PHYLLIS J. HAMILTON, District Judge.
Defendants' motions to dismiss the third amended complaint ("TAC") came on for hearing before this court on February 17, 2016. Plaintiff and counterdefendant Free Kick Master LLC and plaintiff Free Kick Master Junior LLC appeared by their counsel Stanley L. Josselson, Val Schurowliew, and Eugene Alkana; defendants Amazon.com Inc. ("Amazon") and Google Inc. ("Google") appeared by their counsel Michael H. Page; defendant and counterclaimant Apple Inc. ("Apple") appeared by its counsel David R. Eberhart; and defendant Samsung Electronics USA ("Samsung") appeared by its counsel John C. Ulin. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court hereby GRANTS the motions.
This is a case alleging trademark infringement. Plaintiff Free Kick Master LLC asserts ownership of the "Free Kick Master" mark, and plaintiff Free Kick Master Junior LLC asserts ownership of the "Free Kick Master Junior" mark. TAC ¶¶ 1, 2,16-20. Plaintiffs allege that the Free Kick Master mark was "intended for use by Free Kick Master LLC in the production of television shows and sports movies, radio and television programs, namely sports program production, film production, organization of sports events, and organizing sporting events, including soccer football games[,]" and was "intended to extend to the production of computer games and applications." TAC ¶¶ 18-19. Plaintiffs allege that the Free Kick Master Junior mark "is for use in `Board games: . . . Toy, namely battery powered computer game [sic] with LCD screen which features animation and sound effects.'" TAC ¶ 20.
Through its AppStore, Apple provides the owners of Apple devices such as iPhones and iPads the ability to download various applications ("apps") or games, and allegedly allows third-party developers of apps for use on Apple devices to use "Apple Software" to develop those apps. TAC ¶¶ 33, 38. Similarly, Amazon operates the Amazon Appstore, through which it allows customers to obtain apps for its Kindle devices. TAC ¶¶ 89-91. Google operates Google Play, which is a distribution platform for apps developed for use with the Android operating system. TAC ¶ 105. Most of the apps that are available from Apple, Amazon, and Google are developed by third-party developers.
Samsung sells electronic devices and products — including the Galaxy mobile devices — on the Internet and in stores and electronics outlets. TAC ¶ 116. Samsung's electronic devices and products allegedly "can accommodate and accept" apps, including apps developed by third-party developers which "feature[e]" the Free Kick Master mark. TAC ¶ 116-118. Samsung allegedly affords developers of apps and websites featuring those apps the ability to make the apps compatible with Samsung devices. TAC ¶ 119.
Plaintiffs allege that apps/games containing the "Free Kick Master" title were developed by third parties and sold, distributed, and/or promoted by Apple, Amazon, Google, and Samsung.
Two non-parties — foreign nationals Slobodan Petrovic and Miroslav Nestorovic — assert in affidavits attached to the TAC that they are involved to some extent with Free Kick Master LLC.
Plaintiffs assert that an internationally televised Free Kick Master event, at which famous soccer players appeared and which was attended by more than 45,000 spectators, was held in July 2008 in Houston Texas. TAC ¶ 24. Plaintiffs claim that a similar event was scheduled for 2010 at the MGM Grand Garden Arena in Las Vegas, Nevada, but was cancelled because MGM began "facing bankruptcy issues." TAC ¶ 26. They also assert that a 2012 Free Kick Master event in Buenos Aires, Argentina, "was in the planning stages, with many famous soccer players making commitments to participate in the game." TAC ¶ 27.
In addition, according to plaintiffs, a Free Kick Master event "was to be held in 2013 at the SunLife Stadium," but it "was never held because sponsors withdrew support, in part, indicating that the prospects for profit from development of Free Kick Master or Free Kick Master Junior computer games and `apps' would not be profitable since companies like the instant [d]efendants were involved in developing, marketing, distributing, authorizing, and certifying `Free Kick Master' apps and downloads mimicking the previous Free Kick Master sporting events described above." TAC ¶ 30. Another Free Kick Master event for 2014 "was in the planning stages, along with rules governing the games, physical board games, electronic games, watches, and other memorabilia." TAC ¶ 31.
