macy's v. strategic marks, llc, 3-2011-cv-06198 (n.d. cal.) (macy's' reply brief in further support...

7/29/2019 Macy's v. Strategic Marks, LLC, 3-2011-CV-06198 (N.D. Cal.) (Macy's' reply brief in further support of its motion fo

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4993385.1 Case No. 11-6198 SCPLTFS' REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY J UDGMENT

AMSTER, ROTHSTEIN & EBENSTEIN LLPANTHONY F. LO CICERO, NY [email protected] ROTHSTEIN, NY [email protected] J ASON SBN2384832 (Pro Hac Vice Application Forthcoming)

[email protected] ESSICA CAPASSO, NY [email protected] Park AvenueNew York, NY 10016Telephone: (212) 336-8000Facsimile: (212) 336-8001(Admitted Pro Hac Vice)

HANSON BRIDGETT LLPGARNER K. WENG, [email protected] S. WALTERS, SBN267262

[email protected] Market Street, 26th FloorSan Francisco, California 94105Telephone: (415) 777-3200Facsimile: (415) 541-9366

Attorneys for Plaintiffs MACY'S, INC. andMACYS.COM, INC.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

MACY'S, INC. and MACYS.COM, INC.,

Plaintiffs,

v.

STRATEGIC MARKS, LLC,

Defendant.

Case No. CV 11-6198 SC

PLAINTIFFS' REPLY IN SUPPORT OFMOTION FOR PARTIAL SUMMARYJUDGMENT

Date: March 15, 2013Time: 10:00 a.m.Crtm: 1J udge: Honorable Samuel Conti

STRATEGIC MARKS, LLC,

Counter-Claimant,

v.

MACY'S, INC. and MACYS.COM, INC.

Counter-Defendants.

Case3:11-cv-06198-SC Document72 Filed02/22/13 Page1 of 14


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4993385.1 -i- Case No. 11-6198 SCPLTFS' REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY J UDGMENT

TABLE OF CONTENTS

Page

I. PRELIMINARY STATEMENT ................................................................................. 1II. ARGUMENT ........................................................................................................... 4

A. Defendant Did Not Use the Marks for "Retail Store" Services ...................... 4B. Defendant Did Not Use the Marks in Commerce for "Online Retail

Store" Services ............................................................................................. 6

1. Rearden Case Supports the Plaintiffs' Position ................................. 62. Ms. Horwich Was Not Produced for Deposition ................................. 73. Invoices Do Not Reflect the Defendant or the Marks at Issue ........... 84. Defendant's Own Admission Supports Plaintiffs ................................ 85. Office Action ...................................................................................... 9

III. CONCLUSION ...................................................................................................... 10



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4993385.1 -ii- Case No. 11-6198 SCPLTFS' REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY J UDGMENT

TABLE OF AUTHORITIES

Page

CASESBrookfield Communs., Inc. v. West Coast Entertainment Corp.

174 F.3d 1036 (9th Cir. 1999) ................................................................................. 6

Chance v. Pac-Tel Teletrac Inc.242 F.3d 1151 (9th Cir. 2001) ................................................................................. 7

Gibson Guitar Corp. v. Paul Reed Smith Guitars, LP311 F. Supp. 2d 690 (M.D. Tenn. 2004) ................................................................. 5

In re Ancor Holdings79 U.S.P.Q. 2d 1218 (T.T.A.B. 2006) ................................................................... 10

In re Bose Corp.580 F.3d 1240 (Fed. Cir. 2009) ............................................................................. 11

In re Retail Royalty Company2010 TTAB LEXIS 417, at *2 (T.T.A.B. Nov. 23, 2010) ........................................... 5

Rearden LLC v. Rearden Commerce, Inc.683 F.3d 1190 (9th Cir. 2012) ............................................................................. 6, 7

Stillwell v. RadioShack Corp.676 F. Supp. 2d 962 (S.D. Cal. 2009) ..................................................................... 5

STATUTES15 U.S.C. 1127 ............................................................................................................... 1

37 C.F.R. 2.76(c) ............................................................................................................ 1

RULESFed. R. Civ. P. 56(c)(2) ...................................................................................................... 3



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4993385.1 -1- Case No. 11-6198 SCPLTFS' REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY J UDGMENT

Plaintiffs Macys, Inc. and Macys.com, Inc. (individually and collectively, Plaintiffs

or Macys) submit this reply and supplemental declaration of Anthony F. Lo Cicero in

further support of their motion for partial summary judgment.

