United States Court of Appeals,
Fifth Circuit.
E. & J. GALLO WINERY, Plaintiff-Appellee,
v.
SPIDER WEBS LTD.; Steve E. Thumann; Pierce A. Thumann; Fred H. Thumann,
Trustee, Defendants-Appellants.
No. 01-20333.
April 3, 2002.
Owner of "Ernest & Julio Gallo" trademark sued defendants who had registered ernestandjuliogallo.com domain name, alleging, inter alia, violation of Texas Anti-Dilution Statute and Anti-Cybersquatting Consumer Protection Act (ACPA). The United States District Court for the Southern District of Texas, Marcia Crone, United States Magistrate Judge, 129 F.Supp.2d 1033, granted summary judgment for owner, and appeal was taken. The Court of Appeals, E. Grady Jolly, Circuit Judge, held that: (1) defendants' bad faith registration of domain name violated ACPA; (2) registration of domain name diluted plaintiff's mark under state law; and (3) awards of damages and injunctive relief were proper.
West Headnotes
[1] Federal Courts 
669
Time for
filing appeal from judgment did not begin to run until date order was filed
denying appellant's new trial motion. F.R.A.P.Rule
4(a)(4)(A)(v), 28 U.S.C.A.
[2] Trademarks 1502
(Formerly 382k350.1)
Defendant
registered and used ernestandjuliogallo.com domain name with bad faith intent
to profit from its sale, within meaning of Anti-Cybersquatting Consumer
Protection Act (ACPA); defendant had no intellectual property interest in name
aside from domain name registration, had registered it in hopes of selling it
to winery which owned similar, famous mark, and was using name for website at which it disparaged
winery and alcohol use. Lanham
Trade-Mark Act, § 43(d)(1)(A), 15
U.S.C.A. § 1125(d)(1)(A).
[3] Federal Courts 871
Trial
court's award of damages is reviewed for clear error.
[4] Trademarks 1653
(Formerly 382k680.1)
Defendant
found to have violated Anti-Cybersquatting Consumer Protection Act (ACPA) could be held liable for statutory
damages, even though it registered offending name before enactment of ACPA,
based on its post-enactment use of name.
Lanham Trade-Mark Act, § 35(d), 15
U.S.C.A. § 1117(d).
[5] Trademarks 1657
(Formerly 382k680.1)
Award of $25,000 in statutory damages for
violation of Anti-Cybersquatting Consumer Protection Act (ACPA) was not clearly
erroneous; although mark owner did not actually lose any business as result of
defendant's conduct, it was placed at risk of losing business and of having its
business reputation tarnished. Lanham
Trade-Mark Act, § § 35(d), 43(d)(1)(A), 15
U.S.C.A. § § 1117(d), 1125(d)(1)(A).
[6] Trademarks 1470
(Formerly 382k366)
Under
Texas law, defendant's unauthorized registration of "ernestandjuliogallo.com" domain
name diluted winery's distinctive "Ernest & Julio Gallo" mark;
defendant's conduct associated winery's mark with defendant's website and prevented
winery from using its mark to identify its goods and services on Internet. V.T.C.A.,
Bus. & C. § 16.29.
[7] Federal Courts 814.1
Trial
court's grant of permanent injunction is reviewed for abuse of discretion.
[8] Trademarks 1714(4)
(Formerly 382k641)
Grant of
permanent injunctive relief against violator of Texas Anti-Dilution Statute was
not abuse of discretion; remedy at law alone would not have protected trademark
owner's reputation. V.T.C.A.,
Bus. & C. § 16.29.
[9] Trademarks 1717(5)
(Formerly 382k644.1)
Permanent
injunction, requiring violator of Texas Anti-Dilution Statute to transfer
offending domain name to mark owner and prohibiting it from registering
similarly offending names in the future, was not overly broad. V.T.C.A.,
Bus. & C. § 16.29.
Trademarks
1800
(Formerly 382k736)
ERNEST
& JULIO GALLO.
*271
Craig William Weinlein (argued), Carrington,
Coleman, Sloman & Blumenthal, Dallas, TX, for Plaintiff-Appellee.
Bernard
Lilse Mathews, III (argued), Hocker, Morrow &
Mathews, Spring, TX, for Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of Texas.
Before GARWOOD, JOLLY and DAVIS, Circuit Judges.
E.
GRADY JOLLY, Circuit Judge:
The Ernest and Julio Gallo Winery
("Gallo") holds a trademark in the name "Ernest & Julio
Gallo." Spider Webs Ltd.
registered the internet domain name "ernestandjuliogallo.com" (the
"domain name"). Gallo sent Spider
Webs a letter requesting that they release or transfer the domain name to
Gallo, but Spider Webs refused to do so.
