Kaplan, Inc. v. Yun

• Decision Date: 30 April 2014
• Docket Number: No. 13 CIV. 1147 JGK.,13 CIV. 1147 JGK.
• Citation: 16 F.Supp.3d 341
• Parties: KAPLAN, INC. et al., Plaintiffs, v. Tracy YUN, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

16 F.Supp.3d 341

KAPLAN, INC. et al., Plaintiffs

v.Tracy YUN, et al., Defendants.

No. 13 CIV. 1147 JGK.

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

Signed April 30, 2014.

Michelle Mancino Marsh, Kenyon & Kenyon, New York, NY, Mimi Kristin Rupp, Kenyon & Kenyon, Palo Alto, CA, for Plaintiffs.

Arthur M. Peslak, Mandel & Peslak, LLC, Freehold, NJ, Kalpana Nagampalli, Feldman Law Group, New York, NY, for Defendants.

OPINION AND ORDER

JOHN G. KOELTL, District Judge.

The plaintiffs, Kaplan, Inc. and MG Prep, Inc., bring this action against defendants Tracy Yun and Manhattan Enterprise Group, LLC (“MEP”), alleging that the defendants infringed and misappropriated the plaintiffs' trademarks, “Manhattan Prep” and “Manhattan GMAT” (collectively, the “Manhattan marks”) by running a competing business under the name “Manhattan Elite Prep.” The plaintiffs allege various causes of action under the Lanham Act and the Anticybersquatting Consumer Protection Act (ACPA), as well as several causes of actions under New York State law.

This Court has federal question jurisdiction under 28 U.S.C. §§ 1331, 1338(a), and 1338(b) over the federal law claims and supplemental jurisdiction under 28 U.S.C. § 1367 over the state law claims. The defendants now move to dismiss the Amended Complaint pursuant to Rule 12(b)(6), or, in the alternative, to convert the motion to a summary judgment motion pursuant to Rules 12(d) and 56 of the Federal Rules of Civil Procedure. However, because the parties have not engaged in discovery and the plaintiffs have not had the opportunity to gather and present evidence and argument in opposition to a summary judgment motion, the Court declines to convert the motion into one for summary judgment. See Fargas v. Cincinnati Mach., LLC, 986 F.Supp.2d 420, 421, No. 13 Civ. 4443, 2013 WL 6508863, at *1 (S.D.N.Y. Dec. 12, 2013).

I.

In deciding a motion to dismiss pursuant to Rule 12(b)(6), the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiffs' favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.2007) ; Arista Records LLC v. Lime Grp. LLC, 532 F.Supp.2d 556, 566 (S.D.N.Y.2007). The Court's function on a motion to dismiss is “not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). The Court should not dismiss the complaint if the plaintiff has stated “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While the Court should construe the factual allegations in the light most favorable to the plaintiff, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”Id.

When presented with a motion to dismiss pursuant to Rule 12(b)(6), the Court may consider documents that are referenced in the complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiff's possession or that the plaintiff knew of when bringing suit, or matters of which judicial notice may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002). In particular, the Court may take judicial notice of official records of the United States Patent and Trademark Office (PTO). Telebrands Corp. v. Del Labs., Inc., 719 F.Supp.2d 283, 287 n. 3 (S.D.N.Y.2010).

II.

The Court accepts the allegations in the Amended Complaint as true for purposes of this motion. The plaintiffs and the defendants run competing preparation courses for various standardized tests including the Graduate Management Admission Test (“GMAT”), Graduate Record Examinations (“GRE”), and the Law School Admission Test (“LSAT”). (See Am. Compl. ¶¶ 1, 5.) The plaintiffs have previously offered courses under the brand “Manhattan GMAT.” (Am. Compl. ¶ 3.) Allegedly in July 2011, the plaintiffs adopted a new umbrella brand, “Manhattan Prep,” because they offered preparation courses for exams other than GMAT; the plaintiffs continued to offer GMAT courses under the brand “Manhattan GMAT.” (Am. Compl. ¶¶ 3–4.)

Around December 2011, defendant Yun launched a business offering GMAT, GRE, and LSAT preparation courses and registered the domain name “manhattaneliteprep.com”; the defendants first used the mark “Manhattan Elite Prep” in commerce in February 2012. (Am. Compl. ¶¶ 5, 88, 111.) Consumers were allegedly confused between the two brands. (See generally Am. Compl. ¶¶ 41–58.) The plaintiffs specifically allege circumstances in which potential students mistook “Manhattan Elite Prep” courses for “Manhattan Prep” courses while purchasing the courses on internet shopping websites such as Groupon or Gilt City. (E.g. Am. Compl. ¶¶ 44, 48, 52.)

