Spice Merchants Entities Corp. et al v. Pretty Colorado, LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 24-cv-00371-NRN
SPICE MERCHANTS ENTITIES CORP., a Michigan corporation,
STM Properties, LLC, a Michigan limited liability company, and
LISA FREEMAN, a Michigan individual,
Plaintiffs,
v.
PRETTY COLORADO, LLC, a Colorado limited liability company,
CORINE WINSLOW, a Colorado individual, and
ELLIS YOUNG (USA), LTD, a Colorado limited liability company,
Defendants.
ORDER DENYING
DEFENDANTS’ PARTIAL MOTION TO DISMISS (ECF No. 17).
N. REID NEUREITER
United States Magistrate Judge
The Parties have consented to the jurisdiction of this magistrate judge for all
purposes and Judge Regina M. Rodriguez issued an Order of Reference on May 6,
2024. ECF. No. 29.
This matter comes before the Court on Defendant’s Partial Motion to Dismiss,
filed on April 4, 2024. ECF No. 17. Plaintiffs opposed the motion on April 25, 2024. ECF
No. 26. Defendants filed a reply in support on May 9. 2024. ECF No. 31.
It is fair to say that the Court and the Parties were then distracted from the
substance of Defendants’ motion to dismiss by an evidentiary preliminary injunction
hearing that began on May 28, 2024, with additional days of hearing and argument on
June 7, 2024, and June 14, 2024. See ECF Nos. 45, 52, 54. Hoping that the matter
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 1
of 18

2
could be resolved through mediation, the Parties and the Court effectively agreed to
stay proceedings (and any decision on the preliminary injunction) while a settlement
conference could be scheduled with Chief Magistrate Judge Michael E. Hegarty. See
ECF No. 56 (Order setting settlement conference). The settlement conference did not
bear fruit.
After the delay associated with the mediation, on September 24, 2024 the Court
issued a decision on the preliminary injunction motion, granting in limited part the
injunction, but denying much of the requested relief, including the request to enforce a
non-compete provision. See ECF No. 67. The Court finally entered a scheduling order
in the case on October 17, 2024. ECF No. 76.
After all this opening jousting, a decision on Defendants partial motion to dismiss
is overdue.
I. Background of the Case and Allegations of the Complaint
a. Plaintiffs’ Allegations
The nature of the overarching disputes between the Parties is laid out in detail in
the Court’s Order on Plaintiff’s Motion for Preliminary Injunction. ECF No. 67. The
following allegations are taken from the Complaint, ECF No. 1, and will be repeated
here in a limited fashion only as necessary.
Plaintiffs are Spice Merchants Entities Corp. (“Spice”), STM Properties, LLC
(“STM”), and Lisa Freeman (“Freeman”). Freeman is a Michigan resident and citizen.
She is the founder and owner of Spice and STM, which are Michigan entities.
Defendant Pretty Colorado, LLC (“Pretty”) is a Colorado company owned by Defendant
Corinne Winslow (“Winslow”). Defendant Ellis Young (USA) Ltd. (“Young”) is a Colorado
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 2
of 18

3
company. Young is the landlord caught in the fight between Freeman and her Spice
entities on one hand, and Winslow and Pretty on the other.
This is, at its heart, a dispute between a franchisor (Freeman and Spice) and a
former franchisee (Winslow and Pretty). Spice is a franchisor that licenses the marks
Spice Merchants and Spice & Tea Merchants to franchisees who operate retail
businesses that sell spices, spice blends, teas, and related items. ECF No. 1 ¶ 11.
Freeman, the managing member of Spice, is the owner of United States Trademark
Registration No. 5048478 for the trademark “Spice & Tea Merchants” (the “Mark”).
Freeman licenses the Mark to Spice which, in turn, licenses the Mark to franchisees. Id.
¶ 13. In 2009, Spice established a location in Breckenridge. Id. ¶ 15. Young, as
landlord, leased the property located at 324 South Main Street, Breckenridge, to STM
for Spice to operate a retail business. The lease agreement between Young and STM is
referred to as the “Head Lease.” Id. ¶ 16. STM is Freeman’s vehicle for real estate
transactions and holds leases for certain store locations.
The Breckenridge Spice retail shop was operated using the Mark as a franchisor-
owned store from May 2017 until January 2022. The term of the Head Lease was
extended several times, the last extension being executed by STM on February 16,
2022, which extended the Head Lease through March 31, 2025. Id. ¶¶ 17–18.
Winslow was the Breckenridge store manager in 2021. She formed Pretty in
March 2021 and began discussions with Freeman about the possibility of becoming a
franchisee of Spice, acquiring the Breckenridge store’s inventory, and running the
Breckenridge store as her own. Id. ¶¶ 19–21. Pretty executed a Franchise Agreement in
November 2021. Id. ¶ 23. In early 2022, Pretty and Winslow agreed to purchase the
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 3
of 18

