Case3:11-cv-06198-SC Document66 Filed02/16/13 Page1 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

BENJAMIN ASHUROV (SBN# 271716) Bashurov@KB-Ash.com KB ASH Law Group 5674 Sonoma Drive, Suite A Pleasanton, CA 94566 Telephone: (415) 754-9346 Facsimile: (925) 734-8125 Attorneys for Defendant STRATEGIC MARKS, LLC

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION MACY’S INC and MACYS.COM, INC., Plaintiffs, v. STRATEGIC MARKS, LLC, Defendant. STRATEGIC MARKS, LLC, CASE NO. 3:11-cv-06198-SC DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

18 19 20 21 22 23 24 25 26 27 28 Counter-Defendants. Counter-Claimant, v. MACY’S INC and MACYS.COM, INC.,

Date: March 15, 2013 Time: 10:00 a.m. Courtroom: 1 THE HONORABLE SAMUEL CONTI

DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page2 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. 2. D. 1. C. B. I. II. III. A.

TABLE OF CONTENTS INTRODUCTION AND SUMMARY OF ARGUMENT…………………………………...iv RELEVANT FACTS...................................................................................................................v ARGUMENT…………………………………………………………………………….……..1 Summary Judgment Is Disfavored In Trademark Cases ………………………................... …..1 Genuine Triable Issues Of Fact Exist Concerning The Definition Of The Identified Services .………………………………………………………………………...2 1. “On-Line Retail Services” Means Providing A Virtual Destination Wherein Items Are Sold In Small Quantities To Ultimate Consumers Over The Internet...... 3

Genuine Triable Issues Of Fact Exist Concerning STRATEGICMARKS’ “Use in Commerce ”Of The Registered Marks When The Statements OF Use Were Submitted To the USPTO ……………………………………..………………………….. …...3 Totality Of Circumstances Control “Use In Commerce” Determinations And Sales Are Not Required …………………………………………………….4 The Totality Of The Circumstances Suggest STRATEGIC MARKS Rendered On-line Retail Store Services…………………………………………….5

2.

Genuine Triable Issues of Fact Exist Concerning Whether Registered Marks Met The Affixation Requirement of the Lanham Act………………………………………………. …...6 1. MACY’S Presents No Probative Evidence To Rebut the Presumption of Validity ………………………………………………………………………….....6 The Evidence Supports A Finding That The Registered Marks Are Sufficiently Affixed To The Services Top Obtain Lanham Act Protection ……….7

CONCLUSION ..……………………………………………………………………………….8

-iDEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACY’S.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page3 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Rules 22 23 24 25 26 27 28 Cases

TABLE OF AUTHORITIES

Adidas America, Inc. v. Payless Shoesource, Inc., 546. F. Supp. 2d 1029, 1044 (D. Or. 2008)…………………………………………………….... In re Ancor Holdings, LLC, 79 U.S.P.Q.2d 1218, 2006 WL 1258813 (T.T.A.B. 2006)……………………………… Aycock Engineering, Inc. v. Airflite, Inc., 560 F. 3d 1350, 1356 (Fed. Cir. 2009)……………………………………………………… Chance v. Pac-Tel Teletrac, Inc., 242 F. 3d 1151 (9th Cir. 2001)……………………………………………………………… Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Management, Inc., 618 F.3d 1025, 1029 (9th Cir. 2010)……………………………………………………… In re Walker Research, Inc., 228 USPQ 691, 692 (TTAB 1986)……………………………………………………… Interstellar Starship Servs., Ltd. V. Epix Inc., 184 F. 3d 1107, 1109 (9th Cir. 2010) …………………………………………………… Rearden LLC v. Rearden Commerce, Inc., 683 F. 3d 1190, 1205 (9th Cir. 2012)……………………………………………………… Witco Chemical Corp. v. U.S., 742 F. 2d 615 (Fed Cir. 1984)…………………………………………………………… Statutes Section 45 of the Lanham Act (15 U.S.C § 1127)………………………………………

5

12, 13.

7

9

5

12

5

5, 6, 9

8

Passim

Fed. R. Civ. P. 56…………………………………………………………………………… Other Authorities McCarthy on Trademarks and Unfair Competition, § 16:33 (4th ed. 2012) ……………………………………………………………………………………………………

5

12

-iiDEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACY’S.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page4 of 15

1 2 3 4 5 6 7 8 9 10 11 12

I.

