Oaklawn Jockey Club, Inc. et al v. Kentucky Downs, LLC et al

Filing 41

MEMORANDUM OPINION AND ORDER by Judge Greg N. Stivers. IT IS HEREBY ORDERED that the Motion to Dismiss filed by Defendants (DN 30 ) is GRANTED. Plaintiffs' Motion for Preliminary Injunction (DN 28 ) is DENIED AS MOOT. cc: Counsel (CDR)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:15-CV-00118-GNS

OAKLAWN JOCKEY CLUB, INC., et al.

PLAINTIFFS

v.

KENTUCKY DOWNS, LLC
ENCORE GAMING, LLC

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiffs’ Motion for Preliminary Injunction (DN 28)
and Defendants’ Joint Motion to Dismiss for Failure to State a Claim (DN 30). The motions
have been fully briefed and are ripe for decision. For the reasons stated below, the Motion to
Dismiss (DN 30) is GRANTED, and the Motion for Preliminary Injunction (DN 28) is
DENIED AS MOOT.1
I.

BACKGROUND

Plaintiffs own horse racing tracks and trademark rights associated with those tracks.
(Am. Compl. ¶ 23, DN 20). The claims in this case relate to use of Plaintiffs’ marks by
Defendant Encore Gaming, LLC (“Encore”) in conjunction with Encore’s pari-mutuel gambling
system featured at a track owned by Defendant Kentucky Downs, LLC (“Kentucky Downs”).
(Am. Compl. ¶¶ 24-54). Encore’s system presents a form of gambling called “historical horse

1

Pursuant to LR 7.1(f), Plaintiffs have also filed the Motion for Hearing (DN 29). Because the
Court determines that it is unnecessary to hold a hearing to address the pending motions, the
Motion for Hearing is DENIED.

racing,”2 which displays a digitized enactment of an historical race on a video monitor after a
wager is placed and identifies when and where the race occurred. (Defs.’ Resp. to Mot. for
Prelim. Inj. 4, 11, DN 35). While displaying the animated race, the video screen identifies the
race track where the race was conducted, variously including the names of Plaintiffs’ tracks and
Plaintiffs’ wordmarks. (Defs.’ Resp. to Mot. for Prelim. Inj. 4). For example, the system may
display “Location: Churchill Downs” followed by the date and other information identifying the
past race. All identifying information is displayed in plain white lettering at the bottom of the
screen. (Defs.’ Resp. to Mot. for Prelim. Inj. 4).
In the Motion for Preliminary Injunction, Plaintiffs seek to enjoin Defendants’ usage of
Plaintiffs’ trademarks. (Pls.’ Mem. in Supp. of Mot. for Prelim. Inj. 1, DN 28-2). In the Motion
to Dismiss, Defendants seek to dismiss all claims asserted in the Amended Complaint. (Defs.’
Mot. to Dismiss 2, DN 30).
II.

JURISDICTION

The Court has subject matter jurisdiction over this pursuant to 15 U.S.C. § 1121, 28
U.S.C. § 1331, and 28 U.S.C. § 1338(a)-(b), and supplemental jurisdiction over related state law
claims pursuant to 28 U.S.C. § 1367(a).
III.
A.

DISCUSSION

Trademark Infringement Claims

Plaintiffs claim that Defendants are infringing upon their trademarks and seek immediate
injunctive relief to protect them from imminent harm. See IP, LLC v. Interstate Vape, Inc., No.

2

Under Kentucky Horse Racing Commission regulations, historical horse racing is defined as
“any horse race that: (a) [w]as previously run at a licensed pari-mutuel facility located in the
United States; (b) [c]oncluded with official results; and (c) [c]oncluded without scratches,
disqualifications, or dead-heat finishes.” 810 KAR 1:001 § 1(30).
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1:14-CV-00133-JHM, 2014 WL 5791353, at *2 (W.D. Ky. Nov. 6, 2014) (“A preliminary
injunction is an extraordinary remedy that is generally used to preserve the status quo between
the parties pending a final determination of the merits of the action.”). Defendants argue that
Plaintiffs have failed to state a claim upon which relief can be granted regarding Plaintiffs’
trademark infringement claims.

