Kische USA LLC v Simsek et al

Filing 130

ORDER denying Plaintiff's 101 Second Motion for Summary Judgment. Signed by Judge James L. Robart. (PM)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 KISCHE USA LLC, CASE NO. C16-0168JLR ORDER DENYING PLAINTIFF’S SECOND MOTION FOR SUMMARY JUDGMENT Plaintiff, 11 v. 12 13 ALI SIMSEK, et al., Defendants. 14 15 I. INTRODUCTION 16 Before the court is Plaintiff Kische USA LLC’s (“Kische”) second motion for 17 summary judgment.1 (2d MSJ (Dkt. # 101).) Defendants oppose the motion. (2d MSJ 18 19 20 21 22 Defendants Ali Simsek, Diane Walker, and JD Stellar LLC (“JD Stellar”) (collectively, “Defendants”) have also filed a motion for summary judgment. (Defs. MSJ (Dkt. # 121).) That motion is not yet ripe for the court’s consideration (see id. at 1 (stating a noting date of December 8, 2017)), and thus the court makes no ruling on that motion at this time. However, where Defendants argue in response to Kische’s motion that the court should enter summary judgment in their favor, the court addresses the argument. See infra. 1 ORDER - 1 1 Resp. (Dkt. # 107).) The court has considered the motion, the parties’ submissions in 2 favor of and in opposition to the motion, the relevant portions of the record, and the 3 applicable law. Being fully advised,2 the court DENIES Kische’s motion for the reasons 4 set forth below. 5 6 II. BACKGROUND The court has extensively detailed the factual and procedural background of this 7 case in numerous prior orders. (See, e.g., 6/29/16 Order (Dkt. # 39); 12/13/16 Order 8 (Dkt. # 65); 2/22/17 Order (Dkt. # 74); 9/6/17 Order (Dkt. # 95); 11/2/17 Order (Dkt. 9 # 115).) Thus, in this order, the court recounts only the facts salient to Kische’s instant 10 11 motion. Mehmet Uysal, who resides in Turkey, formed Kische in 2007. (Uysal Decl. (Dkt. 12 # 103) at 2.)3 Beginning at that time, Kische “designed, imported[,] and sold clothing to 13 prominent retailers in the United States, including Nordstrom, Haute Look, Winners, T.J. 14 Maxx, Marshalls[, and] Ross.” (Id.) Kische contends that Mr. Simsek and Ms. Walker 15 abused their positions as Kische managers to misappropriate Kische’s assets and form JD 16 Stellar, a competing business. (See id. (stating that Mr. Simsek and Mr. Walker “worked 17 as managers of Kische”); SAC (Dkt. # 75) ¶¶ 4.19, 4.23-4.26; 9/6/17 Order (concluding 18 that Mr. Simsek breached duties that he owed to Kische as its manager).) Of particular 19 20 21 2 Kische requests oral argument (see 2d MSJ at 1), but the court determines that oral argument would not be helpful to the court’s disposition of the motion, Local Rules W.D. Wash. LCR 7(b)(4). Accordingly, the court denies Kische’s request. Kische mislabels Mr. Uysal’s declaration on the docket as “Declaration of Plaintiff.” (See Uysal Decl.) Mr. Uysal is not, however, a party to this case. (See generally Dkt.) 3 22 ORDER - 2 1 relevance here, Kische contends that Defendants invalidly transferred and used two 2 trademarks of which Kische is “the senior user and owner”: (1) Kische word mark # 682 3 (“the Kische Mark”), and (2) Marseille design mark # 455 (“the Marseille Mark”) 4 (collectively, “the Marks”).4 (2d MSJ at 6 (citing SAC ¶¶ 4.9, Ex. 6 (Dkt. # 75-1) at 5 35-36 (“Kische Reg.”), 4.10, Ex. 7 (Dkt. # 75-1) at 37-38 (“Marseille Reg.”)).) On this 6 basis, Kische claims that Defendants infringed the marks in violation of the Lanham Act, 7 15 U.S.C. § 1114, and common law. (SAC ¶¶ 5.1-6.7.) 8 Kische registered the Marseille Mark on May 17, 2011, and the Kische Mark on 9 August 5, 2014, with the United States Patent and Trademark Office (“USPTO”). (See 10 Kische Reg.; Marseille Reg.) The registrations state that Kische first used the Kische 11 Mark in 2007 and the Marseille Mark in 2010. (See Kische Reg.; Marseille Reg.) 12 According to Mr. Uysal, Kische “used its trademarks in commerce in Washington State, 13 as well as regionally across the United States through its shipments and distributions to 14 major retailers.” (Uysal Decl. at 2; see also Simsek Decl. (Dkt. # 108) ¶ 8 (agreeing that 15 Kische sold clothing under the Marks).) Kische’s sale of clothing with the Marks 16 “grossed annual sales of $13 million” in 2011. (Uysal Decl. at 1.) Kische promoted the 17 clothing bearing the Marks “through the internet, email and print advertising, word of 18 Kische’s briefing also implicates two other marks—a Kische design mark and a Marseille word mark. (See 2d MSJ at 8 (discussing both the Marseille design mark and the Marseille word mark); see also SAC ¶ 4.8, Ex. 5 (Dkt. # 75-1) at 33-34 (registering a Kische design mark on December 23, 2008, but showing that Kische later canceled the registration on July 24, 2015); id. ¶ 4.30, Ex. 25 (Dkt. # 75-2) (showing that after the Marseille Mark was assigned to JD Stellar, JD Stellar also registered a Marseille word mark).) However, Kische does not allege infringement of those marks or move for summary judgment on any infringement of those marks other than for transfer of the Marseille word mark. (See SAC ¶¶ 5.1-6.7; 2d MSJ at 28.) 4 19 20 21 22 ORDER - 3 1 mouth, showrooms, tradeshows, retail agents, and at clothing showcase events.” (Id. at 2 2.) 3 On March 13, 2014, Mr. Simsek—while he was still Kische’s manager— 4 facilitated the assignment of the Marseille Mark to JD Stellar.5 (See SAC ¶ 4.23, Ex. 18 5 (Dkt. # 75-1) (“Assignment”) at 55.) After the assignment, JD Stellar filed for federal 6 trademark protection of a Marseille word mark. (See SAC ¶ 4.30, Ex. 25 at 6.) The 7 registration stated that the mark had first been used on June 20, 2010. (Id.) The word 8 mark was registered to JD Stellar on July 7, 2015. (Id.; Simsek Decl. ¶ 22, Ex. F.) Citing 9 two purchase orders from JD Stellar to TJ Maxx in 2014, Kische contends that after the 10 transfer and redesign of the Marseille Mark, JD Stellar used the mark in connection with 11 selling its goods. (2d MSJ at 9 (citing Herschlip Decl. (Dkt. # 102) at 2, Exs. F, G).) 