ArcSoft, Inc. v. CyberLink Corp. et al

Filing 67

ORDER DENYING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S THIRD CAUSE OF ACTION by Hon. William H. Orrick denying 63 Motion to Dismiss. Cyberlink's motion to dismiss is DENIED. It shall answer the First Amended Complaint within ten days of the date of this Order. (jmdS, COURT STAFF) (Filed on 3/7/2016)

1
2
3
4
5
6

UNITED STATES DISTRICT COURT

7

NORTHERN DISTRICT OF CALIFORNIA

8
9

ARCSOFT, INC.,

Case No. 15-cv-03707-WHO

Plaintiff,
10

ORDER DENYING DEFENDANTS’
MOTION TO DISMISS PLAINTIFF’S
THIRD CAUSE OF ACTION

v.

United States District Court
Northern District of California

11
12

CYBERLINK CORP., et al.,

Re: Dkt. No. 63

Defendants.
13
14
15

INTRODUCTION
This is a trademark infringement action involving competing self-portrait photo (“selfie”)

16

editing applications (“apps”). Plaintiff ArcSoft, Inc. (“ArcSoft”) is the developer of the

17

“Perfect365” selfie-editing app. It accuses defendants Cyberlink Corp. and its two subsidiaries

18

(collectively, “Cyberlink”) of infringing the trademarks and trade dress embodied in the

19

Perfect365 app by, among other things, using and marketing their “YouCam Perfect” selfie editing

20

app. Cyberlink moves to dismiss ArcSoft’s third cause of action for trade dress infringement

21

under 15 U.S.C. § 1125(a). It asserts that the cause of action is defective because, shortly after

22

ArcSoft filed this action, Cyberlink changed the appearance of its app and voluntarily abandoned

23

the allegedly infringing trade dress. Cyberlink also asserts that ArcSoft has not plausibly alleged

24

inherent distinctiveness, secondary meaning, or nonfunctionality.

25

Oral argument on this motion is unnecessary, and the hearing set for March 9, 2016 is

26

VACATED. Cyberlink’s voluntary abandonment of the allegedly infringing trade dress does not

27

moot the trade dress cause of action, and ArcSoft’s allegations regarding the asserted trade dress

28

are sufficient to withstand a motion to dismiss. Cyberlink’s motion is DENIED.

1

BACKGROUND

2

ArcSoft filed its original complaint on August 13, 2015 and moved for a preliminary

3

injunction shortly thereafter. Dkt. Nos. 1, 10. The original complaint brought seven causes of

4

action against Cyberlink: (1) federal trademark infringement under 15 U.S.C. § 1114; (2) federal

5

unfair competition under 15 U.S.C. § 1125(a); (3) federal trade dress infringement under 15

6

U.S.C. § 1125(a); (4) federal trademark dilution under 15 U.S.C. § 1125(c); (5) state common law

7

trademark infringement under California law; (6) state trademark dilution under California

8

Business & Professions Code § 14247; and (7) unfair competition under California Business &

9

Professions Code § 17200. Dkt. No. 1 ¶¶ 54-95 (Dkt. No. 1). Cyberlink moved to dismiss the
third, fourth, and sixth causes of action. Dkt. No. 40. On December 28, 2015, I issued an Order

11
United States District Court
Northern District of California

10

granting the motion to dismiss with leave to amend and denying the motion for a preliminary

12

injunction. Dkt. No. 60 (“Prior Order”).

13

ArcSoft filed its first amended complaint (“FAC”) on January 15, 2016. Dkt. No. 61. The

14

FAC drops the causes of action for federal and state trademark dilution but otherwise brings the

15

same causes of action as the original complaint. See id. ¶¶ 55-84.

16

Cyberlink moved to dismiss on January 29, 2016. Dkt. No. 63 (“Mot.”). Its motion is

17

aimed only at the third cause of action, for federal trade dress infringement under 15 U.S.C. §

18

1125(a). In dismissing that cause of action in the Prior Order, I stated, “At the very least, ArcSoft

19

must specifically identify, in its complaint, the particular aspects of the Perfect365 app that it

20

claims amount to the protectable trade dress that defendants have infringed.” Prior Order at 15.

