Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-00863/USCOURTS-caed-1_07-cv-00863-2/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

GNI WATERMAN LLC, CASE NO. CV F 07-0863 LJO TAG

Plaintiff, ORDER ON DEFENDANT’S F.R.Civ.P. 12

MOTIONS

vs. (Doc. 13.)

A/M VALVE COMPANY LLC,

et al.,

Defendants.

 /

INTRODUCTION

Defendant A/M Valve Company LLC (“AM Valve”) seeks F.R.Civ.P. 12(b)(6) dismissal of

plaintiff GNI Waterman LLC’s (“GNI Waterman’s”) Lanham Act and related unfair trade claims on

grounds that GNI Waterman’s complaint fails to allege essential elementsfor the claims. Alternatively,

AM Valve seeks F.R.Civ.P. 12(e) relief that GNI Waterman replead its claims with greater specificity.

GNI Waterman responds that it has sufficiently alleged that AM Valve “passes off” GNI Waterman’s

products to violate the Lanham Act and to support its claims. This Court considered AM Valve’s

motions to dismiss and for a more definite statement on the record and VACATES the September 14,

2007 hearing, pursuant to Local Rule 78-230(h). For the reasons discussed below, this Court GRANTS

in part and DENIES in part the relief requested by AM Valve.

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BACKGROUND

The Parties

GNI Waterman is a Delaware limited liability company with its principal place of business in

Exeter, California. AM Valve is a Nevada limited liability company with its principal place of business

in Visalia, California. Defendant Qingdao Everbright Machinery Co., Ltd. (Qingdao”) is a Chinese

corporation. Defendant Lucent Auto & Casting, Inc. (“Lucent”) is a New Jersey corporation. Defendant

William Wang (“Mr. Wang”) is a New Jersey resident.

Formation Of GNI Waterman And AM Valve

In 1912, William Waterman formed W.A. Waterman Company and produced irrigation control

products. W.A. Waterman Company was incorporated as Waterman Industries, Inc. (“Waterman

Industries”) in 1951 and passed through several Waterman family generations. In 2001, three family

members, David Appling, Ken Appling and Randy Mullins (“Mr. Mullins”), assumed control of

Waterman Industries, which failed and was liquidated in bankruptcy. In 2006, Galena National

Investment purchased assets from the Waterman Industries’ bankruptcy estate and incorporated them

as GNI Waterman, the successor-in-interest to W.A. Waterman Company and Waterman Industries.

David Appling, Ken Appling and Mr. Mullins relinquished their control of Waterman Industries.

During Waterman Industries’ bankruptcy reorganization, Mr. Mullins and Cheryl Appling (“Ms.

Appling”), David Appling’s wife, formed AM Valve. According to GNI Waterman, AM Valve “was

designed to compete directly with Waterman by using the ‘Waterman heritage’ to attract customers to

its purportedly ‘compatible’ line of irrigation control products and valves.”

GNI Waterman’s Claims

On June 15, 2007, GNI Waterman filed its complaint to allege against AM Valve causes of

action for violations of the Lanham Act and California Business & Professions Code sections 17200,

et seq. (“Unfair Competition Law”), conversion and trespass to chattel. GNI generally alleges that:

1. The “Waterman” name “has long been associated with superior quality and design” in

the irrigation valve and water control industry and “is protected by a federally-registered

trademark when used in connection with irrigation valves, water control gates, and

similar products”;

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2. The Waterman product line’s shape and design have become “recognized in the industry

as symbols uniquely associated with Waterman” and in particular, the GNI Waterman

C-10 canal gate, which comprises a semi-circular “hubcap” design;

3. AM Valve misappropriated GNI Waterman’s proprietary “forms,” patterns and designs

– property which GNI Waterman created, paid for and owns to manufacture GNI

Waterman’s valves and water control gates;

4. AM Valve has used GNI Waterman’s proprietary molds to produce “exact copies of

[GNI] Waterman’s products that are indistinguishable from [GNI] Waterman’s products

in every material respect” and the only difference in GNI Waterman C-10 canal gate and

AM Valve’s AMC-10 canal gate is color (GNI Waterman (red) and AM Valve (green));

and

5. David Appling, Ken Appling and/or Mr. Mullins contacted defendants Lucent and Mr.

Wang and asked defendant Qingdao to use GNI Waterman’s molds to copy GNI

Waterman’s products, changing only the name on the finished product. 

1

GNI Waterman alleges three Lanham Act and three state law causes of action against AM Valve

and which will be addressed separately below.

