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Nelson-Ricks Cheese Co., Inc. v. Lakeview Cheese Company LLC

United States District Court, D. Idaho

July 12, 2018

NELSON-RICKS CHEESE COMPANY, INC., an Idaho corporation, Plaintiff,
v.
LAKEVIEW CHEESE COMPANY, LLC, a Nevada limited liability company, Defendant.

          MEMORANDUM DECISION AND ORDER

          DAVID C. NYE, U.S. DISTRICT COURT JUDGE

         I. INTRODUCTION

         Pending before the Court is Defendant Lakeview Cheese Company LLC's (“Lakeview”) Motion for Summary Judgment. Dkt. 70. Lakeview has also filed a motion seeking to exclude the testimony of two of Plaintiff Nelson-Ricks Cheese Company's (“NRCC”) experts from the Court's consideration in deciding the Motion for Summary Judgment. Dkt. 79. After holding oral argument on the motions, the Court took the matters under advisement. Also after oral argument, NRCC filed a Motion to Supplement the record with additional material in support of its opposition to summary judgment. Dkt. 89. Upon review, the Court now issues the following decision GRANTING the Motion to Supplement, DENYING the Motion to Exclude, and GRANTING the Motion for Summary Judgment.

         II. BACKGROUND

         This is a trademark infringement case. The trademark at issue is the word mark “Nelson-Ricks Creamery Company” (“the Mark”). The two parties in this case own and operate various assets that formerly belonged to Nelson-Ricks Creamery Company (“Creamery”), a now defunct business entity.

         Prior to 2012, Creamery owned facilities in Salt Lake City, Utah, and Rexburg, Idaho. Creamery also owned certain intellectual property including both the “Banquet” and “Nelson Ricks Creamery” brand names of cheese. In 2012, Lakeview purchased both the Salt Lake City facility and the Banquet brand from Creamery. The sale included the transfer of Creamery's www.banquetcheese.com website to Lakeview. Importantly, the sale also included a limited license allowing Lakeview to make use of the Nelson Ricks Creamery brand name. In 2014, Creamery sold the Rexburg facility and the Nelson Ricks Creamery brand to NRCC Asset Acquisition LLC, an affiliate of NRCC.

         NRCC's claims in this matter center on the “About Us” webpage from Creamery's original www.banquetcheese.com website. The “About Us” webpage detailed Creamery's history, story, and the historical affiliation of Nelson-Ricks Creamery Company and the Banquet brand. In 2014, contemporaneously with Creamery's sale to NRCC Asset Acquisition, Creamery terminated Lakeview's limited license agreement to use the Mark. As a result, Lakeview updated Creamery's website to remove the “About Us” webpage, making it no longer accessible via www.banquetcheese.com.

         Approximately one year later, in April 2015, NRCC obtained trademark registration for “Nelson-Ricks Creamery Company.” One year after that, NRCC became aware that, even though the “About Us” webpage was no longer linked to the www.banquetcheese.com website, if manually typed into a web-browser, a person could still access the page, in the same form as when it was created by Creamery, and containing the trademarked “Nelson-Ricks Creamery Company” Mark. NRCC sent Lakeview a cease and desist letter demanding that the information be changed or taken down. Lakeview altered the “About Us” page and removed any reference to Nelson Ricks Creamery. Those actions aside, this lawsuit ensued. NRCC alleges six trademark related claims against Lakeview: (1) trademark infringement under the Lanham act; (2) common law trademark infringement; (3) unfair competition; (4) unfair methods and practices; (5) unjust enrichment; and (6) tortious interference with prospective economic advantage.

         Lakeview now moves for summary judgment on all counts. Additionally, in evaluating summary judgment, Lakeview asks the Court to exclude from consideration the testimony of two of NRCC's experts. The Court will address each matter in turn.

         During oral argument, the Court requested that the parties supplement the record with more accurate pictures of the webpages at issue (as those provided in the record were out of focus or otherwise difficult to read). The parties prepared a joint submission, which the Court now accepts. Dkt. 93.

         Additionally, NRCC filed a Motion to Supplement the record, dkt. 89, in support of its opposition to summary judgement. The Court will also address this motion.

