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Daniel Henderson, An Individual v. Matthew Lindland

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


December 27, 2012

DANIEL HENDERSON, AN INDIVIDUAL, PLAINTIFF,
v.
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 GRANTING IN PART AND DENYING IN PART PLAINTIFF'S SECOND MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, FOR AN ORDER TREATING SPECIFIED FACTS AS ESTABLISHED [Docket No. 71 ]

Presently before the Court is Plaintiff Daniel Henderson's ("Plaintiff") Second Motion for Summary Judgment, or in the Alternative, for an Order Treating Specified Facts as Established ("Motion"). (Docket No. 71.) The Court GRANTS summary judgment in Defendant's favor on the copyright infringement and the senior and continuous user issues. The Court DENIES summary judgment on the laches, trademark cancellation, and trademark counterfeiting issues.

I Background

On August 15, 2012, this Court issued its Order Denying Plaintiff's Motion for Summary Judgment ("Order"). (Docket No. 67.) The Order outlines the factual background for this case, which the Court now adopts. (Order at 1:25-5:7.) The basic facts of the case, though, are as follows. Plaintiff has sued Defendants Matthew Lindland ("Lindland") and Team Quest Fight Club ("TQFC") LLC (collectively "Defendants") for trademark infringement, copyright infringement, and unfair competition. (See generally Compl., Docket No. 1.) Defendants have counterclaimed for trademark infringement, false designation of origin, unfair competition, trademark counterfeiting, copyright infringement, deceptive advertising, breach of contract, breach of covenant of good faith and fair dealing, and intentional interference with prospective economic advantage. (See generally Amended Answer and Counterclaims, Docket No. 43.) Plaintiff, his teammate Randy Couture ("Couture"), and Lindland are all mixed martial arts ("MMA") fighters. Plaintiff and Couture came up with the name TQFC in 1999, and the name has since featured prominently in televised fights and even video games depicting Plaintiff. Lindland began to associate with Plaintiff and Couture, and in April 2001 started using the TQFC trademark. Lindland and Couture founded TQFC LLC, an MMA gym in 2002. In 2006 Couture released his rights in TQFC LLC to Lindland. (Decl. of Robert Follis in Supp. of Defs.' Mot. to Dismiss ¶ 9, Ex. F. (filed under seal).) Plaintiff, Lindland, and Couture maintained fairly amicable relations until 2011, when this case was brought.

II. Legal Standard on Summary Judgment

Summary judgment shall be granted when a movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). In other words, summary judgment should be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Parth v. Pomona Valley Hosp. Med. Ctr., 630 F.3d 794, 798©99 (9th Cir. 2010)(internal quotation marks omitted).

To satisfy its burden at summary judgment, a moving party must produce facts for each element which it has the burden of proof at trial "sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (emphasis omitted). A moving party without the burden of persuasion "must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000); see also Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc) ("When the nonmoving party has the burden of proof at trial, the moving party need only point out 'that there is an absence of evidence to support the nonmoving party's case.'") (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986), and citing Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir. 2000) (holding that the Celotex "showing" can be made by "pointing out through argument-- the absence of evidence to support plaintiff's claim")).

It is not enough for a party opposing summary judgment to "rest on mere allegations or denials of his pleadings." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 259 (1986). Instead, the nonmoving party must go beyond the pleadings to designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 325.

At the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence, and views all evidence and draws all inferences in the light most favorable to the non-moving party. See id. at 630-31 (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)); see also Hrdlicka v. Reniff, 631 F.3d 1044 (9th Cir. 2011); Miranda v. City of Cornelius, 429 F.3d 858, 860 n.1 (9th Cir. 2005). Speculative testimony in affidavits and motion papers is insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). As the Supreme Court has stated, "[t]he mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

It is not the Court's task "to scour the record in search of a genuine issue of triable fact." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). Counsel has an obligation to lay out their support clearly. Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001). The Court "need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found." Id.

