Battle of the "Bays": Tradebay vs. eBay

[Post by Mark Borghese]

Does an intent-to-use trademark applicant, faced with a trademark office opposition proceeding, have the right to seek declaratory relief in federal court? Or, does the fact that the applicant has not yet used the mark in commerce prevent a federal court from exercising jurisdiction?

Those are the legal question a federal court in the District of Nevada will have to answer in Tradebay v. eBay, Case No. Case 2:11-cv-00702-ECR -PAL.

This dispute began almost two years ago when, on January 6, 2009, Tradebay filed a trademark application with the United States Patent and Trademark Office for the mark TRADEBAY for various services including "computerized online ordering" and "operating online marketplaces for seller and buyers of goods and/or services."

When Tradebay's trademark was approved by the trademark office and published for opposition, eBay immediately opposed the mark claiming that consumers would confuse Tradebay and eBay. In support of this opposition, eBay cites Perfumebay.com Inc. v. eBay Inc., 506 F3d 1165 (9th Cir., Nove. 5, 2007) where the Ninth Circuit Court of Appeals stated that the term "BAY" was the dominant portion of the eBay mark. From this ruling, eBay argues that any "generic" + BAY mark in the internet marketplace space is likely to cause confusion and dilute eBay's distinctive mark.

After the opposition was filed, on May 3, 2011, Tradebay filed a declaratory relief action in the United States District Court, District of Nevada. Tradebay wanted a federal court to make the determination as to whether its mark, Tradebay, was likely to be confused with the famous eBay mark. The Trademark Trial and Appeal Board proceeding was thereafter stayed in light of the District Court lawsuit.

On June 28, 2011, eBay filed a motion to dismiss Tradebay's District Court lawsuit alleging that no case or controversy existed for the court to decide. The motion argues that dismissal pursuant to Fed. R. Civ. P. 12(b)(6) is the appropriate remedy as no trademark infringement can exist when Tradebay has not yet used the Tradebay mark in commerce.

Courts enforcing Rule 12(b)(6) curtail this risk by weeding out complaints that fail to give rise to a plausible inference of harm to the plaintiff. Neither eBay nor the Court should be required to expend the resources necessary to litigate the merits of claims of trademark infringement and dilution and unfair competition based on nothing more than vague and conclusory allegations that fail to evince the specific and concrete steps to use the mark that might give rise to a controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. Dismissal is the appropriate remedy here.

Tradebay filed an opposition to the motion on August 2, 2011, arguing that the "case or controversy" standard has been met and pointing out that as early as January 30, 2009 Tradebay received a cease and desist letter from eBay accusing it of infringing and diluting eBay's trademark rights.

Tradebay’s complaint presents an "actual controversy" within the meaning of the caselaw. Specifically, almost immediately after Tradebay filed its trademark application, eBay sent a cease and desist letter. If Tradebay refused eBay's demands, eBay threatened to "take whatever actions eBay deems necessary to protect its rights." Exhibit 2-A. eBay reaffirmed the identical threat a few days later. Exhibit 2-B. Once Tradebay’s application was accepted for publication, eBay opposed it in the USPTO. Exhibit 3-A.

In its reply brief filed August 25, 2011, eBay argues again that no case or controversy exists as Tradebay has not taken any concrete steps to actually use its Tradebay mark, such as developing a product line, conducting market research, or creating packaging and advertising.

Tradebay makes no attempt to show that it has alleged, let alone actually undertaken, any concrete steps to actually use the TRADEBAY mark in connection with any goods or services. At best, Tradebay has alleged nothing more than a vague and indefinite desire to use the TRADEBAY mark at some future date. That does not come close to showing a real and immediate controversy. Tradebay's utter failure to allege the requisite concrete steps can only lead to the conclusion that it has not engaged in any such activity. Under these circumstances, it would be a waste of the Court's (and eBay's) time and resources to render what would amount to an impermissible advisory opinion as to whether activities Tradebay may or may not undertake in the future would infringe or dilute eBay's trademarks.

Under the facts in this case, eBay argues that Tradebay is simply requesting that the court issue an improper advisory opinion rather than settle an actual trademark infringement dispute involving two competing marks being used in commerce.

The briefing on this issue is now closed and an order from the court is expected within the next ninety days. This ruling will be an interesting one to watch.

About the author
Mark Borghese is a Las Vegas internet attorney with the law firm of Borghese Legal, Ltd.

Gallup Survives Motion to Dismiss in Trademark Infringement Lawsuit Against Gallup Pakistan

Gallup, Inc. (“Gallup”), the organization famous for its surveys and public opinion polls, filed a trademark infringement and trademark dilution lawsuit in March against Business Research Bureau and Ijaz Shafi Gilani (the “Defendants”) over the use of the mark GALLUP.

