Gibson Guitar Corp v. Viacom International Inc et al

Filing 36

ORDER granting 30 Viacoms Motion to Dismiss with prejudice by Judge Dean D. Pregerson. (lc). Modified on 5/17/2013 (lc).

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1 2 O 3 4 NO JS-6 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 GIBSON GUITAR CORP., a Delaware corporation, 12 Plaintiff, 13 v. 14 15 16 VIACOM INTERNATIONAL INC., a Delaware corporation; JOHN HORNBY SKEWES & CO., LTD., a United Kingdom corporation, 17 18 Defendants. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 12-10870 DDP (AJWx) ORDER GRANTING MOTION TO DISMISS [Dkt. No. 30] 19 Presently before the court is Defendant Viacom International 20 Inc. (“Viacom”)’s Motion to Dismiss Plaintiff’s Amended Complaint 21 for Failure to State a Claim on Which Relief May Be Granted. 22 Having considered the parties’ submissions and heard oral argument, 23 the court adopts the following order. 24 I. Background 25 Plaintiff Gibson Guitar Corporation (“Gibson”) owns trademarks 26 to the Flying V Body Shape Design Trademark, the Flying V Peg-Head 27 Design Trademark, and the word mark FLYING V. 28 Defendant Viacom is a Delaware corporation that owns trademarks for (FAC ¶ 14.) 1 SpongeBob Squarepants and Nickelodeon. 2 Hornby Skewes & Co. Ltd. (“JHS”) is a United Kingdom corporation 3 that promotes and sells various products using the SPONGEBOB 4 trademarks. 5 Plaintiff’s Flying V trademarks without authorization. 6 32.) 7 Viacom: 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Id. ¶ 7.) (Id. ¶ 6.) Defendant John Plaintiff alleges that JHS has used (Id. ¶¶ 21- Plaintiff makes the following factual allegations regarding 35. Upon information and belief, the Viacom License requires Defendant Viacom to monitor and control the quality and distribution of the JHS’ Unauthorized Products containing the SPONGEBOB SQAREPANTS and NICKELODEON trademarks. 36. Upon information and belief, the Viacom License requires Defendant Viacom to monitor and control the quality and distribution of the JHS’s Unauthorized Products containing the SPONGEBOB SQUAREPANTS and NICKELODEON trademarks. JHS is the distributor of the JHS’s Unauthorized Products, and specifically pursuant to the License Agreement, Viacom controls, among other things, which products JHS can use Viacom’s trademarks on, i.e. Ukuleles. Viacom controls product approval, and JHS must report and notify Viacom of all sales outside the Licensed Territory. A copy of this License Agreement is attached as Exhibit G. 37. Upon information and belief, Viacom had constructive knowledge that JHS’ Unauthorized Products were infringing the Gibson Trademarks. The Gibson Trademarks are all registered in the United States, one for over 30 years. The Lanham Act requires the trademark owner to monitor the use of its own trademarks, including the use by third parties, or trademark rights could be lost. 38. Viacom has actual knowledge of the infringement of the Gibson Trademarks by JHS’ Unauthorized Products. Gibson contacted Viacom on December 7, 2012, with a cease and desist letter describing the infringement of JHS’ Unauthorized Products. A copy of this cease and desist letter is attached hereto as Exhibit H. 39. Despite its constructive and actual knowledge of the infringement of the Gibson Trademarks by JHS’ Unauthorized Products, Viacom has continued to provide its intellectual property to JHS for use with JHS’ Unauthorized Products. 40. Upon information and belief, Viacom intentionally induced JHS to infringe on Gibson Trademarks by controlling and approving products that infringe on Gibson Trademarks and obtaining license fees for such infringement. 2 1 41. Upon information and belief, the aforementioned misuse of the Gibson Trademarks by Viacom was done with the intent of deceiving or misleading customers into mistakenly believing that said JHS’ Unauthorized Products were authorized Gibson products originating from Gibson or its related companies and otherwise misappropriating the goodwill built up by Gibson in the Gibson Trademarks and otherwise attracting and misdirecting consumers looking for genuine or authorized Gibson goods to the JHS websites. 2 3 4 5 6 7 Based on these allegations, Plaintiff alleges that Viacom is 8 contributorily and vicariously liable for JHS’s infringement. 9 II. Legal Standard 10 A complaint will survive a motion to dismiss under Rule 11 12(b)(6) when it contains "sufficient factual matter, accepted as 12 true, to state a claim to relief that is plausible on its face." 13 Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting Bell Atl. 14 Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 15 Rule 12(b)(6) motion, a court must "accept as true all allegations 16 of material fact and must construe those facts in the light most 17 favorable to the plaintiff." 