Anthem Sports, LLC v. Under the Weather, LLC

• Decision Date: 06 March 2018
• Docket Number: No. 3:17cv596 (MPS),3:17cv596 (MPS)
• Citation: 320 F.Supp.3d 399
• Parties: ANTHEM SPORTS, LLC et al., Plaintiffs, v. UNDER THE WEATHER, LLC et al., Defendants.
• Court: U.S. District Court — District of Connecticut

320 F.Supp.3d 399

ANTHEM SPORTS, LLC et al., Plaintiffs,

v.UNDER THE WEATHER, LLC et al., Defendants.

No. 3:17cv596 (MPS)

United States District Court, D. Connecticut.

Signed March 6, 2018

Barry J. Herman, Pro Hac Vice, Womble Bond Dickerson (US) LLP, Baltimore, MD, Charles I. Miller, Law Office of Charles I. Miller, West Hartford, CT, David R. Boaz, Pro Hac Vice, Womble Bond Dickinson (US) LLP, Raleigh, NC, Preston H. Heard, Pro Hac Vice, Womble Bond Dickerson (US) LLP, Atlanta, GA, Lisa Jeannine Moyles, Moyles IP, LLC, Stratford, CT, for Plaintiffs.

Elizabeth A. Batts, Pro Hac Vice, Risto Pribisich, Pro Hac Vice, Benesch, Friedland, Coplan & Aronoff, LLP, Cleveland, OH, Jeffrey M. Rosenfeld, Pro Hac Vice, Liana W. Chen, Pro Hac Vice, Kronenberger Rosenfeld, LLP, San Francisco, CA, Benjamin M. Daniels, Kevin M. Smith, Wiggin & Dana, New Haven, CT, for Defendants.

RULING ON MOTION TO DISMISS

Michael P. Shea, District Judge.

Plaintiffs Anthem Sports, LLC ("Anthem"), and Griffin Global Products, LLC, bring this suit against Under the Weather, LLC ("UTW"), and Eric Pescovitz, its principal, for various intellectual property and other claims arising from the marketing and sale of "sportspods," i.e., small tents for viewing outdoor sporting events during inclement weather. The plaintiffs set out eight counts in their amended complaint: (i) a request for a declaratory judgment of non-infringement with regard to various patents owned by UTW (count one); (ii) a request for a declaratory judgment of invalidity with respect to various patents owned by UTW (count two); (iii) a request for a declaratory judgment of non-infringement and invalidity with respect to a trademark asserted by UTW (count three); (iv) various violations of the Lanham Act (count four); (v) common law trademark infringement (count five); (vi) tortious interference with business expectancies (count six); (vii) violation of the Connecticut Unfair Trade Practices Act ("CUTPA") (count seven); and (viii) common law unfair competition (count eight). The defendants move to dismiss all of the plaintiffs' counts save for the third. (ECF No. 41–1 at 2). For the following reasons, the defendants' motion is granted in part and denied in part.

I. Factual Allegations

The plaintiffs make the following factual allegations in their amended complaint, which I assume to be true.

Anthem is "a family-owned business and premier nationwide distributor of brand name sporting goods and equipment" that "primarily does business online through its website, through company catalogs, and [through] significant advertising and marketing efforts through its social media accounts." (ECF No. 38 at ¶ 2). UTW is an Ohio company in possession of various patents¹ ("Patents-in-Suit") that "purport to claim certain rights in designs for personal enclosures that protect the user from weather while watching sporting events (‘UTW Personal Enclosure[s]’)." (Id. at ¶¶ 4, 10). When UTW "first began selling the UTW Personal Enclosures, [it] was unable to garner significant interest in the market and struggled to make appreciable sales." (Id. at ¶ 11). Around the fall of 2014, "Anthem became aware of the UTW Personal enclosures and approached UTW to establish an exclusive online distribution relationship." (Id. at 12) Through "Anthem's extensive efforts in early 2015, ... the UTW Personal Enclosures gained traction in the marketplace and became commercially successful...." (Id. at ¶ 13). At this point, "UTW and Anthem entered into an agreement in Connecticut whereby Anthem would be the exclusive online distributor of UTW Personal Enclosures other than UTW, who would continue to sell UTW Personal Enclosures online." (Id. at ¶ 14). The parties discussed forming a partnership, but these discussions dissipated after UTW declined to respond to Anthem's proposed "partnership term outline." (Id. at ¶ 15).

