Metal Jeans, Inc. v. Metal Sport, Inc.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 16 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
METAL JEANS, INC., a Nevada No. 19-55923
corporation,
D.C. No.
Plaintiff-Appellant, 2:15-cv-08987-DDP-RAO
v.
MEMORANDUM*
METAL SPORT, INC., et al.,
Defendants-Appellees.
and
ANO VELI SAMUEL TURTIAINEN,
Defendant.
Appeal from the United States District Court
for the Central District of California
Dean D. Pregerson, District Judge, Presiding
Argued and Submitted August 11, 2020
Pasadena, California
Before: WARDLAW and VANDYKE, Circuit Judges, and HILLMAN,** District
Judge.
Concurrence by Judge WARDLAW
*
This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
**
The Honorable Timothy Hillman, United States District Judge for the District of
Massachusetts, sitting by designation.
Metal Jeans, Inc., an apparel brand and owner of the non-stylized trademark
“METAL,” brought a trademark infringement claim against Metal Sport, Inc., a
powerlifting brand with a similar but stylized mark. Metal Jeans appeals the district
court’s grant of summary judgment on the basis that Metal Jeans came before the
court with unclean hands. We have jurisdiction pursuant to 28 U.S.C. § 1291, and
we reverse and remand.1
1. We assume without deciding that the district court sufficiently articulated that
unclean hands must be “prove[n] by clear and convincing evidence [to] establish
sufficient culpability.” Pinkette Clothing, Inc. v. Cosmetic Warriors Ltd., 894 F.3d
1015, 1029 (9th Cir. 2018).
2. As set forth in the simultaneously filed opinion, we review de novo whether
there exist any disputes of material fact, and we review the district court’s
application of the unclean hands doctrine to undisputed facts for abuse of discretion.
Summary judgment is only appropriate when, viewing the evidence and reasonable
inferences in the non-movant’s favor, no genuine issues of material fact exist and the
movant is entitled to judgment as a matter of law. See Frudden v. Pilling, 877 F.3d
821, 828 (9th Cir. 2017); Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove,
Inc., 419 F.3d 925, 927 (9th Cir. 2005). Factual questions related to the defense of
1
The parties are familiar with the facts, and we cite them herein only where
necessary.
2
unclean hands “may only be resolved on summary judgment if the evidence
presented by both sides would permit the trier of fact to come to only one
conclusion.” Japan Telecom, Inc. v. Japan Telecom Am. Inc., 287 F.3d 866, 871
(9th Cir. 2002).
To constitute unclean hands, a defendant must show, “[1] that the plaintiff’s
conduct is inequitable and … [2] relates [directly] to the subject matter of its claims.”
Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., 826 F.2d 837, 847 (9th Cir. 1987); see
also S. Cal. Darts Ass’n v. Zaffina, 762 F.3d 921, 933 (9th Cir. 2014) (the
misconduct must bear “‘immediate and necessary relation’ to the manner in which
[the plaintiff] acquired its rights or to the equities of this case”); Wells Fargo & Co.
v. Stagecoach Props., Inc., 685 F.2d 302, 308 (9th Cir. 1982) (“Bad intent is the
essence of [unclean hands].”); Republic Molding Corp. v. B. W. Photo Utils., 319
F.2d 347, 349–50 (9th Cir. 1963) (“[T]he extent of actual harm caused by the
conduct in question … is a highly relevant consideration.”); see also id. at 349(noting that unclean hands doesn’t include “extraneous transgressions,” or
“misconduct in the abstract, unrelated to the claim to which it is asserted as a
defense”).
The district court concluded that six instances of alleged misconduct
constituted unclean hands. First, Metal Jeans provided varying accounts of how it
acquired the mark. Second, Metal Jeans’ website represented that it owned the
3
METAL mark at a time when Topolewski America, Inc. (“TA”) owned it. Third,
Gary Topolewski, the owner of TA and Metal Jeans, told the U.S. Patent and
Trademark Office (“PTO”) in connection with Metal Jeans’ application for the mark
that METAL was a “premium denim lifestyle clothing brand,” but testified in this
case that this was inaccurate. Fourth, Metal Jeans may source some products from
China, despite its “American Made, American Worn” slogan. Fifth, Topolewski
testified inconsistently about how he assigned the goodwill and trademarks between
TA and Metal Jeans in 2009. And sixth, Topolewski previously made a false
statement to the PTO, which led the PTO to cancel TA’s registration of the mark in
2008.
As to the first five instances, the district court improperly resolved disputed
issues of material fact in the movant’s favor and used those erroneously resolved
facts and inferences to reach the conclusion that Metal Jeans acted with unclean
hands. See Frudden, 877 F.3d at 828; Japan Telecom, 287 F.3d at 871. On the
summary judgment record, moreover, the first, second, fourth, fifth and sixth
instances do not necessarily relate directly to the trademark claim Metal Jeans asserts
in this case, see Republic Molding, 319 F.2d at 349, do not appear to have caused
any harm, see id. at 349–50, or do not definitively evince malintent on the part of
Metal Jeans. See Wells Fargo, 685 F.2d at 308. The district court’s factual
conclusions regarding these instances of alleged misconduct may ultimately be
4
proved accurate after a trial, but they were not the only reasonable conclusions that
could be adduced from the evidence at summary judgment. See Japan Telecom, 287
F.3d at 871. Accordingly, the district court erred in concluding at summary
judgment that Metal Jeans came before the court with unclean hands.
3. For the same reasons, we affirm the district court’s rejection at summary
judgment of Metal Jeans’ counter-defense that Metal Sport acted with unclean hands.
This counter-defense, along with the unclean hands affirmative defense and the
merits of the infringement claims, should be fully developed and resolved at trial.
We therefore AFFIRM IN PART, REVERSE IN PART, and REMAND
for proceedings consistent with this disposition and the simultaneously filed opinion.
5
Metal Jeans, Inc. v. Metal Sport, Inc., No. 19-55923
FILED
FEB 16 2021
WARDLAW, Circuit Judge, with whom HILLMAN, District Judge, joins,
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
concurring:
I agree that many of the facts underpinning the district court’s unclean hands
decision in this case remain disputed. Meanwhile, those facts that are undisputed,
while “troubling,” are currently insufficient to establish unclean hands. Jarrow
Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 842 (9th Cir. 2002) (noting
that a party’s hands need not be “clean as snow” to defeat an unclean hands
defense).
That being said, all of this may change after a bench trial. For example,
whether the facts at trial support the district court’s implicit, though at this stage of
the proceedings, inappropriate, conclusion that Topolewski, Topolewski America,
and Metal Jeans, Inc. are alter egos of one another (under pertinent state law) may
prove critical. If so, Topolewski and Topolewski America’s misrepresentations to
the United States Patent and Trademark Office will be attributable to Metal Jeans,
and support for an unclean hands determination will become significantly stronger.