Here is the latest in a periodic look at what’s going on in the Arizona courts in the area of trademark, copyright, trade secrets, and cybersquatting law, from our counsel Matthew Hersh.

HIGHLIGHTED DECISIONS—

BBK Tobacco & Foods v. Central Coast Agriculture, 2024 WL 1364300 & 2024 WL 1356981 (9th Cir. April 1, 2024)—This matched set of circuit court decisions (one published, unpublished) both arose out of the same Arizona case. BBK Tobacco is a Phoenix company that provides what it describes as “roll-your-own and other smoking lifestyle products”—rolling papers, lighters, tobacco shredders, and the like. It operates under the RAW trademark. Central Coast Agriculture is a California company that sells cannabis products under the mark RAW GARDEN. So you can probably see where this is going.

The Phoenix tobacco company sued the California cannabis company for trademark infringement in the Phoenix federal court. The California company struck back, taking aim at the validity of tobacco company’s RAW registration in a counterclaim. The district court issued a split decision, rejecting the Phoenix company’s trademark infringement claim but also rejecting the California company’s attack on its mark. The district court also canceled the California company’s RAW GARDEN trademark registration application on grounds that the company had no bona fide intent to use the mark at the time it filed.

The Ninth Circuit took the case, but with a split opinion. The court started with a question of law: can a district court cancel a trademark application? The Lanham Act allows a district court to cancel a registration. But the RAW GARDEN application was still in process when the district court stopped it in its tracks. Did it have that power? The majority found that it did. Why have the power to “determine the right to registration” and “rectify the register,” the majority reasoned, without the right to decide on applications as well? Judge Patrick Bumatay dissented. “While the Lanham Act permits courts to cancel trademark registrations once the PTO makes a decision,” he wrote, “it does not permit federal courts to interfere with the PTO’s approval process and to prematurely cancel pending trademark registration applications.” We will surely hear more of this debate again.

With the big legal issue out of the way, the court then issued a second—and unpublished—decision to handle the remaining issues. The district court was wrong, it found, to throw out the Phoenix company’s trademark claim—the company had demonstrated a material dispute of fact on a wide range of likelihood of confusion factors. But the district court got it right in refusing to cancel the Phoenix company’s registration. The Phoenix company may well have advertised its rolling papers for use with cannabis, the court noted—an illegal product. But rolling papers are legal products no matter what the seller’s intent is. So the registration would remain undisturbed.

Want to read more? I did a full writeup of this case in IP Law Daily here.

Arroyo, CV-24-00036-PHX-SPL, 2024 WL 659482 (D. Ariz. Jan. 23, 2024) / Whaleco v. Arslan, CV-23-02549-PHX-DLR, 2024 WL 342459 (D. Ariz. Jan. 30, 2024) / Whaleco v. TemuExpress.com, CV-23-02243-PHX-MTL, 2024 WL 1366933 (D. Ariz. Apr. 1, 2024)

These are cases brought by TEMU, the massive Chinese online marketplace (“Whaleco” is just the holding company for its US operations.) TEMU claimed that a bunch of these sites used TEMU ubiquitous orange logo—your basic trademark infringement. TEMU claimed that other sites not only purloined the logo but also created domain names with the word TEMU in them—so add cybersquatting claims as well. TEMU earned TROs or judgment against the sites, as expected.

But what’s interesting to me about these decisions is that TEMU not only went after the anonymous people running the sites (and in some cases the sites themselves, in rem)—they also went after the domain name registrars. And here they had less luck. In Arroyo and Arslan, they tried to get TRO or preliminary injunctive relief extended to registrars NameCheap, GoDaddy, Name.com, and a bunch of others. But the Court said no; there was no evidence the registrars knew of the infringing activity.

