Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 1 of 25
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF ARIZONA
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`WO
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`No. CV11-1086 PHX DGC
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`ORDER
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`AFL Telecommunications LLC,
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`Plaintiff,
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`v.
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`SurplusEQ.com Incorporated; et. al.,
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`Defendants.
`This case concerns claims by Plaintiff AFL Telecommunications LLC (“AFL”)
`against Defendants Surplus EQ.Com Incorporated (“SurplusEQ”), Tech Sales LLC
`(“Tech Sales”), Daniel Parsons, and Lisa Parsons (collectively, “Defendants”) for unfair
`competition, false advertising, and copyright infringement arising from Defendants’ sale
`of fusion splicers (devices used to splice fiber optic cable) made by AFL’s Japanese
`parent, Fujikura Ltd. (“Fujikura”). The parties have cross-moved for summary judgment.
`Docs. 147, 158. Also pending before the Court is the motion to seal documents filed by
`AFL (Doc. 155), and the motion to exclude AFL’s expert opinions filed by Defendants
`(Doc. 190). The motions are fully briefed and no party has requested oral argument. For
`the reasons set forth below, the Court will deny AFL’s motion for summary judgment,
`grant in part and deny in part Defendants’ motion for summary judgment, grant in part
`and deny in part AFL’s motion to seal, and deny Defendants’ motion to exclude AFL’s
`expert opinions.
`I.
`Background.
`
`The following background facts are not disputed by the parties. AFL is a wholly-
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 2 of 25
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`owned subsidiary of Fujikura, a Japanese manufacturer of fiber optic equipment. One of
`Fujikura’s products is a fusion splicer, a device that is manufactured in Japan and made
`up of hardware and operating software. Fujikura sells its splicers under the FUJIKURA
`trademark. The “FUJIKURA plus stylized F” design was registered with the U.S. Patent
`and Trademark Office on March 21, 2000, for use with “OPTICAL FIBER SPLICERS.”
`Doc. 147-1, ¶¶ 12-13; Doc. 169, ¶¶ 12-13. The “FUJIKURA plus stylized F color”
`design was registered with the U.S. Patent and Trademark Office on April 13, 2010, for
`use with “OPTICAL FIBERS [and] OPTICAL FIBER FUSION SPLICERS.” Doc. 147-
`1, ¶ 14; Doc. 169, ¶ 14. AFL sells splicers bearing the FUJIKURA mark in the United
`States, and, since 2003, has been the exclusive distributor of Fujikura splicers in North
`America.
`
`Fujikura manufacturers a variety of splicers, including the FSM-50S, FSM-50R
`FSM-60S, FSM-60R, FSM-18S and FSM-18R models. The hardware and software on
`every Fujikura splicer is identical, regardless of where Fujikura intends to sell the splicer.
`The software contains many available languages. During the manufacturing process,
`Fujikura implements a lock that changes the splicer’s settings to display only the
`language suited to the region where the splicer is intended to be sold. Thereafter,
`changes must be made to the splicer’s software settings to make another language
`available. In 2006, Fujikura added a “splash screen” to its FSM-60 and FSM-18 series
`splicers which states that the unit is licensed for a particular country or region.
`
`Fujikura employees, as part of their employment duties, developed the operating
`software for the FSM-18 and FSM-60 series in Japan. Fujikura periodically upgrades the
`software, and each successive version contains substantial code from the preceding
`version and also incorporates some new content that the preceding version did not
`contain. Doc. 147-1, ¶¶ 7-8; Doc. 169, ¶¶ 7-8. Fujikura registered version 1.32b of the
`operating software for its FSM-60 series, and was granted a U.S. Copyright certificate of
`registration on March 26, 2011. Doc. 147-1, ¶ 9; Doc. 169, ¶ 9. The certificate’s
`“Limitation of copyright claim” section states the following: “Material excluded from
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 3 of 25
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`this claim: Previous version.” Doc. 151, ¶ 52; Doc. 174-1, ¶ 52.
