Appeal from the United States District Court for the Northern District of California, San Francisco Marilyn H. Patel, Senior District Judge, Presiding D.C. No. 3:06-cv-07367-MHP
The opinion of the court was delivered by: Cowen, Circuit Judge
Argued and Submitted December 8, 2011-San Francisco, California
Before: Diarmuid F. O'Scannlain, Robert E. Cowen,*fn1 and Marsha S. Berzon, Circuit Judges.
Plaintiffs Rearden LLC, Rearden Productions LLC, Rear-den Studios LLC, Rearden, Inc., and Rearden Properties LLC appeal from the orders of the United States District Court for the Northern District of California granting summary judgment in favor of Defendant Rearden Commerce, Inc. In two rulings, the District Court granted Rearden Commerce's motions for summary judgment with respect to Appellants' claims under the Lanham Act, the Anticybersquatting Consumer Protection Act ("ACPA"), California's common law of trademark infringement, and the California Unfair Competition Law ("UCL"). Because there are genuine issues of material fact, we vacate and remand for further proceedings consistent with this opinion.
Steve Perlman founded Rearden Steel, Inc. in May 1999. He chose this name, at least in part, because it was a reference to the "Hank Rearden" character from Ayn Rand's novel, Atlas Shrugged. This company changed its name to Rearden Studios, Inc. in March 2002, Rearden, Inc. in October 2004, and, finally, Rearden LLC in June 2006. Rearden LLC was only the first of several Bay Area-based "Rearden" companies started by Perlman. Other Rearden entities include: (1) Rear-den Studios LLC (which was originally incorporated as Rear-den Steel Entertainment, Inc. in March 2000, and then changed its name to Rearden Entertainment, Inc. in March 2002, Rearden Studios, Inc. in February 2005, and Rearden Studios LLC in June 2006); (2) Rearden Productions LLC (which was incorporated as Look Aside Productions, Inc. in March 2000, changed its name in the same month to Rearden Steel Productions, Inc., and then became Rearden Productions, Inc. in March 2002 and Rearden Productions LLC in June 2006); and (3) Rearden Properties LLC.
Appellants have offices in San Francisco and Palo Alto, and they collectively employ approximately one hundred employees. They also operate a number of websites, including "Rearden.com" (their main website, which has been in operation since April 2001), "ReardenSteel.com" (maintained since November 1999), "ReardenStudios.com" (since March 2002), and "ReardenLabs.com" (since May 2005).
"The Rearden companies are technology incubators and artistic production companies." Rearden LLC v. Rearden Commerce, Inc., 597 F. Supp. 2d 1006, 1012 (N.D. Cal. 2009) ("Rearden I") (citation omitted). Simply put, an incubator provides resources and support for the ground-up development of start-up ventures. Such resources and support include office space, personnel, equipment, IT infrastructure, funding, credit guarantees, insurance, administrative services, benefits, travel services, marketing, creative ideas, intellectual property, and domain names. In turn, Appellants sometimes contract with third parties in order to provide certain services. For example, they have entered into a partnership with TriNet, a human resources company, to provide their affiliates with online access to payroll and benefits management services as well as the ability to purchase such services as airline, hotel, and dining reservations, car services, and event tickets.
Unlike Rearden Commerce, Appellants generally do not distinguish between the various Rearden entities for the purposes of this lawsuit. The District Court likewise frequently referred to "the Rearden companies" or, simply, to "Rearden." It also pointed out that Rearden LLC, as the "flagship entity," actually provides the resources and support for the ground-up development of new ventures. Id. at 1013. On the other hand, Rearden Productions LLC and Rearden Studios LLC specialize in high definition and animated movie production services. Finally, Rearden Properties LLC is a property ownership and management company that rents three units in a San Francisco building to the other Rearden entities.
Appellants own a registered mark in the words "Rearden Studios" as well as in a blue and black logo featuring a prominent figure of an Amazon warrior and the words "REARDEN STUDIOS." Specifically, the company now known as Rear-den LLC originally sought protection from the Patent and Trademark Office ("PTO") for this mark on April 20, 2002, and registration was ultimately obtained on November 1, 2005. On May 31, 2007, Appellants filed "intent-to-use" applications for the following marks: "Rearden," "Rearden Companies," "Rearden Commerce Email," "Rearden Personal Email," "Rearden Mobile," "Rearden Wireless," and "Rearden Communications." In addition to alleging that Rearden Commerce has infringed on their "Rearden Studios" mark and name, Appellants claimed that Rearden Commerce has infringed on a large number of other alleged "Rearden" marks and names, including "Rearden," "Rearden LLC," "Rearden Productions," "Rearden Properties," "Rearden Commerce Email," "Rearden Companies," "Rearden Entertainment," "Rearden, Inc.," "Rearden Labs," "Rearden Personal Email," and "Rearden Steel." Partly because Rearden Commerce has frequently referred to itself simply as "Rearden," the District Court (following the example set by Appellants themselves) believed it was appropriate to focus on the word "Rearden," which appears in each of the Appellants' names.
