Visual Dynamics, LLC v. Chaos Software LTD et al

Filing 65

MEMORANDUM OPINION AND ORDER granting in part and denying in part 28 Motion for Partial Summary Judgment; granting 22 Motion for Summary Judgment; granting in part and denying in part 23 Motion for Summary Judgment; see order for specifics. Signed by Honorable Timothy L. Brooks on February 12, 2018. (rg)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION

VISUAL DYNAMICS, LLC

V.

PLAINTIFF/
COUNTER-DEFENDANT
CASE NO. 5:16-CV-5287
DEFENDANTS/
COUNTER-CLAIMANTS

CHAOS SOFTWARE LTD. and
CHAOS GROUP, LLC

MEMORANDUM OPINION AND ORDER

Currently before the Court are:
•

Defendants/Counter-Plaintiffs Chaos Software Ltd.'s and Chaos Group, LLC's
(collectively, "Chaos") Motion for Summary Judgment against Plaintiff/CounterDefendant Visual Dynamics, LLC's ("Visual Dynamics") Claims (Doc. 22), Brief in
Support (Doc. 24), and Statement of Undisputed Material Facts in Support (Doc.
26); Visual Dynamics' Response in Opposition (Doc. 40-1 ), Brief in Support (Doc.
41-1), and Statement of Disputed Facts in Support(Doc. 42-1); and Chaos's Reply
Brief in Support of its Motion (Doc. 43);

•

Chaos's Motion for Summary Judgment on its Counterclaims (Doc. 23)_, Brief in
Support (Doc. 25-1 ), and Statement of Undisputed Material Facts in Support (Doc.
26); Visual Dynamics' Response in Opposition (Doc. 37-1 ), and Statement of
Disputed Facts in Support (Doc. 42-1); and Chaos's Reply Brief in Support of its
Motion (Doc. 44); and

•

Visual Dynamics' Motion for Summary Judgment as to Chaos's Counterclaims
(Doc. 28), Statement of Undisputed Facts in Support (Doc. 30), and Brief in

1

Support (Doc. 31 ); Chaos's Response in Opposition (Doc. 35), and Response in
Opposition to Visual Dynamics' Statement of Undisputed Facts (Doc. 36); and
Visual Dynamics' Reply Brief in Support of its Motion (Doc. 46-1 ).
As further explained below, Chaos's Motion with respect to Visual Dynamics'
claims is GRANTED, Chaos's Motion with respect to its own claims is GRANTED IN
PART AND DENIED IN PART, and Visual Dynamics' Motion is GRANTED IN PART AND
DENIED IN PART.

I. BACKGROUND
Chaos is a Bulgarian software developer that was founded in 1997. One of its
products is a renderi~g software application that is sold under the "V-Ray" name and
mark, which was first registered with the United States Patent and Trademark Office
("US PTO") on March 20, 2007. V-Ray is used to create realistic graphics and animation
in a variety of industries, including video games, film and television, and architecture
design. But Chaos does not sell V-Ray directly to the public; instead, it sells the product
to a network of "authorized resellers," who in turn resell the product to the general public.
Sometimes those resellers distribute the product to "sub-resellers," who then sub-resell it
to the general public. Chaos contracts with its resellers, but it does not contract" with subresellers. However, its contracts with its resellers require them to demand certain things
of their sub-resellers, such as pricing limits.
Visual Dynamics is an Arkansas business that resells software from outside
developers. In September of 2008, Visual Dynamics' owner, Scott Slauson, purchased
the internet domain name registration for www.vray.com from a man named Vance Ray
for $4,000, in anticipation of using vray.com to sell V-Ray products in the United States

2

as one of Chaos's authorized resellers.

After purchasing the vray.com domain, Mr.

Slauson approached Chaos on behalf of Visual Dynamics, asking whether Chaos would
make Visual Dynamics one of its authorized resellers. Chaos declined, explaining that it
already had seven authorized resellers in the United States, and didn't want to
oversaturate the American market or dilute its brand there. However, Chaos encouraged
Visual Dynamics to go ahead and seek out one of its authorized resellers in order to
become a sub-reseller of V-Ray products. Visual Dynamics did this, and sub-resold VRay products on vray.com, with Chaos's knowledge, from 2008 until May 26, 2011, when
it finally became an authorized reseller of V-Ray products for Chaos.
The relationship between Visual Dynamics and Chaos was a complicated and
frustrating one for both parties. On the one hand, Visual Dynamics made money for
Chaos, and of course, for itself.

On the other hand, Chaos experienced frequent

complaints from customers about Visual Dynamics' customer service, and about the
vray.com website. Eventually, Chaos had enough, and on October 11, 2012, Chaos
terminated the parties' authorized-reseller relationship, effective on November 9, 2012.
However, Visual Dynamics continued sub-reselling V-Ray products on vray.com. Then
on June 3, 2013, Visual Dynamics was hit with a letter from Chaos's attorneys, demanding
that it ce~se using the V-Ray mark and _immediately turn over the registration of the
vray.com domain to Chaos.

Visual Dynamics declined, and instead continued sub-

reselling V-Ray products on vray.com.
For the next three and a half years, an uneasy truce of sorts seems to have held
between the parties. Chaos complained to consumers and to the public about Visual
Dynamics and vray.com, and went out of its way to emphasize to anyone with questions

3

about the matter that the two entities were not affiliated with each other. But Chaos took
no legal action to follow up on its 2013 cease-and-desist letter. Mr. Slauson, however,
fumed over the things Chaos was saying about Vi·sual Dynamics to others, and on
October 14, 2016, crossed the Rubicon by filing this lawsuit, claiming that Chaos was
tortiously interfering with Visual Dynamics' business expectancy. In addition to that claim
of tortious business interference, Visual Dynamics also asserted claims against Chaos
for civil conspiracy and for a preliminary injunction, both of which were premised on the
same conduct as the first claim. Chaos was apparently displeased with this turn of events,
and responded by filing nine counterclaims against Visual Dynamics for trademark
infringement, trademark dilution, false representation, false designation of origin, unfair
competition, cyberpiracy, and deceptive trade practices, under various theories of federal
and Arkansas law.
On October 30, 2017, the parties filed their summary judgment motions. Chaos
filed two motions: one seeking summary judgment on its own claims against Visual .
Dynamics, and the other seeking dismissal of Visual Dynamics' claims against Chaos.
Visual Dynamics filed one motion, seeking dismissal of Chaos's claims. All three of those
motions are now ripe for adjudication. Trial of whatever claims survive these motions is
set to begin on February 20, 2018. A final pretrial conference will be held tomorrow,
February 13.

