IP Law Daily, TRADEMARK—D. Md.: Overstock trademark suit against Overstock Outlet business can proceed, (Jul 8, 2025)

By Steven Melendez

A federal court allowed claims to proceed, except for punitive damages and attorney fees claims under Maryland state law.

Beyond, Inc. d/b/a Overstock, operator of the Overstock.com website, sufficiently pleaded trademark infringement, unfair competition, and related claims against Maryland-based The Asset Store, LLC, d/b/a Overstock Outlet, a Maryland federal district court has ruled. Consumers could plausibly be confused between the retail sellers’ use of marks featuring the common word OVERSTOOK and a red letter “O” (Beyond, Inc. v. The Asset Store, LLC, No. 1:24-cv-01555-JRR (D. Md. July 7, 2025)).

A judge declined to dismiss claims brought by Overstock, operators of overstock.com, except for claims for punitive damages and attorney fees brought under Maryland state law.

Overstock holds various federal trademark registrations "related to its name," according to the ruling, including OVERSTOCK.COM and a red logo featuring the letter O. The Asset Store, LLC, operator of Maryland-based Overstock Outlet retail seller, similarly sellers "mattresses, furniture, and other home goods" through a website and a store in Baltimore, according to the ruling, and uses its own "OVERSTOCK OUTLET" mark featuring a red O.

Overstock argued consumers are likely to be confused by the similarity, providing examples of Google reviews that seem to demonstrate actual confusion taking place, according to the ruling, and sued for trademark infringement and unfair competition under the Lanham Act and state law.

Shotgun pleading argument. Overstock Outlet argued the case should be dismissed as an example of a "'shotgun pleading' because it incorporates prior paragraphs containing factual allegations under each claim for relief and has a separate section for its prayer for relief," according to the ruling. That term typically refers to a pleading that makes it difficult to know which allegations correspond to which actual claims for relief, often through broad incorporation by reference.

But the court found that Overstock's complaint, incorporating factual allegations into claims, "is a common, efficient practice of litigation when implemented as Plaintiff has done here" rather than an ambiguous shotgun pleading. Claims do have "the same factual underpinning" in some cases, but the complaint "alleges a factual basis for each asserted claim and the related relief sought."

Federal trademark claims. Overstock Outlet argued Overstock hadn't sufficiently pleaded its federal claim of "false designation of origin and unfair competition," saying it hadn't sufficiently alleged that "Defendants labeled and passed the goods it sold off as those of the Plaintiff."

But, the court found, Overstock doesn't assert "reverse passing off," where someone misrepresents another producer's goods as their own, but consumer confusion and unfair competition.

In general, the court found federal claims under the Lanham Act were sufficiently pleaded to proceed.

Treble damages, prejudgment interest, and injunctive relief. Overstock Outlet claimed that Overstock wasn't entitled to treble damages under trademark law. But the court found that the Fourth Circuit precedent the company cited didn't hold that treble damages were unavailable and only addressed the standard for determining when they should be available, allowing the claim for treble damages to stand.

Similarly, Overstock Outlet claimed prejudgment interest isn't explicitly provided for in the law, the precedent it cited didn't rule out the possibility of a court awarding such interest under its own discretion, according to the ruling.

Overstock Outlet also argued that Overstock failed to sufficiently pleaded its claim for an injunction. But, the court found, it sufficiently pleaded the necessary elements, including irreparable harm, as well as "the balance of equities and public interest factors" for this stage of the proceeding.

Maryland trademark infringement. Overstock Outlet argued that a Maryland state law claim of trademark infringement should be dismissed because Overstock didn't allege it registered the marks in question with the Maryland Office of the Secretary of State.

But the court found that the "plain language of the law" doesn't require state registration, nor does applicable caselaw. Prior rulings have held that the Maryland trademark law and Lanham Act "require the same proof," the court found, letting the claim stand.

But the court did dismiss claims for punitive damages and attorneys' fees brought under Maryland law. The law doesn't explicitly provide for them, and Overstock failed to counter Overstock Outlet's argument on the matter, "effectively conceding the point," according to the ruling.

Still, the court found, "this has little bearing on the progression of this case because the court does not dismiss its requests for punitive damages and attorneys' fees" based on other claims.

Common law unfair competition. Overstock Outlet also asked for a claim of common law unfair competition under Maryland law to be dismissed. But the court found that the legal standard is the same as the Lanham Act, and since the Lanham Act claim was sufficiently pleaded, the Maryland claim and a related request for injunctive relief can remain in play.

Overstock Outlet also argued that Overstock can't seek prejudgment interest, which is "at the discretion of the factfinder." The court agreed the matter rests on questions of fact, finding it ill-suited to argue as part of a motion to dismiss and letting the claim stand.

Overstock Outlet also claimed Overstock failed to sufficiently allege "actual malice," required for punitive damages under Maryland law. But the court found that allegations that Overstock Outlet deliberately intended to deceive consumers and continued to willfully infringe the marks even after notice from Overstock are sufficient, "even if just barely," to support the claim for punitive damages.

The Case is No. 1:24-cv-01555-JRR.

Judge: Rubin, J.

Attorneys: Dennis M. Benschoter (Latham & Watkins LLP) for Beyond, Inc. Howard J. Schulman (Howard J. Schulman, Attorney at Law) for The Asset Store, LLC.

Companies: Beyond, Inc.; The Asset Store, LLC

Cases: Trademark MarylandNews