Herman Miller V. Blumenthal - Order Denying Sj On Functionality

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 1 of 28 Page ID #:9136 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Present: The Honorable

March 4, 2019

JOHN A. KRONSTADT, UNITED STATES DISTRICT JUDGE

Andrea Keifer

Not Reported

Deputy Clerk

Court Reporter / Recorder

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

I.

Date

(IN CHAMBERS) REDACTED ORDER RE DEFENDANT’S MOTION FOR SUMMARY JUDGMENT (DKT. 85); PLAINTIFF’S MOTION FOR LEAVE TO AMEND THE PLEADINGS (DKT. 174)

Introduction

Plaintiff Herman Miller, Inc. (“Plaintiff” or “Herman Miller”) filed this action on March 21, 2017. See Compl., Dkt. 1. The Second Amended Complaint (“SAC”), which is the operative pleading, advanced claims of patent infringement, trade dress infringement, and unlawful competition against the following Defendants: Blumenthal Distributing, Inc. d/b/a Office Star Products (“Defendant” or “Office Star”); Jorng Well Industrial Co., Ltd. (“Jorng Well”); Nova Asia International, Inc. (“Nova Asia”); Nova Innovations International, Ltd. (“Nova Innovations”); and King Hong Industrial Co., Ltd. (“King Hong”). See generally SAC, Dkt. 41. Plaintiff’s claims arise from the contention that Office Star, in conjunction with the other defendants, infringed Plaintiff’s intellectual property rights in its “iconic” office furniture. See id. ¶¶ 11, 24-26, 38-42. The parties have resolved certain claims advanced by the SAC. Thus, on March 23, 2018, Claims I and II of the SAC were dismissed with prejudice. See Dkt. 80. On June 12, 2018, two stipulated permanent injunctions were entered, dismissing Claims VI through X of the SAC with prejudice, dismissing Claims III-V as to King Hong only, and dismissing King Hong, Jorng Well, Nova Asia, and Nova Innovations as defendants. See Dkts. 99, 100. Therefore, the only remaining causes of action are Claims III-V against Office Star, which is the only remaining defendant. See Dkt. 84 at 2. Plaintiff alleges that certain chairs imported, marketed, and sold by Office Star infringe the trade dress of Plaintiff’s “Caper” chair model, in violation of the Lanham Act, 15 U.S.C. § 1125(a), Cal. Bus. & Prof. Code §§ 17200 et seq. (“UCL”), and common law unfair competition. See SAC, Dkt. 41 ¶¶ 61-85. On June 4, 2018, Office Star filed a Motion for Summary Judgment. Dkts. 85, 106 (“MSJ”).1 Plaintiff

1

An order granted Office Star’s application to file the Motion, and certain supporting materials, under seal (see Dkt. 105), and it did so. Dkt. 108 (under seal). A redacted version of the Motion was filed on the public docket. Dkt. 106. Page 1 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 2 of 28 Page ID #:9137 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

filed an Opposition to the MSJ. Dkt. 118-1 (“Opposition”).2 Office Star filed a Reply. Dkt. 126 (“Reply”).3 A hearing on the MSJ was held on September 10, 2018, and it was taken under submission. Dkt. 156. On October 16, 2018, Plaintiff filed a Motion for Leave to Amend the Pleadings (“MLA”). Dkt. 174. Defendant opposed the MLA on October 30, 2018. Dkt. 177. Plaintiff’s request for oral argument was denied, and the MLA was taken under submission on November 15, 2018. Dkt. 182. For the reasons stated in this Order, the Motion for Summary Judgment and the Motion for Leave to Amend the Pleadings are both DENIED. II.

Background A.

The Caper Chair

Herman Miller manufactures and sells contemporary office furniture. Plaintiff asserts trade dress rights in its stackable “Caper” chair. See Statement of Uncontroverted Facts (“SUF”), Dkt. 131-1 ¶ 1. The Caper was first introduced in 1999. See Declaration of Michael Blum (“Blum Decl.”), Dkt. 131-3 ¶ 2. Plaintiff submitted evidence showing that, since its introduction into the marker, Plaintiff has sold Caper chairs, that collectively featured slightly different designs. Thus, some have arms, some do not, some are stackable and serve several purposes and some feature stools. The . See Expert Report of Suzanne Heinemann (“Heinemann Report”), Dkt. 130-7 at 47 (under seal). Although the Caper chairs are sold through retail channels, evidence was submitted showing that Herman Miller sells . See id. ¶ 38. Plaintiff submitted evidence showing that the Caper chair is marketed extensively. See Blum Decl. ¶¶ 34, 7. The chair appears on Herman Miller’s website, as well as that of its distributors and retailers. See id. ¶ 6. B.

The Asserted Trade Dress

Plaintiff’s trade dress claim is based on the “overall look” of the Caper chair, which consists of “core elements” including “a seat pan coupled with a distinctive bowler-hate-like backrest.” See SUF ¶¶ 3-4; see also Expert Report of Robert Anders (“Anders Report”), Dkt. 113-46 ¶ 54 (describing the Caper’s backrest as “the most salient feature of the overall trade dress since it is the most prominent visually.”). Plaintiff also asserts certain “secondary” features of Caper’s trade dress, including: (i) two thin armrests 2

This version of the Opposition replaces an earlier one (Dkt. 113), which was withdrawn pursuant to the inadvertent disclosure of confidential material. Pursuant to an order granting Plaintiff’s application to file the Opposition, and certain supporting materials, under seal (Dkt. 128), the opposition was also filed under seal. Dkt. 117-21 (under seal). A redacted version of the Opposition was filed on the public docket. Dkt. 118-1. 3 Herman Miller submitted objections with respect to the evidence submitted in connection with the Motion. Dkt. 155. Defendant also submitted voluminous objections with respect to the evidence submitted in connection with Plaintiff’s Opposition to the Motion. See Dkts. 120, 121, 122, 123, 136, 137, 138. Herman Miller filed responses to those objections. See Dkts. 145-1, 145-2, 145-3, 145-4, 145-5, 145-6, 145-7. An order issued granting Herman Miller’s ex parte application to file such responses. See Dkt. 153. Rulings on these evidentiary objections are set forth in a separate order. Dkts. 184, 185, 187, 189-196. Page 2 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 3 of 28 Page ID #:9138 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

supported by struts from the corners of the seat; (ii) small rounded perforations across the backrest; (iii) thin strut legs on the stacking version of the Caper chair; and (iv) an upside-down semicircular opening at the top of the backrest. SUF ¶ 6. Images of the Caper chair are reproduced below:

Ex. A-1 to SAC, Dkt. 41-1. According to Jeffrey Weber, who is the principal designer of the Caper chair, the asserted trade dress focuses on Caper’s “overall contoured backrest shape [which] was based on aesthetic considerations of what would appear visually pleasing and playful.” Declaration of Jeffrey A. Weber (“Weber Decl.”), Dkt. 131-2 ¶ 5. The following reproduction of the backrest design was included in marketing and development materials. However, Weber declares that the drawing “was intended more as an aspirational depiction of what is really just the simple concept of having a somewhat flexible periphery”:

Id. ¶ 8 (“back flex” diagram). Herman Miller owns several design patents in the Caper chair. See Ex. 12 to Declaration of Jean-Paul Page 3 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 4 of 28 Page ID #:9139 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

Ciardullo (“Ciardullo Decl.”), Dkt. 113-12. Each design patent claims the “ornamental design” in a different variation of Caper chair. See id. at 2. Herman Miller also owns a utility patent in a “modular arm rest system for a chair.” See U.S. Patent No. 6,837,546 (the “’546 Patent”), Ex. 15 to Declaration of David Dillard (“Dillard Decl.”), Dkt. 101-2 at 6-51. The parties dispute the extent to which the ’546 Patent applies to the Caper design. See SUF ¶¶ 105-114. Thus, Defendant submitted expert testimony suggesting that certain claims of the ’546 Patent cover the lateral extensions and arm rest modularity of the Caper chair. See Expert Report of Lance Rake (“Rake Report”), Dkt. 102-1 ¶¶ 157-63. Plaintiff also filed a trademark application with the United States Patent and Trademark Office (“PTO”) regarding the design of the Caper backrest. See Ex. 13 to Ciardullo Decl., Dkt. 113-14 (prosecution history of PTO Application No. 86969876). On July 26, 2017, the PTO issued a Notice of Publication on the application, which stated that the “mark of the application identified appears to be entitled to registration,” and published the application “for the purpose of opposition by any person who believes he will be damaged by the registration of the mark.” Id. at 53-54. Office Star filed a timely objection to the application. See Statement of Additional Facts (“SAF”), Dkt. 127 ¶ 9. In response, at Herman Miller’s request, the PTO stayed substantive proceedings related to Office Star’s objection pending the resolution of this action. Id. C.

Allegedly Infringing Chairs

Plaintiff accuses Office Star of infringing Herman Miller’s trade dress rights in the Caper design, through the distribution, marketing and sale of certain chairs of allegedly similar design. Images of these products are reproduced below:

Page 4 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 5 of 28 Page ID #:9140 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

Ex. 2 to Ciardullo Decl., Dkt. 113-3. It is undisputed that King Hong, not Office Star, actually manufactures the allegedly infringing chairs. See, e.g., SAF ¶ 19.4 It is also undisputed that Office Star sells a large majority of the allegedly infringing chairs through commercial dealer channels, which includes dealers who also sell Herman Miller products. See id. ¶¶ 58-59.5 It is undisputed that some of the accused chair models have been on the market since 2006. See SUF ¶ 171. D.

Prior Action

On December 13, 2013, Herman Miller sent a cease and desist letter to Office Star, in which it claimed that Office Star chairs infringed alleged trade dress rights in Herman Miller designs and products other than the Caper design. SUF ¶ 168. This led to a prior action between the parties. See Blumenthal Distributing, Inc., et al. v. Herman Miller, Inc., Case No. 14-cv-01926-JAK (C.D. Cal.) (the “1926 Action”). In 2016, Herman Miller raised with Office Star the issue of the alleged infringement of the Caper design, and sought Office Star’s agreement to discontinue sales of the accused chairs in connection with ongoing negotiations to resolve overall disputes between the parties. Id. As noted, the present action was filed on March 21, 2017. Dkt. 1. E.

