Hangingout, Inc. v. Google, Inc.

Filing 44

ORDER (Redacted) denying 12 Hanginout's Motion for Preliminary Injunction; and denying 23 Google's Motion to Dismiss the First Amended Complaint for Failure to State a Claim. Google must file an answer to the operative complaint no later than thirty (30) days from the date of this order. Signed by Judge Anthony J. Battaglia on 5/12/14. (cge)

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1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 SOUTHERN DISTRICT OF CALIFORNIA 11 12 HANGINOUT, INC., a Delaware corporation, 13 Plaintiff, 14 v. 15 GOOGLE, INC., a Delaware corporation, 16 Defendant. 17 18 19 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.13cv2811 AJB (NLS) ORDER: (1) DENYING HANGINOUT’S MOTION FOR PRELIMINARY INJUNCTION, (Doc. No. 12); and (2) DENYING GOOGLE’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT, (Doc. No. 23). On November 26, 2013, Hanginout, Inc. (“Hanginout”) filed this action against 20 Google, Inc. (“Google”) alleging trademark infringement, federal unfair competition, and 21 California statutory and common law unfair competition.1 (Doc. No. 1.) In the First 22 Amended Complaint, Hanginout alleges that it has used the HANGINOUT mark in 23 commerce to market its interactive video-response platform since at least March 2010, 24 and that Google’s use of the HANGOUTS mark to market its video-response platform, 25 which is substantially similar if not identical to Hanginout’s product, infringes on 26 Hanginout’s common law trademark rights. (Doc. No. 14.) 27 1 Google filed a motion to dismiss the original complaint on January 10, 2014, 28 (Doc. No. 9), which was deemed moot after Hanginout filed the First Amended Complaint on January 28, 2014, (Doc. No. 14). 1 13cv2811 AJB (NLS) 1 Currently before the Court are Hanginout’s motion for preliminary injunction filed 2 on January 22, 2014, (Doc. No. 12), and Google’s motion to dismiss the First Amended 3 Complaint filed on February 28, 2014, (Doc. No. 23). Hanginout’s motion for prelimi4 nary injunction seeks to enjoin Google from using the HANGOUTS mark on the Internet 5 in connection with its social media platform, either nationwide or limited to California. 6 The Court heard oral argument on both motions on April 25, 2014. (Doc. No. 41.) For 7 the reasons set forth below, the Court DENIES Hanginout’s motion for a preliminary 8 injunction and DENIES Google’s motion to dismiss. 9 BACKGROUND 10 I. Factual Background 11 Hanginout is a technology based Delaware corporation that has developed mobile 12 video and social media based communication products since at least 2009.2 (Doc. No. 14 13 ¶ 10.) At issue in this litigation is Hanginout’s interactive video response platform 14 HANGINOUT, which enables users to create, promote, and sell their own brands by 15 engaging directly with potential customers via pre-recorded video messages and/or video 16 profiles. (Id. at ¶¶ 12–14.) The HANGINOUT platform also includes a “Q&A” 17 function, wherein users can exchange questions and personal video responses from 18 anyone in the application at any time. (Id. at ¶¶ 14–15.) 19 A. 20 Hanginout alleges it adopted the HANGINOUT word and design marks in The HANGINOUT mark 21 connection with its social media based platform as early as November 2008, and that for 22 the first year or so developed business plans and the technological know-how to turn its 23 vision into a reality. (Id. at ¶ 11; Doc. No. 12, Malone Decl. ¶¶ 6, 7, Ex. 1.) Thereafter, 24 beginning in early 2010, Hanginout began marketing the HANGINOUT platform 25 through social media and various partnerships with celebrities and professional athletes. 26 (Doc. No. 4 ¶¶ 16-17.) For example, in March 2010, Hanginout’s company Facebook 27 2 Hanginout incorporated in the state of Delaware in 2011. (Doc. No. 14 at ¶ 1.) 28 Its principal place of business is located at 2712 Jefferson Street, Carlsbad, CA 92008. (Id.) 2 13cv2811 AJB (NLS) 1 profile containing the HANGINOUT mark was uploaded and Hanginout partnered with 2 professional athlete Shawne Merriman to shoot a HANGINOUT promotional video. 3 (Id.) 4 Approximately a year later, in or around March or April 2011, Hanginout alleges 5 that consumers began registering for HANGINOUT profiles via Hanginout’s web-based 6 application and endorsing the product on social-media based platforms such as Twitter 7 and Facebook. (Id. at ¶ 18.) Thereafter, Hanginout alleges it continued to market the 8 HANGINOUT application through various social-media outlets. (Id. at ¶ 19.) By May 9 2011, Hanginout alleges that over 200 customers had registered for and used Version 1.0 10 of the HANGINOUT Q&A web-based platform. (Id. at ¶ 20.) 11 On July 12, 2012, Hanginout filed trademark applications for the HANGINOUT 12 word and design marks with the United States Patent and Trademark Office (“USPTO”). 13 (Id. at ¶ 21.) The USPTO assigned Application Serial No. 85674801 to the 14 HANGINOUT word mark and Application Serial No. 85674799 to the HANGINOUT 15 design mark.3 (Id. at ¶ 22.) Both applications have since been published by the USPTO 16 for opposition. (Id. at ¶ 24.) As of the date of this order, neither trademark is officially 17 registered with the USPTO. Two months later, on September 12, 2012, Hanginout 18 officially launched a HANGINOUT iOS application for its web-based platform on the 19 iTunes App Store. (Doc. No. 12 at 5:2–3, 25; Doc. No. 14 ¶ 27.) Since this date, 20 Hanginout alleges that the HANGINOUT app has received hundreds of thousands of 21 views from individuals across the world, received celebrity media attention, has been 22 downloaded and used by consumers across the United States, and has been featured by 23 Apple in the iTunes application portal. (Doc. No. 12 ¶ 27.) 24 B. 25 By 2009, Google alleges it had already developed an internal version of what later The HANGOUTS Mark 26 became its HANGOUTS product, referring to the prototype as “The Hangout.” (Doc. 27 28 3 Hanginout attached both trademark applications to the First Amended Complaint. (Doc. No. 14, Exs. A, B.) 3 13cv2811 AJB (NLS) 1 No. 30 at 2:24-25, Lachappelle Decl. ¶ 4.) Thereafter, on June 28, 2011, Google made 2 HANGOUTS accessible to the public, including it as one of several products that made 3 up Google+, a social layer that connects many of Google’s products.4 (Doc. No. 30 at 4 2:26-28, Leske Decl. ¶ 3, Exs. 1-2.) Among other features, HANGOUTS allows users to 5 engage in live interactions with other users, including instant messaging and real-time 6 video-conferencing. (Doc. No. 34, Caruso Decl. ¶ 3, Ex. 1; Leske Decl. ¶¶ 3, 6.) 7 HANGOUTS had 50,000 unique registered users the very first day it launched and 8 150,000 unique registered users as of July 8, 2011.5 (Doc. No. 30 at 3:6, Leske Decl. ¶ 3, 9 Ex. 1.) Since HANGOUTS launch, Google contends that users have initiated more than 10 œœœœœœœœœœœœœHANGOUT video conferences and the app version of HANGOUTS has been 11 installed on more than œœœœœœœœœœœœœœœmobile devices. (Id. at 3:6-10, Leske Decl. ¶¶ 5-6.) 12 On April 26, 2013, Google filed an application with the USPTO to register the 13 HANGOUTS mark, which was assigned Application Serial No. 85916316. (Doc. No. 14 14 ¶ 29.) Thereafter, in or around May 2013, Google released the HANGOUTS iTunes 15 application for the App store. (Doc. No. 12 at 7:2-3.) On July 30, 2013, the USPTO 16 suspended Google’s HANGOUTS trademark application after finding that a “pending 17 application(s) may present a bar to registration of the applicant’s mark.” (Doc. No. 12, 18 Malone Decl., Ex. 26.) 19 On September 12, 2013, Google launched Hangouts On Air (“HOA”), which 20 offers users the ability to host interactive conversations with people from around the 21 world. (Doc. No. 29, Ex. 3.) HOA is different from HANGOUTS because HOA is not 22 23 24 4 At oral argument, counsel for Google provided the Court with a time line of 25 Google’s uses of “Hangouts” and “Google+ Hangouts.” This document has been marked at Court’s Exhibit 1. (Doc. No. 42.) 26 5 Google asserts that by June 30, 2011, Google’s official blog post announcing 27 HANGOUTS was viewed more than 460,000 times. (Doc. No. 30, Leske Decl. ¶ 3.) Press reports regarding the release of HANGOUTS immediately followed, including 28 articles and announcements by The New York Times, NBC News, CNN, Fox News, Bloomberg Businessweek, Computer World, Rolling Stone, and PC Magazine. (Id.) 4 13cv2811 AJB (NLS) 1 limited to ten participants and allows the public to view the live feed.6 (Doc. No. 30, 2 Leske Decl. ¶¶ 8–10.) Google alleges that HANGOUTS can be accessed through Gmail, 3 Google+ websites, or through mobile applications available for Android and iOS 4 devices. (Id. at ¶ 28.) 5 DISCUSSION 6 I. Hanginout’s Motion for Preliminary Injunction 7 Hanginout moves to preliminary enjoin Google from using the HANGOUTS mark 8 in its messaging and social media platforms, its Q&A platform, and cease advertising 9 and soliciting the HANGOUTS mark in connection with its messaging platform. 10 Because the parties’ briefing focused solely on Hanginout’s trademark infringement 11 claim under the Lanham Act, the Court does not address Hanginout’s federal unfair 12 competition claim or Hanginout’s statutory and common law unfair competition claims 13 under California law. 14 A. 15 In deciding whether to issue a preliminary injunction, the court must consider: (1) Legal Standard 16 the likelihood of the moving party’s success on the merits; (2) the possibility of irrepara17 ble injury to the moving party if relief is not granted; (3) the extent to which the balance 18 of hardships tips in favor of one party or the other; and (4) whether the public interest 19 will be advanced by granting preliminary relief. Toyo Tire Holdings of Ams. Inc. v. 20 Cont'l Tire N. Am., Inc., 609 F.3d 975, 982 (9th Cir. 2010) (citing Winter v. Natural Res. 21 Def. Council, Inc., 555 U.S. 7, 22, 20 (2008)). “A preliminary injunction is an extraordi22 nary remedy” that may only be granted “upon a clear showing that the plaintiff is entitled 23 to such relief.” Winter, 555 U.S. at 22, 24; Mazurek v. Armstrong, 520 U.S. 968, 972 24 (1997) (“And what is at issue here is not even a defendant’s motion for summary 25 judgment, but a plaintiff’s motion for preliminary injunctive relief, as to which the 26 requirement for substantial proof is much higher.”). The mere possibility that a plaintiff 27 28 6 The live feed is then saved on the host Google+ page and YouTube to allow editing and sharing. (Doc. No. 30, Leske Decl. ¶¶ 8–10.) 