American Casino and Entertainment Properties, LLC v. Modern Housing, LLC

Filing 32

RESPONSE to Modern Housing, LLC's October 14, 2011 Letter to the Court Objecting to Plaintiff's Proposed Order filed by Plaintiff American Casino and Entertainment Properties, LLC. (Fountain, Jonathan)

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MICHAEL J. McCUE (Nevada Bar #6055)
JONATHAN W. FOUNTAIN (Nevada Bar #10351)
LEWIS AND ROCA LLP
3993 Howard Hughes Parkway, Suite 600
Las Vegas, Nevada 89169
Tel: [phone]
Fax: [phone]
Attorneys for Plaintiff
American Casino and Entertainment Properties, LLC

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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AMERICAN CASINO AND
ENTERTAINMENT PROPERTIES, LLC,
a Delaware limited liability company,

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Plaintiff,

Case No. 2:11-cv-00222-JCM-LRL
PLAINTIFF’S RESPONSE TO
DEFENDANT’S OBJECTION TO
PLAINTIFF’S PROPOSED ORDER

v.
MODERN HOUSING, LLC,
a Washington limited liability company,
Defendant.

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Lewis and Roca LLP
3993 Howard Hughes Parkway
Suite 600
Las Vegas, Nevada 89109

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588635.1

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Plaintiff American Casino and Entertainment Properties LLC (“Plaintiff” and/or “ACEP”)

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hereby responds to Defendant Modern Housing LLC’s October 14, 2011 letter to the Court. In the

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letter, Defendant objects to the entry of Plaintiff’s proposed order (Docket No. 31).
The Defendant is objecting to two sentences in Plaintiff’s proposed order. Those sentences

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state:

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The Court hereby FINDS that Plaintiff American Casino and Entertainment
Properties, LLC has not used its ACESTAY mark in commerce. [and]

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The Court hereby further FINDS that Defendant Modern Housing, LLC has filed
with the Court a stipulation and covenant not to sue Plaintiff American Casino and
Entertainment Properties, LLC (Doc. #10) for its use of the ACEPLAY mark.

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(Doc. #31 at 1, ll. 24-28.)

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The Defendant’s objection to these two sentences is meritless. Both sentences are true.

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With respect to the first sentence, at the hearing on the Defendant’s motion to dismiss, the

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Defendant argued that its stipulation and covenant not to sue would not cover the ACESTAY

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mark because the mark has not been used in commerce.

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following:

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The hearing transcript states the

THE COURT: Let me ask the defendants a question. Your proposed stipulation
covers ACEPLAY, does it also cover ACESTAY?

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MR. MERONE: My understanding, your Honor is that because they have not used
the mark yet that it wouldn’t be covered because there’s no possibility of an actual
claim.

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(Tr. at 3, ll. 2-8.) A true and accurate copy of the transcript is attached hereto as Exhibit A.

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Indeed, the Court went on to conclude that: “There’s no controversy over ACESTAY because you

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haven’t used it yet.” (Tr. at 13, ll. 11-12.)

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With respect to the second sentence, the fact that the Defendant filed a stipulation and
covenant not to sue is a matter of record. (See Doc. #10.)

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Both of the sentences in Plaintiff’s proposed order (Doc. #31) are also neutrally worded so

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as not to favor the Plaintiff or the Defendant.

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Lewis and Roca LLP
3993 Howard Hughes Parkway
Suite 600
Las Vegas, Nevada 89109

-2-

588635.1

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CONCLUSION
The Defendant’s objection to two true and neutrally worded sentences in Plaintiff’s
proposed order is meritless. The Court should enter Plaintiff’s proposed order, Docket No. 31.
Dated: this 14th day of October, 2011.
Respectfully submitted,

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LEWIS AND ROCA LLP
By: /s/Jonathan W. Fountain
MICHAEL J. McCUE (NV Bar #6055)
JONATHAN W. FOUNTAIN (NV Bar #10351)
3993 Howard Hughes Parkway, Suite 600
Las Vegas, NV 89169
Tel: [phone]
Fax: [phone]
Attorneys for Plaintiff
American Casino and
Entertainment Properties, LLC

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Lewis and Roca LLP
3993 Howard Hughes Parkway
Suite 600
Las Vegas, Nevada 89109

