## Facts

- Monster, Inc. manufactured consumer audio products and, under a prior license agreement, used Dolby’s registered “Dolby Headphone” mark on certain products.
- Monster sued for declaratory relief, seeking a declaration that its “Monster Headphone” mark did not infringe Dolby’s trademark rights and asserting related federal and California unfair-competition theories.
- Monster also sought abandonment and cancellation of Dolby’s registration, alleging abandonment through “naked licensing” (insufficient quality control over licensees).
- Dolby answered, asserted affirmative defenses (including licensee estoppel), and counterclaimed for federal trademark infringement, federal unfair competition, and California unfair competition.
- The parties filed cross-motions for summary judgment: Monster sought judgment against Dolby’s counterclaims; Dolby sought partial summary judgment to defeat Monster’s abandonment/naked-licensing theories and Monster’s aesthetic-functionality defense.

## Issues

1. Whether Monster could obtain summary judgment of noninfringement and no unfair competition, or whether material fact disputes required trial on likelihood of confusion.
2. Whether Monster’s abandonment and “naked licensing” theories could survive summary judgment, given the evidentiary burden for abandonment and Monster’s status as a former licensee.
3. Whether Monster could invoke aesthetic functionality to bar Dolby’s infringement and unfair-competition counterclaims based on headphone imagery used in a mark for consumer electronics.

## Decision

- Monster’s motion for summary judgment was denied.
- Dolby’s motion for partial summary judgment was granted as to Monster’s abandonment and naked-licensing theories.
- Dolby’s motion for partial summary judgment was granted as to Monster’s aesthetic-functionality affirmative defense.
- Dolby’s infringement and unfair-competition counterclaims remained for further proceedings.

## Legal Principles

- Likelihood of confusion in trademark cases is commonly fact-intensive; summary judgment is improper where disputes of material fact exist regarding mark similarity, marketing channels, consumer sophistication, and related factors.
- A party asserting trademark abandonment bears a heavy burden; abandonment through naked licensing requires strong proof that the trademark owner failed to exercise adequate quality control over licensees.
- A registered mark carries a presumption of validity; a party resisting enforcement must produce sufficient evidence to overcome that presumption on asserted defenses.
- Aesthetic functionality is applied narrowly; a claimed aesthetic feature is not unprotectable merely because it is visually appealing, and the defense fails absent a showing that exclusive rights would place competitors at a significant, non-reputation-related disadvantage.
- Licensee estoppel may limit a former licensee’s ability to attack a licensor’s trademark validity where the licensee previously recognized and benefitted from the mark under a license.

## Conclusion

The court denied Monster summary judgment on noninfringement because triable fact issues remained on likelihood of confusion, and it granted Dolby partial summary judgment eliminating Monster’s abandonment/naked-licensing attacks and aesthetic-functionality defense, leaving Dolby’s counterclaims to proceed.


Monster, Inc. v. Dolby Lab’ys Licensing Corp., 920 F. Supp. 2d 1066 (N.D. Cal. 2013)