Ferring B.V. v. Fera Pharms., LLC

• Decision Date: 29 September 2014
• Docket Number: 13-CV-4640 (SJF)(AKT)
• Citation: Ferring B.V. v. Fera Pharms., LLC, 13-CV-4640 (SJF)(AKT) (E.D. N.Y. Sep 29, 2014)
• Parties: FERRING B.V., Plaintiff, v. FERA PHARMACEUTICALS, LLC, Defendants.
• Court: U.S. District Court — Eastern District of New York

FERRING B.V., Plaintiff, v. FERA PHARMACEUTICALS, LLC, Defendants.

13-CV-4640 (SJF)(AKT)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

September 29, 2014

ORDER

FEUERSTEIN, J.

Plaintiff Ferring B.V. ("plaintiff" or "Ferring") brings this action against defendant Fera Pharmaceuticals, LLC ("defendant" or "Fera"), alleging trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1051 et seq. and the common law. [Docket Entry No. 1 (the "Complaint")]. In its answer to the Complaint, defendant Fera asserted four counterclaims against plaintiff. [Docket Entry No. 46 (the "Am. Answer and Am. Counterclaims")].¹ Plaintiff moved to dismiss defendant's First, Second, Third and Fourth Counterclaims. [Docket Entry No. 37 (the "Motion to Dismiss")]. Now before the Court is the Report and Recommendation of Magistrate Judge A. Kathleen Tomlinson dated August 13, 2014 (the "Report") that plaintiff's motion to dismiss be granted in part and denied in part. [DocketEntry No. 78].² On August 27, 2014, defendant filed an objection to the Report ("Obj."). [Docket Entry No. 84]. On September 10, 2014, plaintiff filed a response to defendant's objection ("Rep. to Defs.' Obj."). [Docket Entry No. 86]. The Court has fully considered the parties' submissions. For the reasons that follow, the Court adopts the Report in its entirety.

I. Standard of Review

Rule 72 of the Federal Rules of Civil Procedure permits a magistrate judge to conduct proceedings of dispositive pretrial matters without the consent of the parties. Fed, R. Civ. P. 72(b). Any portion of a report and recommendation on dispositive matters to which a timely objection has been made is reviewed de novo. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). However, "when a party makes only conclusory or general objections, or simply reiterates the original arguments, the Court will review the report strictly for clear error." Frankel v. City of N.Y., Nos. 06-cv-5450, 07-cv-3436, 2009 WL 465645, at *2 (S.D.N.Y. Feb. 25, 2009). The Court is not required to review the factual findings or legal conclusions of the magistrate judge as to which no proper objections are made. See Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). To accept the report and recommendation of a magistrate judge on a dispositive matter to which no timely objection has been made, the district judge need only be satisfied that there is no clear error on the face of the record. See Fed. R. Civ. P. 72(b); Johnson v. Goord, 487 F. Supp. 2d 377, 379 (S.D.N.Y. 2007), aff'd, 305 F. App'x 815 (2d Cir. Jan. 9, 2009); Baptichon v. Nev. State Bank, 304 F. Supp. 2d 451, 453 (E.D.N.Y. 2004), aff'd, 125 F. App'x 374 (2d Cir. Apr. 13, 2005). Whether or not proper objections have been filed, the district judge may, after review, accept, reject, or modify any of the magistrate judge's findings or recommendations. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b).

II. Discussion

A. Defendant's Objection to the Report's Dismissal of the Third Counterclaim

Defendant "objects to the recommendations made at pages 19-21 of the Report and Recommendation" (Obj. ¶ 1) and argues that its "Third and Fourth³ Counterclaims for cancellation of Ferring's incontestable marks based on the non-use of the mark in commerce state valid claims for full or partial cancellation and/or modification as to Ferring's marks, whether registered for longer than 5 years or not" (Obj. ¶ 9) because "incontestable marks can be challenged based on equitable grounds...pursuant to 15 U.S.C. § 1068, 15 U.S.C. § 1115(b), and 15 U.S.C. § 1119." Obj. ¶ 6. Accordingly, the Court is required to conduct a de novo review of the portion of the Report found on pages 19-21 dismissing defendant's Third Counterclaim as it relates to plaintiff's incontestable marks.⁴ Upon de novo review of this portion of the Report and consideration of the defendant's objection and the plaintiff's responses thereto, the Court overrules the objection and accepts the Report in its entirety.⁵

B. Grounds for Cancellation of an Incontestable Trademark Under the Lanham Act

A trademark gains "incontestable" status after it "has been in continuous use for five consecutive years subsequent to the date of registration and is still in use in commerce..." 15 U.S.C. § 1065 (including other conditions not at issue here). Incontestable trademarks are "conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(b).

