JTH Tax LLC v. AMC Networks Inc.

694 F.Supp.3d 315

JTH TAX LLC d/b/a Liberty Tax, Plaintiff, v. AMC NETWORKS INC. and Sony Pictures Television Inc., Defendants.

22 Civ. 6526 (PGG)

United States District Court, S.D. New York

Filed September 25, 2023

Clair Wischusen, Gordon & Rees, Florham Park, NJ, James L. Messenger, Gordon & Polscer, LLC, Portland, OR, Peter George Siachos, Gordon & Rees LLP, Charleston, SC, for Plaintiff.

Gianni P. Servodidio, Susan Joan Kohlmann, Allison N. Douglis, Jenner & Block LLP, New York, NY, for Defendants.

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, United States District Judge

Plaintiff JTH Tax LLC brings this action for trademark and trade dress infringement under the Lanham Act, 15 U.S.C. §§ 1051 et seq., trademark dilution under New York General Business Law § 360-1, and common law defamation. (Am. Cmplt. (Dkt. No. 29) ¶¶ 5,71-121) Plaintiff alleges that Defendants AMC Networks Inc. and Sony Pictures Television Inc. infringed on certain of Plaintiff's trademarks in Season 6, Episode 2 of Defendants' television show, Better Call Saul. (Id. ¶¶ 35-45)

Defendants have moved to dismiss the Amended Complaint pursuant to Rule 12(b)(6). (Dkt. No. 37) For the reasons stated below, Defendants' motion to dismiss will be granted.

BACKGROUND¹

I. FACTS

Plaintiff JTH Tax LLC is a tax preparation service incorporated in Delaware and headquartered in Virginia. It has done business under the name Liberty Tax Service since 1997. (Am. Cmplt. (Dkt. No. 29) ¶¶ 6,14) Liberty Tax uses trademarks and trade dress that "are immediately recognizable for the red, white, and blue motif and extensive use of Statue of Liberty" sculptures and inflatables. (Id. ¶ 17) Several of these marks are registered with the United States Patent and Trademark Office. (Id. ¶¶ 18-24) Plaintiff "has invested millions of dollars and decades of time and effort to create customer recognition of the Liberty Tax Trademarks and Trade Dress." (Id. ¶ 26)

Defendant AMC Networks Inc. is a Delaware corporation, headquartered in New York, that operates the AMC cable channel. (Id. ¶¶ 7, 29) Defendant Sony Pictures Television Inc. ("Sony") is a Delaware corporation headquartered in California that produces and distributes television shows. (Id. ¶¶ 8, 30-31)

Better Call Saul follows Jimmy McGill, "a former con artist" who adopts the name Saul Goodman and becomes an "egocentric criminal lawyer." (Id. ¶ 33) The show is "a spin-off, prequal, and sequel of Defendants' critically acclaimed television series, Breaking Bad," and is one of Defendants' most widely known and successful shows. (Id. ¶ 32) Better Call Saul premiered on AMC in 2015 and is distributed by Sony. It was in its sixth and final season when the Complaint was filed on August 1, 2022. (Id. ¶ 34)

"On April 18, 2022, Defendants aired Episode 2, Season 6 of Better Call Saul [which is entitled] 'Carrot and Stick' ("Episode 2" or the "Show")." (Id. ¶ 35) Episode 2 depicts a fictional tax preparation business called "Sweet Liberty Tax Services," which is operated by "convicted felon, Craig Kettleman, and his wife, Betsy Kettleman." (Id. ¶¶ 36-37) Craig Kettleman was a client of Saul Goodman in Season 1 of Better Call Saul who was imprisoned after being convicted of embezzlement. (Id. ¶¶ 37-38) The Kettlemans and Sweet Liberty defraud their clients "by skimming money from their tax refunds." (Id. ¶ 39) Kim Wexler - one of the Show's central characters and Saul's wife - refers to the fictional tax business as a "rundown little mom and pop outfit." (Id. ¶ 40) Wexler blackmails the Kettlemans by threatening to reveal their crimes to the IRS. (Id.)

In the Amended Complaint, Plaintiff alleges that the Show's Sweet Liberty Tax Services "is an obvious imitation of an actual Liberty Tax location, but twisted to paint Liberty Tax in a negative and disparaging light[,]" with "just the word 'Sweet' added." (Id. ¶¶ 41-42) According to Plaintiff, similarities between the fictional Sweet Liberty Tax Services and the real Liberty Tax Service include the use of an inflatable Statue of Liberty, the use of checks bearing a Statue of Liberty logo, a Statue of Liberty wall mural inside the tax preparation office, and the use of a red, white and blue motif on the location's exterior (id. ¶¶ 3, 43-46), as Image materials not available for display.

shown below:

Image materials not available for display.

