Reserve Media, Inc. v. Efficient Frontiers, Inc.

Filing 359

ORDER RE: PLAINTIFFS THIRD MOTION FOR PARTIAL SUMMARY JUDGMENT 305 by Judge Dean D. Pregerson: The Court GRANTS Reserves Third Motion for Partial Summary Judgment that there is no triable issue of fact as to the infringement of the RESERVE Q marks. Further, having granted summary judgment in favor of Reserve on all of EFIs counterclaims for infringement, the court finds that judgment is also appropriate on Reserves declaratory claim for non-infringement. In light of this order, all pending motions are hereby vacated. MD JS-6. Case Terminated. (lc). Modified on 4/14/2017 .(lc).

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O 1 2 3 JS-6 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 12 RESERVE MEDIA, INC., 13 Plaintiff, 14 15 16 v. EFFICIENT FRONTIERS, INC., et al., 17 Defendants. 18 ) ) ) ) ) ) ) ) ) Case No. CV 15-05072 DDP (AGRx) ORDER RE: PLAINTIFF’S THIRD MOTION FOR PARTIAL SUMMARY JUDGMENT [Dkt. 305] 19 20 Presently before the court is Plaintiff and Counter-Defendant Reserve Media, 21 Inc.’s (“Reserve”) Third Motion for Partial Summary Judgment. After considering the 22 parties’ submissions and hearing oral argument, the court adopts the following Order. 23 I. BACKGROUND 24 The court assumes the parties’ familiarity with the facts, which have been set forth 25 more fully in the court’s prior partial summary judgment orders. (Dkts. 235, 296.) In 26 brief, Efficient Frontiers, Inc. (“EFI”) is a company that offers software products to 27 companies in the hospitality industry. (First Amended Counterclaim (“FAC”) ¶¶ 4, 15- 28 17.) EFI’s products assist with catering and event-management, restaurant table 1 management, and dining reservations. (FAC ¶¶ 17-19.) Reserve Media, Inc. (“Reserve”) 2 is a startup company focusing on restaurant technology, which was founded in 2014. 3 (Dkt. 296 at 2.) According to the founders, the company aims to compete with consumer- 4 facing software companies that facilitate restaurant reservations. (Id.) The company offers 5 products and services using the mark “Reserve.” 6 This suit arises out of a trademark dispute between EFI and Reserve. After 7 learning about Reserve’s business, EFI sent Reserve a cease-and-desist letter for 8 attempting to use a mark that infringes on EFI’s marks “Reserve Interactive and its 9 variations.” (Id.) The parties attempted to negotiate their trademark dispute but Reserve 10 ultimately filed for declaratory relief seeking a determination that its use of the “Reserve” 11 mark does not infringe on EFI’s trademark rights. (Complaint ¶ 14.) EFI responded with 12 a counterclaim asserting federal and state causes of action for trademark infringement 13 and unfair competition. (FAC ¶¶ 34-60.) 14 At issue in this litigation were ten EFI trademarks. Prior summary judgment 15 motions addressed whether there were triable issues as to eight of the ten trademarks. 16 (See Dkts. 235, 296.) In prior Orders, the court concluded that six of EFI’s marks were not 17 valid and protectable as a matter of law because they were descriptive and lacked 18 secondary meaning. (Id.) The court also concluded that there was no triable question as to 19 Reserve’s willful infringement for any mark. The two trademarks that were not 20 addressed in either Order were EFI’s RESERVE Q marks. Given the basis for the prior 21 summary judgment orders, the court determined that the best use of judicial resources 22 would be to direct the parties to file summary judgment briefs regarding these remaining 23 marks so as to ensure that there were triable issues warranting a jury trial. See Portsmouth 24 Square Inc. v. Shareholders Protective Comm., 770 F.2d 866, 869 (9th Cir. 1985) (noting that, 25 even as late as the final pretrial conference, the district court has authority to sua sponte 26 enter summary judgment if no material facts are at dispute in order to “conserves scarce 27 judicial resource”). In order to ensure the parties had adequate notice and a “full and fair 28 opportunity to ventilate the issues,” see Norse v. City of Santa Cruz, 629 F.3d 966, 972–73 2 1 (9th Cir. 2010) (citing Greene v. Solano Cnty. Jail, 513 F.3d 982, 990 (9th Cir. 2008)), the 2 court set a briefing schedule for a third successive summary judgment motion. 3 At issue in this motion are EFI’s two RESERVE Q marks. The first RESERVE Q 4 mark was registered in October 2012 and is a standard word mark for “computer 5 software for database management used in the hospitality industry.” (Carter Decl., Ex. 1.) 