throbber
Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 1 of 13
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
`
`
`
`CTC International, Inc.
`d/b/a UBUNTU,
`Plaintiff
`
`
`v.
`
`The Supply Change, LLC,
`Defendant
`
`







`
`
`
`
`
` Case No. 1:21-cv-0676-RP
`
`
`REPORT AND RECOMMENDATION
`OF THE UNITED STATES MAGISTRATE JUDGE
`
`
`TO: THE HONORABLE ROBERT PITMAN
` UNITED STATES DISTRICT JUDGE
`
`Before the Court are Plaintiff’s Motion for Leave to File Amended Complaint, filed October 4,
`
`2022 (Dkt. 18); Defendant’s Rule 12(b)(1) Motion to Dismiss and Brief in Support, filed
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`October 20, 2022 (Dkt. 22); and the associated response and reply briefs.1
`
`I. Background
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`Plaintiff CTC International, Inc. d/b/a Ubuntu (“CTC”) is a nonprofit corporation organized
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`under Texas law with its principal place of business in Austin, Texas. Original Complaint (Dkt. 1)
`
`¶ 1. CTC works with Maasai craftswomen in Kenya to create handmade products for sale in the
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`United States and internationally. Id. ¶ 14. CTC’s best-selling products generally have been beaded
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`message bracelets, which have been sold in the United States since at least 2014. Id. ¶¶ 14, 18.
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`Defendant The Supply Change, LLC (“Supply Change”) was a limited liability corporation
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`incorporated under Texas law with its principal place of business in Austin, Texas from 2015 until
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`2020, when it converted to a limited liability corporation in California. Id. ¶¶ 2-3. On March 1,
`
`
`1 By Text Orders entered October 12 and October 24, 2022, the District Court referred the motions to the
`undersigned Magistrate Judge for a report and recommendation, pursuant to 28 U.S.C. § 636(b)(1)(B),
`Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules of the United States
`District Court for the Western District of Texas.
`
`
`
`1
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`

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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 2 of 13
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`2015, after CTC successfully contracted with Supply Change to produce a new product not at issue
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`here, the parties entered into an independent contractor agreement (“Agreement”), which was
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`amended effective January 31, 2016. Id. ¶¶ 15-16, 22. Supply Change offered consulting services
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`under the Agreement, including “cultivating new customers for Plaintiff and engaging in the sale
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`of Plaintiff’s products.” Id. ¶ 24.
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`CTC alleges that Supply Change placed purchase orders for its products totaling $84,577 but
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`has paid only $66,305.38, leaving a balance owed of $18,271.62. Id. ¶¶ 24, 30. CTC further alleges
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`that Supply Change has violated the Agreement by selling beaded message bracelets “virtually
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`identical to those designed and created by Plaintiff” and submitting them as specimens in support
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`of an application to register Supply Change’s word mark LOVE IS PROJECT on the Principal
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`Register. Id. ¶¶ 25-26 & Dkt. 1-4 (Exh. D). CTC also alleges that Supply Change “has engaged in
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`a course of business disparagement directed at Plaintiff with the intent to damage Plaintiff’s
`
`business reputation.” Dkt. 1 ¶ 31.
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`CTC filed this action on August 2, 2021, asserting claims for infringement of an unregistered
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`trademark, in violation of Lanham Act Section 43(a), 15 U.S.C. § 1125(a); unfair competition and
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`dilution by blurring or “garnishment,”2 in violation of Lanham Act Section 43(c), 15 U.S.C.
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`§ 1125(c); breach of contract; and injury to business reputation and dilution under the Texas
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`Business and Commerce Code. CTC seeks damages, attorney fees, and injunctive and other relief.
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`On April 27, 2022, Supply Change moved the Court to dismiss CTC’s Lanham Act claims and
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`decline to exercise jurisdiction over CTC’s remaining state law claims. Dkt. 13. This Magistrate
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`Judge recommended that the District Court grant Supply Change’s motion and dismiss CTC’s
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`federal claims without prejudice, and the District Court adopted the report and recommendation.