Unfair Competition Claims

Herman Miller states that in March and April of 2018, it discovered new evidence showing that Office Star used its reputation as a seller of “knock-off goods” to “position the accused chairs as substitutes for real Caper chairs,” and that it “target[ed]” and “interfere[d] with” Herman Miller dealers who were “contractually obligated to not sell Caper knock-offs.” See Dkt. 131 at 24-25. Herman Miller states that it notified Office Star about this evidence as early as April 22, 2018. Dkt. 174 at 10. It states that it did so through a letter stating its intention to seek jury instructions regarding a passing-off theory of unfair competition. Id.at 8-9. Herman Miller states that Office Star did not reply to the letter (id. at 6), and in Office Star’s MSJ, which was filed after the letter was delivered, Office Star raised no arguments 4

As noted, King Hong was dismissed as a defendant pursuant to a stipulated injunction that places restrictions on its conduct. See Dkt. 99. 5 As discussed below, Office Star does not contend in the MSJ that its products are not infringing of the Caper design. Thus, Office Star does not dispute the physical resemblance between its products and the Caper chairs. Rather, it contends that Caper is not eligible for trade dress protection at all. Page 5 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 6 of 28 Page ID #:9141 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

relating to unfair competition other than the statute of limitations defense. See Dkt. 106 at 24-25. In opposing the MSJ, Herman Miller argues that “deceptive product substitution” would be independently actionable under the UCL and common law unfair competition, even if Herman Miller did not prevail on the trade dress claim. See Dkt. 131 at 24-26. Office Star replies that this is a new allegation, without supporting evidence and that it should not be permitted as a response to the MSJ. Dkt. 126 at 6. Following Office Star’s reply, Herman Miller filed the MLA on October 16, 2018. There, it identifies the evidence on which it seeks to rely. See Dkt. 174 at 8-9. This evidence includes sales data, deposition testimony, and emails allegedly supporting a product-substitution theory of unfair competition. See id. III.

Analysis A.

Legal Standards 1.

Summary Judgment

A motion for summary judgment will be granted where the “depositions, documents, electronically stored information, affidavits or declarations, stipulations[,] . . . admissions, interrogatory answers, or other materials” show that there is “no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(a), (c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The party seeking summary judgment bears the initial burden to show the basis for its motion and to identify those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 322. Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. Where the nonmoving party will have the burden of proof on an issue, however, the movant need only demonstrate that there is an absence of evidence to support the claims of the nonmoving party. See id. If the moving party meets its initial burden, the nonmoving party must set forth “specific facts demonstrating the existence of genuine issues for trial.” In re Oracle Corp. Secs. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Celotex, 477 U.S. at 324). Only admissible evidence may be considered in connection with a motion for summary judgment. Fed. R. Civ. P. 56(c). In considering such a motion, a court is not to make any credibility determinations or weigh conflicting evidence. All inferences are to be drawn in the light most favorable to the nonmoving party. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630-31 (9th Cir. 1987). However, conclusory, speculative testimony in declarations or other evidentiary materials is insufficient to raise genuine issues of fact and defeat summary judgment. See Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). In considering a motion for summary judgment as to issues of trademark infringement, the Ninth Circuit has “warn[ed] that ‘trial courts disfavor deciding trademark cases in summary judgments because the ultimate issue is so inherently factual.’” Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1267 (9th Cir. 2001) (quoting Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1355 n.5 (9th Cir. 1985)). Page 6 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 7 of 28 Page ID #:9142 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al. 2.

Date

March 4, 2019

Trade Dress

“Trade dress refers generally to the total image, design, and appearance of a product and ‘may include features such as size, shape, color, color combinations, texture or graphics.’” Id. at 1257 (quoting Int’l Jensen, Inc. v. Metrosound U.S.A., Inc. 4 F.3d 819, 822 (9th Cir. 1993)). “A seller’s adoption of a trade dress confusingly similar to a competitor’s constitutes unfair competition that is actionable under [the Lanham Act].” Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 613 (9th Cir. 1989). To prove trade dress infringement, “a plaintiff must demonstrate that (1) the trade dress is nonfunctional, (2) the trade dress has acquired secondary meaning, and (3) there is a substantial likelihood of confusion between the plaintiff’s and defendant’s productions.” Art Attacks Ink, LLC v. MGA Entm’t Inc., 581 F.3d 1138, 1145 (9th Cir. 2009) (citing Disc Golf Ass’n v. Champion Discs, 158 F.3d 1002, 1005 (9th Cir. 1998)).6 3.

Leave to Amend

Fed. R. Civ. P. 15(a)(1) provides that a party may amend a pleading once as a matter of course within 21 days of its service, or, if the pleading is one for which a responsive pleading is required, 21 days after service of a responsive pleading or motion under Fed. R. Civ. P. 12. In all other cases, “a party may amend its pleading only with the opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so requires.” Id. In general, a district court should grant leave to amend with “extreme liberality.” Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001); but see Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (“Although the rule should be interpreted with extreme liberality, leave to amend is not to be granted automatically.”) (internal quotation marks and citations omitted). However, after a district court enters a pretrial scheduling order pursuant to Fed. R. Civ. P. 16 establishing pleading amendment deadlines, “that rule’s standards control[].”Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 60809 (9th Cir. 1992). Fed. R. Civ. P. 16(b)(4) provides that an established schedule may be modified “only for good cause and with the judge’s consent.” “Rule 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the amendment.” Johnson, 975 F.2d at 609. “Moreover, carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief. Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party’s reasons for seeking modification. If that party was not diligent, the inquiry should end.” Id. (internal citations omitted). The decision whether to modify a scheduling order is within the broad discretion of the district court. Id. at 607. If the requirements of Rule 16 are satisfied, the movant must also demonstrate that the amendment is proper under Rule 15. Campion v. Old Republic Home Prot. Co., 861 F. Supp. 2d 1139, 1150 (S.D. Cal. 2012). Under Rule 15, leave to amend should be granted unless there is a sufficient showing of one of the following: (i) prejudice to the opposing party; (ii) undue delay; (iii) bad faith; or (iv) futility. See Foman v. Davis, 371 U.S. 178, 182 (1962); see also DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 6

Office Star has not presented any arguments with respect to the third factor: whether a substantial likelihood of confusion between its chairs and the Caper chairs exist. Page 7 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 8 of 28 Page ID #:9143 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

186 (9th Cir. 1987) (the “liberality” with which Rule 15 is to be applied is “subject to the qualification that amendment of the complaint does not cause the opposing party undue prejudice, is not sought in bad faith, and does not constitute an exercise in futility.”). The most important of the foregoing factors is whether prejudice would result to the nonmoving party if the amendment were permitted. See William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co., 668 F.2d 1014, 1053 (9th Cir. 1981); see also Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (“[I]t is the consideration of prejudice to the opposing party that carries the greatest weight.”). Leave to amend after discovery has been conducted and a summary judgment motion has been filed and briefed can be prejudicial to the non-moving party. Schlacter-Jones v. General Tel., 936 F.2d 435, 443 (9th Cir. 1991), overruled on other grounds, Cramer v. Consol. Freightways, Inc., 255 F.3d 683 (9th Cir.2001); see also Roberts v. Arizona Bd. of Regents, 661 F.2d 796, 798 (9th Cir. 1981) (finding prejudice to defendant when amendment was sought “at the eleventh hour, after discovery was virtually complete and [defendant’s] motion for summary judgment was pending before the court”). However, delay alone is generally insufficient to justify denial of leave to amend. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). Where there is no showing that allowing amendment would prejudice to the non-moving party, there must be a “strong showing” of the remaining Foman factors; if there is not, “there exists a presumption in favor of granting leave to amend.” Id. When considering these issues, inferences are to be drawn in favor of the moving party. See Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999). The non-moving party bears the burden of showing the presence of factors that weigh against granting leave to amend. See DCD Programs, 833 F.2d at 187. B.

Application 1.

Functionality a)

Legal Standards

“[T]rade dress protection may not be claimed for product features that are functional.” TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 30 (2001). The Ninth Circuit has identified four factors as significant in assessing functionality: “(1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantage of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.” Disc Golf, 158 F.3d at 1006. In addition to these four factors, courts inquire “whether protection of the feature as a trademark would impose a significant non-reputation-related competitive disadvantage.” Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1072 (9th Cir. 2006). The Ninth Circuit has applied a two-part test as to functionality. See Millennium Labs., Inc. v. Ameritox, Ltd., 817 F.3d 1123, 1128-29 (9th Cir. 2015) (“[T]he test for functionality proceeds in two steps.”) (quoting Au-Tomotive Gold, 457 F.3d at 1072). At “Step One,” courts apply the Disc Golf factors to determine whether the asserted trade dress is “essential to the use or purpose of the article [or] affects [its] cost or quality.” Id. at 1129; see also TrafFix, 532 U.S. at 32-33. “If the claimed trade dress is determined to be functional under Step One, then ‘the inquiry is over.’” Millennium Labs., 817 F.3d at Page 8 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 9 of 28 Page ID #:9144 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

