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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

TELEBRANDS CORP.,

Plaintiff,

 v.

EXCEPTIONAL PRODUCTS INC.,

 Defendant.

11-CV-2252

OPINION

This matter comes before the Court on Defendant Exceptional Products Inc. 

(“EPI”)’s motion to dismiss. Plaintiff Telebrands Corp. (“Telebrands”) filed an

action against EPI seeking, among other relief, a declaration of non-infringement. 

EPI seeks to dismiss the entire Amended Complaint pursuant to Federal Rule of 

Civil Procedure 12(b)(1) for lack of subject matter jurisdiction.

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For the reasons stated below, the Court will deny the motion in part and 

grant it in part.

I. Factual and Procedural Background

Telebrands and EPI are both direct marketing companies that market and sell 

a variety of consumer products. Telebrands sells an oral care product for pets 

known as DR. GEORGE’S PLAQUE BLAST; EPI sells a competitive product in 

association with the mark PLAQUE ATTACK (U.S. Trademark Registration No. 

3,921,968). Both parties use video commercials that air on television to sell these 

competing products. According to the allegations of the Amended Complaint, on 

April 19, 2011, Stephanie Stewart, President of EPI, called AJ Khubani, President 

and Founder of Telebrands, and alleged that Telebrand’s commercial selling its 

oral care product is a direct copy of EPI’s commercial selling its oral care product. 

EPI’s president allegedly further stated that EPI had a number of causes of action 

against Telebrands. The parties dispute the actual details of the conversation, 

although Ms. Stewart admits in her declaration that she called Khubani and “told 

 1 EPI also nominally moves to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. 

But in its briefing, EPI makes no substantial arguments for dismissal under Rule 12(b)(6); rather, this Court 

understands all of EPI’s arguments to relate to the scope of this Court’s jurisdiction. 

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him that [she] perceived Telebrand’s [sic] actions in trademarking and marketing 

Plaque Blast using a very similar commercial . . . to be hostile and inconsistent 

with the historically friendly competition within the business.” 

On April 20, 2011, Telebrands filed this action seeking declaratory relief. 

Thereafter, the parties attempted settlement. On June 20, 2011, EPI moved to 

dismiss the complaint, and Telebrands sought leave to amend. After Telebrands 

filed the Amended Complaint, EPI renewed its motion to dismiss. 

II. Legal Analysis

A. Motion to Dismiss Standard

Federal Rule of Civil Procedure 12(b)(1) allows a party to move for 

dismissal of claims based on a lack of subject matter jurisdiction. Where a 

defendant challenges the jurisdiction on the face of the complaint, the Court must 

assume the veracity of plaintiff’s allegations; in contrast, a factual challenge to a 

Court’s jurisdiction does not require a court to afford plaintiff's allegations the 

presumption of truthfulness. See Mortensen v. First Fed. Sav. & Loan Ass’n, 549 

F.2d 884, 891 (3d Cir. 1977); Dasrath v. Continental Airlines, Inc., 228 F.Supp.2d 

531, 534 (D.N.J. 2002); Med. Soc’y of New Jersey v. Herr, 191 F.Supp.2d 574, 578 

(D.N.J. 2002) (“A facial attack on jurisdiction is directed to the sufficiency of the 

pleading as a basis for subject matter jurisdiction,” while a factual attack “calls into 

question the essential facts underlying a claim of subject matter jurisdiction.”). In 

adjudicating a factual 12(b) (1) challenge, the court may consider affidavits, 

depositions, and testimony to resolve factual issues, and weigh the evidence to 

satisfy itself as to the existence of its power to hear the case. Iwanowa v. Ford 

Motor Co., 67 F.Supp.2d 424, 438 (D.N.J. 1999). 

EPI raises several issues that bear on whether this Court may or should

exercise jurisdiction over this action: (1) whether, generally, an actual controversy 

exists between the parties; (2) whether the fact that EPI has not registered its 

copyright in the commercial defeats Telebrand’s request for a declaratory 

judgment on that point; (3) whether Telebrand’s allegations regarding unfair 

competition are sufficient to show that a controversy exists as to those claims; (4) 

whether settlement discussions have mooted the controversy; and (5) whether this 

Court should decline to exercise jurisdiction even if a sufficient controversy exists. 

The Court will consider each in turn.

B. Actual Controversy under the Declaratory Judgment Act

EPI argues that no actual controversy exists between the parties and 

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therefore this Court lacks jurisdiction under the Declaratory Judgment Act, 28 

U.S.C. §2201(a). Section 2201 provides that “[i]n a case of actual controversy 

within its jurisdiction . . . any court of the United States . . . may declare the rights 

and other legal relations of any interested party seeking such declaration, whether 

or not further relief is or could be sought.” To determine whether the allegations 

meet the actual controversy requirement of Section 2201(a), the Court must decide 

“whether the facts alleged, under all the circumstances, show that there is a 

substantial controversy, between parties having adverse legal interests, of sufficient 

immediacy and reality to warrant the issuance of a declaratory judgment.” 

