CTF Development, Inc. v. Penta Hospitality, LLC, No. 3:2009cv02429 - Document 44 (N.D. Cal. 2009)
Court Description: ORDER DENYING PLAINTIFF'S MOTION TO DISMISS DEFENDANT'S COUNTERCLAIM AND GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO STRIKE AFFIRMATIVE DEFENSES 2, 3, 4, 5, 7, 9, AND 11 AND VACATING HEARING by Judge William Alsup [denying 34 Motion to Dismiss; granting in part and denying in part 34 Motion to Strike]. (whasec, COURT STAFF) (Filed on 10/26/2009)
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CTF Development, Inc. v. Penta Hospitality, LLC Doc. 44 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 CTF DEVELOPMENT, INC., a Delaware Corporation, Plaintiff, 12 13 14 15 No. C 09-02429 WHA ORDER DENYING PLAINTIFF’S MOTION TO DISMISS DEFENDANT’S COUNTERCLAIM AND GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION TO STRIKE AFFIRMATIVE DEFENSES 2, 3, 4, 5, 7, 9, AND 11 AND VACATING HEARING v. PENTA HOSPITALITY, LLC., a California Limited Liability Company, Defendant. 16 / 17 INTRODUCTION 18 In this trademark-infringement action, Plaintiff CTF Development, Inc., moves to dismiss 19 and strike the counterclaim and certain affirmative defenses of defendant Penta Hospitality, LLC 20 (“Hospitality”). For the reasons stated below, the motion to dismiss the counterclaim is DENIED, 21 and the motion to strike the affirmative defenses is GRANTED IN PART and DENIED IN PART. 22 23 STATEMENT Plaintiff CTF Development, Inc., is the United States affiliate of Penta Hotel Holdings, 24 Ltd., which has developed hotels, motels, and resorts in Germany and England under the PENTA 25 trademark. CTF and its affiliates also operate hotels, motels, and resorts in the United States 26 under this mark. On June 9, 2006, CTF filed a trademark application for PENTA with the 27 United States Patent and Trademark Office. On November 18, 2008, as part of the trademark 28 Dockets.Justia.com 1 application process, CTF filed a statement of use detailing how the mark was used in commerce.1 2 In this statement, CTF claimed that it had used the PENTA mark since as early as September 23, 3 2008, “in commerce on or in connection with” the following services related to CTF’s Ko’a Kea 4 Hotel in Hawaii (Dkt. No. 21, Exh. B): 5 Hotel services; making hotel reservations for others; provision of temporary accommodation; hotel, motel and resort hotel accommodation services; providing of food and drink; restaurant, bar and catering services; provision of facilities for meetings, conferences, exhibitions, congresses, seminars, symposiums and workshops; reservation services for hotel accommodation and other accommodation; food and beverage preparation services. 6 7 8 9 PENTA mark to CTF on January 27, 2009. 11 For the Northern District of California United States District Court 10 Based, in part, on the contents of the statement of use, the USPTO officially registered the On December 28, 2006, defendant Penta Hospitality, LLC, registered its domain name, 12 www.pentahospitality.com. In January 2007, Hospitality started using the mark PENTA 13 HOSPITALITY in connection with hotel and real-estate investment, development, and 14 management. At some point, CTF became aware of Hospitality’s use of the PENTA mark, and 15 on November 10, 2008, CTF sent a letter notifying Hospitality of CTF’s exclusive rights to the 16 PENTA mark. Hospitality allegedly continues to use the mark. 17 This action commenced on June 2, 2009. CTF sued Hospitality, LLC, alleging numerous 18 claims, including trademark infringement and violation of the Anticybersquatting Consumer 19 Protection Act, 15 U.S.C. 1125(d). 20 Two weeks before the complaint was filed, Hospitality filed a petition to cancel the mark 21 with the Trademark Trial and Appeal Board, asserting that CTF did not use the mark as 22 claimed and thereby made fraudulent representations on its statement of use to the USPTO. 23 24 25 26 27 28 1 For clarification purposes, the trademark registration process is as follows: “[15 U.S.C.] 1051(b) allows an applicant who alleges a bona fide intent to use a mark to file an application seeking registration on the Principal Register. If, upon examination, the mark appears registrable, the [USPTO] publishes it for opposition. 