TTAB
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the Matter of:
`
`Trademark Application No. 77/472785
`Published March 17, 2009
`
`Opposition No 91 189592
`‘
`
`OPTIMAL PETS, INC.,
`
`Opposer,
`
`V.
`
`NUTRI-VET, LLC,
`
`Applicant.
`
`
`STATUS REPORT
`
`In response to the Board'sSeptember 7, 2012 Order requesting information on the status of
`
`the civil action which occasioned the suspension of this opposition proceeding, Applicant Nutri-
`
`Vet, LLC hereby reports that a Judgment was entered in that civil action in favor of the Applicant
`
`and its co—defendant by the United States District Court for the Central District of California on July
`
`2, 2012, resulting in the dismissal of all claims for unfair competition, false designation of origin,
`
`and common law trademark infringement alleged by Opposer Optimal Pets, Inc., with prejudice.
`
`True and complete copies of the District Court's Judgment, as well as its Memorandum and Order
`
`on the Defendants’ Renewed Motion for Judgment as a Matter of Law are attached hereto as
`
`Exhibits A and B.
`
`Subsequently, on July 31, 2012, Opposer filed a Notice of Appeal from the District Court's
`
`Judgment. That appeal remains pending before the United States Court of Appeals for the Ninth
`
`Circuit under Case No. 12-56409.
`
`IllllllllllIllllllllllllllllllllllllllllllllllllllllllll
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`*1 0-092 0 1 2
`US. Patent and TradernarkOffioe #72
`
`
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the Matter of:
`
`Trademark Application No. 77/472785
`Published March 17, 2009
`
`Opposition No 91 189592
`‘
`
`OPTIMAL PETS, INC.,
`
`Opposer,
`
`V.
`
`NUTRI-VET, LLC,
`
`Applicant.
`
`
`STATUS REPORT
`
`In response to the Board'sSeptember 7, 2012 Order requesting information on the status of
`
`the civil action which occasioned the suspension of this opposition proceeding, Applicant Nutri-
`
`Vet, LLC hereby reports that a Judgment was entered in that civil action in favor of the Applicant
`
`and its co—defendant by the United States District Court for the Central District of California on July
`
`2, 2012, resulting in the dismissal of all claims for unfair competition, false designation of origin,
`
`and common law trademark infringement alleged by Opposer Optimal Pets, Inc., with prejudice.
`
`True and complete copies of the District Court's Judgment, as well as its Memorandum and Order
`
`on the Defendants’ Renewed Motion for Judgment as a Matter of Law are attached hereto as
`
`Exhibits A and B.
`
`Subsequently, on July 31, 2012, Opposer filed a Notice of Appeal from the District Court's
`
`Judgment. That appeal remains pending before the United States Court of Appeals for the Ninth
`
`Circuit under Case No. 12-56409.
`
`IllllllllllIllllllllllllllllllllllllllllllllllllllllllll
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`*1 0-092 0 1 2
`US. Patent and TradernarkOffioe #72
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`
`
`RESPECTFULLY SUBMITTED this 9th day of October, 2012.
`
`SACKS TIERNEY P.A.
`
`4250 N. Drinkwater B1Vd., Fourth Floor
`Scottsdale, Arizona 85251-3693
`Telephone: (480) 425-2628
`Facsimile: (480)425-4928
`E-Mail: armstrong@sackstierney.com
`
`f’
`
`By:
`
`,
`
`gt/X
`
`M
`
`Jam s W. Armstrong
`V,Attorney for Applicant
`
`
`
`CERTIFICATE OF EXPRESS MAILING
`
`I hereby certify that the foregoing "Notice of Appearance" is being deposited this 9th day of
`
`October, 2012, with the United States Postal Service as "Express Mail Post Office to Addressee,"
`
`postage prepaid, in an envelope addressed to
`
`United States Patent and Trademark Office
`
`Trademark Trial and Appeal Board
`P.O. Box 1451
`
`Alexandria, Virginia 22313-1451
`
`The Express Mail Receipt No. is EQ 804739006 US. I
`1/ ‘
`
`~ .
`
`
`James
`Armstrong
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that a copy of the foregoing "Notice of Appearance" was served this 9th day
`
`of October, 2012, by First Class Mail, postage prepaid, upon counsel for the Opposer, at the
`
`following address:
`
`Colin C. Holley, Esq.
`Hampton Holley LLP
`2101 East Coast Highway, Suite 260
`Corona del Mar, California 92625
`
`/’
`
`4! p/
`WL”
`James W. Armstrong
`
`913335.
`
`V
`
`
`
`Case 5:O8—cv-O1795—MJG-AGR Document 186
`
`Filed 06/29/12 Page 1 of2 Page ID #:2451
`
`JS-6
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE CENTRAL DISTRICT OF CALIFORNIA
`EASTERN DIVISION
`
`OPTIMAL PETS,
`
`INC.
`
`Plaintiff
`
`vs.
`
`*
`
`EDCV—O8—l795 MJG
`
`NUTRI-VET,
`
`LLC, et al.
