Thursday, May 24, 2018

Dr. Seuss Trademark Claims Against Parody Book Title Dismissed

On May 21, 2018, the U.S. District Court for the Southern District of California granted a Motion for Judgment on the Pleadings filed by the creators of a Dr. Seuss-Star Trek mash-up parody book entitled “Oh, the Places You’ll Boldly Go!” (the “Boldly” book) against trademark infringement claims brought by Dr. Seuss Enterprises LP (the owner of the intellectual property rights associated with the Dr. Seuss books).  See Dr. Seuss Enterprises, L.P. v. ComicMix LLC et al, Case No. 16-cv-02779 (S.D. Cal.) (decision here).

Previously, Defendants argued that Plaintiff’s trademark infringement claims should be dismissed because Defendants’ title choice was protected by the First Amendment under the limiting construction provided for in the landmark case Rogers v. Grimaldi, 75 F.2d. 994 (2nd Cir. 1989):

Under the Rogers two-prong test, the title of an expressive work does not violate the Lanham Act “unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.” Mattel Inc. v. MCA Records, Inc., 296 F.3d 894, 902 (9th Cir. 2002) (internal quotation marks omitted) (quoting Rogers, 875 F.2d at 999). This test “insulates from restriction titles with at least minimal artistic relevance that are ambiguous or only implicitly misleading but leaves vulnerable to claims of deception titles that are explicitly misleading as to source or content, or that have no artistic relevance at all.” Rogers, 875 F.2d at 1000.

Defendants had argued that there is nothing misleading about its “Boldly” book title and that the use of the title was directly relevant to the underlying creative work.  Plaintiff focused its opposition on a specific portion of the Rogers decision – footnote 5 – to argue that this case was different.  That footnote 5 stated that the outlined “limiting construction would not apply to misleading titles that are confusingly similar to other titles. The public interest in sparing consumers this type of confusion outweighs the slight public interest in permitting authors to use such titles.” Rogers, 875 F.2d at 999 n.5.

In its order on the motion to dismiss, the Court found that Defendants’ invocation of Plaintiff’s trademarks was relevant to the book’s artistic purposes and that the title did not explicitly mislead as to its source or content.  However, with respect to the footnote exception, while the Ninth Circuit had not directly addressed such exception, because other district courts had determined that the exception is applicable, the Court decided that it would not dismiss Plaintiff’s trademark claims on First Amendment grounds pursuant to Rogers.

However, on November 16, 2017, the Ninth Circuit Court of Appeals issued its opinion in the case Twentieth Century Fox Television a Division of Twentieth Century Fox Film Corp. v. Empire Distribution, Inc., 875 F.3d 1192 (9th Cir. 2017).  This case involved a dispute between a record label named Empire Distribution and the companies behind the television show Empire (and its portrayal of a fictional music label named “Empire Enterprises”).  As expected, the Ninth Circuit invoked the Rogers test in deciding if the allegedly infringing use of EMPIRE as the title of an expressive work was protected by the First Amendment. 

Empire Distribution had argued that the limiting construction of the Rogers test did not apply because of footnote 5.  However, the Ninth Circuit rejected Empire’s argument for an exception based on footnote 5 – nothing that the footnote had only ever been cited once by an appellate court, and even then the Second Circuit had rejected its applicability. 875 F.3d at 1197 (citing Cliffs Notes, Inc. v. Bantam Doubleday Dell Publ’g Grp., Inc., 886 F.2d 490 (2d Cir. 1989)).  The Ninth Circuit stated “[t]he exception the footnote suggests may be ill-advised or unnecessary” because identifying confusingly similar titles “has the potential to duplicate either the likelihood-of-confusion test or the second prong of Rogers” and “conflicts with our precedents, which ‘dictate that we apply the Rogers test in [Lanham Act] § 43(a) cases involving expressive works.’” Id. (alternation in original) (quoting Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1241–42 (9th Cir. 2013)).

