InProcessOut, LLC v. World Tech Toys, Inc.

Western District of Texas, txwd-5:2018-cv-00869

ANSWER to [24] Amended Complaint, with Jury Demand, COUNTERCLAIM against InProcessOut, LLC by World Tech Toys, Inc.

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3 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION INPROCESSOUT, LLC Plaintiff, CIVIL ACTION NO. 5:18-CV-0869-FB v. WORLD TECH TOYS, INC. Defendant. DEFENDANT'S ANSWER, AFFIRMATIVE DEFENSES AND COUNTERCLAIMS World Tech Toys, Inc., files this "Defendants Answer, Affirmative Defenses and Counterclaims" to Plaintiff's First Amended Complaint 1, asserting its Answer, Affirmative Defenses, and Counterclaims as follows: ANSWER Plaintiff's First Amended Complaint is answered in the same numerical order as the numbered paragraphs contained therein. PARTIES 1. Denied. 2. Admitted. 3. Admitted. JURISDICTION Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 1 CM/ECF Dkt. No. 24 1 3 4. Denied. 5. Denied. 6. Denied. 7. Denied. 8. Denied. 9. Denied. 10. Denied. 11. Denied. 12. Denied. 13. Denied. 14. Denied. 15. Denied. VENUE Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 16. Denied. PLAINTIFF'S INFRINGED INTELLECTUAL PROPERTY Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 17. Denied. 18. Defendant is without sufficient knowledge to admit or deny the allegations of this paragraph, and therefore denies the same. 19. Denied. 2 3 DEFENDANT'S INFRINGING PRODUCTS FOR GOODS/SERVICES Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 20. Denied. 21. Denied as to paragraph 21, and sub paragraphs (i) through (vi) thereof. 22. Denied. PLAINTIFF'S FACTS Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 23. Denied. 24. Denied. 25. Denied. 26. Denied. 27. Denied. 28. Denied. DEFENDANT'S ALLEGATIONS Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 29. Denied. 30. Denied. 31. Denied. 32. Denied. 33. Denied. 3 3 34. Denied. COUNT 1 FEDERAL TRADEMARK INFRINGEMENT Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 35. Denied. 36. Denied. 37. Denied. COUNT 2 FEDERAL UNFAIR COMPETITION AND FALSE DESIGNATION OF ORIGIN Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 38. Denied. COUNT 3 TEXAS COMMON LAW UNFAIR COMPETITION Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 39. Denied. COUNT 4 TEXAS COMMON LAW TRADEMARK INFRINGEMENT Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 40. Denied. 4 3 COUNT 5 TEXAS COMMON LAW MISAPPROPRIATION Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 41. Denied. COUNT 6 TEXAS COMMON LAW UNJUST ENRICHMENT Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 42. Denied. DEMAND FOR JURY TRIAL Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 43. Admitted. PRAYER FOR RELIEF Defendant denies Plaintiff is entitled to any relief whatsoever, including but not limited to the relief requested in the Prayer for Relief as contained in subparagraphs a. through p. In its Prayer for Relief in the First Amended Complaint. AFFIRMATIVE DEFENSES In further answering the First Amended Complaint, Defendant asserts the following Affirmative Defenses. Defendant reserves the right to amend its Answer to allege any additional affirmative defenses as they become known during discovery. 5 3 1. Plaintiff's First Amended Complaint fails to state a cause of action for which relief can be granted. 2. Plaintiff's claims are barred by laches, waiver, estoppel and/or unclean hands. 3. Plaintiff failed to mitigate Plaintiff's damages, if any. 4. Plaintiff's Federal Trademark Registration is invalid. 5. Plaintiff has no federal or common law trademark rights in ORION. 6. Plaintiff is not the first to use the mark ORION to market drones. 7. Defendant's use of ORION predates Plaintiff's use of the mark ORION in conjunction the sale or offer for sale drones. 8. Plaintiff has committed fraud on the United States Patent and Trademark Office. 9. Defendant has not violated any trademark rights for the mark ORION 10. Plaintiff has abandoned any trade mark rights it may have had in the mark ORION 11. Plaintiffs is not using the mark ORION as a trademark. 12. Plaintiff's claims are barred by Plaintiff's failure to enforce the mark against others. COUNTERCLAIMS Defendant hereby counterclaims against Plaintiff and in support of the same alleges as follows: 1. Defendant brings counterclaims for Declaratory Judgment pursuant to 28 U.S.C. §2201 to declare that Plaintiff has not violated any rights of Defendant under the 6 3 Lanham act, or Texas State or Common Law. Defendant further Counterclaims to cancel Plaintiff's registration pursuant to 15 U.S.C. § 1119, as well as Unfair Competition under the Lanham Act, 15 U.S.C. §1125(a), and Trademark Infringement under the Common Law. 2. The Court has subject matter over the Federal Counterclaims pursuant to 28 U.S.C. §1331 and 1338 (A), and over the State Law Counterclaims pursuant to 28 U.S.C. §1367 and 1338 (B). THE PARTIES 3. Defendant/Counterclaim Plaintiff World Tech Toys, Inc., is a corporation duly organized under the laws of the State of California having its principal place of business at 28904 Avenue Paine, Valencia, CA 91355. 