Forever 21, Inc. v. Gucci America, Inc. et al

NOTICE OF MOTION AND MOTION to Dismiss Count II

C.D. Cal.December 8, 2017

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 Case No. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT QUINN EMANUEL URQUHART & SULLIVAN, LLP Daniel C. Posner (Bar No. 232009) danposner@quinnemanuel.com Susan Estrich (Bar No. 124009) susanestrich@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) 51 Madison Avenue, 22nd Floor New York, New York 10010-1601 Telephone: (212) 849-7000 Facsimile: (212) 849-7100 Attorneys for Defendant 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. 17-cv-04706-FMO-E(x) DEFENDANT GUCCI AMERICA, INC.’S NOTICE OF MOTION AND MOTION FOR PARTIAL DISMISSAL OF FOREVER 21, INC.’S SECOND AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES [Declaration of Daniel C. Posner submitted herewith] Judge: Hon. Fernando M. Olguin Hearing Date: January 25, 2018 Hearing Time: 10:00 a.m. Courtroom: 6D GUCCI AMERICA, INC., a New York corporation, Counterclaimant, vs. FOREVER 21, INC., a Delaware corporation, Counter-Defendant. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 1 of 20 Page ID #:902 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT TO THE COURT AND ALL PARTIES AND THEIR RESPECTIVE ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that, on January 25, 2018, at 10:00 a.m., or as soon thereafter as the matter can be heard, in the courtroom of the Honorable Fernando M. Olguin, located at 350 W. 1st Street, 6th Floor, Courtroom 6D, Los Angeles, CA 90012, defendant and counterclaimant Gucci America, Inc. (“Gucci America”) will, and hereby does, move for an order pursuant to Federal Rule of Civil Procedure 12(b)(6) granting Gucci America’s Motion for Partial Dismissal of Plaintiff Forever 21, Inc. (“Forever 21”)’s Second Amended Complaint (Dkt. 47) (“SAC”). Specifically, Gucci America seeks partial dismissal of Count Two of the SAC and complete dismissal of Count Three on the grounds that: (i) Forever 21 lacks standing to challenge the validity of Gucci America’s trademark registrations and applications that Gucci America has not accused Forever 21 of infringing, and as to which Forever 21 has not alleged any facts showing that it has used or has any intent to use the marks covered by those registrations and applications; and (ii) in asking the Court to order the “denial” of Gucci America’s pending applications for trademark registration, Forever 21 seeks relief this Court is not authorized to grant under the Lanham Act. The motion is based on this Notice of Motion and Motion for Partial Dismissal, the Memorandum of Points and Authorities attached hereto, the SAC and all materials incorporated or relied upon in it, matters of which this Court may take judicial notice, and any and all other materials the Court deems proper. This motion is made following the conference of counsel pursuant to Local Rule 7-3, which took place on November 28, 2017 and on other dates, as set forth in the Declaration of Daniel C. Posner, filed herewith. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 2 of 20 Page ID #:903 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT DATED: December 8, 2017 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-FMO-E Document 48 Filed 12/08/17 Page 3 of 20 Page ID #:904 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT TABLE OF CONTENTS Page TABLE OF AUTHORITIES.......................................................................................ii MEMORANDUM AND POINTS OF AUTHORITIES............................................. 1 PRELIMINARY STATEMENT ................................................................................. 1 FACTUAL BACKGROUND...................................................................................... 3 ARGUMENT............................................................................................................... 7 I. LEGAL STANDARD ....................................................................................... 7 II. COUNTS TWO AND THREE OF THE SAC SHOULD BE DISMISSED IN PART, WITH PREJUDICE, TO THE EXTENT THEY SEEK THE CANCELLATION OR DENIAL OF BRB WEBBING REGISTRATIONS AND APPLICATIONS THAT GUCCI AMERICA HAS NOT ACCUSED FOREVER 21 OF INFRINGING.................................................................................................... 8 III. INDEPENDENTLY, COUNT THREE SHOULD BE DISMISSED WITH PREJUDICE BECAUSE THE COURT DOES NOT HAVE THE AUTHORITY TO “DENY” AN APPLICATION FOR REGISTRATION............................................................................................ 10 CONCLUSION.......................................................................................................... 