United States District Court, N.D. California
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For Ingrid & Isabel, LLC, a California limited liability company, Plaintiff: Robert Joseph Yorio, LEAD ATTORNEY, Ilene Hoffman Goldberg, Carr & Ferrell LLP, Menlo Park, CA; Christine S. Watson, Carr & Ferrell LLP, Palo Alto, CA.
For Baby Be Mine, LLC, a Delaware limited liability company, Defendant: Jeremy Joseph Sugerman, Kevin J. Holl, LEAD ATTORNEYS, Aman Pradhan, Gordon-Creed Kelley Holl & Sugerman, LLP, San Francisco, CA.
For Helen Tekce, an individual, Isabelle Gartner, an individual, Defendants: Jeremy Joseph Sugerman, Kevin J. Holl, LEAD ATTORNEYS, Gordon-Creed Kelley Holl & Sugerman, LLP, San Francisco, CA.
For Ingrid & Isabel, LLC, Counter-defendant: Kevin J. Holl, LEAD ATTORNEY, Gordon-Creed Kelley Holl & Sugerman, LLP, San Francisco, CA; Robert Joseph Yorio, LEAD ATTORNEY, Ilene Hoffman Goldberg, Carr & Ferrell LLP, Menlo Park, CA.
For Baby Be Mine, LLC, a Delaware limited liability company, Counter-claimant: Jeremy Joseph Sugerman, LEAD ATTORNEY, Gordon-Creed Kelley Holl & Sugerman, LLP, San Francisco, CA.
ORDER RE SUMMARY JUDGMENT
Re: Dkt. Nos. 92, 98
JOSEPH C. SPERO, United States Magistrate Judge.
On April 19, 2013, Plaintiff Ingrid & Isabel, LLC (" I& I," " Plaintiff" ) initiated this action against Defendants Baby Be Mine Maternity, LLC (" BBM" ) and BBM's sole members and co-founders, Helen Tekce (" Tekce" ) and Isabelle Gartner (" Gartner" ) (collectively, " Defendants" ). Plaintiff alleges multiple counts of breach of contract, one count of violation of the Lanham Act, and two California statutory and common counts of unfair competition. Defendants subsequently alleged counterclaims against Plaintiff for intentional interference with contractual relations, and intentional and negligent interference with prospective economic advantage. The parties brought cross-motions for summary judgment, which are presently before the Court and which collectively address all of the parties' claims and counterclaims. Plaintiff moved for partial summary judgment on its breach of contract claims and all of Defendants' counterclaims; Defendants moved for summary judgment, or in the alternative, partial summary judgment, on all of Plaintiff's claims and on Defendants' counterclaim for intentional interference with contractual relations.
The motions came on for hearing August 29, 2014 at 9:30am. For the reasons set forth below, I& I's summary judgment motion is GRANTED in part and DENIED in part. BBM's motion is GRANTED in part and DENIED in part.
Plaintiff and Defendants are in the business of selling belly bands, among other products. " A belly band is a cloth band worn around a pregnant woman's waist." Dkt. No. 101 (Joint Statement In Support Of Parties' Motions For Summary Judgment) (" JSF" ) at ¶ 1. Plaintiff markets its line of belly bands under the trade names " Bellaband® " and " BeBand® ," Dkt. No. 47 (First Amended Complaint) (" FAC" ) at 31; Defendants currently market BBM's line of belly bands using the descriptor " Maternity Belly Band." See JSF at ¶ 36.
A belly band may be functional, decorative, or both. See JSF at ¶ ¶ 10-11; Dkt. No. 98 at 2. One potential function of a belly band is to hold up the pants or skirts of the pregnant woman wearing the band. See JSF at ¶ ¶ 10-11. The elastic fabric holds in place pants or skirts that no longer fit during the pregnancy and which would otherwise fall or slip down. See, e.g., Dkt. Nos. 98 at 3; 96-1 at 12. Some belly bands are capable of holding up unbuttoned pants or skirts, and thus allow a pregnant woman to wear her existing clothes, as opposed to larger sizes or special " maternity" clothing, during at least the early phase of the pregnancy. See, e.g., Dkt. Nos. 92 at 12; 98 at 3; 96-1 at 12-13. The size, shape, and composition of the belly band may affect its ability to hold up the pregnant wearer's pants or skirts. Id.
