Choose Energy, Inc. v. Am. Petroleum Inst.

• Decision Date: 08 April 2015
• Docket Number: Case No. 5:14–cv–04557–PSG
• Citation: 87 F.Supp.3d 1218,114 U.S.P.Q.2d 1698
• Parties: Choose Energy, Inc., Plaintiff, v. American Petroleum Institute, Defendant.
• Court: U.S. District Court — Northern District of California

87 F.Supp.3d 1218

114 U.S.P.Q.2d 1698

Choose Energy, Inc., Plaintiff

v.American Petroleum Institute, Defendant.

Case No. 5:14–cv–04557–PSG

United States District Court, N.D. California, San Jose Division.

Signed April 8, 2015

Michael Kelly Erickson, Ray Quinney Nebeker P.C., Salt Lake City, UT, Jeffrey E. Faucette, Skaggs Faucette LLP, San Francisco, CA, for Plaintiff.

Scott Richard Mosko, Finnegan, Henderson, Farabow, Garrett & Dunner LLP, Palo Alto, CA, Margaret A. Esquenet, Naresh Kilaru, Finnegan Henderson Farabow Garrett and Dunner LLP, Washington, DC, for Defendant.

ORDER GRANTING MOTION TO DISMISS AND GRANTING MOTION TO STRIKE

(Re: Docket Nos. 20, 32)

PAUL S. GREWAL, United States Magistrate Judge

Last October, Plaintiff Choose Energy, Inc. filed this trademark infringement action against Defendant American Petroleum Institute over API's use of “choose energy” in its pre-election promotional campaign. In the days leading up to the November election, Choose Energy sought a temporary restraining order to require API to take down its website at chooseenergy.org. This court denied such relief, finding insufficient likelihood of success on Choose Energy's claims, particularly in light of Choose Energy's inability to establish that it competes with API. With the election in the rear view mirror—and the website at issue no longer in operation—API now moves to dismiss Choose Energy's federal and state law claims and moves to strike Choose Energy's state law claims under California's anti-SLAPP statute. Both motions are GRANTED.

I.

The Trademark Act of 1946 (“Lanham Act”) prohibits uses of trademarks, trade names, and trade dress that are likely to cause confusion about the source of a product or service.¹ “The Supreme Court has made it clear that trademark infringement law prevents only unauthorized uses of a trademark in connection with a commercial transaction in which the trademark is being used to confuse potential consumers.² Section 1114(a) is explicit in prohibiting only unauthorized use of a mark “in commerce ... in connection with the sale, offering for sale, distribution, or advertising of any goods or services [if] ... such use is likely to cause confusion.”

For over ten years, Choose Energy and its online marketplace have allowed individuals and businesses in deregulated states like California to compare offerings from a diverse group of energy suppliers.³ These suppliers do not compete on price alone.⁴ They also compete on source of supply, allowing options including natural gas plans with carbon offsets and electricity from renewables such as wind and solar to tout their green credentials even if they charge more per kWh.⁵ Choose Energy uses its domain name and trademarks to emphasize the fact that its services, as opposed to its offerings, are not energy biased.⁶

API touts itself as the leading trade association for the petroleum and natural gas industry in the United States.⁷ API was established to afford a means of cooperation between the industry and the government in matters of national concern, foster foreign and domestic trade in American petroleum products and promote the interests of the petroleum industry.⁸ API has long engaged in political messaging activities to advocate the collective views of its members and the petroleum industry as a whole.⁹

Last year, API launched a “Choose Energy” project as part of a campaign aimed at educating voters and encouraging them to engage in conversation about energy issues in the 2014 election and to elect officials who support energy initiatives.¹⁰ API says that its sole purpose in this campaign, including its website at chooseenergy.org, was to “encourage voters to make energy a ballot box decision and to educate themselves in assessing candidates' energy policies” leading up to the November 4, 2014 election.¹¹

After learning about API's campaign, Choose Energy wrote a letter to API demanding that its use of “Choose Energy” in its campaign stop. After a period of consideration and negotiation, API ultimately declined. API's response was curt, declaring that the First Amendment right to free speech justified its use without condition.