DISCUSSION

F.R.Civ.P. 12(b)(6) Motion To Dismiss Standards

In short, AM Valve contends that GNI Waterman’s causes of action against AM Valve lack

necessary elements or allegations to warrant their dismissal. A F.R.Civ.P. 12(b)(6) motion to dismiss

is a challenge to the sufficiency of the pleadings set forth in the complaint. “When a federal court

reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or

admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately

prevail but whether the claimant is entitled to offer evidence to support the claims.” Scheurer v. Rhodes,

416 U.S. 232, 236, 94 S.Ct. 1683 (1974); Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9

th

Cir. 1997). A F.R.Civ.P. 12(b)(6) dismissal is proper where there is either a “lack of a cognizable legal

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theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” Balisteri v. Pacifica

Police Dept., 901 F.2d 696, 699 (9 Cir. 1990); Graehling v. Village of Lombard, Ill., 58 F.3d 295, 297 th

(7 Cir. 1995). th

In resolving a Rule 12(b)(6) motion, the court must: (1) construe the complaint in the light most

favorable to the plaintiff; (2) accept all well-pleaded factual allegations as true; and (3) determine

whether plaintiff can prove any set of facts to support a claim that would merit relief. Cahill v. Liberty

Mut. Ins. Co., 80 F.3d 336, 337-338 (9th Cir. 1996). “However, conclusory allegations of law and

unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. F.D.I.C., 139 F.3d

696, 699 (9 Cir. 1998). A court need not permit an attempt to amend a complaint if “it determines that th

the pleading could not possibly be cured by allegation of other facts.” Cook, Perkiss and Liehe, Inc. v.

N. Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9 Cir. 1990). th

F.R.Civ.P. 12(e) Motion For More Definite Statement Standards

AM Valve further pursues an alternative motion for a more definite statement pursuant to

F.R.Civ.P. 12(e), which provides in pertinent part:

If a pleading to which a responsive pleading is permitted is so vague or

ambiguous that a party cannot reasonably be required to frame a responsive pleading, the

party may move for a more definite statement before interposing a responsive pleading.

A motion for a more definite statement is proper if “defendant cannot frame a responsive pleading.”

Famolare, Inc. v. Edison Bros. Stores, Inc., 525 F.Supp. 940, 949 (E.D. Cal. 1981); see Boxall v.

Sequoia Union High School District, 464 F.Supp. 1104, 1114 (N.D. Cal. 1979). A F.R.Civ.P. 12(e)

motion is designed to strike unintelligibility rather than lack of detail. See Woods v. Reno Commodities,

Inc., 600 F.Supp. 574, 580 (D. Nev. 1984); Nelson v. Quimby Island Reclamation Dist., 491 F.Supp.

1364, 1385 (N.D. Cal. 1980). A F.R.Civ.P. 12(e) motion should be denied if the pleading provides a

“short and plain statement” of the claim showing that the pleader is entitled to relief. Virgen v. Mae,

2007 WL 1521553, *2 (E.D. Cal. 2007) (citing F.R.Civ.P. 8(a)(2)).

With these standards in mind, this Court turns to AM Valve’s challenges to GNI Waterman’s

causes of action.

Lanham Act Violation – Palming Off

GNI Waterman’s (first) Lanham Act palming off cause of action alleges that AM Valve

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misappropriated GNI Waterman’s product patterns and designs, created products interchangeable with

and indistinguishable from GNI Waterman’s products “in every material respect,” and has palmed off

“those counterfeit products.” AM Valve faults the cause of action’s absence of allegations that AM

Valve sold GNI Waterman’s products under AM Valve’s name or sold AM Valve’s products under GNI

Waterman’s name. 

GNI Waterman alleges that AM Valve has engaged in conducted prohibited by section 43(a) of

the Lanham Act, 15 U.S.C. § 1125(a) (“section 1125(a)”), which provides:

(1) Any person who, on or in connection with any goods or services . . . uses in

commerce any word, term, name, symbol, or device, or any combination thereof, or any

false designation of origin, false or misleading description of fact, or false or misleading

representation of fact, which--

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the

affiliation, connection, or association of such person with another person, or as to the

origin, sponsorship, or approval of his or her goods, services, or commercial activities

by another person, or

(B) in commercial advertising or promotion, misrepresents the nature,

characteristics, qualities, or geographic origin of his or her or another person's goods,

services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely

to be damaged by such act.

Section 1125(a) “condemns false designations or representations in connection with any goods or

services.” Shaw v. Lindheim, 919 F.2d 1353, 1364 (9 Cir. 1990). th

As AM Valve notes, the Ninth Circuit Court of Appeals distinguishes between “palming/passing

off” claims and “reverse palming/passing off” claims. Palming/passing off involves selling a product

of one person’s creation under another’s name or mark of another. Lamothe v. Atlantic Recording Corp.,

847 F.2d 1403, 1406 (9 Cir. 1988). Express palming/passing off arises when “a business labels its th

goods or services with a mark identical to that of another enterprise, or otherwise expressly

misrepresents the origin of the goods or services.” Lamothe, 847 F.2d at 1406. Implied palming/passing

off “involves the use of a competitor’s advertising material, or a sample or photograph of the

competitor’s product, to impliedly represent that the product being sold is made by the competitor.”