The alleged infringer, Rearden Commerce, Inc., is a Silicon Valley-based business concierge company. Simply put, it offers a proprietary web-based platform called the "Rearden Personal Assistant," which links its clients, specifically businesses and professionals, to an online marketplace where they then are able to search for, compare, purchase, and manage a variety of business and travel-related services from more than 130,000 different vendors (including such well-known companies as American Airlines, Hertz, Hilton, and WebEx). The available services include air, car, hotel, and dining reservations, event tickets, web conferencing, and package shipping.
Patrick Grady founded Rearden Commerce as Gazoo Corporation in 1999. He then changed its name to Talaris two years later. Grady also has an affinity for Rand's "Hank Rear-den" character. In August 2004, Talaris accordingly reserved the California corporate name "Rearden, Inc.," but it ultimately lost this reservation to Appellants in October 2004. After reserving the "Rearden Commerce" name in November 2004, Talaris officially changed its name to Rearden Commerce in January 2005. The renamed company then re-launched its main website as "ReardenCommerce.com" in February 2005 (a domain name that Rearden Commerce had obtained in August 2004). On March 4, 2005, it formally filed applications with the PTO for the "Rearden Commerce with logo" and "Rearden Commerce" marks. The red and black logo consists of a stylized letter "R" next to the words "REARDEN commerceTM." The applications were formally published for opposition on July 4, 2006 and October 31, 2006, and Appellants thereby became aware of Rearden Commerce and its alleged marks.
Rearden Commerce also began to obtain a variety of Internet domain names incorporating the word "Rearden."*fn2 A user accessing one of these domain names is then redirected to the company's primary website. In particular, Rearden Commerce registered the following domain name "families" (e.g., ".com," ".org") on March 4, 2005: (1) "ReardenInc"; (2) "ReardenCo"; and (3) "ReardenC."*fn3
On October 31, 2006, the same day it agreed to an extension of time for Appellants to file a possible opposition to its applications with the PTO, Rearden Commerce, at the direction of General Counsel Gabriel Sandoval, registered the "ReardenLLC.com" domain name. It then registered the "ReardenLLC.net" domain name on November 6, 2006 and the "ReardenMobile.com" and "MobileRearden.com" names on November 10, 2006. As of December 1, 2006, Rearden Commerce began directing individuals accessing the "ReardenLLC" domain names to its main website.
Appellants, in a letter dated November 7, 2006, informed Rearden Commerce that their research revealed a conflict between the parties' marks and names and accordingly asked for a response by November 17, 2006. According to Appellants, no substantive response was provided, and they filed suit on November 30, 2006.
In their initial complaint, Appellants advanced the following claims against Rearden Commerce: (1) false designation of origin under the Lanham Act, 15 U.S.C. § 1125; (2) common law trademark infringement; (3) violations of the California UCL, Cal. Bus. & Prof. Code § 17200; and (4) false advertising under California law, Cal Bus. & Prof. Code § 17500. Perlman subsequently discovered, among other things, Rearden Commerce's registration of the "ReardenLLC" domain names as well as the fact that it was directing traffic from these domain names to its main website.
At a mediation session held on June 6, 2007, Appellants demanded that Rearden Commerce cease its alleged cyber-squatting. As a supposed sign of good faith, Rearden Commerce ceased directing traffic from the "ReardenLLC" and the "ReardenInc" domain names to its main website. While denying any wrongdoing on its part and refusing to assign the domain names, Rearden Commerce "parked" the "ReardenLLC" domain names (i.e., a generic Network Solutions web page was displayed on the screen to any person accessing these domain names) until the case was resolved or the District Court directed otherwise.
On June 11, 2007, Appellants accused Rearden Commerce of cybersquatting in connection with the "ReardenC.com" domain name. They also asked Rearden Commerce to agree to a stipulated preliminary injunction prohibiting the company from using various "Rearden" domain names and from registering or using any domain name containing Appellants' corporate names, brands, trademarks, or trade names, with the sole exception of the "ReardenCommerce" domain name. In a June 19, 2007 letter from its attorneys, Rearden Commerce refused to agree to this injunction. However, it did state that, "[i]n that same spirit of compromise, and without any admissions, Rearden Commerce would be willing to voluntarily maintain the nondirecting nature of the 'reardenllc.com,' 'reardenllc.net,' 'reardeninc.net,' 'reardeninc.org,' and 'rear-deninc.us' domain names-provided that your client agrees to withdraw the trademark applications it has filed on May 31, 2007 directed to REARDEN COMMERCE EMAIL, REAR-DEN PERSONAL EMAIL, REARDEN MOBILE, REAR-DEN WIRELESS, REARDEN COMMUNICATIONS, REARDEN COMPANIES, AND REARDEN-based upon our clients' marks and announced new products." (ER208.)
