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1 AMSTER, ROTHSTEIN & EBENSTEIN LLP ANTHONY F. LO CICERO, NY SBN1084698 2 alocicero@arelaw.com CHESTER ROTHSTEIN, NY SBN2382984 3 crothstein@arelaw.com MARC JASON SBN2384832 (Pro Hac Vice Application Forthcoming) 4 mjason@arelaw.com JESSICA CAPASSO, NY SBN4766283 5 jcapasso@arelaw.com 90 Park Avenue 6 New York, NY 10016 Telephone: (212) 336-8000 7 Facsimile: (212) 336-8001 (Admitted Pro Hac Vice) 8 HANSON BRIDGETT LLP 9 GARNER K. WENG, SBN191462 gweng@hansonbridgett.com 10 CHRISTOPHER S. WALTERS, SBN267262 cwalters@hansonbridgett.com 11 425 Market Street, 26th Floor San Francisco, California 94105 12 Telephone: (415) 777-3200 Facsimile: (415) 541-9366 13 Attorneys for Plaintiffs MACY'S, INC. and 14 MACYS.COM, INC. 15 16 17 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. CV 11-6198 SC PLAINTIFFS' REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT Date: Time: Crtm: Judge: March 15, 2013 10:00 a.m. 1 Honorable Samuel Conti

18 MACY'S, INC. and MACYS.COM, INC., 19 20 v. Plaintiffs,

21 STRATEGIC MARKS, LLC, 22 23 24 25 26 27 28

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Defendant. STRATEGIC MARKS, LLC, Counter-Claimant, v. MACY'S, INC. and MACYS.COM, INC. Counter-Defendants.

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1 2 3 I. 4 II. 5 6 7 1. 8 2. 9 3. 10 4. 11 5. 12 III. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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TABLE OF CONTENTS Page PRELIMINARY STATEMENT ................................................................................. 1 ARGUMENT ........................................................................................................... 4 A. B. Defendant Did Not Use the Marks for "Retail Store" Services ...................... 4 Defendant Did Not Use the Marks in Commerce for "Online Retail Store" Services............................................................................................. 6 Rearden Case Supports the Plaintiffs' Position ................................. 6 Ms. Horwich Was Not Produced for Deposition ................................. 7 Invoices Do Not Reflect the Defendant or the Marks at Issue ........... 8 Defendant's Own Admission Supports Plaintiffs ................................ 8 Office Action ...................................................................................... 9

CONCLUSION ...................................................................................................... 10

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1 2 3 4 CASES

TABLE OF AUTHORITIES Page

5 Brookfield Communs., Inc. v. West Coast Entertainment Corp. 174 F.3d 1036 (9th Cir. 1999) ................................................................................. 6 6 Chance v. Pac-Tel Teletrac Inc. 7 242 F.3d 1151 (9th Cir. 2001) ................................................................................. 7 8 Gibson Guitar Corp. v. Paul Reed Smith Guitars, LP 311 F. Supp. 2d 690 (M.D. Tenn. 2004) ................................................................. 5 9 In re Ancor Holdings 10 79 U.S.P.Q. 2d 1218 (T.T.A.B. 2006) ................................................................... 10 11 In re Bose Corp. 580 F.3d 1240 (Fed. Cir. 2009) ............................................................................. 11 12 In re Retail Royalty Company 13 2010 TTAB LEXIS 417, at *2 (T.T.A.B. Nov. 23, 2010) ........................................... 5 14 Rearden LLC v. Rearden Commerce, Inc. 683 F.3d 1190 (9th Cir. 2012) ............................................................................. 6, 7 15 Stillwell v. RadioShack Corp. 16 676 F. Supp. 2d 962 (S.D. Cal. 2009) ..................................................................... 5 17 18 STATUTES 19 15 U.S.C. 1127 ............................................................................................................... 1 20 37 C.F.R. 2.76(c) ............................................................................................................ 1 21 22 RULES 23 Fed. R. Civ. P. 56(c)(2) ...................................................................................................... 3 24 25 26 27 28
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Plaintiffs Macys, Inc. and Macys.com, Inc. (individually and collectively, Plaintiffs

