Wahoo International, Inc. v. Phix Doctor, Inc. et al

Filing 49

ORDER Denying 36 Defendant's Motion to Dismiss. The Court Denies Defendant's requests for judicial notice and Sustains 39 Plaintiff's objection to Gowen's declaration. The hearing set for June 27, 2014 is Vacated. Signed by Judge Gonzalo P. Curiel on 6/24/2014. (srm)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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WAHOO INTERNATIONAL, INC,

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Plaintiff,

vs.

PHIX DOCTOR, INC., a Florida
Corporation; and DOES 1-10,

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CASE NO. 13cv1395-GPC(BLM)
ORDER DENYING DEFENDANT’S
MOTION TO DISMISS
[Dkt. No. 36.]

Defendants.

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Before the Court is Defendant Phix Doctor, Inc.’s (“Phix Doctor” or

17 “Defendant”) motion to dismiss for failure to state a claim pursuant to Federal Rule of
18 Civil Procedure (“Rule”) 12(b)(6).1 Plaintiff Wahoo International, Inc.’s (“Wahoo” or
19 “Plaintiff”) filed an opposition on May 2, 2014. (Dkt. No. 38.) A reply was filed on
20 May 20, 2014. (Dkt. No. 45.) Based on the reasoning below, the Court DENIES
21 Defendant’s motion to dismiss.
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Defendant also moves for judgment on the pleadings pursuant to Federal Rule
of Civil Procedure 12(c). (Dkt. No. 36.) Rule 12(c) provides that a party may move
for judgment on the pleadings after the pleadings have closed. Fed. R. Civ. P. 12(c).
In this case, the pleadings have not closed since no answer has been filed.
Accordingly, Defendant may not move pursuant to Rule 12(c). See Doe v. U.S., 419
F.3d 1058, 1061-62 (9th Cir. 2005) (motion for judgment on the pleadings before
answer was filed was premature and should have been denied). The Court also notes
that in the first paragraph of Defendant’s brief, it states that it is also moving in the
alternative for change in venue. (Dkt. No. 36-1 at 5.) However, the brief does not
address that argument and the Court assumes it is a typographical error.
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Background
According to the Complaint, Wahoo is a leading manufacturer of UV cure resins.

3 Resins are thick liquids that harden into transparent solids and used to repair fiberglass,
4 plastics, wood and metal. The repair putty hardens in 3 minutes when exposed to UV
5 sunlight. SOLAREZ is a unique UV cure synthetic resin. It was the first UV cure resin
6 on the surf market and first sold in 1987. Wahoo has invested in promotion of its
7 product and education regarding use to the UV cure repair resin. As the first resin of
8 its kind, SOLAREZ has become famous in the surf, snowboard, and skate industry.
9 Plaintiff sells its products online directly to consumers and through distributors and
10 retailers. Its distributors are located in San Diego, CA, Ocean City, MD and Aiea, HI
11 and they distribute to retailers across the country.
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Wahoo first registered the mark SOLAREZ on April 14, 1992 (Reg. No.

13 1,682,565) for clear resin coating. The mark’s first registration lapsed for inadvertent
14 failure to renew in 2003, but it was re-registered on January 6, 2004 with Reg. No.
15 2,802,579. The registration’s date of first use is June 26, 1989. Plaintiff has used the
16 SOLAREZ mark on its repair putty continuously and consistently since June 26, 1989.
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Wahoo also alleges it is the owner of a family of marks with the root suffix -rez.

18 Plaintiff has advertised “Rez-solutions” such as SPONGEREZ for bodyboard and
19 swimfin repair resin since 1989; NEOREZ for wetsuit repair resin since 1990; and
20 RADREZ for snow and skateboard and skate shoe repair resin since 1992. In the surf,
21 skate, and snowboard industry and culture, -rez is recognized by customers to be
22 associated with Plaintiff’s products when it appears in a composite.