`
`Defendants
`
`JUDGMENT
`
`This action came on for trial before the Court and a jury,
`
`Honorable Marvin J. Garbis, United States District Judge,
`
`presiding. After the presentation of evidence, argument, and the
`
`Court's charge to the jury,
`
`a Special Verdict Form was submitted
`
`to the jury for their consideration and a verdict was duly
`
`rendered.
`
`The Court has,
`
`this date, granted Judgment as a
`
`Matter of Law to Defendants.
`
`Accordingly:
`
`1.
`
`Judgment shall be,
`
`and hereby is, entered in
`LLC and Vitamin
`favor of Defendants Nutri—Vet,
`Shoppe Industries,
`
`Inc. against Plaintiff Optimal
`Inc. dismissing all claims with prejudice
`Pets,
`etc. with costs.
`
`Any and all prior rulings disposing of any claims
`against any parties are incorporated by reference
`herein.
`
`EXHIBIT A
`
`
`
`Case 5:08—cv-O1795—MJG-AGR Document 186
`
`Filed 06/29/12 Page 2 of 2 Page ID #12452
`
`3.
`
`This Order shall be deemed to be a final judgment
`within the meaning of Rule 58 of the Federal
`Rules of Civil Procedure.
`
`SO ORDERED, on Friday,
`
`June 29, 2012.
`
`/s/
`Marvin J. Garbis
`
`United States District Judge
`
`
`
`Case 5:08-cv-O1795—MJG—AGR Document 185
`
`Filed 06/29/12 Page 1 of 36 Page ID
`
`#12415
`
`:,
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE CENTRAL DISTRICT OF CALIFORNIA
`EASTERN DIVISION
`
`OPTIMAL PETS,
`
`INC.
`
`Plaintiff
`
`vs.
`
`NUTRI-VET, LLC, et al.
`
`Defendants
`
`~)z
`
`fir
`
`*
`
`*
`
`*
`
`*
`
`*
`
`*
`
`*
`
`*
`
`EDCV*O8-1795 MJG
`
`*
`
`*
`
`*
`
`9:
`
`MEMORANDUM AND ORDER RE:
`
`JUDGMENT AS A MATTER OF LAW
`
`The Court has before it Defendants’ Renewed Motion for
`
`Judgment as a Matter of Law pursuant to Fed. R. Civ. P. 50 and
`
`the materials submitted related thereto.
`
`The Court has held a
`
`hearing and had the benefit of the arguments of counsel.
`
`I.
`
`BACKGROUND
`
`The instant case grew out of the competition between two
`
`producers of pet vitamins and dietary supplements to obtain a
`
`contract with a national chain of vitamin distributors.
`
`In 2004,
`
`the Garmon Corporation,
`
`led by Scott Garmon
`
`(“Garmon”) was a well—established producer of pet products,
`
`primarily selling to large retailers such as Petco, Petsmart,
`
`and Pet Supermarket, under various trademarked brand names,
`
`EXHIBIT B
`
`
`
`Case 5:08-cv—01795-MJG-AGR Document 185
`#2416
`
`Filed 06/29/12 Page 2 of 36 Page ID
`
`e.g., Green Tree, Pet Organics, and Naturvet. At this time,
`
`Bill Bookout
`
`(“Bookout”) was the President of the National
`
`Animal Supplement Council
`
`(“NASC”), an industry trade
`
`association. Bookout was also operating a “side” business —
`
`Genesis, Limited — that sold pet products primarily to
`
`veterinarians who resold the products to their patient’s owners.
`
`Garmon and Bookout decided to form a jointly—owned business
`
`that would sell primarily to pet professionals, i.e., breeders,
`
`trainers,
`
`rescue groups, kennels, etc.
`
`They chose a name for
`
`the new business that was unassociated with either Garmon or
`
`Bookout, since (1)
`
`the joint venture would be somewhat in
`
`competition with customers of both the Garmon Corporation and
`
`Genesis Limited, and (2) Bookout would be engaged in business
`
`with one of the members of the board of NASC,
`
`a board that
`
`included competitors of the Garmon Corporation.
`
`They formed Plaintiff, Optimal Pets,
`
`Inc.
`
`(“OPT”).
`
`OPI
`
`purchased products from Garmon Corporation and Genesis Limited.
`
`OPI’s shares were owned 50% by Garmon, and 50% were in the name
`
`of Bookout’s cousin.1 OPI set up a website and commenced efforts
`
`to sell pet products under the name “Optimal Pets” in January
`
`2004, aiming to develop a national niche market presence.
`
`
`
`1 There may bela question whether the shares in the name of
`Bookout’s cousin were effectively owned and/or controlled by
`Bookout.
`
`
`
`Case 5:08-cv-01795-MJG—AGR Document 185
`#22417
`
`Filed 06/29/12 Page 3 of 36 Page ID
`
`As discussed in more detail herein, OPI started in early
`
`2004 with a sales effort that, by 2008, had dwindled down to
`
`primarily accepting orders trickling in from the continuing
`
`offer of products on the internet website.
