Carnivale v. Staub Design, LLC et al

Filing 98

MEMORANDUM ORDER having considered the parties' briefs on remand, IT IS ORDERED that the clerk of court shall enter judgment in favor of plaintiff David John Carnivaleand against defendants in the amount of $25,000. Signed by Judge Sue L. Robinson on 1/7/2013. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
DAVID JOHN CARNIVALE,

Plaintiff,
v.
STAUB DESIGN, LLC;
JOHN STAUB; and DAVID STAUB;

Defendants.

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) Civ. No. 08-764-SLR
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MEMORANDUM ORDER
At Wilmington this

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th day of January, 2013, on remand from the United States

Court of Appeals for the Third Circuit, having considered the parties' briefs on remand
and the papers submitted therewith;
IT IS ORDERED that the clerk of court shall enter judgment in favor of plaintiff
David John Carnivale and against defendants in the amount of $25,000, as follows:

1. Background. Plaintiff David John Carnivale ("plaintiff') filed a complaint
against defendants Staub Design, LLC, John Staub, and David Staub (collectively,
"defendants") in the United States District Court for the Eastern District of New York on
May 30, 2007. (D.I. 1) The complaint alleges that defendants' use of the domain name
"theaffordablehouse.com" violates the Anticybersquatting Consumer Protection Act
("ACPA"}, codified as§ 43(d) of the Lanham Act, 15 U.S.C. § 1125(d). (D.I. 1) The
case was transferred to this court on October 10, 2008. (D.I. 27)

2. On March 31, 2010, this court granted in part and denied in part plaintiff's
motion for summary judgment and denied defendants' cross-motion for summary
judgment. (D.I. 57) The court found that plaintiff sufficiently proved his mark's
distinctiveness and that defendants' domain name and plaintiff's mark are identical or
confusingly similar, but the court determined that a fact finder should weigh the factors
relevant to the bad faith inquiry. See Carnivale v. Staub Design, LLC, 700 F. Supp. 2d
660 (D. Del. 201 0). After a bench trial on August 3, 2010, the court found that
defendants used plaintiff's domain name in bad faith and defendants' wholesale use of
plaintiffs mark in their domain name violated § 1125(d)(1 )(B)(i) of the A CPA. See
Carniva/e v. Staub Design, LLC, 754 F. Supp. 2d 652 (D. Del. 201 0). Specifically, the
court found "that the first, second, third, fourth, fifth, and ninth factors [of§
1125(d)(1 )(B)(i)] weigh in favor of bad faith, and the sixth, seventh, and eighth factors
weigh against bad faith. Balancing these factors qualitatively in light of the
circumstances in this case, the court concludes that the record supports plaintiff's
contention that defendants acted in bad faith." /d. at 658. The court entered judgment
for plaintiff and awarded damages in the amount of $25,000. /d. at 661.
3. On January 12, 2011, defendants appealed this court's order on summary
judgment and the judgment for plaintiff. (D.I. 72) On January 4, 2012, the Third Circuit
reversed the judgment for plaintiff and remanded the case for further consideration of
factors five and nine, "conclud[ing] that the District Court erred in evaluating factors five
and nine, ... [but] leav[ing] to the District Court the task of reanalyzing those factors
and determining how any changes affect the overall balance of the factors in this case."

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Camivale v. Staub Design, LLC, No. 11-1124, 456 Fed. App'x. 104, 108, 2012 WL
11214 (3d Cir. Jan. 4, 2012).
4. Legal Standard. To prevail under the ACPA, plaintiff must prove that
defendants acted with a bad faith intent to profit from plaintiff's mark. 15 U.S.C. §
1125(d)(1).
In determining whether a person has a bad faith intent described under
subparagraph (A), a court may consider factors such as, but not limited to--

(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;
... 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) of this section.
15 U.S.C. § 1125(d)(1)(B)(i) (emphasis added). In passing the ACPA, the Senate
sought to prohibit those with a bad faith intent from trading on the goodwill associated
with another's mark. S. REP. No. 106-140, at 4 (1999). In evaluating the requisite bad
faith intent, the statute sets forth balancing factors for courts to consider, but the Senate
cautioned that "the presence or absence of any of these factors may not be
determinative." /d. at 9; see, e.g., Mayflower Transit, LLC v. Prince, 314 F. Supp. 2d
362, 368 (D. N.J. 2004). "Courts must ultimately weigh the facts of each case and make
a determination based on those facts whether or not the defendant registered,
trafficked in, or used the domain name with bad-faith intent to profit from the goodwill of

