WILLIAM D. QUARLES, JR., District Judge.
Basile Baumann Prost Cole & Associates, Inc. (the "Corporation") sued BBP & Associates LLC (the "LLC"), James Prost, and Ralph Basile (collectively, the "Defendants") for trademark infringement and other claims. For the following reasons, the Court will deny the Defendants' motion for summary judgment, and the Corporation's cross-motion for summary judgment.
In 1990, Basile, Prost, and Wilbur Baumann formed an economics and real estate consulting firm called Basile Baumann Prost & Associates, Inc. Ralph Basile Decl. ¶ 2; James Prost Dep. 11:7-10, Dec. 2, 2011. Based in Annapolis, Maryland, the company advised local, state, and federal agencies. Answer ¶ 1; Basile Decl. ¶ 3; Prost Dep. 31:1-19. The company referred to itself by the acronyms "BBPA" and "BBP." Prost Dep. 19:7-20:4; Basile Decl. ¶ 4. In 1995, the company launched the website www.bbpa.com. Answer ¶¶ 29-30.
As the business developed, Basile and Prost worked mostly with state and local governments and institutions. Basile Decl. ¶ 3. Baumann devoted most of his time to projects with the U.S. Navy. Id.
In 2006, Baumann sold his share of the company to R. Thomas Cole, see Answer ¶ 15, and the company changed its name to Basile Baumann Prost Cole & Associates, Inc. (hereinafter the "Corporation"), see Prost Dep. 29:2-10; Basile Decl. ¶ 4. The Corporation began to refer to itself as "BBPC," see Answer ¶ 31, and developed a logo using that acronym:
ECF No. 23-1, Ex. O. The logo appeared on the Corporation's business cards:
ECF No. 22-1, Ex. Q. The parties dispute whether the Corporation continued to refer to itself by the acronyms "BBPA" or "BBP."
The Corporation's marketing materials have included lists of awards the firm has received, see ECF No. 23-1, Ex. FF, and client testimonials, such as:
ECF No. 23-1, Ex. CC; Cole Decl. ¶ 36.
By 2009, Basile and Prost had decided that they no longer wanted to work with Cole. Prost Dep. 72:19. The Corporation had 25 employees and its total annual sales exceeded $10 million. Prost Dep. 34:8-17; ECF No. 23-1, Ex. H. Basile and Prost continued to work with smaller state and local governments, and Cole worked mainly with the U.S. Navy. R. Thomas Cole Dep. 120:2-15, Dec. 14, 2011.
On December 31, 2009, Basile, Prost, Cole, and the Corporation entered a Stock Redemption Agreement, whereby the Corporation agreed to redeem Basile and Prost's shares in exchange for $1.8 million and certain assets, including:
ECF No. 22-1, Ex. 2 at §§ 1, 2.1.1, 2.2.1, Schedule 2.2.1 (Revised). The Corporation "retain[ed] all [other] assets, properties[,] and rights," including the company name, office location and lease, telephone number, domain name and website, two-thirds of the Corporation's staff, and 70 percent
A separate transfer agreement signed the same day provided that the Corporation was transferring to the LLC its "interests, rights[,] and obligations in certain existing client contracts." ECF No. 22-1, Ex. 2 at 47.
In an "Addendum to [the] Closing Documents," the parties added the following provision to the Stock Redemption Agreement:
ECF No. 22-1, Ex. 2 at 49. The parties further provided that
Id. at 49-50.
On January 1, 2010, Basile and Prost formed BBP & Associates LLC (hereinafter the "LLC"), an "economics and real estate development advisory firm" headquartered in Annapolis.
The LLC refers to itself by the acronyms "BBP" and "BBP LLC," see Answer ¶ 39, and developed the following logos:
ECF No. 23-1, Ex. P, UU. The first logo has appeared on the LLC's business cards:
ECF No. 23-1, Ex. R. On January 4, 2010, the LLC registered the Internet domain name "bbpallc.com," and later launched the website www.bbpallc.com. Basile Decl. ¶ 10.
On January 5, 2010, an LLC employee asked Basile and Prost to comment on a proposed statement distinguishing the LLC from the Corporation:
Basile responded that
Email from Ralph Basile to Taylor Yewell, Jim Prost & David Starnes (Jan. 5, 2010 11:02 a.m.).
