Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 1 of 31 Page ID #:1
`
`Christopher J. Renk (pro hac vice to be filed)
` Chris.Renk@arnoldporter.com
`Michael J. Harris (pro hac vice to be filed)
` Michael.Harris@arnoldporter.com
`Arnold & Porter Kaye Scholer LLP
`70 West Madison Street, Suite 4200
`Chicago, IL 60602-4231
`Telephone: (312) 583-2300
`Michael J. Gershoni (Cal. Bar No. 311192)
` Michael.Gershoni@arnoldporter.com
`Bridgette C. Gershoni (Cal. Bar No. 313806)
` Bridgette.Gershoni@arnoldporter.com
`Arnold & Porter Kaye Scholer LLP
`601 Massachusetts Ave., NW
`Washington, D.C. 20001-3743
`Telephone: (202) 942-5000
`Attorneys for Plaintiff Nike, Inc.
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`NIKE, INC.,
`
`v.
`
`Plaintiff,
`
`GNARCOTIC LLC.
`Defendant.
`
`Case No. 2:22-cv-8765
`COMPLAINT FOR:
`(1) Trademark Infringement in
`Violation of 15 U.S.C. § 1114
`(2) False Designation of Origin /
`Unfair Competition in Violation
`of 15 U.S.C. § 1125(a)
`(3) Trademark Dilution in Violation
`of 15 U.S.C. § 1125(c)
`(4) Unfair Competition in Violation
`of Cal. Bus. & Prof. Code §§
`17200, et seq.
`(5) Common Law Trademark
`Infringement and Unfair
`Competition
`JURY TRIAL REQUESTED
`
`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 2 of 31 Page ID #:2
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`
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`Plaintiff Nike, Inc. (“Nike”) for its Complaint against Defendant Gnarcotic
`LLC (“Gnarcotic”) alleges as follows:
`PRELIMINARY STATEMENT
`1.
`The Nike Dunk is one of the most iconic and influential sneaker designs
`of all time. Released decades ago, the Nike Dunk has transcended sports and fashion
`and is heralded as one of the most collectible sneakers on the market today.
`2. While the Nike Dunk has helped pave the way for modern sneakerhead
`culture through limited releases of various colorways and collaborations, its
`consistent design is the common thread that has excited consumers for decades. The
`iconic design represents the originality, authenticity, and creativity that is entwined
`in the DNA of sneaker culture. That is why Nike must protect its Dunk design and
`related intellectual property from bad actors who confuse consumers and undermine
`the very DNA of authentic sneaker culture by promoting, copying, and selling Nike’s
`designs as their own.
`3.
`Gnarcotic is an example of one such bad actor. Gnarcotic has and
`continues to promote and sell Nike Dunk knockoffs in several colorways, as well as
`making unauthorized use of patterns that confusingly mimic Nike’s iconic Elephant
`Print design. For reference, the table below shows Nike’s genuine sneakers and
`examples of Gnarcotic’s knockoffs side-by-side:
`
`Genuine Dunks
`
`Gnarcotic’s Knockoffs
`
`
`
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 3 of 31 Page ID #:3
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`Genuine Dunks
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`Gnarcotic’s Knockoffs
`
`
`Gnarcotic Butterfly Effect Orange/Black
`(“Gnarcotic v1 sneaker”)
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`Gnarcotic Butterfly Effect v2 “Concrete”
`(collectively with other colorways
`“Gnarcotic v2 sneakers”)
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`Gnarcotic Butterfly Effect v3
`Orange/Black
`(collectively with other colorways
`“Gnarcotic v3 sneakers”)
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 4 of 31 Page ID #:4
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`4.
`false
`infringement,
`trademark
`Gnarcotic’s conduct constitutes
`designation of origin, unfair competition, and trademark dilution. And the damage
`to Nike from Gnarcotic’s knockoffs is considerable. Gnarcotic’s knockoffs dilute
`Nike’s famous trademarks and they confuse, and are likely to confuse, consumers as
`to the source, origin, affiliation, and/or sponsorship of the products, especially in the
`post-sale environment. If not stopped, Gnarcotic’s illegal conduct will undermine
`Nike’s control over its brand, business reputation, and associated goodwill, which it
`has spent decades building.
