Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-01400/USCOURTS-cand-3_07-cv-01400-2/pdf.json

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

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1 All parties have consented to my jurisdiction

pursuant to 28 U.S.C. § 636(c) for all proceedings, including

entry of final judgment.

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THRESHOLD ENTERPRISES LTD.,

Plaintiff(s),

v.

FUNCTIONAL BRANDS, LLC,

Defendant(s).

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No. C07-1400 BZ

ORDER DENYING DEFENDANT’S

MOTION TO DISMISS

Plaintiff Threshold sued defendant Functional Brands

alleging that defendant infringed upon plaintiff’s trademarks,

in violation of federal and state laws. Defendant has moved

to dismiss the Sixth Cause of Action in the First Amended

Complaint for failure to state a claim upon which relief may

be granted or, alternatively, for failure to comply with

Federal Rule of Civil Procedure 9(b).1 The Sixth Cause of

Action alleges that defendant violated California Business and

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Professions Code Section 17500 by activities “including, but

not limited to, using marks on its products and advertising

and using internet domain names that indicate affiliation,

connection or association with Plaintiff’s LIFE FORCE

products, and which Defendant knows, or upon exercise of

reasonable care should know, are untrue and/or misleading.” 

Compl. ¶ 66. 

Defendant argues that plaintiff’s claim must be dismissed

because it sounds in fraud, and therefore implicates the

heightened pleading requirements of Federal Rule of Civil

Procedure 9(b). A claim “sounds in fraud” when it alleges “a

unified course of fraudulent conduct and rel[ies] entirely on

that course of conduct as the basis of a claim.” Vess v.

Ciba-Geigy Corp., 317 F.3d 1097, 1103 (9th Cir. 2003). 

However, when a party alleges “some fraudulent and some nonfraudulent conduct . . . only the allegations of fraud are

subject to Rule 9(b)’s heightened pleading requirements.” Id.

at 1104. 

I do not read the Section 17500 claim as alleging a claim

for fraud or as sounding in fraud. It alleges that defendant

adopted a name it knew or should have known would mislead the

public. See Bacon ex rel. Moroney v. American Intern. Group,

415 F. Supp.2d 1027, 1033 (N.D. Cal 2006) (holding that a

claim that the defendants “should have known [that the

advertisements] were untrue and misleading” is a non-fraudbased claim). Therefore I do not find that it is

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2 To the extent that plaintiff intended to allege

fraudulent conduct, it should seek leave to file an amended

complaint properly alleging its allegations.

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subject to Rule 9(b)’s heightened pleading requirements.2 

Defendant’s argument that Proposition 64 altered Section

17500 so as to mirror the elements of fraud by requiring

misrepresentation, intent, resulting damages, and reliance, is

incorrect. Although at least one court has read Proposition

64 to require proof of injury-in-fact in a Section 17500

claim, that same court explicitly rejected the proposition

that Section 17500 was reduced to common law fraud. See

Anunziato v. eMachines, Inc., 402 F. Supp.2d 1133, 1138 (C.D.

Cal. 2005). Moreover, since the passage of Proposition 64, at

least one court within the Northern District has held that

claims can be asserted under Section 17500 without implicating

Rule 9(b)’s fraud requirements. See Bacon ex rel. Moroney,

supra, 415 F. Supp.2d at 1033 cite. Defendant does not cite

any case law to the contrary, and I know of none. 

Defendant also argues, incorrectly, that plaintiff’s

claim is a “catchall phrase or [list] of hypothetical

possibilities,” and thus fails to meet the minimum pleading

requirements of Federal Rule of Civil Procedure 8(a)(2). 

Plaintiff’s claim can be distinguished from the list of

hypothetical possibilities rejected in Pickern v. Pier 1

Imports, Inc., 457 F.3d 963, 968 (9th Cir. 2006). Whereas the

plaintiff’s complaint in Pickern did not allege any specific

conduct by the defendant, plaintiff in this case alleges that

defendant engaged in specific prohibited conduct. Plaintiff

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alleges in pertinent part that since 1991 it has used the name

LIFEFORCE for its nutritional products, that it has

established substantial goodwill associated with that name,

that defendant was aware of plaintiff’s use of the name, and

that defendant adopted names such as LIFEFORCE V for the

purposes of appropriating plaintiff’s goodwill and misleading

and deceiving the public as to the source of defendant’s

products. Plaintiff further alleges specific instances of

actual and likely confusion between the parties products. 

Plaintiff’s complaint adequately states a claim for false

advertising post Proposition 64 and provides defendant fair

notice of the grounds on which the complaint is based. See

Holgate v. Baldwin, 425 F.3d 671, 676 (9th Cir. 2006); See

also Filon Plastics Corp. v. H. Koch & Sons, 243 F. Supp. 636

(N.D. Cal. 1965) (holding that Section 17500 has been violated

when “there has been a palming off of defendant’s goods as

those of plaintiff”).

The Motion to Dismiss having been fully briefed by both

parties, I find no need for a hearing. The hearing set for

July 11, 2007 is hereby VACATED. Because plaintiff has met

the minimum pleading requirements of Federal Rule of Civil

Procedure 8(a)(2), and because Rule 9(b) does not apply to

plaintiff’s claim, IT IS HEREBY ORDERED that defendant’s 

Motion to Dismiss is DENIED. 

Dated: June 18, 2007

Bernard Zimmerman 

 United States Magistrate Judge

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