This posting was written by Jody Coultas, Editor of State Unfair Trade Practices Law and contributor to Antitrust Law Daily.
The federal district court in Albuquerque has denied in part fashion retailer Urban Outfitters, Inc.’s motion to dismiss trademark infringement and dilution claims brought by the Navajo Nation (The Navajo Nation v. Urban Outfitters, Inc., March 26, 2013, Hansen, C.). The court declined to dismiss the Navaho Nation’s claim under the Indian Arts and Crafts Act and stayed ruling on whether the Navajo Nation has standing to sue under the New Mexico Unfair Practices Act.
The Navajo Nation alleged that Urban Outfitters and its subsidiaries started a product line of items containing the NAVAJO trademark, which they sold on their website and retail stores, that evoked the Navajo Nation’s tribal patterns and resembled Navajo Indian-made patterned clothing, jewelry, and accessories.
Specifically, the Navajo Nation alleged that the product lines were likely to cause confusion and had created actual confusion in the market place, and constituted trademark infringement, trademark dilution by blurring, and willful trademark dilution by tarnishment in violation of the Lanham Act. Urban Outfitters also allegedly engaged in unfair competition and false advertising under the Lanham Act.
Trademark infringement. To state a trademark infringement claim under the Lanham Act, a plaintiff must allege that its mark is protectable, and the defendant’s use of an identical or similar mark in commerce is likely to cause confusion among consumers.
The fair use doctrine did not apply to the claims and did not warrant a dismissal because The Navajo Nation sufficiently stated trademark infringement claims, according to the court. A word that has acquired a secondary meaning still belongs to the public in its primary descriptive sense and any person may use it in such a way that does not convey the secondary meaning or deceive the public.
Urban Outfitters used the term "Navajo" in a trademark sense and did not accompany the term with marks such that a buyer exercising ordinary care would not be deceived into believing the product was produced by the Navajo Nation. There were no clarifying words that would clarify that a "Navajo" product was made by a member of the Navajo Nation. The inclusion of the manufacturer’s brand name did not eliminate confusion as to the source of the product.
Urban Outfitters’ argument that the term "Navajo" was a generic, descriptive term for a particular style of prints, clothing, and clothing accessories was better suited for a motion for summary judgment or trial, according to the court.
Trademark dilution. The court limited the Navajo Nation’s trademark dilution claims to those based on the relative qualities of the products at issue. An owner of a famous mark is entitled to an injunction against another person who uses a mark in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark. Dilution by blurring arises from the similarity between a mark and a famous mark that impairs the distinctiveness of the famous mark. Dilution by tarnishment is association arising from the similarity between a mark and a famous mark that harms the reputation of the famous mark.
The Navajo Nation argued that Urban Outfitters’ use of "Navaho" was scandalous because the Navajo Nation Code provides that the term be spelled "Navajo," and argued that products like Urban Outfitters’ "Navajo Flask" was derogatory, scandalous, and contrary to the Navajo Nation’s principles because it banned the sale and consumption of alcohol within its borders and does not use its mark in conjunction with alcohol. There was sufficient evidence that the mark was famous. However, there was evidence that the Navajo Nation had used the mark on shot glasses, and the alleged misspelling was not sufficiently scandalous to state a dilution claim.
Indian Arts and Crafts Act. Urban Outfitter’s request to dismiss the Navajo Nation’s Indian Arts and Crafts Act (IACA) claim was denied by the court. The IACA is a truth-in-advertising law that creates a cause of action "against a person who, directly or indirectly, offers or displays for sale or sells a good, with or without a Government trademark, in a manner that falsely suggests it is Indian produced, an Indian product, or the product of a particular Indian or Indian tribe or Indian arts and crafts organization." Urban Outfitters argued that the allegations did not show that it falsely suggested that their products were made by Indians, Indian products, or the products of a particular Indian or Indian tribe, and that neither clothing nor clothing accessories constitute "arts" or "crafts" within the meaning of the IACA. The Navajo Nation sufficiently alleged that the products were in a traditional Indian style, and composed of Indian motifs and Indian designs. Also, modern apparel may fall within the definition of an "art" or "craft." The court declined to rule on Urban Outfitters’ judicial estoppel argument and declined to rely on any extra-pleading evidence to make a judicial estoppel finding at this stage of the case.
