Court Opinion

ID: 4766428
Source: CourtListenerOpinion
Date Created: 2021-08-17 20:03:47.37275+00
Date Added: 2024-06-11T08:09:17.628353
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       AUG 17 2021
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

EKO BRANDS, LLC,                                No.    20-35369

                Plaintiff-Appellee,             D.C. No. 2:17-cv-00894-TSZ

 v.
                                                MEMORANDUM*
ADRIAN RIVERA MAYNEZ
ENTERPRISES, INC.; ADRIAN RIVERA,

                Defendants-Appellants.

EKO BRANDS, LLC,                                No.    20-35556

                Plaintiff-Appellant,            D.C. No. 2:17-cv-00894-TSZ

 v.

ADRIAN RIVERA MAYNEZ
ENTERPRISES, INC.; ADRIAN RIVERA,

                Defendants-Appellees.

                   Appeal from the United States District Court
                     for the Western District of Washington
                    Thomas S. Zilly, District Judge, Presiding

                      Argued and Submitted August 4, 2021
                              Anchorage, Alaska

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: WARDLAW, MILLER, and BADE, Circuit Judges.

        Adrian Rivera Maynez Enterprises, Inc., and Adrian Rivera (collectively,

ARM) appeal the district court’s judgment in favor of Eko Brands, LLC (Eko) and

award of disgorgement of ARM’s profits in this Lanham Act case. On cross-

appeal, Eko appeals the district court’s limits on the disgorgement award and

denial of Eko’s motion for attorney’s fees. We have jurisdiction under 28 U.S.C.

§ 1291, and we affirm.1

        1.     The district court did not err in denying ARM’s motion to dismiss

based on claim splitting or claim preclusion because the two cases do not arise

from the “same transactional nucleus of facts.” United States v. Liquidators of

Eur. Fed. Credit Bank, 630 F.3d 1139, 1151 (9th Cir. 2011). The series of events

that gave rise to the unfair competition case—ARM’s development of the ECO-

FILL mark and distribution of brewing cartridges under that mark—took place

years before ARM and Eko were issued the patents that formed the basis of the

patent infringement case. See Superior Indus., LLC v. Thor Global Enters. Ltd.,

700 F.3d 1287, 1294–95 (Fed. Cir. 2012); see also Media Rights Techs. Inc. v.

Microsoft Corp., 922 F.3d 1014, 1029–30 (9th Cir. 2019). Furthermore, the “rights

or interests established” in the patent suit were not at risk of being “destroyed or

impaired by” the unfair competition case, and the two cases did not involve

1
    ARM’s motion to take judicial notice (ECF #17) is granted.

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substantially the same evidence or infringement of the same rights. Media Rights,

922 F.3d at 1026.

      2.     Nor did the district court err in finding that the EKOBREW trademark

was protected. Contrary to ARM’s argument, the district court properly applied

the imagination test when it concluded that the mark is suggestive because “a

‘mental leap’ is required to understand that the device referenced by the

EKOBREW [m]arks is a reusable filter or cartridge for a single-serving beverage

brewing machine.” Although a mark need not describe the “essential nature” of

the product, just “some aspect” of it, to be descriptive, Zobmondo Ent., LLC v.

Falls Media, LLC, 602 F.3d 1108, 1116 (9th Cir. 2010), “a small exercise of

imagination” is all that is required to move a mark from descriptive to suggestive,

Rearden LLC v. Rearden Com., Inc., 683 F.3d 1190, 1211 (9th Cir. 2012). The

district court adhered to this legal standard, and its conclusion that EKOBREW’s

mark is suggestive was not clearly erroneous. See Lahoti v. Vericheck, Inc., 586

F.3d 1190, 1198 (9th Cir. 2009). The “line between descriptive and suggestive

marks is elusive,” Ironhawk Techs., Inc. v. Dropbox, Inc., 2 F.4th 1150, 1163 (9th

Cir. 2021), and the question here is close, but we are not left with a “definite and

firm conviction that a mistake has been committed,” Easley v. Cromartie, 532 U.S.

234, 243 (2001).

