McGowen Precision Barrels, LLC v. Proof Research, Inc.
| Docket Number | CV 22-39-M-KLD |
| Decision Date | 28 October 2022 |
| Citation | 637 F.Supp.3d 1116 |
| Parties | MCGOWEN PRECISION BARRELS, LLC, Plaintiff, v. PROOF RESEARCH, INC., Defendant. |
| Court | U.S. District Court — District of Montana |
Kyle Keegan, Amber Robichaux, Keegan Juban Lowe & Robichaux, Baton Rouge, LA, Timothy B. Strauch, Strauch Law Firm PLLC, Missoula, MT, for Plaintiff.
Matthew B. Hayhurst, Natasha Prinzing Jones, Tyler M. Stockton, Boone Karlberg, P.C., Missoula, MT, for Defendant.
Defendant Proof Research, Inc. ("Proof") moves to dismiss Plaintiff McGowen Precision Barrels, LLC's ("McGowen") Complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant's motion is granted in part and denied in part for the reasons discussed below.
Since 2007, McGowen has manufactured steel firearm barrels and barrel blanks, or liners, which its customers wrap with a continuous-filament carbon fiber and epoxy resin composite. (Doc. 1, ¶¶ 5-6, 8; Doc. 15-2, 12). In 2016, when the dispute underlying this litigation commenced, McGowen's customers included McGowen's sister company, Carbon Six Barrels, LLC ("Carbon Six"), Fierce Firearms, LLC, and Primary Weapons Systems, Inc. McGowen states in its Complaint that Primary Weapons Systems "no longer purchases barrel blanks from McGowen." (Doc. 1, ¶¶ 8, 28-29).
Proof began making helically wound and ground carbon fiber rifle barrels through its predecessor in interest, Advanced Barrel Systems ("ABS") in 2003. (Doc. 15-2, 26). Proof applied to register its "mottled pattern" trade dress ("Mark") with the United States Patent and Trademark Office ("USPTO") in May 2012. (Doc. 1, ¶ 9). The USPTO initially refused to register the Mark, noting it "consisted of nondistinctive features of a product design that is not registrable on the Principal Register without sufficient proof of acquired distinctiveness." (Doc. 1, ¶ 15). In an email discussing this initial refusal, Proof's attorney advised its CEO that if the finish of the barrel was a natural consequence of the manufacturing process, then Proof could not get a trademark. (Doc. 1, ¶ 16). Three days later, Proof responded to the USPTO by asserting that "nothing in the . . . underlying technology dictates the appearance of the Mark on gun barrels . . . namely, the unique irregular, mottled, rippled patches on the finished barrel." (Doc. 1, ¶ 17). On August 27, 2013, the USPTO registered the Mark. (Doc. 1, ¶ 9; Doc. 15-1, 1).
On June 2, 2016, Proof sent cease-and-desist letters to Carbon Six and Primary Weapons Systems, informing the companies of its Mark and demanding the companies "cease and desist from selling, distributing, advertising, or promoting barrels, or rifles fitted with barrels, having a ground carbon fiber composite winding finish" with Proof's "distinctive trade dress." (Doc. 1, ¶¶ 26, 28; Docs. 15-3, 15-4). Proof had sent a similar letter to Fierce Firearms on February 9, 2015. (Doc. 1, ¶ 28; Doc. 15-5).
On June 10, 2016, Carbon Six responded with a letter, stating, "We strongly believe that once the facts are brought to light, Proof Research's Registration No. 4,390,533 will be cancelled," and "we do not believe that any action on our part is necessary." (Doc. 1, ¶ 30; Doc. 15-6). The letter also noted:
Please be advised that carbonsix has not sold any of the barrels at issue, to date. Additionally, carbonsix is developing a line of carbon fiber wrapped rifle barrels that are significantly different in appearance from the barrels at issue. So, while carbonsix strongly believes that it has not infringed any valid trade dress rights, the issue is likely to be moot in the near future.
On December 15, 2017, Proof filed a complaint in this district court, alleging trademark infringement, unfair competition, and trademark dilution under the Lanham Act. (Doc. 1, ¶ 10; Proof Research, Inc. v. McGowen Precision Barrels, LLC, No. 9:17-cv-00173-DLC (D. Mont. 2017) ("Proof I")). On December 22, 2017, McGowen filed a Petition for Cancellation of the Mark with the USPTO Trademark Trial and Appeal Board ("TTAB"), asserting five grounds for cancellation: the Mark comprised matter that is functional; the Mark represented multiple marks; the trade dress was generic; the trade dress was aesthetically functional; and Proof committed fraud in the procurement of its registration under § 14 of the Lanham Act, 15 U.S.C. § 1064. (Doc. 1, ¶ 11). On January 16, 2018, the parties agreed to stay the federal lawsuit pending the outcome of the TTAB proceeding. (Doc. 1, ¶ 12; Proof I, Doc. 7).
