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

[CORRECTED] NOTICE OF MOT. AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MPA IN SUPPORT

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)

[CORRECTED] PLAINTIFF FITBIT, 

INC.’S NOTICE OF MOTION AND 

MOTION FOR PARTIAL SUMMARY 

JUDGMENT;

MEMORANDUM OF POINTS AND 

AUTHORITIES IN SUPPORT THEREOF 

Judge: Honorable Edward M. Chen

Date: June 28, 2018

Time: 1:30 p.m.

Crtrm.: 5

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

[CORRECTED] NOTICE OF MOT. AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MPA IN SUPPORT

LAW OFFICES

SIDEMAN

& BANCROFT LLP

ONE EMBARCADERO CENTER, 22ND FLOOR

SAN FRANCISCO, CALIFORNIA 94111-3711

NOTICE OF MOTION AND MOTION

TO ALL PARTIES AND TO THEIR COUNSEL OF RECORD:

PLEASE TAKE NOTICE THAT on June 28, 2018 at 1:30 p.m., or as soon thereafter as 

it may be heard, in the courtroom of the Honorable Edward M. Chen, located in the United States 

District Court for the Northern District of California, 450 Golden Gate Avenue, San Francisco, 

CA 94102, Plaintiff Fitbit, Inc. (“Fitbit”) will, and hereby does, move this Court for partial 

summary judgment pursuant to Federal Rules of Civil Procedure Rule 56(a) on the First, Third, 

Fourth, and Eighth Claims for Relief in Fitbit’s Second Amended Complaint.

Fitbit seeks partial summary judgment on the ground that there is no genuine dispute as to 

any material fact and Fitbit is entitled to judgment as a matter of law as to liability on the First, 

Third, Fourth, and Eighth Claims for Relief in Fitbit’s Second Amended Complaint against 

Defendants P-Cove Enterprises Inc. dba Buyers Consultation Service (“BCS”), Environmental 

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

Baker (“Baker”) (collectively, “Defendants”). This Motion is based on this Notice of Motion and 

Motion, the Memorandum in support below, the Declarations of Brett Millar, Zachary Alinder, 

Jeff Bonham, Cali Resources, Inc. (“Cali”), Laguna 2, LLC (“L2”), and Groupon, Inc., all filed 

concurrently herewith, the Expert Reports (or excerpts thereof) of Hal Poret, Greg Regan, and 

Michael Easterbrook filed concurrently attached to the Alinder Decl., all of the pleadings, orders,

and docket entries in this proceeding, including any prior sworn declarations filed in this Action, 

all matters of which the Court may take judicial notice, and any evidence presented to the Court 

prior to its ruling.

DATED: May 30, 2018 SIDEMAN & BANCROFT LLP

By: /s/ Zachary J. Alinder

Zachary J. Alinder

Attorneys for FITBIT, INC.

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[CORRECTED] NOTICE OF MOT. AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MPA IN SUPPORT

LAW OFFICES

SIDEMAN

& BANCROFT LLP

ONE EMBARCADERO CENTER, 22ND FLOOR

SAN FRANCISCO, CALIFORNIA 94111-3711

TABLE OF CONTENTS

Page

MEMORANDUM OF POINTS AND AUTHORITIES .................................................................. 1

I. INTRODUCTION................................................................................................................. 1

II. STATEMENT OF ISSUES TO BE DECIDED.................................................................... 2

III. STATEMENT OF FACTS.................................................................................................... 2

A. Relevant Background Regarding Fitbit..................................................................... 2

B. Fitbit’s Federally-Registered Trademarks................................................................. 3

C. Fitbit’s Supply Chain And Related Quality Control Processes................................. 3

D. Defendants’ Breach of Contract and Related Misrepresentations............................. 4

E. Defendants’ Conspiracy To Sell Infringing Products and Control of Same ............. 7

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

Products..................................................................................................................... 8

G. Defendants’ Concealment of Their Scheme.............................................................. 9

H. Defendants’ Scheme Unravels................................................................................ 10

I. Consumer Confusion Regarding These Scrap Products ......................................... 13

IV. ARGUMENT ...................................................................................................................... 15

A. Standard on Summary Judgment............................................................................. 15

B. The Court Should Grant Fitbit Summary Judgment On Its Breach of 

Contract Claim Against BCS .................................................................................. 15

C. Summary Judgment Is Warranted On Trademark and Unfair Competition ........... 16

1. Federal Trademark Counterfeiting and Infringement ................................. 16

a. Fitbit Has a Protectable Ownership Interest in its Trademarks....... 17

b. Consumer Confusion Should Be Presumed Here ........................... 17

c. Fitbit Has Also Established High Likelihood of Confusion ........... 19

(1) Strength of the Fitbit Marks................................................ 20

(2) Proximity of the Goods....................................................... 20

(3) Similarity Between the Marks............................................. 21

(4) Evidence of Actual Confusion ............................................ 21

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(5) Marketing Channels Used ................................................... 22

(6) Type of Goods and Purchasers’ Likely Degree of 

Care ..................................................................................... 22

(7) Defendants’ Intent in Selecting the Mark ........................... 22

(8) Likelihood of Expansion of the Product Lines.................... 23

2. Federal Unfair Competition and California Unfair Competition ................ 23

3. All Defendants Are Jointly and Severally Liable........................................ 23

V. CONCLUSION ................................................................................................................... 24

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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) .......................................................................................24

AMF Inc. v. Sleekcraft Boats,

599 F.2d 341 (9th Cir. 1979)..........................................................................................19, 21, 23

Anderson v. Liberty Lobby, Inc.,

477 U.S. 242 (1986)...................................................................................................................15

Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc.,

457 F.3d 1062 (9th Cir. 2006)....................................................................................................17

Bambu Sales, Inc. v. Sultana Crackers, Inc.,

683 F. Supp. 899 (E.D.N.Y. 1988).............................................................................................24

Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp.,

174 F.3d 1036 (9th Cir. 1999)..................................................................................17, 20, 21, 22

Celotex Corp. v. Catrett,

477 U.S. 317 (1986)...................................................................................................................15

Cleary v. News Corp.,

30 F.3d 1255 (9th Cir. 1994)......................................................................................................23

Comm. for Idaho’s High Desert, Inc. v. Yost,

92 F.3d 814 (9th Cir. 1996)........................................................................................................24

Congdon v. Uber Techs., Inc.,

291 F. Supp. 3d 1012 (N.D. Cal. 2018) ...............................................................................15, 16

Donsco, Inc. v. Casper Corp.,

587 F.2d 602 (3d Cir. 1978).......................................................................................................24

E. & J. Gallo Winery v. Gallo Cattle Co.,

967 F.2d 1280 (9th Cir. 1992)....................................................................................................20

Eclipse Assoc., Ltd. v. Data Gen. Corp.,

894 F.2d 1114 (9th Cir. 1990)....................................................................................................20

El Greco Leather Prods. Co, Inc.. v. Shoe World, Inc.,

806 F.2d 392 (2d Cir. 1986).......................................................................................................18

Entrepreneur Media, Inc. v. Smith,

279 F.3d 1135 (9th Cir. 2002)....................................................................................................21

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

[CORRECTED] NOTICE OF MOT. AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MPA IN SUPPORT

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ONE EMBARCADERO CENTER, 22ND FLOOR

SAN FRANCISCO, CALIFORNIA 94111-3711

Fleischmann Distilling Corp. v. Maier Brewing Co.,

314 F.2d 149 (9th Cir. 1963)......................................................................................................23

