Rhino Metals, Inc. v. Kodiak Safe Company, LLC

Filing 43

ORDER - NOW THEREFORE IT IS HEREBY ORDERED that the Report and Recommendation entered on March 25, 2017 (Dkt. 36 ) is ADOPTED IN ITS ENTIRETY as clarified herein and the Court orders as follows: 1) Defendants Motion to Dismiss (Dkt. 6 ) is DENIED. 2) Plaintiffs Motion for Preliminary Injunction (Dkt. 5 ) is GRANTED. The Court will enter a separate Preliminary Injunction Order consistent with this decision. 3) Issuance of the Preliminary Injunction Order is contingent upon Plaintiff filing pr oof of deposit of the bond in the amount of $10,000 on or before 7/13/2017 before 4:00 p.m. Upon such proof of deposit being filed, the Court will issue the injunction. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
RHINO METALS, INC., an Idaho
corporation,

Case No. 1:16-cv-00285-EJL-REB

Plaintiff,
vs.
ORDER
KODIAK SAFE COMPANY LLC, a
California limited liability company,
Defendant.
INTRODUCTION
On March 25, 2017, Chief United States Magistrate Judge Ronald E. Bush issued
a Report and Recommendation (“Report”), recommending that Defendant’s Motion to
Dismiss be denied and Plaintiff’s Motion for Preliminary Injunction be granted. (Dkt.
36.) Any party may challenge the Magistrate Judge’s proposed recommendation by filing
written objections within fourteen days after being served with a copy of the Report. 28
U.S.C. § 636(b)(1)(C). The district court must then “make a de novo determination of
those portions of the report or specified proposed findings or recommendations to which
objection is made.” Id. The district court may accept, reject, or modify in whole or in
part, the findings and recommendations made by the Magistrate Judge. Id.; see also Fed.
R. Civ. P. 72(b).
Defendant filed objections to the Report arguing that the Magistrate Judge erred in
his analysis, conclusions, and findings. (Dkt. 38.) Plaintiff responded to the objections

and the matter is ripe for this Court’s consideration. Fed. R. Civ. P. 72; Local Civ. R.
73.1.
STANDARD OF REVIEW
Pursuant to 28 U.S.C. § 636(b)(1)(C), this Court “may accept, reject, or modify, in
whole or in part, the findings and recommendations made by the magistrate judge.”
Where the parties object to a report and recommendation, this Court “shall make a de
novo determination of those portions of the report which objection is made.” Id. Where,
however, no objections are filed the district court need not conduct a de novo review. To
the extent that no objections are made, arguments to the contrary are waived. See Fed. R.
Civ. P. 72; 28 U.S.C. § 636(b)(1) (objections are waived it they are not filed within
fourteen days of service of the Report and Recommendation). “When no timely objection
is filed, the Court need only satisfy itself that there is no clear error on the face of the
record in order to accept the recommendation.” Advisory Committee Notes to Fed. R.
Civ. P. 72 (citing Campbell v. United States Dist. Court, 501 F.2d 196, 206 (9th Cir.
1974)).
DISCUSSION
The factual and procedural background of this case are correctly stated in the
Report and this Court adopts the same. (Dkt. 36.) The dispute concerns the Plaintiff’s
claims against Defendant alleging violations of federal, state, and common law
infringement of Plaintiff’s registered trademark “KODIAK” (KODIAK mark). (Dkt. 1,
36.) Plaintiff filed its Motion for Preliminary Injunction seeking to enjoin Defendant
from its use of the KODIAK mark through its selling, offering to sell, marketing, or

advertising gun safes bearing the KODIAK mark in any geographic region outside the
city of Fresno, California. (Dkt. 1, 36.) Defendant filed its Motion to Dismiss this case for
lack of personal jurisdiction. The Report concludes this Court has personal jurisdiction
over Defendant and should not be dismissed. The Report additionally recommends that
Plaintiff’s preliminary injunction should be granted. (Dkt. 36.)
Defendant raised three challenges in its objections to the Report. The first two
objections relate to the Defendant’s Motion to Dismiss and the third relates to Plaintiff’s
Motion for a Preliminary Injunction. (Dkt. 38.)
This Court has reviewed the objected to portions of the Report de novo. The Court
has also conducted a review of the entire Report as well as the record in this matter for
clear error on its face. Having done so, this Court finds the Report correctly characterizes
the facts, circumstances, allegations, and claims made in this case. The Court agrees with
the Report’s discussion of the law, analysis, conclusions, and recommendation as to
Defendant’s first two objections. In regards to the third objection, the Court agrees and
adopts the Report’s law, conclusion, and recommendation, but finds reason to clarify a
portion of the analysis.
ANALYSIS
1. Personal Jurisdiction
Defendant’s first objection challenges the Magistrate Judge’s reliance on
Washington Shoe Co. v. A-Z Sporting Goods, Inc., 704 F.3d 668 (9th Cir. 2012) instead
of following Walden v. Fiore, 134 S. Ct. 1115 (2014), which Defendant argues implicitly
overruled Washington Shoe. (Dkt. 38.) The Report addressed Defendant’s argument, and

