Zero Motorcycles, Inc. v. Pirelli Tyre S.p.A., Case No. C 10–01290 SBA.

• Decision Date: 18 July 2011
• Docket Number: Case No. C 10–01290 SBA.
• Court: U.S. District Court — Northern District of California
• Parties: ZERO MOTORCYCLES, INC., a Delaware corporation, Plaintiff, v. PIRELLI TYRE S.p.A. and Pirelli & C. S.p.A., Defendants.

802 F.Supp.2d 1078

ZERO MOTORCYCLES, INC., a Delaware corporation, Plaintiff,

v.PIRELLI TYRE S.p.A. and Pirelli & C. S.p.A., Defendants.

Case No. C 10–01290 SBA.

United States District Court, N.D. California,Oakland Division.

July 18, 2011.

Michael Lawrence Rodenbaugh, Erin Dennis Vivion, Rodenbaugh Law, San Francisco, CA, for Plaintiff.

Robert Francis McCauley, Finnegan, Henderson, Farabow, Garrett, Palo Alto, CA, Laurence R. Hefter, Finnegan, Henderson, Farabow, Garrett and Dunner, LLP, Washington, DC, Virginia Louise Carron, Finnegan, Henderson, Farabow, Garrett, and Dunner, LLP, Atlanta, GA, for Defendants.

ORDER DENYING PLAINTIFF'S MOTION FOR LEAVE TO AMEND AND GRANTING DEFENDANTS' MOTION TO DISMISS

SAUNDRA BROWN ARMSTRONG, District Judge.

Plaintiff Zero Motorcycles, Inc., filed the instant declaratory relief action against Defendants Pirelli & C. S.p.A. and Pirelli Tyre S.p.A. (collectively “Defendants”) seeking a declaration that its use of the ZERO mark and ZERO-formative marks does not infringe Defendants' ZERO and ZERO-formative registered trademarks. The parties are presently before the Court on: (1) Plaintiff's Motion for Leave to File Amended Complaint, Dkt. 33; and (2) Defendants' Motion to Dismiss for Lack of Personal Jurisdiction, Dkt. 32. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby DENIES Plaintiff's motion for leave to amend and GRANTS Defendants' motion to dismiss. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b); N.D. Cal. Civ. L.R. 7–1(b).

I. BACKGROUNDA. Factual Summary

Plaintiff is a manufacturer of electric motorcycles, which it markets and sells in “many foreign countries” under the ZERO MOTORCYCLES mark—a mark which it has used since 2007. Compl. ¶¶ 8–9, 12. Plaintiff owns United States trademark registrations for ZERO for use on electric vehicles, namely motorcycles, and ZERO-formative marks consisting of ZERO MOTORCYLES, ZERO DS, ZERO S, ZERO SS, ZERO X and ZERO MX. Id. ¶ 13. Defendants Pirelli & C. S.p.A. (“Pirelli & C.”) and Pirelli Tyre S.p.A. (“Pirelli Tyre”) allegedly manufacture and sell various products, including tires for vehicles, and own a number of trademarks which incorporate the ZERO mark. Id. ¶¶ 17–18.

Defendant Pirelli & C. is the parent entity and 100% owner of Defendant Pirelli Tyre. Giannesi Decl. ¶ 3, Dkt. 32–1. Both entities are organized under Italian law as a società per azioni, a type of Italian corporate body, and have their principal places of business in Milan, Italy. Id. ¶¶ 6, 12. Neither maintains any presence in California nor conducts any business in the state. Id. ¶¶ 7–17. Though Pirelli & C. does not directly transact business in California, it indirectly owns subsidiaries which do, including Pirelli Tire LLC. Rosenzweig Decl. ¶ 4, Dkt. 49–2. Specifically, at the time the Complaint was filed, Pirelli Tire LLC was owned by Pirelli North America, Inc. (“Pirelli North America”), which, in turn, was owned by Pirelli Tyre Holland N.V., which, in turn, was owned by Pirelli Tyre, which, as noted, was owned by Pirelli & C. Id.¹

According to Plaintiff, “[i]n March 2009, Defendants began a global campaign against Plaintiff's trademark applications by commencing a series of opposition and cancellation filings against Plaintiff's marks in the [United States Patent and Trademark Office (“PTO”) ], European Union and Switzerland.” Id. ¶ 21. In particular, Plaintiff avers that on June 10, 2009, Defendants submitted a Combined Declaration of Use and Incontestability to the PTO to ensure that their ZERO mark remained on the PTO's Principal Register. Pl.'s Opp'n to Defs.' Mot. to Dismiss (“Pl.'s Opp'n”) at 3, Dkt. 36.² The declaration claimed that the ZERO mark was in use in the United States, and attached an exemplar consisting of marketing material showing a tire with the P ZERO mark. Id.; Rodebaugh Decl. Ex. 1, Dkt. 37–1. Plaintiff claims that the representation of use was false ostensibly because the exemplar was for the P ZERO mark, as opposed to the ZERO mark.

