Internet Trademark Case Summaries
Simon Prop. Group L.P. v. mySimon, Inc.
104 F. Supp. 2d 1033 (S.D. Ind. 2000) (motion in limine), 2001 U.S. Dist. LEXIS 852 (S.D. Ind. Jan. 24, 2001) (parties’ post-trial motions), rev’d, 282 F.3d 986 (7th Cir. 2002)
Plaintiff owned and operated retail shopping malls across the United States under the federally registered trademark SIMON. Defendant was an Internet-based comparative shopping service called “mySimon.” Plaintiff recently began expanding its Internet presence by providing information about its malls and its retailers, and claimed that defendant’s “mySimon” trademark and "mysimon.com" domain name infringed its SIMON trademark. In this decision, the court denied plaintiff's motion in limine to admit three consumer surveys on likelihood of confusion, one of which was a "home-page" survey. In the home-page survey, respondents were shown defendant's home page and then plaintiff's home page, and then asked whether the web pages were "put out by (a) Two unrelated sources, companies, or organizations; (b) The same source, company, or organization; (c) Related but different sources, companies, or organizations; or (d) Don't Know." In denying plaintiff’s motion in limine, the court found three major flaws with the home-page survey. First, a “side-by-side” comparison of the parties' home pages was not reflective of actual marketplace conditions, as those two pages were not normally encountered simultaneously by consumers. Instead, the survey should have asked respondents to view the marks as they would actually appear, such as in actual search-engine results pages. Second, by failing to provide actual search-engine results, plaintiff’s side-by-side comparison completely “disregarded the fact that other businesses, including other large and relatively well-known ones, use ‘Simon’ as part of their names on the Internet and could also be confused with [plaintiff].” Plaintiff thus failed to include adequate controls in the form of noninfringing third-party SIMON marks to measure the noise level attributable solely to the similarity in names. Also, the court noted that even if plaintiff’s and defendant’s marks did appear simultaneously in search-engine results, the additional descriptive information about the sites next to the URLs would assist the user in finding the appropriate site. Third, the survey questions were leading because they "implicitly suggest to the respondent the possibility of a business connection between the [parties'] home pages that the respondent may not have made on his or her own." Finally, regarding plaintiff's concerns about initial-interest confusion, “[a]ny Internet user is familiar with the confusion one confronts with such a welter of search results, but that confusion is the uncertainty about where to go next, not necessarily the confusion that is relevant for purposes of trademark law.” Although the court acknowledged that initial-interest confusion might be a viable theory, plaintiff’s surveys were "still deeply flawed and cannot provide reliable evidence that any such initial interest confusion occurs here."
On August 31, 2000, a jury found that defendant’s use of “mySimon.com” infringed plaintiff's SIMON trademark and awarded plaintiff $11.5 million based on defendant’s profits, $5.3 million in corrective advertising, and $10 million in punitive damages.
On January 24, 2001, the court denied defendant’s post-trial motion for judgment as a matter of law and/or a new trial on the issues of secondary meaning and likelihood of confusion. The court held that plaintiff’s evidence provided a legally sufficient basis for a reasonable jury to find the existence of secondary meaning among relevant consumers as well as a likelihood of confusion. The court thus granted plaintiff’s motion for permanent injunctive relief and barred defendant from using the MYSIMON mark, the “mysimon.com” domain name, and the “Simon” character. The injunction, however, was subject to a one-year transition period beginning on the sixtieth day after all appeals had been exhausted and during which traffic to “mysimon.com” would be redirected to a new web site. The court also ordered defendant to transfer the “mysimon.com” domain name and any other SIMON-formative domain names to plaintiff within thirty days after the expiration of the transition period. If plaintiff decided to actively use any of the subject domain names within a year of transfer, it had to post a link to defendant’s new website, and the link and explanation had to be reasonably prominent and visible upon initial loading of the web page. The injunction also required defendant to request Internet search engines “to sever any connection between the www.mysimon.com domain name and any form of the ‘Simon’ mark, including ‘mySimon,’ so that use of any form of the ‘Simon’ mark in a search will not return a link to the www.mysimon.com domain name or any other domain name or website owned by [defendant].” Finally, if defendant appealed the final judgment, the order provided that the permanent injunction would be stayed pending appeal. To preserve plaintiff’s interests pending appeal, however, the court ordered defendant to continue to place two percent of its gross revenue in an escrow account as a potential royalty for plaintiff as it had been required to do so following the jury’s verdict.
