Seattle Trademark Lawyer

In Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, plaintiff cheese maker sued defendant cheese maker in the Northern District of California. At issue was Sonoma Cheese Factory’s use of Sonoma Foods’ registered trademarks, SONOMA CHEESE FACTORY and DESIGN and SONOMA JACK (the “Bull Trademarks”), allegedly constituting infringement and a false description or passing off.

According to Sonoma Cheese Factory, before December 31, 2001, Sonoma Foods owned and operated the Sonoma Cheese Factory retail store. On that date, the corporation was restructured; Sonoma Cheese Factory, LLC, was formed; and Sonoma Foods transferred the retail store to the new entity. When Sonoma Cheese Factory acquired the store, it continued to use the same signs and packaging that Sonoma Foods had used. It is that use about which Sonoma Foods complains.

    
Two Photos Sonoma Cheese Factory submitted in support of its
motion for partial summary judgment based on laches.

Sonoma Cheese Factory responded by moving for partial summary judgment on the ground of laches. It argued:

“Sonoma Cheese Factory used the Bull Trademarks on two signs in its retail store. These signs hung above the store’s front door and above its main cheese counter, just inside the front door. Both signs were displayed continuously from December 31, 2001 until after this suit was filed. During the same period, Sonoma Cheese Factory sold cheeses and other products packaged in paper bags imprinted with U.S. Trademark No. 1,099,709. Sonoma Cheese Factory also used U.S. Trademark No. 1,111,024 on mailing envelopes at least as early as February 2002.

“These signs, bags, and envelopes were used in commerce, in connection with the sales of cheese products — including products that compete with Plaintiff’s cheeses. Sonoma Foods’ officers knew the defendants were using the Bull Trademarks but took no action for over five years. The statute of limitations therefore provides a complete defense to Sonoma Foods’ second and sixth claims.”

Judge Jeffrey White denied the motion. (Order not available online.) The court found:

“Regardless of whether a statute of limitations defense is applicable to Plaintiff’s trademark infringement claim, the alleged violations are ongoing, and thus, ‘the statute of limitations is conceivably only a bar to monetary relief for the period outside of the statute of limitations.’ Defendants’ alleged infringement activity is ongoing. Therefore, even assuming a statute of limitations defense may bar some portion of Plaintiff’s trademark infringement claim, Plaintiff would still be entitled to pursue damages based on the infringement activity that occurred within the statute of limitations period.”

This strikes me as wrong. Laches exists to cut off a plaintiff’s claim when the plaintiff has unreasonably delayed in bringing suit and caused the defendant prejudice as a result. Here, Sonoma Cheese Factory alleged that Sonoma Foods knew of its alleged infringement since December 31, 2001, and delayed bringing suit more than five years — long after the analogous statute of limitations had run. For the court to find this delay merely cuts off damages Sonoma Foods can recover undermines the equitable principles on which laches is based. By this reasoning, Sonoma Foods could wait 30 years to sue and still be entitled to recover damages from Sonoma Cheese Factory’s “continuing violation.” To my mind, laches stands for the proposition that when it comes to sitting on one’s rights, at some point enough is enough. Laches bars a claim; it does not merely limit the damages a plaintiff can recover.

The case cite is Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, No. 07-554, 2008 WL 913279 (N.D. Calif. April 3, 2008) (White, J.).

The parties in Carey Licensing, Inc. v. Sandler have had a little trouble trying to book a Western District magistrate judge for a settlement conference in their trademark infringement and cybersquatting case. But as the Western District reminded them this week, magistrate judges don’t participate in settlement conferences — only parties do. The court’s minute order serves as a good reminder as to the difference between settlement conferences, mediations, and judicial settlement conferences. And, of course, to follow the local rules:

“The court has been notified that counsel for both parties in this action have attempted to contact one or more magistrate judges to schedule a settlement conference. In doing so, the parties have ignored the court’s previously issued scheduling orders, and have ignored the court’s local rules.

