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3609505 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

JEFFREY C. HALLAM (State Bar No. 161259) 

E-Mail: jhallam@sideman.com 

ZACHARY J. ALINDER (State Bar No. 209009) 

E-Mail: zalinder@sideman.com 

ELLEN P. LIU (State Bar No. 280459) 

E-Mail: eliu@sideman.com 

REBECCA K. FELSENTHAL (State Bar No. 303476) 

E-Mail: rfelsenthal@sideman.com

SIDEMAN & BANCROFT LLP 

One Embarcadero Center, Twenty-Second Floor 

San Francisco, California 94111-3711 

Telephone: (415) 392-1960 

Facsimile: (415) 392-0827 

Attorneys for Plaintiff 

FITBIT, INC. 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

FITBIT, INC., 

Plaintiff, 

v. 

LAGUNA 2, LLC, et al., 

Defendants. 

 Case No. 3:17-cv-00079 EMC (KAW) 

PLAINTIFF FITBIT, INC.’S OPPOSITION 

TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR 

PARTIAL SUMMARY JUDGMENT 

Judge: Honorable Edward M. Chen 

Date: June 28, 2018 

Time: 1:30 p.m. 

Crtrm.: 5, 17th Floor

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 1 of 32
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3609505 i Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

TABLE OF CONTENTS 

Page 

I. INTRODUCTION AND STATEMENT OF ISSUES TO BE DECIDED ............................. 1

II. STATEMENT OF RELEVANT FACTS ............................................................................... 1

A. Relevant Background Regarding Fitbit ....................................................................... 1

B. Fitbit’s Supply Chain And Related Quality Control Processes ................................... 2

C. Defendants’ Misrepresentations to Induce Fitbit to Hire BCS ................................... 2

D. Defendants’ Continuing Misrepresentations After Entering the SOW ....................... 4

E. Defendants’ Conspiracy To Sell Infringing Products and Control of Same ............... 5

F. The Execution of the Scheme and the Distribution of the Infringing Products .......... 6

G. Defendants’ Concealment of Their Scheme ................................................................ 7

H. Defendants’ Scheme Unravels .................................................................................... 9

III. LEGAL STANDARD ........................................................................................................... 11

IV. ARGUMENT ........................................................................................................................ 12

A. Defendants Cannot Meet Their Initial Burden On Summary Judgment ................... 12

B. The Court Should Deny Defendants’ Motion As To Breach Of Contract ................ 12

C. Defendants’ Motion as to Fitbit’s Trademark Claims Fails ...................................... 17

1. Defendants Used the Fitbit Marks in Commerce .......................................... 17

2. Defendants Are Liable For Their Entire Infringing Distribution Chain ....... 18

a. Defendants Are Liable Under Multiple Legal Theories .................... 19

b. Defendants Are Also Liable Under Inwood ...................................... 20

D. The Court Should Deny The Motion On Dilution And Unfair Competition ............ 21

E. Defendants’ Motion On Fitbit’s Fraud-Related Claims Is Also Meritless ................ 21

F. Defendants’ Challenge to the Conspiracy and Unfair Competition Claims 

Fails ........................................................................................................................... 24

V. FITBIT’S EVIDENTIARY OBJECTIONS AND MOTION TO STRIKE .......................... 25

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 2 of 32
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3609505 ii Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

VI. CONCLUSION ..................................................................................................................... 25 

 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 3 of 32
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3609505 iii Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

TABLE OF AUTHORITIES 

 Page(s) 

Cases 

Adobe Systems Inc. v. Blue Source Group, Inc., 

125 F. Supp. 3d 945 (N.D. Cal. 2015) ........................................................................................ 19 

Bar’s Leaks Western, Inc. v. Pollock, 

148 F. Supp. 710 (N.D. Cal. 1957) ............................................................................................. 19 

Brae Transp., Inc. v. Coopers & Lybrand, 

790 F.2d 1439 (9th Cir. 1986) ............................................................................................... 12, 16 

In re Carroll, 

549 B.R. 375 (Bankr. N.D. Cal. 2016) ........................................................................................ 24 

Coach, Inc. v. Celco Customs Servs. Co., 

2014 WL 12573411 (C.D. Cal. June 5, 2014) ....................................................................... 19, 21 

Daniel v. Ford Motor Co., 

806 F.3d 1217 (9th Cir. 2015) ..................................................................................................... 22 

Davis & Cox v. Summa Corp., 

751 F.2d 1507 (9th Cir. 1985) ............................................................................................... 24, 25 

Delk v. Ocwen Financial Corp., 

2017 WL 3605219 (N.D. Cal. 2017) ........................................................................................... 22

Detoy v. City & Cty. of San Francisco, 

196 F.R.D. 362 (N.D. Cal. 2000) ................................................................................................ 25 

Drop Dead Co. v. S.C. Johnson & Son, Inc., 

326 F.2d 87 (9th Cir. 1963) ......................................................................................................... 18 

Eddy v. Sharp, 

1991 Cal.App.3d 858 (1988) ....................................................................................................... 23 

Fonovisa, Inc. v. Cherry Auction, Inc., 

76 F.3d 259 (9th Cir. 1996) ......................................................................................................... 19 

FTC v. EDebitPay, LLC, 

695 F.3d 938 (9th Cir. 2012) ....................................................................................................... 14 

Imation Corp. v. Koninklijke Philips Elecs. N.V., 

586 F.3d 980 (Fed. Cir. 2009) ..................................................................................................... 15 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 4 of 32
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3609505 iv Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 

 456 U.S. 844 (1982) .................................................................................................................... 18

Karl Storz Endoscopy Am., Inc. v. Surgical Techs., Inc., 

285 F.3d 848 (9th Cir. 2002) ....................................................................................................... 18 

Lawyers Title Ins. Corp. v. U.S. Fid. & Guar. Co., 

122 F.R.D. 567 (N.D. Cal. 1988) ................................................................................................ 16 

Letizia v. Facebook Inc., 

267 F. Supp. 3d 1235 (N.D. Cal. 2017) ................................................................................ 12, 15 

Lockheed Martin Corp. v. Network Sols., Inc., 

194 F.3d 980 (9th Cir. 1999) ....................................................................................................... 21 

Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 

658 F.3d 936 (9th Cir. 2011) ....................................................................................................... 20 

Maples v. SolarWinds, Inc., 

50 F. Supp. 3d 1221 (N.D. Cal. 2014) ........................................................................................ 16 

MetroPCS v. Devor, 

215 F. Supp. 3d 626 (N.D. Ill. 2016) .......................................................................................... 19 

Mirkin v. Wasserman, 

5 Cal 4th 1082 (1993) .................................................................................................................. 22 

Naidong Chen v. Fleetcor Technologies, Inc., 

2017 WL 1092342 (N.D. Cal. 2017) ........................................................................................... 23

Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 

638 F.3d 1137 (9th Cir. 2011) ..................................................................................................... 17 

Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 

210 F.3d 1099 (9th Cir. 2000) ............................................................................................... 11, 12 

Shell Oil Co. v. Winterthur Swiss Ins. Co., 

12 Cal. App. 4th 715 (1993) ........................................................................................................ 15 

Ticor Title Ins. Co. v. Rancho Santa Fe Assn., 

177 Cal.App.3d 726 (1986) ................................................................................................... 13, 14 

Transgo, Inc. v. Ajac Transmission Parts Corp., 

768 F.2d 1001 (9th Cir. 1985) ..................................................................................................... 19 

United States v. Stuart, 

489 U.S. 353 (1989) .................................................................................................................... 15 

Vega v. Jones, Day, Reavis & Pogue

121 Cal.App.4th 282 (2004) ........................................................................................................ 24 

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3609505 v Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Statutes 

15 U.S.C. § 45 ................................................................................................................................... 25 

15 U.S.C. § 1127 ......................................................................................................................... 17, 18 

18 U.S.C. §§ 2314-15 ........................................................................................................................ 25 

Cal. Bus. & Prof. Code Section 17200 .............................................................................................. 25 

Other Authorities 

Fed. R. Evid. 403 ............................................................................................................................... 25 

Fed. R. Evid. 602 ............................................................................................................................... 25 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 6 of 32
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3609505 1 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Plaintiff Fitbit, Inc. (“Fitbit” or “Plaintiff”) respectfully submits the following Opposition to 

the Motion for Summary Judgment for Partial Summary Judgment (the “Motion”) filed by 

Defendants P-Cove Industries dba Buyers Consultation Service (“BCS”), Environmental 

Liquidation, Inc. (“ELI”), Jonathan Manhan (“Manhan”), and Francis Michael Baker (“Baker,” and 

collectively, the “Defendants”), ECF No. 241, in the above-captioned Action on May 24, 2018. 

I. INTRODUCTION AND STATEMENT OF ISSUES TO BE DECIDED 

Faced with a mountain of undisputed, damning evidence, confirming their illegal conspiracy 

to resell scrap Fitbit products, Defendants’ Motion ignores the relevant facts and law, and instead 

asks the Court to redefine the word “repurpose” to mean “resell.” In doing so, Defendants seek to 

magically transmute their agreement with Fitbit from a scrap recycling and destruction agreement 

into an authorized reseller agreement. Defendants’ Motion hinges on this thin reed that the resale of 

scrap products, which Defendants actively concealed from Fitbit, was somehow also authorized by 

Fitbit. This desperate tactic, under the guise of summary judgment, confirms that Defendants cannot 

even meet their initial burden of production for this Motion. It also confirms Defendants have no 

plausible defense here, and that the Court should grant judgment in Fitbit’s favor, see ECF No. 246. 