ultimately concluded that Washington Shoe was applicable to this case and analyzed
specific personal jurisdiction under its rationale. (Dkt. 36.) Defendant’s second objection
challenges the Magistrate Judge’s finding that Defendant had engaged in conduct
expressly aimed at the forum state. (Dkt. 38.) The Report concluded that Defendant’s
conduct of “purposefully launch[ing] a commercial and interactive website advertising
the sale of allegedly-infringing products” coupled with the knowledge that Plaintiff had
registered the KODIAK mark and that Plaintiff was located in Idaho was sufficient to
constitute conduct by the Defendant as expressly aimed at the Plaintiff in Idaho. (Dkt. 36,
p. 14-16.) The Magistrate Judge found this conduct satisfied Washington Shoe and
determined personal jurisdiction exists over Defendant.
This Court agrees that Washington Shoe applies to this case and that Defendant’s
conduct satisfies the expressly aimed requirement of the purposeful direction test.
Defendant’s objection argues its allegedly infringing website is not enough to find it
expressly aimed conduct at Idaho without something more.
Having reviewed the record de novo, the Court finds Defendant did more than
merely maintain an allegedly infringing website. When Defendant created the website
under the domain name of kodiaksafes.com in 2012, it simply had Defendant’s contact
information and read: “Website Coming Soon!” (Dkt. 36.) On May 22, 2015, Plaintiff
responded to a letter sent by Defendant about a week prior denying Defendant’s
allegations of infringement and noting that Defendant had made no efforts to market its
KODIAK safes outside of Fresno, California. (Dkt. 36.) On August 5, 2015, Defendant’s
trademark application for the KODIAK mark was rejected “because of a likelihood of

confusion” with Plaintiff’s KODIAK mark, whose registration issued May 19, 2015.
(Dkt. 36.) Thereafter, in August 2015, Defendant, knowing Plaintiff’s had registered the
KODIAK trademark and that Plaintiff was located in Idaho, updated its kodiaksafes.com
and relaunched it as a commercial and interactive website advertising the sale of
allegedly infringing products, including Idaho in a drop down menu, and a cart feature for
customer purchases. (Dkt. 36.) When considering the totality of these circumstances, the
Court agrees with the Report and finds the Defendant engaged in conduct expressly
aimed at the Plaintiff in Idaho.
For these reasons, this Court agrees with the Magistrate Judge’s finding that
personal jurisdiction exists over Defendant and the Motion to Dismiss is denied.
2. Preliminary Injunction
Defendant’s third objection challenges the Report’s conclusion that Plaintiff’s
request for a preliminary injunction should be granted, arguing Plaintiff has not shown it
is likely to succeed on the merits of its infringement claim because, in fact, Defendant
owns the KODIAK mark based on its priority use since 1981. (Dkt. 38.) Defendant
argues the Report erred as a matter of law by recommending the preliminary injunction
be granted because the Report failed to find Plaintiff was likely to success on the merits.
(Dkt. 38.) Instead, the Report found the ownership of the mark is “hotly contested” and
states there are “serious questions” as to who owns the mark. Which, Defendant argues,
precludes a finding that Plaintiff made the necessary showing to grant a preliminary
injunction. (Dkt. 38.)

Having reviewed the issue de novo, this Court agrees that Plaintiff’s Motion for a
Preliminary Injunction should be granted. To obtain a preliminary injunction, the moving
party must establish: (1) it is likely to succeed on the merits of its claim, (2) it is likely to
suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities
tips in its favor, and (4) a preliminary injunction is in the public interest. See Winter, 555
U.S. at 20; see also Leigh v. Salazar, 677 F.3d 892, 896 (9th Cir. 2012). The Ninth
Circuit considers all of the Winter elements, except irreparable injury, using a sliding
scale approach, which provides “if a plaintiff can only show that there are ‘serious
questions going to the merits’—a lesser showing than likelihood of success on the
merits—then a preliminary injunction may still issue if the ‘balance of [equities] tips
sharply in the plaintiff’s favor,” so long as the plaintiff also makes a showing on the other
two prongs. Feldman v. Arizona Secretary of State’s Office, 843 F.3d 366, 375 (9th Cir.
2016) (quoting Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir.
2013)) (emphasis in original); see also Cottrell, 632 F.3d at 1134-35.
In its analysis of the likelihood of success on the merits for trademark
infringement, the Magistrate Judge considered Plaintiff’s alleged ownership of the
KODIAK mark and if Defendant’s use of the mark was likely to cause consumer
confusion. (Dkt. 36.) The Report found the parties’ “respective arguments illustrate
serious questions concerning whether [Plaintiff] owns the KODIAK mark by virtue of its
registration, whether [Defendant] has priority use of the KODIAK mark by virtue of its
business enterprise dating back to 1981, and whether the cross-currents of such claims of
ownership impact the geographic scope of either party’s use of the same mark.” (Dkt. 36,

