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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JEFFREY CASTALINE,

Plaintiff,

 v.

AARON MUELLER ARTS, et al.,

Defendants. /

No. C 09-02543 CRB

ORDER GRANTING IN PART AND

DENYING IN PART MOTION TO

DISMISS

Plaintiff and Counterdefendant, Jeffery Castaline is a competitor of Defendants and

Counterclaimants, Aaron and Ronda Mueller (the “Muellers”). Castaline sued the Muellers

in this Court for trademark and trade dress infringement and for unfair competition. Cmplt.

at ¶¶ 19, 37, 51. The Muellers counterclaimed, seeking declaratory judgment on Counts 1-3

and monetary damages on Counts 4-6. Castaline moved to dismiss all counterclaims. After

carefully considering the parties’ submissions, and the arguments at the hearing, and good

cause appearing therefor, the Court hereby GRANTS the motion to dismiss in part, by

dismissing Counts 3 and 4 of the Counterclaim, and DENIES the motion to dismiss in part,

as to Counts 1, 2, 5 and 6 of the Counterclaim.

BACKGROUND

Plaintiff Jeffrey Castaline is an individual and sole proprietor doing business as

Aanraku Glass Studios. Cmplt. at ¶ 1. Aanraku is in the business of creating and selling a

variety of glass art products and goods designed to incorporate artistic material, including

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jewelry findings (components for making jewelry). Cmplt. at ¶ 6. Among Aanraku’s

findings is a leaf-shaped “bail” - an item with a flat surface that allows a purchaser to apply

adhesive and artistic material like glass to create a jewelry pendant - inscribed with a crosshatched design surrounded by a circle. Id. Castaline alleges that the Muellers infringed both

the trade dress (the leaf shape of the bail) and the trademark (the cross-hatch and circle

design) by marketing confusingly similar bails. Cmplt at ¶¶ 19, 37. Castaline further alleges

that the Muellers’ action caused a false designation of origin and constitutes unfair

competition. Cmplt at ¶ 27.

The Muellers filed a Counterclaim with six separate Counts. Counts 1-3 seek a

declaratory judgment of non-infringement of the trade dress (Count 1), non-infringement of

the trademark (Count 2), and trademark invalidity because of fraud on the PTO by the

Plaintiff (Count 3). The Muellers additionally seek monetary relief for misappropriation

and/or conversion (Count 4), interference with prospective economic advantage (Count 5),

and unfair competition (Count 6). Castline moved to dismiss Counts 1-3 under Rule 12(f)

and Counts 4-6 under Rule 12(b)(6).

DISCUSSION

1. Motion to Dismiss under Rule 12(f)

A. Legal Standard

“[T]he court may order stricken from any pleading any insufficient defense or any

redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). On a

motion to strike, the court must view the pleading under attack in the light most favorable to

the pleader. See State of Cal. v. United States, 512 F.Supp. 36, 39 (N.D. Cal. 1981). 

Furthermore, in adjudicating a motion to strike, the court should consider that “the function

of a 12(f) motion to strike is to avoid the expenditure of time and money[, which] arise from

litigating spurious issues by dispensing with those issues prior to trial....” Sidney-Vinstein v.

A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). “Generally, Rule 12(f) motions are

‘disfavored’ because they are ‘often used as delaying tactics, and because of the limited

importance of pleadings in federal practice.’” Equine Solutions, Inc., v. Buntrock, No.

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07-04976 (CRB), 2008 WL 111237, at *2 (N.D. Cal. Jan. 9, 2008) (citing Bureerong v.

Uvawas, 922 F.Supp. 1450, 1478 (C.D. Cal. 1996) (quotations and citations omitted)).

B. Counts 1-2: Trademark and Trade Dress Non-Infringement

Castaline asserts that the trade dress (Count 1) and trademark (Count 2) noninfringement counterclaims should be dismissed because they are “mirror images” of issues

that will be determined through the complaint. Mot. at 5. Although Castaline is correct that

the issues covered by Counts 1 and 2 will likely receive attention by resolution of Complaint 

¶¶ 13-24 and 34-42, “it is not always appropriate to strike declaratory judgment

counterclaims simply because they concern the same subject matter or arise from the same

transaction as the complaint.” See Stickrath v. Globalstar, Inc., No. 07-1941(TEH), 2008

U.S. Dist. LEXIS 95127, at *11 (N.D. Cal. May 13, 2008) (citing Pettrey v. Enterprise Title

Agency, Inc., No. 1:05CV1504, 2006 U.S. Dist. LEXIS 83957, at *3 (N.D. Ohio Nov. 17,

2006)). Courts should instead focus on whether the counterclaims “serve any useful

purpose.” Id.