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quotations 

omitted). 

The facts alleged, taken in sum, show the existence of an actual controversy. 

The parties have adverse legal interests because they have potentially conflicting 

claims to certain, articulated intellectual properties. The controversy is substantial 

because it affects the business of both parties and their respective abilities to sell 

their products. And the controversy is of sufficient immediacy and reality because 

the events that could result in Telebrands incurring liability – the broadcast of the 

possibly infringing commercial and the sale of the potentially infringing products –

have already occurred and indeed, continue to occur. See, e.g., Sea Tow Services 

Intern., Inc. v. Pontin, 472 F. Supp. 2d 349, 357 (E.D.N.Y. 2007) (finding actual 

controversy exists where alleged infringement already occurred); see also Prasco, 

LLC v. Medicis Pharmaceutical Corp., 537 F.3d 1329, 1336 (Fed. Cir. 2008) 

(holding that “whether there has been potentially infringing activity or meaningful 

preparation to conduct potentially infringing activity” is one important factor in 

determining whether actual controversy exists). And, the dispute regarding the 

precise content of that conversation aside, the fact that the President of EPI called 

the President of Telebrands and notified him of EPI’s potential causes of action 

shows the immediacy and reality of the controversy.2 The Court will deny EPI’s 

motion on this point.

C. Count I: Copyright Infringement

EPI argues that because it has not registered any copyrights in connection 

with its commercial, it could not sue Telebrands for infringement, and, therefore, 

the Court lacks jurisdiction over Telebrands’s declaratory action for non-

 2 EPI emphasizes the reasonable apprehension test and relies heavily on cases applying the reasonable apprehension 

test in arguing that no actual controversy exists here. But in MedImmune, the Supreme Court expressly disavowed 

application of the reasonable apprehension test, and although the test may still prove useful in certain circumstances, 

MedImmune significantly lowers the bar for showing an actual controversy. See Prasco, 537 F.3d at 1336 

(discussing how MedImmune altered actual controversy analysis).

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infringement of the copyright. EPI is correct that a party may not state a prima 

facie case of copyright infringement where the party does not hold a registered 

copyright in accordance with 17 U.S.C. § 411(a). Dawes-Lloyd v. Publish America, 

LLLP, 2011 WL 3555427, at *1 (3d Cir. Aug. 12, 2011) (affirming dismissal of 

suit for copyright infringement). But the conclusion that this Court cannot exercise 

jurisdiction over Telebrands’s declaratory judgment action does not flow from that 

premise. 

In making this inferential leap, EPI relies on out-of-date case law, such as 

Stuart Weitzman, LLC v. Microcomputer Resources, Inc., 542 F.3d 859 (11th Cir. 

2008), holding that federal courts lack subject matter jurisdiction over copyright 

actions where the copyright was not yet registered. See id. at 863. As the Supreme 

Court of the United States made clear in Reed Elsevier, Inc. v. Muchnick, the 

registration requirement of Section 411(a) is not jurisdictional in nature. 130 S. Ct. 

1237, 1247 (2010). That is, the absence of registration does not prevent a federal 

court from exercising jurisdiction over a copyright infringement suit. And so this 

pre-Reed Elsevier law is no longer controlling or even persuasive on this point.

3 In 

light of the fact that an actual controversy does exist here – and the fact that EPI 

could elect to register the copyright at any time and then commence suit – the 

Court rejects EPI’s arguments regarding Count I and will deny the motion on this 

point.

D. Count II: Unfair Competition

EPI also argues that Count II for unfair competition under New Jersey and 

Texas law must fail for two reasons: first, the claims are insufficiently specific in 

their allegations; and second, the Amended Complaint fails to allege that EPI made 

any specific threats regarding possible claims under unfair competition laws. 

Although the Court does not agree with EPI’s exact reasoning, EPI is 

generally correct that the allegations regarding Telebrands’s unfair competition 

count, as currently plead, are inadequate. Under both New Jersey and Texas law, 

unfair competition is a broad category that subsumes specific causes of action. See, 

e.g., C.R. Bard, Inc. v. Wordtronics Corp., 561 A.2d 694, 696 (N.J. Super. Ct. Law 

Div. 1989) (“There is no distinct cause of action for unfair competition. It is a 

general rubric which subsumes various other causes of action.”); U.S. Sporting 

Products, Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 217 (Tex. Ct. 

 3 And even if Reed Elsevier had not been decided, this Court is skeptical of the logical reasoning that led these 

courts to hold that Section 411(a)’s registration requirement determines subject matter jurisdiction over a declaratory 

judgment action. See, e.g., 2-7 Nimmer on Copyright § 7.16[B][3][b][v] (criticizing holding of Stuart Weitzman and 

noting “even without Reed Elsevier v. Muchnick’s clarification of ranking, the Eleventh Circuit’s reasoning still 

seems plainly wrong, given that the registration requirement set forth in the statute explicitly applies only to ‘an 

action for infringement of the copyright,’ not to a declaration of rights under the Copyright Act.”).

