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Luv n' Care Ltd. v. Toys "R" Us

October 24, 2012

LUV N' CARE LTD. AND ADMAR INTERNATIONAL, INC., PLAINTIFFS,
v.
TOYS "R" US, INC. AND MUNCHKIN, INC., DEFENDANTS.



The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.

OPINION AND ORDER

I. INTRODUCTION

Plaintiffs Luf n' Care, Ltd. and Admar International, Inc. (collectively "LNC") bring this action against defendants Toys "R" Us, Inc. ("TRU") and Munchkin, Inc. Plaintiffs assert six causes of action for patent infringement, trade dress infringement and unfair competition under the Lanham Act, and for unfair competition and trade dress dilution under New York law. Pursuant to Federal Rule of Civil Procedure 12(b)(6), defendants now movee to dismiss three of these counts. For the following reasons, defendants' motion to dismiss is granted, but plaintiffs are granted leave to amend.

II. BACKGROUND*fn1

Luv n' Care is a company, organized and operating under the laws of Louisiana,*fn2 that designs and sells baby products.*fn3 Admar is an affiliate of Luv n' Care,*fn4 and is the owner of the trademarks and trade dress associated with Luv n' Care's products.*fn5 Luv n' Care owns two design patents which disclose, respectively, a child's cup and a child's cup top.*fn6 LNC has incorporated these patents into a line of soft-top children's drinking cups.*fn7 On June 22, 2009, LNC settled a suit against Royal King ("RK"), a Thai manufacturer of baby products, relating to RK's alleged infringement of LNC's intellectual property.*fn8 Under the terms of the settlement, RK agreed to stop selling and manufacturing products likely to cause confusion with LNC's products.*fn9

TRU is a domestic corporation that distributes and sells baby products in the United States, both directly and under the name Babies R' Us.*fn10 The Complaint alleges, inter alia, that TRU infringed on LNC's intellectual property by buying and selling knock-offs of LNC's products.*fn11 Through the instant motion, defendants moved to dismiss Counts Three (federal trademark dilution), Five (violation of New York General Business Law Section 360-1), and Six (contributory infringement) of the Complaint.*fn12 Following an adverse ruling in a parallel federal proceeding, LNC has voluntarily withdrawn Counts Three and Five.*fn13

Count Six, styled "contributory infringement," alleges that TRU was aware of LNC's settlement agreement with RK, but nevertheless deliberately and knowingly chose to sell products infringing on LNC's rights under the agreement.*fn14

Count Six further alleges that this conduct "constitutes contributory infringement of [LNC's] rights as set forth under its settlement agreement, and constitutes unfair competition, in violation of the Lanham Act and New York Law."*fn15 Finally, LNC alleges that it has been harmed, and requests a broad spectrum of legal and equitable relief.*fn16

III. APPLICABLE LAW

A. Rule 12(b)(6) Motion to Dismiss

A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief."*fn17 "Such a statement must [] 'give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.'"*fn18 In deciding a motion to dismiss pursuant to Rule 12(b)(6), the court "must accept all non-conclusory factual allegations as true and draw all reasonable inferences in the plaintiff's favor."*fn19 For the purposes of such motion, ". . . a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint."*fn20

However, the court may also consider a document that is not incorporated by reference, "where the complaint 'relies heavily upon its terms and effect,' thereby rendering the document 'integral' to the complaint."*fn21

The court evaluates the sufficiency of the complaint under the "two-pronged approach" suggested by the Supreme Court in Ashcroft v. Iqbal.*fn22 Under the first prong, a court "'can . . . identify[] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.'"*fn23 Thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to withstand a motion to dismiss.*fn24 Under the second prong of Iqbal, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief."*fn25 A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant ...


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