18 (9th Cir. 2000). 19 factual allegations," it must offer "more than an unadorned, 20 the-defendant-unlawfully-harmed-me accusation." 21 678. 22 statement of a legal conclusion "are not entitled to the assumption 23 of truth." 24 offers "labels and conclusions," a "formulaic recitation of the 25 elements," or "naked assertions" will not be sufficient to state a 26 claim upon which relief can be granted. 27 internal quotation marks omitted). When considering a Resnick v. Hayes, 213 F.3d 443, 447 Although a complaint need not include "detailed Iqbal, 556 U.S. at Conclusory allegations or allegations that are no more than a Id. at 679. In other words, a pleading that merely 28 3 Id. at 678 (citations and 1 "When there are well-pleaded factual allegations, a court 2 should assume their veracity and then determine whether they 3 plausibly give rise to an entitlement of relief." Id. at 664. 4 Plaintiffs must allege "plausible grounds to infer" that their 5 claims rise "above the speculative level." 6 555-56. "Determining whether a complaint states a plausible claim 7 for relief" is a "context-specific" task, "requiring the reviewing 8 court to draw on its judicial experience and common sense." 9 556 U.S. at 663-64. 10 Twombly, 550 U.S. at Iqbal, III. Discussion 11 A. Contributory Infringement 12 “To be liable for contributory trademark infringement, a 13 defendant must have (1) ‘intentionally induced’ the primary 14 infringer to infringe, or (2) continued to supply an infringing 15 product to an infringer with knowledge that the infringer is 16 mislabeling the particular product supplied.” 17 Inwood Labs., Inc v. Ives Labs., Inc., 456 U.S. 844, 855 (1982). 18 “When the alleged direct infringer supplies a service rather than a 19 product, under the second prong of this test, the court must 20 ‘consider the extent of control exercised by the defendant over the 21 third party's means of infringement.’ 22 there must be ‘direct control and monitoring of the instrumentality 23 used by a third party to infringe the plaintiff's mark.’” Id., 24 quoting Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 25 980, 984 (9th Cir.1999)(alterations omitted). 26 Id. at 807, citing For liability to attach, “The tests for secondary trademark infringement are even more 27 difficult to satisfy than those required to find secondary 28 copyright infringement.” Perfect 10, Inc. v. Visa Int'l Serv. 4 1 Ass'n, 494 F.3d 788, 806 (9th Cir. 2007). 2 America v. Universal City Studios, Inc., 464 U.S. 417, 439 n.19 3 (1984)(noting that “Inwood’s narrow standard for contributory 4 infringement” governs only trademark cases, not copyright cases, 5 which has a broader contributory infringement standard). 6 7 See also Sony Corp. of 1. Intentional Inducement The standard for “intentional inducement” is fairly high. It 8 requires that the contributory infringer do more than be able to 9 “reasonably anticipate” the direct infringement. Inwood, 456 U.S. 10 at 852 n.13. 11 that produced “generic” capsules designed to duplicate the 12 appearance of a trademarked drug, there was no intentional 13 inducement where “incidents [of mislabeling] occurred too 14 infrequently to justify the inference that the petitioners’ 15 catalogs and use of imitative colors had ‘impliedly invited’ 16 druggists to mislabel” the generic drugs under a brand name. 17 at 853. 18 Service Association, payment processing for infringing Internet 19 websites by credit card companies did not constitute intentional 20 inducement of infringement even though it did provide “critical 21 support” to infringing websites; Perfect 10 alleged no “affirmative 22 acts by Defendants suggesting that third parties infringe Perfect 23 10's mark, much less induce them to do so.” 24 at 807. Thus, in Inwood, which concerned a drug manufacturer Id. Likewise, in Perfect 10, Inc. v. Visa International Perfect 10, 494 F.3d 25 Here, under the intentional inducement prong, Plaintiff 26 alleges that “[u]pon information and belief, Viacom intentionally 27 induced JHS to infringe on Gibson Trademarks by controlling and 28 approving products that infringe on Gibson Trademarks and obtaining 5 1 license fees for such infringement.” 2 thus whether Viacom’s “controlling and approving” infringing 3 products and receipt of license fees for infringing products 4 constitute intentional inducement. 