I. PRELIMINARY STATEMENT

Plaintiffs motion is based on the uncontroverted evidence that defendant Strategic

Marks, LLC (Defendant) did not use its registered marks in commerce1 for any of the

services specified in its Registrations.2 The facts and law articulated in Defendants

opposition brief and declarations do not show otherwise.

Defendant filed four separate Statements of Use in its intent-to-use service mark

applications, thus amending them to applications based on actual bona fide use in

commerce. Defendant signed Declarations under oath that it had used its marks in

commerce on each and every one of the services listed in the application and submitted

purported actual specimens of such use. 37 C.F.R. 2.76(c). The law is clear that if

Defendant had not yet used the mark in commerce for all of the services specified in its

registrations on the dates it filed its Statements of Use, each listed service which was

wrongly alleged must be canceled from the registration. Furthermore, in cases such as

this where none of the listed services were actually used in commerce as of the date of

the filing, the Registration is incurably void ab initio.

With respect to each and every one of the various types of retail store services

alleged in its Statements of Use, Defendant does not (and cannot) refute the unequivocal

1Use in commerce for a service mark is defined in the Trademark Act as used or displayed in

the sale or advertising of services and the services are rendered in commerce . . . (emphasisadded). 15 U.S.C. 1127.2Defendants specified services for each Registration which are the subject of this motion areidentical, as follows:

retail department store and on-line retail department store services;retail and on-line retail clothing boutiques;retail and on-line retail clothing stores;retail and on-line retail apparel stores;retail and on-line retail store services featuring clothing and fashion accessories.



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deposition testimony of its principal, Ellia Kassoff, and effectively admits that it has never

used any mark in connection with a physical brick and mortar store. So instead,

Defendant argues that the definition of retail store is vague enough that such physical

stores are not required. Defendant calls for the suspension of all common sense (and

ignores numerous cases and its own web site) in trying to convince the Court that retail

stores need not be physical brick and mortar stores, thus attempting to render

meaningless the differences in services in its own Registrations and the law

differentiating between retail store and online retail store.

With respect to the various online retail store portions of its registrations,

Defendant argues that despite the uncontroverted fact that it never sold a single product

in its purported online retail stores for the marks at issue, it nonetheless engaged in

use in commerce when the totality of the circumstances surrounding its activities are

considered.

The facts and law asserted by Defendant to show this totality are specious and

cannot withstand judicial scrutiny. First, Defendant asserts that it employed a supply

chain management method for online sales where goods are manufactured upon order.

But Defendant submits no evidence of such a method, and attempts to gloss over the

crucial fact that no such goods were ever manufactured since no goods were ever

ordered or sold through the alleged virtual stores.

Defendant relies in part on the purported activities of Helen Horwich, asserted to

be Defendants Merchandising Manager. (Dft. Opp. Brief at iv). However, Defendant

submits no evidence of any such activities. Moreover, Defendant should not be allowed

to rely on Ms. Horwichs alleged activities because Defendant has prevented Plaintiffs

from taking her deposition.3 Specifically, on February 19, 2013, less than 48 hours

before her scheduled deposition in Southern California (notably, both the date and the

3If not for the refusal to produce Ms. Horwich at her scheduled deposition, her testimony wouldhave been taken in time to be considered in this Reply brief.



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place had been selected by Defendant), Defendants counsel unilaterally canceled Ms.