`
`By 2008,
`
`the sales
`
`“success” of “Optimal Pets” products was ge minimis.
`
`Indeed,
`
`OPI’s total gross sales for the entire period for which there is
`
`evidence of sales volume, January 2004 through to March 2009,
`
`(five years and three months) was less than $35,000.00,2 which
`
`averages less than $6,700.00 per year.
`
`In terms of an alleged
`
`nationwide market presence,
`
`there was not a single sale in the
`
`entire five—year period in 16 states.
`
`In 28 states,
`
`the total
`
`gross sales for the entire five—year period — not sales per year
`
`— was less than $5,400.00. This is an average of less than
`
`$200.00 in total sales per state during the entire five—year
`
`period. Accordingly, by the time of the events pertinent to the
`
`instant lawsuit, OPI was a minimally functioning business,
`
`essentially filling orders through its website.
`
`In late 2007, Defendant Vitamin Shoppe Industries,
`
`Inc.
`
`(“Vitamin Shoppe”) decided to add a product line of pet vitamins
`
`and supplements to sell in its chain of some 422 retail stores
`
`in 37 states and on the internet. Vitamin Shoppe was interested
`
`2 Including within this total about $8,500.00 of sales that were
`sold to a reseller that sold the products under a different
`brand name.
`
`
`
`Case 5:08-CV-01795-MJG-AGR Document 185
`#2418
`
`Filed 06/29/12 Page 4 of 36 Page ID
`
`in having Garmon Corporation provide the products and commenced
`
`discussions with Garmon.
`
`There was no problem with the
`
`production side of the arrangement, but there was a problem with
`
`the brand name for the products.
`
`Vitamin Shoppe did not like any of the brand names that
`
`Garmon Corporation proposed for the private label. Garmon did
`
`not propose the name “Optimal Pets,” presumably because using
`
`that name would have raised the possibility that the Bookout
`
`side of OPT would be entitled to some share of the Vitamin
`
`Shoppe business. Eventually, Vitamin Shoppe decided to find a
`
`different source of product and commenced discussions with
`
`Defendant Nutri—Vet, LLC (“Nutri—Vet”).
`
`Initially, Nutri—Vet was no more able than Garmon to find a
`
`name that Vitamin Shoppe would accept. Ultimately, however,
`
`the
`
`name “Optimal Pet” was proposed,
`
`liked by Vitamin Shoppe, and
`
`cleared by Nutri—Vet’s trademark attorney as available for use
`
`and trademark registration.
`
`Thus,
`
`the name “Optimal Pet” was
`
`adopted as the brand name for the new line of products. Nutri-
`
`Vet applied for federal trademark registration of the “Optimal
`
`Pet” name in May 2008.3
`
`
`
`3 Nutri—Vet’s registration was approved for publication on
`January 31, 2009, after the filing of the instant lawsuit.
`Thereafter, OPI filed a petition to oppose.
`Proceedings before
`the Trademark Trial and Appeal Board are suspended pending the
`result of the instant lawsuit.
`
`
`
`Case 5:08-Cv—O1795-MJG-AGR Document 185
`#:2419
`
`Filed 06/29/12 Page 5 of 36 Page ID
`
`Nutri—Vet thereafter began production of products under the
`
`name “Optimal Pet” for Vitamin Shoppe.
`
`The Vitamin Shoppe
`
`product
`
`launch of the “Optimal Pet” line of pet vitamins and
`
`supplements began on August 1, 2008. Within a few days, Garmon
`
`learned of the use of the name “Optimal Pet.”
`
`In September
`
`2008, OPI had an attorney send a “cease and desist” letter to
`
`Defendants Vitamin Shoppe and Nutri—Vet.
`
`The letter stated that
`
`OPI had nationwide common law rights to the trademark “Optimal
`
`Pets” for pet products and demanded that the Defendants cease
`
`and desist infringing by use of the name “Optimal Pet.”
`
`Defendants, deciding that OPI did not have common law
`
`trademark rights nationwide, or anywhere for that matter,
`
`refused to cease and desist. Garmon then decided to institute
`
`the instant lawsuit but found that Bookout did not wish to be
`
`associated — even through a cousin — with litigation against a
`
`member of the NASC board. Thereupon, Garmon acquired Bookout’s
`
`cousin's ownership interest, and OPI filed the instant lawsuit.
`
`II.
`
`PROCEDURAL SETTING
`
`The Court, having denied Defendants’ motion for summary
`
`judgment,4 proceeded to trial by jury. Prior to submission of
`
`the case to the jury, both sides moved for Judgment as a Matter
`
`4 See Memorandum and Order: Re Summary Judgment
`
`[Document 70].
`
`
`
`Case 5:08—ev-O1795—MJG-AGR Document 185
`#:242O
`
`Filed 06/29/12 Page 6 of 36 Page ID
`
`of Law under Fed. R. Civ. P. 50. Defendants sought
`
`judgment on
`
`all claims on the ground that OPI failed to introduce evidence
`
`sufficient to prove market penetration, resulting in the
`
`inability to establish that it had a valid and legally
`
`enforceable common law trademark.5
`
`The Court denied the motion
`
`without prejudice to its renewal after verdict.
