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

MEMORANDUM in Opposition to NOTICE OF MOTION AND MOTION to Dismiss Count II

C.D. Cal.December 22, 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. 2:17−cv−4706 SJO (Ex) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership, Including Professional Corporations SEONG KIM, Cal. Bar No. 166604 shkim@sheppardmullin.com KENT RAYGOR, Cal. Bar No. 117224 kraygor@sheppardmullin.com 1901 Avenue of the Stars, 16th Floor Los Angeles, California 90067 Telephone: 310.228.3700 Facsimile: 310.228.3701 LAURA L. CHAPMAN, Cal. Bar No. 167249 lchapman@sheppardmullin.com TONI QIU, Cal. Bar No. 302268 tqiu@sheppardmullin.com Four Embarcadero Center, 17th Floor San Francisco, California 94111-4109 Telephone: 415.434.9100 Facsimile: 415.434.3947 Attorneys for Plaintiff and Counter-Defendant FOREVER 21, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION FOREVER 21, INC., a Delaware corporation, Plaintiff and Counter-Defendant, v. GUCCI AMERICA, INC., a New York corporation, Defendants and Counter-Claimants. Case No. 2:17−cv−4706 SJO (Ex) FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT Date: January 25, 2018 Time: 10:00 a.m. Courtroom: 10C 350 W. 1st Street Los Angeles, CA. 90012 Complaint Filed: June 27, 2017 First Amended Complaint Filed: November 17, 2017 Second Amended Complaint Filed: December 5, 2017 Pretrial Conference: October 5, 2018 Trial Date: October 23, 2018 Judge: Hon. S. James Otero GUCCI AMERICA, INC., a New York corporation, Counter-Claimant, v. FOREVER 21, INC., a Delaware corporation, Counter-Defendant. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 1 of 27 Page ID #:1452 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT TABLE OF CONTENTS Page I. INTRODUCTION ............................................................................................. 1 II. FACTS AND PROCEDURAL HISTORY ....................................................... 2 III. LEGAL STANDARDS ..................................................................................... 6 IV. FOREVER 21 HAS STANDING TO CHALLENGE ALL OF GUCCI’S REGISTRATIONS AND APPLICATIONS AS ALLEGED IN COUNTS TWO AND THREE .................................................................... 6 A. Standing Is a Low Bar Intended to Disqualify Mere Intermeddlers........................................................................................... 7 B. Forever 21 Has Standing ......................................................................... 8 1. Forever 21 Has Standing As A Competitor .................................. 8 2. Forever 21 Has Standing Because It Claims An Equal Right To Use The Claimed “Mark” .............................................. 9 C. Forever 21 Has Standing Whether or Not Gucci “Asserted” All of Its Registrations and Applications, and Gucci Did Assert Them All ............................................................................................... 10 1. Gucci Asserted All of Its Registrations and Applications .......... 10 2. A Challenger Need Not Be Accused of Infringement, Let Alone Have Any Particular Registration or Application Asserted Against It to Have Standing......................................... 11 D. A Challenger Need Not Sell Every Product Sold By the Registrant or Applicant ......................................................................... 12 E. Cases Cited By Gucci Do Not Apply ................................................... 12 V. THIS COURT HAS AUTHORITY TO REFUSE REGISTRATION OF ALL OF GUCCI’S PENDING TRADEMARK APPLICATIONS ......... 15 A. Courts Routinely Exercise Their Authority to Deny Applications ....... 16 B. Gucci’s Cases Do Not Apply ................................................................ 19 VI. CONCLUSION ............................................................................................... 20 Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 2 of 27 Page ID #:1453 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT TABLE OF AUTHORITIES Page(s) Federal Cases Airs Fragrance Prods. v. Clover Gifts, Inc. 395 Fed. App’x. 482 (9th Cir. 2010) .................................................................... 16 Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc. 525 F.3d 8 (D.C. Cir. 2008) .................................................................................. 17 Avon Shoe Co. v. David Crystal, Inc. 279 F.2d 607, 614-15 (2d Cir. 1960), cert. denied, 364 U.S. 909 (1960) ........................................................................ 18 Balston, Inc. v. Finite Filter Co. 212 U.S.P.Q. (BNA) 210 (T.T.A.B. 1981) ............................................................. 8 Belstone Capital, LLC v. Bellstone Partners, LLC No. 2:16-cv-01124-KJM-GGH, 2017 U.S. Dist. LEXIS 46015 (E.D. Cal. Mar. 27, 2017) .................................... 16 Binney & Smith, Inc. v. Magic Marker Indus., Inc. 222 U.S.P.Q. 1003, 1984 WL 63077 (T.T.A.B. 1984) .......................................... 8 Blue Ath., Inc. v. Nordstrom, Inc. No. 10-cv-036-SM, 2010 U.S. Dist. LEXIS 72615 (D.N.H. July 19, 2010) ......................................................................................... 16 Books on Tape, Inc. v. Booktape Corp. 836 F.2d 519 (Fed. Cir. 1987) ................................................................................ 8 Catch Curve, Inc. v. Venali, Inc. 519 F. Supp. 2d 1028 (C.D. Cal. 2007) .................................................................. 6 Central Mfg., Inc. v. Brett 492 F.3d 876 (7th Cir. 2007) ................................................................................ 18 CSL Silicones Inc. v. Midsun Grp. Inc. 170 F. Supp. 3d 304 (D. Conn. 2016) .................................................................. 17 De Walt, Inc. v. Magna Power Tool Corp. 289 F.2d 656 (C.C.P.A. 1961) ................................................................................ 9 Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 3 of 27 Page ID #:1454 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT Ditri v. Coldwell Banker Residential Affiliates, Inc. 954 F.2d 869 (3d Cir. 1992) ................................................................................. 19 Durox Co. v. Duron Paint Mfg. Co. 320 F.2d 882 (4th Cir. 1963) ................................................................................ 17 Durox Co. v. Duron Paint Mfg. Co., Inc. 320 F.2d 882, 886-87 (4th Cir. 1963) ................................................................... 18 In re Falchi No. 97 B 43080 (JLG), 1998 WL 274679 (Bankr. S.D.N.Y. May 27, 1998) ......................................................................... 19 Farm & Trade, Inc. v. Farmtrade, LLC No. 2:14-CV-00415-MCE, 2014 WL 1665146 (E.D. Cal. Apr. 23, 2014) ..................................................................................... 19 Federal Glass Co. v. Corning Glass Works 162 U.S.P.Q. 279 (T.T.A.B. 1969) ......................................................................... 9 Ferro Corp. v. SCM Corp. 219 U.S.P.Q. 346 (T.T.A.B. 1983) ......................................................................... 8 Forschner Grp., Inc. v. B-Line A.G. 943 F. Supp. 287, 289-90 (S.D.N.Y. 1996) .......................................................... 