15 F. Supp. 3d 258
E.D.N.Y2014Background
- Plaintiff Sussman-Automatic Corp. (owner of registered "Mr. Steam" marks) alleges Spa World (Steam Sauna Depot) and its principals advertised and solicited sales of "Mr. Steam" products online and by phone but never stocked them, telling customers the items were "temporarily out of stock."
- Plaintiff alleges Spa World employees steered customers to Spa World’s SteamSpa products, made positive factual claims about SteamSpa (e.g., U.S.-made, UL-certified, higher quality) that were false, and disparaged Mr. Steam products.
- Plaintiff claims this bait-and-switch and disparagement caused customer confusion and lost sales.
- Plaintiff amended its complaint asserting Lanham Act claims (trademark infringement, false advertising, unfair competition), New York common-law trademark/unfair competition, New York GBL § 349 deceptive acts, and trademark dilution.
- Defendants moved to dismiss pre-discovery under Fed. R. Civ. P. 12(b)(6) (and 9(b) argued), and the district court considered the amended complaint on the second motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 9(b) heightened pleading applies to Lanham Act claims | Rule 9(b) should not be imposed on Lanham Act claims | Rule 9(b) applies because claims sound in fraud | Court declined to impose Rule 9(b) on Lanham Act claims absent controlling Circuit authority imposing it |
| Whether trademark infringement (initial-interest confusion) pleaded | Unauthorized use of "Mr. Steam" and website display diverted customers — sufficient for initial-interest confusion | Plaintiff failed to allege similarity between marks; allegations show differentiation, not source confusion | Dismissed: no plausible allegation that defendants’ marks or use were similar so as to cause initial-interest confusion |
| Whether false advertising under § 43(a) pleaded (falsity, commercial advertising, materiality) | Website display and statements that items were "temporarily out of stock," plus false factual claims about SteamSpa, were false and part of promotional conduct | Statements were puffery or insufficiently disseminated to constitute commercial advertising; lack of relevant market alleged | Court found falsity sufficiently alleged for certain representations but held plaintiff failed to define relevant market; allowed leave to replead false advertising (and related NY statutory claims) within 30 days |
| Whether supplemental jurisdiction over state statutory claims should remain | Plaintiff sought to keep state claims tied to Lanham claims | Defendants sought dismissal of federal claims and state claims | Court declined to exercise supplemental jurisdiction over NY GBL § 349 and § 360 claims after dismissing federal claims, but allowed reassertion if false-advertising claim is repleaded |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not entitled to assumption of truth)
- Rombach v. Chang, 355 F.3d 164 (Rule 9(b) particulars required to plead fraud)
- Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036 (initial-interest confusion in metatags and online use)
- Louis Vuitton Malletier v. Burlington Coat Warehouse Corp., 426 F.3d 532 (Lanham Act protects initial-interest confusion)
- Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (multifactor likelihood-of-confusion test)
- Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (initial-interest confusion can constitute trademark injury)
- Time Warner Cable Inc. v. DIRECTV, Inc., 497 F.3d 144 (literal falsity vs. reasonable interpretation for § 43(a) claims)