Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 1 of 14 Page ID #:1733
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`United States District Court
`Central District of California
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`Plaintiff,
`
`NNG, KFT.,
`
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`
`
`v.
`AVA ENTERPRISES, INC., d/b/a BOSS
`AUDIO SYSTEMS,
`
`
`
`Defendant.
`
`Case No. 2:14-cv-00220-ODW(AJW)
`
`ORDER GRANTING IN PART AND
`DENYING IN PART DEFENDANT’S
`MOTION TO DISMISS [46]
`
`I.
`INTRODUCTION
`Pending before the Court is Defendant AVA Enterprises, Inc.’s (“AVA”)
`Motion to Dismiss. (ECF No. 46.) AVA seeks dismissal of four of the eight causes
`of action in Plaintiff NNG, Kft.’s (“NNG”) First Amended Complaint (ECF No. 40
`[“FAC”]).
` This dispute
`involves copyrighted navigation software used
`in
`entertainment hardware for automobiles. For the reasons discussed below, the Court
`GRANTS IN PART and DENIES IN PART AVA’s Motion.1
`II. FACTUAL BACKGROUND
`NNG, a Hungarian corporation, manufactures and distributes navigation
`software. (FAC ¶ 11.) NNG owns several U.S. copyright registrations for various
`
`
`1 After carefully considering the papers filed in support of and in opposition to the Motion, the Court
`deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 2 of 14 Page ID #:1734
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`versions of its “iGo Primo” software. (Id. ¶ 13.) The software is commonly used in
`automobile and personal navigation systems and is licensed to more than 150
`hardware manufacturers worldwide. (Id. ¶ 1.) NNG employs certain procedures to
`protect the software from unauthorized use. An approved licensee is authorized to
`download the software and a customized “license pool” which the licensee then
`unlocks with a unique identification number provided by NNG. (Id. ¶ 15.) One
`specific section of computer code in the software is specifically designed to read the
`identification number and verify the authenticity of the installed software (the
`“Authentication Code”). (Id. ¶ 23.)
`AVA, a California corporation, manufactures and distributes automotive audio
`and entertainment products such as aftermarket hardware for vehicle dashboards. (Id.
`¶ 22.) AVA’s hardware often contains navigation software. (Id.) Despite not having
`a license or authorization, AVA allegedly manufactured and distributed two
`automobile entertainment devices that contain pirated versions NNG’s navigation
`software: the Boss Audio BV9380NV unit and the Boss Audio BV9370NV unit
`(hereinafter the “Infringing Units”). (Id.) The pirated versions of NNG’s software
`allegedly lack the Authentication Code thus allowing an unlimited number of devices
`to utilize NNG’s software. (Id. ¶ 27.) NNG alleges that AVA “or its agent”
`developed code that “overrides and/or gets around NNG’s [Authentication Code].”
`(Id. ¶ 55.)
`Not only do the Infringing Units utilize pirated versions of NNG’s software, but
`they allegedly display the trademarked “iGo” mark on a “splash page” when a
`consumer activates the navigation features on the devices. (Id. ¶ 28.) NNG alleges
`that consumers are “extremely likely to assume, incorrectly, that the Infringing Units
`use authentic navigation software from NNG.” (Id. ¶ 32.)
`NNG’s First Amended Complaint, filed on March 17, 2015, raises eight causes
`of action: (1) Lanham Act copyright infringement, 17 U.S.C. § 501; (2) violations of
`the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201; (3) Lanham Act
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 3 of 14 Page ID #:1735
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`trademark counterfeiting, 15 U.S.C. §§ 1114, 1116(d)(1), and 1117; (4) Lanham Act
`trademark infringement, 15 U.S.C. § 1114; (5) Lanham Act unfair competition, 15
`U.S.C. § 1125(a); (6) a violation of California’s unfair competition law, Cal. Bus. &
`Prof Code § 17200; (7) common law trademark infringement; and (8) common law
`unfair competition. (ECF No. 40.) AVA filed the pending Motion to Dismiss on
`April 14, 2015, and seeks dismissal of NNG’s second, third, fourth, and fifth causes of
`action under Federal Rule of Civil Procedure 12(b)(6). (ECF No. 36.)
