Saber Interactive Inc. v. Oovee, Ltd.

• Decision Date: 30 August 2022
• Docket Number: 2:21-cv-01201-JHC
• Parties: SABER INTERACTIVE INC., Plaintiff, v. OOVEE, LTD., ZANE SAXTON, DEVIN MILSOM and VINCE MILSOM, Defendants.
• Court: U.S. District Court — Western District of Washington

SABER INTERACTIVE INC., Plaintiff,
v.
OOVEE, LTD., ZANE SAXTON, DEVIN MILSOM and VINCE MILSOM, Defendants.

No. 2:21-cv-01201-JHC

United States District Court, W.D. Washington, Seattle

August 30, 2022

ORDER RE: DEFENDANT OOVEE LTD.'S MOTION TO DISMISS SECOND AMENDED COMPLAINT AND PLAINTIFF SABER INTERACTIVE INC.'S MOTION TO FILE THIRD AMENDED COMPLAINT

John H. Chun United States District Judge

I.

Introduction

This matter comes before the Court on Defendant Oovee, LTD's Motion to Dismiss Plaintiff Saber Interactive Inc.'s Second Amended Complaint (SAC) (Dkt. # 27) and Plaintiff Saber Interactive Inc.'s Motion for Leave to File Third Amended Complaint (TAC) (Dkt. # 37). Having reviewed the materials in support of and in opposition to the motions, for the reasons below, the Court GRANTS the Motion to Dismiss, DISMISSES the SAC without prejudice and with leave to amend, and GRANTS the Motion for Leave to File TAC.

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II.

Background

For Oovee's Motion to Dismiss, the Court presumes as true all facts alleged in Saber's Second Amended Complaint (Dkt. # 20). See Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1247 (9th Cir. 2013) (“On a motion to dismiss, the court presumes that the facts alleged by the plaintiff are true.” (quoting Halet v. Wend Inv. Co., 672 F.2d 1305, 1309 (9th Cir. 1982))). Unless stated otherwise, the facts below are from that complaint.

Generally, game developers program simulated driving games to provide the consumer with the experience of driving a vehicle that “operates as closely to the real thing as possible.” Dkt. # 20 at 4. Game developers also “obtain a license from the vehicle manufacturer to feature a particular vehicle in a game.” Id. Video game consumers know games feature simulated vehicles licensed by the vehicle manufacturer. Id. Game developers disclose these licenses. Id.

Peterburgsky traktorny zavod JSC (“PTZ”), which is known under the brand name “Kirovets,” manufactures and sells tractors, including the K-700. Id. at 5-6. This is an image of the K-700:

(Image Omitted)

Id. at 6. Kirovets sells K-700s to consumers in the United States. Id. K-700s have “two discrete but connected tractor parts (a front and a back), the pair of distinctive large wheels for each part, the front part having a box cabin and the extended engine cover with grill-style grate, and the back part featuring mostly just the large pair of wheels.” Id.

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Saber is a video game developer. Dkt. # 20 at 3. It develops a simulated driving video game called Mudrunner that allow users to choose from different vehicles to drive in a particular environment. Dkt. # 20 at 3-5. Saber sells Mudrunner on Steam, a Bellevue-based “digital contact distribution platform” from which consumers can purchase games. Id. at 11.

Saber uses the K-700 design in Mudrunner:

(Image Omitted)

Id. at 7, 9. Unlike the other vehicles featured in Mudrunner, the K-700 has articulated steering. Id. at 8. Under a December 29, 2020 License Agreement between it and PTZ, Saber is the “exclusive licensee with respect to various intellectual property rights related to PTZ's Kirovets tractors.” Id. at 7. The Licensing Agreement gives Saber “‘rights to take legal and other enforcement actions, including retroactive rights, to damages and injunctive relief against any entity or product that has previously infringed, is currently infringing or will in the future infringe on the granted rights at any time in any territory and to collect damages for such infringement.'” Id.

Defendant Oovee, as well as individual Defendants Zane Saxton, Devin Milsom, and Vince Milsom (collectively, “Oovee”), sells a simulated driving video game called Spintires. Id. at 2. Oovee sells Spintires worldwide through Steam. Id. at 3, 11. In November 2015, Oovee released an update to Spintires that included the K-700:

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(Image Omitted)

Id. at 10. Oovee advertised Spintires with a video trailer, and “roughly half of the trailer segment introducing [new] vehicles was dedicated to shots involving solely the K-700.” Id. In 2020, Oovee released another update to Spintires that included a new vehicle called the SHERP ARK 10x10 ATV. Id. at 11. Oovee promoted the SHERP as using “articulating steering like the K-700.” Id. Oovee provided a disclaimer, which noted that “SHERP is a registered trademark of Quadro International LLC and is being used under license.” Id. The disclaimer further stated that “[a]ll other trademarks are the property of their respective owners. All characters and vehicles appearing in Spintires ® are fictitious (except where licensed). Any representations to real-life persons (living or dead), or real-world vehicle designs (except where licensed), is purely coincidental.” Id.