15 U.S.C. § 1062(a). If no opposer is successful, the [USPTO] issues a notice of allowance. Id. § 1063(b)(2). The applicant then has six months in which to file a statement that verifies that the mark is in use in commerce, the date of first use in commerce, the goods and services in connection with the mark are used in commerce, and the manner in which the mark is being used. Id. § 1051(d)(1). The statement of use is then subject to another examination, in which the [USPTO] considers how the mark is used and, if it is still satisfied that, as used, the mark is registrable, issues a certificate of registration. Id.” Eastman Kodak Co. v. Bell & Howell Document Management Products Co., 994 F.2d 1569, 1570 (Fed. Cir. 1993). 2 1 Specifically, Hospitality asserted that even though CTF declared in its trademark application 2 that it intended to use the mark for meetings, conferences, exhibitions, congresses, seminars, 3 symposiums, and workshops, CTF’s Ko’a Kea Hotel did not in fact provide facilities for such use. 4 CTF moved to suspend the TTAB proceedings pending final disposition of this civil action, and 5 the TTAB granted CTF’s motion. Hospitality then moved to stay this civil action until after the 6 TTAB had made a decision or, in the alternative, to dismiss CTF’s cyberpiracy claim, both of 7 which were denied (Dkt. No. 23). For the Northern District of California United States District Court 8 Hospitality filed an answer to the complaint (Dkt. No. 27). In the answer, Hospitality 9 asserted a counterclaim against CTF alleging that CTF’s registration regarding the PENTA mark 10 must be cancelled pursuant to 15 U.S.C. 1119 because CTF filed a fraudulent statement of use in 11 support of its registration application. Hospitality also asserted sixteen affirmative defenses in 12 the answer. CTF now moves to dismiss Hospitality’s counterclaim and to strike Hospitality’s 13 affirmative defenses 2, 3, 4, 5, 7, 9, and 11. 14 ANALYSIS 15 1. 16 A motion to dismiss a counterclaim brought pursuant to Federal Rule of Civil Procedure MOTION TO DISMISS HOSPITALITY’S COUNTERCLAIM. 17 12(b)(6) is evaluated under the same standard as a motion to dismiss the plaintiff’s complaint. 18 Rule 12(b)(6) tests the legal sufficiency of the claims asserted and “must be read in conjunction 19 with Rule 8, which requires a short and plain statement showing that the pleader is entitled to 20 relief and contains a powerful presumption against rejecting pleadings for failure to state a 21 claim.” Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir. 2003) (quotation marks omitted). 22 These settled principles are qualified by the new, more stringent pleading standard articulated by 23 the Supreme Court in Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949–50 (2009). 24 The counterclaim seeks cancellation of CTF’s registration of the PENTA mark pursuant 25 to 15 U.S.C. 1119 on the basis of fraud. Section 1119 gives the court the authority, inter alia, 26 to order the cancellation of trademark registrations. Under 15 U.S.C. 1064(c), a party can seek 27 cancellation of a registered trademark on the basis of fraud by showing that the applicant or 28 registrant made: (1) “a false representation;” (2) “regarding a material fact;” (3) with “knowledge 3 For the Northern District of California United States District Court 1 or belief that the representation is false;” (4) with “the intent to induce reliance upon the 2 misrepresentation;” (5) “reasonable reliance thereon;” and (6) “damages proximately resulting 3 from the reliance.” Robi v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th Cir. 1990). Moreover, 4 for all allegations of fraud, Federal Rule of Civil Procedure 9(b) requires that “a party must state 5 with particularity the circumstances constituting fraud,” while “[m]alice, intent, knowledge, and 6 other conditions of a person’s mind may be alleged generally.” “A pleading is sufficient under 7 Rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can prepare an 8 adequate answer from the allegations. While statements of the time, place and nature of the 9 alleged fraudulent activities are sufficient, mere conclusory allegations of fraud are insufficient.” 10 Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989) (citations omitted). 