II. LEGAL STANDARD
"The court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law." Fed. R. Civ. P. 56(a). When, as here, cross-motions for summary judgment are

4

filed, each motion should be reviewed in its own right, with each side "entitled to the
benefit of all inferences favorable to them which might reasonably be drawn from the
record." Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983). The
Court must view the facts in the light most favorable to the non-moving party, and give
the non-moving party the benefit of any logical inferences that can be drawn from the
facts. Canada v. Union Elec. Co., 135 F.3d 1211, 1212-13 (8th Cir. 1997). The moving
party bears the burden of proving the absence of any material factual disputes. Fed. R.
Civ. P. 56(a); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87
(1986).
If the moving party meets this burden, then the non-moving party must "come
forward with 'specific facts showing that there is a genuine issue for trial."' Matsushita,
475 U.S. at 587 (quoting then-Fed. R. Civ. P. 56(e)). These facts must be "such that a
reasonable jury could return a verdict for the nonmoving party."

Allison v. Flexway

Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)). "The nonmoving party must do more than rely on allegations
or denials in the pleadings, and the court should grant summary judgment if any essential
element of the prima facie case is not supported by specific facts sufficient to raise a
genuine issue for trial." Register v. Honeywell Fed. Mfg. & Techs., LLC, 397 F.3d 1130,
1136 (8th Cir. 2005) (citing Celotex Corp v. Catrett, 477 U.S. 317,324 (1986)).

Ill. DISCUSSION
The Court is of the opinion that there can be no reasonable dispute as to certain
facts in this case, regardless of whether the record is viewed in the light most favorable
to Chaos or to Visual Dynamics. So before diving into the specific elements of any

5

particular claim or defense by either party, it is useful to make certain factual findings and
legal rulings flowing therefrom, that will have the effect of dramatically streamlining the
analysis that follows.
Chaos does not claim that it is unlawful for Visual Dynamics to sub-resell V-Ray
products. See, e.g., Doc. 35, p. 5. And there is no reasonable dispute that Chaos gave
Visual Dynamics permission to use the V-Ray logo in connection with the sale of V-Ray
products, long before Visual Dynamics became an authorized reseller. See Doc. 28, p.

27. There is also no reasonable dispute that, long before Visual Dynamics became an
authorized reseller, Chaos not only permitted Visual Dynamics to use the vray.com
domain, but even encouraged Visual Dynamics to sell V-Ray products on the vray.com
domain.

See id. at 10-17, 27.

True, Chaos conditioned this permission and

encouragement on Visual Dynamics's compliance with requests, for example, that the
vray.com domain explain that it was not Chaos's property, that it explain that it was not
connected with Chaos, and that it not use any Chaos Software logos. See id. at 27. But
there is no evidence in the record that Visual Dynamics ever failed to comply with such
requests at any point from when the two companies first communicated, all the way
through the time when Chaos terminated its authorized-reseller contracts.
Given all of this, the Court finds that long before Visual Dynamics became an
authorized V-Ray reseller for Chaos, Chaos had already given Visual Dynamics a license
to use the V-Ray mark in marketing and advertising materials for the sale of V-Ray
products on the vray.com website. Although it would seem to be the better practice for a
trademark license to take the form of a written contract, this is not the only means by
which a license may arise. A trademark license can also arise through a course of

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conduct that clearly indicates to a reasonable observer in the implied licensee's position
that the holder of the trademark has consented to a particular type of use of that mark by
the licensee.

See Restatement (Third) of Unfair Competition § 29 & comments a, c

( 1995). And that is what happened here, long before Visual Dynamics ever became an
authorized V-Ray reseller for Chaos.
However, whatever the precise scope of that prior license may have been, it
merged into and was superseded by the written contracts that governed these parties'
authorized-reseller relationship from May 26, 2011 to November 9, 2012. That is because
these contracts were, among other things, written licensing agreements. They explicitly
authorized Visual Dynamics to use the V-Ray logo and Chaos's marketing materials in
advertising the product, see Doc. 1-1,

1J

1.4; Doc. 1-2, 11 1.3, and they exerted quality

control by requiring Visual Dynamics to immediately inform Chaos about trademarkrelated issues, see Doc. 1-1,

,r 4.11;

Doc. 1-2, 11 4.10, authorizing Visual Dynamics to

take legal action to protect Chaos's intellectual property, see Doc. 1-1, 11 12, and by
requiring Visu·a1 Dynamics to stop distributing and advertising V-Ray products when the
agreements were terminated, see Doc.1-1,1114; Doc.1-2,1112; see also 3 McCarthy on
Trademarks and Unfair Competition§§ 18:38, 18:42 (5th ed.) (discussing importance of
quality control for trademark licensing). So under the so-called "merger rule," any prior
license that Visual Dynamics held with respect to the V-Ray trademark merged into the
written authorized-reseller license and was terminated when the reseller contract was

terminated. See Hot Stuff Foods, LLC v. Mean Gene's Enters., Inc., 468 F. Supp. 2d
1078, 1095 (D.S.D. 2006); 4 McCarthy on Trademarks and Unfair Competition § 25:32

7

(5th ed.). 1

And there is no reasonable dispute that on October 11, 2012, Chaos

terminated the reseller contract, effective on November 9, 2012. See Doc. 23-2, p. 4.
Chaos indisputably took some steps to protect its intellectual property as soon as
it terminated the reseller contract, by demanding that Visual Dynamics post new and more
prominent disclaimers on vray.com, explaining the lack of affiliation between Visual
Dynamics and Chaos. See id. Visual Dynamics complied with these demands. See Doc.
28, p. 36. 2 However, Visual Dynamics continued selling V-Ray products on vray.com as
a sub-reseller, just as it had done for many years before becoming an authorized reseller.