New Mexico Unfair Practices Act. The court stayed ruling on whether the Navajo Nation had standing to pursue a claim under the New Mexico Unfair Practices Act (UPA). New Mexico courts would hold that a business competitor has standing to assert UPA claims where the business competitor can show that the challenged practice significantly affects the public as actual or potential consumers of the defendant’s goods or services. The briefing on whether business competitors have standing to assert UPA claims did not directly addressed whether there is a public interest component to business competitor standing and/or whether the Navajo Nation sufficiently alleged a public interest component.
Showing posts with label trademark infringement. Show all posts
Showing posts with label trademark infringement. Show all posts
Friday, April 12, 2013
Thursday, September 13, 2012
Hotel Franchisee’s Post-Termination Use of Marks Was Infringement
This posting was written by Peter Reap. Editor of CCH Business Franchise Guide.
Jagaji, Inc., a terminated hotel franchisee, committed trademark infringement in violation of the Lanham Act by continuing to display franchisor Choice Hotels International, Inc.’s trademarks without authorization following the franchisor’s termination of the parties’ relationship, the federal district court in Columbus, Ohio, has determined.
Because the same analysis applied when determining liability on federal trademark infringement, federal unfair competition, and Ohio law claims for common law infringement, unfair competition, and deceptive trade practices, Choice was also entitled to summary judgment on its remaining claims which were all based upon the unauthorized use and display of its trademarks.
Background
On or about July 31, 2000, Choice entered into a franchise agreement with Jagaji which permitted Jagaji to open and operate an ECONO LODGE hotel franchise in Marietta, Ohio. On or about November 17, 2008, after previously sending notices of default, Choice sent Jagaji a Notice of Termination, stating Choice’s termination of the franchise relationship and the parties’ agreement, effective immediately. The Notice of Termination referred to Jagaji’s previous failure to respond to customer complaints as the basis for termination of the franchise relationship; however, it also sought payment of remaining outstanding debts from Jagaji and lost profits under the agreement, for a combined total demand of $50,040.42.
The Notice of Termination instructed Jagaji immediately to cease use of any and all marks owned by Choice and informed Jagaji that its continued use of the ECONO LODGE family of marks would constitute trademark infringement. Sometime in November 2008, Choice removed Jagaji from its Econo Lodge reservation system.
After receiving the Notice of Termination, Jagaji continued to use the ECONO LODGE family of marks in, around, and in publicity for, Jagaji’s hotel. The franchisee’s principal, Bhogi Patel “believed [Jagaji] could be reinstated once all questions were answered.”
In 2009, Jagaji received three successive form letters from Choice regarding certification procedures of its hotel general manager. Bhogi Patel claimed that these letters gave him the understanding that Choice still considered Jagaji to be a franchisee, that the relationship had not been terminated, and that there was a possibility of Jagaji being reinstated into the franchisor’s reservation system.
On November 17, 2009, Choice sent another letter to Jagaji by certified mail regarding Jagaji’s continued unauthorized use of the ECONO LODGE family of marks. In this letter, Choice stated that it considered Jagaji’s continued unauthorized use of the ECONO LODGE family of marks to be trademark infringement, and once again demanded that Jagaji immediately cease its use of the ECONO LODGE family of marks.
Jagaji asserted that, as of November 30, 2009, it had discontinued its use of the ECONO LODGE marks and changed the name of its hotel to the “Marietta Inn.” Jagaji admitted, however, that even after that date it continued to display ECONO LODGE signage on the hotel.
Choice filed its complaint against Jagaji on October 26, 2010, seeking both injunctive and monetary relief.
