1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 PLAYGROUND AI LLC, Case No. 23-cv-05181-BLF

8 Plaintiff, ORDER VACATING MOTION 9 v. HEARING; AND DENYING DEFENDANT DOSHI’S MOTION TO 10 MIGHTY COMPUTING, INC. and DISMISS FIRST AMENDED SUHAIL DOSHI, COMPLAINT 11 Defendants. [Re: ECF 20] 12 _________________________________

13 AND RELATED COUNTERCLAIMS.

14 15 This suit arises from a trademark dispute between two competitors in the artificial 16 intelligence market, Playground AI LLC (“Playground AI”) and Mighty Computing, Inc. 17 (“Mighty”). Both companies assert rights in the mark “Playground AI” and variations of that 18 mark. Playground AI filed this suit against Mighty and its founder, Suhail Doshi (“Doshi”), 19 asserting claims under two federal statutes, the Lanham Act and the Anti-Cybersquatting 20 Consumer Protection Act. Mighty answered and filed counterclaims against Playground AI and 21 its founder, Rick Latona (“Latona”), asserting a Lanham Act claim and related state law claims. 22 All parties have answered except Doshi, who moves to dismiss Playground AI’s operative 23 first amended complaint (“FAC”) under Federal Rule of Civil Procedure 12(b)(6). Doshi argues 24 that he cannot be held liable for Mighty’s alleged trademark infringement and cybersquatting 25 based solely on his role as a corporate officer, and contends that the FAC does not sufficiently 26 allege his personal involvement in Mighty’s alleged wrongdoing to state a claim against him. The 27 Court finds the motion suitable for decision without oral argument, and therefore the motion 1 Doshi’s motion to dismiss the FAC is DENIED for the reasons discussed below. 2 I. BACKGROUND1 3 Playground AI is a company specializing in artificial intelligence software, and “[i]ts 4 website is a ‘one-stop’ location for a variety of generative AI tools and models.” FAC ¶ 1, ECF 5 15. Both “AI” and “playground” are generic terms commonly used in the AI field: “AI refers to 6 ‘artificial intelligence,’ while playground refers to an application or platform where users can 7 safely experiment, test, learn, or play with various tools and algorithms.” Id. ¶ 3. “However, 8 Playground AI’s inverted word order, in which playground is a noun-adjunct modifying AI, 9 creates a distinctive composite” that has been in continual use by Playground AI and its 10 predecessors in interest since December 2019. Id. ¶¶ 4-5. The “Playground AI” mark and 11 variations of the mark have been used in connection with Playground AI’s goods and services 12 relating to artificial intelligence, including “(i) ‘Anonymous Camera,’ a popular and well- 13 publicized application for investigative journalists and political activists, which uses AI to identify 14 people in images and videos; blur, pixelate, or block identifying features in real time; and strip 15 metadata from the resulting file; and (ii) ‘Worklens,’ a mobile application that uses AI to analyze, 16 label, group, and search photos based on content.” Id. ¶¶ 5-6. 17 Mighty is a technology company founded by Doshi in 2019. See FAC ¶¶ 7-8. The 18 company is a closely held corporation with approximately ten employees, which is run from 19 Doshi’s home. See id. ¶ 7. Mighty’s Statement of Information filed with the California Secretary 20 of State lists “Doshi as the sole officer of the company, simultaneously holding the key positions 21 of ‘Chief Executive Officer,’ ‘Chief Financial Officer’ and ‘Secretary.’” Id. ¶ 82. Doshi “has 22 personally participated in all major business strategy, branding, and marketing decisions and 23 actions” of Mighty. Id. 24 In September 2022, Mighty launched a website at <playgroundai.com> with the title 25 “Playground AI,” and shortly thereafter Mighty deployed an application with text-to-image and 26 image search features on its website. See FAC ¶ 9. In November 2022, Mighty filed an intent to 27 1 use application with the United States Patent and Trademark Office for “Playground AI.” Id. ¶ 9. 2 “At the time, Mighty knew or should have known that ‘Playground AI’ and similar variants were 3 already in use by another company offering substantially similar goods or services, specifically, 4 applications that apply machine learning to image, video, and other data.” Id. ¶ 10. Mighty 5 nonetheless registered for the Twitter/X handle of “@playground_ai,” and “funded an aggressive 6 marketing and litigation campaign against Playground AI in the hopes of overwhelming and 7 bullying the company out of its rights and domain name.” Id. ¶¶ 11-15. In September 2023, 8 Mighty filed an complaint with the World Intellectual Property Organization (“WIPO”) pursuant 9 to its Uniform Domain Name Dispute Resolution Policy (“UDRP”), alleging that Mighty has 10 common law rights in the domain name <playground.ai> and that Playground AI has no rights in 11 the domain name. See id. ¶ 13. Mighty dismissed the UDRP complaint without prejudice on 12 October 11, 2023. See id. ¶ 16. 13 Playground AI filed the present action on October 11, 2023. See Compl., ECF 1. The 14 following day, Mighty began changing some of its branding from “Playground AI” to 15 “Playground.” FAC ¶ 18. However, Mighty continues to use “Playground AI,” “playgroundai,” 16 and similar variations on Mighty’s website. Id. ¶¶ 19-24. Playground AI alleges that “Mighty 17 built its business and brand by infringing on the Playground AI Marks. It attracted customers, 18 attention, and, upon information and belief, new funding, by leveraging the good will, publicity, 19 and consumer recognition already associated with the Playground AI Marks in the AI software 20 space.” Id. ¶ 23. Playground AI filed the operative FAC on November 14, 2023, asserting claims 21 against Mighty and Doshi for: (1) False Association and Designation of Origin under the Lanham 22 Act,

