Garcia v. Coleman et al

Filing 61

ORDER by Judge Edward M. Chen Granting in Part and Denying in Part 46 Defendants' Motion for Summary Judgment. (emcsec, COURT STAFF) (Filed on 9/8/2008)

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1 2 3 4 5 6 7 8 9 10 v. DAVID COLEMAN, et al., Defendants. ___________________________________/ ROLAND E. GARCIA, Plaintiff, No. C-07-2279 EMC ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (Docket No. 46) UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff Roland Garcia, dba Garcia International Trading ("GIT"), has filed suit against Defendants David Coleman, Ann Coleman, and Amerivine, Inc. for copyright infringement, common law misappropriation, unfair competition (both statutory and common law), fraud, conversion, breach of the implied covenant of good faith and fair dealing, and conspiracy. Currently pending before the Court is Defendants' motion for summary judgment. Defendants argue that they are entitled to summary judgment because the majority of claims are barred by the statute of limitations and, even if not, Mr. Garcia has failed to show a genuine dispute of material fact to support any of the claims. Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel and all other evidence of record, the Court hereby GRANTS in part and DENIES in part Defendants' motion. I. FACTUAL & PROCEDURAL BACKGROUND Between 1991 and 1994, Mr. Garcia owned and operated a company known as California Wine Country Consultants, Inc. ("CWCCI"). See Garcia Decl. 2. "CWCCI, located in Healdsburg, California[,] sold wines across the United States via catalogue." Garcia Decl. 2. Mr. 1 2 3 4 5 6 7 8 9 10 Garcia was CWCCI's president. See Garcia Decl. 6. In September 1993, CWCCI purchased from a photographer all rights to a photograph which depicted a Sonoma ridge ("Sonoma ridge photograph"). See Garcia Decl. 3 & Ex. 1 (bill of sale, dated 9/27/93). CCWI had previously purchased from the photographer the right to use the Sonoma ridge photograph on its catalogue cover. See Garcia Decl. 3-4 & Ex. 2 (catalogue cover). In 1994, Mr. Garcia decided to close down CWCCI and set up a new business known as Garcia International Trading ("GIT"). See Garcia Decl. 5; see also Garcia Depo. at 24 (noting that CWCCI went out of business in 1994). On January 21, 1994, Mr. Garcia, as president of CWCCI, issued a letter to GIT stating as follows: "[CWCCI] agrees to surrender all rights and copyrights, to `Sonoma Ridge Cellars' and transfer and assign, in lieu of payment of $150.00 for services rendered, these rights and copyrights to [GIT] on this date." Garcia Decl., Ex. 3. In his deposition, Mr. Garcia stated that he could not recall ever using the name Sonoma Ridge Cellars in any context. See Garcia Depo. at 54. In 1995, Mr. Garcia began to make inquiries about creating his own label. See Garcia Decl. 7. Mr. Garcia's son, Kelly, told Mr. Garcia about Mr. Coleman and his winery Adler Fels. See Garcia Decl. 7. Some time in 1996, Mr. Garcia met with Mr. Coleman to discuss Mr. Garcia's plan to create a brand. See Garcia Decl. 7; see also Coleman Decl. 5 ("In approximately June 1996, Garcia approached me about the possibility of purchasing wine from Adler Fels, custom labeling it with the name `Sonoma Ridge,' and including a photograph of the vineyards on Westside Road on the label."). Thereafter, Mr. Coleman contacted a label designer that he knew, Michelle LeBlanc, to assist Mr. Garcia. See Garcia Decl. 8. Mr. Garcia met with Ms. LeBlanc and, in November 1996, her company provided a mock-up for his review. See Garcia Decl. 10 & Ex. 5 (mock-up, dated 11/96). The label featured prominently the Sonoma ridge photograph. According to Mr. Garcia, in November 1996, he and Mr. Coleman agreed verbally that [Mr. Coleman] would find the wine [Mr. Garcia] wanted and [Mr. Garcia] would buy it from [Mr. Coleman]. [Mr. Garcia was] interested in bottling and exporting Sauvignon Blanc and Chardonnay. . . . [Mr. Garcia] agreed to supply [Mr. Coleman with] the labels for [the] Sonoma Ridge brand. [Mr. Coleman] would get United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 1 2 3 4 5 6 7 8 9 10 approval for the labels and bottle the wine. [Mr. Garcia] understood [he was] to pay for the wine before pick-up. Garcia Decl. 11; see also Garcia Depo. at 46-47 ("So the deal with Mr. Coleman was . . . that he would find the wine. . . . [H]e assured me he would find the two wines we wanted, the sauvignon blanc and the chardonnay, and he would bottle it and we would supply the labels, and that was the deal we made. And he would bill us for the bottled wine with our label on it read to go. So that was our deal."). According to Mr. Garcia, in November 1996, Mr. Coleman created an invoice -- No. 961115 -- from Adler Fels to GIT for 56 cases of Sonoma Ridge Napa Valley Chardonnay and 56 cases of Sonoma Ridge North Coast Sauvignon Blanch. See Garcia Decl. 12 & Ex. 6 (Invoice No. 96-1115). Mr. Garcia claims that the "invoice was a pro forma invoice created well before the wine was actually ready for purchase" and "was never paid as another invoice was created when the [wine] was bottled and ready for shipment in June 1997." Garcia Decl. 12. According to Mr. Coleman, well before November 1996, GIT ordered wines from Adler Fels for the Sonoma Ridge label. Mr. Coleman has provided copies of three invoices (Nos. 96-602, 96603, 96-604), all dated June 2, 1996, for cases of Sauvignon Blanc and Chardonnay. See Coleman Decl. 11 & Ex. A (invoices). Mr. Coleman claims that, in November 1996, it became clear that Mr. Garcia "did not have the finances to pay invoice #96-603 or invoice #96-604," and so Mr. Coleman "negotiated . . . an agreement to relieve him of his obligation to pay the invoices"; in return, "Adler Fels could sell, in the U.S.A., the cases of wine affixed with the Sonoma Ridge labels that [Mr.] Garcia had ordered but failed to pay for." Coleman Decl. 13. According to Mr. Coleman, only after Mr. Coleman relieved Mr. Garcia of this debt did Mr. Garcia then order additional wines which were bottled and shipped in 1997. See Coleman Decl. 14. Mr. Garcia disputes that he ever allowed Mr. Coleman to use the Sonoma Ridge label domestically. See Garcia Decl. 31. In December 1996, Mr. Garcia met with a company about making labels for the Sonoma Ridge wine and received a quote. See Garcia Decl. 14 & Ex. 7 (quote, dated 12/12/96). Mr. Garcia asked Mr. Coleman to comment on the quote, see Garcia Decl. 15 & Ex. 8 (fax, dated United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 2 3 4 5 6 7 8 9 10 12/16/96), and, in response, Mr. Coleman noted, inter alia, that it seemed "high." Garcia Decl. & Ex. 9 (fax, dated 12/16/96). Mr. Coleman suggested that Mr. Garcia use a different company instead -- a company by the name of AC Label. See Garcia Decl., Ex. 9; Coleman Decl. 6 ("I contacted AC Label, a company with which I had a good long-term relation, about pricing for a master run."). Mr. Garcia met with AC Label and received a quote from the company on March 13, 1997. See Garcia Decl. 17 & Ex. 10 (quote, dated 3/13/97). Mr. Garcia apparently decided to move forward with AC Label, and, on or about April 22, 1997, AC Label sent an "Order Acknowledgment" for 25,000 Sonoma Ridge shells and 4,500 imprints.1 See Garcia Decl. 19 & Ex. 12 (Order Acknowledgment); see also Garcia Decl., Ex. 13 (invoice, dated 5/30/97). Mr. Garcia claims that he paid all of the money that he owed to AC Label. See Garcia Decl. 35. Mr. Coleman claims otherwise and further claims that, "[i]n [an] effort to save [Mr.] Garcia further embarrassment and to make whole a very important supplier, Adler Fels paid the remaining balance to AC Label." Coleman Decl. 8. Mr. Garcia disputes that Mr. Coleman paid AC Label for any labels on behalf of