OTR Wheel Engineering Inc et al v. West Worldwide Services Inc et al
Filing
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ORDER Granting 3 Motion for Preliminary Injunction. Signed by Senior Judge Lonny R. Suko. (PL, Case Administrator)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF WASHINGTON
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OTR WHEEL ENGINEERING, INC.,
BLACKSTONE/OTR, LLC, and F.B.T.
ENTERPRISES, INC.,
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Plaintiffs,
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v.
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WEST WORLDWIDE SERVICES, INC., )
and SAMUEL J. WEST, individually and )
his marital community,
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Defendants.
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___________________________________ )
No. CV-14-085-LRS
ORDER GRANTING
MOTION FOR
PRELIMINARY
INJUNCTION
BEFORE THE COURT is Plaintiffs’ Motion For Preliminary Injunction
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(ECF No. 3). The motion was heard with oral argument on May 7, 2014.
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Leslie R. Weatherhead, Esq., argued for Plaintiffs. R. Scott Johnson, Esq.,
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argued for Defendants.1
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I. PRELIMINARY INJUNCTION STANDARD
In order to obtain a preliminary injunction, a plaintiff must establish
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irreparable harm is likely, not just possible. “A plaintiff seeking a preliminary
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Although Defendant Samuel J. West has appeared in this action through
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counsel, his appearance is limited and he has reserved his right to challenge this
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court’s personal jurisdiction over him.
ORDER GRANTING MOTION
FOR PRELIMINARY INJUNCTION- 1
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injunction must establish that he is likely to succeed on the merits, that he is
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likely to suffer irreparable harm in the absence of preliminary relief, that the
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balance of the equities tips in his favor, and that an injunction is in the public
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interest.” Winter v. Natural Resources Defense Council, 555 U.S. 7, 129 S.Ct.
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365, 374 (2008). Under Ninth Circuit law, “if a plaintiff can only show that
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there are ‘serious questions going to the merits’- a lesser showing than
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likelihood of success on the merits- then a preliminary injunction may still
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issue if the ‘balance of hardships tips sharply in plaintiff’s favor,’ and the other
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two Winter factors are satisfied.” Shell Offshore, Inc. v. Greenpeace, Inc., 709
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F.3d 1281, 1291 (9th Cir. 2013), quoting Alliance for the Wild Rockies, 632 F.3d
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1127, 1135 (9th Cir. 2011).2
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“Serious questions are ‘substantial, difficult and doubtful, so as to make
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them a fair ground for litigation and thus for more deliberative investigation.’”
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Republic of the Philippines v. Marcos, 862 F.2d 1355, 1361-62 (9th Cir. 1988)
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(en banc), cert. denied, 490 U.S. 1035, 109 S.Ct. 1933 (1989). “Serious
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questions need not promise a certainty of success, nor even present a probability
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of success, but must involve a ‘fair chance of success on the merits.’” Id.,
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quoting National Wildlife Fed’n v. Coston, 773 F.2d 1513, 1517 (9th Cir. 1985).
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II. LIKELIHOOD OF SUCCESS ON THE MERITS
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At this juncture, a reasonable inference arises from the evidence
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presented by Plaintiffs (collectively “OTR”) that they have legally protectable
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Federal courts have held that federal, not state, standards govern the
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issuance of a preliminary injunction when a federal court is sitting in diversity
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or exercising supplemental jurisdiction over state law claims. Kane v.
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Chobani, Inc., 2013 WL 3776172 at * 2-3 (N.D. Cal. 2013); Anselmo v. Mull,
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2012 WL 5304799 at *5-6 (E.D. Cal. 2012).
ORDER GRANTING MOTION
FOR PRELIMINARY INJUNCTION- 2
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trade secrets regarding the design of their Outrigger tire which were
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misappropriated by Defendants in that Defendants knew or had reason to know
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those trade secrets were acquired by improper means and used to manufacture
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their competing tire (now called “Extremelift”).
