Steeped, Inc. v. Nuzee, Inc.

Background

Steeped, Inc. brought trademark-infringement claims under the Lanham Act against Nuzee, Inc. Steeped alleged that Nuzee used “Steep Coffee,” “Steep Bag Coffee,” “Steep Pouch,” “Steeped to Perfection,” and similar terms in connection with Pine Ranch Coffee Co. products. Steeped claimed those terms were confusingly similar to its STEEPED COFFEE mark and other marks it used or had sought to register.

Steeped alleged that Nuzee displayed products bearing the challenged marks at a trade show, marketed and pre-sold coffee products and services, and contacted Steeped’s customers. Steeped also alleged that its mark had acquired goodwill and recognition in the coffee industry and that some customers initially believed Nuzee representatives were Steeped sales representatives.

Motion to Dismiss and Jurisdiction

Nuzee moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately state a legal claim. Nuzee argued that Steeped had not sufficiently alleged that Nuzee used an infringing mark “in commerce” and had not sufficiently alleged that the STEEPED COFFEE mark had acquired secondary meaning.

Nuzee characterized the “use in commerce” argument as a challenge to subject-matter jurisdiction under Rule 12(b)(1). The court rejected that characterization. It held that whether Steeped adequately pleaded an element of its trademark claim did not affect the court’s power to hear the case. The court stated that federal-question jurisdiction existed because Steeped alleged a Lanham Act violation and that Steeped had Article III standing based on its alleged brand injury.

Use in Commerce

The court held that Steeped’s allegations were sufficient at the pleading stage to show use in commerce. Although Nuzee argued that it had not yet sold the relevant products and that displaying products at a trade show was insufficient, Steeped also alleged that Nuzee had begun marketing and pre-selling the products and had solicited Steeped’s customers before and after the trade show.

The court found those allegations sufficient to plead that Nuzee used the allegedly infringing marks in commerce. The court also noted that, even if Nuzee argued that the case was moot because it had removed the mark from its products, the complaint alleged that Nuzee continued using “steep” and similar terms in marketing and prepared additional marketing materials. At the motion-to-dismiss stage, the court had to view those factual allegations in Steeped’s favor.

Secondary Meaning

A trademark must be valid and protectable to support an infringement claim. Because Steeped’s mark was registered on the Supplemental Register rather than the Principal Register, the court explained that Steeped had to allege that the mark was nonfunctional and had acquired secondary meaning. Secondary meaning exists when buyers or potential buyers associate products using the mark with a particular source.

The court found Steeped’s allegations sufficient, although it described the supporting facts as “far from overwhelming.” Steeped alleged that STEEPED COFFEE had acquired extensive goodwill and was recognized in the coffee industry as identifying products originating with or authorized by Steeped. Steeped also alleged that customers confused Nuzee’s representatives and products with Steeped’s offerings. The court concluded that, if proven, those allegations could establish secondary meaning.

Disposition

The court found that Steeped’s complaint sufficiently pleaded a claim under 15 U.S.C. § 1141 and denied Nuzee’s motion to dismiss. The ruling addressed the adequacy of the complaint at the pleading stage; it did not resolve whether Nuzee ultimately infringed Steeped’s trademark.