Schussler et al v. Webster, No. 3:2007cv02016 - Document 70 (S.D. Cal. 2009)
Court Description: ORDER granting in part and denying in part Plaintiffs' 58 Motion for Permanent Injunction; Granting in part and denying in part Defendant's 60 Motion to Vacate Order. Court grants 1.) Dft's motion to vacate the judgment that dft� 39;s use of the name 'Hot Dog Hall of Fame' does not invalidate Schussler Creative's trademark for 'Hot Dog Hall of Fame', 2.) denies Dft's motion to vacate its decision that dft has "no trademark right to his use o f 'The Hot Dog Hall of Fame', 3.) enters an amended declaratory judgment in favor of plaintiffs, and 4.) grants in part plaintiffs' motion to permanently enjoin dft from publishing certain statements.. Signed by Judge Irma E. Gonzalez on 3/9/2009. (All non-registered users served via U.S. Mail Service).(jah) (jrl).
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Schussler et al v. Webster Doc. 70 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 STEVEN SCHUSSLER and SCHUSSLER CREATIVE, INC., et al., CASE NO. 07cv2016 IEG (AGB) ORDER: 12 Plaintiffs, (1) GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO VACATE ORDER; (Doc. No. 60) 13 vs. 14 15 (2) ENTERING AMENDED DECLARATORY JUDGMENT; and 16 17 J. FRANK WEBSTER, (3) GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR PERMANENT INJUNCTION. (Doc. No. 58) Defendant. 18 19 20 Presently before the Court are defendant’s motion to vacate the Court’s September 22, 2008 21 Order, and plaintiffs’ motion for permanent injunction. For the reasons stated herein, the Court: (1) 22 grants defendant’s motion to vacate in part; (2) denies defendant’s motion to vacate in part; (3) enters 23 an amended declaratory judgment in favor of plaintiffs; (4) grants plaintiffs’ motion for permanent 24 injunction in part; and (5) denies plaintiffs’ motion for permanent injunction in part. 25 /// 26 /// 27 /// 28 -1- 07cv2016 Dockets.Justia.com 1 2 3 BACKGROUND Factual Background Plaintiffs bring this action for defamation, tortious interference with contract, and tortious 4 interference with prospective economic advantage. Plaintiffs develop concepts for themed 5 restaurants; their previous projects include the “Rainforest Café” and “T-Rex.” In 2005, Schussler 6 Creative filed a trademark application for the mark “Hot Dog Hall of Fame.” Together with its 7 business partner, RED Development, LLC, (“RED Development”) Schussler Creative is 8 developing a restaurant franchise called “Hot Dog Hall of Fame.” The first “Hot Dog Hall of 9 Fame” opened on August 13, 2008, at the Mohegan Sun Casino at Pocano Downs, Wilkes-Barre, 10 Pennsylvania. 11 Defendant is J. Frank Webster, also known as “Uncle Frank” and “Mr. Hot Dog.” 12 Defendant owns a large collection of hot dog memorabilia which he has been collecting since the 13 1970's. He maintains a website with an online newsletter at www.thehotdoghalloffame.com. The 14 last hot dog restaurant he operated closed in 1983. He has never sought or received money in 15 connection with his activities on his website or with the memorabilia collection, although he 16 considers it more than a hobby. It is his eventual plan to open a museum showcasing the 17 collection with an on-site restaurant and other hot-dog related activities. 18 In June of 2007, defendant sent e-mails to various media organizations, hospitality 19 companies, civic leaders, and RED Development regarding plaintiffs’ plan to open the Hot Dog 20 Hall of Fame restaurants. In the e-mails, defendant claimed Mr. Schussler stole the concept of Hot 21 Dog Hall of Fame from him; plaintiffs do not own the intellectual property of the Hot Dog Hall of 22 Fame; and Mr. Schussler was a “liar,” a “thief,” and a “con man.” Defendant also stated he would 23 “poison the well” for Mr. Schussler and “blacken” the “eyes” of Mr. Schussler and his counsel. 24 Procedural Background 25 Plaintiffs filed a complaint on October 18, 2007, alleging (1) defamation, (2) tortious 26 interference with prospective economic advantage, and (3) tortious interference with contract. 27 (Doc. No. 1.) On November 15, 2007, the Court preliminarily enjoined defendant from “sending 28 e-mails, letters, or other correspondence to current or prospective business associates of plaintiffs, -2- 07cv2016 1 or making verbal statements to such persons, or posting materials on a website, which state or 2 imply that plaintiffs have stolen, misappropriated, or infringed upon intellectual property allegedly 3 belonging to defendant relating to the Hot Dog Hall of Fame.” (11/15/2007 Order at 7.) The 4 preliminary injunction is in effect until the conclusion of this litigation. 5 On June 27, 2008, plaintiffs filed a motion for summary judgment and for a permanent 6 injunction of defendant’s “tortious and defamatory behavior.” (Doc. No. 32.) On September 22, 7 2008, the Court issued an Order (“Order”) granting in part and denying in part the motion for 8 summary judgment, and denying the motion for permanent injunction. (Doc. No. 47.) The Court 9 found that “[b]ecause Schussler Creative has registered the trademark, it is presumed valid.” 