Horwichs deposition after all arrangements, flights, hotel reservations, and court reporter

were scheduled. The cancellation had nothing to do with the deponents availability (as it

had been the first time Defendant canceled the deposition of Ms. Horwich, in November

2012, due to an alleged illness). Rather, the purported reason was that Strategic Marks

has limited resources.4 (Lo Cicero Decl. Ex.U at 2).5

Notwithstanding the failure to produce Ms. Horwich for deposition, the ostensible

evidence submitted in support of Defendants use of the marks in commerce for online

services would not be admissible at trial, and therefore could not be said to raise a triable

issue of fact. Fed. R. Civ. P. 56(c)(2). Defendant submits alleged invoices from a

supplier to support its argument; but they do not reflect use of any of the marks and they

are not even issued to Defendant. There also is no supporting declaration or sworn

testimony as to what the invoices are or as to what Defendants alleged supply chain

management method entailed. However, even if Defendant could overcome these

evidentiary concerns and Defendants unsupported statements in the brief are accepted

as true, such activities still did not rise to the level of rendered services under the

marks.

Defendant also asserts that its sale of a single t-shirt on its Retro Department

Stores site, bearing a different department store brand than the ones at issue here,

shows that it had the ability to make sales in the relevant online stores. This, however, is

not the standard for use in commerce and is insufficient, even under the totality of the

circumstances test, to raise a triable issue of fact.

4Plaintiffs are prepared to seek sanctions against Defendant, including granting Plaintiffs motionin full, and an award of fees and costs incurred by Plaintiffs due to the last minute depositioncancellation. At the very least, the Court should infer that Ms. Horwichs testimony would nothave supported Defendants allegations.5Plaintiffs submit at Lo Cicero Decl. Ex. U the correspondence between Plaintiffs andDefendants counsel regarding the last minute cancellation of the Horwich deposition.



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With respect to the issue of the USPTO office action for the Abraham and Straus

mark, Defendant is incorrect that the USPTO rejection was solely based on the specific

specimen of use and is, therefore, not relevant to all of the registrations at issue. Rather,

this was just one basis of the rejection. After Defendant submitted new specimens using

the words Abraham and Straus (not A & S) to the USPTO following the rejection, the

examiner issued another Office Action rejecting Defendants application, again finding

that the proposed mark on the website did not identify the source of any online retail

services, that the services were not yet being rendered in commerce, and that the only

service mark displayed in the specimens is Retro Department Stores, not each of the

Registered marks. Clearly, Defendants website does not constitute use of the marks for

online retail store services. Defendant has not refuted this.

Finally, Defendants tortured logic in concluding that the mere offer for sale of

products, even absent a sale, is enough to constitute use in commerce of online services,

is unsupported by authority and conflicts with Defendants own statements in its brief.

II. ARGUMENT

A. Defendant Did Not Use the Marks for "Retail Store" Services

Plaintiffs set forth iron-clad evidence in their opening brief that Defendant never

used the marks in connection with physical brick and mortar retail stores,6 and Defendant

tacitly concedes this. Defendant argues instead that Plaintiffs failed to provide a

cognizable definition of the specified services, and that the words physical and brick

and mortar are nowhere to be found in the specified services. (Dft. Opp. Brief at 2-3).

Aside from the obvious -- that in these days of the internet, retail stores are

referred to as brick and mortar stores -- there are numerous cases where retail stores

are defined as brick and mortar stores, including cases where brick and mortar retail

stores are distinguished from internet or on-line retail stores. See, e.g., Stillwell v.

6Dkt. No. 55, pages 10-12.



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RadioShack Corp., 676 F. Supp. 2d 962, 972 (S.D. Cal. 2009) (court distinguishes

between company-owned retail stores -- defined as brick and mortar stores -- and

internet retailers for purposes of interpreting a franchise agreement); Gibson Guitar Corp.

v. Paul Reed Smith Guitars, LP, 311 F. Supp. 2d 690, 707 (M.D. Tenn. 2004) (court

recognized that retail stores were brick and mortar stores required for authorized

retailers, and distinguished from internet retailers).

