Balance Studio, Inc. v. Cybernet Entertainment, LLC

Filing 89

ORDER by Magistrate Judge Donna M. Ryu denying 80 Motion for Summary Judgment. (dmrlc1, COURT STAFF) (Filed on 6/8/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BALANCE STUDIO, INC., Plaintiff, 8 ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT v. 9 10 CYBERNET ENTERTAINMENT, LLC, 11 United States District Court Northern District of California Case No. 15-cv-04038-DMR Defendant. Re: Dkt. No. 80 12 Plaintiff Balance Studio, Inc., doing business as Kink Academy and KinkAcademy.com 13 (“Kink Academy”), sues Defendant Cybernet Entertainment, LLC, doing business as Kink.com, 14 for violations of the Lanham Act, 15 U.S.C. §§ 1114, 1125, and state law. Defendant moves for 15 summary judgment. [Docket No. 80.] The court held a hearing on May 25, 2017. Having 16 considered the parties’ oral argument and written submissions, and for the reasons stated below as 17 well as at the hearing, the court denies Defendant’s motion. 18 I. BACKGROUND 19 A. Factual Background 20 The following facts are undisputed, unless otherwise noted. Plaintiff is a business that 21 offers adult sexual education. [Docket No. 83-1 (Williams Decl., May 4, 2017) ¶ 4.] Plaintiff 22 offers services through its website, kinkacademy.com, as well as seminars and coaching services 23 by its founder, Kali Williams, that “focus on empowerment, confidence, and communication.” Id. 24 at ¶¶ 1, 4. Plaintiff launched the kinkacademy.com website in 2009. Id. at ¶ 8. 25 On April 1, 2009, Plaintiff applied for registration of its “Kink Academy” word and logo 26 mark. [Docket No. 80-1 (Swanson Decl., Apr. 20, 2017) Ex. BB (Kink Academy application).]1 27 1 28 Defendant submitted the United States Patent and Trademark Office (“USPTO”) documentation for Plaintiff’s word and logo mark as exhibits to the declaration of Julien Swanson (Docket No. 1 On May 10, 2011, the USPTO granted Plaintiff’s application and issued U.S. Trademark 2 Registration Number 3958399 for the “Kink Academy” word and logo mark, as depicted below: 3 4 5 6 7 8 Swanson Decl. Ex. C (Kink Academy registration). According to the USPTO registration, 9 Plaintiff’s word and logo mark was first used on February 1, 2007 and first used in commerce on 10 April 1, 2009. Id. It describes the mark as follows: The mark consists of large letter “K” in the color purple with a white and purple outline, a stylized graduation cap in black on top of the left leg of the “K”, a black leash attached to the lower leg of the “K” going up and around to the left in a circular manner, with the text “Kink Academy” in black underneath the “K”. United States District Court Northern District of California 11 12 13 14 Id. The Kink Academy word and logo mark is registered in International Class 041 for “adult 15 sexuality education, namely, through workshops, seminars, on-line video classes featuring 16 information on adult role-play, bondage, domination and submission, fetishes and gender 17 exploration designed to enhance couple’s [sic] intimacy, and acknowledgement of one’s own 18 sexuality.” Id. 19 Prior to the issuance of the registration, on July 1, 2009, the USPTO directed Plaintiff to 20 disclaim the word “academy” in the mark “because it refers to the educational component of the 21 identification” and was could not be registered. Swanson Decl. Ex. D (July 1, 2009 Office 22 Action). It appears that Plaintiff then took no action on the application for several months, for on 23 24 25 26 27 28 80-1). It also filed a separate request for judicial notice of that documentation. [Docket No. 81.] Judicially noticeable facts are those not subject to reasonable dispute because they are “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). A court may take judicial notice of “records and reports of administrative bodies.” Mack, 798 F.2d at 1282 (citation omitted). Plaintiff does not object to the court taking judicial notice of the USPTO documentation regarding registration of the Kink Academy mark. Accordingly, the court grants Defendant’s request and takes judicial notice of Exhibits A through BB. See Oroamerica Inc. v. D&W Jewelry Co., Inc., 10 Fed. Appx. 516, 517 n.4 (9th Cir. 2001) (taking judicial notice of USPTO registration certificates, patent file history, and patent application materials). 2 1 March 23, 2010, Plaintiff filed a petition to revive its abandoned application in which it disclaimed 2 the “exclusive right to use Academy apart from the mark as shown.” Id. Ex. E. The USPTO 3 subsequently directed Plaintiff to disclaim the word “kink” as “merely descriptive of the subject 4 matter of [Plaintiff’s] adult sexuality education services . . .” Id. at Ex. F (Mar. 31, 2010 Office 5 Action). On April 6, 2010, Plaintiff amended its disclaimer to read, “[n]o claim is made to the 6 exclusive right to use “KINK ACADEMY” apart from the mark as shown.” Id. at Ex. G. Defendant is “a company that produces and markets BDSM2 videos and materials, which 7 8 [it] make[s] available to [its] members online, through [the] www.Kink.com website, its sub- 9 channels and affiliated third parties.” [Docket No. 80-2 (Acworth Decl., Apr. 18, 2017) ¶ 2.] According to its founder, Peter Acworth, Defendant “has been branded as Kink and Kink.com,” 11 United States District Court Northern District of California 10 and “has been known and referred to as Kink since at least 2006.” Id. at ¶¶ 3, 4. Plaintiff’s 12 founder Williams states