1129 (quoting Au-Tomotive Gold, 547 F.3d at 1072). If not, the analysis proceeds to “Step Two,” which addresses whether trade dress protection would impose a significant non-reputation-related competitive advantage. Id. “The fact that individual elements of the trade dress may be functional does not necessarily mean that the trade dress as a whole is functional; rather, functional elements that are separately unprotectable can be protected together as part of a trade dress.” Clicks Billiards, 251 F.3d at 1259 (emphasis and internal quotation marks omitted). “[T]he proper inquiry is not whether individual features of a product are functional or nondistinctive but whether the whole collection of features taken together are functional or nondistinctive.” Kendall-Jackson Winery, Ltd. v. E & J Gallo Winery, 150 F.3d 1042, 1050 (9th Cir. 1998). However, functionality may be found where “the whole is nothing other than the assemblage of functional parts” and “there is no evidence that anything about the appearance exists for any nonfunctional purpose.” Secalt S.A. v. Wuxi Shenxi Const. Mach. Co., 668 F.3d 667, 684 (9th Cir. 2012), abrogated on other grounds by SunEarth, Inc. v. Sun Earth Solar Power Co., Ltd., 839 F.3d 1179 (9th Cir. 2016). Functionality is ordinarily deemed a question of fact. See id. at 683; Tie Tech, Inc. v. Kinedyne Corp., 296 F.3d 778, 783 (9th Cir. 2002) (“[F]unctionality is generally viewed as an intensely factual issue.”). b)

Burden of Proof

Section 43 of the Lanham Act provides that “[I]n a civil action for trade dress infringement under this Act for trade dress not registered on the principal register, the person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional.” 15 U.S.C. § 1125(a)(3). Thus, there is a “statutory presumption that features are deemed functional until proved otherwise by the party seeking trade dress protection.” TrafFix, 532 U.S. at 30. However, if a trade dress is registered with the PTO, the burden of proof shifts to the party asserting non-functionality. See Vuitton et Fils S.A. v. J. Young Enters., Inc., 644 F.2d 769, 776 (9th Cir. 1981). As noted, the PTO issued a Notice of Publication on Plaintiff’s trade dress application for Caper, which stated that the “mark of the application identified appears to be entitled to registration.” Ex. 13 to Ciardullo Decl., Dkt. 113-14 at 53-54. However, in response to the Notice of Publication, Officer Star timely filed an opposition to Plaintiff’s application. See SAF ¶ 9. The PTO then stayed proceedings related to Plaintiff’s trade dress registration pending the resolution of this action. Id. Herman Miller argues that “[b]ut for Office Star’s filing of an opposition (which is now stayed pending the outcome of this case), the registration would have issued and Herman Miller would now enjoy the presumption of non-functionality.” Dkt. 131 at 13. However, Herman Miller offers no authority supporting its position that the burden shifts upon a showing that a registration “would have issued.” The statutory presumption of functionality applies to asserted trade dresses that are unregistered. 15 U.S.C. § 1125(a)(3). It is undisputed that Caper’s asserted trade dress is currently unregistered. Accordingly, the presumption of functionality applies, and the burden remains with Herman Miller to establish that the claimed features are non-functional.

Page 9 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 10 of 28 Page ID #:9145 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al. c)

Date

March 4, 2019

Application (1)

Utilitarian Advantage (a)

Features of the Caper Chair (i)

Evidence Submitted by the Parties

Office Star argues that the following seven features of the Caper chair show that the claimed trade dress is functional because they show a utilitarian advantage: (i) light weight and compact size; (ii) flexible backrest; (iii) stacking capabilities; (iv) modular design; (v) provides aeration; (vi) comfortable and ergonomic for long-term use; and (vii) fits a broad range of male and female body sizes. See Dkt. 106 at 11; SUF ¶ 7. Office Star also contends that the configuration of each component of the Caper’s design—the backrest, the seat, the armrests and the legs—contributes to the overall function and operation of the chair. It argues that this also supports the view that the design is functional. See Dkt. 106 at 13-20. To support this argument, Office Star submitted evidence including Herman Miller documents that were generated during the development of the Caper. For example, the business proposal for Caper identifies as a “key feature[] of the static performer chair” the Caper’s “[w]eight of 8.5 pounds,” which is “virtually half the weight of [the] competitive set, [and which] allows unprecedented ease of movement and superior ergonomic handling.” Dkt. 106 at 11. Similarly, the Winona7 product specification manual describes the weight of the chair as “critical to the success of the program.” Id. These documents also support the existence of certain utilitarian advantages provided by the other features of the Caper, including its backrest, which, as noted, is a primary focus of Herman Miller’s asserted trade dress. SUF ¶¶ 3-4; Weber Decl., Dkt. 131-2 ¶ 5. Thus, the business proposal stated that the development of a “flexible back” was one of “three major challenges” faced by the Caper development team. Dkt. 106 at 12. The Winona manual referred to the “back shell” of the Caper as Ex. C to Dillard Decl., Dkt. 110 at 10 (under seal). The surface is perforated “to promote surface breathability and stabilize surface temperature.” Dkt. 106 at 13. The Manual concludes that the “total sum of these characteristics provide a high degree of comfort, for prolonged sitting.” Id. Other evidence proffered by Office Star in support of its position as to the functionality of the asserted trade dress includes the testimony of Douglas Van de Riet, who worked for Herman Miller as an engineer. Van de Riet testified that the features of the Caper on which Office Star relies to establish functionality were incorporated into the chair’s design on the basis of functional objectives. See Ex. F to Dillard Decl., Dkt. 102-1 at 12-22 (Van de Riet Depo Tr.) at 47:21-48:7 (“[T]he designer was asking the back to be able to flex given somebody torsionally moving in the chair as opposed to being rigid.”). Lance Rake, whom Officer Star designated as an expert witness as to the issue of functionality, reviewed the pleadings and relevant evidence, and examined a physical sample of a Caper chair, and submitted an expert report. See Declaration of Lance Rake (“Rake Decl.”), Dkt. 102 ¶ 1; Rake Report, Dkt. 102-1. He provided the following opinion as to the functionality of the Caper chair: 7

“Winona” was used by Herman Miller as a project name for the Caper during its development. See SUF ¶ 10. Page 10 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 11 of 28 Page ID #:9146 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

It is my opinion that there is nothing arbitrary, random, or strictly ornamental about the design of the Caper chair . . . . To understand the overall functionality of the Caper chair is understand how the overall design is actually multifunctional. There are other chairs that are stacking. There are other chairs that are lightweight. There are other chairs that are ergonomic. There are other chairs that are comfortable. The Caper chair is a comfortable, lightweight, stacking, and ergonomic chair. The overall appearance and the constituent components of the Caper chair are dictated by the functions and the purposes for the chair. Id. ¶ 23 (emphasis in original). Rake also opines that the Caper chair was developed in accordance with the Business + Institutional Furniture Manufacturers Association (“BIFMA”) Ergonomics Guideline, which provides recommendations for furniture manufacturers that make office chairs. See id. ¶¶ 46-50. He further opines that, based on a review of Herman Miller’s internal documents about the development of Caper, the chair embodies the seven “key functional objectives” discussed above. Id. ¶ 55. For example, Rake states that the Caper’s light weight “facilitates easy movement and stacking,” and that the backrest was designed to be “flexible to move as a user twists and bends in the seat. Id. ¶¶ 56, 62. Rake further opines that there are no ornamental or aesthetic reasons to have included in the Caper’s design its light weight, flexible backrest, modularity or capacity to be stacked. See id. ¶¶ 56, 62, 67, 72. Herman Miller argues that the features of the Caper chair identified by Office Star as functional—its lightweight, aerating, and ergonomic nature—are not driven by the chair’s stylized silhouette. For this reason, it contends that these features are not functional as a matter of law. See Dkt. 131 at 13. Thus, it contends that Office Star improperly separated from the overall aesthetic design of the Caper chair individual elements of the chair, without establishing that the manner in which those elements were assembled to form the overall shape of the chair was not based on an aesthetic or ornamental objective. Id. at 15. Herman Miller submitted evidence in support of its position that the asserted trade dress is nonfunctional. This includes the testimony of Jeff Weber (“Weber”), one of the original designers of the Caper, and Robert Anders (“Anders”), who has been designated as an expert as to the issue of functionality. See Weber Decl., Dkt. 131-2; Anders Report, Dkt. 113-46; Rebuttal Report of Robert Anders (“Anders Rebuttal Report”), Dkt. 113-47. Anders defined the following elements of the Caper’s design, as relevant to the asserted trade dress: (i) “the dominant design element of the distinctive and ornamental bowler-hat-like backrest, coupled with”; (ii) “the sub dominant element of the distinctive and ornamental design of the seat pan”; (iii) “the subordinate design element of the perforation pattern on the backrest;” and (iv) “the subordinate design element of the crescent-shaped opening at the top of the backrest.” See Anders Report ¶ 53. Anders also opines that the “bowler hat” shape of the backrest “serves no functional purpose and is an aesthetic design. The basic functional requirements of a backrest of a chair of this kind are to have a certain minimum surface area to support the user’s back, and perhaps a contour to the vertical axis running down the center to accommodate the user’s back. Within those parameters, an infinite variety of shapes could be used . . . . Thus, there is no functional constraint to the shape of the backrest . . . .” Page 11 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 12 of 28 Page ID #:9147 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Date

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

March 4, 2019

Id. ¶ 67. Anders’s opinion is based on his examination of different styles of Caper chair and a comparison of them to the designs of other stacking chairs. See id. ¶¶ 56-57, 64. Anders’s opinion is supported by Weber, who states that his intention in designing the Caper was to create a stacking chair that would have a look that is distinct from other stacking chairs. See Weber Decl. ¶ 7. Thus, he declares that he designed the backrest—including the flared portions at its base, where it meets the arms and legs of the chair, as well as the rounded contours at the top and bottom— based on that aesthetic objective. Id. After Weber created the original design, Herman Miller engineers, including Van de Riet, became involved in the Caper’s development to increase the functionality of Weber’s aesthetic design. Id. Weber states that the flexibility and added ergonomic support of the backrest was not determined by its shape, but by the use of plastics of varying thickness, and that the effect was not dictated by the shape of the backrest. Id. ¶ 8. Weber also declares that the holes that appear on the backrest of the Caper were designed for aesthetic continuity, and that they were not necessary to achieve the weight reduction and aeration benefits on which Office Star relies. Id. ¶¶ 9, 12. (ii)

