Pa. State Univ. v. Keystone Alts. LLC

THE PENNSYLVANIA STATE UNIVERSITY, Plaintiff v. KEYSTONE ALTERNATIVES LLC d/b/a GOPSURV.COM and MARK LAUER, Defendants

No. 1:19-cv-02039

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

August 12, 2020

(Judge Kane)

MEMORANDUM

Before the Court is Plaintiff The Pennsylvania State University ("Plaintiff" or "Penn State")'s motion to dismiss Count IV of counterclaims brought against it by Defendant Keystone Alternatives LLC d/b/a GoPSURV.com ("GoPSURV.com" or "Keystone") and Defendant Mark Lauer ("Defendant Lauer") (collectively "Defendants") for failure to state a claim for which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 33.) For the reasons that follow, Plaintiff's motion will be granted.

I. BACKGROUND

A. Procedural Background

Plaintiff initiated the above-captioned action on November 27, 2019 by filing a complaint in this Court asserting claims against Defendants for trademark infringement (Count I), unfair competition (Count II), cybersquatting (Count III), and trademark dilution (Count IV) in violation of the Lanham Act, 15 U.S.C. § 1051 et seq. (Doc. No. 1.) The complaint also asserted a claim for trademark dilution (Count V) under Pennsylvania law and a claim for common law trademark infringement and unfair competition (Count VI). (Id.) Defendants filed a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6) on December 23, 2019 (Doc. No. 14), which the Court denied on March 5, 2020 (Doc. Nos. 28, 29). Defendants subsequently filed an answer to Plaintiff's complaint on March 30, 2020 (Doc. No. 32), asserting counterclaims for cyberpiracy (Count I), reverse domain name hijacking (Count II), and tortious interference with contractual relations (Count IV), and seeking a declaratory judgment that Defendants' domain name GoPSUrv.com does not violate the Lanham Act (Count III). In the instant motion, Plaintiff seeks to dismiss only Count IV of Defendants' counterclaims alleging tortious interference. (Doc. No. 33.) Having been fully briefed (Doc. Nos. 34, 36, 37), the motion is ripe for disposition.

B. Factual Background¹

Plaintiff is an institution of higher education that was created by and operates as an instrumentality of the Commonwealth of Pennsylvania. (Doc. No. 1 ¶ 5.) Plaintiff's designated place of business is located at 208 Old Main, University Park, Centre County, Pennsylvania, 16802. (Id.) Plaintiff owns two federal trademark registrations for the mark "PSU." (Id. ¶ 19.) Plaintiff additionally owns and controls two internet domain names that incorporate the PSU mark. (Id. ¶ 21.) Plaintiff also "has obtained numerous registrations for PENN STATE and marks incorporating PENN STATE in the United States and around the world." (Id. ¶ 27.) Further, Plaintiff has federal trademark registrations to protect its rights to a logo of its mascot, the "Nittany Lion Logo." (Id. ¶¶ 29-30.)

Plaintiff alleges that Defendants, in the course of business, have infringed Plaintiff's registered trademarks. (Id. ¶¶ 41-69.) Specifically, Plaintiff alleges that Defendants incorporated the PSU mark into their internet domain, registered as (the"Disputed Domain") (id. ¶¶ 42, 46), that Defendants "almost exclusively use the brand GoPSUrv.com rather than 'Keystone Alternatives' to promote their goods and services" (id. ¶ 43), and that "[t]hrough the [d]omain, the associated website, and virtually all of their branding and advertising, Defendants attempt to suggest a connection, sponsorship[,] or affiliation with Penn State where no such affiliation exists" (id. ¶ 45). Plaintiff alleges that Defendants advertise in other media also using the PSU mark. (Id. ¶¶ 54-58.) Plaintiff further alleges that Defendants use Plaintiff's other trademarks on their webpage and in advertising. (Id. ¶¶ 49, 52.) Plaintiff asserts that Defendants' use of its trademarks "has caused, or is likely to cause, great and irreparable injury to Penn State, including irreparable injury to the goodwill and reputation embodied in those marks." (Id. ¶ 66.)

