Chicago Business Litigation Lawyer Blog

Federal Circuit Rules Hotels.com May Not Have Trademark Because Name is too Generic

October 28, 2009 | Peter S. Lubin and Patrick Austermuehle

Our Chicago trademark litigation lawyers noticed a recent trademark law decision that underscores the difficulty of protecting a mark in the emerging world of Internet commerce. The Federal Circuit Court of Appeals ruled July 30 that the hotel review and search Web site Hotels.com may not trademark its name because “Hotels.com” is a generic term. In Re Hotels.com, L.P., 08-1429 (Fed. Cir., July 30, 2009). Hotels.com had argued that it is distinct from the generic word “hotels” because it is not a hotel that provides lodging; it is a Web site that provides information about finding lodging at a discount, travel agency services and related services. The Federal Circuit disagreed, saying the addition of “.com” was not enough to remove the generic nature of the name.

To get to the appeals court, the Hotels.com application was first denied by a trademark examiner, then by the Trademark Trial and Appeal Board (TTAB). The examiner denied the application because the name “Hotels.com” was “merely descriptive of hotel reservation services,” meaning that it fails the distinctiveness requirement laid out by the Lanham Act. In doing so, the examiner rejected evidence Hotels.com offered to show that it had acquired distinctiveness, including surveys showing that the majority of respondents associated the name “Hotels.com” with its business. On appeal, the TTAB agreed that the term was too generic to trademark, but said acquired distinctiveness may be enough to support registration if the site succeeded on appeal.

In its appeal to the Federal Circuit, Hotels.com argued that its proposed mark is not generic because it is not a hotel in the business of providing lodging; it is a Web site in the business of providing information about hotels. It also argued that its surveys show that consumers associate the name “Hotels.com” with its business and do not see it as generic. Relying largely on the TTAB’s analysis, the court rejected these claims.

Addressing the issue of genericness first, the Federal Circuit found that the TTAB did not err when it considered the word “hotels” for genericness separate from the “.com” suffix. That board found that both “hotels” and “.com” were generic, and Hotels.com did not have the only URL that combined the two words. They do not produce a new meaning in combination or indicate source, the TTAB said, and thus the combination is generic. Furthermore, the TTAB argued, the existence of other sites incorporating “hotels” and “.com” shows that there’s a need to protect competitors who would use the proposed mark in their own names. The appeals court agreed, pointing out a similar decision in the case of Lawyers.com, In re Reed Elsevier Props., Inc., 482 F.3d 1376, 1378 (Fed. Cir. 2007).

The circuit court next tackled the evidence of distinctiveness offered by Hotels.com. This includes 64 declarations by the company’s customers, competitors and vendors that Hotels.com is not a generic name. The TTAB dismissed these outright as form letters. While the Federal Circuit found that rejected “unwarranted,” it said they were negated by the totality of other evidence. It next turned to a survey commissioned by Hotels.com, which found that 76% of respondents believed “Hotels.com” was a brand name. The TTAB criticized the design of this study, saying it was skewed in the company’s favor. It also said that respondents may associated a domain name with a brand name. The Federal Circuit took it one step further, suggesting that the TTAB could easily have made its decision on the basis of the genericness evidence alone. Thus, it concluded, the TTAB met its burden of proof and should not be overturned.

Illinois Plaintiffs Can Recover Under Promissory Estoppel, Illinois Supreme Court Rules

October 26, 2009 | Peter S. Lubin and Patrick Austermuehle

Promissory estoppel is an affirmative cause of action in Illinois, the Illinois Supreme Court decided April 2. Newton Tractor Sales v. Kubota Tractor Corporation, Ill. Sup. Co. No. 106798, (April 2, 2009). In this Illinois business lawsuit, the court allowed plaintiff Newton Tractor Sales to continue its lawsuit against defendants Kubota Tractor Corporation and Michael Jacobson for allegedly reneging on a promise to make Newton an authorized dealer of Kubota farm equipment.

