Sream, Inc. v. Superior Discount, LLC, No. 2:2017cv08177 - Document 98 (E.D. La. 2019)
Court Description: ORDER AND REASONS - The 90 Motion to Dismiss Counterclaims filed by Sream Inc. and Roor International BV is GRANTED IN PART AND DENIED IN PART. The counter-claim asserted by Quicky's Discount for abuse of process is dismissed with prejudice for failure to state a claim. The counter-claims for cancellation of the trademarks and a declaration of invalidity remain. Signed by Judge Susie Morgan on 5/15/19.(Reference: 17-8243)(sbs)
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Sream, Inc. v. Superior Discount, LLC Doc. 98 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A SREAM, IN C., Plain tiff CIVIL ACTION VERSU S N O. 17-8 177 c/ w 17-8 179 , 17-8 18 0 , 17-8 18 4 , 17-8 18 6 , 17-8 19 1, 17-8 19 3 , 17-8 2 0 5 , 17-8 2 16 , 17-8 2 18 , 17-8 2 3 8 , 17-8 2 4 2 , 17-8 2 4 3 , 17-8 2 4 4 , 17-8 2 4 6 , 17-8 2 52 SU PERIOR D ISCOU N T, LLC, D e fe n d an t Ap p lie s t o : 17-8 2 4 3 SECTION : “E” ( 1) ORD ER AN D REAS ON S Before the Court is a Motion to Dism iss filed by Counter-Defendants Sream , Inc. (“Sream ”) and Roor International BV (“Roor”). 1 The m otion is opposed. 2 For the reasons that follow, the m otion is GRAN TED IN PART AN D D EN IED IN PART. BACKGROU N D On August 25, 20 17, Sream filed suit against Defendant Quicky’s Discount (“Quicky’s”), alleging Quicky’s sold counterfeit m erchandise bearing the RooR m ark. Sream asserted two causes of action: (1) a claim for tradem ark counterfeiting and infringem ent under 15 U.S.C. § 1114 an d (2) a claim for false designation of origin and unfair com petition under 15 U.S.C. § 1125(a). The Court determ in ed Sream lacks standing to assert a claim under 15 U.S.C. § 1114 because its status as licensee does not equate it to 1 R. 2 Doc. 90 . R. Doc. 92. 1 Dockets.Justia.com an assignee. 3 The Court dism issed Sream ’s claim under 15 U.S.C. § 1114 and granted Sream leave to am end its Com plaint to add Roor as a plaintiff. 4 On March 11, 20 19, Sream an d Roor filed an am ended com plaint adding Roor as a plaintiff. 5 In the am ended com plaint, both Roor and Sream assert a claim for false designation of origin and unfair com petition under 15 U.S.C. § 1125(a). Roor alone asserts a claim for tradem ark counterfeiting and infringem ent under 15 U.S.C. § 1114. Roor alleges it is the owner of the following tradem arks: (a) U.S. tradem ark registration num ber 3,675,839 for the m ark “RooR” and its logo in association with goods in international class 34, including “sm oker’s articles, nam ely glass pipes, bongs, water pipes, [and] water pipes of glass;” (b) U.S. tradem ark registration num ber 2,30 7,176 for the word m ark “RooR” and its logo in association with goods in international class 25 for “clothing, nam ely, shirts, pants, jackets, sweaters, socks, hats, caps an d footwear” and class 34 for “sm oker’s articles, nam ely cigarettes, cigars, tobacco, pouches, hum idors, tobacco spittoons, chewing tobacco, sm oking tobacco and m atches;” and (c) U.S. tradem ark registration num ber 2,235,638 for the word m ark “RooR” and its logo in association with goods in international class 21 for glass bowls, glass boxes, glass beverageware and bowls, glass rods, stoppers, and glass tubes not for scientific purposes. (d) Com m on law and unregistered state law rights in the following variants of the registered “RooR tradem arks. 6 In its Answer, Quicky’s asserts counter-claim s against Sream and Roor. 7 In count one, Quicky’s seeks a declaration that the registered tradem arks are invalid and seeks cancellation of the tradem ark registrations pursuant to 15 U.S.C. § 1119. 8 In count two, 3 R. Doc. 76. Id. 5 R. Doc. 77. 6 Id. at ¶ 11; see also R. Doc. 77-2. 7 R. Doc. 79. 8 Id. at ¶¶ 10 -64 4 2 Quicky’s requests a declaratory judgm ent that the tradem arks, both registered and unregistered, are invalid and unenforceable. 9 In count three, Quicky’s asserts a cause of action for abuse of process, seeking dam ages, attorneys’ fees, an d costs. 