Oaklawn Jockey Club, Inc. v. Ky. Downs, LLC

184 F.Supp.3d 572

Oaklawn Jockey Club, Inc., et al., Plaintiffs

v.Kentucky Downs, LLC Encore Gaming, LLC, Defendants

CIVIL ACTION NO. 1:15-CV-00118-GNS

United States District Court, W.D. Kentucky, Bowling Green Division.

Signed April 18, 2016

Filed April 19, 2016

E. Kenly Ames, English, Lucas, Priest & Owsley LLP, Bowling Green, KY, Jennifer E. Hoekel, Margaret R. Szewczyk, Richard L. Brophy, Armstrong Teasdale, LLP, St. Louis, MO, for Plaintiffs.

Mary Elisabeth Naumann, William A. Hoskins, Jackson Kelly, PLLC, Lexington, KY, Mark A. Thurmond, Timothy J. Crocker, Crocker & Thurmond, Attorneys, Franklin, KY, Spiro Bereveskos, William A. McKenna, Woodard, Ernhardt, Moriarty, McNett & Henry, LLP, Indianapolis, IN, for Defendants.

MEMORANDUM OPINION AND ORDER

Greg N. Stivers, Judge United States District Court

This matter is before the Court on Plaintiffs' Motion for Preliminary Injunction (DN 28) and Defendants' Joint Motion to Dismiss for Failure to State a Claim (DN 30). The motions have been fully briefed and are ripe for decision. For the reasons stated below, the Motion to Dismiss (DN 30) is GRANTED , and the Motion for Preliminary Injunction (DN 28) is DENIED AS MOOT .¹

I. BACKGROUND

Plaintiffs own horse racing tracks and trademark rights associated with those tracks. (Am. Compl. ¶ 23, DN 20). The claims in this case relate to use of Plaintiffs' marks by Defendant Encore Gaming, LLC ("Encore") in conjunction with Encore's pari-mutuel gambling system featured at a track owned by Defendant Kentucky Downs, LLC ("Kentucky Downs"). (Am. Compl. ¶¶ 24-54). Encore's system presents a form of gambling called "historical horse racing,"² which displays a digitized enactment of an historical race on a video monitor after a wager is placed and identifies when and where the race occurred. (Defs.' Resp. to Mot. for Prelim. Inj. 4, 11, DN 35). While displaying the animated race, the video screen identifies the race track where the race was conducted, variously including the names of Plaintiffs' tracks and Plaintiffs' wordmarks. (Defs.' Resp. to Mot. for Prelim. Inj. 4). For example, the system may display "Location: Churchill Downs" followed by the date and other information identifying the past race. All identifying information is displayed in plain white lettering at the bottom of the screen. (Defs.' Resp. to Mot. for Prelim. Inj. 4).

In the Motion for Preliminary Injunction, Plaintiffs seek to enjoin Defendants' usage of Plaintiffs' trademarks. (Pls.' Mem. in Supp. of Mot. for Prelim. Inj. 1, DN 28–2). In the Motion to Dismiss, Defendants seek to dismiss all claims asserted in the Amended Complaint. (Defs.' Mot. to Dismiss 2, DN 30).

II. JURISDICTION

The Court has subject matter jurisdiction over this pursuant to 15 U.S.C. § 1121, 28 U.S.C. § 1331, and 28 U.S.C. § 1338(a) -(b), and supplemental jurisdiction over related state law claims pursuant to 28 U.S.C. § 1367(a).

III. DISCUSSION

A. Trademark Infringement Claims

Plaintiffs claim that Defendants are infringing upon their trademarks and seek immediate injunctive relief to protect them from imminent harm. See IP, LLC v. Interstate Vape, Inc. , No. 1:14–CV–00133–JHM, 2014 WL 5791353, at *2 (W.D.Ky. Nov. 6, 2014) ("A preliminary injunction is an extraordinary remedy that is generally used to preserve the status quo between the parties pending a final determination of the merits of the action."). Defendants argue that Plaintiffs have failed to state a claim upon which relief can be granted regarding Plaintiffs' trademark infringement claims. (Defs.' Mem. in Supp. of Mot. to Dismiss 7, DN 30–1 [hereinafter Defs.' Mot.]).

In order to survive dismissal for failure to state a claim under Rule 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) (internal quotation marks omitted) (citation omitted). "A claim has facial plausibility 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. (citation omitted). "[A] district court must (1) view the complaint in the light most favorable to the plaintiff and (2) take all well-pleaded factual allegations as true." Tackett v. M & G Polymers, USA, LLC , 561 F.3d 478, 488 (6th Cir.2009) (citation omitted). "But the district court need not accept a bare assertion of legal conclusions." Id. (internal quotation marks omitted) (citation omitted). "A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks omitted) (citation omitted).

