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Sebastian Brown Productions LLC v. Muzooka Inc.

United States District Court, N.D. California, San Jose Division

July 5, 2016

SEBASTIAN BROWN PRODUCTIONS, LLC, Plaintiff,
v.
MUZOOKA, INC., et al., Defendants.

          ORDER GRANTING MOTION FOR LEAVE TO FILE A MOTION FOR RECONSIDERATION AND GRANTING RECONSIDERATION TO ALLEGE NEWLY PRESENTED FACTS RE: DKT. NO. 92

          LUCY H. KOH, UNITED STATES DISTRICT JUDGE

         Plaintiff Sebastian Brown Productions, LLC (“Plaintiff”) sues Defendant Muzooka, Inc. (“Defendant”) for unfair competition and trademark infringement under federal and state law. ECF No. 65 (First Amended Complaint, or “FAC”). Before the Court is Plaintiff’s motion for leave to file a motion for reconsideration of the Court’s March 14, 2016 order dismissing the FAC with prejudice. ECF No. 92 (“Mot.”). Having considered the submissions of Plaintiff, the relevant law, and the record in this case, the Court GRANTS Plaintiff’s motion for leave to file a motion for reconsideration. The Court also GRANTS reconsideration and ORDERS Plaintiff to file a Second Amended Complaint alleging a Lanham Act claim with Plaintiff’s newly presented facts.

         I. BACKGROUND

         In its March 14, 2016 order dismissing the FAC with prejudice, the Court provided a detailed factual background to this action and legal analysis of each of Plaintiff’s claims. Sebastian Brown Prods. LLC v. Muzooka Inc. (“Muzooka II”), 2016 WL 949004 (N.D. Cal. Mar. 14, 2016), ECF No. 86. Rather than repeat that analysis here, the Court provides a brief factual and procedural background and then considers the issues raised in Plaintiff’s motion for leave to file a motion for reconsideration. The Court assumes that the parties and readers of this order have read the Court’s March 14, 2016 order on Defendant’s motion to dismiss.

         The gravamen of Plaintiff’s action is that the “Muzooka” trademark owned by Defendant (the “Muzooka Mark”) infringes upon Plaintiff’s “Muzook” trademark (the “Muzook Mark”). Plaintiff alleges (1) statutory and common law unfair competition; (2) infringement of common law trademark rights; and (3) unfair competition under the Lanham Act, 15 U.S.C. § 1125(a). Plaintiff filed the original complaint on January 6, 2014. ECF No. 1.

         On November 11, 2015, the Court granted in part and denied in part Defendant’s motion to dismiss the original complaint. Sebastian Brown Prods., LLC v. Muzooka, Inc. (“Muzooka I”), 143 F.Supp.3d 1026 (N.D. Cal. 2015), ECF No. 64. As relevant to the instant motion, the Court concluded that Plaintiff failed to state a Lanham Act claim. Specifically, the Court concluded that Plaintiff insufficiently alleged ownership of the Muzook Mark because the U.S. Patent and Trademark Office (“PTO”) listed the individual J. Michael Miller (“Miller”) as the owner of the Muzook Mark. Id. at 1040. Moreover, there was no assignment of the Muzook Mark from Miller to Plaintiff in the record. Id. The Court concluded that Plaintiff may be able to allege additional facts showing an ownership interest in the Muzook Mark and dismissed Plaintiff’s Lanham Act claim with leave to amend. Id. at 1041.

         On December 11, 2015, Plaintiff filed the FAC, which included the assignment of the Muzook Mark from Miller to Plaintiff. ECF No. 65. The FAC alleged that Miller had applied for the Muzook Mark under an “intent-to-use” application, which permits an applicant with a bona fide intent to use a mark to effectively reserve the mark before the mark is actually used in commerce. See Muzooka II, 2016 WL 949004, at *1. To complete registration of the mark with the PTO, an intent-to-use applicant must file a statement of use indicating that the mark has been used in commerce. Id. According to the FAC, Miller assigned the intent-to-use application for the Muzook Mark to Plaintiff before filing a statement of use. Id. at *1-2.

         On March 14, 2016, the Court granted Defendant’s motion to dismiss the FAC. The Court found that Plaintiff failed to allege that the assignment of the Muzook Mark complied with 15 U.S.C. § 1060(a)(1). Analyzing the text of the statute, applicable case law, and legislative history, the Court concluded that § 1060(a)(1) limits the assignment of intent-to-use applications before a statement of use is filed to situations where the intent-to-use application is transferred with both the goodwill accrued by the mark and the “ongoing and existing” business associated with the mark. See Id. at *8-11. The Court noted that the FAC contained no allegations about Miller’s pre-assignment use of the Muzook Mark. Id. at *12. Thus, Plaintiff failed to allege that the Muzook Mark had accrued goodwill or been part of an “ongoing and existing” business prior to the assignment. Accordingly, the Court concluded that Plaintiff failed to allege a valid assignment and thus an ownership interest in the Muzook Mark. Id. The Court also rejected a procedurally improper declaration by Miller submitted in opposition to the motion to dismiss, which failed to show that the Muzook Mark accrued goodwill before the assignment. Id. at *12-13. The Court denied leave to amend. Id. at *16.

         On April 8, 2016, Plaintiff filed the instant motion for leave to file a motion for reconsideration of the Court’s March 14, 2016 order. ECF No. 92.

         II. LEGAL STANDARD

         Pursuant to Civil Local Rule 7-9(a), “[b]efore the entry of a judgment adjudicating all of the claims and the rights and liabilities of all the parties in a case, any party may make a motion before a Judge requesting that the Judge grant the party leave to file a motion for reconsideration of any interlocutory order made by that Judge on any ground set forth in Civil L.R. 7-9(b). No party may notice a motion for reconsideration without first obtaining leave of Court to file the motion.” Civil Local Rule 7-9(b) provides three grounds for reconsideration of an interlocutory order:

(1) That at the time of the motion for leave, a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought. The party also must show that in the exercise of reasonable diligence the party applying for reconsideration did not know such fact or law at the time of the interlocutory order; or
(2) The emergence of new material facts or a change of law occurring after the time of such order; or
(3) A manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court ...

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