`III. LEGAL STANDARD
`Pursuant to Rule 12(b)(6), a defendant may move to dismiss an action for
`failure to allege “enough facts to state a claim to relief that is plausible on its face.”
`Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility
`when the plaintiff pleads factual content that allows the court to draw the reasonable
`inference that the defendant is liable for the misconduct alleged. The plausibility
`standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer
`possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662,
`678 (2009) (internal citations omitted). For purposes of ruling on a Rule 12(b)(6)
`motion, the Court “accept[s] factual allegations in the complaint as true and
`construe[s] the pleading in the light most favorable to the non-moving party.”
`Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
`Nonetheless, the Court need not accept as true allegations contradicted by
`judicially noticeable facts, and the “court may look beyond the plaintiff’s complaint to
`matters of public record” without converting the Rule 12(b)(6) motion into one of
`summary judgment. Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 1995). The
`Court is not required to “assume the truth of legal conclusions merely because they are
`cast in the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th
`Cir. 2011) (internal quotation marks and citations omitted). Mere “conclusory
`allegations of law and unwarranted inferences are insufficient to defeat a motion to
`/ / /
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 4 of 14 Page ID #:1736
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`dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004) (internal quotation
`marks and citations omitted).
`
`IV. DISCUSSION
`AVA does not seek a dismissal of the entire First Amended Complaint, but only
`NNG’s causes of action under the DMCA, Lanham Act counterfeiting, Lanham Act
`trademark infringement, and Lanham Act unfair competition. As discussed below,
`AVA correctly argues that NNG failed to state claim for two theories of liability under
`the DCMA and for Lanham Act trademark counterfeiting. However, the rest of
`AVA’s challenges to the First Amended Complaint are unfounded.
`A.
`Second Cause of Action: Violation of DMCA
`
`“Through the DMCA, Congress sought to prohibit certain efforts to unlawfully
`circumvent technologies, while at the same time preserving users’ rights of fair use.”
`United States v. Elcom Ltd., 203 F. Supp. 2d 1111, 1119 (N.D. Cal. 2002). The
`DMCA contains three separate provisions that prohibit the circumvention of
`technological measures. First, 17 U.S.C. § 1201(a)(1)(A) “is a general prohibition
`against ‘circumventing a technological measure that effectively controls access to a
`work protected under [the Copyright Act].’” MDY Indus., LLC v. Blizzard Entm’t,
`Inc., 629 F.3d 928, 942 (9th Cir. 2010) opinion amended and superseded on denial of
`reh’g, 09-15932, 2011 WL 538748 (9th Cir. Feb. 17, 2011) (quoting 17 U.S.C.
`§ 1201(a)(1)(A)). Second, § 1201(a)(2) “prohibits trafficking in technology that
`circumvents a technological measure that ‘effectively controls access’ to a
`copyrighted work.” Id. (quoting 17 U.S.C. § 1201(a)(2)). These first two provisions
`protect the same basic rights by “prohibit[ing] the circumvention of any technological
`measure that effectively controls access to a protected work and grant[ing] copyright
`owners the right to enforce the prohibition.” Id. at 944. The third provision,
`§ 1201(b), “prohibits trafficking in technology that circumvents a technological
`measure that ‘effectively protects’ a copyright owner’s right.” Id. at 942 (quoting 17
`U.S.C. § 1201(b)(1)).
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 5 of 14 Page ID #:1737
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`The FAC alleges violations of the three provisions in the DMCA. (FAC ¶¶ 53–
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`67.) AVA argues that all three theories of liability under the DMCA fail as a matter of
`law because (1) AVA did not commit any acts of circumvention, (2) NNG failed to
`utilize effective access control measures, and (3) the trafficked devices do not conduct
`the circumvention themselves. (Mot. 7.)