14 Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 4 of 20 Page ID #:905 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT TABLE OF AUTHORITIES Page Cases Airs Aromatics, LLC v. Opinion Victoria’s Secret Stores Brand Mgmt., Inc., 744 F.3d 595 (9th Cir. 2014) .................................................................................13 Airs Fragrance Prods. v. Clover Gifts, Inc., 395 Fed. App’x. 482 (9th Cir. 2010) .....................................................................13 Ashcroft v. Iqbal, 556 U.S. 662 (2009).................................................................................................7 Avon Shoe Co. v. David Crystal, Inc., 279 F.2d 607 (2d Cir. 1960) ..................................................................................12 Belstone Capital, LLC v. Bellstone Partners, LLC, 2017 WL 1153111 (E.D. Cal. Mar. 28, 2017).......................................................13 British Broad. Corp. v. Stander, 2017 WL 1807592 (C.D. Cal. Mar. 18, 2017).........................................................8 Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) .................................................................................8 Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869 (2d Cir. 1992) ..................................................................................14 Farm & Trade, Inc. v. Farmtrade, LLC, 2014 WL 1665146 (E.D. Cal. Apr. 23, 2014) .......................................................11 Forschner Group v. B-Line A.G., 943 F. Supp. 287 (S.D.N.Y. 1996) ........................................................................12 Franklin v. Murphy, 745 F.2d 1221 (9th Cir. 1984) .................................................................................8 GMA Accessories, Inc. v. Idea Nuova, Inc., 157 F. Supp. 2d 234 (S.D.N.Y. 2000) ...................................................................13 Hokto Kinoko Co. v. Concord Farms, Inc., 810 F. Supp. 2d 1013 (C.D. Cal. 2011) ...................................................................9 Hostzilla, Ltd. v. Hostzilla, Inc., 2013 WL 12142839 (C.D. Cal. Feb. 25, 2013)......................................................13 In re Falchi, 1998 WL 274679 (Bankr. S.D.N.Y. May 27, 1998) .............................................14 Jackson v. Bank of Am., 2017 WL 4586930 (C.D. Cal. May 9, 2017)...........................................................8 Ketab Corp. v. Mesriani & Assocs., 2015 WL 8022874 (C.D. Cal. Dec. 4, 2015)...........................................................9 Lewis v. Bank of Am., N.A., 2010 WL 1372526 (S.D. Cal. Apr. 5, 2010) ..................................................8 MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).................................................................................................9 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097 (9th Cir. 2008) .................................................................................8 Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 5 of 20 Page ID #:906 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT Pegasus Satellite Television, Inc. v. DirecTV, Inc., 318 F. Supp. 2d 968 (C.D. Cal. 2004) ...................................................................12 Silver Textile, Inc. v. D Lux Brands, LLC, 2014 WL 12594456, at *5 (C.D. Cal. May 12, 2014) Sisseton-Wahpeton Sioux Tribe v. U.S., 90 F.3d 351 (9th Cir. 1996) .....................................................................................8 Sunrich Food Grp., Inc. v. Pac. Foods of Oregon, Inc., 233 F. Supp. 2d 1273 (D. Or. 2002) ........................................................................9 Statutory Authorities 15 U.S.C. § 1052(d)...................................................................................................13 15 U.S.C. § 1065..........................................................................................................3 15 U.S.C. § 1119..............................................................................2, 6, 10, 11, 12, 13 15 U.S.C. § 1127........................................................................................................11 Rules and Regulations Local Rule 7-18 .........................................................................................................11 Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 6 of 20 Page ID #:907 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT MEMORANDUM AND POINTS OF AUTHORITIES Preliminary Statement In granting Gucci America’s previous motion to dismiss Forever 21’s original complaint (“Complaint”), but providing Forever 21 with leave to amend, the Court cautioned Forever 21 to “carefully evaluate the contentions set forth in” Gucci America’s motion before filing an amended complaint. (Dkt. 41 at 2 (the “Order”)). In response, Forever 21 filed a First Amended Complaint (“FAC”) in which it wisely abandoned its claims seeking the cancellation or “denial” of Gucci America’s registrations and applications for its iconic webbing trademarks consisting of three bands of green-red-green (“GRG”) color combinations (the “GRG Webbing Marks”)— essentially conceding that those claims were baseless. Notwithstanding the Court’s cautionary words, however, Forever 21 reasserted all of its claims for cancellation and denial of Gucci America’s registrations and applications for its famous webbing trademarks consisting of three bands of blue-red-blue (“BRB”) color combinations (the “BRB Webbing Marks”). After the parties met and conferred regarding various deficiencies in the FAC, Forever 21 filed a Second Amended Complaint (Dkt. 47) (“SAC”).1 But the SAC still has not cured the pleading deficiencies relating to: (i) Forever 21’s lack of standing to challenge registrations or applications it has not been accused of infringing; or (ii) the Court’s lack of statutory authority to “deny” pending trademark applications. 