Hangingout, Inc. v. Google, Inc.

Filing 27

RESPONSE in Opposition re 23 MOTION to Dismiss for Failure to State a Claim filed by Hanginout, Inc.. (Skale, Andrew) (cxl).

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Andrew D. Skale (SBN 211096)
[e-mail]
Ben L. Wagner (SBN 243594)
[e-mail]
Justin S. Nahama (SBN 281087)
[e-mail]
MINTZ LEVIN COHN FERRIS GLOVSKY AND POPEO P.C.
3580 Carmel Mountain Road, Suite 300
San Diego, CA 92130
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiff
HANGINOUT, INC.

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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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HANGINOUT, INC., a Delaware
corporation,
Plaintiff,

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vs.
GOOGLE, INC., a Delaware
corporation,
Defendant.

Case No. 13-cv-02811-AJB-NLS
HANGINOUT, INC.’S
MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF ITS
OPPOSITION TO GOOGLE, INC.’S
MOTION TO DISMISS FIRST
AMENDED COMPLAINT
Date:
April 25, 2014
Time:
2:00 p.m.
Courtroom 3B
The Honorable Anthony J. Battaglia

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Case No. 3:13-cv-02811-JAH-NLS

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Defendant Google , Inc. (“Google”) has once again asked the Court to

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prematurely evaluate the merit of Hanginout’s factual assertions in the First

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Amended Complaint (“FAC”). Going as far as questioning Hanginout’s veracity to

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the USTPO, Google distorts the pleading requirements for common law trademark

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infringement and unfair competition. For example, Google ignores Paragraph 41 of

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the FAC:

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Hanginout substantially used its HANGINOUT marks in

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commerce before Google used the HANGOUTS mark. Its

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market penetration was prior to Google’s first use of the

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infringing HANGOUTS mark.

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Google’s motion waives its hand at this clear statement saying instead it “must be

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disregarded.” Motion To Dismiss First Amended Complaint (“MTD”) at 8. Besides

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providing no case law that says this statement “must be disregarded” for purposes of

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pleading a claim for trademark infringement, Google forgets that the statement is read

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in conjunction with the numerous other paragraphs in the complaint that plead

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specific facts and examples. See, e.g., FAC ¶¶ 9-20, 27. Google’s motion is simply a

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delay tactic, intending to force Hanginout to spend time, money and resources

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defending a motion that should not have been filed.

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Because Hanginout has sufficiently pled ownership for purposes of trademark

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infringement and unfair competition―specifically, seniority and market

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penetration―Google’s motion must fail.

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I.

HANGINOUT’S COMMON LAW TRADEMARK INFRINGEMENT
CLAIM IS SUFFICIENTLY PLED

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When assessing a FRCP 12(b)(6) motion, the court must accept all factual

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allegations pled in the complaint as true, and must construe them and draw all

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reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty

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Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). In order to comply with the

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notice pleading standards of Fed.R.Civ.P. 8(a), a complaint “must contain sufficient

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factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

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face.’” Dichter-Mad Family Partners, LLP v. United States, 709 F.3d 749, 761 (9th

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Cir. 2013) (citing Ashcroft v. Iqbal, 556 U.S. 662, (2009)). “A claim has facial

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plausibility when the plaintiff pleads factual content that allows the court to draw the

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reasonable inference that the defendant is liable for the misconduct alleged.” Id.

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To state a trademark infringement claim, a Plaintiff must plead: “(1) that it has

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a protectable ownership interest in the mark and (2) that the defendant’s use of the

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mark is likely to cause consumer confusion, thereby infringing upon [plaintiff’s]

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rights to the mark.” Dep’t of Parks & Recreation v. Bazaar Del Mundo, Inc., 448

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F.3d 1118, 1124 (9th Cir. 2006). To establish enforceable common-law trademark

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rights, Hanginout must prove that it (1) is the senior user of the mark and (2) has

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established legally sufficient market penetration. Optimal Pets, Inc. v. Nutri-Vet, LLC,

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877 F. Supp. 2d 953, 959 (C.D. Cal. 2012). Google does not argue that its mark is not

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confusingly similar to Hanginout’s Mark. Thus, the only inquiry on this motion

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should be whether Hanginout has plausibly pled a cognizable ownership interest in its

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Mark.

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A.

Google Misreads the Complaint

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Instead of looking to what Hanginout actually pled, Google mistakenly argues

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a first use date for its own mark of June 28, 2011. Motion to Dismiss (“MTD”) at 1.