         III. LEGAL STANDARD

         A. Summary Judgment

         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). This Court's role at summary judgment is not “to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Zetwick v. Cty. of Yolo, 850 F.3d 436, 441 (9th Cir. 2017) (citation omitted). In considering a motion for summary judgment, this Court must “view[] the facts in the non-moving party's favor.” Id. To defeat a motion for summary judgment, the respondent need only present evidence upon which “a reasonable juror drawing all inferences in favor of the respondent could return a verdict in [his or her] favor.” Id. (citation omitted). Accordingly, this Court must enter summary judgment if a party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The respondent cannot simply rely on an unsworn affidavit or the pleadings to defeat a motion for summary judgment; rather the respondent must set forth the “specific facts, ” supported by evidence, with “reasonable particularity” that precludes summary judgment. Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 997 (9th Cir. 2001).

         B. Exclusion of Expert Testimony

         Even though this case is not at the trial stage, the extent to which experts may render an opinion is addressed under the well-known standard first enunciated in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), and its progeny, and now set forth in Rule 702 of the Federal Rules of Evidence. See Moore v. Deer Valley Trucking, Inc., No. 4:13-CV-00046-BLW, 2014 WL 4956241, at *1 (D. Idaho Oct. 2, 2014).

         Rule 702 establishes several requirements for admitting an expert opinion. First, the evidence offered by the expert must assist the trier of fact either to understand the evidence or to determine a fact in issue. Primiano v. Cook, 598 F.3d 558, 563 (9th Cir. 2010); Fed.R.Evid. 702. “The requirement that the opinion testimony assist the trier of fact goes primarily to relevance.” Id. (Internal quotations and citation omitted).

         Additionally, the witness must be sufficiently qualified to render the opinion. Id. If specialized knowledge will assist the trier of fact in understanding the evidence or determining a fact in issue, a witness qualified by knowledge, skill, experience, training or education may offer expert testimony where: (1) the opinion is based upon sufficient facts or data, (2) the opinion is the product of reliable principles and methods; and (3) the witness has applied those principles and methods reliably to the facts of the case. Fed.R.Evid. 702; Daubert, 509 U.S. at 592-93; Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999). The inquiry is a flexible one. Primiano, 598 F.3d at 564. Ultimately, a trial court must “assure that the expert testimony both rests on a reliable foundation and is relevant to the task at hand.” Id. (internal quotation marks and citation omitted).

         IV. ANALYSIS

         A. Motion for Summary Judgment

         Lakeview argues that all of NRCC's claims fail as a matter of law and because there are no disputed facts in this case. The Court will address each cause of action in turn. However, the Court will place extra emphasis on the first claim, as the analysis there is relevant to later claims.

         1. Trademark Infringement Under the Lanham Act

         In order to prevail on a claim for trademark infringement, NRCC must establish that: (1) it is the owner of a valid and protectable trademark; (2) the defendant used the mark in commerce; (3) the defendant's use of the mark is likely to cause confusion; and (4) NRCC has suffered damages. 15 U.S.C. § 1125(a); Adobe Sys. Inc. v. Christenson, 809 F.3d 1071, 1081 (9th Cir. 2015) (citing Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1030 (9th Cir. 2010)).

         Commercial use of the mark is a jurisdictional predicate. Bosley Med Inst., Inc. v. Kremer, 403 F.3d 672, 676 (9th Cir. 2005). If a defendant does not use the mark in commerce, a plaintiff's claim for trademark infringement fails as a matter of law. Id. If commercial use is established, then the “core element of trademark infringement” is “[p]rotecting against a likelihood of confusion, ” which helps to “ensur[e] that owners of trademarks can benefit from the goodwill associated with their marks” and “that consumers can distinguish among competing producers.” Adobe Sys. Inc., 809 F.3d at 1081 (quoting Brookfield Commc'ns v. W. Coast Entm't Corp., 174 F.3d 1036, 1053 (9th Cir. 1999); Thane Int'l, Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901 (9th Cir. 2002)).

         a. Owner of a Valid Trademark

         As stated previously, in 2012, when Lakeview purchased some of Creamery's assets, it also entered into a Limited License Agreement that allowed it to use the name “Nelson-Ricks Creamery Company.” In March of 2014, when NRCC Asset Acquisition bought Creamery's remaining assets, Creamery-in anticipation of the pending sale- revoked this agreement with Lakeview. Lakeview immediately disconnected the “About Us” webpage that had the Mark's language. Creamery, however, retained the right to collect royalties from Lakeview, and the Mark did not officially become NRCC Asset Acquisition's until an escrow period of 180 days had closed. The Mark, therefore, could not become NRCC's until sometime after August 24, 2014.[1] On August 11, 2014, NRCC filed its application to register the Mark with the United States Patent and Trademark Office (“USPTO”), and on April 21, 2015, NRCC registered the Mark with the USPTO.