12 Kische also contends that JD Stellar used the Kische Mark to “sell clothing goods[] and 13 solicit sales” by using the mark in emails to customers. (Id. at 12 (citing Mitchell Decl. 14 (Dkt. # 104) at 2, Exs. D-F).) 15 Defendants’ version of events does not differ significantly from Kische’s.6 16 However, Defendants maintain that “Kische has not delivered a single clothing order 17 since 2014” (2d MSJ Resp. at 6 (citing Simsek Decl. ¶ 13, Ex. B); but see id. at 8 (stating 18 19 20 21 22 In its September 6, 2017, order on Kische’s first motion for summary judgment, the court found that Mr. Simsek breached his common law fiduciary duty by using Kische’s property for his own benefit at the time he assigned the Marseille Mark from Kische to JD Stellar. (9/6/17 Order at 31.) 5 The court does not recount Defendants’ explication of Mr. Uysal’s financial difficulties in Turkey because those facts are irrelevant to the trademark infringement claims before the court. (See 2d MSJ Resp. at 7; Foreman Decl. (Dkt. # 109) ¶¶ 3-10; Simsek Decl. ¶¶ 7, 10-15.) 6 ORDER - 4 1 that “[t]he last shipment of Kische’s Marseille mark clothing was February 26, 2014, and 2 the last shipment of Kische’s Kische mark clothing . . . was May 28, 2016”)) and that JD 3 Stellar never sold or advertised any clothing bearing the Kische Mark (Simsek Decl. 4 ¶ 17). Defendants further aver that the Kische Mark was the more popular of the Marks 5 and accounted for at least 90 percent of Kische’s sales prior to 2014. (Id. ¶ 8.) 6 Defendants contend that Kische sold only small quantities of the Marseille Mark 7 “primarily to select Canadian customers.” (Id. ¶ 9.) Mr. Simsek attests that Mr. Uysal’s 8 goal was to turn the Kische Mark “into an internationally known brand” and that Mr. 9 Uysal disfavored the Marseille Mark as a result. (Id. ¶ 8.) Mr. Simsek further states that 10 the Marseille Mark has also made up only a small percentage of JD Stellar’s sales, while 11 the “vast majority” of JD Stellar’s sales have come from its Dantelle mark. (Id. ¶ 20, Ex. 12 D.) Defendants maintain that JD Stellar stopped selling any clothing under the Marseille 13 Mark after they received a cease-and-desist letter from Kische’s counsel on September 14 11, 2015. (Id. ¶ 26.) 15 Kische now seeks summary judgment on its claims that Defendants infringed the 16 Marks. (See 2d MSJ at 15-28; SAC ¶¶ 5.1-5.7 (alleging trademark infringement in 17 violation of 15 U.S.C. § 1114), 6.1-6.7 (alleging common law trademark infringement).) 18 19 20 III. A. ANALYSIS Legal Standard Summary judgment is appropriate if the evidence shows “that there is no genuine 21 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 22 Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Galen v. ORDER - 5 1 Cty. of L.A., 477 F.3d 652, 658 (9th Cir. 2007). A fact is “material” if it might affect the 2 outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A 3 factual dispute is “‘genuine’ only if there is sufficient evidence for a reasonable fact 4 finder to find for the non-moving party.” Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 5 992 (9th Cir. 2001) (citing Anderson, 477 U.S. at 248-49). 6 The moving party bears the initial burden of showing there is no genuine dispute 7 of material fact and that it is entitled to prevail as a matter of law. Celotex, 477 U.S. at 8 323. If the moving party does not bear the ultimate burden of persuasion at trial, it can 9 show the absence of such a dispute in two ways: (1) by producing evidence negating an 10 essential element of the nonmoving party’s case, or (2) by showing that the nonmoving 11 party lacks evidence of an essential element of its claim or defense. Nissan Fire & 12 Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1106 (9th Cir. 2000). If the moving party 13 will bear the burden of persuasion at trial, it must establish a prima facie showing in 14 support of its position on that issue. UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 15 1465, 1471 (9th Cir. 1994). That is, the moving party must present evidence that, if 16 uncontroverted at trial, would entitle it to prevail on that issue. Id. at 1473. If the moving 17 party meets its burden of production, the burden then shifts to the nonmoving party to 18 identify specific facts from which a fact finder could reasonably find in the nonmoving 19 party’s favor. Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 252. 20 The court is “required to view the facts and draw reasonable inferences in the light 21 most favorable to the [nonmoving] party.” Scott v. Harris, 550 U.S. 372, 378 (2007). 22 The court may not weigh evidence or make credibility determinations in analyzing a ORDER - 6 1 motion for summary judgment because those are “jury functions, not those of a judge.” 2 Anderson, 477 U.S. at 249-50. Nevertheless, the nonmoving party “must do more than 3 simply show that there is some metaphysical doubt as to the material facts . . . . Where 4 the record taken as a whole could not lead a rational trier of fact to find for the 5 nonmoving party, there is no genuine issue for trial.” Scott, 550 U.S. at 380 (internal 6 quotation marks omitted) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 7 475 U.S. 574, 586-87 (1986)). 