1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 LA TERRA FINA USA, LLC, Case No. 3:23-cv-02631-JSC
8 Plaintiff, ORDER RE: MOTION TO DISMISS 9 v. RESER’S AMENDED COUNTERCLAIMS 10 RESER’S FINE FOODS, INC., Re: Dkt. No. 87 Defendant. 11
12 La Terra Fina USA, LLC and Reser’s Fine Foods, Inc., are competitors who manufacture 13 and sell specialty foods, including dips, spreads, and quiches, in the same retail channels. La 14 Terra Fina filed this action bringing trade dress infringement and unfair competition claims and 15 Reser’s responded with counterclaims for trade dress infringement and unfair competition. The 16 Court previously dismissed two of those counterclaims for failure to state a claim. (Dkt. No. 66.) 17 Reser’s has since filed amended counterclaims, which La Terra Fina again moves to dismiss in 18 part. (Dkt. Nos. 69, 87.) After carefully considering the parties’ briefs and the relevant legal 19 authority, the Court concludes oral argument is unnecessary, see Civ. L.R. 7-1(b), VACATES the 20 July 25, 2024 hearing, and GRANTS the motion to dismiss. 21 DISCUSSION 22 “A party harmed by a trademark’s registration can seek cancellation of the mark on certain 23 specified grounds, including that the trademark was obtained by the commission of fraud on the 24 [USPTO].” OTR Wheel Eng’g, Inc. v. W. Worldwide Servs., 897 F.3d 1008, 1019 (9th Cir. 2018) 25 (citing Hokto Kinoko Co. v. Concord Farms, Inc., 738 F.3d 1085, 1097 (9th Cir. 2013) (citing 15 26 U.S.C. §§ 1064, 1119)). “Fraud in procuring a mark occurs when an applicant knowingly makes 27 false, material representations of fact in connection with an application.” Quicksilver, Inc. v. 1 Kymsta Corp., 466 F.3d 749, 755 (9th Cir. 2006) (quoting L.D. Kichler Co. v. Davoil, Inc., 192 2 F.3d 1349, 1351 (Fed. Cir. 1999)). To allege a claim of cancellation based on fraud in the 3 procurement, a party must allege: “(1) a false representation regarding a material fact; (2) the 4 registrant’s knowledge or belief that the representation is false; (3) the registrant’s intent to induce 5 reliance upon the misrepresentation; (4) actual, reasonable reliance on the misrepresentation; and 6 (5) damages proximately caused by that reliance.” Hokto Kinoko Co. v. Concord Farms, Inc., 738 7 F.3d 1085, 1097 (9th Cir. 2013) (citing Robi v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th Cir. 8 1990)). “A false representation in the original trademark application ... may be grounds for 9 cancellation if all five requirements are met.” Id. Because the claim sounds in fraud, Federal Rule 10 of Civil Procedure 9(b) applies. Under Rule 9(b), the plaintiff “must state with particularity the 11 circumstances constituting fraud.” Fed. R. Civ. P. 9(b). 12 La Terra Fina moves to dismiss Reser’s third and fourth counterclaims for fraudulent 13 procurement. 1 The two claims have identical factual predicates but seek different remedies. (Dkt. 14 No. 69 at 52 (third counterclaim seeking cancellation under 15 U.S.C. §1064, 15 U.S.C. § 1119); 15 Id. at 58 (fourth counterclaim seeking civil penalties under 15 U.S.C. § 1120).) The prior version 16 of these counterclaims was predicated on the falsity of La Terra Fina’s representation that no one 17 else had the right to use the mark—a representation that was made “on information and belief.” 18 (Dkt. No. 66 at 2-3 (quoting Dkt. No. 55 at 52 ¶ 45).) In the amended counterclaim, Reser alleges 19 fraud in the procurement based on the submission of a product image (specimen), which La Terra 20 Fina represented depicted the mark used in commerce, but which, on information and belief, was 21 in fact digitally created or altered such that it did not in fact depict the mark used in commerce. 22 (Dkt. No. 69 at p. 53 at ¶¶ 46-50.) As with the prior version of this claim, Reser’s allegations 23 require too great an inferential leap and fail to plausibly allege a claim for fraud in the 24 procurement. 25 Reser’s claim is predicated on the material falsity of Ms. Jimenez’s declaration to the PTO 26
