Bullseye Leak Detection, Inc. v. Jeremy Garcia

Opinion

1 2 3 4 5 6 7 10 San Francisco Division 11 BULLSEYE LEAK DETECTION, INC., Case No. 25-cv-10395-LB

12 Plaintiff, ORDER DENYING MOTION TO 13 v. DISMISS

14 JEREMY GARCIA, Re: ECF No. 10 15 Defendant. 16

18 This is a trademark-infringement action. Plaintiff Bullseye Leak Detection, Inc., holds U.S. 19 Trademark Registration 5,739,791 for the standard-character mark BULLSEYE LEAK 20 DETECTION. It contends that defendant Jeremy Garcia owns a competing leak-detection business 21 (for plumbing, pools, and the like) in the San Francisco Bay Area and Central Valley under the 22 identical name, causing consumer confusion. The complaint asserts five claims: (1) direct 23 trademark infringement under section 32 of the Lanham Act, 15 U.S.C. § 1114; (2) direct 24 trademark infringement, false designation of origin, and unfair competition under section 43(a) of 25 the Lanham Act, id. § 1125(a); (3) common-law trademark infringement; (4) common-law unfair 26 competition; and (5) unfair competition under Cal. Bus. & Prof. Code § 17200. 27 The defendant moves to dismiss the complaint on three grounds: (1) the plaintiff has not 1 overlap of services; and (3) amendment is futile because laches bars the claims. The motion is 2 denied: the complaint plausibly alleges claims, including priority of use and consumer confusion, 3 and the laches defense turns on fact questions unsuitable for resolution at the pleadings stage. 4 6 The plaintiff is a California corporation with its principal place of business in West Sacramento, 7 California. It was incorporated on March 16, 2009, and offers plumbing, leak detection, gas-line 8 repair, sewer repair, and related services to residential and commercial customers.1 Defendant 9 Jeremy Garcia is a California individual with a principal place of business in San Jose, California. 10 His business is “Bullseye Leak Detection,” which since at least January 2014 has offered “identical” 11 services: locating leaks in plumbing and swimming pools in the San Francisco Bay Area and the 12 Central Valley.2 13 The plaintiff owns U.S. Trademark Registration No. 5,739,791 for the standard character mark 14 BULLSEYE LEAK DETECTION in class 42 for “Inspection services, namely, detection of leaks 15 in buildings, spas, pools ground, sewers.” It was registered on April 30, 2019, based on an 16 application filed September 28, 2018, and was made incontestable on April 3, 2025. The plaintiff 17 has used the mark extensively and continuously in commerce in California since at least June 25, 18 2008, and in interstate commerce since at least July 12, 2016.3 19 The defendant has held the fictitious name “Bullseye Leak Detection” since August 19, 2009.4 20 On June 5, 2019, the plaintiff sent a cease-and-desist letter and resent it on April 17, 2020.5 21 The defendant sent an email on April 30, 2020, that he would consult with a trademark attorney 22 23 1 Compl. – ECF No. 1 at 2 (¶¶ 5–6). Citations refer to material in the Electronic Case File (ECF); 24 pinpoint citations are to the ECF-generated page numbers at the top of documents. 25 2 Id. at 2 (¶¶ 7, 10–11), 4 (¶ 26); Website Screenshot, Ex. A to id. – ECF No. 1-1. 3 Compl. – ECF No. 1 at 3 (¶¶ 17–19); Trademark Registration, Ex. C to id. – ECF No. 1-3 at 2 (first 26 use 6-25-2008; in commerce 7-12-2016); Notification, Ex. D to id. – ECF No. 1-4. 27 4 Fictitious Bus. Name Recs. – ECF No. 10-1. The court judicially notices the public record. Fed. R. Evid. 201; Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). 1 and had added a disclaimer to his website that he had no association with the plaintiff.6 In early 2 2023, the plaintiff spoke with the defendant on the phone to try to resolve ongoing consumer 3 confusion.7 The plaintiff sent a follow-up email on February 1, 2023, proposing alternative names 4 for the defendant’s business and referencing phone calls that he had received “from people 5 confusing our companies.”8 The parties tried to settle the matter repeatedly over the phone but did 6 not reach an agreement.9 The plaintiff continues to receive inquiries from customers who confuse 7 the businesses.10 8 The plaintiff filed the lawsuit on December 4, 2025. The court held a hearing on the motion to 9 dismiss on March 26, 2026. The court has federal-question jurisdiction. 28 U.S.C. § 1331. The 10 parties consented to magistrate-judge jurisdiction.11 Id. § 636(c)(1). 11 13 A complaint must contain a short and plain statement of the claim showing that the pleader is 14 entitled to relief to give the defendant fair notice of the claim and the grounds upon which it rests. 15 Fed. R. Civ. P. 8(a); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). It may fail by lacking a 16 cognizable legal theory or sufficient facts under one. Woods v. U.S. Bank N.A., 831 F.3d 1159, 17 1162 (9th Cir. 2016). The court accepts factual allegations as true and construes them favorably to 18 the plaintiff. Interpipe Contracting, Inc. v. Becerra, 898 F.3d 879, 886–87 (9th Cir. 2018). But 19 allegations must state a plausible claim. Twombly, 550 U.S. at 570. Threadbare recital of the 20 elements of a claim, supported by mere conclusory statements, do not suffice. Ashcroft v. Iqbal, 21 556 U.S. 662, 678 (2009). 22 23