The Trademark Trial and Appeal Board, in a published yet non-precedential

decision, has also distinguished between retail store services and online retail store

services, referring to the retail store services as brick and mortar retail store services.

For example, in In re Retail Royalty Company, the applicant sought to register its mark

for the following services: retail store services and online retail store services featuring

clothing and clothing accessories, footwear, headwear . . . . In distinguishing specimens

of use proffered for both retail store services and online retail store services, the TTAB

stated: [w]e first shall consider applicants proffered specimen for its retail store services

. . . featuring clothing . . . , which we deem to be what are commonly referred to as brick-

and-mortar retail store services. In re Retail Royalty Company, 2010 TTAB LEXIS 417,

at *2 (T.T.A.B. Nov. 23, 2010) (not precedential).

It is also obvious from Defendants own description of services provided to the

USPTO (e.g., retail department store and on-line retail department store services) that

the services include both traditional brick and mortar stores as well as on-line virtual

stores. The conjunctive and must have a meaning -- in this case, that the two elements

on either side of the term are not the same.

Finally, Defendants own website demonstrates that Defendants services were to

include an online virtual mall as well as brick and mortar stores. Under the heading

The Plan, Defendant states:

Youll see these stores first as part of this nostalgic virtualmall. Then we plan to branch out with unique accessoriesat small boutiques, followed by exclusive apparel by up andcoming designers, and then ultimately with actual Brick



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and Mortar stores throughout the United States with a fullline-up of products. (Emphasis added.)

(Dkt. No. 56-2, Lo Cicero Decl. Ex. M).

The inevitable conclusions are that (i) Defendants argument that the specified

retail store services were not cognizably defined is without merit and unavailing; and (ii)

Defendant has not used the marks for retail stores in commerce.

B. Defendant Did Not Use the Marks in Commerce for "Online RetailStore" Services

1. Rearden Case Supports the Plaintiffs' Position

Once again, the Defendant does not refute the incontrovertible evidence that there

has been no rendering of any services under the marks at issue. Instead, Defendant

argues that the Court must consider a totality of the circumstances to determine

whether Defendant made a use in commerce of the marks for online services. In support

of this position, Defendant relies on Rearden LLC v. Rearden Commerce, Inc., 683 F.3d

1190 (9th Cir. 2012). However, Rearden is not apposite because it analyzes the use in

commerce issue from the perspective of determining priority of rights to the mark, which

is different than a determination of whether there is use in commerce for purposes of

registration.

Nevertheless, even ifRearden were to be followed, it confirms that the specified

services must actually be rendered in commerce for there to be use in commerce. In

quoting Brookfield Communs., Inc. v. West Coast Entertainment Corp., the Rearden court

recognizes that [t]he Lanham Act grants trademark protection only to marks that are

used to identify and to distinguish goods or services in commerce -- which typically

occurs when a mark is used in conjunction with the actual sale of goods or services.

Rearden, 683 F.3d at 1204 (quoting Brookfield Communs., Inc. v. West Coast

Entertainment Corp., 174 F.3d 1036, 1051 (9th Cir. 1999)) (emphasis added).

While stating that a lack of sales is not dispositive in determining whether a party

has established use in commerce, the Rearden court did recognize that there is a very



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high standard to show use in commerce when there are no sales. Rearden, 683 F.3d at

1205. Thus, while not dispositive, a lack of sales is highly relevant. The court quoted

Chance v. Pac-Tel Teletrac Inc. and that courts determination that mailing 35,500

postcards, which generated only 128 telephone responses and no sales, was insufficient

to raise a triable issue of fact as to use in commerce. Rearden, 683 F.3d at 1205;

(quoting Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1159-60 (9th Cir. 2001)).

As discussed below, Defendant submitted five irrelevant invoices, website screen

shots deemed insufficient by the USPTO, unsupported allegations of business methods,

and canceled a deposition with a purported manager referred to in the opposition brief.