See id.
As previously mentioned in Section I, supra, on June 3, 2013, roughly seven
months after Chaos's termination of its authorized-reseller contract with Visual Dynamics
took effect, Chaos's attorneys sent Visual Dynamics a letter citing "potential consumer
confusion," demanding that Visual Dynamics immediately cease and desist from any
further use whatsoever of the V-Ray mark, and further demanding that Visual Dynamics
hand over the vray.com domain to Chaos within fourteen days-apparently in exchange

1

Importantly, this rule's application is grounded not in the existence of any particular
contractual "merger clause," but rather in more general principles of trademark law itself.
The idea here is that when a licensee contractually acknowledges a trademark holder's
superior rights in that mark, it is inconsistent for the licensee to later argue, after the
license terminates, that he or she has any preexisting rights in the mark's use that are
superior to those of the trademark's owner. See Bunn-O-Matic Corp. v. Bunn Coffee
Serv., Inc., 88 F. Supp. 2d 914, 923 (C.D. Ill. 2000); cf. A & L Labs., Inc. v. Bou-Matic
LLC, 429 F.3d 775, 781 (8th Cir. 2005) ("If A & L had owned the trademarks, it would not
have needed DEC's permission to use them.").
2

Chaos points to one instance of alleged noncompliance: a particular page on vray.com
from October 29, 2014 on which the disclaimers were not posted. See Doc. 23-2, p. 29.
But this page was not one of the pages on which Chaos asked the disclaimers to be
posted, see id. at 4, so the Court finds that this was not an instance of noncompliance by
Visual Dynamics.
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for no compensation at all from Chaos. See Doc. 23-2, pp. 56-57. The Court would
observe here that, at least as a general proposition, trademark law is quite clear that
continued use of a mark by a former licensee after a license has been terminated
constitutes trademark infringement.

See 4 McCarthy on Trademarks and Unfair

Competition § 25:31 (5th ed.) ("Once a ... license contract is terminated, there is no
doubt that the former ... licensee has no authorization or consent to continue use of the
mark.") (collecting cases). This is because the risk of customer confusion is ·especially
high when the entity using the mark once did so with the explicit and widely-known
authorization of the mark's owner but no longer has permission to do so. See id. On the
other hand, one who is looking past the letter of the law to the equities of the situation
might justifiably raise an eyebrow over Chaos's decision to let seven months pass before
making this demand. Cf. Citibank, N.A. v. Citytrust, 756 F.2d 273, 276 (2d Cir. 1985)
(declining to enter preliminary injunction in favor of claimant who waited to file suit until
nine months after receiving notice in the press and ten weeks after receiving actual notice
of alleged wrong).

But at any rate, Visual Dynamics felt this to be an unfair and

unreasonable demand, and declined to accommodate it. See Doc. 37-1, pp. 13-14.
Certainly, what transpired next is far more eyebrow-raising: as already noted,
another three and a half years passed with Chaos taking no legal action to enforce or
follow up on its demand. Visual Dynamics simply continued sub-reselling V-Ray products
from vray.com.

In the meantime, Chaos contented itself to deal with confused or

frustrated consumers on an ad hoc basis, by telling them that Visual Dynamics was not
affiliated with Chaos, see Doc. 40-1, p. 45, that Visual Dynamics was not an official
reseller of V-Ray products, see id., that Chaos does not trust Visual Dynamics and was

9

unable to obtain the vray.com domain from them, see id. at 48, that if a customer who
purchased a V-Ray product from Visual Dynamics wants a refund, then he or she must
seek the refund from Visual Dynamics, see Doc. 23-2, pp. 7-8, and that Chaos could not
help customers with problems they might have using the vray.com website, see Doc. 45,
pp. 3-4, 11-12. Visual Dynamics took umbrage at even this much interference by Chaos,
see Doc. 41-1, pp. 2-5, and eventually decided that instead of letting sleeping dogs lie, it

would poke the bear by filing this lawsuit. Only then did Chaos take legal action to enforce
its demand of several years ago, by asserting its nine counterclaims in this case.
Given all of the foregoing context, this is an appropriate place for the Court to make
three especially important findings. First, it was not improper for Chaos to say these
things about its relationship or lack thereof with Visual Dynamics. This is so for the rather
obvious reason that all of these statements were true and in furtherance of Chaos's
legitimate self-interest. See Restatement (Second) of Torts § 767. Visual Dynamics is

not affiliated with Chaos. Visual Dynamics is not an authorized reseller of V-Ray
products. 3 Chaos does

not trust Visual Dynamics. Chaos is not able to "refund'' a

transaction to which it was not a party. Chaos does

not own vray.com, and therefore

Chaos is not able to help customers resolve any technical problems they might have using

3

Visual Dynamics' contention to the contrary in a summary judgment response brief
beggars belief. See Doc. 41-1. Chaos's termination of Visual Dynamics' reseller
agreements speaks for itself, see Doc. 23-2, p. 4, such that even Visual Dynamics
previously admitted in this litigation that it is no longer one of Chaos's authorized resellers,
see Doc. 23-2, pp. 305-06. The only evidence on which Visual Dynamics belatedly relies
to support the opposite notion is accurately characterized by Chaos as "an email from a
Chaos employee ... in Bulgaria who clearly speaks limited English, responding to a
customer in Saudi Arabia who is confused about who owns the vray.com website and
happens to use the phrase 'authorized reseller' when referring to vray.com." See Doc.
43, p. 5 (citing Doc. 45, pp. 6-7).
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that website. And there is nothing improper about Chaos encouraging potential V-Ray
customers to purchase. V-Ray products only from authorized resellers; rather, this is
simply an entirely reasonable attempt by Chaos to protect its own brand. Cf. Fisher v.
Jones, 311 Ark. 450, 458-59 (1993) (not improper for party to direct business to someone

other than its former franchisee).
Second, there is no reasonable dispute that Visual Dynamics' use of the V-Ray

mark is likely to, and actually does, cause confusion and mislead consumers. Chaos has
presented evidence of numerous actual instances of customer confusion and frustration
over whether Visual Dynamics and the vray.com website are affiliated with Chaos, see
Doc. 23-2, pp. 219-22, 224, 229-30, 262-71, and Visual Dynamics has not presented
any evidence to rebut this. Various specific instances of such confusion and frustration
will be discussed further below, as appropriate.
Third_, there is no reasonable dispute that Visual Dynamics knew or should have

known, after June 3, 2013, that its use of the V-Ray mark on vray.com was likely to cause
confusion and mislead consumers as to whether Visual Dynamics was an authorized
reseller of V-Ray products and as to whether vray.com was affiliated with Chaos.
Although it is true that Visual Dynamics prominently placed disclaimers on vray.com
explaining the lack of any affiliation between vray.com and Chaos, it is a/so true that after
Visual Dynamics was no longer an authorized reseller of V-Ray products, it continued to
refer to itself on vray.com's "about us" page as "a reseller," see Doc. 23-2, p. 35, and
continued to send emails to Visual Dynamics customers that contained Chaos's
marketing materials or the V-Ray logo without any accompanying disclaimers about the
lack of affiliation between the two entities, see, e.g., id. at 32, 34. Any reasonable person