With this revised interpretation of the Rogers test in hand, the Court then reevaluated Defendants’ use of the Boldly title under the First Amendment.  The Court reaffirmed its previous findings that Defendants’ invocation of Plaintiff’s alleged trademark is relevant to Boldly’s artistic purpose

As well-put by the court in CI Games S.A. v. Destination Films, No. 2:16-cv-5719-SVW-JC, 2016 WL 9185391 (C.D. Cal. Oct. 25, 2016): “It is clear to the Court that the artistic relevance prong of the Rogers test is meant to ensure that the title in question uses the potential trademark to express or describe its own content rather than merely to attract notoriety using a trademark in its title that is irrelevant to the underlying work.” Id. at *6.

As for the second prong – whether the alleged use explicitly misleads as to the source or content of the work – the question is “whether there was an ‘explicit indication,’ ‘overt claim,’ or ‘explicit misstatement’ that caused . . . consumer confusion.” Brown, 724 F.3d at 1245. (quoting Rogers, 875 F.2d at 1001).  The Court noted that not only did no such statement appear in Defendants’ work, but that Defendants actually went out of their way on the Boldly copyright page to inform readers that it was a work of parody that was not associated with or endorsed by Dr. Seuss.  While Plaintiff disputed the effectiveness of such disclaimers, “what cannot be disputed is that there is no statement in Boldly to the contrary, i.e., that the work is associated with or endorsed by Plaintiff.” (emphasis in original).  Moreover, Defendants’ use of similar text and design for their book title is not enough to be an “explicit misstatement.”  Without any clear evidence that the title of Boldly explicitly misleads as to the source of the work, the Court found that the second prong had been satisfied by Defendants. 

With both prongs of the Rogers test satisfied, the Court ruled that Defendants were entitled to a judgment on the pleadings as to Plaintiff’s trademark claims relating to the title of Boldly.  While Plaintiff had also pled trademark rights in the font and illustration style, because the Court had not determined if Plaintiff had protectable trademark rights in the font and illustration style of the Dr. Seuss book and only analyzed the title of the book (which it had previously determined was a protectable trademark when it analyzed Defendants’ Boldly book title), the Court’s dismissal of Plaintiff’s trademark claims was limited to just those relating to the title of Boldly. 

Tuesday, May 1, 2018

Different Firm Name, Same Great Las Vegas Trademark Attorney

I finally decided to go out on my own.  In connection with my new in-house position as Project Manager and General Counsel for the Clark County Regional Center, I've established my own law practice which will continue representing clients in connection with various intellectual property matters (trademarks, copyrights, trade secrets, and domain names) along with legal matters in the areas of business immigration (EB-5 Visas and L-1 Visas). 

My new contact information is as follows:

Ryan Gile
Gile Law Group Ltd.
10655 Park Run Drive, Suite 230
Las Vegas, Nevada  89144
Phone: (702) 522-9512

Thursday, February 18, 2016

The Rat Pack is . . . Generic! -- Ninth Circuit Affirms Nevada District Court’s Decision that “The Rat Pack” is Generic in connection with “Rat Pack” tribute shows

The title of this blog post could also be entitled “How I won at the Ninth Circuit without doing a thing.” 

On February 16, 2016, the Ninth Circuit Court of Appeals issued its ruling in the appeal that was filed in 2013 by TRP Entertainment, LLC, seeking to overturn the Nevada district court’s 2009 decision which found that the “Rat Pack” was generic and ordered a disclaimer of the term “RAT PACK” on TRP’s trademark registration for “THE RAT PACK IS BACK.”  A copy of the decision can be downloaded here.   See TRP Entertainment, LLC v. BC Entertainment et al., Case No. 13-16754 (9th Cir.)

