Project Consulting Services, Inc. v. NVI, L.L.C. et al, No. 2:2015cv01652 - Document 52 (E.D. La. 2016)
Court Description: ORDER AND REASONS DENYING 45 Motion to Strike, 47 MOTION to Dismiss for Failure to State a Claim. Signed by Judge Sarah S. Vance on 4/8/2016. (my)
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Project Consulting Services, Inc. v. NVI, L.L.C. et al Doc. 52 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA PROJ ECT CONSULTING SERVICES, INC. CIVIL ACTION VERSUS NO: 15-1652 NVI, LLC and PIPELINE SAFETY, LLC d/ b/ a PIPELINE SAFETY AND COMPLIANCE SECTION: R ORD ER AN D REASON S Plaintiff Project Consulting Services, LLC ("Project Consulting") m oves the Court to dism iss defendant Pipeline Safety, LLC's ("Pipeline Safety") counterclaim under Federal Rule of Civil Procedure 12(b)(6).1 Project Consulting also m oves to strike affirm ative defenses raised by Pipeline Safety and defendant NVI, LLC under Federal Rule of Civil Procedure 12(f).2 For the following reasons, the Court denies both m otions. I. BACKGROU N D This is a tradem ark infringem ent and unfair com petition case. Plaintiff Project Consulting is an engineering firm that provides design engineering, 1 R. Doc. 47. 2 R. Doc. 45. Dockets.Justia.com project engineering, construction m anagem ent, inspection, traceability, and records m anagem ent services for com panies in the oil and gas industry.3 Since 1992, Project Consulting has delivered its goods and services under the m arks PROJ ECT CONSULTING SERVICES and PCS.4 Project Consulting owns nine federal tradem ark registrations protecting its PROJ ECT CONSULTING SERVICES and PCS-related m arks (the "PCS Marks").5 Defendant NVI provides non-destructive testing, inspection, stress relieving, mechanical integrity, and project m anagem ent services.6 According to Project Consulting, NVI established defendant Pipeline Safety in or around 20 10 to provide traceability and records m anagem ent services.7 After its form ation, Pipeline Safety allegedly began trading under the nam e "Pipeline Safety and Com pliance."8 According to Project Consulting, custom ers and vendors inevitably shorten this nam e to "PSC"--an abbreviation that, Project Consulting contends, is confusingly sim ilar to Project Consulting's PCS 3 R. Doc. 37 at 2. 4 Id. at 3. 5 Id. at 3-6. 6 Id. at 6; see also R. Doc. 39 at 4 (NVI, LLC's answer, adm itting plaintiff's allegation). 7 Id. at 7. 8 Id. 2 Marks.9 Project Consulting alleges that NVI and Pipeline Safety adopted the "Pipeline Safety and Com pliance" or "PSC" nam e in an intentional effort to trade on Project Consulting's goodwill in the engineering and construction industries.10 On April 17, 20 15, Project Consulting sent defendants a cease and desist letter, but defendants continued their alleged m isconduct.11 On May 18, 20 15, Project Consulting filed this lawsuit against NVI and Pipeline Safety.12 In its Second Am ended Com plaint, Project Consulting alleges tradem ark infringem ent and false designation of origin under the Lanham Act.13 NVI and Pipeline Safety each filed an answer, in which each defendant asserts five affirm ative defenses.14 Pipeline Safety also filed a counterclaim seeking cancellation of Project Consulting's federal registration of four of the PCS Marks.15 According to Pipeline Safety, the PCS Marks are not entitled to tradem ark protection because they are m erely descriptive of 9 Id. 10 Id. at 7-8. 11 Id. at 8. 12 R. Doc. 1. 13 R. Doc. 37. 14 R. Docs. 38, 39. 15 R. Doc. 44. 3 Project Consulting's goods and services and have not attained secondary m eaning. Project Consulting m oves to dism iss Pipeline Safety's counterclaim under Federal Rule of Civil Procedure 12(b)(6).16 Project Consulting also m oves to strike three of defendants' affirm ative defenses on the grounds that they are inadequately pleaded and inject redundant and im m aterial issues.17 II. LEGAL STAN D ARD A. Mo tio n to D is m is s To survive a Rule 12(b)(6) m otion to dism iss, the plaintiff m ust plead enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 570 (20 0 7)). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the m isconduct alleged." Id. A court m ust accept all well-pleaded facts as true and m ust draw all reasonable inferences in favor of the plaintiff. Lorm and v. U.S. Unw ired, Inc., 565 F.3d 228, 239 (5th Cir. 16 R. Doc. 47. 17 R. Doc. 45. 4 20 0 9). