In a February 19, 2014 ruling, Judge Colleen McMahon dismissed defendants’ A.O.D. Jewelry Company and David Aghbashoff’s three counterclaims against plaintiff IDI Design Inc. for (i) violation of the antitrust laws through misuse of its copyright registration; (ii) copyright misuse constituting unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a); and (iii) unfair competition in violation of the New York General Business Law § 360.First, defendants alleged that plaintiff had violated antitrust laws by misusing its copyright registration, basing its claim on the belief that plaintiff was “engaged in interfering in commerce by expanding the scope of its Copyright Registration beyond a reasonable scope to intimidate and inhibit commerce in the jewelry business.” The Court held that the defendants plead no facts to support its allegation of a violation of the antitrust laws, and failed to state which antitrust law had allegedly been violated. In order to state an antitrust claim, “[P]laintiff must allege a relevant product market in which the anti-competitive effects of the challenged activity can be assessed.” The defined market must be supported in the complaint by a “theoretically rational explanation” for why the boundaries of the market are defined as they are. Finding that the “jewelry business,” in which plaintiff was purportedly trying to intimidate and inhibit commerce,” was not a bounded market, the court dismissed defendants’ first counterclaim.
Second, defendants claimed that plaintiff’s misuse constituted unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a). To succeed on this claim, the defendant “needs to demonstrate that is has a valid mark entitled to protection and that defendant’s use of it is likely to cause confusion.” The Court, finding that defendants failed to plead any facts in support of its unfair competition claim, dismissed defendants’ second claim.
Finally, defendants alleged that the acts of the plaintiff “constitute[d] unfair competition in violation of the New York General Business Law § 360.” Under New York common law, an unfair competition claim “must be grounded in either deception or appropriation of the exclusive property of the plaintiff.” The “essence” of an unfair competition claim “is the bad faith misappropriation of the labors and expenditures of another, likely to cause confusion or to deceive purchasers as to the origins of the goods.” Once again, the Court, finding the pleadings woefully insufficient to state a claim for unfair competition, dismissed the defendants’ third claim.
The Court denied plaintiff’s request for attorneys’ fees in connection with the motion to dismiss, notwithstanding its characterization of defendants’ counterclaims as “patently ridiculous [which] were filed to harass and retaliate for the filing of the complaint, because (frankly) plaintiff’s opposing papers were not all that helpful.” The Court granted the defendants 10 days to file amended counterclaims, with the express warning that if the amended pleadings were found to be woefully insufficient -- and obviously intended to harass, as the dismissed counterclaims were -- not only would the Court dismiss the claims, but defendants and their counsel would be sanctioned, in addition to having to pay plaintiff’s attorneys fees.