2 or Macys) submit this reply and supplemental declaration of Anthony F. Lo Cicero in 3 further support of their motion for partial summary judgment. 4 I. 5 PRELIMINARY STATEMENT Plaintiffs motion is based on the uncontroverted evidence that defendant Strategic

6 Marks, LLC (Defendant) did not use its registered marks in commerce1 for any of the 7 services specified in its Registrations.2 The facts and law articulated in Defendants 8 opposition brief and declarations do not show otherwise. 9 Defendant filed four separate Statements of Use in its intent-to-use service mark

10 applications, thus amending them to applications based on actual bona fide use in 11 commerce. Defendant signed Declarations under oath that it had used its marks in 12 commerce on each and every one of the services listed in the application and submitted 13 purported actual specimens of such use. 37 C.F.R. 2.76(c). The law is clear that if 14 Defendant had not yet used the mark in commerce for all of the services specified in its 15 registrations on the dates it filed its Statements of Use, each listed service which was 16 wrongly alleged must be canceled from the registration. Furthermore, in cases such as 17 this where none of the listed services were actually used in commerce as of the date of 18 the filing, the Registration is incurably void ab initio. 19 With respect to each and every one of the various types of retail store services

20 alleged in its Statements of Use, Defendant does not (and cannot) refute the unequivocal 21 22
1

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

23 the sale or advertising of services and the services are rendered in commerce . . . (emphasis
added). 15 U.S.C. 1127. 2 Defendants specified services for each Registration which are the subject of this motion are identical, as follows: 25 retail department store and on-line retail department store services; retail and on-line retail clothing boutiques; 26 retail and on-line retail clothing stores; retail and on-line retail apparel stores; 27 retail and on-line retail store services featuring clothing and fashion accessories.

24

28
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1 deposition testimony of its principal, Ellia Kassoff, and effectively admits that it has never 2 used any mark in connection with a physical brick and mortar store. So instead, 3 Defendant argues that the definition of retail store is vague enough that such physical 4 stores are not required. Defendant calls for the suspension of all common sense (and 5 ignores numerous cases and its own web site) in trying to convince the Court that retail 6 stores need not be physical brick and mortar stores, thus attempting to render 7 meaningless the differences in services in its own Registrations and the law 8 differentiating between retail store and online retail store. 9 With respect to the various online retail store portions of its registrations,

10 Defendant argues that despite the uncontroverted fact that it never sold a single product 11 in its purported online retail stores for the marks at issue, it nonetheless engaged in 12 use in commerce when the totality of the circumstances surrounding its activities are 13 considered. 14 The facts and law asserted by Defendant to show this totality are specious and

15 cannot withstand judicial scrutiny. First, Defendant asserts that it employed a supply 16 chain management method for online sales where goods are manufactured upon order. 17 But Defendant submits no evidence of such a method, and attempts to gloss over the 18 crucial fact that no such goods were ever manufactured since no goods were ever 19 ordered or sold through the alleged virtual stores. 20 Defendant relies in part on the purported activities of Helen Horwich, asserted to

21 be Defendants Merchandising Manager. (Dft. Opp. Brief at iv). However, Defendant 22 submits no evidence of any such activities. Moreover, Defendant should not be allowed 23 to rely on Ms. Horwichs alleged activities because Defendant has prevented Plaintiffs 24 from taking her deposition.3 Specifically, on February 19, 2013, less than 48 hours 25 before her scheduled deposition in Southern California (notably, both the date and the 26
3

27 have been taken in time to be considered in this Reply brief. 28

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If not for the refusal to produce Ms. Horwich at her scheduled deposition, her testimony would

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1 place had been selected by Defendant), Defendants counsel unilaterally canceled Ms. 2 Horwichs deposition after all arrangements, flights, hotel reservations, and court reporter 3 were scheduled. The cancellation had nothing to do with the deponents availability (as it 4 had been the first time Defendant canceled the deposition of Ms. Horwich, in November 5 2012, due to an alleged illness). Rather, the purported reason was that Strategic Marks 6 has limited resources.4 (Lo Cicero Decl. Ex.U at 2).5 7 Notwithstanding the failure to produce Ms. Horwich for deposition, the ostensible

