Axon Enterprise, Inc. v. Luxury Home Buyers, LLC

Opinion

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 Axon Enterprise, Inc., Case No.: 2:20-cv-01344-JAD-MDC 4 Plaintiff v. 5 Order Amending Permanent Injunction Luxury Home Buyers, LLC d/b/a Accredited 6 Financial Services, [ECF No. 90]

7 Defendant

8 Axon Enterprise, Inc. sues Luxury Home Buyers, LLC (LHB) for trademark 9 infringement, alleging that LHB used Axon’s “Taser” mark in a manner that violated Axon’s 10 intellectual-property rights. Last year, I granted in part Axon’s motion for summary judgment on 11 its false-advertising and deceptive-trade-practices claims because LHB’s advertising suggested 12 an affiliation with Axon’s brand that did not exist, and I permanently enjoined LHB “from 13 making statements claiming sponsorship by or affiliation with Axon or ownership of any of 14 Axon’s marks.”1 But I denied Axon’s motion for judgment on its claim that LHB’s use of the 15 Taser mark infringed on Axon’s intellectual-property rights: LHB asserted a nominative-fair-use 16 defense to that claim, I applied the Ninth Circuit’s three-prong test to that defense, and I 17 concluded that LHB satisfied the first prong but failed the second, and genuine disputes of fact 18 prevented me from ruling on the third. Citing Toyota Motor Sales, U.S.A., Inc. v. Tabari,2 which 19 used the disjunctive or when outlining the three factors in a nominative-fair-use test, I treated the 20 factors as a balancing test and determined that a jury needed to break the tie on the third factor. 21 22

23 1 ECF No. 70 at 37. 2 Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171 (9th Cir. 2010). 1 Axon promptly moved for reconsideration of that conclusion, arguing that it was clear 2 error for me to balance the factors because the Ninth Circuit treats the test as an all-or-nothing 3 proposition: if the defendant fails just one factor, it can’t rely on the nominative-fair-use 4 defense.3 I granted that motion, concluding that LHB needed to satisfy all three factors in order 5 to show that its use of the Taser mark was nominative fair use, and found that because LHB

6 couldn’t satisfy the second factor, Axon was entitled to summary judgment on its trademark- 7 infringement and false-designation-of-origin claims.4 I also ordered Axon to file a supplemental 8 brief explaining its entitlement to injunctive relief on those claims and addressing any First 9 Amendment concerns associated with limiting LHB’s ability to advertise its refurbished Taser 10 products.5 11 In its supplement, Axon asks the court to modify its permanent injunction to prohibit 12 LHB “from using any Taser logos or the stylized Taser Mark” on any of its materials, “restrict 13 the use of the standard Taser word mark to plaintext of the same type size as the predominant 14 document text,” and require a disclaimer of affiliation and ownership on LHB’s website and

15 advertising materials.6 It contends that these restrictions appropriately balance Axon’s interest in 16 protecting its trademark and LHB’s First Amendment rights to advertise its products. LHB did 17 not file a response. 18 “The trademark law generally prevails over the First Amendment when another’s 19 trademark (or confusingly similar mark) is used without permission as a means of source 20 21 3 ECF No. 79. 22 4 ECF No. 88. 23 5 Id. at 6. 6 ECF No. 90 at 2–3. 1 identification.”7 But “a trademark injunction, particularly one involving nominative fair use, can 2 raise serious First Amendment concerns because it can interfere with truthful communication 3 between buyers and sellers in the marketplace.”8 So when issuing a trademark injunction, a 4 court “must ensure that it is tailored to eliminate only the specific harm alleged.”9 Axon’s 5 proposed injunction is narrowly tailored to the harm alleged: LHB’s use of the Taser mark’s

6 logos and lettering and its suggestion of affiliation with Axon. And Axon’s proposed 7 requirement that LHB disclaim its affiliation with Axon ensures truthful communication between 8 LHB and its customers. So I grant the injunctive relief that Axon seeks. 9 Conclusion 10 IT IS HEREBY ORDERED that the permanent injunction previously entered (ECF No. 11 70 at 37) is amended as follows: 12 • LHB and its affiliates are permanently enjoined from making statements claiming 13 sponsorship by or affiliation with Axon or ownership of Axon’s marks, and from using 14 any TASER logos or the stylized TASER mark on any of their websites, brochures,

15 letters, emails, and other advertising materials; 16 • LHB and its affiliates must restrict the use of the standard TASER word mark to plaintext 17 of the same size as the predominant document text; and 18 • LHB and its affiliates must include the following disclaimer of affiliation and ownership 19 on websites and advertising materials in a type size not smaller than the smallest type on 20 the page: 21

22 7 Jack Daniel’s Props., Inc. v. VIP Prods. LLC, 599 U.S. 140, 159 (2023). 8 Toyota Motor Sales, 610 F.3d at 1176 (citing Va. State Bd. of Pharmacy v. Va. Citizens 23 Consumer Council, Inc., 425 U.S. 748, 763–64 (1976)). 9 E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1297 (9th Cir. 1992). 1 o “TASER® is a registered trademark of Axon Enterprise, Inc. Accredited Security 2 is not affiliated with Axon, and Axon does not sponsor or endorse Accredited 3 Security or any of its products or services. Any use of the TASER® mark is for 4 identification purposes only.”

US. Distri (ge Jen ifenA, Dorsey 6 March 8, 2024 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23