Case 3:17-cv-00026-TCB Document 53 Filed 03/06/18 Page 1 of 19

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA
NEWNAN DIVISION

KASON INDUSTRIES, INC.,

Plaintiff,
CIVIL ACTION FILE
v.
NO. 3:17-cv-26-TCB
ALLPOINTS FOODSERVICE
PARTS & SUPPLIES, LLC d/b/a
ALLPOINTS HOLDINGS, INC., et
al.,

Defendants.

ORDER

This case comes before the Court on Defendants’ motion [20] to

dismiss Kason Industries, Inc.’s first amended complaint [8].

I. Background

On February 23, 2017, Plaintiff Kason Industries, Inc. filed this

action based on alleged trademark infringement, counterfeiting, unfair

competition, and related causes of action against Defendants. Kason

amended its complaint on May 5.

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Kason, a manufacturer of various parts and equipment for the

restaurant industry, is the registered owner of a number of trademarks.

These include word marks for its name, “KASON,” as well as marks for

the distinctive design of a number of its products, including latches and

hinges.

Kason alleges that Defendants, various distributors of restaurant

equipment and replacement parts, all market or sell parts in a manner

that infringes one or more of Kason’s registered trademarks. For

example, Kason avers that one or more of the Defendants offer

refrigeration parts for sale, using Kason’s marks—either its word marks

or trade dress—to market a product as a Kason product, but then

deliver a Kason knock-off or competitor product. This is accomplished

by showing a picture of a Kason part on an order page, and either

failing to identify the part as a Kason product or identifying it as a

Kason product but shipping something different.

Defendants have now moved to partially dismiss Kason’s amended

complaint.

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II. Legal Standard on a Motion to Dismiss

Federal Rule of Civil Procedure 8(a)(2) requires that a complaint

provide “a short and plain statement of the claim showing that the

pleader is entitled to relief.” This pleading standard does not require

“detailed factual allegations,” but it does demand “more than an

unadorned, the-defendant-unlawfully-harmed-me accusation.”

Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012)

(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

Under Rule 12(b)(6), a plaintiff must plead “enough facts to state a

claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007); Chandler v. Sec’y of Fla. Dep’t of Transp., 695

F.3d 1194, 1199 (11th Cir. 2012) (quoting id.). The Supreme Court has

explained this standard as follows:

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 misconduct
alleged. The plausibility standard is not akin to a
“probability requirement,” but it asks for more than a sheer
possibility that a defendant has acted unlawfully.

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Iqbal, 556 U.S. at 678 (citation omitted) (quoting Twombly, 550 U.S. at

556); see also Resnick v. AvMed, Inc., 693 F.3d 1317, 1324–25 (11th Cir.

2012).

Thus, a claim will survive a motion to dismiss only if the factual

allegations in the complaint are “enough to raise a right to relief above

the speculative level . . . .” Twombly, 550 U.S. at 555–56 (citations

omitted). “[A] formulaic recitation of the elements of a cause of action

will not do.” Id at 555 (citation omitted). While all well-pleaded facts

must be accepted as true and construed in the light most favorable to

the plaintiff, Powell v. Thomas, 643 F.3d 1300, 1302 (11th Cir. 2011),

the Court need not accept as true the plaintiff’s legal conclusions,

including those couched as factual allegations, Iqbal, 556 U.S. at 678.

Thus, evaluation of a motion to dismiss requires two steps: (1)

eliminate any allegations in the pleading that are merely legal

conclusions, and (2) where there are well-pleaded factual allegations,

“assume their veracity and then determine whether they plausibly give

rise to an entitlement to relief.” Iqbal, 556 U.S. at 679.

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III. Discussion

Defendants seek to dismiss the following claims in Kason’s

amended complaint: (1) Count III, Kason’s Federal Trademark Dilution

Act (“FTDA”), 15 U.S.C. § 1125(c), claim; (2) Count VI, common law

unjust enrichment; and (3) Kason’s claims for pre-suit damages,

damages for willful infringement, and injunctive relief. These

arguments are taken in turn.