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

76 F.3d 259 (9th Cir. 1996)........................................................................................................24

GoTo.com, Inc. v. Walt Disney Co.,

202 F.3d 1199 (9th Cir. 2000)..............................................................................................20, 22

Hokto Kinoko Company v. Concord Farms, Inc.,

810 F. Supp. 2d 1013 (C.D. Cal. 2011)......................................................................................18

Intel Corp. v. Terabyte Int’l, Inc., 

6 F.3d 614 (9th Cir. 1993)..........................................................................................................19

KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc.,

408 F.3d 596 (9th Cir. 2005)......................................................................................................17

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

658 F.3d 936 (9th Cir. 2011)......................................................................................................18

McIndoe v. Huntington Ingalls Inc.,

817 F.3d 1170 (9th Cir. 2016)....................................................................................................15

MetroPCS v. Devor,

215 F. Supp. 3d 626 (N.D. Ill. 2016) .........................................................................................24

Moroccanoil, Inc. v. Perfumes World Com, Inc.,

234 F. Supp. 3d 1026 (C.D. Cal. 2017)......................................................................................18

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

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

Official Airline Guides, Inc. v. Goss,

6 F.3d 1385 (9th Cir. 1993)........................................................................................................23

Surfvivor Media, Inc. v. Survivor Prods.,

406 F.3d 625 (9th Cir. 2005)......................................................................................................22

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

768 F.2d 1001 (9th Cir. 1985)....................................................................................................24

Ubiquiti Networks, Inc. v. Kozumi USA Corp.,

No. 12-2582 CW, 2012 WL 2343670 (N.D. Cal. Jun. 20, 2012) ..............................................17

United States v. Farmer,

370 F.3d 435 (4th Cir. 2004)......................................................................................................18

United States v. Milstein,

401 F.3d 53 (2d Cir. 2005).........................................................................................................19

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

[CORRECTED] NOTICE OF MOT. AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MPA IN SUPPORT

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SIDEMAN

& BANCROFT LLP

ONE EMBARCADERO CENTER, 22ND FLOOR

SAN FRANCISCO, CALIFORNIA 94111-3711

Westinghouse Elec. Corp. v. Gen. Circuit Breaker & Elec. Supply Inc.,

106 F.3d 894 (9th Cir. 1997)......................................................................................................18

Zeltiq Aesthetics, Inc. v. BTL Indus., Inc.,

32 F. Supp. 3d 1088 (N.D. Cal. 2014) .......................................................................................23

Statutes

18 U.S.C § 2320(a)...........................................................................................................................19

Cal. Civil Code section 1619............................................................................................................15

Cal. Civil Code section 1621............................................................................................................15

Cal. Civil Code section 1622............................................................................................................15

Other Authorities

CACI No. 305 ..................................................................................................................................15

Fed. R. Civ. P. 56(a).........................................................................................................................15

Fed. R. Civ. P. 56(c).........................................................................................................................15

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

[CORRECTED] NOTICE OF MOT. AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MPA IN SUPPORT

LAW OFFICES

SIDEMAN

& BANCROFT LLP

ONE EMBARCADERO CENTER, 22ND FLOOR

SAN FRANCISCO, CALIFORNIA 94111-3711

MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION

Discovery has now confirmed that BCS and ELI, acting through Manhan and Baker, 

supplied all of the scrap “Fitbit” branded products that this Court enjoined further sale of last year. 

See February 24, 2017 Order, ECF No. 52, at 3-4; see also Stipulated Injunction as to Cali, ECF 

No. 56. Defendants’ admissions and the undisputed evidence also show that Defendants, acting 

through Manhan and Baker, masterminded the underlying scheme to resell those “scrap” Fitbit 

products to unwitting consumers, resulting in conclusive liability on all of Fitbit’s claims.

1

As relevant to this Motion, the undisputed facts establish Defendants’ liability for breach of 

contract, trademark infringement, and unfair competition, as a result of their orchestration of the 

underlying scheme to resell hundreds of thousands of scrap “Fitbit” branded products that they 

admit they had no authorization to resell. From mid-2015 to late 2016, Fitbit contracted 

Defendants’ services as a scrap destruction and recycling vendor in Fitbit’s reverse logistics 

process, under “strict instructions” to recycle and/or destroy scrap “Fitbit” products sent to them. 

Defendants ignored those instructions, and their contractual obligations, and instead sent the scrap 

“Fitbit” branded products to Cali for refurbishment, repackaging, and resale, earning millions of 

dollars of ill-gotten profit, pursuant to an agreement with Cali to split the profits from the resale

50/50. Defendants also admit that they violated the contractual provision requiring them to obtain 

written authorization from Fitbit to use Fitbit’s brand and intellectual property, which of course 

occurred each time Defendants resold scrap “Fitbit” branded products bearing the Fitbit trademarks. 

These undisputed facts establish that Defendants breached their agreement with Fitbit.

In addition, under well-established Ninth Circuit law, the resale of these scrap products 

without authorization rendered them “non-genuine” and infringing as a matter of law. Defendants’

resale of the scrap products deprived Fitbit of its right to control the quality of goods sold with its

trademarks, and also resulted in the resale of “Fitbit” branded products that were materially 

 

1

 In light of the summary judgment standards and page limit, Fitbit has streamlined its requested 

relief here to partial summary judgment on its contract, trademark, and unfair competition claims.

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SIDEMAN

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different from the high quality products that Fitbit authorizes for sale or refurbishes itself for 

warranty replacements. Defendants passed off this scrap as like new refurbished products, 

guaranteeing consumer confusion. The undisputed facts and expert evidence establish that these 

products had not met Fitbit’s quality control standards and that their designation for scrap 

destruction was “highly material” to consumer purchasing decisions. Further, the undisputed facts 

show that these products were resold in counterfeit packaging and often with counterfeit cables. 

Actual consumer confusion should be presumed by the Court in such circumstances and 

summary judgment entered thereon. Even absent that presumption, the undisputed facts establish 

significant actual confusion, including thousands of customer support calls related to these products

and numerous scathing reviews from duped customers. In addition, presumed confusion is not 

necessary here, as the evidence here also easily establish a high likelihood of consumer confusion.

In short, the Court should grant Fitbit’s Motion and enter judgment as a matter of law 

against Defendants for their liability on Fitbit’s First, Third, Fourth, and Eighth Claims for Relief.

II. STATEMENT OF ISSUES TO BE DECIDED

Should the Court grant Fitbit’s Motion for Partial Summary Judgment on its claims for 

breach of contract, trademark infringement, and unfair competition where there are no genuine 

issues of fact regarding Defendants’ liability to prevent entry of judgment as a matter of law?

III. STATEMENT OF 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 a “smart” scale called 

Aria) 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 and Motion to Seal, filed 

concurrently with this Motion, (“Millar MSJ Decl.”), ¶ 2. Fitbit’s customers recognize these 

products and services for their high quality and reliability in helping them achieve their healthrelated goals. See id. Fitbit has worked hard to earn that reputation by investing significant human 

and financial resources to develop its cutting-edge products and services, which, in turn, have 

achieved worldwide popularity. See id. 

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B. Fitbit’s Federally-Registered Trademarks

Fitbit is the owner of numerous federally-registered trademarks related to the Fitbit brand of 

products and services, including but not limited to the Federal Registration Numbers 3,732,334; 

4,343,562; 4,380,130; 4,507,210; 4,851,801; 4,851,802; 4,851,803, 5,013,394; 5,142,157; and 

5,210,272 (collectively, the “Fitbit Marks”). See id., ¶ 3 & Ex. A. These include the Fitbit 

tradename and trademarks for the specific products resold here, as well as Fitbit’s well-known 

diamond marks:

Id. The Fitbit Marks were registered to Fitbit at its principal place of business at the time of 

registration in San Francisco, California, and have been used in interstate commerce to identify and 

distinguish Fitbit’s high quality products and services since approximately 2009. See id.