Belly bands may also be worn for purposes other than holding up pants or skirts. See, e.g., Dkt. No. 98 at 2-3. They can be worn as a decorative item over or along with other clothing. Id. They can serve to cover undone buttons on a woman's clothing without functionally holding up the undone item. Id. Belly bands are also marketed to cover a pregnant women's exposed skin, bridging the gap that might be created between her pants or skirt and her shirt or blouse. Id.
This litigation stems directly from the settlement of two previous actions against Defendant by Plaintiff. The first was a trademark infringement claim, in which Plaintiff's predecessor-in-interest, Ingrid & Isabel Inc. (" I& I Inc." ) accused Defendants of infringing I& I Inc.'s common law trademark rights and of conduct in violation of 15 U.S.C. § 1125(a) (the Lanham Act). FAC at 32. Specifically, I& I Inc. alleged that Defendant's sale, offers for sale and advertising of maternity waist bands under the name " Belly Band" was confusingly similar to I& I Inc.'s " Bella Band" product. Id. at 32. That case was dismissed pursuant to a Trademark Settlement Agreement (the " TSA" ) in 2006.
In the 2008 litigation, I& I Inc. alleged claims for patent infringement and unfair competition against Defendants. I& I Inc. alleged violation of U.S. Patent No. 7,181,775 B2 (" the '775 Patent" ), which includes claims for a belly band which " hold[s] the skirt or pants in place on the women's body" and which " retain[s] the pants or skirt in place." That case was dismissed pursuant to a Patent Settlement Agreement (the " PSA" ) in 2009. JSF ¶ ¶ 4, 8.
B. The TSA
Paragraph 1 of the TSA states in relevant part:
" Defendants hereby represent, covenant, and warrant to plaintiffs that defendants will cease and desist from using the term " Bella" in connection with defendants' sale, distribution, or marketing of Maternity Bands."
JSF ¶ 5; Dkt. No. 1 Ex. B.
C. The PSA
Paragraph 1 of the PSA states in relevant part:
Defendants' Future Advertising and Maternity Band Statements. Defendants and their Affiliates (as used herein, " Affiliates" means any corporation, partnership, joint venture, or other entity or person in which Defendants or any of them hold an equity position) shall include on their websites an express statement that Defendants' Maternity Bands are decorative and are to be used as a fashionable clothing accessory that is not intended to nor does it actually hold up skirts or pants while being worn in a comfortable, nonbinding fashion. Defendants agree to include an express statement on each webpage of any website that they control or in which they have an ownership interest and on which they advertise or sell their Maternity Bands that their Maternity Bands " are not intended to nor do they actually hold up skirts or pants." Defendants agree to clearly communicate that the purpose of their Maternity Bands is decorative (and this obligation may be satisfied with respect to magazine or other media publication advertisements by the inclusion of a statement that the Maternity Bands " are for decorative use" ). . . Defendants agree to include a statement that their Maternity Bands are not designed to hold up skirts or pants on all of their product packaging and in Defendants' product descriptions, provided
that Defendants may continue to use their existing packaging without modification for a period not to exceed -120 days after the suit is dismissed. Failure to comply with any provision of Paragraph 1 shall constitute a material breach of this Agreement.
JSF ¶ 10; Dkt. No. 1 Ex. A.
Paragraph 2.A of the PSA states in relevant part:
Function of Maternity Bands. Defendants agree that they will not . . . offer to sell, sell, market, promote, distribute or advertise Maternity Bands that hold up pants or skirts.
JSF ¶ 10; Dkt. No. 1 Ex. A.
Paragraph 2.B of the PSA states in relevant part:
Compliance by Defendants' Retailers, Vendors, Sales Representatives, and Agents. Defendants agree to provide written notification to all of their retailers, vendors, sales representatives, agents and any other individuals or companies acting for, on behalf of, or in concert with Defendants to comply with the provisions of this Paragraph 1. Defendants further agree to use commercially reasonable best efforts to insure that their retailers, vendors, sales representatives, agents, and any other individuals or companies acting for, on behalf of, or in concert with Defendants do not advertise, promote, sell or offer to sell its Maternity Bands for the purpose of holding up skirts or pants. However, Defendants will not be directly liable for the independent actions of those vendors, sales representatives, agents and any other individuals or companies that are not Affiliates of Defendants.
JSF ¶ 12; Dkt. No. 1 Ex. A.