1 Anxious to persuade the Court that it should be excused from a business model based on calculated knockoffs, Forever 21’s SAC now pleads the truism that unspecified “[s]triped clothing designs are widely available for sale” (SAC ¶ 8), and then purports to identify “examples” that include red and blue or red and green stripes (SAC ¶¶ 9-138). Forever 21’s “examples” are smoke and mirrors. The vast majority of them merely show uses of stripes that bear no resemblance to the particular BRB and GRG Webbing Marks at issue here, proving the point that there are infinite creative possibilities for use of stripes that do not infringe Gucci America’s iconic marks. And the few examples that may be actionably similar simply demonstrate that others (like Forever 21) have sought to exploit the goodwill Gucci America developed in its BRB and GRG Webbing Marks. While Gucci America will address Forever 21’s fallacious pleading on the merits in due course, it is beyond the scope of this particular motion. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 7 of 20 Page ID #:908 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT Because Forever 21 failed, after two additional chances, to offer sufficient factual allegations to support these claims, they should now be dismissed with prejudice. First, Counts Two and Three of the SAC should be dismissed in part for lack of standing. These counts seek the cancellation of federal registrations and the denial of pending applications for Gucci America’s BRB Webbing Marks. Even after two amended complaints, it remains undisputed that: (i) Gucci America never accused Forever 21 of marketing or selling products that infringe upon Gucci America’s rights in certain registrations and applications; and (ii) Forever 21 does not allege any facts showing that it has ever marketed or sold any of the goods covered by those “unasserted” registrations and applications, or that it has any intent to do so. In the Order, the Court explicitly “question[ed] whether plaintiff has standing to seek cancellation of registrations that defendant has not accused plaintiff of infringing” (Order at 2), yet the SAC still fails to allege sufficient facts in support of Forever 21’s standing, thereby confirming that no such facts exist. Thus, Counts Two and Three of the SAC should again be dismissed, this time with prejudice, to the extent they challenge the unasserted registrations and applications. Second, for the same reasons that led the Court to dismiss Forever 21’s previously asserted claim for the “denial” of Gucci America’s pending trademark applications, the Court should dismiss Count Three of the SAC. As the Court recognized in the Order, a federal court is not authorized to order the “denial” of an application pending before the United States Patent and Trademark Office (“USPTO”) because 15 U.S.C. § 1119 “refers only to registered marks.” (Order at 2 (emphasis added)). The SAC alleges no new facts to support a contrary result—and instead is effectively an unauthorized and improper request for reconsideration of the Court’s prior ruling. Because there is no basis for the Court to reconsider its prior ruling, Count Three of the SAC should be dismissed in its entirety, with prejudice. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 8 of 20 Page ID #:909 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT Factual Background Gucci America’s Webbing Marks. GUCCI is a world-famous luxury and fashion brand associated with many iconic trademarks. Relevant to this litigation, Gucci America has for decades sold jackets, pants, sweaters, jewelry, and other accessories displaying the GRG and BRB Webbing Marks. Gucci America has received several federal registrations for these trademarks across a wide variety of goods, the majority of which have long since become incontestable pursuant to 15 U.S.C. § 1065. As relevant to the instant motion, Forever 21 seeks cancellation of the following four federal registrations for BRB Webbing Marks (the “BRB Webbing Registrations”), with incontestable registrations identified by a “*”: Reg. No. Mark Reg. Date First Use In Commerce Goods/Services (Class) 1511774* BRB 11/8/1988 1963 Wallets, purses, handbags, shoulder bags, clutch bags, tote bags, business card cases, credit card cases, passport cases, cosmetic cases sold empty, attaché cases, valises, suitcases, duffle bags, necktie cases, umbrellas, saddles, bridles, walking sticks, canes and key cases (18)2 4563151 BRB 7/8/2014 1963 Gym bags, wallets, cosmetic cases sold empty (18) 1495863* BRB 7/12/1988 1967 Footwear (25) 1520796* BRB 1/17/1989 1967 [Goods made or coated with precious metal – namely, candle holders,] watches, [cufflinks, bracelets, pendants, key rings, paperweights, earrings, rings, necklaces, ice buckets, goblets, and stylized animal containers] (14)3 In addition, Forever 21 seeks a judgment ordering the denial of the following three applications for BRB Webbing Marks (the “BRB Webbing Applications”): 2 The SAC incorrectly lists Registration No. 1511774 as covering Class 28. 