403 F.Supp.3d 813
N.D. Cal.2019Background
- Cisco sued BecTech and Arbitech alleging trademark/copyright infringement, counterfeiting, and related state-law claims for selling Cisco products on the secondary market (some allegedly counterfeit, some genuine but sold without warranty/support).
- Defendants (BecTech and Arbitech) answered and asserted counterclaims: (1) declaratory judgment that resale of genuine Cisco products lacking warranty does not violate the Lanham Act; (2) declaratory judgment that Cisco’s warranty-limitation practice violates N.Y. Gen. Bus. Law § 369-b; (3) California Unfair Competition Law (UCL) claim alleging anticompetitive conduct; and (4) Lanham Act false advertising claim based on (a) Cisco labeling unopened secondary-market goods as “used” and (b) representations that an embedded-software EULA forbids downstream use without a new Cisco license.
- Cisco moved to dismiss/strike the counterclaims and to strike the request for attorneys’ fees.
- The district court evaluated Article III jurisdiction for declaratory relief, Noerr-Pennington immunity, the availability of a private right of action under NY GBL § 369-b, Lanham Act false advertising elements (false statement, deception/materiality, proximate cause), and the UCL prongs.
- The court dismissed the NY GBL § 369-b declaratory claim (no private right of action) but otherwise denied Cisco’s motion: it found a justiciable controversy re: whether unwarranted genuine goods infringe; rejected Noerr-Pennington as a bar to the declaratory claim; found the Lanham Act false-advertising allegations sufficient (both “used” labeling and EULA representations survived dismissal); and held Defendants pleaded a viable UCL claim (unlawful, unfair, fraudulent prongs). The court also denied striking the attorneys’ fees request.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Declaratory judgment that resale of genuine unwarranted goods does not violate the Lanham Act | Cisco: no actual controversy on warranty-only theory; claim is outside dispute pleaded in FAC | Defs: Cisco put warranty squarely at issue; declaratory relief would resolve a real controversy about lawful resale | Court: Jurisdiction exists; claim is justiciable; motion DENIED |
| Noerr-Pennington immunity to declaratory claim | Cisco: Defs rely on Cisco’s litigation/petitioning to create controversy; Noerr-Pennington bars | Defs: claim is not seeking to punish petitioning; seeks declaration of noninfringement | Court: Noerr-Pennington does not bar the declaratory claim here; motion DENIED |
| Declaratory judgment under N.Y. Gen. Bus. Law § 369-b | Cisco: statute has no private right of action; alternatively claim fails on merits | Defs: § 369-b prohibits limiting warranty by dealer and supports declaratory relief | Court: § 369-b affords no private right of action; claim DISMISSED WITHOUT LEAVE TO AMEND |
| Lanham Act false advertising (and UCL derivative) | Cisco: allegations fail to plead a false statement, deception/materiality, or proximate causation | Defs: Cisco mislabels unopened secondary goods as "used" and misrepresents EULA bindingness; consumers deterred from buying on secondary market; Defs suffered lost sales | Court: Allegations sufficient on falsity (fact questions), deception/materiality, and proximate causation; Lanham Act claim survives; UCL claim likewise survives (unlawful, unfair, fraudulent prongs); motion DENIED |
| Request to strike attorney fees under CCP § 1021.5 | Cisco: strike fee request because counterclaims insufficient to vindicate public rights | Defs: their claims serve public interest of secondary-market consumers/resellers | Court: Fact-intensive inquiry unsuitable on motion to dismiss; request to strike DENIED |
Key Cases Cited
- Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010) (first-sale doctrine and licensee/owner test for software)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014) (proximate-cause standing under § 1125(a))
- Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163 (1999) (California UCL unfair-prong standard)
- Sosa v. DIRECTV, Inc., 437 F.3d 923 (9th Cir. 2006) (Noerr-Pennington doctrine principles)
- Noerr Motor Freight, Inc. v. Eastern R.R. Presidents Conference, 365 U.S. 127 (1961) (origins of petitioning immunity)
- United Mine Workers of America v. Pennington, 381 U.S. 657 (1965) (Noerr-Pennington expanded)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (Iqbal/Twombly pleading framework)