Plaintiff also points to a Notice of Opposition filed by Defendants in the PTO on September 29, 2009, in response to Plaintiff's trademark applications. Defendants' opposition claimed that Plaintiff's use of ZERO-formative marks would “be likely to cause confusion, or to cause mistake, or to deceive in violation of Section 2(d), 15 U.S.C. § 1052(d).” Id. Ex. 3 ¶ 19. Similarly, on December 16, 2009, Defendants filed a Petition for Cancellation before the PTO, which again claimed that Plaintiff's use of ZERO-formative marks was likely to cause confusion. Id. Ex. 4 ¶ 15, Dkt. 37–2. Plaintiff alleges that Defendants' submissions to the PTO are part of a campaign of harassment to prevent it from using ZERO or ZERO-formative marks.

B. Procedural History

On March 26, 2010, Plaintiff filed the instant action in this Court seeking declaratory and injunctive relief. Plaintiff alleges that a justiciable controversy has arisen regarding Plaintiff's use of the ZERO mark and ZERO-formative marks by virtue of Defendants' actions before the PTO and their corresponding refusal to discuss settlement. The Complaint alleges four claims for relief, as follows: (1) a declaration of non-trademark infringement; (2) a declaration of no unfair competition; (3) cancellation of United States Trademark Registration No. 2749340; and (4) a permanent injunction to enjoin Defendants from further prosecuting their cancellation and opposition proceedings in the PTO, and anywhere in the world.

In response to the Complaint, Defendants filed a motion to dismiss for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). The crux of Defendants' motion is that Defendants are Italian entities over which the Court lacks general or specific jurisdiction. Pursuant to the stipulation of the parties, the Court subsequently granted Plaintiff leave to conduct jurisdictional discovery and denied Defendants' motion to dismiss without prejudice. Dkt. 25. After Plaintiff conducted its jurisdictional discovery, Defendants renewed their motion to dismiss. Dkt. 32.

Two days after Defendants filed their renewed motion to dismiss, Plaintiff separately filed a motion for leave to file an amended complaint. Dkt. 33. Plaintiff seeks to join Pirelli North America and Pirelli Tire LLC, both of which are United States subsidiaries of Defendants, as party-defendants. In addition, Plaintiff requests leave to include three additional claims for: (1) disparagement under the Lanham Act § 43(a); (2) unfair competition under California Business & Professions Code § 17200; and (3) trade libel under California law. See Pl.'s Proposed First Am. Compl. (“FAC”) (Ex. A to Pl.'s Mot. for Leave to Amend). Defendants oppose Plaintiff's motion on the ground that the proposed amendments are futile and that there is no basis for joining Pirelli North America and Pirelli Tire LLC in this action. Dkt. 54. Defendants also claim that Plaintiff has unduly delayed in seeking leave to amend.

II. PLAINTIFF'S MOTION FOR LEAVE TO AMENDA. Legal Standard

Rule 15(a)(2) provides that leave to amend a complaint should be “freely given when justice so requires.” Fed.R.Civ.P. 15(a)(2); Moss v. United States Secret Serv., 572 F.3d 962, 972 (9th Cir.2009). Rule 15 “is to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir.2003). “Four factors are commonly used to determine the propriety of a motion for leave to amend. These are: bad faith, undue delay, prejudice to the opposing party, and futility of amendment.” Ditto v. McCurdy, 510 F.3d 1070, 1079 (9th Cir.2007) (citations and internal quotation marks omitted). The party opposing the amendment carries the burden of showing why leave to amend should not be granted. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir.1987). The decision to grant or deny a request for leave to amend rests in the discretion of the trial court. See California v. Neville Chem. Co., 358 F.3d 661, 673 (9th Cir.2004).

Defendants oppose Plaintiff's motion on the ground that the joinder of new claims and parties is futile. Leave to amend under Rule 15(a) “need not be granted when the proposed amendment is futile.” Nordyke v. King, 644 F.3d 776, 788 n. 12 (9th Cir.2011). “A proposed amended complaint is futile if it would be immediately subject to dismissal.” Id. (internal quotation marks omitted). The test for assessing futility is “identical” to the test applied on a Rule 12(b)(6) motion. Id. Thus, in assessing the allegations of a proposed pleading, the Court “accept[s] as true all well-pleaded allegations of material fact, and construe[s] them in the light most favorable to the non-moving party.” Daniels–Hall v. National Educ. Ass'n, 629 F.3d 992, 998 (9th Cir.2010). The facts alleged must be sufficient to push the claims “across the line from conceivable to plausible[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In addition, the allegations must “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Id. at 555, 127 S.Ct. 1955 (internal quotations and citation omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).

B. Proposed Claims

1. Disparagement under the Lanham Act

Plaintiff first proposes joining a claim for disparagement under the Lanham Act. The Lanham Act allows for product disparagement claims in cases in which there is a “misrepresentation of ‘the nature, characteristics, qualities, or geographic origin’ of ‘another person's goods, services, or commercial activities.’ ” Id. at 903 (quoting 15 U.S.C. § 1125(a)(1)(B)). To state a claim for product disparagement, the plaintiff must allege...