Analysis

The evidence shows that there is a genuine issue of triable fact as to whether the overall combination of elements included in the asserted Caper trade dress provide a utilitarian advantage or are purely aesthetic in nature. To support its position, Office Star primarily argues that certain elements of the Caper design—that it is lightweight and compact, stackable, modular, ergonomic, and fits a broad range of body types—are functional. See Dkt. 106 at 11-13. However, a finding of functionality is not compelled “even if a comparison of results is functional.” Millennium Labs., 817 F.3d at 1130. Instead, an evaluation of functionality must focus on the overall effect of the combination of elements included in the asserted trade dress, not on whether any of those individual elements by itself provides a utilitarian benefit. See Clicks Billiards, 251 F.3d at 1259 (“[I]n evaluating functionality as well as the other elements of a trade dress claim, it is crucial that we focus not on the individual elements, but rather on the overall visual impression that the combination and arrangement of those elements create.”); Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., 826 F.2d 837, 842 (9th Cir. 1987) (“functional elements that are separately unprotectable can be protected together as part of a trade dress.”). At the hearing, Office Star argued that Clicks Billiards and Fuddruckers are distinguishable because functionality in the context of a restaurant’s trade dress should be analyzed differently from trade dress in the configuration of a consumer product. The Ninth Circuit has held that for “an overall product configuration to be recognized as a trademark, the entire design must be nonfunctional.” Leatherman Tool Grp., Inc. v. Cooper Indus., Inc., 199 F.3d 1009, 1011 (9th Cir. 1999); Apple, Inc. v. Samsung Elecs. Co., Ltd., 786 F.3d 983, 991 (Fed. Cir. 2015), rev’d on other grounds, 137 S. Ct. 429 (2016) (the use of trade dress “in the protection of ‘physical details and design of a product’ must be limited to those that are ‘nonfunctional.’”) (quoting Leatherman, 199 F.3d at 1011-12). Office Star relies on Apple and Leatherman to argue that any functional element of a product’s design must be disregarded for purposes of assessing the design’s functionality. This position is not supported by Fuddruckers, which explained that functional elements “that are separately unprotectable can be Page 12 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 13 of 28 Page ID #:9148 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

protected together as part of a trade dress.” 826 F.2d at 842. This is justified, as Leatherman notes, because “it is, and should be, more difficult to claim product configuration trade dress than other forms of trade dress.” Leatherman, 199 F.3d at 1013 (citing Landscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373, 379 (2d Cir. 1997) (“[T]his circuit appears to be moving toward a rule that packaging is usually indicative of a product’s source, while the design or configuration of the product is usually not so.”)). In decisions following Leatherman and Apple, the Ninth Circuit has clarified that “this divergence between physical and aesthetic products is not necessary,” and that the two-step test for functionality encompasses both categories of trade dress claim. See Millennium Labs., 817 F.3d at 1128-29; see also Au-Tomotive Gold, 457 F.3d at 1072. Thus, Millennium Laboratories calls for assessing the functionality of an asserted trade dress under the same approach, notwithstanding whether the claim is based on aesthetic functionality or product design. In that case, the plaintiff provided medical testing services. It alleged trade dress protection in the design and formatting of the graphic reports it provided to its clients. See Millennium Labs., 817 F.3d at 1125-26. The district court granted summary judgment for defendant, and the Ninth Circuit reversed. It concluded that genuine issues of triable fact were presented as to whether the plaintiff’s asserted trade dress in its reporting layout provided any utilitarian advantage: “A jury could conclude that, although placing the graphs on the same page serves the function of allowing easy and facile review of the medical results, the alleged trade dress—the side-byside placement of the graphs and other features, such as minimal text—is merely aesthetic, not functional.” Id. at 1130. The interpretation of the rule presented by Office Star—that all elements of a design must be disregarded if they serve any function—is inconsistent with this analysis in Millennium Laboratories. This determination is also consistent with the Supreme Court’s instruction that trade dress cannot attach to a design that is “necessary to the operation of the device.” TrafFix, 532 U.S. at 30. In TrafFix, the dual-spring design of traffic signs served “the important purpose of keeping the sign upright even in heavy wind conditions.” Id. There is a distinction between whether individual elements of a design serve a function—which is not fatal to a trade dress claim-- and whether the design as a whole is functional, which generally is. Because the plaintiff in Millennium Laboratories did not assert a trade dress “on graphed results generally, but on the specific layout it chose,” and because evidence was submitted supporting the aesthetic nature of that choice, there were triable issues of fact. Millennium Labs., 817 F.3d at 1129-30. The outcome is the same here. Herman Miller seeks to protect a claimed trade dress not in stacking chairs generally, or as to chairs with distinctive backrests, but rather as to the particular arrangement and design of those elements. Moreover, the evidence it submitted supports the conclusion that the design of the Caper was intended to distinguish the product from other stackable chairs. See id. at 1130 (“Millennium used its marketing department and graphic designers to create a presentable product, and to distinguish Millennium from its competitors.”). Office Star presented evidence supporting the functionality of the asserted trade dress. That evidence identified certain features of the Caper’s design that suggested the chair was “in its particular shape because it works better in this shape.” Secalt, 668 F.3d at 684 (emphasis in original) (quoting Leatherman, 199 F.3d at 1013). For example, there is evidence that Herman Miller considered the creation of a “flexible back” to be one of the “major challenges” faced in developing the Caper. Dkt. 106 Page 13 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 14 of 28 Page ID #:9149 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Date

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

March 4, 2019

at 12. Additionally, internal documents refer to the Caper’s backrest as Ex. C to Dillard Decl., Dkt. 110 at 10 (under seal). The surface is perforated to promote surface breathability and stabilize the surface temperature, and the “total sum of these characteristics provide[s] a high degree of comfort, for prolonged sitting.” Dkt. 106 at 13. In light of Herman Miller’s position that the Caper’s distinctive backrest is likely the most critical aspect of its asserted trade dress, this evidence supports an inference that the trade dress is functional. However, Herman Miller presented competing evidence that supported a different conclusion. This included that the Caper’s backrest and other features were designed to achieve aesthetic, ornamental objectives, that were intended to distinguish Caper from other stacking chairs, and that any functional benefits were added to that aesthetic design. As noted, functionality is an “intensely factual issue.” Tie Tech, 296 F.3d at 783. For the foregoing reasons, there are triable issues of fact as to whether the Caper’s holistic design yields utilitarian benefits.8 (b)

Relevant Patents

Office Star also contends that certain features of the asserted trade dress are covered by Herman Miller’s utility patent for the Caper chair. See Dkt. 106 at 20; ’546 Patent, Dkt. 101-2 at 6-51. The ’546 Patent claims a “modular arm rest system for a chair.” , Dkt. 101-2 at 6. The patent claims that such a system: is desirable to allow chairs to be provided with or without arm rests. Desirably, this system would include a reclining chair and a four-legged stacker chair. A modular arm rest system such as this could increase the number of chair configurations possible and could minimize costs by using common components or components with similar functions. Id. at 39. Office Star also contends that various claims in the ’546 Patent are directed at the modular configuration of the Caper chair. It relies on testimony from Anders, who has been designated by Herman Miller as an expert as to functionality expert, and Rake, whom Office Star has designated as an expert in this area. See Anders Depo. Tr., Ex. O to Dillard Decl., Dkt. 101-2 at 82:7-10, 85:22-87-20 (admitting that certain elements of the Caper design are covered by Claims 1, 7, and 14 of the ’546 Patent); Rake Report, Dkt. 102-1 ¶¶ 160-63 (opining that Caper’s modularity, particularly with respect to its armrest system, is covered by Claims 1, 14, and 15 of the ’546 Patent). Rake also states that some of the diagrams included in the ’546 Patent are representations of the Caper design. Id. ¶ 159; see also ’546 Patent, Dkt. 102-2 at 7, 21, 23, 27 (Figures 1, 22, 25 and 32 of the ’546 Patent). Based on this evidence, Office Star argues that the patent supports its position that the asserted trade dress is 8

Even if Office Star had established conclusively that the Caper design offers utilitarian benefits, that is only one of the four factors considered under Disc Golf. “No one factor is dispositive; all should be weighed collectively.” Disc Golf, 158 F.3d at 1006; see also Millennium Labs., 817 F.3d at 1129 (“The Supreme Court did not discredit the Disc Golf four-factor test [in TrafFix] and we have held already that the test still applies after TrafFix was decided . . . .”) (citing Au-Tomotive Gold, 457 F.3d at 1072). Page 14 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 15 of 28 Page ID #:9150 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

