Mortgage Electronic Registration Systems, Inc. v. Brosnan et al, No. 4:2009cv03600 - Document 34 (N.D. Cal. 2009)
Court Description: ORDER GRANTING PLAINTIFFS MOTION FOR PRELIMINARY INJUNCTION. The preliminary injunction will take effect upon Plaintiff's posting of a bond in the amount of $1,000. The TRO shall remain in effect for (10) ten-days to allow Plaintiff time to post bond. Signed by Judge Claudia Wilken, on 9/4/09. (scc, COURT STAFF) (Filed on 9/4/2009) Modified on 9/8/2009 (jlm, COURT STAFF).
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Mortgage Electronic Registration Systems, Inc. v. Brosnan et al Doc. 34 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware 9 corporation, 10 11 Plaintiff, No: C 09-3600 SBA ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION vs. 12 JOHN BROSNAN, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, 13 INC., a California corporation, and ROBERT JACOBSEN, 14 Defendants. 15 _______________________________/ 16 17 Plaintiff Mortgage Electronic Registration Systems, Inc. 18 (Plaintiff MERS), a Delaware corporation, brings the instant 19 action against John Brosnan, Robert Jacobsen and “Mortgage 20 Electronic Registration Systems, Inc.” (a California corporation 21 recently formed by Mr. Brosnan), alleging federal claims for 22 trademark infringement and false designation of origin, along with 23 various state law claims for conversion, violations of 24 California’s Unfair Competition Law (UCL) and conversion and 25 trespass to personal property.1 26 27 28 1 Because Defendants have formed companies using the same name as Plaintiff, the Court will distinguish them by reference to Plaintiff MERS and Defendant MERS. Dockets.Justia.com 1 Plaintiff MERS moves for a preliminary injunction prohibiting 2 Defendants from using Plaintiff MERS’ name and accepting service 3 of process of documents intended for Plaintiff MERS. 4 Plaintiff MERS seeks the return of any documents in Defendants’ 5 possession that were intended for delivery to Plaintiff MERS. 6 matter was heard on August 26, 2009. 7 argument and all of the papers submitted by the parties, the Court 8 grants Plaintiff MERS’ motion.2 In addition, The Having considered oral 9 BACKGROUND 10 Plaintiff MERS is a Delaware corporation that provides e- 11 commerce real estate mortgage and related services to lenders and 12 loan servicers, among others. 13 approximately the last thirteen years, Plaintiff MERS has used the 14 name Mortgage Electronic Registration Systems as well as the MERS® 15 mark in connection with its business operations. 16 MERS is owned by MERSCORP, Inc., which maintains a database 17 containing information on approximately 60 million mortgages and 18 deeds of trust, 9.7 million of which relate to properties located 19 in California. 20 mortgage servicing rights and beneficial ownership interests that 21 are bought and sold between Plaintiff MERS’ members, which include 22 some of the country’s largest mortgage companies and banks. 23 Id. ¶ 3. 24 25 Compl. ¶ 7; Hultman Dec. ¶ 3. Hultman Dec. ¶¶ 3, 7. Id. For Plaintiff This database tracks In the vast majority of the loans maintained in MERSCORP’s database, Plaintiff MERS is listed as the mortgagee or 26 2 27 28 Messrs. Brosnan and Jacobsen filed individual pro se oppositions, while Defendant MERS filed its opposition through counsel. All three oppositions were filed after the 5:00 p.m. deadline on August 21, 2009. - 2 - 1 beneficiary, thus granting it legal title to the property. 2 However, the beneficial ownership interests and servicing rights 3 remain with the member, i.e., the lender or servicing company. 4 Id. 5 or beneficiary, its members are able to buy and sell mortgages 6 without incurring the time and expense associated with mortgage 7 lien assignments. 8 most mortgages as the beneficiary, it generally is served with 9 legal documents in matters involving the property. Id. Because Plaintiff MERS always remains listed as the mortgagee Id. Because Plaintiff MERS is identified on Patry Dec. 10 ¶ 11. 11 approximately 2,500 lawsuits involving properties in California, 12 Arizona, Texas, Oregon and Washington. 13 In 2009 alone, Plaintiff MERS has been served in Id. On June 19, 2009, Mr. Brosnan contacted Joseph Patry, in- 14 house counsel for MERSCORP who also serves as counsel for 15 Plaintiff MERS, claiming that he had registered an entity 16 identified as “Mortgage Electronic Registration Systems Inc.” with 17 the California Secretary of State. 