O 1

2 3 4 5 6 7

8 United States District Court 9 Central District of California

10

11 MARS ADVERTISING, INC., Case № 2:24-cv-03475-ODW (PVCx)

12 Plaintiff,

ORDER GRANTING MOTION FOR

13 v.

PRELIMINARY INJUNCTION [19];

14 XMARS CORP.et al., AND DENYING REQUEST FOR 15 LEAVE TO FILE NEW EVIDENCE Defendants. [71] 16 17 I. INTRODUCTION 18 Plaintiff MARS Advertising, Inc. (“MARS”), a traditional advertising agency 19 that provides marketing and e-commerce services using the trademark “MARS,” 20 brings this trademark infringement action against Defendants XMars Corp., SparkX 21 Global Corp., and SparkX Marketing Co., Ltd. (collectively “Defendants”), which 22 also provide e-commerce advertising services under the trademark “XMARS.” (See 23 Compl., ECF No. 1.) MARS moves for a preliminary injunction prohibiting 24 Defendants’ use of the “XMARS” Mark to market and sell the same services offered 25 by MARS through the same channels of trade. (Mot. Prelim. Inj. (“Motion” or 26 “Mot.”), ECF No. 19.) On September 10, 2024, the Court heard argument and 27 received evidence from the parties. (Mins., ECF No. 70.) For the reasons that follow, 28 the Court GRANTS the Motion. (ECF No. 19.) 1 Il. BACKGROUND 2 Due to the complex nature of intellectual property disputes, the background is 3 || divided into two sections: (1) a general “factual background” of the parties, a brief 4|| discussion of the two marks currently in dispute, and a comparison of services that MARS and Defendants offer; and (2)a “procedural background” addressing the 6 || relevant filings in this matter. A. Factual Background 8 MARS has operated as an advertisement agency—using “MARS” as a 9 || trademark continuously and exclusively—for the past fifty-two years. (Mot. 1.) 10 | MARS owns registrations for the following trademarks for use in connection with 11 || their advertisement, marketing, and e-commerce services: 12 [Reg.No.| Mark _—i|,_ Date Registered Goods/Services 13 MARS Advertising agency rons] mans fosinsine Jeeenem 14 ® Advertising agency 16 Advertising and 4613927 THEMARSAGENCY September 30, 2014 | marketing services 17 (stylized) Class 35 Advertising agency 18 THE MARS services; advertising and 19 4657754 AGENCY December 16, 2014 | marketing services; shopper marketing 20 services (Class 35 21 | (Mot. 3.) 22 MARS also owns the MARS UNITED and MARS UNITED COMMERCE word 23 | marks and the following MARS UNITED COMMERCE design marks (together with 24 | the registrations above, the “MARS Marks”). (Compl. § 21; Mot. 3-4.)

MARS

26 ABS MW commence UNITED

COMMERCE

28 || (Mot. 12.)

1 Defendants began using the “XMARS” Mark on or around Fall of 2022. 2 || (Opp’n 1, ECF No. 35.) Through the “XMARS” Mark, Defendants offered a range of 3 || “ad technology tools” to brands, third-party sellers, and advertising agencies, to 4|| increase sales on the Amazon Marketplace. (/d.) Defendants offer similar or 5 || near-identical e-commerce advertising and marketing services as MARS under the 6 || “XMARS” Mark: : xmars 8 (Mot. 7.) The parties present several examples of how MARS and Defendants both 10 || use their respective marks. This is the actual side-by-side comparison of the two 11 || marks (in their current brand logo format): 2

16 || (Mot. 12.) 17 While the stylized Marks may at first glance seem dissimilar, when the two 18 | marks are searched online or appear on website databases and in print, the similarities 19 | are obvious. For instance, when typed, “MARS” and “XMARS” appear virtually 20 || identical and, when spoken, sound virtually identical. The two marks differ by a single letter, “X,” and when searched in online databases, the two marks frequently 22 || appear in the same search results. One example is the “Amazon Ads Partner 23 || Directory,” through which MARS and Defendants both offer services. (Opp’n 2; 24 || Reply 3, ECF No. 39.) A search for “mars” in the “Amazon Ads Partner Directory,” 25 || provides MARS and “XMARS” as the first two advertisement partners to appear: 26 27 28

ele Melina og 2 3 1140 results 4 © nivence © réraneed 5 Services vo UNITED. ( )