Gallo sued Spider *272 Webs under the Anti-Cybersquatting
Consumer Protection Act ("ACPA"), and under federal and Texas anti-dilution, trademark infringement, and
unfair competition laws. After this
litigation began, Spider Webs hosted a web site at the domain name that was
critical of this litigation, of alcohol, and of corporate America. The parties consented to proceed before a
magistrate judge, who granted summary judgment to Gallo on the ACPA and Texas
Anti-Dilution Statute ("ADS") claims, issued an injunction under the
ADS, ordered the transfer of the domain name to Gallo under the ACPA, and
awarded statutory damages to Gallo under the ACPA. Spider Webs appeals. We AFFIRM.
I
Ernest & Julio Gallo Winery
("Gallo") registered the trademark "Ernest & Julio
Gallo" on October 20, 1964 with the United States Patent and Trademark
Office, as Registration Number 778,837.
Gallo has registered a number of other trademarks, as well as internet
domain names, but had not registered the domain name at issue here. It is no surprise to us that Gallo has sold
more than four billion bottles of wine and has spent more than $500 million
promoting its brands. On the other
hand, the individual defendants, brothers Steve and Pierce Thumann, and their
father, Fred Thumann, trustee, run a family-owned prehanging millwork business
named Doortown, Inc. In June 1999, they
created Spider Webs Ltd. as a limited partnership. According to Steve Thumann, Spider Webs's
business plan is to develop internet address names. It has registered more than 2000 internet
domain names through Network Solutions, Inc., one of the companies responsible for the registration
of internet domain names. Approximately 300 of these contained names that could
be associated with existing businesses, including
"ernestandjuliogallo.com," "firestonetires.com,"
"bridgestonetires.com," "bluecross-blueshield.com,"
"oreocookies.com," "avoncosmetics.com," and others. As the trial court found, because internet
domain names cannot contain ampersands or spaces, and because all internet
domain names must end in a top-level domain such as ".com,"
".org," ".net," etc., "ernestandjuliogallo.com"
is effectively the same thing as "Ernest & Julio Gallo." E.
& J. Gallo Winery v. Spider Webs Ltd.,
129 F.Supp.2d 1033, 1041 (S.D.Tex.2001). Spider Webs sells some of the names it has
registered on its web site and on the internet auction site Ebay (and
apparently has refused to accept any bids of less than $10,000), although it
has not yet offered "ernestandjuliogallo.com" for sale. Steve Thumann admitted in his deposition
that "ernestandjuliogallo.com" is valuable because of the goodwill
that Gallo had developed in its name, and that when they registered this domain
name they "hoped that Gallo would contact us and we could assist them in
some way." However, Spider Webs
did not initiate any contact with Gallo, nor did it attempt to sell the domain
name to Gallo.
Approximately six months after Gallo brought
this lawsuit, Spider Webs published a website at
"ernestandjuliogallo.com" that discussed the lawsuit, the risks
associated with alcohol use, and alleged misrepresentations by corporations.
It contained a picture of the upper half of a wine bottle with the words
"Whiney Winery" ("the Whiney Winery website"). It had links to a number of other pages on
the site, including: an Alcohol
Awareness page that discussed the dangers of alcohol; an "Our Mission" page that was
critical of corporate America; a
"Press Release" about the lawsuit;
and a letter from a Gallo lawyer.
Although the first page contained a disclaimer that stated "This
Site Is Not Affiliated With Ernest & Julio Gallo (R) Wineries,"*273
none of the other linked pages did. As
of the date of the trial court's opinion, typing in
"www.ernestandjuliogallo.com" as the address on a web browser led a
user to a website entitled "SpinTopic." Spider Webs states that the SpinTopic
website is owned by it and is a noncommercial, nonprofit, consumer information
site.
II
[1] After the defendants registered the domain name, Gallo
sent a letter to Spider Webs, requesting that they release or transfer to Gallo
the domain name, but Spider Webs refused to do so. On February 11, 2000, Gallo filed suit
against Spider Webs Ltd., Steve Thumann, Pierce Thumann, and Fred Thumann,
Trustee (collectively, "Spider Webs"), alleging violations of the
Anti-Cybersquatting Consumer Protection Act ("ACPA"), 15
U.S.C. § 1125(d), trademark dilution under federal and Texas law, see
Texas Anti-Dilution Statute, Tex.
