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George Nelson Found. v. Modernica, Inc.

United States District Court, S.D. New York

March 12, 2014

THE GEORGE NELSON FOUNDATION
v.
MODERNICA, INC

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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For The George Nelson Foundation, Plaintiff: Jessica Megan Garrett, LEAD ATTORNEY, Michael F Sarney, Katten Muchin Rosenman, LLP (NYC), New York, NY; Carolyn M. Passen, PRO HAC VICE, Katten Muchin Rosenman LLP, Chicago, IL; William J. Dorsey, PRO HAC VICE, Katten Muchin Rosenman LLP (Chicago), Chicago, IL.

For Modernica, Inc., Defendant: David Glenn Ebert, LEAD ATTORNEY, Mioko Catherine Tajika, Ingram Yuzek Gainen Carroll & Bertolotti, LLP, New York, NY; Victor K. Sapphire, PRO HAC VICE, Michelman & Robinson LLP, Encino, CA.

OPINION

MICHAEL M. BAYLSON, U.S.D.J.

Page 640

MEMORANDUM RE MOTION TO DISMISS

" What's in a name? That which we call a rose By any other name would smell as sweet.[1]

The mystery of a name drives the plot in Puccini's opera Turnadot. In the Grimm Brothers' fairy tale about Rumpelstiltzken, correctly guessing his name releases the promise he had extracted from a young maiden that she would give him her first born child. Notwithstanding Shakespeare's question, names are important.

Common law courts have long recognized that a person or entity can acquire a property right to a name by creating a protectable interest through use in commerce, and our Constitution, of course, gave Congress the power to enact laws to protect intellectual property.

This case presents an issue centered around Plaintiff's allegations that Defendant has infringed on its name or, in legal parlance, its " mark."

According to the complaint, George Nelson was an American furniture designer who operated a design studio in New York from 1947 to 1986, and designed chairs, clocks, desks, lamps, and other furnishings that were continuously sold under the GEORGE NELSON and NELSON name or " marks" since 1947. Plaintiff does not allege a registered trademark, but instead asserts a common-law right to the marks GEORGE NELSON and NELSON based on its continuous use of the marks in connection to furniture and accessories designed by George Nelson.

The complaint alleges Defendant has sold products under the names George Nelson Bubble Lamps and Half Nelson Table Lamp, without permission from Plaintiff.

Plaintiff's Complaint alleges trademark infringement (Counts I & IV), false designation of origin (Count II), trademark dilution (Count III), common law unfair competition (Count V), violation of New York General Business Law § § 349 & 360-1 (Counts VI & VII), and seeks cancellation of Defendant's registration of the marks NELSON and GEORGE NELSON. (ECF No. 1). Plaintiff seeks injunctive relief, actual damages for all profits and advantages acquired through use of the mark, treble damages under 15 U.S.C. § 1117, money sufficient for corrective advertising, and punitive damages.

Defendant filed a motion to dismiss the complaint. (ECF No. 18). The Court heard oral argument on the Motion to Dismiss on February 25, 2014.

II. The Parties' Arguments

1. Trademark infringement

Defendant contends the complaint fails to state a claim for trademark infringement because it does not sufficiently allege continued use in commerce, and it fails to identify the geographic scope. Defendant also contends it sells genuine goods, so there can be no consumer confusion. Plaintiff responds its complaint does allege continued use in commerce, the complaint alleges sales of the infringing products in the same retail stores as licensed products, and responds that genuineness is an alternative theory of infringement, not a failure to state a claim.

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Finally, Defendant contends Plaintiff abandoned or failed to police its trademarks, so it does not have an enforceable interest. Plaintiff responds that the complaint alleges continued licensing of the marks and continued use of the marks in commerce.

2. Trademark Dilution

Defendant contends the complaint fails to state a claim for trademark dilution because it does not adequately allege the mark GEORGE NELSON is famous, but only alleges the person George Nelson is famous. Plaintiff responds the complaint alleges the marks acquired a secondary meaning that was famous. Defendant further contends the complaint fails to allege how Defendant's use has blurred or tarnished the mark. Plaintiff responds that Defendant's unlicensed use of the mark dilutes the mark for licensed goods.

3. Unfair Competition

Defendant contends the complaint fails to state a claim for unfair competition because the alleged facts do not support bad faith. Plaintiff responds that Defendant was aware of its senior use of the mark and adopted it with the purpose of capitalizing on the fame and goodwill built in the GEORGE NELSON marks.

4. Deceptive Acts or Practices

Defendant contends the complaint fails to state a claim for deceptive acts or practices because the complaint does not allege any consumer harm. Plaintiff responds the complaint alleges consumers are duped into spending large sums of money on lamps based on the misrepresentation that they are associated with or endorsed by George Nelson's successors in interest.

