Beijing Tong Ren Tang (USA), Corp. v. TRT USA Corporation et al, No. 5:2009cv00882 - Document 87 (N.D. Cal. 2009)
Court Description: ORDER granting 30 Motion to Strike and granting in part 6 , 16 Motion for Preliminary Injunction. (rmwlc2, COURT STAFF) (Filed on 12/18/2009)
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Beijing Tong Ren Tang (USA), Corp. v. TRT USA Corporation et al Doc. 87 1 2 E-FILED on 12/18/09 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 11 BEIJING TONG REN TANG (USA) CORP., a California corporation, Case No. C-09-00882-RMW 12 Plaintiff, 13 vs. 14 15 16 TRT USA CORPORATION, a California corporation, GUANGMING SUN aka GEORGE SUN, an individual, MEI XU, an individual, PENGTAO ZHANG aka JOHN ZHANG, an individual, ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION [Re Docket Nos. 6, 16, 30] 17 Defendants. 18 19 Plaintiff Beijing Tong Ren Tang USA Corp. ("Beijing TRT") brings this action alleging 20 unfair competition, false designation of origin, and trademark infringement by defendants TRT USA 21 Corporation ("TRT USA"), and Guangming Sun ("Sun"), Mei Xu ("Xu"), and Pengtao Zhang 22 ("Zhang"), who are officers and directors of TRT USA. Beijing TRT now moves for a preliminary 23 injunction to enjoin defendants from using the trademarks of China Beijing Tongrentang Group 24 Co., Ltd ("China Beijing TRT Group"). Beijing TRT objects to and moves to strike portions of 25 Sun's declaration submitted in opposition to the motion for a preliminary injunction. For the 26 reasons stated below, the court grants the motion to strike and grants the motion for 27 preliminary injunction in limited respects. 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW Dockets.Justia.com 1 I. BACKGROUND 2 "Tongrentang" was established in 1669, and now, under the name "Tong Ren Tang," it is a 3 well-known brand of traditional Chinese medicine. The rights to exploit the Tong Ren Tang brand 4 are presently controlled by China Beijing TRT Group. It offers over 1,000 products in 26 forms. In 5 the 1990s, China Beijing TRT Group began marketing its products outside of China, starting with 6 Hong Kong and eventually expanding to many other countries including the United States, 7 Canada, and the United Kingdom. As part of that expansion, China Beijing TRT Group owns 8 three United States federally-registered trademarks, including the mark that appears on many 9 of the products and marketing materials at issue in this suit, Registration No. 3535318 10 ("Tong Ren Tang Design Mark"). The Tong Ren Tang Design Mark includes a circular logo 11 with Chinese calligraphy inside, and "Tong Ren Tang" appears below the circle in an arc. 12 Declaration of Chuanli Zhou IS0 Mot. Prelim. Inj. Ex. A (hereinafter "Zhou Declaration")1 13 Plaintiff Beijing TRT was formed in 1999 and is a subsidiary of the China Beijing TRT 14 Group. Beijing TRT aids in the marketing and distribution of Tong Ren Tang products in the 15 United States. Chuanli Zhou is the manager of the U.S. operations for Beijing TRT. 16 According to Zhou's declaration, Beijing TRT has made significant investments in selling and 17 marketing Tong Ren Tang products in the U. S., including advertising in Chinese-language 18 newspapers, attending trade shows, and visiting retailers in person. Zhou Decl. ¶ 18. Tong Ren 19 Tang products are distributed widely throughout the United States, with the main markets 20 being the San Francisco Bay Area, Los Angeles, New York, Seattle, New Jersey and Boston. 21 Id. at ¶ 19. The total sales of Tong Ren Tang products in the U.S. over the last nine years 22 total approximately $4,300,000.00. Id. at ¶ 20. 23 24 It is against this background that the events giving rise to the present dispute take place. Around 2004 Zhou and Juangming Sun of Advantage United Corporation began discussions 25 26 27 1 The parties do not appear to dispute that Beijing TRT has the right to enforce whatever trademark rights China Beijing TRT Group has in its trademarks, presumably as the exclusive United States licensee of the trademarks. However, the court has not located specific evidence of such license but the issue of lack of standing to enforce has not been raised. 