`5.
`To be clear, Gnarcotic’s theft of Nike’s designs and associated goodwill
`was, and continues to be, intentional. Since notifying Gnarcotic of its infringement
`in July of this year, Nike has attempted to reach a resolution with Gnarcotic that does
`not involve the continued theft of Nike’s designs. During these discussions,
`Gnarcotic made representations that it would cease, among other things, selling
`products that infringe Nike’s intellectual property, and these representations were a
`cornerstone of Nike’s decision to continue its attempt to resolve this matter
`amicably.
`6.
`Yet, on November 21, 2022, any hope that Nike and Gnarcotic could
`reach an amicable resolution to Gnarcotic’s infringement ended with Gnarcotic’s
`announcement on its social media account that it intended to sell the “Gnarcotic SBs
`v2 ‘Concrete’” sneakers on Black Friday, as shown below. Notably, in addition to
`infringing Nike’s Dunk trade dress, Gnarcotic’s “Concrete” colorway also infringes
`Nike’s registered Elephant Print trade dress.
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 5 of 31 Page ID #:5
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`Prior to its planned release, Nike promptly sent Gnarcotic a second
`7.
`cease-and-desist letter informing Gnarcotic that the Gnarcotic v2 sneakers continue
`to infringe Nike’s intellectual property rights in the Dunk and the Elephant Print
`trade dress.
`8.
`In response, Gnarcotic informed Nike that it would not sell the
`Gnarcotic v2 sneakers and that all images and references to the sale of this model
`would be removed from Gnarcotic’s website and social media accounts. Simply put,
`that did not happen.
`9.
`Instead, at least as of the day of filing this Complaint, images of the
`Gnarcotic v2 sneakers continue to be used to market Gnarcotic’s infringing footwear
`to consumers on its website and social media accounts, as shown below.
`
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 6 of 31 Page ID #:6
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`Gnarcotic Butterfly Effect v3 - Cement/Blue Product Page
`(last accessed Dec. 2, 2022)
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`Gnarcotic Butterfly Effect v3 - Cement/Red Product Page
`(last accessed Dec. 2, 2022)
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 7 of 31 Page ID #:7
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`Gnarcotic Butterfly Effect v3 - Cement/Yellow Product Page
`(last accessed Dec. 2, 2022)
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`Gnarcotic Instagram Post (last accessed Dec. 2, 2022)
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 8 of 31 Page ID #:8
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`10. Whether Gnarcotic merely changed the name of its sneakers to
`“Gnarcotic Butterfly Effect v3’s” or is attempting to bait-and-switch its customers
`into believing that they will receive the Gnarcotic v2’s in the “Cement” colorways
`is of no consequence. As demonstrated throughout this Complaint, each version of
`Gnarcotic’s sneakers infringe Nike’s intellectual property rights in its iconic Dunk
`and Elephant Print designs.
`11. Nike cannot allow bad actors like Gnarcotic to confuse consumers by
`building a business on the back of Nike’s most famous trademarks, as it has
`previously done and is continuing to do today with its alleged “v3” versions of its
`footwear. Such illicit activity undermines the value of Nike’s trademarks and the
`messages they convey. Nike therefore brings this lawsuit to stop bad actors like
`Gnarcotic from making, sourcing, distributing, and selling knockoffs of Nike’s
`products and illegally using Nike’s most famous designs.
`THE PARTIES
`12. Nike is a corporation organized under the laws of the State of Oregon
`with a principal place of business at One Bowerman Drive, Beaverton, Oregon
`97005.
`13. On information and belief, Gnarcotic LLC is a limited liability
`company organized under the laws of the State of Georgia with a principal place of
`business at 10001 Pioneer Blvd., Santa Fe Springs, California, 90670.
`JURISDICTION AND VENUE
`This action arises under the trademark and anti-dilution laws of the
`14.
`United States, 15 U.S.C. § 1051, et seq., and under statutory and common law of
`unfair competition. This Court has subject matter jurisdiction at least under 15
`U.S.C. § 1121 and 28 U.S.C. §§ 1331 and 1338 because this action arises under
`federal trademark law. This Court has supplemental jurisdiction over the remaining
`claims pursuant to 28 U.S.C. § 1367.