Plaintiffs allege that they have developed products based on the Free Kick Master events, including electronic and board games and watches. See TAC ¶¶ 23, 25, 28. Plaintiffs assert that the format and rules of the apps/games that are available on defendants' sites are similar to the format and rules utilized in plaintiffs' game and events, and that this similarity is "a source of confusion to the public as to the source and origin of the applications and downloads." TAC ¶ 25.
Plaintiffs claim that their agents' "attempts to communicate with [d]efendants have been fruitless" and "have been ignored." TAC ¶ 32. In his affidavit, Mr. Petrovic states that he "was calling by phone, on several occasions, different offices of Google, Inc., Apple Inc., Amazon, Inc., and Samsung Inc., etc., informing officials to whom I was referred about the fact that their companies were using the trademark and format of Free Kick Master without authorization of the owners of trademark, Free Kick Master LLC." TAC Exh. XIX.
He asserts further that "[e]ach time when I was calling, I was switched from one department to another as nobody in these above mentioned companies seemed to be responsible for discussing the matter." He claims that he "was regularly leaving, with the person I was talking to in these companies, my telephone number and e-mail address as I have been promised that person in charge will contact me shortly." However, he asserts, he never heard back from anyone. TAC Exh. XIX.
Mr. Petrovic claims that he then retained attorney Wilfredo Pesante to "officially inform one by one the mentioned companies who were in infringement with our trademark Free Kick Master." TAC ¶ 32 & Exhs. XIX, XX. He claims that Mr. Pesante "sent the official letter to Samsung, Inc., informing them about the problems arised [sic] from their unauthorized use of our trademark," but that Samsung did not respond. TAC Exh. XIX. A copy of a letter from Mr. Pesante to the CEO of Samsung's parent corporation in South Korea, dated March 9, 2011, is attached to the TAC as Exhibit XX. Mr. Petrovic asserts that even after he retained counsel to file the present action against defendants, "all of them continued until October 2015 to distribute Free Kick Master electronic game." TAC Exh. XIX.
Mr. Nestorovic states in his affidavit that he is an "official FIFA soccer agent," and that "together with Mr. Slobodan Petrovic, director of Free Kick Master LLC," he was "calling and trying to inform several times, Google, Inc., Apple, Inc., Samsung, Inc., and Amazon, Inc., that they were not unauthorized [sic] to use brand Free Kick Master, duly registered with USPTO by Free Kick Master LLC." He claims that "[u]sually, every call was ending in a way that officials who I was contacting were passing me on different departments and nobody during those conversations looked as right person responsible even to talk to me." He states that "[o]ften, I was told to leave my e-mail address and telephone number and that somebody from legal department will contact me," but that "[e]ventually, nobody from any of these companies contacted me. . . ." TAC Exh. XIX.
Mr. Nestorovic asserts further that "quite a few of the players who I was trying to sign for the Free Kick Master events supposed to be held in 2010 [and later] in Las Vegas, Miami, Argentina, and Singapore, were through their representatives asking for clarification, before signing their participation agreements, of who is the legitimate party with whom, through my introduction, they were going to sign the agreements" — whether the agreements "should be signed with Free Kick Master LLC" or with "Google, Apple, Samsung, or Amazon, who were present all around internet as the distributors of Free Kick Master electronic game." TAC Exh. XIX.
Free Kick Master LLC filed the original complaint in this action on April 14, 2015, in the Northern District of Ohio, asserting claims of trademark infringement and false designation of origin under the Lanham Act; deceptive trade practices under Ohio statutory and common law; and unfair competition and injury to business reputation under Ohio common law. The original complaint sought only injunctive relief. On May 12, 2015, Free Kick Master LLC filed a first amended complaint, asserting the same causes of action, but seeking injunctive relief and damages.