(a); and (2) Cybersquatting under the Anti-Cybersquatting Consumer 23 Protection Act,

(d). 24 Mighty answered the FAC, and filed counterclaims against Playground AI and its founder, 25 Latona. Doshi filed the present motion to dismiss, arguing that the FAC does not state a claim 26 against him because it does not allege facts showing his personal involvement in the claimed 27 trademark infringement and cybersquatting. 1 II. LEGAL STANDARD 2 “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a 3 claim upon which relief can be granted tests the legal sufficiency of a claim.” Conservation Force 4 v. Salazar,

(9th Cir. 2011) (internal quotation marks and citation omitted). 5 While a complaint need not contain detailed factual allegations, it “must contain sufficient factual 6 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 7

(2009) (quoting Bell Atl. Corp. v. Twombly,

(2007)). 8 When evaluating a Rule 12(b)(6) motion, the district court is limited to the allegations of 9 the complaint, documents incorporated into the complaint by reference, and matters which are 10 subject to judicial notice. See Louisiana Mun. Police Employees’ Ret. Sys. v. Wynn,

(9th Cir. 2016) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

, 322 12 (2007)). The Court need not “accept as true allegations that contradict matters properly subject to 13 judicial notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or 14 unreasonable inferences.” In re Gilead Scis. Sec. Litig.,

(9th Cir. 2008) 15 (internal quotation marks and citations omitted). 16 III. DISCUSSION 17 Doshi contends that the FAC does not allege facts sufficient to give rise to personal 18 liability against him for Mighty’s alleged trademark infringement and cybersquatting. In 19 opposition, Playground AI argues that the claims against Doshi are adequately alleged because the 20 FAC makes clear that Doshi controls Mighty and is involved in all significant corporate decisions. 21 In the event the Court does not find the allegations of the FAC to be adequate, Playground AI 22 requests leave to amend and proffers additional facts that could be alleged with respect to Doshi. 23 “[A] corporate officer or director is, in general, personally liable for all torts which he 24 authorizes or directs or in which he participates, notwithstanding that he acted as an agent of the 25 corporation and not on his own behalf.” Comm. for Idaho’s High Desert, Inc. v. Yost,

(9th Cir. 1996) (internal quotation marks and citation omitted). The Ninth Circuit has 27 expressly applied this principle to trademark infringement actions. See id. at 823-24. “Cases 1 the defendant was the ‘guiding spirit’ behind the wrongful conduct, or the ‘central figure’ in the 2 challenged corporate activity.” Facebook, Inc. v. Power Ventures, Inc.,

