Planet Coffee Roasters Inc v. Planet Coffee et al, No. 8:2009cv00571 - Document 18 (C.D. Cal. 2009)

Court Description: MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS by Magistrate Judge Marc L. Goldman. Defendant's motion to dismiss Plaintiff's claim for false designation of origin in DENIED. Defendan t's motion to dismiss the claim for trademark dilution is GRANTED WITH LEAVE TO AMEND. Defendant's motion to dismiss Plaintiff's claims for federal unfair competition, common law unfair competition, and California Unfair Competition is GRANTED WITH LEAVE TO AMEND. Plaintiff shall have twenty-one days from the date of this order to file a second amended complaint correcting or elimianting the deficiences described in this order. (db)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 CENTRAL DISTRICT OF CALIFORNIA 8 SOUTHERN DIVISION 9 10 11 12 13 14 15 16 PLANET COFFEE ROASTERS, INC., ) ) ) Plaintiff, ) ) v. ) HUNG DAM, dba PLANET COFFEE, et) ) al., ) ) Defendants. ) Case No. SACV 09-00571-MLG MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS MOTION TO DISMISS 17 18 I. Factual and Procedural Background 19 On May 26, 2009, Plaintiff Planet Coffee Roasters, Inc., filed a 20 first amended complaint ( FAC ) against Defendant Hung Dam alleging 21 (1) false designation of origin (15 U.S.C. § 1125(a)); (2) trademark 22 dilution (15 U.S.C. § 1125(c)); (3) federal unfair competition (15 23 U.S.C. 24 California unfair competition (Cal. Bus. & Prof. Code § 17200). § 1125(a); (4) common law unfair competition; and (5) 25 In the first amended complaint, Plaintiff alleges that since 26 1993, it has been operating a well-known and successful business 27 offering services related to coffee, including roasting, supplies and 28 equipment. The first amended complaint accuses Defendant of unlawfully 1 using Plaintiff s mark Planet Coffee as the name of his coffee 2 house, located in Garden Grove, California. Plaintiff does not hold a 3 federally registered trademark on either Planet Coffee or Planet 4 Coffee Roasters. 5 On July 9, 2009, Defendant filed a motion to dismiss pursuant to 6 Federal Rule of Civil Procedure 12(b)(6). On July 28, 2009, Plaintiff 7 filed an opposition to the motion to dismiss. On August 4, 2009, 8 Defendant filed a reply to Plaintiff s opposition. On August 11, 2009, 9 the Court heard oral argument on the motion. The matter is now ready 10 for decision. 11 12 II. Standard of Review 13 Federal Rule of Civil Procedure 12(b)(6) provides for dismissal 14 of a complaint for failure to state a claim upon which relief may be 15 granted. To survive a motion to dismiss for failure to state a claim, 16 a plaintiff must allege enough facts to state a claim to relief that 17 is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 18 544, 570 (2007). A claim has facial plausibility when the plaintiff 19 pleads factual content that allows the court to draw the reasonable 20 inference that the defendant is liable for the misconduct alleged. 21 Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 22 U.S. at 556). The plausibility standard is not akin to a probability 23 requirement, but it asks for more than a sheer possibility that a 24 defendant has acted unlawfully. Id. Where a complaint pleads facts 25 that are merely consistent with a defendant s liability, it stops 26 short of the line between possibility and plausibility of entitlement 27 to relief. Twombly, 550 U.S. at 557. 28 The Court in Twombly explained that a complaint is read in 2 1 conjunction 2 requires a showing that the plaintiff is entitled to relief, rather 3 than a blanket assertion of entitlement to relief. Id. at 556, n.3. 4 While Rule 8 does not require detailed factual allegations, it 5 nevertheless 6 unlawfully-harmed-me accusation. Iqbal, 129 S.Ct. at 1949. A pleading 7 that offers labels and conclusions or a formulaic recitation of the 8 elements of a cause of action will not do. Twombly, 550 U.S. at 555. 