Federal Trademark Infringement
After review of the parties’ pleadings and exhibits, there was no genuine issue of material fact over Jagaji’s liability for trademark infringement, the court held. Jagaji admitted that it continued to display the ECONO LODGE marks on the hotel’s property after Choice unequivocally denied Jagaji the authority to do so. As a matter of law, therefore, Choice established Jagaji’s liability for trademark infringement under the Lanham Act, according to the court.
Jagaji admitted receiving the franchisor’s notices of default in 2008, as well as the Notice of Termination in November 2008, the court noted. Jagaji was then removed from Choice’s Econo Lodge reservation system. Jagaji argued that because it received three form letters from Choice regarding management certification in 2009, it still reasonably believed Choice considered Jagaji to be a franchisee, and that the relationship had not been terminated. At oral argument, however, counsel for Jagaji acknowledged that Choice never rescinded the Notice of Termination.
Any remaining belief Jagaji held that it was still a franchisee authorized to use Choice’s trademarks was dispelled upon Jagaji’s receipt of Choice’s November 17, 2009, letter expressly forbidding Jagaji from any further use of the ECONO LODGE Marks. Choice Hotels’ position in that letter was crystal clear: Jagaji was no longer a franchisee of Choice, and was no longer authorized to use Choice Hotels’ registered trademarks, the court observed. Jagaji was ordered to cease its use of Choice Hotels’ marks within a reasonable time frame, but it admittedly failed to do so.
Jagaji contended that the parties could have legitimate disagreements about the alleged breaches of the franchise agreement by Jagaji, and/or the intent or effect of the notices of default and termination sent by Choice. However, those allegedly disputed issues, did not serve to create a genuine dispute of the material facts establishing Jagaji’s unauthorized use of the ECONO LODGE Marks after receiving the letter of November 17, 2009, the court decided.
Likelihood of Confusion
The Sixth Circuit held, in a similar context involving a restaurant chain franchise agreement, that “proof of continued, unauthorized use of an original trademark by one whose license to use the trademark had been terminated is sufficient to establish ‘likelihood of confusion.’” U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185 (6th Cir. 1997).
There was no dispute that Jagaji continued to use the ECONO LODGE Marks after its license was terminated, and so there could be no genuine issue of fact as to whether Jagaji’s unauthorized use was likely to cause confusion in the marketplace, the court reasoned.
Jagaji also claimed that material issues of fact existed as to whether it took reasonable action to discontinue use of the ECONO LODGE trademark once Choice made its position clear. While the court appreciated Mr. Patel’s testimony that, once he received the November 17, 2009 letter from Choice, Jagaji took some measures to stop using Choice’s marks and to mitigate any confusion of its hotel with one of Choice’s franchisees, those factual issues would bear on the measure of Choice’s damages from the infringement, not liability.
Because likelihood of confusion was established, and the November 17, 2009, letter left no genuine dispute as to whether Jagaji’s use of the trademark was without the registered owner’s consent, Choice met its burden to establish a Lanham Act violation, the court ruled. Having determined liability, the next step would be to determine the appropriate injunctive relief to prevent any further infringement and monetary relief to compensate Choice for any applicable damages. Thus, a request by Choice for a hearing on those issues was granted.
Because the same analysis applied when determining liability on federal trademark infringement, federal unfair competition, and Ohio law claims for common law infringement, unfair competition, and deceptive trade practices, Choice was also entitled to summary judgment on its remaining claims which were all based upon the unauthorized use and display of its trademarks.
Background
On or about July 31, 2000, Choice entered into a franchise agreement with Jagaji which permitted Jagaji to open and operate an ECONO LODGE hotel franchise in Marietta, Ohio. On or about November 17, 2008, after previously sending notices of default, Choice sent Jagaji a Notice of Termination, stating Choice’s termination of the franchise relationship and the parties’ agreement, effective immediately. The Notice of Termination referred to Jagaji’s previous failure to respond to customer complaints as the basis for termination of the franchise relationship; however, it also sought payment of remaining outstanding debts from Jagaji and lost profits under the agreement, for a combined total demand of $50,040.42.