4. Plaintiff/Counterclaim Defendant InProcessOut, LLC alleges that it is doing business as Flynoceros, and is a Texas Limited Liability Company with its principal place of business at 1424 N. Walnut Ave., New Braunfels, TX 78130 in its First Amended Complaint. COUNTERCLAIM I DECLARATORY JUDGMENT OF NONINFRINGEMENT OF U.S. REGISTRATION NO. 5,491,614 Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 5. Plaintiff has alleged a date of first use, and a date of first use in commerce for using the mark ORION in connection with drones as January 16, 2016. 6. In doing so, Plaintiff declared that it believed it was the owner of the mark ORION, that the mark is in use in commerce on or in connection with the goods in 7 3 the application, the specimen shows the mark as used on or in connection with the goods in application, and to the best of Plaintiff's knowledge and belief, the facts recited in application are true and accurate. 7. In the process of applying to register the mark ORION as set forth in U.S. Trademark Registration No. 5,491,614, Plaintiff, by and through its Manager Josh Ingram, declared before the United States Patent and Trademark Office "To the best of the signatory's knowledge and belief, no other persons, except, if applicable, concurrent users, have the right to use the mark in commerce, either in the identical form or in such near resemblance as to be likely, when used on or in connection with the goods/services of such other persons, to cause confusion or mistake, or to deceive." 8. Plaintiff also declared before the United States Patent and Trademark Office in applying for U.S. Trademark Registration No. 5,491,614, through Mr. Ingram, "To the best of the signatory's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, the allegations and other factual contentions made above have evidentiary support." 9. In filing the application to register the mark ORION as set forth U.S. Trademark Registration No. 5, 491,614, Plaintiff, through its Mr. Ingram, declared before the United States Patent and Trademark Office "The signatory being warned that willful false statements and the like are punishable by fine or imprisonment, or both, under 18 U.S.C. §1001, and that such willful false statements and the like may jeopardize the validity of the application or submission or any registration resulting therefrom, declares that all statements made of his/her own knowledge are true and all statements made on information and belief are believed to be true." 8 3 10. In spite of these declarations before the United States Patent and Trademark Office, Defendant began selling drones under the mark ORION prior to Plaintiff's allegation that it began selling drones under the mark ORION on January 16, 2016. 11. Plaintiff's claims for infringement under 15 U.S.C. §1114 and 1125 (a) for unfair competition, for common law trademark infringement and unfair competition, for common law misappropriation, and for common law unjust enrichment will require Plaintiff to prove a showing of a valid and protectable trademark, a likelihood of confusion by consumers or potential consumers of the parties goods. Plaintiff cannot make this proof under the facts. 12. Because Defendant's use of the ORION trademark predates Plaintiff's, Defendant seeks a Declaratory Judgement from this Court that Defendant has not infringed Plaintiff's U.S. Trademark Registration, has not committed unfair competition or false designation of origin, has not violated any of Plaintiff's common law unfair competition or trademark rights, has not committed common law misappropriation, and has not committed unjust enrichment under the common law. COUNTERCLAIM II CANCELLATION OF REGISTRATION UNDER 15 U.S.C. § 1119 Defendant repeats and incorporates the foregoing paragraphs as though fully set herein. 13. Plaintiff is the registrant of a mark ORION for drones as set forth in U.S. Trademark Registration No. 5,491,614. Under 15 U.S.C. §1119, this Court is granted jurisdiction "to determine the right to registration, order the cancellation of registrations, 9 3 in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to registrations of any party to the action". 15 U.S.C. § 1119. 