A. Dismissal as to Count III: Kason’s Trademark Is Not

“Famous”

To establish a claim of trademark dilution under the FTDA, Kason

is required to prove, inter alia, “that the plaintiff’s mark is ‘famous,’

meaning that ‘it is widely recognized by the general consuming public of

the United States as a designation of source of the goods or services of

the mark’s owner . . . .’” Chanel, Inc. v. Bryan, No. 1:07-cv-225-ODE,

2008 WL 11336327, at *5 (N.D. Ga. Nov. 18, 2008) (quoting 15 U.S.C. §

1125(c)(1), (c)(2)(A)). “To warrant protection from dilution, a trademark

must be especially famous and distinctive.” Michael Caruso & Co. v.

Estefan Enters., Inc., 994 F. Supp. 1454, 1463 (S.D. Fla. 1998). When

Congress enacted the FTDA’s anti-dilution protections, it provided

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examples of trademark dilution: “Dupont shoes,” “Buick Aspirin,” and

“Kodak pianos.” H.R. REP. No. 104-374, at 3 (1995), as reprinted in 1995

U.S.C.C.A.N. 1029, 1030.

The FTDA itself lists several factors a court might consider to

determine whether a mark is distinctive and famous, including

(i) The duration, extent, and geographic reach of advertising

and publicity of the mark, whether advertised or publicized
by the owner or third parties. (ii) The amount, volume, and
geographic extent of sales of goods or services offered under
the mark. (iii) The extent of actual recognition of the mark.
(iv) Whether the mark was registered under the Act of
March 3, 1881, or the Act of February 20, 1905, or on the
principal register.

15 U.S.C. § 1125(c)(2)(A)(i)–(iv). For the reasons that follow, the Court

concludes that Kason’s marks do not rise to the level of fame required

under the FTDA.

Kason’s averments regarding the fame of its mark can be grouped

as follows: wide recognition in the commercial refrigeration market

(factor iii); nearly a century’s use for some, but not all, of its marks

(factors i and ii); and registration on the principal register (factor iv).

Kason’s complaint makes it clear that its marks are well-known

only within the commercial refrigeration and restaurant equipment

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hardware market. See, e.g., [8] ¶ 19. This “niche fame,” however, is

outside of Congress’s intended scope for FTDA protection. See Dan-

Foam A/S v. Brand Named Beds, LLC, 500 F. Supp. 2d 296, 307 n.90

(S.D.N.Y. 2007). Without a high bar for anti-dilution protection, the

“anti-dilution laws would turn every trademark into ‘an anti-

competitive weapon.’” Heller, Inc. v. Design Within Reach, Inc., No. 09-

Civ-1909 (JGK), 2009 WL 2486054, at *4 (S.D.N.Y. Aug. 14, 2009)

(quoting J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS & UNFAIR

COMPETITION § 24:104 (5th ed. Mar. 2018 update)). This factor weighs

heavily against a finding of fame under FTDA.

Kason’s allegations regarding its duration of use—from the

1920s—of its word mark are insufficient to make its brand famous.

“[T]he duration of the use of [Kason’s] mark is only part of the analysis.

[A] court must also consider the extent of the advertising and publicity

the marks received during its life,” among other factors, never

forgetting that the endgame is to determine what level of fame the

mark has achieved among the general consuming public. Eli Lilly & Co.

v. Nat. Answers, Inc., 86 F. Supp. 2d 834, 849 (S.D. Ind. 2000).

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Even though some of Kason’s marks have been used for over a

century, Kason’s complaint does not make it plausible that such use has

led to its widespread acceptance and recognition among the general

consuming public, rather than just in the commercial refrigeration

equipment market. Cf., e.g., Avery Dennison Corp. v. Sumpton, 189 F.3d

868, 877 (9th Cir. 1999) (holding that marks in use since the late 19th

and early 20th century were not famous under the FTDA).