Consequently, even if this Court were to consider a totality of the circumstances in

making its determination regarding use in commerce of Defendants registered marks,

Defendants evidence is wholly deficient and does not raise any triable issue of fact.

2. Ms. Horwich Was Not Produced for Deposition

To support its totality of the circumstances argument, Defendant states that [t]o

further develop its merchandise selection, Strategic Marks employed the services of

Helen Horwich as Merchandising Manager (Ashurov Decl. Ex. 1). (Dft. Opp. brief at iv).

However, Plaintiffs never had the chance to test this assertion because Defendant

unilaterally canceled Ms. Horwichs deposition at the 11th hour. This cancellation

deprived Plaintiffs of the opportunity to explore Defendants purported merchandising

efforts and supply chain method. In email correspondence regarding the cancellation,

Defendants counsel stated Plaintiffs are not likely to get very much, if any, information

from an elderly lady that it did not already obtain during Strategic Marks deposition. (Lo

Cicero Decl. Ex. U). Defendants unilateral decision of what Plaintiffs may or may not get

from Ms. Horwichs deposition is of no significance. Further, this so-called elderly lady

with no information is the person purportedly managing Defendants merchandising

efforts. Defendant cannot have it both ways -- it cannot on one hand rely on Ms. Horwich

to raise a question of fact under a totality of the circumstances scenario, yet then on the

other hand say that she does not have anything valuable to offer and cancel her



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deposition.

3. Invoices Do Not Reflect the Defendant or the Marks at Issue

Defendant points to its alleged supply chain management method and online

sales fulfillment by a pre-contracted vendor (Dft. Opp. Brief at 5) to support its use in

commerce argument. However, purported evidence of these activities submitted by

Defendant is illusory. With respect to its purported supplier, Defendant provides five

invoices. (Dkt. No. 65, Kassoff Decl. Ex. F). However, not one of these invoices was

issued to Defendant. They were to entities called Astro Pop, LLC and Leaf Brand LLC.

These are believed to be entities that market goods (not even services as are involved in

this case) under brands which are not even involved in this case. (Lo Cicero Decl. Ex. V;

Kassoff Depo. at 25). Significantly, the invoices do not even mention any of the marks at

issue in this case, but all appear to be for activities related to these other entities.

Further, Mr. Kassoffs Declaration does not substantively discuss these invoices, or attest

to any facts about them. Thus, this evidence does not show any transaction by the

Defendant involving any mark in this case. Thus, there is no actual evidence of any such

supply chain management method or pre-contracted vendor.

4. Defendant's Own Admission Supports Plaintiffs

Defendant seeks to define online retail store services through a tortured logic

that ends up contradicting Defendants own subsequent statement. First, Defendant

quotes the definition of retail from the dictionary: to sell in small quantities directly to

the ultimate consumer. (Dft. Opp. Brief at 3) (Emphasis added.). Then, Defendant goes

on to extrapolate and states the following:

Strategic Marks contends that on-line means connectedto, served by, or available through a system and especially acomputer or telecommunications system (as the Internet).Thus, Strategic Marks submits that online retail servicesmeans selling in small quantities directly to consumersthrough the Internet, and online retail store servicesmeans providing a virtual store wherein goods are offeredfor sale in small quantities to ultimate consumers via theInternet.



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(Dft. Opp. Brief at 3).

So, Defendant went from retail, which is to sell, to online retail services, which

means selling, to online retail store services, which somehow means a virtual store where

goods are offered for sale. How Defendant made the leap of logic from selling to offering

for sale is not explained. Moreover, in the very next sentence, Defendant states that [a]s

explained in section 2(c) below, Strategic Marks opened virtual retail stores in which

goods are sold in small quantities to ultimate consumers, thereby rendering online

retail store services. (Dft. Opp. Brief at 3). Not only does this contradict Defendants

prior statement (offered for sale vs. sold), but it is untrue. It is undisputed that

Defendant has never sold a single good or service under the marks at issue in this

motion. Thus, by Defendants own admission, its failure to make sales constitutes a

failure to render services.

