Opinion
Case No. 23-cv-04145-RFL
2024-02-12
GOOD MEAT PROJECT, Plaintiff, v. GOOD MEAT, INC., et al., Defendants.
Caleb A. Hatch, Pro Hac Vice, Johanna R. Tomlinson, Pro Hac Vice, Rhett V. Barney, Pro Hac Vice, Lee Hayes, P.C., Spokane, WA, Patrick James Wingfield, Murphy Pearson Bradley & Feeney, San Francisco, CA, for Plaintiff. Philip J. Wang, Constance Jiun-Yee Yu, Traci Michelle Keith, Putterman Yu Wang LLP, San Francisco, CA, for Defendants.
Caleb A. Hatch, Pro Hac Vice, Johanna R. Tomlinson, Pro Hac Vice, Rhett V. Barney, Pro Hac Vice, Lee Hayes, P.C., Spokane, WA, Patrick James Wingfield, Murphy Pearson Bradley & Feeney, San Francisco, CA, for Plaintiff.
Philip J. Wang, Constance Jiun-Yee Yu, Traci Michelle Keith, Putterman Yu Wang LLP, San Francisco, CA, for Defendants.
ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION, PARTIALLY DENYING AND PARTIALLY GRANTING MOTION TO DISMISS, AND DENYING MOTION TO STRIKE
Re: Dkt. Nos. 25, 26, 29
RITA F. LIN, United States District Judge
Good Meat Project ("GMP") brings this trademark case against GOOD Meat, Inc.
("GMI"), and its parent company, Eat Just, Inc. GMP is a nonprofit focused on sustainable butchery and meat production practices. GMI is a food company which produces and sells cultivated, lab-grown meat from extracted animal cells.
GMP owns two federally registered trademarks: the "GOOD MEAT" character mark and the "GOOD MEAT BREAKDOWN" design mark. Both marks feature the words "good meat." The defendants have also adopted a mark, the GMI Mark, which features the words "good meat." GMP alleges that the defendants, through their use of the GMI Mark, are infringing GMP's trademark rights and that they should be preliminarily enjoined from doing so. The defendants, in turn, move to dismiss GMP's Complaint under Federal Rule of Civil Procedure 12(b)(6), and move to strike portions of the Complaint as inadmissible settlement communications.
For the reasons described below, GMP's Motion for a Preliminary Injunction is denied. The defendants' Motion to Dismiss is denied in part and granted in part with leave to amend. The defendants' Motion to Strike is denied.
I. BACKGROUND
A. The Complaint's Allegations
GMP is a non-profit corporation that encourages holistic meat production and consumption practices. (Dkt. No. 1 ¶¶ 3, 10.) It provides farmers, ranchers, and butchers with marketing education and technical assistance; incubates "Meat Collectives" across the country; and educates consumers about responsible meat production and consumption practices. (Id., ¶¶ 10-13.) It owns two federally registered trademarks: the GOOD MEAT character mark and the GOOD MEAT BREAKDOWN design mark. (Id., ¶¶ 14-15.) The GOOD MEAT mark claims the term "GOOD MEAT" and "consists of standard characters without claim to any particular font style, size, or color[.]" (Dkt. No. 1-1.) It was registered on October 11, 2022, and first used in commerce in May 2018. (Id.) The GOOD MEAT BREAKDOWN mark is stylized and depicts the words "good meat BREAKDOWN" in a specific font and layout. (Dkt. No. 1-2.) It too was registered on October 11, 2022, and it was first used in commerce in November 2020. (Id.) GMP alleges that it has continuously and consistently used these marks to promote commercial activities related to its services. (Dkt. No. 1 ¶ 17.)
GMI is a corporation that specializes in the manufacture and sale of cultivated, labgrown food products derived from animal cells. (Id., ¶¶ 4, 18.) Eat Just is GMI's parent company. (Id., ¶ 18.) According to the Complaint, GMI removes embryonic fertilized chicken eggs, minces the tissue and places the cells in culture, grows cells in culture, and then 3D prints the cells into shapes resembling cuts of chicken. (Id., ¶¶ 20-22.) GMI allegedly markets its cultivated meat products using its own "GOOD Meat" design trademark (the "GMI Mark"). (Id., ¶ 71.) The GMI Mark features a stylized depiction of the words "GOOD Meat" in a specific font and layout. (Id., ¶ 26, Dkt. No. 1-9.) Eat Just filed an intent-to-use application for the GMI Mark on September 4, 2020. (Dkt. No. 1 ¶ 26.) In 2021, the defendants entered into agreements granting their security interests in the intent-to-use application to a third party. (Id., ¶¶ 28-29.) In 2021, Eat Just assigned the entirety of its business having an interest in the GMI Mark to GMI. (Id., ¶ 30.) On April 12, 2022, the GMI Mark received a Notice of Allowance. (Id., ¶ 36.)
GMP alleges that the defendants advertise and promote their cultivated meat products using the GMI Mark in a manner likely to cause consumer confusion. (Id.,
¶ 71.) Specifically, GMP alleges that consumers are likely to be confused as to the association between GMI and GMP and will likely be deceived into believing that GMP endorses GMI's cultivated meat products. (Id., ¶¶ 71, 107.) The defendants allegedly acknowledged this risk of confusion in an April 18, 2022, letter. (Id., ¶ 72.)
GMP also alleges that the defendants advertise and promote their cultivated meat products as "real meat, made without... taking a life" by "painlessly extract[ing] cells from an egg or living animal" and that these statements are false and misleading. (Id., ¶¶ 83, 85-93.) GMP alleges that, because the GMI Mark will likely cause consumers to believe GMP endorses GMI's cultivated meat products, GMI's misleading statements will cause GMP to lose customers who disagree with GMI's practices. (Id., ¶ 98.) GMP asserts claims against the defendants for: (1) trademark infringement under section 1115 of the Lanham Act, 15 U.S.C. § 1114; section 1125(a) of the Lanham Act, 15 U.S.C. § 1125(a); and the California common law; (2) false description and false advertising under the Lanham Act, 15. U.S.C. § 1125(a); (3) declaratory judgment that the GMI Mark is deceptively misdescriptive; (4) declaratory judgment that the defendants have violated the Lanham Act's anti-trafficking provision, 15 U.S.C. § 1060(a)(1); and (5) California state law violations of the Unfair Competition Law, Cal. Bus. Prof. Code §§ 17200, et seq.; Unfair, Deceptive, False or Misleading Advertising Law, Cal. Bus. Prof. Code §§ 17500, et seq.; and common law unfair competition.