On August 14, 2007, Appellants amended their complaint to allege, inter alia, that Rearden Commerce's purchase of several domain names violated the ACPA, 15 U.S.C. § 1125(d), and constituted corporate name infringement and unfair competition under California law. Appellants also moved for a preliminary injunction, which was granted by the District Court. Expressly rejecting Rearden Commerce's claim that the issue was now moot, the District Court enjoined the company from directing traffic from the "ReardenLLC" domain names and from registering any other domain name containing the words "Rearden LLC."
The parties filed cross-motions for summary judgment as to Appellants' trademark-related claims. In an extensive memorandum and order, the District Court granted Rearden Commerce's motion for summary judgment and denied Appellants' motion.
After acknowledging that the federal and state trademark claims were subject to the same legal standards, the District Court stated that "[t]he first step in the analysis is to determine whether there is any genuine issue of material fact as to whether the Rearden companies have used 'Rearden' in commerce so as to give rise to a protected right." Rearden I, 597 F. Supp. 2d at 1016. The District Court called into question whether there is any evidence at all showing that "Rearden has marketed any products or services to consumers using the Rearden name" and whether it has any actual customers. Id. at 1017. It specifically turned to an exchange that occurred between the parties' attorneys at oral argument: "At oral argument, defense counsel stated that the Rearden companies have served only to incubate Perlman's ideas and that no one actually pays Rearden to have their ideas incubated. Plaintiffs' counsel did not challenge that characterization, other than to state that outside persons 'could' come to Rearden." Id. (citation omitted). Nevertheless, the District Court ultimately assumed without deciding that there was a triable issue of fact with respect to the "use in commerce" requirement because its "likelihood of confusion" analysis sufficed to dispose of the trademark claims.
After establishing a protectable interest in the trade or service mark or name at issue, a plaintiff must then show that the defendant's use of the mark or name creates a likelihood of confusion. The District Court turned to the eight factors identified by this Court in AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979), for assistance in determining whether such confusion is likely: "(1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant's intent in selecting the mark; and (8) likelihood of expansion of the product lines." Rearden I, 597 F. Supp. 2d at 1018 (citing Sleekcraft, 599 F.2d at 348-49).
The District Court found that two factors weigh-albeit only "somewhat" so-in favor of a "likelihood of confusion" finding. Specifically, the "Rearden" mark constitutes a suggestive mark entitled to a certain degree of protection. The District Court similarly acknowledged the similarities between the name "Rearden Commerce" and the names of the various Rearden companies.
On the other hand, the District Court explained at some length why: (1) the "proximity of the goods" and "type of goods and the degree of care likely to be exercised by the purchaser" factors "strongly" weigh against a finding of a likelihood of confusion; (2) the "marketing channels used" and "likelihood of expansion of the product lines" factors weigh against any such finding; and (3) the "evidence of actual confusion" factor does not support a "likelihood of confusion" finding, and there is no basis for a reasonable finder of fact to conclude that Rearden Commerce acted in bad faith.
Among other things, the District Court rejected Appellants' various theories of why the parties should be considered to be in competitive proximity. According to the District Court, no reasonably prudent consumer seeking to obtain start-up support would mistake Rearden Commerce's online marketplace for Appellants' incubation business. In turn, no prudent consumer seeking a web-based means to search, compare, and purchase a variety of business services would mistake Appellants' start-up incubation services for Rearden Commerce's online personal assistant program.
The District Court likewise concluded that it would be unreasonable for a finder of fact to find that the relevant consuming public has experienced any real confusion. It explained, inter alia, that nearly every example of purported confusion in the record involved a vendor or an industry insider of some sort, while the critical determination is whether prospective purchasers are likely to be deceived, regardless of the experiences of vendors, industry insiders, and job-seekers. The District Court therefore went on to reject Appellants' argument that confusion on the part of investors, vendors, and suppliers can support a finding of infringement even in the absence of any evidence of actual consumer confusion. Turning to the only alleged incidents appearing to demonstrate confusion on the part of members of the relevant consuming public (a Rearden Commerce customer known as QubicaAMF expressed confusion as to which "Rearden" it conducted business with after receiving a subpoena in this lawsuit, and Appellants received dozens of misdirected e-mails originally intended for Rearden Commerce, some of which were sent by Rearden Commerce's own customers), the District Court believed that both examples (as well as the various incidents involving vendors or industry insiders) merely involved, at best, confusion with respect to the parties' names or affiliations and, possibly, simple confusion as to the correct e-mail addresses.
