Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA1061144
`
`ESTTA Tracking number:
`
`Filing date:
`
`06/10/2020
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`Proceeding
`
`92074099
`
`Party
`
`Correspondence
`Address
`
`Submission
`
`Filer's Name
`
`Filer's email
`
`Signature
`
`Date
`
`Attachments
`
`Defendant
`Kiva Health Brands LLC
`
`KIVA HEALTH BRANDS LLC
`2002 KAHAI STREET
`HONOLULU, HI 96819
`UNITED STATES
`support@kivahealthfood.com
`888-610-5584
`
`Motion to Dismiss - Rule 12(b)
`
`Eric J. Ball
`
`eball@fenwick.com, kfritz@fenwick.com, anercessian@fenwick.com,
`seth.reiss@lex-ip.com, DocketCalendarRequests@fenwick.com, Trademark-
`DocketRequests@fenwick.com
`
`/Eric J. Ball/
`
`06/10/2020
`
`2020 06 10 Kiva Health Motion to Dismiss and Exhibits 1 and 2.pdf(1028487
`bytes )
`
`

`

`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`
`
`
`
`In the Matter of
`Trademark Registration No.: 5108487
`Registered: 12/27/2016
`Published:
`Mark : KIVA
`
`
`
`
`
`
`Cancellation No. 92074099
`
`Kiva Brands Inc.
`
`
`
`vs.
`
`Kiva Health Brands LLC,
`
`
`
`Petitioner,
`
`Registrant.
`
`
`
`
`
`
`
`
`
`REGISTRANT KIVA HEALTH BRANDS LLC’S MOTION TO DISMISS
`
`Registrant KIVA HEALTH BRANDS LLC (“Kiva Health” or “Registrant”) submits this
`
`motion to dismiss pursuant to 15 U.S.C. § 1064, 37 C.F.R. 2.127(a), and Rule 12(b)(6) of the
`
`Federal Rules of Civil Procedure because Petitioner KIVA BRANDS INC. (“KBI” or
`
`“Petitioner”) lacks standing to bring this proceeding and has no rights to seek cancellation of
`
`Kiva Health’s KIVA mark.
`
`KBI’s petition arises from a dispute between Petitioner and Kiva Health over use of the
`
`KIVA mark, which is currently the subject of pending litigation in federal court for the Northern
`
`District of California. Kiva Health Brands LLC vs. Kiva Brands Inc. (the “Lawsuit”), Case No.
`
`3:19-cv-03459-CRB. As the court in that action has already determined (twice), KBI’s cannabis
`
`edible products are federally illegal, and thus it has no ability to assert rights, seek remedies, or
`
`claim defenses under the Lanham Act as a matter of law. See Lawsuit, Order on Motions for
`
`
`
`

`

`
`
`Preliminary Injunction, Dkt. No. 52 filed September 6, 2019, at 12–14, 31–32 (“Exhibit 1”);
`
`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`Order re Cross-Motions, Dkt. No. 74 filed February 14, 2020, at 13–18 (“Exhibit 2”). That
`
`court’s holdings are fully consistent with the TTAB’s treatment of cannabis-based products, and
`
`there is no legal or logical reason for the TTAB to allow KBI to pursue relief in this forum based
`
`on purported international use of the KIVA mark when the Lanham Act forecloses any such
`
`action based on domestic use with respect to the same class of federally illegal goods. As KBI
`
`has no cognizable rights under the Lanham Act based on its purported use of the KIVA mark for
`
`its cannabis products, KBI lacks standing to bring this action, and the Board should dismiss
`
`KBI’s cancellation.
`
`I.
`
`RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
`
`Kiva Health is the senior user of the KIVA mark and the owner of three corresponding
`
`federal trademark registrations, Registration Nos. 4,514,257; 4,804,607; and 5,108,487. By
`
`application filed April 16, 2016 and designated Serial No. 87,020,541, Kiva Health filed its third
`
`application to register the word mark KIVA with respect to a variety of goods in classes 003,
`
`005, 029, 030, and 032. Kiva Health claims use in commerce in respect to each of the identified
`
`goods, from at least February 15, 2013 for all but the class 003 goods, and from at least
`
`December 20, 2014 for the class 003 goods. The application issued, on December 27, 2016, as
`
`Registration No. 5,018,487 for each of the goods that had been listed in the application. Kiva
`
`Health was using the KIVA mark in commerce on and in respect of each of the goods that had
`
`been listed in Serial No. 87,020,541 at the time of the filing. Since that time, Kiva Health has
`
`continued to use its KIVA mark in commerce with respect to goods in each of the classes 003,
`
`005, 029, 030, and 032, and Kiva Health has no intention of stopping its commercial use with
`
`respect to any of these classes.
`
`2
`
`