18 Glow Indus. v. Lopez 252 F. Supp. 2d 962 (C.D. Cal. 2002) .................................................................. 11 Hokto Kinoko Co. v. Concord Farms, Inc. 810 F. Supp. 2d 1013 (C.D. Cal. 2011) .......................................................... 14, 15 Hostzilla, Ltd. v. Hostzilla, Inc. No. CV 12-10616 DSF (EX), 2013 WL 12142839 (C.D. Cal. Feb. 25, 2013) ..................................................................................... 19 Int’l Order of Job’s Daughters v. Lindeburg & Co. 727 F.2d 1087 (Fed. Cir. 1984) .............................................................................. 9 Jewelers Vigilance Committee, Inc. v. Ullenberg Corp. 823 F.2d 490 (Fed. Cir. 1987) ................................................................................ 9 Ketab Corp. v. Limonadi 2015 WL 5096417 (C.D. Cal. Aug. 28, 2015) ..................................................... 13 Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 4 of 27 Page ID #:1455 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT Ketab Corp. v. Mesriani & Assocs. No. 214CV07241RSWLMRW, 2015 WL 8022874 (C.D. Cal. Dec. 4, 2015) ....................................................................................... 12 Lipton Indus., Inc. v. Ralston Purina Co. 670 F.2d 1024 (C.C.P.A. 1982) .............................................................................. 8 Lyons v. Am. Coll. of Veterinary Sports Med. & Rehab., Inc. 997 F. Supp. 2d 92 (D. Mass. 2014) ..................................................................... 17 McCormick & Co. v. Summers 354 F.2d 668 (C.C.P.A. 1966) ................................................................................ 9 Mears v. Montgomery No. 02 Civ. 0407 (BSJ)(MHD), 2004 U.S. Dist. LEXIS 7836 (S.D.N.Y. May 5, 2004) ......................................................................................... 8 MedImmune, Inc. v. Genentech, Inc. 549 U.S. 118, 127 (2007) ..................................................................................... 14 Meehanite Metal Corp. v. Int’l Nickel Co., Inc. 262 F.2d 806 (C.C.P.A. 1959) ................................................................................ 9 Otto Roth & Co. v. Universal Foods Corp. 640 F.2d 1317 (C.C.P.A. 1981) .............................................................................. 9 Patsy’s Italian Rest., Inc. v. Banas 508 F. Supp. 2d 194 (E.D.N.Y. 2007) .................................................................. 17 Plyboo Am., Inc. v. Smith & Fong Co. 51 U.S.P.Q.2d 1633, 1999 WL 667420 (T.T.A.B. 1999) ...................................... 8 Ritchie v. Simpson 170 F.3d 1092 (Fed. Cir. 1999) .............................................................................. 8 Sheetz of Del., Inc. v. Doctor’s Assocs. Inc. 108 USPQ2d 1341 (TTAB 2013) ........................................................................... 8 Silver Textile, Inc. v. D Lux Brands, LLC No. CV1209023MWFPLAX, 2014 WL 12594456 (C.D. Cal. May 12, 2014) ..................................................................................... 20 Simmonds Aerocessories, Ltd. v. Elastic Stop Nut Corp. 257 F.2d 485 (3d Cir. 1958) ................................................................................. 18 Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 5 of 27 Page ID #:1456 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 -v- Case No. 2:17−cv−4706 SJO (Ex) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT Std. Pressed Steel Co. v. Midwest Chrome Process Co. 418 F. Supp. 485 (N.D. 1976) .............................................................................. 17 Stiefel Labs., Inc. v. Galenium USA, Ltd. Liab. Co. No. 05-23108 CIV-LENARD/KLEIN, 2006 U.S. Dist. LEXIS 43970, at *8 (S.D. Fla. May 2, 2006) ................................................................... 17 Sunrich Food Grp., Inc. v. Pac. Foods of Oregon, Inc. 233 F. Supp. 2d 1273 (D. Or. 2002) ............................................................... 12, 13 Tillamook County Creamery Ass’n v. Tillamook Cheese and Dairy Ass’n 345 F.2d 158 (9th Cir. 1965) ..................................................... 11 Whitney Info. Network, Inc. v. Gagnon 353 F. Supp. 2d 1208 (M.D. Fla. 2005) ............................................................... 20 Wind Turbine Indus. Corp. v. Jacobs Wind Elec. Co. No. 09-36, 2010 U.S. Dist. LEXIS 121372 (D. Minn. Nov. 15, 2010) ..................................................................................... 17 Federal: Statutes, Rules, Regulations, Constitutional Provisions 15 U.S.C. §§ 1051, 1127 ....................................................................................................... 10 §§ 1063-64 .............................................................................................................. 9 §§ 1063, 1064 ......................................................................................................... 7 § 1064 ..................................................................................................................... 5 § 1064(c) ................................................................................................................. 5 § 1065 ..................................................................................................................... 5 § 1071(b) ............................................................................................................... 18 § 1114 ............................................................................................................... 5, 11 § 1119 ................................................................................................. 16, 17, 18, 19 § 1125(a) ............................................................................................................... 11 Lanham Act ......................................................................................................... passim U.S. Constitution Article III .............................................................................................................. 14 Other Authorities Gilson on Trademarks § 11.03(2)(a)(vi) ................................................................... 18 3 McCarthy on Trademarks & Unfair Comp. § 20:46 (5th ed.) ............................. 