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      Even if we were to conclude that the EKOBREW mark is descriptive, rather

than suggestive, it would still enjoy protection. The district court did not err in

finding that the EKOBREW mark attained secondary meaning prior to the alleged

infringement. See Converse, Inc. v. Int’l Trade Comm’n Skechers U.S.A., Inc., 909

F.3d 1110, 1116 (Fed. Cir. 2018). The district court correctly asked whether the

public had come to “associate the mark with” Eko. See Kendall-Jackson Winery,

Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 1047 (9th Cir. 1998). Consumer

survey evidence is not required, and here the district court properly considered

other evidence indicative of secondary meaning, such as Eko’s advertising

practices, financial success, industry recognition, and the exclusivity of its use of

the mark for refillable coffee cartridges. See Filipino Yellow Pages, Inc. v. Asian

Journal Publ’ns, Inc., 198 F.3d 1143, 1151 (9th Cir. 1999); Clamp Mfg. Co., Inc.

v. Enco Mfg. Co., Inc., 870 F.2d 512, 517 (9th Cir. 1989). Based on this evidence,

the district court’s finding that the mark had gained secondary meaning was not

clearly erroneous.

      3.     The district court correctly concluded that ARM’s laches defense was

barred by its willful infringement. The district court was not required to credit the

testimony of ARM’s vice-president and president as to the genesis of the design

choice for ECO-FILL, and in light of the evidence that ARM carefully watched its

competitors, selected a logo and colors that resembled EKOBREW’s logo, and

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rushed to file its trademark application for ECO-FILL, the factual finding that

ARM willfully infringed on Eko’s trademark was not clearly erroneous. See, e.g.,

Lee v. W. Coast Life Ins. Co., 688 F.3d 1004, 1009 (9th Cir. 2012). Having found

that ARM willfully infringed, the district court did not abuse its discretion in

holding that ARM’s laches defense was barred. See Danjaq LLC v. Sony Corp.,

263 F.3d 942, 956 (9th Cir. 2001); Jarrow Formulas, Inc. v. Nutrition Now, Inc.,

304 F.3d 829, 841–42 (9th Cir. 2002).

      4.     The district court did not abuse its discretion by ordering

disgorgement of ARM’s profits. The Lanham Act affords district courts equitable

discretion to award monetary relief in trademark infringement cases. Skydive Ariz.,

Inc. v. Quattrocchi, 673 F.3d 1105, 1110 (9th Cir. 2012). The Supreme Court’s

recent decision in Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492, 1495–97

(2020), precludes district courts from requiring a finding of willfulness before

awarding disgorgement of profits but is silent as to whether such a finding is

sufficient to allow disgorgement. See generally id. Because nothing in our case

law prevents a district court from ordering disgorgement of profits based on a

finding of willfulness, the district court did not abuse its “broad” equitable powers

by ordering disgorgement of profits based primarily on ARM’s willfulness. See

Consumer Fin. Prot. Bureau v. Gordon, 819 F.3d 1179, 1195 (9th Cir. 2016).

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      5.     The district court did not abuse its discretion in calculating the profits

it awarded to Eko. First, it did not abuse its discretion in excluding from

disgorgement the profits on the products that were also at issue in the prior patent

suit. The district court permissibly structured its award to avoid double recovery,

taking into account Eko’s assertion at the patent trial that “various product features,

including the labeling, were not divisible.” See Teutscher v. Woodson, 835 F.3d

936, 954 (9th Cir. 2016).

      Second, the district court did not abuse its discretion in declining to award

profits from the ECO CARAFE product. Contrary to Eko’s assertion, the district

court did not base its decision solely on the lack of a competing product but also

considered “the relative weakness of plaintiff’s EKO BREW mark” and the

“minimal similarity” of the ECO CARAFE mark. Its conclusion that the ECO

CARAFE profits were “attributable to a factor other than unfair competition” was

not clearly erroneous, and its decision not to order disgorgement of those profits

was well within its “broad” discretion. Gordon, 819 F.3d at 1195.

      6.     The district court did not abuse its discretion in concluding that this

was not an “exceptional case” meriting an award of attorney’s fees under the

Lanham Act. 15 U.S.C. § 1117(a); see Stephen W. Boney, Inc. v. Boney Servs.,

Inc., 127 F.3d 821, 825 (9th Cir. 1997). It carefully considered the factors

discussed in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545,

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554 (2014), and SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1181

(9th Cir. 2016), and permissibly concluded that despite ARM’s willful

infringement, the “totality of the circumstances” did not merit an award of

attorney’s fees, see SunEarth, 839 F.3d at 1180–81.

      AFFIRMED.

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