1 □□□ 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 | LVDV Holdings, LLC, CV 22-5921-RSWL-PDx 13 Plaintift, DISMISS [22], MOTION TO 14 vy. STRIKE [24], AND REQUEST

FOR JUDICIAL NOTICE [23]

Jabari Shelton, 16 Defendant. 17 $a 19 Plaintiff LVDV Holdings, LLC (“Plaintiff”) brought 20 | the instant Action against Defendant Jabari Shelton 21 (“Defendant”) alleging false designation of origin and 22 | unfair competition, common law trademark infringement, 23 | federal trademark infringement, and counterfeiting. 24 | Currently before the Court is Defendant’s Motion to 25 | Dismiss Plaintiff’s First Amended Complaint (“FAC”) 26 | Under Federal Rules of Civil Procedure 12(b) (1) and 27 | 12(b) (6), Motion to Strike, and Request for Judicial 28

1 Notice [22, 23, 24]. 2 Having reviewed all papers submitted pertaining to

3 this Motion, the Court NOW FINDS AND RULES AS FOLLOWS: 4 the Court DENIES in part Defendant’s Motion to Dismiss, 5 GRANTS in part Defendant’s Motion to Dismiss with leave 6 to amend, and GRANTS Defendant’s Motion to Strike with 7 leave to amend. 8 I. BACKGROUND 9 A. Factual Background 10 Plaintiff alleges the following in its FAC: 11 Plaintiff is a well-known streetwear brand that 12 owns rights in apparel bearing the V-Logo mark, VLONE- 13 logo mark, and VLONE word mark (collectively, the “VLONE 14 marks”). See generally FAC, ECF No. 18; Id. ¶¶ 52-53. 15 Defendant originally owned the rights to the VLONE marks 16 and first used them in commerce in April 2012. Id. 17 ¶¶ 16-17. Defendant later assigned the rights in the 18 VLONE marks to Plaintiff in 2020. Id. ¶ 17. Plaintiff 19 licensed the VLONE marks to Defendant, but now, 20 Defendant is a “former” licensee. Id. ¶¶ 16, 56. The 21 Parties had an oral licensing agreement in which 22 Plaintiff licensed Defendant to use and sublicense the 23 VLONE marks. Id. ¶¶ 56, 69. Plaintiff does not state 24 when Defendant’s license terminated. Plaintiff’s owner, 25 So Hunter, assisted Defendant in making, selling and 26 marketing clothing bearing the VLONE marks while 27 Defendant was licensing those marks. Id. ¶ 63. 28 Moreover, under this agreement, Defendant was required 1 to pay all revenues related to the use, licensing, and

2 sublicensing to an entity called VLONE Holdings, LLC

3 (“VHL”). Id. 4 In 2021, Defendant took $200,000 out of VHL’s bank 5 account without authorization. Id. ¶ 76. Around this 6 time, Defendant falsely represented that he was the 7 owner of the VLONE marks and entered contracts giving 8 various recording artist and enterprises licenses and/or 9 authority to use the VLONE marks without Plaintiff’s 10 permission. Id. ¶¶ 78-79, 84-86. Indeed, Defendant 11 even formed a business called Endless Circle Denim LLC 12 (“ECD”), which he used to enter into at least one 13 contract to license the VLONE marks. Id. ¶¶ 139-144. 14 By entering these contracts, Defendant aided in the 15 creation of counterfeit products that compete with 16 Plaintiff’s products. Id. ¶¶ 81; 131-33. 17 B. Procedural Background 18 Plaintiff filed a Complaint [1] on August 19, 2022. 19 Defendant then filed a Motion to Dismiss [15] on 20 November 21, 2022. Plaintiff filed its First Amended 21 Complaint (“FAC”) on November 29, 2022. And Defendant 22 subsequently filed another Motion to Dismiss [22] along 23 with a Motion to Strike Paragraphs 148-153 of the FAC 24 [24], and a Request for Judicial Notice [23] on 25 December 13, 2022. On January 3, 2023, Plaintiff filed 26 its Oppositions to Defendant’s Motions to Dismiss [29] 27 and Strike [30], and to Defendant’s Request for Judicial 28 Notice [31]. On January 10, 2023, Defendant filed 1 Replies in support of its Motions to Dismiss [35] and