INTRODUCTION AND SUMMARY OF ARGUMENT In furtherance of its vision of bringing a new type of virtual shopping experience to consumers,

defendant Strategic Marks, LLC (“STRATEGIC MARKS”) created and opened a collection of virtual stores housed within its virtual mall entitled “Retro Department Stores.” Like physical malls, this virtual mall contains individual stores which provide retail store service under their respective store names, i.e., service marks. After STRATEGIC MARKS submitted trademark applications covering each of the individual store names within the mall, the USPTO issued registrations for three (3) of the stores: THE BROADWAY, U.S. Reg. No. 4,099,878; THE BON MARCHE, U.S. Reg. No. 4,136,284; and ROBINSON’S, U.S. Reg. No. 4,165,969 (collectively the “Registered Marks”). While STRATEGIC MARKS’ trademark applications were pending, plaintiffs Macy’s, Inc. and Macys.com, Inc. (collectively “MACY’S”) initiated this trademark infringement lawsuit against STRATEGIC MARKS. In response, STRATEGIC MARKS asserted counterclaims for, inter alia,

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

infringing STRATEGIC MARKS’ Registered Marks. MACY’S now moves for partial summary judgment asking this Court to summarily order the cancellation of the Registered Marks in order to defeat some of STRATEGIC MARKS’ counterclaims. MACY’S bases its motion on its allegation that STRATEGIC MARKS did not make “use in commerce” of the Registered Marks as required for federal registration of a service mark under the Lanham Act. The Registered Marks are presumed valid, and so MACY’S bears the burden of (i) producing sufficient evidence in its motion to overcome that burden, and then (ii) establishing that STRATEGIC MARKS will be unable to produce any evidence during trial from which a jury could draw a fair inference that STRATEGIC MARKS made “use in commerce” of the Registered Marks in connection with even one of the services recited in the statements of use (“Identified Services”) submitted during the prosecution of the Registered Marks. MACY’S’ does not meet its burden. Instead, MACY’S disingenuously mischaracterizes the case law which interprets the phrase “use in commerce,” ignores salient evidence, and relies (without analysis or support) upon a purely conclusory assertion that the Registered Marks were not properly affixed as service marks. More importantly, MACY’S arguments are built upon a false premise: MACY’S has provided no authority to support the purported “definition” of the Identified Services that
-iiiDEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACY’S.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case No. 3:11-cv-06198-SC

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page5 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

it seeks to impose upon this Court. The precise scope and nature of the Identified Services for the Registered Marks have not yet been determined, and MACY’S has made no effort whatsoever to provide this Court with sufficient facts, authority, or analysis to support such a determination. Accordingly, summary judgment should be denied. This opposition is accompanied by the declarations of Ellia Kassoff (“Kassoff Decl.”) and Benjamin Ashurov (“Ashurov Decl.”) II. RELEVANT FACTS In order to position itself to render services using the Registered Marks, STRATEGIC MARKS retained purchased domain names (Kassoff Decl. Ex. A)1, and retained a web developer to “construct” the on-line stores along with a virtual mall to house the stores (Kassoff Decl. Ex. B)2. This “construction” involved first building a webpage representing the virtual exterior of the mall (Kassoff Decl. Ex. C)3. , and then constructing the interior infrastructure of the mall wherein virtual main entrances bearing the names of each on-line store were seen. (Kassoff Decl. Ex. D)4. Finally, the web developer was tasked with constructing store interiors containing virtual shelves for merchandise and virtual cashiers to enable shoppers to purchase the merchandise. (Kassoff Decl. Ex. E.)5. Well before submitting the statements of use for the Registered Marks, STRATEGIC MARKS retained vendor PinPoint Associates (“PinPoint”) to provide STRATEGIC MARKS’ virtual stores with wholesale merchandise (Kassoff Decl. Ex. F)6. To further develop its merchandise selection, STRATEGIC MARKS employed the services of Helen Horwich as Merchandising Manager (Ashurov Decl. Ex. 1)7. To help market and promote the stores, STRATEGIC MARKS engaged the services of Tricia Buenvenida to as Vice President of Marketing (Ashurov Decl. Ex. 2)8.
1 2