Choose Energy responded by filing suit in this court. Choose Energy's complaint alleges that “API has misappropriated Choose Energy's trademarks for a promotional campaign that is energy biased —extolling the purported benefits of the oil and natural gas industries and presenting a single choice to consumers: continued dependence upon non-renewable fossil fuels regardless of their adverse impact upon the environment.”¹² The complaint further alleges that “API is ‘fracking’ Choose Energy's brand and is likely to cause confusion, mistake, and to deceive consumers as to the affiliation, connection, or association of API with Choose Energy. API's unauthorized use of Choose Energy's trademarks is a violation of Choose Energy's valuable intellectual property rights and is causing significant injury to Choose Energy's reputation and customer goodwill.”¹³

Choose Energy sought a temporary restraining order to shut down chooseenergy.org mere days before last year's election, which this court denied, finding that the Lanham Act did not apply because Choose Energy and API do not compete and that Choose Energy could not show a likelihood of prevailing on the merits.¹⁴ Consistent with API's commitment under penalty of perjury that its campaign would end come election day, API's website no longer contains any content.¹⁵ API now moves to dismiss Choose Energy's federal and state law claims under Fed. R. Civ. P. 12(b)(6) and further moves to strike Choose Energy's state law claims under Cal.Code of Civ. Proc. § 425.16 (the California “anti-SLAPP” statute).

II.

This court has jurisdiction under 28 U.S.C. §§ 1331 and 1338. The parties further consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c) and Fed. R. Civ. P. 72(a).¹⁶

Under Fed. R. Civ. P. 12(b)(6), “dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.”¹⁷ If a plaintiff fails to proffer “enough facts to state a claim to relief that is plausible on its face,” the complaint may be dismissed for failure to state a claim upon which relief may be granted.¹⁸ A claim is facially plausible “when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”¹⁹ Against these standards, none of Choose Energy's claims pass muster.

III.

First, Choose Energy has not alleged facts sufficient to state a claim under the Lanham Act. In order for the alleged conduct to fall within the Act's purview, Choose Energy must allege that API used its mark in connection with goods or services.²⁰ It is undisputed that no goods are at issue. So to fall within the ambit of the statute, the infringing mark must be alleged to be for a classifiable service as contemplated by the statute. Through its website chooseenergy.org, API provides “political messaging strategy” that educates voters and encourages them to engage in the political discourse about energy and to elect officials who support specific energy initiatives.²¹ But Choose Energy has not plausibly alleged that these or any other API activities could be construed as classifiable services.²² Other than making the broad-sweeping allegation that “API is making commercial use of the Choose Energy Marks,”²³ the complaint does not allege that API is selling, offering to sell, distributing or advertising any services at all.²⁴ And although Choose Energy attempts to erect new arguments in its opposition—relying on API's television commercials as an advertising hook for services—no such allegation is in the complaint.²⁵

To the extent that Choose Energy relies on United We Stand to argue that political activities can be construed as services to trigger liability under the Lanham Act,²⁶ the argument is misplaced. Choose Energy would still have to show that API competes with Choose Energy in the provision of that service.²⁷ And that Choose Energy simply does not do. As this court previously found, there is no world in which Choose Energy and API could compete.²⁸ And there is no colorable claim of customer confusion because it is impossible for a customer to purchase a good or service from API thinking that it was purchasing that good or service from Choose Energy. Especially when API does not sell any goods or services at all.

While Choose Energy's complaint is devoid of any allegation that it is in competition with API, Choose Energy's final attempt to identify such competition in its brief is unavailing. In particular, Choose Energy argues that API and Choose Energy compete as ideological rivals to educate Americans on key energy issues. But this is contrary to Choose Energy's claims in its own complaint that it “provides a commercial service that is energy unbiased” that allows consumers to make choices about their energy use.²⁹ While the complaint alleges that many of Choose Energy's customers choose clean energy sources, the unbiased nature of Choose Energy's services presupposes that consumers also can choose energy plans that rely on petroleum. Without plausible allegations that API provided a competing service, the Lanham Act claim cannot stand. API's motion to dismiss must be GRANTED.

Second, Choose Energy has failed to state a claim on its state law causes of action. In the Ninth Circuit, trademark claims and unfair competition claims under California state law are “substantially congruent” with federal trademark and unfair competition claims.³⁰ Under the same reasoning outlined above, the court DISMISSES Choose Energy's state law claims.

Third, Choose Energy's state law claims cannot overcome California's anti-SLAPP law. In order to prevail on an anti-SLAPP motion, a defendant “must show that the lawsuit arises from exercising his right of free speech under the United States Constitution in...