6 The second mark was registered in March 2013 and is a standard service mark for 7 “design, development, implementation and maintenance of software for others in the 8 hospitality industry.” (Id., Ex. 2.) These marks are used in connection with EFI’s “ReServe 9 Q” online hospitality management software. (Carter Decl. ¶ 5.) ReServe Q is a web-based 10 software application that allows business in the hospitality industry to “leverage 11 reservations, waitlists, and marketing opportunities.” (Id. ¶ 14, Ex. 11.) The question at 12 issue in the instant motion is whether the RESERVE Q marks are valid and enforceable as 13 a matter of law and, if so, whether there is a triable issue of fact as to likelihood of 14 confusion under the Sleekcraft analysis. Finally, as in the prior motions for partial 15 summary judgment, there is a question of whether Reserve is entitled to summary 16 judgment on EFI’s damages theories for the RESERVE Q marks. 17 II. LEGAL STANDARD 18 Summary judgment is appropriate where the pleadings, depositions, answers to 19 interrogatories, and admissions on file, together with the affidavits, if any, show “that 20 there is no genuine dispute as to any material fact and the movant is entitled to judgment 21 as a matter of law.” Fed. R. Civ. P. 56(a). A party seeking summary judgment bears the 22 initial burden of informing the court of the basis for its motion and of identifying those 23 portions of the pleadings and discovery responses that demonstrate the absence of a 24 genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). All 25 reasonable inferences from the evidence must be drawn in favor of the nonmoving party. 26 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 242 (1986). If the moving party does not 27 bear the burden of proof at trial, it is entitled to summary judgment if it can demonstrate 28 3 1 that “there is an absence of evidence to support the nonmoving party’s case.” Celotex, 2 477 U.S. at 323. 3 Once the moving party meets its burden, the burden shifts to the nonmoving party 4 opposing the motion, who must “set forth specific facts showing that there is a genuine 5 issue for trial.” Anderson, 477 U.S. at 256. Summary judgment is warranted if a party 6 “fails to make a showing sufficient to establish the existence of an element essential to 7 that party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 8 477 U.S. at 322. A genuine issue exists if “the evidence is such that a reasonable jury 9 could return a verdict for the nonmoving party,” and material facts are those “that might 10 affect the outcome of the suit under the governing law.” Anderson, 477 U.S. at 248. There 11 is no genuine issue of fact “[w]here the record taken as a whole could not lead a rational 12 trier of fact to find for the nonmoving party.” Matsushita Elec. Indus. Co. v. Zenith Radio 13 Corp., 475 U.S. 574, 587 (1986). 14 It is not the court’s task “to scour the record in search of a genuine issue of triable 15 fact.” Keenan v. Allan, 91 F.3d 1275, 1278 (9th Cir. 1996). Counsel has an obligation to lay 16 out their support clearly. Carmen v. San Francisco Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 17 2001). The court “need not examine the entire file for evidence establishing a genuine 18 issue of fact, where the evidence is not set forth in the opposition papers with adequate 19 references so that it could conveniently be found.” Id. 20 III. DISCUSSION 21 “To prevail on [a] trademark infringement claim,” a party must show that “(1) it 22 has a valid, protectable trademark, and (2) that [the other party’s] use of the mark is 23 likely to cause confusion.” Applied Info. Sciences Corp. v. eBay, Inc., 511 F.3d 966, 969 (9th 24 Cir. 2007). The court addresses each of these issues in turn. 25 A. Distinctiveness of RESERVE Q Marks 26 This is the court’s third inquiry into whether EFI’s RESERVE marks are distinctive, 27 and thus protectable, as a matter of law. See Zobmondo Entm’t, LLC v. Falls Media, LLC, 602 28 F.3d 1108, 1113 (9th Cir. 2010). In each of the prior instances, the operative question was 4 1 whether the marks were descriptive, and thus required a showing of secondary meaning, 2 Zobmondo, 602 F.3d at 1113, or suggestive, and thus automatically entitled to federal 3 trademark protection as “inherently distinctive,” id.; see also Two Pesos, Inc. v. Taco Cabana, 4 Inc., 505 U.S. 763, 769 (1992). The question is no different with regards to EFI’s final two 5 marks at issue: the RESERVE Q marks. 