Bus. & Com.Code § 16.29, trademark infringement under federal and Texas law, and unfair competition under
federal and Texas law. Approximately six months later, Spider Webs published
the Whiney Winery website at "ernestandjuliogallo.com." On August 31, 2000, Gallo moved for partial
summary judgment on its claims of violations of the Texas Anti-Dilution Statute
and the ACPA. The magistrate judge
granted summary judgment to Gallo on these claims, holding that under the Texas
ADS Gallo owned a distinctive mark and Spider Webs's actions created a
likelihood of dilution of that mark, thereby violating the ADS. E.
& J. Gallo,
129 F.Supp.2d at 1037-42. The trial court further held that the ACPA
was constitutional, that Spider Webs had registered the domain name in bad
faith under the ACPA's standard, that Spider Webs's use was not a fair use, and
therefore Spider Webs had violated the ACPA. Id.
at 1042-48.
The court ordered the defendants to transfer the domain name to Gallo
within ten days from the entry of judgment, as allowed by the ACPA, see 15
U.S.C. § 1125(d)(1)(C), and entered a permanent injunction under the ADS
restraining them "from using the Internet domain name 'ERNESTANDJULIOGALLO.COM,'
registering any domain name that contains the word 'Gallo,' and registering any
Internet domain name that contains the words 'Ernest' and 'Julio' in
combination." Id. at
1048. The court also awarded Gallo
$25,000 in statutory damages under the ACPA, plus post-judgment interest and
costs. The court granted Gallo's
unopposed motion to dismiss the rest of its claims, without prejudice. Spider Webs moved for a new trial, which the
magistrate judge denied. Spider Webs then filed this appeal. [FN1]
FN1. Gallo argues
that Spider Webs's appeal is untimely.
The magistrate judge entered her memorandum and order granting partial
summary judgment to Gallo on January 29, 2001, and entered final judgment on
February 6. Spider Webs moved for a new trial on February 16, and the
magistrate judge denied this motion on March 19. Spider Webs filed a notice of appeal on
March 28. Under FRAP
4(a)(1)(A), a notice of appeal must be filed
"within 30 days after the judgment or order appealed from is
entered." If a party timely moves
for a new trial under Fed.R.Civ.P.
59, then "the time to file an appeal runs
for all parties from the entry of the order disposing of" the motion for a
new trial. FRAP
4(a)(4)(A)(v).
Spider Webs moved for a new trial within ten days of the entry of
judgment as required by Fed.R.Civ.P.
59(b).
After this motion was denied, Spider Webs appealed within thirty days of
the entry of this order. Therefore,
Spider Webs's appeal is timely.
III
We review the trial court's grant of summary
judgment to Gallo on its ACPA claim de novo, applying the same standard as the
district court. *274Mississippi
River Basin Alliance v. Westphal,
230 F.3d 170, 174 (5th Cir.2000). Summary judgment
is appropriate if "there is no genuine issue as to any material fact and [
] the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P.
56(c).
"This Court will consider the evidence in the light most favorable
to the non-movant.... [I]f no reasonable
juror could find for the non-movant, summary judgment will be granted." Mississippi
River Basin,
230 F.3d at 174.
Spider Webs does not appeal the holdings that
Gallo had a valid registration in its mark, that the mark is famous and
distinctive, and that the domain name registered by Spider Webs is identical or
confusingly similar to Gallo's mark. However, Spider Webs argues that they did
not act with a "bad faith intent to profit," as required by the ACPA.
The ACPA prohibits "cybersquatting" by providing that:
A person shall be liable in a civil action by the owner of
a mark, including a personal name which is protected as a mark under this
section, if, without regard to the goods or services of the parties, that
person (i) has a bad faith intent to profit from that mark, including a
personal name which is protected as a mark under this section; and (ii) registers, traffics in, or uses a
domain name that-- (I) in the case of a mark that is distinctive at the time of
registration of the domain name, is identical or confusingly similar to that
mark; (II) in the case of a famous mark that is famous at the time of
registration of the domain name, is
identical or confusingly similar to or dilutive of that mark; or (III) is a trademark, word, or name
protected by reason of section 706 of Title 18 or section 220506 of Title 36.