11 The six elements required to justify cancellation of a trademark registration on the basis 12 13 14 15 16 of fraud are now addressed in turn. A. A False Representation. The counterclaim alleges that CTF made various false representations in its statement of use. Specifically, the counterclaim states (Ans. 7–8): 20 [O]n June 9, 2006, CTF filed an application with the USPTO for the CTF Mark . . . for use with, “hotel services; making hotel reservations for others; provision of temporary accommodation; hotel, motel and resort hotel accommodation services; providing of food and drink; restaurant, bar and catering services; provision of facilities for meetings, conferences, exhibitions, congresses, seminars, symposiums and workshops; reservation services for hotel accommodation and other accommodation; food and beverage preparation services,” in International Class 43. 21 But the counterclaim states that, contrary to CTF’s representations, at the time that CTF filed its 22 statement of use the mark was not being used in conjunction with “all of CTF’s Services,” 23 including “motel and accommodation services,” “the provision of facilities for meetings, 24 conferences, exhibitions, congresses, seminars, symposiums and workshops,” and “the providing 25 of food and drink; restaurant, bar and catering services and food and beverage preparation 26 services” (id. at 8–10). Indeed, Hospitality states that, at that time, CTF’s Ko’a Kea Hotel did 27 not even include “conference or meeting facilities,” nor did the Ko’a Kea Hotel website include 28 the mark or “any reference to the provision of facilities for meetings, conferences, exhibitions, 17 18 19 4 1 congresses, seminars, symposiums and workshops” (id. at 9). Hospitality further claims that, 2 although CTF represented in its statement of use that “it began using the CTF Mark with all of 3 its CTF Services on September 23, 2008, that statement was false. . . . CTF did not then and still 4 does not use the CTF Mark in conjunction with all of the CTF Services” (id. at 9–10). 5 6 Instead, CTF merely states that Hospitality has not sufficiently alleged materiality and intent to 7 deceive. These elements are addressed below. In sum, Hospitality has sufficiently alleged that 8 the representations were false. 9 For the Northern District of California 10 United States District Court Plaintiff CTF does not challenge Hospitality’s allegations that these statements were false. B. Regarding a Material Fact. Under its usual meaning, “[a] fact is ‘material’ if the fact may affect the outcome of the 11 case.” Far Out Productions, Inc., v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001). Likewise, “in the 12 trademark context, a material misrepresentation arises only if the registration should not have 13 issued if the truth were known to the examiner.” Alphaville Design, Inc. v. Knoll, Inc., 627 F. 14 Supp. 2d 1121, 1132 (N.D. Cal. 2009) (Patel, J.) (quotation marks omitted). Misrepresentations 15 of fact made on the statement of use are, by their nature, “material” because “the statement of use 16 would not have been accepted nor would registration have issued but for [the applicant’s] 17 misrepresentation, since the USPTO will not issue a registration covering goods upon which the 18 mark has not been used.” Medinol Ltd. v. Neuro Vasx, Inc., No. 92040535, 2003 T.T.A.B. LEXIS 19 227, at *11 (T.T.A.B. May 13, 2003); see also Tri-Star Marketing, LLC, v. Nino Franco Spumanti 20 S.R.L., No. 92043953, 2007 T.T.A.B. LEXIS 81, at *8 (T.T.A.B. Aug. 28, 2007); Universal 21 Nutrition Corp. v. Carbolite Foods, Inc., 325 F. Supp. 2d 526, 531 (D. N.J. 2004) (citing cases).2 22 The counterclaim alleges just that — that “CTF’s false statements were material as they were 23 made with the intent to induce the USPTO to grant registration of the CTF Mark. Reasonably 24 relying upon the truth of such false statements, the UPSTO did, in fact, grant registration of the 25 CTF Mark to CTF” (Ans. 10). 26 27 28 2 Contrary to plaintiff (see Reply Br. 5), Medinol has not been reversed. It is true that the portion of Medinol regarding the “intent” prong of a fraud claim was overturned in In re Bose Corp., No. 2008-1448, 2009 U.S. App. LEXIS 19658, at *8–13 (Fed. Cir. Aug. 31, 2009). But the portion of Medinol addressing the “materiality” prong of a fraud claim is still good law. 5 For the Northern District of California United States District Court 1 Plaintiff states that defendant has failed to allege that, had the USPTO known the truth, 2 the trademark would not have issued. Instead, plaintiff argues, the USPTO would have taken 3 alternative action. First, plaintiff cites Ritz Hotel, Ltd. v. Shen Manufacturing Co., Inc., 4 No. 05-4730, 2009 WL 723394, at *3–4 (E.D. Pa. Mar. 17, 2009), to argue