p. 30.) Applying the Sleekcraft factors, the Magistrate Judge concluded Plaintiff had
shown a likelihood of consumer confusion. The Report went on to conclude that “at this
stage, [Plaintiff] has shown a likelihood of success on its allegations – represented, in
part, by serious questions going to the ownership of a valid, protectable mark.” (Dkt. 36,
p. 32.) In order to find that a preliminary injunction should issue when a plaintiff has
shown “serious questions to the merits” the plaintiff must also show that the balance of
equities weighs sharply in its favor. This Court finds the balance of equities does, in fact,
weigh sharply in Plaintiff’s favor here.
Plaintiff sold its first gun safe bearing the KODIAK mark in January 2015 and
since has sold over 9,400. (Dkt. 36.) Defendant is a smaller manufacturer and seller with
a market predominately in southern California and only reached beyond California via its
website as of August 2015, months after Plaintiff applied for and was granted the
registration of the KODIAK mark. (Dkt. 36.) The status quo is preserving Plaintiff as the
nationwide seller of KODIAK gun safes and limiting Defendant to the smaller regional
market it existed in prior to August 2015. (Dkt. 36.) Plaintiff is, has been since January
2015, a nationwide seller of gun safes bearing its registered KODIAK trademark and it
would be significantly harmed if Defendant were not enjoined from its national
marketing and sale of allegedly infringing gun safes pending the outcome of this matter.
The Report also accurately notes Defendant is not prohibited from marketing and selling
its two other lines of gun safes, which each bear other registered trademarks owned by
the Defendant. (Dkt. 36, p. 38.)

For these reasons, the Court finds the Plaintiff has raised serious questions going
to the merits of the case and the balance of equities tips sharply in its favor.1 The Motion
for Preliminary Injunction is granted.
3. Security Bond
The Court may only issue a preliminary injunction if the moving party “gives
security in an amount that the court considers proper to pay the costs and damages
sustained by any party found to have been wrongfully enjoined or restrained.” Fed. R.
Civ. P. 65(c). The Court is given wide discretion in setting the amount of the security
bond. See Walczak v. EPL Prolong, Inc., 198 F.3d 725, 133 (9th Cir. 1999) (citing Fed.
R. Civ. P. 65(c)).
The Report found the scope of Plaintiff’s request for preliminary injunction was
overly broad and recommended the parties stipulate to the scope of the preliminary
injunction should one issue, or in the alternative propose their respective positions in their
filings to the Court, which both did. (Dkt. 36.) The Report recommended a bond amount
of $10,000 unless/until Defendant is capable of justifying a higher bond amount. (Dkt.
36.) In its Objection, Defendant accepted the $10,000 bond amount suggested in the
Report if the preliminary injunction’s scope was limited to only restrain its sales outside
the state of California. (Dkt. 38.) In its Response, Plaintiff, noting it may be a little
excessive, did not raise a formal objection to the $10,000 amount. (Dkt. 40.)

1

Plaintiff has also made the requisite showing of irreparable harm and public interest, but
Defendant did not object to those portions of the Report.

The Court agrees with the Report’s recommendation and finds that a $10,000 bond
is appropriate in this case based on the nature of the claims, the relief sought, and the
circumstances involved. Plaintiff shall deposit payment for the bond in the amount of
$10,000 with the Clerk of the Court for the United States District Court for the District of
Idaho to be held until further order of the Court.
ORDER
NOW THEREFORE IT IS HEREBY ORDERED that the Report and
Recommendation entered on March 25, 2017 (Dkt. 36) is ADOPTED IN ITS
ENTIRETY as clarified herein and the Court orders as follows:
1) Defendant’s Motion to Dismiss (Dkt. 6) is DENIED.
2) Plaintiff’s Motion for Preliminary Injunction (Dkt. 5) is GRANTED.
The Court will enter a separate Preliminary Injunction Order consistent
with this decision.
3) Issuance of the Preliminary Injunction Order is contingent upon Plaintiff
filing proof of deposit of the bond in the amount of $10,000 on or
before July 13, 2017 before 4:00 p.m. Upon such proof of deposit being
filed, the Court will issue the injunction.

June 13, 2017