Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`
`ESTTA Tracking number:
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`ESTTA742681
`
`Filing date:
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`04/27/2016
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`Proceeding
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`91226088
`
`Party
`
`Correspondence
`Address
`
`Submission
`
`Filer's Name
`
`Filer's e-mail
`
`Signature
`
`Date
`
`Plaintiff
`Designer Protein, LLC
`
`JANET F SATTERTHWAITE
`POTOMAC LAW GROUP
`1300 PENNSYLVANIA AVENUE NW SUITE 700
`WASHINGTON, DC 20004
`UNITED STATES
`tm@potomaclaw.com, jsatterthwaite@potomaclaw.com,
`ereese@potomaclaw.com
`
`Reply in Support of Motion
`
`Janet F. SATTERTHWAITE
`
`tm@potomaclaw.com, jsatterthwaite@potomaclaw.com
`
`/Janet F. Satterthwaite/
`
`04/27/2016
`
`Attachments
`
`Fenwich-v.-Dukhman.pdf(3409682 bytes )
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 1 of 18 PageID: 978
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`NOT FOR PUBLICATION
`
`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
`
`JOSHUA FENWICK,
`individually and on
`behalf of PRO-NRG, LLC, a New Jersey
`Corporation,
`
`Civil Action No.: 13-4359 (CCC)
`
`OPINION & ORDER
`
`Plaintiff,
`
`V.
`
`EDDIE DUKHMAN, TANIA PATRUNO,
`HELEN KHOROSH. JOSEPH RASA,
`BRANDON JACOBS. BRAYDEN
`ENTERPRISES, LLC, and SANTE PUR
`SOLUTIONS LLC,
`
`Defendants.
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`CECCHI, District Judge.
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`I.
`
`INTRODUCTION
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`This matter comes before the Court by way of three separate motions to dismiss Joshua
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`Fenwick’s (“Fenwick”) Amended Complaint: (1) Defendant Joseph M. Rasa’s motion to dismiss
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`the Complaint under Fed R Ci P l2(b)(1) and 12(b)(6) (the Rasa motion ) {ECF \o 36]
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`(2) Defendants Brayden Enterprises, LLC and Brandon Jacobs’ motion to dismiss the complaint
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`pursuant
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`to Fed. R. Civ, P. 8(a) and 12(b)(6) (the “Bra den motion”) [ECF No. 35], and
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`(3) Defendants Eddie Dukhrnan, Tania Patruno, Helen Khorosh, and Sante Pur Solutions, LLC’s
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`motion to dismiss Plaintiffs complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) (the
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`“Dukhman motion”) [ECF No. 34]. No oral argument was heard pursuant to Fed. R. Civ. P. 78.
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`For the reasons set forth below, Plaintiffs complaint is dismissed without prejudice.
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 2 of 18 PageID: 979
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`Ii.
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`BACKGROUND
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`This case arises out of a joint business venture entered into by Fenwick and Eddie
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`Dukbman (“Dukhman”) to manufacture, market, and sell a high-protein, non-milk based energy
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`drink called PRO-NTRG. (Am. Compi. ¶ 12, 1 7). After developing a business plan and deciding
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`that they would form a company called PRO-NRG, LLC, which would own the PRO-NRG drink,
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`Fenwick and Dukhman recruited Joseph Rasa (“Rasa”) as General Counsel in April 2011 and
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`requested that he incorporate their company. (Am. Compi. ¶f 15, 18-19.) Rasa did so on June 7,
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`2011. (Am. Compl. ¶22.)
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`Due to Dukhman’s criminal background, Dukhman enlisted his sister, Helen Khorosh
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`(“Khorosh”), to serve as his representative within PRO-NRG, LLC.
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`(Am. Compi. ¶ 21.) The
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`PRO-NRG, LLC certificate of incorporation therefore lists Rasa, Fenwick, and Khorosh as the
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`managing members of PRO-NRG, LLC, and Khorosh’s name is used in place of Dukhman’s on
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`all of the LLC’s formation documents. (Am. Compi. ¶J 2 1-23.) Plaintiff alleges that Khorosh had
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`no involvement in the development of PRO-NRG or PRO-NRG, LLC and that her role was strictly
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`limited to acting as Dukhman’s representative, (Am. Compl. ¶ 24.)