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the mark of another." S. REP. No. 106-140, at 10. The Third Circuit recognizes that
applying these factors "is a holistic, not mechanical, exercise." Camivale, 456 Fed.
App'x. at 108 (citation omitted); Green v. Fomario, 486 F.3d 100, 106 (3d Cir. 2007). In
the first appellate opinion evaluating the bad faith factors of the ACPA, the Second
Circuit noted that the most important grounds for a decision "are the unique
circumstances of [the] case, which do not fit neatly into the specific factors enumerated
by Congress but may nevertheless be considered under the statute." Sporty's Farm
L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 499 (2d Cir. 2000); see also
Mayflower Transit, 314 F. Supp. 2d at 368. Courts should also consider "any other
elements of bad faith." Advance Magazine Publishers Inc. v. Vogue tnt'/, 123 F. Supp.
2d 790, 799 (D.N.J. 2000).
5. The fifth factor evaluates "the person's intent to divert consumers." 15 U.S.C.

§ 1125(d)(1 )(B)(i)(V). "As intent is rarely discernible directly, it must typically be inferred
from pertinent facts and circumstances." tnt'/ Bancorp, L.L.C. v. Societe Des Baines De
Mer Et Du Cercle Des Etrangers A Monaco, 192 F. Supp. 2d 467, 486 (E. D. Va. 2002).
The wholesale inclusion of a mark in the disputed domain name implies a bad faith
intent to divert customers from plaintiff's website. See id.
6. Plaintiff's website, affordablehouse.com, features the phrase, The Affordable
House, in several places, lists plaintiff's book and house plans for sale, and offers help
with specific projects or house plans. (DTX-9; DTX-31) Defendants admit to viewing
plaintiff's website and noting the copyright. (D.I. 77 at 90:14-24, 131:13-22)
Defendants then selected their domain name, theaffordablehouse.com. As this court
previously discussed, defendants' knowing and wholesale inclusion of the mark THE

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AFFORDABLE HOUSE in the domain name implies that defendants sought to divert
customers away from plaintiffs website. See Carnivale, 754 F. Supp. 2d at 660.
7. Defendants claim that their motivation and purpose for their website was to
educate the public about a new building material, autoclaved aerated concrete ("AAC").
(D.I. 77 at 83:18-84:3) As previously discussed, defendants could have accomplished
this education by using a .org website, but instead chose to register their website as a
.com. See Carnivale, 754 F. Supp. 2d at 659-60 & n.2. Defendants admit that they
were also interested in remodeling houses and that their company Staub Design, LLC,
was intended to make profits. (D. I. 77 at 114:24-115:2, 124:14-15) Defendants tried
unsuccessfully in their testimony to separate theaffordablehouse.com website - for
teaching purposes- with Staub Design, LLC- for business purposes. (D.I. 77 at
112:25-116:3) Namely, even their earliest website design contained their names and
contact information and used the slogan "The Affordable House - a project of Staub
Design LLC," tying together the website and the business. 1 (PTX-34)
8.

There is no dispute that plaintiffs website offered house plans for sale.

(DTX-31) Customers seeking to build a new home would likely be customers for a new
building material, a new way to build houses and house plans to build those houses, all

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This court's discussion of commercial use is also informative. Carnivale, 754
F. Supp. 2d at 659-60. Specifically, "defendants used the mark for commercial
purposes. . . . The court does not credit defendants' testimony that defendants'
motives were purely based on a desire to educate the public because, if this were true,
defendants would have no reason to associate the name of their business with the
project. In fact, defendants John and David Staub could have achieved their
educational purpose by developing the website in their capacity as individuals without
mentioning their business at all. In addition, the website as a whole fails to distinguish
the company's commercial activities from defendants' desire to make information on
AAC available to the public." /d. at 659.