COMMERCE =

Products ww 6 Mars United Commerce Xmars Countries w We are an independently-owned connected mars, powered by SparkXGlobal, is an 7 commerce agency that specializes in creating advanced Al plattorm that provides brands, breakthrough solutions by balancing the ... sellers and agencies with unparalleled ... 8 Corfications ~ @ 36 Services @ 36 Services Industries we & 12 Products: & 12 Products 9 # 7 Certifications # 12 Certifications More filters we ® 2 Awards 10 .

View profile View profile 12 13 || (Reply 3.) With regard to the goods and services MARS and Defendants’ “XMARS” 14 || offer, the Amazon Ads Partner comparison feature provides a clear picture of the near 15 || identical range of services: 16 Mars United Commerce | Mars 17 Media planning and buying Media planning and buying Campaign setup | Campaign setup 18 | Campaign management and optimization Campaign management and optimization 19 Campaign monitoring | Campaign monitoring 30 Campaign reporting and analytics Campaign reporting and analytics 1 _ Audience management and engagement Audience management and engagement | Creative and brand experience Creative and brand experience Pp Pp 22 | Photography | Photography 23 | Video production | Video production 4 Audio ads production Audio ads production | Rich media | Rich media

26 || Ud. at 4-5.)! 27 28 || | This is only a small portion of the near-identical services that MARS and Defendants via “XMARS?” offer.

1 B. Procedural Background: 2 On April 24, 2024, MARS sent Defendants a cease-and-desist letter demanding 3 Defendants discontinue their infringement of MARS’s trademarks. (Decl. Robert E. 4 Hough, II (“Hough Decl.”), Ex. Y (“Cease & Desist Letter” or “Letter”), ECF 5 Nos. 19-1, 19-26.) To be specific, MARS demanded that Defendants “[s]top all use 6 and promotion of ‘XMARS’ . . . in connection with marketing, advertising, consulting 7 and related goods and services.” (Letter 2.) The letter provided Defendants with 8 forty-eight hours to respond before MARS would file suit. (Id.) Defendants 9 acknowledged receipt of the Letter twice, but were unable to retain legal counsel and 10 formally respond to MARS within the time allotted. (See Mot. 8; Opp’n 18.) 11 On April 26, 2024, MARS filed this action. (See Compl.) MARS alleges five 12 causes of action for: (1) trademark infringement under 15 U.S.C. § 1114; (2) false 13 designation of origin and false descriptions and representation under 15 U.S.C. 14 § 1125(a); (3) trademark infringement and unfair competition under state common 15 law; (4) cancellation of federal trademark registration under 15 U.S.C. § 1119; and 16 (5) cyberpiracy pursuant to 15 U.S.C. § 1125(d). (Id. ¶¶ 38–72.) 17 On May 17, 2024, MARS filed the instant Motion seeking to: 18  Prohibit Defendants from using MARS or “XMARS” Marks to designate the 19 source of any advertising, marketing, or e-commerce-type services; 20  Prohibit Defendants from stating or suggesting that Defendants’ services originated with MARS, or that there is any affiliation or connection between 21 MARS and Defendants and their respective services; 22  Order Defendants to file proof of compliance within fifteen days to the 23 Court. 24 (MARS Proposed Order ISO Mot., ECF No. 19-36.) The Motion is fully briefed. 25 (Mot.; Opp’n; Reply; Surresponse,2 ECF No. 61 (sealed); Surreply, ECF No. 66.) 26 27

