Defense v. Cleardefense Pest Control of Greensboro, LLC

CLEAR DEFENSE, L.L.C. Plaintiff, v. CLEARDEFENSE PEST CONTROL OF GREENSBORO, LLC,CLEARDEFENSE PEST CONTROL OF CHARLOTTE, LLC,and CLEARDEFENSE PEST CONTROL OF RALEIGH, LLC, Defendants.

1:17-cv-01139

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

October 23, 2018

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

Plaintiff Clear Defense, L.L.C. brings suit for statutory and common law trademark infringement, common law unfair competition, and unfair or deceptive trade practices in violation of N.C. Gen. Stat. § 75-1.1 ("UDTPA"), against Defendants ClearDefense Pest Control of Greensboro, LLC, ClearDefense Pest Control of Charlotte, LLC, and ClearDefense Pest Control of Raleigh, LLC. (Doc. 13.) Before the court is Defendants' motion to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 16.) For the reasons set forth below, the motion will be granted in part and denied in part.

I. BACKGROUND

The allegations of the amended complaint and the contents of documents the court may properly consider at this stage of the proceedings,¹ all of which are accepted as true and viewed in thelight most favorable to Plaintiff for purposes of the present motion, show the following:

Plaintiff is a Greensboro-based company that produces "clear films and laminates applied to glass" for the purposes of "security, insulation, and protection." (Doc. 13 ¶¶ 2, 9.) Plaintiff alleges that its customers include residential, commercial, educational, sporting, and military entities. (Id. ¶ 16.) It is also the assignee of the trademark "CLEARDEFENSE," U.S. Trademark Registration No. 1656820,² registered September 10, 1991, which it has been "using since at least the 2000s." (Id. ¶¶ 10, 12; Doc. 17-2.) Plaintiff presents this mark, styled "ClearDefense," on its product packaging and company vehicles. (Doc. 13 ¶ 21.)

Defendants are pest control companies located in Raleigh, Charlotte, and Greensboro, and organized in 2013, 2014, and 2017, respectively. (Id. ¶¶ 25, 38.) Defendant ClearDefense Pest Control of Raleigh, LLC owns a trademark for a composite design including the words "CLEARDEFENSE PEST CONTROL," U.S. Trademark Registration No. 4636639, which was registered on November 11, 2014. (Id. ¶ 34; Doc. 17-1.) Defendant ClearDefense Pest Control of Charlotte, LLC has applied for a trademark for the phrase "Clear Defense Pest Control," U.S. Trademark Application No. 87446449,filed on May 11, 2017. (Doc. 13 ¶ 36; Doc. 17-6.) Defendants use these or similar marks on advertising, webpages, and company vehicles, with the marks variously styled as "CLEARDEFENSE PEST CONTROL," "CLEARDEFENSE Pest Control," "Clear Defense Pest Control," "CLEARDEFENSE PEST," and "Clear Defense." (Doc. 13 ¶¶ 28, 30; Doc. 13-1.) According to Plaintiff, a "managing member of Defendants" acknowledged the problem of the parties' similar marks and assured Plaintiff that Defendants "would change their mark(s)." (Doc. 13 ¶ 50.) However, Defendants continue to use the marks. (Id.)

Plaintiff brought this action on December 22, 2017. (Doc. 1.) The amended complaint asserts causes of action under the Lanham Act, 15 U.S.C. § 1125, the North Carolina common law of trademark infringement and unfair competition, and the UDTPA, N.C. Gen. Stat. § 71-1.1. (Doc. 13 ¶¶ 63-92.) Defendants filed the instant motion to dismiss on March 22, 2018, contending that the complaint fails to plausibly allege a likelihood of confusion (as to Counts One through Four) and seeking dismissal of Counts Five (seeking an accounting) and Six (seeking cancellation of registration) for failure to state free-standing claims. (Docs. 16, 17.) The motion is fully briefed (Docs. 17, 18, 19) and is ready for decision.

II. ANALYSIS

Federal Rule of Civil Procedure 8(a)(2) provides that acomplaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A Rule 12(b)(6) motion to dismiss "challenges the legal sufficiency of a complaint considered with the assumption that the facts alleged are true." Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted).

A. Applicable Legal Standard for Trademark Infringement, Unfair Competition, and UDTPA Claims

To prove trademark infringement under Section 43(a) of the Lanham Act, a plaintiff must show the following:

(1) that it possesses a mark; (2) that the defendant used the mark; (3) that the defendant's use of the mark occurred "in commerce"; (4) that the defendant used the mark "in connection with the sale, offering for sale, distribution, or advertising" of goods or services; and (5) that the defendant used the mark in a manner likely to confuse consumers.

