Small Axe Enterprises, Inc. v. Amscan, Inc. et al

MOTION to Dismiss for Failure to State a Claim

S.D. Cal.October 19, 2016

CHADBOURNE & PARKE, LLP AT T ORN E YS AT LA W LO S AN GE L E S 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 NOTICE OF MOTION AND MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM; 3:16-CV-00981-BEN-WVG ROBIN D. BALL (State Bar No. 159698) rball@chadbourne.com CHADBOURNE & PARKE LLP 350 Grand Avenue, 32nd Floor Los Angeles, California 90071 Telephone: (213) 892-1000 Facsimile: (213) 892-2045 PAUL J. TANCK (Pro Hac Vice Pending) ptanck@chadbourne.com CHADBOURNE & PARKE LLP 1301 Avenue of the Americas New York, New York 10019-6022 Telephone: (212) 408-5100 Facsimile: (212) 541-5369 Attorneys for Defendants AMSCAN, INC.; PARTY CITY HOLDCO, INC., PARTY CITY COPORATION; and PARTY CITY OF SAN DIEGO, INC. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA SMALL AXE ENTERPRISES, INC., Plaintiff, v. AMSCAN, INC.; PARTY CITY HOLDCO, INC., PARTY CITY COPORATION; PARTY CITY OF SAN DIEGO, INC.; DM MERCHANDISING, INC., Defendants. Case No. 3:16-CV-00981-BEN-WVG NOTICE OF MOTION AND MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM Date: December 5, 2016 Time: 10:30 a.m. Place: Courtroom 5A Judge: Roger T. Benitez [Filed concurrently with Memorandum of Points and Authorities] Initial Complaint Filed: April 22, 2016 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on December 5, 2016 at 10:30 a.m., or as soon thereafter as the matter can be heard, in the courtroom of the Honorable Roger T. Benitez, located at 221 West Broadway, San Diego, California 92101, Defendants Amscan, Inc., Party City Holdco, Inc., Party City Corporation, and Case 3:16-cv-00981-BEN-WVG Document 22 Filed 10/19/16 Page 1 of 2 CHADBOURNE & PARKE, LLP AT T ORN E YS AT LA W LO S AN GE L E S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 2 - NOTICE OF MOTION AND MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM; 3:16-CV-00981-BEN-WVG Party City of San Diego, Inc. (the “Party City Defendants”), will and hereby does move for an order granting the Party City Defendants’ motion to dismiss Plaintiff’s Complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) for the Federal Rules of Civil Procedure. Specifically, the Party City Defendants seek dismissal of all four claims for relief alleged in Plaintiff’s Complaint. This Motion is made based on this Notice, the accompanying memorandum of points and authorities, and exhibits thereto, and the proposed Order filed and served in connection with this Motion. Respectfully submitted, Dated: October 19, 2016 /s/ Robin D. Ball Robin D. Ball rball@chadbourne.com CHADBOURNE & PARKE LLP Attorneys for Defendants AMSCAN, INC.; PARTY CITY HOLDCO, INC., PARTY CITY COPORATION; and PARTY CITY OF SAN DIEGO, INC. Case 3:16-cv-00981-BEN-WVG Document 22 Filed 10/19/16 Page 2 of 2 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 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 IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG ROBIN D. BALL (State Bar No. 159698) rball@chadbourne.com CHADBOURNE & PARKE, LLP 350 Grand Avenue, 32nd Floor Los Angeles, California 90071 Telephone: (213) 892-1000 Facsimile: (213) 892-2045 PAUL J. TANCK (Pro Hac Vice Pending) ptanck@chadbourne.com CHADBOURNE & PARKE LLP 1301 Avenue of the Americas New York, New York 10019-6022 Telephone: (212) 408-5100 Facsimile: (212) 541-5369 Attorneys for Defendants AMSCAN, INC.; PARTY CITY HOLDCO, INC., PARTY CITY COPORATION; and PARTY CITY OF SAN DIEGO, INC. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA SMALL AXE ENTERPRISES, INC., Plaintiff, v. AMSCAN, INC.; PARTY CITY HOLDCO, INC., PARTY CITY CORPORATION; PARTY CITY OF SAN DIEGO, INC.; DM MERCHANDISING, INC., Defendants. Case No. 3:16-CV-00981-BEN-WVG MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM Date: December 5, 2016 Time: 10:30am Courtroom: Courtroom 5A Judge: Roger T. Benitez [Filed concurrently with Notice of Motion and Motion to Dismiss For Failure to State a Claim] Initial Complaint Filed: April 22, 2016 Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 1 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 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 IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG TABLE OF CONTENTS Page I. PRELIMINARY STATEMENT............................................................................. 1 II. STATEMENT OF FACTS .................................................................................... 1 III. ARGUMENT........................................................................................................ 2 A. The Party City Defendants Do Not Infringe Any Claim Of The ‘809 Patent. ............................................................................................................. 3 B. Small Axe’s Lanham Act Claim Is Barred By Laches And Is Insufficiently Pled. ......................................................................................... 