After the action was transferred to this court on July 23, 2015, Free Kick Master LLC filed a second amended complaint, alleging six causes of action, against all defendants: (1) trademark infringement under the Lanham Act, 15 U.S.C. § 1114; (2) false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a)); (3) injunctive relief; (4) common law trademark infringement; (5) unfair, unlawful, and fraudulent business practices under California Business & Professions Code § 17200; and (6) false advertising under California Business & Professions Code § 17500. On August 20, 2015, Amazon and Google filed a motion to dismiss the SAC; Apple filed an answer and counterclaim; and Samsung filed a motion to dismiss. Free Kick Master LLC filed an answer to Apple's counterclaim on September 3, 2015.
On October 19, 2015, the court issued an order granting the motions to dismiss. With regard to the Amazon/Google motion, the court dismissed the claims of direct infringement under the Lanham Act (first and second causes of action) because plaintiff had failed to allege facts showing that Amazon or Google had in fact "used" the mark or that that "use" created a likelihood of confusion. The court also noted that plaintiff had effectively conceded that it could not state a claim of direct infringement against Amazon or Google.
The court found further that the SAC did not mention contributory infringement or allege facts sufficient to state a claim for contributory infringement. Nevertheless, because the court had not previously ruled on the adequacy of plaintiff's claims, it allowed leave to amend to plead contributory infringement. As for the state law claims, the court found that they were barred by § 230 of the Communications Decency Act ("CDA"), 47 U.S.C. § 230.
With regard to Samsung's motion, the court found, as with the claims asserted against Amazon/Google, that plaintiff had conceded it was pursuing a theory of contributory trademark infringement — not direct infringement — against Samsung, but that plaintiff had alleged no facts sufficient to state a claim for contributory infringement. The court granted leave to amend to attempt to plead a claim for contributory infringement. The court also found that the state law claims failed to state a claim as to Samsung, but granted leave to amend to attempt to state a claim for common law trademark infringement, and to state a claim under the "unlawful" and "unfair" prongs of § 17200, and under § 17500.
The TAC was filed on November 16, 2015 by Free Kick Master LLC and a second plaintiff, Free Kick Master Junior LLC. Plaintiffs reallege the same six causes of action against Apple, and also assert claims of contributory infringement against Amazon and Google, and contributory infringement and the three state-law causes of action against Samsung. Apple, Amazon/Google, and Samsung now seek an order dismissing all claims asserted against them, for failure to state a claim.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal sufficiency of the claims alleged in the complaint.
To survive a motion to dismiss for failure to state a claim, a complaint generally must satisfy only the minimal notice pleading requirements of Federal Rule of Civil Procedure 8, which requires that a complaint include a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A complaint may be dismissed under Rule 12(b)(6) for failure to state a claim if the plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory.
While the court is to accept as true all the factual allegations in the complaint, legally conclusory statements, not supported by actual factual allegations, need not be accepted.
A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Defendants argue that the claims asserted against them are untimely, based on doctrine of laches and/or applicable statutes of limitation. They assert that the allegations in the TAC and the attached exhibits establish that plaintiffs knew of the alleged infringement before March 2011, which was more than four years prior to the filing of the original complaint.
Defendants point to the March 9, 2011, letter from Mr. Pesante to Samsung's parent corporation in South Korea, and to the assertion in the Petrovic affidavit that the March 9, 2011 letter was sent "[a]fter quite a few telephone conversations" with the defendants. Based on this, defendants contend that plaintiffs have effectively acknowledged that they were aware of the allegedly infringing games/apps well before March 9, 2011 — yet they delayed in commencing this action until April 15, 2015. Defendants assert that in light of these allegations, the Lanham Act claims are barred by the doctrine of laches, and the state law claims are barred by the applicable statutes of limitation.
In opposition, plaintiffs assert that it is improper for the court to make a determination, on a Rule 12(b)(6) motion, as to the applicability of the doctrine of laches, because laches is a fact-sensitive inquiry which requires full development of the record. They also contend that dismissal of the state-law claims based on the statutes of limitations is improper by virtue of application of the "continuing violations" doctrine. They assert that because the alleged infringement was "ongoing" and involved a "course of conduct actionable in its entirety," and because as of the time of the filing of the original complaint in April 2015, defendants were still "distributing" and "advertising" the Free Kick Master electronic games, the running of the statute of limitations should not be a bar to the state law claims.
