United Tactical Systems, LLC v. Real Action Paintball, Inc. et al

Filing 348

ORDER by Judge Maria-Elena James granting in part and denying in part 307 Motion for Partial Summary Judgment and denying 316 Cross-Motion for Summary Judgment. (mejlc2S, COURT STAFF) (Filed on 2/23/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 UNITED TACTICAL SYSTEMS, LLC, 7 Case No. 14-cv-04050-MEJ Plaintiff, 8 ORDER RE: CROSS MOTIONS FOR SUMMARY JUDGMENT v. 9 REAL ACTION PAINTBALL, INC., et al., Defendants. 10 Re: Dkt. Nos. 307, 316 United States District Court Northern District of California 11 AND RELATED ACTION AND CROSS ACTION 12 13 14 15 INTRODUCTION 16 Pending before the Court is the Motion for Summary Judgment filed by Plaintiff and 17 Counter-Defendant United Tactical Systems, LLC (“UTS”) and related Counter-Defendants1 18 (together with UTS, “Counter-Defendants”). UTS Mot., Dkt. No. 307. Defendants and Counter- 19 Claimants Real Action Paintball, Inc. and K.T. Tran (collectively, “Real Action”) filed an 20 Opposition and Cross-Motion for Summary Judgment. RAP Mot., Dkt. No. 316. UTS and Real 21 Action each filed Replies. UTS Reply, Dkt. No. 320; RAP Reply, Dkt. No. 322. Having 22 considered the parties‟ positions, the relevant legal authority, and the record in this case, the Court 23 GRANTS IN PART and DENIES IN PART Counter-Defendants‟ Motion and DENIES Real 24 Action‟s Motion for the following reasons. 25 // 26 27 28 1 Counter-Defendants are UTS, Advanced Tactical Ordnance Systems, LLC (“ATO”); Perfect Circle Projectiles LLC; Gary Gibson; Tactical Air Games, Inc.; Tyler Tiberius; United Tactical Systems Holdings, LLC; and United Tactical Systems Intermediate Holdings, LLC. BACKGROUND 1 2 A. Factual Background 3 1. The PepperBall Trademark 4 PepperBall projectiles are small plastic spheres that contain a proprietary irritant powder 5 that functions similarly to pepper spray. RAP Resp. to Counter-Defs.‟ Statement of Undisputed 6 Fact (“RAP SUF Reply”) ¶ 2, Dkt. No. 316-17.2 UTS and its predecessors have sold PepperBall 7 projectiles to police and governmental agencies, militaries, and private security firms as a non- 8 lethal force compliance tool. Id. ¶ 3; Decl. of Gary Gibson (“Gibson Decl.”) ¶ 5, Dkt. No. 308. On September 14, 1999, Jaycor, Inc. (“Jaycor”) filed an application with the United States 10 Patent and Trademark Office (“USPTO”) to trademark the name “PepperBall.” RAP SUF Resp. ¶ 11 United States District Court Northern District of California 9 5; see Gibson Decl., Ex. 1. On October 27, 2000, Jaycor assigned the PepperBall trademark 12 application to Jaycor Tactical Systems, Inc. (“Jaycor Tactical”). RAP SUF Resp. ¶ 6; Gibson 13 Decl., Ex. 2. On December 31, 2001, Jaycor filed a confirmation of assignment of six trademark 14 applications, including the PepperBall trademark, to Jaycor Tactical. RAP SUF Resp. ¶ 7; see 15 Gibson Decl., Ex. 3. On May 13, 2003, the PepperBall trademark was registered under the number 2,716,025 16 17 (the “PepperBall mark”) to Jaycor Tactical for use generally in connection with “NON-LETHAL 18 WEAPONRY, NAMELY, NON-LETHAL PROJECTILES; LAUNCH DEVICES FOR NON- 19 LETHAL PROJECTILES; NON-LETHAL SUBSTANCES FOR USE IN NON-LETHAL 20 PROJECTILES, NAMELY, LIQUID AND NON-LIQUID MATERIALS, NAMELY, WATER, 21 INERT OR IRRITANT POWDERS, OLEORESIN CAPSICUM, MARKER DYES, IRRITANTS 22 AND POWDERED OR GRANULATED MATERIALS, NAMELY BISMUTH, IN CLASS 13 23 24 25 26 27 28 2 Real Action included in a single document (1) its Statement of Disputes of Fact in response to Counter-Defendants‟ original Statement of Uncontroverted Facts and (2) its Statement of Uncontroverted Facts. See Dkt. No. 308-12. For citation purposes, this Order separately cites Real Action‟s Responses to Counter-Defendants‟ SUF (“RAP SUF Resp.”) and Real Action‟s Statement of Facts (“RAP SUF”). Real Action‟s Responses contain both Counter-Defendants‟ SUF (Dkt. No. 307-1) and Real Action‟s responses thereto. 2 1 (U.S. CLS. 2 AND 9).”3 RAP SUF Resp. ¶ 8; Gibson Decl., Ex. 4; Decl. of Padraic Glaspy 2 (“Glaspy Decl.”), Ex. 63, Dkt. No. 309. Jaycor Tactical twice filed a change of name to PepperBall Technologies, Inc. 3 4 (“PepperBall Technologies” or “PTI”), once on December 26, 2002 and again on July 23, 2003. 5 RAP SUF Resp. ¶¶ 10-11; see Gibson Decl., Exs. 6-7. PepperBall Technologies was registered as 6 a Delaware corporation. Gibson Decl., Ex. 7. The July 23, 2003 filing included an assignment of 7 the PepperBall mark to PepperBall Technologies. Id.; RAP SUF Resp. ¶ 11. 2. 9 On January 15, 2010, PepperBall Technologies took out a loan from the James Simpson 10 Foundation (the “Simpson Foundation Loan”), which provided a security interest in PepperBall 11 United States District Court Northern District of California 8 The Simpson Loans Technologies‟ intellectual property, including its trademarks and associated goodwill. RAP SUF 12 Resp. ¶ 15; Gibson Decl., Ex. 9. Under the terms of the Simpson Foundation Loan, “Borrower 13 grants Lender a security interest in all of Borrower‟s personal property . . . , including without 14 limitation all of the following: all accounts, cash, patents, copyrights, trademarks, goodwill, 15 general intangibles . . . .” Gibson Decl., Ex. 9 § 2. PepperBall Technologies also took out a loan 16 from the J.A. & G.L. Simpson Trust (the “Simpson Trust Loan”) (together with the Simpson 17 Foundation Loan, the “Simpson Loans”), a related Simpson entity. RAP SUF Resp. ¶ 16. The 18 Simpson Trust Loan “contained substantially the same terms” as the Simpson Foundation Loan. 19 RAP SUF Resp. ¶ 16. On October 25, 2011, the J.A. & G.L. Simpson Trust and the James Simpson Foundation 20 21 (together, the “Lenders”) and PepperBall Technologies amended the Simpson Loans to include 22 PepperBall Technologies-CA, Inc. (“PepperBall Technologies-CA” or “PTI-CA”) as a co- 23 borrower. Counter-Defs.‟ Statement of Uncontroverted Facts (“Counter-Defs.‟ SUF”) ¶ 17, Dkt. 24 No. 307-1; Gibson Decl., Ex. 10 (Second Amendment to the Simpson Foundation Loan); id., Ex. 25 12 (Second Amendment to the Simpson Trust Loan); Declaration of Jim Simpson (“Simpson 26 27 28 3 Another PepperBall trademark was registered under the number 2,651,502 (the “1502 mark”) to Jaycor Tactical on November 19, 2002. RAP SUF ¶ 9; Gibson Decl., Ex. 5. The 1502 mark is not at issue in this litigation. 3 1 Decl.”), Ex. 2 (Second Amendment to the Simpson Foundation Loan), Dkt. No. 320-4; id., Ex. 3 2 (Second Amendment to the Simpson Trust Loan). PepperBall Technologies-CA is a wholly 3 owned subsidiary of PepperBall Technologies and is incorporated in Delaware. Gibson Decl., Ex. 4 13. Both amendments provided that “the grant of security interest set forth in Section 2 of the 5 Original Agreement shall be deemed for all purposes to include a grant of security interest by 6 PepperBall Technologies-CA in its personal property[.]” Gibson Decl., Exs. 10 ¶ 2 & 12 ¶ 2; 7 Simpson Decl., Exs. 2 ¶ 2 & 3 ¶ 2. PepperBall Technologies‟ and PepperBall Technologies-CA‟s 8 chairman, as well the James Simpson Foundation‟s president, signed the amendments. See Gibson 9 Decl., Exs. 10, 12; Simpson Decl., Exs. 2-3. The James Simpson Foundation filed two Uniform Commercial Code (“UCC”) Financing Statements with the Delaware Secretary of State indicating 11 United States District Court Northern District of California 10 it and the J.A. & G.L. Simpson Trust had a secured interest in “[a]ll of Borrower [PepperBall 12 Technologies-CA]‟s personal property . . . including without limitation all of the following: . . . 13 patents, copyrights, trademarks, [and] goodwill[.]” RAP SUF Resp. ¶ 18; Gibson Decl. Exs. 16- 14 17. 15 Phoenix International LLC (“Phoenix”) acquired the Simpson Loans through an 16 Assignment Agreement. RAP SUF Resp. ¶ 21; Gibson Decl., Exs. 20-22. In addition to the 17 Simpson Loans, PepperBall Technologies and PepperBall Technologies-CA took out “second-tier 18 debt” in the form of small loans from individuals and entities. RAP SUF Resp. ¶ 22; Gibson 19 Decl., Exs. 18, 40. PepperBall Technologies also gave a security interest to Agility Capital, LLC 20 (“Agility Capital”). RAP SUF Resp. ¶ 19; Gibson Decl., Ex. 18. 21 3. The UCC Foreclosure Sale 22 PepperBall Technologies and PepperBall Technologies-CA materially defaulted on the 23 Simpson Loans. Counter-Defs.‟ SUF ¶ 24; see Gibson Decl., Exs. 20-22. On January 9, 2012, 24 Phoenix held a UCC foreclosure sale pursuant to the security interests in PepperBall Technologies 25 and PepperBall Technologies-CA‟s secured assets, including the PepperBall trademark and 26 goodwill. Counter-Defs.‟ SUF ¶ 25. Notices of the UCC foreclosure sale were placed in the San 27 Diego Daily Transcript on December 30, 2011 and January 6, 2012. RAP SUF Resp. ¶ 26; Gibson 28 Decl., Exs. 23-24. Notice of the sale was made by multiple means and sent to each of PepperBall 4 1 Technologies‟ secured creditors. Counter-Defs.‟ SUF ¶ 27; see, e.g., Gibson Decl., Ex. 26. 2 PepperBall Technologies-CA received notice of the foreclosure sale indicating its assets were 3 being foreclosed upon; it did not object to or challenge the sale. Counter-Defs.‟ SUF ¶ 29. 4 PepperBall Technologies and PepperBall Technologies-CA worked with Phoenix to ensure 5 foreclosure proceedings included the proper entities. Id. ¶ 28. On May 25, 2012, Phoenix changed its name to Advanced Tactical Ordinance Systems 6 7 LLC; it filed a second Certificate of Amendment that same day to correct the name to Advanced 8 Tactical Ordnance Systems LLC (“ATO”). RAP SUF Resp. ¶¶ 31-32; Gibson Decl., Exs. 28-29. 9 On December 5, 2012, ATO filed with the USPTO a nunc pro tunc Bill of Sale memorializing the completed foreclosure sale. RAP SUF Resp. ¶ 34; see id. ¶ 33 (not disputing nunc pro tunc 11 United States District Court Northern District of California 10 trademark assignment); Gibson Decl., Ex. 30. The Bill of Sale‟s identified property included the 12 PepperBall mark as the property. Gibson Decl., Ex. 30. 13 4. Renewal of the PepperBall Mark 14 On May 13, 2009, the USPTO received pursuant to Section 8 of the Lanham Act a 15 Declaration of Use regarding the PepperBall mark. See Glaspy Decl., Ex. 67; Counter-Defs.‟ 16 Reply to RAP SUF ¶¶ 1-2, Dkt. No. 320-7.4 The Section 8 Declaration lists “Jaycor Tactical 17 Systems, Inc.” as the current owner and “Pepperball Technologies, Inc.” as the proposed owner. 18 Glaspy Decl., Ex. 67. The Declaration is signed by Conrad Sun. Id. The USPTO accepted the 19 Declaration on June 29, 2009. Id., Ex. 66. 