A1 Mortgage v. A1 Mortgage & Financial Services

Citation: A1 Mortgage Corp. v. A1 Mortgage & Financial Services, LLC, 82 U.S.P.Q. 2d (BNA) 1440 (W.D. Pa. 2006).

Factual Background
Plaintiff and defendant operated competing mortgage companies. Plaintiff had operated its mortgage business under the mark and name A1 MORTGAGE since 1996. In 2001, defendant adopted the trade name "A1 Mortgage and Financial Services, LLC" and opened an office about 30 miles from plaintiff's office. Defendant also registered and used the domain name "a1mortgagellc.com" to promote its services. Following a state-court lawsuit filed by plaintiff, the parties entered into a settlement agreement in 2003 that permitted defendant to continue to use its full corporate name and the "a1mortgagellc.com" domain name but only with an appropriate disclaimer. Defendant purchased the domain name "a1mortgage.com" in May 2003 and began using that name in August 2003 despite the prior state-court lawsuit and the parties' settlement agreement.

Trial Court Proceedings
Following a bench trial, plaintiff brought this suit for false designation of origin under Section 43(a) and cybersquatting. The court initially held that defendant's use of the "a1mortgage.com" domain name, as well as its noncompliance with the parties' settlement agreement, infringed plaintiff's unregistered mark A1 MORTGAGE.

Regarding cybersquatting, although plaintiff's mark was descriptive, it had acquired secondary meaning through plaintiff's advertising, volume of business, and reputation. The court also held that the "a1mortgage.com" domain name was "actually identical" to plaintiff's A1 MORTGAGE mark but for the ".com."

The court next found that defendant registered and used the "a1mortgage.com" with a bad-faith intent to profit from plaintiff's mark. According to the court, plaintiff used the domain name with the clear intent to divert consumers from plaintiff and to compete with plaintiff. The court rejected defendant's argument that it shortened its legal name into the domain name "a1mortgage.com" for the sake of "consumer convenience" "in view of the contentious litigation history between the parties."

The court also held that defendant did not qualify for ACPA's safe-harbor provision because defendant could not have believed and did not have reasonable grounds to believe that its use of the domain name was a fair use or otherwise lawful based on the parties' "protracted litigation history." Accordingly, the court permanently enjoined defendant from using the domain name and ordered defendant to transfer the domain name to plaintiff.

The court awarded plaintiff its reasonable attorney's fees. It also awarded statutory damages for cybersquatting, which serves to deter wrongful conduct and to provide adequate remedies for trademark owners to enforce their rights. The court described statutory damages as "essential" based on the statement in Electronics Boutique that "actual damages suffered by a plaintiff as a result of lost customers and goodwill is incalculable." Here, "[b]ased on the facts established by [plaintiff] and the incalcuable nature of [plaintiff's] loss and damages," the court awarded statutory damages in the amount of $50,000.

This page uses content from Finnegan’s Internet Trademark Case Summaries. This entry is available under the GNU Free Documentation License.