8 B. 9 Second Motion for Summary Judgment As a threshold issue, Defendants take issue with the fact that this motion is 10 Kische’s second motion for summary judgment. (2d MSJ Resp. at 5.) District courts 11 have discretion to entertain second motions for summary judgment. Hoffman v. 12 Tonnemacher, 593 F.3d 908, 909 (9th Cir. 2010). The Ninth Circuit has stated that 13 “allowing a party to file a second motion for summary judgment is logical, and it fosters 14 the ‘just, speedy, and inexpensive’ resolution of suits.” Id. at 911 (quoting Fed. R. Civ. 15 P. 1); see also id. at 912 (“Allowing a successive summary judgment motion potentially 16 can save all concerned the far greater expenses of a trial.”). However, the Ninth Circuit 17 also cautioned that district courts should “weed out frivolous or simply repetitive 18 motions.” Id. In exercising its discretion on this question, a district court may consider 19 the following factors: “‘(1) an intervening change in controlling law; (2) the availability 20 of new evidence or an expanded factual record; and (3) [the] need to correct a clear error 21 or prevent manifest injustice.’” Brazill v. Cal. Northstate Coll. of Pharm., LLC, No. CIV. 22 // ORDER - 7 1 2:12-1218 WBS GGH, 2013 WL 4500667, at *1 (E.D. Cal. Aug. 22, 2013) (quoting 2 Whitford v. Boglino, 63 F.3d 527, 530 (7th Cir. 1995)). 3 Although Defendants contest Kische’s filing of a second motion for summary 4 judgment, the court will consider the motion in the interest of judicial efficiency. (2d 5 MSJ Resp. at 5.) Even though many of the underlying facts and issues are the same as in 6 Kische’s first motion, the second motion is not patently frivolous or simply repetitive. 7 See Hoffman, 593 F.3d at 911. Moreover, the first motion for summary judgment 8 involved the breach and duty elements of Kische’s breach of contract and fiduciary duty 9 claims against Mr. Simsek, whereas this motion involves Kische’s trademark 10 infringement claims. (Compare 1st MSJ (Dkt. # 85), with 2d MSJ.) 11 However, if left unchecked, repetitive motions practice can create significant costs 12 and expend considerable court resources. Thus, the court orders any party wishing to file 13 an additional dispositive motion to first seek the court’s leave. See Fed. R. Civ. P. 56(b) 14 (stating that “[u]nless a different time is set by local rule or the court orders otherwise, a 15 party may file a motion for summary judgment at any time until 30 days after the close of 16 all discovery”); (see also Sched. Order (Dkt. # 78) at 1 (setting the dispositive motions 17 deadline as January 9, 2018).) A party’s failure to seek the court’s leave will result in the 18 court striking the dispositive motion as improperly filed. 19 C. 20 Kische’s Motion As presented in its motion, Kische seeks summary judgment on four issues: (1) 21 that Kische had valid common law and federal trademark rights in the Marks; (2) that Mr. 22 Simsek’s transfer of the Marseille Mark was invalid and should be reversed; (3) that ORDER - 8 1 Defendants infringed on the Marks by causing a likelihood of consumer confusion; and 2 (4) that Defendants knowingly and willfully infringed on the Marks.7 (2d MSJ at 6.) As 3 a preliminary matter, Defendants argue Kische’s motion is so confused and unclear that 4 they cannot properly respond to it. (See 2d MSJ Resp. at 5.) But Defendants exaggerate 5 the severity of any ineloquence in Kische’s motion. Although Kische does not expressly 6 state that it seeks summary judgment on its trademark infringement claims—instead 7 stating that it requests judgment in its favor on the issues of whether it had rights in the 8 Marks and whether Defendants infringed on the Marks by causing a likelihood of 9 consumer confusion—Kische’s motion adequately informs Defendants and the court of 10 Kische’s arguments. (See 2d MSJ at 14 (using the subheading “JD Stellar Has 11 Committed Federal Trademark Infringement In Violation of 15 U.S.C. § 1114”); see also 12 2d MSJ Resp. at 13-25 (contesting the entry of summary judgment on the trademark 13 infringement claims).) Indeed, those two “issues” comprise the two elements of a 14 trademark infringement claim under both Section 32 of the Lanham Act and common 15 law.8 See Applied Info. Scis. Corp. v. eBay, Inc., 511 F.3d 966, 969 (9th Cir. 2007) 16 (stating that a plaintiff asserting a trademark infringement claim must prove that (1) it has 17 7 18 19 20 However, Kische elsewhere in its motion states that three issues are suitable for summary judgment: (1) whether the transfer of the Marseille Mark to JD Stellar was proper; (2) whether JD Stellar’s use of the Marks “in connection with the sale of identical clothing goods create[d] a likelihood of confusion”; and (3) whether the Marseille Mark should be transferred to Kische. (Id. at 13; see also id. at 14.) In the interest of comprehensively addressing the motion, the court takes up the four issues identified above. 8 21 22 Although Kische does not expressly say so in either its second amended complaint or second motion for summary judgment, Kische appears only to assert a theory of direct trademark infringement. (See, e.g., SAC; 2d MSJ.) Thus, the court does not address any other theory of liability. ORDER - 9 1 valid, protectable trademarks, and (2) the defendant’s use of the marks in commerce is 2 likely to cause confusion); Hokto Kinoko Co. v. Concord Farms, Inc., 810 F. Supp. 2d 3 1013, 1031 (C.D. Cal. 2011) (analyzing common law and Lanham Act trademark 4 infringement claims together because “courts have uniformly held that common law and 5 statutory trademark infringement are merely specific aspects of unfair competition”). 6 The court thus proceeds to analyze whether Kische is entitled to summary judgment on 7 its trademark infringement claims. 8 1. Laches 9 Before turning to the merits of the claims, the court addresses Defendants’ 10 argument that the doctrine of laches applies because Kische has not sold any clothing or 11 used either of the Marks since 2014.9 (2d MSJ Resp. at 16-17.) Kische argues that the 12 doctrine is inappropriate on the facts of this case. (Reply (Dkt. # 110) at 7-8.) 