Lamothe, 847 F.2d at 1406.

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Like palming/passing off, reverse palming/passing off may be express or implied. Express

reverse palming/passing off arises “when a wrongdoer removes the name or trademark on another party’s

product and sells that product under a name chosen by the wrongdoer.” Lamothe, 847 F.2d at 1406. “A

defendant may also be guilty of reverse palming/passing off by selling or offering for sale another's

product that has been modified slightly and then labeled with a different name.” Roho, Inc. v. Marquis,

902 F.2d 356, 359 (5 Cir. 1990). Implied reverse palming/passing off arises “simply by removing or th

obliterating the name of the source and then selling the product in an unbranded state.” Lamothe, 847

F.2d at 1406. The Ninth Circuit has “implicitly limited the ‘reverse passing off’ doctrine to situations

of bodily appropriation.” Shaw, 919 F.2d at 1364. Leading Ninth Circuit cases have not indicated that

section 1125(a) “is applicable where the products at issue are merely substantially similar.” Shaw, 919

F.2d at 1364.

AM Valve argues that its alleged copying of GNI Waterman’s canal gates is not palming/passing

off in the absence of allegations that AM Valve sells products under GNIWaterman’s name. AM Valve

points to photographs in GNI Waterman’s complaint and which demonstrate that the AM Valve and GNI

Waterman brands appear prominently on their respective products. AM Valve contends that GNI

Waterman fails to claim reverse palming/passing off in the absence of allegations that AM Valve sells

GNI Waterman’s products under AM Valve’s name. 

AM Valve further contends that “copying a competitor’s functional design in manufacturing

one’s own goods does not provide grounds for the competitor to assert a ‘passing/palming off’ claim.”

“In general, unless an intellectual property right such as a patent or copyright protects an item, it will be

subject to copying.” TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 39, 121 S.Ct. 1255

(2001). Copying is not always discouraged or disfavored by the laws which preserve our competitive

economy. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 160, 109 S.Ct. 971, 103

L.Ed.2d 118 (1989). Allowing competitors to copy will have salutary effects in many instances. TrafFix

Devices, 532 U.S. at 39, 121 S.Ct. 1255. Reading § 1125(a) “as creating a cause of action for, in effect,

plagiarism – the use of otherwise unprotected works and inventions without attribution – would be hard

to reconcile with our previous decisions.” Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S.

23, 33, 123 S.Ct. 2041 (2003).

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GNI Waterman responds that the “core” of its complaint is AM Valve’s “methods” to make

copies, not that AM Valve has copied GNI Waterman’s products. GNI Waterman argues that although

AM Valve may “independently” develop products that compete with GNI Waterman, AM Valve is

prohibited to misappropriate “a competitor’s property to make copies that are ‘passed off’ as something

else.” GNI Waterman contends that AM Valve misappropriated GNI Waterman’s patterns, used those

proprietary patterns to manufacture identical products, and stamped AM Valve’slogo to attempt to pass

them off as AMValve’s own products. GNI Waterman claims that “the counterfeit products are not only

substantially similar, but identical in every material respect.” (Italics in original.) According to GNI

Waterman, AM Valve has committed reverse palming/passing off by using GNI Waterman’s patterns

to create copies that A/M Valve sells as its own.

The gist of GNI Waterman’s (first) palming off cause of action is that AM Valve misappropriated

GNIWaterman’s product patterns and designs to create products interchangeable with GNI Waterman’s

products. GNI Waterman points to limited differences in its and AM Valve’s canal gates, such as color.

GNI Waterman’s complaint notes that GNI Waterman and AM Valve’s canal gates comprise the semicircular “hubcap” design. The (first) palming off cause of action alleges in essence that AM Valve sells

GNI Waterman’s products in a slightly modified state and differently labeled. The (first) palming off

cause of action alleges the essence of no less than reverse palming off. Construed most favorably to GNI

Waterman, the (first) palming off cause of action survives AM Valve’s challenge as to the absence of

allegations that AM Valve sells products under GNI Waterman’s name. 

Lanham Act Violation – Trade Dress Infringement

GNI Waterman’s (second) Lanham Act trade dress infringement cause of action alleges that AM

Valve has created copies of GNI Waterman’s products to misappropriate GNI Waterman’s trade dress

and to misrepresent the origin of AM Valve’s design. AM Valve faults the cause of action’s absence

of allegations that the subject trade dress in non-functional and has acquired secondary meaning.

