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Sunearth, Inc.; the Solaray Corporation v. Sun Earth Solar Power Co.

February 3, 2012

SUNEARTH, INC.; THE SOLARAY CORPORATION, PLAINTIFFS,
v.
SUN EARTH SOLAR POWER CO., LTD.; NBSOLAR USA, INC.; AND DOES 1-10, DEFENDANTS.



The opinion of the court was delivered by: Claudia Wilken United States District Judge

ORDER GRANTING PLAINTIFFS‟ MOTION FOR A PRELIMINARY INJUNCTION (Docket No. 25)

Plaintiffs SunEarth, Inc. and The Soloray Corporation seek a preliminary injunction enjoining Defendants Sun-Earth Solar Power 13 Co., Ltd. and NBSolar USA, Inc. from using the "Sun Earth" name 14 and mark within the United States during the pendency of this 15 action. Defendants oppose Plaintiffs‟ motion. Having considered 16 the papers submitted by both parties and their oral arguments, the 17

Court GRANTS Plaintiffs‟ motion. 18

BACKGROUND

Plaintiff SunEarth, Inc. was created and incorporated in the state of California in 1978. Reed Decl. ¶ 3. Plaintiff The 21 Solaray Corporation acquired SunEarth, Inc. on July 1, 1992, and 22 has independently operated SunEarth, Inc. as a subsidiary under 23 its original name since that date. Id. at ¶¶ 4-6. Through the SunEarth, Inc. name, Plaintiffs manufacture and sell solar thermal 25 collectors and related components. Id. at ¶¶ 55, 57. Plaintiffs 26 registered and began using the domain name www.sunearthinc.com in 27 1990. Id. at ¶ 11.

Solar thermal collectors are a type of solar energy technology, which collect the heat of the sun and transfer that heat to a liquid. Id. at ¶ 55. The most common use of solar collectors is to heat water for home or industrial use. Id. at ¶ 56. They can also be used to heat swimming pools or for space heating, and are sometimes used to boil water used for larger-7 scale power production. Id.
Another type of solar energy technology is photovoltaic, in which photovoltaic cells covert energy from the sun directly into 10 electricity. Reed Decl. ¶ 58; Xie Decl. ¶ 3. Photovoltaics are 11 more expensive than solar collectors, but have a wider variety of uses. Reed Decl. ¶ 58. Consumers can sell excess electricity 13 that they obtain from photovoltaics to a utility company. Xie 14 Decl. ¶ 7. 15

Solar technology consumers generally choose to use either a solar thermal collector, a photovoltaic system or some combination of the two. Reed Decl. ¶ 61. Some of Plaintiffs‟ advertisements 18 contain a comparison of the efficiency and cost of their solar 19 collectors to that of photovoltaic systems. Id. at ¶¶ 59-60. 20

While Plaintiffs do not currently manufacture photovoltaic cells or modules, Plaintiffs have developed a hybrid product that 22 combines both technologies into a single unit. Id. at ¶ 61; Mot. 23 at 14. This product was recognized by Popular Science magazine in 24 June 2000 in an article in which SunEarth, Inc. was described as 25 "one of the largest producers of solar collectors in the United States." Id. at ¶¶ 61, 84, Ex. 17. In June 2003, Plaintiffs also began selling rail mounting systems for generic photovoltaic modules under the product name SunEarth CompRail. Reed Decl. ¶¶ 8, 89, Ex. 22. In that same year, they received media 2 attention after their solar collectors were installed on the White House. Reed Decl. ¶¶ 9, 72, Ex. 3.

Plaintiffs continue to enjoy success and recognition in their field. Plaintiffs have submitted a declaration by the company 6 president, Richard Reed, stating that, under the trade name SunEarth, they have sold more than $80 million worth of solar collectors and related products since 2000 in forty-nine states, including California and Texas, about $14 million of which was in California alone. Reed Decl. ¶ 5; Reed Reply Decl. ¶ 8. About $6.8 million of the sales in California took place between 2000 and 2007 (about $5 million between 2000 and 2006), and sales 13 figures have been increasing since 2000. Reed Reply Decl. ¶ 9 14 (containing sales figures by year). Plaintiffs have also provided 15 a 2008 magazine article recognizing that they sold thirty-nine 16 percent of all solar thermal collectors sold in the United States 17 during 2007, a figure corroborated by Reed. Reed Reply at ¶ 10, 18 Ex. 40. The company was profiled in the Winter 2010 issue of Energy Leaders Today. Reed Decl. ¶ 78, Ex. 11. Plaintiffs‟ 20 website receives over 3,400 visitors per month and they spend 21 approximately $66,000 per year in advertising and marketing costs.