8, 9 Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 6 of 27 Page ID #:1457 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT I. INTRODUCTION This motion to dismiss addresses two discrete legal issues: (1) Forever 21’s standing to cancel certain trademark registrations and prevent certain applications from maturing to registration; and (2) this court’s power to direct the U.S. Patent and Trademark Office not to register the applications at issue. The motion should be denied because Forever 21 has standing to bring these claims and this Court has the power to prohibit registration of the applications at issue. Starting in 2016, Gucci sent cease and desist letters to Forever 21, demanding that Forever 21 stop selling clothing with blue-red-blue and green-red-green stripes, alleging that only Gucci can use such designs on clothing, footwear and accessories. Gucci claimed “Intellectual Property” rights to the designs. Gucci defined its “Intellectual Property” rights as including all of its trademark registrations and applications for these designs in different classes of goods. Gucci cannot monopolize the stripe design at issue, at least in part because others have also sold the very same striped design, as shown in more than 100 images depicted in the Second Amended Complaint, like these: Sanctuary Bloomingdale’s J. Crew Tommy Hilfiger (SAC, Dkt. No. 47, ¶¶ 9-138). The legal consequence of this third party use, and Gucci’s corresponding lack of exclusive use, is that the design that Gucci asserts as a trademark does not serve as an indication of a single source of product. Since the purpose of a trademark is to Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 7 of 27 Page ID #:1458 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT designate a single source, and since the design is used by different producers, Gucci cannot obtain or maintain trademark registrations on this design. The requirement that a party have standing under the Lanham Act to seek cancellation and prevent registration of a claimed mark is generally easy to meet and is certainly satisfied in this case because: (a) a party has standing if it is a competitor, and Gucci’s counterclaim alleges Forever 21 is a competitor; and (b) a party has standing when it alleges an equal right to use the claimed mark, which Forever 21 has done. The Lanham Act’s standing requirement is a low bar. Standing is designed merely to prevent “intermeddlers”—members of the public with no interest in the outcome—from instituting proceedings against trademark registrations and applications. Forever 21 is no intermeddler. It seeks to cancel and prevent registrations for the design Forever 21 asserts it has the equal right to use. Gucci’s claim that this court has no power to direct the U.S. Patent & Trademark Office (“USPTO”) to deny registration for the design in Class 25 for clothing, as well as for other classes of goods is also wishful thinking. After determining the invalidity of a trademark, many courts have denied registrations pursuant to the concurrent authority that courts and the USPTO have under the Lanham Act. This case should be no different. The cases cited by Gucci are easily distinguishable and do not apply. Gucci’s motion should be denied. II. FACTS AND PROCEDURAL HISTORY The cease and desist letters Gucci sent to Forever 21 in 2016 and 2017 allege that Forever 21’s sale of certain apparel products infringed Gucci’s claimed trademark rights in stripes colored green and red and blue and red. In those letters, Gucci asserted that it is the “exclusive owner” of various trademarks, including the blue-red-blue stripe design, which Gucci emphasized “is the subject of trademark registrations and applications worldwide.”1 Gucci included the blue-red-blue 1 All emphasis is added for emphasis unless indicated otherwise. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 8 of 27 Page ID #:1459 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT design and all of the registrations and applications for that design as part of the “Gucci Intellectual Property” that Gucci expressly alleged Forever 21 was infringing. Gucci specifically identified, as part of its “Intellectual Property,” its trademark registrations for blue-red-blue stripe designs, namely, U.S. Reg. Nos. 1,520,796 (in class 14 for “[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]”); 4,563,151 (in class 18 for “gym bags, wallets, cosmetic cases sold empty”); 1,495,863 (in class 25 for “footwear”) and 1,511,774 (in class 18 for “[wallets,] purses, handbags, shoulder bags, clutch bags, tote bags [, business card cases, credit card cases, passport cases, cosmetic cases sold empty, attache cases, valises, suitcases, duffle bags, necktie cases, umbrellas, saddles, bridles, walking sticks, canes and key cases ]”). (See Declaration of Toni Qiu filed concurrently herewith, ¶¶ 4-8 and Exhibit A attached thereto.) Based on Gucci’s threats and claims in the cease and desist letters, Forever 21 filed this action for declaratory relief of non-infringement and invalidity and for cancellation of the registrations on, and applications for, the blue-red-blue design. Gucci filed a motion for partial dismissal of the Complaint (Dkt. No. 21). Gucci argued that Forever 21 failed to plead sufficient facts to challenge Gucci’s registrations and applications on the grounds that the underlying marks are not valid. The Court granted the motion with leave to amend, without analyzing Gucci’s standing argument or determining the court’s authority to adjudicate applications. (Dkt. No. 41.) Forever 21 filed a First Amended Complaint (“FAC”) (Dkt. No. 42) which includes an additional 129 paragraphs of factual allegations, consisting of images of representative examples of apparel, accessory, and footwear products featuring the design Gucci claims as its trademark - blue and red stripes - offered for sale by various independent manufacturers and retailers. (FAC, Dkt. No. 42, ¶¶ 9-138.) Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 9 of 27 Page ID #:1460 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT Some of the products Forever 21 included in the FAC are shown below with the corresponding brand or retailer: Tinsel Sanctuary Bloomingdale’s Tommy Hilfiger J. Crew Anthropologie Cotton:On & Co. Tory Burch Tommy Hilfiger Paul Hewitt (See FAC., Dkt. No. 42, ¶¶ 9, 18, 22, 93, 94, 100, 105, 121, 123.) Forever 21 included these additional facts and images to support its claim that Gucci’s claimed striped trademark does not qualify for trademark protection since it is commonly used as a decorative, ornamental feature on clothing, accessories, footwear, and related products in a non-source identifying way. Gucci contended that the FAC did not sufficiently allege causation; that Forever 21 did not expressly plead that because of these third party uses of Gucci’s Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 10 of 27 Page ID #:1461 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT claimed mark the stripe design did not serve as a trademark. Forever 21 added this causation language in a Second Amended Complaint, to which Gucci stipulated. (SAC, Dkt. No. 47, ¶¶ 167, 170). The SAC contains the same additional factual allegations with regard to the third party use of the stripe design. (SAC, Dkt. No. 47, ¶¶ 9, 18, 22, 93, 94, 100, 105, 121, 123.). Gucci’s pending motion to dismiss does not challenge Forever 21’s first cause of action for a declaratory relief of non-infringement, as Gucci has conceded that the more than one hundred additional paragraphs showing third party use of Gucci’s claimed trademark supports Forever 21’s claim that the stripe design is common. These same facts also support Forever 21’s claim to cancel Gucci’s registrations and prohibit its applications from registering in various classes of goods. Gucci filed counterclaims for trademark infringement and related claims. (Countercl., Dkt. No. 22.) Of the 89 paragraphs in Gucci’s counterclaim, 67 contain allegations as to Gucci’s claimed rights in the blue-red-blue (and green-red-green) stripe designs, and Forever 21’s alleged violation of those rights. (Id., ¶¶ 14-41, 53- 87.) In its counterclaim, Gucci alleges that its blue-red-blue stripe designs are “distinctive,” “iconic,” “instantly recognizable,” and are “[a]mong Gucci America’s most famous trademarks,” in which Gucci has “long-held exclusive rights.” (Id., ¶¶ 2, 4, 7, 20.) Gucci asserts and identifies all of its trademark registrations and applications for blue-red-blue (and green-red-green) stripe designs in its counterclaim, including those registrations that have become “incontestable” pursuant to 15 U.S.C. § 1065.2 (Id., ¶¶ 28-41.) The First Cause of Action alleged in Gucci’s counterclaim is for infringement of a registered mark pursuant to 15 U.S.C. § 1114. That cause of action expressly incorporates the preceding allegations in the 2 An incontestable registration can only be cancelled on certain grounds enumerated in 15 U.S.C. § 1064, including, for example, that the designation does not function as a trademark because it is generic or merely ornamental. 