3 Brackets indicate subsequently deleted goods or services. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 9 of 20 Page ID #:910 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT App. No. Mark Filing Date First Use In Commerce Goods/Services (Class) 87206686 BRB 10/18/2016 1974 Clothing, namely, sweaters, shirts, tops, jackets, coats, skirts, pants, jeans, shorts, dresses, belts and hats (25)4 87391139 BRB 3/29/2017 2004 2008 2011 Sunglasses; mobile phone cases; cell phone straps (9) Scarves (25) Backpacks (18) 87116368 BRB 7/26/2016 2016 Baby blankets (24) Gucci America Demands That Forever 21 Stop Using The Webbing Marks. Plaintiff Forever 21 is a retail chain that sells clothing and accessories in brick-and- mortar stores and online. (See SAC ¶¶ 140-143). On December 7, 2016, Gucci America sent a cease-and-desist letter to Forever 21 demanding that it stop selling, and refrain from selling in the future, certain products that infringe Gucci America’s BRB Webbing Marks. (Id. ¶ 144). When Forever 21 neither substantively responded nor agreed to comply, Gucci America sent additional letters on January 6 and February 13, 2017, repeating its demands and identifying additional infringing items, including items that infringe Gucci America’s GRG Webbing Marks, that had come to Gucci America’s attention. (Id. ¶¶ 145-146). With respect to Forever 21’s infringements of the BRB Webbing Marks, Gucci America identified in its letters the following infringing products being sold by Forever 21, which are also identified in the SAC (collectively, the “Infringing Products”): (1) “Striped Choker”: a cloth choker that copied Gucci America’s BRB Webbing Mark in its entirety (SAC p. 134); (2) “Embroidered Satin Bomber Jacket”: a jacket with trim and cuffs that copied Gucci America’s BRB Webbing Mark (id. at p. 135); (3) “Tiger Embroidery Stripe Sweater”: a sweater with trim and cuffs that copied Gucci America’s BRB Webbing Mark (id. at p. 136); and 4 Application No. 87206686 initially included “boots, sandals, sneakers,” but on July 21, 2017 Gucci America amended the application to delete these items because they were already covered by Registration No. 1495863. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 10 of 20 Page ID #:911 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT (4) “Metallic Faux Leather Bomber”: a jacket with trim and cuffs that copied Gucci America’s BRB Webbing Mark (id. at p. 137). In its letters, Gucci America identified itself as the owner of the BRB and GRG Webbing Marks, and, by way of background, listed some of its registrations for those marks, including the four BRB Webbing Registrations listed above. (See id. ¶ 146). While Gucci America did not specifically identify any of the BRB Webbing Applications in its correspondence with Forever 21, the two BRB jackets and the BRB sweater Gucci America identified as infringing (the “Embroidered Satin Bomber Jacket,” “Tiger Embroidery Stripe Sweater” and “Metallic Faux Leather Bomber”) fall within the scope of Application No. 87206686, which covers clothing. Forever 21 Preemptively Sues Gucci America. Gucci America’s February 13, 2017 letter demanded that Forever 21 cease its sales of the “infringing products” identified therein. (Id. ¶¶ 146-147). The parties began communicating regarding the matter; as a result, Gucci America did not immediately file a lawsuit against Forever 21. On June 26, 2017, however, Forever 21 preemptively sued Gucci America,5 alleging that the GRG and BRB Webbing Marks are not protectable because “[t]he colors red, blue, and green, and stripe designs, are among the most favorite, popular and widely used colors and design features on clothing” (Complaint ¶ 1), and “[m]any clothing and accessory items adorned with decorative stripes colored blue-red-blue or green-red-green are sold by countless third parties” (id. ¶ 27). Forever 21 sought: (i) a declaratory judgment that the products identified by Gucci America are not infringing; (ii) cancellation of Gucci America’s GRG and BRB registrations for lack of secondary meaning, aesthetic functionality, and “genericism”; and (iii) “denial” of Gucci America’s GRG and BRB pending applications on the same grounds. (Id. ¶¶ 31-46). Gucci America’s Motion to Dismiss. Gucci America filed a motion for partial dismissal of Forever 21’s Complaint on the grounds that: (i) Forever 21 failed to allege 5 Although Guccio Gucci S.p.A. was named as a co-defendant in this action, it has been dismissed pursuant to a stipulation of the parties. (Dkt. 39). Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 11 of 20 Page ID #:912 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT sufficient facts supporting its contention that the GRG and BRB Webbing Marks are generic, aesthetically functional, or lack secondary meaning; (ii) Forever 21 lacks standing to challenge trademark registrations or applications that Gucci America has not asserted against Forever 21; and (iii) the Court does not have statutory authority to order the denial of a pending application for a registration. (Dkt. 21). On November 6, 2017, the Court granted Gucci America’s motion to dismiss, noting the following deficiencies in Forever 21’s Complaint: [T]he Complaint seeks the denial of Gucci’s pending trademark applications with the United States Patent and Trademark Office (“USPTO”), but the authority on which it relies, 15 U.S.C. § 1119, refers only to registered marks. Further, the court is skeptical that plaintiff has sufficiently alleged facts to support its claims for cancellation based on lack of secondary meaning, aesthetic functionality, and genericism. Moreover, the court questions whether plaintiff has standing to seek cancellation of registrations that defendant has not accused plaintiff of infringing. (Order at 2 (citations omitted)). While the Court gave Forever 21 leave to amend, it instructed Forever 21 to “carefully evaluate the contentions set forth in [Gucci America’s] motion” before filing any amended complaint. (Id.). Forever 21’s First Amended Complaint. In its FAC, filed on November 17, 2017 (Dkt. 42), Forever 21 withdrew all its challenges to Gucci America’s trademark registrations and applications for the GRG Webbing Marks. However, it maintained all of its claims directed to the BRB Webbing Registrations and Applications, including the registrations and applications that apply to the categories of products that Gucci America never accused Forever 21 of infringing, either in its prior letters or in its counterclaims (collectively, the “Unasserted BRB Webbing Registrations and Applications”).6 Forever 21 alleged no additional facts to demonstrate its standing to bring a claim for the cancellation or denial of these Unasserted BRB Webbing Registrations and Applications, or to establish this Court’s authority to order the “denial” of Gucci America’s pending BRB Webbing Applications. 6 These include Registration Nos. 1495863, 4564151 and 1511774 and Serial Nos. 87116368 and 87391139. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 12 of 20 Page ID #:913 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT Forever 21’s Second Amended Complaint. During the course of extensive meet-and-confer discussions, the parties addressed Gucci America’s ongoing concerns about the sufficiency of Forever 21’s allegations in its FAC. (See Declaration of Daniel C. Posner (“Posner Decl.”), ¶¶ 6-19). In particular, Gucci America continued to challenge the sufficiency of Forever 21’s factual allegations that the BRB Webbing Registrations and Applications are subject to cancellation or denial on the basis of genericism, lack of secondary meaning, and aesthetic functionality. (Id.). Gucci America also noted that Forever 21 had not added any new factual allegations to address the grounds for the Court’s prior dismissal of Forever 21’s claims for the cancellation or denial of registrations or applications that Gucci America had not accused Forever 21 of infringing, and for the denial of applications still pending in the USPTO. To attempt to address these deficiencies, Forever 21 agreed to file the SAC, which contains certain additional factual allegations. (Id. ¶ 9). While Gucci America vigorously disputes the veracity and sufficiency of those allegations, to avoid burdening this Court with unnecessary motion practice, Gucci America has elected to defer until summary judgment its challenge to Forever 21’s claims based on genericism, lack of secondary meaning and aesthetic functionality. However, because the SAC’s few additional allegations still do not establish Forever 21’s standing to challenge the Unasserted BRB Webbing Registrations and Applications, or the Court’s authority to order the “denial” of any of Gucci America’s BRB Webbing Applications, Gucci America reasserts its challenges to those claims herein. Argument I. LEGAL STANDARD A complaint will survive a motion to dismiss under Rule 12(b)(6) when it contains “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted). “Dismissal for failure to state a claim can be warranted based on either a lack of a Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 13 of 20 Page ID #:914 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT cognizable legal theory or the absence of factual support for a cognizable legal theory.” British Broad. Corp. v. Stander, 2017 WL 1807592, at *4 (C.D. Cal. Mar. 18, 2017) (Olguin, J.) (citing Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). “A complaint may be dismissed also for failure to state a claim if it discloses some fact or complete defense that will necessarily defeat the claim.” Id. (citing Franklin v. Murphy, 745 F.2d 1221, 1228-29 (9th Cir. 1984)). Further, where a party has “had an opportunity to amend the complaint to make factual allegations” but fails to sufficiently do so, the Court may dismiss with prejudice. Lewis