Zero Motorcycles, Inc. v. Zero Labs Group, LLC

Background

Zero Motorcycles, Inc. alleged that it owns the ZERO MOTORCYCLES trademark, federally registered in 2009 and incontestable since 2014, along with other marks containing “ZERO” and a “Z” logo. It alleged that Zero Labs Group, LLC later adopted and used the ZERO LABS or ZEROLABS mark and a similar Z logo in connection with electric-vehicle conversion services and an electric-vehicle platform.

The amended complaint asserted four causes of action: federal trademark infringement, California trademark infringement, California unfair competition, and cancellation of Zero Labs’ federal trademark registrations and applications. Zero Labs moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim, and argued that the cancellation claim also failed Rule 9(b)’s requirement that fraud be pleaded with particular detail.

Judicial Notice

Zero Labs asked the court to take judicial notice of nine documents, including Patent and Trademark Office records and filings. The court explained that such records may be noticed to establish that filings or agency actions occurred, but not to establish disputed factual assertions contained in those records. Because Zero Labs offered the documents primarily to dispute the strength of Zero Motorcycles’ marks, the court did not rely on them for that purpose and DENIED the request for judicial notice.

Federal Trademark-Infringement Claim

To state a federal trademark-infringement claim, Zero Motorcycles had to allege ownership of the mark, unauthorized commercial use of a reproduction or imitation, and a likelihood of confusion. Zero Labs challenged the likelihood-of-confusion allegations under the eight-factor test used in the Ninth Circuit, including the marks’ strength, the similarity and proximity of the parties’ goods and services, marketing channels, actual confusion, purchaser care, intent, and likely expansion.

The court held that likelihood of confusion is highly factual and usually is evaluated on a fuller record at summary judgment or trial. At the pleading stage, the amended complaint alleged facts making confusion plausible, including similar marks, related electric-vehicle services, and similar marketing channels. The court therefore DENIED the motion to dismiss the federal trademark-infringement claim.

California Trademark-Infringement Claim

Zero Motorcycles clarified that its California trademark claim was based only on California common law, not California Business and Professions Code section 14200 and following. The court noted that California common-law trademark claims are evaluated under the same standards as federal trademark claims. For the reasons supporting the federal claim, the court DENIED dismissal of the California common-law trademark-infringement claim and STRUCK the reference to the California statute from paragraph 1 of the amended complaint. The court directed that the forthcoming second amended complaint not include that statutory reference.

Cancellation Claim

Zero Motorcycles sought cancellation of Zero Labs’ trademark registrations based on alleged fraud in obtaining them. The court treated the claim as one requiring particularized allegations under Rule 9(b). Such a claim requires allegations of a materially false statement, the registrant’s knowledge or belief that the statement was false, an intent to induce reliance, actual and reasonable reliance, and damages caused by that reliance.

The amended complaint identified Zero Labs’ registrations, registration numbers, issue dates, claimed first-use dates, and an allegedly fraudulent advertising specimen. But the court concluded that the complaint did not plead all required elements with the specificity Rule 9(b) demands. Because Zero Labs had not shown that amendment would be futile, the court GRANTED the motion to dismiss the cancellation claim WITH LEAVE TO AMEND. The court stated that any amendment must identify the relevant Statements of Use dates, each allegedly false statement, and the factual basis for asserting that the marks were not in use when those statements were filed.

Disposition

The court DENIED Zero Labs’ motion to dismiss the federal and California trademark-infringement claims. It GRANTED the motion to dismiss the cancellation claim WITH LEAVE TO AMEND. Zero Motorcycles could file a second amended complaint by May 17, 2023. The opinion’s conclusion does not separately state a disposition for the California unfair-competition claim.