In upholding the lower court’s decision, the Ninth Circuit found that “the record demonstrates that the term ‘The Rat Pack’ describes a type of live entertainment show and does not identify any particular producer of a Rat Pack tribute show.”  The Court noted that even TRP had referred to “Rat Pack performances as a ‘genre’ of entertainment.”  As such, the district court did not err in determining that “The Rat Pack” is generic in the context of live shows about or in tribute to members of the Rat Pack.  The Ninth Circuit also held that the district court did not abuse its discretion in ordering a disclaimer of the term “The Rat Pack” modifying TRP’s trademark registration (citing 15 U.S.C. § 1119, which allows a court to order the modification of a trademark registration to include a disclaimer of generic components).  As such, the Ninth Circuit affirmed the district court’s grant of partial summary judgment and remanded the case back to the district court to instruct the Director of the United States Patent and Trademark Office to enter a disclaimer of the term “THE RAT PACK” on TRP’s trademark registration for ““THE RAT PACK IS BACK.” 

In order to understand how this victory is one for which I can claim some credit, I will defer to my prior detailed post on the district court’s decision when it was first handed down.  I was no longer Defendants’ counsel of record on the case at the time the decision was handed down, but it was the Motion for Partial Summary Judgment that I prepared and filed on behalf of the Defendants in that case that the district court ultimately ruled on in deciding that “Rat Pack” was generic – a decision that the Ninth Circuit has now affirmed.

Moreover, I was not involved in any briefings relative to TRP’s appeal, so that is why I write that I won at the Ninth Circuit without doing a thing – because indeed I did not.   In fact, the Ninth Circuit ruled against TRP despite having no substantive opposing briefs filed by the Defendants.  Original Defendant Barrie Cunningham did send a one page letter to the Ninth Circuit asking for the lower court’s decision to be upheld, but otherwise, no briefs were filed by the Defendants arguing in favor of upholding the lower court’s decision – which makes the decision of the Ninth Circuit to uphold the decision anyway all the more sweeter.  This victory for Defendants also demonstrates that just because no one opposes you on appeal does not necessarily mean you are going to win your appeal.

So short of an appeal by TRP of the Ninth Circuit’s decision to the U.S. Supreme Court or possibly a request for reconsideration with the Ninth Circuit, this decision marks the end of the great “Rat Pack Generic” saga that started as far back as 13 years ago.  The glory days of TRP claiming to have exclusive rights to the term “THE RAT PACK”  in connection with a “Rat Pack” tribute show – much like the “Rat Pack” itself – is forever gone. 

Friday, April 10, 2015

Sam’s Club Loses Motion to Dismiss David Yurman Trademark Lawsuit Based on First Sale Doctrine Defense

In September 2014, luxury jewelry designer David Yurman filed a trademark infringement lawsuit against Sam’s Club over the alleged unauthorized sales of David Yurman jewelry at Sam’s Club stores.  See David Yurman Enterprises LLC and David Yurman IP LLC v. Sam’s East, Inc. and Sam’s West Inc., Case No. 14-cv-02553 (S.D. Tex. Filed September 4, 2014).  Click here for a news article on the complaint.

In the complaint, Yurman alleged that Sam’s Club, through its purchase and resale of genuine David Yurman jewelry from authorized David Yurman retailers, infringed on Yurman’s trademark rights to the DAVID YURMAN mark as well as intentionally interfered with Yurman’s contractual relations with its authorized retailers. 

Sam’s Club filed a motion to dismiss Yurman’s complaint for failure to state a claim, primarily on the basis that its sale of Yurman’s genuine jewelry was protected by the “first sale doctrine.”  On April 9, 2015, the Court denied Sam’s Club’s motion to dismiss finding that Yurman’s complaint had sufficiently pled causes of actions for trademark infringement (sufficient to overcome Sam’s Club assertion of the “first sale doctrine” defense) as well as for tortious interference with contractual relations.  See David Yurman Enterprises LLC et al v. Sam’s East, Inc., Case No. 14-cv-02553 (S.D. Tex. April 9, 2015) (court order here)

As part of Yurman’s complaint, Yurman asserted that it only sells its jewelry through its own boutiques and authorized retailers who sign an Authorized Retailer Agreement that “expressly prohibits the transshipment, diversion, or transfer of any Yurman products to any other party.”  Yurman further asserted that Yurman’s Authorized Retailer Agreement and the prohibition against selling its jewelry to any other parties were well known in the retail industry, especially retailers of jewelry products.  As such, Sam’s Club was well aware of the prohibition (or certainly became aware after Sam’s Club was notified by Yurman to stop such purchasing), and yet intentionally sought out and purchased Yurman jewelry from one or more of Yurman’s authorized retailers despite knowing that such retailers were prohibited from selling the jewelry to Sam’s Club.  There was no dispute that Sam’s Club was selling authentic Yurman jewelry products at its stores and that Sam’s Club is not a Yurman-authorized retailer of its jewelry. 

