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Pop Bar, LLC v. Fellows

United States District Court, Second Circuit

August 19, 2013

POP BAR, LLC, Plaintiff,
v.
ANTHONY L. FELLOWS, and HIP POPS, F/K/A CULTURED INVESTMENTS LLC, Defendants.

OPINION

THOMAS P. GRIESA, District Judge.

Plaintiff, Pop Bar, LLC, brings this action against defendants, Hip-Pops, LLC, and its owner Anthony Fellows, alleging three counts, including false designation of origin and unfair competition pursuant to 15 U.S.C. § 1125(a); misappropriation of trade secrets; and breach of a confidential disclosure agreement.

On November 12, 2012, defendants moved to dismiss the complaint, arguing that the court lacks personal jurisdiction under Fed.R.Civ.P. 12(b)(2), and that plaintiff has failed to state a claim upon which relief may be granted under Fed.R.Civ.P. 12(b)(6). Alternatively, defendant has moved to transfer venue or dismissal for improper venue pursuant to 28 U.S.C. § 1406 and 28 U.S.C. § 1404(a).

Defendants' motion to dismiss and request to transfer venue are denied in their entirety.

BACKGROUND

The following facts are drawn from the complaint are assumed to be true for the purposes of resolving this motion.

Pop Bar ("Popbar") is a New York limited liability company in the business of design and sale of handcrafted and customizable Italian gelato, sorbet and frozen yogurt on a stick, through the use of uniquely designed equipment, processes, and product offerings known as the "Popbar System."

In addition to offering its variation of the Italian iced treat, Popbar also franchises the Popbar brand and mark to independent businesses, including those in New York and Florida, which are licensed to use trade names, service marks and trademarks owned by Pop Bar, and to operate under the Popbar System. The complaint alleges that plaintiff is the sole and exclusive owner of all proprietary rights and interests in the Popbar System and the "popbar" mark issued August 9, 2011, which is registered on the principal register of the United States Patent and Trademark Office (the "Popbar Mark").[1]

Popbar has used the Popbar name as a trade name and service mark in connection with the operation of its store in New York, New York, on its website, and in advertising, since May 3, 2010. The complaint alleges that plaintiff's mark is a valuable asset to the company, and a symbol of quality goods dispensed by Popbar. Moreover, plaintiff allegedly has an interest in protecting its mark and name to safeguard its goodwill and reputation.

Defendant Anthony L. Fellows resides in Hollywood, Florida and is the owner of defendant Hip Pops, LLC f/k/a Cultured Investments LLC ("Hip Pops"), a Florida limited liability company.

On April 4, 2011, Fellows, through Hip Pops - then known as Cultured Investments LLC - allegedly submitted a Popbar franchising request to the company. Fellows was interested in taking Popbar's cool appeal to warmer climates and thus expressed interest in opening a Popbar franchise in Southern Florida. On April 7, 2011, defendants executed a confidential disclosure agreement with plaintiff. By its terms, defendants were to receive certain confidential information relating to a potential Popbar franchise; to not disclose any such confidential information; and to take all steps reasonably necessary to protect the secrecy of the confidential information.

On August 22, 2011, Daniel Yaghoubi, a Popbar founder, travelled from New York City to Miami, Florida to meet with Fellows in order to discuss defendants' interest in opening a Popbar franchise in Southern Florida. From September 8, 2011 through September 11, 2011, Fellows, in turn, travelled to New York City to meet with the principals of Popbar regarding his interest in a potential Popbar franchise in Southern Florida and to learn the workings of the Popbar System. During this visit, the parties entered into a confidential disclosure agreement whereby Popbar shared with defendants the Popbar System, including, Popbar's recipes and formulas, specially designed equipment, systems and methods of making customized Popbar products, and ideas for Popbar food trucks.

During the visit, defendants' learned about the Popbar System, including all aspects of the Popbar store. After Fellows' visit, defendants sent Popbar a Letter of Intent, which offered franchising terms that were a fraction of the typical Popbar franchising terms. Popbar rejected the proposal. The complaint alleges that the weak terms of the offer indicated to plaintiff that defendants never truly planned to open a Popbar franchise in Southern Florida. Defendants thereafter allegedly used the information gained while Fellows was in New York to open their own business in Southern Florida, namely, Hip Pop, LLC (a/k/a "HipPOP"). This action violated the parties' agreement.

In December of 2011, Popbar's Brazilian machinery manufacturer informed Popbar that Fellows had inquired about whether the manufacturer supplied Popbar's machinery. Defendants allegedly then purchased certain other machinery from this manufacturer, the same machinery defendants learned about when they visited New York. In May of 2012, defendants launched their business, using the Hip Pop food truck to sell frozen Gelato on a stick in Southern Florida.

The complaint alleges that defendants did not have any intention to open a Popbar franchise in Southern Florida, and instead sought only to gain Popbar's valuable proprietary information to start a competing business. Defendants also allegedly used the knowledge about the Popbar System that they acquired to develop their business. For example, it is alleged that defendants copied Popbar's systems and methods of making customized Popbar artisanal treats. Moreover, using the same machinery as Popbar, defendants also allegedly offer handcrafted and customizable gelato, sorbet, and frozen yogurt on a stick to customers. And, like Popbar, defendants also offer a unique three step process for creating customizable treats which is very similar to Popbar's. Defendants' treats are offered in many of the same flavors, and some use Pop Bar's product names, including "Hot Chocolate on a Stick" and "Frozen Hot Chocolate."

Defendants have allegedly been using HipPOP, a confusing similar imitation of the Popbar mark, on defendants' website (www.hippops.com) and also in the course of defendants' advertising. Furthermore, defendants' use of the mark and similar products allegedly confuses consumers into believing that a combination of the Hip Pop name, the HipPOP mark, and the products and operations used by defendants, are condoned or authorized by Popbar.

Plaintiff's first count arises under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Count One alleges that defendants' use, offer, and sale of defendants' goods and services under HipPOP constitutes use of a false designation of origin and a false description that is likely to cause confusion among purchasers. The complaint further alleges that defendants' activities have taken Popbar's reputation out of its control so that any failure of defendants to maintain adequate standards will reflect adversely ...


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