11

in Visual Dynamics' position would expect such conduct inevitably to result in some
amount of customer confusion over Chaos's relationship with vray.com and Visual
Dynamics-especially given that Visual Dynamics had formerly been an authorized
reseller of V-Ray products. The existence of the disclaimers on certain pages of vray.com
does not change this, because "a disclaimer does not serve to cure an otherwise clear
case of likelihood of confusion." Bd. of Trs. of Univ. of Ark. v. Prof/ Therapy Servs., Inc.,
873 F. Supp.1280, 1292 (W.D. Ark.1995) (quoting 2 McCarthy on Trademarks and Unfair
Competition, § 23.15 (3d ed. 1993)).
With the foregoing discussion out of the way, the table is now set for an efficient
march through each party's particular claims and defenses. The Court will begin with
Visual Dynamics' claims against Chaos, on which Chaos has moved for summary
judgment. Then, the Court will take up Chaos's claims against Visual Dynamics, on which
the parties have filed cross-motions for summary judgment. There, the Court will first
consider Chaos's claims themselves, and then the Court will consider Visual Dynamics'
asserted defenses against those claims.
A. Visual Dynamics' Claims against Chaos
As mentioned in Section I of this Opinion and Order, supra, Visual Dynamics'
Complaint sets forth three counts against Chaos: (1) tortious interference with business
expectancy; (2) civil conspiracy; and (3) preliminary injunction. But we are of course well
past the stage for preliminary injunctions in this lawsuit, so only the first two counts are
still live at this point.
As for the tort of interference with business expectancy, it has four elements: (1)
that Visual Dynamics had a valid business expectancy; (2) that Chaos had knowledge of

12

that business expectancy; (3) that Chaos intentionally and improperly interfered with, or
induced or caused a disruption or termination of, that.business expectancy; and (4) that
the interference, disruption, or termination of that business expectancy proximately
caused damage to Visual Dynamics. See Constr. Mgmt. and Inspection, Inc. v. Caprock
Commc'ns Corp./Caprock Telecomms. Corp., 301 F.3d 939,941 (8th Cir. 2002). Visual

Dynamics' claim for this tort is premised on Chaos's statements to V-Ray customers that
were described in the preceding subsection of this Opinion and Order. But the Court
found above that there was nothing improper about any of those statements. Therefore
it is impossible for Visual Dynamics to satisfy the third element of this tort; accordingly,
summary judgment for Chaos is proper on this claim.
From this it follows that summary judgment for Chaos is also proper on Visual
Dynamics' civil conspiracy claim. Under Arkansas law, civil conspiracy "is not actionable
in and of itself," but rather, must be predicated on injury suffered from some additional
wrongful conduct committed pursuant to the conspiracy. See Dodson

v. Allstate Ins. Co.,

345 Ark. 430, 445 (2001 ). But here, the only conduct alleged to have been committed in
furtherance of the conspiracy is the very conduct that the Court just held in the preceding
paragraph was not improper. See Doc. 1,

,r,r 40-42.

Lacking any other independent

grounds, the claim for civil conspiracy must be dismissed. See Strack v. Capital Servs.
Grp., LLC, 2006 WL 14507, at *6 n.4 (Ark. Ct. App. Jan. 4, 2006) (unpublished) (limiting

reinstatement of civil conspiracy claim on remand "to the extent that it might be supported
by [plaintiff]'s primary cause of action for insurance fraud").
To recap, then: summary judgment in favor of Chaos is proper on all of Visual
Dynamics' claims. Accordingly, Chaos's Motion for Summary Judgment against Visual

13

Dynamics'_ Claims (Doc. 22) will be GRANTED, and Visual Dynamics' claims will be
DISMISSED WITH PREJUDICE.
B. Chaos's Claims against Visual Dynamics

The Court turns now to Chaos's claims against Visual Dynamics. First, the Court
will consider whether Chaos has met its burden on summary judgment of satisfying each
element of each such claim. Then, the Court will consider the applicability of Visual
Dynamics' defenses to each of Chaos's claims.
1. The Elements of Chaos's Claims

As previously mentioned, see Section I, supra, Chaos has asserted nine
counterclaims against Visual Dynamics: (1) statutory trademark infringement in violation
of 15 U.S.C. § 1114(1 )(a); (2) federal unfair competition, false representation, and false
designation of origin in violation of 15 U.S.C. § 1125(a); (3) federal trademark dilution in
violation of 15 U.S.C. § 1125(c); (4) federal anti-cyberpiracy in violation of 15 U.S.C.
§ 1125(d); (5) statutory trademark infringement in violation of Ark. Code Ann.§ 4-71-212;
(6) trademark infringement in violation of Arkansas common law; (7) trademark dilution in
violation of Ark. Code Ann.§ 4-71-213; (8) deceptive trade practices in violation of Ark.
Code Ann.§ 4-88-101 et seq. (the Arkansas Deceptive Trade Practices Act, or "ADTPA");
and (9) unfair competition in violation of Arkansas common law. In Chaos's Motion for
Summary Judgment on these claims, it groups them into four categories-a grouping to
which this Opinion and Order will also adhere. The first category consists of claims 1, 2,
5, 6, and 9. The second category consists of claim 4. The third category consists of
claims 3 and 7. And the fourth category consists of claim 8. The Court will now consider
each of these categories in that sequence.

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a. Claims 1, 2, 5, 6, and 9-trademark infringement, unfair competition, false
representation, and false designation of origin under federal and Arkansas law
The Lanham Act makes it unlawful for any person to use a registered trademark
"in connection with the sale, offering for sale, distribution, or advertising of any goods or
services" in a manner that "is likely to cause confusion, or to cause mistake, or to deceive"
consumers, without the consent of the registrant. See 15 U.S.C. § 1114(1 )(a). Similarly,
it also declares unlawful the commercial use of "any word, term, name, symbol, ... false
designation of origin, false or misleading description of fact, or false or misleading
representation of fact" that "is likely to- cause confusion, ... mistake, or to deceive as to
the affiliation, connection, or association of' the person making such use "with another
person, or as to the origin, sponsorship, or approval of his or her goods, services, or
commercial activities by another person." See id. at § 1125(a)(1 )(A). The Arkansas
trademark infringement statute tracks the Lanham Act nearly word-for-word, except that
it requires the mark in question to be registered with the Arkansas Secretary of State.

See Ark. Code Ann.§ 4-71-212(1 ). But otherwise, the "Arkansas law of trademarks, trade
names and unfair competition is in accord with the general law," Gaston's White River

Resort v. Rush, 701 F. Supp. 1431, 1435 (W.D. Ark. 1988). Indeed, Arkansas courts
define "unfair competition," as "the simulation by one person, for the purpose of deceiving
the public, of the names, symbols or devices employed by a business rival ... thereby
obtaining for such person the benefits properly belonging to such person's competitor,"
which can be established by showing "a course of dealing which leads, or is likely to lead,
consumers into believing that the goods or services of one supplier are those of another."