Sometime after January 8, 2010, the LLC sent an announcement to Basile and Prost's industry contacts and current, former, and potential clients, stating that "BBP & Associates, LLC (BBP LLC) ha[d] moved to a new location!" ECF No. 23-1, Ex. NN at 1; Prost Dep. 177:1-19; Basile Dep. 332:22-333:17.
On January 18, 2010, the LLC sent the following mass email:
The reorganized BBP LLC includes Mess[ ]rs. Basile and Prost and all of their experienced professional staff. BBP LLC continues to offer the highest quality development advisory services with a focus on serving state and local governments and agencies, public and quasi-public institutions and the private sector.
ECF No. 22-1, Ex. 5 at 6. On January 19, 2010, one of the Corporation's past clients forwarded the email to Cole and asked, "Will you change name???" Id.
Janet Sumner, the LLC's financial manager,
On February 25, 2010, the LLC gave a presentation on economic development in the North East Durham neighborhoods of North Carolina. See ECF No. 23-1, Ex. MM. In the presentation, the LLC used its green "BBP" logo and described itself as a "[n]ationally-[r]ecognized [f]irm" with "[p]rojects in 47 states," and "[four] countries[,] serving over 1,250 ... [c]lients." Id. at 3.
On February 26, 2010, the LLC responded to a request for proposals for a retail development plan for Newport News, Virginia. ECF No. 23-1, Ex. LL. The LLC's proposal used the same logo and described the LLC as a "nationally-recognized economic and real estate development advisory services firm" that had "caused construction of over $8 billion of development in 47 states and [five] countries while assisting over 1,250 public and private sector clients." Id. at 1-2.
On April 21, 2010, the Corporation received mail from the City of Orlando that was intended for the LLC. Cole Decl. ¶ 28.
On May 6, 2010, Basile told Cole that the Corporation had violated the non-compete provision of the Stock Redemption Agreement by improperly soliciting local government work, and listing on its website two projects that Basile and Prost had done in the past four years. ECF No. 22-1, Ex. 7 at 1, 3. Shortly thereafter, the Corporation removed the two projects from its website. Basile Decl. ¶ 11.
On May 24, 2010, the Corporation asked Basile and Prost to "discontinue use of the BBP service mark, change the appearance of [the LLC's] website[,] and adopt a replacement name that is not confusingly similar to [the Corporation's]." ECF No. 22-1, Ex. 8, Letter from Michael J. Bevilacqua to Ralph Basile & James Prost (May 24, 2010). The Corporation asserted that it had used the marks BBP and BBPA from 1993 through 2006, and the "design of [the LLC's] website [was] very similar to" the Corporation's because it used "the same color scheme and very similar borders." Id. The Corporation asserted that, because the Corporation and the LLC offered "substantially similar services," and Basile and Prost had been principals of both entities, there was a "very strong likelihood that many of [the LLC's] customers and potential customers [would] be confused as to the origin, source[,] and identity of the services offered by [the Corporation] ... and [the LLC]." Id.
On May 31, 2010, the LLC responded that the Corporation had abandoned use of the acronyms "BBP" and "BBPA," and any confusion about the entities had been caused by the Corporation, which had altered its logo and website after the LLC was formed. ECF No. 22-1, Ex. 9, Letter from Daniel J. Mellin to Michael J. Bevilacqua (May 31, 2010). Nonetheless, the LLC stated that it had decided to alter its website and logo. Id. The new logo used gold lettering on a blue background, incorporated the letters "LLC," and used the Helvetica Neue font instead of Menion semibold:
Id.; ECF No. 23-1, Ex. 56.
On July 9, 2010, RKG Associates, Inc. ("RKG") submitted a proposal for an economic diversification plan for the Aquidneck Island (R.I.) Reuse Planning Authority (the "Planning Authority"), and listed the LLC as its subcontractor. See ECF No. 34-1, Tina Dolen Decl., Ex. A. The proposal referred to the LLC as "Basile Baumann Prost & Associates, LLC" and "BBP LLC." Id. at 10. It described the LLC as having "caused construction of
The RKG proposal also included a brochure produced by the LLC called "Government Asset Management and Privatization Services." See ECF No. 34-1, at 77-82. The brochure listed many BRAC projects purportedly completed by the LLC. Id. In fact, the projects were completed by the Corporation, when Basile was a principal there. Tina Dolen Decl. ¶ 15.