15
U.S.C. § 1125(d)(1)(A). In order to
determine whether someone has acted in bad faith under the ACPA,
a court may consider factors such as, but not limited to
(I) the trademark or other intellectual property rights of the person, if any,
in the domain name; (II) the extent to which the domain name consists of the
legal name of the person or a name that is otherwise commonly used to identify
that person; (III) the person's prior use, if any, of the domain name in
connection with the bona fide offering of any goods or services; (IV) the
person's bona fide noncommercial or fair use of the mark in a site accessible
under the domain name; (V) the person's intent to divert consumers from the
mark owner's online location to a site accessible under the domain name that
could harm the goodwill represented by the mark, either for commercial gain or
with the intent to tarnish or disparage the mark, by creating a likelihood of
confusion as to the source, sponsorship, affiliation, or endorsement of the
site; (VI) the person's offer to transfer, sell, or otherwise assign the domain
name to the mark owner or any third party
for financial gain without having used, or having an intent to use, the domain
name in the bona fide offering of any goods or services, or the person's prior
conduct indicating a pattern of such conduct; (VII) the person's provision of
material and misleading false contact information when applying for the
registration of the domain name, the person's intentional failure to maintain
accurate contact information, or the person's prior conduct indicating a
pattern of such conduct; (VIII) the person's registration or acquisition of
multiple domain names *275 which the person knows are identical or
confusingly similar to marks of others that are distinctive at the time of
registration of such domain names, or dilutive of famous marks of others that
are famous at the time of registration of such domain names, without regard to
the goods or services of the parties;
and (IX) the extent to which the mark incorporated in the person's
domain name registration is or is not distinctive and famous within the meaning
of subsection (c)(1) of this section.
15
U.S.C. § 1125(d)(1)(B)(i). The ACPA also
provides a fair use defense: "Bad
faith intent described under subparagraph (A) shall not be found in any case in
which the court determines that the person believed and had reasonable grounds
to believe that the use of the domain name was a fair use or otherwise lawful." 15
U.S.C. § 1125(d)(1)(B)(ii). [FN2] If a court finds a violation of the ACPA, it
may order the transfer of the domain name to the owner of the mark and may
award statutory damages. See 15
U.S.C. § § 1125(d)(1)(C), 1117(d).
FN2. At trial, Spider
Webs argued that the ACPA bad faith standard could not be applied to them
because they registered the domain name before the effective date of the ACPA.
They do not make this argument on appeal, so they have abandoned it. However, even if they had not abandoned this
argument, it would still be unsuccessful.
They registered the domain name on August 26, 1999. The ACPA was passed on November 29, 1999,
but it states that it applies to "all domain names registered before, on,
or after the date of enactment of this Act." 1999 Acts, P.L.
106-113, § 3010, 113 Stat. 1536. The statute
applies to "use" of a mark, see 15
U.S.C. § 1125(d)(1)(A)(I)(ii), and Spider Webs "used" the mark when it hosted
the Whiney Winery website at the domain name in August 2000, after the
effective date of the ACPA. Therefore, the statute applies to their use of the
mark.
[2] We turn now to consider the listed bad-faith factors as
they apply to this case. Spider Webs has
no intellectual property rights or trademark in the
name "ernestandjuliogallo," aside from its registered domain
name. The domain name does not contain
the name of Spider Webs or any of the other defendants. Spider Webs had no "prior use" (or
any current use) of the domain name in connection with the bona fide offering
of goods or services. Under the fourth
factor, Spider Webs's use is commercial, and there is no indication that it is
a fair use. Steve Thumann admitted that
the domain name was valuable and that they hoped Gallo would contact them so
that they could "assist" Gallo in some way. Further, at least two other courts have
found that when a defendant registers a domain name that is identical to someone
else's trademarked name and thereby impacts the trademark owner's business by
preventing internet users from reaching the trademark owner's own web site,
this is impacts the trademark owner's business and is a use " 'in
connection' with goods and services."
People
for the Ethical Treatment of Animals v. Doughney,
113 F.Supp.2d 915, 919 (E.D.Va.2000) ("PETA")
(citing Planned
Parenthood Federation of America, Inc. v. Bucci,
42 U.S.P.Q.2d 1430, 1435 (S.D.N.Y.1997)) ("
'[I]t is likely to prevent Internet users from reaching [PETA]'s own Internet
web site. The prospective users of
[PETA]'s services who mistakenly access Defendant's web site may fail to
continue to search for [PETA]'s own home page, due to anger, frustration, or
the belief that the Plaintiff's home page does not exist.' ").
Additionally, there is uncontradicted evidence
that Spider Webs was engaged in commerce in
the selling of domain names and that they hoped to sell this domain name some
day. Although Spider Webs did not offer
"ernestandjuliogallo.com" for *276 sale, it has offered for
sale other domain names that it has registered. Steve Thumann stated that Spider Webs
intended to wait until the ACPA is declared unconstitutional before selling the
domain name here. E.