that Kink.com offers “[h]ard-core extreme porn entertainment; webcam 13 video chat virtual prostitution services; and porn industry advocacy.” Williams Decl. ¶ 18. Although not clear from the record, in approximately 2014,3 Defendant began operating a 14 15 “Kink University” website accessible at kinkuniversity.com, and sought to trademark the term 16 “Kink University.” See Compl. ¶ 15; Swanson Decl. Ex. H (USPTO rejection of Defendant’s 17 application). Defendant sought to register the term “Kink University” in the area of “[e]ducation 18 services, namely, providing live and on-line classes, panel discussions, tutorials, seminars, and 19 workshops in the field of sexuality.” Id. The USPTO rejected Defendant’s application on July 23, 20 2014, finding a likelihood of consumer confusion between “Kink University” and Plaintiff’s Kink 21 Academy word and logo mark. Id. (“Registration of the applied-for mark is refused because of a 22 23 24 25 2 The term “BDSM” “refers to a range of sexual preferences that generally relate to enjoyment of physical control, psychological control, and/or pain,” and “can be broken down into six overarching components: bondage and discipline, domination and submission, and sadism and masochism.” www.merriam-webster.com/dictionary/BDSM (last accessed on May 16, 2017). 3 26 27 28 It is not clear when Defendant began operating the kinkuniversity.com website and sought to trademark the term “Kink University.” Although Defendant asserts that it applied to register the term “Kink University” in 2014, it cites only to Plaintiff’s unverified complaint in support of this fact. It did not submit its application for registration or other evidence supporting the date of its application. As discussed below, however, its registration application was rejected on July 23, 2014. Swanson Decl. Ex. H. 3 1 likelihood of confusion with the mark in U.S. Registration No. 3958399.”). The USPTO 2 explained the likelihood of confusion between Defendant’s proposed “Kink University” mark and 3 Plaintiff’s registered Kink Academy word and logo mark as follows: 4 In terms of the marks, the proposed mark is KINK UNIVERSITY, while the cited mark is comprised of the letter K with the design of a mortarboard and leash and the terms KINK ACADEMY. Considering that the terms UNIVERSITY and ACADEMY are descriptive for the educational services and that literal elements dominate over design elements, the dominant components of the marks are both KINK. ... 5 6 7 8 9 In this case, despite the differences in the marks, the terms UNIVERSITY and ACADEMY, each coupled with the dominant component KINK, convey the same idea, i.e., a traditional institute of higher learning juxtaposed next to the informal slang term for an unusual sexual preference. Therefore, the marks are similar in sound, appearance, and commercial impression. 10 United States District Court Northern District of California 11 12 With respect to the services, those of the proposed mark are “Education services, namely, providing live and on-line classes, panel discussions, tutorials, seminars, and workshops in the field of sexuality”, while those of the cited mark are “Adult sexuality education, namely, through workshops, seminars, on-line video classes featuring information on adult role-play, bondage, domination and submission, fetishes and gender exploration designed to enhance couple’s intimacy, and acknowledgment of one’s own sexuality”. Because both of the services are educational services related to the topic of sexuality, they are related such that there is a likelihood of confusion if both of the marks were used for the respective services. 13 14 15 16 17 18 19 Id. 20 On April 14, 2015, the USPTO issued a final rejection of Defendant’s trademark 21 application for “Kink University,” reiterating that the two marks “convey a similar commercial 22 impression,” and that the use of the term “Kink University” would likely cause consumer 23 confusion with the “Kink Academy” word and logo mark. Swanson Decl. Ex. J. 24 B. Procedural History 25 Plaintiff filed the complaint on September 3, 2015. It alleges that despite the USPTO’s 26 determination, Defendant continues to infringe Plaintiff’s Kink Academy word and logo mark by 27 using the confusingly similar “Kink University” mark, and that the Kink University website is 28 “designed to take advantage of the significant name recognition and goodwill surrounding Kink 4 Academy and its products.” Compl. ¶¶ 24, 25. According to Williams, Kink Academy “offers 2 adult sexual education” with a focus on “building trust and intimacy through bondage and 3 sadomasochism,” as well as “empowerment, confidence, and communication.” Williams Decl. ¶ 4 4. In contrast, “Defendant uses their ‘Kink University’ brand in connection with porn services 5 including live chat rooms and pornographic videos.” Id. at ¶ 7. Williams states that “Kink 6 University is not truly an educational branch of Defendant’s business.” Id. Plaintiff further 7 alleges that it has suffered monetary damage in the form of diverted traffic and lost sales, and that 8 Defendant is damaging the valuable reputation and goodwill in Plaintiff’s brand by “marketing 9 pornography videos under the guise of educational videos.” Id. at ¶ 26. Finally, Plaintiff alleges 10 that actual confusion has already occurred between Kink Academy and Kink University, id. at ¶ 11 United States District Court Northern District of California 1 27, and submits evidence of what it claims is actual consumer confusion between the two 12 businesses. See Williams Decl. ¶ 15 Ex. C. Plaintiff alleges the following claims for relief: 1) 13 trademark infringement under 15 U.S.C. § 1114; 2) false designation of origin under 15 U.S.C. § 14 1125(a); and 3) unfair competition under California Business & Professions Code § 17200 et seq. 15 (“UCL”). Defendant filed a counterclaim for cancellation of Plaintiff’s Kink Academy word and logo 16 17 mark. [Docket No. 50.] It also alleges counterclaims against Plaintiff and its founder, Kali 18 Williams, for trademark infringement under 15 U.S.C. § 1114, false designation of origin under 15 19 U.S.C. § 1125(a), and unfair competition under the UCL. Defendant now moves for summary 20 judgment on all of Plaintiff’s claims. 