Exhibit A is a printout of the domain name purchase receipt. (Kassoff Decl. Ex. A). Exhibit B is a copy of the invoice provided by the web developer. (Kassoff Decl. Ex. B). 3 Exhibit C is screen capture showing the webpage representing the exterior of the virtual mall (Kassoff Decl. Ex. C). 4 Exhibit D is a screen capture showing the webpage representing the inside of the virtual mall wherein the virtual front entrances to the individual stores are seen. (Kassoff Decl. Ex. D). 5 Exhibit E is a screen capture showing the webpages representing the inside of each virtual store wherein merchandise may be browsed and purchased, and designs of the initial merchandise. (Kassoff Decl. Ex. E). 6 Exhibit F shows invoices establishing an ongoing relationship between Strategic Marks and Pinpoint (Kassoff Decl. Ex. F). 7 Exhibit 1 is an excerpt from the Kassoff Deposition referencing Ms. Horwich’s role as Merchandising Manager for STRATEGIC MARKS. (Ashurov Decl. Ex. 1 at 2:8-9). 8 Exhibit 2 is an excerpt from the Buenvenida Deposition showing her role as VP of Marketing for STRATEGIC MARKS. (Ashurov Decl. Ex. 2 at 2:22-25). -ivDEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACY’S.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page6 of 15

1 2 3 4 5 6 7 8 9 10 11 12

On or about February 2011, once the virtual stores were built, merchandise had been obtained, and key personnel retained, STRATEGIC MARKS opened the doors to its on-line retail stores and offered its merchandise for sale within each store. (Ashurov Decl. Ex. 3)9. Thereafter, STRATEGIC MARKS continuously promoted the services of its various virtual stores through various channels, including social media, press releases in traditional media, and trade shows. (Kassoff Decl. Ex. G). Evidence in the record suggests that at least some members of the public recognized STRATEGIC MARKS’ association with the Registered Marks. (Kassoff Decl. Ex. H). Instead of keeping inventory in stock, STRATEGIC MARKS employed a different type of supply chain management method commonly used by on-line retailers. Instead of incurring the expense of obtaining inventory beforehand, on-line retailers commonly use a method where once an order for given merchandise is placed, the retailer passes on the details of the order to its vendor, who then proceeds to fill the order within a specified amount of time. The ability to use this method, as

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
9

opposed to the traditional method of carrying inventory in stock, is one great advantage on-line retailers enjoy because customers browse pictures of merchandise on-line, as opposed to browsing physical goods.10

Exhibit 3 is an excerpt from the Kassoff Deposition identifying February 11 as the day the on-line stores were launched. Ashurov Decl. Ex. 3). 10 By using this method, online retailers can avoid expending significant funds on building up inventory that may not be sold to consumers. -vDEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACY’S.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page7 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

III.

ARGUMENT A. Summary Judgment Is Disfavored In Trademark Cases

In deciding a motion for summary judgment, this Court must draw all reasonable inferences in STRATEGIC MARKS’ favor; summary judgment is not appropriate where the record would allow a reasonable trier of fact to find for [STRATEGIC MARKS].” Adidas America, Inc. v. Payless Shoesource, Inc., 546. F. Supp. 2d 1029, 1044 (D. Or. 2008). Trademark use issues rarely lend themselves to summary adjudication. The Ninth Circuit Appellate Division recently reaffirmed this notion by overturning summary judgment granted based upon a trademark “use in commerce” determination under 15 U.S.C § 1127. See Rearden LLC v. Rearden Commerce, Inc., 683 F. 3d 1190, 1205 (9th Cir. 2012) (“[b]ecause of the intensely factual nature of trademark disputes, summary judgment is generally disfavored in the trademark arena”) (citing Interstellar Starship Servs., Ltd. V. Epix Inc., 184 F. 3d 1107, 1109 (9th Cir. 2010)); see also, e.g., Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Management, Inc., 618 F.3d 1025, 1029 (9th Cir. 2010). As discussed below, determining whether a trademark has been “used in commerce” requires an exercise of discretion by the fact-finder, including examining “the totality of the circumstances,” and weighing a multitude of factors and determining the weight and credibility of competing evidence. Such determinations do not lend themselves to a summary judgment adjudication process. As stated in Rearden LLC, “Nevertheless, this Court is not currently sitting as the finder of fact at this stage of the proceeding. We are instead confronted with motions implicating a highly fact-specific “totality of the circumstances” inquiry as well as the generally applicable requirement to view all evidence in the light most favorable to the nonmoving party.” Rearden LLC, 683 F. 3d at 1208. Moreover, the Ninth Circuit will reverse a grant of summary judgment where there is conflicting evidence regarding “use in commerce.” Given the record now before us, we conclude that genuine issues of material fact preclude summary judgment in favor of Rearden Commerce on “use in commerce” grounds.” Id. (emphasis added)
-1DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case No. 3:11-cv-06198-SC

