Chemeon Surface Technology LLC v. Metalast International, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 2, 2022
• Docket: 21-15561
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 2 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

CHEMEON SURFACE TECHNOLOGY No. 21-15561 LLC, a Nevada Limited Liability Company, D.C. No. 3:15-cv-00294-CLB Plaintiff-Appellant,

v. MEMORANDUM*

METALAST INTERNATIONAL, INC.; et al.,

Defendants-Appellees,

DEAN MEILING; MADYLON MEILING,

Defendants-counter- claimants-Appellants,

and

MARC HARRIS; MHA GROUP,

Defendants.

Appeal from the United States District Court for the District of Nevada Carla Baldwin, Magistrate Judge, Presiding

Argued and Submitted May 11, 2022 San Francisco, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: W. FLETCHER and BUMATAY, Circuit Judges, and KANE,** District Judge.

Chemeon Surface Technology LLC (“Chemeon”) raises numerous claims on

appeal from the district court’s judgment in favor of Defendants-Appellees (David

Semas).1 We have jurisdiction under 28 U.S.C. § 1291 and we affirm in part and

vacate and remand in part.

1. We affirm the district court’s judgment in favor of the breach of contract

counterclaim. We review the district court’s interpretation of the contract de novo.

Rittman v. Amazon.com, Inc., 971 F.3d 904, 909 (9th Cir. 2020). The Settlement

Agreement between the parties prohibited Chemeon from using “the name Metalast

in any fashion or manner whatsoever.” The district court found that Chemeon’s use

of “formerly Metalast” on purchase orders, invoices, advertising materials, and on

technical and safety data sheets violated the Agreement. The district court properly

applied the terms of the Agreement, which clearly provides that Chemeon may not

use the name “Metalast” in any “manner whatsoever.”2 Thus, by using “formerly

** The Honorable Yvette Kane, United States District Judge for the Middle District of Pennsylvania, sitting by designation. 1 Because both parties refer to Defendants-Appellees as “David Semas” in their briefing, we do so as well. 2 We reject Chemeon’s argument that the district court was bound under the law of the case doctrine. The district court was not bound by a prior analysis of the Agreement because it retained the discretion to interpret the Agreement in reaching judgment on Semas’s counterclaim. See City of L.A., Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 888 (9th Cir. 2001) (explaining that the law of the case

2 Metalast” in its commercial documents, Chemeon breached the express terms of the

Agreement.3 We therefore affirm the district court’s grant of judgment on Semas’s

breach of contract counterclaim.4

2. The district court did not abuse its discretion in excluding Chemeon’s

affirmative defense evidence. See Clare v. Clare, 982 F.3d 1199, 1201 (9th Cir.

2020). Chemeon argues that its evidence with respect to fair use, unclean hands, and

fraudulent acquisition of the disputed trademarks were all improperly excluded by

the district court. But importantly, Chemeon’s evidence supported affirmative

defenses for a trademark action, not the breach of contract claim at issue. Thus, the

district court did not err in excluding Chemeon’s trademark evidence.

Chemeon’s remaining argument is that the district court abused its discretion

by excluding the introduction of an Occupational Safety and Health Administration

(“OSHA”) litigation brief which allegedly shows that former business names can be

required in safety sheets. But the brief was not properly offered into evidence.

Additionally, Chemeon failed to establish that the OSHA brief even represented the

doctrine “is discretionary, not mandatory and is in no way a limit on a court’s power” (simplified)). 3 Even under the analysis of Kassbaum v. Steppenwolf Productions, Inc., 236 F.3d 487 (9th Cir. 2000), the district court properly held that Chemeon exceeded the scope of any implied use by using “Metalast” in multiple commercial documents— going well beyond a mere historical reference. See id. at 492. 4 Given that we affirm the grant of judgment on the breach of contract counterclaim, we also affirm the district court’s injunction preventing Chemeon from using the name “Metalast” in commerce.

3 agency’s official interpretation of its safety requirements. Thus, the district court

did not abuse its discretion in excluding the brief.

3. We affirm the district court’s denial of judgment on Chemeon’s trademark

infringement claims. To determine whether Chemeon’s product marks are

distinctive and thus protectable, we “consider whether the mark owner has engaged

in a constant pattern or effort to use the product mark in a manner separate and

distinct from the house mark.” Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 757

(9th Cir. 2006) (simplified). Here, the district court found that the terms “TCP-HF”

and “AA-200” were never used to sell products without the preceding name

“Metalast.” Chemeon fails to show that the district court’s factual finding is clearly

erroneous. As a result, because Chemeon did not sell its products using “TCP-HF”

or “AA-200” and did not otherwise engage in a “pattern” of distinctive usage, the

district court properly denied judgment on Chemeon’s trademark infringement

claims.

4. The district court did not abuse its discretion in denying Chemeon’s claim

for attorney fees under the Lanham Act. See SunEarth, Inc. v. Sun Earth Solar

Power Co., 839 F.3d 1179, 1181 (9th Cir. 2016) (en banc) (per curiam). The district

court properly analyzed Chemeon’s attorney fees claim under the totality of the

circumstances approach set out in Octane Fitness, LLC v. ICON Health & Fitness,

572 U.S. 545, 554 (2014). In doing so, the district court specifically looked to

4 Semas’s conduct and found that the voluntarily dismissed claims were neither

frivolous nor otherwise exceptional. Chemeon cannot point to any evidence

compelling an award of attorney fees and so the district court did not abuse its

discretion in denying fees.

5. The district court erred at summary judgment by dismissing Chemeon’s

trademark cancellation claim solely on the fact that Chemeon did not have an interest

in its “own mark.” In reaching its decision, the district court cited Star-Kist Foods,

Inc. v. P.J. Rhodes & Co., 735 F.2d 346 (9th Cir. 1984). The district court reasoned

that Star-Kist requires a trademark cancellation petitioner to have an interest in his

“own mark” to establish standing. Assuming Star-Kist applies here,5 that case did

not create a bright-line rule that a trademark cancellation petitioner must have an

interest in his “own mark” to establish standing. Rather, Star-Kist explained that the

standing analysis turns on whether “the cancellation petitioner [can] plead and prove

facts showing a ‘real interest’ in the proceeding in order to establish standing.” Id.

at 349 (simplified). And the Star-Kist court made clear that the “[i]nterest assertions

will vary with the facts surrounding each cancellation dispute” thus requiring a

“case-by-case” analysis. Id. On remand, the district court must determine whether

Chemeon’s other asserted interests are sufficient to pursue a trademark cancellation

5 We note that the Supreme Court’s decision in Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), arguably provides the proper basis for analyzing this trademark cancellation claim.

5 claim.

AFFIRMED IN PART, VACATED AND REMANDED IN PART.