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 2 1 about cooperating on developing Tong Ren Tang-branded products for sale in the United 2 States. In 2004, Sun was director of Advantage United Corporation, which changed its name to 3 TRT USA in June of 2005 and is a defendant in this action. The parties dispute what 4 occurred, but Beijing TRT and TRT USA entered into two agreements regarding their 5 cooperation, one in 2005 and another in 2006. The parties disagree as to the proper translation 6 of the agreements, each providing its own translation. Decl. of Phillip Yan Hing IS0 Reply 7 Exs. A, B; Sun Decl. Ex. 1. Generally speaking, the agreements appear to provide that Beijing 8 TRT and TRT USA will collaborate on producing and marketing a series of products for sale 9 in the United States. The details of these agreements as they relate to the instant motion are 10 11 discussed below. Under the 2005 Agreement, Beijing TRT and TRT USA agreed to jointly developed a 12 number of products. Beijing TRT began to receive orders for the jointly developed products in 13 January of 2006, and was paid $6,000 by TRT USA from the net profits on those products. 14 Zhou Decl. ¶¶ 35-36. In September of 2006, the parties terminated the 2005 agreement and 15 entered into a new agreement (the 2006 agreement) providing for the joint development and sale 16 of products. Id. at ¶ 37. Zhou states in his declaration that Beijing TRT and TRT USA 17 following the execution of the 2006 agreement "did not end up jointly developing or jointly 18 distributing any products, although we discussed many." Id. at ¶ 38. In his declaration, Sun 19 disputes this claim, describing in some detail the process of developing a "Royal Ganoderma 20 Ludicum" ("RDL") product. Sun states that Zhou approved the printing of the RGL package, 21 called the container, label and package "good," and approved "TRT's proposed sales plan for 22 the RGL product, including the price, marketing, and profit margin for the product. " Sun Decl. 23 ¶¶ 17-21. In a declaration in support of Beijing TRT's reply, Zhou states that he never called 24 the packaging "good" or approved any sales plan for the RGL product. Zhou Decl. IS0 Reply 25 ¶¶ 21-22. According to Zhou, he and Sun had a "complete falling out" by June of 2008. 26 Zhou Decl. ¶ 45. 27 On December 10, 2008, TRT filed suit in Santa Clara County Superior Court for breach 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 3 1 of contract and related actions. Sun Decl. ¶ 23. On February 24, 2009, Beijing TRT 2 terminated the 2006 Cooperation Agreement as well as all other outstanding agreements that it 3 had in place with TRT USA. Zhou Decl. ¶ 61. Plaintiff filed the instant suit on February 27, 4 2009, and moved for a preliminary injunction on March 13, 2009. 5 II. ANALYSIS 6 A. 7 TRT USA opposes the motion for a preliminary injunction in part because of Beijing TRT's The Motion to Strike and the Unclean Hands Defense 8 allegedly unclean hands. In support of the unclean hands defense, TRT USA offers three 9 statements from the declaration of Sun alleging unethical and criminal conduct by Zhou. Beijing 10 TRT objects to and moves to strike the three statements. TRT USA has not responded in 11 writing to the motion to strike. Because the motion to strike relates to the substance of the 12 unclean hands defense, the court considers them here together. 13 Unclean hands is a defense to a Lanharn Act infringement suit. Japan Telecom, Inc. v. 14 Japan Telcom America Inc., 287 F.3d 866, 870 (9th Cir. 2002). To prevail, the defendant must 15 demonstrate that the plaintiff's conduct is inequitable, and that the conduct relates to the 16 subject matter of its claims. Fuddruckers, Inc. v. Doc's B.R. Others, Inc., 826 F.2d 837, 847 (9'h 17 Cir. 1987). The nature of the required relationship to the subject matter is based on the 18 principles of equity that underlie the doctrine of unclean hands. A plaintiff "who has violated 19 conscience, good faith, or other equitable principles in his prior conduct, as well as [one] who 20 has dirtied his hands in acquiring the right presently asserted" is barred from relief. Dollar 21 Systems, Inc. v. Avcar Leasing Systems, Inc. , 890 F .2d 165, 173 (9th Cir . 1989). 22 In paragraph 25 of his declaration, Sun states that Zhou reported TRT USA's sales as Beijing 23 TRT's revenue in order to boost Beijing TRT's sales volume, create the illusion that Beijing TRT 24 was a thriving business, and induce the United States Citizenship and Immigration Services 25 Bureau to provide Zhou with a green card. Sun Decl. ¶ 25. In paragraph 26, Sun states that 26 Beijing TRT attempted to defraud the Food and Drug Administration by shipping mislabeled 27 products to the United States before affixing accurate labels after the products arrived. Id. at ¶ 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 4 1 26. Paragraph 27 states that Sun has been advised by business associates Guang Li Sun, 2 president of Tianjin Wonderland International Company, and defendant Pengtao Zhang, that 3 Zhou had threatened him. Id. at ¶ 27. 