Most importantly, Yurman alleged that “Sam’s Club prominently advertised and promoted the jewelry in its stores and on its website, in an effort to drive traffic to its stores” and that in its stores, Sam’s Club was “displaying Yurman products, placards and packaging displaying the Yurman trademark” and supposedly even Yurman-issued certificates of authenticity.  Yurman alleged that Sam’s Club’s actions created “the false impression that Sam’s Club is among Yurman’s network of authorized retailers, and has caused consumer confusion and disappointment.” (e.g., unlike an authorized Yurman retailer, Sam’s Club, at the point of purchase, was not being able to service customers purchasing or attempting to purchase DAVID YURMAN jewelry products sold in its stores).

In support of its trademark infringement claims, Yurman basically argued that Sam’s Club’s “display of the jewelry and its packaging; the prominent placement of placards, certificates, and other Yurman materials; and the prominent advertisement of Yurman products in its stores and on its website to create foot traffic to the stores, all create the false impression that Sam’s Club is authorized to sell Yurman products and that its products have been sourced directly from Yurman.”  In response, Sam’s Club maintained that Yurman’s trademark infringement claims were barred by the “first sale doctrine” (i.e., because Sam’s Club was selling genuine Yurman jewelry identified by the David Yurman trademark, there is no potential for consumer confusion regarding the source of the goods).

The Court stated the following regarding the “first sale doctrine” defense:
Under the rule “a distributor who resells trademarked goods without change is not liable for trademark infringement.” Mary Kay, Inc. v. Weber, 301F. Supp. 2d 839, 852 (N.D. Tex. 2009) (internal quotations omitted). However, there are two exceptions to the rule: 1) “[t]he doctrine does not protect alleged infringers who sell trademarked goods that are ‘materially’ different from those sold by the trademark owner;” and 2) the doctrine will not protected alleged infringers “if they have given off the false impression that they are affiliated with or sponsored by” the trademark owner. Id. The second exception is relevant to this case. Under this rule, an unauthorized dealer may use a mark to advertise or promote truthfully that it sells a certain trademarked product, so long as the advertisement or promotion does not suggest affiliation or endorsement by the mark holder. Id. (quoting Fetzer, 381 F.3d at 484).

In analyzing whether Yurman had pled sufficient facts to show that the use of the Yurman trademark creates a likelihood of confusion as to an affiliation between Sam’s Club and Yurman, the Court noted that “Yurman has pled that the stores had Yurman products and materials prominently displayed, which suggests the Yurman products were highlighted more than other products. . .[and] that Sam’s Club had prominent advertisements of the Yurman products on its website in an effort to drive foot traffic to its stores, which suggests the Yurman jewelry was featured in a way that other jewelry was not. The context of the use was that Sam’s Club was featuring Yurman products more aggressively and prominently than other products to gain more traffic to its stores.”  Because the “[p]rominent and pervasive use of a mark will suggest affiliation,” the Court found Yurman had pled sufficient facts to state claim for likelihood of confusion.

As for Sam’s Club reliance on the “first sale doctrine” defense, “the defense must be apparent on the face of the claim, and the rule does not apply if Sam’s Club has given off the false impression that it is affiliated with Yurman.”  Sam’s Club relied heavily upon another case, Matrix Essentials, Inc. v. Emporium Drug Mart, Inc., of Lafayette, 988 F.2d 587, 593 (5th Cir.1993), which held that “the mere unauthorized stocking and sale of trademarked products is not a trademark violation.”  However, the Court distinguished that case from the instant case because Yurman “alleges more than the mere unauthorized stocking and sale is occurring here. Yurman also alleges prominent and aggressive advertising, including on the Sam’s Club’s website, and a prominent display of Yurman materials and jewelry within its stores. Matrix Essentials anticipates that if more action is taken beyond mere unauthorized stocking and sale of a trademarked product, a claim might survive summary judgment.”  Accordingly, the Court denied Sam’s Club motion to dismiss Yurman’s trademark infringement claim (as well as Yurman’s other claims for false designation of origin and unfair competition, for similar reasons).