10 On April 15, 20 19, Sream and Roor filed a m otion to dism iss the counter-claim s asserted by Quicky’s, pursuant to Federal Rule of Civil Procedure 12(b)(6). 11 Sream and Roor argue Quicky’s fails to state a claim for cancellation of the tradem arks, is not entitled to a declaratory judgm ent that the tradem arks are invalid, and fails to state a claim for abuse of process. LEGAL STAN D ARD Pursuant to Federal Rule of Civil Procedure 12(b)(6), a district court m ay dism iss a com plaint, or any part of it, for failure to state a claim upon which relief m ay be granted if the plaintiff has not set forth factual allegations in support of his claim that would entitle him to relief. 12 “To survive a m otion to dism iss, a com plaint m ust contain sufficient factual m atter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”13 “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 m isconduct alleged.” 14 The court, however, does not accept as true legal conclusions or m ere conclusory statem ents, and “conclusory allegations or legal conclusions m asquerading as factual conclusions will not suffice to prevent a m otion to dism iss.” 15 “[T]hreadbare 9 Id. at ¶¶ 65-79. Id. at ¶¶ 80 -97. 11 R. Doc. 90 . 12 Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 555 (20 0 7); Cuvillier v. Tay lor, 50 3 F.3d 397, 40 1 (5th Cir. 20 0 7). 13 Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quotin g Tw om bly , 550 U.S. at 570 ). 14 Id. 15 S. Christian Leadership Conference v. Suprem e Court of the State of La., 252 F.3d 781, 786 (5th Cir. 20 0 1) (citing Fernandez-M ontes v. Allied Pilots Ass’n, 987 F.2d 278, 284 (5th Cir. 1993)). 10 3 recitals of elem ents of a cause of action, supported by m ere conclusory statem ents” or “naked assertion[s] devoid of further factual enhancem ent” are not sufficient. 16 In sum m ary, “[f]actual allegations m ust be enough to raise a right to relief above the speculative level.”17 “[W]here the well-pleaded facts do not perm it the court to infer m ore than the m ere possibility of m isconduct, the com plaint has alleged—but it has not show[n]’—that the pleader is entitled to relief.” 18 “Dism issal is appropriate when the com plaint ‘on its face show[s] a bar to relief.’”19 LAW AN D AN ALYSIS I. Can ce llatio n o f th e Marks In Count one, Quicky’s seeks a declaration that Roor’s three registered tradem arks are invalid and an order cancelling the registration of the three registered m arks. 20 Section 37 of the Lanham Act, 15 U.S.C. § 1119, grants federal courts the authority to “order the cancellation of registrations . . . and otherwise rectify the register with respect to the registrations of any party.” The party seeking cancellation m ust prove two elem ents: (1) that it has standing; and (2) that there are valid groun ds for cancelling the registration. 21 “Standing is the m ore liberal of the two elem ents and requires only that the party seeking cancellation believe that it is likely to be dam aged by the registration.”22 Quicky’s is the defendant in this action for tradem ark infringem ent and, as a result, has standing to seek cancellation of the RooR tradem arks. 16 Iqbal, 556 U.S. at 663, 678 (citations om itted). Tw om bly , 550 U.S. at 555. 18 Id. (quotin g F ED . R. CIV. P. 8(a)(2)). 19 Cutrer v. McMillan, 30 8 F. App’x 819, 8 20 (5th Cir. 20 0 9) (per curiam ) (quotation s om itted). 20 R. Doc. 79 at ¶¶ 10 -64. 21 Cunningham v. Laser Golf Corp., 222 F.3d 943, 945 (Fed. Cir. 20 0 0 ). 22 Cunningham , 222 F.3d 943 at 945. 17 4 A federal court is lim ited by the sam e grounds for cancellation as is the U.S. Patent and Tradem ark Office (“USPTO”). 23 After a m ark has been registered for five years, the m ark becom es “incontestable.” 24 The RooR m arks were registered between 1999 and 20 0 9 and, as a result, are “incontestable.” 25 An incontestable m ark is subject to cancellation only upon certain enum erated grounds, including: (1) that the m ark has been abandon ed or (2) that the registration was obtained fraudulently, am ong others. 