DENTSPLY SIRONA, INC., Plaintiff, v. DENTAL BRANDS FOR LESS LLC, Defendant.
15 Civ. 8775 (LGS)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
April 2, 2020
LORNA G. SCHOFIELD, District Judge
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge:
Plaintiff Dentsply Sirona Inc. (“Dentsply“) sues Defendant Dental Brands for Less d/b/a Dental Wholesale Direct (“Dental Brands“) over Defendant‘s resale of Dentsply‘s dental products. Dental Brands moves for summary judgment on the remaining claims, and Dentsply cross-moves on Count I, which asserts federal trademark infringement. For the following reasons, Dentsply‘s motion is denied, and Dentаl Brands’ motion is denied in part and granted in part.
I. BACKGROUND
Unless otherwise noted, the facts below are drawn from the record and are undisputed.
Dentsply produces, markets and sells dental supply products. In the United States, Dentsply sells its products through a network of twenty-four authorized dealers who purchase the products directly from Dentsply. Dentsply products include trademarks that Dentsply owns and are still in effect. Dental Brands also sells dental supply products, including Dentsply products. Dental Brands is not authorized to sell Dentsply products in the United States and accordingly admits that its Dentsply products are “gray goods.” Moti Betesh is Dental Brand‘s founder, and the managing director of the company that is Dental Brand‘s sole member. Oded Sherman is Dental Brand‘s managing director. He reports to Betesh.
Dentsply‘s Second Amended Complaint (“SAC“) alleges trademark infringement (Count I), unfair competition, false description and false design of origin (Count II) and trademark dilution (Count III), all under federal law. The SAC also alleges under state law trademark dilution and injury to business reputation (Count IV), tortious interference with contraсts (Count V), tortious interference with business relations (Count VI), unfair competition (Count VII) and unfair and deceptive practices (Count VIII). Defendant‘s motion to dismiss was granted as to Count VI and Count V (only for contracts where Plaintiff was not a party) and denied as to the other allegations.
II. STANDARD
When parties cross-move for summary judgment, the Court analyzes the motions separately, “in each case construing the evidence in the light most favorable to the non-moving party.” Wandering Dago, Inc. v. Destito, 879 F.3d 20, 30 (2d Cir. 2018). Summary judgment is appropriate where the record establishes that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
III. DISCUSSION
A. Count I - Federal Trademark Infringement (15 U.S.C. § 1114 )
Both parties’ cross-move for summary judgment on the trademark infringement claim. Both motions are denied. “A claim for trademark infringement under the Lanham Act is analyzed under a two-prong test. The first prong looks at whether the senior user‘s mаrk is entitled to protection; the second to whether the junior user‘s use of its mark is likely to cause consumers confusion as to the origin or sponsorship of the junior user‘s goods.” Guthrie Healthcare Sys. v. ContextMedia, Inc., 826 F.3d 27, 37 (2d Cir. 2016) (internal quotes and citations omitted). Dentsply is the senior user and Dental Brands is the junior user.
“As to the first prong, a certificate of registration with the [Patent and Trademark Office] is prima facie evidence that the mark is registered and valid (i.e., protectable), that the registrant owns the mark, and that the registrant has the exclusive right to use the mark in commerce.” Id. (internal quotation marks omitted). The undisputed evidence shows that Dentsply owns each of the trademarks at issue. “The likelihood-of-confusion prong turns on whether ordinary consumers are likely to bе misled or confused as to the source of the product in question because of the entrance in the marketplace of the junior user‘s mark.” Id. (internal quotation marks omitted). In a gray-market-goods case, if the goods are not “genuine” then a likelihood of confusion exists. See Zino Davidoff SA v. CVS Corp., 571 F.3d 238, 243 (2d Cir. 2009); Original Appalachian Artworks, Inc. v. Granada Elecs. Inc., 816 F.2d 68, 72-73 (2d Cir. 1987). Goods are not genuine if “they do not conform to the trademark holder‘s quаlity control standards or if they differ materially from the product authorized by the trademark holder for
As the parties have framed the issue in their briefing, a critical question that determines Defendant‘s liability is whether consumers care about the differences between the parties’ respective products in their purchasing dеcisions. Defendant proffers evidence that they do not, and Plaintiff proffers a survey that they do. This creates a classic question of fact for the jury, not suitable for resolution on a motion for summary judgment.
Plaintiff identifies various differences between the products it sells and the products that Dental Brands sells, including that Dental Brands’ warranty provides less protectiоn and is harder to access; that Dental Brands customer service is inferior to Dentsply‘s; and that Dental Brands’ packaging contains irrelevant information that can confuse or mislead customers.
Plaintiff relies on a survey it commissioned and Defendant‘s lack of any comparable survey as evidence that dentist consumers care about these differences. Defendant, in contrast, argues that its product inside the packaging is identical to Plaintiff‘s, and that dentist customers care only that they can get the same product from Defendant at a more economical price than what Plaintiff offers. Defendant points to evidence from Plaintiff‘s sales database reflecting conversations between Plaintiff‘s distributors and dentists suggesting that the dentists do not care about the differences and care only about the price. This conflicting evidence creates a dispute of material fact, precluding summary judgment to either party on this claim. See Nick‘s Garage, Inc., 875 F.3d at 113.
