Weather Underground, Incorporated v. Navigation Catalyst Systems, Incorporated et al

Filing 49

TRANSCRIPT of Motion Hearing held on March 15, 2010. (Court Reporter/Transcriber: Deborah Kremlick) (Number of Pages: 22) Redaction Request due 4/28/2010. Redacted Transcript Deadline set for 5/10/2010. Release of Transcript Restriction set for 7/6/2010. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date, the transcript is publicly available. (JCha)

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Weather Underground, Incorporated v. Navigation Catalyst Systems, Incorporated et al Doc. 49 1 2 3 4 Plaintiff, 5 v 6 7 8 9 Ordered By: 10 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION WEATHER UNDERGROUND, INCORPORATED, Case No. 09-CV-10756 U.S. Magistrate Judge Virginia M. Morgan Detroit, Michigan March 15, 2010 2:45 p.m. NAVIGATION CATALYST SYSTEMS, INCORPORATED, Defendant. ___________________________/ ENRICO SCHAEFER, ESQ. MOTION HEARING 11 APPEARANCES: 12 For the Plaintiff: 13 14 15 16 17 18 19 For the Defendants: 20 21 22 23 24 25 Dockets.Justia.com ENRICO SCHAEFER, ESQ. (P43506) Traverse Legal 810 Cottageview Drive Suite G-20 Traverse City, MI 49684 231-932-0411 ANTHONY PATTI, ESQ. (P43729) Hooper, Hathaway, Price, Beuche & Wallace 126 S. Main Street Ann Arbor, MI 48104-1903 734-662-4426 MICHAEL HUGET, ESQ. (P39150) Butzel, Long 350 S. Main Street Suite 300 Ann Arbor, MI 48104-2131 734-995-3110 N/A Deborah Kremlick Court Recorder: Transcriber: Proceedings recorded by electronic sound recording, transcript produced by transcription service. PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 today. MR. HUGET: THE COURT: MR. HUGET: me to proceed? THE COURT: MR. HUGET: Yes. Okay. Yes, Your Honor. Okay. plaintiff. THE COURT: MR. HUGET: Okay. Good afternoon, Your Honor. (Court in Session) THE CLERK: 2 The Court calls case number 09-10756, Weather Underground, Incorporated versus Navigation Catalyst Systems, Incorporated. identify themselves? MR. SCHAEFER: Your Honor, Enrico Schaefer on behalf Will counsel please step forward and of plaintiff Weather Underground. MR. PATTI: Anthony Patti, co-counsel for the Michael Huget on behalf of the defendant Navigation Catalyst Systems, Inc. THE COURT: Okay. We have some subpoenas at issue It's defendant's motion, would you like Yes, Your Honor, we're here, we're moving for a protective order on the third party subpoenas that have been issued to companies such as Google and Facebook and some other well known trademark owners. The basis of our -­ our motion is fairly simple and PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 straightforward. 3 The information is ­- is not necessary, it Essentially it's exceeds the scope of allowable discovery. harass -­ it's harassment of significant third parties out there designed for really no purpose that will advance this case. And our goal and our motivation for being here today is to try and keep ­- trying to keep this case focused and keep it -­ keep it narrow. All of these requests essentially -­ what they're essentially seeking is information from third parties about their trademarks which is publicly available information, information about whether these trademarks were ever asserted against defendant Navigation Catalyst Systems by way of lawsuit, cease and desist letters, whether there are licensing agreements, just a whole host of information they're seeking against Yahoo and Facebook for example relating to whether my client Navigation Catalyst registered domains and then got embroiled in a dispute with them essentially. The pretext for this motion is ­- is -­ well, it goes to our bad faith allegedly and whether we committed willful -essentially willful infringement under one of the factors in the -­ in the Lanham Act. But it's the simple facts we're focusing on, Your Honor here. And that is whether multiple domains registered by the defendant and did we know at the time, and that's a critical limitation, at the time we registered these multiple domains PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of these trademarks. And all the information they bear 4 looking for is information that would then come afterwards. You know, you send a cease and desist letter, you send a complaint, that sort of thing. It's information that is And either not relevant or information they can get from us. we're very early on the discovery process. We just supplemented our initial disclosures and produced the first set of documents and are in the process of producing more. What we're trying to do, Your Honor -­ accomplish is just try and keep the -­ let's ­- let's try to keep the other players out of this. There may become a point in time when perhaps there is an isolated or a limited piece of information that is in dispute and we need to bother Facebook and Yahoo and these other players and haul them into Court, but right now we don't need that. Let's keep this case focused and that's -­ that's the goal of our motion here. These are ­- these are just harassing subpoenas issued to generate ill will against the defendants in the marketplace quite frankly. We don't need this at this point and they haven't advanced any ­- any substantial need that they can't get this information elsewhere. I mean let's look at the very first request, the Yahoo and Facebook for example. Send us your list of all your trademarks, everything about your trademarks, unlimited request for -­ to Yahoo and others for their trademarks. PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Well, those are public records. ­- we can stipulate. 