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`To promote their new energy drink, Fenwick contacted Brandon Jacobs (“Jacobs”), a
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`professional football player, who entered into an Endorsement Agreement with PRO-NRG, LLC
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`in August 2011. (Am. Compi, ¶ 25.) Around September 30. 2011. Fenwick. Khorosh (on behalf
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`of Dukhrnan). Rasa, and Jacobs on behalf of a company he owns called Brayden Enterprises. LLC
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`(“Brayden”) executed an Operating Agreement for PRO-NRG, LLC (the “Operating Agreement”).
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`(Am. Cornpl. ¶ 26-27.) The Operating Agreement listed Fenwick, Rasa, and Dukhman as
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`members of the Management Committee. (Am. Compi. ¶ 29.) Throughout the next year, Fenwick
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`2
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 3 of 18 PageID: 980
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`and Dukhman continued to develop PRO-NRG. producing boxes with Jacobs’
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`image and
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`manufacturing 8,000 bottles of their energy drink with the name PRO-NRG on the bottles.
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`(Am.
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`Compi. ¶ 34.)
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`In February 2012, Fenwick and Dukhman brought samples of PRO-NRG to gyms
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`and food and nutrition stores, while Fenwick worked on finalizing a PRO-NRG website.
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`(Am.
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`Compi. J 36-3 7.)
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`Fenwick alleges that, for reasons not disclosed to the Court, since the time Fenwick,
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`Khorosh, and Rasa signed the Operating Agreement, all of the Defendants (but most specifically
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`Dukhman) have engaged in concerted activity to eliminate his interest in the PRO-NRG business.
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`(Am. Compi. ¶ 70.) For example, Fenwick asserts that the Defendants set up a shadow company
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`called Sante Pur Solutions, LLC (“SPS”), naming Rasa as SPS’s agent and Khorosh as the sole
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`member, in an attempt to take ownership of the PRO-NRG drink.
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`(Am. Compl. ¶ 31-32.) PRO
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`NRG is now allegedly being marketed under the SPS name and all of PRO-NRG, LLC’s assets
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`have been transferred to SPS.
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`(Am. Compl. ¶ 72.) Additionally, Fenwick alleges that Dukhman
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`secretly opened a bank account for PRO-NRG, LLC using a fraudulent copy of the PRO-NRG,
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`LLC Certificate of Formation that listed Dukhman as the sole member, and that Dukhman has kept
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`Fenwick from accessing the account.
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`(Am. Compi. ¶J 3 7-43.) Further, Fenwiek asserts that
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`Dukhman persuaded Jacobs and various other marketing, manufacturing, and distribution contacts
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`to cease communication with Fenwick regarding PRO-RG. thereby interfering with his business
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`relationships.
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`(Am. Compi. ¶ 48.) He also alleges that Dukhman andIor his agents changed the
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`login information to Fenwick’s PRONRG email and website accounts to deny him access to said
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`accounts.
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`(Am. Compl. ¶T 49-50.) Fenwick also maintains that Jacobs and Dukhman’s wife,
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`Tania Patruno (“Patruno”), went on the television show Shark Tank, falsely represented that
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`Patruno had sole authority to determine whether to sell an interest in PRO-NRG, LLC. and sold a
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 4 of 18 PageID: 981
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`30% interest
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`in PRO-NRG. LLC to an investor for S250000. even though Patruno had no
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`involvement in the development of PRO-NRG or authority to sell the company.
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`(Am. Compi.
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`¶ 64-71.)
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`Finally, Fenwick alleges that, in March 2012, “one or more” of Dukhman, Rasa, Khorosh,
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`Patruno, and Jacobs applied for a Federal Trademark for “PRO-NRG.” fraudulently listing
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`Khorosh as the owner of the trademark when it was in fact owned by PRO-NRG, LLC.
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`(Am.
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`Compl. ¶ 51.) In support of the trademark application, Khorosh allegedly misrepresented that she
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`used the PRO-NRG mark in commerce, and submitted false specimens of the mark which in fact
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`belonged to PRO-NRG, LLC.
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`(Am, Compi. ¶ 87-88.) The U.S. Patent and Trademark Office
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`granted the PRO-NRG trademark to Khorosh on November 27, 2012.
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`(Am. Compl. ¶ 53.)
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`Fenwick instituted this action on July 17, 2013, bringing five counts under the Lanham
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`Act, 15 U.S.C. § § 1051 et seq., and twelve state law causes of action. Defendants filed three
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`separate motions to dismiss [ECF Nos. 13, 17, 18]. On April 29, 2014,
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`the Court granted
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`Defendant Dukhman’s motion,’ denied the motions of Rasa and Brayden as moot, and dismissed
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`Plaintiff’s complaint without prejudice [ECF No. 26]. Fenwick filed an amended complaint on
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`July 14, 2014 [ECF No. 3Q].2 Defendants then filed the instant motions seeking to dismiss
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`Plaintiff’s amended complaint [ECF Nos. 34-361.
