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Worth Beauty LLC v. Allstar Products Group, LLC

United States District Court, S.D. Texas, Houston Division

November 13, 2017

WORTH BEAUTY LLC, Plaintiff,
v.
ALLSTAR PRODUCTS GROUP, LLC, Defendant.

          MEMORANDUM AND ORDER

          NANCY F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE

         Pending before the Court in this intellectual property dispute is Defendant Allstar Products Group LLC's (“Allstar”)[1] Motion to Dismiss Plaintiff Worth Beauty LLC's (“Worth Beauty”) First Amended Complaint (the “Motion”) [Doc. # 15]. Plaintiff filed a timely response to which Defendant replied. See Plaintiff's Response to Defendant's Motion to Dismiss First Amended Complaint [Doc. # 21] and Reply Memorandum of Law in Further Support of Defendant's Motion (the “Reply”) [Doc. # 22]. The Motion is now ripe for decision. Having considered the parties' briefing, the applicable legal authorities, and all appropriate matters of record, the Court concludes that the Motion should be granted in part and denied in part.

         I. BACKGROUND

         Plaintiff Worth Beauty develops, markets and sells beauty products. The dispute in this case relates to Plaintiff's flagship product line, an automatic motorized makeup brush system sold under the trademark blendSMART (the “blendSMART System”). The blendSMART System consists of a single automated handle and interchangeable brush heads that spin to mimic the motion of professional makeup artists. According to Plaintiff, it owns all of the intellectual property rights relating to the blendSMART System both in the United States and internationally.

         The blendSMART System debuted in April 2015 as a co-branded product with Doll 10 Beauty. According to Plaintiff, this co-branded product was the first of its kind to reach the market and initially enjoyed a 100% market share in the automated makeup brush market. Plaintiff launched the blendSMART System as a standalone, rather than co-branded, product in early 2016. Since its launch, Plaintiff has spent significant resources marketing and promoting the blendSMART System across various channels and platforms, including social media, both domestically and internationally.

         In the Spring of 2017, Plaintiff became aware that Defendant was selling a rotating makeup brush called the “Airtouch Rotating Makeup Brush” (the “Airtouch Brush”). Plaintiff alleges that the Airtouch Brush is, for all intents and purposes, identical to the blendSMART System, including with respect to color, shape, design, size and appearance. According to Plaintiff, the two products are so similar that many of their most important parts, such as the rotating brush heads, are actually interchangeable across the Airtouch Brush and blendSMART System. Plaintiff also alleges that in addition to copying its actual product, Defendant has replicated its advertising, packaging and written materials, such as instruction manuals, for the blendSMART System for use in connection with selling the Airtouch Brush.

         At bottom, Plaintiff contends that Defendant's misappropriation of its intellectual property rights in the blendSMART System has caused confusion among customers and those in the beauty industry regarding the relationship between the Airtouch Brush and the blendSMART System. This confusion has allegedly resulted in commercial harm to Plaintiff.

         II. LEGAL STANDARDS

         A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563 F.3d at 147. The complaint must, however, contain sufficient factual allegations, as opposed to legal conclusions, to state a claim for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d 614, 617 (5th Cir. 2012). When there are well-pleaded factual allegations, a court should presume they are true, even if doubtful, and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. Additionally, regardless of how well-pleaded the factual allegations may be, they must demonstrate that the plaintiff is entitled to relief under a valid legal theory. See Neitzke v. Williams, 490 U.S. 319, 327 (1989); McCormick v. Stalder, 105 F.3d 1059, 1061 (5th Cir. 1997).

         III. ANALYSIS

         A. Defendant's Motion

         In the Complaint, Plaintiff asserts the following ten causes of action: federal trade dress infringement (Count I), federal unfair competition and false designation of origin (Count II), common law trade dress infringement (Count III), federal trademark infringement (Count IV), common law trademark infringement (Count V), common law unfair competition (Count VI), common law misappropriation (Count VII), trade dress dilution under Section 16.103 of the Texas Business and Commerce Code (Count VIII), unjust enrichment (Count IX) and advertising injury through misappropriation of advertising ideas (Count X). Defendant has moved to dismiss all ten counts in the Complaint.[2] The Court first addresses Plaintiff's trade dress and trademark infringement claims. The Court then addresses the remaining claims, which are based in large part on the same allegations as Plaintiff's trade dress and trademark infringement claims, in turn.