`1.
`Acts of Circumvention are Properly Alleged.
`
`AVA first argues “the FAC nowhere alleges that AVA descrambled, decrypted
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`or otherwise circumvented NNG’s claimed protection measure.” (Id. [emphasis
`original].) “Circumvention,” as used in the DMCA, means “to descramble a
`scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove,
`deactivate, or impair a technological measure, without the authority of the copyright
`owner.” 17 U.S.C. § 1201(a)(3)(A). AVA’s argument is patently incorrect. In
`Paragraph 55 of the First Amended Complaint, NNG clearly alleges that “[AVA
`d/b/a/] Boss Audio or its agent has illegally circumvented Plaintiff’s technological
`copyright protection measures that control access to the Copyrighted Work by
`developing code . . . that allows the Copyrighted Work to run on a non-approved
`device.” (FAC ¶ 55.) This allegation unquestionably identifies AVA as the party that
`bypassed or circumvented security measures and describes what actions AVA
`undertook to pull it off.
`In its Reply, AVA argues that NNG’s “Boss Audio or its agent” allegation “is
`too generic and conclusory to survive a 12(b)(6) motion.” (Reply 4.) The Court
`disagrees. The allegation is not generic at all—it specifically states that AVA
`committed the wrongdoing. AVA insists that a third-party circumvented NNG’s
`technology measures, but at this stage in the litigation the Court must accept the
`allegations in the First Amended Complaint as true and construe the pleadings in the
`light most favorable to the nonmoving party. See Twombly, 550 U.S. at 555; Taylor v.
`Yee, 780 F.3d 928, 935 (9th Cir. 2015). The Court therefore rejects AVA’s claim that
`acts of circumvention are not properly alleged.
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 6 of 14 Page ID #:1738
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`Effective Control Measures are Properly Alleged Under § 1201(a)(1).
`2.
`AVA argues that NNG failed to allege that its software includes a measure that
`
`“effectively controls access” to its navigation software under § 1201(a)(1). (Mot. 10.)
`“[A] technological measure ‘effectively controls access to a work’ if the measure, in
`the ordinary course of operation, requires the application of information, or a process
`or a treatment, with the authority of the copyright owner, to gain access to the work.”
`17 U.S.C. § 1201(a)(3)(B). The work at issue is NNG’s navigation software.
`Software generally includes three distinct “elements” that are each protectable under
`copyright law: (1) the software’s “literal elements” such as the actual source and
`object codes; (2) the software’s “individual non-literal elements” such as discrete
`visual and audible components; and (3) the software’s “dynamic non-literal elements”
`such as the real time experience and operation of the software. MDY Indus., 629 F.3d
`at 942–42, 952–54. The Ninth Circuit has recognized all three of these elements
`within the DCMA context. Id.
`
`According to AVA, NNG’s Authentication Code “merely confirms whether the
`software is being run on an authorized device . . . [and] does not control access to the
`underlying software files or code.” (Mot. 11 [emphasis original].) AVA contends that
`“NNG only asserts copyright protection in its software code (which is not protected by
`the license-checking procedure); it does not assert copyright protection over the
`experience of running the software program.” (Id. [emphasis original].) Stated
`differently, AVA argues that NNG’s Authentication Code only controls access to the
`navigation software’s dynamic non-literal elements, and since NNG only brings
`copyright infringement claims for the literal and individual non-literal elements, the
`Authentication Code does not effectively “control access.” AVA believes that the
`technological measure must control access to the elements of the work underlying the
`copyright infringement cause of action in order to state a claim under § 1201(a)(1).
`(See Reply 8–9 [“NNG argues that, because the mechanism protects against access to
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 7 of 14 Page ID #:1739
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`the dynamic nonliteral elements, it is ‘effective’ for DMCA purposes. However, the
`dynamic nonliteral elements of the software are not at issue in this case.”].)