24 6 Compl. – ECF No. 1 at 5 (¶ 37); Email, Ex. I to id. – ECF No. 1-9. 25 7 Compl. – ECF No. 1 at 5 (¶ 38). 26 8 Id. at 6 (¶ 39); Email, Ex. J to id. – ECF No. 1-10. 9 Compl. – ECF No. 1 at 6 (¶ 40). 27 10 Id. (¶ 41). 2 The defendant moves to dismiss on three grounds: (1) the plaintiff failed to plausibly allege 3 priority of use, which is necessary to establish ownership; (2) even if the plaintiff has a valid mark, 4 it did not allege that the plaintiff serves the San Francisco Bay area or Central Valley (the 5 defendant’s markets), eliminating the possibility of consumer confusion; and (3) laches bars the 6 claims.12 These grounds turn on fact issues that are not resolvable by a Rule 12(b)(6) motion. 7 8 1. Prior Rights 9 The claims for trademark infringement and unfair competition are under the Lanham Act, 15 10 U.S.C. §§ 1114 and 1125(a), and California common law. The elements of the California common- 11 law claims are the same as the federal trademark claims. Grupo Gigante SA De CV v. Dallo & Co., 12 Inc., 391 F.3d 1088, 1100 (9th Cir. 2004) (trademark); Int’l Order of Job’s Daughters v. Lindeburg 13 & Co., 633 F.2d 912, 916–17 (9th Cir. 1980) (common-law unfair competition); Cleary v. News 14 Corp., 30 F.3d 1255, 1262–63 (9th Cir. 1994) (unfair-competition claims under Cal. Bus. & Prof. 15 Code § 17200 are “substantially congruent” to Lanham Act claims). 16 To establish a claim for trademark infringement, a plaintiff must allege (1) a valid, protectable 17 mark, (2) the defendant used the same or a confusingly similar mark in commerce, and (3) the 18 defendant’s use is likely to cause confusion among consumers. Applied Info. Scis. Corp. v. eBay, 19 Inc., 511 F.3d 966, 969–70 (9th Cir. 2007). The parties dispute whether there is a protectable 20 ownership interest. 21 In trademark law, the standard test of ownership is priority of use. Sengoku Works Ltd. v. RMC 22 Int’l, Ltd., 96 F.3d 1217, 1219 (9th Cir. 1996); see Brookfield Commc’ns, Inc. v. W. Coast Ent. 23 Corp., 174 F.3d 1036, 1046 n.6 (9th Cir. 1999) (the analysis of “priority of use” is the same for 24 infringement of a registered mark under 15 U.S.C. § 1114(1) or infringement of common-law 25 trademark rights (also called unfair competition or false designation of origin) under § 26 1125(a)(1)(A)). To show a protectable ownership interest, it is not enough to invent or register the 27 1 mark first: the party claiming ownership must be the first to use it in the sale of goods or services. 2 Sengoku, 96 F.3d at 1219. 3 When proving ownership, federal registration of the mark is prima facie evidence that the 4 registrant is the owner of the mark. Id. (citing 15 U.S.C. §§ 1057(b) & 1115(a)). A registrant thus 5 is granted a presumption of ownership, dating to the filing date of the application for federal 6 registration. Id. The non-registrant can rebut this presumption by showing by a preponderance of 7 the evidence that the registrant had not established valid ownership rights in the mark at the time 8 of registration. In other words, if the non-registrant can show that he used the mark in commerce 9 first, “then the registration may be invalidated.” Id. at 1220. The Lanham Act also creates a limited 10 exception to the use-based priority rule, providing for a mark that is subject to a federal trademark 11 application under Section 1(b) or Section 44 of the Act to obtain a “constructive use” date that 12 may be earlier than the actual first-use date, meaning, a priority date with the same legal effect as 13 the earliest actual use of a trademark at common law. Gearsource Holdings, LLC v. Google LLC, 14 No. 18-cv-03812-HSG, 2020 WL 3833258, at *4 (N.D. Cal. July 8, 2020) (citing 15 U.S.C. § 15 1057(c) & 2 J. Thomas McCarthy on Trademarks and Unfair Competition § 16:17 (5th ed.)). 16 Therefore, to establish priority, a plaintiff must establish a date of first use — constructive or 17 actual — that is before the defendant’s alleged first use. Id. at *5. 18 Under the Lanham Act, “actual” trademark use occurs through “use in commerce,” “which 19 means ‘the bona fide use of a mark in the ordinary course of trade, and not [use] merely to reserve a 20 right in a mark.’” Id. at *7 (quoting Brookfield, 174 F.3d at 1051). A mark is “in use in commerce” 21 for services “when it is used or displayed in the sale or advertising of services and the services are 22 rendered in commerce.” 15 U.S.C. § 1127 (the word “commerce” means “all commerce which may 23 lawfully be regulated by Congress”); Gearsource, 2020 WL 3833258, at *7. 