6 As a general matter, suggestive marks require “a consumer [to] use imagination or 7 any type of multistage reasoning to understand the mark’s significance.” Kendall-Jackson 8 Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 1047 n. 8 (9th Cir. 1998). By contrast, 9 descriptive marks “define qualities or characteristics of a product in a straightforward 10 way.” Id. “Whether a mark suggests or describes the goods or services of the trademark 11 holder depends, of course, upon what those goods or services are. We therefore adjudge 12 a mark’s strength by reference to the goods or services that it identifies . . . .” Entrepreneur 13 Media, Inc. v. Smith, 279 F.3d 1135, 1142 (9th Cir. 2002) (internal quotations and citations 14 omitted). 15 The two tests invoked in the Ninth Circuit to differentiate between suggestive and 16 descriptive marks are the “imagination test” and the “competitors’ needs test.” 17 Zobmondo, 602 F.3d at 1115. The former asks whether “imagination or a mental leap is 18 required in order to reach a conclusion as to the nature of the product being referenced,” 19 Rudolph Int’l, Inc. v. Realys, Inc., 482 F.3d 1195, 1198 (9th Cir. 2007) (quotation marks 20 omitted), and the latter “focuses on the extent to which a mark is actually needed by 21 competitors to identify their goods or services,” Rodeo Collection, Ltd. v. W. Seventh, 812 22 F.2d 1215, 1218 (9th Cir. 1987). These two tests are complementary rather than 23 independent inquiries as “the more imagination that is required to associate a mark with 24 a product or service, the less likely the words used will be needed by competitors to 25 describe their products or services.” Zobmondo, 602 F.3d at 1117 (quotations and citations 26 omitted). 27 Reserve argues that the RESERVE Q marks are descriptive when used in 28 connection with “a web-based software application that enables customers to manage 5 1 reservations, call-aheads, and waitlists.” (Dkt. 276 [Carter Decl.] ¶ 15.) In support, 2 Reserve notes that EFI selected the letter “Q” as “a play on the word [queue] – a line at a 3 restaurant.” (Ex. E [Remmel Depo.], p. 214:6-12.) Given that a queue ordinarily refers to a 4 line of people waiting for something, Reserve contends that a literal and unimaginative 5 consumer would be able to understand that RESERVE Q refers to a service for managing 6 reservations. (Opp’n 4.) 7 EFI responds that the RESERVE Q marks are, at a minimum, suggestive. First, EFI 8 notes that a consumer might understand “Q” to mean just the letter, the word “cue,” the 9 idea of “questions,” among other possibilities. (Opp’n 4-5.) Although Q may have been 10 selected because it evokes the idea of a “queue,” it takes at least some imagination to 11 connect the two concepts. EFI further contends that, even if Q immediately signified 12 “queue,” that does not accurately describe the product in question. EFI’s software does 13 not enable someone to “reserve a queue” or a spot in a queue. Rather, EFI argues that the 14 software in question deals with table reservations—which often can be done in advance 15 and do not require patrons to stand in queue—and also enables businesses to leverage 16 reservations for marketing purposes. (Carter Decl. 5.) 17 At bottom, EFI’s various “reserve” marks are fundamentally weak. As the court 18 has explained in prior Orders, this family of marks invokes the common verb “reserve” 19 in a business context where there is almost no other substitute for the service being 20 offered. (See Dkt. 235 at 9.) Admittedly, EFI did not use the term in isolation to describe 21 its products. However, the majority of the marks at issue appended the word “reserve” 22 with equally common words such as “it” or “cloud” or “interactive.” In all these 23 instances, “an entirely unimaginative, literal-minded person would understand the 24 significance of the reference.” Entrepreneur Media, 279 F.3d at 1142. Thus, on prior 25 occasions, the court found that allowing EFI a monopoly over “reserve,” and closely 26 associated phrases, would inhibit competitors across a range of businesses dealing with 27 reservations from invoking a common word to describe their products and services. 28 6 1 Even beyond this specific business context, the court notes that “reserve” is one of 2 a few words so essential to economic activity across domains that courts should be 3 particularly cautious about allowing any single private actor to monopolize the use of the 4 term. The word reserve means “[t]o set (a thing) apart for some purpose.” 