`
`OPI sought
`
`Judgment as a Matter of Law on Defendants’
`
`lack of likelihood of
`
`confusion defense.6 The Court granted this motion.
`
`Thus,
`
`the case was submitted to the jury for determination
`
`of whether, and to what extent, OPI had established enforceable
`
`common law trademark rights, and whether Defendants had adopted
`
`the name “Optimal Pet” in bad faith.
`
`As detailed in the Appendix hereto,
`
`the jury ultimately
`
`returned a partial verdict on a Second Revised Verdict Form,
`
`providing unanimous answers to the questions relating to
`
`trademark rights as follows:
`
`
`
`5 See Defendants’ Memorandum of Points and Authorities in Support
`of their Motion for Judgment as a Matter of Law Pursuant to Rule
`50 of the F.R.C.P.
`[Document 159].
`6 gee Plaintiff Optimal Pets, Inc.’s Motion for Judgment as a
`Matter of Law on Defendants’ Defense of a Lack of Likelihood of
`Confusion; Memorandum of Points and Authorities [Document 160].
`
`
`
`Case 5:08-Cv-01795-MJG-AGR Document 185
`#2421
`
`Filed 06/29/12 Page 7 of 36
`
`Page|D
`
`In which geographical areas,
`Question 1.
`if any, has Plaintiff Optimal Pets,
`Inc.
`proven by a preponderance of the evidence
`that, by August 2008, it had used in
`commerce the name “Optimal Pets” as a
`trademark for the products at issue?
`
`Answer: The entire United States
`
`In which geographical area of
`Question 2 A.
`the United States,
`if any, do you
`unanimously agree that Plaintiff Optimal
`Pets,
`Inc. has proven by a preponderance of
`the evidence that, by August I, 2008, it had
`legally sufficient market penetration to
`establish common law ownership rights in
`“Optimal Pets?”
`
`Answer: Zip codes 863057 and 64113.8
`
`In which geographical area of
`Question 2B.
`the United States, if any, do you
`unanimously agree that Plaintiff Optimal
`Pets,
`Inc. has not proven by a preponderance
`of the evidence that, by August 1, 2008, it
`had legally sufficient market penetration to
`establish common law ownership rights in
`“Optimal Pets?”
`
`Answer:
`
`[Sixteen named states].9
`
`The jury did not reach a unanimous verdict as to the
`
`following questions related to Defendants’
`
`intent:
`
` 7 8
`
`In Prescott,
`
`Arizona.
`
`Missouri.
`In Kansas City,
`Iowa, Maine, Mississippi, North
`9 Alabama, Delaware, Hawaii,
`Dakota,
`Nebraska,
`New Hampshire, Oklahoma, Pennsylvania, Rhode
`Island, South Dakota, Utah, West Virginia, and Wyoming.
`These
`were the 16 states where there were never any “Optimal Pets”
`sales.
`
`
`
`Case 5:08-Cv—O1795-MJG-AGR Document 185
`#:2422
`
`Filed 06/29/12 Page 8 of 36 Page ID
`
`Question 3. Has Plaintiff Optimal Pets,
`Inc. proven by a preponderance of the
`evidence that Defendant Nutri-Vet, LLC
`
`adopted the name “Optimal Pet” for the
`products at issue in bad faith?
`
`Answer:
`
`No unanimity
`
`Question 4. Has Plaintiff Optimal Pets,
`Inc. proven by a preponderance of the
`
`evidence that Defendant Vitamin Shoppe
`Industries,
`Inc. adopted the name “Optimal
`Pet” for the products at issue in bad faith?
`
`Answer:
`
`No unanimity
`
`By the instant motion, Defendants seek judgment as a matter
`
`of law establishing that OPI has failed to present evidence
`
`adequate to prove (I)
`
`that it had sufficient market penetration
`
`to establish common law ownership rights in “Optimal Pets” in
`
`any geographical area,
`
`(2)
`
`that neither Defendant adopted the
`
`name “Optimal Pet” for the products at issue in bad faith, and
`
`(3)
`
`that OPI cannot establish that any infringement would have
`
`been willful.
`
`III. DISCUSSION
`
`A.
`
`COMMON LAW TRADEMARK RIGHTS
`
`1.
`
`Legal Framework
`
`One can establish enforceable trademark rights through the
`
`use of a trademark in commerce and federal registration under
`
`
`
`Case 5:O8—cv—01795-MJG—AGR Document 185
`#2423
`
`Filed 06/29/12 Page 9 of 36 Page ID
`
`the Lanham Actw (nationwide rights),
`
`some analogous state
`
`registration systems (statewide rights), or by virtue of a
`
`common law trademark in a particular area. OPI did not register
`
`the trademark at issue with the United States Patent and
`
`Trademark Office or with any state. Accordingly,
`
`the issue
`
`presented is whether, as of the date that Defendants used the
`
`name “Optimal Pet” in commerce (August 2008), OPI had acquired
`
`common law trademark rights with regard to a geographical area
`
`in which Defendants used the name.
