Case 1:18-cv-02637-LGS Document 37 Filed 05/18/18 Page 1 of 31

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK
X

SM KIDS, LLC, as successor-in-interest to :

STELOR PRODUCTIONS, LLC, :
:
Plaintiff, :
:
- against - : Case No. 18 Civ. 2637 (LGS)
:
GOOGLE LLC, ALPHABET INC., XXVI :
HOLDINGS, INC., and JOHN AND/OR JANE :
DOES 1-100, Inclusive, :
:
Defendants. :
X

PLAINTIFF’S MEMORANDUM OF LAW IN OPPOSITION TO

DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT

DAVIS WRIGHT TREMAINE LLP

John M. Magliery
johnmagliery@dwt.com
Geoffrey S. Brounell
geoffreybrounell@dwt.com
1251 Avenue of the Americas, 21st Floor
New York, New York 10020
Tel: (212) 489-8230
Fax: (212) 489-8340

Robert Wyman (admitted pro hac vice)

bobwyman@dwt.com
865 S. Figueroa Street, Suite 2400
Los Angeles, California 90017
Tel: (213) 633-6808
Fax: (213) 633-6899

Attorneys for Plaintiff SM Kids, LLC

 Case 1:18-cv-02637-LGS Document 37 Filed 05/18/18 Page 2 of 31

TABLE OF CONTENTS
Page

TABLE OF AUTHORITIES .......................................................................................................... ii

PRELIMINARY STATEMENT .................................................................................................... 1

FACTUAL BACKGROUND ......................................................................................................... 3

ARGUMENT .................................................................................................................................. 5

I. LEGAL STANDARD ............................................................................................. 5

II. THE COMPLAINT SHOULD NOT BE DISMISSED PURSUANT TO
RULE 12(b)(1) ........................................................................................................ 6
A. Defendants’ “Standing” Argument Presents A Non-Jurisdictional
Affirmative Merits Defense Inappropriate For Resolution On This
Motion ......................................................................................................... 7
B. Under The Governing Standard, SM Kids Pleads “Standing” ................. 10
C. The Underlying Trademark Assignments Are Valid ................................ 12
D. In Any Event, The Statutorily Mandated Remedy For Dismissal Of
A Removed Matter Pursuant To Rule 12(b)(1) Is Remand To State
Court, Not Dismissal................................................................................. 14
III. THE COMPLAINT SHOULD NOT BE DISMISSED PURSUANT TO
RULE 12(b)(6) ...................................................................................................... 14
A. The Breach Of Contract Claim Should Not Be Dismissed Pursuant
To Section 13 Of The Agreement ............................................................. 15
B. The Breach Of Contract Claim Should Not Be Dismissed Pursuant
To The So-Called “Safe Harbor” In Section 7(4) Of The
Agreement ................................................................................................. 19
C. The Breach Of Contract Claim Should Not Be Dismissed Due To
Any Failure To Allege “Likelihood Of Confusion” ................................. 21
D. The Remainder of Defendants’ Arguments Are Similarly Without
Merit .......................................................................................................... 23

CONCLUSION ............................................................................................................................. 25

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 Case 1:18-cv-02637-LGS Document 37 Filed 05/18/18 Page 3 of 31

TABLE OF AUTHORITIES

Page(s)

Federal Cases

Ahmed v. GEO USA LLC,

No. 14 Civ. 7486 (JMF), 2015 WL 1408895 (S.D.N.Y. Mar. 27, 2015) ................................23

Beautiful Home Textiles (USA), Inc. v. Burlington Coat Factory Warehouse

Corp.,
No. 13 Civ. 1725 (LGS), 2013 WL 3835191 (S.D.N.Y. July 25, 2013) ...........................11, 15

Beazley Insurance Co. v. Ace American Insurance Co.,

150 F. Supp. 3d 345 (S.D.N.Y. 2015)..................................................................................9, 10

Berni v. Int’l Gourmet Rests. of Am., Inc.,

838 F.2d 642 (2d Cir. 1988).......................................................................................................7

Burgess v. Gilman,
316 F. App’x 542 (9th Cir. 2008) ............................................................................................17

Chamilia, LLC v. Pandora Jewelry, LLC,

No. 04 Civ. 6017 (KMK), 2007 WL 2781246 (S.D.N.Y. Sept. 24, 2007) ..............................18

Clark & Freeman Corp. v. Heartland Co.,

811 F. Supp. 137 (S.D.N.Y. 1993) ......................................................................................8, 12

Cordell v. McGraw-Hill Cos.,

No. 12 Civ. 0637 (ALC), 2012 WL 5264844 (S.D.N.Y. Oct. 23, 2012),
aff’d, 525 F. App’x 22 (2d Cir. 2013) ......................................................................................15

Crash Dummy Movie, LLC v. Mattel, Inc.,

601 F.3d 1387 (Fed. Cir. 2010)................................................................................................17

Cumulus Media, Inc. v. Clear Channel Commc’ns, Inc.,

304 F.3d 1167 (11th Cir. 2002) ...............................................................................................17

Diverse Partners, LP v. AgriBank, FCB,

No. 16 Civ. 9526 (VEC), 2017 WL 4119649 (S.D.N.Y. Sept. 14, 2017) ...............................11

Eternity Glob. Master Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y.,
375 F.3d 168 (2d Cir. 2004).....................................................................................................22

Falchi v. Cyber Champion Int’l, Ltd.,

No. 02 Civ. 8072 (JSR), 2003 WL 22070529 (S.D.N.Y. Sept. 5, 2003) ...................................7

Faulkner v. Beer,
463 F.3d 130 (2d Cir. 2006).....................................................................................................17

ii
 Case 1:18-cv-02637-LGS Document 37 Filed 05/18/18 Page 4 of 31

Five Star Dev. Resort Cmtys., LLC v. iStar RC Paradise Valley LLC,
No. 09 Civ. 2085 (LTS), 2010 WL 2697137 (S.D.N.Y. July 6, 2010) ....................................25

Germain v. M & T Bank Corp.,

111 F. Supp. 3d 506 (S.D.N.Y. 2015)........................................................................................5

Glow Indus., Inc. v. Lopez,

273 F. Supp. 2d 1095 (C.D. Cal. 2003) .....................................................................................8

interState Net Bank v. NetB@nk, Inc.,

348 F. Supp. 2d 340 (D.N.J. 2004) ............................................................................................8

ITC Ltd. v. Punchgini, Inc.,

482 F.3d 135 (2d Cir. 2007).....................................................................................................18

King Zak Indus., Inc. v. Toys 4 U USA Corp.,

No. 16 Civ. 9676 (CS), 2017 WL 6210856 (S.D.N.Y. Dec. 8, 2017) .....................................24

Lazar v. Cecelia Co.,

30 F. Supp. 769 (S.D.N.Y. 1939) ............................................................................................17

In re Lehman Bros. Holdings, Inc.,

No. 08 Civ. 13555 (SCC), 2015 WL 7194609 (S.D.N.Y. Sept. 16, 2015) ..............................16

Leidig v. Buzzfeed, Inc.,

No. 16 Civ. 542 (VMG) (WG), 2017 WL 6512353 (S.D.N.Y. Dec. 19, 2017) ......................18

Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992) .................................................................................................................11

Makarova v. United States,

201 F.3d 110 (2d Cir. 2000).......................................................................................................5

Marshak v. Green,
746 F.2d 927 (2d Cir. 1984)...........................................................................................8, 12, 13

Muller-Paisner v. TIAA,
289 F. App’x 461 (2d Cir. 2008) .............................................................................................13

Nat’l Util. Serv., Inc. v. Tiffany & Co.,

No. 07 Civ. 3345 (RJS), 2009 WL 755292 (S.D.N.Y. Mar. 20, 2009) ...................................21

Novak v. Tucows, Inc.,

No. 06 Civ. 1909 (JFB) (ARL), 2007 WL 922306 (E.D.N.Y. Mar. 26, 2007),
aff’d, 330 F. App’x 204 (2d Cir. 2009) ....................................................................................18

In re NYSE Specialists Secs. Litig.,

503 F.3d 89 (2d Cir. 2007).........................................................................................................6

iii
 Case 1:18-cv-02637-LGS Document 37 Filed 05/18/18 Page 5 of 31

Pace v. Schwartz,
680 F. Supp. 2d 591 (S.D.N.Y. 2010)......................................................................................25