Originally, trade dress “included only the packaging, or “dressing,” of a product, but in recent

years has been expanded by many Courts of Appeals to encompass the design of a product.” Wal-Mart

Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 209, 120 S.Ct. 1339, 1342 (2000). Trade dress involves

“the total image of a product and may include features such as size, shape, color or color combination,

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texture, graphics, or even particular sales techniques.” Mattel, Inc. v. Walking Mountain Prods., 353

F.3d 792, 808 n. 13 (9th Cir.2003) (quoting Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 765

n. 1, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992)). A trade dress infringement plaintiff “must show that its

trade dress is protectable and that defendant’s use of the same or similar trade dress is likely to confuse

consumers.” Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., 826 F.2d 837, 841 (9 Cir. 1987). Trade th

dress “may be protected if it is nonfunctional and has acquired secondary meaning and if its imitation

creates a likelihood of consumer confusion.” Fuddruckers, 826 F.2d at 842. To state a claim for trade

dress infringement, plaintiff must allege: (1) that its claimed trade dress is inherently distinctive or has

acquired secondary meaning; (2) that its claimed trade dress is nonfunctional; and (3) that defendant's

product creates a likelihood of consumer confusion. Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d

1252, 1258 (9th Cir.2001); Nova Wines, Inc. v. Alder Fels Winery LLC, 467 F.Supp.2d 965, 975 (N.D.

Cal. 2006).

Non-Functionality

AM Valve seeks to dismiss the (first) palming off and (second) trade dress infringement causes

of action on grounds that GNI Waterman’s complaint fails to allege “non-functionality.” AM Valve

argues that GNI Waterman “made absolutely no effort to allege non-functionality of the shape and

design that is the subject of its alleged trade dress.” 

GNI Waterman responds that “non-functionality can be reasonably inferred” from its complaint’s

allegations. GNI Waterman argues that the semi-circular “hubcap” design of GNI Waterman and AM

Valve’s canal gates, as depicted in the complaint, “is arbitrary.” GNI Waterman contends that there are

“commercially feasible alternative configurationsfor water control gates which A/MValve could utilize

without ‘passing off’ Waterman’s products.” GNI Waterman claims that AM Valve could have used

“a hexagonal or composite design distinct from the Waterman products described and depicted in the

Complaint.” According to GNI Waterman, its complaint alleges “indistinguishable” products and

provides “explicit pictures” to evaluate its claim.

“A product feature is functional if it is essential to the product’s use or if it affects the cost and

quality of the product.” Rachel v. Banana Republic, 831 F.2d 1503, 1506 (9 Cir. 1987). Functional th

features are the “actual benefit” that a consumer wishes to purchase, as distinguished from an assurance

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that a particular entity made, sponsored or endorsed a product. Rachel, 831 F.2d at 1506. “The

functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm's

reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful

product feature.” Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 131 L.Ed.2d

248 (1995) “In determining functionality, a product’s trade dress must be analyzed as a whole.” First

Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1381 (9 Cir. 1987). Inquiry “is not directed at the th

whether the individual elements are functional but whether the whole collection of elements taken

together are functional.” International Jensen v. Metrosound U.S.A., 4 F.3d 819, 823 (9 Cir. 1993). th

Unique arrangements of “purely functional features” are a functional design not entitled to section

1125(a) protection. Rachel, 831 F.2d at 1506. 

Functionality is a “question of fact.” Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 614 (9

th

Cir. 1989) (citing Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 514 (9th Cir.1989)); Fuddruckers,

826 F.2d at 842.) Factors to consider include whether: (1) a particular design yields a utilitarian

advantage; (2) alternative designs are available to avoid hindering competition; and (3) the design

achieves economies in manufacture or use. International Jensen, 4 F.3d at 823.

Although the complaint’s photos of GNIWaterman and AM Valve’s canal gates are helpful, the

complaint lacks defined non-functionality allegations. The fact that functionality is a factual issue is

persuasive to avoid F.R.Civ.P. 12(b)(6) dismissal of GNI Waterman’s (first) palming off and (second)

trade dress infringement causes of action. Nonetheless, AM Valve is entitled to a more definite

statement of non-functionality to address factors of utilitarian advantage, availability of alternative

designs and economies in manufacture or use. As AM Valve notes, GNI Waterman is not allowed to

“punt” on non-functionality, and its amended complaint is expected to address absence of nonfunctionality allegations.

