Forever 21, Inc. v. Gucci America, Inc. et alMEMORANDUM of CONTENTIONS of FACT and LAWC.D. Cal.October 29, 20181 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case No. 2:17-cv-4706-SJO (Ex) GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW QUINN EMANUEL URQUHART & SULLIVAN, LLP Daniel C. Posner (Bar No. 232009) danposner@quinnemanuel.com Zack Schenkkan (Bar No. 304738) zackschenkkan@quinnemanuel.com 865 South Figueroa Street, 10th Floor Los Angeles, California 90017-2543 Telephone: (213) 443-3000 Facsimile: (213) 443-3100 QUINN EMANUEL URQUHART & SULLIVAN, LLP Robert L. Raskopf (pro hac vice) (robertraskopf@quinnemanuel.com) Todd Anten (pro hac vice) (toddanten@quinnemanuel.com) Jessica A. Rose (pro hac vice) (jessicarose@quinnemanuel.com) 51 Madison Avenue, 22nd Floor New York, New York 10010-1601 Telephone: (212) 849-7000 Facsimile: (212) 849-7100 Attorneys for Defendant and Counterclaimant Gucci America, Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION FOREVER 21, INC., a Delaware corporation, Plaintiff, vs. GUCCI AMERICA, INC., a New York corporation, Defendant. Case No. 2:17-cv-4706-SJO (Ex) GUCCI AMERICA’S MEMORANDUM OF CONTENTIONS OF FACT AND LAW PURSUANT TO LOCAL RULE 16-4 Judge: Hon. S. James Otero Location: Courtroom 10C Complaint Filed: June 27, 2017 Pretrial Conf.: November 19, 2018 Trial Date: November 27, 2018 GUCCI AMERICA, INC., a New York corporation, Counter-Claimant, vs. FOREVER 21, INC., a Delaware corporation, Counter-Defendant. Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 1 of 21 Page ID #:16606 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -i- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW TABLE OF CONTENTS Page I. GUCCI’S REQUEST FOR REALIGNMENT OF THE PARTIES................. 1 II. CLAIMS AND DEFENSES ............................................................................. 4 A. Summary of Forever 21’s Claims ........................................................... 4 1. Declaratory Judgment of Non-Infringement of Trademarks........ 4 2. Cancellation of Federal Registrations........................................... 4 3. Denial of Federal Registration of Alleged Trademark ................. 4 B. Elements Required to Establish Forever 21’s Claims ............................ 5 1. Declaratory Judgment of Non-Infringement of Trademarks........ 5 2. Cancellation of Federal Registrations........................................... 5 3. Denial of Federal Registration of Alleged Trademark ................. 5 C. Brief Description of Key Evidence In Opposition To Forever 21’s Claims.............................................................................................. 6 1. Declaratory Judgment of Non-Infringement of Trademarks........ 6 2. Cancellation of Federal Registrations......................................... 10 3. Denial of Federal Registration of Alleged Trademark ............... 10 D. Summary of Gucci’s Counterclaims and Affirmative Defenses .......... 10 1. Registered Trademark Infringement........................................... 10 2. Trademark Infringement And False Designation of Origin ....... 10 3. Federal Trademark Dilution ....................................................... 11 4. Common Law Trademark Infringement..................................... 11 5. State Trademark Dilution ........................................................... 11 6. State Unfair Competition............................................................ 11 7. Affirmative Defenses.................................................................. 11 E. Elements Required To Establish Gucci’s Counterclaims And Affirmative Defenses ............................................................................ 11 1. Registered Trademark Infringement Under Section 32 of the Lanham Act, 15 U.S.C. § 1114............................................. 11 Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 2 of 21 Page ID #:16607 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -ii- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW 2. Trademark Infringement And False Designation of Origin Pursuant Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) ..................................................................................... 12 3. Federal Trademark Dilution Pursuant to 15 U.S.C. § 1125(c) ..................................................................................... 12 4. Common Law Trademark Infringement..................................... 12 5. State Trademark Dilution ........................................................... 13 6. State Unfair Competition............................................................ 13 7. Affirmative Defenses.................................................................. 13 F. Brief Description of Key Evidence In Support of Gucci’s Claims and Affirmative Defenses ..................................................................... 13 III. ANTICIPATED EVIDENTIARY ISSUES.................................................... 14 IV. ISSUES OF LAW ........................................................................................... 15 V. BIFURCATION OF ISSUES.......................................................................... 15 VI. JURY TRIAL .................................................................................................. 15 VII. ATTORNEYS’ FEES...................................................................................... 16 VIII. ABANDONMENT OF ISSUES ..................................................................... 