21 II. LEGAL STANDARDS 22 A court shall grant summary judgment “if . . . there is no genuine dispute as to any material 23 fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The burden 24 of establishing the absence of a genuine issue of material fact lies with the moving party, see 25 Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986), and the court must view the evidence in the 26 light most favorable to the non-movant. See Scott v. Harris, 550 U.S. 372, 378 (2007) (citation 27 omitted). A genuine factual issue exists if, taking into account the burdens of production and 28 proof that would be required at trial, sufficient evidence favors the non-movant such that a 5 1 reasonable jury could return a verdict in that party’s favor. Anderson v. Libby Lobby, Inc., 477 2 U.S. 242, 248. The court may not weigh the evidence, assess the credibility of witnesses, or 3 resolve issues of fact. See id. at 249. 4 To defeat summary judgment once the moving party has met its burden, the nonmoving 5 party may not simply rely on the pleadings, but must produce significant probative evidence, by 6 affidavit or as otherwise provided by Federal Rule of Civil Procedure 56, supporting the claim that 7 a genuine issue of material fact exists. TW Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 8 F.2d 626, 630 (9th Cir. 1987) (citations omitted). In other words, there must exist more than “a 9 scintilla of evidence” to support the non-moving party’s claims, Anderson, 477 U.S. at 252; conclusory assertions will not suffice. See Thornhill Publ’g Co. v. GTE Corp., 594 F.2d 730, 738 11 United States District Court Northern District of California 10 (9th Cir. 1979). Similarly, “[w]hen opposing parties tell two different stories, one of which is 12 blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not 13 adopt that version of the facts” when ruling on the motion. Scott, 550 U.S. at 380. 14 III. DISCUSSION 15 A. Trademark Infringement Claims 16 Plaintiffs’ first and second claims are for trademark infringement under 15 U.S.C. § 1114 17 and false designation of origin under 15 U.S.C. § 1125(a). At the hearing, Plaintiff clarified that it 18 only challenges Defendant’s use of the term “Kink University.” Plaintiff argues that Defendant’s 19 use of “Kink University” infringes Plaintiff’s Kink Academy word and logo mark because it is 20 confusingly similar to Plaintiff’s mark. Plaintiff does not challenge Defendant’s use of its 21 registered marks “Kink.com” or “Kink,” or the design mark associated with Kink University. 22 “To establish a trademark infringement claim under section 32 of the Lanham Act or an 23 unfair competition claim under section 43(a) of the Lanham Act, [a plaintiff] must establish that [a 24 defendant] is using a mark confusingly similar to a valid, protectable trademark of [the 25 plaintiff’s].” Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1046 (9th Cir. 26 1999) (citing AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-39 (9th Cir. 1979), abrogated on 27 other grounds by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003)); see also 28 La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 874 (9th Cir. 2014) (“To show 6 1 trademark infringement, a plaintiff must establish ownership of a trademark and a likelihood of 2 consumer confusion.”). “Federal registration of a trademark ‘constitutes prima facie evidence of 3 the validity of the registered mark and of [the registrant’s] exclusive right to use the mark’ in 4 commerce.” Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 755 (9th Cir. 2006) (quoting 5 Brookfield, 174 F.3d at 1047). The presumption of validity, including the presumption that the 6 mark is inherently distinctive, “is a strong one, and the burden on the defendant necessary to 7 overcome that presumption at summary judgment is heavy.” Zobmondo Entm’t, LLC. v. Falls 8 Media, LLC, 602 F.3d 1108, 1115 (9th Cir. 2010). Defendant moves for summary judgment on all of Plaintiff’s claims on the grounds that 9 Plaintiff’s trademark registration is invalid.4 At the hearing, it clarified that it asserts three bases 11 United States District Court Northern District of California 10 for invalidity.5 Each is addressed below. 