Res Judicata Does Not Bar Trademark Action Arising After Settlement Agreement

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By Anandashankar Mazumdar  

July 15 — Under the doctrine of res judicata, the existence of a settlement agreement did not bar a trademark action by Swiss jeweler and watchmaker TechnoMarine against online discounter Jomashop when the new claims had arisen subsequent to the execution of the agreement, the U.S. Court of Appeals for the Second Circuit ruled July 15.

A 2009 settlement did not bar TechnoMarine from initiating a new lawsuit claiming that Jomashop had again engaged in trademark infringement in 2012 with similar conduct, the court said.

However, looking at the claims, the appeals court agreed with the district court that TechnoMarine had “failed plausibly to plead its claims” and had thus correctly dismissed the action under Rule 12(b)(6).

History of Dispute Between Parties

Jewelry company and watchmaker TechnoMarine S.A. was founded in Geneva in 1997. The company sells its timepieces only through authorized dealers and prohibits the retailers in its network from selling to unauthorized dealers.

Giftports Inc. of New York is an online discount retailer of watches that operates the Jomashop website. In 2008, TechnoMarine sued Giftports, alleging copyright infringement, unfair competition and other claims. The proceeding was settled by agreement in 2009.

In 2012, TechnoMarine sued again, alleging trademark infringement, false designation of origin, trademark dilution, unfair competition, and copyright infringement. Giftports moved for dismissal pursuant to the doctrine of res judicata.

Judge Deborah A. Batts of the U.S. District Court for the Southern District of New York granted the motion, finding that the claims were barred by the prior settlement between the parties. TechnoMarine appealed.

Res Judicata Not Applicable

The appeals court first determined that the new claims were not precluded by the settlement agreement.

“Because we conclude that at least as to its trademark infringement claim, TechnoMarine's complaint is properly read at this stage of the litigation to assert liability based on new, post-settlement conduct, this claim, and perhaps others, are ‘not barred by res judicata' even though ‘premised on facts representing a continuance of the same “course of conduct,” ' ” the court said.

Thus, the court said that the district court had erred in finding the claims precluded. However, the court then agreed with the district court that even though not barred under principles of claim preclusion that under Fed. R. Civ. P. 12(b)(6), TechnoMarine had failed to state a claim for which a remedy is available under the law.

Further, the court ruled that the district court need not offer TechnoMarine leave to amend its complaint to cure this defect.

“A plaintiff need not be given leave to amend if it fails to specify either to the district court or to the court of appeals how amendment would cure the pleading deficiencies in its complaint,” the court said. And TechnoMarine had failed to do so.

In this case, the court noted that TechnoMarine had already had the opportunity to amend its claim once and this did not cure the deficiencies.

Thus the court affirmed the lower court's grant of dismissal under Rule 12(b)(6).

The court's opinion was authored by Judge Debra Ann Livingston and joined by Judge Raymond Joseph Lohier Jr. and Judge Sidney H. Stein. TechnoMarine was represented by the Blakely Law Group, Manhattan Beach, Calif. Giftports was represented by Schwartz & Thomashower LLP, New York.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

Text is available at http://www.bloomberglaw.com/public/document/Technomarine_SA_v_Giftports_Inc_Docket_No_1204174_2d_Cir_Oct_18_2.