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Domo, Inc. v. Grow, Inc.

United States District Court, D. Utah

May 9, 2018

DOMO, INC., a Utah corporation, Plaintiff,
v.
GROW, INC., a Delaware corporation, and ROB NELSON, an individual, Defendants.

          MEMORANDUM DECISION AND ORDER

          Jill N. Parrish United States District court Judge

         Before the court is Defendants' Motion to Dismiss (ECF No. 23). For the reasons below, Defendants' motion is GRANTED with respect to Plaintiff's federal claims. The remaining state-law claims are dismissed for lack of subject-matter jurisdiction.

         I. BACKGROUND

         Plaintiff Domo, Inc. is a Utah company that develops business intelligence software and markets it in the United States and abroad. Defendant Rob Nelson is a former Chief Technology Officer of AFS, a transportation-cost-management company operating out of Shreveport, Louisiana.

         While Nelson worked at AFS, Domo contacted him multiple times to promote Domo's products. On September 12, 2013, Nelson finally responded, represented himself as a potential buyer on behalf of AFS, and requested Domo's demonstration materials. Between October 11- 14, 2013, Domo provided Nelson with a live demonstration, single-use videos for his AFS team, and a slide show of the Domo platform. After the demonstration, Nelson informed Domo that he would meet with AFS officers and board members to seek approval to purchase the Domo platform. But when Domo attempted to contact Nelson at AFS in late October/early November of 2013, Domo learned that Nelson had left AFS.

         In January 2014, Nelson founded Defendant Grow, Inc., which sells business intelligence software very similar to Domo's product. The similarities include a dashboard design with individual tiles that can be moved, enlarged, or reduced in size, and various other features that look similar to the features of Domo's design. Grow targets the same market of customers but sells its software at prices significantly lower than those of Domo. Below are screenshots of Domo and Grow software submitted by Domo as Exhibits A and B, respectively.

         Image Omitted

         Because Grow markets its product at lower prices, Domo alleges that it lost customers and business opportunities to Grow. Domo filed this complaint against both Grow and Nelson (collectively, “Grow”). Domo believes Nelson misrepresented AFS's interest in Domo's product and that he used Domo's demonstrations to develop his own platform. Domo asserts that Nelson defrauded Domo by misrepresentations and omissions when he obtained information about the Domo platform. Domo also alleges that Grow's use of Domo's trade dress causes customer confusion as to the source of the software. Additionally, Domo asserts that its platform is protected by U.S. Patent No. 8, 914, 740 (“the '740 patent”), which claims a certain method of displaying stacked bar graphs in computer-implemented presentations of data. Domo alleges that Grow's product infringes the '740 patent. Finally, Domo asserts that Grow's actions give rise to claims for tortious interference, unfair competition, and deceptive trade practices under Utah law.

         Domo seeks compensatory damages, punitive damages, pre- and post-judgment interest, and attorneys' fees under 15 U.S.C. § 1117 and Utah Code Ann. § 13-11a-4(2)(c). Domo also seeks a preliminary and permanent injunction against Grow's use of its competing platform under § 34(a) of the Lanham Act, 15 U.S.C. § 1116(a), and Utah Code Ann. § 13-11a-4(2)(a).

         Defendant Grow moves the court to dismiss all causes of action for failure to properly state a claim under Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure.

         II. MOTION STANDARD

         Under Rule 12(b)(6), a defendant may move to dismiss a claim when the plaintiff fails to state a claim upon which relief can be granted. The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties may present at trial but to “assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.” Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (quoting Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991)).

         “A court reviewing the sufficiency of a complaint presumes all of plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106, 1108 (10th Cir. 1991) (citing Scheuer v. Rhodes, 416 U.S. 232 (1974)). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff has alleged facts that allow “the court to draw [a] reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         Under Iqbal, the court must first identify “the allegations in the complaint that are not entitled to the assumption of truth, ” including allegations that are legal conclusions, bare assertions, or merely conclusory. Id. at 680-81. The court must then consider the factual allegations that are entitled to the assumption of truth “to determine if they plausibly suggest an entitlement to relief.” Id. at 681. If the allegations state a plausible claim for relief, the plaintiff's claim survives the motion to dismiss. Id. at 679. A complaint is insufficient if it contains “naked assertion[s]” devoid of “further factual enhancement.” Id. at 678.

         III.TRADE DRESS INFRINGEMENT

         “A trade dress is an object's ‘total image and overall appearance, ' and ‘may include features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques.'” Savant Homes, Inc. v. Collins, 809 F.3d 1133, 1146 (10th Cir. 2016) (quoting Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 765 n.1 (1992)). “A party may register a trade dress with the United States Patent and Trademark Officer under § 2 of the Lanham Act, 15 U.S.C. § 1052.” Id. at 1147 (citing Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 209-10 (2000)). Domo alleges its trade dress is unregistered, but failure to register does not preclude its protectability. Id.

         Grow's business intelligence software bears uncanny resemblance to the Domo platform. Domo argues that Grow's software infringes Domo's trade dress under § 43(a) of the Lanham Act.

To obtain relief under § 43(a), a plaintiff must show: “(1) The trade dress is inherently distinctive or has become distinctive through secondary meaning; (2) There is a likelihood of confusion among consumers as to the source of the competing products; and (3) The trade dress is nonfunctional.”