16 Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 3 of 21 Page ID #:16608 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iii- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW TABLE OF AUTHORITIES Page Cases Allegro Ventures, Inc. v. Almquist, 2013 WL 3864329 (S.D. Cal. July 24, 2013).....................................................1, 3 adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747 (9th Cir. 2018) ..................................................................................5 2017 WL 3319190 (D. Or. Aug. 3, 2017) ..............................................................6 adidas Am., Inc. v. Soccer & Soccer, 2013 WL 11323120 (C.D. Cal. Oct. 25, 2013) ......................................................6 Applied Info. Scis. Corp. v. eBay, Inc., 511 F.3d 966 (9th Cir. 2007) ............................................................................4, 11 Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999) ..............................................................................11 City of Indianapolis v. Chase Nat’l Bank of City of N.Y., 314 U.S. 63 (1941)..................................................................................................1 Coryn Group II, LLC v. O.C. Secrets, Inc., 2011 WL 3240456 (D. Md. Jul. 27, 2011) .............................................................2 Cox Commc’ns Inc. v. Sprint Commc’ns Co. L.P., 2017 WL 4848814 (D. Del. Oct. 26, 2017)............................................................2 Deere & Co. v. FIMCO Inc., 2016 WL 4443184 (W.D. Ky. Aug. 19, 2016).............................................3, 9, 15 Empresa Cubana Del Tabaco v. Culbro Corp., 123 F. Supp. 2d 203 (S.D.N.Y. 2000) ..........................................................3, 9, 15 FCE Benefits Adm’rs, Inc. v. Training, Rehab. & Dev. Inst., Inc., 2016 WL 4426897 (N.D. Cal. 2016)......................................................................1 Freecycle Network, Inc. v. Oey, 505 F.3d 898, 902 (9th Cir .2007) ........................................................................11 Granite State Ins. Co. v. Smart Modular Techs., Inc., 76 F.3d 1023 (9th Cir. 1996) ..........................................................................12, 15 Juan Pollo Franchising, Inc. v. Perez, 2013 WL 12120077 (C.D. Cal. May 2, 2013)................................................12, 15 Kerr Corp. v. N. Am. Dental Wholesalers, Inc., 2011 WL 4965111 (C.D. Cal. 2011) ......................................................................2 Lions Gate Entm’t Inc. v. TD Ameritrade Servs. Co., 170 F. Supp. 3d 1249 (C. D. Cal. 2016)...............................................................12 Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 4 of 21 Page ID #:16609 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iv- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW Monte Carlo Shirt, Inc. v. Daewoo Int’l (Am.) Corp., 707 F.2d 1054 (9th Cir. 1983) ..............................................................................12 Moss v. Infinity Ins. Co., 197 F. Supp. 3d 1191 (N.D. Cal. 2016)................................................................12 Plumtree Software Inc. v. Datamize LLC, 2003 WL 25841157 (N.D. Cal. 2003) ................................................................1, 2 Prudential Real Estate Affil., Inc. v. PPR Realty, Inc., 204 F.3d 867 (9th Cir. 2000) ..................................................................................1 Sazerac Co. v. Skyy Spirits, Inc., 1996 WL 680248 (E.D. La. Nov. 21, 1996)...........................................................2 Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d 426 (9th Cir. 2017) ..................................................................................6 Statutory Authorities 15 U.S.C. § 1052..........................................................................................................5 15 U.S.C. § 1064..........................................................................................................4 15 U.S.C. § 1064(c) .....................................................................................................5 15 U.S.C. § 1114........................................................................................................10 15 U.S.C. §§ 1114(1)(a), 1125(a)(1)(A)) ....................................................................6 15 U.S.C. § 1117(a) ...................................................................................................15 15 U.S.C. § 1119................................................................................................3, 9, 15 15 U.S.C. § 1125(a) ...................................................................................................10 15 U.S.C. § 1125(c) ...................................................................................................10 Cal. Bus. & Prof. Code § 14247 ................................................................................10 Cal. Bus. & Prof. Code § 17200 ................................................................................10 Rules and Regulations J. Thomas McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 30:113.50 (5th ed.).........................................................................5 Ninth Circuit Manual of Model Civil Jury Instructions § 15.6 .................................11 Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 5 of 