v. Bank of Am., N.A., 2010 WL 1372526, at *2 (S.D. Cal. Apr. 5, 2010); see also, e.g., Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1058 (9th Cir. 2011) (“[t]he district court’s discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint”) (quotation omitted); Sisseton- Wahpeton Sioux Tribe v. U.S., 90 F.3d 351, 355 (9th Cir. 1996) (same); Jackson v. Bank of Am., 2017 WL 4586930, at *2 (C.D. Cal. May 9, 2017) (dismissing claim with prejudice “[b]ecause Plaintiff has already amended his complaint once and failed to cure the defects”). II. COUNTS TWO AND THREE OF THE SAC SHOULD BE DISMISSED IN PART, WITH PREJUDICE, TO THE EXTENT THEY SEEK THE CANCELLATION OR DENIAL OF BRB WEBBING REGISTRATIONS AND APPLICATIONS THAT GUCCI AMERICA HAS NOT ACCUSED FOREVER 21 OF INFRINGING Forever 21 fails to state a claim for the cancellation or denial (Counts Two and Three) of any of the Unasserted BRB Webbing Registrations and Applications, because Forever 21 lacks standing to challenge them. In its order granting Gucci America’s motion to dismiss, the Court “question[ed] whether plaintiff has standing to seek cancellation of registrations that defendant has not accused plaintiff of infringing.” (Order at 2). Forever 21’s SAC still fails to allege sufficient facts to show that it has such standing—establishing that no further set of facts can support its claim. “In order to bring a claim for trademark cancellation, the cancellation petitioner must plead and prove facts showing a ‘real interest’ in the proceedings in order to Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 14 of 20 Page ID #:915 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT establish standing.” Hokto Kinoko Co. v. Concord Farms, Inc., 810 F. Supp. 2d 1013, 1034 (C.D. Cal. 2011); see also MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (declaratory relief requires “a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment”) (internal quotation marks omitted). “A cancellation petitioner must show that he is more than an intermeddler but rather has a personal interest, and that there is a real controversy between the parties.” Sunrich Food Grp., Inc. v. Pac. Foods of Oregon, Inc., 233 F. Supp. 2d 1273, 1277 (D. Or. 2002) (internal quotation marks and brackets omitted). Simply pleading that the plaintiff has suffered injuries “relating to the generic or descriptive nature of the marks” is not sufficient. Ketab Corp. v. Mesriani & Assocs., 2015 WL 8022874, at *7 (C.D. Cal. Dec. 4, 2015). Before Forever 21 filed the Complaint, Gucci America accused Forever 21 of infringing its GRG and BRB Webbing Marks by selling certain products that fall with the scope of particular registrations and applications. (SAC ¶¶ 144-148). Nevertheless, in its SAC (as in the Complaint and the FAC), Forever 21 asks the Court to cancel or deny the Unasserted BRB Webbing Registrations and Applications—even though Forever 21 concedes that none of the Infringing Products are covered by those registrations or applications. Specifically, Gucci America’s challenge to Forever 21’s use of the BRB Webbing Mark is limited to its use on two jackets, one sweater, and one choker. The jackets and sweater are the subject of Serial No. 87206686 (which includes “sweaters” and “jackets”). Yet Forever 21 asks the Court to also cancel and deny the Unasserted BRB Webbing Registrations and Applications, which are entirely distinct registrations and applications, covering products such as wallets, purses, credit card cases, gym bags, shoes, sunglasses, cell phone cases, scarves, backpacks and baby blankets. Gucci America has not accused Forever 21 of selling products that infringe upon the Unasserted BRB Webbing Registrations and Applications, and Forever 21 has never (in any of its three complaints) alleged any facts suggesting that it has ever made Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 15 of 20 Page ID #:916 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT or sold a product covered by the Unasserted BRB Webbing Registrations and Applications, or that it has any real intent to do so. Forever 21 has thus failed to allege any facts showing it has a “real and immediate” interest in the Unasserted BRB Webbing Registrations and Applications, or that there is a “real controversy” regarding them. Accordingly, Forever 21 has not cured the defects that the Court rightly found in the original Complaint with respect to Forever 21’s lack of standing to bring a claim to cancel or deny the Unasserted BRB Webbing Registrations and Applications. The Court should therefore dismiss Counts Two and Three of the SAC with prejudice to the extent they seek relief based on those registrations and applications. III. INDEPENDENTLY, COUNT THREE SHOULD BE DISMISSED WITH PREJUDICE BECAUSE THE COURT DOES NOT HAVE THE AUTHORITY TO “DENY” AN APPLICATION FOR REGISTRATION Gucci America demonstrated in its prior motion that under 15 U.S.C. § 1119, federal courts have the authority to cancel existing trademark registrations, but not to “deny” applications pending in the USPTO. (Dkt. 21 at 19-20). On that basis, the Court dismissed