As for Yurman’s claim for tortious interference with a contract, Yurman argued that despite Sam’s Club knowledge of Yurman’s Authorized Retailer Agreement with every authorized retailers of its products prohibiting the transshipment, diversion or transfer of its products to any other party,”Sam’s Club obtained significant inventories of Yurman products to sell in Sam’s Club stores throughout the United States. . . .” And if Sam’s Club did not know about the prohibition in the Authorized Retailer Agreement initially, Sam’s Club was certainly put on notice when Yurman demanded that Sam’s Club stop inducing Yurman’s retailers into breaching their agreement (a demand that Sam’s Club refused).  Yurman further alleged that Sam’s Club could not have acquired such large inventories of Yurman products without having intentionally induced one of Yurman’s retailers to breach its Agreement with Yurman.  Based on these factual assertions, the Court found Yurman’s pleadings were sufficient to make out a claim for tortious interference with a contract

Accordingly, the Court denied Sam’s Club’s motion to dismiss.

Monday, March 16, 2015

Righthaven Remembered

It’s hard to believe that Righthaven, the company that was going to change the news media business by applying the patent lawsuit business model to the enforcement of copyrights, filed its first series of lawsuits five years to go.  (The events were so notable that even this trademark dedicated blog could not resist writing up a copyright related post).

To mark the anniversary, former Las Vegas Sun Reporter Steve Green (now a staff writer with the Orange County Register), who helped shine a spotlight on Righthaven as the company embarked on and went about its controversial copyright enforcement campaign, published a new article last week which looks back upon the rise and demise of Righthaven (including new quotes from Righthaven founder Steve Gibson who continues to stand by the actions taken by Righthaven).

See the photo of Steve Gibson and the infamous “bluetooth” headset. (Photo © Las Vegas Sun)

Thursday, March 5, 2015

Hakkasan denied preliminary injunctive relief in cybersquatting case for failure to establish irreparable harm

Trademark attorneys in the Ninth Circuit continue to face the fallout from last year’s Ninth Circuit decision in Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc., 736 F.3d 1239, 1249 (9th Cir. 2013), cert. denied, 2014 WL 1575656 (Oct. 6, 2014) (“Herb Reed”).  In Herb Reed, the Ninth Circuit, following the Supreme Court’s precedents in eBay Inc. v. MercExchange, 547 U.S. 388 (2006) (which held that the traditional four factor test, including establishing irreparable harm, must be employed in patent cases) and Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (which held that parties seeking a preliminary injunction must demonstrate that irreparable harm is likely in the absence of an injunction), rejected the notion that a plaintiff in a trademark infringement lawsuit was entitled to a presumption of irreparable harm upon demonstrating a likelihood of confusion from alleged trademark infringement and held that a plaintiff seeking a preliminary injunction in a trademark infringement case must demonstrate irreparable harm in order to get preliminary injunctive relief:

Gone are the days when “[o]nce the plaintiff in an infringement action has established a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief does not issue.” Rodeo Collection, Ltd. v. W. Seventh, 812 F.2d 1215, 1220 (9th Cir. 1987) (citing Apple Computer, Inc. v. Formula International Inc., 725 F.2d 521, 526 (9th Cir.1984)). This approach collapses the likelihood of success and the irreparable harm factors. Those seeking injunctive relief must proffer evidence sufficient to establish a likelihood of irreparable harm.