Plaintiff is incorrect that Defendant must use survey evidence to establish that a material difference exists between the parties’ products. The case Plaintiff cites states the opposite: “We do not here suggest that . . . empirical or survey evidence is always required.” Weight Watchers Intern., Inc. v. Luigino‘s, Inc., 423 F.3d 137, 144 n.7 (2d Cir. 2005). The jury, as the ultimate fact finder, must evaluate the strength of Defendant‘s evidence or lack of evidence. Plaintiff is also incorrect that the Dentsply sales database evidence of the dentist statements is likеly inadmissible double hearsay. Reserving a definitive ruling for trial and subject to a sufficient foundation, it is likely that the distributor statements reflected in the database records are admissible as business records under
Accordingly, Dentsply‘s motion for summary judgment as to Count I is denied, and Dental Brands’ motion for summary judgment as to Count I is also denied.
B. Count II - Unfair Competition, False Description and False Designation of Origin under Federal Law (15 U.S.C. 1125(a) )
Dental Brands’ motion for summary judgment on the false advertising claim in Count II is denied. False advertising under
Dental Brands’ motion is denied because a reasonable factfinder could find that Plaintiff has proved all of the elements of a false advertising claim. Dental Brands advertises its Dentsply products on the web with Dentsply‘s trademarks. A reasonable purchaser could view these and
C. Counts III and IV - Trademark Dilution under Federal Law (15 U.S.C. 1125(c) ) and State Law (N.Y. Gen. Bus. Law § 360-l )
Dental Brands’ motion for summary judgment on the claims of trademark dilution in Counts III (federal law) and IV (state law) is granted. “Federal law allows the owner of a famous mark to enjoin a person from using a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark.” Starbucks Corp. v. Wolfe‘s Borough Coffee, Inc., 736 F.3d 198, 205 (2d Cir. 2013) (internal quotes and citations omitted). “[D]ilution by blurring is association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.”
Under Federal law, “[a] mark is famous if it is widely recognized by the general consuming publiс of the United States as a designation of source of the goods or services of the mark‘s owner.”
“[D]ilution fame is difficult to prove,” see Coach Services, Inc. v. Triumph Learning LLC, 668 F.3d 1356, 1373 (Fed. Cir. 2012), and the Second Circuit grants dilution claims only where the mark is widely recognized by the general public. See e.g., Starbucks Corp., 736 F.3d at 201 (the Starbucks mark is famous); Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 111-12 (2d Cir. 2010) (affirming a District Court decision that the Tiffany mark is famous); see also Knowles-Carter v. Feyonce, Inc., 347 F. Supp. 3d 217, 227-28 (S.D.N.Y. 2018) (the BEYONCÉ mark is “famous and distinctive“), 4 McCarthy on Trademarks and Unfair Competition § 24:104. What is a “famous” mark? (5th Ed.) (proving fame “is a difficult and demanding requirement“). New York similarly requires the trademark‘s distinctiveness to be “extremely strong.” Malaco Leaf, AB v. Promotion In Motion, Inc., 287 F. Supp. 2d 355, 367 (S.D.N.Y. 2003); see also Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 625 (2d Cir. 1983) (construing New York law).
The record provides that members of the dental industry are aware of thе Dentsply trademarks, but offers no evidence that the mark is recognized by the general public. The
D. Count V - Tortious Interference with Contracts
Dental Brands’ motion for summary judgment as to Count V is granted. “Under New York law, ‘[t]ortious interference with contract requires the existence of a valid contract between the plaintiff and a third party, defendant‘s knowledge of that contract, defendant‘s intentional procurement of the third-party‘s breach of the contract without justification, actual breach of the contract, and damages resulting therefrom.‘” Cohane v. Nat‘l Coll. Athletic Ass‘n, 612 F. App‘x 41, 44 (2d Cir. 2015) (summary order) (quoting Lama Holding Co. v. Smith Barney Inc., 668 N.E.2d 1370 (N.Y. 1996)); see also White Plains Coat & Apron Co. v. Cintas Corp., 867 N.E.2d 381, 383 (N.Y. 2007). As the record contains no evidence that Dental Brands took any steps to interfere with the contracts between Dentsply and its foreign or domestic distributоrs, Dental Brands’ motion as to this claim is granted.