15 U.S.C. § 1064(c). Forever 21’s claims challenging Gucci’s registrations and applications include these grounds. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 11 of 27 Page ID #:1462 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT complaint, which refer to and assert all of Gucci’s trademark registrations for the blue-red-blue design. (Id., ¶¶ 53-59.) Below the header entitled “First Cause of Action,” Gucci specifically refers to U.S. Reg. No. 1,520,796, which is registered for the blue-red-blue design for use with “goods made or coated with precious metal” (the “’796 Registration”). (Id., ¶¶ 31, 53-59.) The Forever 21 products that Gucci alleges as infringing this registration are mostly clothing and one accessory (a choker). Gucci does not allege that any of the accused products are “goods made or coated with precious metal.” (Id., ¶ 45.) Gucci apparently called out the ’796 Registration because it is incontestable (see footnote 2 above) and thereby provides certain evidentiary presumptions, even though that registration does not cover the allegedly infringing products sold by Forever 21. Gucci contends it has standing to assert the irrelevant ’796 Registration against Forever 21’s sale of clothing products unrelated to that registration, but that Forever 21 does not have standing to challenge registrations and applications for classes of goods that are more like clothing than precious metal products. Gucci’s position makes no sense and should be rejected. III. LEGAL STANDARDS Motions to dismiss for failure to state a claim are disfavored, and dismissals are proper only in “extraordinary cases.” Catch Curve, Inc. v. Venali, Inc., 519 F. Supp. 2d 1028, 1034 (C.D. Cal. 2007). If a court grants dismissal for failure to state a claim, leave to amend should be freely granted, “unless the court determines that the pleading could not possibly be cured by the allegation of other facts.” Id. The instant motion should be denied. IV. FOREVER 21 HAS STANDING TO CHALLENGE ALL OF GUCCI’S REGISTRATIONS AND APPLICATIONS AS ALLEGED IN COUNTS TWO AND THREE Gucci moves to dismiss that portion of Forever 21’s Second Cause Of Action that seeks to cancel certain of Gucci’s federal trademark registrations for blue-red- Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 12 of 27 Page ID #:1463 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT blue stripes (U.S. Reg. No. 1,495,863 in class 25 for “footwear”; No. 1,511,774 in class 18 for “[wallets,] purses, handbags, shoulder bags, clutch bags, tote bags [, business card cases, credit card cases, passport cases, cosmetic cases sold empty, attache cases, valises, suitcases, duffle bags, necktie cases, umbrellas, saddles, bridles, walking sticks, canes and key cases ],” and No. 4,563,151, in class 18 for “gym bags, wallets, cosmetic cases sold empty,” and the portion of Forever 21’s Third Cause Of Action preventing registration of Gucci’s federal trademark applications for blue-red-blue stripes (U.S. App. Serial No. 87/116,368, in class 24 for “baby blankets” and No. 87/391,139, in class 9 for “sunglasses; mobile phone cases; cell phone straps,” class 18 for “backpacks,” and class 25 for “scarves”). As an initial matter, Gucci’s approach is inconsistent. Gucci makes no effort to move to dismiss Forever 21’s challenge to U.S. Registration No. 1,520,796 for the blue-red-blue design in class 14 for “goods made or coated with precious metal” goods which Forever 21 is not being accused of selling. Nor does Gucci move to dismiss Forever 21’s challenge to Application Serial No. 87/206,686, for the blue- red-blue stripe in class 25 for clothing (at least not for lack of standing). In any event, by failing to include these registrations/applications in its motion, Gucci concedes that Forever 21 has standing to challenge them in this district court. Gucci contends that Forever 21 lacks standing to challenge the specific registrations and applications described above for two reasons: (1) Gucci claims now that it has not “asserted” these registrations and applications against Forever 21, and (2) Forever 21 has not alleged that it made or sold products covered by these registrations and applications. These arguments fail as a matter of both fact and law. A. Standing Is a Low Bar Intended to Disqualify Mere Intermeddlers Under the Lanham Act, “any person who believes that he is or will be damaged” by a trademark registration has standing to challenge it. 15 U.S.C. §§ 1063, 1064 (emphasis added). This standard requires only that the party objecting to a registration have a “real interest” in the proceeding, to prevent a “mere Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 13 of 27 Page ID #:1464 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT intermeddler” from bringing litigation where there is no real controversy between the parties. Ritchie v. Simpson, 170 F.3d 1092, 1095 (Fed. Cir. 1999); Lipton Indus., Inc. v. Ralston Purina Co., 670 F.2d 1024, 1027-29 (C.C.P.A. 1982); Books on Tape, Inc. v. Booktape Corp., 836 F.2d 519, 520 (Fed. Cir. 1987). Standing is generally allowed and is easily met, and because few proceedings are ever brought by “mere intermeddlers,” a challenge to standing “is usually just a futile procedural gesture.” 3 McCarthy on Trademarks & Unfair Comp. § 20:46 (5th ed.) (hereinafter, “McCarthy”). Broadly interpreting the standing requirement serves the public interest. Lipton, 670 F.2d at 1030. B. Forever 21 Has Standing 1. Forever 21 Has Standing As A Competitor Gucci pleaded in its counterclaim that Forever 21 and Gucci are competitors. (Countercl., Dkt. No. 22, ¶ 87 (alleging that “Forever 21 has the purpose or intent to injure Gucci America, a competitor”). Forever 21 therefore has standing. Plyboo Am., Inc. v. Smith & Fong Co., 51 U.S.P.Q.2d 1633, 1999 WL 667420, at *1 (T.T.A.B. 1999) (“no issue as to whether opposer had standing” where applicant admitted opposer is a competitor); Ferro Corp. v. SCM Corp., 219 U.S.P.Q. 346, 352 (T.T.A.B. 1983) (“concession” that opposer was competitor was “sufficient, in and of itself,” to establish standing); Balston, Inc. v. Finite Filter Co., 212 U.S.P.Q. (BNA) 210 (T.T.A.B. 1981) (absent evidence as to opposer’s commercial activities, standing found based on pleadings claiming parties’ goods were in competition); Mears v. Montgomery, No. 02 Civ. 0407 (BSJ)(MHD), 2004 U.S. Dist. LEXIS 7836, at *45 (S.D.N.Y. May 5, 2004) (competitor has standing); Binney & Smith, Inc. v. Magic Marker Indus., Inc., 222 U.S.P.Q. 1003, 1984 WL 63077, at *7 (T.T.A.B. 1984) (where challenger was competitor with present or prospective to use disputed mark, “there can be no question” as to standing); see also Sheetz of Del., Inc. v. Doctor’s Assocs. Inc., 108 USPQ2d 1341, 1350 (TTAB 2013) (same). Gucci simply ignores the fact that because it pleaded Forever 21 is a competitor, Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 14 of 27 Page ID #:1465 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT Forever 21 has standing to challenge Gucci’s registrations and applications. 