Simon Property Group v. MySimon Inc ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-1444
SIMON PROPERTY GROUP, L.P.,
a Delaware limited partnership,
Plaintiff-Appellant,
v.
mySIMON, INC., a California
corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. IP 99-1195-C H/G--David F. Hamilton, Judge.
Argued February 14, 2002--Decided March 13, 2002
Before FLAUM, Chief Judge, and BAUER and
EVANS, Circuit Judges.
EVANS, Circuit Judge. Simon Property
Group attempts to appeal from the
district court’s decision effectively
staying the issuance of an injunction it
will issue when a final judgment is
entered. mySimon argues that we lack
jurisdiction because the district court’s
decision is not an order "granting . . .
or refusing" an injunction under 28
U.S.C. sec. 1292(a)(1).
Simon Property Group (SPG) is an
Indianapolis-based real estate investment
trust that owns and manages retail real
estate, primarily shopping malls, in 36
states. SPG has been in the real estate
business for more than 40 years, but it
has operated under several different
names after being founded as Melvin Simon
and Associates. In 1993 the company went
public and became Simon Property Group.
Three years later it merged with
DeBartolo Realty Corporation and became
the Simon DeBartolo Group. In 1998 the
name changed back to Simon Property
Group. SPG is the largest retail real
estate investment trust in the United
States. Unlike mySimon, it does not offer
comparison shopping services on the
Internet. The only products SPG sells on
the Internet are a relatively small
number of shopping mall gift
certificates.
In early 1998 Michael Yang and Yeogirl
Yun (we’ll refer to both, and other
colleagues like Lynn Gately, simply as
"Yang") founded a company to provide
comparison shopping via the Internet. As
a youth, Yang must have had permission to
take a lot of giant and scissor steps,
because he decided on "Simon" as a name
for his company, based on the childhood
game "Simon Says."
Yang was interested in using the
Internet domain name "simon.com" but it
belonged to SPG (which was then known as
Simon DeBartolo). SPG was not interested
in selling the domain name. Therefore,
Yang began searching for new names,
hitting upon mySimon. Yang liked the name
because it suggested a personalized
shopping experience and because his
initials were M.Y. After learning that
the Internet domain name mysimon.com was
not taken, Yang moved forward with plans
to call the company mySimon.
Although SPG was not interested in
selling its domain name to Yang’s
company, SPG executives did express an
interest in mySimon as a potential
partner or investment opportunity. Yang
and Andrew Halliday, who was co-president
of SPG’s strategic business unit, Simon
Brand Ventures, discussed this
possibility, but nothing materialized.
When Yang spoke with Halliday, mySimon
had not yet been incorporated, nor had
Yang done a trademark search on the
mySimon name. Therefore, Yang’s
communications with SPG referred to
mySimon as his company’s "temporary"
name. Halliday testified that he told
Yang that he should choose a different
name for mySimon to avoid using the
"Simon" name.
mySimon launched its Web site and began
a national advertising campaign in
October 1998. By the summer of 1999 it
had spent millions of dollars on
advertising and had attained national
recognition.
In March 1999, 6 months after mySimon’s
launch, SPG launched a corporate
"branding" campaign to inform consumers
that it owned and managed certain
shopping malls, something it had not done
in its 40 years of existence. According
to Karen Corsaro, former president of
Simon Brand Ventures, no other American
property management company had ever
attempted to "brand" any of its shopping
malls. Not surprisingly, the branding
campaign had its work cut out for it.
According to SPG’s annual report for
1999, a 1997 survey showed that only 3
percent of shoppers were aware of SPG’s
"Simon" name. The annual report for 1998
said, "There is much work to be done as
research shows shoppers do not have the
proper awareness of the added value that
a Simon-managed shopping center can
deliver." SPG’s advertising agency
reported that brand recognition for the
"Simon" name was "almost nonexistent"
before 1999. In an attempt to raise
consumer awareness, SPG spent $90 million
on advertising in 1999. According to
SPG’s annual report for 1999, the
branding campaign increased SPG’s
consumer awareness to 50 percent.
