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Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 1 of 16

1 Michael R. Mushkin, Esq.


Nevada State Bar No. 2421
2 MICHAEL R. MUSHKIN & ASSOCIATES
4475 South Pecos Road
3 Las Vegas, Nevada 89121
Telephone: 702-386-3999
4 Facsimile: 702-454-3333
Email: michael@mushlaw.com
5
Mark Borghese, Esq.
6 Nevada State Bar No. 6231
mark@borgheselegal.com
7 BORGHESE LEGAL, LTD.
10161 Park Run Drive, Suite 150
8 Las Vegas, Nevada 89145
Tel. (702) 382-0200
9 Fax (702) 382-0212

10 Attorneys for Plaintiff

11 UNITED STATES DISTRICT COURT

12 DISTRICT OF NEVADA

13
BOSTON DENTAL GROUP, LLC, a Nevada Case No.: 2:16-cv-01636-RFB-CWH
14 limited liability company,

15 Plaintiff, PLAINTIFFS REPLY IN SUPPORT


OF MOTION FOR PARTIAL
16 vs. SUMMARY JUDGMENT
(TRADEMARK PRIORITY -
17 AFFORDABLE CARE, LLC, a North Carolina UNLAWFUL USE)
limited liability company
18 ORAL ARGUMENT REQUESTED
Defendants.
19 [Redacted Version of Document #65]

20 Plaintiff, Boston Dental Group, LLC (Plaintiff or BDG), by and through its
21 attorneys, hereby files this reply brief in support of its motion for partial summary judgment on
22 the issue of trademark priority - unlawful use. This reply is based on the following:
23 1. Trademark priority is an issue in every trademark infringement case. In addition
24 to priority being a core prong of trademark infringement, the affirmative defenses of unclean
25 hands and unenforceability were clearly pled by BDG. Moreover, the specific allegations that
26 Defendants trademark is unenforceable due to its violation of Nevada law has been in issue
27 throughout this case, including throughout discovery.
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Reply - Trademark Priority - Unlawful Use 1
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 2 of 16

1 2. As set out in more detail in BDGs Motion to Strike, S. Paul Steelman was never

2 disclosed as a witness in this case. His declaration attached to BDGs opposition should be

3 stricken and not considered by this court. In addition, the Vegas Financial Statements and Vegas

4 Fee Statements were never disclosed as evidence in this case during discovery and should be

5 stricken and not considered by this court.

6 3. Even if the court were to consider Defendants undisclosed witness and

7 undisclosed documents, it is clear that Defendant Affordable Cares arrangement with its

8 Nevada dentist is in violation of Nevada law. Affordable Cares supposed fixed fee fluctuates

9 quarterly based on the gross revenue of the dental office with the apparent goal of keeping the

10 fixed fee near 13-15% of the dental offices total revenue.

11 4. Regarding priority, BDG does not need to show acquired distinctiveness or

12 secondary meaning as BDG is not alleging trademark infringement. The relevant priority date

13 for BDG (which is being accused of infringement) is simply when BDG began using its

14 allegedly infringing trademark, namely January 2008. In contrast, the relevant priority date for

15 Affordable Care is when (if ever) it has obtained enforceable trademark rights for dental

16 services due to the fact that its agreements with its licensees appear to be illegal and/or based on

17 naked licenses.

18

19 Dated this 25th day of August 2017.

20 BORGHESE LEGAL, LTD.

21 /s/ Mark Borghese


Mark Borghese, Esq.
22 10161 Park Run Drive, Suite 150
Las Vegas, Nevada 89145
23
Michael R. Mushkin, Esq.
24 MICHAEL R. MUSHKIN & ASSOCIATES
4475 So. Pecos Road
25 Las Vegas, Nevada 89121
Attorneys for Plaintiff
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Reply - Trademark Priority - Unlawful Use 2
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 3 of 16

1 MEMORANDUM OF POINTS AND AUTHORITIES

2 I. INTRODUCTION

3 The question of the legality of Affordable Cares management agreements with dentists

4 goes straight to the heart of whether Affordable Care has enforceable trademark rights. All of

5 Affordable Cares claimed rights in its dental services trademarks are purportedly through

6 oral licenses it has with independent dental offices around the country. If the financial

7 arrangements with those dental offices are illegal, this illegal activity cannot form the basis of

8 any trademark rights, and Affordable Cares has trademarks are unenforceable.