`AVA’s position would be correct in other Circuits, but not here. In MDY
`Industries, the Ninth Circuit explained that a DCMA circumvention claim under
`§ 1201(a) “creates a new anti-circumvention right distinct from the traditional
`exclusive rights of a copyright owner.” MDY Indus., 629 F.3d at 950. The court
`reasoned that since § 1201(a) does not “explicitly refer[] to traditional copyright
`infringement under [17 U.S.C.] § 106,” the provision extends “a new form of
`protection, i.e., the right to prevent circumvention of access controls, broadly to works
`protected under Title 17, i.e., copyrighted works.” Id. at 945. There is no requirement
`that the circumvention lead to infringement—an “infringement nexus”—because
`§ 1201(a) merely “prohibits circumvention itself.” Id. at 946, 952. MDY Industries
`explicitly rejected the rule from the Federal Circuit which required a plaintiff bringing
`a claim under § 1201(a) to demonstrate the “nexus to infringement.” Id. at 949
`(quoting Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d 1178, 1202 (Fed.
`Cir. 2004)).
`AVA’s argument is foreclosed by MDY Industries. It is undisputed that the
`technological measure in this case, the Authentication Code, effectively controls
`access to one element of NNG’s copyrighted computer software—the dynamic non-
`literal elements. The fact that AVA did not allegedly infringe on copyrighted dynamic
`non-literal elements is of no consequence. Section 1201(a) “prohibits circumvention
`itself.” Id. at 946. The Authentication Code prohibits an unauthorized user from
`accessing the dynamic non-literal elements of its navigation software, and NNG
`alleges that AVA bypassed this measure by removing the Authentication Code from
`the pirated software installed in the Infringing Units. (FAC ¶¶ 56–57.) While the
`dynamic non-literal elements might be irrelevant to every other claim in this case, this
`does not mean that NNG failed to state a claim under § 1201(a)(1)(A). The First
`Amended Complaint alleges that AVA circumvented a technological control measure
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 8 of 14 Page ID #:1740
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`that effectively controls access to an element of NNG’s work. Therefore, NNG
`properly stated a claim upon which relief can be granted under § 1201(a)(1)(A).
`3.
`NNG Fails to Under § 1201(a)(2) Because There is No Trafficking of
`Devices that Conduct the Circumvention.
`AVA also challenges NNG’s theory of liability under § 1201(a)(2). AVA
`
`argues that to state a claim under § 1201(a)(2), the FAC “‘must allege that [AVA]
`trafficked in a product or service that enabled the circumvention, not access to what
`has already been obtained.’” (Opp’n 14 [emphasis original] [quoting Dish Network
`L.L.C. v. World Cable, Inc., 893 F. Supp. 2d 452, 467 (E.D.N.Y. 2012)].) According
`to AVA, § 1201(a)(2) only applies to devices that “actually perform[] the
`circumvention” and not those devices that merely “facilitated the distribution of
`unlawfully received copyrighted material.” (Id. [quoting Dish Network, 893 F. Supp.
`2d at 467].) AVA argues that the FAC fails to allege that the Infringing Units
`themselves actually performed the circumvention. (Id.)
`AVA is correct. Section 1201(a)(2) provides: “No person shall manufacture,
`import, offer to the public, provide, or otherwise traffic in any technology, product,
`service, device, component, or part therefor, that . . . is primarily designed or produced
`for the purpose of circumventing a technological measure that effectively controls
`access to a work protected under this title.” 17 U.S.C. § 1201(a)(2). Under the plain
`language of § 1201(a)(2), the trafficked device must be “primarily designed or
`produced” to circumvent and it must actually do the circumventing itself. See Dish
`Network, 893 F. Supp. 2d at 467 (“Thus, as Congress made clear, the devices targeted
`under § 1201(a)(2) were not those that facilitated the distribution of unlawfully
`received copyrighted material, but rather those devices or services that actually
`performed the circumvention.”); Universal City Studios, Inc. v. Reimerdes, 111 F.