4 These allegations lack foundation, are not relevant to the trademark dispute, and are 5 based on inadmissible hearsay. As for paragraph 25, Sun's declaration provides no basis for 6 Sun having personal knowledge of the communications between Zhou and the Bureau of 7 Citizenship and Immigration Services, nor are any documents provided in support of Sun's 8 testimony. See Fed. R. Evid. 602. In addition, the allegations in paragraph 25 appear irrelevant to 9 the instant trademark dispute and to defendants' unclean hands defense. The allegations in 10 paragraph 26 also lack any basis for Sun's personal knowledge and appear unrelated to the present 11 action. Finally, the threats that Sun describes in paragraph 27 were allegedly made by Zhou to his 12 business associates, although disturbing, constitute blatant hearsay. 13 The motion to strike is therefore granted. Defendants have offered no admissible evidence 14 in support of their unclean hands defense, and it is thus no bar to issuance of the preliminary 15 injunction. 16 17 18 B. Preliminary Injunction 1. Standard for a Preliminary Injunction A preliminary injunction in a trademark case requires either (1) a combination of probable 19 success on the merits and the possibility of irreparable injury, or (2) the existence of serious 20 questions going to the merits and that the balance of hardships tips sharply in plaintiffs favor. 21 GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1 199, 1204-05 (9th Cir. 2000). In Goto.com, the 22 court noted that because irreparable injury may be presumed from a showing of probable success on 23 the merits for a trademark infringement claim, a plaintiff satisfies the first prong of this test by 24 showing a likelihood of success on the merits. Id. at 1205 n. 4 (citing Brooweld Communications, 25 Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1066 (9th Cir. 1999)). 26 27 2. Likelihood of Success on the Merits To show a likelihood of success on the merits on their trademark infringement claim, Beijing 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 5 1 TRT must show: (1) that it has a valid, protectable trademark, and (2) that TRT USA's use of the 2 mark is likely to cause confusion. Applied Information Sciences Corp. v. eBay, Inc., 51 1 F.3d 966, 3 969 (9th Cir. 2007). Registration of a mark with the Patent and Trademark Office constitutes prima 4 facie evidence of the mark's validity and of the registrant's exclusive right to use the mark as 5 specified in the registration. Id. at 970. Beijing TRT has provided registration certificates for three 6 federal trademarks (Zhou Decl. Ex. A), and TRT USA does not contest the proper registration or 7 protectability of these marks, nor that they are used on the challenged products. 8 The Ninth Circuit has developed eight factors, called the Sleekcraft factors, to guide the 9 determination of a likelihood of confusion. Goto.com at 1205. Those factors are: (1) the strength 10 of the mark; (2) proximity or relatedness of the goods; (3) the similarity of the marks; (4) evidence 11 of actual confusion; (5) the marketing channels used; (6) the degree of care customers are likely to 12 exercise in purchasing the goods; (7) the defendant's intent in selecting the mark; and (8) the 13 likelihood of expansion into other markets. KP Permanent Make-Up, Inc. v. Lasting Impression I, 14 Inc., 408 F.3d 596,608 (9th Cir. 2005) (citing AMF v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th 15 Cir. 1979)). Here, there is no dispute that the accused TRT USA products use a mark identical to 16 the one owned by China Beijing TRT Group so an analysis of the italicized SleekCraft factors is 17 not critical. 18 TRT USA argues that Beijing TRT cannot show a likelihood of confusion because: (1) 19 TRT USA's use of the marks was authorized by Beijing TRT; 2) TRT USA's sales are protected 20 under the first-sale doctrine; and 3) that Beijing TRT's requested relief is barred under the 21 doctrine of laches. 