George & Co. v. Spin Master U.S. Holdings, Inc.

• Decision Date: 28 December 2021
• Docket Number: 19-CV-4391-DG-SJB,19-CV-4883-DG-SJB
• Court: U.S. District Court — Eastern District of New York
• Parties: GEORGE & COMPANY LLC, Plaintiff, v. SPIN MASTER U.S. HOLDINGS, INC., SPIN MASTER, INC., CARDINAL INDUSTRIES, INC., WALMART, INC., a foreign profit corporation, and JOEL BERGER, an individual, Defendants.

GEORGE & COMPANY LLC, Plaintiff,
v.
SPIN MASTER U.S. HOLDINGS, INC., SPIN MASTER, INC., CARDINAL INDUSTRIES, INC., WALMART, INC., a foreign profit corporation, and JOEL BERGER, an individual, Defendants.

Nos. 19-CV-4391-DG-SJB, 19-CV-4883-DG-SJB

United States District Court, E.D. New York

December 28, 2021

REPORT & RECOMMENDATION

SANKET J. BULSARA UNITED STATES MAGISTRATE JUDGE

This report and recommendation addresses Plaintiff George & Company LLC's motion to dismiss counterclaims for trademark cancellation in this long-running litigation about the dice-game “Left Center Right, ” and concludes that dismissal is inappropriate.

George & Company LLC (“George & Co.”) commenced this action against Spin Master Corp.; Spin Master U.S. Holdings, Inc.; Spin Master Ltd.; Spin Master, Inc.; Cardinal Industries, Inc.; WalMart, Inc.; and Joel Berger, on July 31, 2019.^[1] Following the dismissal of Spin Master Corp. and Spin Master Ltd., the remaining defendants answered on December 14, 2020.^[2] In the same pleading, Spin Master, Inc. (“Spin Master”) filed two counterclaims against George & Co. seeking the cancellation of 17

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trademarks, pursuant to 15 U.S.C. § 1064 and 15 U.S.C. § 1119.^[3] George & Co. then moved to dismiss the counterclaims.^[4] For the reasons outlined below, the Court respectfully recommends the motion to dismiss be denied.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This case is one battle of many these parties have fought in their decade-plus war for trademark supremacy. The trademarks relate to a dice game that uses specially marked dice and playing chips.^[5] Versions of the game are sold at popular retailers, including Amazon.com, Walmart, Target, and Kohl's.^[6] George & Co.'s 17 trademarks at issue here protect various formulations of the names and designs LEFT CENTER RIGHT and LCR for versions of its games, including for different visual styles and types of gameplay.^[7] Given the long history of litigation between the parties, the procedural history consists of the events pertinent to the present motion.

In February 2020, all defendants moved to dismiss the Complaint. District Judge Rachel P. Kovner^[8] granted the defendants' motion to dismiss in part and denied it in part.^[9] Relevant to this motion, the District Court dismissed Spin Master Corp. and

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Spin Master Ltd.^[10] The remaining defendants answered the Complaint and Spin Master filed two counterclaims seeking the cancellation of 17 of George & Co.'s marks.^[11]

The first counterclaim seeks cancellation of four of George & Co.'s federally registered trademarks. Spin Master refers to these marks as the “LEFT CENTER RIGHT Marks, ” and they are:

(1) LEFT, CENTER, OR RIGHT - DON'T LOSE YOUR CHIPS Registration No. 4, 519, 607, registered April 29, 2014 (the “'607 Mark”)

(2) LEFT, CENTER, OR RIGHT - DON'T LOSE YOUR CHIPS!, Registration No. 5, 091, 344, registered November 29, 2016 (the “'344 Mark”);

(3) LCR LEFT! CENTER! RIGHT! and design, Registration No. 4, 519, 608, registered April 29, 2014 (the “'608 Mark”);

(4) LCR LEFT! CENTER! RIGHT! and design, Registration No. 5, 091, 343, registered November 29, 2016 (the “'343 Mark”).^[12]

This counterclaim seeks cancellation on two grounds. The first is that George & Co. did not possess valid trademark rights in the marks after the Eastern District of Virginia invalidated several of George & Co.'s marks, a decision that the Fourth Circuit affirmed.^[13] The second is that George & Co. obtained the marks by committing fraud on the United States Patent and Trademark Office (“PTO”).^[14] Spin Master's fraud

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allegations aver that Peter Smilanich, George & Co.'s President, filed two declarations with the PTO in 2016 falsely indicating that no other entity was using a mark similar to the LEFT CENTER RIGHT mark. However, by that point George & Co. was litigating with Spin Master over its marks, and neither Smilanich nor George & Co.'s counsel, Jennifer Whitelaw, disclosed Spin Master Ltd.'s registration and use of a LEFT CENTER RIGHT mark or the existence and outcome of the civil litigation to the PTO.^[15]

The second counterclaim alleges that 13 other marks George & Co. has registered are subject to cancellation because they have become generic.^[16] These marks, referred to by Spin Master as the “LCR Marks, ” are:

(5) LCR and design, Registration No. 2, 802, 321, registered January 6, 2004;

(6) LCR, Registration No. 2, 989, 658, registered August 30, 2005;