Plaintiffs licensed intellectual property rights to Camoplast Solideal to
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allow Camoplast to build Outrigger design molds and use the molds to
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manufacture Outrigger tires. In 2007, Camoplast subcontracted the
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manufacture of the Outrigger tire to Shandong Hawk International Rubber Co.
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Ltd. (“Superhawk”). Sometime thereafter, Superhawk contracted to
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manufacture tires for Defendant West Worldwide Services, Inc. (“West”).
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These are the tires which Plaintiffs allege infringe upon their trade dress (tire
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tread design). The design of these tires appears to be virtually identical to the
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design of Plaintiffs’ Outrigger tires. A reasonable inference is that Superhawk,
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in breach of confidentiality agreements with Camoplast and its predecessor
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(World Tyres, Ltd.), improperly used Outrigger design molds to manufacture
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the West tires and/or improperly used Plaintiffs’ proprietary information to
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make replica Outrigger design molds to manufacture the West tires. A
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reasonable inference is that West knew or had reason to know Plaintiffs’ trade
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secrets were used to manufacture West’s tires.
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Accordingly, there is a likelihood Plaintiffs will succeed on the trade
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secret misappropriation claim they have asserted pursuant to Washington’s
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Uniform Trade Secrets Act (UTSA). RCW 19.108.010 et seq..3 It follows that
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While the legal analysis in Plaintiffs’ briefing tends to focus on their trade
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dress infringement claim, it is readily apparent from their arguments and the
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evidence offered in support thereof that alleged trade secret misappropriation is
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a critical element of their request for injunctive relief.
ORDER GRANTING MOTION
FOR PRELIMINARY INJUNCTION- 3
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Plaintiffs have at least a “fair chance,” if not a likelihood, of success on their
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trade dress infringement claim, as now discussed.4
To recover for the infringement of a trade dress under the Lanham Act, 15
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U.S.C. §1051 et seq., a plaintiff must establish that (1) “the . . . design is
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nonfunctional,” (2) “the design is inherently distinctive or acquired
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distinctiveness through secondary meaning,” and (3) “there is a likelihood of
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confusion that the consuming public will confuse [the plaintiff’s and the
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defendant’s products].” Disc Golf Ass’n v. Champion Discs, Inc., 158 F.3d
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1002, 1005 (9th Cir. 1998).
The court recognizes that a competing tire which bears the same tread
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design as Plaintiffs’ tire may not violate Plaintiff’s trade dress if the design is
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ultimately deemed “functional” and therefore, not deserving of trademark
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protection. Trade dress protection under federal law is designed to promote
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competition. Secalt S.A. v. Wuxi Shenxi Construction Machinery Company,
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Ltd., 668 F.3d 677, 683 (9th Cir. 2012), citing TrafFix Devices, Inc. v. Mktg.
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Displays, Inc., 532 U.S. 23, 28, 121 S.Ct. 1255 (2001). Such protection “must
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subsist with the recognition that in many instances there is no prohibition
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against copying goods and products.” Id., quoting TrafFix Devices, 532 U.S. at
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29. Rather, “[t]he physical details and designs of a product may be protected
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under the trademark laws only if they are nonfunctional . . . .” Id., quoting
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Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 515 (9th Cir. 1981). Plaintiffs’
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trademark of its trade dress is, however, presumptively valid because it was
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registered in 2012 (U.S. Trademark Registration No. 4,220,169 aka “169
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It appears that all of the other claims pled by Plaintiffs in their Complaint
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(Washington Consumer Protection Act, tortious interference with business
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expectancy, and quantum meruit) are derivative of the trade misappropriation
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and trade dress infringement claims.
ORDER GRANTING MOTION
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Registration”). Talking Rain Beverage Co., Inc. v. South Beach Beverage
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Company, 349 F.3d 601, 603 (9th Cir. 2003). This constitutes a presumption of
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non-functionality. Id. at 605. While this presumption is rebuttable via this
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litigation, it creates, at this early juncture, at least a “fair chance” that Plaintiffs
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will succeed in establishing, as they previously did to the satisfaction of the U.S.
