Poquito Mas Licensing Corporation v. Taco Bell Corp.

OPPOSITION TO re: MOTION for Summary Judgment 147 , MOTION for Summary Judgment 146

C.D. Cal.December 22, 2014

1 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 Brent H. Blakely (SBN 157292) bblakely@blakelylawgroup.com Cindy Chan (SBN 247495) cchan@blakelylawgroup.com BLAKELY LAW GROUP 1334 Parkview Avenue, Suite 280 Manhattan Beach, California 90266 Telephone: (310) 546-7400 Facsimile: (310) 546-7401 Attorneys for Plaintiff Poquito Mas Licensing Corporation UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - SOUTHERN DIVISION POQUITO MAS LICENSING CORPORATION, a California Corporation, Plaintiff, vs. TACO BELL CORP., a California Corporation; and DOES 1-10, inclusive; Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 8:13-CV-01933 DOC (JPRx) PLAINTIFF POQUITO MÁS LICENSING CORPORATION’S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/SUMMARY ADJUDICATION HEARING: Date: January 12, 2015 Time: 8:30 a.m. Courtroom: 9D Hon. David O. Carter Motion Hearing Cut-Off: 01/12/2015 Pre-Trial Conference: 03/02/2015 Trial Date: 03/10/2015 TACO BELL CORP., a California Corporation; FOOTE CONE & BELDING ADVERTISING INC., Counter-Plaintiffs, vs. POQUITO MÁS LICENSING CORPORATION, a California Corporation, and KEVIN MCCARNEY, an individual Counter-Defendants Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 1 of 32 Page ID #:11187 i PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 TABLE OF CONTENTS I. INTRODUCTION .................................................................................. 1 II. FACTS .................................................................................................... 2 A. Poquito Mas and its MÁS Marks .................................................. 2 B. Defendant Taco Bell ..................................................................... 3 C. Taco Bell Rebrands ....................................................................... 4 D. Taco Bell Attempts to License Rights to MÁS From Poquito Mas ............................................................................................... 4 E. Taco Bell Launches MÁS ............................................................. 5 III. LEGAL ARGUMENT ............................................................................ 7 A. Triable Issues Of Fact Exist Regarding Liability ........................... 8 1. Plaintiff has Standing to Assert Claims on All of its MÁS Marks ................................................................................. 8 2. No Basis For Summary Judgment on Likelihood of Confusion ............................................................................ 9 a. Strength of Parties’ Respective MÁS Marks ............. 11 b. Parties Respective Goods/Services are Identical........ 13 c. The Parties’ Marks are Highly Similar ...................... 14 d. Evidence of Actual Confusion ................................... 15 e. Parties Use Identical Marketing Channels ................. 16 f. There is a Low Degree of Consumer Care ................. 17 g. Taco Bell Acted With Knowledge of Plaintiff’s MÁS marks ............................................................... 17 h. Defendants’ Use of MÁS Hinders Plaintiff’s Expansion ................................................................. 18 B. Triable Issues Of Fact Exist Regarding Damages .......................... 18 Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 2 of 32 Page ID #:11188 ii PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 1. Plaintiff Is Entitled to Damages in the Form of Reasonable Royalties .......................................................... 20 2. Plaintiff Is Entitled to Damages for Corrective Advertising and Loss of Ability to Control Its Goodwill and Reputation .................................................................... 21 3. Plaintiff Is Entitled to a Disgorgement of Defendants’ Profits ................................................................................. 23 4. Plaintiff Is Entitled to Injunctive Relief ............................... 24 5. Plaintiff Is Entitled to Punitive Damages and Attorney’s Fees ..................................................................................... 25 IV. CONCLUSION ....................................................................................... 25 Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 3 of 32 Page ID #:11189 iii PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 TABLE OF AUTHORITIES CASES 7–Eleven, Inc. v. Wechsler, 2007 WL 1431084 (T.T.A.B.2007) ................................................................. 14 Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970) .......................................................................................... 7 Adray v. Adry-Mart, Inc., 76 F.3d 984 (9 th Cir., 1995) ............................................................................. 21 AM General v. DaimlerChrysler, 311 F.3d 796 (7th Cir.2002) ............................................................................ 14 Americana Trading Inc. v. Russ Berrie & Co., 966 F.2d 1284 (9th Cir.1992) .......................................................................... 15 AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) ....................................................................... 9, 13 Anderson v. Liberty Lobby, 477 U.S. 242 (1986) .......................................................................................... 7 Audi AG v. D’Amato, 469 F.3d 534 (6th Cir. 2006) ........................................................................... 17 Banjo Buddies, Inc. v. Renosky, 399 F.3d 168 (3d Cir.2005) ............................................................................. 23 Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, 376 F.3d 8 (1st Cir. 2004) ............................................................................... 19 Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th Cir. 1977) ....................................................................... 22 Boldface Licensing + Branding v. By Lee Tillett Inc., 940 F. Supp. 2d 1178 (CD Cal. 2013) ............................................................. 12 Brookfield Commc’ns., Inc. v. W. Coast Entm’t Corp., 174 F. 3d 1036 (9th Cir. 1999) ............................................................ 16, 17, 18 CaesarsWorld, Inc. v. Milanian, 247 FS 2d 1171 (D.Nev., 2003)....................................................................... 14 Cairns v. Franklin Mint Co., 24 FS 2d 1013 (C.D. Cal. 1998) ................................................................ 15, 16 Charles Jacquin Et Cie, Inc. v. Destileria Serralles, Inc., 921 F.2d 467 (3d Cir. 1990) ............................................................................ 16 Citizens Financial Group, Inc. v. Citizens Nat. Bank of Evans City, 383 F.3d 110 (3d Cir. 2004) ............................................................................ 23 Days Inns Worldwide, Inc. v. Patel, 2005 WL 4655381 (SD Cal. 2005) .................................................................. 22 Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 4 of 32 Page ID #:11190 iv PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 Downing v. Abercrombie & Fitch, 265 F.3d 994 (9th Cir.2001) .............................................................................. 7 E&J Gallo v. Gallo Cattle, 967 F. 2d 1280 (9th Cir. 1992) ........................................................................ 15 E&J Gallo Winery v. Pasatiempos Gallo, 905 F.Supp. 1403 (ED Cal. 1994) ................................................................... 16 Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135 (9th Cir.2002) ................................................................ 9, 11, 18 Fortune Dynamic, Inc. v. Victoria’s Secret, 618 F. 3d 1025 (9th Cir. 2010) ........................................................................ 12 GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199 (9th Cir., 2000) ........................................................................ 14 Guru Denim v. L.A. Idol Fashion, Inc., 2012 U.S. Dist. LEXIS 10363 (C.D. Cal., Jan. 25, 2012) ................................ 18 Harper House, Inc. v. ThoMÁS Nelson, Inc., 889 F. 2d 197 (9th Cir. 1989) .......................................................................... 19 Healthport Corp. v. Tanita Corp. of Am., 563 FS 2d 1169 (D. Or. 2008) ......................................................................... 19 Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980) ............................................................................. 9 Jerry’s Famous Deli, Inc. v. Papanicolaou, 383 F.3d 998 (9th Cir., 2004) .......................................................................... 23 Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042 (9th Cir. 1998) ......................................................................... 