Secondary Meaning

AM Valve seeks to dismiss the (first) palming off and (second) trade dress infringement causes

of action on grounds that GNI Waterman’s complaint fails to satisfy the essential element “that the

subject product shape and design has acquired secondary meaning.” AM Valve contends that GNI

Waterman is required to plead secondary meaning that the subject trade dress was uniquely associated

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with a single source because product shape and design is never “inherently distinctive.” AM Valve

argues that references in GNI Waterman’s complaint to the irrigation valve and water control industry

are insufficient “in the context of this case.” 

GNI Waterman responds that its complaint’s references to recognition in the industry of its

products line’s shape and design satisfy the secondary meaning requirements. GNI Waterman argues

that “when a product has acquired secondary meaning in the industry for which it is intended, the

product has acquired secondary meaning in the minds of potential purchasers.” GNI Waterman

continues that when viewed most favorably to GNI Waterman, its allegations “that its products have

achieved secondary meaning in the water control industry are sufficient to state a trade dress claim.”

A “mark has acquired distinctiveness, even if it is not inherently distinctive, if it has developed

secondary meaning.” Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 211, 120 S.Ct. 1339

(2000). “The trade dress of a product or service attains secondary meaning when the purchasing public

associates the dress with a particular source.” Fuddruckers, 826 F.2d at 843. In the context before this

Court, “secondary meaning” refers to “the acquired, source-identifying meaning of a nonword mark.”

Wal-Mart Stores 529 U.S. at 211, n., 120 S.Ct. at 1343, n.

Design “is not inherently distinctive” and “in an action for infringement of unregistered trade

dress under § 43(a) of the Lanham Act, a product’s design is distinctive, and therefore protectable, only

upon a showing of secondary meaning.” Wal-Mart Stores, 529 U.S. at 212, 216, 120 S.Ct. at 1339,

1344, 1346. Although § 1125(a) does not require “a producer to show that its trade dress is distinctive,

. . . courts have universallyimposed that requirement,since without distinctiveness the trade dress would

not ‘cause confusion . . . as to the origin, sponsorship, or approval of [the] goods.”

GNI Waterman alleges that its product line’s shape and design have “become recognized in the

industry as symbols uniquely associated with” GNI Waterman and that its “semi-circular ‘hubcap

design’, represents a distinctive appearance unique” to GNI Waterman in the industry. AM Valve argues

that “a claim of association in the ‘industry’” is not an association in customers and potential customers’

minds and that association by customers and potential customers “is at the heart of secondary meaning

and patently missing” from GNI Waterman’s complaint.

GNI Waterman’s products at issue here are not purchased by the general public. Purchasers are

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generally limited to canal operators and farmers. The universe of purchasers is too finite to support AM

Valve’s arguments. GNI Waterman’s complaint sufficiently alleges that its products line’s design and

shape have achieved secondary meaning in that the potentially purchasing public associates the design

and shape with a particular source, GNI Waterman. At this pleading stage, GNI Waterman has alleged

sufficient distinctiveness to develop secondary meaning to survive AM Valve’s F.R.Civ.P. 12(b)(6) and

(e) motions.

Likelihood Of Confusion

In addition to its (first) palming off and (second) trade dress infringement causes of action, GNI

Waterman alleges a (third) trademark infringement cause of action that AM Valve, through its website

and other channels, has used GNI Waterman’s “federally-registered ‘Waterman’ trademark to promote

its products and services” and that such use “is likely to cause public confusion, mistake or deception

in violation of the Lanham Act.” AM Valve argues that GNI Waterman’s three Lanham Act causes of

action fail in the absence of allegations as to the essential element of “likelihood of confusion by

customers and potential customers as to the source of the product(s) in question.”

Trademark infringement law “prevents only unauthorized uses of a trademark in connection with

a commercial transaction in which the trademark is being used to confuse potential customers.” Bosley

Medical Institute, Inc. v. Kremer, 403 F.3d 672, 676 (9 Cir. 2005). The Second Circuit Court of th

Appeals has explained that the “Lanham Act seeks to prevent consumer confusion that enables a seller

to pass off his goods as the goods of another . . . [T]rademark infringement protects only against

mistaken purchasing decisions and not against confusion generally.” Lang v. Ret. Living Publishing

Co., Inc., 949 F.2d 576, 582-583 (2 Cir. 1991) (Bold added.) nd

AM Valve argues that a Lanham Act infringement claim (palming/passing off, trade dress or

trademark infringement) requires GNI Waterman to plead that AM Valve’s “use creates a likelihood of

confusion with customers and potential customers as to the source of the products in question.” AM

Valve points out that GNI Waterman alleges that GNI Waterman and AM Valve’s products bear their

respective name brands and different colors (GNI Waterman (red) and AM Valve (green)). AM Valve

continues that “the products in question are by their very nature not consumer goods sold to the general

public” to negate “public confusion” tantamount to confusion among GNI Waterman’s customers and

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potential customers.