B. Procedural Background
GMP filed its Complaint on August 15, 2023. (Dkt. No. 1.) On October 13, 2023, the defendants filed a Motion to Dismiss and a separate Motion to Strike portions of the Complaint. (Dkt. Nos. 25, 26.) In support of their Motion to Dismiss, the defendants also filed a Request for Judicial Notice. (Dkt. No. 27.) On October 17, 2023, GMP filed a Motion for a Preliminary Injunction. (Dkt. No. 29.) The case was reassigned to this Court on November 27, 2023 (Dkt. No. 51), and the parties re-noticed all three motions for hearing on January 16, 2024.
II. LEGAL STANDARD
A. Motion for Preliminary Injunction
A "preliminary injunction is an extraordinary and drastic remedy" which should not be granted unless the movant shows "substantial proof and "by a clear showing, carries the burden of persuasion." Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997) (emphasis in original) (quotation marks and citation omitted). To obtain a preliminary injunction, a plaintiff "must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). The Ninth Circuit employs a sliding scale approach in weighing these factors. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011). The "[l]ikelihood of success on the merits 'is the most important' Winter factor[.]" Disney Enters., Inc. v. VidAngel, Inc., 869 F.3d 848, 856 (9th Cir. 2017) (quoting Garcia v. Google, Inc., 786 F.3d 733, 740 (9th Cir. 2015) (en banc)).
B. Motion to Dismiss
Federal Rule of Civil Procedure 8(a)(2) requires a complaint to 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 that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). See Fed. R. Civ. P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss after the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), and Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), a plaintiffs "factual allegations [in the complaint] 'must ... suggest that the claim has at least a plausible chance of success.'" Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (quoting In re Century Aluminum Co. Sec. Litig., 729 F.3d 1104, 1107 (9th Cir. 2013)).
The Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But "allegations in a complaint ... may not simply recite the elements of a cause of action [and] must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Levitt, 765 F.3d at 1135 (quoting Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir. 2014)). "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." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955).
C. Motion to Strike
Before responding to a pleading, a party may move to strike from a pleading any "redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). The essential function of a Rule 12(f) motion is to "avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to the trial." Wang v. OCZ Tech. Grp., Inc., 276 F.R.D. 618, 624 (N.D. Cal. Oct. 14, 2011) (quoting Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010)). Motions to strike are generally disfavored. See Shaterian v. Wells Fargo Bank, N.A., 829 F. Supp. 2d 873, 879 (N.D. Cal. 2011); Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 1048, 1057 (N.D. Cal. 2004). Just as with a motion to dismiss, courts should view the pleading sought to be struck in the light most favorable to the nonmoving party. Platte Anchor Bolt, 352 F. Supp. 2d at 1057.
III. DISCUSSION
A. GMP's Motion for a Preliminary Injunction
GMP alleges that GMI infringes its two federally registered trademarks: the character mark, GOOD MEAT, and the design mark, GOOD MEAT BREAKDOWN. The Court begins its analysis with the GOOD MEAT mark.
1. GOOD MEAT: Likelihood of Success on the Merits
GMP fails to carry its burden to establish that it is likely to prevail on its claims regarding the GOOD MEAT mark. The first requirement for injunctive relief is a likelihood of success on the merits. "To prevail on a claim of trademark infringement under the Lanham Act, 15 U.S.C. § 1114, a party 'must prove: (1) that it has a protectible ownership interest in the mark; and (2) that the defendant's use of the mark is likely to cause consumer confusion.'"
Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1144 (9th Cir. 2011) (quoting Dept of Parks & Recreation v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1124 (9th Cir. 2006)).
GMP does have a protectible interest in its trademarks, which it undisputedly owns. GMP registered both marks in October 2022. (Dkt. Nos. 30-1, 30-2.) The defendants do not contest GMP's proofs of registration. GMP has therefore met the ownership interest element of its claim. See Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1124 (9th Cir. 2014) ("Registration of a mark is prima facie evidence of the validity of the mark, the registrant's ownership of the mark, and the registrant's exclusive right to use the mark in connection with the goods specified in the registration. When proof of registration is uncontested, the ownership interest element of a trademark infringement claim is met.") (citation omitted).
However, GMP fails to submit sufficient evidence to support the second required element: likelihood of consumer confusion. There is a likelihood of confusion "when consumers are likely to assume that a product or service is associated with a source other than its actual source because of similarities between the two sources' marks or marketing techniques." Int'l Jensen, Inc. v. Metrosound U.S.A., Inc., 4 F.3d 819, 825 (9th Cir. 1993) (quotation marks and citation omitted). The likelihood of confusion is determined by analyzing eight factors identified in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), abrogated on other grounds by Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792, 810 n.19 (9th Cir. 2003): (i) the strength of the protected mark; (ii) the proximity of the goods; (iii) the similarity of the marks; (iv) evidence of actual confusion; (v) the similarity in the marketing channels used; (vi) the type of goods and the degree of care likely to be exercised by consumers; (vii) the defendant's intent in selecting its mark; and (viii) the likelihood of expansion into other markets.
a. Factor 1: Strength of Protected Mark
GMP fails to produce sufficient evidence to support a finding that the GOOD MEAT mark is strong. Strong marks are inherently distinctive and are "afforded the widest ambit of protection," while a "descriptive mark tells something about the product [and] will be protected only when secondary meaning is shown." Sleekcraft, 599 F.2d at 349. Two measures are relevant in analyzing the strength of a protected mark: conceptual strength and commercial strength.
Conceptual Strength. Conceptual strength is classified along a five-category continuum of increasing inherent distinctiveness, from generic, to descriptive, suggestive, arbitrary, and fanciful. Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1032-33 (9th Cir. 2010).
As the parties agreed at the hearing, GMP is entitled to a strong but rebuttable presumption that the GOOD MEAT mark is inherently distinctive because it registered the mark without being required to show secondary meaning. Marks may generally have either inherent distinctiveness or acquired distinctiveness, but not both. See 2 McCarthy on Trademarks and Unfair Competition § 11:43 (5th ed.). When a mark is registered without being required to show secondary meaning, it is entitled to a strong but rebuttable presumption that it is inherently distinctive — i.e., suggestive, arbitrary, or fanciful Id. Here, GMP was not required to show proof of secondary meaning when it registered
the GOOD MEAT mark. (Dkt. No. 30-1.)