Fitbit has built tremendous goodwill and brand reputation among consumers through 

significant investment in advertising, promoting, and delivering products and services of the highest 

quality under the Fitbit Marks the Fitbit trade name. See id. Fitbit vigorously protects this 

reputation, and consumers have come to rely on the Fitbit Marks, by maintaining high qualitycontrol and supply-chain standards for all of its products. See id. As a result, Fitbit’s products are 

associated by consumers and the public in general, with exceptional materials, design, functionality, 

and reliability. See id. 

C. 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, ¶¶ 2-12

(detailing Fitbit’s reverse logistics and established quality control processes). 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 brand reputation with 

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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 id., ¶ 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. Id., ¶ 13. And, as further set forth below, Fitbit lived up to its end of the 

agreement, 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 and Motion to Seal, filed concurrently with this Motion, (“Bonham MSJ Decl.”), ¶ 2. 

D. Defendants’ Breach of Contract and Related Misrepresentations

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 Zachary Alinder in support of MSJ, filed with this Motion, (“Alinder MSJ Decl.”), 

¶¶ 10, 20, 21, 29, 30, 32, Exs. I, S, T, BB, CC, EE & ¶ 2, Ex. A (Deposition of Jennifer Windsor), 

at 63:3-64:5, 96:19-97:18. BCS, acting by and through Baker, Manhan, and other BCS employees, 

repeatedly confirmed this lie. See id., at ¶ 6, Ex. E (Deposition of Kyle Regal) at 83:8-88:18; ¶¶ 25, 

29, 30, 36, 47, Exs. X, BB, CC, II, TT. Instead, unbeknownst to Fitbit, BCS intended from the very 

beginning to unlawfully divert these scrap “Fitbit” products, shipping them directly to Cali for

refurbishment, repackaging, and resale to unwitting consumers, which they did month after month 

until Fitbit terminated the relationship. See id., ¶¶ 17, 18, 22, 37, Exs. P, Q, U, JJ.

Indeed, on May 26, 2015, Fitbit instructed BCS in writing not to resell any scrap Fitbit 

products, and Baker (BCS’s VP of Business Development) explicitly agreed to this restriction: 

[Mr. Baker:] 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. 

[Fitbit’s Jennifer 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 

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break things down to recycle and sell for commodity. Id. (emphasis added). 

[Mr. Baker:] Sounds perfect. ... 

See id., at Ex. T (emphasis added). It is also undisputed that at no later point did Fitbit consent to 

allow BCS to resell any scrap Fitbit branded products. See id. at Ex. A at 126:12-128:19, 148:12-

150:19; ¶ 5, Ex. D (BCS 30(b)(6) Deposition) at 161:7-10.

On May 29, 2015, Defendants sent Fitbit 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 constitutes the contract here. See id., Ex. I & D at 170:7-13.

2

 The 

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

Defendants admit, it said nothing about reselling the 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.

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

settlement report.

Id. at FIT005987 (Section 3) (emphasis added). The SOW also provided that “[a] gain sharing 

formula will be applied to the net proceeds whereby 30% will remain with BCS and 70% will be 

remitted to Fitbit. . .” Id. at FIT005988 (Section 5). 

Defendants admit that Fitbit never authorized their use of Fitbit’s “brand or intellectual 

property”; under the explicit terms of the SOW, written authorization was necessary for BCS to do 

anything other than recycle and destroy the scrap products, including reusing and/or reselling the 

scrap Fitbit products bearing Fitbit’s registered trademarks (which was not allowed in any event). 

Id.; see also id., Ex. D at 161:7-10. Outside of the actual contractual services BCS agreed to 

 

2 BCS and Fitbit amended the SOW in November 2015 to extend the term beyond the initial pilot 

project, but the other material terms did not change. Alinder MSJ Decl., ¶ 31, Ex. DD. 

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provide, BCS also agreed in a “Certification” Section that they would certify the recycling of scrap 

products “down to plastic, metal, wire, cardboard or other commodity level components” and 

provide certificates of destruction certifying that process. See id., Ex. I at FIT005988 (Section 6). 

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

Manhan. See id., Ex. D at 147:2-5.

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

Regal again confirmed that the three “avenues” for scrap Fitbit products did not include resale or 

reuse in any way. See id., Ex. E at 91:20-93:25; Ex. S. Regal believed that these three avenues 

were consistent with BCS’s SOW, and claimed he was not aware Defendants were reselling scrap 

Fitbit products. See id., Ex. E at 96:1-16. On July 9, 2015, a few weeks into the initial pilot phase 

of the project, and pursuant to a pending request from Ms. Windsor, BCS even sent Fitbit videos

that purported to demonstrate its “destruction” process for Fitbit products. See id., Exs. BB & CC. 

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

used to report to Fitbit the destruction and recycling of the Fitbit scrap to raw materials. See id., Ex. 

T. That template settlement report was comprised of seven sections, including a “section 3,” which 

BCS, acting through Baker, confirmed would be used if items were to be resold. See id. The 

resale reporting section understandably 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 Baker, it is undisputed, and Defendants admit, that the settlement reports never

included the Section 3 resale reporting. See id., Ex. E at 121:19-122:5; ¶ 8, Ex. G (Deposition of 

Mike Baker) at 141:1-10; see also, Ex. T, supra, compared with ¶¶ 19, 34, Exs. R, GG. BCS’s 

employees had no answer for why the Section 3 resale reporting was missing from the Settlement 

Reports, given that BCS was reselling these products. See id., Ex. E at 123:5-17. 

The settlement reports and the related certificates of recycling and destruction sent by BCS 

to Fitbit also contained a detailed breakdown of the commodities, like rubber, steel, and plastic, that 

were purportedly recycled. See id., Exs. R, GG. However, Defendants admit that within a month 

or two of beginning the contract, BCS actually stopped breaking down any product at all and 

shipped the product straight to Cali. See id., ¶ 7, Ex. F (Deposition of Jeffrey Franklin) at 115:13-

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118:1; ¶ 9, Ex. H (BCS Depo). at 287:18-290:7; accord Alinder MSJ Decl., ¶ 38, Ex. KK (“[T]he 

product is sent to Cali Resources Inc. and Cali Resources SA de CV for processing.”). Although

Defendants were no longer processing any of the scrap products, they continued to report a full 

breakdown of commodities that had been purportedly recycled. See id., Exs. R, GG. To create a 

plausible breakdown of commodities to report to Fitbit going forward, Defendants sampled one 

shipment to derive the percentage of commodity weights and used that going forward to fill out the 

settlement reports sent to Fitbit. Ex. F at 115:13-18. 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 Jeff Franklin admitted flatly “No.” Id. 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” products. Alinder MSJ Decl., ¶ 4, Ex. C (Deposition of Jonathan Manhan), 102:5-103:2; 

accord Declaration of Joel Blank in Support of Opposition to Fitbit’s TRO (“Blank Decl.”), ECF 

No. 19-5 at ¶ 20 (advertising product as having been refurbished to “perform and look like new...”). 

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; ¶ 16, Ex. O; Ex. Q; Ex. G at 115:5-116:8, 185:21-186:8; ¶ 70, Ex. MM; ¶ 

33; Ex. FF; Ex. KK. 

