Superior Consulting Servs., Inc. v. Shaklee Corp.

SUPERIOR CONSULTING SERVICES, INC., Plaintiff, v. SHAKLEE CORPORATION, Defendant.

Case No: 6:16-cv-2001-Orl-31GJK

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

June 30, 2017

ORDER

This matter comes before the Court on the Motion to Dismiss Counterclaim (Doc. 72) filed by the counter-defendant, Superior Consulting Services, Inc. ("Superior"), and the Response in Opposition (Doc. 75) filed by the counter-plaintiff, Shaklee Corporation ("Shaklee").

I. Background

Shaklee presents two separate sets of facts to support its allegations. Counts I and III are related to Superior's alleged use of Shaklee trademarks and representations Superior makes when marketing its services. Count II involves representations that Superior has allegedly made in the registration of its own trademark.

A. Shaklee's Trademarks

According to the facts alleged in the counterclaim (Doc. 68), which are taken as true for the purposes of this order, Superior operates a blood-testing company through its principal, Eleanor Cullen. Cullen is a registered nurse who has researched the early detection of serious health problems and turned that research into services offered by Superior. (Id. ¶ 5.) A customer interested in Superior's services orders a blood test packet through Superior's website and then gets blood drawn at a laboratory under contract with Superior. (Id. ¶ 6.) Once a client's blood is drawn, Superior analyzes the blood and provides a set of diagnoses and recommendations for various supplements—some of which are Shaklee's—to treat the client's disease or pre-disease conditions. (Id.)

In 2005, Shaklee became aware that Superior was marketing its blood-testing services directly to Shaklee distributors. (Id. ¶ 11.) Due to a concern that Superior's marketing could implicate Shaklee in the unlicensed practice of medicine, Shaklee requested further information from Superior. (Id. ¶ 12.) Superior provided some of the requested information and Shaklee warned Superior against prescribing or recommending any Shaklee products to treat disease. Despite these admonitions Superior continued. As a result, customers have contacted Shaklee regarding confusing and misleading information provided by Superior related to the effectiveness or appropriateness of Shaklee products. (Id. ¶ 16.)

In addition to the prescription of Shaklee products to treat disease, Superior has used Shaklee trademarks within its marketing materials.¹ These materials were sent directly to Shaklee distributors in an attempt to connect Superior to Shaklee, make sales, and use Shaklee distributors and customers as a client base for Superior's blood-testing services. (Id. ¶¶ 29-31.)

On these facts, Shaklee alleges that Superior's use of its trademarks in marketing materials constitutes trademark dilution. Further, Superior's prescription of Shaklee nutritional supplements to treat serious diseases is an unfair or deceptive act under the Florida Deceptive and Unfair Trade Practices Act, Florida Statutes §§ 501.201-501.23.

B. Superior's Trademark Registration

On February 26, 2002, Superior was assigned a trademark for the word Healthprint. Soon after, on July 22, 2002, Superior amended the mark and filed a registration with the United States Patent and Trademark Office ("USPTO") affirming that Superior used the mark in connection with nutritional supplements for general health maintenance.² Superior included a sample nutritional supplement of "Organic Zinc" bearing the Healthprint mark. (Doc. 68 at 26-27.) Superior made similar representations on November 4, 2008, and October 25, 2012. (Id.)

Despite these representations, Superior has advertised that it does not sell nutritional supplements because doing so would be a conflict of interest. (Id. at 27.) According to Superior's website and a book written by Cullen, Superior has not sold nutritional supplements since 2002. (Id.) Shaklee claims that these facts support a declaratory judgment that Superior has committed fraud on the USPTO and abandoned its Healthprint trademark under the Lantham Act, 15 U.S.C. §§ 1051-1141.

