United States District Court, D. New Mexico
VOLKER STROBEL, HEIKE STROBEL, and HANS BAUR, in their individual capacities and on behalf of UNC Holding LLC and V.I.P. DRINKS BOTTING LLC, Plaintiffs,
UWE RUSCH and DR. MABEL RUSCH, Defendants.
MEMORANDUM OPINION AND ORDER
C. BRACK, SENIOR U.S. DISTRICT JUDGE.
Rusch began developing a brand of cordials in 1998 under the
name CORDIALS V.I.P. Drinks. Mr. Rusch asserts ownership in
the copyright to the brand and also registered the trademark
to the brand's logo (the “Royal Logo”), which
has been used to sell CORDIAL V.I.P. Drinks since 2005,
primarily in Europe. In 2012, he formed UNC Holding LLC
(“UNC-FL”) in Florida to establish his business
in the United States. In 2013 Mr. Volker Strobel, Mrs. Heike
Strobel, Mr. Hans Baur, and Mr. Gregor Fischer agreed to
invest money with Defendants in the CORDIALS V.I.P. Drinks
business. The parties later agreed to dissolve UNC-FL and
re-establish the business in New Mexico under the name
UNC-NM. At some point, their business relationship soured.
Plaintiffs contend that Defendants violated the parties'
agreement and brought this lawsuit for a variety of tort and
contract claims. Defendants have filed 22 affirmative
defenses and 14 counterclaims and argue that Plaintiffs'
actions have infringed on their rights and have made any
purported contract unenforceable. Plaintiffs move to dismiss
the counterclaims and strike certain affirmative defenses.
The Court will grant both motions in part.
Rusch began developing a line of cordials in 1998. (Doc. 40
(Answer & Countercl.) ¶ 10.) He designed the Royal
Logo for the CORDIALS V.I.P. Drinks brand and asserts that he
has “sole ownership in the copyright of the design logo
. . . .” (Id. ¶¶ 11-14.) He
registered the CORDIALS V.I.P. Drinks logo as an
international trademark through the World Intellectual
Property Organization (WIPO) and later transferred ownership
of the trademark to his wife, Dr. Mabel Rusch. (Id.
¶¶ 24-25.) He also “granted Dr. Rusch a
non-exclusive license to . . . use the Royal Logo copyright .
. . in connection with the sale, advertising, marketing, and
services of CORDIALS V.I.P. Drinks.” (Id.
¶ 21.) Mr. Rusch has used the Royal Logo to market
CORDIALS V.I.P. Drinks in Europe since 2005. (Id.
moved to Florida in 2008 to establish their cordials business
in the United States. (Id. ¶ 27.) They met the
Strobels in 2012, and the Strobels became acquainted with the
Rusches' cordials business. (Id. ¶¶
30-35.) Mr. Strobel invested in another of Mr. Rusch's
businesses, but after that enterprise failed “Mr.
Strobel approached Mr. Rusch about investing in the CORDIALS
V.I.P. Drinks business.” (Id. ¶¶
36-45, 55.) Mr. Strobel, Mr. Rusch, and Mr. Baur met in
Arizona in February 2013 to hammer out details of the
agreement. (Id. ¶¶ 57-58.) The parties
later brought Mr. Fischer into the partnership. (Id.
parties' Partnership Agreement for UNC, Holding LLC (the
“Partnership Agreement”) provided that Dr. Rusch
would convey to the business her trademark rights.
(See Doc. 41-A at 2.) In May 2013 Dr. Rusch executed
two documents that would initiate the transfer of the
CORDIALS V.I.P. Drinks trademark to UNC-FL. (Answer &
Countercl. ¶ 60.) Mr. Strobel was responsible for
submitting the documents and the appropriate payments to the
correct authorities. (Id. ¶ 61.) Mr. Strobel
told his partners that the transfer had been initiated, but
he never finalized the transfer and Dr. Rusch still owns the
trademark. (Id. ¶¶ 62-65, 112.)
March 2014, Mr. Strobel asked Mr. Rusch to dissolve UNC-FL
effective April 18, 2014, giving Mr. Strobel time to set up
UNC-NM. (Id. ¶ 66.) Defendants contend that,
despite his representations to the contrary, Mr. Strobel
failed to comply with all requirements necessary to
reestablish the business in New Mexico, such as retaining an
attorney or transferring funds from UNC-FL's bank account
to UNC-NM's bank account. (Id. ¶¶
67-74.) Mr. Strobel took other actions without the input or
approval of Mr. Rusch, including changing the business's
CPA and dissolving one of the business's two independent
subsidiaries. (Id. ¶¶ 75-81.)
October 2016, Defendants received a letter from WIPO
requesting renewal of the trademark, which was still listed
under Dr. Rusch's name. (Id. ¶ 82.)
