Los Angeles sushi restaurants may be closed for omakase, but they remain open for litigation.  Sushi Nozawa, the owner of LA sushi staple KazuNori, which specializes in sushi hand rolls, is presently embroiled in a trademark and unfair competition lawsuit against The HRB Experience, which operates two restaurants in Downtown and Century City.

Sushi Nozawa alleges that The HRB Experience’s use of the phrases “THE HAND ROLL BAR EXPERIENCE” and “THE HRB EXPERIENCE” to sell sushi infringes on its registered marks of “THE ORIGINAL HAND ROLL BAR EXPERIENCE” and “THE ORIGINAL HAND ROLL BAR FOUNDED 2014 LOS ANGELES” constituting trademark infringement and unfair competition under the Lanham Act, unfair competition under California Business and Professions Code § 17200, and common law unfair competition.  In response, HRB filed a motion to dismiss Sushi Nozawa’s complaint, arguing that HRB’s alleged use of any protected mark creates no likelihood of confusion or qualifies as fair use.  However, just last week, a California federal court denied HRB’s motion.

The court prefaced its analysis of likelihood of confusion by noting a plaintiff is not required to prove likelihood of confusion at the pleadings stage and before discovery.  Nevertheless, the court entertained HRB’s arguments.  In doing so, it focused on whether the marks are patently dissimilar or the channels in which they are used are completely unrelated, two important factors under the 9th Circuit’s likelihood of confusion analysis set forth in MF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979).

In its defense, HRB asserted that its marks are fundamentally dissimilar to Sushi Nozawa’s, which are in a stylized box while HRB’s marks contain an image of a fish.  In light of the 9th Circuit’s direction that similarity is assessed in overall sight, sound, and meaning, the court found HRB’s argument unpersuasive because it failed to consider how the marks as a whole appear in the marketplace.  Given that Sushi Nozawa and HRB are involved in the same channels of trade and geographic location—sushi rolls and Los Angeles—and the marks overall appeared relatively similar, Sushi Nozawa adequately pleaded customer confusion.

The court next addressed if HRB’s use of “hand roll bar” constitutes fair use.  Because HRB argued it uses elements of Sushi Nozawa’s marks to describe its restaurant style, the court determined that HRB was claiming "classic" fair use. Under classic fair use, codified in the Lanham Act, defendants are not liable for trademark infringement if they use the mark "fairly and in good faith" only to describe their own goods.  However, under 9th Circuit law, the court found that HRB could not show it used the mark "fairly and in good faith" where Sushi Nozawa demonstrated a likelihood of confusion.  Finally, the court held that Sushi Nozawa necessarily stated a claim for unfair competition because it was premised on the alleged trademark violation, which survived the motion to dismiss.

The court’s refusal to grant dismissal again demonstrates the reluctance of courts to decide likelihood of confusion before discovery.  While the coronavirus backlog of civil cases in the courts means it may be a while until we see more action in this case, it will be interesting to see how the court’s analysis changes on a motion for summary judgment, if any.