& J. Gallo,
129 F.Supp.2d at 1046. Spider Webs admitted that Gallo had a
valuable trademark, and that when they registered the domain name they hoped
Gallo would contact them so they could "assist" Gallo. Indeed, the Ninth Circuit had found that one
can be in the "business" of "register[ing] trademarks as domain
names and then sell[ing] them to the rightful trademark owners." Panavision
Intern., L.P. v. Toeppen,
141 F.3d 1316, 1325 (9th Cir.1998). The ACPA was passed to address situations
just like this one: "For example, many cybersquatters are now careful to
no longer offer the domain name for sale in any manner that could implicate
liability under existing trademark dilution law. And, in cases of warehousing and trafficking
in domain names, courts have sometimes declined to provide assistance to
trademark holders, leaving them without adequate and effective judicial
remedies." Sporty's
Farm L.L.C. v. Sportsman's Market, Inc.,
202 F.3d 489, 495-96 (2d Cir.2000) (quoting S.
Rep. No. 106-140, at 7 (1999), on the ACPA). [FN3]
FN3. Spider Webs also
argues that "use" under the ACPA must be commercial use, as evidenced by the "bad
faith intent to profit" requirement, and that their use was purely
non-commercial. The trial court found
that the ACPA does not require commercial use.
E.
& J. Gallo Winery,
129 F.Supp.2d at 1047-48. Because we find that Spider Webs's use was
commercial, we need not reach this issue.
Additionally, there is no evidence that Spider
Webs actually used the domain name until after the lawsuit began. The Second and Third Circuits have indicated
that when a registrant first uses a web site after litigation begins, this
undermines any claim that the use was in good faith or was a fair use under the
ACPA. See Sporty's
Farm L.L.C.,
202 F.3d at 499 (considering bad faith factors
and finding bad faith); Shields
v. Zuccarini,
254 F.3d 476, 485-86 (3d Cir.2001) (same). Under the fifth bad faith factor, the fact
that Spider Webs hosted a website using Gallo's trademarked name, at which it
disparaged the instant litigation and alcohol, is evidence of intent to harm
Gallo's goodwill and to tarnish its mark.
See, e.g., PETA,
113 F.Supp.2d at 920 ("Defendant clearly
intended to confuse, mislead and divert internet users into accessing his web
site which contained information antithetical and therefore harmful to the
goodwill represented by the PETA mark.")
Under the sixth and eighth factors, although Spider Webs has not offered
this domain name for sale, it has registered other domain names that are
identical or similar to the names of
well-known businesses and products, has offered other domain names for sale,
and has refused to accept less than $10,000 per name. These factors all favor a finding of bad
faith. Under factor seven, there is no
evidence that Spider Webs provided misleading contact information.
Finally, as to the last factor, there was
evidence presented that Gallo's mark is distinctive and famous. See 15
U.S.C. § 1125(c)(1) (listing factors to consider). Further, Gallo registered the mark, which is
a family name, thirty-eight years ago, and other courts have found that "
'Gallo' has clearly become associated with wine in the United States such that
its evolution to 'secondary meaning' status may not be seriously
questioned." E.
& J. Gallo Winery v. Consorzio del Gallo Nero,
782 F.Supp. 457, 462 (N.D.Cal.1991). In sum, seven of the nine statutory factors
strongly support a finding of bad faith.
*277 Additionally, this court is not
limited to the consideration of the listed statutory factors, but can consider
other factors as well. See 15
U.S.C. § 1125(d)(1)(A)(i) (court can consider factors "such as, but not limited
to" the listed statutory factors).
For example, "[w]hen the senior user's trademark is famous in the
marketplace and where the junior user was aware of the trademark and of its
fame, a presumption of bad faith arises from the choice of the same name
because it is inferable that the junior user adopted the mark for the purpose
of profiting from the aura of goodwill surrounding
the senior user's mark." E.
& J. Gallo Winery v. Gallo Cattle Co.,
12 U.S.P.Q.2d 1657, 1675 (E.D.Cal.1989), aff'd,
967
F.2d 1280 (9th Cir.1992). The circumstances of this case all indicate
that Spider Webs knew Gallo had a famous mark in which Gallo had built up
goodwill, and that they hoped to profit from this by registering
"ernestandjuliogallo.com" and waiting for Gallo to contact them so
they could "assist" Gallo.