7 C. Small Axe’s Unlawful Business Practices Claim Is Barred By The Applicable Statute of Limitations. ............................................................... 11 D. Small’s Axe’s Claim Of Unjust Enrichment Is Not A Cause Of Action For Which Relief May Be Granted And Is Not An Otherwise Available Remedy......................................................................................................... 12 IV. CONCLUSION .................................................................................................. 13 Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 2 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -ii- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG TABLE OF AUTHORITIES Page(s) Cases Arcsoft, Inc. v. Cyberlink Corp., 153 F. Supp. 3d 1057, 1068 (N.D. Cal. 2015) ..............................................12, 13 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................................. 3 Au-Tomotive Gold Inc. v. Volkswagen of America, Inc., 603 F.3d 1133 (9th Cir. 2010).......................................................................10, 11 Baby Trend, Inc. v. Playtex Prod., LLC, 2013 WL 4039451 (C.D. Cal. Aug. 7, 2013) .................................................... 3, 9 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .......................................................................................... 2, 3 Bolden v. Colvin, 2015 WL 450522 (S.D. Cal. Feb. 3, 2015) ........................................................... 3 e.Digital Corp. v. iBaby Labs, Inc., 2016 WL 4427209 (N.D. Cal. Aug. 22, 2016).................................................. 3, 5 Frison v. Accredited Home Lenders, Inc., 2011 WL 1103468 (S.D. Cal. Mar. 25, 2011)..................................................... 15 Homeland Housewares, LLC v. Euro-Pro Operating LLC, 2014 WL 6892141 (C.D. Cal. Nov. 5, 2014) ................................................12, 14 Jarrow v. Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829 (9th Cir. 2002) ........................................................................... 9, 10 Keep a Breast Found. v. Seven Grp., 2011 WL 3240756 (S.D. Cal. July 28, 2011)................................................12, 13 Kim v. ConAgra Foods, Inc., 465 F.3d 1312 (Fed. Cir. 2006) ......................................................................... 6, 8 Konvin Assocs. v. Extech/Exterior Techs., 2006 WL 2460589 (N.D. Ill. Aug. 21, 2006)........................................................ 7 Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 3 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iii- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 63 P.3d 937 (2003) ................................................................. 16 London v. New Albertson's, Inc., 2008 WL 4492642 (S.D. Cal. Sept. 30, 2008) .................................................... 15 McBride v. Boughton, 123 Cal. App. 4th 379 (2004).............................................................................. 16 Perez v. Nidek Co., 657 F. Supp. 2d 1156 (S.D. Cal. 2009), aff'd, 711 F.3d 1109 (9th Cir. 2013)............................................................................................................. 14 Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) ............................................................................. 7 Sleep Sci. Partners v. Lieberman, 2010 WL 1881770 (N.D. Cal. May 10, 2010) .................................................... 13 Smith v. Capital One Fin. Corp., 2012 WL 259515 (N.D. Cal. Jan. 27, 2012) ......................................................... 3 Tillamook Cnty. Smoker, Inc. v. Tillamook Cnty. Creamery Assoc., 465 F.3d 1102 (9th Cir. 2006)............................................................................. 10 Travares v. Nationstar Mortg., LLC, 2014 WL 3502851 (S.D. Cal. July 14, 2014)...................................................... 14 Ultra-Precision Mfg., Ltd. v. Ford Motor Co., 411 F.3d 1369 (Fed. Cir. 2005) ........................................................................... 18 Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d 1546 (Fed.Cir. 1989) .......................................................................... 6, 8 Statutes 15 U.S.C. §1125(a) ............................................................................................passim 35 U.S.C. § 112....................................................................................................... 6, 7 Other Authorities Leahy-Smith America Invents Act Pub. L. No. 112-29, §1 et seq., 125 Stat. 284 (2011)............................................ 7 Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 4 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iv- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG Cal. Bus. & Prof. Code § 17200 ......................................................................1, 14-16 Cal. Bus. & Prof. Code § 17208 .........................................................................14, 15 Fed. R. Civ. P. 8(2) ..................................................................................................... 