The court finds that the motions to dismiss the TAC as untimely must be GRANTED. In federal court, federal law determines when a claim accrues.
The Lanham Act does not specify a limitations period. When a federal statute lacks a specific statute of limitations, courts, including the Ninth Circuit, "generally presume that Congress intended to `borrow' the limitations period from the most closely analogous action under state law."
The court finds that plaintiffs' Lanham Act claims are barred by the doctrine of laches, based on the running of the analogous state statute of limitations. "Laches is an equitable time limitation on a party's right to bring suit and is a valid defense to Lanham Act claims."
This defense embodies the principle that a plaintiff cannot sit on the knowledge that another company is using its trademark, and then later come forward and seek to enforce its rights.
For a suit to be barred by laches, the defendant must show that plaintiff's delay in filing suit was unreasonable, and that defendant would suffer prejudice caused by the delay if the suit were to continue.
Here, while the Petrovic and Nestorovic affidavits are vague in the extreme — as they do not say when Mr. Petrovic and Mr. Nestoriovic first discovered the alleged infringement, when Mr. Petrovic and Mr. Nestorovic made the phone calls to the defendants, which numbers or offices they called, whom they spoke to, nor when they contacted the attorney Wilfredo Pesante — plaintiffs do allege in the TAC that the Free Kick Master app "has been available" for use on iPhones and iPads "since 2011." TAC ¶ 35.
In addition, Mr. Petrovic claims that it was only after he received no response from any of the defendants that he decided to engage Mr. Pesante, and that it was only after "quite a few telephone conversations" that Mr. Pesante decided to send the March 9, 2011 letter to Samsung. When Mr. Pesante received no response to that letter, plaintiffs decided to retain other counsel, who filed the present action. The letter to Samsung does not state when plaintiffs became aware of the alleged infringement. However, the allegations in the TAC, taken together with the March 2011 letter, makes it clear that plaintiffs were aware of the apps/games in 2010, but certainly no later than February 2011.
Thus, the original complaint, filed on April 15, 2015, was filed more than four years after plaintiffs first discovered the alleged infringement. Since the complaint was not filed within the analogous statute of limitations (the two-year Ohio limitations period), there is a strong presumption that laches is a bar to the Lanham Act claims.
In addition, it was unreasonable for plaintiffs to delay filing suit until April 2015. In considering whether a plaintiff's delay was unreasonable, courts consider (1) the length of the delay, measured from the time the plaintiff knew or should have known about his potential cause of action, and (2) whether the plaintiff's delay was reasonable, including whether the plaintiff has proffered a legitimate excuse for his delay.
In addition to establishing that plaintiffs' delay was unreasonable, defendants must also show that they are likely to be prejudiced by the delay. "Courts have recognized two chief forms of prejudice in the laches context — evidentiary and expectations-based."
Here, defendants argue that given the vague and imprecise account in the Petrovic and Nestorovic affidavits, and also given plaintiffs' failure to locate any documentary support of the alleged attempts to contact defendants in late 2010 or early 2011 (despite plaintiffs' counsel's representation that they would do so), they are likely to suffer prejudice because the passage of time will make it difficult for any of the defendants to locate any record of the alleged phone call(s) in 2010 or early 2011. They also contend that plaintiffs' delay in filing suit will potentially increase the amount of damages plaintiffs could pursue, for each year of alleged infringement.
Defendants have shown that prejudice is likely — both evidentiary prejudice (plaintiffs allege in vague terms that defendants received "notice" via a "phone call" sometime prior to March 2011, but the chances are slight that defendants will be able five years later to track down a record of any such phone call) and expectations-based prejudice (had plaintiffs timely filed suit, Apple could have ceased distributing the allegedly infringing app sooner, thereby minimizing or completely negating plaintiffs' claims of damages to their goodwill and reputation). The claim of evidentiary prejudice is further strengthened by plaintiffs' counsel's concession at the hearing on the present motions that counsel have been unable to obtain any documentation or further details of the phone calls allegedly placed by Mssrs. Petrovic and Nestorovic to defendants.
The state-law claims are all barred under the relevant statutes of limitations. Caims under Business & Professions Code § 17500 are subject to the three-year statute of limitations of Code of Civil Procedure § 338.
