ORDER ON MOTIONS FOR SUMMARY JUDGMENT
I. INTRODUCTION
Now before the Court are two motions for summary judgment in this trademark infringement and unfair competition case. First, Plaintiff Fitbug Ltd. (“Fitbug”) seeks partial summary judgment on likelihood of confusion; Defendant Fitbit, Inc.’s (“Fitbit”) affirmative defense of laches; and Fitbit’s fifth and sixth counterclaims. ECF No. 47-3 (“Fitbug Mot.”). Second, Fitbit moves for summary judgment on two affirmative defenses: laches and acquiescence. ECF No. 50 (“Fitbit Mot.”). Both motions are fully briefed,
II. BACKGROUND
Fitbit and Fitbug both produce portable electronic fitness tracking devices. These devices are wearable, and collect data about a user’s steps walked, calories burned, activity intensity, sleep, and other health and fitness metrics. Portable electronic fitness tracking devices also connect to the internet or a user’s computer or smartphone, and, in conjunction with an application or website, allow the user to view and analyze the data collected, set or track fitness goals, and collect other information relevant to the user’s health 'and fitness plans.
Fitbug owns two federal trademark registrations, and Fitbit also owns a federal trademark registration.
There have been several variations of the parties’ logos throughout their history, but the relevant logos are:
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Fitbug, headquartered in the United Kingdom and founded in 2004, was one of the first companies to enter the portable electronic fitness tracker market. Since that time, Fitbug has made both sales directly consumers (“business-to-consumer” sales), and so-called “business-to-business-to-consumer” sales of its products. Business-to-business-to-consumer sales include sales to health insurance plans, corporate wellness programs, and other programs, and generally involve incentives like bulk discounts as well as special tools for tracking group fitness goals or running fitness competitions. Initially, Fitbug focused on the British market, but in 2005 it sought to sell its products in the United States as well. Since that time, however, Fitbug’s success in the United States market has been limited.
Fitbit, headquartered in San Francisco, is one of the leading providers of portable electronic fitness trackers. James Park
Fitbit first announced its products on September 9, 2008. By the next day, Fit-bit’s website featured information regarding its first device, the Fitbit Classic, as well as a link for businesses or individuals to place orders for the devices. Id. ¶ 13; Ex. 5. Nonetheless, Fitbit did not begin shipping its products until September 2009, and early on, only a small amount of Fitbit’s sales were in the business-to-business-to-consumer category. However, over time Fitbit’s sales grew substantially both in general and in the business-to-business-to-consumer market.
The day Fitbit announced its product, Fitbug received several emails and other contacts stating that Fitbit was entering the portable electronic fitness tracking device market. Additionally, a representative of Fitbug sought (unsuccessfully) to contact Fitbit to explore a potential business partnership. Over the next weeks and months, internal communications show that Fitbug was concerned about potential competition from Fitbit, and was contemplating various responses including sending a cease and desist letter. See ECF No. 46 (“Wakefield Decl.”) Exs. 17-23. Nevertheless, Fitbug did not assert any violation of its trademark rights at that time. Instead, Fitbug first assert infringement of its rights by Fitbit in a December 2011 letter. Park Decl. at ¶26; Ex. 11. Fitbit denied infringement, and subsequent letters failed to resolve the dispute. Id.
Fitbug filed suit on March 29, 2013 alleging trademark infringement under 15 U.S.C. Section 1114(1), unfair competition under 15 U.S.C. Section 1125(a), common law trademark infringement and unfair competition, violations of the California Business and Professions Code Section 17200, and seeking cancellation of Fitbit’s trademark registration. See ECF No. 1 (“Compl.”). Fitbit counterclaimed, alleging unfair competition and false or misleading advertising under California law. ECF No. 43 (“Am. Answer & Counter-Cls.”) at ¶¶ 189-255.
Now, both parties have filed motions for summary judgment seeking to resolve significant portions of these claims. The matter is currently set for trial beginning on February 9, 2015.
