OPINION AND ORDER
Plaintiffs Transcience Corporation and Yolanda Von Braunhut (collectively, “Plaintiffs”) bring this action against Big Time Toys, LLC (“Defendant”), alleging, inter alia, breach of contract and trademark and copyright infringement. Plaintiffs are the owners of the “Sea-Monkeys” product: hybrid brine shrimp that hatch from eggs into “live micro-crustaceans.” Am. Compl. ¶ 16. Plaintiffs allege that Big Time Toys, inter alia, breached a contract relating to the licensing of the “Sea-Monkeys” product.
Pending before the Court are Defendant’s motion to dismiss the Amended Complaint (Doc. 16), and Plaintiffs’ motion for a preliminary injunction (Doc. 19). For the reasons discussed below, Defendant’s motion to dismiss is GRANTED in part and DENIED in part, and Plaintiffs’ motion for a preliminary injunction is DENIED. Plaintiffs are granted leave to re-plead the. breach of contract claim within thirty (30) days of the date of this Order.
I. Factual Background
Transcience Corporation and its Chief Executive Officer, Yolanda Von Braunhut, are the sole and exclusive owners of meth
In June 2007, Plaintiffs entered into a license agreement with Big Time Toys (the “2007 Agreement”), that granted Defendant the right to produce, market, and sell Sea-Monkeys. Id. ¶¶ 29, 30. Under the 2007 Agreement, Defendant agreed to pay Transcience a royalty of ten percent (10%) of the gross sales of Sea-Monkeys. Id. ¶ 31.
The 2007 Agreement also gave Defendant the right to purchase the Sea-Monkeys product for an amount not to exceed $10 million. Id. ¶ 41. The Agreement provided that the purchase price would be made in two segments: (i) an initial lump sum payment of $5 million, and (ii) payments of a five percent (5%) annual royalty from merchandising sales and a percentage of entertainment-related revenue, until the remaining $5 million sum was achieved. Id. ¶ 42. Under the 2007 Agreement, upon payment of the first $5 million, Plaintiffs would turn over to Defendant the production and manufacture of the pouches, as well as the related trade secrets. Id. ¶ 43.
In May 2009, the parties modified the 2007 Agreement (the “2009 Agreement”). Id. ¶ 45. The 2009 Agreement, which modified the 2007 Agreement only where expressly indicated, increased the percentage of royalties owed to Plaintiffs. Id. ¶ 46. Specifically, the 2009 Agreement required Big Time Toys pay to Plaintiffs a royalty of twenty percent (20%) of gross sales. Id. ¶ 47. The 2009 Agreement also modified the procedure by which Big Time Toys could purchase the Sea-Monkeys product. First, the 2009 Agreement specified that the total purchase price for the Sea-Monkeys product would be $10 million, as opposed to an amount not to exceed $10 million. Id. ¶ 48. The 2009 Agreement further provided that the initial purchase price of $5 million would be realized through: (i) a $500,000 lump sum payment upon execution of the agreement, and (ii) the payment of $4,500,000 from the royalties discussed above. Id. ¶ 50.
Under the 2009 Agreement, in the event of a failure to make a royalty payment, Big Time Toys would have 15 days from the receipt of notice of its failure to cure the default. Id. ¶ 59. The 2009 Agreement further provided that Plaintiffs could, in the event of Big Time Toys’ failure to cure any default relating to royalty payments, (1) declare the agreement terminated; (2) commence an action for equitable relief, including injunctive relief, prohibiting any continued use of licensed trademarks and copyrights; and (3) require that Defendant immediately cease selling, marketing, or producing the licensed products. Id. ¶ 78. Additionally, any rights granted under the contract would be deemed null and void. Id. Accordingly, on December 20, 2012, Transcienee sent to Defendant a notice of default. Id. ¶ 60. After Big Time Toys failed to cure the default, Transcienee sent a letter to Defendant, dated January 18, 2013, declaring that the parties’ agreements were “null and void and of no further force or effect.” Id. ¶ 61.
