250 F. Supp. 3d 596
C.D. Cal.2017Background
- UL LLC owns registered, incontestable UL certification and service marks and licenses their use only for certified products; UL announced a hoverboard safety standard (UL 2722) in Feb 2016 and first certified products in May–June 2016.
- Space Chariot, founded by Kevin Walker, sold hoverboards and repeatedly displayed replicas of the UL Certification Mark and statements that its products were "UL certified" on its website and social media beginning as early as Dec 2015–Jan 2016.
- UL sent cease-and-desist notices and an investigator confirmed Space Chariot sold non-UL boards; communications show Space Chariot purchased both non‑UL and later UL‑certified boards from a supplier (JOMO/Deep Vapes) and continued using UL marks broadly.
- UL sued for trademark infringement, counterfeiting, false designation, UCL, and false advertising; the court previously issued a TRO, a stipulated preliminary injunction, and found civil contempt/sanctions against defendants for violating injunction terms.
- Space Chariot sought leave to file a third‑party indemnity claim against Deep Vapes; UL moved for partial summary judgment on trademark infringement and counterfeiting as to Space Chariot.
- The court denied leave to implead Deep Vapes (prejudice/delay, impleader not required to pursue indemnity) and granted UL partial summary judgment on LF claims, finding willful counterfeiting and awarding $1,000,000 statutory damages to UL (attorneys’ fees denied).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Space Chariot may implead Deep Vapes under Rule 14 | Impleading Deep Vapes promotes judicial economy and allows access to supplier records relevant to indemnity | Impleader is unnecessary; would delay the case and prejudice UL; Space Chariot can sue separately or pursue third‑party discovery | Denied — impleader would unduly delay and prejudice UL; Space Chariot may file a separate indemnity action |
| Whether Space Chariot used UL marks without consent (ownership/use element) | UL: owns valid marks and Space Chariot used identical replicas in advertising | Space Chariot contests some factual assertions but offers no contradictory evidence | Granted — undisputed that UL owns marks and Space Chariot used identical replicas without consent |
| Whether Space Chariot’s use was likely to cause confusion (Lanham Act) | UL: marks are strong, goods related, marks identical, consumer care low, intent to deceive; likelihood of confusion follows | Space Chariot disputes some Sleekcraft factors and invokes nominative fair use | Granted — majority of Sleekcraft factors favor UL; use was likely to cause confusion |
| Whether defendants can invoke nominative fair use or avoid willfulness | Defendants: use referred to supplier certification and later certified products; nominative use applies; not willful | UL: use preceded available certification; defendants continued broad representations; notice and communications show knowledge | Denied — nominative fair use fails (marks were not "true marks" when used); defendants’ use was willful |
| Appropriate remedy: statutory damages and fees | UL elected statutory damages up to the willful cap and sought $2,000,000 plus fees | Defendants argued against willfulness and large damages; sought to show cooperation and lack of culpability | Court awarded $1,000,000 statutory damages (reduced as windfall concern); denied attorneys’ fees (case not "exceptional") |
Key Cases Cited
- Stewart v. Am. Int’l Oil & Gas Co., 845 F.2d 196 (9th Cir. 1988) (Rule 14 impleader requires third‑party liability to be derivative of main claim)
- Southwest Admins., Inc. v. Rozay’s Transfer, 791 F.2d 769 (9th Cir. 1986) (district court has discretion to permit impleader)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct. 1986) (summary judgment burden shifting principles)
- Anderson v. Liberty Lobby, 477 U.S. 242 (Sup. Ct. 1986) (standard for genuine dispute of material fact)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (Sup. Ct. 1986) (inferences at summary judgment viewed in light most favorable to nonmovant)
- Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190 (9th Cir. 2012) (Lanham Act ownership and likelihood of confusion framework)
- Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011) (Sleekcraft factors and strength/recognition of marks)
- AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) (eight‑factor likelihood of confusion test)
- Dr. Seuss Enters. v. Penguin Books USA, Inc., 109 F.3d 1394 (9th Cir. 1997) (use of Sleekcraft factors in trademark cases)
- Adobe Sys. Inc. v. Christenson, 809 F.3d 1071 (9th Cir. 2015) (nominative fair use doctrine and limits where mark use is not truthful)
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749 (Sup. Ct. 2014) (definition of "exceptional" case for fee awards)