Petroliam Nasional Berhad v. GoDaddy.com, Inc.

Filing 100

RESPONSE (re 94 MOTION to Amend/Correct 89 Answer to Amended Complaint ) filed by Petroliam Nasional Berhad. (Clark, Perry) (Filed on 7/14/2011) Modified on 7/15/2011 (vlk, COURT STAFF).

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PERRY R. CLARK, State Bar No. 197101
Law Offices of Perry R. Clark
825 San Antonio Road
Palo Alto, CA 94303
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for Plaintiff
PETROLIAM NASIONAL BERHAD
(PETRONAS)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION

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PETROLIAM NASIONAL BERHAD
(PETRONAS),

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Plaintiff,

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vs.

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GODADDY.COM, INC.,

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Defendant.

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OPPOSITION TO MOTION FOR LEAVE TO AMEND
Case No: 09-CV-5939 PJH

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CASE NO.: 09-CV-5939 PJH
OPPOSITION TO MOTION FOR
LEAVE TO AMEND ANSWER TO
ADD COUNTERCLAIM AND
ADDITIONAL AFFIRMATIVE
DEFENSES
Date: August 10, 2011
Time: 2 p.m.

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I.

GoDaddy’s motion to amend should be denied because it is late and because the proposed

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INTRODUCTION

amendments are futile.
Although the deadline to amend the pleadings in this case is July 21, 2011, GoDaddy

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waited to file its motion until June 30, 2011 and, as a result, the hearing date for the motion is

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August 10, 2011. As a result, and assuming GoDaddy prevails on its motion, the earliest its

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pleading could be amended is August 10, 2011, well after the deadline for amending the

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pleadings.
Even if its motion were timely, GoDaddy’s new counterclaim and amended affirmative

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defenses are futile. GoDaddy’s counterclaim is futile because it fails to plead that it will be

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damaged by the continued registration of the Petronas mark, which is required in order to confer

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standing on a party seeking the cancellation of a trademark registration. As for the amended

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affirmative defenses, GoDaddy’s proposed amendments fail to plead all of the elements for each

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of its affirmative defenses.

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II.

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GODADDY FAILS TO PLEAD STANDING FOR ITS COUNTERCLAIM
SEEKING CANCELLATION OF THE PETRONAS REGISTRATION
GoDaddy’s counterclaim for cancellation of the Petronas registration is futile because it

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fails to plead any facts which, if true, would establish GoDaddy’s standing to assert the

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counterclaim. The trademark cancellation statute, 15 U.S.C. §1064, limits standing by stating

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that “a petition to cancel a registration of a mark . . . may . . . be filed by any person who believes

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that he is or will be damaged by the registration of a mark.” It is well settled that to establish

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standing under 15 U.S.C. § 1064, “a petitioner must show a real and rational basis for his belief

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that he would be damaged by the registration sought to be cancelled, stemming from an actual

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commercial or pecuniary interest in his own mark.” Star-Kist Foods, Inc. v. P.J. Rhodes & Co.,

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735 F.2d 346, 349 (9th Cir. 1984) (emphasis added) (noting that “[e]xamples of what courts have

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countenanced as reasonable bases are: an assertion of a likelihood of confusion between the

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petitioner’s mark and the registered mark at issue . . . or a rejection of an application during

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prosecution.” (citations omitted)). Thus, “[w]hen a petitioner has no right to use a name shown

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in a registered trademark of another party, that petitioner has no standing to seek cancellation of

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the trademark.” General Healthcare Limited v. Qashat, 254 F. Supp.2d 193, 204 (D. Mass.

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2003) (citing In Re Houbigant, Inc., 914 F. Supp. 997, 1002 (S.D.N.Y. 1996).

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Here, GoDaddy does not state, much less plead facts which would establish, that it has

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any interest in or right to use the Petronas trademark or any other trademark that “is or will be

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damaged” by the continued the registration of the Petronas trademark. GoDaddy specifically

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pleads, in paragraph 93 of its answer to the complaint in this case, that “GoDaddy admits that it

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does not claim ownership in the Petronas trademark.” (Slafsky Decl. Ex. A ¶93). And nowhere

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in its answer and counterclaim does GoDaddy plead any “use” of the Petronas trademark that

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would support such a claim to ownership. Indeed, GoDaddy repeatedly and specifically denies

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even that it “used the ‘petronastower.net’ and ‘petronastowers.net’ domain names.” (Doc. No.

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69 ¶¶63-65; Slafsky Decl. Ex. A ¶¶63-65).