There is no merit to plaintiffs' claim that the "continuing violations" doctrine applies to plaintiffs' state-law claims. The "continuing violations" doctrine is an equitable exception developed and applied mostly in the area of employment and housing discrimination claims.
Specifically, the
Plaintiffs assert claims of direct infringement under 15 U.S.C. § 1114 and § 1125(a) against Apple. To state a claim of direct trademark infringement, a plaintiff must allege facts sufficient to show (1) that it has valid, protectable trademarks, and (2) that defendant's use of the marks in commerce is likely to cause confusion.
In the TAC, plaintiffs allege that a Free Kick Master game developed by a third-party developer infringes their trademark rights, and contend that this game has been available in defendants' on-line stores — including Apple's App Store — since 2011. TAC ¶ 35. Plaintiffs allege that this game has been "advertised by third parties" and its format and rules are similar to the format and rules of the Free Kick Master event that allegedly occurred in 2008. TAC ¶ 36. They assert that the third-party developers used "Apple Software" to develop apps to be playable on Apple devices. TAC ¶ 38. They claim that because Apple requires apps to meet certain guidelines in order to be included in the App Store, Apple "should have known, had every reason to know, and every opportunity to know that it was helping develop, certifying, and marketing infringing products," and that Apple "ignored communications from [p]laintiff's agents." TAC ¶ 46.
Apple argues that the direct infringement claims asserted against it should be dismissed because they are indistinguishable from the direct infringement claims that the court previously dismissed against Amazon/Google and Samsung. In the October 19, 2015 order, the court held that these claims could "only be interpreted as claims of contributory infringement," as they were premised on the availability of certain games in defendants' on-line stores that were developed by third-party developers rather than by codefendants.
Here, Apple argues, all the claims are premised on an app or apps that plaintiffs concede were developed by one or more "third party developers" rather than by Apple or any of the defendants in this case (citing TAC ¶¶ 32, 34, 35, 37, 38, 46). Apple asserts that just as plaintiffs previously attempted to do with the other defendants, they now seek to hold Apple liable because Apple allegedly provides software that third-party developers use to develop apps, promulgates and enforces quality standards for apps available via its App Store, and made a "Free Kick Master" app available for download. Apple contends that these claims fail for the same reasons they failed as to the other defendants.
In opposition, plaintiffs assert that they can sustain a claim of direct infringement against Apple based on allegations Apple "used" the plaintiffs' mark "in commerce." Plaintiffs point to allegations that apps containing the Free Kick Master mark were "developed, sold, marketed, authorized, certified, and provided free of charge, by or though, or with the cooperation of . . . Apple[,]" TAC ¶ 36; that Apple "in its sole discretion" selects applications for development using Apple Software to be distributed via the App Store, TAC ¶ 40; & Ex. XXII, Section 3.2(g); and that Apple goes well beyond simply hosting third-party content on a website, as it has "direct control and monitoring over every item in its App Store," TAC ¶ 45. Plaintiffs contend that even if the infringing content did not originate with Apple, its role in hosting and selling the infringing content is sufficient under the plain meaning of "use in commerce."
In support of this last argument, plaintiffs cite
Here, plaintiffs contend that the court in
The court finds that the motion to dismiss the claims of direct infringement against Apple must be GRANTED. The court previously dismissed the claims of direct infringement against Amazon/Google, finding that the claims were all premised on apps that were developed by third-party developers, not by Amazon or Google, and that Amazon/Google had not "used" plaintiffs' marks. Similarly, plaintiffs' claims in the TAC are all premised on apps that plaintiffs concede were developed by "third-party developers," rather than by Apple.
Further, plaintiffs are seeking to hold Apple liable because Apple allegedly provides the software third-party developers use to develop apps, promulgates and enforces quality standards for apps available via its App Store, and made a "Free Kick Master" app available for download in that App Store.
Rather than attempt to distinguish the direct infringement claims previously asserted against the other defendants, plaintiffs here have simply asserted that the issues regarding Apple are "novel" because they concern the "use in commerce" of the Free Kick Master mark. Plaintiffs raised (and lost) that issue as to Amazon/Google in the opposition to the prior motions to dismiss the SAC.