(Defs.’ Mem. in Supp. of Mot. to Dismiss 7, DN 30-1

[hereinafter Defs.’ Mot.]).
In order to survive dismissal for failure to state a claim under Rule 12(b)(6), “a complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted)
(citation omitted). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. (citation omitted). “[A] district court must (1) view the complaint in the light most
favorable to the plaintiff and (2) take all well-pleaded factual allegations as true.” Tackett v. M
& G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citation omitted). “But the district
court need not accept a bare assertion of legal conclusions.” Id. (internal quotation marks
omitted) (citation omitted).

“A pleading that offers labels and conclusions or a formulaic

recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it
tenders naked assertion[s] devoid of further factual enhancement.” Iqbal, 556 U.S. at 678
(internal quotation marks omitted) (citation omitted).
A trademark is “any word, name, symbol, or device . . . used by a person . . . to identify
and distinguish his or her goods, including a unique product, from those manufactured or sold by
others and to indicate the source of the goods, even if that source is unknown.” 15 U.S.C. §
1127. To assert a claim for trademark infringement, Plaintiffs must allege that: (1) they own the

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registered trademark; (2) Defendants used the mark in commerce; and (3) the use was likely to
cause confusion. See 15 U.S.C. § 1114(1). Only the likelihood of confusion is at issue in this
case.
1.

The Likelihood Of Confusion

Plaintiffs claim trademark infringement under the Lanham Act and under Kentucky
common law, which both employ the same “likelihood of confusion” test.3 See Daddy’s Junky
Music Stores, Inc. v. Big Daddy’s Family Music Ctr., 109 F.3d 275, 280 (6th Cir. 1997)
(employing the “likelihood of confusion” standard to a federal trademark infringement claim);
Colston Invs. Co v. Home Supply Co., 74 S.W.3d 759, 764 (Ky. App. 2001) (stating the
“likelihood of confusion” is the barometer for trademark infringement). The elements turn on
“whether the Defendant’s use of the disputed mark is likely to cause confusion among consumers
regarding the origin of the goods offered by the parties.” Big Daddy’s, 109 F.3d at 280.
The Sixth Circuit has held that likelihood of confusion depends on eight factors:
(1) strength of the senior mark; (2) relatedness of the goods or services; (3)
similarity of the marks; (4) evidence of actual confusion; (5) marketing channels
used; (6) likely degree of purchaser care; (7) the intent of defendant in selecting
the mark; and (8) likelihood of expansion of the product lines.
Hensley Mfg., Inc. v. ProPride, Inc., 579 F.3d 603, 610 (6th Cir. 2009) (citing Big Daddy’s, 109
F.3d at 280). These factors are not equally weighted, but are used as a guide in determining
whether “relevant consumers are likely to believe that the products or services offered by the
parties are affiliated in some way.” Homeowners Grp., Inc. v. Home Mktg. Specialists, Inc., 931
F.2d 1100, 1107 (6th Cir. 1991). This eight-factor test does not apply, however, where a