`SurplusEQ1 is a Phoenix-based company that sells several manufacturer brands of
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`fiber optic equipment, including Fujikura products, over the Internet. In 2005,
`SurplusEQ began selling gray market Fujikura splicers that it had obtained from
`companies in China and Hong Kong. In an Internet blog post, SurplusEQ referred to its
`splicers as “new,” purchased directly from the manufacturer, and covered by a
`manufacturer’s warranty. Doc. 147-1, ¶ 37; Doc. 169, ¶ 37. On its website, SurplusEQ
`advertised some of its Fujikura splicers as “new and unused” and “[g]uaranteed not
`modified in any way.” Doc. 147-1, ¶¶ 42, 46; Doc. 169, ¶¶ 42. SurplusEQ is not
`authorized by AFL to sell Fujikura splicers. In late October 2011, SurplusEQ stopped
`selling gray market Fujikura splicers.
`
`Fujikura splicers sold in the United States through authorized channels carry a
`manufacturer’s warranty that entitles the purchaser to obtain warranty service from AFL.
`Those sold through unauthorized channels do not carry a manufacturer’s warranty.
`SurplusEQ offers a one-year warranty on its splicers. In 2009, AFL began to offer an
`additional year of warranty coverage for its FSM-60 series splicers.
`
`In 2009, Entergy Mississippi Inc. (“Entergy”) purchased a FSM-60S splicer (the
`“818 splicer”) from SurplusEQ. After using the splicer for approximately one year,
`Entergy contacted AFL for service. AFL identified the 818 splicer as a gray market unit,
`and offered Entergy a replacement splicer in exchange for the 818 splicer. AFL’s
`inspection of the 818 splicer revealed the following alterations: the 818 splicer’s serial
`number had been changed both on the outside of the unit and in a flash memory chip, the
`splicer’s flash memory chip had been replaced and nearby components had been
`
`
`1 Defendant Tech Sales is a company solely owned by Defendant Daniel Parsons
`that never developed. Doc. 151, ¶ 1; Doc. 174-1, ¶ 1; Doc. 55, ¶¶ 4-6; Doc. 110, ¶¶ 4-6.
`Any conduct related to Tech Sales is attributable to SurplusEQ. Doc. 151, ¶ 1; Doc. 174-
`1, ¶ 1. Daniel Parsons is the sole officer and director of SurplusEQ. Doc. 55, ¶ 6;
`Doc. 110, ¶6. Defendant Lisa Parsons (previously named as Jane Doe Parsons) is
`married to Daniel Parsons. Doc. 55, ¶ 8; Doc. 110, ¶ 8.
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 4 of 25
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`subjected to heat damage, and the splicer’s protective coating had been damaged.
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`AFL and Fujikura developed a plan to eliminate gray market competition in 2009.
`As part of that plan, on February 17, 2011, AFL and Fujikura entered into a copyright
`license agreement that provided AFL with the exclusive license to distribute the software
`that is preloaded on Fujikura’s splicers in North America and to register such rights with
`the U.S. Copyright Office in AFL’s name. The agreement also assigned to AFL “all
`claims for infringement of the right of distribution . . . that may exist as of the date of this
`license.” Doc. 147-1, ¶¶ 15-16; Doc. 169, ¶¶ 15-16. On March 14, 2011, AFL and
`Fujikura entered into a trademark license agreement that gave AFL the exclusive right to
`purchase and distribute splicers bearing the FUJIKURA mark in North America and to
`use the FUJIKURA mark in connection with its advertising and sales.
`II.
`AFL’s Motion for Partial Summary Judgment.
`
`AFL’s motion seeks summary judgment that SurplusEQ violated AFL’s exclusive
`right to use the Fujikura trademark in North America, that SurplusEQ falsely advertised
`its gray market Fujikura splicers, and that SurplusEQ infringed AFL’s exclusive right to
`distribute copyright-protected software.2
`A.
`Legal Standard.
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`
`
`A party seeking summary judgment “bears the initial responsibility of informing
`the district court of the basis for its motion, and identifying those portions of [the record]
`which it believes demonstrate the absence of a genuine issue of material fact.” Celotex
`Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the
`evidence, viewed in the light most favorable to the nonmoving party, shows “that there is
`no genuine issue as to any material fact and that the movant is entitled to judgment as a
`matter of law.” Fed. R. Civ. P. 56(a). Only disputes over facts that might affect the
`outcome of the suit will preclude the entry of summary judgment, and the disputed
`
`2 In response, Defendants raise several evidentiary objections to evidence
`submitted by AFL in support of its motion. Doc. 176 at 6-7. Because the Court will
`deny AFL’s motion, it will not address these objections.