GNI Waterman responds that the “specific type of ‘confusion’” suggested by AM Valve is “hairsplitting” and unsupported by case law. GNI Waterman argues that it need not “plead the potential effect

of A/M Valve’s conduct on specific individuals,” only that “A/M Valve’s acts have or are likely to cause

confusion.” 

GNI Waterman’s complaint points to “public” or general confusion, not mistaken purchasing

decisions or similar confusion. Although the market for and potential consumers of GNI Waterman and

AM Valve’s products are limited, the complaint lacks sufficiently definite allegations as to confused or

mistaken purchasing decisions. Although GNI Waterman, at this time, escapes F.R.Civ.P. 12(b)(6)

dismissal as to the likelihood of confusion issue, AM Valve is entitled to a more definite statement as

to confusion of GNI Waterman’s potential consumers, especially given the limited market of GNI

Waterman’s products. 

Waterman Family Heritage

GNI Waterman’s complaint alleges that AM Valve uses the “Waterman heritage” to attract

customers to its irrigation control products and valves purportedly “compatible” with GNI Waterman’s

products. GNI Waterman’s (third) trademark infringement cause of action alleges that AM Valve has

used GNIWaterman’s federally-registered “Waterman” trademark to promote its products and services

through AM Valve’s website and other channels. 

The Lanham Act “prohibits uses of trademarks, trade names, and trade dress that are likely to

cause confusion about the source of a product or service.” Bosely Medical Institute, 403 F.3d at 677.

The Lanham Act’s infringement section provides that any person who “use[s] in commerce any

reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale,

offering for sale, distribution, or advertising of any goods or services on or in connection with which

such use is likely to cause confusion, or to cause mistake, or to deceive . . .” can be held liable for such

use. 15 U.S.C. § 1114(1)(a). 

AM Valve argues that to prove trademark infringement, GNI Waterman must demonstrate that

AM Valve’s use of GNI Waterman’s registered trademark “is likely to cause confusion, mistake or to

deceive customers.” AM Valve contends that use of a family name in business may constitute trademark

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infringement in absence of precaution or explanation to prevent deception. AM Valve claims that its

website use of the Waterman family name is non-infringing in that it has explained that it “is a different

company and not a successor to the holder of the trademark” and that its website compares its products

to competitors, including GNI Waterman. AM Valve faults the (third) trademark infringement cause

of action’s absence of allegations that AM Valve’s use of its owners’ family heritage is confusing or that

AM Valve failed to explain it is a different company than GNI Waterman.

GNI Waterman responds that use of the Waterman surname is an invalid defense in that it is not

the surname of any AM Valve principal. GNI Waterman argues that even if the defense applied, it

requires reasonable precautions to distinguish use of the surname from the trademark.

“[A]lthough the use of one's surname is not a ‘defense’ to a trademark infringement action, courts

generally allow the use of one's own name if reasonable precautions are taken.” Sardi's Restaurant

Corp. v. Sardie, 755 F.2d 719, 725 (9 Cir. 1985); see Herring-Hall-Marvin Safe Co. v. Hall’s Safe Co.,

th

208 U.S. 554, 559, 28 S.Ct. 350 (1908) (“rights of the two parties have been reconciled by allowing the

use [of surname], provided that an explanation is attached.) If a “second comer owns the company

himself and evinces a genuine interest in establishing an enterprise in which his own skill or knowledge

can be made known to the public, that argues in favor of allowing him to use his own name in some

restricted fashion.” Taylor Wine Co. v. Bully Hill Vineyards, Inc., 569 F.2d 731, 735 (2 Cir. 1978). nd

As stated in Societe Vinicole de Champagne v. Mumm, 143 F.2d 240, 241 (2d Cir. 1944), to prohibit an

individual from using his true family surname is to “take away his identity: without it he cannot make

known who he is to those who may wish to deal with him; and that is so grievous an injury that courts

will avoid imposing it, if they possibly can.” “When confusion is likely, however, there must obviously

be some limitation on an individual's unrestricted use of his own name. Thus, a second comer may not

use any name, mark or advertisement indicating that he is the successor of another corporation or that

his goods are the products of that corporation.” Taylor Wine, 569 F.2d at 735. 

Based on cryptic allegations of GNI Waterman’s complaint, alleged consumer confusion from

use of the Waterman trademark is unclear. Although GNI Waterman is correct that at this pleading

stage, it need not address AM Valve’s reasonable precautions, GNI Waterman must provide a more

definite statement as to confusion of GNI Waterman’s potential consumers from AM Valve’s alleged

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use of the Waterman trademark through AM Valve’s website and other channels, which the complaint

fails to identify or to define adequately.

