WebQuest.com Inc. v. Hayward Industries

Filing 47

MEMORANDUM DECISION Regarding Motion For Judgment on the Pleadings 25 ; Motion to Dismiss Counterclaim 30 ; and Motion for Sanctions 29 ; signed by Judge Oliver W. Wanger on 11/8/2010. (Defendant shall lodge a formal order consistent with this decision within five (5) days following electronic service of this decision by the clerk. Plaintiff shall file an amendedcomplaint within fifteen (15) days of the filing of the order.Defendant shall file a response within fifteen (15) days ofreceipt of the amended complaint.) (Gaumnitz, R)

WebQuest.com Inc. v. Hayward Industries

Doc. 47

1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and for I. INTRODUCTION. WebQuest.com, Inc., ("Plaintiff") proceeds with this action declaratory relief against Hayward Industries, Inc. v. HAYWARD INDUSTRIES, INC., Defendant. WEBQUEST.COM, INC., Plaintiff, 1:10-cv-00306-OWW-JLT MEMORANDUM DECISION REGARDING MOTION FOR JUDGMENT ON THE PLEADINGS (Doc. 25); MOTION TO DISMISS COUNTERCLAIM (Doc. 30); AND MOTION FOR SANCTIONS (Doc. 29)

("Defendant") arising out of a domain name dispute.

On April 26,

2010, Defendant filed a counterclaim against Plaintiff. (Doc. 10). Defendant filed a motion for judgment on the pleadings on June 29, 2010. (Doc. 20). Plaintiff filed opposition to Defendant's (Doc. 25). On August 31,

motion for judgment on August 30, 2010.

2010, Plaintiff filed a motion for sanctions in connection with Defendants motion for judgment on the pleadings. (Doc. 29).

Plaintiff also filed a motion to dismiss Defendant's counterclaim. (Doc. 30). Defendant filed opposition to Plaintiff's motion to dismiss motion for sanctions on October 12, 2010. (Doc. 35).

Defendant filed a reply to Plaintiff's opposition to the motion for 1

Dockets.Justia.com

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judgment on the pleadings on October 12, 2010.

(Doc. 36).

On October 15, 2010, Plaintiff filed a reply to Defendant's opposition to the motion to dismiss and a reply to Defendant's opposition to the motion for sanctions. (Docs. 41, 42).

II. FACTUAL BACKGROUND. Plaintiff is a domain name investment company with a portfolio of thousands of domain names. On or about July 31, 2006, Plaintiff

purchased the domain name "Hayward.com" from Hayward & Associates, Inc., a Georgia-based IT company. Plaintiff had previously

registered the "wwwHayward.com" domain name on August 14, 2004. Plaintiff alleges that at the time that Plaintiff registered the Hayward domain names ("Domain Names"), it had never heard of Defendant, Hayward Industries. Plaintiff states it did not

register the Domain Names with the intent to sell them to Hayward Industries, and Plaintiff never offered to sell the Domain Names to Hayward Industries. domain Plaintiff name because alleges of it obtained the

"Hayward.com"

Hayward's

geographic

significance as a city in the Bay Area of Northern California. After registering with the Domain Names, Plaintiff A used them in

connection

pay-per-click

advertising.

domain

name

monetization company, Domain Sponsor, supplied the content for the Hayward Sites. Defendant is a manufacturer and seller of pool equipment and related supplies. Defendant has been the owner of the trademark Hayward has registered numerous the HAYWARD mark, such as

HAYWARD since February 8, 1977. domain names incorporating

"haywardnet.com" and "haywardpoolproducts.com."

Hayward uses the

domain name "haywardnet.com" for the uniform resource locator 2

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("URL") of its primary company website devoted to advertising and promoting the swimming pool controls, filters, heaters, pumps, valves, automatic pool cleaners, and related products that the company manufactures and sells. Immediately after Plaintiff acquired "Hayward.com" on July 31, 2006, Defendant sent Plaintiff a cease and desist letter, dated August 1, 2006, accusing Plaintiff of willful infringement and dilution of Hayward's trademarks, and demanding that Plaintiff transfer "Hayward.com" to Defendant. By letter dated August 4,

2006, Plaintiff denied the allegations. In that letter, Plaintiff informed portfolio Hayward of Industries that it geo was the registrant names, of a

Northern

California

domain

including From no

"Hayward.com", "CastroValley.com", and "Pleasanton.com." August 2006 to November 3, 2009, Plaintiff received

correspondence from Defendant. Defendant filed a Complaint with the World Intellectual

Property Organization ("WIPO") on or about November 3, 2009. Proceedings commenced on November 18, 2009, and a decision was issued on January 27, 2010 ordering Plaintiff to transfer the Domain Names to Defendant. III. DISCUSSION. A. Plaintiff's Motion to Dismiss Defendant's Counter-Claims Plaintiff seeks dismissal of Defendant's counter-claims on the grounds that Defendant violated Rule 8 of the Federal Rules of Civil Procedure by attaching over one-hundred pages of exhibits to its pleading. Alternatively, Plaintiff moves to strike the

exhibits attached to Defendants' counter claim pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. 3

