Applied Infromation v. Ebay Inc

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
APPLIED INFORMATION SCIENCES 
CORP., a California corporation,
Plaintiff-Appellant, No. 05-56123
v.  D.C. No.
EBAY, INC., a Delaware CV-04-00274-DT
corporation,
Defendant-Appellee.

APPLIED INFORMATION SCIENCES 
CORP., a California corporation,
No. 05-56549
Plaintiff-Appellee,
v.  D.C. No.
CV-04-00274-DT
EBAY, INC., a Delaware
OPINION
corporation,
Defendant-Appellant.

Appeal from the United States District Court
for the Central District of California
Dickran M. Tevrizian, District Judge, Presiding
Argued and Submitted
May 17, 2007—Pasadena, California
Filed December 28, 2007
16869
16870 APPLIED INFORMATION SCIENCES v. EBAY, INC.
Before: Raymond C. Fisher and Richard R. Clifton, Circuit
Judges, and Jeremy D. Fogel, District Judge.*
Opinion by Judge Fisher
*The Honorable Jeremy D. Fogel, United States District Judge for the
Northern District of California, sitting by designation.
16872 APPLIED INFORMATION SCIENCES v. EBAY, INC.
COUNSEL
Joanna M. Esty, Angela C. Agrusa (argued), Wendy E. Lane,
Liner Yankelevitz Sunshine & Regenstreif LLP, Los Angeles,
California, for the appellant/cross-appellee.
Michael T. Zeller (argued), Daniel H. Bromberg, Patrick C.
McGannon, Elizabeth B. Wydra, Quinn Emanuel Urquhart
Oliver & Hedges, LLP, Los Angeles, California, for the
appellee/cross-appellant.
OPINION
FISHER, Circuit Judge:
This appeal requires us to clarify what an owner of a feder-
ally registered trademark needs to establish in order to mount
an infringement action against a user of the trademarked name
on goods or services that are not the same as those specified
in the owner’s trademark registration. Applied Information
Sciences Corp. (AIS) owns the trademark “SmartSearch” for
certain computer related search functions, and claims that
eBay, Inc. (eBay) uses the name “Smart Search” for its Inter-
net auction website, which AIS contends will be confused
with its “SmartSearch” product. The district court rejected the
claim, granting summary judgment to eBay, and AIS now
appeals. eBay cross-appeals the district court’s order denying
attorney’s fees to eBay as the prevailing party. We affirm
both the district court’s grant of summary judgment and the
denial of attorney’s fees.
I. Background
AIS is a vendor of specialized software. In 1994, AIS
applied to register a trademark, “SmartSearch,” and in 1998,
APPLIED INFORMATION SCIENCES v. EBAY, INC. 16873
the United States Patent and Trademark Office issued AIS a
registration for use of the mark on “computer software and
instruction manuals sold together which allow the user to
retrieve information from on-line services via phone line in
the fields of agriculture and nutrition, books, chemistry, com-
puters and electronics, education, law, medicine and bio-
sciences, news, science and technology, social sciences and
humanities.” AIS asserts that it marketed SmartSearch prod-
ucts from 1995 to 2004.
AIS alleges that in 2000, eBay began using the Smart-
Search mark without AIS’s consent in violation of federal
trademark and California unfair competition laws. eBay — a
commercial website providing online auction services to
Internet users — displayed the words “Smart Search” as a link
on its homepage; clicking this link would take a user to a sep-
arate page with advanced search options. Late in 2001, AIS
contacted eBay, requesting that it either pay a license fee or
stop using the mark. eBay refused, and AIS filed the instant
suit in the district court in 2004.
After both parties moved for summary judgment, the dis-
trict court granted eBay’s motion on the ground that AIS does
not have a valid, protected interest in the mark.1 The district
1
AIS unsuccessfully moved to strike eBay’s cross-motion for summary
judgment as untimely or, in the alternative, for an extension of time to
respond to the cross-motion. AIS argues that the district court erroneously
allowed eBay to file its cross-motion in violation of the scheduling order.
