Rhee Bros., Inc. v. Han Ah Reum Corp.

• Decision Date: 31 December 2001
• Docket Number: No. CIV. AMD 01-1894.,CIV. AMD 01-1894.
• Citation: 178 F.Supp.2d 525
• Parties: RHEE BROS., INC., Plaintiff v. HAN AH REUM CORP., et al., Defendants
• Court: U.S. District Court — District of Maryland

Page 525

178 F.Supp.2d 525

RHEE BROS., INC., Plaintiff v. HAN AH REUM CORP., et al., Defendants

No. CIV. AMD 01-1894.

United States District Court, D. Maryland.

December 31, 2001.

James A Johnson, Jonathan Ilsong Ahn, Semmes Bowen and Semmes PC, Baltimore, MD, for Rhee Bros. Inc.

Stephen C. Leckar, Butera & Andrews, Washington, DC, for Han Ah Reum, Corp., Ilyeon Kwon.

James T Wharton, David Alan Roling, Wharton Levin Ehrmantraut Klein and Nash, Annapolis, MD, for Seoul Shik Poom, Inc.

Harry P. Stringer, Jr., Mudd, Harrison and Burch, Towson, MD, for Har Wheaton, Inc.

MEMORANDUM

DAVIS, District Judge.

This case involves claims for trademark infringement, trademark dilution and unfair competition in the domestic market for Asian food products. Plaintiff, Rhee Bros., Incorporated ("plaintiff" or "Rhee Bros."), has joined five defendants: (1) Han Ah Reum Corporation, trading as Han Ah Reum Asian Supermarket ("Han Ah Reum"); (2) HAR Wheaton, Inc., trading as Han Ah Reum Asian Market ("HAR Wheaton"); (3) Il Yeon Kwon ("Kwon"), who is the owner and operator of Han Ah Reum; (4) Seoul Shik Poom, Inc. ("SSP"); and (5) Joong Kwon, who is the owner of SSP. Plaintiff seeks injunctive relief and damages, including actual and punitive damages, profits, costs and attorney's fees.

Three preliminary motions are now pending: (1) a motion to dismiss for failure to state a claim brought by defendants Han Ah Reum, HAR Wheaton and Kwon; (2) a like motion to dismiss for failure to state a claim brought by SSP; and (3) a motion to dismiss for lack of personal jurisdiction brought by Joong Kwon. I shall first address the motions to dismiss for failure to state a claim and, thereafter, the motion to dismiss for lack of personal jurisdiction. For the reasons set forth, I shall deny the motions to dismiss, and I shall reserve determination as to the issue of personal jurisdiction over Joong Kwon until the completion of discovery.

I.

All defendants, other than Joong Kwon, move to dismiss plaintiff's claims for trademark dilution for failure to state a claim. These motions shall be denied.

A.

A complaint should not be dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Conley v Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). Motions to dismiss for failure to state a claim are "granted sparingly and with caution in order to make certain that plaintiff is not improperly denied a right to have his claim adjudicated on the merits." 5A Charles A. Wright & Arthur R. Miller, FEDERAL PRACTICE & PROCEDURE, CIVIL 2D § 1349 at 192-93 (1990).

Federal Rule of Civil Procedure 8(a)(2) requires only that a complaint include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). A claimant is not required to "set out in detail the facts upon which he bases his claim" so long as the claim "will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley, 355 U.S. at 47, 78 S.Ct. 99. Moreover, all well-pleaded factual allegations are assumed to be true and are viewed in the light most favorable to the plaintiff. Jenkins v. McKeithen, 395 U.S. 411, 421-22, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969). Only when the factual allegations in support of a claim are not well-pleaded (e.g., when they are "functionally illegible" or "baldly conclusory," Shuster v. Oppelman, 962 F.Supp. 394, 395 (S.D.N.Y.1997)), should they not be accepted as true and the claim dismissed.

B.

Viewing the facts in the light most favorable to plaintiff, and taking its well-pleaded allegations as true, the following constitutes the factual basis for this suit.

Rhee Bros. is a Maryland corporation. It has been in the business of importing, manufacturing, distributing, selling, marketing and otherwise promoting Asian food products in the United States. Over the last 27 years, Rhee Bros. has developed a substantial reputation and name recognition in its market, which consists of Korean and other Asian-American consumers in the United States. A substantial portion of plaintiff's business is conducted in and around Maryland, the District of Columbia, Northern Virginia and New York.