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A district court has discretion to dismiss a claim due to a party's excessive attachment of unnecessary exhibits. See, e.g.,

Hatch v. Reliance Ins. Co., 758 F.2d 409, 415 (9th Cir. 1985) (noting that district court did not abuse discretion in dismissing complaint that included over 70 pages of exhibits). Here, because

the voluminous exhibits attached to Defendant's counter-claim do not render the claim confusing or otherwise violative of Rule 8, dismissal is not warranted. by Defendant's attachment Further, Plaintiff was not prejudiced of the exhibits, to as they have no

evidentiary

value.

Plaintiff's

motion

dismiss

Defendant's

counter-claim is DENIED. A district court also has discretion to strike any immaterial or impertinent matter from a pleading. Fed. R. Civ. P. 12(f).

Although documentary evidence may be incorporated into a pleading pursuant to Rule 10 of the Federal Rules of Civil Procedure, exhibits containing largely evidentiary material typically do not fall within the purview of Rule 10. See United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). exhibits Defendant attached to Save for Exhibit A, all of the its counter-claim constitute

unnecessary evidentiary materials.1 authenticated.

See id.

The documents are not

Plaintiff's motion to strike is GRANTED.

B. Defendant's Motion for Judgment on the Pleadings Defendant contends it is entitled to judgment on the pleadings with respect to its counter-claim under 15 U.S.C. § 1125(d). In

order to prevail on a claim under section 1125(d), Defendant must

Although Plaintiff's motion to strike d i s c r e t i o n to strike these materials sua sponte.

1

is untimely, the court Fed. R. Civ. P. 12.

has

4

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establish that (1) Defendant is the holder of a distinctive mark that is entitled to protection; (2) the domain names registered by Plaintiff are identical or confusingly similar to Defendant's mark; (3) Plaintiff registered the domain names with a bad faith intent to profit from them. See, e.g., Lahoti v. VeriCheck, Inc., 586 Because whether Plaintiff acted

F.3d 1190, 1197 (9th Cir. 2009).

with a bad faith intent to profit from Defendant's mark is a factual question, judgment on the pleadings is typically

inappropriate. Section 1125(d)(1)(B)(i) sets forth nine non-exclusive

criteria a court may consider in assessing whether a party acted in bad faith. "The first four factors are those that militate against a finding of bad faith by providing some reasonable basis for why a defendant might have registered the domain name of another mark holder." Lucas Nursery & Landscaping, Inc. v. Grosse, 359 F.3d A court may consider:

806, 809 (6th Cir. 2004).

(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 15 U.S.C. § 1125(d)(1)(B)(i). Defendant contends that each of

these factors weighs in favor of finding Plaintiff acted in bad faith, because Plaintiff has no trademark or other intellectual property rights in the domain name, has never been known as "Hayward," had no prior use of the domain name in connection with 5

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a bona fide offering of goods or services, and never developed the website beyond placing pay-per-click advertising links on the site. Defendant also contends that the fifth, sixth, eighth, and ninth factors listed in section 1125(d)(1)(B)(i) also support a finding of bad faith. The fifth factor concerns a persons "intent

to divert customers from the mark owner's online location to a site accessible under the domain name." The pleadings do not establish

that Plaintiff "intended" to divert customers from Defendant's website; to the contrary, the complaint alleges that Plaintiff had never heard of Defendant at the time it registered the Domain Names.2 The sixth factor set forth in section 1125(d)(2)(B)(i) states that courts may consider: 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; 15 U.S.C. § 1125(d)(1)(B)(i). Defendant correctly notes that

Plaintiff's complaint alleges that it offered to sell the Domain Names at a public auction. The eighth factor under 1125(d)(1)(B)(i) provides that the person's registration or acquisition of multiple domain names 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

2 Defendant's attempt to rely on exhibits to the counter-claim to establish t h a t Plaintiff's website has led to confusion demonstrates the impropriety of d e c i d i n g this issue at the pleading stage. Likelihood of confusion is a factual i s s u e . Green v. Fornario, 486 F.3d 100, 106 (3rd Cir. 2007).