28 2 Defendants actually sought to file a “surreply,” but for clarity and correctness, the Court refers to Defendants’ filing as Defendants’ “Surresponse.” 1 On September 10, 2024, the Court heard argument and received evidence from 2 both sides. (See Mins.) In addition to the documentary exhibits received, the Court 3 heard the un-noticed testimony of Ken Barnett, MARS’s executive representative. 4 The Court notes that it does not and need not rely on Barnett’s testimony, as the Court 5 resolves the Motion on other grounds. 6 III. LEGAL STANDARD 7 A court may grant preliminary injunctive relief to prevent “immediate and 8 irreparable injury.” Fed. R. Civ. P. 65(b). To obtain this relief, the plaintiff must 9 establish: (1) a likelihood of success on the merits; (2) a likelihood that he will suffer 10 irreparable harm if the preliminary relief is not granted; (3) that the balance of equities 11 tips in his favor; and (4) that the injunction is in the public interest (the “Winter 12 factors”). See Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). 13 Under the Trademark Modernization Act of 2020, a plaintiff seeking an 14 injunction to prevent trademark infringement is entitled to a rebuttable presumption of 15 irreparable harm upon a finding of likelihood of success on the merits. Cisco Sys. v. 16 Wuhan Wolon Commc’n Tech. Co., No. 5:21-cv-04272-EJD, 2021 WL 4962661, at *7 17 (N.D. Cal. July 23, 2021); cf. Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 612 18 n.3 (9th Cir. 1989 (“In trademark infringement or unfair competition actions, once the 19 plaintiff establishes a likelihood of confusion, it is ordinarily presumed that the 20 plaintiff will suffer irreparable harm if injunctive relief is not granted”). 21 The purpose of a preliminary injunction is merely to preserve the relative 22 positions of the parties until a trial on the merits can be held. Univ. of Texas v. 23 Camenisch, 451 U.S. 390, 395 (1981). The burden of demonstrating the need for a 24 preliminary injunction rests with the moving party. Stanley v. Univ. of S. Cal., 25 13 F.3d 1313, 1319 (9th Cir. 1994). The moving party must meet this burden with a 26 “clear showing” that the preliminary injunction is warranted. Conn. Gen. Life Ins. Co. 27 v. New Images of Beverly Hills, 321 F.3d 878, 881 (9th Cir. 2003). 28 1 “In the trademark context, ‘state common law claims of unfair competition and 2 actions pursuant to the California Business and Professions Code [section] 17200 are 3 substantially congruent to claims made under the Lanham Act.’” Alixir Co. v. Qué 4 Onda Beverage, Inc., No. 2:20-cv-08368-RGK (RAOx), 2021 WL 971057, at *6 5 (C.D. Cal. Jan. 6, 2021) (quoting Cleary v. News Corp., 30 F.3d 1255, 1262–63 6 (9th Cir. 1994)).3 7 IV. DISCUSSION 8 The Winter factors support entering a preliminary injunction in this case. 9 A. MARS is Likely to Succeed on the Merits, at Least with Respect to 10 Likelihood of Confusion 11 MARS is likely to succeed on the merits with regard to Defendants’ alleged 12 trademark infringement. The “critical determination” is whether Defendants’ use of 13 the “XMARS” Mark “creates a likelihood that the consuming public will be confused 14 as to who makes what product.” Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 632 15 (9th Cir. 2008) (internal quotation marks and citations omitted). 16 The Ninth Circuit has set forth eight factors a court should consider in 17 determining whether two marks are confusingly similar. AMF Inc. v. Sleekcraft Boats, 18 599 F.2d 341, 348–49 (9th Cir. 1979), abrogated on other grounds by Mattel, Inc. v. 19 Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003). The Sleekcraft factors are: 20 (1) strength of the mark, (2) proximity or relatedness of the goods, (3) similarity of the 21 marks, (4) evidence of actual confusion, (5) marketing channels used, (6) type of 22 goods and the degree of care likely to be exercised by the purchasers, (7) defendant’s 23 intent in selecting the mark, and (8) likelihood of expansion of product lines. Id. 24 A court need not address all eight factors, as “it is often possible to reach a 25 conclusion . . . after considering only a subset of the factors.” Brookfield Commc’ns, 26 Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1054 (9th Cir. 1999); see Fortune 27