27 1 Although La Terra Fina’s motion is untimely by one week, see Fed. R. Civ. P. 15(a)(3), given 1 that “the mark is in use in commerce.” 15 U.S.C. § 1051. In particular, Reser’s challenges as 2 || materially false the following statements in La Terra Fina’s signed declaration to the PTO: 3 e “the specimen(s) shows the mark as used on or in connection with the goods/services in the 4 application.” 5 e “the applicant is submitting one (or more) specimen(s) showing the mark as used in 6 commerce on or in connection with any item in the class of listed goods/services, 7 consisting of a(n) product and display.” 8 e “[t]he specimen(s) shows the mark as used on or in connection with the goods/services in 9 the application and was used on or in connection with the goods/services in the application 10 as of the application filing date[.]” 11 (Dkt. No. 69 at 53 § 48.) a 12 The Application identified two specimens, depicted side-by-side here:
ment Es OW sac □ i Om | ol, = ack teva cintrtno tin. ARTICHOKE 16 (tee esa © qine BAALAPEND c : =f = 2-PAC ai ——— =
ee 4 18 Fe (“First Specimen”). font 19 (“Second Photo”). 20 21 (Id. at 9] 47-48.) Reser’s fraud theory alleges the First Specimen is “characteristic of a digitally 22 || created/altered or mockup” and thus does not depict the mark actually used in commerce. (/d. at 23 || J 55-56.) So, argues Reser’s, the above statements were materially false. 24 Reser’s theory fails to state a fraud claim for at least two reasons. First, as with the prior 25 || version of this claim, Reser’s does not allege facts plausibly supporting an inference the First 26 Specimen is actually false. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1108 (9th Cir. 27 2003) (holding allegations of fraud must be specific). While Reser’s has included additional 28 allegations beyond simply stating that the First Specimen is on a white background, these
1 allegations still fail to support a plausible inference the First Specimen was digitally modified such 2 that it does not reflect the actual mark used in commerce. For example, Reser’s alleges the First 3 Specimen must be false because of differences between the two Specimens, including the First 4 Specimen fails to include information “typically included in the trade” such as labelling the 5 product is gluten-free, and the First Specimen has the “hallmarks of a staged photograph” because 6 there is “no shadow between the sleeve and the plastic, and the edges and intersection of edges 7 appear perfect.” (Dkt. No. 69 at 56 ¶¶ 57-58.) But none of these allegations supports an 8 inference of falsity—it is equally, if not more, plausible La Terra Fina had two versions of the 9 product packaging. See Bell Atl. Corp. v.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 LA TERRA FINA USA, LLC, Case No. 3:23-cv-02631-JSC
8 Plaintiff, ORDER RE: MOTION TO DISMISS 9 v. RESER’S AMENDED COUNTERCLAIMS 10 RESER’S FINE FOODS, INC., Re: Dkt. No. 87 Defendant. 11
12 La Terra Fina USA, LLC and Reser’s Fine Foods, Inc., are competitors who manufacture 13 and sell specialty foods, including dips, spreads, and quiches, in the same retail channels. La 14 Terra Fina filed this action bringing trade dress infringement and unfair competition claims and 15 Reser’s responded with counterclaims for trade dress infringement and unfair competition. The 16 Court previously dismissed two of those counterclaims for failure to state a claim. (Dkt. No. 66.) 17 Reser’s has since filed amended counterclaims, which La Terra Fina again moves to dismiss in 18 part. (Dkt. Nos. 69, 87.) After carefully considering the parties’ briefs and the relevant legal 19 authority, the Court concludes oral argument is unnecessary, see Civ. L.R. 7-1(b), VACATES the 20 July 25, 2024 hearing, and GRANTS the motion to dismiss. 21 DISCUSSION 22 “A party harmed by a trademark’s registration can seek cancellation of the mark on certain 23 specified grounds, including that the trademark was obtained by the commission of fraud on the 24 [USPTO].” OTR Wheel Eng’g, Inc. v. W. Worldwide Servs., 897 F.3d 1008, 1019 (9th Cir. 2018) 25 (citing Hokto Kinoko Co. v. Concord Farms, Inc., 738 F.3d 1085, 1097 (9th Cir. 2013) (citing 15 26 U.S.C. §§ 1064, 1119)). “Fraud in procuring a mark occurs when an applicant knowingly makes 27 false, material representations of fact in connection with an application.” Quicksilver, Inc. v. 1 Kymsta Corp., 466 F.3d 749, 755 (9th Cir. 2006) (quoting L.D. Kichler Co. v. Davoil, Inc., 192 2 F.3d 1349, 1351 (Fed. Cir. 1999)). To allege a claim of cancellation based on fraud in the 3 procurement, a party must allege: “(1) a false representation regarding a material fact; (2) the 4 registrant’s knowledge or belief that the representation is false; (3) the registrant’s intent to induce 5 reliance upon the misrepresentation; (4) actual, reasonable reliance on the misrepresentation; and 6 (5) damages proximately caused by that reliance.” Hokto Kinoko Co. v. Concord Farms, Inc., 738 7 F.3d 1085, 1097 (9th Cir. 2013) (citing Robi v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th Cir. 8 1990)). “A false representation in the original trademark application ... may be grounds for 9 cancellation if all five requirements are met.” Id. Because the claim sounds in fraud, Federal Rule 10 of Civil Procedure 9(b) applies. Under Rule 9(b), the plaintiff “must state with particularity the 11 circumstances constituting fraud.” Fed. R. Civ. P. 9(b). 