Commercial Litigation and Arbitration

Judicial Notice of Internet Evidence — Opponent’s Filings with Gov’t Agency Noticed for Fact of Filing, Not for Contents, on 12(b)(6) Motion — 12(f) Motion to Strike Disfavored, Should Be Denied unless Allegations Have No Conceivable Relevance

Morton & Bassett, LLC v. Organic Spices, Inc., 2016 U.S. Dist. LEXIS 120092 (N.D. Cal. Sept. 6, 2016):

Before the Court is the motion to dismiss filed by Defendant-Counterclaimant Organic Spices, Inc. ("Defendant"). Dkt. No. 40 ("Mot."). Defendant moves to dismiss Plaintiff Morton & Bassett, LLC's ("Plaintiff") complaint for trade dress infringement under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon [*2]  which relief can be granted. In the alternative, Defendant moves to strike functional and generic elements of the asserted trade dress. Plaintiff has filed an opposition, Dkt. No. 43 ("Opp."), and Defendant has replied, Dkt. No. 46 ("Reply").

Under Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7-1(b), the Court finds that this matter is suitable for disposition without oral argument. For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART Defendant's motion to dismiss and DENIES Defendant's motion to strike. The Court also SETS a further case management conference for September 13, at 2:00pm to discuss scheduling in this matter.


A. Factual Allegations

Plaintiff manufactures and distributes high quality, all-natural, and preservative-free spices. Dkt. No. 39 ("Am. Compl.") ¶ 2. Plaintiff's spices are sold in grocery stores, supermarkets, and other retail outlets throughout the United States. Id. Plaintiff asserts that its spices have long had a distinctive and recognizable trade dress. Id. ¶ 3. Specifically, Plaintiff packages its spices in contemporary, round, clear glass containers with opaque white (or occasionally colored) lettering in modern-style font, without any opaque labeling, and with a [*3]  solid color cap. Id. ¶ 14. The name of the spice is displayed in all capital letters that are the largest letters on the jar. Id. Plaintiff uses clear glass bottles to show the quality of its spices inside, which pioneered the "glass gourmet" category in the spice market. Id. To that effect, Plaintiff has adopted the slogans, "Clearly What Spices Should Be" and "Our Commitment To Quality Is Clear." Id. Plaintiff has used this trade dress continuously for over 25 years, leaving a "unique impression" on consumers. Id. ¶¶ 15-16. In 2000, Plaintiff added a "100% organic" line of spices that uses the same trade dress elements as its original line of spices, as set forth above, but also includes a white (or occasionally black) label that reads "100% ORGANIC" in reverse lettering, with a circle in the middle of the jar. Id. ¶ 14.

Defendant, selling spices under the name SPICELY, competes directly with Plaintiff. Id. ¶¶ 23, 28. It also markets its spices as 100% natural and preservative free in the stores, boutiques, and supermarkets in which Plaintiff sell its spices. Id. ¶ 30. Defendant packages its spices in two different versions of glass jars that are "virtually indistinguishable" from [*4]  Plaintiff's glass jars. Id. ¶¶ 24-25. Specifically, Defendant's jars have the same round, clear bottle, opaque white lettering in the same font and in the same size, and with the same solid color cap as Plaintiff's jars. Id. ¶ 26. Defendant also mimics Plaintiff's marketing strategy, using slogans such as "Quality You Can See," in a similar cursive letting and light green color as Plaintiff uses for its slogans. Id. ¶ 27.

Plaintiff alleges that these intentional similarities cause consumers to mistake Defendant's spices for its own, because the spices are often displayed side-by-side in stores and are often impulse purchases bought without a high degree of care. Id. ¶¶ 29-31. As a result, Plaintiff has and continues to suffer irreparable harm from lost sales and loss of consumer goodwill. Id. ¶ 32.