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678. A legally sufficient com plaint need not contain detailed factual allegations, but it m ust go beyond labels, legal conclusions, or form ulaic recitations of the elem ents of a cause of action. Id. In other words, the face of the com plaint m ust contain enough factual m atter to raise a reasonable expectation that discovery will reveal evidence of each element of the plaintiff's claim . Lorm and, 565 F.3d at 257. If there are insufficient factual allegations to raise a right to relief above the speculative level, or if it is apparent from the face of the com plaint that there is an insuperable bar to relief, the claim m ust be dism issed. Tw om bly , 550 U.S. at 555. B. Mo tio n to Strike Federal Rule of Civil Procedure 12(f) allows the court to strike "from any pleading any insufficient defense or any redundant, im m aterial, im pertinent, or scandalous m atter." Fed. R. Civ. P. 12(f). A m otion to strike under Rule 12(f) "is a drastic rem edy to be resorted to only when required for the purposes of justice." Augustus v. Bd. of Pub. Instruction of Escam bia Cnty ., Fla., 30 6 F.2d 862, 868 (5th Cir. 1962); see also Kaiser Alum inum & Chem . Sales, Inc. v. Avondale Shipy ards, Inc., 677 F.2d 10 45, 10 57 (5th Cir. 1982) ("[M]otions to strike a defense are generally disfavored."); Sy nergy Mgm t., LLC v. Lego 5 Juris A/ S, No. 0 7– 5892, 20 0 8 WL 4758634, at *1 (E.D. La. Oct. 24, 20 0 8) ("[M]otions to strike m ade under Rule 12(f) are viewed with disfavor by the federal courts, and are infrequently granted."). Even when m otions to strike are well-founded, they are not to be granted "in the absence of a showing of prejudice to the m oving party." Abene v. Jay bar, 80 2 F. Supp. 2d 716, 723 (E.D. La.20 11). III. D ISCU SSION A. Pro je ct Co n s u ltin g's Mo tio n to D is m is s Pip e lin e Safe ty's Co u n te rclaim In its counterclaim , Pipeline Safety seeks cancellation of Project Consulting's registration of four of the PCS Marks. According to Pipeline Safety, the challenged PCS Marks are "descriptive" m arks that, having failed to acquire secondary m eaning, are not entitled to tradem ark protection.18 Project Consulting m oves to the dism iss for failure to state a claim . In any lawsuit involving a registered tradem ark, a district court has the power to cancel the registration of m arks that are not legally protectable. 15 U.S.C. § 1119 ("In any action involving a registered m ark the court m ay . . . order the cancellation of registrations. . . ."); Nola Spice Designs, L.L.C. v. 18 R. Doc. 44 at 2-3. 6 Hay del Enterps., Inc., 783 F.3d 527, 537 (5th Cir. 20 15). To be protectable, "a m ark m ust be capable of distinguishing the applicant's goods from those of others, or stated another way, a m ark m ust be distinctive." Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 566 (5th Cir. 20 0 5) (quoting Sugar Busters, LLC v. Brennan, 177 F.3d 258, 267– 68 (5th Cir. 1999)). A m ark is inherently distinctive "if its intrinsic nature serves to identify a particular source" of a product. W al-Mart Stores, Inc. v. Sam ara Bros., 529 U.S. 20 5, 210 (20 0 0 ). In the context of word m arks, m arks that are "arbitrary," ("Cam el" cigarettes), "fanciful" ("Kodak" film), or "suggestive" ("Tide" laundry detergent) are inherently distinctive and entitled to protection. Test Masters, 428 F.3d at 566 (citing Tw o Pesos, Inc. v. Taco Cabana, Inc., 50 5 U.S. 763, 768 (1992)). "Descriptive" m arks, by contrast, are not inherently distinctive. Nola Spice, 783 F.3d at 537. A descriptive m ark "identifies a characteristic or quality of an article or service, such as its color, odor, function, dim ensions, or ingredients." Am azing Spaces, Inc. v. Metro Mini Storage, 60 8 F.3d 225, 241 (5th Cir. 20 10 ) (quoting Zatarains, Inc. v. Oak Grove Sm okehouse, Inc., 698 F.2d 786, 790 (5th Cir. 1983), abrogated on other grounds, KP Perm anent Make-Up, Inc. v. Lasting Im pression I, Inc., 543 U.S. 111 (20 0 4)). As the Fifth Circuit has explained, "[e]xam ples of descriptive m arks would include 'Alo' 7 with reference to products containing gel of the aloe vera . . . and 'Vision Center' in reference to a business offering optical goods and services." Zatarains, 698 F.2d at 790 . Because descriptive m arks do not inherently identify a product's source, they are protectable as tradem arks only if they have acquired "secondary m eaning." Test Masters, 428 F.3d at 566. A descriptive m ark acquires secondary m eaning "when, in the m inds of the public, the prim ary significance of the m ark is to identify the source of the product rather than the product itself." Nola Spice, 783 F.3d at 543 ; see also Zatarains, 698 F.2d at 795. While Project Consulting's registration of the challenged m arks with the Patent and Trade Office constitutes prim a facie evidence of their validity, Pipeline Services m ay rebut this presum ption by establishing that the m arks are not inherently distinctive. Am azing Spaces, 60 8 F.3d at 237. In its counterclaim , Pipeline Services alleges that Project Consulting's registration of four of the PCS Marks should be cancelled because the m arks are descriptive m arks