Finally, the registration of Kason’s mark on the principal register

is not dispositive. Like the duration of use and all of the other relevant

factors, registration is only among the factors to be considered. Even if a

factor is supported by some facts, at the motion to dismiss stage the

facts, in light of all the relevant factors, must create the plausible

inference that the mark is famous within the meaning of the FTDA.

Here, Kason’s averments have not done so. Despite registration in the

early 20th century, Kason’s mark has yet to achieve that widespread

level of fame found in truly famous marks, which would bring it within

the scope of the FTDA’s anti-dilution protections. See House of Bryant

Publ’ns, LLC v. City of Lake City, 30 F. Supp. 3d 711, 715 (E.D. Tenn.

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2014) (providing examples of well-known brands that fell short of the

FTDA’s fame threshold).

The Court also rejects Kason’s contention that the fame of a

trademark cannot be resolved at the motion to dismiss stage. Kason

contends that it is entitled to factual development, and that this issue

should be reserved for summary judgment. But Kason must first

plausibly state a claim that its mark is famous—the classic Twombly–

Iqbal prerequisite—before being permitted to continue on to the factual

development stage. It has not done so. Once again, truly famous marks

are “those that receive multi-million dollar advertising budgets,

generate hundreds of millions of dollars in sales annually, and are

universally recognized by the general public.” Heller, Inc., 2009 WL

2486054, at *3. Kason’s complaint simply fails to plausibly allege that

its brand possesses so wide an impact and reach in the national

economy, and Kason has provided the Court no facts that suggest it can

remedy this shortcoming. As a result, dismissing under Rule 12(b)(6) is

appropriate.

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Accordingly, the Court holds that Kason does not own a famous

mark, and therefore its dilution claim (Count III) must be dismissed.

B. Dismissal as to Count VI: Unjust Enrichment Is Not a

Separate Theory of Recovery

The parties appear to disagree regarding what exactly Kason is

asserting in Count VI. Defendants contend that Count VI is an unjust

enrichment claim asserted as a separate tort under Georgia common

law, which would be improper. Kason rebuts that Count VI is an

alternate theory of recovery to its trademark claims. After reviewing

the amended complaint, the Court holds that Count VI must be

dismissed.

“[A] claim for unjust enrichment is not a tort, but an alternative

theory of recovery if a contract claim fails.” Tidikis v. Network for Med.

Commc’ns & Research, LLC, 619 S.E.2d 481, 485 (Ga. Ct. App. 2005).

Because Kason has not asserted any contract claims, it cannot assert an

independent claim for unjust enrichment in lieu of a contract. Valencia

v. Universal City Studios, LLC, No. 1:14-cv-528-RWS, 2014 WL

7240526, at *5 (N.D. Ga. Dec. 18, 2014). Therefore, this claim must be

dismissed.
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While this dismissal precludes unjust enrichment as an

independent tort-based recovery for Kason, it does not necessarily

preclude Kason’s ability to calculate damages flowing from Defendants’

alleged misconduct on a theory that they unjustly profited from the

misuse of Kason’s trademarks. That is, the theory of unjust enrichment

could supply a measure of damages, but the claim itself must be

predicated upon a separate legal theory of recovery properly proven. Cf.

Delta Air Lines, Inc. v. Network Consulting Assocs., Inc., No. 8:14-cv-

948-T-24 TGW, 2014 WL 4347839, at *10 (M.D. Fla. Sept. 2, 2014)

(“[T]he Court dismisses Plaintiff’s unjust enrichment claim under

Florida law, and instead, Plaintiff may pursue damages under the

Lanham Act in the form of Defendants’ profits under a theory of unjust

enrichment.”).

Accordingly, Count VI is dismissed.

C. Dismissal of Pre-suit Damages

Defendants move to dismiss Kason’s claim for pre-suit damages as

to Kason’s claims that Defendants have infringed its trade dress

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registrations, 1 damages resulting from willful infringement, and

injunctive relief. These are addressed as follows.