5. Office Action

Defendant argues that the Abraham and Straus Office Action is wholly

irrelevant because it was directed to a specific specimen of use. (Dft. Opp. brief at 7).

However, this ignores that the deficient specimen (A & S as opposed to Abraham and

Straus) was only one aspect of the rejection. The rejection was also based on the fact

that the services were not yet being rendered in commerce as required under the Aycock

case and other authorities, and that the use of the proposed mark on the website did not

identify the source of any online retail services.

The fact that the rejection was based on much more than simply the manner in

which the Abraham and Straus mark appeared was confirmed by the subsequent office

action dated March 9, 2012. (Lo Cicero Decl. Ex.W). After Defendant corrected the way

the mark appeared on the website and submitted new specimens, the examiner once

again rejected Defendants application. The rejection states as follows:

While the first web page submitted references a retrodepartment store, it does not show use of the mark inconnection with any actual store services. This isemphasized by the second submitted specimen. This



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specimen is a web page devoted to the ABRAHAM ANDSTRAUS store in particular. The contents of this page areas follows: historical facts about the ABRAHAM ANDSTRAUS department store, video links which appear to befor old commercials advertising the store, and a t-shirt for

sale that has ABRAHAM AND STRAUS written across thefront of it. As shown on this page, the applied for marksimply fails to show use in connection with any retailstore services. The mark as it appears on the page isnot used as a source indicator for any services, butappears only as part of informational matter about the oldABRAHAM AND STRAUS department store. The other useof the mark on the page is as decoration for the t-shirt;however, providing a t-shirt with the mark on it isinsufficient to show use as a source indicator for retailstore services.

(Lo Cicero Decl. Ex. W at 3).

Thus, the bottom line is that Defendants use of the marks on the Retro

Department Stores website does not constitute service mark use of the marks in the

registrations. This is applicable to all of the marks shown on the website as Defendants

web site makes similar use of each and every one of the subject marks.

Defendants citation to the In re Ancor Holdings decision is unavailing and does

not overcome this deficiency. See In re Ancor Holdings, 79 U.S.P.Q. 2d 1218 (T.T.A.B.

2006). In In re Ancor Holdings, the TTAB addressed an issue of semantics as to whether

the mark in question functioned to identify the source of goods as opposed to services.

In that case the applicant did not even offer any goods for sale, but the specimen referred

to tools to be used in rendering services. In re Ancor Holdings has nothing to do with

the present situation where, as the examiner has recognized, t-shirts bearing the marks

are offered for sale by Defendant, but the marks are not used to indicate the source of

any department store services.

III. CONCLUSION

In accordance with the above and with Plaintiffs original brief and supporting

papers, Plaintiffs respectfully request that their motion for partial summary judgment be

granted, that the Court dismiss Defendants first and fifth counterclaims with prejudice,



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4993385.1 -11- Case No. 11-6198 SC

and that the Court order cancellation of THE BROADWAY Registration, THE BON

MARCHE Registration, and the ROBINSONS Registration.7 In addition, Plaintiffs

respectfully request that the Court find that Defendant did not make use in commerce of

the ABRAHAM AND STRAUS mark, and Defendant does not have the right to register

the mark.

DATED: February 22, 2013 HANSON BRIDGETT LLP

By: /s/ Christopher S. WaltersGARNER K. WENG

CHRISTOPHER S. WALTERSAttorneys for Plaintiffs MACY'S, INC. andMACYS.COM, INC.

7In the alternative, if the Court finds that Defendant has used the marks in commerce for some ofits specified services, Plaintiffs respectfully request that the Registrations be appropriatelyrestricted to reflect only those services for which the marks are being used. In re Bose Corp., 580F.3d 1240, 1247 (Fed. Cir. 2009).


macy's v. strategic marks, llc, 3-2011-cv-06198 (n.d. cal.) (macy's' reply brief in further support...

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