8 evidence submitted in support of Defendants use of the marks in commerce for online 9 services would not be admissible at trial, and therefore could not be said to raise a triable 10 issue of fact. Fed. R. Civ. P. 56(c)(2). Defendant submits alleged invoices from a 11 supplier to support its argument; but they do not reflect use of any of the marks and they 12 are not even issued to Defendant. There also is no supporting declaration or sworn 13 testimony as to what the invoices are or as to what Defendants alleged supply chain 14 management method entailed. However, even if Defendant could overcome these 15 evidentiary concerns and Defendants unsupported statements in the brief are accepted 16 as true, such activities still did not rise to the level of rendered services under the 17 marks. 18 Defendant also asserts that its sale of a single t-shirt on its Retro Department

19 Stores site, bearing a different department store brand than the ones at issue here, 20 shows that it had the ability to make sales in the relevant online stores. This, however, is 21 not the standard for use in commerce and is insufficient, even under the totality of the 22 circumstances test, to raise a triable issue of fact. 23 24
4

Plaintiffs are prepared to seek sanctions against Defendant, including granting Plaintiffs motion

25 in full, and an award of fees and costs incurred by Plaintiffs due to the last minute deposition 26 have supported Defendants allegations.
5

cancellation. At the very least, the Court should infer that Ms. Horwichs testimony would not Plaintiffs submit at Lo Cicero Decl. Ex. U the correspondence between Plaintiffs and

27 Defendants counsel regarding the last minute cancellation of the Horwich deposition. 28
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With respect to the issue of the USPTO office action for the Abraham and Straus

2 mark, Defendant is incorrect that the USPTO rejection was solely based on the specific 3 specimen of use and is, therefore, not relevant to all of the registrations at issue. Rather, 4 this was just one basis of the rejection. After Defendant submitted new specimens using 5 the words Abraham and Straus (not A & S) to the USPTO following the rejection, the 6 examiner issued another Office Action rejecting Defendants application, again finding 7 that the proposed mark on the website did not identify the source of any online retail 8 services, that the services were not yet being rendered in commerce, and that the only 9 service mark displayed in the specimens is Retro Department Stores, not each of the 10 Registered marks. Clearly, Defendants website does not constitute use of the marks for 11 online retail store services. Defendant has not refuted this. 12 Finally, Defendants tortured logic in concluding that the mere offer for sale of

13 products, even absent a sale, is enough to constitute use in commerce of online services, 14 is unsupported by authority and conflicts with Defendants own statements in its brief. 15 II. 16 17 ARGUMENT A. Defendant Did Not Use the Marks for "Retail Store" Services

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

18 used the marks in connection with physical brick and mortar retail stores,6 and Defendant 19 tacitly concedes this. Defendant argues instead that Plaintiffs failed to provide a 20 cognizable definition of the specified services, and that the words physical and brick 21 and mortar are nowhere to be found in the specified services. (Dft. Opp. Brief at 2-3). 22 Aside from the obvious -- that in these days of the internet, retail stores are

23 referred to as brick and mortar stores -- there are numerous cases where retail stores 24 are defined as brick and mortar stores, including cases where brick and mortar retail 25 stores are distinguished from internet or on-line retail stores. See, e.g., Stillwell v. 26
6

27 28
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Dkt. No. 55, pages 10-12.