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`‘The Court granted the Dukhrnan motion on the grounds that Fernwick did not allege a cognizable injury
`independent from PR -NRG LLC and. as such, lacked standing.
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`2 To cure the deficiency noted by the Court, Fenwick amended his complaint to assert derivative claims on behalf of
`PRO-NRG, LLC,
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`4
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 5 of 18 PageID: 982
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`III.
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`LEGAL STANDARDS
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`The avarnen of the Dukhman motion3 is that Plaintiff lacks standing to bring these
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`Lanham Act claims. A motion to dismiss for lack of standing is properly brought pursuant to Fed.
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`R. Civ. P. 12(b)(1) because standing is a matter ofjurisdiction. Ballentine v. U.S., 486 F.3d 806,
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`810 (3d. Cir. 2007) (citing St. Thomas-St. John Hotel Tourism Ass’n v. Gov’t of the U.S. Virgin
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`Islands, 218 F.3d 232, 240 (3d. Cir. 2000)); Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727, 733
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`(3d Cir. 1970). However, not all 12(b)(1) motions are created equal: “[a] district court has to first
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`determine [] whether a Rule 1 2(b)( 1) motion presents a ‘facial’ attack or a ‘factual’ attack on the
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`claim at
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`issue, because that distinction determines how the pleading must be reviewed.”
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`Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 357-58 (3d Cir. 2014). A facial
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`attack “is an argument that considers a claim on its face and asserts that it is insufficient to invoke
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`the subject matter jurisdiction of the court because, for example, it does not present a question of
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`federal law”.
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`Id. at 358. A factual attack, in contrast, “is an argument that there is no subject
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`matter jurisdiction because the facts of the case. .
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`. do not support the asserted jurisdiction.” Id.
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`For instance, “while diversity of citizenship might have been adequately pleaded by the plaintiff,
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`the defendant can submit proof that, in fact, diversity is lacking.” Id. Here, the Dukhman motion
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`attacks the sufficiency of the Amended Complaint on the pounds that the pleaded facts do not
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`establish constitutional standing. Accordingly, the Court considers the Dukhman motion a facial
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`attack on the Amended Complaint and therefore “must only consider the allegations of the
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`complaint and documents referenced therein and attached thereto. in the light most favorable to
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`Although principally raised in the Dukhman Motion, the Rasa Motion also relies heavily on these standing
`arguments.
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 6 of 18 PageID: 983
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`the plaintiff.”
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`Pursuant to Article III of the U.S. Constitution, federal courts may only hear cases in which
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`a plaintiff demonstrates adequate standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
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`(1992) (“Though some of its elements express merely prudential considerations that are part of
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`judicial self-government, the core component of standing is an essential and unchanging part of
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`the case-or-controversy requirement of Article III.”). “The standing inquiry focuses on whether
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`the party invoking jurisdiction had the requisite stake in the outcome when the suit was filed.”
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`Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 360 (3d Cir, 2014) (citing Davis v.
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`FEC, 554 U.S. 724, 734 (2008)). To establish standing, a plaintiff must satisfy a three-part test,
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`showing:
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`(1) an ‘injury in fact,’ i.e., an actual or imminently threatened injury that is ‘concrete and
`particularized’ to the plaintiff; (2) causation, i.e., traceability of the injury to the actions
`of the defendant; and (3) redressability of the injury by a favorable decision by the Court.
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`Nat’l Collegiate Athletic Ass’n v. Gov. of N.J., 730 F.3d 208, 218 (3d. Cir. 2013) (citing Summers
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`v. Earth Island Inst., 555 U.S. 488, 493 (2009)). “The party invoking federal jurisdiction bears the
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`burden of establishing these elements.” Lujan, 504 U.S. at 561.
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`IV.
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`DISCUSSION
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`A.
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`Federal Claims
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`Plaintiff4 asserts three federal causes of action pursuant to the Lanham Act: damages for
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`fraudulent
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`trademark registration under 15 U.S.C.
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`§ 1120, cancellation of the PRONRG
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`trademark under 15 U.S.C. § 1051(a), and declaratory judgment for cancelation of the PRONRG
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`“Plaintiff’ refers to PRO-NRG, LLC, Although the Amended Complaint notes that Fenwick brings his claims
`“individually” as well as derivatively (on behalf of PRO-NRG, LLC), the Court has already concluded that Fenwick
`lacks standing to assert claims “individually”,
`[ECF No. 26.]