`
`To establish common law trademark rights in a geographical
`
`area, OPI had to be the first to use the name “Optimal Pets” in
`
`commerce to designate the pertinent products in the area and had
`
`N The Lanham Act provides:
`
`The term “use in commerce” means the bona fide
`use of a mark in the ordinary course of trade, and
`not made merely to reserve a right in a mark.
`For
`purposes of this chapter,
`a mark shall be deemed to
`be in use in commerce——
`
`(1) on goods when——
`
`(A) it is placed in any manner on the goods or
`their containers or the displays associated
`therewith or on the tags or labels affixed thereto,
`or if the nature of the goods makes such placement
`impracticable,
`then on documents associated with
`the goods or their sale, and
`
`the goods are sold or transported in
`(B)
`commerce,
`
`l5 U.S.C.
`
`§ ll27.
`
`
`
`Case 5:08-cv—O1795-MJG—AGR Document 185
`#12424
`
`Filed 06/29/12 Page 10 of 36 Page ID
`
`to continue to so use the name in that area. See Halicki Films,
`
`LLC V. Sanderson Sales & Marketing, 547 F.3d 1213, 1226 (9th
`
`Cir. 2008)(citing Sengoku Works Ltd. V. RMC Int’l, Ltd., 96 F.3d
`
`1217, 1219 (9th Cir. 1996)); Quiksilver,
`
`Inc. V. Kymsta Corp;,
`
`466 F.3d 749, 761-62 (9th Cir. 2006)(describing the common law
`
`innocent—use defense).
`
`The first to use a mark in an area is deemed the “senior”
`
`user and has the right to enjoin “junior” users from using
`
`confusingly similar marks in the same industry and market or
`
`within the senior user's natural zone of expansion. Brookfield
`
`Commc’ns,
`
`Inc. V. West Coast Entm’t Corp., 174 F.3d 1036, 1047
`
`(9th Cir. 1999).
`
`Thus,
`
`in the absence of federal registration,
`
`both a senior and junior user would have the right to expand
`
`into unoccupied territory and establish customer recognition in
`
`that territory.
`
`§ee id; at 1054 (“Even where there is precise
`
`identity of a complainant's and an alleged infringer's mark,
`
`there may be no consumer confusion — and thus no trademark
`
`infringement — if the alleged infringer is in a different
`
`geographic area .
`
`.
`
`.
`
`.”).
`
`To maintain a
`
`common law trademark right there must be a
`
`continuing use. Quiksilver,
`
`Inc. V. Kymsta Corp., 466 F.3d 749,
`
`762 (9th Cir. 2006).
`
`“To be a continuing use,
`
`the use must be
`
`maintained without interruption.” Casual Corner Assocs.,
`
`Inc. v.
`
`10
`
`
`
`Case 5:08-cv-01795-MJG-AGR Document 185
`#:2425
`
`Filed 06/29/12 Page 11 of 36 Page ID
`
`Casual Stores of Nevada,
`
`Inc., 493 F.2d 709, 712 (9th Cir.
`
`1974); see also Dep’t of Parks & Recreation v. Bazaar Del Mundo
`
`Inc., 448 F.3d 1118, 1126 (9th Cir. 2006)(requiring proof that
`
`the mark’s actual use in commerce was continuous and not
`
`interrupted). Trademark rights are not created by a sporadic or
`
`casual use;
`
`there must be an active and public attempt
`
`to
`
`establish trade.
`
`See id;
`
`To establish enforceable common law trademark rights in a
`
`geographical area,
`
`a plaintiff must prove that,
`
`in that area,
`
`(1) it is the senior user of the mark, and (2) it has
`
`established legally sufficient market penetration. See, e.g.,
`
`Credit One Corp. v. Credit One Financial, Inc., 661 F. Supp. 2d
`
`1134, 1138 (C.D. Cal. 2009)(“A party asserting common law rights
`
`must not only establish that it is the senior user, it must also
`
`show that it has ‘legally sufficient market penetration’
`
`in a
`
`certain geographic market
`
`to establish those trademark rights.”
`
`(quoting Glow Indus.
`
`Inc. V. Lopez, 252 F. Supp. 2d 962, 983
`
`(C.D. Cal. 2002) )
`
`.11
`
`H OPI suggests that requiring a senior user of a distinctive
`mark to further pass a market penetration test is the equivalent
`of requiring all senior users to pass a secondary meaning test
`irrespective of whether the mark is distinctive, and that is
`
`OPI contends that the proper test
`contrary to trademark law.
`for establishing the right to assert a distinctive trademark is
`
`found in Pollution Denim & Co. v. Pollution Clothing Co., 547 F.
`Supp. 2d 1132, 1141 (C.D. Cal. 2007), which closely tracks the
`wording in the Jury Instruction for Question 1.