2 Strike [34], as well as to its Request for Judicial

3 Notice [36]. 4 II. DISCUSSION 5 A. Legal Standard 6 1. Motion to Dismiss: Rule 12(b)(6)1 7 Federal Rule of Civil Procedure (“Rule”) 12(b)(6) 8 allows a party to move for dismissal of one or more 9 claims if the pleading fails to state a claim upon which 10 relief can be granted. A complaint must “contain 11 sufficient factual matter, accepted as true, to state a 12 claim to relief that is plausible on its face.” 13 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation 14 omitted). Dismissal is warranted for a “lack of a 15 cognizable legal theory or the absence of sufficient 16 facts alleged under a cognizable legal theory.” 17 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 18 (9th Cir. 1988) (citation omitted). 19 In ruling on a 12(b)(6) motion, a court may 20 generally consider only allegations contained in the

21 1 Defendant moves to dismiss Plaintiff’s claims for lack of 22 standing under 12(b)(1). While questions of Article III standing are analyzed under the 12(b)(1) standard for lack of subject 23 matter jurisdiction, questions of lack of statutory standing are analyzed under the 12(b)(6) standard for failure to state a 24 claim. See Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011). Accordingly, the Court assesses Defendant’s arguments 25 that Plaintiff does not have standing under section 32(1) of the 26 Lanham Act and California common law under the 12(b)(6) standard. See Lasco Fittings, Inc. v. Lesso Am., Inc., No. EDCV 13-02015- 27 VAP (DTBx), 2014 WL 12601016, at 2 (C.D. Cal. Feb. 21, 2014). 28 1 pleadings, exhibits attached to the complaint, and

2 matters properly subject to judicial notice. Swartz v.

3 KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007); see also 4 White v. Mayflower Transit, LLC, 481 F. Supp. 2d 1105, 5 1107 (C.D. Cal 2007), aff’d sub nom. White v. Mayflower 6 Transit, L.L.C., 543 F.3d 581 (9th Cir. 2008) (“unless a 7 court converts a Rule 12(b)(6) motion into a motion for 8 summary judgment, a court cannot consider material 9 outside of the complaint (e.g., facts presented in 10 briefs, affidavits, or discovery materials”). A court 11 must presume all factual allegations of the complaint to 12 be true and draw all reasonable inferences in favor of 13 the non-moving party. Klarfeld v. United States, 14 944 F.2d 583, 585 (9th Cir. 1991). “[T]he issue is not 15 whether a plaintiff will ultimately prevail but whether 16 the claimant is entitled to offer evidence to support 17 the claims.” Jackson v. Birmingham Bd. of Educ., 18 544 U.S. 167, 184 (2005) (quoting Scheuer v. Rhodes, 19 416 U.S. 232, 236 (1974)). While a complaint need not 20 contain detailed factual allegations, a plaintiff must 21 provide more than “labels and conclusions” or “a 22 formulaic recitation of the elements of a cause of 23 action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 24 (2007). However, “a well-pleaded complaint may proceed 25 even if it strikes a savvy judge that actual proof of 26 those facts is improbable, and ‘that a recovery is very 27 remote and unlikely.’” Id. at 556 (quoting Scheuer v. 28 Rhodes, 416 U.S. 232, 236 (1974)). 1 2. Motion to Strike