22 23 24 3. Authorization to Use Beijing TRT's Marks a. Use of the Mark in Advertisements and Marketing Beijing TRT's motion for a preliminary injunction is based in part on use of the Tong 25 Ren Tang Design Mark in advertisements, promotional materials, in-store displays, and 26 business cards. Mot. for Prelim. Inj. 11-13. TRT USA does not address this basis for the 27 preliminary injunction in its opposition, and Sun's declaration, although alluding to an approval 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 6 1 of marketing for the RGL product, does not address any other of these allegedly infringing 2 uses of the Tong Ren Tang Design Mark. 3 4 5 TRT USA also argues that the preliminary injunction should not be issued under the doctrine of unclean hands, which the court has addressed above. Samples of the allegedly infringing advertisements are attached to Zhou's declaration at 6 Ex. J. A screen shot of the website appears in Ex. K. Part of the allegedly infringing 7 in-store display is attached at Ex. L, as is a photograph of an allegedly infringing shopping 8 bag. On the basis of this showing and the lack of opposition from TRT USA, Beijing TRT 9 has demonstrated a probable chance of success on the merits as to advertising and uses of the 10 11 12 Tong Ren Tang Design Mark. b. Authorization to Sell Products TRT USA's primary contention in opposition to the motion for a preliminary injunction is 13 that the marks and goods in question have been produced and sold with Beijing TRT's 14 authorization. In support of this agreement, TRT USA offers the declaration of Sun describing 15 the past business dealings of TRT USA and Beijing TRT. Sun describes the two "Joint 16 Venture" Agreements that Beijing TRT and TRT USA entered into in 2005 and 2006, 17 respectively, as well as some other communication he had with Zhou. These agreements and 18 the other communication, the Sun declaration states, constitute authorization to produce, sell, 19 and market the TRT-branded products. TRT USA's Opp. to Prelim. Inj. 4. 20 The parties dispute whether the agreements are properly titled "Cooperation Agreements" 21 or "Joint Venture Agreements," but the court does not find the distinction particularly 22 significant. See Reply IS0 Prelim. In.. 5. 23 Neither the 2005 nor the 2006 Agreement conclusively authorizes TRT USA to produce, 24 market, or sell any product. The 2005 Agreement does state that Beijing TRT "authorizes 25 [TRT USA] to be the exclusive [sales/distribution] agent for Tong Ren Tang products at 26 [traditional Chinese medicine] clinics throughout the United States." See Decl. of Phillip Yan 27 Hing Wong IS0 Reply Ex. A (TRT USA translates the Chinese word at "sales/distribution" in 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 7 1 this quote as "sales. " Beijing TRT translates it as "distribution. "). But later, under "Duties of 2 both parties," the Agreement states, "Duties of [Beijing TRT]: select required products and 3 provide related data and heavy metals reports; work with [TRT USA] to carry out related product 4 trials and laboratory inspection and testing; provide [TRT USA] with required support such as 5 technical exchanges and media for news releases." Id. (emphasis added). The 2005 Agreement 6 also provides: "For matters not covered by this agreement, both parties shall execute the necessary 7 amendments and supplements before they come into force." Id. This agreement thus appears to 8 designate TRT USA as the exclusive distributor of Tong Ren Tang-branded products that the parties 9 would later develop, and Beijing TRT would select. 10 The 2006 Agreement includes similar provisions. Under "Scope of cooperation," it states 11 that TRT USA "shall be the general exclusive agent to distribute the main Tong Ren Tang 12 products that are brought into the U.S. market at various [traditional Chinese medicine] clinics, 13 websites, and dedicated sales counters for Tong Ren Tang products at drugstores and 14 supermarkets within the United States." Id. at Ex. B. Again, Beijing TRT has the responsibility 15 under the 2006 Agreement to "select necessary products and provide relevant materials." Id. 16 The agreements appear to provide a framework on which the parties could develop, market, 17 and sell products. But neither, standing alone, constitutes authorization by Beijing TRT for TRT 18 USA to sell any particular products or to use any Tong Ren Tang trademark. 19 Sun's declaration also contains other allegations in support of TRT USA's contention that 20 the product sales were authorized. The court notes that Sun's declaration does not include any 21 clear allegation that Beijing TRT or Zhou authorized TRT USA to use the Tong Ren Tang 22 trademarks and sell any particular jointly developed product. Rather, the authorization, if 23 provided, appears to have been implied. 