9 Before this case was filed, while the prior Trademark Trial and Appeal Board (TTAB)

10 proceeding was active, counsel for BDG repeatedly told counsel for Defendant that Affordable

11 Cares management agreement with the Nevada dental office

12 illegal under Nevada law. The illegality of

13 Affordable Cares management agreement was an issue throughout this case and multiple

14 discovery requests by BDG sought information concerning this illegal arrangement.

15 Despite the numerous discovery requests, Affordable Care refused to identify any

16 witnesses or produce any financial documents on this issue. Regardless, Defendant did produce

17 its 2007 Management Services Agreement which is illegal on its face (prior to this case being

18 filed Affordable Care produced an unsigned copy of this document which began the

19 conversation on the illegal nature of its arrangement with its dentists).

20 Now for the first time, Affordable Care decides to bring forth a witnesses and a handful

21 of select documents to claim that the 2007 illegal management agreement was just a copy-and-

22 paste template and the fact that both it and the Nevada dental office signed the agreement was

23 meaningless. Such a claim is simply unbelievable.

24 Nevertheless, even if these witnesses and documents -- which were never identified in

25 discovery -- were considered (which they should not be) as set out in detail below,

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28 This arrangement is not a fixed fee contract.


Reply - Trademark Priority - Unlawful Use 3
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 4 of 16

2 II. ARGUMENT

3 A. Trademark Priority, the Unenforceability of Affordable Cares Trademark,

4 and Affordable Cares Unclean Hands

5 Affordable Cares assertion that trademark priority is not part of any of the claims or

6 defenses in this matter is without merit. Trademark priority is an issue in every trademark

7 infringement case. It is axiomatic in trademark law that the standard test of ownership is

8 priority of use. . . . [I]t is not enough to have invented the mark first or even to have registered it

9 first; the party claiming ownership must have been the first to actually use the mark in the sale

10 of goods or services. Sengoku Works Ltd. v. RMC Intl, Ltd., 96 F.3d 1217, 1219 (9th Cir.

11 1996).

12 Moreover, the specific allegations that Affordable Cares trademark is unenforceable and

13 that it has unclean hands due to a violation of Nevada law has been in issue throughout this case,

14 including in the pleadings and throughout discovery.

15 In BDGs Answer to Defendants Counterclaim, BDG states the following affirmative

16 defenses, among others:

17 Defendants counterclaims are barred by unclean hands.


18 Defendants trademarks are invalid and/or unenforceable.
19 See BDGs Answer to Counterclaim, Doc. 10, p. 5, lines 24-25.

20 In addition to the pleadings, both before and after this lawsuit was filed, counsel for

21 BDG repeatedly informed Affordable Care that its management agreement with its Nevada

22 dentist was illegal under Nevada law. This is apparently what prompted Affordable Care to

23 amend its management agreement with its Nevada dentist and back-date it to January 1, 2016.

24 Attached as Exhibit 3 to this Reply is an email chain including an email from the Nevada

25 practice owner Dr. Cher Chang. In the email, dated June 1, 2016,

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Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 5 of 16

6 See Exhibit 3, AFCA 0010392.

7 It is unclear when this January 1, 2016 management agreement was signed by Dr.

8 Chang.

10 See Exhibit 4, AFCA 0010489.

11 The argument set out in BDGs Motion for Partial Summary Judgment (Trademark

12 Priority - Unlawful Use) is a simple one, and one clearly within the pleadings of this case--

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15 Affordable Cares actions constitute the illegal practice of dentistry in Nevada and cannot form

16 the basis of any claimed trademark rights for dental services.

17 B. Defendants Undisclosed Witness and Documents Should not be Considered

18 by this Court

19 As set out in more detail in BDGs Motion to Strike, Affordable Care failed to name Mr.

20 Steelman as witnesses and failed to produce the financial information it now claims address

21 BDGs arguments concerning trademark priority and the unenforceability of Defendants

22 trademarks. This declaration and these documents should be stricken and not considered by this

23 court.