GMI may rebut this presumption by showing that the mark is merely descriptive (or generic) by a preponderance of the evidence. Zobmondo Entertainment, LLC v. Falls Media, LLC, 602 F.3d 1108, 1115 (9th Cir. 2010). "[W]hile the registration adds something on the scales, we must come to grips with an assessment of the mark itself." Id. If the presumption is rebutted, the burden returns to GMP to show that the mark has acquired distinctiveness through a showing of a secondary meaning. Sleekcraft, 599 F.2d at 349.
Here, GMI has carried its burden to rebut the presumption. The Ninth Circuit employs two key tests to evaluate whether a mark is inherently distinctive. First, the "imagination" test asks if "a mental leap is required to understand the mark's relationship to the product." Zobmondo, 602 F.3d at 1116. A routinely used example of a mark that fails the imagination test is "ENTREPENEUR," which is descriptive as a magazine title because "an entirely unimaginative, literal-minded person would understand the significance of the reference." Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1142 (9th Cir. 2002). Second, the "competitors' needs" test asks whether the mark is "actually needed by competitors to identify their goods or services." Zobmondo, 602 F.3d at 1117 (quotation marks and citation omitted). Under both of those tests, GMI has presented sufficient evidence to rebut the inherent distinctiveness of the GOOD MEAT mark.
Customers do not need to exercise their imaginations to understand that the term "GOOD MEAT," as applied to educational services, refers to education concerning "responsible" consumption of animal meat: that is, meat that consumers can feel good about eating. (See Dkt. No. 31 ¶¶ 5-12.) There is little-to-no mental leap required to understand that GOOD MEAT describes GMP's services. Indeed, the evidence shows that, in ordinary parlance, the term "good meat" is used routinely to refer to the concept of sustainably sourced meat. Specifically, the fourth entry in the Google search results for "good meat" is a book entitled, Good Meat: The Complete Guide to Sourcing and Cooking Sustainable Meat. (Dkt. No. 31-14.) The description reads, "GOOD MEAT is about finding and cooking grass-fed and pastured meat. Such meat is the opposite of industrial meat — it is sustainable ... [.]" (Id.) GMP correctly notes that book titles cannot be protected as trademarks, but that is beside the point. The book title is probative of how the term "good meat" is used in ordinary speech and demonstrates the descriptive nature of the term. See 2 McCarthy on Trademarks and Unfair Competition § 11:69 (5th ed.) ("Relevant to the issue of descriptiveness is use in any type of media available to the relevant group of customers," such as "dictionaries, newspapers, surveys, websites, publications, advertising materials," etc.). That supports a conclusion that customers regard GOOD MEAT, in the context of educational services, as merely descriptive of teaching about meat that consumers can feel good about eating. Zobmondo, 602 F.3d at 1117 (requiring a showing that "consumers regard the mark as merely descriptive of that product.") (emphasis in original) (quoting Borinquen Biscuit Corp. v. M.V. Trading Corp., 443 F.3d 112, 119 (1st Cir. 2006)).
The competitors' needs test likewise supports a conclusion that GMI has carried its burden to rebut the presumption of distinctiveness. "If competitors have a great need to use a mark, the mark is probably descriptive; on the other hand, if the suggestion made by the mark
is so remote and subtle that it is really not likely to be needed by competitive sellers to describe their goods or services, this tends to indicate that the mark is merely suggestive." Id. (cleaned up). As with the imagination test, "the more imagination that is required to associate a mark with a product or service, the less likely the words used will be needed by competitors to describe their products or services." Id. (quoting Rodeo Collection, Ltd. v. W. Seventh, 812 F.2d 1215, 1218 (9th Cir. 1987)).
Here, GMI has produced evidence that other purveyors need to use the term "good meat" in order to describe goods or services that support responsible meat consumption. GMI points to, for example, two LinkedIn pages run by international companies selling food products, Good-Meat and Good Meat Co. (Dkt. No. 31-4 at 4-5); the aforementioned book title, Good Meat: The Complete Guide to Sourcing and Cooking Sustainable Meat (Dkt. No. 31-14); and USPTO records showing over 570 live registered trademarks using the term "good" to describe meats and processed foods (Dkt. No. 40-1 at 7). GMP correctly points out that trademark registrations alone do not constitute evidence of trademark use, and international use does not establish the extent of use in the United States. But these examples are not being used to show a crowded trademark field or the extent of use in the term in the domestic market; they are used to show how difficult it is to market goods and services that support sustainably or responsibly sourced meat without using the term "good meat." See 2 McCarthy on Trademarks and Unfair Competition § 11:69 (5th ed.) ("Third-party registrations are probative evidence of the meaning of a word, in the same way that a dictionary can be used.... For example, introduction of many third-party registrations for electronic products of marks with a -TRONICS or -TRONIX suffix could be evidence that those third parties and the public consider such a suffix descriptive, such that there would be no likely confusion between DAKTRONICS and TEKTRONIX.").
Because GMI has successfully rebutted the presumption of distinctiveness in the GOOD MEAT mark, the burden thus shifts back to GMP to show that the mark has acquired secondary meaning. "The test of secondary meaning is the effectiveness of the effort to create it, and the chief inquiry is directed towards the consumer's attitude about the mark in question: does it denote to [them] a single thing coming from a single source?" Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 802 (9th Cir. 1970) (quotation mark and citation omitted). GMP fails to satisfy this burden. In its briefing, GMP principally relies on its argument that the presumption of distinctiveness applies. Although GMP's evidence does indicate that it has used the GOOD MEAT mark to incubate Meat Collectives and has promoted its services throughout the country, GMP presents no evidence that consumers viewed the term "good meat" as referring a single source: that is, GMP. Accordingly, the conceptual strength of the GOOD MEAT mark weighs against the mark's strength.
Commercial Strength. Commercial strength is based on actual marketplace recognition. Brookfield Comm., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1058 (9th Cir. 1999). It is a fact-intensive inquiry that need not be reached at the preliminary injunction stage. See Network Automation, 638 F.3d 1137 at 1150. Even if the Court were to consider this factor, GMP's evidence is insufficient on this point. GMP argues that it has organized Meat Collectives in numerous states and has promoted its services
in various states, but does not offer evidence of how its efforts have been received in the actual marketplace. (See Dkt. No. 31-5.) That evidence is insufficient to gauge the mark's commercial strength.
