March Madness Athletic Ass'n v. Netfire Inc. , 120 F. App'x 540 ( 2005 )

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT January 24, 2005
Charles R. Fulbruge III
Clerk
No. 03-11069
MARCH MADNESS ATHLETIC ASSOCIATION LLC
Plaintiff - Counter Defendant - Third Party Plaintiff -
Appellee - Cross Appellant
versus
NETFIRE INC, a Texas Corporation, dba Sports Marketing
International Inc; SPORTS MARKETING INTERNATIONAL INC
Defendants - Counter Claimants - Third Party Defendants
- Appellants - Cross Appellees
MATTHEW JONES
Third Party Defendant - Appellant - Cross Appellee
versus
ILLINOIS HIGH SCHOOL ASSOCIATION, an Illinois Assocation
Counter Defendant - Appellee
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION
Counter Defendant - Appellee - Cross Appellant
--------------------
Appeals from the United States District Court
for the Northern District of Texas, Dallas
3:00-CV-398-R
--------------------
Before REAVLEY, BENAVIDES, and PRADO, Circuit Judges.
1
PER CURIAM:*
I. INTRODUCTION
This dispute centers on competing claims to the domain name
marchmadness.com. The Appellants/Cross-Appellees in this case
are Netfire, Inc. (“Netfire”), Sports Marketing International,
Inc. (“SMI”) and Matthew Jones (“Jones”) (collectively the “SMI
Parties”). The Appellees are the March Madness Athletic
Association (“MMAA”), the National Collegiate Athletic
Association (“NCAA”) and the Illinois High School Association
(“IHSA”). MMAA and NCAA are also Cross-Appellants, while IHSA
has withdrawn its cross-appeals.
In February 2000, IHSA sued Netfire for trademark
infringement, dilution and unfair competition under the Lanham
Act and Texas state law. MMAA later replaced IHSA as the
plaintiff in the case, and amended its complaint to add a claim
for cybersquatting, in violation of 15 U.S.C. § 1125.
SMI filed counterclaims for fraud, tortious interference
with contract and with business relations, and civil conspiracy.
Finally, the SMI Parties amended their counterclaims to add a
claim for conversion against IHSA and claims for fraud and civil
conspiracy against IHSA and NCAA.
The district court, in orders on August 15, 2001 and June 4,
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
2
2002, granted IHSA and NCAA’s motion for summary judgment on
SMI’s counterclaims. The district court denied the remaining
motions for summary judgment filed by the parties, and the case
proceeded to a bench trial.
On August 28, 2003, the district court issued its Findings
of Fact and Conclusions of Law in favor of MMAA on its
infringement and cybersquatting claims, and against MMAA on its
civil conspiracy claim. The district court transferred ownership
of the domain name marchmadness.com to MMAA, and it required the
SMI Parties to pay the costs of the district court action. The
district court did not, however, require the SMI Parties to pay
MMAA’s attorneys’ fees, nor did it find the SMI Parties liable
for any damages.
The SMI Parties appeal the district court’s findings that
March Madness is a protectable mark and that a likelihood of
confusion exists between March Madness and marchmadness.com. The
SMI Parties also appeal the district court’s grant of summary
judgment in favor of the NCAA and IHSA on SMI’s counterclaims.
MMAA and NCAA appeal the following findings by the district
court: that March Madness was not an inherently distinctive mark,
that the SMI Parties did not engage in a civil conspiracy, that
SMI was not liable for the acts of Jones and Netfire, that MMAA
was not entitled to damages and that MMAA was not entitled to
attorneys’ fees.
For the reasons below, we affirm in all respects.
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II. STATEMENT OF FACTS
A. History of marchmadness.com
Dirk and Phil Brinkerhoff (“Dirk” and “Phil”) are brothers
who together formed SMI. Matthew Jones is Phil’s son-in-law and
the founder of Netfire.1 In December 1995 or January 1996, Dirk
and Jones discussed obtaining the domain name marchmadness.com so
that SMI could use it to develop a website focused on the NCAA
Division I Men’s Basketball Championship (the “NCAA Tournament”).
Jones told Dirk that the domain name was available, so Dirk
instructed Jones to acquire it.
In fact, an individual named Adam Stein (“Stein”) had
registered marchmadness.com in late 1995 before Jones could do
so. As an alternative, Jones registered the domain name march-
madness.com.
Jones, acting on behalf of Netfire, and without the
knowledge of the Brinkerhoffs or SMI, contacted Stein in early
1996. Jones told Stein that Netfire was affiliated with the NCAA
and that Netfire was the rightful owner of marchmadness.com,
neither of which was true. On February 7, 1996, Jones and Stein
executed an agreement transferring marchmadness.com to Netfire in
exchange for a $25,000 advertising credit on Netfire websites,
the rights to the domain name march-madness.com and a link from
1
Jones is an experienced cybersquatter. He registered for
many other domain names including stairmaster.com, gucci.com and
windows98.com.
4
marchmadness.com to march-madness.com.