The Corporation also submitted a proposal, under the name "Basile Baumann Prost Cole & Associates, Inc." ECF No. 34-1 ¶ 16. The Planning Authority awarded the contract to RKG, in part because RKG's "experience with BRAC, and specifically with the Navy, was important to the... selection of a team for the project."
On August 18, 2010, the LLC responded to the City of Orlando's request for proposals for consulting services. See ECF No. 23-1, Ex. RR. The LLC's proposal stated that the LLC was a "national economics and real estate development advisory firm" that had been "[r]eorganized at the end of 2009." Id. at 7. It further provided that the LLC was "neither a parent nor a subsidiary in a group of firms/agencies." Id.
On February 15, 2011, the LLC responded to the Annapolis Economic Development Corporation's request for proposals for a retail market study in Annapolis. ECF No. 23-1, Ex. JJ. On the first page of its proposal, the LLC described itself as "a nationally-recognized economic development, real estate and development advisory services firm." Id. at 2.
Id. The LLC had not done business outside the United States or in 47 states, nor had it entered contracts worth $11 billion. Basile Dep. 226:19-227:4-18, 229:8-11.
On March 7, 2011, the Annapolis Economic Development Corporation announced that it had awarded the bid to the LLC, which had been "[b]ased in Annapolis for over three decades," and
ECF No. 23-1, Ex. KK. Jerry Parks and the U.S. Naval Academy were clients of the Corporation. Cole Decl. ¶ 43.
On June 3, 2011, a prospective client forwarded the Corporation an email newsletter that he had received from the LLC
On its website, the LLC has described itself as
ECF No. 23-1, Ex. N.
Before September 2011, the LLC's website listed about 600 clients. ECF No. 23-1, Ex. W; Answer ¶ 52. After the Corporation filed this lawsuit, the LLC added the following note at the bottom of the client list:
ECF No. 23-1, Ex. W; ECF No. 22-1 at 21. In August 2011, the LLC's website stated that the LLC "ha[d] provided real estate development assistance to ... literally hundreds of clients at the state and local level."
In August 2011, the LLC website included the Government Asset Management and Privatization Services Brochure that had been submitted in the July 2010 RKG proposal to the Planning Authority. See Answer ¶ 57. It provided that:
Each of these "firsts" was accomplished before the LLC was formed on January 1, 2010. See Answer ¶ 60. A current version of the brochure lists 45 projects, eight of which were completed by the LLC. ECF No. 23-1, Ex. Y; Basile Dep. 245:8-246:5. The rest were done by the Corporation. Cole Decl. ¶ 41.
Under the "Testimonials" tab, the LLC's website has listed endorsements that are verbatim to those in the Corporation's marketing materials, or substitute "BBP LLC" or "BBP & Associates, LLC" for the entity named in the Corporation's testimonials. ECF No. 23-1, Ex. BB, CC. Examples are:
Of the 36 testimonials on the LLC's website, only three did not originally appear in the Corporation's marketing materials. See ECF No. 23-1, Ex. CC, DD.
Under a tab called "Awards & Recognitions," the LLC's website lists the same awards as those in the Corporation's marketing materials. See ECF No. 23-1, Ex. EE, FF. The LLC's website presents the list in the same order and font, and accompanied by the same photos.
On its website and in presentations, the LLC has represented that it existed before its January 1, 2010 formation. Under the "Projects" tab of its website, the LLC states that "BBP LLC is proud to [have] be[en] providing services for 13 years now to the City of Long Branch[.]" www. bbpallc.com/Projects.asp (last visited on June 1, 2012). Sometime after January 1, 2010, Basile spoke at a conference of the International Economic Development Council and stated that the LLC had been established in 1990. ECF No. 23-1, Ex. II.
Since Basile and Prost's departure, the Corporation has continued to provide "real estate development, economics[,] and financial advisory services," primarily to the U.S. Navy. See www.bbpa.com/about-us (last visited June 1, 2012); Cole Dep. 160:14-18. As of December 14, 2011, the Corporation had added three new clients besides the Navy. Cole Dep. 160:14-18.