Patsy’s Italian Rest., Inc. v. Banas,

658 F.3d 254 (2d Cir. 2011).....................................................................................................17

Pilates, Inc. v. Current Concepts, Inc.,

120 F. Supp. 2d 286 (S.D.N.Y. 2000)........................................................................................7

Pom Wonderful, LLC v. Starbuzz Tobacco, Inc.,

2011 WL 13225094 (C.D. Cal. June 6, 2011) .........................................................................18

Postlewaite v. McGraw-Hill, Inc.,

411 F.3d 63 (2d Cir. 2005).................................................................................................19, 20

Prince of Peace Enterprises, Inc. v. Top Quality Food Market, LLC,

760 F. Supp. 2d 384 (S.D.N.Y. 2011)........................................................................................8

Pub. Free Will Corp. v. Verizon Commc’ns Inc.,

2017 WL 1047330 (E.D.N.Y. Mar. 17, 2017) .........................................................................23

Pulse Creations, Inc. v. Vesture Grp., Inc.,

154 F. Supp. 3d 48 (S.D.N.Y. 2015)........................................................................................23

Raines v. Byrd,
521 U.S. 811 (1997) .................................................................................................................11

Ritani, LLC v. Aghjayan,

880 F. Supp. 2d 425 (S.D.N.Y. 2012)......................................................................................23

Ross v. Bank of Am., N.A.(USA),

524 F.3d 217 (2d Cir. 2008).....................................................................................................11

Sik Gaek, Inc. v. Yogi’s II, Inc.,

No. 10 Civ. 4077 (ARR) (VVP), 2013 WL 2408606 (E.D.N.Y. June 3, 2013) ....................8, 9

Taylor v. Fin. Recovery Servs., Inc.,

252 F. Supp. 3d 344 (S.D.N.Y. 2017), aff’d, 886 F.3d 212 (2d Cir. 2018) .............................11

Topps Co. v. Cadbury Stani S.A.I.C.,

526 F.3d 63 (2d Cir. 2008)...................................................................................................7, 15

Varga v. McGraw Hill Fin., Inc.,

36 F. Supp. 3d 377 (S.D.N.Y. 2014)........................................................................................14

Wilson v. Merrill Lynch & Co.,

671 F.3d 120 (2d Cir. 2011).......................................................................................................6

iv
 Case 1:18-cv-02637-LGS Document 37 Filed 05/18/18 Page 6 of 31

State Cases

ACE Secs. Corp. v. DB Structured Prods., Inc.,

25 N.Y.3d 581 (2015) ..............................................................................................................16

Forman v. Guardian Life Ins. Co. of Am.,

76 A.D.3d 886 (1st Dep’t 2010) ..............................................................................................23

Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co.,

86 N.Y.2d 685 (1995) ..............................................................................................................15

Federal Statutes

15 U.S.C.
§ 1125.......................................................................................................................................23
§ 1127 (Lanham Act) ....................................................................................................... passim

28 U.S.C. § 1447(c) .......................................................................................................................14

Rules

Federal Rules of Civil Procedure

9(c) ...........................................................................................................................................15
12(b)(1) ............................................................................................................................ passim
12(b)(6) ............................................................................................................................ passim

Federal Rules of Evidence 901 ......................................................................................................18

Regulations

37 C.F.R. § 3.25 .............................................................................................................................13

Constitutional Provisions

U.S. Const.
art. III ...........................................................................................................................2, 8, 9, 10
art. III, § 2 ................................................................................................................................11

Other Authorities

3 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 18:2 (5th ed. 2018) ........................7

Restatement (Second) of Contracts § 224......................................................................................15

v
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Plaintiff SM Kids, LLC (“SM Kids”) submits this memorandum of law in opposition to

the motion to dismiss the Complaint filed by Defendants Google LLC, Alphabet Inc., and XXVI

Holdings Inc. (collectively, “Google” or “Defendants”) pursuant to Rules 12(b)(1) and 12(b)(6)

of the Federal Rules of Civil Procedure.

PRELIMINARY STATEMENT

This motion is a master class in corporate defense strategy. Google, now a network of

corporate entities nearing $1 trillion in market capitalization, has responded to a straightforward

contract dispute by filing a baseless motion to dismiss, claiming that SM Kids lacks “standing”

to bring a breach of contract claim—a perversion of the legal doctrine of standing. The motion is

accompanied by a total of fifteen purportedly “Judicially Noticeable” exhibits (the maximum

permitted by this Court’s Individual Rules), consisting of inadmissible evidence such as results

from its own search service. But no weight of paper can alter the facts. Googles, a children’s

multimedia platform, predated the now world-dominating behemoth Google by years. Litigation

resulted, and in order to settle that litigation, Google agreed in 2008 not to enter the children’s

space. In return, Google was permitted to move forward with its business, except—critically—it

was not permitted to enter into the business of children’s-related products and services, and was

specifically prohibited from creating, developing, or publishing fictional children’s content.

Fast forward to today: Defendants have launched Google Play, YouTube Kids, and other

children’s-related products and services, all in unequivocal breach of their earlier written

promises. SM Kids, the owner of all rights and assets associated with Googles and the

underlying agreement (the “Settlement Agreement” or the “Agreement”), has invested time and

expense in the Googles children’s platform, a platform with a singular meaning to SM Kids’

principal—Googles was an early and meaningful spark to his special needs child’s imagination.

Because of Google’s impermissible conduct, however, SM Kids has been unable to make use of

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the rights protected by the Agreement and now brings this lawsuit to hold Defendants to their

covenants.

Defendants raise various grounds for dismissal, all of which lack merit. Defendants first

challenge the validity of the underlying trademark assignments and posit that this somehow

implicates SM Kids’ “standing” to enforce the Agreement. This putative 12(b)(1) motion,

however, raises neither a jurisdictional question—the conventional meaning of “standing”—nor

one that can be resolved on a motion to dismiss, as Defendants’ own cited case authority

conclusively demonstrates. SM Kids pleads standing sufficient for Article III purposes, and the

Court need not at this juncture attempt to resolve the factual disputes that Google raises

regarding the assignment of trademark rights to SM Kids—but even if did, the underlying

trademark assignments are valid as a matter of law. Moreover, it is Defendants (not SM Kids)

that invoked the subject-matter jurisdiction of this Court by removing this case to federal court,

and the statutorily mandated remedy for dismissal on 12(b)(1) grounds is remand to state court,

where SM Kids originally filed. Defendants’ 12(b)(1) motion is truly an exercise in frivolous

defense-side motion practice, intended to send a message that SM Kids’ meritorious breach of

contract case will be a Herculean, resource-depleting, and time-consuming task.

Defendants’ 12(b)(6) arguments are similarly without merit. The four grounds that

Defendants posit in support of their 12(b)(6) motion to dismiss the breach of contract claim rely

on a misreading of the contractual language, disputed issues of fact not resolvable on the current

motion, misapplication of the governing law, and/or reliance on evidence not properly before this

Court—and, in some instances, all four. Defendants’ inevitable tag-along motion to dismiss the

implied covenant of good faith and fair dealing fails as well: among other things, SM Kids

alleges that Defendants have not only breached the contract, they have undermined its very

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purpose by heedlessly invading the children’s sphere. Finally, because the underlying agreement

is signed by the now-defunct “Google Inc.,” it would be inappropriate to dismiss any of the

Defendants at this stage of the proceedings.

For all of these reasons, elaborated below, Defendants’ motion should be denied in its

entirety and this action should proceed on the merits.

FACTUAL BACKGROUND

Before there was “Google,” there was “Googles,” a multimedia platform for children.

Compl. ¶ 1. 1 Googles, founded prior to Google in the mid-1990s, develops music, books,

animated series, and other media such as live action short form and reality-based content with the

goal of providing children with guidance and support through the use of fun, safe, and

educational messages. Id. “At all times from its inception to the present time, Googles’ primary

business objective has been to create and disseminate children’s-related content in an attempt to

stimulate children’s minds and to instill in them important core values such as self-esteem,

kindness, good manners and respect for the environment. This . . . remains [the] business model

today.” Id. ¶ 16.