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page8 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Summary judgment must be denied because the evidence in this case is not as one-sided as MACY’S would have the Court believe. There is competing evidence regarding “use in commerce” that would support, after consideration of the totality of the circumstances, a favorable jury verdict for STRATEGIC MARKS. B. Genuine Triable Issues Of Fact Exist Concerning The Definition Of The Identified Services

To prevail on its Motion, MACY’S must overcome the presumption that STRATEGIC MARKS used the Registered Marks in commerce. MACY’S makes no such evidentiary showing. Moreover, MACY’S fails to establish that no reasonable jury could decide that STRATEGIC MARKS had used the Registered Marks “in commerce” for even one component of the Identified Services for those marks. The Identified Services for each of the Registered Marks are: (a) retail department store and on-line retail department store services (b) retail and on-line retail clothing boutiques (c) retail and on-line retail clothing stores (d) retail and on-line retail apparel stores (e) retail and on-line retail store services featuring clothing and fashion accessories. (Emphasis added). “A prerequisite to deciding the use requirement issue, discussed infra, involves defining the recitation of services in the application”. Aycock Engineering, Inc. v. Airflite, Inc., 560 F. 3d 1350, 1356 (Fed. Cir. 2009). MACY’S simply ignores this threshold issue, and fails to provide an y cognizable definition of the Identified Services against which STRATEGIC MARKS’ use must be compared. Instead, MACY’S simply parrots that which can be gleaned from the language of the Identified Services itself, namely, that the (as yet undefined) Identified Services can be viewed as having both a (i) “brick and mortar” retail component, and (ii) an “on-line” retail component, before concluding that STRATEGIC MARKS makes no such “use in commerce.” However, this summary is not a definition of the types of services that may fall within the Identified Services and would enable this Court to determine whether, in fact, STRATEGIC MARKS has used the marks “in commerce.” Thus, Plaintiffs’ motion fails. STRATEGIC MARKS disputes MACY’S’ “definition” to the extent that it interjects a physical
-2DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case No. 3:11-cv-06198-SC

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page9 of 15

1 2 3 4 5 6 7

or “brick and mortar” component into the Identified Services. The word “physical” and “brick and mortar” are nowhere to be found within the Identified Services, and MACY’S fails to provide any analysis or authority for its interjection of these words into the purported “definition” of the Identified Services. MACY’S’ arbitrary definition is useless to the careful analysis a motion for summary adjudication merits, and it should receive little weight in these proceedings. Instead, the scope and nature of the Identified Services must be resolved by the jury during trial. 1. “On-Line Retail Services” Means Providing A Virtual Destination Wherein Items Are Sold In Small Quantities To Ultimate Consumers Over The Internet

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 C. 24 25 26 27 28
11 12

STRATEGIC MARKS concedes that the Identified Services contain an “on-line” retail component. Within the confines of this component, STRATEGIC MARKS contends that “retail” means “to sell in small quantities directly to the ultimate consumer.”11 The Court of Appeals for the Federal Circuit has endorsed this definition of “retail” in Witco Chemical Corp. v. U.S., 742 F. 2d 615 (Fed Cir. 1984).12 STRATEGIC MARKS contends that “on-line” means “connected to, served by, or available through a system and especially a computer or telecommunications system (as the Internet).”13 Thus, STRATEGIC MARKS submits that “online retail services” means “selling in small quantities directly to consumers through the Internet,” and “online retail store services” means “providing a virtual store wherein goods are offered for sale in small quantities to ultimate consumers via the Internet.” As explained in section 2(c) below, STRATEGIC MARKS opened virtual retail stores in which goods are sold in small quantities to ultimate consumers, thereby rendering online retail store services. Thus, Plaintiffs motion for partial summary judgment must be denied. Genuine Triable Issues Of Fact Exist Concerning STRATEGIC MARKS’ “Use in Commerce” Of The Registered Marks When The Statements OF Use Were Submitted To The USPTO

