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1 Yuri Mikulka (SBN 185926)

ymikulka@manatt.com
2 MANATT, PHELPS & PHILLIPS, LLP
695 Town Center Drive, 14th Floor
3 Costa Mesa, CA 92626-1924
Tel: (714) 371-2500
4
Robert E. Shapiro (admitted pro hac vice)
5 Wendi E. Sloane (admitted pro hac vice)
rob.shapiro@bfkn.com
6 wendi.sloane@bfkn.com
BARACK FERRAZZANO KIRSCHBAUM
7 & NAGELBERG LLP
200 West Madison Street, Suite 3900
8 Chicago, IL 60606
Tel: (312) 984-3100
9

10 Attorneys for Hublot of America, Inc.


11 UNITED STATES DISTRICT COURT
12 CENTRAL DISTRICT OF CALIFORNIA
13 SOLID 21, INC., No. 2:11-cv-00468 DMG (JCx)
14 Plaintiff,
Hon. Dolly M. Gee
15 vs.
MOTION IN LIMINE NO. 1 OF
16 HUBLOT OF AMERICA, Inc., DEFENDANT HUBLOT OF
AMERICA, INC. TO EXCLUDE
17 Defendant. EVIDENCE OF HUBLOT’S
18
REVENUE AND/OR PROFITS