Newton, a farm equipment dealership in Fayette County, purchased competitor Vandalia Tractor & Equipment (VTE) in July of 2003. As a condition of that sale, the contract specified that the deal could be canceled if Newton did not get permission to sell several makes of equipment, including Kubota. Kubota asked Newton to apply to their local representative, defendant Michael Jacobson. Jacobson required VTE to first cancel its relationship with Kubota, which it agreed to do only if it was assured that Newton would be authorized to sell Kubota products. Jacobson said it would, and both dealerships relied on that statement in signing those papers. Newton further relied on it when it began selling and servicing Kubota products.’

Unfortunately, Kubota’s corporate office denied Newton’s application, as well as a later appeal for reconsideration. Newton sued Kubota for promissory estoppel, common-law fraud and negligent misrepresentation. A Fayette County court granted Kubota summary judgment on all three counts, and after an appeal, the appellate court affirmed that judgment. On the promissory estoppel count, both courts found that Illinois appellate decisions said promissory estoppel is not a recognized cause of action in Illinois. Newton appealed as to the promissory estoppel claim to the Illinois Supreme Court.

Illinois Trade Secrets Act Does Not Preempt Breach of Fiduciary Duty Claims, First District Rules

October 23, 2009 | Peter S. Lubin and Patrick Austermuehle

Our Chicago trade secrets litigation lawyers were interested to see a recent case pitting a school bus company in Cook County against competitors and former employees. Alpha School Bus Company, Inc. v. Wagner, No. 1-06-3427 (Ill. 1st May 15, 2009). Alpha is owned by Cook-Illinois Corporation (collectively “Alpha”), which contracts to provide busing to school districts for special education students. Defendant Michael Wagner was an officer of Alpha and non-appealing defendant Leroy Meister was a managing employee. Barbara Ann Hackel owned Southwest Transit and Wagner owned Southwest Transit Leasing LLC, which leased buses to Southwest. Wagner and Meister left Alpha to join Southwest in 2003.

Alpha alleges that defendants, while employed at Alpha, conspired to secure a contract for Southwest by using their positions to make sure Southwest had a lower bid. Alpha also alleges that in forming Southwest, defendants conspired to drive Alpha out of business, sabotaged it, stole trade secrets and lured away employees. They allegedly hid their involvement in Southwest, solicited Alpha’s customers, falsified time sheets for Meister and other employees and had employees of Alpha stay to sabotage the company. Alpha sued for misappropriation of trade secrets, civil conspiracy, breach of fiduciary duty, antitrust violations and an injunction.

After Alpha filed several amended complaints, defendants moved to dismiss all of these claims, which the trial court granted with prejudice on all counts except the claim for misappropriation of trade secrets. The trial court found that all of the counts were based on the alleged theft of trade secrets and were therefore preempted by the Illinois Trade Secrets Act. Similarly, several other counts alleging conspiracy were preempted by the Antitrust Act. The remaining count was the claim for misappropriation of trade secrets, which the court dismissed without prejudice because it did not have enough information to state a cause of action. After an amended complaint that didn’t meet legal standards, the court dismissed that count with prejudice as well. The instant appeal followed.

The appeals court started by noting that Alpha did not submit a record of the trial, as required, so it could only consider the issues of law. It then took up the issue of whether the Antitrust and Trade Secrets Act preempt Alpha’s breach of fiduciary duty, conspiracy, trade secrets and antitrust claims. Alpha claims that Wagner used his position to prepare a lower bid for Southwest, which indeed would be a breach of fiduciary duty under caselaw. The court wrote that this would have involved the misappropriation of trade secrets, but does not depend on it. Thus, the Trade Secrets Act doesn’t preempt the breach of fiduciary duty claim and the trial court erred.

Similarly, the claim that Hackel induced Wagner to breach his fiduciary duty should not have been dismissed, the court wrote, because most of the allegations supporting it did not depend on misappropriation of trade secrets. And Cook-Illinois may sue Wagner for breach of fiduciary duty because Alpha properly asserted that Wagner was an officer of Cook-Illinois when he allegedly converted some of its trade secrets for use by Southwest. The First reversed the trial court on those three claims.

