Lamparello v. Falwell, No. 04-2011 (4th Cir. Aug. 24, 2005).
Following on the Ninth Circuit Bosley (No. 04-55962, 9th Cir. Apr. 4, 2005) opinion from earlier this year, gripe sites won another important victory in the Fourth Circuit. This ruling is significant not only because it vindicates gripe sites, but also because it squarely confronts the Initial Interest Confusion doctrine (which so many other courts have ducked recently). 1-800 Contacts, Inc. v. WhenU.com, Inc., Docket Nos. 04-0026-cv and 04-0446-cv (2d Cir. June 27, 2005).
The Facts
Lamparello built a site at fallwell.com that criticized Jerry Falwell’s views. The home page contained a disclaimer and a link to Falwell’s site; at some point Lamparello had commercial outlinks. The parties agreed that Lamparello had very little traffic (200 hits/day) and no diversionary effect.
No Likelihood of Confusion
The court discusses, and then sidesteps, the argument that Lamparello’s site was non-commercial and therefore outside the scope of the Lanham Act. Instead, the court says it does not need to resolve that question because there was no likelihood of confusion.
In support of this, the court does a very efficient multi-factor analysis. There is not sufficient similarity between the “products” because the Web sites look totally different and offer opposing, not similar, views. Further, there is no evidence that consumers were actually confused; instead, the anecdotal evidence showed that misdirected searchers quickly realized they were at the wrong site.
While I don’t disagree with this conclusion, this type of analytically efficient multi-factor analysis shows exactly why trademark law should not apply to non-commercial gripe sites at all. The factors really don’t make sense because Lamparello was not marketing goods or services in commerce. Thus the court has to resort to analytical tricks like comparing the source of the “content” rather than the source of “goods or services.” So, from my view, the court should have disposed of the case because there was not sufficient “use in commerce” to meet the threshold standards for trademark infringement.
Initial Interest Confusion
Having concluded that there was no likelihood of confusion under the multi-factor test, the court then addressed the initial interest confusion (IIC) doctrine. Plaintiffs have routinely attempted to use the IIC doctrine as a bypass to the multi-factor test, and in some cases the courts have let this go to absurd results.
In this case, the court had to address IIC because of the Fourth Circuit PETA v. Doughney precedent. In that case, a parody Web site called “People Eating Tasty Animals,” operated at peta.org, was deemed to infringe the trademark of People for the Ethical Treatment of Animals. Although the Doughney case never used the phrase “initial interest confusion,” the case was entirely consistent with an IIC analysis.
The court trashes the IIC doctrine in a variety of ways. It calls the doctrine “relatively new and sporadically applied,” even though there have been at least 100 cases referencing the doctrine over more than three decades.
It then takes the position that the Fourth Circuit has never adopted the IIC doctrine. While this is technically true, this is a very generous characterization of Asia Apparel, LLC v. Cunneen, 118 Fed. Appx. 782 (4th Cir. Jan. 11, 2005) (which affirmed without comment a lower court opinion predicated on IIC) and the Doughney case (which was an IIC case in every respect except that it didn’t use the words “initial interest confusion”). The court then severely limits the Doughney precedent, saying that the case merely evaluated whether Doughney’s peta.org was a good enough parody. In any case, the court says that IIC is not a bypass to the multi-factor test; instead, the entire context must be considered.
One would think the court had said enough at this point. The court sidestepped the “use in commerce” inquiry. The court said there was no likelihood of confusion. The court said that the Fourth Circuit does not recognize an IIC bypass to the multi-factor test. What’s left to say?
Too much! The court then spends three more pages in a surprisingly academic discourse trashing the IIC doctrine, articulating a completely confusing definition of IIC, and generally going where no dicta should ever go.
Having concluded that IIC was not recognized in the Fourth Circuit, the court then says that even if it was, there was no IIC in this case because all prior appellate courts applying IIC to the Internet have done so when the mark was being used for financial gain.
While I think this is technically true, this is a confusing statement. Almost all trademark infringement cases take place in the context of one party using a trademark for financial gain because of the “use in commerce” requirement. If the trademark is not being used for financial gain, usually there isn’t use in commerce, which means the plaintiff’s case should fail before even reaching the question of likelihood of confusion/IIC.