2. Forever 21 Has Standing Because It Claims An Equal Right To Use The Claimed “Mark” When a party like Forever 21 challenges a registration on the grounds that the claimed mark is not valid and is not subject to exclusive use by a single party, and claims an equal right to use the challenged mark, it has standing. Federal Glass Co. v. Corning Glass Works, 162 U.S.P.Q. 279 (T.T.A.B. 1969); De Walt, Inc. v. Magna Power Tool Corp., 289 F.2d 656, 661 (C.C.P.A. 1961); see also Int’l Order of Job’s Daughters v. Lindeburg & Co., 727 F.2d 1087, 1091-92 (Fed. Cir. 1984); McCarthy § 20:50. Here, the “mark” is a blue and red stripe design. Forever 21 claims an equal right to use that design as ornamental and decorative features on clothing, accessories, and other similar or related items. (2d Am. Compl., Dkt. No. 47, ¶ 140- 143, 158; see also id., ¶¶ 167, 170). This is all that is required for standing. A party who challenges a registration can “believe[] that he or she will be damaged” as set forth in the Lanham Act’s standing requirement in 15 U.S.C. §§ 1063-64, because the evidentiary value of a registration (such as the validity of the mark) is “a potent weapon in litigation.” De Walt, Inc. v. Magna Power Tool Corp., 289 F.2d 656, 662 (C.C.P.A. 1961). Thus, to have standing, all an opposer must do is “convince the Patent Office, or the courts, that the granting of the registration would be contrary to [the Lanham Act]” and would give the registrant an evidentiary advantage it should not have. Otto Roth & Co. v. Universal Foods Corp., 640 F.2d 1317, 1319-20 (C.C.P.A. 1981); see also McCormick & Co. v. Summers, 354 F.2d 668 (C.C.P.A. 1966) (challenger’s right to use disputed mark is “certainly … placed in jeopardy” by a registration with its “attendant presumptions of validity, ownership, and the right to exclusive use.”); Jewelers Vigilance Committee, Inc. v. Ullenberg Corp., 823 F.2d 490 (Fed. Cir. 1987); Meehanite Metal Corp. v. Int’l Nickel Co., Inc., 262 F.2d 806, 807-08 (C.C.P.A. 1959) (no actual use whatsoever – regardless of classification of goods – is necessary to Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 15 of 27 Page ID #:1466 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT establish that challenger “would probably be damaged by the registration”). Granting and maintaining the registrations at issue here would be contrary to the Lanham Act because the statute permits only those words, symbols or designs that denote a single source of product to be registered as a trademark, 15 U.S.C. §§ 1051, 1127. The allegations in the Second Amended Complaint demonstrate that the blue-red-blue design does not designate a single source and therefore is not a trademark. (2d. Am. Compl., Dkt. No. 47, ¶¶ 9-138.) Forever 21 claims an equal right to use these designs and therefore has standing. C. Forever 21 Has Standing Whether or Not Gucci “Asserted” All of Its Registrations and Applications, and Gucci Did Assert Them All Gucci’s claim that Forever 21 lacks standing because Gucci has not “asserted” certain of its registrations or applications against Forever 21 is a fantasy. 1. Gucci Asserted All of Its Registrations and Applications Gucci asserted all of its trademark registrations, trademark applications, and claimed trademark rights in blue-red-blue stripes against Forever 21. As explained above, in Gucci’s 2016 and 2017 cease and desist letters, Gucci asserted that it is the “exclusive owner” of the blue-red-blue stripe design, which Gucci stated is “iconic” and “is the subject of trademark registrations and applications worldwide,” and which Gucci defined broadly as “Gucci Intellectual Property” that the letter contends Forever 21 is infringing. Gucci identified its trademark registrations for blue-red-blue stripe designs, namely, U.S. Reg. Nos. 1,520,796; 4,563,151; 1,495,863 and 1,511,774. Also, in its counterclaim, Gucci alleges that the blue-red-blue stripe “is the subject of several registrations.” (Countercl., Dkt. No. 22, ¶ 31.) Gucci specifically identifies the foregoing registrations (attaching them as an exhibit) as well as asserts that it “continues to prosecute additional trademark applications” for blue-red-blue stripes. (Id., ¶¶ 37-41; see also Ex. F to Countercl., Dkt. No. 22-6.). The facts show that Gucci asserted its multiple registrations and applications for blue-red-blue. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 16 of 27 Page ID #:1467 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT 2. A Challenger Need Not Be Accused of Infringement, Let Alone Have Any Particular Registration or Application Asserted Against It to Have Standing Whether Gucci “asserted” any specific registrations is irrelevant. There is absolutely no requirement that a challenger receive a claim of infringement, let alone that any particular registration be asserted against a challenger, for that challenger to have standing to cancel or prevent a registration from issuing. Gucci does not cite a single case for the proposition that Forever 21 is limited to challenging only a registration that is “asserted” against it. A party does not have to be accused of infringement to challenge a registration or application, let alone have any particular registration be specifically asserted against it to challenge that registration. As explained above, standing requires a challenger to be either a competitor, or a party claiming an equal right to use a mark. According to facts pleaded by Gucci in its counterclaim, Forever 21 is a competitor. According to facts pleaded by Forever 21 in its complaint, Forever 21 claims an equal right to use the mark. Either way, Forever 21 has standing. See supra, section IV(B)(1). The fact that Gucci has sought multiple registrations on the same mark in different classes of goods and different products does not prevent Forever 21 from challenging all of them; they all cover the same claimed mark. Registrations do not create trademark rights. Trademark rights derive only from prior, continuous, and exclusive use of a mark. Tillamook County Creamery Ass’n v. Tillamook Cheese and Dairy Ass’n, 345 F.2d 158, 160 (9th Cir. 1965). Trademark registrations merely provide certain (rebuttable or other) presumptions about the validity of the mark. Glow Indus. v. Lopez, 252 F. Supp. 2d 962, 976 (C.D. Cal. 2002). Trademarks can be the subject of infringement actions, whether or not they are registered. Infringement of registered marks can be asserted under 15 U.S.C. § 1114; infringement of marks that are not registered (referred to as common law trademark rights) can be asserted under 15 U.S.C. § 1125(a). Gucci has not cited a single case Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 17 of 27 Page ID #:1468 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT for the made-up and nonsensical proposition that party challenging a registration must have received a claim from the trademark owner, let alone that such a challenge must be limited only to the specific registrations “asserted” by it. Moreover, Gucci’s standing argument is inconsistent with its counterclaim. In its first claim for relief, Gucci contends that Forever 21’s sale of clothing infringes the ’796 Registration for the blue-red-blue stripe in class 14 for “[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].” Gucci is at best hypocritical in contending that Forever 21 has no right to challenge registrations and applications for product categories including “footwear,” “scarves,” “sunglasses,” “backpacks,” “gym bags,” and “baby blankets,” while at the same time reserving for itself the right to assert a registration for the mark for use on “precious metal” in connection with Forever 21’s sale of clothing. (Countercl., Dkt. No. 22, ¶ 53-59.) Gucci should not permitted to take such an inconsistent position in asserting a “precious metal” registration against the sale of clothes while simultaneously arguing that Forever 21 cannot seek to prohibit the issuance of registrations for goods more similar in nature to what Forever 21 is accused of selling. D. A Challenger Need Not Sell Every Product Sold By the Registrant or Applicant Gucci contends that Forever 21 has not alleged facts suggesting that it has made or sold goods covered by all of the blue-red-blue registrations and applications, or “any real intent to do so.” (Motion, Dkt. No. 48, pp. 10-11.) Gucci cites to no authority. A party has standing when it is a competitor that claims an equal right to use a mark. Forever 21 has standing. See supra, section IV(B)(1). E. Cases Cited By Gucci Do Not Apply Gucci cites to Sunrich Food Grp., Inc. v. Pac. Foods of Oregon, Inc., 233 F. Supp. 2d 1273, 1277 (D. Or. 2002) and Ketab Corp. v. Mesriani & Assocs., No. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 18 of 27 Page ID #:1469 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT 214CV07241RSWLMRW, 2015 WL 8022874, at *7 (C.D. Cal. Dec. 4, 2015) in support of its argument that Forever 21 does not have standing. (Motion, Dkt. No. 48, p. 9.) Neither of these cases apply. Sunrich was not a trademark case; rather, it alleged breach of contract and related torts. Id. at 1279. The plaintiff in Sunrich was a supplier that contracted with the defendant, a manufacturer, to make a soy beverage, which the plaintiff-supplier sold to third-party retailer, Trader Joe’s. The defendant used its proprietary formula for the product and the plaintiff used its trademark, SOY-UM and RICE-UM on the packaging. The supplier sued the manufacturer for breaching their contract. The manufacturer counter-claimed with a trademark cancellation claim. The court granted summary judgment on the cancellation claim on the grounds that the manufacturer lacked standing to cancel, as it was not a party to a co-brand agreement between the plaintiff-trademark owner and Trader Joe’s and there was “no dispute over the ownership or the right to use the SOY-UM and RICE-UM marks.” Id. at 1278. Unlike the instant case, the challenger in Sunrich was not a competitor and did not allege it had an equal right to use the marks at issue. Here, there is a trademark infringement claim, Gucci contends Forever 21 is a competitor and Forever 21 alleges an equal right to use the claimed mark. These facts give Forever 21 standing and make Sunrich inapplicable. The Ketab decision cited by Gucci refers to an earlier decision issued in the same case, which addressed the standing issue more fully. Ketab Corp. v. Limonadi, 2015 WL 5096417, at *4 (C.D. Cal. Aug. 28, 2015). The earlier case explains that the challenger sought to cancel certain registrations but did not have standing because it failed to allege that the challenged marks were invalid. Specifically, the two parties in that case published business directories targeted to the Iranian community in Southern California. The challenger sought to cancel three registrations: an Arabian design mark that translates to “Iranian pocket yellow pages” (Registration No. 3,337,567); an “08” mark (Registration No. 3,271,704); Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 19 of 27 Page ID #:1470 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT and a design mark that consists only of an image of what appears to be an open book (Registration No. 3,246,367). But, unlike here, the challenger did not allege that those marks were unprotectable because they failed to distinguish source. Instead, the challenger alleged facts showing that two different marks were invalid: one mark was “Iranian Information Center” and the other was “Yellow Page-Iranian.” But, strangely, the challenger did not seek to cancel the registrations for “Iranian Information Center” or “Yellow Page – Iranian.” The court found standing was lacking to challenge the three registrations that were at issue because the challenger failed to allege facts showing that those three marks failed to denote source. Here, Forever 21 is challenging Gucci’s registrations and applications for the exact same mark, the blue-red-blue stripe design. Forever 21 has alleged that the blue-red-blue stripe design does not function as a trademark, and is not registrable. Forever 21 made an extremely robust showing in support of that allegation by adding 129 paragraphs to the First and Second Amended Complaints. Ketab is wholly distinguishable and fails to support Gucci’s position. Gucci also appears to conflate standing to challenge a registration or application under the Lanham Act with standing to bring a suit in federal court based on a “case or controversy” between the parties as required by Article III of the U.S. Constitution. Gucci cites cases that address the constitutional standing requirement under Article III. (Motion, p. 9 (citing MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) and Hokto Kinoko Co. v. Concord Farms, Inc., 810 F. Supp. 2d 1013 (C.D. Cal. 2011)). Neither apply here. MedImmune involved a patent license in which the court stated that “The continuation of royalty payments makes what would otherwise be an imminent threat at least remote, if not nonexistent. As long as those payments are made, there is no risk that respondents will seek to enjoin petition’s sales. Petitioner’s own acts, in other words, eliminate the imminent threat of harm.” MedImmune, supra at 128. Nevertheless, the court went on to hold that the plaintiff had standing. MedImmune Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 20 of 27 Page ID #:1471 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT is not case about Lanham Act standing and therefore not applicable here. Hokto Kinoko is a Lanham Act case in which the defendant, Concord, asserted a counterclaim against third party defendant, Hokuto Corporation, Ltd. for cancellation of its trademark registrations. The court determined that Concord lacked standing