Id. (quoting Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1227 (2007)). Failure to allege any of these three requirements is fatal to Domo's trade dress infringement claim. Here, Domo sufficiently alleges a likelihood of confusion. However, it does not sufficiently allege distinctiveness or nonfunctionality.

         A. Distinctiveness

         Trade dress must either be inherently distinctive or become distinctive through acquiring secondary meaning. Id. However, Domo does not sufficiently allege that its trade dress is either inherently distinctive or that it became distinctive through acquiring secondary meaning.

         1. Inherent Distinctiveness

         “A trade dress is inherently distinctive if its ‘intrinsic nature serves to identify a particular source.'” Sally Beauty Co. v. Beautyco, Inc., 304 F.3d 964, 977 (10th Cir. 2002) (quoting Two Pesos, 505 U.S. at 768). “Trade dress, like trademarks, are classified in the following categories of generally increasing distinctiveness: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful.” Savant Homes, 809 F.3d at 1147 (citing Two Pesos, 505 U.S. at 768). Of these five categories, only suggestive, arbitrary, and fanciful trade dress are inherently distinctive.[1]

         Domo's amended complaint does not assert that Domo's trade dress is inherently distinctive. Nor does it assert that the trade dress is suggestive, arbitrary, or fanciful. Instead, Domo simply asserts that “the Domo Trade Dress has become an asset of substantial value to Domo as a distinctive indication of the origin and quality of the Domo Platform” and that “Grow copied the distinctive Domo Trade Dress.” ECF No. 4 at ¶¶ 35, 39. But Domo's conclusory use of the word “distinctive, ” absent any factual allegations, is insufficient to adequately allege inherent distinctiveness.[2]

         2. Secondary Meaning

         “To acquire secondary meaning, a trade dress ‘must have been used so long and so exclusively by one producer with reference to his goods or articles that, in the trade and to that branch of the purchasing public, the [trade dress] has come to mean that the article is his product.'” Savant Homes, 809 F.3d at 1148 (quoting Water Pik, Inc. v. Med-Sys., Inc., 726 F.3d 1136, 1154 (10th Cir. 2013)). “Put differently, secondary meaning exists when ‘in the consumer's mind the [trade dress] denotes a single thing coming from a single source.'” Id. (quoting Sally Beauty Co., 304 F.3d at 978). Secondary meaning may be established from consumer testimony or consumer surveys, the length and manner of the use, the nature and extent of advertising and promotion of the trade dress, the efforts made to promote a connection in the public's mind between the trade dress and a particular product, actual consumer confusion, intentional copying, and volume of sales. Id. Although at this stage it is not necessary to make “heightened fact pleading of specifics, ” Domo must nonetheless allege “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 547. Much of the information that courts use to evaluate a trade dress's secondary meaning is naturally in possession of the plaintiff rather than the defendant. Accordingly, the plaintiff should know and allege some essential facts even without the benefit of discovery.

         In a recent case, a New York district court dismissed a trade dress infringement complaint by a martial arts school against a competitor. The complaint alleged “extensive . . . web presence” with “hundreds of websites, ” “thousands of man hours, and significant amounts of money” expended, and it recited a number of the website features copied by the infringer. FC Online Mktg., Inc. v. Burke's Martial Arts, LLC, No. 14-cv-3685, 2015 WL 4162757, at *9 (E.D.N.Y., July 8, 2015). The district court held that “the amended complaint is bereft of any factual allegations, other than plaintiff's conclusory allegations, from which it may reasonably be inferred that plaintiff's ‘Web Presence' has acquired secondary meaning in the relevant market, ” and hence “it fails to state a plausible claim of trade dress infringement with respect to plaintiff's Website.” Id. at *10.

         Similarly, trade dress infringement allegations were dismissed in AJB Enters., LLC v. Backjoy Orthotics, LLC, No. 3:16-cv-00758, 2016 WL 7341702, at *5 (D. Conn., Dec. 18, 2016). There, the plaintiff marketed a cane massager for over twenty years and used the trade dress in “widespread sales” and advertising. Id. at *5. The court ruled that “[a]n extensive and successful history of selling and advertising the product, without more . . . is not sufficient to demonstrate that the claimed trade dress has secondary meaning for purposes of a trade dress infringement claim.” Id. However, the court allowed the amended complaint to proceed after the plaintiff alleged that it spent $500, 000 in advertising on Amazon, Google, and Facebook, recited extensive video promotions on YouTube and the plaintiff's own website, and included the statement from a Facebook cofounder who provided “an unsolicited, unpaid and enthusiastic testimonial for the strangely shaped massage device he swears by.” AJB Enters., LLC v. Backjoy Orthotics, LLC, No. 3:16-cv-00785, 2017 WL 4400746, at *2 (D. Conn., Sep. 29, 2017).

         Domo alleges that its product has been advertised, marketed and sold nationwide and throughout the world and has continuously featured a number of common design elements. ECF No. 4 at ¶¶ 31-32, 36. Domo also submits a screenshot of its product, recites the product's various visual elements, and asserts that its business intelligence software was the first of its kind. But these allegations are generic. There ...


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