Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01521/USCOURTS-casd-3_08-cv-01521-1/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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28 1 For ease of reference, the court will refer to these parties throughout as Anto and

Ara, respectively. No disrespect is intended by the use of first names.

08cv1521

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

KAROUN DAIRIES, INC.,

Plaintiff,

v.

KAROUN DAIRIES, INC., et al.

Defendants; _________________________________

AND RELATED COUNTERCLAIM.

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Civil No. 08cv1521-L(WVG)

ORDER (1) DENYING PLAINTIFF’S

MOTION FOR A PRELIMINARY

INJUNCTION, AND (2) DENYING

PLAINTIFF’S MOTION TO

DISMISS THE COUNTERCLAIM

This trademark infringement action arises from a family dispute over the right to use in

the United States a trademark previously established in the family business in Lebanon. Plaintiff

was first to use and register the mark in the United States and filed this infringement action

against Defendants. Defendants filed a counterclaim alleging that Plaintiff is the infringer and

requested cancellation of Plaintiff’s registered mark. Plaintiff moved for a preliminary

injunction pursuant to Federal Rule of Civil Procedure 65(a) and to dismiss the counterclaim

pursuant to Rule 12(b)(6) for lack of trademark standing. For the reasons which follow,

Plaintiff’s motions are DENIED.

Plaintiff’s founder, Anto Baghdassarian and Defendant Ara Baghdassarian are brothers.1

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2 The family business was established in 1931 as a sole proprietorship known as

Laiterie Karoun. In 1972 it was incorporated in Lebanon under the name Karoun Dairies, S.A.L.

3 The factual allegations from pleadings referenced herein were not disputed.

2 08cv1521

Anto and Ara both worked for many years in the family dairy business in Lebanon (“Karoun

Lebanon”).2

 Karoun Dairies is a trade name which has been used in the family business since

1931 and is registered in Lebanon. Karoun Lebanon was well known in the Middle East and

exported its products as far as Paris and London. (Answer and Countercl. at 10-11.)3

Ara was Karoun Lebanon’s financial controller and manager. (Answer and Countercl. at

10.) Anto was a shareholder, director and officer of Karoun Lebanon. In these capacities, he

was privy to the company’s plans to further expand its business outside Lebanon. (Id. at 11.) In

approximately 1990, after the death of his father and due to civil unrest in Lebanon, Anto sold

his interest in Karoun Lebanon to Ara, and moved to the United States. (Id.; Decl. of Andrea M.

Kimball in Supp. of Karoun Dairies, Inc.’s Mot. for Prelim. Inj. (“Kimball Decl.”) Ex. L at 30;

Decl. of John M. Nading in Supp. of Defs/Countercls’ Opp’n to Pl./Counterdef.’s Mot. to

Dismiss (“Nading Decl.”) Ex. B at 5).) While Ara asserts that they entered into an agreement

that Anto would not enter the dairy business, Anto disputes this. (Cf. Anto PI Decl. at 2 with

Third Decl. of Ara Baghdassarian in Supp. of Defs/Countercls’ Opp’n to Pl./Counterdef’s Mot.

to Dismiss (“Ara Mot. to Dismiss Decl.”) at 1.) 

Subsequently, Ara continued to manage Karoun Lebanon, which proceeded to expand its

business. Karoun Lebanon participated in local and intentional exhibitions, and advertised in

international directories and journals. (Answer and Countercl. at 11.) In 1998 Karoun Lebanon

registered the karoun.com and karoundairies.com domain names. (Suppl. Decl. of Andrea M.

Kimball in Supp. of Karoun Dairies, Inc.’s Reply in Supp. of Its Mot. for Prelim. Inj. (Suppl.