12 La Terra Fina moves to dismiss Reser’s third and fourth counterclaims for fraudulent 13 procurement. 1 The two claims have identical factual predicates but seek different remedies. (Dkt. 14 No. 69 at 52 (third counterclaim seeking cancellation under 15 U.S.C. §1064, 15 U.S.C. § 1119); 15 Id. at 58 (fourth counterclaim seeking civil penalties under 15 U.S.C. § 1120).) The prior version 16 of these counterclaims was predicated on the falsity of La Terra Fina’s representation that no one 17 else had the right to use the mark—a representation that was made “on information and belief.” 18 (Dkt. No. 66 at 2-3 (quoting Dkt. No. 55 at 52 ¶ 45).) In the amended counterclaim, Reser alleges 19 fraud in the procurement based on the submission of a product image (specimen), which La Terra 20 Fina represented depicted the mark used in commerce, but which, on information and belief, was 21 in fact digitally created or altered such that it did not in fact depict the mark used in commerce. 22 (Dkt. No. 69 at p. 53 at ¶¶ 46-50.) As with the prior version of this claim, Reser’s allegations 23 require too great an inferential leap and fail to plausibly allege a claim for fraud in the 24 procurement. 25 Reser’s claim is predicated on the material falsity of Ms. Jimenez’s declaration to the PTO 26
27 1 Although La Terra Fina’s motion is untimely by one week, see Fed. R. Civ. P. 15(a)(3), given 1 that “the mark is in use in commerce.” 15 U.S.C. § 1051. In particular, Reser’s challenges as 2 || materially false the following statements in La Terra Fina’s signed declaration to the PTO: 3 e “the specimen(s) shows the mark as used on or in connection with the goods/services in the 4 application.” 5 e “the applicant is submitting one (or more) specimen(s) showing the mark as used in 6 commerce on or in connection with any item in the class of listed goods/services, 7 consisting of a(n) product and display.” 8 e “[t]he specimen(s) shows the mark as used on or in connection with the goods/services in 9 the application and was used on or in connection with the goods/services in the application 10 as of the application filing date[.]” 11 (Dkt. No. 69 at 53 § 48.) a 12 The Application identified two specimens, depicted side-by-side here:
ment Es OW sac □ i Om | ol, = ack teva cintrtno tin. ARTICHOKE 16 (tee esa © qine BAALAPEND c : =f = 2-PAC ai ——— =
ee 4 18 Fe (“First Specimen”). font 19 (“Second Photo”). 20 21 (Id. at 9] 47-48.) Reser’s fraud theory alleges the First Specimen is “characteristic of a digitally 22 || created/altered or mockup” and thus does not depict the mark actually used in commerce. (/d. at 23 || J 55-56.) So, argues Reser’s, the above statements were materially false. 24 Reser’s theory fails to state a fraud claim for at least two reasons. First, as with the prior 25 || version of this claim, Reser’s does not allege facts plausibly supporting an inference the First 26 Specimen is actually false. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1108 (9th Cir. 27 2003) (holding allegations of fraud must be specific). While Reser’s has included additional 28 allegations beyond simply stating that the First Specimen is on a white background, these