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Plaintiffs also assert an unfair competition claim under 15 U.S.C. § 1125(a), which likewise
requires a showing of likelihood of confusion. See Champions Golf Club v. The Champions Golf
Club, 78 F.3d 1111, 1123 (6th Cir. 1996) (holding that “[a]s in an action alleging infringement of
a mark, likelihood of confusion is the essence of an unfair competition claim”).
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defendant uses the mark in a “non-trademark way.” See Interactive Prods. Corp. v. a2z Mobile
Office Sols., Inc., 326 F.3d 687, 695 (6th Cir. 2003) (citing New Kids on the Block v. News Am.
Publ’g, Inc., 971 F.2d 302, 307 (9th Cir. 1992)); Hensley Mfg., 579 F.3d at 610. Specifically,
there can be no finding of trademark infringement where the alleged offending party is not
“using the challenged mark in a way that identifies the source of their goods.” Interactive, 326
F.3d at 695. In this regard, an important distinction exists between a mark used to identify the
source of a good versus a use that is merely descriptive. See Interactive, 326 F.3d at 695; New
Kids, 971 F.2d at 307.
A good example of the non-trademark use of a mark is presented in WCVB-TV v. Boston
Athletic Ass’n, 926 F.2d 42, 46 (1st Cir. 1991). There, the Boston Athletic Association (“BAA”)
sued seeking to enjoin the local television station from displaying the words “Boston Marathon”
as part of the station’s coverage of the annual Patriot’s Day marathon. See id. at 44. The BAA
asserted that it had trademark rights in the mark BOSTON MARATHON and alleged that the
station’s use of the mark infringed upon BAA’s trademark rights. See id. In reviewing the trial
court’s decision refusing to grant injunctive relief, the Fourth Circuit affirmed, holding that there
was no infringement and that the station was not required to have a license from the BAA to
broadcast coverage of the event. See id. at 46-47. In concluding that there was no likelihood of
confusion to support the infringement claim, the court noted:
[T]he record provides us with an excellent reason for thinking that Channel 5's
use of the words “Boston Marathon” would not confuse the typical Channel 5
viewer. That reason consists of the fact that those words do more than call
attention to Channel 5’s program; they also describe the event that Channel 5 will
broadcast. Common sense suggests (consistent with the record here) that a viewer
who sees those words flash upon the screen will believe simply that Channel 5
will show, or is showing, or has shown, the marathon, not that Channel 5 has
some special approval from the BAA to do so. In technical trademark jargon, the
use of words for descriptive purposes is called a “fair use,” and the law usually
permits it even if the words themselves also constitute a trademark. If, for
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example, a t-shirt maker placed the words “Pure Cotton” (instead of the words
“Boston Marathon”) on his t-shirts merely to describe the material from which the
shirts were made, not even a shirt maker who had a registered trademark called
“Pure Cotton” could likely enjoin their sale. As Justice Holmes pointed out many
years ago, “[w]hen the mark is used in a way that does not deceive the public we
see no such sanctity in the word as to prevent its being used to tell the truth.”
Id. at 46 (internal citations omitted) (quoting Prestonettes, Inc. v. Coty, 264 U.S. 359, 368
(1924)).
In order to survive a motion to dismiss, Plaintiffs must establish Defendants’ use of their
marks is likely to cause confusion regarding the source of the pari-mutuel wagering experience
Defendants present. See Hensley Mfg., 579 F.3d at 610. Here, the Complaint fails to plausibly
establish the Defendants’ use of Plaintiffs’ marks is anything but a non-trademark use. The
video terminal utilized by the customer is physically located at Kentucky Downs’ track in
Franklin, Kentucky, so that it is inconceivable that the customer may be confused regarding the
site of his gambling activity.

As Plaintiffs specifically incorporate into their Amended

Complaint, Defendants’ typical usage of Plaintiffs’ marks is depicted as follows:

(Am. Compl. Ex. G, at 7-8, DN 20-7). This image reflects use of the mark to identify the
location of the historical race along with the date and race number. Defendants’ use of the marks
is more akin to race results appearing in the sports section of the newspaper rather than any
purported sponsorship or association from Plaintiffs.

