Airhawk International, LLC v. Ontel Products Corporation et al

Filing 145

ORDER Denying 139 Plaintiff's Motion for Reconsideration. Signed by Judge Michael M. Anello on 5/8/2020. (tcf)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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AIRHAWK INTERNATIONAL, LLC, a
California Limited Liability Company,

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Case No. 18-cv-00073-MMA-AGS
ORDER DENYING PLAINTIFF’S
MOTION FOR
RECONSIDERATION

Plaintiff,

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v.

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ONTEL PRODUCTS CORPORATION, a
New Jersey Corporation; and DOES 1
through 50, inclusive,

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[Doc. No. 139]

Defendants.

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Plaintiff Airhawk International, LLC (“Airhawk”) brings this action against

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Defendant Ontel Products Corporation (“Ontel”) asserting claims of: (1) Trademark

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Infringement, in violation of the Lanham Act, 15 U.S.C. § 1114(1); (2) Common Law

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Trademark Infringement; (3) False Designation of Origin and False Description, in

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violation of the Lanham Act, 15 U.S.C. § 1125(a); and (4) Unfair Competition, in

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violation of California Business and Professions Code §§ 17000 et seq. and 17500 et seq.

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See Compl., Doc. No. 1. On January 2, 2020, the Court granted partial summary

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judgment for Ontel on the issue of Airhawk’s request for disgorgement of profits, finding

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that Airhawk “fail[ed] to provide evidence to raise a triable issue of fact as to whether

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Ontel willfully infringed its mark.” See Doc. No. 130 at 41. 1 Airhawk now moves for

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reconsideration, arguing that (1) good cause exists to grant reconsideration of partial

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summary judgment on the issue of disgorgement of profits, see Doc. 139-1 at 8-10, and

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(2) an intervening change in the law after the United States Supreme Court decided

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Romag Fasteners, Inc. v. Fossil Group, Inc., (2020) 590 U.S._, Case No. 18-1233

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(“Romag”) requires reconsideration. See Doc. No. 143. Ontel filed an opposition to the

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motion, to which Defendant replied. See Doc. Nos. 140, 141. Ontel also filed a response

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to Airhawk’s supplemental brief in support of its motion for reconsideration. See Doc.

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No. 144. The Court found the matters suitable for determination on the papers and

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without oral argument pursuant to Civil Local Rule 7.1.d.1. See Doc. No. 141. For the

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reasons set forth below, the Court DENIES Airhawk’s motion for reconsideration.

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BACKGROUND

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Airhawk is the owner of United States Patent and Trademark Office (“PTO”)

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Registration No. 4,009,225 (hereinafter “the Airhawk word mark”) for the standard

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character mark bearing the word “AIRHAWK.” See Compl., Ex. A. The Airhawk word

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mark was first used in 1997 and has been used continuously for goods or services related

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to truck and motorcycle seat cushions and/or related products. See id. Airhawk is also

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the owner of PTO Registration Nos. 4,009,228 and 4,977,720 for the configuration of a

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hawk design and a hawk design located between the words “AIR” and “HAWK,”

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respectively. See id., Ex. B. 2

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Ontel develops, markets, and distributes a wide variety of consumer products,

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which it sells through a direct-to-consumer market, commonly referred to in the industry

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as “As Seen on TV.” In 2016, Ontel developed a portable, battery-operated, handheld,

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automatic air compressor to inflate tires. The air compressor product

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The Court’s citations to electronically filed documents refer to the pagination assigned by the
document’s author, rather than the pagination assigned by the CM/ECF system.
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Airhawk’s word and design marks are collectively referred to as Airhawk’s “marks.”
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launched in January 2017. Ontel selected the name “Air Hawk” for its air

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compressor. On December 12, 2016, Ontel filed a trademark application with the PTO

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for its “AIR HAWK” logo in connection with air compressors. The PTO approved

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Ontel’s application, finding no conflicting marks that would bar registration. Ontel

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maintains that it had no knowledge of Airhawk’s marks at the time it selected

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the AIR HAWK name for its product. Airhawk opposed registration of Ontel’s

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application on December 18, 2017 before the Trademark Trial and Appeal Board. The

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opposition is suspended pending the outcome of this action.

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Airhawk claims that Ontel’s use of the name “Air Hawk” has created confusion

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among consumers, causing damage to Airhawk’s business, reputation, and goodwill.

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Airhawk asserts that Ontel’s marketing campaign related to the introduction of Ontel’s air

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compressor product in early 2017 caused Airhawk to experience a decline in sales. In

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February 2017, Airhawk’s intellectual property counsel sent a letter to Ontel regarding

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Ontel’s pending trademark application for “AIR HAWK” and highlighted the similarities

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between the parties’ marks. On March 24, 2017, Ontel’s intellectual property counsel

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responded and identified the differences between the parties’ products and trade channels.