Defendants’ remaining grab bag of arguments on Fitbit’s other claims are similarly 

unsupported by the facts and law. When all the dust has settled, one clear picture emerges from the 

undisputed facts here: Defendants orchestrated a sophisticated fraud and infringement scheme to 

generate millions of dollars in profits based upon the resale of scrap Fitbit products they represented 

they would not resell. Defendants are each jointly and severally liable for their part in directing, 

operating, controlling, and profiting from that unlawful and infringing distribution chain. The Court 

should therefore summarily deny Defendants’ Motion in full. 

II. STATEMENT OF RELEVANT FACTS 

A. Relevant Background Regarding Fitbit 

Fitbit is a San Francisco-based technology company focused on delivering health solutions 

that impact health outcomes through a platform of wearable devices (and the Aria smart scale) with 

software and services, with sales in excess of $1.6 billion in 2017. See Declaration of Brett Millar in 

Support of Fitbit’s Motion for Partial Summary Judgment, ECF No. 235 (“Millar MSJ Decl.”), ¶ 2. 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 7 of 32
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3609505 2 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

B. Fitbit’s Supply Chain And Related Quality Control Processes 

To protect its trademarks, brand, and reputation, and also ensure that consumers receive the 

high quality products and services that they have come to expect from Fitbit, Fitbit has instituted 

very detailed, non-pretextual, and established corporate protocols that govern the supply chain by 

which Fitbit’s products are distributed and returned. See id., ¶ 4; see also Supplemental Declaration 

of Brett Millar in support of TRO (“Supp. Millar TRO Decl.”), ECF No. 29, ¶¶ 2-11. These 

procedures help ensure that products not meeting Fitbit’s standards for high quality and reliability 

are not sold or otherwise distributed to consumers. Id. This is vital to preserving Fitbit’s reputation 

with the consuming public, so that Fitbit’s brand, reputation, and trademarks are not tarnished or 

otherwise harmed or degraded, or its customers deceived by inferior non-genuine goods. See id. 

Fitbit’s corporate protocols include an established “reverse supply chain” quality control 

process for any returns or exchanges. See Supp. Millar TRO Decl., ¶ 4. At all times relevant here, 

any returned products that did not pass all of Fitbit’s quality control standards were provided to 

Defendant BCS, acting primarily through Manhan and Baker, as “scrap” for BCS to break down into 

component parts and raw materials, recycle the materials that could be recycled, and destroy and 

dispose of the remaining parts/materials. Supp. Millar TRO Decl., ¶ 11. Fitbit lived up to its end of 

the agreement, relying on Defendants’ representations, by sending Defendants approximately 2 

million scrap products for destruction and recycling. See Declaration of Jeff Bonham in Support of 

Fitbit’s Motion for Partial Summary Judgment, ECF No. 236 (“Bonham MSJ Decl.”), ¶ 2. 

C. Defendants’ Misrepresentations to Induce Fitbit to Hire BCS 

At the outset of Defendants’ scheme, Defendants represented themselves as a certified scrap 

destruction and recycling company, assuring Fitbit that they would break down all scrap Fitbit 

products into raw materials to be recycled or otherwise destroyed, and not resell them. See, e.g.,

Declaration of Ellen Liu in support of Fitbit’s Opposition (“Liu Decl.”), ¶¶ 10, 19-21, 29, 30, 32, 34, 

Exs. I, R-T, BB, CC, EE, GG; ¶ 2, Ex. A (Deposition of Jennifer Windsor) at 63:3-64:5, 96:19-

97:18. On May 26, 2015, Defendant Baker (BCS’s VP of Business Development) assured Fitbit’s 

representative Ms. Windsor that “All the product I receive will be recycled, unless you allow me to 

resell items of your choice. I’m set up to do both.” Id., Ex. T at FIT006023. Fitbit then instructed 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 8 of 32
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3609505 3 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

and BCS agreed that no resale would be allowed, period: [Ms. Windsor:] “As with Tom Tom, for 

now, we won't be able to resell anything. Maybe in time we can resell something as whole, but for 

now we will have to break things down to recycle and sell for commodity. [Mr. Baker:] Sounds 

perfect...” See id. At no later point did Fitbit consent to allow Defendants to resell any scrap Fitbit 

branded products. See id., Ex. A at 126:12-128:19, 148:12-150:19; ¶ 5, Ex. D (Deposition of BCS’s 

30(b)(6)) at 161:7-10. 

Notably, Defendants also previewed for Fitbit the settlement report template that would be 

used to report the destruction and recycling of the Fitbit scrap at the commodity level. See id., Ex. T 

at FIT006023. That template settlement report was comprised of seven sections, including a 

“section 3,” which Defendant Baker confirmed would be used only if items were to be resold. See

id. The resale reporting section 3 included “Finished goods Model numbers, QTY and rate per 

item.” See id. While the settlement reports sent to Fitbit included all of the other six sections 

identified by Defendant Baker, it is undisputed, and Defendants admit, that the settlement reports 

never included any section 3 resale reporting. See id., ¶ 6, Ex. E (Deposition of Kyle Regal) at 

121:19-122:5; ¶ 8, Ex. G (Deposition of Mike Baker) at 141:1-10; compare, Ex. T with Exs. R, GG. 

Defendants had no answer for why the Section 3 resale reporting was never used in the Settlement 

Reports, even though they resold the Fitbit products with Cali. See id., Ex. E at 123:5-17. 

Three days later, on May 29, 2015, Defendants sent Fitbit two documents: a slide deck titled 

“BCS Location & fitbit Process Flow”, and a Statement of Work (“SOW”) that was consistent with 

Fitbit’s express requirement that BCS “break things down to recycle and sell for commodity,” and 

which Defendants concede embodied the key terms of the agreement. See id., Exs. I & D at 170:7-

13. The SOW confirmed the recycling and destruction “Services” that BCS would provide, and, as 

Defendants admit, it said nothing about reselling scrap Fitbit products: 

a. BCS will arrange for pick-up when contacted by Fitbit. 

b. BCS will receive, weigh and sort material into commodities/channels. 

c. BCS will destroy product as requested and provide Certificate of Destruction. 

d. BCS to manage downstream activities. Downstream activities could include 

shredding, smelting, reprocessing cardboard, incinerating, and resale of recycled 

commodities. Additionally, no use of Fitbit’s brand or intellectual property is 

authorized hereunder without Fitbit’s prior written approval.

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 9 of 32
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3609505 4 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

e. Process commodities and record final pricing, weights, and all related costs on the 

settlement report. 

Id., Ex. I at FIT005987 (Section 3) (emphasis added); ¶4, Ex. C (Deposition of Jonathan Manhan) 

at 180:12-21. Thus, the agreement expressly contemplated “resale,” but also expressly limited such 

resale to “recycled commodities.” Id. 

Outside of the actual contractual Services Defendants agreed to provide, Defendants also 

agreed in a “Certification” Section that they would certify the recycling and/or repurposing of scrap 

products, “meaning that product would be recycled down to plastic, metal, wire, cardboard or other 

commodity level components,” and provide certificates of recycling and destruction certifying that 

process. See id., Ex. I at FIT005988 (Section 6). Further, it is undisputed that Fitbit never 

provided approval to use its “brand or intellectual property,” as required by Section 3 of the SOW. 

Id., at Ex. D at 161:7-10, Exh. I at FIT005987 (Section 3). 

The relevant contractual terms were drafted entirely by BCS, acting through its owner 

Defendant Manhan. See id., Ex. D at 147:2-5. Defendant Manhan, President of BCS and ELI, 

admitted that he specifically chose the word repurpose, but that he never communicated to Fitbit 

that his secret reason for doing so was that he wanted the “option” all along to resell scrap products 

“for their original purpose.” Id., Ex. C at 177:6-180:21; Ex. D at 174:5-175:5. 

The May 29, 2015 slide deck Defendants provided with the SOW also reinforced the intent 

to recycle at the commodity level, as it showed separate stations at BCS for Fitbit products to be 

sorted and then broken down into raw materials (dongle, batteries, raw electronic parts, wire, 

bands...). Id., Ex. I at FIT005982. The document then explained that “Station 3 will be a weight 

reconciliation of product and then it will be consolidated with like product in gaylords ready for 

recycling,” with no mention of resale. Id. Months later, Defendants updated this slide deck, 

explaining that each Fitbit product type would be broken down “to basic commodities for 

recycling,” again with no mention of resale. See id., ¶ 54, Ex. AAA at FIT005406. 

