Internmatch, Inc. v. Nxtbigthing, LLC

          ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING MOTION FOR CLARIFICATION Re: ECF No. 122, 157

          JON S. TIGAR UNITED STATES DISTRICT JUDGE

         In this trademark dispute, Plaintiff InternMatch, Inc. alleges that Defendants Nxtbigthing, LLC and Chad Batterman wrongly obtained registration of the trademark INTERNMATCH. ECF No. 1. Plaintiff seeks cancellation of the mark. Id. Presently before the Court is Plaintiff’s Motion for Partial Summary Judgment. Plaintiff requests that the Court grant partial summary judgment against Defendants on Plaintiff’s claims for (1) declaratory judgment that Plaintiff has superior rights to Defendants in the INTERNMATCH trademark; (2) cancellation of Registration No. 4, 641, 911 (“the ’911 Registration”); (3) false designation of origin; and (4) unfair competition. Plaintiff also seeks a permanent injunction and an award of attorneys’ fees and costs incurred in the litigation. The Court will grant Plaintiff’s motion for partial summary judgment and enjoin Defendants from using the INTERNMATCH mark, but will not award attorneys’ fees.

         I. BACKGROUND

         A. Undisputed Facts

         Founded in 2009, Plaintiff provides an online platform that connects individuals seeking internships with employers seeking interns. ECF No. 124, Maguire Decl. ¶ 2. Plaintiff offers these resources and tools under the service mark INTERNMATCH. Id. Individuals use InternMatch to search for internships and utilize its tools, such as resume creation. Id. ¶ 3. Plaintiff offers its services online and through social media. Its website (www.internmatch.com) has been maintained since at least October 31, 2009. Id. ¶ 4. Plaintiff uses the INTERNMATCH mark to advertise and promote its services on social media, including LinkedIn, Instagram, Google, and Twitter. Id. ¶ 9.

         Since its founding, InterMatch has invested time, money, and resources to grow its business and develop goodwill associated with the INTERNMATCH mark. Id. ¶ 5. Plaintiff spent the following amounts annually in advertising from 2009-2015: $8, 178 (2009); $5, 012 (2010); $18, 715 (2011); $53, 634 (2012); $100, 704 (2013); $127, 770 (2014); and $66, 701 (2015). Id. In 2009, 100 interns and 85 employers used Plaintiff’s services, id. ¶ 6; today, Plaintiff has 1.56 million registered interns, and 39, 645 employers have used its services. Id. 180 colleges and universities link to Plaintiff’s website, and a number of third party news articles have covered Plaintiff’s services. Id. ¶¶ 7-8.

         In 2009, Plaintiff began a trademark application with the U.S. Patent and Trademark Office (“USPTO”), but abandoned the application by July 7, 2010. Id. ¶ 10. Plaintiff filed a new trademark application on January 6, 2014, but the application was suspended because of a pending application for the same mark filed by defendant Nxtbigthing. Id. ¶ 11.

         Nxtbigthing is a limited liability company owned by Chad Batterman. ECF No. 32 at 8 ¶ 2. Batterman formed Nxtbigthing in 2012. Id. at 9 ¶ 9. On March 27, 2013, Nxtbigthing filed an intent-to-use trademark application for INTERNMATCH, and the application issued on November 18, 2014. ECF No. 1 ¶ 22; ECF No. 32 ¶ 22. Nxtbigthing states that the trademark was first used in commerce on February 15, 2007. ECF No. 1 ¶ 23.

         In January of 2014, Plaintiff sent Batterman a letter, informing him of InternMatch’s “prior rights in the INTERNMATCH trademark.” ECF No. 124, Maguire Decl. ¶ 11. Batterman responded by offering to settle the INTERNMATCH matter for $325, 000. Id. Batterman also provided documents to Plaintiff, demonstrating use of the INTERNMATCH trademark as early as 2007. Id. The documents included marketing flyers and an activity log. See ECF No. 1-3, Ex. C. Plaintiff did not believe the documents were genuine. ECF No. 124, Maguire Decl. ¶ 11. Plaintiff did not accept Batterman’s offer to sell his rights in the trademark. ECF No. 124, Maguire Decl. ¶ 11.

         Batterman began to send trademark claim notices to various social networking services used by Plaintiff. Id. ¶ 12. These notices “were very disruptive to InternMatch’s ongoing operations and continued promotion of its brand and goodwill, ” so Plaintiff filed this lawsuit. Id.

         During discovery, Defendants did not produce any evidence showing Defendants’ commercial use of the INTERNMATCH mark. ECF No. 88-1, ECF No. 64-1, Keyes Decl., Ex. 1, Batterman Tr. 62:12-23. In fact, the evidence showed that Defendants have never received any revenue from use of the mark. Id.

         B. Procedural History and the Court’s Spoliation Order

         Plaintiff filed its Complaint on December 12, 2014. See ECF No. 1. Plaintiff alleges five causes of action: (1) false designation of origin; (2) cancellation for fraud on the USPTO; (3) cancellation for lack of use in commerce; (4) declaratory judgment that InternMatch has superior rights to Nxtbigthing and Chad Batterman in the INTERNMATCH trademark; and (5) unfair competition under California Business and Professions Code section 17200. Id. Plaintiff contends that “Nxtbigthing and Mr. Batterman currently hold or control various trademark registrations and/or trademark applications that have been or are being prosecuted through the use of false specimens of use at the USPTO.” Id. ¶ 39. Central to Plaintiff’s claims is the determination of whether InternMatch or Nxtbigthing has priority in the INTERNMATCH trademark and whether Batterman created and provided genuine evidence of use documents. ECF No. 63 at 11.

