On December 9, 2016, in Simoniz USA, Inc. v. Dollar Shave Club, the United States District Court for the District of Connecticut dismissed a declaratory judgment complaint filed in an intellectual property lawsuit. Simoniz USA, Inc. (“Simoniz”), a company that sells cleaning products, filed the complaint against Dollar Shave Club (“DSC”), a company that sells personal care products, alleging trademark infringement. DSC had concerns about the potential for confusion between the brands of the two companies and had formally opposed Simoniz’s trademark applications in the U.S. and Europe. In response to Simoniz’s repeated requests that DSC withdraw its opposition, DSC sent Simoniz an e-mail containing “cease and desist” language. While DSC did not formally threaten any trademark infringement claim on the part of Simoniz, it did include a demand at the conclusion of its letter that Simoniz stop using the mark in the U.S. as well as in the E.U. Simoniz thereafter sought a declaratory judgment from the court stating that Simoniz’s use of the DOLLAR CLEAN CLUB trademark in the U.S. did not infringe U.S. law.
The U.S. Supreme Court has clarified that a party seeking a declaratory judgment must show that there is a “substantial controversy between the parties having adverse legal interests of sufficient immediacy and reality to warrant the issuance of a declaratory judgment” ( see MedImmune v. Genentech Inc., 549 U.S. 118 (2007)). Although the court in this matter did not find DSC’s opposition to the Simoniz trademark application in Europe constituted a “substantial controversy” for declaratory judgment purposes, the court found its demand that Simoniz cease all use of the contested trademark may rise to this level. However, substantial controversy alone is not sufficient to confer subject matter jurisdiction for the purposes of a declaratory judgment action and the court needed to look to whether there was sufficient immediacy and reality.
In dismissing the action, the court found that any “substantial controversy” between the parties was not of sufficient “immediacy and reality” as required to confer subject matter jurisdiction. Specifically, the court noted Simoniz failed to establish that it had a definite intent and apparent ability to use the trademark in the U.S. at the time it requested a declaratory judgment. As such, Simoniz failed to establish an actual case of controversy required to survive a motion to dismiss.
This decision is important in that the court found “cease and desist” language could be sufficient to demonstrate a substantial controversy between parties for the purposes of subject matter jurisdiction. Although here, the court noted that substantial controversy alone is not enough to sustain a declaratory judgment action without a showing of an immediacy and reality sufficient to justify the court taking action, and ultimately dismissed the case. Companies may now find it easier to preemptively file suit and request declaratory judgment claiming they are under the threat of an intellectual property lawsuit.