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588635.1

CERTIFICATE OF SERVICE

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I hereby certify that on October 14, 2011, I caused a copy of the foregoing document

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entitled PLAINTIFF’S RESPONSE TO DEFENDANT’S OBJECTION TO PLAINTIFF’S

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PROPOSED ORDER to be filed with the Court and served upon the following counsel of record

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via the Court’s CM/ECF system:

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Jonathan D. Reichman
William M. Merone
William R. Urga

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/s/Jonathan W. Fountain
An employee of Lewis and Roca LLP

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Lewis and Roca LLP
3993 Howard Hughes Parkway
Suite 600
Las Vegas, Nevada 89109

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588635.1

Exhibit A

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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THE HONORABLE JAMES C. MAHAN, JUDGE PRESIDING

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AMERICAN CASINO AND
ENTERTAINMENT PROPERTIES,
LLC,

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Plaintiff,
vs.

NO. 2:11-CV-0222-JCM-CWH

MODERN HOUSING, LLC,
Defendant.

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MOTION HEARING
/

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REPORTER'S TRANSCRIPT OF PROCEEDINGS

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WEDNESDAY, SEPTEMBER 21, 2011

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10:00 A.M.

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APPEARANCES:

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For the Plaintiff:

JONATHAN FOUNTAIN, ESQ.
MICHAEL McCUE, ESQ.

For the Defendant:

WILLIAM MERONE, ESQ.
MINDY FISHER, ESQ.

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Reported by:

Joy Garner, CCR 275
Official Federal Court Reporter

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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LAS VEGAS, NEVADA, WEDNESDAY, SEPTEMBER 21, 2011

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10:00 A.M.

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P R O C E E D I N G S

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THE CLERK:

Case Number

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2:11-CV-222-JCM-CWH, American Casino and

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Entertainment Properties, LLC versus Modern

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Housing, LLC.

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Counsel, would you please state
your appearances for the record.

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MR. FOUNTAIN:

Jonathan Fountain,

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Michael McCue, and Nikkya Williams on behalf of

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the Plaintiff American Casino Entertainment

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Properties, LLC.

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MR. MERONE:

All right, thank you, Mr.

MS. FISHER:

Mindy Fisher on behalf of

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MR. MERONE:

William Merone, Kenyon and

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Kenyon, on behalf of defendant.

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Fountain.

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defendant.

THE COURT:

All right, I've reviewed

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this with my brain trust.

Let me tell you what

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I'm inclined to do and then I'll give everyone a

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chance to argue and admire my brain trust here in

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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the jury box.

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Let me ask the defendants a

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question.

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ACEPLAY, does it also cover ACESTAY?

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Your proposed stipulation covers

MR. MERONE:

My understanding, your

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Honor, is that because they have not used the

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mark yet that it wouldn't be covered because

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there's no possibility of an actual claim.

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THE COURT:

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MR. MERONE:

Your saying it would?
There's no -- my -- if

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they haven't actually used it up and to the point

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where this case began which is my understanding,

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then there's nothing to cover.

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we could bring an action for past or present

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infringement of use of ACESTAY because they

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haven't used ACESTAY.

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not technically be within the scope of the

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covenant, but it doesn't need to be because

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there's nothing to -- we could act on.

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THE COURT:

So there's no way

So, therefore, it would

All right, I understand,

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all right.

What I'm inclined to do is to grant

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the motion to dismiss because it seems like

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there's no -- they aren't -- there's just no

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competition here here in Las Vegas particularly

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with the stipulation not to sue American Casino

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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for any past, current, or continued use.

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that, of course, in the future -- and I mean a

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dismissal, by the way, would be without prejudice

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in the event that some infringement did arise.

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Now

But, of course, you've got the

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MedImmune case out of the District Court in

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California, the Central District, but I'm

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inclined to grant the motion without prejudice.

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Really there's no basis the defendants would have

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to sue the plaintiff at this point and the

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covenant I think is sufficiently broad to protect

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you.

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Now, in the event that the

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defendants do enter the marketplace here, then

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there might be something different.

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a different result.

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before, the TTAB, they really -- that's almost

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before you come to court.

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situation like this, don't register this mark,

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this mark infringes, do not register it.

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course, with a court action you're saying they're

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using the mark, they're infringing on my existing

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mark.