`The Court
`
`11
`
`
`
`Case 5:08—cv-01795-MJG~AGR Document 185
`#2426
`
`Filed 06/29/12 Page 12 of 36 Page ID
`
`In the Glow decision,
`
`the court stated that a senior user
`
`of a distinctive unregistered mark must demonstrate the
`
`territorial scope of its trademark use.
`
`§ee 252 F. Supp. 2d at
`
`983 (“Generally,
`
`in the absence of federal registration, both
`
`parties have the right to expand their use of an unregistered
`
`mark into unoccupied territory and establish exclusive rights by
`
`being first in that territory.
`
`In effect, it is a race between
`
`the parties to establish customer recognition in unoccupied
`
`territory.” (citations omitted)).
`
`The Glow court recognized that a senior trademark user is
`
`entitled to assert its rights only in areas in which it has
`
`legally sufficient market penetration.
`
`Id.
`
`The court stated
`
`that legally sufficient market penetration “is determined by
`
`examining the trademark user's volume of sales and growth
`
`trends,
`
`the number of persons buying the trademarked product in
`
`relation to the number of potential purchasers, and the amount
`
`of advertising.
`
`Id.
`
`(adopting the test for legally sufficient
`
`/I
`
`that the Pollution Denim case relied on by OPI
`notes, however,
`clearly indicates that a “senior user of a common law mark may
`not be able to obtain relief against the junior user in an area
`where it has no established trade, and hence no reputation and
`
`goodwill,” and even an owner of a federally registered mark “is
`not entitled to injunctive relief except
`in the area actually
`penetrated through use of the mark.” Pollution Denim, 547 F.
`Supp. 2d at 1141 n.34 (citations omitted).
`“[P]rotection is
`only potential in areas where the registrant in fact does not do
`business and a competing user could use the mark there until the
`
`registrant extended its business to the area.” Id;
`
`12
`
`
`
`Case 5:08-cv—O1795-MJG-AGR Document 185
`#:2427
`
`Filed 06/29/12 Page 13 of 36 Page ID
`
`market penetration from Natural Footwear, Ltd. v. Hart,
`
`
`Schaffner & Marx, 760 F.2d 1383, 1398-99 (3d Cir. 1985)).
`
`2.
`
`Jury Verdict
`
`a.
`
`Senior User
`
`With regard to the senior use issue,
`
`the Court instructed
`
`the jury, without objection:
`
`Inc. would have used the
`Optimal Pets,
`name “Optimal Pets” in commerce as a
`trademark for the products at issue in an
`area if,
`following its first use of the name
`“Optimal Pets” in commerce in that area,
`there was a follow up of activities that,
`the context of the particular industry or
`trade, was sufficient to show a genuine
`intent to put the product on the market
`under that name on a commercial scale in the
`context of the market within a reasonable
`time.
`
`in
`
`The jury returned the following verdict:
`
`In which geographical areas,
`Question 1.
`if any, has Plaintiff Optimal Pets,
`Inc.
`proven by a preponderance of the evidence
`that, by August 2008, it had used in
`commerce the name “Optimal Pets” as a
`trademark for the products at issue?
`
`Answer: The entire United States
`
`Defendants do not contend that OPI failed to present
`
`evidence sufficient to permit
`
`the jury to make this finding.
`
`The Court agrees.
`
`13
`
`
`
`Case 5:08-cv—O1795-MJG—AGR Document 185
`#22428
`
`Filed 06/29/12 Page 14 of 36 Page ID
`
`The evidence established that in the first year or so o;
`
`operations, OPI placed at least one substantial advertisement
`
`in
`
`a trade magazine with substantial circulation in the United
`
`States (and Canada), engaged in some sales—promoting activities
`
`in several states, and utilized an internet website to offer
`
`products for sale everywhere.
`
`However, OPI’s establishment of nationwide first—user
`
`status in 2004, does not establish enforceable common law
`
`trademark rights in all, or any part of,
`
`the nation in 2008.
`
`Rather, OPI must establish legally sufficient market penetration
`
`in a geographical area to have such rights in that area.
`
`b.
`
`Sufficient Market Penetration
`
`In regard to the sufficient market penetration questions,
`
`the jury was instructed, without objection:
`
`You shall determine the geographical
`area, if any,
`in which Optimal Pets,
`Inc.
`had legally sufficient market penetration by
`considering each of the following four
`factors, giving each factor the weight that
`you determine to be appropriate under the
`circumstances of this case.
`The factors
`
`are:
`
`(l)
`
`the volume of sales of OPI’s
`
`the growth trends
`(2)
`Optimal Pets products,
`(both positive and negative)
`in the area;
`
`the number of persons actually
`(3)
`purchasing the Optimal Pets products in
`relation to the potential number of
`
`the amount of Optimal
`customers; and (4)
`Pets product advertising in the area.
`
`l4
`
`
`
`Case 5:08—cv-01795-MJG-AGR Document 185
`#2429
`
`Filed 06/29/12 Page 15 of 36
`
`Page|D
`
`The jury returned the following verdict:
`
`In which geographical area of
`Question 2 A.