functional. Herman Miller argues that the ‘546 Patent has “nothing to do with the shape of the Caper trade dress, and instead concern[s] the arm attachment mechanism and fabric mounting system.” Dkt. 131 at 16; see also SAF ¶ 8. Thus, Anders opines that the ’546 Patent covers only a system that allows an armrest to be inserted into the top of the back legs of a chair, which is consistent with his opinion that the lateral extensions connecting the Caper backrest to the top of the back legs are non-functional. See Anders Rebuttal Report, Dkt. 113-47 ¶¶ 50-52. “The advantage claimed and described in the Utility Patents[9] of having the tops of the back legs exposed to insert armrests could have been just as easily achieved without any lateral extensions, i.e., with the opening for the armrest directly attached to the side of the backrest . . . .” Id. ¶ 52. Herman Miller also identified several design patents it obtained for the Caper, which claim the “ornamental design for a chair.” See Ex. 12 to Ciardullo Decl., Dkt. 113-12. Exhibit 12 of the Ciardullo Declaration contains copies of the following U.S. Design Patents: (i) D449,172; (ii) D449,938; (iii) D455,571; (iv) D456,160; (v) D456,164; (vi) D460,870. See generally id. Herman Miller argues that the design patents collectively support its position that the asserted trade dress in the Caper chair is nonfunctional. See Dkt. 131 at 16. The existence of a utility patent “has vital significance” and where such a patent “claimed the features in question, one who seeks to establish trade dress protection must carry [a] heavy burden” to demonstrate non-functionality. TrafFix, 532 U.S. at 29-30. Design patents, on the other hand, provide some evidence of non-functionality, but are not alone sufficient to establish the protectability of an asserted trade dress. See Secalt, 668 F.3d at 685 (citing McCarthy on Trademarks and Unfair Competition § 7.93 (4th ed. 2010) (“While a design patent is some evidence of nonfunctionality, alone it is not sufficient without other evidence.”). Viewing collectively the ’546 Patent and the six design patents identified by Herman Miller does not change the determination that there are genuine issues of triable fact as to whether the asserted trade dress seeks to protect elements of the Caper chair that are strictly aesthetic. The ‘546 Patent supports Office Star’s argument of functionality with respect to Caper’s modular arm rest system, but the asserted trade dress is not limited to that feature. TrafFix emphasized the evidentiary weight of utility patents with respect to functionality, because the utility patents there claimed the same feature—the dual-spring design incorporated into traffic signs—that the plaintiff had asserted as its trade dress. See TrafFix, 532 U.S. at 30 (“[T]he central advance claimed in the expired utility patents . . . is the dualspring design; and the dual-spring design is the essential feature of the trade dress MDI now seeks to establish and to protect.”). The identity of claims between the utility patents and the asserted trade dress does not warrant summary judgment on the basis of the ’546 Patent. Furthermore, the existence of the design patents relating to the Caper chair, although not independently sufficient to prove non-functionality, see Secalt, 668 F.3d at 685, provide evidentiary support for Herman Miller’s contention that the claimed trade dress is non-functional. That the design 9

Anders also offered an opinion about a different utility patent relating to the Caper chair, U.S. Patent No. 6,995,402 (the “’402 Patent”). Because Office Star does not rely on the ’402 Patent in support of the MSJ, it is not addressed in this Order. Page 15 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 16 of 28 Page ID #:9151 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

patents weigh against the presumption supported by the ’546 patent confirms the presence of a triable issue of fact on this issue. See, e.g., Fuji Kogyo Co., Ltd. v. Pac. Bay Intern., Inc., 461 F.3d 675, 684 (6th Cir. 2006) (“[W]hile the product described in the [] design patent is almost identical to that in the [] utility patent, the utility patent presents a presumption of functionality and the design patent presents a presumption of nonfunctionality. Clearly, the variety of intellectual property in this case demonstrates that the issue cannot be decided through evidentiary presumptions. This type of contradiction cannot be resolved without a trial.”). For the foregoing reasons, this Disc Golf factor weighs against granting the MSJ. (2)

Availability of Alternative Designs

Herman Miller submitted evidence supporting the claim that there are alternative designs that will provide the same functionality as the Caper chair, without the distinctive features of the asserted trade dress. This included submissions by Anders, Herman Miller’s expert on functionality, as to examples of “other chair designs that stack,” and the corresponding opinion that “there are a virtually limitless number of chair designs available, all of which have a similar function as the Caper[] chair designs . . . but none of which have its particular design aesthetics.” See Anders Report, Dkt. 113-46 ¶¶ 64-65.10 Weber also described Herman Miller’s having “purposefully . . . made the [Caper] chair harder and more expensive to manufacture for the sake of style.” Weber Decl., Dkt. 131-2 ¶ 22. Office Star argues that Herman Miller’s reliance on these alternative designs is inappropriate because “the existence of alternative designs cannot negate a trademark’s functionality.” See Dkt. 126 at 7-8 (citing Talking Rain Beverage Co. v. South Beach Beverage Co., 349 F.3d 601, 603 (9th Cir. 2003)). This argument is not persuasive. As noted above, a product feature is functional if “it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” TrafFix, 532 U.S. at 32 (quoting Qualitex Co. v. Jacobson Prods Co., Inc., 514 U.S. 159, 165 (1995)). Where such a functionality determination has been made, consideration of other design possibilities is unnecessary. See id. at 33-34. Thus, in TrafFix, after determining that the “dual-spring design” for a mechanism intended to keep road signs upright was functional, the Supreme Court held that “the functionality of the spring design means that competitors need not explore whether other spring juxtapositions might be used.” Id. In Talking Rain, the Ninth Circuit applied the approach adopted by TrafFix to an asserted trade dress in the design of a water bottle. It was first determined that the water bottle was functional because its advertising touted the bottle’s utilitarian features. It was next observed that manufacturing considerations explained why the bottle had its particular form. It was then explained that the bottle’s design conveyed a utilitarian advantage because it fit easily into a bottle holder on a bicycle and provided an easy-to-grasp grip. See Talking Rain, 349 F.3d at 603-04. After concluding that these Disc Golf factors weighed in favor of a finding that features of the water bottle over which trade dress 10

Table 3 of the Anders Report provides images of 33 “chair designs that stack.” Those images are incorporated by this reference. Anders states that none of the stacking chairs in Table 3 “have the ability to have arms added to an armless chair,” as the Caper chair does. Id. ¶ 72. He therefore provides, in Table 4, images of 15 “stacking chair designs capable of having arms added,” see id., which he opines represent the possibility of designing a stacking chair “without arms that may have arms attached subsequently.” Id. ¶ 73. Page 16 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 17 of 28 Page ID #:9152 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

protection was sought were functional, Talking Rain determined that “the existence of alternative designs does not diminish these indicia of functionality.” Id. at 605. Neither TrafFix nor Talking Rain supports Office Star’s position that the existence of alternative designs is no longer relevant to the functionality analysis. Rather, these cases hold that evidence of such alternative designs, on its own, cannot overcome a finding of functionality through the application of the other Disc Golf factors. See TrafFix, 532 U.S. at 34 (“Because the dual-spring design is functional, it is unnecessary for competitors to explore [alternative] designs . . .”) (emphasis added); Talking Rain, 349 F.3d at 603 (“once functionality is established, “[t]here is no need . . . to engage . . . in speculation about other design possibilities . . . .”) (emphasis added) (quoting TrafFix, 532 U.S. at 33). This is consistent with Disc Golf, which held that the “availability of alternative designs by itself is insufficient to prove nonfunctionality; there must be a sufficient number of alternative designs such that providing trademark protection to one design would not hinder competition.” 158 F.3d at 1008 (emphasis added); see also Talking Rain, 349 F.3d at 603 (applying Disc Golf factors). The Ninth Circuit has confirmed that “[o]ur case law shows that we continue to consider the existence or nonexistence of alternative designs as probative evidence of functionality or nonfunctionality.” Moldex-Metric, Inc. v. McKeon Prods., Inc., 891 F.3d 878, 886 (9th Cir. 2018). The existence of alternative designs is still a relevant Disc Golf factor unless functionality has otherwise been determined pursuant to the remaining three factors. Talking Rain, 349 F.3d at 605. Because there are triable issues of fact as to functionality under the other Disc Golf factors, the evidence submitted by Herman Miller with respect to this Disc Golf factor is relevant to the functionality analysis. That evidence is sufficient to raise triable issues of fact as to the availability of alternative methods of manufacture that are “more than merely theoretical or speculative.” Disc Golf, 158 F.3d at 1008. Thus, Anders analyzed chair designs on the market, and concluded that they provided the same functional benefits of the Caper without the aesthetic features over which Herman Miller claims trade dress. Therefore, there is a triable issue of fact as to whether “commercially feasible alternative configurations exist.” Id. (emphasis in original) (quoting Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1531 (9th Cir. 1992)). For the foregoing reasons, this factor weighs against granting the MSJ. (3)

Whether Advertising Touts Utilitarian Advantage

“If a seller advertises the utilitarian advantages of a particular feature, this constitutes strong evidence of functionality.” Disc Golf, 158 F.3d at 1009. Office Star submitted evidence in support of its position that Herman Miller promoted the ergonomic functionality and improved comfort of the Caper chair in advertising materials and on its website. For example, Office Star relies on the following excerpt from a Herman Miller brochure about the Caper: The contoured, molded polypropylene seat and back evenly distribute weight and minimize pressure points. The perforated seat and back let air pass through, relieving heat build-up for comfort even during long periods of sitting. The FLEXNET seat option consists of a strong, mesh-like material for comfort and breathability. The waterfall seat edge helps maintain proper leg circulation. Strong yet flexible arms support the upper body. The multipurpose chair features simple-to-use pneumatic seat height and tilttension adjustments. Page 17 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 18 of 28 Page ID #:9153 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