5 13cv2811 AJB (NLS) 1 will suffer irreparable injury is insufficient. See Am. Trucking Ass’n, Inc. v. City of L.A., 2 559 F.3d 1046, 1052 (9th Cir. 2009) (stating that following Winter cases suggesting a 3 lower standard “are no longer controlling, or even viable”). 4 B. 5 6 Analysis 1. Likelihood of Success on the Merits To state a claim for trademark infringement under the Lanham Act, 15 U.S.C. § 7 1125(a), a plaintiff must demonstrate that it is: “(1) the owner of a valid, protectable 8 mark, and (2) that the alleged infringer is using a confusingly similar mark.” Herb Reed 9 Enters., LLC v. Fla. Entm't Mgmt, Inc., 736 F.3d 1239, 1247 (9th Cir. 2013) (citing 10 Grocery Outlet, Inc. v. Albertson's, Inc., 497 F.3d 949, 951 (9th Cir. 2007)). 11 12 i. Ownership of a Valid, Protectable Mark To establish common law trademark rights in the absence of federal registration, a 13 plaintiff must plead and prove that it is the senior user of the mark with sufficient market 14 penetration to preclude the defendant from using the mark in a specific geographic 15 market.7 See Sengoku Works Ltd. v. RMC Int'l, Ltd., 96 F.3d 1217, 1219 (9th Cir. 1996) 16 (“To acquire ownership of a trademark it is not enough to have invented the mark first or 17 even to have registered it first; the party claiming ownership must have been the first to 18 actually use the mark in the sale of goods or services.”); Quiksilver, Inc. v. Kymsta 19 Corp., 466 F.3d 749, 761–62 (9th Cir. 2006) (stating that use equated to sales in a 20 specified area); Adray v. Adry-Mart, Inc., 76 F.3d 984, 988 (9th Cir. 1995); Credit One 21 Corp. v. Credit One Fin., Inc., 661 F. Supp. 2d 1134, 1138 (C.D. Cal. 2009) (“A party 22 asserting common law rights must not only establish that it is the senior user, it must also 23 show that it has ‘legally sufficient market penetration’ in a certain geographic market to 24 25 26 27 7 It is undisputed that neither mark—HANGOUTS or HANGINOUT—is registered with the USPTO. Therefore, neither are presumed valid. See Tie Tech, Inc. v. 28 Kinedyne Corp., 296 F.3d 778, 783 (9th Cir. 2002) (stating that registration of a mark carries a “presumption of validity”). 6 13cv2811 AJB (NLS) 1 establish those trademark rights.”).8 Contrary to Plaintiff’s contentions, the Court finds 2 these are two independent determinations—seniority of use and market penetra3 tion—both of which must be satisfied in the absence of federal registration.9 4 5 a. Senior User “It is axiomatic in trademark law that the standard test of ownership is priority of 6 use. To acquire ownership of a trademark it is not enough to have invented the mark 7 first or even to have registered it first; the party claiming ownership must have been the 8 first to actually use the mark in the sale of goods or services.” Brookfield Commc'ns, 9 Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1047 (9th Cir. 1999). Although seniority 10 of use does not require “evidence of actual sales,” Rearden LLC v. Rearden Commerce, 11 683 F.3d 1190, 1205 (9th Cir. 2012), the Ninth Circuit has stated that use of the mark 12 must be “sufficiently public” so that the public identifies the mark with the “adopter of 13 the mark,” Johnny Blastoff, Inc. v. L.A. Rams Football Co., 188 F.3d 427, 433-34 (9th 14 Cir. 1999). In making this determination, a court may rely on the mark’s use and 15 promotion in “ ‘advertising brochures, catalogs, newspaper ads, and articles in newspa16 pers and trade publications,’ as well as in media outlets such as television and radio.” Id. 17 at 434 (quoting T.A.B. Sys. v. Pactel Teletrac, 77 F.3d 1372, 1375 (Fed. Cir. 1996); see 18 8 Hanginout contends that a presumption of nationwide ownership should exist 19 based on Hanginout’s pending federal trademark applications. The Court does not agree. See, e.g., CG Roxane LLC v. Fiji Water Co. LLC, 569 F. Supp. 2d 1019, 1032 (N.D. Cal. 20 2008) (“[S]ince the defendant was using the mark prior to its registration, plaintiff is not entitled to a presumption that the mark is valid.”); Pollution Denim & Co. v. Pollution 21 Clothing Co., 547 F. Supp. 2d 1132, 1139 (C.D. Cal. 2007). 22 23 24 25 26 27 28 9 At oral argument, Hanginout suggested that market penetration in a specific geographic area is not required to assert common law trademark rights in the absence of federal registration. The Court does not agree. It is nonsensical that mere advertising or use of a mark in commerce could be enough to enjoin a junior user from using a similar mark anywhere in the United States—priority of use is limited to the geographic area in which the product at issue is sold. See, e.g., Adray, 76 F.3d at 989 (“The extent of market penetration depends upon the volume of sales, the positive and negative growth trends, the number of people who purchased the party’s goods in relation to the number of potential customers, and the amount of advertising.”); Glow, 252 F. Supp. 2d at 983 (“Generally, the senior user of a mark is entitled to assert trademark rights in all areas in which it has legally sufficient market penetration.”); Optimal Pets, 877 F. Supp. 2d at 958 (“A party asserting common law rights must not only establish that it is the senior user, it must also show that it has ‘legally sufficient market penetration’ in a certain geographic market to establish those trademark rights.”) (internal citation omitted). 7 13cv2811 AJB (NLS) 1 also Brookfield Commc'ns, 174 F.3d at 1036 (stating that trademark rights can vest even 2 before any goods are actually sold if “the totality of [one’s] prior actions, taken together, 3 [can] establish a right to use the trademark”) (internal quotations and citation omitted). 4 Under the framework set forth above, Hanginout contends it is the senior user of 5 the mark based on the totality of the circumstances. Hanginout asserts that by March 6 2010, over a year before Google released Hangouts+ as part of the Google+ platform, 7 and over two years before Google rebranded the platform as purely HANGOUTS, 8 Shawne Meriman shot a HANGINOUT promotional video and Hanginout’s company 9 Facebook page was uploaded. Thereafter, by May 2011, nearly two months before 10 Google’s release of HANGOUTS+, Hanginout asserts that over 200 consumers regis11 tered for and used Version 1.0 of the HANGINOUT Q&A web-based platform. (Doc. 12 No. 12, Malone Decl. ¶ 17.) Hanginout further argues that the marketing campaign for 13 the HANGINOUT platform, all of which utilized the HANGINOUT mark, was aggres14 sively and publicly pursued on a continuous basis beginning in May 2011 via LinedkIn, 15 Twitter, and celebrity YouTube videos. 16 In opposition, Google contends Hanginout cannot possibly be the senior user of 17 the mark based on Hanginout’s own representations to the USPTO. Google argues that 18 on July 12, 2012, more than a year after Google released HANGOUTS, Hanginout filed 19 trademark applications with the USPTO asserting that it first began using the mark in 20 commerce on June 6, 2012.10 (Doc. No. 14 ¶ 22, Exs. A, B.) Therefore, because 21 Hanginout previously represented to the USPTO that it first began using the mark in 22 commerce on June 6, 2012, but now asserts an earlier “first use” date, Google argues 23 Hanginout must prove the earlier first-use date by clear and convincing evidence. See 24 Wells Fargo & Co. v. Stagecoach Props., Inc., 685 F.2d 302, 304 n.1 (9th Cir. 1982).11 25 26 27 10 Google contends it was only after it raised this priority of use argument in its first motion to dismiss that Hanginout amended its complaint. (Doc. No. 14 ¶¶ 17–20.) 11 Both parties agree that under Wells Fargo v. Stagecoach a party must present 28 “clear and convincing” evidence to establish a date prior in time than that represented to the USPTO. (Doc. No. 30 at 7:19-23; Doc. No. 36 at 3:9-11.) 8 13cv2811 AJB (NLS) 1 Representations to the USPTO aside, Google argues Hanginout’s actions fail to 2 establish seniority of use in a nationwide market. Google maintains that similar to 3 Future Domain Corp. v. Trantor Sys. Ltd., No. C930812, 1993 WL 270522, at *8 (N.D. 4 Cal. May 3, 1993), wherein the court found the plaintiff’s advertisement at a large trade 5 show was insufficient to establish seniority of use, here, the only evidence Hanginout 6 provides to support its alleged aggressive marketing campaign prior to June 28, 2011 7 (Google’s alleged first use date), are exhibits showing two promotional YouTube videos, 8 Hanginout’s company Facebook page, an announcement of the HANGINOUT preview 9 launch on LinkedIn, a brief article in a lesser-known tech-blog called Tech Cocktail, and 10 48 tweets on Hanginout’s company Twitter page. (Doc. No. 12 at 3, Malone Decl. ¶¶ 7, 11 11, 12, 15–16; Doc. No. 30, Caruso Decl. ¶¶ 4–5, Exs. 2–5.) However, Google contends 12 none of these alleged advertising tactics are noteworthy because the article in Tech 13 Cocktail received no likes, tweets, or shares; the endorsement on Facebook by Tech 14 Cocktail received only two likes (one of which was from the then COO/CFO of 15 Hanginout); the announcement of the preview on LinkedIn received only one like; and 16 Hanginout’s Twitter feed shows only 48 tweets before June 28, 2011 (18 of which were 17 from Hanginout). As a result, Google contends Hanginout has failed to provide any 18 evidence that a sufficient number of people actually saw or noticed its promotional 19 efforts.12 20 Although the parties ardently dispute whether Google first began using the 21 HANGOUTS mark in commerce as of June 2011, or whether the use did not commence 22 until May 2013, this argument need not be resolved because the Court finds Hanginout 23 first began using the HANGINOUT mark in commerce in or around May 2011—prior to 24 both of Google’s alleged first-use dates.13 Therefore, because more than 200 customers 25 26 27 12 Google asserts that Hanginout’s promotional YouTube videos were poorly viewed. ( Doc. No. 30, Caruso Decl. ¶¶4–5, Exs. 2, 5.) 