GMP also argues that the Court should evaluate commercial strength in the reverse confusion context. In a reverse confusion case, the important question is "whether the junior mark is so commercially strong as to overtake the senior mark." Ironhawk Techs., Inc. v. Dropbox, Inc., 2 F.4th 1150, 1162 (9th Cir. 2021) (quoting Walter v. Mattel, Inc., 210 F.3d 1108, 1111 n.2 (9th Cir. 2000)). The evidence does not support GMP's argument that its mark has been completely overtaken. For example, GMP argues that GMI dominates online search results. But GMP is the sixth result in a Google search for "good meat," behind two results unrelated to either GMP or GMI. (Dkt. No. 31-14.)
Given the current record, GMP has not shown that its mark is conceptually strong, and its commercial strength is unclear. In total, this factor weighs against confusion.
b. Factor 2: Proximity of the Goods
"Related goods are those 'products which would be reasonably thought by the buying public to come from the same source if sold under the same mark.'" Sleekcraft, 599 F.2d at 348 n.10 (quoting Standard Brands, Inc. v. Smidler, 151 F.2d 34, 37 (2d Cir. 1945)). The companies do not need to be direct competitors. See Entrepreneur Media, 279 F.3d 1135 at 1148. ("While the public and the trademark owner have an interest in preventing consumer confusion, there is also a broad societal interest in preserving common, useful words for the public domain. We do not want to prevent the commercial use of descriptive words to name products, as straightforward names are often the most useful identifiers. An absolute measure of relatedness, in contrast, would discourage use of descriptive words in marks."). To analyze the proximity of the goods, "courts may consider whether the goods are complementary, whether the products are sold to the same class of purchasers, and whether the goods are similar in use and function." Groupion, LLC v. Groupon, Inc., 859 F. Supp. 2d 1067, 1074 (N.D. Cal. 2012).
At a high level of abstraction, there are similarities between the two parties' offerings. Both concern the production of meat for human consumption and companies emphasize sustainability. But the similarities end there. GMP offers services, while GMI sells goods. GMP focuses on butchering, slaughter, and the development of Meat Collectives. It provides educational services to butchers, ranchers, farmers, and consumers interested in sustainable meat production. GMI, by contrast, sells a food product that explicitly avoids butchering, ranching, and farming. To show similarity, GMP highlights a cease-and-desist letter it received from GMI's counsel saying "that the parties' use of the identical term GOOD MEAT for products and services associated with two very different methods of sustainable meat production is highly likely to confuse consumers." (Dkt. No. 30-9.) This conclusory statement does not establish that the parties' offerings are sold to the same class of purchasers or are similar in use and function. Moreover, it is contradicted by GMP's own executive director Michele Thome's declaration, which attests that the parties "are promoting vastly different products/services[.]" (Dkt. No. 31 22.)
This factor weighs against confusion.
c. Factor 3: Similarity of the Marks
"Similarity of the marks is tested on three levels: sight, sound, and meaning[.]" Sleekcraft, 599 F.2d at 351.
The marks are plainly similar. The GOOD MEAT mark "consists of standard characters without claim to any particular font style, size or color[.]" (Dkt. No. 30-1.) The GMI Mark has a distinctive appearance. In black sans-serif font, the capital letters "GO" are displayed on top of the letters "OD." Below it, in black serif font, is the word "Meat" written with a capital "M" and lowercase "eat." The words are contained in a tall rectangular box. It looks like this:
Image materials not available for display.
(Dkt. 1-9 at 7.) Visually, the marks are similar. Aurally and semantically, they are identical. "Balancing the marks' many visual similarities, perfect aural similarity, and perfect semantic similarity more heavily than the marks' visual dissimilarities — as we must — the similarity factor weighs heavily in [GMP's] favor." Pom Wonderful, 775 F.3d at 1130.
This factor weighs in favor of confusion.
d. Factor 4: Evidence of Actual Confusion
"Evidence of actual confusion is strong evidence that future confusion is likely[.]" Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1393 (9th Cir. 1993). But "[p]roving actual confusion is difficult ... and the courts have often discounted such evidence because it was unclear or insubstantial." Sleekcraft, 599 F.2d at 352. At the preliminary injunction stage, this factor is of diminished importance. Network Automation, 638 F.3d 1137 at 1151.
GMP relies on a declaration from a member of its board, Rosalie Kissel, to show that confusion has already occurred. (Dkt. No. 32.) Kissel claims to have received a LinkedIn message from students at an Italian university who mistakenly believed they were contacting GMI. (Id., ¶ 2.) GMP does not persuade on this record. The Ninth Circuit has found mistakes made by a single retailer and single customer insufficient to support a showing of actual confusion. See Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 633 (9th Cir. 2005). Other courts in this District have also found even stronger evidence of this type to be similarly unpersuasive. In Equinox Hotel, the plaintiff offered declarations by its executives stating, "that plaintiff has been mistaken 'repeatedly' for defendant by potential clients and organizers at industry conferences and by two industry journalists and a vendor." Equinox Hotel Mgmt., Inc. v. Equinox Holdings, Inc., No. 17-CV-06393-YGR, 2018 WL 659105, at *7 (N.D. Cal. Feb. 1, 2018). The court found that "[t]hese sporadic episodes are insufficient to support a finding of actual confusion." Id. at *8. The evidence here is weaker: Kissel only claims one example of actual confusion by foreign students, not industry journalists or the vendors that are GMP's target customers.
This evidence is even less compelling given the passage of time. GMP alleges that GMI has flooded the online market with its advertising, but only presents this one example of actual confusion. While the value of this factor is limited at this stage, it does weigh somewhat against confusion.
e. Factor 5: Marketing Channel Convergence
"In assessing marketing channel convergence, courts consider whether
the parties' customer bases overlap and how the parties advertise and market their products." Pom Wonderful, 775 F.3d at 1130. Merely showing that both businesses advertise on the internet is insufficient to show marketing channel convergence. Network Automation, 638 F.3d at 1151; see also Playboy Enters. v. Netscape Commc'ns. Corp., 354 F.3d 1020, 1028 (9th Cir. 2004) ("[The parties] use identical marketing channels: the Internet.... Given the broad use of the Internet today, the same could be said for countless companies. Thus, this factor merits little weight.").