In June 1999 SPG demanded that mySimon
stop using the "mySimon" name. When
mySimon refused, SPG sued under the
Lanham Act (and various state statutes),
alleging that SPG owned exclusive rights
to the "Simon" name and that mySimon’s
name, Web address, and cartoon mascot
named "Simon" infringed on it rights. SPG
moved for a temporary restraining order
and preliminary injunction. The district
court denied the TRO motion after a 2-day
hearing. SPG then withdrew its motion for
preliminary injunction. It never renewed
its request for interlocutory injunctive
relief while the case moved forward in
the district court.
Eventually the case was tried to a jury.
SPG won a verdict despite presenting
relatively weak evidence that its "Simon"
name had attained secondary meaning or
that consumers were likely to confuse SPG
with mySimon. For example, the vast
majority of SPG’s "consumer" witnesses
who testified that they had heard of SPG
were professionals whose jobs required
them to be aware of the company. They
included employees of SPG’s advertising
agency, real estate analysts who covered
SPG, executives of the National
Association of Real Estate Investment
Trusts (of which SPG is a member), and
members of a law firm that represents
SPG. Indeed, because SPG’s witnesses were
so unrepresentative of the average
consumer, the district court termed their
testimony regarding secondary meaning "so
slight as to amount to almost nothing."
Additionally, the district court noted,
"Simon" is an extremely common first name
and surname, weakening SPG’s argument
that mySimon’s use of the name is likely
to confuse consumers.
In contrast, mySimon presented
substantial survey evidence demonstrating
that there was no likelihood of confusion
between mySimon and SPG. Two of the four
surveys involved showing consumers in
shopping malls either a mySimon
advertisement or a picture of its home
page. The survey respondents were then
asked which company they thought put out
the advertisement or the Web page.
Respondents were also asked what other
products or services they believed were
put out by the same company and whether
they believed that the company whose ad
or Web page they believed that they were
seeing was related to any other company.
The format of the other two surveys
involved asking Internet users similar
questions about the mySimon Web site. The
surveys were conducted in June of 2000,
after the SPG branding campaign.
mySimon’s expert witness in consumer
research (whose name, coincidentally, is
Itamar Simonson) testified that the
average result across the four surveys
showed a "completely negligible"
likelihood of confusion, with under 2
percent of respondents indicating
relevant confusion. SPG presented no
survey evidence about the likelihood of
consumer confusion.
Despite the relative strength of
mySimon’s evidence and the relative
weakness of SPG’s, SPG’s lawyer must have
done a whale of a selling job as the jury
awarded the company $11.5 million in
mySimon’s "profits" (although mySimon had
not yet earned any profits), $5.3 million
in corrective advertising (although SPG
had not engaged in any corrective
advertising), and $10 million in state
law punitive damages.
After the jury spoke, SPG requested a
permanent injunction barring mySimon from
using the name "Simon." The district
court crafted an order permanently
enjoining mySimon from using the "Simon"
and "mySimon" names, the Web address
www.mysimon.com, and its "Simon" cartoon
mascot. Under the injunction, traffic to
the www.mysimon.com Web site would be
automatically redirected to mySimon’s new
site for one year after final judgment.
During that year, the company would be
allowed to use the mySimon name on its
Web site, but only to inform visitors of
its new name. After the transition
period, mySimon would be required to
transfer the www.mysimon.com domain name
to SPG. The district court stated that
the injunction was to issue upon entry of
a final judgment, a matter that still
must be worked out.
mySimon moved for judgment as a matter
of law and a new trial. The district
court (Judge David F. Hamilton) granted
in part and denied in part these motions.
Judge Hamilton expressed serious doubt
regarding the strength of SPG’s evidence
but declined to overturn the jury’s
verdict on liability. The judge did,
however, set aside the $11.5 million
damages award because he found that
requiring mySimon to change its name
provided sufficient relief, as SPG’s
damages expert had based his estimate on
the assumption that mySimon would
continue to use the mySimon name
indefinitely. The court also held that
the $5.3 million corrective advertising
award was arbitrary and not supported by
the evidence. Consequently, Judge
Hamilton ordered a new trial on the
corrective advertising issue, subject to
SPG’s acceptance of a remittitur to
nominal damages of $10. Because Indiana
law limits punitive damages to the
greater of $50,000 or three times
compensatory damages, the judge also
reduced the jury’s $10 million punitive
damages award to $50,000 pending SPG’s
decision with respect to the remittitur.
