Varsity Spirit LLC v. Varsity Tutors, LLC

• Decision Date: 28 April 2022
• Docket Number: Civil Action 3:21-CV-0432-D
• Court: U.S. District Court — Northern District of Texas
• Parties: VARSITY SPIRIT LLC, VARSITY BRANDS, LLC, and VARSITY SPIRIT FASHIONS & SUPPLIES, LLC, Plaintiffs-Counterdefendants, v. VARSITY TUTORS, LLC Defendant-Counterplaintiff, and VERITAS PREP LLC, Defendant.

VARSITY SPIRIT LLC, VARSITY BRANDS, LLC, and VARSITY SPIRIT FASHIONS & SUPPLIES, LLC, Plaintiffs-Counterdefendants, v. VARSITY TUTORS, LLC Defendant-Counterplaintiff, and VERITAS PREP LLC, Defendant.

Civil Action No. 3:21-CV-0432-D

United States District Court, N.D. Texas, Dallas Division

April 28, 2022

MEMORANDUM OPINION AND ORDER

SIDNEY A. FITZWATER, SENIOR JUDGE

Plaintiffs-counterdefendants Varsity Spirit LLC (“Varsity Spirit”), Varsity Brands, LLC (“Varsity Brands”), and Varsity Spirit Fashions & Supplies, LLC^[1] (“Varsity Spirit Fashions”) (collectively, “Varsity, ” unless the context indicates otherwise) sue defendantcounterplaintiff Varsity Tutors LLC (“Varsity Tutors”) and defendant Veritas Prep LLC (“Veritas”) to recover on federal- and state-law trademark infringement and related claims. Veritas moves to dismiss the claims against it under Fed.R.Civ.P. 12(b)(6). For the reasons explained, the court denies the motion.

I

Varsity is a company that hosts cheerleading and dance tournaments and camps.^[2] Its annual competitions feature more than one million competitors, and its camp offerings, which include cheer, dance, and band instruction, provide training to over 350, 000 students nationwide, making Varsity the “largest camp operator in the world.” 2d Am Compl. ¶ 24. In addition to its hosted competitions and camps, Varsity sells apparel to over one million athletes-making it the world's leading designer and manufacturer of cheerleading and dance uniforms. Varsity also provides “online instructional programs” through a variety of media, including its web-based platform entitled “Varsity University, ” and an online library.

Varsity has registered United States trademarks for its “VARSITY” marks and its unique “V” logo. Its “V” logo is reproduced here in black and in its oft-used scheme, blue and black:^[3]

[Image Omitted] Its marks-including the “V” logo-have become “widely recognized by the general consuming public.” Id. at ¶ 41. The marks have been used to promote Varsity's brand and feature on all of its paper, email, Internet, and social media advertising materials. They appear at Varsity's events and camps as well.

Veritas is a company that offers test prep and tutoring services, including via online platforms, for standardized tests and other topics.^[4] Veritas has a similar clientele to Varsity (students) and offers similar services. Veritas used this logo to market its products:^[5]

[Image Omitted] Varsity Spirit originally filed this suit by itself, against only Varsity Tutors.^[6] Varsity Tutors moved to dismiss. Before the court ruled on the motion, Varsity Spirit amended its complaint, adding Varsity Brands and Varsity Spirit Fashions as plaintiffs. Varsity Tutors moved again to dismiss, and the court granted the motion in part and denied it in part, and also granted Varsity leave to amend. Varsity then filed a second amended complaint, adding Veritas-an affiliate company of Varsity Tutors-as a defendant.^[7] Varsity Tutors counterclaims against all three plaintiffs.^[8] Veritas now moves to dismiss Varsity's action against it under Rule 12(b)(6). Varsity opposes the motion. The court is deciding the motion on the briefs.

II

In deciding a Rule 12(b)(6) motion, the court evaluates the sufficiency of Varsity's second amended complaint by “accept[ing] ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (internal quotation marks omitted). To survive Veritas' motion to dismiss, Varsity must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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 (2009). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.; see also Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise the right to relief above the speculative level[.]”). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘shown'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679 (quoting Rule 8(a)(2)) (alteration omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 678 (citation omitted).