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What Hanginout actually pled was a first use date by Google of May 15, 2013. See

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FAC 26 (“On information and belief, Google’s first use of the HANGOUTS mark is

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on or after May 15, 2013”).

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When viewed in light of Google’s May 15, 2013 first use date of

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HANGOUTS, Hanginout certainly pled detailed facts of prior use and market

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penetration before May 15, 2013. FAC ¶¶ 39-44.

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Contrary to what Google argues, Hanginout does not “admit” the first use date

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by Google of the mark HANGOUTS was June 28, 2011. As pled, this first public

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announcement was not for the mark HANGOUTS, but was in fact for the mark

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“+HANGOUTS” – which is different from the mark HANGOUTS. Hence,

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Wikipedia identifies Google’s launch date of HANGOUTS as May 15, 2013, which

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is the date Hanginout pled Google first used the mark. FAC ¶ 26 (See

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http://en.wikipedia.org/wiki/Google_Hangouts). Thus, notwithstanding any of the

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other arguments herein, Hanginout certainly pled use prior to May 15, 2013.

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Even assuming Google’s “+HANGOUTS” use could be relevant to the

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seniority inquiry at the pleadings stage, it would go beyond a plausibility inquiry to

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assume Google could claim “tacking” based on use of “+HANGOUTS”. One

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Industries v. Jim O’Neal Dist., 578 F.3d 1154, 1160-61 (9th Cir. 2009) (“The

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standard for ‘tacking’ is exceedingly strict,” citing example where “dci” in lower-case

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letters was held not close enough to “DCI” in upper-case letters to tack).

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Accordingly, even assuming more than FAC ¶ 41 (which alleged prior use and

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market penetration) needed to be pled, Hanginout properly pled market penetration

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and first use.

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B.

Hanginout Has Sufficiently Pled Seniority

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Based on an incorrect first use date, Google advances three misguided

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arguments in an effort to subvert Hanginout’s seniority allegations. Thus, even

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assuming Google could rely on a first use date different from what Hanginout pled,

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the Complaint is more than sufficient.

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First, Google’s Motion claims the FAC “does not allege any facts showing the

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nature and extent of Hanginout’s marketing of its products bearing the HANGINOUT

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marks, the volume of actual paying customers, or where the customers are located for

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any time.” MTD at 1 (emphasis added). Second, aware the facts alleged in the FAC

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must be accepted as true, Google improperly suggests Hanginout was untruthful to

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the USTPO.1 Third, Google attempts to support its arguments with a cursory

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overview of case law, which, upon closer examination, does not stand for the

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sweeping propositions Google advances.

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In contrast to Google’s claim that Hanginout failed to cite “any” facts alleging

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seniority, the FAC provides that the HANINGOUT logo was adopted and used as

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early as November 2008 and its platform was developed at least as early as 2009.

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FAC, ¶¶ 10,11. Further addressing seniority, the FAC alleges that Hanginout began

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shooting promotion videos with celebrities in March 2010 (FAC, ¶ 16), began its

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advertising campaign through Facebook in March 2010 (FAC, ¶ 17), and, by May

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2011, over 200 customers had registered for and used Version 1.0 of the Hanginout

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Q&A Platform after an aggressive marketing campaign (FAC, ¶¶ 18-20). For

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purposes of Google’s motion, these facts must be accepted as true. Accordingly, the

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FAC unequivocally alleges that Hanginout began promoting its product and had

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customers before Google adopted its Hangouts platform.

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Next, the case law cited by Google in support of its seniority argument is

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overgeneralized and readily distinguishable from the facts alleged in the FAC. For

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example, Google suggests the FAC pales in comparison to the facts alleged in Future

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Domain Corp. v. Trantor Sys. Ltd.,1993 U.S. Dist. Lexis 9177 (N.D. Cal. May 3,

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1993), a case not considering a motion to dismiss, but rather likelihood of success on

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a preliminary injunction. Google suggests that the court there concluded the various

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efforts at a trade show did not establish seniority of use, ignoring that Future Domain

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was evaluated under the lens of a preliminary injunction. MTD at 4.

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Upon closer examination, however, the Future Domain facts are readily

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Google’s placement of its underhanded argument in a footnote is revealing, and
does not make the argument any more proper. MTD at 3, fn 1. Because the facts in
the FAC must be accepted as true, Google’s argument concerning Hanginout’s
veracity to the USPTO should not be considered in any regard.