9 In considering Defendants motion to dismiss, the Court must 10 accept all factual allegations of the complaint as true and construe 11 those facts, as well as the inferences from those facts, in the light 12 most favorable to Plaintiff. See Knievel v. ESPN, 393 F.3d 1068, 1072 13 (9th 14 unreasonable inferences or conclusory legal allegations cast in the 15 form of factual allegations. Ileto v. Glock Inc., 349 F.3d 1191, 1200 16 (9th Cir. 2003) (citing Western Mining Council v. Watt, 643 F.2d 618, 17 624 18 framework 19 allegations. Iqbal, 129 S.Ct. at 1250. Cir. (9th with Federal demands 2005). Cir. of more However, 1981)). a Rule than the While complaint, of Civil an unadorned, Court legal they Procedure need not conclusions must be 8(a)(2) the defendant- accept can supported which as provide by true the factual 20 21 22 23 24 III. Discussion and Analysis A. Plaintiff Has Stated a Claim Against Defendant for False Designation of Origin (15 U.S.C. § 1125(a)) Plaintiff claims mark or that Defendant confusingly has marks Planet in Coffee s 25 distinctive 26 connection with its own goods, which use is likely to cause confusion 27 or to deceive as to the origin of such goods. (FAC ¶ 16.) Defendant 28 claims that Plaintiff s false designation of origin claim should be 3 similar used commerce in 1 dismissed because Defendant, as the first user of the mark Planet 2 Coffee in Garden Grove, California, has a prior use defense. (Def. s 3 Mot. to Dismiss at 6.) 4 A federal claim under section 43(a) of the Lanham Act for 5 infringement of an unregistered mark is triggered by a use which is 6 likely to cause confusion, or to cause mistake, or to deceive as to 7 the affiliation, connection, or association of the user with the 8 senior user. 15 U.S.C. § 1125(a). To prove a false designation of 9 origin claim, a plaintiff must show that defendant (1) uses a false 10 designation 11 connection with goods or services; (4) when the designation is likely 12 to 13 sponsorship, or approval of defendant s goods, services, or commercial 14 activities by another person; and (5) plaintiff has been or is likely 15 to be damaged by these acts. McCarthy on Trademarks and Unfair 16 Competition, § 27:13 (Fourth Ed.) cause of origin; confusion, (2) in mistake, interstate or commerce; deception as to (3) the and in origin, 17 Section 43(a) is the only provision in the Lanham Act that 18 protects an unregistered mark. See Kendall-Jackson Winery, Ltd. v. E. 19 & 20 ( Registration is not a prerequisite for protection under § 43(a). ). 21 Its purpose is to prevent consumer confusion regarding a product s 22 source, 23 differentiate it from others on the market. Centaur Communications, 24 Ltd. v. A/S/M Communications, Inc., 830 F.2d 1217, 1220 (2d Cir. 25 1987). J. Gallo ... Winery, and to 150 F.3d enable 1042, those 1047 that n.7 (9th fashion a Cir. 1998) product to 26 Prior use is a complete defense to a claim of false designation 27 of origin. See T Shirts Plus v. T-Shirts Plus, Inc., 222 U.S.P.Q. 117, 28 120 (C.D.Cal. 1983). In order to successfully establish a prior use 4 1 defense, Defendant must demonstrate that (1) its use of the mark began 2 before it had actual or constructive notice of another s prior use of 3 the mark and (2) there has been continuing use since that time. Casual 4 Corner Associates, Inc. v. Casual Corner Stores of Nevada, Inc., 493 5 F.2d 709, 712 (9th Cir. 1974); T Shirts Plus, 222 U.S.P.Q. at 120. 6 Defendant claims that it has a prior use defense to Plaintiff s false 7 designation of origin claim because (1) it began using the mark 8 Planet 9 constructive knowledge of Plaintiff s use of the mark and (2) it has 10 Coffee in August 2008 before it had any actual or been continuously using the mark since August 2008. 11 Applying the standard governing motions to dismiss and accepting 12 all factual allegations pleaded in the complaint as true, the Court 13 finds that Plaintiff has sufficiently pleaded a claim for false 14 designation of origin. It is inappropriate at the pleading stage of 15 the litigation to determine factual issues, such as whether Defendant 16 can assert a prior use defense. Plaintiff does not need to provide 17 evidence, at this stage, to defeat Defendant s prior use defense. 