Sugarfina v. Bouquet Bar - Order Denying MTD

Case 8:18-cv-01305-CJC-DFM Document 46 Filed 10/09/18 Page 1 of 13 Page ID #:326
8 UNITED STATES DISTRICT COURT

9 CENTRAL DISTRICT OF CALIFORNIA
10 SOUTHERN DIVISION
11
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12 ) Case No.: SACV 18-01305-CJC(DFMx)
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SUGARFINA, INC., )
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14 )
Plaintiff, )
15 ) ORDER DENYING DEFENDANTS’
v. ) MOTION TO DISMISS COMPLAINT
16 ) [Dkt. 39]
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BOUQUET BAR, INC., et al., )
)
18 )
Defendants. )
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1 I. INTRODUCTION
2
3 Plaintiff Sugarfina, Inc. (“Sugarfina”) brings this action against Defendants

4 Bouquet Bar, Inc. (“Bouquet Bar”), Bouquet Bar, LLC, David (Daoud) Yusuf, Alex
5 Amidi, Jeffrey Matsen, and Sal Aziz. Plaintiff alleges trade dress infringement, unfair
6 business practices, patent infringement, and copyright infringement. (See generally Dkt.
7 1 [Complaint, hereinafter “Compl.”].) Before the Court is Defendants’ motion to dismiss
8 the Complaint for failure to state a claim. (Dkt. 39 [Notice of Motion and Motion]; Dkt.
9 39-1 [Memorandum, hereinafter “Mot.”].) For the following reasons, the motion is
10 DENIED.1
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12 II. BACKGROUND
13
14 Plaintiff Sugarfina is a California-based luxury candy boutique. (Compl. ¶ 1.)

15 Sugarfina is well-known for its distinctive packaging. The candy boutique sells candy in
16 rectangular or square packages that contain smaller clear-top cubes filled with candy.
17 Through its Candy Bento Box® products, Sugarfina invites its customers to “mix and
18 match” different items from approximately 140 different lines of candy. (Id. ¶¶ 3, 8.)
19 Since the company’s founding in 2012, Sugarfina has grown to employ over 400 people
20 and operate over fifty retail locations in high-end luxury spaces throughout the United
21 States and Canada. (Id. ¶¶ 2–4.)
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23 Sugarfina has protected its unique and distinctive packaging through design
24 patents, trademarks, copyrights, and trade dress protection. (Id. ¶ 9.) Sugarfina owns
25 U.S. Design Patent No. D763,684 (“the ’D684 Patent”) as well as U.S. Copyright Reg.
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Having read and considered the papers presented by the parties, the Court finds this matter appropriate
28 for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set
for October 15, 2018 at 1:30 p.m. is hereby vacated and off calendar.
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1 Nos. VA0001963483 and VA0001963482. (Id. ¶ 25.) Sugarfina alleges its distinctive
2 trade dress consists of the following elements: (1) “an individual clear top cube with a
3 label with a patterned band and shapes (namely, circles, diamonds, or hearts), and a
4 triangular end-tab containing candy product,” (2) “a rectangular or square product
5 package with minimal lettering,” (3) “the inside bottom surface of the product package
6 dominated by a series of cube wells or trays,” (4) “the series of cube wells being spaced
7 from one another within the product package,” and (5) “a series of clear top cubes with
8 labels and a patterned band, overlaid shapes (namely, circles, diamonds, or hearts), and a
9 triangular end-tab containing candy product that each reside in a corresponding cube
10 inside the box.” (Id. ¶ 34.)
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1 Defendants also sell candy in curated gift boxes. (Id. ¶ 10.) After gaining
2 experience in the floral industry, Defendants launched Bouquet Bar in 2017. (Id. ¶¶ 10,
3 44.) Defendant Bouquet Bar, Inc. (“Bouquet Bar”) is a Delaware corporation with its
4 principal place of business in Irvine, California. (Id. ¶ 14.) Bouquet Bar, LLC was a
5 Wyoming limited liability company that dissolved in November 2017. (Id. ¶ 15.)
6 Defendants David (Daoud) Yusuf, Alex Amidi, and Sal Aziz are owners of Bouquet Bar
7 and reside in California. (Id. ¶¶ 16–17, 19.) Defendant Jeffrey Matsen is one of the
8 registered agents of Bouquet Bar, LLC and a California resident. (Id. ¶ 18.)
9
10 Sugarfina alleges that a number of Bouquet Bar’s candy products infringe its
11 intellectual property rights.2 (Id. ¶ 46.) Bouquet Bar sells candy in small orange cubes
12 with clear tops that are arranged in wells in rectangular boxes. (Id. Ex. 5.) Bouquet
13 Bar’s customers can create gift boxes from a wide selection of candy, including milk
14 chocolate cookie dough bites, watermelon gummy rings, different flavors of gummy
15 bears, and chocolate truffles. (Id. ¶ 49.)
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Sugarfina’s Complaint identifies the following products: “The Shot,” “The Cocktail,” “The Martini,”
27 “Love Rocks,” “Love Box,” “Love Box 1,” “Love Box 2,” “Love Box 3,” “Love Box 4,” “Thank You
Box,” “Thank You Box 5,” “Sympathy Box,” “Sympathy Box 1,” “Sympathy Box 2,” “Birthday Box,”
28 “Birthday Box 3,” “Birthday Box 4,” “Birthday Box 5,” “Birthday Box 7,” “Legends Box,” “Fit Box,”
“My Girl,” and “Spa Box.” (Compl. ¶ 46; id. Ex. 4.)
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1 On October 17, 2017, Sugarfina sent a cease-and-desist letter to Defendants to