12 1. Intent to Use the Mark Defendant first argues that Plaintiff’s trademark registration is void because Plaintiff did 13 14 not have a bona fide intent to use the Kink Academy word and logo mark in commerce at the time 15 it filed its registration application in 2009. “A bona fide intent to use the mark in commerce is a statutory requirement of a valid 16 17 intent-to-use trademark application under § 1(b) of the Lanham Act.” Bobosky v. Adidas AG, 843 18 F. Supp. 2d 1134, 1140 (D. Or. 2011) (citing 15 U.S.C. § 1051(b)(1)). “Section 1(b) requires both 19 20 21 22 4 Plaintiff’s third claim for violation of the UCL based on infringement is “substantially congruent” to its Lanham Act claims. See Cleary v. News Corp., 30 F.3d 1255, 1262-63 (9th Cir. 1994). Defendant moves for summary judgment on Plaintiff’s UCL claim on two grounds, including invalidity. The second ground, failure to show lost sales, is discussed below. 5 23 24 25 26 27 28 In order to establish an infringement claim, a plaintiff must also show a likelihood of confusion. Courts weigh eight factors, referred to as the Sleekcraft factors, to determine whether a likelihood of confusion exists. See La Quinta, 762 F.3d at 874 (citing Sleekcraft, 599 F.2d at 348-49). Defendant did not address the Sleekcraft factors in its motion and clarified at the hearing that it does not seek summary judgment on the issue of likelihood of consumer confusion, conceding that it involves disputed material facts. See, e.g., Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1209 (9th Cir. 2012) (cautioning that “district courts should grant summary judgment motions regarding the likelihood of confusion sparingly, as careful assessment of the pertinent factors that go into determining likelihood of confusion usually requires a full record.” (quotation omitted)). Accordingly, the court need not reach Plaintiff’s arguments regarding the admissibility of the opinions of Defendant’s purported expert, Jackie Bruckman, since her opinions appear to go to the question of consumer confusion. 7 1 actual intent to use the mark in commerce and evidence that objectively demonstrates such an 2 intent.” Id. (citations omitted). “Lack of bona fide intent to support an intent-to-use application . . 3 . may render an application void ab initio upon challenge in federal district court.” Id. (citing 4 Caesars World, Inc. v. Milanian, 247 F. Supp. 2d 1171, 1192-93 (D. Nev. 2003) (following a 5 bench trial, holding that defendant’s applications “were not made with a bona fide intent to use 6 and are void.”)). On September 13, 2010, in connection with its registration application for the Kink 8 Academy word and logo mark, Plaintiff submitted a “Trademark/Service Mark Statement of Use,” 9 identifying two Kink Academy logo specimens. Swanson Decl. Ex. G-1. The first specimen 10 showed a green chalkboard with the words “Kink Academy” in white letters to the right of the 11 United States District Court Northern District of California 7 design element, and the second showed Plaintiff’s Kink Academy word and logo mark printed on 12 a tote bag, as follows: 13 14 15 16 17 18 19 Id. On October 19, 2010, the USPTO rejected the specimens. As to the chalkboard image, the 20 USPTO noted that it was inconsistent with Plaintiff’s claimed mark, because Plaintiff’s mark 21 included the words “Kink Academy” in black directly below the design element. In contrast, the 22 chalkboard image showed the words in white to the right of the design element. Swanson Decl. 23 Ex. G-2. As to the tote bag, the USPTO noted that “[u]se of the mark on goods does not support a 24 finding that applicant is using the mark for the services listed in the application,” namely, 25 International Class 041 for “adult sexuality education, namely, through workshops, seminars, on- 26 line video classes featuring information on adult role-play, bondage, domination and submission, 27 fetishes and gender exploration designed to enhance couple’s [sic] intimacy, and 28 acknowledgement of one’s own sexuality.” Id.; see also Kink Academy registration. 8 1 Defendant argues that this evidence shows that Plaintiff had no intent to use its mark for 2 the described services, and “has never used its mark in relation to its described services.” Mot. 19. 3 Defendant also submits evidence that at various times, Plaintiff used different versions of its 4 registered mark on its kinkacademy.com website, including the chalkboard image that was 5 rejected by the USPTO in 2010. See Swanson Decl. Exs. V-Y. 6 Plaintiff responds that it has used its registered Kink Academy word and logo mark in commerce and continues to do so, and submits evidence depicting the registered mark 1) printed 8 on a gift certificate for a kinkacademy.com membership; 2) used as Kink Academy’s Instagram 9 account avatar; 3) appearing on a 2009 screenshot from the kinkacademy.com website; 4) printed 10 on promotional clothing; and 5) printed on the DVD cover for the educational video titled, “Kink 11 United States District Court Northern District of California 7 Academy Princess Kali—Introduction to Domination.” Williams Decl. ¶ 14 Ex. B. 12 In its reply, Defendant argues without explanation that the “only acceptable specimen of 13 use presented to show actual use in commerce regarding Plaintiff’s online services” is the 2009 14 screenshot of the Kink Academy website. Reply 14; see Williams Decl. Ex. B (Docket No. 83-1 15 at ECF p. 17). In so doing, Defendant effectively concedes that Plaintiff has established a dispute 16 of fact on this point. Beyond that, Defendant’s position is far from clear. Defendant appears to 17 argue that Plaintiff’s mark is registered in a class that is confined to on-line video classes, and 18 therefore, use of the mark outside of that context does not establish actual use in commerce. See 19 Reply 14. The basis for Defendant’s argument is factually