`Supp. 2d 194, 319 (S.D.N.Y. 2000) (“Section 1201(a)(2) . . . separately bans offering
`or providing technology that may be used to circumvent technological means of
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 9 of 14 Page ID #:1741
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`controlling access to copyrighted works.”); Directv Inc. v. Little, No. 03-cv-2407,
`2004 WL 181153, *5 (N.D. Cal. Aug. 12, 1004).
`AVA’s Infringing Units are not primarily designed to circumvent any
`technological measure and do not conduct the actual circumventing. Customers do
`not buy the Infringing Units to then circumvent NNG’s protectable software. The
`Infringing Units merely house the alleged pirated software to which “access . . . has
`already been obtained.” See Dish Network, 893 F. Supp. 2d at 467. The Infringing
`Units merely “facilitate[] the distribution of unlawfully received copyrighted material”
`and therefore do not run afoul of § 1201(a)(2). See id.
`NNG attempts to argue that AVA “developed a piece of code” that was
`embedded in NNG’s navigation software and would “overrid[e] and/or get[] around
`[NNG’s] technological measures.” (Opp’n 14.) Thus, according to NNG, AVA’s
`“piece of code” was then trafficked when AVA sold the infringing units. (Id.) This
`argument, however, fails to recognize the purpose of § 1201(a)(2)—to prevent the
`trafficking of devices that allow consumers to conduct the circumvention themselves.
`See, e.g., Apple, Inc. v. Psystar Corp., 673 F. Supp. 2d 921, 941 (N.D. Cal. 2009)
`(finding a violation of § 1201(a)(2) when the defendant installed circumvention
`technology on computers and then sold the computers to allow customers to
`circumvent plaintiff’s operating software); Adobe Sys. Inc. v. Feather, 895 F. Supp. 2d
`297, 302 (D. Conn. 2012) (“In this case, the serial numbers and product keys marketed
`and distributed by [the defendant] were primarily designed and produced for the
`purpose of circumventing the activation and validation features of the plaintiffs’
`software in violation of section 1201(a)(2).”) Consumers do not purchase the
`Infringing Units so that they can then circumvent NNG’s navigation software, but
`instead purchase the Infringing Units to utilize the pirated software already installed.
`There is no allegation that this “piece of code” can be removed and then used by
`consumers to circumvent NNG’s access control measures—the circumventing is
`complete before the infringing units are trafficked. Thus, NNG’s theory of liability
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`under the § 1201(a)(2) of the DCMA fails to state a claim upon which relief can be
`granted.
`4.
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`NNG Fails to Properly Allege a Violation of § 1201(b) Because There
`is No Trafficking of Devices that Conduct the Circumvention.
` AVA further challenges the NNG’s alleged theory of DCMA liability under
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`§ 1201(b). “Section 1201(b)’s prohibition is thus aimed at circumventions of
`measures that protect the copyright itself: it entitles copyright owners to protect their
`existing exclusive rights under the Copyright Act. Those exclusive rights are
`reproduction, distribution, public performance, public display, and creation of
`derivative works.” MDY Indus., 629 F.3d at 944. In MDY Industries, the Ninth
`Circuit explained the difference between a claim under § 1201(a) and § 1201(b):
`A violation of § 1201(a)(1)(A), which prohibits
`circumvention itself, will not be a violation of § 1201(b),
`which does not contain an analogous prohibition on
`circumvention. A violation of § 1201(a)(2), which prohibits
`trafficking in devices that facilitate circumvention of access
`control measures, will not always be a violation of
`§ 1201(b)(1), which prohibits trafficking in devices that
`facilitate circumvention of measures that protect against
`copyright infringement.
`Id. at 946 (original emphasis).