Defendant contended that the injunction should allow it to continue offering its services through the “mysimon.com” domain name if it used a disclaimer on its website stating that it was not associated with plaintiff. According to the court, however, a disclaimer would not provide an effective remedy in this case because (1) consumers often ignore disclaimers, (2) without an injunction, the likelihood of confusion between the parties’ marks would only increase with time, (3) a disclaimer would not adequately address the possibility of initial-interest confusion.
Concerning defendant’s post-trial motions on damages, the court vacated the jury’s award of $11.5 million in compensatory damages in the form of defendant’s profits. Plaintiff’s calculation of defendant’s profits was misleading because defendant had not generated any profits. In addition, the notion that plaintiff’s shareholders profited from the company’s use of the MYSIMON mark as a percentage of the company’s acquisition price was flawed because a substantial portion of the value paid to shareholders by defendant’s parent, CNET, was based on presumed indefinite use of the marks at issue. Entry of a permanent injunction, however, prevented future use of the mark. Therefore, plaintiff’s $11.5 million figure was more like a royalty calculation rather than a traditional damages calculation.
The court also granted defendant’s motion for a new trial on the jury’s award of $5.3 million for corrective advertising. Defendant successfully argued that plaintiff failed to connect its expert’s $5.3 million figure to a proven injury that would be remedied by corrective advertising. First, unlike previous cases, defendant did not “effectively usurp” the mark in question. To the contrary, plaintiff’s branding campaign elevated consumer awareness of the SIMON mark to its highest levels during the period of infringement. Second, plaintiff did not undertake any effort to protect its mark through corrective advertising through the date of the trial even though plaintiff, as a successful multibillion-dollar company, had the resources to do so. Third, plaintiff’s expert wrongly presumed that plaintiff was entitled to 25 percent of the defendant’s advertising budget based solely on the presentation of some evidence of actual confusion. Without specific knowledge of the extent of actual confusion, the expert could not determine whether $5.3 million in unspecified advertising would be an effective way to remedy that confusion. Although the court granted a new trial on the issue of corrective advertising, it stated that it would enter final judgment promptly if plaintiff accepted a remittitur of the $5.3 million to nominal damages of $10.
Concerning punitive damages, the court denied defendant’s motion for a new trial on the jury’s finding of liability for punitive damages under Indiana state law because a reasonable jury could have determined that defendant used the SIMON name to willfully capitalize on the synergy he had identified between plaintiff’s retail-shopping service and his Internet business. Turning to the amount of punitive damages, Indiana law limited them to the greater of three times the amount of compensatory damages or $50,000. Assuming plaintiff accepted the remittitur on damages for corrective advertising to $10, plaintiff would be entitled to only $50,000 in punitive damages, 75 percent of which had to be paid into the state’s violent-crime victims-compensation fund per Indiana law.
Finally, the court denied plaintiff’s motion for attorney’s fees as a matter of equity because plaintiff itself played a central role in causing the case. The record persuaded the court that plaintiff acted unreasonably and negligently by failing to act much earlier that it did, at a time when litigation could have been avoided or resolved far more quickly and cheaply. The combination of plaintiff’s lack of substantial harm and defendant’s lack of profits also weighed against an award of attorney’s fees. Moreover, plaintiff never attempted to prove loss of sales or actual damage to its goodwill, and defendant did not profit in any material way from its use of the SIMON marks.
Even though a final judgment had not been entered in the case, Plaintiff filed a notice of appeal seeking immediate issuance of the injunction against defendant and a reduction of the website transition period from one year to thirty days. Plaintiff argued that the appeals court had subject-matter jurisdiction because the district court’s delay in issuing the injunction was, effectively, a denial of injunctive relief and therefore appealable. Defendant argued that the appeals court lacked jurisdiction because the district court’s decision was not an order “granting . . . or refusing” an injunction. The Seventh Circuit held that it did not have jurisdiction over the district court’s decision to stay the issuance of an injunction for two reasons. First, plaintiff failed to show that the district court’s decision was a definitive disposition of the request for relief as opposed to merely postponing relief. As a matter of law, the court noted that the district court judge could revise his ruling at any time before entering final judgment. Second, plaintiff failed to show that the delay in entering the injunction caused it irreparable harm. In particular, plaintiff’s withdrawal of its motion for preliminary injunction after the district court denied its motion for temporary restraining order, undermined plaintiff’s argument that a delay in granting such an injunction would cause irreparable harm, and rendering its plea “thin at best.”