The SMI Parties immediately began to develop content for
marchmadness.com. All of the content related to the NCAA
Tournament.2
The NCAA sent SMI a cease and desist letter on February 5,
1996 asserting its trademark rights. The letter stated: “The
name of the project [marchmadness.com], in the context in which
your client is using it, infringes on the NCAA’s common law mark
‘March Madness.’” In response, SMI decided not to operate the
website for the March 1996 NCAA Tournament.
IHSA sent a cease and desist letter to SMI on October 14,
1996. The letter stated that IHSA was the “owner of all rights
to the trademark March Madness, including Federal Trademark
Registration No. 1,571,340.”
Despite the letters from the NCAA and IHSA, SMI decided to
continue development of the site. The website was operational
from sometime in 1997 until July 1999.3
In 1998, IHSA requested that Network Solutions, Inc.
(“NSI”), the entity that controls the domain registration
process, place marchmadness.com on hold, which would pull the
2
Dirk Brinkerhoff testified that marchmadness.com was not
intended to be a commercial site and that SMI had a long-term
plan for it to cover a wide range of sports, as opposed to only
covering the NCAA Tournament. However, the district court found
his testimony “unpersuasive” and “entirely without credibility.”
3
Due to a server malfunction, the site was not available
for a few months in 1998.
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domain name out of circulation. NSI did so in late June 1999.
However, in January 2000, NSI notified IHSA that it had changed
its hold policy, and that IHSA would have to submit court
documents related to SMI by February 23, 2000 in order to
preserve the hold. Accordingly, IHSA filed this suit on February
22, 2000.
B. History of “March Madness”
IHSA has organized an annual boys’ high school basketball
tournament in Illinois since 1908. Since the 1940s, IHSA has
used the term “March Madness” to refer to the IHSA Tournament.
IHSA first attempted to register March Madness in 1990. At
that time it discovered that an entity called Intersport had
registered the phrase on December 12, 1989. Intersport’s
registration was for “entertainment services, namely,
presentation of athletic and entertainment personalities in a
panel forum” regarding the NCAA Tournament. IHSA and Intersport
eventually came to an agreement, on July 24, 1995, whereby
Intersport assigned its registered service mark to IHSA in return
for a perpetual license to use March Madness for its sports
programming and a share of royalty payments received by IHSA.
IHSA claimed exclusive rights to March Madness, and it
licensed the phrase for any use, even uses that did not relate to
the IHSA Tournament. Its commercial licensees included Wilson
Sporting Goods, Pepsi and the Chicago Tribune. IHSA also
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licensed March Madness to other state high school associations
for the nominal fee of $10.
The NCAA’s first use of the phrase “March Madness” is
generally traced to 1982, when CBS broadcaster Brent Musberger
used the phrase to describe the NCAA Tournament.4 The NCAA began
licensing March Madness in 1988 as one of a set of marks relating
to NCAA championships.
C. Trademark Dispute Between IHSA and NCAA
In the early 1990s, both IHSA and NCAA were claiming
exclusive rights to all commercial uses of March Madness. In
1996, IHSA sued an NCAA licensee, GTE Vantage, that created a
basketball video game that made use of the phrase March Madness.
In December 1996, the Seventh Circuit, in Illinois High School
Ass’n v. GTE Vantage, rejected IHSA’s claim to rights over March
Madness in the context of the NCAA Tournament. 99 F.3d 244, 247-
48 (7th Cir. 1996).
Following the Seventh Circuit decision in GTE Vantage, IHSA
and NCAA decided to work together to protect their rights in
March Madness. After several years of negotiation, IHSA and NCAA
formed MMAA on February 29, 2000, one week after the instant case
was filed by IHSA. IHSA and NCAA each transferred all rights it
held in March Madness to MMAA, and in return each received a
4
CBS was the licensed television broadcaster for the NCAA
Tournament at the time.
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license to use the term in relation to its basketball tournament.
As of August 2003, MMAA held seven registered service marks
or trademarks for March Madness, an additional five for America’s
Original March Madness and another for March Madness Experience.
III. Discussion
After considering the record and the parties’ arguments in
their briefs and at oral argument, we affirm the district court
for the following reasons:
With respect to the district court’s finding that “March
Madness” is a descriptive mark which has acquired secondary
meaning - a question of fact that we review for clear error - we
find no clear error. See, e.g., Am. Heritage Life Ins. Co. v.
Heritage Life Ins. Co., 494 F.2d 3, 11, 13 (5th Cir. 1974).
With respect to the district court’s finding that
marchmadness.com created a likelihood of confusion with “March
Madness” - a question of fact that we review for clear error - we
find no clear error. See, e.g., Elvis Presley Enters. v. Capece,
141 F.3d 188, 196 (5th Cir. 1998).
With respect to the district court’s determination that the
registration and use of marchmadness.com by SMI, Netfire and
Jones violated the Anti-Cybersquatting Consumer Protection Act
(“ACPA”),5 we find no error. Whether they profited or not, SMI,
Netfire and Jones acted with the bad faith intent to profit as
5
15 U.S.C. § 1125(d).
8
required by 15 U.S.C. § 1125(d)(1)(A)(i), and the domain name
marchmadness.com is identical or confusingly similar to the term
March Madness as required by § 1125(d)(1)(A)(ii).