In the patent and trademark realm, courts have found that counterclaims alleging

patent or trademark invalidity should not be dismissed as redundant under Rule 12(f). In

Stickrath v. Globalstar for example, the court explained that “courts should decline to dismiss

counterclaims that seek a declaration that the patent or trademark is invalid” because the

issue of non-infringement is distinct from the issue of invalidity and a case and controversy

over patent and trademark validity continues even after the issue of infringement is resolved. 

Id. at 3 (citing Cardinal Chem. Co. v. Morton Int'l, 508 U.S. 83, 94-96 (1993)). Similarly,

the court in Dominion Elec. Mfg. Co. v. Edwin L. Wiegand Co., 126 F.2d 172, 175 (6th Cir.

1942), reversed the trial court and declined to dismiss a counterclaim alleging trademark noninfringement and invalidity. The court explained that because a plaintiff alleging patent or

trademark infringement may terminate the litigation, and leave the issue of patent or

trademark validity unresolved, for the sake of “avoidance of multiplicity of actions,” such

counterclaims should not be dismissed. Id.

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Here, the Muellers in Count 1 allege non-infringement under a number of theories

including that the trade dress is invalid because Castaline “will be unable to prove by the

required preponderance of the evidence the threshold requisite of distinctiveness or

secondary meaning...” Counterclaim at ¶¶ 29-30. In Count 2, the Muellers similarly allege

trademark non-infringement under a number of theories, including that the trademark is

invalid due to the “functionality” of the cross-hatch mark. Id. at ¶ 34.

Because the Court finds the reasoning of Stickrath and Dominion persuasive, and the

Muellers allege invalidity of the trade dress and trademark within Counts 1 and 2, the Court

DENIES the motion to dismiss both Counts.

C. Count 3: Fraud on the PTO

In Count 3 of the Counterclaim, the Muellers allege that Castaline committed fraud on

the PTO by knowingly “misrepresent[ing] to the PTO the date of first use in commerce for

the specific design of the Glue On Tab within the oval” and by knowingly misrepresenting

the “functionality” of the crossed lines. Counterclaim at ¶ 39. Count 3 meets the pleading

requirements for fraud. Fed. R. Civ. P. 9(b).

Nevertheless, Count 3 is redundant of the Eleventh, Twelfth, Fifteenth, Sixteenth and

Twenty-Second affirmative defenses pled in Defendants’ amended answer. See Amended

Answer, at 15-19. See Strickrath, 2008 US Dist. LEXIS 95127, at *8 (indicating that a

counterclaim that will be resolved by the affirmative defenses is redundant and should

therefore be dismissed). The reasoning from Stickrath that applied to Counts 1 and 2 does

not apply to Count 3 because a resolution of Counts 1 and 2 would make a resolution of

Count 3 redundant: the only relief sought by the Muellers is a declaration of noninfringement and invalidity of the trademark and trade dress. Counterclaim at ¶ 2, a-c. The

fraud count presupposes invalidity either by prior use in commerce or functionality that was

knowingly misrepresented to the PTO. Thus, if the Muellers prevailed on Count 3, then the

Muellers would also necessarily prevail on Counts 1 and 2, but the converse is not true. 

Because Counts 1-3 seek the same declaratory relief, and Count 3 presupposes the earlier

counts, Count 3 is redundant. 

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Therefore, the Court GRANTS the motion to dismiss Count 3 as a redundant count

under Rule 12(f), without leave to amend.

2. Motion to Dismiss under Rule 12(b)(6)

A. Legal Standard

“A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the

pleadings.” Silas v. E*Trade Mortg. Corp., 421 F. Supp. 2d 1315, 1317 (S.D. Cal. 2006). 

The complaint is to be construed in the light more favorable to the non-moving party and all

material allegations in the complaint are take as true. Sanders v. Kennedy, 794 F.2d 478, 481

(9th Cir. 1986). However, district courts need not accept legal conclusions cast in the form

of factual allegations, if those conclusions cannot reasonably be drawn from the facts alleged. 

Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1996). “Nor is the court

required to accept as true allegations that are merely conclusory, unwarranted deductions of

fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d. 979, 988

(9th Cir. 2001).

B. Count 4: Misappropriation and/or Conversion

Count 4 alleges that the Muellers were the first party to use the descriptive term “leaf

bail.” Counterclaim at ¶ 45. It further alleges that Castaline infringed the Muellers’ rights to

the descriptive term leaf bail, misappropriated that term, and converted it for Castaline’s own

use. Counterclaim at ¶ 46. 

