United States District Court, D. South Carolina, Columbia Division
C. NORTON UNITED STATES DISTRICT JUDGE.
matter is before the court on a motion to dismiss filed by
U.S. Foods, Inc., ECF No. 23, and a motion to dismiss filed
by Hymans Seafood Company, Inc., Eli Hyman, Aaron Hyman, Brad
Gena, and Holy City Skin Products Inc., ECF No. 16. For the
reasons set forth below, the court grants in part and denies
in part the motions to dismiss. Additionally, the court
orders plaintiff Secret of the Islands (“SOTI”)
to file an amended complaint and instructs it to delineate
which facts apply to what claims as well as which claim is
levied against which defendant.
in the business of selling soaps and personal skin care
products to retailers and packaging the products in mason
jars. Compl. ¶ 16. SOTI uses a marketing method
including slogans such as “Turn your bathroom into a
profit center, ” “turn your bathroom into a
display, ” “turn your bathroom into a showroom,
” and “turn your bathroom into a display and
showroom.” Id. ¶ 1(A). SOTI brought this
action against defendants, Hymans Seafood Company, Inc.
(“Hymans”), Eli Hyman (“Eli Hyman”),
Aaron Hyman (“Aaron Hyman”), and Brad Gena
(“Gena”) (Hymans, Eli Hyman, Aaron Hyman, and
Gena collectively “Hyman Group”), Holy City Skin
Products, Inc., (“HC”), (Hyman Group, and HC
collectively “Hyman defendants”), and U.S. Foods,
Inc. (“US Foods”), USA Distributions, LLC
(“USA Distributions”) (all defendants
collectively referred to as “defendants”).
Id. at 1. Hyman defendants were SOTI's clients
before creating and operating their own company called Holy
City Skin Products, a company that sells personal skin care
products. Id. ¶ 1(A)-(P).
alleges that defendants have been displaying similar
products, samples, and displays using a similar marketing
method and display of “Turn your bathroom into a
display.” Id. ¶ 1(B). In some cases, SOTI
alleges defendants have used SOTI's products to fill
mason jars and sell it as their own product. Id.
¶ 1(C). SOTI alleges that its manager and then its sales
representative contacted Eli Hyman to inform him that Hymans
was selling SOTI's product in infringing jars and that it
was a violation of SOTI's intellectual property rights.
Id. ¶ 1(E). In July 2012, SOTI's manager
Johnny Hoy (“Hoy”) spoke to U.S. Foods and
informed U.S. Foods that Hymans had stolen SOTI's
marketing and products. Id. ¶ 8. As a result of
defendants' intellectual property infringement, SOTI was
forced to decrease the sales price of its products from 35%
to 60% and has lost a number of sales accounts to Hyman
defendants. Id. ¶ 1(K).
filed this action on February 3, 2017, alleging a number of
claims against defendants: (1) unfair competition in violation of
the Lanham Act, 15 U.S.C. § 1051 et seq.; (2)
false advertising in violation of the Lanham Act; (3) false
designation of origin in violation of section 1125 of the
Lanham Act, which protects both registered trademarks and
unregistered and valid trademarks; (4) trademark violation
under the Lanham Act; (5) trade dress infringement in
violation of the Lanham Act; (6) unfair competition under the
South Carolina Unfair Trade Practices Act, SC Code Ann.
§ 39- 5-10, et seq. (“SCUTPA”); (7)
deceptive trade practices under SCUTPA; (8) common law unfair
competition; (9) action for damages due to federal copyright
infringement; (10) injunctive relief to impound records and
destroy infringing articles under 17 U.S.C. § 503; (11)
accruing damages for U.S. Patent Pending; (12) trade secrets
including formulas, methods of marketing, general sales
practices, customer lists under the S.C. Trade Secrets Act;
(13) trade secret formulas and reverse engineering under the
S.C. Trade Secrets Act. Compl. pp. 1-32. The court groups the
claims into the following categories for ease of reference:
(1) Lanham Act; (2) SCUTPA; (3) common law unfair
competition; (4) action for damages due to federal copyright
infringement; (5) injunctive relief under 17 U.S.C. §
503; (6) damages for U.S. Patent Pending; (7) S.C. Trade
Secrets Act. SOTI asks the court for injunctive relief and to
grant damages of $20, 160, 000 for the decrease in sales
prices, $31, 104, 000 for loss of accounts, and $129, 600,
000 for online reorders, as well as full costs and
defendants brought a motion to dismiss on March 7, 2017. ECF
No. 16. SOTI responded on March 21, 2017. ECF No. 18. U.S.