24 Not only was this witness not identified during discovery and these documents not

25 produced, BDG requested this information and Defendant Affordable Care refused to produce

26 it. Specifically, BDG requested an identification of all witnesses and documents related to

27 financial information of the Las Vegas affiliated practice, including:

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Reply - Trademark Priority - Unlawful Use 5
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 6 of 16

1 REQUEST FOR PRODUCTION NO. 9:

2 Please produce documents sufficient to show for Nevada and California

3 Affordable Cares and any Nevada or California Licensees monthly and annual

4 net profit from goods for services sold under Affordable Care Marks from 2007 to

5 the present.

6 RESPONSE: In addition to the foregoing General Objections, Affordable

7 Care objects to this request as irrelevant to this action and not reasonably

8 calculated to lead to the discovery of admissible evidence. Neither Plaintiffs

9 action for declaratory relief of non-infringement nor Affordable Cares

10 counterclaims for trademark infringement, false designation of origin, and unfair

11 competition involves evidence of profit from goods or services sold under

12 Affordable Care Marks.

13 See Doc. 32-7 as Exhibit 7, p. 3.

14

15 INTERROGATORY NO. 11:

16 Please state in detail the factual basis, including, but not limited to,

17 identification of all documents and persons, all sums and amounts received by

18 you from your affiliated practices located in California and Nevada.

19 ANSWER: In addition to the foregoing General Objections, Affordable

20 Care objects to this Interrogatory because the revenue that Affordable Care has

21 received from its affiliated practices in Nevada and California is not relevant to

22 Plaintiffs claims and defenses, or Affordable Cares counterclaims, which all

23 relate to the use of the AFFORDABLE DENTURES Marks. Affordable Care

24 further objects to this Interrogatory because the information sought in this

25 Interrogatory is not proportional to the needs of the case.

26 ///

27 ///

28 ///
Reply - Trademark Priority - Unlawful Use 6
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 7 of 16

1 INTERROGATORY NO. 13:

2 Please state in detail the factual basis, including, but not limited to,

3 identification of all documents and persons, of all reimbursements, including, but

4 not limited to, fee-for-service methods of reimbursements paid to you and/or paid

5 by you to your affiliated dental practices located in California and Nevada.

6 ANSWER: In addition to the foregoing General Objections, Affordable

7 Care objects to this Interrogatory because Affordable Cares financial relationship

8 with its affiliated practices in Nevada and California is not relevant to Plaintiffs

9 claims and defenses, or Affordable Cares counterclaims, which all relate to the

10 use of the AFFORDABLE DENTURES Marks. Affordable Care further objects

11 to this Interrogatory because the information sought in this Interrogatory is not

12 proportional to the needs of the case.

13 See Doc. 32-5 as Exhibit 2, p. 9-10.

14 Affordable Care cannot refuse to produce this information or identify witnesses during

15 discovery and then attempt to get into evidence a new witness and select documents because it

16 now suits them.

17 C. Defendants Arrangement with its Nevada Dentist is Illegal Under Nevada

18 Law

19 1. The Evidence of Record in this Case Demonstrates that Affordable Care

20 Operated Illegally in Nevada

21 In addition to the fact that Affordable Cares surprise declaration and exhibits were

22 never produced and should not be considered, this untimely evidence contradicts the evidence

23 that is properly of record in this case, including the sworn testimony of Affordable Cares only

24 witness, Adam Siegal who testified that

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Reply - Trademark Priority - Unlawful Use 7
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 8 of 16

7 See Exhibit 5, Adam Siegal Deposition, p. 28 lines 17-24

8 This was echoed by Dr. Cher Y. Chang who owns the Nevada dental practice. She

9 testified as follows

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5 See Exhibit 6, Cher Y. Chang, DMD Deposition, p. 12, line 16 - p. 13, line 19.