Kimball Decl.”) Ex. 3.) It focused its expansion efforts on the United States, Canada, Australia

and Europe because these regions were politically stable and had large Lebanese and Armenian

communities. Karoun Lebanon registered its mark in Australia and Canada, it attempted

registration in the United States, and has a pending Community Trademark application in

Europe. (Answer and Countercl. at 11-12.) In 2004 or 2005 Karoun Lebanon had to

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temporarily suspend production in Lebanon during a military conflict, however, it continued to

use the Karoun mark through its exclusive licensees, Defendants Karoun Dairies, Inc., a

Canadian corporation (“Karoun Canada”) and Karlacti, Inc., a Delaware corporation

(“Karlacti”). (See Ara Mot. to Dismiss Decl. at 2.) 

Anto started a dairy business in California in 1992, incorporated Plaintiff and started

selling cheese products. (Decl. of Anto Baghdassarian in Supp. of Karoun Dairies, Inc.’s Mot.

for Prelim. Inj. (“Anto PI Decl.”) at 1-2.) Anto named his business after the family business in

Lebanon and marketed his products to Middle Eastern emigres in California and elsewhere in the

United States. (Nading Decl. Ex. B at 5; see also id. at Ex. A.) In 1993 Plaintiff registered

trademark “Karoun Dairies” and in 2003 it registered the mark “Karoun’s California Cheese, a

Whole Milk Cheese.” (Kimball Decl. Ex. A & B.) Plaintiff has invested in advertising and

promoting its marks in the United States by attending national trade shows and placing

newspaper and television advertising. (Anto PI Decl. at 4-5; Kimball Decl. Ex. B at 32-33.) 

Plaintiff registered its first domain name, karouncheese.com, in 1999 and its second,

karoundairiesinc.com, in 2006. (Ara Mot. to Dismiss Decl. at 1.) Starting in February 2007,

Plaintiff registered a number of additional marks, including a circular logo with a drawing of a

cow’s head and the word “karoun.” (Kimball Decl. Ex. C-H.) 

In January 2006 Ara retained intellectual property counsel in California. (Decl. of Ara

Baghdassarian in Supp. of Mot. to Dismiss for Lack of Personal Jurisdiction (“Ara Personal

Jurisdiction Decl.”) at 1.) In June 2006 Ara’s counsel filed a trademark application to register

the Karoun mark in the United States on behalf of Karoun Lebanon. Plaintiff objected and

demanded Ara to withdraw the application. Ara, on the other hand, asserted that Karoun

Lebanon intended to expand its business into the United States under the Karoun name and

demanded that Plaintiff cease and desist using the name. He argued that Anto had sold his right

to use the mark to Ara when he sold him his interest in the family business. In May 2007 Ara’s

trademark application was abandoned. (See Order Denying Defendants’ Motion to Dismiss for

Lack of Personal Jurisdiction, dated July 13, 2009 (“Personal Jurisdiction Order”), at 4.) In

/ / / / /

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November 2007, Karoun Lebanon was able to register in the United States a circular logo with

two cows. (Ara PI Decl. Ex. B at 14.)

In July 2006 following the outbreak of military conflict in Lebanon, Ara and his family

immigrated into the United States. (Ara Personal Jurisdiction Decl. at 1.) In October 2006, Ara

and his family visited Anto and his family in California. While the precise nature of this visit is

disputed, Anto contends that Ara demanded a share in Plaintiff corporation or compensation,

both of which Anto denied. (See Personal Jurisdiction Order at 4-5.) 

From October 2006 to August 2008, Ara contacted “a couple of times” Raffi Kradjian of

Kradjian Importing Co. in California. Mr. Kradjian is in the business of importing and

distributing Middle Eastern specialty foods in the United States. The precise nature of Ara’s

contacts with Mr. Kradjian are disputed. According to Ara, he contacted Mr. Kradjian on behalf

of Karoun Lebanon to “get a general feel of the U.S. market.” According to Anto, Ara

represented that his business was the “real” Karoun Dairies and asked him to deal only with Ara

to the exclusion of Plaintiff. (See Personal Jurisdiction Order at 5.) 