MACY’S accurately identifies the relevant Lanham Act definition of service mark “use-in"retail." Merriam-Webster.com. 2013. http://www.merriam-webster.com (15 February 2013). The court accepted retain to mean “sales made in small quantities to ultimate consumers for personal use.” Witco Chemical Corp., 742 F. 2d at 621. 13 “on-line.” Merriam-Webster.com. 2013. http://www.merriam-webster.com (15 February 2013). -3DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page10 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

commerce,”14 but it grossly mischaracterizes case law which interprets this statutory language. The case law is clear that the totality of the circumstances test governs the interpretations of the phrase, but MACY’S’ motion makes no mention whatsoever of that test. MACY’S also misleads this Court by suggesting that actual sales are necessary to meet the statutory definition of “use in commerce” for service marks15. Instead, as discussed more fully below, the case law has long held in this Circuit that sales are not a prerequisite to register service marks. Instead the totality of the circumstances must be considered in determining “use in commerce” under 15 U.S.C. § 1127. 1. Totality Of Circumstances Control “Use In Commerce” Determinations And Sales Are Not Required

A totality of the circumstances test applies to the determination of whether “a service mark has been adequately used in commerce so as to gain the protection of the Lanham Act.” See Chance v. Pac-Tel Teletrac, Inc., 242 F. 3d 1159 (9th Cir. 2001). The totality of the circumstances test requires consideration of the following factors: (i) the genuineness and commercial character of the activity; (ii) whether the mark was sufficiently public to identify or distinguish the marked service in an appropriate segment of the public mind as those of the holder of the mark; (iii) the scope of the non-sales activity relative to what would be a commercially reasonable attempt to market the service; (iv) the degree of ongoing activity of the holder to conduct the business using the mark; (v) the amount of business transacted; and (vi) other similar factors which might distinguish whether a service has actually been

19 20 21 22 23 24 25 26 27 28

“rendered in commerce.” See Rearden LLC, 683 F. 3d at 1205. As part of the totality of the circumstances, “evidence of actual sales, or lack thereof, is not dispositive in determining whether a party has established ‘use-in-commerce’ within the meaning of the Lanham Act, 15 U.S.C § 1127.” Rearden LLC v. Rearden Commerce, Inc., 683 F. 3d 1190, 1205 (9th Cir. 2012) (emphasis added). To the contrary, non-sales activity may well be relevant to the
14

The “use-in-commerce” requirement is met when (1) a mark is used or displayed in the advertising of services and (2) either (i) the services are “rendered in commerce” or (ii) the services are “rendered in more than one state or in the United States and a foreign county and the person rendering those services is engaged in commerce in connection with the services.” 15 U.S.C. § 1127. 15 “Thus, in the absence of any sales whatsoever, the TTAB held that services were not rendered, and there was no use in commerce of the mark. Similarly, in the present case Defendant did not sell a single t-shirt for any of the marks . . .” Mot. 15: 24-26. -4DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page11 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

determinations whether (i) “a mark has been adequately displayed in public,” and (ii) “whether a service identified by the mark has been ‘rendered in commerce.’” Rearden LLC, 683 F. 3d at 1190, 1205 (9th Cir. 2012). 2. The Totality Of The Circumstances Suggest STRATEGIC MARKS Rendered On-line Retail Store Services

Consideration of the totality of the circumstances will support a jury determination that STRATEGIC MARKS had made “use in commerce” of the Registered Marks per 15 U.S.C § 1127 as of the date the statements of use were submitted. The facts stated herein support the conclusion that STRATEGIC MARKS opened the doors to its on-line retail stores, including stores bearing the Registered Marks, and made them available to public patronage well before it submitted statements of use to the USPTO. Therefore, before submitting its statements of use, STRATEGIC MARKS provided an on-line destination (store) for the public to browse and purchase merchandise, and was operating a fully functional online retail store under each of the Registered Marks. Thus, prior to submitting its statements of use, STRATEGIC MARKS rendered on-line retail store services in commerce using the Registered Marks. MACY’S argues that the stores bearing the Registered Marks carried no inventory,16 but this argument is irrelevant and misleading. As set forth in the facts section, STRATEGIC MARKS simply employed a supply chain management method that is commonly used by on-line retailers by which the