III. Discussion

As in his first summary judgment motion, Plaintiff asks the Court to find that he was the senior user of the TQFC trademarks, and that he thus has priority. "It is a cardinal principle of federal trademark law that the party who uses the mark first gets priority." One Indus., LLC v. Jim O'Neal Distrib., Inc., 578 F.3d 1154, 1158 (9th Cir. 2009). "It is axiomatic ... that the standard test of ownership is priority of use.... [T]he party claiming ownership must have been the first to actually use the mark in the sale of goods or services." Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1047 (9th Cir.1999) (internal quotation marks omitted).

Plaintiff's first summary judgment motion was procedurally denied because his evidence was not properly authenticated. (Order at 7:22-8:12.) Plaintiff claims to have cured this defect with sworn declarations attesting to the previously challenged evidence's accuracy, and has resubmitted that evidence for this Motion. (See Plaintiff's Memorandum in Support Motion ("Memo.") at 3:20-4:5, Docket No.71.) Since Defendants have not objected to the re-submitted evidence in this Motion, it is hereby accepted. Defendants challenge Plaintiff's priority claim with three arguments. First, Plaintiff merely displayed the marks, and he did not use them in commerce. Second, even if Plaintiff did use them in commerce, he did so in Japan, not in the United States. Third, Defendants argue that they are entitled to laches in any event, because Plaintiff has waited more than a decade to assert his right.

Plaintiff additionally seeks summary adjudication on the issues of Defendant's laches affirmative defense, canceling Defendants' registered trademarks, Defendants' trademark counterfeit counterclaim, and Defendants' copyright infringement counterclaim.

A. Use in Commerce

The Court's prior Order explained how it would have ruled on the use in commerce issue if Plaintiff's evidence had not been defective. (Order at 9:1-10:2.) As discussed, defective evidence is no longer an issue. The Order suggested the Court would find that Plaintiff began using the TQFC mark in commerce before April 2001, and has continually used it since. (Id.) The Order relied on such evidence as MMA fights where Plaintiff and his corner coaches wore clothing with the TQFC mark, Plaintiff accepting a $200,000 check for his MMA services while wearing the TQFC mark, a video game depicting Plaintiff wearing clothes featuring the TQFC mark, and an MMA commentator's sworn statement that he associated the TQFC mark with Plaintiff. (Id.; see generally Quadros Decl., Docket No. 71-48; Henderson Decl. and Exs., Docket Nos. 71-1 - 71-33; Butler Decl. Ex. A, Docket No. 71-4.) The Court now adopts the reasoning and conclusions it did in the Order. (Id.) Therefore, Plaintiff is the senior and continuous user of the TQFC mark.

Defendants argue that Plaintiff's commercial use was insufficient for two reasons: (1) "Mere display of mark on athletic apparel is not a trademark use;" and (2) "use of a mark on a t-shirt or a video. . . does not establish trademark rights and services such as MMA instruction, athletic training, or the sale of apparel." (Defendants' Opposition to Motion ("Opp'n") at 6:10-8:21, Docket No. 73.) Defendants' argument on the first point is essentially the same as what they said in their opposition brief for the first summary judgment motion, often borrowing from that brief verbatim. (See Docket No. 61 at 9:9-10:16.) Their second argument appears to be what they stated word-for-word in their first opposition brief. (See id. at 12:3-17.) Because Defendants make the same arguments, the Court reaches the same decision, and hereby adopts the Order's reasoning. (Order at 9:1-10:2). Regarding the first argument, Plaintiff's use of the TQFC mark constitutes commercial use.*fn1 However, the Order's discussion of Defendants' second argument should be supplemented.