D. Defendants’ Continuing Misrepresentations After Entering the SOW 

 On June 2, 2015, four days after Defendants provided the SOW, BCS’s Operations Manager 

Kyle Regal again omitted any mention of resale. See id., Ex. E at 91:20-93:25; Ex. S. Mr. Regal 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 10 of 32
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3609505 5 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

explained that there were only three “avenues” for Fitbit scrap products – Recycling, Incineration, 

and Landfill – not resale. Id.; see also id. Ex. E at 96:1-16. He confirmed at his deposition that this 

was consistent with his understanding of the SOW. See id. On July 9, 2015, a few weeks into the 

initial pilot phase of the project, and pursuant to a pending request from Ms. Windsor, Defendants 

even sent Fitbit videos that purported to demonstrate its “destruction” process for Fitbit products. 

See id., Exs. BB & CC. By mid-July, Defendants had sent several Fitbit loads to their coconspirators at Cali Resources (“Cali”) and provided Cali with an internal BCS email address to 

communicate directly with Fitbit “representing BCS.” See id., ¶¶ 17, 18, 22, Exs. P, Q, U. None of 

their communications disclosed this, and Defendant Manhan later admitted that Fitbit was not aware 

of Cali’s involvement. See id., Ex. C at 289:21-25. 

Thereafter, the monthly settlement reports and the related certificates of recycling and 

destruction sent by Defendants to Fitbit purported to detail breakdown of the recycled commodities, 

like rubber, steel, and plastic. See id., Exs. R, GG. However, Defendants admit that within “weeks” 

of beginning the SOW, Defendants stopped breaking down any product at all and shipped the 

product straight to Cali to be resold. See id., Ex. E at 22:14-29:24; ¶ 7, Ex. F (Deposition of Jeffrey 

Franklin) at 115:13-118:1; ¶ 9, Ex. H (Deposition of BCS 30(b)(6) at 287:18-290:7; accord id., ¶ 38, 

Ex. KK. Despite this, Defendants continued to report monthly on commodities that had been 

purportedly recycled, without a hint they were actually reselling the scrap products with Cali. See

id., Exs. R, GG. To help conceal the lack of recycling of commodities, Defendants sampled an early 

Fitbit shipment to derive a sample percentage breakdown of commodity weights and applied that 

going forward so they could continue to report a plausible commodity breakdown to Fitbit for each 

shipment. Id., Ex. F at 115:13-18; Ex. E at 22:14-29:24. When asked whether it was “industry 

practice to issue a certificate of recycling with commodity breakdown for products that are intended 

for resale,” BCS’s General Manager admitted flatly “No.” Id., Ex. F at 48:21-49:1. 

E. Defendants’ Conspiracy To Sell Infringing Products and Control of Same 

Discovery has confirmed that Defendants had a long-standing business relationship with 

Cali, and that they coordinated from the outset to induce Fitbit to use BCS’s scrap and recycling 

services so that they could divert the Fitbit scrap products for resale as like new refurbished “Fitbit” 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 11 of 32
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3609505 6 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

products. Liu Decl., Ex. C at 102:5-103:2, Ex. D at 174:5-175:6; accord Declaration of Joel Blank 

in Support of Opposition to Fitbit’s TRO (“Blank Decl.”), ECF No. 19, at ¶ 11, Ex. A. Indeed, 

Defendants were so close with Cali that they referred to themselves as a “team,” referred to Cali’s 

Mexican refurbishing plant as “BCS’s Tijuana Facility,” and even set up a masked BCS email 

address for Cali to communicate directly with Fitbit, acting as a BCS representative. See id., Ex. C 

at 187:19-189:23; Ex. G at 115:5-116:8, 185:21-186:8; ¶¶ 18, 33, 40, 56, Exs. Q, FF, MM, CCC. 

Defendants and Cali partnered on procuring and refurbishing Fitbit products for resale prior 

to BCS entering into the SOW with Fitbit. See id., Ex. C at 104:5-9; Ex. KK. Defendants first 

partnered with Cali to refurbish and resell Fitbit products that BCS obtained from Target, ERS, and 

other wholesalers and dealers. Id., Ex. C at 104:10-18, 106:19-107:11. Defendants and Cali then 

extended this agreement to cover the scrap products that BCS received through Fitbit’s reverse 

supply chain (pursuant to their agreed upon 50/50 profit split). Id. at 105:16-106:25 & Ex. D at 

37:20-24, 53:1-5, & 91:23-25; ¶ 27, Ex. Z. As the supplier of the scrap products, Defendants were 

essential to the distribution chain and completely controlled whether they were recycled or resold. 

See id., Ex. D at 95:5-96:21, 105:23-106:8; Ex. KK; ¶¶ 42, 45, Exs. OO, RR. 

F. The Execution of the Scheme and the Distribution of the Infringing Products 

The first step in the distribution chain required Defendants to procure the Fitbit scrap from 

Fitbit, using the pretext of scrap destruction and recycling services set forth above. See id., Ex. D at 

96:16-21 & 105:23-106:8. Defendants then diverted these scrap “Fitbit” branded products to Cali, 

which attempted to refurbish them at its facility in Tijuana, Mexico. See id., Ex. RR; see also, Ex. C 

at 65:15-66:6.; Ex. D at 109:20-110:7; Ex. U; ¶ 23, Ex. V; Ex. FF. Indeed, Defendants continued to 

do so knowing that Cali was purchasing non-genuine Fitbit cables from China, to “get orders out” in 

support of their common plan. See id., Ex. D at 237:11-238:14; Ex. O; ¶¶ 37, 46, Exs. JJ, SS. 

Defendants also kept close tabs on Cali’s resale of the “Fitbit” branded products, from 

receiving reports of refurbished inventory from Cali, to questioning what happened with product that 

could not be refurbished, to sending questions about Cali’s online sales, including sales on Groupon, 

and their packaging. See id., Ex. D at 239:3-243:2; Ex. G at 169:18-177:15; Exs. O, OO, SS. 

Defendants also controlled the shipping and logistics process to get the scrap Fitbit products from 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 12 of 32
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3609505 7 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Fitbit’s reverse supply chain to Cali. See id., Ex. C at 186:12-189:23; Ex. H at 291:15-293:7; Ex. Q. 

These “Fitbit” products, procured as scrap by Defendants and “refurbished” by Cali, were 

then sold either directly or through secondary market distribution channels to unwitting consumers, 

duped into thinking they were getting a “like new” Fitbit product on the cheap. See Declaration of 

Cali Resources, Inc. (“Cali Decl.”), ECF No. 237, ¶ 5; Liu Decl.,¶¶ 17, 22, 48, Exs. P, U, UU; see

also Blank Decl. at ¶ 20. This practice continued unabated throughout the Fitbit relationship, 

resulting in the resale of hundreds of thousands of scrap “Fitbit” branded products to consumers, by 

former defendant Laguna 2 (“L2”) and others on Groupon, Woot.com, and eBay, as well as directly 

by Cali on Overstock.com. See Liu Decl., Ex. UU; ¶ 53, Ex. ZZ; see also Millar TRO Decl., ¶ 7 & 

Ex. G. In addition to counterfeit packaging and cables, all of Defendants’ “Fitbit” product sales 

necessarily included Fitbit’s registered trademarks, as Fitbit’s wordmark and diamond trademark are 

incorporated into the products themselves. See Bonham MSJ Decl., ¶ 11. This unlawful conduct 

resulted in over $16 million dollars in profit to the infringing distribution chain, millions of which 

went to Defendants, including ELI, the entity that Defendants used to invoice Cali for the profits. 

See Liu Decl., Ex. D at 36:22-37:6 & 53:1-54:18; Ex. Z; ¶ 51, Ex. XX at p. 2. 

G. Defendants’ Concealment of Their Scheme 

Throughout 2016, Fitbit sent scrap products to Defendants in reliance on their continuing 

representations that they were not reselling anything. See Liu Decl., ¶¶ 12, 24, 26, 41, 43, Exs. K, 

R, W, Y, GG, , PP, QQ, TT; see also Declaration of Jeff Bonham in Support of Fitbit’s Response to 

L2’s Supplemental Statement re Motion for TRO (“Bonham TRO Decl.”), ECF No. 49-1, ¶ 5. 

Defendants’ internal communications reflect their efforts to conceal their breaches, fraud, and 

infringement. For example, when Defendants attempted to obtain additional Fitbit products from 

Verizon (which had been introduced to them by Fitbit), Defendants represented to Verizon and 

Fitbit that “BCS has been given strict instructions to destroy all Fitbits for recycling.” Liu Decl., 

Ex. Y. At the same time, Defendants noted internally that the Verizon deal would need to be a 

“sacrificial lamb,” because they could only offer a “scrap play” to “make sure nothing is offered to 

verizon (sic) that we don’t give to fitbit,” which otherwise of course would risk exposing their 

resale of Fitbit products to Fitbit. Id., Ex. C at 255:3-15; ¶ 28, Ex. AA. 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 13 of 32
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3609505 8 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Even explicit instructions to recycle or destroy scrap Fitbit products in country in 2016 were 

ignored by Defendants, who instead shipped these products to Cali. Id., Ex. RR. In a March 13, 

2016 email related to the export of Fitbit scrap from Australia to Los Angeles, Baker warned Cali to 

be careful because “Fitbit believes we process material in country.” Id., ¶ 39, Ex. LL. Mr. Kelvin, 

Cali’s CEO, forwarded the warning to Manhan, stating: “Why does he put that in writing?” Id. 