II. Motion to Dismiss Standard

A Federal Rule of Civil Procedure 12(b)(6) motion to dismiss for failure to state a claim tests the sufficiency of the complaint—it does not reach the merits of the case. Milburn v. United States, 734 F.2d 762, 765 (11th Cir. 1984). In ruling on a motion to dismiss, the Court accepts factual allegations as true and construes the complaint in the light most favorable to the plaintiff. SEC v. ESM Group, Inc., 835 F.2d 270, 272 (11th Cir. 1988). The Court limits its consideration to the pleadings and any exhibits attached thereto. Fed. R. Civ. P. 10(c); see also GSW, Inc. v. Long Cty., Ga., 999 F.2d 1508, 1510 (11th Cir. 1993).

Federal Rule of Civil Procedure 8(a)(2) mandates that pleadings contain "a short and plain statement of the claim showing that the pleader is entitled to relief," so as to give the defendant fair notice of what the claim is and the grounds upon which it rests. Conley v. Gibson, 35 U.S. 41, 47 (1957), overruled on other grounds, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The plaintiff must allege facts that raise a right to relief above the speculative level and indicate the presence of the required elements. Twombly, 550 U.S. at 555; Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1302 (11th Cir. 2007). Conclusory allegations, unwarranted factual deductions, or legal conclusions masquerading as facts will not prevent dismissal. Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003).

In Ashcroft v. Iqbal, the Supreme Court explained that a complaint need not contain detailed factual allegations, "but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. 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.'" 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555, 557) (internal citations omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the plaintiff is entitled to relief.'" Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).

III. Trademark Dilution

In Count I of its counterclaim, Shaklee seeks to enjoin Superior's use of Shaklee trademarks, claiming that said use constitutes trademark dilution under 15 U.S.C. § 1125. Injunctive relief for trademark dilution is available under 15 U.S.C. § 1125(c)(1), which states:

Subject to the principles of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner's mark has become famous, commences use of a mark ortrade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.

Id. Therefore, "to prove a dilution claim, a plaintiff must provide sufficient evidence that '(1) the mark is famous; (2) the alleged infringer adopted the mark after the mark became famous; (3) the infringer diluted the mark; and (4) the defendant's use is commercial and in commerce.'" PortionPac Chem. Corp. v. Sanitech Sys., 217 F. Supp. 2d 1238, 1250-51 (M.D. Fla. 2001) (quoting Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 644, 649 (7th Cir. 1999)). Superior argues that Shaklee has failed to sufficiently allege that its marks are famous and that Superior adopted its marks after they became famous.

A mark is considered famous "if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark's owner." 15 U.S.C. § 1125(c)(2)(A). To determine whether a mark is recognized by the public, courts consider factors such as (1) the duration, extent, and geographic reach of advertising and publicity of the mark; (2) the amount, volume, and geographic extent of sales of goods or services offered under the mark; (3) the extent of actual recognition of the mark; and (4) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register. Id. To be famous, "a mark must have a degree of distinctiveness and strength beyond that needed to serve as a trademark . . . [it] must be truly prominent and renowned." Carnival Corp. v. SeaEscape Casino Cruises, Inc., 74 F. Supp. 2d 1261, 1270 (S.D. Fla. 1999) (quotation omitted).

Here, Shaklee alleges that its marks have been used for more than thirty years within the nutritional supplement market "to identify, market, and sell millions of products worldwide" and that its marks are famous worldwide. (Id. ¶¶ 26, 27.) Taken as true, Shaklee has alleged facts that give rise to an inference that its marks are famous in terms of the factors listed above—at leastwithin the nutritional supplement market. PortionPac Chem. Corp., 210 F. Supp. 2d at 1310 (denying a motion to dismiss when a plaintiff alleged facts showing its trademark was famous throughout the school sanitation market).

Next, Superior argues that Shaklee has not alleged the date that Superior began using its marks, making it impossible to determine if the marks were famous when Superior began using them. For support, Superior relies on Brain Pharma, LLC v. Scalini, 858 F. Supp. 2d 1349 (S.D. Fla. 2012), where the court found that the plaintiff's complaint was deficient, in part, because the plaintiff alleged neither the date that the defendant began using the plaintiff's mark nor that the defendant used the mark after it had achieved its fame. But Shaklee's allegations go beyond those in Brain Pharma, LLC. While Shaklee never provides the specific date that Superior began...