BARRY TED MOSKOWITZ, Chief District Judge.
On December 30, 2015, Plaintiff Aegis Software, Inc., filed a Complaint against Defendant 22nd District Agricultural Association. (ECF No. 1.) On February 29, 2016, Defendant filed a motion to dismiss. (ECF No. 9.) For the reasons discussed below, Defendant's motion to dismiss is
Plaintiff Aegis Software hosts the "San Diego Spirits Festival" (hereinafter "SDSF"), an annual specialty cocktail and spirits festival held in San Diego since 2009. (Compl. ¶¶ 8-10.) In preparation for the first event, Plaintiff registered the fictitious business name "San Diego Spirits Festival" with the San Diego County Clerk. (Compl. ¶ 14.) In 2014, after consecutive years of growth in both attendance and vendor participation, the SDSF "enjoyed approximately 3800 attendees (a 35% increase from the prior year) and 80 `Spirit Brands' (a 23% increase from the prior year)." (Compl. ¶ 23.)
The SDSF is marketed through a variety of online, radio, television, and print medias. (Compl. ¶ 11.) Local news and media outlets have covered and promoted the SDSF, and the SDSF has been featured in various online publications associated with alcoholic beverages. (Compl. ¶ 30.) Travel publications, including Fodor's and Premier Traveler Magazine, have also featured the SDSF. (Compl. ¶ 30.) Finally, starting in 2013, the San Diego mayor has proclaimed a day in August each year as "San Diego Spirits Festival Day." (Compl. ¶ 31.)
In 2013, and given the success of the SDSF, Plaintiff hosted the first annual "San Diego International Spirits Bottle Competition" (hereinafter "Competition"). (Compl. ¶ 20.) The Competition takes place during the SDSF and features applicants from around the world that submit new spirits for competition and judging. (Compl. ¶ 21.) In 2013 the Competition featured 35 competitors, and in 2014 the Competition featured 86 competitors. (Compl. ¶¶ 22, 23.)
On October 21, 2015, Plaintiff successfully registered the service mark "San Diego Spirits Festival" with the Secretary of State of California. (
Defendant 22nd District Agricultural Association is a public association formed pursuant to the California Food and Agriculture Code for the express purpose of "[h]olding fairs, expositions, and exhibitions for the purpose of exhibiting all of the industries and industrial enterprises, resources and products of every kind or nature of the state with a view toward improving, exploiting, encouraging, and stimulating them." Cal. Food & Agric. Code § 3951(a).
In 2013 Defendant allegedly contacted Plaintiff to discuss Defendant's interest in hosting a cocktail event during the San Diego County Fair. (Compl. ¶ 35.) Alan and Elizabeth Edwards, the principals of the SDSF, allegedly shared important details relating to the business and operation structure of the SDSF at a meeting in July 2013 to discuss the potential partnership,. (Compl. ¶ 38.) Following the July 2013 meeting, Plaintiff allegedly did not hear from the Defendant again until Plaintiff learned that Defendant intended to hold a competing festival at the San Diego Country Fair in 2015. (Compl. ¶¶ 41-42.) Defendant's festival is named, "Distilled: San Diego Spirit & Cocktail Festival," and includes a spirits competition, named "Distilled: San Diego Spirit & Cocktail Competition." (Compl. ¶ 42.)
Plaintiff alleges that the SDSF has suffered as a direct result of Defendant's cocktail festival. (Compl. ¶ 24.) Moreover, Plaintiff alleges that potential participants are routinely confused because of the similarity between the Plaintiff's marks—the SDSF Mark and the Competition Mark—and Defendant's advertisements. (Compl. ¶ 43.)
Plaintiff's Complaint alleges federal service mark infringement, federal dilution of a famous mark, violation of federal unfair competition laws, state service mark infringement, state service mark dilution, violations of state unfair competition laws, and breach of Defendant's fiduciary duty. Defendant moves to dismiss.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be granted only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient facts to support a cognizable legal theory.
Although detailed factual allegations are not required, factual allegations "must be enough to raise a right to relief above the speculative level."
Plaintiff alleges infringement pursuant to 15 U.S.C. § 1114, dilution pursuant to 15 U.S.C. § 1125(c), and unfair competition pursuant to 15 U.S.C. § 1125(a). Each claim is discussed in turn.
The first cause of action alleges service mark infringement pursuant to 15 U.S.C. § 1114. As Defendant notes, section 1114 applies to infringement of registered marks.
