Seattle Trademark Lawyer

On Sept. 7, the Ninth Circuit published a decision affirming in part and vacating in part an arbitrator’s award based on a trademark license agreement. The decision underscores how deferential courts are when reviewing arbitration awards, but that such deference is not unlimited.

In Comedy Club, Inc. v. Improv West Associates, plaintiffs Comedy Club and Al Copeland Investments, Inc., entered into a Trademark License Agreement that granted Comedy Club an exclusive nationwide license to use Improv West’s trademarks. Thereafter, Comedy Club breached the agreement and sought to protect its interests in the trademarks by filing a declaratory judgment action in the Central District of California. The court ordered the parties to arbitrate pursuant to the agreement’s arbitration clause. 

The arbitrator found that Comedy Club was liable for breaching the agreement and entered an injunction enjoining Comedy Club and its affiliates from opening any other comedy clubs and from changing the name of any of their clubs until the Trademark Agreement ended. Incorporating the agreement’s definition of “affiliates,” the arbitrator extended the injunction to include “family members, family members of shareholders, all collateral relatives, former spouses, and all collateral relatives of former spouses.” The court confirmed the award. Comedy Club then appealed.

The Ninth Circuit found the arbitrator acted beyond the scope of his authority when he included family members, ex-spouses, and other persons who did not sign the Trademark Agreement since Federal Rule of Civil Procedure 65(d) limits injunctions to parties, “their officers, agents, servants, employees, and attorneys,” and those persons “in active concert or participation” with them.

As for the substance of the award, the Ninth Circuit found that its review is “both limited and highly deferential” and that it was empowered to vacate the arbitration award only if the award was “completely irrational” or constituted “manifest disregard of the law.” The Ninth Circuit upheld the “basic outline” of the arbitrator’s decision because it could not say the award was “completely irrational.”

That said, the Ninth Circuit found the arbitrator’s ruling enforcing the agreement’s covenant not to compete violated California’s statutory ban on such covenants. Therefore, it vacated the Central District’s order confirming the award to the extent it prevented Comedy Club from opening or operating non-Improv clubs.

The case cite is Comedy Club, Inc. v. Improv West Assoc., Nos. 05-55739, 05-56100,  __ F.3d __, 2007 WL 2556702 (9th Cir.).

If you tried to access STL this weekend and instead were directed to my law firm bio, I apologize. My domain name registrar, Network Solutions, inadvertently changed some of my settings. The error has been corrected. Thanks for your patience!

Design house Paul Frank Industries, Inc., brought a trademark infringement action in the Central District of California against its namesake and former designer, Paul Frank Sunich, based on the commercial use of his name. In particular, plaintiff alleged that Mr. Sunich and his companies’ Web sites, www.paulfranksunich.com, www.chasermerch.com, and www.treestitchdesign.com, and defendants’ sale of t-shirts using Mr. Sunich’s full name, “Paul Frank Sunich,” infringe PFI’s rights in its PAUL FRANK trademark.

Plaintiff brought a motion for preliminary injunction to enjoin defendants from using the name “Paul Frank” in any commercial context. Defendants responded that Mr. Sunich has an absolute right to use his full name in any context, including in connection with the sale of t-shirts that he designs.

On August 21, the court granted the motion in part and denied it in part. On one hand, It found: 

“Under trademark law, there is no absolute right to use one’s own personal name where that use would be confusingly similar to an established use of a famous mark that the public has come to associate with another source. Through the extensive efforts of both PFI and Mr. Sunich, the Paul Frank mark has become famous. Mr. Sunich, therefore, has no absolute right to make use of his name in a manner that would be confusingly similar to PFI’s use of the Paul Frank mark. Accordingly, Mr. Sunich, along with the other Defendants, must be enjoined from using his full name in the sale of Defendants’ T-shirts.”

On the other hand, the court also found:

“Mr. Sunich, however, is entitled under trademark law to use his name in other contexts, commercial or otherwise, to identify himself and inform others about his work. PFI has no right to prevent Mr. Sunich and the other Defendants from using Mr. Sunich’s full name in contexts where such use will not result in any confusion with PFI’s use of the Paul Frank mark.”

With regard to defendants’ Web sites, the court declined to enjoin defendants’ use “so long as they maintain their messages explaining that Mr. Sunich does not work for or with PFI” or “sell or link to any other site that would sell clothing using the Paul Frank name in any form on either the product itself or the product’s label.”