that “[t]he [US]PTO 5 would not have deleted the . . . registration had it known that some associated goods were not in 6 use at the time [plaintiff] filed its Statement of Use; the [US]PTO would have deleted the unused 7 goods without cancelling the registration.” But Ritz Hotel did not address a statement of use 8 filed in support of an application to obtain a trademark registration. Rather, the facts involved a 9 statement of use filed to renew an already existing trademark registration and the court addressed 10 how the USPTO would respond when certain uses originally listed on the registration had since 11 been abandoned. Ibid. As a result, Ritz Hotel is inapplicable to the present case in which it is 12 alleged that the applicant fabricated certain uses in order to obtain the trademark registration. 13 Second, plaintiff cites Sections 1108 and 1110 of the Trademark Manual of Examining 14 Procedures for the proposition that, had it known the truth, the USPTO would have either simply 15 deleted the items on which the mark was not in use, divided the application into multiple 16 applications, or, alternatively, extended the deadline for the statement of use by six months. 17 But plaintiff’s reasoning is flawed. First, neither Section 1108 or 1110 speak to deleting items 18 on which the mark is not in use. Moreover, both Sections require the prospective registrant to 19 file a separate application for division of the application or extension of time with the USPTO 20 within a certain time limit and pay a fee. See §§ 1108–1108.02, 1110(a) and (d). If these 21 requirements are not complied with, the USPTO will deny the request and “abandon” or deny 22 the application for registration. See, e.g., §§ 1108, 1110.01. In this case, plaintiff neither applied 23 nor paid the fee for division of the application or the six month time extension, nor did so within 24 the time limit set forth in Section 1108 and 1110. As a result, had the USPTO known that certain 25 items listed on the statement of use were not being used in conjunction with the mark, the USPTO 26 would not have simply unilaterally divided the application or unilaterally granted a time extension 27 to fix the problem. Rather, the USPTO would have denied the registration application. 28 6 1 Finally, plaintiff states that cancelling “a technically good trademark because of a minor 2 technical defect in an affidavit” is inappropriate. Morehouse Manufacturing Corp. v. J. 3 Strickland & Co., 407 F.2d 881, 888 (C.C.P.A. 1968). But the technical defect at issue in 4 Morehouse truly was “minor” (referring to one item actually used in commerce with two different 5 names in an affidavit thereby causing mild confusion over the item’s actual name). Attempting to 6 deceive the USPTO by listing false uses of the trademark in the statement of use, as is alleged in 7 this action, is not a “minor” defect. 8 9 CTF’s statement of use, the USPTO would have denied CTF’s registration application. Thus, the materiality prong is sufficiently alleged.3 C. 11 For the Northern District of California United States District Court 10 In sum, Hospitality has stated facts to show that, had the USPTO known the truth about The third prong requires that the applicant or registrant knew that the material 12 13 Knowledge or Belief that the Representation is False. misrepresentation was false. Hospitality’s counterclaim alleges that (Ans. 10): CTF falsely alleged in a Declaration under 37 C.F.R. § 1(a) that CTF’s first use of the mark was on September 23, 2008, for the CTF Services. Upon information and belief, however, CTF did not then and still does not use the CTF Mark in conjunction with all of the CTF Services. Therefore, upon information and belief, CTF procured the registration for the CTF Mark by false means and/or by knowingly and willfully making false and/or fraudulent declarations or representations to the USPTO . . . CTF knew, at the time the statement was made, that the statement of first use made in the application for the CTF Mark was false. 14 15 16 17 18 19 These are not mere conclusory allegations; rather, defendant lists supporting facts to show that 20 plaintiff knew the statements were false, thereby satisfying the Iqbal standard. Regardless, 21 plaintiff does not dispute Hospitality’s allegations that CTF knowingly made false representations. 22 Plaintiff merely claims that the intent prong is not met. Therefore, the knowledge prong is 23 sufficiently alleged. 