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SCS Direct, Inc. v. Insassy, Inc.

United States District Court, D. Connecticut

April 7, 2016

SCS DIRECT, INC., Plaintiff,
INSASSY, INC., Defendant.


Janet Bond Arterton, U.S.D.J.

Defendant Insassy, Inc. (“Insassy”) moves [Doc. # 38] to dismiss Plaintiff SCS Direct, Inc.’s (“SCS Direct”) claims alleging false designation of origin (Count I) in violation of the Lanham Act, 15 U.S.C. § 1125(a).[1] Alternatively, Insassy moves the Court to transfer venue to the Central District of California pursuant to 28 U.S.C. 1404(a) on the grounds that Connecticut is an “inconvenient forum.” The Court heard oral argument on March 8, 2016. For the following reasons, Defendant’s motion is denied.

I. Plaintiff’s Factual Allegations

Plaintiff alleges the following in its Amended Complaint [Doc. # 35]. SCS Direct is a Connecticut corporation with a principal place of business in Milford, Connecticut. (Am. Compl. ¶ 9.) It has sold “Loom Bands, ” i.e., small rubber bands that are woven into bracelets and other charms, through the online retailer (“Amazon”) since July 2013, primarily using the seller name “Loom Bands.” (Id. ¶ 2.)

The SCS Loom Bands trade dress involves a particular layout and specific spatial relationship with certain “sizes, shapes, color schemes, text and graphics, ” including “a child’s hand with colorful bracelets; ‘Loom Bands’ diagonally written in a particular script font in multicolor lettering; a blue band with certain wording crossing the design’s middle section with text identifying the contents of the package directly beneath the band; and a colored circle in the design’s upper left corner with specific text.”[2] (Id. ¶ 3.) The trade dress is “non-functional as the SCS Loom Bands Trade Dress is on the packaging of the Loom Bands product and there are multiple alternative designs for packaging of the Loom Bands product that do not impact its function, as evidenced by the numerous sellers of rubber bands [sic] products on Amazon that do not use the SCS Loom Bands Trade Dress on Advertising or packaging.” (Id. ¶ 25.)

Over time, SCS Direct has received hundreds of positive reviews for its Loom Bands products, all sold using the SCS Loom Bands Trade Dress packaging. Due to the widespread use and display of SCS Direct’s Loom Band products, including its trade dress, “(a) the public, including users of Amazon, uses the SCS Loom Bands Trade Dress to identify and refer to SCS Direct’s Loom Bands product, and thus the trade dress serves primarily as a designation of origin of products emanating from SCS Direct and (b) the trade dress has built up secondary meaning and extensive goodwill, as evidenced, at least in part, by the positive reviews received by SCS Direct for its sale of the Loom Bands products on Amazon.” (Id. ¶ 17.)

SCS Direct alleges that Insassy, a California corporation with its principal place of business in San Gabriel, California, and a SCS Direct business competitor, “sold a rubber band product on Amazon using the SCS Loom Bands Trade Dress in connection with the sale, advertising and packaging of its own rubber band product.” (Id. ¶¶ 9, 4.) Insassy was never given “authorization to use the SCS Loom Bands Trade Dress in its advertising, marketing, packaging, or otherwise.” (Id. ¶ 4.) By using SCS Direct’s Trade Dress, Insassy sought to “confuse customers by making customers believe that they were purchasing SCS Direct’s Loom Bands Product and to pass off its own products as SCS Direct’s Loom Bands.” (Id. ¶ 6.) Indeed, Insassy, or one its various business aliases, advertised under SCS Direct’s Loom Bands product’s Amazon listing using the SCS Loom Bands Trade Dress to sell its products, purposefully employing various business aliases in order to continue using SCS Loom Band’s trade dress and “to thwart SCS Direct’s and Amazon’s efforts to prevent Insassy’s wrongful misconduct.” (Id.)

By using SCS Direct Loom Band’s Trade Dress, Insassy intentionally confused Plaintiff’s customers, making them believe that they were purchasing SCS Direct Loom Bands products when, in fact, they were purchasing Insassy’s loom bands. (Id. ¶ 6.) SCS Direct seeks injunctive relief, damages, and disgorgement of Defendant’s profits.

II. Discussion[3]

A. False Designation of Origin, False Representation, and False Description

The Lanham Act was intended to make “actionable the deceptive and misleading use of marks” and “to protect persons engaged in . . . commerce against unfair competition.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767-68 (1992). Section 43(a) of the Lanham Act, which protects qualifying unregistered trademarks, provides:

Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a)(1)(A). “The protection against unregistered trademark infringement extends to ‘trade dress, ’ which encompasses the design and appearance of a product along with all the elements that serve to identify the product to consumers.” Sherwood 48 Assocs. v. Sony Corp. of Am., 76 F. App’x 389, 391 (2d Cir. 2003).

“To state a claim for false designation under § 1125(a) based on trade dress, a plaintiff must establish (1) that its trade dress ‘is distinctive as to the source of the good, ’ (2) ‘that there is a likelihood of confusion between [the plaintiff’s] good and the defendant’s, ’ and (3) that the trade dress is not functional.” Eliya, Inc. v. Kohl’s Dep’t Stores, No. 06 CIV.195 (GEL), 2006 WL 2645196, at *2 (S.D.N.Y. Sept. 13, 2006) (quoting Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 115-16 (2d Cir. 2001)). “In a claim based on product packaging trade dress, the distinctiveness requirement can be met in one of two ways-either by establishing that the dress is inherently distinctive because it clearly identifies the source of the product, or by establishing that the dress has acquired secondary meaning because, in the mind of ...

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