United States District Court, C.D. California
ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS
MANUEL
L. REAL UNITED STATES DISTRICT JUDGE
Before
the Court is Defendants’ Motion to Dismiss, which was
filed on June 6, 2016 (Dkt. No. 37). Having been thoroughly
briefed by both parties, this Court took the matter under
submission on June 28, 2016.
On a
motion to dismiss, the trial court takes all well-pleaded
facts in the complaint to be true and determines whether,
based upon those facts, the complaint states a claim upon
which relief may be granted. Fed.R.Civ.P. 12(b)(6); see
Alperin v. Vatican Bank, 410 F.3d 532, 541 (9th Cir.
2005). To state a claim, the complaint must contain factual
assertions which make the claimed relief not merely possible,
but “plausible.” Ashcroft v. Iqbal, 556
U.S. 662, 663 (2009); Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). Although factual assertions are
taken as true, the court does not accept legal conclusions as
true. Id.
Dismissal
under Federal Rule of Civil Procedure 12(b)(6) is proper only
when a complaint exhibits either a “(1) lack of a
cognizable legal theory or (2) the absence of sufficient
facts alleged under a cognizable legal theory.”
Balistreri v. Pacifica Police Dept., 901 F.2d 696,
699 (9th Cir. 1988). Under the heightened pleading standards
of Iqbal and Twombly, a plaintiff must
allege “enough facts to state a claim to relief that is
plausible on its face, ” so that the defendant receives
“fair notice of what the . . . claim is and the grounds
upon which it rests.” Twombly, 550 U.S. at
570. The plaintiff must plead factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged. Iqbal, 556 U.S.
at 678.
Plaintiff
Beachbody LLC’s First Amended Complaint asserts six
causes of action against both Defendants Universal Nutrients
and Wal-Mart Stores arising from Defendants’ use of
Plaintiff’s trademarked “shakeology” name
on product packaging and purchase receipts: (1) trademark
infringement under Title 15 U.S.C. § 1114; (2) unfair
competition and false association under Title 15 U.S.C.
§ 1125(a); (3) false advertising under Title 15 U.S.C.
§ 1125(b); (4) contributory trademark infringement and
unfair competition under federal common law; (5) unfair
competition under California Business & Professions Code
§ 17200 et seq.; and (6) commercial
disparagement and trade libel under California common law.
Pursuant to Rule 12(b)(6), Defendants seek to dismiss all six
of Plaintiff’s causes of actions.
Plaintiff’s
first cause of action is for trademark infringement under
Title 15 U.S.C. § 1114. To demonstrate trademark
infringement, a plaintiff must show that it is “(1) the
owner of a valid, protectable mark, and (2) that the alleged
infringer is using a confusingly similar mark.”
Herb Redd Enters., LLC v. Fla. Entm’t Mgmt.,
Inc., 736 F.3d 1239, 1247 (9th Cir. 2013); Airs
Aromatics, LLC v. Opinion Victoria’s Secret Stores
Brand Mgmt., Inc., 744 F.3d 595, 599 (9th Cir. 2014).
Registration of a mark is prima facie evidence of a
party’s ownership of the mark and exclusive use of the
mark in commerce. § 1057(b). Plaintiff has properly
registered all marks and designations complained of in the
present action.
A
person who uses a registrant’s trademark without their
permission and applies it to packages or advertisements in
connection with the sale or advertising of goods or services
can be liable in a civil action if the use of the trademark
is likely to cause confusion. § 1114(1)(b). However,
“[t]he use of a competitor's trademark for purposes
of comparative advertising is not trademark infringement so
long as it does not contain misrepresentations or create a
reasonable likelihood that purchasers will be confused as to
the source, identity, or sponsorship of the advertiser's
product.” SSP Agric. Equip., Inc. v. Orchard-Rite
Ltd., 592 F.2d 1096, 1103 (9th Cir. 1979) (internal
quotation marks omitted). To establish this nominative fair
use defense, a defendant must meet three elements: (1) the
plaintiff’s product or service in question must be one
not readily identifiable without use of the trademark; (2)
only so much of the mark or marks may be used as is
reasonably necessary to identify the product or service; and
(3) the user must do nothing that would, in conjunction with
the mark, suggest sponsorship or endorsement by the trademark
holder. New Kids on the Block v. News Am. Pub.,
Inc., 971 F.2d 302, 308 (9th Cir. 1992).
First,
Plaintiff alleges that “shakeology” meal
replacement shakes are comprised of a unique blend of
ingredients that are not comparable to the ingredients in
Defendants’ OmniHealth shakes. Although Plaintiff does
describe the unique ingredients in its
“shakeology” products and makes conclusory
allegations of the wide identifiability of its products,
Plaintiff’s limited pleadings do not provide a basis to
assume that consumers would readily identify
Plaintiff’s meal replacement shakes without also using
the trademarked “shakeology” name in the
product’s description. Therefore, Plaintiff has not
alleged sufficient facts to defeat the first element of the
nominative fair use defense.
Second,
Plaintiff alleges that Defendants use the trademarked name
“shakeology” in almost identical fashion on their
OmniHealth packaging. In response, Defendants state that
while they did use the “shakeology” name on their
product packaging, they did not use the same logo, font, or
coloring scheme as Plaintiff’s trademark. “[A]
soft drink [company] would be entitled to compare its product
to [a competitor’s product], but would not be entitled
to use [the competitor’s] distinctive lettering.”