B. Procedural History

1. Pleadings

Plaintiff filed its complaint on April 24, 2015. Dkt. No. 1. Defendants answered and counterclaimed for a declaratory judgment of non-infringement and that Plaintiff's trade dress is non-protectable because it is both functional and generic. Dkt. No. 13. Plaintiff answered the counterclaim. Dkt. No. 21. On December 18, 2015, the parties filed a stipulated request [*5]  that the Court grant leave for Plaintiff to file an amended complaint. Dkt. No. 36. The Court granted the request, Dkt. No. 28, and Plaintiff filed an amended complaint on February 10, 2016, Dkt. No. 39.

Plaintiff asserts claims for trade dress infringement and false designation of origin in violation of both 15 U.S.C. § 1125(a) and California Business and Professions Code § 14245, for "passing off" under California common law, and for unfair competition under California Business and Professions Code § 17200. Am. Compl. ¶¶ 33-47. It seeks a permanent injunction barring Defendant from using infringing trade dress and anything else that is calculated or likely to cause consumer confusion, actual damages, statutorily enhanced damages, punitive damages, pre-judgment interest, disgorgement of profits, and attorneys' fees and costs. Id., Prayer.

2. Defendant's Motion to Dismiss or Strike

Defendant then filed the instant motion to dismiss. Defendant contends that Plaintiff has failed to state a claim for trade dress infringement because it has not pled its trade dress is not functional and not generic. Mot. at 12-15. Furthermore, Defendant argues that these defects are incurable because Plaintiff has judicially admitted that elements of its trade dress are functional and generic in its answer to Defendant's [*6]  counterclaim. Id. at 14-16. Even without those judicial admissions, Defendant argues that Plaintiff's trademarks for its advertising slogans, set forth in the operative complaint and on file with the United States Patent and Trademark Office ("USPTO"), conclusively prove that Plaintiff's trade dress is functional because they tout the utilitarian nature of the glass jars that contain Plaintiff's spices. Id. at 9-10. Similarly, Defendant contends that USPTO records show that third parties use words like "clear" or "see" to advertise spices, proving that Plaintiff's trade dress is generic. Id. at 11-12. In the event that the Court is not inclined to grant its motion to dismiss, Defendant moves to strike each element of Plaintiff's asserted trade dress that the Court finds to be either functional or generic. Id. at 17. To that effect, Defendant explains that each element of Plaintiff's trade dress is non-protectable. Id. at 6-9.

Plaintiff responds that it was not required to plead that its trade dress is not functional or generic because those are affirmative defenses. Opp. at 4. In any case, Plaintiff argues, whether its asserted trade dress is functional or generic is not a question that can be resolved on a motion to dismiss. Id. at 5, 14-16. And, according to [*7]  Plaintiff, its answer to Defendant's counterclaim did nothing to change that: it expressly denied its trade dress was functional or generic, admitting only that its glass jar may serve some functional purpose, not that it was functional as a matter of law. Id. at 4. Furthermore, Plaintiff contends that Defendant's attempt to prove that the elements of its trade dress are functional misunderstands the nature of trade dress protection; trade dress must be evaluated holistically to determine whether it serves a source-identifying function for consumers. Id. at 6-11. But, regardless, Plaintiff argues that its trade dress elements are not legally functional. Id. at 12-14.

Defendant's reply largely restates the arguments from its motion. See generally Reply.


A. Federal Rule of Civil Procedure 12(b)(6)

Federal Rule of Civil Procedure 8(a) requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" A defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead "enough facts [*8]  to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). A claim is facially plausible when a plaintiff pleads "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009).

In reviewing the plausibility of a complaint, courts "accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, Courts do not "accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). And even where facts are accepted as true, "a plaintiff may plead [him]self out of court" if he "plead[s] facts which establish that he cannot prevail on his . . . claim." Weisbuch v. Cnty. of Los Angeles, 119 F.3d 778, 783 n.1 (9th Cir. 1997) (quotation marks and citation omitted).

If dismissal is appropriate, a court "should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (quotation marks and citation omitted).