TemuExpress was different—but also ended the same. Here TEMU had asked GoDaddy in advance to disable the sites and give them the names of the people running them. But GoDaddy refused to do so. So TEMU sued GoDaddy for contributory infringement as well. The court dismissed the claim. Critically, the court found, borrowing from Ninth Circuit precedent, that domain name registrars “do not exercise the requisite level of control over purportedly infringing domain names to sustain a claim for contributory infringement.” And even if they did, they had statutory immunity “absent a showing of bad faith intent to profit from such registration or maintenance of the domain name.” So GoDaddy would be off the hook here.

Want to read more? My colleague Kevin Finson did a full writeup of this case in IP Law Daily here.

OTHER CASES

Paul Johnson Drywall v. Sterling Group, CV-21-01408-PHX-DWL, 2024 WL 1285629 (D. Ariz. Mar. 26, 2024): A drywall company claimed it gave confidential information to a potential buyer—but the potential buyer turned around and shared the information with third parties (including a competitor of the drywall company.) Both parties moved for summary judgment on a wide range of issues, but we focus here on the trade secrets issue. The problem for the drywall company, the court found, was that it had not identified with enough specificity what trade secrets it claimed—it simply claimed its entire due diligence production as a trade secrets, without identifying what information within that compilation was a trade secret. The defendant would get summary judgment on that issue.

Cadence Bank v. Heritage Family Offices, CV-23-00124-TUC-SHR, 2024 WL 962174 (D. Ariz. Mar. 6, 2024): A bank adequately pleaded misappropriation of trade secrets claims against a wealth management company because it alleged that the wealth management company purloined an employee with valuable information about proprietary customer lists and then used those lists to solicit clients. The bank adequately pleaded that it had a confidentiality agreement with its employees and that it made substantial efforts to develop the list. And the bank was not limited to just suing the former employee because it adequately pleaded that the new employer was in on the misappropriation, but allegedly encouraging him to purloin the secrets before coming onboard. I covered the case for IPLD here.

Stensrud v. Unknown Parties, CV-24-00334-PHX-DJH, 2024 WL 757171 (D. Ariz. Feb. 22, 2024) / Stensrud v. Unknown Parties, CV-24-00334-PHX-DJH, 2024 WL 894674 (D. Ariz. Mar. 1, 2024): These are for the reggaeton fans. Bad Bunny came to town at the end of February to perform at the Footprint Center. But he has a problem: there are unauthorized merchandisers who follow him around from concert to concert, set up stalls, and sell merchandise with his trademarks on it. And he can’t identify who those people are until the day of the shows. So his licensing agent came to the Phoenix court to get a TRO—and then a preliminary injunction—to empower the police to look out for the merchants, identify them, and stop them in their tracks.

Smoketree Holding v. Apke, CV-22-02123-PHX-DLR, 2024 WL 776772 (D. Ariz. Feb. 26, 2024): An online educational academy that claimed that a subscriber made off with “a very specific way of identifying, buying and selling land” did not adequately state a claim under either Arizona or federal trade secret law, the federal court for Phoenix held. The court, while emphasizing that generalized descriptions such as “market studies,” “financial information,” or “manufacturing methods” might well be enough to state a trade secrets claim in other settings, found that the description given by the real estate company did not describe information that, by nature, would “plausibly cross over from matters of general knowledge to trade secrets. I covered the case for IP Law Daily here.

Footprint International v. Footprint Asia, CV-24-00093-PHX-DGC, 2024 WL 776604 (D. Ariz. Feb. 26, 2024): The court refused to grant preliminary injunction on a trademark claim to Footprint International, a company that makes fiber-based bowls, plates, cups, straws, cutlery, and food containers. The company hired a manufacturer in Asia to make its products, but soon came to believe that the Asian company was using its marks without license. The court found that the company was not likely to prevail on its trademark claim. The company claimed that it had lost four customers due to the infringement. But the evidence showed, the court found, that the customers were more likely to have been lost due to the company’s financial difficulties and not because they were confused about the origin of the products. My colleague Saurabh Kashyap covered the case for IP Law Daily here.