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. BCS first partnered with Cali 

to refurbish and resell Fitbit products that BCS obtained from Target, ERS, and other wholesalers 

and dealers. Id. at 104:10-18, 106:19-107:11. BCS 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 

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completely controlled whether they were recycled or resold. See id., Ex. D at 95:5-96:21, 105:23-

106:8; Exs. KK; ¶ 42, Ex. OO; ¶ 45, Ex. RR. 

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

As the first step of the agreed-upon distribution chain, Defendants procured the Fitbit scrap

from Fitbit’s reverse supply chain, using the pretext of scrap destruction and recycling services set 

forth above. See id., Ex. D at 96:16-21 and 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. D at 109:20-110:7; Exs. U; ¶ 23, Ex. V; Ex. FF (“Q: And so 

their responsibility was to sell these products to an end customer and then after you guys took out 

your hard costs, split the proceeds between Cali and BCS, right? A: Cali was our downstream. 

They did the processing and sale.”); Ex. C at 65:15-66:6. Indeed, Defendants continued to do so 

knowing that Cali was purchasing counterfeit Fitbit cables from China, to “get orders out” in 

support of the common plan. See id., Exs. D at 237:11-238:14; JJ, ¶ 16, Ex. O; and ¶ 46, Ex. SS.

BCS, acting through Manhan and Baker, also kept close tabs on Cali’s resale of the Fitbit 

branded products, from getting refurbished inventory reports 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 packaging. See Alinder MSJ Decl., Exs. OO & G at 169:18-

177:15, Exs. O, SS, & D at 239:3-243:2. BCS, acting through Manhan and Baker, also controlled 

the shipping and logistics process to get the scrap Fitbit products to Cali, from coordinating the 

shipments and logistics to setting up a BCS email alias specifically for Cali – traffic@scrapdr.com –

for Cali to communicate directly with Fitbit without Fitbit’s knowledge. See id., Ex. Q (instructing 

Cali to use the email alias setup by BCS and to represent to Fitbit that they are “BCS primary 

contact for logistics control”) & Ex. C at 186:12-189:23.

These “Fitbit” products, procured as scrap by Defendants, acting through Manhan and 

Baker, and “refurbished” by Cali, were then sold either directly or through downstream secondary 

market distribution channels to unwitting consumers, duped into thinking they were getting a “like 

new” Fitbit product on the cheap. See concurrently-filed Declaration of Cali Resources, Inc. 

Certifying Business Records, ¶ 5; Alinder MSJ Decl.,¶ 48, Ex. UU; Exs. P, U; see also Blank 

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Decl., ECF No. 19-5 at ¶ 20. This practice continued unabated throughout the relationship, 

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

both through L2 on Groupon, Woot.com, and eBay, as well as directly by Cali on Overstock.com. 

See Alinder MSJ Decl., at Ex. UU; ¶ 53, Ex. ZZ; see also Millar TRO Decl., ECF No. 13, ¶ 7 & 

Ex. G. This infringing and unlawful conduct proved extremely lucrative, resulting in over $16

million dollars in profit to the infringing distribution chain, millions of which ended up with 

Defendants, including ELI, which Defendants used to invoice Cali for the profits received from 

reselling the Fitbit products. See Alinder MSJ Decl., ¶ 27, Ex. Z; Ex. D at 36:22-37:6 & 53:1-

54:18; ¶ 51, Ex. XX (Expert Report of Greg Regan). In addition to the spurious marks on the 

counterfeit packaging and cables, all scrap Fitbit product sales made through Defendants’ 

distribution chain necessarily included Fitbit’s registered trademarks, as the Fitbit wordmark and 

the Fitbit diamond trademark are incorporated into the products themselves. See Bonham MSJ 

Decl., ¶ 11. Not surprisingly, Defendants’ unlawful conduct caused many millions of dollars of 

damage and harm to Fitbit. See id., Ex. XX.

G. Defendants’ Concealment of Their Scheme

Throughout 2016, Fitbit continued to send scrap products to Defendants in reliance on 

their continuing representations that they were not reselling anything. See id., ¶ 12, Ex. K; Ex. R; 

¶ 24, Ex. W; ¶ 26, Ex. Y; ¶ 34, Ex. GG; ¶ 41, Ex. NN; ¶ 43, Ex. PP; ¶ 44, Ex. QQ; ¶ 47, Ex. 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 (detailing 11/30/2016 

meeting where BCS represented it “did not resell any Fitbit products it received from Fitbit’s 

authorized logistics partners, . . . but rather that BCS recycled down to the commodity level 

and/or destroyed all such scrap Fitbit products it received.”). Defendants’ internal 

communications reflect their efforts to conceal their breaches, fraud, and infringement. In one 

example, in a March 13, 2016 email related to the export of 9 pallets of Fitbit scrap from Australia 

to Los Angeles, Baker emphasized to Cali and its vendor that they should be “aware” of the fact 

that “Fitbit believes we process material in country.” Alinder MSJ Decl., ¶ 39, Ex. LL. Mr. 

Kelvin, Cali’s CEO, was not pleased and forwarded the warning to Manhan, stating: “Why does 

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he put that in writing?” Id. In another 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.” Id., 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,” because of course in so doing they 

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

Meanwhile, Defendants continued to send Fitbit settlement reports and the related 

certificates of recycling and destruction, containing a detailed breakdown of the commodities, that 

were purportedly recycled, even though these products were being sent whole to Cali. See id., Exs.

R, GG. Then, during the fall of 2016, questions started to arise regarding the resale of Fitbit 

branded products through online marketplaces like eBay and Groupon. See Millar TRO Decl., ECF 

No. 29, ¶ 12. Fitbit sought further information and assurances from Defendants, but was met with 

more misrepresentations. See Alinder MSJ Decl., Ex. W. 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-

216:5; ¶ 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 not be referenced to provide an “extra layer of protection,”Baker 

represented to Fitbit that all materials were properly recycled, and without any reference to Cali or 

to the resale of the Fitbit products: Id., Ex. W. If resale was allowed here, there was no reason to 

conceal Cali’s involvement; however, as Baker agreed, while the “easy answer” to Ms. Windsor’s 

question was that BCS sending the products to Cali for resale, he did not refer to them at all in his 

response to Fitbit. Id., Ex. G at 215:24-216:8 & 220:20-223:25); Ex. W.

H. Defendants’ Scheme Unravels

Defendants’ scheme started to unravel after Fitbit purchased a number of “Fitbit” branded 

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

May and September 2016. See Supp. Millar TRO Decl., ¶¶ 12-23. Fitbit analyzed those products 

and determined that their serial numbers matched the serial numbers of Fitbit products that had 

been designated for scrap destruction. Id. They were also sold in packaging with a close facsimile 

of the stylized Fitbit wordmark and the Fitbit diamond trademark symbol:

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

See Millar TRO Decl., ECF No. 13, ¶ 6, Ex. F, ECF No. 13-6 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. See id. Their product warranty was for 60 days and only covered 

broken units. Id. Fitbit’s warranty allows product return for any reason for 45 days and one year 

for defective products in the United States. See id.; see also https://www. fitbit.com/legal/returnsand-warranty. L2 confirmed that the counterfeit packaging and warranty card were not changed 

until November 2016, a year after these scrap sales began. Blank Decl., ECF No. 19, ¶ 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, Alinder MSJ

Decl., ¶13, Ex. L; ¶ 14, Ex. 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 trademarks. See id.; see also Bonham TRO Decl., ECF 49-1, Ex. E: 

 Magnified on the marks:

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Bonham TRO Decl. (Publicly Filed Version), ECF Nos. 60 & 60-6.