Reed Decl. ¶ 64. 23

Defendant Sun-Earth Solar Power Co., Ltd. (SESP) was first established in 1966 as Ningbo Solar Electric Company, a 25 state-owned company in Ningbo, China. Xie Depo. 61:4-19. In 26 1978, the company began selling solar products to the public in China under the brand name Sun Earth. Id. at 61:22-63:2. The 28 company was known as Ningbo Solar Electric Power Co., Ltd. from 1999 through 2010, when its name was changed to SESP. Answer ¶ 26; Reed Decl. ¶ 77, Ex. 10. In January 2010, Defendant NBSolar 3 USA, Inc. was formed as a California corporation affiliated with 4 SESP. Answer ¶ 4; Xie Decl. ¶ 16. 5

On October 14, 1996, Ningbo Solar obtained a trademark in China for the following mark: 7 8 9 10 11 Xie Depo. 63:6-64:18. The Chinese characters translate "verbatim into English" as "the sun and the earth." Id. Ningbo Solar (now, SESP), still based in China, currently sells photovoltaic systems only. Xie Decl. ¶ 4; Answer ¶ 3. Plaintiffs‟ CompRail product can be used to mount Defendants‟ photovoltaic modules. Reed Decl. ¶ 8. Defendants began marketing their photovoltaic panels outside of China in 2004. Xie Depo. 64:19-23. Currently, the vast majority of Defendants‟ business comes from international utility markets, with about 80% of their business in Europe, about 15% in China and about 1% in the United States. Xie Decl. ¶ 12.

Starting in 2004, Ningbo Solar applied for, and obtained, trademark protection in several countries, including Germany, Australia, and China, for a mark that consisted of a circle above a horizontal line above the words "Sun-Earth" (hereinafter, Defendants‟ mark), as follows:

Rutt Decl. ¶¶ 5-6, Exs. D-F; Xie Decl. ¶¶ 14-15. 6 Ningbo Solar entered the United States photovoltaics market in 2004. Xie Decl. ¶ 14. In their supplemental reply, Defendants 8 argue for the first time that Ningbo Solar began making sales in 9 the United States as early as 2007. Defs.‟ Suppl. Brief 7. 10

Defendants provide four invoices from 2007 showing shipments to buyers within the United States from the company‟s address in Ningbo, China; the earliest such invoice has a date of April 27, 13 2007. Foster Decl. ¶¶ P, Exs. S-V. The invoices contain 14 Defendants‟ Sun-Earth mark. Id.*fn1

On July 5, 2006, Ningbo Solar filed an application with the United States Patent and Trademark Office (USPTO) to trademark its 17 Sun-Earth mark. Reed Decl., Ex. 12 at 1. On October 2, 2007, the USPTO issued a letter regarding the application, warning, "You 19 filed the trademark application identified below based upon a bona 20 fide intention to use the mark in commerce. You must use the mark 21 in commerce and file a State of Use . . . before the USPTO will 22 register the mark." Id. at 7. USPTO deemed the application abandoned on April 3, 2008, after Ningbo Solar failed to file a statement of use. Id. at 5. 3

In September 2007, Plaintiffs and Defendants attended a trade show in Long Beach, California. Defendants were listed in the 5 official program as "Ningbo Solar Electric Power." Reed Third 6 Decl. ¶ 4, Ex. 42, at 47. Plaintiffs were listed as "SunEarth, 7 Inc." Id. at 53. A Ningbo representative noticed that 8 Plaintiffs‟ company name was the same as the name on Ningbo‟s mark 9 and visited Plaintiffs‟ booth, where he exchanged business cards 10 with Plaintiffs. Xie Depo. 75:19-76:7. Defendants were a "Megawatt" sponsor of the show and their "nbsolar" mark, depicted 12 below, appeared in the official printed program that was 13 distributed at the show: 14 15 16 17 18

Reed Third Decl. ¶ 4, Ex. 42, at 18.*fn2 Defendants‟ Sun-Earth mark 19 appeared on the website for the show in the list of sponsors for a 20 period of time, until the nbsolar mark was substituted for the 2 Sun-Earth mark several months before the conference took place. 3 Proffitt Decl. ¶¶ 3-11, Exs. 47-51. 4

On December 12, 2008, Ningbo Solar filed a second application 5 to trademark the Sun-Earth mark with the USPTO, alleging as its 6 filing basis that it had a bona fide intention of using the mark 7 in commerce pursuant to 15 U.S.C. § 1051(b). Reed Decl. ¶ 80, Ex. 8 13 at 3, 53. This application was assigned Serial No. 77632347. 9 Id. at 3. In August 2010, Ningbo Solar filed a declaration 10 attesting that the Sun-Earth mark was first used in commerce in the United States "at least as early as 07/02/2010." Answer ¶ 25; Reed Decl. ¶ 80, Ex. 13 at 17-20. On December 7, 2010, the USPTO 13 granted Ningbo Solar‟s application and issued it Trademark 14 Registration No. 3,886,941 for the Sun-Earth mark. Id.*fn3