26 Quicky’s alleges the RooR m arks should be cancelled because the m arks have been abandon ed and because the registrations were obtained through fraud. A. Aban d o n m e n t A registration can be cancelled at any tim e if the registered m ark has been abandon ed. 27 Under the Lanham Act, a m ark is considered abandoned when its use has been discontinued with the intent not to resum e; nonuse for three consecutive years is prim a facie evidence of abandonm ent. 28 “Use” of a tradem ark requires lawful use in com m erce in the United States. 29 It has long been the policy of the USPTO's Tradem ark Trial and Appeal Board that use in com m erce only creates tradem ark rights when the use is lawful. 30 23 Park ‘N Fly , Inc. v . Dollar Park & Fly , Inc., 469 U.S. 189, 20 3 (1985). 15 U.S.C. §§ 10 64-10 65; 15 U.S.C. § 1115(b). 25 R. Doc. 79-1 at 2-4. 26 15 U.S.C. §§ 10 64-10 65; 15 U.S.C. § 1115(b). 27 15 U.S.C. § 1115(b)(2); 15 U.S.C. § 10 64(3). 28 15 U.S.C. § 1127. 29 CreAgri, Inc. v. USAN A Health Sciences, Inc., 474 F.3d 626, 628 (9th Cir. 20 0 7); United Phosphorus, Ltd. v. Midland Fum igant, Inc., 20 5 F.3d 1219, 1225 (10 th Cir. 20 0 0 ); Im perial Tobacco Ltd. v. Philip Morris, Inc., 899 F.2d 1575, 1579 (Fed. Cir. 1990 ); Riv ard v. Linville, 133 F.3d 1446, 1449 (Fed. Cir. 1998 ). 30 CreAgri, 474 F.2d at 630 (citing United Phosphorus, 20 5 F.3d at 1225; In re Midw est Tennis & Track Co., 29 U.S.P.Q.2d 138 6, 1386 n . 2, 1993 WL 562977 (T.T.A.B. 1993); Clorox Co. v . Arm our– Dial, Inc., 214 U.S.P.Q. 850 , 851, 198 2 WL 50 434 (T.T.A.B. 198 2); In re Pepcom Indus., Inc., 192 U.S.P.Q. 40 0 , 40 1, 1976 WL 21138 (T.T.A.B. 1976); In re Stellar Int'l, Inc., 159 U.S.P.Q. 48 , 51, 1968 WL 8 159 (T.T.A.B. 1968)). 24 5 Quicky’s alleges the following facts with respect to the abandonm ent of the registered RooR m arks through nonuse: Registration Nos. 2235638 and 3675839 have been abandoned for failure to ever have lawful use in com m erce. 31 Registration No. 2235638 applies to “glass pipes, bongs, water pipes, [and] water pipes of glass.” These goods are expressly identified in the [Controlled Substances Act] as “drug paraphernalia.”32 Registration No. 36758 39 applies to “glass bowls, glass boxes, glass casters, glass beverage ware and bowls, glass rods, stoppers, [and] glass tubes not for scientific purposes.” Although innocuously described in the registration as com m on household item s, in reality, the goods covered by this registration are the com ponent parts of a bong. 33 [T]he goods covered by Registration No. 230 7176 have been abandoned . . . [because they] have never been on sale or transported in the United States. For exam ple, internet searches for “ROOR cigarettes” or “ROOR cigars” or “ROOR tobacco” turn up zero results. Moreover, these products are not m entioned in Sream ’s license agreem ent and Sream holds itself out as “exclusive licensee” of ROOR brand in the United States . . . For exam ple, internet searches for “ROOR socks” or “ROOR pants” or “ROOR footwear” turn up zero results. Internet searches for “ROOR shirts” return results in the Germ an language on the Germ an ROOR website, but no availability in the United States. No clothing item s are available for sale on the U.S. website for ROOR. 34 Quicky’s alleges the goods covered by the RooR registrations have either never been used in com m erce, or have never been in lawful use in com m erce in the Un ited States, and sets forth sufficient facts to support its claim . As a result, the m otion to dism iss Quicky’s claim for cancellation under 15 U.S.C. § 1119 due to abandonm ent is denied. 31 R. Doc. 79 at ¶ 39. Id. at ¶ 18 . 33 Id. at ¶¶ 19-20 . 34 Id. at ¶ 40 . 32 6 B. Frau d u le n tly Obta in e d Re gis tratio n A registration can be cancelled at any tim e if the registration of the m ark was obtained fraudulently. 