Castaline correctly argues that this fails to state a claim for relief because the Muellers

fail to assert ownership of any trademark right in the descriptive term “leaf bail” and no

allegation of consumer confusion is made. See Mot. at 7. A descriptive mark is entitled to

protection only if it has acquired secondary meaning - i.e., a strong association between the

mark and its owner - in the mind of the relevant consumer population. Surgicenters of

America, Inc. v. Medical Dental Surgeries Co., 601 F.2d 1011, 1014 (9th Cir. 1979). 

Because the Muellers fail to allege either ownership of a trademark or secondary meaning,

Count 4 fails to allege any property right that may have been infringed, misappropriated or

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converted. Furthermore, the Muellers do not argue to the contrary. See Opp. at 11 (stating

that they would rather not “burden the court with further dialogue” on this issue).

Therefore, the Court GRANTS the motion to dismiss Count 4, with leave to amend.

C. Counts 5 and 6: Interference with Prospective Economic Advantage and

Unfair Competition

Counts 5 and 6 allege that Castaline interfered with the Muellers’ prospective

economic advantage and acted in violation of California’s Unfair Competition Law for three

reasons: (1) Castaline sent copies of the complaint in this action to the Muellers’ distributors

and communicated to third parties that if third parties purchased the Muellers’ bails,

Castaline would (2) commence legal action against third parties and (3) refuse to sell

Castaline’s bails to third parties. Counterclaim at ¶ 52.

Castaline moves to dismiss Counts 5 and 6 for failure to state a claim because the

actions complained of are privileged under California law and federal law. Mot. at 8:13. 

Castaline correctly argues that sending the complaints is privileged under the California

Litigation Privilege and that threatening legal action is similarly privileged under the NoerrPennington doctrine right to petition. However, Castaline incorrectly argues that refusing to

sell Castaline’s bails to third parties is also privileged. Because not all of Castaline’s alleged

actions are privileged, the Court DENIES the motion to dismiss Counts 5 and 6 for failure to

state a claim.

1. California Litigation Privilege

Castaline argues that his sending of the Complaint to distributors is protected by the

litigation privilege. Under California Law, the litigation privilege applies to any “publication

or broadcast” made in any “judicial proceeding.” Cal. Civ. Code § 47. Courts have broadly

applied the litigation privilege to cease and desist letters and other litigation and pre-litigation

communications. See Blanchard v. DirecTV, Inc., 123 Cal. App. 4th 903, 919 (2004). The

litigation privilege applies when the following four requirements are met: “[T]he publication

(1) was made in a judicial proceeding; (2) had some connection or logical relation to the

action; (3) was made to achieve the objectives of the litigation; and (4) involved litigants or

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other participants authorized by law.” Costa v. Superior Court, 157 Cal. App. 3d 673, 677

(1984).

Here, the first requirement is satisfied because the Complaint relates to a judicial

proceeding even though it was not made in the proceeding per se. Id. at 678 (“[T]he absolute

privilege applies ‘even though the publication is made outside the courtroom and no function

of the court or its officers is invoked.’” (internal citation omitted)). The second and third

requirements are satisfied because Castaline notified the distributors of a lawsuit they could

become a party to (satisfying 2) and sought to further the primary objective of the litigation -

stopping the Muellers and their distributors from unlawfully selling infringing products

(satisfying 3). The fourth requirement is also met because “other participants authorized by

law” include non-parties who have a “substantial interest in the outcome of the pending

litigation.” Id. at 677-678. See also Adams v. Superior Court, 2 Cal. App. 4th 521, 529

(1992). Finally, the Muellers, in their Opposition, do not attempt to dispute that any of these

factors were not met. Therefore, the sending of the complaint is privileged and does not state

a claim.

2. Noerr-Pennington

Castaline argues that his threat to commence litigation against third parties is

privileged under the First Amendment right to petition and the Noerr-Pennington doctrine. 

Mot. at 12. Sosa v. DirecTV Inc., 437 F. 3d 923, 936 (9th Cir. 2006) (“Not only petitions

sent directly to the court in the course of litigation, but also conduct incidental to the conduct

of the suit protected by the Noeer-Pennington doctrine.” Id. at 934-35). Furthermore, the

Muellers acknowledge that the Noerr-Pennington doctrine has been extended by judicial

decisions to state tort claims. Opp. at 13. 