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 5 of 25
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`evidence must be “such that a reasonable jury could return a verdict for the nonmoving
`party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
`
`B.
`Count I.
`
`AFL’s first claim for relief under Section 43 of the Lanham Act alleges unfair
`competition in violation of 15 U.S.C. § 1125(a)(1)(A). To prevail on this claim, AFL
`must show that the use of the FUJIKURA mark by SurplusEQ is likely to cause
`consumer confusion. In the context of gray market goods – that is, foreign-manufactured
`goods bearing a valid U.S. trademark that are imported without the consent of the mark
`holder, K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 285 (1988) – “the likelihood of
`confusion relates to the existence of material differences between the allegedly infringing
`good and the [mark holder’s] product.” Hokto Kinoko Co. v. Concord Farms, Inc.,
`810 F. Supp. 2d 1013, 1024 (C.D. Cal. 2011) (citation omitted). Although gray market
`goods “are authentic in the sense that they originated with the mark owner, they are not
`considered ‘genuine’ within the meaning of the Lanham Act if they are not authorized for
`sale in the United States and they differ materially from those that are.” Zip Int’l Grp.,
`LLC v. Trilini Imps., Inc., No. 09-CV-2437 (JG)(VVP), 2010 WL 648696, at *3
`(E.D.N.Y. Feb. 22, 2010) (citations omitted). “The sale of such goods is actionable by
`the exclusive United States licensee not because consumers may be confused about the
`manufacturer of the goods, but because consumers may unwittingly purchase the goods
`on the basis of the domestic markholder’s reputation only to be disappointed when the
`product does not meet their expectations.” Id. The parties agree that SurplusEQ sold
`gray market Fujikura splicers. Doc. 147-1, ¶ 21; Doc. 169, ¶ 21.
`
`The sale of gray market goods under the same trademark as the authorized goods
`is likely to cause consumer confusion, and thereby run afoul of Section 43 of the Lanham
`Act, where the gray market goods differ materially from the authorized goods.
`See PepsiCo, Inc. v. Reyes, 70 F. Supp. 2d 1057, 1059 (C.D. Cal. 1999). “The threshold
`of materiality ‘is always quite low.’” Id. (quoting Societe Des Produits Nestle, S.A. v.
`Casa Helvetia, Inc., 982 F.2d 633, 641 (1st Cir. 1992)). “The existence of any difference
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 6 of 25
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`between [the trademark owner’s] product and the allegedly infringing gray good that
`consumers would likely consider to be relevant when purchasing a product creates a
`presumption of consumer confusion sufficient to support a Lanham Trade-Mark Act
`claim.” Societe Des Produits Nestle, S.A., 982 F.3d at 641; see Beltronics USA, Inc. v.
`Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1073 (10th Cir. 2009) (because many
`factors influence a consumer’s decision to purchase a product, the materiality standard
`“must be kept low to include even subtle differences between products” (citation
`omitted)); see also PepsiCo, 70 F. Supp. 2d at 1059 (labeling and language differences
`were “material and demonstrate that there is a likelihood of confusion and deception
`concerning the nature and origin of the goods”); Hokto Kinoko Co., 810 F. Sup. 2d at
`1025 (material differences can relate to a product’s labeling and quality control
`standards); Idaho Potato Comm’n v. G & T Terminal Packaging, Inc., 425 F.3d 708, 721
`(9th Cir. 2005) (“many cases have found a likelihood of confusion when a trademark
`owner was prevented from exercising quality control over the merchandise bearing its
`mark”).
