Golden Eye Media USA, Inc. v. Trolley Bags UK Ltd.

• Decision Date: 12 March 2021
• Docket Number: Case No.: 3:18-cv-02109-BEN-LL
• Parties: GOLDEN EYE MEDIA USA, INC., a California corporation, Plaintiff, v. TROLLEY BAGS UK LTD, a corporation of the United Kingdom; and BERGHOFF INTERNATIONAL, INC., a Florida corporation, Defendant. TROLLEY BAGS UK LTD, a corporation of the United Kingdom; and BERGHOFF INTERNATIONAL, INC., a Florida corporation, Counterclaimants, v. GOLDEN EYE MEDIA USA, INC., a California corporation; FARZAN DEHMOUBED, an individual; and JENNIFER DUVALL, an individual, Counterdefendants.
• Court: U.S. District Court — Southern District of California

GOLDEN EYE MEDIA USA, INC., a California corporation, Plaintiff,
v.
TROLLEY BAGS UK LTD, a corporation of the United Kingdom;
and BERGHOFF INTERNATIONAL, INC., a Florida corporation, Defendant.

TROLLEY BAGS UK LTD, a corporation of the United Kingdom;
and BERGHOFF INTERNATIONAL, INC., a Florida corporation, Counterclaimants,
v.
GOLDEN EYE MEDIA USA, INC., a California corporation;
FARZAN DEHMOUBED, an individual;
and JENNIFER DUVALL, an individual, Counterdefendants.

Case No.: 3:18-cv-02109-BEN-LL

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

March 12, 2021

ORDER:

(1) GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

(2) GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

[ECF No. 80, 83, 86, 89, 90, 93, 97]

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I. INTRODUCTION

Plaintiff/Counterdefendant GOLDEN EYE MEDIA USA, INC., a California corporation ("Plaintiff") brings this action for a declaratory judgment of non-infringement against Defendants/Counterclaimants TROLLEY BAGS UK LTD, a corporation of the United Kingdom ("Trolley Bags"); and BERGHOFF INTERNATIONAL, INC., a Florida corporation ("Berghoff") (collectively, "Defendants"). Complaint, ECF No. 1 ("Compl.").

Before the Court are (1) Plaintiff's Motion for Summary Judgment, ECF No. 83, and (2) Defendants' Motion for Summary Judgment, ECF No. 80.

The Motions were submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF Nos. 94, 114. After considering the papers submitted, supporting documentation, and applicable law, the Court (1) GRANTS Plaintiff's Motion for Summary Judgment, ECF No. 83, and (2) GRANTS IN PART and DENIES IN PART Defendants' Motion for Summary Judgment, ECF No. 80.

II. BACKGROUND

This matter arises out of a dispute over whether Plaintiff is infringing on the claim of U.S. Design Patent No. D779,828 (the "828 Patent") as well as the trademark held by Trolley Bags. Compl. at 2:7-9; see also Answer, ECF No. 14 ("Ans.") at 9:24-27.

A. Statement of Facts

Plaintiff owns and operates Lotus Sustainables, a family-run company located in Carlsbad, California, which aims to eliminate plastic bags. Plaintiff's Motion for Summary Judgment, ECF No. 83-1 ("Pltff. Mot.") at 10:2-4.¹ As part of its business, it sells eco-friendly items, including but not limited to reusable shopping bags. Id. at 10:4-5.

Defendant Trolley Bags also sells reusable shopping bags that are used with ordinary shopping carts, also known as trolleys. Compl. at 3:15-18; see also Ans. at 9:21-23. In March 2015, Defendants began promoting and selling Trolley Bags' reusable bags in the

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United States and "gained a significant foothold" there, with their bags being sold in hundreds of Bed Bath & Beyond Stores. Ans. at 10:4-8. "Defendant Berghoff purports to be the exclusive distributor of Trolley Bags' products in the United States." Compl. at 19-20; see also Ans. at 9:27-28. Defendants market and sell Trolley Bags' reusable bags throughout the United States under the mark TROLLEY BAGS™. Ans. at 10:1-4. However, on March 14, 2016, the United States Patent and Trademark Office ("USPTO") rejected Trolley Bags' application for U.S. Trademark Reg. No. 5,126,274. Compl. at 4, ¶20:20-22; Defendants and Counterclaimants' First Amended Answer, Affirmative Defenses, and Counterclaims, ECF No. 32 ("First Amend. Ans.") at 3, ¶¶ 20-22.

Sometime in 2016, Plaintiff created its Lotus Bags "as Plaintiff sought to design a solution to plastic bags when the city of San Diego approved a ban on plastic shopping bags around the same timeframe." Plaintiff's Opposition to Defendants' Motion for Summary Judgment, ECF No. 90 ("Pltff. Oppo.") at 8:9-11. That same year, around April 2016, Trolley Bags also started using its claimed trademark of "Trolley Bags." See Plaintiff's Reply Brief in Support of Plaintiff's Motion for Summary Judgment, ECF No. 95 ("Pltff. Reply"), at 10:17; First Amend. Ans. at 10, ¶ 13:1-4.

On February 28, 2017, the USPTO approved Trolley Bags' 828 Patent as a design patent titled, "Foldable Bag," which included one claim for "the ornamental design for a foldable bag." Pltff. Mot. at 12:3-7; First Amend. Ans. at 12, ¶ 26:20-21. Meanwhile, sometime between late 2016 and May 2017, Plaintiff began marketing and selling reusable bags in the United States under the mark LOTUS TROLLEY BAG™. First Amend. Ans. at 11, ¶ 16:12-16; Pltff. Oppo. at 8:9-11; Pltff. Reply at 10:8-9.