13 Because Hanginout’s trademark applications stated that the marks were first 28 used in commerce “[a]t least as early as 06/06/2012,” the clear and convincing standard set forth in Wells Fargo does not apply. (Doc. No. 36, Wagner Decl., Exs. 13, 14.) 9 13cv2811 AJB (NLS) 1 had registered for Version 1.0 of Hanginout’s web-based platform as of May 2011, 2 which was then followed by continuous advertising and marketing of the platform under 3 the HANGOUTS mark, this case is markedly different from Future Domain and Chance 4 v. Pac-Bel, both of which were cited by Google. Future Domain v. Trantor, No. 5 C930812, 1993 WL 270522, at *6–10 (N.D. Cal May 3, 1993) (stating that the launch of 6 a mark at a single trade show was insufficient to show priority of use); Chance v. Pac7 Bel, 242 F.3d 1151 (9th Cir. 1988) (finding no priority of use based on postcards that did 8 not generate a single use of services) and, because here, Hanginout has presented 9 evidence of its actual use and marketing of the HANGINOUT mark, in commerce, prior 10 to the first use date of Google’s HANGOUTS mark.14 11 Accordingly, the Court finds Hanginout is the senior user of the marks based on 12 the totality of the circumstances—number of registered users, marketing via social 13 media, and launch of iTunes app in the Apple store to name a few. See Allard Enter14 prises, Inc. v. Advanced Programming Res., Inc., 146 F.3d 350, 358 (6th Cir. 1998) (“As 15 long as there is a genuine use of the mark in commerce, however, ownership may be 16 established even if the first uses are not extensive and do not result in deep market 17 penetration or widespread recognition.”); Dep't of Parks & Recreation v. Bazaar del 18 Mundo Inc., 448 F.3d 1118, 1126 (9th Cir. 2006) (“Although mere advertising by itself 19 may not establish priority of use, advertising combined with other non-sales activity, 20 under our ‘totality of the circumstances test,’ can constitute prior use in commerce.”) 21 (internal citations omitted). 22 b. 23 Market Penetration in a Specific Geographic Area Establishing priority of use however is not in and of itself sufficient to 24 bestow common law trademark rights. To warrant immediate injunctive relief, 25 14 The HANGINOUT app had been viewed more than a million times (90% repeat 26 visits) from users in every state in the U.S. (30,000 from California), it enjoyed tens of thousand of users (including high-profile celebrities and politicians), and had substantial 27 media attention (including ESPN). (Doc. No. 12, Malone Decl. ¶¶ 3-5, 9, 11-17, 20, 23, 24, 26, 27, 29-33, Exs. 2-7, 9, 11-12, 14, 15, 17-19.) Hanginout also contends that of the 28 nearly 300 YouTube views, it generated over 200 customers, thereby equating to a 65% conversion ratio. 10 13cv2811 AJB (NLS) 1 Hanginout must also establish sufficient market penetration in a specified geographic 2 area. See Credit One Corp, 661 F. Supp. 2d at 1138 (“A party asserting common law 3 rights must not only establish that it is the senior user, it must also show that it has 4 ‘legally sufficient market penetration’ in a certain geographic market to establish those 5 trademark rights.”); Optimal Pets, 877 F. Supp. 2d at 958 (“The first to use a mark in an 6 area is deemed the ‘senior’ user and has the right to enjoin ‘junior’ users from using 7 confusingly similar marks in the same industry and market or within the senior user’s 8 natural zone of expansion.”). 9 To determine whether Hanginout has market penetration in an identified geo- 10 graphic area, the court considers: (1) the volume of Hanginout’s sales with regard to the 11 product at issue; (2) the growth trends of the product both positive and negative; (3) the 12 number of persons actually purchasing/registering for the pertinent product in relation to 13 the total number of potential customers; and (4) the amount of advertising with the 14 regard to the product at issue. See Adray, 76 F.3d at 989 (9th Cir. 1995); Optimal Pets, 15 877 F. Supp. 2d at 958. Thereafter, and only if Hanginout can establish market penetra16 tion in a specific geographic area, the Court must then assess whether Hanginout may 17 preclude Google from utilizing the mark within Hanginout’s “natural zone of expan18 sion.” Optimal Pets, 877 F. Supp. 2d at 958; 4 J. Thomas McCarthy, McCarthy on 19 Trademarks and Unfair Competition, § 26:13 (4th ed. 2002) (stating that “in the absence 20 of federal registration, both parties have the right to expand [use of an unregistered 21 mark] into unoccupied territory and establish exclusive rights by being first in that 22 territory. In effect, it is a race between the parties to establish customer recognition in 23 unoccupied territory.”). 24 Here, Hanginout urges the Court to find that its market penetration is either 25 nationwide, or Southern California with a nationwide zone of expansion. In support, 26 Hanginout asserts that: (1) it had a Facebook profile by March 2011; (2) by May 27 2011,over 200 consumers had registered for and used Version 1.0 of the HANGINOUT 28 web-based platform; (3) from September 15, 2012 through December 23, 2013 the 11 13cv2811 AJB (NLS) 1 HANGINOUT smart phone application had 30,000 visits from California15 consumers, 2 7,000 visits from New York consumers, 3,500 visits from Florida consumers, 2,700 3 visits from Michigan consumers, 2,600 visits from Texas consumers, and a ranging 4 number of visits from consumers in the remaining states; (4) nearly 8,000 individuals 5 had registered for the HANGINOUT iTunes application by the filing of the preliminary 6 injunction; and (5) various celebrities and politicians have created HANGINOUT 7 accounts and published content utilizing the HANGINOUT platform. (Doc. No. 12 at 8 10–11; Malone Decl. ¶¶ 10, 20, 17, 32, Exs. 9, 19.) Therefore, Hanginout contends that 9 because it offered and marketed its computer-based services under the HANGINOUT 10 mark via its website and iTunes application, its customers, and therefore its market 11 penetration, is nationwide. 12 In response, Google contends Hanginout has failed to submit any evidence of its 13 actual market penetration in a specific area, and use of a mark over the Internet does not 14 automatically implicate a nationwide market. In support, Google relies on Glow Indus., 15 Inc. v. Lopez, 252 F. Supp. 2d 962, 984 (C.D. Cal. 2002) (finding no market penetration 16 because the plaintiff had presented no evidence of the “volume or level of sales in any 17 location, nor how [the plaintiff’s] market penetration compares with that of competi18 tors”); Credit One Corp. v. Credit One Fin., Inc., 661 F. Supp. 2d 1134, 1137 (C.D. Cal. 19 2009) (stating that the plaintiff failed to show market penetration in areas where an 20 office had closed and there was no basis for which to believe sales had occurred); and 21 Optimal Pets, 877 F. Supp. 2d 953, 962 (C.D. Cal. 2012) (finding no market penetration 22 because the plaintiff had no sales in 34 states, in 8 of the 16 states where there were sales 23 24 25 26 27 15 The California data can be further broken down as follows: Los Angeles (4,456 28 visits), Carlsbad (4,191 visits), and San Diego (3,726 visits). (Doc. No. 12, Malone Decl. ¶ 45, Ex. 28.) 12 13cv2811 AJB (NLS) 1 those sales were under $80, and the two states with “big ticket” sales all originated in a 2 single zip code).16 3 The Court finds the cases relied upon by Google instructive, and Hanginout’s 4 failure to present any evidence as to the actual location of its registered users dispositive. 5 First, with regard to total sales, or in this case registered users, although Hanginout 6 represented that it had over 200 registered users of its web-based platform as of May 7 2011, and nearly 8,000 registered users of its iTunes application as of the filing of the 8 preliminary injunction, Hanginout has never identified the state of residence of these 9 alleged registered users.17 See Optimal Pets, 877 F. Supp. 2d at 962 (“Thus, a sale to a 10 customer through the internet will be considered a sale in the geographical area in which 11 the customer is located.”).18 Hanginout’s evidence of “site visits” fairs no better.19 12 Although this evidence pins down the state (and city within California) of the consumer 13 that viewed Hanginout’s mobile profile, the Court is at a loss as to how these statistics 14 15 16 17 17 The Optimal Pets court further noted that there was a “downward trend” in sales, no evidence of “actual vis-á-vis potential purchasers,” and no evidence of 16 “continued” marketing or advertising from 2004 through 2008. Id. at 963–64. Hanginout conceded this point at oral argument, stating that they are not required to identify the location of their users to attain common law trademark rights. As 18 stated below, the Court does not agree, and finds the location of Hanginout’s users key to fashioning an injunction. 