Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-04949/USCOURTS-cand-3_18-cv-04949-1/pdf.json

Parties Involved:
Atari Interactive, Inc.
Plaintiff
SunFrog, LLC
Defendant

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ATARI INTERACTIVE, INC.,

Plaintiff,

v.

SUNFROG, LLC,

Defendant.

Case No. 18-cv-04949-JST 

ORDER DENYING DEFENDANT’S 

MOTION TO DISMISS

Re: ECF No. 23

Before the Court is Defendant SunFrog, LLC’s motion to dismiss the fifth claim for relief 

for common law unfair competition. ECF No. 23. The Court will deny the motion.

I. BACKGROUND

Plaintiff Atari Interactive, Inc. alleges that it owns various copyrights and trademarks that 

SunFrog infringes in the following manner:

Through SunFrog’s website, www.sunfrog.com, visitors can upload 

designs that SunFrog then displays on a variety of products – from 

t-shirts to phone cases to mugs – pictured on the site. SunFrog 

offers for sale the products on display. If a visitor to the site orders 

a product, SunFrog makes, ships, and processes the payment for the 

product. SunFrog then splits the profits with the person who 

originally uploaded the design.

SunFrog is advertising, marketing, creating, displaying, offering for 

sale, selling, distributing, and profiting from massive quantities of 

counterfeit Atari products. Many of the counterfeit products 

incorporate exact replicas of the registered ATARI trademark (name 

and logo) on products in the classes for which the marks are 

registered. Other counterfeit products incorporate easily identifiable 

depictions of the Atari 2600 console and joystick with the distinctive 

red button. . . .

In addition, SunFrog is advertising, marketing, creating, displaying, 

offering for sale, selling, distributing, and profiting from products 

incorporating copyrights owned by Atari.

Case 3:18-cv-04949-JST Document 50 Filed 08/13/19 Page 1 of 4
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ECF No. 1 ¶¶ 15-17 (paragraph numbers omitted). Atari asserts various trademark and copyright 

infringement claims, as well as a claim for “common law unfair competition.” Id. ¶¶ 20-78. 

SunFrog now moves to dismiss the unfair competition claim.

II. LEGAL STANDARD

A complaint must contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief.” Fed. R. Civ. P. 8(a). Dismissal under Federal Rule of Civil 

Procedure 12(b)(6) “is appropriate only where the complaint lacks a cognizable legal theory or 

sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 

521 F.3d 1097, 1104 (9th Cir. 2008). A complaint need not contain detailed factual allegations, 

but facts pleaded by a plaintiff must be “enough to raise a right to relief above the speculative 

level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “To survive a motion to dismiss, a 

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 

plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 

570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the 

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

While this standard is not a probability requirement, “[w]here a complaint pleads facts that are 

merely consistent with a defendant’s liability, it stops short of the line between possibility and 

plausibility of entitlement to relief.” Id. (internal quotation marks and citation omitted). In 

determining whether a plaintiff has met this plausibility standard, a court must “accept all factual 

allegations in the complaint as true and construe the pleadings in the light most favorable” to the 

plaintiff. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

III. DISCUSSION

SunFrog argues that Atari’s common law unfair competition claim is preempted by the 

federal Communications Decency Act (“CDA”). The CDA provides that “[n]o provider or user of 

an interactive computer service shall be treated as the publisher or speaker of any information 

provided by another information content provider,” 47 U.S.C. § 230(c)(1), and “expressly 

preempts any state law to the contrary,” Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1118 (9th 

Cir. 2007) (citing 47 U.S.C. § 230(e)(3)). The statute “protects from liability (1) a provider or 

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user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause 

of action, as a publisher or speaker (3) of information provided by another information content 

provider.” Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1100-01 (9th Cir. 2009) (footnote omitted). 

Whether a claim is preempted under § 230(c)(1) depends on whether it “inherently requires the 

court to treat the defendant as the ‘publisher or speaker’ of content provided by another. To put it 

another way, courts must ask whether the duty that the plaintiff alleges the defendant violated 

derives from the defendants’ status or conduct as a ‘publisher or speaker.’ If it does, section 

230(c)(1) precludes liability.” Id. at 1102.