21

Cyberlink does not dispute that ArcSoft has complied with this directive. It contends that the trade

22

dress cause of action nevertheless fails for three reasons: (1) the cause of action is based on a

23

version of Cyberlink’s app that is no longer in use; (2) ArcSoft has not adequately alleged inherent

24

distinctiveness or secondary meaning; and (3) ArcSoft has not adequately alleged

25
26
27
28
2

1

nonfunctionality. See, e.g., Mot. at 1.1
According to a declaration Cyberlink filed in conjunction with the briefing on the motion

2
3

for a preliminary injunction, Cyberlink released the current version of its app on August 26, 2015,

4

approximately two weeks after ArcSoft filed its original complaint. Su Decl. ¶ 7 (Dkt. No. 45).
LEGAL STANDARD

5

Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain “a short and plain

6
7

statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), in

8

order to “give the defendant fair notice of what the claim is and the grounds upon which it rests,”

9

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks and alterations

10

omitted).
A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure

United States District Court
Northern District of California

11
12

12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.

13

2001). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable

14

legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela

15

Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). While a complaint “need not contain

16

detailed factual allegations” to survive a Rule 12(b)(6) motion, “it must plead enough facts to state

17

a claim to relief that is plausible on its face.” Cousins v. Lockyer, 568 F.3d 1063, 1067-68 (9th

18

Cir. 2009) (internal quotation marks and citations omitted). A claim is facially plausible when it

19

“allows the court to draw the reasonable inference that the defendant is liable for the misconduct

20

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted).
In considering whether a claim satisfies this standard, the court must “accept factual

21
22

allegations in the complaint as true and construe the pleadings in the light most favorable to the

23

nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.

24

2008). However, “conclusory allegations of law and unwarranted inferences are insufficient to

25
1

26
27
28

In conjunction with its motion to dismiss, Cyberlink submits an unopposed request for judicial
notice of two documents. Dkt. No. 64. Its request for judicial notice of the transcript of the
December 16, 2015 hearing in this case is GRANTED, although it is advised for future reference
that it need not request judicial notice of a transcript of a hearing previously held in the same case
– an accurate citation will suffice. Its request for judicial notice of the screenshot from the Apple
iTunes App Store is DENIED.
3

1

avoid a Rule 12(b)(6) dismissal.” Cousins, 568 F.3d at 1067 (internal quotation marks omitted).

2

“[I]t is within [the court’s] wheelhouse to reject, as implausible, allegations that are too

3

speculative to warrant further factual development.” Dahlia v. Rodriguez, 735 F.3d 1060, 1076

4

(9th Cir. 2013).

5

DISCUSSION

6

Cyberlink’s arguments do not justify dismissal of ArcSoft’s trade dress cause of action.

7

Cyberlink first contends that the cause of action is defective because it is based on a version of

8

Cyberlink’s app that is no longer in use. See Mot. at 7-9; Reply at 2-4 (Dkt. No. 66). As a result,

9

Cyberlink argues, ArcSoft request for injunctive relief for trade dress infringement is now moot.

10

There are several problems with this argument. First, while the “cessation of the unlawful

United States District Court
Northern District of California

11

conduct can moot” a claim for injunctive relief, “the reform of the defendant must be irrefutably

12

demonstrated and total.” Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1135 (9th Cir.

13

1986) (internal quotation marks omitted) (reversing the district court’s refusal to grant permanent

14

injunctive relief in a trademark infringement action). Cyberlink, as the party asserting mootness

15

because of “voluntary compliance,” has the “formidable burden of showing that it is absolutely

16

clear the allegedly wrongful behavior could not reasonably be expected to recur.” Friends of the

17

Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 190 (2000). Cyberlink has not

18

attempted to make this showing, much less succeeded in making it.

19

Further, ArcSoft is seeking not only injunctive relief for Cyberlink’s alleged trade dress

20

infringement, but also damages under 15 U.S.C. § 1117. See FAC ¶¶ 72, 85-97. Cyberlink

21

identifies no reason why ArcSoft would not be entitled to damages if it were to prevail on its trade

22

dress infringement claims. Even if ArcSoft’s request for injunctive relief were moot, its trade

23

dress cause of action could still go forward. See Z Channel Ltd. P’ship v. Home Box Office, Inc.,

24

931 F.2d 1338, 1341 (9th Cir. 1991) (“If [plaintiff] is entitled to collect damages in the event that

25

it succeeds on the merits, the case does not become moot even though declaratory and injunctive

26

relief are no longer of any use.”); see also Cano v. Taylor, 739 F.3d 1214, 1217 (9th Cir. 2014).

