Grey Matter Medical Products LLC v. Schreiner Group Limited Partnership

Filing 33

ORDER by Judge Benjamin H. Settle denying 25 Motion for Partial Summary Judgment and granting in part and denying in part 26 Plaintiff's cross-motion for summary judgment.(TG)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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GREY MATTER MEDICAL
8 PRODUCTS, LLC,
Plaintiff,

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10 v.

11 SCHREINER GROUP LIMITED
PARTNERSHIP, et al.,
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Defendants.

CASE NO. C13-5861 BHS
ORDER DENYING
DEFENDANTS’ MOTION FOR
PARTIAL SUMMARY
JUDGMENT AND GRANTING IN
PART AND DENYING IN PART
PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT

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This matter comes before the Court on Defendants Schreiner Group GMBH & Co.

15 KG and Schreiner Group Limited Partnership’s (collectively “Schreiner”) motion for
16 summary judgment (Dkt. 25) and Plaintiff Grey Matter Medical Products, LLC’s (“Grey
17 Matter”) cross-motion for summary judgment (Dkt. 26). The Court has considered the
18 pleadings filed in support of and in opposition to the motions and the remainder of the
19 file and hereby rules as follows:
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I. PROCEDURAL HISTORY
On October 1, 2013, Grey Matter filed a complaint against Schreiner for

22 trademark infringement, unfair competition, and declaratory judgment. Dkt. 1. On

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1 November 18, 2013, Schreiner answered and asserted counterclaims for cancelation of
2 trademark registrations, trademark infringement, and declaratory judgment. Dkt. 14.
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On May 8, 2014, Schreiner filed a motion for partial summary judgment. Dkt. 25.

4 On May 27, 2014, Grey Matter responded and filed a cross motion for summary
5 judgment. Dkt. 26. On May 30, 2014, Schreiner replied. Dkt. 29. On June 16, 2013,
6 Schreiner responded to Grey Matter’s motion. Dkt. 30. On June 20, 2014, Grey Matter
7 replied. Dkt. 32.
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II. FACTUAL BACKGROUND
A founding member of Grey Matter, Cory Dobak, declares that he and his

10 business partners “invented and developed the NeedleTrap device because hundreds of
11 thousands of healthcare workers each year continued to be hurt due to accidental needle
12 injuries.” Dkt. 28, Declaration of Cory Dobak, ¶ 3. Mr. Dobak claims that the first use
13 of the device was in August of 2005 when he transported the device from Oregon to a
14 Spokane, Washington hospital. Id., ¶ 5. In August 2008, Grey Matter filed an
15 application for the trademark “NeedleTrap.” Dkt. 25, Exh. A. The United States Patent
16 and Trademark Office (“USPTO”) registered the trademark on March 17, 2009, stating
17 that the mark was for a “needle management system, namely, a one handed needle
18 recapper for medical use” with a date of first use in commerce of January 1, 2006. Id.
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In December 2012, Schreiner sought registration for the mark “Needle-Trap. Dkt.

20 27, Declaration of Mark P. Walters, Exh. B. In March 2013, the USPTO denied the
21 application in light of Grey Matter’s mark. Id., Exh. C. Schreiner filed a petition to
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1 cancel Grey Matter’s mark, which is stayed pending determination of this litigation. Id.,
2 Exh. D.
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III. DISCUSSION

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Schreiner moves for partial summary judgment on its counterclaim for cancelation

5 of Grey Matter’s trademark. Dkt. 25. On the other hand, Grey Matter moves for
6 summary judgment on the same counter claim alleging theories of fraud, abandonment,
7 and failure to use the mark.
8 A.

Summary Judgment Standard

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Summary judgment is proper only if the pleadings, the discovery and disclosure

10 materials on file, and any affidavits show that there is no genuine issue as to any material
11 fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
12 The moving party is entitled to judgment as a matter of law when the nonmoving party
13 fails to make a sufficient showing on an essential element of a claim in the case on which
14 the nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317,
15 323 (1986). There is no genuine issue of fact for trial where the record, taken as a whole,
16 could not lead a rational trier of fact to find for the nonmoving party. Matsushita Elec.
17 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (nonmoving party must
18 present specific, significant probative evidence, not simply “some metaphysical doubt”).
19 See also Fed. R. Civ. P. 56(e). Conversely, a genuine dispute over a material fact exists
20 if there is sufficient evidence supporting the claimed factual dispute, requiring a judge or
21 jury to resolve the differing versions of the truth. Anderson v. Liberty Lobby, Inc., 477
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1 U.S. 242, 253 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d
2 626, 630 (9th Cir. 1987).
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The determination of the existence of a material fact is often a close question. The

