Connor Sport Court International, Inc. v. Rhino Sports, Inc., et al

Filing 9

Connor Sport Court International, Inc. v. Rhino Sports, Inc., et al

Doc. 9

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FENNEMORE CRAIG, P.C.
P HOENIX

FENNEMORE CRAIG, P.C. John D. Everroad (No. 002484) Ray K. Harris (No. 007408) Jamie A. Brown (No. 022830) 3003 North Central Avenue Suite 2600 Phoenix, Arizona 85012-2913 Telephone: [phone] Email: [e-mail] Email: [e-mail] Email: [e-mail] Attorneys for Plaintiffs Rhino Sports, Inc. and John E. Shaffer UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Rhino Sports, Inc., an Arizona corporation; and John E. Shaffer, individually, Plaintiffs/Counterdefendants, v. Sport Court, Inc. a Delaware corporation, Defendant/Counterclaimant. Rhino Sports, Inc. moves to dissolve or modify the Permanent Injunction entered on March 23, 2004 pursuant to Fed. R. Civ. P. 60(b). The parties' Settlement Agreement contemplated both entry of the permanent injunction and the right to use SPORT COURT if it is generic and used by other competitors. Settlement Agreement ¶ 2 (Contempt Motion, Ex. B). Due to changes in the applicable law and the pertinent facts, the scope of the injunction is no longer equitable. Background Connor Sport Court is successor-in-interest to Sport Court, Inc. Connor Sport Court ("Sport Court") and Rhino Sports, Inc. ("Rhino") are competitors in the sale of No. CV-02-1815-PHX- JAT MOTION TO MODIFY PERMANENT INJUNCTION

Case 2:06-cv-03066-JAT

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FENNEMORE CRAIG, P.C.
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recreational athletic surfaces for residential users.

Both Rhino and Sport Court sell

surfaces for basketball, volleyball, sport courts and tennis courts. Pursuant to a March 2004 Settlement Agreement, this Court entered a permanent injunction prohibiting Rhino from using the mark "SPORT COURT" as a sponsored link. I. Legal Analysis A. Sport Court has unclean hands

The Court has the power to modify an injunction due to changed conditions. See, e.g., Coca-Cola Co. v. Standard Bottling Co., 138 F.2d 788, 789 (10th Cir. 1943). A party can obtain relief from a final judgment "if it is no longer equitable that the judgment should have perspective application." Fed. R. Civ. P. 60(b). Attached as Exhibit 1 is a Google search for "rhinosports" which shows as a sponsored link www.sportcrt.com in Northern California. Sport Court asserts Rhino and its distributors are using SPORT COURT as Ad Words. However, Sport Court or its distributor is engaged in the same type of conduct to which it objects in this Court. B. Google Ad Words do not cause confusion

In additional to search results generated by user entry of search terms, the Google search engine presents a separate list of websites in a sponsored links section. Sponsored links are generated by key word triggered advertising called the Ad Words Program. Participants pay Google for the right to have links to their websites displayed when a user searches for certain key words. Since the permanent injunction was entered, the United States District Court for the Eastern District of Pennsylvania has held: Assuming that defendant did in fact use plaintiff's marks through Google's Ad Word Program or in the key word metatags for its website ­ as a matter of law defendant's actions do not result in any actionable likelihood of confusion under the Lanham Act. ***

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Due to the separate and distinct nature of the links created on any of the search results pages in question, potential consumers have no opportunity to confuse defendant's services, goods, advertisements, links or websites for those of plaintiff. J.G. Wentworth, S.S.C. Limited Partnership v. Settlement Funding LLC, 2007 WL 30115 (E.D.Pa. January 4, 2007). C. Ad Words are not used as trademarks

Other courts have found that internal use as an advertising key word does not constitute trademark use as a matter of law. In RescueCom Corp. v. Google, Inc., 456 F. Supp. 2d 393 (N.D.N.Y. 2006) the court held: Defendant's internal use of plaintiff's trademark to trigger sponsored links is not a use of a trademark within the meaning of the Lanham Act, either, because there is no allegation that defendant places plaintiff's trademark on any goods, containers, displays or advertisements, or that its internal use is visible to the public. 456 F. Supp. at 403; See also Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 431 F. Supp. 2d 425, 427 (S.D.N.Y. 2006) ("This internal use of the mark `Zocor' as a key word to trigger the display of sponsored links is not the use of the mark in a trademark sense; rather, this use is more akin to the product placement marketing strategy employed in retail stores, where, for example, a drug store places its generic products alongside similar national brand products to capitalize on the latter's name recognition.") D. No court has found liability for Ad Words

