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Adidas America, Inc. v. Trb Acquisitions LLC

United States District Court, D. Oregon

September 25, 2018

ADIDAS AMERICA, INC., et al., Plaintiffs,
TRB ACQUISITIONS LLC, et al., Defendants.

          Stephen M. Feldman, Perkins Coie LLP, R. Charles Henn Jr., Charles H. Hooker III, and Nichole D. Chollet, Kilpatrick Townsend & Stockton LLP, Of Attorneys for Plaintiffs.

          Kenneth R. Davis II, Lane Powell PC, Michelle Mancino Marsh, Allen G. Reiter, Lindsay Korotkin, Alissa F. Bard, and Phaik Lin Goh, Arent Fox LLP, Of Attorneys for Defendants.



         The Court is filing two versions of this Opinion and Order. In the public version, Defendants' attorney-client communications are redacted. An unredacted version will be filed under seal, but will be available to Plaintiffs and Defendants and their counsel as “Confidential” under the terms of the First Amended Protective Order entered in this case (ECF 98).

         Defendants requested that the Court review in camera 134 documents withheld from production by Plaintiffs as either privileged or subject to the work-product doctrine. The Court ordered that Plaintiffs provide a sample of 26 documents (20 percent of the total number requested by Defendants) for in camera review. After reviewing the documents in camera, the Court submitted questions to Plaintiffs, because the Court's in camera review raised concerns regarding the crime-fraud exception to privilege and the veracity of the answers given at depositions by Plaintiffs' corporate-representative witnesses designated under Rule 30(b)(6) of the Federal Rules of Civil Procedure.

         Plaintiffs filed a response to the Court's questions, and Defendants requested the opportunity to file a brief in response to Plaintiff's filing, which the Court allowed. Plaintiffs' then filed a reply to Defendants' filing. In total, the parties filed 258 pages on this issue (in addition to the documents submitted in camera), and incorporated by reference numerous other filings in the record. Thus, the Court has a significant record on which to make its findings. For the reasons discussed below, the Court finds that the crime-fraud exception applies to certain documents withheld on the basis of privilege and thus those documents are not privileged and must be disclosed to Defendants.


         A. Crime-Fraud Exception

         Under the crime-fraud exception, documents subject to the attorney-client privilege “are not privileged when the client consults an attorney for advice that will serve him in the commission of a fraud or crime.” In re Grand Jury Investig., 810 F.3d 1110, 1113 (9th Cir. 2016) (quotation marks omitted); see also United States v. Zolin, 491 U.S. 554, 563 (1989) (“It is the purpose of the crime-fraud exception to the attorney-client privilege to assure that the ‘seal of secrecy' between lawyer and client does not extend to communications made for the purpose of getting advice for the commission of a fraud or crime.” (citation and quotation marks omitted)).

         A party asserting the crime-fraud exception first must establish “a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.” Zolin, 491 U.S. at 572. Only a “minimal showing” is needed to satisfy this threshold step. United States v. Christensen, 828 F.3d 763, 800 (9th Cir. 2015).

         A party invoking the crime-fraud exception must then satisfy a two-part test to make a prima facie case that the crime-fraud exception applies:

First, the party must show that the client was engaged in or planning a criminal or fraudulent scheme when it sought the advice of counsel to further the scheme. Second, it must demonstrate that the attorney-client communications for which production is sought are sufficiently related to and were made in furtherance of [the] intended, or present, continuing illegality.

In re Grand Jury, 810 F.3d at 1113 (quotation marks omitted) (emphasis and alteration in original); see also In re Napster, Inc. Copyright Litig., 479 F.3d 1078, 1090 (9th Cir. 2007), abrogated on other grounds by Mohawk Indus. v. Carpenter, 558 U.S. 100 (2009). “The attorney need not have been aware that the client harbored an improper purpose, ” nor must the planned crime or fraud “have succeeded for the exception to apply.” In re Napster, 479 F.3d at 1090. The burden of proof by a party in a civil case seeking disclosure under the crime-fraud exception of documents protected by attorney-client privilege or the work-product doctrine is preponderance of the evidence. Id. at 1094-95.

         B. Trademark Renewal

         Renewal of a trademark is governed by §§ 1058 and 1059 of the Lanham Act (the “Act”). 15 U.S.C. §§ 1501, et seq. Renewal requires the submission of an affidavit that must assert, among other things, that the mark is “in use in commerce” and describe the goods and services in connection with which the mark is in use in commerce. 15 U.S.C. § 1058(b)(1)(A)-(B). The term “use in commerce” is defined by the Act as:

The term “use in commerce” means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this chapter, a mark shall be deemed to be in use in commerce--
(1) on goods when--
(A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and
(B) the goods are sold or transported in commerce.

15 U.S.C. § 1127

         Although the terms “bona fide” and “ordinary course of trade” are not defined in the Act, the Ninth Circuit, in the context of the considering the term “bona fide” under § 1127, has noted the dictionary definitions of “made in good faith; without fraud or deceit” and “sincere; genuine.” Electro Source, LLC v. Brandess-Kalt-Aena Grp., Inc., 458 F.3d 931, 936 n.3 (2006) (quoting Black's Law Dictionary at 186 (8th ed. 2004)). Thus, the Ninth Circuit has focused on the good faith of the use, in addition to the use being in the ordinary course of trade. See Id. at 938-39 (quoting Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 1970)). The Ninth Circuit has also noted, however, that use simply to maintain a trademark is insufficient because otherwise “the requirement of good faith commercial use would be read out of the trademark law altogether.” Id. at 939 n.6 (quoting La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1273 n.10 (2d Cir. 1974) (discussing a “trademark maintenance program” in the context of “minimal sales effort”); see also Id. at 940 (noting that a court can consider, among other factors, the “genuineness” of the use (quoting Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1159 (9th Cir. 2001)).

         C. Fraud on the PTO

         “Fraud in procuring a trademark registration or renewal occurs when an applicant knowingly makes false, material representations of fact in connection with his application.” In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009) (quoting Torres v. Cantine Torresella S.r.l., 808 F.2d 46, 48 (Fed. Cir.1986)). There must be intent to mislead the U.S. Patent and Trademark Office (“PTO”), and even a material misrepresentation will not constitute fraud if it is made based on a misunderstanding, a mistake, a negligent omission, an inadvertence, and the like. Id. Thus, there is a difference between a “fraudulent misrepresentation, ” which involves an ...

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