Considering the statutory factors and all the
circumstances of this case, the trial court's conclusion that Spider Webs acted
with a bad faith intent to profit and its grant of summary judgment to Gallo on
this issue were appropriate. [FN4]
FN4. Although Spider
Webs argues on appeal that the ACPA violates the First Amendment, it did not
make this argument before the trial court and therefore it has forfeited this
issue. See Simon
v. United States,
891 F.2d 1154, 1159 (5th Cir.1990). Spider Webs argued to the trial court that
the ACPA constitutes a taking and is impermissibly retroactive, but it has not
raised these issues before this court and therefore has abandoned them.
IV
[3] Spider Webs also argues that the trial court should not
have awarded Gallo $25,000 in statutory
damages under the ACPA because Gallo did not suffer any actual injury. We review a trial court's award of damages
for clear error. St.
Martin v. Mobil Exploration & Producing U.S. Inc.,
224 F.3d 402, 410 (5th Cir.2000).
[4] The United States trademark laws provide that:
In a case involving a violation of section
1125(d)(1) of this title [the ACPA], the
plaintiff may elect, at any time before final judgment is rendered by the trial
court, to recover, instead of actual damages and profits, an award of statutory
damages in the amount of not less than $1,000 and not more than $100,000 per
domain name, as the court considers just.
15
U.S.C. § 1117(d). Spider Webs notes
that under the ACPA and applicable portions of § 1117, damages
"shall not be available with respect to the registration, trafficking, or
use of the domain name that occurs before the date of the enactment of this Act
[November 29, 1999]." 1999 Acts, P.L.
106-113, § 3010, 113 Stat. 1536. They argue that
because they registered the domain name prior to enactment of the ACPA, they
cannot be liable. However, the evidence
before the trial court demonstrated that Spider Webs "used" the
domain name at least since August 15, 2000, when it hosted the "Whiney
Winery" website at the domain name.
See, e.g., Shields,
254 F.3d at 486-87 (continued use of domain name
confusingly similar to a trademarked name after the ACPA's effective date
entitled the trademark owner to statutory damages). Therefore, although Spider Webs registered
the domain name before the effective date of the ACPA, because they used
the domain name after this date, they can be held liable for statutory damages
for this use.
In Shields, the Third Circuit affirmed
an award of statutory damages of $10,000
per infringing domain name for the five infringing *278 domain names in
that case. Id. The defendant in Shields
stated that he only used the infringing names for sixty days, but the Third
Circuit noted that there was no requirement that the court consider the
duration of the infringement when calculating statutory damages, and that the
court could award damages as it considered "just" under the statute. Id. at 487. These considerations indicate that the award
of damages here was not in clear error.
[5] The statutory damages provisions in the ACPA, which is
relatively new, are akin to the statutory damages provisions of the copyright
laws. [FN5] In copyright law, the Supreme Court has said
that the "statutory [damages] rule, formulated after long experience, not
merely compels restitution of profit and reparation for injury but also is
designed to discourage wrongful conduct."
F.W.
Woolworth Co. v. Contemporary Arts,
344 U.S. 228, 233, 73 S.Ct. 222, 97 L.Ed. 276 (1952). In this case, although Gallo
did not present evidence that it actually lost any business due to Spider
Webs's actions, the trial court found that Spider Webs's actions put Gallo
"at risk of losing business and of having its business reputation tarnished."
E.
& J. Gallo Winery,
129 F.Supp.2d at 1048. The award of $25,000 in statutory damages in
response to the defendants' conduct is not clear error.
FN5. See 17
U.S.C. § 504(c)(1): "[T]he
copyright owner may elect, at any time before final judgment is rendered, to
recover, instead of actual damages and profits, an award of statutory damages
for all infringements involved in the action, with respect to any one work, for
which any one infringer is liable individually, or for which any two or more
infringers are liable jointly and severally, in a sum of not less than $750 or
more than $30,000 as the court considers just...." The copyright laws also provide for statutory
damages of up to $150,000 per violation if the infringement was willful, and
for damages of as little as $200 if the infringement was unknowing. See 17
U.S.C. § 504(c)(2).
V
[6] The trial judge also found that the Texas Anti-Dilution
Statute ("ADS") applies to non-commercial activities, and that Spider
Webs's conduct violated the ADS. The
trial court issued an injunction against Spider Webs, as allowed by the Texas
ADS. See Tex.
Bus. & Comm.Code. § 16.29. We review the
trial court's grant of summary judgment on this issue de novo. See Mississippi
River Basin,
230 F.3d at 174.
Because we have found that Spider
Webs's use was commercial, we need not decide whether the ADS applies to
non-commercial activities. We agree
with the trial court, however, that Spider Webs's use violated the ADS.