In 2008, Stelor Productions, LLC (“Stelor”)—which then possessed all of the assets,

goodwill and rights to Googles and design—entered into an agreement with Google to settle

litigation arising out of the understandable confusion between the “Googles” and “Google”

brands. Id. ¶¶ 1, 2. The Agreement is a straightforward six-page document. 2 In it, Stelor agreed

to drop its trademark infringement lawsuit and to permit Google to move forward with the

Google trademark, tradename, domain name, and website, enabling it to grow into the massive

1
SM Kids attaches the Complaint as Exhibit A to the Brounell Declaration, for the convenience of the Court and in
order to provide it with a clean copy.
2
Defendants attach the Settlement Agreement as Exhibit C to the Mead Declaration. SM Kids has no objection to
the Court’s full consideration of this document.

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and valuable corporate conglomerate it is today. Id. ¶ 3. In exchange, Defendants made the

following promises in Section 7 of the Agreement:

Google agrees that it will not intentionally make material modifications to its
current offering of products or services in a manner that is likely to create
confusion in connection with Stelor’s present business. Google will not, for
example, create, develop and publish fictional children’s books, fictional
children’s videos, or other fictional children’s related content that have a title of
“GOOGLE” or a “GOOGLE-” formative title or mark.

Mead Decl. Ex C. (“Agreement”) at 3-4. The language is explicit: Defendants agreed not to

modify its business to create confusion with Stelor’s children’s multimedia business, with three

concrete (but significantly non-exhaustive) examples: fictional children’s books, fictional

children’s videos, or other fictional children’s-related content.

Notwithstanding this Agreement, Defendants have since made intentional and material

modifications of its business in violation of these written promises. First, Google created

“Google Play,” Google’s version of Apple’s “App Store,” a digital service that curates,

publishes, distributes, and sells, among other things, children’s content (including fictional

children’s content) in the form of mobile applications or “apps,” games, music, books, movies,

television shows, magazines, and more. Compl. ¶¶ 4, 23-26. Second, Google launched

“YouTube Kids,” a stand-alone mobile application built specifically for children and child-

appropriate content; YouTube Kids creates, develops, curates, publishes, and distributes, among

other things, children’s content in the form of videos, including original children’s programming

developed by Google. Id. ¶¶ 4, 27-36. Consumers attempting to download the YouTube Kids

application are made aware that YouTube Kids is a web product/service provided by Google and

marketed under the Google banner. Id. As alleged in the Complaint, Google has also made

numerous modifications to its offerings of products and services in breach of the Agreement. Id.

¶¶ 4, 37. The release of these children’s-related products and services constitutes an unequivocal

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breach of the Settlement Agreement by Defendants.

SM Kids brings this lawsuit to enforce the terms of the Agreement and to enjoin Google

Play, YouTube Kids, and other Google products and services in the children’s space. SM Kids

“owns and controls all of the assets of Stelor Productions, LLC including, but not limited to, all

of its business assets, all trademarks, all tradenames, all domain names, all websites and the

goodwill associated therewith” and further “is the owner of the Googles trademark, tradename,

domain name, and website and is the successor-in-interest to the Settlement Agreement and all

rights and benefits set forth therein.” Id. ¶ 7. While, as explained below, these allegations more

than suffice to establish SM Kids’ right to bring this lawsuit for purposes of the current motion,

SM Kids is also submitting the declaration of Stephen Garchik, which the Court may consider

respecting Defendants’ motion to the extent that it purports to be based on Rule 12(b)(1). The

declaration demonstrates that Defendants are wrong respecting the facts underlying their

12(b)(1) motion, including, for example, that the assignment of the “Googles” mark was an

impermissible assignment in gross because Stephen Garchik never acquired the physical or

tangible assets of Stelor. In fact he did; as detailed in his declaration, Mr. Garchik acquired all of

Stelor’s assets—including all rights to Googles—and those assets have now been transferred to

SM Kids, the plaintiff in this litigation. At a minimum, these issues turn on disputed questions of

fact which preclude this motion and any motion for summary judgment.

ARGUMENT

I. LEGAL STANDARD

“A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1)

when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v.

United States, 201 F.3d 110, 113 (2d Cir. 2000). The party who invokes the Court’s jurisdiction

bears the burden of proof to demonstrate that subject matter jurisdiction exists. See Germain v.

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M & T Bank Corp., 111 F. Supp. 3d 506, 518 (S.D.N.Y. 2015). By contrast, to survive a motion

to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter . . . to state a

claim to relief that is plausible on its face.” Wilson v. Merrill Lynch & Co., 671 F.3d 120, 128

(2d Cir. 2011) (citation omitted). “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.” Id. (citation omitted). In determining whether this standard is

satisfied, courts “must accept all allegations in the complaint as true and draw all inferences in

the light most favorable to the non-moving party’s favor.” In re NYSE Specialists Secs. Litig.,

503 F.3d 89, 95 (2d Cir. 2007) (Sotomayor, J.) (citation omitted).

II. THE COMPLAINT SHOULD NOT BE DISMISSED

PURSUANT TO RULE 12(B)(1)

Defendants first claim that this Court should dismiss the Complaint pursuant to Rule

12(b)(1) due to the supposed invalidity of the underlying trademark assignments. In so arguing,

Defendants are attempting to shoehorn a fact-intensive affirmative merits defense into a

jurisdictional motion. This is a moonshot theory, with no support in law or fact. Pursuant to the

actual, governing standard, SM Kids pleads standing sufficient to withstand a motion to dismiss.

But even if this Court were to conduct the requested analysis and assess the validity of the

underlying trademark assignments (which given the Complaint’s allegations is unnecessary),

Defendants misrepresent both the legal standard and the relevant facts. Properly considered,

there is no dispute on the record before this Court that the underlying assignments are valid. And

all of this ignores the wasteful and circular irony here: it is Defendants—not SM Kids—that

removed this action and invoked the jurisdiction of this Court in the first place; any dismissal on

jurisdictional grounds will result in only a remand back to state court, where this action started.

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A. Defendants’ “Standing” Argument Presents A Non-Jurisdictional

Affirmative Merits Defense Inappropriate For Resolution On This Motion

Defendants contend that the underlying trademark assignments were “‘in gross’ and thus

invalid,” and that, as a result, SM Kids lacks “standing” to enforce the Agreement. Defs.’ Mem.

at 6. Notwithstanding Defendants’ unexplained use of the word “standing,” this is not in any

sense of the word a “jurisdictional” challenge—it presents, at most, a fact-intensive affirmative

merits defense, inappropriate for resolution on this motion.

First, the analysis of whether a trademark assignment is “in gross” is neither jurisdictional

nor properly resolvable on a motion to dismiss. This follows naturally from the relevant test,

which revolves around the nebulous (non-jurisdictional) concept of “goodwill.” “The basic rule

of trademark assignments is that a trademark cannot be assigned to another separate from the

goodwill associated with the mark.” 3 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION

§ 18:2 (5th ed. 2018) (“MCCARTHY ON TRADEMARKS”). “[T]he transfer of a trademark or trade

name without the attendant goodwill of the business which it represents is, in general, an invalid,

‘in gross’ transfer of rights.” Berni v. Int’l Gourmet Rests. of Am., Inc., 838 F.2d 642, 646 (2d

Cir. 1988). Accordingly, “[w]hether [a trademark] assignment [is] ‘in gross’”—by definition—

“turns on a disputed issue of fact, viz, whether [the assignor] assigned the Mark without

assigning the corresponding good will. This, in turn, depends on a number of factors . . . .

Determination of these factors in this instance is for the trier of fact.” Falchi v. Cyber Champion

Int’l, Ltd., No. 02 Civ. 8072 (JSR), 2003 WL 22070529, at *2 (S.D.N.Y. Sept. 5, 2003) (citations

omitted); see also, e.g., Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 70 (2d Cir. 2008)

(reversing a grant of summary judgment and holding that “[a]t the very least, this question of fact

[i.e., whether the assignment was made in gross] could not be resolved in [defendant’s] favor on

[defendant’s] motion for summary judgment”); Pilates, Inc. v. Current Concepts, Inc., 120 F.