State Law Unfair Competition

GNI Waterman alleges a (fourth) unfair business practices cause of action under the unfair

competition law of California Business & Professions Code sections 17200, et seq. (“Unfair Competition

Law”). The cause of action alleges that AM Valve violated the Unfair Competition Law in that AM

Valve palmed off GNI Waterman’s goods and infringed upon of GNI Waterman’s trade dress and

trademark to constitute a false designation of origin, a false or misleading description of fact, and/or a

false or misleading representation of fact likely to cause confusion.

AM Valve argues that its conduct is permissible under federal law to preempt GNI Waterman’s

(fourth) Unfair Competition Law cause of action, which targets the same conduct as GNI Waterman’s

unsupported Lanham Act causes of action and relies on the same facts to support the Lanham Act causes

of action. AM Valve contends that the (fourth) unfair business practices cause of action should be

dismissed because “federal patent and copyright policy forbid states from imposing unfair competition

liability for copying product shapes which federal law leaves in the public domain.” 

AM Valve appears to rely on the following from Sears, Roebuck & Co. v. Stiffel Co., 376 U.S.

225, 231, 84 S.Ct. 784 (1964): “Just as a State cannot encroach upon the federal patent laws directly,

it cannot, under some other law, such as that forbidding unfair competition, give protection of a kind that

clashes with the objectives of the federal patent laws.” AM Valve further appears to rely on the

following from Campco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 237, 84 S.Ct. 779 (1964):

“Today we have held in Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, that when an

article is unprotected by a patent or a copyright, state law may not forbid others to copy that article. To

forbid copying would interfere with the federal policy, found in Art. I, § 8, cl. 8, of the Constitution and

in the implementing federal statutes, of allowing free access to copy whatever the federal patent and

copyright laws leave in the public domain.”

AM Valve fails to establish how the (fourth) Unfair Competition Law cause of action is

preempted or clashes with federal law at issue here. As noted by GNI Waterman, the Unfair

Competition Law provides a “separate and independent means” to prohibit illegal conduct. “In contrast

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to its limited remedies, the unfair competition law's scope is broad.” Cel-Tech Communications, Inc.

v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548 (1999). The Unfair

Competition Law does not proscribe specific practices but, rather, defines “unfair competition” to

include “any unlawful, unfair or fraudulent business act or practice.” Cal-Tech Communications, 20

Cal.4th at 180, 83 Cal.Rptr. 548 (quoting Cal. Business & Prof. Code § 17200.) The Unfair Competition

Law’s coverage is “sweeping” and embraces “anything that can properly be called a business practice

and that at the same time is forbidden by law.” Rubin v. Green, 4 Cal.4th 1187, 1200,17 Cal.Rptr.2d

828 (1993). It governs “anti-competitive business practices” and has as a major purpose “the

preservation of fair business competition.” Barquis v. Merchants Collection Assn., 7 Cal.3d 94, 110,

101 Cal.Rptr. 745 (1972). By proscribing “any unlawful” business practice, “section 17200 'borrows'

violations of other laws and treats them as unlawful practices” that the Unfair Competition Law makes

independently actionable. State Farm Fire & Casualty Co. v. Superior Court 45 Cal.App.4th 1093,

1103, 53 Cal.Rptr.2d 229 (1996) (citing Farmers Ins. Exchange v. Superior Court, 2 Cal.4th 377, 383,

6 Cal.Rptr.2d 487 (1992)). GNI Waterman further notes that although its Unfair Competition Law

remedies may be limited to injunctive relief and restitution, such remedies are in addition to, not

dependent on, its other sought after remedies. As such, since GNI Waterman’s Lanham causes of action

survive, subject to granting in part AM Valve’s motion for more definite statement, GNI Waterman’s

(fourth) Unlawful Competition Law cause of action survives.

Conversion And Trespass To Chattel

GNI Waterman alleges (fifth) conversion and (sixth) trespass to chattel causes of action that AM

Valve wrongfully interfered with GNI Waterman’s “valid ownership rights” by misappropriating GNI

Waterman’s forms, designs and patterns without GNI Waterman’s consent. AM Valve faults the causes

of action’s absence of allegations that AM Valve “actually interfered with specific personal property”

of GNI Waterman. 

“[C]onversion is a tort that may be committed only with relation to personal property” and

applies to personal property. Munger v. Moore, 11 Cal.App.3d 1, 7, 89 Cal.Rptr. 323 (1970).

“Conversion is the wrongful exercise of dominion over the personal property of another.” Taylor v.