2 “refrain from selling and promoting candy products in cubes and gift boxes with spaced
3 cube receiving wells that infringe Sugarfina’s intellectual property rights.” (Id. ¶ 58.) On
4 January 21, 2018, Bouquet Bar co-owners Yusef, Amidi, and Aziz appeared on the ABC
5 show Shark Tank to present Bouquet Bar’s products for potential investment. (Id. ¶ 53.)
6 During the episode, Shark Tank investor Lori Greiner told Defendants that their product
7 “looks just like Sugarfina” and that their product was “sort of [Sugarfina’s] trademark.”
8 (Id. ¶ 54.) On January 30, 2018, Sugarfina again demanded that Defendants cease and
9 desist their alleged infringing activities. (Id. ¶ 58.)
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11 Sugarfina filed this action in federal court on July 27, 2018. (Dkt. 1.) Sugarfina
12 brings claims for (1) trade dress infringement, (2) unfair business practices under section
13 17200 of the California Business and Professions Code, (3) design patent infringement,
14 and (4) copyright infringement. (See generally Compl.) On September 10, 2018,
15 Defendants filed the present motion to dismiss the Complaint for failure to state a claim.
16 (Dkt. 39.)
17
18 III. LEGAL STANDARD

19
20 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal
21 sufficiency of the claims asserted in the complaint. The issue on a motion to dismiss for
22 failure to state a claim is not whether the claimant will ultimately prevail, but whether the
23 claimant is entitled to offer evidence to support the claims asserted. Gilligan v. Jamco
24 Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). Rule 12(b)(6) is read in conjunction with
25 Rule 8(a), which requires only a short and plain statement of the claim showing that the
26 pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). When evaluating a Rule 12(b)(6)
27 motion, the district court must accept all material allegations in the complaint as true and
28 construe them in the light most favorable to the nonmoving party. Moyo v. Gomez, 32
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1 F.3d 1382, 1384 (9th Cir. 1994). The district court may also consider additional facts in
2 materials that the district court may take judicial notice, Barron v. Reich, 13 F.3d 1370,
3 1377 (9th Cir. 1994), as well as “documents whose contents are alleged in a complaint
4 and whose authenticity no party questions, but which are not physically attached to the
5 pleading,” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled in part on
6 other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).
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8 However, “the tenet that a court must accept as true all of the allegations contained
9 in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678
10 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (stating that while
11 a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
12 allegations, courts “are not bound to accept as true a legal conclusion couched as a factual
13 allegation” (citations and quotes omitted)). Dismissal of a complaint for failure to state a
14 claim is not proper where a plaintiff has alleged “enough facts to state a claim to relief
15 that is plausible on its face.” Twombly, 550 U.S. at 570. In keeping with this liberal