24 For example, the display of a mark in promotional materials is insufficient for trademark rights 25 to attach. Gearsource, 2020 WL 3833258, at *7 (the “dual requirement” that services be 26 advertised and rendered in commerce means that “mere advertising by itself may not establish 27 priority of use” (quoting Rearden LLC v. Reardon Com., Inc., 683 F.3d 1190, 1204 (9th Cir. 2012) 1 proposals is insufficient. Id. (“mere use in limited e-mail correspondence with lawyers and a few 2 customers” was not use in commerce (quoting Brookfield, 174 F.3d at 1052)). “The purpose of a 3 trademark is to help consumers identify the source, but a mark cannot serve a source-identifying 4 function if the public has never seen the mark and thus is not meritorious of trademark protection 5 until it is used in public in a manner that creates an association among consumers between the 6 mark and the mark’s owner.” Id. (quoting Brookfield, 174 F.3d at 1051). 7 The complaint alleges that the plaintiff has made “extensive and continuous use of the BLD 8 registration at least as early as June 25, 2008, and in interstate commerce at least as early as July 12, 9 2016,” before the defendant’s alleged first use in August 2009.13 The defendant distinguishes 10 between “first use” in June 2008 and “first use in commerce” in July 2016, as cited in the trademark 11 registration.14 The complaint’s allegation of use “in California” by June 2008 is reasonably read as 12 an allegation that the plaintiff used the mark in connection with rendering services in California as 13 of that date. Also, the defendant’s filed fictitious business-name statement is not necessarily “use in 14 commerce” of the mark. The defendant could have adopted the name before he rendered services. 15 These are fact questions not resolvable on a Rule 12(b)(6) motion. Finally, the plaintiff has a federal 16 registration, which carries a presumption of validity. 15 U.S.C. § 1057(b). The registration has 17 become incontestable, which shifts the burden to the defendant to prove a defense. Id. § 1115(b); 18 Sengoku, 96 F.3d at 1219. The defendant ultimately may be able to establish prior use as a defense, 19 but he has not shown that the complaint does not plausibly allege priority. 20 21 2. Geographic Limitations 22 The plaintiff is based in Sacramento, and the defendant is based in San Jose and allegedly does 23 business in the San Francisco Bay Area and the Central Valley.15 In a declaration, the plaintiff adds 24 25 13 See supra Statement (citing Compl. – ECF No. 1 at 3 (¶ 19) & Trademark Registration, Ex. C to id. 26 – ECF No. 1-3 at 2). 27 14 Mot. – ECF No. 10 at 5; Trademark Registration, Ex. C to id. – ECF No. 1-3 at 2 (first use 6-25- 2008; in commerce 7-12-2016). 1 that it does work in Sacramento, the San Francisco Bay Area, and the Central Valley.16 The court 2 does not consider facts — other than the public records that it has judicially noticed — that are not 3 alleged in the complaint. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). The issue is 4 whether the plaintiff must plead overlap in the service territory. 5 Under the Dawn Donut rule, while a senior federal registrant has superior priority, there is no 6 likely confusion for a court to enjoin unless the senior user shows a likelihood of entry into the 7 junior user’s trade territory because absent that entry, there is no likelihood that customers in that 8 territory will be faced with two products or services marketed under confusingly similar marks. 9 4 J. Thomas McCarthy on Trademarks and Unfair Competition § 26:33 (5th ed.) (citing Dawn 10 Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959)). The Ninth Circuit has applied 11 the rule: “[W]here a federal registrant has expanded its business to the point that the use of the 12 conflictingly similar marks by the registrant and the unauthorized user are no longer confined to 13 separate and distinct market areas and there is established the likelihood of public confusion, the 14 federal registrant is entitled under the authority of the Lanham Act to injunctive relief.” Mister 15 Donut of Am., Inc. v. Mr. Donut, Inc., 418 F.2d 838, 844 (9th Cir. 1969); see Lodestar Anstalt v. 16 Bacardi & Co. Ltd., 31 F.4th 1228, 1250 (9th Cir. 2022) (citing rule approvingly). 17 The rule is a defense to injunctive relief and illustrates the element of consumer confusion: if 18 competitors are using the marks in geographically separate and distinct market areas, with no real 19 competition between them or present likelihood of overlap in market territories, there is no cause 20 for injunctive relief based on infringement. Lodestar, 31 F.4th at 1250 (citing earlier version of 21 McCarthy treatise, 5 McCarthy on Trademarks and Unfair Competition § 29:21). 22 Here, the complaint plausibly alleges actual consumer confusion: the word marks are identical, 23 and consumers have confused the businesses, which operate in California in areas with geographic 24 overlap.17 “Operating in California” is broad enough to encompass the Bay Area and Central 25 Valley, and the allegations of actual consumer confusion support geographic overlap: confusion 26