5 And we have offered to We can sit down as counsel and sit down and figure out all right, these were registered, these were not. We don't need to involve third parties in -­ in such an It's those kind of things that builds off of that, exercise. the request then. THE COURT: Well, if these guys ask for all their trademarks, wouldn't that be up to Yahoo or Facebook or whoever to object? MR. HUGET: It would. We're just trying to avoid that because we're going to get -THE COURT: MR. HUGET: Because they need your help? No, because it's going to cost us more We're going to be involved in money as we go down the road. these fights, we're going to be here during the other motion. You can just ­- the cascade of motions, this is -­ this is kind of the starting point. Maybe if they need to get Why don't we involved later it can be narrow and discreet. just push this off until later, move for a protective order on these, work our way through discovery so we don't have to go through the motions. You know what's that like, you get those kind of motions all the time, the third party is going to come in, we're going to have to spend time and money involved in as those disputes go on. We're -­ we're -­ we're at the critical juncture trying PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to avoid that, that's why I'm here. 6 I agree, ultimately it's their fight and I'm not sitting here arguing trying to be counsel for Facebook and Yahoo and everybody else. So I'm And trying to avoid ­- avoid all that from happening later. quite honestly from creating more ill will and antagonism toward our client. THE COURT: MR. HUGET: Okay. I can go through the requests individually, Your Honor, but we've -­ we've briefed that fairly carefully, they're all fairly simple straightforward objections that flow from that same ­- those same basic fundamental premises. THE COURT: Okay. You know, I have a bunch of cases like this and I'm -­ I'm just trying to remember this in the context of them. MR. HUGET: We're the ­ we're the company, Navigation is the company that has an automated system for registering domain names. We have been sued by Weather Underground which owns Wonderground and Weather Underground trademarks for getting things that are close to their domains that they believe is infringing. So what they're doing here is going after a whole bunch of other defendants -­ I'm sorry, not defendants, a whole bunch of other third parties who may be equally aggrieved even though they own a couple limited marks. I'm going to keep this case from spiraling out of PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Okay. control. THE COURT: Okay. MR. HUGET: MR. PATTI: THE COURT: MR. PATTI: Okay. Thank you, Your Honor. Okay. 7 Steve, this is not the AAA case. Good afternoon, Your Honor. Uh-huh. This is the case where Navigation Catalyst System has registered over 700,000 typographical variations of essentially high traffic web sites. They design software specifically to identify high volume web sites such as Facebook, Netflix, Flicker, Weather Underground, our client which is one of the most high traffic web sites in the world. And they register all kinds of variations of typographical errors. So www.wonderground.com, no dot. They know that a surprisingly -­ you will eventually see this data in this case I'm sure, but shockingly high number of people mistype domain names as a result of something called direct navigation. So instead of going to Google and saying I want to go to Weather Underground, they actually go right to the browser address bar and they type it in. mistyped a lot. And what they did is they designed an entire business model on actually registering those variations of typos, understanding what were the most typos ­- the most high That happens a lot and they PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8 traffic typos, and then targeting high traffic web sites. Now high traffic web sites I think we all know are going to be trademark protected. So they essentially have designed an unlawful business model to engage in mass or habitual cyber squatting which is a violation of part of the Lanham Act which was in 1999 specifically enacted by Congress to give domain names special trademark rights. So if someone puts a trademark on a web site or on a brochure, whether or not that is a violation of the trademark statute, the Lanham Act, is something that can be debated. And what Congress said is, but when it comes to domain names these are special. storefront. They're like ­- they're like the When They're like the name above the store. people see it they expect to go in that store, they expect it to be what's on the storefront. And so domain names have special protection. So essentially what they don't want to have happen here, is they've engaged in this mass typo squatting, cyber squatting, clear violation of the statute and their real ­- their defense in this case is, we didn't do it, the software that we designed did it. We can't have bad faith intent as is required under the statutory damages provision of the cyber squatting statute which is really what this case is, is you know, we're never going to be able to unwind lost profits here, so we go into the bad faith sections and say bad faith PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9 cyber squatter, therefore the Judge in this case will be able to award statutory damages. So in order ­- as all their defenses to this bad faith claim they say well the software did it and then they have all these defenses such as -THE COURT: something like that. MR. PATTI: affidavits -THE COURT: MR. PATTI: Isn't it like this, no