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of which defendants claim to be interested in and which Staub Design, LLC provides.
Defendants admit that they found plaintiff's website at affordablehouse.com and then
proceeded to use the domain name theaffordablehouse.com. (D.I. 77 at 90: 18-24;
PTX-34; DTX-1) The most logical conclusion is that defendants sought to profit from an
older more established website, one whose customers were shopping for house plans
or looking at new housing options. 2 For the forgoing reasons, the court again concludes
that the fifth factor weighs in favor of bad faith.
9. The ninth factor involves the extent to which the mark incorporated in the
registrant's domain name registration is or is not distinctive and famous. See 15 U.S. C.
§ 1125(d)(1)(B)(i)(IX). This court deemed the mark inherently distinctive in its summary
judgment decision. See Carniva/e, 700 F. Supp. 2d at 664-67. Plaintiffs trademark
registration was applied for and "accepted on the basis of§ 1(a) of the Lanham Act, the
actual use in commerce provision, with no reliance on § 2(f), the acquired
distinctiveness/secondary meaning provision," and plaintiff presented evidence of
continuous use since 1996. /d. at 665-66. In line with the Third Circuit's instruction to
evaluate "how strong or distinctive [plaintiff]'s mark was," this court now turns its
attention to the factors from§ 1125 (c)(2)(A):

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The Third Circuit noted that this court's conclusion under the analysis of the
second factor that "the mark [THE AFFORDABLE HOUSE] bears no resemblance to
AAC, which is the primary focus of defendants' website," seems at odds with a
conclusion that the businesses would share customers. Carnivale, 456 Fed. App'x. at
107 n.1. Defendants continually assert that the use of AAC as a building material is the
focus of their website. The second factor focuses on whether the domain name
consists of the legal name or a name commonly used to describe defendants. THE
AFFORDABLE HOUSE is not defendants' name nor does it imply or relate to AAC or
building materials. The more detailed analysis of the fifth factor provided here should
clarify this court's rationale for its conclusion.

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(i) The duration, extent, and geographic reach of advertising and publicity of the
mark, whether advertised or publicized by the owner or third parties.
(ii) The amount, volume, and geographic extent of sales of goods or services
offered under the mark.
(iii) The extent of actual recognition of the mark.
(iv) Whether the mark was registered under the Act of March 3, 1881, or the Act
of February 20, 1905, or on the principal register.
10. This court partly evaluated these factors in its summary judgment decision
under the analysis used in Shields v. Zuccarini, 254 F.3d 476, 482 (3d Cir. 2001), which
applied the statutory factors from§ 43(c) of the Lanham Act. 3 See, Carnivale, 700 F.
Supp. 2d at 666 & n.1. Plaintiff has continuously maintained his website since 1996,
which is a form of advertising and has unlimited reach. Plaintiff has advertised in at
least two print publications, Fine Home Building Magazine in 2002 and the Seattle
Times in 2004. (PTX-15; PTX-16) Plaintiff offered his book and blueprints for sale, as
well as his architectural services. Plaintiff has presented evidence of orders for his
book and/or house plans each year from 1996-2008. (0.1. 1 app. 41-64; PTX-17 to
PTX-23) He did not testify as to the volume of sales. Plaintiff sold his book and house
plans, to customers throughout the United States, as well as from Canada, Australia
and Japan. (0.1. 1 app. 42-66; PTX-17 to PTX-23) Plaintiff has only offered his own
testimony of the recognition of his mark. Finally, plaintiff's mark is registered, albeit
after defendants' registration of their domain name. Balancing the evidence, the court
concludes that, while not the strongest mark, plaintiffs mark is distinctive.
11. The Third Circuit also instructed this court to evaluate the secondary
meaning factors presented in Browne Drug Co. v. Cococare Prods., Inc., 583 F.3d 185,