24 25 26 27 28 3 Plaintiff suggests that a decision finding that CTF’s PENTA trademark is invalid would not change the legal position of the parties “with respect to CTF’s registration related to hotel services, as CTF’s trademark rights would have nonetheless dated back to the filing of its application upon issuance of the underlying registration” (Reply Br. 4). This argument presupposes that CTF had established a valid right to use the PENTA mark prior to the allegedly fraudulent trademark registration. Indeed, one goal of this action is to conclusively determine which products, if any, CTF has a valid and exclusive right to use. Sengoku Works Ltd. v. RMC International, Ltd., 96 F.3d 1217, 1219–20 (9th Cir. 1996) (explaining that the presumption of exclusive right to use is rebuttable). 7 1 2 3 4 5 D. Intent to Induce Reliance Upon the Misrepresentation. The Trademark Trial and Appeal Board has: [C]onsistently and correctly acknowledged that there is a material legal distinction between a “false” representation and a “fraudulent” one, the latter involving an intent to deceive, whereas the former may be occasioned by a misunderstanding, an inadvertence, a mere negligent omission, or the like. In other words, deception must be willful to constitute fraud. 6 In re Bose, 2009 U.S. App. LEXIS 19658, at *6 (citations and quotation marks omitted) 7 (emphasis added). 8 Defendant Hospitality alleges that CTF’s false statements “were made with the intent to 9 induce the USPTO to grant registration of the CTF Mark” (Ans. 10). Plaintiff responds that this 10 CTF intended to deceive the USPTO (Br. 4–6). But defendant has alleged facts which establish a For the Northern District of California United States District Court is a mere conclusory allegation and that Hospitality has not sufficiently alleged facts to show that 11 12 plausible inference of such a deceptive intent. Such an inference is sufficient: 13 14 15 16 17 [B]ecause direct evidence of deceptive intent is rarely available, such intent can be inferred from indirect and circumstantial evidence. But such evidence must still be clear and convincing, and inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement. When drawing an inference of intent, the involved conduct, viewed in light of all the evidence . . . must indicate sufficient culpability to require a finding of intent to deceive. 18 In re Bose, 2009 U.S. App. LEXIS 19658, at *10–11 (citations and quotation marks omitted). 19 Under the facts alleged, the inference of intent is easily drawn. When false facts are affirmatively 20 written on a statement of use, it is difficult to conclude that it is not at least plausible, under the 21 Iqbal standard, that such an act was done with the intent to deceive the UPSTO into granting a 22 trademark registration. Why else would such an act occur? Plaintiff has not suggested an 23 alternative reason. 24 Plaintiff incorrectly claims that the intent prong of a fraud claim must be alleged with the 25 particularity required by Rule 9(b) (Br. 5). To the contrary, Rule 9(b) specifically states that 26 “[m]alice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” 27 28 8 1 As stated, this order holds that Hospitality has alleged sufficient facts to meet the applicable 2 standard under Iqbal.4 For the Northern District of California United States District Court 3 Finally, plaintiff cites several decisions to support the proposition that there must be 4 subjective intent to deceive, rather than evidence of mere negligence in failing to disclose certain 5 evidence (Br. 4, 6). This order does not dispute plaintiff’s proposition. But plaintiff wrongly 6 assumes that Hospitality has only alleged facts that show mere negligence. By way of example, 7 the cases cited by plaintiff address situations where certain facts were accidentally omitted from 8 a statement of use — a circumstance of arguable negligence in which an inference of an intent to 9 deceive does not naturally follow. In contrast, when allegedly false facts are affirmatively added 10 to the statement of use, this order cannot say that an intent to deceive the USPTO is not a 11 plausible inference. As that is all that is required to survive a motion to dismiss, the intent prong 12 is sufficiently alleged. E. 13 Reasonable Reliance Upon the Misrepresentation And Damages Proximately Resulting Therefrom. 