(9th 3 Cir. 2016) (internal quotation marks and citation omitted). “At the motion to dismiss stage, courts 4 have found a plausible basis for personal liability when the plaintiffs have alleged that the officer 5 exercises sufficient control over the corporation with respect to the challenged activity.” DISH 6 Network L.L.C. v. Jadoo TV, Inc., No. 20-CV-01891-CRB,

, at *4 (N.D. Cal. 7 Sept. 30, 2020). 8 Here, the FAC alleges that “Doshi is the founder and central figure of Mighty Computing, 9 Inc., and has personally participated in all major business strategy, branding, and marketing 10 decisions and actions.” FAC ¶ 82. Those allegations are supported by the following facts: Doshi 11 founded Mighty; Mighty is a closely held corporation with approximately ten employees; the 12 corporation is operated from Doshi’s home; and the corporation’s Statement of Information filed 13 with the California Secretary of State lists Doshi as the sole officer of the company, holding the 14 positions of CEO, CFO, and Secretary.

The FAC contains screen shots of Doshi’s social 15 media posts announcing transition of Mighty’s branding from “Playground AI” to “Playground” 16 and opining that the company’s use of “Playground” was “Trademark clear.”

. 17 Finally, the FAC alleges that after the present lawsuit was filed, Doshi direct messaged 18 Playground AI’s founder Latona to ask if he wanted to “find a more peaceful resolution.”

¶ 19 123. The Court finds that these allegations give rise to a plausible basis for personal liability 20 against Doshi based on his exercise of control over Mighty with respect to the alleged trademark 21 infringement and cybersquatting. 22 Doshi argues that the FAC’s allegations are too general to give rise to personal liability 23 against him, relying on In re JUUL Labs, Inc., Mktg., Sales Pracs., & Prod. Liab. Litig.,

Supp. 3d 552 (N.D. Cal. 2020). In JUUL, the district court found allegations regarding certain 25 corporate officers’ direct involvement in youth-targeted marketing to be sufficient to give rise to 26 personal liability under California’s Unfair Competition Law, but found more general allegations 27 that certain directors had “final say” in marketing materials to be insufficient for personal liability. 1 inadequate in JUUL. Doshi’s reliance on JUUL is misplaced. He is not merely a board member 2 || alleged to have final say in marketing decisions, but rather an individual alleged to have founded 3 || Mighty, to hold every significant corporate office, to run the corporation out of his home, and to 4 || be someone who personally announces corporate rebranding and initiates negotiations regarding 5 || trademark litigation. The Court finds these allegations sufficient to assert personal liability against 6 || Doshi for pleading purposes. 7 The Court observes that even if it were to grant Doshi’s motion to dismiss, it would grant 8 || leave to amend based on Playground’s representation that it could add additional allegations 9 || regarding Doshi’s status as a central figure in the alleged trademark infringement. Playground 10 submits the declaration of its counsel, Brett E. Lewis, containing screen shots of several of 11 Doshi’s social media posts. See Lewis Decl., ECF 31-1. In one, Doshi teased a big corporate 12 announcement and, when asked whether the board was involved, replied “i am the board and i am 13 definitely involved.”

. The following day, he posted a thread introducing “Playground v2.” 14 ||

. The addition of allegations regarding Doshi’s personal involvement in the alleged 15 || trademark infringement based on these social media posts would bolster Playground AI’s claims a 16 || of personal liability. However, the Court concludes that it need not require amendment of 3 17 || Playground AI’s pleading to add such allegations (and thus potentially invite another round of 18 motion practice), because the FAC is adequate as pled. 19 Doshi’s motion to dismiss the FAC is DENIED. 20 IV. ORDER 21 (1) Defendant Doshi’s motion to dismiss the FAC is DENIED; and 22 (2) This order terminates ECF 20. 23 24 || Dated: March 14, 2024

TH LABSON FREEMAN 26 United States District Judge 27 28