Coach Inc. v. Kmart Corporations

• Decision Date: 16 November 2010
• Docket Number: No. 10 Civ. 1731(LMM).,10 Civ. 1731(LMM).
• Citation: 756 F.Supp.2d 421
• Parties: COACH, INC., et al., Plaintiffs,v.KMART CORPORATIONS, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

756 F.Supp.2d 421

COACH, INC., et al., Plaintiffs,

v.KMART CORPORATIONS, et al., Defendants.

No. 10 Civ. 1731(LMM).

United States District Court, S.D. New York.

Nov. 16, 2010.

Jonathan David Davis, Jonathan D. Davis, P.C., New York, NY, for Plaintiffs.Alison Giselle Carlson, Lora A. Moffatt, Salans, Emily Bab Kirsch, Reed Smith, Laura Goldbard George, Steven Brent Pokotilow, William Joseph Seymour, Stroock & Stroock & Lavan LLP, New York, NY, for Defendants.

MEMORANDUM AND ORDER

LAWRENCE M. McKENNA, District Judge.

Coach, Inc. and Coach Services, Inc. (collectively “Plaintiffs”) filed this action against Kmart Corporation (“Kmart”), Sears Holding Corporation (“SHC”) ¹, and 24 Seven International LLC (“24 Seven”) (collectively “Defendants”) asserting claims of trademark and trade dress infringement, copyright infringement, false advertising, unfair competition and unjust enrichment. In response, Defendants assert numerous affirmative defenses. Plaintiffs move to strike these affirmative defenses pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. For the reasons set forth below. Plaintiffs' motion is granted in part and denied in part. ²

BACKGROUND

Plaintiffs manufacture, market and sell fine leather goods and mixed material products, including handbags and luggage. (Compl. ¶ 13.) Many of these goods bear trademarks, trade dress and copyrighted design elements that Plaintiffs allege are widely recognized by the public. ( Id. ¶¶ 14–15.) Specifically, Plaintiffs manufacture, market and sell handbags and luggage bearing the “Coach Op Art” Trademark and certain copyrighted Coach Op Art design elements. ( See Id. ¶¶ 16; 22–23). Plaintiffs registered the Coach Op Art Trademark with the federal Patent and Trademark Office on October 13, 2009, and registered the Coach Op Art Copyright with the federal Copyright Office on October 7, 2009 ( Id. ¶¶ 16, 23).

Defendants also manufacture and sell handbags and luggage. At issue here are Defendants' Concourse luggage and wheeled bags. ( See Pls.' Memo. in Supp. of Motion to Strike Affirmative Defenses (“Pls.' Memo.”) at 2–5; Defs.' Memo. in Opp'n. to Pls.' Mot. to Strike Affirmative Defenses (“Defs.' Opp'n. Memo.”) at 2.) These bags are distributed by 24 Seven and sold at Kmart retail stores. ( Id.).

On March 3, 2010, Plaintiffs filed this action alleging, inter alia, that Defendants' Concourse luggage set bears “logos, source-identifying indicia and design elements that infringe Coach's intellectual property rights” and that Defendants' Concourse wheeled bag “bears on its exterior a design that is confusingly similar to Coach's [Op Art Trademark and Copyright].” (Pls.' Memo. at 3–4.) Specifically, in their complaint, Plaintiffs allege trademark counterfeiting and infringement under Section 32 of the Lanham Act; trade dress infringement, false designation of origin and false advertising under Section 43(a) of the Lanham Act; trademark dilution under Section 43(c) of the Lanham Act; copyright infringement under the United States Copyright Act; trademark infringement under New York law; trademark dilution, deceptive practices, and false and misleading advertising under New York General Business Law; and unfair competition and unjust enrichment under New York common law.

On May 19, 2010, 24 Seven, Kmart and SHC each filed separate Answers and Affirmative Defenses. Generally, Defendants assert the same affirmative defenses. These include the first sale doctrine, statute of limitations, estoppel, implied license, acquiescence, laches, waiver, copyright misuse, unclean hands, failure to mitigate damages, failure to negotiate damages, and failure to state a claim. ( See Kmart Ans. at 23–24; SHC Ans. at 23–24; 24 Seven Ans. at 13–15.) Defendants further assert that Defendants have not infringed, Defendants' goods do not use a counterfeit mark, Plaintiffs are not entitled to statutory damages, and Plaintiffs' copyrights, trademarks and trade dress are invalid and unenforceable. ( Id.)

On June 9, 2010, Plaintiffs moved to strike these affirmative defenses pursuant to Rule 12(f) of the Federal Rules of Civil Procedure.³ For the reasons set forth below, Plaintiffs' motion is granted in part and denied in part.

DISCUSSION

A. Legal Standard for Motions to Strike

Under Rule 12(f), the Court may strike any “insufficient defense or any redundant, immaterial, impertinent or scandalous matter.” Fed. R. Civ. Pro. 12(f). Motions to strike are generally disfavored and will not be granted “unless it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense.” Salcer v. Envicon Equities Corp., 744 F.2d 935, 939 (2d Cir.1984), vacated and remanded on other grounds, 478 U.S. 1015, 106 S.Ct. 3324, 92 L.Ed.2d 731 (1986), (quotations and citations omitted); see also Estee Lauder, Inc. v. Origins Natural Res., Inc., 189 F.R.D. 269, 271 (S.D.N.Y.1999).