Paragraph 4 of the PSA states in relevant part:
Defendants' Agreement Regarding Defendants' Use, Offer to Sell, Sale, Promotion, Distribution or Marketing of Maternity Bands. Defendants hereby represent, covenant and warrant to Plaintiffs that, following the execution of this Agreement by all Parties, Defendants shall not copy any of Plaintiffs' advertising, marketing and promotional copy or layout elements and materials, copying statements, ideas, or expressions used in Plaintiffs' advertising, promotional and marketing materials.
JSF ¶ 13; Dkt. No. 1 Ex. A.
D. BBM's websites
Defendants continued to market and sell belly bands following the settlement agreements. Defendants marketed their belly bands on their website, www.babybeminematernity.com (the " BBM website" ), JSF ¶ 26, as well as on a mobile website (the " mobile website" ) JSF ¶ 29. " In August 2009, BBM instructed its web design [firm] to add a disclaimer to the website that 'Baby Be Mine Maternity Bands are not intended to nor do they actually hold up skirts or pants.'" JSF ¶ 16. It is also undisputed that BBM launched a new website design in September 2012, and the new website contained a disclaimer that states, " Baby Be Mine Maternity Bands are not intended to nor do they actually hold up skirts or pants." JSF ¶ 19. The disclaimer is located " at the bottom of the web pages under the copyright notice." Id.
" BBM advertised the Maternity Bands on the mobile website, but did not have the Disclaimer on all of the mobile webpages." Id. at ¶ 30. " I& I first brought the lack of a disclaimer on the mobile website to BBM's attention at a February 25, 2014 deposition. BBM's counsel did not receive a written communication regarding this issue. The mobile website was subsequently disabled." Id. at ¶ 31.
Defendants also had a page for BBM on Facebook.com. The parties do not agree as to how it was used with regard to
marketing Defendants' belly bands. Plaintiff alleges that Defendants " marketed the Maternity Bands on their Facebook.com page," and that the BBM Facebook.com page did not include a disclaimer that BBM's belly band " is not intended to nor does it actually hold up skirts or pants." Dkt. No. 92 at 8. Defendants claim that BBM's Facebook.com page is " devoted almost exclusively to gownies and other products unrelated to the belly band." Dkt. No. 102 (Decl. of Helen Tekce) at ¶ 23, and maintains that BBM " has never sold bands directly from the Facebook.com page." Id.
E. BBM's product descriptions
The parties have entered into stipulations regarding the product descriptions on BBM's website, www.babybeminematernity.com. The site:
describes the White, Crème Brule, Glacier Gray, Simply Taupe, Dark Denim, Pink, Cocoa, Raspberry Rose, 2 Pack Special 1 White and 1 Black, and 3 Pack Special 1 White, 1 Black and 1 Crème Brule Maternity Band, Brown and Crème printed Maternity Band, Black and White printed Maternity Bands . . . with the following language:
The belly band that grows with you! You don't have to worry about that in between stage when nothing fits, your regular clothes too small & maternity clothes too big! Designed with your comfort in mind this little beauty will cover any gaps between your tops & bottoms by adding length & cover those ugly elastic waistbands or unbuttoned pants. This fabulous belly band is a 'must have' at every stage of your pregnancy, is excellent postpartum to cover exposed skin when breastfeeding while still looking great in yummy colors.
JSF ¶ 26. The parties also agree that:
Under the photograph of the Current Products is a section titled " Description" on BBM's website, which includes the following statements: " Conceal those unsightly elastic waistbands and expandable panes on maternity pants and skirts" ; " Double your wardrobe. You don't have to worry about that in between stage when nothing fits -- your regular clothes are too small and your maternity clothes are too big" ; " Keep your tummy under wraps as it becomes beautifully round - cover any gaps between your tops & bottoms" ; " Wear your favorite pre-pregnancy clothes longer" ; " Get back into prepregnancy clothes sooner after birth" ; " Make your maternity clothing more comfortable instantly -- just fold your waistband under your belly and cover with the belly band" ; " Perfect while you recuperate postpartum and as a breastfeeding cover-up, too" .
JSF ¶ 28.
It is also undisputed that, " Two bands sold on BBM's website as of June 11, 2014 -- a solid black band, and a 'pink maternity belly band last years inventory' -- include a statement in the product description that these bands 'are not designed to hold up skirts or pants.'" JSF ¶ 27.