19 20 21 22 23 24 25 26 27 28

stores’ online sales are fulfilled by a pre-contracted vendor tasked to do so. MACY’S seeks to penalize STRATEGIC MARKS for taking advantage of one of the primary business advantages gained by taking a store online. STRATEGIC MARKS arranged for vendor PinPoint Associates to fill its merchandise orders, and so MACY’S’ inventory arguments are irrelevant. MACY’S relies heavily upon Aycock Engineering, Inc. v. Airflite, Inc., 560 F. 3d 1350, 1356 (Fed. Cir. 2009), but Aycock Engineering, Inc. undercuts MACY’S Motion. Aycock Engineering, Inc. clarifies that the questions one asks to determine whether the “use in commerce” requirement under 15. U.S.C. § 1127 is met, are simply the following: (i) did the service mark owner give intended
16

Mot. 15:27-28. -5KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page12 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

customers the opportunity to use the relevant services? And (ii) was the service mark owner was in a position to render the services he was advertising at the time he made the advertisement?17 The evidence supports a finding that STRATEGIC MARKS gave intended customers the opportunity to use its services because STRATEGIC MARKS opened functioning stores to public patronage and enabled those customers to browse and purchase the merchandise found inside those stores. Indeed, customers have actually purchased merchandise from another STRATEGIC MARK virtual store that is set up the same as the virtual stores for the Registered Marks, Jordan Marsh, in STRATEGIC MARKS’ virtual mall (Kassoff Decl. Ex. I)18. Because the Jordan Marsh store set up in manner identical to the stores bearing the Registered Marks, a fact finder could easily infer that STRATEGIC MARKS gave its intended customers true opportunities to use the Identified Services. Thus, STRATEGIC MARKS may be found to have rendered services under the Aycock formulation of “use in commerce.” D. Genuine Triable Issues of Fact Exist Concerning Whether The Registered Marks Met The Affixation Requirement Of The Lanham Act

MACY’S asserts that STRATEGIC MARKS does not affix the Registered Marks in a manner sufficient to satisfy U.S.C. § 112719. This unsupported assertion does not overcome the presumption of validity accompanying the USPTO Examiner’s approval of STRATEGIC MARKS’ statements of use for the Registered Marks, these marks enjoy a presumption of validity. Instead, to succeed on its claim,

19 20 21 22 23 24 25 26 27 28

MACY’S must rebut this presumption of validity by a preponderance of the evidence, which MACY’S fails to do. 1. MACY’S Presents No Probative Evidence To Rebut the Presumption of Validity

In support of its claim that the Registered Marks do not meet the affixation requirements,

17

TTAB's determination that Mr. Aycock failed to offer his service to the public is supported by substantial evidence, because he never gave anyone an opportunity to use his AIRFLITE service to make a charter flight reservation.” Aycock Eng’g, Inc., 560 F. 3d at ). 18 Exhibit I is a copy of a purchase order submitted by a customer for merchandise ordered from the Jordan Marsh store (Kassoff Decl. Ex I) 19 Mot. 14: 10-21. Although under the title “Department store marks are not used,” it appears Macy’s argues that the affixation requirement is not met. -6DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page13 of 15

1 2 3 4 5 6 7 8 9 10 11 12

MACY’S produces just one office action letter from STRATEGIC MARKS’ application file for the mark ABRAHAM AND STRAUSS20 (“Office Action”), and extrapolates from that one letter the conclusion that none of the three Registered Marks meet the affixation requirement. However, the cited Office Action is neither relevant to nor dispositive of, the issue. In fact, the Office Action is wholly irrelevant as to the Registered Marks. The Examiner’s comments in the Office Action are directed towards the specific specimen of use submitted by STRATEGIC MARKS in that particular application. Moreover the specific issue raised by the Examiner simply does not apply to the Registered Marks. The specimen of use shows the service mark as A&S, while the applied-for mark is ABRAHAM AND STRAUSS21. The Examiner’s Office Action comments as quoted by MACY’S directly address this disparity between the applied-for mark (ABRAHAM AND STRAUSS) and the manner in which the mark appeared in the specimen of use (A&S) used in commerce.22 Unlike in ABRAHAM AND STRAUSS, the applications for the Registered Marks had no such

13 14 15 16 17 18 19

disparity. Thus, the Examiner’s findings in the Office Action are not probative in regards to the Registered Marks, which were found properly affixed and used in commerce when the Examiner approved the statements of use submitted for the Registered Marks. 2. The Evidence Supports A Finding That The Registered Marks Are Sufficiently Affixed To The Services Top Obtain Lanham Act Protection