`the United States,
`if any, do you
`unanimously agree that Plaintiff Optimal
`Pets,
`Inc. has proven by a preponderance of
`the evidence that, by August 1, 2008, it had
`legally sufficient market penetration to
`establish common law ownership rights in
`
`“Optimal Pets?”
`
`Answer: Zip codes 86305” and 64113.” [Note
`that Defendants had no sales at all in
`
`either of these zip codes].
`
`In which geographical area of
`Question 2B.
`the United States,
`if any, do you
`unanimously agree that Plaintiff Optimal
`Pets,
`Inc. has not proven by a preponderance
`of the evidence that, by August 1, 2008, it
`had legally sufficient market penetration to
`establish common law ownership rights in
`
`“Optimal Pets?”
`
`Answer:
`
`Iowa,
`Alabama, Delaware, Hawaii,
`Maine, Mississippi, North Dakota, Nebraska,
`New Hampshire, Oklahoma, Pennsylvania, Rhode
`Island, South Dakota, Utah, West Virginia,
`
`and Wyoming.
`
`The Jury,
`
`therefore,
`
`found the absence of sufficient market
`
`penetration in 16 states, sufficient market penetration in 2 zip
`
`codes in which Defendants made no sales at any time, and it was
`
`unable to reach a unanimous verdict as to the rest of the
`
`country.
`
`
`
`H In Prescott, Arizona.
`B In Kansas City, Missouri.
`
`15
`
`
`
`Case 5:08-cv-01795-MJG-AGR Document 185
`#2430
`
`Filed 06/29/12 Page 16 of 36 Page ID
`
`3.
`
`Judgment as a Matter of Law
`
`a.
`
`Legal Standard
`
`Rule 50 of the Federal Rules of Civil Procedure provides in
`
`pertinent part:
`
`If the court does not grant a motion
`
`for judgment as a matter of law made under
`Rule 50(a),
`the court is considered to have
`
`submitted the action to the jury subject to
`the court's later deciding the legal
`In
`.
`questions raised by the motion.
`.
`.
`ruling on the renewed motion,
`the court may:
`
`(l) allow judgment on the verdict,
`
`if the
`
`jury returned a verdict;
`(2) order a new trial; or
`
`(3) direct the entry of judgment as a matter
`of law.
`
`Fed. R. Civ. P. 50(b).
`
`Rule 50 thus “allows a trial court to remove cases or
`
`.C
`issues irom the jury's consideration when the facts are
`
`sufficiently clear that the law requires a particular result.”
`
`Weisgram v. Marley Co., 528 U.S. 440, 448 (2000).
`
`A court
`
`should only render judgment as a matter of law “when a party has
`
`been fully heard on an issue and there is no legally sufficient
`
`evidentiary basis for a reasonable jury to find for that party
`
`on that issue.” Reeves v. Sanderson Plumbing Prods., Inc., 530
`
`U.S. 133, 149 (2000)(quOting Fed. R. Civ. P. 50(a)).
`
`“The standard for granting summary judgment
`
`‘mirrors’
`
`the
`
`standard for judgment as a matter of law, such that
`
`‘the inquiry
`
`16
`
`
`
`Case 5;O8—cv—O1795-MJG—AGR Document 185
`#2431
`
`Filed 06/29/12 Page 17 of 36 Page ID
`
`under each is the same.’” Ed; at 150 (quoting Anderson v.
`
`Liberty Lobby, Inc., 477 U.S. 242, 250-51 (1986)). The court
`
`should review all of the evidence in the record, draw all
`
`reasonable inferences in favor of the nonmoving party, but not
`
`weigh the evidence or make credibility determinations.
`
`lg;
`
`In
`
`other words, “the court should give credence to the evidence
`
`favoring the nonmovant as well as that evidence supporting the
`
`moving party that is uncontradicted and unimpeached, at least to
`
`the extent that that evidence comes from disinterested
`
`witnesses.” lg; at 151 (citations omitted).
`
`For a party to prevail on its renewed motion for judgment
`
`as a matter of law following a jury trial,
`
`the party “must show
`
`that the jury's findings, presumed or express, are not supported
`
`by substantial evidence or,
`
`if they were,
`
`that the legal
`
`conclusion(s)
`
`implied [by]
`
`the jury's verdict cannot
`
`in law be
`
`supported by those findings.” Pannu v.
`
`lolab Corp., 155 F.3d
`
`1344, 1348 (Fed. Cir. 1998).
`
`“Judgment as a matter of law is
`
`proper only if there can be but one reasonable conclusion as to
`
`the verdict.” Star Scientific,
`
`Inc. v. R.J. Reynolds Tobacco
`
`Co., 655 F.3d 1364, 1372 (Fed. Cir. 2011)(citations omitted).
`
`17
`
`
`
`Case 5:O8~Cv-01795-MJG-AGR Document 185
`#22432
`
`Filed 06/29/12 Page 18 of 36 Page ID
`
`b.