21 Page ID #:16610 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW Pursuant to Local Rule 16-4 and the Court’s Standing Order for Civil Cases (“Standing Order”), defendant and counterclaimant Gucci America, Inc. (“Gucci”) respectfully submits this Memorandum of Contentions of Fact and Law. I. GUCCI’S REQUEST FOR REALIGNMENT OF THE PARTIES As a threshold matter, Gucci requests that the Court realign the parties so that Gucci, the natural plaintiff in this action, may proceed at trial as the plaintiff. Gucci has requested that Forever 21 stipulate to this realignment, but Forever 21 has not agreed. There is no legitimate dispute that Gucci is the natural plaintiff in this action— Gucci brought six causes of action, including claims that Forever 21 infringed and diluted its green-red-green (“GRG”) and blue-red-blue (“BRB”) trademarks (the “Marks”), and that Gucci is entitled to damages for those violations. In contrast, Forever 21 brought a declaratory action for non-infringement, and two equitable claims (for cancellation or denial of trademark registrations or applications) for which it is not entitled to a jury trial. Under such circumstances, Gucci should be treated as the plaintiff and Forever 21 as the defendant for trial. See Allegro Ventures, Inc. v. Almquist, 2013 WL 3864329, at *2 (S.D. Cal. July 24, 2013) (“[I]t is the duty of federal courts to ‘look beyond the pleadings, and arrange the parties according to their sides in the dispute.’”) (quoting City of Indianapolis v. Chase Nat’l Bank of City of N.Y., 314 U.S. 63, 69 (1941)). In the Ninth Circuit, courts have discretion to realign the parties under the “primary purpose” test. Plumtree Software Inc. v. Datamize LLC, 2003 WL 25841157, at *2-3 (N.D. Cal. 2003) (citing Prudential Real Estate Affil., Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir. 2000)); see FCE Benefits Adm’rs, Inc. v. Training, Rehab. & Dev. Inst., Inc., 2016 WL 4426897, at *2 (N.D. Cal. 2016) (realigning parties). Under this test, a court “should align the parties in accordance with the primary dispute in controversy, despite the fact that there may be actual and substantial ancillary or secondary issues to the primary issue.” Plumtree, 2003 WL 25841157, at *3. Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 6 of 21 Page ID #:16611 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW Here, the primary dispute is whether Forever 21 infringed and diluted Gucci’s Marks. Gucci, as the aggrieved (and only) party seeking damages for violations of its rights, and “the party asserting the affirmative claim of infringement,” is “more properly considered the natural plaintiff.” Plumtree, 2003 WL 25841157, at *3. Further, realignment would “aid in the logical presentation of evidence at trial,” as “it is simply more logical to present the affirmative case for infringement first, rather than presenting the case for noninfringement first.” Id. The latter sequencing “might invite juror confusion on the issue of burden of proof, as [the party seeking affirmative relief] would essentially be put in the position of rebutting … the defensive claims.” Id. at *4. Other courts have faithfully followed the same course, including in trademark cases involving a declaratory judgment claim of noninfringement. See, e.g., Coryn Group II, LLC v. O.C. Secrets, Inc., 2011 WL 3240456, at *4 (D. Md. Jul. 27, 2011) (trademark owner “will bear the burden of proof … and must prove its ownership and the likelihood of confusion between the marks … allowing it to proceed as if it were the plaintiff would be the most logical presentation”); Sazerac Co. v. Skyy Spirits, Inc., 1996 WL 680248, at *1 (E.D. La. Nov. 21, 1996) (realignment so that defendant in declaratory judgment action would “present its claim of trademark and trade dress infringement first, followed by [the plaintiff’s] defense,” which would “provide[] the most effective presentation of evidence at trial”); see also Kerr Corp. v. N. Am. Dental Wholesalers, Inc., 2011 WL 4965111, at *3 (C.D. Cal. 2011) (recognizing “the common-sense rule that where a plaintiff seeks declaratory relief that it is not liable and the defendant counterclaims the plaintiff is liable, it is more logical to realign the parties so the defendant becomes the plaintiff”); Cox Commc’ns Inc. v. Sprint Commc’ns Co. L.P., 2017 WL 4848814, at *3 (D. Del. Oct. 26, 2017) (determining “the order of proof at trial will be Sprint presenting its infringement case first, and Cox presenting its defenses second” where natural defendant’s “proposed order of proof further complicates things and is likely to confuse the jury”). Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 7 of 21 Page ID #:16612 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW Realignment would also avoid confusing the jury as to the facts and applicable burdens of proof. Requiring the jury to assess Forever 21’s case of noninfringement first, in the absence of the fuller context that is standard in infringement trials, invites juror confusion. The Court thus should exercise its discretion to structure and manage the trial in the clearest manner. Allegro Ventures, 2013 WL 3864329, at *2 (realigning parties where plaintiff sought declaratory judgment, concluding that “[t]he burdens of proof … support realignment,” and “Defendant’s affirmative positions make him more suitable to be in the plaintiff position, and Plaintiff’s defensive positions make it more suitable to be in the defendant position”). Moreover, as