April 2009 Issue

Civil Cases

Enea Embedded Tech., Inc. v. Eneas Corp.,
2009 WL 648891 (D. Ariz. Mar. 11, 2009)


ABSTRACT
The District of Arizona dismissed plaintiffs’ federal infringement and unfair competition claims for lack of subject matter jurisdiction under Rule 12(b)(1). Relying on the Ninth Circuit’s decision in Bosley, the court noted that both of plaintiffs’ claims include a requirement that defendants are making commercial use of the allegedly infringing marks. Here, the court held that plaintiffs failed to plead that defendants used the disputed mark in commerce, because they alleged only that defendants registered the mark as a corporate name in various states and sent correspondence under the mark to plaintiffs. The court explained that this was not sufficient commercial use to render consumer confusion likely for Lanham Act purposes, because defendants in no way used the mark in connection with goods and services before the public.

CASE SUMMARY

FACTS
Plaintiffs were a Swedish corporation and its subsidiaries that distributed telecommunications goods and services under various “Enea”-formative names. One of these companies owned the registered mark ENEA for telecommunications goods and services. In 2006, the companies initiated a global effort to change all of their names to “Enea, Inc.,” including an attempt to change the corporate name of their Texas-based company with the Texas Secretary of State. However, their request was refused, because defendants already owned a Texas corporate registration under the name Eneas Corporation, even though they were not offering any goods or services at the time.

Plaintiffs proceeded to seek consent from defendants to register the name. Defendants allegedly agreed but demanded payment as consideration for the consent. As the parties exchanged letters to resolve the dispute, Defendants registered several more “Enea”-formative corporate names in Oklahoma and Arizona, including “Enea Embedded Technology, Inc.,” a name identical to one of the plaintiffs. After plaintiffs learned of these registrations, the dispute escalated and both parties sent cease-and-desist letters. Eventually, plaintiffs filed a lawsuit asserting federal and state trademark infringement and unfair competition claims. Defendants moved to dismiss under Fed. R. Civ. P. 12(b) for lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, and failure to state a claim.

ANALYSIS
The court first addressed subject matter jurisdiction.  As a threshold matter, the court noted that under Bosley Med. Inst. v. Kremer, 403 F.3d 672 (9th Cir. 2005), both of plaintiffs’ Lanham Act claims required that defendants had made commercial use of the allegedly infringing marks.  In their complaint, plaintiffs alleged that defendants used the disputed marks in commerce when they registered the disputed marks as corporate names and corresponded under the marks with plaintiffs, including the very correspondence in which defendants allegedly demanded money as part of the agreement to change the corporate registrations.  However, plaintiffs did not allege that defendants ever used the marks in connection with the sale or advertisement of any goods or services.

With these facts in mind, the court surveyed federal case law to determine whether plaintiffs sufficiently pled commercial use.  The court concluded that mere registration of a mark alone, either as a corporate or domain name, “simply cannot mislead consumers” because defendants did not use the mark before the public in connection with goods and services.  Thus, the mere fact that defendants registered the disputed marks as corporate names was insufficient use in commerce to sustain plaintiffs’ Lanham Act claims.

Similarly, the court found that defendants’ use of the marks in correspondence was not directed to consumers, and thus did not constitute commercial use of the mark.  In total, because plaintiffs never alleged that defendants used the marks in connection with goods or services “before the public,” the court found that plaintiffs’ allegations of commercial use were merely “conclusory,” and not supported by its factual allegations.

Accordingly, because plaintiffs’ complaint failed to plead a federal claim, the court dismissed plaintiffs’ claims for lack of subject matter jurisdiction.  Because the court’s federal jurisdiction over plaintiffs’ state law unfair competition claim was dependent on its federal claims, the court also dismissed it for lack of federal subject matter jurisdiction.

CONCLUSION
This decision shows that, at least in the Ninth Circuit, merely registering a corporate name and sending correspondence under that name not directed to consumers is insufficient commercial use to sustain an infringement or unfair competition claim under the Lanham Act.