Audi AG v. D'Amato

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 06a0439p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiffs-Appellees, -
AUDI AG and VOLKSWAGEN OF AMERICA, INC.,
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No. 05-2359
v.
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BOB D’AMATO, d/b/a QUATTRO ENTHUSIASTS, -
Defendant-Appellant. -
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 04-70665—Paul D. Borman, District Judge.
Argued: October 24, 2006
Decided and Filed: November 27, 2006
Before: MARTIN and COOK, Circuit Judges; BERTELSMAN, District Judge.*
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COUNSEL
ARGUED: Damian G. Wasserbauer, INTELLECTUAL PROPERTY ADVISORS, LLC, Canton,
Connecticut, for Appellant. Gregory D. Phillips, HOWARD, PHILLIPS & ANDERSON, Salt Lake
City, Utah, for Appellees. ON BRIEF: Damian G. Wasserbauer, INTELLECTUAL PROPERTY
ADVISORS, LLC, Canton, Connecticut, for Appellant. Gregory D. Phillips, Cody W. Zumwalt,
HOWARD, PHILLIPS & ANDERSON, Salt Lake City, Utah, for Appellees.
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OPINION
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BOYCE F. MARTIN, JR., Circuit Judge. Defendant Bob D’Amato, who is unaffiliated with
Audi, used the domain name www.audisport.com to sell goods and merchandise displaying Audi’s
name and trademarks. Audi claims that D’Amato’s website infringes and dilutes its world famous
trademarks “AUDI,” the “AUDI FOUR RING LOGO,” and “QUATTRO,” as well as the distinctive
trade dress of Audi automobiles. Audi also claims that D’Amato violated the AntiCybersquatting
Consumer Protection Act. The district court granted summary judgment and injunctive relief to
Audi on all claims. The district court also granted Audi attorneys’ fees, but refused to award Audi
statutory damages under 15 U.S.C. § 1117(a). D’Amato appeals the grant of summary judgment and
injunctive relief and award of attorneys’ fees to Audi. He also appeals the district court’s denial of
*
The Honorable William O. Bertelsman, United States District Judge for the Eastern District of Kentucky,
sitting by designation.
1
No. 05-2359 Audi AG, et al. v. D’Amato Page 2
his Rule 56(f) motion for additional discovery. For the reasons below, we AFFIRM the district
court.
I
On February 11, 1999, Defendant Bob D’Amato registered the domain name
www.audisport.com. He posted content to the website on June 4, 1999, and April 4, 2000. Audi
AG v. D’Amato, 381 F. Supp. 2d 644, 654 (E.D. Mich. 2005). According to D’Amato, Richard Cylc,
who worked at Champion Audi, an Audi dealership in Pompano, Florida, contacted him via email
stating that he liked the site. Cylc later “asked if it would be mutually beneficial if we develop the
site.” Appellant’s Br. at 4. Cylc then turned development over to Devin Carlson, a salesperson
employed by Champion Audi, who D’Amato claims sent content to the site. Id. at 4-5. D’Amato
testified that Carlson gave him verbal authorization to display Audi Trademarks. D’Amato alleges
that when he asked if displaying the logos was permissible, Carlson stated that it had been
authorized by a man named Bob Skal. Audi, 381 F. Supp. 2d at 649. D’Amato states that he asked
Skal for written authorization “many, many, many times,” but that Skal continued to make excuses
as to why he had not gotten around to giving D’Amato written authorization. Id. at 649-50.
Audi has shown that in reality, Skal was not affiliated with Audi in any way.1 Id. at 650.
Further, Champion Audi, the employer of Carlson and Cylc, entered into an agreement with Audi
providing that: “This agreement does not grant Dealer [Champion Audi] any license or permission
to use Authorized Trademarks except as mentioned herein, and Dealer has no right to grant any
such permission or interest.” Id. (emphasis added).
Beginning on April 18, 2002, D’Amato agreed with Carlson that he would post hyperlinks
to another site, www.audisportline.com, which would direct internet customers to an “Audisport
Boutique and Services” webpage. This webpage offered goods (such as hats and shirts) with the
“Audi Sport” logo, and an email subscription service offering “audisport.com” email addresses. Id.These items were posted for sale in 2003. Id. at 648. In exchange for posting the link on the
website, D’Amato would receive a portion of the sales revenue. Id. at 650. Each item had a Paypal
button for customers to make payments.
Prior to posting these items for sale, D’Amato commissioned Thompson Smith, a graphic
designer, to create two logos incorporating the AUDI RING LOGO that D’Amato displayed on his
audisport.com website. Smith visited the plaintiff’s actual www.audi.com website and noticed some
items of concern, which he emailed to D’Amato on May 21, 2002:
1. Audi already HAS a “Collection” site that is really well done with “some very
limited” Audi Sport goodies. Are we taking over management, production of this
and it will then become “audisport.com”?
2. Are you sure that we have the licensing rights to reproduce “Audi”, “Audi Sport”,
quattro, etc. logos? If we do, lets please see this in writing for working with vendors,
etc. I will need a copy of this.
3. Will the new company be incorporated, and we are employees/partners or are we
going to be sub-contractors for [Audi of America]?