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It might be

As far as the matters

I mean that's a

And, of

So it's really two different, if
you will, two different prongs or two different

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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emphases.

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you do that in TTAB.

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and they are infringing on it, I'm suing for the

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infringement, and that's where we get involved.

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So it's like that there are TTAB proceedings

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pending, or may be pending, or whatever the

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status of them is I don't think has any bearing

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on this.

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your motion.

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One is don't register the mark, that's
The other is it's my mark

So what I'm inclined to do is to grant
Now you can talk me out of that if

you want.
MR. MERONE:

Well, your Honor, unless

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the Court has any specific questions you wanted

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to answer, I'd like to just ask permission to

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respond to counsel.

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THE COURT:

Of course.

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from the plaintiff now.

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MR. FOUNTAIN:

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THE COURT:

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MR. FOUNTAIN:

Let me hear

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Thank you, Judge.

Yes, sir.

Mr. Fountain.

And I certainly would

like to try and talk you out of your inclination.

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THE COURT:

Sure.

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MR. FOUNTAIN:

I think the fact that we

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are here arguing over whether there is a dispute

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is strong evidence that there really is a dispute

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substantial enough for the Court to have subject

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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matter jurisdiction.

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and Entertainment Properties, who I'll call ACEP

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or plaintiff, you know, applied to register two

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trademarks, ACEP for its casino player awards

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program and ACESTAY on an intent to use basis for

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its hotel rewards program.

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Essentially American Casino

Now, the defendants opposed the

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ACEPLAY -- excuse me -- the ACESTAY application

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and have moved to cancel the ACEPLAY registration

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on two basis, the likelihood of confusion and

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trademark dilution.

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discussions with respect to discovery and such in

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the TTAB litigation and one of the questions was,

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Modern Housing, do you oppose simply maintenance

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of these registrations, or do you also oppose

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ACEP's use of the marks?

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that they, in fact, opposed the use of the marks

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in commerce.

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for trademark infringement.

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And we were informed

That's why we have the dec action

THE COURT:

But I mean that's something

in front of the TTAB.

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The parties entered into

MR. FOUNTAIN:
Judge.

Well, no, not use,

The trademark -THE COURT:

Well, I understand, but I

mean you're talking now about the TTAB hearing or

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LAS VEGAS, NEVADA [phone]

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proceeding or whatever it was.

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MR. FOUNTAIN:

Well, they said they

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want to do away with our registrations and it

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said they object to our use in commerce of the

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mark.

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that's tantamount to saying you're committing

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trademark infringement which is what prompted the

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declaratory relief action.

Now objecting to the use in commerce,

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THE COURT:

Well, I understand, but why

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isn't there a stipulation sufficient to allay

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your concerns when they say we're not going to

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sue you for any past, present, or continued use

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of the marks?

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MR. FOUNTAIN:

Well, ACEP has

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specifically announced its intent to use ACESTAY

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for its hotel guest rewards program.

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concede that their stipulation doesn't even cover

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ACESTAY.

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stipulation is under inclusive.

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nonspecific.

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So that's one reason.

THE COURT:

They

Their
It's also very

Well, I mean that's why I

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asked because I might be inclined at the most to

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allow the suit to continue as far as ACESTAY is

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concerned because you wouldn't know without a

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stipulation, yeah, we cover ACESTAY as well.

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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MR. FOUNTAIN:

But as far as ACEPLAY is

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concerned, their stipulation doesn't identify

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specific uses that they say are okay or ones that

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are not okay.

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THE COURT:

Well, have you used it?

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Yes.

In the past, how did you use it?

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however you use it in the past and you continue

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to use it in the future, you can't be sued under

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this stipulation.

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MR. FOUNTAIN:

So

Well, Judge, that's

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actually not what they say in their reply brief.

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They say that if we engage in any expansion of

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our use, they can sue us.

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THE COURT:

But I mean that's future

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use.

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ACEPLAY.

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going to do something different.

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it here, we want to do something else with it.

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And, God knows, my crystal ball is broken, I

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can't see into the future.

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uses, oh, they can't say you can use that any way

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you want to in the future and we won't do

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anything about it.

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that kind of a stipulation.

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I mean who knows what you do with that with
I mean you may decide, well, you're
We want to use

So whatever other

You can't expect them to make
Do you understand?