13 A laches defense “can defeat an otherwise valid claim under the Lanham Act.” 14 Tillamook Country Smoker, Inc. v. Tillamook Cty. Creamery Ass’n, 465 F.3d 1102, 1108 15 (9th Cir. 2006) (internal quotation marks omitted). “The limitations period 16 for laches starts from the time the plaintiff knew or should have known about its potential 17 cause of action.” Id. (internal quotation marks omitted). This standard can be satisfied 18 by either actual or constructive knowledge because “[c]ompanies expecting judicial 19 20 21 22 9 The court notes that Defendants appear to conflate their laches argument with their abandonment argument. (See id. (stating that Kische “should be barred under laches from making an infringement claim[] because, since 2014, it has abandoned the production of clothing and abandoned the use of any marks, including [the] Marseille [mark]”).) Because the doctrine of laches and the abandonment defense are distinct legal doctrines, the court addresses them separately. See infra § III.C.1.i. ORDER - 10 1 enforcement of their marks must conduct an effective policing effort.” Grupo Gigante Sa 2 De CV v. Dallo & Co. Inc., 391 F.3d 1088, 1102 (9th Cir. 2004) (emphasis omitted). 3 Laches requires a defendant to show that the plaintiff’s delay in filing suit was 4 unreasonable and that the defendant suffers prejudice from the delay. See Jarrow 5 Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 838 (9th Cir. 2002). In a trademark 6 infringement action, the court engages in two steps to determine whether a delay was 7 unreasonable. See id. First, the court determines when the statute of limitations period 8 expired for “the most closely analogous action under state law.” Jarrow Formulas, 304 9 F.3d at 836. “If the plaintiff filed within that statutory period, there is a strong 10 presumption against laches.” Tillamook, 465 F.3d at 1108. The district court then 11 balances six factors to determine whether the trademark owner’s delay in filing suit was 12 unreasonable: “(1) strength and value of the trademark rights asserted; (2) plaintiff’s 13 diligence in enforcing [the] mark; (3) harm to [the] senior user if relief is denied; (4) good 14 faith ignorance by [the] junior user; (5) competition between [the] senior and junior 15 users; and (6) extent of harm suffered by the junior user because of [the] senior user’s 16 delay.” Id. 17 Defendants make no argument regarding an analogous statute of limitations or the 18 six factors bearing on unreasonableness. (See 2d MSJ Resp.) In addition, Defendants 19 make no showing of prejudice from any delay in Kische asserting its trademark 20 infringement claims. (See id.) These omissions are fatal to Defendants’ contention that 21 laches should bar Kische’s trademark claims, and the court declines to apply the laches 22 // ORDER - 11 1 doctrine here. Accordingly, the court proceeds to analyze the trademark infringement 2 claims. 3 2. Trademark Infringement Claims 4 To prove a claim for trademark infringement, Kische must show that (1) it has 5 valid, protectable trademarks,10 and (2) Defendants’ use of the Marks in commerce is 6 likely to cause consumer confusion. Applied Info. Scis., 511 F.3d at 969 (citing 15 7 U.S.C. ¶ 1114(1)(a)). Courts often characterize those two elements as comprising three 8 distinct requirements: (1) a valid, protectable trademark (2) used in commerce (3) in such 9 a way that is likely to cause consumer confusion. See Karl Storz Endoscopy Am., Inc. v. 10 Surgical Techs., Inc., 285 F.3d 848, 855 (9th Cir. 2002) (“We must address whether [the 11 defendant] used [the plaintiff’s] trademark in commerce.”); UL LLC v. Space Chariot 12 Inc., 250 F. Supp. 3d 596, 608 (C.D. Cal. 2017) (addressing whether the defendant used a 13 mark “identical with, or substantially indistinguishable from” the mark at issue “in 14 connection with the sale, offering for sale, distribution, or advertising of goods or 15 services” before addressing the likelihood of consumer confusion). The key inquiry in a 16 claim for trademark infringement is whether the infringing use of a valid trademark 17 “creates a likelihood that the consuming public will be confused as to who makes what 18 product.” Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 632 (9th Cir. 2008). “Because of 19 20 21 22 The Lanham Act defines a trademark as “any word, name, symbol, or device, or any combination thereof” that is “used by a person” or that “a person has a bona fide intention to use in commerce and applies to register on the principal register . . . to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.” 15 U.S.C. § 1127. 10 ORDER - 12 1 the intensely factual nature of trademark disputes, summary judgment is generally 2 disfavored in the trademark arena.” Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 3 1140 (9th Cir. 2002). 4 a. Valid Ownership 5 The court first considers whether Kische owns the marks. Kische contends that it 6 “has established prima facie evidence of its trademarks’ validity by virtue of their 7 registration, and established common law rights to [the] marks by virtue of their prior 8 use.” (2d MSJ at 16.) “Registration of a mark on the Principal Register in the Patent and 9 Trademark Office constitutes prima facie evidence of the validity of the registered mark 10 and of [the registrant’s] exclusive right to use the mark on the goods and services 11 specified in the registration.” Applied Info. Scis., 511 F.3d at 970 (internal quotation 12 marks omitted and alteration in original). The defendant can rebut the presumption by 13 demonstrating that the registrant had not established valid ownership rights in the mark at 14 the time of registration. Sengoku Works v. RMC Int’l, 96 F.3d 1217, 1219-20 (9th Cir. 15 1996). 