Also in early 2016, when asked to destroy certain Slovakian products in the EU due to an 

issue with the strap on the products (id., Exs. PP & QQ; ¶ 55, Ex. BBB at FIT000765), Defendants 

created an elaborate ruse to export them to “BCS’s Tijuana facility,” another name for Cali: 

Mr. Manhan: Have a guy in the UK will that work? 

Mr. Baker: I believe that will work. We can show the recycling name with a UK 

address and a contact name and number. Fitbit sees the material landing in the UK 

at a recycling company that we know. Once the product has landed then we can 

direct product from the UK with new export documents. This will slow or stop the 

volley of emails going between Ingram slovakia and Fitbit. 

Id., ¶¶ 56-57, Exs. CCC, DDD. Defendants then certified the products as recycled on March 6, 

though Cali did not receive the scrap in Tijuana until weeks later. Id., Ex. R at FIT001071; Ex. RR. 

During the fall of 2016, questions arose regarding the resale of “Fitbit” branded products 

through online marketplaces like eBay and Groupon. See Millar TRO Decl., ¶¶ 5-11. Fitbit sought 

further information and assurances from Defendants, but was met with more misrepresentations. See

Liu Decl., Ex. W. In one instance, Defendant Baker copied and pasted Fitbit’s inquiries into a new 

email sent to others at BCS, including Manhan, writing “Jen, has meeting with her legal team 

tomorrow, below she is asking for some info just in case she is asked. Which company’s do we want 

to tell her in regards to her questions below.” See id., Ex. G at 213:14-216:8; ¶ 35, Ex. HH 

(emphasis added). This was then forwarded to Cali for their assistance. Id. Defendants and Cali 

developed a plan to “keep Cali out of the mix if you could and just use downstream for extra layer 

of protection.” Id., ¶ 36, Ex. II (emphasis added). Consistent with Mr. Kelvin’s instruction that Cali 

be excluded for an “extra layer of protection” and even though the “easy answer” was that BCS was 

sending the products to Cali for resale, Baker omitted Cali from his response to Fitbit. Id., Ex. G at 

215:24-216:8 & 220:20-223:25; Ex. W. Instead, Baker went into great detail about how all Fitbit 

scrap was being properly recycled and repurposed into “soles for Sandals and Mats.” Id., Ex. W. 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 14 of 32
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3609505 9 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

On November 30, 2016, Fitbit’s senior manager for brand protection and associate general 

counsel for litigation met with BCS at its facility in Indianapolis. See Bonham TRO Decl., ¶ 5. At 

that meeting, BCS, acting through its onsite managers Jeff Franklin and Kyle Regal, provided Fitbit 

with a tour of the facility, and provided documentation and further verbal representations that 

Defendants had never resold any products received from Fitbit, but instead had destroyed or 

recycled them all at a commodity level. See id.; see also Liu Decl., ¶ 58, Ex. EEE. Regal and 

Franklin did not deny that these conversations occurred, but conveniently claimed not to recall 

them at their depositions. Id., Ex. E at 117:11-118:16; Ex. F at 100:11-101:20. 

H. Defendants’ Scheme Unravels 

During this same time period, Fitbit purchased and analyzed a number of “Fitbit” branded 

products being sold as genuine refurbished Fitbit branded products by L2 on Groupon.com. See

Supp. Millar TRO Decl., ¶¶ 12-23. Fitbit confirmed that their serial numbers were on the list of 

products Fitbit had designated for scrap destruction and the packaging contained counterfeit marks: 

Example of Genuine Fitbit Packaging Defendants’ Counterfeit “Fitbit” Packaging 

 

See Millar TRO Decl., ¶ 6, Ex. F, at pp. 10-17. The packaging also referred the consumer to 

Fitbit.com to setup the product and had a “Warranty Card” that referred the customer to the 

Fitbit.com and contained a significantly inferior warranty. See id; see also https://www. 

fitbit.com/legal/returns-and-warranty. The counterfeit packaging and warranty card were not 

changed for at least a year after these scrap sales began. Blank Decl., ¶ 13. 

Further analysis performed by Fitbit confirmed additional physical differences affecting six 

of these scrap “Fitbit” branded products. See Supp. Millar TRO Decl., ¶¶ 12-23; Liu Decl., ¶¶13-14, 

Exs. L, M. While all nine products were shipped in counterfeit packaging, four products were also 

shipped with counterfeit “Fitbit” accessories and charging cables falsely bearing Fitbit’s diamond 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 15 of 32
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3609505 10 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

trademark. See id.; see also Bonham TRO Decl., ¶ 7, Ex. E: 

 Magnified on the marks: 

 

Id. Fitbit confirmed these products had cosmetic defects, band damage, and a broken button. Id. 

These defects are material, failing Fitbit’s quality control and disqualifying them even from being 

refurbished for warranty replacement (Fitbit has never resold refurbished goods to consumers). Id. 

Further, Fitbit has now analyzed a sample of 100 from the thousands of “Fitbit” branded 

units recently returned by L2 against Fitbit’s internal records and data, and determined that 97 of the 

100 products appear either conclusively or with a very high likelihood to have been designated for 

scrap destruction, and therefore would have been sent to BCS to be destroyed and/or recycled at the 

commodity level. See Bonham MSJ Decl., ¶ 10. The remaining 3 simply had insufficient data to 

confirm for sure how they got into L2’s inventory. Id. 

In addition, U.S. Customs and Border Protection (“CBP”) informed Fitbit about the seizure 

of thousands of Fitbit products that CBP determined to be counterfeit. Millar MSJ Decl., ¶ 6, Exs. B 

& C. This seizure, on or around January 10, 2017, included 1,243 “Counterfeit Fitbit Scales.” Id., at 

Ex. B. The seized shipment also included 13,626 “Counterfeit Fitbit Watches” according to CBP. 

See id. The seizure notice identified Cali as the Importer of Record. Id. Fitbit has now analyzed a 

sample of ten “Fitbit” branded Aria scales from the Cali seizure that were provided to Fitbit for 

examination by CBP. Millar MSJ Decl., ¶¶ 6-8. Each of those Aria scales had all serial number and 

regulatory compliance information stripped off the units, making them not only materially altered 

and non-genuine, but also out of compliance with U.S. law on resale of medical devices. See id., Ex. 

D. While certain of the scales were completely non-functional, the scales that functioned all had 

serial numbers that were previously designated by Fitbit as scrap. See id. 

Shortly after CBP seized these counterfeit and scrap products, Defendants furnished Cali 

with a letter, in the hope that CBP would release these products back to Cali. See Cali Decl., ¶ 4. In 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 16 of 32
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3609505 11 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

that letter on BCS Letterhead, Manhan admitted that Defendants were reselling these Fitbit products, 

that Cali was processing and reselling at their direction, and even claimed they had prior written 

consent from Fitbit to use its logo (which Manhan has admitted he did not): 

We receive a variety of merchandise and brands from the large retailers we do 

reverse logistics for...includ[ing]...Fitbit.... Please understand that the product 

is sent to Cali Resources Inc. and Cali Resources SA de CV for processing. 

We only sell refurbished products and do not use logos unless we have prior 

written consent from manufacturer. All material is used refurbished and sold 

as such with warranties from us not the manufacturer. 

Id., Ex. KK; accord Cali Decl., ¶ 5; see also Liu Decl., Ex. D at 161:7-10. In doing so, Defendants 

admitted to the direct distribution and resale of counterfeit and scrap Fitbit products. See id. 

I. Consumer Confusion Regarding These Scrap Products 

It is undisputed that it was never disclosed to consumers that these “Fitbit” products had been 

designated as scrap, or that they were accompanied by counterfeit accessories or in counterfeit 

packaging. See Bonham MSJ Decl., ¶ 3 at Ex. A; Blank Decl., Exs. E1, E2; Declaration of Joel 

Blank in support of Supplemental Response, ECF No. 33, ¶ 28; Liu Decl., Ex. KK (representing 

products as “used refurbished and sold as such...”). Indeed, Cali’s customer L2 believed the 

products “performed and looked like new” and were accompanied by “original” Fitbit accessories. 

Id. L2’s eBay and Groupon listings reflected this confusion, and did not reflect the scrap nature of 

the goods, to the detriment of Fitbit and hundreds of thousands of duped consumers. See id. 

While Defendants do not challenge consumer confusion, it is undisputed that resale of scrap 

as “like new” genuine product caused significant actual consumer confusion and reputational harm 

to Fitbit. See Liu Decl., ¶ 52, Ex. YY; Bonham MSJ Decl., ¶¶ 4-5 & Ex. B. It is also undisputed 

that the resale of scrap, as like new refurbished units, was substantially likely to cause consumer 

confusion and that the fact that the products failed Fitbit’s quality control and were scrap designated 

would have been “highly material” to consumers. See Liu Decl., ¶ 50, Ex. WW at pp. 66 & 72. 

III. LEGAL STANDARD 

Defendants have both the initial burden of production and the ultimate burden of persuasion 

on a motion for summary judgment to show that there is no genuine issue of material fact and that 

they are entitled to judgment as a matter of law here. Nissan Fire & Marine Ins. Co. v. Fritz 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 17 of 32
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3609505 12 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). However, as set forth in greater detail 

below, Defendants have failed to “either produce evidence negating an essential element of the 

nonmoving party’s claim . . . or show that the nonmoving party does not have enough evidence of 

an essential element to carry its ultimate burden of persuasion at trial.” See id. 