2 Fed. R. Civ. P. 12(b)(6) .............................................................................................. 1 Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 5 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 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 IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG I. PRELIMINARY STATEMENT In both its original Complaint and its First Amended Complaint, Plaintiff, Small Axe Enterprises, Inc. (“Small Axe”) asserted claims for patent infringement despite making statements in the very same pleadings which preclude any viable theory by which Defendant’s product could infringe the asserted patent. Nor has Small Axe pleaded any other cause of action on which relief may be granted. Small Axe’s Lanham Act claim is time barred and is not pled with the required specificity. Small Axe’s claim based on Cal. Bus. & Prof. Code Section 17200 is likewise time barred. Small Axe’s unjust enrichment claim fails because, under California law, unjust enrichment is not recognized as a cause of action, but only as a species of remedy for other causes of action; Small Axe has not even attempted to plead any other cause of action which could serve as a predicate cause of action to support an unjust enrichment remedy. In light of these bars to Small Axe’s claims, any attempt by Small Axe to amend its complaint yet again would be futile. Accordingly, Defendants respectfully request that the Court dismiss with prejudice all counts of Plaintiff’s First Amended Complaint for failure to state a claim upon which relief can be granted under Fed. R. Civ. P. 12(b) (6). II. STATEMENT OF FACTS On April 22, 2016, Small Axe filed its initial Complaint against Amscan, Inc., Party City Holdco Inc., Party City Corporation, and Party City of San Diego, Inc. (the “Party City Defendants”) 1 , asserting infringement of U.S. Patent No. 6,578,809 (the “‘809 Patent”) and reciting a claim for unjust enrichment. (Dkt. 1). In its initial Complaint, Small Axe alleged that the Party City Defendants, Luau Coaster Bottom and Stem Gemz products infringe the ‘809 Patent. (Dkt. 1 at ¶4). Small Axe further alleged that the Luau Coaster Bottom products are exact 1 Defendant D.M. Merchandising, Inc. was voluntarily dismissed with prejudice by Small Axe on September 26, 2016. (Dkt. 16). Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 6 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG replicas of Small Axe’s products, such as its 3D Beverage Coaster products, and cause confusion to Small Axe’s customers in the market. (Dkt. 1 at ¶¶ 1, 4). After the first complaint was filed, discussions between counsel for Small Axe and the Party City Defendants (the “Parties”) led to an attempt to reach settlement. To enable continuing discussions, the Parties filed a joint motion and stipulation for extension of time to answer on September 19, 2016. (Dkt. 14), which the Court granted on September 26, 2016. (Dkt. 18). After further discussions failed to produce a settlement, on October 3, 2016, Small Axe filed a First Amended Complaint including the same claims of patent infringement and unjust enrichment and adding claims for Lanham Act violations and unfair business practices under California law. (Dkt. 19). Small Axe attached a copy of the ‘809 Patent to their First Amended Complaint as Exhibit A. (Dkt. 19 at ¶3; Dkt. 19-1) III. ARGUMENT A pleading is deficient if it fails to state a plausible claim for relief on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Fed. R. Civ. P. 8(2) (a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief”). A “claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). However, when the facts pled in a complaint, even if viewed most favorably for the plaintiff, make clear that a claim cannot be granted, it must be dismissed. Id.; see also Smith v. Capital One Fin. Corp., 2012 WL 259515, at *2 (N.D. Cal. Jan. 27, 2012) (“A motion to dismiss should be granted if the complaint does not proffer enough facts to state a claim for relief that is plausible on its face.”). To adequately plead patent infringement under the Twombly standard, a plaintiff must plausibly allege that an accused product practices each of the limitations found in at least one asserted claim. See e.Digital Corp. v. iBaby Labs, Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 7 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG Inc., 2016 WL 4427209, at *3-5 (N.D. Cal. Aug. 22, 2016). Further, a motion to dismiss must be granted when it is apparent from the face of the complaint that the applicable statute of limitations has run and the complaint gives no support for a tolling of the statute. Bolden v. Colvin, 2015 WL 450522, at *2 (S.D. Cal. Feb. 3, 2015); see also Baby Trend, Inc. v. Playtex Prod., LLC, 2013 WL 4039451, at *3-5 (C.D. Cal. Aug. 7, 2013) (plaintiff’s Lanham Act claim was time-barred because it knew or should have known about its §43(a) cause of action three years before it filed its complaint). In addition, while the Court must accept well-pled allegations as true and construe them in a light most favorable to the nonmoving party, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. Small Axe’s Lanham Act and unjust enrichment claims lack this required specificity. A. The Party City Defendants Do Not Infringe Any Claim Of The ‘809 Patent. 