35 Federal Rule of Civil Procedure 9(b) requires fraud be pled with specificity. Cancellation of a tradem ark due to fraud on the USPTO in connection with the registration requires proof of the following elem ents: (1) a false representation of a m aterial fact; (2) knowledge or belief that the representation was false; (3) an intent to induce the USPTO to act in reliance on the m isrepresentation; (4) reasonable reliance by the USPTO on the m isrepresentation; and (5) dam age from such reliance. 36 Quicky’s alleges the following facts with respect to fraud in obtaining the registrations of the RooR m arks: All three ROOR tradem ark registrations were obtained by fraud. In applying to register the ROOR m arks, Birzle knowingly m ade false statem ents to the USPTO about m aterial aspects of his applications with the intent that the USPTO rely upon his false and m isleading representations to issue a certificate of registration that he was not entitled to. 37 Whether goods or services are in “lawful use” in U.S. com m erce is a m aterial elem ent of a tradem ark application. 38 In filing to register the ROOR Marks, Birzle falsely represented that his m arks were lawfully used in com m erce or that he had the bona fide intent to use the m arks lawfully in com m erce. In fact, the goods covered by the Registration Nos. 3675839 and 2235638 are illegal under the [Controlled Substances Act]. These false representations were m ade with the intent to deceive the USPTO and constitute fraud on the office. 39 Birzle and the attorney who filed the applications which m atured into Registration Nos. 2235638 and 3675839 knew that the goods con stituted drug paraphernalia intended for use and use[d] in ingesting m arijuana. 40 35 15 U.S.C. § 1115(b)(1); 15 U.S.C. § 10 64(3). Tex. Pig Stands, Inc. v. Hard Rock Cafe Intern ., Inc., 951 F.2d 684, 693 n . 14 (5th Cir. 1992). 37 R. Doc. 79 at ¶ 50 . 38 Id. at ¶ 52. 39 Id. at ¶ 61. 40 Id. at ¶ 51. 36 7 Birzle intentionally withheld inform ation about the true nature of his goods. For exam ple, in subm itting his first specim en of use for U.S. Registration No. 2235638 on J anuary 27, 20 0 5, Birzle, through his attorney, filed the following at the USPTO. By subm itting truncated im ages showing only the central portion of the product, Birzle hid from the USPTO that the products that he sought to m aintain on the U.S. Register were, in fact, bongs – not m ere “glass tubes not for scientific purposes.”41 At the tim es that Birzle applied for his second tradem ark registration [No. 230 7176], he knew that he had no evidence that he sold apparel or tobacco products in the U.S. m arket. Instead of filing truthful paperwork with the USPTO to docum ent use in U.S. com m erce, Birzle fraudulently subm itted eviden ce of hats denom inated in euros and a box for rolling papers (but no tobacco product such as cigarettes or cigars). 42 Rolling papers are not listed in the goods covered by Registration No. 230 7176. Moreover, Birzle’s rolling papers are not intended for use with tobacco, they are com plim entary products for the goods for which Birzle claim s renown: high-end, designer bongs used to ingest m arijuana. 43 Birzle . . . knew at the tim e he m ade his filings with the USPTO that the goods covered by Registration Nos. 2235638 and 36758 39 were item s prim arily inten ded or designed for use in ingesting, inhaling, or otherwise introducing m arijuana into the hum an body. Likewise he knew that the goods covered by Registration No. 230 7176 were not in use in the United States. 44 Because of these m isrepresentations, registrations fraudulently. 45 Birzle obtained his ROOR Quicky’s pleads sufficient facts which, taken as true, support its claim for cancellation of the registrations under 15 U.S.C. § 1119 as fraudulently obtained. Quicky’s also specifically pleads fraud as required by Rule 9(b). Quicky’s alleges Birzle m ade false representations regarding a m aterial fact when he represented to the USPTO that his m arks were in lawful use in com m erce. 41 Id. at ¶ 53. Id. at ¶ 55. 43 Id. at ¶ 56. 44 Id. at ¶ 62. 45 Id. at ¶ 64. 46 Id. at ¶¶ 50 -53, 62. 