Forever 21’s claim seeking the denial of a number of Gucci America’s applications. (Order at 2). The SAC includes no additional facts to support Forever 21’s claim for the denial of Gucci America’s applications. While Forever 21 cites two cases in the SAC that it inexplicably did not cite in opposing Gucci America’s prior motion (SAC ¶ 169), those cases, even if they were to be considered—which, as discussed below, they should not be—do not support a contrary result. Because it is now clear that Forever 21 cannot identify any new facts or law to support its request for the denial of Gucci America’s applications, Count Three of the SAC should be dismissed with prejudice. The parties agree that whether this Court has authority to order the denial of Gucci America’s pending applications turns on the meaning of 15 U.S.C. § 1119, which provides: “In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, restore Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 16 of 20 Page ID #:917 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT canceled registrations, and otherwise rectify the register with respect to the registrations.” 15 U.S.C. § 1119 (emphasis added); see also 15 U.S.C. § 1127 (“The term ‘registered mark’ means a mark registered in the [USPTO] under this chapter.”). Consistent with its plain language, a precondition to invoking § 1119 is that the specific mark being challenged actually be “registered” by the USPTO, and not merely the subject of a pending application. See, e.g., Silver Textile, Inc. v. D Lux Brands, LLC, 2014 WL 12594456, at *5 (C.D. Cal. May 12, 2014) (“Where there is only a pending application at issue, the Court lacks authority to cancel that application.”); Farm & Trade, Inc. v. Farmtrade, LLC, 2014 WL 1665146, at *7 (E.D. Cal. Apr. 23, 2014) (“[T]o state a claim [for cancellation under the Lanham Act], Defendant must hold a registered trademark with the USPTO. The existence of a pending application is not sufficient.”) (emphasis added). Accordingly, because Count Three challenges Gucci America’s applications in unregistered trademarks, the Court lacks the authority to adjudicate it under § 1119.7 The two cases Forever 21 now cites in its SAC (at ¶ 169) do not support a contrary result. As a threshold matter, the Court need not consider these cases because Forever 21 has failed to offer any explanation for why it could not have raised them in its opposition to Gucci America’s prior motion to dismiss, or why it should be entitled to simply reargue the merits of that motion now, under the guise of “amending” its prior complaint. Under Local Rule 7-18, Forever 21’s attempt to make a backdoor motion for reconsideration through a purported amendment to its pleading is improper, and should be rejected. See L.R. 7-18 (“No motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the 7 As Gucci America showed in its prior reply brief, Forever 21’s previous attempts to distinguish Silver Textile and Farm & Trade were unavailing. (See Dkt. 32 at 12 n.4 (explaining that in Silver Textile, the plaintiff’s registered mark was the subject of its infringement claim, but the court nonetheless held that it did not have the authority to order the denial of a related application; and that Farm & Trade held that Section 1119 gives federal courts the power to cancel registered marks, but not applications for registration)). Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 17 of 20 Page ID #:918 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT original motion.”); Pegasus Satellite Television, Inc. v. DirecTV, Inc., 318 F. Supp. 2d 968, 981 (C.D. Cal. 2004) (“Under L.R. 7-18, a motion for reconsideration may not be made on the grounds that a party disagrees with the Court’s application of legal precedent.”). Even if considered, both cases in fact support Gucci America because both involved registered marks. Forever 21 first cites Forschner Group v. B-Line A.G., 943 F. Supp. 287, 291 (S.D.N.Y. 1996), for the proposition that the “district court has subject matter jurisdiction to determine the registrability of defendant’s trademark applications.” (SAC ¶ 169). Forschner is inapposite, as it concerned the plaintiff trademark owners’ challenge to an alleged infringer’s attempt to register a mark that was confusingly similar to the plaintiffs’ already-registered marks, as part of the defendant’s alleged “scheme to unfairly compete with Plaintiffs and to trade upon their good will by imitating” the plaintiffs’ registered marks. 943 F. Supp. at 289. A claim that an infringer’s application for a mark is confusingly similar to a registered mark is subject to § 1119 as “[i]nvolving a registered mark”: the plaintiffs’ registered mark. Id. at 291 (“[b]ecause Plaintiffs own registered trademarks ‘SWISS ARMY’ and ‘OFFICER,” this is an action involving a ‘registered mark.’”). Here, Forever 21 does not allege ownership of a registration infringed by Gucci America’s BRB Webbing Applications, and thus the reason why Forschner found that the case “involved” a registered mark does not apply here. Forever 21’s citation to Avon Shoe Co. v. David Crystal, Inc., 279 F.2d 607, 615- 16 (2d Cir. 1960), similarly fails to support Forever 21’s position. Unlike here, Avon Shoe involved an applicant’s request for the dismissal of an opposition to an application, not the denial of an application, and in any case, the application there was a “concurrent use” application, which by definition involves an already-registered mark.8 8 As Avon Shoe explains, a concurrent use registration “authorizes a permissive, concurrent registration to a second [unrelated] applicant.” 