In February 2007, Ara incorporated Karlacti in Delaware and in July 2008, he registered a

domain name karlacti.com. Although Karlacti has not and is not using the Karoun mark in

commerce in connection with any goods or services in the United States, its plans for expansion

in the United States were put on hold due to this litigation. (Third Decl. of Ara Baghdassarian in

His Capacity as President of Karlacti, Inc., a Delaware Corp., in Supp. of Defs/Countercls’

Opp’n to Pl./Counterdef’s Mot. for Prelim. Inj. (“Ara Karlacti PI Decl.”) at 2; Second Decl. of

Ara Baghdassarian in His Capacity as President of Karlacti, Inc., a Delaware Corp., in Supp. of

Defs/Countercls’ Opp’n to Pl./Counterdef.’s Mot. to Dismiss (“Ara Karlacti Mot. to Dismiss

Decl.”).) 

In September 2007, Ara incorporated Karoun Canada, and in July and August 2008

registered domain names karoundairies.ca, karouncheese.ca, karounfoods.com,

karoundairiesgroup.com, karouncheese.net and karoundairy.com. The company had sales in

Canada starting in November 2007. All of its customers have been in Canada, and it has never

sold or offered for sale any products in the United States. The products are labeled “Not for sale

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28 4 ARZ, GOPI LASSI and YANNI are some of the products sold by Plaintiff.

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in the USA.” Its operations have been suspended due to this litigation. (Second Decl. of Ara

Baghdassarian in His Capacity as President of Karoun Dairies, Inc., a Canadian Corp., in Supp.

of Defs/Countercls’ Opp’n to Pl./Counterdef’s Mot. to Dismiss (Ara Karoun Canada Mot. to

Dismiss Decl.”); Third Decl. of Ara Baghdassarian in His Capacity as President of Karoun

Canada, Inc., a Canadian Corp., in Supp. of Defs/Countercls’ Opp’n to Pl./Counterdef.’s Mot.

for Prelim. Inj.) 

Plaintiff admits that Karoun Canada registered the Karoun mark in Canada and has a right

to market and sell its goods under the Karoun name there. (Pl.’s Mot. for Prelim. Inj. at 19.) In

addition, in response to Plaintiff’s demand letters (Ara PI Decl. at 1-2), Defendants’ websites

include notices stating, “Licensees of the original KAROUN DAIRIES S.A.L. Beirut - Lebanon. 

Not affiliated with KAROUN DAIRIES, Inc. California - USA incorporated without our

consent” and “KAROUN DAIRIES S.A.L. does not sponsor ARZ, GOPI LASSI and YANNI

branded dairy products.”4

 (Anto PI Decl. Ex. G.) Defendants are not “currently using the

KAROUN mark in commerce in connection with any goods or services in the United States, nor

targeting the United States under the KAROUN brand.” (Defs’ Opp’n to Pl.’s Mot. for Prelim.

Inj. at 3; see also id. at 17.) 

In August 2008 Plaintiff filed a complaint against Ara, Karlacti and Karoun Canada. The

operative complaint claims trademark infringement under the Lanham Act and federal common

law, false designation of origin and federal unfair competition, dilution, and unfair competition

under California law. Defendants filed a counterclaim for false designation of origin and federal

unfair competition under the Lanham Act, cancellation of trademark registrations, and

accounting. 

Contending that it likely will prevail on the merits of its infringement and unfair

competition claims, Plaintiff filed a motion for a preliminary injunction, requesting an order

prohibiting Defendants from using any trademarks owned by Plaintiff, or any references thereto

and from using Plaintiff’s marks on any websites or products, including the use of Plaintiff’s

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marks in the URL. In the alternative, Plaintiff requests that Defendants’ websites be modified to

preclude visitors from the United States.

To the extent Plaintiff requests relief against Karoun Lebanon and its two web sites,

karoun.com and karoundairies.com, the court notes that Karoun Lebanon is not a party to this

action. "A federal court may issue an injunction if it has personal jurisdiction over the 

parties . . .; it may not attempt to determine the rights of persons not before the court." Zepeda v.