Mr. Garcia. See Garcia Decl. 35 ("When Coleman says he paid AC Label for the labels, he did not pay my debt but in fact I am informed and believe that he paid for additional imprinted inserts when he then affixed on my `shells'/master labels.") (emphasis added). In June 1997, Mr. Coleman filed an application for a certification/exemption of label/bottle approval ("COLA") for the Sonoma Ridge 1994 North Coast Sauvignon Blanc with the Bureau of Alcohol, Tobacco, and Firearms ("BATF"). See Garcia Decl. 21 & Ex. 14 (COLA). Mr. Coleman filed this application on behalf of GIT. See Garcia Decl., Ex. 14. That application was subsequently approved by the BATF. See Garcia Decl. 25. On June 16, 1997, Adler Fels issued an invoice to GIT -- No. 97-621 -- for 56 cases of Sonoma Ridge Sauvignon Blanc and 42 cases of Sonoma Ridge Chardonnay. See Garcia Decl. 23 & Ex. 15 (invoice, dated 6/16/97). According to Mr. Garcia, he paid for the wines and had them United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Three thousand imprints were for the Chardonnay; the remaining 1,500 were for the Sauvignon Blanc. See Garcia Decl., Ex. 12. The term "shells" refers to masters -- i.e., labels without any information about the particular varietal. See Garcia Depo. at 147. 1 4 1 2 3 4 5 6 7 8 9 10 picked up for delivery to GIT's shipper. See Garcia Decl. 23. Eventually, the wines were shipped to Germany. See Garcia Decl. 14. According to Mr. Garcia, GIT's German customers began to sell the Sonoma Ridge wine in the early part of 1998. See Garcia Decl. 26. GIT received many complaints from the German customers that the wine was turning bad; GIT therefore decided not to order any more wine from Adler Fels. See Garcia Decl. 26. Thus, "[t]he Sonoma Ridge label was put on the back burner." Garcia Decl. 26. Mr. Garcia claims that, "[s]ometime after June 1997, Defendants stole and converted the approximately 20,500 `Sonoma Ridge' master labels that had remained at AC Label, by directing AC Label to imprint the labels with specific information relating to Coleman's wine." Garcia Decl. 29. Thus, in October 1997, Mr. Coleman sold 28 cases of wine labeled Sonoma Ridge Merlot to a company in Sonoma County called Wines Limited, LLC. See Garcia Decl. 34 & Ex. 19 (invoice, dated 10/23/97). According to Mr. Garcia, in March 1998, "[Mr.] Coleman ordered an additional 25,000 labels from AC Label, labels again that were identical to my label." Garcia Decl. 30; see also Garcia Decl., Ex. 18 (Sonoma Ridge labels). Except for the evidence about limited sales to Wines Limited, there is no evidence before the Court as to how much wine Defendants ultimately sold under the Sonoma Ridge brand and where specifically it was sold or distributed. In his declaration, Mr. Coleman simply states in conclusory terms that there was distribution "throughout the U.S.A. and California." Coleman Decl. 18. In November 1997 (i.e., shortly after the sales to Wines Limited), the Colemans vacationed as Mr. Garcia's guests in Mexico. See Garcia Decl. 32. According to Mr. Garcia, the Colemans did not say anything about Defendants' use of the Sonoma Ridge labels. In March 1998, Mr. Coleman filed an application to register "Sonoma Ridge" as a trademark in the state of California. See Garcia Decl. 37. It appears that the trademark was registered that same month. See Arnone Reply Decl., Ex. B (trademark registration). In April 1998, Allied Management of New Jersey -- purportedly a business associate of Mr. Coleman -- filed an application to register "Sonoma Ridge" as a trademark with the U.S. Patent and Trademark Office. See Garcia Decl. 37. Allied's application claimed first use as of November 1997. See Garcia United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 2 3 4 5 6 7 8 9 10 Decl. 37; Arnone Decl., Ex. D (trademark information). The trademark was eventually registered on August 24, 2004. See Arnone Decl., Ex. D. In October 1998, the Colemans invited Mr. Garcia and his ex-wife to play in a golf tournament in California. See Garcia Decl. 33. According to Mr. Garcia, the Colemans did not say anything about their use of the Sonoma Ridge labels that Mr. Garcia had allegedly paid for, their purchase of more Sonoma Ridge labels from AC Label, or their application -- or Allied's application -- for a trademark for the Sonoma Ridge name. Mr. Garcia claims that, in late 2005, he and his son Kelly decided to use the Sonoma Ridge label again, this time to sell wine domestically. See Garcia Decl. 26. According to Mr. Garcia, "[i]n the first few months of 2006, we contacted several different people to assist us with our label and learned that Coleman had been filing COLA's for Sonoma Ridge wine for his own account [and not GIT's, since 1998] and selling wine using my label since 1997." Garcia Decl. 27 (emphasis added); see also Garcia Decl., Ex. 17 (COLAs, dated 3/98 to 12/00). This lawsuit ensued. II. A. Legal Standard Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be rendered "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). An issue of fact is genuine only if there is sufficient evidence for a reasonable jury to find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). "The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]." Id. at 252. At the summary judgment stage, evidence must be viewed in the light most favorable to the nonmoving party and all justifiable inferences are to be drawn in the nonmovant's favor. See id. at 255. Where the plaintiff has the ultimate burden of proof, the defendant may prevail on a motion for summary judgment simply by pointing to the plaintiff's failure "to make a showing sufficient to establish the existence of an element essential to [the plaintiff's] case." Celotex Corp. v. Catrett, DISCUSSION United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 1 2 3 4 5 6 7 8 9 10 477 U.S. 317, 322 (1986). But, if the defendant is moving for summary judgment based on an affirmative defense for which it has the burden of proof, the defendant "must establish beyond peradventure all of the essential elements of the . . . defense to warrant judgment in [its] favor." Martin v. Alamo Cmty. College Dist., 353 F.3d 409, 412 (5th Cir. 2003) (internal quotation marks omitted; emphasis in original); see also Kinghorn v. Citibank, N.A., No. C 97-3111 FMS, 1999 U.S. Dist. LEXIS 442, at *7-8 (N.D. Cal. Jan. 20, 1999) (noting same). B. Statute of Limitations In their motion for summary judgment, Defendants assert that all of the causes of action -except for breach of the implied covenant of good faith and fair dealing -- are barred by the statute of limitations since the alleged wrongful conduct occurred in 1997 and 1998. A claim that a cause of action is barred by the statute of limitations is an affirmative defense. See, e.g., Wyatt v. Terhune, 315 F.3d 1108, 1117-18 (9th Cir. 2003) ( "[I]t is well-settled that statutes of limitations are affirmative defenses, not pleading requirements."). As noted above, ordinarily, a defendant moving for summary judgment based on an affirmative defense "must establish beyond peradventure all of the essential elements of the . . . defense to warrant judgment in [its] favor." Martin, 353 F.3d at 412 (emphasis in original). Where, however -- as here -- a plaintiff contends that the statute of limitations is not a bar based on the discovery rule or equitable tolling, the plaintiff bears the burden of proving the applicability of such. See, e.g., V.C. v. Los Angeles Unified Sch. Dist., 139 Cal. App. 4th 499, 516 (2006) ("It is plaintiff's burden to establish facts showing that he was not negligent in failing to make the discovery sooner and that he had no actual or presumptive knowledge of facts sufficient to put him on inquiry.") (internal quotation marks omitted); United States v. Marolf, 173 F.3d 1213, 1218 n.3 (9th Cir. 1999) ("A court may . . . equitably toll a statute of limitations in the interests of justice, such as when (1) the defendant misleads the plaintiff into allowing the statutory period to expire, or (2) extraordinary circumstances beyond the plaintiff's control make it impossible for him to file suit on time. The burden is on the plaintiff to show that equitable tolling is appropriate."). Accordingly, to defeat summary judgment based on the statute of limitations where the limitations period would otherwise have run, Mr. Garcia must establish a genuine dispute of material fact with respect to the discovery rule and/or equitable tolling. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 1 2 3 4 5 6 7 8 9 10 1. Copyright Infringement The Copyright Act provides that "[n]o civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued." 17 U.S.C. 507(b). "A cause of action for copyright infringement accrues when one has knowledge of a violation or is chargeable with such knowledge." Roley v. New World Pictures, Ltd., 19 F.3d 479, 481 (9th Cir. 1994). Thus, "the statute of limitations does not prohibit recovery of damages incurred more than three years prior to the filing of suit if the copyright plaintiff was unaware of the infringement, and that lack of knowledge was reasonable under the circumstances." Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 706 (9th Cir. 2004). Whether a plaintiff's lack of knowledge was reasonable takes into account what a reasonable copyrightholder in the plaintiff's position would have known. See In re Napster, Inc. Copyright Litig., Nos. C MDL-00-1369-MHP, C 04-3004 MHP, 2005 WL 289977, at *4 (N.D. Cal. Feb. 3, 2005) ("[T]he court holds that based on the facts alleged in the complaint, a reasonable copyright owner in plaintiffs' position would have known of both the alleged acts of direct infringement and Hummer's alleged involvement in those acts before July 23, 2001."); see also Goldberg v. Cameron, 482 F. Supp. 2d 1136, 1148-49 (N.D. Cal. 2007) ("Plaintiff . . . argu[es] that he `is a successful song writer and producer in his own right.' It is unreasonable for a `successful song writer and producer' who shopped around a movie script and sound track to movie studios to commence a Yoga path only to reemerge from electronic isolation twenty years later and thereafter commence suit for copyright infringement."). The date of discovery of infringement is an issue of fact. See Polar Bear, 384 F.3d at 707. According to Defendants, Mr. Garcia's claim is time barred because he did not file suit until April 26, 2007, and therefore only alleged infringements that occurred on or after April 26, 2004, are actionable. According to Defendants, they discontinued use of the Sonoma Ridge label long before April 2004. See Coleman Decl. 19 (claiming that they "discontinued use of the Sonoma Ridge label bearing the Photograph in 2003"). In response, Mr. Garcia argues that the copyright infringement claim did not actually accrue until 2006 because that is when he first learned that Defendants were using the infringing label. Defendants, in turn, argue that Mr. Garcia's lack of knowledge was not reasonable, relying primarily on the fact that Defendants sold the wine with the United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 1 2 3 4 5 6 7 8 9 10 Sonoma Ridge label "to retailers and restaurants throughout the U.S.A. and California, including establishments in Santa Rosa, California where [Mr.] Garcia lived until August 2000." Coleman Decl. 18; see also Garcia Decl. 34 (stating that, in October 1997, Mr. Coleman sold 28 cases of wine labeled Sonoma Ridge Merlot to a company in Sonoma County called Wines Limited, LLC). Viewing the evidence in the light most favorable to Mr. Garcia and drawing all justifiable inferences in his favor, the Court concludes that a reasonable jury could find that Mr. Garcia's lack of knowledge was reasonable. Although Mr. Coleman claims that wine with the Sonoma Ridge label was sold throughout the United States and California, see Coleman Decl. 18, he says nothing about the amount of wine that was sold, where it was sold and distributed, and so forth. Drawing all inferences in Mr. Garcia's favor, the very limited facts presented here fail to establish as undisputed fact that even a person with the experience in the wine industry possessed by Mr. Garcia would have known about Mr. Coleman's sale of wine with the Sonoma Ridge label.2 Similarly, while Defendants make much of the fact that there were sales not just in California but in the specific city where Mr. Garcia used to live, there is no evidence that the sales consisted of anything more than the sale of only 28 cases of wine (336 bottles). See Garcia Decl. 34 & Ex. 19 (invoice, dated 10/23/97). Furthermore, the extent of Mr. Garcia's knowledge of sales in the United States, including California, was hampered by the fact that he spent every other two weeks in Germany for business during much of this period. See Garcia Decl. 39. See, e.g., Bibeau v. Pacific Northwest Research Found., Inc., 188 F.3d 1110 (9th Cir. 1999), available at 1999 U.S. App. LEXIS 38092, at *13-14 (acknowledging that there were many published news articles about the experiments that allegedly caused plaintiff's injury but stating that "that doesn't mean that [plaintiff] must be lying about his ignorance, or that a reasonable man would necessarily have discovered the truth," noting United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 To the extent Defendants argue that a person's involvement in an industry alone can establish chargeable knowledge, the Court does not agree. A person's involvement in an industry is a factor to consider and may at times be a significant factor, but alone it is not enough to establish chargeable knowledge. The nature and breadth of the infringement must also be considered. See, e.g., Goldberg v. Cameron, 482 F. Supp. 2d 1136, 1148 (N.D. Cal. 2007) (in case in which plaintiff claimed infringement based on the Terminator movies, noting that the movies "have been exceedingly popular both domestically and abroad"). 2 9 1 2 3 4 5 6 7 8 9 10 that plaintiff "was employed as a long-haul trucker, and thus was often traveling around the country during the time that a rash of lawsuits over the Heller Experiments were filed in Oregon"). Defendants argue still that Mr. Garcia should still be charged with knowledge of their use of the Sonoma Ridge label based on the limited "shelf-life" of the labels. The evidence before the Court indicates that the labels at issue were "pressure sensitive" labels which used an adhesive that lasted for less than five years. See Coleman Decl. 9 ("Although the adhesives on the pressure sensitive labels made application to the bottles less costly, the properties of the adhesives limited the useful life of the labels to less than five (5) years. After the adhesive hardens, the labels become useless."). According to Defendants, given the limited shelf-life of the labels, Mr. Garcia should have checked on the labels much earlier than 2006. The problem here is that there is nothing to show that Mr. Garcia knew about the adhesive used on the labels and its properties. Absent such knowledge, there is nothing that should have prompted Mr. Garcia to check on the labels earlier. Moreover, even if Mr. Garcia had been aware that the labels had a limited shelf life, that would not lead him to suspect Mr. Coleman would take the remaining labels and use them for his own bottles for distribution. This is particularly true given that, in June 1997, Mr. Coleman filed an application for a COLA for the Sonoma Ridge 1994 North Coast Sauvignon Blanc with the BATF on GIT's behalf -- i.e., on Mr. Garcia's behalf -- and not on behalf of