Cairns v. Franklin Mint Co., 292 F.3d 1139, 1153
(9th Cir. 2002). Accordingly, Plaintiff does not allege
sufficient facts to demonstrate Defendants used more of the
trademark than was reasonably necessary to identify
Plaintiff’s product.
Third,
Plaintiff asserts that Defendants use the
“shakeology” trademark to confuse consumers into
thinking that Plaintiff sponsors or endorses
Defendants’ OmniHealth products. In the Complaint,
Plaintiff alleges that consumers are likely to view the
portion of the OmniHealth packaging with the
“shakeology” name, and then associate
“shakeology” with OmniHealth. Plaintiff also
alleges that the “compare to the ingredients in
shakeology” phrase on the OmniHealth packaging would
confuse consumers about Plaintiff’s endorsement of
Defendants’ meal replacement shakes. However, Plaintiff
does not provide any evidence of consumers actually
associating the two brands because of the OmniHealth
packaging. It is also clearly stated on the back of
OmniHealth boxes that Defendant’s meal replacement
shake is not associated with “shakeology.”
Furthermore, Plaintiff’s meal replacement shakes are
only sold on its own website, and they are sold for a much
larger amount of money than Defendants’ product.
Therefore, Plaintiff does not allege sufficient facts to
demonstrate consumers are likely to be confused about a
relationship between Plaintiff’s and Defendants’
products.
Plaintiff
further alleges that Defendants intentionally use the
“shakeology” name on Wal-Mart receipts to deceive
customers into believing that OmniHealth products are
associated with “shakeology” when they are
repurchasing the Defendants’ product. When a consumer
purchases an OmniHealth meal replacement shake at Wal-Mart,
the only word for the description of the product on the
receipt is “shakeology.” However, Plaintiff does
not provide any factual basis to demonstrate that customers
would likely associate the two products together based on
these receipts. Accordingly, Plaintiff does not allege
sufficient facts to defeat Defendants’ nominative fair
use defense, and therefore, Plaintiff’s trademark
infringement claim is dismissed.
Plaintiff’s
second cause of action is for unfair competition and false
association under Title 15 U.S.C. § 1125(a). A plaintiff
only needs to allege commercial injury based upon the
deceptive use of a trademark or its equivalent to satisfy
standing requirements under the false association prong of
§ 43 of the Lanham Act. 15 U.S.C. § 1125(a)(1)(A);
Jack Russell Terrier Network of N. Ca. v. Am. Kennel
Club, Inc., 407 F.3d 1027, 1037 (9th Cir. 2005). Both
parties agree that claims for unfair competition and false
association are analyzed in the same manner as a claim for
trademark infringement. Brookfield Commc’ns, Inc.
v. W. Coast Entm’t Corp., 174 F.3d 1036, 1046-47
n. 8 (9th Cir. 1999). Therefore, because Defendants’
nominative fair use defense defeats a claim for trademark
infringement under Title 15 U.S.C. § 1114, this same
defense also defeats a claim for unfair competition and false
association under Title 15 U.S.C. § 1125(a).
Plaintiff’s
fourth claim for contributory trademark infringement and
unfair competition under federal common law fails because, as
this Court stated above, Plaintiff cannot state a claim for
trademark infringement and unfair competition. See
Perfect 10, Inc. v. Visa Int’l Serv. Ass’n,
494 F.3d 788, 807 (9th Cir. 2007) (explaining that there must
be prior trademark infringement to bring a contributory
trademark infringement and unfair competition claim under
federal common law). Plaintiff’s fifth claim for unfair
competition under Cal. Bus. & Profs. Code §§
17200 et seq. likewise fails because, as this Court stated
above, Plaintiff cannot state a claim for unfair competition.
Japan Telecom, Inc. v. Japan Telecom Am. Inc., 287
F.3d 866, 875 (9th Cir. 2002) (explaining that a state law
unfair competition claim failed because its related Lanham
Act claims failed).
Plaintiff’s
third cause of action is for false advertising under Title 15
U.S.C. § 1125(b). Plaintiff first alleges that the
“compare to the ingredients of shakeology”
statement on OmniHealth product packaging implicitly and
falsely suggests to consumers that the ingredients in
Defendants’ competing meal replacement shakes are
comparable or similar to those in Plaintiff’s shakes.
The elements of a Lanham Act § 43(a) false advertising
claim are: (1) a false statement of fact by the defendant in
a commercial advertisement about its own or another's
product; (2) the statement actually deceived or has the
tendency to deceive a substantial segment of its audience;
(3) the deception is material, in that it is likely to
influence the purchasing decision; (4) the defendant caused
its false statement to enter interstate commerce; and (5) the
plaintiff has been or is likely to be injured as a result of
the false statement, either by direct diversion of sales from
itself to defendant or by a lessening of the goodwill
associated with its products. Southland Sod Farms v.
Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997).
Courts have determined that “compare to . . .”
statements similar to the ones on Defendants’
packaging, are a type of advertising that can “convey a
specific assertion of measurable fact, such as the same
ingredients or efficacy . . . [and can be] actionable,
” in court. E.g., Rexall Sundown, Inc. v. Perrigo
Co., 651 F.Supp.2d 9, 21 (E.D.N.Y. 2009). However,
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