Rhee Bros. was one of the first firms in the United States to import, manufacture and distribute authentic Asian food products in the United States. Since 1978, plaintiff has been selling and distributing a hot bean paste product using the trademark (a series of Korean characters) "Soon Chang Chapssal Gochujang" (hereinafter referred to as "plaintiff's hot bean paste," and the trademark as "Soon Chang trademark"). In 1998, plaintiff registered its Soon Chang trademark with the United States Patent and Trademark Office, Registration No. 2,140,224. Further, since 1988, plaintiff has been selling and distributing a dried seaweed product using the common law trademark (a series of Korean characters) "DolGak Mi Yuk" (hereinafter referred to as "plaintiff's dried seaweed," and the trademark as "DolGak trademark").

Plaintiff has invested significant money and other resources to develop and promote its Soon Chang trademark and its DolGak trademark (hereinafter jointly referred to as "plaintiff's trademarks") using professional graphics designers and marketing personnel. Plaintiff also has invested significant financial and other resources to develop, market, promote and distribute its hot bean paste and its dried seaweed (hereinafter jointly referred to as "plaintiff's products") using newspapers, salesmen and brochures to advertise its products in Korean-American communities. Plaintiff was the first firm in the United States to introduce these products adopting these trademarks.

As a result of many years of plaintiff's continuing and substantial promotion, marketing, advertisement and investment in its products, retail customers, and general consumers in the Korean-American communities in the United States, particularly Korean-American communities in Maryland, New York and Virginia, have come to recognize plaintiff's trademarks for the high quality and reputation associated with plaintiff's products. Since Rhee Bros. introduced these products, it has enjoyed sales in the millions of dollars. Defendants were well aware of plaintiff's marketing success and its use of the trademarks.

Defendant Han Ah Reum is a Virginia corporation in the retail business of advertising, offering for sale, distributing and selling Asian food products, particularly to Korean-American communities in Virginia. Kwon, a resident of Virginia, is the owner and operator of Han Ah Reum and exercises primary responsibility for the control, management and operation of the business affairs of Han Ah Reum.

Defendant HAR Wheaton is located in Wheaton, Maryland, and is in the retail business of advertising, offering for sale, distributing and selling Asian food products in Korean-American communities in Maryland.

Defendant SSP is a New York corporation. It operates a wholesale business of advertising, importing, manufacturing, supplying, offering for sale, distributing and selling Asian food products to retail stores in Asian-American communities in the United States, including Maryland. SSP provided the allegedly infringing products to the other defendants.

In late January/early February 2001, one of plaintiff's employees visited the Han Ah Reum store located in Falls Church, Virginia. This employee purchased a jar of hot bean paste product bearing the trademark Soon Chang and a bag of dried seaweed product bearing the trademark DolGak. Subsequently, Jae D. Koh ("Koh"), the Managing Director of Rhee Bros., examined the products purchased from Han Ah Reum and determined that the trademarks on these products were identical or confusingly similar to plaintiff's trademarks.

On or about June 8, 2001, one of plaintiff's employees visited HAR Wheaton, in Wheaton, Maryland and purchased a jar of hot bean paste product bearing the trademark Soon Chang and a bag of dried seaweed product bearing the trademark DolGak. Subsequently, Koh concluded that the trademarks of these products are identical to or confusingly similar to plaintiff's trademarks.

Plaintiff alleges that defendants began using the Soon Chang and the DolGak trademarks after plaintiff's trademarks had acquired recognition and a reputation in Korean-American communities in the United States. Moreover, plaintiff alleges that defendants' trademark use causes dilution of plaintiff's trademarks by lessening the capacity of plaintiff's trademark to identify and distinguish goods among Asian food retailers and consumers in Korean-American communities.

C.

Movants' assertion, which I reject, that the complaint fails to state cognizable dilution claims, is best understood after a brief summary of the statutory context in which such claims arise. Under the Federal Trademark Dilution Act, 15 U.S.C. § 1125(c)(1) ("FTDA"),

[t]he owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial uses in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. (Emphasis added).

The term "dilution"

means the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of —

(1) competition between the owner of the famous mark and other parties, or

(2) likelihood of confusion, mistake, or deception.

15 U.S.C. § 1127.

Accordingly,...