18 Therefore, Defendant s motion to dismiss Plaintiff s claim for false 19 designation of origin is DENIED. 20 21 B. Plaintiff Has Failed to State a Claim Against Defendant for Trademark Dilution (15 U.S.C. § 1125(c)) 22 Plaintiff claims that its Planet Coffee mark is distinctive, 23 well known and famous. (FAC ¶ 23.) Plaintiff contends that Defendant 24 is diluting the distinctiveness of Planet Coffee s marks by marketing 25 and selling inferior goods bearing marks virtually identical or 26 confusingly similar to Planet Coffee s trademarks. (FAC ¶ 24.) 27 Plaintiff further contends that Defendant has engaged in the conduct 28 alleged in these claims, willfully intending to trade on Planet 5 1 Coffee s reputation and/or 2 distinctive marks owned by Planet Coffee. (Id.) Defendant argues that 3 Plaintiff s 4 Plaintiff has failed to allege any supporting facts to show that its 5 mark has achieved the requisite degree of national fame necessary to 6 support a trademark dilution claim. (Def. s Mot. to Dismiss at 5.) trademark to cause dilution claim dilution must be of the famous dismissed and because 7 To prove a dilution claim, a plaintiff must demonstrate that the 8 mark used by the alleged diluter is identical, or nearly identical, to 9 the protected mark. Thane Intern., Inc. v. Trek Bicycle Corp., 305 10 F.3d 894, 905 (9th Cir. 2002). Additionally, the plaintiff must prove 11 that (1) its mark is famous; (2) the defendant is making commercial 12 use of the mark in commerce; (3) the defendant s use began after the 13 plaintiff s mark became famous; and (4) the defendant s use presents 14 a likelihood of dilution of the distinctive value of the mark." Avery 15 Dennison 16 Moreover, the Trademark Dilution Revision Act of 2006 ( TDRA ), 17 Pub.L. 109-312, 120 Stat. 1730, revised the Federal Trademark Dilution 18 Act to deny protection to marks that are famous only in niche 19 markets. Century 21 Real Estate LLC v. Century Ins. Group, 2007 WL 20 484555, *14 (D. Ariz. 2007) (citing House Report on Trademark Dilution 21 act of 2005 at 8, 25). Corp. v. Sumpton, 189 F.3d 868, 874 (9th Cir. 1999). 22 Dilution is a cause of action reserved for a select class of 23 marks those marks with such powerful consumer associations that even 24 non-competing uses can impinge on their value. Avery, 89 F.3d at 875. 25 For this reason, dilution protection extends only to those whose mark 26 is a household name. Thane, 305 F.3d at 911. 27 Applying the standard governing motions to dismiss, the Court 28 finds that Plaintiff has not pled sufficient facts to state a claim 6 1 for trademark dilution that is facially plausible. Iqbal, 2009 WL 2 1361536, at *14. 3 that its mark is nationally famous nor that Defendant s use of the 4 mark 5 distinctive value of Plaintiff s famous mark. Accordingly, Plaintiff s 6 claim for trademark dilution is DISMISSED WITH LEAVE TO AMEND. Planet C. 7 Plaintiff has not alleged facts sufficient to show Coffee presents a likelihood of dilution of the Plaintiff Has Failed to Plead Fraud with the Specificity Required by Fed.R.Civ.P. 9(b) 8 Defendant contends that Plaintiff s federal, common law and 9 10 California unfair competition claims are rooted in fraud, and 11 therefore Plaintiff must plead fraud with greater specificity under 12 Fed.R.Civ.P. 9(b). (Def. s Mot. to Dismiss at 8.) 13 Rule 9(b) requires that, when fraud is alleged, a party must 14 state with particularity the circumstances constituting fraud .... 15 Rule 9(b) requires that the circumstances constituting the alleged 16 fraud be specific enough to give defendants notice of the particular 17 misconduct ... so that they can defend against the charge and not just 18 deny that they have done anything wrong. Bly-Magee v. California, 19 236 F.3d 1014, 1019 (9th Cir. 2001) (quoting Neubronner v. Milken, 6 20 F.3d 21 accompanied by the who, what, when, where, and how of the misconduct 22 charged. Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1106 (9th Cir. 23 2003). A party alleging fraud must set forth more than the neutral 24 facts necessary to identify the transaction. In re GlenFed, Inc. Sec. 25 Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) (emphasis in original), 26 superceded by statute on other grounds. 