MEMORANDUM OPINION AND ORDER
Plaintiffs KJ Korea, Inc. (“KJ Korea”) and Young Ki Eun filed their complaint against Defendants Health Korea, Inc. (“Health Korea”) and Kay Park, alleging Trademark Infringement (Count I) and Unfair Competition (Count II) under the Lanham Act; Unfair Competition in violation of Illinois’s Uniform Deceptive Trade Practices Act (Count III); Unfair Competition in violation of Illinois’s Consumer Fraud and Deceptive Business Practices Act (Count IV); Common Law Trademark Infringement (Count V); Common Law Unfair Competition (Count VI); and Unjust Enrichment (Count VII). Defendants move for dismissal under Federal Rule of Civil Procedure 12(b)(6) on all counts. For the reasons stated beíow, the Court denies Defendants’ motion to dismiss [16] in its entirety.
1. Background
The complaint alleges that, since 2008, Plaintiffs have sold nutritional supplements, massage instruments, and other health products in association with three marks, all of which read “Health Korea” in Korean or both Korean and English. See Compl. at ¶ 15.
Plaintiffs allege that they own the first mark,
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under the Lanham Act. Compl. at ¶¶ 13, 15; Exh. A. This mark is registered in the Supplemental Register of the U.S. Patent and Trademark Office (“U.S.P.T.O”) with a Registration Number of 3,968,033 (hereafter “the '033 Mark”). Compl. at ¶¶ 13,15; Compl. Exh. A.
The complaint alleges that Plaintiffs own the second mark, “HEALTH KOREA,” under Illinois common law. Compl. at ¶ 15. This mark has no pending application or registration with the U.S.P.T.O. See id.
The complaint further alleges that Plaintiffs own the third mark,
, under Illinois common law. Id. at ¶¶ 14, 15. This mark is allegedly in the application stage before the U.S.P.T.O. with a Serial Number 86040691 (hereafter, the “'691 Mark”). Id.
Plaintiffs allege that, since 2008, they have sold goods and services, including massage apparatuses and nutritional supplements, in association with the three marks in California, where they now own four retail stores. Id. at ¶ 16. Plaintiffs allege that, since May 2009, they have spent more than one million dollars advertising these goods and services in association with their three marks in Chicago and nationwide through various television channels, including but not limited to The Asia Network, Inc., SBS International, and Television Korea 24, Inc. Id. at ¶¶ 17-18. According to the complaint, plaintiffs have sold and shipped goods, including massag-ers and nutritional supplements, with these three marks to various retailers and distributors in Chicago since at least as early as November 2011. Id. at ¶ 19. They allege that, as a result of five continuous years of advertising, sales and promotions of goods and services associated with the three marks, all three marks have acquired secondary meaning in the United States. Id. at ¶ 20.
Plaintiffs allege that Defendants have knowingly violated Plaintiffs’ rights to the three marks in two ways. First, they have allegedly operated a retail store named and labeled
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in Chicago since 2013. Id. at ¶ 36. Second, Defendants have allegedly published newspaper advertisements displaying the English words “HEALTH KOREA.” Id. at ¶ 37.
Plaintiffs allege that, prior to opening the store in Cook County, Defendant Kay Park visited two of KJ Korea’s retail stores in Los Angeles. Id. at ¶¶ 27-28. While in the stores, she allegedly observed Plaintiffs’ three marks in connection with massagers and nutritional supplements as well as the store layout, the display and merchandise arrangement, and the store ambiance. Id. During subsequent conversations between Defendant Kay Park and KJ Korea’s marketing director, Defendant Kay Park allegedly stated that she had learned of “HEALTH KOREA” through televised advertisements on SBS in Chicago and that her research showed that the mark “HEALTH KOREA” was well recognized and popular in the Korean community. Id. at ¶¶ 30-31. According to Plaintiffs, she stated that any products and services bearing the “HEALTH KOREA” trademark/service mark would be successful and stated that she therefore intended to use the mark in her new store. Id.