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 7 of 18 PageID: 984
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`trademark under 15 U.S.C. § 1064. (Am. Compl. ¶J 76-91.) For the reasons that follow, Plaintiff
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`lacks standing to bring these Lanham Act claims.5
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`1.
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`Plaintiffs 15 U.S.C. § 1120 Claim
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`The Lanham Act provides: “Any person who shall procure registration in the Patent and
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`Trademark Office of a mark by a false or fraudulent declaration or representation, oral or in
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`writing, or by any false means, shall be liable in a civil action by any person injured thereby for
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`any damages sustained in consequence thereof.” 15 U.S.C. § 1120.6 To have standing under
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`§ 1120, “it is not enough for the plaintiff merely to establish fraud in the registration of the
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`trademark”; the plaintiff “must also show that it sustained some damage in consequence of the
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`fraud.” Virginia Polytechnic Inst. & State Univ. v. Hokie Real Estate, Inc., 813 F. Supp. 2d 745,
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`755 (W.D, Va. 2011) (citing Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri. Inc., 989 F.2d
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`985, 991 (8th Cir. 1993)). More specifically, courts interpreting this provision have held that the
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`injury asserted under § 1120 must be a “direct” and “proximate” result of the alleged false
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`registration.
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`Stanfield v. Osborne Indus., Inc., 52 F.3d 867, 874 (10th Cir. 1995)8 (“To prove
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`Standing is a threshold issue for all cases in federal court. See Warth v. Seldin, 422 U.S. 490. 498 (1975).
`“Absent Article III standing, a federal court does not have subject matter jurisdiction to address a plaintiffs claims,
`and they must be dismissed.” pg,,y.Obpa, 586 F,3d 234, 242 (3d Cir. 2009). Therefore, although the issue of
`standing was raised in the Dukhman motion and the Rasa motion, the Court must dismiss the federal trademark
`claims for lack of standing against all other Defendants as well. FW/PBS, Inc. v, City of Dallas, 493 US, 215. 229-
`32 (1990) “The federal courts are under an independent obligation to examine their own jurisdiction, and standing
`‘is perhaps the most important of [the jurisdictional] doctrines.”) (citations omitted).
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`15 U.S.C. § 1120 is also referred to as § 38 of the Lanham Act.
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`7To the extent that Gilbert/Robinson has been abrogated by Lexmark Int’l, Inc. v. Static Control Components, Inc.,
`134 5. Ct. 1377 (2014), the discussion of § 1120 in Gilbert/Robinson remains good law even after Lexmark, See id
`at 1395 (discussing only the Lanham Act’s cause of action for false advertising).
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`As with Gilbert/Robinson, to the extent that Stanfield has been abrogated by Lexmark Int’l, Inc. v. Static Control
`134 5 Ct 1377 (2014) the Stanfield court s analysis of 1120 remains pertinent even after
`Lexmark jç,ç id at 1395 (considering only standing for a false athertising claim under 15 U S C
`1125(a))
`7
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 8 of 18 PageID: 985
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`a claim of fraud in the procurement of a federal trademark, plaintiff must prove: .
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`. reasonable
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`.
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`reliance on the misrepresentation[] and [J damages proximately resulting from such reliance.”);
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`Landstrom v, Thorpe, 189 F,2d 46, 54 (8th Cir. 1951): Santander Consumer USA Inc. v. Walsh,
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`762 F. Supp. 2d 217, 234 (D. Mass. 2010) (“In order to prevail on the section 1120 claim, [a party)
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`must prove inter alia ‘damages proximately resulting from’ reliance on the misrepresentation.”
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`(citation omitted)); Zobmondo Entm’t LLC v. Falls Media LLC, 2008 WL 6138835, at *6 (C.D.
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`Cal. Aug. 11, 2008) (A plaintiff “must prove: .
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`. reliance on the misrepresentation (‘reasonable
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`.
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`reliance’)[j and [] damage proximately resulting from such reliance.”); Jackson v. Lynley Designs,
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`Inc., 729 F. Supp. 498, 500 (E.D. La. 1990) (A plaintiff “must also show that she sustained some
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`damage in consequence of the fraud; she must indicate an offense to a protected interest.”).