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Supp. 2d 286, 310 (S.D.N.Y. 2000) (resolving issue of assignment in gross after bench trial).

Defendants’ own cited cases demonstrate that the validity of a trademark assignment

presents a non-jurisdictional question of fact: each conducts a fact-intensive and non-

jurisdictional analysis of a trademark assignment. For example, the court in Clark & Freeman

Corp. v. Heartland Co., 811 F. Supp. 137 (S.D.N.Y. 1993), analyzed the propriety of the

assignment of a trademark after conducting a trial, without any discussion of subject matter

jurisdiction. Id. The few additional cases cited by Defendants similarly conduct fact-intensive

analyses of trademark assignments; none treat the issue as implicating jurisdiction. 3

The decision in Sik Gaek, Inc. v. Yogi’s II, Inc., No. 10 Civ. 4077 (ARR) (VVP), 2013

WL 2408606 (E.D.N.Y. June 3, 2013), is particularly instructive. The defendant in Sik filed a

motion to dismiss pursuant to Rule 12(b)(1), arguing that the plaintiff lacked standing to bring a

claim under the Lanham Act due to the invalidity of the underlying trademark assignment. Id. at

*4. The court denied the motion, holding that it “cannot resolve the disputed issues of fact as to

whether the plaintiff owns or has a legally cognizable interest in the mark and whether it has

abandoned the mark.” Id. In so holding, the court explicitly rejected the notion that a challenge

to the ownership of a trademark raised a question of Article III standing, id. at *6 n.3, and further

observed that—like the Defendants here—“[t]he defendant does not cite any case where a court

resolved a factual dispute as to the plaintiff’s interest in a trademark as part of a ruling on a

3
See Marshak v. Green, 746 F.2d 927 (2d Cir. 1984) (resolving validity of assignment on appeal of attachment
order; no mention of subject matter jurisdiction); Glow Indus., Inc. v. Lopez, 273 F. Supp. 2d 1095 (C.D. Cal. 2003)
(resolving validity of assignment on summary judgment; no mention of subject matter jurisdiction); interState Net
Bank v. NetB@nk, Inc., 348 F. Supp. 2d 340 (D.N.J. 2004) (resolving validity of assignment on summary judgment;
no mention of subject matter jurisdiction). Defendants cite to one additional case, Prince of Peace Enterprises, Inc.
v. Top Quality Food Market, LLC, 760 F. Supp. 2d 384 (S.D.N.Y. 2011), which did not address the validity of a
trademark assignment, but rather held that because the plaintiff in that case was “the beneficiary of a license
agreement, and not of an assignment of ownership rights, [it] lack[ed] standing to bring its infringement claim.” Id.
at 392. This case is inapposite, as SM Kids is an assignee, not a licensee. But notably, even Prince of Peace
analyzed the issue of a licensee’s “standing to bring [an] infringement claim” pursuant to Rule 12(b)(6), not Rule
12(b)(1)—further underscoring that Defendants fail to raise a jurisdictional issue and demonstrating that this motion
is nothing more than an attempt to squash SM Kids and deplete its resources.

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motion to dismiss for lack of standing under Rule 12(b)(1).” Id. at *8. 4

Second, Defendants piggyback on this first conceptual mistake in support of another: the

assumption that their challenge to SM Kids’ “standing to enforce the Agreement” is somehow

part of a jurisdictional analysis. It is not. The requirement to plead standing in order to pursue a

breach of contract (and related) claims pursuant to Article III of the U.S. Constitution is not the

same as the requirement to plead the validity of an underlying contractual assignment. Judge

Rakoff addressed an almost identical situation in Beazley Insurance Co. v. Ace American

Insurance Co., 150 F. Supp. 3d 345 (S.D.N.Y. 2015). The defendant in that case moved to

dismiss the plaintiff’s breach of contract claim for the failure to plead with enough specificity the

assignment of the underlying contract, including “the precise date, scope, or content of the

purported assignment such that the Court can determine whether the assignment is valid and

whether [plaintiff] has standing to bring the claim.” Id. at 360. The plaintiff in Beazley pleaded

assignment in one sentence, alleging that “the [assigning] [p]arties have assigned [plaintiff] their

contractual rights and extra-contractual rights against [defendants] related to the” action.

Beazley Ins. Co. v. Ace Am. Ins. Co., No. 15 Civ. 5119 (JSR), Doc. No. 2, ¶ 69 (ECF filing of the

underlying complaint); see also id. ¶ 5. Despite this short statement describing the assignment,

Judge Rakoff rejected the notion that this pleading of assignment was insufficient, noting that the

defendant there (as with Defendants here) “cites no apposite case in support of the proposition

that [the plaintiff] need plead the assignment with such specificity to survive a motion to

dismiss.” Beazley, 150 F. Supp. 3d at 360. The court proceeded to hold that, “[i]n any case, the

4
The court in Sik further observed that the defendant raised a question of statutory standing to sue under the
Lanham Act, which involved “disputed factual issues that go to the merits of [the] claim and cannot be resolved on
this motion to dismiss.” Sik, 2013 WL 2408606, at *9; see also id. at *3 (In reviewing objections to the Magistrate
Judge’s Report and Recommendation, the District Court Judge similarly held that “there is a genuine factual dispute
as to whether plaintiff acquired the Sik Gaek mark along with its associated goodwill.”). Here, because SM Kids is
not asserting a claim under the Lanham Act, the notion of “statutory standing” is irrelevant to the analysis—
Defendants’ argument simply involves disputed issues of fact that go to the merits and therefore cannot be resolved
on a motion to dismiss or on a subsequent motion for summary judgment.

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assignment is not the relevant contract at issue for purposes of the ‘contract’ element of the

claim. To the extent discovery reveals that the assignment of rights was somehow ineffective,

defendants may pursue this argument on summary judgment.” Id. The same holds true here.

SM Kids readily meets its pleading requirements. SM Kids alleges that it “owns and

controls all of the assets of Stelor Productions, LLC including, but not limited to, all of its

business assets, all trademarks, all tradenames, all domain names, all websites and the goodwill

associated therewith” and further that it “is the owner of the Googles trademark, tradename,

domain name, and website and is the successor-in-interest to the Settlement Agreement and all

rights and benefits set forth therein.” Compl. ¶ 7 (emphasis added). This is more than sufficient

to meet SM Kids’ burden to plead a valid assignment of the underlying trademark for purposes

of withstanding the current motion to dismiss.

Indeed, Defendants later concede that, as concerns the Googles mark, SM Kids “step[]

into the shoes of the assignor and assume[] all rights and limitations concerning the assigned

mark, including rights and obligations pursuant to agreement with third parties.” Defs.’ Mem. at

6 n.3 (citing MCCARTHY ON TRADEMARKS § 18:15); see also Agreement at 6 (“This Agreement

shall inure to the benefit of and be binding upon the successors and assigns of the parties.”).

While Defendants are free to pursue their assignment theory in discovery—which will bear out

that SM Kids is the proper assignee of the Settlement Agreement and Googles mark—there is no

merit to their contention that these issues are appropriate for resolution on this current motion.

B. Under The Governing Standard, SM Kids Pleads “Standing”

Defendants do not raise or argue “standing” as that term is used to determine whether a

party is properly before a federal court. Pursuant to the proper standard, SM Kids pleads

standing sufficient to withstand a motion to dismiss.

Article III of the U.S. Constitution limits the jurisdiction of federal courts to the

10
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resolution of “[c]ases” and “[c]ontroversies.” U.S. Const. art. III, § 2. One aspect of this case-

or-controversy requirement is that the party invoking the jurisdiction of the federal judiciary

must establish “standing” to sue. Raines v. Byrd, 521 U.S. 811, 818 (1997). “To satisfy this

jurisdictional requirement, the plaintiff must have (1) suffered an injury in fact, (2) that is fairly

traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a

favorable judicial decision.” Taylor v. Fin. Recovery Servs., Inc., 252 F. Supp. 3d 344, 348

(S.D.N.Y. 2017) (quotation marks and citation omitted), aff’d, 886 F.3d 212 (2d Cir. 2018).