incorrect. Plaintiff’s mark is registered 20 in International Class 041, which is “adult sexuality education . . . through workshops, seminars, 21 [and] on-line video classes.” As such, the registered use of the mark includes workshops and 22 seminars that are not restricted to an on-line format. Plaintiff has presented evidence of actual use 23 of the registered mark in commerce, i.e., the screenshot of the Kink Academy website, gift 24 certificate, Instagram avatar, promotional clothing, and DVD cover. A reasonable jury could 25 conclude that such uses of Plaintiff’s registered mark establish bona fide intent to use the mark in 26 commerce for the services listed in its application, namely, “adult sexuality education . . . through 27 workshops, seminars, [and] on-line video classes.” Accordingly, summary judgment on trademark 28 invalidity based on Plaintiff’s alleged failure of intent to use the mark is denied. 9 1 2 2. Fraud Defendant next argues that Plaintiff’s mark is subject to cancellation due to alleged fraud in connection with Plaintiff’s trademark application. “A party may seek cancellation of a 3 registered trademark on the basis of fraud under 15 U.S.C. § 1064(c) by proving a false 4 representation regarding a material fact, the registrant’s knowledge or belief that the representation 5 is false, the intent to induce reliance upon the misrepresentation and reasonable reliance thereon, 6 and damages proximately resulting from the reliance.” Robi v. Five Platters, Inc., 918 F.2d 1439, 7 1444 (9th Cir. 1990) (citing San Juan Products, Inc. v. San Juan Pools of Kansas, Inc., 849 F.2d 8 9 468, 473 (10th Cir. 1988)). False statements in an incontestability affidavit “provide[] a basis for canceling the registration itself.” Id. (citations omitted). Further, “[a] party may allege fraud in 10 the procurement of a trademark by showing, inter alia, that a trademark applicant knowingly and United States District Court Northern District of California 11 falsely declared under oath in conjunction with the trademark application that ‘no other person, 12 firm, corporation, or association . . . has the right to use such mark in commerce.’” AirWair Int’l 13 Ltd. v. Schultz, 84 F. Supp. 3d 943, 952 (N.D. Cal. 2015) (quoting Rosso & Mastracco, Inc. v. 14 Giant Food Inc., 720 F.2d 1263, 1266 (Fed. Cir. 1983)). 15 Defendant challenges allegedly fraudulent statements made by Plaintiff in its 2009 16 registration application and 2016 incontestability declaration. 17 18 a. 2009 Registration Application Plaintiff’s 2009 registration application contains the following declaration made under 19 20 21 22 23 penalty of perjury: to the best of [the undersigned’s] knowledge and belief no other person, firm, corporation, or association has the right to use the mark in commerce, either in the identical form thereof or in such near resemblance thereto as to be likely, when used on or in connection with the goods/services of such other person, to cause confusion, or to cause mistake, or to deceive . . . Swanson Decl. Ex. BB (Kink Academy application). The declaration was signed by an unnamed 24 25 26 President of “Balance Studios.” Id. Defendant argues that this statement was a misrepresentation because Plaintiff’s founder was personally aware of Defendant’s branding and “educational ventures,” see Acworth Decl. ¶¶ 10, 11, and was therefore obligated to disclose Defendant’s 27 similar Kink.com and Kink marks. 28 10 1 The court finds that there are numerous disputes of fact as to whether the statement in the 2 2009 application constitutes a “false representation regarding a material fact.” Robi, 918 F.2d at 3 1444. To begin with, Defendant seems to argue that Plaintiff lied to the USPTO by not disclosing 4 that Defendant could also have the right to use the mark that Plaintiff sought to register. 5 Plaintiff’s failure to identify Defendant’s alleged and highly debatable right to use Plaintiff’s mark 6 does not amount to a “false representation regarding a material fact.” A trademark applicant “is 7 not ‘obligate[d] . . . to investigate and report all other possible users of an identical or confusingly 8 similar mark.’” AirWair, 84 F. Supp. 3d at 952 (quoting Rosso, 720 F.2d at 1266). Instead, an 9 applicant must only disclose “conflicting rights” of another user “which are clearly established, for example, by a court decree, by the terms of a settlement agreement, or by a registration.” Rosso, 11 United States District Court Northern District of California 10 720 F.3d at 1266; see, e.g., Robi, 918 F.2d at 1444 (trademark user made “clearly false” statement 12 in trademark registration application where she failed to acknowledge conflicting rights of another 13 user which were established by prior court decision). Moreover, the “statement of an applicant 14 that no other person ‘to the best of his knowledge’ has the right to use the mark does not require 15 the applicant to disclose those persons whom he may have heard are using the mark if he feels that 16 the rights of such others are not superior to his.” Quiksilver, 466 F.3d at 755 (quoting Yocum v. 17 Covington, 216 U.S.P.Q. 210, 216-17 (T.T.A.B. 1982)) (emphasis in original). A trademark 18 applicant “is not ‘obligate[d] . . . to investigate and report all other possible users of an identical or 19 confusingly similar mark.’” AirWair, 84 F. Supp. 3d at 952 (quoting Rosso, 720 F.2d at 1266). 