Trademark Law Updates | New Judicial Opinions

April 21, 2008

Federal Judge Denies Monster's Plea to Dismiss "Acoustic Research" Mark Case

Audiovox Corporation v. Monster Cable Products, Inc.
No. CV 07-462, District Court for the Eastern District of New York, 4/7/2008

Federal Judge Denies Monster's Plea to Dismiss "Acoustic Research" Mark Case

Holding:

The U.S. District Court for the Eastern District of New York denied a motion to dismiss an action for declaratory judgment of non-infringement and invalidity of a patent and trademark registration relating to audio speaker wires. In ruling against defendant Monster Cable Products’ (“Monster”), the district court held that Monster had inappropriately raised issues of falsity and materiality of particular statements made before the USPTO (U.S. Patent and Trademark Office). Defendant’s arguments went beyond the “four corners of the complaint,” and required courts to characterize the scope of the patent in dispute and its trademark registration. Because plaintiff Audiovox Corp. (“Audiovox”) was able to assert sufficient facts in support of its causes of action to state claims for relief, the district court ruled that dismissal of the complaint was not warranted.

Detailed Summary:

At the time of the filing of the complaint, plaintiff Audiovox wzs engaged n the business of distributing a variety of consumer electronic products, including automobile and home sound systems, television accessories, audio speakers and wires.  Under its brand name “Acoustic Research,” Audiovox distributed electrical speaker wire for use in connecting audio and home entertainment products, such as electronic amplifiers, to audio loudspeakers.  On the other hand, defendant Monster is a competitor of Audiovox in the field of consumer electronics.  Particularly, its competition with Audiovox was in the field of audio speaker wires.

The patent at issue (“’360” patent) was a patent for a “cable assembly having an internal dielectric core surrounded by a conductor.” Monster was also the owner of the ‘907 Registration for a mark that “consists of a pair of stranded copper conductors each twisted into a rope lay and enclosed by transparent cylindrical insulation.”

Prior to this action, Monster informed Audiovox that its (Audiovox’s) electrical speaker wire, sold under the “Acoustic Research” brand, infringed the ‘360 patent and the ‘907 Registration.  Subsequently, Audio instituted this action for a declaratory judgment that its speaker wire does not infringe Monster’s patent or its trademark registration.  Further, Audiovox sought a judgment invalidating the ‘907 Registration on the ground that it was fraudulently obtained as a result of intentional misstatements made by Monster’s counsel before the USPTO.

In particular, Monster alleged under Counts IV and V of the complaint that the application for the ‘907 Registration began in 1987 and was filed by the same attorney who prosecuted the ‘360 patent, as well as second patent involving wires, known as the ‘544 patent.  Monster alleged that in 1988, the USPTO examiner handling the application refused registration on functionality grounds because the “proposed mark consists of a design feature of the identified goods which serves a utilitarian purpose.” The examiner allegedly asked Monster whether the proposed trademark was the subject of either a design or utility patent, and to provide all information concerning any such patent.  In response, Monster allegedly stated that the proposed trademark was not the subject of either a design or utility patent. Monster allegedly failed to disclose the existence of either the ‘544 patent or the ’360 patent. According to Audiovox, these misrepresentations were material to the procurement of the ‘907 Registration and amounted to fraud upon the USPTO. On the basis of these misrepresentations, Audio sought cancellation of the ‘907 Registration under Section 1119 of 15 U.S.C.

In its motion to dismiss, Monster sought to dismiss Counts IV and V of the complaint on the ground that these counts are “so lacking in substance under either fact or law,” as to require dismissal under Rule 12(b)(6). Specifically, Monster asserted that the patents were not required to be disclosed to the USPTO because the patenting of the internal features referred to in the patents was irrelevant to the transparent appearance that is the subject of the ‘907 Registration.  In response to Monster’s motion, Audiovox took issue with Monster’s characterization of the nature of its patents and the ‘907 Registration.  It also argued that Monster’s assertions in its motion were improper in a motion to dismiss.

The district court sustained Audiox’s arguments.  According to the district court, Monster’s arguments “goes well beyond the four corners of the complaint and requires the court to characterize the scope of the ‘360 and the ‘544 patents, as well as the ‘907 Registration.” Monster was improperly asking the court to consider the functionality of the subject of the ‘907 Registration.  Monster was inappropriately asking the court to determine issues of falsity and materiality of particular statements.  The district court found that the complaint contained sufficient facts in support of its causes of action at this pleading stage to state claims for relief. Issues of truth or falsity of statements before the USPTO cannot be determined in context of motion for summary judgment (West Indian Sea Island Cotton Ass’n, Inc. v. Threadtex, Inc., 761 F. Supp. 1041, 1052 (S.D.N.Y., 1991)).

In view of the foregoing analysis, the district court denied Monster’s motion to dismiss Counts IV and V of the complaint.

View a PDF of the judicial opinion

Companies Mentioned

Audiovox Corp.

Monster Cable Products, Inc.

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