13 Oxford 5 English Dictionary (OED) (2d ed. 1989) 701. Along with concepts such as buying, selling, 6 renting, and consuming, “reserving” is a basic commercial activity that nearly all 7 individuals and business must engage in at times. Given that one of the central aims of 8 trademark law is to promote fair and productive economic competition, see New Kids on 9 the Block v. News Am. Pub., Inc., 971 F.2d 302, 305 (9th Cir. 1992), any use that seeks to own 10 11 core words such as “reserve” must be scrutinized closely. Bearing these concerns in mind, the court notes that there is some argument for 12 extending its prior holdings about other descriptive “reserve marks” to the RESERVE Q 13 marks. Nonetheless, at this juncture, the court determines that these final two marks fall 14 slightly on the other side of descriptive-suggestive divide. While Reserve is correct that 15 the phrase “Reserve Queue” is conceptually related to the services EFI offers, it does 16 require some level of “multistage reasoning” to understand the marks’ significance. 17 Specifically, a consumer must first understand that the letter “Q,” even when placed in 18 the appropriate context of the reservation management business, specifically means a 19 literal queue rather than indicating just the letter or a question. Then, the consumer must 20 associate “reserve queue” with a table reservation, waitlist management, and marketing 21 platform rather than, say, a line waiting service. See Jacob Bernstein, A Professional Line 22 Sitter Throws His Wait Around, New York Times, Oct. 3, 2014, at ST8 (noting the 23 emergence of professional line-sitters). Thus, even appropriately defined, the marks 24 “subtly connote something about the products,” AMF Inc. v. Sleekcraft Boats, 599 F.2d 941, 25 349 (9th Cir. 1979) (describing suggestive marks) rather than defining the product in a 26 straightforward manner. 27 28 7 1 B. Likelihood of Confusion 2 “The test for likelihood of confusion is whether a reasonably prudent consumer in 3 the market place is likely to be confused as to the origin of the good or service bearing 4 one of the marks.” Dreamwerks Production Group, Inc. v. SKG Studio, 142 F.3d 1127, 1129 5 (9th Cir.1998) (internal quotations omitted). Relevant factors include the strength of the 6 mark, proximity of the goods, similarity of the marks, evidence of actual confusion, 7 marketing channels used, degree of care likely to be exercised by consumers, defendant's 8 intent, and likelihood of expansion of product lines. Sleekcraft, 599 F.2d at 348-49. It is 9 unnecessary to meet every factor, because the likelihood of confusion test is “fluid.” 10 11 12 Surfvivor Media, Inc. v. Survivor Prods , 406 F.3d 625, 631 (9th Cir. 2005). 1. Strength of the Mark “The stronger a mark—meaning the more likely it is to be remembered and 13 associated in the public mind with the mark’s owner—the greater the protection it is 14 accorded by the trademark laws.” Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 15 F.3d 1036, 1058 (9th Cir. 1999). In order to determine the strength of a particular mark, 16 courts take into account both the conceptual strength and the commercial strength of a 17 mark. See, Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000). 18 “A mark’s conceptual strength depends largely on the obviousness of its 19 connection to the good or service to which it refers.” Network Automation, Inc. v. Advanced 20 Systems Concepts, Inc., 638 F.3d 1137, 1149 (9th Cir. 2011). As a general matter, suggestive 21 marks are protectable, but it is presumed that they are conceptually weak. Brookfield 22 Communications, 174 F.3d at 1058 (noting that “[w]e have recognized that, unlike arbitrary 23 or fanciful marks which are typically strong, suggestive marks are presumptively 24 weak”). As discussed above, the Court finds that Plaintiff’s marks are suggestive, and, 25 thus, are presumed weak. 26 The second step of the inquiry is to determine the strength of the mark in the 27 marketplace. One Indus., LLC v. Jim O'Neal Distrib., Inc., 578 F.3d 1154, 1164 (9th Cir. 28 2009). Two undisputed facts suggest that the RESERVE Q marks are commercially weak 8 1 as a matter of law. First, between 2011 and 2015, EFI has generated less than $15,000 in 2 sales of the Reserve Q product. (Dkt. 276-1. [Sealed Exs. 72-76].) During the same period, 3 EFI’s total sales were between $3 million and $4 million dollars annually. (Id.) Both 4 compared to the size of the market and to EFI’s other products, Reserve Q sales were 5 marginal. Second, as discussed in the prior orders, EFI’s RESERVE marks, including 6 RESERVE Q, are hemmed in all sides by competitors who must also use the term reserve. 