IVY SILBERSTEIN and SILBERSTEIN AND SILBERSTEIN, LLC v. Fox Entertainment Group, Inc.;

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
IVY SILBERSTEIN and SILBERSTEIN
AND SILBERSTEIN, LLC,
Plaintiffs-Appellants,
v.
FOX ENTERTAINMENT GROUP, INC.; et
al.,
Defendants-Appellees.
No. 16-55318
D.C. No.
2:15-cv-09276-R-PLA
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued and Submitted November 9, 2017
Pasadena, California
Before: REINHARDT** and WARDLAW, Circuit Judges, and DANIEL, ***
District Judge.
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** Prior to his death, Judge Reinhardt concurred in this memorandum
disposition.
*** The Honorable Wiley Y. Daniel, United States District Judge for the
U.S. District Court for Colorado, sitting by designation.
FILED
APR 25 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Appellants Ivy Silberstein, et al., (“Silberstein”) appeal the order of the
district court granting Appellees Fox Entertainment Group, Inc.’s, et al., (“Fox” or
“Fox Entertainment”) Motion to Dismiss Plaintiffs’ Complaint without leave to
amend under Federal Rule of Civil Procedure 12(b)(6). We have jurisdiction over
this appeal pursuant to 28 U.S.C. § 1291. We affirm on other grounds.
1. We note that Silberstein has not registered her trademark on the
Principal Register—rather, she has merely obtained registration on the
Supplemental Register. ER, 47. The district court properly found that the
SQRAT® (“Sqrat”) Mark’s June 12, 2012 registration on the Supplemental
Register is inconsequential to a collateral estoppel determination. While
“[r]egistration on the principal register shows that the Commissioner has
determined that the mark is distinctive,” and provides certain statutory
presumptions, “[r]egistration on the supplemental register means that the
Commissioner has determined that the mark is ‘capable of distinguishing.’”
California Cooler, Inc. v. Loretto Winery, Ltd., 774 F.2d 1451, 1454 (9th Cir.
1985) (quoting 15 U.S.C. § 1091(a)). Unlike Principal Registration,
“Supplemental Registration creates no substantive rights.” Unitek Solvent Servs.,
Inc. v. Chrysler Grp. LLC, No. 12-00704DKW-RLP, 2013 WL 5503087, at *5 (D.
Haw. Sept. 30, 2013), aff'd, 580 F. App'x 535 (9th Cir. 2014) (quoting J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition (“McCarthy”) §

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19:37). Furthermore, “registration is not a prerequisite to an infringement action.”
B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1305 (2015).
2. Although the parties have not briefed, or raised, the issue of res
judicata, “a court may, sua sponte, dismiss a case on preclusion grounds ‘where the
records of that court show that a previous action covering the same subject matter
and parties had been dismissed.’” Headwaters Inc. v. U.S. Forest Serv., 399 F.3d
1047, 1054 (9th Cir. 2005) (quotation and citation omitted). In this case, claim
preclusion is supported by the record. “Res judicata is applicable whenever there
is (1) an identity of claims, (2) a final judgment on the merits, and (3) privity
between parties.” Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning
Agency, 322 F.3d 1064, 1077 (9th Cir. 2003) (citations omitted). The record
shows, and neither party disputes, that the parties fully litigated the New York
action, including an appeal to the Second Circuit. ER, 6–7. Thus, there has been a
final judgment on the merits. Additionally, privity exists because Silberstein &
Silberstein LLC succeeded to Ms. Silberstein’s rights in the alleged mark. ER, 7.
Thus, the question is whether there is an identity of claims.
3. We consider four factors in determining an “identity of claims”: (1)
whether rights or interests established in the prior judgment would be destroyed or
impaired by prosecution of the second action; (2) whether substantially the same
evidence is presented in the two actions; (3) whether the two suits involve

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infringement of the same right; and (4) whether the two suits arise out of the same
transactional nucleus of facts. Turtle Island Restoration Network v. U.S. Dep't of
State, 673 F.3d 914, 917–18 (9th Cir. 2012) (citing Costantini v. Trans World
Airlines, 681 F.2d 1199, 1201–02 (9th Cir. 1982) (citation omitted)). The fourth
criterion—the same transactional nucleus of facts—is the most important. Id. The
fact that res judicata depends on an “identity of claims” does not mean that an
imaginative attorney may avoid preclusion by attaching a different legal label to an
issue that has, or could have, been litigated. Tahoe-Sierra Pres. Council, Inc., 322
F.3d at 1077. Rather, “[i]dentity of claims exists when two suits arise from ‘the
same transactional nucleus of facts.’” Stratosphere Litig. L.L.C. v. Grand Casinos,
Inc., 298 F.3d 1137, 1143 n. 3 (9th Cir. 2002) (quoting Owens v. Kaiser Found.
Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001)). Although Silberstein’s
claim in the Second Circuit was one for unfair competition under § 43(a) of the
Lanham Act, the inquiry is the same for claims of trademark infringement under §
32 of the Act. Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1202 (9th
Cir. 2012); Grey v. Campbell Soup Co., 650 F. Supp. 1166, 1173 (C.D. Cal. 1986)
(“The tests for infringement of a federally registered mark under § 32(1), 15 U.S.C.
§ 1114(1), infringement of a common law trademark, unfair competition under §
43(a), 15 U.S.C. § 1125(a), and common law unfair competition involving
trademarks are the same.”).

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4. For purposes of res judicata, although Silberstein has obtained
supplemental registration, Silberstein’s claim that she has a protectable ownership
interest in the mark she asserted in the Ninth Circuit is identical to her Lanham Act
claim asserted in the Second Circuit. For a valid trademark infringement claim
under the Lanham Act, Silberstein must establish priority of use in commerce. See
Rearden LLC, 683 F.3d at 1203 (“It is axiomatic in trademark law that the standard
test of ownership is priority of use.”). To support her claim, Silberstein alleges that
her pre-sales activity gives her priority of use in commerce against Defendant-
Appellees. ER, 5, 12–22. Silberstein’s claims arise from the same transactional
nucleus of facts: in both lawsuits, Silberstein relies on the same pre-2004 facts to
support her argument that her activity in marketing and promoting her Sqrat
character sufficiently establishes her priority of use in commerce under the
Lanham Act. ER, 12–22, 34–36. The trademark claims in the New York action
were decided on the basis that Silberstein could not prove priority of use in
commerce of the Sqrat Mark to establish a protectable ownership interest against
Fox. ER, 43–46. Because the issue of Silberstein’s priority of use in commerce
of the Sqrat Mark has been decided, the litigation of her claims in California would
impair or destroy the parties’ rights and interests established by the Second Circuit.
AFFIRMED.

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