1. The Accused Products Do Not Infringe Any Independent Claim of the ‘809 Patent. Despite asserting a claim for patent infringement, the allegations made by Small Axe in its First Amended Complaint affirmatively demonstrate that the Party City Defendants cannot infringe any claim of the ‘809 patent. In its First Amended Complaint, Small Axe alleges infringement of the ’809 patent, but fails to identify even a single claim of the ‘809 patent that is infringed by the Party City Defendants, nor does Small Axe compare any limitation of any patent claim to any accused product. Instead, Small Axe shows a figure from the ‘809 patent alongside a picture of the Party City Defendants’ product and concludes that it is “an exact replica[] of the invention” without providing any explanation or any comparison to any claim of the patent. (Dkt. 19 at ¶19). This failure to state Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 8 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG even minimum facts demonstrating why the Party City Defendants’ product is alleged to infringe alone is grounds for dismissal of the First Amended Complaint. See, e.g., e.Digital, 2016 WL 4427209, at *3 (dismissing a complaint for patent infringement because it did not “plausibly allege that the accused products practice each of the limitations found in at least one asserted claim.”). In addition to failing to plead infringement with the requisite specificity, Small Axe goes a step farther by making statements clearly demonstrating that the Party City Defendants’ products cannot infringe any claim of the ‘809 patent as a matter of law. The ‘809 patent contains three independent claims (claims 1, 4 and 8). (Dkt. 19-1 at 12). Each of these independent claims contains the limitation that the patented device or article of manufacture be formed of a “single strip” (claims 1 and 8) or a “unitary strip” (claim 4) of material. (Dkt. 19-1 at 12). However, in its First Amended Complaint, Small Axe admits that the Party City Defendants’ products are made of “two pieces of neoprene material.” (Dkt. 19 at ¶19). Thus, as Small Axe admits that the Party City Defendants’ products are made of “two pieces of material” and not a “single” or “unitary” strip, the accused products cannot infringe any of the three independent claims of the ‘809 patent. As discussed below, without infringement of any independent claim, there can be no infringement of any of the dependent claims either. See, e.g., Kim v. ConAgra Foods, Inc., 465 F.3d 1312, 1316, n.1 (Fed. Cir. 2006); Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d 1546, 1552 n. 9 (Fed.Cir. 1989). Accordingly, even when taken in the light most favorable to plaintiff, Small Axe’s claim for patent infringement must be dismissed. 2. The Accused Products Do Not Infringe Any Dependent Claim of the ‘809 Patent. Although not pled in its First Amended Complaint, based on correspondence between counsel for the parties, Small Axe is likely to argue that even though none Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 9 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG of the independent claims are infringed, one of the dependent claims 2 is still infringed by a product that is formed of two strips of material. However, a fundamental axiom of patent law is that a dependent claim cannot be infringed if the independent claim from which it depends is not also infringed. Kim, 465 F.3d at 1316, n.1 (holding that because an independent claim was not infringed, the dependent claims were necessarily also not infringed); Wahpeton Canvas, 870 F.2d at 1552 n. 9 (“One who does not infringe an independent claim cannot infringe a claim dependent on (and thus containing all the limitations of) that claim.”). Dependent claims must be read to include every limitation found in the claims from which they depend. 35 U.S.C. § 112(4) (“A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers.”).3 Accordingly, a dependent claim may not contain a limitation that contradicts a limitation in any claim upon which it depends, lest that dependent claim be found invalid under 35 U.S.C. §112(2). Konvin Assocs. v. Extech/Exterior Techs., 2006 WL 2460589, at *4-5 (N.D. Ill. Aug. 21, 2006). However, in a 2 A patent specification must include at least one claim “particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.” 