4. If incorporated or LLC as www.audisport.com, do we have a corporate lawyer?
Audi, 381 F. Supp. 2d at 648.
1
Nor was Bob Skal affiliated with Champion Audi, according to a statement made by Devin Carlson.
No. 05-2359 Audi AG, et al. v. D’Amato Page 3
While the www.audisport.com website was running, the homepage displayed the message:
“Who are we? We are a cooperative with Audi of America, and will be providing the latest products
for your Audi’s [sic] and information on Audisport North America.” Id. at 649. D’Amato initially
testified that he never received written permission to display Audi Trademarks, but later stated that:
Since the spring of 2003 to the present, I received email, oral, and written
communications from Melissa Grunnah, Audi AG, currently Audi AG’s Press
Officer.2 Devin Carlson initially directed me to Melissa Grunnah, who sends me
news and press releases by e-mail about Audi racing events. She has on more than
one occasion given me permission to post news, content, images and racing
information at audisport.com as well as emailed to other multiple parties including
audiworld.com. She sends copies of this content by email to multiple people, of
which I am one of, on the email distribution list.
Id.On May 29, 2003, due to the fact that the website had generated no profit, Carlson cancelled
any further development. Id. at 650-51. He told D’Amato that he would tell him the actual date he
should remove the links, though Carlson never got back to D’Amato about taking them down. On
December 19, 2003, December 22, 2003, and January 8, 2004, D’Amato received Cease and Desist
letters from Audi. Id. at 651.
D’Amato claims that on February 9, 2004, he “removed references to all approved page
designs, all logos developed, and content posted having Audi Trademarks (AUDI, AUDI FOUR
RINGS, and QUATTRO)” such that, as a result, “audisport.com appeared in a noncommercial way.”
D’Amato states that through the course of its existence, his “website was transformed from a non-
commercial informational website, to a site for an Audi’s [sic] licensee, and then back to non-
commercial website,” and contends that “Audi AG continues to use and supply content to
audisport.com.” Appellant’s Br. at 9.
Despite D’Amato’s contention, the facts show that www.audisport.com continued to have
some commercial purpose. At the time the district court ruled on summary judgment, D’Amato was
still offering to sell advertising space on the website. Audi, 381 F. Supp. 2d at 650.
Simultaneously, the website informed visitors “this page is not associated with Audi AG or Audi
USA in any way.” Id.II
The district court found that there were no issues of material fact and entered summary
judgment in favor of Plaintiff Audi for its infringement, dilution, false designation of origin, and
cyberpiracy claims. Id. at 670-71. The court denied Audi’s request for statutory damages under 15
U.S.C. § 1117(a), but granted its request for a permanent injunction and attorneys’ fees. Id.The court also denied D’Amato’s motion to reopen the discovery period through his
submission of a Rule 56(f) affidavit. It found that although D’Amato was well aware of the issues
with regard to which he sought discovery, he had not attempted to conduct discovery until after
business hours on the last day of discovery. Id. at 653.
2
According to Audi, Melissa Grunnah was not employed directly by Audi. Rather, she was an independent
contractor who provided press relations services to Audi. Audi, 381 F. Supp. 2d at 663. The district court noted that
Audi’s contention is supported by the fact that her email address was “not an Audi company address (i.e.
Grunnah@audi.com) but rather mgrunnah@charter.net.” Id.No. 05-2359 Audi AG, et al. v. D’Amato Page 4
III
We review a district court’s denial of additional time for discovery for abuse of discretion.
Plott v. General Motors Corp., 71 F.3d 1190, 1198 (6th Cir. 1995). Factors that should be
considered include when the moving party learned of the issue that is the subject of discovery, how
the discovery would affect the ruling below, the length of the discovery period, whether the moving
party was dilatory, and whether the adverse party was responsive to prior discovery requests. Id.
at 1196-97.
In this case, the discovery period ended on February 28, 2005. D’Amato sought additional
discovery in the form of a notice of deposition faxed to Audi after business hours on this day, which
Audi did not receive until the next day. Audi, 381 F. Supp. 2d at 653. The magistrate judge denied
D’Amato’s motion to compel responses and extend the discovery deadline, and the district court
affirmed on June 17, 2005. Id. When it denied D’Amato’s Rule 56(f) affidavit, the district court
found that such an affidavit is appropriate when a party files it before discovery, but here, D’Amato
filed it after discovery. Id. The court also noted that it had previously addressed and rejected this
issue in June. Id.D’Amato contends that his delay was excusable because he was unaware of the issue the
request pertained to — namely, an alleged abandonment by Audi of its mark “AUDI SPORT” —
until February 16, 2005. Appellant’s Br. at 43-44. Even if we believe D’Amato, this was twelve
days prior to the discovery deadline on which D’Amato finally made his discovery request. More
importantly, D’Amato’s counsel conceded at the magistrate hearing that D’Amato had been aware
of the issue this request pertained to since December 14, 2004, a full two-and-a-half months before
the discovery deadline.
In Plott, we found that the district court did not abuse its discretion in denying Plaintiff
Plott’s motion for additional discovery where he had learned of the pertinent issue three weeks
before the close of discovery. Plott, 71 F.3d at 1197. Under this reasoning, we must find that a
delay of two-and-a-half months is dilatory.