any Defendant. See Garcia Decl. 21 & Ex. 14 (COLA). Viewing the facts in Mr. Garcia's favor, Mr. Coleman's filing of the application on Mr. Garcia's behalf might have lulled Mr. Garcia from suspecting that Mr. Coleman would take and use the labels. Finally, Defendants contend that Mr. Garcia should be charged with knowledge of their use of the Sonoma Ridge label based on the trademark registration for the Sonoma Ridge brand with the state of California and with the United States Patent and Trademark Office. Defendants point out that, under former California Business & Professions Code 14242 (repealed in 2008), "[r]egistration of a mark with the Secretary of State under this chapter shall be constructive notice of the registrant's claim of ownership thereof." Cal. Bus. & Prof. Code 14242 (repealed in 2008). Similarly, under 15 U.S.C. 1072, "[r]egistration of a mark on the principal register provided by this Act [i.e., the Lanham Act] or under the Act of March 3, 1881, or the Act of February 20, 1905, United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 1 2 3 4 5 6 7 8 9 10 shall be constructive notice of the registrant's claim of ownership thereof."). The Court does not find this argument availing for several reasons. First, Defendants did not raise this argument in its moving papers but raised it for the first time in its reply brief, thus depriving Mr. Garcia of an opportunity to respond on the papers. Second, even if the Court were to consider the merits of this argument, Defendants have cited no authority which has concluded that "constructive notice" for purposes of enforcing the state or federal trademark statutes establishes chargeable knowledge for purposes of the discovery rule. Simply because some courts have referred to "constructive notice" in discussing the discovery rule3 does not by itself demonstrate an intent to import the meaning of "constructive notice" from the state or federal trademark statutes. Indeed, there is sound reason why "constructive notice" for purposes of the state or federal trademark statutes is not necessarily sufficient to establish chargeable knowledge for purposes of the discovery rule. Under the trademark statutes, a trademark registration gives constructive notice to potential infringers. Before one employs a mark for commercial purposes, he or she can reasonably be expected to conduct due diligence in, e.g., checking whether the mark has already been registered. A good faith defense ought not be available to one who neglects to exercise such a diligence. See McCarthy on Trademarks & Unfair Competition 19:9 (4th ed.) ("A Principal Register registration is constructive notice of a claim of ownership so as to eliminate any defense of good faith adoption and use made after the date of registration."). In the context of the discovery rule, on the other hand, one in Mr. Garcia's position did not have an obvious incentive to conduct such an inquiry. Absent any authority establishing that registration automatically defeats the discovery rule, the Court sees no reason why the issue should not be treated as a factual question as is normally the case. Registration may be a relevant fact but itself is not dispositive. Cf. Prudential Home Mortg. Co. v. Superior Court, 66 Cal. App. 4th 1236, 1247-48 (1998) (noting that "we have United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 See, e.g., Parsons v. Tickner, 31 Cal. App. 4th 1513, 1525 (1995) ("The rule is that the plaintiff must plead and prove the facts showing: (a) Lack of knowledge. (b) Lack of means of obtaining knowledge (in the exercise of reasonable diligence the facts could not have been discovered at an earlier date). (c) How and when [s]he did actually discover the fraud or mistake. Under this rule constructive and presumed notice or knowledge are equivalent to knowledge."). 3 11 1 2 3 4 5 6 7 8 9 10 found no case suggesting the existence of public records precludes the application of the delayed discovery doctrine as a matter of law"; also stating that, "[w]hile public records certainly impart presumptive notice under some circumstances, we decline to hold their mere existence imparts knowledge as a matter of law"). Accordingly, the Court rejects Defendants' contention that the copyright infringement claim should be disposed of on summary judgment. As stated above, a reasonable jury could find that Mr. Garcia's lack of knowledge about the alleged infringement until 2006 was reasonable. 2. Common Law Misappropriation and Fraud A claim for common law misappropriation appears to be subject to a two-year statute of limitations. See Cal. Code Civ. Proc. 339(1) (providing for a two-year limitations period for "[a]n action upon a contract, obligation or liability not founded upon an instrument of writing"); see also Italiani v. Metro-Goldwyn-Mayer Corp., 45 Cal. App. 2d 464, 466-67 (1941) (concluding that claim for misappropriation of literary property or conversion thereof was subject to 339(1); see also Barton v. New United Motor Mfg., Inc., 43 Cal. App. 4th 1200, 1206-07 & n.4 (1996) (explaining that 339(1) typically applies to tort actions where there have been infringements of property rights). A claim for fraud is subject to a three-year statute of limitations. See Cal. Code Civ. Proc. 338(d) (providing for a three-year limitations period for "[a]n action for relief on the ground of fraud or mistake"). Similar to above, Defendants assert that both the claims for common law misappropriation and fraud are time barred because the alleged wrongdoing took place well before April 26, 2005, and April 26, 2004, respectively. See Coleman Decl. 19 (claiming that they "discontinued use of the Sonoma Ridge label bearing the Photograph in 2003"). And similar to above, Mr. Garcia contends that he is not time barred because the claims did not accrue until 2006 when he discovered Defendants' use of the Sonoma Ridge labels. Defendants do not dispute that the discovery rule applies to claims for common law misappropriation. See also Bernson v. Browning-Ferris Indus., 7 Cal. 4th 926, 931 (1994) (noting that, as a general matter, a cause of action accrues on the date of injury but that there is an exception under the common law discovery rule). Moreover, it is clear that, under the California Code of Civil Procedure, fraud claims are subject to the discovery rule. See Cal. Code Civ. Proc. 338(d) (stating United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 1 2 3 4 5 6 7 8 9 10 that a fraud claim "is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake"). Accordingly, for the reasons discussed above, see Part II.B.1, supra, a reasonable jury could find that Mr. Garcia's lack of knowledge about the alleged wrongdoing until 2006 was reasonable, and thus summary judgment on this ground must be denied. 3. Unfair Competition (Statutory and Common Law) The statute of limitations for a statutory unfair competition claim is four years. See Cal. Bus. & Prof. Code 17208 ("Any action to enforce any cause of action pursuant to this chapter shall be commenced within four years after the cause of action accrued."). It appears that there is a two-year statute of limitations for a claim for common law unfair competition, at least as alleged in the instant case.4 Again, Defendants argue that the statute of limitations is a bar for each claim and, again, Mr. Garcia argues otherwise invoking the discovery rule. As Defendants point out, there are cases which have held that claims for statutory unfair competition are not subject to the discovery rule. See, e.g., Snapp & Assocs. Ins. Servs. v. Robertson, 96 Cal. App. 4th 884, 891 (2002) (in case involving a claim pursuant to California Business & Professions Code 17200, stating that the discovery rule "does not apply to unfair competition actions" and that "`the statute begins to run . . . irrespective of whether plaintiff knew of its accrual, unless plaintiff can successfully invoke the equitable tolling doctrine'"). However, the California Supreme Court has stated that this is not settled law. See Grisham v. Philip Morris U.S.A., Inc., 40 Cal. 4th 623, 635 n.7 (2007) (comparing Snapp with Massachusetts Mut. Life Ins. Co. v. Superior Court, 97 Cal.App.4th 1282, 1295 (2002), in which the court stated that the discovery rule "probably" applies). Moreover, even if it is settled law with respect to claims for statutory unfair competition, it is not clear whether common law claims for unfair competition would be subject to the discovery rule. Defendants have not cited any authority directly on point. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The common law unfair competition claim is essentially the same as the common law misappropriation claim. See FAC 58 ("By appropriating Plaintiff's `SONOMA RIDGE' brand name for their own proprietary wines, Defendants David Coleman and Amerivine have engaged in unlawful, unfair, and/or fraudulent business acts or practices"). As noted above, it appears that the common law misappropriation claim is subject to a two-year statute of limitations. 4 13 1 2 3 4 5 6 7 8 9 10 Accordingly, for purposes of this order, the Court assumes that the discovery rule is applicable, both to claims for statutory and unfair competition, and the Court shall not grant summary judgment on this ground. However, for the reasons discussed below, summary judgment is appropriate on another ground. 4. Conversion5 There is a three-year limitations period for a conversion claim. See Cal. Code Civ. Proc. 338(c) (providing for a three-year limitations period for "[a]n action for taking, detaining, or injuring any goods or chattels, including actions for the specific recovery of personal property"); Bono v. Clark, 103 Cal. App. 4th 1409, 1432 (2002) (stating that there was a three-year statute of limitations for plaintiff's claim of conversion pursuant to 338(c)); Snapp, 96 Cal. App. 4th at 892 n.2 (same). As above, Defendants assert that the conversion claim is time barred, and Mr. Garcia disputes such based on the discovery rule. To the extent there is a discovery rule for conversion claims under California law, it appears to be limited in nature. The conventional discovery rule does not apply. As one state court has noted, the rule is applicable only . . . when the defendant in a conversion action fraudulently conceals the relevant facts or where the defendant fails to disclose such facts in violation of his or her fiduciary duty to the plaintiff. In those instances, "the statute of limitations does not commence to run until the aggrieved party discovers or ought to have discovered the existence of the cause of action for conversion." AmerUS Life Ins. Co. v. Bank of Am., N.A., 143 Cal.App.4th 631, 639 (2006). See also Strasberg v. Odyssey Group, 51 Cal. App. 4th 906, 916 (1996) ("`Ordinarily the statute of limitations applying in conversion actions . . . begins to run from the date of the conversion even though the injured person is ignorant of his rights. This rule, however, is not absolute; for example, where there has been a fraudulent concealment of the facts the statute of limitations does not commence to run until the At the hearing, Mr. Garcia explained that the conversion claim is based on the alleged theft of the wine labels (i.e., tangible property) that Defendants used. In contrast, the misappropriation claim is based on the alleged misappropriation of the Sonoma Ridge brand name (i.e., intangible property). Given Mr. Garcia's comments at the hearing, the Court understands Mr. Garcia to have given up any claim for misappropriation based on misappropriation of tangible property. See FAC 43 (claiming misappropriation of not only the Sonoma Ridge brand name but also the master printing plates). 5 United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 2 3 4 5 6 7 8 9 10 aggrieved party discovers or ought to have discovered the existence of the cause of action for conversion.").6 Accordingly, the applicable standard for deferring accrual of the limitations period is fraudulent concealment.7 There is no real dispute that, in the instant case, Defendants did not make any affirmative misrepresentations to Mr. Garcia about their use of the Sonoma Ridge labels. Rather, Mr. Garcia's contention is that Defendants should have told him about their use of the labels but did not. Defendants in turn argue that they cannot be charged with fraudulent concealment because they had no duty to disclose that information in the first place. Cf. Rutledge v. Boston Woven Hose & Rubber Co., 576 F.2d 248, 250 (9th Cir. 1978) ("To avoid the bar of limitation by invoking the concept of fraudulent concealment, the plaintiff must allege facts showing affirmative conduct upon the part of the defendant which would, under the circumstances of the case, lead a reasonable person to believe that he did not have a claim for relief. Silence or passive conduct of the defendant is not deemed fraudulent, unless the relationship of the parties imposes a duty upon the defendant to make disclosure."). In his opposition, Mr. Garcia implicitly argues that there was a duty to disclose based on his and his wife's friendship with the Colemans and his business dealings with Defendants. See Opp'n at 9 ("[Mr.] Garcia had no reason to investigate the actions of his trusted friend [Mr. Coleman] with whom he was also doing business."). Although the existence of a confidential or fiduciary relationship sufficient to impose a duty to disclose is typically a question of fact, see O'Neil v. Spillane, 45 Cal. App. 3d 147, 153 (1975); Kudokas v. Balkus, 26 Cal. App. 3d 750, 751 (1972), the United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 There is a broader discovery rule when there is a theft of "any article of historical, interpretive, scientific, or artistic significance." Cal. Code Civ. Proc. 383(c) ("An action for taking, detaining, or injuring any goods or chattels, including actions for the specific recovery of personal property. The cause of action in the case of theft, as defined in Section 484 of the Penal Code, of any article of historical, interpretive, scientific, or artistic significance is not deemed to have accrued until the discovery of the whereabouts of the article by the aggrieved party, his or her agent, or the law enforcement agency that originally investigated the theft."). There is no allegation that any such article is at issue in the instant case. Fraudulent concealment can also be a basis for equitable tolling. See, e.g., Bernson, 7 Cal. 4th at 931 (1994) (noting that fraudulent concealment is a well-established ground for equitable tolling). 