2 Rule 12(f) provides that a court may, by motion or

3 on its own initiative, “strike from a pleading an 4 insufficient defense or any redundant, immaterial, 5 impertinent, or scandalous matter.” Fed. R. Civ. P. 6 12(f). “The function of a 12(f) motion to strike is to 7 avoid the expenditure of time and money that must arise 8 from litigating spurious issues by dispensing with those 9 issues prior to trial.” Whittlestone, Inc. v. Handi- 10 Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quoting 11 Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 12 1993), rev’d on other grounds, 510 U.S. 517 (1994)). 13 “Motions to strike are generally disfavored.” Leghorn 14 v. Wells Fargo Bank, N.A., 950 F. Supp. 2d 1093, 1122 15 (N.D. Cal. 2013) (citation omitted); see also Sapiro v. 16 Encompass Ins., 221 F.R.D. 513, 518 (N.D. Cal. 2004) 17 (“Courts have long disfavored Rule 12(f) motions, 18 granting them only when necessary to discourage parties 19 from making completely tendentious or spurious 20 allegations.”). 21 “In ruling on a motion to strike under Rule 12(f), 22 the court must view the pleading in the light most 23 favorable to the nonmoving party.” Cholakyan v. 24 Mercedes-Benz USA, LLC, 796 F. Supp. 2d 1220, 1245 25 (C.D. Cal. 2011). “[B]efore granting such a 26 motion . . . the court must be satisfied that there are 27 no questions of fact, that the [claim or] defense is 28 insufficient as a matter of law, and that under no 1 circumstance could [it] succeed.” Id. “[C]ourts

2 frequently require the moving party to demonstrate

3 prejudice before granting the requested relief, and 4 ultimately whether to grant a motion to strike falls on 5 the sound discretion of the district court.” Cook v. 6 Cnty. of Los Angeles, No. CV 19-2417 JVS (KLSx), 2021 WL 7 1502704, at *2 (C.D. Cal. Mar. 31, 2021). 8 B. Discussion 9 1. Judicial Notice 10 Defendant requests the Court take judicial notice 11 of:2 (1) archived pages of the Vlone website between 12 September 19, 2020, and August 31, 2022, accessible 13 through the Internet Archive’s Wayback Machine; (2) the 14 applications, specimens, and assignments filed with the 15 U.S. Patent and Trademark Office for the three Vlone 16 Marks, downloaded from the U.S. Patent and Trademark 17 Office; (3) press releases and news articles detailing 18 Defendant’s founding of the Vlone brand; (4) the 19 Articles of Organization of LVDV Holding, LLC; and 20 (5) the U.S. Patent and Trademark Office Courtesy 21 Reminder of Required Trademark Registration Maintenance 22 Filing Under Section 8 for the “VLONE Word Mark,” 23 downloaded from the U.S. Patent and Trademark Office. 24 Def.’s Req. for Judicial Notice (“RJN”), ECF No. 23; 25 Id., Exs. 1-5, ECF Nos. 23-1, 23-2, 23-3. 26 2 The documents are attached to the Request for Judicial 27 Notice as exhibits and are referred to here by their exhibit 28 number. 1 A court may take judicial notice of “a fact that is

2 not subject to reasonable dispute because it: (1) is

3 generally known within the court’s territorial 4 jurisdiction; or (2) can be accurately and readily 5 determined from sources whose accuracy cannot reasonably 6 be questioned.” Fed. R. Evid. 201(b). Courts may also 7 take judicial notice of administrative bodies’ records 8 and reports. Anderson v. Holder, 673 F.3d 1089, 1094 9 n.1 (9th Cir. 2012). 10 The Court GRANTS Defendant’s requests with respect 11 to items (2), (4), and (5), as trademark registrations, 12 publicly available documents from the U.S. Patent and 13 Trademark Office, and articles of incorporation are all 14 properly subject to judicial notice. See Dep’t of Parks 15 & Recreation v. Harper, No. CV 05-2008 DSF (JWJx), 2006 16 WL 8434676, at *3 (C.D. Cal. Apr. 25, 2006) (quoting 17 Vitek Sys., Inc. v. Abbott Labs., 675 F.2d 190, 192 n.3 18 (8th Cir. 1982)) (“[T]he ‘court may take judicial notice 19 of Patent and Trademark Office documents.’”); Horn v. 20 Azusa Pac. Univ., No. 218CV09948CASPLAX, 2019 WL 21 9044606, at *5 (C.D. Cal. Jan. 14, 2019) (taking 22 judicial notice of a corporation’s articles of 23 incorporation). 24 The Court DENIES as moot Defendant’s request as to 25 items (1) and (3), as the Court does not rely on those 26 documents in reaching its decision. See Flate v. Mortg. 27 Lenders Network USA, Inc., No. CV 15-08873-AB (FFMx), 28 2016 WL 9686051, at *4 (C.D. Cal. Mar. 4, 2016) (denying 1 as moot a request for judicial notice where “the [c]ourt