6 The evidence and witnesses of record in this case, including Affordable Cares only

7 named witness, confirm that

9 As set out in detail in BDGs Motion, this is a clear violation of Nevada law. See NRS

10 631.395 (A person is guilty of the illegal practice of dentistry or dental hygiene who . . . 10.

11 Except as otherwise provided in NRS 631.385, owns or controls a dental practice, shares in the

12 fees received by a dentist or controls or attempts to control the services offered by a dentist if

13 the person is not himself or herself licensed pursuant to this chapter.) emphasis added; See also

14 NRS 631.215(2)(h)(1) (stating that a person who provides goods or services to a dental practice

15 may not, [p]rovide such goods or services in exchange for payments based on a percentage or

16 share of revenues or profits of the dental practice, office or clinic.)

17 A declaration from an undisclosed witnesses and documents should not be allowed into

18 evidence to attempt to contradict the documents of record in this case and the sworn testimony

19 of Affordable Cares only witnesses along with the sworn testimony of the Nevada dentist who

20 signed the management agreement with Affordable Care.

21 2. Even if the Court were to Consider Defendants Undisclosed Witness and

22 Documents the Arrangement between Affordable Care and the Nevada Dental

23 Practice Appears to be Illegal

24 Even if this Court were to consider the declaration of Mr. Steelman and the undisclosed

25 Vegas Financial Statements and Vegas Fee Statements, the arrangement between Affordable

26 Care and its Nevada dental office appears to be illegal under Nevada law.

27

28 This is abundantly clear from the Vegas Financial Statements and


Reply - Trademark Priority - Unlawful Use 9
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1 the Vegas Fee Statements.

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1 (See 2016 Management Services Contract, Doc. 54-1 as Exhibit A-4, p. 21 AFCA 0009190).

6 Mr. Steelmans claim that the amounts paid by the Nevada dental practice are

7 contractually fixed simply does not hold up to scrutiny.

10

11 Affordable Cares arrangement with the Nevada dental office is analogous to a company

12 which provides services to a law firm, such as a runner service, making an agreement with a

13 Nevada law firm to provide certain services,

14

15 Affordable Cares

16 sham fixed fee simply does not stand up to scrutiny and is illegal under Nevada law.

17 Moreover, Affordable Care has not identified a single state where this type of arrangement

18 would be legal. Affordable Cares business practices appear to violate the laws of every, or

19 nearly every, state it operates in.

20 D. Illegal Activity Cannot Form the Basis of Any Trademark Rights

21 Affordable Cares arrangement with the Nevada dental office is illegal under Nevada

22 law and cannot form the basis of any trademark rights. CreAgri, Inc. v. USANA Health Scis.,

23 Inc., 474 F.3d 626, 630 (9th Cir. 2007).

24 In response, Affordable Care argues that a case in the Western District of Washington,

25 Vosk Intl Co. v. Zao Gruppa Predpriyatij Ost, 2013 U.S. Dist. LEXIS 147011, which was an

26 appeal of a Trademark Trial and Appeal matter stands for the proposition that once a party has

27 obtained priority in a trademark subsequent illegal activities are irrelevant. That district court

28 case, however, is not similar to the case at bar. Vosk Intl Co involved a company that was
Reply - Trademark Priority - Unlawful Use 11
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 12 of 16

1 notified by the FDA of two beverage labeling defects-- one in 2005 involving a single shipment

2 of product that contained a color additive prohibited by the FDA and a second violation in 2008

3 involving an unspecified color additive. In contrast, in this case there is no evidence that

4 Affordable Care has made any legal use of its trademark for dental services. Affordable Care is

5 unable to supervise or oversee its licensees trademark use in all fifty states (naked licensing)

6 and it is apparently in financial arrangements with various dentists in violation of most, if not all

7 state laws.

8 Next, Affordable Care argues that its illegal financial arrangements might be

9 immaterial to its trademark rights. CreAgri, 474 F.3d at 633; S. California Darts Assn v.

10 Zaffina, 762 F.3d 921, 931 (9th Cir. 2014) (trademark protection might not be withheld on

11 account of unlawful conduct that is collateral, namely where there is an insufficient nexus

12 between the unlawful behavior and the use of the mark in commerce.).