666, 671 (9th Cir. 1993)). Averments of fraud must be 27 Even where fraud is not an essential element of a claim, a 28 plaintiff may allege a unified course of fraudulent conduct and rely 7 1 entirely on that course of conduct as the basis of a claim. In that 2 event, the claim is said to be grounded in fraud or to sound in 3 fraud, and the pleading of that claim as a whole must satisfy the 4 particularity requirement of Rule 9(b). Vess, 317 F.3d at 1103-1104. 5 However, in a case where fraud is not an essential element of a 6 claim, 7 heightened pleading requirements of Rule 9(b). Allegations of non- 8 fraudulent conduct need satisfy only the ordinary notice pleading 9 standards of Rule 8(a). Id. at 1105. 10 only While allegations fraud is of not a fraudulent necessary conduct element must of a satisfy claim the under 11 California s unfair competition law (Cal. Bus. & Prof. Code § 17200), 12 a plaintiff may nonetheless allege that the defendant engaged in 13 fraudulent conduct. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th 14 Cir. June 8, 2009) (used car purchaser failed to allege particular 15 circumstances surrounding seller s purported misrepresentations and 16 fraud regarding certified pre-owned vehicles, and thus failed to 17 state claim for violation of California s unfair competition law under 18 heightened pleading requirements for fraud claims). Where a plaintiff 19 has alleged fraudulent conduct, those allegations must satisfy the 20 heightened pleading requirements of Rule 9(b). Id. 21 Plaintiff has made allegations of fraudulent conduct which 22 require more particularized pleading under Rule 9(b). In its federal 23 unfair competition claim (15 U.S.C. § 1125(a)), Plaintiff alleges that 24 Defendant 25 practices which present a continuing threat to members of the public 26 in that they are likely to be deceived as to the origin and quality of 27 Planet Coffee s products. (FAC ¶ 32.) Plaintiff further alleges that 28 Defendant engaged has in engaged unlawful, in the unfair conduct 8 and fraudulent alleged in business these claims 1 knowingly and willfully. (FAC ¶ 30.) In its common law unfair 2 competition claim, Plaintiff alleges that Defendant actions were 3 undertaken willfully and with the intention of causing confusion, 4 mistake and deception. (FAC ¶ 40.) In its unfair competition claim 5 under 6 Defendant s use of the infringing marks ... constitutes deceptive and 7 misleading advertising.... (FAC ¶ 46.) Cal. Bus. & Prof. Code § 17200, Plaintiff alleges that 8 To the extent that Plaintiff alleges fraudulent conduct in its 9 unfair competition causes of action, Plaintiff must either allege 10 particular facts sufficient to satisfy the requirements of 11 Fed.R.Civ.P. 9(b) or alternatively, eliminate the allegations of fraud 12 in those causes of action. If Plaintiff chooses to eliminate the fraud 13 allegations, but later determines during discovery that there are 14 sufficient facts to support a fraud allegation, it may file a motion 15 with the Court to amend the complaint. Accordingly, Plaintiff s unfair 16 competition claims are DISMISSED WITH LEAVE TO AMEND. 17 18 IV. 19 ORDER Defendant s motion to dismiss Plaintiff s claim for false 20 designation of origin is DENIED. 21 claim 22 Defendant s motion to dismiss Plaintiff s claims for federal unfair 23 competition, common law unfair competition, and California Unfair 24 Competition is GRANTED WITH LEAVE TO AMEND. 25 // 26 // 27 // 28 // for trademark dilution Defendant s motion to dismiss the is 9 GRANTED WITH LEAVE TO AMEND. 1 Plaintiff shall have twenty-one days (21) days from the date of 2 this order to file a second amended complaint 3 correcting or eliminating the deficiencies described in this order. 4 5 Dated: August 12, 2009 6 7 8 ________________________________ Marc L. Goldman United States Magistrate Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10

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