Plaintiff

23 advertises, promotes, and sells its -rez products in a manner designed to create an
24 association of common origin for all marks containing -rez.
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Defendant Phix Doctor is a producer of fiberglass repair products and

26 accessories. Defendant purchased SOLAREZ products sometime before 2010. On
27 November 29, 2011, it announced its new product “DURA REZ” on its website.
28 According to its description, it is a fiber filled epoxy and polyester repair product and
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1 also made of resin. Its advertising states: “cures in full sun in less then 3 minutes for
2 a professional finish that saves you time and money!” The product is advertised as an
3 ultra-clear, sun powered resin that works on epoxy and polyester and does not harden
4 in the tube. DURA REZ has a product line with distributors in California, North
5 Carolina, and Florida as well as retailers throughout the country.
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When Plaintiff discovered the infringement on its trademark, SOLAREZ, it sent

7 a cease and desist letter dated December 10, 2012 to Phix Doctor; however, Phix
8 Doctor never responded. In January 2013, at a Surf Expo in Orlando, Florida, Wahoo’s
9 sales manager, Nelz Vellocido, saw Tony Gowen, a principal of Phix Doctor,
10 exhibiting DURA REZ. At the time, Gowen told Vellocido that he would be “wind
11 down” the use of the DURA REZ mark. However a month later, one of Plaintiff’s
12 distributors called to complain that retailers claimed to be buying SOLAREZ from a
13 non-Wahoo distributor. When Plaintiff’s distributors called that particular retailer and
14 asked if they carried SOLAREZ, they said “yes, we sell SOLAREZ.” However, the
15 store was selling DURA REZ.
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In March 2013, Defendant’s website was still advertising DURA REZ.

17 Therefore, on June 14, 2013, Plaintiff filed a complaint alleging causes of action for
18 (1) Trademark Infringement, 15 U.S.C. § 1114; (2) Trademark Dilution,15 U.S.C. §
19 2235(c); (3) False Designation of Origin, 15 U.S.C. § 1125(A); (4) Injury to Business
20 Reputation and Dilution, California Business & Professions Code section 14247; (5)
21 Common Law Passing Off and Unfair Competition; and (6) Unfair Competition,
22 California Business & Professions Code section 17200. (Dkt. No. 1.)
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Discussion

24 A.

Legal Standard on Federal Rule of Civil Procedure 12(b)(6)

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Federal Rule of Civil Procedure (“Rule”) 12(b)(6) permits dismissal for “failure

26 to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Dismissal
27 under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory
28 or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police
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1 Dep’t., 901 F.2d 696, 699 (9th Cir. 1990). Under Federal Rule of Civil Procedure
2 8(a)(2), the plaintiff is required only to set forth a “short and plain statement of the
3 claim showing that the pleader is entitled to relief,” and “give the defendant fair notice
4 of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v.
5 Twombly, 550 U.S. 544, 555 (2007).
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A complaint may survive a motion to dismiss only if, taking all well-pleaded

7 factual allegations as true, it contains enough facts to “state a claim to relief that is
8 plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
9 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
10 content that allows the court to draw the reasonable inference that the defendant is
11 liable for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause
12 of action, supported by mere conclusory statements, do not suffice.” Id. “In sum, for
13 a complaint to survive a motion to dismiss, the non-conclusory factual content, and
14 reasonable inferences from that content, must be plausibly suggestive of a claim
15 entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.
16 2009) (quotations omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as
17 true all facts alleged in the complaint, and draws all reasonable inferences in favor of
18 the plaintiff. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009).
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Where a motion to dismiss is granted, “leave to amend should be granted ‘unless

20 the court determines that the allegation of other facts consistent with the challenged
21 pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc.,
22 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well
23 Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to
24 amend would be futile, the Court may deny leave to amend. See Desoto, 957 F.2d at
25 658; Schreiber, 806 F.2d at 1401.
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While it appears that Defendant moves to dismiss the entire complaint which

27 includes six causes of action, Defendant, in fact, only directly addresses the cause of
28 action for trademark infringement by name. Moreover, Defendant fails to assert the
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1 legal standard as to each cause of action, and it also only indirectly addresses some
2 factors of certain causes of action. Lastly, while some of the causes of action have
3 similar elements, Defendant fails to articulate which causes of action alleged in the
4 Complaint are similar.
5 B.