20 On October 30, 2013, ATO filed a Section 8 Declaration of Use and a Section 9 21 Application for Renewal for the PepperBall mark. Counter-Defs.‟ SUF ¶ 49; Gibson Decl., Ex. 22 35. On November 4, 2013, the USPTO granted the Section 9 Renewal portion, but it rejected the 23 Section 8 portion because “[o]ffice records do not show clear chain of title in the party [ATO] who 24 filed the Section 8 Affidavit.” Counter-Defs.‟ SUF ¶ 50; Gibson Decl., Ex. 36. That same day, 25 ATO filed with the USPTO a statement confirming ATO had acquired the PepperBall mark in a 26 foreclosure sale. Counter-Defs.‟ SUF ¶ 51; Gibson Decl., Ex. 37. On November 13, 2013, the 27 4 28 This document contains both Real Action‟s asserted facts and Counter-Defendants‟ reply thereto. 5 1 USPTO issued a Notice of Acceptance under Section 8 and Registration Renewal under Section 9. 2 Counter-Defs.‟ SUF ¶ 52; Gibson Decl., Ex. 38. 3 5. UTS Acquisition of ATO and the PepperBall Mark 4 ATO‟s assets were transferred to UTS by written assignment. RAP SUF Resp. ¶ 56; 5 Gibson Decl. ¶ 63. The PepperBall mark was included in the transfer of these assets. RAP SUF 6 Resp. ¶¶ 56-57; see Gibson Decl., Ex. 33. 7 B. Procedural Background 8 Litigation over the PepperBall trademark has been extensive and fought in multiple courts. 9 1. The Indiana Action In September 2012, ATO filed suit in the United States District Court for the Northern 10 United States District Court Northern District of California 11 District of Indiana in a case styled Advanced Tactical Ordnance Systems, LLC v. Real Action 12 Paintball, Inc., et al., Case No. 12-00296-JVB-RBC (N.D. Ind.), in which ATO sought and 13 obtained a temporary restraining order (“TRO”) against Real Action (the “Indiana Action”).5 RAP 14 SUF ¶ 42; Glaspy Decl., Exs. 49-50. On August 16, 2013 and after approximately forty hours of 15 evidentiary hearings, the Northern District of Indiana issued a preliminary injunction against Real 16 Action which, among other things, prohibited Real Action from selling the irritant projectiles it 17 purchased from ATO. RAP SUF ¶ 43; see Glaspy Decl., Exs. 51-60. Real Action appealed to the United States Court of Appeals for the Seventh Circuit. RAP 18 19 SUF ¶ 45; Glapsy Decl., Ex. 61. The Seventh Circuit found the district court lacked personal 20 jurisdiction over Real Action and ordered the district court to vacate the preliminary injunction 21 and dismiss the action. RAP SUF ¶ 46; see Glaspy Decl., Ex. 62.6 22 2. 23 The parties have litigated the case in this Court since 2014. On May 27, 2014, Real Action 24 The Instant Proceedings sued ATO for claims arising out of the Indiana Action in a case styled Real Action Paintball, Inc. 25 5 26 ATO also sought a TRO against APON Industries Corp., APON International Group, and Conrad Sun. The Northern District of Indiana dismissed those parties after they settled with ATO. 27 6 28 The Seventh Circuit‟s opinion is available at Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796, 799 (7th Cir. 2014), as corrected (May 12, 2014). 6 1 v. Adv. Tactical Ordnance Sys., Inc., et al., 14-cv-2435-MEJ (N.D. Cal.) (the “ATO Case”). RAP 2 SUF ¶ 48. On September 5, 2014, UTS filed the present suit against Real Action (the “UTS 3 Case”). RAP SUF ¶ 47; see Compl., Dkt. No. 1. UTS asserts ten claims against Real Action: (1) 4 infringement of a registered trademark pursuant to 15 U.S.C. § 1114; (2) infringement of a 5 trademark pursuant to 15 U.S.C. § 1125(a); (3) common law trademark infringement and unfair 6 competition; (4) deceptive comparative advertising in violation of 15 U.S.C. § 1125(a); (5) 7 counterfeiting in violation of 15 U.S.C. § 1114, et seq.; (6) trade dress infringement; (7) trademark 8 dilution; (8) misappropriation of trade secrets; (9) violation of California false advertising law, 9 Cal. Bus. & Prof. Code § 17500; and (10) violation of California unfair competition law, Cal. Bus. 10 & Prof. Code § 17200. Compl. ¶¶ 32-90. United States District Court Northern District of California 11 UTS moved for a TRO (Dkt. No. 27), which the Court construed as a Motion for a 12 Preliminary Injunction (Dkt. No. 34 at 5). The Court ultimately granted it in part and denied it in 13 part, and enjoined Real Action from using the PepperBall name to refer to its irritant projectiles. 14 Dkt. No. 85; see United Tactical Sys., LLC v. Real Action Paintball, Inc., 2014 WL 6788310, at *1 15 (N.D. Cal. Dec. 2, 2014). Real Action then counter-sued UTS, asserting several counterclaims 16 that were related to its claims against ATO. Dkt. No. 51. The Court subsequently consolidated 17 the two actions under the UTS Case. Dkt. No. 140. 18 Real Action‟s operative Third Amended Counterclaim asserts thirteen counterclaims 19 against Counter-Defendants. See Third Am. Countercl. ¶¶ 71-192, Dkt. No. 281. Real Action 20 asserts three federal claims: (1) wrongful seizure, 15 U.S.C. § 1116(d)(1); (2) false designation of 21 origin, 15 U.S.C. § 1125; and (3) monopoly and combination in restraint of trade, 15 U.S.C. §§ 1- 22 2. Id. ¶¶ 71-78, 111-36. Real Action also asserts seven claims under state law: (1) abuse of 23 process under Indiana law; (2) intentional interference with contractual relations under Indiana and 24 California laws; (3) intentional or negligent interference with prospective economic advantage 25 under Indiana and California laws; (4) combination in restraint of trade under the California 26 Cartwright Act, Cal. Bus. & Prof. Code § 16720 et seq.; (5) unfair competition and false 27 advertising, Cal. Bus. & Prof. Code §§ 17200, 17500; (6) unjust enrichment under Indiana law; 28 and (7) conspiracy under California and Indiana laws. Id. ¶¶ 79-108, 137-53, 165-78. Finally, 7 1 Real Action seeks declaratory judgments (1) of no Lanham Act, common law trademark, or trade 2 dress violations; (2) of no trade secret misappropriation; and (3) for the cancellation of the 3 PepperBall registration. Id. ¶¶ 154-64, 180-92. The Court ordered the parties to attend a settlement conference before the Honorable 4 5 Joseph C. Spero. Dkt. No. 218 at 2. At the settlement conference, the parties agreed to file cross 6 motions for summary judgment on two issues: (1) whether the registered trademark(s) at issue in 7 this case was validly transferred, and (2) whether the registered trademark(s) at issue had lapsed 8 before it was transferred. Settlement Minutes, Dkt. No. 270; see Dkt. No. 278 at 1 n.1. These 9 Motions followed. REQUEST FOR JUDICIAL NOTICE 10 United States District Court Northern District of California 11 Counter-Defendants request the Court take judicial notice of forty-four documents filed 12 with the Northern District of Indiana and the U.S. Court of Appeals for the Seventh Circuit; the 13 U.S. Patent and Trademark Office; the Delaware and Colorado Secretaries of States; and the U.S. 14 Securities and Exchange Commission (“SEC”). Request for Judicial Notice (“RJN”) at 2-7, Dkt. 15 No. 311. Real Action does not oppose Counter-Defendants‟ request. Pursuant to Federal Rule of Evidence 201(b), “[t]he court may judicially notice a fact that 16 17 is not subject to reasonable dispute because it: (1) is generally known within the trial court's 18 territorial jurisdiction; or (2) can be accurately and readily determined from sources whose 19 accuracy cannot reasonably be questioned.” Documents in the public record may be judicially 20 noticed to show, for example, that a judicial proceeding occurred or that a document was filed in 21 another case, but a court may not take judicial notice of findings of facts from another case. Lee v. 22 City of L.A., 250 F.3d 668, 689 (9th Cir. 2001). Nor may a court take judicial notice of any matter 23 that is in dispute. Id. at 689-90; but see Ruiz v. City of Santa Maria, 160 F.3d 543, 548 n.13 (9th 24 Cir. 1998) (finding judicial notice is inappropriate where the facts to be noticed were not relevant 25 to the disposition of the issues before the court). 26 A. 27 28 Documents Filed in the Northern District of Indiana and the Seventh Circuit Counter-Defendants seek judicial notice of seventeen documents that were filed in the Indiana Action. RJN at 2-4; see Glaspy Decl., Exs. 46, 48, 50-62, 64. Because they have been 8 1 publicly filed in other litigation, the Court may judicially notice these documents. See Harris v. 2 Cty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take judicial notice of undisputed 3 matters of public record, . . . including documents on file in federal or state courts.” (internal 4 citation omitted)). The Court GRANTS Counter-Defendants‟ request as to these exhibits, but it 5 does so solely for its existence and content, not the truth of any statements therein. See Rieckborn 6 v. Jefferies LLC, 81 F. Supp. 3d 902, 913 (N.D. Cal. 2015). 7 B. Counter-Defendants also request the Court take judicial notice of twenty-four documents 8 9 Documents Filed with the USPTO and the SEC filed with the USPTO and one document filed with the SEC. RJN at 4-7; see Glaspy Decl., Ex. 39, 41-45, 63, 65; Gibson Decl., Exs. 2-7, 18-19, 30, 34-38, 66-67. As these documents are public 11 United States District Court Northern District of California 10 records filed with the USPTO or the SEC, they are properly the subject of judicial notice. See 12 Kelly v. Primco Mgmt., Inc., 2015 WL 10990368, at *4 (C.D. Cal. Jan. 12, 2015). The Court thus 13 GRANTS Counter-Defendants‟ Request as to these documents. However, while “the USPTO 14 [and the SEC] records may be subject to judicial notice, they are noticeable only for the limited 15 purpose of demonstrating that the filings and actions described therein occurred on certain dates.” 16 Pinterest Inc. v. Pintrips Inc., 15 F. Supp. 3d 992, 997 (N.D. Cal. 2014). 17 C. 18 Documents Filed with the Delaware and Colorado Secretaries of State Counter-Defendants also request judicial notice of documents filed with the Delaware and 19 Colorado Secretaries of State. RJN at 7; see Gibson Decl., Exs. 16-17. Because these UCC 20 financing statements are public records, the Court GRANTS Counter-Defendants‟ Request as to 21 them. See Hanover Ins. Co. v. Fremont Bank, 68 F. Supp. 3d 1085, 1092 (N.D. Cal. 2014) (taking 22 judicial notice of UCC Financing Statement); Theta Chi Fraternity, Inc. v. Leland Stanford Junior 23 Univ., 2016 WL 4524305, at *4 (N.D. Cal. Aug. 30, 2016) (finding it appropriate to take judicial 24 notice of filings with the California Secretary of State). 