Ex. J to Dillard Decl., Dkt. 101-1 at 38. Herman Miller responds that such marketing materials “focus on generalized aspects” of the Caper “like its light weight and breathability” and not the shape of its asserted trade dress. See Dkt. 131 at 16. It submitted other advertising materials for the Caper which it contends highlight the shape and contours of the chair. See Ex. B to Blum Decl., Dkt. 113-39. These materials refer to some of the Caper’s functional benefits, see, e.g. id. at 10 (“Go ahead and call Caper ‘lightweight.’ At just 8.5 pounds, stackable Caper chairs certainly fit that description.”), although they also highlight aesthetic features. Most of the images of the chair are accompanied by only a few words, and several of them emphasize the visual appearance of the silhouette of its distinctively shaped and textured backrest. See id. at 3-9. The advertising evidence submitted by Office Star weighs against a finding of non-functionality. The, advertisements tout the utilitarian advantages offered by the Caper. This includes reference to the Caper’s backrest, on which Herman Miller primarily relies to establish Caper’s trade dress. However, this evidence would not preclude a reasonable jury from finding that the distinctive shape and silhouette of the backrest, as emphasized by the marketing materials submitted by Herman Miller, is distinct from the utilitarian advantages provided by its perforation. Accordingly, a triable issue remains. See, e.g., Toyo Tire & Rubber Co., Ltd. v. CIA Wheel Grp., 2016 WL 4992111, at *7 (C.D. Cal. Sept. 15, 2016) (denying motion for summary judgment despite determination that advertising touted utilitarian elements of the tire treads at issue, because a reasonable jury could find that the utilitarian benefits that were touted related to elements of the tire not included in the asserted trade dress). (4) Whether Design Results from Comparatively Simple or Inexpensive Method of Manufacture Under the fourth Disc Golf factor, a finding that a design “achieves economies in manufacture or use” supports a finding of functionality. See Disc Golf, 158 F.3d at 1009. Office Star argues that the modularity of the Caper design, i.e., that the same backrest and seat designs would be used for each style of the Caper, reduces manufacturing costs. See Rake Report ¶ 168 (“The design of using the same backrest and seat designs . . . simplifies manufacturing costs . . . [and] reduces inventory demands, which further saves on costs.”) Weber, the Caper’s original designer, also testified that the armrests of the Caper were designed to create a system that could be easily and more efficiently manufactured. See Weber Depo Tr., Ex. I to Dillard Decl., Dkt. 102-1 at 37:1-7 and 38:1-12. Herman Miller submitted statements by Weber and Anders that support the conclusion that Caper’s design was more expensive and complex than other comparable stacking chair designs. See Weber Decl. ¶ 14; Anders Report ¶ 71 (“Such cheaper designs might include larger holes in the backrest or using slats rather than a solid backrest.”). Anders challenged Rake’s expert testimony as to this factor, because it relied on components of the Caper chair that were not copied by the allegedly infringing chair. Therefore, Herman Miller contends they are irrelevant to the analysis of manufacturing costs. See Anders Rebuttal Report ¶ 63 (“In Paragraph 169, Mr. Rake discusses the manufacturing advantages of Caper’s armrest and cap interface. However, I am informed that Defendants have not copied this feature, so it is irrelevant to the present assessment of manufacturing costs.”). The parties submitted limited evidence with respect to this factor. What has been presented through the Page 18 of 28

Case 2:17-cv-04279-JAK-SP Document 198 Filed 03/04/19 Page 19 of 28 Page ID #:9154 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES – GENERAL Case No.

LA CV17-04279 JAK (SPx)

Date

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

March 4, 2019

reports shows triable issues of fact. Thus, there is a factual dispute with respect to whether any economies in manufacturing achieved by the modularity of the Caper’s backrest and seat designs are outweighed by the existence of less expensive alternatives. Therefore, this factor weighs against granting the MSJ. *

*

*

A consideration of the evidence as to the four Disc Golf factors shows that triable issues of fact exist as to whether the asserted trade dress in the Caper design is functional. See Clicks Billiards, 251 F.3d at 1267. (5) Whether Trade Dress Protection Would Competitively Disadvantage Defendant Because issues of material fact have been raised as to the Disc Golf factors, it is necessary to proceed to “step two” of the functionality analysis, also known as the “aesthetic functionality” test. See Millennium Labs., 817 F.3d at 1131. To determine whether an asserted trade dress is aesthetically functional, courts looks to whether it “perform[s] some function such that exclusive use of [the asserted trade dress] would put competitors at a significant non-reputation-related disadvantage. Au-Tomotive Gold, 457 F.3d at 1073. The Ninth Circuit has “squarely rejected the notion that ‘any feature of a product which contributes to the consumer appeal and salability of the product is, as a matter of law, a functional element of that product.’” Id. (quoting Vuitton, 644 F.2d at 773). Accordingly, “aesthetic functionality has been limited to product features that serve an aesthetic purpose wholly independent of any source-identifying function.” Id. (citing Qualitex, 514 U.S. at 166) (coloring dry cleaning pads served nontrademark purpose by avoiding visible stains)). The aesthetic functionality test is traditionally applied in connection with trade dress claims involving aesthetic designs or layouts as opposed to physical devices. See Millennium Labs., 817 F.3d at 1128; Clicks Billiards, 251 F.3d at 1260. However, as noted above, Au-Tomotive Gold concluded that the “test for functionality proceeds in two steps,” and that aesthetic functionality is to be considered together with the Disc Golf factors. 457 F.3d at 1072; see also Millennium Labs., 817 F.3d at 1128 (“we have clarified that this divergence between physical and aesthetic products is not necessary.”). Accordingly, Office Star’s argument that competitive necessity is not relevant to the functionality analysis, see Dkt. 126 at 7, is not persuasive. Neither party submitted substantial evidence as to whether the asserted trade dress in the Caper design is necessary to the manufacture of stackable office chairs. Thus, there is little evidence as to whether exclusive use would put Office Star and other competitors at a significant non-reputation disadvantage. Au-Tomotive Gold, 457 F.3d at 1073. Some of the evidence submitted by Herman Miller, i.e., the existence of many other types of stacking chairs without the Caper’s distinctive backrest (see Anders Report ¶¶ 64-65, 74), weighs against this conclusion. For these reasons, the aesthetic functionality test does not establish a basis to grant the MSJ. *

*

*

For the foregoing reasons, there are triable issues of fact as to whether the asserted trade dress in the Page 19 of 28

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Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

Caper design is functional. Accordingly, the MSJ is DENIED as to this issue. 2.

Secondary Meaning a)

Legal Standards

In order to prevail on its trade dress claim, Plaintiff also must establish that the Caper chair has attained secondary meaning. See Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 214 (2000). “The trade dress of a product [] attains secondary meaning when the purchasing public associates the dress with a particular source.” Clicks Billiards, 251 F.3d at 1262 (quoting Fuddruckers, 826 F.2d at 843). Secondary meaning can be established “in many ways, including (but not limited to) direct consumer testimony; survey evidence; exclusivity, manner, and length of use of a mark; amount and manner of advertising; amount of sales and number of customers; established place in the market; and proof of intentional copying by the defendant.” Art Attacks, 581 F.3d at 1145 (quoting Filipino Yellow Pages, Inc. v. Asian Journal Publ’ns, Inc., 198 F.3d 1143, 1151 (9th Cir. 1999)). Like functionality, the secondary meaning element of a trade dress claim is also an issue of fact. First Brands Corp. v. Fred Meyer, Inc., 809 F.2d 1378, 1383 (9th Cir. 1987). b)

Application

Herman Miller presented evidence in support of its position that the Caper chair attained secondary meaning prior to 2006, which is the first time Office Star is alleged to have introduced an infringing product. Between 2000 and 2006, Herman Miller sold chairs, grossing Heinemann Report at 47. Herman Miller also submitted evidence indicating that between had been spent by Herman Miller on marketing related to the Caper. See Declaration of Patrick Hogan (“Hogan Decl.”), Dkt. 113-48 ¶ 3; Ex. B to Hogan Decl., Dkt. 130-11 (under seal).11 To support its position that the Caper had substantial visibility within the market, Herman Miller submitted several articles and other coverage about the Caper starting from the time it was launched. See Ex. A to Blum Decl., Dkt. 113-38. The articles include discussion of both Caper’s functional features and its aesthetic distinctiveness. Compare id. at 3 (“As important as cost is [Caper’s] ability to support flexible, multifunctional work environments. Caper can be transported easily . . . thanks to its lithe form, which according to Herman Miller, is half the weight of comparable chairs . . . in addition to several other ergonomic features, seats and backs are perforated with holes allowing aeration and the maintenance of constant skin temperature.”) with id. at 14 (“The chair’s distinctive yet clean and simple appearance adds to its universality, making it a truly global seating solution.”). Blum explains this approach by stating that “[w]hile we do want to inform out customers about the engineering benefits of the chair with respect to its light weigh, breathability, and comfort, we try to emphasize the stylish look 11

This evidence has been authenticated by Patrick Hogan, the Director of Global Financial Business Systems for Herman Miller. See Hogan Decl., Dkt. 113-48 ¶ 1. Hogan prepared charts of financial information which he attaches to his declaration, and he declares that their underlying data was obtained from Herman Miller’s financial records. Id. ¶¶ 2-3. However, because the underlying data was not submitted, certain objections to this evidence were sustained, and those portions of Hogan’s evidence are not considered in this Order. See Dkt. 185. Page 20 of 28

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Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

of the chair with copious and prominent photography showing the chairs from multiple angles and in multiple settings.” Blum Decl. ¶ 8. This claim is supported by advertisements and marketing brochures for the Caper. See Ex. B to Blum Decl., Dkt. 113-39. For example, one of the brochures contains the phrase “caper comes in / easily / lightly / quickly / with a little drama / with a lot of spirit / always ready for work,” which each separated word or phrase superimposed on a different image of the chair. Id. at 3-9. These images depict the Caper in different settings, and highlight the silhouette of the chair’s backrest:

Id. at 5. Caper has also received several industry awards, including the Gold Award in Seating Category (1999) and the Bronze Award (2000) from the Best of NeoCon; the Bronze Award in “Seating, Desk/Workstation Chairs,” from the IIDEX/NeoCon Canada (2000); silver award from the MBDC Cradle to Cradle (2006). See Blum Decl. ¶ 5. Blum declares that Caper has also been featured in the television shows “House of Cards,” “Shameless,” and “Billions,” and was featured in a Coca Cola commercial. Id. Blum also declares that Herman Miller’s website has been operating since Caper’s launch, and that it regularly features the Caper chair. Id. ¶ 6. It also appears on the websites of certain of Herman-Miller’s retail partners and distributors. See id. Herman Miller also presented evidence that the Google searches for “stacking chair” yields Herman Miller, and specifically the Caper chair, among the “highest” results. See Declaration of Richard Gralnik (“Gralnik Decl.”), Dkt. 113-51 ¶¶ 9-14; Exs. C-E to Gralnik Page 21 of 28

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LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