On September 2, 2011, the Corporation sued, alleging violations of the Lanham Act
On January 25, 2012, 2012 WL 3115867, the Defendants moved for summary judgment on all counts. ECF No. 22. On February 13, 2012, the Corporation opposed the Defendants' motion, and moved for summary judgment on Count I (Lanham Act trademark infringement). ECF No. 23. On March 1, 2012, the Defendants filed a reply in further support of their motion for summary judgment, and opposed the Corporation's motion for summary judgment. ECF No. 27. On March 19, 2012, the Corporation filed a reply in further support of its motion for summary judgment. ECF No. 28.
The Court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In considering the motion, "the judge's function is not ... to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. 2505.
The Court must "view the evidence in the light most favorable to ... the nonmovant, and draw all reasonable inferences in [its] favor," Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 645 (4th Cir.2002), but the Court must abide by the "affirmative obligation of the trial judge to prevent factually unsupported claims and defenses from proceeding to trial," Bouchat v. Bait. Ravens Football Club, Inc., 346 F.3d 514, 526 (4th Cir.2003) (citation and internal quotation marks omitted).
When cross motions for summary judgment are filed, "each motion must be considered individually, and the facts relevant to each must be viewed in the light most favorable to the nonmovant." Mellen, 327 F.3d at 363 (citing Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir.2003)).
The Defendants have moved for summary judgment on all counts.
In Count I, the Corporation alleges that the LLC's use of "BBP" and "BBP LLC" — and its representations about its clients, testimonials, practice areas, and awards and recognitions — violate the Lanham Act because they will likely cause confusion about the LLC's affiliation with
To prevail on its trademark infringement claim, the Corporation must prove that (1) it owns a valid mark, (2) the Defendants "used the mark in commerce and without [the Corporation's] authorization," (3) the Defendants "used the mark (or an imitation of it) in ... the sale, offering for sale, distribution, or advertising of goods or services," and (4) the Defendants' use of the mark "is likely to confuse consumers." Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 152 (4th Cir. 2012). A mark includes "any word, name, [or] symbol" used by a company "to identify and distinguish the services" of the entity "from the services of others[,] and to indicate the source of the services." 15 U.S.C. § 1127.
The Defendants argue that they are entitled to judgment as a matter of law on Count I because the Corporation does not own "BBP" or "BBP LLC," nor can it show that the Defendants' use of those marks is likely to confuse consumers. ECF No. 22-1 at 17.
The Defendants contend that the Corporation transferred "most or all of the goodwill associated with [marks such as `BBP' and `BBP LLC']" under the Stock Redemption Agreement, so "any rights [the Corporation] may have had in the marks were either ... transferred to [the] Defendants or abandoned." ECF No. 22-1 at 8.
The Corporation counters that it transferred only the personal goodwill of Basile and Prost, and retained ownership of its corporate goodwill and marks. ECF No. 23-1 at 22-27. The Corporation argues that it has continued to use "BBP" and "BBPA," and "[the LLC's] use of `BBP' and `BBP LLC [is] confusingly similar to `BBPC.'" Id. at 22 & n.c.
Goodwill is "the total of all the imponderable qualities that attract customers to [a] business."
The parties' dispute about what the Corporation transferred in the Stock Redemption Agreement raises an issue of contract interpretation. "Under Maryland law, the interpretation of a contract, including the determination of whether a contract is ambiguous, is a question of law."
The Stock Redemption Agreement is unambiguous in at least one respect: it was not a sale of the Corporation's entire business and goodwill. Although Basile and Prost acquired certain assets — including 83 jobs, 138 leads and proposals, and the "goodwill [they] created on [certain] past contracts and clients" — the Corporation retained all other assets, including the company name and location, two-thirds of the staff, and 70 percent of the Corporation's contracts by revenue. ECF No. 22-1, Ex. 2 at § 2.2.1, Schedule 2.2.1 (Revised); Cole Decl. ¶ 44. Thus, the agreement was not a "sale of a business and ... its good will" that impliedly transferred the Corporation's trademarks.
The Defendants argue alternatively that the Corporation abandoned marks
A company abandons its trademark when it stops using the mark and has no intention of resuming its use in the reasonably foreseeable future. See George & Co., LLC v. Imagination Entertainment Ltd., 575 F.3d 383, 400 (4th Cir.2009). "Once abandoned, a mark returns to the public domain and may, in principle, be appropriated for use by others in the marketplace[.]" Id. "The ultimate burden of proof remains always on the party claiming a mark has been abandoned." Id. at 401.