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1 RadioShack Corp., 676 F. Supp. 2d 962, 972 (S.D. Cal. 2009) (court distinguishes 2 between company-owned retail stores -- defined as brick and mortar stores -- and 3 internet retailers for purposes of interpreting a franchise agreement); Gibson Guitar Corp. 4 v. Paul Reed Smith Guitars, LP, 311 F. Supp. 2d 690, 707 (M.D. Tenn. 2004) (court 5 recognized that retail stores were brick and mortar stores required for authorized 6 retailers, and distinguished from internet retailers). 7 The Trademark Trial and Appeal Board, in a published yet non-precedential

8 decision, has also distinguished between retail store services and online retail store 9 services, referring to the retail store services as brick and mortar retail store services. 10 For example, in In re Retail Royalty Company, the applicant sought to register its mark 11 for the following services: retail store services and online retail store services featuring 12 clothing and clothing accessories, footwear, headwear . . . . In distinguishing specimens 13 of use proffered for both retail store services and online retail store services, the TTAB 14 stated: [w]e first shall consider applicants proffered specimen for its retail store services 15 . . . featuring clothing . . . , which we deem to be what are commonly referred to as brick16 and-mortar retail store services. In re Retail Royalty Company, 2010 TTAB LEXIS 417, 17 at *2 (T.T.A.B. Nov. 23, 2010) (not precedential). 18 It is also obvious from Defendants own description of services provided to the

19 USPTO (e.g., retail department store and on-line retail department store services) that 20 the services include both traditional brick and mortar stores as well as on-line virtual 21 stores. The conjunctive and must have a meaning -- in this case, that the two elements 22 on either side of the term are not the same. 23 Finally, Defendants own website demonstrates that Defendants services were to

24 include an online virtual mall as well as brick and mortar stores. Under the heading 25 The Plan, Defendant states: 26 27 28
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Youll see these stores first as part of this nostalgic virtual mall. Then we plan to branch out with unique accessories at small boutiques, followed by exclusive apparel by up and coming designers, and then ultimately with actual Brick
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1 2

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

3 (Dkt. No. 56-2, Lo Cicero Decl. Ex. M). 4 The inevitable conclusions are that (i) Defendants argument that the specified

5 retail store services were not cognizably defined is without merit and unavailing; and (ii) 6 Defendant has not used the marks for retail stores in commerce. 7 8 9 10 B. Defendant Did Not Use the Marks in Commerce for "Online Retail Store" Services 1. Rearden Case Supports the Plaintiffs' Position

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

11 has been no rendering of any services under the marks at issue. Instead, Defendant 12 argues that the Court must consider a totality of the circumstances to determine 13 whether Defendant made a use in commerce of the marks for online services. In support 14 of this position, Defendant relies on Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 15 1190 (9th Cir. 2012). However, Rearden is not apposite because it analyzes the use in 16 commerce issue from the perspective of determining priority of rights to the mark, which 17 is different than a determination of whether there is use in commerce for purposes of 18 registration. 19 Nevertheless, even if Rearden were to be followed, it confirms that the specified

20 services must actually be rendered in commerce for there to be use in commerce. In 21 quoting Brookfield Communs., Inc. v. West Coast Entertainment Corp., the Rearden court 22 recognizes that [t]he Lanham Act grants trademark protection only to marks that are 23 used to identify and to distinguish goods or services in commerce -- which typically 24 occurs when a mark is used in conjunction with the actual sale of goods or services. 25 Rearden, 683 F.3d at 1204 (quoting Brookfield Communs., Inc. v. West Coast 26 Entertainment Corp., 174 F.3d 1036, 1051 (9th Cir. 1999)) (emphasis added). 27 While stating that a lack of sales is not dispositive in determining whether a party

28 has established use in commerce, the Rearden court did recognize that there is a very
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1 high standard to show use in commerce when there are no sales. Rearden, 683 F.3d at 2 1205. Thus, while not dispositive, a lack of sales is highly relevant. The court quoted 3 Chance v. Pac-Tel Teletrac Inc. and that courts determination that mailing 35,500 4 postcards, which generated only 128 telephone responses and no sales, was insufficient 5 to raise a triable issue of fact as to use in commerce. Rearden, 683 F.3d at 1205; 6 (quoting Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1159-60 (9th Cir. 2001)). 7 As discussed below, Defendant submitted five irrelevant invoices, website screen

