United States District Court, E.D. New York
VOX AMPLIFICATION LTD, KORG INC. and KORG USA, INC., Plaintiffs/Counterclaim-Defendants,
JACK CHARLES MEUSSDORFFER and PHANTOM GUITAR WORKS INC. a/k/a PHANTOM GUITAR WORKS, Defendants/Counterclaim-Plaintiffs
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
For the Plaintiffs and Counterclaim-Defendants: Marsha J. Indych, Esq., Brian A. Coleman, Esq., Of Counsel, Drinker Biddle & Reath LLP, New York, NY.
For the Defendants and Counterclaim-Plaintiffs: Ronald S. Bienstock, Esq., Brent Merrill Davis, Esq., Of Counsel, Bienstock & Michael PC, Hackensack, NJ.
MEMORANDUM OF DECISION AND ORDER
ARTHUR D. SPATT, United States District Judge.
On September 3, 2013 the Plaintiffs and Counterclaim-Defendants Vox Amplification Ltd, Korg Inc. and Korg USA, Inc. (the " Plaintiffs" ), commenced this action against the Defendants and Counterclaim-Plaintiffs Jack Charles Meussdorffer (" Meussdorffer" ) and Phantom Guitar Works, Inc., also known as Phantom Guitar Works (" PGW," and collectively, the " Defendants" ). The Plaintiffs seek (1) a declaratory judgment at to [the] Plaintiffs' non-infringement of [the] Defendants' claimed trademark rights in the terms 'Phantom' and 'Teardrop' and in the 'Phantom' and
'Teardrop' guitar body styles; [and] (2) cancellation of [the] Defendant Meussdorffer's federal trademark registrations for these same word marks and guitar designs[.]" (Compl., ¶ 1.) The Plaintiffs also assert a claim for " tortious interference with [the] Plaintiffs' supply network and unfair competition with [the] Plaintiffs based on [the] Defendants' threats of suit and assertions of trademark infringement, despite the Defendants' awareness of its lack of enforceable rights and inability to prove infringement." (Compl., ¶ 1.)
On October 15, 2013, the Defendants filed an Answer and Counterclaim against the Plaintiffs. The next day, October 16, 2013, the Defendants moved for a preliminary injunction pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 65 and the Lanham Act, 15 U.S.C. § 1501, et seq., enjoining the Plaintiffs from the Defendants' four federally registered trademarks, particularly in connection with the marketing, advertising, distributing or selling of musical instruments. On October 25, 2013, the Court referred the matter to United States Magistrate Judge Gary R. Brown for the purpose, if necessary, of holding a hearing and issuing a Report and Recommendation addressing the Defendants' motion for a preliminary injunction.
Thereafter, on November 8, 2013, the Plaintiffs moved to dismiss the Defendants' Counterclaim pursuant to Fed.R.Civ.P. 12(b)(6). In response, on November 18, 2013, the Defendants filed a First Amended Counterclaim, thereby rendering the Plaintiffs' November 8, 2013 motion moot. However, on December 5, 2013, the Plaintiffs moved to dismiss the Defendants' First Amended Counterclaim, alleging that it was still legally insufficient under Fed.R.Civ.P. 12(b)(6). The First Amended Counterclaim asserts causes of action for (1) trademark infringement pursuant to 15 U.S.C. § 1114; (2) false designation of origin and unfair competition pursuant to 15 U.S.C. § 1125(a); (3) common law trademark infringement pursuant to New York State law; and (4) common law unfair competition pursuant to New York State law.
On February 11, 2014, Judge Brown issued a Report and Recommendation (the " R& R" ), in which he recommended that the Defendants' motion for a preliminary injunction be granted as to the Plaintiffs' allege use of the Defendants' incontestable registered Phantom trademarks, but denied as to the Defendants' claims emanating from the Teardrop guitar body design and Teardrop word mark, as applied to electric guitars. Judge Brown also recommended that the Court deny any claim concerning the Plaintiffs' production of electric ukuleles, which the Defendants' had alleged infringed on the Teardrop trademarks.
On February 25, 2014, the Plaintiffs filed written objections to the R& R only with respect to Judge Brown's recommendation concerning the Phantom trademarks. The Defendants oppose the Plaintiffs' objections and argue that the R& R should be adopted in its entirety.