Simply put, the TAC does not state a claim of direct infringement against Apple, because there are no facts pled sufficient to show that Apple used the Free Kick Masters mark in commerce. Under the Lanham Act, "[t]he term `use in commerce' means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark." 15 U.S.C. § 1127. At most, plaintiffs are attempting to assert a claim of contributory infringement, as their claims are premised on the availability in Apple's App Store of certain apps or games that were developed by third-party developers.
The
Apple, Amazon, and Google argue that the TAC fails to allege facts sufficient to state a claim for contributory infringement. A manufacturer or distributor can be held liable for the infringing acts of another if it "intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement."
Defendants contend that despite the court's clear direction in the October 19, 2015, order, the TAC alleges no facts showing that Apple, Amazon, or Google intentionally induced third-party developers to infringe the plaintiffs' marks, and alleges no facts supporting a plausible inference that any of these defendants knew its third-party developers were infringing the plaintiffs' mark but continued to allow the infringing apps to remain available in the defendants' application stores.
For example, defendants argue, plaintiffs allege that defendants "ignored" or "never answered" communications from "[p]laintiffs' agents," TAC ¶ 46 (Apple), ¶ 101 (Amazon), ¶ 112 (Google), but they fail to support these allegations with any facts. Defendants contend that the Petrovic and Nestorovic affidavits are too vague to enable any plausible inference that Apple, Amazon, or Google knew third parties were infringing plaintiffs' trademarks. They argue that the affidavits are vague as to when the alleged notice was provided, as Mr. Petrovic says only that he "called" before plaintiffs' counsel contacted Samsung on March 9, 2011, and Mr. Nestorovic provides no timeframe, but states that he "was calling with" Mr. Petrovic. They also contend that the affidavits are vague as to who Mr. Petrovic and Mr. Nestorovic called, as they do not identify any number they called, any individual they reached, how they obtained the contact information, or even which of defendants' numerous global offices they contacted.
Finally, defendants assert, the affidavits are vague as to what Mssrs. Petrovic and Mr. Nestorovic discussed in the alleged phone calls. For example, neither Mr. Petrovic nor Mr. Nestorovic states that he identified the allegedly infringing apps in the phone calls. Defendants argue that the TAC, taken together with the two affidavits, amounts to nothing more than an allegation that plaintiffs gave notice of something to someone at Apple, Amazon, and/or Google at some time prior to March 2011. They contend that this is insufficient to state a claim for contributory infringement.
In opposition, plaintiffs assert that defendants "should have known of" the contributory infringement, and that defendants were "several times" put on notice of their contributory infringement ("advertising and distributing the Free Kick Master electronic game"). Plaintiffs argue that both Mr. Petrovic and Mr. Nestorovic stated under penalty of perjury that they had "called" all four defendants to inform them they were not authorized to use the "Free Kick Master" mark," and that none of the defendants ever responded or took any further responsibility for discussing the matter. In plaintiffs' view, "[i]t is not implausible that organizations with `tens or hundreds of thousands of employees worldwide' would fail to respond to inquiries and telephone messages" and "[t]his experience with governments and large corporations repeats regularly, and `getting the run-around' is not unheard of."
Plaintiffs contend that a defendant cannot claim to have been unaware of infringing content when it in fact was simply being "willfully blind" to ongoing trademark violations. In support, plaintiffs cite
The court finds that the motion to dismiss the contributory infringement claims asserted against Apple, Amazon, and Google for failure to state a claim must be GRANTED. First, plaintiffs have made no attempt to allege facts showing that Apple, Amazon, or Google intentionally induced the third-party developers to infringe plaintiffs' trademarks.
Nor have plaintiffs alleged facts sufficient to create a plausible claim that Apple knew or had reason to know about the alleged infringement. The affidavits are vague and imprecise, and basically devoid of substance. And notwithstanding counsel's representations at the hearing on the motion to dismiss the SAC, the TAC includes no supporting documents or even allegations of documentary evidence. The only addition to the TAC regarding the "knowledge" requirement is the exhibit containing the two affidavits.