`
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`2 Dkt. 1 ¶ 45. While not addressed by the parties, the Court construes this as a typographical error for
`“tarnishment.”
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`2
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`

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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 3 of 13
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`Dkt. 16; Dkt. 20. CTC now requests leave to file an amended complaint, while Supply Change
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`moves to dismiss the state law claims in CTC’s Original Complaint for lack of jurisdiction. Both
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`motions are opposed.
`
`II. CTC’s Motion to Amend
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`Courts should freely grant leave to amend when justice so requires. FED. R. CIV. P. 15(a)(2).
`
`Courts should deny leave to amend when amendment would cause undue delay or undue prejudice
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`to the opposing party, or the amendment would be futile or in bad faith. Mayeaux v. La. Health
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`Serv. & Indem. Co., 376 F.3d 420, 425 (5th Cir. 2004). Amendment is futile where it “would fail
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`to state a claim upon which relief could be granted.” Stripling v. Jordan Prod. Co., 234 F.3d 863,
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`873 (5th Cir. 2000).
`
`A. Infringement of Unregistered Mark and Trade Dress
`
`Lanham Act Section 43(a) provides a cause of action for trade dress infringement. 15 U.S.C.
`
`§ 1125(a). “Trade dress refers to the total image and overall appearance of a product and may
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`include features such as the size, shape, color, color combinations, textures, graphics, and even
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`sales techniques that characterize a particular product.” YETI Coolers, LLC v. JDS Indus., Inc.,
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`300 F. Supp. 3d 899, 907 (W.D. Tex. 2018) (quoting Amazing Spaces, Inc. v .Metro Mini Storage,
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`608 F.3d 225, 251 (5th Cir. 2010)).
`
`To succeed on a claim of infringement of unregistered product design trade dress under the
`
`Lanham Act, a plaintiff must establish that its trade dress is not functional and has acquired
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`secondary meaning, and that there is a likelihood of consumer confusion. See Wal-Mart Stores,
`
`Inc. v. Samara Bros., Inc., 529 U.S. 205, 215 (2000); Eng’g Dynamics, Inc. v. Structural Software,
`
`Inc., 26 F.3d 1335, 1350 (5th Cir. 1994). A plaintiff must “articulate the elements that comprise
`
`its protected trade dress in order for the court to evaluate the plausibility of its claim and so the
`
`defendant has fair notice of the grounds of the claim.” JDS, 300 F. Supp. 3d at 907 (citation
`
`3
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`

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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 4 of 13
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`omitted); see also Test Masters Educ. Servs., Inc. v. State Farm Lloyds, 791 F.3d 561, 565 (5th Cir.
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`2015) (stating that a plaintiff “must identify the discrete elements of the trade dress that it wishes
`
`to protect”).
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`The District Court dismissed the Lanham Act claims in CTC’s Original Complaint because
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`CTC failed to identify any discrete elements of its bracelets comprising its protected trade dress.
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`This Magistrate Judge finds that CTC’s proposed Amended Complaint fails to state a Lanham Act
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`claim for the opposite reason: Its allegations are overbroad, as well as inconsistent.
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`CTC includes in its complaint this image of an allegedly infringing Supply Change bracelet:
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`Dkt. 18-1 at 14-16. CTC also offers eight “example[s] of the CTC beaded message bracelets.”
`
`
`
`Id. ¶ 19. The first is:
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`Id. As stated in the previous Report and Recommendation, the Court agrees that these two bracelets
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`appear identical. But CTC alleges that its trade dress is far broader.
