UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
April 16, 2012
DANIEL HENDERSON, AN INDIVIDUAL, PLAINTIFF,
MATTHEW LINDLAND, AN INDIVIDUAL; TEAM QUEST FIGHT CLUB, LLC, AN OREGON LIMITED LIABILITY COMPANY , DEFENDANTS.
The opinion of the court was delivered by: Dean D. Pregerson United States District Judge
ORDER DENYING PLAINTIFF'S MOTIONS TO DISMISS AND FOR SANCTIONS
[Docket Nos. 48 & 49]
Presently before the court are Plaintiff's Motion to Dismiss Defendants' Counterclaim for Federal Trademark Counterfeiting ("Motion to Dismiss") and Plaintiff's Motion for Sanctions. Having reviewed the parties' moving papers and heard oral argument, the court denies the Motions and adopts the following Order.
This action involves the parties' dispute over who owns and has the right to use certain TEAM QUEST trademarks. In their Counterclaim, Defendants Matthew Lindland and Team Quest Fight Club, LLC (collectively, "TQFC") contend that they own the marks.
According to TQFC, Plaintiff Daniel Henderson ("Henderson") used these marks without authorization, beyond the scope and after rescission of a prior license "to operate a single facility in California under the TEAM QUEST name and marks." Among other causes of action, TQFC alleges federal trademark infringement and counterfeiting under the Lanham Act, 15 U.S.C. §§ 1114-1125.
II. LEGAL STANDARD
"After the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). Judgment on the pleadings is proper "when there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009). Because Rule 12(c) is "functionally identical" to Rule 12(b)(6), "the same standard of review applies to motions brought under either rule." Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 n. 4 (9th Cir. 2011) (internal quotation marks omitted). Accordingly, when considering a Rule 12(c) motion, "a court must accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000).
In his Motion to Dismiss, Henderson argues that TQFC fails to adequately plead a trademark counterfeiting claim, because "Henderson has a good faith belief that he has an ownership interest in the [TEAM QUEST] marks." In response, TQFC contends that there is no statutory good faith exception to counterfeiting in violation of 15 U.S.C. § 1116(d), and that it has adequately pled such a claim. The court agrees.
A counterfeiting claim under "Section 1116(d) requires that the mark in question be (1) a non-genuine mark identical to the registered, genuine mark of another, where (2) the genuine mark was registered for use on the same goods to which the infringer applied the mark." Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936, 946 (9th Cir. 2011); see also Partners for Health & Home, L.P. v. Seung Wee Yang, No. CV 09--07849, 2011 WL 5387075, at *8 (C.D. Cal. Oct. 28, 2011) ("Trademark infringement under 15 U.S.C. § 1114(1) also constitutes trademark counterfeiting when the infringer uses a 'counterfeit mark,' which is defined as 'a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use . . . .' 15 U.S.C. § 1116(d)(1)(B)(I).").
There is no dispute that TQFC has adequately pled these elements. Contrary to Plaintiff's contention, there is no statutory requirement of good faith. Also, although there is split authority as to whether a former licensee can be held liable for counterfeiting, the Ninth Circuit has answered this question in the affirmative, at least in the context of certification marks. See Idaho Potato Comm'n v. G & T Terminal Packaging, Inc., 425 F.3d 708, 720-22 (9th Cir. 2005). The court concludes that the same analysis applies to trademarks more broadly. See Century 21 Real Estate, LLC v. Destiny Real Estate Props., No. 4:11-CV-38, 2011 WL 6736060, at *3-5 (N.D. Ind. Dec 19, 2011) (discussing the conflicting rulings on this issue and concluding that there is "no reason why an ex-franchisee should escape liability for counterfeiting"); Travis R. Wimberly, Holdover Trademark Licensees and the Counterfeiting Loophole, 88 Tex. L. Rev. 415, 440 (2009) (discussing the split authority and concluding that "[h]oldover licensees, at least in most circumstances, should be adjudged as trademark counterfeiters").
Defendants have therefore sufficiently alleged a claim for counterfeiting. The court notes, however, that certain damages available for counterfeiting claims do require proof of knowledge and intent or willfulness. See 15 U.S.C. § 1117(b) (mandating treble damages, absent extenuating circumstances, where the violation consists of "intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark"); id. § 1117(c) (allowing for increased statutory damages "if the court finds that the use of the counterfeit mark was willful"). The court need not resolve these remedy-related issues at this time.
Finally, in his Motion for Sanctions, Henderson asks for attorneys' fees he incurred in responding to TQFC's prior Motion to Dismiss his Complaint. The court declines to exercise its discretion to award attorneys' fees pursuant to its inherent power, 28 U.S.C. § 1927, or Federal Rule of Civil Procedure 11. The court has reviewed TQFC's prior Motion and finds that it does not rise to the level of bad faith, improper purpose, or unreasonableness that would justify sanctions.
For all of these reasons, the court DENIES Plaintiff's Motions to Dismiss and for Sanctions.
IT IS SO ORDERED.
© 1992-2012 VersusLaw Inc.