16 i. The Kische Mark 17 Kische has established prima facie ownership of the Kische Mark because Kische 18 registered the mark on August 5, 2014. (See Kische Reg.); Applied Info. Scis., 511 F.3d 19 at 970. Defendants do not attempt to rebut this showing by arguing that Kische did not 20 have valid ownership rights at the time of registration. (See generally 2d MSJ Resp.); see 21 Sengoku Works, 96 F.3d at 1219-20. Rather, Defendants challenge Kische’s ownership 22 by arguing that Kische abandoned it. (2d MSJ Resp. at 16.) They contend that Kische ORDER - 13 1 has not sold any clothing under the mark since 2014, “has not offered any evidence of a 2 plan or even the possibility of starting to sell clothing again,” and is “now a presumably 3 insolvent company with no means of production.” (Id. at 17.) 4 “Abandonment is a defense to a claim of infringement of a registered trademark.” 5 Grocery Outlet Inc. v Albertson’s Inc., 497 F.3d 949, 951 (9th Cir. 2007). Abandonment 6 requires “both discontinuance of all bona fide trademark use in the ordinary course of 7 trade and an intent not to resume such use.”11 Electro Source, LLC v. 8 Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 933 (9th Cir. 2006) (citing 15 U.S.C. 9 § 1127). Abandonment requires that an entity completely cease or discontinue its 10 trademark use, and unless use “is actually terminated, the intent not to resume use prong 11 of abandonment does not come into play.” Id. at 937-38. The party claiming 12 abandonment bears the burden of proving both elements, see Grocery Outlet, 497 F.3d at 13 951, and the proof required is “strict,” see Wallack v. Idexx Labs., Inc., 14 No. 11cv2996-GPC (KSC), 2015 WL 5943844, at *5 (S.D. Cal. Oct. 13, 2015) (“The 15 Ninth Circuit has not decided whether ‘strictly proved’ means to prove by clear and 16 convincing evidence, but the burden of proof is high.”). Nonuse for three consecutive 17 years constitutes prima facie evidence of abandonment, although it does not shift the 18 burden of proof to the trademark owner. See Herb Reed Enters., LLC v. Fla. Entm’t 19 Mgmt., Inc., 736 F.3d 1239, 1247-48 (9th Cir. 2013); Abdul-Jabbar v. Gen. Motors 20 Corp., 85 F.3d 407, 411 (9th Cir. 1996). 21 11 22 A trademark may also be abandoned when it becomes generic. See Grocery Outlet, 497 F.3d at 951. ORDER - 14 1 Defendants have not “strictly proved” abandonment of the Kische Mark. See 2 Wallack, 2015 WL 5943844, at *5. Mr. Simsek attests that Kische has not sold any 3 clothing under either of the Marks for the last three years—since May 28, 2014 (Simsek 4 Decl. ¶ 13, Ex. B), which constitutes prima facie evidence of abandonment, Herb Reed, 5 736 F.3d at 1247-48. However, Defendants fail to meet their burden of proving intent not 6 to resume use of the Marks. Wallack, 2015 WL 5943844, at *5. They rely only on 7 conclusory assertions to make this showing. (See 2d MSJ Resp. at 17.) For example, 8 Defendants state that Kische “has not offered any evidence of a plan or even the 9 possibility of starting to sell clothing again.” (Id.) But this assertion falls far short of the 10 strict proof Defendants must put forth to demonstrate abandonment. In addition, even if 11 Defendants’ assumption that Kische is no longer a solvent business is correct (id. (stating 12 that Kische is “now a presumably insolvent company”)), “a failing, yet ongoing, business 13 [does not] automatically abandon[] its mark,” Electro Source, 458 F.3d at 933. For these 14 reasons, the court finds that Defendants have not met their burden of proving 15 abandonment and denies Defendants’ request to grant judgment in their favor on the 16 trademark infringement claims on this basis. (See 2d MSJ Resp. at 17 (“[U]nder Rules 17 56(e)(4) and 56(f), the [c]ourt is asked to enter a ruling that [Kische’s] infringement 18 claims must fail . . . .”).) 19 ii. The Marseille Mark 20 As to the Marseille Mark, the undisputed evidence before the court shows that JD 21 Stellar is currently the registered owner of the Marseille Mark. (See Assignment.) Thus, 22 the court presumes that JD Stellar owns the trademark. Sengoku Works, 96 F.3d at 1219 ORDER - 15 1 (“When proving ownership of a trademark, federal registration of the mark is prima facie 2 evidence that the registrant is the owner of the mark.”). However, Kische can rebut this 3 presumption by “showing that the registrant had not established valid ownership rights in 4 the mark at the time of registration—in other words, if the non-registrant can show that 5 he used the mark in commerce first, then the registration may be invalidated.”12 Id.; see 6 also Dep’t of Parks & Recreation v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1124 (9th 7 Cir. 2006) (stating that the plaintiff “may rebut the presumption of ownership [in favor of 8 the defendant] with evidence establishing its own prior use in commerce of the registered 9 mark”). Kische must prove “(1) that it actually adopted and used the mark[] in commerce 10 prior to [JD Stellar’s] registration in such a manner that sufficiently associated the mark[] 11 with” Kische’s sale of clothing, and “(2) that its use of the mark[] was continuous and not 12 interrupted.” Id. at 1126. Prior use in commerce includes an element of actual use and 13 an element of display. Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1159 (9th Cir. 14 2001) (citing 15 U.S.C. § 1127). In evaluating these elements, the court uses a totality of 15 the circumstances approach to determine whether the mark was used “in a way 16 sufficiently public to identify or distinguish the marked goods in an appropriate segment 17 of the public mind.” Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1205 (9th 18 Cir. 2012) (internal quotation marks omitted); see also Airs Aromatics, LLC v. Opinion 19 20 21 22 12 In this regard, Defendants are incorrect that because JD Stellar is the registered owner of Marseille mark, Kische’s claim fails as a matter of law. (See 2d MSJ Resp. at 15 (“Because JD Stellar’s use of the Marseille mark occurred during the period of time it was the registered owner and not [Kische], there cannot be infringement.”).) The court therefore denies Defendants’ request to “enter a ruling that [Kische’s] infringement claims must fail due to” JD Stellar’s registration of the Marseille mark. (Id. (citing Fed. R. Civ. P. 56(e)(4), (f)).) ORDER - 16 1 Victoria’s Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 599 (quoting Brookfield 2 Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1052 (9th Cir. 1999)) 3 (“Continuous usage requires sufficiently public usage as ‘to identify or distinguish the 4 marked goods in an appropriate segment of the public mind as those of the adopter of the 5 mark.’”). Under this approach, the court considers actual sales, the genuineness and 6 commercial character of the activity, the amount of business transacted, the degree of 7 ongoing activity to the holder to conduct the business using the mark, and whether the 8 mark was sufficiently public, among other factors. Rearden, 683 F.3d at 1205. 9 Although Kische does not dispute that JD Stellar is the registered owner of the 10 Marseille Mark, Kische argues that it acquired ownership of the Marseille Mark before 11 JD Stellar by using it in commerce before JD Stellar’s registration. (2d MSJ at 17.) The 12 court concludes that Kische fails to meet its burden of production regarding Kische’s 13 prior use. See id. at 1208. 14 To prove prior use, Kische proffers Mr. Simsek’s deposition testimony, a 15 cease-and-desist letter from Kische’s counsel, Defendants’ answers to Kische’s requests 16 for admission, and pictures of clothing bearing a Marseille label. (See 2d MSJ at 17.) 17 However, when viewing this evidence in the light most favorable to Defendants, Kische 18 falls short of demonstrating prior use as a matter of law. First, the deposition testimony, 19 cease-and-desist letter, and responses to the requests for admission demonstrate at best 20 establish a dispute of material fact as to whether Kische first used the Marseille Mark in 21 commerce. For example, Mr. Simsek testified that he believed Kische began using the 22 Marseille mark in 2011 but was “not sure” and that Kische stopped using the mark in ORDER - 17 1 2012. (Herschlip Decl. at 1, Ex. A (“Simsek Dep.”) at 44.) In addition, Kische’s 2 counsel’s cease-and-desist letter states only that “on information and belief,” Kische had 3 used the Marseille mark in commerce since August 2010, and thus is insufficient to 4 demonstrate prior use. (Id. at 2, Ex. D at 42.) Further, Defendants’ answers to Kische’s 5 requests for admission state only that Kische “briefly” used the Marseille Mark, Mr. 6 Uysal directed Mr. Simsek to stop using the Marseille Mark, and the mark was first used 7 in August 2010. (Id. at 2, Ex. B at RFA Nos. 47, 82, 110.) Finally, the court cannot 8 discern what Kische intends the pictures to demonstrate because Kische does not provide 9 any context for the pictures. (See, e.g., id. at 2 (describing the exhibit as “[a] true and 10 correct copy of JD Stellar’s MARSEILLE work mark specimen of use”).) In short, none 11 of the proffered material illustrates the exemplary factors the court evaluates under the 12 totality of circumstances analysis.13 13 The other piece of evidence Kische presents in support of demonstrating its prior 14 use is its May 17, 2011, registration of the Marseille Mark before the mark was later 15 assigned to JD Stellar. (See 2d MSJ at 17 (citing Marseille Reg.).) In the registration, 16 Kische stated that it first used the mark on June 20, 2010, and first used the mark in 17 commerce on August 10, 2010. (Marseille Reg.) Although the statements in the 18 To the extent that other material in the voluminous docket supports Kische’s assertion of prior use, Kische bears responsibility for bringing that material to the court’s attention. See Celotex, 477 U.S. at 323 (stating that the party seeking summary dismissal of the case “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact”); United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (per curiam) (“Judges are not like pigs, hunting for truffles . . . .”). Accordingly, the court does not trawl the record for additional material helpful to Kische’s position. 13 19 20 21 22 ORDER - 18 1 registration suggest Kische used the mark in commerce before JD Stellar, they fail to 2 demonstrate first use as a matter of law. See Halicki Films LLC v. Sanderson Sales & 3 Mktg., 547 F.3d 1213, 1226 (9th Cir. 2008) (stating that to acquire ownership of a 4 trademark, “[i]t is not enough to have invented the mark first or even to have registered it 5 first; the party claiming ownership must have been the first to actually use the mark in the 6 sale of goods or services”). Kische puts forth no evidence to support any other factors 7 under the totality of circumstances test, such as actual sales, the genuineness and 8 commercial character of the activity, the amount of business transacted, the degree of 9 ongoing activity to the holder to conduct the business using the mark, or whether the 10 mark was sufficiently public.14 See Rearden, 683 F.3d at 1205; (see also 2d MSJ.) In 11 short, it is simply not enough for Kische to state that it first used the Marseille Mark in 12 commerce—it must actually demonstrate that it did so through evidence other than its 13 prior registration. See id.; Halicki Films, 547 F.3d at 1226. 