279 F.2d at 615 (emphasis added). There can only be a “concurrent registration” if a subject registration already (footnote continued) Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 18 of 20 Page ID #:919 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT During the parties’ meet and confer discussions, Forever 21 belatedly identified additional cases that it failed to raise in its initial papers. Again, even if the Court considers these cases (and it should not), they would not change the outcome. For example, Forever 21 cited dicta in Belstone Capital, LLC v. Bellstone Partners, LLC, 2017 WL 1153111 (E.D. Cal. Mar. 28, 2017), for the proposition that § 1119 allows a court to cancel a pending application when it is “relating to” a registered mark, id. at *3 (quoting Airs Fragrance Prods. v. Clover Gifts, Inc., 395 Fed. App’x. 482, 485 (9th Cir. 2010)). However, the Ninth Circuit later clarified that the unpublished Airs Fragrance case—which involved the unique circumstances of a scheme to “defraud creditors” through the transfer of an entire “family of marks”—ordered the cancellation of “any registered marks covering the Airs family of marks,” not applications. Airs Aromatics, LLC v. Opinion Victoria’s Secret Stores Brand Mgmt., Inc., 744 F.3d 595, 597 (9th Cir. 2014) (emphasis added). Nor has Forever 21 alleged any facts showing that the applications it challenges “involv[e]” a registered mark in a similar manner. In any case, even if the Court were to consider additional authorities on this issue that could have been raised in connection with Gucci America’s prior motion, then the overwhelming authorities establish, consistent with the Court’s prior ruling, that under the plain language of § 1119, a court does not have freestanding “power” to order the denial of pending trademark applications. See supra at 11; see also, e.g., Hostzilla, Ltd. v. Hostzilla, Inc., 2013 WL 12142839, at *2 n.4 (C.D. Cal. Feb. 25, 2013) (denying plaintiff’s “requests that the Court order the [USPTO] to cancel Defendant’s Trademark Application” because the court “has no power to do so under 15 U.S.C. § 1119”); GMA Accessories, Inc. v. Idea Nuova, Inc., 157 F. Supp. 2d 234, 241 (S.D.N.Y. 2000) (dismissing claim to “cancel” trademark application and noting the absence of “authority for the proposition that [§ 1119] permits a district court to cancel a pending exists; otherwise, there is nothing for it to be “concurrent” to. See 15 U.S.C. § 1052(d) (“concurrent registrations may be issued to such persons when they have become entitled to use such marks as a result of their concurrent lawful use in commerce”). Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 19 of 20 Page ID #:920 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. 17-cv-04706-FMO-E(x) GUCCI AMERICA’S MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT trademark application”); Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873 (2d Cir. 1992) (“a controversy as to the validity of or interference with a registered mark must exist before a district court has jurisdiction to grant the cancellation remedy”) (emphasis added); In re Falchi, 1998 WL 274679, at *7 (Bankr. S.D.N.Y. May 27, 1998) (“to obtain an order cancelling a trademark registration … plaintiff must allege a controversy as to the validity of or interference with a registered trademark”) (emphasis added). Accordingly, Forever 21 has provided no basis in fact or law for the Court to reconsider its prior ruling on this same issue. The Court should therefore dismiss Count Three of the SAC with prejudice.9 Conclusion For the foregoing reasons: • Counts Two and Three should be dismissed with prejudice for lack of standing as to the Unasserted BRB Webbing Registrations and Applications; and • Count Three should be dismissed with prejudice because the Court does not have the authority to order the denial of the BRB Webbing Applications. DATED: December 8, 2017 QUINN EMANUEL URQUHART & SULLIVAN, LLP By /s/ Daniel C. Posner Daniel C. Posner Attorneys for Defendant and Counterclaimant Gucci America, Inc. 9 The dismissal of Forever 21’s claim for the denial of Gucci America’s applications will not leave Forever 21 without a remedy. Indeed, Forever 21 has already initiated opposition proceedings in the USPTO as to the two BRB Webbing Applications that have been published for opposition (Nos. 87206686 and 87116368). The third application (No. 87391139) has been accepted for publication on the Principal Register, but has not yet been published for opposition. Case 2:17-cv-04706-FMO-E Document 48 Filed 12/08/17 Page 20 of 20 Page ID #:921