KatiRoll Co. v. Kati Junction, Inc.
KatiRoll Co. v. Kati Junction, Inc.
Opinion of the Court
OPINION AND ORDER
I. INTRODUCTION
Plaintiff, The KatiRoll Company, Inc. (“TKRC”), brings this action against Kati
II. BACKGROUND
A. The KatiRoll Company, Inc.
TKRC is a carry-out style restaurant that first opened in June 2002 on MacDou-gal Street in Manhattan.
There are currently four TKRC restaurants, three in Manhattan and one in London, England.
It took many months for TKRC to develop the recipes for each of its dishes as well as the proprietary processes used to create desired textures and to keep ingredients ready for use without artificial preservatives.
TKRC employees wear a uniform that includes a t-shirt with the company mark, a hat, and an apron.
B. Kati Junction, Inc.
In February 2014, Kati Junction, Inc. opened a takeout-style restaurant called Kati Junction at 200 West 40th Street in Manhattan, approximately three blocks from a TKRC restaurant.
Kati Junction’s restaurant features an-unobstructed open glass front, limited seating in front with a counter further back, an open kitchen plan, and uses wood facing on the counters and wood surrounds for trash bins.
Kati Junction hired seven “current and former” TKRC employees.
III. LEGAL STANDARD
A. Motion to Dismiss
In deciding a motion to dismiss under Rule 12(b)(6), the court must “accept[ ] all factual allegations in the complaint as true, and draw[ ] all reasonable inferences in the plaintiffs favor.”
A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider “only the complaint, ... any documents attached thereto or incorporated by reference and documents upon which the complaint relies heavily.”
B. Pleading Requirements
1. Rule 8
Rule 8(a)(2) requires “a short and plain statement of the claim showing that the pleader is entitled to relief.”
IY. APPLICABLE LAW
A. Lanham Act Claims
1. Trade Dress Infringement
Pursuant to section 1125(a) of Title 15 of the United States Code, a cause of action for trade dress infringement may be sustained under the Lanham Act.
[a]ny person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which [ ] is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person [ ] shall be liable in a civil action by any person who believes that*366 he or she is or is likely to be damaged by such act.38
In Two Pesos v. Taco Cabana, the Supreme Court held that “[t]rade dress is the total image of the business” and “may include the shape and general appearance of the exterior of the restaurant, the identifying sign, the interior kitchen floor plan, the decor, the menu, the equipment used to serve food, the servers’ uniforms and other features reflecting the total image of the restaurant.”
A plaintiff must prove “that (1) the claimed trade dress is non-functional; (2) the claimed trade dress has secondary meaning; and (3) there is a likelihood of confusion between the plaintiffs goods and the defendant’s.”
The Second Circuit cautions that in analyzing trade dress claims, “courts must not lose sight of the underlying purpose of the Lanham Act, which is protecting consumers and manufacturers from deceptive representations of affiliation and origin.”
In assessing the likelihood of customer confusion “[t]he Lanham Act seeks to prevent consumer confusion that enables a seller to pass off his goods as the goods of another.”
2. Unfair Competition
At its core, an unfair competition claim under the Lanham Act examines “whether the public is likely to be misled into believing that the defendant is distributing products manufactured or vouched for by the plaintiff.”
3. Liability of Individual Defendants
It is well-established in the Second Circuit that “under the Lanham Act, a corporate officer may be held personally liable for trademark infringement and unfair competition if the officer is a moving, active[,] conscious force behind [the defendant corporation’s] infringement.”
B. Common Law Claims
1. Trademark Infringement
“ ‘It is well-established that the elements necessary to prevail causes of action for trademark infringement and unfair competition under New York common law mirror the Lanham Act claims.’ ”
2. Unfair Competition
The essence of the tort of unfair competition under New York common law is the bad-faith misappropriation, for the commercial advantage of one person, of “a benefit or ‘property’ right belonging to another [person].”
C.Breach of Duty of Loyalty
“New York law with respect to disloyal or faithless performances of employment duties is grounded in the law of agency, and has developed for well over a century.”
D. Breach of Contract
To establish a claim for breach of contract under New York law, a party must prove “(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages.”