A trademark is "any word, name, symbol, or device ... used by a person ... to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." 15 U.S.C. § 1127. To assert a claim for trademark infringement, Plaintiffs must allege that: (1) they own the registered trademark; (2) Defendants used the mark in commerce; and (3) the use was likely to cause confusion. See 15 U.S.C. § 1114(1). Only the likelihood of confusion is at issue in this case.

1. The Likelihood Of Confusion

Plaintiffs claim trademark infringement under the Lanham Act and under Kentucky common law, which both employ the same "likelihood of confusion" test.³ See Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr. , 109 F.3d 275, 280 (6th Cir.1997) (employing the "likelihood of confusion" standard to a federal trademark infringement claim); Colston Invs. Co v. Home Supply Co. , 74 S.W.3d 759, 764 (Ky.App.2001) (stating the "likelihood of confusion" is the barometer for trademark infringement). The elements turn on "whether the Defendant's use of the disputed mark is likely to cause confusion among consumers regarding the origin of the goods offered by the parties." Big Daddy's , 109 F.3d at 280.

The Sixth Circuit has held that likelihood of confusion depends on eight factors:

(1) strength of the senior mark; (2) relatedness of the goods or services; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) likely degree of purchaser care; (7) the intent of defendant in selecting the mark; and (8) likelihood of expansion of the product lines.

Hensley Mfg., Inc. v. ProPride, Inc. , 579 F.3d 603, 610 (6th Cir.2009) (citing Big Daddy's , 109 F.3d at 280 ). These factors are not equally weighted, but are used as a guide in determining whether "relevant consumers are likely to believe that the products or services offered by the parties are affiliated in some way." Homeowners Grp., Inc. v. Home Mktg. Specialists, Inc. , 931 F.2d 1100, 1107 (6th Cir.1991). This eight-factor test does not apply, however, where a defendant uses the mark in a "non-trademark way." See Interactive Prods. Corp. v. a2z Mobile Office Sols., Inc. , 326 F.3d 687, 695 (6th Cir.2003) (citing New Kids on the Block v. News Am. Publ'g, Inc. , 971 F.2d 302, 307 (9th Cir.1992) ); Hensley Mfg. , 579 F.3d at 610. Specifically, there can be no finding of trademark infringement where the alleged offending party is not "using the challenged mark in a way that identifies the source of their goods." Interactive , 326 F.3d at 695. In this regard, an important distinction exists between a mark used to identify the source of a good versus a use that is merely descriptive. See Interactive , 326 F.3d at 695 ; New Kids , 971 F.2d at 307.

A good example of the non-trademark use of a mark is presented in WCVB – TV v. Boston Athletic Ass'n , 926 F.2d 42, 46 (1st Cir.1991). There, the Boston Athletic Association ("BAA") sued seeking to enjoin the local television station from displaying the words "Boston Marathon" as part of the station's coverage of the annual Patriot's Day marathon. See id. at 44. The BAA asserted that it had trademark rights in the mark BOSTON MARATHON and alleged that the station's use of the mark infringed upon BAA's trademark rights. See id. In reviewing the trial court's decision refusing to grant injunctive relief, the Fourth Circuit affirmed, holding that there was no infringement and that the station was not required to have a license from the BAA to broadcast coverage of the event. See id. at 46–47. In concluding that there was no likelihood of confusion to support the infringement claim, the court noted:

[T]he record provides us with an excellent reason for thinking that Channel 5's use of the words "Boston Marathon" would not confuse the typical Channel 5 viewer. That reason consists of the fact that those words do more than call attention to Channel 5's program; they also describe the event that Channel 5 will broadcast. Common sense suggests (consistent with the record here) that a viewer who sees those words flash upon the screen will believe simply that Channel 5 will show, or is showing, or has shown, the marathon, not that Channel 5 has some special approval from the BAA to do so. In technical trademark jargon, the use of words for descriptive purposes is called a "fair use," and the law usually permits it even if the words themselves also constitute a trademark. If, for example, a t-shirt maker placed the words "Pure Cotton" (instead of the words "Boston Marathon") on his t-shirts merely to describe the material from which the shirts were made, not even a shirt maker who had a registered trademark called "Pure Cotton" could likely enjoin their sale. As Justice Holmes pointed out many years ago, "[w]hen the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth."

Id. at 46 (internal citations omitted) (quoting Prestonettes, Inc. v. Coty , ...