INS, 753 F.2d 719, 727 (9th Cir. 1983); Fed. R. Civ. Proc. 65(d). Accordingly, Plaintiff’s

motion for a preliminary injunction is denied as to Karoun Lebanon and its websites.

With respect to Karoun Canada, Karlacti and Ara, “[a] preliminary injunction is an

extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., __

U.S. __; 129 S. Ct. 365, 376 (2008) “A plaintiff seeking a preliminary injunction must establish

that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the

absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction

is in the public interest.” Id. at 374. 

The burden of proving the foregoing elements is on the moving party. Marlyn

Neutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 n.2 (9th Cir. 2009). 

“Once the moving party has carried its burden of showing a likelihood of success on the merits,

the burden shifts to the non-moving party to show a likelihood of that its affirmative defense will

succeed.” Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1158 (9th Cir. 2007).

To prevail on a trademark infringement claim, Plaintiff must show that Defendants “(1)

use in commerce (2) any word, false designation of origin, false or misleading description, or

representation of fact, which (3) is likely to cause confusion or misrepresents the characteristics

of his or another person’s goods or services.” Marlyn Neutraceuticals, 571 F.3d at 877. 

Plaintiff assumes that Defendants’ use of the Karoun mark constitutes “use in commerce.” It

contends that Defendants have caused initial interest confusion, which “occurs when the

defendant uses the plaintiff's trademark in a manner calculated to capture initial consumer

attention, even though no actual sale is finally completed as a result of the confusion.” 

Interstellar Starship Serv., Ltd. v. Epix, Inc., 304 F.3d 936, 941 (9th Cir. 2002). It argues that

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5 Plaintiff’s reliance on internet search engine results to support its argument is

irrelevant. Interstellar Starship, 304 F.3d at 945 n.10 (“[W]e find largely irrelevant what results

when a given term is input into a search engine. Our initial interest confusion analysis does not

depend on a given business’s payment or lack thereof to the various search engines.”).

6 In an attempt to show bad faith on Ara’s part, Anto speculates that Karoun

Lebanon set up e-mail boxes with the names of Plaintiff’s employees attached to Karoun

Lebanon’s domain names. (Anto PI Decl. at 6.) This argument is rejected because the evidence

offered in its support is speculative and because Defendants provided evidence to the contrary. 

(See Ara PI Decl. at 1.) Moreover, the e-mail was forwarded the same day to Plaintiff. 

7 08cv1521

Defendants’ use of domain names which include the word “Karoun” confuses customers who

wish to purchase products from Plaintiff.5

 “To evaluate the likelihood of confusion, including

interest confusion, the so-called Sleekcraft factors provide non-exhaustive guidance,” Id. at 942. 

However, in the internet context, the three most important Sleekcraft factors “are (1) the

similarity of the marks, (2) the relatedness of the goods or services, and (3) the parties'

simultaneous use of the Web as a marketing channel.” Id. When these factors suggest

confusion, the other factors must weigh strongly against a likelihood of confusion to avoid the

finding. Id.

It is undisputed that there is a likelihood of confusion in this case. The mark “Karoun

Dairy” is the same, the products are very similar, i.e., Mediterranean-style dairy products, and

the parties use the internet as their marketing channel. The remaining Sleekcraft factors do not

negate the likelihood of confusion.

Defendants argue the confusion was created when Plaintiff adopted the Karoun mark. 

Plaintiff relies on a 2004 e-mail from a Costco employee to rostom@karoundairies.com to show

an instance of actual confusion. (Anto PI Decl. Ex. I.) Because the domain name was registered

to Karoun Lebanon, the e-mail went there.6

 However, this was two years before Ara attempted

to register a trademark in the United States, and three years before Karoun Canada and Karlacti

were incorporated. It therefore appears that Defendants did not cause the confusion, but that it

originated with Plaintiff’s use of the Karoun mark.

Defendants do not dispute the strong likelihood of confusion, but instead argue that they

are senior users and have a right to use the Karoun mark in the United States. Plaintiff counters

that Plaintiff was the first to register the mark in the United States and has exclusive use under

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the territoriality principle of trademark law. 