20 Additionally, there are other elements of fraud that Defendant completely fails to discuss, 21 i.e., Plaintiff’s knowledge that the representation was false, Plaintiff’s intent to induce reliance 22 upon the misrepresentation, the USPTO’s reasonable reliance on the misrepresentation, and 23 damages resulting from the reliance. See Robi, 918 F.2d at 1444. Williams states that she “never 24 had any intent to deceive the Trademark Office,” and that “[a]ll [of] the documents filed by me or 25 on my behalf in the Trademark Office were filed in good faith.” Williams Decl. ¶ 28. For these 26 reasons, Defendant is not entitled to summary judgment on its theory of invalidity based on fraud 27 in the 2009 application. 28 b. 2016 Incontestability Declaration 11 1 After Plaintiff filed the instant litigation, Defendant instituted proceedings with the 2 Trademark Trial and Appeal Board (“TTAB”) to cancel Plaintiff’s mark. See Swanson Decl. Ex. 3 U (Sept. 21, 2016 Office Action referencing cancellation proceeding). On July 12, 2016, Plaintiff 4 filed a declaration of incontestability and continued use under penalty of perjury before the 5 USPTO. It states as follows: 6 7 8 9 10 United States District Court Northern District of California 11 The mark is in use in commerce on or in connection with the goods/services, or to indicate membership in the collective membership organization . . . as evidenced by the attached specimen(s) showing the mark as used in commerce. The mark has been in continuous use in commerce for five consecutive years after the date of registration . . . and is still in use in commerce on or in connection with all goods/services, or to indicate membership in the collective membership organization, listed in the existing registration . . . and there is no proceeding involving said rights pending and not disposed of in either the U.S. Patent and Trademark Office or in a court. 12 Swanson Decl. Ex. Z (emphasis added). The declaration was signed by Robert Edwards, 13 President of Balance Studio, Inc., on July 12, 2016. 14 Defendant argues that the declaration contains two falsehoods. First, Defendant argues 15 that the statement that there was “no proceeding involving [Plaintiff’s ownership rights in the 16 mark] pending” in court or at the USPTO was false because Defendant had instituted cancellation 17 proceedings against the mark. Plaintiff does not dispute that its statement is incorrect. In fact, on 18 September 21, 2016, the USPTO pointed out the inaccuracy of Plaintiff’s statement. It issued an 19 Office Action in which it stated that the declaration “cannot be acknowledged because there is a 20 pending proceeding before the [TTAB] involving ownership of the subject registered mark.” 21 Swanson Decl. Ex. U. Since the USPTO rejected the affidavit, it does not appear that Defendant 22 will be able to establish that the USPTO reasonably relied on Plaintiff’s false statement. At the 23 very least, whether the USPTO reasonably relied on the false statement and whether its reliance 24 resulted in damages present factual disputes. See Robi, 918 F. 2d at 1444. Moreover, Defendant 25 must also establish Plaintiff’s knowledge that the representation was false, as well as its intent to 26 induce reliance upon the misrepresentation. 27 28 Defendant also challenges Plaintiff’s statement in the 2016 incontestability declaration that it has been continuously using the mark in commerce for five consecutive years after registration. 12 1 Defendant claims that evidence shows that Plaintiff has used different versions of its registered 2 mark on its website kinkacademy.com, including the chalkboard image that was rejected by the 3 USPTO in 2010, and versions of the mark that feature the words “Kink Academy” to the right of 4 the design element instead of immediately below. Swanson Decl. Exs. W, X, Y. Defendant 5 asserts that the current version of Plaintiff’s website features a different unregistered version of its 6 mark. See Swanson Decl. Ex. Y. Relying on this evidence, Defendant argues that Plaintiff falsely 7 represented to the USPTO that it has continuously used the registered mark for five years. 8 9 In response, Plaintiff points to evidence that it has used its registered Kink Academy word and logo mark in commerce and continues to do so. Williams Decl. ¶ 14. It relies on the same evidence described above in connection with the parties’ dispute about Plaintiff’s intent to use its 11 United States District Court Northern District of California 10 mark, including evidence that Plaintiff used the registered Kink Academy word and logo mark on 12 a gift certificate for a kinkacademy.com membership, as its Instagram account avatar, on a 2009 13 version of the kinkacademy.com website, on promotional clothing, and on the DVD cover for an 14 educational video. See id. Ex. B. The court finds that this evidence demonstrates a triable issue of 15 fact as to the truthfulness of Plaintiff’s 2016 statement to the USPTO about its continuous use of 16 the mark in commerce. Further, in light of Williams’s statement that she “never had any intent to 17 deceive the Trademark Office,” and that “[a]ll [of] the documents filed by me or on my behalf in 18 the Trademark Office were filed in good faith,” Williams Decl. ¶ 28, the court finds that whether 19 Plaintiff intended to induce reliance on the statement about its continuous use of the mark is 20 disputed. Defendant’s motion for summary judgment based on alleged fraud in the 2016 21 declaration is therefore denied. 