However, it upheld the trial court on all of the other claims. In many cases, the court wrote that the claims failed as a matter of law because of confusions between defendants as individuals and the corporations for whom they were acting as agents, or because of procedural errors. Furthermore, most of the trade secrets Alpha alleged were misappropriated failed to meet the definition of a trade secret under Illinois law: “Plaintiffs’ attempt to claim as a trade secret their “customer list,” i.e., the names of the school districts, is patently false because this information is glaringly nonsecret.” Finally, the court affirmed on the dismissal of the final complaint with prejudice, noting that the record shows no attempt by Alpha to amend its complaint again before the dismissal and appeal. Thus, the trial court was mostly affirmed and partly reversed.

Second Circuit Rules Sale of Google Keyword Advertisements May Be a Use in Commerce Under Lanham Act

October 21, 2009 | Peter S. Lubin and Patrick Austermuehle

A trademark infringement lawsuit against Google may go forward despite a related ruling by the same court, the Second Circuit Court of Appeal ruled April 3. In Rescuecom v. Google, No. 06-4881-cv (2nd Cir. April 3, 2009), the appeals court ruled that its own previous ruling in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), which held that an online advertiser was not using the plaintiff’s trademark in commerce, did not apply. The court made no determination as to whether Google’s use of Rescuecom’s trademark was a use in commerce, as required by the Lanham Act to show infringement. Rather, it said Rescuecom should have a chance to present its evidence, and sent the case back to trial court.

The case is one of multiple lawsuits against Google alleging that the search engine giant infringes trademarks by selling them as keywords. When a Google user searches for these trademarked keywords, the competitor’s advertisements appear as “Sponsored Links.” Rescuecom (and plaintiffs in other suits) claimed that this created a likelihood of confusion among consumers searching for its own Web site. Rescuecom also alleged that Google’s Keyword Suggestion Tool, which automatically generates keywords for potential advertisers, infringed its trademark by suggesting the trademark to competitors. It sued Google on multiple grounds, but Google succeeded on a motion to dismiss some trademark claims for failure to state a claim (Rule 12(b)(6)), because the use of Rescuecom’s trademark was not a use in commerce under 1-800-Contacts.Rescuecom appealed.

In a ruling that will be important for Illinois online trademark infringement attorneys like us, the Second Circuit overturned that decision. It said 1-800-Contacts was not binding because it had material differences from this case. In that case, the defendant distributed free software displaying popups that were clearly advertisements and clearly indicated that the defendant, rather than the trademark holder, was responsible for them. This was not a “use in commerce” under the meaning of the Lanham Act, the court wrote, and thus the defendant was not liable for the trademark claims. (The court went into detail about the weighty issue of “use in commerce” in an appendix.) Furthermore, the defendant in 1-800-Contacts did not display the plaintiff’s trademark or sell it as a keyword.

Neither of those was true in Rescuecom, the Second Circuit wrote. Unlike in the previous case, in which competitors’ ads would pop up after a search for a broad product category like “eye care,” Google was actively using the plaintiff’s trademark as a keyword for sale and putting it s on display. Furthermore, the court said, Google was using the trademark as a suggestion for potential advertising customers using the Keyword Suggestion Tool. Google’s argument that placing the advertisements next to “organic” search results was similar to placing competing brands next to each other on a store’s shelf failed, the court said, because its Sponsored Links could be deceptive to consumers. The court emphasized that it made no ruling on whether this was likely to be confusing — necessary for proving a trademark infringement claim — but said Rescuecom should have a chance to make that case in trial court. Thus, it reversed and remanded the Rule 12(b)(6) decision.

Best Websites to Learn About Consumer Law Issues — Our DuPage, Lake, and Cook County, and Chicago Illinois Consumer Lawyers Can Assist You in Consumer Fraud and Deception Lawsuits

October 17, 2009 | Peter S. Lubin and Patrick Austermuehle

As Illinois consumer rights lawyers we are pleased to see that Illinois Attorney General LIsa Madigan maintains an extensive website with many resources to provide information on important consumer rip-offs and ways for consumers to protect themselves. The website contains links to many publications and articles on consumer rights topics such as id theft, autobuying finance and repair, and consumer alerts and warnings. The website also provides access to consumer complaint forms to file with the Attorney General.