Fire Security Electronics & Communications v. Nye, CV-23-02730-PHX-DLR, 2024 WL 620813 (D. Ariz. Feb. 14, 2024): The court granted preliminary injunction relief to a fire safety company that provides fire system installation, testing and inspection services, repair and maintenance services, and fire extinguisher maintenance to residential and commercial sites throughout Arizona. The company claimed that two of its employees made off to competitor with information from an online inspection portal, called “Building Reports,” that stores and maintains information about its clients and projects. The court easily found that the information qualified as trade secrets under both Arizona and federal trade secrets law and that there would be irreparable harm from its continued disclosure.

Wavve Americas v. Max, CV-23-01819-PHX-MTL, 2024 WL 455098 (D. Ariz. Feb. 6, 2024): The court easily granted a default judgment on behalf of the company that owns kocowa.com to stream movies and TV shows to a Korean audience. The company went after the owners of kokoa.tv and kokoatv.net for trademark infringement and cybersquatting. It was an easy default judgment, the court found—a Korea-based audience would easily be confused by the similar sounding names.

Xfinity Mobile v. Globalgurutech, CV-22-01950-PHX-SMB, 2024 WL 185113 (D. Ariz. Jan. 17, 2024): The court dismissed a trademark infringement claim by Xfinity on the normative fair use doctrine. Xfinity claimed a phone reseller was acquiring its phones through surreptitious means and then reselling them for profit. Xfinity brought a trademark infringement claim—among others—against the reseller, claiming that the reseller was infringing on its logo to sell the phones. But all the reseller was doing, the court found, was to use the Xfinity mark “to identify the types of phones it buys and sells.” Given that the product at issue here was just general cell phones, the court noted, “the mark’s use is to differentiate the carrier of origin for the phones.” Nominative fair use thus applied here.

PragmaticPlay v. Agenpragmaticplay.live, CV-23-00497-PHX-DLR, 2024 WL 113306 (D. Ariz. Jan. 10, 2024): The court easily granted default judgment to a gaming company that brought a cybersquatting action in rem in order to obtain ownership of 81 domain names—all using domain name registrars in Arizona—that used variations of its name in URLs. Notably, the court found that the gaming company could join all 81 domains in a single cybersquatting action—a legal question that had not been addressed before in the Arizona court. Joinder was appropriate here as all of the domains were registered “in the same series of registration transactions occurring within the same general time frame (starting in 2020), to a small set of registrars, using the same method of cybersquatting on the PRAGMATIC PLAY mark, to unidentified and/or foreign registrants, and with many of the websites displaying similar content that misleads visitors into assuming an affiliation between the website and Plaintiff.”

OSN Labs v. Phoenix Energy, CV-23-01188-PHX-MTL, 2024 WL 69690 (D. Ariz. Jan. 5, 2024): The court granted default judgment on a trademark infringement brought by the Arizona maker of a sleeping pill entitled BLACKOUT. The court easily found that the Idaho-based defendant, which didn’t appear in the case, infringed on the Arizona company’s trademark by selling a sleeping pill under the exact same name. (Perhaps the most surprising thing about this case is that OSN Labs was the Arizona plaintiff and “Phoenix Energy” was actually the name for the Idaho defendant.)

Luxottica Group v. MySpecs, CV-23-01393-PHX-ROS, 2024 WL 69687 (D. Ariz. Jan. 5, 2024): This was a pretty straightforward case where the owner of the Ray-Ban sunglasses brand sued a company for selling knockoffs through an online storefront. The complaint alleged that a Ray-Ban investigator was able to purchase several pairs of the knockoffs through the storefront. The defendants argued that the complaint wasn’t specific enough because Ray-Ban did not plead “additional facts, such as receipts, screenshots, or shipping materials associated with the order to establish the sunglasses were ordered and received from Defendants.” But the complaint was more than adequate to require an answer, the court found.