D’Amato has also failed to show that granting additional discovery time would have changed
the outcome of this case. D’Amato contends that Audi abandoned its rights in the AUDI SPORT
logo. However, as the district court noted, any dispute over D’Amato’s use of the domain name
www.audisport.com is immaterial to the question of whether he is liable for his use of the Audi
Trademarks. Audi, 381 F. Supp. 2d at 649 n.1. Thus, even if D’Amato had used another domain
name, such as www.damatoracing.com, he would still be liable for his commercial use of Audi’s
trademarks.
For the reasons above, we hold that the district court did not abuse its discretion when it
rejected D’Amato’s Rule 56(f) affidavit.
IV
A moving party is entitled to summary judgment as a matter of law “‘if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact.’” Bennett v. Eastpointe, 410 F.3d 810,
817 (6th Cir. 2005) (quoting Fed. R. Civ. P. 56(c)); see also Celotex Corp. v. Catrett, 477 U.S. 317,
325 (1986). “[T]he mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the requirement is that there
be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
(1986). If the moving party meets its burden, the burden shifts to the nonmoving party to come forth
with evidence demonstrating that there is a genuine issue of material fact, and therefore the case
No. 05-2359 Audi AG, et al. v. D’Amato Page 5
should go to trial. Fed. R. Civ. P. 56(e); Bailey v. Floyd County Bd. of Educ., 106 F.3d 135, 145 (6th
Cir. 1997).
We review de novo a district court’s grant of summary judgment, construing the facts in the
light most favorable to the nonmoving party. Bennett, 410 F.3d at 817.
A. Trademark Infringement Claim
Under both common law and federal law, “a trademark is a designation used ‘to identify and
distinguish’ the goods of a person.” J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS, § 3.1
(4th ed. 2004) (quoting 15 U.S.C. § 1127). Under the Lanham Act, 15 U.S.C. § 1051 et seq., we use
the same test to decide whether there has been trademark infringement, unfair competition, or false
designation of origin: the likelihood of confusion between the two marks. Two Pesos v. Taco
Cabana, 505 U.S. 763, 780 (1992). D’Amato argues that the district court’s finding of a likelihood
of confusion should be reversed because Audi did not offer evidence demonstrating actual
confusion. However, although proof that the buying public was actually deceived is necessary in
order to recover statutory damages under the Lanham Act, only a “likelihood of confusion” must
be shown in order to obtain equitable relief, which is at issue in this appeal. Frisch’s Restaurants
v. Elby’s Big Boy, 670 F.2d 642, 647 (6th Cir. 1982).
We have held that in determining whether there is a likelihood of confusion, the following
eight factors should be considered: (1) strength of plaintiff’s mark; (2) relatedness of the goods; (3)
similarity of the marks; (4) evidence of actual confusion; (5) marketing of channels used; (6) degree
of purchaser care; (7) defendant’s intent in selecting the mark; and (8) likelihood of expansion in
selecting the mark. Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1186-90 (6th Cir. 1988); Elby’s Big
Boy, 670 F.2d at 648.
As to the first factor, “[t]he strength of a mark is a factual determination of the mark’s
distinctiveness. The more distinct a mark, the more likely is the confusion resulting from its
infringement, and therefore the more protection it is due.” Frisch’s Restaurant, Inc. v. Shoney’s
Inc., 759 F.2d 1261, 1264 (6th Cir. 1985). Audi’s trademarks are world-famous, and D’Amato has
provided no evidence to the contrary. The district court was correct in finding that “the Audi
Trademarks are recognizable and widely known.” Audi, 381 F. Supp. 2d at 660.
With respect to the second factor, relatedness of goods, we have held that “if the parties
compete directly by offering their goods or services, confusion is likely if the marks are sufficiently
similar.” Daddy’s Junky Music Stores v. Big Daddy’s Family Music Ctr., 109 F.3d 275, 282 (6th
Cir. 1997). The record shows that D’Amato sold merchandise bearing the Audi symbol on his
website, in addition to selling @audisport.com email addresses and advertising space. The goods
and services sold by Audi and D’Amato are “related,” for they are “marketed and consumed such
that buyers are likely to believe that the services [and goods], similarly marked, come from the same
source, or are somehow connected with or sponsored by a common company.” Id. at 283.
As to the third factor, “[w]hen analyzing similarity, courts should examine the pronunciation,
appearance, and verbal translation of conflicting marks.” Id. D’Amato contends that his use of the
domain name www.audisport.com is lawful because Audi cancelled the trademark “AUDI SPORT”
in 1993. However, we have held that with respect to domain names, addition of characters along
with the mark “does not eliminate the likelihood of confusion.” PACCAR Inc. v. Telescan Techs.,
319 F.3d 243, 252 (6th Cir. 2003) (finding that Telescan’s domain names, such as
www.peterbiltnewtrucks.com, had the same appearance as PACCAR’s domain name
www.peterbilt.com). As in PACCAR., where the addition of “generic or common descriptive words”
did not make the domain names sufficiently dissimilar, in the case at bar, the addition of “sport”
after “audi” fails to distinguish the two, and public confusion is thus likely. In addition, as the
No. 05-2359 Audi AG, et al. v. D’Amato Page 6
district court found, the marks used by D’Amato on the goods and services sold are undoubtedly
similar, for they are, in fact, Audi’s actual trademarks.