III. LEGAL STANDARD
Entry of summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment should be granted if the evidence would require a directed verdict for the moving party. Anderson v. Liberty Lobby, Inc., 477 U,S. 242, 251,
IV. DISCUSSION
Fitbug moves for summary judgment on three issues. First, Fitbug believes the Court should find as a matter of law that they have demonstrated a likelihood of confusion among consumers. Second, Fit-bug argues that laches do not bar its claims. Finally, Fitbug seeks summary
Fitbit opposes these arguments and moves for summary judgment in its own right arguing that Fitbug’s claims are barred by laches, and, in any event, Fit-bug’s claims are barred by its acquiescence to Fitbit’s use of the Fitbit mark. Because the Court finds that Fitbug’s claims are barred by laches, the Court need only address that issue and Fitbit’s unfair competition and false advertising claims.
A. Laches
Fitbit’s primary argument is that Fitbug’s claims are barred by laches. “Laches is an equitable time limitation on a party’s right to bring suit, resting on the maxim that one who seeks the help of a court of equity must not sleep on his rights.” Jarrow Formulas, Inc. v. Nutrition Now, Inc.,
Two issues determine whether a delay was unreasonable. “First' [a court] assesses] the length of delay, which is measured from the time the plaintiff knew or should have known about its potential cause of action.” Jarrow,
First, the Court must determine when Fitbug “knew or should have known about its potential cause of action.” Id. This standard can be satisfied by either actual or constructive knowledge, because “[cjompanies expecting judicial enforcement of their marks must conduct an effective policing effort.” Grupo Gigante Sa De CV v. Dallo & Co. Inc.,
The undisputed facts are as follows. Fitbit announced its products on September 9, 2008 and began receiving significant media coverage. Park Deck ¶ 10. By the next day, Fitbit’s website was active and visitors to the site could see Fitbit’s trademark, learn about its products, and place an order for the original Fitbit device. Id. ¶ 13, Ex. 5. Beginning that day and continuing for some time after, individuals within and outside the Fitbug organization contacted Fitbug to point out Fitbit’s entry in the market. Those emails refer to Fit-bit as, among other things, “[a]nother competitor,” suggest aspects of Fitbit’s user interface are a “total ripoff,” and note that while Fitbit’s entry into the market is “[n]othing to panic about, ... [Fitbit] will become an issue and I’d rather be one step ahead.” Wakefield Deck Exs. 9-17. In
Over the next several months, Fitbug explored several potential responses to Fitbit. First, beginning two days after Fitbit announced its products, Fitbug’s Chief Marketing Officer (“CMO”) (unsuccessfully) attempted to contact Fitbit to discuss potential partnerships. Id. Exs. 17, 20. Then, on October 14, in an email conversation with the CMO, an attorney said, “I was wondering if they were infringing on your IP — sounds like some improvements on your idea, but pretty close to [F]itbug including the name.” Id. Ex. 19. A month later a Fitbug employee wrote to Landau “to remind [him] of Fit-bit” because he was “thinking of sending them a cease and desist.” Id. Ex. 21. Around the same time, Landau referred to Fitbit as “thieving bastards[.]” Id. Ex. 23.
Nevertheless, Fitbit did not begin shipping its products to consumers until September 2009. After that point, Fitbug received several further emails regarding Fitbit’s activities. For instance, another lawyer contacted Fitbug’s CMO to point out that Fitbit “could cause confusion in the classic trademark sense.” Id. Ex. 31.