42 8 46 Quicky’s alleges Birzle knew these representations were false and m ade them for the purpose of inducin g the USPTO to issue the registrations. 47 Quicky’s alleges the USPTO reasonably relied on these representations and issued registration num bers 3675839, 230 7176, and 2235638 with respect to the RooR m ark. 48 Accordingly, the m otion to dism iss Quicky’s claim for cancellation of the RooR tradem arks under 15 U.S.C. § 1119 due to fraud in obtaining the registration is denied. II. D e claratio n o f In valid ity In count two, Quicky’s seeks a declaration that both the registered tradem arks and the unregistered com m on law tradem arks are invalid. 49 Quicky’s alleges, “[b]ecause the registered an d unregistered RooR . . . m arks are invalid, a finding and declaration of invalidity and unenforceability should be en tered.”50 Under the Declaratory J udgm ent Act, 28 U.S.C. § 220 1, a federal court “m ay declare the rights and other legal relations of any interested party.” In a tradem ark infringem ent action, a defendant sued for infringem ent is perm itted to counterclaim for cancellation of the m ark and seek a declaratory judgm ent that the m ark is invalid. 51 Quicky’s alleges the registered an d unregistered tradem arks are invalid and unenforceable because the products sold under these m arks are illegal drug paraphernalia and because the products have either never been used in com m erce or never been lawfully used in com m erce. 52 47 Id. at ¶ 51, 55. Id. at ¶ 64. 49 Id. at ¶¶ 65-79. 50 Id. at ¶ 79. 51 Green Edge Enter., LLC v. Rubber Mulch Etc., LLC, 620 F.3d 1287, 130 0 (Fed. Cir. 20 10 ). 52 R. Doc. 79 at ¶ 71. Quicky’s also alleges the unregistered, com m on law tradem arks are invalid because the m arks have been abandoned due to naked licensing. Because the Court denies the m otion to dism iss on the basis that Quicky’s properly alleges the un registered m arks are invalid because they are not in lawful use, the Court declines to address this argum ent. 48 9 “[T]he general principles qualifying a m ark for registration . . . are for the m ost part applicable in determ ining whether an unregistered m ark is entitled to protection.”53 To be entitled to com m on law tradem ark protection, a m ark need not be registered but m ust be used in com m erce; the use m ust be lawful. Tradem ark rights cannot develop during periods of tim e when a m ark is used in connection with goods which could not be lawfully shipped in interstate com m erce. 54 “It is doubtful that the tradem ark statute— passed pursuant to Congress's power under the Com m erce Clause—'was . . . inten ded to recognize . . . shipm ents in com m erce in contravention of other regulatory acts prom ulgated [by Congress] under [that sam e constitutional provision].’” 55 The Tradem ark Trial and Appeal Board has noted that to perm it unlawful use to constitute use, for registration purposes, “would to be to place the Patent Office in the anom alous position of accepting as a basis for registration a shipm ent in com m erce which is unlawful under a statute specifically controlling the flow of such goods in com m erce.” 56 This principle applies by analogy to the developm ent of com m on law rights in unregistered tradem arks. Quicky’s alleges the following facts with respect to the lack of use and the unlawful use of the RooR m ark: The products at issue in this Action constitute illegal “drug paraphernalia” under the Controlled Substances Act (“CSA”), 21 U.S.C. § 863(d), because they are “item s prim arily intended or design ed for use in ingesting, in haling, or otherwise introducing m arijuana…into the hum an body” (em phasis added). Indeed, the CSA specifically lists “glass pipes,” “water pipes,” and “bongs” as exam ples of unlawful drug paraphernalia. 21 U.S.C. § 863(d) (1), (2), and (12). 57 53 Tw o Pesos, Inc. v . Taco Cabana, Inc., 50 5 U.S. 768 (1992). CreAgri, 474 F.3d at 630 ; In re Tay lor, 133 U.S.P.Q. 490 (T.T.A.B. 1962); Coahom a Chem . Co., Inc. v. How erton Gow en Co., Inc., 113 U.S.P.Q. 413 (Com 'r Pat. & Tradem arks 1957) 55 CreAgri, 474 F.3d at 630 (quoting In re Stellar, 159 U.S.P.Q. at 51). 