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Qs Wholesale, Inc v. World Marketing

May 9, 2013

QS WHOLESALE, INC., PLAINTIFF,
v.
WORLD MARKETING, INC., DEFENDANT.



The opinion of the court was delivered by: David O. Carter United States District Judge

ORDER DENYING IN PART AND GRANTING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT, and DENYING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT

Before the Court are two motions: (1) Plaintiff QS Wholesale's ("Plaintiff's" or "Quiksilver's") Motion for Partial Summary Judgment (Dkt. 150); and (2) Defendant World Marketing's ("Defendant's" or "WMI's") Motion for Partial Summary Judgment (Dkt. 154). Oral arguments were presented to the Court on May 6, 2013. After considering the moving papers and oral arguments, this Court GRANTS IN PART and DENIES IN PART Plaintiff's motion, and DENIES Defendant's motion.

I.Background

Since this action involves a former Baywatch star,*fn1 perhaps the Court should not be surprised that the parties continue to generate a great deal of heated conflict even as the plotline of this case has meandered and the audience has shrunk.

In this trademark infringement action, both Defendant WMI's VISITOR mark and Plaintiff Quiksilver's VSTR mark are registered for use in connection with men's clothing and apparel. Def's Statement of Uncontroverted Facts and Conclusions of Law ("Def's SUF") (Dkt. 154-1) ¶¶ 2-3, 6-8. WMI obtained registration in 1998 of the mark VISITOR in connection with men's shirts, pants, shorts, sports jackets, and t-shirts, while Quiksilver obtained registration in 2011 of the mark VSTR in connection with shirts; Quiksilver has also applied to register the VSTR mark in connection with other apparel such as pants, shorts, jackets, and swimwear. Id.

¶¶ 4, 6-8. Defendant WMI began selling VISITOR branded clothing and apparel in 1987; Plaintiff Quiksilver began selling VSTR-branded goods on or about June 17, 2011. Id. ¶¶ 2, 7.

a.Quiksilver attempts to buy the VISITOR mark from WMI

Quiksilver originally planned to use the name "Visitor" for its VSTR brand. Declaration of Neil K. Roman ("Roman Decl.") (Dkt. 168-2) Exs. R (38:19-40:9), S (100:4-14), T (25:12-20), and U (31:19-25). During development of the brand in 2009 and 2010, Quiksilver executives and agents referred to the brand as "Visitor" or "KS Visitor," since it was inspired by the world travels of professional surfer (and aforementioned Baywatch star) Kelly Slater. Id. Exs. V-X, R (38:19-40:9), Z (83:16-84:13), and QQ. Quiksilver, however, learned in February 2010 that WMI had already registered the VISITOR mark for use in connection with clothing and apparel. Id. Exs. S (179:5-15) and U (31:8-33:16); see also id. Ex. BB (February 12, 2010, email of Craig Stevenson, Quiksilver Global Brands President expressing dismay at the discovery of WMI's mark).

At that point, in April or May of 2010, Quiksilver reached out to WMI and attempted to purchase the VISITOR mark; between May of 2010 and February of 2012, the parties exchanged offers, but, ultimately, they did not agree on a price. Id. Ex. CC (Quiksilver's offers ranged from $60,000 to $250,000); see also id. Exs. S (240:16-249:20), X, DD. While a sale of the mark was discussed, neither party alleges that they ever discussed the possibility of Quiksilver obtaining a license to use the mark. Quiksilver presents no evidence that the potential of a lawsuit was ever discussed during these communications between the parties, and never suggests that Quiksilver or WMI characterized them as anything other than business communications regarding the potential purchase of a trademark.

b.The present litigation commences

On March 8, 2012, after Quiksilver's VSTR line began appearing on the market, WMI sent Quiksilver a letter demanding that Quiksilver discontinue use of its VSTR mark. Def's SUF ¶ 9. On March 21, 2012, Quiksilver filed the present Complaint (Dkt. 1) seeking a declaratory judgment, pursuant to 28 U.S.C. § 2201(a), "that Quiksilver's use of the VSTR mark does not infringe or dilute any valid and protectable trademark owned by [WMI], nor does it constitute unfair competition or false designation of origin." Compl. ¶ 22. WMI filed counterclaims for trademark infringement under the Lanham Act and pendant state law claims, seeking as relief (1) cancellation of the VSTR mark; (2) injunctive relief; (3) actual damages under the Lanham Act; (4) Quiksilver's profits; and (5) attorney's fees and costs. See Def's Answer and Counterclaims (Dkt. 15).

c.Quiksilver loses money and shuts down the VSTR brand

VSTR was not a success. Quiksilver submitted expert testimony showing that the company lost $1,268,136 on the VSTR brand during the fiscal year ending October 31, 2011, and lost $2,170,158 during the fiscal year ending October 31, 2012. Pl's Mot. at 4. WMI does not appear to dispute these figures. Sometime after Andrew Mooney became the new CEO of Quiksilver on January 13, 2013, he made the decision to shut down the VSTR brand. Id. at 7. On March 8, 2013, he sent a letter to WMI informing them of this decision. Id. While the brand is currently "shut down" and Quiksilver "has no plans to design, manufacture, advertise, and/or distribute any new product under the VSTR mark," Decl. of Brent H. Blakely (Dkt. 167-1) ¶ 4, Quiksilver does still intend to "sell[] off pre-existing inventory." Pl's Opp'n to Def's Mot. (Dkt. 167) at 6.

d.The current motions are filed

On April 8, 2013, Quiksilver filed a Motion for Partial Summary Judgment (Dkt. 150), arguing, first, that there can be no damages recovered for any cause of action, and, second, that WMI's counterclaim for injunctive relief is moot in light of the fact that the VSTR brand has been shut down. See Pl's Mot. Also on April 8, 2013, WMI filed its own Motion for Partial Summary Judgment (Dkt. 154), arguing that Quiksilver's claims for declaratory relief are moot. See Def's Mot. Oppositions and replies were filed by each party, and oral arguments were presented to the Court on May 6, 2013.

II.Legal Standard

Summary judgment is proper if "the 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(c). The court must view the facts and draw inferences in the manner most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1992); Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1161 (9th Cir. 1992). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact for trial, but it need not disprove the other party's case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). When the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden by pointing out that the non-moving party has failed to present any genuine issue of material fact. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir. 1990).

Once the moving party meets its burden, the opposing party must set out specific facts showing a genuine issue for trial; merely relying on allegations or denials in its own pleading is insufficient. See Anderson, 477 U.S. at 248-49. A party cannot create a genuine issue of material fact simply by making assertions in its legal papers. S.A. Empresa de Viacao Aerea Rio Grandense v. Walter Kidde & Co., Inc., 690 F.2d 1235, 1238 (9th Cir. 1982). Rather, there must be specific, admissible evidence identifying the basis for the dispute. Id. The Supreme Court has held that "[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 opposing party]." Anderson, 477 U.S. ...


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