because Hokuto Corporation, Ltd. had previously assigned the trademarks to another entity, plaintiff Hokto Kinoko Company. The court held that the “declaratory relief claim for trademark cancellation should proceed against Hokto Kinoko, the party who currently owns the trademarks at issue.” Id. at 1034. The instant case previously presented a similar issue that the parties resolved between themselves. Forever 21 originally asserted claims against Guccio Gucci S.p.A. because that Italian entity was identified in Gucci’s cease and desist letters. After counsel for Gucci explained that this Italian entity does not own the trademarks at issue, the parties stipulated to the dismissal of that entity, consistent with the holding of Hokto Kinoko. (See Dkt. Nos. 39-40). Hokto Kinoko does not apply to the issues presented in the instant motion, since Forever 21’s standing derives from its status a competitor and its claim to be equally entitled to use the claimed mark, and, unlike Hokto Kinoto, there is no present dispute regarding which of the Gucci-affiliated parties owns the trademarks sought to be cancelled. The stripe design that Gucci claims as a trademark does not denote a single source of product and therefore does not function as a trademark. Since Forever 21 is a competitor who claims an equal right to use the mark, it has standing to challenge Gucci’s registrations and applications. V. THIS COURT HAS AUTHORITY TO REFUSE REGISTRATION OF ALL OF GUCCI’S PENDING TRADEMARK APPLICATIONS Gucci does not have a registration for the blue-red-blue stripe for use on clothing. Gucci has a pending application to register the blue-red-blue stripe for use on clothing (U.S. App. Ser. No. 87/206,686), which Forever 21 seeks to prevent from registering in its Third Cause of Action. Gucci argues that it can assert in this Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 21 of 27 Page ID #:1472 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) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT action the (inapplicable) ‘796 Registration (for use on “precious metal” products) against Forever 21’s sale of clothing. In the same breath, Gucci argues that this Court would not have the authority to prohibit the registration of any of Gucci’s pending applications for use of the blue-red-blue stripe on clothing and similar accessories, even if it is determined in this action that the blue-red-blue stripe does not denote a single source of product. Gucci’s incongruous positions are wrong. A. Courts Routinely Exercise Their Authority to Deny Applications 15 U.S.C. § 1119 broadly states, “In any action involving a registered mark the court may determine the right to registration, … and otherwise rectify the register.” Id. “As provided by 15 U.S.C. § 1119, courts have the power to cancel a registered trademark, as well as ‘any pending trademark applications relating to the registered mark.’” Belstone Capital, LLC v. Bellstone Partners, LLC, No. 2:16-cv- 01124-KJM-GGH, 2017 U.S. Dist. LEXIS 46015, at *9 (E.D. Cal. Mar. 27, 2017). Belstone has similar facts. There, plaintiff sought to cancel defendant’s registration for “Bellstone” in class 36 and a pending application, also for “Bellstone” in class 36 and in other classes. It based the challenge on fraud on the USPTO. The district court stated it had the power to determine whether the application should register but determined plaintiff failed to plead the facts constituting fraud with particularity. Belstone cites Airs Fragrance Prods. v. Clover Gifts, Inc., 395 Fed. App’x. 482, 485 (9th Cir. 2010). There, the district court found neither party was the rightful owner of the marks and therefore ordered the cancellation of registered marks and further ordered both parties to withdraw each of their pending trademark applications. The Ninth Circuit held that this was not an abuse of discretion because § 1119 authorizes the district court to “rectify the [USPTO] register.” “District courts have broad authority to review trademark decisions by the U.S. Patent and Trademark Office (PTO), both before and after the registration of a mark” and “may authorize the PTO to register or to deny registration to a pending mark.” Blue Ath., Inc. v. Nordstrom, Inc., No. 10-cv-036-SM, 2010 U.S. Dist. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 22 of 27 Page ID #:1473 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 -17- Case No. 2:17−cv−4706 SJO (Ex) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT LEXIS 72615, at *17 (D.N.H. July 19, 2010) (quoting Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 12-13 (D.C. Cir. 2008)). It is well settled that the federal courts have concurrent authority with the USPTO to determine the fate of a pending trademark application and whether it should be registered. See, e.g., Durox Co. v. Duron Paint Mfg. Co., 320 F.2d 882, 886 (4th Cir. 1963) (“15 U.S.C. § 1119 gives the courts parallel jurisdiction over the right to registration of trade-marks”); Patsy’s Italian Rest., Inc. v. Banas, 508 F. Supp. 2d 194, 207 (E.D.N.Y. 2007) (federal court hearing a case involving a registered mark has the power to determine whether an application should mature to registration under 15 U.S.C. § 1119 and “the federal court’s decision regarding registration is binding upon the Commissioner of Patents and Trademarks and the administrative tribunals of the PTO.”); Std. Pressed Steel Co. v. Midwest Chrome Process Co., 418 F. Supp. 485, 493 (N.D. 1976) (the court has parallel jurisdiction with the patent office to determine registrability). Ample other courts have relied on 15 U.S.C. § 1119 to deny trademark applications. E.g., Lyons v. Am. Coll. of Veterinary Sports Med. & Rehab., Inc., 997 F. Supp. 2d 92, 115-16 (D. Mass. 2014) (ordering PTO to reject trademark application based on “this Court’s authority under Section 1119”); see also CSL Silicones Inc. v. Midsun Grp. Inc., 170 F. Supp. 3d 304, 318 (D. Conn. 2016) (§ 1119 provides a district court with the power to order a refusal of a trademark application); Stiefel Labs., Inc. v. Galenium USA, Ltd. Liab. Co., No. 05-23108 CIV- LENARD/KLEIN, 2006 U.S. Dist. LEXIS 43970, at *8 (S.D. Fla. May 2, 2006) (ordering PTO to refuse registration of defendant’s trademark application); Wind Turbine Indus. Corp. v. Jacobs Wind Elec. Co., No. 09-36 (MJD/SRN), 2010 U.S. Dist. LEXIS 121372, at *33 (D. Minn. Nov. 15, 2010) (“Because the ‘473 Application [to register “JACOBS”] is tied directly to an existing registration [containing the word “JACOBS”], this Court finds that § 1119 provides it the requisite authority to grant [plaintiff’s] request to order the PTO to refuse the ‘473 Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 23 of 27 Page ID #:1474 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 -18- Case No. 2:17−cv−4706 SJO (Ex) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT Application.”) (citing Avon Shoe Co. v. David Crystal, Inc., 279 F.2d 607, 614-15 (2d Cir. 1960), cert. denied, 364 U.S. 909 (1960) (court has authority to review a trademark application that is tied directly to an existing registration); Durox Co. v. Duron Paint Mfg. Co., Inc., 320 F.2d 882, 886-87 (4th Cir. 1963) (court has jurisdiction pursuant to 15 U.S.C. § 1119 to deny a