United States District Court, S.D. New York
Decided July 15, 2014
[Copyrighted Material Omitted]
For Plaintiff: Elizabeth Shieldkret, Esq., Forest Hills, NY.
For Defendants: Kalpana Nagampalli, Esq., Feldman Law Group, P.C., New York, NY.
OPINION AND ORDER
Shira A. Scheindlin, U.S.D.J.
Plaintiff, The KatiRoll Company, Inc. (" TKRC" ), brings this action against Kati
Junction, Inc. and eight of its employees. TKRC asserts eight causes of action: ( 1) infringement of a federally registered service mark against Kati Junction and the John Doe defendant; (2) trade dress infringement against all defendants; (3) unfair competition under the Lanham Act against all defendants; (4) state statutory infringement and unfair competition against all defendants; (5) common law unfair competition against all defendants; (6) breach of duty of loyalty against employee defendants; (7) breach of contract against defendants Islam and Alam; and (8) misappropriation of trade secret and/or proprietary and confidential information against all defendants. Defendants move to dismiss counts two through eight of the Complaint. For the reasons that follow, defendants' motion is DENIED.
A. The KatiRoll Company, Inc.
TKRC is a carry-out style restaurant that first opened in June 2002 on MacDougal Street in Manhattan. TKRC primarily sells Indian food, using flatbread (paratha or roti) prepared on a griddle and then wrapped around one or more fillings such as kebab meats, eggs, cheese, or vegetables. Since TKRC first opened in 2002, it has used a " 2-for" discount when a customer purchases two of the same item.
There are currently four TKRC restaurants, three in Manhattan and one in London, England. Each of the restaurants uses orange and white signage, has an orange awning with the company's word mark in white lettering and an orange banner with the company's word mark in white lettering. The layout of each TKRC restaurant features an open glass front with unobstructed windows, limited seating in front with a counter further back and an open kitchen plan to enhance the customer experience by allowing customers to observe preparation of the food. The stores use wood facing on the counters and wood surrounds on the trash bins.
It took many months for TKRC to develop the recipes for each of its dishes as well as the proprietary processes used to create desired textures and to keep ingredients ready for use without artificial preservatives. Additionally, the company spent approximately six months perfecting its roti recipe before introducing it in the restaurant. Employees were told to keep the recipes secret as part of their job training and in the employee manual. Employees also signed non-disclosure agreements.
TKRC employees wear a uniform that includes a t-shirt with the company mark, a hat, and an apron. The company name and design trademarks appear on the back
of the shirt to ensure they are not obstructed by the apron.
B. Kati Junction, Inc.
In February 2014, Kati Junction, Inc. opened a takeout-style restaurant called Kati Junction at 200 West 40th Street in Manhattan, approximately three blocks from a TKRC restaurant. Kati Junction uses orange and white signage. Kati Junction's menu is nearly identical to TKRC's, including the names of the menu items and descriptions of those items. Kati Junction sells the same menu items as the TKRC restaurants and does not offer any additional or different rolls from the TKRC menu--Kati Junction also offers a " 2-for" discount when a customer purchases two of the same item. The flavor profile and texture of Kati Junction's fillings, sauces, and breads are very similar to TKRC's.
Kati Junction's restaurant features an unobstructed open glass front, limited seating in front with a counter further back, an open kitchen plan, and uses wood facing on the counters and wood surrounds for trash bins. Employees wear a uniform that includes a t-shirt with the Kati Junction orange and white design on the back, a hat, and an apron.
Kati Junction hired seven " current and former" TKRC employees. These employees are allegedly using TKRC's proprietary recipes and techniques to copy the TKRC menu. Since Kati Junction opened, more than one customer has asked TKRC about its new branch, demonstrating that customers are confused and believe Kati Junction is a TKRC restaurant.
III. LEGAL STANDARD
A. Motion to Dismiss
In deciding a motion to dismiss under Rule 12(b)(6), the court must " accept all factual allegations in the complaint as true, and draw all reasonable inferences in the plaintiff's favor."  The court evaluates the complaint under the " two-pronged approach" set forth in Ashcroft v. Iqbal.  First, a court may " identify pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth."  " Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to withstand a motion to dismiss. Second, " [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 ...