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Malem Medical, Ltd. v. Theos Medical Systems, Inc.

United States District Court, N.D. California

July 18, 2014

MALEM MEDICAL, LTD., et al., Plaintiffs,
v.
THEOS MEDICAL SYSTEMS, INC., et al., Defendants.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION TO STRIKE CERTAIN AFFIRMATIVE DEFENSES IN DEFENDANTS' ANSWER OR, IN THE ALTERNATIVE, MOTION FOR JUDGMENT ON THE PLEADINGS OR MOTION TO DISMISS (Docket No. 36)

EDWARD M. CHEN, District Judge

Plaintiffs Malem Medical, Ltd. ("Malem") and Enuresis Associates, LLC, dba the Bedwetting Store ("BWS"), (collectively "Plaintiffs") have filed suit against Defendants Theos Medical Systems, Inc. ("Theos") and Saket Bhatia (collectively "Defendants") asserting claims for violation of the Lanham Act and the Copyright Act, as well as state law claims for unfair competition, false advertising, conversion, and common law misappropriation. See First Amended Complaint ("FAC"), Docket No. 29. Pending before the Court is Plaintiffs' motion to strike certain affirmative defenses in Defendants' answer to the FAC ("Answer") or, in the alternative, motion for judgment on the pleadings or motion to dismiss. See Docket No. 36. The hearing is scheduled for July 24, 2014.

Having considered the parties' briefs and accompanying submissions, the Court finds this matter is appropriate for resolution without argument and hereby VACATES the hearing pursuant to Civil Local Rule 7-1(b). The Court hereby GRANTS in part and DENIES in part the motion to strike. Defendants voluntarily withdraw Affirmative Defenses Nos. 6 and 10-12. The motion is granted with leave to amend as to Affirmative Defenses Nos. 2-5, 7-9, 17-20, and 22. The motion is denied as to Affirmative Defense No. 21.

I. FACTUAL & PROCEDURAL BACKGROUND

In the FAC, Plaintiffs allege as follows.

All parties to this action are in the business of selling alarm systems and related products, which detect the presence of urine or other bodily fluids on pajamas or other night garments (hereinafter referred to as "alarms"). FAC ¶ 17. The alarms are primarily used to train users out of bed wetting. Id. Plaintiff BWS, a Maryland corporation, has used the service marks BEDWETTING STORE and DRY AT NIGHT since 2001 and 2000 respectively. See id. ¶¶ 4, 23, 24. Since 2001, Plaintiff BWS has also been the exclusive United States distributor of Plaintiff Malem's alarms, which is an English corporation. See id. ¶¶ 5, 22. Plaintiff Malem has used the service mark MALEM since 1979 and currently has applications pending at the United States Patent and Trademark Office ("USPTO") to register the marks related to its alarms. See id. ¶¶ 20, 25. On February 5, 2014, Plaintiff BWS filed an application with United States Copyright Office to register the materials contained on their website. See id. ¶¶ 30, 64, Ex. 8. Defendant Theos, a California corporation, and Defendant Bhatia, a resident of California, use the mark CHUMMIE to distinguish their alarm products. See id. ¶¶ 1-2, 19.

According to Plaintiffs, for at least the past two years Defendants have systematically and dishonestly attempted to cause confusion in the marketplace by using Plaintiffs' service marks to attract customers. See id. ¶ 34. Specifically, Defendants have advertised on the Internet using Plaintiffs' marks, including BEDWETTING STORE, DRY AT NIGHT, and MALEM. See id. ¶¶ 40, 41, Ex. 6, 7. Furthermore, Plaintiffs allege that Defendants have made it their practice in commercial advertising and promotions to misrepresent the nature, characteristics, and qualities of Defendants' and Plaintiffs' goods, services, or commercial activities. See id. ¶ 43. Specifically, Defendants have claimed that the MALEM devices were dangerous, that Defendants were the leading providers of alarms, that Defendants products were the most recommended by pediatricians, and that Defendants have sold over 100, 000 of their devices. See id.

