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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`ALDEN GAJO,
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`Case No. 17-cv-00380-EMC
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`ORDER GRANTING DEFENDANTS’
`MOTION TO DISMISS
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`Docket No. 13
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`Plaintiff,
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`v.
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`CHICAGO BRAND, et al.,
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`Defendants.
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`Plaintiff Alden Gajo, proceeding pro se, has filed suit against Defendants Chicago Brand,
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`Eva Stone, and Holly Snyder (erroneously sued as “Holly Smith”), asserting claims for, inter alia,
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`breach of contract and violation of various intellectual property rights (e.g., copyright, trademark,
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`and patent). Currently pending before the Court is Defendants‟ 12(b)(6) motion to dismiss. At a
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`hearing held on June 1, 2017, the Court GRANTED the motion. This order memorializes the
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`rulings made by the Court at that hearing and provides additional analysis, as necessary.
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`A.
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`False Advertising
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`I.
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` DISCUSSION
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`Mr. Gajo has asserted a claim for dissemination of false advertising pursuant to 15 U.S.C.
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`§ 52. Section 52 is part of the Federal Trade Commission Act (“FTCA”). Courts have held that
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`consumers and members of the public at large may not maintain a private action to enforce the
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`FTCA. See, e.g., Dreisbach v. Murphy, 658 F.2d 720, 730 (9th Cir. 1981) (stating that “private
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`litigants may not invoke the jurisdiction of the federal district courts by alleging that defendants
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`engaged in business practices proscribed by” 15 U.S.C. § 45(a)(1); “[t]he Act rests initial remedial
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`power solely in the Federal Trade Commission”); Holloway v. Bristol-Myers Corp., 485 F.2d 986,
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`987 (D.C. Cir. 1973) (“hold[ing] that private actions to vindicate rights asserted under the Federal
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`For the Northern District of California
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`United States District Court
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`Case 3:17-cv-00380-EMC Document 30 Filed 06/08/17 Page 2 of 8
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`Trade Commission Act may not be maintained”); Kerr v. Am. Home Mortg. Serv’g, Inc., No. 10-
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`cv-1612 BEN (AJB), 2010 U.S. Dist. LEXIS 100076, at *7 (S.D. Cal. Sep. 22, 2010) (stating that
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`“[i]t is well-established that there is no private right of action for violation of the FTCA; only the
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`Federal Trade Commission has standing to enforce it”). Accordingly, the Court dismisses the
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`claim for false advertising, and with prejudice. Mr. Gajo shall not reassert this claim in any future
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`pleading.
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`B.
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`Trafficking of Counterfeit Goods
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`Mr. Gajo has also asserted a claim for trafficking of counterfeit goods. See 18 U.S.C. §
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`2320. As Defendants note, § 2320 is a criminal statute, and criminal statutes generally do not
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`provide a private cause of action. See Kraft v. Old Castle Precast, Inc., No. LA CV 15-00701-
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`VBF1, 2015 U.S. Dist. LEXIS 103440, at *4 (C.D. Cal. Aug. 5, 2015). See, e.g., Cannon v. Univ.
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`of Chicago, 441 U.S. 677, 690 (1979) (noting that “[t]he language in these statutes – which
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`expressly identifies the class Congress intended to benefit – contrasts sharply with statutory
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`language customarily found in criminal statutes”); Cent. Bank, N.A. v. First Interst. Bank, N.A.,
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`511 U.S. 164, 190 (1994) (stating that “[w]e have been quite reluctant to infer a private right of
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`action from a criminal prohibition alone”; adding that “we have not suggested that a private right
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`of action exists for all injuries caused by violations of criminal prohibitions”); Alexander v.