At the hearing on the motion to dismiss the SAC, the court asked plaintiffs' counsel, "If I were to give you leave to amend on the knowledge issue, what would you add?" Plaintiffs' counsel responded, "We would have to speak to everybody associated with the plaintiff in order to obtain specific facts dealing with phone calls, text messages, anything that they — any kind of communications that they had with [defendants]." Sept. 30, 2015 Transcript (Doc. 95) at 27-28. Counsel then conceded that they had not done this before the SAC was filed, but asserted that "we did not think that actual knowledge was required. We thought that constructive knowledge was sufficient. And we felt we had enough as far as constructive knowledge goes because we were able to see that these people had notice from the trademark office and we were able to see that they had all of these vetting procedures for checking the apps."
In other words, plaintiffs' counsel specifically represented at the hearing that if granted leave to amend the contributory infringement claim, plaintiffs would be able to locate documentary evidence so they could allege facts sufficient to support their claim that defendants knew or should have known that the Free Kick Master apps/games were infringing plaintiffs' trademarks. Nevertheless, they included no such facts in the TAC, relying instead on the Petrovic and Nesorovic affidavits regarding alleged phone calls that occurred prior to March 2011. And, as noted above, counsel conceded at the hearing on the present motions that they had been unable to obtain any documentation or details of the supposed phone calls to defendants.
As for plaintiffs' argument that defendants were "willfully blind," the cases plaintiffs rely on are easily distinguishable. In
In both
Samsung is in a slightly different position than Apple, Amazon, and Google. It does not operate an applications store, where consumers can download apps/games for their electronic devices. Rather, it manufactures and sells electronic devices incorporating the Android operating system, on which downloaded apps/games can be utilized.
Samsung argues that the TAC fails to state a claim for contributory infringement, because plaintiffs allege no facts showing that Samsung provided any product or service to an identified infringer; because they allege no facts showing that Samsung had knowledge of the alleged infringement; and because plaintiffs allege no facts showing that Samsung directly monitored or controlled the instrumentalities of any of the alleged third-party infringement.
First, Samsung asserts that at best, the TAC alleges that Samsung affords certain services to app developers who request them, but fails to allege facts showing that any of the third-party developers of the apps in issue (or any of the third-party websites over which the apps were allegedly distributed or sold) actually used any of those services. Samsung notes that plaintiffs identify three services it claims Samsung provided to app developers, but contends that there are no facts pled that show that these services apply to — or were ever used by — the third-party developers (whoever they might be) who are alleged to have infringed plaintiffs' trademarks or that any of the allegedly infringing apps were ever registered for, or offered through, Samsung's Galaxy Apps platform, or that they were offered through a designated Samsung Galaxy website.
With regard to whether plaintiffs allege facts showing that Samsung knew about the alleged infringement, Samsung notes that the TAC alleges that Samsung "should have known" of the alleged infringement because of its "vetting process."
As for plaintiffs' allegations regarding their "attempts to communicate" with defendants, and their citation to the letter from Mr. Pesante, Samsung notes that when counsel identified this letter at the last hearing as "an example" of the communications between Free Kick Master and Samsung, and the court inquired why plaintiffs had chosen an example that was "irrelevant to the trademark at issue here," plaintiffs' counsel insisted that plaintiffs had "other text messages" and "other communications" showing that plaintiffs had provided notice to Samsung of the alleged infringement at issue here. In the TAC, however, all that plaintiffs have added by way of "facts" is the exhibit with the Petrovic and Nestorovic affidavits, which Samsung argues are insufficient to show notice.
Third, with regard to whether plaintiffs allege facts showing that Samsung directly monitored or controlled the instrumentalities of any of the alleged third-party infringement, Samsung asserts that the only facts alleged are those that relate to the "services" Samsung allegedly offered app developers, and that there is no allegation that any purportedly infringing app ever used the Developers' Website, and no other allegations showing "direct monitoring" or "control" of the instrumentality of infringement.
