United States District Court, E.D. Washington
OTR WHEEL ENGINEERING, INC., BLACKSTONE/OTR, LLC, and F.B.T. ENTERPRISES, INC., Plaintiffs,
WEST WORLDWIDE SERVICES, INC., and SAMUEL J. WEST, individually and his marital community, Defendants.
ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION
LONNY R. SUKO, Senior District Judge.
BEFORE THE COURT is Plaintiffs' Motion For Preliminary Injunction (ECF No. 3). The motion was heard with oral argument on May 7, 2014. Leslie R. Weatherhead, Esq., argued for Plaintiffs. R. Scott Johnson, Esq., argued for Defendants.
I. PRELIMINARY INJUNCTION STANDARD
In order to obtain a preliminary injunction, a plaintiff must establish irreparable harm is likely, not just possible. "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of the equities tips in his favor, and that an injunction is in the public interest." Winter v. Natural Resources Defense Council, 555 U.S. 7, 129 S.Ct. 365, 374 (2008). Under Ninth Circuit law, "if a plaintiff can only show that there are serious questions going to the merits' - a lesser showing than likelihood of success on the merits - then a preliminary injunction may still issue if the balance of hardships tips sharply in plaintiff's favor, ' and the other two Winter factors are satisfied." Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013), quoting Alliance for the Wild Rockies, 632 F.3d 1127, 1135 (9th Cir. 2011).
"Serious questions are substantial, difficult and doubtful, so as to make them a fair ground for litigation and thus for more deliberative investigation.'" Republic of the Philippines v. Marcos, 862 F.2d 1355, 1361-62 (9th Cir. 1988) (en banc), cert. denied, 490 U.S. 1035, 109 S.Ct. 1933 (1989). "Serious questions need not promise a certainty of success, nor even present a probability of success, but must involve a fair chance of success on the merits.'" Id., quoting National Wildlife Fed'n v. Coston, 773 F.2d 1513, 1517 (9th Cir. 1985).
II. LIKELIHOOD OF SUCCESS ON THE MERITS
At this juncture, a reasonable inference arises from the evidence presented by Plaintiffs (collectively "OTR") that they have legally protectable trade secrets regarding the design of their Outrigger tire which were misappropriated by Defendants in that Defendants knew or had reason to know those trade secrets were acquired by improper means and used to manufacture their competing tire (now called "Extremelift").
Plaintiffs licensed intellectual property rights to Camoplast Solideal to allow Camoplast to build Outrigger design molds and use the molds to manufacture Outrigger tires. In 2007, Camoplast subcontracted the manufacture of the Outrigger tire to Shandong Hawk International Rubber Co. Ltd. ("Superhawk"). Sometime thereafter, Superhawk contracted to manufacture tires for Defendant West Worldwide Services, Inc. ("West"). These are the tires which Plaintiffs allege infringe upon their trade dress (tire tread design). The design of these tires appears to be virtually identical to the design of Plaintiffs' Outrigger tires. A reasonable inference is that Superhawk, in breach of confidentiality agreements with Camoplast and its predecessor (World Tyres, Ltd.), improperly used Outrigger design molds to manufacture the West tires and/or improperly used Plaintiffs' proprietary information to make replica Outrigger design molds to manufacture the West tires. A reasonable inference is that West knew or had reason to know Plaintiffs' trade secrets were used to manufacture West's tires.
Accordingly, there is a likelihood Plaintiffs will succeed on the trade secret misappropriation claim they have asserted pursuant to Washington's Uniform Trade Secrets Act (UTSA). RCW 19.108.010 et seq.,  It follows that Plaintiffs have at least a "fair chance, " if not a likelihood, of success on their trade dress infringement claim, as now discussed.
To recover for the infringement of a trade dress under the Lanham Act, 15 U.S.C. §1051 et seq., a plaintiff must establish that (1) "the... design is nonfunctional, " (2) "the design is inherently distinctive or acquired distinctiveness through secondary meaning, " and (3) "there is a likelihood of confusion that the consuming public will confuse [the plaintiff's and the defendant's products]." Disc Golf Ass'n v. Champion Discs, Inc., 158 F.3d 1002, 1005 (9th Cir. 1998).