“The court’s most recent scheduling order requires the parties to complete a ‘Settlement Conference per CR 39.1(c)(2)’ no later than April 4, 2008 and to conduct a ‘Mediation per 39.1(c)(3)’ no later than July 1, 2008. As the applicable sections of the court’s local rules state, a settlement conference is a conference solely between the parties, and is a prerequisite to engaging in the mediation that the court requires. Local Rules W.D. Wash. CR 39.1(c)(2). A ‘judicial settlement conference,’ by contrast ordinarily takes place only after a Rule 39.1 mediation.

“In this case, so far as the record reveals, the parties have neither engaged in the settlement conference required under Rule 39.1(c)(2) nor the mediation required by Rule 39.1(c)(1). Until they have satisfied those requirements, the parties shall not seek a judicial settlement conference. Once they have completed these steps, the parties may contact this court’s Deputy Clerk … to discuss the possibility of appointing a settlement judge.”

The case cite is Carey Licensing, Inc. v. Sandler, No. 05-1337 (W.D. Wash. Mar. 17, 2008) (Jones, J.).

In Amiga, Inc. v. Hyperion VOF, plaintiff sued defendant in the Western District for breach of contract, trademark infringement, trademark dilution, false designation of origin, and unfair competition relating to the development of a software operating system. Hyperion counterclaimed against Itec, Inc., alleging that Amiga, Inc. (Washington), one of the other parties to a software development agreement, had assigned its rights to Itec, which breached its obligation under the agreement to deliver certain intellectual property to Hyperion. (Itec allegedly later transferred its rights to another company that changed its name to Amiga, Inc. (Delaware), the plaintiff in this case).

New York-based Itec moved to dismiss the counterclaims based on lack of personal jurisdiction. Judge Ricardo Martinez agreed. As the court summarized:

“Hyperion’s counterclaims against Itec arise from the April 24, 2003 agreement between these two parties. That agreement states, in relevant part, ‘Hyperion confirms that for the receipt of 25000.00 USD, Hyperion shall transfer the ownership of the Object Code, Source Code and intellectual property for OS 4.0 to Itec in accordance with the provisions of the [November 3, 2001] agreement between Amiga, Hyperion and Eyetech and to the extent it can do so under existing agreements with their party developers whose work shall be integrated in OS 4.0.’ Hyperion asserts that this agreement constitutes an assignment to Itec of the rights and obligations of the 2001 Agreement, including the jurisdiction and venue provisions, which laid venue in Washington State. Itec argues that this is a simple contract of sale of the rights to OS 4.0; that it has never claimed to be an assignee of the 2001 Agreement between Amiga Inc., (the Washington corporation) and Hyperion, and that as a non-party to that Agreement it is not bound by its jurisdiction and venue provisions.

“The Court cannot resolve this ‘assignment’ versus ‘sale’ dispute on the basis of the record now before it. The issue has taken on proportions far beyond the scope of this motion…. However, it is not necessary for the Court to resolve that dispute, as regardless whether the April 24, 2003 agreement was an assignment of rights in OS 4.0 or a sale, there is no language in that agreement by which Itec consented to the jurisdictional and venue provisions of the November 3, 2001 Agreement between Amiga, Inc., and Hyperion.

“The Court finds in this 2003 agreement between two non-residents of this forum, neither purposeful direction of activities toward Washington State, nor consummation of a transaction within this forum or resident thereof. Nor has Itec performed some act by which it purposefully avails itself of the privilege of conducting activities in this forum, thereby invoking the benefits and protections of its laws. The first test for specific jurisdiction is therefore not met.”

The case cite is Amiga, Inc. v. Hyperion VOF, 2008 WL 163623, No. 07-631 (W.D. Wash. Jan. 17, 2008).