IV. ARGUMENT 

A. Defendants Cannot Meet Their Initial Burden On Summary Judgment 

As a preliminary matter, the Court should summarily deny Defendants’ Motion because they 

have not remotely met their initial burden of production. See Motion, ECF No. 241, pp. 7-8. As set 

forth in detail below, Defendants’ Motion ignores the relevant facts and evidence, and instead 

creates a fanciful and manicured recitation of the underlying facts. Id., pp. 4-7. While all inferences 

must be drawn in Fitbit’s favor, the undisputed facts, including Defendants’ admissions, actually 

establish that Fitbit is entitled to summary judgment here. As such, and as their deficient and 

misleading factual showing establishes, Defendants cannot meet their initial burden of production. 

B. The Court Should Deny Defendants’ Motion As To Breach Of Contract 

Defendants’ overarching argument asks this Court to change the entire nature of the 

agreement with Fitbit by construing the word “repurpose” in the SOW to mean “resell.” Motion, pp. 

11:24-15:8. Doing so would fundamentally alter the intended purpose of the agreement, which was 

to recycle and/or destroy scrap products. It would also contradict the plain meaning of the term 

“repurpose,” the undisputed evidence of the parties’ intent at the time the agreement was formed, the 

undisputed evidence regarding the parties’ disclosed performance under the agreement, and their 

representations over the course of the relationship. See Brae Transp., Inc. v. Coopers & Lybrand, 

790 F.2d 1439, 1443 (9th Cir. 1986) (“The court may consider the nature and object of the contract, 

as well as the preliminary negotiations and the circumstances under which it was made.”); Letizia v. 

Facebook Inc., 267 F. Supp. 3d 1235, 1251 (N.D. Cal. 2017) (“[T]he most reliable evidence of the 

parties’ intentions is their conduct after the contract is signed and before any controversy has 

arisen.”). Defendants’ Motion as to breach of contract fails for at least five distinct reasons. 

First, Defendants agreed up front that they would not “be able to resell anything,” 

representing to Fitbit: “Sounds perfect.” See Liu Decl., Ex. T at FIT006023. Four days later, 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 18 of 32
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3609505 13 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Defendants reflected this agreement to not resell products and to only recycle and/or destroy 

products in the SOW, which Defendants admit they drafted and which explicitly limited any resale 

to “resale of recycled commodities.” See id., Ex. I. Thus, resale was expressly contemplated in the 

agreement between Fitbit and Defendants, but it also was expressly limited to resale of commodities. 

Id. Moreover, the SOW further confirmed their agreement not to resell by prohibiting any use of 

Fitbit’s brand and trademarks without Fitbit’s written authorization, which they never obtained and 

which would have been required to resell whole products. Id.; see also Ex. D at 161:7-10. 

Consistent with this agreement, Defendants’ settlement reports, certificates of recycling, and 

all of their communications with Fitbit prior to the lawsuit reflected the purported recycling of tons 

of raw materials (not the resale of whole products), even though Defendants admit there was a 

section in their reporting that for use when reselling whole products. See id., Exs. R, T & GG. 

Likewise, BCS’s General Manager admitted that it was not “industry practice to issue a certificate of 

recycling with commodity breakdown for products that are intended for resale.” Id., Ex. F at 48:21-

49:1. In short, Defendants’ newly-minted definition for “repurpose” violates the parties’ intentions 

in entering, and their express and implied understanding of the obligations under ,the agreement. 

Ticor Title Ins. Co. v. Rancho Santa Fe Assn., 177 Cal.App.3d 726, 730 (1986) (“The fundamental 

canon of interpreting written instruments is the ascertainment of the intent of the parties.”). 

Indeed, Defendants’ onsite manager Kyle Regal explained to Fitbit, four days after he sent 

Fitbit the SOW, that there were only three “avenues” for Fitbit scrap products – Recycling, 

Incineration, and Landfill – not resale. See id., Ex. S. Mr. Regal admitted in deposition that this was 

consistent with his understanding of the SOW. See id., Ex. E at 96:1-16. In short, as both Mr. Regal 

and as Fitbit confirmed, resale was not the intent of the parties – “There was no misunderstanding. 

There was no misreading.” See id., Ex. A at 149:8-15. 

Second, Defendants’ argument that the use of the term “repurpose” in the Preamble and 

Certification section of the SOW somehow authorized “resale” of whole products is frankly absurd. 

See Motion, pp. 11:24-15:8. The word “repurpose” is not in the Services section of the SOW, but 

even if it had been, their argument makes no sense. The plain meaning of the word “repurpose” is to 

“[a]dapt for use in a different purpose.” See, e.g., Oxford English Dictionary, available at 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 19 of 32
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3609505 14 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

https://en.oxforddictionaries. com/definition/repurpose; accord Google’s definition of repurpose. 

Resale of whole products for the exact same intended purpose is the opposite of repurposing a 

product or component. As Baker confirmed to Fitbit at the time, repurposing means, for example, 

turning the rubber of a Fitbit product into soles for sandals or a rubber mat. Liu Decl., Ex. W. 

Reading “repurpose” to mean “resale” would not only violate the entire purpose of the 

agreement (scrap destruction and recycling), it would also directly contradict the definition for 

“repurpose at the product or component level” that Defendants put in the agreement itself: “meaning 

that product would be recycled down to plastic, metal, wire, cardboard or other commodity level 

components.” See id., Ex. I at FIT005988 (emphasis added). Finally, it would also directly 

contradict the agreed Services to be provided by BCS, which limited resale to resale of recycled 

commodities and which expressly prohibited BCS from using Fitbit’s brand or trademarks without 

prior written approval. See id. at FIT005987; see also Ticor, 177 Cal. App. 3d at 730 (“A court must 

view the language in light of the instrument as a whole and not use a ‘disjointed, single-paragraph, 

strict construction approach.’”). It is undisputed that Defendants never obtained such approval and 

that all of their sales violated this provision, because the products they resold with Cali were 

materially different from genuine products and contained Fitbit’s trademarks. See Section II.H. 

Third, Defendants’ attempt to rewrite the contractual terms years later is contrary to basic 

hornbook law on contract interpretation. As established above, the plain meaning of “repurpose” 

directly contradicts Defendants’ new – and previously undisclosed – meaning for this term. 

Further, it is well established that specific language controls over more general language, and 

where specific and general provisions conflict, the specific provisions ordinarily qualify the meaning 

of the more general one. See FTC v. EDebitPay, LLC, 695 F.3d 938, 944 (9th Cir. 2012). Arguing 

that “repurpose” meant “resale” violates this canon. First, the use of “repurpose” in the Preamble in 

reference to allowed services is more specifically defined in the actual “Services” section of the 

SOW and cannot be read to allow some additional service. Liu Decl., Ex. I. And, to be sure, the 

“Services” section of the SOW specifically does allow resale, but only resale of recycled 

commodities. Id. at FIT005987. The other “repurpose” language that Defendants cite is in the 

“Certification” section of the SOW, which also cannot be read to expand the specifically allowed 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 20 of 32
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3609505 15 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Services. Id. at FIT005988. Even as to the language in the Certification section regarding 

“repurpose at the product or component level,” as stated above, Defendants specifically defined the 

“meaning” directly after this language, confirming that “product would be recycled down to plastic, 

metal, wire, cardboard or other commodity level components.” Id. (emphasis supplied). This 

“meaning,” which Defendants drafted, modifies the entire prior sentence as a summative modifier by 

referring to each element of the prior sentence together “product,” “recycling,” and “component.” 

Id.; see also id., Ex. A at 125:9-23. 

It is also well established that the same words used in different parts of a writing should have 

a consistent meaning. See Imation Corp. v. Koninklijke Philips Elecs. N.V., 586 F.3d 980, 990 (Fed. 

Cir. 2009). Thus, “repurpose” and “recycle” here should be given a similar meaning, neither of 

which includes resale of whole products, particularly given that Defendants knew how to use the 

term “resale” when that was intended, like “resale of recycled commodities”. Thus, interpreting 

repurpose to mean resale here would be internally inconsistent and would violate the rule of giving 

“each word significance,” since resale is already used in the SOW. Shell Oil Co. v. Winterthur Swiss 

Ins. Co., 12 Cal. App. 4th 715, 753 (1993). 

Fourth, the Parties’ conduct after entering into the agreement was also consistent with the 

parties’ expressed intent (rather than Defendants’ new one) and should be given great weight here. 

See Letizia, 267 F. Supp. 3d at 1251. Here, Defendants continued to represent to Fitbit that they 

were recycling all products at the commodity level, reporting to Fitbit, month after month, about the 

tons of purported raw materials that had been recycled. Liu Decl., Exs. R, GG. Defendants 

confirmed again about nine months into the relationship that they “had been given strict instructions 

to destroy all Fitbits for recycling.” Id., Ex. Y. Indeed, Defendants lied to Fitbit to the bitter end, 

representing to Fitbit on November 30, 2016 (just a week before the initial lawsuit was filed) that 

Defendants had not resold any scrap Fitbit products. See Bonham TRO Decl., ¶ 5. 

