Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 53 U.S.P.Q.2d (BNA) 1570 (2d Cir.) (full-text), cert. denied, 530 U.S. 1262 (2000).
Plaintiff, a mail-order catalog business featuring aviation-related products, began using the mark SPORTY'S in the 1960s. In early 1995, defendant formed a subsidiary called Pilot's Depot and entered the aviation-catalog business. In March 1995, with knowledge of plaintiff's SPORTY'S trademark, defendant registered the domain name "sportys.com." In January 1996, defendant formed another subsidiary named "Sporty's Farm" for the purpose of selling Christmas trees.
In March 1996, immediately after plaintiff discovered defendant's "sportys.com" domain name, defendant filed a declaratory judgment action seeking to continue its use of "sportys.com." Plaintiff counterclaimed, alleging trademark infringement, trademark dilution, and unfair competition. After defendant filed suit, it began selling Christmas trees on its "sportys.com" website.
Trial court proceedings
After a bench trial, the district court held that plaintiff's SPORTY'S trademark was famous, and defendant's use of "sportys.com" diluted that mark. The court issued an injunction forcing defendant to relinquish its rights to "sportys.com," but did not award damages to plaintiff, citing an absence of willfulness. Defendant appealed the injunction, and plaintiff cross-appealed the denial of damages.
Appellate court proceedings
During the pendency of the appeal, the Anticybersquatting Consumer Protection Act (ACPA) was passed. Retroactively applying the ACPA, the Second Circuit affirmed the district court's injunction, holding that SPORTY'S is a distinctive mark and that "sportys.com" is confusingly similar to SPORTY'S.
The court also found "more than enough evidence" of defendant's bad faith intent to profit, noting that: (1) defendant did not have any intellectual property rights in "sportys.com" when it registered the name; (2) defendant did not form Sporty's Farm until nine months after the "sportys.com" domain name was registered and did not use the "sportys.com" website for Christmas trees until after it filed the lawsuit; (3) the domain name did not consist of the legal name of the party that registered it; and (4) the "sportys.com" domain name was transferred to Sporty's Farm under suspicious circumstances.
Because defendant planned to enter into direct competition with plaintiff's aviation business, the court believed that defendant attempted to keep "sportys.com" away from plaintiff by transferring it to an unrelated business, thus hoping to avoid a likelihood of confusion challenge.
As to damages, the Second Circuit noted that damages are not available under the ACPA because defendant registered the domain name before the ACPA was enacted. With respect to damages under the Federal Trademark Dilution Act of 1995 (FTDA), the court reasoned that because of the "uncertain state of the law" that formerly existed when this suit commenced, the district court did not clearly err by finding an absence of willful dilution.
Lastly, the court rejected defendant's argument that a retroactive application of the FTDA or the ACPA was impermissible, especially because the court's injunction does no more than "avoid the continuing harm that would result from Sporty's Farm's use of the domain name."
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