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Patent and Trademark Office (USPTO), that their trade dress (tire tread design)
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is non-functional.5
It appears “functionality” is the critical issue in regard to Plaintiffs’ trade
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dress infringement claim. If Plaintiffs’ trade dress is non-functional, that
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significantly bolsters Plaintiffs’ argument that their tire tread design has
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acquired secondary meaning and that there is a likelihood of consumers
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confusing the Outrigger tire with West’s “Extremelift” tire. The evidence
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presented by Plaintiffs thus far, however, already makes it likely this court will
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conclude Plaintiffs’ tire tread design has acquired secondary meaning over the
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years such that consumers in the relevant market (manufacturers and users of
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aerial work platforms) associate the design with the Outrigger tire. Plaintiffs’
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certificate of registration also gives rise to a presumption of acquired
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A tire of any design is de facto functional, but what renders it functional
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precluding trademark protection is whether it is de jure functional. The
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question is whether the tread design of the Outrigger tire somehow makes the
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tire perform better. Leatherman Tool Grp. v. Cooper Indus., 199 F.3d 1009,
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1012 (9th Cir. 1999). A trademark is functional “when it is essential to the use
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or purpose of the device or when it affects the cost or quality of the device.”
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TrafFix Devices, 532 U.S. at 33. Plaintiffs, as the “one[s] who seek[] to
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establish trade dress protection must carry the heavy burden of showing that the
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feature is not functional, for instance by showing that it is merely an
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ornamental, incidental, or arbitrary aspect of the device.” Id. at 30.
ORDER GRANTING MOTION
FOR PRELIMINARY INJUNCTION- 5
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distinctiveness through secondary meaning and relieves them of the burden of
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proving secondary meaning. Sand Hill Advisors, LLC v. Sand Hill Advisors,
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LLC, 680 F.Supp.2d 1107, 1116 (N.D. Cal. 2010).
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Defendants have yet to offer any evidence which disproves that Plaintiffs’
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tire tread design has acquired secondary meaning among consumers in the
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relevant market. On the other hand, Plaintiffs offer compelling evidence of
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secondary meaning, including that Defendants’ tire is a virtual carbon copy of
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Plaintiffs’ Outrigger tire. Cybergun , S.A., v. JAG Precision, 2012 WL 4868104
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at *6 (D. Nev. 2012), citing Swatch, S.A. v. SIU Wong Wholesale, 1992 WL
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142745, *6 (S.D.N.Y. 1992) (“Evidence that the trade dress or product design
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was intentionally copied by a competitor can support an inference of secondary
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meaning if the circumstances indicate an intent to benefit from the goodwill of
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the prior user through confusion”). At least preliminarily, the circumstances
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indicate an intent by Defendants to benefit from the goodwill of Plaintiffs
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through consumer confusion. A reasonable inference is Defendants copied
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Plaintiffs’ tire tread design, not because it is functional, but because it is non-
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functional and has acquired secondary meaning in the relevant market because
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it is associated with the Outrigger tire. Using that design allows Defendants to
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gain a bigger share of the market by capitalizing on confusion among
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consumers.
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In order to succeed on the merits of their trade dress infringement claim,
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Plaintiffs must show Defendants’ tires will probably cause consumer confusion
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as to the source or sponsorship of the product- in other words, that Defendants’
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tires are produced by or affiliated with Plaintiffs. Rodeo Collection, Ltd. v. West
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Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987). The Ninth Circuit has identified
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a non-exclusive set of eight factors to determine likelihood of confusion: 1)
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strength of the mark; 2) proximity or relatedness of the goods or services; 3)
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similarity of the sight, sound, and meaning of the marks; 4) evidence of actual
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confusion; 5) degree to which the marketing channels converge; 6) type of
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goods and degree of care likely to be exercised by the purchaser; 7) defendant's
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intent in selecting the mark; and 8) likelihood of expansion of product lines.