So the court’s delineation (no financial gain, no IIC) should apply to a null set of cases (or a very small number of cases). So this statement, while seemingly important to this case, has very little predictive consequence for most other cases (besides the fact that it’s dicta).
In any case, the court then uses this definition of IIC to conclude that the “critical element—use of another firm’s mark to capture the markholder’s customers and profits—simply does not exist when the alleged infringer establishes a gripe site that criticizes the markholder.” Of course, these factual conditions are not opposites; one could imagine a gripe site that also is for-profit (see, e.g., badbusinessbureau.com) Whitney Information Network, Inc. v. Xcentric Ventures, LLC, 2005 WL 1677256 (M.D. Fla. Jul 14, 2005). Nevertheless, the court says that giving the trademark owner too much power here would allow the owner to insulate itself from criticism, and that’s not permissible.
In a footnote, the court specifically attacks two early IIC-style cases--Planned Parenthood v. Bucci and Jews for Jesus v. Brodsky--both of which held gripe sites liable for infringement. The court said that these cases failed to consider the site’s content in considering if the domain name was infringing.
To recap, the court reaches the following key points in its dicta:
I am no fan of the initial interest confusion doctrine, a point I’ve explained in great detail elsewhere. (Goldman, Eric. Deregulating Relevancy in Internet Trademark Law, 54 Emory Law J, 2005.) So I’m certainly not going to complain about any ruling that takes swipes at the IIC doctrine. However, this opinion is deficient in at least two key respects.
First, as discussed earlier, the limitation of IIC to “financial gain” situations does very little to constrain the doctrine.
Second, the court says that IIC cannot be evaluated without looking at the underlying Web site—this is fine, but why call that initial interest confusion? The court could have said—and should have said—that it was simply refusing to recognize IIC at all. Instead, its implicit standard—look at both the domain name and the Web site to determine IIC—sounds less like IIC and more like standard likelihood of confusion. So why didn’t the court skip the IIC charade and just say that the standard likelihood of confusion test should be applied to the domain name + Web site combination?
After the dangerous dicta digression, the court concludes that there is no likelihood of confusion, so the court grants summary judgment to Lamparello.
ACPA
The court also rejected Falwell’s ACPA claim. In this respect, this case is even better for gripe sites than the Bosley case, which left the ACPA claim open. The court says there is no way for Falwell to show that Lamparello had a bad faith intent to profit from the domain name and does a fairly efficient application of the multi-factor bad faith test in ACPA.
More interesting is how the court distinguishes Doughney. The court notes that Doughney had a portfolio of 50-60 domain names and had told PETA to “make him an offer” suggesting a desire to get paid. Through these distinctions, I think the court again severely limits the precedential impact of Doughney.
Conclusion
This has been a good year for trademark defendants—two major victories for gripe sites (Bosley and Lamparello) and major win for adware vendors (1-800 Contacts). This trend suggests that the courts are correcting the silly doctrines that were an overreaction to the dot com speculative bubble, and we should applaud this development. In particular, this court does serious violence to Doughney as a precedent and undercuts the Bucci and Brodsky cases as well—all welcome corrections from my perspective.
However, the combination of the three cases still leave far more questions than answers. Exactly what constitutes a “use in commerce” in the online context? Exactly what constitutes IIC? These major opinions continue to sidestep these important issues rather than resolving them, leaving us with continued uncertainty about the scope of these doctrines. I trust eventually we’ll get cases that make clear and strong pronouncements, but for now we’re left waiting.
On that front, the press reports indicate that Falwell is seeking an en banc rehearing. So we may not have heard the last of this case.
Trademark law is founded on protecting the consumer from source confusion and buying the wrong goods and services. In the United States, trademarks are based on use. A trademark may not be reserved for indefinite future use. After three years of nonuse, the trademark claimant has the burden to show bona fide intent to resume commercial use, and not merely to reserve a right in a trademark.
