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Mazcon, a Kurtz Bros. Co., LLC v. BEG Group LLC

United States District Court, W.D. Pennsylvania

December 3, 2019

MAZCON, A KURTZ BROS. CO., LLC, Plaintiff,
v.
BEG GROUP LLC, and JOSEPH GRECO, Defendants.

         Re: Motion for Preliminary Injunction

          MEMORANDUM OPINION WITH FINDINGS OF FACT AND CONCLUSIONS OF LAW

          SUSAN PARADISE BAXTER, UNITED STATES DISTRICT JUDGE.

         Pending before this Court is Defendants' motion for preliminary injunction [ECF No. 29] seeking to enjoin Plaintiff from prosecuting two Petitions for Cancelation at the United States Patent and Trademark Office ("USPTO"). Oral argument on the motion was held on October 30, 2019.[1]

         I. Procedural History

         On February 15, 2019, Plaintiff Mazcon, a Kurtz Brothers Company, an industry leader in sediment control, initiated this civil action. ECF No. 1. As Defendants to this action, Plaintiff names the BEG Group LLC, a direct competitor, and its President Joseph Greco.

         The parties sell competing products and each accuses the other of sowing confusion in the market. Plaintiff raises four separate legal claims: Count I - False Advertising under the Lanham Act, 15 U.S.C. § 1125(A); Count II - Fraudulent Registration under the Lanham Act, 15 U.S.C. § 1120; Count III -Misappropriation of Trade Secrets; and Count IV - Unfair Competition. ECF No. 1. Defendants filed an Answer and a Counterclaim against Plaintiff: Count I - Trademark Infringement under the Lanham Act, 15 U.S.C. § 1114; Count II - Unfair Competition under both the Lanham Act, 15 U.S.C. § 1125 and at common law; and Count III -Trademark Infringement at common law. ECF No. 7.

         On September 23, 2019, Plaintiff Mazcon filed two Petitions for Cancelation with the USPTO. These Petitions seek the cancelation of the federal registrations on Defendants' trademarks BIG SWITCH and THE BIG SWITCH. Defendants have filed a motion for preliminary injunction, seeking to enjoin Plaintiff from prosecuting both Petitions for Cancelation. The present dispute between the parties, on this motion for preliminary injunction, arises out of the applicability of the "first filed rule" and whether based on this case being the first filed, the Petitions for Cancelation at the USPTO should be stayed. Although there are four counts in the complaint and arguably four counts in the counterclaim, the gist of the complaint as it relates to the pending motion for preliminary injunction is only cancelation of the mark THE BIG SWITCH.

         II. Standard of Review on Motion for First-filed Injunction

         The "first-filed rule" allows a district court "to enjoin the prosecution of 'proceedings of the same parties and the same issues' in a court of coordinate jurisdiction." Specialty Insurance Agency, Inc. v. Walter Kaye Associates, Inc., 1989 WL 65618, at *2 (D. NJ. Jun.7, 1989) quoting E.E.O.C. v. University of Pennsylvania, 850 F.2d 969, 971 (3d Cir. 1988).[2]

         "As explained by the Third Circuit: The first-filed rule encourages sound judicial administration and promotes comity among federal courts of equal rank. It gives courts 'the power' to enjoin the subsequent prosecution of proceedings involving the same parties and the same issues already before another district court." Phoenix Insurance Co. Ltd. v. Teva Pharmaceutical Industries Ltd., 381 F.Supp.3d 416, 419 (E.D. Pa. Feb. 22, 2019) quoting E.E.O.C. v. Univ. of Pa., 850 F.2d 969, 971 (3d Cir. 1988). "[A]lthough a 'first-filed injunction is technically directed at the parties, the order is tantamount to exercising a coordinate court's power to control its own cases." Specialty Ins. Agency, 1989 WL 656218, at *2.

         A court may enjoin the parties "from proceeding in a subsequently-filed suit where (a) the court has jurisdiction, (b) the suit in whose favor the injunction is sought was filed first, (c) the issues are the same, (d) the parties are the same, (e) parallel litigation will mean duplicate expenditures of judicial effort and the possibility of inconsistent judgments, and (e) the injunction will not aid the movant in an inequitable strategy or work an impermissible hardship on one or more of the parties."[3] Specialty Ins. Agency, 1989 WL 65618, at *5, quoting A. O. Smith Corp. v. F.T.C., 530 F.2d 515, 525 (3d Cir. 1976).

         With this standard of review in mind, the Court makes Findings of Fact and Conclusions of Law granting the motion for preliminary injunction. See Federal Rule of Civil Procedure 52.

         III. Findings of Fact

         The Present Litigation

         1. The instant action was filed in this Court on February 15, 2019.

         2. Plaintiff Mazcon and Defendant BEG Group are direct competitors in the sediment control industry.

         3. Joseph Greco is an officer and director of BEG.

         4. Mr. Greco owns Registration No. 5, 306, 024 ('024) for the mark THE BIG SWITCH. As part of the present lawsuit, Mazcon seeks cancelation of the trademark registration for THE BIG SWITCH. The relief sought in the complaint is very broad but does include a specific request that the Commissioner of the USPTO be directed to cancel '024 for THE BIG SWITCH. See ECF No. 1, pages 36-37 ("(g) Order that Defendants committed fraud in procuring and maintaining trademark registration No. 5, 306, 024 for the mark THE BIG SWITCH by making and maintaining false, material representations of fact in connection with a trademark application with the intent to deceive the U.S. Patent and Trademark Office and award Plaintiff damages associated with misleading customers regarding the same; (h) Order the Commissioner of the USPTO to cancel trademark registration No. 6, 306, 024 [THE BIG SWITCH] consistent with this findings...").

         5. Defendants BEG Group and Mr. Greco filed a counterclaim claiming that Mazcon has infringed on its valid trademark of THE BIG SWITCH through Mazcon's sale of SWITCH SOCK. As relief, Defendants seek "the abandonment of Mazcon's U.S. ...


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