Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-02197/USCOURTS-casd-3_10-cv-02197-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1121 Trademark Infringement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 1 - 10cv2197 WQH (POR)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

KLEIN ELECTRONICS, INC., a

California Corporation,

Plaintiff,

CASE NO. 10cv2197 WQH (POR)

ORDER

vs.

BOXWAVE CORPORATION,

Defendant.

HAYES, Judge:

The matter before the Court is the Motion to Dismiss filed by Defendant Boxwave

Corporation. (ECF No. 12).

I. Background

On October 21, 2010, Plaintiff Klein Electronics, Inc. initiated this action by filing a

Complaint. On January 10, 2011, Plaintiff filed an Amended Complaint asserting the

following six claim: (1) trademark infringement, (2) trademark dilution, (3) violation of the

Lanham Act due to false representation, (4) violation of California Business & Professions

Code section 14245 due to infringement, (5) violation of California Business & Professions

Code section 17200 et seq. due to unfair competition, and (6) “misappropriation and unjust

enrichment.” (ECF No. 10). On February 4, 2011, Defendant Boxwave Corporation filed a

Motion to Dismiss plaintiff’s claims for trademark dilution, violation of California Business

& Professions Code section 17200 et seq. due to unfair competition, and “misappropriation and

unjust enrichment.” (ECF No. 12). On February 28, 2011, Plaintiff filed an Opposition. (ECF

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 1 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 - 10cv2197 WQH (POR)

No. 13). On March 8, 2011, Defendant filed a Reply. (ECF No. 15). 

II. Allegations of the Complaint

Plaintiff Klein Electronics, Inc. is the owner of the trademark ARMORCASE issued on

October 11, 2010 and the trademark ARMORCASE (+ design) issued on November 1, 2010

which it uses on a variety of electronic devise carrying cases. (ECF No. 1 at ¶¶ 3,6, 8).

Plaintiff sells ARMORCASE carrying cases for devises including “two-way radios, cellular

phones, mobile phones, and smart phones.” Id. at ¶ 8. Defendant is the seller of a carrying

case for electronic devises including “handheld electronic devices, namely, cellular phones,

mobile phones, smart phones, personal digital assistants (PDA), cameras, global positioning

systems, and tablet computers” sold as the ARMOR CASE. Id. at ¶¶ 7, 9. Defendant began

using the ARMOR CASE mark on March 28, 2005, about three years after Plaintiff first used

the ARMORCASE mark in July 2002 Id. at ¶¶ 9, 13. 

III. Discussion

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state a 

claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil

Procedure 8(a) provides: “A pleading that states a claim for relief must contain . . . a short and

plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.

8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable

legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica

Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

To sufficiently state a claim for relief and survive a Rule 12(b)(6) motion, a complaint

“does not need detailed factual allegations” but the “[f]actual 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). “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

requires more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do.” Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to

dismiss, a court must accept as true all “well-pleaded factual allegations.” Ashcroft v. Iqbal,

__ U.S. __, 129 S. Ct. 1937, 1950 (2009). “In sum, for a complaint to survive a motion to

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 2 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 - 10cv2197 WQH (POR)

dismiss, the non-conclusory factual content, and reasonable inferences from that content, must

be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv.,

572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).

A. Trademark Dilution

Defendant contends that Plaintiff’s claim of trademark dilution fails on the grounds that

Plaintiff “merely parrots the language of the dilution statute and summarily states the required

elements of a dilution claim.” (ECF No. 12-1 at 5). 

Plaintiff contends that Defendant’s Motion to Dismiss “applies fact pleading standards

to [Plaintiff’s] complaint as opposed to federal notice pleading standards ....” (ECF No. 13 at

2). Plaintiff contends that it is “required to plead only legal conclusions giving rise to a cause

of action, and is not required to provide evidence in support of those conclusions in the

complaint.” Id. Plaintiff contends that the complaint alleges that “the parties sell a similar

product under almost identical mark[s]”; therefore, the complaint provides fair notice “to

defend a claim of trademark infringement and other trademark related causes of action.” Id.

at 4. 

The Federal Trademark Dilution Act provides for injunctive relief where plaintiff

shows: “(1) its mark is famous; (2) the defendant is making commercial use of the mark in

commerce; (3) the defendant's use began after the plaintiff's mark became famous; and (4) the

defendant’s use presents a likelihood of dilution of the distinctive value of the mark.”

Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165, 1180 (9th Cir. 2007) (citing Avery

Dennison Corp. v. Sumpton, 189 F.3d 868, 874 (9th Cir. 1999)). “California's dilution cause

of action is substantially similar, providing relief if the plaintiff can demonstrate a likelihood

of injury to business reputation or of dilution of the distinctive quality of a mark

notwithstanding the absence of competition between the parties or the absence of confusion

as to the source of goods or services.” Id.; see also Panavision Intern., L.P. v. Toeppen, 141

F.3d 1316, 1324 (9th Cir. 1998) (holding that a “state law dilution claim is subject to the same

analysis as its federal claim.”). 

Plaintiff alleges that it “has extensively advertised, marketed, manufactured, and

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 3 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 - 10cv2197 WQH (POR)

distributed goods under the Mark to dealers and the public throughout the United States and

worldwide and as a result has built up substantial goodwill recognition in the Mark.” (ECF No.

10 at ¶ 13). Plaintiff alleges that there is a likelihood of confusion in the marketplace between

Plaintiff’s Mark ARMORCASE and Defendant’s mark ARMOR CASE. Id. at ¶ 10.

“Defendant’s use of ARMOR CASE in connection with the advertising, marketing, and selling

of its products and services in interstate commerce has caused, and will continue to cause,

confusion, blurring, tarnishment, and dilution of the distinctive quality of the ARMORCASE

mark in the minds of consumers ....” Id. at 25. “Defendant’s use of Plaintiff’s Mark

diminishes the capacity of the Mark and makes it difficult to identify and distinguish the

services and goods offered by Plaintiff.” Id. at 26. “Defendant’s use of Plaintiff’s Mark has

caused a negative association with the Mark ....” Id. at 27. “Plaintiff is informed and believes

that Defendant has used the ARMOR CASE mark with the willful intent to trade on Plaintiff’s

reputation and/or cause dilution of Plaintiff’s Mark which had become famous prior to the

unauthorized use.” Id. at 28. 

Plaintiff’s allegations of trademark dilution offer “a formulaic recitation of the elements

of a cause of action” which is insufficient to state a claim. Bell Atl. Corp. v. Twombly, 550

U.S. at 555. Plaintiff has alleged no “more than labels and conclusions.” Id. The Motion to

Dismiss Plaintiff’s claim for trademark dilution is granted. 

B. Unfair Competition

Defendant contends that Plaintiff’s claim of violation of California Business &

Professions Code section 17200 et seq. due to unfair competition seeks the remedy of

disgorgement which is not permitted by law. Defendant also contends that Plaintiff’s claim

of violation of California Business & Professions Code section 17200 et seq. due to unfair

competition is barred by the statute of limitations. 

Plaintiff contends that even if Plaintiff is not entitled to disgorgement under Plaintiff’s

claim of violation of California Business & Professions Code section 17200 et seq. due to due

to unfair competition, the claim should not be dismissed because Plaintiff has sought other

forms of relief. Plaintiff also contends that claim is not barred by the statute of limitations on

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 4 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 - 10cv2197 WQH (POR)

the grounds that there was an ongoing injury. 

California Business and Professions Code section 17208 provides, “Any action to

enforce any cause of action pursuant to [California Business & Professions Code section 17200

et seq.] due shall be commenced within four years after the cause of action accrued.” Cal. Bus.

& Prof. Code § 17208; see also Karl Storz Endoscopy America, Inc. v. Surgical Technologies,

Inc., 285 F.3d 848, 857 (9th Cir. 2002) (explaining that the statute of limitations begins to run

on the date the injury accrued, not the date the injury was discovered). “[E]ach allegedly

infringing display of Defendant’s service name on products, advertisements, etc., could create

a separate cause of action for unfair competition and trademark infringement.” Suh v. Yang,

987 F.Supp. 783, 796 (N.D. Cal. 1997).

Plaintiff alleges that Defendant “sells a wide variety of electronic products, including

carrying cases for electronic devises.” (ECF No. 10 at ¶ 7). Plaintiff alleges that the carrying

case “sold as ‘ARMOR CASE’” infringes on Plaintiff’s trademark. Id. “Defendant’s use of

ARMOR CASE in connection with the advertising, marketing, and selling of its products and

services in interstate commerce has caused, and will continue to cause, confusion, blurring,

tarnishment, and dilution of the distinctive quality of the ARMORCASE mark in the minds of

consumers ....” Id. at ¶ 25. 