7 (Dkt. 235 at 11; Dkt. 296 at 16.) “When similar marks permeate the marketplace, the 8 strength of the mark decreases. In a crowded field of similar marks, each member of the 9 crowd is relatively weak in its ability to prevent use by others in the crowd.” One Indus., 10 578 F.3d at 1164 (internal quotation marks omitted). EFI’s primary rejoinder on the 11 strength of the mark is that it intends to “revamp its product offerings” under the 12 RESERVE Q marks. While future plans to improve the strength of the mark may change 13 the analysis for purposes of a future infringement claim, it cannot be used to buttress the 14 instant claim. 15 16 2. Proximity of the Goods “Related goods are those products which would be reasonably thought by the 17 buying public to come from the same source if sold under the same mark.” Sleekcraft, 599 18 F.2d at 348 n. 10 (citation and internal quotation marks omitted). Both parties use marks 19 in connection with a software program for accepting and managing dining reservations. 20 Although EFI’s product may have additional capabilities, both parties acknowledge that 21 goods in question are related. Nonetheless, Reserve argues that the court should follow 22 the Ninth Circuit’s statement in Entrepreneur Media that courts should “apply a sliding 23 scale approach as to the weight that relatedness will carry dependent upon the strength 24 of the trademark holder’s mark.” Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1148 25 (9th Cir. 2002). The rationale for this approach is that, “[w]hile the public and the 26 trademark owner have an interest in preventing consumer confusion, there is also a 27 broad societal interest in preserving common, useful words for the public domain.” Id. 28 In Entrepreneur Media, the court was addressing a descriptive mark but that logic should 9 1 extend to weak suggestive marks such as RESERVE Q. Although some imagination is 2 required to connect the mark “RESERVE Q” with the products in question, competitors 3 in the reservation management industry should not be discouraged from using the term 4 “reserve.” Id. (“We do not want to prevent the commercial use of descriptive words to 5 name products, as straightforward names are often the most useful identifiers.”). 6 Accordingly, the court recognizes that the parties’ goods are related but concludes that 7 the factor does not weigh heavily in favor of likely confusion. 8 9 3. Similarity of the Marks “Similarity of the marks is tested on three levels: sight, sound, and meaning.” 10 Sleekcraft, 599 F.2d at 351. As to sight, the marks “must be considered in their entirety and 11 as they appear in the marketplace.” Brookfield Communications, 174 F.3d at 1054. EFI’s 12 RESERVE Q marks and Reserve’s RESERVE mark are visually distinct. Although both 13 marks are comprised of upper case letters, they are depicted in different fonts. Further, 14 EFI’s marks are made up of two colors (red and purple) while Reserve’s mark is black. 15 Some of the letters in EFI’s marks are different sizes while Reserve’s mark is a uniform 16 size. EFI’s marks also have an additional design element (there are three waves or arcs 17 emanating from the “Q”) while Reserve’s mark is unadorned. Turning to sound, the 18 marks are sonically distinct. EFI’s marks are made up of two words while Reserve’s mark 19 is only one word. Furthermore, Reserve ‘s mark is only two syllables while EFI’s is three. 20 See Groupion, LLC v. Groupon, Inc., 826 F. Supp. 2d 1156, 1163 (N.D. Cal. 2011) (nothing 21 differences in the number of syllables in each mark). Finally, on the issue of meaning, the 22 parties recognize that a consumer will understand both uses of the word “reserve” to 23 mean the same thing. However, the additional letter “Q,” which is also intended to evoke 24 the idea of queue, suggests the two words also have different meaning. Stonefire Grill, Inc. 25 v. FGF Brands, Inc., 987 F. Supp. 2d 1023, 1052 (C.D. Cal. 2013) (“Multiple courts have 26 found that the presence of a common word does not render two marks similar where 27 additional words make the marks distinctive.”) Taken together, this factor weighs against 28 a finding of likely confusion. 10 1 4. Evidence of Actual Confusion 2 “Evidence that use of the two marks has already led to confusion is persuasive 3 proof that future confusion is likely.” Sleekcraft, 599 F.2d at 352. However, due to “the 4 difficulty in garnering such evidence, the failure to prove instances of actual confusion is 5 not dispositive.” Id.; see Brookfield Communications, 174 F.3d at 1050 (“[D]ifficulties in 6 gathering evidence of actual confusion make its absence generally unnoteworthy.”). 