The second argument is essentially about likelihood of confusion, not priority and commercial use. Priority is about who uses a mark first, not about the type of products or services the mark is used on. (See e.g. One Indus. 578 F.3d at 1158 ("It is a cardinal principle of federal trademark law that the party who uses the mark first gets priority."). Likelihood of confusion is different. See Guichard v. Universal City Studios, LLLP, No. C 06-6392 JSW, 2007 WL 1750216, at *2 (N.D. Cal. June 15, 2007) (explaining that under the Lanham Act, a plaintiff must prove both that she has "a valid, protectable trademark interest" and that there is a "likelihood of confusion," and noting that priority goes to whether the mark is protectable). Regardless of who used a mark first, a party will not be found to have infringed unless the marks are used in a way that is likely to cause confusion. See generally AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 347 (9th Cir. 1979); see also Guichard,2007 WL 1750216, at *4 ("Only after Plaintiff demonstrates that he has a valid, protectable trademark interest does the Court turn to the [likelihood of confusion analysis]".). Defendants' argument that Plaintiff was not the first to commercially use the TQFC mark in the type of services and products Defendants offer, then, is essentially a likelihood of confusion argument. The Court need not address the likelihood of confusion issue, because neither party has moved for the Court to do so.

B. Location of Use

The Court's Order explained how the Court would have ruled on the location of use issue if Plaintiff's evidence had not been defective. (Order at 10:3-21.) Although Plaintiff's MMA fights were in Japan, where he featured the TQFC mark, these fights were marketed in the United States and available on Pay-Per-View in this country, with a number occurring before April 2001. (See id.; see generally Quadros Decl.; Henderson Decl. and Exs.; Butler Decl. Ex. A.) As discussed, defective evidence is no longer an issue. Defendants claim that if Plaintiff commercially used the TQFC mark, he used it outside the United States, which is insufficient for senior user status. (See Opp'n at 8:22-9:8.) Defendants' location of use argument is again, nearly word-for-word what they argued in their opposition brief for the first summary judgment motion. (Docket No. 61 at 11:7-12:2.) The Court, therefore, adopts its prior reasoning, and finds that Plaintiff has continually used the TQFC mark in commerce within the United States prior to Defendants. (Order at 10:3-21.)

C. Estoppel by Laches and Estoppel by Acquiescence

Plaintiff seeks summary adjudication on Defendants' laches and acquiescence defenses. Although the terms are often used as synonyms in case law, laches "denotes passive consent, while acquiescence implies active consent." J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition ("McCarthy"), § 31:41 (4th ed. 2002); see also Seller Agency Council, Inc. v. Kennedy Center for Real Estate Educ., Inc., 621 F.3d 981, 989 (9th Cir. 2010)("[P]rejudice in the context of acquiescence inherently must involve reliance on the senior user's affirmative act or deed, and such reliance must be reasonable."). It is clear from their brief, though, that Defendants are arguing that Plaintiff waited too long to bring his current action, thus indicating the passive nature of laches, not acquiescence. (See generally Opp'n at 9:9-10:21.) It is equally clear that Plaintiff also focuses on the passiveness element, and is arguing against laches. (See generally Memo. at 12:11-14-16; Plaintiff's Reply in Support of Motion ("Reply") at 4:20-8:28.)

The Order indicated the Court was inclined to find that laches barred Plaintiff's claims. (Order at 11:12-13:24.) The Court emphasized the considerable length of time that both parties had used the mark, the substantial investment both made in using the mark, and Plaintiff's long-standing consent of Defendants' use. (Id.) Plaintiff, however, makes one new argument. Plaintiff claims that a laches affirmative defense is unavailable to Defendant, because Plaintiff and Couture (both senior users) had given Defendants an implied license to use the TQFC mark. (Memo. at 12:11-13:16.) Plaintiff filed suit within a month of receiving Defendants' letter demanding that he cease and desist in his use of the TQFC mark, and it was at this time that he allegedly revoked the implied license. Therefore, Plaintiff claims, he did not wait an undue amount of time to file suit, and laches is inapplicable.