19 18 Hanginout provided a print-out from Apple to document the total number of 20 individuals who registered for the HANGINOUT iTunes application in 2012 and 2013. (Doc. No. 12, Malone Decl., Ex. 28.) However, this document shows that of the 9,534 21 individuals who downloaded the application in 2012, only 6,926 resided in the United States; and of the 2,306 individuals who downloaded the application in 2013, only 1,235 22 resided in the United States. (Id.) The document never specifies the specific geographic residence within the United States of each registered user. (Id.) Furthermore, Hanginout 23 did not provide any evidence, other than the Malone Declaration, of the 200 users that registered for its web-based platform in May 2011. (Id.) 24 19 Hanginout attached a Google Analytic Report showing that between September 25 15, 2015 and December 23, 2012, 61,601 total individuals visited/clicked on HANGINOUT Mobile. (Doc. No. 12, Malone Decl., Ex. 17.) This information further 26 breaks down the number of visits between and among the various states in the United States, showing visits from every state with the highest number of visits from California 27 (29,985), New York (7,056), Florida (3,506), Michigan (2,701), Texas (2,629), Colorado (1,283), and Illinois (1,094). (Doc. No. 12, Malone Decl., Ex. 19.) Although the total 28 number of visits is 71,503, the Court disregards visits from individuals outside the United States. 13 13cv2811 AJB (NLS) 1 identify the location of Hanginout’s registered users. Therefore, although evidence of 2 site visits shows that consumers are actually looking at Hanginout’s website and/or 3 products, and supports Hanginout’s seniority of use argument, it is insufficient to show 4 actual sales/registration for Hanginout’s product necessary to establish market penetra5 tion. 6 Second, with regard to actual growth trends of the product at issue, although 7 Hanginout never specifically commented on this factor, the Court finds the evidence 8 submitted by Hanginout speaks for itself. For example, the Google Analytic Audience 9 Overview report shows a dramatic decline in the overall number of views of the 10 HANGINOUT application, with the number of visits the highest in or around October 11 2012, then nearly flat-lining in or around October 2013. (Doc. No. 12, Malone Decl., 12 Ex. 17.) This analysis is then confirmed by sales statistics that were reported to 13 Hanginout by iTunes. (Doc. No. 12, Malone Decl., Ex. 28.) These sales reports indicate 14 that 6,926 individuals downloaded the HANGINOUT application in 2012, and that 1,235 15 individuals downloaded the HANGINOUT application in 2013. (Id.) This represents a 16 82.17% decline in the number of registered users, or 5,691 fewer registered users from 17 2012 to 2013. (Id.) Therefore, based on these statistics, all of which were produced by 18 Hanginout, there appears to be a negative growth trend for the HANGINOUT product. 19 See Optimal Pets, 877 F. Supp. 2d at 963. 20 Third, with regard to the actual number of consumers actually purchas- 21 ing/registering for the product in relation to the total number of potential consumers, 22 Hanginout once again did not produce or direct the Court to any evidence indicative of 23 this factor. Instead, the only evidence the Court is left to consider is that 6,926 individu24 als registered for the HANGINOUT iTunes application in 2012, 1,235 individuals 25 registered for the HANGINOUT iTunes Application in 2013, and that 61,601 individuals 26 viewed HANGINOUT Mobile between September 2012 and December 23, 2013. 27 However, as these numbers do not directly overlap, nor did Hanginout present any 28 14 13cv2811 AJB (NLS) 1 evidence regarding its market share, this weighs against finding Hanginout had sufficient 2 market penetration to warrant immediate injunctive relief. 3 However, with regard to marketing and advertising, Hanginout fares much better. 4 Hanginout contends that as early as 2009, it began utilizing various means to market and 5 advertise the HANGINOUT web-based platform. For example, Hanginout asserts that 6 by March 2010, it began partnering with celebrities and professional athletes to create 7 HANGINOUT profiles for their interactive social-media platforms. These individuals 8 included Kassim Osgoode (NFL), Shawne Meriman (NFL), Ritchie Brusco (X-Games), 9 DJ Chuckie (DJ), Eric Griggs (Music Producer), Miles McPhereson (Pastor at the Rock 10 Church and former NFL player), Mike Hill (ESPN), Daphne Joy (Actress/Model), 11 Jessica Burciaga (Model), Amanda Cerny (Model), Da Internez (Music Producers), and 12 Belmont Lights (Band). (Doc. No. 12, Malone Decl. ¶ 10, Ex. 2.) Hanginout further 13 contends that these efforts were supplemented by announcements on Twitter, LinkedIn, 14 and the release of YouTube videos detailing key elements of the HANGINOUT plat15 form. (Doc. No. 12, Malone Decl. ¶¶ 11, 13-14.) Thereafter, on October 24, 2011, San 16 Diego mayoral candidate Carl DeMaio utilized HANGINOUT to create a “virtual town 17 hall” for his campaign, and on July 6, 2012, professional skateboarder Ritchie Brusco 18 launched an application utilizing the HANGINOUT platform. (Id. at ¶ 22, Ex. 11.) 19 Hanginout further contends that ESPN ran an article about the Brusco application in 20 conjunction with the upcoming X-Games, (Id. at ¶ 23, Ex. 12), and that on September 16, 21 2012, Hanginout officially launched a HANGINOUT application in the iTunes App store 22 and Apple elected to feature the HANGINOUT app as one of its social-media based 23 applications. (Id. at ¶ 24.) 24 Although the Court finds the evidence presented above exemplifies Hanginout’s 25 marketing and intent to use the HANGINOUT mark in commerce, none of the evidence 26 is sufficient to support a finding of market penetration in a specific geographic market. 27 Therefore, because marketing and advertising is but one factor to consider in determin28 ing market penetration of an unregistered mark, without evidence as to the actual 15 13cv2811 AJB (NLS) 1 location of Hanginout’s registered users, the Court cannot determine Hanginout’s market 2 penetration. See Charles Jacquin Et Cie, Inc. v. Destileria Serralles, Inc., 921 F.2d 467, 3 472 (3d Cir. 1990) (“The proper geographic scope of an injunction in a trademark 4 infringement case is determined by examining the market penetration of the mark.”). 5 Accordingly, although the Court is cognizant of the complexities posed by the use of 6 Internet, the Court does not agree with Hanginout that marketing, advertising, and 7 promoting an unregistered mark over the Internet is sufficient to find nationwide market 8 penetration. The Court also does not agree with Hanginout that it has sufficient market 9 penetration in Southern California by virtue of the location of its office and/or the 10 number of site views originating out of Southern California. 11 As a result, the Court finds Hanginout had not presented sufficient evidence to 12 permit the Court to determine its market penetration in a specific geographic area, and as 13 a result, the Court need not consider Hanginout’s natural zone of expansion. See, e.g., 14 Optimal Pets, 877 F. Supp. 2d at 962 (quoting Brian L. Berlandi, What State Am I In?: 15 Common Law Trademarks on the Internet, 4 Mich. Telecomm. & Tech. L. Rev. 105, 16 123–24 (1998) (“[T]he limits of territorial protection for a common law mark become 17 much more difficult to define once that mark is placed on the Internet . . . mostly due to 18 the apparent lack of ‘boundaries’ on the Internet.”); Echo Drain v. Newsted, 307 F. Supp. 19 2d 1116, 1128 (C.D. Cal. 2003) (“Although Echo Drain has a website, Echo Drain offers 20 no evidence that people outside of the Dallas–Fort Worth area have accessed the 21 website, downloaded performances from the website, or even posted messages to the 22 website.”); Pure Imagination, Inc. v. Pure Imagination Studios, Inc., No. 03 C 6070, 23 2004 WL 2967446, at *12 (N.D. Ill. Nov. 15, 2004) (“Studios has failed to offer any 24 specificity as to its activity in any markets in which it alleges priority rights.”); Alliance 25 for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (“A preliminary 26 27 28 16 13cv2811 AJB (NLS) 1 injunction is an extraordinary remedy never awarded as of right.”) (internal citations 2 omitted).20 3 4 ii. Likelihood of Confusion Although the Court has determined that Hanginout has not shown market penetra- 5 tion in a specific geographic area, the Court will nonetheless examine whether Google’s 6 use of the HANGOUTS mark will likely confuse the consuming public as to the source 7 of the parties’ products. A court considers eight factors to determine if there is a 8 likelihood of confusion: 9 10 11 (1) strength of the mark, (2) proximity of the goods, (3) similarity of the marks, (4) evidence of actual confusion, (5) marketing channels used, (6) type of goods and the degree of care likely to be exercised by the purchaser, (7) defendant's intent in selecting the mark, and (8) likelihood of expansion of the product lines. 12 AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348–49 (9th Cir. 1979). 13 A court need not address all eight factors, nor must the plaintiff establish that each 14 weighs in its favor to establish a likelihood of confusion. See C & C Org. v. AGDS, Inc., 15 676 F. Supp. 204, 206 (C.D. Cal. 1987); Network Automation, Inc. v. Advanced Sys. 16 Concepts, Inc., 638 F.3d 1137, 1145 (9th Cir. 2011) (“The Sleekcraft factors are 17 intended as an adaptable proxy for consumer confusion, not a rote checklist.”); 18 Dreamwerks Prod. Grp., Inc. v. SKG Studio, 142 F.3d 1127, 1129 (9th Cir. 1998) (“The 19 factors should not be rigidly weighed; we do not count beans.”); Eclipse Assoc. Ltd. v. 20 Data Gen. Corp., 894 F.2d 1114, 1118 (9th Cir.1990) (“These tests were not meant to be 21 requirements or hoops that a district court need jump through to make the determina22 tion.”). The Court addresses the Sleekcraft factors in the order presented by Hanginout. 23 24 a. Proximity or Relatedness of the Goods “Related goods are those ‘products which would be reasonably thought by the 25 buying public to come from the same source if sold under the same mark.’ ” Sleekcraft, 26 27 20 The Court finds Hanginout’s citation to Taylor v. Thomas, No. 2:12-CV-02309-JPM, 2013 WL 228033, (W.D. Tenn. Jan. 22, 2013) unavailing. The 28 issue in Taylor was not whether the plaintiff had established sufficient use in a particular market, but whether ownership of a mark could be based on an assignment. 