On or about December 30, 2020, Steam removed Spintires because of “its unauthorized use of the exclusively-licensed intellectual property.” Id. at 11-12.

Saber sued Oovee on September 2, 2021. Dkt. # 1. On April 26, 2022, Saber filed its SAC, which contained three claims: (1) unfair competition under the Section 43(a) of the Lanham Act, 15 U.S.C. § 1125; (2) unfair competition under Washington's Consumer Protection Act (WCPA), Washington Revised Code (RCW) 19.86.010; and (3) unjust enrichment. Dkt. # 20 at 13-14.

Oovee moves to dismiss Saber's SAC under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Dkt. # 27 at 13. It argues that the First Amendment bars Saber's claims,

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and that even if it does not, Saber has not pleaded facts sufficient to survive a motion to dismiss. Id. at 8, 14.

Saber filed a Motion for Leave to File TAC. Dkt. # 37. The proposed TAC alleges that on June 12, 2022, Saber became aware that Oovee published a press release titled “Indie Gaming Developers Increasingly at Risk of Losing IP to Ruthless Industry Giants.” Dkt. ## 37 at 2; 37-1 at 15. It alleges that the press release “falsely claim[s] that Saber stole Oovee's intellectual property” and makes it look like a “bully.” Dkt. # 37 at 2. The proposed TAC also alleges that Oovee “knew the statements were false and made them intentionally,” and that the statements harmed and will harm Saber's relationships with consumers who purchase its games and distributors who market its games. Dkt. # 37-1 at 17. It alleges that the damages exceed $100,000. Id. The proposed TAC seeks to add claims for defamation and tortious interference with business relationships and expectancies. Dkt. ## 37 at 2; 37-1 at 20-21.

III.

Analysis

A. Oovee's Motion to Dismiss the SAC

1. Rule 12(b)(6)

In considering a motion under Rule 12(b)(6), the Court construes the complaint in the light most favorable to the nonmoving party. See Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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

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misconduct alleged.” Id. But legal conclusions “are not entitled to the assumption of truth” and “must be supported by factual allegations.” Id. at 679. A court may dismiss a complaint under Rule 12(b)(6) that lacks a “cognizable legal theory” or fails to allege “sufficient facts” under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

2. Unfair Competition under the Lanham Act

In the SAC, Saber claims that Oovee engaged in unfair competition in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), which prohibits persons from misleading consumers about the origin or nature of products they sell. Dkt. # 20 at 13. Saber says that the unfair competition arises from Oovee's unauthorized use of its trademark and trade dress. Id. at 2. Oovee moves for dismissal, claiming that the First Amendment bars the Lanham Act claim and, even if not, Saber does not sufficiently plead facts to state a claim for relief under the Lanham Act. Dkt. # 27 at 16, 24. Saber responds that the First Amendment does not bar its Lanham Act claim because Spintires is not an expressive work and, even if considered an expressive work, Oovee explicitly misleads consumers about Saber's endorsement. Dkt. # 31 at 7. Saber also contends that it has alleged sufficient facts to support its Lanham Act claim and survive Oovee's Motion to Dismiss. Id. at 7, 25.

Section 43(a) of the Lanham Act provides a civil cause of action against:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person....

15 U.S.C. § 1125(a)(1).

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a. Oovee's First Amendment Defense

Oovee says that the First Amendment bars Saber's Lanham Act claim. Dkt. # 27 at 8.

Generally, courts apply the “likelihood-of-confusion test” when evaluating an infringement claim under the Lanham Act. Gordon v. Drape Creative, Inc., 909 F.3d 257, 264 (9th Cir. 2018) (citation omitted). But when “artistic expression is at issue,” the likelihood-of-confusion test “fails to account for the full weight of the public's interest in free expression.” VIP Prod. LLC v. Jack Daniel's Properties, Inc., 953 F.3d 1170, 1174 (9th Cir. 2020) (quoting Id.). “Section 43(a) protects the...