E. Misappropriation of Trade Secret and/or Proprietary and Confidential Information
New York’s unfair competition law recognizes a cause of action for misappropriation — “taking the skill, expenditures and labors of a competitor,
To state a claim for misappropriation of trade secrets under New York law, a plaintiff must demonstrate’ “(1) that it possessed a trade secret, and (2) that the defendants used that trade secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means.’ ”
V. DISCUSSION
A. Trade Dress Infringement Against Kati Junction
Defendant argues that dismissal of the trade dress infringement claim is warranted because the Complaint fails to specifically plead the elements of TKRC’s alleged trade dress. Kati Junction contends that the generic food items, colors, and signs in both its restaurant and TKRC’s are too typical of fast food restaurants to provide a basis for a distinctive trade dress.
TKRC does plead specific elements comprising its trade dress including (1) TKRC’s orange and white signage and col- or scheme, (2) the layout of its restaurants, including an unobstructed open glass window, limited seating in front with the counter further back and an open kitchen plan, (3) menu items and pricing, (4) employee uniforms with the company mark on the back of the shirt, and (5) the unique food items sold.
- The Complaint alleges customer confusion by asserting that more than one
B. Trade Dress Infringement and Unfair Competition Against Individual Employees
Kati Junction moves to dismiss the trade dress infringement and unfair competition claims under the Lanham Act and New York State statutory laws for failure to plead infringing activity by the named employees. Kati Junction correctly notes that for an individual to be held personally liable for a corporation’s acts of infringement, he or she must be the “moving, active[,] conscious force” behind the infringement.
Kati Junction further argues that under New York State law, owners, officers, directors, or operators of a corporation cannot be held individually liable for torts committed by the corporation absent individual acts outside the scope of their corporate role. The Complaint does not allege this sort of vicarious liability. Rather, TKRC alleges that the individuals personally engaged in infringing acts.
TKRC alleges that the John Doe defendant directs the activities of Kati Junction and Md. Akhter Hossain was a manager who received training on trade secret and proprietary TKRC information.
C. Common Law Trademark Infringement and Unfair Competition
The common law trademark infringement claim against Kati Junction mirrors the Lanham Act claim, which, as noted above, was satisfactorily pleaded. To state a claim for unfair competition under New York common law, the plaintiff must state a Lanham Act claim coupled with a showing of bad faith or intent.
D. Breach of Duty of Loyalty
TKRC asserts that the individual employees violated their common law duty by disclosing to a competitor TKRC trade secrets or confidential and proprietary information. Defendants rely on affidavits to argue that none of the acts alleged in the Complaint took place prior to the individuals leaving their employment at TKRC and each began working at Kati Junction after the restaurant was already open for business. Again, these affidavits may not be considered in a motion to dismiss and the Court may only consider the facts alleged in the Complaint.
Kati Junction further argues that recipes for kati rolls are not a trade secret because they are generally available in the industry and can be found online. But TKRC does not use generic kati roll recipes and spent time developing the unique flavor profile and even partnered with a celebrity chef to develop a proprietary shrimp-based roll.
Because each of the defendants alleged to have breached the duty of loyalty worked at TKRC prior to Kati Junction, it is a fair inference the defendants are using their proprietary knowledge of TKRC recipes to copy TKRC’s menu and compete with TKRC. Thus, the allegations pleaded in the Complaint support the inference that the employee defendants breached their duty of loyalty and the motion to dismiss this claim is DENIED.
E. Breach of Contract Claims Against Md. Tariqul Islam and Shaikh Nuhul Alam
TKRC asserts defendants Islam and Alam breached their signed nondisclosure agreements, presumably by sharing TKRC recipes with Kati Junction. Kati Junction argues the breach of contract claim is indistinguishable from the breach of duty of loyalty claim and should be dismissed because it is duplicative. The two claims are not duplicative, however, because the breach of duty of loyalty claim requires only that the defendants “divert[ ] business opportunities” while the breach of contract claim specifically alleges that Islam and Alam breached their signed nondisclosure agreements.
Plaintiff and defendants argue about the precise date on which Alam left his employment at TKRC and began working for Kati Junction. Because the contested dates are found in an affidavit, they are irrele
F. Misappropriation of Trade Secrets and Proprietary or Confidential Information
TKRC alleges that the defendants willfully shared confidential information about TKRC’s recipes because, upon information and belief, the flavor profile and texture of Kati Junction’s fillings, sauces, and breads are extremely similar to TKRC’s.