16 pleading standard, the district court should grant the plaintiff leave to amend if the
17 complaint can possibly be cured by additional factual allegations. Doe v. United States,
18 58 F.3d 494, 497 (9th Cir. 1995).
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20 IV. DISCUSSION
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22 1. Trade Dress Infringement

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24 Sugarfina’s first claim is for trade dress infringement under section 43(a) of the
25 Lanham Act. (Compl. ¶¶ 86–97.) The Lanham Act “provides protection for a trade
26 dress, which is the total image of a product, including features such as size, shape, color,
27 texture, and graphics.” Millennium Labs. Inc. v. Ameritox, Ltd., 817 F.3d 1123, 1126 (9th
28 Cir. 2015) (citations and internal quotation marks omitted). To state a claim for trade
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1 dress infringement, the plaintiff must allege that the trade dress is (1) nonfunctional, (2)
2 either “inherently distinctive or [it has] acquired distinctiveness through a secondary
3 meaning,” and (3) likely to be confused with the defendant’s product by the consuming
4 public. Disc Golf Ass’n, Inc. v. Champion Discs, Inc., 158 F.3d 1002, 1005 (9th Cir.
5 1998).
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7 Defendants argue that Sugarfina fails to adequately allege that its trade dress is
8 nonfunctional. (Mot. at 4–8.) Trade dress protection extends only to product features
9 that are nonfunctional. Disc Golf, 158 F.3d at 1006. A feature is functional “if it is
10 essential to the use or purpose of the article or if it affects the cost or quality of the article,
11 that is, if exclusive use of the feature would put competitors at a significant non-
12 reputation-related disadvantage.” Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159,
13 165 (1995). To determine whether a product feature is functional, courts consider:
14 “(1) whether the design yields a utilitarian advantage, (2) whether alternative designs are
15 available, (3) whether advertising touts the utilitarian advantages of the design, and
16 (4) whether the particular design results from a comparatively simple or inexpensive
17 method of manufacture.” Disc Golf, 158 F.3d at 1006. Ultimately, the “functionality
18 analysis . . . is a question of fact.” Secalt S.A. v. Wuxi Shenxi Constr. Mach. Co., 668
19 F.3d 677, 683 (9th Cir. 2012).
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21 Here, Sugarfina alleges its trade dress is “inherently distinctive and not functional,”
22 (Compl. ¶ 87), because “there exist wide and varied ways to design packaging that
23 contains gifts and candy,” (id. ¶ 37). Defendants argue that Sugarfina fails to state a
24 claim for trade dress infringement because the alleged trade dress’s “functional nature . . .
25 is self-evident.” (Mot. at 5.) Defendants assert the various features of Sugarfina’s
26 alleged trade dress—rectangular or square packaging, the clear-top boxes, the use of
27 patterned bands to secure box lids, and the series of cube wells or trays—are all
28 inherently functional. (Id. at 5–7.)
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1 Defendants’ focus on the individual features, however, ignores the overall