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`Generalized or “speculative” damages assertions are not enough; “[tjhe damages allegedly
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`incurred as a result of the fraud must be clearly articulated”. 6 McCarthy on Trademarks and
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`Unfair Competition § 31:85 (4th ed.).
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`Plaintiff primarily alleges that damages were incurred prior to SPS’s alleged fraudulent
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`registration in March 2012. These include: manufacturing 8,000 bottles of PRO-NRG, bringing
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`samples of PRO-NRG to gyms and stores, acquiring a celebrity endorser for the product, and
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`finalizing a website for PRONRG.
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`(See Pl.’s Opp. to Dukhman Mot. at 610.) However, it is
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`well settled that such preregistration damages are not cognizable under § 1120.
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`567 F. App’x 945, 958 (Fed. Cir. 2014); Qfçj]Ljr1ineGuiçs
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`Inc. v. Goss, 6 F.3d 1385, 1395—96 (9th Cir, 1993) (holding that a claim under § 1120 accrued the
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`day the trademark registration was procured in the USTPO): Country Mut. Ins, Co. v. Am. Farm
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`Bureau Fed’n, 876 F.2d 599. 601 (7th Cir. 1989); 4gç v.UPIHoldins,Inc., 2010 WL
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`2651304, at *8 (D. Md. July 1, 2010);
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`eauv,Am.Pimiotion&.Evcrns Inc., 511 F. Supp. 2d
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`8
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 9 of 18 PageID: 986
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`152, 160 (D.D.C. 2007); Zobmondo Entm’t LLC v. Falls Media LLC, 2008 WL 6138835, at *8
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`(C.D. Cal. Aug. II. 2008) (“[defendant]’s application alone, whether fraudulent or valid, could
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`not have caused cognizable injury under section 38 based upon the three deals that predated
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`[defendant]’s 2005 registration”); Dunn Computer Cow. v. Loudcloud, Inc., 133 F.Supp.2d 823,
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`831—32 (E.D.Va. 2001); GMA Accessories, Inc. v. Idea Nuova, Inc., 157 F.Supp.2d 234, 242
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`(S.D.N.Y. 2000) (“[B]y its terms Section 38 .
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`.
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`. does not apply to trademark applications that have
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`not
`
`been
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`registered”); Bernard
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`v. Commerce Drug Co.,
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`774
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`F.Supp.
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`103,
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`109
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`(E.D.N.Y.1991) (Section 38 is “inapplicable where a defendant’s trademark has not been
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`registered.”),
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`964 F.2d 1338, 1342 (2d Cir.l992); 4 Callmann on Unfair Competition,
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`Trademarks, & Monopolies § 22:31 (“A claim for false or fraudulent trademark registration under
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`§ 38 of the Lanham Act accrues at the time when the registration issues.”)
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`With respect to post-registration damages, Plaintiffs amended complaint fails to “clearly
`
`articulate[]” an injury that is “concrete”. Plaintiff argues, however, that “just when PRO-NRG
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`was poised to be launched to the market,” Defendants “committed their acts of treachery” by
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`“fraudulently register[ing] the trademark, lock[ing] Mr. Fenwick out of taking any further part in
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`the development of the PRO-NRG drink, and [] marketing the drink under the Sante Pur Solutions
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`company instead of the PRO-NRG, LLC company.”
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`(Pl.’s Opp. to Dukhman Mot. at 8.) Plaintiff
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`also argues that, Defendants “have allegedly obtained contracts for the sale of PRO-NRG in
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`thousands of stores,” resulting in “sales[] that would have accrued to the benefit of PRO-NRG,
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`LLC, had it not been for the fraudulent registration and other fraudulent acts of [] Defendants”.
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`(ii)
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`While the precise bounds of post-registration damages necessary to confer standing under
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`§ 1120 are not defined, persuasive authority strongly suggests that Plaintiffs alleged damages are
`
`9
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 10 of 18 PageID: 987
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`insufficient. In Sik Gaek. Inc. v. Yogi’s II, Inc., 2014 WL 4063403 (E.D.N.Y. Aug. 14. 2014), the
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`plaintiff alleged a cause of action under § 1120 on the grounds that its own trademark applications
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`were denied due to the defendant’s antecedent, false registrations.
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`at *2. The plaintiff asserted
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`ambiguous “damages” as a result of the defendant’s conduct along with S2.000,000 in
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`compensatory damages re1ating to [defendant’s] alleged breach of a licensing agreement under
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`which [defendant] was purportedly required to pay a S2.000.000 license fee”.
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`Id. The court found
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`that plaintiff did not allege cognizable damages under § 1120.