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By failing to plead any use, right, or interest in a trademark that has been or would be

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damaged by the registration of the Petronas trademark, GoDaddy has failed to plead the “real

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interest” required to establish standing to petition for cancellation. “The case law establishes

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‘that when a plaintiff has no right to use a name shown in a registered trademark of a defendant,

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that plaintiff has no standing to seek cancellation of the trademark.’” Houbigant, 914 F. Supp. at

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1002 (citing Ging v. Showtime Entertainment, Inc., 570 F. Supp. 1080, 1084 (D. Nev. 1983);

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Avedis Zildjian Co. v. Fred Gretsch Mfg. Co., 251 F.2d 530 (2nd Cir. 1958)).

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Rather than alleging any use or interest in the Petronas trademark as a basis to claim
standing, GoDaddy pleads in its counterclaim that is has been damaged “by the Petronas

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Registration, as Petronas is relying on that registration as a basis for this action for

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cybersquatting and other related claims.” (Slafsky Decl. Ex. A ¶ 19). Avoiding litigation for

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infringement of a registered trademark, however, has long been rejected as a “real interest” that

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would confer standing to petition for the cancellation of a trademark registration. “[I]t is well

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settled . . . that the mere threat of a suit for infringement and/or the filing and litigation of an

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opposition proceeding does not, per se, constitute damage within the meaning of Section 13 and

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14 of the Statute.” Yard-Man, Inc. v. Getz Exterminators, Inc., 157 U.S.P.Q. 100, 1968 WL

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8094 (T.T.A.B. 1968); see also McCarthy J., McCarthy on Trademarks and Unfair Competition,

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§20:12 (2010) (“No ‘damage’ results from infringement suit against opposer.”). As the

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predecessor court to the Federal Circuit explained, “while a registration of the trademark at issue

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may give applicant some tactical advantages in other litigation between the parties, we do not

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agree that this constitutes ‘damage’ to appellant in the sense contemplated by Sec. 13 of the

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Lanham Act (15 U.S.C. § 1064).” Morton Foods, Inc. v. Frito Co., 50 C.C.P.A. 1105 (Ct. of

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Customs and Pat. Appeals 1963) (holding, “in view of infringement action against opposer based

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in part on the unregistered mark,” no “damage” would arise out of the “registration of the mark

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by reason of the advantages that would accrue to applicant as plaintiff in the infringement suit.”).

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III.

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GODADDY’S AMENDED AFFIRMATIVE DEFENSES ARE FUTILE
Of the eleven affirmative defenses in GoDaddy’s answer to the amended complaint,

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GoDaddy moves to amend all of them except its First Affirmative Defense and Second

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Affirmative Defense. All of the proposed amendments are futile because they fail to plead all of

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the essential elements of each defense, as set forth below.

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A.

Third Affirmative Defense: Waiver, Estoppel, and Laches

Although it is not clear why GoDaddy treats waiver, estoppels, and laches as a single
affirmative defense, it nonetheless fails to plead facts that would support any of these defenses.

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As for waiver, GoDaddy fails to plead any facts that would establish Petronas’s “clear,

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decisive, and unequivocal” intent to relinquish any of its trademark rights. Groves v. Prickett,

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420 F.2d 1119, 1125 (9th Cir.1970) (“An implied waiver of rights will be found where there is

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‘clear, decisive and unequivocal’ conduct which indicates a purpose to waive the legal rights

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involved.”)). “Waiver is the intentional relinquishment of a known right with knowledge of its

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existence and the intent to relinquish it.” United States v. King Features Entm't, Inc., 843 F.2d

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394, 399 (9th Cir.1988). “Although mere silence can be a basis for a claim of estoppel when a

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legal duty to speak exists, waiver must be manifested in an unequivocal manner” Duncan v.

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Office Depot, 973 F.Supp. 1171, 1177 (D.Or.1997); see also United States v. Amwest Surety Ins.

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Co., 54 F.3d 601, 602–03 (9th Cir.1995).
Here, GoDaddy alleges only that “Petronas waited until 2009 to take any action with

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regard to one of the domain names at issue and waited until 2010 to take action with regard to

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the other domain name at issue.” (Slafsky Decl. Ex. A ¶ 104). This is insufficient, however,

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because “even if [plaintiff] failed to take preventative measures to stop [defendant’s]

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infringement-related activities, failure to act, without more, is insufficient evidence of the

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trademark owner’s intent to waive its right to claim infringement.” Novell, Inc. v. Weird Stuff,

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Inc., No. C92–20467, 0094 WL 16458729, at *12–13 (N.D.Cal. Aug.2, 1993).

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With respect to estoppel, GoDaddy fails to plead virtually all of the required elements

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needed to state a claim, including that Petronas knew of the alleged infringement and that

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GoDaddy was misled to its detriment by some conduct of Petronas. “Unlike waiver, estoppel

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focuses not on a party’s intent, but rather on the effects of his conduct on another. Estoppel

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arises only when a party’s conduct misleads another to believe that a right will not be enforced

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and causes him to act to his detriment in reliance upon this belief.” Novell, 0094 WL 16458729,

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at * 13 (citing Saverslak v. Davis–Cleaver Produce Co., 606 F.2d 208, 213 (7th Cir.1979)).