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`Sandoval, 532 U.S. 275, 289 (2001) (noting that “[s]tatutes that focus on the person regulated
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`rather than the individuals protected create „no implication of an intent to confer rights on a
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`particular class of persons‟”). Moreover, in his opposition brief, Mr. Gajo essentially concedes
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`that the cause of action should be dismissed. See Opp‟n at 10 (“Plaintiff[] realizes that the
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`Complaint of Trafficking of Counterfeit Goods is a more serious criminal offense beyond the
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`jurisdiction of this civil Court[;] a separate Complaint to the Federal Trade Commission shall be
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`filed for investigation and possible prosecution.”). The Court therefore dismisses the claim for
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`counterfeit trafficking, and with prejudice. Mr. Gajo shall not reassert the claim in any future
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`pleading.
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`C.
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`Breach of Contract
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`The main claim asserted by Mr. Gajo is that for breach of contract. Because Mr. Gajo‟s
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`For the Northern District of California
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`United States District Court
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`Case 3:17-cv-00380-EMC Document 30 Filed 06/08/17 Page 3 of 8
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`complaint was somewhat confusing with respect to this cause of action, the Court asked Mr. Gajo,
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`at the hearing, to clarify the factual allegations supporting his breach-of-contract claim. In
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`response, Mr. Gajo articulated a breach-of-contract theory that was not pled (at least not clearly) in
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`the complaint. That is, Mr. Gajo asserted that Defendants breached the contract in two ways: (1)
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`because Defendants used K. Fung as the manufacturer for the Alden wrench (instead of finding a
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`new manufacturer)1 and (2) because (regardless of the manufacturer) Defendants failed to pay
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`royalties on their sales of the Alden wrench.
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`Because this breach-of-contract theory was not pled in the original complaint, the Court
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`shall, in the interest of efficiency, dismiss the breach-of-contract claim as currently pled and allow
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`Mr. Gajo to amend the claim so as to make factual allegations consistent with the representations
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`above. In so ruling, the Court does not opine as to whether any amended claim would be subject
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`to, e.g., a statute-of-limitations defense or would otherwise be viable.
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`D.
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`Copyright Infringement
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`Mr. Gajo has asserted various claims for infringement of intellectual property, including a
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`claim for copyright infringement and a related claim for vicarious infringement. Defendants‟
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`motion to dismiss the copyright claims is granted because it is not clear what the copyrighted
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`works are in the first instance and whether they have been registered. The complaint refers
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`generally to photos of the wrench and product descriptions, but both references are vague. To the
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`extent Mr. Gajo has tried to cure that deficiency by submitting a declaration, see Gajo Decl. ¶ 4 &
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`Ex. D (providing a copy “of a violated creative work by [Mr. Gajo]” – “Sample 1 is the original
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`packaging and instructions created by [Mr. Gajo] for A&S” and “Sample 2 is . . . a photograph
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`taken by [Mr. Gajo]”), he cannot do so for purposes of a 12(b)(6) proceeding. See In re Bare
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`Escentuals, Inc. Sec. Litig., 745 F. Supp. 2d 1052, 1065 (N.D. Cal. 2010) (stating that, “when
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`resolving a motion to dismiss for failure to state a claim, the court may not generally consider
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`materials outside the pleadings”). Moreover, even if those specific works were named in an
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`1 At the hearing, Mr. Gajo added that, if Defendants had used a manufacturer other than K. Fung,
`then Defendants would have had the authority to use the Alden wrench name in selling the
`product.
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`For the Northern District of California
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`United States District Court
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`Case 3:17-cv-00380-EMC Document 30 Filed 06/08/17 Page 4 of 8
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`amended complaint, Mr. Gajo would still have to plead registration of the works. See Epikhin v.
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`Game Insight N. Am., 145 F. Supp. 3d 896, 902 (N.D. Cal. 2015) (noting that, under 17 U.S.C. §
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`411(a), “„no civil action for infringement of the copyright in any United States work shall be
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`instituted until registration of the copyright claim has been made‟”; adding that, “[a]lthough the
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`registration requirement is not jurisdictional, it is a „precondition to suit‟”). Mr. Gajo‟s suggestion
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`that he is relieved from the registration requirement by virtue of the Berne Act lacks merit.
