United States District Court, E.D. Michigan, Southern Division
ABG PRIME GROUP, INC., Plaintiff/Counter-Defendant.
INNOVATIVE SALON PRODUCTS, INC., d/b/a LOMA Defendant/Counter-Plaintiff,
Steven Whalen Magistrate Judge.
OPINION AND ORDER DENYING MOTION TO DISMISS
J. MICHELSON UNITED STATES DISTRICT COURT JUDGE.
Greenberg, Adam Greenberg, and Bryan Acrich formed ABG Prime
Group to resell beauty supplies on Amazon. (R. 1, PID 3.) In
2016, ABG Prime opened an Amazon store and began to sell
LOMA-brand hair-care products. (Id. at 4-6.) ABG
buys LOMA's products from an authorized LOMA distributor
and then resells the identical, unopened products on
ABG's Amazon store. (Id. at 5-6.)
LOMA never agreed to let ABG sell its products on Amazon. So
starting in 2017, LOMA filed a series of complaints with
Amazon requesting that the retail giant shutter ABG's
store. (Id. at 6-7.) Each time, Amazon suspended
ABG's account. (Id. at 7-8.)
the final Amazon suspension, and anticipating an eventual
trademark suit from LOMA, ABG filed a declaratory judgment
action on LOMA's trademark rights. According to ABG,
because it lawfully purchased LOMA's products from a LOMA
distributor, the first-sale doctrine protects ABG from any
liability for trademark infringement.
disagrees. LOMA filed a counter-complaint alleging trademark
infringement and false designation of origin. ABG now moves
to dismiss the counter-complaint.
following factual allegations from the counter-complaint are
accepted as true. See Ashcroft v. Iqbal, 556 U.S.
662, 679 (2009).
Hanen founded Innovative Salon Products to sell high-quality
beauty supplies to salons, spas, barbershops, and beauty
schools (a market informally known as the salon channel of
trade). (R. 10, PID 92.) In 1991, Hanen first started using
the LOMA mark. Fourteen years later, the U.S. Patent and
Trademark Office added the LOMA mark to the Principle
Register. (Id.) The mark is now incontestable under
15 U.S.C. § 1065. (Id.) In that time “the
mark has become well known among consumers as a distinctive
source indicator of high quality goods.” (Id.
at PID 92- 93.)
a source indicator because the products come with training,
support, and warranties. (R. 10, PID 94.) LOMA staff,
including Hanen, visit salons to show salon staff how to use
LOMA products and provide one-on-one consultations.
(Id.) And LOMA provides the same level of training
and support to its distributors. (R. 10, PID 94.) When LOMA
brings a new distributor on board, staff train the
distributor's salespeople on the proper uses for LOMA
products. (Id.) LOMA wants to ensure that
distributors educate salons and spas on the proper uses for
LOMA products, and understand LOMA's product support.
centerpiece of LOMA's product support is an unconditional
satisfaction and replacement guarantee. LOMA recognizes that
salons and their hair-care professionals are the best
ambassadors for the LOMA brand. (Id.) So LOMA tells
the distributors about the guarantee, and once LOMA products
reach salon and spa shelves, LOMA's Brand Managers
conduct routine visits to salons and spas to tell the
hair-care professionals about the guarantee. (R. 10, PID 95.)
It is this guarantee that ultimately persuades salons and
customers to purchase the products and has been a primary
driver of LOMA's growth. (Id.) Within the salon
channel of trade, LOMA has been one of the “fastest
growing brands in the professional hair care business . . .
for each of the last two years.” (Id.)
strives to ensure that its products are sold exclusively
within the salon channel of trade. (R. 10, PID 96.)
LOMA's distributors must sign a non-diversion agreement
restricting to whom distributors may sell LOMA products.
(Id.) Under the terms of the non-diversion
agreement, distributors may only sell to “Salon[s],
Spa[s], Barbershop[s][, ] or Beauty Schools that have no less
than 50% of the square footage of their facility devoted to
professional services and no more than 50% of the square
footage of the store dedicated to retail display and
sales.” (Id. at 97.) The non-diversion
agreement further prohibits salons, spas, barbershops, and
beauty schools from reselling LOMA products on the internet.
(Id. at PID 97-98.)
Beauty Supply is an authorized distributor of LOMA products
and signed LOMA's non-diversion agreement. (Id.)
ABG purchased LOMA's products from Windsor. (R. 10, PID
97.) And yet, ABG does not operate a salon, spa, barbershop,
or beauty school. (Id. at 98.) Instead, 100 percent
of ABG's revenue comes from selling its wares on Amazon.
(Id.) So Windsor never should have sold ...