United States District Court, W.D. Arkansas, Fayetteville Division
OPINION AND ORDER
TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE
before the Court is a Motion to Dismiss Counterclaims (Doc.
14) filed by Plaintiffs and Counter-Defendants David King and
King Outdoor Enterprises, LLLP (collectively,
"King"). Defendant and Counter-Claimant American
Fish Attractor and Habitat, LLC ("American Fish")
filed its Response (Doc. 15) on August 19, 2016, making the
Motion ripe for adjudication. The Court held a case
management hearing on September 7, 2016, during which it took
oral argument and ruled on King's Motion from the bench.
To the extent that anything in this Order differs from the
Court's pronouncement from the bench, this Order
the holder of a patent for an artificial fish habitat, of the
sort that is placed in a lake or pond to attract fish and
allow them to populate. King also holds a trademarked logo
associated with this product. The logo features a fish
superimposed over a depiction of the product. King's
Complaint (Doc. 1), filed on June 7, 2016, alleges that a
product sold by American Fish infringes on its fish habitat
patent; that American Fish's logo infringes on its
trademarked logo under Arkansas state law and federal law;
and that American Fish injured its business reputation in
violation of Arkansas state law. American Fish filed its
Answer (Doc. 10) on July 12, 2016 generally denying the
claims against it and asserting three counterclaims. Its
first counterclaim seeks a declaration of non-infringement
regarding its product and King's patent; its second
counterclaim seeks a declaration of non-infringement
regarding its logo and King's trademark; and its third
counterclaim alleges trademark misuse against King.
than answering American Fish's counterclaims, King filed
a Motion to dismiss them on August 2, 2016. (Doc. 14). The
Motion contends that the first two counterclaims must be
dismissed under Federal Rules of Civil Procedure 12(b)(6) and
12(f), as they are redundant and duplicative of King's
infringement claims. It also contends that American
Fish's third counterclaim must be dismissed because no
cause of action for trademark misuse exists; rather, courts
recognize it only as an affirmative defense. American
Fish's Response (Doc. 15) argues that declaratory
judgment noninfringement counterclaims are relatively
commonplace in intellectual property suits. It also argues
that its trademark misuse counterclaim should not be
dismissed, though it cites no law to support that
proposition. Having considered the parties' briefs and
heard their arguments, the Court GRANTS IN PART AND DENIES IN
PART King's Motion to Dismiss Counterclaims (Doc. 14).
survive King's Rule 12(b)(6) Motion to Dismiss, American
Fish's Counterclaim must provide "a short and plain
statement of the claim that [it] is entitled to relief."
Fed.R.Civ.P. 8(a)(2). The purpose of this requirement is to
"give the [opposing party] fair notice of what the ...
claim is and the grounds upon which it rests."
Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). The Court must accept all of the Counterclaims'
factual allegations as true, and construe them in the light
most favorable to American Fish, drawing all reasonable
inferences in its favor. See Ashley Cnty., Ark. v.
Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).
in adjudicating a 12(b)(6) motion, the Court must determine
whether a complaint or counterclaim "contain[s]
sufficient factual matter, accepted as true, to 'state a
claim to relief that is plausible on its face.'"
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). "A pleading that
offers 'labels and conclusions' or 'a formulaic
recitation of the elements of a cause of action will not
do.' Nor does a complaint [or counterclaim] suffice if it
tenders 'naked assertion[s]' devoid of 'further
factual enhancement.'" Id. However, with
respect to American Fish's first two counterclaims, King
argues not that they fail under the Twombly-Iqbal
heightened pleading standard, but that dismissal is
appropriate because they are duplicative of its own claims.
While such an argument may technically result in dismissal
pursuant to Rule 12(b)(6), it requires analysis pursuant to
Rule 12(f). That Rule allows a court to "strike from a
pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter."
is some disagreement amongst federal courts as to whether
dismissal of a declaratory judgment counterclaim for
non-infringement is appropriate when the complaint includes
claims for infringement. King directs the Court's
attention to Sarkis' Cafe, Inc. v. Sarks in
the Park, LLC, 55 F.Supp.3d 1034 (N.D. III. 2014).
Therein, the court held that the defendant's counterclaim
for non-infringement of trademark was duplicative to the
plaintiffs trademark infringement claim, and should
accordingly be dismissed. Id. at 1037-38. The
Sarkis Cafe Court explained:
Plaintiff asserts that Defendant's declaratory judgment
counterclaim should be dismissed because it is duplicative of
the claims contained in the Complaint and will thus fail to
serve a "useful purpose" in determining the outcome
of this case. . . . The Court agrees. In this instance, a
cognizable dispute already exists between Plaintiff and
Defendant regarding the latter's use of Plaintiffs marks
triggered by Count II of the Complaint. Where "the
substantive suit would resolve the issues raised by the
declaratory judgment action, the declaratory judgment action
'serves no useful purpose' because the controversy
has 'ripened' and the uncertainty and anticipation of
litigation are alleviated." Intercon Solutions, Inc.
v. Basel Action Network, 969 F.Supp.2d 1026, 1065
(N.D.III.2013) (internal citations and quotations omitted)
(collecting cases); see Nielsen Co. (US), LLC v. Truck
Ads, LLC, No. 08 C 6446, 2011 WL 221838, at *5 (N.D.III.
Jan. 24, 2011) (striking without prejudice counterclaim
seeking declaratory judgment of non-infringement). Here, once
the Court rules on the merits of Count II of the Complaint,
the question of whether Defendant infringed upon Plaintiffs
marks will be resolved in its entirety. Therefore, the Court
dismisses Defendant's declaratory judgment counterclaim
pursuant to Rule 12(b)(6).
Id. at 1038. American Fish, on the other hand,
effectively suggests that Sarkis Cafe is an outlier.
Wright & Miller, it notes, states that when a
"patentee sues for infringement, [the] defendant may
counterclaim for a declaration of invalidity and
noninfringement." 10B Fed. Prac. & Proc. Civ. §
2761 (4th ed.). This is so to ensure that "the defendant
is protected against the possibility that the patentee will
dismiss the suit or that the infringement action will not
resolve all of the issues between the parties."
Id. Indeed, in Malibu Media, LLC v. Doe,
2016 WL 3383758 (N.D. Cal. June 20, 2016), relied on by
American Fish, the court expressed nearly this exact concern.
Section 505 of Title 17 of the United States Code provides
that a "prevailing party" may be awarded
attorney's fees in a copyright infringement action;
however, when a copyright plaintiff voluntarily dismisses a
claim without prejudice, the defendant is not a prevailing
party. . . . Absent defendant's counterclaim, if events
reveal that this case is meritless, [the plaintiff] could
voluntarily dismiss its affirmative claims without prejudice
under Rule 41(a)(2), seeking to avoid an award of