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Edward F. Richards v. Burgett

April 4, 2011

EDWARD F. RICHARDS, PLAINTIFF,
v.
BURGETT, INC., BURGETT BROTHERS, INC., AND AMERICA SEJUNG CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge George W. Lindberg

MEMORANDUM OPINION AND ORDER

Plaintiff Edward F. Richards filed this action against defendants Burgett, Inc., Burgett Brothers, Inc. ("Burgett Brothers"), and America Sejung Corporation ("ASC"). Before the Court are Burgett Brothers' and ASC's motions to dismiss, and ASC's request for judicial notice. For the reasons stated below, ASC's request for judicial notice is granted, and the motions to dismiss are denied.

I. Background

According to the complaint, in 1996 Burgett, Inc. and Burgett Brothers (collectively, "the Burgett Companies") acquired common law rights in the GEORGE STECK trademarks, which are marks used in connection with pianos. The Burgett Companies filed applications for these marks on the Supplemental and Principal Registers.

The complaint further alleges that in 2001, the Burgett Companies agreed to sell their rights in the GEORGE STECK marks to plaintiff for $100,000. Plaintiff paid $33,500 toward the purchase. On February 19, 2002, the Burgett Companies executed a sales agreement relating to the GEORGE STECK marks, as well as agreements assigning all right, title and interest to the GEORGE STECK marks to plaintiff. However, executed copies of the assignments were never delivered to plaintiff. According to plaintiff, he did not learn of the assignments until September 2010, through discovery in another case in this district, Persis International, Inc. v. Burgett, Inc., 09 C 7451. The Burgett Companies did not return the $33,500 plaintiff paid them. According to the complaint, despite this assignment of the rights in the GEORGE STECK marks to plaintiff, in 2003 the Burgett Companies licensed use of the GEORGE STECK marks to defendant ASC. ASC began advertising and selling pianos bearing the GEORGE STECK marks in 2003, and continues to do so today. The complaint alleges claims of trademark infringement and unfair competition under the Lanham Act, as well as claims under Illinois law.

II. Analysis

A. Burgett Brothers' motion to dismiss for lack of subject matter jurisdiction

The Court first considers Burgett Brothers' motion to dismiss for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1). Burgett Brothers states that it owned no rights in the GEORGE STECK marks and was not involved in the alleged assignment of the marks to plaintiff. Burgett Brothers argues that because there is no factual connection between it and plaintiff's claims, plaintiff cannot hale it into court in this controversy. Burgett Brothers characterizes this issue as a question of whether it -- Burgett Brothers -- has standing to be sued in this case.

"In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Lac du Flambeau Band of Lake Superior Chippewa Indians v. Norton, 422 F.3d 490, 495 (7th Cir. 2005) (quoting Warth v. Seldin, 422 U.S. 490, 498 (1975)). Here, Burgett Brothers is not arguing that plaintiff lacks standing to bring his claims, but rather that Burgett Brothers lacks standing to be sued because plaintiff cannot establish that Burgett Brothers owned the marks at issue. Burgett Brothers cites no authority in support of its argument that a claim should be dismissed for lack of subject matter jurisdiction because the claim would fail on the merits. Burgett Brother's argument does not implicate standing or subject matter jurisdiction, and is not a proper ground for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1). Burgett Brothers' Rule 12(b)(1) motion to dismiss is denied.

B. ASC's motion to dismiss for failure to state a claim

Next, the Court turns to ASC's motion to dismiss for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering this motion, the Court accepts as true all well-pleaded factual allegations in the complaint, and draws reasonable inferences in plaintiff's favor. See Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). The complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In considering plaintiff's allegations, the Court "should not accept as adequate abstract recitations of the elements of a cause of action or conclusory legal statements." See Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).

1. Statute of limitations

ASC first argues that plaintiff's claims against it should be dismissed because they are time-barred. Although ASC frames its argument as a statute of limitations issue, it is more accurately framed as a laches issue, since the Lanham Act does not contain a statute of limitations. See Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 821 (7th Cir. 1999). "The doctrine of laches is derived from the maxim that those who sleep on their rights, lose them."

Chattanoga Mfg., Inc. v. Nike, Inc., 301 F.3d 789, 792 (7th Cir. 2002). Laches is an affirmative defense, and as such need not be anticipated in the complaint. See Flentye v. Kathrein, 485 F. Supp. 2d 903, 916 (N.D. Ill. 2007). Because a laches defense is highly fact-dependent, it ordinarily should not be determined on a motion to dismiss. See id. at 916-17. However, it is appropriate to dismiss a claim as time-barred when the complaint "plainly reveals that an action is untimely." See U.S. v. Lewis, 411 F.3d 838, 842 (7th Cir. 2005).

To establish laches, ASC must show that plaintiff had knowledge of ASC's allegedly infringing use of the marks, that plaintiff inexcusably delayed taking action based on that use, and that ASC would be prejudiced if plaintiff is allowed to assert his rights at this time. See Chattanoga Mfg., Inc., 301 F.3d at 792-93. As ASC observes, federal courts refer to the three-year statute of limitations found in the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/10a(e), in assessing ...


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