`
`AFL contends that SurplusEQ’s gray market splicers are materially different from
`its authorized splicers because of physical alterations, differences in warranty coverage,
`and software licensing issues. As to the physical alterations, AFL points to the 818
`splicer and changes that were made after its production by Fujikura. AFL argues that the
`818 splicer had been modified before it was sold by SurplusEQ, but presents no evidence
`of this fact. And as SurplusEQ notes, witnesses in this case were unable to say when or
`by whom the splicer was modified. AFL argues that SurplusEQ has not shown that the
`splicer was modified after its sale, but AFL has the burden of proof and has not shown
`that the splicer had been modified when sold by SurplusEQ.
`
`As to the warranty coverage, it is undisputed that Fujikura splicers sold through
`authorized channels in the United States carry a manufacturer’s warranty that entitles the
`purchaser to obtain warranty service from AFL, whereas those sold through unauthorized
`channels do not. Defendants argue that they offered an identical warranty, but this
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 7 of 25
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`clearly is not the case. The Fujikura warranty allowed the customer to return the splicer
`to AFL for repair by AFL, a Fujikura-authorized dealer; the SurplusEQ warranty required
`repair by SurplusEQ or, more likely, by whatever entity sold the splicer to SurplusEQ.
`
`Defendants next contend that despite the difference between these warranties,
`there is no likelihood of consumer confusion because SurplusEQ fully disclosed the
`differences between the products. “The alleged infringer, of course, may attempt to rebut
`this presumption, but in order to do so he must be able to prove by preponderant evidence
`that the differences are not of the kind that consumers, on average, would likely consider
`in purchasing the product.” Societe Des Produits Nestle, S.A., 982 F.2d at 641; Am.
`Circuit Breaker Corp. v. Or. Breakers Inc., 406 F.3d 577, 585-86 (9th Cir. 2005) (finding
`that there was no material fact as to infringement where customers who purchased the
`gray market product “get exactly what they expect” (citing Iberia Foods Corp. v. Romeo,
`150 F.3d 298, 303 (3d Cir. 1998)). In support of this proposition, Defendants point to the
`deposition of Defendant Daniel Parsons who stated that “I always said make sure they
`say we’re not authorized and that Fujikura won’t repair them.” Doc. 151-1 at 31:15-19.
`Defendants also point to the deposition of SurplusEQ employee Cody Wood, who stated
`that “Usually before they [customers] bought the unit from me, they would mention, oh
`this is a gray market unit, can I send it to AFL, and I would say no.” Doc. 152-7 at 14:6-
`9. Wood also stated that “On the website it would say this is a non-AFL unit. AFL will
`not service this unit. You have to send it to SurplusEQ for service. . . . It would be on the
`invoice, and we also made stickers and put them right on the units and carrying case as
`well. . . . [the stickers say] this is a non-AFL unit. It must be sent back to SurplusEQ.
`AFL will not service this unit.” Id. at 21:10 - 22:3. This evidence creates a genuine issue
`of fact as to whether the warranty differences were material to consumers and gave rise to
`consumer confusion.
`
`As to software licensing, it is undisputed that SurplusEQ generally obtained
`Fujikura splicers from Asian distributors and resold the splicers in the United States. It is
`also undisputed that Fujikura changes the language settings on its splicers depending on
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 8 of 25
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`where the units are to be sold and, starting in 2006, added to its units a “splash screen”
`stating that a unit was licensed for a particular region only. AFL argues from these facts
`that its units sold in the United States were locked so that only the English language was
`available to the user, while SurplusEQ units originally destined for a country in Asia
`would be locked to display that country’s language. AFL also argues that the “splash
`screen” on its units said that the unit was licensed for sale in the United States, while
`SurplusEQ’s units would not say this, and that purchasers would consider their possible
`copyright liability for using unauthorized software to be material. Although the Court
`finds this to be a close question, it concludes that summary judgment should not be
`granted to AFL. “[T]he question of likelihood of confusion is routinely submitted for
`jury determination as a question of fact.” Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d
`1352, 1362 n.5 (9th Cir. 1985) (citations omitted). Whether AFL has presented sufficient
`evidence to show that SurplusEQ sold units with altered language displays or splash
`screens, and whether software licensing issues were material, are questions best left to the
`jury to decide when the totality of the evidence in this case can be considered.
`
`C.
`Count II.