Foods filed a motion to dismiss on March 24, 2017. ECF No.
21. SOTI responded on April 4, 2017. ECF No. 23. U.S. Foods
replied on April 18, 2017. ECF No. 29. Both motions have been
fully briefed and are now ripe for the court's review.
12(b)(6) motion for failure to state a claim upon which
relief can be granted “challenges the legal sufficiency
of a complaint.” Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009) (citations omitted); see
also Republican Party of N.C. v. Martin, 980 F.2d 943,
952 (4th Cir.1992) (“A motion to dismiss under Rule
12(b)(6) . . . does not resolve contests surrounding the
facts, the merits of a claim, or the applicability of
defenses.”). To be legally sufficient, a pleading must
contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
12(b)(6) motion should not be granted unless it appears
certain that the plaintiff can prove no set of facts that
would support his claim and would entitle him to relief.
Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th
Cir. 1993). When considering a Rule 12(b)(6) motion, the
court should accept all well-pleaded allegations as true and
should view the complaint in a light most favorable to the
plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251
(4th Cir. 1999); Mylan Labs., Inc., 7 F.3d at 1134.
“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 Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
may have a number of meritorious claims against
defendants. However, the court is precluded from
considering a number of these claims by procedural bars,
namely the statute of limitations. The court organizes its
analysis by first discussing procedural doctrines that bar
entire sets of claims, and then moves to discuss each count
in the complaint. It gives SOTI leave to amend the complaint.
Statute of Limitations
defendants first argue that the statute of limitations bars
all of SOTI's SCUTPA and S.C. Trade Secrets claims. ECF
No. 16 at 4. The court agrees.
applicable statute of limitations for SCUTPA is three years.
Abrasives-S., Inc. v. Awuko Abrasives Wandmacher GmbH
& Co. KG, 2016 WL 8116893, at *2 (D.S.C. Aug. 17,
2016). The statute of limitations for trade secret
misappropriation is also three years. S.C. Code Ann. §
39-8-70 (2016). Under “the discovery rule, the statute
of limitations begins to run from the date the injured party
either knows or should know, by the exercise of reasonable
diligence, that a cause of action exists for the wrongful
conduct.” True v. Monteith, S.E.2d 615, 616
that starting point, the court now turns to determining which
claims are time-barred under the statute of limitations. In a
section of the complaint headlined “history of
Plaintiffs putting defendant USF on notice since 2012,
” SOTI discusses that in July 2012, Johnny Hoy, the
manager at SOTI, “told [US Foods] that Hymans stole the
marketing, product, intellectual property and put him on
notice.” Compl. ¶ 8. SOTI alleges that in
response, the U.S. Foods Representative answered that
“that is between you and Hymans.” Id.
This proves that at least by July 2012, SOTI was aware that
Hyman defendants were embarking on infringing activity and
that U.S. Foods was selling the “pirated” goods.
The complaint was not filed until February 3, 2017-nearly
five years after SOTI knew that a cause of action for
intellectual property infringement existed. Applying the
discovery rule, the statute of limitations for SOTI's
claims against the Hyman defendants and U.S. Foods related to
intellectual property and infringement began to run in July
2012 at the latest. Even viewing the pleadings in a light
most favorable to SOTI, it is clear that the SCUTPA and S.C.
Trade Secret claims accrued by July 2012. Therefore, all of
SOTI's SCUTPA and S.C. trade secret misappropriation
claims are barred by the three-year statute of limitations.
statute of limitations analysis for SOTI's Lanham Act
claims is more nuanced. Although the Lanham Act does not
provide an express statute of limitations, the Fourth Circuit
has stated that “it is proper to use the analogous
state limitations period for Lanham Act suits.” PBM
Prod., LLC v. Mead Johnson Co., 639 F.3d 111, 121 (4th
Cir.2011). Under South Carolina law, the relevant and
applicable statutory period is three years. See S.C.
Code Ann. § 15-3-530 (three-year limitations period for
actions other than for recovery of real property); S.C. Code
Ann. § 39-5-150 (three-year limitations period for
actions under the South Carolina Unfair Trade ...