However, the Muellers argue that Castaline is not entitled to Noerr-Pennington

protection because Castaline’s petitioning activity was a sham. Opp. at 13. The

Noerr-Pennington doctrine does not protect petitioning activity “ostensibly directed toward

influencing governmental action” but in fact “a mere sham to cover ... an attempt to interfere

directly with the business relationships of a competitor.” Eastern R. R. Presidents

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Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144 (1961). The Supreme Court has

further limited the sham exception to First Amendment immunity only if the lawsuit is

objectively baseless in that “no reasonable litigant could realistically expect success on the

merits.” Professional Real Estate Investor, Inc. v. Columbia Pictures Industries, Inc., 508

U.S. 49, 60-61 (1993). 

The Muellers’ argument is misplaced. The Muellers, in their opposition to the motion

to dismiss and in their amended Counterclaim, fail to assert that the litigation between the

Muellers and Castaline is objectively basis. Additionally, even if the Muellers did allege

this, they would likely fail to meet the requirements for proving a suit “objectively baseless.” 

Castaline’s suit cannot be considered objectively baseless because Castaline has a registered

trademark, believes that the Muellers are infringing his trademark, and thus, has a valid basis

for his suit. See Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978) (“Even

where the law or the facts appear questionable or unfavorable at the outset, a party may have

an entirely reasonable ground for bringing suit.”); and White v. Lee, 227 F.3d 1214, 1232

(9th Cir. 2000) (noting that a winning lawsuit is not a sham, but also that “[t]he fact that a

litigant loses his case does not show that his lawsuit was objectively baseless.”). Therefore,

the sham litigation exception does not apply and Castaline’s communications with third

parties is protected under the Noerr-Pennington doctrine.

3. Competition Privilege

Finally, Castaline argues that the competition privilege is an absolute bar to the

Muellers’ cause of action as to Castaline’s threat to cease selling bails to any distributors who

continued to sell the Muellers’ bails. Mot. at 12-13. The privilege has a four part test:

One who intentionally causes a third person not to enter into a prospective contractual

relation with another who is his competitor or not to continue an existing contract

terminable at will does not interfere improperly with the other's relation if: (a) the

relation concerns a matter involved in the competition between the actor and the other

and (b) the actor does not employ wrongful means and (c) his action does not create or

continue an unlawful restraint of trade and (d) his purpose is at least in part to advance

his interest in competing with the other.

S.F. Design Ctr. Assoc. v. Portman Co., 41 Cal. App. 4th 29, 40 (1995) (citing Restatement

(Second) of Torts § 768 (1979)). Castaline cites to the above language, arguing that all four

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requirements are met. Mot. at 13. However, Castaline fails to satisfy the second prong

because the refusal to sell Castaline’s bails to non-neutral distributors may have interfered

with actual contracts and thus constituted “wrongful means.”

Courts have drawn a distinction between contractual relations that are “merely

contemplated or potential” and those that are more definite. See, e.g., A-Mark Coin Co. v.

General Mills, Inc., 148 Cal. App. 3d 312, 324 (1983); Los Angeles Land Co v. Brunswick

Corp., 6 F.3d 1422, 1430 (9th Cir. 1993). Only in the “merely contemplated or potential”

scenario do courts definitively find that “wrongful means” were not used. Id. at 1431

(explaining that “[b]ecause the record shows that L.A. Land’s contractual relations with

Timberlake were ‘merely contemplated or potential,’ Brunswick was free to ‘refuse to deal

with third parties [e.g., Timberlake] unless they cease dealing with’ L.A. Land” (internal

citations omitted)). Additionally, courts have explained that “[t]he competitive privilege

clearly is inapplicable to interference with an existing contract unless the contract is

terminable at will.” S.F. Design Ctr. Assoc., 41 Cal. App. 4th at 40. 

The Muellers argue that “there has been actual and threatened disruption of certain of

Muellers’ Economic Relationships by reason of such acts of Castaline.” Counterclaim at ¶

55. Because the Muellers allege that harm was done to economic relationships that were not

“merely contemplated,” Castaline may have used “improper means” and the competition

privilege does not apply to Castaline’s communications to the distributors. Therefore,

Castaline’s argument that Counts 5 and 6 “fail to state a claim because the actions

complained of are privileged under California law and federal law” fails. Mot. at 8.

Consequently, the Court DENIES the motion to dismiss Counts 5 and 6.

CONCLUSION

For the forgoing reasons, the Court GRANTS the motion to dismiss Counts 3 and 4 

//

//

//

//

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and DENIES the motion to dismiss all other counts.

IT IS SO ORDERED.

Dated: February 16, 2010 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

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