Plaintiff has alleged current trademark infringement by the Defendant. The Court finds

that Plaintiff has alleged trademark infringement occurring within the statute of limitations.

The Motion to Dismiss Plaintiff’s claim of violation of California Business & Professions

Code section 17200 et seq. due to unfair competition on the grounds that it is barred by the

statute of limitations is denied. 

“While the scope of conduct covered by the UCL is broad, its remedies are limited.”

Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1144 (Cal. 2003). “Through

the UCL a plaintiff may obtain restitution and/or injunctive relief against unfair or unlawful

practices.” Id. (citation omitted). Restitution includes an order “compelling a UCL defendant

to return money obtained through an unfair business practice to those persons in interest from

whom the property was taken ....” Id. (citation omitted). Disgorgement is a broader remedy

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 5 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 - 10cv2197 WQH (POR)

that includes an order compelling “a defendant to surrender all money obtained through an

unfair business practice even though not all is to be restored to the persons from whom it was

obtained ... [ and includes an order] to surrender ... all profits earned as a result of an unfair

business practice regardless of whether those profits represent money taken directly from

persons who were victims of the unfair practice.” Id. (citations omitted). Disgorgement is not

an available remedy for an individual action under California’s unfair competition law. Id. at

1152; see also Colgan v. Leatherman Tool Group, Inc., 135 Cal. App. 4th 663, 697 ( 2006).

 In Plaintiff’s claim of unfair competition, Plaintiff “seeks to have all of the profits

which are the product of Defendant’s unfair business act or practices disgorged and paid over

to Plaintiff, including, but not limited to, the gross sales by Defendant of all products and

services offered under the ARMOR CASE mark.” (ECF No. 10 at ¶ 50). In Plaintiff’s prayer

for relief, Plaintiff also seeks: “[o]n all claims for relief, ... an order permanently enjoining

Defendant ... from using the ARMORCASE or ARMOR CASE marks ....” Id. at 13. 

The Court finds that Plaintiff has sought the relief of disgorgement which is unavailable

under Plaintiff’s claim of violation of California Business & Professions Code section 17200

et seq. due to unfair competition. However, Plaintiff has also sought injunctive relief which

is an available remedy. The Motion to Dismiss Plaintiff’s claim of violation of California

Business & Professions Code section 17200 et seq. due to unfair competition is granted in part;

Plaintiff’s request for disgorgement is dismissed.

C. Misappropriation and Unjust Enrichment

Defendant contends that Plaintiff’s claim of “misappropriation and unjust enrichment”

fails on the grounds that misappropriation is not available for trademark infringement and

unjust enrichment is a remedy, not a claim. Defendant also contends that the

“misappropriation and unjust enrichment” claim “is rooted in fraud” and fails on the grounds

that the claim does not meet the heightened pleading standard required by Federal Rule of

Civil Procedure 9. 

Plaintiff contends that California law is “split” regarding whether there is a “stand

alone” claim of unjust enrichment. 

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 6 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 - 10cv2197 WQH (POR)

“Common law misappropriation is one of a number of doctrines subsumed under the

umbrella of unfair competition.” U.S. Golf Ass’n v. Arroyo Software Corp., 69 Cal. App. 4th

607, 714 (1999). “It is normally invoked in an effort to protect something of value not

otherwise covered by patent or copyright law, trade secret law, breach of confidential

relationship, or some other form of unfair competition.” Id. To state a case for

misappropriation, Plaintiff must allege: 

(a) the plaintiff invested substantial time, skill or money in developing

its property; (b) the defendant appropriated and used the plaintiff's

property at little or no cost to the defendant; (c) the defendant's

appropriation and use of the plaintiff's property was without the

authorization or consent of the plaintiff; and (d) the plaintiff can

establish that it has been injured by the defendant's conduct.

Id. In Toho Co., Ltd. v. Sears, Roebuck & Co., 645 F.2d 788 (9th Cir. 1981), the Ninth Circuit

stated:

[t]he California doctrine of misappropriation prohibits the substantial

copying of another's commercial labors even when there is no

likelihood of confusion. ... There is no similar substantial taking by [the

defendant] in this case. The only ‘taking’ [the plaintiff] alleges relates

to [the defendant's] use of its trademark, and [the plaintiff] cites no

cases extending the misappropriation theory to trademark infringement.