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`In 1989, the United States agreed to the Berne Convention, an
`international copyright treaty that, among other things, prohibits
`signatories from imposing copyright formalities as a condition to the
`protection of works of nationals of other member countries. "To
`meet obligations necessary to adhere to the Convention, the United
`States eliminated many of the formalities for foreign works,
`including the registration requirement of § 411(a)."
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`Crunchyroll, Inc. v. Admiral, No. 11-cv-02334-JCS, 2014 U.S. Dist. LEXIS 47033, at *38 (N.D.
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`Cal. Feb. 10, 2014) (emphasis added); see also Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, 606
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`F.3d 612, 619 n.12 (9th Cir. 2010) (stating that, “[a]s a result of the Berne Convention‟s mandate
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`that foreign works not be subject to formalities, § 411‟s pre-suit registration requirement does not
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`apply to non-U.S. works”). There is no indication in the complaint that Mr. Gajo has a copyright
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`in a foreign work as opposed to a U.S. work.
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`Finally, it would appear that the royalty agreement may have encompassed an implied
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`right to use certain materials, such as photographs of the Alden wrench, cf. note 1 (discussing the
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`right to use the Alden wrench name). If so, the copyright claim may rise and fall with the breach
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`For the Northern District of California
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`United States District Court
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`of contract claim.
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`Accordingly, the Court dismisses the copyright infringement claims but shall give Mr.
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`Gajo leave to amend if he can, in good faith, identity what the copyrighted works are and state that
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`they are registered. If Mr. Gajo amends, he should also clarify whether Defendants were
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`authorized by contract to use any copyrighted works in selling the Alden wrench if they had used a
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`manufacturer other than K. Fung.
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`E.
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`Trademark Infringement
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`Mr. Gajo‟s claim for trademark infringement and related claim for vicarious infringement
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`are also dismissed with leave to amend. Based on the parties‟ papers, it appears that the only
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`Case 3:17-cv-00380-EMC Document 30 Filed 06/08/17 Page 5 of 8
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`trademark at issue is the word mark “Alden wrench.” Defendants have offered judicially
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`noticeable evidence that the Alden wrench word mark was cancelled back in July 2006, see Defs.
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`RJN, Ex. B (PTO record), and, as alleged in the complaint, Defendants‟ wrongdoing did not take
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`place until years after, i.e., 2009 or later (the agreements between the Gajos and Chicago Brand
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`were signed in November and December 2009). Because the alleged wrongdoing did not take
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`place until after the trademark was already cancelled, Mr. Gajo has failed to plead viable
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`trademark infringement claims. See, e.g., ZipSleeve, LLC v. W. Marine, Inc., No. 3:14-cv-01754-
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`SI, 2015 U.S. Dist. LEXIS 65050, at *7 (D. Or. May 19, 2015) (recognizing that there was no
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`binding authority but concluding that the “weight of authority . . . clearly indicates that Congress
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`sought to protect only the interests of plaintiffs with registered trademarks under § 1114”;
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`“[t]herefore, the owner of a mark that was valid when issued but which has since lapsed has no
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`cause of action under § 1114 – not even for infringement that occurred during the lifetime of the
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`mark”).
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`The Court therefore dismisses the trademark infringement claims but shall give Mr. Gajo
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`leave to amend if he can plead, in good faith, a different trademark that has allegedly been
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`infringed. At the hearing, Mr. Gajo disavowed Defendants had any right to use the company name
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`“A&D Industrial Tools and Instruments.” As noted above, Plaintiff shall clarify the scope of any
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`license to use any trademark as part of the contract.
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`F.
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`Patent Infringement
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`Mr. Gajo‟s final intellectual property claim is related to patent infringement. Although Mr.