employees. -­ where they have affidavits saying we We have ­- here's the structure of Or no employees where they have And we only have two employees or have all these employees. the company which is important because in our subpoena we ask for ­- we define who got the company as Navigation Catalyst System and Basic Fusion and Firstlook and Connexus. These are four companies that are all under the same roof, that all share the same employees. Part of the illegal model here is as of 19 -­ I think ­or excuse me, as of 2007, this defendant Navigation Catalyst System performed all the various functions in order to carry out the scheme. They were the registrar which is the company that can ­- who can I register the domain names. They offered Parking Services, Parking Services are the software that generates and optimizes the ads that show up on the page. So for instance in order to have ­- they get paid PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 every time a consumer goes to that -­ one of their pages, their typo pages not realizing that it's a typo page, and sees Weather.com as a link. And they click on Weather.com. Well, again nothing on that page says it's an advertising link, it's very deceptive. But when someone clicks on that Weather.com ad which is served up through Google Ad Sense, they get paid. And so they want to optimize. So they optimize their So they know software to gravitate towards the trademark. that if someone comes to www.wonderground.com for instance, they want to show that person one of our competitors' ads. it's the worst form, most egregious form business model unlawful activity. And what they're basically saying is, they don't want us to be able to subpoena these third parties who are also being cyber squatted because then they're going to know that they're being cyber squatted. They might not know that some of the So domain names that we've identified already such as some of the Facebook variations that you've seen with F-a-b-e-b-o-o-k offering up social networking ads. They don't want us to send a subpoena because then Facebook is going to know they're being cyber squatted too. Well, that's not a defense. It's like what they do is they steal the car, they wait for someone to realize it, and if someone complains then they give it back and they pretend PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 as though that would relieve them of responsibility for stealing the car in the first instance. 11 Now this is not about us trying to drive more litigation at Navigation Catalyst System. We assume there's some finite amount of money there and it certainly does our client no good if Facebook and Google and all these other companies start suing NCS. Because now what's there going to be. So we've been very strategic about rolling out third party subpoenas. The reason why these third party subpoenas are so relevant in this case is because of the cyber squatting statute which lists eight non-exhaustive factors under the statutory bad faith element that we have to prove. One of those is whether or not they have registered domain names of third parties that are trademark protected. Well, that's exactly what these subpoenas are. We've asked what their trademarks are, we actually talked to Mr. Delgado as he sets forth in his affidavit in a meet and confer on February 3rd over this very subpoena issue. And we said well, number one, we don't think there's any case law that says that we have to get all this information from you that we have to trust you to provide this information. So if you'll provide us some law that says if there's information out there and the defendant has ­- should have control of it, that we can't go to the third party to get it as well to verify. He provided us no response. PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12 We said well, in terms of narrowing the issues, if you're telling us that you're going to stipulate every time we find a company that's being typo squatted by you, if you're going to stipulate to their trademark rights, then maybe we can modify that provision and we don't need their trademark registrations. Now in trademark cases the challenge is always yeah, you can print this trademark off the USPTO data base, but are they going to stand up and object that it's not authenticated, it's not true copy, that there's no foundation for that trademark. So we said to him, now on that particular first item if you want to stipulate every time we find a trademark in the data base, that's fine. client. that. And he said well, I'll go talk to my Well, we have not heard back from ­- from them on So the interesting -THE COURT: MR. PATTI: THE COURT: MR. PATTI: You have not or now? Have not. Okay. There's been no stipulation. His suggestion that we somehow piecemeal every time we find a Facebook or a Netflix or whatever, that we then come to them and say hey, will you stipulate to the trademarks. want to do that and we're not required to do that. They're going to provide us a list of the trademarks that if at the end of the case before trial they want to stipulate We don't PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to authenticity and admissibility of those trademark registrations, then so be it. 13 The interesting thing is we have actually received responses back from many of these subpoenas that we sent out. Hum, we haven't had a single problem or objection from those people to the scope that we ultimately agreed to on the phone which is essentially what's included in the subpoena. So the key issue is bad faith. Under the elements whether or not they're habitual typo