United States District Court, N.D. Illinois, Eastern Division
REPUBLIC TECHNOLOGIES NA, LLC and REPUBLIC TOBACCO, L.P., Plaintiffs,
BBK TOBACCO & FOODS, LLC d/b/a HBI INTERNATIONAL, Defendant.
MEMORANDUM OPINION AND ORDER
E. Bucklo United States District Judge
me is a motion by defendant BBK Tobacco & Foods LLP,
d/b/a HBI International (“HBI”) to dismiss Count
VI of the Second Amended Complaint (SAC) filed by plaintiffs
Republic Technologies (NA), LLC and Republic Tobacco, L.P.
(together, “Republic”). Also before me is
Republic's motion to strike certain allegations in the
amended counterclaims filed by HBI. For the reasons below,
HBI's motion is granted in part and denied in part, and
Republic's motion is denied.
a trademark dispute between two makers of cigarette rolling
papers. Republic markets its rolling papers under the
trademark “OCB”; HBI markets its papers and other
products under the trademark “RAW.” Republic
initially sued HBI in this court seeking a declaratory
judgment that it had not infringed any trade dress rights
that HBI may possess. It subsequently amended its complaint
to include causes of action for unfair competition under the
Lanham Act, 15 U.S.C. § 1125(a); common law unfair
competition; and violation of the Illinois Uniform Deceptive
Trade Practices Act (IUDTPA), 815 ILCS 510/1 et seq.
unsuccessfully moving to transfer the suit to Arizona,
see Republic Techs. (NA), LLC v. BBK Tobacco & Foods,
LLC, No. 16 C 3401, 2016 WL 6248187, at *4 (N.D. Ill.
Oct. 26, 2016), HBI filed counterclaims against Republic for
trademark infringement, 15 U.S.C. § 1114; false
designation of origin, unfair competition, and false
advertising under 15 U.S.C. § 1125(a); common law
trademark infringement and unfair competition; federal
copyright infringement; and violation of the IUDTPA.
later amended its complaint a second time to include a claim
for cancelation of HBI's Raw trademarks pursuant to 15
U.S.C. § 1119. The claim alleges that HBI's
trademarks must be canceled because they are “used with
goods that are marketed, promoted and sold for use with
marijuana.” SAC ¶ 81. HBI subsequently amended its
counterclaims to include allegations that Republic's OCB
papers are marketed for use with marijuana. Unlike Republic,
however, HBI stopped short of asserting a claim for
cancelation of Republic's mark.
moved to dismiss Republic's trademark-cancelation claim.
In the alternative, it seeks leave to file an amended
counterclaim seeking cancelation of Republic's trademark.
Republic has filed a motion to strike the allegations in
HBI's amended counterclaims regarding the marketing of
its papers for use with marijuana.
Lanham Act provides that “[i]n any action involving a
registered mark the court may determine the right to
registration, order the cancelation of registrations, in
whole or in part, restore canceled registrations, and
otherwise rectify the register with respect to the
registrations of any party to the action.” 15 U.S.C.
§ 1119. Republic argues that HBI's trademarks should
be canceled on two grounds: (1) because the marks are used in
unlawful commerce (i.e., they are used for the consumption of
marijuana); and (2) because, by failing to disclose this
information to the U.S. Patent and Trademark Office (USPTO)
in its trademark applications, HBI obtained the marks through
fraud. I consider each of these asserted bases for
Unlawful Use in Commerce
have “held that only lawful use in commerce can give
rise to trademark priority.” S. California Darts
Ass'n v. Zaffina, 762 F.3d 921, 931 (9th Cir. 2014)
(quotation marks omitted); United Phosphorus, Ltd. v.
Midland Fumigant, Inc., 205 F.3d 1219, 1225 (10th Cir.
2000); see also In Re Morgan Brown, 119 U.S.P.Q.2d
1350 (T.T.A.B. July 14, 2016) (“We have consistently
held that, to qualify for a federal service mark
registration, the use of a mark in commerce must be
lawful.”) (quotation marks omitted). Thus, “any
goods for which a mark is used must not be illegal under
federal law.” In Re Jj206, LLC, DBA Juju
Joints, 120 U.S.P.Q.2d 1568 (T.T.A.B. Oct. 27, 2016)
(quotation marks and ellipsis omitted). Where a
trademark's use in commerce is not lawful, the mark may
be canceled. See, e.g., CreAgri, Inc. v. USANA
Health Scis., Inc., 474 F.3d 626, 634 (9th Cir. 2007)
(cancelation of trademark was proper where product was
mislabeled in violation of federal requirements).
argues that the RAW marks violate the Controlled Substances
Act (CSA), 21 USC § 801 et seq. Specifically,
Republic contends that the goods sold under the RAW trademark
constitute drug paraphernalia, which the CSA defines as
“any equipment, product, or material of any kind which
is primarily intended or designed for use in manufacturing,
compounding, converting, concealing, producing, processing,
preparing, injecting, ingesting, inhaling, or otherwise
introducing into the human body a controlled
substance.” 21 U.S.C. § 863(d). The CSA sets forth
a number of factors to be considered in determining whether
an item constitutes drug paraphernalia, including
“national and local advertising concerning its use,
” “the manner in which the item is displayed for
sale, ” and “expert testimony concerning its
use.” 21 U.S.C. § 863(e). In addition, the Act
contains an exemption for “any item that, in the normal
lawful course of business, is imported, exported,
transported, or sold through the mail or by any other means,
and traditionally intended for use with tobacco products,
including any pipe, paper, or accessory.” 21 U.S.C.
points out, it has registered the RAW trademark for at least
fifteen different products. Neither Republic's complaint
nor its response brief makes clear which of these products
are at issue in Count VI. Some of the products -- such as
HBI's rolling papers -- almost certainly fall within
§ 863(f)(2)'s exemption for products traditionally
intended for use with tobacco products. Republic asserts that
“many of the RAW products, including papers and other
items described and depicted in the Second Amended Complaint,
do not fall within the exemption and are illegal under
federal law.” See Pl.'s Resp. Br. at 2. In
support of this claim, however, the only example Republic
cites is of rolling papers that have been made into
pre-formed “cones.” This example is inapt because HBI
does not have a registered trademark for rolling paper cones.
See Def.'s Counterclaims, Ex. B; see
also Def.'s Reply Br. at 2.
Republic identifies at least one HBI trademarked product -- a
vaporizer -- that does not incontrovertibly fall under the
exemption. In some contexts, vaporizers have been deemed drug
paraphernalia. Cf. In Re Jj206, LLC, DBA Juju
Joints, 120 U.S.P.Q.2d 1568 (T.T.A.B. Oct. 27, 2016)
(affirming refusal to register trademark for use with
marijuana vaporizing devices). Whether HBI's device
constitutes drug paraphernalia is a factual question that
cannot be resolved at the motion-to-dismiss stage. See,
e.g., United States v. Assorted Drug
Paraphernalia, 90 F.Supp.3d 1222, 1229 (D.N.M. 2015)
(denying summary judgment on forfeiture claim on the ground
that genuine dispute of material fact as to whether scales
and other items were drug paraphernalia within the meaning of
§ 863(d)). Because I cannot say as a matter of law that
none of ...