LiveRamp, Inc. v. Kochava, Inc.

Background

LiveRamp and Kochava disputed their competing use of the IDENTITYLINK mark. Kochava alleged that it had used the mark since at least August 17, 2012, for online software services involving consumer identification across marketing channels. Kochava alleged that it had continuously used the mark, invested substantial resources in it and the related services, and received industry publicity.

Kochava alleged that it learned in a 2016 business meeting that LiveRamp was offering similar services under the same mark. LiveRamp continued using the mark and filed an application for the LIVERAMP IDENTITYLINK mark. The application was granted on November 13, 2018. LiveRamp later filed this action seeking a declaration that it had not infringed Kochava’s rights and seeking injunctive relief. Kochava asserted several counterclaims, including trademark infringement, cancellation of LiveRamp’s registration, and violation of California’s Unfair Competition Law (UCL). The motion addressed the cancellation and UCL counterclaims.

Legal standard

LiveRamp moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a pleading does not state a legally sufficient claim for relief. The court was required to accept the counterclaims’ factual allegations as true and draw reasonable inferences for Kochava. Because the fraud-based cancellation claim alleged fraud, it also had to satisfy Rule 9(b), which requires fraud to be pleaded with particularity, including the time, place, and specific content of the alleged false statements.

Fraud-based cancellation counterclaim

The court held that Kochava identified the alleged false statement in LiveRamp’s trademark application: LiveRamp stated that no other person had the right to use the mark in commerce in a way likely to cause confusion. The court followed the approach that a trademark applicant need disclose only another party’s clearly established conflicting rights, such as rights established by a court decree, settlement, or registration. Mere knowledge that another party was using the mark was not enough.

Kochava alleged that it used the mark before LiveRamp and that LiveRamp knew about that use. But Kochava did not allege that its rights were clearly established in a way that would have shown LiveRamp that Kochava had the right to use the mark. The court therefore dismissed Kochava’s counterclaim for cancellation based on fraud in the procurement without prejudice, because the court could not conclude that additional facts could not cure the pleading defect.

Kochava also argued that it had adequately pleaded a separate cancellation theory based on superior rights to the IDENTITYLINK mark. LiveRamp did not dispute that argument, so the court did not address it.

UCL counterclaim

The court denied the motion to dismiss Kochava’s UCL counterclaim. Under California law, a private UCL plaintiff must allege an economic injury—an injury involving money or property—resulting from unfair competition. Kochava’s general allegation of monetary damages was too conclusory by itself. However, Kochava also alleged that LiveRamp’s alleged trademark infringement diminished the value and goodwill of Kochava’s IDENTITYLINK mark.

The court recognized conflicting decisions within the district about whether harm to intellectual property or intangible business assets can establish UCL economic injury. It followed the decisions concluding that devaluation of such assets can satisfy the injury requirement and held that Kochava had standing to bring its UCL claim.

Requested monetary relief

The court declined to strike Kochava’s request for disgorgement because Kochava’s description of “restitutionary disgorgement” appeared to describe restitution, the monetary remedy available under the UCL. Restitution generally seeks to return money or property in which the plaintiff has an ownership interest. The court held, however, that Kochava could not seek nonrestitutionary disgorgement. The court did not need to decide whether Kochava could seek restitution because LiveRamp did not appear to dispute that remedy.

Disposition

The fraud-based cancellation counterclaim was dismissed without prejudice. The motion to dismiss was denied as to Kochava’s UCL counterclaim. The court also ordered that Kochava could not seek nonrestitutionary disgorgement under the UCL.