GMP does not allege that the parties sell their products in the same stores — in fact, GMP does not sell products at all. Cf. Pom Wonderful, 775 F.3d at 1130-31. While GMP does allege that both parties advertise using online channels, news outlets, and journals, it only submits one news story showing that GMI was featured in a Meat and Poultry section. (Dkt. No. 30-7.) The evidence in the record shows that their marketing is otherwise quite distinct. As explained above, GMP markets services principally to ranchers and farmers. GMI markets cultivated meat products made without ranching or farming.
This factor weighs against confusion.
f. Factor 6: Degree of Customer Care
"In analyzing the degree of care that a consumer might exercise in purchasing the parties' goods, the question is whether a 'reasonably prudent consumer' would take the time to distinguish between the two product lines." Surfvivor Media, 406 F.3d at 634 (quoting Brookfield, 174 F.3d 1036 at 1060). Consumers with higher levels of expertise are expected to exercise greater care. Sleekcraft, 599 F.2d at 353. Similarly, consumers are likely to exercise greater care when making expensive purchases. Id.
The record here is mixed with respect to the type of goods and services and nature of consumers to whom the parties market. According to GMP's LinkedIn, "[t]he Good Meat Project partners and collaborates with a diverse network of experts, organizations, and businesses from across the globe who are excited to share their knowledge with each other and with others." (Dkt. No. 31-4.) Ranchers and farmers are likely to exercise high levels of care in seeking out training programs and networking opportunities, but members of the public interested in sustainable meat practices may be less discerning. Likewise, GMI's products are relatively cheap — its cultivated meat product is served as part of a tasting menu that costs only $70 despite being offered by a famous chef — but also cater to a relatively niche group of consumers who may exercise greater care in their meat consumption. (See Dkt. No. 30-15.)
The evidence is insufficient to support a conclusion that any particular level of care dominates among GMP and GMI's consumer groups. This factor is neutral.
g. Factor 7: GMI's Intent in Selecting Its Mark
In evaluating the defendant's intent, courts "ask 'whether defendant in adopting its mark intended to capitalize on plaintiff's good will.'" Marketquest Grp., Inc. v. BIC Corp., 862 F.3d 927, 934 (9th Cir. 2017) (quoting Fortune Dynamic, 618 F.3d at 1043). "When the alleged infringer knowingly adopts a mark similar to another's, reviewing courts presume that the defendant can accomplish his purpose: that is, that the public will be deceived." Sleekcraft, 599 F.2d at 354.
There is no evidence here that GMI intentionally selected its mark to capitalize on GMP's goodwill or to "palm off"
its goods as that of GMP. Stark v. Diageo Chateau & Est. Wines Co., 907 F. Supp. 2d 1042, 1063 (N.D. Cal. 2012). Nor has GMP demonstrated intent in the reverse confusion context. In a reverse confusion case, intent is shown when the junior user floods the market to create reverse confusion, or when the junior knew or should have known of the mark and disregarded the risk of reverse confusion. Ironhawk, 2 F.4th at 1167-68. As discussed above, GMP has not shown that GMI flooded the market or that it intentionally disregarded the risk of reverse confusion.
Considering both the forward and reverse confusion contexts, this factor weighs against confusion.
h. Factor 8: Likelihood of Product Expansion
Likelihood of product expansion is possible even when the goods and services are marketed to different submarkets so long as "the general class of... purchasers exposed to the products overlap." Sleekcraft, 599 F.2d at 353. Given their antithetical targets, it seems unlikely that the GMP and GMI would expand into each other's marketing channels. GMP offers educational services; GMI sells edible products. There is little risk that GMP will begin creating any lab-based meat product, and it is equally unlikely that GMI will begin providing educational services related to farmed and butchered meat. GMP offers no specific concrete evidence that either party intends to enter the other's field. This final factor weights against confusion.
All in all, GMP has not demonstrated a likelihood of confusion regarding its GOOD MEAT mark. While the similarity of the two marks weighs in GMP's favor, most of the other factors, including the relative weakness of the protected mark and the differences between GMP's services and GMI's goods, weigh against confusion. GMP has therefore not shown a likelihood of success on the merits based on this mark.
2. GOOD MEAT BREAKDOWN: Likelihood of Success on the Merits
GMP has also not shown a likelihood of success on the merits based on its GOOD MEAT BREAKDOWN mark. Unlike the GOOD MEAT mark, the GOOD MEAT BREAKDOWN does have a distinctive appearance. In black sans-serif font, it displays the words "good meat" in bold, lowercase letters. The word "good" is written above the word "meat," and a broken circle is drawn through the upper-right and lower-left corners of the image. The lower-left portion of the circle ends with an arrow pointing to the word "BREAKDOWN," which is written in thin capital letters. Each component of the mark has a hand-drawn appearance. It looks like this:
Image materials not available for display. (Dkt. No. 30-2.)
Still, much of the above GOOD MEAT analysis applies to this mark as well. There are two important differences, although neither leads to a different outcome.
First, the GOOD MEAT BREAKDOWN mark is conceptually stronger. There is a mental leap required between its artistic depiction and the services offered by GMP. And GMI has not submitted evidence rebutting the presumption of distinctiveness here. Accordingly, the GOOD MEAT BREAKDOWN mark is strong. For the GOOD MEAT BREAKDOWN mark, the strength of the mark weighs in favor of confusion.
However, there are far fewer similarities between GOOD MEAT BREAKDOWN and the GMI Mark. The two marks are pictured below:
Image materials not available for display.
(Dkt. Nos. 30-2 and 1-9 at 7.) Unlike the GOOD MEAT mark, these marks are not aurally or semantically identical. They are also far less visually similar. In GOOD MEAT BREAKDOWN, the words "good meat" are written in lowercase while "BREAKDOWN" is capitalized. In the GMI Mark, the word "GOOD" is capitalized while the word "Meat" is mixed case. GOOD MEAT BREAKDOWN is wider horizontally, while the GMI Mark has a longer vertical line. Finally, GOOD MEAT BREAKDOWN appears hand-drawn. The GMI Mark, by contrast, uses straight lines that appear digitally rendered. Accordingly, for the GOOD MEAT BREAKDOWN mark, the level of similarity between the marks weighs against confusion.
While the GOOD MEAT BREAKDOWN mark is strong, it is not highly similar to the GMI Mark. Taking the Sleekcraft factors together, GMP has not shown a likelihood of confusion as to the GOOD MEAT BREAKDOWN mark. GMP has thus failed to show that it is likely to succeed on the merits of its claims as to either mark.