7 In the instant case, EFI relies on declarations submitted by users of EFI’s other 8 RESERVE products to substantiate the claim that there is at least some evidence of actual 9 confusion. (Opp’n 15-16.) As Reserve notes, however, these alleged instances of 10 confusion pertain to other EFI marks—specifically, RESERVE INTERACTIVE and 11 RESERVE CLOUD—and do not address the instant mark. EFI also relies on an expert 12 survey to show consumer confusion between the RESERVE Q and RESERVE marks. 13 (Opp’n 16.) Reserve raises a number of objections to relying on this survey, including the 14 fact that EFI’s expert did not timely disclose the survey. (See Dkt. 81; Mot. 14-15.) Without 15 resolving whether that issue makes the survey data inadmissible, the court notes a 16 separate deficiency identified by Reserve, which is that expert survey did not show 17 respondents the marks as they appear in the marketplace and instead asked: “How 18 different or similar do you think are the names Reserve versus Reserve Q?” and “How 19 likely do you think the names Reserve and Reserve Q are associated with products or 20 services offered by the same company?” (Dkt. 321-7 [Ex. 28 to Okadigbo Decl.], at 9, 24- 21 25, 39, 53.) These questions, without any indication of what the marks actually looked 22 like, cannot be used to support EFI’s contention that there was evidence of actual 23 confusion. Given that the lack of actual confusion should not be given substantial weight, 24 the court finds that this factor is neutral in the overall likelihood of confusion analysis. 25 26 5. Marketing Channels Used “Convergent marketing channels increase the likelihood of confusion.” M2 27 Software, Inc. v. Madacy Entm’t, 421 F.3d 1073, 1083 (9th Cir. 2005). In evaluating this 28 factor, courts consider the locations of potential buyers, the price ranges of the goods or 11 1 services, and the types of advertising used. See Sleekcraft, 599 F.2d at 353. Reserve 2 contends that this factor weighs against a finding of likelihood confusion because EFI 3 markets its products solely to business while Reserve markets to both consumers and 4 businesses. (Mot. 11.) EFI responds that Reserve’s multipronged marketing approach 5 should not alter the conclusion that both parties rely on at least some of the same 6 marketing channels. Instead, according to EFI, the operative facts are that both parties 7 market to businesses and that they do so, at least in part, through in-person contacts. 8 (Opp’n 17-18 (citing Okadigbo Decl. Ex. 12 [Hong Depo. Trs.] at 213-214; Carter Decl. ¶ 9 22.) While the parties employ different marketing channels, the evidence does suggest 10 that at time their marketing efforts may overlap. Accordingly, the court finds that this 11 factor weighs somewhat in favor of a likelihood of confusion. 12 13 6. Degree of Care “Low consumer care . . . increases the likelihood of confusion.” Playboy Enters., Inc. 14 v. Netscape Commc’ns Corp., 354 F.3d 1020, 1028 (9th Cir. 2004). Courts should take into 15 account “the type of good or service offered and the degree of care one would expect 16 from the average buyer exercising ordinary caution.” See La Quinta Worldwide LLC v. 17 Q.R.T.M., S.A. de C.V., 762 F.3d 867, 877 (9th Cir. 2014) (internal quotation marks and 18 citation omitted). “When the buyer has expertise in the field, a higher standard is proper 19 though it will not preclude a finding that confusion is likely.” Sleekcraft, 599 F.2d at 353. 20 “Similarly, when the goods are expensive, the buyer can be expected to exercise greater 21 care in his purchases; again, though, confusion may still be likely.” Id. 22 The evidence suggests that business consumers selecting a reservation software 23 platform are likely to exercise a comparatively higher degree of care. As Reserve notes, 24 the average EFI customer pays $3,000 per year and the average Reserve customer pays 25 $1200 per year. (Houck Decl., Ex. W [Carter Depo.] at 29:4-16, 64:5-19, 129:13-16.) While 26 there is no evidence to contextualize how large an expenditure this is from the 27 perspective of the average business owner buying these products, it does suggest that the 28 consumers are sophisticated decision-makers and professionals who can be expected to 12 1 exercise a greater degree of care. While EFI notes that this merely an assumption about 2 how business owners think, EFI’s own corporate representative acknowledged that 3 decision to purchase EFI products was “a big decision.” (Carter Depo. 159:11-163:2.) 4 While not necessarily dispositive, it does suggest that this factor weighs against a finding 5 of likelihood of confusion. 