14 Kische also fails to show that its use of the Marseille Mark was continuous and 15 uninterrupted. See Bazaar Del Mundo Inc., 448 F.3d at 1126; (2d MSJ at 17-18 (failing 16 to address this requirement for showing prior use).) In addition to Kische’s failure to 17 Although some of the statements in Defendants’ motion could support the proposition that Kische first used the Marseille mark in commerce (see, e.g., 2d MSJ Resp. at 6 (stating that “the Marseille mark was far less popular” than the Kische mark, and sold in small quantities primarily to select Canadian customers), 8 (stating that “[t]he last shipment of Kische’s Marseille mark clothing was February 26, 2014”)), those statements are insufficient because Kische has not met its burden of establishing a prima facie showing in support of its position on this issue, Nor-Cal Plumbing, 48 F.3d at 1471; see also Playboy Enters., Inc. v. Netscape Commc’ns Corp., 354 F.3d 1020, 1024 (9th Cir. 2004) (“If the moving party meets its initial burden, the burden shifts to the non-moving party to set forth, by affidavit or as otherwise provided by Rule 56, specific facts showing that there is a genuine [dispute] for trial.” (internal quotation marks and emphasis omitted).). 14 18 19 20 21 22 ORDER - 19 1 meet its initial burden of production, Mr. Simsek’s testimony suggests a genuine dispute 2 of material fact on this point because he attests that Kische discontinued using the 3 Marseille Mark in 2014. (See Simsek Decl. ¶ 13.) Thus, the court concludes that on this 4 record and viewing the evidence in the light most favorable to Defendants, Kische has 5 not met its burden of demonstrating its ownership of the Marseille Mark, and denies 6 summary judgment as to the trademark infringement claim regarding the mark.15 7 In setting forth its arguments, Kische makes much of the fact that Mr. Simsek 8 improperly assigned the Marseille Mark to JD Stellar. (See 2d MSJ at 14.) To the extent 9 Kische asserts that the mark was fraudulently transferred (id. at 17 (“Kische also filed for 10 federal trademark registration of its MARSEILLE design mark prior to its invalid 11 assignment.”)), a claim for trademark infringement is not the proper vehicle for testing 12 that theory, see Dahon N. Am., Inc. v. Hon, No. 2:11-cv-05835-ODW (JCGx), 2012 WL 13 1413681, at *10-11 (C.D. Cal. Apr. 24, 2012) (discussing a claim for fraudulent 14 trademark registration and citing 15 U.S.C. § 1120). In any event, Kische does not allege 15 such a claim or properly raise the argument on summary judgment. Kische also provides 16 no argument or authority for connecting its assertion that Mr. Simsek’s “assignment of 17 the trademark was improper as a matter of law” to the motion for summary judgment on 18 the trademark infringement claims. (See 2d MSJ at 14; see also Reply at 6 (citing only 19 deposition testimony in which Mr. Simsek agreed that he “asked . . . to . . . reverse the 20 21 22 For this reason, the court does not address whether Defendants’ use of the Marseille Mark in commerce caused a likelihood of consumer confusion. See Applied Info. Scis., 511 F.3d at 969. 15 ORDER - 20 1 transfer and send [the Marseille Mark] back to Kische”).) Accordingly, the court 2 concludes that any improper assignment does not negate Kische’s need to demonstrate 3 ownership. b. Defendants’ Use of the Kische Mark 4 5 The court now addresses whether Defendants used the Kische Mark in commerce. 6 Kische contends that Defendants used “ email addresses that include the 7 KISCHE mark to sell JD Stellar’s clothing goods, and solicit JD Stellar sales” by 8 including the mark “in the body of emails and in the signature lines of the emails.” (2d 9 MSJ at 18.) Specifically, Kische points the court to three emails that include the Kische 10 Mark. (See Mitchell Decl. at 2, Exs. D-F.) The first email includes correspondence from 11 Ms. Walker and representatives from Haute Look and Nordstrom, and some parts of the 12 email thread include “Kische” in the signature. (See Mitchell Decl. at 2, Ex. D. at 32, 13 35-37.) The second email appears to be an internal email between Kische and/or JD 14 Stellar employees and includes “Kische” in Ms. Walker’s signature. (Id., Ex. E at 40.) 15 Finally, the third email is from Ms. Walker—using a email address—to 16 Nordstrom representatives, stating that she and Mr. Simsek “are transitioning from 17 Kische to JD Stellar” and that they “have a new label [they] can ship [the] cardigan 18 under, Dantelle.” (Id., Ex. F at 43.) Kische argues that these emails constitute a use of 19 the mark in commerce, which created a likelihood of confusion. (See 2d MSJ at 18.) 20 Defendants respond that their use of the Kische Mark in the form of email addresses and 21 signatures cannot constitute trademark infringement. (See 2d MSJ Resp. at 22 // ORDER - 21 1 15 (“The question[] the [c]ourt must ask is whether JD Stellar is even using the mark for 2 possible infringement purposes . . . .”).) 3 A trademark is used in commerce for goods when “it is placed in any manner on 4 the goods or their containers or the displays associated therewith or on the tags or labels 5 affixed thereto.”16 15 U.S.C. § 1127. Thus, courts have held that marks used in a 6 brochure describing a good, tradeshow activities related to a good, and handwritten 7 receipts for the sale of a good, for example, do not constitute use in commerce. See 8 VersaTop Support Sys., LLC v. Ga. Expo Inc., No. 3:15-cv-02030-JE, 2017 WL 1364617, 9 at *4-5 (D. Or. Feb. 16, 2017) (holding that the use of a mark in a brochure describing 10 pipe and drape products and in tradeshow activities were not uses in commerce because 11 15 U.S.C. § 1127 requires that a mark be placed on the good in question); Langford v. 12 Rice, No. CV 10-3258-JST (PLAx), 2010 WL 11549752, at *5 (C.D. Cal. Oct. 28, 2010) 13 (finding that the use of a mark on two handwritten receipts was not a use in commerce). 