The Texas ADS provides that:
A person may bring an action to enjoin an act likely to
injure a business reputation or to dilute the distinctive quality of a mark
registered under this chapter or Title 15, U.S.C., or a mark or trade name
valid at common law, regardless of whether there is competition between the
parties or confusion as to the source of goods or services. An injunction sought under this section
shall be obtained pursuant to Rule
680 et seq. of the Texas Rules of Civil Procedure.
Tex.
Bus. & Comm.Code § 16.29 ("Injury to Business Reputation or Trade Name or
Mark"). In order to succeed on a
dilution claim, Gallo must show that it owns a distinctive mark and that there
is a likelihood of dilution. Pebble
Beach Co. v. Tour 18 I, Ltd.,
942 F.Supp. 1513, 1564 (S.D.Tex.1996), aff'd
as modified, 155
F.3d 526 (5th Cir.1998) (citing Hormel
Foods Corp. v. Jim Henson Productions, Inc.,
73 F.3d 497, 506 (2nd Cir.1996)). As discussed previously Gallo has validly
registered "*279 Ernest & Julio Gallo," and there is no
serious dispute that the mark is distinctive and has acquired a secondary
meaning. However, Gallo must also show
a likelihood of dilution. There are not
many cases interpreting the Texas Anti-Dilution statute,
so this court has previously looked to "the general law of dilution ... in
construing the Texas Statute." Exxon
Corp. v. Oxxford Clothes, Inc.,
109 F.3d 1070, 1081 (5th Cir.1997). A likelihood of dilution can be caused by
either "1) 'blurring,' a diminution in the uniqueness or individuality of
the mark, or 2) 'tarnishment,' an injury resulting from another's use of the
mark in a manner that tarnishes or appropriates the goodwill and reputation associated
with the plaintiff's mark." Id.
(citations omitted). Other courts have
found that when a defendant prevents a plaintiff from identifying its goods and
services on the internet, this constitutes dilution. See, e.g., Sporty's
Farm,
202 F.3d at 495; Panavision
Intern.,
141 F.3d at 1324;
Intermatic,
Inc. v. Toeppen,
947 F.Supp. 1227, 1240 (N.D.Ill.1996). Spider Webs's use of Gallo's mark as an
internet domain name did just that.
The evidence here showed that the "Whiney
Winery" website posted by Spider Webs at the domain name was critical of
the instant litigation and of alcohol consumption, contained crude formatting
and misspellings, and only contained a disclaimer that the web page was not
associated with Gallo on the opening page, but not on other pages. Spider Webs asserts that this page was only
available for forty-eight hours, but, as the trial court found, there is no
evidence in the record to support this.
Gallo does not complain because Spider Webs was critical of Gallo, but
rather because Spider Webs sought to associate the Gallo trademark with the contents of its web site and
because Spider Webs prevented Gallo from using its mark to identify its goods
and services on the internet. These acts, if associated with Gallo due to
Spider Webs's use of Gallo's trademarked name, could harm Gallo's reputation
and goodwill. Although Spider Webs
alleges that Gallo has not shown any actual injury, under the ADS all that
Gallo must show is a likelihood of dilution, and Gallo has done so. Summary judgment for Gallo on this issue was
proper as well.
VI
[7] Finally, Spider Webs argues that the injunction the trial
court issued against them is overly broad.
We review the trial court's grant of a permanent injunction for abuse of
discretion. Cox
v. City of Dallas, Tex.,
256 F.3d 281, 289 (5th Cir.2001) (citing Hopwood
v. Texas,
236 F.3d 256, 276 (5th Cir.2000)).
[8] As noted previously, the trial court permanently enjoined
the defendants under the Texas ADS "from using the Internet domain name
'ERNESTANDJULIOGALLO.COM,' registering any domain name that contains the word
'Gallo,' and registering any Internet domain name that contains the words
'Ernest' and 'Julio' in combination."
E.
& J. Gallo,
129 F.Supp.2d at 1048. The Texas Anti-Dilution Statute allows for
injunctions. See Tex.