5 (FAC ¶ 40.) The issue is In the first place, the control and approval exercised by 6 Viacom do not appear to be “affirmative acts.” 7 right to stop a product from being marketed and sold, but Plaintiff 8 does not allege any facts suggesting that Viacom acted 9 affirmatively in its relationship with JHS once the license Viacom retains the 10 agreement was signed. 11 names and logos” to the infringers “despite actual knowledge of the 12 infringement,” but these facts as pled do not “constitute a clear 13 expression of a specific intent to foster infringement.” 14 at 802 (internal quotation marks omitted). 15 Plaintiff here “has not alleged any ‘specific acts’ intended to 16 encourage or induce infringement.” 17 As in Perfect 10, “Defendants lend their 494 F.3d Like Perfect 10, Id. Additionally, a certain amount of control is required for a 18 valid trademark license agreement. “[W]hen the owner of a trademark 19 licenses the mark to others, he retains a duty to exercise control 20 and supervision over the licensee's use of the mark.” 21 Glenn Miller Prods., Inc., 454 F.3d 975, 992 (9th Cir. 22 2006)(internal citation and quotation marks omitted). 23 supervise and control derives from trademark law rather than a 24 given contract. 25 such control is to protect consumers from deceptive use of a 26 trademark. 27 reasonable steps to prevent misuses of his trademark in the hands 28 of others the public will be deprived of its most effective Id. Miller v. The duty to The purpose of requiring a licensor to retain “If the licensor is not compelled to take some 6 1 protection against misleading uses of a trademark.” 2 v. Hart’s Food Stores, Inc., 267 F.2d 358, 367 (2d Cir. 1959). 3 Hence, “naked licensing, without any control over the quality of 4 goods produced by the licensee, . . . is inherently deceptive and 5 constitutes abandonment of any rights to the trademark by the 6 licensor.” 7 Inc., 289 F.3d 589, 598 (9th Cir. 2002)(internal citations and 8 quotation marks omitted). 9 Dawn Donut Co. Barcamerica Intern. USA Trust v. Tyfield Importers, To hold that the amount of control required by a license 10 agreement is sufficient to state a claim for contributory 11 infringement by a licensor would expose every licensor to claims of 12 contributory infringement for every license. 13 requiring control by licensors is not to expose them to secondary 14 liability but to protect consumers.1 15 contributory infringement liability to all licensors would dilute 16 the standard for contributory trademark infringement by lowering 17 the bar for intentional inducement. 18 the control exerted by a licensor, without more, is not sufficient 19 to state a claim for contributory trademark infringement. 20 21 The purpose of Furthermore, expanding The court therefore finds that For these reasons, the claim for contributory infringement fails under the first prong. 22 23 24 25 26 27 28 1 Since the requirement of quality control is intended to protect consumers from fraudulent or misleading use of a trademark, it makes little sense to extend that control beyond the use of that trademark to all aspects of a product. Viacom is required to control its SPONGEBOB trademarks to ensure that a consumer does not purchase a product believing that it comes from the SpongeBob source and that it will be of the typical SpongeBob quality, only to find that it is an inferior product. Viacom in its quality control is required to ensure that the product meets its own standards of quality, not to ensure that the product breaks no other law, including trademark infringement. 7 1 2. Continued Supply to Known Infringer 2 Under the second prong of the Inwood contributory infringement 3 test, Plaintiff alleges that “Viacom had constructive knowledge 4 that JHS’s Unauthorized Products were infringing the Gibson 5 Trademarks” by virtue of the U.S. registration of the Gibson 6 Trademarks, and that “Viacom has actual knowledge of the 7 infringement of the Gibson Trademarks by JHS’ Unauthorized 8 Products” by virtue of the cease and desist letter. 9 38.) (Id. ¶¶ 37- “Despite its constructive and actual knowledge of the 10 infringement of the Gibson Trademarks by JHS’ Unauthorized 11 Products, Viacom has continued to provide its intellectual property 12 to JHS for use with JHS’ Unauthorized Products.” 13 Plaintiff describes Viacom’s licensing of its SPONGEBOB trademark 14 to JHS as a “service” provided to JHS.2 15 (Id. ¶ 39.) (Opp. at 14.) Whether Viacom had actual or constructive knowledge of JHS’s 16 infringement, it must also have had the requisite control over the 17 infringement in order to be held liable for contributory 18 infringement. 