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Wal-Mart Stores, Inc. v. Case-Mate, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

January 25, 2017

WAL-MART STORES, INC. PLAINTIFF/ COUNTER DEFENDANT
v.
CASE-MATE, INC. DEFENDANT/COUNTER PLAINTIFF

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE

         Currently before the Court are Plaintiff/Counter Defendant Wal-Mart Stores, Inc.'s ("Walmart") Motion to Dismiss (Doc. 33) and Brief in Support (Doc. 34), concerning Counts I and II of Defendant/Counter Plaintiff Case-Mate, Inc.'s ("Case-Mate") Amended Counterclaims. Case-Mate filed a Response in Opposition (Doc. 37) to the Motion, and Walmart filed a Reply (Doc. 39). On January 17, 2017, the Court held a hearing on the Motion, during which both parties presented oral argument. Now that the Motion is ripe for decision, the Court finds it should be GRANTED IN PART AND DENIED IN PART for the reasons explained herein.

         I. BACKGROUND

         Case-Mate is an American company that sells mobile phone and smartwatch accessories, including phone cases, wallets, wristlets, clutches, screen protectors, computer cases, power cables, and stickers. The company launched in 2006 and maintains that it has invested more than $30 million promoting its brand since that time. Case-Mate currently sells its products at a number of physical locations, including big-box stores, office supply stores, department stores, discount stores, electronics companies, specialty stores, and mall kiosks. The company also sells online through Case-Mate's website, as well as through Walmart.com, Walmart.ca, Jet.com, Amazon.com, Groupon.com, eBay.com, and others.

         In 2006, Case-Mate applied for United States trademark protection for its brand name, "CASE-MATE." The mark was accepted in 2007 for official registration by the United States Patent and Trademark Office ("PTO") (U.S. Registration 3, 246, 753). In 2008, Case-Mate began selling its trademarked products at Walmart stores in the United States and on Walmart.com. Then in 2012, Case-Mate applied for trademark protection in Canada by petitioning the Canadian Intellectual Property Office to register the "CASEMATE" mark. A Canadian trademark was granted in 2013 (No. TMA864357).

         In March of 2014, while Walmart was still selling Case-Mate's products in its American stores and online, Walmart filed a trademark-registration application with the PTO for a new line of office and school supply products. The term Walmart sought to protect was "CASEMATE." Walmart filed a similar trademark application in Canada in June of 2014.

         Sometime in December of 2014, the PTO published notice of Walmart's pending trademark application. Case-Mate believed that Walmart's proposed CASEMATE mark was confusingly similar to the already-registered CASE-MATE mark, so Case-Mate decided to formally oppose Walmart's petition. Case-Mate notified the Trademark Trial and Appeal Board ("TTAB") in January of 2015 of its intent to oppose and its request for a three-month period of time to file an opposition brief. In the meantime, Walmart continued to sell its CASEMATE brand of office products at its physical stores and online at Walmart.com. Case-Mate ultimately filed its opposition brief before the TTAB in April of 2015. At around the same time, Walmart began selling Case-Mate's cell phone products at Walmart stores in Canada, as well as on Walmart's Canadian website, Walmart.ca. As of yet, Walmart's Canadian trademark application has not been granted and is still pending final approval.

         On August 17, 2016, Walmart filed a Complaint for declaratory judgment of noninfringement in this Court, asserting the following:

Because there can be no likelihood of confusion between Walmart's use of the CASEMATE trademark[1] and Defendant's use of the CASE-MATE trademark (indeed, there has been none since Walmart began using the CASEMATE trademark over two years ago), Walmart seeks a declaratory judgment that its use of the CASEMATE trademark in connection with its stationery products does not constitute trademark infringement of Defendant's alleged CASE-MATE trademark.

(Doc. 1, p. 16). Walmart also requested that the TTAB suspend its review of the proposed CASEMATE mark in favor of litigating the infringement issue in this Court.

         On November 14, 2016, Case-Mate responded to Walmart's Complaint by filing an Answer and Counterclaim (Doc. 18), and on December 1, 2016, Case-Mate filed an Amended Answer and Counterclaim (Doc. 28). Case-Mate has now asserted four separate legal claims against Walmart in this case. Count I of the Amended Counterclaim maintains that Walmart violated the Lanham Act at 15 U.S.C. § 1114, by infringing Case-Mate's validly registered trademark. Count II claims that Walmart violated the Lanham Act at 15 U.S.C. § 1125(a), by using the brand name CASEMATE in a manner "likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association" of Walmart's goods in comparison with Case-Mate's. Both Counts I and II ask the Court to enjoin Walmart's use of the term CASEMATE on goods sold "in the United States, Canada, and elsewhere, " and award "damages proven to have been caused by reason of Wal-Mart's aforesaid acts and a disgorgement of Wal-Mart's profits for sales of products under the CASEMATE name." (Doc. 28, pp. 26-27). Case-Mate argues that Walmart's use of CASEMATE in connection with Walmart's office and school supply product line "is causing consumers to associate Case-Mate's CASE-MATE products with low-quality goods." Id. at p. 21. According to the Amended Counterclaim, "Case-Mate has received communications from dissatisfied consumers of Wal-Mart's CASEMATE products in both the United States and Canada who have wrongly attributed quality problems to Case-Mate" Id.

         As for Counts III and IV of the Amended Counterclaim, these will not be substantively addressed in this Order, as they are not the subject of Walmart's Motion to Dismiss and concern only Case-Mate's claims brought under state law, including violations of the Arkansas Deceptive Trade Practices Act, common-law trademark infringement, and unfair competition. The instant Motion seeks dismissal of only those portions of Counts I and II that allege violations of the Lanham Act committed by Walmart outside the United States. Walmart contends that Case-Mate has failed to state a claim that supports the extraterritorial application of the Lanham Act beyond U.S. borders, including in Canada and "elsewhere."

         Case-Mate responds that it has met the test for establishing an extraterritorial application of the Lanham Act, in particular with respect to Walmart's use of CASEMATE in Canada. During the motion hearing, Case-Mate's counsel admitted that they "aren't really certain yet if there are other places in the world where Wal-Mart is selling Casemate products where we may also have rights .... But in Canada, it's actually a full throttled issue . . . ." (Doc. 41, p. 16). Case-Mate believes that Walmart's decision to market and sell CASEMATE products in Canada, in violation of Case-Mate's Canadian trademark rights, substantially affects U.S. commerce and weighs in favor of applying U.S. trademark law to enjoin Walmart's activities at home and abroad.

         II. ...


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