27
28

Finally, ArcSoft’s trade dress infringement claims are based in part on the trade dress
embodied in the icon for its app. See FAC ¶ 26b. The FAC describes the app icon as “so
4

1

distinctive and essential an element of ArcSoft’s comprehensive trade dress throughout the app

2

that the app icon is additionally, in and of itself, an entirely protectable trade dress standing on its

3

own.” Id. The FAC accuses Cyberlink of using “a highly similar app icon featuring ArcSoft’s

4

distinctive purple and similar flower design.” Id. ¶ 43. ArcSoft asserts, and Cyberlink does not

5

dispute, that Cyberlink continues to use the same allegedly infringing app icon. See Opp. at 3 n.3

6

(Dkt. No. 65). To the extent that ArcSoft’s trade dress cause of action is based on the trade dress

7

embodied in its app icon “standing on its own,” FAC ¶ 26b, ArcSoft’s request for injunctive relief

8

is not impacted by Cyberlink’s voluntary abandonment of its previous app design.
Cyberlink’s arguments regarding the protectability of ArcSoft’s asserted trade dress are

9

also unpersuasive at this early juncture. Courts in this circuit generally allow trade dress plaintiffs

11
United States District Court
Northern District of California

10

to proceed past the pleading phase so long as they have clearly defined their asserted trade dress,

12

such that the complaint gives adequate notice to the defendant. See, e.g., Lepton Labs, LLC v.

13

Walker, 55 F. Supp. 3d 1230, 1240 (C.D. Cal. 2014) (“So long as a plaintiff has alleged a

14

complete recitation of the concrete elements of its alleged trade dress, it should be allowed to

15

proceed.”); Touchpoint Commc’ns, LLC v. Dentalfone, LLC, No. 15-cv-05240-JRC, 2016 WL

16

525932, at *4 (W.D. Wash. Feb. 10, 2016) (quoting same); see also Prior Order at 14-15 (citing

17

cases); Calyx Techs., Inc. v. Ellie Mae, Inc., No. 04-cv-01640-SI, 2004 WL 2075446, at *2-3

18

(N.D. Cal. Sept. 3, 2004). Cyberlink does not dispute that ArcSoft’s FAC satisfies this

19

requirement. There are undoubtedly circumstances where the protectability of an asserted trade

20

dress is so implausible or so conclusorily pleaded that dismissal is appropriate no matter how

21

clearly the elements of the asserted trade dress have been defined. But Cyberlink has not shown

22

that this is such a case.2 Its attacks on the distinctiveness and nonfunctionality of ArcSoft’s

23

asserted trade dress come too early in these proceedings. It may raise them again once the parties

24
25
26
27
28

2

In the Prior Order, in ruling on ArcSoft’s preliminary injunction request, I described ArcSoft’s
chances of establishing each element of its trade dress infringement claims as “extremely low
based on the current record.” Prior Order at 15 n.7. The standard on a Rule 12(b)(6) motion to
dismiss is different than on a motion for a preliminary injunction, and I do not prejudge what the
developed record will show after discovery. ArcSoft’s trade dress allegations are sufficient to
proceed past the pleading phase.
5

1

have had an opportunity for discovery and a factual record has been developed.3
CONCLUSION

2

Cyberlink’s motion to dismiss is DENIED. It shall answer the FAC within ten days of the

3
4

date of this Order.
IT IS SO ORDERED.

5
6

Dated: March 7, 2016
______________________________________
WILLIAM H. ORRICK
United States District Judge

7
8
9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

3

Cyberlink also asks that ArcSoft’s trade dress cause of action be dismissed to the extent that it is
based on the current version of Cyberlink’s app, as ArcSoft effectively concedes in its briefing that
the current version does not infringe the asserted trade dress. See Reply at 4. I do not read the
FAC as attacking the current version of Cyberlink’s app. ArcSoft will need to seek leave to
amend the FAC to assert such a claim.
6