2 did not rely on any documents in . . . its ruling”).

3 2. 12(b)(6) 4 a. Standing 5 Defendant argues that the assignment of the VLONE 6 marks to Plaintiff was invalid, and therefore Plaintiff 7 has no standing to sue for trademark infringement and 8 related claims. See generally Mot. Section 32(1) of 9 the Lanham Act allows only a “registrant” to bring a 10 civil action under that section for any of the forms of 11 trademark infringement made unlawful therein. 15 U.S.C. 12 § 1114(1) (“Any person who shall, without the consent of 13 the registrant . . . [commit any of several infringement 14 offenses] shall be liable in a civil action by the 15 registrant for the remedies hereinafter provided.”). 16 “Registrant” includes the registrant’s “legal 17 representatives, predecessors, successors, and assigns.” 18 Id. § 1127 (defining “registrant”). 19 “There is no such thing as property in a trade-mark 20 except as a right appurtenant to an established business 21 or trade in connection with which the mark is employed.” 22 United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 23 97–98(1918). A trademark is therefore “assignable 24 [only] with the good will of the business in which the 25 mark is used, or with that part of the good will of the 26 business connected with the use of and symbolized by the 27 mark.” 15 U.S.C. § 1060. A “naked” or “in gross” 28 transfer of a mark, i.e., without the associated 1 goodwill, is invalid. See Visa, U.S.A., Inc. v.

2 Birmingham Trust Nat’l Bank, 696 F.2d 1371, 1375

3 (Fed. Cir. 1982). 4 “Goodwill” has been generally described as “the 5 advantage or benefit, which is acquired by an 6 establishment, beyond the mere value of the capital, 7 stock, funds, or property employed therein, in 8 consequence of the general public patronage and 9 encouragement which it receives from constant or 10 habitual customers.” Newark Morning Ledger Co. v. 11 United States, 507 U.S. 546, 555 (1993). Goodwill must 12 accompany the assignment of a trademark “to maintain the 13 continuity of the product or service symbolized by the 14 mark and thereby avoid deceiving or confusing 15 customers.” Gallo Winery, 967 F.2d at 1289 (citing 1 J. 16 THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION, § 17 18:1(C)). A mere recitation in the assignment agreement 18 “that the mark was assigned ‘together with the good will 19 of the business symbolized by the mark’” is not 20 sufficient to establish a valid transfer. Money Store 21 v. Harriscorp Fin., Inc., 689 F.2d 666, 676 (7th Cir. 22 1982). 23 Courts often assess whether there has been a 24 transfer of goodwill by whether the assignee offers 25 goods substantially similar to, or of the same nature 26 and quality as, the goods previously associated with the 27 mark. Visa, U.S.A., Inc., 696 F.2d at 1376; Archer 28 Daniels Midland Co. v. Narula, No. 99 C 6997, 2001 WL 1 804025, at *6–7 (N.D. Ill. July 12, 2001). Indeed, an