10 (Order at 4.) The Court granted plaintiffs’ motion for summary judgment as to the claim for 11 trademark rights, and entered a declaratory judgment that defendant had no trademark right in his 12 use of “The Hot Dog Hall of Fame” and that defendant’s use of that name “did not invalidate 13 Schussler Creative’s trademark for ‘Hot Dog Hall of Fame.” (Order at 6-7.) The Order denied 14 plaintiffs’ motion for summary judgment on their defamation and tortious interference claims. 15 On January 14, 2009 plaintiffs moved for a permanent injunction asking the Court to 16 preclude defendant from publishing statements that claim, insinuate, or imply that plaintiffs: (a) do 17 not own or are not entitled to use the phrases “The Hot Dog Hall of Fame” or “Hot Dog Hall of 18 Fame”; or (b) stole or otherwise misappropriated trademark rights from defendant. (Doc. No. 58.) 19 Defendant has filed an opposition, (Doc. No. 65,) and plaintiffs filed a reply. (Doc. No. 66.) On 20 January 26, 2009 defendant moved to vacate the Order under Fed. R. Civ. P. 60(b). (Doc. No. 60.) 21 Plaintiffs filed an opposition (Doc. No. 64,) and defendant has filed a reply. (Doc. No. 67.) 22 23 DISCUSSION I. Defendant’s Motions to Vacate September 22, 2008 Order 24 Federal Rule of Civil Procedure 60(b) provides, “[o]n motion and just terms, the court may 25 relieve a party or its legal representative from a final judgment, order, or proceeding,” for a variety 26 of reasons. Fed. R. Civ. P. 60(b) (2009). Defendant moves the Court for an order vacating in part 27 the Order pursuant to either Fed. R. Civ. P. 60(b)(1), 60(b)(3), or 60(b)(6), primarily because 28 plaintiffs allegedly made false statements of fact and law that “induced” the Court to erroneously -3- 07cv2016 1 issue the declaratory judgment in plaintiffs’ favor. The alleged misrepresentations are set forth 2 below, followed by a discussion of whether relief is warranted under Fed. R. Civ. P. 60(b). Misrepresentations of Fact 3 A) 4 Defendant argues that contrary to plaintiffs’ representations in their pleadings, plaintiffs do 5 not own a registered trademark in the name “Hot Dog Hall of Fame,” and do not even own the 6 trademark application for that name. Defendant also states that regardless of who owns the 7 trademark application, no trademark has ever been issued on the name. Defendant supports his 8 argument with the declaration of Michael A. Febbo. Mr. Febbo’s declaration details reports from 9 the United States Patent and Trademark Office (“PTO”) website regarding trademark applications 10 for the “Hot Dog Hall of Fame,” and attaches those reports as exhibits.1 His declaration and the 11 attached exhibits indicate: 12 13 14 15 16 17 (a) Schussler Creative filed a trademark/service mark application for “Hot Dog Hall of Fame” on March 21, 2005 with an application serial number of 78591560 (“‘560 application.”) The PTO mailed a “final refusal” of the statement of use for the application on November 19, 2008. As of January 21, 2009, no trademark had been issued on the ‘560 application. (b) The application was assigned to an entity called “Creative Attractions, LLC” on November 30, 2007, and the assignment was recorded on December 11, 2007. (Febbo Decl. ISO Mot. to Vacate, ¶¶ 5-12.) 18 Plaintiffs argue they fully and accurately disclosed the assignment of the application to 19 “their affiliate” Creative Attractions, LLC (“Creative Attractions”) as well as the status of their 20 trademark application. With regard to ownership of the trademark application, plaintiffs affirm 21 that Schussler Creative assigned its rights in the ‘560 application to Creative Attractions on 22 November 30, 2007. (Schussler Decl. ISO Opp. to Mot. to Vacate, ¶ 3.) Plaintiffs explain 23 Schussler Creative is a fifty percent owner of Creative Attractions through its wholly-owned 24 subsidiary, Creative Holdings, LLC (“Creative Holdings”). (Id., ¶ 2.) Plaintiffs state that under 25 Creative Attractions’ Member Control Agreement, Schussler Creative, Steven Schussler, and 26 Creative Holdings are required to indemnify Creative Attractions for claims involving its assets. 27 1 28 Mr. Febbo’s declaration also discusses two other trademark applications regarding the “Hot Dog Hall of Fame.” The Court does not discuss them here because the fraud allegation centers on plaintiffs’ representations regarding the ‘560 application in their summary judgment motion. -4- 07cv2016 1 (Id., ¶ 4.) Plaintiffs claim that they were “required” to continue the instant litigation on Creative 2 Attractions’ behalf even after the trademark application was assigned. (Id.) Plaintiffs maintain 3 that their summary judgment motion clearly disclosed the fact that the trademark application had 4 been assigned to Creative Attractions. 