25 EVIDENTIARY OBJECTIONS 26 Real Action and Counter-Defendants assert several evidentiary objections. Real Action 27 objects to evidence Counter-Defendants included with their Reply, specifically, portions of the 28 Reply Declaration of Gary Gibson (Gibson Reply Decl., Dkt. No. 320-4), the Declaration of 9 1 George Eurick (Eurick Decl., Dkt. No. 320-2), and Exhibits 2 and 3 of the Simpson Declaration. 2 RAP Reply at 2-3. Counter-Defendants object to paragraph 3 of the Declaration of Paul B. 3 Overhauser submitted in support of Real Action‟s Reply (“Overhauser Reply Declaration”), which 4 discusses Exhibits 2 and 3 of the Simpson Declaration. UTS Obj., Dkt. No. 323; see Overhauser 5 Reply Decl., Dkt. No. 322-1. 6 A. The Gibson Reply Declaration Real Action objects to paragraph 3 of the Gibson Declaration on the ground that it asserts 8 an inadmissible legal conclusion. Id. at 2. “[S]tatements in declarations based on speculation or 9 improper legal conclusions, or argumentative statements, are not facts and likewise will not be 10 considered on a motion for summary judgment. Objections on any of these grounds are simply 11 United States District Court Northern District of California 7 superfluous in this context.” Burch v. Regents of Univ. of Cal., 433 F. Supp. 2d 1110, 1119 (E.D. 12 Cal. 2006). The Court thus OVERRULES Real Action‟s objection to paragraph 3 of the Gibson 13 Reply Declaration. Real Action also objects to paragraphs 5 through 8 of the Gibson Reply Declaration for 14 15 lack of personal knowledge. RAP Reply at 2. Real Action contends that “[b]ecause Mr. Gibson 16 expressly conditions his allegations the statements „to my knowledge‟ (¶¶ 5, 6, 8) and „as far as I 17 am aware‟ (¶ 5), these statements are not based on personal knowledge as required by Rule 56(c).” 18 Id. Accordingly, Real Action argues “Gibson‟s declaration does not affirmatively show that he is 19 competent to testify about these matters.” Reply at 2. Real Action does not specifically address 20 how Gibson lacks personal knowledge of the statements made in paragraph 7. Rule 56(c) requires that “[a]n affidavit or declaration used to support or oppose a motion 21 22 must be made on personal knowledge, set out facts that would be admissible in evidence, and 23 show that the affiant or declarant is competent to testify on the matters stated.” Fed. R. Civ. P. 24 56(c)(4). The Court disagrees that Gibson‟s statements that his assertions are made “[t]o [his] 25 knowledge” or “[t]o the best of [his] knowledge” indicate that he lacks personal knowledge. See 26 Gibson Reply Decl. ¶¶ 5-6, 8. On the contrary, Gibson offers explanations as to how his 27 knowledge was formed: 28 // 10 3 I was involved in providing the required notice of the foreclosure sale to all known secured creditors of PTI and/or PTI-CA. I worked with John Stitska, who was an officer of PTI-CA (dba PTI), and James Drake, ATO‟s counsel, in sending notice to the proper individuals and entities and I am familiar with the process by which notice was sent. 4 Id. ¶ 4. Given that he was personally involved in the notice process, Gibson would have personal 5 knowledge regarding Conrad Sun‟s involvement and notice to PepperBall Technologies and 6 PepperBall Technologies-CA‟s known secured creditors. See id. ¶¶ 5-6. That he makes the 7 declaration “to [his] knowledge” does not change that. 1 2 Gibson also declares he “did not have any knowledge that Scott & Goldman was a secured 8 9 creditor of either PTI or PTI-CA” because “[t]here was no lien filed by Scott & Goldman at the time that we completed our search for secured creditors.” Id. ¶ 7. Finally, Gibson explains that he 11 United States District Court Northern District of California 10 knows that “[t]o date no secured creditor of PTI has ever . . . complained about the foreclosure 12 sale on the basis of lack of notice or any other basis” because “[n]either Primary Funding 13 Corporation nor Scott & Goldman, Inc. have ever complained about the foreclosure sale based on 14 lack of notice.” Id. ¶ 8. Given that Gibson explains the bases for his personal knowledge, the 15 Court OVERRULES Real Action‟s objections to paragraphs 5 through 8 of the Gibson Reply 16 Declaration.7 17 B. The Eurick Declaration Real Action also requests the Court strike the Eurick Declaration for lack of personal 18 19 knowledge. RAP Reply at 3. Real Action notes Eurick never states when he served as an officer 20 of UTS and does not claim to have worked for ATO, Primary Funding Corporation, PepperBall 21 Technologies-CA or PepperBall Technologies. Id. There is no evidence that Eurick ever worked for ATO. See Eurick Decl. The Court 22 23 agrees that Eurick fails to establish personal knowledge about ATO‟s knowledge or awareness of 24 matters and SUSTAINS Real Action‟s objections to the portions of the Eurick Declaration that 25 7 26 27 28 To the extent Real Action objects Gibson‟s statement regarding Conrad Sun‟s personal knowledge of the notice process (see Gibson Reply Decl. ¶ 5), the Court OVERRULES such objection. See Smith v. Cty. of Santa Clara, 2016 WL 4076193, at *8 (N.D. Cal. Aug. 1, 2016), appeal dismissed (Sept. 30, 2016) (“„[O]bjections to evidence on the ground that it is . . . speculative . . . [is] duplicative of the summary judgment standard itself‟ and [is] unnecessary.” (quoting Burch, 433 F. Supp. 2d at 1119)). 11 1 pertain to ATO. Further, although Eurick declares he is the UTS‟ Chief Innovation Officer (Eurick Decl. ¶ 2 3 1), he does not explain how this position gives him familiarity with certain aspects of UTS or 4 ATO. For instance, it is unclear how Eurick, as Chief Innovation Officer, would have knowledge 5 about the use of the term “pepperball” by parties other than UTS. The Court therefore SUSTAINS 6 Real Action‟s objections to paragraphs 4, 5, and 6 of the Eurick Declaration. However, the Court disagrees with Real Action‟s assertion that “Eurick does not claim to 7 8 have worked for . . . Primary Funding Corporation, PepperBall Technologies -- CA, Inc. or 9 PepperBall Technologies, Inc., so he clearly lacks knowledge about matters supposedly within the corporate knowledge of those companies.” RAP Reply at 3. On the contrary, Eurick states that 11 United States District Court Northern District of California 10 “[i]n my position at the time of the foreclosure sale . . . I worked with Primary Funding 12 Corporation, and specifically with its CEO, Patricia Burns. Primary Funding Corporation received 13 notice of that sale and was fully aware of the foreclosure sale prior to it taking place. I am 14 personally aware that notice of the foreclosure sale was given to Primary Funding Corporation.” 15 Eurick Decl. ¶ 7. Eurick further states that “I had business dealings with Pepperball 16 Technologies, Inc. prior to and leading up to the time of the foreclosure sale.” Id. ¶ 8. These 17 dealings with Primary Funding Corporation and PepperBall Technologies provide a basis for his 18 knowledge about Primary Funding Corporation‟s receipt of notice of the foreclosure sale and 19 about the names under which PepperBall Technologies and PepperBall Technologies-CA 20 conducted business. Accordingly, the Court OVERRULES Real Action‟s objections to 21 paragraphs 7 and 8 of the Eurick Declaration. 22 C. Exhibits 2 and 3 of the Simpson Declaration and Paragraph 3 of the Overhauser 23 Reply Declaration 24 Real Action objects to Exhibits 2 and 3 of the Simpson Declaration, which consist of the 25 Second Amendments to the Simpson Foundation and Trust Loans, respectively. Reply at 3-4; see 26 Simpson Decl., Exs. 2-3. Counter-Defendants submitted versions of these documents in support 27 of their Motion. See Gibson Decl., Exs. 10, 12. Real Action points out that the Second 28 Amendments attached to the Gibson Declaration are missing the Lenders‟ signatures. RAP Mot. 12 1 at 43; see Gibson Decl., Exs. 10, 12. In response, Counter-Defendants submit Exhibits 2 and 3 of 2 the Simpson Declaration, which show the Second Amendments with the signatures of James 3 Simpson as President/Director of the James Simpson Foundation, and Simpson and Gretchen 4 Simpson as Trustees of the J.A. & G.L. Simpson Trust. See Simpson Decl., Ex. 2 at 3; id., Ex. 3 5 at 3. Real Action contends Counter-Defendants failed to disclose the Second Amendments during 6 discovery, despite a Court order requiring “the parties [to] produce all documents relating to the 7 trademark registrations and renewals and to the transfer of the registered trademark in accordance 8 with Judge Spero‟s proposal by September 1, 2016.” Dkt No. 278 at 2 (emphasis in original); see 9 Settlement Minutes. In support of this argument, Real Action offers the Overhauser Reply 10 Declaration, in which counsel for Real Action declares that United States District Court Northern District of California 11 On December 1, 2016, as part of the Declaration of Jim Simpson (Dkt. 320-4), UTS proffered two new versions of (a) a document entitled Second Amendment To Loan Agreement purportedly between the James Simpson Foundation, Pepperball Technologies, Inc. and Pepperball Technologies -- CA, Inc.; and (b) a document entitled Second Amendment To Loan Agreement purportedly between the J.A. & G.L. Simpson Trust, Pepperball Technologies, Inc. and Pepperball Technologies -- CA, Inc. UTS had never produced these documents prior to submitting them as part of the Simpson Declaration. 12 13 14 15 16 17 Overhauser Reply Decl. ¶ 3.8 Counter-Defendants object to this paragraph as inadmissible speculation and for lack of 18 19 foundation. UTS Obj. at 1. Counter-Defendants contend “Overhauser does not indicate anywhere 20 in his declaration any knowledge as to whether Plaintiff or Counter-Defendants were in possession 21 of the fully executed amendment documents prior to submitting them with their Opposition, and 22 therefore whether they were under any duty to produce the same, or had any ability to.” Id. They 23 explain that “Counter-Defendants were not in possession of a copy of the fully executed 24 agreement, but rather were able to obtain the same after Real Action filed its Cross-Motion . . . in 25 which, for the first time, it challenged the validity of the Second Amendment on the basis that it 26 had not been fully executed.” Id. at 2 (internal citation omitted). “Once challenged, Plaintiff and 27 8 28 The Overhauser Reply Declaration contains two paragraphs numbered as “3.” See Overhauser Reply Decl. This citation refers to the first paragraph “3.” 