2 assignee’s failure to “set forth factual allegations

3 tending to show that [it] maintained actual control 4 sufficient to ensure continuity of the mark” serves as 5 grounds to dismiss trademark infringement claims. 6 Parkinson v. Robanda Int’l, Inc., 641 F. App’x 745, 747 7 (9th Cir. 2016). Importantly, “information sufficient 8 to enable [the assignee] to continue” the business that 9 the assignor was conducting prior to the assignment may 10 constitute a transfer of goodwill. See Gallo, 967 F.2d 11 at 1289. 12 Here, Plaintiff adequately alleged that it obtained 13 the goodwill necessary to confer standing. Indeed, 14 Plaintiff states that prior to the assignment, its sole 15 owner, So Hunter, assisted Defendant in making, selling, 16 and marketing clothing bearing the VLONE marks. FAC 17 ¶ 63. Plaintiff thus contends that its owner is 18 familiar with the marketing and trade channels for 19 products bearing the VLONE marks. Id. ¶¶ 61-62. 20 Accordingly, Plaintiff states that its owner “has 21 sufficient knowledge and information to continue the 22 business using the VLONE marks.” Id. ¶ 64. These 23 contentions are sufficient to show that Plaintiff 24 received the goodwill associated with the VLONE marks, 25 and thus received a valid assignment. See Gallo, 26 967 F.2d at 1289. Therefore, at this stage of 27 litigation, Plaintiff’s allegations are adequate to show 28 that Plaintiff has standing to bring this claim. See 1 Klarfeld, 944 F.2d at 585 (holding that a court must

2 presume all factual allegations of the complaint to be

3 true and draw all reasonable inferences in favor of the 4 non-moving party on a motion to dismiss).3 5 b. Claims One, Two, and Three: False 6 Designation of Origin, Trademark 7 Infringement, and Unfair Competition 8 Plaintiff brings claims of false designation of 9 origin, trademark infringement, and unfair competition 10 under 15 U.S.C. § 1125(A), 15 U.S.C. § 1114(1), and 11 California law. See generally FAC. 12 This Court analyzes these claims together for the 13 purposes of this Motion. “[T]he courts have uniformly 14 held that common law and statutory trademark 15 infringement are merely specific aspects of unfair 16 competition.” Hokto Kinoko Co. v. Concord Farms, Inc., 17 810 F.Supp.2d 1013, 1031 (C.D. Cal. 2011) (citing New W. 18 Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1201 (9th 19 Cir.1979)); see also Grey v. Campbell Soup Co., 650 F. 20

21 3 Since Plaintiff alleges that Defendant licensed the VLONE marks after the assignment, it is possible that there could also 22 be an “assignment/license-back” agreement—a transaction in which Company A assigns a trademark to Company B, but continues to 23 utilize the trademark under a license with Company B. Gallo, 967 24 F.2d at 1290. Such arrangements can serve to prevent the disruption of the “continuity of the products or services 25 associated with a given mark,” and therefore preserve the goodwill of the marks. Id. at 1289–90. Nonetheless, since the 26 Court determines that Plaintiff has adequately pled it received the goodwill of the marks and has standing, the Court declines to 27 address whether the parties established a valid 28 assignment/license-back agreement. 1 Supp. 1166, 1173 (C.D. Cal. 1986) (“The tests for

2 infringement of a federally registered mark under

3 § 32(1), 15 U.S.C. § 1114(1), infringement of a common 4 law trademark, unfair competition under § 43(a), 5 15 U.S.C. § 1125(a), and common law unfair competition 6 involving trademarks are the same”). A claim for false 7 designation of origin under 15 U.S.C. § 1125 requires 8 proof of the same elements as a claim for trademark 9 infringement under 15 U.S.C. § 1114. Brookfield 10 Commc’ns, Inc. v. W. Coast Ent. Corp., 174 F.3d 1036, 11 1046 n.6 (9th Cir. 1999) (citing 15 U.S.C. §§ 1114(1) & 12 1125; AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 13 (9th Cir. 1979)). 14 Furthermore, the Ninth Circuit “has consistently 15 held that state common law claims of unfair 16 competition . . . are ‘substantially congruent’ to 17 claims made under the Lanham Act.” Cleary v. News 18 Corp., 30 F.3d 1255, 1262–63 (9th Cir. 1994) (citing 19 Academy of Motion Picture Arts & Scis. v. Creative House 20 Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir. 1991)). 21 To prove a claim of trademark infringement, a 22 plaintiff must show: (1) that it has a valid, 23 protectable trademark, and (2) that defendant’s use of 24 the mark is likely to cause confusion. Applied Info. 25 Scis. Corp. v. eBay, Inc., 511 F.3d 966, 969 26 (9th Cir.2007) (citing Brookfield Commc’ns, 174 F.3d 27 at 1047, 1053). 28 1 Defendant contends that Plaintiff has not stated a