19

20 HUBLOT OF AMERICA, Inc.,


21 Counterclaimant, Pretrial Conference: October 2, 2018
22 vs. Trial Date: October 23, 2018
23 SOLID 21, INC.,
24 Counter-Defendant.
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M ANATT , P HELPS & MOTION IN LIMINE NO. 1 OF
P HILLIPS , LLP 1 DEFENDANT/COUNTERCLAIMANT
ATTORNEYS AT LAW
NEW YORK
HUBLOT OF AMERICA, INC.
1 NOTICE OF MOTION AND MOTION IN LIMINE NO. 1
2 TO THE COURT AND ALL PARTIES AND THEIR COUNSEL OF
3 RECORD:
4 PLEASE TAKE NOTICE THAT, on October 2, 2018, at 2 p.m. or as soon
5 thereafter as the matter may be heard, before the Honorable Dolly M. Gee of the
6 United States District Court for the Central District of California, at 350 W. First
7 Street, Los Angeles, California 90012, Courtroom 8C, Eighth Floor, in accordance
8 with the Court’s Standing Civil Trial Order, Defendant and Counterclaimant Hublot
9 of America, Inc. (“Hublot”) will and hereby does submit this Motion in Limine No.
10 1 for an Order, pursuant to Federal Rules of Evidence (“FRE”) 401, 402, and 403,
11 excluding Plaintiff and Counter-Defendant Solid 21, Inc. (“Solid 21”) from
12 presenting evidence of Hublot’s revenues and/or profits.
13 This Motion is made on the grounds that Hublot’s revenues or profits have
14 no probative value – as Solid 21 cannot show willful infringement, cannot meet its
15 threshold evidentiary burdens, and cannot use Hublot’s figures as a proxy for Solid
16 21’s lost profits in this case – and that any possible relevance they may have is
17 substantially outweighed by the potential for jury confusion and unfair prejudice.
18 Pursuant to Local Rule 7-3, Hublot’s counsel attempted in good faith to
19 confer with Solid 21’s counsel regarding this Motion. (See Declaration of Wendi E.
20 Sloane in Support of this Motion (“Sloane Decl.”) ¶ 2, attached hereto as
21 Exhibit A.)
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M ANATT , P HELPS & MOTION IN LIMINE NO. 1 OF
P HILLIPS , LLP 1 DEFENDANT/COUNTERCLAIMANT
ATTORNEYS AT LAW
NEW YORK
HUBLOT OF AMERICA, INC.
1 MEMORANDUM OF POINTS AND AUTHORITIES
2 I. INTRODUCTION
3 Plaintiff Chris Aire has admitted he is seeking to sway the jury in this case
4 through unfair prejudice and sensationalism. Just recently, he prompted a local
5 news outlet to report on this case as follows: “Watchmaker Chris Aire says swanky
6 fashion conglomerate is infringing on his trademark, favored by Hollywood and
7 sports stars.” (Itay Hod, “‘Red Gold’ Rush: Celebrity Watch Brand Takes on
8 Luxury Giant LVMH in Multi-Million Dollar Case,” THE WRAP, August 20, 2018,
9 available at https://www.thewrap.com/red-gold-lvmh-lawsuit-trademark-
10 infringement, attached as Exhibit 1 to Sloane Decl.) In touting his case to the press,
11 Mr. Aire promised to parade various celebrity witnesses before the jury. The
12 celebrities, as well as Mr. Aire’s own friends, have no probative evidence to offer.
13 To the same end, Mr. Aire seeks to disparage Hublot in the eyes of the jury
14 as a “swanky fashion conglomerate.” (Id.) Hublot actually is a discrete American
15 corporation that sells only watches. The reference to a conglomerate is obviously
16 to the LVMH Group, of which Hublot’s parent company is a member. But Hublot
17 alone is the defendant here; all other defendants (including LVMH itself) have been
18 dismissed from this case. The LVMH Group is irrelevant and can form no part of
19 the proof in this case.
20 Finally, and most immediately for this motion, Solid 21 seeks to prejudice
21 the jury by introducing at trial evidence of Hublot’s revenues and/or profits from its
22 sales of watches using the red gold alloy. But Hublot’s revenues or profits have no
23 legitimate bearing on this case either. Introducing such irrelevant evidence serves
24 no purpose other than to emotionally influence or otherwise confuse the jury, with
25 the goal of obtaining a verdict based on the supposed “big pockets” touted in Mr.
26 Aire’s press notices. This is precisely the type of undue prejudice Federal Rule of
27 Evidence 403 protects against. Therefore, Hublot respectfully requests this Court
28
M ANATT , P HELPS &
P HILLIPS , LLP
ATTORNEYS AT LAW
MOTION IN LIMINE NO. 1 OF
NEW YORK DEFENDANT/COUNTERCLAIMANT
HUBLOT OF AMERICA, INC.
1 enter an order barring the admission of Hublot’s revenues or profits in this case.
2 II. ARGUMENT
3 This case involves the issue whether, by using the phrase “red gold” to
4 identify a gold and copper alloy used for the casing, straps, and/or clasps for some
5 of its watch models, Hublot has infringed and diluted Solid 21’s purported
6 trademark rights in “red gold.” Solid 21 claims exclusive rights to use this phrase
7 for “fine jewelry made of a special alloying of gold with a distinct color made into
8 fine jewelry, namely watches [and other specific jewelry products],” for which it
9 procured a federal trademark registration. (U.S. Reg. No. 2,793,987, attached as
10 Sloane Ex. 2.) Hublot argues that the phrase “red gold” is generic for a high-copper
11 gold alloy and that, in any event, it has not infringed.
12 Solid 21 lost and/or destroyed evidence relating to its own finances and
13 therefore was forced to withdraw its actual damages theory. 1 Solid 21 is now
14 attempting instead to obtain a “multi-million dollar” recovery by confusing and
15 improperly influencing the jury through various improper pre-trial and trial tactics.
16 Solid 21’s pre-trial tactics include efforts by its new counsel to reopen the
17 record and offer new expert opinions. (See Hublot’s concurrently filed Motion
18 under Fed. R. Civ. P. 37 to Exclude the Untimely Expert Supplemental Report of
19 Brent Kaczmarek and Testimony Relating Thereto.) Solid 21’s trial strategy also
20 includes attempts to influence the jury pool through the press, promising the public
21 that the trial will be a “celebrity affair.” (Sloane Ex. 1.) And the press has obliged
22