In addition, Defendants misrepresented and concealed their interpretation of “repurpose” and 

concede Fitbit had no idea they were using Cali to resell product (see Section II.D above); thus, the 

Court should reject Defendants’ interpretation out of hand. United States v. Stuart, 489 U.S. 353, 

368 n. 7 (1989) (“It is hornbook contract law that the proper construction of an agreement is that 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 21 of 32
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3609505 16 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

given by one of the parties when ‘that party had no reason to know of any different meaning attached 

by the other, and the other had reason to know the meaning attached by the first party.’”) (citing 

Rest.2d, Contracts § 201(2)); Brae Transp., 790 F.2d at 1443 (court will pierce the objective form of 

the contract if contract language used to conceal rather than express the true intent). That 

Defendants constructed a new definition for “repurpose” years later to immunize their fraud should 

be given no weight by the Court. See Lawyers Title Ins. Corp. v. U.S. Fid. & Guar. Co., 122 F.R.D. 

567, 569 (N.D. Cal. 1988). Indeed, if Defendants were actually allowed to resell products under this 

agreement, they were also obligated to pay Fitbit 70% of the millions of dollars of revenue earned 

pursuant to that agreement, and it is undisputed they did not. See Motion, p. 6:7-10 (admitting they 

owed Fitbit 70% of revenue); Liu Decl., Ex. XX at p. 2. Finally, even if there was any ambiguity 

created by the word “repurpose” (as is plainly not the case here), that ambiguity must be resolved 

against Defendants as the drafters of the SOW and this term in particular. Maples v. SolarWinds, 

Inc., 50 F. Supp. 3d 1221, 1228 (N.D. Cal. 2014); see also Liu Decl., Ex. C at 89:12-16 & 233:3-8. 

Fifth, Defendants’ reliance on their R2 certification and two instances of required destruction 

(rather than recycling) provides no cover for their unlawful conduct. Motion, p. 13:1-6. Even if 

Defendants had disclosed their intent to use the R2 standard as cover for resale, the R2 standard 

would not have allowed resale here, because it specifically does not permit resale if the customer 

directs otherwise or if resale is inconsistent with a commercial agreement. See Liu Decl., Ex. VV; ¶ 

59, Ex. FFF. As discussed in detail above, the agreement between the parties did not allow resale of 

whole products, and there is no dispute that Defendants received repeated directions from Fitbit that 

the Fitbit scrap had to be recycled or destroyed, and not resold. Id., Ex. A at 128:5-19 & 149:8-15; 

Ex. T. Likewise, the two instances Defendants cite, where Fitbit required destruction (rather than 

recycling) also supports Fitbit. These products had issues, including a product recall, such that no 

recycling of the product could occur, and indeed the destruction needed to be witnessed by a 

government representative. See id., Ex. A at 147:9-148:11; Exs. J, PP, QQ. These two instances 

confirm that the intent of the agreement was to recycle and resell raw commodities from the scrap 

Fitbit products and to split the net proceeds, such that Fitbit had to specifically inform them in these 

two instances that no recycling of any commodities could occur. See id; see also, id., Ex. Z. As 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 22 of 32
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3609505 17 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

such, these two instances further confirm that the Court should deny Defendants’ Motion and reject 

their request to insert the term “resell whole products” into the agreement years after the fact. 

C. Defendants’ Motion as to Fitbit’s Trademark Claims Fails 

Defendants have similarly failed to satisfy their burden on Fitbit’s trademark infringement, 

unfair competition, and dilution claims. See Network Automation, Inc. v. Advanced Sys. Concepts, 

Inc., 638 F.3d 1137, 1144 (9th Cir. 2011). Defendants’ primary argument – that Fitbit somehow 

authorized their infringement (Motion, p. 10:5-14) – fails for the same reasons as the contract 

argument in Section B above. Moreover, the undisputed evidence establishes that Defendants are 

both directly and indirectly liable for trademark infringement here. 

1. Defendants Used the Fitbit Marks in Commerce 

Defendants’ novel argument, that they did not directly infringe on Fitbit’s Marks because 

they did not “use” them “in commerce,” is meritless. Motion, pp. 9:1-10:4. Under 15 U.S.C. § 

1127, a mark is in “use in commerce” when (1) the mark has been placed on the goods or their 

containers, labels or the documents associated with the goods or their sale, and (2) the goods are 

“sold or transported in commerce.” 15 U.S.C. § 1127. 

First, Defendants have already admitted that they directed and conspired with Cali to resell 

the scrap products: “We only sell refurbished products and . . . [a]ll material is used refurbished and 

sold as such with warranties from us not the manufacturer.” See Liu Decl., Ex. KK (emphasis 

supplied); accord Cali Decl., ¶ 5 (referring to their “joint sales” with BCS). It is also undisputed that 

Cali made some of these “joint sales” directly on overstock.com and ebay.com. See Liu Decl., Exs. 

UU, ZZ; see also Millar TRO Decl., ¶ 7 & Ex. G. Further, it is undisputed that Defendants knew 

these “joint sales” required buying and reselling non-genuine charging cables from China to “get 

orders out,” and that the massive profit they made was from resale to consumers pursuant to their 

“long-standing agreement that they would split the profits on any materials BCS sent Cali that Cali 

was able to refurbish and resell . . . .” See Liu Decl., Ex. D at 237:11-238:14 & 239:3-243:2; Ex. G 

at 169:18-177:15; Exs. O, JJ & SS; Motion, p. 6:21-23; Decl. of Jonathan Manhan (“Manhan 

Decl.”), ECF No. 241-19, ¶ 6 . Indeed, in their Motion, Defendants do not dispute the agreed 

distribution chain: “Cali refurbished and repurposed the items that could be refurbished and 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 23 of 32
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3609505 18 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

repurposed, and sold them to a distributor, Laguna 2, LLC (“L2”), which marketed them for sale on 

Groupon as refurbished products.” Motion, p. 2:7-10. Accordingly, Defendants cannot dispute that 

they “used” the Fitbit Marks in commerce. 

Moreover, the “or transported” language in 15 U.S.C. § 1127 makes it clear that a “use in 

commerce” is not limited to sales. Defendants’ shipping of scrap Fitbit products from numerous 

overseas locations to Cali in California and Tijuana is a use in commerce under Federal law. See 

Drop Dead Co. v. S.C. Johnson & Son, Inc., 326 F.2d 87, 93 (9th Cir. 1963). The Karl Storz 

Endoscopy Am., Inc. v. Surgical Techs., Inc., 285 F.3d 848 (9th Cir. 2002) case is instructive. There, 

the court evaluated whether the mere repair or refurbishment, without any distribution, could 

constitute a “use in commerce” under the Lanham Act, and concluded that if repair or refurbishment 

resulted in a different product, there was use in commerce. Id. at 856. So it should be here. Thus, 

Defendants’ shipping of scrap products to Cali across state and international lines to be refurbished 

and resold constitutes an independent “use in commerce” under the Lanham Act. See Drop Dead, 

326 F.2d at 90; accord Motion, p. 6:21-23; Manhan Decl., ¶ 6. 

Likewise, Defendants’ related argument that “Cali was [not] likely to be confused” here is a 

red herring. Motion, p. 9:12-14. Cali was not the consumer here, but rather, and as Defendants 

admit in their Motion, Cali was Defendants’ co-conspirator in reselling the scrap products: “Cali and 

BCS had a long-standing agreement that they would split the profits on any materials BCS sent Cali 

that Cali was able to refurbish and resell, after deducting associated costs.” Motion, p. 6:21-28. 

Thus, Defendants’ admissions disprove their own argument of Cali as a consumer, and further admit 

the facts necessary for conspiracy and joint tortfeasor liability for the resale of these scrap products. 

2. Defendants Are Liable For Their Entire Infringing Distribution Chain 

Defendants also cannot escape conspiracy or joint and several liability by claiming not to 

fully know what their co-conspirators and other members of the infringing distribution chain were 

doing. Motion, p. 9:15-23. Defendants only discuss the contributory liability standard under Inwood 

Laboratories, Inc. v. Ives Laboratories, Inc., and although that standard applies here as well, it 

ignores Defendants’ critical and direct role in the conspiracy to distribute infringing scrap products. 

456 U.S. 844 (1982). Whether based on the joint and several liability, conspiracy liability, vicarious 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 24 of 32
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3609505 19 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

liability, or contributory liability, Defendants’ liability for the infringement that they controlled and 

that they profited from handsomely on the back end is settled under federal law. See Adobe Systems 

Inc. v. Blue Source Group, Inc., 125 F. Supp. 3d 945, 973 (N.D. Cal. 2015) (citations omitted). 

a. Defendants Are Liable Under Multiple Legal Theories 

It is well established that “[i]n copyright, trademark and unfair competition actions under 

federal law, all persons participating in the actionable conduct are jointly and severally liable.” 

Bar’s Leaks Western, Inc. v. Pollock, 148 F. Supp. 710, 714 (N.D. Cal. 1957). Thus, where as here, 

multiple defendants are involved in a distribution chain that ultimately sells infringing products to 

consumers, “‘any member of the distribution chain’ of allegedly infringing products can be ‘jointly 

and severally liable’ for the alleged misconduct.” Adobe Systems, 125 F. Supp. 3d at 973. 