56 In re Stellar Int'l, Inc., 159 U.S.P.Q. 48 . 57 R. Doc. 79 at 1 (First Defen se). 54 10 The ROOR and ROOR TECH m arks asserted against Quicky’s are invalid and unenforceable for the following reasons: because the products sold under those m arks constitute illegal “drug paraphernalia” under the CSA. That the ROOR m arks are used for goods intended and designed for use with m arijuana is dem onstrated by, am ong other things: a. the entry of ROOR bongs on m ultiple occasions into the “Cannabis Cup” com petition and the participation of RIBV and Birzle in other cannabis related trade shows; b. prom otion of “Cannabis Cup” awards to ROOR-branded products by the owners and licensees of the ROOR tradem arks and by vendors of ROOR branded products; c. videos posted onlin e by users, reviewers, and sellers showing use of ROOR branded products to ingest, inhale, or otherwise introduce m arijuana into the hum an body; d. the channels of trade for products bearing ROOR and ROOR TECH tradem arks include sellers who prom ote consum ption of m arijuana; e. interviews of the owners and licensees of ROOR and ROOR TECH tradem arks showing knowledge of use of their for the consum ption of m arijuana; f. news articles and published product reviews discussing use of products bearing the ROOR and ROOR TECH m arks for purposes of consum ing m arijuana; g. adm issions under oath by the principal of Sream that ROOR products are used to consum e m arijuana; h. the operation of a bong rental store in Am sterdam by RIBV; i. the use of the term “bong” to refer to products bearing the ROOR and ROOR TECH tradem arks (instead of the term “hookah” which is used to refer to pipes used to consum e tobacco); j. tobacco usage patterns am ong consum ers in the United States showing that only a m inuscule num ber of adults currently using tobacco products report use of glass/ water pipes for that purpose; and k. the product packaging used for ROOR rolling papers which specifically instruct that the goods are “NOT for Use with Tobacco.”58 58 R. Doc. 79 at ¶ 73. 11 Because the goods sold under the ROOR m arks are not in lawful use in com m erce, the tradem arks asserted against plaintiff-in-counterclaim are invalid and unenforceable. 59 Because the goods sold under the ROOR m arks are not in lawful use in com m erce, the tradem arks asserted against plaintiff-in-counterclaim are deem ed abandoned and are therefore invalid and unenforceable. 60 Further, upon inform ation and belief, the goods described in Registration No. 230 7176 are not presently on sale, or were never sold, in the United States. Internet searches for products such as “Roor cigarettes” an d “Roor cigars” return no results. Specim ens of use subm itted to the USPTO for these goods show prices denom inated in euros, not dollars. These tradem ark registrations are abandoned and are therefore invalid and unenforceable. 61 Quicky’s alleges fact which, taken as true, support its claim that there are no valid com m on law tradem ark rights in the RooR m arks because the RooR m arks have not been used in com m erce or have not been lawfully used in com m erce. Accordingly, the m otion to dism iss Quicky’s claim for a declaration of invalidity and unenforceability of the com m on law RooR tradem ark is denied. III. Abu s e o f Pro ce s s In count three, Quicky’s asserts a claim for abuse of process against Sream and Roor. 62 Abuse of process is a cause of action recognized at com m on law and now adopted in Louisiana jurisprudence. Abuse of process involves the m isuse of a process already legally issued whereby a party attem pts to obtain a result not proper under the law. 63 Under Louisiana law, a claim for abuse of process “has two essential elem ents: (1) the existen ce of an ulterior purpose and (2) a willful act in the use of the process not proper 59 Id. at ¶ 74. Id. at ¶ 75. 61 Id. at ¶ 76 62 Id. at ¶¶ 80 -97. 