13 1 Counter-Defendants were able to obtain a copy of the fully executed agreement from Jim 2 Simpson, who was in possession of such a copy, and as is reflected in the declaration that he 3 submitted with [Counter-Defendants‟] Opposition.” Id. Counter-Defendants emphasize that “no 4 one, including Real Action, had previously challenged the validity of the Second Amendment on 5 the basis of the lack of a fully executed copy of the amendment documents.” Id. 6 The Court is perturbed that Counter-Defendants did not obtain or produce Exhibits 2 and 3 to the Simpson Declaration prior to filing its Motion. “If a party fails to provide information . . . 8 as required by Rule 26(a) or (e), the party is not allowed to use that information . . . to supply 9 evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is 10 harmless.” Fed. R. Civ. P. 37(c)(1). Nonetheless, Real Action offers no evidence that Counter- 11 United States District Court Northern District of California 7 Defendants purposefully withheld Exhibits 2 and 3. The Overhauser Declaration fails to establish 12 that Counter-Defendants could and should have produced Exhibits 2 and 3 before September 1, 13 2016, or that Counter-Defendants were not otherwise substantially justified in failing to provide 14 them to Real Action. Further, Real Action is not harmed by not receiving Exhibits 2 and 3 before 15 this point: their argument on the issue is relatively brief (only three paragraph), and they had an 16 opportunity to address these documents in their Reply. Therefore, the Court SUSTAINS Counter- 17 Defendants‟ objection to paragraph 3 of the Overhauser Reply Declaration and OVERRULES 18 Real Action‟s objections to Exhibits 2 and 3 of the Simpson Declaration. 19 20 LEGAL STANDARD Summary judgment is proper where the pleadings, discovery and affidavits demonstrate 21 that there is “no genuine dispute as to any material fact and [that] the movant is entitled to 22 judgment as a matter of law.” Fed. R. Civ. P. 56(a). The party moving for summary judgment 23 bears the initial burden of identifying those portions of the pleadings, discovery and affidavits that 24 demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 25 317, 323 (1986). Material facts are those that may affect the outcome of the case. Anderson v. 26 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is 27 sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. 28 Where the moving party will have the burden of proof on an issue at trial, it must 14 1 affirmatively demonstrate that no reasonable trier of fact could find other than for the moving 2 party. Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where 3 the nonmoving party will bear the burden of proof at trial, the moving party can prevail merely by 4 pointing out to the district court that there is an absence of evidence to support the nonmoving 5 party‟s case. Celotex, 477 U.S. at 324-25. If the moving party meets its initial burden, the opposing party must then set forth specific 7 facts showing that there is some genuine issue for trial in order to defeat the motion. Fed. R. Civ. 8 P. 56(c)(1); Anderson, 477 U.S. at 250. All reasonable inferences must be drawn in the light most 9 favorable to the nonmoving party. Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 10 2004). However, it is not the task of the Court to scour the record in search of a genuine issue of 11 United States District Court Northern District of California 6 triable fact. Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). The Court “rel[ies] on the 12 nonmoving party to identify with reasonable particularity the evidence that precludes summary 13 judgment.” Id.; see also Simmons v. Navajo Cty., Ariz., 609 F.3d 1011, 1017 (9th Cir. 2010). 14 Thus, “[t]he district court need not examine the entire file for evidence establishing a genuine 15 issue of fact, where the evidence is not set forth in the opposing papers with adequate references 16 so that it could conveniently be found.” Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1031 17 (9th Cir. 2001). If the nonmoving party fails to make this showing, “the moving party is entitled 18 to a judgment as a matter of law.” Celotex, 477 U.S. at 322 (internal quotations omitted). 19 Additionally, at the summary judgment stage, parties must set out facts they will be able to 20 prove at trial. At this stage, courts “do not focus on the admissibility of the evidence‟s form . . . . 21 [but] instead focus on the admissibility of its contents.” Fraser v. Goodale, 342 F.3d 1032, 1036 22 (9th Cir. 2003) (citation omitted). “While the evidence presented at the summary judgment stage 23 does not yet need to be in a form that would be admissible at trial, the proponent must set out facts 24 that it will be able to prove through admissible evidence.” Norse v. City of Santa Cruz, 629 F.3d 25 966, 973 (9th Cir. 2010) (citations omitted). Accordingly, “[t]o survive summary judgment, a 26 party does not necessarily have to produce evidence in a form that would be admissible at trial, as 27 long as the party satisfies the requirements of Federal Rules of Civil Procedure 56.” Block v. City 28 of L.A., 253 F.3d 410, 418-19 (9th Cir. 2001); Celotex, 477 U.S. at 324 (a party need not “produce 15 1 evidence in a form that would be admissible at trial in order to avoid summary judgment.”); see 2 also Fed. R. Civ. P. 56(c)(4) (“An affidavit or declaration used to support or oppose a motion must 3 be made on personal knowledge, set out facts that would be admissible in evidence, and show that 4 the affiant or declarant is competent to testify on the matters stated.”). DISCUSSION 5 The Court first addresses whether the registered trademark at issue had lapsed before it was 6 7 transferred then turns to the issue of whether the registered trademark at issue was validly 8 transferred. 9 A. 10 Whether the PepperBall Trademark Lapsed Prior to the Transfer Section 9 of the Trademark Act provides that a trademark “registration may be renewed for United States District Court Northern District of California 11 periods of 10 years at the end of each successive 10-year period following the date of 12 registration.” 15 U.S.C. § 1059(a); see In re Bose Corp., 580 F.3d 1240, 1242 n.1 (Fed. Cir. 2009) 13 (“Federal trademark registrations issued on or after November 16, 1989, remain in force for ten 14 years, and may be renewed for ten-year periods.”). “To renew a registration, the owner must file 15 an Application for Renewal under Section 9.” In re Bose, 580 F.3d at 1242 n.1. 16 In addition, Section 8 requires the trademark‟s owner to file, before the fifth and tenth 17 years of the registration, an affidavit or declaration stating the trademark is still in use, among 18 other things. 15 U.S.C. § 1058(a), (b)(1)(A); see 37 C.F.R. § 2.160 (“[T]he owner of the 19 registration must file an affidavit or declaration of continued use or excusable nonuse, or the 20 registration will be cancelled . . . on or after the fifth anniversary and no later than the sixth 21 anniversary after the date of registration”); id. § 2.161 (“A complete affidavit or declaration under 22 section 8 of the Act must . . . [i]nclude a verified statement attesting to the use in commerce . . . 23 within the period set forth in section 8 of the Act.”). Failure to timely file a Section 8 affidavit 24 automatically results in the trademark‟s cancellation. 15 U.S.C. § 1058(a) (“[T]he registration of 25 any mark shall be canceled by the Director unless the owner of the registration files in the United 26 States Patent and Trademark Office [Section 8] affidavits . . . .”); 37 C.F.R. § 2.164(b) (“If the 27 affidavit or declaration is not filed within the time periods set forth in section 8 of the Act, the 28 registration will be cancelled.”). 16 1 “Registration of a mark is prima facie evidence of the validity of the mark, the registrant‟s 2 ownership of the mark, and the registrant‟s exclusive right to use the mark in connection with the 3 goods specified in the registration.” Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1124 (9th 4 Cir. 2014) (citing 15 U.S.C. § 1115(a)); see Yellow Cab Co. of Sacramento v. Yellow Cab of Elk 5 Grove, Inc., 419 F.3d 925, 928 (9th Cir. 2005) (“Federal registration of a mark constitutes prima 6 facie evidence of the validity of the mark.” (citing 15 U.S.C. § 1057(b)). “Therefore, the registrant 7 is granted a presumption of ownership, dating to the filing date of the application for federal 8 registration, and the challenger must overcome this presumption by a preponderance of the 9 evidence.” Sengoku Works Ltd. v. RMC Int’l, Ltd., 96 F.3d 1217, 1219 (9th Cir.), as modified, 97 10 F.3d 1460 (9th Cir. 1996). United States District Court Northern District of California 11 1. The 2009 Section 8 Declaration 12 Jaycor, which later became Jaycor Tactical, originally registered the PepperBall mark on 13 May 13, 2003. RAP SUF Reply ¶¶ 6, 8; Gibson Decl., Ex. 4. Jaycor Tactical changed its name 14 and transferred the PepperBall mark to PepperBall Technologies on July 23, 2003. See RAP SUF 15 Reply ¶ 11; Glaspy Decl., Ex. 63. The Lanham Act required the PepperBall mark‟s owner to file a 16 Section 8 affidavit in 2009 and both a Section 8 affidavit and a Section 9 renewal in 2013 to keep 17 the mark valid. See 15 U.S.C. §§ 1058-59. Real Action maintains the true owner of the 18 PepperBall mark did not file the 2009 Section 8 Declaration and the Declaration is therefore 19 invalid. RAP Mot. at 18-20. a. 20 Owner of the PepperBall Mark 21 On May 13, 2009, PepperBall Technologies filed a Combined Declaration of Use and 22 Incontestability under Sections 8 and 15, which listed “PepperBall Technologies, Inc.” as the 23 mark‟s proposed owner. See 2009 Declaration. The USPTO accepted the Declaration on June 29, 24 2009, stating “[t]he registration remains in force.” Id., Ex. 66. Counter-Defendants have therefore 25 made a prima facie showing that PepperBall Technologies was the owner of the PepperBall mark 26 in 2009. 27 28 Real Action disputes PepperBall Technologies was the true owner and argues the PepperBall mark‟s owner did not file timely or properly file the required affidavits or renewals 17 1 and, as a result, the mark lapsed. RAP Mot. at 18-33. This claim is based on Real Action‟s 2 assertion that two distinct corporations used the name “PepperBall Technologies, Inc.”: (1) a 3 Delaware corporation, which became PepperBall Technologies-CA after a merger; and (2) a 4 Colorado corporation, which resulted from Securities With Advanced Technologies, Inc.