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Airhawk did not respond to Ontel’s March 2017 letter.

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On January 11, 2018, Airhawk commenced the instant action alleging trademark

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infringement of PTO Registration Numbers 4,009,225, 4,009,228, and 4,977,720.

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Compl. ¶ 10. Airhawk further asserts that sales of Defendant’s goods utilizing the name

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“AIR HAWK” constitute a false designation of origin, deceptive trade practices, and

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unfair competition. Id. ¶ 22. Airhawk seeks damages and permanent injunctive relief,

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including “an order requiring Defendants, and each of them, to account for and pay

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AIRHAWK all illegal profits from their sale and/or distribution of infringing products.”

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See Compl. at 11.

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As noted above, the Court previously granted partial summary judgment for Ontel

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on the issue of Airhawk’s request for disgorgement of profits. Airhawk moves for

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reconsideration, arguing that (1) good cause exists to grant reconsideration of partial
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summary judgment on the issue of disgorgement of profits, see Doc. 139-1 at 8-10, and

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(2) an intervening change in the law requires reconsideration. See Doc. No. 143. Ontel

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contends that the motion is untimely, improper under Rule 60(b), and fails on the merits,

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even though Romag changed the law with respect to willfulness as a required showing for

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a plaintiff seeking disgorgement of profits under 15 U.S.C. § 1117(a). See Doc. Nos. 140

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at 1-8; 144 at 1-3.

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DISCUSSION
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Legal Standard
The Federal Rules of Civil Procedure do not expressly provide for motions for

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reconsideration. However, a motion for reconsideration may be construed as a motion to

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alter or amend a final judgment, order, or proceeding under Rule 60(b). See Osterneck v.

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Ernst & Whinney, 489 U.S. 169, 174 (1989); In re Arrowhead Estates Dev. Co., 42 F.3d

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1306, 1311 (9th Cir. 1994). Additionally, a motion for reconsideration is proper under

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Civil Local Rule 7.1.i.1. See CivLR 7.1.i.

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Reconsideration under Rule 60 may be granted in the case of: (1) mistake,

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inadvertence, surprise or excusable neglect; (2) newly discovered evidence; or (3) fraud;

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or if (4) the judgment is void; (5) the judgment has been satisfied; or (6) for any other

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reason justifying relief. Fed. R. Civ. P. 60(b). Under Rule 60, a motion for “relief from a

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final judgment, order or proceeding” may be filed within a “reasonable time,” but must

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be filed “no more than a year after the entry of the judgment or order or the date of the

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proceeding” for reasons (1), (2), and (3). Fed. R. Civ. P. 60(c)(1). Under the Local

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Rules, “[e]xcept as may be allowed under Rules 59 and 60 of the Federal Rules of Civil

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Procedure, any motion . . . for reconsideration must be filed within twenty-eight (28) days

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after the entry of the ruling, order or judgment sought to be reconsidered.” CivLR 7.1.i.2.

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Reconsideration is an “extraordinary remedy, to be used sparingly in the interests

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of finality and conservation of judicial resources.” Kona Enters., Inc. v. Estate of Bishop,

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229 F.3d 877, 890 (9th Cir. 2000). “Ultimately, however, the decision on a motion for

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reconsideration lies in the Court’s sound discretion.” Labastida v. McNeil Techs., Inc.,
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No. 10-CV-1690-MMA (CAB), 2011 WL 767169, at *2 (S.D. Cal. Feb. 25, 2011) (citing

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Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir. 2003)). Airhawk bases its motion

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for reconsideration on the catchall provision of Rule 60(b)(6). See Doc. No. 47 at 6.

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2.

Analysis

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Airhawk argues that its motion for reconsideration is timely made, and in any

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event the Court should reach the merits as any delay was not unreasonable. See Doc. No.

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139-1 at 6-8. Airhawk further argues that the Court granted partial summary judgment

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for Ontel based on evidence that Ontel has since stipulated it will not rely on “in any way

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before the Court—including testimony, evidence, argument, and written submissions—to

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support its ‘innocent intent’ or ‘good faith’ affirmative defenses.” See Doc. No. 139-1 at

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8-10 (citing Doc. No. 109 at 2:14-18). Airhawk also asserts that an intervening change in

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the law requires reconsideration and reversal of the Court’s order granting Ontel partial

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summary judgment on disgorgement of profits. See Doc. No. 143 at 2-3. Ontel responds

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that Airhawk’s motion is untimely under the Local Rules and fails on the merits. See

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Doc. No. 140 at 1-8. Ontel also argues that while the Supreme Court’s Romag decision

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admittedly changed the applicable law, Romag nevertheless supports this Court’s grant of

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partial summary judgment on Airhawk’s request for disgorgement of profits. See Doc.