SPG rejected the remittitur and did not
ask the district court to reconsider any
aspect of its opinion. Therefore, final
judgment will not enter until completion
of a new trial on the corrective
advertising issue, and the injunction has
not issued. SPG filed a notice of appeal
seeking immediate issuance of the
injunction and a reduction of the Web
site transition period from 1 year to 30
days. SPG claims that we have subject
matter jurisdiction because the district
court’s delay in issuing the injunction
was, effectively, a denial of injunctive
relief, which is appealable. See 28
U.S.C. sec. 1292(a)(1).
We distinguish between merely postponing
relief and denying a request for an
injunction. If the district court’s
decision simply postpones injunctive
relief, a party attempting to appeal must
show both that the district court’s
decision was a definitive disposition of
the request for relief and that
irreparable harm will result from a
delay. See Donovan v. Robbins, 752 F.2d
1170, 1173-74 (7th Cir. 1985)./1
Donovan rested on the Supreme Court’s
holding in Carson v. American Brands, 450
U.S. 79 (1981). There, the Court held
that the district court’s refusal to
enter a proposed consent decree was
immediately appealable because it had the
same practical effect as a refusal to
enter an injunction and would cause
irreparable harm if not appealable. See
id. at 84, 86. But because sec.
1292(a)(1) was intended to carve out only
a limited exception to the final-judgment
rule, the Court held in Carson that the
statute is to be construed narrowly. See
id. For example, the Court noted that the
interlocutory orders in Switzerland
Cheese Ass’n v. E. Horne’s Market, Inc.,
385 U.S. 23 (1966), and Gardner v.
Westinghouse Broadcasting Co., 437 U.S.
478 (1978), were not appealable because
neither petitioner sought a preliminary
injunction, thereby undercutting the
argument that delaying review would cause
irreparable harm. See Carson, 420 U.S. at
85; see also Anderson v. City of Boston,
244 F.3d 236, 239 (1st Cir. 2001)
(holding that court of appeals lacked
jurisdiction because appellants did not
appeal from denial of interim relief or
seek other avenues of interlocutory
appeal, such as separate final judgment
on dismissed claims under Fed. R. Civ. P.
54(b) or certification for interlocutory
appeal under 28 U.S.C. sec. 1292(b));
Huminski v. Rutland Police Dep’t, 221
F.3d 357, 361 (2d Cir. 2000) (holding
same and also noting that appellant made
no effort to expedite appeal).
Here, SPG voluntarily abandoned its
quest for a preliminary injunction after
the district court denied its TRO motion.
This strongly undermines its argument
today that a delay in issuing a permanent
injunction will cause it to suffer
irreparable harm. SPG cites Processed
Plastic Co. v. Warner Communications,
Inc., 675 F.2d 852 (7th Cir. 1982), for
the proposition that its inability to
control the nature and quality of
mySimon’s services is "the most corrosive
and irreparable harm attributable to
trademark infringement." See id. at 858(quoting 4 R. Calmann, Unfair
Competition, Trademarks and Monopolies,
section 88.3 (b) at 205 (3rd ed. 1970)).
The potential threat to SPG’s name is
questionable. SPG and mySimon do not
offer similar services. SPG offered
rather weak evidence of the likelihood of
confusion between the two enterprises,
whereas mySimon presented survey evidence
showing that there was a negligible risk
of confusion. We think SPG’s plea of
irreparable harm is thin at best.
Nor can SPG show that the district
court’s decision was a definitive
disposition with regard to injunctive
relief. The judge, as the case continues,
is free to revise his ruling at any time
before entering final judgment. See
Samayoa v. Chicago Bd. of Educ., 783 F.2d
102, 104 (7th Cir. 1986). Therefore,
because SPG cannot show that the district
court’s decision to delay entry of the
injunction was a definitive disposition
causing SPG irreparable harm, we lack
jurisdiction.
APPEAL DISMISSED.
FOOTNOTE
/1 SPG argues that it is not required to show
irreparable harm under Holmes v. Fisher, 854 F.2d
229 (7th Cir. 1988). We held in Holmes, however,
that irreparable injury is not relevant only
where the district court’s order is unquestion-
ably the denial of an injunction. See id. at 231.
Here, the district court’s decision was not
unquestionably the denial of an injunction.