“A fundamental principle of trademark law is first in time equals first in right. . . . [¶] 

Under the principle of first in time equals first in right, priority ordinarily comes with earlier use

of a mark in commerce.” Grupo Gigante SA de CV v. Dallo & Co., Inc., 391 F.3d 1088, 1093

(9th Cir. 2004). It is undisputed that Karoun Lebanon used the mark in commerce first, but not

in the United States, and that Plaintiff was first to use the mark in the United States. Under the

territoriality principle, the “priority of trademark rights in the United States depends solely upon

priority of use in the United States, not on priority of use anywhere else in the world. Earlier use

in another country usually just does not count.” Id. (brackets, footnote and internal quotation

marks omitted). 

However, “even those who use marks in other countries can sometimes - when their

marks are famous enough - gain exclusive rights to the marks in this country.” Id. at 1095. This

is the case even when the foreign user has not used the mark in the United States. Id. at 1094;

see also id. at 1095.

While the territoriality principle is a long-standing and important doctrine within

trademark law, it cannot be absolute. An absolute territoriality rule without a

famous-mark exception would promote consumer confusion and fraud. Commerce

crosses borders. In this nation of immigrants, so do people. Trademark is, at its

core, about protecting against consumer confusion and palming off. There can be

no justification for using trademark law to fool immigrants into thinking that they

are buying from the store they liked back home.

Grupo Gigante, 391 F.3d at 1094 (footnote omitted). To come within the exception, the foreign

user must show that its mark acquired a secondary meaning and a substantial percentage of

consumers in the relevant American market is familiar with the foreign mark. Id. at 1098.

“Secondary meaning refers to a mark's actual ability to trigger in consumers' minds a link

between a product or service and the source of that product or service. That is, a mark has

secondary meaning when, in the minds of the public, the primary significance of a mark is to

identify the source of the product rather than the product itself.” Id. at 1095 (internal quotation

marks and footnote omitted). 

Although Anto asserts that the “trademark and brand name KAROUN was not known by

consumers in the United States until I started Karoun in 1992" (Anto PI Decl. at 1), this bald

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assertion is contradicted by prior representations on Plaintiff’s website: 

Karoun, which is Armenian for “springtime,” was the name of the family factory

in Beirut, where Ohannese Baghdassarian specialized in yogurt before developing

cheese-making skills. Almost anyone from that part of the world will recognize the

name.

(Nading Decl. Ex. A. (emphasis added).) According to Plaintiff’s own advertising, the Karoun

name was already known among the Middle Eastern immigrants in the United States. 

To determine whether a substantial percentage of American consumers in the relevant

market is familiar with the foreign mark, the court considers the following:

The relevant American market is the geographic area where the defendant uses the

alleged infringing mark. In making this determination, the court should consider

such factors as the intentional copying of the mark by the defendant, and whether

customers of the American firm are likely to think they are patronizing the same

firm that uses the mark in another country. While these factors are not necessarily

determinative, they are particularly relevant because they bear heavily on the risks

of consumer confusion and fraud, which are the reasons for having a famous-mark

exception.

Grupo Gigante, 391 F.3d at 1098. It is beyond dispute that Plaintiff intentionally copied the

Karoun mark. In addition to showcasing the history of Karoun Lebanon on Plaintiff’s website,

Anto discussed it in interviews for industry publications. For example, Cheese Market News

published interviews with Anto and later his son Rostom Baghdassarian on September 15, 2000

and July 18, 2008, respectively. (Nading Decl. Ex. B & C.) Anto admitted that he named his

business after his family’s plant in Beirut. (Id. Ex. B at 5.) In each instance, Plaintiff drew on

the long history of the family business. (Id. Ex. B & C.) However, when Ara asked Cheese

Market News for a clarification of the 2008 article to state that Karoun Lebanon is still in

existence and that it is separate from Plaintiff, Plaintiff protested. (See Kimball Decl. Ex. L; se

also Nading Decl. Ex. C at 12-13.) Plaintiff used the Karoun mark because it was already wellknown in the United States among the immigrants from the Middle East. Accordingly,

Defendants, as Karoun Lebanon’s licensees, have shown a likelihood of prevailing on their

senior user defense.

