Treasury Management Services, Inc. v. Wall Street Systems Delaware, Inc.
1:16-cv-00283
D. Del.May 5, 2017Background
- Plaintiff Treasury Management Services, Inc. (Texas) owns incontestable federal registrations for the marks "TMS" and "TMS TRADE" for financial services (registered 2007) and alleges continuous U.S. use since 1993.
- Defendants Wall Street Systems Delaware, Inc. (WSS) and subsidiary IT2 Treasury Solutions (Delaware/New York) market a treasury management product described on their websites as "TMS" or "IT2 TMS."
- Plaintiff alleges defendants' online use of "TMS" in marketing and as a service identifier has caused customer confusion and continued despite defendants' awareness of plaintiff's marks.
- Plaintiff asserts claims for federal trademark infringement (15 U.S.C. § 1114), false designation/unfair competition (15 U.S.C. § 1125(a)), federal dilution (§ 1125(c)), Delaware dilution (6 Del. C. § 3313), Delaware deceptive trade practices/unfair competition (6 Del. C. § 2531/2532), and Delaware common-law trademark and unfair competition; seeks fees.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing (inter alia) that their "TMS" use is descriptive (not a use as a mark), not a "use in commerce," or is fair descriptive use.
- The district court evaluated pleadings under Twombly/Iqbal/Connelly standards and denied the motion to dismiss in full, finding plaintiff pleaded sufficient facts on validity (incontestability), ownership, likelihood of confusion, and fame for dilution claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Federal trademark infringement (§ 32) | Plaintiff: Incontestable marks; defendants' use of "TMS" on websites and services will cause confusion as to source/affiliation | Defendants: "TMS" is descriptive/generic use to describe treasury management systems, not a trademark use; not a use in commerce; fair descriptive use | Court: Denied dismissal—plaintiff pleaded incontestable registration and plausible likelihood of confusion; factual defenses reserved for later stages |
| False designation/unfair competition (§ 43(a)) | Plaintiff: Defendants falsely designate origin by using confusingly similar marks on services and websites | Defendants: Same descriptive/fair-use arguments; no trademark use | Court: Denied dismissal—standards for § 1114 and § 1125(a) are identical and pleaded facts suffice |
| Federal dilution (§ 43(c)) | Plaintiff: Marks are famous/distinctive through long, continuous use and registration; defendants' later use dilutes mark | Defendants: Complaint lacks facts showing "fame" required by statute | Court: Denied dismissal—pleaded facts about registration, duration, and geographic reach make fame plausible at pleading stage |
| Delaware statutory and common-law claims (dilution, DTPA/unfair competition, common-law infringement) | Plaintiff: State statutory and common-law claims parallel Lanham Act claims; pleaded likelihood of dilution and confusion | Defendants: If federal claims fail, state/common-law claims are duplicative and should be dismissed | Court: Denied dismissal—federal pleading sufficiency supports state statutory and common-law claims to proceed |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must state plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard and courts may disregard legal conclusions)
- Connelly v. Lane Const. Corp., 809 F.3d 780 (3d Cir.) (three-step Rule 12(b)(6) analysis)
- Checkpoint Sys. v. Check Point Software Tech., 269 F.3d 270 (3d Cir.) (elements of federal trademark infringement)
- Ford Motor Co. v. Summit Motor Prod., 930 F.2d 277 (3d Cir.) (incontestable registration establishes validity/ownership)
- A&H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198 (3d Cir.) (similarity of marks can alone support confusion when marks and products directly compete)
- Interpace Corp. v. Lapp, Inc., 721 F.2d 460 (3d Cir.) (Lapp factors for likelihood of confusion)
- Times Mirror Magazines, Inc. v. Las Vegas Sports News, 212 F.3d 157 (3d Cir.) (standards for dilution under Lanham Act)
- Erickson v. Pardus, 551 U.S. 89 (pleadings to be construed in plaintiff's favor)
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.) (courts may consider public records and exhibits on Rule 12(b)(6))