trademark application where a registered mark is involved in the application determination); Forschner Grp., Inc. v. B-Line A.G., 943 F. Supp. 287, 289-90 (S.D.N.Y. 1996) (court has jurisdiction to determine whether an application should be proceed to registration)).3 Gucci’s attempt to distinguish the Avon Shoe and Forschner Group cases (Motion, Dkt. No. 48, p. 12) is unpersuasive. In those cases and others, courts have held that § 1119 “should be read broadly” to permit a district court judge to determine whether a trademark application should mature to registration here, as is the case here, the application concerns a trademark that is the subject of one or more existing registrations.4 3 Issues of non-infringement, invalidity and registrability should all be decided in the district court action, as this “arms the court with the power to update the federal trademark register to account for a mark’s actual legal status (or lack thereof) after it has been adjudicated, thereby reducing the potential for future uncertainty over the rights in a particular mark.” Central Mfg., Inc. v. Brett, 492 F.3d 876, 883 (7th Cir. 2007). See also Simmonds Aerocessories, Ltd. v. Elastic Stop Nut Corp., 257 F.2d 485, 491 (3d Cir. 1958); Gilson on Trademarks § 11.03(2)(a)(vi)(citing efficiency), 4 This interpretation is consistent with the district court’s power to review an opposition or cancellation proceeding de novo based on a timely appeal by a party to the proceeding pursuant to 15 U.S.C. § 1071(b). 15 U.S.C. § 1071(b) broadly states that a “court may adjudge that an applicant is entitled to a registration upon the application involved, that a registration involved should be canceled, or such other matter as the issues in the proceeding require, as the facts in the case may appear.” Id. (emphasis added). Thus, if a party to an opposition proceeding appeals the TTAB’s decision on registrability to a federal district court (that has independent grounds for jurisdiction), under the express statutory language of § 1071(b), the district court would have authority to grant or deny the application. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 24 of 27 Page ID #:1475 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 -19- Case No. 2:17−cv−4706 SJO (Ex) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT B. Gucci’s Cases Do Not Apply Gucci cites cases in which no party had a registration on any mark, making 15 U.S.C. § 1119 plainly inapplicable. Farm & Trade, Inc. v. Farmtrade, LLC, No. 2:14-CV-00415-MCE, 2014 WL 1665146, at *7 (E.D. Cal. Apr. 23, 2014) (action did not involve registered mark; no party had a registration); Hostzilla, Ltd. v. Hostzilla, Inc., No. CV 12-10616 DSF (EX), 2013 WL 12142839, at *2 & n.4 (C.D. Cal. Feb. 25, 2013) (action was common law infringement case; not Lanham Act case involving registered mark); In re Falchi, No. 97 B 43080 (JLG), 1998 WL 274679, at *7 (Bankr. S.D.N.Y. May 27, 1998) (action was for breach of contract and fraud, not Lanham Act, and did not involve registered mark). As the cases cited above by Forever 21 show, as long as a registration is involved in the action, which is the case at least with regard to Gucci’s U.S. Reg. No. 1,520,796, as well as all of the other three other registrations pleaded Gucci’s counterclaims on file in this action for the same blue-red-blue marks (Dkt. 22), the district court has the power to deny the pending applications for the same mark pursuant to § 1119. Gucci also cites Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869 (3d Cir. 1992). No pending trademark application was even involved in that case, making it inapplicable. The plaintiff alleged a claim for false advertising under the Lanham Act and sought cancellation of a registration based on the defendant’s failure to control the quality of services rendered under the marks. Id. The district court dismissed the false advertising claim for failure to state a claim. The district court then dismissed the cancellation claim for lack of jurisdiction because 15 U.S.C. § 1119 is a remedial provision that does not provide an independent basis for federal court jurisdiction. Id. at 874. Here, the independent basis permitting the court to determine the fate of the pending applications challenged by Forever 21 are the registrations issued to Gucci for the same mark, which Gucci is asserting against Forever 21, which makes this a case “involving a registered mark” under 15 U.S.C. § 1119, thereby permitting this court to determine Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 25 of 27 Page ID #:1476 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 -20- Case No. 2:17−cv−4706 SJO (Ex) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT whether the pending applications for the same marks can mature to registration. See cases cited supra in Section V A. The court’s opinion in Silver Textile, Inc. v. D Lux Brands, LLC, No. CV1209023MWFPLAX, 2014 WL 12594456 (C.D. Cal. May 12, 2014) was a ruling on a motion for default judgment. There, the court indicated it had authority to cancel a trademark assignment that had been recorded or filed with the USPTO. But the court indicated that it “does not appear to have the authority to cancel” the trademark application at issue, based only on one case, Whitney Info. Network, Inc. v. Gagnon, 353 F. Supp. 2d 1208, 1211 (M.D. Fla. 2005), in which no registered mark was involved. The lack of analysis in Silver Textile and the distinguishing facts of Whitney are insufficient to support Gucci’s position or outweigh the significant body of caselaw cited supra in Section V-A. Finally, Gucci’s assertion that the Court need not consider Forever 21’s cases because Forever 21 is effectively seeking a “motion for reconsideration” is baseless. There can be no “reconsideration” of an issue that was never previously considered. Moreover, the Court granted Forever 21 leave to amend the complaint, which Forever 21 did. The additional allegations pleaded support all of Forever 21’s clams. VI. CONCLUSION For the foregoing reasons, Gucci’s Motion should be denied in its entirety. Dated: December 22, 2017 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP By /s/ Laura L. Chapman SEONG KIM KENT RAYGOR LAURA L. CHAPMAN TONI QIU Attorneys for Plaintiff and Counter-Defendant FOREVER 21, INC. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 26 of 27 Page ID #:1477 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 -21- Case No. 2:17−cv−4706 SJO (Ex) SMRH:484954982.5 FOREVER 21, INC.’S OPPOSITION TO GUCCI AMERICA, INC.’S MOTION FOR PARTIAL DISMISSAL OF THE SECOND AMENDED COMPLAINT CERTIFICATE OF SERVICE I hereby certify that I electronically filed the document(s) with the Clerk of the Court by using the CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the CM/ECF system. Participants in the case who are not registered CM/ECF users will be served by mail or by other means permitted by the court rules. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Dated: December 22, 2017 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP By /s/ Laura L. Chapman LAURA L. CHAPMAN Attorneys for Plaintiff and Counter-Defendant FOREVER 21, INC. Case 2:17-cv-04706-SJO-E Document 59 Filed 12/22/17 Page 27 of 27 Page ID #:1478