`

`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`Kiva Health discovered that Petitioner was also using the KIVA name on class 030 goods
`
`
`
`
`that are similar to the goods for which Kiva Health uses its mark and that Petitioner’s use of Kiva
`
`Health’s KIVA mark was creating a likelihood of confusion. Petitioner uses the KIVA mark
`
`solely on and in respect to the sale and promotion of cannabis-infused confections, and claims
`
`use from December 2010 in limited parts of California. In September 2018, Kiva Health filed
`
`the Lawsuit against Petitioner to stop the confusion from Petitioner KBI’s infringing use of Kiva
`
`Health’s KIVA mark. The Lawsuit is currently pending in the U.S. District Court for the
`
`Northern District of California. In response to the Lawsuit, KBI filed counterclaims petitioning
`
`to cancel Kiva Health’s marks – including seeking to cancel the registration that KBI challenges
`
`here – under 15 U.S.C. §§ 1119 and 1052(d), and claiming infringement and federal unfair
`
`competition under 15 U.S.C. § 1125(a)(1)(A), which Kiva Health moved to dismiss. In a
`
`September 6, 2019 order, the court dismissed KBI’s federal counterclaims, holding that
`
`“[b]ecause KBI’s products are illegal under federal law, KBI cannot demonstrate that it made
`
`lawful use of the mark in commerce prior” to Kiva Health. Exhibit 1 at 31–32. As KBI “did not
`
`make lawful use of the mark,” the district court reasoned, “[t]o hold that KBI’s prior use of the
`
`KIVA mark on a product that is illegal under federal law is a legitimate defense to KHB’s
`
`federal trademark would ‘put the government in the anomalous position of extending the benefits
`
`of trademark protection to a seller based upon actions the seller took in violation of that
`
`government’s own laws.’” Id. at 16 (quoting CreAgri, Inc. v. USANA Health Scis., Inc., 474
`
`F.3d 626, 630 (9th Cir. 2007)). Indeed, applying TTAB precedent, the court in the Lawsuit
`
`determined that KBI was ineligible to seek cancellation of any Kiva Health marks from the
`
`Federal Register based on its purported prior use of the KIVA mark for its cannabis products, nor
`
`could KBI bring any infringement action under the Lanham Act. Id.
`
`3
`
`

`

`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`In addition to its counterclaims, KBI also raised an affirmative defense to Kiva Health’s
`
`
`
`
`infringement claims based on its purported prior use. On cross-motions for summary judgment,
`
`the court in the Lawsuit rejected that argument as well. The court held: “When a mark is used
`
`for cannabis products, the Lanham Act does not recognize the user’s trademark priority”—even
`
`as a defense to a claim of federal trademark infringement. Exhibit 2 at 18. To the contrary, the
`
`court ruled, to the extent that a “state law that allows KBI a common law right in the KIVA mark
`
`would encroach on KHB’s federal trademark rights (thereby permitting a confusing trademark to
`
`operate and infringing on the guarantee of exclusive use to the federal trademark holder), the
`
`Lanham Act preempts the state law.” Id. (internal citations and quotations omitted).
`
`It is because Petitioner is barred from claiming it has been damaged based upon rights
`
`arising under the trademark laws of the United States (as confirmed two times by the federal
`
`court) that it asks the Board to cancel in part Kiva Health’s Registration No. 5,018,487 based
`
`upon alleged injury from Kiva Health’s opposition to Petitioner’s trademark applications in
`
`Europe. 1 TTABVUE ¶¶ 8–11 & 14. Petitioner relies on these claimed foreign damages in
`
`alleging that “The continued registration of [the challenged goods] under Registration No.
`
`5,108,487, and the resulting WIPO Registration, is causing harm to Petitioner as Registrant is
`
`relying on such identified goods . . . as the basis to sustain challenges to Petitioner’s EU
`
`Applications based on an alleged likelihood of confusion.” 1 TTABVUE ¶ 14.
`
`II.
`
`LEGAL STANDARD
`
`To survive a “motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6),
`
`petitioner’s complaint must allege facts which would, if proved, establish that: (1) petitioner has
`
`standing to maintain the proceeding; and (2) there is a valid ground for cancelling the
`
`Registrations.” Robert Doyle v. Al Johnsons Swedish Rest. & Butik, Inc., 101 USPQ2d 1780
`
`4
`
`