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`Gajo has technically invoked contributory patent infringement, the allegations in his complaint
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`really seem to be directed at inducement of patent infringement instead. See generally Emblaze
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`Ltd. v. Apple Inc., No. C 11-01079 SBA, 2012 U.S. Dist. LEXIS 168201, at *14 (N.D. Cal. Nov.
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`27, 2012) (stating that “[t]here are two theories under which a party may be held liable for indirect
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`infringement: (1) induced infringement under § 271(b); and (2) contributory infringement under §
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`271(c)”). “„[I]nducement [of infringement] requires that the alleged infringer knowingly induced
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`infringement and possessed specific intent to encourage another‟s infringement.‟” Id. at *14-15.
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`In contrast, “„[c]ontributory infringement imposes liability on one who embodies in a non-staple
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`United States District Court
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`Case 3:17-cv-00380-EMC Document 30 Filed 06/08/17 Page 6 of 8
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`device the heart of a patented process and supplies the device to others to complete the process
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`and appropriate the benefit of the patented invention.‟” Id. at *15. In his complaint, Mr. Gajo
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`alleges that Chicago Brand – helmed by Ms. Stone – “indirectly infringed [his] Patent by
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`continuing to order, import, [and] promote sales of the counterfeit Alden Wrenches made by K.
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`Fung.” Compl. ¶ 52. Clearly, this sounds more in the nature of induced infringement rather than
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`contributory infringement.
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`The claim for contributory infringement, however, would appear to rise or fall with the
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`claim for breach of contract. For example, if Defendants were authorized by contract to sell the
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`Alden wrench, then it is hard to see how they could infringe the patent that covers the Alden
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`wrench. Here, of course, Mr. Gajo is claiming that Defendants were not authorized by contract
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`because they breached the terms of the contract – i.e., by using a manufacturer other than K. Fung.
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`Because the Court is dismissing Mr. Gajo‟s breach-of-contract claim as currently pled, it
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`also dismisses his related claim for contributory infringement. Mr. Gajo has leave to amend his
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`patent infringement claim consistent with any amendment of his breach-of-contract claim.
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`G. Wrongdoing of Individual Defendants
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`The final issue remaining is whether the individual defendants (Ms. Stone and Mr. Snyder)
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`can be held liable for any of claims for which the Court is permitting amendment.
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`For breach of contract, Ms. Stone and Mr. Snyder were not parties to the contracts at issue,
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`and therefore they cannot be held liable for breach of contract absent, e.g., alter ego liability. If
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`Mr. Gajo wishes to assert a breach-of-contract claim against the individual defendants, then, in his
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`amended complaint, he must include specific factual allegations showing that the individual
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`defendants may be held liable – e.g., factual allegations that Chicago Brand is the alter ego of the
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`For the Northern District of California
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`United States District Court
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`individual defendants.
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`Similarly, for the patent infringement claim, there does not appear to be any basis for
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`liability absent factual allegations that Chicago Brand is the alter ego of Ms. Stone and Mr.
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`Snyder. See, e.g., Manville Sales Corp. v. Paramount Sys., 917 F.2d 544, 552-53 (Fed. Cir. 1990)
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`(reversing as to liability of officers in their individual capacities with respect to patent
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`infringement claim; acknowledging district court findings that, e.g., officers assisted in copying of
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`Case 3:17-cv-00380-EMC Document 30 Filed 06/08/17 Page 7 of 8
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`design but emphasizing that no alter ego liability was established and the officers were acting
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`“within the scope of their employment and thus were protected by the corporate veil”); see also
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`Wordtech Sys. v. Integrated Networks Sols., Inc., 609 F.3d 1308, 1313 (Fed. Cir. 2010) (noting
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`that “„[p]atent infringement is a tort,‟ and „[i]n general, a corporate officer is personally liable for
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`his tortious acts, just as any individual may be liable for a civil wrong,‟” but “the „corporate veil‟
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`shields a company‟s officers from personal liability for direct infringement that the officers
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`commit in the name of the corporation, unless the corporation is the officers‟ „alter ego‟”); Hoover
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`Grp., Inc. v. Custom Metalcraft, Inc., 84 F.3d 1408, 1411-12 (Fed. Cir. 1996) (citing Manville for
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`the proposition that “acts of a corporate officer that are within the scope of the officer‟s
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`responsibility are not always sufficient grounds for penetrating the corporate protection and
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`imposing personal liability”).
