Dentsply Sirona Inc. v. Net32, Inc.
3:20-cv-00200
| W.D.N.C. | Mar 4, 2020Background
- Dentsply, a Pennsylvania-headquartered dental products manufacturer, owns valid U.S. trademarks and sells in the U.S. through authorized distributors. Net32 operates an online marketplace (net32.com) where third‑party vendors offered Dentsply products.
- Numerous listings on Net32 were allegedly gray‑market goods manufactured for foreign markets (e.g., Spectrum TPH‑3, Dycal, Dyract) and not intended or registered for U.S. sale.
- Dentsply alleges material differences between the gray‑market goods and U.S. goods (packaging, quantity/sizes, non‑U.S. labeling, altered packaging, missing FDA instructions) that harmed goodwill and caused actual customer confusion.
- Dentsply notified Net32 of infringing listings (customer complaints since 2014; notices in 2017 and 2018), yet Net32 allegedly continued to permit sales.
- Dentsply’s amended complaint asserts contributory trademark infringement (15 U.S.C. §1114), unfair competition/false designation (15 U.S.C. §1125(a)), and contributory dilution (15 U.S.C. §1125(c)); Net32 moved to dismiss or strike parts of the complaint.
- Court disposition: motion granted in part and denied in part — Counts I (contributory trademark infringement) and II (contributory unfair competition/false designation) survive; Count III (contributory dilution) dismissed for failure to plead fame; portions of the prayer seeking relief as to genuine U.S. products were stricken.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contributory trademark infringement (15 U.S.C. §1114) | Dentsply: gray‑market goods are not "genuine" because of material differences (packaging, quantity, FDA labeling), causing confusion; Net32 knew and materially contributed by hosting listings. | Net32: alleged differences are minor/de minimis; plaintiff failed to plead direct infringement or Net32's knowledge; prior record undermines likelihood of confusion. | Denied — Dentsply plausibly pleaded material differences, actual confusion instances, and Net32's knowledge, so Count I survives. |
| Contributory unfair competition / false designation (15 U.S.C. §1125(a)) | Dentsply: same factual theory as Count I; material differences and consumer confusion support contributory liability. | Net32: same grounds as for Count I — insufficient allegations of material differences and knowledge. | Denied — Count II survives for the same reasons as Count I. |
| Contributory trademark dilution (15 U.S.C. §1125(c)) | Dentsply: marks are "famous and well known" and gray‑market sales dilute distinctiveness. | Net32: complaint only pleads fame conclusorily; lacks factual allegations showing fame to general consuming public. | Granted — Count III dismissed because fame was alleged only conclusorily. |
| Prayer for relief covering genuine U.S. products | Dentsply: seeks relief only for non‑genuine/gray‑market or foreign‑only goods (not genuine U.S. products). | Net32: asked to dismiss/strike relief as to genuine U.S. products. | Granted — court struck portions of the prayer seeking relief as to genuine Dentsply products; relief limited to non‑genuine gray‑market/foreign‑only goods. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: must plead factual matter making claim plausible)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility/ Twombly pleading framework)
- AT&T Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421 (3d Cir.) (contributory Lanham Act liability requires knowledge of third‑party infringement)
- Arrowpoint Capital Corp. v. Arrowpoint Asset Mgmt., LLC, 793 F.3d 313 (3d Cir.) (likelihood‑of‑confusion standard under §1114)
- Iberia Foods Corp. v. Romeo, 150 F.3d 298 (3d Cir.) (gray‑market/genuineness test: material differences doctrine)
- Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir.) (contributory liability: induce, cause, or materially contribute to infringement)
- Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633 (1st Cir.) (packaging differences can be material for gray‑market claims)
- Times Mirror Magazines, Inc. v. Las Vegas Sports News, LLC, 212 F.3d 157 (3d Cir.) (elements required to state a trademark dilution claim)