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`Both § 1201(a)(2) and § 1201(b) require the device in question to actually
`perform the circumvention, whether that be the circumvention of an access control
`measure or a copyright infringement protection measure. See Directv, 2004 WL
`181153 at *6 (“The same two elements necessary to establish a violation of
`§ 1201(a)(2) must be shown to demonstrate a violation of § 1201(b)(1).”). As
`discussed supra, the Infringing Units were not primarily designed to circumvent—the
`alleged circumvention was already complete when the Infringing Units were shipped
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`to the customers. For the same reason NNG’s theory of liability under § 1201(a)(2)
`fails, NNG’s theory of liability under § 1201(b) also fails.
`B.
`Third Cause of Action: Lanham Act Trademark Counterfeiting
`AVA argues that NNG failed to state a claim for trademark counterfeiting under
`the Lanham Act because NNG failed to allege that AVA used NNG’s trademark in
`connection with the same goods for which the mark was registered. (Mot. 18.)
`According to the First Amended Complaint, AVA’s customer would see NNG’s iGo
`mark, Registration No. 3,883,494, “prominently” displayed on a “splash page” when
`“the navigation software on the Infringing Units is activated by a consumer.” (FAC
`¶ 32.) NNG’s iGo mark is registered for “computer programs and software for use in
`fixed or handheld microcomputers enabling navigation by the use of global
`positioning systems.” (FAC ¶ 18.)
`To bring a claim for counterfeiting, the Lanham Act “requires that the mark in
`question be (1) a non-genuine mark identical to the registered, genuine mark of
`another, where (2) the genuine mark was registered for use on the same goods to
`which the infringer applied the mark.” Louis Vuitton Malletier, S.A. v. Akanoc
`Solutions, Inc., 658 F.3d 936, 946 (9th Cir. 2011); see also Idaho Potato Comm’n v. G
`& T Terminal Packaging, Inc., 425 F.3d 708, 721 (9th Cir. 2005).
`For NNG to properly assert a claim for counterfeiting, the iGo mark would have
`to be registered for “the same goods to which the infringer applied the mark.” Louis
`Vuitton, 658 F.3d at 946. AVA’s Infringing Units allegedly display the mark on
`“automotive audio and entertainment products” when operating (FAC ¶ 22), yet NNG
`registered its mark for computer programs and software. While NNG’s software is
`allegedly used within AVA’s Infringing Units, this does not mean that an
`entertainment product is a “counterfeit” of a computer program. A consumer would
`not purchase an automobile accessory under the impression that it purchased a
`computer program. Without an allegation that AVA used NNG’s mark on similar
`goods, NNG cannot state a claim for Lanham Act counterfeiting. See 5 J. Thomas
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 12 of 14 Page ID #:1744
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`McCarthy, McCarthy on Trademarks and Unfair Competition § 25:15 (4th ed. 2015)
`(“The definition of ‘counterfeit’ reaches only cases in which the counterfeit mark is
`used in connection with the same goods or services as those for which the mark is
`registered on the Principal Register and is in use. Thus, if the mark REGIS is
`registered only for pens and pencils, while the trademark owner might well have a
`civil remedy against the unauthorized use of REGIS on writing paper, such a use is
`not a ‘counterfeit.’”).
`C.
`Fourth Cause of Action: Lanham Act Trademark Infringement
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`AVA’s sole argument for why NNG’s trademark infringement claim fails is
`there is no allegation that AVA used NNG’s registered mark “in commerce.” (Mot.
`21.)
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`To prevail on a claim for trademark infringement, a holder of a registered mark
`must show that another party is using: (1) any reproduction, counterfeit, copy or
`colorable imitation of a mark; (2) without the registrant’s consent; (3) in commerce;
`(4) in connection with the sale, offering for sale, distribution or advertising of any
`goods; (5) where such use is likely to cause confusion, or to cause a mistake or to
`deceive. 15 U.S.C. § 1114(1)(a); Century 21 Real Estate Corp. v. Sandlin, 846 F.2d
`1175, 1178 (9th Cir. 1988). A mark is “used in commerce” when the mark “is placed
`in any manner on the goods or their containers or the displays associated therewith or
`on the tags or labels affixed thereto, or if the nature of the goods makes such
`placement impracticable, then the documents associated with the goods or their sale.”