         1.Trade Dress Infringement

         Counts I and III of the Complaint assert claims for federal and common law trade dress infringement, respectively. Defendant contends that both claims should be dismissed because Plaintiff has failed to adequately identify the trade dress elements that form the basis of its claims, and to the extent Plaintiff has adequately identified trade dress elements, those elements have not obtained any secondary meaning, and the elements alleged are purely functional. These assertions lack merit.

         Trade dress and trademark claims under federal law are governed by the Trademark Act of 1946 (the “Lanham Act”), 15 U.S.C. §§ 1051 et seq. Plaintiff does not allege that any of its trade dress elements or trademarks are registered. To establish trade-dress infringement under § 43(a) of the Lanham Act for an unregistered mark, a plaintiff must first demonstrate that its trade dress is either inherently distinctive or that it has acquired distinctiveness through secondary meaning. AMID, Inc. v. Medic Alert Found. United States, Inc., 241 F.Supp.3d 788, 800 (S.D. Tex. 2017) (citing Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992)). An otherwise inherently distinctive trade dress is entitled to protection only if it is also nonfunctional. Id. Second, to establish infringement, a plaintiff must show that a defendant's trade dress creates a likelihood of confusion with the plaintiff's. Id.[3] In addition to arguing that it does not have fair notice of the trade dress rights that Plaintiff seeks to vindicate in this lawsuit, Defendant also contends that Plaintiff's alleged trade dress fails to satisfy the first prong the trade dress infringement test because it has not acquired secondary meaning and is purely functional. The Court addresses these assertions in turn.

         Defendant's argument that it lacks fair notice of the trade dress elements that Plaintiff is seeking to protect is plainly belied by the allegations in Plaintiff's First Amended Complaint (the “Complaint”). In Paragraph 28 of the Complaint, Plaintiff explicitly identifies no less than thirty-three trade dress elements of the blendSMART System that it believes are protected, ranging from the design, size and appearance of the brush handle to the placement of logos. Complaint [Doc. # 14], ¶ 28 at ECF 12-15. The Complaint also provides Defendant fair notice of the advertising, promotional, packaging and instructional materials that appear to form part of Plaintiff's trade dress infringement claim. See, e.g., id., ¶¶ 47-55 at ECF 25-30.[4] Plaintiff has adequately identified in the Complaint the purportedly protectable elements that are the subject of its trade dress infringement claims.

         The Court also concludes that Plaintiff has adequately alleged in the Complaint that its trade dress obtained a secondary meaning and did so before Defendant began its allegedly infringing conduct. To be legally protectable, a mark must be “distinctive.” Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 237 (5th Cir. 2010). A mark can be distinctive in one of two ways:

First, a mark is inherently distinctive if its intrinsic nature serves to identify a particular source . . . . Second, a mark has acquired distinctiveness, even if it is not inherently distinctive, if it has developed secondary meaning, which occurs when, in the minds of the public, the primary significance of a mark is to identify the source of the product rather than the product itself.

Nola Spice Designs, L.L.C. v. Haydel Enterprises, Inc., 783 F.3d 527, 537 (5th Cir. 2015) (quoting Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 210-11 (2000)). “Whether a mark is inherently distinctive and whether it has acquired secondary meaning are questions of fact.” Amazing Spaces, 608 F.3d at 234 (citing Pebble Beach Co. v. Tour 18 I, Ltd., 155 F.3d 526, 537 (5th Cir. 1998)).