The plaintiffs applied for registration of the trademark “Manhattan Prep” with the PTO on May 4, 2012 in an “intent-to-use” application under § 1(b) of the Lanham Act, 15 U.S.C. § 1051(b). (Butera Decl. Ex. A (“Application”) at 5.) The PTO initially denied registration of the “Manhattan Prep” mark in September 2012 because the mark was “primarily geographically descriptive of the origin of [the plaintiffs'] services.” (Butera Decl. Ex. B at 2.) On March 14, 2013, the PTO further found that the mark had not acquired secondary meaning. (Butera Decl. Ex. C at 2.) However, the PTO subsequently reversed its decision and approved the mark for publication on October 9, 2013.

On August 1, 2012, about three months after filing the application with the PTO, the plaintiffs sent the defendants a letter demanding that the defendants cease and desist from infringing upon the Manhattan marks and that the defendants hand over the infringing internet domain name. (Am. Compl. ¶ 86; Am. Compl. Ex. J. at 4–5.) The defendants responded on August 8, 2012, claiming trademark rights superior to the plaintiffs' marks, as well as invalidity of the “Manhattan Prep” mark. (Am. Compl. ¶ 87, Ex. K.) The plaintiffs replied on August 29, 2012, claiming superior rights based on the plaintiffs' alleged use of the “Manhattan Prep” mark starting from July 2011. (Am. Compl. ¶ 88, Ex. L.) Following unsuccessful settlement discussions between the parties, the present action was commenced on February 20, 2013. (Am. Compl. ¶ 90.)

In addition to the alleged infringement of the Manhattan marks by Manhattan Elite Prep, the plaintiffs further allege that defendant Yun previously infringed the “Manhattan GMAT” mark in conducting a similar preparation-course business named “Manhattan Review,” (Am. Compl. ¶¶ 59–63), and that Yun subsequently had a trademark dispute with her former business partner at Manhattan Review, (Am. Compl. ¶¶ 74–79).

III.

To state a claim for trademark infringement under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), a plaintiff must show that it has a valid mark entitled to protection and that “the defendant's use of its mark is likely to cause an appreciable number of ordinarily prudent purchasers confusion as to the origin, sponsorship, or approval of the defendant's product.” Louis Vuitton Malletier S.A. v. Warner Bros. Entm't Inc., 868 F.Supp.2d 172, 177 (S.D.N.Y.2012) (citations and internal quotation marks omitted). In their opening papers, the defendants have not argued that the Amended Complaint failed to plead consumer confusion sufficiently, but have instead focused their arguments on the validity of the plaintiffs' trademarks and the plaintiffs' standing to sue.

A mark must be “distinctive” and not “generic” in order to qualify as a protectable trademark. Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F.3d 206, 216 (2d Cir.2012) (citation omitted). For trademark purposes, terms or phrases are usually classified as (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir.1976). “Generic terms are never entitled to protection. Suggestive, arbitrary and fanciful terms, on the other hand, are inherently distinctive and generally entitled to protection. Descriptive terms are not inherently distinctive, but are nonetheless entitled to protection if they acquire secondary meaning in the marketplace.” Paco Sport, Ltd. v. Paco Rabanne Parfums, 86 F.Supp.2d 305, 310 (S.D.N.Y.2000) ; see also Abercrombie & Fitch, 537 F.2d at 9–11. Thus, “[t]o qualify for trademark protection, an owner of a descriptive mark must demonstrate that the mark had acquired secondary meaning before its competitor commenced use of the mark.” PaperCutter, Inc. v. Fay's Drug Co., Inc., 900 F.2d 558, 564 (2d Cir.1990).

On this motion, there is no dispute that the term “Manhattan Prep” is not inherently distinctive, because the plaintiffs do not contend that the term “Manhattan Prep” is suggestive, fanciful, or arbitrary. Accordingly, the plaintiffs' term “Manhattan Prep” is protectable as a trademark only if it had acquired secondary meaning before the defendants commenced their use of the allegedly infringing mark in February 2012.

The defendants first rely on the PTO's initial determination in March 2013 that the “Manhattan Prep” mark had not acquired secondary meaning. (Butera Decl. Ex. C at 2.) However, as the plaintiffs correctly point out, that determination was reversed and is entitled to no deference. See Lebewohl v. Heart Attack Grill LLC, 890 F.Supp.2d 278, 292 (S.D.N.Y.2012). Thus, the PTO's initial determination carries no weight on this motion to dismiss.

The defendants next argue that the allegations regarding the plaintiffs' commercial use prior to February 2012 are insufficient. The plaintiffs allege that ...