United States District Court, C.D. California
ORDER DENYING PLAINTIFF’S MOTION FOR SANCTIONS
[DKT. NO. 88]
D. PREGERSON United States District Judge.
before the court is Plaintiff Gibson Brands, Inc.’s
("Gibson") Motion for Sanctions Under the
Court’s Inherent Powers. (Dkt. No. 88.) Having
considered the parties’ submissions, the court denies
litigation history of this case is familiar to the parties
and set forth in this Court’s prior Order granting
Defendants’ Motion to Dismiss (Dkt. No. 70.) In brief,
Plaintiff Gibson brought suit against Defendant John Hornby
Skewes & Co. Ltd.’s (“JHS”) alleging
that JHS sold products in violation of Gibson’s Flying
V trademarks. (First Amended Complaint ¶24.) In
particular, Gibson’s complaint concerns the SpongeBob
SquarePants Flying V Ukulele. (FAC Ex. D, E.) Gibson also
named as defendant Viacom International Inc. (Viacom), a
corporation that owns trademarks for SpongeBob Squarepants.
This Court dismissed Gibson’s claims against Viacom for
failure to state a claim upon which relief could be granted.
(Dkt. No. 36.) It later dismissed claims against JHS for lack
of subject matter jurisdiction under Rule 12(b)(1). Of
particular importance to the prior order was this
Court’s conclusion that, because all allegedly
infringing activity occurred outside of the United States,
the weight of the evidence counseled against exercising
extraterritorial jurisdiction under the Lanham Act.
appeal, the Ninth Circuit reversed in part and remanded the
case to the district court to determine whether
Gibson’s complaint survives under Rule 12(b)(6).
Gibson Brands, Inc. v. Viacom Int'l, Inc., No.
13-57050, 2016 WL 685026 (9th Cir. Feb. 19, 2016). JHS then
filed a new Motion to Dismiss at the direction of this court.
(Dkt. Nos. 82 & 83.) In its Opposition to the Motion to
Dismiss, Gibson drew the court’s attention to newly
uncovered evidence that it believes would have altered the
course of earlier proceedings and proves JHS made material
misrepresentations to the court. (Dkt. No. 84.) JHS then
withdrew its Motion to Dismiss. (Dkt. No. 85.) Gibson now
files this Motion for Sanctions.
heart of Gibson’s motion is a newly discovered
licensing agreement between JHS and MTV, a division of Viacom
(the “Canada License”). (Gibson’s Motion
for Sanctions 2.) In prior proceedings, the parties and this
Court focused primarily on a separate licensing agreement
between JHS and Viacom that authorized JHS to use the
SpongeBob trademark on musical instruments in a number of
jurisdictions across Europe, Asia, Africa, and South America.
(Declaration of Dennis Drumm ¶5.) As part of its earlier
decision, the court found: “JHS’s license from
Viacom to use the SpongeBob trademark on ukuleles
specifically excludes sales in the United States, indicating
an intent to avoid U.S. commerce.” (Dkt. No. 70 at
11-12.) However, this newly produced licensing agreement
between JHS and MTV states that JHS was also authorized to
distribute the ukulele in Canada. (Declaration of Brent
Davis, Ex. B, C.)
to Gibson, JHS intentionally withheld this agreement to
obscure the fact that JHS had sold the allegedly infringing
product in North America. (Mot. 7-13.) Gibson also argues
that representatives of JHS made material misrepresentations
to the court in an effort to evade disclosure of the Canada
License. Specifically, it notes a statement by JHS’s
Managing Director that “JHS marketed and offered the
Ukulele for sale solely in the Licensed Territory-principally
in the United Kingdom and Europe, and never in the United
States.” (Drumm Decl. ¶7.) After finding the
Canada License, Gibson has also identified a previously
undisclosed distributor, M.I.D.C., that JHS worked with to
distribute the ukuleles in North America. (Dkt. 84.) Gibson
now submits additional evidence related to M.I.D.C.’s
marketing efforts that it believes controverts JHS’s
previous assertion that it never marketed the ukuleles in the
United States. (Declaration of Kurt Schuettinger, Exs. 5-12.)
In particular, Gibson points to an advertisement for the
SpongeBob Ukulele placed in a trade publication in 2008
contrary to Mr. Drumm’s statement that the SpongeBob
Ukulele was not distributed until 2012. (Schuettinger Decl.,
Ex. 9; Drum Decl. ¶8.)
opposition, JHS denies that it engaged in a conspiracy to
withhold evidence or make material misrepresentations to the
court. (JHS’s Opposition to Plaintiff’s Motion
for Sanctions 1.) It notes that counsel for JHS first learned
of the existence of M.I.D.C. when Gibson filed its opposition
papers to the renewed Motion to Dismiss. (Davis Decl.
¶15.) JHS also explained that it believed the licensing
agreement with Viacom, the other named defendant, was the
relevant licensing agreement and that there was no bad faith
effort to hide the Canada License from the court. (Opp. 11.)
Finally, JHS argues that existence of the Canada License is
immaterial because it does not affect JHS’s central
claim that it never marketed or sold the SpongeBob Ukulele in
the United States. (Id.)
Court has inherent authority to “fashion an appropriate
sanction for conduct which abuses the judicial
process.” Chambers v. NASCO, Inc., 501 U.S. 32
at 44-45 (1991). “Before awarding sanctions under its
inherent powers, however, the court must make an explicit
finding that [the] conduct ‘constituted or was
tantamount to bad faith.’” Primus Auto. Fin.
Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir.
1997) (quoting Roadway Exp., Inc. v. Piper, 447 U.S.
752, 767 (1980)).
on the facts before it, this Court cannot conclude that
JHS’s actions rise to the level of bad faith. The court
acknowledges, and indeed shares, some of Gibson’s
concerns regarding the newly discovered evidence. In
particular, the failure to disclose a related licensing
agreement-whether or not it altered JHS’s defense that
it did not sell the allegedly infringing products in the
United States-or to ensure the accuracy of dates in a sworn
declaration is of concern. The court also acknowledges,
however, counsel for JHS’s explanation that they were
not aware of these facts prior to Gibson’s most recent
filings. While sanctions are not merited at this time, the
court expects full compliance with discovery obligations. The
court also ...