Accordingly, “[a]t the pleading stage, general factual allegations of injury resulting from the

defendant’s conduct may suffice, for on a motion to dismiss we presume that general allegations

embrace those specific facts that are necessary to support the claim.” Lujan v. Defenders of

Wildlife, 504 U.S. 555, 561 (1992) (quotation marks and citation omitted).

The allegations set forth in SM Kids’ Complaint suffice to satisfy this “low threshold.”

Ross v. Bank of Am., N.A.(USA), 524 F.3d 217, 222 (2d Cir. 2008). The pleadings detail the

existence of the Settlement Agreement, e.g., Compl. ¶¶ 2-3, 18-21, Defendants’ breach of the

Agreement (as well as its implied covenant of good faith and fair dealing), by, among other

things, intentionally modifying their business to launch Google Play and YouTube Kids, e.g., id.

¶¶ 4, 22-38, and the resultant injuries suffered by SM Kids, e.g., id. ¶¶ 5, 39, 44, 49. This is

enough to plead a valid claim for breach of contract under well-settled law. See Beautiful Home

Textiles (USA), Inc. v. Burlington Coat Factory Warehouse Corp., No. 13 Civ. 1725 (LGS),

2013 WL 3835191, at *3 (S.D.N.Y. July 25, 2013) (holding that pleading “the existence of a

contract,” “performance under the contract,” and an alleged breach of the contract is sufficient

for purposes of a breach of contract claim); see also, e.g., Diverse Partners, LP v. AgriBank,

FCB, No. 16 Civ. 9526 (VEC), 2017 WL 4119649, at *2 n.3 (S.D.N.Y. Sept. 14, 2017)

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(explaining that the defendant in that case was “conflat[ing] Plaintiff’s contractual standing to

sue under the Note with Plaintiff's Article III standing. Clearly, Plaintiff has Article III standing:

Plaintiff alleges that it suffered an injury in fact by [defendant’s] purported breach of the

Agreement, and Plaintiff alleges that its injury is redressable through damages and is traceable to

[defendant]” (citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016))).

C. The Underlying Trademark Assignments Are Valid

Even if it were appropriate for this Court to conduct an “assignment in gross” analysis on

the present motion—and for all of the reasons just stated, it is not—Defendants misstate both the

law and the facts. The underlying trademark assignments are valid.

According to Defendants, if “physical or tangible assets of the business” were not

transferred, an assignment of a trademark “will be regarded as an invalid assignment-in-gross

unless the assignee is using the mark to produce goods or services that are substantially the same

as the assignor’s goods and services.” Defs.’ Mem. at 6-7. The very cases Defendants cite

contradict this rigid formulation of the standard, including Marshak v. Green, 746 F.2d 927 (2d

Cir. 1984), and Clark & Freeman Corp. v. Heartland Co., 811 F. Supp. 137 (S.D.N.Y. 1993).

See Defs.’ Mem. at 6-7 (citing theses case). The court in Clark, after noting that the assignment

of a trademark may be upheld “even if no physical or tangible assets have been transferred,” held

that “[g]oodwill may also be transferred if . . . there is a continuity of management.” Clark, 811

F. Supp. 137 n.3 (quotation marks and citation omitted); see also Marshak, 746 F.2d at 930

(“Courts have also upheld such assignments if there is a continuity of management.”).

Defendants’ own purportedly “judicially noticeable” factual submissions conclusively

demonstrate that there was continuity of management for SM Kids and its assignor. Defendants

attach as Exhibit L to the Mead Declaration a declaration from Stephen Garchik—the President

of SJM Partners, the Manager of SM Kids, and a key financial investor in Stelor—in which he

12
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swears that in late 2006 he was the director of Stelor and that in 2007 he also became the acting

Chief Financial Officer of Stelor. Mead Decl. Ex. L at 2; see also Garchik Decl. ¶¶ 2, 4. Mr.

Garchik is himself a continuous officer and investor in the entities that owned the Googles mark

and enjoyed the rights under the Settlement Agreement. See Garchik Decl. ¶¶ 4, 5; Cf. Marshak,

746 F.2d at 930 (trademark assignment valid when “[t]he plaintiff had been the manager of the

group prior to the assignment and continued in that capacity after the assignment”).

Defendants misconstrue other facts they place into the record as well. Most notably, SJM

Partners did acquire all of the physical and tangible assets of Stelor. After Stelor’s bankruptcy,

SJM Partners ultimately acquired all of Stelor’s assets, including the physical and other tangible

assets; SJM Partners subsequently transferred all of these assets to SM Kids. Garchik Decl. ¶ 5. 5

As a result, the underlying assignments may also be deemed valid pursuant to Defendants’ own

formulation of the test, pursuant to which the transfer of physical and tangible assets alone

suffices.

For all of these reasons, even if this Court were to consider the validity of the trademark

assignments, they may be deemed valid as a matter of law based on the record currently before

the Court. And to the extent that this Court deems this to be a disputed issue of fact properly

resolved on this motion to resolve jurisdictional issues—which the authority plainly

demonstrates it should not—SM Kids respectfully requests that this Court hold an evidentiary

hearing so that it may demonstrate the validity of the underlying trademark assignments.

5
To support the notion that assets of Stelor were not transferred, Defendants present this Court with a selection of
curated evidence, including trademark assignment papers registered with the United States Patent and Trademark
Office, and then contend that these documents contain no evidence that “Garchik acquired any physical or tangible
assets of Stelor’s business.” Defs.’ Mem. at 7. Of course they don’t. There is no requirement that assignment
papers filed with the Trademark Office list the physical or tangible assets transferred along with the underlying
trademark, see 37 C.F.R. § 3.25, and Defendants cite to nothing to indicate that they should. Defendants also rely,
for some reason, on the website of SJM Partners, as if there is some sort of affirmative obligation for that website to
contain evidence that Stelor’s physical or tangible assets were transferred to it more than five years ago. See Defs.’
Mem. at 7-8. Moreover, judicial notice of this website may only be taken “for the fact of its publication,” not the
truth of the matter asserted therein. Muller-Paisner v. TIAA, 289 F. App’x 461, 466 & n.5 (2d Cir. 2008).

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D. In Any Event, The Statutorily Mandated Remedy For Dismissal Of A

Removed Matter Pursuant To Rule 12(b)(1) Is Remand To State Court, Not
Dismissal

As a final matter, it was Defendants—not SM Kids—that invoked the subject-matter

jurisdiction of this Court by filing a notice of removal. See Notice of Removal (Doc. No. 1). As

this Court has recognized, “[t]he burden to establish federal jurisdiction lies with the removing

party.” Varga v. McGraw Hill Fin., Inc., 36 F. Supp. 3d 377, 381 (S.D.N.Y. 2014) (citation

omitted). SM Kids does not disagree with Defendants that standing is not subject to waiver. See

Defs.’ Mem. at 5 n.1. It is a striking waste of both judicial and SM Kids’ resources, however, to

remove a matter to federal court and then move to dismiss on jurisdictional grounds. Even if

Defendants are successful on this motion, the statutorily mandated remedy is not dismissal but a

remand back to state court, with the possible awarding of SM Kids’ attorney fees and costs. See

28 U.S.C. § 1447(c) (“If at any time before final judgment it appears that the district court lacks

subject matter jurisdiction, the case shall be remanded. An order remanding the case may

require payment of just costs and any actual expenses, including attorney fees, incurred as a

result of the removal.”). Accordingly, if the Court determines now (or at a future hearing) that it

lacks subject-matter jurisdiction over this dispute, SM Kids respectfully requests that the Court

issue an order for the payment of SM Kids’ costs, expenses, and fees incurred as a result of

Defendants’ removal.

III. THE COMPLAINT SHOULD NOT BE DISMISSED

PURSUANT TO RULE 12(B)(6)

Defendants also move to dismiss the Complaint on various grounds pursuant to Rule

12(b)(6). For the reasons explained below, these arguments are completely without merit.

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A. The Breach Of Contract Claim Should Not Be Dismissed Pursuant To

Section 13 Of The Agreement

Defendants argue that Section 13 of the Agreement establishes a “condition precedent,” 6

pursuant to which SM Kids’ supposed “non-use” of the Googles mark terminated the parties’

respective obligations under the Agreement. See Defs.’ Mem. at 11. Section 13 provides that

“[t]he restrictions above on each parties’ use of their respective trademark shall terminate if and

when the other party abandons its use of ‘GOOGLE’ or ‘GOOGLES.’” Agreement at 5.

