165 F. Supp. 3d 705
N.D. Ill.2015Background
- Slep-Tone, a manufacturer/licensor of karaoke accompaniment tracks, owns registered trademarks for the mark “Sound Choice.”
- Elwood operates a venue (Mecca Supper Club) that hires third‑party karaoke operators who allegedly displayed the Sound Choice mark without Slep‑Tone’s authorization.
- Slep‑Tone sued Elwood for trademark infringement and unfair competition; Elwood counterclaimed seeking declarations of invalidity/noninfringement, cancellation, and brought claims for fraudulent procurement, antitrust violations, abuse of process, and common‑law fraud.
- Elwood alleges Slep‑Tone procured two registrations by falsely stating the mark was in “use in commerce” (Nov. 29, 2011 application) even though Slep‑Tone itself did not conduct karaoke shows and allegedly relied on licensee use without proper disclosure.
- Elwood alleges Slep‑Tone used threats of litigation to coerce venues into hiring only Slep‑Tone licensed jockeys, raising price and excluding competitors; Elwood seeks to challenge validity of the registrations under Lanham Act procurement‑fraud theories.
Issues
| Issue | Plaintiff's Argument (Slep‑Tone) | Defendant's Argument (Elwood) | Held |
|---|---|---|---|
| Whether Elwood plausibly alleges fraudulent procurement of trademarks | Slep‑Tone contends its application and photos show use in commerce via licensees and complied with PTO disclosure rules | Elwood alleges Slep‑Tone misrepresented "use in commerce" on Nov. 29, 2011 and failed to disclose use was solely through licensees | Denied dismissal: fraudulent procurement counterclaims survive (Counts I, III, IV, V) — pleadings sufficient under Rule 9(b) and 12(b)(6) |
| Whether Elwood sufficiently pleads an antitrust violation under Sherman/Clayton Acts | Slep‑Tone argues no concerted agreement or market definition alleged; unilateral threats cannot sustain Section 1 claim | Elwood alleges coercion of venues via litigation threats to exclude competitors and raise prices | Dismissed: antitrust claim (Count VI) fails for lack of alleged agreement, market definition, and facts supporting price discrimination |
| Whether Elwood states an abuse of process claim under Illinois law | Slep‑Tone argues filing suit (even with intent) is not abuse absent use of judicial process to compel improper act | Elwood contends suit was brought to coerce exclusive purchases/hiring and pressure venue contracting | Dismissed: abuse of process (Count VII) lacks allegation that court process was used to compel an act beyond legal process; leave to amend granted |
| Whether Elwood pleads common‑law fraud under Illinois law | Slep‑Tone argues no actionable fraud because Elwood did not plead reliance causing exclusive purchases/hirings | Elwood claims misrepresentations of valid trademark ownership induced it to buy/hire Slep‑Tone products/jockeys | Dismissed with prejudice: Count VIII fails because Elwood did not allege detrimental reliance |
Key Cases Cited
- Yeftich v. Navistar, Inc., 722 F.3d 911 (7th Cir.) (Rule 12(b)(6) plausibility standard)
- Williamson v. Curran, 714 F.3d 432 (7th Cir.) (documents central to complaint may be considered on motion to dismiss)
- San Juan Products, Inc. v. San Juan Pools of Kansas, Inc., 849 F.2d 468 (10th Cir.) (elements of fraudulent procurement of trademark)
- Money Store v. Harriscorp Fin., Inc., 689 F.2d 666 (7th Cir.) (registrant must deliberately attempt to mislead PTO)
- NCAA v. Board of Regents of Univ. of Oklahoma, 468 U.S. 85 (U.S.) (per se antitrust violation discussion)
- Volvo Trucks North America, Inc. v. Reeder‑Simco GMC, Inc., 546 U.S. 164 (U.S.) (types of price discrimination under Clayton Act)
- Menasha Corp. v. News Am. Mktg. In‑Store, Inc., 354 F.3d 661 (7th Cir.) (rule‑of‑reason requires defined market and adverse/anticompetitive effects)
- Tricontinental Indus., Ltd. v. PricewaterhouseCoopers, LLP, 475 F.3d 824 (7th Cir.) (elements of Illinois common‑law fraud)