`

`
`
`(TTAB 2012) (petitioner-photographer lacked standing to challenge service marks used in
`
`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`connection with restaurants and gift shops, where petitioner appeared to “concede that he is not
`
`in a position to use the desired photographs as marks in connection with restaurant, gift shop or
`
`related services”). That means that a petition “must contain sufficient factual matter, accepted as
`
`true, to ‘state a claim to relief that is plausible on its face.’” Dragon Bleu (SARL) v. Venm, 112
`
`USPQ2d 1925 (TTAB 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), in turn
`
`quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “In the context of Board
`
`inter partes proceedings, a claim is plausible on its face when the plaintiff pleads factual content
`
`that if proved, would allow the Board to conclude, or draw a reasonable inference, that the
`
`plaintiff has standing and that a valid ground for opposition or cancellation exists.” RLP
`
`Ventures, LLC v. Focus Approach, LLC, No. 91228593, 2017 WL 4054467, at *3 (Sept. 8, 2017)
`
`(citing Twombly, 550 U.S. at 556).
`
`Here, Petitioner is requesting relief based upon injury suffered abroad premised upon
`
`rights arising under the trademark laws of other countries. Petitioner’s allegations are
`
`insufficient, as a matter of law, to give Petitioner standing to maintain its request for partial
`
`cancellation of Reg. No. 5,018,487.
`
`III. ARGUMENT: PETITIONER KIVA BRANDS INC. LACKS STANDING TO
`BRING THIS CANCELLATION PROCEEDING BECAUSE IT HAS NO
`COGNIZABLE RIGHTS UNDER THE LANHAM ACT.
`
`An essential part of any cancellation proceeding is the allegation that a petitioner believes
`
`that it “is or will be damaged . . . by the registration of a mark on the principal register . . . .”
`
`15 U.S.C. § 1064. While a petitioner need not plead actual damage to establish standing, it must
`
`show that it has a belief of damage that has a “reasonable basis” in fact. NSM Resources Corp.
`
`and Huck Doll LLC v. Microsoft Corp., 113 USPQ2d 1029, 2014 WL 7206403, at *3 (Nov. 25,
`
`5
`
`

`

`
`
`2014) (quoting Ritchie v. Simpson, 170 F.3d 1092, 50 USPQ2d 1023, 1027 (Fed. Cir. 1999), and
`
`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`collecting cases). “Although the standard is low, the belief in damage resulting from registration
`
`must be objectively reasonable.” NSM Resources, 2014 WL 7206403, at *9 (dismissing petition
`
`for cancellation, and granting sanctions motion) (emphases in original).
`
`Here, KBI lacks any objectively reasonable basis to seek cancellation of Reg.
`
`No. 5,018,487 or any other registration held by Kiva Health. A federal district court already
`
`barred KBI from seeking cancellation of Kiva Health’s federal trademark registrations based on
`
`its domestic use of the KIVA mark for its cannabis products in the Lawsuit, and tellingly KBI
`
`does not base its cancellation petition on that domestic use. Instead, KBI claims injury that is
`
`entirely extraterritorial, based upon activities within countries of the European Union based upon
`
`rights alleged to arise under trademark laws of European countries. Petitioner is not alleging
`
`injury within the United States and is not alleging injury based upon rights arising from the
`
`Lanham Act or other U.S. law. KBI should not be allowed to seek cancellation from the Board
`
`on damage experienced exclusively outside the United States under foreign laws, when it is
`
`precluded from seeking the identical relief—concerning uses with respect to the same illicit
`
`product—based on its domestic use.
`
`Petitioner is not alleging damage within the United States or damage based upon U.S.
`
`based rights because it cannot—it has no U.S. based rights. In the Lawsuit, Judge Breyer
`
`collected and applied a consistent line of Ninth Circuit and TTAB authority demonstrating that
`
`the federal Lanham Act does not offer right, remedy or defense to persons that use a mark with
`
`respect to cannabis products, which remains illegal under federal law. Exhibit 1 at 12–14, 31–
`
`32; Exhibit 2 at 13–18; see also In re Morgan Brown, 119 USPQ2d 1350 (TTAB July 14, 2016)
`
`(“We have consistently held that, to qualify for a federal service mark registration, the use of a
`
`6
`
`

