Sushi Nozawa, LLC v. The HRB Experience, LLC

O [7] United States District Court [8] Central District of California [10] 11 SUSHI NOZAWA, LLC, Case No. 2:19-cv-07653-ODW (SSx) 12 Plaintiff, ORDER DENYING DEFENDANT’S 13 v. MOTION TO DISMISS [16] 14 The HRB Experience, LLC, 15 Defendant. [17] 18 I. INTRODUCTION 19 Defendant The HRB Experience, LLC (“HRB”) moves to dismiss the complaint 20 of Plaintiff Sushi Nozawa, LLC (“Sushi Nozawa”) alleging trademark infringement 21 and unfair competition. (Mot. to Dismiss (“Mot.”), ECF No. 16.) For the reasons 22 that follow, the Court DENIES Defendant’s Motion to Dismiss (“Motion”).1 23 II. FACTUAL BACKGROUND 24 Sushi Nozawa brings this suit against HRB for trademark infringement and 25 unfair competition. Sushi Nozawa, founded by its namesake chef Kazunori Nozawa, 26 is a limited liability company and is more commonly known by the restaurants it [27] 28 1 After carefully considering the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 operates, KazuNori, Sugarfish, and Nozawa Bar. (Compl. ¶¶ 6–8, ECF No. 1.) At 2 KazuNori, Sushi Nozawa creates a memorable experience centered around Chef 3 Nozawa’s specially crafted sushi hand rolls. (Compl. ¶ 7.) Since its unique creation, 4 several others copied KazuNori’s sushi hand rolls to varying degrees and opened up 5 sushi restaurants specializing in hand rolls. (Compl. ¶ 7.) 6 Sushi Nozawa owns a family of marks, including the following in the 7 supplemental register: (1) “THE ORIGINAL HAND ROLL BAR” (text only), and (2) 8 “THE ORIGINAL HAND ROLL BAR FOUNDED 2014 LOS ANGELES” (text in 9 stylized font in a box) (collectively, “Registered Marks”). (Compl ¶¶ 10–11; Compl. 10 Ex. A, ECF No. 1-1; Compl. Ex. B, ECF No. 1-2.) Sushi Nozawa seeks to register the 11 same marks in the principal register. (Compl. ¶ 14.) Sushi Nozawa intends to 12 maintain exclusive ownership of the Registered Marks and use them in connection 13 with its products and services. (Compl. ¶ 18.) 14 Nevertheless, HRB has advertised a similar “hand roll bar” experience and 15 plans to operate two Los Angeles restaurants which specialize in sushi hand rolls. 16 (Compl. ¶¶ 20–22.) Sushi Nozawa avers that HRB was on notice of its Registered 17 Marks before HRB created its advertisement. (Compl. ¶ 23.) Furthermore, HRB filed 18 an intent-to-use application with the United States Patent and Trademark Office 19 (“USPTO”) for the mark “HRB.” However, HRB failed to disclose that “HRB” is an 20 acronym for “hand roll bar” allegedly to avoid having the Registered Marks cited 21 against its application. (Compl. ¶¶ 24–26.) Moreover, Sushi Nozawa alleges that 22 HRB used its Registered Marks without permission and for the sole purpose of 23 benefitting from its restaurants’ popularity and goodwill. (Compl. ¶ 27.) 24 On September 4, 2019, Sushi Nozawa filed suit against HRB alleging (1) 25 Federal Trademark Infringement, 15 U.S.C. § 1114 ; (2) Federal Unfair Competition, [26] 15 U.S.C. § 1125 (a); (3) Common Law Unfair Competition; and (4) California Unfair 27 Competition, California Business and Professions Code section 17200. (See Compl.) [28] 1 III. REQUEST FOR JUDICIAL NOTICE 2 Both parties request the Court to judicially notice filings with the United States 3 Patent and Trademark Office (“USPTO”). (Def.’s Req. for Judicial Notice, ECF No. 4 16-3; Def.’s Supp. Req. for Judicial Notice, ECF No. 19; Pl.’s Req. for Judicial 5 Notice, ECF No. 21; Pl.’s Supp. Req. for Judicial Notice, ECF No. 23; Def.’s Notice 6 of USPTO Action, ECF No. 26.) HRB additionally requests the Court to take judicial 7 notice of websites. (Def.’s Req. for Judicial Notice.) 8 “[A] court may judicially notice a fact that is not subject to reasonable dispute 9 because it: (1) is generally known within the trial court’s territorial jurisdiction; or 10 (2) can be accurately and readily determined from sources whose accuracy cannot 11 reasonably be questioned.” Fed. R. Evid. 201(b). While “undisputed matters of 12 public record” are judicially noticeable, a court may not take notice of disputed facts 13 in public records. Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001). Accordingly, 14 “USPTO records may be subject to judicial notice, [but] they are noticeable only for 15 the limited purpose of demonstrating that the filings and actions described therein 16 occurred on certain dates.” Pinterest Inc. v. Pintrips Inc., 15 F. Supp. 3d 992 , 997 17 (N.D. Cal. 2014). Furthermore, as websites contain disputed matter and do not satisfy 18 the Rule 201(b) requirements, the Court may not take judicial notice of the contents 19 on websites. Lee, 250 F.3d at 689 ; Pinterest, 15 F. Supp. 3d at 997 . 20 Accordingly, the Court GRANTS the requests for judicial notice for the limited 21 purpose discussed above. 22 IV. LEGAL STANDARD 23 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 24 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 25 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). “To 26 survive a motion to dismiss . . . under Rule 12(b)(6), a complaint generally must 27 satisfy only the minimal notice pleading requirements of Rule 8(a)(2)”—a short and 28 plain statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); see 1 also Fed. R. Civ. P. 8(a)(2). The “[f]actual allegations must be enough to raise a right 2 to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544 , 555 3 (2007). The “complaint must contain sufficient factual matter, accepted as true, to 4 state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662 , 5 678 (2009) (internal quotation marks omitted). “A pleading that offers ‘labels and 6 conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not 7 do.’” Id. (citing Twombly, 550 U.S. at 555 ). 8 Whether a complaint satisfies the plausibility standard is a “context-specific 9 task that requires the reviewing court to draw on its judicial experience and common 10 sense.” Id. at 679 . A court is generally limited to the pleadings and must construe all 11 “factual allegations set forth in the complaint . . . as true and . . . in the light most 12 favorable” to the plaintiff. Lee, 250 F.3d at 679 . But a court need not blindly accept 13 conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. 14 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Where a 15 district court grants a motion to dismiss, it should generally provide leave to amend 16 unless it is clear the complaint could not be saved by any amendment. See Fed. R. 17 Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th 18 Cir. 2008). 19 V. DISCUSSION 20 HRB moves to dismiss Sushi Nozawa’s trademark infringement and unfair 21 competition claims, asserting that HRB’s alleged use of any protected mark creates no 22 likelihood of confusion, or alternatively, qualifies as fair use. (See Mot.) 23 A. Likelihood of Confusion 24 In a trademark infringement cases, a plaintiff must establish: (1) an ownership 25 of a trademark right; (2) that was used by the defendant; “(3) in a way that is likely to 26 cause consumer confusion and thus infringe upon the trademark right.” Adobe Sys., 27 Inc. v. Blue Source Grp., Inc., 125 F. Supp. 3d 945, 966 (N.D. Cal. 2015) (citing Levi [28] 1 Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1354 (9th Cir. 1985)). HRB moves to 2 dismiss on the basis that its use does not create a likelihood of confusion. (Mot. 1–35.) 3 The likelihood of confusion is the central element of a trademark infringement 4 claim. Abercrombie & Fitch Co. v. Moose Creek, Inc., 486 F.3d 629, 633 (9th Cir. 5 2007). To determine a likelihood of confusion between related goods, courts use the 6 Sleekcraft factors: (1) strength of the mark; (2) proximity of the goods; (3) similarity 7 of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type 8 of goods and the degree of care likely to be exercised by the purchaser; (7) 9 defendant’s intent in selecting the mark; and (8) likelihood of expansion of the 10 product line. Id. (discussing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 , 348–49 (9th 11 Cir. 2003)). 