Pixels.com, LLC v. Instagram, LLC

RESPONSE

N.D. Cal.November 30, 2015

PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 VIJAY K. TOKE (CA Bar No. 215079) (vijay@cobaltlaw.com) MATTHEW S. SLEVIN (CA Bar No. 287968) (matt@cobaltlaw.com) COBALT LLP 918 Parker Street, Bldg. A21 Berkeley, CA 94710 Telephone: (510) 841-9800 Facsimile: (510) 295-2401 JOEL T. BERES (CA Bar No. 125890) (jberes@stites.com) BRUCE B. PAUL (to be admitted pro hac vice) (bpaul@stites.com) DAVID B. OWSLEY II (to be admitted pro hac vice) (dowsley@stites.com) STITES & HARBISON PLLC 400 West Market Street, Suite 1800 Louisville, KY 40202-3352 Telephone: (502) 587-3400 Facsimile: (502) 587-6391 MARI-ELISE GATES (mgates@stites.com) STITES & HARBISON PLLC 1800 Diagonal Road, Suite 325 Alexandria, VA 22314 Telephone: (703) 837-3932 Facsimile: (703) 518-2952 Attorneys for Plaintiff PIXELS.COM, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION PIXELS.COM, LLC, an Illinois limited liability company, Plaintiff, v. INSTAGRAM, LLC, a Delaware limited liability company, Defendant. Case No.: 3:15-cv-03610-VC PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 1 of 21 TABLE OF CONTENTS Page - i - PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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. INTRODUCTION .................................................................................................................. 1 II. BACKGROUND .................................................................................................................... 2 III. LEGAL STANDARD ............................................................................................................. 4 IV. ARGUMENT .......................................................................................................................... 4 A. Pixels States a Proper Antitrust Claim. ....................................................................... 4 1. Instagram’s Fraudulent and Intentional Misrepresentations to the USPTO and TTAB Negate Noerr-Pennington Immunity. ............................. 5 2. Instagram has Engaged in a Pattern of Sham Litigation. ................................ 7 a. Instagram Has Filed Numerous Notices of Oppositions for Purposes of Harassing Competitors and Potential Competitors ......... 7 b. Instagram’s Own Actions Confirm that It Believes Pixels is a Competitor. ......................................................................................... 8 3. Pixels Alleges a Plausible Antitrust Theory. .................................................. 9 B. Pixels’s California Unfair Competition Claim is Viable. ......................................... 12 C. Pixels’s Claims for Declaratory Relief on Equitable Grounds are Proper. ............... 13 V. CONCLUSION ..................................................................................................................... 15 Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 2 of 21 TABLE OF AUTHORITIES Page - ii - PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 Cases Activision Publ’g, Inc. v. Gibson Guitar Corp., 2009 U.S. Dist. Lexis 21931 (C.D. Cal. Feb. 26, 2009) ............................................................................................................... 14 Allan Block Corp. v. Cnty. Materials Corp., 512 F.3d 912 (7th Cir. 2008) ...................................... 14 Allied Tube & Conduit Corp., v. Indian Head, Inc., 486 U.S. 492 (1988) ............................................ 5 Apple Inc. v. Psystar Corp., 2009 WL 303046 (N.D. Cal. 2009) ...................................................... 14 Apple Inc. v. Samsung Elec. Co., 2012 WL 1672493 (N.D. Cal. 2012) ........................................ 9, 10 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .......................................................................................... 4, 10 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .......................................................................... 4, 10 Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297 (3d Cir. 2007) ................................................... 11 Broadcom v. Qualcomm, 501 F.3d 297 (3d Cir. 2007) ........................................................................ 2 Cal. Motor Transp. v. Trucking Unlimited, 404 U.S. 508 (1972) ............................................... 5, 7, 8 Cel-Tech Commcn’s, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163 (1999) ...................................... 12 Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992 (9th Cir. 2010) ....................................................... 4 Deniece Design, LLC v. Braun, 953 F. Supp. 2d 765 (S.D. Tex. June 19, 2013) ............................. 14 Donald F. Duncan, Inc. v. Royal Tops Mfg. Co., 381 F.2d 879 (7th Cir. 1967) .................................... 5 Dunn Computer Corp. v. Loudcloud, Inc., 133 F. Supp. 2d 823 (E.D. Va. January 10, 2001) ... 13, 14 Edible Arrangements Int’l, LLC v. 1-800-Flowers.com, Inc., No. 3:14-cv-01744 (D. Conn.) ........... 7 Gen Physio., Inc. v. Sybaritic, Inc., 2006 U.S. Dist. LEXIS 3796 (E.D. Miss. Feb. 1, 2006) ............. 7 Harris v. Amgen, Inc., 738 F.3d 1026 (9th Cir. 2013) ......................................................................... 4 In re Buspirone Patent Litig., 185 F. Supp. 2d 363 (S.D.N.Y. 2002) ................................................. 6 In re Capacitors Antitrust Litig., 2015 WL 3398199 (N.D. Cal. May 26, 2015) ................................ 9 Kalo Inoculant v. Funk Bros. Seed, 161 F.2d 981 (7th Cir. 1947) .................................................... 15 Kottle v. N.W. Kidney Ctrs., 146 F.3d 1056 (9th Cir. 1998) ............................................................... 7 Livingston Downs Racing v. Jefferson Downs, 192 F. Supp. 2d 519 (M.D. La. Aug. 13, 2001) ........ 7 Lopez v. Smith, 203 F.3d 1122 (9th Cir. 2000) .............................................................................. 4, 12 Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 3 of 21 TABLE OF AUTHORITIES Page - iii - PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 Mentor Graphics Corp. v. Quickturn Design Sys., 2003 U.S. Dist. LEXIS 16194 (N.D. Cal. July 24, 2003) ............................................................................................................... 