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 9 of 31 Page ID #:9
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`15. On information and belief, this Court may exercise personal jurisdiction
`over Gnarcotic at least because Gnarcotic resides in this District, Gnarcotic’s
`principal place of business is located within this District, Gnarcotic does business in
`this District, and Gnarcotic has committed acts of infringement at issue in this
`Complaint in this District.
`16. Venue is proper in this District pursuant to 28 U.S.C. § 1391 because
`Gnarcotic resides in this District, Gnarcotic’s principal place of business is in this
`District, Gnarcotic does business in this District, Gnarcotic is subject to personal
`jurisdiction in this District, and Gnarcotic has committed acts of infringement at
`issue in this Complaint in this District.
`FACTUAL BACKGROUND
`
`A. NIKE
`17. Nike’s principal business activity is the design, development and
`worldwide marketing and selling of athletic footwear, apparel, equipment,
`accessories and services.
`18. Nike is the largest seller of athletic footwear and apparel in the world.
`19. Nike sells its products directly to consumers through Nike-owned retail
`stores and digital platforms, and to retail accounts and a mix of independent
`distributors, licensees and sales representatives in virtually all countries around the
`world.
`20. Having distinctive trademarks that are readily identifiable is an
`important factor in creating a market for Nike’s products, in identifying Nike and its
`brands, and in distinguishing Nike’s products from the products of others.
`21. As a result of continuous and long-standing promotion, substantial
`sales, and consumer recognition, Nike has developed powerful trademarks rights.
`B. NIKE’S DUNK TRADE DRESS
`22. The Nike Dunk sneaker began as a basketball sneaker in the 1980s.
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 10 of 31 Page ID #:10
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`23. Nike introduced the Dunk sneaker in 1986 in connection with its
`College Colors Program. College basketball players had typically worn single color
`shoes (e.g., white or black). Nike’s College Colors Program offered schools the
`opportunity to have shoes that mirrored their school colors. Nike’s original “Be True
`to Your School” advertisement for its College Colors Program is reproduced below.
`
`
`24. Nike’s College Colors Program became wildly popular. At that time in
`the 1980s, college basketball was reaching new heights among a wide age range of
`athletes and fans. From east to west, rivalries were strong and network TV brought
`college hoops, and Nike’s Dunk sneakers, to the masses.
`25. The Dunk’s adoption and popularity eventually spread beyond
`basketball culture as the skateboard community organically adopted the Dunk
`making it a skate icon by the 2000s. From there, the Dunk crossed over sports and
`fashion, and today it is recognized as one of the most iconic and influential sneakers
`of all time.
`26. Nike has registered the Dunk trade dress and sole pattern on the
`Principal Register of the U.S. Patent and Trademark Office. Nike owns all right,
`title, and interest in the U.S. Trademark Registrations identified below.
`
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 11 of 31 Page ID #:11
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`
`
`Reg. No.
`
`Trademark
`
`Reg. Date
`
`Goods
`
`Compl. Ex.
`
`3,711,305
`
`3,721,064
`
`
`
`
`
`Nov. 17, 2009 Footwear
`
`Dec. 8, 2009 Footwear
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`1
`
`2
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`
`
`27. Pursuant to 15 U.S.C. § 1065, the Dunk Trade Dress Registrations are
`incontestable and constitute conclusive evidence of the validity of the Dunk trade
`dress, Nike’s ownership of the Dunk trade dress, and Nike’s exclusive right to use
`the Dunk trade dress.
`
`C. NIKE’S ELEPHANT PRINT TRADE DRESS
`28.
`In addition to the designs of its iconic sneaker silhouettes, Nike elevates
`the style and fashion of its sneakers through the use and application of unique
`designs. The Elephant Print is one of Nike’s most famous and popular design
`features.
`29. Designed by Tinker Hatfield, the Elephant Print trade dress was first
`introduced as part of the Air Jordan 3 shoe in 1988, setting the installment in the
`signature line apart from the rest as one of the first performance sneakers to
`incorporate animal print.
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 12 of 31 Page ID #:12
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`30. The Elephant Print was immensely popular and became one of the most
`significant design elements in footwear history, instantly identifying Nike products
`in the minds of consumers.
`31.
