Security USA Services, LLC v. Invariant Corp.

District Court, D. New Mexico·Decided June 1, 2022·No. 1:20-cv-01100·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW MEXICO _______________________

SECURITY USA SERVICES, LLC,

Plaintiff / Counter-defendant,

v. No. 1:20-cv-01100-KWR-KRS INVARIANT CORP., and HYPERION TECHNOLOGY GROUP, INC.,

Defendants / Counterclaimants.

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court upon Defendants’ Motion to Cancel Plaintiff’s Trademark Registration (Doc. 96). Having reviewed the parties’ pleadings and the applicable law, the Court FINDS that Defendants’ Motion is WELL TAKEN and therefore is GRANTED. This case is a trademark dispute over threat or gunshot detection systems. Both sides market and sell gunshot detection systems under the “FIREFLY” mark. Plaintiff registered the mark in 2017, but Defendants assert they continuously used the FIREFLY mark in commerce first, as early as 2011. Plaintiff asserted various claims alleging that Defendants infringed on their mark. The Court denied those claims as Plaintiff failed to show that it exercised prior use of the mark in commerce. Doc. 94. Now Defendants seek to cancel Plaintiff’s “FIREFLY” trademark registration pursuant to 15 U.S.C. § 1119. As explained below, the Court finds that Defendants’ cancellation counterclaim is meritorious. The undisputed record reflects that Plaintiff cannot assert priority over Defendants, because Defendants used the FIREFLY mark continuously in commerce before Plaintiff did so. Plaintiff is not the “owner” of the FIREFLY mark, a requirement for trademark registration. The Court therefore cancel’s Plaintiff’s trademark registration for FIREFLY with the United States Patent and Trademark Office. BACKGROUND I. General Background. Plaintiff’s first three claims arise under the federal trademark statute, the Lanham Act, 15

U.S.C. § 1114(1) (federal trademark infringement); 15 U.S.C. § 1125(a) (federal unfair competition); and 15 U.S.C. § 1125(c) (dilution under federal law). Plaintiff also asserts claims under New Mexico law, including common law unfair competition and trademark dilution under New Mexico law (NMSA § 57-3B-15). Doc. 1-1. Plaintiff requested that the Court issue a preliminary injunction prohibiting Defendants from using the FIREFLY mark. The Court denied the preliminary injunction motion. Defendants filed a motion for summary judgment on Plaintiff’s claims. Doc. 61. Defendants primarily argued that Plaintiff was not the true owner of the “FIREFLY” mark, because Plaintiff could not show prior use of the trademark in commerce. The Court agreed and found in

favor of Defendants and dismissed Plaintiff’s claims. Doc. 94. Plaintiff moved to set aside the summary judgment ruling. Doc. 99. Plaintiff asserted (1) new evidence allegedly showing prior use of the trademark in commerce and (2) that the Court clearly erred as a matter of law. The Court disagreed and concluded that Plaintiff failed to show prior use of the trademark in commerce. The Court therefore denied the motion to set aside. Doc. 112. Defendants filed affirmative defenses and counterclaims, asserting that they are the true owners of the mark based on prior and continuous use going back to 2011. Doc. 16. Defendants asserted the following counterclaims: Count 1: False designation of Origin under 15 U.S.C. § 1125(a); Count 2: Unfair Competition; and Count 3: Cancellation of Registration under 15 U.S.C. § 1119. This matter concerns Count 3. II. Undisputed facts as to summary judgment motion.1

Defendants requested that the Court consider the facts in the summary judgment record. Plaintiff did not object, but requested that the Court hold off on ruling on this motion until it ruled on the motion to set aside. Now that the motion to set aside has been denied, this motion is ripe. As in the motion to set aside, here Plaintiff argues that (1) new evidence compels a different result and (2) the Court erred as a matter of law. Therefore, the Court will consider the summary judgment record, along with all new facts presented by Plaintiff in this motion. In mid-2011, Defendants began jointly developing their gunshot detection system named FIREFLY. The U.S. Army commissioned and paid for a commercial demonstration of FIREFLY in August 2011, in Yuma, Arizona. Doc. 61 at 3, Undisputed Material Fact (“UMF”) 1.

FIREFLY was completed soon after and was put on sale at an international trade show in San Francisco in December 2011. The first four FIREFLY systems were sold in March 2012. Id., UMF 2. Since its first sale, FIREFLY has been marketed and sold nationwide. Id. at UMF 3. Defendants’ average sales of FIREFLY products are approximately 19 units per year between the

1 These facts are taken from the Court’s opinion on summary judgment. See Doc. 94. Initially, the Court notes that Defendants’ summary judgment statement of facts 1-7 are properly supported in the record and not genuinely disputed. Although Plaintiff nominally disputes Defendants’ facts, the Court finds that Plaintiff’s disputes are not responsive or relevant to Defendants’ asserted facts, and therefore Plaintiff does not create genuine disputes as to Defendants’ facts 1-7. Plaintiff asserted its own separate facts, which the Court generally found to be irrelevant or unsupported. See docs. 77, 94. Even if its additional facts were relevant, the Court finds that Plaintiff’s exhibits 1-6, 11, 13, 14, 15, 16, 171, 18, and 191 (doc. 77) attached to its summary judgment response should be excluded because they rely upon inadmissible hearsay. years 2012 -2021. Id. at UMF 4. For each system sold, the FIREFLY trademark was placed on the system’s packaging, handbook, and internal circuitry. The name is also prominently displayed on marketing material, including Defendant Invariant’s website. Id. at UMF 5. Plaintiff first began using the FIREFLY mark in connection with its gunshot detection system on October 1, 2014. Id. at UMF 6. Plaintiff registered the mark on November 7, 2017.

Id. at UMF 7. DISCUSSION Defendants assert that the Court should look to the summary judgment record and the summary judgment ruling (Doc. 94) to cancel Plaintiff’s trademark registration. Defendants assert that the Court’s prior ruling that Defendants had demonstrated prior use of the trademark necessitates canceling Plaintiff’s trademark registration. Plaintiff did not object to the Court looking to the summary judgment record but requested that the Court stay ruling on this motion pending resolution of its motion to set aside the summary judgment decision. See Doc. 100 at 1. The Court stayed ruling on this decision until the motion to set aside was resolved. Now that the

Court has denied Plaintiff’s motion to set aside, the Court will look to (1) the summary judgment record and (2) all exhibits attached to this briefing on the motion to cancel registration. See Doc. 96 (motion to cancel trademark registration); Doc. 100 (Plaintiff’s response to motion to cancel); Doc. 103 (Defendants’ reply). Plaintiff essentially repeats arguments it made in the motion to set aside, which the Court denied. Nevertheless, the Court has reviewed all twelve exhibits Plaintiff attached to its response to the motion to cancel (Doc. 100), and the summary judgment record, and concludes that Plaintiff has failed to establish ownership or prior use of the FIREFLY trademark. For the reasons stated by the Court in its prior opinions (Docs.

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Security USA Services, LLC v. Invariant Corp., (D.N.M. 2022).

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