The parties' relationship collapsed shortly thereafter. UTW "raised the prices for the UTW Personal Enclosures sold to Anthem" to the point where Anthem could no longer afford to purchase and sell them. (Id. at ¶ 16). UTW then began selling the enclosures "to major sporting goods retailer DICK's Sporting Goods, [which] in turn" offered them for sale online. (Id. at ¶ 17). Anthem subsequently located a different manufacturer and "began offering all weather personal enclosure products under the trade names UnderCover™ and SportPod™, including SoloPod™, Action Pod™, TeamPod™, and BugPod™ (collectively, the ‘Anthem Pods’)"; Anthem ensured that none of these products "infringe[d] any valid or enforceable claim of the Patents-in-Suit." (Id. at ¶ 18). Subsequent to "Anthem's adoption and use of the trademark SportPod™," UTW began using "the mark ‘Sportspod’ to refer to multiple goods" that it offered for sale. (Id. at 19). "Anthem did not authorize UTW to use its SportPod™ mark, and the ‘SportsPod’ mark is confusingly similar and likely to cause confusion, mistake, or deception as to the source of UTW's goods, and is likely to cause confusion, mistake, or deception as to whether UTW's products are associated, affiliated, or connected with or approved or sponsored by Anthem." (Id. ).

Despite Anthem's precautions concerning the Patents-in-Suit, UTW subsequently demonstrated "that it believes [that] Anthem ... is allegedly infringing upon UTW's rights in the Patents-in-Suit...." (Id. at ¶ 22). "On or about April 7, 2017, one of UTW's principals left a voicemail for one of Anthem's principles" stating as follows:

Hey Mark, it's Rick; just got an email from Anthem with your new products. I shouldn't sound surprised, I assume that's how you work. I just [sic] letting you know, and you can tell your friend Shanghai Eversuccess as well, they will be sued as well as you, I have the patent on that design, so, and if you think I'm kidding, there will be a lawsuit for you next week. Just letting you know.

(Id. at ¶¶ 22–23). UTW has also "made threats against Anthem, its supposed supplier, and customers that the Anthem Pods allegedly infringe one or more claims of the Patents-in-Suit." (Id. at ¶ 26). Further, UTW "recently sued another personal enclosure product supplier ... for infringement of four of the Patents-in-Suit ... in the Southern District of Ohio." (Id. at ¶ 20).

UTW has also waged a campaign against Anthem's products on Facebook.com. "On numerous occasions and without justification, [Defendant] Pescovitz, UTW, or its representatives have responded to customer comments indicating a desire to purchase Anthem Pods" on Anthem's web page on Facebook.com with the following comments: (i) that the "only place to get [Anthem Pods] is undertheweatherpod.com,"; (ii) that the Anthem Pods "are illegal knockoffs and very poor quality," and that the "legal ones are only available at undertheweatherpods.com"; and (iii) that the Anthem Pods were "[Pescovitz's] idea and patent"; (iv) and that the Anthem Pods are "complete knock offs." (Id. at ¶ 25).

II. Legal Standard

Under Fed. R. Civ. P. 12(b)(6), the Court must determine whether plaintiffs have alleged "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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." Ray v. Watnick , 688 F. App'x 41 (2d Cir. 2017) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citations and internal quotation marks omitted) ). While the Court must "draw all reasonable inferences in favor of the non-moving party," Vietnam Ass'n for Victims of Agent Orange v. Dow Chem. Co. , 517 F.3d 104, 115 (2d Cir. 2008), it must grant the moving party's motion if "a complaint is based solely on wholly conclusory allegations and provides no factual support for such claims...." Scott v. Town of Monroe , 306 F.Supp.2d 191, 198 (D. Conn. 2004).

III. Discussion

A. The Patent Claims (Counts One and Two)

The defendants make two arguments with respect to the plaintiffs' patent claims. First, they contend that there is no actual case or controversy for the purposes of the Declaratory Judgment Act with respect to four newly issued UTW patents first mentioned in the plaintiffs' operative amended complaint—the '023 Patent, the '024 Patent, the '025 Patent, and the '26 Patent ("new patents"). (ECF No. 41–1 at 5). Second, they aver that the plaintiffs' second count requesting a declaratory judgment of invalidity as to the Patents-in-Suit fails to set out a plausible claim. (Id. at 7–8). I address each of these contentions in turn.

1. The New Patents

The Declaratory Judgment Act provides, in relevant part, as follows:

In a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.

28 U.S.C. § 2201(a). With respect to patents, the Declaratory Judgment Act ("the Act") "can prevent patent owners from brandishing a Damoclean threat with a sheathed sword" by enabling a competitor to secure legal certainty when the patent owner informs prospective customers that the competitor is infringing. Cat Tech LLC v. TubeMaster, Inc. , 528 F.3d 871, 878 (Fed. Cir. 2008) (quoting Arrowhead Indus. Water, Inc. v. Ecolochem, Inc. , 846 F.2d 731, 735 (Fed. Cir. 1988), overruled on other grounds by MedImmune, Inc. v. Genentech, Inc. , 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) ). Prior to the Act, "competitors victimized by that tactic were rendered helpless and immobile so long as the patent owner refused to grasp the nettle and sue." Arrowhead Indus. Water, Inc. , 846 F.2d at 735. The Act provides these competitors with the ability to "clear the air by suing for a judgment that would settle the conflict...