squatter, cyber squatter, is perhaps the thing that is the most important issue in the case. They have set up these companies, Your Honor, so that Navigation Catalyst System simply is listed as the registrant of the domains. Basic Fusion is the registrar which is essentially captive to Navigation Catalyst System. Firstlook is the software company that serves up the parking pages and Connexus owns them all. Now what you're going to see here because since we actually got their reply to our response, we actually received their ­- we actually received their response to discovery. And, Your Honor, if I may, here is the responses that they provided us. Keep in mind the fundamental basis of their motion today that we can get it from them. Well, let's take a look at whether or not they're willing to give it to us. If you go to request number 45, we say PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here? MR. PATTI: 14 produce all documents, communications internal and external pertaining to each and every instance of notice, which is a key issue in this case, whether oral or in writing, that you were a registrant of a domain name that was alleged to infringe a trademark. Exactly what the subpoena is. Exactly what they're now here today telling you is, we ought to be limited to get those ­- that ­- that information about whether or not they received a notice letter from them. Well, in their response they list every possible objection in the book and they refuse to provide any of that information. Okay. So here we are on a motion that we had to respond to at a hearing where their basis is, just get it from them and they specifically refused to provide it in their discovery responses. MR. HUGET: The same thing in response to 46. I'm sorry to interrupt. I don't -­ you That's didn't hand me those, I'm sorry. not what you handed me. THE COURT: I didn't have that. Which number are you talking about in The first one is 45, Your Honor which is one of the reasons why we believe that attorney's fees and costs should be awarded for us having to be here today because we think it's a ­- really a very frivolous motion in the first instance and then to then object to providing us the very PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 back. information that they say that we should get from them. 15 And then 46 is the portion that says whether or not they have permission from these third parties. And they object to providing any ­- a single document with regard to that. The other thing is, Your Honor, what they're going to do, and this is a motion that's coming down the pipe is, they have no employees and they apparently have almost no documents. You know why? Because when we filed the UDRP arbitration on these very domain names, NCS has no documentation of notice from us or response by them because you know which company does it? Connexus. Connexus employees are the ones that provide the response letters to these threat letters. And if you'll notice in the discovery response they say we're not entitled to any documents from Basic Fusion or Firstlook, or Connexus. all a shell game. It's They've actually set their companies up to do exactly what's going on in this case and preclude us from getting documents based on holding those documents in another corporate entity at the exact same address with the exact same shared employees. those documents. The same thing on the Flicker subpoena that just came The ­- you remember he said oh, well, it has to be at And they're saying we're not entitled to the time of registration that they had notice of the trademark rights. This is why these subpoenas are so important. PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16 The Flicker subpoena came back and they said well, no, we were not aware of these particular domain names that you provided to us, but we did previous to that send them a notice letter saying turn over a whole bunch of other typos of Flicker's trademarks and you shall not infringe on and then a list of their company trademarks including the Flicker one. Well, guess what happened after that notice letter, again from Connexus Corporation went -­ went to Navigation Catalyst System. The very domains that are in our subpoena were then registered by them. In this case -- in this case the reason that the Judge was able to hold in Navigation Catalyst under personal jurisdiction because after we brought an arbitration proceeding against them on our trademarks over I think it was 23 or 25 of our domain names, typos, they went out and registered more typo variations of our famous and incontestable trademark. So the concept that somehow we ought to limit this, and it's not fair, and it's unduly burdensome, it's just not the reality. The game here is to preclude us from getting the evidence that will establish definitively that they're bad faith cyber squatters, their business model was designed to do exactly what we see here, that it wasn't the software that did it, it's them that designed the software to do it, and it accomplished the very ­- very thing that they set out to do. PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 17 So we don't see any reason to limit any of the requests of our ­- of our third party subpoenas which we think are very narrow. Tell us your list of trademarks, tell us whether or not you've had any communication with these companies concerning those trademarks or cyber squatting. Tell us whether or not you gave them permission to do that and that's ­- that's what this case is all about, Your Honor. And there is -­ there is probably tens of thousands if not hundreds