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Klein Electronics, Inc., A California Corporation v. Boxwave Corporation

June 27, 2011

KLEIN ELECTRONICS, INC., A CALIFORNIA CORPORATION,
PLAINTIFF,
v.
BOXWAVE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matter before the Court is the Motion to Dismiss filed by Defendant Boxwave Corporation. (ECF No. 12).

I. Background

On October 21, 2010, Plaintiff Klein Electronics, Inc. initiated this action by filing a Complaint. On January 10, 2011, Plaintiff filed an Amended Complaint asserting the following six claim: (1) trademark infringement, (2) trademark dilution, (3) violation of the Lanham Act due to false representation, (4) violation of California Business & Professions Code section 14245 due to infringement, (5) violation of California Business & Professions Code section 17200 et seq. due to unfair competition, and (6) "misappropriation and unjust enrichment." (ECF No. 10). On February 4, 2011, Defendant Boxwave Corporation filed a Motion to Dismiss plaintiff's claims for trademark dilution, violation of California Business & Professions Code section 17200 et seq. due to unfair competition, and "misappropriation and unjust enrichment." (ECF No. 12). On February 28, 2011, Plaintiff filed an Opposition. (ECF No. 13). On March 8, 2011, Defendant filed a Reply. (ECF No. 15).

II. Allegations of the Complaint

Plaintiff Klein Electronics, Inc. is the owner of the trademark ARMORCASE issued on October 11, 2010 and the trademark ARMORCASE ( design) issued on November 1, 2010 which it uses on a variety of electronic devise carrying cases. (ECF No. 1 at ¶¶ 3,6, 8). Plaintiff sells ARMORCASE carrying cases for devises including "two-way radios, cellular phones, mobile phones, and smart phones." Id. at ¶ 8. Defendant is the seller of a carrying case for electronic devises including "handheld electronic devices, namely, cellular phones, mobile phones, smart phones, personal digital assistants (PDA), cameras, global positioning systems, and tablet computers" sold as the ARMOR CASE. Id. at ¶¶ 7, 9. Defendant began using the ARMOR CASE mark on March 28, 2005, about three years after Plaintiff first used the ARMORCASE mark in July 2002 Id. at ¶¶ 9, 13.

III. Discussion

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides: "A pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

To sufficiently state a claim for relief and survive a Rule 12(b)(6) motion, a complaint "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[A] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937, 1950 (2009). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).

A. Trademark Dilution

Defendant contends that Plaintiff's claim of trademark dilution fails on the grounds that Plaintiff "merely parrots the language of the dilution statute and summarily states the required elements of a dilution claim." (ECF No. 12-1 at 5).

Plaintiff contends that Defendant's Motion to Dismiss "applies fact pleading standards to [Plaintiff's] complaint as opposed to federal notice pleading standards ...." (ECF No. 13 at 2). Plaintiff contends that it is "required to plead only legal conclusions giving rise to a cause of action, and is not required to provide evidence in support of those conclusions in the complaint." Id. Plaintiff contends that the complaint alleges that "the parties sell a similar product under almost identical mark[s]"; therefore, the complaint provides fair notice "to defend a claim of trademark infringement and other trademark related causes of action." Id. at 4.

The Federal Trademark Dilution Act provides for injunctive relief where plaintiff shows: "(1) its mark is famous; (2) the defendant is making commercial use of the mark in commerce; (3) the defendant's use began after the plaintiff's mark became famous; and (4) the defendant's use presents a likelihood of dilution of the distinctive value of the mark." Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165, 1180 (9th Cir. 2007) (citing Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 874 (9th Cir. 1999)). "California's dilution cause of action is substantially similar, providing relief if the plaintiff can demonstrate a likelihood of injury to business reputation or of dilution of the distinctive quality of a mark notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services." Id.; see also Panavision Intern., L.P. v. Toeppen, 141 F.3d 1316, 1324 (9th Cir. 1998) (holding that a "state law dilution claim is subject to the same analysis as its federal claim.").

Plaintiff alleges that it "has extensively advertised, marketed, manufactured, and distributed goods under the Mark to dealers and the public throughout the United States and worldwide and as a result has built up substantial goodwill recognition in the Mark." (ECF No. 10 at ¶ 13). Plaintiff alleges that there is a likelihood of confusion in the marketplace between Plaintiff's Mark ARMORCASE and Defendant's mark ARMOR CASE. Id. at ¶ 10. "Defendant's use of ARMOR CASE in connection with the advertising, marketing, and selling of its products and services in interstate commerce has caused, and will continue to cause, confusion, blurring, tarnishment, and dilution of the distinctive quality of the ARMORCASE mark in the minds of consumers ...." Id. at 25. "Defendant's use of Plaintiff's Mark diminishes the capacity of the Mark and makes it difficult to identify and distinguish the services and goods offered by Plaintiff." Id. at 26. "Defendant's use of Plaintiff's Mark has caused a negative association with the Mark ...


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