discussed below, see infra Part VI, while Gucci indisputably is entitled to a jury trial on each of its six claims, Forever 21 is not entitled to a jury on any of its claims. See Deere & Co. v. FIMCO Inc., 2016 WL 4443184, at *2 (W.D. Ky. Aug. 19, 2016) (claims for declaratory judgment for trademark infringement, dilution, and unfair competition, and cancellation of trademark registrations, present “no legal (as opposed to equitable) issues … entitling [plaintiff] to a trial by jury”); Empresa Cubana Del Tabaco v. Culbro Corp., 123 F. Supp. 2d 203, 209 (S.D.N.Y. 2000) (“A claim for cancellation of a trademark registration [under § 1119] is equitable in nature and does not give rise to a jury trial right.”) (emphasis added); 15 U.S.C § 1119 (“[i]n any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations”) (emphasis added). It makes little sense for the party that is not entitled to a jury for its claims to be presented to the jury as a putative plaintiff. Finally, this request is timely. Requests for realignment at trial should be decided closer to trial rather than earlier in the case. See, e.g., MySpace, Inc. v. Graphon Corp., 732 F. Supp. 2d 915, 916 (N.D. Cal. 2010) (“Defendant seeks an order changing the order of proof at trial. … Because this case is in its infancy, realignment of the parties is premature. If Defendant brings a similar motion closer to trial, the Court would consider changing the order of proof at trial …”). After all, the Court is Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 8 of 21 Page ID #:16613 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW well-equipped to understand the true relationship of the parties during pretrial proceedings. Thus, Gucci has followed the preferred course of raising this issue at the time when initial trial submissions (such as motions in limine) are due, so as to not have acted prematurely or burden the Court with early requests for relief that might have turned out unnecessary. Nor is there prejudice to Forever 21, as trial is still a month away. Gucci therefore respectfully requests that the Court realign the parties for the purposes of trial such that Gucci is the plaintiff and Forever 21 is the defendant. II. CLAIMS AND DEFENSES A. Summary of Forever 21’s Claims1 1. Declaratory Judgment of Non-Infringement of Trademarks Forever 21 seeks a declaratory judgment that none of the products at issue that it has sold (the “Infringing Products”) infringes Gucci’s trademarks, which consist of three bands of specific depictions of green-red-green (“GRG”) and blue-red-blue (“BRB”) color combinations (collectively, the “Webbing Marks”). 2. Cancellation of Federal Registrations Forever 21 seeks cancellation of four of Gucci’s trademark registrations for use of the BRB Webbing Mark on certain classes of products: Registration Nos. 1,520,796 (watches), 4,563,151 (gym bags, wallets, etc.), 1,495,863 (footwear), and 1,511,774 (wallets, purses, handbags, etc.). This claim is equitable in nature and does not give right to a jury trial. See infra Part VI. 3. Denial of Federal Registration of Alleged Trademark Forever 21 seeks an order denying Gucci’s pending United States Patent and Trademark Office (“USPTO”) trademark applications for registrations of the BRB Webbing Mark on certain classes of products: Application Serial Nos. 87/206,686 (clothing), 87/116,368 (baby blankets), and 87/391,139 (sunglass, scarves, backpacks). 1 Notwithstanding its request to realign the parties for purposes of trial, for the avoidance of confusion Gucci treats Forever 21 herein as the plaintiff. Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 9 of 21 Page ID #:16614 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW This claim is equitable in nature and does not give right to a jury trial. See infra Part VI. B. Elements Required to Establish Forever 21’s Claims 1. Declaratory Judgment of Non-Infringement of Trademarks Because Forever 21 seeks a declaration of non-infringement, it must prove that the elements of Gucci’s infringement claim are not satisfied—i.e., (i) the Webbing Marks are not “valid, protectable trademark[s]”; (ii) Gucci is not the owner of the trademarks, or (iii) Forever 21’s unauthorized use of the marks is not “likely to cause confusion.” Applied Info. Scis. Corp. v. eBay, Inc., 511 F.3d 966, 969 (9th Cir. 2007). 2. Cancellation of Federal Registrations To cancel Gucci’s registrations, Forever 21 must prove that: (1) it has standing, because there is a likelihood it will suffer damage caused by the registrations; and (2) one of the statutory grounds for canceling the registrations is satisfied. See 15 U.S.C. § 1064. For the registrations that are more than five years old, and thus “incontestable”— Nos. 1,511,774, 1,495,863, and 1,520,796—Forever 21’s only asserted statutory grounds for cancellation is that the Webbing Marks are generic or functional. See 15 U.S.C. § 1064(c). 3. Denial of Federal Registration of Alleged Trademark To support the denial of Gucci’s pending trademark applications, Forever 21 must show that there is a valid ground for denial of the pending trademark applications by the USPTO (see 15 U.S.C. § 1052) and that there is a “close nexus between the issues in the pending application proceeding and those in the federal court dispute involving [a] registered mark.” J. Thomas McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 30:113.50 (5th ed.) (“McCarthy”). Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 10 of 21 Page ID #:16615 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW C. Brief Description of Key Evidence In Opposition To Forever 21’s Claims 1. Declaratory Judgment of Non-Infringement of Trademarks Ample evidence will show that Gucci’s Webbing Marks are: (1) valid and protectable marks; and (2) Forever 21 infringed the Marks. Thus, Forever 21’s declaratory relief claim must fail. First, Gucci will prove the Webbing Marks are valid and protectable. Gucci owns numerous trademark registrations for the Webbing Marks (six of which are incontestable), providing conclusive proof —or, at minimum, a presumption—of their validity, as well as prima facie evidence of the distinctiveness of the Webbing Marks when used on unregistered but closely related products. Furthermore, even without such presumptions and inferences, the Webbing Marks have acquired distinctiveness through Gucci’s extensive use, sales and promotion of them. See, e.g., adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747, 754 (9th Cir. 2018) (listing factors for establishing secondary meaning). Gucci will offer evidence of the Webbing Marks’s distinctiveness by showing that Gucci has: (1) used the Webbing Marks extensively on a wide range of products for more than 50 years; (2) sold hundreds of millions of dollars of products bearing the Webbing Marks; (3) spent millions of dollars on advertising featuring the Webbing Marks; (4) heavily promoted the Webbing Marks on social media (where it often refers to the Webbing Marks as the “House Web”) and through celebrity and influencer relationships; and (5) received extensive media coverage (including unsolicited coverage) of the Webbing Marks for decades. Second, Gucci will offer evidence showing that under the Ninth Circuit’s “Sleekcraft” test, Forever 21’s use of the Webbing Marks is “likely to cause confusion, or to cause mistake, or to deceive.” Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d 426, 431 (9th Cir. 2017) (citing 15 U.S.C. §§ 1114(1)(a), 1125(a)(1)(A)). Two Sleekcraft factors that are “particularly probative” are “[1] the similarity of the Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 11 of 21 Page ID #:16616 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW marks and [2] the proximity of the goods,” while additional “potentially relevant factors include [3] the strength of the protected mark, [4] evidence of actual confusion, [5] the use of a common marketing channel, [6] the defendant’s intent in selecting the allegedly infringing mark, [7] the type of goods and the degree of consumer care, and [8] the likelihood of product expansion.” Id. at 432. While no single Sleekcraft factor is dispositive, Gucci will offer evidence on the relevant factors to support a finding of likely confusion in a post-sale context:2 • Similarity of the Marks: Gucci will show, including by comparisons of the Infringing Products with Gucci products (images and, if available, the actual products), that the parties’ marks at issue are effectively identical—and that such similarities are even more acute in a post-sale context. • Used on Identical or Related Goods: Gucci will show, including by comparing the Infringing Products with Gucci products, the parties’ use of the marks at issue on identical goods, as well as closely related and complementary goods, —specifically, clothing and other fashion-related accessories. • Strength of the Mark: Gucci will show the Webbing Marks are both conceptually and commercially strong. Gucci will offer fact and expert testimony showing that the Webbing Marks are arbitrary and fanciful indicators of source with no descriptive or literal meaning. As discussed above, Gucci will further offer evidence of the Webbing Marks’ strength by showing that Gucci has (1) used the Webbing Marks extensively on a wide range of products for more than 50 years; (2) sold hundreds of millions of 2 Because the confusion Gucci alleges is post-sale, the (i) degree of care exercised by consumers at the point of sale, (ii) marketing channels, and (iii) likelihood of product expansion have no meaningful role in the Sleekcraft analysis. See adidas Am., Inc. v. Soccer & Soccer, 2013 WL 11323120, at * 2 (C.D. Cal. Oct. 25, 2013) (marketing channels “largely irrelevant” in post-sale confusion context); adidas Am., Inc. v. Skechers USA, Inc., 2017 WL 3319190, at *20 (D. Or. Aug. 3, 2017) (where both parties sell same category of goods, product expansion does not factor into analysis). Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 12 of 21 Page ID #:16617 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -8- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW dollars of products bearing the Webbing Marks; (3) spent millions of dollars on advertising featuring the Webbing Marks; (4) heavily promoted the Webbing Marks on social media (where it often refers to the Webbing Marks as the “House Web”) and through celebrity and influencer relationships; and (5) received extensive media coverage (including unsolicited coverage) of the Webbing Marks for decades. • Forever 21’s Intent to Copy: Gucci will offer documentary and testimonial evidence (including from Forever 21’s own employees) showing the Infringing Products were first sold by Forever 21 in connection with a 2016 “back-to-school” campaign that was explicitly intended to evoke “Gucci.” The Infringing Products themselves were referred to as “Gucci,” and a Forever 21 employee later admitted “there was a period of time where the designer just literally copied