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New Balance Athletics, Inc. v. USA New Bunren International Co. Limited LLC

United States District Court, D. Delaware

December 4, 2019


          Arthur G. Connolly, III, Ryan P. Newell, Connolly Gallagher LLP, Wilmington, Delaware, Thomas L. Holt, Jeremy L. Buxbaum, Perkins Coie LLP, Chicago, Illinois. Attorneys for Plaintiff.

          Dennis J. Butler, John D. Simmons, Panitch Schwarze Belisario & Nadel LLP, Wilmington, Delaware, Timothy T. Wang, Ni, Wang & Massand, PLLC, Dallas, Texas. Attorneys for Defendant.



         Plaintiff New Balance Athletics, Inc. (“New Balance”) is a company that manufactures and markets athletic apparel and footwear. Defendant USA New Bunren International Co. Limited LLC (“New Bunren”) is a Delaware limited liability company formed in 2012 for the purpose of distributing and selling in the United States shoes and other products made by Qierte Corporation Ltd. (“Qierte”), a Chinese company that has been found liable by a Chinese court for infringing New Balance's trademarks in China.

         New Balance has asserted claims against New Bunren based on federal and state law for, among other things, trademark infringement, trademark dilution, and unfair competition. Currently pending before the Court are the parties cross-motions for summary judgment. (D.I. 52; D.I. 54; D.I. 58). Although New Balance has asserted claims based on its word marks and its “N” marks, the parties seek summary judgment only as to the “N” marks.” (D.I. 26; D.I. 58). The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1332 and 1367. For the following reasons, New Balance's motion for summary judgment is granted in part and denied in part, and New Bunren's motions for summary are denied.

         I. BACKGROUND

         A. Parties

         New Balance was founded in 1906 and first started using its “N” marks in commerce in 1974. (D.I. 60 ¶ 4; D.I. 57-1, Ex. I at No. 1). It is now a global company offering products in more than 120 countries. (D.I. 72-1, Ex. 10 at 17). Defendant New Bunren is a Delaware limited liability company formed by Shy Fu Pao on July 23, 2012 as Little Pres. LLC. (D.I. 66 ¶¶ 1-2). The name was changed to New Bunren on July 28, 2014. (Id.).

         B. New Bunren's “N” Marks.

         Between July 2014 and October 2016, New Bunren registered U.S. Trademark Nos. 4, 568, 883; 5, 055, 943; 4, 580, 787; 4, 585, 058; 4, 860, 914; and 4, 878, 478 with the U.S. Patent and Trademark Office. (D.I. 66 ¶ 3). In New Bunren's trademark applications, the stylized “N” contains a flying bird design as seen in the images below:

         (Image Omitted)

         (Id.). The flying bird design, however, is not always apparent on New Bunren's products, as shown in the image below:

         (Image Omitted)

         (D.I. 60 ¶ 3; D.I. 64 ¶ 3; D.I. 72-1, Ex. 9).

         According to New Bunren, all of its “N” marks are based on marks successfully registered by Qierte in China. (D.I. 57-1, Ex. C at No. 1, Ex. D). Shy Fu Pao simply registered Qierte's “N” marks in the United States. (Id., Ex. B at 24:18-25:1). Qierte's “N” marks in China were purportedly an extension of an earlier stylized mark called “Naiyao” (reproduced below), wherein the letter “N” was purportedly designed as a flying bird within the letter “N.” (Id., Ex. C at No. 1). The parties do not explain the relationship between Qierte and Naiyao or whether Naiyao was a company, a product, or something else. New Balance disputes the details of the Naiyao origin story. (D.I. 66 ¶ 5).

         (Image Omitted)

         (D.I. 57-1, Ex. E).

         To sell New Bunren's products, Qierte designed and managed a website for New Bunren with the url (D.I. 66 ¶ 6; D.I. 57-1, Ex. B at 89:11-13). The website was active from 2015 to 2017 or 2018, and displayed products bearing New Bunren's “N” marks. (D.I. 66 ¶ 6; D.I. 57-1, Exs. G, H). The website prominently described New Bunren as an “American Classic, ” and captioned one photograph with the words “New Balance (China) Sports Goods Co., Ltd.” (D.I. 57-1, Ex. H).[1] There was no pricing information or purchasing instructions on the website. (D.I. 66 ¶ 6). But it did provide a “contact us” form. (See D.I. 57-1, Ex. G). In addition, the website at one point had an Alabama phone number that consumers could call if they were interested in purchasing the products. (Id., Ex. B at 116:7-17). Shy Fu Pao resides in Alabama. (Id. at 8:10-13). New Bunren claims that none of its products were shipped to or sold in any physical stores in the United States. (D.I. 66 ¶ 6). Notably, this leaves open the possibility that its products could have been sold through the internet and directly shipped to a consumer.