18 that he or his entity’s agent for service of process had 19 “accepted” approximately 200 legal documents that were intended 20 for Plaintiff MERS. 21 MERS enter into a fee arrangement with him for forwarding those 22 documents to Plaintiff MERS. 23 Mr. Patry responded by sending Mr. Brosnan a cease and desist 24 letter (by UPS and email) demanding that he cease using Plaintiff 25 MERS’ name and that he immediately return any legal documents 26 intended for Plaintiff MERS. Id. Id. ¶ 2. Mr. Brosnan stated In addition, he demanded that Plaintiff Id. On behalf of Plaintiff MERS, Id. ¶ 3 and Exh. A. 27 Shortly after Mr. Patry sent his letter, Mr. Brosnan 28 responded with two emails in which he insisted that he had the - 3 - 1 right to use the Plaintiff MERS’ name. 2 Plaintiff MERS cease using its name in California and threatened 3 to seek a temporary restraining order if it refused to do so. 4 Exh. B. 5 Brosnan claimed he had the right to “discard” any of them that did 6 not pertain to Defendant MERS. 7 want me to forward documents to you I will but we will need to 8 enter into a fee agreement.” 9 as “CEO – Mortgage Electronic Registrations Systems Inc.” 10 The California Secretary of State’s website indicates that 11 “Mortgage Electronic Registrations Systems Inc.” was registered as 12 a corporation in California on June 1, 2009, and the email address 13 for the agent for service of process is listed as 14 “MERSSERVICE@GMAIL.COM.” 15 Id. ¶ 4. He demanded that Id. As for the documents mistakenly served on him, Mr. Id. Id. He further stated: “If you Mr. Brosnan signed the letter Id. Oakley Dec. Exh. A. On July 17, 2009, Plaintiff MERS learned that an entity had 16 been formed in Arizona, again using its name, and that an 17 application for its incorporation was pending. 18 Arizona Corporation Commission’s website lists Kerease Margita as 19 the contact for the company. 20 Arizona entity has any affiliation with Plaintiff MERS. 21 MERS sent Ms. Margita a letter at the address listed, demanding 22 that the application for incorporation be withdrawn and that the 23 Arizona entity cease using Plaintiff MERS’ name. 24 days later, on July 21, 2009, Mr. Patry received a call from 25 “David” stating that Ms. Margita did not own the Arizona entity Id. Id. ¶ 5.3 The Neither Ms. Margita nor the Id. ¶ 6. Id. ¶ 7. A few 26 3 27 28 Information from Arizona public records indicates that Mr. Brosnan submitted an application to form a corporation named “Mortgage Electronic Registration Systems, Inc.” with the state on or about June 8, 2009. Id. Exh. C. - 4 - 1 and that she was serving solely as its agent for service of 2 process. 3 received an email from michael@incsmart.biz directing it to send 4 its “threatening letters” to Mr. Brosnan at an address in Las 5 Vegas. 6 Id. ¶ 8. A few minutes after the call, Plaintiff MERS Id. In the afternoon of July 21, 2009, the same day he received a 7 call from David, Mr. Patry received an email from Robert Jacobsen 8 who claimed to be the President of “Mortgage Electronic 9 Registration Systems, Inc.” in Texas, Oregon and Washington. Id.4 10 Like Mr. Brosnan, Mr. Jacobsen claimed that he had the exclusive 11 right to use Plaintiff MERS’ name and demanded that Plaintiff MERS 12 cease using its name in those particular states. 13 threatened to seek a temporary restraining order in the event 14 Plaintiff MERS refused to comply. 15 he had received “numerous filings” and that he has had to review 16 them to determine if they were intended for Plaintiff MERS. 17 Mr. Jacobsen also told Mr. Patry that he would forward any 18 documents belonging to Plaintiff MERS on the condition that it 19 “reimburse” him “for the cost to review and ship these documents.” 20 Mr. Jacobsen listed his “fees” as follows: 21 review cost”; (2) $25 for “Registered agent fee”; (3) $200 for 22 “Electronic format”; and (4) $1,000 for “10 day rush service.” 23 Id. Exh. F. 24 25 Id. Id. He also Mr. Jacobsen stated that Id. (1) $1,000 for “legal On August 6, 2009, Plaintiff MERS filed the instant action in this Court, accompanied by an Ex Parte Application for Temporary 26 27 28 4 Mr. Jacobsen apparently formed a corporation under the MERS name in Texas and Oregon on or about June 1, 2009, and in Washington in June 3, 2009. Id. Exhs. B, C, D. - 5 - 1 Restraining Order and Order to Show Cause. 2 the Court entered a temporary restraining order prohibiting 3 Defendants from: On August 12, 2009, 4 (A) 5 ELECTRONIC REGISTRATION SYSTEMS (with or 6 without an “S”), MERS or any confusingly 7 similar designations, as a mark, business 8 name, domain name, email address, meta-tag or 9 otherwise; and Using or applying to register MORTGAGE 10 (B) 11 documents intended for MERS, including 12 summonses, complaints, subpoenas, or any other 13 legally-required notices naming or involving 14 mortgage liens held by Mortgage Electronic 15 Registration Systems, Inc., a Delaware 16 corporation. Accepting service of process or other 17 In addition, the Court ordered Defendants to forward any documents 18 in their possession intended for Plaintiff MERS to the intended 19 recipient within three days of being served with the order.5 20 According to Plaintiff MERS, Defendants had not returned any 21 documents as of the time their Reply was filed. 