4
Breckenridge store at the value of its inventory, which his alleged to have been
$39,144.94. Id. ¶¶ 26–27. However, Winslow never executed a purchase agreement or
a promissory note for the value of the inventory, despite a request from Spice. Id ¶ 29.
She did take possession of the inventory and fixtures in the building, however. Winslow
entered into a sublease for the store on January 6, 2022. The sublease is in the name
of “Spice & Tea Merchants Breckenridge, LLC”—a tradename registered by Pretty with
the Colorado Secretary of State. Id. ¶¶ 30–33. The Complaint specifically alleges that
Young approved the sublease to Winslow’s company in February 2022. Id. ¶¶ 25; 35.
The term of the sublease expired on March 31, 2022, but Winslow and Pretty
continued to operate the store into late-2023 as a Spice franchisee, with STM as the
sublessor and Winslow as a month-to-month sublessee of STM. Id. ¶ 39.
Pretty allegedly violated the Franchise Agreement by failing to timely pay
October 2023 royalties in the amount of $759.24. Spice sent a default letter which
warned that the franchise rights would terminate in ten days if the monetary default was
not cured. It also advised Pretty that it had not complied with other provisions of the
Franchise Agreement regarding minimum monthly advertising expenditures and
providing quarterly and annual financial statements. The letter gave 30 days to cure the
advertising and financial statement defaults. Id. ¶¶ 41–44.
Pretty failed to cure any of the claimed defaults within the prescribed timeframe,
and on November 29, 2023, STM served a “notice to quit” on Pretty demanding that
Pretty vacate the store no later than midnight December 31, 2023. Id. ¶¶ 44–45. But
Pretty did not vacate the store.
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 4
of 18

5
Apparently, Young and Winslow were in contact about the situation and Young
then terminated the Head Lease and signed a new lease agreement with Pretty. Pretty
and Winslow then reopened the store as “Breckenridge Tea & Spice” to sell spices,
spice blends, teas, and related items, in arguable violation of the covenant not to
compete and while continuing to use the Mark and Spice trade dress. Id. ¶¶ 49–51.
Thus, per the Complaint, Spice previously had a franchise location in
Breckenridge, Colorado, ongoing franchise royalty payments, and at least an implicit
promise to be reimbursed for the value of the inventory and furnishings that Winslow
acquired when she started her store. Today, Spice has nothing in Colorado: no
franchise location in Breckenridge, no payment for the inventory it lost to Winslow and
Pretty, and no lease. It also has a competitor—Pretty—selling the substantially the
same products its franchisee previously sold, in the same location.
b. Plaintiffs’ Claims for Relief
Plaintiffs Freeman, Spice, and STM bring multiple claims against multiple parties
in their Complaint.
In Claim 1, Freeman and Spice assert a claim for federal trademark infringement
against Pretty and Winslow. The allegation is that the new “Breckenridge Tea & Spice”
mark being used by Pretty and Winslow is likely to cause confusion as to the source
and origin of the goods being sold under that mark, inducing purchasers to believe that
the goods are somehow sponsored or connected to Freeman and Spice. Id. ¶¶ 52–64.
In Claim 2, Spice makes a claim for unfair competition under 15 U.S.C. § 1125
(a) (the “Lanham Act”). Spice alleges that its franchises have, distinctive trade dress,
consisting of, among other things, custom-built furniture and fixtures handmade in
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 5
of 18