2 impression that these features could create in combination. Factfinders “examine trade
3 dress as a whole to determine its functionality,” as “functional elements that are
4 separately unprotectable can be protected together as a part of a trade dress.”
5 Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., 826 F.2d 837, 842 (9th Cir. 1987). The
6 focus is “not on the individual elements, but rather on the overall visual impression that
7 the combination and arrangement of those elements create.” Clicks Billards, Inc. v.
8 Sixshooters, Inc., 251 F.3d 1252, 1259 (9th Cir. 2001) (emphasis in original).
9 Accordingly, the inquiry “is not addressed to whether individual elements of the trade
10 dress fall within the definition of functional, but to whether the whole collection of
11 elements taken together are functional.” Fuddruckers, 826 F.2d at 842. From the
12 photographs in the Complaint, it can be reasonably inferred that it is the overall
13 combination of these features that matters, not each feature in isolation. (See Compl. at
14 7–12.)
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1 Defendants also argue Sugarfina’s allegation that “there exist wide and varied
2 ways to design packaging that contains gifts and candy,” (Compl. ¶ 37), is insufficient to
3 allege the trade dress’s nonfunctionality because it is a conclusion of law. (Mot. at 7.)
4 The Court disagrees. Whether or not there are wide and varied ways to design candy
5 packaging is a question of fact, possibly requiring expert testimony. Courts consider the
6 availability of alternative designs—a factual issue—in order to reach the legal conclusion
7 that a product feature is nonfunctional. Cf. Disc Golf, 158 F.3d at 1006. On a Rule
8 12(b)(6) motion to dismiss, the Court is required to accept all factual allegations as true.
9 See Moyo, 32 F.3d at 1384. Assuming there exist wide and varied ways to design candy
10 packaging besides Sugarfina’s alleged trade dress, Sugarfina has sufficiently alleged that
11 its trade dress is nonfunctional. The Complaint states a valid claim for trade dress
12 infringement.
13
14 2. Unfair Business Practices

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16 Sugarfina’s second claim is for unfair business practices under section 17200 of
17 the California Business and Professions Code. (Compl. ¶¶ 98–109.) Claims made under
18 this section are substantially congruent to claims made under the Lanham Act. Cleary v.
19 News Corp., 30 F.3d 1255, 1262–63 (9th Cir. 1994); see also Rearden LLC v. Rearden
20 Commerce, Inc., 683 F.3d 1190, 1221 (9th Cir. 2012). If a plaintiff has sufficiently pled
21 claims for trade dress infringement, the plaintiff has also sufficiently pled a claim for
22 unfair business practices. See Sugarfina, Inc. v. Sweet Pete’s LLC, 2017 WL 4271133, at
23 *6 (C.D. Cal. Sept. 25, 2017). As discussed above, Sugarfina has adequately alleged
24 trade dress infringement. Sugarfina’s claim for unfair business practices also stands.
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1 3. Infringement of the ’D684 Patent

2
3 Sugarfina’s third claim is for design patent infringement. (Compl. ¶¶ 110–14.) To

4 state a valid claim for design patent infringement, a plaintiff must (1) allege ownership of
5 the patent, (2) name each defendant, (3) cite the patent that is allegedly infringed, (4)
6 state the means by which the defendant allegedly infringes, and (5) point to the sections
7 of the patent law invoked. Hall v. Bed Bath & Beyond, Inc., 705 F.3d 1357, 1362 (Fed.
8 Cir. 2013). In order to establish design patent infringement, a plaintiff must prove that an
9 ordinary observer familiar with the product would be deceived into believing that the
10 accused product is the same as the patented design. Amini Innovation Corp. v. KTY Int’l
11 Mktg., 768 F. Supp. 2d 1049, 1055 (C.D. Cal. 2011); see also Egyptian Goddess, Inc. v.
12 Swisa, Inc., 543 F.3d 665, 681 (Fed. Cir. 2008) (en banc).
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14 Sugarfina’s Complaint adequately alleges design patent infringement. Sugarfina