6 7 7. Defendant’s Intent The court has previously concluded that there is no evidence of willful 8 infringement. (Dkt. 296 at 21:22-23.) Accordingly, this factor weighs against a finding of 9 likelihood of confusion. 10 11 8. Likelihood of Expansion of Product Lines When there is “a strong possibility that either party may expand his business to 12 compete with the other,” this factor weighs in favor of finding “that the present use is 13 infringing.” Sleekcraft, 599 F.2d at 354 (internal quotation marks omitted). “When goods 14 are closely related, any expansion is likely to result in direct competition.” Id. The Court 15 must determine whether the allegedly infringing mark is “hindering the plaintiff's 16 expansion plans.” Surfvivor Media, 406 F.3d at 634. A plaintiff must offer proof beyond 17 mere speculation or generalized expansion goals. See id. (holding that mere “expressed 18 interest in”—rather than “concrete evidence” of—expansion tilted factor in favor of 19 defendant). Reserve contends that there is no evidence that EFI plans to expand its 20 Reserve Q offerings to compete with Reserve. EFI does not dispute this claim but instead 21 focuses on the principle that “[w]here two companies are direct competitors, this factor is 22 unimportant.” Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1153 23 (9th Cir. 2011). EFI contends that, because the two parties are competitors, this factor 24 should be ignored. Thus, the court finds that, at a minimum, this factor is neutral and, if 25 anything, it weighs slightly in favor of Reserve. 26 27 28 9. Overall Likelihood of Confusion Analysis Six of the eight Sleekcraft factors in this case are either neutral or weigh against a finding of likely confusion. Specifically, the evidence of actual confusion and the 13 1 likelihood of expansion of product lines are neutral. The strength of the marks, the 2 similarity of the marks, the degree of care exercised by the relevant consumer, and the 3 defendant’s intent all weigh against likely confusion. There is some evidence of overlap 4 in marketing channels and an acknowledgement that the goods are proximate. While the 5 former suggests some possibility of confusion, the latter will not be given much weight in 6 this case where the primary word in the mark is a common term that must be invoked by 7 all competitors in this field of business. Given this balance of factors, the court finds that 8 EFI has not met its burden to show triable issue as to likelihood of confusion between the 9 RESERVE and RESERVE Q marks. 10 C. Damages 11 Having concluded the summary judgment should be entered in Reserve’s favor on 12 the question of liability, the court will not consider the arguments regarding damages. 13 D. Declaratory Relief 14 Reserve initiated this action seeking a declaration that its “use of the term 15 RESERVE does not infringe on any valid trademark right of Defendants or otherwise 16 violate Defendants’ rights . . . .” (See Compl.) In the first partial summary judgment 17 Order, the court held that EFI’s RESERVE INTERACTIVE word mark was not valid and 18 protectable, and thus could not provide the basis for an infringement action against 19 Reserve. (Dkt. 235 at 10.) In the second Order, the court came to the same conclusion 20 regarding EFI’s RESERVE IT, RESERVE IT 2.0, RESERVE GATEWAY, RESERVE 21 UNIVERSITY, and RESERVE CLOUD marks. (Dkt. 296 at 16.) The court also held in the 22 second partial summary judgment Order that there was no infringement as a matter of 23 law as to EFI’s incontestable RESERVE INTERACTIVE design mark and RESERVE 24 ANYWHERE word mark (Id. at 18-19.) Finally, in this Order, the court concluded that 25 Reserve was entitled to summary judgment on infringement claims pertaining to the 26 RESERVE Q marks after a Sleekcraft analysis. In light of these determinations—that EFI 27 cannot show Reserve infringed upon any of EFI’s asserted trademarks—the court finds 28 that Reserve is entitled to declaratory relief as a matter of law. 14 1 2 IV. CONCLUSION For the reasons stated above, the court GRANTS Reserve’s Third Motion for 3 Partial Summary Judgment that there is no triable issue of fact as to the infringement of 4 the RESERVE Q marks. Further, having granted summary judgment in favor of Reserve 5 on all of EFI’s counterclaims for infringement, the court finds that judgment is also 6 appropriate on Reserve’s declaratory claim for non-infringement. In light of this order, all 7 pending motions are hereby vacated. 8 9 IT IS SO ORDERED. 10 11 12 13 Dated: April 14, 2017 ___________________________________ DEAN D. PREGERSON UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15

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