We believe that California courts would refuse to make such an

extension.

Toho Co., Ltd., 645 F.2d at 794; Bell v. Harley Davidson Motor Co., 539 F. Supp. 2d 1249,

1256 (S.D. Cal. 2008) (“Black-letter law holds that California’s common-law doctrine of

misappropriation does not extend to trademark infringement claims.”). 

The Court finds that misappropriation does not extend to trademark infringement. The

Motion to Dismiss Plaintiff’s misappropriation claim is granted. 

 “The state and the federal courts appear to be unclear whether in California a court may

recognize a claim for ‘unjust enrichment’ as a separate cause of action.” Nordberg v.

Trilegiant Corp., 445 F. Supp. 2d 1082, 1100 (N.D. Cal. 2006) (collecting cases); see also MB

Tech., Inc. v. Oracle Corp., No. C09-5988, 2010 WL 1576686, at *4 (N.D. Cal., 2010)

(“California courts, as well as the courts in this District, are squarely divided on this point [of

whether unjust enrichment is a cause of action].”) (collecting cases). 

This Court concludes that unjust enrichment is not a separate claim under California

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 7 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 8 - 10cv2197 WQH (POR)

law. See MB Tech., Inc., 2010 WL 1576686, at *4 (“Of these conflicting interpretations, the

better view is that unjust enrichment represents a form of relief rather than an independent

claim.”); Johns v. Bayer Corp., No. 09cv1935-DMS, 2010 WL 476688, at *6 n.3 (S.D. Cal.,

Feb. 9, 2010) (“While a split of authority appears to exist on this issue, this Court agrees with

those courts that conclude unjust enrichment is not a separate claim.”); McBride v. Boughton,

123 Cal. App. 4th 379, 387 (2004) (“Unjust enrichment is not a cause of action ... or even a

remedy, but rather a general principle, underlying various legal doctrines and remedies. It is

synonymous with restitution.”) (citing Melchior v. New Line Prods., Inc., 106 Cal. App. 4th

779, 793 (2003)); see also McKell v. Wash. Mut ., Inc., 142 Cal. App. 4th 1457, 1490 (2006)

(“There is no cause of action for unjust enrichment. Rather, unjust enrichment is a basis for

obtaining restitution based on quasi-contract or imposition of a constructive trust.”) (citation

omitted). “To plead ... unjust enrichment, a plaintiff must allege a receipt of a benefit and

unjust retention of it at the expense of another. A dismissal of the [unjust enrichment] ‘claim’

will not, in fact, preclude [plaintiff]’s ability to recover on a theory of unjust enrichment,

because [plaintiff] could potentially show the existence of these elements in connection with

several of its other claims, such as copyright infringement or fraud.” MB Tech., Inc., 2010 WL

1576686, at *4 (citing Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000)).

The Motion to Dismiss the unjust enrichment claim is granted. This ruling will not

preclude Plaintiff from seeking to recover on a theory of unjust enrichment in connection with

Plaintiff’s other claims. See (ECF No. 10 at 14) (requesting in the prayer for relief, “Over the

12 months immediately following entry of Final Judgment in this action, Defendant shall, as

a means of restitution, spend no less than $1 million for national advertising in a variety of

media ... designed to correct the effects of dilution and infringing uses of ARMOR CASE[.]”);

cf. McBride, 123 Cal. App. 4th at 387 (“Unjust enrichment is ... synonymous with

restitution.”).

IV. Conclusion

IT IS HEREBY ORDERED that the Motion to Dismiss (ECF No. 12) is GRANTED

IN PART and DENIED IN PART. The Motion is granted as to Plaintiff’s second claim of

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 8 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 9 - 10cv2197 WQH (POR)

federal trademark dilution in violation of 15 U.S.C. § 1125(c) and Plaintiff’s sixth claim of

“misappropriation and unjust enrichment.” The Motion is also granted as to Plaintiff’s request

for disgorgement under the claim of unfair competition in violation of California Business &

Profession Code section 17200 et seq. The Motion is denied in all other respects. 

DATED: June 27, 2011

WILLIAM Q. HAYES

United States District Judge

Case 3:10-cv-02197-WQH-POR Document 16 Filed 06/27/11 Page 9 of 9