United States District Court, S.D. California
ORDER DENYING DEFENDANT'S MOTION TO DISMISS [Dkt. No. 36.]
GONZALO P. CURIEL, District Judge.
Before the Court is Defendant Phix Doctor, Inc.'s ("Phix Doctor" or "Defendant") motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). Plaintiff Wahoo International, Inc.'s ("Wahoo" or "Plaintiff") filed an opposition on May 2, 2014. (Dkt. No. 38.) A reply was filed on May 20, 2014. (Dkt. No. 45.) Based on the reasoning below, the Court DENIES Defendant's motion to dismiss.
According to the Complaint, Wahoo is a leading manufacturer of UV cure resins. Resins are thick liquids that harden into transparent solids and used to repair fiberglass, plastics, wood and metal. The repair putty hardens in 3 minutes when exposed to UV sunlight. SOLAREZ is a unique UV cure synthetic resin. It was the first UV cure resin on the surf market and first sold in 1987. Wahoo has invested in promotion of its product and education regarding use to the UV cure repair resin. As the first resin of its kind, SOLAREZ has become famous in the surf, snowboard, and skate industry. Plaintiff sells its products online directly to consumers and through distributors and retailers. Its distributors are located in San Diego, CA, Ocean City, MD and Aiea, HI and they distribute to retailers across the country.
Wahoo first registered the mark SOLAREZ on April 14, 1992 (Reg. No. 1, 682, 565) for clear resin coating. The mark's first registration lapsed for inadvertent failure to renew in 2003, but it was re-registered on January 6, 2004 with Reg. No. 2, 802, 579. The registration's date of first use is June 26, 1989. Plaintiff has used the SOLAREZ mark on its repair putty continuously and consistently since June 26, 1989.
Wahoo also alleges it is the owner of a family of marks with the root suffix -rez. Plaintiff has advertised "Rez-solutions" such as SPONGEREZ for bodyboard and swimfin repair resin since 1989; NEOREZ for wetsuit repair resin since 1990; and RADREZ for snow and skateboard and skate shoe repair resin since 1992. In the surf, skate, and snowboard industry and culture, -rez is recognized by customers to be associated with Plaintiff's products when it appears in a composite. Plaintiff advertises, promotes, and sells its -rez products in a manner designed to create an association of common origin for all marks containing -rez.
Defendant Phix Doctor is a producer of fiberglass repair products and accessories. Defendant purchased SOLAREZ products sometime before 2010. On November 29, 2011, it announced its new product "DURA REZ" on its website. According to its description, it is a fiber filled epoxy and polyester repair product and also made of resin. Its advertising states: "cures in full sun in less then 3 minutes for a professional finish that saves you time and money!" The product is advertised as an ultra-clear, sun powered resin that works on epoxy and polyester and does not harden in the tube. DURA REZ has a product line with distributors in California, North Carolina, and Florida as well as retailers throughout the country.
When Plaintiff discovered the infringement on its trademark, SOLAREZ, it sent a cease and desist letter dated December 10, 2012 to Phix Doctor; however, Phix Doctor never responded. In January 2013, at a Surf Expo in Orlando, Florida, Wahoo's sales manager, Nelz Vellocido, saw Tony Gowen, a principal of Phix Doctor, exhibiting DURA REZ. At the time, Gowen told Vellocido that he would be "wind down" the use of the DURA REZ mark. However a month later, one of Plaintiff's distributors called to complain that retailers claimed to be buying SOLAREZ from a non-Wahoo distributor. When Plaintiff's distributors called that particular retailer and asked if they carried SOLAREZ, they said "yes, we sell SOLAREZ." However, the store was selling DURA REZ.
In March 2013, Defendant's website was still advertising DURA REZ. Therefore, on June 14, 2013, Plaintiff filed a complaint alleging causes of action for (1) Trademark Infringement, 15 U.S.C. § 1114; (2) Trademark Dilution, 15 U.S.C. § 2235(c); (3) False Designation of Origin, 15 U.S.C. § 1125(A); (4) Injury to Business Reputation and Dilution, California Business & Professions Code section 14247; (5) Common Law Passing Off and Unfair Competition; and (6) Unfair Competition, California Business & Professions Code section 17200. (Dkt. No. 1.)
A. Legal Standard on Federal Rule of Civil Procedure 12(b)(6)
Federal Rule of Civil Procedure ("Rule") 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't. , 901 F.2d 696, 699 (9th Cir. 1990). Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief, " and "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007).
A complaint may survive a motion to dismiss only if, taking all well-pleaded factual allegations as true, it contains enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Twombly , 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id . "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id . "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv. , 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as true all facts alleged in the complaint, and draws all reasonable inferences in favor of the plaintiff. al- Kidd v. Ashcroft , 580 F.3d 949, 956 (9th Cir. 2009).
Where a motion to dismiss is granted, "leave to amend should be granted unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'" DeSoto v. Yellow Freight Sys., Inc. , 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co. , 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to amend ...