In order for a court to strike a defense as insufficient: “(1) there must be no question of fact that might allow the defense to succeed; (2) there must be no substantial question of law that might allow the defense to succeed; and (3) the plaintiff must be prejudiced by the inclusion of the defense”. Specialty Minerals, Inc. v. Pluess–Staufer AG, 395 F.Supp.2d 109, 111–112 (S.D.N.Y.2005).

In considering the sufficiency of a defense under the first two prongs of the analysis, courts apply the same standard applicable to a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See FSP, Inc. v. Societe Generale, 2005 WL 475986, *7–8 (S.D.N.Y. Feb. 28, 2005). When deciding a motion to dismiss, “the Court ordinarily accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor.” In re Parmalat Sec. Litig., 501 F.Supp.2d 560, 572 (S.D.N.Y.2007) (citing Levy v. Southbrook Int'l Invs., Ltd., 263 F.3d 10, 14 (2d Cir.2001)). Thus, “[t]he sufficiency of a defense is to be determined solely upon the face of the pleading.” Houston v. Manheim–New York, 2010 WL 744119 at *3 (S.D.N.Y. Mar. 3, 2010). And the Court should construe “the pleadings liberally to give the defendant a full opportunity to support its claims at trial, after full discovery has been made”. S.E.C. v. McCaskey, 56 F.Supp.2d 323, 326 (S.D.N.Y.1999). On the other hand, as courts in this district have explained, conclusory assertions, absent any supporting factual allegations are insufficient as a matter of law and fail to provide a plaintiff with any notice as to how the defense applies to the plaintiff's claims. See e.g., Obabueki v. Int'l Bus. Machs. Corp., 145 F.Supp.2d 371, 401 (S.D.N.Y.2001) (striking unclean hands defense explaining that pleading the words “unclean hands” without more offered the plaintiff no indication about how the doctrine would bar his claims).

If a court determines that a defense is legally insufficient, the court must next determine whether inclusion of the defense would prejudice the plaintiff. Increased time and expense of trial may constitute sufficient prejudice to warrant striking an affirmative defense. See Estee Lauder, 189 F.R.D. at 272. For example, in Specialty Minerals, the court held that plaintiffs would be prejudiced because inclusion of an unclean hands defense would require additional discovery and would expand the length and scope of the trial. 395 F.Supp.2d at 114. Moreover, inclusion of a defense that must fail as a matter of law prejudices the plaintiff because it will needlessly increase the duration and expense of litigation. See Estee Lauder, 189 F.R.D. at 272 (explaining that when “the defense is insufficient as a matter of law, the defense should be stricken to eliminate the delay and unnecessary expense from litigating the invalid claim”) (quoting FDIC v. Ornstein, 73 F.Supp.2d 277, 280 (E.D.N.Y.1999)); U.S. v. Manhattan–Westchester Medical Svcs., P.C., 2008 WL 241079 at *3 (S.D.N.Y. Jan.28, 2008) (same).

B. First Sale Doctrine and Statute of Limitations

Plaintiffs move to strike Defendants' Eighth Affirmative Defense that Plaintiffs' copyright claims are barred by the first sale doctrine and Kmart and SHC's Fifth Affirmative Defense that Plaintiffs' claims are barred by the applicable statute of limitations. (Pls.' Memo at 9–10; 15.) Defendants voluntarily withdraw these defenses ( see Defs.' Opp'n Memo. at 10), and thus, Plaintiffs' motion to strike Defendants' Eighth Affirmative Defense and Kmart and SHC's Fifth Affirmative Defense is granted.

C. Equitable Defenses

1. Legal Sufficiency

Plaintiffs move to strike Kmart and SHC's Fourth and 24 Seven's Sixth Affirmative Defenses that “Plaintiffs' claims are barred by estoppel, implied license, acquiescence, waiver and laches”. (Pls.' Memo. at 11–15.) Defendants argue that these defenses are “factually and legally feasible”. (Defs.' Opp'n. Memo. at 7.) It is of no consequence, however, that there may be some unknown and hypothetical set of facts that could support these defenses. Instead, the relevant question is whether, based on the pleadings as construed in the light most favorable to Defendants, there is a question of fact or a substantial question of law that might allow any of these defenses to succeed. See Specialty Minerals, 395 F.Supp.2d at 111–12. The Court will consider the sufficiency of each defense in turn.

i. Estoppel

Estoppel is a defense to copyright infringement where:

the party to be estopped had knowledge of defendant's infringing conduct and either intended that his own conduct be relied upon or acted so that the party asserting the estoppel has a right to believe it was so intended. Additionally, the defendant must be ignorant of the true facts and must rely on plaintiff's conduct to his detriment.

Lottie Joplin Thomas Trust v. Crown Publishers, Inc., 456 F.Supp. 531, 535 (S.D.N.Y.1977). Thus, it is an essential element of estoppel “that the party who invokes it shall have acted to his detriment in...