It is undisputed that Defendants were all members of the distribution chain of the infringing 

“Fitbit” products, and further that Defendants orchestrated this conspiracy to distribute infringing 

products and set up the distribution chain. See Transgo, Inc. v. Ajac Transmission Parts Corp., 768 

F.2d 1001, 1020–21 (9th Cir. 1985); MetroPCS v. Devor, 215 F. Supp. 3d 626, 633 (N.D. Ill. 2016) 

(finding liability for “conspiracy to sell and offer for sale materially different MetroPCS Handsets, 

removed from packaging, carrying bad IMEI, and/or devoid of the manufacturer’s warranty.”); see

Section II.F above. Indeed, Defendants admitted the basic facts regarding the formation and 

operation of the conspiracy in their Motion at 6:16-28, and further admitted to their own direct 

involvement in reselling thousands of “refurbished” scrap products, which CBP seized as 

counterfeit, “with a warranty from us not the manufacturer.” Liu Decl., Ex. KK; Cali Decl., ¶ 4. 

Thus, Defendant’s conspiracy and joint tortfeasor liability is beyond dispute here. 

Further, Defendants also controlled the distribution of scrap products by injecting hundreds 

of thousands of infringing products into the stream of commerce that were ultimately resold to 

unwitting consumers through their conspiracy with Cali, and each Defendant profited handsomely 

from those infringing “joint sales.” See Cali Decl., ¶ 5; Sections III.C.-I. above; see, also, Fonovisa, 

Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996) (finding vicarious liability based on control 

and direct financial benefit); see also, Coach, Inc. v. Celco Customs Servs. Co., 2014 WL 12573411, 

at *17 (C.D. Cal. June 5, 2014) (finding contributory liability based on inference of particularized 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 25 of 32
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3609505 20 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

knowledge of infringement). Defendants were also required by the SOW to “manage downstream 

activities” and even Defendants’ purported R2 certification required them to know and monitor the 

downstream resale of these products. See Liu Decl., Ex. I.; see also Declaration of Matthew G. 

Whitten, ECF No. 241-1, Ex. K. Indeed, Defendants have admitted that they were the ones reselling 

scrap products, which were seized by CBP as counterfeit, with Cali acting at their direction to 

process those products, pursuant to a long-standing agreement that Cali would “split profits of any 

materials . . . Cali was able to refurbish and resell.” See Liu Decl., Ex. KK (emphasis supplied); see 

also Motion at p. 6:21-28 (describing “long-standing agreement”); Cali Decl., ¶ 4. 

Thus, the undisputed facts and admissions made by Defendants show an agreed plan to resell 

scrap products, which included Fitbit’s trademarks, and which were materially different from 

genuine Fitbit products. See Sections II.E-F above. In short, Defendants are jointly and severally, 

conspiratorially, and vicariously liable for injecting hundreds of thousands of infringing products 

into the stream of commerce, profiting off those sales to the tune of millions of dollars. Defendants 

held the “master switch” and could have turned off the supply of infringing goods at any time. Louis 

Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936, 942-43 (9th Cir. 2011). The money 

was simply too good to do the right thing. 

b. Defendants Are Also Liable Under Inwood 

Instead of disputing their liability under the above well-established legal theories, Defendants 

argue only that they are not contributorily liable under the Inwood case, claiming they “did not 

induce or tell Cali to use Fitbit’s trademarks in any way.” Motion, p. 9:22. Not so. The Court made 

clear in Inwood that “[e]ven if a manufacturer does not directly control others in the chain of 

distribution, it can be held responsible for their infringing activities under certain circumstances.” 

Inwood, 456 U.S. at 854; see also Akanoc Solutions, 659 F.3d 936 (holding Akanoc liable where 

they held the “master switch” controlling the means of infringement). 

The Court in Inwood also specifically distinguished its facts from a case, like here, with 

undisputed evidence of a conspiracy to distribute infringing products. Inwood, 456 U.S. at 854. 

Here, Defendants not only had a long-standing relationship with Cali, but Defendants knew that Cali 

would be infringing on Fitbit’s marks by reselling these scrap products (see Liu Decl., Exs. O, JJ, 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 26 of 32
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3609505 21 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

KK, SS), and admit they did not inform the rest of the infringing distribution chain of their lack of 

authorization to resell the scrap Fitbit products or to use Fitbit’s brand or trademarks. See id., Ex. D 

at 162:18-163:7. Indeed, when Fitbit raised questions about how the products were being 

destroyed/recycled, Defendant Manhan assured Cali: Mr. Kelvin: “Your good right?” [sic], Mr. 

Manhan: “Yes sir.” Id., ¶ 25, Ex. X. Indeed, in Mr. Manhan’s letter to CBP attempting to get 

thousands of Fitbit products, seized as counterfeit, released back to Cali, he admitted that Cali was 

acting at his direction in “processing” the products, and that “[a]ll material is used refurbished and 

sold as such with warranties from us not the manufacturer.” Id., Ex. KK. Defendants simply cannot 

escape liability for an infringing distribution chain where they were the start and the end, and from 

which they received millions of dollars of split profits based on the resale of the infringing goods. 

It is also beyond dispute that Defendants continued to supply Fitbit’s products to Cali with 

actual or constructive knowledge that such products would be resold to consumers. See Lockheed 

Martin Corp. v. Network Sols., Inc., 194 F.3d 980, 983 (9th Cir. 1999); see also Coach, Inc., 2014 

WL 12573411, at *17. The undisputed facts and admissions (see Sections II.D-H above), along with 

their control of the supply and profit share on the resale, easily establish contributory liability here. 

D. The Court Should Deny The Motion On Dilution And Unfair Competition 

Defendants have similarly failed to meet their burden by establishing that their actions did 

not constitute dilution or unfair competition. Defendants’ arguments on dilution and federal unfair 

competition rely completely on their failed contract and trademark arguments above, and the Court 

should deny those portions of their Motion for the same reasons. See Sections IV.B.-C. above. 

E. Defendants’ Motion On Fitbit’s Fraud-Related Claims Is Also Meritless 

Defendants’ primary fraud and negligent misrepresentation argument relies on the absurd 

claim above that they were authorized to resell scrap Fitbit products. Motion, pp. 15:9-21:22. That 

argument fails for the same reasons as it did with respect to the breach of contract claim. See

Section IV.B. above. Defendants’ additional fraud-related arguments also fail on their face. 

Putting aside the contract related arguments above, Defendants’ Motion also hinges on an 

bizarre reading of Fitbit’s fraud-related claims in its Second Amended Complaint: that Fitbit’s 

claims for relief arise out of BCS falsely telling Fitbit that all of Fitbit’s materials would be 

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3609505 22 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

destroyed and none would be repurposed. Motion, p. 16:19-20. The undisputed facts show, and 

Defendants concede, that BCS falsely represented to Fitbit that they would break down all scrap 

Fitbit products into raw materials to be recycled or otherwise destroyed, and not resell whole Fitbit 

products. See Motion, p. 16:23-25; see also Liu Decl., Exs. I, R-T, BB, CC, EE; Ex. A at 63:3-64:5 

& 96:19-97:18. Defendants’ argument is therefore a straw man and does not help them at all. The 

evidence of Defendants’ fraud and negligent misrepresentation here is simply overwhelming. 

First, discovery has proven that Defendants (1) made intentional or negligent representations 

to Fitbit that were not true and which Defendants knew were not true at the time they were made, (2) 

intended for Fitbit to rely on their misrepresentations so that BCS could obtain the benefit of Fitbit’s 

business, and that (3) Fitbit justifiably relied on Defendants’ misrepresentations. See Delk v. Ocwen 

Financial Corp., 2017 WL 3605219, at *7 (N.D. Cal. 2017); see Sections II.C-D above. 

Here, there is damning evidence that Defendants intended to deceive Fitbit from the outset. 

Daniel v. Ford Motor Co., 806 F.3d 1217, 1225 (9th Cir. 2015). As discussed in detail in Sections 

II.C-D above, Defendants induced Fitbit to engage them by agreeing that they would break down all 

scrap Fitbit products into raw materials to be recycled or otherwise destroyed, and specifically 

agreed not resell them. See, e.g., Liu Decl., Exs. I, S, T, BB, CC, EE; Ex. A at 63:3-64:5 & 96:19-

97:18. All of the documents and communications from BCS to Fitbit and the SOW 

contemporaneous with the hiring of BCS confirmed these misrepresentations, including videos sent 

to Fitbit showing BCS employees destroying and/or breaking down all the Fitbit products to 

commodities even though at least three trailers of Fitbit scrap had already been sent directly to Cali. 

See id., Ex. D at 170:7-13; Ex. E at 91:20-93:25 & 96:1-16; Exs. I, S, T, U, BB, CC, EE. 

