Alfwear, Inc. v. IBKUL Corp.
| Decision Date | 05 May 2023 |
| Docket Number | 2:21-cv-00698-DBB-JCB |
| Parties | ALFWEAR, INC., Plaintiff/Counter Defendant, v. IBKUL CORP., a Florida corporation; and IBCOOL INC., a Florida corporation, Defendants/Counter Claimants. |
| Court | U.S. District Court — District of Utah |
The matter before the court is Plaintiff Alfwear, Inc.'s (“Alfwear”) Motion to Dismiss[1] Defendants IBKUL Corp. and IBCOOL Inc.'s (collectively “Defendants”) Amended Counterclaim.[2] After having fully considered the briefing and relevant law, the court finds oral argument unnecessary.[3] For the reasons below, the court grants Alfwear's motion.
Alfwear sells clothing and other products bearing the mark “KUHL.”[4] Defendants sell products with the mark “IBKUL.”[5] On February 8, 2011, Alfwear registered the KUHL mark with the United States Patent and Trademark Office (“USPTO” or “Patent Office”).[6] On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).[7] The act gave the Under Secretary of Commerce for Intellectual Property and Director of the USPTO (the “Director”) the authority to “toll waive, adjust, or modify, any timing deadline established by . . . the Trademark Act . . . or regulations promulgated thereunder, in effect during such period, if the Director determines that the [COVID-19] emergency prevent[ed] applicants, registrants, patent owners, or others appearing before the Patent Office from filing a document or fee with the [office].”[8] The Director's authority under the CARES Act expired March 27, 2022.[9]
The Patent Office sent Alfwear's counsel, Trent Baker (“Mr. Baker”), a courtesy notice on February 8 2020 regarding the “KUHL” registration.[10] The notice directed Alfwear to file a Declaration of Use or Excusable Nonuse and a renewal application by February 8, 2021.[11]Alfwear could also pay a fee and file as late as August 9, 2021.[12] Between February 8, 2020 and August 9, 2021, Mr. Baker did not file renewal paperwork for the KUHL mark. He instead submitted fifty other documents to the Patent Office, thirty-two on Alfwear's behalf.[13]
On August 10, 2021, the Patent Office cancelled Alfwear's registration for “KUHL.”[14]Alfwear filed a petition for excusal on September 11, 2021. It stated the “KUHL” registration [15] Alfwear asked the Patent Office to reinstate the registration.[16] At the same time, Alfwear applied for an identical “KUHL” registration.[17]
The Patent Office responded on April 6, 2022. It noted “Petitioner ha[d] not sufficiently detailed how the COVID-19 outbreak personally impacted petitioner's ability to file a declaration of use or excusable nonuse by the statutory deadline.”[18] Additionally, the Patent Office said it needed information “detailing the specific impact the outbreak had on petitioner's business and ability to timely file a declaration ....”[19]
Alfwear filed a response on April 7, 2022, claiming:
Covid-19 substantially impacted petitioner's ability to file a declaration of use by the statutory deadline. The impact included practitioner's health resulting from contracting Covid-19 multiple times during the statutory period. The impact included practitioner's inability to access files because of inability to access online files, emails, and docket during the statutory period. The impact included practitioner's and registrant's business cash-flow interruptions resulting from the registrant's retail distributors being closed during the statutory period.[20]
Alfwear also asserted the “mark was in use in commerce during the relevant filing period” and currently was in use.[21] Eight days later, the Patent Office granted the petition and reinstated the registration.[22] Affirming the Director's authority under the CARES Act, the USPTO noted that “the statutory deadline for filing a combined filing fell within the period of relief, and petitioner declares that the delay in filing timely was due to the COVID-19 outbreak.”[23] The Patent Office found persuasive the argument that Alfwear's attorney “became sick with COVID-19 on multiple occasions and petitioner's business suffered significant losses resulting from its retail distributors being closed during the outbreak.”[24]
Defendants filed an Amended Counterclaim against Alfwear on December 2, 2022.[25]
They seek declaratory judgment, cancellation of the KUHL mark, and cancellation or modification of six related marks.[26] On December 29, 2022, Alfwear moved to dismiss the Amended Counterclaim.[27] Defendants responded on February 9, 2023.[28] Alfwear filed a reply on February 23, 2023.[29]
For a Rule 12(b)(6) motion to dismiss, the court “accept[s] as true all well-pleaded factual allegations in the complaint and view[s] them in the light most favorable to . . . the nonmoving party.”[30] “In considering whether the complaint's allegations are sufficient, the court first eliminates conclusory allegations, mere ‘labels and conclusions,' and any ‘formulaic recitation of the elements of a cause of action.'”[31] “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”[32] “A claim is plausible on its face ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'”[33]
Alfwear moves to dismiss Defendants' three counterclaims for failure to state a claim.
The court addresses each counterclaim in order.
Defendants' first counterclaim centers on the Director's authority under the CARES Act.
Defendants seek a declaration that the Director exceeded his authority when he reinstated the “KUHL” registration.[34] Alfwear contends the Lanham Act does not provide grounds for a party to challenge the Patent Office's cancellation.[35] Defendants do not contest this point.[36] Instead, Defendants argue the Patent Office lacked authority to reinstate the cancelled registration.
In particular, Defendants plead the Patent Office cancelled the KUHL mark on August 10, 2021 for failure to timely file renewal documentation.[37] But, they argue, the Director's authority under the CARES Act expired on March 27, 2022.[38] Defendants assert that by April 2022, the Director had “no authority to waive the deadline for filing” petitions for late-filed renewal applications.[39] They further assert the Administrative Procedure Act (“APA”) allows the court to “review, hold unlawful, and set aside” the Director's actions for exceeding its statutory bounds.[40] Last, they contend the court can issue a declaratory judgment stating the Director exceeded his authority.[41] Alfwear makes three points in response. It contends Defendants lack standing, Defendants fail to state an APA claim, and the CARES Act does not create a private right of action.
“Courts are required to consider the justiciability of a case . . . to ensure that a declaratory judgment is not an improper advisory opinion.”[42] “Article III of the Constitution limits the jurisdiction of the federal courts to ‘Cases' and ‘Controversies.'”[43] The Supreme Court has “long understood th[is] constitutional phrase to require that a case embody a genuine, live dispute between adverse parties, thereby preventing the federal courts from issuing advisory opinions.”[44]To have constitutional standing, a party must show “[1] [it] has suffered a concrete and particularized injury [2] that is fairly traceable to the challenged conduct, [3] and is likely to be redressed by a favorable judicial decision.”[45]
1. Injury in Fact
“To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'”[46] “[A] grievance that amounts to nothing more than an abstract and generalized harm to a citizen's interest in the proper application of the law does not count as an ‘injury in fact.'”[47] “When . . . a plaintiff's asserted injury arises from the government's allegedly unlawful regulation (or lack of regulation) of someone else, much more is needed.”[48]
Defendants offer insufficient facts as to how the Director's allegedly unlawful actions harmed them. They allege only that the USPTO's action affected Alfwear and unidentified “persons who would be injured by any late acceptance of any [Alfwear] declaration of use[.]”[49]But they have pleaded no facts as to how the Director's reinstatement of the KUHL mark invaded their legally protected interest. Neither do Defendants plead facts showing how such invasion was a concrete, particularized, and actual injury. As such, they have failed to plead an injury in fact.
2. Traceability and Redressability
Even assuming an injury, Defendants must show “a causal connection between the injury and the conduct complained of-the injury has to be ‘fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.'”[50] “[A]t the motion to dismiss stage, a plaintiff can satisfy the ‘fairly traceable' requirement by advancing...
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