Kroma Makeup Eu, Ltd. v. Boldface Licensing + Branding, Inc., Case No: 6:14-cv-1551-Orl-40GJK
| Decision Date | 15 April 2015 |
| Docket Number | Case No: 6:14-cv-1551-Orl-40GJK |
| Parties | KROMA MAKEUP EU, LTD., Plaintiff, v. BOLDFACE LICENSING + BRANDING, INC., et al., Defendants. |
| Court | U.S. District Court — Middle District of Florida |
This cause comes before the Court on the following:
I. INTRODUCTION
This trademark dispute tests the extraterritorial reach of the Lanham Act by presenting a situation in which a foreign licensee of a registered U.S. trademark sues U.S. citizens for their alleged infringement of the trademark abroad. The foreign licensee additionally sues its licensor for refusing to share in the proceeds of a settlement of a separate lawsuit regarding the same infringing conduct. The Court ultimately concludes that it has subject matter jurisdiction over all of the foreign licensee's trademark claims and that the Lanham Act reaches the Defendants' infringing conduct abroad, allowing the foreign licensee to state claims under its provisions. The Court additionally concludes that, although the foreign licensee cannot state a claim for promissory estoppel against its licensor under Florida law, the foreign licensee may proceed against the licensor under a breach of contract theory.
II. FACTUAL BACKGROUND1
Defendant, By Lee Tillett, Inc. ("Tillett"), is a domestic corporation incorporated under the laws of Florida. (Doc. ¶ 4). Tillett owns a registered U.S. trademark in "Kroma," which Tillett has continuously used in commerce since 2004 as a premium, all-naturalmakeup brand. (Id. ¶ 9). Kroma products sell from between $19 and $100 and have been featured at high-profile fashion events throughout the United States and the world, including the Oscars and the Emmys. (Id.).
Plaintiff, Kroma Makeup EU, Ltd. ("Kroma EU") is a foreign corporation incorporated under the laws of the United Kingdom. (Id. ¶ 3). In October 2012, Tillett granted an exclusive license to Kroma EU to import, sell, and distribute Kroma products in the European Union and to use the "Kroma" mark in furtherance of its business. (Id. ¶¶ 10-12). As part of the license agreement, Tillett guaranteed that it owned the "Kroma" mark and promised to provide Kroma EU with evidence that "Kroma" was registered in the United Kingdom. (Id.). By late 2012, Kroma EU's business was thriving, with Kroma EU negotiating to place Kroma products in a number of upscale British and European retail stores. (Id. ¶ 14).
In 2011, Defendants, Kim Kardashian, Kourtney Kardashian, and Khloe Kardashian (together, the "Kardashian Defendants"),2 became interested in creating a Kardashian-backed makeup line and approached various companies about launching their endeavor. (Id. ¶ 17). The Kardashian Defendants ultimately selected Defendant, Boldface Licensing + Branding, Inc. ("Boldface"),3 to spearhead the venture. (Id. ¶¶ 18-19). To that end, the Kardashian Defendants entered into a licensing agreement with Boldface to create and develop their makeup brand. (Id. ¶ 19). The licensing agreement provided that the Kardashian Defendants held final decision making authority regardingthe brand and would receive a royalty based on the sale of their makeup products. (Id. ¶¶ 20, 23, 88).
Before selecting a name for the makeup brand, Boldface conducted a preliminary trademark search for terms such as "Khroma" and "Kardashian Khroma." (Id. ¶ 21). Boldface subsequently presented these designations to the Kardashian Defendants as possible brand names, despite their conflict with "Kroma" in the preliminary trademark search. (Id. ¶¶ 21-22). The Kardashian Defendants also inquired into the propriety of using "Khroma" when it became unclear whether they could purchase or use the "Kroma" mark. (Id. ¶ 24). Nevertheless, the Kardashian Defendants chose "Khroma" and submitted applications to the United States Patent and Trademark Office ("USPTO") to protect "Khroma" and other similarly-named marks. (Id. ¶ 26). The USPTO ultimately refused to register any mark containing the word "Khroma," stating that it was likely to create consumer confusion with "Kroma." (Id. ¶ 30).