Believing Mr. Strobel completed the transfer, Mr. Rusch had
designed and printed product labels and updated the
business's website to reflect that the trademark was
owned by UNC, Holding LLC. (Id. ¶¶ 83-86.)
Defendants asked Mr. Strobel to explain why the trademark had
not been transferred, and he told them that the business had
no money to pay for the renewal. (Id. ¶ 87.)
Defendants contend that this statement was false.
(Id. ¶ 88.) Defendants paid for the renewal
costs themselves based on Mr. Strobel's representations
that UNC-NM would repay them when it had funds. (Id.
February 2018, Mr. Strobel asked Mr. Rusch to meet with him
and Mr. Baur to discuss the future of UNC-NM, but Mr. Rusch
refused to meet them without all of the members present.
(Id. ¶¶ 94-95.) At Mr. Strobel's
request, Mr. Rusch organized a General Meeting to be held on
April 19, 2018. (Id. ¶¶ 96-97.) On the day
of the meeting, Mr. Strobel emailed to cancel participation
in the meeting on behalf of himself, Mrs. Strobel, and Mr.
Baur. (Id. ¶ 98.) Mr. Rusch and Mr. Fischer,
who together “formed a quorum with a majority of 56% of
the voting rights” in the business, went forward with
the meeting and voted to dismiss Mr. Strobel as CEO of the
second independent subsidiary. (Id. ¶¶
100-01.) Despite his dismissal, Mr. Strobel later
“seized the bank account of” the subsidiary and
wrote a check to the CPA. (Id. ¶ 103.) Mr.
Strobel also discovered that Mr. Strobel had, through the
CPA, “eliminated Mr. Rusch's ‘Income
Shares' in UNC-NM.” (Id. ¶ 104.) In
May 2018, Mr. Strobel transferred money from the UNC-FL bank
account to his own personal bank account. (Id.
¶ 106.) On March 1, 2019, Defendants registered the
Royal Logo with the United States Copyright Office.
(Id. ¶ 114; see also Doc. 40-1.)
filed this lawsuit on July 10, 2018, and contend that
Defendants have infringed on UNC-NM's rights in the
trademark and caused damage to Plaintiffs. (See
Docs. 1; 62 (Am. Compl.).) Defendants assert 22 affirmative
defenses and 14 counterclaims. (Doc. 40.) Plaintiffs now move
to dismiss all of Defendants' counterclaims (Doc. 41) and
to strike many of their affirmative defenses (Doc. 46).
Motion to Dismiss Standard
reviewing a motion to dismiss under Fed.R.Civ.P. 12(b)(6),
the Court “must accept all the well-pleaded allegations
of the [counterclaim] as true and must construe them in the
light most favorable to the [counterclaimant].” In
re Gold Res. Corp. Sec. Litig., 776 F.3d 1103, 1108
(10th Cir. 2015) (citation omitted). “To survive a
motion to dismiss, ” the counterclaim does not need to
contain “detailed factual allegations, ” but it
“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, 555, 570 (2007)). “Threadbare recitals of
the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id.
ordinarily, a motion to dismiss must be converted to a motion
for summary judgment when the court considers matters outside
the complaint, see Fed. R. Civ. P. 12(d), matters
that are judicially noticeable do not have that effect . . .
.” Genesee Cty. Emps.' Ret. Sys. v. Thornburg
Mortg. Sec. Tr. 2006-3, 825 F.Supp.2d 1082, 1122 (D.N.M.
2011) (citing Duprey v. Twelfth Judicial Dist.
Court, 760 F.Supp.2d 1180, 1192-93 (D.N.M. 2009)).
[F]acts subject to judicial notice may be considered in a
Rule 12(b)(6) motion without converting the motion to dismiss
into a motion for summary judgment. This allows the court to
take judicial notice of its own files and records, as well as
facts which are a matter of public record. However, the
documents may only be considered to show their contents, not
to prove the truth of matters asserted therein.
Id. at 1122-23 (quoting Tal v. Hogan, 453
F.3d 1244, 1264 n.24 (10th Cir. 2006)).
ask the Court to take judicial notice of the Partnership
Agreement (Doc. 41-A) attached to their motion, as it is
referenced in the Amended Complaint and the Counterclaims,
and it is central to the lawsuit. (See Doc. 41 at 2
(citing Radian Asset Assurance Inc. v. Coll. of the
Christian Bros. of N.M., No. CIV 09-0885 JB/DJS, 2011 WL
10977180, at *17 (D.N.M. Jan. 24, 2011)).) See also Raja
v. Ohio Sec. Ins. Co., 305 F.Supp.3d 1206, 1238 n.9
(D.N.M. 2018). Although Defendants question whether the
Partnership Agreement is valid and enforceable, they do not
dispute its existence or its authenticity. (See Doc.