On July 13, 2017, Defendant Berghoff served a cease and desist letter on Plaintiff, asserting that Plaintiff's sale of trolley bags infringed on Trolley Bags 828 Patent. Compl. at 3:21-28; see also Ans. at 20-23; Pltff. Mot. at 6-8; Defendants' Opposition to Plaintiff's Motion for Summary Judgment, ECF No. 89 ("Defs. Oppo.") at 29:9-11. Defendants allege that (1) Plaintiff's reusable bags are substantially the same as Trolley Bags' reusable bags and infringe on Trolley Bags' 828 Patent under the "ordinary observer" test and (2)

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the LOTUS TROLLEY BAG™ mark is likely to, and has caused, confusion among customers with respect to Defendants' TROLLEY BAGS™ mark. Ans. at 10:14-20.

On October 24, 2017, the USPTO "rejected Trolley Bags' trademark application [No. 87531929] under Section 2(e)(1) of the Lanham Act on the basis that the term 'trolley bags' is merely descriptive and thus not entitled to trademark protection or registration." Compl. at 4:11-14; First Amend. Ans. at 3, ¶¶ 20-22.

In 2018, Plaintiff alleges that its "Lotus Bags began to receive local and national media attention, and their online presence on sites like Amazon began to increase" as "they became one of the most popular reusable bag sellers on Amazon." Pltff. Oppo. at 8:18-22.

From February 2018 through August 2019, Trolley Bags filed forty-three (43) complaints with Amazon alleging Plaintiff's infringement of the 828 Patent, which resulted in Amazon removing Plaintiff's product from its website in twenty-five (25) of those complaints. Defendants' and Counterclaimants' Motion for Summary Judgment, ECF No. 80-1 ("Defs. Mot.") at 8:10-13; Compl. at 5:8-10; Pltff's Oppo. at 8:26-28; Defendants' Reply in Support of Their Motion for Summary Judgment, ECF No. 93 ("Defs. Reply") at 6:11-16. Defendants argue that "[f]or the 18 times that Amazon did not remove Plaintiff's listings, six were for administrative reasons, such as inadvertent failure to link the '828 patent in the submission or because the complaint was duplicative." Defs. Reply at 6:15-18. Defendants concedes that in twelve (12) instances, Amazon initially determined that Plaintiff's bags were not infringing the 828 Patent. Defs. Reply at 6:20-23.

The parties agree that after Amazon would remove Plaintiff's bags due to Defendants' complaints, Plaintiff would then appeal to Amazon for reinstatement, and Amazon would re-list the bags. Defs. Mot. at 8:13-14; Pltff. Mot. at 10:10-13; see also Compl. at 5, ¶ 28:20-22. Whenever this occurred, as soon as Defendants realized the product had been reinstated, Trolley Bogs would again follow Amazon's stated process of resubmitting a notice of infringement, which would again, get reviewed and result in the removal of Plaintiff's products. Defs. Mot. at 8:14-17; see also Compl. at 5, ¶ 28:22-24. "This cycle continued for around 18 months," and Defendants submitted more than a dozen

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complaints. Defs. Mot. at 8:17; see also Compl. at 5, ¶ 28:22-24.

On December 18, 2018, Plaintiff's co-owners, Jennifer Duvall ("Ms. Duvall") and Farzan Dehmoubed ("Mr. Dehmoubed"), were granted U.S. Design Patent No. D835,912 for reusable shopping bags (the "912 Patent"), which Defendants allege is invalid for numerous reasons, including but not limited to lack of novelty, obviousness relative to prior art, which includes European Community Design No. 002682302-0001. First Amend. Ans. at 12:1-9. Defendants allege that the European Design was not cited during the examination of the 912 Patent. Id. at 12:7-9. Shortly after the 912 Patent was granted, Plaintiff submitted complaints with third-party retailers like Amazon.com against Defendants and/or Defendants' products for infringing the 912 Patent. First Amend. Ans. at 12:9-12; see also Plaintiff's Answer to First Amend. Ans., ECF No. 33 at 4, ¶ 23.

Plaintiff alleges that Defendants have negligently misrepresented facts to Amazon, including but not limited to failing to represent that (1) Trolley Bags disclaimed the term 'trolley bags' as unprotectable under trademark law; (2) Plaintiff's product does not fall within the scope of the 828 Patent; and (3) Trolley Bags, not Berghoff, holds the alleged patent and trademark rights. Compl. at 5:11-19. Plaintiff also alleges that "[d]ue to Amazon's partially automated system, defendants' wrongful, false, and misleading complaints has caused temporary interruption and interference with plaintiff's listing and sale of products." Id. at 6:1-7. Plaintiff pleads that "defendants have prevented sales of at least $150,000 during the temporary periods of being delisted by Amazon's system." Id.

B. Procedural History

On September 11, 2018, Plaintiff filed a lawsuit against Defendant pleading claims for relief for (1) declaratory judgment of non-infringement of the 828 Patent against Trolley Bags; (2) declaratory judgment of non-infringement of the Trademark TROLLEY BAGS and U.S. Trademark Reg. No. 5,126,274 against Trolley Bags; (3) interference with prospective of contractual economic relations against all Defendants; (4) negligent misrepresentation against all Defendants; (5) unfair competition against all Defendants, 15 U.S.C. § 1125; (6) unfair competition pursuant to California's Unfair Competition Law,

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CAL. BUS. & PROF. CODE § 17200 (the "UCL"); and (7) common law unfair competition. Compl., ECF No. 1.

On October 24, 2018, Defendants filed an answer to Plaintiff's complaint along with counter-claims for (1) infringement of the 828 Patent and (2) common law trademark infringement and unfair competition...