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D'Pergo Custom Guitars Inc. v. Sweetwater Sound Inc.

United States District Court, D. New Hampshire

August 20, 2018

D'Pergo Custom Guitars, Inc.
v.
Sweetwater Sound, Inc.

          ORDER

          LANDYA McCAFFERTY UNITED STATES DISTRICT JUDGE.

         Before the court are three pending motions. First, plaintiff D'Pergo Custom Guitars, Inc. (“D'Pergo”) moves to amend its complaint to add two claims based on its registered trademark. Second, defendant Sweetwater Sound, Inc. (“Sweetwater”) moves for judgment on the original pleadings, on the narrow ground that D'Pergo is not entitled to statutory damages or attorney's fees on its claim for copyright infringement. Third, Sweetwater moves for judicial notice of certain facts for purposes of its objection to D'Pergo's motion to amend. On August 17, 2018, the court held a status conference via telephone. For the following reasons, D'Pergo's motion to amend the complaint is granted in part; Sweetwater's motion for judgment on the pleadings is denied as moot; and Sweetwater's motion for judicial notice is denied as moot.

         BACKGROUND

         The following facts are taken from D'Pergo's original complaint, unless otherwise noted. D'Pergo manufactures and sells custom guitars. In 2003, D'Pergo created a photograph showing a No. of its unique guitar necks, which it then published on its website. Sweetwater is a retailer that sells musical instruments, including guitars, through its website. D'Pergo alleges that Sweetwater obtained the photograph and published it on Sweetwater's own website. Specifically, Sweetwater posted the photograph in its online “Electric Guitar Buying Guide, ” a printout of which D'Pergo has attached to both its original and proposed amended complaints. See doc. no. 1 at 18-24; doc. no. 27-4. D'Pergo brought this action in December 2017, initially raising a claim for copyright infringement (Count I), an unfair competition claim under the New Hampshire Consumer Protection Act (“CPA”) (Count II), and a deceptive business practices claim under the CPA (Count III).

         DISCUSSION

         The court begins by examining D'Pergo's motion to amend. D'Pergo moves to amend its complaint to add two new claims and factual allegations related to those claims. Proposed Count IV is for false designation of origin and unfair competition (15 U.S.C. § 1125(a)(1)), and proposed Count V is for trademark infringement (15 U.S.C. § 1114(1)(a)). These claims relate to Sweetwater's alleged infringement of D'Pergo's federally registered trademark, which is a distinctive design for its guitar necks:

         (Image Omitted)

         Doc. nos. 27-5 at 2, 27-6 at 2 (resized from originals). For both claims, D'Pergo alleges that Sweetwater's display of D'Pergo's trademark in the photograph is likely to cause confusion and mislead consumers into believing that Sweetwater's goods are affiliated or connected with D'Pergo.

         Under Rule 15(a) of the Federal Rules of Civil Procedure, a party may generally amend its pleading “only with the opposing party's written consent or the court's leave, ” which should be “freely give[n] . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2). Nevertheless, “a district court may deny leave to amend when the request is characterized by undue delay, bad faith, futility, or the absence of due diligence on the movant's part.” Sykes v. RBS Citizens, N.A., 2 F.Supp. 3d 128, 133 (D.N.H. 2014).

         “A proposed amendment to a complaint is futile if, as amended, the complaint . . . fails to state a claim.” Id. (internal quotation marks omitted). “Therefore, review for futility is identical to review under Federal Rule of Civil Procedure 12(b)(6), ” id., whereby the court accepts the factual allegations in the complaint as true, construes reasonable inferences in the plaintiff's favor, and “determine[s] whether the factual allegations in the plaintiff's complaint set forth a plausible claim upon which relief may be granted, ” Foley v. Wells Fargo Bank, N.A., 772 F.3d 63, 71 (1st Cir. 2014) (internal quotation marks omitted). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         Sweetwater makes six arguments in objecting to D'Pergo's motion to amend. First, it contends that any claim based on D'Pergo's trademark is futile because D'Pergo alleges that in 2006, it stopped using the photograph on its website. In Sweetwater's view, this allegation establishes that D'Pergo abandoned its trademark. But as D'Pergo points out, there is a distinction between D'Pergo's continued use of the photograph, and D'Pergo's continued use of its trademark. It is the latter that is relevant for purposes of assessing abandonment. See 3 McCarthy on Trademarks & Unfair Competition § 17:9 (5th ed.) (“[L]ack of actual usage of a symbol as a ‘trademark' can result in a loss of legal rights. This loss is known as ‘abandonment.'” (emphasis added)). Because the complaint does not establish that D'Pergo abandoned its trademark in that sense, Sweetwater's argument fails. And regardless, abandonment presents a question of fact that the court cannot resolve at this juncture. See Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387, 1390 (Fed. Cir. 2010).

         Second, Sweetwater claims that it removed the photograph from its Buying Guide on January 6, 2016, months prior to the date of registration for D'Pergo's trademark (August 23, 2016). This fact is derived not from the complaint, however, but from a declaration that Sweetwater has submitted with its objection. Because the court may not consider that fact in evaluating the futility of D'Pergo's motion, and must instead confine its analysis to the complaint, Sweetwater's argument fails.[1] See Foley, 772 F.3d at 71. By the same token, the court may not consider Sweetwater's claim that it had no actual or constructive notice of D'Pergo's trademark application or registration while the photograph was posted in its Buying Guide.

         Third, Sweetwater alleges that D'Pergo “committed a fraud on the USPTO” because D'Pergo averred in its trademark application that it sold necks for electric guitars, when in fact it does not. Doc. no. 30-1 at 9. For this argument, it suffices to say that an allegation of fraudulent misrepresentation presents questions of fact that the court cannot resolve in Sweetwater's favor at this time. See generally MPC Franchise, LLC v. Tarntino, 826 F.3d 653 (2d Cir. 2016) (discussing standard for claim that trademark registration was procured through fraud).

         Fourth, Sweetwater asserts that its “functional and/or aesthetic use” of the photograph in its Buying Guide cannot support a claim for trademark infringement or unfair competition. Doc. no. 30-1 at 13. To be sure, D'Pergo's theories of liability based on Sweetwater's use of the photograph may present unique issues not present in more prototypical cases of trademark infringement or unfair competition, and such issues may become the subject of subsequent motion practice. But both parties present their arguments in brief fashion, largely bereft of relevant case law. The court is not in a position to resolve the nuanced questions alluded to, but not fully developed, by Sweetwater, and therefore declines to address this argument at present. See United States v. Zannino,895 F.2d 1, 17 (1st ...


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