Thus, presently before the Court is the R& R, which the Court " may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b) (1)(C)." Also before the Court is the Plaintiffs' motion to dismiss the First Amended Counterclaim, as well as a motion by the Plaintiffs' to supplement the preliminary injunction record with a consumer survey that was completed after Judge Brown issued the R& R.
For the reasons set forth below, the Court denies the Plaintiffs' motion to dismiss; denies the Plaintiffs' motion to supplement the preliminary injunction record;
and overrules the Plaintiffs' objections and adopts the R& R in its entirety.
Beginning in late 1961, a United Kingdom company known as Jennings Musical Industries (" JMI" ) began producing and selling guitars in the United Kingdom under the " Vox" brand name and with " Phantom" as the model designation. These guitars were unique due to their rounded trapezoidal body shape. In 1963, JMI began manufacturing and selling guitars in the United Kingdom that had a rounded body shape, similar to a teardrop, under the " Vox" brand name and using " Phantom III" and " Phantom IV" as their model designations. JMI began manufacturing these guitars for the United States market, but it appears that the parties do not provide further details as to when JMI started to do so.
In any event, in 1963, JMI stopped producing the above guitars for the United States market. Rather, on behalf of JMI, from 1963 to 1969, an Italian company called EKO manufactured these guitars for the United States market, but the guitars sold in very limited quantities during this period. In 1969, JMI ceased manufacturing all guitars, thus abandoning any trademark rights it may have had to either the guitar's model names or body shapes.
At some point about the early 1990s, the Defendant Meussdorffer, who is a luthier, or maker of stringed instruments, decided to manufacture, market and sell guitars in similar shapes as those produced by JMI and EKO in the 1960s. Thus, in 1993, Meussdorffer formed the Defendant PGW, which started producing guitars and basses with model designations of Phantom and Teardrop. PGW's Phantom guitars had a rounded trapezoidal body shape with a rounded shaped headstock (the " Phantom Body Shape" ), while the Teardrop guitars had a teardrop body shape with a rounded shaped headstock (the " Teardrop Body Shape" ). PGW has continued to sell Phantom guitars and Teardrop guitars without interruption from 1993.
According to the Defendants, since 1993, they have policed their marks in connection with the Phantom guitars and Teardrop guitars. In this regard, the Defendants claim the following four marks: (1) a mark for the word " Phantom" ; (2) a mark for the word " Teardrop" ; (3) a mark for the Phantom Body Shape; and (4) a mark for the Teardrop Body Shape.
The Defendants have licensed these marks to various companies, including EKO, which was one of the original manufacturers of the Vox guitars in the 1960s, as well as Roland Corporation, which is one of the Plaintiffs' main competitors. In addition, the Defendants claim to have developed significant goodwill over the last twenty years in connection with these marks. In this regard, they claim that famous musicians, such as the lead singer of the band Coldplay, the guitarist for Bruce Springsteen and the E Street Band, and the guitarist for The Cars, have used the Defendants' products bearing their marks.
Also in 1993, the Plaintiffs revived the Vox brand in International Class 009 and started to sell guitar amplifiers. That same year, the Plaintiffs and the Defendants participated as exhibitors at the 1993 NAMM show, which is North America's largest musical instrument trade show. During the show, the Plaintiffs borrowed the Defendants Phantom and Teardrop guitars so that attendees of the show could try the new Vox branded guitar amplifiers. Following the NAMM show, the Plaintiffs reached out to the Defendants about possibly manufacturing guitars for the Plaintiffs. However, no agreement ever materialized from the parties' negotiations.
On April 1, 1994, the Defendants applied to the United States Patent and Trademark Office (" USPTO" ) for trademark registration of the standard character word mark " Teardrop," and on January 11, 1996, the Defendants applied to the USPTO for trademark registration of the standard character word mark " Phantom." Thereafter, on February 13, 1996, the USPTO granted word mark registration for " Teardrop," and on December 29, 1996, the USPTO granted word mark registration for " Phantom."
In 1998, the Plaintiffs issued a small amount of guitars using body shapes that were similar to the Defendants' Phantom Body Shape and Teardrop Body Shape (the " 1998 guitars" ). In response, the Defendants sent the Plaintiffs a cease and desist letter concerning the alleged infringement. However, it seems that none of the 1998 guitars were ever sold in the United States and the Plaintiffs stopped selling them.
On December 26, 2001, the Defendants applied to the USPTO for trademark registration for the Phantom Body Shape and the Teardrop Body Shape. On September 30, 2003, the USPTO granted registration for the Teardrop Body Shape. On October 5, 2004, the USPTO granted registration for the Phantom Body Shape.
