Shenzhen Big Mouth Technologies Co., Ltd. v. Factory Direct Wholesale, LLC

Background

Plaintiffs Decai (Tony) Fu and Shenzhen Big Mouth Technologies Co., Ltd. sued Factory Direct Wholesale, LLC over the domain name <bestoffice.com>. Big Mouth is an office lighting and furniture business founded and operated by Fu. The plaintiffs alleged that they had used “BESTOFFICE” while selling products since 2012. Fu acquired the domain name on October 3, 2019.

Factory Direct Wholesale also sells office furniture and claimed to have used “BESTOFFICE” since 2013. It held a trademark registration for the term on the Supplemental Register and later obtained registration on the Principal Register after establishing five years of prior use.

Factory Direct Wholesale filed a domain dispute proceeding against Fu under the Uniform Domain Name Dispute Resolution Policy. Fu did not respond, and the arbitration forum ordered the domain transferred to Factory Direct Wholesale. The plaintiffs then filed this federal lawsuit seeking to prevent or reverse the transfer and seeking other declaratory and trademark-related relief. The complaint asserted five claims, including a claim for reverse domain-name hijacking under 15 U.S.C. § 1114(2)(D)(iv).

Motion to Dismiss Big Mouth from Count Two

Factory Direct Wholesale moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim, to remove Big Mouth from Count Two. It argued that Big Mouth was not the proper party to bring the reverse domain-name hijacking claim because it had never been the domain-name registrant.

The court treated the issue as a question about who may sue under § 1114(2)(D)(iv), not as a question of constitutional standing or federal subject-matter jurisdiction. The court examined the statutory text, the surrounding statutory scheme, and legislative history. It concluded that the statute allows only the domain-name registrant to sue because the statute identifies the registrant as the person entitled to damages and injunctive relief, including reactivation or transfer of the domain name.

Fu had been the registrant during the domain dispute proceeding and throughout the lawsuit, while Big Mouth had never been the registrant. The court rejected the plaintiffs’ arguments based on the general trademark standing rules and their contention that Big Mouth could sue as Fu’s licensee. Because Big Mouth could not change the fact that it was not the registrant, amendment would be futile.

The court dismissed Big Mouth from Count Two with prejudice. The dismissal applied only to Big Mouth’s Count Two claim; it did not remove Fu from that count or Big Mouth from any other count.

Motion to Strike Affirmative Defenses

The plaintiffs moved under Federal Rule of Civil Procedure 12(f) to strike nineteen of Factory Direct Wholesale’s twenty affirmative defenses. A motion to strike can remove redundant, immaterial, impertinent, or scandalous material from a pleading. The court explained that an affirmative defense must give the opposing party fair notice of the defense.

The court struck the Eighth Affirmative Defense, which stated that the plaintiffs’ claims were barred because their use and registration of <bestoffice.com> was unlawful. The court found that merely stating that the plaintiffs’ activity was unlawful did not provide enough factual or legal detail under the pleading standard applied to affirmative defenses.

The court denied the motion to strike as to all other challenged affirmative defenses because striking them would not streamline the litigation. The court granted leave to amend the Eighth Affirmative Defense.

Disposition

The court granted the motion to dismiss Big Mouth from Count Two and dismissed Big Mouth from that count with prejudice. It granted in part and denied in part the plaintiffs’ motion to strike affirmative defenses: the Eighth Affirmative Defense was stricken with leave to amend, and the motion was denied as to the other affirmative defenses. Richard Seeborg, Chief United States District Judge, signed the order on April 5, 2022.