These cases recognize that the case law is developing as applied to Ad Words and other courts have declined to dismiss claims until the facts are further developed. See, e.g., Buying for the Home, LLC v. Humble Abode, LLC, 2006 WL 3000459 (D.N.J. Oct. 20, 2006) (denying summary judgment); Rescuecom Corp. v. Computer Troubleshooters USA, Inc., 2005 WL 4908692 (N.D.Ga. Sept. 16, 2005) (denying motion to dismiss);

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Google, Inc. v. Am. Blind & Wallpaper Factory, Inc., 2005 WL 832398 (N.D. Cal. March 30, 2005) (denying motion to dismiss); Edina Realty, Inc. v. TheMLSOnline.com, 2006 WL 737064 (D. Minn. March 20, 2006) (denying motion for summary judgment). In GEICO v. Google, Inc., the trademark claim was dismissed at trial on judgment as a matter of law due to lack of confusion. 330 F. Supp. 2d 700 (E.D.Va. 2004) and 2005 WL 1903128 (E.D.Va. Aug. 8, 2005). No case dealing with Google Ad Words appears to have found trademark liability. E. Other Competitors Use Sport Court as Ad Words

Attached as Exhibits 2-5 are recent Google Ad Word searches for "Sport Court," "Sports Courts," "Sport Courts," and "Sports Court." Rhino does not appear on any of the four searches. Sport Court International appears as the first unsponsored result on each search and as the first sponsored link for "SPORTS COURT." Sport Court of California, a Sport Court distributor, appears as a sponsored link on two of the searches. Versa Court, a competitor, appears as a sponsored link on two of the searches. Snap Sports, another competitor, appears as a sponsored link on three of the searches. Game Courts, yet another competitor, appears as a sponsored link on two of the searches. competitors, including LewisSurface.com, CentaurFloors.com Other and

BasketballHoopsUnlimited.com appear as a sponsored link in one of the searches. The effect of the injunction, as interpreted by Movant, is to prevent only Rhino from using the words Sport and Court as Ad Words on Google. This results in an unfair disadvantage to Rhino that did not exist at the time the injunction was entered. The parties contemplated that the obligations under the Settlement Agreement would be measured by the use permitted by other competitors. If at some future point in time any Sport Court mark is found to be generic, and all appeals are exhausted or waived, Rhino Sports shall have the right to use such mark in the marketplace consistent with the use permitted by other competitors.

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FENNEMORE CRAIG, P.C.
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Settlement Agreement ¶ 2 (Motion for Order to Show Cause Ex. 3). Although no formal adjudication has occurred, Connor Sports Court has permitted competitors to use Sport Court as Ad Words and the case law has developed to reflect that such use does not infringe the rights of Connor Sport Court. CONCLUSION Based on the changes in the underlying facts (Sport Court distributors are using the RHINOSPORTS marks as ad words) and law (district courts have held use of ad words is not a trademark use and does not lead to confusion as a matter of law), the Court should modify the injunction to eliminate the prohibition on use of the words "SPORT COURT" as Google ad words. RESPECTFULLY SUBMITTED this 5th day of February, 2007. FENNEMORE CRAIG, P.C.

By /s/Jamie A. Brown Ray K. Harris John D. Everroad Jamie A. Brown Attorneys for Plaintiffs Rhino Sports, Inc. and John E. Shaffer

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FENNEMORE CRAIG, P.C.
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CERTIFICATE OF SERVICE I hereby certify that on February 5th , 2007, I electronically transmitted the attached document to the Clerk Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/EMF registrants: Douglas F Behm: [e-mail], [e-mail] I hereby certify that on February 6th , 2007, a true and correct copy of the attached document was sent via U.S. Mail, postage paid thereon, to the following parties, at the addresses listed: Mark M Bettilyon Ray Quinney & Nebeker PO Box 45385 Salt Lake City, UT 84145-0385 Gordon K Hill Thorpe North & Western LLP 8180 S 700 E Ste 350 Sandy, UT 84070 Samuel C Straight Ray Quinney & Nebeker PC 36 S State St Ste 1400 Salt Lake City, UT 84145-0385 Peter M de Jonge Thorpe North & Western LLP PO Box 1219 Sandy, UT 84091-1219

/s/Michele A. Maul
PHX/1877637.3

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