1 allegations still fail to support a plausible inference the First Specimen was digitally modified such 2 that it does not reflect the actual mark used in commerce. For example, Reser’s alleges the First 3 Specimen must be false because of differences between the two Specimens, including the First 4 Specimen fails to include information “typically included in the trade” such as labelling the 5 product is gluten-free, and the First Specimen has the “hallmarks of a staged photograph” because 6 there is “no shadow between the sleeve and the plastic, and the edges and intersection of edges 7 appear perfect.” (Dkt. No. 69 at 56 ¶¶ 57-58.) But none of these allegations supports an 8 inference of falsity—it is equally, if not more, plausible La Terra Fina had two versions of the 9 product packaging. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (holding when two 10 inferences are equally plausible, and one inference does not support liability, the plaintiff does not 11 state a claim); see also Nielsen v. Thornell, 101 F.4th 1164, 1169 (9th Cir. 2024), as amended 12 (July 8, 2024) (“[the allegations] must “nudge[ ]” the [] claims across the line from conceivable to 13 plausible meaning that it must allege facts that present more than a sheer possibility that a 14 defendant has acted unlawfully”) (cleaned up). Further, that La Terra Fina may have cleaned up 15 the image to remove the shadow does not support an inference the First Specimen was not used in 16 commerce. 17 Second, Reser’s does not allege La Terra Fina represented both specimen images depicted 18 the mark used in commerce and there is no dispute the Second Specimen image depicts the 19 product used in commerce. Instead, Reser’s alleges
20 [t]he PTO will not approve an application based on use in commerce under 15 U.S.C. § 1051(a), without an acceptable specimen showing 21 the entire mark…The First Specimen and Declaration were provided by Ms. Jimenez on behalf of La Terra Fina USA, LLC to secure 22 approval of the application for registration. The First Specimen covers the entire mark depicted in the ‘712 Application. In reliance on this 23 Declaration and providing the First Specimen and claiming it to be in use in commerce, the PTO approved the application. 24 (Id. at ¶ 50.) In other words, Reser’s urges the PTO must have relied on the First Specimen to 25 approve the trademark application because the Second Specimen does not depict the entire mark. 26 This theory fares no better than Reser’s prior theory. Reser’s does not allege La Terra Fina 27 represented the Second Specimen depicted the entire mark; instead, La Terra Fina represented at 1 least one of the two Specimens depicted the mark as used in commerce. Reser’s does not make 2 any allegations that support an inference that representation was false. 3 Nor has Reser’s alleged the other elements of a fraud in the procurement claim because 4 Reser’s theory requires the assumption La Terra Fina intended to induce the PTO to rely on the 5 First Specimen as depicting the mark used in commerce as well as the assumption the PTO in fact 6 relied on the First Specimen as opposed to the Second when granting La Terra Fina’s trademark 7 application. There are, however, no facts alleged to support these inferences. Although the Court 8 accepts Reser’s well-pleaded factual allegations as true, it cannot accept conclusory and 9 unsupported allegations such as these. See Nielsen, 101 F.4th at 1169 (“we discount conclusory 10 allegations in a complaint because they are not entitled to the assumption of truth”) (cleaned up). 11 Reser’s reliance on the PTAB’s decision in In re R. Torre & Co., 2004 TTAB LEXIS 730, *5-6 12 (TTAB Dec. 16, 2004), is unavailing. The case has nothing to do with fraud in the procurement. 13 Accordingly, La Terra Fina’s motion to dismiss Reser’s fraud in the procurement 14 counterclaims three and four is granted.2 15 CONCLUSION 16 For the reasons stated above, the Court GRANTS La Terra Fina’s motion to dismiss the 17 amended counterclaims without leave to amend. It is apparent further leave to amend would be 18 futile. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (“[W]here 19 [a party] has previously been granted leave to amend and has subsequently failed to add the 20 requisite particularity to its claims, [t]he district court’s discretion to deny leave to amend is 21 particularly broad.”) (quotation omitted). Reser’s objections to La Terra Fina’s evidence 22 submitted in support of its motion is GRANTED; the Court did not rely on any of that evidence in 23 determining Reser’s fails to state a fraud claim. 24 The case management conference scheduled for August 1, 2024 at 1:30 p.m. is moved up 25 one day to July 31, 2024 at 11:00 a.m. via videoconference. An updated joint case management 26 conference statement is due July 25, 2024. 27 1 This Order disposes of Docket No. 87. 2 IT IS SO ORDERED. 3 Dated: July 19, 2024 4 ne J&CQUELINE SCOTT CORL 5 United States District Judge 6 7 8 9 10 11 12
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