24 Sun alleges that, in 2006, when TRT USA was reorganized, that he, Zhou, and Zhang 25 were the only shareholders and the three Directors of the Board of TRT USA. Sun Decl. 1 26 11. According to Zhou, Sun repeatedly asked him to become a director, but he refused. Zhou 27 Decl. IS0 Reply 1 11-12 ("Zhou Reply Decl."). Zhou states that Sun asked him to sign a 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 8 1 document titled "TRT USA Corp. Resolutions of the First Board of Directors Meeting" but 2 he refused. Id. (the document is attached to Zhou Reply Decl. Ex. C). Additionally, according to 3 Statements of Information filed with the California Secretary of State, it appears that no one besides 4 Mei Xu has ever been a director of TRT USA. Supp. Yang Decl. IS0 Reply Ex. D. 5 Sun next alleges that "[from about December 2006, TRT worked with BTU to develop 6 a new product containing the fungus ganoderma ludicum (the 'RGL Product'). . . . The RGL 7 Product was manufactured by Zhongxin Co., a manufacturer that was approved by Zhou. " Sun 8 Decl. 1 ¶ 14. After some communication about the package design, Sun alleges that on "February 9 27, 2008, [Beijing TRT] issued written authorization to [TRT USA] to commence printing of 10 the RGL package." Id. at 1 ¶ 17. The attached authorization does not mention the RGL Product, 11 and indeed appears only to grant TRT USA general permission to print packaging, rather than 12 to begin printing of the packaging for a particular product. 13 Sun also states that Zhou called the container and packaging of the RGL product 14 "good" at a dinner in May 2008. Id. at 1 ¶ 19. Beijing TRT contends that Zhou did not make 15 such a statement, and instead that Zhou objected to certain aspects of the packaging. Decl. of 16 Renee Li IS0 Mot. Prelim. Inj. ¶¶ 2-4. 17 Sun next states that "[following Zhou's approval of the design of the container, label, 18 and package for the RGL Product, TRT began distributing advertisements of the RGL Product 19 to retail stores. Zhou approved TRT's proposed sales plan for the RGL Product, including the 20 price, marketing, and profit margin for the product." Sun Decl. ¶ 20. Finally, Sun states that 21 Zhou approved a label design for a "concentrated pills" product. Id. at ¶ 21. Beijing TRT 22 contends that Zhou did not approve the plan or label design. In addition, the declaration 23 provides no particular allegations as to the circumstances or the manner of approval. 24 In sum, TRT USA's evidence offered in opposition to the motion for a preliminary 25 injunction provides little support for the view that TRT USA was authorized to use the Tong 26 Ren Tang marks on products for sale and in advertising and marketing of any particular 27 products. The allegations in Sun's declaration are often conclusory, and lack sufficient 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 9 1 evidentiary support. The court therefore concludes that Beijing TRT has demonstrated a probable 2 success on the merits of its trademark infringement claim as to the use of the mark on 3 packaging for unauthorized products actually sold or to be sold. 4 4. First-Sale Doctrine 5 TRT USA argues that the first-sale doctrine bars relief. Under the first-sale doctrine, 6 "resale by the first purchaser of the original article under the producer's trademark is neither 7 trademark infringement nor unfair competition." Sebastian Intern., Inc. v. Longs Drug Stores 8 Corp., 53 F.3d 1073, 1074 (91h Cir. 1999). In other words, "the right of a producer to 9 control distribution of its trademarked product does not extend beyond the first sale of the 10 product." Id. 11 In this case, Beijing TRT challenges not subsequent sales of genuine, approved goods, 12 but the initial sale and marketing of goods bearing Beijing TRT's trademarks. That is, Beijing 13 TRT here challenges the first sale. TRT USA's argument appears to assume that the goods 14 were sold with Beijing TRT's authorization, which the court considered above. The first-sale 15 doctrine therefore does not bar issuance of the preliminary injunction. 16 5. 17 Laches TRT USA argues that the doctrine of laches bars entry of an order barring TRT USA from 18 using "TRT" as part of its corporate name. TRT USA states that laches bars "much of the injunctive 19 relief" sought by Beijing TRT. Because TRT USA does not dispute that Beijing TRT did not 20 discover the allegedly infringing sales until late 2008, and because TRT USA focuses on the 21 corporate name of TRT USA in its opposition, the court will limit its consideration of laches to that 22 issue. 23 Laches can bar recovery in trademark actions where injunctive relief is sought. E-Systems, 24 Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983). For laches to apply, the passage of time 25 must be accompanied by circumstances which estop plaintiff from obtaining injunctive relief. 