15 establishes that it held at all relevant times an enforceable patent for its packaging design.
16 (Compl. ¶¶ 70–76.) Sugarfina alleges that Defendants infringed its patents by making a
17 copycat product in 2017. (Id. ¶ 77.) Sugarfina also alleges that the ordinary observer
18 would find Bouquet Bar’s packaging to be substantially similar to the ’D684 Patent,
19 which protects Sugarfina’s design for “cubes arranged in two cells spaced apart and
20 nested fully within a rectangular box with high, straight walls.” (Id. ¶ 79.)
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22 Defendants argue the scope of Sugarfina’s design patent is extremely narrow after
23 filtering out the functional elements of the design. (Mot. at 8.) Defendants also argue no
24 reasonable ordinary observer would conclude that Sugarfina’s and Bouquet Bar’s
25 products are substantially identical. (Mot. at 11.) But the Court’s inquiry on a motion to
26 dismiss asks whether Sugarfina’s design patent infringement claim is “plausible.” See
27 Twombly, 550 U.S. at 570. Here, the Complaint sets forth facts that make it plausible that
28 an ordinary observer would find the products to be substantially identical. The
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1 Complaint’s side-by-side comparison of Sugarfina and Bouquet Bar packaging allows the
2 Court to reasonably infer that an ordinary observer might be deceived into believing that
3 Bouquet Bar’s product is the same as Sugarfina’s patented design. (See Compl. ¶ 78-80;
4 id. Ex. 5.) Sugarfina also alleges that individuals, like the Shark Tank investor, find the
5 products to be substantially the same. (Compl. ¶ 80.) Sugarfina states a valid claim for
6 design patent infringement.
7
8 4. Copyright Infringement
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10 Sugarfina’s fourth claim is for copyright infringement. (Compl. ¶¶ 115–21.) “To

11 prove copyright infringement, a plaintiff must demonstrate (1) ownership of the allegedly
12 infringed work and (2) copying of the protected elements of the work by the defendant.”
13 Unicolors, Inc. v. Urban Outfitters, Inc., 853 F.3d 980, 984 (9th Cir. 2017); see also Feist
14 Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). Here, Sugarfina alleges
15 that it has two registered copyrights for its three-piece designer candy boxes and its
16 designer candy bento boxes. (See Compl. ¶¶ 81, 116.) Sugarfina also alleges that
17 Defendants designed and developed near exact imitations of Sugarfina’s works. (Id. ¶¶
18 83–84, 118.)
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20 Defendants argue that Sugarfina’s registered copyrights are for the photos and
21 drawings of Sugarfina’s boxes, i.e., the two-dimensional artwork, rather than the boxes
22 themselves. (Mot. at 12–16.) Copyright protection, however, extends to derivative
23 works. See 17 U.S.C. § 101 (broadly defining “derivative work” as work “based upon
24 one or more preexisting works”); id. § 106(2) (providing the copyright owner with the
25 exclusive right to prepare derivative works). Sugarfina’s registered copyrights are
26 presumed to be valid. See id. § 410(c). Accordingly, copyright protection extends to
27 derivative works of those registered copyrights, including three-dimensional renderings
28 of the two-dimensional copyrighted work. See 4 Patry on Copyright § 12:20 (2018). An
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1 unauthorized three-dimensional rendering of the two-dimensional artwork could still

