Allison Transmission, Inc. v. Fleetpride, Inc.

• Decision Date: 14 July 2017
• Docket Number: No. 1:16-cv-02455-LJM-MJD,1:16-cv-02455-LJM-MJD
• Parties: ALLISON TRANSMISSION, INC., Plaintiff, v. FLEETPRIDE, INC., and BP LUBRICANTS USA INC., Respondents.
• Court: U.S. District Court — Southern District of Indiana

ALLISON TRANSMISSION, INC., Plaintiff, v. FLEETPRIDE, INC., and BP LUBRICANTS USA INC., Respondents.

No. 1:16-cv-02455-LJM-MJD

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION

July 14, 2017

ORDER ON MOTION TO DISMISS COUNTERCLAIMS

This matter comes before the Court on Plaintiff Allison Transmission, Inc.'s ("Allison's"), Motion to Dismiss Counterclaims (the "Motion"). Dkt. No. 52. Allison argues that Defendant Fleetpride, Inc. ("Fleetpride"), lacks standing to support its counterclaims to invalidate a certification mark owned by Allison. Id. at ¶¶ 1-2. Allison also seeks to dismiss Fleetpride's counterclaim seeking declaratory judgment for non-infringement because it is duplicative of Allison's infringement claim in its Second Amended Complaint. Id. at ¶ 3. For the foregoing reasons, the Court GRANTS in part and DENIES in part Allison's Motion.

I. BACKGROUND

Allison began manufacturing automatic transmissions for commercial vehicles approximately seventy years ago and has since developed a reputation for building high quality, reliable automatic transmissions. Dkt. No. 43, ¶ 8. In order to protect the rights to its name, Allison obtained federal registration for standard character trademarks in "ALLISON" and "ALLISON TRANSMISSIONS" (the "Allison Standard Character Marks"). Id. Allison also registered five design marks for use in relation to its automatic transmission products, all of which incorporated at least one of the Allison Standard Character Marks. Id.

In 1999, Allison developed a new transmission fluid certification standard, TES 295, which it used to indicate which transmission fluids worked best with its transmissions. Id. at ¶¶ 11-12. In connection with this new certification standard, Allison registered for a standard character, certification mark in "TES 295" (the "TES 295 Standard Character Mark") and two design marks, both of which include the TES 295 Standard Character Mark and at least one of the Allison Standard Character Marks (collectively with the TES 295 Standard Character Mark, the "TES 295 Marks"). Id. at ¶ 12. Before obtaining a license to use the TES 295 Marks, Allison requires each licensee to first demonstrate that its transmission fluid meets Allison's strict requirements for obtaining TES 295 certification. Id. at ¶ 15.

In May 2015, Allison learned that Fleetpride was marketing and selling transmission fluid known as "Primatech TES295," and that Fleetpride's packaging of Primatech TES295 incorporated the TES 295 Standard Character Mark, as well as the Allison Standard Character Marks. Id. at ¶ 20. As an example, Allison attached Exhibit C to its Second Amended Complaint, which depicts a Fleetpride transmission fluid container label (the "Primatech Label") that states the product is "suitable for use in Allison Transmissions for extended drain" and lists its product number as "PTATF-TES295-G." Id. at Ex. C. Although Allison requested that Fleetpride cease and desist its use of Allison's marks, Fleetpride refused, believing that its use of Allison's marks was a non-infringing, fair use. Id. at ¶¶ 21, 24. Fleetpride continues to employ Allison's marks in relation to its transmission fluid products. Id. at ¶ 27.

Allison alleges that "Fleetpride's adoption and continued use" of the Allison Standard Character Marks and the TES 295 Standard Character Mark infringes on all of Allison's trademark rights because Fleetpride's use of its marks falsely suggests that Fleetpride's transmission fluid is certified or sponsored by Allison, or is otherwise affiliated with Allison. Id. at ¶¶ 28-38. As such, Allison claims that Fleetpride's use of its marks constitutes trademark infringement, unfair competition, and a false description of goods in violation of the Lanham Act and common law. Id. at ¶¶ 39-66.

On April 26, 2017, in response to Allison's Second Amended Complaint, Fleetpride filed its Answer and Counterclaim, in which it asserts three counterclaims against Allison (the "Counterclaims"). Dkt. No. 47. In Counterclaims I and II, Fleetpride seeks to invalidate Allison's TES 295 Marks, in accordance with 15 U.S.C. § 1064. Id. at ¶¶ 95-137. Fleetpride similarly alleges as affirmative defenses that the TES 295 Marks are invalid. Id. at ¶¶ 74-76. Fleetpride asserts that invalidation of the TES 295 Marks is appropriate because Allison improperly produced and marketed an automatic transmission fluid using the TES 295 Marks and because Allison discriminately refused to certify products meeting the TES 295 certification standards. Id. at ¶¶ 74-76, 95-137.