In evaluating the fourth factor, evidence of actual confusion, we have noted that although
such evidence is the best indicator of likelihood of confusion, “the absence of actual confusion
evidence is inconsequential.” Id. Here, the best evidence is Thompson Smith’s email to D’Amato,
supra, where he reveals his confusion with www.audisport.com. He notes that the real Audi website
already has similar merchandise available. He further inquires about licensing rights and requests
to have something in writing. If Smith, an experienced graphic designer, was confused by the
relationship between Audi and D’Amato’s business, then a consumer would be more likely to be
confused.
With respect to the fifth factor, we consider “the similarities or differences between the
predominant customers of the parties’ respective goods or services,” and “whether the marketing
approaches employed by each party resemble each other.” Daddy’s Junky Music Store, 109 F.3d
at 285. The same group of individuals — namely, those interested in purchasing goods and services
displaying the Audi brand — would be the predominant customers to either Audi’s or
www.audisport.com’s goods. In addition, both Audi and D’Amato used the internet in marketing.
“[S]imultaneous use of the Internet as a marketing tool exacerbates the likelihood of confusion,”
given the fact that “entering a web site takes little effort — usually one click from a linked site or
a search engine’s list; thus, Web surfers are more likely to be confused as to the ownership of a web
site than traditional patrons of a brick-and-mortar store would be of a store’s ownership.” PACCAR,
319 F.3d at 252 (citation omitted).
As to the sixth factor, degree of consumer care, given the fact that the goods and services
offered on D’Amato’s website displayed the Audi name and trademark, and the low cost of the
items, consumers were unlikely to exercise a high degree of care when making purchases. “Internet
users do not undergo a highly sophisticated analysis when searching for domain names.” Id. at 253(citation omitted). We also recognize that customers exercise a lower degree of care when services
or goods for sale are inexpensive. See Daddy’s Junky Music Stores, 109 F.3d at 285-86 (“For
example, home buyers will display a high degree of care when selecting their real estate brokers,
whereas consumers of fast-food are unlikely to employ much care during their purchases.”). Here,
the goods, shirts and hats, and services, such as email addresses, were relatively inexpensive and
insignificant. Therefore, it is unlikely that a customer would exercise a great deal of care before
making a purchase from D’Amato’s website.
With respect to the seventh factor, we have noted that “[t]he intent of defendants in adopting
[their mark] is a critical factor, since if the mark was adopted with the intent of deriving benefit from
the reputation of [the plaintiff], that fact alone may be sufficient to justify the inference that there
is confusing similarity.” Elby’s Big Boy, 670 F.2d at 648. We have further explained that intent
need not be proved by direct evidence of intentional copying. Intent may be inferred.
First, the use of a contested mark with knowledge of the protected mark at issue can
support a finding of intentional copying. . . . Second, the nature of [the defendant]’s
use of the marks on its web sites, such as including the marks in its domain names,
repeating the marks in watermarks, and mimicking the distinctive scripts of the
marks, indicates an intent to create the impression that the web sites are sponsored
or affiliated with [the plaintiff].
PACCAR, 319 F.3d at 254.
Here, D’Amato used Audi’s trademarks knowing that it appeared that he was intentionally
copying the marks. In 1999, when he registered www.audisport.com, D’Amato was aware that Audi
No. 05-2359 Audi AG, et al. v. D’Amato Page 7
used the trademarks AUDI, QUATTRO, and the AUDI FOUR RING LOGO. In fact, he emailed
Volkswagen of America3 asking if his registration of the domain name would cause any problems.
However, the email bounced back to him, and D’Amato did not take any further action in order to
determine whether there were problems using www.audisport.com. Further, Thompson Smith’s
inquiries regarding D’Amato’s rights to use the Audi Trademarks should have put D’Amato on
notice that there were issues with his website and the goods and services for sale. Also, although
D’Amato received some form of permission from Devin Carlson and Bob Skal (neither of whom
actually had authorization to grant such permission), D’Amato never recieved written permission.
Audi, 381 F. Supp. 2d at 662.
D’Amato contends that Carlson and Melissa Grunnah gave him permission via emails that
were legally binding. Appellant’s Br. at 56-58. Even assuming arguendo that Carlson and Grunnah
were authorized to give D’Amato permission to use the trademarks, in order to create a legally
binding contract by electronic means, Michigan law requires that each party agree to conduct
transactions electronically. MICH. COMP. LAWS § 450.835. There is no evidence in the record that
Carlson or Grunnah agreed to create a legally binding contract via email authorizing D’Amato to
use Audi’s trademarks. Instead, it appears that the emails sent from Carlson and Grunnah to
D’Amato simply included press releases regarding new Audi cars. These press releases were sent
in the form of a mass email, and D’Amato was but one person on the distribution list. Audi has
pointed out that nothing would have prevented D’Amato from posting these press releases on his
own personal website. However, D’Amato went far beyond that. He somehow construed the phrase
“Text and Photos Courtesy of Audi AG” contained in these Audi Press Releases to give him
permission to run www.audisport.com in the manner he did. While we should construe all facts and
inferences in favor of D’Amato on this summary judgment motion, D’Amato’s argument that “Text
and Photos Courtesy of Audi AG” somehow absolves him from liability for his commercial use of
the Audi Trademarks is objectively unreasonable. We will not draw such unreasonable inferences.