The Herb Reed case has since left many trademark litigation practitioners (at least those practicing in the Ninth Circuit), after years of being able to obtain preliminary injunctions based on a showing strong showing of likelihood of confusion and the presumption of irreparable harm thereby, now trying to figure out what type of actual “evidence” can be shown to overcome this threshold of demonstrating a likelihood of irreparable harm and having to inform some trademark clients that a preliminary injunction might not be as easily obtainable for trademark infringement as it once was. 
The latest example of the struggle to overcome this irreparable harm threshold comes from a court decision by Nevada District Judge Jennifer Dorsey who denied the owner of the Hakkasan nightclub chain preliminary injunctive relief for alleged cybersquatting against an individual who had registered various domain names containing the term “hakkasan.”  See Hakkasan LV, LLC et al v. Eddie Miller, Case No. 2:15-cv-290-JAD-PAL (D. Nev).

Hakkasan had filed a cybersquatting lawsuit against Defendant Miller for his registration of the domain names domain names , , , , and (the “Contested Domain Names”) – one of which was linked to a website offering the domain name for sale for $5000 and the other four linked to a webpage located at (also owned by Miller), which encouraged third parties to “partner” with him. 

Along with the filing of the complaint, Hakkasan also sought an ex parte temporary restraining order and preliminary injunction against Miller.  However, the Court – without receiving any opposition from Miller – denied Hakkasan’s request for preliminary injunctive relief on the grounds that Hakkasan had failed to show any evidence of a likelihood of irreparable harm arising from Miller’s actions.

In rejecting Hakkasan’s arguments of irreparable harm, the Court stated that “there is no evidence that Miller has taken any steps to compete with Hakkasan’s business beyond registering the Contested Domain Names and offering them for sale.”   And while Hakkasan alleged that Miller was using the domain names to “solicit partners to offer counterfeit services to the public,” the Court found
no indication that Miller has sold any of the domain names, partnered with any other person, or constructed a website designed to create confusion with Hakkasan’s business, siphon customers from Hakkasan’s business, or otherwise cause Hakkasan irreparable harm. Speculation of what Miller will do with the domain names is hardly enough to bridge the legal gap between Miller’s actions and Hakkasan’s irreparable injury. Instead, these are the sorts of “platitudes” that the Herb Reed court warned may show harm Hakkasan might suffer, but not harm a party seeking injunctive relief is likely to suffer
Order at p. 4 (emphasis in original).

The Court also rejected as unpersuasive several other cases cited by Hakkasan as support that its evidentiary proffer was sufficient to show irreparable harm.  One case – Starbucks Corp. d/b/a Starbucks Coffee Company v. Heller, 2014 WL 6685662, at *8 (C.D. Cal. Nov. 24, 2014) – involved a case where the court found irreparable harm where the presence of infringing products in the market could damage business goodwill.  However, the Court noted that Hakkasan had not offered any evidence that Miller had “introduced any competing or counterfeit ‘products’ into the marketplace or taken any steps other than to register the domain name and attempt to sell it to third parties.” Order at p. 4. The second case – Kalologie Franchising LLC v. Kalologie Skincare Medical Group of California , 2014 WL 953442, at *5 (C.D. Cal. Mar. 11, 2014) – involved a defendant who was continuing to use the alleged infringing mark at the defendant’s facility through a point of sale system and a website and where the court found irreparable harm from “plaintiff’s loss of control over its business reputation resulting from a defendant’s alleged unauthorized use of its protected mark during the pendency of an infringement action.”  In the case of Hakkasan, however, there was no indication that Hakkasan’s marks were being used by Miller in a manner that was similar to the Kalologie case. 

Finally, Hakkasan made one final “Hail Mary” argument that Herb Reed was a trademark infringement case and that the Ninth Circuit’s decision did not expressly overrule the presumption of irreparable harm in a cybersquatting case.  The Court rejected such argument, especially given the Ninth Circuit past statements that “cybersquatting is a form of trademark infringement.”  The Court further noted two other cybersquatting court decisions issued post-Herb Reed where the plaintiffs were granted preliminary injunctive relief   one involving an evidentiary record showing systematic cybersquatting that was intended to deceive customers (Bittorrent, Inc. v. Bittorrent Marketing GMBH, 2014 WL 5773197 (N.D. Cal. Nov. 5, 2014) and another where “loss of control over business reputation” established irreparable harm in circumstances where the domain name owner actually operated a business in the same market as the plaintiff and sold products “slightly dissimilar” from plaintiff’s products (Kreation Juicery, Inc. v. Shekarchi, 2014 WL 7564679, at *12 (C.D. Cal. Sept. 17, 2014)).  The Court found that Hakkasan had failed to show use of the Contested Domain Names by Miller that reached the same levels as those in the Bittorrent and Kreation Juicery cases. 

