Now-Casting Economics, LTD. v. Economic Alchemy LLC

Background

Economic Alchemy LLC sent Now-Casting Economics, LTD. a cease-and-desist letter alleging that Now-Casting infringed Economic Alchemy’s registered marks “NOWCAST” and “NOW-CAST.” Now-Casting sued for declarations that its use did not infringe Economic Alchemy’s rights, cancellation of the registrations, and an injunction against interference with Now-Casting’s use of the terms. Economic Alchemy asserted counterclaims for trademark infringement, common-law trademark infringement and unfair competition, false designation of origin under section 43(a) of the Lanham Act, and deceptive business practices under New York General Business Law section 349.

The United States Patent and Trademark Office canceled Economic Alchemy’s registrations in 2020 because Economic Alchemy did not file the required declarations of use. The parties agreed that this cancellation made Now-Casting’s claims seeking cancellation of the registrations moot, and Now-Casting agreed to withdraw its injunction claim without prejudice. The court dismissed those three claims without prejudice and dismissed Economic Alchemy’s counterclaim based on infringement of registered marks without prejudice. The remaining matters were Now-Casting’s declaratory claim concerning Economic Alchemy’s unregistered trademark rights and Economic Alchemy’s remaining counterclaims.

Summary-judgment ruling

The court rejected Economic Alchemy’s argument that it lacked subject-matter jurisdiction. The court held that a claim seeking a declaration of noninfringement under section 43(a) of the Lanham Act could support federal jurisdiction because a coercive infringement action under that provision would raise a federal question. It also found an actual dispute because Now-Casting had marketed and sold its services in the United States using the disputed terms, and Economic Alchemy had sent a letter threatening legal action.

For an unregistered trademark claim, the party seeking protection must prove that the mark is valid and protectable. A registered mark receives a presumption of validity, but the court held that this presumption no longer applied after Economic Alchemy’s registrations were canceled. Economic Alchemy presented no evidence that “NOWCAST” or “NOW-CAST” was distinctive enough to receive protection as an unregistered trademark. The court therefore found no genuine dispute of material fact about protectability and held that Economic Alchemy could not establish infringement.

The court granted Now-Casting’s motion for summary judgment on its remaining declaratory-judgment claim and on Economic Alchemy’s federal and common-law trademark counterclaims. It also granted Now-Casting summary judgment on Economic Alchemy’s New York General Business Law section 349 counterclaim. The court explained that Economic Alchemy had not opposed summary judgment on that claim, so it could be treated as abandoned, and that the claim also failed on the merits because the record showed no deceptive or misleading conduct causing actionable public harm. The court denied Economic Alchemy’s motion for summary judgment on Now-Casting’s remaining claim.

Sanctions

Now-Casting sought sanctions under Federal Rule of Civil Procedure 11, arguing that Economic Alchemy and its counsel had asserted and continued pursuing counterclaims without adequate support concerning prior use of the disputed terms. Economic Alchemy requested its fees for opposing the sanctions motion.

The court denied Now-Casting’s sanctions motion. Although Now-Casting had complied with Rule 11’s notice requirement, the court concluded that Economic Alchemy’s counterclaims and litigation positions were not objectively unreasonable and that it was not clear that the claims had no chance of success when asserted. The court also denied Economic Alchemy’s request for fees because Now-Casting’s sanctions motion was not frivolous or wholly without merit.

Disposition

The court granted Now-Casting’s motion for summary judgment as to its remaining claim and Economic Alchemy’s remaining counterclaims, denied Economic Alchemy’s motion for summary judgment, denied both parties’ sanctions requests, directed the Clerk to enter judgment, and closed the case. Judge John P. Cronan signed the order.