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H-D U.S.A., LLC v. SunFrog, LLC

United States District Court, E.D. Wisconsin

October 4, 2017



          J. P. Stadtmueller U.S. District Judge

         This is a trademark infringement case brought by Plaintiffs, collectively referred to as “Harley-Davidson, ” against Defendants, collectively referred to as “SunFrog.” SunFrog runs an online marketplace where third-party sellers can upload designs and logos onto clothing, hats, mugs, or other items and sell them. SunFrog prints and ships the purchased items. Some of those items bore Harley-Davidson logos and word trademarks, and Plaintiffs filed this lawsuit as a result.[1] Before the Court is SunFrog's motion to dismiss the complaint for failure to state a claim upon which relief may be granted. (Docket #27). For the reasons stated below, it will be denied.

         1. LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b) provides for dismissal of complaints which fail to state a viable claim for relief. Fed.R.Civ.P. 12(b)(6). To state a claim, a complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In other words, the complaint must give “fair notice of what the. . .claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The allegations must “plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level[.]” Kubiak v. City of Chicago, 810 F.3d 476, 480 (7th Cir. 2016) (citation omitted). In reviewing the complaint, the Court is required to “accept as true all of the well-pleaded facts in the complaint and draw all reasonable inferences in favor of the plaintiff.” Id. at 480-81.

         2. RELEVANT FACTS

         The facts as pleaded can be briefly summarized. Harley-Davidson is, of course, a world-famous motorcycle manufacturer, and its word trademarks and logos are well known. Harley-Davidson prints those logos and marks on merchandise it sells alongside its automotive products. Those logos and word marks have appeared on goods sold on SunFrog's website, including clothing and other items. These are counterfeits, as none of them is sponsored by or affiliated with Harley-Davidson.

         Users of SunFrog's website create and sell these counterfeit goods either by uploading their own designs featuring Harley-Davidson's marks and logos onto blank versions of the goods in question (supplied by SunFrog), or by selecting an infringing design created by another user which is stored in the SunFrog art database. SunFrog users are largely anonymous, as they are identified on the website only by self-made account names or numerical codes that do not reveal the user's identity. Once a buyer actually purchases one of the user's infringing designs, SunFrog prints the item using an automated printer and then ships it. SunFrog also keeps the majority of the profit from the sales.

         SunFrog advertises these products on the Internet and through social media outlets. Further, it encourages users to track sales using its sales-tracking tools and to advertise their goods on social media. SunFrog persists in promoting and selling these goods despite receiving numerous takedown requests and other notifications from Harley-Davidson that infringement is occurring. Indeed, “[f]rom at least as early as October 2016 to the present, H-D has submitted more than 70 complaints to SunFrog that: (a) notified SunFrog of H-D's rights in the H-D Marks, and (b) reported and objected to more than 800 Infringing Products that have been advertised, promoted, offered, and/or sold on SunFrog's Website in violation of H-D's rights.” (Docket #1 ¶ 68). Moreover, even when SunFrog would try to control infringement by users, its attempts were halfhearted: it would take a long time for infringing designs to be taken down in response to requests for the same, those same designs would crop up again soon after because there was no system in place to curb infringement at the design stage, and repeat infringers would pop up again and again with few or no repercussions.

         Harley-Davidson claims that “SunFrog is thus not a passive participant in the business conducted by sellers on and through SunFrog's Website.” Id. ¶ 64. According to Harley-Davidson, “[t]his is not a situation where SunFrog's only role is to provide sellers with access to an online marketplace to sell their products and everything is done by the sellers. Rather, SunFrog is an active partner of the sellers and directly involved in the sellers' business in many ways, all for SunFrog's financial gain[.]” Id.

         The complaint recites claims for: (1) trademark counterfeiting under 15 U.S.C. § 1114(1); (2) trademark infringement under 15 U.S.C. § 1114(1); (3) trademark infringement, false designation of origin, and unfair competition under 15 U.S.C. § 1125(a)(1)(A); (4) trademark dilution under 15 U.S.C. § 1125(c); (5) copyright infringement under 17 U.S.C. § 101 et seq.; (6) trademark infringement under Wis.Stat. § 132 et seq.; and (7) common law trademark infringement, unfair competition, and misappropriation. See (Docket #1 at 38-45).

         3. ANALYSIS

         SunFrog does not contest that its users' conduct constitutes infringement of Harley-Davidson's intellectual property rights. Rather, its motion focuses on why it should not be responsible for this rampant infringement. First, says SunFrog, it does not itself create infringing designs. (Docket #28 at 6). Second, it cannot be expected to review the millions of designs presently on its website and the thousands more added each day. Id. Third, it has made efforts to curb infringement, including requiring users to check a box stating that they are not violating the intellectual property rights of others when they submit a design. Id. SunFrog claims that it will terminate users who renege on this promise. Id. Further, SunFrog claims that in light of its explosive growth and the concerns over potential infringement, it is all the time developing and refining tools that can be used to search its database for infringing goods and remove them, including responding to takedown notices, permitting rights holders like Harley-Davidson to directly search its design databases to identify problematic offerings, and diverting profits from infringing goods to the rights holders. Id. at 6-7.

         SunFrog raises four grounds for dismissal, none of which has merit. First, it claims that Harley-Davidson has not alleged facts that plausibly support their seven claims for relief. Id. at 7-8. The problem with the argument, however, is that SunFrog does no more than state this conclusion. See Id. SunFrog cites a host of cases about the plausibility pleading regime and its application in intellectual property cases, but omits the critical link between those legal principles and any of the facts alleged in the complaint. Why does SunFrog think that Harley-Davidson's complaint-which is lengthy, detailed, and specific-is so conclusory as to be worthy of dismissal? It does not say. To the extent that SunFrog believes that the burden here shifted to Harley-Davidson once it invoked the word “plausibility, ” see (Docket #37 at 4), it is mistaken, Yeksigian v. Nappi, 900 F.2d 101, 104 (7th Cir. 1990); Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991). The Court is not required to develop SunFrog's arguments on its behalf, and so the point need not be addressed further. See Hardrick v. City of Bolingbrook, 522 F.3d 758, 762 (7th Cir. 2008); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 397 (7th Cir. 2000) (“[I]t is not this court's responsibility to research and construct the parties' arguments.”) (quotation omitted).[2]

         Second, SunFrog contends that, as a mere printer of goods bearing Harley-Davidson's marks, it has not used the marks in commerce as required to sustain a claim under federal or Wisconsin trademark law. Id. at 8-9. As the Court observed in its ruling on Harley-Davidson's motion for preliminary injunction, SunFrog cites no case that colorably supports its position. H-D U.S.A., LLC v. SunFrog, LLC, Case No. 17-CV-711-JPS, 2017 WL 3261709, at *2 n.1 (E.D. Wis. July 31, 2017). Instead, SunFrog directs the Court to one 20-year-old case in which Harley-Davidson chose not to sue a printer of infringing goods and implies that such a ...

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