Decl., Dkts. 113-54, 113-55, 113-56.12 Herman Miller also presented evidence supporting its position that Office Star intended to copy the Caper design. Thus, in 2008, an email was sent by Don Smith to Richard and Joshua Blumenthal, who are principals of Office Star. It stated, “We’re getting requests for a chair that King Hong can probably make. The Herman Miller Caper Chair . . . It could be made with a plastic seat, with Holes, like the existing 2894 from King Hong.” Ex. 157 to Ciardullo Decl., Dkt. 113-15 at 2.13 This evidence supports a showing that there are triable issues of fact as to whether the Caper design attained secondary meaning. Thus, it reflects extensive investment in marketing the chair, high sales figures, significant visibility within the market for office chairs, and circumstantial evidence that Office Star intended to reproduce the Caper design. All of these are relevant factors in an analysis as to whether secondary meaning has been achieved. See Art Attacks, 581 F.3d at 1145; Adidas Am, Inc. v. Skechers, Inc., 890 F.3d 747, 754 (9th Cir. 2018). In Adidas, the plaintiff asserted a trade dress in the “Stan Smith,” one of its leading shoe brands as measured by sales and market influence. See Adidas, 890 F.3d at 752. The Ninth Circuit considered evidence relating to whether the Stan Smith brand had attained secondary meaning. The evidence is similar to what Herman Miller has proffered: The evidence showed that [A]didas has used the Stan Smith trade dress exclusively since the early 1970s, expended considerable capital and human resources to promote the shoe, and reaped significant but difficult-to-quantify value from placing the Stan Smith with celebrities, musicians, athletes, and other “influencers” to drive consumer hype and recognition of the trade dress—which, in 2014, became adidas’s top selling shoe of all time with the 40 millionth pair sold. See Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1016 (9th Cir. 1985) (finding evidence of sales, promotional efforts, and duration of exclusive use indicative of secondary meaning). Also indicative of secondary meaning is the considerable amount of unsolicited media coverage praising the Stan Smith’s influence and iconic status as one of the most famous sneakers of all time. See Golden Door, Inc. v. Odisho, 646 F.2d 347, 350-51 (9th Cir. 1980). Id. at 754. Adidas also held that “proof of copying strongly supports an inference of secondary meaning.” 890 F.3d at 755 (quoting Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 615 (9th Cir. 1989)). Whether the evidence, including the 2008 e-mail from Don Smith to Office Star, is 12

Gralnik was retained by Herman Miller as an expert in computer forensics to perform “virgin” searches to establish the market visibility for office chairs of Herman Millerin general as well as the Caper chair. See Dkt. 131 at 8 n.4; see also Gralnik Decl. ¶¶ 3-6, 9. The stated purpose of the searches was to eliminate any influence of prior internet searches on the search results being offered as evidence of Caper’s market visibility. Accordingly, prior to running the searches that form the basis for his opinions, Gralnik deleted the cache, history, and cookies on his web browser “so that Google would not find artifacts of [his] prior activities.” Id. ¶ 10. He also used an internet privacy protection application called Windscribe to alter his IP address in order to prevent Google from associating his searches with previous searches that originated at his office. Id. 13 Don Smith is employed by a third-party distributor of office furniture that did business with Office Star, including through the sale of stacking chairs. See Smith Depo Tr., Ex. 6 to Ciardullo Decl., Dkt. 131-9 at 3:15-18, 8:16-9:2. Page 22 of 28

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LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

sufficient to establish intentional copying, is an issue of fact. Office Star argues that Herman Miller failed to establish a triable issue as to secondary meaning because it did not submit any direct evidence showing that consumers associate the asserted trade dress with Herman Miller. See Dkt. 126 at 11-12. The source identification is the touchstone of secondary meaning analysis, see, e.g., Clicks Billiards, 251 F.3d at 1262, and consumer surveys are relevant to establish such an identification with a particular source. However, Office Star offers no authority supporting its position that such evidence is mandatory in order to show a triable issue of fact. Indeed, there are “many ways” to establish secondary meaning. Art Attacks, 581 F.3d at 1145-46 (“direct survey evidence of purchaser perception is not required” to establish secondary meaning) (citing Clamp Mfg. Co. Inc. v. Enco Mfg. Co. Inc., 870 F.2d 512, 517 (9th Cir. 1989)). Testimony from consumers is one means to seek to establish secondary meaning. Once again, the evidence submitted by Herman Miller relies on other bases, including: the manner, and length of use of a mark; the amount and manner of advertising; the amount of sales and number of customers; and established place in the market. See id. Office Star also challenges Herman Miller’s reliance on Blum’s testimony because he is employed by Herman Miller. See Dkt. 106 at 24-25. The Ninth Circuit has held that little, if any, weight may be afforded to the opinions of those affiliated with or employed by the business that owns the alleged trade dress. See Filipino Yellow Pages, 198 F.3d at 1152 (9th Cir. 1999); see also Art Attacks, 581 F.3d at 1146 (“Testimony from a single source is insufficient to demonstrate secondary meaning.”). Under this standard, limited weight should be given to Blum’s unsupported assertions of fact or opinions. However, other evidence has been presented, including media coverage, advertising, and sales data, all of which is discussed above, and which is sufficient to show a triable issue of fact as to secondary meaning.14 Similarly, Office Star submitted evidence to support its contention that stacking chairs with designs similar to that of the Caper have been sold by third parties for most of the time that the Caper has been on the market. See SUF ¶¶ 133-36. Office Star argues that Herman Miller’s failure to seek to enforce its alleged trade dress rights against these third parties, see id. ¶¶ 139-41, supports its contention that Herman Miller enjoyed exclusive use of the alleged trade dress during the relevant time period. See Dkt. 106 at 25-26. This evidence is insufficient to demonstrate the absence of triable issues of fact as to whether the Caper design attained secondary meaning. 14

Relying on Talking Rain, Office Star argues that Herman Miller’s advertisements are insufficient to establish secondary meaning because they were directed at both functional and nonfunctional aspects of the Caper’s design. See Dkt. 126 at 12-13. This argument is not persuasive. Talking Rain only reaches the functionality element of the trade dress claim. See 349 F.3d at 603 (affirming district court’s determination that the water bottle design was functional and concluding that it was unnecessary to reach the secondary meaning or likelihood of confusion elements). The determination in Talking Rain that courts “are not required to ignore advertising that touts functional features just because those adds may include messages [] aimed at nonfunctional features,” id. at 604, supports the conclusion stated above about the Disc Golf factor relating to advertising. Thus, that factor weighs slightly in favor of functionality, and triable issues have been raised with respect to functionality. This warrants proceeding to the secondary meaning issue that is not addressed by Talking Rain. Page 23 of 28

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LA CV17-04279 JAK (SPx)

Date

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

March 4, 2019

The use of an allegedly protected trade dress by a third party is relevant to whether secondary meaning has been obtained. See, e.g., Art Attacks, 581 F.3d at 1146. This could distinguish this case from Adidas, where the evidence showed that Adidas used the Stan Smith trade dress exclusively for several decades prior to the launch by the defendant of the allegedly infringing shoe. See Adidas, 890 F.3d at 754. However, that other stacking chairs have been sold by third parties is not, by itself, sufficient to show that the third-party chairs infringe the claimed trade dress of Caper, that the sales of such chairs were significant enough to warrant pursuing the manufacturers, . See Blum Decl. ¶ 16 (under seal).15 For these reasons, this evidence is not sufficient to rebut the evidence proffered by Herman Miller in response to its burden to show that there are triable issues of facts. Based on the foregoing discussion, there are triable issues of fact as to whether the Caper chair attained secondary meaning. Therefore, the MSJ is DENIED as to this issue. 3.

Damages

Office Star argues that Herman Miller is not entitled to Office Star’s profits as a proxy for lost sales, because it failed to submit any evidence showing that Herman Miller would have sold more Caper chairs but for Office Star’s alleged infringement. See Dkt. 106 at 29. Herman Miller responds that it has submitted evidence, primarily through Suzanne Heinemann (“Heinemann”), its expert on damages, showing why it is reasonable to apply the proxy theory of damages. See Dkt. 118-1 at 26-29; see also Heinemann Report (under seal). With respect to available damages for violations of its provisions, the Lanham Act provides: When a violation of any right of the registrant of a mark registered in the [PTO], a violation of section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled . . . and subject to the principles of equity to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. 15 U.S.C. § 1117(a). To recover an alleged infringer’s profits in a trademark action, a plaintiff must show that the alleged infringement caused either a rise in defendant’s sales or a decline in plaintiff’s sales. See Fifty Six Hope Road Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1076 (9th Cir. 2015) (“The trademark holder has the burden to prove the defendant infringer’s gross revenue from the infringement.”) (emphasis added). Accordingly, for Herman Miller to obtain the remedy of a disgorgement of Office Star’s profits, it must establish that, but for Office Star’s sales of allegedly infringing products, Herman Miller would have sold more Caper chairs. There are triable issues as to whether this causal nexus has been established. Heinemann reviewed sales data from Herman Miller and Office Star. Based on that review, she opines, 15

Blum declares that Id. (under seal). Page 24 of 28

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LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

that:

See Heinemann Report ¶ 2 (summary of damages opinion) (under seal). For the foregoing reasons, Herman Miller has presented evidence sufficient to meet its burden to show triable issues of fact as to the availability of monetary damages. Accordingly, the MSJ is DENIED as to this issue. 4.