We conclude that the district court’s denial of AIS’s motion was not an
abuse of discretion. See Does I thru XXIII v. Advanced Textile Corp., 214
F.3d 1058, 1069 (9th Cir. 2000). Even if AIS is correct that the scheduling
order required eBay to file its cross-motion earlier, AIS would have to
show that its “substantial rights” were affected. Fed. R. Civ. P. 61; see
also Nicholas v. Wallenstein, 266 F.3d 1083, 1089 (9th Cir. 2001)
(Tashima, J., concurring). The record reflects that AIS had a full and fair
opportunity to explain why it opposed eBay’s cross-motion. The district
court specifically noted that it considered AIS’s filing in opposition to
eBay’s motion. Moreover, AIS has not made clear how additional time
“would [have] preclude[d] summary judgment.” Nicholas, 266 F.3d at
1088-89 (affirming the denial of a continuance to permit further discovery
in connection with opposition to a motion for summary judgment).
16874 APPLIED INFORMATION SCIENCES v. EBAY, INC.
court later awarded costs of $8,971.31 against AIS, but denied
eBay’s motion for attorney’s fees after concluding that the
case was not exceptional. AIS appeals the grant of summary
judgment, and eBay appeals the denial of attorney’s fees.
II. Summary Judgment in Favor of eBay
Reviewing de novo the district court’s grant of summary
judgment and viewing the evidence in the light most favor-
able to AIS, see Talking Rain Beverage Co., Inc. v. South
Beach Beverage Co., 349 F.3d 601, 602 (9th Cir. 2003), we
conclude that AIS discharged its burden of establishing that
it had a valid, protectable interest in its SmartSearch mark, but
failed to produce any admissible evidence tending to show a
likelihood of confusion. For this reason, we affirm the district
court’s grant of summary judgment in favor of eBay.
[1] To prevail on its trademark infringement claim, AIS
must show that: (1) it has a valid, protectable trademark, and
(2) that eBay’s use of the mark is likely to cause confusion.
See Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174
F.3d 1036, 1047, 1053 (9th Cir. 1999). “The threshold issue
in any action for trademark infringement is whether the words
used by a manufacturer in connection with his product are
entitled to protection.” Transgo, Inc. v. Ajac Transmission
Parts Corp., 768 F.2d 1001, 1014 (9th Cir. 1985). There are
three ways in which AIS could have established it had a pro-
tectable interest: (1) it has a federally registered mark in
goods or services; (2) its mark is descriptive but has acquired
a secondary meaning in the market; or (3) it has a suggestive
mark, which is inherently distinctive and protectable. AIS
argues that on the basis of its federal registration alone, it
established its rights in the “SmartSearch” mark. We agree.
[2] Registration of a mark “on the Principal Register in the
Patent and Trademark Office constitutes prima facie evidence
of the validity of the registered mark and of [the registrant’s]
exclusive right to use the mark on the goods and services
APPLIED INFORMATION SCIENCES v. EBAY, INC. 16875
specified in the registration.” Brookfield Commc’ns, 174 F.3d
at 1047; see also 4 J. Thomas McCarthy on Trademarks and
Unfair Competition § 16.19 (4th ed. 1992) (“A trademark reg-
istration on the federal Principal Register is at least prima
facie evidence of the registrant’s ownership of the mark.”)
(hereinafter “McCarthy”). Without registration, a plaintiff
“would have to establish his right to exclusive use in a com-
mon law infringement action,” Vuitton Et Fils S.A. v. J. Young
Enterprises, Inc., 644 F.2d 769, 775 (9th Cir. 1981), such as
by proving that the mark is not generic, see Filipino Yellow
Pages, Inc. v. Asian Journal Publications, Inc., 198 F.3d
1143, 1151 (9th Cir. 1999), and that no one else had first used
it in commerce, see Brookfield Communications, 174 F.3d at
1047. Registration, however, “discharges the plaintiff’s origi-
nal common law burden of proving validity in an infringe-
ment action.” Yellow Cab Co. of Sacramento v. Yellow Cab
of Elk Grove, Inc., 419 F.3d 925, 928 (9th Cir. 2005) (quoting
Tie Tech, Inc. v. Kinedyne Corp., 296 F.3d 778, 783 (9th Cir.