II. DISCUSSION

A. Legal Authority

Pursuant to Federal Rule of Civil Procedure ("Rule") 12(f) the court may strike from a pleading "an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). "What constitutes an insufficient defense depends upon the nature of the claim for relief and the defense in question." Equal Employment Opportunity Comm'n v. First Nat. Bank of Jackson, 614 F.2d 1004, 1008 (5th Cir. 1980). Moreover, "[t]he key to determining the sufficiency of pleading an affirmative defense is whether it gives plaintiff fair notice of the defense." Simmons v. Navajo Cnty., Ariz., 609 F.3d 1011, 1023 (9th Cir. 2010). "The function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial..." Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010). However, motions to strike are generally disfavored. See Barnes v. AT & T Pension Ben. Plan-Nonbargained Program, 718 F.Supp.2d 1167, 1170 (N.D. Cal. 2010). Last, "[i]f a claim is stricken, leave to amend should be freely given when doing so would not cause prejudice to the opposing party." Wyshak v. City Nat'l Bank, 607 F.2d 824, 826 (9th Cir.1979).

B. Affirmative Defense Nos. 1-20, 22-23

Defendants' Answer contains 23 affirmative defenses. See Docket No. 34. Plaintiffs do not move to strike Affirmative Defense Nos. 1, 13-16, and 23. Defendants voluntarily withdraw Affirmative Defense Nos. 6 and 10-12 and concede that, aside from Affirmative Defense No. 21, all other Affirmative Defenses at issue in the motion lack sufficient supporting factual allegations as currently plead. See Defs. Opposition to Motion ("Opp."), Docket No. 41.[1] Plaintiffs do not object to the Court granting Defendants leave to amend on those defenses. See Reply to Motion ("Reply") at 2, Docket No. 42. Accordingly, the motion to strike is granted with leave to amend as to Affirmative Defense Nos. 2-5, 7-9, 17-20, and 22.

C. Affirmative Defense No. 21

The only contested Affirmative Defense is No. 21 which states Plaintiffs' claims for statutory damages and attorneys' fees under the Copyright Act are barred for failure to register the materials within three months after the first publication, pursuant to 17 U.S.C. § 412. See Answer to FAC ¶ 21. Plaintiffs argue that their claim is not barred because the Copyright Act does not require the materials to be registered within the first three months of publication and that Defendants have confused the requirements regarding preregistered work' under section 408(f)(3), with the copyright referred to in the FAC. See Motion at 15. Essentially, Plaintiffs argue Affirmative Defense No. 21 is precluded as a matter of law.

The Ninth Circuit held that "Rule 12(f) does not authorize district courts to strike claims for damages on the ground that such claims are precluded as a matter of law" and such claims "are better suited for a Rule 12(b)(6) motion or a Rule 56 motion..." Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 974-75 (9th Cir. 2010). Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed.R.Civ.P. 12(b)(6). While "a complaint need not contain detailed factual allegations... it must plead enough facts to state a claim to relief that is plausible on its face.'" Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009).

Whether under Rule 12(f) or Rule 12(b)(6), the Court finds the FAC contains sufficient supporting factual allegations to support Affirmative Defense No. 21. Copyright Act § 412 bars an award of statutory damages or attorneys' fees, generally permissible under the Copyright Act §§ 504 and 505, for "any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work."[2] Oddo v. Ries, 743 F.2d 630, 634-35 (9th Cir. 1984). For Defendants to prevail on this defense, they must show "(1) that the works were published; (2) the date of copyright registration; and (3) that Defendants' infringement commenced prior to the registration." Peliculas Y Videos Internacionales, S.A. de C.V. v. Harriscope of Los Angeles, Inc., 302 F.Supp.2d 1131, 1138 (C.D. Cal. 2004) (emphasis added).

In the FAC Plaintiffs allege that (1) the registration did not occur until on or after February 5, 2014, [3] more than three months from the first publication of work on July 1, 2007 ( see FAC ¶ 64, Ex. 8) and (2) Defendants' infringement occurred prior to the registration. See FAC ¶ 34.

Accordingly, the Court finds Affirmative Defense No. 21 sufficient under Rule 12(f) because it "gives plaintiff fair notice of the defense, " Simmons, 609 F.3d at 1023, as well as under Rule 12(b)(6) because it is plausible that the Plaintiffs' claim for statutory damages and attorneys' fees may be precluded as a matter of law, pursuant to 17 U.S.C. § 412. Accordingly, the Court denies the motion to strike, or in the alternative, the motion to dismiss as to Affirmative Defense No. 21.

III. CONCLUSION

The motion is GRANTED in part and DENIED in part. Defendants voluntarily withdraw Affirmative Defenses Nos. 6 and 10-12. The motion is granted with leave to amend as to Affirmative Defenses Nos. 2-5, 7-9, 17-20, and 22. The motion is denied as to Affirmative Defense No. 21.

This disposes of Docket No. 36.

IT IS SO ORDERED.


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