Particularly striking is the fact the

trademark follows the descriptive term “Location” and is used amongst other descriptions of

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“Date” and “Race Number.” (Defs.’ Mot. 9). In addition, the “race” presentation is animated
and does not feature any actual images of Plaintiffs’ tracks. Further, the bettor cannot be enticed
by confusion regarding the source of the “goods”—i.e., the location of the race—because this
information is intentionally withheld until after the bet is placed. (Defs.’ Mot. 11). Indeed, it is
central to historical racing that the gambler cannot identify the race in advance. Otherwise, all
bets would be winners.
Defendants’ use of the marks likewise does nothing to suggest any form of sponsorship
or partnership between Encore and Plaintiffs’ horse tracks. No logo or stylized representation of
the marks is depicted in any manner. Defendants are fully within their rights to describe where
an event took place in their wagering system without implying the owners of the racetrack are
sponsoring the game. Presenting the name of Plaintiffs’ tracks in plain words as the location of a
race does not constitute trademark infringement. See World Impressions, Inc. v. McDonald’s
Corp., 235 F. Supp. 2d 831, 843 (N.D. Ill. 2002) (“Disney concedes, as it must, that plaintiff has
the right to describe Disneyland’s location on a map with the word ‘Disneyland’ in a plain
printed or typed form.”).
Defendants’ use of Plaintiffs’ marks is a non-trademark use which renders the eight
factor test inapplicable in this case. See Interactive, 326 F.3d at 695. As the Sixth Circuit has
stated, these ordered considerations must yield to the “[t]he ultimate question [which is] whether
relevant consumers are likely to believe that the products or services offered by the parties are
affiliated in some way.” Homeowners Grp., 931 F.2d at 1107. Because Defendants’ use of
Plaintiffs’ marks is in a non-trademark manner, there is no likelihood of confusion required to
support Plaintiffs’ trademark infringement claim.

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2.

Fair Use

Even if Plaintiffs established Defendants’ use of their marks was in fact a trademark use
and was likely to cause confusion, their claim still fails because Defendants are protected under
the affirmative defense of fair use.

The fair use doctrine establishes a defense against

infringement when:
[T]he use of the name, term, or device charged to be an infringement is a use, otherwise
than as a mark, of the party’s individual name in his own business, or of the individual
name of anyone in privity with such party, or of a term or device which is descriptive of
and used fairly and in good faith only to describe the goods or services of such party, or
their geographic origin . . . .
15 U.S.C. § 1115(b)(4) (emphasis added). See also KP Permanent Make-Up, Inc. v. Lasting
Impression I, Inc., 543 U.S. 111, 118-22, 125 (2004); Audi AG v. D’Amato, 469 F.3d 534, 547
(6th Cir. 2006).

The Supreme Court has stated “some degree of confusion” is permitted

alongside the fair use defense. KP Permanent, 543 U.S. at 123. “In evaluating a defendant’s fair
use defense, a court must consider whether [the] defendant has used the mark: (1) in its
descriptive sense; and (2) in good faith.” ETW Corp. v. Jireh Publ’g, Inc., 332 F.3d 915, 920
(6th Cir. 2003) (citation omitted) (applying the test to the artistic use of Tiger Woods’ image).
The Sixth Circuit has extended the fair use defense to trade names. See Innovation Ventures,
LLC v. N2G Distrib., Inc., 763 F.3d 524, 534 (6th Cir. 2014) (applying the two-part fair use test
in dispute over energy drink trademarks). Under the doctrine of fair use, “the holder of a
trademark cannot prevent others from using the word that forms the trademark in its primary or
descriptive sense.” Herman Miller, Inc. v. Palazzetti Imps. & Exps., Inc., 270 F.3d 298, 319 (6th
Cir. 2001).
The plain language of 15 U.S.C. § 1115(b)(4) allows a fair use for trademarks which
describe “the geographic origin” of Defendants’ product—i.e., where the depicted historical race

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was run. See 15 U.S.C. § 1115(b)(4). The statute’s geographic-origin protection stands for the
unremarkable proposition that defendants may state where the subject racing events occurred
without committing trademark infringement. See Leelanau Wine Cellars, Ltd. v. Black & Red,
Inc., 502 F.3d 504, 512-13, 521 (6th Cir. 2007) (use of the name of a region of France did not
infringe on the mark of a competing winery); Chrysler Grp. LLC v. Moda Grp. LLC, 796 F.
Supp. 2d 866, 870 (E.D. Mich. 2011) (use of the phrase “imported from Detroit” did not
constitute trademark infringement).
Defendants are free to use Plaintiffs’ marks in a descriptive sense as Encore’s game is
currently conducted. Herman Miller, 270 F.3d at 319. As discussed above, Defendants’ only
use of Plaintiffs’ marks fits within an innately descriptive template identifying the geographic
origin of the historical races utilized in Defendants’ wagering system. Any doubt regarding the
descriptive use of Plaintiffs’ marks is erased, for instance, by use of the word “Location” in
conjunction with a colon, followed by “Churchill Downs.” (Defs.’ Mot. 9).