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Here, GoDaddy fails to plead that it was misled or that Petronas caused it to take some

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action to GoDaddy’s own detriment. GoDaddy also fails to allege that Petronas knew of the

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infringement for any significant period of time before taking action, which is required to

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establish estoppel. Lehman v. United States, 154 F.3d 1010, 1016 (9th Cir.1998).

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GoDaddy’s laches defense is similarly deficient. Laches is a disfavored defense in

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trademark cases, E. & J. Gallo Winery v. Pasatiempos Gallo, S.A., 905 F.Supp. 1403, 1414

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(E.D.Cal.1994), and available “only where the trademark holder knowingly allowed the

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infringing mark to be used without objection for a lengthy period of time.” Brookfield Comms.,

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Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1061 (9th Cir.1999). To prevail on a

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laches defense, “a defendant must prove: (1) the claimant unreasonably delayed in filing suit;

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and (2) as a result of the delay, the defendant suffered prejudice.” Danjaq LLC v. Sony Corp.,

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263 F.3d 942, 955 (9th Cir. 2001).

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As with estoppel, GoDaddy’s pleading is completely silent as to the length of the alleged

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delay or when Petronas allegedly learned of the infringement. For laches, the relevant delay is

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the period that begins when the plaintiff knew (or should have known) of the allegedly infringing

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conduct and ends with the initiation of the lawsuit in which the defendant seeks to assert the

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laches defense. Kling v. Hallmark Cards, Inc., 225 F.3d 1030, 1036 (9th Cir.2000) (“any delay

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is to be measured from the time that the plaintiff knew or should have known about the potential

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claim at issue”). In addition, GoDaddy has failed to allege any prejudice resulting from any

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delay by Petronas.

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B.

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GoDaddy’s affirmative defense of acquiescence is futile because it fails to plead two

Fourth Affirmative Defense: Acquiescence

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required elements of that defense. The elements of acquiescence are: “(1) the senior user

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actively represented that it would not assert a right or a claim; (2) the delay between the active

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representation and assertion of the right or claim was not excusable; and (3) the delay caused the
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defendant undue prejudice.” Times Mirror Magazines, Inc. v. Field & Stream Licenses Co., 294

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F.3d 383, 395 (2d Cir.2002) (internal quotation marks omitted).

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With respect to acquiescence, GoDaddy alleges only that “Petronas did not take any

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action with regard to the domain names at issue for approximately six years and thereby

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acquiesced and forfeited any right to complain about the conduct that forms the basis for its

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allegations.” (Slasfky Decl. Ex. A ¶ 105). As such, GoDaddy fails to plead any representation

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by Petronas or any prejudice to GoDaddy and thus fails to plead the first and third elements of

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acquiescence identified above.

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C.

Fifth Affirmative Defense: Statute of Limitations (Cal. Bus. Prof. Code §
17208)

GoDaddy’s fifth affirmative defense is futile because it fails to allege any facts which
would establish that any of Petronas’s causes of action “accrued” more than four years before
Petronas filed this suit, as required by Cal. Bus. Prof. Code § 17208. Under California law, the
statute of limitations begins to run at “the time when the cause of action is complete with all of
its elements” unless accrual of the cause of action is postponed by the claimant's failure to
discover the cause of action. Nor art v. Upon Co., 21 Cal, 4th 383, 397 (1999). “A plaintiff has
reason to discover a cause of action when he or she ‘has reason at least to suspect a factual basis
for its elements.’” Keilholtz v. Superior Fireplace Co., 2009 WL 839076 (N.D.Cal., 2009)
(quoting Grisham v. Philip Morris U.S.A., Inc., 40 Cal.4th 623, 54 Cal.Rptr.3d 735, 151 P.3d
1151 (2007)). Thus, when the plaintiff has notice or information of circumstances that would put
a reasonable person on inquiry notice, or has the opportunity to obtain knowledge from sources
open to his or her investigation, the statute commences to run. Id.
Here, GoDaddy fails to state—much plead facts that would show—when any of
Petronas’s causes of action accrued and, thus, fails to plead facts that would support its fifth
affirmative defense. In addition, GoDaddy admits that it did not begin to commit the actions

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forming the basis of its liability in the complaint until April 2007, well within the four year

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statute of limitation. (Slasfky Decl. Ex. A ¶ 43; Compl. Doc. No. 69 ¶ 43).

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D.

Sixth Affirmative Defense: Misrepresentation of Fact

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GoDaddy’s sixth affirmative defense—Misrepresentation of Fact—is futile because

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GoDaddy fails to plead any grounds that would constitute a defense to any claim in this case.