Because neither mark is federally registered, Defendant's motion to dismiss Plaintiff's first cause of action is
Plaintiff's second cause of actions alleges dilution of a famous mark pursuant to 15 U.S.C. § 1125(c). In order to bring a claim for service mark dilution, a plaintiff must show that, "(1) the mark is famous and distinctive; (2) the defendant is making use of the mark in commerce; (3) the defendant's use began after the mark became famous; and (4) the defendant's use of the mark is likely to cause dilution by blurring or dilution by tarnishment."
Section 1125 states that, "a mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark's owner." 15 U.S.C. § 1125(c)(2)(A). When determining whether a mark is famous, courts are instructed to consider the following factors:
15 U.S.C. § 1125(c)(2)(A)(i)-(iv). "[A] mark usually will achieve broad-based fame only if a large portion of the general consuming public recognizes that mark."
First, with respect to the duration, extent, and geographic reach of the Marks, the Complaint asserts that Plaintiff's Marks have been featured on various local television and radio stations (Compl. ¶ 27) and that the Marks were featured in an online article for Fodor's magazine and Premier Traveler Magazine. (Compl. ¶ 30.d.) The SDSF Mark has been advertised since 2009, while the Competition Mark has been advertised since 2013. Although two internet articles have mentioned the festival, the SDSF Mark has not otherwise been advertised extensively to the general consuming public.
Second, with respect to the amount, volume, and geographic extent of services offered under the Marks, the Complaint asserts that the festival has achieved over 3,000 attendees and eighty vendor participants. (Compl. ¶ 23.) While this figure may be impressive locally, such participation does not demonstrate that Plaintiff's Marks have extensively reached the general consuming public.
Third, with respect to the extent of the actual recognition of the Marks, the Complaint asserts that for five years, the San Diego Mayor has delivered a Proclamation greeting guests and participants, and that a day each year has been designated "San Diego Spirits Festival Day" beginning in 2013. (Compl. ¶ 31.) The Complaint also notes that three celebrities have attended the event to promote their spirit lines. (Compl. ¶ 31.) As above, local recognition is insufficient. Although the San Diego Mayor has recognized the festival, the Complaint fails to allege any national recognition of the Marks. The Complaint alleges that the Marks have achieved a "variety of awards, recognition, and accolades at the local, national, and international levels," but such conclusory allegations are supported with local examples of recognition.
Finally, neither Mark is federally registered. Therefore, because the factors weigh in favor of Defendant, Plaintiff has failed to sufficiently allege facts that support its allegations that the Marks are famous.
Because Plaintiff has failed to allege that either Mark is famous, Plaintiff's federal dilution claim fails. Accordingly, Defendant's motion to dismiss Plaintiff's second cause of action is
As noted below, the Court
Dilution by tarnishment is "association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark." 15 U.S.C. § 1125(c)(2)(C). Here, the Complaint alleges Defendant "has tarnished the distinctive quality of" Plaintiff's allegedly famous Marks. (Compl. ¶ 98.) However, the Complaint does not allege how or why Defendant's use of its marks are harmful to Plaintiff's reputation. Without more, Plaintiff fails to plead dilution by tarnishment.
On the other hand, dilution by blurring is "association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark." 15 U.S.C. § 1125(c)(2)(B). Courts are instructed to consider relevant factors, including:
With respect to the first factor, Plaintiff alleges that its Marks and Defendant's marks are confusingly similar in that they both contain the words "San Diego," "Spirit," and "Festival." (Compl. ¶¶ 44, 45, 95.) With respect to the second factor, Plaintiff alleges that its Marks are descriptive and have acquired secondary meaning. (Compl. ¶ 84.) With respect to the third and fifth factors, Plaintiff alleges that it has used the SDSF Mark exclusively since 2009 and the Competition Mark since 2013 (Compl. ¶ 14, 20), and that Defendant attempted to "pass of its services and marks in commerce as those of SDSF." (Compl. ¶ 97.) With respect to the sixth factor, Plaintiff alleges that former attendees and participants in its festival have contacted Plaintiff with questions regarding Defendant's event, thereby demonstrating actual association between the competing marks. (Compl. ¶ 54.)
Assuming Plaintiff can sufficiently plead fame, Plaintiff has otherwise properly alleged facts sufficient to state a claim for dilution by blurring.
Plaintiff's third cause of action alleges violations of 15 U.S.C. § 1125(a). In general, section 1125(a) is a federal claim for infringement of unregistered marks.
"Whether a mark is protectable depends on its degree of distinctiveness."