19 providers of credit card services were liable for infringement by 20 websites for whom they processed payments, and held that despite 21 their knowledge of the websites’ infringement, the credit card In Perfect 10, the Ninth Circuit considered whether 22 23 2 24 25 26 27 28 A license to use a trademark is not clearly either a service or a product. However, the Ninth Circuit advises that “when measuring and weighing a fact pattern in the contributory infringement context without the convenient ‘product’ mold dealt with in Inwood Lab, we consider the extent of control exercised by the defendant over the third party’s means of infringement.” Lockheed Martin Corp., 194 F.3d at 984. As this is the same as the test used to evaluate contributory infringement with respect to services, the court need not consider whether a trademark license is more like a product or a service. 8 1 payment networks were not liable because they lacked the requisite 2 control. 3 4 5 6 7 8 9 10 11 Perfect 10 has failed to allege facts sufficient to show direct control and monitoring of the instrumentality used by a third party to infringe the plaintiff's mark. Perfect 10 claims that the “product” or “instrumentality” at issue here is the credit card payment network through which Defendants process payments for infringing material. . . . [T]his network is not the instrument used to infringe Perfect 10's trademarks; that infringement occurs without any involvement of Defendants and their payment systems. Perfect 10 has not alleged that Defendants have the power to remove infringing material from these websites or directly stop their distribution over the Internet. At most, Perfect 10 alleges that Defendants can choose to stop processing payments to these websites, and that this refusal might have the practical effect of stopping or reducing the infringing activity. This, without more, does not constitute direct control. 12 Perfect 10, 494 F.3d at 807 (internal citations and quotation marks 13 omitted). 14 Perfect 10 is distinguishable from the instant case insofar as 15 there the alleged contributory infringers were providing an 16 ancillary service to the direct infringers, whereas here, Viacom’s 17 “service” - the SPONGEBOB trademarks - appears on the infringing 18 product itself. Here, instead of providing the means for consumers 19 to purchase the infringing product, the infringing product bears 20 Viacom’s SPONGEBOB marks, which presumably create at least a part 21 of the product’s appeal. 22 Despite these differences, this case resembles Perfect 10 in 23 important ways. As in Perfect 10, the “service” provided by Viacom 24 - the SPONGEBOB trademark - is not the instrument of infringement; 25 the infringing trademark is the FLYING V word mark and Flying V 26 trademark body shape. Although Viacom’s mark appears on an 27 allegedly infringing product, Viacom’s licensing of the SPONGEBOB 28 9 1 mark to JHS is not the instrument of infringement. 2 makes non-infringing instruments using the SPONGEBOB mark, such as 3 a drum set and a guitar, and could make a non-infringing SpongeBob 4 ukulele. 5 the SpongeBob SquarePants Flying V Ukulele, which would “have the 6 practical effect of stopping or reducing the infringing activity,” 7 id., but would not prevent JHS from designing and selling a Flying 8 V Ukulele without the SPONGEBOB mark, since the two marks are 9 independent. 10 JHS apparently Also as in Perfect 10, Viacom could bar JHS from selling Thus, when this court “consider[s] the extent of control 11 exercised by the defendant over the third party’s means of 12 infringement,” Lockheed Martin Corp., 194 F.3d at 984, it finds 13 that such control is lacking. 14 could take to prevent allegedly infringing products from being 15 manufactured, marketed, and sold, these steps do not have a direct 16 connection to the infringement itself; JHS can infringe 17 independently of anything Viacom might do. 18 court’s finding, above, that Plaintiff has not alleged that Viacom 19 has taken any affirmative steps to induce JHS to infringe, the 20 court finds that Plaintiff has not alleged facts sufficient to 21 state a claim for Viacom’s contributory infringement. Although there are steps Viacom Combined with the 22 B. Vicarious Liability 23 “Vicarious liability for trademark infringement requires a 24 finding that the defendant and the infringer have an apparent or 25 actual partnership, have authority to bind one another in 26 transactions with third parties or exercise joint ownership or 27 control over the infringing product.” 