This clearly

indicates the location of the event rather than portraying any association between Churchill
Downs and Defendants’ product.4
Plaintiffs assert that using the names of their tracks is not a descriptive term and argue for
a narrow definition of geographic origin under 15 U.S.C. § 1115(b)(4). (Pls.’ Reply to Mot. for
Prelim. Inj. 7-8, DN 38). Plaintiffs’ reading is too restrictive. Plaintiffs suggest if Defendants
seek to convey a race occurred at Churchill Downs, they could simply state the race happened in
Louisville, Kentucky. (Pls.’ Reply to Mot. for Prelim. Inj. 7-8). Courts have uniformly rejected
“almost as good” alternatives regarding descriptive use. See Parks, 329 F.3d at 451; New Kids,
4

The APA style guide notes a word or sentence that follows a colon is one that “illustrates,
extends, or amplifies the preceding thought.” AMERICAN PSYCHOLOGICAL ASSOCIATION, What
are the correct ways to use a colon?, http://www.apastyle.org/learn/faqs/colon-use.aspx (last
visited Jan. 15, 2016).
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971 F.2d at 307. The Sixth Circuit exemplified this problem with a quote from Mark Twain:
“[t]he difference between the almost-right word and the right word is really a large matter—it’s
the difference between the ‘lightning-bug’ and the ‘lightning.’” Parks, 329 F.3d at 451 (citations
omitted). The Sixth Circuit and other jurisdictions have rejected the notion that trademarks
cannot be used descriptively simply because another phrase or word may suffice. See Parks v.
LaFace Records, 329 F.3d 437, 451 (6th Cir. 2003); New Kids, 971 F.2d at 307.
Defendants are protected by the fair use defense when describing where an event took
place, even when the location described is most commonly conveyed using a registered
trademark. See World Impressions, 235 F. Supp. 2d at 843. A significantly different situation
would exist if Defendants used Plaintiffs’ logos and fonts to convey this same geographic
information. In such an instance, Defendants would be using more of the Plaintiffs’ marks than
necessary to convey the specific geographic location which could imply some association
between Plaintiffs and Encore’s product. This is simply not the case here. Defendants have used
Plaintiffs’ marks in a purely descriptive sense instead of any stylized depiction of the marks.
Therefore, Defendants satisfy the first element of the fair use doctrine.
Plaintiffs contend Defendants use of their marks alone constitutes bad faith because
Defendants had knowledge the marks were protected. (Pls.’ Resp. to Mot. to Dismiss 13, DN 36
[hereinafter Pls.’ Resp.]). In light of Kentucky’s pari-mutuel wagering regulations requiring
identification of historical races, however, Defendants’ use of Plaintiffs’ marks in this context
cannot constitute bad faith. Specifically, 810 KAR 1:011 § 3(7)(f) provides with respect to
historical races:
After a patron finalizes his or her wager selections, the terminal shall display a
video replay of the race, or a portion thereof, and the official results of the race.
The identity of the race shall be revealed to the patron after the patron has
placed his or her wager
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810 KAR 1:011 § 3(7)(f) (emphasis added). Identifying the race would seem to necessitate
providing the track name, date, and race number of the event. This information is mandated by
the regulatory requirement, which negates the element of bad faith.
Likewise, Defendants’ knowledge of Plaintiffs’ trademark rights alone is not sufficient to
establish bad faith. As the Second Circuit has noted:
It is a fundamental principle marking an outer boundary of the trademark
monopoly that, although trademark rights may be acquired in a word or image
with descriptive qualities, the acquisition of such rights will not prevent others
from using the word or image in good faith in its descriptive sense, and not as a
trademark. The principle is of great importance because it protects the right of
society at large to use words or images in their primary descriptive sense, as
against the claims of a trademark owner to exclusivity. This common-law
principle is codified in the Lanham Act, which provides that fair use is established
where “the use of the name, term, or device charged to be an infringement is a
use, otherwise than as a mark, . . . which is descriptive of and used fairly and in
good faith only to describe the goods or services of . . . [a] party, or their
geographic origin.”
Car-Freshner Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267, 269 (2d Cir. 1995) (internal
citations omitted) (quoting 15 U.S.C. § 1115(b)(4)). See also Dessert Beauty, Inc. v. Fox, 568 F.
Supp. 2d 416, 427-28 (S.D.N.Y. 2008), aff’d, 329 F. App’x 333 (2d Cir. 2009) (granting
summary judgment for the defendant on the defense of fair use because neither failing to conduct
a trademark search nor ignoring a cease and desist letter constitutes bad faith).
Therefore, even if Plaintiffs could establish a likelihood of confusion, the Defendants
have satisfied the affirmative defense of fair use, which warrants the dismissal of the claims. See
Hensley Mfg., 579 F.3d at 612 (affirming the dismissal of trademark infringement claims under
Rule 12(b)(6) because of the fair use defense).