that have not acquired secondary m eaning. Project Consulting raises two argum ents for dism issal. First, Project Consulting argues that Pipeline Safety has failed to allege sufficient facts to support 8 cancellation of the challenged m arks.19 "Threadbare recitals of a cause of action's elem ents" are insufficient to withstand a m otion to dism iss. Iqbal, 556 U.S. at 663. Pipeline Safety, however, rests its claim on allegations of fact about the words of the PCS m arks and the products and services to which the m arks are applied. It alleges, for instance, that Project Consulting provides goods and services under its m arks--engineering and project services, data collection, construction m anagem ent software, etc.--that are properly characterized as "project consulting services."20 It further alleges that the m arks have not attained secondary m eaning because purchasers do not associate the m arks with Project Consulting alone.21 Based on these factual allegations, Pipeline Safety has sufficiently pleaded a claim for cancellation of Project Consulting's registration of the challenged PCS Marks.22 See Aureflam 19 R. Doc. 47-1 at 8-10 . 20 R. Doc. 44 at 2. 21 Id. at 3. 22 This holds true for the PCS Marks that em ploy the words "project consulting services," as well as the m arks that use the letters "PCS." In its counterclaim , Pipeline Safety alleges that "PCS" is "sim ply the acronym for project consulting services . . . [and] m erely describe the characteristics and types of goods and services provided under the m arks. . . ." R. Doc. 44 at 3. Taking this allegation as true, and drawing all reasonable inferences in Pipeline Safety's favor, the counterclaim sufficiently pleads a claim for cancellation of the m arks containing an abbreviation of the allegedly descriptive term . See Society of Fin. Exam iners v. Nat'l Ass'n of Certified Fraud Exam iners Inc., 41 F.3d 223, 227 n. 5 (5th Cir. 1995) ("[I]f the full nam e is generic, an abbreviation is treated sim ilarly."); see also J . Thom as McCarthy, McCarthy on Tradem arks and Unfair Com petition § 7:11 (4th ed.) ("If a series of letters is m erely a recognizable abbreviation 9 Corp. v. Pho Hoa Phat I, Inc., 375 F. Supp. 2d 950 , 953 (N.D. Cal. 20 0 5) (denying m otion to dism iss tradem ark cancellation claim when claim ant provided factual allegations concerning the m eaning of the allegedly generic term ). Project Consulting's second argum ent, which it also raises in its m otion to strike, is that Pipeline Safety m ade a judicial adm ission in an earlier brief that precludes its argum ent that the PCS Marks are descriptive in nature.23 In an earlier version of its counterclaim , Pipeline Safety alleged that the challenged PCS Marks were either descriptive or generic. After Project Consulting m oved to dism iss, Pipeline Safety argued in opposition that "Project Consulting Services' m arks . . . tell consum ers nothing of who Project Consulting Services is or even what it does."24 Contrary to Project Consulting's assertion, this statem ent does not constitute a judicial adm ission that the PCS m arks are not descriptive. To qualify as a judicial adm ission, a statem ent m ust be "deliberate, clear, and unequivocal." Heritage Bank v. Redcom Laboratories, Inc., 250 F.3d 319, 329 for a descriptive or generic term , the abbreviation is also classified as descriptive or generic."). 23 R. Doc. 47-1 at 6. 24 R. Doc. 19 at 1. 10 (5th Cir. 20 0 1). The statem ent in Pipeline Safety's brief does not m eet this standard. Although Pipeline Safety asserted that the PCS Marks "tell consum ers nothing" about Project Consulting's services, it argued in the sam e brief that the PCS Marks are descriptive, lacking in secondary m eaning, and not entitled to tradem ark protection.25 In addition, Pipeline Safety has since am ended its counterclaim . Although it has rem oved its allegation that the PCS Marks are generic, Pipeline Safety continues to claim that the challenged m arks are m erely descriptive of Project Consulting's goods and services. Under these circum stances, Pipeline Safety's claim that PCS Marks "tell consum ers nothing" does not constitute an "deliberate, clear, and unequivocal" adm ission against the position that Pipeline Safety has taken throughout this lawsuit--that the PCS Marks are descriptive and not entitled to trademark protection. Id.; see also United States v. Chavez-Hernandez, 671 F.3d 494, 50 1 (5th Cir. 20 12) ("[F]or a statem ent of counsel to qualify as a judicial adm ission it m ust be m ade intentionally as a waiver, releasing the opponent from proof of fact."); Mar. Madness Athletic Ass'n, L.L.C. v. N etfire, Inc., 310 F. Supp. 2d 786, 811 (N.D. Tex. 20 0 3), judgm ent entered, No. 3:0 0 -CV-0 398-R, 20 0 3 WL 22173299 (N.D. Tex. Sept. 18, 20 0 3), and aff'd 25 Id. at 6 (arguing that Pipeline Services has adequately alleged that Project Consulting's m arks are either "generic or descriptive and lacking in secondary m eaning"). 