`In response to demand from consumers, Nike began using its Elephant
`Print trade dress on other sneakers and products.
`32. One of the most famous uses of the Elephant Print trade dress was on
`the Nike SB Dunk Low x Supreme in 2002, released in two limited-edition
`colorways. The classic color combination and Elephant Print detail has become one
`of the most sought-after Nike SB Dunk collaborations of all time, currently selling
`on the secondary market for over $5,000.00.
`
`
`
`
`
`33. Throughout the years, Nike continued to feature the Elephant Print on
`Dunks and other styles and products. Examples are shown below.
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 13 of 31 Page ID #:13
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 14 of 31 Page ID #:14
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`34. Today, the Elephant Print has become known as a source-identifier for
`high-quality designs originating from Nike.
`35. Nike has registered the Elephant Print trade dress on the Principal
`Register of the U.S. Patent and Trademark Office. Nike owns all right, title, and
`interest in the U.S. Trademark Registration identified below (together with the
`registrations referenced in Paragraph 26, the “Asserted Marks”).
`Reg. No.
`Trademark
`Reg. Date
`Goods
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`Compl. Ex.
`
`
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`4,137,741
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`May 8, 2012 Footwear
`
`3
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`36. Pursuant to 15 U.S.C. § 1065, the Elephant Print trade dress is
`incontestable and constitutes conclusive evidence of the validity of the Elephant
`Print trade dress, Nike’s ownership of the Elephant Print trade dress, and Nike’s
`exclusive right to use the Elephant Print trade dress.
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 15 of 31 Page ID #:15
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`D. NIKE MAINTAINS STRICT CONTROL OVER ITS TRADEMARKS AND
`NIKE’S RELATED BUSINESS REPUTATION AND GOODWILL
`
`37. Nike maintains strict quality control standards for its products bearing
`the Asserted Marks. Genuine Nike products bearing the Asserted Marks are
`inspected and approved by Nike prior to distribution and sale.
`38. Nike also maintains strict control over the use of the Asserted Marks in
`connection with its products so that Nike can maintain control over its related
`business reputation and goodwill. Nike, for example, carefully determines how
`many products bearing the Asserted Marks are released, where the products are
`released, when the products are released, and how the products are released.
`E. GNARCOTIC’S UNLAWFUL ACTIVITIES
`39. Gnarcotic has wrongfully capitalized on the fame of Nike and its
`Asserted Marks by making, promoting, advertising, marketing, and selling in the
`United States footwear bearing the Asserted Marks and/or confusingly similar
`marks.
`40. Gnarcotic’s Infringing Products include at least all variations of
`sneakers Gnarcotic refers to as “Gnarcotic’s Butterfly Effect[s]” and any other
`footwear that bears the Asserted Marks and/or confusingly similar marks. Examples
`of Gnarcotic’s Infringing Products are shown below next to the Asserted Marks.
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 16 of 31 Page ID #:16
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`Asserted Marks
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`Gnarcotic’s Infringing Products
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`41. As shown above, Gnarcotic’s Infringing Products are near-verbatim
`copies of Nike’s Asserted Marks. Consumers agree, as evidenced below.
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`42. As such, it is unsurprising that there is already confusion in the
`marketplace. Gnarcotic’s copying of the Asserted Marks has led to initial interest
`confusion, post-sale confusion, and confusion in the secondary market. For
`example, when Gnarcotic announced the release of the Gnarcotic Butterfly Effect
`v2’s on November 23, 2022, several users expressed their belief that the Butterfly
`Effect v2’s were a collaboration with Nike:
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 18 of 31 Page ID #:18
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`43. As a further example, after Gnarcotic announced the release of the
`Gnarcotic Butterfly Effect v1’s on July 13, 2022, users also expressed their belief
`that the Butterfly Effect v1’s were a collaboration with Nike:
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`44. Further, consumers selling Gnarcotic’s Infringing Products on the
`secondary market refer to Gnarcotic’s Infringing Products as “Nike Dunks,” and
`“Dunks.”
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`45. On information and belief, Gnarcotic promotes and sells the Infringing
`Products on its website at [https://gnarcotic.com/], and on its Instagram accounts
`under the handles @gnarcotic and @lilgnar.