of thousands of typo domains on famous trademarks held in their portfolio which again they refuse to give us in discovery which we'll be back on of third party trademarks. So, Your Honor, if you have any specific questions I'd be happy to answer them, but we do believe that we're entitled to go get this information. Quite honestly we don't trust them And even if they do provide it to at all to provide it to us. us, to provide it to us in any sort of ­- to give us all of what they've got and to not play the shell game. And we're entitled to go get it from third parties so we can test their credibility and verify what we've received. MR. HUGET: Briefly, Your Honor. Just because plaintiff's counsel thinks this is some illegal model shell game doesn't mean he can go out there and act as the champion for all these other companies which is what he's apparently intending to do here today. We are very early in discovery. We have issues going PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here. 18 back and forth trying to narrow the scope of our ­- of our ­of his request to us, we'll do so. And some of the documents he talks about license agreements, any license agreements with third parties. Well, if we have permission from a third party of course we're going to turn that over. I mean that's just the kind of This quite thing that's in our best interest to do it. honestly is a fishing expedition of third parties. As far as these parties that were dismissed, the other entities that he says is the shell, well, they've been dismissed out of the case. them. They didn't get jurisdiction over They're They could have sued them in ­- in California. not in the case. He can't bring them back in via discovery That's been ruled on already. These requests, they're gone. are arguments that he's already raised. So of course they should be limited to the defendant That's who he's got jurisdiction over. The Court's already ruled there's no jurisdiction over these other -­ these other parties that -­ that he's been talking about. for that reason Basic Fusion, Connexus, and Firstlook. So They were -­ they were dismissed out of this case, so they're not here. And finally, Your Honor, I just think again I'll reiterate. These are just extremely broad. We're very early in discovery. These are broad in attempts just to agitate PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 parties who are out there. 19 I think Facebook and Yahoo are fairly sophisticated companies. If they want to take issue with this they can take That's not the test. The bad faith test is, issue with this. did you do multiple domains and did you know ­- did you, the intent of the defendant, that's the focus of the factor they're talking about. The intent of my ­- the intent of my client at the time he registered this, that's all that matters. Trying to keep this case focused and narrow instead of turning it into the most complex piece of litigation the Eastern District has seen in the last two decades. THE COURT: Thank you, Your Honor. These are subpoenas to a third I think that Okay. party who is not associated with the defendants. there is an issue of standing whether or not the defendant even has standing to raise objections on behalf of Facebook and Yahoo and all the rest of them. that they do. And I really don't think I don't see any personal right in the So I think that they information requested in the subpoenas. don't have standing. I also think that this information is necessary to the determination of bad faith. I think that under 404(b), under absence of mistake, intent, all that kind of stuff this would be relevant evidence if produced. I don't find that the subpoenas are intended to embarass or harass NCS based on the PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 information requested. 20 If NCS has registered typographical cyber squatting names well, then it's their own -­ it's their own actions that lead to embarrassment not the information requested by the subpoenas. I don't -­ so I don't think that the subpoenas are I do think it's important to get over broad or irrelevant. this out as early as possible in the discovery. I'm not sure whether or not this would lead to a request for reconsideration of dismissal of the dismissed entities based on such a close association that they should be subject to personal jurisdiction. But even if they're not, and since they're not here, clearly Navigation Catalyst doesn't ­- in the posture that the case currently is, Navigation Catalyst doesn't have an obligation to respond on behalf of them. So it's unlikely that to the extent that they were related to this information the defendant would be able, willing, or favorably disposed to providing it. So given all of those circumstances I'm going to ­- and this is a motion for a protective order, deny the motion for a protective order and permit the subpoenas to go forward. Do I think that there is an issue of fees and costs? There probably is, but I think I'll wait and see as we go forward how much this leads to this. MR. PATTI: THE COURT: Thank you, Your Honor. So I'm denying that part of it. PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that. MR. HUGET: THE COURT: Okay. Thank you, Your Honor. And here's your document. 21 You can take Thank you. Thank you, Your Honor. Okay. MR. PATTI: THE COURT: (Court Adjourned at 3:11 p.m.) PAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 s/Deborah L. Kremlick, CER-4872 Dated: 4-5-10 22 I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the above-entitled matter.

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