Cosmopolitan Loses "Reverse" Cybersquatting Claim But Trademark Infringement Claims Move On

I’ve previously written (here and here) about the lawsuits filed by 3700 Associates, LLC (“3700 Associates”) – the owner of the troubled (but still under construction) “The Cosmopolitan Resort & Casino” condo-hotel project in Las Vegas, Nevada – against a Florida domainer in a case that epitomizes reverse cybersquatting while at the same time exploring the boundaries of trademark law by claiming that a “web directory” website (those websites featuring a multiple click-through links) constitutes use in commerce for purposes of causes of action for trademark infringement and unfair competition (click here for previous blog entry on this type of trademark infringement litigation). Click here for Sept. 8, 2008 Las Vegas Sun article about the troubled project.

When we last left the story, 3700 Associates had its Nevada District Court case dismissed on jurisdictional grounds. 3700 Associates decided to refile its trademark infringement and cybersquatting lawsuit in Florida (to overcome personal jurisdiction problems) against Tim Griffin, Sr. and Griffin IT Median, Inc. (together “Griffin”) over Griffin’s ownership and use of the Internet domain name “cosmopolitanresort.com” which Griffin registered on or about August 15, 2003 – approximately 16 months before 3700 Associates began using the mark “Cosmopolitan” in connection with its planned condo-hotel project. See 3700 Associates, LLC v. Griffin et al, Case No. 08-cv-80158 (S.D. Fla. Feb. 14, 2008).

On October 6, 2008, U.S. District Court Judge Donald M. Middlebrooks granted in part and denied in part Griffin’s Motion for Summary Judgment. See 3700 Associates, LLC v. Griffin et al, 2008 U.S. Dist. LEXIS 79721 (S.D. Fla. Oct. 6, 2008)

As one would expect given the timeframe in which Griffin registered the domain name compared to when 3700 Associates announced its intent to use the Cosmopolitan name, the court dismissed 3700 Associates’ cybersquatting claim. 3700 Associates attempted to argue that “the fact that Defendants registered the Domain Name a little over a year before Plaintiff began its COSMOPOLITAN Marks is of no consequence to the analysis of whether Defendants violated the ACPA.” Well, the court begged to differ:

Contrary to Plaintiff's assertion, I find that this is a critical fact. It is evident to me--and agreed by all parties--that Plaintiff's Marks did not exist at the time that Defendants registered the domain name in August, 2003. Plaintiff weakly proposes that “[a]t the time Defendants registered the [Domain Name at issue], 'Cosmopolitan' was distinctive as a mark for resort services.” See id. at P 16. However, I find this to be a conclusory assertion unsupported by the record. The term “Cosmopolitan” is a descriptive word meaning “international,” “multinational, or “sophisticated.” Clearly, the term itself is not distinctive or famous standing alone in the context of resort services; arguably, it is most distinct in another context, as the title of a woman's magazine. Moreover, even assuming that Plaintiff has developed the term such that it has become distinctive or famous with regard to its Marks and resort services, this has only occurred since February 2005, approximately 16 months after Defendants registered the Domain Name. To prevail on an ACPA claim, the Act plainly requires that the plaintiff's mark is “distinctive” or “famous” at the time of registration of the domain name. According to the parties' agreed-upon timeline, I find as a matter of law that Plaintiff cannot prevail on its ACPA claim. Simply put, at the time that Defendants registered the Domain Name, Plaintiff's COSMOPOLITAN Marks were not distinctive or famous because the Marks did not exist, and the term “Cosmopolitan” standing alone was not distinctive or famous in real estate services.

(footnotes omitted) (emphasis in original)

Unfortunately for Griffin, however, the court denied summary judgment on 3700 Associates’ federal and common law trademark infringement and unfair competition claims on the basis of too many issues of material fact in dispute.

3700 Associates argued that Griffin was attempting to trade on 3700 Associates’ goodwill by using the domain name to host a directory website containing multiple advertising links, with pop-up advertisements that redirected consumers to various other Las Vegas-oriented websites. Griffin countered that its website did not constitute “use in commerce” of the Cosmopolitan mark because it does not compete with Plaintiff for the sale of hotel, resort, or condo services.

The court stated that while the Eleventh Circuit has quoted another court's language that establishing a web page on the Internet satisfies the Lanham Act's “in commerce” requirement (see Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1195 (11th Cir. 2001) (quoting Planned Parenthodd Fed'n of Am., Inc. v. Bucci, 1997 WL 133313 (S.D.N.Y. 1997), aff'd, 152 F.3d 920 (2nd. Cir.), cert. denied, 525 U.S. 834 (1998)), the Eleventh Circuit has not yet “squarely” determined whether directory websites such as Griffin’s qualifies as a “commercial use” and other circuits have been split on the issue. As such, whether Griffin’s use of the domain name in connection with a web directory website constitute “use in commerce” remained an issue of material fact.

In addition, the court determined that there existed genuine issues of material fact as to whether 3700 Associates even possessed a valid mark for purposes of maintaining an infringement action against Griffin. While 3700 Associates attempted to argue that its COSMOPOLITAN marks were inherently distinctive, the court found that the evidence demonstrated that the marks were merely descriptive:

First, the words in the Marks consist of (1) “Cosmopolitan,” a term frequently used to describe a hotel or resort; and (2) “Resort and Casino” or “Resort Casino,” words that describe the goods that Plaintiff is providing. Second, evidence of myriad hotels and resorts around the world using the term “Cosmopolitan” indicates that the term is not a particularly innovative idea. Third, although not determinative, Plaintiff disclaimed the exclusive use of the terms in its trademark applications. Finally, Plaintiff has not had more than five years of continuous, exclusive use, as it first began promoting its resort hotel casino and condominiums in 2005.

(footnotes and citations omitted). As such, 3700 Associates faces the burden of showing evidence of secondary meaning prior to the date when Griffin began using its domain name (a date that also has yet to be ascertained) in order to maintain its infringement claims against Griffin.

The court did not even bother addressing likelihood of confusion given the other issues of material fact in dispute.