Our consumer rights private law firm handles individual and class action unfair debt collection and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocates, the National Consumer Law Center, and local law school consumer programs. Lubin Austermuehle is proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Naperville, Evanston, Aurora, Waukegan, Joliet, Elgin, Highland Park, Hinsdale, Elmhurst, Northbrook, Wilmette, Wheaton, Oak Brook, and Chicago consumer lawyers provide assistance in fair debt collection, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases we have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Chicago area consumer protection lawyers who can assist in lemon law, unfair debt collection, junk fax, prerecorded telephone solicitations, and other consumer, consumer fraud or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.

Appeals Court Upholds Injunction Enforcing Salesman’s Covenant Not to Compete

October 16, 2009 | Peter S. Lubin and Patrick Austermuehle

A recent decision by the Fourth District Court of Appeal caught the eyes of our Illinois non-compete agreement attorneys because it created a split with other Courts of Appeal that only the Illinois Supreme Court can resolve. In September, the Fourth ruled that a trial court was correct to grant a preliminary injunction to a company suing over a covenant not to compete. Sunbelt Rentals Inc. v. Neil N. Ehlers III and Midwest Aerials & Equipment, Inc., No. 4-09-0290 (Ill. 4th Sept. 23, 2009). Sunbelt sued former sales employee Neil Ehlers and his new employer, Midwest, alleging Ehlers violated restrictive covenants when he took the new job, and Midwest tortiously interfered with the agreement when it hired him.

Sunbelt sells and rents industrial equipment for business and individual use. Ehlers was a salesman there responsible for maintaining a customer base and relationships. When he took the job in 2003, he signed a contract agreeing that he would not, for a year after leaving the job, provide services or solicit business from customers that had used Sunbelt in the preceding 12 months, or customers with whom he had had “contact, responsibility or access to confidential information.” It also forbade him from joining or starting a business “substantially similar” to Sunbelt’s. Both clauses were restricted to designated geographic areas. The contract specifically said Sunbelt would be entitled to an injunction against any breach or threatened breach of the restrictive covenants.

Ehlers quit at Sunbelt in January of 2009 to join Midwest, which rents and sells aerial platforms to construction and industry. Four days after Ehlers left, Sunbelt sent him and Midwest a “cease and desist” letter alleging that Ehlers had breached his agreement. The next month, Sunbelt sued for breach of the covenant and tortuous interference and asked for a preliminary injunction to keep Ehlers from working for Midwest. Finding that the time and geographic scope of the agreement was reasonable, the trial court granted the injunction. Ehlers and Midwest appealed, arguing that Sunbelt had not shown that it had a legitimate business interest test first set forth in Nationwide Advertising Service, Inc. v. Kolar, 28 Ill. App. 3d 671, 673, 329 N.E.2d 300, 301-02 (1975), and thus failed to follow precedent.

The Fourth District disagreed. It started by examining the question of whether the “legitimate business interests” test was valid under Illinois Supreme Court precedent, particularly the recent Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52, 866 N.E.2d 85 (2006). Although every Illinois appellate court has embraced the test, the Fourth District wrote, its analysis was flawed and the Illinois Supreme Court had never embraced it. In fact, in Mohanty and several other decisions, that court never actually used the test. Instead, the Fourth said, precedent says the validity of a covenant not to compete should be based only on time and territory restrictions in the contract.

The court next took up the argument by Ehlers that the restrictive covenant should be declared invalid because it is overly broad. Ehlers argued that the restrictions were so broad that he is precluded from working for any competitor in a Midwestern city, causing him undue hardship. The court interpreted the language of the contract differently; it said the restriction meant Ehlers could not work for a competitor within 50 miles of a branch of Sunbelt where Ehlers had worked, for a year after leaving. This is consistent with previous time-and-territory decisions on restrictive covenants, the court said. Thus, the contract was valid, meaning that the trial court’s decision to issue an injunction was not unreasonable.