The complaint alleges that KJ Korea’s marketing director “clearly told Defendant Kay Park that she cannot use the trademark ‘HEALTH KOREA’ in any form” and that the '033 Mark was federally registered trademark. Id. at ¶ 32. Plaintiffs further allege that the marketing director sent an e-mail to the same effect on July 29, 2013. Id. On August 14, 2013, Defendant Kay Park allegedly replied to the email, stating that she nevertheless intended to name her new business “HEALTH KOREA” and that she would not remove the storefront sign marked with this same name. Id. at ¶ 34. Plaintiffs allege that the marketing director replied via e-mail that same day, again stating that Defendant Kay Park “cannot use - ‘HEALTH KOREA’ ” and requesting that she “not
Plaintiffs allege that their attorney sent a letter demanding that Defendants cease and desist from using infringing marks that would likely cause confusion with Plaintiffs’ registered '033 Mark and its common law trademarks. Id. at ¶37. They allege that Defendants ignored the letter, that they continue to use at least one infringing mark with full knowledge of Plaintiffs’ federal and common law rights, and that they are knowingly and intentionally trading on Plaintiffs’ goodwill and reputation. Id. at ¶¶ 39-40.
The complaint further states that Plaintiffs “have evidence of actual confusion since the Defendants’ use of allegedly infringing marks.” Id. at ¶ 41. The complaint itself does not, however, include this evidence. Plaintiffs additionally allege that they have and will continue to suffer damages given Defendants’ intent to'Continue the infringing acts. Id. at ¶¶ 43-46.
Plaintiffs claim that these activities violate their rights to the three marks under the Lanham Act, state unfair competition statutes, and Illinois common law. Specifically, Plaintiffs claim Trademark Infringement under 15 U.S.C. § 1114 (Count I); Unfair Competition under 15 U.S.C. § 1125 (Count II); Unfair Competition in violation of Illinois’s Uniform Deceptive Trade Practices Act, 815 Ill. Comp. Stat. 510/1 (Count III); Unfair Competition in violation of Illinois’s Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1 (Count IV); Common Law Trademark Infringement (Count V); Common Law Unfair Competition (Count VI); and Unjust Enrichment (Count VII). Defendants move to dismiss Plaintiffs’ complaint under Federal Rule of Civil Procedure Rule 12(b)(6).
II. Legal Standard On Motion To Dismiss
The purpose of a Rule 12(b)(6) motion to dismiss is not to decide the merits of the case; a Rule 12(b)(6) motion tests the sufficiency of the complaint. Gibson v. City of Chi,
III. Analysis
Each of the claims at issue in this motion involves the same elements and proofs. See AHP Subsidiary Holding Co. v. Stuart Hale Co.,
To state a claim for trademark infringement and unfair competition under all of these theories, a plaintiff must allege that: (1) it has a protectable right in the asserted trademarks; and (2) the defendant’s use of the mark is likely to cause confusion. CAE, Inc. v. Clean Air Eng’g, Inc.,
Defendants agree that these elements apply to all claims except a claim of common law unfair competition (Count VI). Defs.’ Mot. to Dismiss at 6. Specifically, Defendants argue that under Wilson v. Electro Marine Systems, Inc.,
Wilson explains that “[u]nfair competition originally was an extension of trademark law, and was limited to circumstances in which a competitor was ‘passing off or ‘palming off the product of another as his own.” Wilson,
The Court disagrees that the standard for Plaintiffs’ common law trademark-related unfair competition claim is whether the Defendants’ activity “shocks judicial sensibilities” or “violates standards of commercial morality.” First, both the Seventh Circuit and the Northern District of Illinois have interpreted claims of unfair competition brought under a trademark infringement theory to include the same elements of trademark infringement itself. See Gimix, Inc.
Defendants’ arguments for dismissal fall within three general categories. They argue, first, that Plaintiffs lack a protectable right in the asserted trademarks; second, that Defendants’ marks are unlikely to cause confusion with Plaintiffs’ marks; and, third, that Defendants should prevail under a fair use defense. None of these arguments prevail at this stage of the litigation.
A. Protectable Right
A plaintiff can allege that its mark is protectable in several ways. First, it can allege that the mark is registered in the U.S.P.T.O.’s Principal Register. Registration of a mark in the Principal Register is “prima facie evidence of the validity of the registered mark[s] * * *, of the owner’s ownership of the mark[s], and of the owner’s exclusive right to use the registered mark[s] in commerce on or in connection with the goods * * * specified in the certificate * * 15 U.S.C. § 1057(b).