35 U.S.C. § 112. A patent specification may also include one or more dependent claims that refer back to and further limit an independent or another dependent claim. Id. Dependent claims include all of the limitations of the claim(s) to which they refer. Id. 3 Reference is made herein to 35 U.S.C. § 112 before the amendments thereto made by the Leahy-Smith America Invents Act (Pub. L. No. 112-29, §1 et seq., 125 Stat. 284 (2011)) (“AIA”) because the application for the ‘809 patent was filed before September 16, 2012, the effective date of the AIA as it applies to 35 U.S.C. §112. AIA at §4(e). Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 10 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG circumstance in which a claim may be amenable to two possible interpretations and one would render the claim invalid and one would not, the claim must be read according to the interpretation that would preserve the claim's validity. Phillips v. AWH Corp., 415 F.3d 1303, 1328 (Fed. Cir. 2005). Here, it is possible to reconcile the seeming ambiguity between the “single” or “unitary” strip requirements of the independent claims on the one hand, and the “material bonded together” limitations of dependent claims 2 and 5 and the “two different types of material” limitation of dependent claim 7 on the other hand by examining the specification of the ‘809 patent. (Dkt. 19-1). The ‘809 patent specification describes an embodiment in which a single, unitary strip of material may be made by laminating an inner layer and an outer layer of material together to form a single strip before forming the cup device: “FIGS. 3 and 8-9 each shows pre-formed cupping means 22, housing a conventional coffee cup 2. It is noted that according to this embodiment, pre-formed cupping means 22, further comprises peripheral/outer layer 38. As discussed above and described below, the nature of the materials as absorbent functions in complementary fashion with the waterproofed nature of at least on aspect of the same. For example, according to an embodiment with outer layer 38, the surface may be a smoothed and sheened rubberized coating, over principal body 22 of neoprene.” (Dkt. 19-1, ‘809 patent, col. 8, lines 31-41) (emphasis added). As Small Axe states in its First Amended Complaint, its own product is made of neoprene (Dkt. 19 at ¶1) which, as is common in many items such as wetsuits, has a neoprene layer bonded to a rubberized “outer coating layer that is waterproofed.” (Dkt. 19-1, ‘809 patent, col. 7, lines 56-62). Small Axe admits that, regardless of whether the Party City Defendants’ products use neoprene bonded to a rubberized material (which is the purportedly inventive concept recited in dependent claims 2, 5 and 7), they do not contain a “single” or “unitary” strip as required by the independent claims. (Dkt. 19 at ¶19) Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 11 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG Accordingly, no matter how the dependent claims of the ‘809 patent are read, a device that does not infringe any independent claim of the ‘809 patent because it is not made of a “single” or “unitary” strip cannot, as a matter of fundamental patent law, infringe any dependent claim of the ‘809 patent. Kim, 465 F.3d at 1316, n.1; Wahpeton Canvas, 870 F.2d at 1552 n. 9. Accordingly, Small Axe’s claim of patent infringement must fail and should be dismissed with prejudice. B. Small Axe’s Lanham Act Claim Is Barred By Laches And Is Insufficiently Pled. 1. Small Axe’s Claim For Lanham Act Violations Is Barred By Laches. Small Axe admits in its First Amended Complaint that it knew of the claims asserted in its First Amended Complaint “[o]n or about May 28, 2009, [when] Peter Gluck, Esq. (‘Mr. Gluck’), Patent Procurement Counsel for Small Axe, spoke with Joe Zepf (‘Mr. Zepf’), general counsel at Amscan, regarding Amscan and PCH, PCC, and PCSD’s infringement of the ‘809 Patent for selling the Luau Coaster Bottoms.” (Dkt. 19 at ¶ 20). Nonetheless, despite knowing of its claim in 2009, Small Axe waited for seven years before it filed its Complaint. Laches is a defense to equitable claims, including Lanham Act claims, and is a proper basis for dismissing claims with prejudice on a Motion to Dismiss. See, e.g., Baby Trend, 2013 WL 4039451, at *3-5 (motion to dismiss Lanham Act claim granted because claim was time-barred under the three year statute of limitations). Although laches and the statute of limitations are different defenses, courts look to the limitations period of an analogous action at law to determine whether a claim is time barred by laches. See Jarrow v. Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835-36 (9th Cir. 2002); Baby Trend, 2013 WL 4039451, at *3-5. The Lanham Act does not contain a specific limitation period. Baby Trend, 2013 WL Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 12 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -8- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG 4039451, at *3. Thus, courts in the Ninth Circuit “‘borrow’ the limitations period from the most closely analogous action under state law.” Id. at 836. In California, the analogous limitations period for a Section 43(a) (15 U.S.C. §1125(a)) Lanham Act Violation is California’s period for fraud, which is three years. Id. at 837; C.C.P. § 338(d). Although Lanham Action violations are continuing, there is a presumption of laches if the alleged wrongful conduct occurred beyond the analogous statute of limitations period (three years in California), which begins when the plaintiff knew or should have known about its potential cause of action. Jarrow, 304 F.3d at 837-38; see also Tillamook Country Smoker, Inc. v. Tillamook Cty. Creamery Ass’n, 465 F.3d 1102, 1108 (9th Cir. 2006) (laches starts “from the time when plaintiff knew or should have known about its potential cause of action”). Small Axe has not pled, and cannot plead the existence of any circumstance that would toll the applicable three year statute of limitations for the four years that would be necessary to revive its expired Lanham Act claim. For a plaintiff’s claim to be barred based on laches, the defendant must show that the plaintiff’s delay in filing suit was 1) unreasonable and 2) defendant would suffer prejudice caused by the delay if the claim was not barred. Au-Tomotive Gold Inc. v. Volkswagen of America, Inc., 603 F.3d 1133, 1139 (9th Cir. 2010); see also Jarrow 304 F.3d at 838 (court held claim was barred because the seven year delay in filing suit was unreasonable and plaintiff did not offer any legitimate excuse for not filing suit earlier). In addition, “[i]f a Lanham Act claim is filed … after the analogous limitations period has expired, the presumption is that laches is a bar to suit.” Au-Tomotive Gold, 603 F.3d at 1139-40. Small Axe’s delay in bringing Lanham Act claims is unreasonable and would cause prejudice to the Party City Defendants. Small Axe waited for seven years before it filed its Complaint and has not offered any excuse whatsoever for its delay Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 13 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG in filing. Allowing Small Axe’s claim to proceed after it waited for seven years would prejudice the Party City Defendants, who made investment efforts that went into manufacture, distribution, and sale of its products. Moreover, it is expected that relevant evidence that may have supported the Party City Defendants’ defenses to this action will no longer be available given Small Axe’s long, unexcused delay in bringing suit. Therefore, because Small Axe delayed for far longer than three years in bringing a lawsuit, its claims are time barred by the doctrine of laches. 2. Small Axe’s Claim For Lanham Act Violations Based On Trade Dress Is Insufficiently Pled. In addition to being time barred for the reasons discussed above, Small Axe’s claim for Lanham Act violations based on trade dress is not pled with sufficient specificity and thus must be dismissed for this independent reason. To state a claim for trade dress infringement under § 43 of the Lanham Act, one must allege that the trade dress is “(1) nonfunctional, (2) either ‘inherently distinctive or [has] acquired distinctiveness through a secondary meaning,’ and (3) likely to be confused with Defendants' products by the consuming public.” Keep a Breast Found. v. Seven Grp., 2011 WL 3240756, at *2 (S.D. Cal. July 28, 2011). Failure to specifically allege each of these elements in a complaint is grounds for dismissing the complaint. See id. at *3; see also Homeland Housewares, LLC v. Euro-Pro Operating LLC, 2014 WL 6892141, at *3 n. 3 (C.D. Cal. Nov. 5, 2014) (“Plaintiffs need to allege facts to establish all three elements of their trade dress infringement claim”). Here, Small Axe did not sufficiently allege trade dress to give the Party City Defendants sufficient notice. First, in its First Amended Complaint, Small Axe completely failed to allege whether the trade dress of their products is nonfunctional. “A product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article, that is, if exclusive use of the feature would put competitors Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 14 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -10- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG at a significant non-reputation-related disadvantage.” Arcsoft, Inc. v. Cyberlink Corp., 153 F. Supp. 3d 1057, 1068 (N.D. Cal. 2015) (quoting Disc Gold Ass’n, Inc. v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir. 1998). “To determine whether a claimed trade dress is functional, the Ninth Circuit considers several factors: (1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantages of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.” Id. (internal citations omitted). Courts in this Circuit require that plaintiffs provide adequate notice by alleging in their complaint “a complete recitation of the concrete elements of [their] alleged trade dress.” Id. at 1069. In Arcsoft, the court held that the plaintiff did not adequately allege that the trade dress