F. BBM's sales to Wayfair and Walmart
In addition to selling its belly bands directly through its website, BBM also sold belly bands to Wayfair, LLC, a distributor and online retailer, which in turn sold BBM's belly bands to Wayfair's customers and partners. Dkt. No. 102 at ¶ 27. BBM signed a supplier contract with Wayfair on or about October 14, 2011. JSF at ¶ 37. The contract states that BBM, as supplier, would sell belly bands and designer hospital gowns (" gownies" ) to Wayfair's customers and/or Partners. Id. BBM subsequently sold belly bands and gownies to Walmart, which was a Wayfair
partner. JSF ¶ 38. Orders made by customers on Walmart's website were received by BBM through Wayfair and fulfilled by BBM. Dkt. No. 102 at ¶ 29.
Plaintiff's counsel contacted Walmart in May and accused it and BBM of infringing on Plaintiff's '775 Patent. Dkt. No. 94-1. Plaintiff later contacted Wayfair as well and described the parties' PSA and this ongoing action. Dkt. No. 104-17. Wayfair subsequently cancelled its supplier agreement with BBM and sales of Defendants' maternity belly bands through Wayfair and Walmart ceased in July 2013. Dkt. No. 102 at ¶ 30. Defendants allege that Plaintiff's contact with Walmart and Wayfair " caused Wayfair to cancel its Supplier Contract with BBM." Dkt. No. 133 at 17.
III. RELEVANT PROCEDURAL HISTORY
A. Plaintiff I& I's Claims
On April 19, 2013, Plaintiff filed its Complaint. Dkt. 1. On February 4, 2014, Plaintiff filed its First Amended Complaint, asserting five breach of contract claims and three unfair competition claims. Dkt. No. 47 (FAC).
1. Count 1: Plaintiff alleged that Defendants breached Paragraph 2A of the Patent Settlement Agreement.
2. Count 2: Plaintiff alleged that Defendants breached Paragraph 2B of the Patent Settlement Agreement.
3. Count 3: Plaintiff alleged that Defendants breached Paragraph 1 of the Patent Settlement Agreement.
4. Count 4: Plaintiff alleged that Defendants breached Paragraph 4 of the Patent Settlement Agreement.
5. Count 5: Plaintiff alleged that Defendants breached Paragraph 1 of the Trademark Settlement Agreement.
6. Count 6: Plaintiff alleged that Defendant engaged in unfair competition in violation of the Lanham Act
7. Count 7: Plaintiff alleged that Defendant engaged in unfair competition in violation of California Business and Professions Code § 17200
8. Count 8: Plaintiff alleged that Defendant engaged in unfair competition in violation of California common law.
B. Defendant BBM's Counterclaims
On August 7, 2013, Defendant filed its Answer and Counterclaims. Dkt. 1. Defendant asserted three counterclaims:
1. Counterclaim 1: Defendant alleged that Plaintiff intentionally interfered with Defendant's Contractual Relations
2. Counterclaim 2: Defendant alleged that Plaintiff intentionally interfered with Defendant's Prospective Economic Advantage
3. Counterclaim 3: Defendant alleged that Plaintiff negligently interfered with Defendant's Prospective Business Advantage
C. Motions for summary judgment
On July 25, 2014 Plaintiff moved for partial summary judgment. Plaintiff sought summary judgment as to liability on:
1. Plaintiff's Counts 1-5; and
a. Count 1: Plaintiff argues that Defendants breached ¶ 2.A. of the PSA " by selling, offering to sell, marketing, promoting, distributing and/or advertising Maternity Bands that hold up pants or skirts." Dkt. No. 92 at 12. Plaintiff submits expert evidence that Defendants' bands have the capacity to hold up pants, and were
actually found by women to hold up pants when tested and surveyed; and offers rhetorical analysis of Defendants' marketing, arguing that Defendants' language conveyed that its bands hold up skirts and pants.
b. Count 2: Plaintiff argues that Defendants breached ¶ 2.B of the PSA because " [w]ritten notice satisfying Defendants' obligations under Paragraph 2.B. of the PSA was not sent to all of Defendants' Agents." Dkt. No. 92 at 16.
c. Count 3: Plaintiff argues Defendants breached ¶ 1 of the PSA by failing to include agreed-upon disclaimer language, which indicates BBM's bands are decorative and not designed to hold up pants or skirts, in all of Defendants' product descriptions, on its mobile website, on its Facebook.com page, and in its printed advertising materials. Dkt. No. 92 at 15.
d. Count 4: Plaintiff argues that Defendants breached ¶ 4 of the PSA by failing to instruct BBM's agents to not copy I& I's website and by expressly instructing them to copy BBM's website. Dkt. No. 92 at 16-17.
e. Count 5: Plaintiff argues that Defendants breached ¶ 1 of the TSA " by using the term " Bella" in connection with Defendants' sale, distribution, or marketing of the Maternity Bands," including Dkt. No. 92 at 17.