Image materials not available for display.
3. Irreparable Harm
The second element in the injunctive relief analysis is whether the plaintiff is likely to suffer irreparable harm in the absence of such relief. See Winter, 555 U.S. at 20, 129 S.Ct. 365. The Lanham Act's presumption of irreparable harm under 15 U.S.C. § 1116(a) does not apply because GMP has not shown that it is likely to succeed on the merits. Moreover, regardless of any presumption, the evidence cuts against a finding of irreparable harm.
Irreparable harm requires a showing of harm that is "real, imminent, and significant, not just speculative or potential." Volkswagen AG v. Verdier Microbus & Camper, Inc., 2009 WL 928130, at *6 (N.D. Cal. Apr. 3, 2009). The length of time that GMP waited before seeking this relief undercuts any finding of imminent harm. GMP received the cease-and-desist letter from GMI in April 2022, but did not file this lawsuit for sixteen months, until August 15, 2023. GMP then waited two more months before bringing this preliminary injunction motion. Although GMI raised this issue in its opposition brief,
GMP submitted no evidence explaining its delay. At the hearing, GMP's counsel raised the possibility that an unspecified portion of the sixteen months was spent attempting to reach a settlement. GMI's counsel responded that his understanding was that GMP had been silent for at least nine months after the April 2022 letter and that any settlement discussions took place during the month or two before the Complaint was filed. GMP did not deny the accuracy of that account. In the end, GMP's unexplained sixteen-month delay in filing this motion (of which only a month or two could potentially be explained by settlement negotiations) indicates a lack of urgency and undercuts any finding of imminent harm. Vineyard House, LLC v. Constellation Brands U.S. Operations, Inc., No. 19-CV-01424-YGR, 2020 WL 95638, at *1 (N.D. Cal. Jan. 8, 2020).
Moreover, the evidence does not support a finding of likely consumer confusion, as discussed above. GMP speculates that the GMI Mark will cause "a high potential for consumers to be concerned about GMP's services, specifically whether GMP supports or sponsors or approves the goods and services provided by Defendants." (Dkt. No. 29 at 12.) But despite the significant passage of time over sixteen months, there is no evidence that any of GMP's customers have developed a mistaken belief that GMP supports GMI's products. At the hearing, GMP argued that, although no such harm has materialized yet, GMI is in the process of preparing to sell its products in grocery stores nationwide, and such harm could therefore materialize soon. GMI replied that it recently withdrew its application to sell its cultivated meat products in the domestic marketplace, a fact that GMP has not disputed. The evidence does not establish a likelihood of real, imminent, and significant harm.
GMP also argues that it will suffer irreparable harm from reverse confusion. In that context, irreparable harm may be found when the junior user "overwhelms" the senior user, causing the senior user to lose "the value of the trademark, its product identity, corporate identity, control over its goodwill and reputation, and ability to move into new markets." Equinox Hotel, 2018 WL 659105, at *10 (quoting Attrezzi, LLC v. Maytag Corp., 436 F.3d 32, 39 (1st Cir. 2006)). As discussed above, the evidence does not show that GMP's mark has been overwhelmed. In addition, despite the passage of sixteen months, GMP only offered a single example of actual confusion: a LinkedIn message from Italian students that confused the two brands. (Dkt. No. 32.) That belies a finding of likely irreparable harm.
Between the scant evidence of damage to GMP's goodwill, GMI's statement that it withdrew its application for sale in the domestic marketplace, and GMP's delay in pursuing injunctive relief, the evidence does not support a finding that irreparable harm is likely.
4. Balance of Equities and Public Interest
As to the balance of equities, GMP suggests that its customers may think that GMP is endorsing the cultivated meat products produced by GMI. In support of this argument, GMP points to a post on GMI's Instagram. The comments on GMI's Instagram post — which are mixed in their support for the product — do not show that consumers already disapprove of the product, and certainly do not show that consumers believe GMP is endorsing the product. (Dkt. No. 30-8.) There is nothing else in the record to bolster this argument.
On the other hand, GMI has invested millions in its branding and advertising, which itself may be considered in assessing
the balance of equities. (Dkt. No. 40-2 ¶ 8.) See Kiva Health Brands LLC v. Kiva Brands Inc., 402 F. Supp. 3d 877, 899 (N.D. Cal. 2019) ("The hardship to [the defendant] in granting an injunction and forcing it to undergo a massive rebranding of a name it has built up for about nine years would therefore be much greater than the hardship to [the plaintiff] in denying an injunction and thereby maintaining the status quo.").
Here, the potential "harm from an erroneously issued, widespread injunction far outweighs any harm should such relief be erroneously denied." Stark v. Diageo Chateau & Est. Wines Co., 907 F. Supp. 2d 1042, 1067 (N.D. Cal. 2012). The balance of equities tips against granting the injunction.
Lastly, the public interest does not favor granting an injunction. GMP's public interest argument rests on the likelihood of customer confusion. Having found that GMP has not clearly shown a likelihood of consumer confusion or irreparable harm, the Court does not find that there is any significant threat to the public interest in the absence of injunctive relief.
In conclusion, GMP has not shown that it is likely to succeed on the merits or that it will suffer irreparable harm in the absence of injunctive relief. It has also not demonstrated that the balance of hardships and public interest weigh in its favor. Accordingly, GMP's Motion for a Preliminary Injunction is DENIED.
B. Motion to Dismiss
1. Request for Consideration and Judicial Notice
Courts generally may not consider materials outside the pleadings when assessing a Rule 12(b)(6) motion. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). There are, however, two exceptions to this rule: the incorporation by reference doctrine, and judicial notice under Federal Rule of Evidence 201. Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018). Incorporation by reference "is a judicially created doctrine that treats certain documents as though they are part of the complaint itself." Id. at 1002. Judicial notice allows courts to consider documents that are "generally known within the trial court's territorial jurisdiction" or which "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Civ. P. 201(b).
