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Century International Arms Inc. v. XTech Tactical LLC

United States District Court, D. Arizona

May 28, 2019

Century International Arms Incorporated, Plaintiff,
v.
XTech Tactical LLC, et al., Defendants.

          ORDER

          G. MURRAY SNOW, CHIEF UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendants' Motion to Dismiss (Doc. 28). For the following reasons, the motion is denied.[1]

         BACKGROUND

         Plaintiff Century International Arms, Inc. (“Century”) is a firearms manufacturer that recently purchased another arms manufacturer, U.S. Palm, LLC (“Palm”). Before it was purchased by Century, U.S. Palm sold two products at issue here: a 30-round ammunition storage and feeding device (“the Magazine”), and a grip configured to mount on AK-47 rifles (“the Grip.”). To produce these items, U.S. Palm contracted with Molded Devices, Inc. (“Molded Devices”) to manufacture the Magazine and Grip according to U.S. Palm's design.

         Defendant XTech Tactical, LLC (“XTech”) is another arms manufacturer and sales company. Defendant Jeremy Deadman is the principal owner and Director of Sales and Marketing at XTech, as well as the Director of Business Development at Modeled Devices. (Doc. 24 at 5-6).

         According to Century's complaint, XTech-without U.S. Palm's consent-offered nearly identical products to the Magazine and Grip for sale at a wholesale show labeled as XTech Products. In a spreadsheet, these two products are described as “MAG47 - (Revised former U.S. Palm AK30)” and “Grip 37 - (Former U.S. Palm AKBG).” (Doc. 25, Ex. A). After discovering this, Century filed this lawsuit alleging violations of the Lanham Act and Arizona Unfair Competition Laws.

         Defendants now move to dismiss the complaint for failure to state a claim.

         I. Legal Standard

         To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action"; it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While “a complaint need not contain detailed factual allegations . . . it must plead enough facts to state a claim to relief that is plausible on its face." Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). The plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (internal citations omitted) (quoting Twombly, 550 U.S. at 557).

         When analyzing a complaint for failure to state a claim under Rule 12(b)(6), "[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). “Specific facts are not necessary; the statement need only give the defendant[s] fair notice of what the claim is and the grounds upon which it rests.” Johnson v. Riverside Healthcare Sys. LP, 534 F.3d 1116, 1122 (9th Cir. 2008).

         II. Analysis

         A. Trade Dress Claim

         “Trade dress refers generally to the total image, design, and appearance of a product and may include features such as size, shape, color, color combinations, texture or graphics.” Clicks Billiards Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1257 (9th Cir. 2001) (internal citation and quotation marks omitted). To properly plead a trade dress claim, Plaintiffs must allege facts showing (1) a likelihood of confusion, (2) secondary meaning, and (3) non-functionality. Id. at 1258. “If a plaintiff has used a mark to identify its goods and if the plaintiff satisfies the three elements discussed above, then the plaintiff has stated a prima facie claim for infringement under § 43(a) of the Lanham Act.” Kendall-Jackson Winery, Ltd. v. E & J Gallo Winery, 150 F.3d 1042, 1048 (9th Cir. 1998).

         1. ...


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