The case cite is Paul Frank Industries, Inc. v. Sunich, No. 07-0609, __ F.Supp.2d __, 2007 WL 2376998 (C.D. Cal.).

Video Only, Inc., today filed a Rule 41(a) notice of dismissal with the Western District, terminating its trademark claims against JSSI Group, Inc., Domain Name Systems, Inc., and three individual defendants. The dismissal follows a motion to dismiss that defendants filed last week.

In its December 2006 complaint, the Seattle-based video retailer alleged that defendants “host, operate, provide DNS services for, serve as the registrar for the associated domain name, and/or publish the Internet web site http://www.videonly.com/….” Video Only alleged that defendants used this site to divert traffic from Video Only’s site and to redirect it to another site that advertises, sells, and promotes pornographic material. The complaint asserted claims for infringement, contributory infringement, infringement, false designation of origin, dilution, cybersquatting, violation of Washington’s Consumer Protection Act, and unjust enrichment.

On August 31, the defendants filed a motion to dismiss on the alleged ground that they did not have sufficient minimum contacts with the state to provide the court with jurisdiction. Defendants claimed they resided and did business in Florida and Canada. They also argued that Video Only’s claims against them in their capacity as a registrar of domain names should be dismissed on the ground that Ninth Circuit courts do not hold registrars liable for the kinds of claims Video Only asserted. The dismissal, of course, makes this motion moot.

It’s unclear (to STL, that is) whether the dismissal is part of a settlement. Defendants’ alleged typosquatting site appears to be inactive, suggesting that it may have been taken down as part of a deal.

The case cite is Video Only, Inc. v. JSSI Group, Inc., No. 06-1778 (W.D. Wash.).

On August 31, Western District Judge Thomas Zilly entered a stipulated injunction in favor of plastic surgery clinic Hypatia Aesthetic & Laser Treatment Clinic, PLLC, against competing plastic surgery clinic Sam Naficy, MD, PS. The injunction concludes Hypatia’s dispute with Sam Naficy over the latter’s purchase of HYPATIA as a keyword in users’ Google searches.

Hypatia’s complaint reads like a Google testimonial. It alleged that Hypatia markets its “minimally invasive and non-invasive cosmetic medical therapies primarily on the Internet.” In the 1.5 months preceding Hypatia’s filing of its complaint in September 2006, Hypatia alleged the Sam Naficy clinic “purchased from www.google.com, the right to have a sponsored link to its website at the top or the top right side of the search results page when anyone performs a Google search for the term ‘hypatia.’” Sam Naficy’s ad allegedly stated, “Rejuvenation Center seattleface.com Non-surgical treatments for healthy & beautiful skin with no down time,” and contained a link that would transfer a user to Sam Naficy’s Web site. During this period, Hypatia stated, it experienced a “drastic drop” in the number of Internet inquiries from new customers.

Hypatia alleged that Sam Naficy’s use of Hypatia’s common law trade name and trademark was “purchased to confuse Hypatia customers and prospects seeking Hypatia’s website into viewing the [Sam Naficy] website and diverting customers and prospects to [Sam Naficy] for their cosmetic medical needs, with the purpose of taking Hypatia’s customers, prospects and market share.” The complaint alleged that these facts supported claims of false designation of origin, common law trademark infringement, trade dress infringement, trade name infringement, violation of Washington’s Consumer Protection Act, and common law unfair competition.

The stipulated order dismisses Hypatia’s claims and permanently enjoins Sam Naficy and its shareholders, directors, officers, and employees from “sponsoring, creating, purchasing or otherwise directing any Internet-based link, connection, directive or methodology of diverting users that has as its basis the inputting by any user” of the terms “Hypatia,” “Hypatia Laser & Aesthetic Clinic,” Hypatia’s address, and Hypatia’s telephone number. The parties agreed that each would bear its own fees and costs.

Given the uncertainty as to whether purchasing a competitor’s trademark as a search engine keyword even constitutes infringement, this result seems extreme. Suffice it to say, the outcome could have been quite different had the case been decided on its merits. Not necessarily, but it sure could have been.

The case cite is Hypatia Aesthetic & Laser Treatment Clinic, PLLC v. Sam Naficy, MD, PS, No. 06-01366 (W.D. Wash.).