See Willis v. Roche Biomedical Laboratories, Inc., 21 F.3d 1368, 1380 (5th Cir. 1994) (“This
standard . . . does not allow, much less require, that we draw strained and unreasonable inferences
in favor of the nonmovant.”) (emphasis in original).
With respect to PACCAR’s second factor in inferring a defendant’s intent to derive benefit
from a plaintiff’s goodwill — namely, defendant’s use of the marks — Audi also prevails. D’Amato
used counterfeit (in other words, identical) Audi trademarks in the domain name and throughout the
website such as in watermarks and wallpaper. See PACCAR, 319 F.3d at 254.
The last factor, likelihood of expansion of product lines, need not be analyzed because the
product lines of Audi and www.audisport.com already overlap. Id.In light of these factors, we agree with the district court’s conclusion that there was a
likelihood of confusion.
1. D’Amato’s Defenses to Audi’s Trademark Infringement Claim
D’Amato defends this claim on several grounds. As an initial matter, D’Amato raises the
defense that Audi’s claim is barred by the statute of limitations. However, the Lanham Act does not
contain a statute of limitations. Rather, courts use the doctrine of laches to determine whether a suit
should be barred. Ford Motor Co. v. Catalanotte, 342 F.3d 543, 550 (6th Cir. 2003).
Audi filed this suit on February 23, 2004. D’Amato contends that he first posted content to
www.audisport.com on June 4, 1999. When deciding whether a suit is time-barred under the
3
Volkswagen of America is a subsidiary of and the United States importer of cars manufactured by
Volkswagen AG and Audi AG.
No. 05-2359 Audi AG, et al. v. D’Amato Page 8
doctrine of laches, a court should consider “(1) whether the owner of the mark knew of the
infringing use; (2) whether the owner’s delay in challenging the infringement of the mark was
inexcusable or unreasonable; and (3) whether the infringing user was unduly prejudiced by the
owner’s delay.” Kellogg Co. v. Exxon Corp., 209 F.3d 562, 569 (6th Cir. 2000) (citing Brittingham
v. Jenkins, 914 F.2d 447 (4th Cir. 1990)). The district court judge correctly found that in this case,
D’Amato has presented no evidence demonstrating that Audi “knew of his infringing use and
inexcusably failed to challenge it.” Audi, 381 F. Supp. 2d at 665. In his appeal, D’Amato has
provided no additional evidence that Audi’s delay was intentional or inexcusable. We also agree
with the district court’s conclusion that D’Amato was not unduly prejudiced because he was never
actually authorized to use Audi’s trademarks for a commercial purpose. Id.D’Amato also defends on the ground that he had consent to use the trademarks. Even if
Carlson, as a dealer, had permission to use Audi’s trademarks, this agreement with Audi did not give
Carlson the right to grant such permission to another party. Therefore, D’Amato did not have the
right to profit from the goods Carlson provided. Further, as discussed above, nothing in the press
releases sent to D’Amato appeared to confer consent to use Audi’s trademarks for commercial gain.
D’Amato’s website also stated that he had a “signed agreement allowing usage of Audi-owned
tradenames,” even though no such agreement ever existed.
D’Amato contends that any proof of consumer confusion is rebutted by a disclaimer on his
website which stated,“[t]his page is not associated with Audi GmbH or Audi USA in any way.”
First, such a disclaimer does not absolve D’Amato of liability for his unlawful use of marks identical
to Audi’s trademarks. Ford Motor Co. v. Lloyd Design Corp., 184 F. Supp. 2d 665, 673-74 (E.D.
Mich. 2002) (“The principle that disclaimers are often ineffective is especially applicable when the
infringer uses an exact replica of the relevant trademark.”) In addition, as we stated in PACCAR,
[a]n infringing domain name has the potential to misdirect consumers as they search
for web sites associated with the owner of a trademark. A disclaimer disavowing
affiliation with the trademark owner read by a consumer after reaching the web site
comes too late. This “initial interest confusion” is recognized as an infringement
under the Lanham Act.
PACCAR, 319 F.3d at 253. Further, any effect this disclaimer had in reducing confusion would
likely be negated by the statement on the website contending that there was a “signed agreement”
with Audi.
D’Amato also defends his actions on the ground that his “[w]ebsite merely had hyperlinks
to goods (hats and shirts) and email hosting services offered by Champion Audi,” and that such
“[h]yperlinks create no liability for [him].” Appellant’s Br. at 50. However, even if D’Amato’s
intention was in fact non-commercial (which it does not appear to be), the issue is whether his
actions had a commercial effect. We have stated that “the proper inquiry is not one of intent. . . . If
consumers are confused by an infringing mark, the offender’s motives are largely irrelevant.”