III

The court turns first to Veritas' motion to dismiss Varsity's^[9] claims for trademark infringement under the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a).^[10]

A

To prevail on a federal trademark infringement claim, Varsity must show “(1) ownership of a legally protectable mark and (2) a likelihood of confusion created by an infringing mark.” All. for Good Gov't v. Coal. for Better Gov't, 901 F.3d 498, 505 (5th Cir. 2018); John Crane Prod. Sols., Inc. v. R2R & D, LLC, 2012 WL 1571080, at *2 (N.D. Tex. May 4, 2012) (Fitzwater, C.J.). “Under the Lanham Act, infringement exists if a person ‘uses (1) any reproduction, counterfeit, copy, or colorable imitation of a mark; (2) without the registrant's consent; (3) in commerce; (4) in connection with the sale, offering for sale, distribution, or advertising of any goods; (5) where such use is likely to cause confusion, or to cause mistake or to deceive.'” TGI Friday's, Inc. v. Great Nw. Rest., Inc., 652 F.Supp.2d 763, 767 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008))

B

Veritas challenges the first element, contending that Varsity's federal and state trademark-related claims must be dismissed because Varsity has no “exclusive right to the letter V per se.” D. Mot. Dis. (ECF No. 65) at 15.^[11] Veritas maintains that, “[p]utting aside that Plaintiff Varsity Spirit does not actually use an unstylized, block letter ‘V' but instead only uses highly-stylized and curved designs of a letter ‘V, '” id., Varsity cannot prevent others from using the letter “V” because the public does not associate the letter with Varsity as a source identifier. Veritas also points to a variety of other marks that use a “V, ” which Veritas suggests shows that Varsity's highly stylized “V” logo lacks secondary meaning and is not distinctive.^[12]

Varsity responds that Veritas has misread its second amended complaint. Varsity contends that it only sues Varsity Tutors for breach of contract, and it does so based on a contractual provision that protects exclusive use of the letter “V.” Against Veritas, Varsity asserts federal- and state-law trademark and common law infringement claims based on its highly-stylized “V” mark. And Varsity posits that its registration of this mark is prima facie evidence that the mark is inherently distinctive, satisfying the first element of its claim; Varsity maintains that Veritas cannot challenge this presumption at the motion to dismiss stage, but, even if it could, that Varsity has plausibly pleaded distinctiveness or secondary meaning.

To satisfy the first element of its trademark infringement claim, Varsity must plausibly plead that its “mark [is] distinctive, either inherently or by achieving secondary meaning in the mind of the public.” Am. Rice, 518 F.3d at 329. Registration of a mark is prima facie evidence that the mark is inherently distinctive. Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 537 (5th Cir. 2015).^[13]

Varsity alleges in the second amended complaint that Veritas has infringed Varsity's highly-stylized “V” logo (not the unregistered letter “V”), which Varsity pleads is registered with the United States Patent and Trademark Office. At the motion to dismiss stage, Varsity's pleading of ownership and registration of its highly-stylized “V” logo raises a presumption of inherent distinctiveness and is sufficient for the court to conclude that Varsity has plausibly pleaded the first element of its trademark infringement claim. See Cat & Dogma, LLC v. Target Corp., 2021 WL 4726593, at *2 (5th Cir. Oct. 8, 2021) (per curiam) (“Target attempts to rebut the presumptive validity afforded by Dogma's registration .... [But] these arguments are premature. Reaching this issue would require us to look beyond the pleadings to make a factual determination and is thus inappropriate on a motion to dismiss.”); Heritage All. v. Am. Policy Roundtable, 2019 WL 3305609, at *5 (W.D. Tex. July 23, 2019) (“At this stage, Heritage's registration of the logo mark, which is ‘prima facie evidence' that the mark is distinctive, suffices to plausibly allege its distinctiveness.” (citation omitted)); Weems Indus., Inc. v. Teknor Apex Co., 540 F.Supp.3d 839, 852 (N.D. Iowa 2021) (“[T]he fact that Weems was able to register chartreuse as a trademark on the principal register is sufficient to find that it has plausibly pleaded that the trademark is protectable ....”); see also Thurber v. Finn Academy: An Elmira Charter Sch., 2022 WL 303795, at *5 (W.D.N.Y. Feb. 2, 2022) (“[T]here are significant questions regarding Plaintiff's registration of the Mark . . . [h]owever, at this stage of the proceedings, the Court cannot say as a matter of law that the presumption of protectability created by the PTO's issuance of a registration for the Mark has been rebutted.”); A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, LLC, 131 F.Supp.3d 196, 214-15 (S.D.N.Y. 2015).^[14]

C

Veritas contends that Varsity has not met the second element of its trademark infringement claim and that each factor in the...