I mean because you can say,

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LAS VEGAS, NEVADA [phone]

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well, good, we'll sell it to Marriott, and I'm

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making this up obviously, but sell it to the

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Marriott, or the Hilton, or somebody, and they

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are going to use it all over the world.

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there is competition, you see, so they can't

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be -- you can't say I expect the defendants to

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say, no, you can use it however you want to in

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the future and we won't do anything.

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can't do that, but the uses you made in the past

Now

No, they

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and the continued use in the present and into the

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future, that same continued use is -- they're not

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going to sue you for it.

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MR. FOUNTAIN:

Well, Judge, your point

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is well taken, however, the purpose of the

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declaratory action was brought is so we can have

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some certainty.

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its marks.

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invest in its marks.

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THE COURT:

Our client has invested money in

It wants to be able to continue to

And it will be able to.

It

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will be able to use the mark as it has used it in

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the past, not a problem.

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a problem because they stipulated to that.

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won't sue you over that.

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not to sue.

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you can continue to use the mark the way you've

And in the future, not
We

You've got a covenant

They won't sue you over that.

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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used it in the past, that's it.

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Now, as far as what's the scope

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of that, that's the scope of it.

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did you use it to sell candy bars?

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past, well, then now you may have a problem in

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the future, or used it for something else selling

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swimming pools, or hardware, or something,

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there's a problem now.

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MR. FOUNTAIN:

In other words,
No, in the

And that's exactly why

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we think the covenant not to sue begs future

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litigation because it is so unspecific and so

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vague that even the slightest change in use by

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our client could result in an infringement suit.

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THE COURT:

Okay.

All right, anything

else?
MR. FOUNTAIN:

Yes, Judge.

They spent

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a lot of time in their reply brief arguing the

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Dawn Donut rule, and they say that they cannot

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currently bring a trademark infringement claim.

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Essentially what the Dawn Donut rule says, and

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I'm paraphrasing, is that where goods and

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services are offered by a junior user in a

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geographically remote area, the senior user of a

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registered trademark cannot enjoin the junior

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user's use of a confusingly similar mark unless

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LAS VEGAS, NEVADA [phone]

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and until the senior user enters the territory

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where the junior user is using the mark.

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problem with Dawn Donut, it's a 1959 case.

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THE COURT:

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MR. FOUNTAIN:

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THE COURT:

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The

'69.
'59, I believe.

Well, I show '69, but

that's all right.
MR. FOUNTAIN:
didn't exist then.

Okay.

The Internet

In this case the parties

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compete in a national market.

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the Internet.

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use of ACEPLAY in connection with the website on

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the Internet.

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promoting hotel services to a national market.

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The complaint alleges our client's

They're both advertising and

THE COURT:

Well, see, you're using the

mark now on the Internet, right?

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MR. FOUNTAIN:

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THE COURT:

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MR. FOUNTAIN:

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They're both on

Yes.

Yeah.
So in addition to there

being a national market -THE COURT:

But I mean so you're using

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that and you can continue to use that in the

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future and they can't do anything about that.

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MR. FOUNTAIN:

That's ACEPLAY.

Now

we've also said we want to use ACESTAY in the

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LAS VEGAS, NEVADA [phone]

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same way but haven't done that yet, but again the

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stipulation doesn't cover that.

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they brought in the TTAB --

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THE COURT:

The other basis

But I mean it's not ripe

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for a controversy until we see what you -- and

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how you're using it.

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case or controversy, until you actually use

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ACESTAY, and they say, oh, my God, you can't use

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that to sell cantaloupe, or whatever, because

There's no controversy, no

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that's what we do, or we've got farm division, or

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whatever, and there is some competition.

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MR. FOUNTAIN:

Well, I think it's a

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matter of degree, Judge.

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straightforwardly and said we're going to use

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ACESTAY in the same manner we've used ACEPLAY,

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and we think that definite statement of intention

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is sufficient to create a case of controversy.

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THE COURT:

And we've come out

Okay.

I mean and talk

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about vague, I mean that's -- we'd use it the

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same way, what does that mean?

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on the Internet.

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That's so expansive, so nondescriptive, it could

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be anything.

Oh, we'll use it

I mean do you understand?

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MR. FOUNTAIN:

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THE COURT:

You know, well --

You won't use it the same

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LAS VEGAS, NEVADA [phone]

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way, oh, we're going to use it to market our

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product.

