United States District Court, S.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO AMEND THE COMPLAINT [Dkt. No. 59.]
GONZALO P. CURIEL, District Judge.
Before the Court is Plaintiff's motion for leave to amend the Complaint. (Dkt. No. 59.) Defendant filed an opposition and Plaintiff filed a reply. (Dkt. Nos. 64, 66.) Based on the briefs, and the applicable law, the Court GRANTS Plaintiff's motion for leave to amend the Complaint.
According to the Complaint, Plaintiff, Wahoo International, Inc. ("Wahoo"), is a leading manufacturer of UV cure resins. Resins are thick liquids that harden into transparent solids and are used to repair fiberglass, plastics, wood and metal. SOLAREZ is a unique UV cure synthetic repair resin putty that hardens in three minutes when exposed to UV sunlight. It was the first UV cure resin on the surf market and was first sold in 1987. Wahoo has invested in promotion of its product and education regarding use of 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 (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, Inc. ("Phix Doctor"), is a producer of fiberglass repair products and accessories. Defendant purchased SOLAREZ products sometime before 2010 and then developed their own resin product. 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 intended to "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 against Defendant Phix Doctor, 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.)
On August 22, 2014, Plaintiff filed a motion for leave to amend the Complaint to add Anthony Gowen ("Gowen"), the principal of Defendant Phix Doctor. (Dkt. No. 59-1.) On September 17, 2014, Defendant filed an opposition. (Dkt. No. 64.) On September 26, 2014, Plaintiff filed a reply. (Dkt. No. 66.)
Under Federal Rule of Civil Procedure ("Rule") 15(a), leave to amend a complaint after a responsive pleading has been filed may be allowed by leave of the court and "shall freely be given when justice so requires." Foman v. Davis , 371 U.S. 178, 182 (1962); Fed.R.Civ.P. 15(a). "If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits." Foman , 371 U.S. at 182. Granting leave to amend rests in the sound discretion of the trial court. Internat'l Ass'n of Machinists & Aerospace Workers v. Republic Airlines , 761 F.2d 1386, 1390 (9th Cir. 1985). This discretion must be guided by the strong federal policy favoring the disposition of cases on the merits and permitting amendments with "extreme liberality." DCD Programs Ltd. v. Leighton , 833 F.2d 183, 186 (9th Cir. 1987). "This liberality in granting leave to amend is not dependent on whether the amendment will add causes of action or parties." Id .; but see Union Pacific R.R. Co. v. Nevada Power Co. , 950 F.2d 1429, 1432 (9th Cir. 1991) (In practice, however, courts more freely grant plaintiffs leave to amend pleadings in order to add claims than to add new parties).
Because Rule15(a) favors a liberal policy, the nonmoving party bears the burden of demonstrating why leave to amend should not be granted. Genentech, Inc. v. Abbott Labs. , 127 F.R.D. 529, 530-31 (N.D. Cal. 1989). In assessing the propriety of an amendment, courts consider several factors: (1) undue delay; (2) bad faith or dilatory motive; (3) repeated failure to cure deficiencies by amendments previously permitted; (4) prejudice to the opposing party; and (5) futility of amendment. Foman , 371 U.S. at 182; United States v. Corinthian Colleges , 655 F.3d 984, 995 (9th Cir. 2011). These factors do not carry equal weight; the possibility of delay alone, for instance, cannot justify denial of leave to amend, DCD Programs , 833 F.2d at 186, but when combined with a showing of prejudice, bad faith, or futility of amendment, leave to amend will likely be denied. Bowles v. Reade , 198 F.2d 752, 758 (9th Cir. 1999). The single most important factor is whether prejudice would result to the non-movant as a consequence of the amendment. William Inglis & Sons Baking Co. v. ITT Continental Baking Co. , 668 F.2d 1014, 1053 (9th Cir. 1981).
Here, Plaintiff seeks to amend the Complaint to add the principal of Defendant, Anthony Gowen ("Gowen"), as a Defendant to the litigation. Plaintiff claims it has discovered facts supporting that Gowen personally directed Defendant's infringement of Plaintiff's trademark and is therefore personally liable under Committee for Idaho's High Desert, Inc. v. Yost , 92 F.3d 814, 823 (9th Cir. 1996). Gowen's deposition was first taken on Wednesday, August 20, 2014. Through that deposition, Plaintiff claims it discovered that Gowen: (1) is the only officer and active director of Defendant; (2) selected the DURA REZ mark; (3) ordered Plaintiff's product prior to launching his competing business; (4) places all orders for packaging materials for Defendant for the DURA REZ line; (5) hired and instructed the graphic designer who designed ...