`

`
`
`mark in commerce must be ‘lawful’. . . . Thus, any goods or services for which the mark is used
`
`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`must not be illegal under federal law”) (refusing to registration mark for cannabis products);
`
`accord In re JJ206, LLC JUJU JOINTS, 120 USPQ2d 1568, at *1 (TTAB Oct. 27, 2016). Those
`
`cases recognize that the Board “cannot simply disregard the requirement of lawful use[.]” Id.
`
`at *4. Accordingly, just as KBI lacks the right to pursue, in federal court, cancellation of Kiva
`
`Health’s trademark registrations under the Lanham Act based on its purported use of the KIVA
`
`mark for cannabis products, it cannot do so here. Whether KBI is asserting domestic state or
`
`foreign law as the basis for its trademark rights is irrelevant. The Lanham Act does not
`
`recognize any rights that KBI may claim in the KIVA mark if it “encroach[es] on Kiva Health’s
`
`federal trademark rights (thereby permitting a confusing trademark to operate and ‘infringing on
`
`the guarantee of exclusive use’ to the federal trademark holder)” because “KBI cannot be the
`
`senior user of the KIVA mark” as a matter of law. Exhibit 2 at 18 (emphases added).
`
`Nor is there any support for KBI’s apparent contention that it has standing based upon
`
`damages being experienced entirely outside the United States or for purported rights arising
`
`under the trademark laws of foreign countries. That contention contravenes the “concept of
`
`territoriality” that is “basic to trademark law.” Person’s Co., Ltd. v. Christman, 900 F.2d 1565,
`
`1568–69 (Fed. Cir. 1990). That principle holds that “trademark rights exist in each country
`
`solely according to that country’s statutory scheme.” Id. (holding that “foreign use has no effect
`
`on U.S. commerce and cannot form the basis for a holding that appellant has priority”). There is
`
`no standing before the Trademark Office where both the injury and claimed rights exist only in
`
`foreign countries; it is for foreign country tribunals to entertain claims arising under their
`
`respective laws for injuries being suffered within their respective borders. Similarly, “[b]oth
`
`U.S. courts and the Trademark Board have held that the decisions of courts or trademark
`
`7
`
`

`

`
`
`registration offices outside the U.S. are not relevant to the ownership and enforcement of
`
`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`trademark rights within the United States.” 5 McCarthy on Trademarks and Unfair Competition
`
`§ 29:5 n.3 (5th ed.) (citing Faberge, Incorporated v. Madison Shirt Corp., 192 USPQ 223 n.3,
`
`1976 WL 21123 (TTAB 1976) (decision of Registrars of Trademarks of South Africa on
`
`likelihood of confusion irrelevant to presence of confusion in United States); Puma-
`
`Sportschuhfabriken Rudolf Dassler, K.G. v. Superga S.P.A., 204 USPQ 688 n.3, 1979 WL 24900
`
`(TTAB 1979) (same for decisions by German courts); In re Highlights for Children, Inc., 118
`
`USPQ2d 1268, 1273, 2016 WL 1380729 (TTAB 2016)) (rejecting argument that registrations in
`
`Mexico and Chile constitute evidence that mark is not merely descriptive to Spanish speakers).
`
`Beyond Petitioner’s allegations of the damages that it is suffering in Europe arising under
`
`European laws, Petitioner has nothing left to base Petitioner’s standing upon. There is neither
`
`allegation nor reasonable inference that Petitioner is being damaged within the United States or
`
`based on some right accruing under U.S. law.
`
`If this Board determines to endow Petitioner with standing based entirely on damages
`
`suffered outside the United States and without reference to any U.S. law, then the Board invites
`
`every petitioner anywhere in the world to challenge pending U.S. trademark applications and
`
`registrations based solely on foreign injuries and foreign rights. This would make for bad policy
`
`and is certainly not what the Congress intended through its enactment of 15 U.S.C. § 1064.
`
`8
`
`