         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.10 (1986). A party asserting that a fact cannot be - or, alternatively, is - genuinely disputed must support its assertion either by citing to “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for the purposes of the motions only), admissions, interrogatory answers, or other materials, ” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1)(A) & (B). If the moving party has carried its burden, the nonmovant must then “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita, 475 U.S. at 587 (internal quotation marks omitted). The Court will “draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

         To defeat a motion for summary judgment, the non-moving party “must present more than just bare assertions, conclusory allegations or suspicions to show the existence of a genuine issue.” Podobnik v. U.S. Postal Serv., 409 F.3d 584, 594 (3d Cir. 2005) (internal quotation marks omitted). However, the “mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment;” a factual dispute is genuine only where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Id. at 249-50 (internal citations omitted).


         For six of the eight claims in its first amended complaint, New Balance has moved for summary judgment only as to its “N” marks. (D.I. 26). Those claims are: (i) infringement of a federally registered trademark under Latham Act § 32(1), 15 U.S.C. § 1114(1); (ii) trademark dilution under Lanham Act § 43(c), 15 U.S.C. § 1125(c); (iii) false designation of origin under Lanham Act § 43(a), 15 U.S.C. § 1125(a); (iv) trademark dilution under Delaware statutory law, 6 Del. C. § 3313; (v) deceptive trade practices under Delaware statutory law, 6 Del. C. § 2532; and (vi) trademark infringement and unfair competition under Delaware common law.[2] For all of the federal trademark claims, New Bunren asserts the same defense, that its activities were not “in commerce” as required by the statute. Accordingly, the Court will address this common defense before addressing the merits of the individual claims. Finally, New Balance has also moved for summary judgment on its request for statutory damages and attorneys' fees.

         A. “In Commerce”

         New Bunren asserts that its activities were not “in commerce” as required by the Lanham Act. (D.I. 55 at 6; D.I. 63 at 8-10, 13). Section 1114 of the Lanham Act, Title 15, United States Code, forbids a party to “use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion . . . .” (Emphasis added). Under § 1125(a)(1), a defendant is liable if he or she uses “in commerce” a mark which: (i) “is likely to cause confusion . . . as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person;” or (ii) “in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities.” (Emphasis added). Under § 1125(c), an owner of a famous mark may obtain an injunction to stop “use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark.” (Emphasis added).

         In support of its argument, New Bunren also cites § 1127, which defines “use in commerce” as follows:

(1) on goods when-
(A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and
(B) the goods are sold or transported in commerce, and
(2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.

15 U.S.C. § 1127.

         It appears that the Third Circuit has not yet addressed this issue, but several courts have held that the definition of “use in commerce” in § 1127 sets the standard for a mark to qualify for protection or registration, not the standard for proving infringement. See VersaTop Support Sys., LLC v. Georgia Expo, Inc., 921 F.3d 1364, 1370 (Fed. Cir. 2019) (reversing district court because the definition of “use in commerce” in § 1127 “does not apply to trademark infringement”); BTG Patent Holdings, LLC v. Bag2Go, GmbH, 193 F.Supp.3d 1310, 1322 (S.D. Fla. 2016) (stating that the definition of “use in commerce” in § 1127 “applies only in the trademark qualification context and not in the trademark infringement context”); Hasbro, Inc. v. Sweetpea Entm't, Inc., C. A. No. 13-3406 DMG (JCGx), 2014 WL 12586021, at *9 (C.D. Cal. Feb. 25, 2014) (holding that “Section 1127 is not . . . the legal standard for proving infringement”); see also Rescuecom Corp. v. Google Inc., 562 F.3d 123, 131-34 (2d Cir. 2009) (providing in lengthy dicta an analysis of the statutory text and historical evolution of the Lanham Act supporting why § 1127 applies to trademark qualifications and not infringement).

         The Court finds these cases and, in particular, the analysis set forth by the Second Circuit in Rescuecom, persuasive. Notably, the definition of “use in commerce” under § 1127 cannot be reconciled with the activities that create liability under §§ 1114 and 1125. Specifically, § 1127 requires that goods be “sold or transported, ” but §§ 1114 and 1125 create civil liabilities for “offer[s] for sale” or “advertising, ” which are activities where goods are not necessarily sold or transported. Section 1127 states that the definitions in that section apply, “unless the contrary is plainly apparent from the context.” The context of ...

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