In 2005, Keystone Laminates, Inc., obtained a default judgment against KlipTech Composites, Inc., owned by defendants Joel and Leeann Klippert, in the total amount of approximately $120,000. Keystone alleges that during supplemental proceedings, it learned that KlipTech had sufficient assets in 2004 to satisfy its debt to Keystone, but that KlipTech instead transferred those assets to Paneltech International, LLC, one of KlipTech’s former clients.

In 2007, Keystone filed suit in the Western District against Mr. and Mrs. Klippert and Paneltech for fraudulent transfer, corporate successor liability as to Paneltech, and to pierce KlipTech’s and Paneltech’s corporate veils as necessary to prevent abuse of the corporate form to frustrate Keystone’s ability to collect on its judgment. In September, it moved for an order transferring title of the trademarks from KlipTech to Keystone to satisfy its judgment.

In support of its motion, Keystone alleged that Joel Klippert wrote Paneltech’s owner a letter structuring the deal as follows: “Paneltech is buying the equipment assets from KlipTech. KlipTech will own the brand names, KlipTech, Ramp X, PaperStone & AquaComp and at the point that KlipTech Composites, Inc. is closed/folded those brand names will be the property of Joel Klippert.” Keystone alleged that KlipTech as a business never closed, so the transfer of the trademarks to Mr. Klippert never took place.

Mr. Klippert disputed those facts, however, and Judge Franklin Burgess found Keystone’s theory lacked clear evidentiary support. The court concluded “where ownership of the aforementioned brand names is not clearly shown, and where the status of the Judgment Debtor is also unclear, Keystone’s motion most be denied.”

The case cite is Keystone Laminates, Inc. v. Klippert, No. 07-5164, 2007 WL 2915153 (W.D. Wash.).

On Sept. 7, the Ninth Circuit published a decision affirming in part and vacating in part an arbitrator’s award based on a trademark license agreement. The decision underscores how deferential courts are when reviewing arbitration awards, but that such deference is not unlimited.

In Comedy Club, Inc. v. Improv West Associates, plaintiffs Comedy Club and Al Copeland Investments, Inc., entered into a Trademark License Agreement that granted Comedy Club an exclusive nationwide license to use Improv West’s trademarks. Thereafter, Comedy Club breached the agreement and sought to protect its interests in the trademarks by filing a declaratory judgment action in the Central District of California. The court ordered the parties to arbitrate pursuant to the agreement’s arbitration clause. 

The arbitrator found that Comedy Club was liable for breaching the agreement and entered an injunction enjoining Comedy Club and its affiliates from opening any other comedy clubs and from changing the name of any of their clubs until the Trademark Agreement ended. Incorporating the agreement’s definition of “affiliates,” the arbitrator extended the injunction to include “family members, family members of shareholders, all collateral relatives, former spouses, and all collateral relatives of former spouses.” The court confirmed the award. Comedy Club then appealed.

The Ninth Circuit found the arbitrator acted beyond the scope of his authority when he included family members, ex-spouses, and other persons who did not sign the Trademark Agreement since Federal Rule of Civil Procedure 65(d) limits injunctions to parties, “their officers, agents, servants, employees, and attorneys,” and those persons “in active concert or participation” with them.

As for the substance of the award, the Ninth Circuit found that its review is “both limited and highly deferential” and that it was empowered to vacate the arbitration award only if the award was “completely irrational” or constituted “manifest disregard of the law.” The Ninth Circuit upheld the “basic outline” of the arbitrator’s decision because it could not say the award was “completely irrational.”

That said, the Ninth Circuit found the arbitrator’s ruling enforcing the agreement’s covenant not to compete violated California’s statutory ban on such covenants. Therefore, it vacated the Central District’s order confirming the award to the extent it prevented Comedy Club from opening or operating non-Improv clubs.

The case cite is Comedy Club, Inc. v. Improv West Assoc., Nos. 05-55739, 05-56100,  __ F.3d __, 2007 WL 2556702 (9th Cir.).