`

`
`
`IV. CONCLUSION
`
`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`Based upon the argument and authority presented above, KBI lacks standing and KBI’s
`
`Petition for Cancellation is deficient as a matter of law and should be dismissed.
`
`
`
`Dated: June 10, 2020
`
`
`
`
`
`
`Respectfully submitted,
`
`
`
`By: /Eric J. Ball/
`Eric J. Ball
`eball@fenwick.com
`Kate J. Fritz
`kfritz@fenwick.com
`Armen Nercessian
`anercessian@fenwick.com
`FENWICK & WEST LLP
`801 California Street
`Mountain View, CA 94041
`Telephone: 650.988.8500
`
`Attorneys for Registrant Kiva Health Brands LLC
`
`9
`
`

`

`
`
`
`CERTIFICATE OF SERVICE
`
`
`Registrant's Motion to Dismiss
`TTAB Proceeding: 92,074,099
`
`I hereby certify that a true and correct coy of the foregoing REGISTRANT KIVA
`
`HEALTH BRAND LLC’S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM with
`
`supporting materials attached is being served on counsel for Petitioner Kiva Brands Inc.
`
`concurrently with the filing hereof via email as follows:
`
`
`
`
`Mary L. Shapiro, Esq.
`
`Nicole A. Syzdek, Esq.
`
`Evoke Law, PC
`
`244 California Street, Suite 507
`San Francisco, CA 94111
`
`mary@evoke.law
`nicole@evoke.aw
`iplaw@evoke.law
`
`as required by the Trademark Trial and Appeal Board.
`
`/Betti J. Walrod/
`
`
`
`
`
`
`
`Betti J. Walrod
`bwalrod@fenwick.com
`FENWICK & WEST LLP
`801 California Street
`Mountain View, CA 94041
`(650) 988-8500
`
`
`
`10
`
`

`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`EXHIBIT 1
`EXHIBIT 1
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 3:19-cv-03459-CRB Document 52 Filed 09/06/19 Page 1 of 34
`
`
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`KIVA HEALTH BRANDS LLC,
`Plaintiff,
`
`v.
`
`KIVA BRANDS INC., et al.,
`Defendants.
`
`Case No. 19-cv-03459-CRB
`
`
`ORDER DENYING MOTION FOR
`PRELIMINARY INJUNCTION AND
`CROSS-MOTION FOR
`PRELIMINARY INJUNCTION, AND
`GRANTING MOTION TO DISMISS
`
`
`
`
`
`
`
`
`
`
`In this trademark case, Plaintiff Kiva Health Brands LLC (“KHB”), a maker of
`natural foods and health supplements, brings suit against Defendant Kiva Brands Inc.
`(“KBI”), a maker of cannabis-infused chocolate and other “edibles.” Both companies
`claim the right to the KIVA mark. KHB has held a federally-registered trademark in the
`KIVA mark since 2014. However, KBI claims to have inherited the KIVA mark from
`predecessors who have been using it to make cannabis-infused edibles in California since
`2010. Now pending are (1) KHB’s Motion for a Preliminary Injunction, see KHB MPI
`(dkt. 21-1); (2) KHB’s Motion to Dismiss two of KBI’s counterclaims, see KHB MTD
`(also dkt. 21-1); and (3) KBI’s Cross-Motion for a Preliminary Injunction, see KBI MPI
`(dkt. 25-1).
`Because the Court concludes that neither party has met its burden for a preliminary
`injunction, the Court DENIES both such motions. The Court GRANTS KHB’s motion to
`dismiss the two counterclaims in light of KBI’s manufacture of a product that is illegal
`under federal law.
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Northern District of California
`United States District Court
`
`