Gallup owns numerous United States trademark registrations and applications containing the GALLUP mark including, among other goods and services, public opinion polls and business management consulting services.

Defendants, operating under the name Gallup Pakistan, provide survey and opinion polls on political, social, and business topics to international agencies and educational institutions, including some in the United States. Between January 11 and February 22, 2008, Defendants released six polls regarding Pakistani public opinion of issues surrounding the Pakistani parliamentary elections. The polls were promoted on Defendants’ website, which is in English and accessible to the United States. Defendant Gilani, the chairman of Gallup Pakistan, also made an appearance at a conference in Chicago in 2007 where he presented a paper that bore the Gallup Pakistan name. He also spoke on National Public Radio on February 12, 2008, to discuss his organization’s poll results and was introduced as the head of “the Pakistani chapter of the Gallup polling organization.” Gilani also made an appearance on an internet broadcast around the same time. Gilani was not in the United States during either of those broadcasts.

In response to Gallup’s lawsuit for trademark infringement and dilution, the Defendants moved to dismiss the complaint on the ground that the court did not have subject-matter jurisdiction (Defendants did not challenge the exercise of personal jurisdiction – possibly because Gilani appeared pro se). Specifically, Defendants argued that there was no basis to exercise extraterritorial jurisdiction under the Lanham Act. Gallup countered by arguing that the exercise of extraterritorial jurisdiction was not necessary because Defendants’ committed infringing acts in the United States sufficient to establish subject-matter jurisdiction.

U.S. District Court Judge William Alsup found that Gallup’s complaint had sufficiently alleged that Defendants’ infringing activities occurred in the United States to meet its burden of establish subject-matter jurisdiction under the Lanham Act. See Gallup, Inc. v. Business Research Bureau et al, Case No. 08-cv-01577, 2008 U.S. Dist. LEXIS 93462 (N.D. Cal. November 10, 2008).

Under the Lanham Act, courts have jurisdiction which extends to “all commerce which may lawfully be regulated by Congress.” (see 15 U.S.C. 1127). The court noted that the phrase “in commerce” does not necessarily require that the infringing acts take place “‘in commerce’ which is subject to congressional regulation, but that the acts have an adverse effect on that commerce.” Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 427 (9th Cir. 1977).

Gallup alleged that Defendants’ trademark infringement occurred “in commerce” in three ways. The first way was Defendants’ publishing of poll results in the United States using the Gallup name. Gallup alleged that Defendants’ trademark infringement not only occurred in commerce, but also has the potential to adversely affect that commerce. The infringement was “in commerce” because Congress regulates the use of trademarks on published materials and the infringement adversely affects that commerce by impairing Gallup’s right to capitalize on its registered mark in its publications. Further, it did not matter that the Defendants do not advertise, market, or promote any goods or services in the United States: “The test is whether the alleged infringement occurred within an area of commerce that Congress regulates or whether the infringement adversely affected that commerce. Even if defendants did not ‘advertise, market, or promote’ their services in the United States, plaintiff sufficiently alleges that defendants’ use of the Gallup mark occurred within commerce and adversely affected that commerce.”

The second way was Defendant Gilani’s appearance in the U.S. promoting his poll results under the Gallup mark. The court found that Gallup had sufficiently alleged that Defendants’ presentations at conferences in the United States using the Gallup mark as well as Gilani’s interview on NPR and participation in the internet broadcast adversely affected commerce regulated by Congress. Specifically, Gallup’s allegations that a) Defendants’ use of the Gallup mark in connection with opinion polls, surveys, and management consulting occurs in the same markets and channels of trade as those offered by Gallup under the Gallup mark and b) Defendants’ use of the Gallup mark has caused or is likely to cause confusion, to cause mistake, or to deceive customers of both Gallup and the defendants and to cause the dilution of the distinctive quality of the Gallup mark.

The third way in which Gallup argued that Defendants’ trademark infringement occurred “in commerce” was Defendants’ operating of a website prominently featuring the Gallup mark. The court found that Gallup had sufficiently alleged that Defendants’ trademark infringement occurred “in commerce” by alleging that the web site was accessible in the United States and that use of the Gallup mark had an adverse effect on commerce.

Because the court found that Gallup’s complaint sufficiently alleged actions “in commerce” and action having an adverse effect on commerce in order to give the court subject-matter jurisdiction over Gallup’s claims against the Defendants, the court did not consider Defendants’ argument that there was no basis for extraterritorial jurisdiction. The court noted that the question of whether a court can exercise extraterritorial jurisdiction under the Lanham Act is only reviewed if the plaintiff seeks to reach foreign activities of the defendant, and, in this case, Gallup clarified in its opposition brief that it was not seeking to enjoin Defendants’ activities in Pakistan or to determine rights to the Gallup mark in Pakistan.