2 infringe Sugarfina’s copyrights.
3
4 Defendants also argue that Sugarfina’s copyrights cannot extend to the candy
5 boxes because the candy boxes are “useful articles” and therefore uncopyrightable. (Mot.
6 at 15–16.) The Copyright Act generally does not protect useful articles, which are
7 defined as articles “having an intrinsic utilitarian function that is not merely to portray the
8 appearance of the article or to convey information.” 17 U.S.C. § 101. Artistic elements
9 incorporated into a useful article, however, are eligible for copyright protection if those
10 features “can be identified separately from, and are capable of existing independently of,
11 the utilitarian aspects of the article.” Id. A feature of a useful article is copyrightable
12 only if the feature (1) can be perceived as a two- or three- dimensional work of art
13 separate from the useful article and (2) would qualify as a protectable pictoral, graphic, or
14 sculptural work if it were imagined separately from the useful article. Star Athletica,
15 L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002, 1010 (2017).
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17 Whether or not the candy boxes are copyrightable under the useful article doctrine
18 is not appropriate for this Court to determine on a motion to dismiss.3 See Lanard Toys
19 Ltd. v. Novelty, Inc., 375 Fed. App’x 705, 710 (9th Cir. 2010) (“[T]he determination
20 whether [an object] is . . . an uncopyrightable ‘useful article’ is a fact-intensive one that
21 must be decided on a case-by-case basis . . . .”); BottleHood, Inc. v. Bottle Mill, 2012 WL
22 1416272, at *3 (S.D. Cal. Apr. 23, 2012) (refusing to decide whether objects were useful
23 articles on a motion to dismiss); The Tactical Tailor, Inc. v. Hirayama, 2005 WL
24 2206808, at *1 (W.D. Wash. Sept. 8, 2005) (same). Even if Sugarfina’s candy boxes are
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In their motion, Defendants primarily rely on Ets-Hokin v. Skyy Spirits, Inc., where the Ninth Circuit
27 determined that a vodka bottle was not copyrightable, so photographs of that vodka bottle could not be
infringing derivative works. 225 F.3d 1068, 1078–81 (9th Cir. 2000). The issues in Ets-Hokin arose on
28 a motion for summary judgment. See id. at 1073. In contrast, the Court must limit its inquiry here to the
four corners of the Complaint.
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1 useful articles, some elements might qualify for copyright protection. The Court here can
2 reasonably infer that there may be nonfunctional artistic elements of the packaging that
3 may be reasonably separated from the utilitarian aspects of the packaging. Cf. DC
4 Comics v. Towle, 2012 WL 630206, at *2 (C.D. Cal. Jan. 26, 2012) (applying similar
5 reasoning on a motion to dismiss). For example, Sugarfina identifies several of the
6 copied features as the packaging’s specific graphic elements, such as the prints, patterns,
7 and colors imprinted on the boxes and labels. (Compl. ¶ 84.)
8
9 Finally, Defendants argue that that the Complaint does not identify any works that
10 are similar to the registered photographs. (Mot. at 16.) Sugarfina specifically identifies
11 the infringing products in its Complaint. (See Compl. ¶ 46.) The Court finds that
12 Sugarfina states a valid claim for copyright infringement.
13
14 V. CONCLUSION
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16 For the foregoing reasons, Defendants’ motion to dismiss the Complaint for failure
17 to state a claim is DENIED.
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21 DATED: October 9, 2018

22 __________________________________
23 CORMAC J. CARNEY
24 UNITED STATES DISTRICT JUDGE
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Case 8:18-cv-01305-CJC-DFM Document 46 Filed 10/09/18 Page 1 of 13 Page ID #:326

8 UNITED STATES DISTRICT COURT

3 Plaintiff Sugarfina, Inc. (“Sugarfina”) brings this action against Defendants

14 Plaintiff Sugarfina is a California-based luxury candy boutique. (Compl. ¶ 1.)

1 On October 17, 2017, Sugarfina sent a cease-and-desist letter to Defendants to

18 III. LEGAL STANDARD

22 1. Trade Dress Infringement

1 Defendants’ focus on the individual features, however, ignores the overall

14 2. Unfair Business Practices

1 3. Infringement of the ’D684 Patent

3 Sugarfina’s third claim is for design patent infringement. (Compl. ¶¶ 110–14.) To

14 Sugarfina’s Complaint adequately alleges design patent infringement. Sugarfina

10 Sugarfina’s fourth claim is for copyright infringement. (Compl. ¶¶ 115–21.) “To

1 unauthorized three-dimensional rendering of the two-dimensional artwork could still

21 DATED: October 9, 2018

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