5 With regard to the status of the trademark registration,2 plaintiffs argue that although no 6 certificate of registration has issued for the ‘560 application, they expect the registration “in due 7 course.” (Opp. to Motion to Vacate at 8.) On October 18, 2005 the PTO preliminarily determined 8 the ‘560 application for the “Hot Dog Hall of Fame” mark was entitled to trademark protection, a 9 notice of publication issued on November 30, 20053 and the application was published for 10 opposition on December 20, 2005. [Provo Decl. ISO Opp. to Motion to Vacate, (“Provo Decl.,”) ¶ 11 3, Ex. 3.] No opposition having been filed, the PTO issued a notice of allowance4 on March 14, 12 2006. (Id., ¶ 4, Ex. 4.) Plaintiffs argue this notice of allowance meant “that the initial examination 13 has been completed, that the [PTO] has determined the mark to be registerable . . . and registration 14 will issue assuming the applicant files the necessary statement of use.”5 (Opp. at 3.) Mr. 15 16 17 18 19 2 The ‘560 application is an “intent to use” application filed under 15 U.S.C. § 1051(b) (2009). (Provo Decl., ¶ 2., Ex. 1.) Section 1051(b) provides: “(1) A person who has a bona fide intention . . . to use a trademark in commerce may request registration of its trademark . . . by paying the prescribed fee and filing in the [PTO] an application and a verified statement . . . . (3) The statement shall be verified by the applicant and specify . . .(B) the applicant's bona fide intention to use the mark in commerce. . . .” 3 20 21 22 23 24 25 26 27 28 15 U.S.C. § 1062(a) (2009) provides, “[u]pon the filing of an application for registration . . . the Director shall refer the application to the examiner in charge of the registration of marks, who shall cause an examination to be made and, if on such examination it shall appear that the applicant . . . would be entitled to registration upon the acceptance of the statement of use required by[15 USCS § 1051(d)], the Director shall cause the mark to be published in the Official Gazette of the Patent and Trademark Office.” 15 USCS § 1051(d) is cited in relevant part in footnote 5, infra. 4 15 U.S.C. § 1063(b) (2009) provides, “[u]nless registration is successfully opposed . . . (2) a notice of allowance shall be issued to the applicant if the applicant applied for registration under[15 USCS § 1051(b)].” 5 15 U.S.C. § 1051(d) (2009) provides, “[w]ithin six months after the date on which the notice of allowance with respect to a mark is issued under [15 USCS § 1063(b)(2)] . . . the applicant shall file in the [PTO], together with such number of specimens or facsimiles of the mark as used in commerce as may be required . . . a verified statement that the mark is in use in commerce and specifying the date of the applicant’s first use of the mark in commerce and those goods or services specified in the notice of allowance on or in connection with which the mark is used in commerce. Subject to examination and acceptance of the statement of use, the mark shall be registered in the [PTO], a certificate of registration shall be issued for those goods or services recited in the statement -5- 07cv2016 1 Schussler and later, Creative Attractions, received several extensions on the filing date for the 2 statement of use. (Id. at 5.) On September 23, 2008, Creative Attractions filed its statement of use 3 for the mark. (Provo Decl., ¶7, Ex. 8.) On September 29, 2008, the PTO “accepted the statement 4 of use and specimens in class 43”6 but refused the statement of use “regarding the specimens 5 submitted in class 35.” (Id., ¶7, Ex. 9.) Creative Attractions resubmitted the class 35 specimens, 6 and the PTO rejected that submission on November 18, 2008, requesting in a “final” office action 7 that Creative Attractions submit a substitute specimen and supporting statement on or before May 8 18, 2009. (Id., ¶8, Ex. 11.) On January 30, 2009, Creative Attractions submitted a request to 9 divide the application so that the class 43 mark could proceed to registration while the class 35 10 mark was being evaluated. (Id., ¶11, Ex. 12.) In a supplemental declaration, plaintiffs submitted a 11 status report indicating the divisional processing of the class 43 specimens occurred on February 5, 12 2009 under application serial number 78980937, the PTO completed final review of that 13 application, and as of February 10, 2009, the application would “register in due course.” 14 (Markinson Supp. Decl. ISO Opp., Ex. 1.) 15 Plaintiffs further argue they never misrepresented to the Court that they owned a registered 16 trademark as opposed to strictly a trademark application. For example, plaintiffs cite to language 17 in their complaint which states “Schussler Creative is the owner of the U.S. Trademark 18 Application Serial No. 78/591560 for the ‘HOT DOG HALL OF FAME’ trademark for restaurant 19 services, retail store and wholesale distributorship services.” (Compl.,¶ 8.) (emphasis added). 