17 13cv2811 AJB (NLS) 1 599 F.2d at 348, n.10 (quoting Standard Brands, Inc. v. Smidler, 151 F.2d 34, 37 (2d Cir. 2 1945)); see also 4 J. McCarthy, McCarthy on Trademarks and Unfair Competition, § 3 24.24 (4th ed. 2002) (“Goods are ‘related’ if consumers are likely to mistakenly think 4 that the infringer’s goods come from the same source as the senior user’s goods or are 5 sponsored or approved by the senior user.”). “[T]he danger presented is that the public 6 will mistakenly assume there is an association between the producers of the related 7 goods, though no such association exists.” Sleekcraft, 599 F.2d at 350. Proximity of 8 goods is measured by whether the products are: (1) complementary; (2) sold to the same 9 class of purchasers; and (3) similar in use and function. Id. 10 Hanginout contends the products offered by Hanginout and Google directly 11 overlap because they are both social-media based platforms offering the same services 12 through the iTunes app store. To support this contention, Hanginout compares its 13 pending trademark application, which lists computer application software, telecommuni14 cation services, audio, text, and video broadcasting, electronic messaging services, and 15 providing online forums for communication as the marks uses, with information obtained 16 from Google’s website, wherein Google describes the HANGOUTS Q&A platform as 17 allowing users to solicit questions from concurrent viewers, select and answer live 18 questions, and timestamp a YouTube recording by marking questions as they are 19 answered. 20 In opposition, Google contends that although the products contain some similar 21 functions within the broad category of video communications, the purposes and func22 tions of the products are neither identical nor interchangeable. For example, whereas 23 HANGOUTS allows real-time, live video-conferencing, instant messaging, and other 24 communications among multiple parties, HANGINOUT is merely a platform for posting 25 and viewing pre-recorded video messages or video profiles. Furthermore, Google 26 maintains that contrary to Hanginout’s contentions, there is no such thing as the HANG27 OUTS Q&A application, instead HANGOUTS Q&A is a feature of Google’s HANG28 OUTS ON AIR, which the host can turn on or off. Therefore, because the Q&A feature 18 13cv2811 AJB (NLS) 1 is only related to HANGOUTS ON AIR, which is not the basis of this litigation, Google 2 argues the Q&A feature of HANGOUTS ON AIR is irrelevant. 3 Although the Court finds Google and Hanginout offer similar products under the 4 HANGOUTS and HANGINOUT marks, the Court finds the products have distinct 5 differences that change the functionality of the products. Therefore, because Hanginout 6 did not respond to Google’s contention that the products are necessarily different based 7 on the fact that HANGOUTS offers real-time capabilities whereas HANGINOUT only 8 offers pre-recorded messaging and video features, this factor does not weigh in favor of 9 finding a likelihood of confusion. 10 11 b. Similarity of the Marks “[T]he more similar the marks in terms of appearance, sound, and meaning, the 12 greater the likelihood of confusion.” Brookfield, 174 F.3d at 1054. “Where the two 13 marks are entirely dissimilar, there is no likelihood of confusion.” Id. “Similarity of the 14 marks is tested on three levels: sight, sound, and meaning. Each must be considered as 15 they are encountered in the marketplace.” Sleekcraft, 599 F.2d at 351 (citations omit16 ted). 17 Here, Hanginout contends that the marks at issue—HANGINOUT and HANG- 18 OUTS—are nearly identical in sight, sound, and meaning, and therefore, this factor 19 weighs in favor of finding a likelihood of confusion. See, e.g. Banff, Ltd. v. Federated 20 Dep’t Stores, Inc., 841 F.2d 486, 491 (2d Cir. 1988) (finding a likelihood of confusion 21 between B WEAR and BEE WEAR for women’s clothing); Baker v. Simmons Co., 307 22 F.2d 458, 465 (1st. Cir. 1962) (finding SIMMONS and SIMMONS essentially identical 23 in sound). As would be expected, Google does not agree. Instead, Google maintains the 24 marks are significantly different because unlike Banff and Baker, the two decisions cited 25 by Hanginout, the marks are not phonetically identical. Google argues that whereas 26 HANGOUTS has two syllables, is plural, and is a noun; HANGINOUT has three 27 syllables, is singular, and describes an activity. These nonsensical arguments aside, 28 Google argues that given the actual appearance of the marks in commerce, in that the 19 13cv2811 AJB (NLS) 1 Google name appears next to or close to any reference to HANGOUTS, no consumer is 2 likely to be confused as to the product’s origin. 3 Although the Court finds Google’s final contention persuasive, in that marks must 4 be considered as they will be encountered in the marketplace, Lindy Pen Co., v. Bic Pen 5 Corp., 725 F.2d 1240, 1245 (9th Cir. 1984), the Court also finds that the marks are 6 relatively similar in sight, sound, and meaning. Thus, although the marks have different 7 design features associated with the words that define them, courts have found that where 8 a trademark includes a combination of words and a design, “the word is normally 9 accorded greater weight[] because it would be used by purchasers to request the goods.” 10 L.C. Licensing, Inc. v. Cary Berman, 86 U.S.P.Q.2d 1883, 2008 WL 835278, at *3 11 (T.T.A.B. 2008); see also Herbko Int'l v. Kappa Books, 308 F.3d 1156, 1165 (Fed. Cir. 12 2002) (“The words dominate the design feature.”). Accordingly, although Hanginout has 13 not presented any evidence of actual consumer confusion (as detailed below), the Court 14 finds this factor weighs slightly in favor of Hanginout. 15 16 c. Marketing Channels Used “Convergent marketing channels increase the likelihood of confusion.” Sleekcraft, 17 599 F.2d at 353 (finding that confusion is likely due to the fact that both parties adver18 tised in niche markets, including boat shows, speciality retail outlets, and trade maga19 zines). “However, this factor becomes less important when the marketing channel is less 20 obscure.” Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 21 1151 (9th Cir. 2011). Where both parties utilize the Internet to market the products at 22 issue, the Ninth Circuit has found this factor carries little weight in the likelihood of 23 confusion calculation. See Playboy Enters., Inc. v. Netscape Commc'ns Corp., 354 F.3d 24 1020, 1028 (9th Cir. 2004) (“Given the broad use of the Internet today, the same could 25 be said for countless companies. Thus, this factor merits little weight.”). 26 Here, although Hanginout urges the Court to find that this factor weighs in favor 27 of finding a likelihood of consumer confusion because there is a limited number of 28 iTunes app store applications, the Court finds Network Automation and Playboy control20 13cv2811 AJB (NLS) 1 ling. Therefore, Google and Hanginout’s shared use of the Internet and iTunes app store 2 to market their respective products weighs against a likelihood of confusion. 3 4 d. Strength of the Plaintiff’s Mark “The stronger a mark—meaning the more likely it is to be remembered and 5 associated in the public mind with the mark’s owner—the greater the protection it is 6 accorded by the trademark laws.” Brookfield, 174 F.3d at 1058. Strength of a given 7 mark is determined by measuring conceptual strength and commercial strength. Network 8 Automation, 638 F.3d at 1149. “Conceptual strength involves classification of a mark 9 ‘along a spectrum of generally increasing inherent distinctiveness as generic, descriptive, 10 suggestive, arbitrary, or fanciful.’ ” Id. (quoting Brookfield, 174 F.3d at 1058). “A 11 mark’s conceptual strength depends largely on the obviousness of its connection to the 12 good or service to which it refers.” Fortune Dynamic, Inc. v. Victoria's Secret Stores 13 Brand Mgmt., Inc., 618 F.3d 1025, 1032–33 (9th Cir. 2010). Once a mark has been 14 placed on the conceptual strength spectrum, the court must then assess the marks 15 commercial strength, i.e., whether the mark has actual “marketplace recognition.” 16 Brookfield, 174 F.3d at 1058 (stating that large advertising expenditures can transform a 17 suggestive mark into a strong mark).21 18 Hanginout contends its marks are suggestive, if not stronger, because a “mental 19 leap” is required to get from the term HANGINOUT to the product’s features. See 20 Network Automation, 638 F.3d at 1149 (“If a mental leap between the word and the 21 product’s attribute is not almost instantaneous, this strongly indicates suggestiveness, not 22 direct descriptiveness.”). Hanginout further argues that Google has admitted that the 23 HANGINOUT mark is inherently distinctive because Google identified the mark on its 24 trademark list as “HanginoutTM Messaging Service.”22 However, besides these two 25 points, Hanginout does not address either marks commercial strength. In opposition, 26 21 Hanginout confirmed at oral argument that this is not a reverse confusion case, 27 which would necessitate a different analysis. 28 22 Hanginout argues that designating a mark with a TM is an admission that the mark is distinctive. 21 13cv2811 AJB (NLS) 1 Google asserts that the HANGINOUT mark is weak and the HANGOUTS mark is 2 strong, which can be exemplified by the market penetration and actual use of the 3 respective marks. Google further argues that Hanginout has an erroneous understanding 4 of the meaning of the TM symbol, in that the symbol reflects common law trademark 5 rights not inherent distinctiveness. 6 The Court finds it telling that Hanginout failed to identify or discuss the commer- 7 cial strength of the HANGINOUT mark, which is key to determining whether Google’s 8 marketing and advertising has resulted in a “saturation in the public awareness of 9 [Hanginout’s] mark,” thereby reducing Hanginout’s marketplace recognition. A & H 10 Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 231 (3d Cir. 2000). 