Defendants assert that the Disputed Domain has been registered and maintained by its current registrant for approximately ten years, having been registered on April 17, 2010. (Doc. No. 32 at 12.) Defendants further assert that Plaintiff had knowledge of and acquiesced to Defendants' use of the Disputed Domain. (Id.) Defendants allege that despite Plaintiff's knowledge of and acquiescence to Defendants' use of the Disputed Domain, Plaintiff initiated a Uniform Domain Name Dispute Resolution Proceeding ("UDRP") against them "for the purpose of depriving Defendants of their rights under the domain registration contract with GoDaddy." (Id. at 19.) Defendants allege that Plaintiff made misrepresentations in its UDRP complaint, and that Plaintiff's actions "have caused a loss of revenue and interfered with Defendant's existing and prospective economic relations." (Id.)

II. LEGAL STANDARD

Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a defendant to move to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ.P. 12(b)(6). When reviewing the sufficiency of a complaint pursuant to a motion to dismiss under Rule 12(b)(6), the Court must accept as true all material allegations in the complaint and all reasonable inferences that can be drawn from them, viewed in the light most favorable to the plaintiff. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010). However, the Court need not accept legal conclusions set forth as factual allegations. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rather, a civil complaint must "set out 'sufficient factual matter' to show that the claim is facially plausible." See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

Consistent with the Supreme Court's ruling in Twombly and Ibqal, the Third Circuit Court of Appeals has identified three steps a district court must take when determining the sufficiency of a complaint under Rule 12(b)(6): (1) identify the elements a plaintiff must plead to state a claim; (2) identify any conclusory allegations contained in the complaint "not entitled" to the assumption of truth; and (3) determine whether any "well-pleaded factual allegations" contained in the complaint "plausibly give rise to an entitlement to relief." See Santiago v. Warminster Twp., 629 F. 3d 121, 130 (3d Cir. 2010) (citation and quotation marks omitted). A complaint is properly dismissed where the factual content in the complaint does not allow a court "to draw the reasonable inference that the defendant is liable for the misconduct alleged." See Iqbal, 556 U.S. at 678. Additionally, a court may not assume that a plaintiff can prove facts that the plaintiff has not alleged. See Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). In evaluating a motion to dismiss, a court may generally only consider the allegations contained in the complaint, exhibits attached to the complaint, and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).

III. DISCUSSION

A. Applicable Legal Standard

In order to state a claim for tortious interference under Pennsylvania law, a party must allege:

(1) the existence of a contractual or prospective contractual or economic relationship between the plaintiff and a third party; (2) purposeful action by the defendant, specifically intended to harm an existing relationship or intended to prevent a prospective relation from occurring; (3) the absence of privilege or justification on the part of the defendant; (4) legal damage to the plaintiff as a result of the defendant's conduct; and (5) for prospective contracts, a reasonable likelihood that the relationship would have occurred but for the defendant's interference.

See Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 212 (3d Cir. 2009) (citing Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 530 (3d Cir.1998)). As established by the above elements, Pennsylvania distinguishes between claims alleging interference with existing contractual relations and claims alleging interference with prospective contractual relations. See Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 470-71 (Pa. 1979).

"In determining whether there is a prospective contractual relationship in a tortious interference case, Pennsylvania courts have considered whether the evidence supports a finding that there was an objectively 'reasonable likelihood or probability' that the contemplated contract would have materialized absent the defendant's interference." Acumed, 561 F.3d 199 at 213 (quoting Glenn v. Point Park Coll., 272 A.2d 895, 898-99 (Pa. 1971); Kachmar v. SunGard Data Sys., Inc., 109 F.3d 173, 184 (3d Cir. 1997)). Such a reasonable likelihood or probability cannot rest solely on the existence of a current contractual relationship. See BP Envt'l Servs., Inc. v. Republic Servs., Inc., 946 F. Supp. 2d 402, 412 (E.D. Pa. 2013) (noting that "[A] mere historical relationship between parties is not sufficient to show a prospective contractual relationship").Furthermore, in order to state a claim for tortious interference, a plaintiff must allege that the defendant "crossed the line from capitalistic self-interested behavior to unfair conduct." See Clarity Sports Int'l LLC v. Redland Sports, 400 F. Supp. 3d 161, 179 (M.D. Pa. 2019) (internal citation omitted).

B. Arguments of the Parties

Plaintiff asserts that the basis of the instant motion is two-fold: (1) that as a matter of law bringing a UDRP action is protected under the First Amendment and is not tortious interference; and (2) that Defendants have nevertheless failed to state a claim for tortious interference. (Doc. No. 34 at 2.) Specifically, Plaintiff argues that "[Plaintiff] has a First Amendment right to bring a...