Statute of Limitations and Laches

Office Star contends that the Lanham Act claim is either barred or restricted by the statute of limitations. See Dkt. 106 at 30-31. Herman Miller responds that there is neither a statutory time bar to its claims or one that arises under the analogous doctrine of laches. See Dkt. 118-1 at 30-31. Because the statute of limitations and laches are affirmative defenses, Office Star bears the burden of proof to establish that the claims are untimely. See, e.g., Payan v. Aramark Mgmt. Servs. Ltd. P’Ship, 495 F.3d 1119, 1122 (9th Cir. 2007) (“[B]ecause the statute of limitations is an affirmative defense, the defendant bears the burden of proving that the plaintiff filed beyond the limitations period.”); Couveau v. Am. Airlines, Inc., 218 F.3d 1078, 1083 (9th Cir. 2000) (“To establish laches a defendant must prove both an unreasonable delay by the plaintiff and prejudice to itself.”). As Office Star concedes, the Lanham Act does not contain an express limitations period. Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 836 (9th Cir. 2002). Jarrow explained that because the Lanham Act provides relief “subject to the principles of equity,” that “Congress might have intended that laches be the sole timeliness bar to suit.” Id. (citing Tandy Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 365 (6th Cir. 1985) (“In determining when a plaintiff’s suit should be barred under the Act, courts have consistently used principles of laches as developed by courts of equity.”). Jarrow concluded that if a Lanham Act claim is filed within the period provided by the most analogous state statute of limitations, “the strong presumption is that laches is inapplicable; if the claim is filed after the analogous limitations period has expired, the presumption is that laches is a bar to suit.” Id. at 837. Jarrow next determined that the most analogous state statute of limitations in California is the threeyear period that applies to fraud claims. See Cal. Cod Civ. Proc. § 338(d); Jarrow, 304 F.3d at 838; Karl Storz Endoscopy Am., Inc. v. Surgical Techs., Inc., 285 F.3d 848, 857 (9th Cir. 2002). Relying on Jarrow and Section 338, Office Star contends that Herman Miller knew or should have known that Office Star was selling the allegedly infringing chairs more than three years before it brought this action. Thus, the Complaint was filed on March 21, 2017. Dkt. 1. On December 13, 2013, Herman Miller sent a cease and desist letter to Office Star, accusing its chairs of infringing alleged trade dress rights in Herman Miller designs other than the Caper design. SUF ¶ 168. Office Star contends that this letter, combined with the fact that the accused chairs have been sold since as early as 2006, warrants the application of laches to bar Herman Miller’s claim. See Dkt. 106 at 31. This argument is not persuasive. Jarrow involved claims of false advertising under the Lanham Act. Page 25 of 28

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LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

After Jarrow, cases that have considered the applicability of laches to trademark infringement claims have applied California’s four-year limitations period for trademark infringement. See Pinkette Clothing, Inc. v. Cosmetic Warriors Ltd., 894 F.3d 1015, 1025 (9th Cir. 2018); Internet Specialties West, Inc. v. Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 990 n.2 (9th Cir. 2009). Applying that limitations period here, the Jarrow presumption would weigh against the application of laches. Thus, the cease and desist letter was sent by Herman Miller in December 2013, and the Complaint was filed within four years—on March 21, 2017. Because the most analogous limitations period had not yet expired prior to the filing of the action, “the strong presumption is that laches is inapplicable.” Jarrow, 304 F.3d at 838; Pinkette Clothing, 894 F.3d at 1025. Jarrow only establishes the basis for a presumption of laches based on the statute of limitations. Even if it were undisputed that Herman Miller was aware of the alleged infringement of the Caper trade dress in December 2013, Office Star has not established that there is no triable issue as to whether Herman Miller’s delay in bringing this action was unreasonable or that Office Star suffered any resulting prejudice. See Couveau, 218 F.3d at 1083; Small Axe Enters., Inc. v. Amscan, Inc., 2017 WL 1479236 (S.D. Cal. 2017) (“[W]hile Defendants can show that [Plaintiff’s] delay in filing suit was unreasonable, they have not demonstrated that they would suffer prejudice if the suit were to continue.”)). “Because the application of laches depends on a close evaluation of all the particular facts in a case, it is seldom susceptible of resolution by summary judgment. Couveau, 218 F.3d at 1083 (citing Bratton v. Bethlehem Steel Corp., 649 F.2d 658, 666-67 (9th Cir. 1980)). In light of the preceding discussion, and the application of this standard, the MSJ is DENIED as to the timeliness issue. 5.

Leave to Amend the Pleadings

As presently alleged, Herman Miller’s Claims IV and V for unfair competition under the UCL and common law respectively, are premised on the “same facts that state a cause of action for infringement of the Caper trade dress under the Lanham Act.” See SAC, Dkt. 41 ¶¶ 75, 81. Accordingly, they are derivative of its trade dress claim. Herman Miller seeks to amend the operative complaint to add new allegations supporting a different theory of unfair competition, i.e., “passing-off.” Dkt. 174 at 5. The Scheduling Order set November 17, 2017, as the last day to amend pleadings. That was eleven months prior to when Herman Miller filed the MLA. Dkt. 68. Consequently, under the applicable legal standards, Plaintiff must show good cause that justifies and its untimely request to amend. Fed. R. Civ. P. 16(b)(4). In general, requests to amend made within one to two months after a party claims to have learned new information are deemed timely. For example, Baird v. BlackRock Institutional Trust Co., N.A., 2018 WL 4028224 at *2 (N.D. Cal. 2018), found good cause where the plaintiff sought leave to amend within a month of learning the new information, which was obtained during discovery. Similarly, a two-month time period between learning new information and seeking leave to amend was deemed reasonable in Fru-Con Const. Corp. v. Sacramento Mun. Util. Dist., 2006 WL 3733815, at *4 (E.D. Cal. 2006). However, in that case, the discovery process and shared information was unusually complex, and the motion was made prior to the discovery cut-off. Other decisions have concluded that the time period between discovery of new information and seeking leave to amend precluded the requested relief. The basis for these decisions is the failure of the moving party to show diligence. Birch v. Polaris Industries, Inc., 812 F.3d 1238, 1248-49 (10th Cir. 2015) (affirming denial of leave to amend when a plaintiff Page 26 of 28

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LA CV17-04279 JAK (SPx)

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

Date

March 4, 2019

learned of information during discovery that warranted a request to amend, but did not file the request until four months later). Id. Herman Miller contends that in March and April 2018, it first learned of the new information that forms the basis for the MLA through written discovery and depositions in this action. On April 22, 2018, it informed Office Star that it would propose jury instructions as to the unfair competition claims based on this evidence. Dkt. 174 at 7-8, 10. However, it did not file the MLA until October 16, 2018, almost six months later. Dkt. 174. Herman Miller argues that there was good cause for this delay because it “explicitly announced the factual bases for its unfair competition already pleaded [in April 2018],” and “the only reason the motion is being made now rather than on or before June 4, 2018, is that Office Star declined to respond to Herman Miller’s April 22 letter.” Id. at 12, 15. This explanation is not sufficient. Herman Miller could have filed the MLA once Office Star did not timely respond to its letter by completing the required meet-and-confer process pursuant to L.R. 7-3. Indeed, counsel for the parties met and conferred several times in April and May of 2018. Ex. A to Opp. to MLA, Dkt. 177-1 ¶ 2 . Counsel for Office Star states that during those conferences, it told Herman Miller’s counsel that alternative theories of unfair competition were not alleged by the operative complaint. See id.; see also Dkt. 177 at 16. The July 9, 2018 Reply in support of the MSJ also gave Herman Miller clear notice that Office Star disputed the timeliness of the theory. Dkt. 126 at 14. Yet, Herman Miller wasted another three months before it filed the MLA. This timeline does not reflect sufficient diligence by Herman Miller. Even if Herman Miller could demonstrate some good cause for its delay, the MLA fails for independent reasons under Rule 15. See Eminence Capital, 316 F.3d at 1052 (“Prejudice is the touchstone of the inquiry under rule 15(a).”) (internal quotes omitted). The deadline for discovery has passed, but Office Star argues that without additional fact-finding, it must “defend this new theory of liability based on mere speculation” and would be prejudiced as a result. Dkt. 177 at 20. Requiring Office Star to respond to Herman Miller’s new theory that Office Star “encourag[ed] dealers and end users’ agents to source Office Star imitations in lieu of original Herman Miller Caper chairs” would require discovery regarding communications between Office Star and its dealers, as well as those between the dealers and those to whom they made sales. Reopening discovery would be prejudicial to Office Star. See, e.g., Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002) (“The requirement of additional discovery would have prejudiced [the defendant]” if leave to amend a complaint were granted.”); Lockheed Martin Corp. v. Network Solutions Inc., 194 F.3d 980, 986 (9th Cir. 1999) (“A need to reopen discovery and therefore delay the proceedings supports a district court's finding of prejudice.”). The prejudice weighs significantly against granting the MLA. Finally, as noted, Herman Miller did not file the MLA until more than three months after the parties had concluded briefing of the MSJ. This timing supports an inference that Herman Miller filed the MLA in light of the challenges to its unfair competition claims that Officer Star presented in the MSJ. Indeed, Herman Miller largely conceded this point in briefing the MLA: The reason Herman Miller is making the present Motion to Amend is because, after Herman Miller invoked the unfair competition claims in opposing Office Star’s Summary Judgment Motion, Office Star argued in its reply brief . . . that Herman Miller’s unfair competition arguments should be disregarded because ‘they were not pled.’ Page 27 of 28

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LA CV17-04279 JAK (SPx)

Date

Title

Herman Miller, Inc. v. Blumenthal Distributing, Inc., et al.

March 4, 2019

Dkt. 174 at 6. This does not warrant allowing a late-filed request for leave to amend. See Schlacter-Jones, 936 F.2d at 443 (“The timing of the motion [to amend], after the parties had conducted discovery and a pending summary judgment motion had been fully briefed, weighs heavily against allowing leave. A motion for leave to amend is not a vehicle to circumvent summary judgment”); see also Trujillo v. Bd. Ed. Albuquerque Public Schools, 2005 WL 3663713 (D.N.M. 2005) (“Where a party proposes amendments while dispositive motions are pending, a court should not allow an amendment whose purpose is to prevent termination of the case on a motion to dismiss or on summary judgment.”). *

*

*

For the foregoing reasons, the MLA fails to meet the standards of either Rule 15 or Rule 16. Therefore, it is DENIED. IV.

Conclusion

For the reasons stated in this Order, both Office Star’s Motion for Summary Judgment (Dkt. 85) and Herman Miller’s Motion for Leave to Amend the Pleadings (Dkt. 174) are DENIED. IT IS SO ORDERED.

: Initials of Preparer

ak

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