“For the purposes of this [Lanahm] Act a mark shall be deemed to be used in commerce…on services when it is used or displayed in the sale or advertising of services and the services are rendered

20 21 22 23 24 25 26 27 28

in commerce.” Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 16:33 (4th ed. 2012) (citing Lanham Act § 45). “All that is necessary to establish proper use of a service mark is to prove that the mark is “used or displayed in the sale or advertising of services” in such a way as to “identify the services of one person and distinguish them from the services of others.” Id. (citing 15 U.S.C.A. § 1127).
20 21

Mot. 14: 18-19. As indicated above, the first specimen submitted by the applicant does not show the mark. The second specimen web page is a shopping page, showing for sale a t-shirt with an “A&S” logo on the front. The proposed mark does appear on this page. 22 “The second specimen web page is a shopping page, showing for sale a t-shirt with an “A&S” logo on the front. The proposed mark does appear on this page.” (Lo Cicero Decl Ex. O at 3). -7DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page14 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Because on-line retail services are at issue, determining whether the Registered Marks are sufficiently affixed requires analyzing the Registered Marks in the context of affixation requirements for services rendered over the Internet. “A designation in the body of an Internet Web site can be used in such a way as to identify and distinguish the source of services rendered via the Internet.” Id. Addressing the issue of affixation of service marks for services rendered via the Internet, the Trademark Trial and Appeal Board (“TTAB”) explains, “whether or not a term functions as a service mark necessarily depends on how that term is used and how it is perceived by potential recipients of the services.” In re Ancor Holdings, LLC, 79 U.S.P.Q.2d 1218, 2006 WL 1258813 (T.T.A.B. 2006) (citing In re Walker Research, Inc., 228 USPQ 691, 692 (TTAB 1986). In In re Ancor Holdings, the TTAB determined that where service mark appears within a website, and where such website identifies the services, “in today’s commercial context, sufficiently creates in the minds of purchasers an association between the mark and applicant’s identified reminder and scheduling services.” In re Ancor Holdings, 79 U.S.P.Q.2d 1218, 2006 WL 1258813 at 7 (emphasis added). Similar to the registrant in In re Ancor Holdings, STRATEGIC MARKS places the Registered

16 17 18 19 20 21 22 23 24 25 26 27 28

Marks on its website throughout the virtual mall. It does so “outside” the mall, inside the mall, and inside each individual store.23 Appearing on the same page as this description are store icons bearing each store name,24 including stores bearing the Registered Marks. In In re Ancor Holdings, the TTAB found affixation sufficient for registration where the relevant services were simply advertised online, even though they were not rendered on-line. STRATEGIC MARKS clearly meets this standard, and STRATEGIC MARKS’ services are advertised and actually rendered on-line25 while the Registered Marks are in view. This forecloses any doubt that the Registered Marks do not meet the affixation requirement as it applies to service marks used to provide on-line services. IV.
23 24

CONCLUSION

(Lo Cicero Decl. Ex O through Ex. M) These store icons are meant to represent the “front entrance” to each on-line store. 25 (Lo Cicero Decl. Ex O through Ex. M) -8DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566

Case3:11-cv-06198-SC Document66 Filed02/16/13 Page15 of 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

MACY’S’ fails to present any evidence to overcome the presumption that the Registered Marks are valid. Moreover, the question whether STRATEGIC MARKS has made “use in commerce” of the Registered Marks under 15 U.S.C § 1127 cannot be summarily adjudicated because genuine triable issues of fact exist concerning: (i) the definition of the recited services under the Registered Marks, (ii) whether STRATEGIC MARKS’ use is sufficient to constitute “use in commerce” of the Registered Marks under the Lanham Act, and (iii) whether STRATEGIC MARKS’ use is sufficient to satisfy the affixation requirement for the Registered Marks. MACY’S’ motion for partial summary judgment should be summarily denied.

DATED: February 15, 2013

KB ASH LAW GROUP

By ____/s/ BENJAMIN ASHUROV Attorneys for Defendant STRATEGIC MARKS, LLC

-9DEFENDANT STRATEGIC MARKS LLC’S OPPOSITION TO PLAINTIFFS MACY’S, INC. AND MACYS.COM, INC.’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case No. 3:11-cv-06198-SC

KB ASH LAW GROUP 5674 Sonoma Drive, Suite A Pleasanton, CA 94566