See id. (quoting Esskay Art Galleries v. Gibbs, 205 Ark. 1157 (1943)) (omissions in
original).

15

In other words-with one caveat to which the Court will return at the end of this
subsection-a claimant may establish violations of a// of 15 U.S.C. §1114(1)(a), 15
U.S.C. § 1125(a)(1 )(A), Ark. Code Ann. 4-71-212, Arkansas common-law trademark
infringement, and Arkansas common-law unfair competition, simply by proving both of the
following elements: "(1) that it owns a valid, protectable mark; and (2) that there is a
likelihood of confusion between its mark and [the] defendant's mark." Cf. Am. Auto Ass'n,
Inc. v. Advance Quotes, LLC, 2010 WL 2985505, at *3 (W.D. Ark. June 29, 2010) (citing
B & B Hardware, Inc. v. Hargis Indus., 569 F.3d 383, 389 (8th Cir. 2009)). And that is

exactly what Chaos has established here. There is no dispute that Chaos's V-Ray mark
is validly registered with the USPTO. And the Court has already found earlier in Section
Ill of this Opinion and Order, supra, that Visual Dynamics' use of the V-Ray mark is likely
to, and actually does, cause confusion and mislead consumers.
But to briefly elaborate now on that finding-the Eighth Circuit considers the
following factors when evaluating the likelihood of confusion:
1) the strength of the [claimant]'s mark; 2) the similarity between the
[claimant]'s and defendant's marks; 3) the degree to which the allegedly
.infringing product competes with the [claimant]'s goods; 4) the alleged
infringer's intent to confuse the public; 5) the degree of care reasonably
expected of potential customers[;] and 6) evidence of actual confusion.
Roederer v. J. Garcia Carrion, S.A., 569 F .3d 855, 860 (8th Cir. 2009). But "no one factor

controls, and because the inquiry is inherently case-specific, different factors may be
entitled to more weight in different cases." Kemp v. Bumble Bee Seafoods, Inc., 398 F.3d
1049, 1054 (8th Cir. 2005). Here, as already noted above, it is indisputable that actual
confusion has resulted from Visual Dynamics' use of the V-Ray mark. And as already
noted above, any reasonable person in Visual Dynamics' position should have anticipated

16

that some confusion would result. The marks in question are not only extremely similar,
but typically textually identical; "vray.com" versus "V-Ray" is about as wide as any
divergence between the two ever gets, and of course both are clearly and intentionally
understood to refer to the same product. And given that the same product is referred to
by beth Visual Dynamics' and Chaos's use of the V-Ray mark, the first and third factors
are simply unimportant or inapplicable here.
To reiterate, then: there is no material dispute that Chaos's V-Ray mark is valid
and protectable, and that Visual Dynamics' use of that mark has resulted, and is likely to
result, in confusion by the ordinary consumer. Thus, Chaos has satisfied every element
of Counts 1, 2, 6, and 9 of its Counterclaim. But now for the caveat referenced two
paragraphs earlier: Chaos has not shown that its V-Ray mark is registered with the
Arkansas Secretary of State, so it has not satisfied every element of Count 5, and is not
entitled to summary judgment on that particular claim.

b. Claim 4-federal cyberpiracy
The Court turns now to Chaos's claim for cyberpiracy. Federal law declares that
a person shall be liable to a trademark owner if that person: "(i) has a bad faith intent to
profit from [the owner]'s mark," and "(ii) registers, traffics in, or uses a domain name that
... 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." See 15 U.S.C. § 1125(d)(1 ){A)(i), (ii)(I).
There is of course no dispute that Visual Dynamics uses the domain name "vray.com,"
and that Visual Dynamics registered that domain name after Chaos registered its V-Ray
mark with the USPTO. See Doc. 23-2, pp. 43-46. And as has already been discussed
in this Opinion and Order, that domain name is confusingly similar to the V-Ray mark.

17

The only remaining question, then, is whether Visual Dynamics "has a bad faith intent to
profit from that mark." See 15 U.S.C. § 1125{d){1 ){A){i).
The statute sets out a non-exhaustive list of factors which the Court "may consider"
when determining whether Visual Dynamics "has a bad faith intent."

See id. at

§ 1125{d){1 ){B){i). However, the statute also states that "bad faith intent ... 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." Id. at§ 1125{d){1 )(B){ii).
The Court finds that regardless of whatever Visual Dynamics actually believed, it
had no reasonable grounds to believe that its use of the domain name was a fair use or
otherwise lawful after receiving the June 3, 2013 demand letter. As previously noted,
Visual Dynamics referred to itself as "a reseller" on the vray.com "about us" page, despite
no longer being authorized by Chaos to resell V-Ray products. And the Court has already
observed several times in this Opinion and Order that any reasonable person in Visual
Dynamics' position should have anticipated that confusion would result from its use of the
V-Ray mark on vray.com-which is to say that in the absence of Chaos's consent, any
reasonable person in that position should have anticipated that this use would constitute
trademark infringement.
Looking then to the list of factors in § 1125{d){1 )(B){i), the Court finds that the
pertinent ones weigh so heavily in favor of a finding of bad faith that there can be no
material dispute that Visual Dynamics' use of vray .com has been characterized by it.
Visual Dynamics has no trademark or other intellectual property rights in the domain
name. See id. at§ 1125{d)(1)(B)(i){I). The domain name consists entirely of Chaos's V-

18

Ray mark. Cf. id. at § 1125(d)(1 )(B)(i)(II). Prior to Chaos's termination of its reseller
agreement, Visual Dynamics used the domain for the good faith offering of V-Ray
products, see id. at§ 1125(d)(1 )(B)(i)(III), (IV), but as discussed above, that very history
made consumer confusion and trademark infringement an inevitable result of its
continued commercial use of the vray.com domain to sell V-Ray products after the reseller
agreement was terminated. The V-Ray mark is indisputably famous (more will be said
on this point in the following subsection regarding trademark dilution).

