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Marketquest Group, Inc v. Bic Corporation; Bic Usa

November 7, 2011

MARKETQUEST GROUP, INC.,
PLAINTIFF,
v.
BIC CORPORATION; BIC USA, INC.; NORWOOD LLC; ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

(ECF Nos. 27, 40)

ORDER: (1) DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION; (2) DENYING DEFENDANTS' MOTION TO STRIKE PROMOTIONAL PRODUCTS,

Presently before the Court is Plaintiff Marketquest Group, Inc.'s (Marketquest) motion for a preliminary injunction. (ECF No. 27.) Also before the Court are Defendants BIC Corp., BIC USA, and Norwood Promotional Products' (BIC) opposition (ECF No. 33), Marketquest's reply (ECF No. 35), and BIC's motion to strike (ECF No. 40). The motion hearing set for November 10, 2011, is HEREBY VACATED, and the matter is taken under submission without oral argument pursuant to Civil Local Rule 7.1(d)(1). Having considered the parties' arguments and the law, the Court DENIES Marketquest's motion for a preliminary injunction and DENIES BIC's motion to strike.

BACKGROUND

Plaintiff Marketquest is a California corporation engaged in the production, advertising, and sale of customizable promotional products, including writing instruments such as pens, using the registered trademarks "ALL-IN-ONE" and "THE WRITE CHOICE." (FAC ¶ 10-12.)*fn1 According to Marketquest, in late 2010 Defendant BIC, comprised of Connecticut and Delaware corporations, began advertising and selling products, including pens and related products and services, using marks similar to Marketquest's. (FAC ¶ 21-25.) Specifically, BIC began using the phrase "The Write Pen Choice" in an online advertising campaign for writing instruments, including pens, in or around October, 2010. (FAC ¶ 23.) BIC also began advertising customizable promotional products, including pens, in 2011 Catalogues using the phrase "All in ONE." (FAC ¶ 24.)

By way of relevant background, in 2009 Defendant BIC USA acquired what became Defendant Norwood Promotional Products, LLC, a competitor in the promotional products business. (Def.'s Opp'n 2.) Norwood has its own trademark registrations for the NORWOOD mark and logo/design.*fn2 (Id.) In late 2010, BIC printed a number of NORWOOD catalogues for 2011, one of which was the "NORWOOD All in ONE" catalogue, which "consolidated all of Norwood's available hard goods products in one catalogue." (Def.'s Opp'n 3.) As of the date of BIC's opposition to this motion, on October 3, 2011, BIC claims that this "NORWOOD All in ONE" catalogue is no longer in print and is no longer being distributed. (Id.) "Norwood will be changing the name of its NORWOOD Catalogue for 2012 and will no longer use the phrase 'All in ONE.'" (Id. at 4.)

On March 28, 2011, Marketquest filed this action for trademark infringement and unfair competition against BIC. (ECF No. 1.) On May 5, 2011, Marketquest filed the operative First Amended Complaint. (ECF No. 14.) Marketquest alleges what are essentially three causes of action:

(1) trademark infringement under 15 U.S.C. § 1114(1) of its ALL-IN-ONE mark (Count I) and its THE WRITE CHOICE mark (Count III); (2) unfair competition under 15 U.S.C. § 1125(a) for its ALL-IN-ONE mark (Count II) and its THE WRITE CHOICE mark (Count IV); and (3) unfair competition in violation of Cal. Bus. & Prof. Code § 17200 (Count V). Marketquest requests a preliminary and permanent injunction to enjoin BIC from using the Infringing Marks in any manner, to order BIC to remove any products bearing the Infringing Marks from sale or display, and to order BIC to deliver any such goods to the Court for destruction. (FAC 8-10.) Marketquest claims BIC's use of the Infringing Marks is likely to confuse consumers, causing irreparable injury. (FAC ¶ 28-34.) On August 26, 2011, Marketquest moved for a preliminary injunction. (ECF No. 27.)