`15 U.S.C. § 1127.
`AVA contends that the iGo trademark was not visible to any consumer
`purchasing one of the Infringing Units, and since the trademark does not appear to the
`customer “long after the point of sale, the marks were not used in commerce.” (Id.)
`The Court rejects this argument for several reasons. First, the “in commerce”
`requirement is expansive. “The Lanham Act specifically defined ‘commerce’ as the
`maximum that Congress can regulate under the Constitution.” McCarthy on
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 13 of 14 Page ID #:1745
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`Trademarks § 25:15. “The commerce coverage of the Lanham Act has been
`characterized by the Supreme Court as a ‘sweeping reach.’” Id. (citing Steele v.
`Bulova Watch Co., 344 U.S. 280 (1952)). In addition to the expansive definition of
`“commerce,” the Lanham Act defines “use” equally as expansively, prohibiting the
`placement of a mark “in any manner on the goods.” 15 U.S.C. § 1127 (emphasis
`added). Here, AVA allegedly sold—“commerce”—the Infringing Units and the
`Infringing Units displayed NNG’s trademark during operation—“use” in any manner.
`This requirement is meant to be expansive and AVA offers no principled reason to
`limit it.
`Second, AVA mistakenly believes that the in-commerce element requires the
`consumer to have actual knowledge of the trademark’s placement prior to purchasing
`a good. There is simply no such requirement in the statute. The point at which the
`consumer observes the trademark is not relevant to this inquiry. While the mechanics
`of a sale might be relevant had AVA challenged a different element of NNG’s
`infringement claim, the issue before the Court is strictly whether or not NNG satisfied
`the third element—use in commerce.
`AVA argues that NNG “does not offer a single case holding that the post-sale,
`post-activation appearance of a splash screen qualifies as placement of the mark ‘on
`the goods.’” (Reply 11 [original emphasis].) AVA’s argument is accurate. However,
`the Court notes that AVA failed to offer a single case where a court found that the “in
`commerce” element of an infringement claim was not satisfied in an analogous
`context. In light of the far-reaching nature of the “in commerce” element in an
`infringement claim and the lack of authority supporting AVA’s position, the Court
`finds that NNG’s First Amended Complaint fairly alleges the third element of an
`infringement claim.
`D. Fifth Cause of Action: Lanham Act Unfair Competition
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`AVA only raises one challenge to NNG’s unfair competition claim. That
`challenge happens to be the exact same challenge it raised to NNG’s infringement
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`Case 2:14-cv-00220-ODW-AJW Document 72 Filed 07/08/15 Page 14 of 14 Page ID #:1746
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`claim—there is no allegation of any use “in commerce.” (Mot. 21.) The Court
`incorporates all of its legal conclusions from the preceding section and rejects AVA’s
`argument to NNG’s fifth cause of action.
`V. CONCLUSION
`The Court partially rejects AVA’s challenge to NNG’s second cause of action
`and fully rejects AVA’s challenges to NNG’s fourth and fifth causes of action. The
`Court dismisses NNG’s theory of DCMA liability under 17 U.S.C. § 1201(a)(2) and
`17 U.S.C. § 1201(b). The Court also dismisses NNG’s third cause of action for
`trademark counterfeiting under the Lanham Act. For the reasons stated above, the
`Court hereby GRANTS IN PART and DENIES IN PART AVA’s Motion to
`Dismiss. (ECF No. 46.)
`IT IS SO ORDERED.
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`July 8, 2015
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` ____________________________________
` OTIS D. WRIGHT, II
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` UNITED STATES DISTRICT JUDGE
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