`

`Case 3:19-cv-03459-CRB Document 52 Filed 09/06/19 Page 2 of 34
`
`
`
`I.
`
`BACKGROUND
`
`A.
`
`Plaintiff Kiva Health Brands LLC
`
`Plaintiff KHB is a Nevada corporation, created in 2010, with a principal place of
`business in Hawaii. Henderson Decl. (dkt. 21-2) ¶ 2. KHB distributes and sells “health
`and wellness foods and food supplements, sourced from farmers that practice sustainable
`and eco-friendly farming methods.” Id. ¶ 3. KHB registered the kivahealthbrands.com
`domain name in 2009, and developed a KIVA logo and its first KIVA product (berry
`powder) in early 2010. Id. ¶ 5. KHB sold KIVA-branded reusable grocery bags as of mid-
`2010, and sold KIVA-branded food products and food supplements as of February 2013.
`Id. ¶¶ 7, 8. KHB’s first online sales were on Amazon.com in June 2013; as of September
`2013, KHB also made sales through its website, www.kivahealthfood.com. Id. ¶ 8. KHB
`has been selling continuously using the KIVA mark since 2013, in California, interstate,
`and internationally. Id. ¶ 8.
`In September 2013, KHB filed an application with the USPTO to register the KIVA
`mark in connection with food products. Id. ¶ 9. The USPTO issued that registration in
`April 2014. Id., Ex. A.1 In 2015 and 2016, KHB obtained two other trademark
`registrations for the mark KIVA to be used on additional food and cosmetic products. Id.
`¶ 9, Exs. B and C.2
`According to KHB’s Managing Member, Tchad Henderson, KHB is “associated
`with quality products, and is well known as a source of safe, healthy, and environmentally
`friendly food products and food supplements.” Id. ¶ 10. KHB spent $245,000 in 2016,
`$720,000 in 2017, and $1,360,000 in 2018 to promote its KIVA-branded products. Id.
`
`
`1 “For: Organic Foods, Namely Maqui Berry Powder, and Wheatgrass Powder, in Class 29. . . .
`For: Organic Foods, Namely, Cacao Powder; Organic Spices, Namely, Saffron, Vanilla, Black
`Pepper, and Seasoned Salts, in Class 30. . . . The Mark Consists of Standard Characters Without
`Claim to Any Particular Font, Style, Size, or Color.” Id. Ex. A (Registration No. 4,514,257).
`2 In particular, Registration No. 5,108,487 includes “Class 30: Candy” with a First Use in
`Commerce of February 15, 2013. See id. Ex. C.
`2
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Northern District of California
`United States District Court
`
`

`

`Case 3:19-cv-03459-CRB Document 52 Filed 09/06/19 Page 3 of 34
`
`
`
`B.
`
`Defendant Kiva Brands Inc.
`
`Defendant KBI is a leading provider of cannabis-infused chocolates and
`confections. Palmer Decl. (dkt. 24-1) ¶ 4. KBI started in November 2010 as a California
`not-for-profit mutual benefit corporation named Indica. Id. ¶¶ 6, 8. Founders Scott Palmer
`and Kristi Knoblich brainstormed potential trade names for the company, and decided on
`“Kiva Confections.” Id. ¶ 7, Ex. A. Indica manufactured, sold, and distributed products
`bearing the names KIVA and/or KIVA CONFECTIONS with permission from Palmer and
`Knoblich. Id. ¶ 9.
`The contract that purports to govern that arrangement is the TM License
`Agreement, between Palmer and Knoblich, Licensors, on the one hand, and Indica,
`Licensee, on the other. See id. Ex. B. It states that Licensors own the trademark Kiva and
`are granting to Licensee “an exclusive, royalty-bearing right and license to use the
`Licensed Rights in the Territory for the processing, production, and sale of the Products.”
`Id. at 1, 3. The TM License Agreement states that it is “entered into as of November 23,
`2010,” and also that the Execution Date of the contract is November 23, 2010. See id.
`Palmer acknowledged in the course of this litigation that the “TM License Agreement was
`signed in or around October 2018,” though he asserts that it “memorialized the agreement
`that had existed since November 2010.” Palmer Decl. ¶ 9B.3 The TM License Agreement
`is signed by Palmer and Knoblich, and there is a typewritten signature for “Matt Desano,
`Director” on behalf of “Indica, Inc. (DBA Kiva Confections).” See id. Ex. B at 20.
`Palmer and Knoblich formed KBI in 2014. Palmer Decl. ¶ 10. Palmer asserts that
`“[b]etween approximately 2014 through 2017, Indica and related entities were reorganized
`into KBI and its wholly-owned subsidiaries.” Id.4 As part of that reorganization, Palmer
`
`
`3 Palmer testified in his deposition that it appeared that the license agreement was signed in
`November 2010. See Miller Decl. (dkt. 21-4) ¶ 8. In subsequent correspondence, Palmer
`corrected that testimony to say that it was signed around October 2018, effective November 23,
`2010. Id., Ex. L
`4 KHB points out that Indica still exists as a California company. KHB Opp’n to KBI (dkt. 28) at
`10, Johnson Decl. Ex. 9 (California Secretary of State Business Search Entity Detail of June 5,
`2019, showing that Indica is “Active”).
`
`3
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Northern District of California
`United States District Court
`
`