G. Procedural Issues Raised by the Parties
The plaintiff raises issues regarding the defendants’ compliance with this Court’s pre-motion letter rules and the defendants’ briefing. Defendants respond that their delay in filing some of their motions to dismiss was due to technological difficulties and it does not appear this delay caused any prejudice.
Plaintiffs contention that the defendants failed to brief their motion to dismiss counts three and four against Kati Junction is irrelevant as the motion is denied on other grounds. Plaintiff also argues that the defendants’ moving brief did not address counts six and seven, although this was addressed in defendants’ reply memorandum. Finally, plaintiff notes that count six, breach of duty of loyalty, is only briefed regarding two defendants, Islam and Alam, even though it was brought against all employee defendants. Because the Complaint sufficiently alleged each of the employee defendants breached the duty of loyalty the extent to which the defendants briefed this claim is irrelevant. Thus, none of the procedural issues raised by the plaintiff have a bearing on the outcome of the defendants’ motion to dismiss.
VI. CONCLUSION
For the foregoing reasons, Defendants’ partial motion to dismiss is DENIED. The Clerk of the Court is directed to close this motion (Docket No. 31). A conference is scheduled for August 15, at 4:00 p.m.
SO ORDERED.
. The Complaint (“Compl.”) alleges that "[¡Jurisdiction is conferred by 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331, 1338, and 1367.” Compl. ¶ 13.
. See id. ¶ 16.
. See id. ¶ 21.
. See id. ¶ 31.
. See id. ¶ 16.
. See id. ¶ 19.
. ■ See id. ¶¶ 23, 26.
. See id: ¶ 32.
. See id. ¶¶ 37, 40.
. See id. ¶ 39.
. See id. ¶ 41.
. See id.
. See id. ¶ 28.
. See id. ■
. See id. ¶¶ 3, 17.
. See id. ¶ 20.
. See id. ¶ 22.
. See id. ¶¶ 22, 31.
. See id. ¶ 44.
. See id. ¶ 24, 33.
. See id. ¶ 29.
. See id. ¶ 43.
. See id. ¶¶ 45, 46.
. See id. ¶ 36.
. Freidus v. Barclays Bank PLC, 734 F.3d 132, 137 (2d Cir. 2013) (citing Gorman v. Consolidated Edison Corp., 488 F.3d 586, 591-92 (2d Cir. 2007)).
. See 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
. Bigio v. Coca-Cola Co., 675 F.3d 163, 173 (2d Cir. 2012) (citing Iqbal, 556 U.S. at 678, 129 S.Ct. 1937), cert. denied, — U.S. -, 133 S.Ct. 952, 184 L.Ed.2d 752 (2013).
. Id.
. Taveras v. UBS AG, 513 Fed.Appx. 19, 22 (2d Cir. 2013) (citing Iqbal, 556 U.S. at 679, 129 S.Ct. 1937).
. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
. Id.
. Building Indus. Elec. Contractors Ass’n v. City of New York, 678 F.3d 184, 187 (2d Cir. 2012) (citing In re Citigroup ERISA Litig., 662 F.3d 128, 135 (2d Cir. 2011) (quotation marks omitted)).
. Faiveley Transp. USA, Inc. v. Wabtec Corp., 758 F.Supp.2d 211, 216 (S.D.N.Y. 2010).
. Kirkendall v. Halliburton, 707 F.3d 173, 175 n. 1 (2d Cir. 2013) ■ (citing L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011)), cert. denied, - U.S. -, 134 S.Ct. 241, 187 L.Ed.2d 146 (2013).
. Iqbal, 556 U.S. at 677-78, 129 S.Ct. 1937 (citing Fed.R.Civ.P. 8(a)(2)).
. See id. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 570, 127 S.Ct. 1955).
. See TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 28-29, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001).
. 15U.S.C. § 1125(a)(1)(A).
. 505 U.S. 763, 764 n. 1, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992).
. Id. at 774, 112 S.Ct. 2753 (citing Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985)).
. Sherwood 48 Assocs. v. Sony Corp. of Am., 76 Fed.Appx. 389, 391 (2d Cir. 2003) (citation omitted).