In June 2012, Tillett learned that Boldface intended to release a makeup line sponsored by the Kardashian Defendants named "Khroma." (Id. ¶ 27). Tillett sent a cease and desist letter to Boldface demanding that Boldface stop using the name "Khroma." (Id. ¶ 28). Boldface responded by denying any infringement and indicating that it would not discuss the matter further. (Id.). On October 26, 2012, Tillett sent a second cease and desist letter to Boldface, again demanding that Boldface discontinue its use of "Khroma." (Id. ¶ 32).
In November 2012, Boldface and the Kardashian Defendants released Khroma into stores throughout the United States and Europe. (Id. ¶¶ 43, 45). Khroma was also sold globally through various websites. (Id. ¶ 45). Khroma products were priced between$6 and $20 and were of inferior quality compared to Kroma. (Id. ¶ 46). Consequently, Kroma suffered severe consumer confusion with Khroma, resulting in the perception that Kroma products were associated with the Kardashian Defendants and were of the same inferior quality as Khroma. (Id. ¶¶ 47-50).
On November 30, 2012, Boldface sued Tillett in a California federal court to seek a declaration that Boldface did not infringe on "Kroma" (hereinafter, the "California litigation"). (Id. ¶ 52). Tillett countersued Boldface for trademark infringement and filed third party claims against the Kardashian Defendants for vicarious trademark infringement. (Id. ¶ 53). On March 11, 2013, the district court entered a preliminary injunction finding that "Khroma" was confusingly similar to "Kroma." (Id. ¶¶ 58-59). Tillett eventually settled with Boldface and the Kardashian Defendants and the California litigation was dismissed with prejudice. (Id. ¶ 68). Importantly, Kroma EU was not named as a party in the California litigation and did not participate in settlement negotiations. (Id. ¶ 70).
Prior to settlement, Tillett, through its attorney, promised to seek damages on Kroma EU's behalf. (Id. ¶ 33). Tillett requested information from Kroma EU regarding its claimed damages in order to include in a demand for settlement to Boldface and the Kardashian Defendants. (Id. ¶¶ 34-35 & n.6). Tillett's attorney kept Kroma EU abreast of all settlement talks and assured Kroma EU that Tillett would continue to act in Kroma EU's best interests throughout negotiations. (Id. ¶ 38).
Upon winning its motion for preliminary injunction, however, Tillett abandoned Kroma EU's interests in pursuing settlement, informing Kroma EU that any recovery would inure solely to Tillett. (Id. ¶ 62). Tillett and its attorney thereafter refused all further substantive communication with Kroma EU. (Id.). As a result, Tillett's settlement of the California litigation with Boldface and the Kardashian Defendants did not include a release of any claims to which Kroma EU was entitled. (Id. ¶ 70).
On September 24, 2014, Kroma EU initiated this lawsuit against Tillett, Boldface, and the Kardashian Defendants by filing a seven-count complaint. (Doc. 1). Counts I and II allege trademark infringement under § 43(a) of the Lanham Act and common law trademark infringement, respectively, against Boldface. (Id. ¶¶ 71-85). Counts III, IV, and V, allege vicarious trademark infringement against each of the Kardashian Defendants based on their control over Boldface. (Id. ¶¶ 86-102). As to these five trademark infringement claims, Kroma EU alleges that Boldface and the Kardashian Defendants infringed on the "Kroma" mark by using "Khroma" in Europe. Count VI alleges promissory estoppel against Tillett. (Id. ¶¶ 103-11). Finally, Count VII alleges tortious interference against Boldface. (Id. ¶¶ 112-17). On February 5, 2015, the Clerk of Court defaulted Boldface. (Doc. 37).
The remaining defendants now move to dismiss the Complaint. The Kardashian Defendants move to dismiss Counts III, IV, and V for lack of subject matter jurisdiction or, in the alternative, for failing to state claims upon which relief can be granted. Specifically, the Kardashian Defendants contend that the Lanham Act does not reach extraterritorial infringement such as what Kroma EU alleges here. (Doc. 33). Tillett moves to dismissCount VI for failing to state a claim for promissory estoppel. (Doc. 14). Both motions are ripe for consideration.
III. ISSUES PRESENTED
Based on the arguments contained within the parties' respective filings, the Court finds itself confronted with the following issues:
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