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AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). The factors
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are not to be weighed rigidly, but are simply to be considered in assessing the
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basic question of whether there is a "likelihood of confusion." Dreamwerks
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Production Group, Inc. v. SKG Studio, 142 F.3d 1127, 1129 (9th Cir. 1998).
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The test is a pliant one. Some factors are more important than others. The
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factors need not be mechanically added up in order to find likelihood of
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confusion.
The evidence offered by Plaintiffs warrants a preliminary finding of a
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likelihood of confusion. The tread design on Defendants’ tire is virtually
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identical to the design on Plaintiffs’ tire; a reasonable inference is the
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Defendants intended to copy the design; and the strength of Plaintiffs’ trade
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dress is significant as consumers in the relevant market recognize Plaintiffs’ tire
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by its tread design. Defendants have yet to offer evidence suggesting why any
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of the factors weigh in their favor.
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Plaintiffs have at least a “fair chance,” if not a likelihood, of success on
their trade dress infringement claim.
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III. LIKELIHOOD OF IRREPARABLE HARM
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At one time, irreparable harm could be presumed from a showing of
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likelihood of success on the merits in trade dress and trademark actions. Marlyn
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Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir.
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2009). More recently, the Ninth Circuit held this is no longer the case in light
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of the U.S. Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C., 547
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U.S. 338 (2006). Herb Reed Enters, LLC v. Fla. Entm’t Mgmt., 736 F.3d 1239,
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1249 (9th Cir. 2013).
ORDER GRANTING MOTION
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Plaintiffs’ evidence adequately demonstrates, as a preliminary matter, that
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they are subject to a threat of immediate irreparable injury by loss of control of
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their reputation and goodwill in the relevant marketplace. If the tire
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manufactured for West is not the result of a misappropriation of Plaintiffs’ trade
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secrets, a legitimate question arises whether that tire is the same quality as
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Plaintiff’s tire. If it is not, that may well damage Plaintiffs’ reputation as
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consumers may well blame Plaintiffs for problems related to West’s tire.
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Plaintiffs’ relationship with its main customer, Genie Industries, has been
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strained because of the sale of the West tire to Genie. West says it was provided
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a design by Genie and that it made modifications which improved the
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functionality of the design. Plaintiffs were compelled to ask Genie if this was
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true. In doing so, Plaintiffs essentially confronted Genie as to whether it was
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complicit in West’s alleged infringement of Plaintiffs’ trade dress. The loss of
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sales to West’s alleged infringing tire can be compensated by money damages.
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The loss of reputation and goodwill cannot.
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IV. BALANCE OF EQUITIES
Defendants contend that due to Plaintiffs’ delay in bringing any action,
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Defendants’ “Extremelift” tire sales have grown to be approximately one-
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quarter of Defendants’ business and therefore, an injunction “will result in a
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certain and significant loss in revenue and potential destruction of a significant
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customer relationship” and “Defendants’ business will likely suffer because
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their business reputation would be harmed by the perception that Defendants
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infringed legitimate trademark rights of Plaintiffs.”
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The court finds Plaintiffs have not unduly delayed in bringing this action.
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Although Plaintiffs indicate it was in October 2012 that they “obtained
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photographs of the Infringing Tires on a third-party freight truck in Moses Lake,
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Washington en route from West’s facilities to Genie for testing,” and that it was
ORDER GRANTING MOTION
FOR PRELIMINARY INJUNCTION- 8
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in April 2013 that they “obtained photographs of the Infringing Tires on a Genie
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machine at a Terex facility in China,” OTR CEO and founder Frederick Taylor
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says it was not until October 2013 that Plaintiffs were able to obtain a West tire.
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(ECF No. 4 at Paragraph 14). The declaration of one of Plaintiff’s experts,
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Owsley Cheek, indicates his comparison of the West tire and the Outrigger tire
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was completed in late January 2014. (ECF No. 8-2). This action was filed on
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April 2, 2014. It appears that once Plaintiffs had possession of a West tire, they
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engaged in a prompt and necessary investigation before deciding to pursue
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claims against Defendants, particularly a claim for misappropriation of trade
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secrets.