2 claim because Defendant had a license to use the marks,

3 and Plaintiff’s claims are improperly based on 4 Defendant’s alleged failure to pay VHL revenues. Mot. 5 20:15-27. Plaintiff, on the other hand, argues that the 6 Parties entered an agreement providing that Defendant 7 could use/sublicense the VLONE marks, and that Defendant 8 was to have all resulting revenues paid to VHL, where 9 the revenues would presumably be split between 10 Defendant, Plaintiff’s owner, and a third party. FAC 11 ¶¶ 69, 72. Plaintiff argues that Defendant’s uses of 12 the VLONE marks were unauthorized insofar as he failed 13 to pay the revenues obtained from those uses to VHL. 14 Id. ¶¶ 76-146. 15 It is well established that when a license ends, a 16 former licensee’s continued use of the relevant marks 17 constitutes infringement. See, e.g., Hambrecht Wine 18 Grp., L.P. v. Millennium Imp. LLC, No. C 05-04625 JW, 19 2007 WL 9760162 (N.D. Cal. Apr. 26, 2007); see also 20 Microban Prods. Co. v. API Indus., Inc., No. 14 Civ. 41 21 (KPF), 2014 WL 1856471, at *6 (S.D.N.Y. May 8, 2014) 22 (stating that “likelihood of confusion is established as 23 a matter of law” where “an ex-licensee continues to use 24 a mark after its license expires.”). Moreover, when a 25 licensee’s use of marks exceeds the scope of the 26 licensor’s consent established in the license, that use 27 constitutes an unauthorized use. See Lee Myles Assocs. 28 Corp. v. Paul Rubke Enters., Inc., 557 F. Supp. 2d 1134, 1 1141–42 (S.D. Cal. 2008). For instance, in Lee Myles,

2 the license provided that the licensee could use the

3 relevant marks only in connection with a preexisting 4 franchise business, and any other uses had to be 5 approved in writing by the licensor. Id. Therefore, 6 the licensor’s allegations that its consent did not 7 extend to the licensee’s use of the marks to facilitate 8 their own separate business established a valid 9 infringement claim. Id. 10 Here, while not as explicitly set forth as in the 11 Lee Myles written license, Plaintiff alleges that the 12 parties agreed that Defendant would place all revenues 13 from his use of the VLONE marks into VHL. Plaintiff 14 further contends that the Defendant’s failure to place 15 revenues into VHL renders the connected uses of the 16 VLONE marks “unauthorized.” Consequently, Plaintiff has 17 adequately stated claims for trademark infringement, 18 false designation of origin, and unfair competition. 19 c. Claim Four: Counterfeiting Under 15 U.S.C. 20 § 1117 21 A counterfeiting claim under “Section 1116(d) 22 requires that the mark in question be (1) a non-genuine 23 mark identical to the registered, genuine mark of 24 another, where (2) the genuine mark was registered for 25 use on the same goods to which the infringer applied the 26 mark.” Louis Vuitton Malletier, S.A. v. Akanoc 27 Solutions, Inc., 658 F.3d 936, 946 (9th Cir.2011); see 28 also Partners for Health & Home, L.P. v. Seung Wee Yang, 1 No. CV 09–07849, 2011 WL 5387075, at *8 (C.D. Cal. Oct.

2 28, 2011) (“Trademark infringement under 15 U.S.C.