`
`AFL’s second claim for relief under Section 43 of the Lanham Act alleges false
`advertising in violation of 15 U.S.C. § 1125(a)(1)(B). Doc. 55 at 14. Section 43 of the
`Lanham Act “explicitly furnishes a private right of action ‘against persons who make
`false and deceptive statements in a commercial advertisement[.]’” PhotoMedex, Inc. v.
`Irwin, 601 F.3d 919, 923 (9th Cir. 2010) (citation omitted). The following five elements
`make up a false advertising claim under the Lanham Act:
`
`
`(1) a false statement of fact by the defendant in a commercial advertisement
`about its own or another’s product; (2) the statement actually deceived or
`has the tendency to deceive a substantial segment of its audience; (3) the
`deception is material, in that it is likely to influence the purchasing
`decision; (4) the defendant caused its false statement to enter interstate
`commerce; and (5) the plaintiff has been or is likely to be injured as a result
`of the false statement, either by direct diversion of sales from itself to
`defendant or by a lessening of the goodwill associated with its products.
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 9 of 25
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`Skydive Ariz., Inc. v. Quattrocchi, 673 F.3d 1105, 1110 (9th Cir. 2012) (citations
`omitted). To constitute a statement made in a commercial advertisement, the statement
`must be:
`(1) commercial speech; (2) by the defendant who is in commercial
`competition with the plaintiff; (3) for the purpose of influencing consumers
`to buy defendant’s goods or services. While the representations need not
`be made in a “classic advertising campaign,” but may consist instead of
`more informal types of “promotion,” the representations (4) must be
`disseminated sufficiently to the relevant purchasing public to constitute
`“advertising” or “promotion” within that industry.
`
`Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1054 (9th Cir. 2008) (citation
`omitted).
`
`AFL alleges that SurplusEQ falsely advertised in a blog post that it sold Fujikura
`splicers that were “new,” the “same machine” provided by authorized sellers, purchased
`“direct from the manufacturer,” and sold with “a full Manufacturers [sic] warranty.”
`Additionally, AFL alleges that SurplusEQ falsely advertised on its own website and its
`eBay store that it sold “new” and “guaranteed not modified in any way” Fujikura splicers.
`Doc. 147 at 13. The Court will analyze each advertisement separately.
`
`The Blog Post.
`1.
`
`
`Defendants argue that AFL has failed to establish that the blog post was
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`sufficiently disseminated to constitute a commercial advertisement. Doc. 176 at 14. AFL
`does not respond to this argument. The blog post is not a “classic advertising campaign,”
`and thus without any evidence establishing that the blog was disseminated to the
`purchasing public, the Court cannot find that the post constitutes a commercial
`advertisement. Accordingly, the Court denies AFL’s motion for summary judgment on
`its false advertising claim with regards to the blog post.
`2.
`SurplusEQ’s Website and eBay Store.
`
`
`
`Unlike the blog post, the statements on SurplusEQ’s website and on its eBay
`webpage appear to constitute a classic advertising campaign. The speech is made for the
`purpose of influencing customers to purchase a splicer and includes direct purchasing
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 10 of 25
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`information. AFL asserts that the eBay materials claimed the splicers were “new” and
`“not modified.” Doc. 147-1, ¶¶ 44, 46. As found above with respect to the unfair
`competition claim, however, genuine issues of material fact remain as to whether the
`splicers sold by SurplusEQ had been modified at the time they were sold. The Court
`therefore cannot grant AFL summary judgment on its false advertisement claim with
`regards to the statements made by SurplusEQ on its website and eBay store.
`
`D.
`Count IV.
`
`Registration of a copyright is a prerequisite to filing a civil action for copyright
`infringement of a U.S. work; there is no registration requirement if it is not a “United
`States work.” 17 U.S.C. § 411(a); see also Cosmetic Ideas, Inc. v. IAC/Interactivecorp.,
`606 F.3d 612, 615 (9th Cir. 2010). To establish a prima facie case of copyright
`infringement, a plaintiff must show (1) ownership of the allegedly infringed material and
`(2) a violation of at least one exclusive right granted to copyright holders under 17 U.S.C.
`§ 106. See A & M Records v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001).
`1.