Fitbit also confirmed that one product was defective due to cosmetic defects, one was 

defective due to band damage, and one was defective due to a broken button. Id. These defects are 

material, failing Fitbit’s quality control and disqualifying them even from being refurbished for 

warranty replacement by Fitbit (Fitbit has never resold refurbished products to consumers). Id. 

Further, Fitbit has now analyzed a sample of 100 from the thousands “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. See id. 

In addition, U.S. Customs and Border Protection (“CBP”) informed Fitbit of two seizures of 

Fitbit products that CBP determined to be counterfeit. Millar MSJ Decl. at ¶ 6, Exs. B & C. The 

first seizure, on or around January 10, 2017, included 1,243 “Counterfeit Fitbit Scales.” Id. at Exh. 

B. The seizure notice identified Cali as the Importer of Record. Id. The seized shipment also 

included 13,626 “Counterfeit Fitbit Watches” according to CBP. See 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. at ¶ 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., 

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

previously designed by Fitbit as scrap. See id. Cali was not the only reseller of these scrap Fitbit 

branded products. CBP also made a subsequent February 7, 2017 seizure, identifying former 

Defendant MI Technologies as the Importer of Record, listing 69 “Counterfeit Fitbit Watches” and 

2 “Counterfeit Fitbit Dongles” that CBP determined to be counterfeit. Id. at ¶ 6, Exh. C. 

After these products were seized, BCS, acting through Manhan, furnished Cali with a letter 

regarding the seized Fitbit products, in the hope that CBP would release them. See Cali Decl. at ¶ 

4. In that letter on BCS Letterhead, Manhan admitted that BCS was reselling these Fitbit products 

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jointly with Cali and that Cali was processing and reselling at his and BCS’s direction:

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. 

Alinder MSJ Decl., Ex. KK; accord Cali Decl., ¶5 (referring to their “joint sales” with BCS). 

I. Consumer Confusion Regarding These Scrap Products

It is also undisputed that the listings for these product sales neither disclosed that they had 

been designated for scrap destruction by Fitbit because they did not meet Fitbit’s quality control 

standards, nor that they were accompanied by counterfeit accessories or in counterfeit packaging. 

See Bonham MSJ Decl. at ¶ 3 Ex. A. Cali’s customer L2 believed that the products “performed and 

looked like new.” See Blank Decl., Dkt. No. 19-5, Ex. E2 (claiming that product ships with “all 

relevant accessories”); Blank Decl., Ex. E1; Blank Decl., Dkt. No. 33 at ¶ 28 (L2 was told that the 

accessories were “original” Fitbit accessories). Not surprisingly, there is also significant evidence 

of actual consumer confusion and brand reputational harm to Fitbit from these scrap sales: 

• “You get what you pay for. In three weeks the device stopped syncing with anything. Simply 

avoid any Fitbit products.” – Mikhail K., Oct. 21, 2016

• “Ask yourself why these items are refurbished. I took a chance on this item. I bought one for 

myself and one for my wife. My wife's unit only lasted a week before it malfunctioned, so I 

gave her mine. Don't waste your money on a refurbished item. I would even question 

purchasing this model new.” – John C., Oct. 17, 2016

• “Extremely disappointed! I purchased February 7th, 2016 & Loved it initially. Unfortunately, it 

is now September 2016 and my fitbit [sic] is falling apart. . . It does not fall under the normal 

Fitbit 1 year warranty, which is something that was NOT disclosed when purchased, nor is there 

any kind of warranty through groupon [sic]. . . . I am really upset about this because i [sic] truly 

enjoyed it while it lasted. But unfortunately even at a discount, paying $80 for a device to last 7 

months is just not acceptable.” – Lauren H., Sep. 26, 2016

• “I have only had my fitbit [sic] charge since January and its [sic] been coming apart on the sides 

like 5-6 months in (it rubs my skin raw on top) . . . The battery life was great at first now it only 

lasts a day and I have to continue to charge it. I am not sure if its [sic] because I got a 

refurbished one or if its [sic] just the product all together.” – Jennifer M., Aug. 17, 2016

See Alinder MSJ Decl., ¶ 52, Ex. YY.

Similarly, between November 2015 and the end of 2016, Fitbit received thousands of 

customer support requests related to “Fitbit” products purchased by customers on Groupon.com and 

Woot.com. Bonham MSJ Decl. at ¶ 4. These included requests to replace broken units and to 

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honor Fitbit’s warranty, even though these products were never supposed to be resold at all: 

• “I received a Fitbit Item # FB404BKS for Mother's Day fro [sic] my kids, they purchased it 

through Groupon. The item had a 60 day warranty, it quit on me 2 weeks ago. I contacted the 

Warranty # and they had me send it back to L2 Sullivan Street RMA-BN 4421 Westwood NJ 

07675 and I would receive a replacement. Could you check on this for me?” After receiving 

information regarding Fitbit’s warranty policy and that Groupon was not an authorized reseller, 

the customer further complained “Any suggestions? Groupon won't help either. Are my kids out 

$79.99 because of a faulty Fitbit?” And then, “Very disappointed as I am a big fan of your 

product...I was sure it would last longer then 60 days.”

• “That stinks ... Groupon is not an authorized retailer. I gave $109.99 for the unit. ... was just 

hoping Fitbit would stand behind their product.”

• “It was a groupon. The warranty card says I should contact fitbit. ... At least I think thats fitbit 

... Groupon is an unauthorised reseller?

• “I am not sure if this is a support issue, but I do not see any other email. I bought a refurbished 

Fitbit Charge HD on Groupon, in Feb 2016 .... I just felt compelled to let your company know 

how it is being represented by Groupon and LC? [sic]

My fitbit Charge HD would not hold a charge for more then 2 hours at most, I decided in the 

short time I had it I LOVED it (my sisters and daughter all have Fitbit). I decided to send it back 

to the warrenty company whos information was in the package the Fitbit came in. I called them ,

they gave me their address and instructed me to send it back and they would replace it, 

WONDERFUL! That was March 21 2016, I still have not received the replacement, and they 

will not answer my calls or emails. 

I am not sure what you can do about it, but as two companies (Groupon and L2?) representing 

Fitbit, I felt you should not how your company is being represented. 

The company address is 

L2 

12 Sullivan St 

Westwood NJ 07675-3109....”

Id., Exh. B. These support cases establish how Fitbit was put in an impossible situation of either 

further harming the customer experience by refusing the support/warranty request, or making an 

exception to mitigate the harm to the customer and Fitbit’s brand, like Fitbit did in at least two of 

the instances above. Id. In addition to the actual confusion from consumers established above, the 

results of a consumer confusion survey performed by Fitbit’s expert, confirm that the resale of scrap 

“Fitbit” branded products here was substantially likely to cause consumer confusion. See Alinder 

MSJ Decl., ¶ 50, Ex. WW (Expert Report of Hal Poret) at pp. 45 & 66. Likewise, a materiality 

survey performed by Mr. Poret confirmed that the undisclosed fact that these products had not met 

Fitbit’s quality control and/or had been designated for scrap destruction by Fitbit would have been 

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“highly material” to consumer purchasing decisions. See id. at pp. 47 & 72.

