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Gregerson v. Vilana Financial

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Citation Edit

Gregerson v. Vilana Financial, Inc., 446 F.Supp.2d 1053 (D. Minn. Nov. 7, 2006) (full-text) (defendant’s motion for preliminary injunction); 2007 U.S. Dist. LEXIS 64960 (D. Minn. Aug. 31, 2007) (full-text) (cross-motions for summary judgment). Findings of Fact, Conclusions of Law, and Order for Judgment, No. 06-1164, 2008 WL 451060 (D. Minn. Feb. 15, 2008) (full-text)

Factual Background Edit

Plaintiff, an independent photographer, licensed his photographs through his websites at “cgstock.com” and “phototour.minneapolis.mn.us.” Defendants ran a finance company under the marks VILANA, VILANA FINANCIAL, VILANA REALTY, and VILANAFINANCIAL.COM. Plaintiff publicized infringement by Vilana, who sued in Minnesota State Court for defamation. Plaintiff then filed his copyright claim in federal court, with the defamation claim being removed and consolidated. Several additional counterclaims were then added by Vilana, all over the photographer's webpage publicizing the infringement.

Trial Court Proceedings Edit

Vilana had taken a photograph from Gregerson's website and using it in advertising without Gregerson's permission. Gregerson wrote about the copyright infringement on his website, and Vilana sued Gregerson in state court for defamation.

Vilana claimed the photo was not Gregerson's, but was actually taken by "Michael Zubitskiy", a man Vilana's owner allegedly met in a sauna and paid in cash for the photo. Gregerson brought a motion for sanctions, arguing Zubitskiy did not exist and the sales agreement with Zubitskiy was forged. Gregerson also then filed a copyright infringement suit in federal court. The defamation claim was removed to federal court and consolidated with the copyright claim.

Vilana then added counterclaims for unjust enrichment, trademark infringement, deceptive trade practices, appropriation of name and likeness, and injunctive relief. The trademark infringement claim alleged Gregerson used defendants’ marks in the links, subject lines, and metatags of his website. Vilana moved for a preliminary injunction to stop plaintiff’s use of defendants’ marks.

At oral argument, the court requested plaintiff to voluntarily alter his site to “obviate the need for granting injunctive relief.” In response, plaintiff removed all third-party comments from the site referring to defendant Vilenchik’s “secretary or girlfriend”; added a large red disclaimer to his website; and edited the metatags and descriptions to “more explicitly state the nature of the web site as a criticism of Vilana Financial and Andrew Vilenchik.” The court then denied defendants’ motion for preliminary injunction because they failed to establish a likelihood of success on the merits.

Quoting from its decision in Faegre & Benson v. Purdy, the court stated that “[a] defendant’s use of a trademark in metatags in a descriptive manner can constitute a non-infringing fair use.” Moreover, although the court recognized that the balance of harms could tip in favor of defendants due to the comments critical of defendants, it acknowledged plaintiff’s First Amendment right to free expression and found that plaintiff’s voluntary modifications to his website “cure[d] much of the harm described in [defendants’] Motion” and “comport[ed] with the “guidelines found to be appropriate in Purdy.” The public interest factor was neutral because the public had interests in the enforcement of both the trademark laws and the First Amendment. The court stated that it would “closely monitor” plaintiff’s websites and that defendants could renew their motion should the circumstances change.

Copyright infringement Edit

Both parties later moved for summary judgment. Regarding Gregerson’s copyright infringement claim, the court found that he sufficiently proved that he had properly registered the photos in question with the Copyright Office and that the photos used by Vilana in its advertisements were the same. Because intent is irrelevant in copyright infringement cases, and Vilana admittedly reproduced the photos, the court granted Gregerson’s motion for summary judgment on his copyright claim.

Trademark infringement Edit

Turning to Vilana’s trademark infringement counterclaims, the court first noted that use of a party’s marks in metatags to divert Internet customers can constitute trademark infringement by creating initial-interest confusion, but when used in a descriptive manner, it could constitute fair use. Without analyzing each likelihood-of-confusion factor, the court found that a likelihood of confusion, whether there was initial-interest confusion or not, was unlikely where the parties were not competitors and do not sell “similar products.”

The court discredited Vilana’s evidence of actual confusion, because those people, while exhibiting general confusion about the relation of Gregerson’s website to Vilana, were not confused as to the services that each party sold. According to the court, “[i]t is highly unlikely that someone looking for any of Vilana’s [real estate] services became confused and actually bought photographs instead.” Further, Gregerson’s commentary on his website was for critical commentary purposes, and not to divert Internet users from Vilana’s website. Thus, the court granted Gregerson’s motion for summary judgment on Vilana’s trademark infringement claims.

Cybersquatting claim Edit

The court also granted summary judgment to Gregerson on Vilana’s cybersquatting claim, finding that Gregerson had no bad-faith intent to profit from the use of Vilana’s mark in a domain name. Gregerson’s use of VILANA in the post-domain path of his URL was not use of a domain name.

Other claims Edit

The court did not, however, grant summary judgment in favor of Gregerson on Vilana’s claims for deceptive trade practices, interference with contract and interference with business relationships, or appropriation. It found that Gregerson posted potentially disparaging and false remarks concerning Vilana’s alleged fraudulent conduct, and allowed a third-party comment referring to Vilana’s owner being tied to the Russia mafia, and that such remarks could support claims of deceptive trade practices and interference with Vilana’s business relationships.

Further, Gregerson’s use of the name and photo of Vilana’s owner on his webpage linked to his commercial website could constitute a use of his name and likeness for Gregerson’s own purposes and benefit, to the detriment of Vilana, and thus could support a common law claim for appropriation.

As to unjust enrichment, the court found Vilana’s claims that Gregerson received increased profits or something else of value were "purely speculative" and granted summary judgment in Gregerson’s favor. Finally, the court refused to revisit its previous denial of an injunction against Gregerson.

Trial outcome Edit

Following a two-day bench trial in November of 2007, the court found in favor of the Plaintiff (Gregerson) on all counts. On his copyright claims, he was awarded $10,000 in statutory damages for copyright infringement of one photo. This was based on a finding that Vilana's owner had fabricated the existence of "Michael Zubitskiy," and lied about paying Zubitskiy $800 cash for the photos (as Gregerson alleged in a 2006 motion for sanctions). The court found the story highly implausible, with no credible evidence to support the belief that Zubitskiy existed. Vilana's owner had, instead, unlawfully downloaded the photos directly from Gregerson's website, where a copyright notice was prominently displayed.

Gregerson was awarded $4,462 in actual damages for copyright infringement of a second photo, and $5,000 in statutory damages for removal of copyright management information.

Regarding the counterclaim of deceptive trade practices and interference with contractual relations, the court found that nothing on Gregerson's web page was identified as false at trial. The court found Gregerson was not liable for comments posted by others (although none of these were challenged as false at trial). Regarding the appropriation claim, the court ruled no evidence was presented to show Gregerson experienced any actual benefit from the publication of the name and likeness of Vilana's owner.

Source Edit

This page uses content from Finnegan’s Internet Trademark Case Summaries. This entry is available under the Creative Commons Attribution-Share Alike License 3.0 (Unported) (CC-BY-SA).

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