On August 8, 2011, the U. S. Court for the District of Maryland granted in part, and denied in part, a motion under Rule 12(b)(6), F.R.C.P., to dismiss claims of trademark and trade dress infringement, trade secret misappropriation and unfair competition. In the ongoing quest to satisfy the pleading requirements of Bell Atlantic Corporation v. Twombly, 550 U. S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Myung Ga decision provides some practical guideposts for the pleadings of trademark and trade dress plaintiffs.
Plaintiff Myung Ga, Inc. (“Myung Ga”) is a New Jersey corporation that develops and licenses Korean food recipes and marketing materials. The two defendant companies are Maryland corporations operating Korean restaurants in two Maryland locations.
Myung Ga pleaded that it granted an exclusive license to a third company for the area embracing Virginia, Maryland and the District of Columbia, to use Myung Ga’s trademarked Korean character names, proprietary trade dress (consisting of traditional Korean restaurant décor), and proprietary recipes for Korean dishes such as tofu soup and stir fried squid. The license did not allow for the assignment of any rights..
Myung Ga pleaded that notwithstanding the bar to assignment, the third company provided the Defendants with unauthorized access to Myung Ga’s intellectual property and that both Defendants now “use” Myung Ga’s trademarks, trade dress and recipes, without Myung Ga’s permission. Myung Ga’s complaint asserted four claims: (1) trademark infringement under the Lanham Act, 15 U. S. C. § 1114, (2) unfair competition under the Lanham, 15 U. S. C. § 1125, (3) unfair competition for trademark infringement under Maryland law, and (4) unfair competition for misappropriation of trade secrets (the recipes) under Maryland law.
The Twombly-Iqbal decisions recognize that the Federal Rules of Civil Procedure require a plaintiff to plead only “a short and plain statement of the claim showing that the pleader is entitled to relief”. F.R.C.P. 8(a)(2). However, they hold that the “showing” must be more than a blanket assertion, and must consist of more than “a formulaic recitation of the elements of a cause of action” or “naked assertion[s] devoid of further factual enhancement.” Ashcroft, 129 S. Ct. at 1949. On that rock the Plaintiff came to grief here.
Disregarding Myung Ga’s initial effort to avoid any application of the Twombly-Iqbal standard, the court found that Myung Ga’s allegations of the Defendants’ infringing “use” amounted to no more than formulaic and conclusory allegations. Myung Ga alleged only that the Defendants made “use” of its trademarks in their “trade name, signage, and advertising” and in manners “likely to cause confusion, or to create mistake, or to deceive the general purchasing public.” It asserted similar conclusory allegations of the “use” of its trade dress. Such language only copied wording from the Lanham Act itself, and failed to identify with specificity how the Defendants infringed Myung Ga’s trademarks and trade dress.
In particular, the court found that Myung Ga
"fails to allege any facts, for instance, that show similarities between its trademark and Defendants’ trade name, signage and advertising. Plaintiff does not allege that there has been any actual confusion. Nor does Plaintiff explain how Defendants use the marks and how such use might create a similar impression to Plaintiff’s mark. There is no indication of the comparative qualities of the two marks. There is no mention of the sophistication of the consuming public."
Slip Op. at *13 (emphasis in original). Noting the multi-factor test relevant to analysis of the likelihood of confusion, see Georgia Pacific Consumer Products, LP v. Von Drehle Corp., 618 F.3d 441 (4th Cir. 2010), the Myung Ga court concluded, “Although Plaintiff does not need to present facts speaking to all of the nine factors that make up the likelihood of confusion inquiry, a complaint is certainly insufficient when it fails to speak to any of them.” Id.
The court found similar shortcomings in Myung Ga’s pleading of its trade dress claim. That claim alleged infringing “use” but failed to specify how the Defendants infringed the trade dress or caused a likelihood of confusion.
In the end, only Myung Ga’s unfair competition claim based on trade secret misappropriation pleaded a sufficient factual basis to survive the Defendants’ motion. The court dismissed the other causes of action, without prejudice to Myung Ga’s right to file an amended complaint adequately stating the factual basis of those claims.