6
Michigan, sourced barn beams and barn siding, metal shelving, and custom built metal
tables and racks, and this trade dress has become distinctive and acquired secondary
meaning in the retail market. Spice claims that despite the termination of the franchise,
Pretty and Winslow, by continuing to operate using the same trade dress used by the
Spice franchise, are creating a likelihood of confusion among consumers as to the
source of their competing products. Id. ¶ ¶65–78.
In Claim 3, Spice brings against Pretty a claim for breach of the Franchise
Agreement. Spice alleges, among other things, that Pretty failed to pay required
royalties for monthly gross revenues since September 2023, failed to spend the
required amounts on advertising, failed to supply quarterly annual income statements or
other financial statements, and otherwise breached the Franchise Agreement by failing
to take certain steps (such as assignment of telephone numbers and return of manuals
and other confidential information) on the termination of Pretty’s franchise rights. This
claim also asserts that Pretty is in violation of the Franchise Agreement’s non-compete
clause.
In Claim 4, Spice sues Winslow individually for breach of the personal guarantee
and the nondisclosure and noncompetition provisions, including a guarantee to
reimburse Spice for all attorneys fees and costs incurred in enforcing the monetary
obligations of the Franchise Agreement against Pretty.
In Claim 5, Spice sues Pretty and Winslow for unjust enrichment, specifically for
receiving and not paying for more than $39,000 in inventory when Pretty and Winslow
took over the Breckenridge store. Spice also claims that Pretty and Winslow were
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 6
of 18

7
provided with more than $72,000 in furnishings, equipment, and trade dress items which
have never been paid for.
In Claim 6, STM brings a claim for breach of the sublease against Winslow. The
claim is that STM substantially performed under the sublease. When Winslow did not
sign a new sublease, she (or Pretty) became a month-to-month tenant. Winslow was
properly served with a notice to quit and refused to leave or surrender the premises.
STM claims that it is entitled to possession of the premises. STM also claims it is
entitled to its attorneys fees and costs under the sublease.
In Claim 7, STM sues Young for breach of the Head Lease. STM alleges that
even though it substantially performed its obligations, Young nevertheless terminated
the Head Lease. And, even if STM had defaulted, Young failed to give STM any
opportunity to cure any default, which the Head Lease requires.
In Claim 8, STM sues Young for interference with contractual relations. STM
claims that STM and Winslow were parties to the sublease. Young knew of the
sublease and was aware that STM had served Winslow with a notice to quit so that
STM could reoccupy the store premises after December 31, 2023. Nevertheless, Young
improperly terminated the Head Lease, cutting off STM’s ability to reoccupy the
premises. This allowed Pretty/Winslow to breach the sublease and remain on the
premises, causing STM damages.
In Claim 9, STM sues Pretty and Winslow for interference with contractual
relations, alleging that Pretty and Winslow intentionally (and wrongfully) induced Young
to terminate STM’s rights under the Head Lease.
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 7
of 18

8
II. Defendants’ Motion to Dismiss
Defendants now move to dismiss Claims 1, 2, and 7.
With respect to Claim 1 (trademark infringement and unfair competition in
violation of 15 U.S.C. § 1114), Defendants assert that the trademarks, as submitted and
approved by the Trademark and Patent Office, are for retail or on-line stores that sell
cookware and cooking utensils, kitchen and culinary equipment, salt and pepper
shakers, kitchen and culinary utensils and accessories, and other cooking accessories.
But Defendants insist that their business does not sell such products—it is a store that
sells spices and tea for drinks, food, scents, and medicinal purposes—therefore, there
can be no infringement.
With respect to Claim 2 (unfair competition in violation of the Lanham Act by
operating a store that allegedly uses Plaintiffs’ trade dress), Defendants assert that
Plaintiffs do not have any distinctive trade dress as a matter of law, lack any distinct
logo or product/business name or make, and did not create the items that are claimed to
be trade dress. Therefore, Defendants argue that the claim should be dismissed with
prejudice for failing to state a claim upon which relief can be granted.
With respect to Claim 7 (breach of lease against Young based on allegation that
Young improperly terminated the lease and failed to provide an opportunity to cure),
Defendants argue that the lease prohibits subleasing without Young’s consent and
nothing in the Complaint alleges that Plaintiffs obtained Young’s written consent to
sublease to Pretty and Winslow. Defendants maintain that this breach of the lease,
having persisted for so long, is uncurable, given that the invalid sublease was allegedly
entered into in January of 2022 and the lease termination occurred in December 2023.
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 8
of 18