28 3 Both parties appear to agree with this principle, as their briefs focus on the Lanham Act claim. The Court therefore follows the parties’ lead by similarly focusing its analysis on the Lanham Act claim. 1 Dynamic, Inc. v. Victoria Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1030 2 (9th Cir. 2010) (“This eight-factor analysis is ‘pliant,’ illustrative rather than 3 exhaustive, and best understood as simply providing helpful guideposts.”). Indeed, 4 “[s]ome of the Sleekcraft factors will be more important in certain contexts than in 5 others.” Glow Indus., Inc. v. Lopez, 252 F. Supp. 2d 962, 986 (C.D. Cal. 2002). 6 The Court finds the following important factors establish a likelihood of 7 confusion. 8 1. Strength of MARS’s Marks 9 A mark’s strength is measured in terms of its “conceptual strength” and 10 “commercial strength.” JL Beverage Co., LLC, v. Jim Beam Brands Co., 828 F.3d 11 1098, 1106 (9th Cir. 2016) (quoting GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 12 1199, 1207 (9th Cir. 2000)). 13 Conceptual strength refers to where a mark falls along the “spectrum of five 14 categories ranging from strongest to weakest: arbitrary, fanciful, suggestive, 15 descriptive, and generic.” Id. at 1107. “Arbitrary and fanciful marks, which employ 16 words and phrases with no commonly understood connection to the product, are the 17 two strongest categories, and trigger the highest degree of trademark protection.” Id. 18 (internal quotation marks omitted). “In the middle of the spectrum are suggestive 19 marks, which suggest a product’s features and require consumers to exercise some 20 imagination to associate the suggestive mark with the product.” Id. (citing Fortune 21 Dynamic, 618 F.3d at 1033). “[U]nlike arbitrary or fanciful marks which are typically 22 strong, suggestive marks are presumptively weak.” Brookfield Commc’ns, 174 F.3d 23 at 1058. 24 Here, the “MARS” Marks are arbitrary, or at the very least fanciful. The word 25 or mark “MARS” has no “commonly understood connection” to advertisement and 26 e-commerce services outside of MARS’s use of the marks. JL Beverage Co., 27 828 F.3d at 1107. Defendants argue “MARS” is conceptually weak because it 28 incorporates the use of “MAR-” which is a widespread element of many words. 1 (Opp’n 15.) Defendants’ argument is misplaced. Defendants mistakenly focus on the 2 strength of a narrow portion of the mark rather than the mark in its entirety. Thus, 3 based solely on the conceptual strength of the entire mark, the arbitrary or fanciful 4 “MARS” Marks are presumptively strong. 5 “Commercial strength ‘is based on actual marketplace recognition.’” JL 6 Beverage Co., 828 F.3d at 1107 (quoting Network Automation, Inc. v. Advanced Sys. 7 Concepts, Inc., 638 F.3d 1137, 1149 (9th Cir. 2011)). And evidence of commercial 8 strength “can transform a suggestive mark into a strong mark, where, for example, that 9 mark has achieved actual marketplace recognition.” See Brookfield Commc’ns, 10 174 F.3d at 1058 (internal citation omitted). 11 Here, MARS convincingly argues that its reputation, client base, services, and 12 work product have achieved actual marketplace recognition. MARS has been 13 operating under the “MARS” Marks for fifty-two years and in that time has 14 “managed, billed, and executed billions of dollars of marketing services.” (Mot. 5.) 15 MARS also submits that through its success and millions of dollars spent on 16 promotional efforts, MARS has retained large, “household name” clients such as: 17 Hallmark, Samsung, Crayola, 7-Eleven, Anheuser-Busch, Coco-Cola, 18 Keurig-Dr. Pepper, Pfizer, and Kraft Heinz. (Id. at 6.) Based on the high level of 19 commercial success of MARS, the MARS’s Marks are strong marks. 20 Accordingly, the Court finds that the “MARS” Marks are strong marks, based 21 on the Marks being both arbitrary or fanciful, and commercially strong. Thus, the 22 strength of the marks weighs in favor of finding a likelihood of confusion. 