Hyson USA, Inc. v. Hyson 2U, Ltd.
2016 U.S. App. LEXIS 8898
| 7th Cir. | 2016Background
- Hyson USA (owned by Leonid Tansky) operated a food-distribution business since 2006; Karolis Kaminskas was a manager.
- In 2012 Hyson USA suspended operations after losing liability insurance; Kaminskas formed Hyson 2U and Hyson USA transferred branded inventory, equipment, and leased warehouse to Hyson 2U.
- Tansky then worked for Hyson 2U for ~17 months before being fired in February 2014.
- In July 2014 Tansky and Hyson USA (now operating again) sued Hyson 2U and Kaminskas for Lanham Act claims (trademark infringement, false designation, dilution, cybersquatting) and state-law claims.
- Hyson 2U moved to dismiss under Rule 12(b)(6) arguing the complaint affirmatively showed the affirmative defense of acquiescence; the district court granted dismissal and declined supplemental jurisdiction over state claims.
- The Seventh Circuit reversed, holding acquiescence is fact-intensive and the complaint did not unambiguously establish all elements of the defense.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint should be dismissed under Rule 12(b)(6) because acquiescence bars relief | Tansky/Hyson USA alleges trademark ownership and infringement; complaint does not concede acquiescence | Hyson 2U contends transfers, knowledge of use, and Tansky's employment show active consent (acquiescence) | Reversed: dismissal improper; complaint does not unambiguously establish acquiescence |
| Whether acquiescence was established by transfer of inventory/equipment and Tansky's 17-month employment | These facts do not amount to an affirmative representation of consent | These facts evidence active consent and delay sufficient for estoppel | Court: mere transfer, knowledge, and employment are insufficient to show the required affirmative word or deed |
| Whether acquiescence can be resolved on the pleadings | Plaintiffs argue equitable defenses usually require factual record; should not be decided on 12(b)(6) unless clear | Defendants argue complaint facts plainly show acquiescence so early dismissal appropriate | Court: acquiescence is fact-intensive and rarely suitable for resolution on a motion to dismiss; plaintiff not required to plead around defense |
| Standard for pleading around affirmative defenses at motion-to-dismiss stage | Plaintiff relies on precedent that a complaint need not anticipate every defense | Defendant relies on exception where complaint ‘‘sets forth everything necessary’’ for the defense | Court: dismissal only when complaint unambiguously establishes all elements; here that standard not met |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard—facial plausibility required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard for Rule 12(b)(6))
- Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687 (7th Cir. 2012) (plaintiff generally need not plead around affirmative defenses)
- United States v. Lewis, 411 F.3d 838 (7th Cir. 2005) (exception: dismissal when complaint alleges everything necessary to establish an affirmative defense)
- TMT N. Am., Inc. v. Magic Touch GmbH, 124 F.3d 876 (7th Cir. 1997) (acquiescence defined as affirmative word or deed conveying consent; relation to laches)
- SunAmerica Corp. v. Sun Life Assurance Co., 77 F.3d 1325 (11th Cir. 1996) (three-element formulation of acquiescence: active representation, inexcusable delay, undue prejudice)
- Piper Aircraft Corp. v. Wag-Aero, Inc., 741 F.2d 925 (7th Cir. 1984) (distinguishing acquiescence from laches; acquiescence requires affirmative conduct)
- What-A-Burger of Va., Inc. v. Whataburger of Corpus Christi, Tex., 357 F.3d 441 (4th Cir. 2004) (acquiescence is the active counterpart to laches)