Canon U.S.A. Inc. v. F & E Trading LLC
2:15-cv-06015
E.D.N.YSep 29, 2017Background
- Canon U.S.A., Inc. (Canon-USA) sued multiple affiliated online wholesalers and retailers and their principal (Houllou) for selling “Gray Market” Canon cameras — products intended for non‑U.S. markets or materially different from U.S. genuine Canon cameras — alleging Lanham Act trademark infringement and common-law unfair competition.
- Alleged differences in gray‑market items included altered/missing serial numbers, non‑U.S. packaging, inferior or no manufacturer warranties, photocopied manuals, and non‑Canon power accessories creating safety/quality differences.
- Defendants are not authorized Canon resellers; they sell via websites and marketplaces and post a website/packaging disclaimer informing buyers some items may be imported and may lack U.S. warranty coverage.
- Moving Defendants (three LLCs) moved to dismiss under Rule 12(b)(6), arguing the complaint’s allegations are conclusory and improperly use group pleading; Canon-USA opposed. Canon-USA moved to strike/dismiss counterclaims by Answering Defendants and Houllou seeking a declaratory judgment that the disclaimers preclude Lanham Act/common‑law liability.
- The district court denied the Motion to Dismiss as to Moving Defendants (found pleadings sufficiently specific and plausible on likelihood of confusion and use in commerce) and denied Canon‑USA’s motions to strike/dismiss the declaratory counterclaims (found an independent case/controversy and that exercising jurisdiction was appropriate).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the SAC plausibly pleads Lanham Act trademark infringement (use in commerce, advertising, sale) | Allegations that corporate defendants imported, advertised, and sold gray‑market Canon cameras bearing the CANON mark, causing lost sales and consumer confusion | Allegations are conclusory and lack defendant‑specific facts; insufficient under Twombly/Iqbal | Denied dismissal: court finds factual allegations (use in commerce, advertising, sale) sufficiently pleaded against the group to be plausible |
| Whether the complaint permissibly uses group pleading | Canon: defendants are similarly situated affiliated entities under common control; defined terms ("Corporate Defendants") give fair notice | Moving Defs: group pleading fails Rule 8(a) fair‑notice requirement; pleads identical allegations without distinguishing conduct | Denied dismissal: court accepts group pleading here because defendants are alleged to be identically situated with common principal and claims give adequate notice |
| Whether the complaint plausibly pleads likelihood of confusion (Polaroid factors) | Canon alleges bad faith marketing of materially different products bearing the CANON mark and consumer confusion; pleads factual bases | Defendants contend likelihood cannot be assumed from grouped, conclusory allegations; factual inquiry inappropriate at pleading stage | Denied dismissal: court treats likelihood of confusion as a fact question but finds plaintiff pleaded sufficient factual allegations to survive 12(b)(6) |
| Whether counterclaims seeking declaratory judgment that disclaimers preclude liability should be struck/dismissed | Canon: counterclaims are duplicative/mirror the complaint and unnecessary; court should decline jurisdiction | Defendants: counterclaims present independent controversy (disclaimers’ legal efficacy) that may remain even if plaintiff’s suit is withdrawn | Denied strike/dismissal; court exercises jurisdiction: counterclaims present an independent, immediate controversy and factors favor hearing them |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: legal conclusions unsupported by factual allegations are insufficient)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts plausibly suggesting entitlement to relief)
- 1–800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400 (2d Cir. 2005) (elements of a Lanham Act trademark infringement claim)
- Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961) (multi‑factor likelihood‑of‑confusion test)
- Leach v. Ross Heater & Mfg. Co., 104 F.2d 88 (2d Cir. 1939) (declaratory relief permissible where counterclaim presents controversy that can survive dismissal of plaintiff’s suit)
- Larson v. Gen. Motors Corp., 134 F.2d 450 (2d Cir. 1943) (counterclaim for declaratory relief may be improper where no controversy remains after disposition of main claim)
- New York Times Co. v. Gonzales, 459 F.3d 160 (2d Cir. 2006) (factors guiding district courts’ exercise of discretion under the Declaratory Judgment Act)