IV. ARGUMENT

A. Standard on Summary Judgment

The Court should grant summary judgment where “there is no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The 

moving party bears the initial burden of demonstrating the absence of a triable issue of material 

fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets the initial 

burden, the burden then shifts to the non-moving party to show that there is a genuinely disputed 

fact. Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 324. A dispute of fact is genuine only if there is 

sufficient evidence for a reasonable fact finder to decide for the nonmovant. See Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Thus, the non-moving party must come forward 

with admissible evidence to satisfy the burden. Fed. R. Civ. P. 56(c). See also McIndoe v. 

Huntington Ingalls Inc., 817 F.3d 1170, 1173 (9th Cir. 2016) (“If the evidence is merely colorable, 

or is not significantly probative, summary judgment may be granted.”)

B. The Court Should Grant Fitbit Summary Judgment On Its Breach of 

Contract Claim Against BCS

For summary judgment for breach of contract, Fitbit needs to establish: (1) the existence of 

the contract;3 (2) the plaintiff’s performance or excuse for nonperformance; (3) the defendant’s 

breach; and (4) damages to the plaintiff as a result of the breach. Congdon v. Uber Techs., Inc., 291 

F. Supp. 3d 1012, 1020 (N.D. Cal. 2018). Interpretation of a contract is a matter of law, as is the 

determination of whether a contract is ambiguous. Id. at 1021 (citing Beck Park Apartments v. U.S. 

Dep’t. of Housing & Urban Dev., 695 F.2d 366, 369 (9th Cir. 1982)). The “clear and explicit 

meaning” of contractual provisions “interpreted in their ordinary and popular sense controls judicial 

interpretation.” Ibid. (citing Santisas v. Goodin, 17 Cal. 4th 599, 608 (1998)). Contract language is 

 

3 Although the existence of a contract cannot be reasonably disputed here, contracts may be 

written or oral, and oral contracts are as valid as written contracts. See Cal. Civil Code section 

1622; Judicial Council of California Jury Instructions (“CACI”) No. 304. Contracts may also be 

created by the conduct of the parties. See Cal. Civil Code sections 1619 and 1621; CACI No. 305. 

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ambiguous only if it is “capable of two or more constructions, both of which are reasonable.” See 

ibid. (citing TRB Invs., Inc. v. Fireman’s Fund Ins. Co., 40 Cal.4th 19 (2006)). Any ambiguity as to 

terms are construed against the drafter of the contract. Id. at 1022. 

Here, it is undisputed that Fitbit and BCS entered into a services agreement for BCS to 

provide scrap destruction and recycling services in support of Fitbit’s reverse supply chain. Alinder 

MSJ Decl., Ex. I; Ex. C at 89:12-16; Ex. D at 173:23-174:5. The plain terms of that agreement 

required BCS to breakdown products to commodities for recycling and scrap destruction, and 

nowhere allowed Defendants to resell those scrap products as “like new” purportedly genuine Fitbit 

branded products. See id. That agreement also unambiguously required Defendants to obtain 

written approval prior to any use of Fitbit’s brand or intellectual property, which includes 

trademarks. See id. It is also undisputed that Fitbit performed under the agreement. See id.; 

Bonham MSJ Decl. ¶ 2

Finally, as set forth in detail in Section III.C.-I. above, the undisputed facts establish that

BCS breached the agreement with Fitbit by (1) reselling (and not recycling/destroying) hundreds of 

thousands of the scrap Fitbit products bearing Fitbit’s registered trademarks in violation of their 

contractual agreement, and (2) using “Fitbit’s brand or intellectual property” without Fitbit’s 

approval in connection with those sales. See id., Ex. D at 161:7-10, 162:3-163:7; Ex. I. Although 

Defendants contend that the term “repurpose” in the “Certification” section of the SOW allowed for 

resale, any such interpretation is unreasonable as a matter of law and inconsistent with industry 

practice. See id., Exh. I & ¶ 49, Ex. VV (Expert Report of Michael Easterbrook). Further, if 

Defendants were actually authorized to resell scrap “Fitbit” branded products under the SOW 

(which they were not), they further breached their agreement with Fitbit by failing to remit 70% of 

their more than $4,000,000 in profit. See id., Exs. I & Z. Each of these breaches independently 

justifies the grant of summary judgment in favor of Fitbit on its breach of contract claim. 

C. Summary Judgment Is Warranted On Trademark and Unfair Competition

1. Federal Trademark Counterfeiting and Infringement

To prevail on its trademark infringement claims, Fitbit “must prove: (1) that it has a 

protectible ownership interest in the mark; and (2) that the defendant’s use of the mark is likely to 

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cause consumer confusion.” Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 

1137, 1144 (9th Cir. 2011) (quotation omitted). In cases such as this one, “where the evidence is 

clear and tilts heavily in favor of a likelihood of confusion,” courts do grant summary judgment. 

See Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1075 (9th Cir. 2006). 

a. Fitbit Has a Protectable Ownership Interest in its Trademarks

Fitbit has registered the Fitbit Marks with the US Patent and Trademark Office and has used 

at least one of the Fitbit Marks for nearly ten years. See Millar Decl., ¶ 3 and Ex. A. Thus, Fitbit 

has a protectable ownership in the Fitbit Marks and its registration of the marks constitutes prima 

facie evidence of Fitbit’s ownership and exclusive right to use the Fitbit Marks in commerce. See

Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1047 (9th Cir. 1999).

b. Consumer Confusion Should Be Presumed Here

As established above, Defendants orchestrated a conspiracy to resell non-genuine scrap 

products as “like new” refurbished “Fitbit” products, some in counterfeit packaging and with 

counterfeit cables, and consumer reviews and customer support cases related to Defendants’ sales 

show not just likely, but actual consumer confusion. Indeed, in such circumstances, confusion 

should be presumed. Even so, the expert evidence is similarly overwhelming that the resale of 

these scrap products in this manner was substantially likely to cause consumer confusion and that 

the fact that these products had been designated for scrap destruction and/or recycling by Fitbit 

would have been highly material to a consumer’s decision to purchase the product. 

“Likelihood of confusion exists when consumers viewing the mark would probably assume 

that the goods it represents are associated with the source of a different product identified by a 

similar mark.” KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 608 (9th 

Cir. 2005). Where the products are counterfeit, likelihood of confusion is presumed. See Ubiquiti 

Networks, Inc. v. Kozumi USA Corp., No. 12-2582 CW, 2012 WL 2343670, at *14 (N.D. Cal. Jun.

20, 2012) (“counterfeit marks are inherently confusing”); Louis Vuitton Malletier, S.A. v. Akanoc 

Solutions, Inc., 658 F.3d 936, 945 (9th Cir. 2011). The existence of a material difference between 

the products sold also creates a presumption of consumer confusion. See Moroccanoil, Inc. v. 

Perfumes World Com, Inc., 234 F. Supp. 3d 1026, 1030 (C.D. Cal. 2017); Hokto Kinoko Company 

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v. Concord Farms, Inc., 810 F. Supp. 2d 1013, 1029-31 (C.D. Cal. 2011). Here, the undisputed 

facts show that Defendants resold non-genuine scrap “Fitbit” products bearing Fitbit trademarks to 

be later resold as refurbished Fitbit products in counterfeit packaging and often with counterfeit 

cables. See Section III.C.-I. above. Thus, the Court should presume likelihood of confusion here.

First, although the scrap “Fitbit” branded products here were originally manufactured by 

Fitbit, Defendants admit that they never obtained written approval to use Fitbit’s brand and 

intellectual property in connection with their unauthorized resale of the scrap “Fitbit” products. See

Section III.C.-H. above. Courts have consistently held that where a good which was originally 

manufactured by the rights holder is distributed without the rights holder’s authorization, that good 

is not “genuine” within the definition of the Lanham Act. See El Greco Leather Prods. Co, Inc.. v. 