Defendants’ argument for dismissal based on this language fails for at least five separate reasons.

First, as Defendants’ own moving papers make plain, the critical term “abandons” in

Section 13 is ambiguous, an admission that alone mandates rejection of this argument. Cordell

v. McGraw-Hill Cos., No. 12 Civ. 0637 (ALC), 2012 WL 5264844, at *2 (S.D.N.Y. Oct. 23,

2012) (“Where a contract is ambiguous, a motion to dismiss a breach of contract claim for failure

to state a claim will be denied.”), aff’d, 525 F. App’x 22 (2d Cir. 2013). Ambiguity exists when

“a reasonably intelligent person viewing the contract objectively could interpret the language in

more than one way.” Topps Co., 526 F.3d at 68. Defendants themselves interpret the word

“abandons” in at least three distinct ways: (1) equating the word “abandons” with “non-use,” a

term that appears nowhere in Section 13, see Defs.’ Mem. at 11 (“non-use of the mark

terminated the Agreement”); (2) positing that a supposed admission that Stephen Garchik

stopped using the mark for one year (a disputed fact) “conclusively establishes” abandonment,
6
These arguments are not “conditions precedent” at all. “A condition precedent is an act or event, other than a
lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the
agreement arises.” Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690 (1995) (quotation
marks and citation omitted); see also Restatement (Second) of Contracts § 224 (“A condition is an event, not certain
to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes
due.”). This is not what Defendants argue—even Defendants do not posit that Section 13 creates some sort of
“condition” upon which their duty to perform under the Agreement relies; rather, they argue that Section 13
functions as a termination provision for the Agreement. Moreover, if Section 13 were to be analyzed as some sort of
“condition precedent,” pursuant to Rule 9(c) of the Federal Rules of Civil Procedure, “[i]n pleading conditions
precedent, it suffices to allege generally that all conditions precedent have occurred or been performed.” As this
Court has recognized, “[i]n this Circuit, a general allegation that all conditions precedent have been met . . . is
sufficient.” Beautiful Home, 2013 WL 3835191, at *3.

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see id. at 12; and (3) relying on the rebuttable presumption created by three years of non-use

under the Lanham Act, 15 U.S.C. § 1127, see Defs.’ Mem. at 12-13. This ambiguity alone

warrants denial of this motion.

Second, Defendants attempt to apply Section 13 of the Settlement Agreement, regarding

use of marks, to Section 7, regarding encroachment into the children’s business, where no such

link exists in the Settlement Agreement itself. Pursuant to Defendants’ interpretation, once one

party “abandons its use of ‘GOOGLE’ or ‘GOOGLES,’” “then the other party’s obligation to

perform under the contract is eliminated.” Defs.’ Mem. at 11. But “simply put, the text does not

say what [Defendants] would have it say.” In re Lehman Bros. Holdings, Inc., No. 08 Civ.

13555 (SCC), 2015 WL 7194609, at *14 (S.D.N.Y. Sept. 16, 2015). Pursuant to Section 13’s

actual language, abandonment results in only the termination of the restrictions “on each parties’

use of their respective trademarks.” The discrepancy is particularly significant because

Defendants made (and then breached) promises that have nothing to do with restrictions on

trademarks. For example, Defendants promised “that it will not intentionally make material

modifications to its current offering of products or services in a manner that is likely to create

confusion in connection with Stelor’s present business.” Agreement at 3-4. This is not just a

limitation on Defendants’ use of their trademark; it is a limitation on the sorts of products and

services Defendants may offer. On this point, the language is unambiguous. The Court should

not permit Defendants to re-write Section 13 to constitute some sort of catch-all termination

provision, especially on a motion to dismiss. Cf. ACE Secs. Corp. v. DB Structured Prods., Inc.,

25 N.Y.3d 581, 597 (2015) (“[C]ourts may not by construction add or excise terms, nor distort

the meanings of those used and thereby make a new contract for the parties under the guise of

interpreting the writing.” (quotation marks and citation omitted)).

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Third, regardless of the precise test used to ascertain “abandon[ment]” for purposes of

Section 13, it is black-letter law in this District that abandonment of a trademark is a question of

fact to be decided by the fact-finder, not by the Court at the pleadings stage. See Lazar v.

Cecelia Co., 30 F. Supp. 769, 771 (S.D.N.Y. 1939) (“[W]hether there was an actual

abandonment of the trade-mark is a question of fact.”). 7 The factual issue of trademark

abandonment cannot be resolved on a motion to dismiss, even with the aid of Defendants’

proposed “judicially noticeable documents.” Defendants do not cite to any authority to the

contrary in their papers.

Fourth, even if properly considered, the so-called “judicially noticeable documents” that

Defendants submit in support of this argument do not show “abandonment” of the mark.

Defendants rely on two categories of evidence. Defendants rely on a sworn declaration from

Stephen Garchik in support of the assertion “that he stopped using the mark from 2014 to 2015.”

Defs.’ Mem. at 12. Overlooking Defendants’ impermissible hearsay use of a declaration on this

12(b)(6) motion, 8 the declaration states: “I can say that except for a brief interruption from about

early 2014 through early 2015, the GOOGLES mark has consistently been used in connection

with online entertainment for children at www.googles.com.” Mead Decl. Ex. L at 3. In other

words, the statement actually proves continued use of the mark with one brief interruption, i.e.,

the precise opposite of abandonment. Defendants also rely on selected screenshots of

googles.com. See Mead Decl. Exs. J, K. Again, although these screenshots are not are properly

7
Other Circuits are in accord. See, e.g., Patsy’s Italian Rest., Inc. v. Banas, 658 F.3d 254, 265 (2d Cir. 2011)
(noting that “[t]he jury was asked to determine whether there was abandonment”); Burgess v. Gilman, 316 F. App’x
542, 543 (9th Cir. 2008) (“Trademark abandonment is a question of fact.”); Crash Dummy Movie, LLC v. Mattel,
Inc., 601 F.3d 1387, 1390 (Fed. Cir. 2010) (“Abandonment of a trademark registration is a question of fact, which
this court reviews for substantial evidence.”); Cumulus Media, Inc. v. Clear Channel Commc’ns, Inc., 304 F.3d
1167, 1174 (11th Cir. 2002) (“[Trademark] [a]bandonment is a finding of fact.”).
8
As explained in the text, the sworn statement when considered in full does not contradict any “party admissions”
and so is not properly considered on a 12(b)(6) motion to dismiss. Accordingly, it is error to rely on the factual
assertions contained in that declaration on this motion. See Faulkner v. Beer, 463 F.3d 130, 134 n.1 (2d Cir. 2006).

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before this Court on Rule 12(b)(6) motion, 9 these pictures do not prove abandonment of the

Googles mark; at most, they demonstrate that a single page from one website was not updated.

Fifth, and finally, under the Lanham Act, even if Defendants were able to demonstrate

three years of non-use of the Googles mark—which they have not in any way done on the record

currently before the Court—this would only create a rebuttable presumption of abandonment.

See ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 147 (2d Cir. 2007). The burden would then shift

to SM Kids to present “contrary evidence as, when viewed in the light most favorable to [SM

Kids], would permit a reasonable jury to infer that it had not abandoned the mark.” Id. at 149.