2. Defendant's Counterclaims 1-3
a. Counterclaim 1: Plaintiff argues that Defendant cannot prove four of the five requisite elements of its claim for Intentional Interference with Prospective Economic Advantage. Plaintiff also argues that its actions are protected by the litigation privilege under California Civil Code Section 47, and that its action were not expressly prohibited by the PSA. Dkt. No. 92 at 18-19.
b. Counterclaim 2: Plaintiff argues that Defendants cannot prove " crucial elements of its Intentional Interference with Prospective Economic Relations Claim." Dkt. No. 92 at 19. Plaintiff also argues that its actions are protected by the litigation privilege and constitutes fair competition. Id. at 20.
c. Counterclaim 3: Plaintiff argues that Defendants cannot prove any of eight requisite elements of the Negligent Interference with Prospective Economic Relations claim, and that Plaintiff's actions are protected by the " litigation and fair competition privileges." Dkt. No. 92 at 21-22.
On July 25, 2014, Defendant moved for:
1. Summary judgment on Plaintiff's claims 1-8:
a. Count 1: Defendants argue that they did not breach ¶ 2.A of the PSA because that clause only proscribed the sale of bands that were designed, intended, or marketed to hold up pants or skirts, not bands that can hold up pants or skirts. Dkt. No. 98 at 9-11.
b. Count 2: Defendants argue that they could not breach ¶ 2.B of the PSA because it is unenforceable as drafted, and contains an impermissibly vague " best efforts" clause. Dkt. No. 98 at 12-14.
c. Count 3: Defendants argue that they did not breach ¶ 1 of the PSA and that " Plaintiff's interpretation of ¶ 1 of the PSA is grossly overbroad, encompassing far more
than was included or intended." Dkt. No. 98 at 16. Defendant argues they have been using " marketing language indicating traditional uses of a maternity band," and that the PSA should be interpreted to allow such marketing. Id.
d. Count 4: Defendants argue that they did not copy Plaintiff's website in breach ¶ 4 of the PSA, and that the PSA " does not impose liability on BBM for having marketing that happens to be similar." Dkt. No. 98 at 18-19. Defendants submit evidence that the BBM website's " designers looked to a variety of other web sites when suggesting examples, and that the elements eventually used were not copied from" Plaintiff. Id. at 20.
e. Count 5: Defendants argue that it never breached ¶ 1 of the TSA by purchasing keywords or adwords that included the word " Bella." Dkt. No. 98 at 21. Defendants submit evidence allegedly showing all they keywords they ever purchased. Id.
f. Count 6: Defendants argue that, " assuming the Lanham Act protects a website's 'look and feel' . . . [Plaintiff] still cannot show inherent distinctiveness, secondary meaning, or likelihood of confusion," which are requisite elements of Plaintiff's claim. Dkt. No. 98 at 22.
g. Count 7: Defendants argue that Plaintiff's state-law unfair competition claim under California Business and Professions Code Section 17200 must fail because Plaintiff cannot demonstrate a likelihood of confusion between Plaintiff's and Defendants' websites. Dkt. No. 98 at 24.
h. Count 8: Defendants argue that Plaintiff's common law unfair competition claim requires a showing of fraud, which Plaintiff fails to show through any submitted evidence. Dkt. No. 98 at 24.
2. Partial summary judgment on Defendant's counterclaim 1: Defendants argue that Plaintiff intentionally interfered with Defendants' contractual relations with Wayfair first by telling Walmart that Defendants " had committed patent infringement, and again when [Plaintiff] claimed to Wayfair that BBM had breached the PSA." Dkt. No. 98 at 25.
A. Legal Standards
i. Summary Judgment
Summary judgment on a claim or defense is appropriate " 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(a). In order to prevail, a party moving for summary judgment must show the absence of a genuine issue of material fact with respect to an essential element of the non-moving party's claim, or to a defense on which the non-moving party will bear the burden of persuasion at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has made this showing, the burden then shifts to the party opposing summary judgment to designate " specific facts showing there is a genuine issue for trial." Id. " [T]he inquiry involved in a ruling on a motion for summary judgment . . . implicates the ...