23 1
Currently pending before the Magistrate Judge is Hublot’s Motion for
24 Sanctions for Solid 21’s Spoliation of Evidence. (ECF No. 248.) To try to avoid
the severest sanctions, Solid 21 stipulated that it was not seeking its own “lost
25
profits” at all. (See, e.g., ECF No. 255 at 4.) Hublot has filed contemporaneously
26 herewith a motion to prevent Solid 21 from reversing this abandonment of a lost
profits recovery. (See Hublot’s concurrently filed Motion in Limine No. 3 to
27
Preclude Solid 21, Inc. from Reversing Its Abandonment of Lost Profits Damages
28 (“MIL 3”).)
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29 MOTION IN LIMINE NO. 1 OF
DEFENDANT/COUNTERCLAIMANT
30 HUBLOT OF AMERICA, INC.
1 by promoting his sensationalist view of the case. The Wrap’s headline promised
2 that Solid 21 is taking on “Luxury Giant LVMH,” even though no “LVMH” entity
3 is a party here. Solid 21’s witness list contains celebrities who simply have nothing
4 relevant to say. (See Hublot’s concurrently filed Motion in Limine No. 4 to
5 Exclude Testimony and Related Evidence of Plaintiff’s Non-Party Affiliate
6 Witnesses.) Likewise, given Solid 21’s destruction of its own financial documents,
7 the law and facts do not permit anything near a “multi-million dollar” recovery.
8 Most immediately, Solid 21’s attempts to confuse and mislead the jury also
9 include its intention to introduce evidence of Hublot’s revenues and/or profits for
10 watches that include “red gold” as constituent materials. The goal here is obvious.
11 Solid 21 seeks to have the jury believe that Hublot is a rich foreign company that
12 can bear whatever claims Solid 21 makes for a remedy. In short, Solid 21 hopes the
13 jury will be swayed by Hublot’s supposed “big pockets” rather than by the relevant
14 facts.
15 Rule 403 excludes evidence if its probative value is substantially outweighed
16 by the danger of unfair prejudice, or if it would lead to jury confusion. FRE 403;
17 Green v. Baca, 226 F.R.D. 624 (C.D. Cal. 2005). Evidence is unfairly prejudicial if
18 it tends to suggest decision on an improper basis, particularly an emotional one.
19 See United States v. Allen, 341 F.3d 870, 886 (9th Cir. 2003) (“‘Unfair
20 prejudice’ . . . means ‘an undue tendency to suggest decision on an improper basis,
21 commonly, though not necessarily, an emotional one.’”) (quoting FRE 403,
22 Advisory Committee Notes); Steger v. General Electric Co., 318 F.3d 1066, 1079
23 (11th Cir. 2003) (“Evidence is . . . excludable ‘if its probative value is substantially
24 outweighed by the danger of unfair prejudice, confusion of the issues, or misleading
25 the jury.’”) (quoting FRE 403); see also Stump v. Gates, 211 F.3d 527, 534 (10th
26 Cir. 2000) (same).
27 These rules exist precisely to prevent the kind of improper course Solid 21
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29 MOTION IN LIMINE NO. 1 OF
DEFENDANT/COUNTERCLAIMANT
30 HUBLOT OF AMERICA, INC.
1 has admitted publicly it is taking in this case. Nor can Solid 21 justify this unfairly
2 prejudicial misuse of Hublot’s sales or profits based on any ground. It cannot, for
3 example, make any claim for disgorgement of any Hublot profits, for four reasons.
4 First, the Ninth Circuit has unambiguously affirmed that “willfulness remains
5 a necessary condition for a disgorgement of profits.” Stone Creek, Inc. v. Omnia
6 Italian Design, Inc., 875 F.3d 426, 442 (9th Cir. 2017) (holding that plaintiff “must
7 show intentional or willful infringement before disgorgement of [a competitor’s]
8 profits could be awarded”). Proving willfulness is no easy task in the Ninth Circuit,
9 where “[w]illful infringement carries a connotation of deliberate intent to deceive.”
10 Lindy Pen Co., Inc. v. Bic Pen Corp., 982 F.2d 1400, 1406 (9th Cir. 1993) (for
11 infringement to be “willful,” there must be at least a showing of trading on the mark
12 holder’s established name), abrogated on other grounds, SunEarth, Inc. v. Sun
13 Earth Solar Power Co., Ltd., 839 F.3d 1179 (9th Cir. 2016) (en banc) (per curiam).
14 “Courts generally apply forceful labels such as ‘deliberate,’ ‘false,’
15 ‘misleading,’ or ‘fraudulent’ to conduct that meets this standard.” Lindy Pen, 982
16 F.2d at 1404–06 (denying an accounting of profits because defendant’s
17 “infringement was innocent and accomplished without intent to capitalize on