20 Plaintiffs argue that although paragraph 13 of the Complaint states that Schussler Creative owned 21 the ‘560 trademark and not merely the application, that paragraph cited to exhibits indicating 22 Schussler Creative was the owner of the application, and thus the Complaint accurately disclosed 23 plaintiffs’ ownership interest in the application. Plaintiffs also cite to their statement of facts in 24 support of their summary judgment motion indicating the ‘560 application would be approved 25 pending demonstration of “actual use in commerce.” (Stmt. of Facts ISO Mot. Summ. J. at 18-19 26 27 of use for which the mark is entitled to registration. . . .” 6 28 The ‘560 application sought to register the word mark “Hot Dog Hall of Fame” in International classes 43 (restaurant services) and 35 (retail store and wholesale distributorship services) pursuant to 15 U.S.C. § 1051(b) (2009). (Provo Decl., ¶ 2., Ex. 1.) -6- 07cv2016 1 n. 7.) 2 B) 3 Defendant also argues that plaintiffs misrepresented a dispositive legal standard in their Misrepresentations of Law 4 summary judgment motion. Plaintiffs stated in that motion, “Mr. Webster–as a non- 5 registrant–may rebut the presumption of validity only by demonstrating that he was the first to use 6 the mark in commerce and that he has used the mark in commerce continuously since the date of 7 his first use.” (Plts.’ Memo. ISO Mot. for Summ. J. at 4) (emphasis in original). Plaintiffs cited 8 Brookfield Comm., Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1047 (9th Cir. 1999) in 9 support of this assertion. Defendant argues plaintiffs misled the Court because they did not 10 explain the burden-shifting described in Brookfield applied only to “inherently distinctive marks.” 11 Brookfield, 174 F.3d at 1047 n.9. Defendant states this omission was misleading because in this 12 case there has been no agreement that “Hot Dog Hall of Fame” is an inherently distinctive mark, 13 and had the Court known the correct legal test it “clearly and convincingly” would have provided 14 him with the chance to show that the mark is “merely descriptive.” 15 C) 16 A motion under Fed. R. Civ. P. 60(b) is addressed to the Court’s sound discretion and will 17 not be reversed absent an abuse of discretion. Civic Ctr. Square v. Ford (In re Roxford Foods), 12 18 F.3d 875, 879 (9th Cir. 1993). Defendant first argues the Order should be vacated under Fed. R. 19 Civ. P. 60(b)(3), which states that the Court may relieve a party of a “final judgment, order, or 20 proceeding” by reason of “fraud . . ., misrepresentation, or other misconduct of an adverse party.” 21 Fed. R. Civ. P. 60(b)(3) (2009). To prevail under Rule 60(b)(3), the moving party must establish 22 by clear and convincing evidence that a judgment was obtained by fraud, misrepresentation, or 23 misconduct, and that the conduct complained of prevented the moving party from fully and fairly 24 presenting the case. Casey v. Albertson’s Inc., 362 F.3d 1254, 1260 (9th Cir. 2004). The fraud 25 “must not be discover-able by due diligence before or during the proceedings.” Id. “Fraud upon 26 the court,” a narrower concept, embraces only fraud which attempts to, “defile the court itself, or is 27 a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the 28 usual manner its impartial task of adjudging cases that are presented for adjudication.” In re Relief Under Fed. R. Civ. P. 60(b) -7- 07cv2016 1 2 Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir. 1991) (citation omitted). The facts submitted by the parties indicate that plaintiffs do not own the ‘560 patent 3 application, and that no registered trademark has been issued to date for the mark “Hot Dog Hall 4 of Fame.” As an initial matter, the Court finds that plaintiffs’ assignment of the ‘560 application 5 to Creative Attractions does not warrant relief under any provision of Rule 60(b) because the 6 assignment does not materially affect the Court’s review of its summary judgment decision. The 7 Court also finds that plaintiffs made inconsistent statements that led the Court to erroneously 8 conclude they had a registered trademark. However, the Court cannot conclude that plaintiffs 9 defrauded the Court because documents showing the true ownership and status of the ‘560 10 application were attached to plaintiffs’ motion for summary judgment. Similarly, defendant is not 11 entitled to relief under Rule 60(b)(3) due to plaintiff’s alleged misrepresentation of law because 12 the applicability of Brookfield could have been determined through due diligence by defendant or 13 the Court before or during the proceedings. 