The Notice of Termination instructed Jagaji immediately to cease use of any and all marks owned by Choice and informed Jagaji that its continued use of the ECONO LODGE family of marks would constitute trademark infringement. Sometime in November 2008, Choice removed Jagaji from its Econo Lodge reservation system.
After receiving the Notice of Termination, Jagaji continued to use the ECONO LODGE family of marks in, around, and in publicity for, Jagaji’s hotel. The franchisee’s principal, Bhogi Patel “believed [Jagaji] could be reinstated once all questions were answered.”
In 2009, Jagaji received three successive form letters from Choice regarding certification procedures of its hotel general manager. Bhogi Patel claimed that these letters gave him the understanding that Choice still considered Jagaji to be a franchisee, that the relationship had not been terminated, and that there was a possibility of Jagaji being reinstated into the franchisor’s reservation system.
On November 17, 2009, Choice sent another letter to Jagaji by certified mail regarding Jagaji’s continued unauthorized use of the ECONO LODGE family of marks. In this letter, Choice stated that it considered Jagaji’s continued unauthorized use of the ECONO LODGE family of marks to be trademark infringement, and once again demanded that Jagaji immediately cease its use of the ECONO LODGE family of marks.
Jagaji asserted that, as of November 30, 2009, it had discontinued its use of the ECONO LODGE marks and changed the name of its hotel to the “Marietta Inn.” Jagaji admitted, however, that even after that date it continued to display ECONO LODGE signage on the hotel.
Choice filed its complaint against Jagaji on October 26, 2010, seeking both injunctive and monetary relief.
Federal Trademark Infringement
After review of the parties’ pleadings and exhibits, there was no genuine issue of material fact over Jagaji’s liability for trademark infringement, the court held. Jagaji admitted that it continued to display the ECONO LODGE marks on the hotel’s property after Choice unequivocally denied Jagaji the authority to do so. As a matter of law, therefore, Choice established Jagaji’s liability for trademark infringement under the Lanham Act, according to the court.
Jagaji admitted receiving the franchisor’s notices of default in 2008, as well as the Notice of Termination in November 2008, the court noted. Jagaji was then removed from Choice’s Econo Lodge reservation system. Jagaji argued that because it received three form letters from Choice regarding management certification in 2009, it still reasonably believed Choice considered Jagaji to be a franchisee, and that the relationship had not been terminated. At oral argument, however, counsel for Jagaji acknowledged that Choice never rescinded the Notice of Termination.
Any remaining belief Jagaji held that it was still a franchisee authorized to use Choice’s trademarks was dispelled upon Jagaji’s receipt of Choice’s November 17, 2009, letter expressly forbidding Jagaji from any further use of the ECONO LODGE Marks. Choice Hotels’ position in that letter was crystal clear: Jagaji was no longer a franchisee of Choice, and was no longer authorized to use Choice Hotels’ registered trademarks, the court observed. Jagaji was ordered to cease its use of Choice Hotels’ marks within a reasonable time frame, but it admittedly failed to do so.
Jagaji contended that the parties could have legitimate disagreements about the alleged breaches of the franchise agreement by Jagaji, and/or the intent or effect of the notices of default and termination sent by Choice. However, those allegedly disputed issues, did not serve to create a genuine dispute of the material facts establishing Jagaji’s unauthorized use of the ECONO LODGE Marks after receiving the letter of November 17, 2009, the court decided.
Likelihood of Confusion
The Sixth Circuit held, in a similar context involving a restaurant chain franchise agreement, that “proof of continued, unauthorized use of an original trademark by one whose license to use the trademark had been terminated is sufficient to establish ‘likelihood of confusion.’” U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185 (6th Cir. 1997).
There was no dispute that Jagaji continued to use the ECONO LODGE Marks after its license was terminated, and so there could be no genuine issue of fact as to whether Jagaji’s unauthorized use was likely to cause confusion in the marketplace, the court reasoned.
