Steeped, Inc. v. Nuzee, Inc.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS RE: DKT. NO. 18

          HAYWOOD S. GILLIAM, JR., UNITED STATES DISTRICT JUDGE.

         Plaintiff Steeped, Inc. (“Steeped Coffee” or “Plaintiff”) filed trademark infringement claims against Defendant Nuzee, Inc. (“Nuzee” or “Defendant”) for its use of the STEEPED COFFEE trademark. See Dkt. No. 1 (“Compl.”). Before the Court is Defendant's motion to dismiss for failure to state a claim, for which briefing is complete. See Dkt. No. 18 (“Mot.”), 26 (“Opp.”), and 30 (“Reply”). The Court DENIES Defendant's motion.

         I. BACKGROUND

         Plaintiff is a Delaware Corporation headquartered in Scotts Valley, California, which began with a crowdfunded Kickstarter campaign in 2015. Compl. ¶ 7. Steeped Coffee “developed a unique and innovative single-serve coffee product that is small, light, pre-ground and pre-portioned, yet can be stored for months with minimal loss of freshness.” Id. ¶ 1. Specifically, its products store “ground coffee in small, specially engineered, biodegradable filter bags, which are in turn kept in zero waste outer pouches flushed with nitrogen gas to eliminate oxygen and thus prevent oxidation.” Id. ¶ 2. Plaintiff alleges that “NuZee's use of ‘Steep Coffee,' ‘Steep Bag Coffee,' ‘Steep Pouch,' ‘Steeped to Perfection,' and similar terms [in connection with its Pine Ranch Coffee Co. brand product] is confusingly similar to Steeped's STEEPED COFFEE mark (and identical to other marks Steeped uses and has filed for registrations on) in sound, appearance, and commercial impression.” Id. ¶ 19. Plaintiff's STEEPED COFFEE trademark is registered on the Supplemental Register, the secondary register maintained by the United States Patent and Trademark Office (“PTO”). Id. ¶ 2, Ex. A.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when a 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).

         In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, Courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). Even if the court concludes that a 12(b)(6) motion should be granted, the “court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (quotation omitted).

         III. ANALYSIS

         Defendant moves to dismiss on two grounds: first, Plaintiff failed to sufficiently allege Defendant's “use” of the infringing mark “in commerce” as required under the Lanham Act, and second, Plaintiff failed to adequately plead a valid trademark. See generally Mot.

         A. Use in Commerce

         As an initial matter, Defendant characterizes its argument that Plaintiff fails to sufficiently allege Defendant used an infringing mark in commerce as a jurisdictional challenge under Federal Rules of Civil Procedure 12(b)(1). This is incorrect. Whether Plaintiff has met its burden to plead the elements of 15 U.S.C. § 1114 does not affect whether the Court has the power to resolve this case. Instead, the Court has subject matter jurisdiction over this case via federal question jurisdiction because Plaintiff alleges a Lanham Act violation. See 28 U.S.C. § 1331. Plaintiff also has standing under Article III of the Constitution because it alleges damage to its brand traceable to NuZee's use of the STEEPED COFFEE mark, which is redressable through an injunction by this Court. Compl. ¶ 4, Prayer for Relief; see also, Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 149 (2010) (“Standing under Article III of the Constitution requires that an injury be concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling.”).^[1] Accordingly, the Court construes Defendant's claim that Plaintiff failed to sufficiently allege an element of the statute as seeking dismissal under Rule 12(b)(6). See Iqbal, 556 U.S. at 678 (analyzing whether plaintiff sufficiently “recit[ed] the elements of a cause of action” as a Rule 12(b)(6) motion.).

         The Lanham Act “grants trademark protection . . . to marks that are used to identify and to distinguish goods or services in commerce-which typically occurs when a mark is used in conjunction with the actual sale of goods or services.” Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1051 (9th Cir. 1999). It provides a remedy against:

(1) Any person who shall, without the consent of the registrant--

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive 15 U.S.C. § 1114 ...