8 shots deemed insufficient by the USPTO, unsupported allegations of business methods, 9 and canceled a deposition with a purported manager referred to in the opposition brief. 10 Consequently, even if this Court were to consider a totality of the circumstances in 11 making its determination regarding use in commerce of Defendants registered marks, 12 Defendants evidence is wholly deficient and does not raise any triable issue of fact. 13 14 2. Ms. Horwich Was Not Produced for Deposition

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

15 further develop its merchandise selection, Strategic Marks employed the services of 16 Helen Horwich as Merchandising Manager (Ashurov Decl. Ex. 1). (Dft. Opp. brief at iv). 17 However, Plaintiffs never had the chance to test this assertion because Defendant 18 unilaterally canceled Ms. Horwichs deposition at the 11th hour. This cancellation 19 deprived Plaintiffs of the opportunity to explore Defendants purported merchandising 20 efforts and supply chain method. In email correspondence regarding the cancellation, 21 Defendants counsel stated Plaintiffs are not likely to get very much, if any, information 22 from an elderly lady that it did not already obtain during Strategic Marks deposition. (Lo 23 Cicero Decl. Ex. U). Defendants unilateral decision of what Plaintiffs may or may not get 24 from Ms. Horwichs deposition is of no significance. Further, this so-called elderly lady 25 with no information is the person purportedly managing Defendants merchandising 26 efforts. Defendant cannot have it both ways -- it cannot on one hand rely on Ms. Horwich 27 to raise a question of fact under a totality of the circumstances scenario, yet then on the 28 other hand say that she does not have anything valuable to offer and cancel her
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1 deposition. 2 3 3. Invoices Do Not Reflect the Defendant or the Marks at Issue

Defendant points to its alleged supply chain management method and online

4 sales fulfillment by a pre-contracted vendor (Dft. Opp. Brief at 5) to support its use in 5 commerce argument. However, purported evidence of these activities submitted by 6 Defendant is illusory. With respect to its purported supplier, Defendant provides five 7 invoices. (Dkt. No. 65, Kassoff Decl. Ex. F). However, not one of these invoices was 8 issued to Defendant. They were to entities called Astro Pop, LLC and Leaf Brand LLC. 9 These are believed to be entities that market goods (not even services as are involved in 10 this case) under brands which are not even involved in this case. (Lo Cicero Decl. Ex. V; 11 Kassoff Depo. at 25). Significantly, the invoices do not even mention any of the marks at 12 issue in this case, but all appear to be for activities related to these other entities. 13 Further, Mr. Kassoffs Declaration does not substantively discuss these invoices, or attest 14 to any facts about them. Thus, this evidence does not show any transaction by the 15 Defendant involving any mark in this case. Thus, there is no actual evidence of any such 16 supply chain management method or pre-contracted vendor. 17 18 4. Defendant's Own Admission Supports Plaintiffs

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

19 that ends up contradicting Defendants own subsequent statement. First, Defendant 20 quotes the definition of retail from the dictionary: to sell in small quantities directly to 21 the ultimate consumer. (Dft. Opp. Brief at 3) (Emphasis added.). Then, Defendant goes 22 on to extrapolate and states the following: 23 24 25 26 27 28
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Strategic Marks contends that on-line means connected to, served by, or available through a system and especially a computer or telecommunications system (as the Internet). Thus, Strategic Marks submits that online retail services means selling in small quantities directly to consumers through the Internet, and online retail store services means providing a virtual store wherein goods are offered for sale in small quantities to ultimate consumers via the Internet.
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1 (Dft. Opp. Brief at 3). 2 So, Defendant went from retail, which is to sell, to online retail services, which

3 means selling, to online retail store services, which somehow means a virtual store where 4 goods are offered for sale. How Defendant made the leap of logic from selling to offering 5 for sale is not explained. Moreover, in the very next sentence, Defendant states that [a]s 6 explained in section 2(c) below, Strategic Marks opened virtual retail stores in which 7 goods are sold in small quantities to ultimate consumers, thereby rendering online 8 retail store services. (Dft. Opp. Brief at 3). Not only does this contradict Defendants 9 prior statement (offered for sale vs. sold), but it is untrue. It is undisputed that 10 Defendant has never sold a single good or service under the marks at issue in this 11 motion. Thus, by Defendants own admission, its failure to make sales constitutes a 12 failure to render services. 13 14 5. Office Action

