San Diego County Credit Union v. Citizens Equity First Credit Union
3:18-cv-00967
| S.D. Cal. | Oct 2, 2018Background
- SDCCU (plaintiff) owns numerous federal service-mark registrations including the ‘596 mark (“IT’S NOT BIG BANK BANKING. IT’S BETTER”); CEFCU (defendant) owns registrations for “CEFCU. NOT A BANK. BETTER” and a common-law mark “NOT A BANK. BETTER.”
- CEFCU filed a TTAB cancellation petition against SDCCU’s ‘596 registration alleging likelihood of confusion and damage from SDCCU’s continued use; TTAB proceedings were stayed after SDCCU filed this district-court action.
- SDCCU sued for declaratory judgment of non-infringement and invalidity (first four claims), plus Lanham Act § 1120 fraud in procuring registration (fifth), § 1125 unfair competition (sixth), and state/common-law unfair competition (seventh and eighth); SDCCU later agreed to dismiss the state/common-law claims.
- CEFCU moved to dismiss for lack of subject-matter jurisdiction (no actual controversy under the Declaratory Judgment Act) and under Rules 12(b)(6)/9(b) for failure to state fraud/unfair-competition claims with requisite particularity.
- The court found SDCCU had a real and reasonable apprehension of suit based on CEFCU’s TTAB pleadings and related disclosures and denied the 12(b)(1) dismissal; the court dismissed the §1120 and §1125 claims for failure to plead recoverable damages (§1120) and lack of a §1125 marketplace/commerce allegation, but granted leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there is an Article III "actual controversy" for declaratory relief on non-infringement/invalidity | TTAB cancellation pleadings, disclosures, and CEFCU’s California contacts create a reasonable apprehension of infringement suit | Mere TTAB cancellation (and no explicit threat or cease-and-desist) does not create a real, immediate controversy | Court: Plaintiff has a real and reasonable apprehension; DJA jurisdiction exists — 12(b)(1) denial |
| Whether the §1120 fraud-on-the-PTO claim pleads fraud with particularity under Rule 9(b) | Complaint identifies who/what/when/where (specific declaration dates and alleged false interstate-use and knowledge of third-party marks), and intent may be pled generally | Plaintiff fails to allege specific subjective intent to deceive PTO and specific falsity | Court: Rule 9(b) satisfied as to factual allegations; denial of 9(b) challenge, but claim dismissed for failure to allege recoverable damages under §1120 (leave to amend to allege non-fee damages) |
| Whether attorney’s fees alone constitute recoverable damages under 15 U.S.C. §1120 | Fees and costs are recoverable and are among consequential damages alleged | Section 38 (§1120) does not expressly authorize attorneys’ fees; Fleischmann/related precedent counsel against fee recovery absent statutory text | Court: Attorneys’ fees are not recoverable under §1120; dismissal without prejudice to plead other damages (leave to amend) |
| Whether the §1125(a) Lanham Act unfair-competition claim is adequately pleaded | §1125 should be read broadly to cover CEFCU’s false statements to the PTO and cancellation petition made in bad faith | §1125 requires a false or misleading representation used in commerce/marketplace capable of causing consumer confusion; TTAB filings alone are not market communications | Court: §1125 requires marketplace use/communication; complaint fails to allege such commerce-based statements — claim dismissed with leave to amend |
Key Cases Cited
- MedImmune, Inc. v. Genentech, 549 U.S. 118 (2007) (DJA actual‑controversy standard under Article III)
- Chesebrough‑Pond’s, Inc. v. Faberge, Inc., 666 F.2d 393 (9th Cir. 1982) (plaintiff’s perceptions and reasonable inferences can show apprehension of suit from pre‑suit opposition pleading)
- Rhoades v. Avon Prods., Inc., 504 F.3d 1151 (9th Cir. 2007) (reasonable‑apprehension test for trademark declaratory relief)
- Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942) (factors for whether district court should exercise DJA jurisdiction)
- Dizol (Gov’t Employees Ins. Co. v. Dizol), 133 F.3d 1220 (9th Cir. 1998) (prudential Brillhart/DJA factors and avoidance of duplicative litigation)
- Exergen Corp. v. Wal‑Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009) (pleading inequitable-conduct/intent to deceive the PTO — intent may be alleged generally but underlying facts must permit a reasonable inference)