Moreover, Defendants committed other independent misrepresentations along the way to 

keep Fitbit on the hook, establishing reasonable reliance. Mirkin v. Wasserman, 5 Cal 4th 1082, 

1093 (1993). The settlement reports and the related certificates of recycling and destruction sent by 

BCS to Fitbit month after month contained a detailed breakdown of the commodities, like rubber, 

steel, and plastic, that were purportedly recycled, and reported nothing about resale of whole 

products. See Liu Decl., Exs. R, GG. These reports were false, because Defendants were actually 

reselling the products with Cali, and using a sample commodity breakdown from an early shipment 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 28 of 32
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3609505 23 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

to fill out the reports to Fitbit. See id., Ex. F at 115:13-118:1; Ex. H at 287:18-290:7; accord Ex. 

KK. Defendants represented to Fitbit that there was section in these reports for resold product, but it 

is undisputed that Defendants never used that section to ensure Fitbit continued to believe they were 

recycling product and continued to send them more scrap to resell. Compare id., Ex. T (describing a 

section 3 to be used “if we resell items”) with Ex. R (showing no section 3 in any report). 

In addition, on at least two occasions Defendants represented to Fitbit that they would 

destroy scrapped Fitbit products in country in Australia and Slovakia when in fact, unbeknownst to 

Fitbit, those products were also shipped to Cali. Id., Exs. LL, RR; Ex. A at 141:24-142:12. The 

documents even reveal their guilty conscience – whether questioning “Why does he put that in 

writing?” to referring to the Verizon deal as a “sacrificial lamb” so as not to have to reveal their 

resale of products to Fitbit. See Section II.G above; see also Liu Decl., Ex. Y (admitting that 

“BCS has been given strict instructions to destroy all Fitbits for recycling.”); Ex. AA. Fitbit would 

never have used Defendants if they had been honest – as reflected in the SOW and as Ms. Windsor 

testified, Fitbit “dictated to BCS . . . what our understanding was. And there was no question that it 

was understood; that our product, if it wasn't coming back to our warehouse, needed to be 

destroyed, broken down to the commodity level, period. There was no misunderstanding. There 

was no misreading.” Liu Decl., Ex. A at 149:8-15; Section II.C., supra. 

These undisputed facts regarding Defendants’ fraud by deceit, omission, and concealment 

further disprove Defendants’ disingenuous argument that they had no obligation to inform Fitbit that 

they were reselling the scrap Fitbit products they received. See Motion, pp. 19:16-21:22. As Fitbit’s 

trusted scrap vendor, BCS had a duty to disclose to Fitbit that it was reselling the scrap Fitbits and 

receiving enormous profits. Naidong Chen v. Fleetcor Technologies, Inc., 2017 WL 1092342, at 

*14 (N.D. Cal. 2017). A party to a business transaction has the duty to exercise reasonable care to 

disclose material facts before consummating the transaction where the other party would have reason 

to believe, based on the relationship, that such material facts would be disclosed. See Eddy v. Sharp, 

1991 Cal.App.3d 858, 864 (1988). And, as set forth in detail in Section II.C.-G. above, Defendants 

concealed and suppressed numerous material facts from Fitbit to keep Fitbit from learning the truth 

and stopping the flow of scrap products. Throughout the relationship, Fitbit continued to send scrap 

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3609505 24 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

products to Defendants in reliance on their continuing representations that they were not reselling 

anything. See Liu Decl., Exs. K, R, W, Y, GG, NN, PP, QQ, TT; see also Bonham TRO Decl., ¶ 5. 

At no time was Cali identified as BCS’s refurbishing and resale partner, and in fact Defendants went 

to great lengths to hide Cali’s involvement from Fitbit. See Section II.C.-G above; Liu Decl., Exs. 

II, EEE. Even when Fitbit asked BCS directly about what they were doing with the Fitbit scrap, and 

whether they were reselling any of the whole Fitbits, they were met with lies and material omissions. 

See id., Ex. G at 213:14-216:8 & 220:20-223:25; Exs. W, Y, HH, II. See Vega v. Jones, Day, Reavis 

& Pogue 121 Cal.App.4th 282, 292 (2004) (“active concealment or suppression of facts ... is the 

equivalent of a false representation”). As Defendant Manhan later admitted, Fitbit “was not aware” 

of the refurbishing and resale of the scrap products. Liu Decl., Ex. C at 289:21-25. 

Defendants’ fraud caselaw also does not help them. See Motion, pp. 18-21. Those cases 

either deal with clearly disclosed information (see id., citing Apollo Group, Davis, Acme Propane, 

Tomek, Noll, and ScripsAmerica) or unnecessary omissions in specific industries, e.g. real estate (see 

id., citing Levine, Berryman, Daugherty) that are completely inapposite. None of these cases 

remotely changes the settled law that where a party makes a disclosure, it must make a full and fair 

disclosure. See, e.g., In re Carroll, 549 B.R. 375, 383 (Bankr. N.D. Cal. 2016). Defendants did not 

remotely meet this requirement and cannot avoid fraud liability here. See Section II.C.-G above. 

The undisputed facts and admissions here establish that BCS intended to defraud Fitbit from 

start, continued to do so throughout, and went to great lengths to conceal that fraud from Fitbit to the 

bitter end. See Sections II.C-H above. Accordingly, the Court should also deny Defendants’ Motion 

on Fitbit’s fraud-related claims, including negligent misrepresentation and conspiracy. 

F. Defendants’ Challenge to the Conspiracy and Unfair Competition Claims Fails 

Defendants’ only argument on conspiracy and primary argument on state unfair competition 

relies on their challenge to the underlying substantive claims, and it fails for the same reasons set 

forth above in Sections IV.B-E. Motion, pp. 22:1-24:23. Indeed, Defendants’ Motion admits the 

basic facts of the formation and operation of the conspiracy to resell infringing and fraudulently 

obtained scrap products. See Motion, p. 6:16:28. Defendants obtained these scrap products from 

Fitbit through false pretenses and transported them from across the globe to Cali in San Diego and 

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3609505 25 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

Mexico in support of their plan to refurbish and resell them to consumers and thereafter to split the 

profits with Cali. See Section II.F above. As such, the undisputed facts here, including 

Defendants’ admissions, easily meet the test for fraudulent and unlawful conduct under Cal. Bus. & 

Prof. Code Section 17200, including under 15 U.S.C. § 45 and 18 U.S.C. §§ 2314-15.

V. FITBIT’S EVIDENTIARY OBJECTIONS AND MOTION TO STRIKE 

While Defendants’ recitation of facts in general is misleading, Fitbit submits the following 

limited evidentiary objections and moves to strike the same as plainly objectionable and prejudicial: 

(1) Legal conclusions re contract. Motion at 4:24-25 (“Mr. Baker sent Ms. Windsor a 

Statement of Work to govern the parties’ relationship.”); 6:2-3 (“It is undisputed that the Statement 

of Work is the only agreement between BCS and Fitbit”); Whitten Decl. at Ex. A, 162:3-163:13

(Q: Okay. So my question is: Are there any other documents that Fitbit contends, as you sit here 

today, constitute the contract or agreement between Fitbit and BCS? . . . A: Right. This is the only 

agreement between Fitbit and BCS.”). Objections: These statements call for a legal conclusion as to 

formation and scope of the contract. Moreover, the testimony attached as Whitten Decl. Ex. A, was 

outside the scope of the 30(b)(6) notice and therefore is not binding on Fitbit and lacked foundation. 

See Detoy v. City & Cty. of San Francisco, 196 F.R.D. 362, 367 (N.D. Cal. 2000); Fed. R. Evid. 602. 

(2) Prejudicial and Misleading Recitation. Motion at 4:27-28 (“Ms. Windsor also 

asked that Mr. Baker provide documentation that BCS was “R2-certified.”); 5:20-22, 17:4-5

(“Fitbit’s reviewing executives then requested two changes to the Statement of Work”); 17:23-24

(“Before BCS began performance, Fitbit requested that BCS provide its R2 certification.”). 

Objections: The statements above are particularly misleading and inaccurate summaries of the 

evidence and are therefore unfairly prejudicial under Fed. R. Evid. 403. See also Davis & Cox v. 

Summa Corp., 751 F.2d 1507, 1516 (9th Cir. 1985). First, as to the R2 certification, Ms. Windsor 

testified that she requested “all their certificates” simply because it “show[ed] them as a reputable 

business.” Whitten Decl., Ex. D, 50:15-19. Second, as to the SOW, Ms. Windsor also testified that 

she (not unnamed “executives”) requested those changes. Whitten Decl., Ex. D at 120:6-122:20. 

VI. CONCLUSION 

For the foregoing reasons, the Court should deny Defendants’ Motion in its entirety. 

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3609505 26 Case No. 3:17-cv-00079 EMC (KAW)

PLAINTIFF FITBIT, INC.’S OPPOSITION TO DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT AND/OR PARTIAL SUMMARY JUDGMENT 

LAW OFFICES 

SIDEMAN

& BANCROFT LLP 

ONE EMBARCADERO CENTER, 22ND FLOOR 

SAN FRANCISCO, CALIFORNIA 94111-3711 

DATED: June 7, 2018 Respectfully submitted, 

SIDEMAN & BANCROFT LLP 

 By: /s/ Zachary J. Alinder 

 Zachary J. Alinder 

Attorneys for FITBIT, INC. 

Case 3:17-cv-00079-EMC Document 251 Filed 06/07/18 Page 32 of 32