E. Count VII - Unfair Competition under State Law
Dental Brands’ motion for summary judgment on the common law claim of unfair competition in Count VII is denied. “The essence of the tort of unfair competition under New York common law is the bad-faith misappropriation, for the commercial advantage of one person, ‘a benefit or property right belonging to another person.‘” Gym Door Repairs, Inc. v. Young Equipment. Sales, Inc., 331 F. Supp. 3d 221, 250 (S.D.N.Y. 2018) (quoting Lorillard Tobacco Co. v. Jamelis Grocery, Inc., 378 F. Supp. 2d 448, 456 (S.D.N.Y. 2005)). “‘It is well-established that the elements necessary to prevail on causes of action for trademark infringement and unfair competition under New York common law mirror the Lanham Act claims.‘” Id. (quoting Lorillard Tobacco Co., 378 F. Supp. 2d at 456). “‘However, unlike its federal counterpart, a viable common law claim for unfair competition requires an additional showing of bad faith.‘” Id. (quoting Lorillard Tobacco Co., 378 F. Supp. 2d at 456). “A defendant exhibits bad faith by ‘adopting its mark with the intention of capitalizing on plaintiff‘s reputation and goodwill and any confusion between his and the senior user‘s product.‘” Flat Rate Movers, Ltd. v. FlatRate Moving & Storage, Inc., 104 F. Supp. 3d 371, 380 (S.D.N.Y. 2015) (citing Lang v. Retirement Living Pub. Co., Inc., 949 F.2d 576, 583 (2d Cir. 1991)).
As detailed above, Dentsply‘s federal trademark infringement claim survives summary judgment. Its New York counterpart also survives summary judgment because the record contains sufficient evidence from which a reasonable jury could find that Dental Brands seeks to capitalize on Plaintiff‘s reputation and goodwill and any confusion between the parties’ respective products.
F. Count VIII - Unfair and Deceptive Trade Practices under State Law (N.Y. Gen. Bus. Law § 349 )
Dental Brands’ motion for summary judgment on the claim of deceptive trade practices in Count VIII is denied. A claim of deceptive trade practices under
There is adequate evidence to survive summary judgment that Dental Brands’ sale of Dentsply products is a deceptive act directed at consumers that deceives them in a material way. A reasonаble jury could find that consumers who purchase products with the Dentsply trademark reasonably expect the products to comply with Dentsply‘s quality control and product recall measures. The fact finder could also reasonably conclude that Dental Brands fails to comply with these measures, and that Dental Brands’ sale of Plaintiff‘s products is therefоre materially misleading, see Chobani, LLC v. Dannon Co., Inc., 157 F. Supp. 3d 190, 203 n.11 (N.D.N.Y. 2016), and injurious to consumers.
G. Issue Preclusion
Finally, Dental Brands contends that issue preclusion bars Dentsply‘s trademark infringement, unfair competition and trademark dilution claims. “For issue preclusion to apply, the same ‘issue of fact or law’ must have been ‘actually litigated and resolved in a valid court determination essential to the prior judgment, even if the issue recurs in the context of a different claim.‘” Kaplan v. Reed Smith LLP, 919 F.3d 154, 159 (2d Cir. 2019) (quoting Taylor v. Sturgell, 553 U.S. 880, 892 (2008)). Dental Brands relies on a 2018, Middle District of Pennsylvania decision, denying Dentsply‘s motion for preliminary injunction against a different gray-goods seller, and that Court‘s subsequent decision granting that defendant‘s motion to dismiss for failure to state a claim. See Dentsply Sirona Inc. v. Net32, Inc., No. 17 Civ. 1530, 2018 WL 372163 (M.D. Pa. Jan. 11, 2018); Dentsply Sirona Inc. v. Net32, Inc., No. 17 Civ. 1530, 2018 WL 3473973 (M.D. Pa. July 19, 2018).
Defendant‘s issue preclusion argument fails. The Pennsylvania District Court dismissed Dentsply‘s trademark infringеment, unfair competition, false description, false designation of origin claims and trademark dilution based on the insufficiency of the pleadings. See Dentsply, 2018 WL 3473973, at *2-3. Accordingly, these claims were not “actually litigated and resolved” and preclusion does not apply. Kaplan, 919 F.3d at 159. Similarly, a determination at a preliminary injunction hearing -- which merely assesses likelihood of sucсess on the merits -- also is not a final decision entitled to preclusive effect. See Moore v. Navillus Tile, Inc., No. 14 Civ. 8326, 2016 WL 750797, at *12 (S.D.N.Y. Feb. 24, 2016) (“Because preliminary injunctions . . . are not final decisions, they are not entitled to preclusive effects on subsequent decisions.“).
IV. CONCLUSION
For the foregoing reasons, Plaintiff‘s motion for summary judgment is DENIED. Dental Brands’ motion for summary judgment as to trademark infringement (Count I), false advertising (Cоunt II), state unfair competition (Count VII) and state deceptive trade practices (Count VIII) is DENIED. Plaintiff should consider whether it will voluntarily dismiss any of the surviving claims, as any damages are likely duplicative, and multiple claims with different legal requirements may be confusing to the jury. Dental Brands’ motion for summary judgment as to federal and state trade dilution (Counts III, IV) and tortious interference with contracts (Count V) is GRANTED. A separate trial ready order will be issued.
Dated: April 2, 2020
New York, New York
LORNA G. SCHOFIELD
UNITED STATES DISTRICT JUDGE