14 N.W. Corp. v. Gabriel Mfg. Co., Inc., 1998 U.S. Dist. LEXIS 12763 (N.D. Ill. Aug. 14, 1998) ........ 7 Nu Sci. Corp. v. eFasteam.com, 2004 U.S. Dist. LEXIS 17763 (N.D. Cal. Aug. 24, 2004) ............. 13 Practice Mgmt. Info. v. Am. Med. Ass’n, 121 F.3d 516 (9th Cir.1997) ............................................. 14 Public Serv. Comm’n v. Wycoff Co., 344 U.S. 237 (1952) ................................................................ 14 Rock River Commc’ns, Inc. v. Universal Musical Grp., 730 F.3d 1060 (9th Cir. 2013) ..................... 8 Seaboard Int’l v. Cameron Int’l, 2013 U.S. Dist. LEXIS 106784 (E.D. Cal. July 30, 2013) ........... 14 Steckman v. Hart Brewing, Inc., 143 F.3d 1293 (9th Cir. 1998) ....................................................... 12 T.N. Dickson Co. v. LL Corp., 1985 WL 14175 (D. Conn. Apr. 30, 1985) ........................................... 5 Toyo Tire & Rubber Co. v. CIA Wheel Grp., 2015 U.S. Dist. LEXIS 98939 (C.D. Cal. July 8, 2015) ................................................................................................................. 15 USS-POSCO Indus. v. Contra Costa County Bldg. & Constr. Trades Council, 31 F.3d 800 (9th Cir. 1994) .................................................................................................................................. 7 Walker Process Equip. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965) ...................................... 5 Statutes 15 U.S.C. § 1051 .................................................................................................................................. 5 California Business & Professions Code § 17200 ....................................................................... 12, 13 Other 1A Callman § 4.53, at 3 ....................................................................................................................... 7 Fed. R. Civ. P. 12(b)(6).................................................................................................................... 4, 9 Fed. R. Civ. P. 15 ............................................................................................................................... 12 Fed. R. Civ. P. 15(a) .......................................................................................................................... 12 Fed. R. Civ. P. 8(a) ............................................................................................................................ 10 Hovenkamp et al., IP & Antitrust §11.3b n.128 .................................................................................. 5 Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 4 of 21 TABLE OF AUTHORITIES Page - iv - PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 William E. Ridgway, Revitalizing the Doctrine of Trademark Misuse, 21 Berkeley Tech. L.J. 1547 (2006) ............................................................................................................................................. 13 Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 5 of 21 1 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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. INTRODUCTION Pixels.com, LLC (“Pixels”) filed this lawsuit to challenge a pattern of trademark misuse and predatory acts whereby Instagram LLC (“Instagram”) has sought to leverage its recently acquired market dominance to clear the field of competition for services ancillary to Instagram’s social media platform. In June 2012, Pixels launched www.instaprints.com, which allowed users to purchase and print digital photos, including from Instagram users. When it launched the site, Pixels received approval from Instagram regarding Pixels’s business model and the use of the INSTAPRINTS mark. First Am. Compl., Docket Entry 28, (“FAC”) ¶ 15-18. At the time, Instagram’s Terms of Use stated “[w]hile you cannot use the word ‘Instagram’ or ‘IG’ in your product’s name, it’s ok to use one (but not both) of the following: ‘Insta’ or ‘gram.’” Id. ¶ 16. Pixels followed Instagram’s explicit guidance when launching the Instaprints business and investing substantial resources in the process, including an application for INSTAPRINTS. Id. ¶ 35. After the launch of instaprints.com in August 2012, the FTC permitted the merger of Instagram and Facebook, which created the most dominant entity in the U.S. market for online social media and file sharing. See Ex. A to Request for Judicial Notice (“RJN”). Following the merger, Instagram reversed course and systematically began to attack the ancillary businesses it had originally approved and supported. In February 2014, Instagram filed a Notice of Opposition in the USPTO to Pixels’s INSTAPRINTS mark and, in September 2015, terminated the credentials for the Instaprints mobile device application, thus restricting access to Instagram user content. Id. ¶27, 38. Instagram took similar action against numerous other entities. Id. ¶ 83. In its ongoing filings at the USPTO, Instagram has made multiple false declarations in support of its putative trademark rights. The apparent motive of Instagram’s post-merger activity is to leverage its recently acquired market position through predatory acts and remove competition in ancillary services so that Instagram may lay claim to that business itself. Id. ¶ 45, 52, 83-85, 96-112. It is objectively baseless, and in bad faith, for Instagram to attempt to expand it trademark rights and accuse Pixels of willfully infringing any INSTAGRAM mark when Instagram explicitly approved Pixels’s use of the INSTAPRINTS mark in 2012. Id. ¶ 84, 96-112. Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 6 of 21 2 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 These facts-which are not disputed in Instagram’s motion to dismiss-are more than sufficient to state plausible claims for federal antitrust violations (Count 8), unfair business practices under California law (Count 9), declaratory judgment of trademark misuse (Count 6), and declaratory judgment of acquiescence/laches/estoppel (Count 7). There is no silver bullet defense to these claims. Pixels’s theory of antitrust violation has sound legal support. See, e.g., Broadcom v. Qualcomm, 501 F.3d 297 (3d Cir. 2007) (holding that the defendant’s use of market power in one market segment in an attempt to monopolize additional related markets segments constituted a plausible antitrust claim). And Pixels has made sufficient allegations of “sham” activity, which must be presumed as true at the pleading stage, to overcome Instagram’s assertion of Noerr-Pennington immunity. Finally, it is appropriate for Pixels to use the Declaratory Judgment Act to fend off Instagram’s tangible threats of trademark infringement-indeed, Instagram’s motion confirms that the threat of an infringement claim is real and that a sufficient controversy exists. FAC ¶ 37. The motion to dismiss should be denied. II. BACKGROUND Pixels owns and operates the website www.instaprints.com, which allows individuals to instantaneously upload their artwork for instant purchase by consumers in the form of prints, greeting cards, and more. Id. ¶ 12. Though Pixels’s website allows users to upload any photos to the site, it also uses the Instagram technical platform, or application programming interface (“API”), to allow users to upload photos from their Instagram social media photo sharing platform. Id. ¶ 17. Instagram originally encouraged developers like Pixels to use the Instagram API. Id. ¶ 21. Before launching its website, Pixels requested and received API credentials from Instagram for use in connection with its instaprints.com business. Id. ¶ 17. These API credentials permit one website to securely obtain data from another. Id. To receive API credentials from Instagram, Pixels was required to register with Instagram, which involved providing Instagram with the INSTAPRINTS mark and instaprints.com URL. Id.¶ 18. Instagram provided guidance to those developers seeking API credentials for selecting and adopting marks to use in connection with their apps. Id. ¶ 15. The API “Trademark and Brand Guidelines” published on Instagram’s website in April 2012 stated that Instagram would not object Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 7 of 21 3 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 to third-parties’ use of the component “insta” or the component “gram” in trademarks, but would only take issue with use of the INSTAGRAM composite mark. Id. ¶ 15-16. Pixels consulted these Guidelines before selecting its mark and launching its business in June 2012. Id. ¶ 15. Instagram had actual knowledge and approved use of Pixels’s INSTAPRINTS mark in June 2012. Id. ¶ 17. Yet, in February of 2014, Instagram filed a Notice of Opposition before the USPTO’s Trademark Trial and Appeal Board (“TTAB”), objecting to registration of Pixels’s mark and claiming that Pixels’s use and registration of its INSTAPRINTS mark infringes and dilutes Instagram’s rights in its INSTAGRAM marks. Id. ¶ 2. Instagram’s opposition is in stark contrast to Instagram’s former and long-standing policy of allowing, and even encouraging, apps using the Instagram technical platform to incorporate the descriptive components “insta” or “gram” in their trademarks. Id. ¶ 21. This prior policy reflected Instagram’s understanding of the unprotectable nature of the “insta” and “gram” components. Id. In April 2012, Facebook Inc. purchased Instagram for a purported $1 billion. Id.¶ 34. Wary that this acquisition had the potential to harm competition, the FTC investigated this merger until August 2012. See Ex. B to RJN. At the time of the acquisition, Facebook was the dominant social network with a substantial market share. See Ex. C to RJN. Post-merger, the combined entity has by far the most dominant U.S. market share for social media and file sharing websites. The FTC and Britain’s Office of Fair Trading investigated concerns that the combined entity could exert too much power over the photo sharing market. See Ex. D to RJN. Following the merger, Instagram launched its baseless trademark enforcement campaign over the unprotectable component parts of its composite INSTAGRAM mark to clear its path to enter product and service markets related to its social media platform. Instagram has engaged in a pervasive pattern of predatory conduct and intentional misrepresentations in its dealings with the TTAB during its trademark opposition process. Id. ¶ 99-107. After the Facebook acquisition, Instagram adopted new terms of use that directly contradicted its previous terms of use in force at the time Pixels adopted its INSTAPRINTS mark. Id. ¶ 37. Instagram coupled this diametric shift in its terms of use with an aggressive campaign, engaging in exclusionary behavior through cease and desist letters, API credential terminations, trademark opposition proceedings, and/or filing Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 8 of 21 4 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 extensions of time to initiate opposition proceedings directed to a large number of marks belonging to competitors and potential competitors. Id. ¶ 82. Instagram has opposed registration of over 60 trademarks and filed extensions of time to oppose at least 15 more. Id. ¶ 83. In doing so, Instagram is making intentional misrepresentations to the TTAB, claiming that it owns exclusive rights in the individual descriptive components “insta” and “gram,” when in fact it does not and cannot. Instagram’s campaign of sham litigation is an unlawful attempt to claw back rights to the descriptive components of its INSTAGRAM mark to which it acquiesced through its own policies and conduct. Instagram’s pattern of trademark misuse and anticompetitive behavior is aimed at increasing cost to other technology companies to obtain goodwill that it does not own and clearing the field of competition for services ancillary to Instagram’s social media platform so that Instagram can capture that business itself. III. LEGAL STANDARD In deciding a motion to dismiss under Rule 12(b)(6), courts must accept as true all “well- pleaded factual allegations” in a complaint and must draw all reasonable inferences in the light most favorable to the nonmoving party. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). While judicial review is generally limited to the face of a complaint, courts may properly consider “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Harris v. Amgen, Inc., 738 F.3d 1026, 1035 (9th Cir. 2013) (citation omitted). To withstand a motion to dismiss, a complaint must merely allege sufficient factual matter, accepted as true, “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). If a complaint fails to state a plausible claim, “[a] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citation omitted). IV. ARGUMENT A. Pixels States A Proper Antitrust Claim. Instagram does not challenge Pixels’s factual allegations concerning Instagram’s sham enforcement activity, its change in policy following the Facebook merger, or the resulting harm to Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 9 of 21 5 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 competition in the market for services ancillary to Instagram’s social media platform (such as that offered by instaprints.com). These allegations are sufficient to state a plausible antitrust claim. Instagram argues that its conduct is immunized under the Noerr-Pennington doctrine and that there is insufficient detail in the allegations concerning market power and the relevant market. Pixels has pleaded a plausible antitrust theory and has alleged sufficient facts to negate Instagram’s asserted immunity on two alternative grounds: (1) fraud on the USPTO, and (2) a pattern of sham petitioning. Courts have expressed increasing reluctance to dismiss at the pleading stage antitrust challenges to bad faith enforcement of intellectual property rights, given the fact-intensive inquiry needed to address these claims. See Hovenkamp et al., IP & Antitrust §11.3b n.128. 1. Instagram’s Fraudulent and Intentional Misrepresentations to the USPTO and TTAB Negate Noerr-Pennington Immunity. The Supreme Court holds that Noerr-Pennington will not immunize unethical and deceptive conduct before administrative agencies and adjudicatory bodies. Allied Tube & Conduit Corp., v. Indian Head, Inc., 486 U.S. 492, 499-500 (1988); Cal. Motor Transp. v. Trucking Unlimited, 404 U.S. 508, 512-13 (1972). While Instagram would have this Court believe that the Noerr-Pennington doctrine protects any enforcement efforts by a trademark holder, the doctrine is not without bounds. For example, it will not immunize fraud on the USPTO committed during the application process. See, e.g., Walker Process Equip. v. Food Mach. & Chem. Corp., 382 U.S. 172, 174-75 (1965). Courts routinely recognize an exception to Noerr-Pennington immunity where a party fraudulently procures trademark registrations and then uses them to attack competitors. See Donald F. Duncan, Inc. v. Royal Tops Mfg. Co., 381 F.2d 879, 883 (7th Cir. 1967); T.N. Dickson Co. v. LL Corp., 1985 WL 14175, at *6 (D. Conn. Apr. 30, 1985). Instagram has done precisely that. Instagram committed fraud on the USPTO both in prosecuting marks and in its TTAB enforcement campaign. Instagram has now even gone so far as to file a trademark application with the USPTO for the component “insta.” See Ex. E to the RJN. The filing of that application required Instagram to sign a declaration alleging that, to the best of its knowledge, no other person has the right to use the mark “INSTA” in commerce. See 15 U.S.C. § 1051 (to be considered by the USPTO, an application must include a statement verifying the applicant’s exclusive use of the Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 10 of 21 6 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 applied-for term). Instagram clearly knew that multiple third parties, including Pixels, have been using the term “insta” and other terms containing the component “insta” for years to identify and describe goods and services that can be provided instantaneously. The USPTO would not have passed for publication the application for “INSTA” but for Instagram’s intentionally deceptive declaration to the USPTO that no others had the right to use the term in commerce in connection with the goods included in the application. Furthermore, Instagram has not used the term “insta” separate and apart from the camera design component. This approval of the “INSTA” application plays a material role in Instagram’s scheme to harass potential competitors. It gives unwarranted teeth to Instagram’s false assertion that it owns rights in a descriptive component and gives Instagram a larger arsenal of marks to assert against third parties, including over component parts of its mark that it knows-and has even admitted-are descriptive and unprotectable. The FAC contains detailed allegations about Instagram’s fraud on the TTAB in attempting to enforce trademark rights in descriptive components of its mark to which it has no claim. FAC ¶ 99- 107. Each of these instances of fraudulent activity negates any immunity Instagram may claim. Instagram is not legitimately enforcing its INSTAGRAM mark. Rather, it is fraudulently claiming rights in these unprotectable component parts-which have existed and properly belong in the public domain-for anticompetitive purposes rather than policing for actual infringements of its mark. Given Instagram’s initial terms and conditions, which demonstrate that Instagram knew it could not claim exclusive rights in the descriptive and weak components “insta” and “gram,” Instagram’s claims to the TTAB that it has rights in these terms must be deemed intentional misrepresentations not protected by Noerr-Pennington immunity. See In re Buspirone Patent Litig., 185 F. Supp. 2d 363, 374 (S.D.N.Y. 2002). This is not innocuous enforcement by a rights holder. Pixels’s allegations demonstrate that Instagram intentionally deceived the PTO and the TTAB about owning exclusive rights in non- protectable terms.1 FAC ¶ 99-107. Asserting trademark rights beyond the scope justified under 1 Instagram misconstrues Plaintiff’s trademark misuse defense, arguing that the mere enforcement of trademark rights cannot serve as the basis for an antitrust claim. Defendant’s Memorandum in Support of its Motion to Dismiss, Docket Entry 37 (“Def. Mem.”) p. 11-12. It is not mere enforcement of Instagram’s INSTAGRAM mark about which Plaintiff complains. Instagram improperly seeks to enforce rights it doesn’t have in the component parts of its mark. Courts have Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 11 of 21 7 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 trademark law can violate the antitrust laws when “it leads to unreasonable restraint of trade, or prevents entry of new competitors into the market.” 