Facebook Inc. v. Lamebook LLC

Filing 25

RESPONSE (re 18 MOTION to Dismiss ) filed byFacebook Inc.. (Norberg, Jeffrey) (Filed on 3/10/2011)

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Facebook Inc. v. Lamebook LLC Doc. 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO COOLEY LLP MICHAEL G. RHODES (116127) (rhodesmg@cooley.com) GAVIN L. CHARLSTON (253899) (gcharlston@cooley.com) 101 California Street, 5th Floor San Francisco, CA 94111-5800 Telephone: (415) 693-2000 Facsimile: (415) 693-2222 ANNE H. PECK (124790) (peckah@cooley.com) JEFFREY T. NORBERG (215087) (jnorberg@cooley.com) 3175 Hanover Street Palo Alto, CA 94304-1130 (650) 843-5000 (650) 849-7400 Attorneys for Plaintiff FACEBOOK, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA FACEBOOK, INC. , Plaintiff, v. LAMEBOOK, INC., Defendant. Case No. 3:10-CV-05048-RS PLAINTIFF FACEBOOK, INC.'S OPPOSITION TO DEFENDANT'S MOTION TO DISMISS DATE: March 31, 2011 TIME: 1:30 P.M. CTRM: 3 JUDGE: Honorable Richard Seeborg I. INTRODUCTION This Court should deny Lamebook's motion to dismiss because Lamebook's first filed Texas complaint1 was an improper anticipatory suit brought only to deprive Facebook, the true plaintiff in this action, of its preferred venue. Lamebook filed its Texas declaratory judgment action in the midst of what Facebook believed to be good faith settlement discussions to resolve the dispute out of Court. For months, Lamebook's counsel represented to Facebook that 1 The Texas case is captioned Lamebook, LLC v. Facebook, Inc., Civil Action No. 1:10-cv00833-SS (W.D. Tex.) (the "Texas Action"). 1. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS Dockets.Justia.com 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO Lamebook was exploring the possibility of changing its name. In the middle of those discussions, and without any notice that it had abandoned any intention of a name change, Lamebook suddenly filed its Texas complaint and issued a press release that it had "preemptively fil[ed] suit in the Lone Star State." Declaration of Gavin Charlston, ("Charlston Decl.") 10-11 & Ex. F.2 Dismissal of Facebook's complaint in this Court, filed just two business days after Lamebook's Texas complaint, would reward Lamebook's deceptive tactics and discourage intellectual property holders from exploring settlement before filing suit. The motion should therefore be denied. Alternatively, Facebook respectfully requests that this Court defer ruling on Lamebook's motion until the Texas court has ruled on Facebook's motion to dismiss the Texas Action. That motion is currently set for hearing on March 25 in Austin, Texas. II. BACKGROUND Facebook is a preeminent provider of online social networking services. See Complaint (D.I.1), 8. Each month, hundreds of millions of users access Facebook worldwide, making it one of the most heavily-trafficked websites in the world. Id. Since its launch in February 2004, Facebook has continuously used the FACEBOOK mark in interstate commerce in the United States in connection with its goods and services. Id., 10. As a result of the considerable publicity that Facebook receives and the broad base of users that enjoy Facebook's services, among other factors, the FACEBOOK mark has become famous. Id., 17. Defendant Lamebook is a Texas LLC that operates a website at www.lamebook.com. Lamebook claims that its website is a "parody" of Facebook, but Lamebook does not write or create any parodic material. Its website simply displays materials copied from individual Facebook users' pages, along with advertisements designed to generate income for Lamebook's 2 The factual declarations from the Texas Action have been resubmitted here as Exhibits to the Declaration of Jeffrey T. Norberg. The Charlston Declaration is Exhibit 1, the Johnston Declaration is Exhibit 2, and the Dubois Declaration is Exhibit 3. For ease of reference, citation in this brief is by declarant name rather than to the exhibit numbers associated with the Norberg Declaration. 2. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO owners. Lamebook is not parodying Facebook; it is a commercial enterprise that consolidates what it considers to be amusing postings by Facebook users and presents them under its own infringing trademark in order to profit from the revenues generated by traffic to the www.lamebook.com website. See generally Complaint (D.I. 1). In November 2009, Lamebook applied to register the LAMEBOOK mark with the United States Patent and Trademark Office. Charleston Decl. Ex. B. In the Spring of 2010, Facebook contacted Lamebook by telephone to convey Facebook's objection to both the trademark application and the www.lamebook.com website in light of Facebook's senior trademark rights. Dubois Decl. 3-5. During a call in early April, Lamebook's counsel Conor Civins said that Lamebook was interested in reaching an amicable resolution to the dispute. Id. 3. Lamebook abandoned its initial application to register the LAMEBOOK logo mark, but filed a second application to register the LAMEBOOK word mark in May 2010. Complaint (D.I. 1), 27-28. Facebook and Lamebook, through their counsel, continued to discuss throughout April and May, 2010, Facebook's objections to Lamebook's activities and the need for Lamebook to change its name and website to end the infringement of Facebook's trademarks. Dubois Decl. 4-5. Facebook reiterated throughout these discussions that it was prepared to take legal action if Lamebook did not change its infringing name. Id. 3-5. On July 1, 2010, for example, at the request of Lamebook, Facebook sent a letter detailing Facebook's objections to the LAMEBOOK mark. Id., 5; Charlston Decl. Ex. C. In its letter, Facebook emphasized that it was "prepared to enforce its rights to the full extent of the law" but was willing to defer legal action while the parties discussed resolution. Charlston Decl. Ex. C at 4-5. In September 2010, Lamebook's counsel Conor Civins told Facebook that Lamebook was considering changing its name to "Lameblog." Johnston Decl. 5. Facebook took Mr. Civins at his word, continued to negotiate in good faith, and did not file suit. In late September, Mr. Civins 3. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO again indicated that his client was testing a new name and would soon be ready to transition away from the LAMEBOOK mark. Charlston Decl. Ex. D. Mr. Civins wrote on September 30, 2010, that he would be happy to provide "a status update and start discussing the possible terms of a transition." Id. Throughout October, the parties exchanged multiple phone calls and engaged in further settlement negotiations. Charlston Decl. 7-9. Mr. Civins continued to claim that Lamebook was testing and preparing to transition to the new name. Id. 8. Facebook continued to defer filing suit based on these statements. On November 2, 2010, at 12:55 p.m. California time, in response to a message from Facebook's counsel, Mr. Civins left a voicemail advising that he would be busy and unavailable on November 2 and November 3, but would be available for further discussions on the afternoon of November 4. Id. 10. Mr. Civins said: [W]e should definitely be able to connect. . . . [I]f you want to just schedule something, I've got a pretty crazy day tomorrow but we can just schedule a call if you want on Thursday. Thursday afternoon looks pretty good for me. So just let me know and we can talk about what's going on. Talk to you soon. Bye. Id. Ex. E. Mr. Civins apparently spent his "crazy" Wednesday preparing to sue Facebook, while Facebook's counsel waited to continue settlement discussions on Thursday afternoon, when Mr. Civins said he would be available. On Thursday, Mr. Civins filed the Texas Action while his client issued a press release stating that Lamebook "is fending off threats of trademark infringement litigation from the multi-billion dollar giant [Facebook] by preemptively filing suit in the Lone Star State through attorney Conor Civins[]." Charlston Decl. Ex. F. Lamebook's founders continued this publicity campaign to promote Lamebook's "David v. Goliath" battle by appearing on two Austin news programs on Friday, November 5, just one day after filing the Texas Action. Charlston Decl. Exs. G, H. Lamebook even used its own Facebook page to promote its preemptive strike. Charlston Decl. Ex. I at 2-3. Now faced with the certainty of litigation, Facebook sued Lamebook in the Northern 4. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO District of California the following Monday, November 8, 2010, asserting a full range of trademark infringement claims and seeking comprehensive monetary and injunctive relief. See generally Complaint (D.I. 1). Shortly thereafter, Facebook filed a motion to dismiss the Texas Action on the ground that it was an improperly filed anticipatory suit. Norberg Decl. 5. That motion is now fully briefed and set for hearing in Texas on March 25, 2011. Id.. III. ARGUMENT A. Lamebook's First Filed Texas Action is an Improper Anticipatory Suit. As Lamebook admits in its Motion, "[t]he `first-to-file' rule does not apply when the earlier-filed action was an `anticipatory suit' that is, when the first filer knew that the second filer was about to sue, and rushed to file first." Motion (D.I. 18) at 3; see also Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 628 (9th Cir. 1991) ("The most basic aspect of the first-tofile rule is that it is discretionary; `an ample degree of discretion, appropriate for disciplined and experienced judges, must be left to the lower courts.") (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip., Co., 342 U.S. 180, 183-84 (1952)). The anticipatory suit doctrine is an exception to the first-to-file rule, allowing a court to dismiss a declaratory relief action that was filed in anticipation of a suit that the declaratory relief plaintiff knew was imminent elsewhere. Alaris Med. Sys., Inc. v. Filtertek, Inc., Civ. No. 00-CV-2404-L (AJB), 2001 WL 34053241, at *2 (S.D. Cal. Dec. 20, 2001). The anticipatory exception applies to plaintiffs who bring a declaratory action in another venue to subvert the "real plaintiff's" right to choose the forum for its claims. Inherent.com v. Martindale-Hubbell, 420 F. Supp. 2d 1093, 1100 (N.D. Cal. 2006); Z-Line Designs, Inc. v. Bell'o Int'l LLC, 218 F.R.D. 663, 665 (N.D. Cal. 2003) ("`The Declaratory Judgment Act is not to be invoked to deprive a plaintiff of his conventional choice of forum and timing, precipitating a disorderly race to the courthouse.'") (quoting DeFeo v. Procter & Gamble Co., 831 F. Supp. 776, 778 (N.D. Cal. 1993)). The rule is intended to encourage intellectual property holders to engage in settlement discussions rather than rushing to file suit. Charles Schwab & Co. v. Duffy, 49 U.S.P.Q. 2d 1862, 1864 (N.D. Cal. 1998). This case represents a classic example of why the anticipatory suit exception to the first5. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO to-file rule exists. Lamebook filed its declaratory judgment action in Texas to prevent the true plaintiff Facebook from bringing its claims in the forum of its choosing. Lamebook was able to file such an action first because it misled Facebook about its willingness to consider changing its name. By inducing Facebook to continue settlement negotiations that Lamebook knew had no chance of success, Lamebook bought time to file its action in Texas before Facebook could file this action. Lamebook's motion does not seriously dispute that the Texas Action was a preemptive strike, but instead argues that two California cases Martindale-Hubbel and Z-Line require Facebook to have set an arbitrary specific deadline for litigation in order to invoke the anticipatory suit doctrine. Martindale-Hubbell, 420 F. Supp. 2d at 1100; Z-Line Designs, 218 F.R.D. at 666. While the presence of such deadlines can be a factor in determining whether a suit is anticipatory, there is no rule requiring a finding of deadlines for a court to find that a declaratory relief plaintiff believed suit in another forum was imminent. Rather, the anticipatory suit doctrine allows the Court to look to factors relating to fairness and judicial efficiency. Courts look at all of the circumstances leading up to the filing of the declaratory relief action, such as the length and tone of settlement discussions, and whether the plaintiff seeking declaratory relief appears to be engaged in forum shopping. See Kinetic Concepts, Inc. v. Connetics Corp., No. Civ.A.SA-04-CA0237XR, 2004 WL 2026812, at *3 (W.D. Tex. Sept. 8, 2004) (dismissing declaratory trademark case filed during settlement negotiations); see also Martindale-Hubbell, 420 F. Supp. 2d at 1100. Here there is overwhelming evidence that Lamebook believed suit was imminent. In the months leading up to the Texas Complaint, Facebook repeatedly warned Lamebook that it must change its name or face legal action. Johnston Decl. 4-5; Charlston Decl. 6-10 & Ex. D. During the two weeks before the Texas Action was filed, the parties exchanged numerous voicemails regarding a speedy transition to a new name. Charlston Decl. 7-10. And, during the parties' final communication before the filing of the Texas Complaint, Facebook's counsel told Lamebook's counsel that Lamebook "needed to develop a clear transition plan for the new name in the very near future." Charlston Decl. 8. It is now clear that during that call Lamebook had 6. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO no intention of changing its name, but rather than disclose this, Lamebook's counsel simply told Facebook's counsel that he would respond within the next few days regarding how much time would be needed for a transition. Id. A rule requiring Facebook to have set a specific deadline makes no sense in the context of this negotiating history. At the time Lamebook filed its complaint, Facebook believed that the parties were close to settlement because Lamebook had led Facebook to believe as much. Lengthy settlement negotiations are routine in trademark case such as this, and requiring intellectual property holders to set arbitrary and tight deadlines in the middle of these negotiations or risk losing their preferred forum would almost certainly result in rights holders filing suit first and negotiating later. This is not the purpose of the Declaratory Relief Act, and it is precisely the type of scenario the anticipatory suit doctrine was intended to prevent. See Z-Line Designs, 218 F.R.D. at 665 ("[a]pplication of the first to file rule [for anticipatory suits] would thwart settlement negotiations, encouraging intellectual property holders to file suit rather than communicate with an alleged infringer."). Lamebook's motion should be denied. B. This Court Should not Dismiss this Matter Before the Texas Court Rules on Facebook's Motion to Dismiss. To the extent this Court is not inclined to immediately deny Lamebook's motion, Facebook respectfully requests that the decision be delayed until such time as the Court in Texas rules on Facebook's pending motion to dismiss. That motion has been fully briefed and is currently set for hearing on March 25, 2011, six days before Lamebook's motion is scheduled to be heard in this Court. Norberg Decl. 5. If the Texas Court grants Facebook's motion, the case will proceed in this Court. Dismissal before the Texas Court rules upon Facebook's motion would be inefficient, because it may require Facebook to refile its complaint in this Court. /// /// /// /// /// 7. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOLEY LLP ATTORNEYS AT LAW SAN FRANCISCO IV. CONCLUSION For the foregoing reasons, Lamebook's motion should be denied. In the alternative, Facebook respectfully requests that the Court delay ruling on this motion until after the Western District of Texas rules on Facebook's motion to dismiss pending in that Court. Dated: March 10, 2011 COOLEY LLP MICHAEL G. RHODES (116127) GAVIN L. CHARLSTON (253899) ANNE H. PECK (124790) JEFFREY T. NORBERG (215087) /s/ Jeffrey T. Norberg Jeffrey T. Norberg (215087) Attorneys for Plaintiff FACEBOOK, IC. 8. FACEBOOK'S OPPOSITION TO MOTION TO DISMISS CASE NO. : 3:10-CV-05048-RS