14. The Defendant began selling drones under the mark ORION prior to Plaintiff, and therefore Plaintiff's registration is invalid. Accordingly, Defendants seek the Court to cancel U.S. registration 5,491,614 pursuant to its authority to do so. COUNTERCLAIM III FEDERAL UNFAIR COMPETITION UNDER THE LANHAM ACT, 15 U.S.C. § 1125 (A) Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 15. Because Defendant is the first to use the mark ORION in connection with the sale of drones, and because Plaintiff subsequently began using the mark ORION in connection with the sale drones, Plaintiff has, and in connection with goods and services used in commerce a word, term, name, symbol and/or device, or any combination thereof in a false or misleading representation of fact which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of Plaintiff with Defendant, or as to the origin, sponsorship, approval of Plaintiffs or Plaintiffs' goods and/or services, or commercial activities by Defendant. COUNTERCLAIM IV COMMON LAW TRADEMARK INFRINGEMENT Defendant repeats and reincorporates the foregoing paragraphs as though fully set forth herein. 16. Defendant possesses a legally protectable mark in the trademark ORION and Plaintiff's subsequent use of the ORION mark creates a likelihood of confusion as to 10 3 the source, affiliation, or sponsorship of Plaintiffs' goods by Defendant, in violation of Defendant's common law trademark rights in the mark ORION. PRAYER FOR RELIEF Wherefore, premises considered, Defendant prays for relief as follows: 1. Dismissal of all Plaintiff's claims with prejudice. 2. Entry of a Declaratory Judgment that Defendant has not violated any of Plaintiff's rights in the mark ORION as set within or under (a) U.S. Registration No. 5,491,614, including pursuant to 15 U.S.C.§§1114(1) and 1125(a), (b) Texas Common Law Trademark Infringement (c) Texas Common Law Unfair Competition, (d) Texas Common Law Misappropriation, or (c) Texas Common Law Unjust Enrichment. 3. An Order Canceling U.S. Registration No. 5,491,614. 4. That Plaintiff has violated Defendant's Common Law Trademark Rights, and has engage in Federal Unfair Competition under the Lanham act, 15 U.S.C. §1125 (a), in violation of Defendant's rights. 5. That Plaintiff be enjoined preliminarily and permanently from further acts of infringement including, but not limited to the use of the mark ORION on its drones. 6. That Plaintiff be permanently enjoined from unfairly competing with Defendant as set forth hereinabove. 7. That Plaintiff be ordered to deliver for destruction, or show proof of destruction of all products, labels, signs, prints, packages, wrappers, receptacles, and advertisements, and any other materials in their possession, custody or control that reference the mark ORION, or any other confusingly or substantially similar marks, and all materials or articles used for making or producing the same. 11 3 8. Plaintiff be ordered to account to Defendant for all profits in respect to the infringement. 9. Defendant to recover all damages it has sustained as a result of Plaintiff's infringement and unfair competition, increased as the Court determines as appropriate to the circumstances of this case. 10. Defendant to recover Plaintiff's profits as a result of their violations of Defendant's rights as set forth herein, increased as the Court determines is appropriate to the circumstances of this case. 11. Defendant be awarded treble damages for the unauthorized use of the counterfeit mark as defined by 15 U.S.C. §1116(d)(1)(B). 12. An award of attorney's fees and costs under 15 U.S.C. §1117(a) as an exceptional case, or in the alternative, under the Court's inherent authority to award such reasonable attorney's fees and costs for defending this lawsuit. 13. Defendant recover pre-and post-judgment interest as authorized by law. 14. Such other relief as the Court deems just and equitable. Date: July 19, 2019 12 3 Respectfully submitted, GUNN, LEE & CAVE, P.C. Callaghan Tower 8023 Vantage Drive, Suite 1500 San Antonio, TX 78230 (210) 886- 9500 Phone (210) 886-9883 Fax /Robert L. McRae/ Robert L. McRae, Texas State Bar No. 24046410 rmcrae@gunn-lee.com ATTORNEY FOR DEFENDANT WORLD TECH TOYS, INC. CERTIFICATE OF SERVICE I hereby certify that on the 19th day of July, 2019, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following: ATTORNEYS FOR PLAINTIFFS INPROCESSOUT, LLC H. Dale Langley, Jr. The Law Firm of H. Dale Langey, Jr., P.C. 1803 West Avenue Austin, TX 78701 (512) 477-3830 Fax: (512) 597-4775 Email: dlangley@iptechlaw.com Matthew J. Booth Matthew J. Booth PC 5501 A Balcones Dr. Ste 301 Austin, TX 78731-4907 512-474-8488 Fax: 512-596-2875 Email: matthewbooth@boothlaw.com /Robert L. McRae/ Robert L. McRae 13