12 Though “[c]ourts may determine likelihood of confusion as a matter of law on 13 either a motion to dismiss or summary judgment[,] a plaintiff is not required to prove 14 the likelihood of confusion at the pleading stage.” Vapor Spot, LLC v. Breathe Vape 15 Spot, Inc., No. CV 15-02110 MMM (EX), 2015 WL 12839123 , at *5 (C.D. Cal. Sept. 16 15, 2015) (internal quotation marks and citations omitted). To make the 17 determination, a court need not address all eight factors as “it is often possible to reach 18 a conclusion . . . after considering only a subset of the factors.” Brookfield Commc’ns, 19 Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1054 (9th Cir. 1999). 20 At the pleading stage, a plaintiff fails to sufficiently allege the likelihood of 21 confusion when the marks are patently dissimilar or the channels in which the marks 22 are used are completely unrelated. See RVCA Platform, LLC v. Nudie Jeans Co AB, 23 No. 208CV00682FMCPJWX, 2008 WL 11337820 , at *3 (C.D. Cal. Aug. 29, 2008) 24 (“[D]ismissal at the pleadings stage tends to be appropriate when it is clear both that 25 the goods or services in question are not related and that confusion is not likely”); 26 Murray v. Cable Nat’l Broadcasting Co., 86 F.3d 858 , 860–61 (9th Cir. 1996) 27 (affirming district court’s dismissal where a consumer survey group used “America [28] 1 Speaks” to sell its survey results to business clients and a television network used the 2 allegedly infringing “America’s Talking” to distribute poll results to the news media). 3 Here, Sushi Nozawa, a Los Angeles area sushi restaurateur, alleges that it 4 registered the trademark “THE ORIGINAL HAND ROLL BAR” and HRB, a 5 competing Los Angeles area sushi restaurateur, uses the mark “HAND ROLL BAR 6 EXPERIENCE.” (Compl. ¶¶ 1, 4, 5, 10.) Accordingly, Sushi Nozawa alleges that 7 because HRB uses similar marks in the same channels as it does, HRB’s mark likely 8 causes customer confusion. 9 On a motion to dismiss, HRB addresses the Sleekcraft factors in hopes that the 10 Court will resolve the likelihood of confusion question.2 (See Mot.) For instance, 11 HRB asserts that the marks are completely dissimilar to Sushi Nozawa’s because 12 Sushi Nozawa’s mark is always in a stylized box while HRB’s mark has an image of a 13 fish. (Mot. 22.) The Ninth Circuit holds that similarity of marks is assessed “in terms 14 of their sight, sound, and meaning.” M2 Software, Inc. v. Madacy Entm’t, 421 F.3d 15 1073, 1082 (9th Cir. 2005). The trademark is not judged by an examination of its 16 parts, but rather “by viewing the trademark as a whole, as it appears in the 17 marketplace.” Id. Although there are certain differentiating characteristics between 18 the two marks here, the use of “hand roll bar” by both may cause confusion amongst 19 customers who enjoy hand roll sushi. Therefore, HRB’s argument is unpersuasive 20 because it fails to consider how the trademark as a whole appears in the marketplace. 21 As the allegedly infringing use occurs in the same channels of trade and 22 geographic location and appears to be relatively similar, Sushi Nozawa has adequately 23 pled that the use is likely to cause customer confusion. See Kythera 24 Biopharmaceuticals, Inc. v. Lithera, Inc., 998 F. Supp. 2d 890, 901 (C.D. Cal. 2014); [25] 2 In its analysis of the factors, HRB weaves in the argument that Sushi Nozawa’s mark is generic. 26 (See Mot.) However, the issue of whether a mark is generic is a question of fact inappropriate to resolve in the context of a motion to dismiss. See Solid 21, Inc. v. Breitling USA, Inc., 512 Fed. 27 Appx. 685, 686–87 (9th Cir. Mar. 19, 2013) (“Breitling’s contention that the mark is, in fact, generic 28 is an attempt to introduce evidence to rebut the complaint, which is impermissible at the motion to dismiss stage”). Accordingly, the Court does not address this argument. 