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now we're selling cantaloupe and so we want to

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use it.

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specific.

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I don't know.

Well,

That doesn't seem very

MR. FOUNTAIN:

Well, we can certainly

make it specific.

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I mean what's your product now?

THE COURT:

I mean understand we deal

with cases of controversy and, of course, you

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know that, but it's got to be a real case or

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controversy.

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because you haven't used it yet.

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There's no controversy over ACESTAY

MR. FOUNTAIN:
position.

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THE COURT:

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MR. FOUNTAIN:

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I understand the Court's

Okay.
I just have a couple of

more points I'd like to make.

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THE COURT:

Yes, sir, sure.

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MR. FOUNTAIN:

Now, one of the other

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basis in the Trademark Trial and Appeal Board

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that Modern Housing has used to say the ACEPLAY

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mark should be cancelled is trademark dilution.

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Now their reply brief doesn't say anything about

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trademark dilution.

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infringement claim against ACEP, but they don't

They say they can't bring an

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LAS VEGAS, NEVADA [phone]

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argue they can't bring a dilution claim today

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against ACEP.

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And their argument goes with

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respect to infringement because we can't bring an

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infringement claim, no case of controversy, but

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you would say, look, they're free to bring a

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dilution claim, there is a case of controversy

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with respect to dilution, and dilution doesn't

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concern geographically isolated markets.

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Dilution is concerned with the fame of a mark in

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a nationwide market.

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Dawn Donut rule to say they can't bring a

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dilution suit.

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So they can't rely on the

And the last point I would make,

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Judge, is that this Court has concurrent

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jurisdiction over the and Trademark Trial and

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Appeal Board to decide issues of trademark

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registrability and cancellation.

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after the Trademark Trial and Appeal Board

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proceedings conclude, a party has a right to

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appeal to this court, to the district court.

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I think it's highly likely that we can be back

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here either on appeal from the TTAB or we're

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going to be back here on an infringement suit

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because they're going to allege that we've

In addition,

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

So

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changed our use in some minor way that

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constitutes infringement.

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compel resolving the entire dispute right here

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right now.

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THE COURT:

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Judicial economy would

All right.

Thank you.

Let me hear from the defense.

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MR. MERONE:

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THE COURT:

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MR. MERONE:

Thank you, your Honor.
Yes, sir.
I just want to clarify a

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couple of things and make sure we keep two

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different things separate.

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let's set aside the coming of the suit as the

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first issue raised as to whether or not there is

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a case or controversy, and we all agree it has to

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be -- it must be an actual case in controversy in

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order to support declaratory judgment action plus

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the DJ Act doesn't confer jurisdiction anywhere.

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There's the issue of

And so the question I would pose

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is in response is what exactly is the

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controversy?

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against them for trademark infringement,

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definitely no likelihood of confusion because

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we're not in this market, therefore, people

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really haven't heard of us here, therefore, under

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the Sleekcraft factors, or the multifactor test,

At present we cannot bring a claim

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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there's no way we could sustain a claim for

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confusion.

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If the question is, well, what

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about in the future?

Five years from now if we

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have a hotel here, it's a completely different

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story, but we can't speculate as to what's going

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to be happening into the future.

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possible controversy then is the issue of

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registrability.

The only other

And contrary to what counsel

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said, opposition proceedings are the exclusive

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jurisdiction of the TTAB.

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Under Section 1071, yes, there
is a --

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THE COURT:

Well, I mean we've been

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through that.

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something different from what I do so they're --

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they --

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I mean that's just they do

MR. MERONE:

What they do just so we're

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clear is they work on a hypothetical.

What they

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say is, it doesn't matter where you are, if

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someone is familiar with your mark, hotel

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services, for any hotel service, not just --

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because we get your trademark case.

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my hotel, that's only a ten-dollar a night hotel

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and we're having this different classes,

Oh, no, no,

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LAS VEGAS, NEVADA [phone]

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different class of purchasers, different price

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points, none of that matters to the trademark

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office.

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conceivable hotel, just name it, and if that same

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person is going to encounter a guest reward

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program for a hotel under ACESTAY, they might

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think there's a connection.

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It's not what's actually happening in the real

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world.