23 2. Relatedness of Goods 24 The test for related goods or services is whether the two products “would be 25 reasonably thought by the buying public to come from the same source if sold under 26 the same mark.” Rearden LLC v. Rearden Com., Inc., 683 F.3d 1190, 1212 (9th Cir. 27 2012) (quoting Sleekcraft, 599 F.2d at 348 n.10). When both products are offered in 28 the same general industry, they are related. Pom Wonderful LLC v. Hubbard, 1 775 F.3d 1118, 1127 (9th Cir. 2014). “To determine whether goods are related, courts 2 may consider whether the goods are complementary, whether the products are sold to 3 the same class of purchasers, and whether the goods are similar in use and function.” 4 Groupion, LLC v. Groupon, Inc., 859 F. Supp. 2d 1067, 1074 (N.D. Cal. 2012). 5 Here, advertising, marketing services, and e-commerce promotions are related 6 goods. Although Defendants may protest and attempt to differentiate themselves as a 7 technology and AI service provider, (Opp’n 1), their “XMARS” website and services 8 offered on Amazon’s Ad Partner Database demonstrate otherwise. (Mot.; Reply 4–5.) 9 Defendants’ online webpages clearly demonstrate that “XMARS” operates as an 10 advertising and e-commerce service. (Mot. 8; Hough Decl. Exs. U–V, ECF 11 Nos. 19-22, 19-23.) These services are similar in use and function to MARS’s 12 services. 13 Accordingly, in the same way that courts have found beer and whiskey to be 14 related goods, even though they may occasionally serve different consumer markets, 15 see Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 155 (9th Cir. 16 1963), this Court finds that MARS’s and Defendants’ services are related, thereby 17 weighing in favor of a finding of likelihood of confusion. 18 3. Similarity of Marks 19 “Three principles guide a court in determining whether marks are similar.” JL 20 Beverage Co., 828 F.3d at 1109 (citing Fortune Dynamic, 618 F.3d at 1032). “First, 21 similarity is best adjudged by appearance, sound, and meaning.” Id. (internal 22 quotation marks omitted). “Second, the marks must be considered in their entirety 23 and as they appear in the marketplace.” Id. “Third, similarities are weighed more 24 heavily than differences.” Id. 25 Here, the marks are similar. Yes, MARS and “XMARS” are technically 26 different words and, yes, MARS’s brand logo is colored red while the “XMARS” 27 brand logo is colored blue. (See Mot. 12.) But similarities weigh more heavily than 28 differences, JL Beverage Co., 828 F.3d at 1109, and both marks use nearly identical 1 words in their brand names, on their websites, and in their promotional 2 advertisements. When appearing in written text or spoken aloud, the superficial 3 distinctions between MARS and “XMARS” melt away. Similarly, when “mars” is 4 searched in an online database, MARS and “XMARS” often appear next to each other 5 in the same results. This was apparent in the “Amazon Ad Partner Database” search 6 whereby, when searching “mars,” both MARS and “XMARS” appeared offering 7 nearly identical advertisement and e-commerce services. (See Reply 3–4.) When the 8 marks are considered “in their entirety and as they appear in the marketplace,” JL 9 Beverage Co., 828 F.3d at 1109, it is easy to see how a consumer might mistakenly 10 believe that “XMARS” is the correct e-commerce advertisement service when—in 11 reality—the consumer was actually looking for MARS. See J & J Snack Foods Corp. 12 v. McDonald’s Corp., 932 F.2d 1460, 1462–63 (Fed. Cir. 1991) (“A family of marks 13 is a group of marks having a recognizable common characteristic, wherein the marks 14 are composed and used in such a way that the public associates . . . the common 15 characteristic of the family, with the trademark owner.”). 16 Thus, the Court finds that the marks are similar, and this factor also weighs in 17 favor of finding a likelihood of confusion. 18 4. Actual Confusion 19 Although this factor does not weigh in favor of a likelihood of confusion in this 20 case, it is worth mentioning that MARS does not present any evidence of actual 21 confusion.4 (See Opp’n 13.) “Nevertheless . . . because of the difficulty in garnering 22 evidence of actual confusion, the failure to prove instances of actual confusion is not 23 dispositive.” JL Beverage Co., 838 F.3d at 1111 (internal quotation marks and 24 brackets omitted). 