This is not an issue resolvable on a motion to dismiss. SM Kids’ pleading evinces no intent to

abandon, and nothing more needs to be alleged for purposes of withstanding a motion to dismiss

on these grounds pursuant to Rule 12(b)(6). See, e.g., Compl. ¶¶ 1-6; 15-17, 39. At the

appropriate time, SM Kids will be able to demonstrate to a factfinder its continuous efforts to

make use of the Googles and design mark in connection with its children’s content entertainment

business. 10 And by way of an offer of proof, SM Kids refers to the declaration of Stephen

Garchik submitted by Google as part of its own request for judicial notice, see Mead Decl. Ex. L

at 3, which, as just noted, establishes that the Googles mark was never abandoned. This, at

9
Because Defendants “have provided no evidence or argument showing that the data generated from the website is
reliable, complete, and admissible in court,” the screenshots from the “Wayback Machine” should not be considered.
Leidig v. Buzzfeed, Inc., No. 16 Civ. 542 (VMG) (WG), 2017 WL 6512353, at *13 (S.D.N.Y. Dec. 19, 2017); see
also Novak v. Tucows, Inc., No. 06 Civ. 1909 (JFB) (ARL), 2007 WL 922306, at *5 (E.D.N.Y. Mar. 26, 2007)
(“Where postings from internet websites are not statements made by declarants testifying at trial and are offered to
prove the truth of the matter asserted, such postings generally constitute hearsay under Fed.R.Evid. 801.”), aff’d, 330
F. App’x 204 (2d Cir. 2009); Chamilia, LLC v. Pandora Jewelry, LLC, No. 04 Civ. 6017 (KMK), 2007 WL
2781246, at *6 n.4 (S.D.N.Y. Sept. 24, 2007) (“In support of its claim, Plaintiff has submitted a series of archived
web pages from an Internet service called the ‘Wayback Machine,’ which Defendant moves to strike. This putative
evidence suffers from fatal problems of authentication under Fed.R.Evid. 901.”).
10
Defendants cite to only a single case from another District in support of their Section 13 argument. That case
stands for the uncontroversial proposition that under the Lanham Act, “A mark shall be deemed ‘abandoned’ if . . .
its use has been discontinued with intent not to resume such use.” Pom Wonderful, LLC v. Starbuzz Tobacco, Inc.,
2011 WL 13225094, at *6 (C.D. Cal. June 6, 2011) (quoting 15 U.S.C. § 1127). As just explained, in the Second
Circuit, demonstrating three years of non-use creates a presumption that SM Kids is entitled to rebut before the
factfinder.

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minimum, demonstrates that the issue of abandonment turns on disputed questions of fact that

warrant denial of this motion to dismiss.

For any or all of these reasons, the Court should reject Defendants’ motion for dismissal

based on Section 13 of the Agreement.

B. The Breach Of Contract Claim Should Not Be Dismissed Pursuant To The

So-Called “Safe Harbor” In Section 7(4) Of The Agreement

Next, Defendants continue to misrepresent to this Court what they gratuitously label a

contractual “safe harbor.” Section 7 of the Settlement Agreement provides that Google will not

encroach into SM Kids’ predecessor’s “present business,” which was the children’s products and

services realm, and provides a few examples of then-existing activities Defendants may maintain

that would not violate that covenant. Defendants now argue that all of their globe-spanning

conduct falls within the four examples of permissible activities. Putting aside Defendants’

misreading of the contractual language, it is incredible to argue that the Court could somehow

resolve what constitutes SM Kids’ predecessor’s then-present business, whether Google’s

products and services violate Section 7, or whether they fit into one of the examples of

permissible activity, on this motion to dismiss. That is a question for trial.

Moreover, Defendants’ entire “safe harbor” argument is predicated on a misreading of

Section 7 of the Agreement. Under New York law, “[c]ontracts must be read as a whole, and if

possible, courts must interpret them to effect the general purpose of the contract.” Postlewaite v.

McGraw-Hill, Inc., 411 F.3d 63, 67 (2d Cir. 2005). The purpose of the Agreement, as noted,

was to permit Google to use the Google trademark, tradename, domain name, and website,

enabling it to grow into a nearly trillion dollar company, in exchange for agreeing not to infringe

the Googles mark by creating confusion or competing with Stelor’s children’s-related

multimedia platform. Section 7’s “safe-harbor” is entirely consistent with this purpose. It carves

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out four specific then-existing services—all of which are search-engine oriented—which Google

was permitted to maintain as long as it did not modify its business and intrude into SM Kids’

children’s multimedia business. Section 7 provides:

Google agrees that it will not intentionally make material modifications to its
current offering of products or services in a manner that is likely to create
confusion in connection with Stelor’s present business. Google will not, for
example, create, develop and publish fictional children’s books, fictional
children’s videos, or other fictional children’s related content that have a title of
“GOOGLE” or a “GOOGLE-” formative title or mark. Subject to and without in
any way limiting this paragraph, the parties agree that nothing in this Agreement
precludes Google from, among other things: (1) offering any of its core products
and services, such as providing search services, including searches for third-party
products, services, or content directed at children or children’s products or
services; (2) from selling advertising in any manner; (3) from selling or
distributing collateral, marketing and/or promotional materials, tangential to its
core business, for the purpose of promoting its core business, such as products
and clothing that contain the famous Google logo (e.g., Google’s current
distribution and sales of such promotional material at the Google store); or
(4) selling, publishing, and/or distributing content by third parties (e.g., books
available through Google’s Book Search service and related services).

Agreement at 4 (emphasis added). As the emphasized text makes plain, the “safe harbor” is

explicitly “[s]ubject to and without in any way limiting” the two promises made by Defendants

earlier in “this paragraph,” i.e., Section 7: first, not to “intentionally make material

modifications to its current offering of products or services in a manner that is likely to create

confusion in connection with Stelor’s present business;” and second, not to “create, develop and

publish fictional children’s books, fictional children’s videos, or other fictional children’s related

content that have a title of ‘GOOGLE’ or a ‘GOOGLE-’formative title or mark.” Id. The four

enumerated carve-outs (the “safe harbors”) must be consistent with this limitation, as they permit

Defendants to maintain specific as-of-2008-existing activities but not to expand them. That this

is the only reading of the “safe harbor” is further reinforced by the examples provided in the

parentheticals, which again refer to then-existing services, such as “Google’s current distribution

and sales of such promotional material at the Google Store,” and “books available through

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Google’s Book Search.” 11 “Only in Wonderland” could the language in Section 7(4) of the

Agreement be flipped on its head in an attempt to justify a theory that would permit Defendants

to intentionally modify its business in explicit violation of its earlier promises to not create,

develop, or publish children’s content on Google Play, YouTube Kids, and other products and

services. Nat’l Util. Serv., Inc. v. Tiffany & Co., No. 07 Civ. 3345 (RJS), 2009 WL 755292, at

*8 (S.D.N.Y. Mar. 20, 2009) (citing Newmont Mines Ltd. v. Hanover Ins. Co., 784 F.2d 127, 135

(2d Cir. 1986) (“Unless otherwise indicated, words should be given the meanings ordinarily

ascribed to them and absurd results should be avoided.”)). Under any reading of the Agreement,

that is not what it permits. 12

C. The Breach Of Contract Claim Should Not Be Dismissed Due To Any Failure
To Allege “Likelihood Of Confusion”

Defendants finally argue that the breach of contract claim should be dismissed because

SM Kids fails to “make a single factual allegation that would support the legal conclusion that

the activities Plaintiff describes would create confusion.” Defs.’ Mem. at 16. To the contrary,

SM Kids’ entire 50-plus paragraph Complaint consists of allegations detailing how Defendants

intentionally modified their business to launch children’s services and products, including

fictional children’s content— precisely what Google promised not to do because of the confusion

it would create. In particular, SM Kids pleads that, “[a]t all time from its inception to the present

time, Googles’ primary business objective has been to create and disseminate children’s-related

content in an attempt to stimulate children’s minds and to instill in them important core values

such as self-esteem, kindness, good manners and respect for the environment. This . . . remains

11
Google’s Book Search service is now referred to as simply “Google Books,” which can be sampled at
https://books.google.com/. As described by Defendants, “Book Search works just like a web search,” and permits
users to download a free .pdf copy of books that are currently in the public domain. See “About Google Books,”
available at https://www.google.com/googlebooks/about/.
12
Moreover, Section 7 forbids the “creat[ion],” and “develop[ment]” of fictional children’s content, but Section
7(4) permits only the “selling, publishing and/or distributing” of content by third parties.

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[the] business model today.” Compl. ¶ 16; see also id. ¶ 1 (alleging that Googles “develops

music, books, animated series, and other media such as live action short form and reality-based

content with the goal of providing children with guidance and support through the use of fun,

safe, and educational messages”). The Complaint then proceeds to allege, in detail, how Google

modified its business to create children’s-related products and services in breach of the

Agreement, including but not limited to the launching of fictional children’s content through

Google Play and YouTube Kids. See, e.g., id. ¶¶ 4, 5, 22-37. These detailed allegations more

than suffice to render plausible the conclusion that Defendants’ intentional actions have created

confusion in breach of the Agreement.