Jagaji also claimed that material issues of fact existed as to whether it took reasonable action to discontinue use of the ECONO LODGE trademark once Choice made its position clear. While the court appreciated Mr. Patel’s testimony that, once he received the November 17, 2009 letter from Choice, Jagaji took some measures to stop using Choice’s marks and to mitigate any confusion of its hotel with one of Choice’s franchisees, those factual issues would bear on the measure of Choice’s damages from the infringement, not liability.
Because likelihood of confusion was established, and the November 17, 2009, letter left no genuine dispute as to whether Jagaji’s use of the trademark was without the registered owner’s consent, Choice met its burden to establish a Lanham Act violation, the court ruled. Having determined liability, the next step would be to determine the appropriate injunctive relief to prevent any further infringement and monetary relief to compensate Choice for any applicable damages. Thus, a request by Choice for a hearing on those issues was granted.
The September 10 decision is Choice Hotels International, Inc. v. Jagaji, Inc. It was published in the September 11 issue of Wolters Kluwer IP Law Daily.
Wednesday, March 14, 2012
Jury Award for False Advertising, Trademark Infringement, Cybersquatting Upheld
This posting was written by John W. Arden.
An Internet and telephone-based advertising service for skydiving customers (Skyride) was properly held liable for trademark infringement, cybersquatting, and false advertising against a skydiving center (Skydive Arizona, Inc.), justifying a total award of $6.6 million, according to the U.S. Court of Appeals in San Francisco.
The court of appeals upheld jury awards of $2.5 million in actual damages for trademark infringement, $2.5 million in disgorged profits from trademark infringement, $600,000 for cybersquatting, and $1 million in actual damages for false advertising. It overturned the district court’s doubling of actual damages.
Skydive Arizona, Inc. has operated under the SKYDIVE ARIZONA mark sine 1986, becoming one of the most well known skydiving centers in the world. It hosts between more than 145,000 skydives per year, furnishing airplanes and personnel for skydiving events in 30 states outside Arizona. The company has been featured in television programs and advertises on the Internet and in Yellow Pages, magazines, and newspapers.
Skyride essentially acts as a third-party advertising and booking service for skydiving centers, providing national telephone and Internet promotional services to skydiving “drop zones” around the U.S. Customers pay Skyride for certificates that can be redeemed at various drop zones around the country. Upon redemption, Skyride must pay the skydiving facility used by the customer.
Skyride owned and operated numerous websites, describing skydiving opportunities in multiple locations without reference to specific drop zones, in addition to websites referencing Arizona, including PhoenixSkydiving, ScottsdaleSkydiving, TucsonSkydiving, skydivearizona.net, skydivingarizona.com, and skydivingarizona.com.
Skydive Arizona brought an action against Skyride, asserting claims of (1) false designation of origin and unfair competition under Section 43(a) of the Lanham Act; (2) trademark infringement, and (3) cybersquatting. Skydive Arizona alleged that Skyride misrepresented ownership in skydiving facilities in Arizona in order to attract customers and sold skydiving certificates by trading on Skydive Arizona’s goodwill and misleading customers into believing that Skydive Arizona would accept its certificates.
The federal district court in Phoenix entered summary judgment in favor of Skydive Arizona for false advertising. A jury subsequently found in favor of Skydive Arizona on the remaining claims, awarding the $6.6 million in damages. The district court doubled the actual damages for false advertising and trademark infringement, resulting in $5 million for trademark infringement and $2 million for false advertising.
False Advertising
On appeal, Skyride challenged the summary judgment ruling on the false advertising claim, contending that the evidence on materiality was ambiguous. The Ninth Circuit disagreed, finding that a declaration of consumer James Flynn constituted direct evidence that Skyride’s statements were likely to influence consumers’ purchasing decisions. Flynn stated that he purchased Skyride certificates based on false representations that he could redeem them at Skydive Arizona. Skyride’s advertisements were misleading and false and had actually confused a consumer, the court held. Skyride further challenged the award of damages.