. Id. (quotation marks and citation omitted).
. Shevy Custom Wigs, Inc. v. Aggie Wigs., No. 06 Civ. 1657, 2006 WL 3335008, at *4 (E.D.N.Y. Nov. 17, 2006).
. Landscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373, 375 (2d Cir. 1997).
. Id. at 377, 380. Accord ID7D Co. v. Sears Holding Corp., No. 11 Civ. 1054, 2012 WL 1247329, at *6 (D.Conn. Apr. 13, 2012).
. Lang v. Retirement Living Pub. Co., Inc., 949 F.2d 576, 582 (2d Cir. 1991) (quotation marks omitted).
. Id. at 583.
. Id. (quoting Restatement (First) of Torts § 20 (1934) reporter’s note at 179).
. Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76, 79 (2d Cir. 1981) (citations and quotation marks omitted).
. L’Oreal USA, Inc. v. Trend Beauty Corp., No. 11 Civ. 4187, 2013 WL 4400532, at *14 (S.D.N.Y. Aug. 15, 2013) (quoting 15 U.S.C. § 1125(a)) (”[T]he standards for false designation of origin claims under Section 43(a) of the Lanham Act (15 U.S.C. § 1125) are the same as for trademark infringement claims under Section 32 (15 U.S.C. § 1114).”). Accord Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 220 F.Supp.2d 289, 297 (S.D.N.Y. 2002); Estate of Ellington ex rel. Ellington v. Harbrew Imps. Ltd., 812 F.Supp.2d 186, 192 (E.D.N.Y. 2011) ("A party establishes liability under [15 U.S.C. § 1125(a)] if it can demonstrate (1) that it has a valid trademark entitled to protection under the Act, and (2) defendant’s actions are likely to cause confusion.”) (citations and quotation marks omitted).
. Cartier v. Aaron Faber, Inc., 512 F.Supp.2d 165, 170 (S.D.N.Y. 2007). Accord Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F.Supp. 899, 913 (E.D.N.Y. 1988) (holding liable individual defendants who were directly involved in the purchase, approval and resale of infringing products) (citing Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir. 1978)).
. Bambu Sales, Inc., 683 F.Supp. at 913-14.
. Id. at 913.
. Allied Interstate LLC v. Kimmel & Silverman P.C., No. 12 Civ. 4204, 2013 WL 4245987, at *5 (S.D.N.Y. Aug. 12, 2013) (quoting Lorillard Tobacco Co. v. Jamelis Grocery, Inc., 378 F.Supp.2d 448, 456 (S.D.N.Y. 2005)). Accord Standard & Poor's Corp. v. Commodity Exch., Inc., 683 F.2d 704, 708 (2d Cir. 1982) ("The heart of a successful claim based upon [both] ... the Lanham Act ... and [the] common law [causes of action] ... is the showing of a likelihood of confusion as to the source or sponsorship of defendant’s products.”).
. Volmar Distribs. v. New York Post Co., 899 F.Supp. 1187, 1197 (S.D.N.Y. 1995) (quoting Metropolitan Opera Ass’n v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y.S.2d 483, 489 (Sup.Ct.N.Y.Co. 1950), aff'd, 279 A.D. 632, 107 N.Y.S.2d 795 (1st Dep't 1951) (quotations omitted)). Accord Saratoga Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980) (noting that the essence of New York’s unfair competition law "is that
. Allied Interstate, 2013 WL 4245987 at *5. Accord Standard & Poor’s, 683 F.2d at 708.
. See Nadel v. Play-By-Play Toys & Novelties, Inc., 208 F.3d 368, 383 (2d Cir. 2000) ("To determine that misappropriation has occurred, bad faith must be found_") (citations omitted); see also Saratoga Vichy Spring, 625 F.2d at 1037 (noting that central to the "notion” of unfair competition under New York law is "some element of bad faith”).
. Star Indus., Inc. v. Bacardi & Co. Ltd., 412 F.3d 373, 388 (2d Cir. 2005).
. Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184, 200 (2d Cir. 2003).
. Id. (citation omitted).
