Amarte USA Holdings, Inc. v. Kendo Holdings Inc.

Background

Amarte USA Holdings, Inc. sued Kendo Holdings Inc., Marc Jacobs International LLC, Sephora USA, Inc., and The Neiman Marcus Group LLC. Amarte alleged that the defendants’ sale of the Marc Jacobs “EYE-CONIC” eyeshadow palette infringed Amarte’s “EYECONIC” trademark for eye cream.

Amarte filed two motions for leave to amend its complaint. The first sought to add seven corporate parent parties. The second sought to add ten retailers that allegedly sold goods bearing the EYE-CONIC trademark. The court considered both motions together and vacated the scheduled hearing.

Legal standard

Federal Rule of Civil Procedure 15(a)(2) generally directs courts to freely allow amendments when justice requires. But amendment is not automatic. One recognized reason to deny leave is futility, meaning the proposed amendment could not survive a motion to dismiss.

For futility, the court applied the Rule 12(b)(6) pleading standard. Under that standard, a proposed complaint must contain enough factual content to state a claim that is plausible on its face, rather than relying on conclusory statements.

Parent Defendants

The proposed complaint alleged that each parent company directed, owned, and controlled one of the original defendants. It also made generalized allegations that all twenty-one defendants advertised, marketed, promoted, distributed, sold, or otherwise offered the allegedly infringing product.

The court held that these allegations did not plausibly plead direct trademark infringement by the Parent Defendants. Parent companies generally are not liable for their subsidiaries’ acts except in narrow circumstances, and the proposed complaint did not allege specific facts about each parent’s individual role. Applying Federal Rule of Civil Procedure 8, the court found that allegations directed collectively at all defendants were insufficient.

The court also found the proposed personal-jurisdiction allegations inadequate. The complaint alleged that each Parent Defendant had an office in California and conducted business in or around San Francisco, but it did not allege that the companies were incorporated in California. The court concluded that these allegations did not establish general jurisdiction, which ordinarily requires that a company be essentially at home in the forum. The allegations also did not establish specific jurisdiction because they did not show that the Parent Defendants themselves committed an intentional act expressly aimed at California, as opposed to causing injury through their subsidiaries’ sales and marketing.

The court therefore found Amarte’s proposed claims against the Parent Defendants futile.

Retailer Defendants

Amarte alleged that the Retailer Defendants sold, advertised, marketed, and promoted the allegedly infringing goods through websites, social-media platforms, other advertising, and retail locations, including stores in the judicial district. The court acknowledged that parties may plead alternative theories, but stated that alternative pleading does not excuse the obligation to plead clearly and provide enough factual matter to make a claim plausible.

The court further held that the proposed complaint did not adequately support personal jurisdiction over the Retailer Defendants. The court stated that even if the allegations were enough to plausibly plead direct infringement, they still did not establish personal jurisdiction for the reasons discussed regarding the Parent Defendants.

Ruling

The court denied Amarte’s motions for leave to amend without prejudice. It did not conclude whether Amarte could amend in the future to allege facts supporting direct infringement or personal jurisdiction for each proposed defendant. Because the court found the proposed amendments futile, it did not address other amendment factors, including bad faith and undue delay. Judge Charles R. Breyer issued the order on August 21, 2023.