28 In support of this claim, Plaintiff has alleged that Viacom and JHS 10 Perfect 10, 494 F.3d at 807. 1 exercise joint control based on the license agreement, which at 2 minimum gives Viacom control over the licensed property, the 3 licensed territory, and the licensed channels of distribution. 4 (Opp. at 8; see redacted 2012 License Agreement, Bates Decl., Exh. 5 A.). Plaintiff asserts that the full license agreements and 6 additional discovery will reveal more factual bases for JHS and 7 Viacom’s joint control. 8 9 The court finds that the alleged control given to Viacom by the license agreement does not rise to the level of control 10 necessary to give Viacom joint control or ownership sufficient to 11 make Viacom vicariously liable for JHS’s alleged infringement. 12 discussed above, Viacom can influence the allegedly infringing 13 product by blocking its sale or by removing its mark from the 14 product, but this does not give Viacom “the right or ability to 15 control the actual infringing activity at issue in this case,” 16 namely, the production and sale of instruments that infringe. 17 Viacom’s type of control is only indirect.3 As 18 3 19 20 21 22 23 24 25 26 27 28 Viacom’s control is arguably more direct than in Perfect 10. There, the Ninth Circuit held that “Defendants cannot take away the software the offending websites use to copy, alter, and distribute the infringing images, cannot remove those websites from the Internet, and cannot themselves block the distribution of those images over the Internet. Defendants can refuse to process credit card payments for those images, but while this refusal would reduce the number of those sales, that reduction is the result of indirect economic pressure rather than an affirmative exercise of contractual rights.” 494 F.3d at 805. Here, Plaintiff’s ability to stop the sale of licensed products is arguably “an affirmative exercise of contractual rights,” since it such ability is an exercise of rights described in a contract. However, as discussed above, those rights are required by trademark law for a valid license agreement, so they are distinguishable from affirmative rights granted by contract. Additionally, here there is no indication that such rights have any function in this contract beyond the purposes of establishing a valid license agreement. Thus, Viacom’s ability to control JHS’s products remains indirect, (continued...) 11 1 Plaintiff asserts that “the extent to which Defendant Viacom 2 exercises control over JHS pursuant to the Redacted July 2012 3 Viacom License Agreement is not fully known, as Defendant Viacom 4 redacted a lion’s share of the language from the Redacted July 2012 5 Viacom License Agreement. 6 notices on Defendants’ own infringing product, it appears that the 7 Defendants began their relationship circa 2007 (five years prior to 8 the July 2012 Viacom License Agreement).” 9 thus argues that the complete license agreements from 2007 to 20124 Furthermore, from the various copyright (Opp. at 6.) Plaintiff 10 and other discovery will reveal “MORE evidence of Defendant 11 Viacom’s misconduct in this case.” 12 Plaintiff has not alleged any facts that, taken as true, would 13 constitute control sufficient to make Viacom vicariously liable; 14 the control required by a license agreement is not sufficient. 15 Because the license agreement and licensing relationship are the 16 sole basis for Plaintiff’s allegations against Viacom, the court 17 finds that Plaintiff has failed to state a claim for vicarious 18 infringement. 19 /// 20 /// 21 /// 22 /// (Opp. at 6-7.) However, 23 24 25 3 (...continued) despite the contract. 4 26 27 28 Plaintiff’s FAC includes seven pages of the redacted license agreement between Viacom and JHS for the year 2012. In its reply brief, Viacom attached a more complete version of the 2012 and 2007 license agreements. Plaintiff’s objection to the new evidence is SUSTAINED. The court declines to consider documents provided in a reply brief to which Plaintiff did not have previous access. 12 1 B. Use in Commerce 2 Because the court has found that Plaintiff has failed to state 3 a claim for Viacom’s secondary liability, it need not reach the 4 issue of whether Plaintiff has stated a claim for use of the mark 5 in U.S. commerce. 6 IV. Conclusion 7 For the reasons stated above, Viacom’s Motion to Dismiss is 8 GRANTED with prejudice. 9 IT IS SO ORDERED. 10 11 12 Dated: May 17, 2013 DEAN D. PREGERSON United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13

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