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Sugar Factory, LLC v. Glossy Pops, LLC

United States District Court, C.D. California

July 8, 2019

SUGAR FACTORY, LLC, a Nevada limited liability company, Plaintiff,
v.
GLOSSY POPS, LLC, a New York limited liability company; GLOSSY POPS SOURCING AND DESIGN, LLC, a New York limited liability company; GLOSSY POPS UK LIMITED, a United Kingdom private limited company; GLOSSY POPS ASIA LIMITED, a Hong Kong private limited company; PROJECT GROUP, LLC, a New York limited liability company; SHAUL SHAI HARARI, an individual; KELLY HARARI, an individual; PHILIPP SHCHEKIN, an individual; and DOES 1-50 inclusive, Defendants.

          ORDER DENYING IN PART AND GRANTING IN PART DEFENDANTS' MOTIONS TO DISMISS THE COMPLAINT [DKTS. 32, 35]

          DEAN D. PREGERSON, UNITED STATES DISTRICT JUDGE

         Presently before the court is Defendants Glossy Pops Sourcing and Design, LLC (“Glossy Pops Sourcing”), Glossy Pops UK Limited (“Glossy Pops UK”), Glossy Pops Asia Limited (“Glossy Pops Asia”), Project Group, LLC (“Project Group”), Shaul Shai Harari, (“Shai Harari”), Kelly Harari (“Kelly Harari”), and Philipp Shchekin (“Shchekin”) (collectively Defendants)'s Motions to Dismiss for lack of personal jurisdiction under Rule 12(b)(2). (Dkts. 32, 35.) Additionally, Defendant Glossy Pops, LLC (“Glossy Pops”) and the above-named Defendants collectively move to dismiss Plaintiff's third and sixth claim for relief for Trade Dilution under 15 U.S.C. § 1125(c) and California Business and Professions Code § 14247 for failure to state a claim under Rule 12(b)(6).

         I. BACKGROUND

         Sugar Factory, LLC (“Sugar Factory” or “Plaintiff”) is a Nevada Limited Liability Corporation with a principal place of business in Las Vegas, Nevada. (Compl. ¶ 4.) Sugar Factory brings this action against Glossy Pops, Glossy Pops Sourcing, and Project Group, all New York Limited Liability Companies, Glossy Pops UK, a United Kingdom Private Limited Company, Glossy Pops Asia, a Hong Kong Limited Liability Company, Shai Harari, Kelly Harari (“Harari Defendants”), and Philip Shchekin (collectively “Defendants”). (Id. ¶¶ 5-12.)

         The Sugar Factory brand was founded by Steve and Charissa Davidovici in 2008. (Id. ¶ 15.) Sugar Factory is an “internationally renowned business operating retail stores and restaurants throughout the United States and in locations around the world.” (Id. ¶ 15.) Sugar Factory deals “primarily in the sale of confections and other items, ” (id. ¶ 16), and alleges that it “enjoys extensive and pervasive media exposure, particularly on social media.” (Id. ¶ 20.) At issue in this case, is Sugar Factory's “Couture Pops®.” Couture Pops® are Sugar Factory's “premier line of products.” (Id. ¶ 21.) The Couture Pops® are both a candy and a fashion accessory and are made of an “intricately bejeweled handle, a rounded lollipop on a stick that is inserted into the handle, and a dome-like top that covers the head of the lollipop.” (Id. ¶¶ 21, 22.) Couture Pops® also “feature a charm (or charms) that is (or are) affixed to the bottom of the handle.” (Id. ¶ 22.)

         Sugar Factory owns the registration for the mark “COUTURE POPS®” and owns trademark registrations for its trade dress covering the “iconic, bejeweled Couture Pop® handle, ” “the combination of the bejeweled handle and a rounded head, ” and the “combination of the Couture Pop® bejeweled handle, rounded head, and dome-like cover.” (Id. ¶¶ 29-32.) Copies of Sugar Factory's registrations are attached to the Complaint. (Compl., Exhs. C-F.) The registrations show that Sugar Factory first used Couture Pops® in 2009 and registered the mark and trade dress in 2011. (Id.)