Taubman Co. v. Webfeats, 319 F.3d 770, 775 (6th Cir. 2003) (internal citations omitted). Even
“minimal” advertisements constitute use of the owner’s trademark in connection with the advertising
of the goods, which the Lanham Act proscribes. Id. Further, the record shows that the URL for the
Boutique and Services webpage was www.audisport.com/Boutique.htm, which would likely lead a
customer to believe that the goods were part of D’Amato’s website. In addition, entirely separate
from the merchandise, www.audisport.com made advertising space available to sponsors. Thus, he
was attempting to directly profit from Audi’s good will.
D’Amato also asserts a defense of fair use, which means that he used the mark for a purpose
other than that for which the mark is typically used. The Supreme Court has held that once a
plaintiff shows a strong likelihood of confusion, the defendant may offer evidence rebutting the
No. 05-2359 Audi AG, et al. v. D’Amato Page 9
plaintiff’s evidence, or simply raise the fair use defense. The Court stated that “all the defendant
needs to do is to leave the factfinder unpersuaded that the plaintiff has carried its own burden on that
point.” KP Permanent Make-Up, Inc. v. Lasting Impression, Inc., 543 U.S. 111, 120 (2004). Even
when we construe the facts in a light most favorable to D’Amato, Audi has shown that there is a
clear likelihood of confusion based on D’Amato’s use of the Audi Trademarks. D’Amato has
presented no evidence to rebut this finding. All D’Amato mentions in his brief regarding his fair
use defense is that he “submitted an affidavit that illustrated his 3 instances using the name Audi as
a descriptive term for ‘source of Audi Racing,’ in disclaimers ‘not associated with Audi AG,’ in the
news articles and to describe the pictures given to him.” Appellant’s Br. at 56. This information
is irrelevant, and fails to address the many commercial uses of www.audisport.com. Thus, we find
that under KP Permanent Make-Up, Audi has carried its burden to disprove fair use, and D’Amato’s
defense fails.
B. Trademark Dilution
“Dilution law, unlike traditional trademark infringement law . . . is not based on a likelihood
of confusion standard, but only exists to protect the quasi-property rights a holder has in maintaining
the integrity and distinctiveness of his mark.” AutoZone, Inc. v. Tandy Corp., 373 F.3d 786, 801
(6th Cir. 2004) (quoting Kellogg Co. v. Toucan Golf, Inc., 337 F.3d 616, 628 (6th Cir. 2003)). We
use a five-point test to determine whether a plaintiff will succeed in a federal dilution claim. Audi
must show that its trademark is (1) famous and (2) distinctive, and that D’Amato’s use of the mark
(3) was in commerce, (4) began after Audi’s mark became famous, and (5) “cause[d] dilution of the
distinctive quality” of Audi’s mark. Id. at 802.
It is clear from the record that Audi’s trademarks, on which Audi has spent millions of
dollars and which are known worldwide, satisfy the first two factors. Further, because the website
sold merchandise, email subscriptions, and advertising space, all with Audi’s logo, the third factor
is satisfied. The fourth factor is met, as there is no dispute that www.audisport.com came after the
Audi Trademarks. As for the fifth element — whether the junior mark dilutes the senior mark —
the Supreme Court has noted that “direct evidence of dilution such as consumer surveys will not be
necessary if actual dilution can reliably be proven through circumstantial evidence — the obvious
case is one where the junior and senior marks are identical.” Moseley v. V. Secret Catalogue, 537
U.S. 418, 434 (2003). Here, D’Amato used identical trademarks on the goods and services on his
website, thus fulfilling the fifth factor. Moreover, it is of no moment that D’Amato did not profit
from www.audisport.com; a plaintiff need not prove a defendant made sales or profited in order to
succeed in proving dilution. Id. at 433.
C. AntiCybersquatting Consumer Protection Act
The AntiCybersquatting Consumer Protection Act (ACPA) was enacted to curb “the
proliferation of cybersquatting — the Internet version of a land grab.” Lucas Nursery and
Landscaping, Inc. v. Grosse, 359 F.3d 806, 808 (6th Cir. 2004) (quoting Virtual Works, Inc. v.
Volkswagen of America, Inc., 238 F.3d 264, 267 (4th Cir. 2001)). With respect to a famous mark,
ACPA provides that a person will be civilly liable when he or she has a bad faith intent to profit
from the mark, and “registers, traffics in, or uses a domain name that . . . is identical or confusingly
similar to or dilutive of that mark..” 15 U.S.C. § 1125(d)(1)(A).
In order to prevail under the ACPA, a plaintiff must show that a defendant’s use of a domain
name was done in bad faith. ACPA provides a list of nine nonexclusive factors which a court should
consider in determining whether a defendant acted in bad faith:
(I) the trademark or other intellectual property rights of the person, if any, in the
domain name;
No. 05-2359 Audi AG, et al. v. D’Amato Page 10
(II) the extent to which the domain name consists of the legal name of the person or
a name that is otherwise commonly used to identify that person;
(III) the person’s prior use, if any, of the domain name in connection with the bona
fide offering of any goods or services;
(IV) the person’s bona fide noncommercial or fair use of the mark in a site accessible
under the domain name;
(V) the person’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;
(VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the
mark owner or any third party for financial gain without having used, or having an
intent to use, the domain name in the bona fide offering of any goods or services, or
the person’s prior conduct indicating a pattern of such conduct;
(VII) the person’s provision of material and misleading false contact information
when applying for the registration of the domain name, the person’s intentional
failure to maintain accurate contact information, or the person’s prior conduct
indicating a pattern of such conduct;
(VIII) the person’s registration or acquisition of multiple domain names which the
person knows are identical or confusingly similar to marks of others that are
distinctive at the time of registration of such domain names, or dilutive of famous
marks of others that are famous at the time of registration of such domain names,
without regard to the goods or services of the parties; and
(IX) the extent to which the mark incorporated in the person’s domain name
registration is or is not distinctive and famous within the meaning of [subsec. (c)(1)
of this section].