Actual Damages
In awarding actual damages for infringement, the jury considered “an array of customer service evidence and three different financial record exhibits.” The district court referred to “voluminous evidence” concerning Skydive Arizona’s stellar business reputation and the hundreds of thousands of dollars it spent in developing and advertising its business. Its failure to provide a specific mathematical formula for the jury to use in calculating actual harm to its goodwill did not undermine the jury’s finding, according to the appeals court..
Disgorgement of Profits
When reviewing an award of lost profits, a court does not ask whether the substance of the evidence was correct or even credible, but only whether the award was based on reasonable inferences and a fair assessment of the evidence. Questions of evidentiary admissibility or credibility must be raised before or during trial, the court held.
In the lost profits analysis, Skydive Arizona’s expert estimated Skyride’s revenues from Arizona by calculating the number of Arizona residents in Skyride’s records, increasing that number to account for files missing residence information, and multiplying that number by an average transaction amount. He added an interest factor of 10 percent as allowed by Arizona law.
On appeal, Skyride alleged that the calculations were clearly erroneous because they did not deduct vendor payments or overhead costs. However, Skyride did not raise these arguments until after trial. The district court held these untimely, and the appellate court agreed.
Damages Enhancement
The Ninth Circuit did reverse the award of double damages for the trademark infringement and false advertising claims. Although the Lanham Act permits a district court to enter damages not exceeding three times the amount, such an enhancement must constitute compensation rather than a penalty.
In this instance, the district court emphasized the purposefully deceitful nature of Skyride’s conduct. “Instead of discussing the appropriate award to compensate Skydive Arizona or to deter SKYRIDE, the district court focused on the need for SKYRIDE to ‘appreciate’ and ‘accept the wrongfulness of their conduct’ ”
Accordingly, the award of twice actual damages was reversed and the jury’s original award was reinstated.
The decision is Skydive Arizona, Inc. v. Quattrocchi, No. 10-16196, March 12, 2012.
An Internet and telephone-based advertising service for skydiving customers (Skyride) was properly held liable for trademark infringement, cybersquatting, and false advertising against a skydiving center (Skydive Arizona, Inc.), justifying a total award of $6.6 million, according to the U.S. Court of Appeals in San Francisco.
The court of appeals upheld jury awards of $2.5 million in actual damages for trademark infringement, $2.5 million in disgorged profits from trademark infringement, $600,000 for cybersquatting, and $1 million in actual damages for false advertising. It overturned the district court’s doubling of actual damages.
Skydive Arizona, Inc. has operated under the SKYDIVE ARIZONA mark sine 1986, becoming one of the most well known skydiving centers in the world. It hosts between more than 145,000 skydives per year, furnishing airplanes and personnel for skydiving events in 30 states outside Arizona. The company has been featured in television programs and advertises on the Internet and in Yellow Pages, magazines, and newspapers.
Skyride essentially acts as a third-party advertising and booking service for skydiving centers, providing national telephone and Internet promotional services to skydiving “drop zones” around the U.S. Customers pay Skyride for certificates that can be redeemed at various drop zones around the country. Upon redemption, Skyride must pay the skydiving facility used by the customer.
Skyride owned and operated numerous websites, describing skydiving opportunities in multiple locations without reference to specific drop zones, in addition to websites referencing Arizona, including PhoenixSkydiving, ScottsdaleSkydiving, TucsonSkydiving, skydivearizona.net, skydivingarizona.com, and skydivingarizona.com.
Skydive Arizona brought an action against Skyride, asserting claims of (1) false designation of origin and unfair competition under Section 43(a) of the Lanham Act; (2) trademark infringement, and (3) cybersquatting. Skydive Arizona alleged that Skyride misrepresented ownership in skydiving facilities in Arizona in order to attract customers and sold skydiving certificates by trading on Skydive Arizona’s goodwill and misleading customers into believing that Skydive Arizona would accept its certificates.