25 26 27 4 After the Court heard argument and received evidence from the parties, and after the Court took the 28 Motion under submission, MARS filed a Request for Leave to File New Evidence in Support of the Motion. (Req., ECF No. 71.) This improper and belated request is DENIED. 1 5. Intent 2 Similarly, it is worth noting that Defendants claim their “XMARS” Mark stood 3 for “X – SparkX, M – Marketplace, A – Advertising, R – Revolutionary, S – System,” 4 and “had nothing to do with [MARS].” (Opp’n 18; Decl. Damon Gjording (“Gjording 5 Decl.”), ECF No. 35-1.) But even accepting this as true, “[a]bsence of malice is no 6 defense to trademark infringement.” Dreamwerks Prod. Grp., Inc. v. SKG Studio, 7 142 F.3d 1127, 1132 n.12 (9th Cir. 1998). 8 In sum, based on the strength of MARS’s Marks, the relatedness of goods, and 9 the similarity of the parties’ marks, the Court finds that there is a likelihood of 10 confusion as to the source of services offered by MARS and “XMARS.” Accordingly, 11 the Court also finds that MARS is likely to succeed on the merits for its infringement 12 claims. See Jada Toys, 518 F.3d at 632 (finding consumer confusion as the “critical 13 determination” in an infringement claim to find a likelihood of success on the merits). 14 B. MARS is Likely to Suffer Irreparable Harm in the Absence of Preliminary 15 Relief 16 MARS shows a likelihood of success on the merits; thus, it is entitled to a 17 rebuttable presumption of irreparable harm. 18 On December 27, 2020, Congress codified the rule that a plaintiff seeking a 19 preliminary injunction to enjoin trademark infringement “shall be entitled to a 20 rebuttable presumption of irreparable harm upon a finding of . . . likelihood of success 21 on the merits.” 15 U.S.C. § 1116. The statute is clear. 22 While there is no rigid formula to rebut the presumption of irreparable harm, 23 courts have generally found certain types of evidence to be particularly forceful in the 24 inquiry. First, a plaintiff’s undue delay in seeking injunctive relief may negate the 25 notion of irreparable harm. See Cuviello v. City of Vallejo, 944 F.3d 816, 833 (9th Cir. 26 2019) (explaining that “long delay before seeking a preliminary injunction implies a 27 lack of urgency and irreparable harm” (quoting Oakland Tr., Inc. v. Chron. Publ’g Co., 28 762 F.3d 1374, 1377 (9th Cir. 1985))). The Ninth Circuit has noted, however, that 1 delay in seeking injunctive relief is often insufficient on its own to refute a 2 determination of irreparable harm. See id. (“Usually, delay is but a single factor to 3 consider in evaluating irreparable injury; indeed, courts are loath to withhold relief 4 solely on that ground.” (internal quotation marks omitted)). 5 Second a showing of purely pecuniary injuries negates a plaintiff’s claim of 6 irreparable harm because the essence of an equitable remedy is that legal remedies are 7 inadequate. See L.A. Mem’l Coliseum Comm’n v. Nat’l Football League, 634 F.2d 8 1197, 1202–03 (9th Cir. 1980) (noting that “[t]he basis of injunctive relief in the 9 federal courts is irreparable harm and inadequacy of legal remedies”). Third, if “the 10 non-movant has or will soon cease the allegedly infringing activities,” the harm is not 11 considered irreparable. Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 974 (Fed. Cir. 12 1996). 13 Here, Defendants attempt to rebut the presumption by relying solely on the 14 argument that MARS’s “undue delay in seeking relief demonstrates that [MARS] will 15 not suffer irreparable in the absence of an injunction.” (Opp’n 9.) Defendants argue 16 that—at the very least—MARS knew of Defendants’ use of the “XMARS” Mark 17 starting on August 19, 2023. (Mot. 10–11; Surresponse 3.) The crux of Defendants’ 18 argument is that MARS operated its advertising and e-commerce business with full 19 knowledge of “XMARS” for at least nine months before bringing the present action 20 on April 26, 2024. However, even assuming arguendo that MARS knew of the 21 “XMARS” Mark starting on August 19, 2023, Defendants’ sole reliance on MARS’s 22 delay does not meet the threshold necessary to rebut the presumption of irreparable 23 harm. As the Ninth Circuit noted