Gucci.” The evidence will show that before this 2016 “Gucci” campaign, Forever 21 never offered products bearing the Webbing Marks, despite having sold hundreds of thousands of different products for years, and that there was no legitimate business reason why Forever 21 had to use the Webbing Marks on its products other than to attempt to benefit from the goodwill Gucci has engendered in them. Furthermore, Gucci will offer evidence that this deliberate infringement of its intellectual property was part of a long-standing pattern, as Forever 21 has been sued more than 140 times by companies alleging copyright or trademark infringement, in addition to receiving dozens of other cease-and-desist demands. • Actual Confusion: Gucci will offer evidence that Forever 21’s sales of products featuring the Webbing Marks have resulted in consumer confusion. For example, consumers who encountered the infringing products on social media queried whether the products were “Gucci[?],” and Gucci customers Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 13 of 21 Page ID #:16618 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW expressed frustration that Forever 21 had “ma[de] it look like I wear knock off Gucci.” • Gucci will establish Forever 21’s infringement through expert testimony, including from: o William D’Arienzo (initial), a branding expert in the fashion market, who will opine on the secondary meaning and fame of the Webbing Marks, and the harm that Forever 21’s sale of products bearing the Webbing Marks likely caused Gucci; o Karl Schulze (initial), a damages expert, who will opine on the damages Gucci has suffered due to Forever 21’s infringement and unlawful conduct; o Dr. Yoram “Jerry” Wind (initial and rebuttal), a marketing and consumer behavior research expert, who will opine on the secondary meaning associated with the Webbing Marks, the likelihood of confusion from Forever 21’s use of the Webbing Marks, and the harm that Gucci suffered as a result of Forever 21’s use, as well as the flaws in and relevance of Forever 21’s consumer surveys on likelihood of confusion; o Dr. Susan Schwartz McDonald (rebuttal), a branding and marketing expert, who will opine on the flaws in Forever 21’s consumer survey on secondary meaning; and o Dr. Susan Scafidi (rebuttal), a fashion industry expert, who will opine on the flaws in the testimony to be proffered by Forever 21’s purported fashion historian, on Gucci’s historical use of the Webbing Marks, consumer association of the Webbing Marks with Gucci; and Forever 21’s attempt to associate its own knockoff products with Gucci in a manner likely to confuse consumers. Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 14 of 21 Page ID #:16619 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -10- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW 2. Cancellation of Federal Registrations Presentation of the same evidence described above will show that Gucci’s Webbing Marks have secondary meaning, are not generic, and are not aesthetically functional, and thus, Gucci’s registrations should not be cancelled. However, this claim will not be presented to the jury. See infra Part VI; Deere & Co., 2016 WL 4443184, at *2 (cancellation presents “no legal (as opposed to equitable) issues . . . entitling [plaintiff] to a trial by jury”); Empresa Cubana, 123 F. Supp. 2d at 209 (“A claim for cancellation of a trademark registration pursuant to [§ 1119], is equitable in nature and does not give rise to a jury trial right.”); 15 U.S.C. § 1119 (“the court” determines whether to “order the cancelation of registrations”). 3. Denial of Federal Registration of Alleged Trademark Presentation of the same evidence described above will show that Gucci’s Webbing Marks have secondary meaning, are not generic, and are not aesthetically functional, and thus Gucci’s applications for new registrations should not be denied, although this claim will not be presented to the jury for the same reasons detailed above. See supra Part II.C.2. D. Summary of Gucci’s Counterclaims and Affirmative Defenses 1. Registered Trademark Infringement Gucci asserts that Forever 21 infringed its registered trademarks in the Webbing Marks by selling the Infringing Products bearing the Webbing Marks, including Registration Nos. 1,122,780; 1,123,224; 1,483,526; 1,495,863; 1,511,774; 1,520,796; 4,563,141; 4,379,039; 4,567,112; and 5,421,749, in violation of Section 34 of the Lanham Act (15 U.S.C. § 1114). 2. Trademark Infringement And False Designation of Origin Gucci asserts a claim that Forever 21’s use of the Webbing Marks on the Infringing Products constitutes a false designation of origin and false and misleading descriptions and representations of fact in violation of Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)). Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 15 of 21 Page ID #:16620 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -11- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW 3. Federal Trademark Dilution Gucci asserts a claim that Forever 21’s use of the Webbing Marks caused dilution by the blurring and tarnishment of, and does in fact dilute, tarnish, and detract from the distinctiveness of, the famous Webbing Marks in violation of 15 U.S.C. § 1125(c). 4. Common Law Trademark Infringement Gucci claims Forever 21 infringed its common law trademark rights by selling the Infringing Products bearing the Webbing Marks. 