Zobmondo Entertainment, LLC v. Falls Media, LLC

• Decision Date: 26 April 2010
• Docket Number: No. 08-56831.,08-56831.
• Parties: ZOBMONDO ENTERTAINMENT, LLC, a California limited liability company, Plaintiff-counter-defendant-Appellee, v. FALLS MEDIA, LLC, a New York limited liability company; Justin Heimberg, an individual; David Gomberg, an individual, Defendants-counter-claimants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

602 F.3d 1108

ZOBMONDO ENTERTAINMENT, LLC, a California limited liability company, Plaintiff-counter-defendant-Appellee, v. FALLS MEDIA, LLC, a New York limited liability company; Justin Heimberg, an individual; David Gomberg, an individual, Defendants-counter-claimants-Appellants.

No. 08-56831.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 3, 2010.

Filed April 26, 2010.

COPYRIGHT MATERIAL OMITTED

Bobby A. Ghajar (argued), Kelly W. Craven, Howrey LLP, Los Angeles, CA; Jerrold J. Ganzfried, Howrey LLP, Washington, D.C., for defendants-counter-claimants-appellants Falls Media, LLC, Justin Heimberg, and David Gomberg.

Lawrence Y. Iser, Gregory P. Korn (argued), Gregory S. Gabriel, Kinsella Weitzman Iser Kump & Aldisert LLP, Santa Monica, CA, for plaintiff-counter-defendant-appellee Zobmondo Entertainment, LLC.

Before: Ronald M. Gould, Sandra S. Ikuta and N. Randy Smith, Circuit Judges.

GOULD, Circuit Judge:

Appellants Falls Media, LLC, Justin Heimberg, and David Gomberg (collectively "Falls Media") appeal the district court's summary judgment for Appellee Zobmondo Entertainment, LLC ("Zobmondo") rejecting Falls Media's action for trademark infringement, unfair competition, and related claims arising from Zobmondo's use of Falls Media's federally registered trademark, "WOULD YOU RATHER ... ?". The district court held that "WOULD YOU RATHER ... ?" is not entitled to federal trademark protection because the mark is "merely descriptive" and lacks secondary meaning, and the district court ordered the mark cancelled from the federal trademark registry. We have jurisdiction under 28 U.S.C. § 1291. We conclude that there is a genuine issue of material fact whether "WOULD YOU RATHER ... ?" is merely descriptive. Hence we reverse the summary judgment and remand for further proceedings consistent with this opinion.

I

This appeal involves a persistent dispute between two competitors, Falls Media¹ and Zobmondo, over the right to sell products using the "WOULD YOU RATHER... ?" mark. Both competitors use similar marks to identify board games and books that incorporate questions posing humorous, bizarre, or undesirable choices.² As of 2008, both competitors had established successful businesses earning millions of dollars in revenues from sales of "WOULD YOU RATHER ... ?" products.

On July 31, 1997, Falls Media filed an intent-to-use ("ITU") application with the United States Patent and Trademark Office ("PTO") stating its intent to use the mark in two product categories: books and games.³ Falls Media published its first book using the mark, Would You Rather... ? Over 200 Absolutely Absurd Dilemmas to Ponder, in October of 1997. It published a sequel to the book, Would You Rather 2, Electric Boogaloo, in 1999. These books were carried by retailers including Borders, Barnes & Noble, and Urban Outfitters. To promote the books, Falls Media also established a website, www.wouldyourather.com, which as of 2008 was receiving about 30,000 unique visitors per month. Although the books were not the subject of a paid advertising campaign at the time of their publication, they received unpaid print, radio, and television publicity, including mention in magazines such as Rolling Stone and comment on television shows such as Oprah and The Tonight Show with Jay Leno. Heimberg and Gomberg also made personal appearances to promote their books. As of 2002 — when Zobmondo began using "WOULD YOU RATHER ... ?" as a mark on its board games⁴ — Falls Media had sold about 91,000 total copies of its two "WOULD YOU RATHER ... ?" books.

In September of 1997 — shortly after Falls Media filed its ITU application — Zobmondo's founder, Randall Horn, also filed an ITU application seeking to register the mark "WOULD YOU RATHER." Horn's application was rejected by the PTO because of the likelihood of confusion with the mark that was the subject of Falls Media's prior ITU filing.⁵ Nonetheless, in 1998 Zobmondo began producing games using a concept similar to the one adopted by Falls Media, including "Zobmondo!! That Crazy `Would You Rather' Game," and "Zobmondo!! The Outrageous Game of Bizarre Choices," the latter of which was licensed to Hasbro between 2000 and 2002. When Hasbro's license expired in 2002, Zobmondo self-released a new version of the game prominently featuring the mark "WOULD YOU RATHER ... ?" on the game's packaging. Zobmondo has produced several versions of its game under the "WOULD YOU RATHER ... ?" mark since then.