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They say any hotel, any possible

It's a hypothetical.

So it's a different process so there's

and no controversy to begin with on any level.

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Now, separately the covenant not

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to sue, that's a belt and suspenders.

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saying is, listen, there's no controversy, but if

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you're afraid that your past or your current

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activities were -- and I did check and it

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actually does cover ACEP even though it doesn't

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have to because there was no ability to cover.

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THE COURT:

What I'm

I didn't have the exact

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language right here in front of me right now, but

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my recollection was that it did, but that's why I

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asked.

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I wanted to be sure.
MR. MERONE:

Yeah, it didn't need to,

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but I do want to make sure we're clear on one

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point so there's no confusion in that it covers

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their past infringement and says if the world

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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stays the same as it is right now, we're not

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going to come after you, but if you engage in

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different use, for example, what if they open a

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casino in Seattle?

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if we open a hotel in Las Vegas?

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going to have a conflict because now --

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Or if we change our use, what

THE COURT:

Then we are

That's why I said my

crystal ball is broken, Mr. Merone, I don't know.
MR. MERONE:

So they can keep doing

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today what they're doing, but in the future it's

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not a covenant for whatever use they may make in

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the future because if we enter this market ten

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years from now under the presumptions afforded by

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the Lanham Act, we're the senior registrant,

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senior national user, they are displaced.

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the way that gets resolved as to, well, would

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there be that problem in the future?

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the TTAB proceedings are all about.

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THE COURT:

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MR. MERONE:

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THE COURT:

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MR. FOUNTAIN:

And

That's what

Yeah.
Thank you.
Thank you.

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point about ACESTAY.

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THE COURT:

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MR. FOUNTAIN:

Judge, just one further

Sure.
We said we want to use

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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it, they say we cannot use it.

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controversy.

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infringement suit where, you know, potentially

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we're exposed to treble damages.

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That's a

We shouldn't have to risk an

THE COURT:

But again until you

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actually use it, then what are we talking about?

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I mean --

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MR. MERONE:

And the only point I would

make on that, your Honor, is -- your Honor, I

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wish to make two points on that.

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it's a major point, but, one, first there's no

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evidence about that.

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complaint that's no --

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THE COURT:

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MR. MERONE:

I don't think

It's an allegation in their

Say that again, I'm sorry.
There's no evidence about

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the conversation they're referencing.

There's an

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allegation in the complaint which is for purposes

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of a 12(b) motion is insufficient.

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actually no evidence, but be that as it may,

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according to the dates what they said is when you

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had a conversation with someone in the context of

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discussing particular cases at a time when they

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weren't using the mark and said, yeah, we're

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going to object to your use.

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they opened in Seattle, absolutely I'd be

So there's

What use?

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

Again if

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objecting.

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THE COURT:

Yeah, there's just no case

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or controversy with that.

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you.

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Okay, all right, thank

All right, I'm going to go ahead

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with my inclination.

Let me ask the defendants

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to prepare an appropriate order granting your

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motion, and I will talk to the brains of the

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outfit.

And that's a joke for the record because

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I know the associates are going to be preparing

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the order.

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order granting your motion and run it by the

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plaintiff.

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language, then you can submit it to me and we'll

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decide the appropriate language, but again

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there's just no case.

I don't see a case for

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controversy here yet.

When there is, and again

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we deal in actuality, so I intend to use your

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mark to sell something -- I keep saying to sell

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cantaloupes I guess because cantaloupes are in

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the news -- to sell cantaloupes, you know, well,

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then we'll deal with that when it comes up, but

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until then, there's just no case or controversy

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with your stipulation that they can continue to

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use ACEPLAY and you won't use them for any use in

So if you will go and prepare an

And if you can't agree on the

JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]

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the past or continued use into the future, all

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right?

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MR. MERONE:

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THE COURT:

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Understood.
All right.

Thank you.

We

will be in recess.

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(Whereupon, the proceedings concluded.)

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I hereby certify that pursuant
to Section 753, Title 28, United States Code, the
foregoing is a true and correct transcript of the
stenographically reported proceedings held in the
above-entitled matter.

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Date:

September 29, 2011

/s/ Joy Garner
JOY GARNER, CCR 275
U.S. Court Reporter

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JOY GARNER, CCR 275
LAS VEGAS, NEVADA [phone]