`46. Gnarcotic’s Infringing Products are not genuine Nike products. Nike
`did not manufacture or inspect the Infringing Products or any component of the
`Infringing Products, and it did not authorize Gnarcotic to make, promote, advertise,
`market, or sell the Infringing Products.
`47. Gnarcotic’s Infringing Products travel in identical channels of trade and
`are sold to identical consumers as Nike’s genuine products.
`48. Gnarcotic has attempted to capitalize on Nike’s valuable reputation and
`consumer goodwill by using the Asserted Marks and/or confusingly similar marks
`in a manner that is likely to cause consumers and potential consumers to believe that
`Gnarcotic’s Infringing Products are associated with and/or approved by Nike, when
`they are not.
`49. Unless stopped, Gnarcotic’s Infringing Products and Gnarcotic’s use of
`the Asserted Marks will continue to cause confusion in the marketplace, including
`but not limited to initial interest confusion, post-sale confusion, and confusion in the
`secondary markets.
`50. On information and belief, Gnarcotic’s actions alleged herein are
`intended to cause confusion, mistake, or deception as to the source of Gnarcotic’s
`Infringing Products and are intended to cause consumers and potential customers to
`believe that Gnarcotic’s business and products are associated with Nike, when they
`are not.
`51. Gnarcotic’s actions alleged herein are also likely to impair the
`distinctiveness of Nike’s Asserted Marks through false association with Gnarcotic,
`constituting dilution by blurring.
`
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 21 of 31 Page ID #:21
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`52.
` By virtue of the acts complained of herein, Gnarcotic has created a
`likelihood of injury to Nike’s business reputation and goodwill, caused a likelihood
`of consumer confusion, mistake, and deception as to the source of origin or
`relationship of Nike’s products and Gnarcotic’s Infringing Products, and has
`otherwise competed unfairly by unlawfully trading on and using the Asserted Marks
`without Nike’s permission.
`53. Gnarcotic’s actions alleged herein are also willful and deliberate.
`Gnarcotic was aware of the Asserted Marks and Nike’s claims herein at least as of
`July 25, 2022, when Nike sent a cease-and-desist letter to Gnarcotic. See Exhibit 4.
`And, in advance of Gnarcotic’s announced release of the Butterfly Effect v2
`sneakers, Nike sent a second cease-and-desist letter to Gnarcotic on November 23,
`2022. See Exhibit 5. Upon information and belief, despite being on notice of Nike’s
`Asserted Marks and claims herein, Gnarcotic continued to promote, sell, and
`distribute the Accused Products, and continues to release the Accused Products in
`various colorways.
`54. Gnarcotic’s acts complained of herein have caused damage to Nike in
`an amount to be determined at trial, and such damages will continue to increase
`unless Gnarcotic is permanently enjoined from its wrongful acts.
`55. Gnarcotic’s acts complained of herein have caused Nike to suffer
`irreparable injury to its business. Nike will suffer substantial loss of goodwill and
`reputation unless and until Gnarcotic is permanently enjoined from the wrongful acts
`complained of herein.
`COUNT I: TRADEMARK INFRINGEMENT
`IN VIOLATION OF 15 U.S.C. § 1114
`
`56. Nike repeats and alleges each and every allegation of paragraphs 1
`through 55, above, as though fully set forth herein.
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 22 of 31 Page ID #:22
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`57. Gnarcotic has knowingly used and continues to use in commerce,
`without Nike’s permission or authorization, the Asserted Marks and/or confusingly
`similar marks, in connection with products Gnarcotic manufactures, advertises,
`promotes, distributes, and/or sells in the United States, including the Infringing
`Products. Gnarcotic has used the Asserted Marks with the knowledge of, and the
`intent to call to mind and create a likelihood of confusion with regard to and/or trade
`off the Asserted Marks.
`58. Gnarcotic’s use of the Asserted Marks (a) constitutes infringement of
`the Asserted Marks; (b) is likely to confuse, mislead, or deceive customers,
`purchasers, and members of the general public as to the origin, source, sponsorship,
`or affiliation of Gnarcotic or Gnarcotic’s Infringing Products with Nike or Nike’s
`products; and (c) is likely to cause such people to believe in error that Gnarcotic’s
`Infringing Products have been authorized, sponsored, approved, endorsed, or
`licensed by Nike or that Gnarcotic is in some way affiliated with Nike.
