Airwair International LTD. v. Zoetop Business Co.

Background

Airwair designs, makes, and sells Dr. Martens footwear. After an earlier lawsuit, the parties entered a settlement agreement. Zoetop acknowledged the validity of certain Airwair trademark registrations, agreed to stop selling allegedly infringing products, paid Airwair a lump sum, and agreed to stop making and selling new products that illegally infringed Airwair’s trademarks or trade dress. The agreement also created an out-of-court process for curing future infringement, including payments by Zoetop.

Airwair alleged that Zoetop continued infringing its intellectual-property rights and breached the settlement agreement. Airwair sent several breach notices and identified 61 allegedly infringing products; it alleged that Zoetop cured 28 of them. Airwair’s amended complaint asserted nine causes of action, including breach of contract, breach of the implied duty of good faith and fair dealing, federal trademark and patent claims, and California unfair-competition and trademark-dilution claims.

Cured Products

Zoetop argued that Airwair could not seek non-contract remedies based on products for which Zoetop had already provided monetary redress under the settlement’s cure process. The Court agreed. It held that Airwair had elected and received a remedy for the 28 cured products and could not use those products to support its non-contract claims. The Court therefore granted Zoetop’s motion to dismiss claims to the extent they were based on the 28 cured products.

Implied Duty of Good Faith and Fair Dealing

The Court held that Airwair’s second count was duplicative of its breach-of-contract claim. The settlement agreement did not give Zoetop discretionary powers affecting Airwair’s rights, and the alleged conduct did not deprive Airwair of the agreement’s benefits because Airwair retained the ability to use the cure process and, if necessary, return to court. The Court dismissed with prejudice count two.

Trademark-Dilution Claims

Zoetop challenged whether Airwair adequately alleged that its marks were famous, an element of federal and California trademark-dilution claims. The Court ruled that, given the 14 separate trademarks and trade dresses at issue, Airwair had to identify more specifically which marks allegedly achieved the required level of fame and explain how. The Court did not require Airwair to prove fame in the complaint, but it granted Zoetop’s motion for a more definite statement on this issue. Airwair was allowed to file an amended complaint with more detailed allegations about the fame of its trademarks no later than June 6, 2025.

Infringement and Unfair-Competition Claims

Zoetop argued that Airwair’s complaint was too vague because it listed 14 trademarks or trade dresses and 61 allegedly infringing products without linking particular products to particular marks. The Court denied Zoetop’s motion to dismiss or require a more definite statement regarding Airwair’s infringement and unfair-competition claims. The Court found that the complaint identified the marks and trade dresses clearly enough to provide notice, while noting that Zoetop could seek more information during discovery.

Motions to Seal

Airwair and Zoetop asked to keep the settlement agreement and related references under seal or redacted. The Court denied the motions to file the settlement agreement under seal. It ruled that the parties’ confidentiality agreement alone was not enough, and that the agreement expressly contemplated disclosure under a court order. The Court directed the parties to meet and confer and jointly propose narrowly tailored redactions protecting truly sensitive information.

Disposition

The Court granted in part and denied in part Zoetop’s motion to dismiss or seek a more definite statement. It also denied the present motions to file the settlement agreement under seal. The hearing was vacated, and the Court ordered that Airwair could amend its complaint regarding the fame of its trademarks by June 6, 2025.