The federal district court in Phoenix entered summary judgment in favor of Skydive Arizona for false advertising. A jury subsequently found in favor of Skydive Arizona on the remaining claims, awarding the $6.6 million in damages. The district court doubled the actual damages for false advertising and trademark infringement, resulting in $5 million for trademark infringement and $2 million for false advertising.
False Advertising
On appeal, Skyride challenged the summary judgment ruling on the false advertising claim, contending that the evidence on materiality was ambiguous. The Ninth Circuit disagreed, finding that a declaration of consumer James Flynn constituted direct evidence that Skyride’s statements were likely to influence consumers’ purchasing decisions. Flynn stated that he purchased Skyride certificates based on false representations that he could redeem them at Skydive Arizona. Skyride’s advertisements were misleading and false and had actually confused a consumer, the court held. Skyride further challenged the award of damages.
Actual Damages
In awarding actual damages for infringement, the jury considered “an array of customer service evidence and three different financial record exhibits.” The district court referred to “voluminous evidence” concerning Skydive Arizona’s stellar business reputation and the hundreds of thousands of dollars it spent in developing and advertising its business. Its failure to provide a specific mathematical formula for the jury to use in calculating actual harm to its goodwill did not undermine the jury’s finding, according to the appeals court..
Disgorgement of Profits
When reviewing an award of lost profits, a court does not ask whether the substance of the evidence was correct or even credible, but only whether the award was based on reasonable inferences and a fair assessment of the evidence. Questions of evidentiary admissibility or credibility must be raised before or during trial, the court held.
In the lost profits analysis, Skydive Arizona’s expert estimated Skyride’s revenues from Arizona by calculating the number of Arizona residents in Skyride’s records, increasing that number to account for files missing residence information, and multiplying that number by an average transaction amount. He added an interest factor of 10 percent as allowed by Arizona law.
On appeal, Skyride alleged that the calculations were clearly erroneous because they did not deduct vendor payments or overhead costs. However, Skyride did not raise these arguments until after trial. The district court held these untimely, and the appellate court agreed.
Damages Enhancement
The Ninth Circuit did reverse the award of double damages for the trademark infringement and false advertising claims. Although the Lanham Act permits a district court to enter damages not exceeding three times the amount, such an enhancement must constitute compensation rather than a penalty.
In this instance, the district court emphasized the purposefully deceitful nature of Skyride’s conduct. “Instead of discussing the appropriate award to compensate Skydive Arizona or to deter SKYRIDE, the district court focused on the need for SKYRIDE to ‘appreciate’ and ‘accept the wrongfulness of their conduct’ ”
Accordingly, the award of twice actual damages was reversed and the jury’s original award was reinstated.
The decision is Skydive Arizona, Inc. v. Quattrocchi, No. 10-16196, March 12, 2012.
Monday, December 28, 2009
T-Mobile Awarded Injunction, Damages for Competitor’s Violation of Unfair Competition Law
This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.
T-Mobile USA, Inc. was granted a permanent injunction and a final judgment of $5 million against competitors that sold counterfeit products, illegally used T-Mobile's trademark, and falsely advertised its products in violation of the California Unfair Competition Law (UCL), according to the federal district court in Los Angeles.
T-Mobile alleged that the competitors engaged in an unlawful enterprise involving the acquisition, sale, and alteration of large quantities of T-Mobile prepaid wireless telephones and other materials used to activate service or acquire airtime.
The competitor acquired bulk quantities with the actual or constructive knowledge and intent that they would not be activated for use on the T-Mobile prepaid wireless network and that the handsets would be computer-hacked.
The hacked handsets were sold overseas under the T-Mobile trademark. The case was part of T-Mobile's ongoing fight to curb misuse of its products.
The competitors were permanently enjoined from purchasing, selling, and unlocking any T-Mobile prepaid handsets or activation materials. Because the alleged actions constituted violations of the UCL and other laws, the competitor was also ordered to pay $5 million to T-Mobile in damages.
The decision is T-Mobile USA, Inc. v. C-Tech Wholesale, Inc., CCH State Unfair Trade Practices Law ¶31,962.
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