(7) PLAY LCR WITH CHIPS OR WHATEVER MAKES IT FUN FOR YOU, Registration No. 3, 854, 443, registered September 28, 2010;

(8) LCR, Registration No. 3, 917, 337, registered February 8, 2011;

(9) LCR, Registration No. 3, 917, 401, registered February 8, 2011;

(10) PLAY LCR WITH CHIPS OR WHATEVER MAKES IT FUN FOR YOU, Registration No. 3, 922, 749, registered February 22, 2011;

(11) LCR and design, Registration No. 4, 002, 630, registered July 26, 2011;

(12) LCR and design, Registration No. 4, 119, 570, registered March 27, 2012;

(13) LCR, Registration No. 4, 132, 929, registered April 24, 2012;

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(14) LCR LCR LCR LCR and design, Registration No. 4, 229, 002, registered October 23, 2012;

(15) LCR, Registration No. 4, 006, 384, registered August 2, 2011;

(16) LCR and design, Registration No. 4, 201, 291, registered September 4, 2012;

(17) LCR WILD, Registration No. 4, 419, 874, registered October 15, 2013.^[17]

In support of its claim that these marks have become generic, Spin Master alleges that the public “uses the abbreviation ‘LCR' as a colloquial phrase or shorthand for” Spin Master's own Left Center Right dice game, as well as similar dice games marketed by neither party.^[18] Furthermore, Spin Master alleges that George & Co. has failed to police the market.^[19] And as a result, whatever protected or unique meaning “LCR” or these marks held has now dissipated.

George & Co. seeks dismissal of the two counterclaims on a variety of grounds: that the claims needed to be filed as compulsory counterclaims in the prior proceeding between the parties before the PTO's Trademark Trial and Appeal Board (“TTAB”); the claims are barred by res judicata and collateral estoppel; the first counterclaim is plead with insufficient particularity under Federal Rule of Civil Procedure 9(b); and the LCR Marks are not generic.^[20]

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Two prior proceedings between the parties are relevant to the disposition of this motion to dismiss. First, George & Co. sued Imagination Entertainment Limited, Imagination Holdings Pty Ltd., and Imagination DVD, Inc. (collectively, “Imagination”) for trademark infringement in the Eastern District of Virginia in 2008. George & Co., LLC v. Imagination Ent. Ltd., No. 07-CV-498, 2008 WL 2883771, at *1 (E.D. Va. July 25, 2008), aff'd, 575 F.3d 383 (4th Cir. 2009). Imagination sold its own version of the dice game under the name “LeFT CeNTeR RIGHT” and subsequently as “LEFT CENTER RIGHT.” Id. at *1, *1 n.3. Spin Master “is Imagination's successor-in-interest.”^[21]Among the marks at issue in the litigation were two LCR Marks that are the subject of the second counterclaim: Nos. 2, 802, 321 (Mark No. 5) (for “LCR”) and 2, 989, 658 (Mark No. 6) (for the LCR Rolling-Dice Design). Id. at *1. George & Co. also claimed that it possessed common law rights in an unregistered mark, LEFT CENTER RIGHT, that Imagination also infringed. Id. In resolving cross-motions for summary judgment, the District Court granted Imagination's motion for summary judgment on the infringement claims, concluding it had not infringed either of the two marks identified by George & Co., and found that George & Co. had no trademark rights in LEFT CENTER RIGHT. Id. at *8-11. The Fourth Circuit affirmed.^[22]

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Second, Imagination (and later Spin Master Ltd.) sought to register four separate marks, including LEFT, RIGHT AND CENTER before the PTO.^[23] George & Co. opposed the registration on multiple grounds, including that these marks would be confused with its own marks.^[24] See generally B&B Hardware v. Hargis Indus., 135 S.Ct. 1293, 1299 (2015) (“Under the Lanham Act . . . an applicant can seek to register a trademark through an administrative process within the [PTO] . . . But if another party believes the PTO should not register a mark because it is too similar to its own, that party can oppose registration before the Trademark Trial and Appeal Board (TTAB).” (internal citation omitted)).^[25]

After the Fourth Circuit's decision in the civil case, Imagination sought to use that decision to seek claim and issue preclusion in the TTAB opposition proceeding. The TTAB concluded that claim preclusion was inapplicable because a finding of non-

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infringement (a claim of interference) rendered by the Fourth Circuit was not the same claim as the confusion claim before the TTAB (a claim of injury from registration of the mark itself).^[26] The TTAB also found that issue preclusion was likewise inapplicable because the marks at issue in three of the consolidated opposition proceedings were different than those adjudicated before the Fourth Circuit.^[27] And with respect to the overlapping mark in the fourth proceeding, the services associated with it, “namely, the recording, storage and subsequent transmission of voice messages and games by telephone, ”^[28] were different than the services associated with the marks in the prior litigation.^[29] A few months after the decision denying preclusion was rendered, Imagination and Spin Master Ltd. withdrew the registration applications.^[30] Because George & Co.'s consent was not obtained prior to the withdrawal, judgment was entered against Imagination and Spin Master Ltd., and registration of the four marks was refused.^[31]

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DISCUSSION

I. Legal Standard

“The purpose of a motion to dismiss for failure to state a claim under Rule 12(b)(6) is to test the legal...