1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 San Francisco Division 11 EXPENSIFY, INC., Case No. 22-cv-05720-LB

12 Plaintiff,

ORDER DENYING MOTION TO STAY

13 v. Re: ECF No. 40 14 SWAPPOINT AG, et al., 15 Defendants. 16 17 INTRODUCTION 18 This is a trademark dispute between plaintiff Expensify, a U.S. provider of expense-reporting 19 services, and defendants Swappoint and Karmapoint, jointly owned Swiss providers of a mobile 20 application and associated website. Expensify uses the “Karma Points” mark in connection with 21 its corporate credit card to allow customers to direct the money value of their credit-card reward 22 points to charitable causes. It alleges that it has common-law rights to the mark. The defendants 23 have the U.S.-registered mark “Karmapoint” that they use in connection with their app, which 24 allows users to accumulate points for good deeds. Expensify alleges that the defendants registered 25 their mark in the U.S. (and around the world) to cover “an ocean of goods of services” that the 26 defendants never intended to provide, the parties’ uses of their marks are not confusingly similar, 27 and Expensify’s mark does not infringe the U.S. trademark registration owned by the defendants. 1 trademark (due to lack of a bona fide intent to use), and liability for a false or fraudulent trademark 2 registration.1 3 The defendants moved to stay the case due to the parties’ pending cancellation proceeding in 4 the Trademark Trial and Appeals Board (TTAB) of the United States Patent and Trademark Office 5 (USPTO). That proceeding, which Expensify filed on the same day it filed this case, is focused on 6 whether the defendants’ trademark should be cancelled for lack of a bona fide intent to use. The 7 defendants contend that once resolved, the TTAB proceeding will have preclusive effect on this 8 case and it would therefore be efficient to stay this case in the meantime. The defendants thus ask 9 for a stay under either the doctrine of primary jurisdiction or the court’s inherent discretionary 10 power. In the event the motion is denied, the defendants request that their response to the 11 complaint be due within fourteen days.2 Expensify counters mainly that a stay would not be 12 efficient because the issue of trademark infringement, at least, will inevitably have to proceed in 13 this case.3 14 Given all the circumstances, the court declines to exercise its discretion to stay the case. The 15 court also sets a deadline for the defendants’ response to the recently filed amended complaint. 16 17 STATEMENT 18 1. Factual Background and Procedural History 19 Expensify is a U.S. corporation that creates a mobile and web-based application for expense 20 management. The software “simplif[ies] expense reports for individuals, employees, and 21 accountants.” “Expensify has more than 12 million users and 53,000 customers across more than 22 169 countries.” In 2020, Expensify introduced a corporate credit card that includes the “Karma 23 Points” reward system. Expensify uses the “Karma Points” moniker in connection with its credit 24 25

26 1 Am. Compl. – ECF No. 42. Citations refer to material in the Electronic Case File (ECF); pinpoint citations are to the ECF-generated page numbers at the top of documents. 27 2 Mot. – ECF No. 40. 1 card, including in marketing materials, and the “moniker featured prominently in press coverage 2 of the card’s rollout.”4 3 Swappoint and Karmapoint are closely held Swiss corporations that allegedly are jointly 4 owned by Umut Ertan. Karmapoint has a website (karmapoint.com) and a mobile application 5 called the Karmapoint SW App. The app is available on the Google Play store (with “only ‘50+’ 6 downloads” reported) and the Apple App store (with no user reviews yet received). The app 7 provides a “platform[] for users to create and maintain profiles and exchange recognition for good 8 deeds and other acts.”5 9 For two years before the complaint was filed on October 4, 2022, the parties had “extensive 10 negotiations” about their trademark rights. The defendants have allegedly “unreasonably 11 persist[ed] in an intransigent campaign to attenuate Expensify’s commerce globally.” They have 12 done so “by first filing overly broad and inflated trademark applications around the world, with no 13 intent of use,” and then “opposing Expensify’s bona fide trademark applications despite having no 14 reasonable arguments that the two marks, as used, are confusingly similar.”6 15 Swappoint applied for registration of its Karmapoint mark in Switzerland in December 2019, 16 and the mark was registered on June 5, 2020. Swappoint then proceeded internationally through 17 the Madrid Protocol.7 It filed an application in the United States on the same day that its Swiss 18 mark was registered: June 5, 2020.8 The U.S. mark was registered on September 7, 2021.9 The 19 registration claims priority to December 9, 2019 (presumably, the date of the Swiss application).10 20 It “identifie[s] nine international classes associated with approximately [seventy-nine] distinct 21 22