`59. Nike has no control over the nature and quality of the Infringing
`Products offered by Gnarcotic, and Nike’s reputation and goodwill will be
`damaged—and the value of the Asserted Marks jeopardized—by Gnarcotic’s
`continued use of the Asserted Marks and/or confusingly similar marks. Because of
`the likelihood of confusion between Gnarcotic’s Infringing Products and the
`Asserted Marks, any defects, objections, or faults found with Gnarcotic’s Infringing
`Products will negatively reflect upon and injure the reputation that Nike has
`established for the products it offers in connection with the Asserted Marks. As
`such, Gnarcotic is liable to Nike for infringement of its registered marks under 15
`U.S.C. §1114.
`60. As a direct and proximate result of Gnarcotic’s wrongful acts, Nike has
`suffered, continues to suffer, and/or is likely to suffer damage to its trademarks,
`business reputation, and goodwill that money cannot compensate. Unless enjoined,
`Gnarcotic will continue to use the Asserted Marks and/or confusingly similar marks
`21
`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 23 of 31 Page ID #:23
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`and will cause irreparable damage to Nike for which Nike has no adequate remedy
`at law. Thus, Nike is entitled to an injunction restraining Gnarcotic and, as
`applicable, its officers, members, agents, servants, and employees, and all persons
`acting in concert with them, from engaging in further acts of infringement.
`61. Nike is further entitled to recover from Gnarcotic the actual damages
`Nike has sustained, is sustaining, and/or is likely to sustain as a result of Gnarcotic’s
`wrongful acts.
`62. Gnarcotic’s use of the Asserted Marks and/or confusingly similar
`marks has been intentional and willful. See Exhibits 4-5. Gnarcotic’s bad faith is
`evidenced at least by the similarity of the Infringing Products to the Asserted Marks,
`and through Gnarcotic’s continued use of Nike’s Asserted Marks after being on
`notice of Nike’s claims. Because of the willful nature of Gnarcotic’s wrongful acts,
`Nike is entitled to an award of treble damages and increased profits under 15 U.S.C.
`§ 1117.
`63. Pursuant to 15 U.S.C. § 1117, Nike is also entitled to recover its costs
`of suit and its attorneys’ fees because this is an exceptional case.
`
`COUNT II: FALSE DESIGNATION OF ORIGIN /
`UNFAIR COMPETITION IN VIOLATION OF 15 U.S.C § 1125(A)
`
`64.
` Nike repeats and alleges each and every allegation of paragraphs 1
`through 63, above, as though fully set forth herein.
`65. The Asserted Marks are federally registered and entitled to protection
`under federal and common law. Nike has extensively and continuously promoted
`and used the Asserted Marks for over three decades in the United States and
`worldwide. Through that extensive and continuous use, the Asserted Marks have
`become famous and well-known indicators of the origin and quality of Nike
`products.
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`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 24 of 31 Page ID #:24
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`66. Gnarcotic’s unauthorized use of the Asserted Marks and/or confusingly
`similar marks constitutes a false designation of origin that is likely to cause
`consumer confusion, mistake, or deception as to the origin, sponsorship, or approval
`of Gnarcotic and/or Gnarcotic’s Infringing Products by creating the false and
`misleading impression that Gnarcotic’s Infringing Products are manufactured by,
`authorized by, or otherwise associated with Nike.
`67. As a direct and proximate result of Gnarcotic’s wrongful acts, Nike has
`suffered, continues to suffer, and/or is likely to suffer damage to its trademarks,
`business reputation, and goodwill that money cannot compensate. Unless enjoined,
`Gnarcotic will continue to use the Asserted Marks and/or confusingly similar marks
`and will cause irreparable damage to Nike for which Nike has no adequate remedy
`at law. Thus, Nike is entitled to an injunction precluding Gnarcotic and, as
`applicable, its officers, members, agents, servants, and employees, and all persons
`acting in concert with them, from using the Asserted Marks and/or confusingly
`similar marks in connection with Gnarcotic and the promotion, marketing, offer to
`sell, or sale of any of Gnarcotic’s products.