On August 30, 2018, while cancellation proceedings were ongoing in front of the TTAB, Proof applied to renew the Mark's registration. (Doc. 1, ¶ 32). In its application, Proof's counsel declared that no proceedings involving the rights of the subject registration were pending in the USPTO or in a court. (Doc. 1, ¶ 32). On September 13, 2018, the USPTO issued a Notice stating Proof's trademark registration of the Mark would remain in force. (Doc. 1, ¶ 33). Proof amended its application on October 31, 2020. (Doc. 1, ¶ 36).
After extensive evidence and testimony, on May 20, 2021, the TTAB canceled Proof's registration on the grounds of functionality, finding "the trade dress comprising the mark in the Registration is, as a whole, functional under Section 2(e)(5) of the Trademark Act, 15 U.S.C. § 1052(e)(5)," and declining to rule on McGowen's remaining claims. (Doc. 15-2, 4). On August 3, 2021, Proof filed a Notice of Voluntary Dismissal of the federal litigation under Fed. R. Civ. P. 41(a)(1)(A)(i). (Doc. 1, ¶ 37; Proof I, Doc. 26). The same day, McGowen filed a motion to deny the dismissal, asking the court to allow it 21 days to file an answer and counterclaim. (Doc. 1, ¶ 38; Proof I, Doc. 30). The court denied McGowen's motion, finding the stay imposed during the pendency of the TTAB proceeding did not extinguish Proof's absolute right to voluntarily dismiss the action prior to service by the defendant of an answer or a motion for summary judgment under Rule 41. (Doc. 1, ¶ 39; Proof I, Doc. 32).
On February 10, 2022, McGowen filed this action, alleging Count I: False or Fraudulent Registration of a Trademark under the Lanham Act § 38, 15 U.S.C. § 1120; Count II: Malicious Prosecution; and Count III: Tortious Interference with Business Relations/Prospective Economic Advantage. (Doc. 1). On April 6, 2022, Proof filed the instant motion to dismiss, arguing McGowen's Lanham Act claim was insufficiently pled, its fraud and tort claims are untimely, and its malicious prosecution claim is legally insufficient. (Doc. 15). McGowen opposes the motion.
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is proper under Rule 12(b)(6) only when the complaint lacks a cognizable legal theory or fails to allege sufficient facts to support a cognizable legal theory. Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). When reviewing a Rule 12(b)(6) motion to dismiss, the court accepts all factual allegations in the complaint as true and construes the pleading in the light most favorable to the nonmoving party. Mudpie, Inc. v. Travelers Cas. Ins. Co. of Am., 15 F.4th 885, 889 (9th Cir. 2021).
Dismissal under Rule 12(b)(6) is informed by Rule 8(a)(2), which requires a pleading to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 677-78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To survive a Rule 12(b)(6) motion to dismiss, a plaintiff's complaint must contain sufficient facts "to state a facially plausible claim to relief." Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). Plausibility is context-specific, requiring courts to draw on judicial experience and common sense when evaluating a complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014). "Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Conclusory allegations and unwarranted inferences are insufficient to defeat a motion to dismiss. Johnson v. Lucent Techs. Inc., 653 F.3d 1000, 1010 (9th Cir. 2011); Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ().
Generally, a district court may not consider material outside the pleadings when assessing the sufficiency of a complaint under Rule 12(b)(6). Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)). When matters outside the pleadings are considered, the motion to dismiss under Rule 12(b)(6) is treated as one for summary judgment under Rule 56. Khoja, 899 F.3d at 998; Olsen v. Idaho State Bd. of Medicine, 363 F.3d 916, 921-22 (9th Cir. 2004).
There are two exceptions to this rule: the incorporation-by-reference doctrine, and judicial notice under Federal Rule of Evidence 201. Khoja, 899 F.3d at 998 (). The incorporation-by-reference doctrine allows a court to consider evidence on which the complaint "necessarily relies" if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion. Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). A court may take judicial notice of undisputed "matters of public record" including other state or federal court proceedings. Lee, 250...
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