United States: Judge Ross Examines Morass Of Pleadings And Refines Dispute To Supported Claims Of Patent, Copyright, And Trade Dress Infringement

In an earlier post today we reported on the Third Amended Complaint filed by Lisa Duer ("Duer"), a resident of Woodstock, Georgia, alleging patent infringement, trademark infringement, copyright infringement, and trade dress infringement action against Bensussen Deutsch & Associates, Inc. ("BDA"), a Washington corporation, and Eli Lilly and Company ("Lilly"), an Indiana corporation (collectively the "Defendants"). This post addresses Judge Eleanor L. Ross's Order of July 8, 2015, which gave rise to that filing.

On July 8, Judge Ross ruled on three motions, one filed by Defendants and two by Plaintiffs. The Court granted in part and denied in part the motion to dismiss of the Defendants and the motion to allow a Second Amended Complaint by Duer and denied Duer's motion to file the Third Amended Complaint "as currently submitted." However, the Court allowed a more limited Third Amended Complaint – "limited to the inclusion of Plaintiff's additional trademark infringement claim."

The procedural history of the case includes an original motion to dismiss and a response which included a Proposed Second Amended Complaint to cure deficiencies, which Defendants contended remained uncured. This gave rise to Plaintiff's request for leave to file a Third Amended Complaint. In denying the motion to file the Third Amended Complaint as submitted, the Court addressed the issues that remained for decision in the Second Amended Complaint. The Court assumed the facts alleged by Plaintiff were true and those facts, as contained in the Third Amended Complaint filed in accordance with the Court's Order, were set forth in our prior post. The picture of Plaintiff's product is repeated here, and the facts as alleged by Plaintiff can be reviewed in our prior post.

In reviewing the motion to dismiss the Court referred to the so-called "plausibility standard" and distinguished that standard from a "probability requirement" citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007): "Even if it is extremely unlikely that a plaintiff will recover, a complaint may nevertheless survive a motion to dismiss for failure to state a claim, and a court reviewing such a motion should bear in mind that it is testing the sufficiency of the complaint and not the merits of the case." P. 5.

The Court first addressed trade dress infringement as alleged in Count III of the Second Amended Complaint. In order to state a trade dress infringement claim, the following elements must be alleged:

  1. that the product design of the two products is confusingly similar;
  2. the features of the produce design are primarily non-functional; and
  3. the product design is inherently distinctive or has acquired secondary meaning.

Pp. 6-7, quoting RMS Titanic, Inc. v. Zaller, 978 F. Supp. 2d 1275, 1293 (N.D. Ga. 2013) ( discussed in a prior post).

Defendants contended that the second and third elements were not adequately plead. In disagreeing, Judge Ross found with regard to the second element that the Plaintiff alleged the trade dress was non-functional and "the Court was not prepared to find that" . . . "the particular shape of the product, the vertical arrangement of the days of the week, and the chosen color scheme" were all functional. P. 7. While the existence of a utility patent claiming these features "is strong evidence that the features" . . . "are functional," Duer is entitled to "the opportunity to 'carry the heavy burden of showing that the feature[s are] not functional.'" P. 7, quoting TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 30 (2001). With regard to the third element, Judge Ross also found that whether or not the Plaintiff's product has gained secondary meaning was a question of fact. P. 9, citing Conagra, Inc. v. Singleton, 743 F.2d 1508, 1513 (11th Cir. 1984).

The Court noted five factors to be reviewed in determining acquisition of secondary meaning:

  1. length and manner of use;
  2. nature and extent of advertising and promotion;
  3. efforts to promote a conscious connection between the public mind and the product;
  4. identification of name with product or venture; and
  5. existence of intentional copying.

P. 9, citing Conagra at 1513 and Brooks Shoe Mfg. Co. v. Suave Shoe Corp., 716 F.2d 854, 860 (11th Cir. 1983) (for the fifth factor). The Court found these factors in sufficient abundance to survive the motion to dismiss.

The Court found Duer's false advertising claim under the Lanham Act failed to state a claim because it only addressed a product insert, which by definition could not materially effect a purchase decision. P. 11 The Court dismissed the unfair competition claim under the Lanham Act because Duer did not allege that she was the "actual source of the physical goods distributed by BDA. P. 12.

Judge Ross found that Duer's assertion of Georgia Uniform Deceptive Trade Practice Act and tortious interference with contract claims relied upon the identical facts relied upon for federal claims of copyright, patent and trade dress infringement and were preempted by the federal claims. Preemption by federal Copyright law is explicit, while the Court found at pages 13-14 that the claims were conflicting and stood"as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1332 (Fed. Cir. 1998) [additional internal cites omitted].

The Court found Duer's allegations amounted to a "reverse passing off claim," where Defendants sold Duer's product as if the product belonged to Defendants. This claim was of a nature preempted by the Copyright Act. P. 14, citing Gary Friedrich Enters., LLC v. Marvel Enters., Inc., 713 F. Supp. 2d 215, 220 (S.D.N.Y. 2010). Judge Ross was unpersuaded by Duer's argument that an additional element of deception beyond copyright infringement was involved (as the Court found this element an implicit part of the copyright infringement claim). The analysis of the tortious interference claim followed the same reasoning and was not saved from preemption by the existence of a breached license to which Duer was not a party.

Judge Ross dismissed Duer's allegations of fraud for failing to plead with particularity (1) the falsity of the representations made or that statements as to future performance were known not to be true when made; (2) allegations of Defendants' gains from the fraud; and (3) allegations of fraud on customers are not actionable as not being made to Duer. Because Duer's punitive damage claim was premised only on fraud, it too must be dismissed.

The Court agreed with Defendants that Duer had been on notice of the deficiencies in the false and deceptive advertising, unfair competition, deceptive trade practices, tortious interference, and fraud claims before submitting its final proposed amendment and therefore those claims were dismissed with prejudice. The punitive damages claim was also dismissed, though not with prejudice.

The case is Lisa Duer v. Bensussen Deutsch & Associates, Inc., and Eli Lilly and Company, No. 1:14-cv-01589-ELR, Dkt. 110, decided July 8, 2015, by Judge Eleanor L. Ross in the U.S. District Court for the Northern District of Georgia, Atlanta Division.

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