Leo Stoller, plaintiff in Central Mfg Co v. Brett (Case 04-C-3049, ND IL, Sept 30, 2005, J. Coar), is known for claiming trademark rights over several common English words, prominently STEALTH, and suing those who do not stop use of the terms or agree to license terms. <http://en.wikipedia.org/wiki/Leo_Stoller> (Oct 9, 2005). George Brett is a Hall of Fame baseball player, who became president of Brett Brothers Sports International, Inc., defendants. Since 1999 Brett Brothers manufactures and sells its STEALTH wooden baseball bats, selling over 25,000 bats.
Stoller and his solely owned companies, Central Mfg Co and Stealth Industries, Inc. claimed ownership of 33 STEALTH or STEALTH-formative marks for various goods and services, 51 licensing or settlement agreements for use of “stealth” on products ranging from hand tools to make prosthetic limbs to construction consulting services to track lighting., and continuous use of Stealth since 1982.
However, plaintiffs’ response to discovery requests was found deficient, producing no documents to support Stoller-deposition claimed sales. The sole documentary support for Stoller’s use claims was a softball and a piece of paper he alleged was an advertising flyer for a Stealth baseball. Plaintiffs did produce “sales records,” but these were a listing of yearly “sales,” with no itemization identifying Stealth products and a “sales quote sheet” that was found not to reflect any actual sales of or orders for any products.
Stoller testified he sold approximately $10,000 of bats, where the source of that datum was his memory. He testified he had no set practice for handling purchase orders or invoices, no record maintenance policy, and did not know how many years’ of records he had.
Stoller obtained two baseball-related federal STEALTH trademark registrations. ® 1,332,378, for “sporting goods, specifically, tennis rackets, golf clubs, tennis balls, basketballs, baseballs, soccer balls, golf balls, cross bows, tennis racket strings and shuttle cocks” and ® 2,892,249 for baseball, softball, T-ball bats. Plaintiffs contended they licensed the ‘378 registration to Jas D Easton, a sporting equipment wholesaler, and submitted a 2004-05 Easton catalog to show licensee use in commerce.
The court found plaintiffs failed to provide admissible evidence they offered STEALTH baseball items in the market at any time. Without documentation to show to whom the alleged sales were made or whether the goods were in fact Stealth brand, there was no valid evidence. The Court therefore found Plaintiffs did not own the STEALTH mark for baseballs or baseball bats. The Court also found that plaintiff’s abandoned the STEALTH mark for baseballs before defendants began to use it on baseball bats in 1999.
Using the seven-factor Seventh Circuit test for likelihood of confusion, August Storck KG v. Nabisco Inc, 59 F3d 616, 619 (7th Cir 1995), the Court found no likelihood Brett’s $49 wooden bat would be confused with alleged licensee Easton’s metal bat.
Federal courts have concurrent power with the US Patent and Trademark Office to cancel federal trademark registrations. 15 USC §1117 (Lanham §37). As can happen on cross motions for summary judgment, the Court also found defendants demonstrated sufficient likelihood of confusion to justify cancellation of plaintiff’s ‘249 trademark registration.
Lambasting plaintiffs, the court found Leo Stoller and his companies presented paradigmatic examples of litigants in the business of bringing oppressive litigation designed to extract settlement, and awarded defendants’ attorney fees and defense costs under both the Lanham Act, 15 USC §1051 et seq and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 510/1 et seq.
The court found plaintiffs’ conduct “oppressive.” A “suit can be oppressive because of lack of merit and cost of defending even though the plaintiff honestly though mistakenly believes that he has a good case and is not trying merely to extract a settlement based on the suit’s nuisance value,” citing Door Sys, Inc v. Pro-Line Door Sys, 126 F3d 1028, 1030-32 (7th Cir. 1997).
Plaintiffs offered irrelevant, questionable, and seemingly fantastical documents; inconsistent, uncorroborated, or arguably false testimony, a cascade of so-called license or settlement agreements for unrelated products and unrelated marks, with an enormous range of license fees from $10 to $25,000, strongly suggesting harassing legitimate actors for the purpose of extracting a settlement amount. “The judicial system is not to be used as a aid in such deliberate, malicious, and fraudulent conduct.”