`Registration.
`
`
`
`AFL submits that the registration requirement is satisfied because either
` (1) Fujikura’s software is a non-U.S. work (Doc. 147 at 15) or (2) Fujikura’s registration
`of version 1.32b is sufficient because the registered version is a derivative work of earlier
`versions (id.). Whether a work is a non-U.S. work depends largely on whether the work
`has been published. See 17 U.S.C. § 101. In its motion for summary judgment, AFL has
`cited no evidence on the issue of publication (Doc. 147 at 15), and AFL’s conclusory
`assertion that Fujikura’s software is a “non-U.S. work” (see Doc. 147-1, ¶ 10; Doc. 169,
`¶ 10) will not suffice at the summary judgment phase. AFL has not established that the
`registration requirement does not apply to its infringement claim.
`
`It is undisputed that Fujikura obtained U.S. Copyright Registration No. TX 7-400-
`942, which covers version 1.32b, the operating software for its FSM-60 series (Doc. 147-
`1, ¶ 9; Doc. 169, ¶ 9), but it is not clear – contrary to what AFL submits (Doc. 147 at 15)
`– that this registration is sufficient to maintain AFL’s action for infringement of all earlier
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 11 of 25
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`versions. Under the effective registration doctrine, the registration of a derivative work
`satisfies the registration requirement for an infringement action based on preexisting
`work not separately registered. See Streetwise Maps v. Vandam, Inc., 159 F.3d 739, 747
`(2d Cir. 1998) (holding that “the registration certificate relating to the derivative work . . .
`will suffice to permit [the plaintiff] to maintain an action for infringement based on
`defendants’ infringement of the preexisting work”); Salestraq Am., LLC v. Zyskowski,
`635 F. Supp. 2d 1178, 1181 (D. Nev. 2009) (holding that a registration of a 2008 version
`of a compilation of floor plans and locations was sufficient to maintain an action for
`infringement of the 2007 unregistered version). AFL submits that version 1.32b is a
`derivative work in that “Fujikura upgrades [its] operating software from time to time . . .
`[and] each successive version incorporates some original, copyrightable content not
`included in the preceding version, and each new version contains substantial code from
`the original version.” Doc. 147-1, ¶ 7.
`
`Defendants argue that AFL has failed to establish that version 1.32b is a derivative
`work because AFL has not produced any evidence showing how Fujikura modified its
`operating software over time. Doc. 176 at 19. Defendants argue that without this
`evidence, AFL has failed to show that the registration of version 1.32b is sufficient to
`register all related preexisting works. Id. Additionally, Defendants contend that the
`effective registration doctrine is inapplicable because Fujikura’s registration specifically
`excludes any “[p]revious version” from its claim (Doc. 151, ¶ 52; Doc. 174-1, ¶ 52), and
`the registration does not otherwise reference preexisting versions as required by Oravec
`v. Sunny Isles Luxury Ventures, L.C., 527 F.3d 1218, 1229-30 (11th Cir. 2008) (holding
`that when the registration of a work fails to identify the unregistered preexisting work, an
`action for infringement of the unregistered work fails) (Doc. 176 at 19-20).
`
`At the motion to dismiss phase, the Court found that the effective registration
`doctrine, as stated in Streetwise and Salestraq, applied in this case because the Court
`found it reasonable to infer from the complaint that each successive software version
`incorporates the preceding versions. Doc. 64 at 4. The Court found that AFL’s
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 12 of 25
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`infringement claim was analogous to the claim in Streetwise, where the plaintiff had
`asserted infringement of prior unregistered street maps based on a registration of a later
`version of the same map. 159 F.3d at 747. The Court distinguished Oravec because the
`plaintiff in that case sought to assert copyright infringement of unregistered three-
`dimensional models of an architectural work based on registration of architectural
`drawings, 527 F.3d at 1230, which was not a derivative work that incorporated material
`from unregistered preexisting works as did the splicer software.
`
`It is now evident, however, that Fujikura’s registration specifically disclaims
`previous versions. The copyright application identifies the “[p]revious version” of the
`software as “[m]aterial excluded from this claim[.]” Doc. 151, ¶ 52; Doc. 174-1, ¶ 52.