‟s 5 (“SWAT”) name change to PepperBall Technologies, a Colorado corporation. 6 Real Action contends that on September 19, 2008, PTI Acquisition Corp. (“PTI 7 Acquisition”) merged with and into PepperBall Technologies—which owned the PepperBall 8 mark—under the name PepperBall Technologies-CA, Inc. RAP Mot. at 4-5, 18; see Decl. of Paul 9 Overhauser (“Overhauser Decl.”), Ex. 7. Real Action argues that pursuant to Delaware law, Pepperball Technologies-CA became the owner of the PepperBall mark as a result of the merger. 11 United States District Court Northern District of California 10 RAP Mot. at 12, 18 (citing Del. Code Ann. tit. 8 § 259 (“When any merger . . . shall have become 12 effective . . . the constituent corporations shall become a new corporation, or be merged into 1 of 13 such corporations, . . . all property, rights, privileges, powers and franchises, and all and every 14 other interest shall be thereafter as effectually the property of the surviving or resulting 15 corporation . . . .”). 16 Around the time PepperBall Technologies and PTI Acquisition merged into Pepperball 17 Technologies-CA in September 2008, SWAT changed its name to PepperBall Technologies, Inc. 18 RAP Mot. at 4-5; see Overhauser Decl., Ex. 6. Real Action does not explain the relationship 19 between SWAT and the original PepperBall Technologies. See RAP Mot.; Overhauser Decl. The 20 new PepperBall Technologies, Inc. was registered as a Colorado corporation. RAP Mot. at 5, 19; 21 see Overhauser Decl., Ex. 6. Real Action argues PepperBall Technologies and PepperBall 22 Technologies-CA are “two separate corporations.” RAP Mot. at 3. 23 Real Action thus contends PepperBall Technologies did not own the PepperBall mark in 24 2009; rather, PepperBall Technologies-CA did. RAP Mot. at 2, 5, 18. Further, because non- 25 owner PepperBall Technologies filed the 2009 Declaration, and PepperBall Technologies-CA did 26 not, Real Action argues the trademark lapsed. 27 28 Counter-Defendants dispute Real Action‟s “argument that Pepperball Technologies and Pepperball-CA are „[t]wo different corporations‟ that bear no relation to each other.” UTS Reply 18 1 at 17 (quoting RAP Mot. at 2; brackets in original). Counter-Defendants argue PepperBall 2 Technologies-CA was the wholly owned subsidiary of the parent company, the new PepperBall 3 Technologies. UTS Reply at 15. In support, Counter-Defendants point to PepperBall 4 Technologies-CA‟s corporate resolution that describes PepperBall Technologies-CA as “a wholly- 5 owned subsidiary of Pepperball Technologies, Inc., a Colorado corporation („Parent‟).” Gibson 6 Decl., Ex. 13; see id., Ex. 14 (PepperBall Technologies‟ corporate resolution stating “proceeds of 7 the Loan Agreements have been applied substantially to the benefit of the [PepperBall 8 Technologies‟] wholly-owned subsidiary, Pepperball Technologies-CA, Inc., a Delaware 9 corporation[.]”); id., Ex. 9 (Exhibit A to the Simpson Foundation Loan, listing PepperBall Technologies-CA as one of the “Subsidiaries and partnerships and joint ventures”). Real Action 11 United States District Court Northern District of California 10 offers no facts to contradict Counter-Defendants‟ evidence of a subsidiary relationship. 12 Counter-Defendants further characterize Real Action‟s argument that PepperBall 13 Technologies-CA owned the PepperBall mark by virtue of Delaware law as “all pure speculation . 14 . . and not evidence.” UTS Reply at 17; see id. at 14 (“Real Action claims that by operation of 15 Delaware law the resulting company, Pepperball-CA would have obtained the ownership of the 16 trademark. However, Real Action has no evidence for this assertion.”). Indeed, Counter- 17 Defendants object to Real Action‟s Statement of Uncontroverted Facts stating PepperBall 18 Technologies-CA owned the PepperBall registration as of May 2009 and May 2013. Counter- 19 Defs.‟ Reply to RAP SUF ¶¶ 1-2. 20 But Counter-Defendants nonetheless implicitly concede that PepperBall Technologies-CA 21 was in fact the owner: “the evidence is that Pepperball-CA was the entity that filed the Section 8 22 Declaration here, but that it did so under the name Pepperball Technologies, Inc., because it did all 23 its business, both before and after the merger with SWAT, under that name, including continued to 24 hold the ownership of the PepperBall® trademark with the USPTO in that name.” UTS Reply at 25 17 (emphasis in original); see id. at 18 (“The only actual evidence in this case is that the party that 26 Real Action contends should have filed the Section 8 Declaration, did in fact do so, just under the 27 name it exclusively did business under and which was the name on the USPTO‟s register.” 28 (emphasis in original)). Counter-Defendants thus recognize that PepperBall Technologies-CA is 19 1 2 the true owner of the PepperBall mark and should have filed the 2009 Declaration. Counter-Defendants explain PepperBall Technologies-CA “continued to do business 3 exclusively as Pepperball Technologies, and official USPTO records and filings continued to list 4 the owner of the mark as Pepperball Technologies.” Id. at 14. Real Action argues Counter- 5 Defendants “do[] not proffer any evidence that PepperBall Technologies-CA, Inc. was . . . „doing 6 business as‟ PepperBall Technologies, Inc.” and “[o]nly someone from PepperBall Technologies- 7 CA, Inc. would be competent to testify as what „doing business as‟ names it used, but [Counter- 8 Defendants] ha[ve] not offered a single declaration from any of its current or former 9 representatives.” RAP Reply at 10. This overlooks the Declaration of Jeffrey McGonegal PepperBall Technologies‟ and PepperBall Technologies-CA‟s former Chief Financial Officer. See 11 United States District Court Northern District of California 10 McGonegal Decl. ¶ 1, Dkt. No. 320-6. McGonegal explains that “Pepperball Technologies-CA, 12 Inc. exclusively conducted business under the name Pepperball Technologies, Inc. Even after the 13 company changed its name to Pepperball Technologies-CA, Inc., after the merger with SWAT, it 14 did not do any business except under the name Pepperball Technologies, Inc.” Id. ¶ 5. 15 But the 2009 Declaration does not reflect these details: it only names “PepperBall 16 Technologies, Inc.” as the mark‟s owner and does not mention that it is a dba for PepperBall 17 Technologies-CA. See Glaspy Decl., Ex. 67. Even if PepperBall Technologies-CA is PepperBall 18 Technologies‟ subsidiary, the evidence shows they are separate entities. See Gibson Decl., Ex. 10 19 (noting PepperBall Technologies is a Colorado corporation and Pepperball Technologies-CA is a 20 Delaware corporation); id., Ex. 12 (same); Overhauser Decl., Ex. 6 (Articles of Amendment for 21 PepperBall Technologies, Inc., a Colorado corporation, effective Sept. 29, 2009); id., Ex. 7 (Sept. 22 19, 2008 Certificate of Merger for PepperBall Technologies-CA, Inc., a Delaware corporation). 23 Prior to October 30, 1999, the Lanham Act required a trademark‟s “registrant” to file a 24 declaration or an affidavit of continued use. That changed with the 1999 amendment. According 25 to the legislative history, 26 27 28 [t]hroughout the revised section 8, the term “registrant” has been replaced by the term “owner.” The practice at the Patent and Trademark Office has been to require that the current owner of the registration file all the post-registration affidavits needed to maintain a registration. The current owner of the registration must aver to 20 1 2 3 4 5 6 actual knowledge of the use of the mark in the subject registration. However, the definition of “registrant” in section 45 of the Act states that the “terms „applicant‟ and „registrant‟ embrace the legal representatives, predecessors, successors and assigns of each applicant and registrant.” Therefore, use of the term “registrant” in section 8 of the Act would imply that any legal representative, predecessor, successor or assign of the registrant could successfully file the affidavits required by sections 8 and 9. To correct this situation, and to keep with the general principal, as set out in section 1, that the owner is the proper person to prosecute an application, section 8 has been amended to state that the owner must file the affidavits required by the section. 7 H.R. Rep. No. 105-194, at 18-19 (1997). “[T]he statute expressly requires that the declaration be 8 filed by the current owner of the registration within the time periods specified in § 8 of the Act.” 9 Re: Trademark Registration of Ace III Commc’ns, Inc., 62 U.S.P.Q.2d 1049 (T.T.A.B. 2001). 10 In In Re Media Central IP Corp., the Commissioner of Trademarks upheld the refusal of a United States District Court Northern District of California 11 Section 8 declaration filed by the subsidiary of the owner of a trademark, rather than the owner 12 itself. 65 U.S.P.Q.2d 1637 (Dec. Comm‟r Trademarks 2002). The USPTO had issued a 13 registration to Hanson Publishing Group, Inc., which later changed its name to Cowles Business 14 Media, Inc. (“Cowles”). In 1999, Cowles assigned the registration to Intertec Publishing 15 Corporation (“Interec”), which changed its name to PRIMEDIA Business Magazines & Media 16 Inc. in 2001. Id. at *1. PRIMEDIA in turn assigned the registration to Media Central IP 17 Corporation (“Media Central”). Id. In 2000, Cowles filed a combined declaration of use and 18 application for renewal; however, the Affidavit/Renewal Examiner refused the Section 8 19 declaration because it was unclear whether Cowles was the current owner of the registration. Id. 20 The Commissioner upheld the refusal. Id. at *4-5. Noting that “only the current owner of 21 the registration can file an affidavit or declaration of use or excusable nonuse under 15 U.S.C. § 22 1058[,]” the Commissioner characterized the fact that the Declaration was signed by a person who 23 had authority to sign on behalf of the registration‟s true owner and therefore should be accepted as 24 “irrelevant.” Id. at *3-4. What mattered was that “Intertec was the owner of the mark when 25 Cowles, its subsidiary, filed the Section 8 Declaration. Although Cowles [was] a subsidiary of the 26 current owner and a predecessor in interest, the fact remain[ed] that Cowles and Intertec [were] 27 two separate entities.” Id. “Since the current owner did not file an affidavit or declaration of 28 continued use or excusable nonuse before the expiration of the statutory grace period, the 21 1 requirements of Section 8 of the Act ha[d] not been met.” Id. Accordingly, the Commissioner 2 ordered the registration cancelled. 