Fed.R.Civ.P. 12(b)(1), arguing that (1) the
Declaratory Judgment Act does not provide Idea Nuova with a basis for
subject matter jurisdiction, and (2) Idea Nuova's claim for declaratory
relief is not justiciable by this Court because there is no "actual
controversy" between the parties.
It is well-settled that the Declaratory Judgment Act is not itself an
independent basis for subject matter jurisdiction. See Niagara Mohawk
Power Corp. v. Tonawanda Band of Seneca Indians, 94 F.3d 747, 752 (2d
Cir. 1996). In addition, the Declaratory Judgment Act "permits
declaratory relief only in cases presenting `actual controvers[ies],'
. . . a requirement that incorporates into the statute the case or
controversy limitation on federal jurisdiction found in Article III of
the Constitution." Id. The test for whether an "actual controversy"
exists in the context of trademark litigation has two prongs,
both of which must be satisfied in order to establish
declaratory judgment jurisdiction: (1) has the
defendant's conduct created a real and reasonable
apprehension of liability on the part of the
plaintiff, and (2) has the plaintiff engaged in a
course of conduct which has brought it into
adversarial conflict with the defendant.
Starter Corp. v. Converse, Inc., 84 F.3d 592, 595 (2d Cir. 1996). The
latter prong is usually met by showing that the plaintiff has "a definite
intent and apparent ability to commence use of the mark." Id. (internal
quotations omitted); see Gianni Sport Ltd. v. Metallica, No. 00 Civ.
0937, 2000 WL 1773511, at *3 (S.D.N.Y. Dec. 4, 2000) (standard intended
to "prevent parties with merely a vague and unspecific desire to use a
mark from seeking an opinion on hypothetical facts") (internal quotations
A declaratory plaintiff in a trademark action is, in most instances,
seeking a declaration that it is free to use a mark without incurring
liability for infringement. See, e.g. Starter Corp., 84 F.3d at 594;
Gianni, 2000 WL 1773511, at *1. Here, however, counterclaim plaintiff
Idea Nuova is seeking a declaration that GMA's use of the mark ROOM IN A
BOX infringes Idea Nuova's trademark. Accordingly, it is necessary to
reverse the nomenclature of the parties when applying the Starter Corp.
Applying this test, it is clear that Idea Nuova has not sufficiently
pled that GMA has "a definite intent and apparent ability to commence use
of" the ROOM IN A BOX mark. The amended counterclaims do not allege that
GMA engaged in any "meaningful preparation" with respect to using the
mark. See Starter Corp., 84 F.3d at 596-97. Idea Nuova's allegation that
GMA filed an application to trademark "Room in a Box" — an
application that the PTO has since suspended — at most shows that
GMA has a "vague or general desire" to use the mark. Starter Corp., 84
F.3d at 596. Such allegations are insufficient to establish the existence
of an actual controversy. Accordingly, Idea Nuova's claim for declaratory
relief is dismissed for lack of subject matter jurisdiction.*fn7
H. Unfair Competition
GMA has not moved to dismiss Idea Nuova's common law unfair competition
claim pursuant to Fed.R.Civ.P. 12(b)(6). Because Idea Nuova states a
claim under the Lanham Act, I will exercise supplemental jurisdiction
over its related unfair competition claim pursuant to 28 U.S.C. § 1367.
See, e.g. Hofmann v. Kleinhandler,
No. 93 Civ. 5638, 1994 WL 240335, at *6-7 (S.D.N.Y. May 31, 1994)
(exercising supplemental jurisdiction over state law unfair competition
claim) (citing United Mine Workers v. Gibbs, 383 U.S. 715, 725-28, 86
S.Ct. 1130, 16 L.Ed.2d 218 (1966)).
For the foregoing reasons, plaintiff's motion to dismiss Idea Nuova's
amended counterclaims is granted in part and denied in part. Idea Nuova's
amended counterclaims seeking relief (1) under § 37 of the Lanham
Act, 15 U.S.C. § 1119, with respect to GMA's unregistered trademark,
(2) § 38 of the Lanham Act, 15 U.S.C. § 1120, and (3) the
Declaratory Judgment Act, 28 U.S.C. § 2201, are dismissed.