JC Hospitality v. Hochberg

Background

JC Hospitality and Jayma Cardoso sued Marisa Hochberg over Hochberg’s alleged use of “The Surf Lodge,” “The Sanctuary,” and related branding. The plaintiffs alleged that Hochberg used the name and social-media handle “@TheSurfLodgeSanctuary” to create a false association with The Surf Lodge and Cardoso and to attract business.

The plaintiffs’ proposed second amended complaint asserted federal claims under the Lanham Act for trademark infringement, false designation of origin and misrepresentation of facts, trademark dilution, and violations of the Anti-Cybersquatting Consumer Protection Act. It also asserted several New York and New York City claims. JC Hospitality had an exclusive license to use The Surf Lodge trademarks, but TSL Management, Inc. was the registered owner of those trademarks.

The plaintiffs moved under Federal Rule of Civil Procedure 15(a)(2) to file the second amended complaint. Hochberg opposed amendment on the ground that it would be futile and moved to dismiss under Rules 12(b)(1), 12(b)(2), 12(b)(4), and 12(b)(5). She also sought attorneys’ fees and costs.

Amendment and Jurisdictional Defenses

The court granted the motion to file the second amended complaint and evaluated the dismissal motion against that pleading. Hochberg’s arguments about the plaintiffs’ right to bring the federal claims were treated under Rule 12(b)(6), which tests whether a complaint states a legally sufficient claim, rather than as a question of subject-matter jurisdiction. The court also held that Hochberg had waived her defenses based on personal jurisdiction, defective process, and defective service because those defenses were available when she filed her earlier motion but were not raised then.

Lanham Act Claims

The court held that JC Hospitality’s license did not amount to an assignment of ownership rights. The license was limited in time and geographic scope, required payments based partly on JC Hospitality’s profitability, imposed operational and quality-related obligations, allowed TSLM to terminate it, preserved TSLM’s ownership and other rights, and required JC Hospitality to obtain TSLM’s consent before suing to protect the marks. Because the plaintiffs were not owners or assignees, they could not sue under Lanham Act Section 32(1) for registered-trademark infringement.

For the same ownership reason, the plaintiffs could not sue for trademark dilution under Section 43(c). The court also stated that the dilution allegations would not establish that the mark was famous enough for coverage under that provision even if the plaintiffs were owners.

The court reached a different conclusion for the Section 43(a) claim alleging false designation of origin and misrepresentation of facts about origin or sponsorship. That provision does not limit suits to trademark owners or registrants. The plaintiffs alleged that JC Hospitality had the exclusive right to use the trademark in connection with The Surf Lodge, that the parties operated in the same general geographic area and had similar customers and collaborators, and that Hochberg’s conduct had caused confusion and threatened economic and reputational harm. At the pleading stage, those allegations showed a sufficient commercial interest to bring the claim.

The court dismissed the plaintiffs’ cybersquatting claim under the Anti-Cybersquatting Consumer Protection Act because that statute allows a civil action by the owner of a mark, and the plaintiffs were exclusive licensees rather than owners.

Attorneys’ Fees and Costs

The court denied Hochberg’s request for attorneys’ fees and costs under Lanham Act Section 1117(a). It found that the case was not frivolous, that there was no evidence of improper motive or bad faith, and that the plaintiffs’ factual and legal submissions were not objectively unreasonable. The court also noted that the plaintiffs had a legitimate economic interest in protecting the mark from misappropriation and false designation.

Disposition

The court granted the plaintiffs’ motion to amend. It granted in part and denied in part Hochberg’s motion to dismiss. It granted dismissal of the claims for trademark infringement, trademark dilution, and cybersquatting, denied dismissal of the Section 1125(a) false-designation and misrepresentation claims, and denied the motion for attorneys’ fees and costs. Because a federal claim remained, the court retained the case and exercised supplemental jurisdiction over the state-law claims.