14 Plaintiff does not dispute the final two prongs of the fraud counterclaim — reasonable 15 reliance on the misrepresentation and damages resulting to defendant therefrom. Defendant 16 sufficiently states that, “[r]easonably relying upon the truth of such false statements, the USPTO 17 did, in fact, grant registration of the CTF Mark to CTF” (Ans. 10). Defendant also explains that 18 “Hospitality is likely to be damaged by the continued registration of the CTF Mark” because 19 (id. at 7, 10): 20 23 Hospitality has invested a great deal of time and money in promoting its business and the professional quality of its services, and is continuing to spend substantial amounts of time and money in the promotion of its hospitality service. . . . Hospitality has done business under the trademark, PENTA HOSPITALITY, nationwide since at least January, 2007. 24 In sum, these final two prongs are sufficiently alleged. 21 22 25 26 27 28 4 As to the other, non-intent elements of the fraud claim, CTF does not explain why Hospitality’s allegations lack particularity. Defendant has pled with sufficient particularity the time, place, and nature of the alleged fraudulent activities, as explained previously, and has not made mere conclusory allegations of such fraud — this is all that is required to overcome a motion to dismiss. 9 1 2 3 Because all required prongs of the fraud claim were sufficiently alleged, plaintiff’s motion to dismiss the counterclaim is hereby DENIED. 2. MOTION TO STRIKE HOSPITALITY’S AFFIRMATIVE DEFENSES 2, 3, 4, 5, 7, 9, AND 11. 4 A motion to strike an affirmative defense is brought pursuant to Federal Rule of Civil 5 Procedure 12(f), under which a court may strike “from any pleading any insufficient defense or 6 any redundant, immaterial, impertinent or scandelous matter.” The Ninth Circuit has held that: 7 8 9 For the Northern District of California United States District Court 10 The procedural sufficiency of a pleaded claim or defense in federal court is governed by the federal rules . . . . Fed. R. Civ. P. 8(c) determines whether the pleading of the . . . defense was sufficient . . . The key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense. 11 Wyshak v. City National Bank, 607 F.2d 824, 827 (9th Cir. 1979). Moreover, the trial court has 12 discretion to strike material from the pleadings. Nurse v. United States, 226 F.3d 996, 1000 13 (9th Cir. 2000). If a claim is stricken, leave to amend should be freely given when doing so 14 would not cause prejudice to the opposing party. Wyshak, 607 F.2d at 826. 15 A. Affirmative Defenses 2, 3, 4, and 7: Estoppel, Laches, Waiver, and Failure to Mitigate Damages. 16 Plaintiff’s motion requested that this order strike affirmative defenses 2, 3, 4, and 7. 17 In response, Hospitality withdrew affirmative defenses 2, 3, 4, and 7 (Opp. 8 n.1). Thus, 18 affirmative defenses 2 (estoppel), 3 (laches), 4 (waiver), and 7 (failure to mitigate damages) are 19 hereby STRICKEN WITH PREJUDICE. 20 B. 21 22 23 24 Affirmative Defenses 5 and 9: Unclean Hands And Invalid Trademark. Defendant sets forth affirmative defenses 5 and 9 as follows (Ans. 5–6): Affirmative Defense No. 5 All or some of CTF’s claims are barred under the doctrine of unclean hands. 25 * * * 26 Affirmative Defense No. 9 27 28 All or some of CTF’s claims are barred because any marks claimed by CTF, including its registration for PENTA (U.S. Reg. No. 3,568,660), are invalid. 10 For the Northern District of California United States District Court 1 Plaintiff’s motion points out that defenses pleaded “in perfunctory fashion, without 2 any supporting factual allegations” are insufficient (Br. 8) (emphasis omitted). Indeed, bare 3 statements reciting mere legal conclusions do not provide a plaintiff with fair notice of the 4 defense asserted, as required under Wyshak. See, e.g., Qarbon.com, Inc. v. eHelp Corp., 315 F. 5 Supp. 2d 1046, 1049–50 (N.D. Cal. 2004) (Ware, J.) (striking defenses that did no more than 6 name the defenses without listing their elements or supporting facts); Solis v. Zenith Capital, 7 LLC, No. C-08-4854, 2009 U.S. Dist. LEXIS 43350, at *8–19 (N.D. Cal. May 8, 2009) 8 (Hamilton, J.) (striking affirmative defenses because no factual bases were provided); Woodfield 9 v. Bowman, 193 F.3d 354, 362 (5th Cir. 1999) (“[B]aldly ‘naming’ the broad affirmative defenses 10 of ‘accord and satisfaction’ and ‘waiver and/or release’ falls well short of the minimum 11 particulars needed to identify the affirmative defense in question and thus notify [the plaintiff]”). 