18 [plaintiff’s] trade name”). But Solid 21 has proffered no evidence of intentional
19 misconduct.
20 Mr. Aire himself admitted Solid 21’s only “evidence” regarding intentional
21 infringement, other than the existence of the registered trademark itself,2 consists of
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23 2
Hublot’s failure to conduct a trademark search does not prove intentional
24 infringement or willful blindness. To be willfully blind, a person must suspect
certain conduct and deliberately fail to investigate. SunEarth, Inc. v. Sun Earth
25
Solar Power Co., Ltd., No. C 11-4991 CW, 2013 WL 4528539, at *21 (N.D. Cal.
26 Aug. 23, 2013), amended in part, 2013 WL 6157208 (N.D. Cal. Nov. 22, 2013),
aff’d, 650 Fed.Appx 473 (9th Cir. 2016), remanded to panel on reh’g en banc, 839
27
F.3d 1179 (9th Cir. 2016), aff’d in part, remanded in part, 664 Fed.Appx. 657 (9th
28 Cir. 2016); see also Thane Int’l, Inc. v. Trek Bicycle Corp., No. CV 99-01470 DT
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29 MOTION IN LIMINE NO. 1 OF
DEFENDANT/COUNTERCLAIMANT
30 HUBLOT OF AMERICA, INC.
1 the inadmissible hearsay statements of Pascal Savoy. (See Hublot’s concurrently
2 filed Motion in Limine No. 2 to Exclude Hearsay Testimony of Chris Aire.) Solid
3 21’s damages expert, Mr. Winer, testified in his deposition that Mr. Aire told him
4 that Solid 21 has no evidence of intentional infringement. (Dep. of Russell Winer
5 on Aug. 21, 2018 at 204:1–21, 205:13–14, attached as Sloane Ex. 3.) Mr. Winer
6 went on to testify: “I am admitting we don’t have it, okay and that’s it,” referring to
7 any evidence of intentional infringement. (Id. at 206:15–24.)
8 On the other hand, Hublot’s evidence unequivocally shows that any possible
9 infringement was not intentional, as Hublot was not even aware of Solid 21’s use
10 while many other watch companies used the phrase “red gold.” (See Rule 30(b)(6)
11 Dep. of Ricardo Guadalupe, Hublot Representative, on Feb. 7, 2018 at 77:10–79:1,
12 attached as Sloane Ex. 4 (testifying that Hublot was not aware of Chris Aire or
13 Solid 21’s use of the phrase “red gold” until Solid 21 filed this suit in 2011, six
14 years after Hublot first used the phrase “red gold”); see also Rule 30(b)(6) Dep. of
15 Jean Sberro, Hublot Representative, on Jan. 10, 2018 at 59:21–60:13, 155:24–
16 156:15, attached as Sloane Ex. 5 (testifying that he only learned of Solid 21’s use of
17 the phrase “red gold” in connection with its watch sales when preparing for his
18 deposition in this case).)
19 Where the defendant was unaware of the plaintiff’s mark when it adopted the
20 mark at issue, infringement is not willful. See, e.g., Fitbug Ltd. v. Fitbit, Inc., 78
21 F.Supp.3d 1180, 1195–96 (N.D. Cal. 2015) (infringement was not willful where
22 there was no evidence that junior user, at time of its first use, knew of senior user’s
23 mark); see also San Miguel Pure Foods Co., Inc. v. Ramar Int’l Corp., 625
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SHX, 1999 WL 33268644, at *13 (C.D. Cal. Dec. 20, 1999) (finding that “failure to
26 perform a trademark search” is not comparable to the “substantial degree of
indifference” required to meet the standard of willful blindness), aff’d in part, rev’d
27
in part on other grounds, 305 F.3d 894 (9th Cir. 2002). There is no such evidence
28 here.
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29 MOTION IN LIMINE NO. 1 OF
DEFENDANT/COUNTERCLAIMANT
30 HUBLOT OF AMERICA, INC.
1 Fed.Appx. 322, 325 (9th Cir. 2015) (“Infringement is not willful if the party
2 reasonably believes its usage of a trademark is not barred by law.”) (citation
3 omitted).
4 Second, disgorgement is a matter for the Court and not the jury. See, e.g.,
5 Synoptek, LLC v. Synaptek Corp., No. SACV 16-01838-CJC, 2018 WL 3359017, at
6 *12 (C.D. Cal. June 4, 2018) (“And while factual disputes remain regarding the
7 disgorgement of Synaptek’s profits, Synaptek is not entitled to have those issues
8 decided by a jury.”) (citation omitted); see also Fifty-Six Hope Road Music, Ltd. v.
9 A.V.E.L.A., Inc., 778 F.3d 1059, 1074–76 (9th Cir. 2015) (“A claim for
10 disgorgement of profits under § 1117(a) is equitable, not legal” such that “the
11 determination of profits under § 1117 is not ‘fundamental, . . . inherent in and of the
12 essence of the system of trial by jury.’”) (quoting Tull v. U.S., 481 U.S. 412, 426
13 (1987)). Even if there were evidence of intentional wrongdoing in this case (which