in Cuviello, sole reliance on delay in seeking 24 injunctive relief is often insufficient on its own to refute a determination of irreparable 25 harm. 762 F.3d at 833; see also Doe v. Horne, No. 23-16026, --- F.4th ---, 2024 WL 26 4113838, at *19 (9th Cir. Sept. 9, 2024) (finding delay of seven months did not, alone, 27 undermine the plaintiffs’ showing of irreparable harm). This is precisely the case 28 here. 1 In their surresponse, Defendants attempting to undercut the testimony and 2 declarations of two MARS employees who claim MARS leadership did not discover 3 the usage of XMARS until April 17, 2024. (See Surresponse 1.) However, the Court 4 does not find this line of argument dispositive at this stage. MARS, in its surreply, 5 explained that its employees did not realize that any pre-April 2024 communications/ 6 notifications included information related to “XMARS,” thereby leveling the field on 7 the issue and leaving the presumption undisturbed. (Surreply 1–2.) 8 As likelihood of confusion would presumptively cause irreparable harm, and as 9 Defendants fail to rebut that presumption, the Court finds that MARS has established 10 a likelihood of irreparable harm in the absence of preliminary injunctive relief. 11 C. The Balance of Equities Depends on the Preliminary Injunction Terms 12 Defendants represent that “[a]n injunction requiring Xmars to change its name 13 now will do substantial and irreparable damage.” (Opp’n 19; see Gjording Decl. 14 ¶ 44.) Additionally, Defendants argue that an injunction would “alter the status quo 15 and force Defendants to do a complete rebranding . . . after Xmars had already built its 16 business and reputation around the XMARS mark, and after it had obtained approval 17 of federally-registered trademarks.” (Id.) Here, because Defendants did properly 18 obtain a registered trademark through the USPTO in May 2024, the Court finds the 19 balance of equities only tips in MARS’s favor if Defendants’ hardship can be 20 mitigated. Relevantly, it is typical for trademark settlements to provide for grace 21 periods during which an infringing mark is phased out with impunity. Implementing a 22 six-month grace period here would allow Defendants time to phase out the use of 23 “XMARS,” and then to rebrand or rollback their brand as they may desire.5 24 5 Defendants argue that MARS seeks a mandatory, not prohibitory, injunction, meaning that MARS 25 bears a heightened burden and the equities favor Defendants. (Opp’n 19.) A prohibitory injunction preserves the status quo by freezing “the positions of the parties until the court can hear the case on 26 the merits.” Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 879 (9th Cir. 2009) (quoting Heckler v. Lopez, 463 U.S. 1328, 1333 (1983)). In contrast, a mandatory 27 injunction “orders a responsible party to ‘take action.’” Id. (quoting Meghrig v. KFC W., Inc., 28 516 U.S. 479, 484 (1996)). Here, MARS seeks an order prohibiting Defendants from infringing the MARS’s Marks. (Mot. 1, 22.) What Defendants do with their branding thereafter is up to them. 1 Accordingly, the Court finds that, with a six-month grace period, the balance of 2 equities favors a preliminary injunction. 3 D. The Public Interest Weighs in Favor of a Preliminary Injunction 4 Lastly, the public has an “interest in protecting trademarks.” Brookfield 5 Commc’ns, 174 F.3d at 1066. Essentially, this factor almost always favors the 6 trademark owner. Thus, the Court finds that the public interest weighs in favor of 7 granting a preliminary injunction. 8 Accordingly, on balance, all four Winter factors support granting a preliminary 9 injunction, provided Defendants are given six months’ grace to phase out their use of 10 the “XMARS” Marks. 11 E. A Security Bond is Not Required 12 Defendants correctly note that Federal Rule of Civil Procedure 65(c) permits a 13 court to grant preliminary injunctive relief “only if the movant gives security in an 14 amount that the court considers proper to pay the costs and damages sustained by any 15 party found to have been wrongfully enjoined or restrained.” (Opp’n 20 (citing Fed. 16 R. Civ. P. 65(c).) Defendants suggest that a security bond amount of no less than 17 $5 million is proper and necessary here. (Id.; Gjording Decl. ¶ 45.) 