It therefore does not appear likely that Plaintiff can prevail on its infringement claims

against Defendants. Because Plaintiff’s unfair competition claim is based entirely on the

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infringement claims, it is also not likely that Plaintiff can prevail on the unfair competition

claim. 

In the absence of likelihood of success on the merits, irreparable harm to Plaintiff cannot

be presumed. See Marlyn Pharmaceuticals, Inc., 571 F.3d at 877. Furthermore, any harm likely

to result from the denial of Plaintiff’s motion is slight. Even if Plaintiff had met its burden for a

preliminary injunction, the court could not grant the requested relief against Karoun Lebanon or

its websites, karoun.com and karoundairies.com, because Karoun Lebanon is not a party. 

Plaintiff admits that Karoun Canada registered the mark in Canada and is entitled use it there. 

(Pl.’s Mot. for Prelim. Inj. at 19.) Karlacti does not incorporate the Karoun name. (See Kimball

Decl. Ex. I at 23.) Any relief would therefore be limited to the accessibility of Karoun Canada’s

websites from the United States and disabling links, if any, on karlacti.com. However, because

Karoun Canada’s and Karlacti’s websites already contain disclaimers stating that they are not

associated with Plaintiff and because neither is selling any products, the benefit to Plaintiff from

granting injunctive relief likely would be meager. The likelihood of irreparable harm therefore

does not weigh in favor of granting Plaintiff’s motion.

Last, based on the facts of this case, the court cannot find that the “balance of equities tips

in [Plaintiff’s] favor” or that “an injunction is in the public interest.” See Winter, 129 S. Ct. at

376. Accordingly, Plaintiff’s motion for a preliminary injunction is DENIED. 

Plaintiff also filed a motion to dismiss Defendants’ counterclaims for lack of trademark

standing. A Rule 12(b)(6) motion tests the sufficiency of the complaint. Navarro v. Block, 250

F.3d 729, 732 (9th Cir. 2001). “While a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds

of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation

of the elements of a cause of action will not do. Factual allegations must be enough to raise a

right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007) (internal quotation marks, brackets and citations omitted). In reviewing a motion to

dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must

construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins.

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7 For purposes of this claim, the correct standard is that the claimant “need only

allege commercial injury based upon deceptive use of a trademark or its equivalent to satisfy the

standing requirements.” Jack Russell Terrier Network of N. Cal. v. Am. Kennel Club, Inc., 407

F.3d 1027, 1037 (9th Cir. 2005); see also Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1109-10 (9th

Cir. 1992).

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Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Legal conclusions need not be taken as true merely

because they are cast in the form of factual allegations. Roberts v. Corrothers, 812 F.2d 1173,

1177 (9th Cir. 1987); W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). Similarly,

“conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion

to dismiss.” Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998). 

“[W]hen ruling on a motion to dismiss, [the court] must disregard facts that are not

alleged on the face of the complaint or contained in documents attached to the complaint,” with

the exception of the “incorporation by reference doctrine, which permits [the court] to take into

account documents whose contents are alleged in a complaint and whose authenticity no party

questions, but which are not physically attached to the [complaint].” Knievel v. ESPN, 393 F.3d

1068, 1076 (9th Cir. 2005) (internal quotation marks and citations omitted). Neither party

requested to convert Plaintiff’s motion to dismiss to a motion for summary judgment. See Fed.

R. Civ. P. 12(d). Accordingly, Plaintiff’s objections to Ara’s affidavits filed with his opposition

are sustained. Ara’s affidavits were not considered in ruling on this motion. For the same

reasons, Plaintiff’s assertions of fact in its briefs (see, e.g., Pl.’s Mot. to Dismiss at 3 & 9 n.3;

Reply at 8), were also not considered.