Shoe World, Inc., 806 F.2d 392, 395 (2d Cir. 1986) (shoes initially ordered by the company which 

were subsequently sold without the company’s approval after the order was cancelled were not 

“genuine” under the Lanham Act because the company “never gave its consent to the use of the 

mark on those shoes”); see also Westinghouse Elec. Corp. v. Gen. Circuit Breaker & Elec. Supply 

Inc., 106 F.3d 894, 900 (9th Cir. 1997). The reason for this is to protect a brand owner’s “‘right to 

control the quality of the goods manufactured and sold.’” United States v. Farmer, 370 F.3d 435, 

441 (4th Cir. 2004) (quoting Shell Oil Co. v. Commercial Petroleum, Inc., 928 F.2d 104, 107 (4th 

Cir. 1991)) (affirming counterfeit conviction for sales of shirts, rejected as defective by brand, that 

would “deceive consumers, to trick them into purchasing as Nike or Hilfiger clothing the very shirts 

those companies had already rejected as of lesser quality” because “the whole point is that deciding 

whether shirts pass muster is reserved to Nike and Hilfiger, not to [the defendant]. . . .”).

Here, Fitbit confirmed through numerous purchases, which bore the Fitbit Marks, that the 

products Defendants had injected into their infringing distribution chain had been designated to be 

scrapped as part of Fitbit’s standard quality-control processes. Bonham MSJ Decl., at ¶ 3. By 

selling such products without Fitbit’s approval to use its brand and intellectual property, Defendants 

subverted Fitbit’s right to control the quality of the goods manufactured and sold. These scrap 

products were also determined to be materially different from genuine goods, even after 

Defendants’ sent them for refurbishment, including physical defects, functional defects, 

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altered/removed labelling, and inferior warranty. See Section III.H. above. Such goods are not 

genuine under the Lanham Act, and are thus infringing as a matter of law. 

Second, it is undisputed that the scrap “Fitbit” products were resold in counterfeit packaging

and often with counterfeit cables. See Supp. Millar TRO Decl. ¶¶ 15-20. Indeed, even if the Fitbit 

products enclosed within that packaging had been “genuine,” where a party repackages genuine 

goods in packaging bearing a trademark without the trademark owner’s authorization, the trademark 

on the packaging renders the whole counterfeit. See United States v. Milstein, 401 F.3d 53, 62-63 

(2d Cir. 2005). In Milstein, the defendant purchased genuine drugs from foreign markets, “stripped 

them of their original factory packaging, [then] repackaged them with forged labels and packaging 

materials closely resembling those of drugs produced in accordance with FDA requirements for the 

U.S. market . . .” Id. at 59. Here, as shown above, in addition to the counterfeit cables, the 

products were repackaged in plastic bags bearing the Fitbit Marks without Fitbit’s authorization;

thus they were counterfeit. Likewise, the material alterations to Aria scales, stripping them of serial 

numbers and compliance labels, also renders those products non-genuine and counterfeit. See, e.g.,

Intel Corp. v. Terabyte Int’l, Inc., 6 F.3d 614, 620 (9th Cir. 1993).

Accordingly, the Court should presume confusion for each of these independent reasons, 

and grant summary judgment for Fitbit on each of its Lanham Act claims.

c. Fitbit Has Also Established High Likelihood of Confusion

Even if a presumption of actual confusion did not arise, Defendants’ product sales were 

highly likely to cause consumer confusion under established Ninth Circuit law. As a preliminary 

matter, the expert report of Hal Poret has determined, based on analysis of his survey results related 

consumer confusion caused by L2’s Groupon listings, that the “use of the Fitbit marks in the 

advertising results in a substantial likelihood of consumer confusion – i.e., that a substantial rate of 

consumers mistakenly believe that the product is refurbished by Fitbit and that the product is

approved for sale or endorsed by Fitbit.” See Alinder MSJ Decl., ¶50 Ex. WW (Poret Report). 

That evidence alone satisfies Fitbit’s burden, though analysis of the Sleekcraft factors also heavily 

favors Fitbit. See, e.g., Eclipse Assoc., Ltd. v. Data Gen. Corp., 894 F.2d 1114, 1117 n.3 (9th Cir. 

1990) (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979)).

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(1) Strength of the Fitbit Marks

A stronger mark is afforded greater protections under trademark laws. See Brookfield 

Commc’ns, Inc., 174 F.3d at 1058. “The strength of a mark is determined by its placement on a 

continuum of marks from generic, afforded no protection; through descriptive or suggestive, given 

moderate protection; to arbitrary or fanciful awarded maximum protection.” E. & J. Gallo Winery 

v. Gallo Cattle Co., 967 F.2d 1280, 1291 (9th Cir. 1992) (quotations omitted). Determining a 

mark’s strength requires evaluating its “conceptual strength and commercial strength.” GoTo.com, 

Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000). 

It is undisputed that the Fitbit Marks require no imagination to form an association between 

the mark and the product. See Section III.A-B. above. Moreover, the Fitbit Marks are unique and 

have no commonly known connection with the products. See id. It is the strength of the Fitbit 

Marks, and the positive association consumers have with the products bearing that mark, which 

justify a greater degree of trademark protection. See id. As such, the first factor weighs heavily in 

favor of finding likelihood of confusion. 

(2) Proximity of the Goods

It is undisputed that Fitbit sells many of its products through online marketplaces, either 

fitbit.com or the online sites of its authorized distributors, e.g. bestbuy.com. See Alinder MSJ 

Decl., ¶ 3, Ex. B (Deposition of David Quong) at 18:25-19:25. Accordingly, there was a very close 

proximity with the products sold by Defendants through other online retailers, like Groupon, Woot,

and Overstock, and such sales competed directly for sales with genuine Fitbit products. Id, Ex.

XX. “When the goods produced by the alleged infringer compete for sales with those of the 

trademark owner, infringement usually will be found if the marks are sufficiently similar that 

confusion can be expected.” Sleekcraft, 599 F.2d at 348. Here, Defendants sold “Fitbit” products 

originally manufactured by Fitbit (that were supposed to be scrapped and/or recycled) to be sold 

downstream as refurbished “Fitbit” products to consumers. See Section III.C.-H. above. Thus, 

there is no doubt that Defendants’ non-genuine “Fitbit” products and genuine Fitbit products are 

related and “[r]elated goods are generally more likely than unrelated goods to confuse the public as 

to the producers of the goods.” Brookfield, 174 F.3d at 1055. This factor also heavily favors Fitbit.

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(3) Similarity Between the Marks

Defendants’ non-genuine “Fitbit” products not only have the Fitbit Marks on the products 

themselves, but were sold to consumers in packaging bearing colorable imitations of the Fitbit 

Marks affixed without Fitbit’s consent. See Section III.C.-I. above. Thus, this factor also strongly 

supports a finding of likelihood of consumer confusion. See Entrepreneur Media, Inc. v. Smith, 279 

F.3d 1135, 1144 (9th Cir. 2002) (while the court may consider the differences between the 

respective trademarks, the similarities should be weighed more heavily than the differences). 

(4) Evidence of Actual Confusion

Customer feedback regarding Defendants’ sales of “Fitbit” branded products has already 

established that consumers were actually confused as to the source, nature, and quality of the goods. 