11 KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596 (9th Cir.2005) ............................................................................ 11 Lahoti v. VeriCheck, Inc., 586 F.3d 1190 (9th Cir.2009) .......................................................................... 11 Lindy Pen Co. v. Bic Pen Corp., 982 F. 2d 1400 (9th Cir. 1993) ............................................................ 18, 22, 23 Louis Vuitton Vuitton v. Akanoc Solutions, Inc., 2010 WL 5598337 (ND Cal. 2010) ................................................................. 25 Maier Brewing Co. v. Fleischman Distilling Corp., 390 F. 2d 117 (9th Cir. 1968) .......................................................................... 18 Marlyn Nutraceuticals v. Mucos Pharma, 571 F.3d 873 (9th Cir. 2009) ........................................................................... 24 Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 5 of 32 Page ID #:11191 v PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 MGM v. Grokster, Ltd., 518 F.Supp.2d 1197 (CD Cal. 2007) .............................................................. 25 Network Automation v. Advanced Systems Concepts, 638 F.3d 1137 (9th Cir. 2011) .................................................................. passim Playboy Enterprises, Inc. v. Chen, 1996 U.S. Dist. LEXIS 21916 (C.D. Cal. Oct. 1, 1997)................................... 18 Playboy Enters., Inc., v. Baccarat Clothing Co., 692 F.2d 1272 (9th Cir. 1982) ......................................................................... 19 Polo Fashions v. Dick Bruhn, 793 F.2d 1132 (9th Cir. 1986) ......................................................................... 19 Pom Wonderful v. Purely Juice, 2008 WL 4222045 (CD Cal. 2008) ................................................................. 24 Quia Corp. v. Mattel, Inc., Inc., 2011 WL 2749576 (N.D. Cal. July 14, 2011) .................................................. 19 R&R Partners v. Tover, 2007 WL 1202802 (Nev. 2007) ....................................................................... 24 Rearden v. Rearden, 683 F.3d 1190 (9th Cir. 2012) ........................................................................... 9 Sands, Taylor & Wood v. Quaker Oats Co., 34 F.3d 1340 (7th Cir. 1994) ........................................................................... 19 Scarves by Vera v. Todo Imports, Ltd., 544 F.2d 1167 (2d Cir.1976) ........................................................................... 12 Skydive Ariz. v. Quattrochi, 704 FS 2d 841 (D.Ariz.,2010) ......................................................................... 22 Southland Sod Farms v. Stover Seed, 108 F. 3d 1134 (9th Cir. 1997) .......................................................................... 7 Surfvivor Media v. Survivor Productions, 406 F.3d 625 (9th Cir.2005) .............................................................................. 9 Two Pesos Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992) ........................................................................................ 11 United States v. Diebold, 369 U.S. 654 (1962) .......................................................................................... 7 Walter v. Mattel, Inc., 210 F.3d 1108, 1110 (9th Cir.2000) ................................................................ 10 Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 6 of 32 Page ID #:11192 vi PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 STATUTES 15 U.S.C. §1117 ................................................................................................... 25 15 U.S.C. §1117(a) .................................................................................. 18, 23, 24 Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 7 of 32 Page ID #:11193 1 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Taco Bell seeks summary judgment notwithstanding that it adopted the Live MÁS slogan for its Mexican restaurants despite (i) prior knowledge that Poquito Mas, another Mexican restaurant chain whom Taco Bell had already identified as a competitor, had pre-existing and superior rights in a family of MÁS marks (many of which are incontestable), (ii) after having received a warning from its counsel that using MÁS would pose a significant risk, (iii) after having unsuccessfully attempted to deceive Poquito Mas into licensing its MÁS marks, (iv) after being warned by Poquito Mas not to proceed with the infringing MÁS marks, and (v) ignoring this warning and brazenly proceeded “Butch Cassidy Style” to swamp the market with its Live MÁS slogan. At trial, Poquito Mas will prove liability and cognizable damages caused by Defendant’s hijacking of its MÁS marks and its entitlement to enhanced and exemplary damages, costs, and attorneys’ fees as a result of Defendants’ willful infringement and bad faith tactics. This is a David and Goliath story with Taco Bell steamrolling its much smaller competitor. Taco Bell has spent a billion dollars to date swamping the market with the MÁS slogan which Taco Bell’s CEO Greg Creed, who was intimately involved with the infringement, has stated is now the “essence of the Taco Bell brand.” As this Court may recall, last summer a jury found against Quiksilver and awarded punitive damages with a considerably less egregious set of facts. At a minimum, this case should be heard by a jury. “[S]ummary judgment is generally disfavored in the trademark arena” given the “intensely factual nature” of most trademark claims. Interstellar Starship Services, Ltd. v. Epix Inc., 184 F.3d 1107, 1109 (9th Cir. 1999). Applying that settled principle here, there are numerous reasons why Defendants’ motion should be denied; as discussed below, each involves consideration of competing testimony, documents, and expert Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 8 of 32 Page ID #:11194 2 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 analysis appropriate for resolution only at trial. Poquito Mas therefore respectfully requests that Defendants’ motion for summary judgment be denied. II. FACTS A. Poquito Mas and its MÁS Marks In 1984, Kevin McCarney opened the first “Poquito MÁS” restaurant in Studio City California, serving Mexican food (i.e. tacos, burritos, quesadillas, enchiladas, etc.). (Statement of Material Facts (“SMF ”) 1) Since then, Poquito Mas has expanded the use of the “MÁS” mark to use on its menu items, slogans, advertising/marketing campaigns, food packaging, and social media. (SMF 3) The Poquito MÁS mark has been in continuous use since the opening of the first Poquito MÁS restaurant and was registered with the United States Patent and Trademark Office (USPTO) on May 2, 1995. (SMF 4) Mr. McCarney has also acquired federal trademark registrations to other composite trademarks bearing the “Poquito MÁS” marks, including two marks with Poquito MÁS and graphics. The MÁS, Chef MÁS, Mucho MÁS, Mini MÁS, and Get Poquito MÁS out of Life. The Poquito MÁS, The MÁS, Chef MÁS and Mucho MÁS marks are incontestable. (SMF 9-10) Poquito Mas has also used “Get Fresh and Get a Little MÁS, Get a Little MÁS…” (e.g. “Get a Little MÁS out of Lunch, Get a Little MÁS out of Dinner, Get a Little MÁS at Night), “Original MÁS,” “MÁS Social,” “MÁS Local,” “Party MÁS (At Home, At Work, At Play)” Little MÁS Catering,” “Chef Little MÁS,” “Think MÁS” as well as various other usages and phrases containing “MÁS” in connection with the POQUITO MÁS restaurants. All of the foregoing MÁS Marks, whether registered or unregistered, are owned by Mr. McCarney (the assignor) and assigned, either in writing or orally, to Poquito Mas Licensing Corporation, of which McCarney is the sole shareholder. (SMF 17) Since 1984, additional POQUITO MÁS restaurants have been opened throughout California as well as one in Hawaii. (SMF 19) There are currently eleven POQUITO MÁS restaurants in California, six of which are operated by franchisees of Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 9 of 32 Page ID #:11195 3 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 Poquito Mas, one being on the Warner Bros. Studio Lot. (SMF 19) Poquito Mas marketing channels include television advertisements, radio advertisements, print advertisements, social media, online advertisements via the POQUITO MÁS Website, and the restaurants themselves. (SMF 25) The MÁS Marks are also featured on cups, food packaging, menus, signage, clothing, etc. (SMF 26) The POQUITO MÁS restaurants have often been the subject of much unsolicited, laudatory press coverage in various media, including magazines, online publications, and television shows. (SMF 34) POQUITO MÁS is also a favorite amongst celebrities, whom have dined at or have mentioned dining at POQUITO MÁS. (SMF 36) POQUITO MÁS restaurants make approximately $15 million in annual revenues, serving approximately 1 million customers a year. (SMF 40) Poquito Mas sells traditional Mexican food such as tacos, burritos, tostadas, nachos, salads, quesadillas, etc... (SMF 1) POQUITO MÁS menu items