“Liability for sales of a product do not . . . fall under the province of the CDA because 

such claims do not treat the defendants ‘as the publisher or speaker’ of third-party information.” 

Parisi v. Sinclair, 774 F. Supp. 2d 310, 318 n.3 (D.D.C. 2011) (quoting 47 U.S.C. § 230(c)(1)). 

Consequently, where companies do more than just “provide[] the online marketplace where thirdparties [can] list and sell goods to customers” and instead actually are “distributors” of the goods, 

they “cannot rely on CDA immunity as a defense to plaintiffs’ distributor-based claims.” Id.

One district court has already rejected SunFrog’s preemption arguments in a case similar to 

this one. The complaint in that case alleged that “Defendants Sunfrog and Merchpond have 

worked in concert to manufacture, distribute, sell, and offer to sell merchandise on their 

sunfrog.com and teemom.com websites. Merchpond manufactures, sells, and fulfills sales of 

merchandise for Sunfrog and third parties.” Bravado Int’l Grp. Merch. Servs., Inc., v. 

GearLaunch, Inc., No. CV 16-8657-MWF (CWx), 2018 WL 6017035, at *1 (C.D. Cal. Feb. 9, 

2018). The court concluded that the CDA does not preempt state law claims “to the extent [they] 

are premised on Defendants’ alleged manufacturing and sale of Infringing Merchandise, and not 

merely passive publication of designs created by third parties.”1 Id. at *6.

 

1 SunFrog mischaracterizes this decision as “analyzing a motion to dismiss brought by 

‘Merchpond Manufacturing, LLC.” See id. at 1 (‘Before the Court is Defendant[] . . . 

Merchpond Manufacturing, LLC . . . Motion to Dismiss’).” ECF No. 49 at 5 (alterations and 

emphasis in original) (quoting Bravado, 2018 WL 6017035, at *1). SunFrog disingenuously 

removed language that clearly identified the motion as being brought by SunFrog, Merchpond, 

and a third defendant: “Before the Court is Defendants SunFrog, LLC, Merchpond 

Manufacturing, LLC, and Josh Kent’s (together ‘Defendants’) Motion to Dismiss . . . .” Bravado, 

2018 WL 6017035, at *1 (emphasis added). 

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SunFrog does not dispute that claims based on the manufacture and sale of goods are not 

preempted by the CDA. Instead, it argues that, “Atari’s complaint has no allegation to suggest 

SunFrog manufactures the disputed goods.”2 ECF No. 49 at 5. However, the complaint alleges 

that SunFrog “regularly markets and sells goods,” “offers for sale the products on display,” 

“makes, ships, and processes the payment” for products that are ordered by visitors to its website, 

and is “creating . . . counterfeit Atari products” and “products incorporating copyrights owned by 

Atari.” ECF No. 1 ¶¶ 5, 15-17. At this stage of the proceedings, the Court must accept these 

allegations as true. SunFrog criticizes the complaint for not “explain[ing] how or where SunFrog 

allegedly makes these products,” ECF No. 49 at 4, but this level of detail is not required by Rule 8. 

Although some “naked assertion[s],” such as those regarding a conspiracy, might require “further 

factual enhancement” to state a plausible claim for relief, the allegations here are distinct. 

Twombly, 550 U.S. at 557. In Twombly, the Court explained that, “[w]ithout more, parallel 

conduct does not suggest conspiracy, and a conclusory allegation of agreement at some 

unidentified point does not supply facts adequate to show illegality.” Id. at 556-57. Here, by 

contrast, the alleged facts that SunFrog manufactures and sells the allegedly infringing goods are

sufficient, without more, to bring Atari’s claim outside the scope of the CDA; no factual 

enhancements are needed. Atari has stated a plausible claim for relief that is not preempted by the 

CDA.

CONCLUSION

SunFrog’s motion to dismiss Atari’s unfair competition law claim is denied.

IT IS SO ORDERED.

Dated: August 13, 2019

______________________________________

JON S. TIGAR

United States District Judge

 

2 SunFrog makes no arguments regarding allegations as to the sale of goods.

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