Bus. & Com.Code § 16.29. Under Texas law,
injunctive relief is appropriate where the applicant demonstrates: "1) the existence of a wrongful
act; 2) the existence of imminent harm; 3) the existence of irreparable injury; and 4) the absence of an adequate remedy at
law." Hues
v. Warren Petroleum Co.,
814 S.W.2d 526, 529 (Tex.App.--Houston [14th Dist.] 1991, writ denied) (citing Priest
v. Texas Animal Health Comm'n,
780 S.W.2d 874, 875 (Tex.App.--Dallas 1989, no writ)). Spider Webs's actions are
wrongful under the Texas ADS, as discussed previously. At least one other federal court has found *280
that a defendant's unauthorized use of a plaintiff's trademark on the internet
to disseminate views contrary to the plaintiff's would result in imminent
irreparable harm without an injunction:
The use of the Mark and the Name of the Plaintiff
Organization by the Defendant has interfered with the ability of the Plaintiff
to control the Mark and the Name of the Plaintiff Organization. This in turn creates the potential for
damage to the reputation of the Plaintiff Organization, especially in light of
the disparaging comments the Defendant and the Outreach Judaism Organization
have made. The Plaintiff Organization
should not be required to leave its reputation in the hands of the Defendant,
especially when the Defendant intends to destroy the reputation of the Plaintiff
Organization.
Jews
for Jesus v. Brodsky,
993 F.Supp. 282, 311-13 (D.N.J.1998) (citations
omitted). A similar potential for
damage exists here. A remedy at law
alone would not help to protect Gallo's reputation, if Spider Webs can continue
to use Gallo's trademarked name.
Therefore, we find that it was not an abuse of discretion to enter an injunction in this case.
[9] However, Spider Webs argues that the injunction issued by
the trial court is overbroad. The only
case to which Spider Webs points is Bally
Total Fitness Corp. v. Faber,
29 F.Supp.2d 1161 (C.D.Cal.1998). In that case, the defendant Faber had
registered the domain name "www.compupix.com" and posted a web page
at this address. This web page
contained links to a number of other internal web pages created by Faber,
including "www.compupix.com/ballysucks," which was dedicated to complaints
about Bally's health club business.
This linked web page contained an image of the Bally trademark with the
word "sucks" printed across it.
Id.
at 1162.
Although the court found that Faber had not infringed or diluted Bally's
mark, it expressly distinguished the case before it from cases in which the
defendant used the plaintiff's registered mark in the defendant's actual
internet domain name, which could constitute infringement or dilution. Id.
at 1165.
However, the court stated in dicta that "even if Faber did use the
mark as part of a larger domain name, such as 'ballysucks.com,' this would not
necessarily be a violation as a matter of law." Id.
The court distinguished this hypothetical from "cases like Panavision[,
141 F.3d at 1324] where an individual
appropriates another's registered trademark as its domain name. In the 'cybersquatter' cases like Panavision,
there is a high likelihood of consumer confusion--reasonably prudent consumers
would believe that the site using the
appropriated name is the trademark owner's official site. Here, however, no reasonably prudent
Internet user would believe that 'Ballysucks.com' is the official site or is
sponsored by Bally." Id. at
1165 n. 2. This case therefore is
unlike Bally, and Bally does not support Spider Webs's position.
In the case today, it was appropriate for the
trial court to prevent Spider Webs from registering or using an internet domain
name containing the words "Gallo" or "Ernest" and
"Julio" in combination, and we affirm the trial court's injunction as
issued. However, it is conceivable that
the defendants could have a legitimate use for an internet domain name
containing these words. If the
defendants have such a specific, legitimate need in mind, they may return to
the trial court and ask for a modification of the injunction to allow for that
need.
VII
For the reasons set forth above, the trial
court correctly entered an injunction under *281 the Texas ADS, ordered
Spider Webs to transfer the domain name to Gallo under the ACPA, and awarded
Gallo statutory damages under the ACPA, as well as post-judgment interest and
costs. Accordingly, the judgment of the
district court is
AFFIRMED.
•E.
& J. GALLO WINERY, Plaintiff-Appellee, v. SPIDER WEBS, LTD.; Steve E. Thumann,
Pierce A. Thumann, and Fred H. Thumann, Trustee, Defendants-Appellants., 2001
WL 34095919 (Appellate Brief) (C.A.5 May 30,
2001), Brief for Appellants
•E.
& J. GALLO WINERY, Plaintiff-Appellee, v. SPIDER WEBS LTD., Steve E.
Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee,
Defendants-Appellants., 2001 WL 34095918
(Appellate Brief) (C.A.5 July 2, 2001), Brief for Appellee
•E.
& J. GALLO WINERY, Plaintiff-Appellee, v. SPIDER WEBS, LTD.; Steve E.
Thumann Pierce A. Thumann, and Fred H. Thumann, Trustee,
Defendants-Appellants., 2001 WL 34095917
(Appellate Brief) (C.A.5 July 18, 2001), Appellants' Reply Brief
286 F.3d 270, 62 U.S.P.Q.2d 1404
END OF
DOCUMENT