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Little Kids, Inc. v. 18Th Avenue Toys, Ltd.

United States District Court, D. Rhode Island

June 18, 2019

LITTLE KIDS, INC., Plaintiff,
v.
18TH AVENUE TOYS, LTD., Defendant.

          REPORT AND RECOMMENDATION

          PATRICIA A. SULLIVAN, UNITED STATES MAGISTRATE JUDGE

         On September 25, 2018, Plaintiff Little Kids, Inc., initiated this trademark action against Defendant 18th Avenue Toys, Ltd., asserting six registered federal trademarks pursuant to the Lanham Act, 15 U.S.C. § 1051, et seq., and Rhode Island statutory and common law. ECF No. 1 (“Compl.”). The parties in this case are both competitors in the children's toy industry. The accused product is Defendant's version of a “bubble solution product, ” Compl. ¶ 18, which Plaintiff has trademarked and sells as a BUBBLE BUCKET®.[1] Both Defendant's accused product and Plaintiff's BUBBLE BUCKET® are sold as toys that hold bubble solution and a wand children can use to blow bubbles. Shortly after the Complaint was filed, the Court issued a temporary restraining order prohibiting Defendant from selling or offering for sale products with terms related to, or products otherwise related to, Plaintiff's trademarks. ECF Nos. 10, 12, 13.

         Defendant responded to the Complaint with denials and affirmative defenses, but also with a single-count Counterclaim. ECF No. 15 at 13-17 (“Countercl.”). The Counterclaim seeks a judicial declaration that Plaintiff's purported trade dress is invalid. Id.; Compl. ¶¶ 29-31, 40, 51, 55. In support of the assertion of invalidity, the Counterclaim alleges that Plaintiff's purported trade dress is functional, generic, not distinctive and unprotectable. Countercl. ¶¶ 6-8, 18.

         Plaintiff now challenges the legal viability of the Counterclaim with a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). ECF No. 16. Plaintiff argues that Defendant could have sought a declaration of noninfringement of Plaintiff's trade dress, but that a counterclaim seeking a declaration of “invalidity of trade dress” is unavailable as a matter of law. In support of its motion, Plaintiff points out that its Complaint alleges four causes of action, each based on infringement and dilution of its trademarks, but that the Complaint does not assert an independent claim of trade dress infringement. Defendant counters that the Complaint purports to claim not only trademark infringement and dilution, but that it also includes the following allegations: that Defendant's versions of the toy are similar and in some cases identical to Plaintiff's “in appearance, sound, connotation and commercial impression”; that Plaintiff has demanded that Defendant cease from using Plaintiff's “trade dress, ” but Defendant has wrongly continued to do so; that Defendant has copied the style and shape of Plaintiff's toy; and that Defendant has knowingly and maliciously used a confusingly similar imitation to the toy in derogation of Plaintiff's rights in its trade dress. Compl. ¶¶ 29-31, 40, 51, 55. Defendant also points out that Plaintiff's lengthy prayer for relief includes a request for an injunction barring Defendant from using Plaintiff's trade dress and from using any design that is likely to dilute the distinctiveness of Plaintiff's trade dress. Id. at 9-10. In response to these allegations, Defendant's Counterclaim asks for a declaration that the toy's overall appearance is functional and generic and is therefore insufficiently distinctive as to amount to protectable trade dress. Countercl. at 17.

         Plaintiff's Fed.R.Civ.P. 12(b)(6) motion has been referred to me for report and recommendation. 28 U.S.C. § 636(b)(1)(B). For the reasons that follow, I recommend that the motion be denied.

         I. BACKGROUND[2]

         Plaintiff is a Rhode Island toy manufacturer, which owns six registered federal trademarks related to the toy. Compl. ¶¶ 1, 5-10. Since acquiring the trademarks, Plaintiff has utilized them in the production and sale of the toy. See id. ¶¶ 11-14. Defendant is a New York corporation that is engaged in the toy business in New York and online. Id. ¶ 15; ECF No. 15 ¶ 15 (“Answer”). It has purchased Plaintiff's products for resale. Answer ¶¶ 16-17. According to Plaintiff, this buy-sell relationship allowed Defendant to become familiar with Plaintiff's toy; with this familiarity, Plaintiff alleges, Defendant intentionally commenced infringing Plaintiff's trademarks and manufacturing and selling products that are confusingly similar to the toy. See Compl. ¶¶ 18-21; Answer ¶¶ 18-21 (denying these allegations). Based on these contentions, Plaintiff's verified Complaint presents four claims:

Count I: Federal Trademark Infringement
Count II: False Designation and Representation of Services in Violation of Section 43(a) of the Lanham Act
Count III: Dilution of Trademarks
Count IV: Common Law Trademark Infringement and Unfair Competition

Compl. at 1, 6, 8. Plaintiff seeks injunctive relief ordering Defendant, inter alia, to stop selling and to impound allegedly infringing products; it also asks for an award of money damages, including punitive damages based on willful and deliberate infringement. Id. at 9-11.

         While “trade dress” is not the basis for the claims set out in the four enumerated Counts, as summarized supra, there are multiple references to it in Counts I, II and IV. Id. ¶¶ 29-31, 40, 51, 55 (e.g., “similarity . . . of Defendant's and Little Kids' products and trade dress”; “cease and desist from using the Little Kids Marks, trade dress”; “deliberate and malicious use of a confusingly similar imitation of the Little Kids Marks and trade dress”). And Plaintiff's prayer for relief seeks to enjoin Defendant from using or diluting Plaintiff's “trade dress.” Id. at 9-10. As relevant here, the Counterclaim contends that Plaintiff's purported trade dress is not protectable because the toy's shape and appearance are functional, generic and not distinctive, in that it is simply a bucket that prevents spills and has a handle. Countercl. ¶¶ 4-8. Corroborating this allegation is the factual assertion (with illustrations) that other competitors use the same or a similar bucket for their bubble solution products. Id. ¶¶ 14-15. Defendant has also raised trade dress invalidity as an affirmative defense. Answer at 12. The motion to dismiss challenges only the Counterclaim, not the trade dress invalidity affirmative defense.

         II. ...


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