13 Unlike S. California Darts Assn which involved a companys failure to incorporate and

14 was unrelated to the trademark at issue, the unlawful activity here relates directly to the

15 arrangement between Affordable Care and its licensee dental practices regarding the practice of

16 dentistry under the brand Affordable Dentures. Violating the Nevada dental statutes such that

17 the violations constitute the illegal practice of dentistry in Nevada is hardly collateral or

18 immaterial when the case at bar concerns trademarks for dental services.

19 E. BDG Does Not Need to Show Acquired Distinctiveness or Secondary

20 Meaning as BDG is not Alleging Trademark Infringement

21 Finally, Affordable Care argues vigorously that BDGs motion cannot be granted as

22 BDG has not shown when enforceable trademark rights began in Boston Dental Groups

23 Affordable Dental mark. Defendant alleges that BDGs Affordable Dental mark is descriptive

24 and therefore BDG must make a showing of acquired distinctiveness and secondary meaning.

25 Affordable Cares arguments concerning acquired distinctiveness and secondary

26 meaning, however, are irrelevant to this case. BDG is not asserting trademark infringement

27 against Affordable Care. The analysis as to when BDG obtained a protectable mark -- or even if

28 it has a protectable mark -- would only be relevant if BDG was asserting a claim of trademark
Reply - Trademark Priority - Unlawful Use 12
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 13 of 16

1 infringement against Affordable Care. Only in that case would it be relevant as to when BDG

2 obtained enforceable trademark rights in relation to when the alleged infringement occurred. See

3 S. California Darts Assn 762 F.3d at 16-17 (when a trademark infringement claim is brought

4 based on a descriptive mark, whether the descriptive mark has acquired secondary meaning is

5 relevant to the first prong of a trademark infringement claim, namely whether the trademark

6 holder has a valid, protectable trademark); see also La Quinta Worldwide LLC v. Q.R.T.M., S.A.

7 de C.V., 762 F.3d 867 (9th Circuit 2014) (the strength of the alleged infringers mark in a

8 trademark infringement case is only relevant in a reverse infringement case).

9 In this case, BDG, a company owned by a licensed Nevada dentist, is merely seeking a

10 declaratory judgment that Affordable Cares trademarks for dental services are invalid and

11 should be cancelled. Affordable Care (not BDG) filed a counterclaim for trademark

12 infringement. Thus, while Affordable Cares priority date in this case is when it first obtained

13 enforceable trademark rights in order to bring its counterclaim, the relevant priority date for

14 BDG is when it first began using its allegedly infringing mark, namely when it opened its first

15 dental office in January 2008.

16 As detailed above, Affordable Cares illegal practice of dentistry in Nevada was not

17 lawful commercial use and cannot form the basis of any trademark rights which pre-date BDGs

18 use of its Affordable Dental mark. Plaintiff Boston Dental Groups trademark rights in its

19 Affordable Dental mark, which began at least as early as January 2008, therefore have priority

20 over Affordable Cares illegal activity.

21 This court should therefore grant partial summary judgment in BDGs favor on the issue

22 of priority of trademark rights as it relates to Defendants Counterclaims.

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Reply - Trademark Priority - Unlawful Use 13
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 14 of 16

1 IV. CONCLUSION

2 For the foregoing reasons, BDG respectfully requests that the Court grant partial

3 summary judgment in its favor on the issue of priority of trademark rights as it relates to

4 Defendants Counterclaims.

6 Dated this 25th day of August 2017.

7 BORGHESE LEGAL, LTD.

8
/s/ Mark Borghese
9 Mark Borghese, Esq.
10161 Park Run Drive, Suite 150
10 Las Vegas, Nevada 89145

11 Michael R. Mushkin, Esq.


MICHAEL R. MUSHKIN & ASSOCIATES
12 4475 So. Pecos Road
Las Vegas, Nevada 89121
13 Attorneys for Plaintiff

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1 CERTIFICATE OF SERVICE

2 I am a resident of Clark County, Nevada and am over the age of 18 years and not a party

3 to the action. My business address is: 10161 Park Run Drive, Suite 150, Las Vegas, Nevada,

4 89145.