range from $1.89 - $9.95. (SMF 2) B. Defendant Taco Bell Taco Bell is a Mexican restaurant chain founded in Downey California in 1962. It has since grown to be a global operation with more than 5,600 restaurants, 800 of which are located in California. (SMF 44) The chain is owned by Yum! Brands, Inc. (which also owns Pizza Hut and KFC), and is headquartered in Irvine, CA. (SMF 46) Like POQUITO MÁS, Taco Bell sells traditional Mexican food, such as burritos, tacos, salads, nachos, etc. (SMF 48) Taco Bell’s menu offers price points such that the consumer can purchase a full meal, including a drink, for around $5.00. (SMF 50) Yum Brands annual revenue for 2013 was $13.6 billion. Taco Bell’s annual revenues were $7.2 billion in 2010, $7.0 billion in 2011, $7.5 billion in 2012, and $7.8 billion in 2013, and expected revenue for 2014 being $8 billion. (SMF 133) Taco Bell identified POQUITO MÁS as a competitor as early as September 2004 and once again identified POQUITO MÁS a Competitor in a December 2011 and to that end sent individuals to scout various POQUITO MÁS locations. (SMF 50 - 54) Taco Bell’s own counsel has identified POQUITO MÁS as a direct competitor. (SMF 70) Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 10 of 32 Page ID #:11196 4 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 C. Taco Bell Rebrands In the summer of 2011, Taco Bell decided to re-brand its company in order to arrest declining sales and the loss of customers. A key component of this rebranding effort was to replace its existing tagline, “Think Outside The Bun,” with something that would attract new customers and make the old customers forget about the bad press surrounding mystery meat tacos and salmonella, as well as the consumer belief that “Taco Bell is cheap and that’s why it’s low quality.” (SMF 56-57) A component of this rebranding effort was to shift consumer beliefs by introducing premium ingredients and higher-end products through Taco Bell’s “Cantina Bell” menu options to compete with fast-casual restaurants, the fastest growing segment in the restaurant industry, such as POQUITO MÁS or Chipotle. (SMF 58-59) Defendant Draft FCB (“FCB”) was the advertising agency working with Taco Bell in connection with the rebranding and identification of a new slogan. (SMF 63) Greg Creed, Taco Bell’s CEO, was adamant that the new slogan be launched in February 2012 during the NBA All-Star weekend. (SMF 68-69) As part of this rebranding, in November 2011, Taco Bell sent its agents into the field to identify what its competitors, including POQUITO MÁS, were doing in terms of products, pricing and marketing. (SMF 53) Contemporaneous thereto, Taco Bell decided to proceed with a new slogan that contained the Spanish word “MÁS,” meaning “more” in English. Taco Bell and FCB decided they wanted to use a new MÁS slogan prior to having its attorneys conduct a due diligence investigation to ascertain whether the proposed use would conflict with any existing uses. (SMF 64-67) On December 1, 2011, Defendants’ attorneys at Winston & Strawn conducted a trademark search which identified POQUITO MÁS as having superior rights and flagged Taco Bell’s proposed new MÁS marks as presenting a significant risk of a complaint. (SUF70) D. Taco Bell Attempts to License Rights to MÁS From Poquito Mas After receiving the “significant risk” opinion, Defendants retained investigator Mike Santoni to deceive McCarney into giving Defendants permission to use a slogan Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 11 of 32 Page ID #:11197 5 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 containing MÁS. (SMF 73) Santoni lied to McCarney about his identity, and represented to Mr. McCarney that he was “Chuck Garvin” from “Clearwater Business Solutions” who purportedly lived in Florida and represented a small Florida chain of restaurants that wanted to use MÁS and inferred that they would not be competing with Poquito Mas, and offered $35,000 for permission to use MÁS, with Defendants agreeing internally to spend up to $750,000 for these rights. (SMF 74-75, 88) When Santoni refused to tell Mr. McCarney about how the slogan would be used by the fictitious restaurants in Florida or identify the chain itself, and concerned that the proposed MÁS slogan may cause confusion in the marketplace, McCarney declined to grant permission. (SMF 76) Taco Bell, fully committed to using MÁS, would not take no for an answer. There were several subsequent attempts to convince McCarney to agree to allow Defendants to use the “MÁS” marks, including an in-person meeting with Jeff Fox from DraftFCB, McCarney, fearing that Defendants’ proposed use of MÁS would “harm [the POQUITO MÁS] brand, [its] ability to franchise the brand, create confusion, and diminish the brand distinction [he had] created,” declined Taco Bell’s offer. In a detailed letter set forth his reasoning as well as his objection to Taco Bell using MÁS. (SMF 89-99) Taco Bell then took over the process from FCB and obtained new pre-cleared opinions which it believed would allow it to proceed with MÁS as it had already decided to do. (SMF 100-110) The later opinions were not objective, were superficial, did not analyze reverse confusion, and actually concede that several of the Sleekcraft factors favored Poquito Mas. (SMF 110-112) Importantly, none said there would be no risk, but rather that Taco Bell should be able to overwhelm Poquito Mas in the anticipated lawsuit. (Id.) E. Taco Bell Launches MÁS Because of the Winston & Strawn opinion letter, FCB refused to allow Taco Bell to proceed with LIVE A LITTLE MÁS and refused to indemnify Taco Bell in the likely eventuality of a lawsuit with Poquito Mas . (SMF 113-114) “[U]nless Taco Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 12 of 32 Page ID #:11198 6 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 Bell indemnifies Draftfcb on this matter our IPG lawyers and our outside trademark counsel ... will not allow the Live a Little MÁS tagline to be used by Taco Bell.” (SMF 114) In order to circumvent this problem and obtain indemnification and resulting insurance coverage from FCB’s carrier, on February 6, 2012 Taco Bell obtained pre-cleared opinions for Live MÁS, which it promptly launched two weeks later during the NBA All-Star weekend. 1 (SMF 115-118) As before, these opinions were superficial, not objective, did not analyze reverse confusion, and clearly manufactured to provide an excuse for the intended infringement of Plaintiff’s MÁS marks. (SMF 115) As Taco Bell’s CEO has stated, MÁS is the essence of the Taco Bell brand. (SMF 138) The “Live MÁS” tagline has been included in all of Taco Bell’s advertisements since the first use of same in February 2012. (SMF 120) Taco Bell has spent approximately $300 million annually in advertising since the launch of the “Live MÁS” tagline, a billion dollars to date, mostly in connection with national television advertisements (SMF 120) Taco Bell advertises Live MÁS on radio, print, in its restaurants, on its website, in social media, on packaging, on clothing, etc. (SMF 121-130) In or around December 2013, Taco Bell asked its market research agency to conduct a study regarding consumer awareness of the “Live MÁS” mark. The study found that as of December 2013, 64% percent of Taco Bell users and 58% of quick- service restaurant users were aware the tagline’s association with Taco Bell. (SMF 142) The study also stated that 94% of quick service restaurant users were aware of Taco Bell’s previous Think Outside the Bun tagline as of January 2012 - some ten years after same was introduced. (Id.) Taco Bell has indicated that it does not have plans to cease use of Live MÁS, and in fact plans to double in size by 2024 (Id.) 1 When apprised of Taco Bell’s decision to proceed with MAS notwithstanding Plaintiff’s objection, FCB’s attorney stated in an email that “I don’t think any of us can wipe the slate clean like that, though I often wish I could.” (SMF 91-93) Yet this is exactly what Defendants then attempted to do. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 13 of 32 Page ID #:11199 7 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 In 2010 and 2011, McCarney had extensive discussions with Branstetter and Lion Capital regarding the potential acquisition and/or development of the POQUITO MÁS enterprise, including nationwide expansion of the restaurants. (SMF 146-151) These discussions were put on hold due to the uncertainty of the Taco Bell’s use of Live MÁS and the present litigation. (SMF 152) III. LEGAL ARGUMENT Taco Bell has the burden of showing the absence of a genuine issue as to any material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). Courts must view all inferences to be drawn from the evidence lodged in a light most favorable to Poquito Mas . Anderson v. Liberty Lobby, 477 U.S. 242, 247-248 (1986). Such inferences may be drawn from subsidiary facts contained in affidavits, attached exhibits, and submitted depositions. United States v. Diebold, 369 U.S. 654, 655 (1962). Courts must not weigh the evidence or determine the truth of the matters asserted by only determine whether there is a genuine issue for trial. Southland Sod Farms v. Stover Seed, 108 F. 3d 1134 (9th Cir. 1997). Any doubt as to the existence of a genuine issue of material fact must be resolved against Taco Bell. Adickes at 157- 159. To prevail on a claim of trademark infringement a party must establish (1) that it has a protectable ownership interest in the mark; and (2) that the defendant’s use of the mark is likely to cause consumer confusion. Network Automation v. Advanced Systems Concepts, 638 F.3d 1137, 1144 (9th Cir. 2011). The Lanham Act’s likelihood of confusion standard is predominantly factual in nature. Thus, summary judgment is inappropriate when a jury could reasonably conclude that there is a likelihood of confusion. Downing v. Abercrombie & Fitch, 265 F.3d 994, 1001, 1008 (9th Cir.2001). “Indeed, we have observed that “trial courts disfavor deciding trademark cases in summary judgments because the ultimate issue is so inherently factual… Additionally, the question of likelihood of confusion is routinely submitted for jury determination as a question of fact.” Clicks Billiards v. Sixshooters, 251 F. 3d 1252, 1264 (9th Cir. 2001). This case is no exception. Each issue discussed below -- Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 14 of 32 Page ID #:11200 8 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 such as the likelihood of confusion between Poquito Mas’ family of MÁS Marks and Taco Bell’s MÁS mark -- is “intensely factual.” A. Triable Issues Of Fact Exist Regarding Liability 1. Plaintiff has Standing to Assert Claims on All of its MÁS Marks McCarney, who founded POQUITO MÁS thirty years ago when he opened his first restaurant, is the owner of all of the MÁS marks (registrations and common law rights), the sole owner of Plaintiff, and the sole owner of all of the non-franchised POQUITO MÁS restaurants. McCarney’s rights to the MÁS marks have all been validly assigned to Plaintiff and there is no merit to Defendants’ argument that Plaintiff cannot enforce rights as to GET POQUITO MÁS OUT OF LIFE, I AM THE MÁS, and MINI MÁS. 2 Where Defendants’ assignment argument borders on frivolous, its fraud argument regarding the POQUITO MÁS marks steps over the line. Poquito Mas has been using POQUITO MÁS as its trademark and trade name in connection with its Mexican restaurants for thirty years and the POQUITO MÁS marks, which are now incontestable, have been registered for twenty years. In its brief, Taco Bell calls McCarney a liar: “McCarney knowingly filed affidavits of use in the PTO for the POQUITO MÁS and one of the POQUITO MÁS and Design marks, claiming use in interstate commerce at a time when he knew that was not true.” (Mot. pg. 8) With such an unqualified representation, the evidence contained in SUF#20 should be, as required by law, clear and convincing. However, a simple review of the evidence cited offers no support for the “undisputed fact” of deliberate fraud. 3 The 2 Plaintiff’s assignment of the Federal trademark registrations is in writing. An assignment in writing is not necessary to pass McCarney’s (a party to this action) common law rights in his MAS trademarks, both registered and unregistered, to Plaintiff. McCarthy at §18:4; C.C. §1052. 3 Page 11of McCarney’s deposition confirms that he is the sole owner of Poquito MAS. The three cited exhibits discuss the Kona restaurant. None of this evidence supports the assertion that McCarney attempted to commit fraud on the PTO. Conspicuously absent from Defendants’ SUF is the portion of McCarney’s deposition wherein he testified that he truthfully stated in his PTO application that he engaged in interstate commerce in 1984 when he first opened his restaurant. (SMF , ¶ 1, see also Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 15 of 32 Page ID #:11201 9 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 truth of the matter is that Poquito Mas has engaged in interstate commerce since its inception in 1984. 4 2. No Basis For Summary Judgment on Likelihood of Confusion Poquito Mas’ rights in its MÁS marks include the right to prevent consumer confusion. Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912, 919 (9th Cir. 1980). Far from seeking an improper “monopoly on the common Spanish word ‘MÁS’,” as Taco Bell claims, Poquito Mas is simply enforcing its statutory rights against Taco Bell’s use of Live MÁS and MÁS, which is similar enough to its MÁS marks to cause confusion in connection with their respective Mexican restaurants. Regarding the test for likelihood of confusion, the Ninth Circuit considers eight “Sleekcraft” factors in its analysis: strength of the mark; proximity of goods; similarity of marks; evidence of actual confusion; marketing channels; degree of care likely to be exercised by the purchaser; defendant’s intent in selecting the mark; and likelihood of expansion. Network Automation, at 1145(citing AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979)). However, “the list is not exhaustive,” nor is it exclusive, and “[o]ther variables may come into play depending on the particular facts presented.” Id. “The test is a fluid one and the plaintiff need not satisfy every factor, provided that strong showings are made with respect to some of them.” Surfvivor Media v. Survivor Productions, 406 F.3d 625, 631 (9th Cir.2005). Likelihood of confusion is not decided “by considering mechanically the number of Sleekcraft factors that weigh in favor of either party, or by giving the same weight to a particular factor from case to case.” Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1141 (9th Cir. 2002). Rather, Sleekcraft’s “multi-factor approach must be applied in a flexible fashion.” Rearden v. Rearden, 683 F.3d 1190, 1209 (9th Cir. 2012). Blakely Dec., Exhibit 97 (McCarney Depo. Transcript, 11:17-19)) Defendants’ brief is replete with similar mischaracterizations. 4 McCarthy, § 19:107-123; Lebewohl v. Heart Attack Grill LLC, 890 FS.2d 278 (SDNY 2012); 15 U.S.C. §1127. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 16 of 32 Page ID #:11202 10 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 Here, Plaintiff has asserted claims of both forward and reverse confusion. The traditional pattern of classic “forward confusion” occurs when customers mistakenly think that the junior user’s goods or services are from the same source as or are connected with the senior user’s goods or services. “Reverse confusion” occurs when the junior user’s advertising and promotion swamps the junior user’s reparation in the market that customers are likely to be confused into thinking that the senior user’s goods are those of the junior user. J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition (“McCarthy”), §23:10, 4th ed. 2014. Claims of reverse confusion “protect the small senior user from losing control over its identity in ‘the rising tide of publicity associated with the junior mark.;” Walter v. Mattel, Inc., 210 F.3d 1108, 1110 (9th Cir.2000). As McCarthy instructs: The archetypical case of reverse confusion occurs when the junior user is a larger company which, prior to its nationwide launch, discovers a small (usually regional) senior user with a very similar mark in a related field. Because the smaller senior user has only a relatively small group of customers, the large company may (mistakenly) think that there is no conflict because there will be only a local and minimal level of forward confusion. And the junior user has no intention of taking a free ride on the good will and reputation of the small, local user. So the junior user rolls out its new mark nationally, swamping the local recognition of the senior user. For example, assume the hypothetical senior user uses AUNTIE ISABELLA’S as its mark for a chain of three small pizza restaurants in the vicinity of Seattle, Washington. Hypothetical national marketer Colossal Foods Inc. coincidentally chooses the mark AUNT ISABELLA’S for its new national distributed line of frozen pizza. Colossal Foods finds the senior user on a trademark search, but dismissing it as a tiny user with only local recognition, decides to launch nationally. Forward confusion will be likely to occur only when people in Seattle who know of the local senior user first come into contact with the junior user’s nationally advertised and distributed product, and, because of the similarity of the marks, mistakenly think that the junior user is an offshoot or licensee of the senior user. Reverse confusion will be likely to occur when a person who only knows of the well-known junior user (e.g. a visitor from San Francisco) first comes into contact with the lesser-- known senior user in Seattle and, because of the similarity of the marks, mistakenly thinks that the senior user is the same as or is affiliated or connected with the junior user. Simply put, when a large national company finds a conflicting mark of a small local user on a