By contrast, a mark registered in the Supplemental Register is not entitled to this presumption of validity because it is only “capable” of becoming a trademark. 15 U.S.C. § 1094. Similarly, where a mark is unregistered with the U.S.P.T.O, “the burden is on the claimant * * * to establish that it is entitled to protection under § 43(a) of the Lanham Act.” Platinum Home Mortg. Corp. v. Platinum Fin. Group, Inc.,
Where a mark is registered in the Supplemental Register or is unregistered, a Plaintiff may state a claim for trademark infringement and unfair competition by showing that the mark is protectable based on the degree of its distinctiveness. The level of trademark protection available generally corresponds to the distinctiveness of the mark. Platinum Home Mortg.
Marks are classified into five categories of increasing distinctiveness: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, and (5) fanciful. Platinum, Home Mortg. Corp.,
A descriptive mark may, however, receive trademark protection' if it acquires “secondary meaning in the collective consciousness of the relevant community.” Id. (citations and quotations omitted). Secondary meaning is “a mental association in buyers’ minds between the alleged mark and a single source of the product.” Packman,
Finally, suggestive, arbitrary, or fanciful marks are “automatically entitled to trademark protection because they are inherently distinctive.” Id. (citing Two Pesos,
Defendants seek dismissal by arguing that Plaintiffs’ marks are merely descriptive. In arguing that the '033 Mark is not protectable, for example, Defendants contend that “[t]he words health and Korea merely describe the quality of the goods being sold by Plaintiffs * * * * [and] it would be unfair for Plaintiffs to be awarded exclusive use of health and Korea to describe the goods they are selling to the exclusion of all other business that likewise seek to sell Korean health related products and supplements.” Defs.’ Mot. to Dismiss at 4. Defendants additionally argue that Plaintiffs’ allegations “do not establish any secondary meaning.” Id. at 6.
Plaintiffs’ allegations regarding protect-ability are sufficient to survive Defendants’ motion to dismiss. The complaint expressly alleges that its marks have developed secondary meaning. Compl. at ¶ 20. Its relevant factual allegations fall under two of the seven ways of demonstrating secondary meaning listed above. See Pack-man,
First, the complaint addresses the amount and manner of advertising; it alleges that, over the last five years, the three marks have acquired secondary meaning through the promotion and sale of associated goods and services nationwide and through advertisements online and on at least three Korean television channels, which have cost over one million dollars. Compl. at ¶¶ 18, 20. Second, the complaint also alleges intentional copying; it states that Defendant Kay Park told KJ
These allegations regarding protectability provide “fair notice of what the * * * claim is and the grounds upon which it rests.” Erickson,
B. Likelihood of Causing Confusion
Courts in the Seventh Circuit analyze the likelihood of confusion under a seven-factor test: “(1) similarity between the marks in appearance and suggestion; (2) similarity of the products; (3) area and manner of concurrent use; (4) degree of care likely to be exercised by consumers; (5) strength of the plaintiffs mark; (6) actual confusion; and (7) intent of the defendant to “palm off’ his product as that of another.” Packman,
The complaint includes facts relating to all but the fourth factor. Viewed together, these factual allegations are sufficient to raise the possibility of relief above the “speculative level.” E.E.O.C.,
Defendants argue that the marks are not similar because the '033 Mark is exclusively in Korean, while Defendants’ allegedly infringing marks are only in English. However, courts compare marks “in light of what happens in the marketplace, not merely by looking at the two marks side-by-side.” Id.; Ty, Inc. v. Jones Grp., Inc.,
In examining the second factor— similarity between the products — courts ask “whether the products are the kind the public attributes to a single source.” Ty, Inc.,
Under the third factor — area and manner of concurrent use — courts assess “whether there is a relationship in use, promotion, distribution, or sales between the goods or services of the parties.” Ty, Inc.,
The complaint addresses this factor by alleging that both Plaintiffs and Defendants sell their products, including nutritional supplements, in the Chicagoland area. Specifically, it alleges that Plaintiffs have advertised their products nationwide, including in Chicago, through several Korean television stations and online. Compl. at ¶ 17. It also alleges that Plaintiffs have sold and shipped goods, including nutritional products, to retailers and distributors in Chicago since at least as early as November 2011. Compl. at ¶ 19. Lastly, it alleges that Defendants have operated a retail store selling similar nutritional products in Chicago since August 2013. Compl. at ¶¶ 26, 36, 37, 40.