14 Similarly, Defendants’ use of email addresses and their inclusion of 15 signatures with the Kische Mark in the emails described above does not constitute use in 16 commerce. See 15 U.S.C. § 1127. Kische fails to point to any evidence of Defendants 17 using the Kische Mark on goods. (See 2d MSJ; Reply at 7 (focusing solely on “the strong 18 weight of [Kische’s] forensic expert” in authenticating the emails)); 15 U.S.C. § 1127 19 (requiring a mark to be placed on a good). Thus, Kische fails to meets its burden of 20 “[I]f the nature of the goods makes such placement impracticable,” a trademark is used in commerce when it is placed “on documents associated with the goods or their sale.” Id. Because the goods at issue here are clothing (Uysal Decl. at 1), there is no indication that it is impracticable to place the Kische Mark on the clothing. 16 21 22 ORDER - 22 1 demonstrating that Defendants used the Kische Mark in commerce, and the court denies 2 summary judgment on this trademark infringement claim.17 3 3. Willful and Knowing Infringement 4 Kische further seeks summary judgment in its favor that Defendants willfully and 5 knowingly infringed the Marks, entitling Kische to attorneys’ fees and treble damages.18 6 (See 2d MSJ at 6.) Because the court denies Kische’s motion for summary judgment on 7 the trademark infringement claims, it does not address any damages arising from the 8 alleged infringement. 9 10 4. Invalid Assignment and Return Finally, Kische argues that because the Marseille Mark was improperly assigned 11 to JD Stellar, Defendants “should be foreclosed from continuing to benefit from 12 possessing the registrations, and the registrations of the two marks should be transferred” 13 to Kische.19 (2d MSJ at 28.) Defendants counter that Kische in effect seeks injunctive 14 17 15 16 17 18 19 20 21 Accordingly, the court does not address the likelihood of consumer confusion from Defendants’ use of the Kische Mark. See Dreamwerks Prod. Grp., Inc. v. SKG Studio, 142 F.3d 1127, 1129 (9th Cir. 1998) (internal quotation marks omitted) (“The test for likelihood of confusion is whether a reasonably prudent consumer in the marketplace is likely to be confused as to the origin of the good or service bearing one of the marks.”). In addition, the court denies Defendants’ request for summary judgment in its favor based on this factor. (See 2d MSJ Resp.) Defendants raise this issue in their own motion for summary judgment (see Defs. MSJ at 22-23), and the court will address the issue after Kische has had an opportunity to respond to that motion, cf. Fed. R. Civ. P. 56(f)(1) (stating that the court may grant summary judgment for a nonmovant “[a]fter giving notice and a reasonable time to respond”). 18 The court also notes that despite raising willful and knowing infringement as an issue for summary judgment, Kische provides no argument in support of its damages. (See generally 2d MSJ.) 19 22 Thus, Kische requests that the court transfer not only the Marseille Mark, but also the Marseille word mark that JD Stellar later registered. See supra n.4. ORDER - 23 1 relief and fails to meet the standard for demonstrating its entitlement to that form of 2 relief. (2d MSJ Resp. at 25-26.) 3 Although a court may cancel a trademark under 15 U.S.C. §1064(3) if the 4 trademark’s “registration was obtained fraudulently,” Prof’l’s Choice Sports Med. 5 Prods., Inc. v. Eurow & O’Reilly Corp., No. 13cv1484 AJB (KSC), 2013 WL 12077438, 6 at *4 (S.D. Cal. Nov. 12, 2013); see also eCash Techs., Inc. v. Guagliardo, 127 F. Supp. 7 2d 1069, 1079 (C.D. Cal. 2000) (“Fraud in procurement of a trademark registration may 8 be raised as a ground for cancellation in civil litigation . . . .”), as the court noted above, 9 Kische does not raise any legal grounds upon which it is entitled to a transfer of the 10 Marseille Mark, see supra § III.C.2.a.ii; (2d MSJ at 28.) Although the court concluded 11 that Mr. Simsek breached his fiduciary duty to Kische by assigning the Marseille Mark to 12 JD Stellar (see 9/6/17 Order at 31), that conclusion alone—without any showing that a 13 transfer is legally permissible or justified—is insufficient to grant Kische the relief it 14 seeks. The court therefore denies at this time Kische’s motion for transfer of the 15 Marseille mark.20 16 5. Leave to Amend 17 In its reply brief, Kische requests that the court grant Kische leave to amend 18 pursuant to Federal Rule of Civil Procedure 15 if the court finds “any aspect” of Kische’s 19 second motion for summary judgment “inadequate.” (Reply at 13 (citing Fed. R. Civ. P. 20 21 22 Given the lack of clarity about the basis for Kische’s request, the court denies Defendants’ request for summary judgment in its favor on this issue pursuant to Rule 56(f). (See 2d MSJ Resp. at 26.) 20 ORDER - 24 1 15).) Leave to amend is unnecessary, however, because the court rules only that Kische 2 has not demonstrated that it is entitled to summary judgment on its trademark 3 infringement claims. Accordingly, the court denies the request for leave to amend. 4 5 6 7 IV. CONCLUSION For the foregoing reasons, the court DENIES Kische’s second motion for summary judgment (Dkt. # 101). Dated this 29th day of November, 2017. 8 9 A 10 JAMES L. ROBART United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 ORDER - 25

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