`

`Case 3:19-cv-03459-CRB Document 52 Filed 09/06/19 Page 4 of 34
`
`
`
`and Knoblich transferred “all rights, title, and interest (including but not limited to, all
`registration rights, all rights to prepare derivative works, all goodwill and all other rights,
`in and to the intellectual property” to KBI pursuant to an Intellectual Property and Sale
`Agreement (“IP Sale Agreement”) dated October 30, 2014. Id. ¶ 11, Ex. C. That
`agreement listed the California trademark for KIVA and the trademark application for
`KIVA among the intellectual property being sold. Id. Schedule A.
`Palmer and Knoblich co-founded KBI, Indica, and all of their affiliates. Palmer
`Decl. ¶ 12. They have been the majority and controlling owners/members since the
`entities’ inception. Id. “The main activity of all of these businesses has always been to
`manufacture, distribute, and sell and promote ‘Kiva Confections’ and its products.” Id.
`Indica made its first sales in Northern California in December 2010, and expanded
`to Southern and Central California in 2011. Id. ¶ 13. By 2015, KBI was also selling in
`Arizona, Nevada, Illinois, Hawaii and Michigan. Id. ¶ 14. Palmer declares that since
`2010, KBI has used both “KIVA” and “KIVA CONFECTIONS” on its products, and that
`there has never been a strategic change in how often KBI uses one or the other. Id. ¶ 15.
`KBI has continuously sold products with the KIVA mark since December 2010. Id. ¶ 18.
`In that time, KBI has sold millions of units, including 1,705,000 units in California in
`2018. Id. It has a marketing budget of $6.5 million for the 2019 year. Id. “Over the past
`several years,” KBI registered the KIVA mark on the state level in California and other
`states. Id. ¶ 20, Ex. H.5 A California trademark issued on January 20, 2018 for the mark
`KIVA for “Chocolate and confections, all of the foregoing containing cannabis,” with a
`date of first use of December 1, 2010. Palmer Decl. Ex. H.
`
`C.
`
`The Conflict Between the Parties
`
`Palmer and KBI first became aware of KHB’s use of the KIVA mark in August
`
`
`5 KBI also filed a USPTO “intent to use” application in 2017, seeking a registration for the KIVA
`mark for “a website featuring health, wellness and nutrition information . . . all in the field of
`herbal remedies, medical benefits of cannabis, medical cannabis strains . . . and effects of
`medic[al] cannabis.” See Amended Counterclaim ¶ 28.
`4
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Northern District of California
`United States District Court
`
`