was nonfunctional because plaintiff did not identify the particular aspects of the product that was covered by the protectable trade dress. Id. at 1070. Here, not only did Small Axe not describe which aspects of the product are covered by the trade dress, Small Axe did not even address whether the trade dress is nonfunctional. Thus, Small Axe did not plead this element with the required level of specificity. Second, Small Axe failed to plead with the required specificity that the trade dress of its products is distinctive, either inherently or by having its distinctiveness acquired through secondary meaning. Instead, Small Axe states in a conclusory fashion that “[t]he 3D Beverage Coaster’s trade dress specifically identifies Small Axe as its source. The design is characteristic of Small Axe’s image. The Small Axe trade dress is inherently distinctive and, through 3D Beverage Coaster’s extensive use, has come to be associated solely with Small Axe as the source of the products on which it is used.” (Dkt. 19 at ¶39). However, Small Axe did not “describe, or even list, the elements that compose the ‘overall look and feel’ of their products.” Keep a Breast Found., 2011 WL 3240756, at *2 (holding that trade dress was not sufficiently pled when Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 15 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -11- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG plaintiff stated that defendant “adopted the overall look and feel of products sold,” but did not describe what elements composed this look and feel); cf. Sleep Sci. Partners v. Lieberman, 2010 WL 1881770, at *3 (N.D. Cal. May 10, 2010) (finding that a complaint does not allege “an adequate definition of the elements comprising the website's ‘look and feel,’” because “[a]lthough it has cataloged several components of its website, Plaintiff has not clearly articulated which of them constitute its purported trade dress”). Finally, Small Axe failed to plead with any specificity that its trade dress is likely to be confused with the Party City Defendants’ products. Merely stating that use of the accused product “is likely to cause confusion or mistake or to deceive consumers” is the type of conclusory allegation that cannot survive a motion to dismiss. (Dkt. 19 at ¶ 41); see Homeland Housewares, LLC, 2014 WL 6892141, at *3 n. 3. Thus, Defendants have not been sufficiently been put on notice of the trade dress at issue and Plaintiff’s claim must be dismissed. C. Small Axe’s Unlawful Business Practices Claim Is Barred By The Applicable Statute of Limitations. The statute of limitations governing Small Axe’s claim of unlawful business practices under California Business and Professions Code §§ 17200, et seq. (Dkt. 19 at ¶¶44-53) is “four years after the cause of action accrued.” Cal. Bus. & Prof. Code § 17208; see also Perez v. Nidek Co., 657 F. Supp. 2d 1156, 1166 (S.D. Cal. 2009), aff'd, 711 F.3d 1109 (9th Cir. 2013) (§17200 claim barred by statute of limitations because the complaint was filed more than four years after the cause of action accrued); Travares v. Nationstar Mortg., LLC, 2014 WL 3502851, at *6 (S.D. Cal. July 14, 2014) (same). Small Axe admits that it knew of the facts underlying its claim for unlawful business practices at least as early as May 28, 2009. (Dkt. 19 at ¶20). Because Small Axe knew of a possible claim in 2009 yet waited until 2016 to file this Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 16 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -12- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG lawsuit, its claim for unlawful business practices under Cal. Bus. & Prof. Code Sections 17200, et seq., is barred by Cal. Bus. & Prof. Code Section 17208. Small Axe has not pled, and cannot plead the existence of any circumstance that would toll the four year statute of limitations for the three years that would be necessary to revive its expired unlawful business practices claim. D. Small’s Axe’s Claim Of Unjust Enrichment Is Not A Cause Of Action For Which Relief May Be Granted And Is Not An Otherwise Available Remedy. Small Axe’s claim of unjust enrichment is not an available remedy because unjust enrichment is not a cause of action but merely a remedial principle potentially applicable to other causes of action. Furthermore, Small Axe has not pled any other cause of action that could support a remedy of unjust enrichment. Small Axe’s claim of unjust enrichment is governed by California law. See, e.g., Frison v. Accredited Home Lenders, Inc., 2011 WL 1103468, at *8 (S.D. Cal. Mar. 25, 2011) (applying California state law to unjust enrichment claim); London v. New Albertson's, Inc., 2008 WL 4492642, at *9 (S.D. Cal. Sept. 30, 2008) (same). However, under California law, unjust enrichment is not a cause of action; rather, it is a principle underlying a potential remedy for some other cause of action with its basis in restitution. McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004). Small