63 Goldstein v. Serio, 496 So.2d 412, 415 (La. App. 4 Cir. 1986). 60 12 in the regular prosecution of the proceeding.”64 For exam ple, the Fifth Circuit found a plaintiff-seller stated a claim for abuse of process when a prospective purchaser of property filed suit to collect rent from the tenant of the property, seized item s on the property, and instituted a possessory action before paying the purchase price for the property. 65 However, “[a]n im proper m otive alone is not enough to [constitute] an abuse of process . . . to m ake out its case, the plaintiff m ust prove irregular steps taken under cover of the process after its issuance.”66 For exam ple, in W aguespack, Seago & Carm ichael v. Lincoln, a Louisiana court found general partners in a real estate partnership failed to state a claim for abuse of process when the general partners alleged the lim ited partners failed to investigate their claim s against the general partners for breaches of fiduciary duty, conversion of partnership assets, fraudulent m isrepresentations, unfair trade practices, and violations of the RICO statute. 67 The court noted, “[w]hile plaintiffs allege that [the lim ited partners] filed their third am ending petition without the due diligence required by [Louisiana Code of Civil Procedure] Article 8 63 B, the [general partners] have not alleged any facts that substantiate the irregularity of the process itself.”68 The court stated that, absent a showing that the petition was im properly served upon a nonparty or other sim ilar scenario, the general partners could not allege an irregularity in the process itself. 69 64 N o Dram a, LLC v . Caluda, 15-211 (La. App. 5 Cir. 10 / 14/ 15), 177 So. 3d 747, 751. Gonsouland v. Rosom ano, 176 F. 481 (5th Cir. 1910 ). 66 Mini-Togs, Inc. v. Young, 354 So.2d 1389, 1391 (La App. 2 Cir. 1978). 67 W aguespack, Seago & Carm ichael v. Lincoln 1999-20 16 (La. App. 1 Cir. 9/ 22/ 0 0 ), 768 So.2d 287, 292. 68 Id. 69 Id. 65 13 Sim ilarly, in Mini-Togs, Inc. v. Young, plaintiffs failed to state a claim for abuse of process when they alleged an owner of city revenue bonds filed suit to prevent the City of Monroe from transferring its utility system on the grounds that the transfer would cause the bonds to be insecure, when in reality, the bond owner sought to protect the jobs of the current utility workers. 70 The Court reasoned that, although plaintiffs alleged the bond owner had an ulterior purpose m otivating the filing of suit, plaintiffs failed to allege any irregularity in the proceedings. 71 Further, in Um erska v. Katz, a Louisiana court found no abuse of process after a landlord filed five separate lawsuits attem pting to evict his tenant. The court found that in each instance, the eviction suit was warranted, and as a result, the landlord did not com m it the tort of abuse of process. 72 A. U lte rio r Pu rp o s e Quicky’s alleges Roor and Sream ’s actions in filing suit are not designed to protect the RooR brand but instead are designed to harass, intim idate, and extort settlem ent paym ents from convenience store owners. 73 Quicky’s alleges “the ulterior purpose of the Roor infringem ent suits is to use the courts to extort m oney from sm all businesses.”74 Quicky’s alleges this ulterior m otive is evidenced by the fact that Sream and Roor do not send cease and desist letters, do not take action against wholesale distributors, and have not sought to protect the im portation of counterfeit goods bearing the RooR m ark. 75 Quicky’s has properly alleged facts to support the first elem ent of its claim for abuse of process: that Sream and Roor use judicial process for an ulterior purpose. 70 Mini-Togs, 354 So.2d at 1391. 71 Id. 72 Um erska v. Katz, 477 So.2d 1252 (La. App. 4 Cir. 1985). R. Doc. 79 at ¶ 84. 74 Id. at ¶ 93. 75 Id. at ¶ 85. 