Cisco Systems, Inc. v. Shenzhen Usource Technology Co.

Background

Cisco Systems, Inc. and Cisco Technology, Inc. asked for permission to file a second amended complaint adding two proposed defendants. The existing lawsuit asserted claims under the Lanham Act for trademark infringement and counterfeiting, false designation of origin and false advertising, and trademark dilution, along with California claims for false advertising and unfair competition. Cisco alleged that Shenzhen Usource Technology Co., Shenzhen Warex Technologies Co., Ltd., and Warex Technologies Limited sold counterfeit transceiver devices through third-party websites using Cisco and Ciena trademarks. Usource and Warex had not appeared in the action. Cisco separately sought a temporary restraining order against the proposed defendants and permission to file more pages for that motion.

Legal standard

The court applied Federal Rule of Civil Procedure 15(a), which generally favors allowing amendments when justice requires, but does not require amendment when it would cause undue prejudice, result from bad faith, be futile, or cause undue delay. Because Cisco sought to add defendants, the court also applied Rule 20(a)(2), which permits defendants to be joined only when the claims against them arise from the same transaction, occurrence, or series of transactions or occurrences, and when the case presents a common question of law or fact.

Court’s analysis

The court considered the allegations in the proposed second amended complaint as true for purposes of the motion. It found that Cisco had not shown that its claims against the proposed defendants arose from the same events as its claims against Usource and Warex. The only alleged connection was that all of the entities sold counterfeit Cisco transceivers on the same website. The court said that Cisco’s simultaneous investigation of the entities did not create a transaction or occurrence, and that selling similar counterfeit goods in separate instances was not enough to support joinder.

Cisco also suggested that the entities likely bought from the same network of clandestine manufacturers, but that allegation was not included in the proposed complaint and was unsupported by facts. Because the proposed complaint did not allege that the proposed defendants acted together with, or were otherwise connected to, Usource and Warex, the court found that joining them would be improper and that the amendment would be futile.

Disposition

The court denied Cisco’s motion for leave to file the proposed second amended complaint. It denied as moot Cisco’s related motion for a temporary restraining order and motion for leave to file excess pages.