Axe’s claim for unjust enrichment in its First Amended Complaint contains no specific allegation of another cause of action for which restitution or unjust enrichment are available remedies. (Dkt. 19 at ¶¶ 35 and 36). Indeed, the only other state-law cause of action Small Axe attempts to plead, its claim under Section 17200, is, as discussed above, time-barred. Accordingly, Small Axe’s claim for unjust enrichment should be dismissed because it is not a cause of action. Moreover, even if Small Axe’s unjust enrichment claim was predicated on its claim under Section 17200 (and even if that claim was not itself time barred), the Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 17 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -13- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG relief Small Axe requests is “a worldwide accounting and disgorgement of all ill- gotten gains and profits.” (Dkt. 19 at ¶36). However, remedies under Section 17200 are purely restitutionary, and non-restitutionary disgorgement of profits is not a permissible remedy under the statute. See Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1152 (2003). Moreover, there is no allegation that Defendants have taken money or assets from Plaintiff, and consequently, no basis for a restitutionary remedy. Similarly, Small Axe’s claims arising out of patent law and the Lanham Act cannot serve as a cause of action that supports a remedy of unjust enrichment. Claims of unjust enrichment are preempted in patent cases, which themselves provide the sole remedy to plaintiffs for infringement of their patents. Ultra- Precision Mfg., Ltd. v. Ford Motor Co., 411 F.3d 1369, 1382 (Fed. Cir. 2005). Thus, because Small Axe’s claim of patent infringement would preempt its claim of unjust enrichment, the patent infringement claim cannot serve as a cause of action that supports a remedy of unjust enrichment. In addition, as discussed above, Small Axe’s Lanham Act claim cannot serve as a basis for a remedy of unjust enrichment because is barred by laches and is not sufficiently pled. Accordingly, Small Axe’s claim for unjust enrichment fails as a matter of law for all of the reasons stated above and should be dismissed with prejudice. IV. CONCLUSION For the foregoing reasons, the Party City Defendants respectfully request that the Court grant its motion to dismiss the Plaintiff’s First Amended Complaint with prejudice. Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 18 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -14- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG Respectfully submitted, Dated: October 19, 2016 /s/ Robin D. Ball Robin D. Ball rball@chadbourne.com CHADBOURNE & PARKE LLP Attorneys for Defendants AMSCAN, INC.; PARTY CITY HOLDCO, INC., PARTY CITY COPORATION; and PARTY CITY OF SAN DIEGO, INC. Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 19 of 20 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 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 IN SUPPORT OF MOTION TO DISMISS; 3:16-CV-00981-BEN-WVG CERTIFICATE OF SERVICE I hereby certify that, on October 19, 2016, I caused the foregoing MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM JURISDICTION to be served on Plaintiff’s counsel via the Court’s CM/ECF system. DATED: October 19, 2016 By: /s/ Robin D. Ball Robin D. Ball (State Bar No. 159698) Case 3:16-cv-00981-BEN-WVG Document 22-1 Filed 10/19/16 Page 20 of 20 Case 3:16-cv-00981-BEN-WVG Document 22-2 Filed 10/19/16 Page 1 of 3 CHADBOURNE & PARKE, LLP ATTO RN EY S AT LA W LOS A NG EL ES 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 PROOF OF SERVICE 3:16-CV-00981-BEN-WVG PROOF OF SERVICE Small Axe Enterprises, Inc. v. Amscan, Inc. et al. USDC Southern Dist. Case No: 3:16-cv-00981-BEN-WVG I am employed in the County of New York State of New York. I am over the age of 18 and not a party to the within action; my business address is: 1301 Avenue of the Americas, New York, NY 10019-6022. On October 19, 2016, I caused the true and correct copy(s) of 1) NOTICE OF MOTION AND MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM; 2) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM; 3) ORDER (PROPOSED) APPROVING MOTION TO DISMISS CLAIMS; and to be served in the manner so indicated to the following individual(s) listed below: Ronald H. Blumberg Blumberg Law Group LLP 137 North Acacia Avenue Solana, Beach, CA 92075 Tel: (858) 509-0600 Fax: (858) 509-0699 Email: rhb@blumberglawgroup.com BY MAIL TO ALL COUNSEL: I deposited such envelope in the mail at Los Angeles, California. The envelope was mailed with postage thereon fully prepaid. As follows: I am "readily familiar" with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with U.S. Postal service on that same day with postage thereon fully prepaid at Los Angeles, California in the ordinary course of business. I am aware Case 3:16-cv-00981-BEN-WVG Document 22-2 Filed 10/19/16 Page 2 of 3 Case 3:16-cv-00981-BEN-WVG Document 22-2 Filed 10/19/16 Page 3 of 3