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`Id. First, the court noted that the
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`“plaintiff cannot recover its asserted S2.000,000 royalty fee under § 1120” because “any alleged
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`loss of the license fee under the purported license agreement was not a direct and proximate result
`
`of trademark registrations based on false or fraudulent application statements—rather, any
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`royalty fee loss resulted from plaintiff’s asserted breach of contract claim against [defendant].” Id.
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`Put simply: “The license fee claim exist[cd] wholly independent of defendants’ registration
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`applications.” Id. The court also dealt with plaintiff’s argument that it was harmed because
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`defendant’s fraudulent registrations “blocked” plaintiff’s application of the relevant trademarks.
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`Id. at *4 After detailing plaintiff’s failure to cite relevant documents, the court explained:
`
`even if the suspension of plaintiff’s application were a direct
`consequence of the allegedly false or fraudulent registration of the
`Sik Gaek marks, the court would nonetheless have to conclude that
`plaintiff has failed to show cognizable damages.
`. Plaintiff has
`alleged no other damages [from those discussed above]: there are no
`allegations of lost business, lost profits, damage to reputation, or
`other injury. The only damage that plaintiff continues to insist that
`it has suffered is the loss of the $2,000.000 royalty fee, which, as
`already addressed, is a direct result of the alleged breach of license
`claim, and not of
`the false or
`fraudulent
`registration claim.
`Plaintiff’s claim for its license fee, which has [sic] asserted through
`its state-law breach of contract claim, would exist independently in
`the absence of any false or fraudulent conduct iolating § 1 120.
`
`.
`
`.
`
`10
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 11 of 18 PageID: 988
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`Id. at *59
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`In Jackson, 729 F. Supp. at 499. the plaintiff sued defendants under § 1120, alleging that
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`they fraudulently secured trademark registration of the “lisa jackson” name for their line of
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`children’s clothing. The court found that “[plaintifti is not engaged in a trade or business which
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`might result in damage to good will. Nor has she ever attempted to commercially exploit her name
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`in any fashion so that defendants’ actions have caused her to lose business.”
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`Accordingly, the
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`court held that plaintiff had “not articulated or established sufficient direct injury resulting from
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`the alleged fraudulent representations and, thus, has not demonstrated a reasonable interest to be
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`protected under [ 1120].”
`
`at 500.
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`Other cases have upheld standing under
`
`§
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`1120 under different circumstances.
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`Professional’s Choice Sports Med. Products, Inc. v. Eurow & O’Reilly Corp., 2014 WL 524007
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`(S.D. Cal. Feb. 10, 2014), involved plaintiff’s allegation that defendants fraudulently registered
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`trademarks for Air Ride—an equine saddle pad—”despite knowledge of [p]laintiffls superior
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`rights to the AIR RIDE mark ‘in efforts to build a facade of legitimacy around its bad-faith
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`adoption of’
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`the same mark.” The court noted plaintiff’s contention that, “as a result of
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`[djefendant’s fraudulent registration of their Air Ride marks, [d]efendant has unfairly gained
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`mafket share from [p]laintiff because consumers wrongfully believed they were purchasing
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`[p]laintiff’s genuine AIR RIDE saddle pads”. and held that plaintiff had standing to sue under
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`1120 because it asserted “damages. in terms of lost market share, sales decline, and damage to
`
`reputation. caused by the assertion or use of the fraudulently procured registration.” Id. at *10
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`The court also rejected plarntiffs claim for “attorneys fees and other costs of hrinn Ohel action to seek
`cancellation of[defendantsj trademark registration” because such damages were not “clearly articulated” and. in
`any event, there were no “extraordinary circumstances” justifying these fees,
`Id. at $. Moreover, the court rejected
`punitive damages because they were not “sustained in consequence” of a § 1120 violation,
`Id.
`11
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 12 of 18 PageID: 989
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`Plaintiff was also found have standing under § 1120 in Golden Golf Lighting, Inc. v.
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`Greenwich Indus.. LP.. 2010 WL 2523443 (N.D. Ill. June 18, 2010). There. plaintiffs and
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`defendant both manufactured and sold folding chairs.
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`Plaintiff alleged that
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`the defendant
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`fraudulently obtained a trademark for a one of its folding chairs in June 2004.
