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Arcadia Group Brands Limited, et al v. Studio Moderna Sa

August 15, 2011

ARCADIA GROUP BRANDS LIMITED, ET AL., PLAINTIFFS,
v.
STUDIO MODERNA SA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant Studio Moderna SA and Defendant Top Shop TV, LLC's (collectively referred to as "Moderna") motion to dismiss Counts I and III of the complaint, and on Plaintiff Arcadia Group Brands Limited and Plaintiff Arcadia Group (USA) Limited's (collectively referred to as "Arcadia") motion to dismiss or strike Counts I and II of the counterclaim. For the reasons stated below, Moderna's motion to dismiss is denied and Arcadia's motion to dismiss is granted.

BACKGROUND

Arcadia contends that it owns the mark "TOPSHOP" (Mark), which is used on a women's fashion brand based in the United Kingdom. Arcadia allegedly has been selling its TOPSHOP brand to United States customers since 1998. In 2002, Moderna allegedly registered a TOP SHOP TV mark to sell retail merchandise. Arcadia contends that it objected to Moderna's registration and petitioned to have the registration and application cancelled. In 2004, Arcadia and Moderna allegedly entered into an agreement (Agreement) under which Moderna agreed not use the Mark for certain brand articles of clothing, footwear or headgear in any country. According to Arcadia, in 2010 Moderna violated the Agreement when it began using the Mark to sell women's clothing to customers in the United States on Moderna's topshoptv.com website. Arcadia contends that Moderna's alleged activities will mislead and/or confuse customers as to the origin of products and that the use of the Mark by Moderna will dilute the reputation of Arcadia's brand as fashion-forward and of high quality, and will tarnish the reputation of Arcadia's TOP SHOP brand.

Arcadia includes in its complaint trademark infringement claims brought under the Lanham Act, 15 U.S.C. § 1051 et seq. (Count I), false designation of origin claims (Count II), trademark dilution claims (Count III), deceptive trade practices claims (Count IV), Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. claims (Count V), common law trademark infringement and unfair competition claims (Count VI), a cybersquatting claim (Count VII), a breach of contract claim (Count VIII), and a claim for declaratory relief (Count IX).

Moderna filed a counter claim, contending that Arcadia is engaging in overreaching, anti-competitive efforts to restrict Moderna's ability to function in the United States market through assertion of non-existent rights under the Mark. Moderna contends that Arcadia does not have superior rights over of the Mark in the United States. Moderna includes in the counterclaim a claim for declaratory relief (Count I), trademark misuse claims (Count II), and a claim seeking the cancellation of Arcadia's trademark registrations (Count III).

Moderna moves to dismiss Counts I and III of the complaint and Arcadia moves to dismiss or strike Counts I and II of the counterclaim.

LEGAL STANDARD

In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)), a court must "accept as true all of the allegations contained in a complaint" and make reasonable inferences in favor of the plaintiff. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)(stating that the tenet is "inapplicable to legal conclusions"); Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). To defeat a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (internal quotations omitted)(quoting in part Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that contains factual allegations that are "merely consistent with a defendant's liability . . . stops short of the line between possibility and plausibility of entitlement to relief." Iqbal, 129 S.Ct. at 1949 (internal quotations omitted).

DISCUSSION

I. Moderna's Motion to Dismiss

Moderna moves to dismiss the trademark infringement claims (Count I) and the trademark dilution claims (Count III).

A. Trademark Infringement Claims (Count I)

Moderna argues that Arcadia's trademark infringement claims brought under the Lanham Act are improper because Arcadia's trademark registrations were not prior to Moderna's registration of its TOPSHOP TV mark. For a trademark infringement claim, a plaintiff must establish: (1) "that its mark is protected under the Lanham Act," and (2) "that the challenged mark is likely to cause confusion among consumers." Barbecue Marx, Inc. v. 551 Ogden, Inc., 235 F.3d 1041, 1043 (7th Cir. 2000). Moderna argues that Arcadia has failed to allege facts that plausibly suggest that it has a protectable mark. Moderna claims that it has shown that it has constructive use of the TOP SHOP TV mark dating back to October 14, 2002, the filing date of Moderna's intent to use application. Moderna contends that Arcadia has claimed a first use date prior to October 14, 2002, for only two of the eight registrations alleged in the complaint. A party can obtain "a protectable right in a trademark only through use of the mark in connection with its product" and "[t]he party who first appropriates the mark through use, and for whom the mark serves as a designation of source, acquires superior rights to it." Johnny Blastoff, Inc. v. Los Angeles Rams ...


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