15 U.S.C. § 1125(d)(1)(B)(i). See also Daimler Chrysler v. Net Inc., 388 F.3d 201, 206-07 (6th Cir.
2004). However, the Act has a “safe harbor” provision that applies where a court finds that a
defendant “believed and had reasonable grounds to believe that the use of the domain name was a
fair use or otherwise lawful.” 15 U.S.C. § 1125(d)(1)(B)(ii).
Audi accepts the district court’s finding that Factors VI through VIII are irrelevant. As for
Factors I and II, the district court was correct in finding that D’Amato has no trademark or
intellectual property rights in www.audisport.com and the domain name consisted of Audi’s legal
name, which was used to identify Audi. With respect to Factor III, although D’Amato also used the
website for some legitimate purpose — providing news to Audi fans — he did not have prior use
of the domain name for the bona fide offering of goods or services. Those goods and services
offered on the site infringed upon Audi’s trademarks from the moment of their initial posting. Under
Factor IV, we find that there was not fair use of the mark because D’Amato used
www.audisport.com to sell merchandise and email addresses bearing the Audi name, and up until
the district court issued the injunction, was selling advertising space bearing the Audi name.
Factor V concerns the defendant’s intent. “As intent is rarely discernible directly, it must
typically be inferred from pertinent facts and circumstances.” International Bancorp, L.L.C. v.
Societe Des Baines De Mer Et Du Cercle Des Etrangers A Monaco, 192 F. Supp. 2d 467, 486 (E.D.
Va. 2002). Here, D’Amato’s website purposefully included Audi’s trademarks in his website and
affirmatively misrepresented his relationship with Audi by falsely stating that he had signed a
written agreement with the company. D’Amato never received written permission from anyone
(even individuals who did not have authorization to grant such permission). Consumers were likely
to believe that his site was affiliated with Audi. It can be inferred that D’Amato intended to divert
these customers from purchasing goods and services from Audi’s legitimate website. Finally, with
No. 05-2359 Audi AG, et al. v. D’Amato Page 11
respect to Factor IX, we find that the Audi mark — which was incorporated in the domain name
www.audisport.com — is undoubtedly “distinctive and famous” within the meaning of ACPA.
Furthermore, D’Amato’s actions are not excused under the “reasonable belief” exception in
section 1125(d)(1)(B)(ii). He contends that “[e]very email from Devin Carlson and/or Melissa
Grunnah offering content to Mr. D’Amato to post on audisport.com creates a signed agreement
allowing usage of Audi-owned trademarks or trade dress.” Appellant’s Br. at 53. However, as a
leading commentator on trademark law explains:
[A] court should . . . make use of this “reasonable belief” defense very sparingly and
only in the most unusual cases. That is, the court should place emphasis on the
phrase “had reasonable grounds to believe” that the conduct was lawful, focusing
primarily upon the objective reasonableness and credibility of the defendant’s
professed ignorance of the fact that its conduct was unlawful. Otherwise, every
cybersquatter would solemnly aver that it was entitled to this defense because it
believed that its conduct was lawful.
J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS § 25.78 (4th ed. 2004). See also Harrods
Ltd. v. Sixty Internet Domain Names, 157 F. Supp. 2d 658, 679 (E.D. Va. 2001), aff’d in part, rev’d
in part on other grounds, 302 F.3d 214 (4th Cir. 2002) (“All but the most blatant cybersquatters will
be able to put forth at least some lawful motives for their behavior. To hold that all such individuals
may qualify for the safe harbor would frustrate Congress’ purpose by artificially limiting the
statute’s reach.”).
As explained above, D’Amato did not have permission to use Audi’s trademarks. He had
no more than representations from individuals who lacked authority to give such permission, and
his requests for written permission were never granted. Further, D’Amato unreasonably interpreted
the language contained in press releases to grant him permission to use the trademarks. Following
the Cease and Desist letters and this lawsuit, D’Amato continued to sell advertising space. Even
construing facts and inferences in a light most favorable to D’Amato, his belief that he had
permission to use the trademarks was objectively unreasonable, and therefore, D’Amato should not
have the benefit of the reasonable belief defense. We affirm the district court’s finding that
D’Amato violated the AntiCybersquatting Consumer Protection Act.
D. Injunctive Relief
When a district court grants a permanent injunction in a trademark case, we review factual
findings under the clearly erroneous standard and legal conclusions under the de novo standard. The
scope of injunctive relief is reviewed for abuse of discretion. Gibson Guitar Corp. v. Paul Reed
Smith Guitars, LP, 423 F.3d 539, 546 (6th Cir. 2005).