Trademark Infringement - Lanham Act

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The Lanham Act provides “national protection of trademarks in order to secure

7 to the owner of the mark the goodwill of his business and to protect the ability of
8 consumers to distinguish among competing producers.” Park ‘N Fly, Inc. v. Dollar
9 Park and Fly, Inc., 469 U.S. 189, 198 (1985). To prevail on a claim of trademark
10 infringement, Plaintiff must prove “(1) that it has a protectible ownership interest in
11 the mark; and (2) that the defendant’s use of the mark is likely to cause consumer
12 confusion.” Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d
13 1137, 1144 (9th Cir. 2011) (citation omitted); 15 U.S.C. § 1114.
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A claim for false designation of origin is subject to “[t]he same standard,” except

15 a claim for false designation of origin does not require that the mark be registered.
16 Brookfield Commc’ns, Inc. v. W. Coast Ent. Corp., 174 F.3d 1036, 1046 n. 6 (9th
17 Cir.1999) (citing 15 U.S.C. §§ 1114(1) (trademark infringement), 1125(a)(1) (false
18 designation of origin)).
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Defendant’s arguments primarily address whether Plaintiff has a protectable

Protectable Ownership Interest in the Mark

21 interest in the mark, “REZ.” In opposition, Plaintiff contends and the Complaint
22 alleges that it has a protectable interest in the mark, SOLAREZ, not REZ and it raises
23 the REZ family of marks theory to support its pleading of a likelihood of confusion.
24 Therefore, the Court looks to see whether Plaintiff has demonstrated a protectable
25 ownership interest in SOLAREZ. The Court disregards the Plaintiff’s argument that
26 address whether REZ is entitled to trademark protection. The issue of REZ is relevant
27 in determining likelihood of confusion.
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Three ways exist for a party to establish a protectable interest “(1) it has a
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1 federally registered mark in goods or services; (2) its mark is descriptive but has
2 acquired a secondary meaning in the market; or (3) it has a suggestive mark, which is
3 inherently distinctive and protectable.” Applied Information Sciences Corp. v. eBay,
4 Inc., 511 F.3d 966, 969 (9th Cir. 2007). Registration of a mark on the Principal
5 Register in the Patent and Trademark Office constitutes prima facie evidence of the
6 validity of the registered mark and the registrant's exclusive use of the mark on the
7 goods and serves specified in the registration. Id.; see also 15 U.S.C. § 1057(b) (“A
8 certificate of registration of a mark . . . shall be prima facie evidence of the validity of
9 the registered mark. . . .”)
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Plaintiff filed its registered trademark no. 2,802,579 to the Complaint. (Dkt. No.

11 1-2, Compl. Ex. A.) Defendant does not dispute the registration of the SOLAREZ
12 trademark. Thus, Plaintiff has a protectable ownership interest in the mark, SOLAREZ.
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2.

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“The test for likelihood of confusion is whether a ‘reasonably prudent consumer’

Likelihood of Confusion

15 in the marketplace is likely to be confused as to the origin of the of the good or service
16 bearing one of the marks.” Entrepreneur Medica, Inc. v. Smith, 279 F.3d 1135, 1140
17 (9th Cir. 2002). Courts in the Ninth Circuit typically apply the eight factors set out in
18 AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) to determine whether a
19 defendant’s use of a mark or name creates a likelihood of confusion. See Rearden
20 LLC, 683 F.3d at 1199; Lahoti v. Vericheck, Inc., 636 F.3d 501, 507 (9th Cir.2011);
21 GoTo.com, 202 F.3d at 1205 Under Sleekcraft, the court analyzes likelihood of
22 confusion by looking at eight factors: “(1) strength of the mark; (2) proximity of the
23 goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing
24 channels used; (6) degree of care likely to be exercised by the consumer; (7)
25 defendant’s intent in selecting the mark; and (8) likelihood of expansion of the product
26 lines.” AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 352 (9th Cir. 1979). The
27 factors are “pliant” with some factors being more important than others and the relative
28 importance of each factor being case-specific. Brookfield Comms., Inc. v. West Coast
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1 Ent’t Crop, 174 F.3d 1036, 1054 (9th Cir. 1999).
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When evaluating likelihood of confusion on a motion to dismiss, “[i]f the court

3 determines as a matter of law from the pleadings that the goods are unrelated and
4 confusion is unlikely, the complaint should be dismissed.” Murray v. Cable Nat'l
5 Broad. Co., 86 F.3d 858, 860 (9th Cir. 1996). However, “[w]hether confusion is likely
6 is a factual determination woven into the law” that courts “routinely treat . . . as [an
7 issue] of fact” best left for determination by a jury. Levi Strauss & Co. v. Blue Bell,
8 Inc., 778 F.2d 1352, 1356, 1356 n. 5 (9th Cir. 1985).
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Plaintiff alleges that the SOLAREZ mark is strong and famous since it is a