14 there is not), the disgorgement remedy is an equitable one in which the Court
15 decides whether it is justified by the facts of the case. On no account, then, should
16 Hublot’s supposed profits be a matter for the jury.
17 Third, to make a claim for Hublot’s profits, Solid 21 has the burden of
18 proving Hublot’s sales or revenues (with Hublot proving any deductible expenses).
19 See, e.g., Fifty-Six Hope Road Music, 778 F.3d at 1076. But Solid 21’s expert,
20 Brent Kaczmarek, professed to have no reliable evidence what those sales or
21 revenues were and could not testify to them “to a reasonable degree of certainty.”3
22 (Dep. of Brent Kaczmarek on Sept. 6, 2018 at 50:10–18, 60:9–61:5, attached as
23 Sloane Ex. 6.) If Solid 21 says there is no reliable basis in the revenue information
24 upon which to calculate the profits, certainly it should be precluded from putting
25 any profit information in evidence.
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27 The documents Mr. Kaczmarek says he would need are in the record, but
Solid 21 apparently neglected to provide them to its expert.
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29 MOTION IN LIMINE NO. 1 OF
DEFENDANT/COUNTERCLAIMANT
30 HUBLOT OF AMERICA, INC.
1 Fourth, Solid 21 cannot offer any evidence that the phrase “red gold” was
2 responsible for any sales. All of the proof in the case is that no consumer could
3 have relied on that phrase to make a purchase decision.
4 Just as Solid 21 cannot put in evidence of Hublot’s supposed profits on a
5 disgorgement theory, it cannot put in that evidence as a proxy for Solid 21’s
6 damages, for three reasons:
7 First, Solid 21 abandoned any claim for its own lost profits to try to avoid
8 harsh sanctions for its spoliation of evidence. (See generally MIL 3.) See Adray v.
9 Adry-Mart, Inc., 76 F.3d 984, 988 (9th Cir. 1995) (holding that a plaintiff who
10 disclaims any intent to seek lost sales damages and opts instead to recover
11 defendant’s profits, cannot evade the willfulness requirement by claiming it seeks
12 defendants’ profits as a measure of his own damages.)
13 Second, as noted, Solid 21’s expert testified that the sales figures he is using
14 are not reliable anyway. They are no more acceptable on a “proxy” theory than
15 they would be for disgorgement.
16 Third, no proxy theory will work in this case. To pursue this idea, Solid 21
17 would be required to prove that Hublot’s sales caused Solid 21’s loss. See Out of
18 the Box Enters., LLC v. El Paseo Jewelry Exchange, Inc., 732 Fed.Appx. 532, 534
19 (9th Cir. 2018). No expert was proffered by Solid 21 on this subject, and the
20 supposed insufficiency of the sales data, among other things, precludes any such
21 causation argument. Pogrebnoy v. Russian Newspaper Distribution, Inc., 289
22 F.Supp.3d 1061, 1072 (C.D. Cal. 2017) (finding evidence of causation and
23 defendant’s sales insufficient).
24 In sum, Solid 21 has no basis to introduce Hublot’s supposed profits. They
25 are being offered for a highly improper and unfairly prejudicial purpose. Moreover,
26 Solid 21 cannot show willful infringement, nor can such inflammatory figures be
27 used as a proxy for Solid 21’s supposed lost profits in this case. No such evidence
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29 MOTION IN LIMINE NO. 1 OF
DEFENDANT/COUNTERCLAIMANT
30 HUBLOT OF AMERICA, INC.
1 of Hublot’s revenues or profits can have any proper role in any decision by the jury,
2 which is being invited instead to decide on the basis of emotion or confusion. Solid
3 21 should, therefore, be barred from introducing such evidence.
4 III. CONCLUSION
5 For the foregoing reasons, evidence relating to Hublot’s revenues or profits
6 for watches that use the phrase “red gold” in their description (or any other profit
7 related information of Hublot) is unfairly prejudicial and should be excluded.
8
Dated: September 11, 2018 BARACK FERRAZZANO KIRSCHBAUM &
9 NAGELBERG LLP
10

11
By: /s/ Wendi Sloane
Robert E. Shapiro (admitted pro hac vice)
12
Wendi E. Sloane (admitted pro hac vice)

13 MANATT, PHELPS & PHILLIPS, LLP


14 Yuri Mikulka (SBN 185926)
15
Attorneys for Hublot of America, Inc.
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29 MOTION IN LIMINE NO. 1 OF
DEFENDANT/COUNTERCLAIMANT
30 HUBLOT OF AMERICA, INC.

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