“Evidence that use of the two marks has already led to confusion is persuasive proof that future 

confusion is likely.” Sleekcraft, 599 F.2d at 352. Indeed, certain consumers believed the 

refurbished Fitbit products sold by Defendants were actually new Fitbit products. See Alinder MSJ 

Decl., Ex. YY (“bands were brand new”; “absolutely love my new Fitbit”; “I love my new Fitbit”). 

Similarly, Fitbit’s internal records report thousands of customers contacting Fitbit directly regarding 

their customer support and warranty claims for refurbished Fitbit products they purchased on 

Groupon and Woot.com during the relevant time period. See Bonham MSJ Decl., ¶ 4, Ex. B. 

These reviews and customer support cases confirm that consumers were actually confused 

about the source of the goods, and believed that the source was Fitbit. See id. In short, Fitbit has 

been harmed because consumers buying these products, commenting on them, or even reviewing 

them believe that these products were authorized or affiliated with Fitbit, or that they reflect the 

quality of new genuine Fitbit products: “Don’t waste your money on a refurbished item. I would 

even question purchasing this model new.” Alinder MSJ Decl., Ex. YY. 

The consumers’ frustration with the poor quality of the goods sold to them plainly harms 

Fitbit’s brand and goodwill, as consumers mistakenly believed these inferior goods are a reflection 

of genuine Fitbit goods. Indeed, the harm is not just to Fitbit and those consumers who purchased 

these goods, but to all consumers now exposed to these misleading reviews about products that 

were never intended to be resold to customers at all. This evidence of actual confusion, and 

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irreparable harm to Fitbit, its brand, and its goodwill tips this factor sharply in favor of Fitbit. 

(5) Marketing Channels Used

Both genuine Fitbit products and the non-genuine “Fitbit” branded products sold to 

consumers by Defendants were sold online. See Section III.D.-I. above; Alinder MSJ Decl., Ex. B

at 18:18-21:16 & Ex. XX. The Internet “as a marketing channel is particularly susceptible to a 

likelihood of confusion since, as it did in this case, it allows for competing marks to be encountered 

at the same time, on the same screen.” GoTo.com, 202 F.3d at 1207; see also Brookfield, 174 F.3d 

at 1057 (“[C]ourts have consistently recognized [the Internet] as exacerbating the likelihood of 

confusion.”). As such, this factor also heavily favors Fitbit.

(6) Type of Goods and Purchasers’ Likely Degree of Care

As shown by the customer complaints, consumers online looking for good deals often do 

not take a high degree of care with respect to such purchases. “In analyzing the degree of care that 

a consumer might exercise in purchasing the parties’ goods, the question is whether a ‘reasonably 

prudent consumer’ would take the time to distinguish between the two product lines.” Surfvivor 

Media, Inc. v. Survivor Prods., 406 F.3d 625, 634 (9th Cir. 2005). The expectations as to the 

behaviors of the “reasonably prudent” consumer depend on the circumstances. Brookfield, 174 

F.3d at 1060. “[W]hen dealing with inexpensive products, customers are likely to exercise less 

care, thus making confusion more likely.” Id. Given the price of these products, the similarities 

between the two, and that consumers shopping online are unable to see how well a product works, 

consumers are not likely to take high care in differentiating between a genuine Fitbit and the nongenuine ones Defendants sold. This factor therefore also strongly weighs in favor of Fitbit.

(7) Defendants’ Intent in Selecting the Mark

That Defendants knowingly used the Fitbit Marks for scrap products that were not 

authorized to be sold to consumers as Fitbit products and that Defendants intended to profit from 

infringing on the Fitbit Marks cannot reasonably be disputed. Indeed, Defendants have admitted 

that they were required to obtain permission to use Fitbit’s brand and intellectual property, and it is 

undisputed that Fitbit never provided that authorization. Alinder MSJ Decl., Ex. D at 161:7-10. 

Moreover, by reselling products with counterfeit cables and packaging, Defendants adopted the 

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Fitbit Marks deliberately to benefit from the “good will, good name, and good trade which [Fitbit] 

has built up,” and to reinforce with the consumer that these products were affiliated with, sponsored 

by, or otherwise approved by Fitbit. Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 

149, 158 (9th Cir. 1963). Thus, this factor also tips heavily in Fitbit’s favor, as Defendants’ 

conduct indicates that it “expect[ed] confusion and resultant profit.” Id.

(8) Likelihood of Expansion of the Product Lines

“A strong possibility that either party may expand his business to compete with the other 

will weigh in favor of finding that the present use is infringing.” Sleekcraft, 599 F.2d at 354 

(quotation omitted); see also Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1394 (9th Cir. 

1993). Defendants thus far have done precisely that in this case, competing directly with Fitbit’s 

online sales products. See Section III.D.-I above; see also Alinder MSJ Decl., Ex. XX. Indeed, 

Fitbit is also considering selling authorized refurbished products in the near future. Millar Decl. at 

¶ 5. As such, this factor also strongly favors Fitbit. 

In short, based on either the presumption of confusion, the likelihood of confusion, or the 

Sleekcraft factors, Fitbit has met its burden to receive summary judgment on these claims. 

2. Federal Unfair Competition and California Unfair Competition

Finally, the undisputed material facts show that Defendants have violated unfair competition 

laws. These claims largely overlap with the analysis above regarding the Lanham Act’s consumer 

confusion test. Cleary v. News Corp., 30 F.3d 1255, 1262–63 (9th Cir. 1994) (finding that 17200 

claims are substantially congruent with Lanham Act); see also Zeltiq Aesthetics, Inc. v. BTL Indus., 

Inc., 32 F. Supp. 3d 1088, 1099 (N.D. Cal. 2014). Therefore, for the reasons outlined above, the 

Court should also grant summary judgment on Fitbit’s federal and state unfair competition claims. 

3. All Defendants Are Jointly and Severally Liable

Where 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 Inc. v. 

Blue Source Group, Inc., 125 F. Supp. 3d 945, 973 (N.D. Cal. 2015) (citation omitted). Not only 

has Fitbit shown Defendants to be members of the distribution chain of the infringing “Fitbit”

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

[CORRECTED] NOTICE OF MOT. AND MOTION FOR PARTIAL SUMMARY JUDGMENT; MPA IN SUPPORT

LAW OFFICES

SIDEMAN

& BANCROFT LLP

ONE EMBARCADERO CENTER, 22ND FLOOR

SAN FRANCISCO, CALIFORNIA 94111-3711

products, but the undisputed facts also show 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 based on “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.”). 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 Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996) (vicarious 

liability based on control and direct financial benefit). 

Further, in Lanham Act cases like this one, personal liability extends to corporate 

employees, like Baker and Manhan, for infringement “which he authorizes or directs or in which he 

participates, notwithstanding that he acted as an agent of the corporation and not on his own 

behalf.” Comm. for Idaho’s High Desert, Inc. v. Yost, 92 F.3d 814, 823 (9th Cir. 1996); Bambu 

Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899, 914 (E.D.N.Y. 1988) (sales manager found 

liable for trademark infringement); see Sections III.C.-I. Accordingly, neither Manhan nor Baker 

may “shield himself behind a corporation when he is an actual participant in the” infringing 

conduct, as here. Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir. 1978). 

V. CONCLUSION

For the foregoing reasons, Fitbit respectfully requests that the Court grant summary 

judgment in its favor as to liability on the First, Third, Fourth, and Eighth Claims for Relief. 

DATED: May 30, 2018 SIDEMAN & BANCROFT LLP

By: /s/ Zachary J. Alinder

Zachary J. Alinder

Attorneys for Plaintiff FITBIT, INC.

Case 3:17-cv-00079-EMC Document 246 Filed 05/30/18 Page 31 of 31