Tropic Ocean Airways: Don’t Draft your Complaint on the Beach

When a lawsuit is filed, a plaintiff must provide the factual and legal basis for the claims to avoid the case being dismissed.  How much detail must be provided was arguably changed significantly by a pair of U.S. Supreme court decisions, Twombly and Iqbal, decided in 2007 and 2009, respectively.  Before these two cases, the courts often repeated the rule that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” 

In Twombly, the Supreme Court retired this rule.  The Court reiterated the requirement of Rule 8, which requires only a “short and plain statement of the claim showing the pleader is entitled to relief.”  However, the Court went on to explain that while the complaint need not recite detailed factual allegations, the allegations provided by a plaintiff must be “more than labels and conclusions, and a formulaic recitation of the elements of a claim will not do.”  Rather, the pleadings should provide enough facts to state a claim for relief that is plausible on its face.

In the context of intellectual property law claims, and particularly in patent cases, the Twombly/Iqbal decisions have not resulted in a significant change in the practice of pleading a case, at least not yet.  For patent infringement claims, the Federal Rules provide a form the Federal Circuit has indicated is sufficient to state a claim for patent infringement.  However, the Judicial Conference of the U.S., which suggests changes to the Federal Rules has unanimously approved the abolishment of the form complaints from the rules, including the patent infringement form complaint.  Should the Supreme Court approve this change, then the Federal Circuit may very well re-evaluate its prior decisions with respect to the adequacy of patent infringement complaints.

With respect to trademark claims, there have been several decisions in which the appellate courts have affirmed dismissals of trademark claims because of a failure to state a claim that is “plausible.”  In some of these cases, the courts have looked into the facts alleged and made judgments about whether the claim is plausible.  At first glance, this could be seen as an improper fact finding exercise and thus a failure of the court to follow the rule that the plaintiff’s allegations must be taken as true.  But on closer review, it becomes apparent that the plaintiff is making conclusory statements regarding the validity of a trademark or the likelihood of confusion without alleging facts to back up the claims. 

In a trademark-related case based on the Anticybersquatting Consumer Protection Act (APCA), our firm was able to secure a dismissal of the complaint, which was recently affirmed by the Eleventh Circuit Court of Appeals.  In Tropic Ocean Airways, Inc. v. Key West Seaplane Service, Inc., the plaintiff failed to make sufficient allegations regarding its trademark rights in the TROPIC OCEAN AIRWAYS mark.  The ACPA allows owners of certain marks to bring claims against those who register domain names that are identical or confusingly similar to the mark in question.  However, one of the requirements of the ACPA is that the mark must have been distinctive at the time the defendant registered the domain name.  Generally speaking, common law trademark rights in a mark arise upon use of the mark in connection with the goods or services unless the mark is merely descriptive of the goods or services provided.  If the mark is merely descriptive, then rights do not arise until the mark has acquired distinctiveness, or in other words, the consuming public has come to associate the mark with a particular source of the good or services.

In the Tropic Ocean Airways case, the plaintiff alleged that it used the TROPIC OCEAN AIRWAYS mark “in connection with offering and provision of its commercial aviation services which transport passengers . . . from the state of Florida to foreign countries such as the Bahamas or other destinations in the Carribean.”  The Eleventh Circuit found that this allegation “establishes only that the mark informs consumers about the service [plaintiff] provides:  flying planes across the ocean to tropical locations.”  Because there was no “leap of imagination” required to connect the mark to the services offered, the mark was not a suggestive mark having inherent distinctiveness.  Although the plaintiff argued that the question whether the mark is distinctive is a question of fact that should not be decided in a motion to dismiss, the court found that the amended complaint failed to allege “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”  Specifically, the plaintiff failed to allege “facts related to use of the mark that, if true, would establish that the mark is suggestive, such as whether competitors infrequently use the terms in the mark.”

The Eleventh Circuit went on to examine the plaintiff’s claim that the mark had secondary meaning in March 2012 when the defendants registered the domain name.  The court held that plaintiff failed to plead a plausible claim of secondary meaning because virtually all the allegations in the amended complaint related to secondary meaning are conclusory.  Plaintiff alleged in the complaint that it “continuously promoted” the mark “through substantial advertising and marketing and sales of its aviation and airline services,” that it “expended considerable time, resources, and effort in promoting” the mark; and that the mark “serv[es] to distinguish Plaintiff’s services in the marketplace.”  The court found that these allegations “amount to nothing more than a formulaic recitation” of the elements of the secondary meaning test, and thus failed to support a reasonable inference of secondary meaning.

The plaintiff did, however, allege two pertinent facts: 1) that it began offering services using the mark beginning in March 2011, one year prior to defendants’ registration of the domain name and 2) that it used the mark on its own website, www.flytropic.com. While these facts show some advertising using the mark, such a bare allegation without any facts concerning the extent to which the public identifies the mark with plaintiff was insufficient to establish that TROPIC OCEAN AIRWAYS had acquired secondary meaning in connection with plaintiff’s tropical airline service.

This case is just one illustration of the importance of adding factual details in the complaint to support a plausible claim for relief.  It is likewise crucial when defending such claims to take a close look at whether a motion to dismiss should be filed in an attempt to get an early dismissal and limit the expense of defending a questionable case.  While the conventional wisdom is that dismissal at the pleadings stage is difficult in intellectual property cases, and that will generally remain the case, this tool should not be overlooked.   You may be pleasantly surprised at what the courts may be willing to do with a Twombly motion. 

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