Descriptive marks "define qualities or characteristics of a product in a straightforward way that requires no exercise of the imagination to be understood."
In general, secondary meaning is a question of fact that is to be decided by the jury.
Courts typically apply the eight factors set out in
Here, Plaintiff alleges that consumers have already demonstrated confusion between the two festivals. Both Plaintiff's Marks and the alleged infringing marks relate to cocktail festivals and spirit bottle competitions. Moreover, Plaintiff alleges that Defendant began using its mark after consulting Plaintiff about the SDSF festival. Such allegations are sufficient to satisfy this element for a trademark claim at the pleading stage.
Accordingly, because Plaintiff has alleged facts sufficient to state a claim pursuant to 15 U.S.C. § 1125(a), Defendant's motion to dismiss Plaintiff's third cause of action is
Plaintiff alleges state service mark infringement, state service mark dilution, violation of California's unfair competition statute, and breach of fiduciary duty. The sufficiency of Plaintiff's remaining claims are discussed in turn.
Plaintiff's fourth cause of action alleges infringement in violation of California Business and Professions Code § 14245. As Defendant points out, section 14245 only applies to owners of registered trademarks.
Claims for infringement under California law are "substantially congruent with federal claims and thus lend themselves to the same analysis."
Plaintiff's sixth cause of action alleges a violation of California Business and Professions Code § 17200, generally known as California's Unfair Competition Law ("UCL").
The UCL generally prohibits the use of any "unlawful, unfair or fraudulent business act or practice." Cal. Bus. & Prof. Code § 17200. A UCL claim may be brought against a "person," which is defined in section 17201 to include "natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons."
As explained above, Defendant is an agricultural district established pursuant to California Food and Agricultural Code § 3951. According to § 3953, Defendant is a state institution.
Plaintiff's argument that Defendant was not acting in a governmental capacity is unpersuasive. Section 3951 states that agricultural association are formed for the purpose of, "holding fairs, expositions and exhibitions for the purpose of exhibiting all of the industries and industrial enterprises, resources and products of every kind or nature of the state with a view toward improving, exploiting, encouraging, and stimulating them." Cal. Food & Agric. Code § 3951. Defendant's alleged actions include holding a cocktail festival and using service marks that allegedly infringe on Plaintiff's Marks. Specifically, Defendant's actions of holding a cocktail festival are within the purpose of the statute. Plaintiff has not cited any authority, and the Court has not found any, that supports the proposition that Defendant, as a state institution, can be held liable under the UCL.
Accordingly, Defendant's motion to dismiss Plaintiff's sixth cause of action is
As to Plaintiff's remaining claims, Defendant argues that Plaintiff is barred from bringing a breach of fiduciary duty or California trademark dilution claim because Plaintiff failed to exhaust administrative remedies. The Court agrees.
California Food and Agricultural Code § 3955 states that, "[c]laims against an association shall be presented to the Department of General Services . . . ." On December 2, 2015, Plaintiff submitted a Government Claim Form which stated, "[Defendant] is violating federal, state, and common law by utilizing the name `Distilled: San Diego Spirit & Cocktail Festival' and `San Diego Spirit & Cocktail Competition' to describe its annual cocktail festival, which is confusingly similar to claimant's marks . . . ." (Government Claim Form, attached to Compl. as Ex. 15, at 2.) The description of the specific damage or injury alleges, "[t]rademark infringement and monetary damages to [Plaintiff's] goodwill and branding." (Government Claim Form 2.)
Because the Government Claim Form only alleges trademark infringement, Plaintiff is precluded from asserting its claims for state trademark dilution and breach of fiduciary duty.
Moreover, even if Plaintiff had asserted its fiduciary duty and dilution claims in the Government Claim Form, Plaintiff's claims would nonetheless be dismissed. First, Plaintiff's seventh cause of action alleges a common law claim for breach of fiduciary duty. As discussed above, "[i]t is a well-settled rule that `there is no common law government tort liability in California; and except as otherwise provided by statute, there is no liability on the part of a public entity for any act or omission of itself, a public employee, or any other person."
Second, a claim for dilution under California law is analyzed under the same framework as a claim for dilution under federal law.
For these reasons, Defendant's motion to dismiss Plaintiff's fifth and seventh causes of action for California service mark dilution and breach of fiduciary duty is
For the reasons discussed above, Defendant's motion to dismiss is
Accordingly, Plaintiff's first, fifth, sixth, and seventh causes of action are
Finally, the Court