14 Defendant alternatively argues he is entitled to relief under Rule 60(b)(1), which states that 15 the Court may relieve a party from a judgment by reason of “mistake, inadvertence, surprise, or 16 excusable neglect[.]” Fed. R. Civ. P. 60(b)(1) (2009). Rule 60(b)(1) provides such relief from a 17 judgment on motion made within a year after entry. Kingvision Pay-Per-View v. Lake Alice Bar, 18 168 F.3d 347, 350 (9th Cir. Cal. 1999). A court may also correct its own error of law under Rule 19 60(b)(1). See Id. (citing Liberty Mut. Ins. Co. v. Equal Employment Opportunity Comm., 691 F.2d 20 438, 441 (9th Cir. 1982)).7 21 In the Order, the Court entered judgment finding: (1) “defendant has no trademark right in 22 his use of the ‘Hot Dog Hall of Fame;’” and (2) “[d]efendant’s use of that name does not 23 invalidate Schussler Creative’s trademark for “Hot Dog Hall of Fame.” (Order at 6-7.) In support 24 7 25 26 27 28 Defendant also argues that his lack of the legal knowledge required to competently oppose the summary judgment motion constitute “mistake, inadvertence, or excusable neglect” warranting relief under Rule 60(b)(1). Generally, “neither ignorance nor carelessness on the part of the litigant or his attorney provide [adequate] grounds for relief under Rule 60(b)(1).” Engleson v. Burlington N. R.R., 972 F.2d 1038, 1043 (9th Cir. 1992). Even though defendant was proceeding pro se when he opposed the summary judgment motion, defendant’s arguments and cited authority do not persuade the Court that pro se party is entitled to relief under Rule 60(b)(1) because he lacked the training to properly defend his case on the merits. The Court DENIES defendant’s motion for relief under Rule 60(b)(1) based on his own “mistake, inadvertence, or excusable neglect.” -8- 07cv2016 1 of judgment the Court reasoned that “[b]ecause Schussler Creative has registered the trademark, it 2 is presumed valid,” and found that defendant could not rebut that presumption because he did not 3 use the mark in a sufficiently “commercial” manner. (Order at 6.) This decision was partially in 4 error. In the Ninth Circuit, a registered trademark constitutes “prima facie evidence of the 5 validity of a registered mark and of the registrant’s exclusive right to use the mark on the goods 6 and services specified in the registration.” Brookfield Comm., Inc. v. West Coast Entertainment 7 Corp., 174 F.3d 1036, 1047 (9th Cir. 1999); Sengoku Works Ltd. v. RMC Int’l, Ltd., 96 F.3d 8 1217, 1219 (9th Cir. 1996). Here, although plaintiffs argue they have a registered trademark “for 9 all intents and purposes,” they still do not have a registered trademark. The presumption of 10 validity therefore does not apply. See Glow Indus., Inc. v. Lopez, 252 F. Supp. 2d 962, 976 (C.D. 11 Cal. 2002) (finding that a party with an “imminent” trademark registration still could not avail 12 itself of the presumption that it owned and had the right to use the disputed trademark). 13 Absent the registered trademark presumption, trademark rights are determined under 14 common law. Id. at 976. At common law, the existence and extent of trademark protection for a 15 particular term depends on the term’s inherent distinctiveness. Blinded Veterans Ass'n v. Blinded 16 American Veterans Foundation, 872 F.2d 1035, 1039 (D.C. Cir. 1989). There are five categories 17 of trademarks: (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; and (5) fanciful. Yellow 18 Cab Co. v. Yellow Cab of Elk Grove, Inc., 419 F.3d 925, 927 (9th Cir. 2005). An unregistered 19 mark, such as “Hot Dog Hall of Fame,” “is distinctive and is capable of being protected if it either 20 (1) is inherently distinctive [suggestive, arbitrary, or fanciful] or (2) [is descriptive, but] has 21 acquired distinctiveness through secondary meaning.”8 Kendall-Jackson Winery v. E. & J. Gallo 22 Winery, 150 F.3d 1042, 1047 (9th Cir. 1998). Ownership of a distinctive mark is then determined 23 through priority of commercial use. See, e.g., CreAgri, Inc. v. USANA Health Scis., Inc., 474 24 F.3d 626, 630 n. 9 (9th Cir.) (explaining that before examining priority of use in a trademark 25 infringement claim, the Court assumed the mark was eligible for protection–i.e. it was inherently 26 distinctive or had acquired inherent distinctiveness through secondary meaning). 27 8 28 “Secondary Meaning” means that purchasers singularly associate the mark with the party claiming rights to the mark. Dept of Parks & Rec. v. Bazaar Del Mundo, Inc., 448 F.3d 1118, 1128 (9th Cir. Cal. 2006). -9- 07cv2016 1 Plaintiffs have not shown they have a protectable trademark interest in “Hot Dog Hall of 2 Fame” because the mark is unregistered and they made no showing on summary judgment that the 3 mark was: (1) inherently distinctive, or (2) descriptive, but distinctive through secondary meaning. 4 Kendall-Jackson, 150 F.3d at1047. Plaintiffs also did not make the required showing of use of the 5 mark in commerce in their summary judgment motion. Sengoku, 96 F.3d at 1219. (“[i]t is 6 axiomatic in trademark law that the standard test of ownership is priority of use. To acquire 7 ownership of a trademark it is not enough to have invented the mark first or even to have 8 registered it first; the party claiming ownership must have been the first to actually use the mark in 9 the sale of goods or services.”) The Court therefore vacates its prior decision that “[d]efendant’s 10 use of [the name ‘Hot Dog Hall of Fame’] does not invalidate Schussler Creative’s trademark for 11 ‘Hot Dog Hall of Fame,’” because plaintiffs in fact have not established trademark rights in the 12 name. 13 The parties also dispute whether the Court’s erroneous application of law warrants 14 defendant’s relief from the Court’s declaratory judgment that defendant had “no trademark right in 15 his use of ‘The Hot Dog Hall of Fame.’” (Order at 6.) Plaintiffs argue that regardless of the 16 validity of their own trademark rights to “Hot Dog Hall of Fame,” they are entitled to a declaratory 17 judgment that defendant has no rights to the mark because on summary judgment defendant failed 18 to show the requisite priority of commercial use. Defendant asserts that only “inherently 19 distinctive” marks are governed by a priority of use analysis, citing Brookfield, 174 F.3d 1036 20 at1047 (“a fundamental tenet of trademark law is that ownership of an inherently distinctive mark . 