The defendants seek incorporation by reference or judicial notice of four categories of documents. First, the defendants argue that certain security and trademark assignment agreements are incorporated by reference in the Complaint. The security agreements (Dkt. No. 28, Exs. A and B) and the trademark assignment (Id., Ex. C) are referenced in GMP's Complaint and form the basis of its claim for violation of the Lanham Act's antitrafficking rule. (Dkt. No. 1 ¶¶ 29-30, 127-31.) As these documents are integral to GMP's claim, and directly referenced within the Complaint, they are deemed incorporated by reference. Second, the defendants argue that the GMP website is incorporated by reference in the Complaint and that the Court should therefore consider a specific page on GMP's website. (Dkt. No. 28, Ex. D). GMP's Complaint does incorporate screenshots from its website, which it relies on in support of its trademark claims. (Dkt. No. 1 ¶ 16, Exs. C and D.) The purpose of the incorporation by reference doctrine is to "prevent[] plaintiffs from selecting only portions of documents that support their claims, while omitting portions of those very documents that weaken — or doom — their claims." Khoja, 899 F.3d at 1002. Including only
selected portions of the website could trigger the dangers that the doctrine seeks to prevent. Exhibits A-D of the Wang Declaration filed with GMI's Request for Judicial Notice (Dkt. No. 28) are therefore incorporated by reference in the Complaint.
Third, the defendants argue that the Court should take judicial notice of a screenshot of search results on the Trademark Electronic Search System for live, . registered marks containing the term "good" in the Meats and Processed Foods class. (Dkt. No. 28, Ex. E). The Court takes judicial notice of the search results for a limited purpose only: the results are noticeable for the fact that the search occurred and that the other trademarks exist. They do not, as the defendants advocate, establish a crowded field. See Children's Miracle Network v. Miracles for Kids, Inc., No. 818CV01227JLSKES, 2018 WL 8243998, at *2 (C.D. Cal. Dec. 6, 2018) ("[W]hile the USPTO search results may be subject to judicial notice, they are noticeable only for the limited purpose of demonstrating that the searches were performed on a certain date and other trademarks containing the word 'miracle' exist.") (citations and quotation marks omitted); see also Dfinity Foundation v. Meta Platforms, Inc., Case No. 22-cv-02632-CRB, 2022 WL 16857036, at *7 n.13 (N.D. Cal. Nov. 10, 2022) (taking judicial notice of USPTO registrations but disregarding the defendant's crowded field argument).
Finally, the defendants seek judicial notice of the definition of the word "meat" listed on merriam-webster.com. (Dkt. No. 28, Ex. F). This request is granted to show that the definition of "meat" on the Merriam-Webster website is as stated. See Threshold Enterprises Ltd. v. Pressed Juicery, Inc., 445 F. Supp. 3d 139, 146 (N.D. Cal. 2020) ("Dictionary definitions are also a proper subject for judicial notice."). The Court does not take judicial notice of the definition to, for example, show what the average consumer understands.
With the limitations described above, the defendants' Request for Consideration of Documents and for Judicial Notice is GRANTED.
2. Trademark Infringement Claims (Counts I, II, and IV)
GMP brings claims for trademark infringement under the Lanham Act, 15 U.S.C. sections 1114 and 1125(a), and under California common law. California common law trademark claims are evaluated by the same standards as federal trademark claims. Grupo Gigante SA De CV v. Dallo & Co., Inc., 391 F.3d 1088, 1100 (9th Cir. 2004). To establish a claim for trademark infringement, a plaintiff must allege that it has a valid, protectable trademark, and that the defendant's use of the mark is likely to cause confusion. See, e.g., Applied Info. Sciences Corp. v. eBay, Inc., 511 F.3d 966, 969 (9th Cir. 2007). "The core element of trademark infringement is the likelihood of confusion, i.e., whether the similarity of the marks is likely to confuse customers about the source of the products." Brookfield, 174 F.3d at 1053 (quoting Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1391 (9th Cir. 1993)).
As in the above preliminary injunction analysis, the critical inquiry is whether there is a likelihood of confusion. However, at the Rule 12(b)(6) stage, GMP need only plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. Moreover, "[a]nalysis of the Sleekcraft factors most typically occurs in the context of a summary judgment motion, or at trial" due to "the intensely factual nature of trademark disputes." Benchmark Capital Holdings Co., LLC v. Benchmark Co.,
LLC, No. C 11-4883 RS, 2012 WL 13041640, at *4 (N.D. Cal. Jan. 3, 2012) (quotation marks and citations omitted).
The Complaint sufficiently alleges a likelihood of confusion and, ultimately, a claim that the defendants infringed GMP's trademarks. GMP alleges that its trademarks are federally registered. (Dkt. No. 1 ¶¶ 14-15.) Federally registered marks are entitled to a "strong" presumption of validity. Zobmondo, 602 F.3d at 1115 ("[T]he presumption of validity is a strong one, and the burden on the defendant necessary to overcome that presumption at summary judgment is heavy.") (emphasis added). Although GMI submitted evidence that rebutted this presumption for purposes of the preliminary injunction motion, a motion to dismiss is decided on based solely on the allegations of the complaint, which must be construed in GMP's favor. GMP has sufficiently alleged that its marks are valid, and defendants have not shown that this presumption should be overcome as a matter of law based solely on the pleadings.
Nor have the defendants shown, as a matter of law, that they are not infringing. GMP alleges that the defendants have used GMI's "confusingly similar mark" to advertise and promote GMI's cultivated meat products, and that this has caused, and will likely continue to cause, consumer confusion. (Dkt. No. 1 ¶¶ 40-43, 57, 59, 107.) Accepting GMP's allegations as true, it has sufficiently stated claims for trademark infringement. The Motion to Dismiss Counts I, II, and IV is DENIED.
3. False Advertising Claim (Count III)
To state a false advertising claim under the Lanham Act, 15 U.S.C. section 1125(a), the plaintiff must allege that the defendant: (1) made a false statement of fact in a commercial advertisement; (2) "the statement actually deceived or has the tendency to deceive a substantial segment of its audience;" (3) the deception is material; (4) the defendant caused its false statement to enter interstate commerce; and (5) the false statement has caused the plaintiff to be injured, either through diversion of sales or loss of goodwill. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997). Falsity is demonstrated by showing that the statement was either literally false, or "literally true but likely to mislead or confuse consumers." Id.
GMP has adequately alleged that the defendants falsely advertise through their use of the GMI Mark and by saying that GMI's cultivated meat products are "real meat" made without "taking a life." (Dkt. No. 1 ¶¶ 86-87, 95.) GMP has plausibly alleged that consumers could understand "GOOD Meat" and "real meat" to mean meat from a once-living animal. Conversely, GMP has also alleged that consumers could believe that GMI's cultivated meat products are developed entirely from chemical or plant-based sources, not from the use of an embryonic, fertilized egg. GMP has also sufficiently alleged that these statements are likely to cause it a loss of goodwill and business, as its consumers may mistakenly believe that GMP endorses GMI's statements and approach to food production, and resultingly decide to stop using GMP's services. The Motion to Dismiss Count III is therefore DENIED.