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distinguishable. Specifically, the court explained that the “determinative” facts

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concerning seniority were (1) no orders of the product were placed at the trade show

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and (2) the alleged infringer was promoting the infringing mark at the same trade

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show (e.g., even the trade show was not a prior use). Future Domain Corp., 1993

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U.S. Dist. Lexis at 19. Further, in contrast to Google’s argument that Hanginout has

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not alleged actual sales, MTD 4-5, Future Domain cited a Ninth Circuit case with

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approval, noting, an “actual sale is not necessary.” Future Domain Corp., 1993 U.S.

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Dist. Lexis at 19-20.

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Ironically, Hanginout and Google both have provided their platforms free of

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charge and Google fails to provide any authority suggesting monetization or

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profitability are required to establish seniority. Indeed, market acceptance is a critical

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prerequisite for profitability to facilitate goodwill and a customer base. But critically,

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because Google was not promoting its Hangouts Mark simultaneously with

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Hanginout, Future Domain is not instructive.

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Equally unavailing, Google cites another preliminary injunction case, Garden

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of Life Inc. v. Letzer, 318 F. Supp. 2d 946 (C.D. Cal. 2004), for a similarly over-

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generalized proposition concerning seniority. Like Future Domain, the Garden of

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Life court’s seniority analysis is not analogous to the facts at issue here. There, the

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party claiming common law trademark rights conceded their company did not use the

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mark continuously and the disputed mark never actually appeared on the products at

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issue. Id. at 958-60.

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Here, unlike Garden of Life where the party seeking trademark protection

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admitted they did not use the mark at issue continuously, the FAC provides a general

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overview of Hanginout’s continuous use. Here, Hanginout properly pled seniority in

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detail. See, e.g., FAC ¶¶ 27, 40, 41. Accordingly, accepting Hanginout’s factual

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allegations as true, the FAC sufficiently alleges seniority of use.

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C.

Hanginout Has Sufficiently Pled Market Penetration

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Google alleges Hanginout failed to plead specific facts regarding its volume of

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sales and growth trends, the number of persons buying the trademarked product in

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relation to the number of potential purchasers, the amount of advertising prior to June

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2011, and the location of the initial 200 users. MTD at 7. Google further claims

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Hanginout failed to allege use of its mark after May 2011 and specific facts to show it

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continuously used mark in any geographic area. MTD at 8.

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Google ignores the pleading standard, arguing that Hanginout must plead a
summary judgment style motion in the Complaint. As noted above, a Complaint does

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not need to plead every detail or prove every fact that a plaintiff will rely upon at

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trial. Google fails to cite a single case requiring such specificity in pleading market

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penetration. In fact, Google self-servingly ignores that because the HANGINOUT

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Mark includes services, even at the trial state “the use [] need not be extensive or

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‘result in deep market penetration or widespread recognition.” Taylor v. Thomas,

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2013 U.S. Dist. LEXIS 8222 *14 (W.D. Tenn. Jan. 22, 2013) (quoting Allard Enters.,

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Inc. v. Advanced Programming Res., Inc., 146 F.3d 350, 356 (6th Cir. 1998)).

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Instead, Google relies on a case deciding a renewed judgment as a matter of

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law after presentation of all evidence at trial, Optimal Pets, Inc. v. Nutri-Vet, LLC,

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877 F. Supp. 2d 953, 959 (C.D. Cal. 2012). Google’s analysis omits the detailed

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rationale supporting that court’s conclusion that there was insufficient evidence of

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market penetration for purposes of entering judgment as a matter of law after trial.

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The driving force behind the court’s conclusion was four-fold:

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1. The party claiming common law rights “did little, if anything” to
promote its product other than maintain a website;

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2. The party claiming common law rights had no sales in 34 states, sales in

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8 states ranging from $12 to $80, and in the two states with largest sales,

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the sales were confined to a single zip code;

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3. “There was no evidence that would even arguably support a meaningful

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positive growth trend except with regard to a single zip code in

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Missouri,” and

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4. The only credible evidence concerning advertising efforts was

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maintenance of a website.
Id. at 962-64.
Unlike the meager evidence of market penetration in Optimal Pets―e.g., the

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maintenance of a website―Hanginout’s FAC alleges extensive promotional efforts.

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See, e.g., FAC ¶¶ 27, 40, 41. While Google may explore the depths of Hanginout’s

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allegations as litigation and discovery progress, Google may not cherry pick which

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allegations are accepted as true for purposes of this motion.