The Amended Complaint further alleges that, despite the breach of the agreements, Big Time Toys continued to “prominently feature[]” the Sea-Monkeys product on the homepage of its website from January 18, 2013 through November 25, 2013. Id. ¶¶ 81, 82.
Plaintiffs allege that Big Time Toys breached its obligations under the agreements and infringed certain of their trademarks and copyrights by continuing to sell Sea-Monkeys without Plaintiffs’ authorization. In addition to the breach of contract and intellectual property claims, Plaintiffs bring the following causes of action: breach of the implied covenant of good faith and fair dealing; unjust enrichment; breach of the implied contract; conversion; and tortious interference with business relationships.
When ruling on a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiffs favor. Koch v. Christie’s Int’l PLC,
III. Discussion
A. Copyright Infringement
Plaintiffs allege that Defendant’s continued use of their copyrights for the Sea-Monkeys product constitutes copyright infringement. To state a claim for copyright infringement, a plaintiff must demonstrate ownership of a valid copyright and infringement of that copyright by the defendant. Am. Broad. Cos. v. Flying J, Inc., 06 Civ. 2967(DAB),
Plaintiffs have adequately pleaded each of these elements. Plaintiffs state that they are the owners of all copyrights for the Sea-Monkeys product and specifically identify each copyright. See Am. Compl. ¶ 168. The Amended Complaint further alleges that all such copyrights are registered with the United States Copyright Office. Id. ¶ 169. And Plaintiffs plead that Big Time Toys featured the copyrighted Sea-Monkeys on their website from at least January 18, 2013 to November 25, 2013, thus “presenting] to the world an assumed right and/or authorization to sell the copyrighted [products].” Id. ¶¶ 172, 173. Accordingly, Defendant’s motion to dismiss the copyright infringement claim is DENIED.
B. Trademark Infringement
Plaintiffs allege that Defendant’s continued use of the trademarks for Sea-Monkeys constitutes trademark infringement. To prevail on a trademark infringement claim for registered trademarks, a plaintiff must establish that (1) it has a valid mark that is entitled to protection under the Lanham Act; and that (2) the defendant used the mark, (3) in commerce, (4) in connection with the sale or advertising of goods or services, (5) without the plaintiffs consent. See 1-800 Contacts, Inc. v. WhenU.Com, Inc.,
Here, Plaintiffs have pleaded that they own all trademarks for the Sea-Monkeys product, and have specified the trademarks registered with the United States Trademark and Patent Office. See Am. Compl. ¶¶ 148-49. Plaintiffs further allege that Big Time Toys prominently featured the trademarked products on its website following the termination of the license agreements, and “continues to present to the world an assumed right and/or authorization to sell [the products] on [its] web
C. Breach of Contract
Plaintiffs claim that Big Time Toys breached the parties’ contracts when it failed to cure its default on the royalty payments. Am. Compl. ¶ 88. As an initial matter, the continued use of a licensed trademark after termination of a license agreement can be actionable as both breach of contract and trademark infringement. See, e.g., Baskin-Robbins Ice Cream Co. v. D & L Ice Cream Co.,
Under New York law, the elements of a cause of action for breach of contract are (1) the existence of a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages suffered as a result of the breach.
“A claimant’s failure to plead the performance of its own contractual obligations is fatal to a breach of contract claim even if the other requisite elements are properly pleaded.” Comfort Inn Oceanside v. Hertz Corp., No. 11-CV-1534 (JGXJMA),
D. Implied Covenant of Good Faith and Fair Dealing
Plaintiffs allege that Big Time Toys breached the implied covenant of good faith and fair dealing. Am. Compl. ¶ 110. Defendant contends that this claim must be dismissed because New York law bars implied covenant claims when they are insufficiently distinct from contractual claims. See Def. Mem. L. 9. Indeed, New York law does not recognize a separate cause .of action for breach of the implied covenant of good faith and fair dealing
E. Unjust Enrichment
Plaintiffs claim that Big Time Toys has been unjustly enriched by the now quasi-contractual nature of the parties’ relationship. See id. ¶ 126. In particular, Plaintiffs contend that Defendant has been unjustly enriched by the unauthorized sales of Sea-Monkeys since Big Time Toys’ final royalty payment in November 2012. See id. ¶¶ 125, 126. Defendant claims that the unjust enrichment claim must be dismissed as insufficiently distinct from the breach of contract claim. Def. Mem. L. 11.
