David Carnivale v. Staub Design

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 11-1124
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DAVID JOHN CARNIVALE
v.
STAUB DESIGN LLC;
JOHN STAUB; DAVID STAUB,
Appellants
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Appeal from the United States District Court
for the District of Delaware
(D.C. Civil No. 1-08-cv-00764)
District Judge: Honorable Sue L. Robinson
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Argued on November 15, 2011
Before: RENDELL and AMBRO, Circuit Judges
and JONES, II,* District Judge.
(Opinion Filed: January 4, 2012)
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Peter J. Duhig, Esq.
S. Lloyd Smith, Esq. [ARGUED]
Buchanan Ingersoll & Rooney
1737 King Street, Suite 500
Alexandria, VA 22314
Counsel for Appellants
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* The Honorable C. Darnell Jones, II, District Judge for the United States District Court
for the Eastern District of Pennsylvania, sitting by designation.
David John Carnivale [ARGUED]
226 Natick Street
Staten Island, NY 10306
Pro se Appellee
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OPINION OF THE COURT
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RENDELL, Circuit Judge
Staub Design LLC, John Staub, and David Staub (together, the Staubs) appeal a
judgment the District Court entered against them on appellee David John Carnivale‟s
Anticybersquatting Consumer Protection Act, or ACPA, claim. See 15 U.S.C. § 1125(d).
In a summary judgment ruling and a decision after a bench trial, the District Court found
that: (1) Carnivale‟s trademark, “The Affordable House,” was distinctive; (2) the
Staubs‟ domain name, www.theaffordablehouse.com, was identical or confusingly
similar to Carnivale‟s mark; and (3) in registering their domain name, the Staubs acted
with a bad faith intent to profit from Carnivale‟s mark. We conclude that the District
Court clearly erred in evaluating two of the factors pertinent to its conclusion that the
Staubs acted with a bad faith intent to profit, and, therefore, will reverse and remand for
further proceedings consistent with this opinion.
I.
Carnivale is an architect who wrote a book called The Affordable House. Since
1998, he has marketed his book and related blueprints through the website
www.affordablehouse.com. John and David Staub started Staub Design LLC, a
residential design firm that focuses on the use of a special, lightweight building material,
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autoclaved aerated concrete (AAC). In 2004, after coming across Carnivale‟s website,
the Staubs registered and began using the domain name www.theaffordablehouse.com to
provide information concerning their business and the use of AAC. In 2005 (after the
Staubs‟ website was up and running), Carnivale applied to register “The Affordable
House” as a trademark; in 2006, the Patent and Trademark Office granted Carnivale‟s
application and registered his trademark. In this lawsuit, Carnivale claims that the
Staubs‟ use of the domain name www.theaffordablehouse.com violated the ACPA, 15
U.S.C. § 1125(d).
II.
The ACPA lists nine, non-exclusive factors that a court should consider in
determining whether a defendant possessed the requisite bad faith intent to profit from
the use of the plaintiff‟s mark. See 15 U.S.C. § 1125(d)(1)(B)(i). In this case, the
District Court concluded that factors one through five and nine weighed in favor of a
finding of bad faith, and that factors six through eight weighed against such a conclusion.
Weighing all of the factors “qualitatively in light of the circumstances of the case as a
whole,” the District Court found that the Staubs acted in bad faith. Carnivale v. Staub
Design, LLC, 754 F. Supp. 2d 652, 658-61 (D. Del. 2010). We agree with the Staubs that
the District Court‟s analysis with respect to factors five, the defendant‟s intent to divert
consumers, and nine, the extent to which the plaintiff‟s mark is distinctive or famous, was
flawed.
A.
The fifth statutory bad-faith factor is:
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the [defendant‟s] intent to divert consumers from the mark
owner‟s online location to a site accessible under the domain
name that could harm the goodwill represented by the mark,
either for commercial gain or with the intent to tarnish or
disparage the mark, by creating a likelihood of confusion as
to the source, sponsorship, affiliation, or endorsement of the
site.
15 U.S.C. § 1125(d)(1)(B)(i)(V). The District Court concluded that this factor weighed
against the Staubs, as follows:
Defendants‟ knowing and wholesale inclusion of the mark
THE AFFORDABLE HOUSE in the domain name implies
that defendants may have sought to divert customers away
from plaintiff‟s website. Moreover, both plaintiff and
defendants are in the business of designing house plans and
likely compete for at least part of their client bases. The
similarities between the parties‟ domain names and the nature
of their businesses suggest that defendants might be
motivated to divert web traffic away from plaintiff‟s website
as a potential competitor.
Carnivale, 754 F. Supp. 2d at 660.