7 6 15 1 2 3 4 5 6 7 8 9 10 Court concludes that no reasonable jury could find that there was such a relationship based on the evidence of record. The mere fact of friendship -- by itself -- is not enough to establish a confidential relationship. See Schultz v. Steinberg, 182 Cal. App. 2d 134, 138 (1960) ("[T]he plaintiff has utterly failed to establish that the evidence proves anything more than a friendship between him and the defendant . . . . `In the absence of a showing of the exercise of undue influence mere friendship does not constitute a confidential relationship.'"); see also Ampuero v. Luce, 68 Cal. App. 2d 811, 819 (1945) ("`It is not every case where parties trust each other that the law recognizes as confidential.'"). A confidential relationship may arise where one party is in such a position of confidence and trust with respect to the other that he or she is in a position to exercise and does in fact exercise undue influence. For example, in Pryor v. Bistline, 215 Cal. App. 2d 437 (1963), the court concluded that there was a confidential relationship between the plaintiff, an elderly woman, and her nephew where, even though prior dealings between the two had been very limited, the plaintiff fell severely ill and the defendant, while purporting to take care of her, took advantage of her situation and managed to get her to transfer a substantial part of her assets to him. Stated differently, a confidential relationship may arise where "one party gains the confidence of the other and purports to act or advise with the other's interests in mind." Estate of Sanders, 40 Cal. 3d 607, 615 (1985). In Sanders, the court concluded that there was a confidential relationship between the plaintiffs and the defendant -- all relatives -- where the defendant was the executor of an estate for which the plaintiffs were beneficiaries and where the plaintiffs regularly inquired about probate proceedings and the defendant made repeated assurances which led them to believe the will offered for probate would leave the estate to them, all the while concealing that he had instructed the decedent to change her will to make him the beneficiary. In short, mere friendship is not enough. The above cases all entail the gaining of trust and the exertion of undue influence in capitalizing on that trust. The instant case does not meet this criterion. Although the evidence indicates that the Garcias and Colemans were friends, there is nothing to indicate that the friendship was one where Defendants had gained special trust and exercised undue influence. Although the Garcias and United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 1 2 3 4 5 6 7 8 9 10 Colemans shared a common interest and occasionally vacationed together, see Garcia Decl. 32-33 (stating that, in November 1997, the Colemans vacationed with the Garcias in Mexico as guests of the Garcias and that, in October 1998, the Garcias participated in a golf tournament at the Colemans' invitation), this friendship was not particularly remarkable or intimate. Compare O'Neil, 45 Cal. App. 3d at 153 (noting that "intimate relationship between the parties was not of recent origin, but rather of long duration, dating back to a friendship between [defendant-wife's] mother and [plaintiff]"). While a business relationship may give rise to a fiduciary duty in some circumstances, no such duty obtains in this case where the parties were engaged in arm's length transactions. See Kudokas, 26 Cal. App. 3d at 750-51 (noting that, in buying certain property from cross-defendant, cross-plaintiffs relied primarily on their own judgment and not that of cross-defendant; adding that cross-defendant did not assume the role of adviser to cross-plaintiffs so that "[t]he trial court was fully justified in viewing the sale as an arm's-length transaction between the seller and self-reliant buyers"). Moreover, although the evidence indicates that Mr. Coleman made business recommendations to Mr. Garcia (e.g., who to use as a label designer, who to buy labels from) and engaged in action for Mr. Garcia's benefit (e.g., filing the COLA), this was not a relationship where Mr. Coleman played a special advisory, fiduciary-like role with respect to Mr. Garcia. In short, Mr. Garcia has not cited any case finding a duty to disclose where there is nothing more than an arm's length business transaction coupled with causal friendship. Because no reasonable jury could find that Mr. Garcia and any Defendant had a confidential or fiduciary relationship, Defendants did not have any duty to disclose Mr. Coleman's use of the labels. Without such a duty Mr. Garcia's claim that the statute of limitations for the conversion claim should be deferred or tolled based on fraudulent concealment must be rejected. Therefore, the Court grants summary judgment as to the conversion claim. 5. Conspiracy United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "Civil conspiracy is not a separate and distinct cause of action under California law. Instead, it is `a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.'" 17 1 2 3 4 5 6 7 8 9 10 Mintel Learning Tech., Inc. v. Beijing Kaidi Educ. & Tech. Dev. Co., Ltd., No. C 06-7541 PJH, 2007 U.S. Dist. LEXIS 59946, at *11 (N.D. Cal. Aug. 9, 2007) (quoting Applied Equip. Corp. v. Litton Saudi Arabia, 7 Cal. 4th 503, 510-11 (1994)). Because there are at least some state law claims that are not barred by the statute of limitations, liability based on the conspiracy doctrine is still possible.8 6. Summary For the reasons stated above, the Court -- with one exception -- rejects Defendants' contention that Mr. Garcia's claims as a matter of law must be dismissed based on the statute of limitations. The one exception is the conversion claim. For the conversion claim, the Court concludes that no reasonable jury could find that there was a confidential relationship between Mr. Garcia and Defendants such that Defendants had a duty to disclose their use of the Sonoma Ridge labels and that their failure to disclose constituted fraudulent concealment. Hence there is no basis for deferring or tolling the statute of limitations on the conversion claim. C. Merits Analysis Having addressed the statute-of-limitations issue, the Court now turns to the merits of Mr. Garcia's claims and asks whether, as Defendants maintain, Mr. Garcia has failed to show a genuine dispute of material fact to support any of his claims for relief. /// /// /// /// /// To the extent Mr. Garcia alleges a civil conspiracy claim based on copyright infringement, that claim is preempted. See RDF Media Ltd. v. Fox Broad. Co., 372 F. Supp. 2d 556, 565-66 (C.D. Cal. 2005) (indicating that unfair competition and civil conspiracy claims based on copyright infringement were preempted because they did not contain extra elements beyond the basic elements of copyright and did not protect rights qualitatively different from those protected by copyright); Idema v. Dreamworks, Inc., 162 F. Supp. 2d 1129, 1193-94 (C.D. Cal. 2001) (noting that "Plaintiffs' Eleventh Claim for Relief, for Civil Conspiracy, is largely just a restatement of Plaintiffs' prior (FAC) `conspiracy to infringe copyright' claim, which was already dismissed with prejudice by this Court"; then concluding that "[t]he Eleventh Claim for Relief is clearly preempted . . . to the extent it attempts to seek liability under this alternate theory for the same conduct challenged under copyright"). 8 United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 1 2 3 4 5 6 7 8 9 10 1. Copyright Infringement Defendants argue that they should be awarded summary judgment on the copyright infringement claim because there is no genuine dispute that Mr. Garcia is not the owner of the Sonoma Ridge photograph.9 Defendants admit that the photographer of the Sonoma Ridge photograph -- i.e., the original owner of the photograph -- properly sold the photograph to CCWI. Defendants further admit that, in a letter to GIT dated January 21, 1994, Mr. Garcia, as president of CWCCI, stated that "[CWCCI] agrees to surrender all rights and copyrights, to `Sonoma Ridge Cellars' and transfer and assign, in lieu of payment of $150.00 for services rendered, these rights and copyrights to [GIT] on this date." Garcia Decl., Ex. 3. Defendants argue, however, that the transfer agreement failed to meet the requirements of 17 U.S.C. 204(a) and is therefore invalid. See 17 U.S.C. 204(a) ("A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent."). According to Defendants, the "critical flaw" in the transfer agreement from CWCCI to GIT is "the absence of any reference to the [Sonoma ridge] Photograph. At his deposition, [Mr.] Garcia admitted that `Sonoma Ridge Cellars' was simply a name owned by CWCCI that was never used in any context." Mot. at 