22 Decl. ¶ 7. Oakley Reply 23 24 25 26 27 28 5 Because Defendants had not yet filed a response, the Court declined to consider Plaintiff MERS’ fourth request for an order directing Defendants to take the necessary actions formally to change the name of or dissolve any companies established under the name Mortgage Electronic Registration Systems, Inc., MERS® or anything confusingly similar. However, this request will be considered in connection with the present motion. - 6 - 1 LEGAL STANDARD 2 “A plaintiff seeking a preliminary injunction must establish 3 that he is likely to succeed on the merits, that he is likely to 4 suffer irreparable harm in the absence of preliminary relief, that 5 the balance of equities tips in his favor, and that an injunction 6 is in the public interest.” 7 Inc., ___ U.S. ___, 129 S. Ct. 365, 374 (2008). 8 showing of harm varies inversely with the required showing of 9 meritoriousness.” Winter v. Natural Res. Def. Council, “[T]he required Indep. Living Ctr. of S. Cal., Inc. v. Shewry, 10 543 F.3d 1047, 1049 (9th Cir. 2008) (quoting Rodeo Collection, 11 Ltd. v. W. Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987)). 12 13 DISCUSSION I. Likelihood of Success on the Merits 14 A. 15 Plaintiff MERS’ first and second claims are for trademark Lanham Act Claims 16 infringement, 15 U.S.C. § 1114, and false designation of origin, 17 15 U.S.C. § 1125, respectively. 18 infringement, or unfair competition, preclude one from using 19 another’s distinctive mark or name if it will cause a likelihood 20 of confusion or deception as to the origin of the goods.” 21 West Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1201 (9th Cir. 22 1979). 23 plaintiff] must show that: (1) it has a valid, protectable 24 trademark, and (2) that [the defendant’s] use of the mark is 25 likely to cause confusion.” 26 Inc., 511 F.3d 966, 969 (9th Cir. 2007). 27 claim is slightly different, because a trade name cannot be 28 registered. “Trade-mark and trade name New “To prevail on its trademark infringement claim, [a Applied Info. Sciences Corp. v. eBAY, A false designation Accuride Int’l Inc. v. Accuride Corp., 871 F.2d 1531, - 7 - 1 1534 (9th Cir. 1989). 2 claims turns on the likelihood of confusion. 3 claims for trademark and tradename claims are evaluated under the 4 same test for likelihood of confusion).6 5 6 1. Nevertheless, the ultimate issue in both Id. (holding that Protectable Mark Both registered and unregistered trade names and trademarks 7 are subject to protection under the Lanham Act. 8 LLC v. Sanderson Sales and Mktg., 547 F.3d 1213, 1225-26 (9th Cir. 9 2008); see also GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 10 1205 n.3 (9th Cir. 2000) (noting that “the same standard” applies 11 to infringement claims, irrespective of whether the marks or names 12 are registered). 13 the Plaintiff MERS’ name because Messrs. Brosnan and Jacobsen were 14 able to incorporate (or apply to incorporate) their entities using 15 the Plaintiff MERS’ name in California, Arizona, Texas, Oregon and 16 Washington.7 17 authorize the use of a name that rightfully belongs to another 18 party. 19 articles of incorporation pursuant to Section 200 of the 20 Corporations Code shall not of itself authorize the use in this 21 state of a corporate name in violation of the rights of another Halicki Films, Defendants argue that they have the right to use However, merely incorporating an entity does not See Cal. Bus. & Prof. Code § 14417 (“The filing of 22 6 23 24 25 26 27 28 Plaintiff MERS registered MERS® as a service mark with the U.S. Patent and Trademark Office. Hultman Exh. A. The name Mortgage Electronic Registration System is not registered as a trademark. 7 Defendants assert, without any evidentiary support, that Plaintiff MERS previously incorporated itself in California but that its corporate status was suspended for having failed to pay taxes. In fact, Plaintiff MERS has never incorporated or attempted to incorporate in California. Hultman Reply Dec. ¶¶ 34. The entity to which Defendants refer has no affiliation with Plaintiff MERS. - 8 - 1 under the federal Trademark Act.”). 2 protection, it is the date of first use that is critical. 3 Works Ltd. v. RMC Int’l, Ltd., 96 F.3d 1217, 1219 (9th Cir. 1996). 4 Here, it is undisputed that Plaintiff MERS used the name Mortgage 5 Electronic Registration Systems, Inc., in commerce long before 6 Defendants. For purposes of trademark Sengoku 7 Next, Defendants contend that Plaintiff MERS previously 8 abandoned its application to register its name with the Patent and 9 Trademark Office, and that Mr. Brosnan now holds the trademark 10 registration for Plaintiff MERS’ name. 11 support Defendants’ claim. 