Defendants offer Exhibit N, which they claim is the official program of the show. Plaintiffs object to this evidence. 17

Defendants have not authenticated this exhibit in any way. Further, Plaintiffs also offer evidence that Exhibit N is in fact 18 not the official program and is instead a print-out of an early version of the sponsor list from the show‟s website and that 19

Defendants‟ symbol was changed to the nbsolar mark by May 2007, 20 four months before the show. Plaintiffs also submit a copy of the official printed program from the 2007, authenticated by Reed who 21 received it at the show. This program contains the nbsolar mark, not the Sun-Earth mark. Reed Third Decl. ¶ 4, Ex. 42, at 18 22

Accordingly, the Court SUSTAINS Plaintiffs‟ objection to Defendants‟ Exhibit N. certain documents from the USPTO‟s files related to this application. Because Defendants do not oppose Plaintiffs‟ request 26 and the existence of this application and documents are "capable of accurate and ready determination by resort to sources whose 27 accuracy cannot reasonably be questioned," the Court GRANTS Plaintiffs‟ request. 28

In January 2010, Defendant NBSolar USA Inc. was formed as a California corporation. Answer ¶ 4; Xie Decl. ¶ 16. Defendants 3 describe NBSolar as affiliated with SESP but deny that NBSolar is 4 a wholly-owned subsidiary of SESP. Answer ¶ 4; Xie Decl. ¶ 17-18. 5

The President of the North American Sales Unit for SESP also 6 serves as the President of NBSolar and worked at SESP prior to the 7 incorporation of NBSolar. Xie Decl. ¶¶ 1-2. 8 Defendants own several domain names containing SunEarth.

Defendants registered the domain name sun-earth.com in 2004. Xie 10 Decl. ¶ 15; Answer ¶ 29. In 2010, Defendants registered the domain names SunEarthPower.com and SunEarthPower.net. Answer ¶ 29. At some point, Defendants also registered the domain name

SunEarth.us. Compl. ¶ 29; Answer ¶ 29. Defendants‟ website indicates that ""Sun-Earth‟ is known as "Nbsolar‟ in the United 15 States. Both [b]rands are belonged [sic] to the same company Sun Earth Solar Power Co., Ltd. (formerly Ningbo Solar Electric Co., Ltd.) with headquarter [sic] located in Ningbo." Urbalejo Decl. ¶ 6; Reed Decl. ¶ 77, Ex. 10. 19

On December 24, 2009, Plaintiffs filed an application with the USPTO seeking to trademark SUNEARTH. USPTO Serial No. 21 of 77900886, File Entry No. 3.*fn4 On March 23, 2010, Plaintiffs‟ trademark application was "suspended pending the disposition of understood the suspension to be because "the office was analyzing 2 another pending application with a similar name." Reed Depo. 3 104:3-12. 4

Defendants used the nbsolar mark within the United States

5 until late 2010. Xie Decl. ¶ 16. Sometime in 2010, Ningbo Solar 6 changed its name to Sun Earth Solar Power Co., Ltd., (SESP) and 7 subsequently assigned the U.S. trademark for the Sun-Earth mark to 8 SESP. Answer ¶ 26. Starting in late 2010, Defendants began 9 prominently using the Sun-Earth mark within the United States. 10

Xie Decl. ¶ 17.

On January 18, 2011, an organizer for a solar power trade show in Colorado sent Plaintiffs an email asking what logo they 13 wanted used for SunEarth in the conference program, suggesting 14

Plaintiffs‟ logo or Defendants‟ Sun-Earth mark. Id. at ¶ 87, Ex. 15 20; Bliss Decl. ¶ 4. On July 6, 2011, a trade show organizer 16 asked Plaintiffs‟ employee, "which SunEarth are you?" Id. at 17 ¶ 66. 18

Defendants registered for the Intersolar North America Conference held in San Francisco, California in July 2011 as "Sun 20 Earth Solar Power/Nbsolar USA." Answer ¶ 30; Reed Decl. ¶ 16. At 21

Defendants‟ booth, the Sun-Earth mark was prominently displayed in a number of places in large print. Id. at ¶ 88, Ex. 21. At this conference, at least seven actual or potential customers to another of Plaintiffs‟ employees, with one stating, "I thought 2 you guys had changed your logo." Bliss Decl. ¶ 6. 3

Defendants registered for the Solar Power International conference in Dallas, Texas in October 2011 under the Sun-Earth 5 mark. Answer ¶ 31; Reed Decl. ¶ 17; Urbalejo Decl. ¶ 4, Ex. 33. 6

At the Dallas conference, this symbol was displayed prominently at 7 Defendants‟ booth. Reed Decl. ¶ 94, Ex. 27.