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famous at the time of registration of such domain names, without regard to the goods or services of the parties may evince bad faith. Id. This factor is of no help to Defendant, alleges that it had never heard of

3 as 4 Defendant at the time it registered the Domain Names. 5 Finally, the ninth factor concerns "the extent to which the 6 mark incorporated in the person's domain name registration is or is 7 not 8 1125(c)]." Id. Defendant argues that because it holds a trademark 9 for "HAYWARD," the mark is presumed distinctive and thus that 10 Plaintiff's use of the mark within the Domain Names evinces bad 11 faith. 12 registration of a particular mark supports the distinctiveness of 13 that 14 protection"). 15 is not always sufficient to establish distinctiveness. See id. 16 ("Registration alone may be sufficient in an appropriate case to 17 satisfy 18 Further, Defendant does not contend, and the pleadings to not 19 establish, that HAYWARD is "famous" within the meaning of section 20 1125(c). 21 Although the parties' pleadings assert that several of the 22 factors listed in section 1125(d)(2)(B)(i) support a finding that 23 Plaintiff acted in bad faith, mechanistic application of the 24 criteria 25 appropriate in a case in which a party's intent is subject to 26 dispute. 27 Nursery, 28 7 As the Fourth Circuit Court of Appeal explained in Lucas set forth in section 1125 is neither required nor a determination of distinctiveness) (emphasis added). However, as Lahoti makes clear, registration alone mark, because the PTO should not otherwise give it See Lahoti, 586 F.3d at 1199 ("Federal trademark distinctive and famous within the meaning of [section Plaintiff's complaint

1 2 3 4

The role of the reviewing court is not simply to add factors and place them in particular categories, without making some sense of what motivates the conduct at issue. The factors are given to courts as a guide, not as a substitute for careful thinking about whether the conduct at issue is motivated by a bad faith intent to profit. 359 F.2d at 811. Bad faith under section 1125(d) is rarely

5 discernible directly and typically must be inferred from pertinent 6 facts and circumstances. 7 (6th Cir. 2006). 8 is, discovery is important in order to allow factual development of 9 the pertinent facts and circumstances relevant to the issue of an 10 entity's bad faith. 11 Here, Plaintiff's motivation for registering the Domain Names 12 is subject to a factual dispute. 13 with 14 presents a question of fact that is not resolvable as a matter of 15 law on a motion for judgment on the pleadings. 16 that it registered the Domain Names because of the geographic 17 significance of Hayward as a city in the Bay Area of Northern 18 California. 19 complaint as true, Plaintiff's activity does not as a matter of law 20 establish the quintessential case of bad faith intent to profit 21 contemplated by section 1125. 22 v. Found. for Apologetic Info. & Research, 23 (10th Cir. 2008) ("quintessential example of a bad faith intent to 24 profit is when a defendant purchases a domain name very similar to 25 the trademark and then offers to sell the name to the trademark 26 owner at an extortionate price...[or] intend[s] to profit by 27 diverting customers from the website of the trademark owner to the 28 8 527 F.3d 1045, 1058 See, e.g., Utah Lighthouse Ministry (Comp. at 7). Accepting the allegations of the Plaintiff contends bad faith intent within the meaning of section 1125(d) Whether or not Defendant acted See Green, 486 F.3d at 107. Where it is unclear how well-recognized a mark See Audi AG v. D'Amato, 469 F.3d 534 549

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defendant's own website, where those consumers would purchase the defendant's products or services instead of the trademark

owner's"); Bosley Med. Inst., Inc. v. Kremer, 403 F.3d 672, 680 (9th Cir. 2005) (same); Lucas Nursery, 359 F.3d at 810 ("the crucial elements of bad faith to mean an `intent to trade on the goodwill of another's mark'"); Coca-Cola Co. v. Purdy, 382 F.3d 774, 779 (8th Cir. 2004) (noting significance of evidence

establishing "bad faith intent to profit from [trademark holder's] mark"); see also Savin Corp. v. Savin Group, 391 F.3d 439, 460 (2nd Cir. 2005)(affirming finding of no bad faith in trademark action where evidence established defendant had no knowledge of trademark holder's existence at the time defendant adopted mark). Defendant

cites no authority for the proposition that bad faith may be found despite an entity's lack of knowledge of a trademark holder's existence. C. Plaintiff's Motion for Sanctions Plaintiff seeks sanctions against Defendant on the grounds that Defendant's motion for judgment on the pleadings violates Rule 11 of the Federal Rules of Civil Procedure. Although Defendant's

motion for judgment borders on the frivolous, it is not so devoid of merit that it violates Rule 11. Plaintiff's motion for

sanctions is DENIED. ORDER For the reasons stated, IT IS ORDERED: 1) Plaintiff's motion to dismiss Defendant's counterclaim is DENIED; 2) Plaintiff's motion to strike all exhibits from Defendant's counterclaim, with the exception of Exhibit A, is GRANTED; 9

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3) Plaintiff's motion for sanctions is DENIED; 4) Defendant's motion for judgement on the pleadings is DENIED; 5) Defendant shall lodge a formal order consistent with this decision within five (5) days following electronic service of this decision by the clerk. Plaintiff shall file an amended

complaint within fifteen (15) days of the filing of the order. Defendant shall file a response within fifteen (15) days of receipt of the amended complaint.

IT IS SO ORDERED. Dated: hkh80h November 8, 2010 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE

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