Case Name:   BTI Group v. Versant Business Team, Inc.

Case No.:       1-14-CV-262354

Plaintiff BTI Group (“Plaintiff”) operates a business brokerage firm in California and Nevada and uses the trade name “Business Team.”  (Complaint ¶ 1.)  Plaintiff has been in business since 1981 and at all times has used the trade name “Business Team.”  (Id.)  Plaintiff alleges that it has built up valuable goodwill in its trade name and its trade name has come to be associated exclusively with its business.  (Complaint ¶ 2.)  Plaintiff further alleges that its trade name is highly distinctive and has acquired a secondary meaning to its name “[consisting] of an association by the general public of the name [Business Team] with high quality and professional business brokerage services.”  (Complaint ¶¶ 7, 23.)   Defendant Versant Business Team, Inc. (“Defendant”) is a business brokerage firm in California that is in direct competition with Plaintiff and recently started using the trade name “Versant Business Team, Inc.”  (Complaint ¶ 3.)  Plaintiff alleges that Defendant’s trade name is substantially similar to its trade name such that there is a substantial likelihood of confusion.  (Complaint ¶¶ 8-9.)  Plaintiff further alleges that Defendant infringed and disparaged Plaintiff’s trade name in commerce by operating a business brokerage firm under the name Versant Business Team, Inc. and selling and advertising its business brokerage services under that name.  (Complaint ¶¶ 24-25.)

On March 19, 2014, Plaintiff filed the operative complaint alleging causes of action for: (1) unfair competition (under California Business & Professions Code sections 17200, et seq.); (2) trade name infringement (under California Business & Professions Code sections 14401, et seq.); and (3) trade name infringement (under 15 U.S.C sections 1051-1128 (the “Lanham Act”)).

On May 20, 2014, Defendant filed the instant demurrer to the second and third causes of action complaint and motion to strike portions of the complaint.  Plaintiff filed papers in opposition to the demurrer and motion to strike on July 1, 2014.  Defendant filed replies on July 10, 2014.

Defendant request for judicial notice of the date of Plaintiff’s corporate formation, January 14, 1993, as indicated on a printout from the website of the California Secretary of State is GRANTED.  (See Evid. Code, § 452, subd. (c); see also Pedus Building Services, Inc. v. Allen (2002) 96 Cal.App.4th 152, 156; Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1286-1287; Ampex Corp. v. Cargle (2005) 128 Cal.App.4th 1569, 1573, fn. 2 [judicial notice of computer printouts from website and online message board to show they existed in the public eye]; Scott v. JP Morgan Chase Bank (2013) 214 Cal.App.4th 743, 753 [judicial notice of agreement posted on a government agency’s website].)

Plaintiff’s request for judicial notice of a printout from the website of the California Secretary of State, indicating the date of Business Team, Inc.’s incorporation, is GRANTED.  (See Evid. Code, § 452, subd. (c); see also Pedus Building Services, Inc. v. Allen, supra, at p. 156; Gamet v. Blanchard, supra, at p. 1286-1287; Ampex Corp. v. Cargle, supra, at p. 1573, fn. 2; Scott v. JP Morgan Chase Bank, supra, at p. 753.)

Defendant’s demurrer to the second cause of action on the grounds of uncertainty and failure to allege facts sufficient to constitute a cause of action is SUSTAINED, with 10 days’ leave to amend.  The second cause of action is labeled as one for trade name infringement under California Business & Professions Code section 14401, et seq.  (Complaint, p. 3:25-26, ¶ 15.)  Thus, the second cause of action is not limited to California Business & Professions Code sections 14401-14405, dealing with bottles, casks, and kegs, as suggested by Defendant.  However, since Plaintiff only generally identifies California Business & Professions Code section 14401, et seq. and does not identify the specific statute that Defendant allegedly violated, it is not clear which specific statutory provision or provisions Plaintiff contends that Defendant violated.  Consequently, the second cause of action is uncertain and fails to state a claim.  (See Covenant Care, Inc. v. Super. Ct. (2004) 32 Cal.4th 771, 790 [noting the general rule that statutory causes of action must be pleaded with particularity]; Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619 [demurrer properly sustained where the “complaint identifies no particular section of the statutory scheme which was violated”].)