“[W]here there is an enforceable written contract governing the particular subject matter, claims based on quasi-contract theories like unjust enrichment do not provide a distinct basis for recovery.” Vitrano v. State Farm Ins. Co., No. 08 Civ. 00103(JGK),
To state a claim for unjust enrichment under New York law, a plaintiff must provide proof that (1) defendant was enriched, (2) at plaintiffs expense, and (3) equity and good conscience militate against permitting defendant to retain what plaintiff is seeking to recover. Briarpatch Ltd. v. Phx. Pictures, Inc.,
Here, Plaintiffs claim that Big Time Toys was unjustly enriched at their expense through the unauthorized sales of the previously licensed Sea-Monkeys product, and that Plaintiffs were harmed accordingly. Am. Compl. ¶¶ 126,127. Because Plaintiffs have alleged that Defendant unjustly benefited from unauthorized sales of Sea-Monkeys, the Amended Complaint states a claim for unjust enrichment under New York law. Cf. C=Holdings B.V. v. Asiarim Corp.,
Section 301 of the Copyright Act preempts state law actions that seek to vindicate rights equivalent to those protected under the Copyright Act. See 17 U.S.C. § 301(a); Berry v. Deutsche Bank Trust Co. Ams., No. 07 Civ. 7634(WHP),
In Briarpatch, the Second Circuit ruled that the Copyright Act preempted an unjust enrichment claim relating to adapta
Despite the conclusion reached in Briar-patch, the Copyright Act does not fully preempt state law claims where the claims also seek to protect trademark rights.
Plaintiffs explicitly state that the unjust enrichment claim is premised on Big Time Toys’ “continuing and ongoing unauthorized sales of the previously licensed Sea-Monkeys product.” Am. Compl. ¶ 126. Accordingly, the unjust enrichment claim is preempted, but only to the extent it relies on Plaintiffs’ copyrighted works;
F. Implied Contract
Plaintiffs allege that an implied contract formed “by implication of fact” after Big Time Toys’ willful termination of the parties’ express contract. See Am. Compl. ¶ 110. Under New York law, absent a written agreement between the parties, a contract may be implied where inferences may be drawn from the facts and circumstances of the case and the intention of the parties as indicated by their conduct. Bader v. Wells Fargo Home Mortg. Inc.,
While the Amended Complaint alleges that there was a valid express contract, Plaintiffs have not pleaded facts and circumstances from which inferences may be drawn that the parties actually intended to be bound by an implied contract after the alleged breach. Instead, Plaintiffs allege that the express contract was terminated by the breach, and have not provided any suggestion that there was mutual assent between the parties following Big Time Toys’ failure to cure its default. See Nadel v. Play-By-Play Toys & Novelties,
G. Conversion
Plaintiffs bring a claim for conversion based on their “clear and unequivocal title to the intellectual property that formed the basis for the contractual relationship” between the parties. Am. Compl. ¶ 134. Under New York law, conversion is the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner’s rights. Thyroff v. Nationwide Mut. Ins, Co.,
Whereas courts in this Circuit allow for alternative pleading of unjust enrichment and contract claims, conversion claims are routinely dismissed on Rule 12(b)(6) motions where duplicative of breach of contract claims. See Kalimantano GmbH v. Motion in Time, Inc.,
H. Tortious Interference with Business Relationships
Plaintiffs further allege that Big Time Toys has tortiously interfered
IV. Preliminary Injunction
Plaintiffs request a preliminary injunction prohibiting any' continuing use of Plaintiffs’ trademarks or copyrights by Big Time Toys, its agents, or assignees for the duration of the instant litigation. See Pis. Mem. L. 27. To obtain a preliminary injunction, the moving party must demonstrate (1) irreparable harm absent injunctive relief; (2) either a likelihood of success on the merits, or a serious question going to the merits to make them a fair ground for trial, with a balance of hardships tipping decidedly in the mov-ant’s favor; and (3) that the public’s interest weighs in favor of granting an injunction. Red Earth LLC v. United States,