5 On August 25, 2017, I served this document on the parties listed on the attached service

6 list via one or more of the methods of service described below as indicated next to the name of

7 the served individual or entity by a checked box:

8 PERSONAL SERVICE: by personally hand-delivering or causing to be hand delivered


by such designated individual whose particular duties include delivery of such on behalf
9 of the firm, addressed to the individual(s) listed, signed by such individual or
his/her representative accepting on his/her behalf. A receipt of copy signed and dated by
10 such an individual confirming delivery of the document will be maintained with the
document and is attached.
11
EMAIL: By transmitting a copy of the document to the electronic-mail address
12 designated by the attorney or the party who has consented to such manner of service.

13 E-FILE: Automatically through the courts electronic filing system.

14 FAX SERVICE: by transmitting to a facsimile machine maintained by the attorney or


the party who has consented to such manner of service.
15
MAIL SERVICE: by placing a true copy thereof enclosed in a sealed envelope with
16 postage thereon fully prepaid, in the United States mail at Las Vegas, Nevada. I am
readily familiar with the firms practice of collection and processing correspondence by
17 mailing. Under that practice, it would be deposited with the U.S. Postal Service on that
same day with postage fully prepaid at Las Vegas, Nevada in the ordinary course of
18 business. I am aware that on motion of the party served, service is presumed invalid if
postal cancellation date or postage meter date is more than one day after date of deposit
19 for mailing an affidavit.

20 I declare that under penalty of perjury under the laws of the State of Nevada that the

21 above is true and correct. I further declare that I am employed in the office of a member of the

22 bar of this court at whose direction the service was made.

23

24
/s/ Mark Borghese
25
An employee of BORGHESE LEGAL, LTD.
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Reply - Trademark Priority - Unlawful Use 15
Case 2:16-cv-01636-RFB-CWH Document 68 Filed 08/25/17 Page 16 of 16

1 SERVICE LIST

2
ATTORNEYS PARTIES METHOD OF
3 OF RECORD REPRESENTED SERVICE
4 Scott R. Cook, Esq. Attorneys for Personal service
Jonathan D. Blum, Esq. Defendant Email
5 Kolesar & Leatham E-File
400 South Rampart Blvd., Suite 400 Fax service
6 Las Vegas, NV 89145 Mail service
7 Email: scook@klnevada.com,
jblum@klnevada.com
8

9
Edward F. Malone, Esq. Attorneys for Personal service
10 Scott J. Slavick, Esq. Defendant Email
Sharon E. Calhoun, Esq. E-File
11 Barack Ferrazzano Kirschbaum & Fax service
Nagelberg LLP Mail service
12 200 W. Madison St., Suite 3900
Chicago, IL 60606
13
Email: edward.malone@bfkn.com,
14 sharon.calhoun@bfkn.com,
scott.slavick@bfkn.com
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EXHIBIT 3

EXHIBIT 3
Case 2:16-cv-01636-RFB-CWH Document 68-1 Filed 08/25/17 Page 2 of 2

FILED UNDER SEAL


Case 2:16-cv-01636-RFB-CWH Document 68-2 Filed 08/25/17 Page 1 of 2

EXHIBIT 4

EXHIBIT 4
Case 2:16-cv-01636-RFB-CWH Document 68-2 Filed 08/25/17 Page 2 of 2

FILED UNDER SEAL


Case 2:16-cv-01636-RFB-CWH Document 68-3 Filed 08/25/17 Page 1 of 2

EXHIBIT 5

EXHIBIT 5
Case 2:16-cv-01636-RFB-CWH Document 68-3 Filed 08/25/17 Page 2 of 2

FILED UNDER SEAL


Case 2:16-cv-01636-RFB-CWH Document 68-4 Filed 08/25/17 Page 1 of 2

EXHIBIT 6

EXHIBIT 6
Case 2:16-cv-01636-RFB-CWH Document 68-4 Filed 08/25/17 Page 2 of 2

FILED UNDER SEAL

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