9
Accordingly, Defendants insist that Plaintiffs have failed to state a claim against Young
with respect to breach of the lease.
III. Legal Standard for Deciding a Motion to Dismiss
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a defendant
may move to dismiss a claim for “failure to state a claim upon which relief can be
granted.” Fed. R. Civ. P. 12(b)(6). “The court’s function on a Rule 12(b)(6) motion is not
to weigh potential evidence that the parties might present at trial, but to assess whether
the plaintiff’s complaint alone is legally sufficient to state a claim for which relief may be
granted.” Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (citations and
quotation marks omitted).
“A court reviewing the sufficiency of a complaint presumes all of plaintiff’s factual
allegations are true and construes them in the light most favorable to the plaintiff.” Hall
v. Bellmon, 935 F.2d 1106, 1108 (10th Cir. 1991). “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)). Plausibility, in the context of
a motion to dismiss, means that the plaintiff pleaded facts which allow “the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The
Iqbal evaluation requires two prongs of analysis. First, the court identifies “the
allegations in the complaint that are not entitled to the assumption of truth,” that is,
those allegations which are legal conclusions, bare assertions, or merely conclusory. Id.
at 679–81. Second, the court considers the factual allegations “to determine if they
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 9
of 18

10
plausibly suggest an entitlement to relief.” Id. at 681. If the allegations state a plausible
claim for relief, such claim survives the motion to dismiss. Id. at 679.
However, the Court need not accept conclusory allegations without supporting
factual averments. S. Disposal, Inc., v. Tex. Waste, 161 F.3d 1259, 1262 (10th Cir.
1998). “[T]he tenet that a court must accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556
U.S. at 678. Moreover, “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’ Nor does the complaint
suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id.
(citation omitted). “Where a complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between possibility and plausibility of
‘entitlement to relief.’” Id. (citation omitted).
Defendants have attached a number of documents as exhibits to their motion to
dismiss. See ECF No. 17-1 (28 pages). These documents include two trademark
documents from the United States Patent and Trademark Office. See ECF No. 17-1 at
1–4 for “Mark 491” (“Spice Merchants”), and ECF No. 17-1 at 5–7 for “Mark 430” (“Spice
& Tea Merchants”). Also attached are three documents related to the lease agreements
between STM and Young. First is the commercial lease between Young and STM. ECF
No. 17-1 at 8–22. Second is the Fourth Extension of Commercial Lease (the “Lease
Extension”) ECF No. 17-1 at 23. And third is the notice of termination of the commercial
lease to STM Properties (the “Lease Termination Letter”). ECF No. 17-1 at 24–26.
These documents fall within the categories of documents that the Court may consider in
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 10
of 18