         Defendants Nxtbigthing and Chad Batterman answered the Complaint on February 25, 2015. See ECF Nos. 31, 32. Nxtbigthing also filed counterclaims alleging (1) trademark infringement, (2) unfair competition under the Lanham Act; and (3) unfair competition under California Business and Professions Code section 17200. See ECF No. 32. Defendants’ Answer asserts “[f]rom 2007 through current day, Mr. Batterman and Nxtbigthing have continuously and extensively used the mark INTERNMATCH® in interstate commerce.” ECF No. 32 ¶ 14.

         On May 6, 2015, the parties submitted a joint case management statement and identified the principal factual issues in dispute:

Whether the evidence of commercial use of the INTERNMATCH trademark by Defendants are [sic] genuine and whether statements made by Defendants in order to procure its INTERNMATCH trademark registration are fraudulent, such that Defendants do not own any rights to the trademark INTERNMATCH. Additionally, the parties dispute whether Plaintiff is an infringer of the INTERNMATCH trademark.

ECF No. 49 at 3. The parties’ joint case management statement also stated that the parties’ had taken reasonable steps “to preserve evidence relevant to the issues reasonably evidence in this action.” Id. at 4.

         During the discovery phase, Plaintiff sought copies, including electronic copies, of documents that would support Nxtbigthing and Batterman’s assertions that they have used the INTERNMATCH mark continuously and extensively. In response to Plaintiff’s requests for production, Defendants informed Plaintiff that electronic copies of potentially responsive documents “were irretrievably lost in August 2011 due to a lightning strike, and in April 2015 due to a power surge.” See ECF No. 65-1, Keyes Decl., Ex. 7.

         Batterman testified as follows at his deposition: Nxtbigthing created a database in 2007 or 2008 that permitted users to search for job postings. ECF No. 64-1, Keyes Decl., Ex. 1, Batterman Tr. 62:12-23. The database was maintained on hard drives. See id. at 62:24-64:10. Two separate lightning strikes hit Batterman’s office in August and September or October of 2011. Id. at 75:1- 14. As a result of the August 2011 lightning strike, the data on the hard drives were not recoverable. Id. Batterman purchased a replacement iMac desktop computer in August or September of 2011. Id. at 96:14-22. Batterman transferred documents evidencing his use of the INTERNMATCH mark to the desktop computer through a backup jump drive on which Batterman had stored past marketing and advertising materials and financial information. Id. at 130:16-132:7. He was able to reconstruct a new database because many of the job postings existed in paper form. Id. at 77:17-78:3. Batterman explained that a power surge destroyed the iMac desktop computer and other electronic devices on April 2, 2015, while this litigation was pending. Sometime between April 5, 2015 and April 12, 2015, various electronic devices, including the iMac desktop computer that contained corporate records and marketing material central to the parties’ dispute, were discarded. Defendants did not run diagnostics on the iMac desktop computer to see if the files on the hard drive could be recovered prior to discarding it. ECF No. 64-1, Keyes Decl., Ex. 1, Batterman Tr. 19:9-18, 20:5-25. The desktop computer contained the only electronic copies of Nxbigthing’s marketing materials that allegedly established prior use. Id. at 19:11-21:8.

         Neither Plaintiff nor, ultimately, the Court believed Batterman’s version of events. On November 12, 2015, Plaintiff filed a motion for terminating sanctions, accusing Defendants of intentionally destroying the electronic versions of the evidence of use documents. ECF No. 63. On February 8, 2016, the Court granted the motion in part, finding that Defendants wilfully failed to preserve relevant evidence of use documents that they had a duty to preserve. ECF No. 114 at 22. The Court found that terminating sanctions were too severe, but held that Plaintiff was entitled to an adverse inference jury instruction. Id. at 21-22. The Court also precluded Defendants from offering testimony or argument that the destroyed evidence, or any versions of it in hard copy or otherwise, supported Defendants’ assertions that they had priority in the trademark. Id. at 23. The Court also awarded monetary sanctions. Id. at 23; ECF No. 140 (granting Plaintiff’s application for $69, 322.45 in attorneys’ fees and costs).

         On December 25, 2015, Nxtbigthing filed a motion to dismiss its counterclaim. ECF No. 83. On February 11, 2016, the Court granted the motion.

         On March 24, 2016, Plaintiff filed this motion for partial summary judgment. ECF No. 122. On March 7, 2016, Defendants filed a response. On April 14, 2016, Plaintiff filed a reply.

         II. SUMMARY JUDGMENT

         A. Legal Standard

         Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show “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). A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). All reasonable inferences from the evidence must be drawn in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 242 (1986). Once the moving party meets its burden, the burden shifts to the nonmoving party opposing the motion, who must “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256. A genuine issue exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party, ” and material facts are those “that might affect the outcome of the suit under the governing law.” Id. at 248. There is no genuine issue of fact “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

         B. Discussion

         Plaintiff moves for summary judgment on four of its five claims, arguing that the undisputed evidence shows that InternMatch is the senior user of the INTERNMATCH mark. See ...