That analysis is not grounded in the record. Rather than relying on actual
evidence presented at trial, the District Court hypothesized that the Staubs “may have
sought to divert customers away from plaintiff‟s website,” that Carnivale and the Staubs
“likely compete for at least part of their client bases,” and that “similarities” between the
parties‟ businesses “suggest that defendants might be motivated to divert web traffic
away from plaintiff‟s website.” Id. (emphases added). While we understand and agree
with the District Court‟s assertion that a plaintiff rarely will uncover direct evidence of an
intent to divert consumers, id., it does not follow that this factor may be satisfied without
any specific facts from which intent to divert could be inferred, such as evidence tending
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to show actual customer overlap or competition between the plaintiff‟s and defendant‟s
businesses.
Further, that the Staubs “may have” or “might have been motivated” to divert
customers away from Carnivale‟s website is not enough to tilt this factor in favor of
Carnivale, who, as the plaintiff, bears the burden of proof.1 On remand, the District
Court should consider whether the evidence in the record supports a finding that the
Staubs did intend to divert customers from Carnivale.
B.
The ninth statutory factor is “the extent to which the mark incorporated in the
[defendant‟s] domain name registration is or is not distinctive and famous within the
meaning of subsection (c) of this section.”2 15 U.S.C. § 1125(d)(1)(B)(i)(IX). The
District Court relied solely on its earlier determination, at summary judgment, that
Carnivale‟s mark is “inherently distinctive” to conclude that this factor supported a
finding of bad faith. 754 F. Supp. 2d at 661.
The District Court also clearly erred in this regard. We do not read the ninth
factor, concerning “the extent to which” the relevant mark “is or is not distinctive and
1
In addition to the foregoing, we also note that the District Court‟s assertion that the
parties‟ businesses are similar and that they likely share customers seems at odds with its
earlier conclusion, under the second statutory factor, that the phrase “THE
AFFORDABLE HOUSE,” which is descriptive of Carnivale‟s business, bears “no
resemblance” to the Staubs‟ website or business. See id. at 658.
2
Subsection (c) of the statute refers to marks that are distinctive, “inherently or through
acquired distinctiveness,” 15 U.S.C. § 1125(c)(1), and defines a “famous” mark as one
that is “widely recognized by the general consuming public of the United States as a
designation of source of the goods or services of the mark‟s owner,” id. § 1125(c)(2)(A).
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famous,” as merely duplicative of the element requiring that a mark be distinctive or
famous to qualify for protection under the ACPA. See 15 U.S.C. § 1125(d)(1)(A)(ii)(I)-
(III); see also Shields v. Zuccarini, 254 F.3d 476, 482 (3d Cir. 2001). Instead, the
statutory language suggests that the District Court must separately assess the extent of the
distinctive or famous nature of the mark.
Obviously, the District Court‟s determination at summary judgment that
Carnivale‟s mark is “distinctive” must be considered as part of the factor nine analysis.3
But the District Court also should have evaluated how strong or distinctive Carnivale‟s
mark was. In this regard, the record suggests that Carnivale‟s mark, even if legally
distinctive, is relatively weak. Although Carnivale used the phrase “The Affordable
House” before the Staubs registered their website, his use does not appear to have been
exclusive — the Staubs presented evidence of numerous other websites using the same
phrase in similar ways. The phrase “The Affordable House” is descriptive, at best, and
the evidence Carnivale submitted to establish secondary meaning does not include
customer surveys, customer testimony, evidence of actual confusion, or several of the
other criteria we typically consider in determining secondary meaning. See Browne Drug
Co. v. Cococare Prods., Inc., 538 F.3d 185, 199 (3d Cir. 2008). Moreover, at the time
the Staubs registered their domain name, Carnivale had not yet applied to register his
trademark, and there was no indication on his website that he claimed exclusive rights to
3
We do not here disturb the District Court‟s ruling that Carnivale‟s mark is distinctive,
but we read that ruling narrowly. In our view, the District Court based its decision more
on the Staubs‟ failures to make the proper arguments and to present legally relevant
evidence to counter Carnivale‟s summary judgment motion than on the legal merits of the
question.
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the phrase “The Affordable House.” On remand, the District Court should evaluate the
extent to which Carnivale‟s mark is distinctive or famous in light of this evidence and the
record as a whole.
C.
As the District Court properly recognized, applying the ACPA‟s bad-faith factors
“„is a holistic, not mechanical, exercise.‟” 754 F. Supp. 2d at 658 (quoting Green v.
Fornario, 486 F.3d 100, 106 (3d Cir. 2007)). Thus, although we conclude that the
District Court erred in evaluating factors five and nine, we leave to the District Court the
task of reanalyzing those factors and determining how any changes affect the overall
balance of the factors in this case.
III.
We will reverse the judgment and remand to the District Court for further
proceedings consistent with this opinion.
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