12 This order finds that defenses 5 and 9 were pled in an insufficient manner. As to defense 13 5, simply stating that a claim fails due to plaintiff’s “unclean hands” is not sufficient to notify the 14 plaintiff what behavior has allegedly given them “unclean hands.” As to defense 9, simply stating 15 that the trademark is “invalid” is not sufficient to notify the plaintiff why the trademark is 16 allegedly invalid. Plaintiff attempts to interpret what defendant may have meant by stating that 17 “Hospitality’s only possible factual basis for these affirmative defenses are those supporting its 18 counterclaim for cancellation” (Br. 8). That is one possible interpretation. But the actual bases 19 for these defenses are not stated in the operative pleading, and it is neither this Court’s nor 20 plaintiff’s responsibility to interpret what defendant may have meant by such vague statements. 21 Defendant makes two arguments in opposition to the motion to strike affirmative defenses 22 5 and 9. First, defendant points out that “[m]otions to strike are disfavored and should not be 23 granted unless it is clear that the matter to be stricken could have no possible bearing on the 24 subject matter of the litigation” (Opp. 8). While this lenient rule applies to affirmative defenses 25 that are sufficiently pleaded, it is inapplicable to affirmative defenses that are mere statements of 26 legal conclusions with no supporting facts. See Iqbal, 129 S. Ct. at 1949–50; Wyshak, 607 F.2d at 27 827. Second, defendant claims that CTF “admits” that affirmative defenses 5 and 9 rely on the 28 same facts as the counterclaim (Opp. 9). This argument is absurd — plaintiff did not, nor could 11 1 it, “admit” anything about the intended bases of defendant’s allegations. Plaintiff, in stating one 2 possible basis, was merely attempting to intelligently respond to an insufficiently stated defense. 3 Under the Iqbal standard, the burden is on the defendant to proffer sufficient facts and law to 4 support an affirmative defense, and not on the plaintiff to gamble on interpreting an insufficient 5 defense in the manner defendant intended. 6 Because defendant has not provided “fair notice” to plaintiff regarding affirmative 7 defenses 5 (unclean hands) and 9 (invalid trademark), as required by Wyshak and Iqbal, these 8 defenses are hereby STRICKEN with leave to bring a motion to add better renditions. 9 C. Defendant sets forth affirmative defense 11 as follows (Ans. 6): 11 For the Northern District of California United States District Court 10 Affirmative Defense 11: Fraud. Affirmative Defense No. 11 12 All or some of CTF’s claims are barred because CTF committed fraud on the U.S. Patent & Trademark Office (“USPTO”) by misrepresenting its use of the PENTA mark (U.S. Reg. No. 3,568,550) in conjunction with all of the services listed in its USPTO application for the PENTA mark. 13 14 15 This defense is sufficiently alleged. It is clear that affirmative defense 11 relies on the same facts 16 as proffered to support the counterclaim. With the counterclaim’s additional supporting facts, this 17 defense provides notice to plaintiff as to why defendant believes CTF’s claims are barred. 18 Because this order has already determined that the counterclaim was sufficiently stated to 19 overcome plaintiff’s motion to dismiss, affirmative defense 11 is likewise sufficiently stated to 20 overcome plaintiff’s motion to strike. Accordingly, plaintiff’s motion to strike affirmative 21 defense 11 is hereby DENIED. CONCLUSION 22 For the reasons stated above, the motion to dismiss the counterclaim is DENIED, and the 23 24 motion to strike affirmative defenses 2, 3, 4, 5, 7, 9, and 11 is GRANTED IN PART and DENIED IN 25 PART. 26 affirmative defenses 5 and 9 are STRICKEN with leave to bring a motion to add better renditions. 27 Affirmative defense 11 still stands. Specifically, affirmative defenses 2, 3, 4, and 7 are STRICKEN WITH PREJUDICE, and 28 12 1 2 3 Any motion to amend must be filed and served by NOVEMBER 12, 2009, setting forth the new pleading in full and explaining why it would overcome the defects, if allowed. The hearing scheduled for October 29, 2009, at 2:00 p.m. is hereby VACATED. 4 5 IT IS SO ORDERED. 6 7 8 Dated: October 26, 2009. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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