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EBIN New York, Inc. v. Lee

United States District Court, D. New Jersey

October 11, 2019

EBIN NEW YORK, INC., Plaintiff,
v.
YOUNG CHUL LEE, KYUNG HO KANG, SM BEAUTY, LLC, S&L HAIR, INC., JOHN DOES 1-10 said names being fictitious, and JOHN ROES CORPS. 1-10 said names being fictitious, Defendants.

          OPINION

          MARK FALK, UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court upon Plaintiff's motion for leave to amend its Complaint. (CM/ECF No. 45.) The motion is opposed. The motion is decided on the papers. Fed.R.Civ.P. 78(b). For the reasons set forth below, the motion is granted.

         BACKGROUND

         A. Factual and Procedural History

         This is a trade dress infringement and theft of trade secrets case. Plaintiff EBIN New York, Inc. (“EBIN” or “Plaintiff”) is in the business of developing, manufacturing and selling beauty supplies such as hair care and hair styling products and is the owner of two trademarks for its hair products (“hair care products”).[1] (Am. Compl. ¶¶ 6-7.) In addition, EBIN manufactures and sells a product line of high-quality false eyelashes. (Declaration of Joon Park (“Park Decl.”) at ¶ 2.)

         Defendants YC Lee (“Lee”) and KH Kang (“Kang”) were hired by EBIN in April 2016, as its marketing director and regional sales director, respectively. According to EBIN, Lee and Kang had access to EBIN's confidential and proprietary business information including marketing and advertising strategy, client lists, and product development plans and designs relative to its trademarked hair care products. (Am. Compl.¶¶ 31-32.) In early 2017, Lee and Kang resigned from EBIN and took employment with Plaintiff's competitors, Defendants SM Beauty, LLC (“SM Beauty”) and S&L Hair, Inc. (“S&L”).[2] EBIN claims that Lee and Kang, while employed by EBIN, stole proprietary and confidential information and assisted SM Beauty and S&L in infringing on Plaintiff's trade dress relating to its trademarked hair care products. Specifically, Plaintiff alleges that SM Beauty used the proprietary information supplied by Lee and Kang in the development, marketing and sales of its own competing hair care product.

         On December 21, 2017, EBIN filed a nine-count Complaint asserting claims for trade dress and mark infringement in violation of the Lanham Act, 15 U.S.C. § 1125, and the New Jersey Fair Trade Act, N.J.S.A. §§ 56:4-1 et seq., as well as a claim for dilution and injury to business reputation under N.J.S.A. § 56:3-13.16, violation of the New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1 et seq., and as well as other common law claims. Defendants filed an Answer on April 19, 2018. (CM/ECF No. 17.) Plaintiff filed an Amended Complaint on June 3, 2019, adding claims of breach of duty of loyalty and theft of trade secrets against Lee and Kang. (CM/ECF No. 38.)

         On June 12, 2018, the Court entered a Scheduling Order closing discovery March 1, 2019, and providing that any motions to amend be filed by September 15, 2018. (CM/ECF No. 23.) The Court entered two more scheduling orders on December 20, 2018 and May 14, 2019, extending discovery; neither order contained a deadline by which motions to amend were to be filed. (CM/ECF Nos. 29 and 36.) Pursuant to the May 14 Order, discovery was set to close September 30, 2019. (CM/ECF No. 36.) Plaintiff filed the instant motion to amend on September 13, 2019.

         B. Plaintiff's Motion to Amend

         Plaintiff seeks leave to file a Second Amended Complaint (SAC) to add new factual allegations and four new causes of action against SM Beauty arising out of acts of trade dress infringement allegedly committed by SM Beauty after this case was commenced. More specifically, Plaintiff seeks to add facts which would support four new claims (trade dress infringement in violation of the Lanham Act and New Jersey Fair Trade Act, dilution and injury to business reputation, and common law unfair competition) against SM Beauty relative to an entirely different product manufactured and sold by EBIN-its false eyelash product line.

         EBIN manufactures and sells a product line of high-quality false eyelashes with products having cat-themed names (the “Cat Lash” line.) (Declaration of Joon Park (“Park Decl.”) at ¶ 2; proposed SAC ¶ 57.) EBIN first began engaging in research and development for this product line around May 2018, approximately six months after this case was commenced. (Proposed SAC ¶ 59.) EBIN has spent approximately $1.5 million advertising and selling its Cat Lash line since October 2018. (Proposed SAC ¶ 60.) In early June 2019, EBIN discovered that SM Beauty allegedly was selling a product line whose trade dress appeared to precisely mimic the Cat Lash line's trade dress. (Proposed SAC ¶ 61; Park Decl. ¶ 6.) Like EBIN's Cat Lash line, SM Beauty's lash product utilized the same color schemes on its packaging, used the term “3D” to describe its lashes, and used similar size boxes and displays. (Proposed SAC ¶¶ 62-67.) According to EBIN, the combination of product displays and boxes appear nearly identical and lead to customer confusion. (Proposed SAC ¶ 69.)

         Maintaining that it only recently became aware of SM Beauty's alleged new instances of trade dress infringement, Plaintiff seeks leave to amend its pleading to assert these new claims now. Plaintiff argues that amending its pleading to assert the proposed new claims in the present case is more efficient than litigating them in a separate action. Specifically, Plaintiff contends that as the proposed new factual allegations of infringement by SM Beauty of the Cat Lash line mirror the existing ones relative to EBIN's hair care products. Defendants oppose the motion maintaining that any amendment will delay resolution of the case and compel Defendants to expend significant additional resources to conduct discovery and prepare for trial.[3]

         DISCUSSION

         A. ...


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