21 . .is governed by priority of use.”) He argues “descriptive” marks, which are not inherently 22 distinctive, are only protectable by proof of secondary meaning. Defendant therefore argues the 23 Court must determine whether or not “Hot Dog Hall of Fame” is inherently distinctive before 24 determining he has no trademark rights due to lack of prior commercial use. 25 Defendant is correct that a descriptive mark must be shown to have secondary meaning to 26 eligible for protection. Kendall-Jackson, 150 F.3d at1047. However, he is incorrect in stating that 27 only “inherently distinctive” marks are governed by the priority of use requirement for three 28 reasons. First, the user of any distinctive mark (including a descriptive mark with secondary - 10 - 07cv2016 1 meaning) must also show priority of use in order to prove priority of a trademark right. CreAgri, 2 474 F.3d at 630 n. 9; see also 1 Anne Gilson Lalonde, Gilson on Trademarks § 3.03[2][b] (2008) 3 (“The owner of a trademark which is not inherently distinctive, which requires proof of secondary 4 meaning as prerequisite to legal protection, has a more strict priority requirement [than the owner 5 of an inherently distinctive mark]. He must prove not only that he adopted and used his mark [in 6 commerce] first but also that it attained secondary meaning prior to the adoption and use of the 7 confusingly similar mark.”) Second, the plain language of Brookfield, a case cited by defendant, 8 does not restrict the applicability of the priority of use rule to inherently distinctive marks; it 9 merely states the rule is applicable to inherently distinctive marks. Third, defendant has no 10 protectable trademark interest regardless of the distinctiveness of the mark. If the mark is not 11 distinctive, it is not eligible for protection, and neither plaintiffs nor defendant have a trademark 12 right. If the mark is distinctive, the prior commercial use rule applies, and the Court has already 13 found, based on undisputed facts that over the course of thirty years defendant “did not use the 14 mark in a sufficiently ‘commercial’ manner to create an enforceable trademark right.” (Order at 5- 15 6.) Thus, the Court’s determination that defendant did not establish the relevant commercial use to 16 establish trademark rights is sound, and its decision that defendant has “no trademark right in his 17 use of ‘The Hot Dog Hall of Fame’” remains in place.9 18 II. 19 Plaintiffs’ Motion for Permanent Injunction Plaintiffs have moved the Court for a permanent injunction consistent with the declaratory 20 judgment Order. 21 A) 22 To obtain a permanent injunction, a moving party must demonstrate “(1) that it has Legal Standard 23 suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are 24 inadequate to compensate for that injury; (3) that, considering the balance of hardships between 25 the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would 26 9 27 28 Defendant has alternatively moved for relief under Rule 60(b)(6). The motion is DENIED because defendant’s asserted grounds for relief are not materially distinguishable from those he offered in support of his Rule 60(b)(1) and (b)(3) motions. A motion brought under 60(b)(6) must be based on grounds other than those listed in the preceding clauses of Rule 60(b). Lafarge Conseils Et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1338 (9th Cir. 1986). - 11 - 07cv2016 1 not be disserved by a permanent injunction.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 2 391 (2006). The considerations with respect to a permanent injunction are substantially similar to 3 those applicable to a preliminary injunction, except that to obtain a permanent injunction, the 4 plaintiff actually must have succeeded on the merits. Sierra Club v. Penfold, 857 F.2d 1307, 1318 5 (9th Cir. 1988). Whether to grant or deny a request for a permanent injunction is within a court's 6 equitable discretion. eBay, 547 U.S. at 391. 7 B) 8 There are two grounds upon which plaintiffs request injunctive relief. First, they request 9 that the Court enjoin defendant from publishing statements claiming plaintiffs do not own or are Success on the Merits 10 not entitled to use the phrases “The Hot Dog Hall of Fame” or “Hot Dog Hall of Fame.” As 11 discussed supra, plaintiffs have not established they own or are exclusively entitled to use those 12 phrases, and thus have not shown success on the merits. Accordingly, the Court denies the motion 13 based on this ground. 