Accordingly, because Hakkasan had failed to demonstrate a likelihood of irreparable harm, the Court denied both Hakkasan’s Application for Temporary Restraining Order and Motion for Preliminary Injunction.

Monday, August 27, 2012

Marc Lurie/ Wins Reverse Domain Name Hijacking Claim Against AirFX, LLC on Summary Judgment

AirFX,LLC (“Defendant”), the owner of the trademark AirFX, suffered a defeat last week in its attempt to “acquire” (or as some might say “hijack”) the domain name from its current registrant, Marc Lurie (“Lurie” or “Plaintiff” ).   [Note: There were many articles about this dispute last year when the court denied Defendant’s Motion to Dismiss – see herehere, here, and here for a small sampling].

The domain name was originally registered by Bestinfo on March 21, 2003.  In June 2005, Air Systems Engineering, Inc. ("ASE") filed a trademark registration application for the mark AirFX for “motorcycles, vehicle parts, namely, shock absorbers, and suspension systems for motorcycles, bicycles, automobiles, and powered vehicles.”  The mark registered in March 2007.  In April 2011, ASE assigned its trademark rights to a wholly owned subsidiary, Defendant AirFX,LLC.

Lurie originally was involved in operating skydiving wind tunnel businesses under the name "SkyVenture," but later decided to use the name AIRFX in connection with a new line of wind tunnels (despite having found ASE’s application to register AIRFX after conducting a trademark search).  Lurie acquired the from Bestinfo for $2,100 on February 2, 2007, but never posted any content or created a website – and instead has a typical landing page (or “splash page” as defined in the opinion) put up by the registrar,  While the landing page does have links to third party advertisements, Lurie maintained that he drived no revenue from such advertisements (and Defendant never provided any evidence to the contrary).  After leaving SkyVenture, Lurie was bound by a non-compete agreement prohibiting him from developing his own line of wind tunnels until 2010.  However, Lurie never sold any product under the brand AIRFX nor conducted any advertising, marketing, or manufacturing activities.  Lurie also never sold or offered to sell suspension systems for motorcycles, or any other motorcycle-related products.

Defendant contacted Lurie in 2008 regarding the purchase of  While the partie dispute the terms of the offer at that time, no agreement was reached.  In 2011, Defendant filed a domain dispute complaint before the National Arbitration Forum.  On May 16, 2011, the arbitration panel ruled in favor of Defendant and ordered that GoDaddy transfer to Defendant.  See AirFX, LLC v. ATTN AIRFX.COM, Claim Number FA1104001384655 (NAF May 16, 2011)).

Lurie sought relief against the ordered transfer by filing a complaint which included a claim for reverse domain name hijacking under 15 U.S.C. § 1114(2)(D)(v).  Defendant counterclaimed with claims of cybersquatting and trademark infringement.  The parties filed cross motions for summary judgment.  On August 23, 2012, the U.S. District Court for the District of Arizona ruled in favor of Lurie by finding as a matter of law that Lurie was not liable for Defendant’s counterclaims of cybersquatting or  trademark infringement, and accordingly, Lurie’s Motion for Summary Judgment on its reverse domain name hijacking claim was granted.  See et al. v. AirFX LLC, 2012 U.S. Dist. LEXIS 120285   (D. Ariz. August 23, 2012) (order here).

