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LegalForce RAPC Worldwide P.C. v. Glotrade

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

November 14, 2019

GLOTRADE, et al., Defendants.


          Lucy H. Koh United States District Judge.

         LegalForce RAPC Worldwide, P.C. (“Plaintiff”) sued eighteen defendants, including WTMR, LLC (“Defendant”), for alleged violations of the Lanham Act, California's False Advertising Law, and California's Unfair Competition Law, as well as a claim for intentional interference with prospective economic advantage. ECF No. 1. Before the Court is Defendant's motion to dismiss.[1] ECF No. 18. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS Defendant's motion to dismiss with leave to amend.

         I. BACKGROUND

         A. Factual Background

         Plaintiff is a California professional corporation with a principal place of business in Mountain View, California and a law office located in Tempe, Arizona. ECF No. 1 at ¶ 18 (“Compl.”). Plaintiff “offers services including trademark preparation and prosecution, patent preparation and prosecution, copyright registration and counseling, international trademark and patent filings, and corporate formation and stock and equity structuring.” Id. ¶ 41. Plaintiff “has clients for intellectual property services in all 50 states and more than 300 cities and towns across America.” Id.

         Plaintiff alleges that companies, termed “Mailer Defendants, ” “use publicly available trademark filer information to send targeted ‘solicitations' to . . . trademark applicants.” Id. ¶¶ 2, 43. The “‘solicitations' are constructed to [deceptively] make the trademark applicant believe that an official U.S. government agency or the [United States Patent & Trademark Office (“USPTO”)] itself is sending a letter to them, raising fear among the unsuspecting public that they must pay large amounts of money or forfeit trademark rights.” Id. ¶ 2. These “Mailer Defendants” provide no real services and “result in no value to trademark owners.” Id.

         Plaintiff alleges that Mailer Defendants “appear to originate . . . [in] countries outside the United States (most frequently from eastern Europe).” Id. ¶ 3. As relevant to the instant motion to dismiss, Plaintiff asserts that Defendant is one such “Mailer Defendant, ” and that Defendant lists a Washington, D.C. address for its business, but is actually located in Hungary. Id. ¶¶ 59-63.[2] Defendant allegedly sends out unsolicited offers and directs recipients to pay a $980 registration fee to have the recipients' trademark listed in Defendant's publication. Id. ¶ 65. The unsolicited offer, however, fails to mention that trademark applications are a matter of public record and, once approved, trademark applications are published in the USPTO's Official Gazette. Id. ¶ 66. Instead, the unsolicited offer is “deliberately constructed to deceive recipients into thinking the unsolicited offer is a bill so the recipient will send a check as a payment for something they think is already owed to protect a trademark.” Id. ¶ 80. Plaintiff alleges that it “has received over 40 unsolicited offers from [Defendant] in the past year, directed to both RACP's clients and to individuals employed by RAPC.” Id. ¶ 73. Defendant acknowledges that some trademark owners who received Defendant's unsolicited offer “may reside in California, ” Popovics Decl. ¶ 8, but that Plaintiff's Complaint fails to allege whether it received Defendant's unsolicited offers at its California office or its Arizona office or whether Plaintiff's clients received Defendant's unsolicited offers in California or out-of-state.[3]

         As a result of the Mailer Defendants' actions, Plaintiff asserts that “significant business” was deceptively diverted to Mailer Defendants. Id. ¶ 198. Plaintiff also alleges that Plaintiff's business reputation was harmed because Plaintiff “received inquiries from its clients confused about the unsolicited actions by the Mailer Defendants and worried that [Plaintiff's] services to the clients were somehow deficient.” Id. ¶ 199. Plaintiff claims that it spent “valuable time and expenses to investigate the facts to appropriately advise its clients.” Id. ¶ 200.

         B. Procedural History

         On March 25, 2019, Plaintiff sued eighteen defendants and alleged the following causes of action: (1) violations of the Lanham Act, 15 U.S.C. § 1125(a); (2) violations of California's False Advertising Law, Cal. Bus. & Prof. Code § 17500; (3) violations of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200; and (4) intentional interference with prospective economic advantage. Compl. ¶¶ 203-61. The eighteen defendants fell into two categories: “Mailer Defendants, ” which are entities that directly engaged in the allegedly false advertising; and “Logistics Enablers, ” which are companies that provided domestic mailing addresses to the foreign “Mailer Defendants” that facilitated the allegedly fraudulent conduct. Id. ¶ 1; see generally Id. ¶¶ 203-61.

         To date, Plaintiff has voluntarily dismissed six of the seven “Logistics Enablers” and three of the eleven “Mailer Defendants.” ECF Nos. 16, 25, 28, 33, 42, 48, and 72. The final “Logistic Enabler” defendant filed a motion to dismiss based on personal jurisdiction, and the Court granted the motion with leave to amend on October 23, 2019. ECF No. 82. Six of the “Mailer Defendants” were served but did not appear, and the Clerk entered default against them. See ECF Nos. 47, 64, and 66.

         Of the two Mailer Defendants, one filed an answer (ECF No. 78), and the other one, Defendant, filed the instant motion to dismiss on July 22, 2019. ECF No. 51 (“Mot.”). Defendant contends that Plaintiff lacks Article III standing to bring this suit, personal jurisdiction over Defendant is absent, venue is improper in this district, and that Plaintiff fails to state a claim. Plaintiff filed an opposition on August 5, 2019, ECF No. 57 (“Opp.”), and Defendant filed a reply on August 12, 2019, ECF No. 63 (“Reply”).


         In the instant motion, Defendant raises four grounds for dismissing Plaintiff's Complaint: (1) lack of Article III standing, under Rule 12(b)(1); (2) lack of personal jurisdiction, under Rule 12(b)(2); (3) improper venue, under Rule 12(b)(3); and (4) failure to state a claim, under Rule 12(b)(6). Because Article III standing implicates constitutional limitations on our power to decide a case, the Court addresses Defendant's standing argument first. Friery v. Los Angeles Unified Sch. Dist., 448 F.3d 1146, 1148 (9th Cir. 2006) (“As standing implicates Article III limitations on our power to decide a case, we must address it before proceeding to the merits.”). The Court then turns to Defendant's personal jurisdiction argument. Because the Court resolves the case by addressing only Article III standing and personal jurisdiction, the Court confines its review of the applicable legal standards to those under Rules 12(b)(1) and 12(b)(2).

         A. Motion to Dismiss under Rule 12(b)(1)

         A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) tests whether the court has subject matter jurisdiction. While lack of “statutory standing” requires dismissal for failure to state a claim under Rule 12(b)(6), lack of Article III standing requires dismissal for want of subject matter jurisdiction under Rule 12(b)(1). See Nw. Requirements Utilities v. F.E.R.C., 798 F.3d 796, 808 (9th Cir. 2015) (“Unlike Article III standing, however, ‘statutory standing' does not implicate our subject-matter jurisdiction.” (citing Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4 (2014)); Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011). “A Rule 12(b)(1) jurisdictional attack may be facial or factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004).

         “In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Id. The court “resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6): Accepting the plaintiff's allegations as true and drawing all reasonable inferences in the plaintiff's favor, the court determines whether the allegations are sufficient ...

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