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`Trademark infringement has been evaluated differently from patent infringement – i.e.,
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`personal liability can stem from either alter ego liability or direct participation in the tort. See
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`Comm. for Idaho’s High Desert, Inc. v. Yost, 92 F.3d 814, 823 (9th Cir. 1996) (in trademark
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`infringement case, stating that “„[a] corporate officer or director is, in general, personally liable for
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`all torts which he authorizes or directs or in which he participates, notwithstanding that he acted as
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`an agent of the corporation and not on his own behalf‟”); see also Partners for Health & Home,
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`L.P. v. Seung Wee Yang, No. CV 09-07849 RZ, 2011 U.S. Dist. LEXIS 130921, at *9-10 (C.D.
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`Cal. Oct. 28, 2011) (stating that “[a]n individual who personally directs a corporation in
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`committing trademark infringement, or who personally commits those acts, is personally liable for
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`that infringement” and that “[t]his is particularly true when a single individual is the corporation‟s
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`sole shareholder, sole officer, and sole manager, and performs the infringing acts himself” –
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`“[s]uch personal liability does not depend on piercing the corporate veil”); Hewlett-Packard Co. v.
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`Repeat-O-Type Stencil Mfg. Corp., No. C-92-3330 DLJ, 1995 U.S. Dist. LEXIS 22676, at *18
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`(N.D. Cal. Aug. 30, 1995) (stating that, “„[i]f an individual actively and knowingly caused the
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`trademark infringement, he is personally responsible[;] [s]pecifically, a corporate officer who
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`directs, controls, ratifies, participates in, or is the moving force behind the infringing activity, is
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`personally liable for such infringement without regard to piercing of the corporate veil‟”). The
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`Case 3:17-cv-00380-EMC Document 30 Filed 06/08/17 Page 8 of 8
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`same appears to be true for copyright infringement. See, e.g., Graham Hanson Design LLC v. 511
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`9th LLC, 2011 U.S. Dist. LEXIS 18623, at *13 (S.D.N.Y. Feb. 24, 2011) (stating that “„corporate
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`officers can be held liable for the infringing acts of their corporations if they personally
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`participated in the acts constituting infringement‟” and so “[i]t is . . . unnecessary to pierce the
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`corporate veil before imposing personal liability for copyright infringement on a corporate
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`officer”). Accordingly, in the instant case, in order for Mr. Gajo to have viable claims of
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`trademark or copyright infringement against the individual defendants, then he must plead, in his
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`amended complaint, factual allegations specifically establishing either alter ego liability or direct
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`participation in the infringement by the individual defendants. His current allegations are not
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`sufficiently clear.
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`For the foregoing reasons, the Court grants the motion to dismiss. The claims for
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`II. CONCLUSION
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`dissemination of false advertising and trafficking of counterfeit goods are dismissed with
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`prejudice – i.e., Mr. Gajo may not reassert the claims in any future complaint. Mr. Gajo has leave
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`to amend his claims for breach of contract, copyright infringement, trademark infringement, and
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`patent infringement. If Mr. Gajo asserts any of these claims against the individual defendants,
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`then he must include specific factual allegations establishing that there is a basis for individual
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`liability (e.g., alter ego liability and/or direct participation). Any amended complaint must be filed
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`United States District Court
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`within thirty (30) days of the date of this order.
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`Mr. Gajo is again advised to seek advice and assistance from the Legal Help Center.
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`This order disposes of Docket No. 13.
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`IT IS SO ORDERED.
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`Dated: June 8, 2017
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`______________________________________
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`EDWARD M. CHEN
`United States District Judge
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