2002)). Thus, by demonstrating that it held a federal registra-
tion, AIS made a prima facie showing that it held a valid, pro-
tectable interest in the use of the SmartSearch mark in
connection with the goods listed in its registration.2
2
A defendant may still attack the validity of a plaintiff’s registered
trademark, such as by showing that someone else first used the mark in
commerce or that the registration was flawed. See Tie Tech, Inc., 296 F.3d
at 783 (“[T]he plaintiff in an infringement action with a registered mark
is given the prima facie or presumptive advantage on the issue of validity,
thus shifting the burden of production to the defendant to prove otherwise
. . . .”). eBay did argue below and on appeal that AIS’s registration had
been invalidated by a subsequent false filing to attain incontestable status,
but the district court did not address this claim, and because the factual
basis for this claim was disputed, summary judgment on this ground
would have been inappropriate in any event. Because we conclude that
AIS established a valid, protectable interest in the mark on which it based
its trademark infringement action, we need not address AIS’s arguments
that it established such an interest because the mark had acquired second-
ary meaning or was suggestive.
16876 APPLIED INFORMATION SCIENCES v. EBAY, INC.
[3] A registered trademark holder’s protectable interest is
limited to those goods or services described in its registration.
See 15 U.S.C. § 1057(b) (“A certificate of registration of a
mark . . . shall be prima facie evidence of . . . the registrant’s
exclusive right to use the registered mark in commerce on or
in connection with the goods or services specified in the cer-
tificate, subject to any conditions or limitations stated in the
certificate.”); 15 U.S.C. § 1115(a) (“Any registration issued
. . . shall be prima facie evidence of the validity of the regis-
tered mark and of the registration of the mark, of the regis-
trant’s ownership of the mark, and of the registrant’s
exclusive right to use the registered mark in commerce on or
in connection with the goods or services specified in the regis-
tration subject to any conditions or limitations stated therein
. . . .”); see also McCarthy § 19:48 (stating that “the prima
facie and incontestable provisions of the Lanham Act apply
only to the goods or services specified in the registration”).
[4] However, the scope of validity and the scope of relief
for infringement are not coextensive. Although the validity of
a registered mark extends only to the listed goods or services,
an owner’s remedies against confusion with its valid mark are
not so circumscribed. The language of the infringement stat-
ute, 15 U.S.C. § 1114, does not limit remedies for allegedly
infringing uses to those goods within the ambit of registration:
Any person who shall, without the consent of the
registrant . . . (a) use in commerce any reproduction,
counterfeit, copy, or colorable imitation of a regis-
tered mark in connection with the sale, offering for
sale, distribution, or advertising of any goods or ser-
vices on or in connection with which such use is
likely to cause confusion, or to cause mistake, or to
deceive . . . shall be liable in a civil action by the
registrant for the remedies hereinafter provided.
15 U.S.C. § 1114(1) (emphasis added). Thus a trademark
owner may seek redress if another’s use of the mark on differ-
APPLIED INFORMATION SCIENCES v. EBAY, INC. 16877
ent goods or services is likely to cause confusion with the
owner’s use of the mark in connection with its registered
goods:
[O]n the issue of validity, the recitation of goods and
services in the registration limits the scope of pre-
sumptions of validity, but on the separate issue of
infringement, the registered mark is infringed when
used by another with any goods or services which
creates a likelihood of confusion.
McCarthy § 24:65; see also Gilson on Trademarks,
§ 4.03[3][a] (2007) (“[W]hen a plaintiff does base the action
on use of his mark on the goods or services identified in the
[incontestable] registration, the scope of relief will extend
beyond those goods or services to an infringing mark used on
any goods or services where confusion is likely to result.”)
(emphasis in original).