That statement — that Fitbit’s mark could cause consumer confusion — is the crucial issue for determining when Fitbug knew or should have known of its potential cause of action. “The essence of ... a [trademark infringement] claim centers on the likelihood of confusion between two marks or products.” Internet Specialties W., Inc. v. Milon-DiGiorgio Enters., Inc.,
The Ninth Circuit’s answer to this question in Internet Specialties is instructive. In that case, the parties were internet service providers with similar names (“IS-West.com” and “ISPWest.com”). Id. at 988. ISWest became aware of ISPWest’s existence shortly after ISPWest registered its domain name in late 1998. Id. At that time, the two companies offered somewhat different services — ISWest offered dial-up and high-speed access nationwide, while ISPWest initially provided only dial-up access in Southern California. Id. According to ISWest’s CEO, the company was not concerned about ISPWest at the time (even though they were aware of its existence) because ISPWest did not offer high speed internet and because the highly volatile internet startup market meant that ISPWest might well go out of business. Id. Instead, ISWest waited to file suit alleging trademark infringement until 2005, after ISPWest had expanded into a provider of nationwide, high-speed internet access. Id. Despite this gradual expansion into the high speed internet market, the Ninth Circuit found that the laches period started in 1998. The court noted that even though ISPWest “did not offer DSL in 1998, both companies did offer internet access, e-mail, and web hosting in the same geographic area under remarkably similar names,” and thus “[a] prudent business person should recognize the likelihood of confusion to consumers under such circumstances .... ” Id. at 990-91.
In this case, the Court finds that Fitbug knew or should have known of the likelihood of confusion by, at the latest, September 2008, after Fitbit’s launch. While Fit-bit was not yet shipping its products, at that time, Fitbit was selling similar devices
Fitbug argues essentially for a per se rule that the laches period can never run “prior to the defendant’s actual sale of its goods or services.” Fitbug Opp’n at 8. There are several problems with that proposal. First, it is undisputed that Fitbit was selling its product in September 2008; it simply had not shipped the products yet. Park Decl. ¶ 13 (“On September 9 or September 10, 2008, Fitbit’s website .... contained a description and images of the Fitbit fitness tracker and invited any potential customer to order the product by clicking a prominent “BUY” button.”) (emphasis added).
Moreover, Fitbug’s support for this rule rests on two flawed premises. First, Fitbug argues that “concrete evidence” of several of the likelihood of confusion factors in AMF Inc. v. Sleekcraft Boats,
Fitbug’s second argument, that between September 2008 and September 2009 (when Fitbit first shipped its products) and it appeared possible that Fitbit would go out of business, is irreconcilable with the purpose of laches. As Judge Learned Hand wrote in the copyright context:
it is inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploitation, and to intervene only when his speculation has proved a success. Delay under such circumstances allows the owner to speculate without risk with the other’s money; he cannot possibly lose, and he may win.
Haas v. Leo Feist, Inc.,
The Court concludes that Fitbug had actual knowledge of its potential causes of action against Fitbit in September 2008. As a result, the length of Fitbug’s delay runs for approximately four and a half years until it filed suit in March 2013.
Even though Fitbug delayed approximately four and a half years before filing suit, that does not end the inquiry. See Internet Specialties,
In assessing whether a plaintiffs delay was reasonable, the Court looks to the limitation period for the most analogous state law cause of action. Jarrow, 304 F.3d at 837. If Fitbug’s claims were “filed within the analogous state limitation period, the strong presumption is that laches is inapplicable; if the claim is filed after the analogous limitations period has expired, the presumption is that laches is a bar to suit.” Id. (collecting cases); see also Internet Specialties,
The parties dedicate a significant amount of attention to the question of what the most analogous cause of action is to trademark infringement and unfair competition in California law, and what the statute of limitations is for such claims. For years, the Ninth Circuit and district courts in California have almost universally assumed the answer is the four-year limitation periods contained in California Code of Civil Procedure Sections 337 or 343. See, e.g., Internet Specialties,
Instead, Fitbit argues that the Ninth Circuit’s references to the four-year limitations period in Miller and Internet Specialties overlooked important California precedent bearing on the statute of limitations for trademark infringement and is inconsistent with both California law and prior Ninth Circuit precedent. Specifically, Fitbit argues that because the Califor
While the Court believes that Fitbit’s argument is meritorious, and that the line of cases assuming the four-year limitation period in Section 343 is applicable to trademark infringement and unfair competition claims is questionable, the Court need not resolve this issue. Because the Court previously found that the laches period began four and a half years before Fitbug filed suit, Fitbug’s claims are presumptively untimely even under the four-year period it urges. Accordingly, the Court presumes that Fitbug’s claims are untimely. See Saul Zaentz,
First, Fitbug argues that the doctrine of progressive encroachment justifies its delay. “ ‘Under this doctrine, the trademark owner need not sue in the face of de minimis infringement by the junior user.’ ” Tillamook Country Smoker, Inc. v. Tillamook County Creamery Ass’n,
Specifically, Fitbug argues that the doctrine of progressive encroachment applies because Fitbit expanded into the so-called ‘business-to-business-to-consumer’ market “no earlier than mid-2011, less than two years before Fitbug filed suit.” Fitbit Opp’n at 9. As explained earlier, the business-to-business-to-consumer market is made up of health insurance plans and corporate wellness programs, among others, and makes up a significant (although not always the majority, see Wake-field Decl. ¶¶ 5, 9, Ex. 4 at Interrog. No. 18, Ex. 8) share of Fitbug’s sales.