`
`
`
`4
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`

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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 5 of 13
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`CTC offers seven additional “example[s] of the CTC beaded message bracelets”:
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`Id. And it alleges that its trade dress comprises multifarious elements, including the following:
`
`
`
`
`
`
`
`• “CTC’s beaded message trademark, applied to its fashion accessory goods in trade since
`2011, consists of a repeating-pattern beadwork, arranged in uniform three or five bead
`rows, with minimalist messages inserted by means of changes in the color of the beads
`inside the rows to form letters.” Dkt. 18-1 ¶ 22.
`
`• “In recent years, CTC’s repeating pattern trademark has included a distinctive arrangement
`of orange and turquoise beads at the end of the bracelet clasp. Id. ¶ 23.
`
`• “Among the various Beaded message bracelets, CTC sold variations of Beaded message
`bracelets that include discrete trade dress elements that are present in four general areas of
`the Beaded message bracelets: 1) The outward facing area; 2) The inward facing area;
`3) The rim area; and 4) The end areas.” Id. ¶ 25.
`
`• “The outward facing central area trade dress for various Beaded message bracelets contains
`multiple rows (e.g., 3 or 5) of beads configured in a generally parallel configuration, as
`depicted in Figure B. The beads included in the outward facing central area configured to
`display a word(s) (e.g., LOVE, UNITE, TEAMO, DREAM, LET GO) in a single color
`(e.g., white, orange, off-white, yellow) surrounded by beads of another single color (e.g.,
`red, orange, blue, black). The word(s) extend from the top row of beads to the bottom row
`of beads. Each letter in the word(s) is spaced from the next letter in the word(s) by a
`multiple of beads.” Id. ¶ 26.
`
`• “The outward facing area trade dress for various Beaded message bracelets contains rows
`and columns of beads wherein the beads included in at least some of the columns are not
`disposed directly over or directly underneath the one or more beads in the same column.”
`Id. ¶ 27.
`
`• “The inward facing area trade dress for various Beaded message bracelets include a brown
`(e.g., tannish natural look) inside backward facing area that is parallel to the rows of beads
`and extends past the opposing ends of the rows of beads. Various Beaded message bracelets
`are leather beaded message bracelets that provide the distinctive brown (e.g., tannish
`natural look) inside backward facing area of the Beaded message bracelets, as depicted
`above and in Exhibit B.” Id. ¶ 28.
`
`5
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`

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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 6 of 13
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`• “The rim area trade dress for various Beaded message bracelets include a distinctive non-
`polished, and uneven textured, black rim extending generally perpendicular to the top and
`bottom backward facing areas of the beads, as depicted above and in Exhibit B.” Id. ¶ 29.
`
`• “The end area trade dress for various Beaded message bracelets contains further include a
`knotted look.” Id. ¶ 30.
`
`• “The rows of beads for various Beaded message bracelets are tapered at the ends of the
`rows such that the number of rows in the central area of the bracelet outnumber the number
`of rows at the opposing ends of the bracelet.” Id. ¶ 31.
`
`By these allegations in its Amended Complaint, CTC again fails to plausibly articulate a
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`protected trade dress, for at least two reasons. First, CTC alleges alternative variations of its
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`asserted trade dress that could be found in any beaded message bracelet. Because CTC identifies
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`“e.g. [for example], 3 or 5” rows of beads, its claims cover any number of multiple rows. Id. ¶ 26.
`
`Second, CTC identifies many elements present only in some of its bracelets. For example:
`
`1. The outward facing area: The letters in some bracelets shown in CTC’s Amended
`Complaint are separated from the next not “by a multiple of beads,” but by a single-
`bead column (i.e., TEAMO, UNITE, and LET GO). Id. ¶ 26.
`
`2. The inward facing area: Some bracelets are leather but some are not and lack “the
`distinctive brown (e.g., tannish natural look) inside backward facing area backing.” Id.
`¶ 28.
`
`3. The rim area: Only two exemplar bracelets have the claimed black rim. Id. ¶ 29.