11
deciding a motion to dismiss under Rule 12(b)(6), in addition to the well-pleaded
allegations of the Complaint. See Berneike v. CitiMortgage, Inc., 708 F.3d 1141, 1146
(10th Cir. 2013) (explaining exceptions to the general rule that a court may only
consider the contents of the complaint when ruling on a 12(b)(6) motion include
“documents incorporated by reference in the complaint; documents referred to in and
central to the complaint, when no party disputes its authenticity; and ‘matters of which a
court may take judicial notice’”) (quoting Gee v. Pacheco, 627 F.3d 1178, 1186 (10th
Cir. 2010).
IV. Analysis
a. Claim 7—Breach of Head Lease
Turning first to Claim 7 (breach of lease agreement against Young), Defendants
argue that Young terminated STM’s Head Lease in December 2023 for various reasons,
including but not limited to: failing to get approval for the Winslow/Pretty sublease that
began in January 2022, failing to execute a valid sublease after March 31, 2022, and
because Winslow/Pretty did not meet insurance requirements. See ECF Nos. 17 at 5,
171-1 at 24–25 (Lease Termination Letter). The Lease Termination Letter suggests that
STM effectively vacated the premises on January 7, 2022, leaving it to be occupied by
Pretty and Winslow without a valid and executed sublease. In addition, the sublease (or
occupation of the premises by Pretty) was supposedly without Young’s knowledge or
written consent. ECF No. 17-1 at 24.
Defendants argue that nothing in the Complaint alleges Plaintiffs obtained “prior
written consent from Young” when STM subleased the premises to Winslow/Pretty. And
“[b]ecause Plaintiffs admit they sublet the property to Winslow/Pretty and there is no
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 11
of 18

12
allegation such sublease was approved prior to the sublease or in writing, there can be
no breach claim against Young for termination.” ECF No. 17 at 11. Defendants also
argue that Plaintiffs never informed Young that there was no sublease after March 31,
2022. Defendants say that Young terminated the Head Lease when it learned this
information, and there would have been no ability to cure a default that had gone on for
so long. ECF No. 17 at 14.
In opposition, Plaintiffs insist that they have alleged enough facts to establish a
claim for breach of the Head Lease. As Plaintiffs point out, the elements of a breach of
contract under Colorado law are relatively simple: a plaintiff must allege (1) the
existence of a contract; (2) performance by plaintiff or some justification for
nonperformance; (3) failure to perform the contract by the defendant; and resulting
damages. McAuliffe v. Vail Corp., 69 F.4th 1130, 1144 (10th Cir. 2023).
Reviewing the allegations of the Complaint, STM properly alleges the necessary
elements: that there was a contract— the Head Lease, ECF No. 1 ¶ 16; that STM
substantially performed under the Head Lease, id. ¶ 123; and that Young breached by
terminating the Head Lease without justification when STM had not defaulted, and even
if STM had defaulted, Young failed to give STM an opportunity to cure, id. ¶ 124.
Contrary Defendants’ arguments, the Complaint specifically alleges that “Young
approved the subletting to a company of Winslow’s on February 16, 2022, when it
extended the Head Lease.” Id. ¶ 35. Moreover, the Complaint alleges that
Pretty/Winslow paid the rent, condominium association dues, and taxes directly to
Young through at least the end of 2023. If Young was paid the rent directly by
Pretty/Winslow, it stands to reason that Young knew of, and either implicitly or explicitly
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 12
of 18

13
approved of, the sublease agreement between STM and Pretty/Winslow. On a motion to
dismiss, all reasonable inferences are viewed in the light most favorable to non-moving
party. Here, it is a reasonable inference that Young knew and approved of the sublease
agreement. In addition, although Young asserts in the Lease Termination Letter that
there was no sublease, the Complaint alleges that, although the written sublease had
expired, Pretty and Winslow continued to operate the store on a month-to-month
sublease. Id. ¶ 39.
In addition, Defendants’ argument that these supposed breaches of the Head
Lease by STM could not have been cured, thereby justifying the termination without the
opportunity to cure, is again a mere assertion by Defendants. To the extent STM was in
violation for not having a written sublease, the violation could have been cured by
getting Pretty/Winslow to sign a written agreement. To the extent that STM was in
violation for having a sublessee without the express written approval of Young, STM
was arguably curing that problem by evicting Pretty/Winslow from the leased premises.
It also beggars belief that Young terminated the Head Lease because Young had never
approved Pretty/Winslow as a subtenant when Young then immediately turned around
and leased the premises to Pretty. Id. ¶ 50.
Although Young insists it was justified in terminating the Head Lease based on
supposed breaches by Spice or STM, the Court cannot and will not make any such
determination on a Rule 12(b)(6) motion to dismiss, which tests only the sufficiency of a
complaint’s well-pled allegations. Based on the allegations of the Complaint, Plaintiffs
have sufficiently alleged that Young breached the Head Lease. Therefore, Defendants’
motion to dismiss Claim 7 will be denied.
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 13
of 18