11 However, based on the evidence presented to the Court, it is apparent that Google has 12 spent substantial time and substantial monies developing and promoting HANGOUTS, 13 which has an installed base of millions of users.23 Google has further represented that 14 the HANGOUTS product has been featured by prominent magazines and websites, and 15 that Google has invested substantial resources in media costs for advertising.24 In 16 contrast, Hanginout has failed to present any evidence as to the amount of money 17 expended to develop, market, and/or promote HANGINOUT, and the only evidence of 18 Hanginout’s growth trends shows a 82% drop in the number of individuals who regis19 tered for the HANGINOUT iTunes application from 2012 to 2013. 20 Therefore, although the parties ardently dispute the marketplace recognition of 21 their respective products, seemingly engaging in a popularity contest based on who 22 utilized their products (Dalai Lama for Google and Shawne Merrriman for Hanginout), 23 the Court finds Google is likely to overwhelm Hanginout’s product line if the products 24 are in competition with one another in the market due to Google’s marketplace recogni25 tion. See Cohn v. Petsmart, Inc., 281 F.3d 837, 841 (9th Cir. 2002) (“Petsmart’s 26 extensive advertising gives it the ability to overwhelm any public recognition and 27 23 For exact figures see Google’s sealed opposition. (Doc. No. 34 at 1:20-25.) 24 For exact figures see Google’s sealed opposition. (Doc. No. 34 at 23-24.) 28 22 13cv2811 AJB (NLS) 1 goodwill that Cohn has developed in the mark.”). However, because the parties did not 2 present any evidence as to how crowded the market actually is, and Hanginout cannot 3 claim a right to all variants of the phrase in the given market, this factor does not weigh 4 in favor of finding a likelihood of consumer confusion. See SunEarth, Inc. v. Sun Earth 5 Solar Power Co., Ltd., 846 F. Supp. 2d 1063, 1078 (N.D. Cal. 2012), appeal dismissed 6 (Apr. 18, 2012) (recognizing that where the marks share a word or phrase but are 7 otherwise different, the plaintiff is not permitted to claim a right to all variant of the 8 phrase in a specific market). 9 10 e. Evidence of Actual Confusion “[A] showing of actual confusion among significant numbers of consumers 11 provides strong support for the likelihood of confusion.” Playboy, 354 F.3d at 1026 12 (citing Thane Int'l, Inc. v. Trek Bicycle Corp., 305 F.3d 894, 902 (9th Cir. 2002)) 13 (“Evidence of actual confusion constitutes persuasive proof that future confusion is 14 likely . . . If enough people have been actually confused, then a likelihood that people are 15 confused is established.”). “Actual confusion is not necessary to a finding of likelihood 16 of confusion under the Lanham Act.” Academy of Motion Picture Arts & Sciences v. 17 Creative House Promotions, Inc., 944 F.2d 1446, 1456 (9th Cir. 1991) (citing Am. Int'l 18 Grp., Inc. v. Am. Int'l Bank, 926 F.2d 829, 832 (9th Cir. 1991)). Indeed, “[p]roving 19 actual confusion is difficult . . . and the courts have often discounted such evidence 20 because it was unclear or insubstantial.” Sleekcraft, 599 F.2d at 352. 21 Here, Hanginout tries to articulate a basis for actual confusion when none in fact 22 exists. Therefore, the Court finds this factor should be accorded no weight.25 See 23 Network Automation, 638 F.3d at 1151 (“Therefore, while this is a relevant factor for 24 determining the likelihood of confusion in keyword advertising cases, its importance is 25 diminished at the preliminary injunction stage of the proceedings.”); Rearden, 597 F. 26 27 25 Hanginout’s only evidence of actual confusion is that consumers have used the phrase “Hanging out” and “Hangout” when referring to the HANGINOUT platform. 28 However, Hanginout does not connect these references to Google’s HANGOUTS mark. (Doc. No. 12 at 20:18-23.) 23 13cv2811 AJB (NLS) 1 Supp. 2d at 1023, 1023 n.9 (stating that, while courts outside of the Ninth Circuit may 2 consider confusion by others relevant, the Ninth Circuit’s “precedents clearly hold that 3 the key inquiry is confusion of prospective purchasers”). 4 5 f. Degree of Care Likely Exercised by Purchasers “Low consumer care . . . increases the likelihood of confusion.” Playboy, 354 6 F.3d at 1028. “In assessing the likelihood of confusion to the public, the standard used 7 by the courts is the typical buyer exercising ordinary caution . . . . When the buyer has 8 expertise in the field, a higher standard is proper though it will not preclude a finding 9 that confusion is likely. Similarly, when the goods are expensive, the buyer can be 10 expected to exercise greater care in his purchases; again, though, confusion may still be 11 likely.” Sleekcraft, 599 F.2d at 353 (citations omitted). 12 Here, Hanginout argues that because the products at issue are inexpensive (or for 13 that matter free), it is likely that consumers are likely to register for the products without 14 doing significant investigation. In opposition, Google contends that Hanginout has 15 presented no evidence of the degree of sophistication of its customers, and that such an 16 inference can not be made purely on the basis that the products are offered free of 17 charge. Google also contends that because consumers will most likely select a product 18 that their friends, family, and/or acquaintances are also using (or will be using), this 19 factor does not automatically weigh in favor of Hanginout. Finally, Google contends 20 that because viruses and spyware can potentially be included in free software, it cannot 21 be assumed that the average consumer takes minimal care in downloading free software. 22 Although Google’s final point is without merit, as Apple pre-screens all applica- 23 tions offered on the iTunes app store (either free or at a cost), the Court finds Google’s 24 first two points raise valid arguments. As recently explained by the Ninth Circuit in 25 Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1176 (9th Cir. 2010), when 26 examining consumer confusion in the context of products offered over the Internet, the 27 “relevant marketplace is the online marketplace, and the relevant consumer is a reason28 ably prudent consumer accustomed to shopping online . . . . Unreasonable, imprudent 24 13cv2811 AJB (NLS) 1 and inexperienced web-shoppers are not relevant.” Id. As a result, although it is true 2 that courts originally presumed a low degree of care exercised by Internet consumers, the 3 Ninth Circuit has cautioned against such a conclusory analysis and instructed lower 4 courts to consider the “nature and the cost of the goods, and whether the products being 5 sold are marketed primarily to expert buyers.” See Network Automation, 638 F.3d at 6 1152 (citing Brookfield, 174 F.3d at 1060). 7 Accordingly, taking all of these factors into consideration: (1) the heightened 8 degree of care of Internet consumers; (2) the fact that both products are offered free of 9 charge; and (3) the fact that the applications offered via the iTunes app store indicated 10 the source of the application, i.e., whether the application was offered by Google or 11 Hanginout, the Court finds Hanginout has not presented sufficient evidence to support a 12 finding that this factor weighs in favor of a likelihood of confusion. 13 14 g. Intent “When the alleged infringer knowingly adopts a mark similar to another’s, 15 reviewing courts presume that the defendant can accomplish his purpose: that is, that the 16 public will be deceived.” Sleekcraft, 599 F.2d at 354. However, the Ninth Circuit has 17 cautioned lower courts that this factor must be considered in light of whether the defen18 dant’s use of the trademark was to mislead consumers rather than truthfully inform them 19 of their choice of products. See Network Automation, 638 F.3d 1153. 20 Hanginout contends Google intentionally adopted the HANGOUTS mark with full 21 knowledge of the HANGINOUT mark because Google received the suspension notice 22 from the USPTO of their trademark application on July 30, 2013, but nevertheless 23 proceeded to launch the HANGOUTS iTunes application on September 12, 2013. 24 Hanginout further argues that considering the shear size of Google, and the number of 25 researchers, employees, and attorneys that work for Google, it seems highly improbable 26 that Google had no knowledge of the HANGINOUT mark prior to releasing its HANG27 OUTS iTunes application. In response, Google contends that its actions are not automat28 ically indicative of bad faith because even after the USPTO alerted it of the existence of 25 13cv2811 AJB (NLS) 1 Hanginout’s pending trademark application in July 2013, it nonetheless believed it had 2 superior common law rights and intended to challenge the mark. 3 Although the date Google submitted its trademark application for HANGOUTS 4 closely correlates with the date Hanginout successfully had a third-party mark for 5 HANGOUTS suspended due to lack of use, the Court does not find that Google adopted 6 the HANGOUTS mark with the intent to deceive consumers. Thus, to the extent Google 7 believed it had superior common law trademark rights, the Court finds this fact does not 8 weigh in favor of finding a likelihood of confusion. See SecuraComm Consulting, Inc. v. 9 Securacom Inc., 166 F.3d 182, 188 (3d Cir. 1999) 10 11 h. Likelihood of Expansion of the Product Line “In asmuch as a trademark owner is afforded greater protection against competing 12 goods, a ‘strong possibility’ that either party may expand his business to compete with 13 the other will weigh in favor of finding that the present use is infringing. When goods 14 are closely related, any expansion is likely to result in direct competition.” Sleekcraft, 15 599 F.2d at 354 (citations omitted). However, where two companies “already compete to 16 a significant extent,” this factor is unimportant. Brookfield, 174 F.3d at 1060; See 17 Network Automation, 638 F.3d 1153. 