         Paragraph 70 of the Complaint states in relevant part:

[Plaintiff] has extensively and continuously promoted and used its trade dress in the United States and the State of Texas. Through that extensive and continuous use, [Plaintiff]'s trade dress has become a well-known and famous indicator of the origin and quality of [Plaintiff]'s automated makeup brush systems. [Plaintiff]'s trade dress acquired this secondary meaning before [Defendant] commenced its unlawful use of [Plaintiff]'s trade dress in connection with the infringing products.

Complaint [Doc. # 14], ¶ 70 at ECF 36. The allegations in Paragraph 70 are in addition to the Complaint's other factual contentions that Plaintiff “has invested substantial and significant resources to the design, creation and development of its packaging, advertising, and promotional materials, ” id., ¶ 15 at ECF 6, “expended significant resources advertising and marketing” various blendSMART products, id., ¶ 24 at ECF 10, and “generated significant sales throughout the United States, including sales to customers in Texas, ” id. Taken together, the Complaint's factual allegations are more than sufficient to support a reasonable inference that the public, prior to the start of Defendant's allegedly infringing conduct, had enough exposure to Plaintiff's trade dress to identify it with Plaintiff as the source of blendSMART products.[5]

         Defendant's arguments regarding the functionality of Plaintiff's claimed trade dress elements also are not persuasive. “[T]rade dress protection may not be claimed for product features that are functional.” TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 29 (2001); see also 15 U.S.C. § 1125(a)(3) (“In a civil action for trade dress infringement under this chapter for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.”). “A product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of an article.” Eppendorf-Netheler-Hinz GMBH v. Ritter GMBH, 289 F.3d 351, 355 (5th Cir. 2002) (quoting TrafFix, 532 U.S. at 32). Under this definition, if a product feature is “the reason the device works, ” then the feature is functional. Id. (quoting TrafFix, 532 U.S. at 34). The Fifth Circuit has also recognized that, although functional features cannot be protected, an arbitrary combination of functional features, “the combination of which is not itself functional, properly enjoys protection.” Clearline Techs. Ltd. v. Cooper B-Line, Inc., 948 F.Supp.2d 691, 701 (S.D. Tex. 2013) (quoting Taco Cabana Int'l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1119 (5th Cir. 1991), aff'd sub nom. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992)).

         In its Motion, Defendant makes the conclusory assertion that “the design features of Plaintiff's product . . . are indisputably functional.” Motion [Doc. # 15], at ECF 22-23; see also Reply [Doc. # 22], n.32 at ECF 20 (same). In support of its premise, Defendant argues, among other things, that “[t]he handle size and shape functions so that the consumer can adequately hold the product; the size and location of the on/off switch functions to turn the product on/off and is situated where the thumb naturally falls on the handle.” Id. at 23. However, these are exactly the types of factual arguments that are not properly resolved on a motion to dismiss. While Defendant's characterizations of Plaintiff's proffered trade dress features may ultimately be proven correct, at this incipient stage of the litigation, there is no basis for the Court to definitively conclude, as a matter of law, those trade dress features are indisputably functional.[6] Moreover, even assuming that many or all of trade dress elements Plaintiff cites in the Complaint are functional, Defendant, in both its Motion and its Reply, ignores the fact that a combination of even functional elements may be entitled to protection. Two Pesos, Inc., 932 F.2d at 1119; see also 1 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 8:2 (4th ed.) (“A defendant cannot avoid liability for infringing a trade dress by segregating out individual elements of the trade dress as defined by plaintiff and arguing that no one of these is valid and protectable in and of itself.”). Here, the Court cannot conclude as a matter of law that the combination of some or all of the elements alleged by Plaintiff to comprise its trade dress is necessarily functional. For example, it is plausible that the combination of style lines and colors in the blendSMART System may constitute arbitrary, non-functional features. Therefore, based on Plaintiff's factual trade dress allegations, Plaintiff has stated a claim that at least some of its proffered trade dress elements are non-functional and entitled to protection.[7] Plaintiff has adequately pleaded the first element of a trade dress infringement claim.

         In sum, the allegations in the Complaint give Defendant fair notice of the trade dress elements at issue in this lawsuit and adequately allege that those elements have acquired secondary meaning and are non-functional. The Motion ...


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