23 4 Am. Compl. – ECF No. 42 at 5 (¶¶ 15–16), 7 (¶¶ 31, 33) 8 (¶¶ 36–37), 10 (¶ 39). 24 5 Id. at 5 (¶¶ 17–21), 14 (¶ 52), 20–21 (¶ 75). 6 Id. at 2 (¶ 2), 3 (¶ 6). 25 7 Id. at 12 (¶ 47). 26 8 Swappoint Trademark Registration, Ex. C. to Am. Compl. – ECF No. 42 at 42. 27 9 Am. Compl. – ECF No. 42 at 14 (¶ 50); Swappoint Trademark Registration, Ex. C. to Am. Compl. – ECF No. 42 at 40. 1 goods and services.”11 Those goods and services range “from real estate to telecommunications to 2 the provision of food and beverages and even legal services.”12 3 Expensify allegedly owns common-law trademark rights in the “Karma Points” mark.13 4 Expensify applied for a U.S. trademark registration in March 2020, which initially was allowed on 5 June 2, 2020, and “Expensify continued its worldwide marketing campaign” using the mark.14 On 6 March 22, 2022, Expensify filed specimens of use with the USPTO to secure registration for its 7 March 2020 trademark application.15 On May 25, 2022, that office refused Expensify’s U.S. 8 trademark application, “in part because of an alleged likelihood of confusion with Swappoint’s 9 [Karmapoint] registration.”16 10 The complaint also has allegations about why Expensify does not infringe the defendants’ 11 mark and why the defendants’ U.S. trademark application was false or fraudulent.17 12 The court previously denied the defendants’ motion to dismiss for lack of personal jurisdiction, 13 mainly because of their U.S. trademark registration.18 Expensify then filed an amended complaint 14 with four claims: (1) declaratory judgment of trademark non-infringement, 28 U.S.C. § 2201 & 15 15 U.S.C. § 1125; (2) cancellation of trademark registration for lack of a bona fide intent to use, 15 16 U.S.C. § 1119; (3) false or fraudulent registration of a trademark, 15 U.S.C. § 1120; and (4) 17 declaratory judgment of non-infringement of a common-law trademark.19 18 19 20 21