. Farricker v. Penson Dev., Inc., No. 07 Civ. 11191, 2010 WL 845983, at *10 (S.D.N.Y. Mar. 4, 2010) (quoting Veritas Capital Mgmt. LLC v. Campbell, 22 Misc.3d 1107(A), 875 N.Y.S.2d 824, 2008 WL 5491146 *10 (Sup.Ct.N.Y.Co. 2008)). Accord Fada Int’l Corp. v. Cheung, 57 A.D.3d 406, 870 N.Y.S.2d 23, 24; (1st Dep’t 2008) (upholding the dismissal of plaintiff's duty of loyalty claim "since there is no claim that defendants used plaintiff’s time, facilities or proprietary secrets in setting up their new business”).
. Terwilliger v. Terwilliger, 206 F.3d 240, 245-46 (2d Cir. 2000).
. Tonking v. Port Auth. of New York & New Jersey, 3 N.Y.3d 486, 490, 787 N.Y.S.2d 708, 821 N.E.2d 133 (2004).
. Id.
. Roy Exp. Co. v. Columbia Broad. Sys., Inc., 672 F.2d 1095, 1105 (2d Cir. 1982) (citations and quotation marks omitted).
. Id.
. See Ritani, LLC v. Aghjayan, 970 F.Supp.2d 232, 258-59 (S.D.N.Y. 2013).
. Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 117 (2d Cir. 2009) (quoting North Atl. Instruments, Inc. v. Haber, 188 F.3d 38, 43-44 (2d Cir. 1999)).
. Softel, Inc. v. Dragon Med. & Scientific Commc'ns, Inc., 118 F.3d 955, 968 (2d Cir. 1997) (quoting Restatement of Torts § 757 cmt. b, at 5 (1939)).
. See The KatiRoll Company Inc.’s Memorandum of Law in Opposition to Defendants' Partial Motion to Dismiss at 6.
. See id. at 2.
. See Two Pesos, 505 U.S. at 764 n. 1, 112 S.Ct. 2753.
. See Katiroll Co. Inc. v. Kati Roll & Platters, Inc., No. 10 Civ. 3620, 2011 WL 346502, at *8-9 (D.NJ. Feb. 1, 2011) ("[T]he non-functional aspects ... are the orange and white color schemes, the exposed and unpainted red brick walls, the brown tile on the floor, and a large window-front that can be[] seen through from the street ... the signs of each are similar albeit with a different font and layout but with each designed with white lettering and an orange background .... evidence also shows that Plaintiffs restaurants’ kitchens are "open.” These elements are "non-functional,” ... Finally, the restaurants both sell katirolls [sic], an Indian fast food, . and they both operate in the "fast-food” style
.These inquiries, standing alone, may not be sufficient to establish consumer confusion as understood under the Lanham Act. More evidence will likely be needed to determine whether customers have purchased food at Kati Junction under the mistaken belief it was a TKRC product. Direct evidence may be gathered through customer surveys and additional indirect evidence may be gleaned from observational studies, online media, and anecdotes. See Kind LLC v. Clif Bar & Co., No. 14 Civ. 770, 2014 WL 2619817, at *8-11 (S.D.N.Y. Jun. 12, 2014).
. Cartier, 512 F.Supp.2d at 170.
. See Defendants’ Memorandum of Law in Support of Their Partial Motion to Dismiss Plaintiff's Complaint at 14.
. See Compl. ¶¶ 4, 42.
. See Streetwise Maps v. VanDam, 159 F.3d 739, 745 (2d Cir. 1998) ("The intent to compete by imitating the successful features of another’s product is vastly different from the intent to deceive purchasers as to the source of the product.”).
. See Compl. ¶¶ 37-38.
. Farricker, 2010 WL 845983, at * 10.
. See Nondisclosure and Confidentiality of' Company Information Form, Ex. 2 to Compl., at 18.
. See Compl. ¶ 44.
. See id. ¶ 45.
.See id. ¶ 46.
Reference
- Full Case Name
- The KATIROLL COMPANY, INC. v. KATI JUNCTION, INC., John Doe 1, Md. Akhter Hossain, Md. Jewel Hossain, Md. Kamal Hossain, Md. Tariqul Islam, Md. Nur Nobi, Shaikh Nuhul Alam, and Nurun Nabi Chowdhury
- Cited By
- 17 cases
- Status
- Published