Plaintiff argues that Defendants lack standing to pursue a counterclaim for false

designation of origin and federal unfair competition under 15 U.S.C. Section 1125(a) because

they did not use the Karoun mark in commerce in the United States. (See, e.g., Pl.’s Mot. to

Dismiss at 5-6.)7

 Defendants point out, however, that in its motion for a preliminary injunction,

Plaintiff took the opposite position on Defendants “use in commerce” of the Karoun mark. See

Marlyn Neutraceuticals, 571 F.3d at 877 (“use in commerce” is an element). Moreover, in

opposition to Plaintiff’s motion to dismiss for lack of personal jurisdiction, Anto declared that

Karoun Canada’s web sites “actively solicit[] business from people in . . . the United States and

California.” (Decl. of Anto Baghdassarian in Supp. of Karoun Dairies, Inc.’s Opp’n to Defs’

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Mot. to Dismiss at 3.) Similarly, Plaintiff alleges in the operative complaint that Karoun Canada

“makes, distributes and sells the very same products as [Plaintiff] in the United States.” (Second

Am. Compl. at 6.) 

Where a party assumes a certain position in a legal proceeding, and succeeds in

maintaining that position, he may not thereafter, simply because his interests have

changed, assume a contrary position, especially if it be to the prejudice of the party

who has acquiesced in the position formerly taken by him. This rule, known as

judicial estoppel, generally prevents a party from prevailing in one phase of a case

on an argument and then relying on a contradictory argument to prevail in another

phase.

New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (brackets, internal quotation marks and

citation omitted). “Its purpose is to protect the integrity of the judicial process by prohibiting

parties from deliberately changing positions according to the exigencies of the moment.” Id.

(internal quotation marks and citations omitted). In considering whether to apply this equitable

doctrine in a particular case, three factors may inform the decision:

First, a party’s later position must be “clearly inconsistent” with its earlier position. 

Second, courts regularly inquire whether the party has succeeded in persuading a

court to accept that party's earlier position, so that judicial acceptance of an

inconsistent position in a later proceeding would create the perception that either

the first or the second court was misled. Absent success in a prior proceeding, a

party's later inconsistent position introduces no risk of inconsistent court

determinations, and thus poses little threat to judicial integrity. A third

consideration is whether the party seeking to assert an inconsistent position would

derive an unfair advantage or impose an unfair detriment on the opposing party if

not estopped. 

Id. at 750-51 (internal quotation marks and citations omitted). 

In this case, the position that Defendants did not use the marks in commerce in the United

States, asserted in the motion to dismiss, is “clearly inconsistent” with the position that they did,

asserted in support of the motion for a preliminary injunction. It is also inconsistent with the

allegations in the operative complaint and declaration supporting personal jurisdiction over

Defendants. The court relied on Anto’s declaration regarding Karoun Canada’s activities in the

United States, among other things, in denying Defendants’ motion to dismiss for lack of personal

jurisdiction. The declaration prejudiced Defendants because it was one of the bases for holding

that they were subject to personal jurisdiction in California. Furthermore, Plaintiff’s attempt to

advance the inconsistent positions in the pending motions seeks an inherently inequitable result

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8 In the cancellation context, standing “requires only that the party seeking

cancellation believe that it is likely to be damaged by the registration. A belief in likely damage

can be shown by establishing a direct commercial interest.” Id. (internal citations omitted); see

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– that Defendants be enjoined based on allegedly infringing activity on one hand, while they

should be precluded from asserting claims against Plaintiff which arise from the right to use the

same mark. This tactic is particularly inequitable because Defendants have delayed their

planned expansion in the United States due to this pending action. (Ara Karlacti Mot. to Dismiss

Decl.; Ara Karoun Canada Mot. to Dismiss Decl.)

Because the fundamental premise of Plaintiff’s lawsuit and its motion for a preliminary

injunction is that Defendants are using the Karoun mark in commerce in the United States so as

to damage Plaintiff’s interest in the same mark in the United States, and in order to prevent

unfair detriment to Defendants, Plaintiff is hereby estopped from arguing that Defendants lack

standing on their counterclaim because they are not using the Karoun mark in commerce in the

United States.