The District Court ultimately concluded that no reasonable jury could find, even after drawing any factual inferences in the light most favorable to Appellants, that Rearden Commerce's use of "Rearden" creates a strong likelihood of confusion in the minds of the relevant consuming public. It then concluded that, given its "likelihood of confusion" analysis, Rearden Commerce's use of the term "Rearden" could not be considered "false and misleading" under California's false advertising statutory provision. Id. at 1027. The District Court likewise granted summary judgment in favor of Rearden Commerce as to the UCL claim "to the extent that [it] relies upon trademark infringement, rather than cybersquatting." Id.
The District Court subsequently denied Appellants' motion for reconsideration, expressly rejecting, among other things, their contention that it improperly failed to consider non-consumer confusion. Appellants and Rearden Commerce then filed motions for summary judgment on the remaining cybersquatting-related claims. For a second time, the District Court granted Rearden Commerce's motion and denied the motion filed by Appellants.
The District Court began with the threshold question of whether (and at what point in time) Appellants have made sufficient use of their "Rearden" marks and names in the sale or advertising of their services. The results were mixed.
On the one hand, it determined that "plaintiffs cannot establish a valid, protectable interest in any 'Rearden' mark prior to July 2005." Rearden LLC v. Rearden Commerce, Inc., No. C 06-7367 MHP, 2010 WL 2650516, at *5 (N.D. Cal. Jul. 1, 2010) ("Rearden II") (footnote omitted). Accordingly, summary judgment was granted in favor of Rearden Commerce with respect to the multiple domain names acquired before that date. In the process, the District Court considered but rejected various pieces of evidence as insufficient to satisfy the "use in commerce" requirement (i.e., a trademark status report, multiple newspaper articles mentioning Appellants, an office lease agreement, an independent contractor agreement for administrative, accounting, and information services between Rearden Studios and Ice Blink Studios, e-mail correspondence regarding services, instances in which Appellants were credited with providing services for various production projects, and merchandise distributed by Appellants).
According to the District Court, "[a] reasonable jury could, however, find that plaintiffs used the 'Rearden Studios' mark as early as July 2005." Id. The District Court pointed to Appellants' entry in the July 2005 "Reel Directory" as evidence that "could establish use or display 'in the sale or advertising of services' along with the rendering of those services in commerce." Id. at *4 (quoting 15 U.S.C. § 1127). Likewise, it indicated that Rearden Studios's July 2006 agreement to provide editing services to Electronic Arts could represent an example of rendering services in commerce. The District Court therefore did not grant Rearden Commerce's summary judgment motion on "use in commerce" grounds as to the domain names evidently obtained by the company after July 2005: "ReardenLLC.com," "ReardenLLC.net," "ReardenMobile.com," "MobileRearden.com," and "ReardenC.com."
The District Court then considered whether Rearden Commerce acted with a bad faith intent to profit with respect to these five specific domain names. After acknowledging that the most important grounds for finding bad faith consist of the unique circumstances of the case, it applied the nine non-exclusive statutory factors that may be considered in determining whether a party acted in bad faith.*fn4 According to the District Court, the first, third, fifth, sixth, and eighth factors favor Rearden Commerce. While the fourth and seventh factors are neutral (and the ninth factor is irrelevant), the second factor "marginally" favors Appellants with respect to the "ReardenLLC" domain names and favors Rearden Commerce with respect to the other domain names.
The District Court accordingly granted summary judgment in favor of Rearden Commerce as to the "ReardenMobile.com," "MobileRearden.com," and "ReardenC.com" domain names. While indicating that it could also conclude as a matter of law on the basis of the statutory factors that the "ReardenLLC" domain names were not acquired in bad faith, it nevertheless addressed the unique circumstances of the case. Relying in particular on the deposition testimony offered by Rearden Commerce General Counsel Sandoval, the District Court determined that "a jury could find that [Rearden Commerce] had not earlier considered the ReardenLLC domain names during its initial registration frenzy, registered them when it became aware of the potential domain names, and registered them as part of its long-standing program." Id. at *9. According to the District Court, the company's decision to cease using the "Rearden LLC" domain names, its belief that it is the proper mark owner, and its unconditional offer (made at oral argument held in connection with the second round of summary judgment motions) to transfer the domain names to Appellants further demonstrate Rearden Commerce's good faith. The District Court questioned why Appellants chose to continue litigating this issue after Rearden Commerce's unconditional offer was made.
In the end, the District Court determined that no reasonable jury could find the existence of bad faith with respect to any of the domain names, even those registered prior to July 2005. It also granted summary judgment to Rearden Commerce with respect to the related UCL claim.
Judgment was entered dismissing the current action in its entirety, and ...