3 Thus, PepperBall Technologies and PepperBall Technologies-CA‟s parent/subsidiary 4 relationship notwithstanding, the fact remains that they were separate corporations. Although 15 5 U.S.C. § 1058 requires the current owner to file a declaration, there is evidence that PepperBall 6 Technologies-CA did not. Courts have refused a Section 8 declaration when the declaration lists 7 an owner that does not match the name the USPTO has on record, even when declaration lists an 8 entity that is a dba for the true owner. 9 For instance, in In re Precious Diamonds, Inc., the appellant filed a Section 8 declaration stating “DAVID K. FINKEL, II . . . declares that he is a citizen of the United States, dba 11 United States District Court Northern District of California 10 PRECIOUS DIAMONDS, INC.” 635 F.2d 845, 846 (C.C.P.A. 1980) (capitalization in original). 12 The declaration further stated that Finkel owned the registration. Id. The USPTO rejected “the 13 declaration because its records indicated that title was held by Precious and not Finkel dba 14 Precious.” Id. Although the appellant filed a declaration executed by Finkel, the examiner refused 15 it as untimely. Id. The declaration was subsequently denied, and the registration was cancelled. 16 Id. at 846-47. The Commissioner held that because the “declaration was submitted by an 17 individual and not by the corporation, a separate legal entity, the declaration was not filed by „the 18 registrant,‟ and amendment of the declaration after the statutory deadline would be 19 impermissible.” Id. The Court of Customs and Patent Appeals agreed and rejected the appellant‟s 20 argument that the mistake was a mere clerical error. Id.; see id. (“Appellant has presented no 21 evidence of error in transcription or otherwise.”). 22 That PepperBall Technologies was a dba for PepperBall Technologies-CA is a factual 23 distinction. Moreover, this fact is not reflected in the 2009 Declaration: it makes no mention that 24 PepperBall Technologies is a dba, or that PepperBall Technologies-CA is the true owner. Indeed, 25 it does not mention PepperBall Technologies-CA at all. 26 Counter-Defendants emphasize Conrad Sun signed the 2009 Declaration. UTS Reply at 27 18-19. Indeed he did, listing his position as “COO,” or Chief Operating Officer. See 2009 Section 28 8 Decl.; see also Glaspy Decl., Ex. 64 ¶ 2 (Dec. 6, 2012 Decl. of Conrad Sun submitted in the 22 1 Indiana Action, stating “I am the Chief Operating Officer of Pepperball Technologies, Inc.”). 2 Counter-Defendants argue that Sun‟s signature supports its assertion that PepperBall 3 Technologies-CA filed the Declaration. Specifically, Counter-Defendants contend that by signing 4 the Declaration, Sun “declare[d] that he/she is properly authorized to execute this document on 5 behalf of the Owner; and all statements made of his/her own knowledge are true and that all 6 statements made on information and belief are believed to be true.” UTS Reply at 18-19 (quoting 7 2009 Section 8 Decl. at ECF p.8). Counter-Defendants correctly note that “Real Action submits 8 no evidence to the contrary.” Id. But it is unclear how Sun‟s signature supports a finding that 9 PepperBall Technologies-CA submitted the Declaration: there are no facts that Sun was also the COO of PepperBall Technologies-CA, or otherwise had the authority to act on PepperBall 11 United States District Court Northern District of California 10 Technologies-CA‟s behalf. On the contrary, Sun‟s signature again supports Real Action‟s 12 position that PepperBall Technologies filed the 2009 Declaration, not PepperBall Technologies- 13 CA. 14 It is undisputed that PepperBall Technologies-CA owned the PepperBall mark at that time, 15 but there is no evidence that PepperBall Technologies-CA filed the Declaration. In sum, nothing 16 in the record would allow a reasonable jury to find the true owner of the PepperBall mark filed the 17 2009 Declaration as required by 15 U.S.C. § 1058. Even if PepperBall Technologies-CA was a 18 subsidiary of and solely did business as PepperBall Technologies, Inc., Real Action‟s evidence 19 indicates PepperBall Technologies and PepperBall Technologies-CA are separate corporations, 20 and Counter-Defendants do not offer facts to the contrary. The 2009 Declaration lists “PepperBall 21 Technologies, Inc.” as the owner and does not state it is a dba for PepperBall Technologies-CA. 22 See 2009 Section 8 Decl. Conrad Sun, the undisputed COO of PepperBall Technologies, signed 23 the Declaration; however, Counter-Defendants offer no evidence that Sun was also acting on 24 behalf of PepperBall Technologies-CA. Counter-Defendants‟ assertion that PepperBall 25 Technologies-CA filed the 2009 Declaration is unsupported. 26 2. Effect of Declaration of Incontestability 27 Having found no evidence that the owner of the PepperBall mark, PepperBall 28 Technologies-CA, filed the 2009 Declaration, the fact remains that the USPTO “accepted and 23 1 acknowledged” the Declaration and stated “[t]he registration remains in force.” Glaspy Decl., Ex. 2 66. The central question presented is thus what impact the USPTO‟s acceptance of the 3 Declaration has on the issue of whether the PepperBall trademark lapsed. The Lanham Act provides that “the right of the owner to use such registered mark in 4 commerce for the goods or services on or in connection with which such registered mark has been 6 in continuous use for five consecutive years subsequent to the date of such registration and is still 7 in use in commerce, shall be incontestable.” 15 U.S.C. § 1065. Once a registered mark is 8 determined to be incontestable, “the registration shall be conclusive evidence of the validity of the 9 registered mark and of the registration of the mark, of the registrant‟s ownership of the mark, and 10 of the registrant‟s exclusive right to use the registered mark in commerce.” 15 U.S.C. § 1115(b). 11 United States District Court Northern District of California 5 But “the label of „incontestability‟ is rather misdescriptive. [] An incontestable registration is still 12 subject to certain defenses or defects, set forth in 15 U.S.C. § 1115, and . . . does not apply to a 13 mark that is generic.” KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 14 603 (9th Cir. 2005) (citation omitted); see also 15 U.S.C. § 1115. 15 Counter-Defendants argue that even if the 2009 Declaration does not list the true owner of 16 the PepperBall mark, the USPTO‟s acceptance of the Declaration means the mark is incontestable 17 and Real Action cannot challenge it. UTS Reply at 19-24; see Glaspy Decl., Ex. 66. They assert 18 “[t]he law is clear that, where the USPTO accepts a Section 8 declaration and does not issue a 19 deficiency notice, a third party cannot unwind that determination because of a technical defect, 20 including a technical defect in the listed name of the owner.” UTS Reply at 19-20. Real Action 21 maintains, however, that even if the mark is incontestable, Real Action may still challenge it on 22 the ground that the PepperBall trademark is generic.9 RAP Reply at 13. Real Action does not 23 9 24 25 26 27 28 In its Opposition and Cross Motion, Real Action argues “pepperball” is a generic term that cannot serve as a trademark and the trademark is invalid. RAP Mot. at 33-37. Genericness is a ground under which a party may seek cancellation of a registered trademark. 15 U.S.C. § 1065(3). However, the trademark‟s validity falls outside the scope of the limited issues the parties agreed to address in their Motions. See Settlement Minutes. The Court disagrees with Real Action‟s assertion that “the agreement and stipulation only addressed what was required to be addressed in the motions, not what could not be addressed.” RAP Reply at 14 (emphasis in original). Had Real Action wished to address genericness, it should have raised the issue during discussions over the cross motions for summary judgment. Moreover, Counter-Defendants argue that “[a]t the time the parties entered into the agreement, Defendants did not provide any indication or suggestion that 24 1 2 seek to invalidate the PepperBall mark on the grounds set forth in § 1115. Counter-Defendants argue the failure to identify PepperBall Technologies-CA as the owner is a mere “technical defect.” See UTS Reply at 19-23. The Court disagrees. “The history 4 of Section 8 supports the view that compliance with the statutory requirements is mandatory.” In 5 re Mother Tucker’s Food Experience (Canada) Inc., 925 F.2d 1402, 1405 (Fed. Cir. 1991). 6 Where the statute sets forth a specific requirement, courts have held that the failure to comply with 7 that requirement is not a technical defect that can be corrected. See, e.g., Precious Diamonds, 635 8 F.2d at 847 (“The failure of the registrant to file a declaration within the statutory period is not a 9 „minor technical defect.‟ Whereas the submission of a specimen label . . . is not a statutory 10 requirement, the timely submission by the registrant of a declaration or affidavit is.”). The 11 United States District Court Northern District of California 3 Lanham Act requires that “owner of the registration” to submit a declaration of use. 15 U.S.C. § 12 1058(a). Because this is a statutory requirement, the Court cannot find that PepperBall 13 Technologies-CA‟s failure to file the Section 8 Declaration is a technical violation. See Re: 14 Trademark Registration of Ace III Commc’ns, Inc., 62 U.S.P.Q.2d 1049 (T.T.A.B. Dec. 6, 2001) 15 (“[T]he requirement that an affidavit or declaration under 15 U.S.C. §1058 be filed in the name of 16 the owner is a statutory requirement that the [USPTO] does not have the authority to waive for any 17 reason.”). 18 Despite this violation, the USPTO nevertheless accepted the 2009 Declaration.10 “Once 19 20 21 22 23 24 25 26 27 28 genericide be included in these cross motions. Discovery on that issue has not closed, and it has not been the subject of the exchanges for the present motion.” UTS Reply at 31. Real Action offers no argument as to why the Court should consider genericness in determining whether the trademark lapsed prior to its transfer to ATO, or why it should consider it with regard to the incontestable status of the mark. The Court therefore STRIKES Real Action‟s arguments regarding the allegedly generic nature of term “pepperball.” 