In any event, as SM Kids stressed in its pre-motion letter, it is not asserting a claim under

the Lanham Act. (See Doc. No. 13.) A claim for breach of contract is, of course, not governed

by the Polaroid factors relied on by Defendants in their moving papers; Defendants cite to no

authority that it should. 13 Rather, “[t]o make out a viable claim for breach of contract a

complaint need only allege (1) the existence of an agreement, (2) adequate performance of the

contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages.” Eternity

Glob. Master Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004)

(quotation marks and citation omitted). For the reasons previously stated, SM Kids’ Complaint

adequately pleads a claim for breach of contract, including in regard to Defendants’ breach of

their promise not to “intentionally make material modifications to its current offering of products

or services in a manner that is likely to create confusion in connection with Stelor’s present

business.” Furthermore, SM Kids separately alleges that Defendants breached the Agreement by

creating, developing, and publishing children’s fictional content. See, e.g., Compl. ¶¶ 4, 5, 19,

13
Similarly, Defendants merely assert without authority that SM Kids is under some obligation to allege “forward or
reverse confusion” for purposes of pleading a breach of contract claim. Defs.’ Mem. at 16.

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20, 22-39. Under any reading, Defendants’ launching of fictional children’s content on YouTube

Kids and Google Play ipso facto constitutes a breach of the Agreement. Google’s ploy to turn a

simple contract case into a likelihood of confusion claim under the Lanham Act should not be

permitted, and this motion to dismiss should be denied.

Finally, even assuming that the Lanham Act’s “likelihood of confusion” standard applies,

a “[p]laintiff need not ‘prove’ confusion at the motion to dismiss stage. On the contrary,

likelihood of confusion is a fact-intensive analysis that ordinarily does not lend itself to a motion

to dismiss.” Pulse Creations, Inc. v. Vesture Grp., Inc., 154 F. Supp. 3d 48, 55-56 (S.D.N.Y.

2015) (alterations, quotation marks, and citations omitted). Accordingly, “courts have refused to

dismiss infringement claims where a likelihood of confusion analysis would be necessary on the

pleadings.” Ritani, LLC v. Aghjayan, 880 F. Supp. 2d 425, 446 (S.D.N.Y. 2012) (collecting

cases). 14 SM Kids’ allegations are sufficient to withstand a motion to dismiss based on

Defendants’ challenge to this “fact-intensive analysis,” even if the Court were to apply a Lanham

Act-specific test in the context of assessing its breach of contract claim.

D. The Remainder of Defendants’ Arguments Are Similarly Without Merit

SM Kids’ claim for the breach of the covenant of good faith and fair dealing is not

duplicative of the breach of contract claim. The covenant “embraces a pledge that neither party

shall do anything which will have the effect of destroying or injuring the right of the other party

to receive the fruits of the contract.” Forman v. Guardian Life Ins. Co. of Am., 76 A.D.3d 886,

14
The cases cited by Defendants are completely distinguishable, as they not only involve claims under the Lanham
Act rather than ones for breach of contract, but they also contain only conclusory allegations regarding likelihood of
confusion, e.g., a plaintiff alleging confusion in one sentence which, for the reasons just stated, are nothing like the
detailed allegations set forth by SM Kids in its Complaint. See, e.g., Pub. Free Will Corp. v. Verizon Commc’ns
Inc., 2017 WL 1047330, at *4 (E.D.N.Y. Mar. 17, 2017) (“Here, [the plaintiff] merely asserts legal conclusions that
track the text of 15 U.S.C. § 1125 and the Polaroid factors which are insufficient to give rise to a plausible claim.”);
Ahmed v. GEO USA LLC, No. 14 Civ. 7486 (JMF), 2015 WL 1408895, at *3 (S.D.N.Y. Mar. 27, 2015) (holding
insufficient the one-sentence allegation that “Plaintiff is involved in the broadcasting and media industry whereas
the Defendant is also infringing the same mark through broadcasting, news publication and entertainment”
(alterations, quotation marks, and citation omitted)).

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888 (1st Dep’t 2010) (citations omitted). That is precisely what SM Kids alleges in this case: in

addition to the explicit promises made in the text of the Settlement Agreement, the purpose of

the Agreement was to divide “Google(s)” into two camps: the children’s space for Googles;

everything else for Google. Defendants’ actions, detailed in the Complaint, constitute an

invasion of the children’s space in violation of not only the text of the Agreement, but also its

implied covenant of good faith and fair dealing. See Compl. ¶ 5 (“Google has acted to

undermine the purpose of the parties’ Agreement by preventing [SM Kids] from functioning

within the very space carved out for Googles in the Settlement Agreement: children’s

multimedia content.”). Moreover, SM Kids alleges an additional distinct violation: that a search

for Googles on the search engine does not return a reference to Googles.com. Compl. ¶ 48. 15

This allegation alone is enough to sustain this claim beyond a motion to dismiss.

Additionally, no Defendants should, at this juncture and on this record, be dismissed from

this action, because there is no evidence of what entity is the successor-in-interest to “Google

Inc.,” the actual party to the Settlement Agreement. The mere fact that Defendants have now

introduced a “Certificate of Conversion” on a Rule 12(b)(6) motion in no way dispels the

possibility that either Alphabet Inc. or XXVI Holdings Inc. bears some legal responsibility for

the promises made by “Google Inc.” in the Agreement. 16

Finally, in regard to Defendants’ motion to dismiss the claims for injunctive and

15
Defendants’ mealy-mouthed response—that a search for Googles returns “3 billion results,” “[w]hile the location
of googles.com may vary greatly among those search results”—only proves the point. Moreover, the “Google
Search Screenshot” that Defendants attach in support of this argument, see Mead Decl. Ex. N, is not properly
considered on a motion to dismiss. See, e.g., King Zak Indus., Inc. v. Toys 4 U USA Corp., No. 16 Civ. 9676 (CS),
2017 WL 6210856, at *3 (S.D.N.Y. Dec. 8, 2017) (“I will not, however, consider the screenshots of the Google
image searches attached to Defendant’s reply brief because ‘the results of a Google search are continually changing
and thus cannot be accurately and readily determined from sources whose accuracy cannot reasonably be
questioned.’” (citation omitted)).
16
The parties are currently negotiating the dismissal of all defendants other than Google LLC in exchange for all of
the defendants stipulating and agreeing that Google LLC is the successor-in-interest to Google Inc., and has
assumed all of the duties and obligations thereunder. Until this stipulation is executed, however, it would be
inappropriate to dismiss any of the Defendants from the litigation.

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declaratory relief, the notion that these claims technically constitute remedies rather than

separate causes of action “is true but irrelevant.” Pace v. Schwartz, 680 F. Supp. 2d 591, 594

(S.D.N.Y. 2010). As in Pace, “there is no potential for confusion arising from its

misplacement.” Id.; see also, e.g., Five Star Dev. Resort Cmtys., LLC v. iStar RC Paradise

Valley LLC, No. 09 Civ. 2085 (LTS), 2010 WL 2697137, at *4 (S.D.N.Y. July 6, 2010)

(similarly denying motion to dismiss plaintiff's claims for declaratory and injunctive relief). SM

Kids maintains that it is entitled to an injunction and a declaratory judgment, whether couched as

a claim for relief or type of remedy and relief to which SM Kids is entitled. To make it crystal

clear that SM Kids seeks this result, and to keep the case simple and streamlined, the claims for

injunctive relief and declaratory relief should not be dismissed.

CONCLUSION

For the foregoing reasons, SM Kids respectfully requests that the Court deny Defendants’

motion in its entirety.

Dated: New York, New York Respectfully submitted,

May 18, 2018
DAVIS WRIGHT TREMAINE LLP

By: /s/ Geoffrey S. Brounell

Geoffrey S. Brounell

John M. Magliery
johnmagliery@dwt.com
Geoffrey S. Brounell
geoffreybrounell@dwt.com
1251 Avenue of the Americas, 21st Floor
New York, New York 10020
Tel: (212) 489-8230
Fax: (212) 489-8340

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