‘Domainer’ Sues for Declaratory Judgment That Domain Name Does Not Violate Company Trademark

October 14, 2009 | Peter S. Lubin and Patrick Austermuehle

A federal case out of Las Vegas recently caught the eyes of our Chicago Internet trademark litigation attorneys. A Texas man who invests in domain names has sued to establish that one of his domains does not infringe on a similarly-named company’s trademark rights, the Las Vegas Sun reported Aug. 3. Gregory Ricks of Texas is a “domainer,” which means he buys domain names he believes will generate high traffic, for the purpose of either redirecting traffic to business partners or selling them. One of his domains is datecheck.com. He is suing DCAEV Inc., a Nevada company that owns date-check.com and the registered service mark DATE CHECK.

According to the article, DCAEV Inc. uses date-check.com to promote escort services in Las Vegas and other cities. The complaint in Ricks’ lawsuit alleges that this is a “well-recognized guise for illegal prostitution services.” Ricks alleges that he bought datecheck.com in 1999, believing it was a generic combination of words not being used by any commercial interest. Since 2001, he says, he has used it continuously to promote the Web sites of other businesses. However, he alleges, when DCAEV discovered that Ricks owned datecheck.com, it began in June 2008 to look for ways to “hijack” the domain name rather than buy it. This effort included an application in the same month to register DATE CHECK as a service mark, which was successful. In July of 2009, DCAEV sent Ricks a cease-and-desist letter threatening a trademark infringement, unfair competition and cybersquatting lawsuit.

Ricks responded with a lawsuit of his own. In his case, filed in Nevada federal district court, he claims that he was using datecheck.com in commerce before DCAEV, and that because of the different nature of their businesses, there is no likelihood of consumer confusion between his site and DCAEV’s site. He seeks a declaratory judgment saying his use of the site does not infringe DCAEV’s trademark or constitute “cybersquatting.” In another count, he also alleges that DCAEV’s service mark application falsely represented that it didn’t know of anyone else using the proposed mark in commerce, harming Ricks. He seeks cancellation of the service mark, unspecified damages, attorney fees and costs.

Unfortunately, DCAEV had no comment for the article. But as Illinois online trademark infringement lawyers, we will be interested in the outcome of this case. Under federal law, businesses and individuals may petition to cancel registration of a mark that they believe harms them, or when the registrant does not have legitimate control over a certification mark. We only have one side of the story, but if the allegations raised by Ricks are true, they imply that DCAEV registered a service mark with the intention of using it to force Ricks to give up datecheck.com through litigation. Lubin Austermuehle vigorously defends clients caught in this type of hostile trademark litigation.

Second Circuit to Rule on Whether Retailer May Be Held Liable for Failing to Stop Sales of Counterfeit Products

October 7, 2009 | Peter S. Lubin and Patrick Austermuehle

Our Illinois trademark infringement lawyers and many others involved in online commerce are awaiting an important ruling from the Second U.S. Circuit Court of Appeals. As the American Lawyer noted July 17, the court heard oral arguments the day before in Tiffany v. eBay (USDC SD NY opinion), in which the famous jewelry retailer sued online auction company eBay for trademark infringement. Tiffany does not claim that eBay directly infringed its trademarks, but that the auction company fails to do enough to stop its users from selling counterfeit Tiffany products. The appeal to the Second Circuit followed a loss for Tiffany in trial court, where a New York judge ruled that the company failed to make its case for trademark infringement, unfair competition, false advertising and dilution.

In the original suit, Tiffany alleged that eBay allowed hundreds of thousands of counterfeit silver jewelry items to be sold on its Web site over three years. Even though these items were sold by individual users of the site rather than eBay itself, Tiffany argued that eBay was liable for not taking strong enough steps to stop the infringing sellers. As Richard J. Sullvian, the trial judge in the case, observed, the heart of the case was the question of who should police Tiffany’s trademarks online. That judge found that the burden fell on Tiffany itself. Relying on Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854 (1982), the judge wrote that eBay should only be liable if it continued to permit sellers after it knew or should have known about their infringement. He ruled that it did not, and in fact went into detail about eBay’s efforts to reduce counterfeiting.