4 Court must consider the substantive evidentiary burden that the nonmoving party must
5 meet at trial – e.g., a preponderance of the evidence in most civil cases. Anderson, 477
6 U.S. at 254; T.W. Elec. Serv., Inc., 809 F.2d at 630. The Court must resolve any factual
7 issues of controversy in favor of the nonmoving party only when the facts specifically
8 attested by that party contradict facts specifically attested by the moving party. The
9 nonmoving party may not merely state that it will discredit the moving party’s evidence
10 at trial, in the hopes that evidence can be developed at trial to support the claim. T.W.
11 Elec. Serv., Inc., 809 F.2d at 630 (relying on Anderson, 477 U.S. at 255). Conclusory,
12 nonspecific statements in affidavits are not sufficient, and missing facts will not be
13 presumed. Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888-89 (1990).
14 B.

Schreiner’s Motion

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In this case, Schreiner moves for summary judgment on its counterclaim that Grey

16 Matter’s trademark registration should be canceled for fraud. Dkt. 25 at 13. While fraud
17 in procuring a trademark is sufficient grounds to cancel a registration, the moving party
18 bears a heavy burden of proving
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a false representation regarding a material fact, the registrant’s knowledge
or belief that the representation is false, the intent to induce reliance upon
the misrepresentation and reasonable reliance thereon, and damages
proximately resulting from the reliance.

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1 Robi v. Five Platters, 918 F.2d 1439, 1444 (9th Cir. 1990) (citing San Juan Products, Inc.
2 v. San Juan Pools of Kansas, Inc., 849 F.2d 468, 473 (10th Cir. 1988)). For purposes of
3 Schreiner’s motion, “where the moving party has the burden—the plaintiff on a claim for
4 relief or the defendant on an affirmative defense—his showing must be sufficient for the
5 court to hold that no reasonable trier of fact could find other than for the moving party.”
6 Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (citation omitted); see also
7 Southern Calif. Gas Co. v. City of Santa Ana, 336 F.3d 885, 888 (9th Cir. 2003).
8 Therefore, Schreiner bears the burden of showing that no reasonable juror could find
9 other than for Schreiner.
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In this case, Schreiner has failed to meet its burden. Schreiner requests

11 cancelation of Grey Matter’s trademark because Grey Matter failed to describe its actual
12 product in the application. Dkt. 25 at 8-13. Grey Matter counters that Schreiner has
13 failed to cite any authority in support of its position. Dkt. 26 at 13. The Court agrees
14 with Grey Matter. At the very least, Schreiner has failed to show that no reasonable juror
15 could find other than for Schreiner on the issues of whether Grey Matter (1) intended to
16 induce reliance when it stated on the application that the product was a recapper, (2)
17 actually induced reasonable reliance, and (3) damage proximately resulted from the
18 statement. Therefore, the Court denies Schreiner’s motion for summary judgment on its
19 counterclaim.
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1 C.

Grey Matter’s Motion

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In its counterclaim, Schreiner alleges that Grey Matter’s mark should be cancelled

3 for fraud, abandonment, and prior use. Dkt. 14, ¶¶ 52-59. Grey Matter moves for
4 summary judgment on each alleged theory. Dkt. 26 at 15.
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1.

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In the Ninth Circuit, the movant must show intent to deceive, reliance, and

Fraud

7 damages proximately resulting from the reliance. Five Platters, 918 F.2d at 1444.
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In this case, Schreiner has failed to submit evidence showing that material issues

9 of fact exist on intent to deceive, reliance, or damages. At most, Schreiner has shown
10 material misrepresentations that amount to false representation, which falls below the
11 level of fraudulence that is required to cancel a trademark registration. Therefore, the
12 Court grants Grey Matter’s motion for summary judgment on the issue of cancellation
13 due to fraud.
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Schreiner requests that, if the Court were inclined to grant Grey Matter’s motion

15 on any issue, the Court allow Schreiner to conduct additional discovery before rendering
16 judgment. Dkt. 30 at 8. In order to request such relief, the party must “show by affidavit
17 or declaration that, for specified reasons, it cannot present facts essential to justify its
18 opposition . . . .” Fed. R. Civ. P 56(d). Schreiner has failed to show that it cannot present
19 facts essential to justify its opposition to this issue and instead makes a blanket request to
20 allow additional discovery. Based on the record, there is a complete lack of any evidence
21 that Grey Matter intended to deceive either the USPTO or the public when it filed its
22 application. There is no evidence that Grey Matter needed to establish priority at the time

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1 of filing or that Grey Matter falsely represented prior adverse actions regarding the mark
2 in question. See Five Platters, 918 F.2d at 1444. In fact, there is also a complete lack of
3 evidence that Grey Matter could be considered a “trademark troll,” as Schreiner contends.
4 Instead, the uncontested evidence establishes that Grey Matter may have provided some
5 immaterial misstatements on its application. Such facts may warrant amendment and
6 alter some aspects of enforceability, but they do not warrant outright cancellation.
7 Therefore, the Court denies Schreiner’s request to withhold judgment on this issue
8 pending additional discovery.
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2.