Defendant argues that the Abraham and Straus Office Action is wholly

15 irrelevant because it was directed to a specific specimen of use. (Dft. Opp. brief at 7). 16 However, this ignores that the deficient specimen (A & S as opposed to Abraham and 17 Straus) was only one aspect of the rejection. The rejection was also based on the fact 18 that the services were not yet being rendered in commerce as required under the Aycock 19 case and other authorities, and that the use of the proposed mark on the website did not 20 identify the source of any online retail services. 21 The fact that the rejection was based on much more than simply the manner in

22 which the Abraham and Straus mark appeared was confirmed by the subsequent office 23 action dated March 9, 2012. (Lo Cicero Decl. Ex.W). After Defendant corrected the way 24 the mark appeared on the website and submitted new specimens, the examiner once 25 again rejected Defendants application. The rejection states as follows: 26 27 28
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While the first web page submitted references a retro department store, it does not show use of the mark in connection with any actual store services. This is emphasized by the second submitted specimen. This
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1 2 3 4 5 6 7 8 9 10

specimen is a web page devoted to the ABRAHAM AND STRAUS store in particular. The contents of this page are as follows: historical facts about the ABRAHAM AND STRAUS department store, video links which appear to be for old commercials advertising the store, and a t-shirt for sale that has ABRAHAM AND STRAUS written across the front of it. As shown on this page, the applied for mark simply fails to show use in connection with any retail store services. The mark as it appears on the page is not used as a source indicator for any services, but appears only as part of informational matter about the old ABRAHAM AND STRAUS department store. The other use of the mark on the page is as decoration for the t-shirt; however, providing a t-shirt with the mark on it is insufficient to show use as a source indicator for retail store services.

11 (Lo Cicero Decl. Ex. W at 3). 12 Thus, the bottom line is that Defendants use of the marks on the Retro

13 Department Stores website does not constitute service mark use of the marks in the 14 registrations. This is applicable to all of the marks shown on the website as Defendants 15 web site makes similar use of each and every one of the subject marks. 16 Defendants citation to the In re Ancor Holdings decision is unavailing and does

17 not overcome this deficiency. See In re Ancor Holdings, 79 U.S.P.Q. 2d 1218 (T.T.A.B. 18 2006). In In re Ancor Holdings, the TTAB addressed an issue of semantics as to whether 19 the mark in question functioned to identify the source of goods as opposed to services. 20 In that case the applicant did not even offer any goods for sale, but the specimen referred 21 to tools to be used in rendering services. In re Ancor Holdings has nothing to do with 22 the present situation where, as the examiner has recognized, t-shirts bearing the marks 23 are offered for sale by Defendant, but the marks are not used to indicate the source of 24 any department store services. 25 III. 26 CONCLUSION In accordance with the above and with Plaintiffs original brief and supporting

27 papers, Plaintiffs respectfully request that their motion for partial summary judgment be 28 granted, that the Court dismiss Defendants first and fifth counterclaims with prejudice,
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1 and that the Court order cancellation of THE BROADWAY Registration, THE BON 2 MARCHE Registration, and the ROBINSONS Registration.7 In addition, Plaintiffs 3 respectfully request that the Court find that Defendant did not make use in commerce of 4 the ABRAHAM AND STRAUS mark, and Defendant does not have the right to register 5 the mark. 6 7 DATED: February 22, 2013 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
7

HANSON BRIDGETT LLP

By:

/s/ Christopher S. Walters GARNER K. WENG CHRISTOPHER S. WALTERS Attorneys for Plaintiffs MACY'S, INC. and MACYS.COM, INC.

26 its specified services, Plaintiffs respectfully request that the Registrations be appropriately 27 F.3d 1240, 1247 (Fed. Cir. 2009). 28
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In the alternative, if the Court finds that Defendant has used the marks in commerce for some of

restricted to reflect only those services for which the marks are being used. In re Bose Corp., 580

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