1. Pre-suit Damages

Kason has asserted trademark infringement claims under 15

U.S.C. §§ 1114 (relating to alleged trademark counterfeiting) and

1125(a) (false designation of origin and descriptions). Defendants argue

that 15 U.S.C. § 1111 limits the recoverability of pre-suit, or more

precisely, pre-actual-notice, damages for claims brought under both

§§ 1125 and 1114. A review of the statutory language and interpreting

case law, however, compels a different conclusion.

There is a consensus among courts addressing similar issues that

§ 1111 is an express limitation upon the damages available under 15

U.S.C § 1117(a), which provides for recovery of profits, damages, and

costs resulting from trademark infringement. See, e.g., OTR Wheel

Eng’g, Inc. v. W. Worldwide Servs., Inc., No. cv-14-085-LRS, 2016 WL

236231, at *2 (E.D. Wash. Jan. 20, 2016) (“15 U.S.C. § 1111 is a limit on

1 Defendants concede in the their reply in support of their motion to dismiss

that the instant motion to dismiss is focused only on Kason’s trade dress, rather
than the word mark in its business name “Kason.” [38] at 11 n.7.

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the recovery of profits and/or damages under 15 U.S.C. § 1117(a).”);

Mophie, Inc. v. Shah, No. SA CV 13-01321-DMG (JEMx), 2014 WL

10988347, at *21 (C.D. Cal. Nov. 12, 2014) (“A defendant must have

actual notice of a registered trademark before profits and damages can

be recovered.” (citing 15 U.S.C. § 1111)).2 This Court agrees, but only to

the extent that such damages are based on a violation of § 1125(a),

rather than violations resulting from the use of a counterfeit mark in

contravention of § 1114(1)(a).

First, the plain reading of § 1111 as it becomes applicable through

§ 1117(a) does not immediately intimate that § 1111 limits damages

available for a violation related to § 1114 and the use of counterfeit

marks. It is true that § 1117(b) indicates that damages for a violation of

§ 1114 may be calculated under § 1117(a)—and then trebled. But this

2 Kason does not contend that any of the marks for which it alleges
infringement are un-registered. This matters because, unlike registered
trademarks, un-registered trademarks are, of course, not subject to § 1111’s
requirement that the infringed party demonstrate actual notice of registration,
because there is no registration of which notice can be taken. See Luci Bags, LLC v.
Younique, LLC, No. 4:16-cv-00377, 2018 WL 324435, at *2 (E.D. Tex. Jan. 8, 2018)
(“Although § 1117 statutory damages for violation of § 1125(a) are ‘subject to’ the
notice requirements of § 1111, such requirements only apply to registered marks.
(quoting MCCARTHY, supra p.7, § 19:144)).

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does not decide our question. There is some tension between § 1117(a)

and its importation of the § 1111 actual-notice requirement, and the

specific definition of counterfeit marks, which must be reconciled.

The statutory language in § 1117(a) applies § 1111 as a limit on

the amount and nature of the damages that can be recovered under

§ 1117(a) when a plaintiff proves a trademark violation. This would

appear to include infringements based on counterfeiting. However, the

Court construes this section as a general provision importing § 1111’s

limitations. And this general provision cannot, however, prevail over

the specific statutory definition of counterfeiting, which does not require

proof of actual notice. See ANTONIN SCALIA & BRYAN A. GARNER,

READING LAW: THE INTERPRETATION OF LEGAL TEXTS 183–88 (2012) (“If

there is a conflict between a general provision and a specific provision,

the specific provision prevails (generalia specialibus non derogant).”).

Section 1117(b), in the context of determining damages under

§ 1117(a) for infringements stemming from the use of counterfeit

marks, specifically references the definition of counterfeit mark found

in § 1116(d). This subsection defines “counterfeit mark” as

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[A] mark that is registered on the principal register in the

United States Patent and Trademark Office for such goods
and services sold, offered for sale, or distributed and that is
in use, whether or not the person against whom relief is
sought knew such mark was so registered[.]

15 U.S.C. § 1116(d)(1)(B)(i) (emphasis added). This quite plainly

indicates that a violation related to a counterfeit mark does not require

proof of actual notice of registration. This specific statutory caveat,

forswearing an actual notice requirement, prevails over the more

general scheme wherein damages are limited by actual notice under

§ 1111 by way of reference in § 1117(a).