3 § 1114(1) also constitutes trademark counterfeiting when 4 the infringer uses a ‘counterfeit mark,’ which is 5 defined as ‘a counterfeit of a mark that is registered 6 on the principal register in the United States Patent 7 and Trademark Office for such goods or services sold, 8 offered for sale, or distributed and that is in 9 use . . . .’ 15 U.S.C. § 1116(d)(1)(B)(I).”). 10 Plaintiff argues that Defendant is liable for 11 trademark counterfeiting because Defendant used the 12 VLONE marks without authority. See generally FAC. 13 Plaintiff states that Defendant “willfully and without 14 authorization directly or indirectly [made] products” 15 bearing Plaintiff’s mark and Defendant is “liable for 16 willfully counterfeiting Plaintiff’s” marks. FAC 17 ¶¶ 195-200. Such assertions, however, are bare 18 allegations and formulaic recitations of the cause of 19 action, insufficient to state a claim. See Bell Atl. 20 Corp. v. Twombly, 550 U.S. 544, 555 (2007). The issue 21 before the Court is whether a mark becomes counterfeit 22 due to unauthorized use. 23 The Ninth Circuit has held that a former licensee 24 can be held liable for counterfeiting in the context of 25 certification marks. See Idaho Potato Comm’n v. G & T 26 Terminal Packaging, Inc., 425 F.3d 708, 720–22 (9th Cir. 27 2005). But the Ninth Circuit was careful to clarify 28 that “[a] certification mark is a special creature for a 1 purpose uniquely different from that of an ordinary

2 trademark or service mark.” Id. at 716 (citing 3

3 MCCARTHY ON TRADEMARKS, § 19:91 (4th ed. 2005)). And, 4 conversely, courts have found that licensees continuing 5 to use a mark after authorization terminated could not 6 be liable for counterfeiting, as the marks were not 7 “counterfeit.” See Meineke Franchisor SPV LLC v. Atta, 8 No. SACV 18-1205-JVS(ADSx), 2019 WL 1751840, at *5 (C.D. 9 Cal. Mar. 19, 2019); see also U.S. Structures Inc. v. 10 J.P. Structures, Inc., 130 F.3d 1185, 1192 (6th Cir. 11 1997) (“We agree with defendants that § 1117(b) does not 12 apply where, as in this case, a [former] franchisee 13 continues to use the franchisor’s original trademark 14 after the franchise has been terminated. Although the 15 use of an original trademark is without authorization, 16 it is not the use of a counterfeit mark . . . .”); 17 Pennzoil-Quaker State Co. v. Smith, No. 2:05CV1505, 2008 18 WL 4107159, at *20-22 (W.D. Pa. Sept. 2, 2008) (holding 19 that a former licensee’s use of genuine marks did not 20 constitute counterfeiting). 21 Here, Plaintiff has not pled a claim for 22 counterfeiting. Plaintiff has failed to show that 23 Defendant used counterfeit marks, and any unauthorized 24 use of Plaintiff’s marks does not make the marks in 25 question “counterfeit.” Therefore, the Court should 26 GRANT Defendant’s Motion to Dismiss Plaintiff’s 27 Counterfeiting claim. 28 /// 1 d. Leave to Amend