22 3. 23 Invalidity Based on Weakness of the Mark Defendant’s third invalidity argument focuses on what it describes as the “weakness” of 24 Plaintiff’s Kink Academy word and logo mark. Although its argument was not clearly presented 25 in either its motion or at the hearing, Defendant appears to assert that Plaintiff’s mark is invalid 26 because of its disclaimer of the words “kink” and “academy” in its word and logo mark, as well as 27 28 13 1 Defendant’s senior rights in the marks “Kink.com” and “kink.”6 As best as the court can 2 understand, Defendant seems to argue as follows: according to the USPTO, the word “kink” is the 3 dominant portion in both Plaintiff’s Kink Academy word and logo mark and Defendant’s rejected 4 Kink University mark. See Swanson Decl. Ex. H. Defendant holds senior, exclusive rights to the 5 word “kink,” since it has owned the trademark registration for “Kink.com” since 2008 and first 6 used the mark in commerce in 2006. Swanson Decl. Ex. A (Feb. 5, 2008 registration for 7 Kink.com). On April 14, 2015, in connection with its final rejection of the mark “Kink 8 University,” the USPTO stated, “[t]he claim of acquired distinctiveness in part as to the term 9 ‘KINK’ based on prior U.S. Registration No. 3379745 [Kink.com] is accepted and made of record.” Id. at Ex. J (Apr. 14, 2015 USPTO Office Action). Therefore, Defendant has acquired 11 United States District Court Northern District of California 10 secondary meaning to the word “kink.” In 2016, Defendant registered the term “kink” as a 12 standalone mark with first use in 2006. Id. at Ex. L (Defendant’s USPTO 2016 registration of the 13 word KINK). Accordingly, since Defendant holds senior, exclusive rights to the dominant portion 14 of Plaintiff’s Kink Academy word and logo mark, “Plaintiff’s mark should be cancelled as its 15 registration conflicts with the senior use rights of Defendant to the dominant component.” Mot. 16 22.7 Defendant thus seems to be arguing that Plaintiff’s mark is invalid because Defendant 17 18 holds senior rights to the disclaimed portions of Plaintiff’s mark. This violates the anti-dissection 19 rule, under which “the validity and distinctiveness of a composite trademark is determined by 20 viewing the trademark as a whole, as it appears in the marketplace.” Official Airline Guides, Inc. 21 v. Goss, 6 F.3d 1385, 1392 (9th Cir. 1993) (emphasis added) (citing California Cooler, Inc. v. 22 Loretto Winery Ltd., 774 F.2d 1451, 1455 (9th Cir. 1985) (“[T]he composite may become a 23 distinguishing mark even though its components individually cannot.”)). For example, in Official 24 6 25 26 27 28 Defendant clarified at the hearing that it is not relying on the tacking doctrine to invalidate Plaintiff’s mark. See Quiksilver, 466 F.3d at 758 (explaining that “[u]nder the tacking doctrine, a mark owner ‘essentially seeks to tack his first use date in the earlier mark onto the subsequent mark.’” (quoting Brookfield, 174 F.3d at 1048)). 7 Defendant asserts, somewhat confusingly, that it “is not claiming that Plaintiff’s mark is invalid because of the fact of the disclaimers.” Reply 5. This collides with its “weak mark” invalidity argument, which appears to rest on Plaintiff’s disclaimers of the words “kink” and “academy.” 14 1 Airline Guides, the plaintiff held rights in the mark “OAG TRAVEL PLANNER” as “an arbitrary 2 composite trademark protectable without proof of secondary meaning, even though the term 3 ‘travel planner’ is descriptive.” 6 F.3d at 1391, 1392 (citing Official Airline Guides, Inc. v. Goss, 4 856 F.2d 85, 87 (9th Cir. 1988)). In analyzing the composite mark under the Sleekcraft factors, 5 the district court considered the strength of the mark “by examining its component parts and found 6 that the term ‘Travel Planner,’ standing alone, is descriptive and therefore weak.” Id. at 1392. 7 The Ninth Circuit held that the district court’s approach amounted to error because it violated the 8 anti-dissection rule. Id. Here, despite acknowledging the existence of the anti-dissection rule, see 9 Mot. 12, Defendant essentially asks the court to ignore it and deem Plaintiff’s composite mark invalid based on its component parts and the fact of their disclaimers. Defendant’s position flies 11 United States District Court Northern District of California 10 in the face of well-established Ninth Circuit law. See, e.g., Sleeper Lounge Co. v. Bell Mfg.Co., 12 253 F.2d 720, 722 n. 1 (9th Cir. 1958) (“[d]isclaimed material forming part of a registered 13 trademark cannot be ignored. It is still part of the composite trademark which must be considered 14 in its entirety.”). 15 At the hearing, Defendant cited Reserve Media, Inc. v. Efficient Frontiers, Inc., No. CV 16 15-05072 DDP (AGRx), 2017 WL 123420 (C.D. Cal. Jan. 11, 2017), in support of its position that 17 a finding of invalidity is appropriate on these facts. However, that case does not support 18 Defendant’s argument. In Reserve Media, plaintiff Reserve Media, Inc. (“Reserve”) moved for 19 partial summary judgment on the defendant’s trademark infringement claims. 