`
`4. The end areas: Only two exemplar bracelets feature orange and turquoise beads at the
`end of the bracelet clasp. Id. ¶ 23.
`
`Because CTC’s allegations of the trade dress of its “various” bracelets are insufficiently precise
`
`to offer notice pleading of its asserted trade dress, it has failed to identify its trade dress “with
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`sufficient clarity or consistency.” AMID, Inc. v. Medic Alert Found. U.S., Inc., 241 F. Supp. 3d
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`788, 807 (S.D. Tex. 2017); see also Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 115 (2d Cir.
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`2001) (stating that “just as copyright law does not protect ideas but only their concrete expression,
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`neither does trade dress law protect an idea, a concept, or a generalized type of appearance”)
`
`(citation omitted); 1 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR
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`6
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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 7 of 13
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`COMPETITION § 8:3 (5th ed. Mar. 2023 Update) (“MCCARTHY”) (“All types of intellectual
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`property, including unregistered trade dress, must have clearly defined boundaries of what is
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`alleged to be the zone of exclusive rights.”). As Supply Change argues:
`
`The multiplicity of possible combinations of optional features
`makes it impossible to discern a single distinctive look in Plaintiff’s
`description of its alleged trade dress. Without any discrete elements
`to create a consistent overall look and feel, Plaintiff has not and
`cannot adequately plead that it has trade dress protection in its
`bracelet design.
`
`Dkt. 21 at 7.
`
`The Court concludes that because CTC does not identify the specific elements of its bracelets
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`comprising its protected trade dress with clarity and consistency in its Amended Complaint, it has
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`not provided fair notice of its claim, and the Court cannot evaluate the claim’s plausibility.
`
`B. Dilution
`
`Lanham Act Section 43(c)(1) provides:
`
`Subject to the principles of equity, the owner of a famous mark that
`is distinctive, inherently or through acquired distinctiveness, shall
`be entitled to an injunction against another person who, at any time
`after the owner’s mark has become famous, commences use of a
`mark or trade name in commerce that is likely to cause dilution by
`blurring or dilution by tarnishment of the famous mark, regardless
`of the presence or absence of actual or likely confusion, of
`competition, or of actual economic injury.
`
`15 U.S.C. § 1125(c)(1). Section 43(c)(4) provides: “In a civil action for trade dress dilution under
`
`this chapter for trade dress not registered on the principal register, the person who asserts trade
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`dress protection has the burden of proving that—(A) the claimed trade dress, taken as a whole, is
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`not functional and is famous . . . .” 15 U.S.C. § 1125(c)(4). To state a dilution claim under the
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`Lanham Act, CTC must allege that (1) it owns a famous and distinctive mark; (2) Supply Change
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`has commenced using a mark in commerce that is diluting its mark; (3) the similarity between the
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`parties’ marks gives rise to an association between the marks; and (4) the association is likely to
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`7
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`

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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 8 of 13
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`impair the distinctiveness of CTC’s mark or harm the reputation of its mark. Nola Spice Designs,
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`L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 548 (5th Cir. 2015).
`
`In its Original Complaint, CTC alleged that it “is the owner of a famous mark that is
`
`distinctive.” Dkt. 1 ¶ 43. CTC seeks to amend its dilution claim by alleging that it “is the owner of
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`a famous mark and trade dress that is distinctive.” Dkt. 18-1 ¶ 71 (emphasis added).
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`Once again, the Court finds that CTC has not sufficiently pled in its Amended Complaint that
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`it owns a famous mark or trade dress. To prevail on its dilution claim, CTC ultimately must
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`establish that the bracelet mark and trade dress it asserts is famous, that is, “widely recognized by
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`the general consuming public of the United States as a designation of source of the goods or
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`services of the mark’s owner.” Lanham Act Section 43(c)(2)(A), 15 U.S.C. § 1125(c)(2)(A).