In 2007, the Plaintiffs decided to issue one hundred guitars with body shapes nearly identical to the Defendants' Phantom Body Shape and Teardrop Body Shape (the " 2007 guitars" ). In response, the Defendants sent the Plaintiffs a cease and desist letter. Ultimately, the Plaintiffs made less than seventy of the 2007 guitars and only a small portion of these guitars were sold in the United States.
Five years later, in 2012, the Plaintiffs again began manufacturing and selling guitars and bases with designs substantially matching the Defendants' Phantom Body Shape mark and Teardrop Body Shape mark. The Plaintiffs used the model designation " Apache" for these instruments (the " 2012 Apache instruments" ), with those instruments utilizing the Phantom Body Shape called Apache II (the " Apache II guitars" ) and those instruments utilizing the Teardrop Body Shape called Apache I (the " Apache I guitars" ). Once more, the Defendants sent the Plaintiffs a cease and desist letter. The Defendants also apparently received inquiries from customers who believed that the Defendants were producing and selling the 2012 Apache instruments.
For two years, the Plaintiffs and the Defendants engaged in discussions over the Defendants manufacturing guitars for the Plaintiffs and the Plaintiffs licensing the Defendants' marks. However, in 2013, the Plaintiffs began making a ukulele under the model designation " Ukelectric" that had a body shape similar to the Defendants' Teardrop Body Shape mark (the " 2013 ukuleles" ). Thus, the Defendants again sent the Plaintiffs a cease and desist letter. At this point, the Plaintiffs commenced the instant action.
II. THE PLAINTIFFS' MOTION TO DISMISS THE FIRST AMENDED COUNTERCLAIM
Before considering the Defendants' motion for a preliminary injunction and the related R& R, the Court will first look at whether the Defendants' First Amended Counterclaim, upon which its motion for preliminary injunction relies, can survive the Plaintiffs' Fed.R.Civ.P. 12(b)(6) motion to dismiss.
A. Legal Standard on a Fed.R.Civ.P. 12(b)(6) Motion to Dismiss
It is well-established that a complaint should be dismissed under Fed.R.Civ.P. 12(b)(6)
only if it does not contain enough allegations of fact to state a claim for relief that is " plausible on its face." Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In this regard, as suggested above, when deciding a motion to dismiss, a court is required to accept the material facts alleged in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Iqbal, 556 U.S. at 678; Zinermon v. Burch, 494 U.S. 113, 118, 110 S.Ct. 975, 108 L.Ed.2d 100 (1990); In re NYSE Specialists Sec. Litig., 503 F.3d 89, 91 (2d Cir. 2007).
As such, " [w]hen there are well-pleaded factual allegations, a court should assume their veracity and . . . determine whether they plausibly give rise to an entitlement of relief." Iqbal, 556 U.S. at 679. However, " although 'a court must accept as true all of the allegations contained in a complaint,' that 'tenet' 'is inapplicable to legal conclusions,' and '[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.'" Harris v. 301 Mills, 572 F.3d 66, 72 (2d Cir.2009) (quoting Iqbal, 556 U.S. at 678).
B. As to the Plaintiffs' Motion to Dismiss the Defendants' Counterclaims
As stated above, the Defendants in this case have filed a Counterclaim alleging (1) trademark infringement pursuant to 15 U.S.C. § 1114; (2) false designation of origin and unfair competition pursuant to 15 U.S.C. § 1125(A); (3) common law trademark infringement pursuant to New York State law; and (4) common law unfair competition pursuant to New York State law. The Plaintiffs attack the sufficiency of the First Amended Counterclaim by making the following arguments: (1) that the Counterclaim is barred by laches; (2) with respect to the trademark infringement claims, the Defendants failed to adequately plead infringing use or likelihood of confusion; (3) the Defendants have failed to plead the required elements of an unregistered trade dress claim with respect to the Plaintiffs' 1998 guitars; and (4) the Defendants have failed to state a claim for unfair competition.
At the outset, the Court notes that the Plaintiffs' argument that the Defendants have failed to plead the required elements of an unregistered trade dress claim with respect to the 1998 guitars is without merit, since the Defendants have asserted no such claim. As such, the Court need not consider this issue any further. Concerning the Plaintiffs' remaining contentions, as discussed in more detail below, on the ...