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Although not entirely clear, it appears that GoDaddy’s sixth affirmative defense is based on an

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assertion that Petronas is guilty of “unclean hands” arising from two alleged misrepresentations.

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First, GoDaddy alleges that Petronas’s complaint “contains numerous factually inaccurate
allegations.” (Slafsky Decl. Ex. A ¶ 107). Petronas’s conduct in bringing this suit, however,

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cannot form the basis for a finding of “unclean hands.” “It is a well-settled principle of

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trademark law that the defense of unclean hands applies only with respect to the right in suit.”

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Liz Claiborne, Inc. v. Mademoiselle Knitwear, Inc. 13 F.Supp.2d 430, 445 (S.D.N.Y.1998) As

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explained in Sears Roebuck & Co. v. Sears plc, 744 F.Supp. 1297 (D.Del.1990):
While bringing a lawsuit brings the contested issue before the court, the
act of bringing suit is not, itself, the matter concerning which a plaintiff
seeks relief. Thus, the Court must focus on alleged inequitable conduct in
the gaining or the use of the right being contested, not alleged inequitable
conduct in the bringing of the lawsuit.

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Id. at 1310; see also 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition §

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31:51 (4th ed.1998) (“The act of bringing the lawsuit is not the subject matter concerning which

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plaintiff seeks relief. Unclean hands must relate to the getting or using the alleged trademark

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rights.”).

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Second, GoDaddy alleges that Petronas “has made false or improper representations with

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intent to induce the U.S. Patent and Trademark Office to issue a trademark registration.”

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(Slafsky Decl. Ex. A ¶ 107). In addition to failing to identify any specific “trademark

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registration,” GoDaddy fails to plead the required elements of a prima facie case of fraud on the

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Patent and Trademark Office, namely, “(1) the false representation regarding a material fact; (2)
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the registrant's knowledge or belief that the representation is false (scienter); (3) reasonable

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reliance on the misrepresentation; and (4) damages proximately resulting from such reliance.”

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San Juan Prods. v. San Juan Pools of Kansas, 849 F.2d 468, 473 (10th Cir. 1988).

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E.

Seventh and Eighth Affirmative Defenses: Invalid Trademark

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GoDaddy’s seventh affirmative defense alleges that “the Plaintiff’s alleged trademark is

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invalid” and “Plaintiff’s alleged trademark registration is invalid” and its eighth affirmative

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defense alleges that Petronas “lacks standing” because “it does not possess valid United States

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trademark rights in the alleged mark.” With respect to the invalidity of “Plaintiff’s alleged

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trademark,” GoDaddy’s seventh and eighth affirmative defenses are futile because they fail to

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identify any specific trademark, the length of time of the alleged abandonment, any facts that

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would establish the intent required for abandonment, or the intent not to resume use. 15 U.S.C. §

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1127 (“A mark shall be deemed abandoned when its use has been discontinued with intent not to

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resume such use.”). As for the “registration,” GoDaddy’s affirmative defenses simply mimic its

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counterclaim, which fails as set forth above.

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F.

Ninth Affirmative Defenses: Failure to Mitigate Damages

GoDaddy’s ninth affirmative defense is futile because it fails to plead each of the
elements required for the defense of failure to mitigate damages. To prove a failure to mitigate,
a defendant must show: (1) what reasonable actions the plaintiff ought to have taken, (2) that
those actions would have reduced the damages, and (3) the amount by which the damages would
have been reduced. Koppers Co. v. Aetna Cas. and Surety Co. 98 F.3d 1440, 1448 (3d Cir.
1996). Here, GoDaddy makes no attempt to show how any action of Petronas would have
reduced its damages or by how much and, as such, its ninth affirmative defense is futile.
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Tenth Affirmative Defense: Failure to Join an Indispensible Party

GoDaddy’s tenth affirmative defense is futile because it fails identify any party that is
allegedly “indispensible” to this action. “The burden is on the party raising the defense of failure
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to join an indispensable party to show that the person or entity who was not joined is needed for

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a just adjudication.” Ford v. Keystone, 2006 WL 800759 (E.D. Mich. 2006) (citing Charles Alan

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Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure 3d § 1609, p.

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129-30). Here, GoDaddy fails to make any allegation that any of the parties identified in its

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tenth affirmative defense are needed for just adjudication of this matter.

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H.

Eleventh Affirmative Defense: Unclean Hands

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GoDaddy’s eleventh affirmative defense merely repeats the allegations in its sixth

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affirmative defense and is futile for the same reasons, explained above.

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IV.

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CONCLUSION
For the reasons set forth above, GoDaddy’s motion for leave to amend should be denied.

Dated: July 14, 2011

LAW OFFICES OF PERRY R. CLARK

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By:

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Case No: 09-CV-5939 PJH

/s/ Perry R. Clark
Perry R. Clark
Attorney for Plaintiff
PETROLIAM NASIONAL BERHAD