On April 1, 2011, Plaintiffs filed a Petition with the USPTO‟s Trademark Trial and Appeal Board (TTAB), seeking 10 cancellation of the registration of Defendants‟ trademark of the Sun-Earth mark. Reed Decl. ¶ 14; Sunearth, Inc. v. Sun Earth Solar Power Co., Ltd., Proceeding No. 92053829 (T.T.A.B.), Docket 13 No. 1.*fn5 14

On June 13, 2011, Plaintiffs sent Defendants a demand letter asking them immediately to cease using the Sun-Earth mark in their 16 business operations within the United States. Mosier Decl. ¶ 3, 17 Ex. 28. The parties subsequently entered into a litigation 18 standstill agreement covering both the pending case before the 19

TTAB and potential civil litigation for the time period between June 13, 2011 through October 10, 2011, in order to allow for settlement negotiations to take place. Mosier Decl. ¶¶ 4, 6, Exs. 22 29, 31. Among other items, the agreement provided that, in 23 connection with any subsequent motion for a preliminary or 24 permanent injunction by Plaintiffs, Defendants would not assert or rely upon that time period to argue that delay or prejudice had 2 occurred. Id. In their case management statement, submitted to 3 this Court on January 26, 2012, the parties state that they "agree 4 that the time period of the standstill agreement, from June 13, 2011 to October 10, 2011 should not count towards any period of 6 delay." Docket No. 55, at 7.

The parties did not reach an agreement during their litigation standstill and Plaintiffs initiated this trade name and 9 trademark infringement action on October 11, 2011, the day after 10 the expiration of the standstill agreement. Docket No. 1; Mosier

Decl. ¶ 6, Ex. 31. Plaintiffs allege that Defendants have 12 misappropriated and infringed upon Plaintiffs‟ "Sun Earth" 13 trademark, service mark and trade name. They bring claims against 14

Defendants for trade name infringement, unfair competition, 15 cybersquatting and cancellation of trademark registration under 16 sections 37 and 43 of the Lanham Act, 15 U.S.C. §§ 1119, 1125, 17 trade name infringement in violation of California Business and 18

Professions Code §§ 14415 and 14402, and common law unfair 19 competition and trademark infringement. Plaintiffs filed the 20 instant motion for a preliminary injunction on November 30, 2011. 21

See Docket No. 25. 22

LEGAL STANDARD

"A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to 25 suffer irreparable harm in the absence of preliminary relief, that 26 the balance of equities tips in his favor, and that an injunction 27 is in the public interest." Winter v. Natural Res. Def. Council, Inc., 129 S. Ct. 365, 374 (2008).

Alternatively, "a preliminary injunction could issue where the likelihood of success is such that serious questions going to 3 the merits were raised and the balance of hardships tips sharply 4 in plaintiff‟s favor," so long as the plaintiff demonstrates 5 irreparable harm and shows that the injunction is in the public 6 interest. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 7 1127, 1131 (9th Cir. 2011) (citation and internal quotation and 8 editing marks omitted).

A court employs a sliding scale when considering a plaintiff‟s showing as to the likelihood of success on the merits and the likelihood of irreparable harm. Id. "Under this 12 approach, the elements of the preliminary injunction test are 13 balanced, so that a stronger showing of one element may offset a 14 weaker showing of another." Id. 15

DISCUSSION

I. Chance of Success on the Merits

To prevail on a claim of trademark or trade name infringement under the Lanham Act or common law, a plaintiff "must prove:

(1) that it has a protectible ownership interest in the mark; and

(2) that the defendant‟s use of the mark is likely to cause 21 consumer confusion." Network Automation, Inc. v. Advanced Sys. 22 Concepts, 638 F.3d 1137, 1144 (9th Cir. 2011) (quoting Dep‟t of 23 Parks & Rec. v. Bazaar Del Mundo, Inc., 448 F.3d 1118, 1124 (9th 24 Cir. 2006)).

While "[t]rademarks and trade names are technically

2 distinct,"*fn6 they are accorded "the same broad level of protection" 3 and infringement of both is analyzed under practically 4 indistinguishable standards. Accuride International, Inc. v. 5

Accuride Corp., 871 F.2d 1531, 1534-1536 (9th Cir. 1989). 6

Similarly, "service marks and trademarks are governed by identical 7 standards and thus like with trademarks, common law rights are 8 acquired in a service mark by adopting and using the mark in 9 connection with services rendered." Chance v. Pac-Tel Teletrac,

Inc., 242 F.3d 1151, 1156 (9th Cir. 2001) (citations omitted).

See also American Steel Foundries v. Robertson, 269 U.S. 372, 380

12

United States District Court

(1926) ("Whether the name of a corporation is to be regarded as a 13 trade-mark, a trade name, or both, is not entirely clear under the 14 decisions. To some extent, the two terms overlap. . . . But the 15 precise difference is not often material, since the law affords 16 protection against its appropriation ...


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