         Sugar Factory alleges that in September of 2014, it began a “business relationship” with the Harari Defendants and their business, Defendant Project Group. (Id. ¶ 36.) Initially, Sugar Factory contracted with the “Harari Defendants to provide products for Sugar Factory restaurants, ” and during this time “the Harari Defendants became intimately familiar with Sugar Factory's Trade Dress.” (Id. ¶ 37.) From May 2015 to December 2017, “Sugar Factory engaged the Harari Defendants to manufacture Couture Pops®” using the confidential Trademarked Couture Pop® design. (Id. ¶¶ 37-39.) Sugar Factory alleges that the “Harari Defendants worked closely with Sugar Factory, and were privy to the details of Sugar[] Factory's business.” (Id. ¶ 39.) During this time, “Sugar Factory began paying [Defendant] Shchekin to do graphic design work, while he was also employed by the Harari Defendants.” (Id.) Sugar Factory alleges that it supplied the Harari Defendants with the “Sugar Factory Trade Dress and Sugar Factory confidential information (including a mold of the Couture Pops® created at Sugary Factory's Expense).” (Id.) Sugar Factory also alleges that Mr. Davidovici communicated to Defendant Shai Harari, in confidence, “his idea for a cosmetic line of Couture Pops®” which were part of Mr. Davidovici's “overall strategic vision for the future expansion of the Couture Pops® brand.” (Id. ¶¶ 40, 41.)

         “Sugar Factory eventually terminated its agreement with the Harari Defendants around approximately December 2017, ” after the Harari Defendants failed to deliver a large quantity of Couture Pops®. (Id. ¶¶ 45-46.) Sugar Factory alleges that the Harari Defendants “refused to return” the Couture Pop® mold. (Id. ¶¶ 45-46.) Further, Sugar Factory alleges that “[n]ot more than ten months” later, the Harari Defendants launched Defendant Glossy Pops. (Id. ¶ 48.) The business was allegedly “devoted to selling one product- an exact copy of the Couture Pops® called ‘Glossy Pops.'” (Id.) The Complaint includes a side-by-side comparison of the trademarked Couture Pops® design and the alleged infringing Glossy Pop. (Id. ¶ 51.) Sugar Factory alleges that Glossy Pop's products “infringe Sugar Factory's trade dress by mimicking, without authorization, the design and configuration, as well as the shape, pattern color, texture, lay-out, size, and overall presentation of” Couture Pops®. (Id. ¶ 53.)

         Sugar Factory also alleges that the Harari Defendants, who “control the Glossy Pop Defendants, ” knowingly manufacture and distribute Glossy Pops which “copy a combination of several elements of the Sugar Factory's Registered Trade Dress.” (Id. ¶¶ 1, 85-86.) Defendants have allegedly “blurred the sharp focus and association in the minds of consumers of Sugar Factory's famous trade dress” and consumers will likely “associate Defendants' lesser quality goods with Sugar Factory.” (Id. ¶¶ 58, 88.) Sugar Factory alleges that it “will suffer and is suffering irreparable harm” from Defendants' continuing infringement. (Id. ¶ 92.)

         Based on these allegations, Plaintiff raises nine causes of action: (1) False Designation of Origin and Unfair Competition, 15 U.S.C. § 1125(a)); (2) Trade Dress Infringement, 15 U.S.C. § 1114; (3) Trade Dress Dilution, 15 U.S.C. § 1125(c)); (4) Common Law Trademark Infringement and Unfair Competition; (5) Statutory Unfair Competition, Cal. Bus. & Prof. Code §§ 17200 et seq.; (6) Statutory Trade Dress Dilution, Cal. Bus. & Prof. Code § 14247; (7) Breach of Contract (8) Breach of Implied Contract; and (9) Conversion.

         Defendants now move to dismiss for lack of personal jurisdiction and move to dismiss the third and sixth causes of action for failure to state a claim. (Dkts. 32, 35.)

         II. LEGAL STANDARD

         a. Motion to Dismiss under Rule 12(b)(2)

         Federal Rule of Civil Procedure 12(b)(2) provides that a court may dismiss a suit for lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). The plaintiff has the burden of establishing that personal jurisdiction exists. See Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). Where, as here, the motion is based on written materials rather than an evidentiary hearing, “the plaintiff need only make a prima facie showing of jurisdictional facts.” Caruth v. International Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1977); Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). “Although the plaintiff cannot simply rest on the bare allegations of its complaint, uncontroverted allegations in the complaint must be taken as true.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (internal quotations and citation omitted). Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor. Id.

         District courts have the power to exercise personal jurisdiction to the extent authorized by the law of the state in which they sit. Fed.R.Civ.P. 4(k)(1)(A); Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). Because California's long-arm statute authorizes personal jurisdiction coextensive with the Due Process Clause of the United States Constitution, see Cal. Civ. Code § 410.10, this court may exercise personal jurisdiction over a nonresident defendant when that defendant has “at least ‘minimum contacts' with the relevant forum such that the exercise of jurisdiction ‘does not offend traditional notions of fair play and substantial justice.'” Schwarzenegger, 374 F.3d at 800-01 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). The contacts must be of such a quality and nature that the defendants could reasonably expect to be “haled into court there.” World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297 (1980).

         b. Motion to Dismiss ...


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