The Ninth Circuit has "set out six factors for determining whether laches bars a claim for either damages or injunctive relief in an action for trademark infringement." Grupo Gigante SA De CV v. Dallo & Co., Inc., 391 F.3d 1088, 1101-1102 (9th Cir. 2004). These factors include:

1. strength and value of trademark rights asserted;

2. plaintiff's diligence in enforcing mark;

3. harm to senior user if relief denied;

4. good faith ignorance by junior user;

5. competition between senior and junior users; and

6. extent of harm suffered by junior user because of senior user's delay.

Id. at 1102. "Laches exists when the plaintiff knows of the defendant's infringing use, delays in taking any action against that use, and knows the defendant is prejudiced as a result of the delay." 3A Fed. Jury Prac. & Instr. ch. 159 (5th ed.) Laches, accordingly, only applies in situations of prolonged infringement.

However, there can be no trademark infringement if a defendant has an implied license to use a trademark. McCarthy, § 18:43.50 (4th ed. 2002); see Dep't of Parks & Recreation for State of California v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1129 (9th Cir. 2006) (describing an implied license as a defense to trademark infringement). "Licenses are contracts governed by ordinary principles of state contract law." Bazaar Del Mundo, 448 F.3d at 1130 (quotations omitted). To show an implied license there must be "evidence of an agreement or course of conduct by the parties to contract for a trademark license." Id. In order for a court to find the existence of an implied license, it is imperative for a licensor to have "maintain[ed] control over the quality of the product or service to guarantee to the public that the goods or services are of the same, pre-license quality." Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1017 (9th Cir. 1985); see also Stanfield v. Osborne Indus., Inc., 839 F. Supp. 1499, 1504 (D. Kan. 1993)(claiming that the Ninth Circuit, like most, requires a licensor to "in fact exercised control over the licensee's operations so as to ensure adequate quality"), aff'd, 52 F.3d 867 (10th Cir. 1995).

Without citing any evidence, Plaintiff argues that the Court should find that he had given Defendants an implied license, claiming that the license should be inferred from their once amicable relationship, and that because of this relationship "throughout the years either Daniel Henderson, Randy Couture, or both were well situated such that they could monitor quality control of Defendants [sic] goods and services." (Memo. at 6:9-11.) Some courts will not "require a formal system of quality control" when the licensor and licensee have a "close association." Woodstock's Enterprises Inc. (California) v. Woodstock's Enterprises Inc. (Oregon), 43 U.S.P.Q.2d 1440 (T.T.A.B. 1997). However, even if the formalities are relaxed, being well situated to exercise quality control is not the same as actually "maintain[ing] control over the quality of the product." See Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d at 1017. Plaintiff's implied license argument, thus, fails.

Plaintiff's reply brief also argues that Defendants cannot argue laches because (1) allowing Defendants to continue using the TQFC mark would injure the public, and (2) Defendants have unclean hands. (Reply at 6:14-11:19.) Since these arguments were raised for the first time in a reply brief, the Court will not address them. See Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007) (affirming district court's decision to reject points raised for the first time in reply). Therefore, the Court DENIES Plaintiff's request to summarily adjudicate the laches issue.

Defendants have not moved for summary adjudication on laches. Should Defendants move for summary adjudication on the laches issue, they should also address Plaintiff's unclean hands and public harm arguments. (See Reply at 6:14-11:19.) They should also address and provide evidence as to whether Plaintiff gave Defendants an implied license (e.g. evidence that Plaintiff did not supervise the quality of Defendants' services).

D. Trademark Cancellation and Defendants' Federal Trademark Counterfeiting Counterclaim Plaintiff asks the Court to cancel Defendants' registered trademarks,*fn2 because they are confusingly similar to Plaintiff's TQFC marks. (Memo. at 14:18-15:21.) Marks registered fewer than five years before being challenged may be cancelled if they are likely to cause confusion with the senior user's mark. McCarthy § 20:53; 15 U.S.C. §§ 11052(d), 1064. However, Plaintiff has not made a likelihood of confusion argument. Since Plaintiff has not argued likelihood of confusion, summary judgment on this issue is inappropriate.