In evaluating the fifth factor— strength of the plaintiffs mark — courts examine “the distinctiveness of the mark, or more precisely, its tendency to identify the goods sold under the mark as emanating from a particular * * * source.” Eli Lilly & Co. v. Natural Answers, Inc.,
Under the sixth factor — actual confusion — courts look to “the confusion of reasonable and prudent consumers, and not confusion among sophisticated members of * * * industry.” Platinum, Home Mortgage Corp.,
Under the seventh factor — intent of the defendant to “palm off’ his product as that of another — courts “look[ ] primarily for evidence that the defendants are attempting to ‘pass off their products as having come from the plaintiff.” Pack-man,
Defendants additionally argue that confusion is unlikely because the parties have distinct markets, product lines, and advertising channels. First, Defendants argue that, aside from nutritional supplements, the parties’ product lines are generally distinct; they argue that the complaint does not allege that Defendants sell “the exact same goods and services as Plaintiffs.” Defendants misconstrue this aspect of the likelihood of confusion test. Plaintiffs need not allege that both businesses sell identical goods and services. They need only allege that the commonly sold products are similar enough that “the public attributes [these products] to the same source.” Ty, Inc.,
Second, the motion to dismiss contends that Plaintiffs’ and Defendants’ markets are distinct; Plaintiffs’ stores are located in California while Defendants’ store is located in Chicagoland. This argument ignores Plaintiffs’ allegations that they advertise nationwide and ship their products to' Chicago. To the extent that Defendants argue that Plaintiffs’ presence in the Chicago market is insufficient to make confusion likely, their argument goes to the sufficiency of the proof rather than the sufficiency of the pleading and is better suited to a motion for summary judgment.
Lastly, Defendants seek dismissal by arguing that Plaintiffs fail to allege that Defendants have sold products bearing Plaintiffs’ marks. Rather, Plaintiffs allege that Defendants’ store name and label allegedly infringes Plaintiffs’ marks.
Defendants cite no case law in emphasizing the distinction between marking a store name as opposed to products. Moreover, this argument ignores fundamental principles underlying trademark law, which the Seventh Circuit characterizes as follows:
Trademarks help consumers to select goods. By identifying the source of the goods, they convey valuable information to consumers at lower costs. Easily identified trademarks reduce the costs consumers incur in searching for what they desire, and the lower the costs of search the more competitive the market. A trademark also may induce the supplier of goods to make higher quality products and to adhere to a consistent level of quality. The trademark is a valuable asset, part of the “goodwill” of a business. If the seller provides an inconsistent level of quality, or reduces quality below what consumers expect from earlier experience, that reduces the value of the trademark. The value of a trademark is in a sense a “hostage” of consumers; if the seller disappoints the consumers, they respond by devaluing the trademark. The existence of this hostage gives the seller another incentive to afford consumers the quality of goods they prefer and expect.
In other words, the likelihood of confusion test focuses not on whether the parties sell products bearing the same mark, but whether the parties’ use of those marks will confuse consumers as to the source of • goods and services. Trademark law aims to avoid confusion regarding source because it would increase consumers’ search costs, reducing market demand, and disincentivize suppliers from investing in quality, creating a less competitive market. An infringing mark on store signage or in newspaper advertisements could create just as much consumer confusion as an infringing mark physically imprinted on a'product itself. Accordingly, this distinction does not justify dismissal.
c. Fair Use Defense
Defendants argue for the first time in their reply brief that they should prevail under a fair use defense. “[A] plaintiff is not required to negate an affirmative defense in his complaint.” Tregenza v. Great Am. Commc’ns Co.,
III. Conclusion
For the foregoing reasons, the Court denies Defendants’ motion to dismiss all counts [16].
Notes
. For the purposes of Defendant's motions to dismiss, the Court assumes as true all well-pleaded allegations set forth in the amended complaint. See Killingsworth v. HSBC Bank Nevada, N.A.,
. At times Defendants characterize Plaintiffs’ claims as involving two marks rather than three; the complaint alleges three so the Court assumes for purposes of this opinion that there are three marks at issue.