Fitbug bases its view of Fitbit’s alleged progressive encroachment on the declaration of its CEO, Paul Landau, who contends that:
“[f]rom 2008 through the [sic] mid-2011, it was the understanding of myself and others at Fitbug2 that Fitbit was focusing its distribution efforts on the direct to consumer channel .... [and] to the extent Fitbit was selling its products through the [business-to-business-to-consumer] market, (a) its distribution was in the form of offering bulk discounts to [business-to-business-to-consumer] customers, (b) such sales were almost exclusively a result of potential [business-to-business-to-consumer] customers reaching out to Fitbit as opposed to Fitbit initiating marketing contact, and (c) Fitbit was not providing Add-On Services to its [business-to-business-to-consumer] customers.
Landau Decl. ¶ 18. Fitbug describes “Add-On Services” as including, among other things, collecting and analyzing additional data for business-to-business-to-eon-sumer customers, creating separate web pages for business-to-business-to-consumer users, and offering additional exercise games or challenges in which fitness groups may participate. Id. at ¶ 5. “To Fitbug, if a distributor of activity trackers to [business-to-business-to-consumer] customers was not providing Add-On Services to these customers, that distributer [sic] was effectively not a participant in the [business-to-business-to-consumer] market and as a result, not a competitor of Fit-bug.” Id. at ¶ 18. Furthermore, Fitbug points out that Fitbit did not add a “Corporate Wellness” link on its website, which specifically targets the business-to-business-to-consumer market, until April 2012. Finally, Fitbug contrasts Fitbit’s business-to-business-to-consumer sales in 2009, which were only a small percentage of Fitbit’s overall sales, with its 2013 business-to-business-to-consumer sales, which accounted for substantially larger percent of Fitbit’s sales. ECF No. 66 (“Rosenberg Deck”) Ex. 6.
The problem with this view is that Fit-bit’s growth in the business-to-business-to-eonsumer market was simply the growth of its existing business, not expansion into a new market. Even drawing all justifiable inferences in Fitbug’s favor, see Anderson,
Nor do the facts support Fitbug’s view that Fitbit’s initial use of its mark was de minimis. On the contrary, Fitbit’s use of its mark was substantial from the outset, and Fitbit received both national and international media attention at the beginning. Park Deck ¶¶ 12-13, 34. In short, this media attention and prominent use of the mark (as well as Fitbug’s internal response) demonstrate that even if “[Fitbug] may have had no obligation to sue a small one-shop brick and mortar infringer, [Fit-bit’s] use of the mark was not de minim-is.” Saul Zaentz, 621 F.Supp.2d at 1115.
