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Onsite Truck and Trailer Service, Inc. v. Precision Diesel Repair Limited Liability Co.

United States District Court, W.D. Kentucky, Louisville Division

March 29, 2018

ONSITE TRUCK AND TRAILER SERVICE, INC., Plaintiff,
v.
PRECISION DIESEL REPAIR LIMITED LIABILITY COMPANY, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          David J. Hale, Judge

         Plaintiff Onsite Truck and Trailer Service accuses its former employees, Defendants Tyler Bratcher and Ryan Farris, of unfair competition and trademark infringement arising out of their use of the term “on-site” in advertising for their new company, Defendant Precision Diesel Repair. (Docket No. 1) Defendants have moved to dismiss, or in the alternative for summary judgment, arguing that they make fair use of the term and thus cannot be held liable. (D.N. 11; see D.N. 11-1) For the reasons explained below, the Court finds that Onsite's complaint states a plausible claim for relief and that consideration of the fair-use defense at this stage would be premature. Defendants' motion to dismiss will therefore be denied.

         I. BACKGROUND

         The following facts are set forth in the complaint and accepted as true for purposes of the present motion. See Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). Onsite provides roadside assistance and repair services for trucks and other vehicles in Kentucky and surrounding states. (D.N. 1, PageID # 3) From at least February 1, 2006, to the present, it has used the service mark ONSITE® “to identify and distinguish its services from those provided by others and to indicate the source of those services”; the mark is recognized “throughout the United States in connection with Onsite's goods and services.” (Id., PageID # 4) The ONSITE® mark was registered with the U.S. Patent and Trademark Office on January 27, 2015. (Id., PageID # 3)

         Bratcher and Farris are former Onsite employees. (Id., PageID # 4) Bratcher held a position of trust at the company and “was able to learn how Onsite developed its market and service[d] its customers.” (Id.) When Bratcher left Onsite, Farris soon followed, and the two formed Precision Diesel Repair (PDR), which directly competes with Onsite. (Id., PageID # 4-5) Defendants use “sponsored link ads” in advertising for PDR. (Id., PageID # 5) These ads “are triggered by the entry of certain keywords” that are “purchase[d]” by the advertiser and entered by computer users. (Id., PageID # 5-6) They allow an advertiser “to bypass the search engine's usual relevancy factors and prominently display that advertiser's caption and text along with an accompanying link to a website specified by the advertiser.” (Id., PageID # 5) PDR's ads on Google, Bing, and similar search sites prominently feature the term “on-site” or “on site” and include a link to the PDR website.[1] (Id., PageID # 6-8) As a result, consumers seeking the services that Onsite and PDR provide “are likely to believe that Defendants' services are Onsite's services, or originate from Onsite, or that Defendants' services are endorsed, sponsored by or approved by Onsite, or that there is some affiliation or connection between Defendants and Onsite” (id., PageID # 8), and Onsite loses business to PDR. (Id., PageID # 8-9)

         Onsite alleges that Defendants use the term “on-site” to take advantage of the reputation and goodwill associated with the ONSITE® mark. (Id., PageID # 9) It asserts claims of trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a), as well as common-law unfair competition. (Id., PageID # 10-13) Defendants have moved to dismiss all of Onsite's claims. (D.N. 11) In the alternative, they ask the Court to enter summary judgment in their favor. (Id.)

         II. ANALYSIS

         To survive a motion to dismiss for failure to state a claim, “a complaint must contain 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 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).[2] A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Factual allegations are essential; “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice, ” and the Court need not accept such statements as true. Id. A complaint whose “well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct” does not satisfy the pleading requirements of Rule 8 and will not withstand a motion to dismiss. Id. at 679.

         A plaintiff states a claim of trademark infringement under the Lanham Act by “alleg[ing] facts establishing that: (1) it owns the registered trademark; (2) the defendant used the mark in commerce; and (3) the use was likely to cause confusion.” Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (citing 15 U.S.C. § 1114(1)). Defendants do not dispute that Onsite's complaint satisfies these elements. However, they maintain that they are protected by the doctrine of fair use because they used Onsite's mark only in a descriptive sense and in good faith. (See, e.g., D.N. 11-1, PageID # 80-82) They rely on Hensley as authority for disposing of an infringement case at the motion-to-dismiss stage on the basis of fair use. (See D.N. 11-1, PageID # 84)

         In Hensley, the Sixth Circuit affirmed the dismissal of the plaintiff's complaint for failure to state a claim. 579 F.3d at 614. Hensley Manufacturing, a company that manufactured trailer hitches, sued its competitor ProPride and Jim Hensley, who designed hitches for ProPride after leaving the company that bore his name. Id. at 606. Hensley Manufacturing alleged that ProPride infringed on its registered trademark in the name “Hensley” by using Jim Hensley's name to advertise ProPride products. Id.The Sixth Circuit first found that Hensley Manufacturing failed to state a plausible claim of trademark infringement because (1) the complaint contained only a conclusory allegation that ProPride's use of Hensley's name “create[d] ‘a strong likelihood of confusion in the marketplace as to the source of origin and sponsorship of the goods of the Plaintiff and the Defendant'”; and (2) the advertisements attached as exhibits to the complaint demonstrated that ProPride's use of Hensley's name did not create a likelihood of confusion. Id. at 611.

         The court further held that even if Hensley Manufacturing's complaint adequately alleged likelihood of confusion, ProPride would be protected by the doctrine of fair use. Id. At 611-12. “Under [that] doctrine, ” the court explained, “the holder of a trademark cannot prevent others from using the word that forms the trademark in its primary or descriptive sense.” Id. At 612 (quoting Herman Miller, Inc. v. Palazzetti Imports & Exports, Inc., 270 F.3d 298, 319 (6th Cir. 2001)).

Rather, “[t]he only right of exclusion that trademark law creates in a descriptive word is in the secondary, new, trademark meaning of the word that plaintiff has created. The original, descriptive primary meaning is always available for use by others to describe their goods, in the interest of free competition.”

Id. (alteration in original) (quoting Herman Miller, 270 F.3d at 319). Defendants quote these passages repeatedly in support of their motion to dismiss, arguing that Onsite's claim is barred because they have engaged in fair ...


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