The Defendants have not met that burden. It is undisputed that the Corporation uses the website www.bbpa.com and the mark "BBPC," and Cole has sworn that the Corporation still refers to itself as "BBP" and "BBPA," especially among clients "with longstanding relationships with the firm." Cole Decl. ¶¶ 5-6. Thus, the Defendants have not shown that the Corporation has stopped using the marks at issue. See George & Co., LLC, 575 F.3d at 400. Even if the Defendants had made that showing, they have failed to show that the Corporation has no intention of using the marks in the reasonably foreseeable future. See id. The Corporation continues to provide "real estate development, economics[,] and financial advisory services" to governments and institutional clients. See www.bbpa.com/about-us (last visited June 1, 2012). Although the Defendants argue that the Corporation has abandoned work with local and state governments, one could reasonably read the Stock Redemption Agreement to bar the Corporation only from soliciting certain clients of Basile and Prost's for four years. See ECF No. 22-1, Ex. 2 at § 8.1.
Because the Defendants have not shown that the Corporation owns no valid marks, they are not entitled to summary judgment on that basis.
The Defendants argue that, even if the Corporation owns valid marks, the Defendants' use of "BBP" or "BBP LLC" will not cause confusion; the Corporation handles federal clients, while the Defendants' clients are state and local governments. ECF No. 22-1 at 12. The Defendants also argue that the Corporation has failed to show any actual client confusion over the first two years of the LLC's existence. Id. at 13.
The Corporation counters that the Defendants are competitors providing substantially similar services, the Defendants intended to confuse consumers, and there have been many instances of actual confusion. ECF No. 23-1 at 27-33.
"A likelihood of confusion exists if the [D]efendant[s'] actual practice is likely to produce confusion in the minds of consumers about the origin of the goods or services in question." George & Co., LLC, 575 F.3d at 393 (internal citation and quotation marks omitted). The Fourth Circuit has identified nine factors for assessing the likelihood of confusion:
Id. The factors "are not meant to be a rigid formula for infringement," but only a "catalog of various considerations that may be relevant in determining the ... likelihood of confusion." Id. (internal quotation marks omitted) (quoting Anheuser-Busch, Inc. v. L & L Wings, Inc., 962 F.2d 316, 320 (4th Cir.1992)).
A reasonable jury could find that the Defendants' use of "BBP" or "BBP LLC" is likely to cause consumer confusion. The Corporation has used "BBPC" since 2006, see Answer ¶ 31, and "BBP" is identical but for one letter. The Corporation and LLC are based in Annapolis and arguably perform similar work: economics and real estate consulting. See www.bbpa. com/about-us (last visited June 1, 2012); Basile Decl. ¶ 8; Answer ¶¶ 6, 24. The LLC's advertising has been similar to the Corporation's. Until May 24, 2010, the LLC's letterhead and business cards used a logo with font, colors, and layout nearly identical to the Corporation's logo. See ECF no. 23-1, Ex. O, P, Q, R, UU. On its website, the LLC has listed endorsements that are nearly verbatim to those in the Corporation's marketing materials. ECF No. 23-1, Ex. BB, CC. The LLC's website has also presented the same list of awards — in the same order and font, and accompanied by the same photos — as those used in the Corporation's advertisements. See ECF No. 23-1, Ex. EE, FF.
A reasonable jury could also find that the Defendants intended to confuse consumers. The LLC's name uses "BBP," which Prost asserts is an acronym identifying Basile and Prost. See Prost Dep. 153:1-6. But a reasonable jury could find that the second "B" in "BBP" refers to Baumann, who has never been affiliated with the LLC. See Answer ¶ 22. Baumann worked for the Corporation, which still identifies itself with his name. See Prost Dep. 29:2-10; Basile Decl. ¶ 4.
The Defendants have also made several representations that could reasonably be construed as attempts to present the LLC as the Corporation. In an email to an employee, Basile said that the Corporation had been "legally restructured, resulting in the formation of [the LLC]." Email from Ralph Basile to Taylor Yewell, Jim Prost & David Starnes (Jan. 5, 2010 11:02 a.m.). In several bids for work, the LLC has said that it existed long before its January 2010 formation, and its marketing materials have claimed that the LLC has completed projects that were done by Basile and Prost when they were principals at the Corporation. See, e.g., ECF No. 23-1, Ex. Y, LL, MM. In August 2011, the LLC's website stated that it had provided services to "literally hundreds of clients" when it had advised "far fewer" than 70 to 80 clients. ECF No. 23-1, Ex. X at BBPC 1523; Basile Dep. 229:12-17, 231:7-13.