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`At the motion to dismiss stage, this Court has found that fame may be plausibly pled by
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`allegations such as how long a mark has been in use, the extent of advertising and sales, and public
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`recognition. See, e.g., Haas Outdoors, Inc. v. Dryshod Int’l, LLC, Nos. 1:18-CV-978-RP, 1:18-
`
`CV-596-RP, 2019 WL 3130231, at *5 (July 15, 2019) (denying motion to dismiss dilution claim);
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`Yeti Coolers, LLC v. Imagen Brands, LLC, No. 1:16-CV-00578-RP, 2017 WL 2199012, at *8
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`(May 18, 2017) (same). Such allegations are pertinent to pleading and later proving that a mark
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`has “the requisite degree of recognition” for a dilution claim because they are among the relevant
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`fame factors identified in the Section 43(c)(2)(A), which include:
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`(i) The duration, extent, and geographic reach of advertising and publicity of the
`mark, whether advertised or publicized by the owner or third parties;
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`(ii) The amount, volume, and geographic extent of sales of goods or services
`offered under the mark; and
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`(iii) The extent of actual recognition of the mark.
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`15 U.S.C. § 1125(c)(2)(A).
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`8
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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 9 of 13
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`Among these factors, in its Amended Complaint, CTC specifically addresses only the duration
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`of use, alleging that its bracelets have been sold since 2014. Dkt. 18-1 ¶ 18. This is insufficient.
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`While CTC need not prove that its mark and trade dress are famous at this juncture, it must allege
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`facts showing that fame is plausible. TrueNorth Cos., L.C. v. TruNorth Warranty Plans of N. Am.,
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`LLC, 292 F. Supp. 3d 864, 873 (N.D. Iowa 2018). CTC’s mere allegations that its bracelet mark
`
`and trade dress have been in use for nine years and are famous fail to plausibly state a claim for
`
`dilution. See, e.g., Read-A-Thon Fundraising Co. v. 99Pledges, LLC, No. 3:22-CV-0420-D, 2022
`
`WL 2704043, at *6-7 (N.D. Tex. July 12, 2022) (dismissing dilution claim as insufficiently pled
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`although plaintiff alleged nearly twenty years of use and extensive marketing, advertising, and
`
`sales); Mike Vaughn Custom Sports, Inc. v. Piku, 15 F. Supp. 3d 735, 749 (E.D. Mich. 2014)
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`(dismissing trade dress dilution claim); Luv N’ Care, Ltd. v. Regent Baby Prods. Corp., 841
`
`F. Supp. 2d 753, 757 (S.D.N.Y. 2012) (same); see also 4 MCCARTHY § 24:104 (“Neither a
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`conclusory allegation that the mark is ‘famous’ nor alleging that the mark is famous in a niche
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`segment is a sufficient pleading.”) (collecting cases); cf. Icon Health & Fitness, Inc. v. Kelley,
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`No. 1:17-CV-356-LY, 2017 WL 6610085, at *3 (W.D. Tex. Dec. 27, 2017) (finding description
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`of significant promotion and nationwide sales for more than eighteen years sufficient to allege
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`fame), R. & R. adopted, 2018 WL 1203465 (W.D. Tex. Jan. 11, 2018).
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`C. Conclusion on Motion to Amend
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`CTC has had two opportunities to plead its Lanham Act claims for infringement and dilution.
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`Because it has sufficiently pleaded neither of those claims, the Court recommends that the District
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`Court deny as futile CTC’s Motion to Amend its Lanham Act claims.
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`III. Claims under Texas Law
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`Finally, in its Motion to Dismiss, Supply Change asks the Court to dismiss the claims in CTC’s
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`Original Complaint for (1) breach of contract and (2) injury to business reputation and dilution
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`9
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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 10 of 13
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`under Texas Business and Commerce Code § 16.103. CTC asserts these same claims in both its
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`Original Complaint and proposed Amended Complaint.