The same issues were the focus of the Second Circuit’s oral arguments, the American Lawyer said. According to the article, a trademark attorney for Tiffany argued that eBay is aware of ongoing problems with counterfeiting, yet continues to allow sellers to sell alleged Tiffany products at suspiciously low prices. He suggested remedies to the court including a zero-tolerance approach to sellers caught counterfeiting and a policy of verifying suspicious goods before they are publicly posted. In response, an attorney for eBay noted that the company spends $18 million a year fighting counterfeiters and takes down listings immediately when their legality is challenged. He further suggested that Tiffany is trying to force eBay to shoulder the work and cost of policing Tiffany’s brand.

This is a closely watched case, with amicus briefs filed by major online retailers and Internet companies, as well as by companies and industry groups whose products are frequently counterfeited. Our Chicago Internet trademark litigation attorneys would not be surprised to see a further appeal to the U.S. Supreme Court after the ruling comes down from the Second Circuit. Trademark holders like Tiffany have a very good reason to be vigilant about trademarks. Allowing others to hijack their brand names dilutes the value of their products, and thus their businesses. However, forcing online companies like eBay to preemptively take down all listings could cripple their business and, ironically, encourage users to move to a black market site willing to break the law.

Appeals Court Decides Client May Sue Insurance Broker for Taking Kickbacks From Insurers

October 5, 2009 | Peter S. Lubin and Patrick Austermuehle

In a proposed class action insurance fraud lawsuit, the Illinois First District Court of Appeal has ruled that a former client may sue an insurance broker for inflating the cost of its insurance policies with “kickbacks.” DOD Technologies v. Mesirow Insurance Services Inc., No. 1-06-3300 (Ill. 1st Feb. 14, 2008). Plaintiff DOD Technologies sued Mesirow Insurance Services Inc., its insurance broker, after learning that Mesirow took contingency fees from insurance companies for steering clients toward those companies.

In its complaint, DOD said it provided confidential information to Mesirow, expecting the broker to get DOD the best price it could for insurance. But in addition to its commission from DOD, Mesirow also received “contingent commissions” from insurance companies, which were payments based on the amount of business it directed to the insurer, the number of renewals and how many losses the insurer had suffered from those clients. The payments were not disclosed to customers, DOD alleged, and created a conflict of interests for Mesirow. They also violated a part of the Illinois Insurance Code that require insurance brokers to disclose fees not directly related to premiums.

DOD sued Mesirow for breach of fiduciary duty, consumer fraud, fraudulent concealment, unjust enrichment and accounting. The complaint alleged that Mesirow steered customers to insurers who paid kickbacks, regardless of whether those insurers offered the best price, inflating the cost of insurance. The trial court dismissed three of DOD’s counts because the Insurance Code precludes breach of fiduciary duty claims and two others because it found no proof that DOD suffered damages or relied on the fraudulent concealment. DOD appealed.

Damages Not Duplicative Under Lanham Act and Anti-Cybersquatting Consumer Protection Act, Eleventh Circuit Rules

September 30, 2009 | Peter S. Lubin and Patrick Austermuehle

In a ruling that clarified laws important to our Chicago and Wheaton internet trademark infringement and business trial lawyers, the Eleventh U.S. Circuit Court of Appeals ruled July 9 that actual damages for service mark infringement under the Lanham Act do not duplicate statutory damages under the Anti-Cybersquatting Consumer Protection Act. In St. Luke’s Cataract and Laser Institute v. Sanderson, No. 08-11848 (11th Cir. July 9, 2009), the court also found that a lower court did not err in denying a motion for a new trial on copyright claims by the clinic and a motion for judgment as a matter of law by Dr. James Sanderson.