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Google’s overbroad allegations, such as Hanginout “has not successfully

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alleged market penetration in any single geographic area,” are patently false. For

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example, the FAC alleges, “Hanginout’s HANGINOUT marks have achieved market

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penetration throughout the United States and, at a minimum, in California.” FAC,

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¶40.

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While Google’s efforts to subvert Hanginout’s allegations and credibility are

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premature, Hanginout’s pending Motion for Preliminary Injunction provides ample

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factual support revealing Google’s misplaced argument that Hanginout “cannot”

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establish seniority of use. See Preliminary Injunction, Doc. 12, at 8-15. While such

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evidentiary specificity is not necessary on a Motion to Dismiss because all alleged

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facts must be presumed as true, Hanginout nonetheless has previously provided the

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Court and Google with evidence that its users are nationwide. See Preliminary

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Injunction, Doc. 12, at 5, 11 (noting Hanginout’s smart phone app has been viewed

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over 1,000,000 times by consumers in 112 countries, and by well-known personalities

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such as San Diego Mayoral Candidate Carl DeMaio and Sean “Puff Daddy” Combs).

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Accordingly, Google’s arguments are not only premature, they are demonstrably

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inaccurate.

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II.

HANGINOUT’S COMMON LAW AND STATUTORY UNFAIR
COMPETITION CLAIMS ARE SUFFICIENTLY PLED

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Google fails to provide any support for its request to dismiss Hanginout’s

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unfair competition claims aside from blanket statement that unfair competition is

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“substantially congruent” to a Lanham Act violation. MTD at 8. For the reasons

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advanced above, Google fails to provide meaningful support suggesting Hanginout

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has insufficiently pled its unfair competition claims.

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III.

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ALTERNATIVELY, LEAVE TO AMEND SHOULD BE GRANTED
While Hanginout maintains Google has not properly moved to dismiss, were

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Defendant’s motion to be granted, the liberal pleading rules provide that leave to

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amend should be granted. Fed. R. Civ. P. 15(a)(2). Defendant offers no justification

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for Plaintiff not to be provided leave to amend. Moore v. Kayport Package Express,

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885 F.2d 531, 534 (9th Cir. Cal. 1989) (discussing how lower court granted leave to

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amend first amended complaint after complaint “was stated in general and conclusory

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terms, and was devoid of facts supporting the charges of fraud…”) Additionally, the

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previous exhibits submitted to this Court in support of Hanginout’s preliminary

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injunction establish that Hanginout is likely to establish seniority and market

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penetration.

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IV.

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CONCLUSION
As Google’s motion notes, “courts look to the totality of a party’s actions to

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determine whether the use is sufficient to establish priority.” MTD at 3. Here,

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Hanginout’s FAC alleges ample facts plausibly stating claims for trademark

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infringement and unfair competition. Given Google’s previous receipt of

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Hanginout’s preliminary injunction motion and corresponding exhibits, Google’s

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claim that Hanginout cannot allege seniority and market penetration are, at best, a

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stall tactic. Because Hanginout’s allegations must be accepted as true, Google’s

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motion should be denied.

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Dated: March 21, 2014

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MINTZ LEVIN COHN FERRIS GLOVSKY
AND POPEO PC
By /s/Andrew D. Skale
Andrew D. Skale, Esq.
Ben L. Wagner, Esq.
Justin S. Nahama, Esq.
Attorneys for Plaintiff
HANGINOUT, INC.

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Case No. 3:13-cv-02811-JAH-NLS

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CERTIFICATE OF SERVICE

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I, the undersigned, certify and declare that I am over the age of 18 years,

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employed in the County of San Diego, State of California, and am not a party to the

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above-entitled action.

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On March 21, 2014, I filed a copy of the following document:

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HANGINOUT, INC.’S MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF ITS OPPOSITION TO GOOGLE,
INC.’S MOTION TO DISMISS FIRST AMENDED COMPLAINT

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by electronically filing with the Clerk of the Court using the CM/ECF system which

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will send notification of such filing to the following:
Andrew D. Skale

[e-mail], [e-mail],
[e-mail], [e-mail],
[e-mail], [e-mail]

Benjamin L. Wagner

[e-mail], [e-mail],
[e-mail]

Margaret M. Caruso

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[e-mail],
[e-mail],
[e-mail],
[e-mail]

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Executed on March 21, 2014, at San Diego, California. I hereby certify that I

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am employed in the office of a member of the Bar of this Court at whose direction the

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service was made.

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/s/Andrew D. Skale
Andrew D. Skale, Esq.

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27417511v.1

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Case No. 3:13-cv-02811-JAH-NLS