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`at *1. After this
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`fraudulent registration, defendant allegedly told U.S. Customs that plaintiffs’ chairs infringed on
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`defendant’s trademark and “requested U.S. Customs seize chairs shipped by [pjlaintiffs to
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`[pjlaintiffs’ customer Specialized Seating.” Id. Thereafter, as a result of the seizure, “Specialized
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`Seating cancelled orders from [p]laintiffs and [pjlaintiffs were subsequently not paid for these
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`orders.” Id. The court held that plaintiffs “adequately alleged a recoverable injury pursuant to 15
`
`U.S.C. § 1120” because “the plain language [of § 1 l2Oj does not limit liability to only injuries to
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`a trademark”.
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`Id. at *2. The court also found adequate proximate causation due to (1) defendant’s
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`request that U.S. Customs seize plaintiffs chairs shipped to Specialized Seating, and (2) as a result
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`of the seizure, Specialized Seating cancelled their orders and plaintiffs were never paid.
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`Id.
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`Here, Plaintiffs case falls in line with Sik Gaek and Jackson rather than Professional’s
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`Choice and Golden Golf. Like Jackson, Plaintiff here did not commercially exploit the PRO-NRG
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`drink in any fashion after the registration of this mark by SPS such that Defendants’ actions have
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`caused Plaintiff to lose business. For example, Fenwick did not utilize PRO-NRG LLC in an
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`attempt to sell PRONRG drinks. Moreover, Plaintiff makes no claim of damages—in terms of
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`lost market share, sales decline, or damage to reputation—caused by the use of a fraudulently
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`procured registration by a direct competitor, as in Professional’s Choice, nor does Plaintiff assert
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`a claim that Defendants’ post-registration actions proximately caused Plaintiff to lose business
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`with a specific customer, as in Golden Golf.
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`Perhaps most significantly, here, as in Sik Gaek. Plaintiff’s claims would exist wholly
`
`12
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 13 of 18 PageID: 990
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`independent of Defendants’ allegedly thise registration. Plaintiffs § 1120 claim stems from the
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`allegation that Defendants shut Fenwick out of PRO-NRG LLC; it is not the use of the PRO-NRG
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`trademark. so much as Defendants’ exclusion of Fenwick. that forms the basis of Plaintiffs
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`Amended Complaint. Thus, any nebulous, post-registration damages asserted by Plaintiff are not
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`“clearly articulated” and did not “directly” result from the fraudulent trademark registration—more
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`accurately, it was the lockout of Fenwick that “directly” caused any such damages.
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`In sum, the
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`Amended Complaint amounts to an assertion that, although PRO-NRG LLC did not engage in any
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`post-registration use of the PRO-NRG trademark, it was precluded from doing so because Fenwick
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`was shut out of the business. Such an injury rightly sounds in the state law causes of action alleged
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`by Plaintiff10 rather than a § 1120 action and, accordingly, the Court finds that Plaintiff lacks
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`standing to assert a cause of action under 15 U.S.C. § 1120.
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`2.
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`Plaintiffs 15 U.S.C. § 1051, 1064 Claims
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`Plaintiff also brings Lanham Act claims seeking cancellation of the PRO-NRG trademark
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`and a declaratory judgment for cancellation of the PRO-NRG trademark pursuant to 15 U.S.C.
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`§ 1051(a) and 15 U.S.C. § 1064, respectively. At the outset, it must be noted that the Court’s
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`power to cancel trademarks derives solely from 15 U.S.C. § 1119,11 which reads in relevant part:
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`“In any action involving a registered mark the court may determine the right to registration, order
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`the cancelation of registrations, in whole or in part. restore canceled registrations, and otherwise
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`rectify the register with respect to the registrations of any party to the action” Although the Court
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`These include: Constructive Trust. Breach of Contract. Disso1utionCompu1sorv Purchase and Sale. Breach of
`Covenant of Good Faith and Fair Dealing. Tortious Interference with Business Relationships, and Conversion.
`(Am.
`Compi. “ 92-120.)
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`Plaintiff does not reference
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`1119 in the Amended Complaint.
`
`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 14 of 18 PageID: 991
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`is empowered to cancel trademarks under § 1119, this section alone cannot confer jurisdiction;
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`there must be some independent basis upon which the Court may exercise the cancellation remedy.
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`Airs Aromatics, LLC v. Opinion Victoria’s Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 599
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`(9th Cir. 2014) (“We therefore hold that [ 1119] does not provide an independent basis for federal
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`jurisdiction,”); Nike, Inc. v. Already. LLC, 663 F.3d 89, 98 (2d Cir. 2011) (Other courts “have
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`held that. by its plain terms. this provision requires that a controversy as to the validity of or
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`interference with a registered mark exist before a district court has jurisdiction to grant
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`the
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`cancellation remedy. .