In Interstellar Starship Services, Ltd. v. Epix Inc., 184 F.3d
1107 (9th Cir. 1999), we emphasized that a markholder’s
rights to protect its interest in a registered mark were not lim-
ited to infringement actions against those using the mark in
connection with the specified goods or services, expressly
rejecting an argument that the plaintiff was required to show
that the scope of its valid interest extended to the defendant’s
use of the mark:
[The defendant] does contend that the Epix trade-
mark is not valid as a service mark for “consulting
services” — only for the uses specified in its regis-
tration. However, the reach of “EPIX” does not
affect its validity as a mark. Rather, the likelihood of
confusion analysis deals with the similarity of prod-
ucts and services and the likelihood of expansion in
product lines.
16878 APPLIED INFORMATION SCIENCES v. EBAY, INC.
Id. at 1110 n.1. Such has been the longstanding rule in other
circuits as well. See, e.g., E. Remy Martin & Co., S.A. v.
Shaw-Ross Int’l Imports, Inc., 756 F.2d 1525, 1529 (11th Cir.
1985) (proceeding to a likelihood of confusion analysis where
the plaintiff’s registration was only for cognac and brandy,
and the defendant’s allegedly infringing use was in selling
wine); Cont’l Motors Corp. v. Cont’l Aviation Corp., 375
F.2d 857, 861 (5th Cir. 1967) (“The remedies of the owner of
a registered trademark are not limited to the goods specified
in the certificate, but extend to any goods on which the use
of an infringing mark is ‘likely to cause confusion.’ ”); Chan-
don Champagne Corp. v. San Marino Wine Corp., 335 F.2d
531, 534 (2d Cir. 1964) (“A registered trade-mark is safe-
guarded against simulation not only on competing goods, but
on goods so related in the market to those on which the trade-
mark is used that the good or ill repute of the one type of
goods is likely to be visited upon the other.”) (internal quota-
tion marks omitted).3
[5] In sum, a plaintiff trademark owner must establish a
valid, protectable interest in order to proceed to the second
prong of the trademark infringement analysis — the likeli-
hood of confusion resulting from the defendant’s alleged
infringing use. Having established a protectable interest by
proving it is the owner of a registered trademark, the owner
does not additionally have to show that the defendant’s alleg-
edly confusing use involves the same goods or services listed
in the registration.
3
It is possible — though not entirely clear — that one circuit has estab-
lished a rule to the contrary. See Natural Footwear Ltd. v. Hart, Schaffner
& Marx, 760 F.2d 1383, 1396 (3d Cir. 1985) (“We believe that [the Lan-
ham Act’s] purpose is best served by limiting the impact of a registered
mark to only the specific terms of the registration so as to allow parties
interested in marketing products with a new mark to rely as fully as possi-
ble on the registry.”). But see McCarthy § 24:65 n.5 (criticizing the Third
Circuit’s decision in Natural Footwear as “confused and internally incon-
sistent” and asserting that “limiting infringement remedies to only defen-
dant’s goods which are identical to those in the plaintiff’s registration . . .
is not the law anywhere”).
APPLIED INFORMATION SCIENCES v. EBAY, INC. 16879
The district court here found that AIS’s registration was
limited to “ ‘[c]omputer software and instruction manuals sold
together which allow the user to retrieve information from on-
line services via a phone line’ in various ‘fields.’ ” The dis-
trict court, however, then concluded that because AIS’s fed-
eral registration did not include eBay’s use of the mark as “a
hyperlink for its web-based trading service,” AIS’s infringe-
ment action failed for lack of a protectable interest. In so con-
cluding, the district court relied upon Levi Strauss & Co. v.
Blue Bell, Inc., 778 F.2d 1352, 1354 (9th Cir. 1985) (en banc),
citing to the following passage:
Strauss cannot simply rely on the federal registration
of certain tabs, most notably of those on pants, to
establish a protected interest in a pocket tab on gar-
ments generally, because registration constitutes
prima facie evidence of a protected interest with
respect to the goods specified in the registration
only.
