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Management v. Navigator Investments, LLC

United States District Court, D. Rhode Island

December 9, 2014

CLARK CAPITAL MANAGEMENT, Plaintiff,
v.
NAVIGATOR INVESTMENTS, LLC, Defendant.

MEMORANDUM AND ORDER

MARY M. LISI, District Judge.

This matter is before the Court on Plaintiff's, Clark Capital Management ("Plaintiff"), motion to dismiss Defendant's, Navigator Investments, LLC ("Defendant"), counterclaim pursuant to Fed.R.Civ.P. 12(b)(6).

I. Background

Plaintiff brings this action against Defendant, alleging, among other things, that Defendant, through its use of the designation "NAVIGATOR INVESTMENTS, " infringed upon Plaintiff's rights in its "NAVIGATOR" family of trademarks. Defendant asserts two counterclaims: (1) cancellation of Plaintiff's Registration No. 3, 970, 349 for "NAVIGATOR" on the basis of fraud, and (2) declaratory relief pursuant to 28 U.S.C. § 2201. At a hearing on the motion to dismiss, the Court granted Plaintiff's motion on the declaratory relief counterclaim but allowed Defendant leave to amend. The Court took the cancellation counterclaim under advisement. Having reviewed the counterclaim as pled and the pertinent case law, the Court concludes that Defendant has not pled sufficient facts to survive Plaintiff's motion to dismiss the cancellation counterclaim.

II. Standard of Review

Courts apply the same standard to motions to dismiss a counterclaim pursuant to Fed.R.Civ.P. 12(b)(6) as they do when reviewing motions to dismiss a complaint. Lexington Luminance LLC v. Osram Sylvania Inc., 972 F.Supp.2d 88 (D. Mass. 2013;). The only issue for the Court to decide in a 12(b)(6) motion to dismiss is "whether, construing the well-pleaded facts of the [counterclaim] in the light most favorable to the [pleader], the [counterclaim] states a claim for which relief can be granted." Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 7 (1st Cir. 2011). In order to withstand a motion to dismiss, a counterclaim "must contain sufficient factual matter... to state a claim to relief that is plausible on its face." Katz v. Pershing, LLC, 672 F.3d 64, 72-73 (1st Cir. 2012) (internal quotation marks omitted). The pleader is required to "include factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 73 (internal quotation marks omitted).

In evaluating a motion to dismiss, the Court takes the counterclaim's "well-pled ( i.e., non-conclusory, non-speculative) facts as true, drawing all reasonable inferences in the pleader's favor, and [determines] if they plausibly narrate a claim for relief." Schatz v. Republican State Leadership Committee, 669 F.3d 50, 55 (1st Cir. 2012). However, "statements in the [counterclaim] that simply offer legal labels and conclusions or merely rehash cause-of-action-elements" must be isolated and ignored. Id . Generally, the Court's review is limited to the allegations contained in the counterclaim. Bose Corp. v. Lightspeed Aviation, Inc., 691 F.Supp.2d 275 (D. Mass. 2010).

Defendant contends that Plaintiff's Registration No. 3, 970, 349 for the trademark "NAVIGATOR" should be cancelled because Plaintiff knowingly made a false statement/material omission to the United States Patent and Trademark Office ("PTO") in registering the mark. To establish fraud in the procurement of a federal trademark registration, Defendant must plead: "(1) that [Plaintiff] made a false representation to the PTO regarding a material fact; (2) that [Plaintiff] knew that the representation was false; (3) that [Plaintiff] intended to induce the PTO to act in reliance on the misrepresentation; and (4) the PTO was thereby deceived into registering the mark." General Linen Service, Inc. v. General Linen Service Co., Inc., ___ F.Supp.2d ___, 2013 WL 2605430, at *2 (D.N.H. June 11, 2014) (quoting Colon-Lorenzana v. South American Restaurant Corp., Civil No. 12-1794 (MEL), 2014 WL 1794459, at *3 (D.P.R. May 6, 2014)). The "obligation which the Lanham Act imposes on an applicant is that he [or she] will not make knowingly inaccurate or knowingly misleading statements in the verified declaration forming a part of the application for registration." General Linen Service, Inc., 2014; WL 2605430, at *2 (quoting Society of Accredited Marine Surveyors, Inc. v. Scanlan, No. 01-11877-GAO, 2005 WL 670541, at *4 (D. Mass. March 23, 2005)). "A party seeking cancellation of a trademark registration for fraudulent procurement bears a heavy burden of proof." In re Boss Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009).

As with other fraud claims, fraud in the procurement of a registration must be plead with particularity. General Linen Service, Inc., 2014 WL 2605430. Intent and knowledge, however, may be alleged generally. Orion Seafood International, Inc. v. Supreme Group B.V., No. 11-cv-562-SM, 2012 WL 3765172 (D.N.H. August 29, 2012). The counterclaim must set forth "specific facts that make it reasonable to believe that [Plaintiff] knew that a statement was materially false or misleading." Id. at *2 (internal quotation mark omitted).

III. The Counterclaim

Defendant alleges the following:

In September 1990, Plaintiff filed a trademark application with the PTO to register the trademark "NAVIGATOR" for "investment advisory services in the field of stocks and mutual funds[.]" Counterclaim at ¶ 7; Docket # 17. Plaintiff claimed a first use in commerce date of March 10, 1987. Id . In October 1991, the PTO issued Registration No. 1, 662, 756 based on the application. Id . In March 2009, Plaintiff filed a second trademark application with the PTO to register the mark "NAVIGATOR" for a broader range of services: "investment advisory services in the field of stocks, bonds, annuities and mutual funds; investment consultation, asset allocation services; stock brokerage services." Id. at ¶ 8. Plaintiff claimed a first use in commerce date of at least as early as March 10, 1987. Id . In October 2009, the PTO issued Registration No. 3, 698, 185 based on the application. Id.

In October 2010, Plaintiff filed a third trademark application with the PTO to register the mark "NAVIGATOR" for an even broader range of services: "[m]utual fund brokerage, distribution, investment; mutual fund services, namely, mutual fund brokerage, mutual fund distribution and the administration and management of mutual funds, financial portfolio solutions, and investments; investment advisory services in the field of stocks, bonds, annuities and mutual funds, investment consultation, asset allocation services; stock brokerage services." Id. at ¶ 10. Plaintiff claimed a first use in commerce date of April 1, 2002. Id. at ¶ 9.

The October 2010 application included a declaration oath ("declaration") from Camille M. Miller ("Miller"), an attorney for Plaintiff. ...


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