My Pillow, Inc. v. LMP Worldwide, Inc.

Background

My Pillow, Inc. alleged that LMP Worldwide, Inc. breached a settlement agreement and infringed My Pillow’s registered trademark. The agreement, governed by Michigan law, authorized LMP to use its own trademark and prohibited LMP from using the My Pillow mark with pillows or purchasing certain online advertising search terms without additional words. My Pillow alleged that LMP violated these restrictions, used the My Pillow mark in connection with My Pillow goods, sent allegedly false statements about My Pillow to a wholesale customer, and broadcast radio advertisements in Minnesota that were designed to cause confusion. My Pillow said it terminated the agreement on January 23, 2018.

My Pillow asserted claims for breach of contract, federal trademark infringement, federal unfair competition and false representation, common-law trademark infringement and unfair competition, violations of the Minnesota Deceptive Trade Practices Act, and cancellation of LMP’s trademark registration.

Motion to Transfer

LMP asked the court to transfer the case to the United States District Court for the Eastern District of Michigan under 28 U.S.C. § 1404(a). The court considered the convenience of the parties, the convenience of witnesses, and the interests of justice.

The convenience of the parties only slightly favored transfer because LMP argued that its Michigan employees and records would make litigation in Minnesota more expensive, while My Pillow was based in Minnesota and maintained records there. The witness factor was neutral because both sides identified nonparty witnesses, but neither side showed that its witnesses were essential or explained the importance of their testimony. The location of documents received little weight because documents could be reproduced electronically.

The interests of justice were also neutral. Michigan law governed the agreement, but LMP did not show that applying Michigan law would be unusually complicated or novel. Judicial economy only slightly favored transfer, and My Pillow’s choice of its home forum slightly disfavored transfer. Because LMP did not show that the relevant factors strongly favored Michigan, the court denied the motion to transfer.

Motion to Dismiss

The court applied the standard for a failure-to-state-a-claim motion. At this stage, factual allegations are accepted as true, but the complaint must allege enough facts to make relief plausible rather than merely possible.

Breach of Contract

My Pillow alleged that LMP breached the agreement by purchasing the prohibited advertising search terms. The court held that this was a specific factual allegation, not merely a legal conclusion, and that it was sufficient to support a breach-of-contract claim under Michigan law. The court therefore denied the motion to dismiss the breach-of-contract claim. Because this determination was sufficient, the court did not address My Pillow’s alternative theory concerning LMP’s use of the My Pillow mark.

Trademark Infringement and Registration Cancellation

The court granted the motion to dismiss Count 2, the federal trademark-infringement claim, because My Pillow did not allege specific facts showing that LMP’s use of its own mark was unauthorized under the agreement. The court also granted the motion to dismiss Count 4 to the extent it alleged common-law trademark infringement. Both of those claims were dismissed without prejudice.

The court granted the motion to dismiss Count 6, which sought cancellation of LMP’s trademark registration. It explained that cancellation is a remedy for another trademark-law violation, not an independent claim. Because My Pillow failed to state a trademark-infringement claim, the court found no basis for cancellation. Count 6 was dismissed without prejudice.

Unfair Competition and False Advertising

The court held that My Pillow adequately stated an unfair-competition claim based on LMP’s radio advertisements and advertising search-term purchases. Allegations that LMP used the My Pillow mark in a way calculated to cause confusion were sufficient at the pleading stage, where the likelihood-of-confusion question is generally fact-intensive. The court therefore denied dismissal of the unfair-competition claims.

The court dismissed the false-advertising claims in Counts 3 and 5 because My Pillow relied on a private email from an LMP employee to a wholesale customer and did not allege that the statement was sufficiently disseminated to the purchasing public to qualify as advertising or promotion. Those false-advertising claims were dismissed without prejudice. The motion was denied as to the other claims in Counts 3 and 5. The motion was also denied as to the other claim asserted in Count 4, the common-law unfair-competition claim.

Disposition

The court denied LMP’s motion to transfer. It granted in part and denied in part LMP’s motion to dismiss: Counts 2 and 6 were dismissed without prejudice; Count 4 was dismissed without prejudice only as to common-law trademark infringement; Counts 3 and 5 were dismissed without prejudice only as to false advertising; and the motion was denied in all other respects.