In opposition, plaintiffs assert that they have stated a claim for contributory infringement because they have alleged that Samsung provided "services" to third-party infringers through the Samsung Developers' Website, and continued to do so after it was put on notice of its contributory infringement of advertising and distributing Free Kick Master apps. For example, they point to the "Terms and Conditions" which reference a "Remote Test Lab" where a qualifying user can conduct tests of software's suitability or compatibility for certain Samsung devices — which they claim "would have been used to test the various `Free Kick Master' apps for their suitability or compatibility with various Samsung devices."
Plaintiffs also contend that Samsung "certifies" any application that runs on a Galaxy device — which they assert includes the infringing apps. Plaintiffs claim that Samsung "should have known" that several of the apps it "assisted in developing and certified" had infringed plaintiffs' Free Kick Master mark, because plaintiffs informed Samsung by letter and phone call that it was certifying apps that infringed on the plaintiffs' marks.
As for Samsung's argument that the March 2011 Pesante letter is "irrelevant" because it references two apps/games that are not at issue here ("Free Kick Legends" and "Free Kick Carnival"), plaintiffs respond that the letter "clearly states" that "Free Kick Master Limited had become aware that Samsung was marketing video game applications called "Free Kick Legends" and "Free Kick Carnival" and that Free Kick Master LLC has "U.S. registered trademarks protecting the `Free Kick Master' [mark] and other such variations."
In addition, plaintiffs assert, Mr. Petrovic and Mr. Nestorovic both stated under penalty of perjury that they had "called" Samsung to inform it that it was not authorized to use the "Free Kick Master" marks, and that no one from Samsung ever took responsibility for following up. Plaintiffs assert that under relevant Ninth Circuit authority, these facts are sufficient to show that Samsung knew or should have known of the alleged infringing conduct. In support, plaintiffs again cite
Plaintiffs have alleged no facts showing that Samsung provided any product or service to an identified infringer,
Plaintiffs have provided no other facts to support their claim that they provided Samsung with notice of the alleged infringement, other than the affidavits of Petrovic and Nesterovic, which (as explained above) fail to include any critical details and are therefore insufficient. Moreover, neither Mr. Petrovic nor Mr. Nesterovic identified any particular app or website that infringed Samsung's trademarks. Plaintiffs' reliance on
Finally, plaintiffs have failed to allege facts showing direct monitoring or control. Plaintiffs do not allege that any of the developers of the apps at issue in this case ever used the Samsung Developers website or the Galaxy Apps platform, and thus, Samsung's ability to remove content from Samsung websites (or those of its parent company) have no bearing on the infringement alleged here. The TAC and its exhibits make clear that the allegedly infringing apps were developed by third parties and made available over third-party websites over which Samsung had no control.
As with Apple, Amazon, and Google, the court finds that plaintiffs have failed to state a claim for contributory infringement. In particular, the TAC does not allege facts sufficient to show that Samsung had knowledge of the alleged infringement.
Samsung contends that plaintiffs' state law claims fail because they are congruent with, and subject to the same analysis as, the Lanham Act claims. Common law trademark infringement has the same elements as federal trademark infringement.
Samsung asserts that because the TAC fails to state a claim under the Lanham Act, it also fails to state a claim of common law infringement (whether direct or contributory) as to Samsung, and that the UCL "unlawful" business practices claim is premised on the alleged Lanham Act violations, and thus fails for the same reasons that the Lanham Act claims fail. Samsung asserts that the "unfair" business practices claim fails because the requirement that developers pay Samsung 30% of the revenue they receive applies only to Samsung Affiliate websites, but there is no allegation in the TAC that any of the websites that purportedly offer the allegedly infringing apps in this case are Samsung Affiliate websites.
In opposition, plaintiffs argue that the common law trademark and UCL claims are viable for the same reasons that the Lanham Act claims are viable.
The court finds that the motion must be GRANTED. The common law trademark and UCL claims fail because they are substantially congruent to the Lanham Act claims.
In accordance with the foregoing, defendants' motions to dismiss the claims asserted against them in the TAC are GRANTED. Because the court finds that further amendment would be futile, the dismissal is WITH PREJUDICE.
No later than March 4, 2016, Apple shall advise the court whether it intends to proceed with its counterclaims against Free Kick Master LLC.