B. Federal Rule of Civil Procedure 12(f)

Federal Rule of Civil Procedure 12(f) authorizes courts to "strike from a pleading . . . any redundant, immaterial, impertinent, or scandalous matter." Immaterial matter refers to "that which has no essential [*9]  or important relationship to the claim for relief or the defenses being pleaded." Petrie v. Elec. Game Card, Inc., 761 F.3d 959, 967 (9th Cir. 2014) (citation omitted). "The function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial[.]" Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (citation omitted). Motions to strike are generally disfavored and should typically be denied "unless it is clear that the matter sought to be stricken could have no possible bearing on the subject matter of the litigation." Martinez v. Cnty. of Sonoma, No. 15-cv-01953, 2016 U.S. Dist. LEXIS 233, 2016 WL 39753, at *6 (N.D. Cal. Jan. 4, 2016) (citation omitted).



Before turning to the substance of Defendant's motion to dismiss, the Court must address its request for judicial notice of certain USPTO records. These records include: (1) copies of five trademarks registered by Plaintiff; (2) a copy of a trademark registered by Defendant; and (3) copies of four trademarks registered by several third parties. Dkt. No. 40-2. Defendant claims that these records are judicially noticeable as materials made publicly available by a governmental entity and, with respect to Plaintiff's trademarks, under the incorporation by reference doctrine.


A. Legal [*10]  Standard

Generally, courts may not look to materials outside of the complaint to rule on a Rule 12(b)(6) motion. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). Under the doctrine of judicial notice, however, courts are permitted to establish and rely on "a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). This includes information governmental entities have made publicly available on websites, unless the authenticity or accuracy of the websites or information displayed is disputed. Daniels-Hall v. Nat'l Ed. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010).

Similarly, under the incorporation by reference doctrine, a court may consider a document extrinsic to the complaint in deciding a Rule 12(b)(6) motion if the document's "authenticity is not contested and the plaintiff's complaint necessarily relies on" it. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (citing Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998)); see also United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (document may be incorporated by reference "if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim"). This doctrine prevents a plaintiff from "deliberately omitting references to documents upon which their claims are based." Parrino, 146 F.3d at 705-06. When a document is incorporated [*11]  by reference, "the district court may treat such a document as part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)." Ritchie, 342 F.3d at 908.

B. Analysis

The Court takes judicial notice of the various USPTO records as materials made publicly available by a governmental entity on its website, see Daniels-Hall, 629 F.3d at 998, but "only for the limited purpose of demonstrating that the filings and actions described therein occurred on certain dates," see Pinterest Inc. v. Pintrips Inc., 15 F. Supp. 3d 992, 997 (N.D. Cal. 2014). Defendant's attempt to judicially notice these materials to prove that Plaintiff's asserted trade dress is functional and generic is "entirely improper" at the dismissal stage. Pinterest, 15 F. Supp. 3d at 997. And "[t]o the extent the USPTO records are nonetheless noticeable for the limited purposes discussed above, they are irrelevant for resolving defendant's motion to dismiss." Id.

The Court also addresses the declaration that Defendant filed in connection with its motion to dismiss. See Dkt. No. 40-3 ("Kanach Decl."). While the declaration was used in part to lay the foundation for the USPTO records discussed above, it also seeks to make evidentiary claims. For example, the declarant avers that Plaintiff owns several registered trademarks but has no registered [*12]  trade dress, based on his search. Id. ¶¶ 2-4. These kinds of evidentiary claims are improper at the dismissal stage, where review is confined to the pleadings and materials subject to judicial notice. See Jen v. City & Cnty. of San Francisco, No. 15-cv-03834, 2016 U.S. Dist. LEXIS 89673, 2016 WL 3669985, at *4 (N.D. Cal. Jul. 11, 2016) (disregarding declaration offered with request for judicial notice that made evidentiary claims extrinsic to the judicially-noticeable materials). Accordingly, the Court disregards Paragraphs 2-4, 6, and 11 of the Kanach Declaration.

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