`
`.
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`. We agree with their analysis”. (citations omitted)), aff’d, 133 S. Ct. 721
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`(2013); Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873 (3d Cir. 1992)
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`(“[A] controversy as to the validity of or interference with a registered mark must exist before a
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`district court has jurisdiction to grant the cancellation remedy.”); Windsurfing Int’l Inc. v. AMF
`
`Inc., 828 F.2d 755, 759 (Fed. Cir. 1987); Toytrackerz LLC v. Koehier, 2011 WL 3702970, at *5
`
`(D. Kan. Mar. 25, 2011) (“Because 15 U.S.C. § 1119 is not an independent source of jurisdiction,
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`but merely defines available remedies. [defendant] must otherwise show that the Court has some
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`other basis for jurisdiction”); Thomas & Betts Corp. v. Panduit Corp., 48 F. Supp. 2d 1088, 1093
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`(N.D. Ill. 1999) (“the Lanham Act power to cancel registrations, 15 U.S.C. § 1119, ‘is not an
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`independent source ofjurisdiction. however; it merely defines certain available remedies”). “This
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`interpretation also helps preserve the use of actions before the USPTO Trademark Board as the
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`primary vehicle tbr cancellation.” Airs Aromatics. LLC. 744 F.3d at 599.
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`Plaintiffs request for cancellation of the PRO-NRC mark under § 1051 must fail. as § 1051
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`camot serve as an independent basis for jurisdiction. Plaintiff asserts its § 1051 claim on the
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`grounds that SPS “knowingly caused its agents and attorneys to falsely assert that it was the owner
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`of the PRO-NRG [mark] and that no other person or entity was entitled to use the mark.” (Am,
`
`14
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`

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`Case 2:13-cv-04359-CCC-MF Document 51 Filed 03/20/15 Page 15 of 18 PageID: 992
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`Compi. ¶ 79.) However, Plaintiff cites no cases, and the Court is aware of none, in which a court
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`cancelled a trademark solely on the basis of § 1051(a) where the registrant falsely asserted
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`ownership of the mark.
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`Indeed, unlike other sections of the Lanham Act, there is no mention of
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`civil liability for violations of § 1051 nor any other indication that § 1051 was meant to create a
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`cause of action. While fraudulent registration contravenes of the requirements of § 1051 and may
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`therefore form the basis of another Lanham Act claim—such as a § 1064 claim—Plaintiff cannot
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`predicate federal jurisdiction on § 1051 standing alone. See Burnscrafi Mfg. Corp. v. Nat’l Const.
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`Rentals,
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`Inc., 2014 WL 1386300, at *5 (S.D. Tex. Apr. 9, 2014) (discussing registration
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`requirements under § 1051(a) and describing noncompliance with § 1051 as a basis for a trademark
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`cancellation claim under § 1064); Maurag, Inc. v. Bertuglia, 494 F. Supp. 2d 395, 397, 399 (E.D.
`
`Va. 2007) (same); Ushodaya Enterprises, Ltd. v. V.R.S. Int’l, Inc., 63 F. Supp. 2d 329, 333
`
`(S.D.N.Y. 1999) (discussing how defendant
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`registered a trademark “in accordance with the
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`registration requirements of 15 U.S.C. § 1051(a)(l)). Accordingly, Plaintiff’s § 1051 claim must
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`be dismissed for lack of standing.
`
`Plaintiffs § 1064 claim must fail for similar reasons. As drafted, the Amended Complaint
`
`asserts a § 1064 claim for a “declaratory judgment” cancelling SPS’s PRO-NRG trademark. (Am.
`
`Compl, ¶T 81-85). However,
`
`it
`
`is beyond argument that § 1064 applies only to trademark
`
`cancellation proceedings in the Patent and Trademark Office (the “PTO”). Windsurfing Int’l Inc.
`
`v.AMF Inc., 828 F,2d 755, 758 (Fed. Cir, 1987) ( 1064 “does authorize persons interested in
`
`using marks that have become the common descriptive names of articles to petition the Patent and
`
`Trademark Office to cancel registration of those marks.
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`It does not, however, authorize suits for
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`cancellation in district courts.”); Po rebnov v. Russian Newspaper Distribution. Inc.. 2014 WL
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`7333295. at *8 (C.D, Cal. Dec. 18, 2014) (noting that § 1064 applies only “to cancellation
`
`15
`