2017 WL 123420, 20 at *1-2. The defendant, Efficient Frontiers, Inc. (“EFI”), asserted that Reserve infringed EFI’s 21 registered marks Reserve Interactive + design, Reserve Anywhere, Reserve Q, Reserve 22 Interactive, and Reserve Cloud. It also asserted infringement of its unregistered marks, including 23 Reserve University. Id. at *2. In relevant part, Reserve moved for summary judgment on five of 24 the marks, arguing that they were unprotectable as a matter of law because they were descriptive 25 and lacked secondary meaning. Id. The court agreed with Reserve. Id. at *4-8. In particular, the 26 court concluded that the mark “Reserve University” was descriptive, noting that EFI had 27 “confirmed at oral argument that, if Reserve University were enforceable, it would also seek to 28 prevent others from using phrases such as Reserve Academy.” Id. at *5. The court explained that 15 1 “[t]his further underscores the risks of permitting a party to enforce marks that are broadly 2 descriptive of an entire category of goods, as is the case here with training modules for reservation 3 software.” Id. The court also concluded that EFI had failed to show that “consumers recognize 4 the five marks found to be descriptive . . . as originating from a single source,” and thus the marks 5 lacked secondary meaning. Id. at *7-8. 6 Defendant says that it does not cite Reserve to support invalidation of Plaintiff’s word and 7 logo mark on the basis that the mark as a whole is descriptive. See Reply 4. However, Defendant 8 appears to rely on Reserve to argue that a mark consisting of a disclaimed word such as “kink” that 9 is appended to a term such as “university” or “academy” is descriptive and therefore unenforceable as a matter of law. Reserve says no such thing. To the extent that Defendant’s 11 United States District Court Northern District of California 10 invalidity argument focuses on the words “Kink Academy,” Defendant must not only establish 12 that they are descriptive, but that they lack secondary meaning. Defendant has made no attempt to 13 do so. More importantly, in any event, such an argument does not hold water because Plaintiff 14 owns rights in a composite mark, which must be considered in its entirety. See Sleeper Lounge, 15 253 F.2d at 722. 16 17 Defendant offers no other support for its position. Its motion for summary judgment on invalidity based on the alleged weakness of Plaintiff’s mark is denied. 18 B. Liability Under the UCL 19 Defendant asserts that it is entitled to summary judgment on Plaintiff’s third claim for 20 violation of the UCL. First, it acknowledges that state unfair competition claims are “substantially 21 congruent” to Lanham Act claims, see Cleary v. News Corp., 30 F.3d 1255, 1262-63 (9th Cir. 22 1994), and argues that Plaintiff’s UCL claim rises and falls with its trademark infringement 23 claims. For the same reasons discussed above, the court finds that Plaintiff has demonstrated 24 triable issues of fact as to the validity of its mark and denies summary judgment on Plaintiff’s 25 UCL claim on this ground. 26 Defendant also argues that UCL claims require proof of actual loss of sales, in contrast 27 with trademark infringement claims, which presume loss based on proof of use of the mark and 28 evidence of sales. Mot. 25 (citing Brooks Bros. v. Brooks Clothing of Cal., Ltd., 60 F. Supp. 442, 16 1 447 (S.D. Cal. 1945)). According to Defendant, Plaintiff produced profit and loss and cash flow 2 statements, and Defendant’s counsel states that he “determined that the Plaintiff’s income for the 3 years 2014, 2015 and 2016, the years where Defendant’s Kink University website was active, 4 correlated directly and almost exactly to the Plaintiff’s business expenses for the corresponding 5 year, leaving Plaintiff unable to prove any loss resulting from Defendant’s activities.” Id.; see 6 Swanson Decl. ¶ 34. Inexplicably, Defendant did not submit the profit and loss and cash flow 7 statements because the information is protected by the stipulated protective order (see Docket No. 8 63 (Protective Order)). See id. at ¶ 33. This is another head-scratcher, as the Protective Order sets 9 forth procedures for seeking leave to file protected material under seal. See Protective Order at § 10 14.3. In response, Williams states that Plaintiff “operates the Kink Academy website at a high 12 gross margin, with very low ongoing costs,” and that “adding incremental sales revenue has 13 minimal impact on costs, and is almost entirely profit.” Williams Decl. ¶ 22. According to 14 Williams, “there is nothing more profitable than adding another subscriber, because there is no 15 incremental unit cost to service the customer,” and that “the damage from Defendant’s 16 infringement is so significant [because] it has deprived Kink Academy of the expected sales and 17 traffic growth on which its profitable operation was based.” Id. at ¶ 23. She also asserts that Kink 18 Academy’s monthly website visitors plummeted after Defendant launched the Kink University 19 website in 2014. Id. at ¶ 25. Given Defendant’s failure to submit evidence in support of its argument that Plaintiff 20 21 cannot prove loss due to Defendant’s alleged infringement, as well as the existence of disputed 22 material facts, the court denies summary judgment as to the UCL claim. 23 IV. CONCLUSION For the foregoing reasons, Defendant’s motion for summary judgment is denied. 25 IT IS SO ORDERED. R NIA ______________________________________ Donna M. Ryu onna M. Ryu Judge D United States Magistrate Judge ER C 17 N F RT FO NO 28 ERED O ORD IT IS S H LI 27 Dated: June 8, 2017 A 26 ISTRIC ES D TC AT T RT U O S 24 UNIT ED United States District Court Northern District of California 11 D IS T IC T O R

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