         Lakeview contends that because NRCC did not have a valid and enforceable trademark prior to August 24, 2014, (when NRCC Assets Acquisition actually acquired the rights to the Nelson-Ricks Creamery Company Mark) any use by Lakeview prior to that date is irrelevant and NRCC only had a valid trademark after August 24, 2014.

         NRCC asserts that it had a common law trademark prior to registration. Even assuming this is true, the earliest date NRCC could claim a common law trademark is March 24, 2014-the date of NRCC Assets Acquisition's purchase of Creamery assets. Construing all possible inferences in NRCC's favor, the period of infringement would at most be from March 24, 2014, to August 2016 (when, following NRCC's cease and desist letter, Lakeview removed all references to Nelson-Ricks Creamery Company from the “About Us” webpage).

         It is not completely clear if NRCC had a valid and enforceable trademark during the time in question, but construing the facts in NRCC's favor, the Court will assume that it did. However, even assuming the Mark's validity, this is only the first step of the inquiry.

         b. Use in Commerce

         The second section of the Lanham Act states that any person who “use[s] in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive” can be held liable for such use. 15 U.S.C. § 1114(1)(a); see also Bosley, 403 F.3d at 676. Courts do not consider there to be infringement under the Lanham Act if a website contains another's trademark if the website does not offer any product for sale or contain any paid advertisements. Bosley, 403 F.3d at 678.

         Here, the mention of Nelson-Ricks Creamery Company on the “About Us” webpage was mostly historical in nature. The “About Us” section of the website told the story of the Banquet cheese brand and the Mark was included to describe when the company was founded and what kind of products are offered. While the website originally contained an online store link (which the Court would have interpreted as offering products for sale), Lakeview removed that function prior to NRCC's accusation and its prior existence is irrelevant to the Court's determination. Simply put, there is no indication that Lakeview used the Mark in commerce.

         NRCC makes a tenuous argument in its reply brief that because the website contains information about a business, it necessarily is an advertisement and is commercial in nature. NRCC does not cite to any court that has made such a finding and this Court declines to do so now.

         c. Confusion

         Although the Court does not find that Lakeview used the Mark in commerce, the Court will nonetheless address confusion, as this is the crux of any trademark claim. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992) (determining that it is “undisputed that liability under § 43(a) requires proof of the likelihood of confusion”); Fortune Dynamic, Inc., 618 F.3d at 1030 (finding that “the likelihood of confusion is the core element of trademark infringement”). Additionally, in this case specifically, confusion and damages are the two elements that weigh most heavily in favor of summary judgment, as NRCC cannot provide a single example of confusion or point to a single dollar in damages.

         To establish a likelihood of confusion, a plaintiff must establish that confusion is probable rather than merely possible. HMH Pub. Co. v. Brincat, 504 F.2d 713, 717 (9th Cir. 1974). Both sides agree that the Court should utilize the long-recognized factors set forth in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979), to determine if a likelihood of confusion exists in this case.

         In applying the Sleekcraft factors, a court is to consider: (1) the similarity of the marks; (2) the relatedness of the two companies' services; (3) the marketing channel used; (4) the strength of plaintiff's mark; (5) the defendant's intent in selecting its mark; (6) evidence of actual confusion; (7) the likelihood of expansion into other markets; and (8) the degree of care likely to be exercised by purchasers. See GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000). The Sleekcraft factors are not mandatory or an exhaustive list but rather “helpful guideposts” for the Court to use. Fortune Dynamic, Inc., 618 F.3d at 1030. The Court need not give the factors equal weight, or even utilize each factor, as some may not be relevant or applicable. Marketquest Grp., Inc. v. BIC Corp., 862 F.3d 927, 938 (9th Cir. 2017). The purpose of a “factor” list such as this is simply to “facilitate a court's analysis, to the degree [the factors] are relevant in a given case.” Id.

         The first four factors are not as relevant to the Court because: the use in question here is not just of a similar mark, but is the use of the actual Mark itself (factor 1); the two companies services are closely related (factor 2); both use the internet as a marketing channel (factor 3); and the strength of the Mark is not in question (factor 4).[2]Additionally, because Lakeview and NRCC are already competitors in a niche market, the likelihood of expansion (factor 7) is not particularly relevant in this case. See Brookfield, 174 F.3d at 1060. The remaining three ...


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