10 registered mark. (Dkt. No. 1, Compl. ¶ 31.) Plaintiff asserts that it and Defendant sell
11 directly competitive UV cure resin products for application in the surf, snowboard, and
12 skate industry. (Id. ¶¶ 10, 14.) In addition, the Complaint alleges that the marks are
13 similar and are used in the same industry. (Id. ¶ 27.) Plaintiff has pled that both parties
14 market through their respective websites, and both exhibited at the January 2013 Surf
15 Expo in Florida. (Id. ¶ 4, 14, 16.) It asserts facts to demonstrate at least one instance
16 of likelihood of confusion. (Id. ¶ 17.) These allegations plausibly support the factor
17 of likelihood of confusion.
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Morever, as to similarity of the mark, Plaintiff contends that it is the owner of

19 a “family of marks” which Plaintiff has advertised as “Rez-solutions” including
20 SPONGEREZ; NEOREZ and RADREZ. It asserts that it advertises, promotes and sells
21 its -REZ products in a manner designed to create an association of common origin for
22 all marks containing -REZ. As a result, consumers in the surf, skate, and snowboard
23 industry have come to associate all marks for repair resin containing the -REZ suffix
24 with Wahoo. Defendant alleges that Plaintiff has not registered “REZ” and Plaintiff
25 is not the first party to use REZ in the industry.
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Confusing similarity of marks may also be established under the “Family of

27 Marks” doctrine. CaesarsWorld, Inc. v. Milanian, 247 F. Supp. 2d 1171, 1197 (D. Nev.
28 2003). “A trademark owner may use a number of marks with a common feature or
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1 ‘surname’ that is distinctive enough to be recognized by the consuming public causing
2 them to associate such derivative marks with the trademark owner.” Id. “A family of
3 marks is a group of marks having a recognizable common characteristic, wherein the
4 marks are comprised and used in such a way that the consuming public associates not
5 only the individual marks, but the common characteristic of the family, with the
6 trademark owner.” Id. (quoting J & J Snack Foods Corp. v. McDonald’s Corp., 932
7 F.2d 1460, 1462 (Fed. Cir. 1991)). A family of marks exist only when “the purchasing
8 public recognizes the common characteristic is indicative of a common origin of the
9 goods.” AM General Corp v. Daimler Chrysler Corp., 311 F.3d 796 814 (7th Cir.
10 2002) (quoting Han Beauty, Inc. v. Alberto-Culver Co., 236 F.3d 1333, 1336 (Fed. Cir.
11 2001)).
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A determination of whether a family of marks exists is a question of fact “based

13 on the common formative component’s distinctiveness, the family’s use, advertising,
14 promotion, and inclusion in party’s other marks.” Id. at 815 (citation omitted). In
15 addition, whether the plaintiff “has used joint advertising and promotion in a manner
16 designed to create an association of common origin may be pertinent.” Id.
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Here, Defendant makes numerous arguments as to the REZ family of marks

18 which will require the Court to look at facts beyond those alleged in the Complaint.
19 The inquiry under Rule 12(b)(6) is the adequacy of the pleadings, not adequacy of the
20 evidence. See Alonso v. Blackstone Finan. Group, LLC, 962 F. Supp. 2d 1188, 1193
21 n.4 (E.D. Cal. 2013). Plaintiff has alleged facts supporting its allegation as to
22 likelihood of confusion.
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Based on the allegations in the Complaint, the Court concludes that Plaintiff has

24 presented sufficient facts to plausibly suggest a claim entitling the plaintiff to relief as
25 to trademark infringement and false designation of origin. See Iqbal, 556 U.S. at 678.
26 Accordingly, the Court DENIES Defendant’s motion to dismiss.
27 C.

Defendant’s Request for Judicial Notice

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Defendant filed requests for judicial notice in support of its motion and in
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1 support of its reply. (Dkt. Nos. 36-2; 45-1.) It filed requests for judicial notice of
2 various trademark applications. Based on the ruling above and the limited review of
3 a complaint on a motion to dismiss, the Court DENIES Defendant’s requests for
4 judicial notice.
5 D.

Plaintiff’s Evidentiary Objection

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Plaintiff filed an objection to Gowen’s declaration because it consists of

7 evidence outside the complaint which should not be considered. Based on the Court’s
8 reasoning above, the Court SUSTAINS Plaintiff’s objection.
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Conclusion
Based on the above, the Court DENIES Defendant’s motion to dismiss. The

11 hearing set for June 27, 2014 shall be vacated.
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IT IS SO ORDERED.

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14 DATED: June 24, 2014
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HON. GONZALO P. CURIEL
United States District Judge

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