The Corporation has also presented evidence that several of the LLC's clients sent payments to the Corporation, the Corporation has received mail intended for the LLC, someone has emailed the Corporation to ask about a project touted in the LLC's newsletter, and the Planning Authority may have confused the LLC with the Corporation. ECF No. 22-1, Ex. TT, Sumner Dep. 47:7-49:8; Cole Decl. ¶¶ 28-30; Tina Dolen Decl., Ex. B. Regardless of whether such incidents were actual consumer confusion, they are further evidence
In sum, a genuine dispute exists as to whether the Defendants' use of "BBP" and "BBP LLC" is likely to cause confusion, because a reasonable jury could find that the LLC's marks, services, and advertising are similar to the Corporation's, and the LLC intended to confuse consumers. See George & Co., LLC, 575 F.3d at 393. Accordingly, the Court will deny the Defendants' motion for summary judgment on Count I.
In Count II, the Corporation alleges that the LLC's representations about its clients, testimonials, projects, and awards and recognitions constitute false advertising under the Lanham Act. Compl. ¶¶ 112-113.
The Lanham Act prohibits "false or misleading description ... or representation of fact, which ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of [its] or another [entity's] goods, services, or commercial activities." 15 U.S.C. 1125(a)(1)(B). A plaintiff must show:
The Defendants argue that they are entitled to judgment as a matter of law because the Corporation cannot show that any of the statements on the LLC's website were material, or that the Corporation has been injured as a result of the LLC's statements. ECF No. 22-1 at 21-27.
A statement is material if it describes a product or service as having a characteristic that most consumers would find appealing.
The Defendants argue that none of the alleged misrepresentations is material because "[n]o customer would `purchase' [the LLC's] services by reading the literature at its website and then clicking a button." ECF No. 22-1 at 22. "Instead," the LLC argues, "potential clients [would] use the website, at most, as a way to become generally familiar with [the LLC] and the services it provides." Id. The LLC contends that, only after contacting the Defendants directly, would a customer buy its services. Id.
The Corporation counters that the LLC's argument "defies common sense." ECF No. 23-1 at 35. It argues that, "if [the LLC's] website had no effect on developing client business," it would not "expend the effort needed to implement and sustain [the] website." Id.
A reasonable jury could find that the statements on the LLC's websites were material. A consumer seeking consulting services would likely be persuaded by a vendor's claims that it had served hundreds of clients, worked on dozens of projects, received accolades from past clients, and been awarded for its work. Thus, the statements all related to characteristics that a consumer would be seeking in a consulting firm. See, e.g., Sanderson Farms, Inc., 547 F.Supp.2d at 507. Moreover, materiality is generally a question of fact for the jury.
The Defendants also argue that the Corporation has failed to produce any evidence that it has been injured by the alleged misrepresentations. ECF No. 22-1 at 22-24. The Corporation counters that
The Defendants are not entitled to summary judgment on Count II. To prevail on a false advertising claim, a plaintiff must show, inter alia, that it "has been or is likely to be injured as a result of the misrepresentation." PBM Prods., LLC, 639 F.3d at 120 (emphasis added). A plaintiff meets this burden by showing actual or likely "lessening of goodwill associated with its products" or "direct diversion of sales." Id. Evidence that the defendant's advertising tended to mislead or confuse consumers may establish harm.
A reasonable jury could find that the LLC's statements would likely injure the Corporation. The record includes evidence that the LLC's website contained misleading statements that could confuse consumers. See supra Parts II. B.1.b & 2.a. From this same evidence, a jury could reasonably find that the Corporation could suffer diversion of sales or lessening of its goodwill.
In Count III, the Corporation alleges that the LLC has tried to profit from the Corporation's marks and divert its customers by registering and using bbpallc.com, which the Corporation asserts is confusingly similar to its marks. Compl. ¶¶ 122-135.