1 Solofill, LLC v. Rivera, No. CV 17:02956-SJO-(AJWx), 2017 WL 5953105 , at *2 2 (C.D. Cal. Oct. 16, 2017) (finding that allegations of similarity of the mark, similarity 3 of channels of trade, and proximity of use sufficient to pass the 12(b)(6) muster). 4 Accordingly, the Court DENIES HRB’s Motion on this basis. 5 B. Fair Use 6 HRB further argues that even if Sushi Nozawa’s mark is descriptive, HRB’s use 7 of “hand roll bar” constitutes fair use. (Mot. 35–37.) Sushi Nozawa opposes HRB 8 arguing that a motion to dismiss is not the proper mechanism to determine HRB’s fair 9 use. (Opp’n to Mot. 22, ECF No. 20.) 10 Indeed, “[f]air use is a mixed question of law and fact.” Harper & Row 11 Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 560 (1985). Although typically, 12 courts reserve the issue of fair use for summary judgment, they may resolve it on a 13 motion to dismiss if the “allegations, when taken as true, do not support a finding of 14 fair use.” Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 530 (9th Cir. 2008). 15 There are two types of fair use: “‘classic fair use,’ in which ‘the defendant has 16 used the plaintiff’s mark to describe the defendant’s own product,’ and ‘nominative 17 fair use,’ in which the defendant has used the plaintiff’s mark ‘to describe the 18 plaintiff’s product.’” Cairns v. Franklin Mint Co., 292 F.3d 1139, 1150 (9th Cir. 19 2002). Here, HRB argues that it used elements of Sushi Nozawa’s mark to describe 20 its restaurant style. (Reply in Supp. of Mot. 16–17, ECF No.24.) Accordingly, the 21 Court analyzes HRB’s fair use argument under the classic fair use structure. 22 To establish a classic fair use defense, HRB must prove the following elements: 23 “1. Defendant’s use of the term is not as a trademark or service mark; 2. Defendant 24 uses the term ‘fairly and in good faith’; and 3. [Defendant uses the term] ‘[o]nly to 25 describe’ its goods or services.” Cairns, 292 F.3d at 1151 ; 15 U.S.C. § 1115 (b). “In 26 [the Ninth] Circuit, the classic fair use defense is not available if there is a likelihood 27 of customer confusion as to the origin of the product.” Cairns, 292 F.3d at 1151 28 (citing Transgo, Inc. v. Ajac Transmission Parts Corp., 911 F.2d 363 , 365 n.2 (9th 1 || Cir. 1990) (classic fair use defense available only so long as such use does not lead to 2 || customer confusion as to the source of the goods or services). As the Court found that 3 || Sushi Nozawa adequately pled likelihood of confusion, the Court determines that the classic fair use defense is not available to HRB at this stage in the litigation. See 5 | Gorski v. The Gymboree Corp., No. 14-CV-01314-LHK, 2014 WL 3533324 , at *7 6 | (N.D. Cal. July 16, 2014) (finding that the “Complaint does not compel a finding that 7 || either [fair use] defense[] applies as a matter of law” as the defendant’s use created 8 || customer confusion). Accordingly, the Court DENIES the motion on this basis. 9 Finally, as the Court found that Sushi Nozawa adequately pleads its trademark 10 | infringement claim, it also sufficiently states a claim for unfair competition because 11 || Sushi Nozawa’s unfair competition claims are premised on the trademark violation. 12 || See Mintz v. Subaru of Am., Inc., 716 F. App’x 618 , 622 (9th Cir. 2017) (finding the 13 || unfair competition claims premised on the copyright infringement and dismissing 14 || them because plaintiff insufficiently plead the copyright infringement claim). 15 VI. CONCLUSION 16 As the Sushi Nozawa adequately pleads its trademark infringement claim and 17 | HRB’s fair use defense is not available at this stage in the litigation, the Court 18 | DENIES HRB’s motion to dismiss in its entirety. [19] 20 IT ISSO ORDERED. 21 March 31, 2020 22 . “ gf 2 Gidflian 24 OTIS D. WRIGHT, II 35 UNITED STATES DISTRICT JUDGE