12 application on May 26, 2009; however, the application has not been 13 granted and remains pending. 14 event, “it is not enough to have invented the mark first or even 15 to have registered it first; the party claiming ownership must 16 have been the first to actually use the mark in the sale of goods 17 or services.” 18 preceded Defendants’ use by more than a decade. 19 20 2. Id. The record does not Mr. Brosnan submitted a trademark Oakley Reply Dec. Exh. F. In any As noted, Plaintiff MERS’ use of its name Likelihood of Confusion In determining whether there is a likelihood of confusion, a 21 court is to weigh the following factors: 22 mark; 2) proximity of the goods; 3) similarity of the marks; 23 4) evidence of actual confusion; 5) marketing channels used; 24 6) type of goods and the degree of care likely to be exercised by 25 the purchaser; 7) the defendant’s intent in selecting the mark; 26 and 8) likelihood of expansion of the product lines. 27 v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). 28 similarity of the marks, proximity of the goods and marketing - 9 - 1) the strength of the See AMF Inc. The 1 channels used constitute “the controlling troika in the Sleekcraft 2 analysis.” 3 are the most important. 4 Entmt. Corp., 174 F.3d 1036, 1055 n.16 (9th Cir. 1999). 5 GoTo.com, Inc., 202 F.3d at 1205. a) 6 These three factors See Brookfield Commc’ns, Inc. v. W. Coast Strength of the Mark The strength of the trademark is evaluated in terms of its 7 conceptual strength and commercial strength. 8 often classified in one of five categories of increasing 9 distinctiveness: (1) generic, (2) descriptive, (3) suggestive, Id. “Marks are 10 (4) arbitrary, or (5) fanciful.” 11 E. & J. Gallo Winery, 150 F.3d 1042, 1047 (9th Cir. 1998). 12 latter three characterizations are inherently more distinctive 13 and, hence, are associated with stronger marks. 14 Mortgage Electronic Registration Systems is more descriptive than 15 suggestive, because it does not require much imagination to 16 understand the type of business that Plaintiff MERS operates. 17 n.8 (“Descriptive marks define qualities or characteristics of a 18 product in a straightforward way that requires no exercise of the 19 imagination to be understood.”). 20 Kendall-Jackson Winery, Ltd. v. Id. The The name Id. Descriptive marks are nonetheless protectable upon a showing 21 of acquired distinctiveness. 22 Lasting Impression I, Inc., 408 F.3d 596, 606 (9th Cir. 1995). 23 The more likely a mark is to be remembered and associated in the 24 public’s mind with the mark’s owner, the greater protection the 25 mark is accorded by trademark laws. 26 1207. 27 evidence that its name has commercial strength. 28 lenders and loan servicers use Plaintiff MERS’ services (among KP Permanent Make-Up, Inc. v. See GoTo.com, 202 F.3d at In this case, Plaintiff MERS has presented undisputed - 10 - Over 4,593 member 1 them are the nation’s best known financial institutions), and 2 Plaintiff is identified as the mortgagee or beneficiary in close 3 to 60 million mortgages and deeds of trust. 4 In addition, Plaintiff MERS has used and marketed its corporate 5 name for the last thirteen years, id. Dec. ¶¶ 10-17, which further 6 supports the strength of its name. 7 Gallo Cattle Co., 967 F.2d 1280, 1291 (9th Cir. 1992) (affirming 8 finding that plaintiff’s trademark was strong, based on long 9 continuous use); Accuride Int’l, Inc., 871 F.2d at 1536 10 (“extensive advertising, length of exclusive use, public 11 recognition and uniqueness” strengthen mark). 12 that Plaintiff MERS has presented sufficient evidence to support 13 the strength of its mark. 14 b) Hultman Dec. ¶¶ 3, 6. See E. & J. Gallo Winery v. The Court finds Proximity of Goods 15 The next factor concerns the proximity or relatedness of the 16 good or services represented by the potentially infringing marks. 17 See Sleekcraft, 599 F.2d at 348-49. 18 conclusory and unsupported assertion that there is no likelihood 19 of confusion because they do not sell the same products. 20 Mr. Brosnan does not specify the nature of his business, his 21 federal trademark application discloses that he intends to use 22 Plaintiff MERS’ name for “Real estate financing services.” 23 Reply Decl. Exh. F. 24 “newly formed companies [will] . . . provide information free of 25 charge, to persons wanting to know about lending, tracking, 26 foreclosure practices of lenders and their ‘nominee 27 beneficiaries.’” 28 descriptions do not suggest that Plaintiff MERS and Defendants are Defendants make the Though Oakley As for Mr. Jacobsen, he states that his See Mr. Jacobsen Opp’n at 5-6. - 11 - Although these 1 direct competitors, it is apparent that their respective 2 businesses are sufficiently related to the real estate and 3 mortgage industry to result in consumer confusion. 