See id. at

§ 1125(d)(1 )(B)(i)(IX). Visual Dynamics' owner, Mr. Slauson, has previously registered
or acquired multiple other domain names that he knows are identical or confusingly similar
to marks of others and that are distinctive at the time of registration, see id. at
§ 1125(d)(1 )(B)(i)(Vlll)-specifically, domain names containing trademarks registered by
a software company called Autodesk, see Doc. 23-2, pp. 82, 85-87. And as has already
been described numerous times above, Visual Dynamics uses vray .com "to divert
consumers ... to a site accessible under the domain name ... for commercial gain ...
by creating a likelihood of confusion as to the source, sponsorship, affiliation, or
endorsement of the site." Cf. 15 U.S.C. § 1125(d)(1 )(B)(i)(V). In sum, Chaos has satisfied
all of the elements for its claim of federal cyberpiracy.

c. Claims 3 and 7-trademark dilution under federal and Arkansas law
Shifting now to Chaos's claims for trademark dilution: federal law provides that "the
owner of a famous mark that is distinctive ... shall be entitled to an injunction against
another person who, at any time after the owner's mark has become famous, commences
use of a mark or trade name in commerce that is likely to cause dilution by blurring or
dilution by tarnishment of the famous mark, regardless of the presence or absence of

19

actual or likely confusion, of competition, or of actual economic injury."
§ 1125(c )( 1).

15 U.S.C.

Arkansas law provides likewise, with the relevant statute once again

substantively tracking the federal one with respect to all these elements, 4 except that the
Arkansas statute requires actual dilution rather than its mere likelihood. See Ark. Code
Ann.§ 4-71-213(a)(1 ).
The V-Ray mark is indisputably famous. As has already been discussed, it is
registered with the USPTO.

See 15 U.S.C. § 1125(c)(2)(A)(iv).

Total V-Ray sales

worldwide in 2016 were nearly $10 million, see Doc. 23-2, p. 295, and Mr. Slauson readily
admits the software's popularity, see id. at 154. See 15 U.S.C. § 1125(c)(2)(A)(i)-(iii);
see a/sq Ark. Code Ann.§ 4-71-213(a)(2). Chaos's cofounder has even won an Academy

Award for V-Ray's use in several blockbuster movies. See Doc. 23-2, p. 257. And
although V-Ray was not winning Academy Awards when Visual Dynamics "commence[d]
use of' the V-Ray mark, 15 U.S.C. § 1125(c)(1 ), it was indisputably famous then too.
When Mr. Slauson was negotiating the purchase of the vray.com domain from Vance
Ray, he explained to Mr. Ray that V-Ray software was "very popular and a strong seller."
See Doc. 23-2, p. 18. And Mr. Slauson testified that it "didn't take long for everybody to

hear about" V-Ray, see id. at 149, when the product first hit the market, see id. at 14850.

4

Unlike the federal statute, the Arkansas statute also permits an award of monetary
damages, "subject to the discretion of the court and the principles of equity," if it is also
proven that "the person against whom the injunctive relief is sought willfully intended to
trade on the [mark] owner's reputation or to cause dilution of the famous mark." See Ark.
Code Ann.§§ 4-71-213(b), 4-71-214(a)(2). For reasons that will become clear in Section
111.B.2 infra, the Court will not reach the question of whether there is any material factual
dispute as to the establishment of this additional element.
20

The federal statute defines "dilution by tarnishment" as "association arising from
the similarity between a mark or trade name and a famous mark that harms the reputation
of the famous mark," 15 U.S.C. § 1125(c)(2)(C), and "dilution by blurring" as "association
arising from the similarity between a mark or trade name and a famous mark that impairs
the distinctiveness of the famous mark," id. at§ 1125(c)(2)(B). The Arkansas statute, on
the other hand, simply refers to "dilution" without reference to any specific type of dilution,
such as blurring or tarnishment, see Ark. Code Ann. § 4-71-213(a)(1 ). Instead, it defines
'

"dilution" as meaning "the lessening of the capacity of a famous mark to identify and
distinguish goods or services, regardless of the presence or absence of: (A) Competition
between the owner of the famous mark and other parties; or (B) A likelihood of confusion,
mistake, or deception." Ark. Code Ann. § 4-71-201 (3).
Chaos's summary judgment motion focuses on the issue of whether its V-Ray
mark is "famous," and does not specify whether it is proceeding under a theory of
tarnishment, blurring, or both. See Doc. 25-1, pp. 15-19. But it is easy for the Court to
see there is no material dispute of fact that Visual Dynamics' use of the V-Ray mark is
likely to cause dilution by tarnishment. Chaos has placed abundant unrebutted evidence
in the record that-Visual Dynamics' use of the V-Ray mark is not only likely to harm that
mark's reputation, but actually has done so, at least to some significant extent.
Consumers have emailed Chaos, assuming that or questioning whether vray.com is an
official Chaos website, and complaining that their experience with vray.com and Visual
Dynamics was "confusing," "inconvenient," "a user experience nightmare," and
"misleading," see Doc. 23-2, pp. 219-20, 222, and telling Chaos things like "[y]ou should
have one link ... [w]hy would you want to make my brain explode?," see id. at 224

21

(emphasis added), or "I ... personally don't appreciate the 'smart ass' comments ... I
am not comfortable purchasing/doing business with your company," see id. at 226
(emphasis added). Similarly, there is no material dispute of fact that Visual Dynamics
has caused a lessening of the V-Ray mark's capacity to distinguish between services,
given the unrebutted evidence that Chaos has received repeated customer complaints
about technical problems with the vray.com website that Chaos has no capacity to
address, see Doc. 45, pp. 3-4, 11-12, and that consumers sometimes incorrectly
believed that Visual Dynamics, rather than Chaos, is the developer of V-Ray, see Doc.
23-2, pp. 217, 265. Therefore, Chaos has satisfied every element of its claims for federal
and Arkansas trademark dilution in Counts 3 and 7 of its Counterclaim.

d. Claim 8-Arkansas Deceptive Trade Practices Act
The reader will recall that none of the trademark claims discussed in the preceding
three subsections of this Opinion and Order require Chaos to prove that it suffered actual
monetary damage; rather, they simply require showing "confusion" or "dilution" of a mark,
whether actual or likely, as the case may be. But unlike these aforementioned trademark
claims, the ADTPA requires a private claimant to prove that actual monetary damages
were proximately caused to Chaos by Visual Dynamics' alleged deceptive trade practice.
See Ark. Code Ann.§ 4-88-113(f)(1 )(A). And here, it is not at all clear to the Court from

the record on summary judgment whether Visual Dynamics' use of the vray.com website
has caused Chaos to lose any money at all-or even if it has, then how the amount of
such loss could reasonably be calculated. Indeed, Chaos's damages expert does not
appear even to offer an opinion on the matter; instead he confines his analysis solely to
the issue of Visual Dynamics' profits, in support of a disgorgement theory of damages for

22

Chaos's trademark claims. See, e.g., Doc. 23-2, p. 247, 273-74. Therefore, Chaos is
not entitled to summary judgment on its ADTPA claim against Visual Dynamics, because
a material factual dispute remains as to whether Visual Dynamics' allegedly deceptive
trade practice has proximately caused any actual monetary damage to Chaos.
2. Visual Dynamics' Defenses against Chaos's Claims

Now having made the preliminary finding that, viewing the record in the light most
favorable to Visual Dynamics, Chaos has satisfied each element of each of its claims
except its ADTPA claim, the Court turns to the matter of Visual Dynamics' asserted
defenses to Chaos's claims. Specifically, the Court addresses the defenses raised in
Visual Dynamics' Motion for Summary Judgment, as well as in its Response to Chaos's
Motion for Summary Judgment on Visual Dynamics' Claims.
Visual Dynamics' Motion discusses three defenses at length.

