In Trafficschool.com, Inc. v. Edriver Inc., defendants own and manage DMV.org, a for-profit, advertising-driven Web site that provides visitors with information about renewing driver’s licenses, buying car insurance, beating traffic tickets, and the like.
Plaintiffs market and sell a traffic school and driver’s ed courses to consumers. They compete with defendants for revenue generated from sponsored links.
Plaintiffs sued for false advertising on the ground that defendants got an unfair leg up on the competition by misleading consumers into believing that defendants’ DMV.org Web site is a government Web site (“DMV” being a common abbreviation for Department of Motor Vehicles).
At trial, the Central District of California held that defendant had engaged in false advertising in violation of Section 43 of the Lanham Act and imposed a permanent injunction but did not find the case was “exceptional” as needed to award attorney’s fees.
Both sides appealed. On July 28, the Ninth Circuit agreed that defendants had violated the Lanham Act. Indeed, it found defendants’ conduct was so misleading to consumers that the district court erred in not awarding fees.
“Defendants challenge the district court’s finding that their deception was willful — and thus ‘exceptional’ under Horphag [Research Ltd. v. Garcia, 475 F.3d 1029 (9th Cir. 2007)] and Lindy Pen [Co. v. Bic Pen Corp., 982 F.2d 1400 (9th Cir. 1993)]. But the district’s willfulness finding is supported by evidence that defendants planned to mislead site visitors and knew that their conduct confused consumers. Defendants associated their website with URLs and search terms that falsely implied DMV.org was a government site. They had in their possession hundreds of emails sent by consumers who contacted DMV.org thinking it was a state agency. And DMV.org’s director of customer service testified that he voiced concerns about these emails to senior management.
“Defendants claim that they reacted by ‘explain[ing] away any confusion’ and adding disclaimers to the bottom of each web page. But defendants knew that the disclaimers were ineffective, because adding them didn’t end the stream of emails sent by consumers who thought they’d contacted their state DMV. There was overwhelming proof that defendants knew their statements confused consumers and did little or nothing to remedy it. The district court could reasonably infer that they willfully deceived the public.”
The case cite is Trafficschool.com, Inc. v. Edriver Inc., __ F.3d __, 2011 WL 3198226, Nos. 08-56518, 08-56588, 09-5533 (9th Cir. July 28, 2011).