ESPN, Inc. v. Quiksilver, Inc.
586 F. Supp. 2d 219, 2008 U.S. Dist. LEXIS 95690, 2008 WL 4924949 (2008)
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Rule of Law:
To survive a motion to dismiss, a counterclaim for trademark infringement need only allege facts that plausibly suggest the claimant owns a valid mark used as a source identifier and that the opposing party's use of a similar mark is likely to cause consumer confusion.
Facts:
- No later than 1986, Quiksilver, Inc. ('Quiksilver'), a clothing manufacturer, began using a stylized 'X' symbol on its products.
- Quiksilver refers to its various 'X' designs collectively as the 'Gen X Brand.'
- No later than 1994, Quiksilver introduced a specific design called the 'Quiksilver X,' featuring its mountain and wave logo inside a thick black X.
- In the mid-1990s, ESPN, Inc. ('ESPN'), a sports entertainment company, created an alternative sports competition initially called the 'Extreme Games.'
- Following the inaugural 1995 event, ESPN changed the competition's name to the 'X Games.'
- ESPN began using its own stylized X Games mark on merchandise sold at its events, online, and in department stores.
- Both companies sell their products, featuring their respective 'X' marks, in similar retail channels like department stores.
Procedural Posture:
- On May 2, 2008, ESPN, Inc. filed a complaint against Quiksilver, Inc. in the U.S. District Court for the Southern District of New York, a federal trial court.
- ESPN's complaint alleged trademark infringement, unfair competition, and dilution under federal and New York law.
- On June 16, 2008, Quiksilver filed an answer, asserting affirmative defenses and counterclaims for declaratory relief, trademark infringement, dilution, unfair competition, and cancellation of ESPN's federal registrations.
- ESPN filed a motion to dismiss under FRCP 12(b)(6) against all of Quiksilver's counterclaims except the one for declaratory relief, arguing they failed to state a claim upon which relief can be granted.
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Issue:
Do Quiksilver's counterclaims for trademark infringement, dilution, unfair competition, and cancellation of registration allege sufficient facts to state a plausible claim for relief and survive a motion to dismiss under FRCP 12(b)(6)?
Opinions:
Majority - McMahon, District Judge
Yes. Quiksilver's counterclaims state a plausible claim for relief because they allege sufficient facts to raise the right to relief above a speculative level. Applying the plausibility standard from Bell Atlantic v. Twombly, the court found that a formulaic recitation of legal elements is not required. For the trademark infringement and unfair competition claims, Quiksilver plausibly alleged ownership of a protectable mark by pleading long-standing use of unique 'X' designs and asserting that consumers recognize the 'Gen X Brand' as originating from Quiksilver. The court found the likelihood of confusion was also plausibly alleged, noting the visual similarity of the marks and, importantly, citing ESPN's own complaint which asserted that the marks could not coexist in the marketplace. For the dilution claim under New York law, Quiksilver's allegations of a long history of use and the development of goodwill were sufficient at the pleading stage to infer the mark was 'extremely strong.' Finally, Quiksilver had standing to seek cancellation of ESPN's registrations because it was being sued by ESPN for infringement, which constitutes sufficient 'damage' under the Lanham Act for an alleged senior user of a mark.
Analysis:
This decision illustrates the practical application of the Twombly plausibility standard in trademark litigation, confirming that detailed factual allegations are not required to survive a motion to dismiss as long as the pleaded facts support a plausible inference of liability. The court's reliance on the plaintiff's (ESPN's) own allegations of consumer confusion to support the defendant's (Quiksilver's) counterclaim demonstrates a key strategic point for litigators. The ruling reinforces the principle that common-law trademark rights based on prior use can form a powerful basis for both defense and counterclaims against a junior user, even one with federal trademark applications.