`This situation is unlike Streetwise, where the plaintiff’s registration certificate stated that
`the work for which it sought protection was derivative of previous versions of the map.
`159 F.3d at 746-47. It is undisputed that Fujikura registered version 1.32b, but for
`purposes of its summary judgment motion, AFL has failed to satisfy the registration
`requirement with regard to any previous version of the software.
`2.
`Ownership and Infringement.
`
`
`
`As to the ownership element, AFL argues that Fujikura owns the software
`preloaded on its splicers as a work made for hire, and that Fujikura granted AFL the
`exclusive right to distribute the copyrighted work in the United States under a written
`licensing agreement. As to infringement, AFL contends that SurplusEQ sold Fujikura
`FSM-60 series splicers in the United States without AFL’s permission. According to
`AFL, these sales constitute unauthorized distribution of copyrighted software and
`violated AFL’s exclusive right to distribute. Since the Court has found that AFL has
`presented evidence establishing only that Fujikura registered version 1.32b, to succeed on
`its motion for summary judgment, AFL must point to evidence showing that SurplusEQ
`sold splicers loaded with this software version. The record does not contain any evidence
`regarding the software version loaded on the Fujikura splicers sold by SurplusEQ.
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`Case 2:11-cv-01086-DGC Document 200 Filed 05/20/13 Page 13 of 25
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`Accordingly, the Court denies AFL’s motion for summary judgment on its copyright
`infringement claim.
`III. Defendants’ Motion for Summary Judgment.
`A.
`Laches.
`
`
`Defendants argue that the doctrine of laches bars all AFL claims. “Laches is an
`equitable time limitation on a party’s right to bring suit, resting on the maxim that one
`who seeks the help of a court of equity must not sleep on his rights.” Jarrow Formulas,
`Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002) (internal quotation marks
`and citations omitted). “It is well established that laches is a valid defense to Lanham
`Act claims[.]” Id. Laches is also a defense to claims for copyright infringement. See
`Danjaq LLC v. Sony Corp., 263 F.3d 942, 950-51 (9th Cir. 2001). “In order to succeed
`on a defense of laches, a defendant must prove both: (1) an unreasonable delay by
`plaintiff in bringing suit, and (2) prejudice to himself.” Miller v. Glenn Miller Prods.,
`Inc., 454 F.3d 975, 997 (9th Cir. 2006) (citation omitted). “In considering whether a
`plaintiff’s delay was unreasonable, courts consider: (1) the length of the delay, measured
`from the time the plaintiff knew or should have known about his potential cause of
`action, and (2) whether the plaintiff’s delay was reasonable, including whether the
`plaintiff has proffered a legitimate excuse for his delay.” Id.
`
`Defendants rely on certain portions of Daniel Parson’s deposition as evidence that
`AFL has been aware of SurplusEQ’s sale of Fujikura splicers since at least 2003, but the
`record does not include the cited pages of the deposition. See Doc. 158 at 31 (citing
`Doc. 151, ¶ 184 (citing Ex. 1, which does not contain the cited pages)). As a result,
`Defendants have not identified any portion of the record demonstrating the absence of a
`genuine issue of material fact as to when AFL learned that Defendants advertised and
`sold Fujikura splicers.
`B.
`Count I.
`
`
`Defendants argue they are entitled to summary judgment on AFL’s Lanham Act
`unfair competition claim because SurplusEQ fully disclosed the nature of the product it
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`sold, negating any claim of consumer confusion. As found by the Court above, however,
`a genuine issue of material fact exists as to whether SurplusEQ sold splicers that were
`materially different from the authorized units sold by AFL.3 Defendants argue that it is
`undisputed that SurplusEQ disclosed all relevant information regarding any material
`difference to customers, but Defendants have not pointed to any evidence establishing
`that SurplusEQ disclosed to its customers the differences related to software licensing
`and language settings. Defendants have failed to establish as a matter of undisputed fact
`that there were no material differences between the splicers, or that even if there were
`differences, that all differences were disclosed.4
`C.
`Count II.
`
`
`Defendants argue that summary judgment is appropriate on AFL’s fal