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Official Pillowtex LLC v. Hollander Home Fashions Corp.

March 26, 2007

OFFICIAL PILLOWTEX LLC, PLAINTIFF,
v.
HOLLANDER HOME FASHIONS CORP., DEFENDANT.



The opinion of the court was delivered by: Judge Marbley

Magistrate Judge King

OPINION AND ORDER

I. INTRODUCTION

This matter is before the Court of Defendant Hollander Home Fashions Corp.'s ("Hollander") Motion to Dismiss Plaintiff's Complaint. For the reasons stated herein, Defendant's Motion to Dismiss is DENIED.

II. FACTS

On October 7, 2003 Plaintiff Official Pillotex ("OP") purchased out of bankruptcy all of the intellectual property assets of Pillotex Corporation,*fn1 Fieldcrest Cannon, Inc. ("Fieldcrest"), and all of their subsidiaries. These assets included six ROYAL VELVET trademarks (the "ROYAL VELVET marks") and two VELVET TOUCH trademarks (the "VELVET TOUCH marks").*fn2 Plaintiff paid $128 million in exchange for these marks and other assets. Plaintiff alleges that there is significant goodwill and other intangible value associated with these marks because Pillotex Corporation and Fieldcrest employed them in commerce for the past forty years.

After acquiring these trademarks, Plaintiff entered into an exclusive license agreement with The Millwork Trading Co., Ltd. d/b/a Li & Fung USA ("Li & Fung") to market and sell products bearing these marks. Less than two months after the execution of this license agreement, Plaintiff successfully began to market and distribute products bearing the six ROYAL VELVET marks. Plainitiff and Li & Fung, however, were unable to put products bearing the VELVET TOUCH marks back into the market "before certain papers were due at the United States Patent and Trademark Office" ("USPTO"). As a result, the VELVET TOUCH registrations were cancelled. In October of 2004, immediately following the VELVET TOUCH marks' cancellations, Plaintiff filed intent-to-use applications seeking to re-register the two VELVET TOUCH marks which it acquired from Fieldcrest. To date, Plaintiff has not reintroduced products bearing the VELVET TOUCH marks into the stream of commerce.

Plaintiff alleges that Defendant has advertised and sold bedding products bearing the VELVET TOUCH marks in question at Wal-Mart stores throughout the United States. Plaintiff asserts that Defendant's sale of products containing the VELVET TOUCH marks infringes on Plaintiff's rights in these marks. It sent Defendant a cease and desist letter requesting that Defendant halt the marketing and sale of products bearing the VELVET TOUCH symbol. Defendant did not cease such activities.

Defendant retorts that it has sold bedding products bearing the VELVET TOUCH mark since 1989 and has developed extensive goodwill in association with this mark. On February 7, 2006, Defendant filed an application to register its VELVET TOUCH mark with the USPTO based on its use of the mark. It alleges that its rights in these marks are paramount to any which Plaintiff purports to possess.

In its complaint, Plaintiff states three claims for relief. In Count I, Plaintiff alleges that Defendant's sale of products containing the VELVET TOUCH mark violates Section 1125 (a) of the Lanham Act by creating a false designation of origin.*fn3 In Count II, Plaintiff further asserts that Defendant's actions violated the Ohio Deceptive Trade Practices Act, O.R.C. § 4165.01 et seq. In Count III, Plaintiff claims that Defendant allegedly infringing actions constituted violations of Ohio state common law trademark infringement, unfair competition, and passing off.

Plaintiff states that this Court has subject matter jurisdiction over Count I under 28 U.S.C. §§ 1331 and 1338(a). The federal question jurisdiction statute, 28 U.S.C. § 1331, states that "the district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1338(a) states, in relevant part, that "the district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks." Plaintiff contends that this Court has jurisdiction over Plaintiff's state law claims, which are contained in Counts II and II of the complaint, under 28 U.S.C. §§ 1367(a) and 1338(b). The supplemental jurisdiction statute, 28 U.S.C. § 1367(a), states, in relevant part, that ". . . the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1338(b) states that "the district courts shall have original jurisdiction of any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the copyright, patent, plant variety protection or trademark laws."

III. Standard of Review

A. Fed. R. Civ. Pro. 12(b)(1)

Before determining whether a plaintiff has failed to state a claim upon which relief may be granted, the Court must first decide whether it has subject matter jurisdiction. City of Heath, Ohio v. Ashland Oil, Inc., 834 F. Supp. 971, 975 (S.D. Ohio 1993) (citing Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir.1990)).

"When "subject matter jurisdiction is challenged under Rule 12(b)(1), . . . the plaintiff has the burden of proving jurisdiction in order to survive the motion." Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986). In the context of a Rule 12(b)(1) motion, "[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984). A Rule 12(b)(1) motion to dismiss will be granted only if, taking as true all facts alleged by the plaintiff, the court is without subject matter jurisdiction to hear the claim.

B. Fed. R. Civ. P. 12(b)(6)

In considering a Rule 12(b)(6) motion to dismiss, this Court is limited to evaluating whether a plaintiff's complaint sets forth allegations sufficient to make out the elements of a cause of action. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983). A complaint should not be dismissed under Rule 12(b)(6) "unless it appears beyond doubt that the [p]laintiff can prove no set of facts in support of his claim which would entitle him to relief." Lillard v. Shelby County Bd. of Educ., 76 F.3d 716, 724 (6th Cir. 1996) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). This Court must "construe the complaint liberally in the plaintiff's favor and accept as true all factual allegations and permissible inferences therein." Conley, 355 U.S. at 45-46. While the complaint need not specify every detail of a plaintiff's claim, it must give the defendant "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir. 1994). While liberal, this standard of review does require more than the bare assertion of legal conclusions. Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1240 (6th Cir. 1993). A complaint must contain either direct or inferential allegations with respect to all the material elements necessary to sustain a recovery under some viable legal theory. Scheid v. Fanny Candy Shop Inc.,859 F.2d 434, 437 (6th Cir. 1988).

IV. LAW and ANALYSIS

A. Summary of the ...


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