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App. 1993) (noting “the difference between unfair competition as a general area of 

law and the specific causes of action that it subsumes.”). In its briefing, Telebrands 

claims that its cause of action for unfair competition is based on potential common 

law trade dress infringement. But the allegations of Count II of the Amended 

Complaint are much broader, and Telebrands seeks a declaration that it “has not, 

and is not, engaging in any unfair competition with respect to its advertising, 

marketing, distribution, or sale of the DR. GEORGE’S PLAQUE BLAST 

product.” (emphasis added). Not only is this pleading unnecessarily broad and 

vague, EPI is also correct that the allegations of the Amended Complaint do not 

suggest that the actual controversy actually extends to encompass all possible 

unfair competition claims under both Texas and New Jersey law. For these 

reasons, the Court will dismiss Count II of the Amended Complaint without 

prejudice. 

E. EPI’s Proposed Release and Forbearance

EPI argues that its settlement offers illustrate that it has no intent to sue 

Telebrands. Thus, EPI argues, even if an actual controversy existed at some point, 

it no longer does.

EPI is wrong. Assuming such evidence is admissible under Federal Rule of 

Evidence 408 – which it likely is, see, e.g., Rhoades v. Avon Products, Inc., 504 

F.3d 1151, 1161-62 (9th Cir. 2007) – the proposed releases are insufficient to 

extinguish the controversy because they are just that – proposed. The threat of 

litigation looms until those settlements are consummated or this Court decides the 

parties’ respective rights. Ruling otherwise would allow EPI to use the actual 

controversy requirement to play games with Telebrands, threatening to sue and 

then reneging on that threat once litigation has started to remove the controversy 

from the Court’s jurisdiction.

EPI’s cases to the contrary are not sufficiently analogous to be of any help to 

it. For example, in Bruce Winston Gem Corp. v. Harry Winston, Inc., 2010 WL 

3629592 (S.D.N.Y. Sept. 16, 2010), the district court found there was no actual 

controversy because no infringement had occurred and there was no evidence of 

meaningful adversity between the parties. Id. at *4-5. Here, Telebrands has already 

engaged in potentially infringing activity and EPI, through its President, has made 

clear its adversity to this activity. While a willingness to later settle the claim is 

promising, it is not sufficient to remove the controversy that has already 

blossomed. Noble Fiber Techs., LLC v. Argentum Medical, LLC, 2006 WL 

1793219 (M.D. Pa. June 27, 2006), relies on the pre-MedImmune reasonable 

apprehension test, and so it is no longer persuasive authority on this point. And the 

intellectual property holder in Indigodental GMBH & Co. KG v. Ivolclar Vivadent, 

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Inc., 2008 WL 5262694 (S.D.N.Y. Dec. 10, 2008), had not threatened litigation 

prior to when the plaintiff filed the declaratory judgment action. See id. at *2-3. 

Finally, in Prasco, there had been no accusation by the defendants of infringement 

– unlike the present case. See 537 F.3d at 1340 (“In contrast, here the defendants 

have not accused Prasco of infringement or asserted any rights to OSCION TM, nor 

have they taken any actions which imply such claims.”). All of EPI’s other cases 

fail for similar reasons. And the Court will deny the motion on this point.

F. Discretionary Exercise of Jurisdiction

Finally, EPI argues that even if an actual controversy exists, the Court 

should decline to exercise jurisdiction. EPI is correct that in deciding a declaratory 

judgment action the Court has discretion to decline jurisdiction over the action in 

its entirety or to decide some issues raised and refuse to rule on others. Henglein v. 

Colt Industries Operating Corp., 260 F.3d 201, 210-11 (3d Cir. 2001). But in cases 

such as this – where there is no threat of piecemeal or duplicate litigation and no 

difficult issues of state law – declining to exercise jurisdiction is usually 

inappropriate. Indeed, “a court should only exercise such discretion if it determines 

that issuing a declaratory judgment would serve no useful purpose.” Aluminum Co. 

of America v. Beazer East, Inc., 124 F.3d 551, 560 (3d Cir. 1997). Here, a 

declaratory judgment would likely resolve the controversy and allow both parties 

to continue marketing their competing products without concerns of possible 

litigation surrounding intellectual property rights; thus, a declaratory judgment 

would serve an obviously useful purpose. And so the Court will exercise 

jurisdiction over this action.

III. Conclusion

For all the foregoing reasons, the Court will grant the motion in part and 

deny it in part. An appropriate order follows. 

 /s/ William J. Martini 

WILLIAM J. MARTINI, U.S.D.J.

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