`

`Case 3:19-cv-03459-CRB Document 52 Filed 09/06/19 Page 5 of 34
`
`
`
`2017. Palmer Decl. ¶ 21. Henderson and KHB first became aware of KBI in 2015.
`Henderson Decl. ¶ 12. Henderson understood at the time, apparently wrongly, “that [KBI]
`was selling marijuana-containing products, exclusively or primarily in the San Francisco
`Bay Area, and that its products were labeled ‘Kiva Confections.’” Id. Henderson learned
`“more recently” that KBI was selling some of its products without the “Confections”
`identifier, and that KBI was selling throughout the state of California and in other states.
`Id. In late 2016 or early 2017, KHB became aware that some of its consumers were
`confusing KHB’s brand with KBI’s. Id. ¶ 13. In January 2017, KHB staff began making a
`consumer confusion log. Id., Ex. E. KHB contends that the consumer confusion is
`causing KHB “economic damage and injury to its reputation and good will.” Henderson
`Decl. ¶ 15. Henderson asserts that “[KHB’s] products are environmentally friendly,
`unadulterated and healthy, but consumers will be confused by the similar marks, and will
`likely [] become worried, or erroneously assume, that [KHB’s] KIVA-brand food products
`are infused with marijuana.” Id.
`In May 2018, KHB’s counsel sent a cease and desist letter to KBI. Henderson Decl.
`Ex. F. KBI responded in May 2018 that it had been making continuous use of the KIVA
`mark for seven years. Johnson Decl. Ex. 1 (dkt. 27-1). It stated that it was not aware of
`any consumer confusion, but that it nonetheless wished to “take appropriate steps to
`minimize, if not eliminate[] misdirected contact to KHB.” Id. KBI asserted that it had
`common law rights to the mark in California that predated KHB’s USPTO registration,
`suggested that the KHB trademarks were vulnerable, and concluded by seeking “to discuss
`an amicable resolution.” Id. KBI wrote to KHB’s counsel again in late July 2018. See
`Johnson Decl. Ex. 2. That letter continued to assert KBI’s common law rights to the
`KIVA mark, and stated that a KHB proposal to mediate or arbitrate the dispute “may be
`premature.” Id.
`KHB brought suit in September 2018 for trademark infringement, unfair
`competition in violation of the Lanham Act, declaratory relief, and unfair and deceptive
`trade practices under state law. See generally Compl. (dkt. 1). It served the Complaint in
`5
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`Northern District of California
`United States District Court
`
`

`

`Case 3:19-cv-03459-CRB Document 52 Filed 09/06/19 Page 6 of 34
`
`
`
`December 2018, see Waiver of Service Executed (dkt. 4), after the parties participated in a
`structured mediation in November and December 2018, see KHB Reply re MPI (dkt. 27) at
`4. KBI filed counterclaims. See Counterclaims (dkt. 8); Amended Counterclaims (dkt.
`10). KHB then filed for a motion for preliminary injunction in March 2019, seeking to
`enjoin KBI from any further use of the KIVA mark. See KHB MPI at 18. That same
`filing includes a motion to dismiss two of KBI’s counterclaims. See KHB MTD. In May
`2019, KBI filed a cross-motion for preliminary injunction, seeking to enjoin KHB from
`using the KIVA mark within California. See KBI MPI at 1.
`This Court received this case in June when it was transferred in from the Southern
`District of California. See Case Transferred In (dkt. 31).
`LEGAL STANDARD
`II.
`A preliminary injunction should issue where the plaintiff establishes that “he is
`likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of
`preliminary relief, that the balance of equities tips in his favor, and that an injunction is in
`the public interest.” See Rodriguez v. Robbins, 715 F.3d 1127, 1133 (9th Cir. 2013)
`(citing Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). The Ninth
`Circuit has adopted a “sliding scale approach,” such that “’serious questions going to the
`merits’ and a balance of hardships that tips sharply towards the plaintiff can support
`issuance of a preliminary injunction, so long as the plaintiff also shows that there is a
`likelihood of irreparable injury and that the injunction is in the public interest.” Alliance
`for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134–35 (9th Cir. 2011). The
`“[l]ikelihood of success on the merits ‘is the most important’ Winter factor[.]” Disney
`Enters., Inc. v. VidAngel, Inc., 869 F.3d 848, 856 (9th Cir. 2017).
`Motions to dismiss are governed by Federal Rule of Civil Procedure 12(b)(6).
`Courts adjudicating such motions must ask whether the complaint “contain[