5. State Trademark Dilution Gucci claims Forever 21’s use of the Webbing Marks caused dilution by the blurring and tarnishment of, and does in fact dilute, tarnish, and detract from the distinctiveness of, the famous Webbing Marks in violation of California Business & Professions Code § 14247. 6. State Unfair Competition Gucci claims that in using the Webbing Marks, Forever 21 intentionally and willfully engaged in unlawful, unfair, and/or fraudulent methods of competition, and unfair or deceptive acts or practices in violation of California Business & Professional Code § 17200 and the common law. 7. Affirmative Defenses Gucci asserts affirmative defenses of unclean hands, waiver, acquiescence, estoppel and laches, each of which bars Forever 21 from any relief for its claims against Gucci. As these are all equitable defenses, Gucci intends to pursue them in post-trial proceedings. E. Elements Required To Establish Gucci’s Counterclaims And Affirmative Defenses 1. Registered Trademark Infringement Under Section 32 of the Lanham Act, 15 U.S.C. § 1114 A trademark infringement claim requires evidence that (1) the trademark at issue is a “valid, protectable trademark”; (2) the claimant is the owner of the trademark, and Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 16 of 21 Page ID #:16621 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -12- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW (3) the defendant’s unauthorized use of the mark is “likely to cause confusion.” Applied Info. Scis. Corp. v. eBay, Inc., 511 F.3d 966, 969 (9th Cir. 2007); see also Ninth Circuit Manual of Model Civil Jury Instructions § 15.6. 2. Trademark Infringement And False Designation of Origin Pursuant Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) In contrast to 15 U.S.C. § 1114, Section 1125(a) applies to claims concerning unregistered marks, but the elements are generally the same. See Ninth Circuit Manual of Model Civil Jury Instructions § 15.6, Comment; Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1046 (9th Cir. 1999) (“To establish … an unfair competition claim under section 43(a) of the Lanham Act [claimant] must establish that [defendant] is using a mark confusingly similar to a valid, protectable trademark of [claimant’s].”). In other words, plaintiff must show that defendant “(1) use[d] in commerce (2) any word, false designation of origin, false or misleading description, or representation of fact, which (3) is likely to cause confusion or misrepresents the characteristics of his or another person’s goods or services.” Freecycle Network, Inc. v. Oey, 505 F.3d 898, 902 (9th Cir .2007). 3. Federal Trademark Dilution Pursuant to 15 U.S.C. § 1125(c) The elements of a federal dilution claim are (1) the mark must be famous and distinctive; (2) the defendant must use the mark in commerce; (3) the defendant’s use must begin after the mark is famous; and (4) the defendant’s use must be likely to cause dilution, such as by blurring or tarnishment. Lions Gate Entm’t Inc. v. TD Ameritrade Servs. Co., 170 F. Supp. 3d 1249, 1269 (C. D. Cal. 2016). 4. Common Law Trademark Infringement As with a federal infringement claim, to prevail in an infringement action based on common-law trademark rights, a plaintiff must prove ownership of a valid mark and likelihood of confusion as to the source, origin, or sponsorship of goods or services. See Monte Carlo Shirt, Inc. v. Daewoo Int’l (Am.) Corp., 707 F.2d 1054, 1058 (9th Cir. 1983). Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 17 of 21 Page ID #:16622 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -13- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW 5. State Trademark Dilution The elements of a California dilution claim are the same as a federal dilution claim: (1) the mark must be famous and distinctive; (2) the defendant must use the mark in commerce; (3) the defendant’s use must begin after the mark is famous; and (4) the defendant’s use must be likely to cause dilution, such as by blurring or tarnishment. Lions Gate Entm’t, 170 F. Supp. 3d at 1269 (C. D. Cal. 2016) 6. State Unfair Competition To prevail on a claim for a violation of Section 17200 of California’s Unfair Competition Law (“UCL”), “a plaintiff must show either an (1) ‘unlawful, unfair, or fraudulent business act or practice,’ or (2) ‘unfair, deceptive, untrue or misleading advertising.’” Moss v. Infinity Ins. Co., 197 F. Supp. 3d 1191, 1198 (N.D. Cal. 2016). Thus, to prevail under Section 17200, a plaintiff must establish that the practice is (1) unlawful (i.e., is forbidden by law), (2) unfair (i.e., harm to victim outweighs any benefit) or (3) fraudulent (i.e., is likely to deceive members of the public). Id. 7. Affirmative Defenses The parties’ respective affirmative defenses of unclean hands, waiver, acquiescence, estoppel and laches are all equitable defenses for which there is no right to a jury trial. See Juan Pollo Franchising, Inc. v. Perez, 2013 WL 12120077, at *2 (C.D. Cal. May 2, 2013); Granite State Ins. Co. v. Smart Modular Techs., Inc., 76 F.3d 1023, 1027 (9th Cir. 1996) (“A litigant is not entitled to have a jury resolve a disputed affirmative defense if the defense is equitable in nature.”). F. Brief Description of Key Evidence In Support of Gucci’s Claims and Affirmative Defenses As to Gucci’s infringement and unfair competition claims, the evidence supporting Gucci’s claims is the same evidence described supra Part II.C. As to Gucci’s dilution claims, Gucci will offer evidence that Forever 21’s sales of products featuring the Webbing Marks have