1A Callman § 4.53, at 3. A bad faith assertion of trademark rights can form the basis of a federal antitrust claim. Gen Physio., Inc. v. Sybaritic, Inc., 2006 U.S. Dist. LEXIS 3796, *9 (E.D. Miss. Feb. 1, 2006) (citing Kellogg v. Nat’l Biscuit, 71 F.2d 662, 665-66 (2nd Cir. 1934) (“[I]f a person having no substantial claim to a trade-mark . . . uses the claim in bad faith to threaten a competitor and customers with lawsuits in order to prevent dealings by the latter in that commodity, they would seem to be steps in an attempt to obtain a monopoly.”)); see N.W. Corp. v. Gabriel Mfg. Co., Inc., 1998 U.S. Dist. LEXIS 12763 (N.D. Ill. Aug. 14, 1998); Edible Arrangements Int’l, LLC v. 1-800-Flowers.com, Inc., No. 3:14-cv-01744 (D. Conn.). Here, Instagram is intentionally misrepresenting the scope of its rights for anticompetitive purposes. Such conduct does not carry immunity. 2. Instagram has Engaged in a Pattern of Sham Litigation. Pixels’s antitrust claim states a legally viable sham claim based on a pattern of repetitive petitioning activities. Noerr-Pennington immunity does not extend to a pattern or practice of serial filings brought without regard to their merit undertaken with a purpose to injure market rivals. See Cal. Motor Transp., 404 U.S. at 513; Kottle v. N.W. Kidney Ctrs., 146 F.3d 1056 (9th Cir. 1998) (relying on Cal. Motor Transp.). In evaluating a pattern claim “the question is not whether any one of them has merit - some may turn out to, just as a matter of chance - but whether they are brought pursuant to a policy of starting legal proceedings without regard to the merits and for the purpose of injuring a market rival.” USS-POSCO Indus. v. Contra Costa Cnty. Bldg. & Constr. Trades Council, 31 F.3d 800, 811 (9th Cir. 1994) (citation omitted). Under this standard, some petitioning activities in the pattern may have objective merit without undermining the sham claim. See Livingston Downs Racing v. Jefferson Downs, 192 F. Supp. 2d 519, 538 (M.D. La. Aug. 13, 2001). a. Instagram Has Filed Numerous Notices of Oppositions for Purposes of Harassing Competitors and Potential Competitors. Pixels has alleged facts in the FAC sufficient to trigger the pattern exception to Noerr- recognized that trademark misuse can serve as the basis of an antitrust claim. See, e.g., N.W. Corp., 1998 U.S. Dist. LEXIS 12763, at *25. Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 12 of 21 8 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 Pennington immunity. The FAC details how Instagram has opposed registration of at least 60 marks and filed extensions of time to oppose at least 15 more. FAC ¶ 83. In doing so, Instagram made intentional misrepresentations to the TTAB, falsely claiming that it owns exclusive rights in the descriptive components “insta” and “gram” when it does not. The FAC contains allegations establishing that, to harass and interfere with its competitors’ and potential competitors’ businesses, Instagram has threatened to bring and has brought opposition proceedings against competitors and potential competitors for doing nothing more than using descriptive and otherwise unprotectable terms necessary to describe their goods and services. Instagram’s litigation campaign is objectively baseless such that no reasonable litigant in Instagram’s position could expect a favorable outcome on the merits. Instagram is using the administrative process of enforcing trademark rights it claims to have as an anticompetitive weapon. This constitutes sham litigation and eliminates any available claim of immunity under the Noerr- Pennington. Instagram is using the opposition process before the TTAB and its dominant position in the social media photo sharing market to pave the way for Instagram to gain quick market share in ancillary markets Instagram has not yet entered. Instagram has filed or threatened to file an opposition proceeding2 against just about every competitor or potential competitor that has dared to use the term “insta” or “gram,” merely for using descriptive terms that these third parties had every right to use. These actual and threatened litigation tactics have placed significant financial strain on third parties and significantly chilled competition. Cal. Motor Transp., 404 U.S. at 511 (pattern of petitions to administrative and judicial bodies could qualify as sham under Noerr-Pennington). b. Instagram’s Own Actions Confirm that It Believes Pixels is a Competitor. Instagram claims that the FAC “does not and cannot allege that [Pixels] competes against Defendant.” Def. Mem. p. 5. Yet, Instagram’s own conduct indicates that it believes that the parties do, or will, compete.3 Instagram has asserted a likelihood of consumer confusion claim in its Notice 2 This Circuit has recognized that a cease and desist letter may qualify as sham petitioning. Rock River Commc’ns, Inc. v. Universal Musical Grp., 730 F.3d 1060, 1068-69 (9th Cir. 2013). 3 For purposes of trademark law, the parties do not compete because Pixels does not offer social media photo sharing services, and consumers will therefore not likely be confused between the two parties’ offerings, especially given the ubiquity and descriptiveness of the shared “insta” component of the parties’ marks. However, Instagram’s own activities have indicated that it believes the parties compete, or at least will, for the purposes of Instagram’s specious enforcement Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 13 of 21 9 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 of Opposition filed with the TTAB, alleging that Pixels’s services are related to Instagram’s goods and services and that the parties operate in the same trade channels. Ex. F to RJN, p. 3-5. Instagram’s own allegations contradict its own statements in its motion to dismiss. In addition to these allegations that Instagram views Pixels as a competitor, Instagram has explicitly represented its own interest in entering into the exact market in which Pixels resides. In its application for a new INSTA-formative mark, INSTASTOP, Instagram has represented to the USPTO its bona fide intent to use that mark for photo and other printing services, photo booths, and advertising. Ex. G to RJN. These statements to the USPTO belie Instagram’s claim in its pending motion to dismiss that the parties do not compete. Instagram actually believes that Pixels’s business is squarely within Instagram’s current, or imminent, business. These public admissions undeniably undercut Instagram’s argument that the parties are not competitors for the purposes of Pixels’s antitrust claims. 