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No. 144 at 1-3. The Court will address these arguments in turn.

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A. Timeliness
As an initial matter, Ontel argues that Airhawk’s motion is untimely for failure to

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comply with Local Rule 7.1.i.2. See Doc. No. 140 at 1-2. The Court issued its summary

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judgment order on January 2, 2020. See Doc. No. 130. Because Airhawk did not file its

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motion for reconsideration until March 4, 2020, see Doc. No. 139, its motion is untimely

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under Local Rule 7.1.i.2. See Brady v. Grendene USA, Inc., No. 3:12-CV-0604-GPC-

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KSC, 2015 WL 3539702, at *3 (S.D. Cal. June 3, 2015) (motion for reconsideration was

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untimely when filed outside of Local Rule 7.1.i.2’s 28-day window). Airhawk argues

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that Rule 60’s “reasonable time” standard governs, as opposed to Local Rule 7.1.i.2’s 28-

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day window, and in any event, the Court should exercise its discretion to consider the
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merits of Airhawk’s motion. See Doc. 139-1 at 7-8.
The Court finds that Airhawk did not file its motion for reconsideration within a

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reasonable time. As an initial matter, Airhawk could have brought the underlying

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evidentiary issue to the Court’s attention shortly after Ontel filed its August 5, 2019

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stipulation “not [to] use its attorney-client communications concerning its trademark

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search and related documents in any way before the Court . . ..” Doc. No. 109 at 2:14-18.

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At that time, Ontel’s motion for summary judgment was fully briefed and pending before

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the Court. Airhawk could have sought leave to file a supplemental brief objecting to

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Ontel’s reliance on evidence falling under the umbrella of “attorney-client

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communications” and “related documents.”

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Moreover, even giving Airhawk the benefit of Rule 60’s “reasonable time”

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standard, Airhawk should have filed its motion in a timely fashion after the Court issued

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its summary judgment ruling. Nevertheless, Airhawk waited until March 4, 2020 to file

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its motion for reconsideration. According to Airhawk, the reason for the delay is because

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it interpreted this Court’s order to schedule a mandatory settlement conference “to mean

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the Court did not intend to entertain any further motions by the parties until they first

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attended the [conference].” Doc. No. 139-1 at 7. However, the Court finds it

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unreasonable to interpret an order to schedule a conference as implying that the Court

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would not entertain a motion for reconsideration within the 28-day window specified in

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the Local Rules.

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Nevertheless, because the parties agree that there has been an intervening change

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in the relevant underlying law, the Court will exercise its discretion to consider

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Airhawk’s motion on its merits under Rule 60(b).

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B. Effect of Ontel’s Stipulation
Airhawk argues that the Court granted partial summary judgment to Ontel on the

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issue of a profit-based remedy “almost exclusively on evidence that has since been

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rendered subject to an exclusionary order at trial.” Doc. No. 139-1 at 8. Ontel replies

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that Airhawk cannot meet the Rule 60(b) standard since the Court’s partial summary
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judgment order is not a “final judgment”, and in any event, its basis for seeking

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reconsideration is without merit. See Doc. No. 140 at 2-8.

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By its express terms, Rule 60(b) applies to “final judgment[s], order[s], or

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proceeding[s] . . ..” “Final decisions end[ ] the litigation on the merits and leave[ ]

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nothing for the court to do but execute the judgment.” Am. States Ins. Co. v. Dastar

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Corp., 318 F.3d 881, 884 (9th Cir. 2003) (internal citations and quotations omitted). This

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Court’s order granting partial summary judgment for Ontel is not a final judgment. See

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id. (“An order granting partial summary judgment is usually not an appealable final order

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under 28 U.S.C. § 1291 because it does not dispose of all of the claims.”). The Court’s

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order did not dispose of all claims, as Airhawk may proceed in seeking to recover actual

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damages as a result of the alleged trademark infringement. See Doc. No. 130 at 44.

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Airhawk neglects to address the standard of finality in briefing its motion for

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reconsideration and thereby implicitly concedes that it cannot meet this standard.

