Entrepreneur Media v. Smith

Citation: Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135 (9th Cir. 2002) (reversing in part district court’s grant of summary judgment); 2004 U.S. Dist. LEXIS 24078 (C.D. Cal. June 24, 2003) (decision following bench trial), aff’d, 101 Fed. Appx. 212 (9th Cir. 2004) (unpublished); 2004 U.S. Dist. LEXIS 24078 (C.D. Cal. June 23, 2004) (entry of findings of fact and conclusions of law from trial).

Factual Background
Plaintiff, owner of the registered mark ENTREPRENEUR for magazines, operated websites at the domain names “entrepreneur.com” and “entrepreneurmag.com.” Defendant Smith d/b/a EntrepreneurPR started a business called ICON Publications that promoted small businesses through its website at “iconpub.com” and magazine entitled “Yearbook of Small Business Icons.” As part of its efforts to promote small businesses, plaintiff listed ICON on its website under “Small Business Links.” Shortly thereafter, defendant changed the name of his public relations company to “EntrepreneurPR,” the name of his publication to “Entrepreneur Illustrated,” and his domain name to “entrepreneurpr.com,” despite being aware of plaintiff’s business and its trademark registration. When soliciting customers, defendant also represented that his business was associated with plaintiff. Among other claims, plaintiff sued defendant for trademark infringement, unfair competition, and counterfeiting.

Trial Court Proceedings
The district court granted plaintiff’s motion for summary judgment on its trademark-infringement and unfair-competition claims, awarded plaintiff $337,280 in damages, and enjoined defendant from using any marks confusingly similar to “Entrepreneur.”

Appellate Court Proceedings
On appeal, the Ninth Circuit reversed the lower court's decision but affirmed the holding of infringement regarding defendant’s use of “Entrepreneur Illustrated” when the term “Illustrated” was downplayed or obstructed. According to the appellate court, the matter was not otherwise appropriate for disposition by summary judgment because a reasonable jury could find in favor of defendant. Although plaintiff's mark was the subject of an incontestable federal registration, the mark was nonetheless inherently weak, and there were many third-party uses of ENTREPRENEUR in magazine names, business names, and domain names.

Regarding similarity of marks, the court found that defendant's use of "Entrepreneur PR" as a business name could be sufficiently different from "Entrepreneur" due to their differences in sound and meaning. Moreover, in the context of defendant's domain name "entrepreneurpr.com," the court noted that the similarity of marks online must be analyzed differently from offline content because small differences in domain names can change what website is viewed by consumers. For example, Internet users typing in plaintiff's trademark followed by .com would not reach defendant's site. Nor would users misspelling plaintiff's mark lead them to defendant's site.

According to the court, "[t]his observation concerning the functional similarity of domain names is largely dispositive." Moreover, "consumers are aware that domain names for different Web sites are quite often similar, because of the need for language economy, and that very small differences matter." Although both parties used the Internet as a marketing channel, that fact alone did not, as a matter of law, constitute overlapping market channels. The proper inquiries are whether both parties "use the Web as a substantial marketing and advertising channel," whether the parties' marks "are utilized in conjunction with Web-based products," and whether the parties' marketing channels overlap in any other way. Here, under the record before the court, neither party's use of the web appeared to be significant enough to be relevant, and there was no significant overlap as to other marketing channels.

Subsequent Trial Court Proceedings
After a bench trial, the district court ruled in favor of plaintiff on its trademark infringement claim. The court first held that plaintiff’s ENTREPRENEUR trademark was strong because of its extensive advertising and public recognition over the last 25 years. The court also presumed that plaintiff’s mark had acquired secondary meaning based on plaintiff’s incontestable registration for ENTREPRENEUR.

In addition, the court found that the parties’ goods were related because both offered publications that targeted small business and both offered public relations services. The parties also used similar marketing channels, including sending their publications to the media free of charge and using the Internet for advertising and promotional purposes. The court placed significant weight on “substantial” evidence that a number of defendant’s potential and actual clients believed that there was a connection between plaintiff and defendant.

And the court found defendant’s infringement to be willful. Not only did defendant select ENTREPRENEUR PR for a magazine title and “entrepreneurpr.com” as a domain name with knowledge of plaintiff’s prior rights, but defendant falsely represented to potential customers that it was affiliated or associated with plaintiff. Because of defendant’s willful infringement, the court awarded $669,656 in defendant’s total profits (including interest), and $720,162.46 in attorney’s fees and costs.

The court also permanently enjoined defendant from using ENTREPRENEUR, ENTREPRENEURPR, ENTREPRENEUR ILLUSTRATED, “entrepreneurpr.com”, or any other confusingly similar term in connection with “paper goods and printed matter” and “advertising and business services, including online services.”

Subsequent Appellate Court Proceedings
Defendant appealed the trial decision, arguing that the district court entered findings of fact and conclusions of law in violation of the mandate of the appellate court. The court of appeals affirmed, noting that the prior panel did not rule in favor of defendant but rather decided only that there were genuine issues of fact that precluded summary judgment. The appellate court also affirmed the district court’s findings of likelihood of confusion, profits based on unjust enrichment, and attorney’s fees based on evidence that defendant “intended to confuse consumers.”

Further Trial Court Proceedings
Shortly after the second appeal decision, the district court entered findings of fact and conclusions of law based on the trial.

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