Friday, October 11, 2013

Failure to allege agency relationship leads to fee award

Anastasia Int’l, Inc. v. EM Online Pty Ltd., No. 13 Civ. 2919, 2013 WL 5550211 (S.D.N.Y. Oct. 4, 2013)

Anastasia sued various defendants for trademark infringement and false advertising, along with related state torts.  Anastasia runs, an “international dating service which, for a fee, matches men in the United States with women located in Russia and the Ukraine,” and alleged that EM Online offered a competing service through  Defendant Juha Natunen owned, and allegedly contained fictional accounts of and complaints about Anastasia’s members’ experiences. The “fraud” site stated that the women featured in Anastasia’s dating service are “paid employees of or dating agencies,” and also allegedly contained a link to that was removed a few days after EM Online received Anastasia’s complaint.  Anastasia alleged that EM Online or its agents hired Natunen to create the “fraud” site to disparage Anastasia’s services and divert customers.

Finding that Anastasia utterly failed to allege facts showing an agency relationship or any connection between the two defendants, the court found the complaint implausible and dismissed it, with a fee award for EM Online.

An agency relationship required a showing that Natunen acted subject to EM Online’s direction and control.  Anastasia failed to plead specific allegations allowing an inference of such a relationship. The strongest factual claim was the alleged link to removed shortly after EM Online received the complaint, but that temporary proximity “is not enough to show any connection or communication whatsoever, let alone an agency relationship, between Natunen and EM Online.”  Anastasia’s claim of a paid relationship between the parties on “information and belief” was merely a legal conclusion couched as a factual allegation.  “Without further allegations of facts showing a connection between the Defendants, it is just as plausible that Natunen created this website himself as that he created the website pursuant to an agency relationship with EM Online.”

Lanham Act fees are only available in the Second Circuit on evidence of fraud or bad faith.  Anastasia filed three versions of its complaint, each time refusing to dismiss EM Online as a defendant despite its failure to allege any relationship between EM Online and  This was done without any reasonable basis in fact or law, and the court inferred an anticompetitive motive, making the case exceptional and allowing EM Online to recover reasonable fees and costs.

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