14 Second, plaintiffs request that the Court enjoin defendant from making statements that 15 plaintiffs stole or misappropriated trademark rights from defendant. Defendant argues the truth of 16 his allegedly libelous statements is a disputed issue of fact that was reserved for trial by the 17 Court’s summary judgment Order, and that plaintiffs have thus not demonstrated success on the 18 merits.10 19 Even though it is a disputed issue of fact whether plaintiffs stole defendant’s general idea, 20 it is not disputed that plaintiffs stole defendant’s trademark rights, because as a matter of law 21 defendant has no trademark rights. Plaintiffs’ request for injunctive relief is consistent with the 22 Court’s finding that defendant has no protectable trademark right to the “Hot Dog Hall of Fame.” 23 The Court finds that plaintiffs have demonstrated success on the merits with respect to this request. Irreparable Harm 24 C) 25 To establish irreparable harm a party must demonstrate that but for the grant of equitable 26 relief, there is a substantial likelihood that the party will suffer an injury ‘for which a monetary 27 28 10 In the Order, the Court concluded “a reasonable jury could find that Mr. Schussler actually took defendant’s idea and thus the “gist” of his emails was true.” (Order at 10.) - 12 - 07cv2016 1 award cannot be adequate compensation.’” LaGuardia Assocs. v. Holiday Hospitality Franchising, 2 Inc., 92 F. Supp. 2d 119, 130 (E.D.N.Y. 2000) (quoting Tom Doherty Assocs., Inc. v. Saban 3 Entm't, Inc., 60 F.3d 27, 37 (2d Cir. 1995). 4 Plaintiffs do not present any new evidence or supporting documentation in support of their 5 argument that they have suffered and will suffer irreparable harm absent the requested injunctive 6 relief. Plaintiffs simply refer to their “previous filings” in support of their argument and mention 7 that plaintiffs’ statements have delayed restaurant openings and threatened Schussler Creative’s 8 reputation. Defendant argues plaintiffs have not shown irreparable harm because they have not 9 attached any evidence to their motion and simply make a general reference to “prior pleadings” for 10 support. Defendant cites no authority which precludes the Court from referring to prior pleadings 11 to determine irreparable harm. 12 The Court finds that the same bases for irreparable harm that supported the preliminary 13 injunction also support the granting of the permanent injunction. The Court previously found that 14 if defendant continued to send e-mails about the disputed intellectual property interests, “plaintiffs 15 will likely suffer irreparable damage to their reputation.” (Prel. Inj. Order at 6.) See Rent-A- 16 Center, Inc. v. Canyon Television & Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991) (reputational 17 damage can constitute irreparable harm). The Court based its finding on the facts, supported by 18 sworn declarations and exhibits that: (1) plaintiffs’ reputation is very important in their industry; 19 (2) plaintiffs had previously enjoyed a good reputation and plaintiffs were concerned that 20 defendant’s emails would harm that reputation irreparably; (3) e-mails are easily forwarded, 21 causing irreparable damage over a short period of time, and one of defendant’s emails was in fact 22 forwarded to plaintiffs by a third-party recipient; (4) defendant intended to “poison the well” 23 against plaintiffs and stated he was “ready to stare [Schussler] down to the bitter end,” indicating 24 his desire to harm their reputation. (Prel. Inj. Order at 6.) Here, plaintiffs’ reputational interests 25 continue to exist, and communications by defendant indicating plaintiffs stole his trademark rights 26 could similarly damage those interests. Inadequate Legal Remedy 27 D) 28 “Injunctive relief is proper only if monetary damages or other legal remedies will not - 13 - 07cv2016 1 compensate the plaintiffs for their injuries.” Walters v. Reno, 145 F.3d 1032, 1048 (9th Cir. 2 1998). In other words, mere economic injury will not support a request for injunctive relief. 3 Rent-A-Center, 944 F.2d at 603. Damage based on reputation is an intangible injury that is 4 difficult to valuate, id., and is the main source of plaintiffs’ likely irreparable harm. Plaintiffs also 5 point out that to the extent any injury is compensable by damages, defendant’s insolvency “renders 6 any money award worthless.” (Reply at 3.) The Court therefore finds that plaintiffs do not have 7 an adequate remedy at law for their injuries. 