LEGAL STANDARD

A preliminary injunction is an equitable remedy aimed at preserving the status quo and at preventing the occurrence of irreparable harm during the course of litigation. See Fed. R. Civ. P. 65. The Ninth Circuit has recently modified its preliminary injunction analysis in response to the Supreme Court's rejection of its previous standard. Now, it is clear that "[a] plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Natural Res. Def. Council, Inc. (NRDC), 555 U.S. 7, 20 (2008) (citing Munaf v. Geren, 553 U.S. 674, 689-90 (2008)); see also Am. Trucking Ass'ns, Inc. v. City of L.A., 559 F.3d 1046, 1052 (9th Cir. 2009). A preliminary injunction is an "extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." NRDC, 555 U.S. at 22. This "clear showing" requires the plaintiff to show more than a mere "possibility" of irreparable harm; instead, he must "demonstrate that irreparable injury is likely in the absence of an injunction." Id. at 22 (emphasis in original); American Trucking, 559 F.3d at 1052.

Federal Rule of Civil Procedure 65(d) requires that every order granting an injunction must "state the reasons why it issued; state its terms specifically; and describe in reasonable detail--and not by referring to the complaint or other document--the act or acts restrained or required." This mandate for specificity ensures that those against whom an injunction is issued receive fair and precise notice of what conduct is prohibited. See Halo Mgmt., LLC v. Interland, Inc., 308 F.Supp.2d 1019, 1027 (N.D. Cal. 2003) (citing Union Pac. R.R. v. Mower, 219 F.3d 1069, 1077 (9th Cir. 2000)).*fn3

ANALYSIS

The Ninth Circuit, as noted, has elaborated a four-part test for determining whether a moving party is entitled to a preliminary injunction. See, e.g., American Trucking, 559 F.3d at 1052. To succeed on a motion for a preliminary injunction, the movant must show: (1) likelihood of success on the merits; (2) likelihood of irreparable harm in the absence of a preliminary injunction; (3) that the balance of equities tips in his favor; and (4) that an injunction is in the public interest. Id. (citing NRDC, 555 U.S. at 20.) The Court will address each aspect of this test below. // //

1. Likelihood of Success on the Merits

In order to establish a claim for trademark infringement and unfair competition, Marketquest must show: (1) that it has a protectable ownership interest in the mark; and (2) that BIC's use of the mark is likely to cause consumer confusion.*fn4 Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1144 (9th Cir. 2011) (citing Dep't of Parks & Recreation v. Bazaar Del Mundo Inc., 448, F.3d 1118, 1124 (9th Cir. 2006). "The core element of trademark infringement is the likelihood of confusion, i.e., whether the similarity of the marks is likely to confuse consumers about the source of the products." E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (9th Cir. 1992). Likelihood of confusion is determined by a fact-intensive, non-exclusive, eight-factor test. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979); Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 631 (9th Cir. 2005).

Marketquest argues that it is likely to succeed on the merits of its federal claims because BIC's use of "All in ONE" is "likely to cause, and has, in fact, caused consumer confusion" because of its similarity to Marketquest's ALL-IN-ONE mark.*fn5 (Pl.'s Mem. ISO Mot. 6.) BIC counters that Marketquest's ALL-IN-ONE marks were obtained fraudulently or have been abandoned and are thus invalid, and also that no likelihood of confusion exists. (Def.'s Opp'n 7-8.) Finally, BIC argues that even if a likelihood of confusion exists, its use of the phrase "All in One" is a protected fair use. (Def.'s Opp'n 14.) The Court addresses each of these arguments in turn.

(A) Validity of the ALL-IN-ONE Marks

To determine whether BIC's use of "All in ONE" constitutes trademark infringement or unfair competition, the Court must first resolve whether Marketquest has a valid, protectable trademark interest in the ALL-IN-ONE mark.*fn6

Marketquest's registration of the four ALL-IN-ONE marks on the Principal Register in the Patent and Trademark Office (PTO) constitutes prima facie evidence of the validity of each registered mark and of Marketquest's exclusive right to use the marks on the goods and services specified in the registration. See 15 U.S.C. §§ 1057(b); 1115(a). Further, both parties agree that two of the four ALLIN-ONE registrations have achieved "incontestable" status, having been in continuous use for five consecutive years subsequent to the date of registration. 15 U.S.C. § 1065; (see also Pl.'s Mem. ISO Mot. 8; Def.'s Opp'n 5.) To the extent that the right to use a registered mark has become incontestable under Section 1065, "the registration serves as conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(a). However, even marks with incontestable status remain subject to the defenses set forth in Section 1115(b).