4. Declaratory Judgment That GMI's Mark is Deceptively Misdescriptive (Count V)
GMP has stated a plausible claim that the GMI Mark is deceptively misdescriptive. The GMI Mark uses the phrase "GOOD Meat." For the reasons described in the false advertising section above — namely, that consumers may believe that a product labeled "GOOD Meat" contains
meat from a once-living animal — GMP has sufficiently alleged that the GMI Mark is deceptively misdescriptive and that the advertising and promotion of GMI's products will cause GMP to suffer commercial harm. The Motion to Dismiss Count V is DENIED.
5. Declaratory Judgment that GMI's Mark Violates the Lanham Act's Anti-Trafficking Rule (Count VI)
Generally, the Lanham Act prohibits the assignment of an intent-to-use application. 15 U.S.C. § 1060(a). Section 1060(a)(1), which governs the assignment of registered trademarks and intent-to-use applications, provides in relevant part that, "no application to register a mark under section 1051(b) of this title shall be assignable prior to the filing of an amendment under section 1051(c) ... except for an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing." 15 U.S.C. § 1060(a)(1). "Thus, an intent-to-use application is not freely assignable. An applicant may assign an intent-to-use application in only two circumstances: (1) after the applicant has filed an allegation of use; or (2) if the application is transferred to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing." Sebastian Brown Prods. LLC v. Muzooka Inc., No. 15-CV-01720-LHK, 2016 WL 949004, at *8 (N.D. Cal. Mar. 14, 2016) (quotation marks and citation omitted).
Here, GMP alleges that the defendants assigned their rights in the GMI Mark as collateral for funding agreements. (Dkt. No. 1 ¶¶ 127, 130.) It does not allege that the defendants outright assigned their intent-to-use application. (See Dkt. No. 28 at 7, 17 (granting "a security interest in all of the Grantor's right, title and interest in... any Trademarks").) A security interest in a mark, as collateral for a loan, does not fall within the plain language of section 1060(a). It also does not raise the policy concerns that underlie the Lanham Act's anti-trafficking provision. Cf. E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1289 (9th Cir. 1992) ("The purpose behind requiring that goodwill accompany the assigned mark is to maintain the continuity of the product or service symbolized by the mark and thereby avoid deceiving or confusing consumers.").
At the hearing, GMP argued that if GMI were to default on the loan, the security assignment could cause the intent-to-use application to be assigned to the lender. The Court does not reach whether the assignment would constitute a violation in that setting. GMP does not allege the defendants have defaulted or otherwise actually transferred the application to their lender.
The Court is doubtful that GMP could amend to cure this defect, but in the abundance of caution and because GMP has not previously had an opportunity to address this issue through amendment, the Motion to Dismiss Count VI is GRANTED WITH LEAVE TO AMEND.
6. State Law Claims (Counts VII, VIII, and IX)
GMP's state law claims are derivative of its surviving Lanham Act claims. Accordingly, the Motion to Dismiss Counts VII, VIII, and IX is DENIED.
C. Motion to Strike
The Complaint attaches and references a letter that GMI's counsel sent to GMP on April 18, 2022. (Dkt. No. 1-13.) At the hearing, the Court and the parties understood this to be a cease-and-desist letter. GMI argues that this cease-and-desist letter, and all references made to it,
should be stricken as an inadmissible settlement communication.
The record does not establish that the letter was sent as part of a settlement negotiation. The letter does not say that it is privileged or that it was sent for the purpose of settlement. Instead, it says that GMI "would like to invite a dialogue to find a mutual and amicable solution to the issue." (Id., at 3.) At most, the letter thus seems to be an "invitation[] to initiate settlement discussions" that had not yet begun. Albert v. Embassy of Music GMBH, No. 5:19-CV-06652-EJD, 2020 WL 4284830, at *7 (N.D. Cal. July 27, 2020) (denying a motion to strike). In fact, it appeal's that the discussions did not begin for least nine months. GMP did not respond to the letter until January 2023. (Dkt. No. 1-14.) During the hearing, GMI admitted that GMP was silent for nine months after it sent the letter. While neither party specified the exact timing, GMI's counsel represented that he understood that the settlement discussions occurred relatively shortly before the Complaint was filed, not shortly after GMI sent the cease-and-desist letter. This period of silence further suggests that the April letter was not made in the context of an "existing dispute." See Cassino v. Reichhold Chemicals, Inc., 817 F.2d 1338, 1343 (9th Cir. 1987) (explaining that "the protections of Rule 408 were designed to encourage the compromise and settlement of existing disputes."). The letter is thus more akin to standard pre-dispute business negotiations than a settlement communication. See, e.g., Telecom Asset Mgmt., LLC v. FiberLight, LLC, 730 F. App'x 443, 445 (9th Cir. 2018).
Even if the letter were construed as a settlement communication, the Court may admit settlement communications for "another purpose, such as proving a witness's bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution." Fed. R. Evid. 408(b). "Rule 408 is designed to ensure that parties may make offers during settlement negotiations without fear that those same offers will be used to establish liability should settlement efforts fail. When statements made during settlement are introduced for a purpose unrelated to liability, the policy underlying the Rule is not injured." Rhoades v. Avon Prod., Inc., 504 F.3d 1151, 1160 (9th Cir. 2007). Regardless of whether the letter is a settlement communication, it could potentially be admitted for the limited purpose of proving willfulness. Willfulness is pled in Counts I, II, and III, and all three Counts incorporate by reference the factual allegations detailing the statements made in the letter. (Dkt. No. 1 ¶¶ 44-46, 64, 78, 102.) Striking the letter from the allegations of the Complaint would prevent its use for that permissible purpose. Accordingly, the Motion to Strike is DENIED.
IV. CONCLUSION
Based on the foregoing, GMP's Motion for a Preliminary Injunction is DENIED. The defendants' Motion to Dismiss is DENIED as to Counts I, II, III, IV, V, VII, VIII, and IX; and is GRANTED WITH LEAVE TO AMEND as to Count VI. The defendants' Motion to Strike is DENIED. If GMP wishes to file an amended complaint, it must do so by March 11, 2024.
IT IS SO ORDERED.