`68. Nike is further entitled to recover from Gnarcotic the actual damages
`Nike has sustained, is sustaining, and/or is likely to sustain as a result of Gnarcotic’s
`wrongful acts.
`69. Gnarcotic’s use of the Asserted Marks and/or confusingly similar
`marks has been intentional and willful. See Exhibits 4-5. Gnarcotic’s bad faith is
`evidenced at least by the similarity of the Infringing Products to the Asserted Marks,
`and through Gnarcotic’s continued use of Nike’s Asserted Marks after being on
`notice of Nike’s claims. Because of the willful nature of Gnarcotic’s wrongful acts,
`Nike is entitled to an award of treble damages and increased profits under 15 U.S.C.
`§ 1117.
`70. Pursuant to 15 U.S.C. § 1117, Nike is also entitled to recover its costs
`of suit and its attorneys’ fees because this is an exceptional case.
`23
`COMPLAINT
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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 25 of 31 Page ID #:25
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`COUNT III: TRADEMARK DILUTION
`IN VIOLATION OF 15 U.S.C. § 1125(C)
`
`71. Nike repeats and alleges each and every allegation of paragraphs 1
`through 70, above, as though fully set forth herein.
`72. The Asserted Marks have become famous throughout the United States
`as a result of the duration, extent, and geographical reach of advertising and
`publicity, the amount, volume, and geographical extent of Nike’s sales and trading
`areas, their channels of trade, their degree of recognition, and registration of the
`marks.
`73. The Asserted Marks became famous before Gnarcotic used the marks.
`74. Because Nike’s products bearing the Asserted Marks have gained a
`reputation synonymous with fashion, quality, style, and authenticity, the Asserted
`Marks have gained substantial renown. Gnarcotic has used and continues to use in
`commerce the Asserted Marks or confusingly similar marks in connection with
`Infringing Products.
`75. Gnarcotic’s use of the Asserted Marks and/or confusingly similar
`marks has caused, continues to cause, and/or is likely to cause irreparable injury to
`and dilution of the distinctive quality of the Asserted Marks in violation of Nike’s
`rights under 15 U.S.C. § 1125(c). Gnarcotic’s wrongful use of the Asserted Marks
`is likely to cause dilution by blurring and the whittling away of the distinctiveness
`and fame of the Asserted Marks.
`76.
` As a direct and proximate result of Gnarcotic’s wrongful acts, Nike has
`suffered, continues to suffer, and/or is likely to suffer damage to its trademarks,
`business reputation, and goodwill that money cannot compensate. Unless restrained,
`Gnarcotic will continue to use the Asserted Marks and/or confusingly similar marks
`and will cause irreparable damage to Nike for which Nike has no adequate remedy
`at law. Thus, Nike is entitled to an injunction restraining Gnarcotic and, as
`
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`COMPLAINT
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`

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`Case 2:22-cv-08765-AS Document 1 Filed 12/02/22 Page 26 of 31 Page ID #:26
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`applicable, its officers, members, agents, servants, and employees, and all persons
`acting in concert with them, from engaging in further acts of dilution.
`77.
` Nike is further entitled to recover from Gnarcotic the actual damages
`Nike has sustained, is sustaining, and/or is likely to sustain as a result of Gnarcotic’s
`wrongful acts.
`78. Gnarcotic’s use of the Asserted Marks and/or confusingly similar
`marks has been intentional and willful. See Exhibits 4-5. Gnarcotic’s bad faith is
`evidenced at least by the similarity of the Infringing Products to the Asserted Marks,
`and through Gnarcotic’s continued use of Nike’s Asserted Marks after being on
`notice of Nike’s claims. Because of the willful nature of Gnarcotic’s wrongful acts,
`Nike is entitled to an award of treble damages and increased profits under 15 U.S.C.
`§ 1117.
`79. Pursuant to 15 U.S.C. § 1117, Nike is also entitled to recover its costs
`of suit and its attorneys’ fees because this is an exceptional case.
`
`COUNT IV: UNFAIR COMPETITION IN VIOLATION OF
`CAL. BUS. & PROF. CODE §§ 17200, ET. SEQ.
`
`80. Nike repeats and alleges each and every allegation of par