3. Pixels Alleges a Plausible Antitrust Theory. Instagram claims that Pixels has pleaded a facially implausible market and has failed to satisfy the market power pleading requirements. Pixels disagrees. The FAC properly alleges that Instagram has market power in its field and that it is using that market power to unlawfully stifle competition by competitors and potential competitors. The FTC investigation of the Facebook/Instagram merger is an indication of plausible market power. Pixels need only provide facts sufficient to establish a claim that is “plausible on its face.” In re Capacitors Antitrust Litig., 2015 WL 3398199, *3 (N.D. Cal. May 26, 2015). Factual allegations in the FAC must only assert a right to relief that is above speculative. Id. *4. Because the validity of the relevant market is typically a “factual element rather than a legal element, alleged markets may survive scrutiny under Rule 12(b)(6).” Apple Inc. v. Samsung Elec. Co., 2012 WL 1672493, *4 (N.D. Cal. 2012). Thus, an antitrust complaint survives a Rule 12(b)(6) motion that attacks the definition of the relevant market campaign over the unprotectable component parts of the INSTAGRAM mark. Such allegations do not contradict Pixels’s previous allegations.Trademark law protects against different injuries than the Sherman Act. For purposes of antitrust violations, Pixels falls within Instagram’s relevant market. Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 14 of 21 10 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 “unless it is apparent from the face of the complaint that the alleged market suffers a fatal legal defect.” Id. It does not. Under Federal Rule of Civil Procedure 8(a), Pixels must plead “enough facts to state a claim to relief that is plausible on its face” with sufficient specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 545 (citation and quotation marks omitted). The Federal Rules do not require “detailed factual allegations,” but require Pixels to simply give Instagram notice of the claims brought against it. Iqbal, 556 U.S. at 678 (citation omitted). The market as alleged encompasses the United States as a whole since mobile apps and websites are accessible anywhere there is an Internet connection. Thus, the geographic scope of the market for the types of goods and services offered by those in the relevant market is clear, even though not explicitly stated in the complaint. However, if the obvious must be stated, Pixels can easily amend to make clear the geographic scope of the relevant market. Instagram further argues that the relevant market is implausibly broad. Instagram overstates the breadth of the defined market. The market as alleged in the FAC derives from Instagram’s own conduct. Instagram’s own broad, baseless litigation campaign establishes that it views numerous far flung companies as competitors. For example, Instagram has filed oppositions against companies that offer social networking for a dating club (Ex. H to RJN), social networking on health-related topics (Ex. I to RJN), sending of electronic greeting cards (Ex. J to RJN), advertising services for others (Ex. K to RJN), and the sharing of prayers (Ex. L to RJN). Instagram, using its market power and vast resources, evaluates each claim it brings before the USPTO, so it must feel that each defendant in an opposition proceeding constitutes competition, since it claims a likelihood of confusion between these applicants’ marks and its own in each of its oppositions. Market definitions that span non-interchangeable technologies can constitute a valid market for antitrust purposes where the alleged anticompetitive acts were aimed at monopolizing such disparate markets through anticompetitive means. See, e.g., Apple Inc., 2012 WL 1672493, *5 (ruling that a market spanning multiple non-interchangeable technologies where the antitrust allegations involved the defendant using its monopoly power to enter into-and thereby combine-these disparate technology markets through anticompetitive means). The market definition itself is plausible and adequately defined. Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 15 of 21 11 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 However, if the Court determines that Instagram’s own definition of its market, as established by its own conduct, is implausibly broad, Pixels requests leave to amend the complaint to allege the relevant market as the social media photo sharing market throughout the United States. Instagram is using its market power there to exert control of ancillary markets (such as the market for printing service that Instaprints provides) by using specious trademark claims as a mechanism of eliminating potential competitors. Such behavior-where a company with market power in its market segment uses that power to more quickly and effectively establish itself in other ancillary or related markets-is actionable under Section 2 of the Sherman Act. See, e.g., Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297 (3d Cir. 2007) (holding that the defendant’s use of its monopoly power in one market segment to monopolize additional related market segments constituted a plausible antitrust claim). This theory comports with common sense and economic realities. There is indeed a reason for Instagram to do what it is doing: to attempt monopolization of markets related to its dominant social media platform. Instagram has represented under oath that it intends to enter into several of