4 Techs. Inc. v. Palantir.net, Inc., 2008 WL 152339 at *6 (N.D. Cal. 5 2008) (use of identical marks likely to cause confusion where 6 plaintiff and defendant’s goods and services were related 7 generally to the computer software industry). 8 services are sufficiently proximate to favor Plaintiff MERS. 9 10 c) See Palantir The parties’ Similarity of the Marks The greater the similarity between the two marks at issue, 11 the greater the likelihood of confusion. 12 v. Smith, 279 F.3d 1135, 1144 (9th Cir. 2002). 13 heavily in favor of Plaintiff MERS, because the marks are 14 identical. 15 trademark almost verbatim into his email address (i.e., 16 merservice@gmail.com) in connection with his appropriation of 17 Plaintiff MERS’ name. 18 F.3d 1165, 1174 (9th Cir. 2007) (“PerfumeBay” confusingly similar 19 to “eBay” mark); Brookfield Commc’ns, Inc., 174 F.3d at 1055 20 (“moviebuff.com” was essentially the same as “moviebuffonline.com” 21 and likely to confuse the public). 22 Plaintiff MERS. 23 Entrepreneur Media, Inc. This factor weighs In addition, Mr. Brosnan has incorporated the MERS® d) See Perfumebay.com Inc. v. EBAY, Inc., 506 This factor weighs in favor of Evidence of Actual Confusion 24 The evidence of actual confusion is undisputed. 25 correspondence to Plaintiff MERS, both Messrs. Brosnan and 26 Jacobsen admit to having received numerous documents that were 27 intended for Plaintiff MERS. 28 In fact, Mr. Brosnan alone has indicated that he has approximately In Patry Dec. ¶ 2; id. Exhs. B, F, G. - 12 - 1 200 of such documents. 2 name has already caused actual confusion as to the source of a 3 product or service is “persuasive proof that future confusion is 4 likely.” 5 Netscape Commc’ns, 354 F.3d 1020, 1026 (9th Cir. 2004) (“actual 6 confusion among significant numbers of consumers provides strong 7 support for the likelihood of confusion . . . .”). 8 weighs in favor of Plaintiff MERS. Evidence that use of a mark or Sleekcraft, 599 F.2d at 352; Playboy Enters., Inc. v. 9 10 Id. ¶ 2. e) This factor Defendants’ Intent The defendants’ intent is a critical element. See 11 Interstellar Starship Servs., Ltd. v. Epix, Inc., 184 F.3d 1107, 12 1111 (9th Cir. 1999) (“intent to deceive is strong evidence of a 13 likelihood of confusion”). 14 mark he knows to be similar to another, one can infer an intent to 15 confuse.” 16 (9th Cir. 2002). 17 intentionally used the name Mortgage Electronic Registration 18 Systems, Inc., to confuse the public. 19 Plaintiff MERS’ existence before purporting to form Defendant 20 MERS, as evidenced by his pro se lawsuits filed against Plaintiff 21 MERS in this Court. 22 Brosnan’s recent pro se action against Plaintiff MERS filed in the 23 Central District includes extensive allegations regarding 24 Plaintiff MERS, thus revealing his knowledge of its business 25 operations. 26 nature of his conduct is further shown by the fact that he 27 admittedly received documents intended for Plaintiff MERS that he 28 has threatened to “discard” unless Plaintiff MERS agreed to a “fee “Where an alleged infringer chooses a Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1148 In this case, it is apparent that Defendants Mr. Brosnan was aware of See Oakley Dec. Exhs. F, H. Id. Exh. O. ¶¶ 61-68. Notably, Mr. The intentional, bad faith - 13 - 1 arrangement” as a condition of their return. 2 9, Exhs. B, F. 3 Patry Dec. ¶¶ 2, 4, With respect to Mr. Jacobsen, the evidence suggests that he 4 was acting in concert with Mr. Brosnan. 5 largely mirrors that of Mr. Brosnan; namely, he formed entities 6 using the Plaintiff MERS’ name around the same time as Mr. 7 Brosnan, which resulted in documents intended for Plaintiff MERS 8 being mistakenly served on the newly-formed entities. 9 Brosnan, Mr. Jacobsen has refused to forward those documents to Mr. Jacobsen’s conduct Like Mr. 10 Plaintiff MERS unless it agrees to enter into a fee agreement for 11 their return. 12 Jacobsen is further shown by the fact that Mr. Brosnan is 13 prosecuting his Central District action against Plaintiff MERS 14 based on an assignment of rights from Mr. Jacobsen’s wife. 15 Dec. Ex. O ¶ 14. 16 The relationship between Messrs. Brosnan and Oakley Defendants deny that they intentionally selected the name 17 Mortgage Electronic Registration Systems to cause confusion. 18 claim that they used Plaintiff MERS’ name because it was 19 “available” in California, Arizona, Washington, Oregon and Texas. 20 However, Defendants never explain why it was necessary for them to 21 form their entities using a name identical to Plaintiff MERS, 22 particularly given their awareness of Plaintiff MERS’ standing in 23 the real estate mortgage industry. 24 based on the uncontroverted evidence presented, Defendants were 25 acting in concert and that their use of the Plaintiff MERS’ name 26 was intentional. They The Court thus concludes that, 27 28 - 14 - 1 f) Summary In sum, the relevant Sleekcraft factors8 support the 2 3 conclusion that Defendants’ use of Plaintiff MERS’ name and mark 4 was intended to and has, in fact, caused actual public confusion. 