Also undermining Fitbug’s argument is its artificial and cramped description of the relevant market. Fitbug states that, in its view, unless another portable electronic fitness tracker company was providing similar Add-On Services to those Fitbug provided, that company was effectively not a competitor in the business-to-business-to-consumer market. But Fitbug offers no objective explanation for why this is the case, and in any event, a close reading of the Ninth Circuit’s progressive encroachment cases shows that expansion into a “different market” requires something more than simply expanding existing marketing channels or increasing sales in an area closely related to the junior mark holder’s existing business.
Take, for instance, the Ninth Circuit’s analysis of progressive encroachment in Tillamook Country Smoker, Inc. v. Tillamook County Creamery Association. In Tillamook, the plaintiff was a cheese company suing a defendant smoked meat company, both located in Tillamook County, Oregon.
Similarly, in this case, any expansion into the business-to-business-to-consumer market (no matter how that market is constituted) was simply the natural growth
Despite the presumption in favor of laches and Fitbug’s inability to show progressive encroachment, the Court must still weigh a series of factors to determine whether Fitbug’s delay in bringing suit was reasonable. Specifically, these factors, the so-called E-Systems factors, direct the Court to analyze “(1) the strength and value of the trademark rights asserted; (2) plaintiffs diligence in enforcing [the] mark; (3) harm to [the] senior user if relief is denied; (4) good faith ignorance by [the] junior user; (5) competition between [the] senior and junior users; and (6)[the] extent of harm suffered by the junior user because of [the] senior user’s delay.” E-Systems, Inc. v. Monitek, Inc.,
The first two factors weigh in Fitbit’s favor. First, while both Fitbit’s and Fit-bug’s marks are descriptive or suggestive, and thus relatively weak, see Grupo Gi-gante,
The third factor and fifth factors either weigh in Fitbug’s favor or can be assumed to do so for the sake of argument. The third factor, the harm to Fitbug if relief is denied, “turns largely on the court’s analysis of the likelihood of confusion.” RSI,
The remaining factors, good faith ignorance by Fitbit and the harm suffered by Fitbit as a result of Fitbug’s delay weigh in Fitbit’s favor as well. First, while it is undisputed that Fitbit was aware of Fit-bug’s existence prior to announcing or selling its products, it is also undisputed that Fitbit selected its mark before it was aware of Fitbug, and even after learning of Fitbug’s existence, Fitbit continued to believe there was no likelihood of confusion. Because this factor focuses on whether “[Fitbit] had prior knowledge of [Fit-bug] when it decided to adopt the name [Fitbit],” this factor weighs in Fitbit’s favor. Internet Specialties,
Nevertheless, Fitbug argues, relying on two out-of-jurisdiction authorities, that Fit-bit cannot be prejudiced because Fitbit knew of Fitbug’s rights prior to making these investments. See Roederer v. J. Garcia Carrion, S.A,
Considering the above factors, the Court finds they weigh in Fitbit’s favor. Nonetheless, Fitbug has one remaining argument: that Fitbit’s willful infringement bars it from asserting laches.
Because laches is an equitable doctrine, the exception to laches for willful infringers stems from “the equitable maxim that ‘he who comes into equity must come with clean hands.’ ” Danjaq,
In Danjaq LLC v. Sony Corp., the Ninth Circuit held that the Copyright Act’s definition of willful infringement — infringement that occurs ‘“with knowledge that the defendant’s conduct constitutes copyright infringement’ ” — is the standard by which courts should assess whether willful infringement bars the application of laches.
Fitbug points to four facts that it believes demonstrate willful infringement. First, “it is undisputed that Fitbit learned about Fitbug nearly two years before selling any products (and nearly one year before even announcing such products).” Fitbug Opp’n at 3. Second, pointing to screenshots of Fitbit’s and Fitbug’s websites, Fitbug argues that “Fitbit ... borrowed significant design elements from Fitbug’s website, marketing materials, and original logo.” Id.; Landau Decl. Exs. 15-18. Third, Fitbit continued using its marks after receiving a cease and desist letter from Fitbug alleging infringement. Finally, Fitbug disputes Fitbit’s view that “it began using the FITBIT mark before learning of Fitbug’s prior rights in FIT-BUG.” Fitbug Opp’n at 3 n.2.
