Playground AI LLC v. Mighty Computing, Inc.

Background

Playground AI LLC and Mighty Computing, Inc. are competitors in the artificial-intelligence market, and both assert rights in the “Playground AI” mark and variations of it. Playground AI sued Mighty and its founder, Suhail Doshi, under the Lanham Act and the Anti-Cybersquatting Consumer Protection Act. Playground AI alleged that Mighty used the “Playground AI” name and similar branding for its website and application, despite knowing or having reason to know that another company was already using the mark for similar services.

Playground AI’s operative first amended complaint asserted claims against Mighty and Doshi for false association and designation of origin under 15 U.S.C. § 1125(a), and cybersquatting under 15 U.S.C. § 1125(d). Mighty answered and filed counterclaims against Playground AI and its founder, Rick Latona. Doshi had not answered and instead moved to dismiss the first amended complaint under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a claim for relief.

Arguments

Doshi argued that the complaint did not allege facts establishing his personal liability for Mighty’s alleged trademark infringement and cybersquatting. He maintained that he could not be liable solely because he was a corporate officer. Playground AI argued that the complaint adequately alleged Doshi’s personal involvement because it identified him as Mighty’s founder and central figure and alleged that he participated in all major business strategy, branding, and marketing decisions. Playground AI alternatively requested permission to amend if the court found the allegations insufficient.

Court’s analysis

The court explained that a corporate officer may be personally liable for torts that the officer authorizes, directs, or participates in, even when acting as the corporation’s agent. The court stated that this principle applies to trademark infringement and that, at the motion-to-dismiss stage, allegations that an officer exercised sufficient control over the challenged corporate activity may support personal liability.

The court found the allegations against Doshi sufficient for pleading purposes. The first amended complaint alleged that Doshi founded Mighty; that Mighty was a closely held corporation with approximately ten employees; that it operated from Doshi’s home; and that Doshi was Mighty’s sole officer, holding the positions of chief executive officer, chief financial officer, and secretary. The complaint also included allegations about Doshi’s social-media posts concerning Mighty’s rebranding and his communications with Playground AI’s founder about resolving the trademark litigation.

The court distinguished a prior case that Doshi relied on because, according to the court, Doshi was alleged to be more than a board member with general authority over marketing. The allegations described him as the founder, holder of every significant corporate office, person operating the company from his home, and participant in corporate rebranding and trademark-litigation negotiations. The court also stated that it would have allowed amendment if necessary, but concluded that the existing complaint was adequate and did not require amendment.

Disposition

The court denied Defendant Doshi’s motion to dismiss the first amended complaint. It also vacated the motion hearing because the motion was suitable for decision without oral argument. The order terminated ECF 20.