resulted in consumers associating Forever 21 with Gucci. For example, consumers who encountered the infringing Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 18 of 21 Page ID #:16623 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -14- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW products on social media made comments such as “Stop copying Gucci…” and “walmart gucci,” demonstrating that even in the context of Forever 21’s own highly branded environment, consumers associated the infringing products with Gucci. This association dilutes the Webbing Marks by both diminishing their distinctive quality and tarnishing their positive reputation and image. III. ANTICIPATED EVIDENTIARY ISSUES The parties have met and conferred and are working to resolve amicably certain evidentiary issues. The parties are concurrently filing motions in limine relating to the issues they were unable to resolve. In particular, Gucci is filing motions to exclude the following evidence: • Testimony and argument of and related to the opinions and survey conducted by Forever 21’s expert Bruce Isaacson on the grounds his opinions are irrelevant and prejudicial; • Testimony and argument of and related to the opinions and surveys conducted by Forever 21’s expert Sarah Butler on the grounds her opinions are irrelevant and prejudicial; • Evidence and argument relating to Forever 21’s alleged examples of third- party uses of “stripes” on the grounds that (1) those uses are irrelevant because they post-date Forever 21’s infringement, are not uses of GRG or BRB, and lack the required contextual information about such purported uses to show public perception of them, and (2) such evidence would prejudice Gucci, cause jury confusion and waste time at trial. • Evidence and argument relating to Forever 21’s alleged examples of Gucci products that use “stripes” other than the Webbing Marks on the grounds that they are irrelevant, prejudicial and likely to confuse the jury, as Gucci does not assert or enforce trademark rights in color combinations of stripes other than the Webbing Marks at issue in this case. Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 19 of 21 Page ID #:16624 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -15- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW In addition to the issues raised in Gucci’s motions in limine, Gucci anticipates that Forever 21 will move to exclude evidence of: (i) Mr. Schulze’s testimony on harm or damages to Gucci; (ii) Mr. D’Arienzo’s and Dr. Wind’s testimony in their entirety; (iii) claims brought previously against Forever 21 for copyright and trademark infringement, or language that paints Forever 21 in a negative light based on such claims; and (iv) social media comments evidencing consumer confusion as unauthenticated and hearsay. Gucci anticipates that other evidentiary issues will arise during the course of the trial when certain exhibits or testimony are offered, but that these can be addressed at the time of the offering. IV. ISSUES OF LAW Gucci does not presently anticipate that any issues of law may arise at trial, other than the issues raised by the motions in limine described above and other evidentiary issues, as well as issues that are not resolved on the parties’ pending motions for summary judgment or addressed in the parties’ proposed jury instructions. V. BIFURCATION OF ISSUES Gucci does not request any bifurcation of issues at trial. VI. JURY TRIAL Gucci contends that all of its claims are triable to a jury as a matter of right, and that a timely demand for a jury has been made. Gucci contends that none of Forever 21’s affirmative claims against Gucci—for declaratory relief and the cancellation or denial of trademark registrations or applications—is triable to a jury as a matter of right. See Deere & Co., 2016 WL 4443184, at *2 (claims for declaratory judgment regarding trademark infringement, dilution, and unfair competition, and cancellation of trademarks present “no legal (as opposed to equitable) issues … entitling [plaintiff] to a trial by jury”); Empresa Cubana, 123 F. Supp. 2d at 209 (“A claim for cancellation of a trademark registration pursuant to [15 U.S.C. § 1119] is equitable in nature and does not give rise to Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 20 of 21 Page ID #:16625 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -16- Case No. 2:17-cv-4706-SJO (Ex GUCCI’S MEMO OF CONTENTIONS OF FACT AND LAW a jury trial right.”); 15 U.S.C. § 1119 (“[i]n any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations”) (emphasis added). In addition, the parties’ respective affirmative defenses of unclean hands, waiver, acquiescence, estoppel and laches are equitable defenses for which there is no right to a jury trial. See Juan Pollo Franchising, 2013 WL 12120077, at *2; Granite State Ins., 76 F.3d at 1027 (“A litigant is not entitled to have a jury resolve a disputed affirmative defense if the defense is equitable in nature.”). VII. ATTORNEYS’ FEES Gucci reserves its right to seek an award of attorneys’ fees for its claims for trademark infringement if it prevails at trial pursuant to 15 U.S.C. § 1117(a). VIII. ABANDONMENT OF ISSUES Gucci is not currently abandoning any issues to be tried at trial. DATED: October 29, 2018 QUINN EMANUEL URQUHART & SULLIVAN, LLP By /s/ Daniel C. Posner Daniel C. Posner Attorneys for Defendant and Counterclaimant Gucci America, Inc. Case 2:17-cv-04706-SJO-E Document 210 Filed 10/29/18 Page 21 of 21 Page ID #:16626