One of those

defenses is that Chaos's trademark claims should fail because Visual Dynamics has only
engaged in nominative fair use of the V-Ray mark. The doctrine of nominative use applies
where the trademark at issue is "the only word reasonably available to describe a
particular thing" and is therefore "pressed into service" by the demands of the occasion.
See New Kids on the Block v. News Am. Pub/'g, Inc., 971 F.2d 302, 308 (9th Cir. 1992).

Related to this notion is the principle that "[a)s a general rule, trademark law does not
I

reach the sale of genuine goods bearing a true mark even though the sale is not
authorized by the mark owner." Polymer Tech. Corp. v. Mimran, 975 F.2d 58, 61 (2d Cir.
1992) (footnote omitted).

For example, there is nothing inherently unlawful about a

person sub-reselling V-Ray products. Nevertheless, this defense is easily rejected here,
because use of a mark in a website's domain name exceeds the minimal pressed-into-

23

service descriptive use that is permitted by the doctrine of nominative use. Cf. E. & J.
Gallo Winery v. Spider Webs Ltd., 286 F.3d 270,275 (5th Cir. 2002) (not fair use); Bulbs
4 E. Side, Inc. v. Ricks, 199 F. Supp. 3d 1151, 1166-67 (same). -In other words, Visual

Dynamics does not need to use a website with the domain name of "vray.com" to engage
in the legitimate sale of V-Ray products online.
Visual Dynamics also asserts the defense of waiver against all of Chc!os's claims,
referring at times to the alleged waiver as a "license," see Doc. 31, p. 5, or as a
"waiver/license," see id. at 6. But as the Court has already ruled supra, whatever license
Chaos may have given Visual Dynamics to use its V-Ray mark ended when the parties'
authorized-reseller agreement was terminated on November 9, 2012. However, although
the termination letter does not explicitly say whether Visual Dynam_ics would be
reauthorized to sub-resell V-Ray products on vray.com just as Visual Dynamics had been
permitted to do before becoming an authorized reseller, it does imply such permission by
demanding that Visual Dynamics place disclaimers on, inter alia, vray.com's "product
pages." See Doc. 37-1, p. 10. But then on the other hand, seven months after the
termination took effect, Chaos sent Visual Dynamics a letter demanding that Visual
Dynamics cease all further use of the V-Ray mark and turn over the registration of
vray.com to Chaos. See Doc. 23-2, pp. 56-57. Yet, then another three and a half years
passed by before Chaos took any legal action to enforce its trademark rights against
Visual Dynamics. So this issue of whether Chaos reissued an implied license to Visual
Dynamics, post-termination of the reseller relationship, is all rather confusing.
And that is where Visual Dynamics' third, related defense of estoppal comes into
play.

In trademark cases, "[a]n estoppel can be created by a [claimant]'s knowing

24

acquiescence in [the] defendant's activities, or by an unreasonable delay coupled with
prejudice, creating an estoppel by laches."

6 McCarthy on Trademarks and Unfair

Competition§ 32:105 (5th ed.) (footnotes omitted); see 15 U.S.C. § 1115(b)(9) (permitting
"equitable principles, including laches, estoppal, and acquiescence" against trademark
claims); Ark. Code Ann. §§ 4-71-213(b)(2), 4-71-214(a)(2) (subjecting remedies to
"principles of equity," requiring injunctions to be "just and reasonable," and vesting the
court with "discretion" with respect to the entry of monetary judgments). The cases and
the secondary literature on these principles are a muddle, to say the least. Compare
Restatement (Third) of Unfair Competition § 29, comment c (discussing "estoppe[I] by ...
'acquiescence,,, and stating that "[s]ome trademark infringement cases . . . speak
synonymously of 'acquiescence' and 'laches,,,) and ProFitness Physical Therapy Ctr. v.

Pro-Fit Orthopedic and Sports Physical Therapy P.C., 314 F.3d 62, 69 (2d Cir. 2002)
("Under these circumstances, it was reasonable for defendant to rely on plaintiff's silence
as consent . . . . We therefore agree ... that plaintiff acquiesced to defendant's use of
[the mark].") with 3M Co. v. lntertape Polymer Grp., Inc., 423 F. Supp. 2d 958, 965 (D.
Minn. 2006) (distinguishing "estoppel by acquiescence" from "laches," in part on the
grounds that the former requires an "affirmative word or deed") and Masters v. UHS of

Del., Inc., 631 F.3d 464, 469 (8th Cir. 2011) (treating laches, acquiescence, and estoppal
as three different equitable defenses, despite favorably citing 3M-which discussed
"estoppel by acquiescence"-for the definition of "acquiescence"). This Court is required
by the Federal Rules of Civil Procedure to construe pleadings "so as to do justice." Fed.
R. Civ. P. 8(e). And the substance of Visual Dynamics' arguments regarding what it
te~med "waiver and estoppel" in its summary-judgment briefing, see Doc. 31, p. 4, and

25

"estoppel and waiver" in its Answer (Doc. 13) to Chaos's Counterclaim, see Doc. 13, ,r 81,
seems most clearly to fit with what the Eighth Circuit has called "[a]cquiescence," and
defined-by directly quoting 3Ms definition for "estoppel by acquiescence"-as "when
'the owner of the trademark, by conveying to the defendant through affirmative word or
deed, expressly or impliedly consents to the infringement."' See Masters, 631 F.3d at
469 (quoting 3M, 423 F. Supp. 2d at 965).
As already mentioned above, Chaos's termination letter impliedly granted Visual
Dynamics permission to sub-resell V-Ray products on vray.com, through its affirmative
demand that Visual Dynamics place disclaimers on vray.com's V-Ray "product pages."
See Doc. 37-1, p. 10. And eight months later, Chaos's demand letter squarely conflicted

with that previous implied acquiescence. See Doc. 23-2, pp. 56-57. Visual Dynamics
could fairly wonder then whether the left hand knew what the right hand was doing, and
who truly spoke for Chaos on this matter. Chaos answered that question for Visual
Dynamics by taking no action for the next three and a half years to legally enforce its
trademark claims against Visual Dynamics. The point here is not simply that Chaos did
nothing; it is that Chaos did nothing after making directly contradictory representations to
Visual Dynamics "through affirmative word" as to whether it would consent to Visual
Dynamics' continued use of the V-Ray mark. Under such factual circumstances, this
Court believes the affirmative defense of estoppal by acquiescence is valid against all of
Chaos's trademark claims.
However, there are limits to the effectiveness of this defense. For one thing, the
Court has already found above that Visual Dynamics' use of the vray.com domain was
characterized by "bad faith intent" within the meaning of 15 U.S.C. § 1125(d)(1 )(A)(i), and