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`Supply Change argues that the Amended Complaint shows there is not complete diversity
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`between the parties and asks the Court to decline to exercise supplemental jurisdiction over CTC’s
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`state law claims. Supply Change makes the same arguments in its response to CTC’s Motion to
`
`Amend. See Dkt. 21 at 17-18. CTC asserts that Supply Change’s Motion to Dismiss is premature
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`because CTC’s Motion to Amend remains pending, contending that Supply Change has “abused
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`the litigation process to inflate the costs of this case.” Dkt. 24 at 4.
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`Courts have an independent obligation to determine their own subject matter jurisdiction.
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`Flagg v. Stryker Corp., 819 F.3d 132, 136 (5th Cir. 2016). For that reason, and in the interest of
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`judicial economy, the Court construes Supply Change’s Motion to Dismiss as addressing CTC’s
`
`Amended Complaint. Cf. Schaefer v. Whitted, 121 F. Supp. 3d 701, 707 n.1 (W.D. Tex. 2015)
`
`(“While the amended pleading generally operates to moot any pending motions to dismiss, an
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`exception exists where a pending motion attacks the original complaint for deficiencies that persist
`
`in the amended complaint.”) (cleaned up); 6 MARY KAY KANE, FED. PRAC. & PROC. CIV.
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`(“WRIGHT & MILLER”) § 1476 (3d ed. April 2022 Update) (“If some of the defects raised in the
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`original motion remain in the new pleading, the court simply may consider the motion as being
`
`addressed to the amended pleading. To hold otherwise would be to exalt form over substance.”)
`
`(footnote omitted).
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`The federal diversity jurisdiction statute provides the district courts with jurisdiction over civil
`
`actions where the amount in controversy exceeds $75,000 and the parties are citizens of different
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`states. 28 U.S.C. § 1332(a). To properly allege diversity jurisdiction under § 1332, the parties must
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`allege “complete diversity.” MidCap Media Fin., L.L.C. v. Pathway Data, Inc., 929 F.3d 310, 313
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`10
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`

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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 11 of 13
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`(5th Cir. 2019). Whether diversity jurisdiction exists is determined by examining the citizenship
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`of the parties when the suit was filed. Smith v. Sperling, 354 U.S. 91, 93 n.1 (1957).
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`In its Amended Complaint, CTC alleges that on May 28, 2020, Supply Change “filed articles
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`of organization in California that converted Supply Change from a limited liability corporation in
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`Texas to a limited liability corporation in California under California law.” Dkt. 18-1 ¶ 3. On
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`December 22, 2020, “in the midst of settlement negotiations with Plaintiff,” Supply Change “filed
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`a Notice of Termination with the Secretary of State for the State of Texas intended to terminate its
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`limited liability corporation in Texas.” Id. ¶ 4. CTC alleges that under Texas law,
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`the terminated Texas limited liability company continues in
`existence until the third anniversary of the effective date of the
`entity’s termination for purposes of an action brought against the
`terminated entity. If an action on an existing claim against a
`terminated entity is brought, the terminated entity continues to
`survive until all judgments, orders and decrees have been fully
`executed.
`
`Id. ¶ 5 (citing TEX. BUS. ORG. CODE § 11.356). “Under the above-described circumstances and to
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`the extent necessary, Plaintiff’s action has been brought against Defendant’s terminated Texas
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`limited liability corporation and against Defendant’s converted California limited liability
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`corporation.” Id. ¶ 6.
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`CTC’s complaint was filed on August 2, 2021, within the three-year survival period. The Court
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`concludes that Supply Change retained its Texas citizenship under Texas law when the suit was
`
`filed, and that CTC’s action accrued before Supply Change filed for termination. See, e.g., Graves
`
`v. Decca Consulting, Inc., No. PE:20-CV-00021-DC-DF, 2020 WL 10317466, at *2 (W.D. Tex.
