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FLP LLC v. Wolf

United States District Court, D. Arizona

January 22, 2019

FLP LLC, Plaintiff,
v.
Kimberly Wolf, Defendant.

          ORDER

          DAVID G. CAMPBELL SENIOR UNITED STATES DISTRICT JUDGE

         FLP, LLC sued Defendant Kimberly Wolf for trademark infringement and tortious interference. Doc. 1, No. CV-17-00214. Ms. Wolf's company, Liv-IT!, LLC, filed a separate suit against FLP seeking cancellation of FLP's trademark and declaratory judgment of no trademark infringement. Doc. 1, No. CV-17-00773. The cases have been consolidated. Ms. Wolf and Liv-IT!, LLC will be referred to in this order as the “Wolf Parties.”[1]

         The parties have moved for summary judgment. Docs. 82; 92. The Wolf parties also have filed a motion to strike and for sanctions. Doc. 109. The motions are fully briefed, and no party requests oral argument. For the reasons stated below, the Court will deny the motions and set this case for trial.

         I. Background.

         The parties dispute most of the facts. For that reason, the Court discusses each side separately. This background section includes key facts from the parties' factual summaries, even when unsupported. The Court notes that FLP, in violation of Local Rule of Civil Procedure 56.1, failed to file a controverting statement of facts. Doc. 102 at 7. But the Wolf Parties also violate Local Rule 56.1 by providing only general citations to large exhibits, rather than citing to “a specific admissible portion of the record” that supports each factual assertion.[2] LRCiv 56.1(a), (b); see, e.g., Doc. 83 ¶¶ 15, 17, 21, 22. Because both sides have failed to comply with the local rules, the Court will not simply credit the Wolf Parties' statements as true.

         A. FLP's Facts.

         FLP sells household products to retail stores that resell directly to consumers. It sells its products under many names and trademarks. Doc. 99-1 ¶¶ 3, 5. FLP asserts that its CEO conceived of and developed the “LIVIT” trademark in 2001 by shortening and combining the phrases “live it up” and “live life to the fullest.” Id. ¶ 9. FLP decided to move forward with the mark in January 2015 and assigned it to several items, which FLP ordered from a Chinese supplier on September 14, 2015 (“the NAIE purchase order”). Docs. 93 ¶ 3; 99-1 at 33. FLP contends that it ordered more than 36, 000 products with the LIVIT mark and circulated sell sheets and product exemplars to customers, all of which displayed the mark. See Docs. 93 ¶ 3; 99-1 ¶ 12; 99-1 at 33-43. The NAIE purchase order products arrived in country in December 2015 and were subsequently sold to retail customers. Doc. 93 ¶ 6.

         On September 29, 2015, FLP filed an intent-to-use-in-commerce trademark application with the United States Patent and Trademark Office (“USPTO”) for the mark “LIVE IT.” See Docs. 93 ¶ 4; 99-1 at 14-20. On November 10, 2015, FLP filed its actual-use-in-commerce application for the mark “LIVIT.” Docs. 93 ¶ 4; 99-1 at 22-31. The application states that FLP used the mark in commerce “at least as early as 10/01/2015.” Doc. 99-1 at 26. It attached pictures of a scrubber brush and an air freshener with the LIVIT mark. Id. at 29.[3]

         According to FLP, tens of thousands of products bearing the LIVIT mark have been sold in retail stores. FLP supports this assertion by providing copies of invoices to Amazon, Piggly Wiggly, Food City Distribution Centers, and other large purchasers, showing sales of the item numbers that, according to FLP, bore the LIVIT mark. Doc. 99-1 ¶ 7; Doc. 96-1 at 2-11. FLP's records indicate that it sold 38, 860 LIVIT items between December 2015 and March 2017. Doc. 93 ¶ 8.

         In February 2016, a third party informed FLP that the Wolf Parties were using a Liv-IT! mark to sell household products to retailers. Doc. 93 ¶ 11. FLP suspended production of the LIVIT products and related marketing activities because of a potential challenge to its mark.[4] Id.; Doc. 99-1 ¶ 5. FLP contacted the Wolf Parties regarding possible trademark infringement. Doc. 93 ¶ 12. The Wolf Parties answered that Liv-IT!, LLC started using the Liv-IT! mark before FLP used the LIVIT mark.

         On March 23, 2016, the USPTO approved the first application for FLP's LIVE IT mark. Doc. 93 ¶ 15. The USPTO suspended, and ultimately denied, the Wolf Parties' application for the LIV-IT! mark, finding FLP's pending application barred the Wolf Parties' registration. Docs. 93 ¶¶ 14-16; 99-1 at 58-65. On October 4, 2016, the USPTO granted FLP's second application for the LIVIT mark. Docs. 93 ¶ 20; 95-1 at 7.