First, as Defendant notes, Plaintiffs’ delay in moving for injunctive relief is “compelling evidence” that there is no irreparable harm. Def. Opp. Mem. L. 11. Indeed, “[unreasonable delay in bringing suit is strong evidence that immediate injunctive relief is not required to prevent irreparable harm.” Andersen Consulting LLP v. Am. Mgmt. Sys., Inc., No. 95 Civ. 5428(KTD),
In Union Cosmetic Castle, Inc. v. Amorepacific Cosmetics USA Inc.,
Second, the Second Circuit has concluded that “[a] harm that can be remedied by a money judgment or at the end of trial is not an irreparable harm.” Lee v. Choi,
Therefore, even if Plaintiffs could prove a likelihood of success on the merits,
V. Conclusion
For the reasons set forth above:
• Defendant’s motion to dismiss the copyright infringement and trademark infringement claims is DENIED.
• Plaintiffs’ breach of contract claim is DISMISSED without prejudice. Plaintiffs are granted leave to re-plead within thirty (30) days of the date of this Order.
• Defendant’s motion to dismiss the implied covenant of good faith and fair dealing, implied contract, conversion, and tortious interference with business relationships claims is GRANTED.
• Plaintiffs’ unjust enrichment claim is preempted, but only to the extent it relies on Plaintiffs’ copyrighted works;
• Plaintiffs’ motion for a preliminary injunction is DENIED.
The Clerk of the Court is respectfully directed to terminate the motions. Docs. 16, 19.
It is SO ORDERED.
. The parties agreed that the royalty payments would be made on a monthly basis. See Am. Compl. ¶ 121.
. Under the 2009 Agreement, the realization of the initial purchase price would trigger the termination of the 2007 Agreement and the release of title to, inter alia, the trade secrets, trademarks, and copyrights relating to the
. Both the 2007 Agreement and the 2009 Agreement contain a mandatory arbitration clause. Each clause states that "[i]n the event of a disagreement between the parties with respect to this Agreement, either party, if they wish to adjudicate such disagreement, shall submit the issue in dispute for arbitration under the rules of the American Arbitration Association, the election to be by written notice to the other party.” See 2007 Agreement, § 19 (emphasis added); 2009 Agreement, § 13(a). The only role contemplated for a federal court under these agreements is to enforce the decision of the arbitrator. See id. Despite the clear language directing the parties to arbitration, Plaintiffs note that they considered pursuing arbitration but determined that arbitration would not be available because of, inter alia, "the effective termination of the agreement between the parties [such that] the clause was no longer applicable.” Pis. Opp. Mem. L. 9. Defendant, on the other hand, has pleaded that "this Court lacks jurisdiction because the parties agreed to arbitrate this matter....” Answer ¶ 6. Defendant also disputes Plaintiffs’ contention that an arbitration clause is without further effect following the termination of a contract. Def. Reply Mem. L. 1. The Court agrees with Defendant. See Butchers, Food Handlers & Allied Workers Union of Greater N.Y. & N.J., Local 174, United Food & Commercial Workers Union v. Hebrew Nat’l Kosher Foods, Inc.,
. Cf. Rescuecom Corp. v. Google Inc.,
. According to the Amended Complaint, "Plaintiffs seek the Court to acknowledge, but not adjudicate, the issue of whether or not there was a breach of contract....” Am. Compl. ¶ 75 (emphasis added). In opposition to the motion to dismiss, Plaintiffs attempt to clarify that because the breach is- — in their view — clear on its face, the Court need only rule on the issue of damages in connection with this claim. Pis. Opp. Mem. L. 6.