5 Indeed, it appears that Defendants’ conduct is in bad faith, as 6 evidenced by their refusal to return documents intended for 7 Plaintiff MERS unless and until it agrees to pay for their return. 8 This evidence is sufficient to show, for purposes of the instant 9 motion, that Defendants’ use of Plaintiff MERS’ marks is likely to 10 cause confusion. 11 has shown a likelihood of success on the merits of its claims 12 under the Lanham Act. 13 3. 14 Accordingly, the Court finds that Plaintiff MERS Fair Use Defendants contend that their use of the Plaintiff MERS’ name 15 is permitted as classic and nominative fair use. 16 defense only comes into play once the party alleging trademark 17 infringement has shown by a preponderance of the evidence that 18 confusion is likely.” 19 Impression I, 408 F.3d 596, 608-609 (9th Cir. 2005). 20 Circuit analysis, there are two distinct forms of the fair use 21 defense: “classic” or statutory fair use and “nominative” fair 22 use. 23 Cir. 2003). 24 appropriate where a defendant has used the plaintiff’s mark only “The fair use KP Permanent Make-Up, Inc. v. Lasting Under Ninth Brother Records, Inc. v. Jardine, 318 F.3d 900, 903 (9th Application of the classic fair use doctrine “is 25 26 27 28 8 The Court has been provided with little information regarding the marketing channels, the likelihood of expansion into other markets or the degree of care exercised by purchasers. Accordingly, none of these factors weighs in favor of either Plaintiff MERS or Defendants. - 15 - 1 to describe his own product, and not at all to describe the 2 plaintiff’s product.” Cairns v. Franklin Mint Co., 292 F.3d 1139, 3 1151 (9th Cir. 2002). In contrast, nominative fair use applies 4 where the defendant is purporting to describe the plaintiff’s 5 service. Id. 6 To establish a “classic fair use defense,” the defendant must 7 prove that its use of the mark is 1) not as a trademark or service 8 mark, 2) fair and in good faith and 3) only to describe its goods 9 or services. Id. Defendants have not met the requirements of 10 this test. 11 their own mark, as shown by the fact that Mr. Brosnan applied to 12 register the name with Patent and Trademark Office. 13 Defendants are not using the Plaintiff MERS’ name in good faith. 14 As discussed, the evidence supports Plaintiff MERS’ claim that 15 Defendants’ purpose in using Plaintiff MERS’ name is to confuse 16 the public into believing that their entities are one in the same 17 as Plaintiff MERS. 18 that they must describe as an electronic mortgage registration 19 system, but instead are using Plaintiff MERS’ name as a trade name 20 ostensibly for real estate financing businesses. 21 First, Defendants are using Plaintiff MERS’ name as Second, Finally, Defendants are not offering a service The nominative fair use doctrine is inapplicable because 22 Defendants are using Plaintiff MERS’ name to describe their own 23 entities, as opposed to describing Plaintiff MERS’ business. 24 25 The Court concludes that Defendants are not likely to succeed on their fair use defense. 26 B. 27 California Business and Professions Code section 17200 makes 28 Unfair Competition Law actionable any “unlawful, unfair or fraudulent business act or - 16 - 1 practice.” 2 almost any federal, state, or local law may serve as the basis for 3 a UCL claim.” 4 1090, 1098 (N.D. Cal. 2008). 5 unfair or fraudulent under the UCL, even if the practice does not 6 violate any law. 7 Cal. Bus. & Prof. Code § 17200. “The violation of Plascencia v. Lending 1st Mortg., 583 F. Supp. 2d Moreover, a business practice may be Id. Code of Civil Procedure section 1209 provides that “acts or 8 omissions in respect to a court of justice, or proceedings 9 therein, are contempts of the authority of the court,” including 10 “unlawful interference with the process or proceedings of a 11 court.” 12 “all writs, warrants, summons and orders of courts of justice, or 13 judicial officers.” 14 interfered with the judicial process by accepting summons and 15 other legal documents intended for Plaintiff MERS, and then 16 refusing to forward such documents unless and until Plaintiff MERS 17 signed a “fee agreement” to secure their return. 18 Defendants acknowledge they demanded fees from Plaintiff MERS to 19 secure the return of its documents, but offer no defense or 20 justification for their actions. 21 claim, Defendants tacitly concede its validity. 