1:17-cv-01530
M.D. Penn.Mar 4, 2020Background
- Dentsply, a U.S. dental-products manufacturer and trademark owner, sells in the U.S. through authorized distributors; Net32 operates an online discount marketplace where third-party vendors list products.
- Vendors on Net32 offered gray‑market Dentsply goods (manufactured for foreign markets), including Spectrum TPH‑3, Dycal, and Dyract; some items lacked U.S. FDA registration/labeling and differed in packaging, quantity, language, and instructions.
- Dentsply alleges Net32 received multiple customer complaints about these listings (2014–2017), received formal notice in Feb. 2017 and Feb. 2018, but continued to allow sales.
- Dentsply sued alleging contributory trademark infringement (15 U.S.C. §1114), contributory 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.
- The court denied dismissal of Counts I (trademark infringement) and II (unfair competition/false designation) because Dentsply plausibly alleged (a) material differences between gray‑market and U.S. products, (b) instances/likelihood of consumer confusion, and (c) Net32’s knowledge and continued facilitation; the court dismissed Count III (dilution) for failure to plead fame, and struck requests for relief as to genuine U.S. products (limiting relief to non‑genuine/foreign‑only goods).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contributory trademark infringement (§1114) | Dentsply: gray‑market goods differ materially (packaging, quantity, labeling, FDA status), causing confusion; Net32 knew and facilitated sales. | Net32: differences are minor/de minimis; record shows no likelihood of confusion; insufficient knowledge allegation. | Denied dismissal — complaint plausibly alleges material differences, actual/likely confusion, and Net32's knowledge. |
| Contributory unfair competition / false designation (§1125(a)) | Same factual basis as trademark claim: material differences, confusion, knowledge. | Same as above. | Denied dismissal — same pleading sufficiency as Count I. |
| Contributory trademark dilution (§1125(c)) | Dentsply: marks are "famous" and gray‑market use dilutes distinctiveness. | Net32: plaintiff’s allegation of fame is conclusory; no factual showings of fame. | Granted dismissal — plaintiff failed to plead facts establishing fame. |
| Prayer for relief regarding genuine U.S. products | Dentsply clarified it seeks relief only against non‑genuine/foreign‑only goods. | Net32 moved to strike relief as to genuine products. | Granted in part — court struck relief relating to genuine U.S. products; injunction/relief limited to materially different gray‑market or foreign‑only goods. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausibility requirement)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (antitrust pleading standard; plausibility framework)
- AT&T Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421 (3d Cir. 1994) (contributory Lanham Act liability requires knowledge of direct infringement)
- Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996) (commercial‑facilitator liability principles applied to third‑party infringing sales)
- Arrowpoint Capital Corp. v. Arrowpoint Asset Mgmt., LLC, 793 F.3d 313 (3d Cir. 2015) (likelihood‑of‑confusion standard under the Lanham Act)
- Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700 (3d Cir. 2004) (likelihood‑of‑confusion framework)
- Freedom Card, Inc. v. JPMorgan Chase & Co., 432 F.3d 463 (3d Cir. 2005) (confusion must be likely, not merely possible)
- Iberia Foods Corp. v. Romeo, 150 F.3d 298 (3d Cir. 1998) (gray‑market/genuineness test — material differences can render goods non‑genuine)
- Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633 (1st Cir. 1992) (differences in packaging/quantity can be material for gray‑market claims)
- Times Mirror Magazines, Inc. v. Las Vegas Sports News, LLC, 212 F.3d 157 (3d Cir. 2000) (elements required to state a trademark dilution claim)
- Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 935 F.2d 1281 (3d Cir. 1991) (affirming liability where gray‑market goods differed in quantity/packaging)