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Kangaroo Manufacturing Inc. v. Amazon.Com Inc.

United States District Court, D. Arizona

March 20, 2019

Kangaroo Manufacturing Incorporated, Plaintiff,
v.
Amazon.com Incorporated, Defendant.

          ORDER

          Honorable Steven P. Logan United States District Judge

         Plaintiff Kangaroo Manufacturing Incorporated (the “Plaintiff”) filed suit against Amazon.com Incorporated (the “Defendant”) alleging trademark infringement, among other claims. (Doc. 1) The Defendant moved for summary judgement on each of the Plaintiff's claims (the “Motion”). (Doc. 72) The Motion was fully briefed on August 28, 2018. (Docs. 78, 82) The Court's ruling is as follows.

         I. Background

         This action arises out of the alleged unauthorized sale of emoji beach balls. The Plaintiff is a corporation formed for the purpose of manufacturing products for resale on Amazon.com. (Doc. 1 at 2; Doc. 73 at 2) The Plaintiff now distributes several products, such as emoji beach balls and flamingo pool floats, through multiple third-party sellers on Amazon.com. (Doc. 73 at 2; Doc. 1 at 6) The Defendant operates the Amazon.com website and allows third parties to register as sellers on the website. (Doc. 73 at 1)

         Third-party sellers create their own listing for a product that they plan to sell, including uploading their own images of the product, and set their own prices for the product. (Doc. 73 at 1) Each product is identified with a universal product code (“UPC code”) and an Amazon Standard Identification Number, and each product also receives its own product detail page (“PDP”). (Doc. 1 at 2, 3) Multiple sellers can list the same product for sale on the same PDP. (Doc. 73 at 1-2). However, only one seller may be awarded the “Buy Box” on a PDP, which makes the seller's item the default for a customer's purchase. (Doc. 73 at 8) When a seller signs up to sell products on the Defendant's website, it agrees to the terms of the Amazon Services Business Solutions Agreement (the “BSA”) and the policies incorporated by the BSA. (Doc. 73 at 2; Doc. 80 at 5)

         At some point, the Plaintiff became aware that its products were being sold on the Defendant's website by sellers that were not authorized by the Plaintiff to do so. (Doc. 1 at 5) The Plaintiff also accuses the Defendant of selling counterfeit products itself. (Doc. 80 at 7) The Plaintiff alleges that these sales violate the Plaintiff's trademark and copyright interests. (Doc. 1 at 5) The Defendant's website has a process by which a seller can report infringement of intellectual property rights, and both parties assert that the Plaintiff submitted infringement reports. (Doc. 73 at 6, 7; Doc. 80 at 5, 6)

         The Plaintiff initiated this lawsuit (the “Complaint”) alleging claims for trademark and copyright infringement, among other claims. (Doc. 1) The Complaint alleges that the Defendant (i) failed to address the Plaintiff's claims of trademark and copyright infringement; (ii) continued to allow unauthorized sellers to sell the Plaintiff's products after the Plaintiff's infringement reports were made; (iii) re-sold some of the counterfeit product that it re-purchased from the Plaintiff as reimbursement for unauthorized sales; (iv) improperly managed the UPC codes assigned to the Plaintiff's products; and (v) profited from the fees it received from sales made by unauthorized sellers. (Doc. 1 at 10, 6, 8, 11, 14; Doc. 80 at 4) The Defendant moved for partial summary judgment on the Plaintiff's claims. (Doc. 72)

         II. Legal Standard

         A court shall grant summary judgment if the pleadings and supporting documents, viewed in the light most favorable to the non-moving party “show 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); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Material facts are those facts “that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine dispute of material fact arises if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The party moving for summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record, together with affidavits, which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. If the movant is able to do such, the burden then shifts to the non-movant who, “must do more than simply show that there is some metaphysical doubt as to the material facts, ” and instead must “come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).

         III. Analysis

         First, the Court notes that the relief requested in the Motion is borderline unintelligible. At times, the Defendant states that it seeks summary judgment on all claims, and, at other times, the Defendant seeks dismissal of some claims. (Doc. 72 at 6, 7, 20) In other parts of the Motion, the Defendant states that it is willing to move forward with three claims, Counts I, II and IV, but then later seeks dismissal of these claims, all while identifying the Motion as one for “partial summary judgment.” (Doc. 72 at 1, 6, 12, 14, 19, 22) At this point, the Court will address the merits of each claim under the summary judgment standard. And where the Defendant has conceded that elements of certain claims should be preserved for trial, the Court will do so. Accordingly, each claim will be addressed in turn.

         A. Count I - Trademark Infringement and False Designation of Origin.

         The Defendant states that it is not seeking summary judgment on the Plaintiff's Lanham Act claims to the extend that those claims allege that the Defendant “itself sold certain of the accused products.” (Doc. 72 at 6) The Court finds that the allegations set forth by the Plaintiff in Count I each focus on the Defendant's actions in advertising, selling and trading on the Plaintiff's registered trademark. (Doc. 1 at 5-6, stating that “Unauthorized sales on Amazon have included . . . products sold by Amazon itself.”) Accordingly, the Court will preserve the Plaintiff's trademark infringement claims pursuant to 15 U.S.C. § 1114 and 15 U.S.C. § 1125 for trial, and the Motion will be denied as to Count 1.

         B. Count II - Use of Counterfeit Trademarks.

         In the same vein, the Court will not address Count II under the summary judgment standard. (Doc. 72 at 6, stating that the Defendant is not seeking summary judgment on the Plaintiff's Lanham Act claims to the extent that those claims arise out of the Defendant's alleged sale of infringing products.) The Court finds that the allegations set forth by the Plaintiff in Count II focus on the Defendant's actions in selling products using counterfeit trademarks. (Doc. 1 at 5, 8) Accordingly, the Court will preserve the Plaintiff's use of counterfeit trademarks claims pursuant to 15 U.S.C. § 1117 and 15 U.S.C. § 1116(d) for trial, and the Motion will be denied as to Count 2.

         C. Count III - ...


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