Additionally, in Counterclaim III, Fleetpride requests declaratory judgment that it has not infringed upon any of Allison's marks. Id. at ¶¶ 138-142. In support of this counterclaim, Fleetpride attached the label it currently uses for its private label automatic transmission fluids, now branded as "OTR" (the "OTR Label"). Id. at ¶ 138; Ex. 8. The front of the OTR Label states that OTR is "suitable for use in Allison Transmissions forextended drain." Id. at Ex. 8. The back of the OTR Label further indicates that OTR is "suitable for use in applications where the OEM specifies a fluid providing performance capability comparable to Allison TES 295® specification" but notes that OTR "is not certified by Allison Transmission under the TES 295® specification." Id. Unlike the Primatech Label, the product number on the OTR Label, "PTATF-SSP-G," does not include any reference to "TES 295." Id.

Allison seeks to dismiss the Counterclaims, pursuant to Federal Rules of Civil Procedure (the "Rules") 12(b)(1) and 12(b)(6). Dkt. No. 52. Specifically, Allison asserts that Fleetpride lacks sufficient standing to seek invalidation of the TES 295 Marks in Counterclaims I and II because Fleetpride never sought TES 295 certification. Dkt. No. 53 at 2-6. Furthermore, Allison argues that Counterclaim III should be dismissed under Rule 12(b)(6) because Fleetpride's claim of non-infringement serves "no useful purpose" in light of Allison's initial claim of infringement. Id. at 6-7.

II. COUNTERCLAIMS I AND II: INVALIDATION UNDER 15 U.S.C. §§ 1064(3) & (5)

With respect to Counterclaims I and II, Allison argues that Fleetpride lacks standing under 15 U.S.C. §§ 1064(3) and 1064(5)(B) & (D). Dkt. No. 53 at 2-6. In response, Fleetpride asserts that it has sufficient standing to invalidate the TES 295 Marks because Allison first asserted its claims against Fleetpride for infringement of those marks. Dkt. No. 56 at 7-8.

A motion to dismiss for lack of standing constitutes a challenge to the Court's subject matter jurisdiction under Rule 12(b)(1). See Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012). When ruling on a motion to dismiss under Rule 12(b)(1), the Court must accept "as true all facts alleged in the well-pleaded complaint and [draw] allreasonable inferences in favor of the plaintiff." Id. The party invoking the Court's jurisdiction bears the burden of establishing that the Court has proper jurisdiction of the case. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). The Court may view any evidence submitted beyond the jurisdictional allegations within a complaint to determine whether the Court has subject matter jurisdiction over a claim. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009).

When a motion to dismiss challenges a plaintiff's standing, the plaintiff bears the burden of demonstrating it has: "(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). "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.'" Id. at 1548 (quoting Lujan, 504 U.S. at 560).

Under 15 U.S.C. § 1064, "any person who believes that he is or will be damaged ... by the registration of a mark" may seek to cancel the registration of that mark under certain conditions. Such a damaged entity may seek to cancel a mark's registration at any time if the registered mark's "registration was obtained fraudulently or contrary to the provisions of [15 U.S.C. §] 1054 ... or of subsection (a), (b), or (c) of [15 U.S.C. §] 1052." 15 U.S.C. § 1064(3). "[I]n the case of a certification mark," one may also seek to cancel the registered mark if

the registrant (A) does not control, or is not able legitimately to exercise control over, the use of such mark, or (B) engages in the production or marketing of any goods or services to which the certification mark is applied, or (C) permits the use of the certification mark for purposes other than to certify, or (D) discriminately refuses to certify or to continue to certify thegoods or services of any person who maintains the standards or conditions which such mark certifies.

15 U.S.C. § 1064(5).

While Fleetpride seeks to invalidate the TES 295 Marks, pursuant to 15 U.S.C. §§ 1064(3) and 1604(5)(B) & (D)¹, Dkt. No. 47, ¶¶ 95-137, Allison asserts that Fleetpride lacks standing because it has not sustained the kind of damage necessary to invalidate a certification mark. Dkt. No. 53 at 2-6. The Court agrees.

Fleetpride must have statutory standing in addition to having constitutional standing to properly bring a claim against Allison to invalidate the TES 295 Marks under 15 U.S.C. § 1064. Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1386 (2014). In order words, Fleetpride must fall "within the class of plaintiffs whom Congress has authorized to sue" under 15 U.S.C. § 1064 and must have "a cause of action under the statute" to bring its claims for invalidation. Id. at 1387. While few courts have examined the requirements for statutory standing to seek invalidation of certification marks, those that have done so determined that under 15...