Viahart, LLC v. Creative Kids Online, LLC

Background

Viahart designs and manufactures children’s toys, including an interlocking plastic-disc toy marketed under the name “Brain Flakes.” Viahart alleged that it had used the name since at least 2013 or 2014, sold more than 250,000 units, received extensive media coverage, and obtained federal trademark registrations for “VIAHART” and “BRAIN FLAKES.”

Viahart alleged that the defendants marketed competing interlocking-disc toys using “Brain Flakes,” “Young Hands Brain Flakes,” “Creative Kids Brain Flakes,” and “Creative Kids Flakes.” It also alleged that the defendants continued using “Brain Flakes” in product images, search terms, or packaging after receiving a cease-and-desist letter. According to Viahart, customers searching for its product on Amazon encountered the defendants’ products, and some customers and a Wall Street Journal writer confused the products.

Legal Standard

The defendants moved to dismiss the First Amended Complaint under Rule 12(b)(6), which allows dismissal when a complaint does not adequately state a claim. On such a motion, the court generally accepts the complaint’s factual allegations as true and asks whether they plausibly support a legal claim. The court does not accept legal conclusions without supporting facts.

Federal Trademark Claims

Viahart asserted trademark infringement and unfair competition claims under the federal Lanham Act. The court explained that these claims require a protected mark and a likelihood that the defendant’s use would confuse consumers about the source or sponsorship of the goods.

The court applied the eight-factor test used in the Second Circuit to evaluate likely confusion. The factors include the strength and similarity of the marks, the products’ proximity and competitiveness, actual confusion, bad faith, product quality, and consumer sophistication.

The court held that Viahart plausibly alleged that “Brain Flakes” was a strong mark. Viahart alleged substantial sales, media coverage, continued use, and attempts by other companies to copy the mark. The court also concluded that “Brain Flakes” was plausibly suggestive and inherently distinctive rather than generic.

The court found the alleged marks sufficiently similar at the pleading stage. The defendants’ use of “Brain Flakes” placed the same two words in sequence on competing products. The court also found that “Creative Kids Flakes” could create confusion when considered with the alleged Amazon images, search results, brain imagery, and references to “Brain Flakes.”

The court further found that Viahart plausibly alleged that the products competed in the same market, that actual confusion had occurred, and that the defendants acted in bad faith. Viahart alleged that customers bought defendants’ products believing they were Viahart’s products and that the defendants intentionally designed their products with reference to Viahart’s product. The court concluded that, considering the allegations together, Viahart had adequately pleaded a likelihood of confusion.

New York Claims

Viahart also asserted New York trademark infringement and common-law unfair competition claims. The court explained that New York trademark infringement claims use essentially the same likelihood-of-confusion analysis as federal claims. A New York unfair competition claim additionally requires bad faith or intentional misappropriation.

Because the court found that Viahart plausibly alleged likelihood of confusion and bad faith, it denied the defendants’ motion to dismiss the New York trademark infringement and common-law unfair competition claims as well.

Disposition

Judge Gregory H. Woods denied the defendants’ motion to dismiss. The decision allowed Viahart’s federal and New York trademark-related claims to continue; it did not determine that infringement or unfair competition had been proven.