Pointing to the social media post shown below, Plaintiff also complains that Defendants have used the fictional Sweet Liberty Tax Services in their advertising for Better Call Saul:

Image materials not available for display.

(Id. ¶ 49)

Defendants have also posted a trailer on YouTube for Better Call Saul's sixth season which includes a clip from Episode 2 featuring the Sweet Liberty Tax Services location. (Id. ¶ 51) The image of Sweet Liberty Tax Services appears in the video for less than one second. See Better Call Saul, Official Season 6 Trailer, (Mar. 10, 2022) https://www.youtube.com/watch?v=Qz3u06eXf0E&t=70s.

Plaintiff further complains that "Defendants [ ] directed or otherwise authorized" a Better Call Saul actor to post images of "Sweet Liberty Tax Services" on the actor's social media pages:

Image materials not available for display.

(Id. ¶ 50)

In support of its claim that Defendants' alleged use of Plaintiff's marks has "expressly misled viewers into believing that Liberty Tax sponsored or endorsed" Better Call Saul Plaintiff contends that an image of " 'Sweet Liberty Tax Services' " at one time appeared "in Google image search results for 'Liberty Tax Service.' " (Id. ¶ 52) A screenshot of the Google search is included in the Amended Complaint:

Image materials not available for display.

(Id. ¶ 52)

Plaintiff sent a cease-and-desist letter to AMC on April 27, 2022, and "thereafter engaged in follow up communications with AMC and Sony, in which it put Defendants on notice that [Episode 2] infringed and tarnished Liberty Trademarks and Trade Dress and that Liberty Tax objected to such depiction." (Id. ¶ 64)

II. PROCEDURAL HISTORY

The Complaint was filed on August 1, 2022 (Cmplt. (Dkt. No. 1)), and the Amended Complaint was filed on October 27, 2022. (Am. Cmplt. (Dkt. No. 29)) The Amended Complaint alleges trademark and trade dress infringement under the Lanham Act, 15 U.S.C. §§ 1051 et seq., trademark dilution under N.Y.G.B.L. § 360-1, and common law defamation. (Id. ¶ 5,71-121)

On January 24, 2023, Defendants moved to dismiss the Amended Complaint, pursuant to Fed. R. Civ. P. 12(b)(6), for failure to state a claim upon which relief can be granted. (Def. Mot. (Dkt. No. 37))

DISCUSSION

I. LEGAL STANDARDS

A. Rule 12(b)(6) Motion to Dismiss

"To survive a motion to dismiss [pursuant to Fed. R. Civ. P. 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "[T]he court is to accept as true all facts alleged in the complaint," Kassner v. 2nd Avenue Delicatessen Inc., 496 F.3d 229, 237 (2d Cir. 2007) (citing Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir. 2002)), and must "draw all reasonable inferences in favor of the plaintiff." Id. (citing Fernandez v. Chertoff, 471 F.3d 45, 51 (2d Cir. 2006)).

A complaint is inadequately pled "if it tenders 'naked assertion[s]' devoid of 'further factual enhancement,' " Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955), and does not provide factual allegations sufficient "to give the defendant fair notice of what the claim is and the grounds upon which it rests." Port Dock & Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117, 121 (2d Cir. 2007) (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

Under this standard, a plaintiff is required only to set forth a "short and plain statement of the claim," Fed. R. Civ. P. 8(a), with sufficient factual "heft to 'sho[w] that the pleader is entitled to relief.' " Twombly, 550 U.S. at 557, 127 S.Ct. 1955 (alteration in Twombly) (quoting Fed. R. Civ. P. 8(a)). To survive a motion to dismiss, plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level," id. at 555, 127 S.Ct. 1955, and present claims that are "plausible on [their] face." Id. at 570, 127 S.Ct. 1955. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

"Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.' " Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Where "the allegations in a complaint, however true, could not raise a claim of entitlement to relief," Twombly, 550 U.S. at 558, 127 S.Ct. 1955, or where a plaintiff has "not nudged [his] claims across the line from conceivable to plausible, the[ ] complaint must be dismissed." Id. at 570, 127 S.Ct. 1955.

"In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010) (citing Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) and Hayden v. Cty. of Nassau, 180 F.3d 42, 54 (2d Cir. 1999)). "Where a document is not incorporated by reference, the court may never[the]less consider it where the complaint relies heavily upon its terms and effect, thereby rendering the document integral to the complaint." Gallagher v. Empire HealthChoice Assurance, Inc., 339 F. Supp. 3d 248, 254 (S.D.N.Y. 2018) (alteration in original) (quotation marks...