`
`Adequacy of Proof
`
`As discussed herein,
`
`the Court concludes that no reasonable
`
`jury could properly find that OPI had legally sufficient market
`
`penetration to establish, as of August 2008, enforceable common
`
`law trademark rights in any geographical area.
`
`The factors to be considered in determining whether OPI
`
`has established legally sufficient market penetration in a
`
`geographical area are,
`
`in regard to that area:
`
`1.
`
`2.
`
`3.
`
`4.
`
`The volume of sales of OPI’s “Optimal Pets”
`products;
`
`The growth trends (both positive and negative);
`
`The number of persons actually purchasing the
`“Optimal Pets” products in relation to the
`potential number of customers; and
`
`The amount of “Optimal Pets” product advertising
`in the area.
`
`i.The Internet
`
`From the beginning of its use of the name “Optimal Pets,”
`
`OPI maintained a website and made sales through the internet.
`
`Indeed, by 2008, OPI did little, if anything, else to promote
`
`sales other than maintain the website.
`
`“[T]he limits of territorial protection for a common law
`
`mark become much more difficult to define once that mark is
`
`placed on the Internet.
`
`.
`
`.
`
`. mostly due to the apparent
`
`lack of
`
`‘boundaries’ on the Internet.” Brian L. Berlandi, What State Am
`
`18
`
`
`
`Case 5:08-cv—01795-MJG-AGR Document 185
`#22433
`
`Filed 06/29/12 Page 19 of 36 Page ID
`
`I In?: Common Law Trademarks on the Internet,
`
`4 Mich. Telecomm.
`
`& Tech. L. Rev.
`
`l05, 123-24 (I998); see also David S. Barrett,
`
`The Future of the Concurrent Use of Trademarks Doctrine in the
`
`Information Age, 23 Hastings Comm.
`
`& Ent. L.J. 687, 696-97
`
`(2001).
`
`It may be possible to view cyberspace as its own distinct
`
`market.
`
`See Barrett, supra, 700.
`
`As such, it could be
`
`evaluated separately from any geographic territory to determine
`
`the level of “cyber—market” penetration and, possibly, establish
`
`common law rights for internet sales using a mark even though
`
`such rights could not be established as to any physical
`
`geographical area.
`
`While OPI has not sought recognition of a common law right
`
`in cyberspace,
`
`the evidence established that, as of 2008, it was
`
`doing little, if anything,
`
`to promote a market presence other
`
`than through its website.
`
`Indeed, except for some very minimal
`
`sales, it appears that virtually every OPI sale was through a
`
`mail or internet order.
`
`In considering the adequacy of OPI’s proof of sufficient
`
`market penetration, evidence regarding internet sales and
`
`internet advertising will be considered together with the
`
`evidence of sales and advertising in geographic areas.
`
`Thus,
`
`a
`
`l9
`
`
`
`Case 5:08—cv-01795-MJG—AGR Document 185
`#2434
`
`Filed 06/29/12 Page 20 of 36 Page ID
`
`sale to a customer through the internet will be considered a
`
`sale in the geographical area in which the customer is located.
`
`ii. Volume Of Sales”
`
`OPI’s volume of sales was beneath any reasonable threshold
`
`for a finding of legally sufficient market penetration in any
`
`state as of August 2008.
`
`Indeed,
`
`for the entire year of 2008,
`
`OPI had no sales at all in 34 states.
`
`In 8 of the 16 states in
`
`which there were any sales in 2008,
`
`total sales for the year
`
`were under $80.00 (ranging from $12.00 to $78.60 per state).
`
`In
`
`four of the remaining six states,
`
`total sales for the year
`
`ranged from $117.50 to $569.48.
`
`The two “big ticket” states
`
`were Arizona at $1,099.29 and Missouri at $1,888.69 with
`
`essentially all sales in each state in a single zip code. None
`
`of these sales results were supportive of a position that OPI
`
`had sufficient market penetration anywhere.
`
`iii. Growth Trends
`
`The evidence of growth trends through 2008 does not, by any
`
`means, support a finding of sufficient market penetration in any
`
`state.
`
`In 34 states, OPI had no sales at all in 2008, and in 14
`
`other states,
`
`total sales of less than $570.00.
`
`In California,
`
`M Sales numbers are based on Defs.’ Trial Ex. 565-5, 566-5 and
`575-1.
`
`20
`
`
`
`Case 5:08-cv—O1795—MJG—AGR Document 185
`#2435
`
`Filed 06/29/12 Page 21 of 36 Page ID
`
`there was a downward trend with sales of $10,284.14” in 2005,
`
`$939.11 in 2006, $804.58 in 2007, and $222.00 in 2008.
`
`In
`
`Arizona,
`
`the trend was virtually flat, with sales of $337 02 in
`
`2005, $960.42 in 2006, $958.06 in 2007, and $1,099.29 in 2008.
`
`Only in Missouri was there an upward trend.
`
`The Missouri sales
`
`total rose from $662.28 in 2006,
`
`to $1,084.20 in 2007, and
`
`$1,888.69 in 2008.
`
`As noted above, however, virtually all
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