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`June 11, 2020) (distinguishing cause of action that accrued after defendant forfeited existence);
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`Diffley v. JPMorgan Chase Bank, N.A., No. 4:13-CV-00986-O, 2013 WL 12131599, at *2 (N.D.
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`Tex. Dec. 19, 2013) (holding that citizenship of terminated Texas entity could not be disregarded
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`in determining subject-matter jurisdiction); Miller v. Gibraltar Savs. Ass’n, No. G-05-328, 2005
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`11
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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 12 of 13
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`WL 1719702, at *2 (S.D. Tex. 2005) (remanding case after removing party failed to show that
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`dissolved savings and loan association was no longer Texas citizen for diversity purposes).3
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`Therefore, there is not complete diversity between CTC, a Texas company, and Supply Change,
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`named as both a California corporation and a terminated Texas corporation.
`
`Under 28 U.S.C. § 1367(c), a district court may decline to exercise supplemental jurisdiction
`
`over a claim if it has dismissed all claims over which it has original jurisdiction. A court’s decision
`
`whether to exercise supplemental jurisdiction over state law claims after dismissing every claim
`
`over which it had original jurisdiction “is purely discretionary.” Carlsbad Tech., Inc. v. HIF Bio,
`
`Inc., 556 U.S. 635, 639 (2009). In the Fifth Circuit, “the general rule is to decline the exercise of
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`supplemental jurisdiction when all federal claims are dismissed or eliminated prior to trial.”
`
`Sanchez v. Griffis, 569 F. Supp. 3d 496, 518 (W.D. Tex. 2021) (citing Wong v. Stripling, 881 F.2d
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`200, 204 (5th Cir. 1989)), appeal filed, No. 21-51160 (5th Cir. Dec. 3, 2021).
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`The District Court has dismissed CTC’s Lanham Act claims and lacks diversity jurisdiction.
`
`This Magistrate Judge recommends that the District Court in its discretion decline to exercise
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`supplemental jurisdiction over CTC’s state law claims and dismiss them without prejudice.
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`IV. Recommendation
`
`For these reasons, this Magistrate Judge RECOMMENDS that the District Court
`
`1. DENY Plaintiff’s Motion for Leave to File Amended Complaint (Dkt. 18)
`with prejudice;
`
`2. GRANT Defendant’s Rule 12(b)(1) Motion to Dismiss (Dkt. 22) and DISMISS CTC’s
`claims for Breach of Contract (Count II) and Injury to Business Reputation and Dilution
`under Texas Business & Commerce Code (Count III) without prejudice; and
`
`3. Enter judgment against CTC.
`
`
`3 Because the Court concludes that complete diversity is lacking, it need not address Supply Change’s
`argument that because CTC has pled damages of only $18,721.62, the amount in controversy does not
`satisfy the $75,000 jurisdictional minimum.
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`12
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`Case 1:21-cv-00676-RP Document 26 Filed 03/20/23 Page 13 of 13
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`IT IS ORDERED that the Clerk REMOVE this case from the Magistrate Court’s docket and
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`RETURN it to the docket of the Honorable Robert Pitman.
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`V. Warnings
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`The parties may file objections to this Report and Recommendation. A party filing objections
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`must specifically identify those findings or recommendations to which objections are being made.
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`The District Court need not consider frivolous, conclusive, or general objections. See Battle v.
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`United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987). A party’s failure to file written
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`objections to the proposed findings and recommendations contained in this Report within fourteen
`
`(14) days after the party is served with a copy of the Report shall bar that party from de novo
`
`review by the District Court of the proposed findings and recommendations in the Report and,
`
`except on grounds of plain error, shall bar the party from appellate review of unobjected-to
`
`proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C.
`
`§ 636(b)(1); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass’n,
`
`79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).
`
`SIGNED on March 20, 2023.
`
`
`
`SUSAN HIGHTOWER
`UNITED STATES MAGISTRATE JUDGE
`
`13
`
`

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