49.) As the “[C]ourt may take notice only of the
authenticity and existence of [judicially noticeable]
documents, not the validity of their contents[, ]”
Port-A-Pour, Inc. v. Peak Innovations, Inc., No.
13-CV-01511-WYD-BNB, 2015 WL 292913, at *3 (D. Colo. Jan. 20,
2015) (citation omitted), the Court finds it may consider the
the Court takes judicial notice of Defendants' March 1,
2019 registration of the Royal Logo with the United States
Copyright Office, which they attached to their Answer and
reference throughout their Counterclaims. (See Doc.
40-1.) While Plaintiffs contend that Mr. Rusch's claim to
ownership of the copyright is invalid, they do not dispute
the existence and authenticity of the registration record.
(See Doc. 51 at 5.)
Motion to Strike Affirmative Defense Standard
Rule of Civil Procedure 12(f) permits the court to
‘strike from a pleading an insufficient
defense.'” Wells v. Hi Country Auto Grp.,
982 F.Supp.2d 1261, 1263 (D.N.M. 2013) (quoting Fed.R.Civ.P.
12(f)). “However, motions to strike affirmative
defenses are generally disfavored.” Id.
(citing Friends of Santa Fe Cty. v. LAC Minerals,
Inc., 892 F.Supp. 1333, 1343 (D.N.M. 1995)). “To
strike a defense, its legal insufficiency must be
‘clearly apparent.' A court ‘must be
convinced that there are no questions of fact, that any
questions of law are clear and not in dispute, and that under
no set of circumstances could the defenses
succeed.'” Id. (quoting Friends of
Santa Fe Cty., 892 F.Supp. at 1343). The purpose of an
affirmative defense is simply “to provide the plaintiff
with fair notice.” Id. (citing Falley v.
Friends Univ., 787 F.Supp.2d 1255, 1257 (D. Kan. 2011)).
“Rule 12(f) is intended to minimize delay, prejudice
and confusion by narrowing the issues for discovery and
trial.” Id. (citing Hayne v. Green Ford
Sales, Inc., 263 F.R.D. 647, 648-49 (D. Kan. 2009)).
The Court will grant in part Plaintiffs' motion to
Defendants have sufficiently pleaded that Dr. Rusch owns the
trademark and Mr. Rusch owns the copyright at issue.
Court first turns to Plaintiffs' contention that
Defendants have failed to sufficiently plead that Dr. Rusch
still owns the trademark at issue. (See Doc. 41 at
6-9.) Plaintiffs assert that the Partnership Agreement
“conclusively” demonstrates that Dr. Rusch does
not own the trademark, but instead transferred her rights in
it to the business. (Id. at 9.) Yet in their
Complaint, Plaintiffs allege that Dr. Rusch “is the
current owner of the registration for the [trademark]”
(Am. Compl. ¶ 14); that she “had agreed to
transfer her rights in the [trademark] to [the business],
never did so” (id. ¶ 22); and that she
has “refused to transfer the ownership and registration
of the [trademark] to UNC-NM” (id.). Thus,
Plaintiffs' own pleadings contradict their argument.
the language of the Partnership Agreement itself does not
provide the proof of transfer of ownership on which
Plaintiffs rely. To the contrary, the Partnership Agreement
provides that Dr. Rusch “hereby undertakes to convey to
the Holding all rights to the CORDIALS trademark . . .
.” (Doc. 41-1 at 2.) This language does not necessarily
signify that Dr. Rusch had already performed the
transfer of her rights in the trademark to the business, it
could also mean that she had simply promised to do
so. See Undertake, Black's Law Dictionary (10th
ed. 2014) (to undertake is “to take on an obligation or
task” or “to give a formal promise;
guarantee”). The next paragraph clarifies the meaning:
it states that “[t]he transfer of ownership of these
rights will be initiated immediately after the
signing of this agreement.” (Doc. 41-1 at 2 (emphasis
added).) And as Defendants averred, Dr. Rusch indeed executed
the necessary transfer documents, but Mr. Strobel, who was
responsible for submitting the documents and the appropriate
payments to finalize the transfer, never took the necessary
actions. (Answer & Countercl. ¶¶ 60-65.)
According to Defendants' allegations, therefore, the
transfer was never consummated. Thus, the language of the
Partnership Agreement does not provide irrefutable proof of
ownership as Plaintiffs suggest.
same is true of Mr. Rusch's ownership of the copyright at
issue, which he “granted Dr. Rusch a non-exclusive
license to . . . use . . . .” (Id. ¶ 21.)
The Partnership Agreement does not specify when or how
Defendants were to transfer the copyright and/or the license
to the business, and Plaintiffs do not specifically discuss
ownership of the copyright in their Amended Complaint.
(See Docs. 41-1; Am. Compl.)
the trademark's registration record reflects
ownership by Dr. Rusch; and the copyright's registration
record reflects ownership by Mr. Rusch. (Doc. 40-1.)