To establish a violation of the ACPA, a plaintiff must show that (1) the defendants had a bad faith intent to profit from using their internet domain name, and (2) the domain name is identical or confusingly similar to, or dilutive of, the plaintiff's distinctive and famous mark. See Newport News Holdings Corp. v. Virtual
In determining whether bad faith exists, the Court must view "the totality of the circumstances," id. at 435, and consider such factors as whether the domain name consists of a name commonly used to identify the defendants, or the defendants intended to divert consumers from the plaintiff's site by creating a likelihood of confusion about the "source, sponsorship, affiliation, or endorsement of the [defendant's] site," 15 U.S.C. § 1125(d)(1)(B)(i).
The Defendants argue that they are entitled to judgment as a matter of law because the Corporation has presented no evidence of the Defendants' bad faith. ECF No. 22-1 at 27. They contend that Basile and Prost are entitled to the goodwill they created with former clients, the LLC's domain name "is comprised of Basile and Prost's initials," they have not registered multiple domain names or offered to transfer the LLC's domain name, and they provided no false information when registering the domain name. Id. at 28. They further argue that bbpallc.com is neither identical nor confusingly similar to any mark owned by the Corporation. Id. at 27-28.
A reasonable jury could find that the Defendants had a bad faith intent to profit from bbpallc.com and that the domain name is confusingly similar to the
The evidence also shows that Basile and Prost left the Corporation to form the competing LLC, the LLC provides substantially similar services, both the Corporation and the LLC are located in Annapolis, and the LLC's website has posted lists of awards and client testimonials that were verbatim or nearly identical to lists in the Corporation's marketing materials. See www.bbpa.com/about-us; Basile Decl. ¶ 8; Answer ¶¶ 6, 24; ECF No. 23-1, Ex. BB, CC, EE, FF. From this, a jury could reasonably infer that the Defendants intended to divert customers from the Corporation by creating a likelihood of confusion about the source of the LLC's site.
The Defendants argue that the Court should decline to exercise supplemental jurisdiction over the remaining claims,
When a district court "has dismissed all claims over which it has original jurisdiction," it "may decline" to exercise supplemental jurisdiction over remaining state law claims. 28 U.S.C. § 1367(c). But the Court has not dismissed all federal claims. Accordingly, § 1367(c) is inapplicable, and the Court will deny summary judgment on Counts IV-VI.
The Corporation has cross-moved for summary judgment on Count I, trademark infringement under the Lanham Act. As stated above, to prevail on its trademark infringement claim, the Corporation must prove that (1) it owns a valid mark, (2) the Defendants "used the mark in commerce and without [the Corporation's] authorization," (3) the Defendants "used the mark (or an imitation of it) in ... the sale, offering for sale, distribution, or advertising of goods or services," and (4) the Defendants' use of the mark "is likely to confuse consumers." Rosetta Stone Ltd., 676 F.3d at 152.
On the Corporation's cross-motion for summary judgment, the Court must accept the Defendants' evidence as true, and draw all reasonable inferences in the Defendants' favor. See Dennis, 290 F.3d at 645. The Court may grant summary judgment to the Corporation only if the evidence is "so one-sided that [the Corporation]
The Corporation has not shown that it is entitled to summary judgment. Although a reasonable jury could find a likelihood of consumer confusion, see supra Part II. B.l.b, the jury could also reasonably find that no such confusion is likely. The Corporation and the LLC consult clients about real estate and economics, but the LLC's business focuses mainly on state and local government, while the Corporation's business remains primarily focused on the U.S. Navy.
Because neither company targets the public at large, a reasonable jury could find that the typical consumer in the relevant market is sophisticated enough to distinguish the LLC from the Corporation.
A jury could reasonably find that another factor — the Defendants' intent
In sum, the Corporation has presented evidence from which a jury could find that the Defendants infringed the Corporation's mark, in violation of the Lanham Act. See supra Part II.B.l. But the evidence does not compel such a finding, and a jury could reasonably find no infringement. Thus, the Court must deny the Corporation's motion for summary judgment on Count I. See Anderson, 477 U.S. at 250-52, 106 S.Ct. 2505.
For the reasons stated above, the Court will deny the Defendants' motion for summary
ECF No. 23-1, Ex. V.
ECF No. 23-1, Ex. DD. Below the testimonials, the LLC stated that they referred to
Id.
See www.bbpallc.com/pdf/Awards.pdf (last visited June 1, 2012).
15 U.S.C. § 1125(d)(1)(B)(i). "[B]ecause use of these listed factors is permissive," the Court "need not ... march through them all in every case." Lamparello, 420 F.3d at 319 (internal quotation marks omitted).