5. Cancellation of Trademarks

Defendant contends has no standing to bring a claim for cancellation of the marks because Plaintiff has no pecuniary interest in the marks. Plaintiff responds that it is the predecessor in interest to George Nelson, and owns the marks.

6. Laches, Acquiescence and Estoppel

Defendant contends Plaintiff's claims are barred by laches because Plaintiff failed to assert its rights for more than fifteen years. Plaintiff responds that laches is not a defense to intentional infringement, and laches is not obvious from the face of the complaint. Defendant further contends Plaintiff's failure to police its marks amounts to a misrepresentation, and its current claims are barred by estoppel. Plaintiff responds there was no communication or reliance, so estoppel cannot apply. Finally, Defendant argues Plaintiff acquiesced to Defendant's use and Defendant relied on that acquiescence in building its business. Plaintiff responds that it made no active representation to Defendant.

III. Analysis

A valid complaint requires only " a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). " To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (dismissing the complaint) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The Court in Iqbal explained that, although a court must accept as true all of the factual allegations contained in a complaint, that requirement does not apply to legal conclusions; therefore, pleadings must include factual allegations to support

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the legal claims asserted. Id. at 1949, 1953.

Three months after the Supreme Court issued its opinion in Iqbal, the Second Circuit applied its holding that " [t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Harris v. Mills, 572 F.3d 66, 71-72 (2d Cir. 2009) (quoting Iqbal, 129 S.Ct. at 1949). In Harris, a physician whose license had been revoked filed of a pro se § 1983 and ADA complaint against the New York Department of Education. Id. at 69-70. The District Court for the Southern District of New York dismissed the complaint for failure to state a claim, and the physician appealed. Id. The Second Circuit reviewed the sufficiency of the physician's claim de novo, and affirmed the dismissal of the complaint. Id. In so doing, the Second Circuit applied the Iqbal two-step test: (1) ignoring conclusory legal statements, take all factual allegations in plaintiff's complaint as true, then (2) determine whether the complaint sets forth a plausible claim for relief. Id. at 71-72. Following Harris, the Second Circuit held " the pleading standard set out in Iqbal supersedes the 'general allegation' deemed sufficient" in earlier Second Circuit precedent. Ruston v. Town Bd. for Town of Skaneateles, 610 F.3d 55, 59 (2d Cir. 2010) (affirming the district court's dismissal).

A. The Sapphire Declaration

As a preliminary matter, this Court will address Defendant's reliance on a number of exhibits attached to the Motion to Dismiss.

In support of its Motion to Dismiss, Defendant submitted the Declarations of Victor Sapphire and Frank Novak, both of which attached exhibits. In a January 30, 2014 hearing, the parties addressed the issue of whether and to what extent the Court could consider those exhibits. During the hearing, Defendant withdrew the Novak Declaration and its supporting exhibits to avoid conversion of the Motion to Dismiss into a Motion for Summary Judgment under FRCP 12(d). This Court requested that the parties submit supplemental briefing discussing whether and to what extent the Court could consider the Sapphire Declaration and its exhibits at the motion to dismiss stage.[2] Plaintiff submitted its Supplemental Memorandum in Opposition to Defendant's Motion to Dismiss on February 6, 2014 (ECF 38), and Defendant submitted Supplemental Memoranda in Support of its Motion to Dismiss on February 13, 2014 (ECF 40), and February 28, 2014 (ECF 44).

The Sapphire Declaration attaches six exhibits, which consist of the following documents:

o Exhibit A: The George Nelson Foundation's U.S. Application Serial No. 85/921, 195 for the mark GEORGE NELSON in connection with " Floor lamps [and] Lamps," filed May 2, 2013.
o Exhibit B: U.S. Registration No. 3,463,818 for the mark GEORGE NELSON BY VERICHRON owned by Wen Chen K. Wu, filed July 27, 2007 and granted July 8, 2008.
o Exhibit C: Modernica's U.S. Registration No. 3,733,895 for the mark GEORGE NELSON in connection with " Electric lamps; Lamp shades;

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[and] Lamps," filed May 29, 2009 and granted January 5, 2010.
o Exhibit D: Modernica's U.S. Registration No. 3,823,800 for the mark NELSON in connection with " Electric lamps; Lamp shades; [and] Lamps," filed May 29, 2009 and granted July 27, 2010.
o Exhibit E: Modernica's U.S. Registration No. 3,939,483 for certain lamp trade dress in connection with " Electric lamps; Lamp shades; [and] Lamps," filed May 29, 2009 and granted April 5, 2011.
o Exhibit F: Modernica's U.S. Registration No. 3,939,484 for certain lamp trade dress in connection with " Electric lamps; Lamp shades; [and] Lamps," filed May 29, 2009 and granted April 5, 2011.

Defendant cites the applications to show it has superior rights to the marks, and that Plaintiff did not oppose its trademark application for the use related to lamps. Defendant submits Plaintiff's trademark application for future use to show that Plaintiff has ...


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