27 16 Spatz Decl. – ECF No. 13-2 at 2 (¶ 2). 1 would not occur without some overlap in the relevant market. The defense is fact-dependent and 2 not resolvable on a Rule 12(b)(6) motion. 3 4 3. Laches 5 The Lanham Act has no statute of limitations. Pinkette Clothing, Inc. v. Cosm. Warriors Ltd., 6 894 F.3d 1015, 1023 (9th Cir. 2018). Instead, the Ninth Circuit applies the equitable doctrine of 7 laches. “Laches is an equitable time limitation on a party’s right to bring suit, and is a valid 8 defense to trademark infringement claims.” DC Comics v. Towle, 802 F.3d 1012, 1026 (9th Cir. 9 2015). Courts apply a two-step process. Pinkette, 894 F.3d at 1025. 10 First, courts assess the delay by examining whether the most analogous state statute of 11 limitations has expired. The analogous California statute is four years, which has expired. Id. The 12 plaintiff sent its cease-and-desist letter in June 2019 and did not file suit until December 2025, 13 more than six years later. 14 Second, the inquiry then pivots to the E-Systems factors: “(1) strength and value of trademark 15 rights asserted; (2) plaintiff’s diligence in enforcing mark; (3) harm to senior user if relief denied; 16 (4) good faith ignorance by junior user; (5) competition between senior and junior users; and (6) 17 extent of harm suffered by junior user because of senior user’s delay.” Id. (cleaned up) (citing E- 18 Sys., Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983)). 19 Also, laches does not apply to willful infringement. DC Comics, 802 F.3d at 1026. And laches 20 is an affirmative defense that ordinarily cannot be resolved on a motion to dismiss unless the 21 defense is apparent on the face of the complaint. Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 22 902 (9th Cir. 2013). 23 The plaintiff contends that it contacted the defendant when it learned about the offending 24 conduct in 2019. Once it gave notice, the defendant allegedly acquired actual knowledge of the 25 infringement, rendering the infringement willful.18 The complaint does not allege that the plaintiff 26 sent a cease-and-desist letter as soon as he learned about the infringement. That said, whether the 27 ] defendant’s continued use of the mark after notice is willful is a fact question. The court also 2 || cannot assess prejudice to the defendant on this record. 3 In sum, the laches defense is not apparent on the complaint as a matter of law. The complaint 4 || plausibly alleges willful infringement. The length and reasonableness of the delay after the cease- 5 and-desist letter, the effect of settlement negotiations, and prejudice cannot be resolved at the 6 || pleadings stage. Laches turns on questions of fact unsuitable for resolution at the pleadings stage. 7 9 The motion to dismiss is denied. This resolves ECF No. 10. M1 Dated: March 30, 2026 Lit EC a (12 LAUREL BEELER 13 United States Magistrate Judge

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