Forte Hotels International, 235 Cal.App.3d 1119, 1124 (1991) (citing Zaslow v. Kroenert, 29 Cal.2d

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541, 549, 176 P.2d 1 (1946)). Trespass to chattels “lies where an intentional interference with the

possession of personal property has proximately caused injury.” Thrifty-Tel, Inc. v. Bezenek, 46

Cal.App.4th 1559, 1566-15667 (1996); see, e.g., Itano v. Colonial Yacht Anchorage, 267 Cal.App.2d

84, 90, 72 Cal.Rptr. 823 (1968). 

As noted by AM Valve, the conversion and trespass to chattels causes of action allege that GNI

Waterman “held a valid ownership right to the proprietary forms, designs and patterns used to

manufacture” GNI Waterman’s products. AM Valve faults the causes of action’s absence of allegations

that AM Valve interfered with GNI Waterman’s “personal property.” AM Valve contends that GNI

Waterman’s alleged “ownership right to the proprietary forms, designs and patterns” is not “tangible,

personal property” to warrant dismissal of the conversion and trespass to chattels causes of action.

GNI Waterman responds that the patterns and forms to manufacture the products at issue are the

“physical property” subject to its claims in that they are items which GNI Waterman paid for and owns

and with which AM Valve interfered. GNI Waterman argues that because AM Valve interfered with

GNI Waterman’s physical property, GNI Waterman’s conversion and trespass to chattels claims survive.

In its reply papers, AM Valve contends that GNI Waterman has changed from a

“misappropriation or interference with ownership rights to interference with its personal property” to

require it to amend its conversion and trespass to chattels causes of action.

AM Valve is correct. GNI Waterman’s complaint fails to allege wrongful exercise of dominion

over another’s “personal property” or intentional interference with the possession of “personal property.”

In its opposition papers, GNI Waterman switches from intangible ownership rights of forms, designs and

patterns to the forms, designs and patterns themselves. Since GNI Waterman’s current complaint

focuses on conversion and interference with intangible ownership rights, the (fifth) conversion and

(sixth) trespass to chattel causes of action are dismissed with leave to amend. 

Greater Pleading Specificity

AM Valve faults GNI Waterman for identifying only AM Valve’s AMC-10 model and claims

it is uncertain which other products, if any, are allegedly infringing. More specifically, AM Valve faults

GNI Waterman for:

1. Failure to identify in the (first) palming off cause of action “products that are

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‘interchangeable’ with Waterman products”;

2. Reference to “creating copies of Waterman’s products” in the (second) trade dress

infringement cause of action; 

3. Consistent vague references to GNI Waterman and AM Valve’s products;

4. Failure to identify and define “other channels” as sources of infringing use of GNI

Waterman’s trademark. 

AM Valve argues that it cannot ascertain the “other channels” in that its products display the AM Valve

brand.

GNI Waterman generally responds that through discovery, AM Valve will be able to obtain the

specific information it seeks.

AM Valve raises valid points as to GNI Waterman’s failure to identify or define: (1) AM Valve’s

specific infringing products; (2) AM Valve’s products interchangeable with GNIWaterman’s products;

and (3) “other channels” as sources of infringing use of GNI Waterman’s trademark. GNI Waterman’s

amended complaint is expected to identify or define precisely AM Valve’s products and other channels

which GNI Waterman alleges are infringing.

The reference to creating copies of GNI Waterman’s products in the (second) trade dress

infringement cause of action appears to address use of GNI Waterman’s forms, patterns and designs to

create irrigation control products and valves. Through discovery and GNI Waterman’s F.R.Civ.P. 26(a)

initial disclosures, AM Valve should be in a position to obtain specificity, the lack of which it complains

here. 

CONCLUSION AND ORDER

For the reasons discussed above and pursuant to its directives herein, this Court:

1. DENIES AM Valve’s F.R.Civ.P. 12(b)(6) motion to dismiss GNI Waterman’s (first)

palming off, (second) trade dress infringement, (third) trademark infringement, and

(fourth) Unfair Competition Law causes of action;

2. GRANTS AM Valve’s F.R.Civ.P. 12(e) motion for a more definite statement insofar as

to ORDER GNI Waterman, no later than September 21, 2007, to file an amended

complaint to allege specific facts and greater particularity as to:

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A. Non-functionality of GNI Waterman’s products’ shapes and designs; 

B. Likelihood of consumer confusion and mistaken purchasing decisions created by

AM Valve’s products and AM Valve’s use of the Waterman trademark through

AM Valve’s website and other channels (including identifying or defining the

other channels); and

C. AM Valve’s specific infringing products and products interchangeable with GNI

Waterman’s products (including identifying or defining such products); and

3. DISMISSES with leave to amend GNI Waterman’s (fifth) conversion and (sixth) trespass

to chattels causes of action.

IT IS SO ORDERED.

Dated: September 7, 2007 /s/ Lawrence J. O'Neill 

66h44d UNITED STATES DISTRICT JUDGE

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