By coming to this conclusion, the Court joins its sister courts in

holding that “in the context of counterfeiting, the language of

§ 1116(d)(1)(B)(i) controls over the statutory notice requirement for the

recovery of damages.” Diane Von Furstenberg Studio v. Snyder, No.

1:06-cv-1356 (JCC), 2007 WL 1835276, at *2 (E.D. Va. June 25, 2007);

see also Playboy Enters., Inc. v. Universal Tel-A-Talk, Inc., No. Civ. A.

96-6961, 1999 WL 285883, at *2 (E.D. Pa. Apr. 26, 1999) (“Upon reading

the various sections as a whole, the Court can conclude only that

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Congress intended to construe counterfeiting as a subset of

infringement, requiring no notice of the registration of the mark.”).

In sum, § 1111 does not limit the damages recoverable for

counterfeiting. For other infringement claims (e.g., those under

§ 1125(a)), however, Kason must show that Defendants had actual

notice in order to recover damages under § 1117(a). At this time,

Kason’s complaint is insufficient to demonstrate that Defendants had

any actual notice of the registration of its trade dress. To the extent

that its claims are predicated upon an infringement activity other than

counterfeiting, this could limit the amount and type of damages

recoverable.

Therefore, upon Kason’s request, see [26] at 17, the Court grants

Kason the opportunity to amend its complaint only as to the actual-

notice issue. Contrary to Defendants’ contention, the Court disagrees

that such an amendment would be futile, as it is supported by the

extrinsic evidence included in Kason’s opposition brief, see generally

[26]. The Court cannot consider that extrinsic evidence to decide the

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motion to dismiss, but it does support Kason’s contention that an

amendment would not be futile.

Kason should file its amendment as a new operative pleading (i.e.,

as a new version that includes the amended portions), within seven

days of this Order. To the extent practicable, Kason should also make

explicit which theories of recovery (i.e., counterfeiting, false designation

of origin, etc.) it is proceeding under as they relate to whether or not it

must prove actual notice.

2. Willfulness and Injunctive Relief

Defendants contend that because Kason has not demonstrated

that they had actual notice of their registration, damages for willful

infringement under § 1117(c) are precluded. The Court disagrees. Not

only is the § 1111 limitation, applied through § 1117(a), absent from

§ 1117(c), but as the Court has already explained, counterfeiting is a

special species of infringement for which Congress has determined that

actual notice is not required. Therefore, damages related to willful

counterfeiting are not precluded by Defendants’ lack of knowledge.

Defendants’ motion to dismiss on this ground is denied.

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Defendants have also failed to demonstrate that an actual-notice

limitation applies to injunctive relief, for example, under 15 U.S.C.

§ 1116. Accordingly, Defendants’ motion on this ground is also denied.

IV. Conclusion

The Court grants in part and denies in part Defendants’ partial

motion [20] to dismiss. The Court grants Defendants’ motion by

dismissing Kason’s FTDA claim (Count III) and, to the extent it is

asserted as a separate tort, its claim for common law unjust enrichment

(Count VI). The Court denies Defendants’ motion to dismiss Kason’s

claims for pre-suit damages, willful damages, and injunctive relief. The

discovery stay entered on July 17, 2017 is accordingly lifted. 3

Kason is also ordered to amend its complaint as described above,

supra Section III.C.1, within seven days of this Order. Defendants are

ordered to file an answer to this second amended complaint within

twenty-one days of Kason’s filing.

3 Kason’s motion [45] to lift the stay and supplement the motion to dismiss is
therefore denied as moot. The Court also considers that, because the stay of
discovery is lifted and Defendant will be required to file an answer, the parties’
now-pending discovery dispute has been resolved. The parties are invited to email
the Court pursuant to its instructions [21] if outstanding issues remain following
the entry of this Order.

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IT IS SO ORDERED this 6th day of March, 2018.

____________________________________
Timothy C. Batten, Sr.
United States District Judge

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