         According to FLP, the Wolf Parties continued to use the Liv-IT! mark on products after the USPTO denial. See Doc. 93 ¶ 29. Further, Liv-IT!, LLC used the trademark registration symbol “®” next to Liv-IT! on its website. Id. ¶ 21.

         B. The Wolf Parties' Facts.

         Liv-IT!, LLC was organized under Illinois law on August 26, 2015. Doc. 83 ¶ 8. The company markets and sells various household and other products. Id. Before September 29, 2015, Liv-IT!, LLC used its mark to issue purchase orders, pay for manufacturing, register for trade shows, lease office space, obtain insurance, and obtain UPC codes for products. Id. ¶ 9; Doc. 115.

         The Wolf Parties contend that on or around September 15, 2015, Liv-IT!, LLC hired an independent graphic designer who developed product packaging, disposable food storage containers, lint rollers, cleaning products, and air care products each bearing the Liv-IT! mark. Doc. 83 ¶ 17. The graphic designer delivered this work to Liv-IT!, LLC on or around September 28, 2015. Id. The Wolf Parties then submitted purchase orders for products that would bear the Liv-IT! mark. Id. ¶18; Doc. 115-1 at 36 (purchase order stating items should have Liv-IT! logo). These products were offered to Liv-IT!, LLC customers on or around September 21, 2015. Doc. 83 ¶ 20. Liv-IT!, LLC's second sale of the products was on October 29, 2015. Id. The items were delivered by a Chinese manufacturer in early November 2015. Id. ¶ 19.

         The Wolf Parties contend that FLP learned of Liv-IT!, LLC and its uses of the Liv-IT! mark on September 15, 2015. Id. ¶ 22. Thus, FLP's September 29, 2015 application for phonetically similar marks was done to prevent Liv-IT!, LLC from registering its mark. Docs. 83 ¶¶ 4, 22; 83-4 at 4. Use of the FLP's marks forced Liv-IT!, LLC to rebrand their products to “Keep-IT!.” See Doc. 83 ¶ 32.

         C. The Parties' Motions.

         The Wolf Parties move for summary judgment on all of FLP's claims. Doc. 82. They argue that they have prior use of the trademark, that FLP never used its marks in commerce, and that FLP has failed to show a tortious interference with business expectancy. Doc. 82 at 15-19. FLP cross-moves on its claims for trademark infringement and false advertising. Doc. 92. FLP argues that it has a presumption of ownership of the marks, that the Wolf Parties' use of their mark causes confusion among vendors and consumers, and that the Wolf Parties falsely represented that their mark was trademarked in violation of the Lanham Act. Doc. 92 at 9-14.

         II. LEGAL STANDARD.

         A party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment is also appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome of the suit will preclude summary judgment, and the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         III. DISCUSSION.

         A. Infringement of FLP's Trademark.

         To prevail on a trademark infringement claim, FLP must prove “(1) that it has a protectible ownership interest in the mark; and (2) that [the Wolf Parties'] use of the mark is likely to cause consumer confusion, thereby infringing upon [FLP's] rights to the mark.” Dep't of Parks & Recreation for State of Cal. v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1124 (9th Cir. 2006).

         1. Ownership of the Mark.

         a. Legal Standard.

         Federal registration is “prima facie evidence of . . . ownership[.]” Dep't of Parks, 448 F.3d at 1124. But mere “adoption of a mark without bona fide use, in an attempt to reserve it for the future, does not create trademark rights.” See Chance v. Pac-Tel Teletrac, Inc., 242 F.3d 1151, 1157 (9th Cir. 2001). A “litigant attempting to establish priority of commercial use must demonstrate both adoption of the marks and ‘use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.” Dep't of Parks, 448 F.3d at 1124 (citing Brookfield Commnc'ns, Inc. v. West Cost Entm't Corp., 174 F.3d 1036, 1052 (9th Cir. 1999) (alteration omitted)).

         Under the Lanham Act, a mark shall be deemed to be used in commerce:

(1) on goods when -
(A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods make such placement impracticable, then on the documents associated with the goods or their sale.

15 U.S.C. §1127. The test is a totality of circumstances, allowing consideration of non-sales activities so long as they show the mark has been publicly rendered in commerce. See Brookfield, 174 F.3d at 1052.

         b. The Wolf Parties' ...


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