Levi Strauss, 778 F.2d at 1354 (emphasis added). eBay
argued, and the district court agreed, that this passage
required AIS to prove that eBay has used the SmartSearch
mark “on goods described in [AIS’s] registration” in order to
make its threshold showing of a valid, protectable interest.
This reading of Levi Strauss is questionable.
Our refusal to allow Levi Strauss to rely on its federal reg-
istration stemmed from the way in which Strauss pled its case.
Strauss was attempting to extend its own use of its registered
mark to goods not specified in its federal registration. Its fed-
erally registered trademark was limited to pants pocket tabs,
but its trademark infringement claim was based on an alleged
trademark in clothing pocket tabs generally. See Levi Strauss,
778 F.2d at 1359 (“Strauss pleaded this case not as an
infringement of its tab as applied to the pants market or as
applied to the shirt market, but as an infringement of its
alleged trademark rights in a pocket tab on garments general-
16880 APPLIED INFORMATION SCIENCES v. EBAY, INC.
ly.”). Where, however, a plaintiff bases its trademark infringe-
ment claim upon the confusion the defendant’s use will create
for the plaintiff’s use of its mark in connection with its own
registered goods or services, that claim comes within the
scope of its protectable interest.
Here, AIS alleged infringement of a mark it used in con-
nection with the kind of products specified in its federal regis-
tration: “computer software and instruction manuals sold
together” that allow users to retrieve information online.
Whether or not eBay ever used the SmartSearch mark in con-
nection with goods specified in AIS’s registration is irrelevant
to the question of whether AIS established a valid, protectable
interest. By virtue of its federal registration, AIS discharged
its burden of establishing the validity of the SmartSearch
mark in connection with those goods listed in the registration.
Whether eBay’s use of SmartSearch infringed AIS’s protected
interest then becomes a question of likelihood of confusion.
[6] However, we do not have to determine whether the dis-
trict court erred in its interpretation of Levi Strauss, because
in opposing eBay’s motion for summary judgment AIS failed
to produce any admissible evidence tending to show a likeli-
hood of confusion, or address any of the Sleekcraft factors
required for a likelihood of confusion analysis. See AMF Inc.
v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979),
abrogated in part on other grounds by Mattel, Inc. v. Walking
Mountain Prods., 353 F.3d 792, 810 n.19 (9th Cir. 2003); see
also Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp.,
174 F.3d 1036, 1046, 1053-54 (9th Cir. 1999); Simo v. Union
of Needletrades, Indus. & Textile Employees, Sw. Dist. Coun-
cil, 322 F.3d 602, 610 (9th Cir. 2003) (“We may affirm a
grant of summary judgment on any ground supported by the
record.”). We therefore affirm the district court’s grant of
summary judgment in favor of eBay.
III. Attorney’s Fees
Under 15 U.S.C. § 1117(a) of the Lanham Act, “[t]he court
in exceptional cases may award reasonable attorney fees to
APPLIED INFORMATION SCIENCES v. EBAY, INC. 16881
the prevailing party.” A case may be considered exceptional
“[w]hen a plaintiff’s case is groundless, unreasonable, vexa-
tious, or pursued in bad faith.” Stephen W. Boney, Inc. v.
Boney Servs., 127 F.3d 821, 827 (9th Cir. 1997) (internal cita-
tion and quotation marks omitted). We review a district
court’s denial of a motion for attorney’s fees under the Lan-
ham Act for an abuse of discretion. Id. at 825.
[7] After the district court entered judgment in its favor,
eBay filed a motion for attorney’s fees. The district court
denied eBay’s motion, finding no compelling proof that AIS
acted capriciously or pursued litigation to harass eBay, or that
AIS intended to bring a meritless or unreasonable case against
eBay. We agree that AIS’s case was not frivolous and that
AIS raised debatable issues. The district court did not abuse
its discretion in denying eBay’s motion for attorney’s fees.
Accordingly, the grant of summary judgment in favor of
eBay is AFFIRMED. The district court’s denial of eBay’s
motion for attorney’s fees is also AFFIRMED.