14
b. Claim 1—Trademark Infringement
With respect to Claim 1, to state a claim for infringement of a registered
trademark and unfair competition under 15 U.S.C. § 1114, the plaintiff must establish
that (1) the mark is valid and legally protectable; (2) it owns the mark; and (3) the
defendant’s use of the mark as complained of is likely to cause confusion as to the
source, sponsorship, affiliation or association. See Big O Tires, Inc. v. Bigfoot 4x4, Inc.,
167 F. Supp. 2d 1216, 1221–22 (D. Colo. 2001), (citing Durango Herald, Inc. v. Riddle,
719 F. Supp. 941, 948 (D. Colo. 1988)).
Here, Freeman can meet the first two elements of a Section 1114 claim because
she alleges that she owns the “Spice & Tea Merchants” mark and it is registered with
the United States Patent and Trademark Office. See 15 U.S.C. § 1057(b) (“A certificate
of registration of a mark upon the principal register provided by this chapter shall be
prima facie evidence of the validity of the registered mark and of the registration of the
mark, of the owner’s ownership of the mark, and of the owner’s exclusive right to use
the registered mark in commerce on or in connection with the goods or services
specified in the certificate, subject to any conditions or limitations stated in the
certificate.”).
The Complaint does allege that Winslow/Pretty are no longer using the Mark and
have instead converted to using the name “Breckenridge Tea & Spice.” Defendants
argue that this means there is no longer the possibility of confusion with respect to the
use of these two marks. But it is not that simple. Assessing the likelihood of confusion is
generally a fact-intensive analysis. Hornady Mfg. Co., Inc. v. Doubletap, Inc., 746 F.3d
995, 1001 (10th Cir. 2014). It may sometimes be amenable to summary judgment in
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 14
of 18

15
appropriate circumstances, but before the Court is a motion to dismiss, not for summary
judgment.
To determine whether two non-identical marks are likely to cause confusion, the
Tenth Circuit directs the Court to examine six non-exhaustive factors to evaluate
whether there is a likelihood of confusion: 1) the degree of similarity between the
competing marks; (2) the intent of the alleged infringer in adopting the contested mark;
(3) evidence of actual confusion; (4) the similarity of the parties’ products and the
manner in which the parties market them; (5) the degree of care that consumers are
likely to exercise in purchasing the parties’ products; and (6) the strength of the
contesting mark. Water Pik, Inc. v. Med-Systems, Inc., 726 F.3d 1136, 1143 (10th Cir.
2013). The importance of any particular factor in a specific case “can depend on a
variety of circumstances, including the force of another factor.” Id. “These [six] factors
are interrelated and no one factor is dispositive.” Sally Beauty Co. Inc. v. Beautyco, Inc.,
304 F.3d 964, 972 (10th Cir. 2002). The key inquiry is whether the consumer is likely to
be deceived or confused by the similarity of the marks. Water Pik, Inc., 726 F.3d at
1143. The degree of similarity is the most important factor. Hornaday Mfg. Co., 746 F.3d
at 1001. A lower degree of similarity can nevertheless cause confusion when the marks
are placed on closely related goods. Nautilus Group, Inc. v. ICON Health and Fitness,
Inc., 372 F.3d 1330, 1345 (Fed. Cir. 2004).
Here, the two marks are somewhat similar, although not identical. The words
“Spice” and “Tea” appear in both marks, which is not surprising, given that Winslow’s
store is effectively the same store that is selling the same items—spices, teas, and
herbs—that it previously sold when it was a franchise store selling under the Spice &
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 15
of 18

