Designer Skin LLC v. S & L Vitamins, Inc., et al.
TMI Inc. v. Maxwell
368 F.3d 433 (5th Cir. 2004)
Reversing the District Court, the Fifth Circuit holds that defendant's operation of a non-commercial gripe site at a domain which varied from plaintiff's mark solely by the subtraction of the letter "s" did not violate either the Federal or Texas State Dilution Acts, nor did it run afoul of the Anticybersquatting Consumer Protection Act ("ACPA"). The Court determined that defendant's actions were not motivated by the requisite bad faith intent to profit from the use of the mark, but rather, by defendant's desire to inform the public about his dispute with plaintiff and the services it offered him. The absence of such bad faith was fatal to plaintiff's ACPA claim. Plaintiff's Federal Dilution Act claim failed because defendant's use was not commercial.
Plaintiff TMI Inc. builds houses under the name "Trend Maker Homes," and operates a web site at the domain "Trendmakerhomes.com." Defendant Joseph Maxwell sought to have TMI build him a house. However, he became disenchanted with plaintiff because of what he claimed were misrepresentations made by a salesperson as to the availability of a certain model home.
Defendant registered the domain Trendmakerhome.com to tell his story. This domain differed from plaintiff's mark solely by the omission of the plural "s." Defendant's web site contained a disclaimer at the top of its home page, noting that it was not TMI's own site. Defendant's web site also contained Maxwell's version of his dispute with TMI. Lastly, the web site contained a section titled "Treasure Chest" which was supposed to promote contractors and others who did good work. In reality however, only one listing, touting an individual who did some work for Maxwell, was ever posted in the Treasure Chest. This individual did not pay for his listing. Nor were there any other paid advertisements on Maxwell's site.
Maxwell let his domain registration lapse after one year, at which time his site was removed from the Internet. Thereafter, TMI sent a cease and desist letter to Maxwell. Maxwell responded by attempting to reregister his trendmakerhome.com domain. Finding plaintiff had already registered it, he registered the domain trendmakerhome.info. He did not repost his gripe site to that domain, however.
After trial, the District Court found that Maxwell violated both the ACPA, as well as the Federal and Texas Trademark Dilution Acts. The District Court awarded plaintiff $40,000 in statutory damages, and, finding this an "exceptional case," an additional $40,000 in attorney's fees.
The Fifth Circuit reversed. The Fifth Circuit held that to establish a violation of the Federal Trademark Dilution Act ("FTDA"), the mark holder must show a use of its mark in commerce. The Court found support for this interpretation in the language of the statute, which permits an injunction to issue "against another person's commercial use in commerce of a mark or trade name" in violation of the Act. The Court also found support for this conclusion in the interpretation given the FTDA by other courts.
Finding such commercial use absent here, the Court held that Maxwell's conduct did not violate the FTDA. Maxwell did not sell anything at this site, and his site did not contain links to sites of third parties at which such sales were made. Nor did Maxwell accept fees for advertising products on his site, including the single listing in his "Treasure Chest." Finally, Maxwell did not offer to sell the domain name to plaintiff. As a result, there was no commercial use of the mark, and the FTDA claim failed.
The Fifth Circuit did not decide whether the ACPA has a similar "in commerce" use requirement. Nonetheless, the Court held that plaintiff's ACPA claim failed because TMI could not establish that defendant acted with a bad faith intent to profit from the mark, a pre-requisitie to an ACPA claim.
The ACPA provides a non-exhaustive list of nine factors a court may, but need not analyze, in determining whether defendant acted in bad faith. The Court noted that some of these statutory factors favored a finding of bad faith (defendant had no intellectual property rights in the mark, was not commonly known by it, had not offered goods or services under that name, and had used a strong, distinctive mark) while others did not (defendant supplied accurate contact information when registering the domain, did not register multiple domains, used his site for non-commercial criticism, and did not offer to sell the domain at issue to plaintiff). Balancing these factors, the Court determined Maxwell did not act with the requisite bad faith. Said the Court:
The Fifth Circuit accordingly reversed the District Court's determination that Maxwell had violated the ACPA.