Equibal, Inc. v. 365 Sun LLC

Background

Equibal, Inc. sued 365 Sun LLC doing business as Nutree Cosmetics, Nutree Professional Brazil, Lance Thompson, Natalia Y. Likhacheva, Bruno Borges Garcia, and Chromus Comercial Eirelli. Equibal alleged trademark infringement under the federal Lanham Act and New York law, unfair competition, false designation of origin, and violations of Sections 349 and 350 of the New York General Business Law. The claims arose from the defendants’ alleged use of the “NUTREE” and “NUTREE PROFESSIONAL” marks, which Equibal contended infringed its “NUFREE” and “NUFREE PROFESSIONALS” marks.

The U.S. Defendants—365 Sun LLC, Lance Thompson, and Natalia Y. Likhacheva—asserted counterclaims against Equibal for tortious interference with business relations and prospective business relations under New York law. The Brazil Defendants—Nutree Professional Brazil, Bruno Borges Garcia, and Chromus Comercial Eirelli—had not yet been served.

Motion to Dismiss the Counterclaims

Equibal moved to dismiss the U.S. Defendants’ counterclaims under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to support a legally plausible claim. The court held that both counterclaims failed because the U.S. Defendants did not plausibly allege injury to their business relationships.

The counterclaims stated generally that Equibal’s actions had injured existing and prospective business relationships, including relationships with the Brazil Defendants and customers. But they did not allege that the Brazil Defendants or anyone else terminated, changed, or failed to enter into a business relationship because of Equibal’s conduct. The court therefore granted Equibal’s motion to dismiss the counterclaims.

Motion for Alternative Service

Equibal also asked to serve the Brazil Defendants by alternative means. Equibal argued that Section 1051(e) of the Lanham Act permits service through the Director of the United States Patent and Trademark Office when a foreign trademark applicant has not provided a usable domestic service contact.

The court interpreted Section 1051(e)’s reference to “proceedings affecting the mark” to include court lawsuits involving trademarks. It concluded that this action affected the marks for which Chromus Comercial Eirelli and Bruno Borges Garcia had applied. The court found that the statute did not apply to Nutree Professional Brazil because Equibal had not alleged, and the court was not aware, that Nutree Professional Brazil had applied for a relevant trademark.

The court further concluded that service through the Director of the United States Patent and Trademark Office for Chromus Comercial Eirelli and Bruno Borges Garcia was not barred by the Hague Convention or the Inter-American Convention. It also found that the method was reasonably calculated to inform those defendants of the lawsuit and that alternative service was necessary and appropriate in light of Equibal’s service efforts and the expected length of service through the usual process in Brazil.

Disposition

The court granted Equibal’s motion to dismiss the counterclaims. It granted in part and denied in part Equibal’s motion to serve the Brazil Defendants by alternative means. Equibal could serve Chromus Comercial Eirelli and Bruno Borges Garcia by serving the Director of the United States Patent and Trademark Office under 15 U.S.C. § 1051(e), but it could not use that method to serve Nutree Professional Brazil. The court directed Equibal to file proof of service for the two defendants and to report on its efforts to serve Nutree Professional Brazil under the Hague Convention.