8 E) 9 Plaintiffs argue defendant will suffer no hardship if the Court grants the permanent Balance of Hardships 10 injunction because the only effect would be to prevent defendant from making statements that 11 would contravene the Court’s declaratory judgment. Plaintiffs argue that if the Court does not 12 grant the injunction they will continue to suffer hardship because defendant has indicated that he 13 will continue his efforts to communicate with the public about plaintiffs allegedly stealing his 14 intellectual property rights. Plaintiffs also argue that absent an injunction they will be forced to 15 file additional lawsuits against defendant if he continues to issue statements that contradict the 16 Court’s declaratory judgment. Defendant argues the balance of hardships tips in his favor because 17 he has devoted much of his life to the “Hot Dog Hall of Fame” and a permanent injunction would 18 preclude him from discussing his rights relating to his business efforts and from achieving his 19 dream of opening a museum and retail outlet. 20 However, the balance of hardships tips in favor of granting equitable relief to plaintiffs. 21 An injunction does not preclude defendant from discussing his business efforts, as he contends, 22 because the equitable relief plaintiffs seek is very narrow. Plaintiffs merely request that the Court 23 enjoin defendant from publishing statements that plaintiffs stole his trademark rights. Public Interest 24 F) 25 In order to obtain a permanent injunction, a party must also show that injunctive relief 26 would not disserve the public interest. N. Cheyenne Tribe v. Norton, 503 F.3d 836, 843 (9th Cir. 27 2007). Plaintiffs argue the public interest would not be disserved by entry of a permanent 28 injunction because the Court has already found defendant’s statements that plaintiffs stole his - 14 - 07cv2016 1 trademark rights to be untrue. Plaintiffs argue the public will not benefit if they are forced to bring 2 a lawsuit against defendant every time he publishes a statement that contradicts the Court’s 3 declaratory judgment. Defendant argues the public interest would be disserved by a permanent 4 injunction because he would be precluded from opening his own “Hot Dog Hall of Fame” 5 museum and making thirty years of his life’s work available for free to the public. 6 Defendant’s argument is without merit; an injunction precluding defendant from publishing 7 statements that plaintiffs stole his trademark rights, in and of itself, does not preclude defendant 8 from opening a museum or retail outlet. The public interest would not be disserved by entry of the 9 injunction. 10 G. First Amendment Concerns 11 Defendant argues that the requested injunction would be an unconstitutional prior restraint 12 on his First Amendment Rights. Defendant’s argument is unavailing. In this case, the Court has 13 determined that defendant has no enforceable trademark right, and that any assertions that 14 plaintiffs stole his trademark rights are therefore false. Although prior restraint of speech is 15 constitutionally repugnant, Near v. State of Minnesota, 283 U.S. 697, 713 (1931), the First 16 Amendment offers no protection for false or deceptive commercial speech. Central Hudson Gas & 17 Elec. Corp. v. Public Serv. Comm’n, 447 U.S. 557, 563 (1980); Bose Corp. v. Consumers Union 18 of U.S., Inc., 466 U.S. 485, 503-04. Moreover, freedom of speech “is . . . not an absolute right, 19 and the state may punish its abuse.” Near, 283 U.S. at 707-08. Once a final determination is 20 rendered that a statement constitutes unprotected speech, “‘it is not a prior restraint for a court to 21 enjoin the defendant from repeating that statement.’” New.Net. Inc. v. Lavasoft, 356 F. Supp. 2d 22 1071, 1084 (C.D. Cal. 2003) (citing Kramer v. Thompson, 947 F.2d 666, 676 (3d Cir. 1991)). 23 H. 24 Plaintiffs have succeeded on the merits of one of their asserted bases for injunctive relief 25 Permanent Injunctive Relief Is Granted In Part and have satisfied the factors set out in eBay with respect to their request. 26 CONCLUSION 27 For the foregoing reasons, the Court: (1) GRANTS defendant’s motion to vacate the 28 judgment that “[d]efendant’s use of [the name ‘Hot Dog Hall of Fame’] does not invalidate - 15 - 07cv2016 1 Schussler Creative’s trademark for ‘Hot Dog Hall of Fame;’” (2) DENIES defendant’s motion to 2 vacate its decision that defendant has “no trademark right in his use of ‘The Hot Dog Hall of 3 Fame;’” (3) enters an amended declaratory judgment in favor of plaintiffs consistent with these 4 findings; and (4) GRANTS IN PART plaintiff’s motion to permanently enjoin defendant from 5 publishing certain statements. 6 Therefore, defendant and his officers, agents, employees, independent contractors, or other 7 persons acting under his supervision or control or at his request are permanently enjoined from 8 sending e-mails, letters, or other correspondence to current or prospective business associates of 9 plaintiffs, or making verbal statements to such persons, or posting materials on a website, which 10 state or imply that plaintiffs have stolen, misappropriated, or infringed upon defendant’s 11 trademark rights to the Hot Dog Hall of Fame. 12 13 IT IS SO ORDERED. 14 15 DATED: March 9, 2009 16 17 IRMA E. GONZALEZ, Chief Judge United States District Court 18 19 20 21 22 23 24 25 26 27 28 - 16 - 07cv2016
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