Blockchange Ventures I GP, LLC v. Blockchange, Inc.

Background

Blockchange Ventures I GP, LLC sued Blockchange, Inc. over the use of the name “Blockchange.” The complaint alleged claims for trademark infringement, trademark dilution, and unfair competition under federal law; common-law trademark infringement and unfair competition under New York law; deceptive acts and practices under New York General Business Law §§ 349 and 350; and trademark dilution under New York General Business Law § 360-L.

The complaint alleged that Blockchange Ventures had provided venture-capital, investment-funding, and related services under the “Blockchange” name since at least 2017 and obtained a federal trademark registration for that mark in 2019. It alleged that Blockchange, Inc. also used “Blockchange,” that the United States Patent and Trademark Office rejected Blockchange, Inc.’s trademark applications because of a likelihood of confusion with Blockchange Ventures’ mark, and that Blockchange, Inc. continued using the name after receiving cease-and-desist communications.

Blockchange, Inc. moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. In the alternative, it asked the court to stay, or pause, the case while the parties litigated a related proceeding before the Trademark Trial and Appeal Board.

Claims the Court Allowed to Continue

The court denied the motion to dismiss Counts One and Four, which alleged trademark infringement under the federal Lanham Act and New York common law. The court accepted that the federal trademark registration protected Blockchange Ventures’ mark. At the pleading stage, the complaint sufficiently alleged a likelihood of consumer confusion because the parties used identical marks, allegedly served the same or similar customers, operated in the same or similar areas, and used the marks on the internet.

The court also denied dismissal of Count Three, the federal unfair-competition claim under Lanham Act § 43(a). The complaint plausibly alleged that services were involved, interstate commerce was affected, Blockchange, Inc.’s use of the mark falsely represented the source or affiliation of its services, and the use was likely to cause confusion.

The court denied dismissal of Count Five, the New York common-law unfair-competition claim. That claim required allegations of a likelihood of confusion and bad faith. The court found bad faith reasonably inferable from the allegations that Blockchange, Inc. continued using the mark after the Patent and Trademark Office rejected its applications based on likely confusion and after Blockchange Ventures sent cease-and-desist communications.

The court also denied dismissal of Count Seven, the New York trademark-dilution claim under General Business Law § 360-L. The complaint alleged that the mark had become associated with Blockchange Ventures’ services, that the parties used identical marks in a similar field, and that Blockchange, Inc.’s use could weaken the mark’s ability to identify Blockchange Ventures’ services.

Claims Dismissed

The court granted the motion to dismiss Count Two, the federal trademark-dilution claim under Lanham Act § 43(c). That statute requires a “famous” mark—one widely recognized by the general consuming public in the United States. The court found that the complaint did not plausibly allege the mark’s nationwide fame. It lacked sufficient factual allegations about advertising and publicity, the amount and geographic reach of the services, and actual public recognition. At most, the complaint alleged fame within the specialized digital-asset field, which was not enough under the statute.

The court granted the motion to dismiss Count Six, the claims under New York General Business Law §§ 349 and 350. Those provisions require more than ordinary trademark confusion or harm to the plaintiff; they require a specific and substantial injury to the public interest. The court found that the complaint alleged harm to Blockchange Ventures and consumer confusion but did not allege additional public harm.

The opinion states that Blockchange Ventures had not requested permission to amend these claims and that the deficiencies were not shown to be repairable. The court therefore dismissed Counts Two and Six with prejudice.

Motion to Stay

The court denied Blockchange, Inc.’s request to stay the federal case pending the Trademark Trial and Appeal Board proceeding. The court explained that, in trademark-infringement suits, the interest in promptly deciding the court case generally outweighs the value of waiting for the Board’s views. The related administrative proceeding therefore did not justify pausing this action.

Disposition

Judge Paul A. Engelmayer granted the motion to dismiss Counts Two and Six, denied the motion to dismiss Counts One, Three, Four, Five, and Seven, and denied the motion to stay the proceedings. The opinion’s conclusion states that Counts Two and Six were dismissed with prejudice.