11 sub nom . 120 F. App'x 540 (5th Cir. 20 0 5) (refusing to treat statem ent that "can be construed to m ean different things" as a conclusive judicial adm ission). Moreover, it is "well-established that trial judges are given broad discretion to relieve parties from the consequences of judicial adm issions in appropriate cases." Kiln Underw riting Ltd. v. Jesuit High Sch. of New Orleans, No. CIV.A. 0 6-4350 , 20 0 8 WL 4724390 , at *12 (E.D. La. Oct. 24, 20 0 8) (quoting Electric Mobility Corp. v. Bourns Sensors/ Controls, Inc., 87 F. Supp. 2d 394, 40 6 (D.N.J . 20 0 0 )). This is such a case. Even if Pipeline Safety's statem ent could be interpreted as a judicial adm ission, the statem ent appeared in a brief that Pipeline Safety filed at an early stage of this litigation and that is now m oot because the parties am ended their pleadings. Its earlier statem ent notwithstanding, Pipeline Safety's live pleadings plausibly allege that the challenged PCS Marks are descriptive. And Project Consulting has not shown that it was prejudiced by Pipeline Safety's earlier assertion. Thus, the Court finds it inappropriate to resolve an im portant issue of trademark validity on the basis of a single sentence in an opposition brief. See id. ("Litigation is not a gam e of 'gotcha,' and the Court declines to resolve a hotly contested coverage issued based on an honest m istake."). The Court therefore finds that Pipeline Safety's claim that the challenged PCS Marks are descriptive is not 12 barred by any supposed adm ission of non-descriptiveness. Project Consulting's m otion to dism iss Pipeline Safety's counterclaim is denied. B. Pro je ct Co n s u ltin g's D e fe n s e s Mo tio n to Strike Affirm a tive Project Consulting also m oves to strike certain affirmative defenses from answers filed by defendants Pipeline Safety and NVI. Specifically, Project Consulting asks the Court to strike the second, third, and fifth affirm ative defenses pleaded by each defendant. In both defendants' answers, the second affirm ative defense is that four of Project Consulting's PCS Marks are not protectable because they are descriptive m arks that have not acquired secondary m eaning. The allegations in the answers are nearly identical to the allegations in Pipeline Safety's counterclaim --as are Project Consulting's argum ents for why the defenses are insufficient.26 Project Consulting's argum ents therefore fail for the reasons discussed above, and its m otion to strike the second affirm ative defense is denied. Thus, the only remaining issue is whether the Court should strike each defendant's third affirm ative defense (no likelihood of confusion) and/ or fifth affirm ative defense (no entitlem ent to Pipeline Safety's and NVI's profits). 26 Com pare R. Doc. 44 at 2-3 w ith R. Doc. 38 at 10 -11; R. Doc. 39 at 39 at 9. 13 Although Federal Rule of Civil Procedure 12(f) allows the Court to strike affirm ative defenses, such m otions are disfavored and should not be granted "in the absence of a showing of prejudice to the m oving party." Abene, 80 2 F. Supp. 2d at 723 (citing 5C Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1381 (3d ed. 20 0 4)). Project Consulting argues that the third and fifth affirm ative defenses do not actually assert defenses but, rather, repeat defendants' denials of the allegations in Project Consulting's com plaint. Whatever the m erits of this argum ent, Project Consulting has not shown that it would be prejudiced by denial of its m otion to strike the challenged defenses. Project Consulting vaguely suggests that if the defenses are not stricken, it will be forced to engage in "unnecessary discovery."27 But according to Project Consulting's argum ent--that the defenses are redundant denials of the allegations in its com plaint--the challenged portions of defendants' answers go to elem ents of Project Consulting's own claim s, on which the parties are already required to engage in discovery. Absent som e plausible showing of prejudice, Project Consulting's m otion to strike affirm ative defenses three and five m ust be denied. See id. (denying m otion to strike defenses because plaintiff failed to show prejudice). 27 R. Doc. 45-1 at 11, 12. 14 IV. CON CLU SION For the foregoing reasons, Project Consulting's m otion to dism iss Pipeline Service's counterclaim is DENIED. Project Consulting's m otion to strike defendants' affirm ative defenses is DENIED. 8th New Orleans, Louisiana, this _ _ _ day of April, 20 16. _______________________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 15
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