E. Defendants' Trademark Counterfeit Claim

Plaintiff argues that he cannot be guilty of trademark counterfeiting, if the Court cancels Defendants' registered trademarks. (Memo. at 15:22-16:8.) However, the Court is not granting summary adjudication on the cancellation issue. Therefore, Plaintiff's argument on the counterfeiting issue also fails.

F. Defendants' Copyright Counterclaim

Defendants counterclaim for copyright infringement. (Amended Answer and Counterclaims, Docket No. 43.) Plaintiff claims that he could not have infringed Defendants' copyrighted image ("the Copyrighted Image"),*fn3 because Defendants did not own the copyright to the image. (Memo. at 16:12-28.) Defendants do not respond to Plaintiff's copyright infringement argument.

To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. Feist Publications, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991). Copyright registration may be "prima facie evidence of the validity of the copyright." 17 U.S.C. § 410(c). But registration only creates a "rebuttable presumption" of validity. A copyright claimaint can apply to register a copyright. 37 C.F.R. § 202.3(c)(1). A copyright claimaint is defined as "the author of a work" or "[a] person or organization that has obtained ownership of all rights under the copyright initially belonging to the author." Id. at § 202.3(a)(3).

Plaintiff provides a declaration from David Kinsey ("Kinsey"), who claims that he created Defendants' Copyrighted Image, and that Jerry Suhrstedt ("Suhrstedt"), who sold the image to Defendants, neither created nor owned the image. (Kinsey Decl. ¶¶ 14-16, (Docket No. 71-34.) Attached to Kinsey's declarations are emails between him and Suhrstedt. In these emails, Kinsey expresses displeasure that the images were sold, and suggests that Suhrstedt did not have the authority to sell them. (See id. at Exs. A, B.)

Defendants' copyright registration lists defendant Team Quest Fight Club as the copyright claimant through "Transfer: By written agreement". (Welch Decl. Ex. B, Docket No. 71-46.) The written agreement that completed the transfer names Suhrstedt as the "assignor." (Welch Decl. Ex. C, Docket No. 71-45.) Plaintiff, therefore, has presented evidence that Suhrstedt did not have authority to transfer the Copyrighted Image to TQFC LLC, and therefore TQFC LLC was not a proper copyright claimant. (Kinsey Decl. ¶¶ 14-16, Ex. B.) Since Team Quest Fight Club applied for registration as a copyright claimaint, their registration was not proper. Id. at § 202.3(a)(3). The registration is the only evidence that Defendants own the Copyrighted Image. Defendants' bear the burden of proving their counterclaim for copyright infringement, and they did not respond to Plaintiff's copyright infringement argument. The Court "need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found." Carmen, 237 F.3d at 1031. Plaintiff's unrebutted evidence and argument are sufficient to show there is no genuine dispute that Defendants do not own the Copyrighted Image. Since they do not own the Copyrighted Image, the Court grants summary adjudication and finds that the Plaintiff did not commit copyright infringement. See Feist, 499 U.S. 340, 361 (1991).

IV. Conclusion

For the reasons discussed the Court GRANTS in part and DENIES in part Plaintiff's Motion. The Court GRANTS Plaintiff's Motion as the following issues: (1) Plaintiff is the senior and continuous user of the TQFC mark; and (2) Plaintiff is innocent of copyright infringement. The Court DENIES summary adjudication on the laches, trademark cancellation, and trademark counterfeiting issues. Should another summary judgment motion be permitted, the parties should strictly adhere to the local rules concerning the statements of uncontroverted facts and genuine disputes. C.D. Cal. L.R. 56-1 - 56-3. The statement of uncontroverted facts should list facts that, if undisputed, would be sufficient to grant summary judgment, and each listed fact (in both statements) should cite supporting admissible evidence.

IT IS SO ORDERED.


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