Sugar Factory, LLC v. Glossy Pops, LLC, 2:19-cv-01438

Background

Plaintiff Sugar Factory, LLC owns registered trade dress and the mark "COUTURE POPS®" for a bejeweled lollipop product introduced in 2009 and registered in 2011.
From 2014–2017 Sugar Factory contracted with Project Group and the Harari defendants to manufacture Couture Pops®; Sugar Factory alleges the Hararis gained confidential trade dress information and a mold.
Sugar Factory terminated the relationship in late 2017, alleges the Hararis retained the mold, and that roughly ten months later the Hararis launched Glossy Pops, selling products that allegedly copy Couture Pops®.
Plaintiff asserts federal and state claims including false designation, trade dress infringement, trade dress dilution (federal and Cal. law), common-law trademark infringement, UCL, breach of contract(s), and conversion.
Defendants moved to dismiss for lack of personal jurisdiction (Rule 12(b)(2)); additionally moved to dismiss the federal and state dilution claims (Rule 12(b)(6)).
The court found a prima facie basis for specific jurisdiction over Shai and Kelly Harari, denied jurisdictional dismissal as to them; denied without prejudice dismissal as to Shchekin, Glossy Pops Sourcing, Project Group, Glossy Pops UK and Glossy Pops Asia and granted limited (90-day) jurisdictional discovery; denied dismissal of the dilution claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Personal jurisdiction over Shai and Kelly Harari	Hararis controlled Glossy Pops, participated in design, manufacture, marketing and knowingly targeted California causing harm there	Hararis lack contacts with California; allegations are vague and conclusory; fiduciary‑shield protects them	Court: specific jurisdiction exists; allegations + uncontroverted travel/marketing suffice; motion denied
Personal jurisdiction over Philipp Shchekin	Shchekin designed/developed Glossy Pops, breached confidentiality, transacted business in district	No factual connection to California; only an employee; fiduciary‑shield shields him	Court: dismissal denied without prejudice; granted 90 days limited jurisdictional discovery
Personal jurisdiction over NY & foreign corporate defendants (Glossy Pops Sourcing, Project Group, Glossy Pops UK/Asia)	These entities are alter egos/controlled by Hararis; discovery can show contacts/alter‑ego	Entities do not do business in California; no jurisdiction	Court: dismissal denied without prejudice; granted 90 days limited jurisdictional discovery to probe alter‑ego/contacts
Failure to state federal and state dilution claims	Couture Pops are famous and distinctive; extensive publicity, sales, recognition, and registrations support fame	Fame insufficiently pled for dilution	Court: allegations of advertising, sales, recognition, celebrity exposure, and registrations are adequate at pleading stage; dilution claims survive

Key Cases Cited

Sher v. Johnson, 911 F.2d 1357 (9th Cir. 1990) (plaintiff bears burden to establish personal jurisdiction)
Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126 (9th Cir. 1995) (prima facie showing required when no evidentiary hearing)
Pebble Beach Co. v. Caddy, 453 F.3d 1151 (9th Cir. 2006) (pleading‑stage jurisdictional standard)
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004) (uncontroverted allegations in complaint must be taken as true)
Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998) (federal courts exercise jurisdiction to extent state law allows)
Int’l Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (minimum contacts and due process standard)
World‑Wide Volkswagen v. Woodson, 444 U.S. 286 (U.S. 1980) (defendants must reasonably expect to be haled into forum)
Dole Food Co. v. Watts, 303 F.3d 1104 (9th Cir. 2002) (Calder effects test for purposeful direction)
Calder v. Jones, 465 U.S. 783 (U.S. 1984) (effects test: intentional act expressly aimed at forum causing foreseeable harm)
A–Z Sporting Goods, Inc. v. Wash. Shoe Co., 704 F.3d 668 (9th Cir. 2012) (requiring more than foreseeable effects to show express aiming)
Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082 (9th Cir. 2000) (express aiming analysis)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility pleading standard)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading requirements for actionable claims)
Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628 (9th Cir. 2008) (elements of dilution under § 1125(c))
Avery Dennison Corp. v. Sumpton, 189 F.3d 868 (9th Cir. 1999) (scope and purpose of dilution doctrine)
Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406 (9th Cir. 1977) (jurisdictional discovery should be allowed where pertinent facts are controverted)