10 It is unclear whether the USPTO would have reason to believe the 2009 Declaration did not list the PepperBall mark‟s true owner. Counter-Defendants present evidence that Jaycor Tactical filed with the USPTO a change of name to PepperBall Technologies in 2002. See Gibson Decl., Ex. 7. But there is no evidence the USPTO would have known of PepperBall Technologies-CA‟s formation or of the transfer of the mark‟s ownership to PepperBall Technologies-CA, such that it would have recognized a discrepancy in its records and the 2009 Declaration. As it stands, it appears the 2009 Declaration would have reflected the USPTO‟s records—i.e., that PepperBall Technologies owned the mark—and would not have caused the USPTO to question the Declaration‟s listed owner. 25 1 the Patent Office accepts these [Section 8] affidavits [or declarations] . . . , the marks are 2 conclusively presumed valid and are subject only to the seven narrow defenses set forth in section 3 33(b) of the Lanham Act, 15 U.S.C.A. § 1115(b), and to the grounds for cancellation recited in 4 sections 14(c) and (e), 15 U.S.C.A. § 1064(c), (e).” Miss Universe, Inc. v. Miss Teen U.S.A., Inc., 5 1980 WL 30268, at *3 (N.D. Ga. Mar. 25, 1980). Real Action does not address how the USPTO‟s 6 determination of incontestable status is affected by the fact that such determination is based on the 7 acceptance of a Section 8 Declaration that does not list the registered trademark‟s true owner, nor 8 does it offer case law on that point.11 At this point, the Court has no reason not to accept the 9 USPTO‟s acceptance of the 2009 Declaration and its finding of incontestability. Based on the present record and in light of the USPTO‟s acceptance of the 2009 10 United States District Court Northern District of California 11 Declaration, a reasonable jury could not find the PepperBall mark lapsed at this point. 12 3. 13 Real Action also challenges the 2013 Combined Declaration of Use and Application of 14 Renewal of Registration (the “combined filing”), which ATO filed on October 30, 2013. RAP 15 Mot. at 28-33; see Gibson Decl., Ex. 35. The USPTO initially rejected the Section 8 portion of the 16 combined filing: on November 4, 2013, it issued an office action stating “[o]ffice records do not 17 show clear chain of title to the registration in the party who filed the Section 8 Affidavit.” Gibson 18 Decl., Ex. 36 at ECF p.2. Specifically, “[o]ffice records show clear chain of title to the 19 registration in PEPPERBALL TECHNOLOGIES, INC. However, the party who filed the Section 20 8 Affidavit is identified as ADVANCED TACTICAL ORDINANCE SYSTEMS, LLC.” Id. The 21 office action required that “[t]he party who filed the Section 8 Affidavit must establish its current 22 ownership of the registration” and set a deadline of six months from the issuance action for it to do 23 so. Id. at ECF pp.2-3. That same day, ATO responded with a declaration explaining that 24 The 2013 Section 8 Declaration and Section 9 Application for Renewal the Office records do show a clear chain of title ending with Advanced Tactical Ordinance Systems, LLC, the party who signed the Section 8 Affidavit. Recorded at Reel/Frame Nos. 4913/0484 is the Nunc Pro Tunc Assignment [the “Assignment”] from Advanced Tactical Ordinance Systems, LLC, as the secured creditor of 25 26 27 11 28 It would seem the USPTO, rather than the Court, is in a better position to determine what recourse a challenger has to a trademark registration under these circumstances. 26 Pepperball Technologies, Inc. authorized to sell the assets of Pepperball Technologies, Inc. in a foreclosure sale, to Advanced Tactical Ordinance Systems, LLC, as the assignee that acquired title to all assets at the foreclosure sale. This document was accepted by the Office as sufficient when it was filed on December 5, 2012, as is reflected by the fact that the Office records do show Advanced Tactical Ordinance Systems, LLC as the Registrant (as is confirmed by the fact that the Post Registration Office Action issued to Advanced Tactical Ordinance Systems, LLC, not to Pepperball Technologies, Inc.). 1 2 3 4 5 6 Id., Ex. 37 at ECF p.2. The USPTO accepted the Section 8 Declaration on November 13, 2013. 7 Id., Ex. 38. 8 9 Real Action argues ATO‟s response to the office action “did not refer to Pepperball Technologies-CA, Inc. by name and does not use the term „subsidiary‟ at all. Instead, the Response merely mentions the Nunc Pro Tunc Assignment which was filed with the USPTO 11 United States District Court Northern District of California 10 Assignment Branch in 2013[.]” RAP Mot. at 31. As a result, Real Action contends “ATO did not 12 establish how Pepperball Technologies-CA, Inc. obtained ownership of the registration before 13 ATO claimed to have acquired it.” RAP Mot. at 31. 14 Real Action‟s argument suffers from the same defect as its arguments regarding the 2009 15 Declaration: it ignores the fact that the USPTO accepted ATO‟s explanation and the Section 8 16 Declaration. Real Action also does not address how that acceptance affects the PepperBall mark‟s 17 becoming incontestable under § 1065 if such acceptance was predicated on a faulty declaration. 18 To that end, Real Action once again does not challenge the mark‟s incontestable status on one of 19 the grounds listed in § 1115. 20 21 22 23 24 25 26 Counter-Defendants point out that the Assignment explicitly refers to PepperBall Technologies-CA: Advanced Tactical Ordnance Systems, LLC . . . herby sells, transfer[s], assigns and conveys to Advanced Tactical Ordnance Systems, LLC nunc pro tunc as of January 9, 2012, all right, title and interest in and to the following property owned by PepperBall Technologies, Inc. and PepperBall Technologies-CA, Inc. . . .: (i) all trademarks and patents, including registrations for the PEPPERBALL trademark (U.S. Registration Nos. 27160625 and 2651052)[.] 27 Gibson Decl., Ex. 30 at EFC p.4. Real Action does not address the Assignment‟s mention of 28 PepperBall Technologies-CA in its Reply. The Court notes, however, the Assignment does not 27 1 specify whether the PepperBall trademark was the property of PepperBall Technologies or 2 PepperBall Technologies-CA. The USPTO could have conceivably interpreted the Assignment to 3 read that PepperBall Technologies owned the PepperBall trademark, not PepperBall 4 Technologies-CA. Nevertheless, it is inescapable that the USPTO accepted ATO‟s explanation and reference 5 6 to the Assignment as sufficient to establish ownership of title. As a result, the PepperBall mark 7 became incontestable under § 1065, and Real Action provides no evidence that challenges the 8 mark‟s incontestability under one of the grounds set forth in § 1115. A reasonable finder of fact 9 thus could not conclude that the PepperBall mark lapsed in 2013. 4. 11 United States District Court Northern District of California 10 Summary Accordingly, the Court GRANTS Counter-Defendants‟ Motion for Summary Judgment on 12 the issue of whether the PepperBall trademark lapsed prior to its transfer and DENIES Real 13 Action‟s Motion for Summary Judgment on the same issue. 14 B. 15 Whether the PepperBall Trademark Was Validly Transferred Also at issue is the transfer of the PepperBall mark from PepperBall Technologies to ATO. 16 As noted earlier, Counter-Defendants argue ATO‟s predecessor, Phoenix, purchased the 17 PepperBall mark from PepperBall Technologies through a UCC foreclosure sale. 18 Real Action challenges the validity of the UCC sale on two grounds: (1) the Simpson 19 Loans did not give their respective lenders a security interest in PepperBall Technologies-CA‟s 20 assets, including the PepperBall mark; and (2) PepperBall Technologies‟ secured creditors were 21 not notified of the sale. RAP Mot. at 43-44. 22 1. Amendment of the Simpson Loans 23 Real Action argues the Amendments to the Simpson Loans were not executed, and thus the 24 Lenders never obtained a secured interest in PepperBall Technologies-CA‟s assets. RAP Mot. at 25 43. The Second Amendments to the Simpson Loans state that 26 27 28 The intent of the parties when entering into the Original Agreement and the First Amendment was that PTI-CA would be a co-borrower of the loan evidenced by the Agreement (the “Credit []Facility”) and co-obligor of all obligations of PTI set forth herein, and that PTI-CA would grant a security interests in its assets to secure repayment of 28 1 2 the Credit Facility. By mutual error of all the parties hereto, PTICA was not made a party to the Original Agreement or the First Amendment. 3 Gibson Decl., Ex. 10 ¶ B; id., Ex. 12 ¶ B. As such, the Second Amendments added PepperBall 4 Technologies-CA 5 6 7 8 9 10 with full effect from January 15, 2010, as a co-borrower under the Credit Facility and a co-obligor of all obligations of [PepperBall Technologies] under the Agreement. [] Without in any manner limiting the foregoing, (a) the grant of security interest set forth in Section 2 of the Original Agreement shall be deemed for all purposes a grant of a security interest by PTI-CA in its personal property as described in said Section 2[.] Gibson Decl., Ex. 10 ¶ 2; id., Ex. 12 ¶ 2. Real Action argues that while PepperBall Technologies and PepperBall Technologies-CA United States District Court Northern District of California 11 signed the Second Amendments, the Lenders did not. See id., Ex. 10 at 3; id., Ex. 12 at 3. As 12 such, Real Action contends the parties never executed Second Amendments and the lenders did 13 not obtain an interest in the PepperBall mark. RAP Mot. at 43. Real Action also argues the 14 Second Amendments are deficient because PepperBall Technologies‟ and PepperBall 15 Technologies-CA‟s chairman signed them, not the corporations‟ president as required by their 16 corporate resolutions. Id. at 44 (citing Gibson Decl., Ex. 13). 17 In response, Counter-Defendants submit copies of the Second Amendments that bear 18 signatures on behalf of PepperBall Technologies, PepperBall Technologies-CA, and the Lenders. 19 Simpson Decl., Exs. 2-3. Counter-Defendants also offer the Simpson Declaration, in which James 20 Simpson, principal of the James Simpson Foundation and the J.A. & G.L. Simpson Trust states 21 “[t]he Second Amendments to the loans of both the Simpson Foundation and the Simpson Trust 22 were fully executed by all parties thereto, including the Simpson Entitites [sic].” Simpson Decl. ¶ 23 6. Real Action offers no evidence to contradict Simpson‟s declaration or other facts that indicate 24 the Second Amendments were not executed. 