11. Defendants' argument is not persuasive. Based on the letter that Mr. Garcia wrote on behalf of CWCCI, there is no doubt that CWCCI meant to transfer something to GIT. The only issue is whether the copyright to the Sonoma ridge photograph was included as part of the transfer. A reasonable jury could find that it was, and this precludes summary judgment. The letter is arguably ambiguous. Its language is broad enough to encompass the photograph copyright. As an ambiguous document, extrinsic evidence is admissible to aid in its interpretation. See Friedman v. Stacey Data Processing Services, Inc., No. 89 C 4444, 1990 U.S. Dist. LEXIS 14621, at *17 (N.D. Ill. Oct. 31, 1990) (holding that "extrinsic evidence of the type generally United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Given the correspondence between Mr. Garcia's counsel and the U.S. Copyright Office, there should be no dispute that the only work that is copyrighted is the Sonoma Ridge photograph itself. See Arnone Decl., Exs. E-G. 9 19 1 2 3 4 5 6 7 8 9 10 allowed with respect to ambiguous contracts shall be relevant in determining whether the contract assigned the copyright"); Bieg v. Hovnanian Enters., Inc., 157 F. Supp. 2d 475, 480 (E.D. Pa. 2001) (in case involving transfer of copyright, noting that, "[w]hen interpreting facially ambiguous documents, some courts have looked to the surrounding circumstances to clarify the intent of the parties"). Mr. Garcia has stated in a declaration that, through the letter, he intended to "convey[] all rights, including copy rights to the [Sonoma Ridge] brand, then called Sonoma Ridge Cellars." Garcia Decl. 6. It is also significant that CWCCI -- or rather, no one purporting to speak for CWCCI as it is now a defunct business -- is claiming that there was no valid transfer of the copyright to the photograph at issue. See Radio TV Espanola S.A. v. New World Entertainment, Ltd., 183 F.3d 922, 929 (9th Cir. 1999) (indicating that, "in situations `in which the copyright holder appears to have no dispute with its licensee on [the issue of transfer], it would be anomalous to permit a third party infringer to invoke this provision against the licensee'"). This is not surprising since there is no obvious reason why the parties would have intended to exclude the copyright from the transfer of rights. 2. Common Law Misappropriation United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 As a preliminary matter, the Court notes that it is not entirely clear from Mr. Garcia's papers what property was allegedly misappropriated. In his complaint, he indicates that the property that was allegedly misappropriated was (1) the master printing plates for the Sonoma Ridge labels and (2) the Sonoma Ridge brand name itself. See FAC 45. However, in his opposition to the motion for summary judgment, Mr. Garcia refers to the misappropriation of the Sonoma Ridge labels. See Opp'n at 16. At the hearing, the Court asked for clarification. Mr. Garcia responded that the misappropriation claim was asserted with respect to the Sonoma Ridge brand name only. See note 5, infra. With respect to this alleged misappropriation, Defendants argue that they should be awarded summary judgment because "the misappropriation doctrine cannot be used in ordinary trademark 20 1 2 3 4 5 6 7 8 9 10 infringement cases as a shortcut around the trademark law's standards of protection."10 Mot. at 15 (citing McCarthy treatise in support). As Defendants note, the McCarthy treatise does state that [t]he misappropriation doctrine cannot be used in ordinary trademark infringement cases as a shortcut around the trademark law's standards of protection. That is, one cannot dispense with the carefully constructed requirements for trademark protection by blithely claiming that defendant "misappropriated" some symbol of plaintiff which may or may not be capable of trademark protection. 2 McCarthy on Trademarks and Unfair Competition 10:72 (4th ed. 2008). The treatise goes on to say that "it is a misnomer to talk of `misappropriation' of trademarks or trade symbols of any type" and further states that "courts have recognized that if plaintiff has failed under classic trademark law to prove trademark ownership and infringement, then plaintiff cannot claim that defendant has `misappropriated' the labor expended in creating the `trademark.'" Id. One of the cases that the treatise cites in support is Toho Co. v. Sears, Roebuck & Co., 645 F.2d 788 (9th Cir. 1981). There, the Ninth Circuit took note that [t]he California doctrine of misappropriation prohibits the substantial copying of another's commercial labors even when there is no likelihood of confusion. It has been applied to record and tape piracy. There is no similar substantial taking by [the defendant] in this case. The only "taking" [the plaintiff] alleges relates to [the defendant's] use of its trademark, and [the plaintiff] cites no cases extending the misappropriation theory to trademark infringement. We believe that California courts would refuse to make such an extension. Id. at 794 (emphasis added). Although the Ninth Circuit's decision in Toho supports Defendants' position, the California courts have held there is in fact a claim for misappropriation for a trade name so long as there is some likelihood of confusion. As discussed in greater detail below, the common law of misappropriation is rooted in the common law test of unfair competition which addresses the act of "passing off" of one's goods as those of another, see United States Golf Ass'n v. Arroyo Software Corp., 59 Cal. App. 4th 607, 618 (1999), interests parallel to those protected by trademark statutes. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants also contend that Mr. Garcia cannot bring such a trademark infringement claim because he abandoned the brand name, and now Allied, and not he, owns the trademark for the name. See Mot. at 15. The Court need not address this argument for the reasons discussed below. 10 21 1 2 3 4 5 6 7 8 9 10 Cf. Tomlin v. Walt Disney Prods., 18 Cal. App. 3d 226, 236 (1971) (in an unfair competition case in which the plaintiff was trying to bar the defendant from use of the title "The Love Bug," indicating that the plaintiff needed to show a likelihood of public confusion for either injunctive relief or damages). The Witkin treatise also indicates that a claim for misappropriation of a trade name is possible, again, so long as there is a likelihood of confusion. It notes as follows: Where no valid trademark, copyright, or patent exists in a particular name or design, one producer may freely copy the goods of another or use the same business name if no deception is involved. But if the goods or services are known to the public by that name, design, or physical appearance, an imitation that has the effect of deceiving purchasers as to the origin of the goods or services may be enjoined as unfair competition. 13 Witkin, Summ. of Cal. Law, Equity 98 (10th ed. 2005). In light of United States Golf Association, Tomlin and Witkin, the Court rejects Defendants' contention that a claim for common law misappropriation of a brand name is not legally possible.11 California common law does afford protection even if the protected interests are akin to those protected by trademark law. At the hearing, Mr. Garcia initially acknowledged that in order to have a claim for misappropriation of a trade name, he needed to demonstrate a likelihood of confusion. Later, Mr. Garcia backtracked and argued that likelihood of confusion was not necessary because case law describes the elements of a claim for common law misappropriation as requiring only that: (a) the plaintiff invested substantial time, skill or money in developing its property; (b) the defendant appropriated and used the plaintiff's property at little or no cost to the defendant; (c) the defendant's appropriation and use of the plaintiff's property was without the authorization or consent of the plaintiff; and (d) the plaintiff can establish that it has been injured by the defendant's conduct. United States Golf Ass'n, 69 Cal. App. 4th at 618. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants do not appear to be making any preemption argument here -- i.e., an argument that the misappropriation claim is preempted by trademark law. To the extent that Defendants are, that argument would not have much merit. See Golden Door, Inc. v. Odisho, 646 F.2d 347, 352 (9th Cir. 1980) (indicating that there is no preemption by the Lanham Act so long as the state law does not conflict with the federal law; also indicating that there is no conflict where state law, like the Lanham Act, "protects both the public from confusion about the services and products it is receiving and the public relations investment of plaintiff"). 11 22 1 2 3 4 5 6 7 8 9 10 The Court is not persuaded. First, as noted above, common law misappropriation is simply a subset of unfair competition, see id. ("Common law misappropriation is one of a number of doctrines subsumed under the umbrella of unfair competition"), and "[t]he common law tort of unfair competition is generally thought to be synonymous with the act of `passing off' one's goods as those of another." Bank of the W. v. Superior Court, 2 Cal. 4th 1254, 1263 (1992) (adding that, "[a]ccording to some authorities, the tort also includes acts analogous to `passing off,' such as the sale of confusingly similar products, by which a person exploits a competitor's reputation in the market"; see also Cel-Tech Comms. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163 (1999) (Kennard, J., dissenting) (stating that "deceptive conduct has remained at the heart of unfair competition"). If the broad category of unfair competition requires a likelihood of confusion, then the same must be true of the narrower subset of common law misappropriation. Second, while the elements of the common law misappropriation claim have been listed as above in Golf, when the specific property at issue is a trade name or something comparable, the courts have consistently required a likelihood of confusion. See, e.g., Tustin Community Hosp., Inc. v. Santa Ana Community Hosp. Ass'n, 89 Cal. App. 3d 889, 893 (1979) (taking note of trial court's conclusion that defendant's use of trade name constituted unfair competition with plaintiff because the name of defendants' hospital was confusingly similar to the name of plaintiff's hospital); Tomlin, 18 Cal. App. 3d at 236 (in an unfair competition case in which the plaintiff was trying to bar the defendant from use of the title "The Love Bug," indicating that the plaintiff needed to show a likelihood of public confusion for either injunctive relief or damages). While Golf did not explicitly address the issue of likelihood of confusion, it had no occasion to since the issue in Golf was whether, in a misappropriation claim, there needed to be "proof of direct competition between the plaintiff and the defendant." Golf, 69 Cal. App. 4th at 618. Finally, the Golf court did note that the trial court specifically found that [the defendant's] unauthorized use of [the plaintiff's] service marks in its advertising, packaging and instructional materials created a likelihood of confusion by conveying to the general public that [the plaintiff] had authorized and approved [the defendant's] use of the Handicap System, and found that [the defendant's] disclaimers were "ineffectual" and "ambiguous." United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23 1 2 3 4 5 6 7 8 9 10 Id. at 615. The requirement of likelihood of consumer confusion is entirely consistent with the last element in Golf -- injury resulting from defendant's conduct. Based on the record before it, Mr. Garcia's misappropriation claim must fail because there is no genuine dispute of fact as to whether "there was a likelihood of confusion in the mind of the public between his [wine] and [Defendants' wine]," an essential element of the claim. Tomlin, 18 Cal. App. 3d at 236. Although the Sonoma Ridge labels used by Defendants were identical to those used by Mr. Garcia and for the same type of product (i.e., wine), there is no record evidence supporting a finding of a likelihood of confusion. Mr. Garcia sold the Sonoma Ridge wines for a short time in Germany only (i.e., targeting German customers only). He established no presence in California or the United States and thus had no evidence that local consumers had any knowledge of his wine. Defendants sold the Sonoma Ridge wines in the United States only (i.e., targeting U.S. customers only). There is no evidence of any overlap in customers or convergence in the channels of distribution and marketing. See M2 Software, Inc. v. Madacy Entm't, 421 F.3d 1073, 1083 (9th Cir. 2006) (stating that one factor to consider in determining whether there is a likelihood of confusion is whether marketing channels converge, with convergent channels increasing the likelihood of confusion); see also Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 239 n.18 (3d Cir. 2005) (Fisher, J., concurring in part and dissenting in part) (noting that "[t]he more the parties' services, customers, advertising, or markets diverge, the more they reduce the likelihood of confusion . . . because differently targeted consumers may see the marks in different contexts, through different advertising, and in relation to different goods or services"). Compare, e.g., Sutter Home Winery, Inc. v. Madrona Vineyards, L.P., No. C 05-0587 MHP, 2005 U.S. Dist. LEXIS 4581, at *32 (N.D. Cal. Mar. 23, 2005) (noting that "both parties to the instant action sell wine, [but] there are substantial differences in how they go about the task of doing so," with the differences "reflect[ing] the fact that plaintiff operates a large winery that sells and distributes multiple brands of wine throughout the United States, whereas defendant is a family winemaker whose marketing /// //// /// United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24 1 2 3 4 5 6 7 8 9 10 literature emphasizes its `commitment to small-batch, high-integrity winemaking'").12 Notably, there is no evidence of any actual confusion either. See M2, 421 F.3d at 1082 (stating that "`[e]vidence that use of the two marks has already led to confusion is persuasive proof that future confusion is likely'"). The Court therefore rejects Mr. Garcia's position and finds summary judgment appropriate on the claim for common law misappropriation based on the lack of evidence of a likelihood of confusion. 3. Common Law Unfair Competition Summary judgment is proper with respect to the claim for common law unfair competition for the same reasons discussed above in Part II.C.2, supra -- i.e., based on the record submitted, no reasonable jury could find a likelihood of confusion. 4. Statutory Unfair Competition (Cal. Bus. & Prof. Code 17200) United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Statutory unfair competition bars (1) unlawful, (2) unfair, or (3) fraudulent business practices. See Cal. Bus. & Profs. Code 17200. As Defendants point out, Mr. Garcia does not have any claim for an unfair business practice by Defendants since, in a suit between competitors (as opposed to a consumer suit), the California Supreme Court has held that the word "unfair" "`means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.'" Van Slyke v. Capital One Bank, No. C 07-00671 WHA, 2007 U.S. Dist. LEXIS 82690, at *32 (N.D. Cal. Nov. 7, 2007) (quoting Cel-Tech, 20 Cal. 4th at 186-87). Section 17200, however, also prohibits fraudulen

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