Plaintiffs note that “‘the law will not
permit' the presumptions of ownership evidenced by a
registration ‘to supersede a contractual arrangement
between the parties.'” (Doc. 41 at 9 (quoting
Blue Planet Software, Inc. v. Games Int'l, LLC,
334 F.Supp.2d 425, 437-38 (S.D.N.Y. 2004)).) See also GTE
Corp. v. Williams, 904 F.2d 536, 539 (10th Cir. 1990)
(discussing “the evidentiary presumption under 15
U.S.C. § 1115(a) of exclusive right to use a registered
mark”) (citation omitted). However, Plaintiffs cite no
authority to establish that they have overcome this
presumption when they have demonstrated that the transfer of
ownership was never completed and that Defendants
have continued to use the trademark “in connection with
businesses they are operating, for the purpose of producing
and marketing beverages under that mark . . . .” (Am.
Compl. ¶ 27.) Thus, whether the Court analyzes the
motion under the standard of review applicable to a motion to
dismiss or a motion for summary judgment, the Court finds
this issue should be resolved in Defendants' favor.
Counterclaim I: False Designation of Origin and False
Advertising under 15 U.S.C. § 1125(a)
bring their first counterclaim under Section 43(a) of the
Lanham Act (15 U.S.C. § 1125(a)). (See Answer
& Countercl. ¶¶ 122-32.) Section 1125(a)
“creates two distinct bases of liability: false
association [(also known as false designation of origin]),
§ 1125(a)(1)(A), and false advertising, §
1125(a)(1)(B).” Intermountain Stroke Ctr., Inc. v.
Intermountain Heath Care, Inc., 638 Fed.Appx. 778, 784
(10th Cir. 2016) (quoting Lexmark Int'l, Inc. v.
Static Control Components, Inc., 572 U.S. 118,
122 (2014)) (subsequent citation omitted). Defendants do not
specify which section they bring their claim under, but it
appears that they are bringing a claim for false designation
of origin under § 1125(a)(1)(A). To state such a claim,
Defendants must demonstrate that: (1) they have “a
protectable interest in the mark; (2) that [Plaintiffs have]
used ‘an identical or similar mark' in
commerce”; and (3) that Plaintiffs' “use is
likely to confuse consumers.” 1-800 Contacts, Inc.
v. Lens.com, Inc., 722 F.3d 1229, 1238 (10th Cir. 2013)
(internal quotation and citation omitted).
assert that: (1) “Dr. Rusch has a protectable ownership
interest in the CORDIALS V.I.P. Drinks trademark”
(Answer & Countercl. ¶ 124); (2) Plaintiffs used Dr.
Rusch's trademark to promote, advertise, and sell goods
in commerce (id. ¶ 128); and (3) this use is
likely to confuse consumers regarding the origin of the goods
(id. ¶¶ 129-30).
arguments that Defendants “have not adequately alleged
they own the trademark, and have failed to state a claim
under 15 U.S.C. § 1125(a)” (Doc. 41 at 12
(citation omitted)), or that Dr. Rusch “cannot allege
an injury given that . . . she does not own the subject
trademark rights” (id. at 13), are moot given
the Court's finding above. Plaintiffs do not attack the
other two prongs, and the Court finds that Plaintiffs'
motion should be denied as to the false designation of origin
claim under § 1125(a)(1)(A).
further argue that “Dr. Rusch has not alleged such
facts or any statements made by [Plaintiffs] in connection
with the commercial advertising or promotion of a product . .
. .” (Id.) This is relevant to a claim for
false advertising under § 1125(a)(1)(B). To demonstrate
a claim under § 1125(a)(1)(B), Defendants must show:
(i) that [Plaintiffs] made a false or misleading statement of
fact in a commercial advertisement about [their] own or
another's product; (ii) the misrepresentation is
material, in that it is likely to influence the purchasing
decision; (iii) the misrepresentation actually deceives or
has the tendency to deceive a substantial segment of its
audience; (iv) [Plaintiffs] placed the false or misleading
statement in interstate commerce; and (v) the Defendants have
been or are likely to be injured as a result of the
misrepresentation, either by direct diversion of sales or by
a lessening of goodwill associated with [their] products.
Guidance Endodontics, LLC v. Dentsply Int'l,
Inc., 708 F.Supp.2d 1209, 1239 (D.N.M. 2010) (citing
Zoller Labs., LLC v. NBTY, Inc., 111 F. App'x.
978, 982 (10th Cir. 2004)) (subsequent citations omitted).
Defendants' allegations in Counterclaim I do not
specifically address these elements, and the Court declines
to dig through the remainder of their pleadings to make this
argument for them. Consequently, the Court will grant
Plaintiffs' motion with respect to a claim for false
advertising under § 1125(a)(1)(B).
Counterclaim II: Registered Trademark Infringement under ...