Plaintiffs' request is improper because it assumes liability has been established. As the Second Circuit has expressed, "[t]o avoid a possible tendency to seek declaratory judgments or advisory opinions on matters hypothetical, the role of the courts under Article III is confined to passing upon an actual ‘case or controversy.’ " Evans v. Lynn,
Similarly, in Asher Associates, L.L.C. v. Baker Hughes Oilfield Operations, Inc., No. 07-cv-01379-WYD-CBS,
. Plaintiffs attempted to plead adequate performance in the Original Complaint. See Compl. ¶ 80 ("Plaintiffs were in-compliance with the terms of the agreement between the parties over the lifespan of the now terminated agreement.”). However, Plaintiffs acknowledge in opposition to the instant motion that the Amended Complaint "somewhat inexplicably leaves this paragraph out.” Pis. Opp. Mem. L. 7. Plaintiffs even request in opposition to the instant motion that the Court deem the Original Complaint, which is attached as an exhibit to the affidavit in support of Defendant’s motion to dismiss, incorporated by reference in the Amended Complaint. Id. at 7-8. Plaintiffs cite no authority in support of this request.
. Cf. Patel v. Baluchi’s Indian Rest., No. 08 Civ. 9985(RJS),
. The Amended Complaint states, inter alia, that "Plaintiffs own all copyrights for the Sea-Monkeys product,” and otherwise references "the copyrighted Sea-Monkeys product.” Am. Compl. ¶¶ 168, 171. However, the only copyright specifically identified in the exhibits to the 2007 Agreement is Plaintiff Von Braunhut’s copyright for the instruction book entitled "It’s Fun to Raise Pet Sea-Monkeys.” See 2007 Agreement, Ex. C.
. Under the 2007 Agreement, Plaintiffs agreed to license to Big Time Toys trademarks relating to, inter alia, the Sea-Monkeys product; the hatched egg design for Sea-Monkeys; and the Ocean-Zoo aquarium made for Sea-Monkeys products. See 2007 Agreement, Ex. B.
. See also Medisim Ltd. v. BestMed LLC,
. The Court reaches this conclusion despite the parties’ failure to raise preemption in their submissions to the Court. Cf. Einiger v. Citigroup, Inc., No. 1:14-cv-4570-GHW,
(S.D.N.Y. May 14, 2012) (dismissing unjust enrichment claim sua sponte as preempted by the Copyright Act because the unjust enrichment claim sought to vindicate plaintiff's exclusive right to distribute copyrighted music).
. The Amended Complaint seeks punitive damages but does not specify- the claims on which Plaintiffs would be entitled to recover such a remedy. Plaintiffs state in opposition to the instant motion that punitive damages would be recoverable under, inter alia, the unjust enrichment claim. Pis. Opp. Mem. L. 10. As Defendant correctly notes, however, New York law does not allow punitive damages on unjust enrichment claims. See Def. Reply Mem. L. 2; M’Baye v. World Boxing Ass’n, No. 05 Civ. 9581(DC),
. Even though the Federal Rules of Civil Procedure allow for alternative pleading, courts in this Circuit have granted motions to dismiss implied contract claims where an express contract governs the same subject matter as the implied contract. See Bader,
. Plaintiffs’ eighth cause of action is entitled "Tortious Interference With Contract and/or Business Relationships.” Under New York law, the elements of tortious interference with contract are (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of the contract; (3) the defendant's intentional procurement of the third-party's breach of the contract without justification; (4) actual breach of the contract; and (5) damages resulting therefrom. See Kirch v. Liberty Media Corp.,
. The Court notes that Plaintiffs' need to replead the breach of contract cause of action — a central claim here — further weighs against injunctive relief. Cf. Chateau Hip, Inc. v. Gilhuly, No. 95 Civ. 10320(JGK),
