Board of Directors of Sapphire Bay Condos West v. Simpson

Board of Directors of Sapphire Bay Condos West v. Simpson, 129 Fed. Appx. 711 (3rd Cir. 2005).

Factual Background
Simpson owned a condominium in the Sapphire Bay Condominiums West (“Sapphire Bay”) in the U.S. Virgin Islands. Following a dispute with the condominium Board over Simpson’s desire to structurally modify his unit, Simpson launched a campaign against the Board and its members, including registering the domain name “sapphirebaycondos.com” and operating a website on which he criticized the Board and its members.

When Simpson initially launched his site, he titled it “The Official website of Sapphire Bay Condominiums West. . . .” After receiving a cease-and-desist letter from the Board, Simpson changed the title to “The Owners Official Website For the Elimination of Dishonesty on the Board of Directors of Sapphire Bay. . . .”

Trial Court Proceedings
The Board filed suit for trademark infringement and dilution. Shortly thereafter, Simpson assigned the “sapphirebaycondos.com” domain name to a company named “North American Alliance for Honest Corporate Management.” Simpson also registered a number of “Sapphire Bay” trade names in the Virgin Islands.

The district court granted the Board’s motion for a preliminary injunction. It initially noted that the Board had valid trade-name and service-mark rights to “Sapphire Bay Condominiums West” and that Simpson retained sufficient control over the website even though he did not technically own the domain name.

Regarding trademark infringement, the district court found both a likelihood of confusion and actual confusion based on the similarity of Simpson’s domain name with the Board’s mark; the strength of the Board’s mark based on the length of use and its “worldwide reputation”; actual confusion among existing and new renters; and Simpson’s intent to use his site to disparage the Board.

The court also found a likelihood of success on the merits of the Board’s dilution claim, noting that: (1) the mark was famous based on the degree of its inherent distinctiveness, the 30-plus years of use, the duration and extent of advertising and publicity under the mark, the worldwide use of the mark, and the degree of recognition of the mark, (2) Simpson’s use of the mark “in luring individuals to his site to disparage the Board caused dilution by lessening the capacity of the mark to identify and distinguish the Board’s services,” and (3) Simpson’s website constituted commercial speech because Simpson “intended to harm the Board financially.”

The district court also found that Simpson’s use of the mark caused irreparable harm as a matter of law and that Simpson failed to establish that an injunction would harm him because he could continue to operate his critical campaign under a different domain name.

Appellate Court Proceedings
On appeal, with Simpson appearing pro se, the Third Circuit affirmed the grant of a preliminary injunction. The appeals court, with no analysis, found that the district court did not abuse its discretion in granting the preliminary injunction.

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