22 Barak Const., 164 Cal. App. 4th 845, 849 n.1 (2008).9 23 II. 24 25 Cal. Code. Civ. Proc. § 1209(a)(8). Cal. Gov. Code § 26660. “Process” refers to Defendants have Notably, By failing to address this See Goldstein v. Irreparable Harm, Balance of Equities and the Public Interest Plaintiff MERS argues that irreparable harm is presumed upon a showing of a likelihood of confusion. Previously, a plaintiff 26 9 27 28 Having determined that Plaintiff MERS has shown a likelihood of success as to its Lanham Act and UCL claims, the Court need not address Plaintiff’s claims for conversion and trespass at this time. - 17 - 1 in a trademark case was entitled to a presumption of irreparable 2 harm upon showing a probable success on the merits. 3 Inc., 202 F.3d at 1204-05. 4 in Winter has effectively eliminated that presumption. 5 Winter, 129 S. Ct. at 374; Volkswagen AG v. Verdier Microbus and 6 Camper, Inc., 2009 WL 928130, at *2 (N.D. Cal. 2009); CytoSport, 7 Inc. v. Vital Pharms., Inc., 617 F. Supp. 2d 1051, 1065 (E.D. Cal. 8 2009). 9 evidence, which is uncontroverted, to establish that it is likely 10 See GoTo.com, However, the Supreme Court’s decision See Nonetheless, Plaintiff MERS has proffered sufficient to suffer irreparable harm in the absence of an injunction. 11 The Ninth Circuit has recognized that the potential loss of 12 good will or the loss of the ability to control one’s reputation 13 may constitute irreparable harm for purposes of preliminary 14 injunctive relief. 15 D. Brush and Co., Inc., 240 F.3d 832, 841 (9th Cir. 2001) 16 (“Evidence of threatened loss of prospective customers or goodwill 17 certainly supports a finding of the possibility of irreparable 18 harm.”); Apple Computer, Inc. v. Formula Int’l Inc., 725 F.2d 521, 19 526 (9th Cir. 1984) (finding irreparable injury where “district 20 court could reasonably have concluded that continuing infringement 21 would result in loss of control over Apple’s reputation and loss 22 of good will”). 23 are considered irreparable due to the inherent difficulty in 24 quantifying such loss. 25 Television & Appliance, 944 F.2d 597, 603 (9th Cir. 1991). 26 The record supports Plaintiff MERS’ claim that it has See Stuhlbarg Intern. Sales Co., Inc. v. John The loss of good will and damage to reputation See Rent-a-Center, Inc. v. Canyon 27 developed significant good will and established its reputation in 28 the mortgage business over the course of the last thirteen years. - 18 - 1 Hultman Dec. ¶¶ 9-17. 2 which include some of the country’s best known mortgage companies 3 and banks, and is involved in approximately 60 million loan 4 transactions. 5 beneficiary on these loans, it frequently receives service of 6 process in connection with third party lawsuits throughout the 7 country. 8 MERS’ name has resulted in legal documents intended for Plaintiff 9 MERS being sent to Defendants by mistake. Plaintiff MERS has thousands of clients, Id. ¶¶ 3, 6. Patry Dec. ¶ 11. Because Plaintiff MERS is listed as However, Defendants’ use of Plaintiff Id. ¶ 2. Defendants 10 nevertheless continue to refuse to return those documents, thus 11 potentially harming Plaintiff MERS’ legal interests in those 12 actions, as well as undermining the administration of justice. 13 Plaintiff MERS’ potential misidentification with the entities 14 recently created by Defendants poses a serious threat to the years 15 of good will that Plaintiff MERS has established in the mortgage 16 industry. 17 The Court is also satisfied that the balance of equities tips 18 in favor of Plaintiff MERS. 19 to Plaintiff MERS and the public resulting from Defendants’ 20 continued use of the Plaintiff MERS’ name is evident from the fact 21 that hundreds of potentially significant legal documents and 22 notices intended for Plaintiff MERS have instead been received by 23 Defendants. 24 given that they have no right to Plaintiff MERS’ documents or to 25 use its name in the first instance. 26 that they will suffer any hardship in the event the Court grants 27 Plaintiff MERS' motion for preliminary injunction. Winter, 129 S. Ct. at 376. The harm In contrast, an injunction will not harm Defendants 28 - 19 - None of the Defendants claims 1 The public interest also favors the issuance of the proposed 2 preliminary injunction. 3 Defendants that were intended for Plaintiff MERS pertain to 4 ongoing legal proceedings in which it has been named as a party. 5 If Plaintiff MERS does not receive the documents possessed by 6 Defendants, it is possible that Plaintiff MERS may be in default 7 in those lawsuits. 8 default that has been entered, that process will result in 9 additional, unnecessary expense to the parties in those cases and The documents in the possession of While Plaintiff MERS could seek to set aside a 10 burden the courts with motion practice that could have been 11 avoided had Defendants forwarded the documents intended for 12 Plaintiff MERS. 13 III. Bond 14 Under Federal Rule of Civil Procedure 65(c), “[t]he court may 15 issue a preliminary injunction or a temporary restraining order 16 only if the movant gives security in an amount that the court 17 considers proper to pay the costs and damages sustained by any 18 party found to have been wrongfully enjoined or restrained.” 