25 Counter-Defendants also argue Real Action‟s argument concerning the ostensible 26 requirement that the president sign the Second Amendments “misrepresents the contents of the 27 Pepperball-CA corporate resolution, which does not require that the Second Amendment be 28 executed by the President.” UTS Reply at 12. Instead, the resolution provides that “the execution, 29 1 delivery and performance by [PepperBall Technologies-CA] of the Second Amendments in 2 substantially the forms reviewed by this Board of Directors are hereby authorized, approved and 3 ratified.” Gibson Decl., Ex. 13 at ECF p.3. Moreover, as Counter-Defendants note, the resolution 4 authorizes PepperBall Technologies-CA‟s president “to enter into and deliver to the appropriate 5 counterparties each of the Second Amendments on behalf of [PepperBall Technologies-CA].” Id. 6 But it does not say that only the president has power to do so, and Real Action offers no evidence 7 that this is in fact the case. Thus, a reasonable jury could not find that it was improper for the 8 chairman of PepperBall Technologies and PepperBall Technologies-CA to sign the Amendments 9 such that the Amendments were not properly executed. 2. 11 United States District Court Northern District of California 10 Compliance with the UCC As there is evidence that PepperBall Technologies-CA‟s assets were secured against the 12 Simpson Loans, the issue is whether there was a valid UCC foreclosure sale. If the sale did not 13 comply with the UCC, ATO would not have validly obtained the PepperBall mark and thus could 14 not have validly transferred it to UTS. Real Action challenges the sufficiency of the sale based on 15 lack of notice. 16 The UCC provides that “[a]fter default, a secured party: (1) may take possession of the 17 collateral; and (2) without removal, may . . . dispose of collateral on a debtor‟s premises under 18 Section 9-610.” UCC § 9-609(a). Section 9-610 in turn allows a secured party to “sell, lease, 19 license, or otherwise dispose of any or all of the collateral in its present condition or following any 20 commercially reasonable preparation or processing.” UCC § 9-610(a). 21 Intellectual property may transfer from one owner to another in a UCC foreclosure sale. 22 Sky Technologies LLC v. SAP AG, which concerned the transfer of patents at a foreclosure sale, is 23 analogous. 576 F.3d 1374 (Fed. Cir. 2009). The plaintiff, Sky Technologies LLC (“Sky”), 24 acquired a patent through an assignment by XACP, a corporation that purchased the patents at a 25 foreclosure sale. Id. at 1378. Sky Technologies thereafter filed a patent infringement suit against 26 SAP, which sought to dismiss the action for lack of standing. Id. The district court held that 27 because XACP had complied with the state law UCC foreclosure requirements—including 28 providing notice— title had transferred on the date of the foreclosure sale. Id. Thus, when XACP 30 1 purchased the patents and thereafter assigned them to Sky, Sky “became vested with all rights, 2 title, and interest in the patents. Thus, the chain-of-title had not been broken . . . , and Sky was 3 declared the proper title-holder of the patents-in-suit, giving Sky standing to bring the patent 4 infringement suit.” Id. The Federal Circuit agreed: “[t]he Federal Patent Act requires that all 5 assignments of patent interest be in writing.” Id. at 1379 (citing 35 U.S.C. § 261). “However, 6 assignment is not the only method by which to transfer patent ownership. . . . [F]oreclosure under 7 state law may transfer patent ownership.” Id. at 1380. Because “XACP‟s foreclosure on its 8 security interest was in accordance with [state] law; therefore, Sky received full title and 9 ownership of the patents from XACP providing it with standing in the underlying case.” Id. at 10 United States District Court Northern District of California 11 1380. Like the Patent Act, the Lanham Act requires that “[a]ssignments shall be by instruments 12 in writing duly executed.” 15 U.S.C. § 1060(a)(3). But several courts have held that trademark 13 rights may be transferred in a foreclosure sale. See, e.g., Great Lakes Transp. Holding, LLC v. 14 Yellow Cab Serv. Corp. of Fl., 2012 WL 4813785, at *4 (E.D. Mich. Oct. 10, 2012) (finding 15 genuine dispute of material fact regarding issue of consent to use marks where “[p]laintiff‟s 16 purchase of the Michigan companies at the foreclosure sale included any rights the companies had 17 to enforce the . . . marks” but also “defendant[‟s] . . . purchase of the Florida companies through 18 the judicial foreclosure included any rights the Florida companies had acquired in the marks”); 19 John C. Flood of Va., Inc. v. John C. Flood, Inc., 700 F. Supp. 2d 90, 95 (D.D.C. 2010) (“The 20 company‟s trademark and associated goodwill are valuable assets that become part of the 21 bankruptcy estate and can be validly sold, assigned, or transferred by the estate.”). 22 Real Action does not dispute that a UCC foreclosure sale can result in the transfer of 23 assets, but instead “argues that in this case, no common law or Federal rights to the term 24 Pepperball were transferred, or were even available to have been transferred.” RAP Reply at 5 25 (emphasis in original). Real Action does not contest that Phoenix had the right to foreclose on 26 PepperBall Technologies‟ assets; it focuses on the sufficiency of the notice and argues that not all 27 of PepperBall Technologies‟ and/or PepperBall Technologies-CA‟s secured creditors were 28 notified of the foreclosure sale. RAP Mot. at 44-45; RAP Reply at 7. 31 Counter-Defendants offer evidence of the notice provided, including notices placed in the 1 2 San Diego Daily Transcript on December 30, 2011 and January 6, 2012. See Gibson Decl. ¶ 51 & 3 Exs. 23-24 (copies of public notices dated December 30, 2011 and January 6, 2012). It is less 4 clear whether the secured creditors received notice beyond those published in the San Diego Daily 5 Transcript. Gary Gibson declares that “[n]otice of the public sale of the assets of PTI and its 6 subsidiary was given to every known secured creditor of PTI and/or PTI-CA.” Id. ¶ 55. James 7 Drake, counsel for Phoenix, also states that “[n]otice of the foreclosure sale was sent to all known 8 secured creditors of PTI and/or PTI-CA.” Drake Decl. ¶ 6, Dkt. No. 310. But Counter- 9 Defendants do not offer facts to support Gibson‟s and Drake‟s statements, and “conclusory allegations, unsupported by facts, are insufficient to survive a motion for summary 11 United States District Court Northern District of California 10 judgment.” Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1116 (9th Cir. 2003) (citing 12 Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989)). Counter-Defendants do not, for instance, 13 provide proof of mailing of notice or other evidence that PepperBall Technologies‟ and/or 14 PepperBall Technologies-CA‟s secured creditors received notice. At best, they offer “a January 9, 15 2012 email that [Gibson] received which was written by the CEO of PTI, John Stiska, explaining 16 the sale[.]” Gibson Decl. ¶ 53 & Ex. 26. This email does not indicate to which secured creditors 17 it was sent: this particular email was sent to Gibson and is simply addressed “To PepperBall 18 Secured Note holders.” See id., Ex. 26. Nor is the fact that “[i]n the more than five years since 19 that sale took place no secured creditor of PTI has ever come forward to challenge the sale on the 20 basis of lack of notice” (Gibson Decl. ¶ 58) dispositive, as lack of a complaint from a creditor is 21 hardly definitive proof that the creditor received notice. Therefore, the Court DENIES Counter- 22 Defendants‟ Motion as to the issue of whether the PepperBall mark was validly transferred. But Real Action also fails to offer facts showing PepperBall Technologies‟ secured 23 24 creditors did not receive notice of the sale. Real Action relies on the Declaration of Conrad Sun 25 (“Sun Declaration”) that was submitted in the Indiana Action.12 See RAP Mot. at 45; Glaspy 26 Decl., Ex. 24. In his Declaration, Sun stated that 27 12 28 While the Court has judicially noticed this document, it does so only for its existence and not the truth of the matters stated therein. 32 1 2 3 4 5 Phoenix/ATO did not notify all of PTI‟s secured creditors of the proposed sale. The secured creditors Phoenis/ATO claims to have notified are listed in the “transcript of the foreclosure sale[.]” As just two examples, the list of notified secured creditors does not list Primary Funding Corporation or Scott & Goldman, Inc., both of whom were secured creditors of PTI who had filed notices of their security interest with the California Secretary of State before Phoenix/ATO‟s purported foreclosure sale.” Glaspy Decl., Ex. 24 ¶ 12. Counter-Defendants argue the Sun Declaration lacks foundation. UTS 7 Reply at 6. Indeed, Sun does not state how he knows Primary Funding Corporation and Scott & 8 Goldman, Inc. did not receive notice. See Glaspy Decl., Ex. 24. Moreover, Counter-Defendants 9 offer Sun‟s deposition testimony, in which Sun states that he “was really never involved in the 10 foreclosure process.” Glaspy Reply Decl., Ex. 68:17-20, Dkt. No. 320. Phoenix counsel James 11 United States District Court Northern District of California 6 Drake confirms that “Conrad Sun was not involved in the process of the foreclosure sale in general 12 or in the process of giving notice of the foreclosure sale to the secured creditors of PTI and/or PTI- 13 CA.” Drake Decl. ¶ 5. Real Action offers no other facts to establish the necessary secured 14 creditors received notice. As such, Real Action fails to meet its burden at summary judgment, and 15 the Court DENIES its Motion. CONCLUSION 16 17 Based on the analysis above, the Court hereby GRANTS Counter-Defendants‟ Motion and 18 DENIES Real Action‟s Motion as to the issue of whether the PepperBall mark lapsed prior to 19 transfer. The Court also DENIES both Counter-Defendants‟ Motion and Real Action‟s Motion on 20 the issue of whether the PepperBall mark was validly transferred. 21 22 23 The parties are scheduled to attend a settlement conference before Judge Spero. The parties shall contact his chambers regarding any scheduling concerns. IT IS SO ORDERED. 24 25 26 27 Dated: February 23, 2017 ______________________________________ MARIA-ELENA JAMES United States Magistrate Judge 28 33

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