18 Hanginout contends that Google intends to directly compete with Hanginout in the 19 social-media arena, and therefore, expansion is an established fact. In opposition, 20 Google contends that Hanginout’s assertions should be afforded little weight because 21 Hanginout has failed to present any evidence that either Google or Hanginout plans to 22 expand into a different product areas. See Instant Media, Inc. v. Microsoft Corp., No. C 23 07-02639 SBA, 2007 WL 2318948, at * 17 (N.D. Cal. Aug. 13, 2007) (“Nevertheless, in 24 the absence of any concrete evidence that Microsoft plans to use the i’m mark in 25 connection with the sort of product that would compete with the I'M player, this factor 26 weighs slightly in Microsoft’s favor.”). 27 The Court agrees with Google that Hanginout has failed to present any evidence 28 that it plans to expand into real-time video conferencing and messaging services, thereby 26 13cv2811 AJB (NLS) 1 merging into and offering services/products in competition with Google. As a result, the 2 Court finds this factor neither weighs in favor or against a finding of likelihood of 3 consumer confusion. 4 Accordingly, after taking all the Sleekcraft factors into consideration, the Court 5 finds Hanginout has failed to show that consumers will likely be confused by the two 6 products at issue based on the evidence presently before the Court. This determination 7 was made with special consideration to: (1) the strength of the marks; (2) evidence of 8 actual confusion; (3) the type of goods and degree of care likely to be exercised by the 9 purchaser; and (4) the labeling and appearance of the marks when offered to consumers 10 through the iTunes app store. 11 12 2. Irreparable Harm In addition to the factors outlined above, a plaintiff must establish irreparable 13 harm to be entitled to immediate injunctive relief, i.e., that the plaintiff is unlikely to be 14 made whole by an award of monetary damages or some other legal remedy within the 15 ordinary course of litigation.26 See Am. Trucking Associations, 559 F.3d at 1059. 16 Speculative future harm is insufficient. See Herb Reed Enters., 736 F.3d at 1250 (stating 17 that the record below failed to support a finding of irreparable harm in the absence of 18 evidence that such harm was likely rather than speculative); see also Mortgage Elec. 19 Registration Sys. v. Brosnan, No. C 09-3600, 2009 WL 3647125, at *8, (N.D. Cal. Sept. 20 4, 2009) (citing Stuhlbarg Intern. Sales Co., Inc. v. John D. Brush and Co., Inc., 240 21 F.3d 832, 841 (9th Cir. 2001)) (“The potential loss of good will or the loss of the ability 22 to control one’s reputation may constitute irreparable harm for purposes of preliminary 23 injunctive relief.”). Moreover, where there is a delay in time between the defendant’s 24 25 26 Although the standard for issuing a preliminary injunction in the trademark context previously presumed irreparable injury if the moving party showed a likelihood 26 of success on the merits, district courts in this circuit have found the presumption no longer applicable. See, e.g., Jumbo Bright Trading Ltd. v. Gap, Inc., No. CV12–8932, 27 2012 WL 5289784, at *1 (C.D. Cal. Oct. 25, 2012) (“As far as this court is aware, every district court in the Ninth Circuit that has examined the issue after Flexible Lifeline . . . 28 has either found or at least suggested that irreparable harm cannot be presumed in trademark cases as well.”) (collecting cases). 27 13cv2811 AJB (NLS) 1 first alleged infringing use and the plaintiff’s filing of the preliminary injunction, courts 2 have found that a “lack of urgency” weighs against finding irreparable harm. Oakland 3 Tribune, Inc. v. Chronicle Publ‘g Co., 762 F.2d 1374, 1377 (9th Cir. 1985); see also 4 Playboy Enters., Inc. v. Netscape Commc'ns Corp., 55 F. Supp. 2d 1070, 1090 (C.D. Cal. 5 1999) (“[Plaintiff]’s [five-month] delay in seeking injunctive relief further demonstrates 6 the lack of any irreparable harm.”) aff'd, 202 F.3d 278 (9th Cir. 1999); Valeo Intellectual 7 Prop., Inc. v. Data Dep't Corp., 368 F. Supp. 2d 1121, 1128 (W.D. Wash. 2005) (“A 8 three-month delay in seeking injunctive relief is inconsistent with [plaintiff]’s insistence 9 that it faces irreparable harm.”). 10 In the present case, Hanginout argues that it will suffer irreparable harm if an 11 injunction does not issue because: (1) Google will continue to exploit Hanginout’s 12 goodwill; (2) Hanginout will lose the ability to police and control its brand and pending 13 trademark applications; and (3) actual confusion, not just a likelihood of confusion, is 14 already occurring. In opposition, Google contends any irreparable harm Hanginout 15 alleges has or will continue to occur is displaced by Hanginout’s failure to commence 16 this litigation, or file the pending motion for preliminary injunctive relief, soon after it 17 learned of Google’s alleged infringing conduct. As a result, because Google first 18 announced the release of HANGOUTS on June 28, 2011, but Hanginout did not file the 19 instant litigation until November 26, 2013 (approximately 29 months later), or the 20 pending motion for preliminary injunction until January 22, 2014 (approximately 31 21 months later), Hanginout’s lack of urgency weighs against irreparable harm. Finally, 22 Google contends that Hanginout has failed to offer any evidence that: (1) it has experi23 enced a decline in customers/goodwill or that such a decline is likely; (2) that actual 24 consumer confusion has occurred; and/or (3) that any immediate threatened injury exists. 25 Whether the Court considers Google’s first-use date as of June 28, 2011 or May 26 2013 is irrelevant. Hanginout still waited anywhere between 29 months (June 2011) to 7 27 months (May 2013) before initiating the instant litigation, and even longer before filing 28 the instant motion for preliminary injunctive relief. Some courts have found a delay 28 13cv2811 AJB (NLS) 1 shorter than this—7 months—on its own, sufficient to weigh against a finding of 2 irreparable harm. See, e.g., Edge Games, Inc. v. Elec. Arts, Inc., 745 F. Supp. 2d 1101, 3 1117–18 (N.D. Cal. 2010) (“The undisputed fact that plaintiff did not timely act to 4 prevent the “Mirror’s Edge” franchise from inundating the market is alone sufficient to 5 deny the instant motion.”) (alteration in original); Playboy Enters., 55 F. Supp. 2d at 6 1090 (C.D. Cal. 1999) (stating the five month delay weighed against a finding of 7 irreparable harm); Valeo Intellectual Prop., 368 F. Supp. 2d at 1128 (stating that three 8 month delay was inconsistent with a finding of irreparable harm). The Court also finds 9 Hanginout’s contention, raised at oral argument, that they did not file sooner because 10 they did not believe Google intended to use the mark without merit. 11 Finally, even if the Court found the delay excusable, which is does not, Hanginout 12 has failed to present any evidence that it has experienced a decline in customers or 13 goodwill that occurred as a result of actual customer confusion. Allegations that the 14 plaintiff has invested resources in developing its brand and that the alleged infringing 15 conduct is denying the plaintiff the benefit of its investment is insufficient. See Mytee 16 Prods., Inc. v. Shop Vac Corp., No. 13CV1610 BTM BGS, 2013 WL 5945060, at *6–7 17 (S.D. Cal. Nov. 4, 2013) (“Plaintiff has failed to establish that Defendant is causing 18 irreparable harm that cannot be cured by money damages.”). Accordingly, the Court 19 finds Hanginout has failed to produce “probative, nonspeculative evidence” that it has 20 “lost, or will likely lose, prospective customers or goodwill due to” Goggle’s alleged 21 infringing conduct. Spiraledge, Inc. v. SeaWorld Entm't, Inc., No. 13 CV29622 WQH-BLM, 2013 WL 3467435, at *4 (S.D. Cal. July 9, 2013); see also ConocoPhillips 23 Co. v. Gonzalez, No. 5:12-CV-00576-LHK, 2012 WL 538266 (N.D. Cal. Feb. 17, 2012) 24 (stating that if the “Plaintiff could wait eight months since becoming aware of the alleged 25 trademark infringement before filing its ex parte application . . . Plaintiff can wait until 26 Defendant has an opportunity to be heard”). 27 /// 28 /// 29 13cv2811 AJB (NLS) 1 3. 2 Balance of Equities and the Public Interest Finally, the Court finds the remaining two factors—balance of equities and public 3 interest—also weigh in favor of denying Hanginouts’s request for injunctive relief. In 4 the trademark context, courts often define the public interest as the right of the public not 5 to be deceived or confused. See, e.g., Moroccanoil, Inc. v. Moroccan Gold, LLC, 590 F. 6 Supp. 2d 1271, 1282 (C.D. Cal. 2008); Davidoff & Cie, S.A. v. PLD Int'l Corp., 263 F.3d 7 1297, 1304 (11th Cir. 2001) (noting the public interest is served by avoiding confusion 8 in the marketplace); BellSouth Adver. & Publ’g Corp. v. The Real Color Pages, Inc., 792 9 F. Supp. 775, 785 (M.D. Fla. 1991) (“When a trademark is said to have been infringed, 10 what is actually infringed is the right of the public to be free of confusion and the 11 synonymous right of the trademark owner to control his products’ reputation.”). 12 Therefore, in light of the findings set forth above, specifically Hanginout’s failure 13 to show market penetration in a specific geographic area and actual consumer confusion, 14 the Court finds the balance of equities and the public interest weigh against granting 15 Hanginout’s motion for immediate injunctive relief. As noted by Google, it has ex16 pended substantial time and resources to develop and market the HANGOUTS mark, and 17 requiring Google to re-brand the product on the evidence presented now would be unjust 18 and potentially harm third-party developers as well as the public. 19 Accordingly, for the reasons stated above, Hanginout’s motion to preliminarily 20 enjoin Google from using the HANGOUTS mark is DENIED. 