trademark search, it cannot simply go ahead and roll over the smaller senior user. To avoid the risk of losing a case of reverse confusion, Colossal foods must either buy the senior user’s mark or change to another mark. McCarthy at 23:10 (emphasis added) Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 17 of 32 Page ID #:11203 11 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 a. Strength of Parties’ Respective MÁS Marks “‘The stronger a mark—meaning the more likely it is to be remembered and associated in the public mind with the mark’s owner—the greater the protection it is accorded by the trademark laws.’” Network Automation, at 1149. In assessing a mark’s strength, the Court must analyze both its “conceptual” and “commercial” strength. Id. Conceptual strength involves classifying the mark on the spectrum of distinctiveness, while commercial strength is based on “ ‘actual marketplace recognition,’ “ including advertising expenditures. Id. In reverse confusion cases, the court evaluates the strength of the junior user’s mark to gauge its ability to overpower the senior user’s mark. For reverse confusion, the first three Sleekcraft factors are “pivotal.” Dreamwerks Prod. Group, Inc. v. SKG Studio, 142 F.3d 1127, 1130 (9th Cir. 1998) (“So the greater the power of the junior user’s mark in the marketplace, the more likely it is to capture the minds of the senior user’s customers). i. Conceptual Strength. Several of Plaintiff’s federally registered MÁS marks are incontestable (POQUITO MÁS , MUCHO MÁS, CHEF MÁS, THE MÁS) and thus presumed to be strong marks. Entrepreneur Media, at 1135. Indeed, Federal trademark registration alone may be sufficient to satisfy a determination of distinctiveness. Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1199 (9th Cir.2009). Defendants have not challenged the presumption of inherent distinctiveness created by Poquito Mas’ federal registrations. Furthermore, on the spectrum of marks, Plaintiff’s MÁS marks are inherently distinctive. There are five categories of trademarks: generic; descriptive; suggestive; arbitrary; and fanciful. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 602 (9th Cir.2005). “The latter three categories of marks, because their intrinsic nature serves to identify a particular source of a product, are deemed inherently distinctive.” Two Pesos Inc. v. Taco Cabana, Inc., 505 U.S. 763, 778 (1992). These three categories of marks therefore meet the distinctiveness element automatically. Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 1047 (9th Cir. 1998). Here, because MÁS is an “actual word Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 18 of 32 Page ID #:11204 12 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 with no connection to” food and/or restaurants, the MÁS marks are arbitrary and therefore entitled to “maximum trademark protection.” Fortune Dynamic, Inc. v. Victoria’s Secret, 618 F. 3d 1025, 1032-33 (9th Cir. 2010). 5 Defendants’ argument that Plaintiff’s MÁS marks exist in a “crowded field” is unavailing. In order for the purported “crowded field” evidence to have the force that Taco Bell attributes to it, Defendants must also submit evidence of how that third-party advertising or registration was actually used or perceived in the marketplace. Scarves by Vera v. Todo Imports, Ltd., 544 F.2d 1167 (2d Cir.1976); 1 T. McCarthy, Trademarks and Unfair Competition, (4th ed. 2014) at §11:88. Here, Taco Bell has simply submitted internet screenshots and USPTO filings, and has offered no evidence to show how and to what extent any of the marks reflected in the registrations and screenshots were in fact used in commerce. As held in Boldface Licensing + Branding v. By Lee Tillett Inc., 940 FS 2d 1178 (CD Cal. 2013), the mere citation of third party registrations and screenshots are not proof of third party uses for the purpose of showing a crowded field and relative weakness because they are not evidence of use so as to have conditioned the mind of prospective purchasers. Id. at 1191; see also Palantir Technologies Inc. v. Palantir.net, Inc. 2008 WL 152339 (ND Cal. 2008). ii. Commercial Strength. Poquito Mas has been operating restaurants and selling food under its MÁS marks for 30 years, has annual sales of $15 million, has advertised and received unsolicited media attention during that time. Indeed, Taco Bell admits in its brief that Poquito Mas’ marks are commercially strong. (MSJ pg. 12) Taco Bell incorrectly argues that because Plaintiff’s MÁS marks are commercially strong there can be no reverse confusion. In cases of reverse confusion, the strength of the junior user’s mark is analyzed in order to determine its ability to overpower that of 5 Contrary to Taco Bell’s assertion, the MAS marks are not suggestive merely because the English translation means more or that MAS is a Spanish word and Mexicans tend to speak Spanish. A suggestive mark is one that “does not describe the products features, but suggests them.” Entrepreneur Media, at 1142. Poquito MÁS, The MÁS, Mucho MÁS, etc., suggest nothing about the features of Poquito MAS’ s product. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 19 of 32 Page ID #:11205 13 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 the senior user. Dreamwerks, at 1130; Fisons Horticulture, Inc. v. Vigoro, 30 F.3d 466, 479 (3rd Cir. 1994). Consequently, even if a regional senior user’s mark is strong where it is located, the proper analysis is whether the junior user has the ability to swamp or otherwise overpower the senior user. Here, there really is no comparison. Taco Bell’s use of MÁS as its slogan follows the traditional market saturation model. Yum Brands, which owns Taco Bell, made $13 billion in revenues in 2013. (SMF 46, 132) In 2013, Taco Bell’s 5,700 restaurants, 800 of which are located in California, generated revenues of $7.2 billion, with revenues in 2014 expected to be $8 billion. (SMF 45, 133) Since its launch on February 26, 2012, Taco Bell has spent approximately $300 million a year advertising the Live MÁS slogan, which appears on virtually all of Taco Bell’s advertising. (SMF 120) Taco Bell has begun saturating the market with its Live MÁS slogan via television advertising, marketing, in-store use, on food wrappers, on products, etc. (SMF 119-130) Similar to Taco Bell’s Think Outside of the Bun slogan which LIVE MÁS replaced, while Taco Bell’s customer recognition is currently around 64%, Taco Bell expects full saturation in about 7 years of use with expected customer recognition reaching 93%. As IPG’s counsel Gabi Davis aptly stated, this is truly a case of David vs. Goliath. (SMF 72) b. Parties Respective Goods/Services are Identical “If the defendant and plaintiff use their trademarks on the same, related, or complementary kinds of goods there may be a greater likelihood of confusion about the source of the goods than otherwise.” Ninth Cir. Model Jury Inst. 15.16. Examples of “proximate” goods are those which complement one another, are sold to the same class of consumers, or are similar in use and function. Network Automation, at 1150. Where the goods are similar in use and function, less similarity between the marks may be required to make a finding of likelihood of confusion. Sleekcraft, 599 F.2d at 350. Both parties sell traditional Mexican food. (SMF 1,48) As Taco Bell’s own counsel has admitted, “[t]he goods and services offered by [Poquito Mas] and [Taco Bell] in Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 20 of 32 Page ID #:11206 14 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 connection with their respective MÁS - inclusive marks are effectively identical. This factor would weigh against [Taco Bell].” (SMF 1,48,110) c. The Parties’ Marks are Highly Similar “If the overall impression created by the plaintiff’s trademark in the marketplace is similar to that created by the defendant’s trademark in appearance, sound or meaning, there is a greater chance of likelihood of confusion. Similarities in appearance, sound or meaning weigh more heavily than differences in finding the marks are similar.” Ninth Cir. Model Jury Inst. 15.16; GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir., 2000). i. Plaintiff Has a Family of MÁS Marks. “A trademark owner may use a number of marks with a common feature or ‘surname’ that is distinctive enough to be recognized by the consuming public causing them to associate such derivative marks with the trademark owner.” CaesarsWorld, Inc. v. Milanian, 247 FS 2d 1171, 1197 (D.Nev., 2003). “Whether a family of marks exists is an issue of fact based on the common formative component’s distinctiveness, the family’s use, advertising, promotion, and inclusion in party’s other marks.” AM General v. DaimlerChrysler, 311 F.3d 796, 815 (7th Cir.2002). Over the past 30 years, Poquito Mas has used over twenty MÁS Marks in connection with its restaurants. Many of these marks are registered and five have achieved incontestable status. (SMF 3-10) The MÁS marks are used extensively, and