In deciding Defendant’s cybersquatting claim, the issue centered around the meaning of “registration” (ed.-an issue near and dear to my heart).  The court detailed the Ninth Circuit’s recent decision in GoPets Ltd. v. Hise, 657 F.3d 1024, 1030 (9th Cir. 2011) which clarified the meaning of "registration" and found that a party’s re-registration and continued ownership of a domain name that a party had registered long before a trademark owner registered its trademarks does not violate the cybersquatting statute (prior blog post here). 

Defendant attempted to distinguish GoPets because in that case, the original domain name registrant transferred the domain name to an entity that he co-owned.  In contrast, Lurie purchased from an unrelated third party.  Defendant argued that the purpose of the ACPA would be undermined if a cybersquatter who purchases a domain name in bad faith is immune from liability simply because the domain name he purchased existed before a mark was  distinctive.

However, the court found otherwise: 
Nothing in the language of GoPets indicates that it should be read as narrowly as defendant suggests. GoPets did not distinguish between transfers of a domain name to related parties and other kinds of domain name transfers. To the contrary, GoPets broadly reasoned that if an original owner's rights associated with a domain name were lost upon transfer to "another owner," the rights to many domain names would become "effectively inalienable," a result the intention of which was not reflected in either the structure or the text of the ACPA.

In short, the court, following GoPets, found that it was undisputed that was initially registered on March 21, 2003 by Bestinfo, ASE’s first use in commerce of the AirFX mark was June 2005, and Lurie purchased on February 2, 2007 – and thus, Lurie’s registration of in February 2007 "was not a registration within the meaning of § 1125(d)(1)” and because Bestinfo registered long before ASE registered its mark, Lurie’s  registration and ownership of does not violate the cybersquatting statute.  The court granted summary judgment on Defendant’s cybersquatting counterclaim in favor of Lurie. 

As for Defendant’s counterclaim for trademark infringement, the court focused on the fundamental issue of whether Lurie used the mark “in commerce” (noting that “If a person's use of a mark is noncommercial, it does not violate the Lanham Act.”).  Defendant’s sole argument of Lurie’s commercial use centered on particular allegations and admissions.  However, the court found no dispute that Lurie had never sold an AirFX product, have no advertising or marketing activities, have no manufacturing activities, never developed a website for, and never sold any AirFX products or services on such website.  The court further found that Lurie’s limited activity of some pre-sales efforts and preliminary research, viewing such facts in the light most favorable to Defendant, was still insufficient to constitute commercial use of a mark.
Although plaintiffs have developed a brand name, registered a domain name, started  researching the design of their wind tunnels and approached potential investors and  customers, plaintiffs have not sold, manufactured, advertised, or marketed any product  bearing the AirFX mark. Defendant points to no other facts to establish plaintiffs'  commercial use of the AirFX mark.

As such, without raising any genuine issue  of material fact as to whether plaintiffs' use of the mark was commercial, the court found as a matter of law that no commercial use existed and therefore, there could be no trademark infringement as a matter of law and granted summary judgment on Defendant’s trademark infringement counterclaim in favor of Lurie. 

Finally, with respect to Lurie’s claim for reverse domain name hijacking, the only issue was whether Lurie’s registration of the domain name was “not unlawful."
Because we have concluded that plaintiffs cannot be liable under the ACPA for cybersquatting as a matter of law, and because plaintiffs are entitled to summary judgment on the trademark infringement claim, we conclude that there is no genuine issue of fact as to whether plaintiffs' use of the domain name is lawful.

Defendant tried to argue that Lurie should not be entitled to such equitable relief because Lurie “conducted the litigation in unprecedented, and unprofessional ways.” [ed.—there are two sides to every story, and I’m sure Lurie has some stories about the actions of Defendant’s counsel as well].  However, the court noted the clear mandate of 15 U.S.C. § 1114(2)(D)(v), which allows the court to “grant injunctive relief to the domain name registrant, including the reactivation of the domain name or transfer of the domain name to the domain name registrant."  As such, the court ordered that the remain registered with Lurie.

The court’s final words was to note that “[b]oth parties argue that this case is ‘exceptional’ under the Lanham Act, warranting an award of attorneys' fees. We will address a motion for attorneys' fees if and when one is before us.”   Stay tuned . . .