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3.

Unfair Competition

As noted above, a claim of unfair competition under 15 U.S.C. § 1125(a) is also governed
by the “likelihood of confusion” test. See Daddy’s Junky Music, 109 F.3d at 288; Wynn Oil Co.
v. Am. Way Serv. Corp., 943 F.2d 595, 604-05 (6th Cir. 1991); Frisch’s Rests., Inc. v. Elby’s Big
Boy of Steubenville, Inc., 670 F.2d 642, 647-49 (6th Cir. 1982). Having already determined that
Defendants’ use of Plaintiffs’ marks does not create confusion and, regardless, is protected by
the affirmative defense of fair use, Plaintiffs’ unfair competition claims are likewise dismissed.
4.

Timeliness of Dismissal

Plaintiffs further argue that this matter should not be decided at the motion to dismiss
stage, citing cite case law outside of the jurisdiction indicating that “distinctiveness” is a question
of fact which should be decided by a jury. (Pls.’ Resp. 7, 12). The question of distinctiveness,
however, is not a basis of Court’s ruling. Instead, this case turns on the lack of confusion in the
use of Plaintiffs’ marks and the affirmative defense of fair use. See Hensley Mfg., 579 F.3d at
610 (affirming dismissal where exhibits and facts alleged in the complaint “demonstrated that
there was no likelihood of confusion and that the fair use defense conclusively applied as a
matter of law.”).
Here, Plaintiffs have failed to allege plausible facts which would justify this matter
proceeding beyond this motion to dismiss. The Court sees no benefit to either party in allowing
further litigation in this matter. Instead, dismissal is appropriate at the point of “minimum
expenditure of time and money by the parties and the court.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 558 (2007) (internal quotation marks omitted) (citation omitted). Therefore, the Court
grants Defendants’ motion and dismisses Plaintiffs’ claims in their entirety.

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D.

Preliminary Injunction

In light of the Court’s disposition of the motion to dismiss, the motion for preliminary
injunction is now moot and will be denied. See Great Lakes Consortium v. Michigan, 480 F.
Supp. 2d 977, 986 n.4 (W.D. Mich. 2007).
IV.

CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED that Motion to Dismiss filed by
Defendants Encore Gaming, LLC and Kentucky Downs, LLC (DN 30) is GRANTED and
Plaintiffs’ Motion for Preliminary Injunction (DN 28) is DENIED AS MOOT.

Greg N. Stivers, Judge
United States District Court
April 18, 2016

cc:

counsel of record

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