in conjunction with one-another in Plaintiff’s advertising and promotion. (SMF 3-38) Printed publications show that the public regards the marks as being part of the MÁS family. (SMF 49) See e.g., 7–Eleven, Inc. v. Wechsler, 2007 WL 1431084 (T.T.A.B.2007) (family of Gulp marks). Defendants’ own counsel has admitted that “[McCarney/Poquito Mas] has a family of marks centered around the MÁS component.” (SMF 72) Finally, whether or not a family of marks exists, Taco Bell’s use of MÁS is highly similar to the numerous MÁS marks used by Plaintiff. ii. Taco Bell and Plaintiff’s use of MÁS is similar. In the present case, both Poquito Mas and Taco Bell share use of the word “MÁS” as a dominant element in Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 21 of 32 Page ID #:11207 15 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 their marks. E&J Gallo v. Gallo Cattle, 967 F. 2d 1280, 1291 (9th Cir. 1992); Giant Food, Inc. v. Nation's Foodservice, Inc., 710 F.2d 1565, 218 USPQ 390 (Fed. Cir. 1983). Moreover, even without a family of Marks (which exists here), the use of one mark may constitute a legal equivalent of another mark if it is an immaterial variation and creates the same continuing commercial impression. HGI Marketing Services, Inc. v. Pepsico Inc., 1995 WL 89385 (9th Cir. 1995). This is particularly applicable in this case. The meaning of the MÁS marks as used by both parties is the same, they literally mean nothing in the context used. Plaintiff’s The MÁS, Mucho MÁS, Poquito MÁS etc. are meaningless as they relate to Mexican restaurants. The same holds true for Live MÁS. And to the extent the uses suggest more of something, they both do equally. Dreamwerks, 142 F.3d at 1131. The word MÁS is the essence of Taco Bell’s brand, which uses it alone and in conjunction with Live MÁS. Both parties depict MÁS with the accent, and the sound of the word MÁS and the parties’ permeations thereof are virtually identical. iii. Taco Bell’s Use of a House Mark. Taco Bell uses Live MÁS both alone and in conjunction with its house mark. Such coupling with the house mark aggravates the possibility of reverse confusion by reinforcing the association with the word MÁS exclusively with Taco Bell. A&H Sportswear,. v. Victoria Secret 237 F. 3d 198, 230 (3rd Cir. 2000); Americana Trading Inc. v. Russ Berrie & Co., 966 F.2d 1284, 1288 (9th Cir.1992). d. Evidence of Actual Confusion As this Court recently pointed out in QS Wholesale v. WMI, “survey evidence is not required to establish likelihood of confusion” or necessary to prove trademark infringement. (Case No. 12-0451, Dkt. #359 pg. 18; Cairns v. Franklin Mint Co., 24 F.Supp. 2d 1013, 1041 (C.D. Cal. 1998). Indeed, it is well established that actual confusion is not necessary to a finding of likelihood of confusion. Network Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 22 of 32 Page ID #:11208 16 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 Automation, 638 F.3d at 1151. 6 Defendants’ rely exclusively -- and inappropriately -- on a survey conducted by Dr. Simonson designed to address the issue of likelihood of reverse confusion. As discussed in Plaintiff’s evidentiary objections, Dr. Simonson’s survey is not only irrelevant to forward confusion, it is fundamentally flawed, entitled to no weight, and should be disregarded. Defendants’ argument that they are entitled to a presumption that the results of a survey by Poquito Mas would have been unfavorable” is incorrect. As held by this Court in QS Wholesale, such an inference is appropriate only if the plaintiff “has the financial resources” to conduct a survey. (Case No. 12-00451, Dkt.#359 pg. 18; Charles Jacquin Et Cie, Inc. v. Destileria Serralles, Inc., 921 F.2d 467, 475 (3d Cir. 1990); Cairns v. Franklin Mint Co., supra. Poquito Mas lacks such resources. (SMF 56) e. Parties Use Identical Marketing Channels “If the plaintiff’s and defendant’s goods are likely to be sold in the same or similar stores or outlets, or advertised in similar media, this may increase the likelihood of confusion.” [Ninth Cir. Model Jury Inst. 15.16; Network Automation, 638 F.3d at 1150-51] “Similarity of trade channels does not require sales of both parties’ goods by identical vendors, but only by the same type of distribution channels.” E&J Gallo Winery v. Pasatiempos Gallo, 905 F.Supp. 1403, 1413 (ED Cal. 1994). Plaintiff and Defendant both advertise and/or otherwise promote their respective products through normal marketing channels associated with Mexican restaurants (through their respective restaurants, television, radio, social media, 6 “Its absence is generally unnoteworthy” and “given little probative weight.” Cohn v. Petsmart, Inc., 281 F.3d 837, 842 (9th Cir. 2002). “The failure to prove instances of actual confusion is not dispositive against a trademark plaintiff, because actual confusion is hard to prove; difficulties in gathering evidence of actual confusion make its absence generally unnoteworthy.” Brookfield Commc’ns., Inc. v. W. Coast Entm’t Corp., 174 F. 3d 1036, 1050 (9th Cir. 1999). Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 23 of 32 Page ID #:11209 17 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 websites 7 , food packaging, clothing, etc.) (SMF ) Again, Taco Bell’s own counsel has admitted that the marketing channels are the same. (SMF 111) f. There is a Low Degree of Consumer Care Low consumer care increases the likelihood of confusion. Network Automation, 638 F.3d at 1152. “Consumers of fast-food are unlikely to employ much care during their purchases.” Audi AG v. D’Amato, 469 F.3d 534 (6th Cir. 2006). Here, the parties respective fast foods are sold at extremely low price points. (SMF 2, 50) g. Taco Bell Acted With Knowledge of Plaintiff’s MÁS Marks Whether or not Taco Bell acted in good faith is not the test for intent under Sleekcraft. 8 Rather, the test is knowledge: the intent factor “favors the plaintiff where the alleged infringer adopted his mark with knowledge, actual or constructive, that it was another’s trademark.” Brookfield, 174 F. 3d at 1059; McCarthy at 23:10 (intent to “free ride” irrelevant). Taco Bell had already identified Poquito Mas as a competitor as early as 2004. When Taco Bell analyzed its competitors as part of its re-branding process in 2011, it visited Poquito Mas and then had its counsel run a search on MÁS marks, which identified Plaintiff’s MÁS marks and flagged Taco Bell’s proposed marks as a significant risk. Defendants, aware that the proposed MÁS slogans were confusingly similar to Plaintiff’s MÁS marks, then attempted to procure use of Plaintiff’s MÁS marks by deception. When Plaintiff refused to license his mark and objected to any use of Live a Little MÁS, Live MÁS, or a similar use of a mark containing MÁS, Taco Bell went ahead “Butch Cassidy Style” with a MÁS mark 7 Use of “the Web, as a marketing channel, is particularly susceptible to a likelihood of confusion since…it allows for competing marks to be encountered at the same time, on the same screen.” GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000). 8 Absence of malice is no defense to trademark infringement: “In “Through the Looking Glass” we are told the walrus shed copious tears as he devoured the innocent oysters who had accepted his invitation to stroll along the beach. He meant them no harm, of course. He merely wished to eat them.” Dreamwerks, 142 F.3d at 1132, fn12. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 24 of 32 Page ID #:11210 18 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 anyway. There is no question that Defendants’ acted with knowledge of Plaintiff’s MÁS marks when the Live MÁS slogan was adopted. In fact, because Taco Bell had previously been held liable and required to pay $42 million in damages in connection with its misappropriation of the Chihuahua character and Yo Quiero Taco Bell! slogan that immediately preceded Think Outside The Bun, (SMF 55; Taco Bell Corp. v. TBWA Chiat/Day Inc., 552 F.3d 1137 (9th Cir. 2009), it is subject to a higher level of scrutiny in this case. (SMF 55) Playboy Enterprises, Inc. v. Chen, 1996 U.S. Dist. LEXIS 21916, *34 (C.D. Cal. Oct. 1, 1997); Guru Denim v. L.A. Idol Fashion, Inc., 2012 U.S. Dist. LEXIS 10363, *3 (C.D. Cal., Jan. 25, 2012). h. Defendants’ Use of MÁS Hinders Plaintiff’s Expansion Defendants’ own attorneys have observed that, the last Sleekcraft factor, likelihood of expansion, has limited relevance here given that the parties were already competing, (SMF 111) Brookfield, at 1060. On the final Sleekcraft factor, a court “must determine whether existence of the allegedly infringing mark is hindering the plaintiff’s expansion plans.” Entrepreneur Media at 1141. McCarney’s plan to create a successful business that could be readily franchised across the nation has been put on hold due to the uncertainty of Taco Bell’s Live MÁS. (SMF 144-153) B. Triable Issues Of Fact Exist Regarding Damages Under the Lanham Act, a party that demonstrates infringement is “entitled, ... subject to the principles of equity, to recover ... any damages” it has “sustained.” 