2 “Where a motion to dismiss is granted, a district

3 court must decide whether to grant leave to amend.” 4 Winebarger v. Pennsylvania Higher Educ. Assistance 5 Agency, 411 F. Supp. 3d 1070, 1082 (C.D. Cal. 2019). 6 “The court should give leave [to amend] freely when 7 justice so requires.” Fed. R. Civ. P. 15(a)(2). In the 8 Ninth Circuit, “Rule 15’s policy of favoring amendments 9 to pleadings should be applied with ‘extreme 10 liberality.’” United States v. Webb, 655 F.2d 977, 979 11 (9th Cir. 1981). Against this extremely liberal 12 standard, the Court may consider “the presence of any of 13 four factors: bad faith, undue delay, prejudice to the 14 opposing party, and/or futility.” Owens v. Kaiser 15 Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 16 2001). 17 The Court should grant leave to amend because 18 Plaintiff can plead additional facts to support its 19 counterfeiting claim. There is no evidence of bad faith 20 or undue delay by Plaintiff, nor potential prejudice to 21 Defendant by allowing amendment. The Court therefore 22 GRANTS Defendant’s Motion to Dismiss Plaintiff’s 23 counterfeiting claim with leave to amend. 24 3. Motion to Strike 25 Defendant seeks to strike paragraphs 148 through 26 153 in the FAC on grounds that they are redundant, 27 immaterial, impertinent, or scandalous. Motions to 28 strike may be granted if “it is clear that the matter to 1] be stricken could have no possible bearing on the 2] subject matter of the litigation.” LeDuc v. Kentucky 3 | Central Life Ins. Co., 814 F. Supp. 820, 830 (N.D. Cal. 4] 1992). 5 An “impertinent” allegation is neither responsive 6 | nor relevant to the issues involved in the action and 7 | which could not be put in issue or given in evidence 8 | between the parties. Wilkerson v. Butler, 229 F.R.D. 9] 166, 170 (E.D. Cal. 2005). An “impertinent” matter 10 J consists of statements that do not pertain and are 11] unnecessary to the issues in question. Id. A 12 | “scandalous” matter improperly casts a derogatory light 13 J on someone, usually a party. Id. Allegations may be 14 | stricken as scandalous if the matter bears no possible 15 | relation to the controversy or may cause the objecting 16 J party prejudice. Id. 17 Here, the Court should strike the allegations in 18 | paragraphs 148 through 153. Plaintiff recounts how in 19 | 2018, Defendant was arrested in England for two counts 20 | of sexual assault, which he later pled guilty to in 214 2019. FAC 148-49. Plaintiff contends that these 22 | incidents resulted in the cancellation of an agreement 23 | wherein Nike was to use the VLONE marks, and therefore 24 | Defendant’s actions harmed the reputation of the VLONE 25 marks. Id. 150-51, 153. On the face of the FAC, 26 | however, it is unclear how any harm caused to the VLONE 27 | marks’ reputation approximately one to two years prior 28 | to Plaintiff’s purported assignment of rights in the 19

1 marks is relevant to Plaintiff’s claims that Defendant

2 infringed upon Plaintiff’s post-assignment rights.

3 Indeed, in its FAC Plaintiff does not adequately 4 connect these factual allegations to any of its claims 5 for relief. Moreover, these allegations could cause 6 Defendant, the objecting party, prejudice. In its 7 Opposition, Plaintiff argues that it raises these facts 8 in anticipation of Defendant later raising a defense of 9 inadequate consideration. See Pl.’s Opp’n to Def.’s 10 Mot. to Strike 2:21-26, ECF No. 30. But speculation as 11 to the precise reason the Nike agreement was lost need 12 not be shared in anticipation of such a defense. And 13 Plaintiff can cure its FAC while still addressing a 14 possible lack of consideration defense. When amending 15 its FAC, Plaintiff is free to explain without including 16 inflammatory, unnecessary detail, that while Defendant 17 was in control of the VLONE marks, a Nike agreement fell 18 through and that may have impacted the consideration 19 exchanged for the VLONE marks. Accordingly, the Court 20 GRANTS Defendant’s motion to strike the allegations in 21 paragraphs 148 through 153 with leave to amend. 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 1 III. CONCLUSION 2 Based on the foregoing, the Court DENIES in part

3 Defendant’s Motion to Dismiss, GRANTS in part 4 Defendant’s Motion to Dismiss with leave to amend, and 5 GRANTS Defendant’s Motion to Strike with leave to amend. 6 7 IT IS SO ORDERED. 8 9 DATED: May 2, 2023 _______/S_/_ R_O_N_A_L_D_ S_._W_. _L_E_W________ 10 HONORABLE RONALD S.W. LEW 11 Senior U.S. District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28