The balance of equities tips sharply in favor of Plaintiffs because they
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will be damaged by what, at this juncture, appears to be infringing behavior by
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Defendants who “will only have to stop marketing and selling the infringing
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products which are only a portion of [their] product offerings.” Cybergun,
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2012 WL 4868104 at *6. The amount of the injunction bond should, however,
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be sufficient to compensate Defendants for loss of revenue and destruction of
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customer relationships in the event Defendants ultimately prevail on the merits.
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V. PUBLIC INTEREST
The public interest favors a preliminary injunction where there is a
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likelihood of confusion. Fiji Water Co. v. Fiji Mineral Water USA, LLC, 741
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F.Supp.2d 1165, 1176 (C.D. Cal. 2010). Avoiding confusion to the consumers
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is in the public interest. Internet Specialties West, Inc. v. Milon-Digiorgio
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Enters., 559 F.3d 985, 993 (9th Cir. 2009).
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As discussed above, Plaintiffs have preliminarily demonstrated a
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likelihood of confusion between their Outrigger tire and Defendants’ tire.
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Furthermore, Plaintiffs have presented evidence of actual confusion, that being
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an instance where Genie sought to purchase the West tire from Plaintiffs.
ORDER GRANTING MOTION
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(McFadin Declaration, ECF No. 6 at Paragraph 7). Therefore, the public
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interest weighs in favor of granting a preliminary injunction.
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VI. INJUNCTION BOND
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Pursuant to Fed. R. Civ. P. 65(c), a court may issue a preliminary
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injunction “only if the movant gives security in an amount that the court
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considers proper to pay the costs and damages sustained by any party found to
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have been wrongfully enjoined or restrained.”
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Defendants offer no argument or evidence regarding the amount of an
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injunction bond. Assuming the validity of comments made by Plaintiffs’
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counsel at oral argument regarding the amount of revenue the Defendants stand
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to lose per month if they are enjoined from selling their tire (approximately
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$150,000 per month), and assuming that trial may not occur until approximately
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a year from now, the court will set the bond amount at $1.8 million ($150,000 x
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12 months = $1,800,000).
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VIII. ORDER
Plaintiffs’ Motion For Preliminary Injunction (ECF No. 3) is
GRANTED.
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1. Defendants, together with their respective agents, servants, employees,
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affiliates, attorneys, and persons in active concert or participation with them, are
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hereby enjoined pending entry of judgment in this action from:
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a. Directly or indirectly making any commercial use of OTR’s
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registered trade dress as defined in U.S. Trademark Registration No. 4,220,169 for
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the Outrigger tire tread design, or any tire tread design that is confusingly similar
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to the Outrigger tire tread design;
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ORDER GRANTING MOTION
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b. Directly or indirectly using OTR’s Outrigger trade dress, or any
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of OTR’s trademarks or colorable imitations thereof, in connection with the sale,
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offer for sale, advertising or promotion of any goods or services;
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c. Directly or indirectly: (i) manufacturing, producing, distributing,
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circulating, selling, offering for sale, advertising, promoting or displaying any
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product or service which tends to relate or connect such product or service in any
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way to OTR; or (ii) making any false description or representation of origin
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concerning any goods or services offered for sale by Defendants; and
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d. Directly or indirectly utilizing any of OTR’s confidential and
proprietary trade secrets for any reason.
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2. This injunction shall take effect upon OTR’s posting of a bond of
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$1,800,000 with the Clerk of the Court for the payment of costs and damages that
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may be incurred by any party found to be wrongfully restrained by this order.
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IT IS SO ORDERED. The District Executive shall forward copies of
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this order to counsel of record.
DATED this
14th
day of May, 2014.
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s/Lonny R. Suko
LONNY R. SUKO
Senior United States District Judge
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ORDER GRANTING MOTION
FOR PRELIMINARY INJUNCTION- 11
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