A plaintiff seeking a permanent injunction must demonstrate that it has suffered irreparable
injury, there is no adequate remedy at law, “that, considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted,” and that it is in the public’s interest to
issue the injunction. eBay Inc., et al. v. MercExchange, LLC, 126 S.Ct. 1837, 1839 (2006).
D’Amato’s website used Audi’s trademarks in its domain name and in the goods and services sold
on it. If the district court did not grant an injunction, Audi would be irreparably harmed by
consumers on D’Amato’s site purchasing counterfeit items, instead of those that were lawfully sold
by Audi. So long as www.audisport.com stayed online, there was potential for future harm, and
therefore, there was no adequate remedy at law. It was in the public’s interest to issue the injunction
in order to prevent consumers from being misled. In balancing the hardships between each party,
we note that D’Amato faces no hardship in refraining from willful trademark infringement, whereas
Audi faces hardship from loss of sales. Thus, injunctive relief is warranted because D’Amato’s
No. 05-2359 Audi AG, et al. v. D’Amato Page 12
website did not fall under the category of protected speech; rather, it attempted to use Audi’s good
will to make a profit.
V
The district court awarded Audi attorneys’ fees under 15 U.S.C. § 1117(a), which provides
that courts may award reasonable attorneys’ fees to the prevailing party in “exceptional” cases.
Thus, section 1117(a) yields two inquiries: (1) whether Audi was a “prevailing party,” and
(2) whether this case was “exceptional.” We review a district court’s award of attorneys’ fees for
abuse of discretion, and will not overturn the district court’s determination unless we have “a
definite and firm conviction that the trial court committed a clear error of judgment.” Gnesys, Inc.
v. Greene, 437 F.3d 482, 488 (6th Cir. 2005) (citations omitted).
D’Amato claims that Audi is not a “prevailing party” on its Lanham Act claim because it did
not recover any money damages, and thus is not entitled to attorneys’ fees. In support of his
argument, he relies on Texas State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792
(1989), which held that when a plaintiff’s success “can be characterized as purely technical or de
minimis,” a district court may conclude that it does not fit the definition of a “prevailing party.”
However, D’Amato cites no cases for his proposition that a plaintiff awarded injunctive relief in a
trademark case is not a prevailing party. As the Ninth Circuit has noted, “[i]njunctive relief is the
remedy of choice for trademark and unfair competition cases, since there is no adequate remedy at
law for the injury caused by a defendant’s continuing infringement.” Century 21 Real Estate Corp.
v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988). We find that Audi’s success in this case was not
merely de minimis.
With respect to the second inquiry, although the statute does not define “exceptional,” we
have held that “a case is not exceptional unless ‘the infringement was malicious, fraudulent, willful,
or deliberate.’” Eagles, Ltd. v. Am. Eagle Found., 356 F.3d 724, 728 (6th Cir. 2004) (quoting
Hindu Incense v. Meadows, 692 F.2d 1048, 1051 (6th Cir. 1982)). D’Amato did not limit his
website to protected speech, such as news and information for Audi enthusiasts. Rather, he used
counterfeit marks on his website and on the goods and services he attempted to sell for a profit. See
U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1192 (6th Cir. 1997) (“Where a
counterfeit mark is used, an award of reasonable attorneys’ fees is mandated, unless the court finds
extenuating circumstances.”). He knew that he needed permission to use such marks, evidenced by
the fact he attempted to obtain consent from Volkswagen of America and individuals affiliated with
Audi. Further, as explained above, the district court was correct in finding that under the
AntiCybersquatting Consumer Protection Act, D’Amato acted in bad faith. A finding of bad faith
under the ACPA does not necessarily compel a court to find “malicious, fraudulent, willful or
deliberate” conduct. However, a court would be well within its discretion in determining that bad
faith under the ACPA supports finding such conduct. See People for the Ethical Treatment of
Animals v. Doughney, 263 F.3d 359, 370 (4th Cir. 2001); see also Playboy Enterprises, Inc. v.
Baccarat Clothing Co., 692 F.2d 1272, 1276 (9th Cir. 1982) (noting that in the context of the
Lanham Act, “bad faith can render cases ‘exceptional’ justifying an award of attorneys’ fees”).
D’Amato contends that he should not be required to pay attorneys’ fees because he changed
the website after the Cease and Desist letters and before Audi filed its complaint. However, even
if we were to believe4 his contention that the website changed to non-commercial use before the
complaint was filed, this does not absolve D’Amato from liability. See Shields v. Zuccarini, 254
F.3d 476, 486-87 (3d Cir. 2001) (awarding attorneys’ fees to the plaintiff, despite the fact that hours
4
D’Amato’s contention is actually false, because, as discussed above, he continued to sell advertising space
on his site.
No. 05-2359 Audi AG, et al. v. D’Amato Page 13
before he was served, the defendant changed his website’s purpose from commercial to political).
We hold that given D’Amato’s bad faith use of counterfeit marks, the district court did not abuse
its discretion in awarding attorneys’ fees under section 1117(a).
VI
For the above reasons, we AFFIRM the judgment of the district court.