these ancillary markets, including Pixels’s, in its pending trademark application for the mark INSTASTOP. See Ex. G to RJN. That application seeks to expand Instagram’s offerings beyond the social media photo sharing market to, among others, printing, photo booths, and advertising. Despite having actively encouraged third parties to adopt marks incorporating the descriptive components of the INSTAGRAM mark, Instagram has now reversed course and engaged in an aggressive campaign, leveraging its market power in the social media photo sharing market to eliminate potential competitors before it enters markets ancillary to its own in an attempt to monopolize those markets. The allegations of market power are implied from the allegations of the size and prominence of Instagram. Indeed, based on Instagram’s anticompetitive actions alleged in this action, federal regulators’ initial reasoning for conducting investigation into the Facebook/Instagram merger were sound. Perhaps that investigation would have come out differently if regulators had had the benefit of knowing the anticompetitive behavior Instagram would enter into within a short timeframe. If the Court concludes, however, that the market power and market definitions supporting Pixels’s antitrust claims have not yet been sufficiently pleaded, Pixels can easily do so and Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 16 of 21 12 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 respectfully requests leave to amend under Rule 15. Under Rule 15(a), leave to amend “shall be freely given when justice so requires,” bearing in mind that “the underlying purpose of Rule 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or technicalities.” Lopez, 203 F.3d at 1127. The Court should not dismiss Pixels’s antitrust claim unless it is clear that amendment could not possibly cure the deficiencies in the FAC. Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1296 (9th Cir. 1998). Simple amendment can alleviate all Instagram’s asserted grievances regarding the level of detail in Pixels’s pleading. B. Pixels’s California Unfair Competition Claim is Viable. California Business & Professions Code § 17200 includes in the definition of unfair competition “any unlawful, unfair or fraudulent business act or practice.” The scope of the statute is broad and encompasses numerous anticompetitive business practices and practices injurious to consumers. Cel-Tech Commcn’s, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 180 (1999). Notably, an act or practice may be actionable as “unfair” under § 17200 even if it is not “unlawful.” Id. An act is “unfair” if the conduct “threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as the violation of the law, or otherwise significantly threatens or harms competition.” Cel-Tech, 20 Cal. 4th at 187 (emphasis added). As explained above, Pixels has stated a valid claim under the Sherman Act. These anti-competitive acts render Instagram liable for violations of § 17200 as well. However, Pixels’s § 17200 claims do not rest solely on antitrust violations by Instagram. As alleged throughout the FAC, Instagram has engaged in trademark misuse based on its acquiescence of any arguable rights it could have in the descriptive, inherently weak component parts of its INSTAGRAM mark. Pixels’s § 17200 claims are therefore not solely predicated on violations of the Sherman Act, but are also grounded in other policies under trademark law. For instance, Pixels has alleged that Instagram “is engaging in other anti-competitive acts with respect to the components “insta” and “gram,” including threatening communications with the specific intent of stifling competition and reserving future business to itself, resulting in actual damages to Pixels and others through expenses incurred to defend against opposition challenges at the USPTO, and potential uncertainty regarding further investment in Pixels’s business and other Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 17 of 21 13 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 businesses associated with the opposed marks.” FAC ¶ 120. These undisputed alleged acts, standing alone, constitute unfair competition under § 17200. Even assuming arguendo that such conduct does not constitute a violation of the Sherman Act per se, it still undermines the policy or spirit of those laws and has harmed Pixels and other similarly-situated third parties, which constitutes a properly pleaded, independent basis for the § 17200 claim. Even if this Court were to dismiss Pixels’s antitrust claims, Pixels’s claim under § 17200 may stand alone. Defendant’s motion to dismiss as to the ninth claim for relief for violation of § 17200 should be denied. C. Pixels’s Claims for Declaratory Relief on Equitable Grounds are Proper. Instagram is correct that trademark misuse, acquiescence, laches, and estoppel are affirmative defenses. However, Instagram misunderstands the nature of Plaintiff’s claim for declaratory judgment on those grounds. Contrary to Instagram’s assertions, Pixels is not asking for relief based on trademark misuse, acquiescence, laches, and estoppel as affirmative claims; instead, Pixels is asking the court for a declaration that these defenses render any trademark infringement claim unenforceable in this context.4 Seeking declaratory relief on affirmative defenses is permissible in these circumstances. In Dunn Computer Corp. v. Loudcloud, Inc., 133 F. Supp. 2d 823 (E.D. Va. January 10, 2001), the court acknowledged that a trademark misuse claim could serve as an affirmative defense if the issue were ripe for adjudication. (“Because no trademark infringement claim has yet been asserted against plaintiff, there is no occasion here for an assertion of the misuse defense.”). Since Instagram has opposed registration of Plaintiff’s mark INSTAPRINTS on likelihood of confusion grounds-and Plaintiff can reasonably anticipate Instagram will therefore bring counterclaims for infringement-these defenses are ripe and properly pleaded. See id. at 830. Given Plaintiff’s more 4 If Plaintiff were asserting trademark misuse as an affirmative cause of action, it would be permissible, since the facts alleged in the FAC are precisely the facts to support a trademark misuse claim. This court has acknowledged that trademark misuse can serve as an affirmative claim. See Nu Sci. Corp. v. eFasteam.com, 2004 U.S. Dist. LEXIS 17763, *11 (N.D. Cal. Aug. 24, 2004) (“If EFT is trying to make out a claim for trademark misuse…, it must provide far greater detail regarding Third-Party Defendants’ wrongful conduct and how this amounts to a violation of the law.) Instagram is attempting to destroy its competitors through use of the unprotectable component parts of its mark. Trademark misuse can serve as an affirmative cause of action, in this context. See William E. Ridgway, Revitalizing the Doctrine of Trademark Misuse, 21 Berkeley Tech. L.J. 1547 (2006)). Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 18 of 21 14 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 than a reasonable apprehension of an imminent suit by Instagram, this court may consider the merits of the affirmative defenses raised by Plaintiff as claims under the Declaratory Judgment Act. See Public Serv. Comm’n v. Wycoff Co., 344 U.S. 237, 248 (1952) (federal courts “regularly consider the merits of affirmative defenses raised by declaratory plaintiffs…”). Analogy to other areas of intellectual property law underscores this point. Much like the issue of invalidity can be raised as both an affirmative defense and a counterclaim seeking declaratory judgment, so too can the issues of trademark misuse and grounds for equitable relief. E.g., Mentor Graphics Corp. v. Quickturn Design Sys., 2003 U.S. Dist. LEXIS 16194 (N.D. Cal. July 24, 2003). Likewise, this court has found that copyright misuse can be raised as both an affirmative defense and counterclaim. See Apple Inc. v. Psystar Corp., 2009 WL 303046, *3 (N.D. Cal. 2009) (“This court is unconvinced…that misuse may never be asserted as a counterclaim for declaratory relief.”). This is consistent with the Ninth Circuit’s position that the doctrine of copyright misuse is a defense, but may also be permitted in actions for declaratory relief. See Practice Mgmt. Info. v. Am. Med. Ass’n, 121 F.3d 516, 518 (9th Cir.1997). Additionally, patent misuse can be raised as both an affirmative defense and counterclaim. See, e.g., Allan Block Corp. v. Cnty. Materials Corp., 512 F.3d 912 (7th Cir. 2008). If patent misuse and copyright misuse can be asserted as counterclaims for declaratory relief, there is no sound basis for holding that trademark misuse claims should be treated differently. Likewise, the other grounds for equitable relief asserted by Pixels should be permitted as claims for declaratory relief. Equitable defenses in intellectual property cases may be pleaded as both affirmative defenses and counterclaims. Seaboard Int’l v. Cameron Int’l, 2013 U.S. Dist. LEXIS 106784 (E.D. Cal. July 30, 2013); Activision Publ’g, Inc. v. Gibson Guitar Corp., 2009 U.S. Dist. Lexis 21931 (C.D. Cal. Feb. 26, 2009); see Deniece Design, LLC v. Braun, 953 F. Supp. 2d 765, 775 (S.D. Tex. June 19, 2013) (“Laches, estoppel and/or waiver can serve as an affirmative defense to patent infringement, while a claim for declaratory judgment that Braun is barred from enforcing the ‘299 patent against Deniece on those grounds can constitute a counterclaim to patent infringement.”). In circumstances where equitable grounds are pleaded as both affirmative defenses and claims for declaratory relief, the claims are not automatically duplicative. For example, the Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 19 of 21 15 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 claimant may prevail on the merits of one of its numerous other affirmative defenses, with the Court never reaching the issue of that affirmative defense. Toyo Tire & Rubber Co. v. CIA Wheel Grp., 2015 U.S. Dist. LEXIS 98939, *11 (C.D. Cal. July 8, 2015) (citing 6 Wright, Fed. Prac. & Proc. § 1406 (3d ed. 2011) (rejecting the argument that “a counterclaim for a declaratory judgment involving the same transaction as plaintiff’s claim is wholly redundant and does not serve any useful purpose” because “it ignores the [fact] that it is very difficult to determine whether the declaratory-judgment counterclaim really is redundant prior to trial”). If these equitable grounds are only raised as affirmative defenses and not also as declaratory relief claims, this Court may find that Instagram’s conduct constitutes trademark misuse, but never reach the issues of laches, acquiescence, or estoppel. So that Pixels’s affirmative defenses may be adjudicated, “the best course is not to dismiss this counterclaim” of equitable relief. See Toyo, 2015 U.S. Dist. LEXIS 98939 at *11; see also Kalo Inoculant v. Funk Bros. Seed, 161 F.2d 981, 991 (7th Cir. 1947) (“[W]hen Plaintiff brought suit for infringement of certain claims and defendant counterclaimed seeking declaratory judgment upon all claims, the court, by judgment upon only the claims in suit, did not dispose of all issues in controversy between the parties. Defendant has a right to know whether what it is doing violates any valid claim of Plaintiff’s patent...”), rev’d on other grounds, 333 U.S. 127 (1948). Pixels has a right to know whether Instagram’s act of reversal of position in encouraging third parties to adopt marks containing the component parts “insta” and “gram” to now aggressively enforcing these unprotectable descriptive component parts constitutes trademark misuse, laches, acquiescence, and/or estoppel. Therefore, Pixels’s claim for declaratory judgment on equitable grounds is proper and must be adjudicated. V. CONCLUSION For the foregoing reasons, Pixels respectfully requests that Instagram’s motion to dismiss be denied. Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 20 of 21 16 PLAINTIFF’S OPPOSITION TO MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF MAY BE GRANTED 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 Dated: November 30, 2015 By: /s/ Vijay K. Toke Vijay K. Toke Matthew S. Slevin COBALT LLP Joel T. Beres Bruce B. Paul (to be admitted pro hac vice) David B. Owsley, II (to be admitted pro hac vice) Mari-Elise Gates STITES & HARBISON PLLC Attorneys for Plaintiff, PIXELS.COM, LLC Case 3:15-cv-03610-VC Document 39 Filed 11/30/15 Page 21 of 21