People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 364 (4th Cir. 2001) (first quoting 15 U.S.C. §§ 1114, 1125(a); then citing Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va.,Inc., 43 F.3d 922, 930 (4th Cir. 1995)). In their briefing in support of their motion to dismiss, Defendants contest only the fifth factor: likelihood of consumer confusion. (Doc. 17 at 21-22.)

Courts have applied essentially the same likelihood of confusion standard to claims of common law trademark infringement or unfair competition (as regarding trademarks) under North Carolina law. See Ga. Pac. Consumer Prods., LP v. Von Drehle Corp., 618 F.3d 441, 449 (4th Cir. 2010) ("[T]he parties do not dispute that, under the facts of this case . . . the tests for trademark infringement and unfair competition under the Lanham Act are essentially the same as that for common law unfair competition under North Carolina common law; all focus on the likelihood of confusion as to the source of the goods involved."); Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 148 (4th Cir. 1987) ("The North Carolina common law of unfair competition in the context of trademarks and tradenames is similar to the federal law of trademark infringement."); Charcoal Steak House of Charlotte, Inc. v. Staley, 139 S.E.2d 185, 203 (N.C. 1964) ("Unfair competition is the child of confusion." (internal quotation marks omitted)); Blackwell's Durham Tobacco Co. v. Am. Tobacco Co., 59 S.E. 123, 126 (N.C. 1907) ("[A]n injunction lies to restrain the simulation and use by one corporation of the name of a prior corporation which tends to create confusion, and to enable the latter corporation toobtain, by reason of the similarity of names, the business of the prior one." (quoting Chas. S. Higgins Co. v. Higgins Soap Co., 39 N.E. 490, 491 (N.Y. 1895))).

Similarly, courts have applied the likelihood of consumer confusion standard to UDTPA claims in the trademark context. See Djarum v. Dhanraj Imps., Inc., 876 F. Supp. 2d 664, 668 (W.D.N.C. 2012) ("Courts have determined that '[the UDTPA] prohibits the same type of activity that the Lanham Act prohibits' because trademark infringement and false designation undercut the mark holder's goodwill and the consumers' ability to distinguish among products." (first quoting Universal Furniture Int'l, Inc. v. Collezione Eur. USA, Inc., No. 1:04CV977, 2007 WL 2712926, at *15 (M.D.N.C. Sept. 14, 2007); then citing Microsoft Corp. v. Computer Serv. & Repair, Inc., 312 F. Supp. 2d 779, 785 (E.D.N.C. 2004))).

Accordingly, the court will limit its analysis below to the question of whether Plaintiff has plausibly alleged a likelihood of consumer confusion.³

B. Likelihood of Consumer Confusion

The court's inquiry into the likelihood of consumer confusion is a factual one. See, e.g., Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 318 (4th Cir. 1992) ("[T]he likelihood of consumer confusion is an 'inherently factual' issue that depends on the unique facts and circumstances of each case." (quoting Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1356 n.5 (9th Cir. 1985))); Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 153 (4th Cir. 2012); 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 23:67 (5th ed. 2018) ("At the trial level, likelihood of confusion is an issue of fact."). As a result, in the mine run of cases, a complaint will not be dismissed pursuant to Rule 12(b)(6) on the basis of an insufficient likelihood of confusion. See Gov't Emps. Ins. Co. v. Google, Inc., 330 F. Supp. 2d 700, 704 (E.D. Va. 2004) ("Whether defendants' uses are legitimate fair uses of the trademarks in competition, and whether they create a likelihood of confusion, are fact-specific issuesnot properly resolved through a motion to dismiss."). Nevertheless, since trademark infringement plaintiffs are not exempted from standard plausibility pleading requirements, "there may be 'unusual' cases in which it is clear from the complaint that the parties' goods or services are totally unrelated as a matter of law" — and that the likelihood of confusion is otherwise insufficiently pleaded — and in which the complaint may be properly dismissed on a Rule 12(b)(6) motion. Va. Polytechnic Inst. & State Univ. v. Hokie Real Estate, Inc., No. 7:10CV466, 2011 WL 926862, at *8 (W.D. Va. Mar. 15, 2011) (quoting MCW, Inc. v. Badbusinessbureau.com, L.L.C., No. 3:02-CV-2727-G, 2004 WL 833595, at *15 (N.D. Tex. April 19, 2004)); accord Murray v. Cable Nat'l Broad. Co., 86 F.3d 858, 860 (9th Cir. 1996) ("If the court determines as a matter of law from the pleadings that the goods are unrelated and confusion is unlikely, the complaint should be dismissed.").

The Fourth Circuit has set out nine factors for courts to consider in the...