Abandonment

“The Lanham Act defines abandonment as (1) discontinuance of trademark use

11 and (2) intent not to resume such use . . . .” Electro Source, LLC v. Brandess-Kalt-Aetna
12 Group, Inc., 458 F.3d 931, 935 (9th Cir. 2006). “Intent not to resume may be inferred
13 from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of
14 abandonment.” 15 U.S.C. § 1127. However,
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“use” of a trademark defeats an allegation of abandonment when: the use
includes placement on goods sold or transported in commerce; is bona fide;
is made in the ordinary course of trade; and is not made merely to reserve a
right in a mark.

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Electro Source, 458 F.3d at 936.
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In this case, Schreiner asserts that Grey Matter has abandoned its mark because (1)
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Grey Matter has never marketed a “recapper” as stated in the application and (2) there
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has been at least three years of non-use. Dkt. 30 at 9–14. With regard to the former
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issue, Schreiner has failed to submit any authority for the proposition that
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1 mischaracterizing one’s actual product in a trademark application amounts to
2 abandonment of a registered trademark. This is especially true when the alleged
3 mischaracterization amounts to what type of needle management system was declared, as
4 opposed to an entirely different market of products. See, e.g., Imperial Tobacco Ltd.,
5 Assignee of Imperial Group PLC v. Philip Morris, Inc., 899 F.2d 1575, 1582 (Fed. Cir.
6 1990) (application listed product as cigarettes, but company efforts were “directed to
7 marketing ‘incidental’ products, such as whisky, pens, watches, sunglasses and food
8 . . . .”). Therefore, Schreiner’s arguments on this issue do not overcome summary
9 judgment.
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With regard to actual non-use of the mark, there are clearly questions of fact. See

11 Dkt. 30 at 10 (listing additional allegations indicating no intention to use mark). Even
12 Grey Matter concentrates on some activities between 2005 and 2009 (Dkt. 32 at 6), with
13 little to no evidence of use since 2009 (Dkt. 26 at 5–8). Taking all inferences in favor of
14 Schreiner, the Court concludes that material questions of fact exist on the issues of
15 discontinuance of use and intent not to resume use. Therefore, the Court denies Grey
16 Matter’s motion on the issue of abandonment.
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3.

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The “use in commerce” requirement is met when a mark is (1) placed on the goods

Commercial Use

19 or container, or on documents associated with the goods if the nature of the goods makes
20 placement on the goods or container impracticable, and (2) that good are then “sold or
21 transported in commerce.” 15 U.S.C. § 1127; Aycock, 560 F.3d at 1357. “[T]rademark
22 rights can vest even before any goods or services are actually sold if ‘the totality of

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1 [one’s] prior actions, taken together, [can] establish a right to use the trademark.’”
2 Brookfield Communications, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1052 (9th
3 Cir. 1999) (quoting New West Corp. v. NYM Co. of Calif., Inc., 595 F.2d 1194, 1200 (9th
4 Cir. 1979)). “The registration of a mark that does not meet the use requirement is void ab
5 initio.” Id. at 1357.
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In this case, the Court is unable to conclude, based on the briefing, which party

7 bears the burden of proof on this issue. It appears that, because commercial use is a
8 requirement of obtaining the trademark, Grey Matter bears the burden. Thus, in order to
9 obtain summary judgment, Grey Matter must show that no reasonable juror could find
10 other than for Grey Matter. In other words, Grey Matter must show that no reasonable
11 juror could find other than Grey Matter’s alleged uses prior to application constitute use
12 in commerce. The Court is unable to reach that conclusion because the transportation of
13 one product across state lines for a showing to one customer does not seem to meet the
14 commercial use requirement. Usually, the Court would request additional briefing to
15 clarify this issue. However, the dispositive motion deadline is months from now and the
16 parties have sufficient opportunity to file another motion on this issue before that
17 deadline. Therefore, the Court denies Grey Matter’s motion without prejudice for a
18 failure to show that Grey Matter is entitled to judgment as a matter of law on this issue.
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IV. ORDER
Therefore, it is hereby ORDERED that Schreiner’s motion for partial summary

21 judgment (Dkt. 25) is DENIED and Grey Matter’s cross-motion for summary judgment
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1 (Dkt. 26) is GRANTED in part on the issue of fraud and DENIED in part as to all
2 other issues.
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Dated this 2nd day of July, 2014.

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BENJAMIN H. SETTLE
United States District Judge

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