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Even assuming arguendo that the partial summary judgment order is “final” for

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purposes of reconsideration under Rule 60(b), Airhawk also fails to show it is entitled to

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relief from the Court’s ruling. Its asserted basis, that this Court granted partial summary

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judgment “almost exclusively” based on evidence that will now be excluded at trial, is

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erroneous. The Court granted partial summary judgment because Airhawk “fail[ed] to

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provide evidence to raise a triable issue of fact as to whether Defendant willfully

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infringed its mark.” Doc. 130 at 41. Contrary to Airhawk’s assertion, the evidence that

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the Court considered in granting partial summary judgment for Ontel has not since been

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excluded. As Ontel recognizes, the two key pieces of evidence that the Court

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considered—(1) Ontel’s counsel’s March 2017 letter to Airhawk’s counsel regarding the

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parties’ respective marks and (2) the United States Patent and Trademark Office’s

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acceptance of Ontel’s trademark applications—“have nothing to do with the attorney-

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client communications that were” the subject of Ontel’s stipulation. Doc. No. 140 at 7.

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Rather, the evidence is non-privileged information bearing on Ontel’s mental state with

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respect to its infringement of Airhawk’s marks. Furthermore, the Court’s key finding
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remains true: Airhawk failed to carry its burden of raising a triable issue of fact as to

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whether Ontel acted with a mental state demonstrating that disgorgement of profits is an

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appropriate remedy.

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In sum, even if the Court’s partial summary judgment order is reviewable under

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Rule 60(b), the Court based its ruling on evidence that is not subject to exclusion at trial

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under the terms of the August 5, 2019 stipulation.

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C. Romag
Airhawk next argues that under Romag, Ontel is not entitled to summary judgment
on Airhawk’s claim for disgorgement of profits. See Doc. No. 143. Ontel replies that

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Romag does not affect the Court’s ruling, but rather supports a finding that it was “proper

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and appropriate.” Doc. No. 144 at 1-2.

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In Romag, the Supreme Court held that willfulness was not an “inflexible

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precondition” for a trademark plaintiff seeking disgorgement of profits from a defendant

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for a violation of 15 U.S.C. § 1117(a). Slip Op. at 6-7. However, the Court recognized

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that given the tradition that considering a defendant’s mental state is relevant to assigning

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an appropriate remedy, “a trademark defendant’s mental state is a highly important

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consideration in determining whether an award of profits is appropriate.” Id. at 7.

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As discussed above, in reaching its ruling, the Court relied on two key pieces of

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evidence that were relevant to whether Ontel acted with a culpable mental state in

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infringing Airhawk’s mark. Romag recognized that such evidence of Ontel’s mental state

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was a “highly important consideration” for the Court in exercising its discretionary and

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equitable authority as to whether Airhawk should be awarded disgorgement of Ontel’s

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profits. Id. at 7 (“[I]t is a principle long reflected in equity practice where district courts

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have often considered a defendant’s mental state, among other factors, when exercising

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their discretion in choosing a fitting remedy.”) (citations omitted); see also Retractable

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Techs., Inc. v. Becton Dickinson & Co., 919 F.3d 869, 883 (5th Cir. 2019)

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(“[D]isgorgement is ultimately an equitable remedy subject to the district court’s sound

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discretion.”).
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Moreover, the Court’s consideration of Ontel’s mental state was especially

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appropriate here because Airhawk sought this profit-based remedy not for compensatory

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purposes, but as a restitutionary measure of damages. See Doc. No. 130 n. 17. The

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Restatement recognizes that disgorgement of profits is typically appropriate in cases

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involving “conscious wrongdoers;” in these cases, plaintiffs, like Airhawk here, seek

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disgorgement of profits not necessarily to be made whole, but to prevent the defendant

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from retaining gains made possible by its wrongdoing. See Restatement (Third) of

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Restitution and Unjust Enrichment § 51 (2011) (“This profit-based measure of unjust

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enrichment determines recoveries against conscious wrongdoers and defaulting

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fiduciaries. Recovery so measured may potentially exceed any loss to the claimant.”).

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“This is not a case, moreover, where the defendant violated the Lanham Act and emerged

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unscathed,” Retractable Techs., 919 F.3d at 884, as Airhawk may proceed against Ontel

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for a recovery of any actual damages it can prove at trial. See Doc. No. 130.

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In short, reconsideration is not warranted here. In opposing Ontel’s motion for

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summary judgment, Airhawk failed to make any showing that disgorgement of profits

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was appropriate in light of Ontel’s mental state and the facts surrounding the alleged §

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1117(a) violation. Therefore, the Court exercised its sound discretion in granting partial

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summary judgment on the issue of disgorgement of profits.

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CONCLUSION
Based on the foregoing, the Court DENIES Airhawk’s motion for reconsideration.

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IT IS SO ORDERED.

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Dated: May 8, 2020
_____________________________
HON. MICHAEL M. ANELLO
United States District Judge

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