Court Opinion

ID: 3203451
Source: CourtListenerOpinion
Date Created: 2016-05-13 20:01:15.328002+00
Date Added: 2024-06-11T14:28:28.734656
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                             MAY 13 2016
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

MERCADO LATINO, INC., DBA                         No. 13-57009
Continental Candle Company,
                                                  D.C. No. 2:13-cv-01027-DDP-
              Plaintiff - Appellant,              RNB

 v.
                                                  MEMORANDUM*
INDIO PRODUCTS, INC., a California
corporation,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                    Dean D. Pregerson, District Judge, Presiding

                       Argued and Submitted March 11, 2016
                               Pasadena, California

Before: CLIFTON, CALLAHAN, and IKUTA, Circuit Judges.

      Plaintiff-Appellant Mercado Latino, Inc. (Mercado) appeals the district

court’s order dismissing its complaint for failure to state a claim for relief. We

have jurisdiction under 28 U.S.C. § 1291. We reverse and remand.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      1.     The district court erred in dismissing Mercado’s claim for trade dress

infringement, as it was not “preempted” by the Copyright Act. Plaintiffs may

bring claims for copyright and trade dress infringement based on the same

wrongful conduct. See Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205,

208 (2000); see also Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007,

1011 (9th Cir. 1994) (recognizing the validity of a trademark infringement claim

under the Lanham Act when the plaintiff also brought a copyright infringement

claim based on the same wrongful conduct).

      Defendant-Appellee Indio Products, Inc. (Indio) argued before the district

court that Mercado’s trade dress claims were “copyright claims disguised as

trademark claims[,] and thus precluded” by the Copyright Act. It cited the

Supreme Court’s refusal to extend “trademark and related protections into areas

traditionally occupied by patent or copyright,” Dastar Corp. v. Twentieth Century

Fox Film Corp., 539 U.S. 23, 34 (2003), and the Ninth Circuit’s decision not to

“expand the scope of the Lanham Act to cover cases in which the Federal

Copyright Act provides an adequate remedy.” Shaw v. Lindheim, 919 F.2d 1353,

1364-1365 (9th Cir. 1990).

      The district court’s reliance on Dastar and Shaw was misplaced. Both of

those cases addressed the narrow instance in which a plaintiff alleges the defendant

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has violated the Lanham Act by falsely designating the origin of “a communicative

product,” i.e., a product “that is valued not primarily for its physical qualities, such

as a hammer, but for the intellectual content that it conveys, such as a book or . . . a

video.” Dastar, 539 U.S. at 33. Dastar declined to extend the protections of the

Lanham Act to cover the plaintiff’s claim that the defendant falsely designated the

origin of a video series, a communicative product, because such allegations

“cause[] the Lanham Act to conflict with the law of copyright.” Id.; see also

Shaw, 919 F.2d at 1364 (affirming the district court’s dismissal of plaintiff’s

Lanham Act claim alleging that defendants copied a television show script and

committed “reverse passing off” by selling it under their own label). Importantly,

neither Dastar nor Shaw addressed traditional trademark and trade dress claims

that allege a defendant’s production of tangible goods are so similar to the

plaintiffs as to confuse consumers.1

      Here, Mercado is not alleging that Indio has falsely designated the origin of

“a communicative product.” Thus, Mercado’s trade dress allegations do not raise

any concern that its claims will “cause[] the Lanham Act to conflict with the law of

copyright.” Rather, Mercado alleges a traditional trade dress claim that Indio’s

candles bear a design so similar to Mercado’s protected trade dress that consumers

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          Neither party brought this distinction to the district court’s attention.

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are confused into believing that Indio’s candles are Mercado’s. Thus, as in Wal-

Mart, Mercado may bring its claim for trade dress infringement under Section 43

of the Lanham Act regardless of whether its claim for copyright infringement is

based on the same facts. “Congress created two separate statutory schemes to

govern copyrights and trademarks; in order to effectuate the purposes of both

statutes, damages may be awarded under both.” Nintendo, 40 F.3d at 1011; see

also Wal-Mart, 529 U.S. at 216 (holding “in an action for infringement of

unregistered trade dress under § 43(a) of the Lanham Act, a product’s design is

distinctive, and therefore protectible, only upon a showing of secondary meaning”;

leaving undisturbed jury verdict of copyright infringement); id. at 214 (“[A]

producer can ordinarily obtain protection for a design that is inherently source

identifying (if any such exists), but that does not yet have secondary meaning, by

securing . . . a copyright for the design—as, indeed, respondent did for certain

elements of the designs in this case.”).

      In reversing the dismissal of Mercado’s trade dress claim, we reject Indio’s

argument that our review is limited to the First Amended Complaint. When we

review a final order dismissing an action, we “consider in a single appeal all

interlocutory rulings” regardless of “whether the claims on appeal are presented in

one document or are sections in several complaints.” Lacey v. Maricopa County,

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693 F.3d 896, 928 (9th Cir. 2012) (en banc). We also conclude that the district

court abused its discretion by striking Mercado’s additional trade dress allegations

from the Second Amended Complaint, because the district court failed to identify

the scope of leave to amend.

      2.     We also reverse the district court’s dismissal of Mercado’s claim for

trademark infringement. Mercado’s allegations regarding Indio’s purported sale of

Mercado candles in Indio boxes constituted facts sufficient to plead a reverse

passing off claim notwithstanding the First Sale Doctrine. Enesco Corp. v.

Price/Costco Inc., 146 F.3d 1083, 1085–1087 (9th Cir. 1998). Because we decide

that Mercado successfully pled a trademark infringement claim under the

repackaging notice exception to the First Sale Doctrine, we do not reach the

question whether Mercado also pleaded a claim under the quality control

exception. Id. at 1087.

      3.     Because we reverse the district court’s dismissal of Mercado’s trade

dress and trademark infringement claims, we also reverse the dismissal of

Mercado’s derivative claims for unfair competition and intentional interference

with prospective economic advantage.

      Each side is to bear its own costs.

      REVERSED AND REMANDED.

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