21 II. Motion to Dismiss 22 Similar to the arguments presented above, Google moves to dismiss the First 23 Amended Complaint on the basis that Hanginout has failed to sufficiently allege 24 seniority of use and market penetration in a specific geographic area.27 However, 25 because obtaining preliminary injunctive relief and succeeding on a motion to dismiss 26 require different quanta of proof, the Court does not assume Google’s motion to dismiss 27 28 27 Google contends Hanginout’s state law claims fail for the same reasons its federal trademark infringement claims fail. 30 13cv2811 AJB (NLS) 1 will be granted purely because Hanginout’s motion for preliminary injunctive relief was 2 denied. See Walker v. Woodford, 454 F. Supp. 2d 1007, 1024 (S.D. Cal. 2006), aff'd in 3 part, 393 F. App’x 513 (9th Cir. 2010). 4 A. 5 A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the Legal Standard 6 claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 7 729, 731 (9th Cir. 2001). When ruling on a motion to dismiss under Rule 12(b)(6), the 8 court must accept all factual allegations pleaded in the complaint as true, and must 9 construe them and draw all reasonable inferences from them in favor of the nonmoving 10 party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). The court, 11 however, is not bound to accept “legal conclusions” as true. Ashcroft v. Iqbal, 556 U.S. 12 662, 664 (2009). 13 To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual 14 allegations; rather, the complaint must plead “enough facts to state a claim to relief that 15 is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim 16 has “facial plausibility when the plaintiff pleads factual content that allows the court to 17 draw the reasonable inference that the defendant is liable for the misconduct alleged.” 18 Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability require19 ment,’ but it asks for more than a sheer possibility that a defendant has acted unlaw20 fully.” Id. “Where a complaint pleads facts that are ‘merely consistent with’ a defen21 dant’s liability, it ‘stops short of the line between possibility and plausibility of entitle22 ment to relief.’ ” Id. (quoting Twombly, 550 U.S. at 557). It is not proper for the court to 23 assume that “the [plaintiff] can prove facts that [he or she] has not alleged or that 24 defendants have violated . . . laws in ways that have not been alleged.” Associated Gen. 25 Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). 26 B. 27 To state a claim for trademark infringement under the Lanham Act, a plaintiff Analysis 28 must allege that it owns a valid, protectable trademark, and that the defendant is using a 31 13cv2811 AJB (NLS) 1 mark in commerce that is confusingly similar to the plaintiff’s mark. See 15 U.S.C. § 2 1125(a); Herb Reed Enters., 736 F.3d at 1247; Dep't of Parks & Recreation for State of 3 Cal. v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1124 (9th Cir. 2006). Although federal 4 registration is not a prerequisite to an infringement claim, in the absence of federal 5 registration, a plaintiff must plead that it is the senior user of the market and has suffi6 cient market penetration in the area in which protection is requested. See, e.g., Adray, 76 7 F.3d at 989 (“The extent of market penetration depends upon the volume of sales, the 8 positive and negative growth trends, the number of people who purchased the party’s 9 goods in relation to the number of potential customers, and the amount of advertising”); 10 Glow, 252 F. Supp. 2d at 983 (“Generally, the senior user of a mark is entitled to assert 11 trademark rights in all areas in which it has legally sufficient market penetration.”); 12 Optimal Pets, 877 F. Supp. 2d at 958 (“A party asserting common law rights must not 13 only establish that it is the senior user, it must also show that it has “legally sufficient 14 market penetration” in a certain geographic market to establish those trademark rights”). 15 Google contends Hanginout has failed in both regards. 16 17 1. Priority of Use “It is axiomatic in trademark law that the standard test of ownership is priority of 18 use.” See Sengoku Works Ltd. v. RMC Int'l, Ltd., 96 F.3d 1217, 1219 as modified, 97 19 F.3d 1460 (9th Cir. 1996). “To acquire ownership of a trademark it is not enough to 20 have invented the mark first or even to have registered it first; the party claiming 21 ownership must have been the first to actually use the mark in the sale of goods or 22 services.” Id. Courts must examine the totality of the circumstances when determining 23 whether a mark has been adequately used in commerce so as to gain the protection of the 24 Lanham Act. See Chance, 242 F.3d at 1159. 25 As discussed above, because Hanginout has alleged that it first used the 26 HANGINOUT mark in commerce as early as March 2010, and had over 200 registered 27 users of the web-based platform as early as May 2011, whereas Google did not begin 28 using the HANGOUTS mark in commerce until June 28, 2011, assuming the Court 32 13cv2811 AJB (NLS) 1 agreed with Google, the Court finds Hanginout has stated a plausible claim that it is the 2 senior user of the mark in question. See, e.g., Allard Enterprises, 146 F.3d at 358 (“As 3 long as there is a genuine use of the mark in commerce, however, ownership may be 4 established even if the first uses are not extensive and do not result in deep market 5 penetration or widespread recognition.”); Dep't of Parks & Recreation, 448 F.3d at 1126 6 (“Although mere advertising by itself may not establish priority of use, advertising 7 combined with other non-sales activity, under our ‘totality of the circumstances test,’ can 8 constitute prior use in commerce.”) (internal citations omitted); Autodesk, Inc. v. 9 Dassault Systemes SolidWorks Corp., No. C08-04397 WHA, 2008 WL 6742224, at *2 10 (N.D. Cal. Dec. 18, 2008) (denying motion to dismiss in trademark case where moving 11 party claimed priority because factual allegations in the complaint were inconsistent with 12 the plaintiff’s submissions to the USPTO); Gulfstream Media Grp., Inc. v. PD Strategic 13 Media, Inc., No. 12-62056-CIV, 2013 WL 1891281 at *5 (S.D. Fla. May 6, 2013) 14 (stating the Court must wait to consider the evidence adduced later in the litigation to 15 determine priority of use and whether that use constituted use in commerce).28 16 17 2. Market Penetration in a Specific Geographic Area “Sufficient market penetration is determined by ‘examining the trademark user’s 18 volume of sales and growth, number of persons buying the trademarked product in 19 relation to the number of potential purchasers, and the amount of advertising’ in a given 20 market.” Credit One Corp., 661 F. Supp. 2d at 1138 (quoting Glow, 661 F. Supp. 2d at 21 1138); 5 McCarthy on Trademarks and Unfair Competition §26:13 (4th ed.) (“In the 22 absence of federal registration, both parties have the right to expand into unoccupied 23 territory and establish exclusive rights by being first in that territory. In effect, it is a race 24 between the parties to establish customer recognition in unoccupied territory, possibly 25 subject to the concept of a zone of natural expansion.”). 26 27 28 The Court also notes that none of the cases cited by Google with respect to this 28 issue concerned a motion to dismiss pursuant to Rule 12(b)(6), in which the Court was required to accept the plaintiff’s factual allegations as true. 33 13cv2811 AJB (NLS) 1 Google asserts Hanginout has failed to sufficiently allege market penetration “in 2 any single geographic location, let alone nationwide.” (Doc. No. 23 at 7.) Google 3 further claims that Hanginout “pleads no specific facts regarding its volume of sales and 4 growth trends, the number of persons buying the trademarked product in relation to the 5 number of potential purchasers, the amount of its advertising prior to June 2011, or 6 where the 200 alleged users were located.” (Id.) In opposition, Hanginout contends 7 Google completely ignores the pleading standard and what is required to defeat a motion 8 to dismiss. Therefore, Hanginout asserts that Google’s efforts are premature, and 9 “[w]hile Google may explore the depths of Hanginout’s allegations as litigation and 10 discovery progress,” such an inquiry is not appropriate on a motion to dismiss. 11 The Court agrees. Although Hanginout has failed to present sufficient evidence of 12 its market penetration in a specific geographic area to warrant preliminary injunctive 13 relief at this juncture, on a motion to dismiss, the Court must take the plaintiff’s allega14 tions as true, and construe the facts in the light most favorable to the plaintiff. Cahill, 80 15 F.3d at 337–38; Ashcroft, 556 U.S. at 678 (stating that while a plaintiff need not “plead 16 every detail or prove every fact,” a plaintiff must allege certain facts, which if true, 17 would state a plausible claim for relief). Therefore, because Hanginout has alleged that 18 it “achieved market penetration through the United States and, at a minimum, in Califor19 nia,” the Court must take these facts as true and leave for a later date the determination 20 of whether Hanginout will be able to support such facts with the necessary evidence. See 21 Monster Daddy, LLC v. Monster Cable Prods., Inc., No. CA 6:10-1170-TMC, 2012 WL 22 2513466, at *2-3 (D.S.C. June 29, 2012) (denying 12(b)(6) motion in trademark case on 23 grounds that it was not appropriate for the court to make factual determinations at that 24 time) (denying 12(b)(6) motion in trademark infringement case on the basis that it was 25 inappropriate for the court to make factual determinations on a motion dismiss); 26 CYBERsitter, LLC v. Google Inc., 905 F. Supp. 2d 1080, 1087 (C.D. Cal. 2012). 27 Accordingly, the Court DENIES Google’s motion to the dismiss the First Amended 28 Complaint. 34 13cv2811 AJB (NLS) 1 2 CONCLUSION As set forth above, the Court DENIES Hanginout’s motion for preliminary 3 injunction, (Doc. No. 12), and DENIES Google’s motion to dismiss the First Amended 4 Complaint, (Doc. No. 23). Google must file an answer to the operative complaint no 5 later than thirty (30) days from the date of this order. 6 7 IT IS SO ORDERED. 8 DATED: May 12, 2014 9 10 Hon. Anthony J. Battaglia U.S. District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 35 13cv2811 AJB (NLS)

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