19 65(c) “invests the district court ‘with discretion as to the 20 amount of security required, if any.’” 21 F.3d 906, 919 (9th Cir. 2003) (emphasis in original; quoting 22 Barahona-Gomez v. Reno, 167 F.3d 1228, 1237 (9th Cir. 1999)). 23 district court may forego a bond “when it concludes there is no 24 realistic likelihood of harm to the defendant from enjoining his 25 or her conduct.” 26 Rule Jorgensen v. Cassiday, 320 A Jorgensen, 320 F.3d at 919. Plaintiff MERS contends, and Defendants do not dispute, that 27 the bond amount should be either dispensed with or set at a 28 nominal amount “because entry of [a preliminary injunction] cannot - 20 - 1 possibly cause any harm to Defendants.” 2 Court concurs that a nominal bond is sufficient. 3 suffer no harm from returning documents that are not rightfully 4 theirs in the first instance. 5 request that Defendants refrain from forming new entities using 6 Plaintiff MERS’ name and change the name of their existing 7 entities, little, if any, damage will result in the event the 8 injunction is found to have been wrongful. 9 that either Messr. Brosnan or Jacobsen are operating any viable 10 businesses, which were formed only a few months ago, under the 11 Plaintiff MERS’ name. 12 bond in the amount of $1,000 is appropriate in this case. 13 14 Pl.’s Mot. at 21. The Defendants will With respect to Plaintiff MERS’ There is no evidence Thus, the Court concludes that a nominal CONCLUSION For the foregoing reasons, the Court GRANTS Plaintiff MERS’ 15 motion for a preliminary injunction. 16 officers, agents, servants, employees, attorneys and all others in 17 active concert or participation with them ARE HEREBY RESTRAINED 18 AND ENJOINED, pending the resolution of this action, from: 19 1. Defendants and their Using or applying to register MORTGAGE ELECTRONIC 20 REGISTRATION SYSTEMS (with or without an “S”), MERS or any 21 confusingly similar designations, as a mark, business name, domain 22 name, email address, meta-tag or otherwise; 23 2. Accepting service of process or other documents intended 24 for Plaintiff MERS, including summonses, complaints, subpoenas, or 25 any other legally-required notices naming or involving mortgage 26 liens held by Mortgage Electronic Registration Systems, Inc., a 27 Delaware corporation; 28 - 21 - 1 3. Defendants shall complete the necessary documents and 2 Secretary of State filings to change the name of companies within 3 their control from Mortgage Electronic Registration Systems, Inc., 4 to another name that is not identical or confusingly similar, or 5 alternatively, to dissolve such companies, by September 8, 2009. 6 4. Defendants shall immediately return to Plaintiff MERS 7 all documents and things that any of them, or their officers, 8 partners, agents, subcontractors, employees, subsidiaries, 9 successors, assigns, and related companies or entities, has 10 received that were intended for Plaintiff MERS and shall do so 11 promptly in the future. 12 directly to Plaintiff MERS’ counsel, by class mail or other 13 mutually agreeable method, addressed as follows: 14 The above documents shall be sent Mortgage Electronic Registration Systems, Inc. c/o Carla Oakley Morgan, Lewis & Bockius LLP One Market, Spear Street Tower San Francisco, CA 94105-1126 15 16 17 18 5. This preliminary injunction will take effect upon 19 Plaintiff MERS’ posting a bond in the amount of $1,000. 20 temporary restraining order shall remain in effect for ten days to 21 allow Plaintiff MERS time to post the bond. 22 IT IS SO ORDERED. 23 9/4/09 24 25 Dated: The ____________________________ CLAUDIA WILKEN United States District Judge 26 27 28 - 22 - 1 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 2 3 4 MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., 5 6 7 8 Plaintiff, v. JOHN BROSNAN et al, Defendant. / 9 10 Case Number: CV09-03600 SBA 11 CERTIFICATE OF SERVICE 12 13 14 15 16 I, the undersigned, hereby certify that I am an employee in the Office of the Clerk, U.S. District Court, Northern District of California. That on September 4, 2009, I SERVED a true and correct copy(ies) of the attached ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION, by placing said copy(ies) in a postage paid envelope addressed to the person(s) hereinafter listed, by depositing said envelope in the U.S. Mail, or by placing said copy(ies) into an interoffice delivery receptacle located in the Clerk's office. 17 18 19 20 21 John Brosnan 848 North Rainbow Boulevard #1643 Las Vegas, NV 89107 Robert Edwin Jacobsen P.O. Box 1386 Lafayette, CA 94549 22 23 24 25 26 Dated: September 4, 2009 Richard W. Wieking, Clerk By: Sheilah Cahill, Deputy Clerk 27 28 - 23 -
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