In January of 2002, the PTO issued a Notice of Allowance of Falls Media's ITU application. Falls Media had not yet released a game using the "WOULD YOU RATHER ... ?" mark. Falls Media sought and received five extensions of time from the PTO, finally releasing its first "WOULD YOU RATHER ... ?" board game in December 2004. On July 19, 2005, having received Falls Media's statement of use, the PTO issued Falls Media a registration for the "WOULD YOU RATHER... ?" mark.

Thereafter, and perhaps in response, Zobmondo filed suit against Falls Media in the Central District of California in 2006 alleging, among other things, statutory and common-law trade-dress infringement, copyright infringement, and unfair competition arising from Falls Media's "WOULD YOU RATHER ... ?" board game. Falls Media then filed suit against Zobmondo in the Southern District of New York alleging trademark infringement, unfair competition, and other claims under federal and state law. Zobmondo in the New York action counterclaimed against Falls Media, seeking, inter alia, cancellation of Falls Media's "WOULD YOU RATHER ... ?" trademark registration. The claims in the New York action were transferred to the Central District of California and consolidated with Zobmondo's 2006 action against Falls Media. Thus the claims and counterclaims in both actions came to a district court within the Ninth Circuit.

Falls Media and Zobmondo filed cross-motions for summary judgment. The district court granted summary judgment to Zobmondo on Falls Media's trademark infringement and unfair competition claims, Falls Media's claim alleging a violation of California Business and Professions Code §§ 17200 et seq., and Zobmondo's counterclaim seeking cancellation of Falls Media's mark from the federal registry.⁶ The district court concluded that, despite the presumption of validity given to Falls Media's federal trademark registration, there was no genuine issue of material fact whether "WOULD YOU RATHER ... ?" was a protectable mark: This mark, as perceived by the district court, was "merely descriptive" of an aspect of Falls Media's games, and no rational juror could find that Falls Media had acquired secondary meaning in the mark by the time Zobmondo began using it in 2002.

Falls Media timely appealed. On appeal, Falls Media contends that it raised genuine issues of material fact regarding whether "WOULD YOU RATHER ... ?" is a valid, protectable mark.

II

We review summary judgments de novo. Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 632 (9th Cir.2008). Summary judgment for the moving party is appropriate only if "there is no genuine issue as to any material fact and ... the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)(2). "Summary judgment is generally disfavored in the trademark arena." KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 602 (9th Cir.2005) (quoting Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1140 (9th Cir.2002)).

To claim trademark infringement, a plaintiff must have a "valid, protectable trademark." Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1046 (9th Cir.1999). The issue of trademark validity is considered "an intensely factual issue." KP Permanent Make-Up, 408 F.3d at 605. The plaintiff bears the ultimate burden of proof in a trademark-infringement action that the trademark is valid and protectable. Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, Inc., 419 F.3d 925, 927-28 (9th Cir.2005).

To be valid and protectable, a mark must be "distinctive." Distinctiveness measures "the primary significance of the mark to the purchasing public." Quicksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 760 (9th Cir.2006) (quotation marks omitted). In determining distinctiveness, "we are required to consider standards of meaning not our own, but prevalent among prospective purchasers of the article." Bada Co. v. Montgomery Ward & Co., 426 F.2d 8, 11 (9th Cir.1970); see also 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 11:70 (4th ed.2010)hereinafter McCarthy. "The fact-finder is not the designated representative of the purchasing public, and the fact-finder's own perception of the mark is not the object of the inquiry. Rather, the fact-finder's function is to determine, based on the evidence before it, what the perception of the purchasing public is." Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337, 344 (2d Cir.1999).

Marks are generally classified in one of five categories of increasing distinctiveness: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992). Which category a mark belongs in is a question of fact. See Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1195-96 (9th Cir.2009). Suggestive, arbitrary, and fanciful marks are considered "inherently distinctive" and are automatically entitled to federal trademark protection because "their intrinsic nature serves to identify a particular source of a product." Two Pesos, 505 U.S. at 768, 112 S.Ct. 2753. Generic marks are not eligible for trademark protection. Entrepreneur Media, 279 F.3d at 1141. Merely descriptive marks are somewhere in-between; although they are not inherently distinctive and are therefore not entitled to automatic trademark protection, a merely descriptive mark can become protectable if it has acquired distinctiveness ...