The court recognizes that a competing tire which bears the same tread design as Plaintiffs' tire may not violate Plaintiff's trade dress if the design is ultimately deemed "functional" and therefore, not deserving of trademark protection. Trade dress protection under federal law is designed to promote competition. Secalt S.A. v. Wuxi Shenxi Construction Machinery Company, Ltd., 668 F.3d 677, 683 (9th Cir. 2012), citing TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28, 121 S.Ct. 1255 (2001). Such protection "must subsist with the recognition that in many instances there is no prohibition against copying goods and products." Id., quoting TrafFix Devices, 532 U.S. at 29. Rather, "[t]he physical details and designs of a product may be protected under the trademark laws only if they are nonfunctional...." Id., quoting Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 515 (9th Cir. 1981). Plaintiffs' trademark of its trade dress is, however, presumptively valid because it was registered in 2012 (U.S. Trademark Registration No. 4, 220, 169 aka "169 Registration"). Talking Rain Beverage Co., Inc. v. South Beach Beverage Company, 349 F.3d 601, 603 (9th Cir. 2003). This constitutes a presumption of non-functionality. Id. at 605. While this presumption is rebuttable via this litigation, it creates, at this early juncture, at least a "fair chance" that Plaintiffs will succeed in establishing, as they previously did to the satisfaction of the U.S. Patent and Trademark Office (USPTO), that their trade dress (tire tread design) is non-functional.
It appears "functionality" is the critical issue in regard to Plaintiffs' trade dress infringement claim. If Plaintiffs' trade dress is non-functional, that significantly bolsters Plaintiffs' argument that their tire tread design has acquired secondary meaning and that there is a likelihood of consumers confusing the Outrigger tire with West's "Extremelift" tire. The evidence presented by Plaintiffs thus far, however, already makes it likely this court will conclude Plaintiffs' tire tread design has acquired secondary meaning over the years such that consumers in the relevant market (manufacturers and users of aerial work platforms) associate the design with the Outrigger tire. Plaintiffs' certificate of registration also gives rise to a presumption of acquired distinctiveness through secondary meaning and relieves them of the burden of proving secondary meaning. Sand Hill Advisors, LLC v. Sand Hill Advisors, LLC, 680 F.Supp.2d 1107, 1116 (N.D. Cal. 2010).
Defendants have yet to offer any evidence which disproves that Plaintiffs' tire tread design has acquired secondary meaning among consumers in the relevant market. On the other hand, Plaintiffs offer compelling evidence of secondary meaning, including that Defendants' tire is a virtual carbon copy of Plaintiffs' Outrigger tire. Cybergun, S.A., v. JAG Precision, 2012 WL 4868104 at *6 (D. Nev. 2012), citing Swatch, S.A. v. SIU Wong Wholesale, 1992 WL 142745, *6 (S.D.N.Y. 1992) ("Evidence that the trade dress or product design was intentionally copied by a competitor can support an inference of secondary meaning if the circumstances indicate an intent to benefit from the goodwill of the prior user through confusion"). At least preliminarily, the circumstances indicate an intent by Defendants to benefit from the goodwill of Plaintiffs through consumer confusion. A reasonable inference is Defendants copied Plaintiffs' tire tread design, not because it is functional, but because it is nonfunctional and has acquired secondary meaning in the relevant market because it is associated with the Outrigger tire. Using that design allows Defendants to gain a bigger share of the market by capitalizing on confusion among consumers.
In order to succeed on the merits of their trade dress infringement claim, Plaintiffs must show Defendants' tires will probably cause consumer confusion as to the source or sponsorship of the product - in other words, that Defendants' tires are produced by or affiliated with Plaintiffs. Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987). The Ninth Circuit has identified a non-exclusive set of eight factors to determine likelihood of confusion: 1) strength of the mark; 2) proximity or relatedness of the goods or services; 3) similarity of the sight, sound, and meaning of the marks; 4) evidence of actual confusion; 5) degree to which the marketing channels converge; 6) type of goods and degree of care likely to be exercised by the purchaser; 7) defendant's intent in selecting the mark; and 8) likelihood of expansion of product lines. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). The factors are not to be weighed rigidly, but are simply to be considered in assessing the basic question of whether there is a ...