15 U.S.C. §1117(a). The Ninth Circuit has emphasized that the statute “confers a wide scope of discretion” on district courts in fashioning a remedy. Maier Brewing Co. v. Fleischman Distilling Corp., 390 F. 2d 117, 121 (9th Cir. 1968). The equitable nature of the damages inquiry leaves little room for hard-and-fast rules; instead, relief for infringement is based on “the totality of the circumstances.” Lindy Pen Co. v. Bic Pen Corp., 982 F. 2d 1400, 1411 (9th Cir. 1993). Damages are therefore appropriate if a party has shown “some injury resulting from the [infringer’s] deception.” Harper House, Inc. v. Thomas Nelson, Inc., 889 F. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 25 of 32 Page ID #:11211 19 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 2d 197, 210 (9th Cir. 1989); Healthport Corp. v. Tanita Corp. of Am., 563 FS 2d 1169, 1182 (D. Or. 2008) (monetary relief also appropriate where the defendant has derived an “actual benefit” from its infringing conduct). Cognizable injuries include lost revenues, including reasonable royalties, the infringer’s profits from infringement, and loss of goodwill or ability to control one’s reputation. Beacon Mut. Ins. Co. v. OneBeacon Ins. Group, 376 F.3d 8, 10 (1st Cir. 2004); Sands, Taylor & Wood v. Quaker Oats Co., 34 F.3d 1340 (7th Cir. 1994) (Sands II); Quia Corp. v. Mattel, Inc., Inc., No. C 10-1902, 2011 WL 2749576, *5 (N.D. Cal. July 14, 2011). Once an injury is adequately proven, equity also demands that the court “carefully fashion [a] remed[y] which take[s] all the economic incentive out of trademark infringement.” Playboy Enters., Inc., v. Baccarat Clothing Co., 692 F.2d 1272, 1275 (9th Cir. 1982) (“[T]he public is injured by an inadequate judicial response to trademark infringement.”). “[A] trademark plaintiff is entitled to effective relief; and any doubt in respect of the extent thereof must be resolved in its favor as the innocent producer and against the [defendant], which has shown by its conduct that it is not to be trusted.” Polo Fashions v. Dick Bruhn, 793 F.2d 1132, 1135 (9th Cir. 1986). Contrary to Taco Bell’s claim, Plaintiff’s damages claims rest on more than idle “speculation.” As discussed in the statement of facts above, Taco Bell tried, but failed, to license the MÁS marks initially for $50,000 and were willing to pay up to $750,000. Taco Bell knowingly adopted MÁS not only in its new slogan, but as the essence of Taco Bell. Taco Bell reaped advantages from its infringement, flooding the market with its new Live MÁS slogan. Poquito Mas suffered losses of royalty payments and goodwill, most particularly the loss of control over its marks (not to mention incurred substantial litigation costs) as a result. On that record, a jury could easily find that Poquito Mas’ damages claims have been proven with “reasonable certainty”; indeed, Poquito Mas submits that the record is sufficiently clear that Taco Bell will also be held accountable for enhanced damages under Section 1117(a) of the Lanham Act and exemplary damages under California law. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 26 of 32 Page ID #:11212 20 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 1. Plaintiff Is Entitled to Damages in the Form of Reasonable Royalties Taco Bell’s argument regarding Plaintiff’s reasonable royalties claim misstates both the law and the facts, and ignores this Court’s ruling in QS Wholesale, Inc. v. World Marketing, Inc.2013 WL 1953719 (C.D.Cal.,2013). As this Court held: Reasonable royalties, which are a calculation of the hypothetical licensing royalties that an infringer would have paid to the senior owner of a mark, can be recovered as a measure of damages in trademark infringement cases.” QS Wholesale at *4.(cites omitted) Contrary to Taco Bell’s assertion that royalties are speculative unless there is a prior license agreement, “[t]he Ninth Circuit has made no such categorical statement, however, finding only more generally that ‘[i]n the absence of a legitimate proposed basis on which to calculate a royalty, awarding a reasonable royalty…would be impermissibly speculative.’” Id. (cites omitted) “Even in cases without [prior licensing] agreements ... courts have awarded or approved of ‘reasonable royalty’ damages if the evidence provides a sufficiently reliable basis from which to calculate them.’” Id. (cites omitted) In Adidas, for example, a case within the Ninth Circuit, even when no previous licensing agreement existed between the plaintiff and the defendant, and the plaintiff “concede[d] that it would not have licensed the marks to [defendant] Payless,” the court upheld a jury’s reasonable royalties award that was “consistent with royalties between adidas or Payless with third parties and also with royalties between third parties.” (cites omitted) In QS Wholesale this Court held that Quiksilver’s attempts to purchase the Visitor mark from World Marketing, by itself, was a sufficient basis to calculate a reasonable royalty. Id. at *5. 9 At the outset, Plaintiff has never stated that he was unwilling to license the MÁS marks. To the contrary, McCarney has not only considered licensing said marks, he has done so in connection with his franchisees. (SMF 18, 20) Plaintiff remains open to licensing “out” its MÁS marks. (SMF 18) There is also an extensive record of negotiations between Taco Bell and Poquito Mas regarding licensing the MÁS marks. (SMF 73-99) Defendants reached out to McCarney on numerous occasions in a concerted effort to obtain rights to the marks, 9 In explaining its conclusion, this Court stated that “[a]s a policy matter, the Court finds this result in congruence with the trademark law’s function: it takes the economic incentive out of infringement and promotes a fair and competitive marketplace. Id. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 27 of 32 Page ID #:11213 21 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 offering McCarney $50,000 initially and considered going as high as $750,000. Finally, there is an extensive record of the negotiations between Poquito Mas , Branstetter and Lion in 2010/2011. (SMF 146-152) Taco Bell does not address Dr. Scott Phillips expert testimony that a reasonable royalty can be based upon: 1) Poquito Mas licenses its trademarks or franchises its restaurant system, including trademarks, to third parties in the United States 10 , 2) Taco Bell licenses its trademarks to franchisees and licensees in the United States, 3) trademark licensing is common in the restaurant industry, 4) over a period of two months Poquito Mas and Defendants engaged in discussions to use Plaintiff’s MÁS marks, 11 and 5) Plaintiff has licensed its marks in the past and has engaged in extensive discussions with various venture capitalist groups about expanding nationwide and licensing its marks in connection therewith. (SMF 18,20,146-152) Indeed, Taco Bells own expert, Louis Berneman, assumed that a reasonable royalty was an appropriate measure of damages and concluded that royalty damages would be in the $200,000 to $390,000 range. (SMF 162) 2. Plaintiff Is Entitled to Damages for Corrective Advertising and Loss of Ability to Control Its Goodwill and Reputation “An award of the cost of corrective advertising, like compensatory damage awards in general, is intended to make the plaintiff whole. It does so by allowing the plaintiff to recover the cost of advertising undertaken to restore the value plaintiff’s trademark has lost due to defendant’s infringement.” Adray v. Adry-Mart, Inc., 76 F.3d 984, 988 (9 th Cir., 1995). A plaintiff need not show a specific measure of harm to its goodwill and reputation in order to recover corrective damages. Id. Actual 10 The fact is that PM licenses its trademarks to others: That it does so within the context of a franchise agreement is a distinction without a material difference. 11 The fact that PM took the time to consider the offers of TB demonstrates that PM did not categorically reject, the possibility that it would enter into a trademark license under circumstances that it concluded were satisfactory to it. Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 28 of 32 Page ID #:11214 22 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 damages under the Lanham Act are calculated based on tort-law principles. Lindy Pen, 982 F. 2d at 1408 . A well-known principle of tort law is that loss of goodwill or reputation is difficult to quantify. Days Inns Worldwide, Inc. v. Patel, 2005 WL 4655381, *5 (SD Cal. 2005) see Restatement (Second) of Torts § 912 (“For harm to ... reputation, compensatory damages reasonably proportioned to the intensity and duration of the harm can be awarded without proof of amount other than evidence of the nature of the harm”). Accordingly, once a jury determines the presence of an injury, the jury then has the discretion to make a reasonable estimate of the harm caused to Plaintiff’s reputation by Defendants. Skydive Ariz. v. Quattrochi, 704 FS 2d 841 (D.Ariz.,2010). Corrective advertising is particularly appropriate in cases of reverse confusion where the junior user has saturated the market with its infringing mark. Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th Cir. 1977) Poquito Mas, over the past thirty years, has spent significant time, effort, and resources to achieve, as many have acknowledged, a stellar reputation . With knowledge and reckless disregard of Plaintiff’s rights, Taco Bell saturated the United States with its infringing MÁS mark to the extent that as of 2013 64% of Taco Bell’s customers associated the MÁS marks with Taco Bell and not Plaintiff. While corrective advertising may not be as important in connection with consumers already aware of Plaintiff’s restaurants, it is critical for consumers who do not know of Plaintiff and perceive MÁS to associated with Taco Bell - critically in San Diego, Northern California, and other areas where Plaintiff will naturally expand. As Plaintiff’s expert, Bruce Silverman opined: Taco Bell will have spent close to $1 billion promoting its restaurants via its “LIVE MÁS” advertising campaign by the end of 2014. It will require a herculean effort for a small company like Poquito Mas to reclaim its singular identification with the “MÁS” marks. In my experience, once a trademark’s meaning and origination is clouded, it is very difficult to restore it to its full value. (SMF 163-164) Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 29 of 32 Page ID #:11215 23 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 The very real damage caused by the loss of control of its MÁS marks and resulting goodwill had a very real and tangible negative impact on Poquito Mas when negotiations with Branstetter and Lion ceased due to the uncertainty of Taco Bell’s use of MÁS. (SMF 152-153) Corrective advertising is a particularly appropriate remedy in cases of reverse confusion. (SMF 163-164) For the same reasons, Plaintiff is entitled to damages for the loss of the ability to control its reputation. “A finding of infringement implicitly signifies a loss of expectation and goodwill as well.” Citizens Financial Group, Inc. v. Citizens Nat. Bank of Evans City, 383 F.3d 110, 131 (3d Cir. 2004). Professor McCarthy explains the presumption in these terms: Injury is presumed because if confusion is likely, it is also probable that the senior user’s reputation is placed in the hands of another - the junior user. The law views the owner of a trademark as damaged by an infringing use “which place[s] the owner’s reputation beyond its control, though no loss in business is shown.” This probable loss of control over reputation and goodwill is presumed by the law to be an injury. 5 McCarthy at 30:2. 3. Plaintiff Is Entitled to a Disgorgement of Defendants’ Profits “[D]isgorgement of profits is a traditional trademark remedy.” Jerry’s Famous Deli, Inc. v. Papanicolaou, 383 F.3d 998, 1004–05 (9th Cir., 2004). “In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed.” 15 U.S.C. § 1117(a). The Ninth Circuit has previously required a showing of willful infringement as a prerequisite to recovery of an infringer’s profits when the parties are not in direct competition. Lindy Pen, 982 F. 2d at 1406. However, a 1999 amendment to Section 1117 “replaced ‘or a violation under section 43(a)’ with ‘a violation under section 43(a), or a willful violation under section 43(c).’” Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 174 (3d Cir.2005) In Banjo Buddies, Inc., the Third Circuit found that the 1999 amendment to Section 1117 “effectively superseded the willfulness requirement as applied to § 43(a).” Id.; See e.g., Quick Technologies, Inc. v. Safe Group PLC, 313 F.3d 338 (5th Cir.2003); Synergistic v. Korman, 470 F. 3d 162 (4th Cir. 2006); Nike v. Top Brand, 2005 WL 1654859 (SDNY 2005). Courts in the Ninth Circuit have Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 30 of 32 Page ID #:11216 24 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 followed suit. See e.g., Pom Wonderful v. Purely Juice, 2008 WL 4222045 (CD Cal. 2008); R&R Partners v. Tover, 2007 WL 1202802 (Nev. 2007). Consequently, if liability is established, plaintiff “shall be entitled ... to recover defendant’s profits.” 15 U.S.C. §1117(a). Additionally, even under the former Lindy Pen standard Plaintiff would be entitled to disgorgement due to the fact that Taco Bell did in fact act willfully 12 and, as it has admitted, Taco Bell is a direct competitor of Poquito Mas . 4. Plaintiff Is Entitled to Injunctive Relief A permanent injunction is the usual and normal remedy once trademark infringement has been found in a final judgment. McCarthy at §30:1. “In a trademark infringement claim, ‘irreparable injury may be presumed from a showing of likelihood of success on the merits,’” Marlyn Nutraceuticals v. Mucos Pharma , 571 F.3d 873, 877 (9th Cir. 2009); McCarthy at §30:1. There is no question that Taco Bell continues to use the Live MÁS slogan and has no intention of stopping unless ordered to do so. As McCarthy warns, “if a court were to permit the infringer to continue its infringing activities, the result would be a judicially imposed compulsory license given to an infringer.” McCarthy at §30:1. Upon a finding liability, absent an injunction consumers will continue to be confused. As to inadequate legal remedies, the ongoing infringing use by Taco Bell of Live MÁS in the marketplace creates an uncertainty 12 Even if willfulness were a factor in disgorgement, numerous questions of fact exist. Among other things, there is the first opinion from Winston & Strawn stating that there was a significant risk to using MÁS. There is evidence that Defendants were proceeding with MAS no matter what. The later advice of counsel opinions were incompetent (did not consider reverse confusion, etc.), not objective and were manufactured to overcome Plaintiff’s objection and obtain indemnification/insurance coverage. The conclusory and superficial nature of the later opinions. Defendants did not actually rely on the opinions. See e.g., Adidas v. Payless, 546 FS 2d 1029, 1049 (DC OR. 2008); Mendocino Envtl. Ctr. v. Mendocino County, 192 F.3d 1283, 1302 (9th Cir.1999). There is also evidence that, particularly after Taco Bell Corp. v. TBWA Chiat/Day Inc. 552 F.3d 1137 (9th Cir. 2009), indemnification from FCB and resulting insurance coverage, and not any advice of counsel opinion, was the reason Taco Bell went forward with Live MAS. Where, as here, the analysis turns ultimately on questions as to state of mind, summary judgment is generally inappropriate); Chiron Corp. v. Genentech, Inc., 268 FS2d 1117 (ED Cal.,2002). Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 31 of 32 Page ID #:11217 25 PLAINTIFF'S OPPOSITION TO DEFENDANT TACO BELL CORP.’S MOTION FOR SUMMARY JUDGMENT/ADJUDICATION 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 29 30 31 and a potential for confusion in Plaintiff’s business that is not easily quantifiable. MGM v. Grokster, Ltd., 518 FS 2d 1197, 1220 (CD Cal. 2007); McCarthy §30:1. The balance of hardships weighs heavily in favor of an injunction. Granting an injunction would not impose a hardship on Taco Bell , which has the resources to change to another slogan. On the other hand, denying an injunction “would create a situation in which Plaintiff could only enforce its intellectual property rights by seeking [further] statutory damages,” and “this would constitute a substantial hardship” to Plaintiff. Louis Vuitton v. Akanoc Solutions, Inc., 2010 WL 5598337, at *18 (ND Cal. 2010). Finally, an injunction protecting Plaintiff’s intellectual property rights would serve the public’s interest. Id. at *19. Any doubt as to a permanent injunction is to be resolved against the infringer. Warner & Co. v. Eli Lilly & Co, 265 U.S. 526, 532 (1924). 5. Plaintiff Is Entitled to Punitive Damages and Attorney’s Fees Under California law, punitive damages are permitted when a plaintiff proves that the defendant acted with oppression, fraud or malice. CC§ 3294(a). Under the Lanham Act, attorneys fees may be awarded if the defendant’s conduct was willful. 15 U.S.C. §1117. Taco Bell has not moved for Summary Judgment on either element of damages. In QS Wholesale this Court upheld an award of punitive damages and attorney’s fees on facts similar to the present case, i.e., knowledge of mark, attempt to license rights, small company bullied by a larger company, refusal to stop infringing (12-cv-00451, Dkt. #359) IV. CONCLUSION “This dispute could have been avoided had [Taco Bell] been more careful, or a tad more creative, in choosing its [slogan].” Dreamwerks at 1132. Plaintiff respectfully requests that this Court DENY Defendant’s Motion in its entirety. DATED: December 22, 2014 BLAKELY LAW GROUP By: /s/ Brent H. Blakely Brent H. Blakely Cindy Chan Attorneys for Plaintiff Poquito Mas Licensing Corporation Case 8:13-cv-01933-DOC-JPR Document 175 Filed 12/22/14 Page 32 of 32 Page ID #:11218