16
Tea Merchants Mark. The Mark that Freeman is trying to protect is not a strong mark;
on the scale from weak to strong, it appears more descriptive or suggestive than
arbitrary or fanciful.
This issue can be decided as a matter of law only when “no reasonable juror
could find likelihood of confusion between plaintiff’s and defendants’ marks.” Affliction,
LLC v. Utah Vap or Smoke, LLC, 935 F.3d 1112, 1114 (10th Cir. 2019) (reversing grant
of summary judgment in the defendant’s favor finding that fact issues remained as to
likelihood of confusion between marks). At this early stage, the Court is not prepared to
declare as a matter of law that there can be no likelihood of confusion.
Defendants make the additional argument that there can be no claim for
trademark infringement where identical marks are used by different parties for different
products or services. ECF No. 17 at 7. For this argument, Defendants rely on the fact
that the International Primary Class for Plaintiffs’ Mark is 035, which is for services, not
associated with any goods. Defendants correctly state that the protections associated
with the Mark are for “retail store services featuring cookware and cooking accessories .
. . namely kitchen and culinary equipment . . . and a wide variety of other cooking
accessories.” According to Defendants, this has little-to-nothing to do with a specialty
shop that sells tea and spices. Therefore, because the Mark is registered for something
other than a tea and spice shop—a cookware and kitchen equipment store—Plaintiffs
cannot use the Mark as a legal basis to prohibit someone using the mark in commerce
for a tea and spice shop.
This is an interesting argument, and one which may ultimately prove successful
on summary judgment. But the fact that Plaintiffs’ Mark was indisputably associated for
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 16
of 18

17
many years with the franchise store which sold tea and spices, and Defendants are
selling the same products in the same location in similar packaging, suggests (at least
at the motion to dismiss stage) that there could be confusion here.
For these reasons, the motion to dismiss Claim 1 will be denied.
c. Claim 2—Unfair Competition
Claim 2 is brought under the Lanham Act, which prohibits, on or connection with
any goods or services, the use in commerce of any word, name, symbol, or combination
thereof, or any false designation of origin, false or misleading description of fact, or false
or misleading representation of fact, that “is likely to confuse, or to cause mistake, or to
deceive as to the affiliation, connection, or association of such person with another
person, or as to the origin, sponsorship, or approval of his or her goods, services, or
commercial activities by another person.” other person.” 15 U.S.C. § 1125(a)(1)(A).
“Courts addressing claims of both trademark infringement and unfair competition
address the claims together because they have virtually identical elements[.]” RV
Horizons, Inc. v. Smith, No. 1:18-cv-02780-NYW, 2019 WL 6052416, at *5 (D. Colo.
Nov. 15, 2019) (citation omitted). Thus, for the same reasons that the Court denies the
motion to dismiss Plaintiffs’ trademark infringement claim, it will deny the motion with
respect to the unfair competition claim. Plaintiffs adequately allege that the Spice
franchises and franchisor-owned locations have inherently distinctive trade dress which
includes custom furniture and fixtures, sourced barn beams and siding, and specifically
sourced hutches and custom-built metal tables. ECF No. 1 ¶ 68. Defendants
Pretty/Winslow are using a similar (although not identical) name to market the exact
same goods, in the same location, using similar trade dress and packaging as the prior
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 17
of 18

18
franchised Spice Merchants store. The Court does not believe it is appropriate to
determine on a motion to dismiss that the asserted trade dress is not protectible. See
Two Pesos, Inc. v. Taco Caba, Inc., 505 U.S. 763, 774 (1992) (holding that colorful
trade dress for Mexican restaurant could be inherently distinctive and qualify as
protected trade dress).
V. Conclusion
For the foregoing reasons, Defendants’ Partial Motion to Dismiss, ECF No. 17, is
DENIED.
Date: November 20, 2024 ________________
N. Reid Neureiter
United States Magistrate Judge
Case No. 1:24-cv-00371-NRN Document 77 filed 11/20/24 USDC Colorado pg 18
of 18