Moreover, Defendants allege that Karoun Canada and Karlacti are exclusive licensees of

Karoun Lebanon. (Answer and Countercl. at 9.) To the extent Plaintiff’s argument is based on

the contention that a third party not before the court is the mark’s owner, the contention is

without merit. See Ninth Cir. Model Jury Instr. 15.14.

Plaintiff next contends that Defendants lack standing and fail to allege sufficient grounds

to state a claim for cancellation of a trademark registration under 15 U.S.C. Section 1064(3). 

Defendants seek to cancel Plaintiff’s registered marks “Karoun Dairies;” “Karoun’s California

Cheese, a While Milk Cheese;” “Karounette” and “Karoun” & Design. 

“The Lanham Act allows for cancellation of a Principal Register registration by anyone

‘who believes that he is or will be damaged . . . by the registration.’” Cunningham v. Laser Golf

Corp., 222 F.3d 943, 945 (Fed. Cir. 2000), quoting 15 U.S.C. § 1064 (ellipsis in Cunningham). 

“The party seeking cancellation must prove two elements: (1) that it has standing; and (2) that

there are valid grounds for cancelling the registration.” Id. 

Plaintiff argues that Defendants lack standing for the cancellation claim because they are

not using the marks in commerce in the United States.8

 For the reasons discussed with respect to

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also Star-Kist Foods, Inc. v. P.J. Rhodes & Co., 735 F.2d 346, 349 (9th Cir. 1984) (the petitioner

“must show a real and rational basis for his belief that he would be damaged by the registration

sought to be cancelled, stemming from an actual commercial or pecuniary interest in his own

mark”). 

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the first cause of action for false designation of origin and federal unfair competition, this

argument is rejected.

With respect to the second element of cancellation, Defendants rely on section 1064(3),

which provides that a registration can be cancelled at any time if “the registered mark is being

used by . . . the registrant so as to misrepresent the source of goods or services on or in

connection with which the mark is used.” “A cancellation claim for misrepresentation under 

§ 14(3) requires a pleading that registrant deliberately sought to pass off its goods as those of

petitioner. Willful use of a confusingly similar mark is not sufficient.” J. Thomas McCarthy,

McCarthy on Trademarks and Unfair Competition, § 20:60 (4th ed. 2010). 

Defendants allege that Plaintiff intentionally used the Karoun name because it is well

known in the Middle East, and therefore well known to the Middle Eastern emigres in

California. (Answer and Countercl. at 12, 13.) Plaintiff intended its potential customers to

associate Plaintiff’s products with the products of Karoun Lebanon, although Plaintiff was not

associated with Karoun Lebanon. (Id at 12, 15.) Specifically, on its website Plaintiff stated that

“Karoun . . . was the name of the family factory in Beirut, where Ohannese Baghdassarian

specialized in yogurt before developing cheese-making skills. Almost anyone from that part of

the world will recognize the name.” (Id. at 12.) 

These allegations go beyond willful use of a confusingly similar mark. Defendants allege

specific facts indicating a deliberate effort to pass off Plaintiff’s goods as Karoun Lebanon’s and

trade on its reputation. Accordingly, Plaintiff’s motion to dismiss the cancellation claim is

denied.

Last, Plaintiff seeks to dismiss the third cause of action for accounting, arguing that it is a

remedy rather than an independent claim and that it depends entirely on the success of the

remaining claims. Because Plaintiff’s motion is denied with respect to the remaining claims, its

/ / / / /

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motion to dismiss accounting is also denied. Based on the foregoing, Plaintiff’s motion to

dismiss the counterclaims is DENIED.

IT IS SO ORDERED.

DATED: September 13, 2010

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. WILLIAM V. GALLO

UNITED STATES MAGISTRATE JUDGE

ALL PARTIES/COUNSEL

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