Defendant’s demurrer to the third cause of action on the grounds of uncertainty and failure to allege facts sufficient to constitute a cause of action is OVERRULED. An unregistered trade name may be protected by section 1125, subdivision (a) of the Lanham Act if it is used in commerce and has come to symbolize the actual product or service provided such that it has acquired a secondary meaning.  (See Pan Am World Airways, Inc. v. Flight 001, Inc., 2007 U.S. Dist. LEXIS 51012, 20-22 [“[t]he Lanham Act addresses trademark infringement of both registered and unregistered marks”]; see also Accuride International, Inc. v. Accuride Corp. (1989) 871 F.2d 1531, 1534 [“[a]s a practical matter, courts are rarely called upon to distinguish between trade names, trademarks and service marks. Trade names often function as trademarks or service marks as well”]; Conagra, Inc. v. Singleton (1985) 743 F.2d 1508, 1512-13 [an unregistered trade name can be protected by the Lanham Act where it is so closely associated with the goods and/or services sold as to be equivalent to a trademark, and where the name has acquired a secondary meaning]; SunEarth, Inc. v. Sun Earth Solar Power Co. (2012) 846 F. Supp. 2d 1063, 1074 [“registered and unregistered trade names and trademarks are protected under the Lanham Act”].)  Here, Plaintiff alleges that it used its trade name Business Team in commerce and the trade name acquired a secondary meaning such that it alleges facts sufficient to constitute a cause of action. (Complaint ¶¶ 7, 22-23.)

Furthermore, Defendant’s argument regarding uncertainty lacks merit as the complaint clearly alleges that Defendant’s use of the trade name Versant Business Team, Inc. violates 15 U.S.C. 1125, subdivision (a).  (See Complaint ¶ 25 [“[t]hese acts are in violation of 15 U.S.C. Section 1125(a)”]; see also Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616 [“a demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures”].)

Defendant’s motion to strike portions of the complaint referencing Plaintiff’s use of the trade name Business Team since 1981 (see ¶ 1, p. 1:26-27; ¶ 16, p. 4:7-9) is DENIED. The mere fact that Plaintiff became incorporated on January 14, 1993, does not, in and of itself, mean that Plaintiff’s allegations in the complaint that it has used the trade name Business Team since 1981 are false.  As Plaintiff points out, a trade name can be transferred to a successor corporation as an asset.  (See Ferrara v. Scharf (1979) 466 F. Supp. 125, 127.)  For purposes of trade name infringement, when evaluating which party was the first in time to use a particular trade name, courts consider a predecessor corporation’s use of the trade name to be part and parcel of the successor corporation’s claim that it was the first user of the term.  (See Accuride International, Inc. v. Accuride Corp. (1989) 871 F.2d 1531, 1540.)  Thus, Defendant has not established that Plaintiff’s allegations that it has used the trade name Business Team since 1981 are false.

Defendant’s motion to strike portions of the complaint requesting attorney fees and damages under 15 U.S.C. section 1117, subdivision (a) (see ¶ 29, p. 6:1-2, 14-15, 17-18, 20-21) is DENIED. A cursory reading of the statute plainly indicates that attorney fees and damages are recoverable under 15 U.S.C. section 1117, subdivision (a), if a party establishes a violation under 15 U.S.C. section 1125, subdivision (a), which covers unregistered trade names as indicated above.  Here, Plaintiff alleges that Defendant has violated 15 U.S.C. section 1125, subdivision (a) and, thus, may properly request attorney fees and damages under 15 U.S.C. section 1117, subdivision (a).  (See Larsen v. Terk Techs. Corp. (1998) 151 F.3d 140, 145.)

The Court will prepare the order.