Hello I am Elliot, Inc. v. Sine

Background

Hello I Am Elliot, Inc. and Sergio Villasenor sued Derek J. Sine, Vander Holdings LLC, Vander Global, LLC, and Vander Group, LLC. The amended complaint asserted four types of claims: trademark infringement under section 43(a) of the Lanham Act; a request for a declaration that Hello I Am Elliot owned the copyright in the Elliot platform’s computer code; defamation under New York law; and tortious interference with prospective business relations under New York law.

Plaintiffs alleged that defendants used the ELLIOT mark on a website and social-media posts and claimed ownership of the Elliot software. They also alleged that Sine sent emails to investors, employees of an investor, counsel, and board members containing false statements about Villasenor and his alleged involvement with litigation involving Sine’s former domestic partner. Plaintiffs separately sought a preliminary injunction barring defendants from using the ELLIOT mark, suggesting ownership or association with it, and claiming ownership of the Elliot platform and software.

Motion to Dismiss

The court granted defendants’ motion to dismiss in full. Because the motion was based on whether the complaint adequately stated claims, the court assumed well-pleaded factual allegations were true but did not accept legal conclusions as facts.

Trademark claim. The ELLIOT mark was not registered, so plaintiffs had to allege that it qualified for protection as an unregistered mark. The court held that ELLIOT was descriptive because personal names, including first names, are generally treated as descriptive terms. The fact that ELLIOT did not refer to a real person associated with the company did not change that conclusion.

A descriptive mark can be protected if it has acquired “secondary meaning,” meaning that consumers associate the mark with a particular source. The court held that the amended complaint did not allege enough facts to support that finding. Plaintiffs alleged marketing expenditures, sales, investment funding, use by merchants, media coverage, and more than three years of use. But the complaint did not say that the marketing featured the ELLIOT mark, did not allege consumer surveys or consumer recognition, did not connect the sales to consumer association with Hello I Am Elliot, did not show that the media coverage was unsolicited, and did not allege other attempts to copy the mark. The court therefore dismissed the trademark claim without prejudice.

The court gave plaintiffs two weeks to amend the complaint one additional time with any evidence of secondary meaning they could allege. It stated that this would be the last opportunity to amend and that the deadline would not be extended.

Copyright-ownership declaration. Plaintiffs sought a declaration that Hello I Am Elliot solely owned the copyright in the Elliot platform’s code. The court held that the Declaratory Judgment Act is procedural and does not itself create an independent claim for relief. It also held that the complaint did not allege an actual controversy because, apart from Sine’s internet posting, plaintiffs did not allege that defendants had used or infringed the software, and the complaint alleged that defendants lacked access to the code and the expertise to use or recreate it.

The court separately held that plaintiffs had not identified an independent substantive cause of action supporting the requested declaration. It noted that plaintiffs had not registered the copyright and therefore could not rely on a copyright-infringement claim as the required underlying cause of action. The court dismissed the copyright-ownership claim for failure to allege an actual controversy and failure to state a substantive cause of action.

State-law claims. After dismissing the federal claims, the court declined to exercise supplemental jurisdiction, meaning jurisdiction over related state-law claims. It dismissed the defamation and tortious-interference claims without prejudice. The court stated that plaintiffs could refile those claims in state court.

Preliminary injunction

The court denied plaintiffs’ motion for a preliminary injunction with prejudice. A preliminary injunction is an extraordinary temporary order, and plaintiffs first had to show irreparable harm—harm that could not be adequately remedied later.

The court held that plaintiffs failed to make that showing. The alleged trademark infringement occurred in June and July 2017. Plaintiffs filed the lawsuit in July 2019 and waited until January 2020 to seek a preliminary injunction. The court found this approximately two-and-a-half-year delay inconsistent with the urgency ordinarily required for preliminary relief. Plaintiffs’ explanation that they had focused on growing the ELLIOT brand did not establish the urgency required, and their passing reference to settlement efforts did not explain the full delay. Because the failure to show irreparable harm was independently fatal, the court did not address the motion’s other requirements.

Disposition

The court granted defendants’ motion to dismiss and denied plaintiffs’ motion for a preliminary injunction. The amended complaint’s dismissal was without prejudice, and plaintiffs had two weeks from the date of the decision to file a second amended complaint. The preliminary-injunction denial was with prejudice. If plaintiffs did not amend within the deadline, the court stated that it would close the case.