73 14 B. Im p ro p e r W illfu l Act Quicky’s alleges Sream and Roor “have en gaged in a pattern of m isuse of the judicial process to obtain results not proper under the law, nam ely paym ents that they are not lawfully entitled to.”76 Quicky’s alleges Roor and Sream have filed hundreds of suits across the country against sm all convenience store owners, claim ing exorbitant am ounts of dam ages an d calculating settlem ent dem ands at levels less than the cost of defense but greater than the am ount of any reasonable award. 77 Quicky’s alleges Sream an d Roor have engaged in the following willful acts that are not proper in regular process: a. Sream and RIBV have wrongfully asserted invalid and unenforceable tradem arks against Quickys. b. Sream and RIBV have falsely represented to the court that Sream is the “exclusive licen see” of the ROOR m ark in the United States. This is not true. Germ an-m ade ROOR products are widely available in the United States, a circum stance not possible if Sream has exclusive rights in the U.S. territory. c. Sream and RIBV have falsely represented to the court that they have a legitim ate license agreem ent, when in fact, that license agreem ent is a sham , for the unlawful purpose of m isrepresenting the true country-and com panyof origin of “ROOR” goods sold to Am erican consum ers. d. Sream has falsely presented itself as the m arketer and distributor of ROOR products in the United States, when, in fact, there is a web of com panies other than Sream fulfilling these roles. e. Sream and RIBV have falsely characterized their products are being intended for use only with tobacco products, when, in fact, ROOR products are widely prom oted for use in ingesting m arijuana. f. The willfulness of the counter-defendants’ unlawful assertion of tradem ark rights for m arijuana-associated drug paraphernalia is dem onstrated by the fact that the illegality and unenforceability of such tradem arks has been widely reported in the general press, in the cannabis press, in news articles about Sream ’s tradem ark litigation, in law review articles, and in countless legal education sem inars by such m ain-stream 76 77 Id. at ¶ 8 2. Id. at ¶¶ 83-84. 15 organizations as the Am erican Bar Association and the Federal Bar Association. g. Sream and RIBV have falsely asserted tradem ark registrations against for products that have never existed such as ROOR-branded cigarettes and cigars. These are phony tradem arks. h. Sream and RIBV has also falsified their injuries in their pleadings. i. The contracts that give Sream and RIBV standing are contra bonos m ores and unenforceable. 78 Accepting these facts as true, Quicky’s fails to state a claim for abuse of process. None of the alleged acts constitutes an irregularity in the process itself or an act not proper in the regular prosecution of the proceeding. Quicky’s generally alleges Sream and Roor “wrongfully assert” claim s and “falsely represent” things to the court. This is sim ilar to the lim ited partners in W aguespack, Seago & Carm ichael v. Lincoln, who allegedly filed suit against the gen eral partners without properly investigating their claim s. What Quicky’s appears to com plain of is “not based on any perversion of any process but sim ply the filing of the suit,”79 m uch like the bond owner in Mini-Togs, Inc. v. Young or the landlord in Um erska v . Katz. 80 Quicky’s has failed to allege facts to support the secon d elem ent of its claim for abuse of process. As a result, the m otion to dism iss Quicky’s claim for abuse of process is granted. CON CLU SION IT IS ORD ERED that the Motion to Dism iss 81 filed by Sream Inc. and Roor International BV is GRAN TED IN PART AN D D EN IED IN PART. The counter-claim asserted by Quicky’s Discount for abuse of process is dism issed with prejudice for failure 78 Id. at ¶ 93. Mini-Togs, 354 So. 2d at 1391. 80 Id.; Um erska, 477 So.2d 1252. 81 R. Doc. 90 . 79 16 to state a claim . The counter-claim s for cancellation of the tradem arks and a declaration of invalidity rem ain. N e w Orle a n s , Lo u is ian a, th is 15th d ay o f May, 2 0 19 . __________ ___________ _________ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 17
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