The willfulness exception is inapplicable here because Fitbug can show “at most only infringement, not willful infringement,” Danjaq,
As a result, the Court finds that willful infringement does not bar Fitbit from invoking laches, and Fitbug’s claims are time-barred. Accordingly, Fitbit’s motion for summary judgment on the issue of laches is GRANTED. Further, because Fitbug’s claims are time-barred, the portion of Fitbit’s motion for summary judgment addressing acquiescence need not be addressed, and Fitbug’s motion for summary judgment on likelihood of confusion is DENIED as moot.
B. Fitbit’s Fifth and Sixth Counterclaims
The only remaining issue is Fitbug’s motion for summary judgment as to Fitbit’s fifth and sixth counterclaims, which assert claims for violations of California’s Unfair Competition Law (“UCL”) and False Advertising Law (“FAL”). See Cal. Bus. & Prof.Code §§ 17200; 17500. These causes of action relate to allegations that Fitbug violated the UCL and FAL by posting online reviews and comments about Fitbit products or comparing Fitbit’s products to Fitbug’s without disclosing their affiliations with Fitbug.
Fitbug argues that it is entitled to summary judgment on these claims because Fitbit cannot satisfy the requirement that a UCL or FAL plaintiff demonstrate it “suffered injury in fact and ... lost money as a result of’ the unfair competition or false advertising. See Id. §§ 17204; 17535. Because a UCL or FAL plaintiff must demonstrate an economic injury and demonstrate that “the misrepresentation was an immediate cause” of the injury suffered, standing under the UCL and FAL is “substantially narrower than federal standing under [A]rticle III.” In re Tobacco II Cases,
The background of this issue is somewhat convoluted, but it stems from a stipulation the parties entered into in response to Fitbit’s desire to amend its counterclaims late in the discovery process. When Fitbit sought to amend its counterclaims, Fitbug apparently sought to depose
In response, Fitbit points to several cases holding that, in the Lanham Act context, injury in fact may be presumed for intentionally deceptive advertising. See Southland Sod Farms v. Stover Seed Co.,
Next, Fitbit points to California cases holding that a UCL or FAL plaintiff can satisfy the statutory standing requirements in “innumerable ways” and that “the quantum of lost money or property necessary to show standing” under the UCL and FAL is “only so much as would suffice to establish injury in fact and it suffices to allege some specific, identifiable trifle of injury.” Law Offices of Mathew Higbee v. Expungement Assistance Servs.,
As a result, Fitbit has failed to demonstrate even a “specific, identifiable trifle of injury” sufficient to satisfy the standing requirements of the UCL or FAL. Id. Accordingly, Fitbug’s motion is GRANTED as to Fitbit’s fifth and sixth counterclaims.
V. CONCLUSION
For the reasons set forth above, Fitbit’s motion for summary judgment on the grounds of laches is GRANTED. Because Fitbug’s claims are time-barred, the Court need not address Fitbit’s arguments for summary judgment on the grounds of acquiescence, and Fitbug’s motion for summary judgment on the grounds of likelihood of confusion is DENIED as moot. Fitbug’s motion for summary judgment on Fitbit’s fifth and sixth counterclaims is GRANTED. Because, based on the Court’s review of the parties’ pleadings this order fully disposes of the parties’ claims, the trial date, pretrial conference, and all other pretrial deadlines are hereby VACATED.
IT IS SO ORDERED.
Notes
. ECF Nos. 61-3 ("Fitbit Opp'n”); 65-3 (“Fit-bug Opp’n”); 71-3 ("Fitbit Reply”); 74 ("Fit-bug Reply”).
. Landau's description of Fitbit’s activities throughout the relevant period is insufficient to create an issue of material fact as to Fitbit’s activities because Landau’s testimony on those issues would be inadmissible. See Fed. R.Civ.P. 56(c)(4); Orr v. Bank of Am., NT &