26

that a reasonable person in Visual Dynamics' position should have expected trademark
infringement to result from its use of the V-Ray mark. The defense of acquiescence is
not available against injunctive relief where there is intentional infringement. Bunn-OMatic Corp. v. Bunn Coffee Serv., Inc., 88 F. Supp. 2d 914, 925 (C.D. Ill. 2000). This is
because the public also has an interest in not being deceived. See Restatement (Third)
of Unfair Competition § 29, comment d.

As the United States Supreme Court has

explained:
The intentional use of another's trade-mark is a fraud; and when the excuse
is that the owner permitted such use, that excuse is disposed of by
affirmative action to put a stop to it. Persistence, then, in the use is not
innocent, and the wrong is a continuing one, demanding restraint by judicial
interposition when properly invoked. Mere delay or acquiescence cannot
defeat the remedy by injunction in support of the legal right, unless it has
been continued so long, and under such circumstances, as to defeat the
right itself.
Menendez v. Holt, 128 U.S. 514, 523 (1888) (emphasis added). Chaos is therefore
entitled to injunctive relief on its trademark claims against Visual Dynamics.
Nevertheless, the defense of acquiescence is still available against claims for
monetary damages, even in the face of intentional infringement, depending on the
equities of the situation. See Bunn-O-Matic, 88 F. Supp. 2d at 926. Here, it is indisputable
that whatever damage Visual Dynamics' infringement may have done to Chaos's brand
and goodwill, the fact is that Visual Dynamics nevertheless placed money in Chaos's
pocket by sub-reselling Chaos's V-Ray products on vray.com. And although this next
point is more typically seen in the context of laches, it seems especially true in this
particular context of ongoing mutual financial benefit: there is a clear inequity in a claimant
"waiting for [the] defendant to build up its business and profits" only to "years later file[]
suit and demand[] an accounting of those profits." 6 McCarthy on Trademarks and Unfair
27

Competition § 31 :4 (5th ed.). Accordingly, Chaos will be estopped from collecting any
money damages on its trademark claims against Visual Dynamics in this case.
However, this estoppal defense is not available against Chaos's ADTPA claim. As
this Court has previously observed, "[c]onsumer protection statutes are intended to be
construed broadly in favor of the consumer, such that applying a common-law defense to
a consumer's claim may stymie the legislative intent." Chruby v. Global Tel*Link Corp.,
2017 WL 4320330, at *10 (W.D. Ark. Sept. 28, 2017) (collecting cases). Granted, here
the claimant is not a consumer.

But as already noted, the consuming public has an

interest that is furthered by Chaos's claims. Certainly, a statute may explicitly provide for
the preservation of some common-law defenses, just as the federal and Arkansas
trademark statutes do. But the Court is unaware of any similar provision in the ADTPA
that permits the use of a common-law defense against it. See id. So Visual Dynamics
will not be permitted to assert its estoppal defense against Count 8 of Chaos's
Counterclaim.
Finally, Visual Dynamics' Motion concludes with some briefly stated arguments
that it terms "miscellaneous." The first is that the ADTPA "does not give a private cause
of action to a product manufacturer or developer such as Chaos that alleges its product
was involved in a deceptive trade practice." (Doc. 31, p. 9). The Court believes this
argument has some intuitive appeal, but Visual Dynamics does not cite any authority in
support of this proposition, and the Court is likewise unaware of any. Therefore, the Court
rejects it, at least at this stage of proceedings. The second is that the Arkansas trademark
statute "only gives a trademark infringement cause of action to trademark holders who
register their mark(s) with the Arkansas Secretary of State," and that Chaos has never

28

fulfilled that particular condition. See id. The Court already observed likewise in Section
111.B.1.a, supra. Chaos ·in its Response, offers no rebuttal to this point. Accordingly,
Visual Dynamics is entitled to summary judgment o_n Count 5 of Chaos's Counterclaim,
which will be DISMISSED WITH PREJUDICE. 5
IV. CONCLUSION
IT IS THEREFORE ORDERED that Chaos's Motion for Summary Judgment

against Visual Dynamics' Claims (Doc. 22) is GRANTED, Chaos's Motion for Summary
Judgment on Its Counterclaims (Doc. 23) is GRANTED IN PART AND DENIED IN PART,
and Visual Dynamics' Motion for Summary Judgment (Doc. 28) is GRANTED IN PART
AND DENIED IN PART as follows:

•

Chaos is awarded summary judgment on all of Visual Dynamics' claims, and Visual
Dynamics' Complaint (Doc. 1) is DISMISSED WITH PREJUDICE.

•

Chaos is awarded partial summary judgment on Counts 1, 2, 3, 4, 6, 7, and 9 of
its Counterclaim (Doc. 7), in that it has satisfied all the elements of these claims
and is thereby entitled to injunctive relief, the scope of which ·shall be determined
on a later date.

However, Chaos is estopped from recovering any monetary

damages on these Counts.
•

Visual Dynamics is awarded summary judgment on Count 5 of Chaos's
Counterclaim, and that Count is DISMISSED WITH PREJUDICE.

5

Visual Dynamics offers two additional "miscellaneous" arguments which are foreclosed
by this Court's rulings supra on "bad faith intent" under 15 U.S.C. § 1125(d)(1 )(A)(i) and
with regard to whether Chaos's V-Ray mark is "famous." See Doc. 31, pp. 9-10.
Accordingly, the Court will not reach those arguments here.
29

•

Count 8 of Chaos's Counterclaim survives summary judgment and will be tried to
a jury.

•

After Count 8 of Chaos's Counterclaim is tried to a jury, the Court will receive
briefing from the parties, and also conduct an evidentiary hearing if necessary, to
determine the specific nature and scope of injunctive relief to which Chaos is
entitled.
IT IS SO ORDERED on this

-t\\

I;

7ay of February, 2018.

30