Sanderson worked at St. Luke’s, a private clinic, as its only cosmetic eye surgery specialist between 1995 and 2003. In 1998, they launched a Web site advertising Sanderson’s services at St. Luke’s, at lasereyelid.com and laserspecialist.com, using LaserSpecialist.com as a logo and service mark. Both the doctor and the clinic contributed content to the site, and a copyright notice attributed the site to the clinic. St. Luke’s paid directly for the site’s creation and maintenance, although Sanderson testified that these costs were deducted from his pay as “overhead,” which St. Luke’s disputed. The clinic’s webmaster provided backup disks to Sanderson.

Sanderson left St. Luke’s in June of 2003 to start a solo practice. The webmaster transferred ownership of the domain names into Sanderson’s name at his request. Sanderson later testified that he did not ask anyone else at St. Luke’s for permission to take ownership of the site. A few months later, Sanderson relaunched the site without references to St. Luke’s or links to its main site. The clinic noticed this in 2005 and removed links from its own site to Sanderson’s site. In January of 2006, it registered a copyright to a version of the site from 2003, claiming ownership of all of the content.

A month later, it sued Sanderson for copyright infringement, Lanham Act and Digital Millennium Copyright Act claims, Anti-Cybersquatting Consumer Protection Act (ACPA) claims, unfair competition, unfair business practices and misappropriation of the domain names. Sanderson counterclaimed for a declaratory judgment that the copyright was unenforceable. The jury found that the copyright was indeed unenforceable, but found for St. Luke’s on all other counts, awarding $150,000 in damages and about $587,000 in attorney fees and costs. The court later reduced the damages award to $98,000, saying the statutory damages under the ACPA duplicated the actual damages awarded for service mark infringement. Both parties appealed on multiple grounds. The Eleventh took up the questions of the duplicative damages; the issue of whether Sanderson should have succeeded on his motion for a judgment as a matter of law on the unfair competition and service mark claims; and the issue of a new trial for St. Luke’s on the copyright claims.

The Eleventh affirmed the trial court on every issue but the duplicative damages, which it found were not duplicative, for several reasons. The Anti-Cyberpiracy Act explicitly says that damages should be awarded in addition to any other civil action or remedy available. Furthermore, the court argued, the laws allow damages for different purposes — the ACPA awards them as sanctions against bad faith conduct, while the Lanham Act awards them as compensation for losses. The Lanham Act allows plaintiffs to choose a statutory damages award rather than an award of actual damages, the court noted. E. & J. Gallo Winery v. Spider Webs Ltd., 286 F.3d 270, 278 (5th Cir. 2002). Thus, it remanded that part of the case, with instructions to reinstate the cyberpiracy damages award.

However, it affirmed the trial court on the new trial issue and the judgment as a matter of law issue. Citing extensive evidence from the trial, it found that the jury had good reason to find that the clinic’s copyrights to the site may not be valid. One copyright was not registered until months after the clinic filed its suit, the court noted, which violates well-established precedent saying that a valid copyright is a necessary prerequisite for suing. The other copyright was registered beforehand, it said, but with overly broad claims that attempted to copyright stock photos, material Sanderson provided and copy from Botox manufacturers. The court noted that intentional misrepresentations and omissions can render a copyright invalid. Original Appalachian Artworks,
Inc. v. Toy Loft, Inc., 684 F.2d 821, 828 (11th Cir. 1982). Because there was evidence that St. Luke’s may have intentionally misrepresented information on its application for the earlier copyright, the court found that it was not entitled to a new trial on that claim.

Finally, the court denied Sanderson’s claim that the trial court should have granted judgment as a matter of law on the service mark infringement and unfair competition claims. There was sufficient evidence to show that the name “LaserSpecialist.com” was a service mark for St. Luke’s, the opinion said, and that it was worthy of protection. Furthermore, the court said, there was sufficient evidence to show that the term had acquired a secondary meaning, as the law requires. St. Luke’s had advertised it extensively for several years, and evidence showed that patients both used it and were referred to it frequently. Thus, there was a clear likelihood of confusion, as required by the law — meaning that the trial judge did not err in denying judgment as a matter of law.