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§43(c) was rewritten as part of the 2006 amendments.
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199 (3d. Cir. 2008). See Camivale, 456 Fed. App'x. at 108. These are:
(1) the extent of sales and advertising leading to buyer association; (2) length of
use; (3) exclusivity of use; (4) the fact of copying; (5) customer surveys; (6)
customer testimony; (7) the use of the mark in trade journals; (8) the size of the
company; (9) the number of sales; (1 0) the number of customers; and, (11)
actual confusion.
Browne Drug, 583 F.3d at 199. Summarizing the discussion above, plaintiff has shown
that he has continuously operated his website since 1996 and advertised in at least two
print sources. (PTX-15; PTX-16) He has offered letters showing orders every year
from 1996-2008, coming from across the United States and a few from abroad. (D. I. 1
app. 42-66; PTX-17 to PTX-23) His website was included as a finalist for website of the
year in 2003 by Business and Economics Architecture magazine. (PTX-14) Plaintiff
has not offered any surveys or customer testimony apart from that contained in some of
the order letters, nor has he presented the number of customers or sales. Finally,
plaintiff has not offered evidence of actual confusion. Conversely, defendants have
only offered their own opinion on the weakness of plaintiff's mark. (D. I. 77 at 88:12-22;
D.l. 9-1 0) Defendants presented an exhibit containing printouts of the domain names
affordablehouse.us and affordablehouse.info. (DTX-10) As these domain names are
not .com websites, they do not impact the court's analysis. Defendants' other evidence
consists of printouts of six websites. 4 (DTX-10; DTX-11) The closest domain names
were buildingaffordable.com and affordablehouses.com. 5 (/d.) Several of the websites

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The websites are: afordablehouses.com, buildingaffordable.com, eplans.com,
simplehome.com, lchouseplans.com, frankbetz.com.
5

This court is not convinced that the website affordablehouses.com was an
active domain name, as the printout that defendants provided, dated June 16, 2010,
seems to offer up the domain name for sale.

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use the phrase "affordable house(s)" to describe their content; however, with the
exception of affordablehouses.com, none of these use "affordable house" in their
domain name. Defendants have not offered any evidence from actual consumers.
Balancing the record before it and giving due consideration to the lack of evidence for
certain factors, the court concludes that the balance tips slightly in favor of plaintiff's
mark having some secondary meaning. Overall, this court concludes again that the
ninth factor slightly supports a finding of bad faith.
12. To round out its holistic analysis of the unique circumstances in this case,
this court also considers the following. Defendants went out of their way to use
plaintiffs domain name in its entirety in their own domain name after viewing it online.
While defendants asserted that they did not wish to spend money on the domain name
disagreement, defendants filed a petition for cancellation of plaintiffs registration with
the United States Patent and Trademark Office Trademark Trial and Appeal Board,
Cancellation No. 92047553, on May 16, 2007. (D. I. 54 at 2) Defendants assert that
they are pursuing this case on principal, wanting only to educate the public about a new
building material. Defendants' alleged principled stand does not ring true in light of their
actions or testimony. Other domain names would easily accomplish defendants'
alleged goal of educating the public. Defendants' testimony failed to substantiate their
claims that the website was for educational not business purposes, and that the domain
name theaffordablehouse.com was a key factor in accomplishing this educational goal.
13. Conclusion. The court has carefully reexamined factors five and nine in the
evaluation of bad faith and the unique circumstances of this case. The court again
concludes that defendants' use of the domain name theaffordablehouse.com was in
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bad faith, as it uses plaintiff's mark in violation of§ 1125(d)( 1)(B)(i) of the ACP A. 6 The
court awards statutory damages of $25,000 in light of defendants' bad faith
infringement of plaintiffs mark. See 15 U.S.C. § 1117(d). Defendants may not resume
usage of the domain name.

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As previously stated:
Weighing the balance of these nine factors qualitatively in light of the
circumstances of the case as a whole, the court concludes that
defendants acted in bad faith. Although defendants did not hoard and sell
domain names registered under a false name, defendants settled on the
domain name www.theaffordablehouse.com to promote their business,
even after learning that plaintiff maintained a website at
www.affordablehouse.com for similar commercial purposes. Defendants
insisted on using the disputed domain name even though it bore no
relation to their legal names and had only a tenuous relation to the subject
matter of the website. Moreover, defendants lacked credibility in their
testimony, drawing nebulous distinctions between their business and their
allegedly noncommercial project.

Camiva/e, 754 F. Supp. 2d at 661.

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