22 11 Am. Compl. – ECF No. 42 at 13–14 (¶ 49). 23 12 Id. at 3–4 (¶ 7). 13 Id. at 3 (¶ 5). 24 14 Id. at 10–11 (¶¶ 40–41); Expensify Trademark Appl., Ex. B to id. – ECF No. 42 at 32–38. 25 15 Am. Compl. – ECF No. 42 at 12 (¶ 44). 26 16 Id. at 14 (¶ 51). 17 Id. at 14–22 (¶¶ 52–68, 73–80). 27 18 Order – ECF No. 37. 1 The court has federal-question jurisdiction. 28 U.S.C. §§ 1331, 1338. All parties consented to 2 magistrate-judge jurisdiction.20 Id. § 636(c). The court can decide the motion without oral argument. 3 N.D. Cal. Civ. L.R. 7-1(b). 4 5 2. TTAB Proceeding 6 In TTAB Cancellation No. 92080725, which Expensify filed on the same day as this lawsuit 7 (October 4, 2022), Expensify seeks cancellation of the defendants’ U.S. trademark registration on the 8 ground of lack of a bona fide intent to use.21 “The parties have been actively engaged in discovery” 9 since January 2023. Due to a current discovery dispute, the proceedings are temporarily suspended. 10 Otherwise, discovery was to close on November 10, 2023. The defendants declare that “[d]espite the 11 temporary suspension, trial is set to commence in the next few months.”22 Expensify responds (in its 12 brief) that “[a]lthough the parties have conducted some written discovery, no depositions have been 13 taken, no expert discovery has been conducted, . . . [no] dispositive motions have been filed,” and no 14 trial date has been set.23 15 LEGAL STANDARDS 16 1. Doctrine of Primary Jurisdiction 17 “The primary jurisdiction doctrine allows courts to stay proceedings or to dismiss a complaint 18 without prejudice pending the resolution of an issue within the special competence of an 19 administrative agency.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). 20 Primary jurisdiction is not “designed to secure expert advice from agencies every time a court is 21 presented with an issue conceivably within the agency’s ambit.” Id. (cleaned up). “Instead, it is to 22 be used only if a claim requires resolution of an issue of first impression, or of a particularly 23 complicated issue that Congress has committed to a regulatory agency, and if protection of the 24 25 20 Consents – ECF Nos. 9, 14. 21 Balfus Decl. – ECF No. 40-1 at 2 (¶¶ 3–4); Gallagher Decl. – ECF No. 40-2 at 2–3 (¶ 5); Pet. for 26 Cancellation, Ex. 1 to Opp’n – ECF No. 43-1. 27 22 Gallagher Decl. – ECF No. 40-2 at 3–4 (¶¶ 6–12). 23 Opp’n – ECF No. 43 at 7, 9–10; TTAB Filings, Exs. 2–9 to id. – ECF Nos. 43-2 to 43-9 (motions to 1 integrity of a regulatory scheme dictates preliminary resort to the agency which administers the 2 scheme.” Id. (cleaned up). 3 Courts in this circuit traditionally apply the primary-jurisdiction doctrine “in cases where there 4 is: (1) a need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an 5 administrative body having regulatory authority (3) pursuant to a statute that subjects an industry 6 or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in 7 administration.” Id. at 1115 (cleaned up); Syntek Semiconductor Co. v. Microchip Tech., Inc., 307 8 F.3d 775, 781 (9th Cir. 2002); United States v. Gen. Dynamics Corp., 828 F.2d 1356, 1365 (9th 9 Cir. 1987). The Ninth Circuit also has explained that the doctrine “is designed to protect agencies 10 possessing ‘quasi-legislative power’ and that are ‘actively involved in the administration of 11 regulatory statutes.’” Clark, 523 F.3d at 1115 (quoting Gen. Dynamics, 828 F.2d at 1365). 12 Whether to stay a case under the primary-jurisdiction doctrine “is a matter for the court’s 13 discretion.” Syntek Semiconductor, 307 F.3d at 781. Under what has been described as the 14 majority view, TTAB proceedings do not justify a stay on primary-jurisdiction grounds. Rhoades 15 v. Avon Prod., Inc., 504 F.3d 1151, 1162–65 (9th Cir. 2007) (agreeing with the First and Second 16 Circuits that “the primary jurisdiction rationale does not justify deferral” of “a trademark 17 declaratory relief action pending the completion of related TTAB proceedings”). For one thing, 18 “[t]he federal courts have concurrent jurisdiction with the [TTAB] over issues of the registrability 19 of trademarks.” 6 McCarthy on Trademarks and Unfair Competition § 32:48 (5th ed. 2023) (citing 20 15 U.S.C. § 1119). Also, in TTAB cancellation proceedings, the TTAB can “decide [only] issues 21 confined to entitlement to a federal registration,” whereas “in a typical trademark infringement suit 22 filed in federal court, the issues will include not only the validity of a federal registration, but . . . 23 what constitutes an infringement of a federal registration, infringement of unregistered federal and 24 state rights,” and the scope of relief. Id. 25 26 2. Discretionary Stay 27 In Landis, the Supreme Court held that “the power to stay proceedings is incidental to the power 1 and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). 2 To determine whether a stay is appropriate, the court “must weigh competing interests and maintain 3 an even balance.” Id. at 254–55. The competing interests include “the possible damage which may 4 result from the granting of a stay, the hardship or inequity which a party may suffer in being 5 required to go forward, and the orderly course of justice measured in terms of the simplifying or 6 complicating of issues, proof, and questions of law which could be expected to result from a stay.” 7 CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254–55); accord 8 Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005). “[I]f there is even a fair possibility” 9 that the stay will harm the non-moving party, the party seeking the stay “must make out a clear case 10 of hardship or inequity in being required to go forward.” Landis, 299 U.S. at 255. 11 12 ANALYSIS 13 The court denies the motion. Analyzed under either the primary-jurisdiction doctrine or Landis, 14 the present case raises issues not raised by the TTAB cancellation proceeding, meaning that a stay 15 would be inefficient. Rhoades, 504 F.3d at 1165 (under the primary-jurisdiction doctrine, “[t]he 16 deciding factor should be efficiency”); CMAX, 300 F.2d at 268 (“the orderly course of justice 17 measured in terms of the simplifying or complicating of issues” is a key consideration). For 18 example, even if the TTAB cancels the defendants’ trademark registration and that decision has 19 preclusive effect here, Expensify still seeks a declaratory judgment of non-infringement of 20 common-law trademark rights in this case. Discovery will likely overlap between the two matters, 21 meaning that proceeding in this case will not result in unnecessary duplication. Overall, this case is 22 just getting started and should not be stayed where the same progress that could occur now would 23 still need to occur after a stay. Cf. 16 Wright & Miller, Fed. Prac. & Proc. Juris. § 3930 (3d ed. 24 2023) (interlocutory appeals should be permitted when it would be “a good gamble”). 25 Moreover, “Congress has not installed the [TTAB] as the exclusive expert in the field,” and 26 “overlapping litigation” in this area is not uncommon. Rhoades, 504 F.3d at 1164. “[F]ederal courts 27 are particularly well-suited to handle the claims so that parties may quickly obtain a determination 1 CONCLUSION 2 The court denies the motion to stay. The defendants’ answer is due by December 4, 2023. This 3 disposes of ECF No. 40. 4 IT IS SO ORDERED. 5 Dated: November 18, 2023 LAE 6 □□ —“‘“COC_CC

LAUREL BEELER

7 United States Magistrate Judge 8 9 10 1]

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