26 Id. Monitek also lists six factors that the court can consider in determining whether laches will 27 bar relief: "1. strength and value of trademark rights asserted; 2. plaintiff's diligence in 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 10 1 enforcing mark; 3. harm to senior user if relief denied; 4. good faith ignorance by junior 2 user; 5. competition between senior and junior users; and 6. extent of harm suffered by junior 3 user because of senior user's delay. " Id. 4 Zhou states in his declaration that Sun asked him in September of 2005 whether Sun 5 could change his company's name from AUC to TRT USA. Zhou Decl. ¶ 29. In October of 6 2005, Beijing TRT filed an application on TRT USA's behalf to register TRT USA with the 7 FDA. Although the 2005 Agreement lists Advantage United Corp. as "Party B," the 2006 8 Agreement is between Beijing TRT and TRT USA. Furthermore, it seems that TRT does 9 possess some inventory of genuine Tong Ren Tang products that Beijing TRT does not object 10 to TRT USA selling. See Reply IS0 Mot. Prelim. Inj. 14. It does appear that, in the particular 11 case of TRT USA using "TRT" in its corporate name, Beijing TRT has been aware of the 12 alleged infringement, has continued business dealings, and did not file suit for approximately 13 three years. Beijing TRT has therefore not raised a sufficient likelihood of success on the merits 14 to warrant a preliminary injunction ordering TRT USA to change its corporate name. 15 Plaintiff has sufficiently shown potential irreparable injury to China Beijing TRT Group 16 and Beijing TRT from the advertising or sale by TRT USA of fake or unauthorized product 17 using the TONG REN TANG trademark or any other designation similar or likely to be 18 confused with TONG REN TANG trademarks. Plaintiff has the right to control the nature and 19 quality of the products utilizing the Tong Ren Tang products which could be seriously impaired 20 if TRT USA were allowed to use the trademarks in connection with goods not manufactured by 21 or on behalf of Beijing TRT. Plaintiff has also shown the potential for irreparable injury if TRT 22 USA is allowed to represent that it is an exclusive or authorized distributor of Tong Ren Tang 23 products or that TRT USA Corporation is currently associated with plaintiff or China Beijing Tong 24 Ren Tang Group Co. 25 C. 26 The court concludes that Beijing TRT has established a sufficient likelihood of success on 27 the merits to warrant a preliminary injunction enjoining TRT USA from the activities described in Preliminary Injunction Order 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 11 1 the accompanying Preliminary Injunction Order. However, Beijing TRT has not made a sufficient 2 showing to justify preliminarily enjoining TRT USA from attempting to register its own trademarks, 3 from using "TRT" as a part of its corporate name, or from using the www.trtusa.com domain name. 4 Although the parties have a legal obligation to retain documents relevant to the lawsuits 5 between them, Beijing TRT has not shown that there has been any threat of destruction warranting a 6 preliminary injunction requiring retention. 7 8 9 The court finds that given the alleged value of the products TRT USA has in unsold inventory, a bond of $100,000 is appropriate as security for the preliminary injunction. For the reasons stated above, the court grants Beijing TRT's motion to strike and grants 10 in part its request for a preliminary injunction as set forth above and in the form of the 11 accompanying preliminary injunction. 12 13 14 15 DATED: 12/18/09 ______________________________________ RONALD M. WHYTE United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 12 1 2 Notice of this document has been electronically sent to: 3 Counsel for Plaintiff: 4 5 6 Jennifer Lee Taylor Mimi Yang Suzan Yee Teddy Tsao-Wu William James Taylor JLeeTaylor@mofo.com mimiyang@mofo.com syee@tsaochow.com ttsaowu@tsaochow.com wtaylor@tsaochow.com 7 Counsel for Defendants: 8 J. James Li lij@gtlaw.com 9 10 Counsel are responsible for distributing copies of this document to co-counsel that have not registered for e-filing under the court's CM/ECF program. 11 12 13 Dated: 12/18/09 CCL 14 Chambers of Judge Whyte 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE AND GRANTING IN PART PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION CASE NO. C-09-00882-RMW 13
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