With respect to the district court’s determination that MMAA
was not entitled to damages under the ACPA as a result of the
violation by SMI, Netfire and Jones, we find no error because
damages under the ACPA are not available for domain registration
and/or use that occurred prior to the ACPA’s enactment on
November 29, 1999, and the registration and use of
marchmadness.com by the SMI Parties occurred before that date.
E. & J. Gallo Winery v. Spider Webs Ltd., 286 F.3d 270, 277 (5th
Cir. 2002); 1999 Acts, P.L. 106-113, § 3010, 113 Stat. 1536.
With respect to the district court’s grant of MMAA’s motion
for summary judgment on the SMI Parties’ counterclaims, we find
no error. We note that we may affirm the district court if
summary judgment “is sustainable on any legal ground in the
record” and that summary judgment “may be affirmed on grounds
rejected or not stated by the district court.” S&W Enters.,
L.L.C. v. SouthTrust Bank of Ala., NA, 315 F.3d 533, 537-38 (5th
Cir. 2003)(internal citations omitted). Because we have affirmed
the district court’s determination that March Madness is a
protectable trademark, all of the SMI Parties’ counterclaims
necessarily fail because they all depend on a finding that March
Madness is a generic term.
9
With respect to the district court’s determination that
Jones and Netfire made false representations in violation of 15
U.S.C. § 1125(a), we find no error. Section 1125(a) prohibits,
inter alia, the use of any false or misleading representation of
fact that is likely to cause confusion or to deceive as to the
affiliation, connection or association of a person with another
person. Jones falsely represented to Adam Stein, the original
owner of the domain name marchmadness.com, that he was affiliated
with the NCAA.
With respect to the district court’s determination that the
SMI Parties were not liable for civil conspiracy, we find no
error. Under Texas law, a civil conspiracy requires: “(1) two or
more persons; (2) an object to be accomplished; (3) a meeting of
minds on the object or course of action; (4) one or more
unlawful, overt acts; and (5) damages as the proximate result.”
Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983). The
district court determined that MMAA failed to prove, by a
preponderance of the evidence, that the SMI Parties had a shared
intent to harm Stein. There was no meeting of the minds because
there was no evidence that Jones told anyone that he was going to
obtain the domain name from Stein, rather than from NSI. We
agree.
With respect to the district court’s determination that SMI
was not vicariously liable for Jones’s misrepresentations to
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Stein regarding an affiliation with the NCAA, we find no error.
Furthermore, even if we did find error it would be harmless error
because a finding that SMI was vicariously liable for Jones’s
misrepresentations would not in any way alter the damage award in
this case.
With respect to the district court’s determination that MMAA
was not entitled to attorneys’ fees, we find no clear error.
Pursuant to 15 U.S.C. § 1117(a), a court may award attorneys’
fees to the prevailing party in “exceptional cases.” An
“exceptional case” under the Lanham Act is one “where the
violative acts can be characterized as malicious, fraudulent,
deliberate, or willful.” Pebble Beach Co. v. Tour 18 I Ltd., 155
F.3d 526, 555 (5th Cir. 1998)(quoting Seven-Up Co. v. Coca-Cola
Co., 86 F.3d 1379, 1390 (5th Cir. 1996)). The prevailing party
must demonstrate the exceptional nature of a case by clear and
convincing evidence. Id. Lack of damages is an important factor
in determining whether a case is exceptional. Id. (citing Texas
Pig Stands, Inc. v. Hard Rock Café Int’l, Inc., 951 F.2d 684, 697
n.23 (5th Cir. 1992)). “We review the district court's findings
as to whether a case is exceptional for clear error and its
decision on whether to award attorneys' fees for an abuse of
discretion.” Id.
We agree with the district court that the question of
whether to award attorneys’ fees in the instant case is a close
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call. Given the district court’s reasons for not awarding
attorneys’ fees, including the fact that as of early 1996, when
the SMI Parties acquired marchmadness.com, the trademark rights
of IHSA and NCAA were not readily apparent and the fact that MMAA
did not prove any damages, as well as the requirement that MMAA
establish the exceptional nature of this case by clear and
convincing evidence, we find that the district court did not
abuse its discretion by declining to award attorneys’ fees to
MMAA.
With respect to the district court’s determination that MMAA
was not entitled to damages as a result of the SMI Parties’
violations of 15 U.S.C. §§ 1125(a) and (d) for false
representations and trademark infringement, we find no error.
The SMI Parties never profited from the operation of
marchmadness.com, nor did MMAA present sufficient evidence that
it sustained damages as a result of the SMI Parties operating
marchmadness.com.
IV. Conclusion
For the foregoing reasons, the judgment of the district
court is AFFIRMED.
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