18 Despite the seemingly mandatory language, “Rule 65(c) invests the district 19 court ‘with discretion as to the amount of security required, if any.’” Jorgensen v. 20 Cassiday, 320 F.3d 906, 919 (9th Cir. 2003) (quoting Barahona–Gomez v. Reno, 21 167 F.3d 1228, 1237 (9th Cir. 1999)). In particular, “[t]he district court may dispense 22 with the filing of a bond when it concludes there is no realistic likelihood of harm to 23 the defendant from enjoining his or her conduct.” Id.; see Johnson v. Couturier, 24 572 F.3d 1067, 1086 (9th Cir. 2009). The Ninth Circuit has found that the language 25 of Rule 65(c) does not absolve the party affected by the injunction from its obligation 26 of presenting evidence that a bond is needed, such that the district court is afforded an 27 opportunity to exercise its discretion in setting the amount of the bond. Conn. Gen., 28 321 F.3d at 883. 1 Here, Defendants argue MARS’s “requested injunction would do substantial 2 and irreparable harm to the goodwill that Xmars has built since 2022, embodied by its 3 registered XMARS mark.” (Opp’n 20; Gjording Decl. ¶¶ 44–46.) Defendants further 4 state that, if “required to stop using this mark, Xmars will not only lose substantial 5 sales, but also will suffer reputational damage, causing it to likely lose its market 6 leading status among Amazon Ads Partners.” Id. However, Defendants do not 7 support these blanket arguments with any substantive evidence and “the language of 8 Rule 65(c) does not absolve the party affected by the injunction from its obligation of 9 presenting evidence that a bond is needed.” Conn. Gen., 321 F.3d at 883. As such, 10 Defendants fail to meet their burden to show a security bond is required. 11 Additionally, with a six-month grace period to allow Defendants to slowly 12 discontinue and/or transition away from their usage of the “XMARS” Mark, any 13 perceived harm resulting from the preliminary injunction will be mitigated. 14 Therefore, the Court finds that a security bond is not required for this preliminary 15 injunction. 16 V. CONCLUSION 17 For the reasons discussed above, the Court GRANTS MARS’s Motion for a 18 Preliminary Injunction, without a security bond, and with a SIX-MONTH GRACE 19 PERIOD to wind down the use of “XMARS,” as detailed below. (ECF No. 19.) 20 A. Defendants Xmars Corp. d/b/a/ Xmars, Inc., SparkX Global Corp. and 21 SparkX Marketing Co., Limited, and each of their respective owners, officers, 22 directors, agents, servants, employees and representatives, and those persons in 23 active concert or participation with any of them, are enjoined and restrained, 24 from: 25 (1) using MARS or XMARS to designate the source of any advertising or 26 marketing services, data analytic services, software services and/or any 27 other services provided by Defendants, effective as of six-months 28 following the date of this Order; 1 (2) using MARS or XMARS to state or suggest that Defendants’ services 2 originated with Plaintiff, or that there is any affiliation or connection 3 between Plaintiff and Defendants or their respective services, effective as 4 of the date of this Order; and 5 (3) taking any action for the purpose of circumventing or otherwise 6 avoiding the prohibitions set forth in subparagraphs (1) and (2) above, 7 effective as of the date of this Order. 8 B. Defendants shall file with this Court and serve upon Plaintiff a joint written 9 report setting forth in detail the manner in which each Defendant has complied 10 with the requirements of this Order. Defendants shall file this status report on 11 the first day of each month beginning on October 1, 2024, and continuing 12 through the completion of the six-month grace period. 13 14 This Order shall remain in full force and effect through the date of the Final 15 || Judgment in this case and through the sooner of the end of any appeal therefrom or the 16 || expiration of the time for filing an appeal. 17 18 IT IS SO ORDERED. 19 20 September 13, 2024 ‘, 21 SS Fe se

3 OTIS D. WRIGHT, II 4 UNITED STATES DISTRICT JUDGE

25 26 27 28