BIC claims all four of Marketquest's ALL-IN-ONE registrations were procured fraudulently or have been abandoned, and are thus invalid under Section 1115(b). (Def.'s Opp'n 7.) Specifically, Section 1115(b)(1) provides the defense "[t]hat the registration or the incontestable right to use the mark was obtained fraudulently," and Section 1115(b)(2) provides the defense "[t]hat the mark has been abandoned by the registrant." The Court examines both of these asserted defenses.

(i) Fraudulent Procurement of Mark

A trademark registration, even if incontestable, is invalid if it was fraudulently obtained. See 15 U.S.C. § 1115(b)(1). "Fraud in procuring a trademark registration or renewal occurs when an applicant knowingly makes false, material representations of fact in connection with his application." In re Bose Corp., 91 U.S.P.Q.2d 1938, 1939 (Fed. Cir. 2009). A party seeking cancellation of a mark due to fraud bears a heavy burden. The party must identify a deliberate attempt by the registrant to mislead the PTO, and must show that misstatements were made with respect to material fact. Halo Mgmt., 308 F.Supp.2d at 1031 (citing Woodstock's Enter., Inc. v. Woodstocks' Enter., Inc., 43 U.S.P.Q.2d 1440 (T.T.A.B.1997) ("Fraud in a trademark cancellation is something that must be 'proved to the hilt' ....").

Here, BIC provides very little evidence to support its theory that Marketquest's ALL-IN-ONE marks were fraudulently procured, especially in the face of such a heavy burden. BIC merely states that there is "a serious question" as to whether the registrations were obtained fraudulently. (Def.'s Opp'n 7.) As its one example, BIC points to Marketquest's submission to the PTO of specimens of use that BIC states, "on information and belief, appear to be computer renderings of products that Plaintiff never intended to sell in commerce." (Def.'s Opp'n 7-8.) In other words, BIC objects that Marketquest provided the PTO with mock-ups of its products bearing the ALL-IN-ONE design/logo, when in fact Marketquest never intended to sell its products bearing its own logo; rather, it intended to sell and in fact did sell versions of these products customized with the marks of clients. (Id. at 8; Ex. 14.) However, BIC does not explain how these catalogues fail to constitute use in commerce of the logo in conjunction with the sale of goods.

The Lanham Act defines "use in commerce" as "the bona fide use of a mark in the ordinary course of trade." 15 U.S.C. § 1127. BIC has not shown that failure to actually sell pens and other items with the ALL-IN-ONE logo imprinted exactly as depicted in its advertisements necessarily means Marketquest did not use the mark in the ordinary course of trade. A trademark need not "appear in any particular position on the goods." In re Morganroth, 208 U.S.P.Q. 284, 288 (T.T.A.B. 1980). Instead, the key to the use in commerce inquiry is whether Marketquest used the mark as a trademark, to identify the source of its goods or services. Id.

Through its extensive use of the mark on its internet website and catalogues to identify its customizable product lines, Marketquest is likely to succeed in establishing it has used the mark in commerce sufficiently extensively to merit some manner of trademark protection. Further, Marketquest has provided evidence that at least some of its customizable products, such as pens and luggage tags, were in fact sold with the ALL-IN-ONE mark embossed on them, in addition to the customer's imprinted mark. (Pl.'s Reply 2; Pl.'s Mem. ISO Mot, Ex. 5.) Thus, BIC has failed to provide the Court with a sufficient basis to find Marketquest did not use its ALL-IN-ONE mark in commerce as a designation of source. As a result, the Court finds BIC has not ...


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