While the Lanham Act gives federal courts the power to, inter alia, cancel a registration, in whole or in part,⁶ the Supreme Court has found that this "power of the courts to cancel registrations and 'to otherwise rectify the register,' § 37, 15 U.S.C. § 1119, must be subject to the specific provisions concerning incontestability." Park 'N Fly v. Dollar Park and Fly, 469 U.S. 189, 203, 105 S. Ct. 658, 666, 83 L. Ed. 2d 582 (1985). The specific provisions concerning incontestability in the Lanham Act are 15 U.S.C. § 1064 and 15 U.S.C. § 1115(b). Therefore, a request to cancel an incontestable trademark is subject to the specific permissible grounds for cancellation of an incontestable trademark in 15 U.S.C. § 1064 and the defenses to incontestability status in 15 U.S.C. § 1115(b). See Levi Strauss & Co. v. GTFM, Inc., 196 F. Supp. 2d 971, 983 (N.D. Cal. 2002) ("an incontestable registration constitutes conclusive evidence of the registrant's right to use the mark, subject to the conditions of § 1064 and the exceptions enumerated in § 1115(b)").

C. Defendant has not Adequately Pled a Claim for Cancellation of Plaintiff's Incontestable Trademark

Defendant does not object to the Report's finding that it has failed to allege any of the grounds for cancellation specified in 15 U.S.C. § 1064 because "failure to use" is not a ground for cancellation of an incontestable trademark under that section of the Lanham Act. See Report, at 21-24. Rather, defendant objects to the Report's conclusion that "in order to adequately plead cancellation of Plaintiff's incontestable marks, Defendant must allege one of the grounds specifically enumerated in the Lanham Act." Report, at 21. In its objection, defendant argues that cancellation of plaintiff's incontestable marks "based on plaintiff's failure to use" (Am. Answer and Am. Counterclaims ¶¶ 115-17) the marks can be achieved through: (1) "equitable principles, including laches, estoppel, and acquiescence," which are defenses to incontestability (See 15 U.S.C. § 1115(b)(9)); and/or (2) "the equitable power to cancel a trademark registration" pursuant to 15 U.S.C. § 1068 and the Trademark Trial and Appeal Board (T.T.A.B)'s decision in Eurostar Inc. v. Euro Star Reitmoden, 34 U.S.P.Q. 2d 1266, 1995 WL 231387 (T.T.A.B. 1994). See Obj. ¶¶ 1 -7. For the reasons discussed herein, both of these arguments fail.

Defendant raises its argument regarding 15 U.S.C. § 1115(b)(9)'s equitable defenses for the first time in its opposition papers.⁷ Additionally, defendant has failed to explain how non-use is an equitable principle within the meaning of 15 U.S.C. § 1115(b)(9) other than to summarily state, in its objection to the Report, that "such grounds are equitable in nature because it would be inequitable to allow a registrant to assert likelihood of confusion against a party when it is notusing the trademark on all the goods described." Obj. ¶ 7. The Court need not decide here whether defendant's statement adequately pleads an equitable defense to plaintiff's incontestable marks under 15 U.S.C. § 1115(b)(9)⁸ because the Court will "not consider arguments made for the first time in opposition to a motion." McCloud v. Cutler, 06-cv-5443, 2008 WL 906701, at *3, n.4 (E.D.N.Y. Apr. 3, 2008) ("it is axiomatic that [a][c]omplaint cannot be amended by the briefs in opposition to a motion to dismiss") (internal citations omitted); see also Bose Corp. v. Lightspeed Aviation, Inc., 691 F. Supp. 2d 275, 280 (D. Mass. 2010) (granting motion to dismiss where counterclaimant argued "in its opposition that it may prevail on its second counterclaim based on the 'equitable principles' exception found in 15 U.S.C. § 1115(b)(9)" but failed to plead "this 'equitable principles' relief theory in its counterclaim." nor "reference 15 U.S.C. § 1115(b)(9)...[or] any of the equitable principles listed in 15 U.S.C. § 1115(b)(9), such as laches, estoppel, or acquiescence" in its counterclaim) (emphasis in original).

Defendant's second argument - that pursuant to 15 U.S.C. § 1068⁹ and the T.T.A.B.'s decision in Eurostar Inc. v. Euro Star Reitmoden, 34 U.S.P.Q. 2d 1266, 1995 WL 231387 (T.T.A.B. 1994), a court "can cancel a mark in whole or in part whether or not the mark has been registered for longer than 5 years and can do so on any equitable ground whether or not enumerated in 15 U.S.C. 1115(b)" (Obj. ¶ 2.) - is also unavailing for two reasons. First, in Eurostar, the T.T.A.B. held that it would permit restrictions under 15 U.S.C. § 1068 "only if the petitioner alleges (and later proves) that a likelihood of confusion will be avoided if the registration is restricted in the manner sought by the petition." Eurostar Inc. v. Euro Star Reitmoden, 34 U.S.P.Q.2d 1266, 1995 WL 231387, at *7 (T.T.A.B. 1994) (emphasis added). Here, defendant has not alleged that the relief it seeks pursuant to 15 U.S.C. § 1068 will avoid a likelihood of confusion; in fact, defendant has pled just the opposite, stating in its counterclaim that "[t]here is no likelihood of confusion between Fera's marks and plaintiff's marks." Am. Answer and Am. Counterclaims ¶ 92. Because the relief defendant has requested is "not supported by claims that the requested restrictions would avoid findings of likelihood of confusion," Eurostar is inapplicable here. Eurostar Inc., 1995 WL 231387, at *5.

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