International Star Registry of Illinois v. SLJ Group (a.k.a. Bowman-Haight Ventures, Inc.), 2001 U.S. Dist. LEXIS 18356 (N.D. Ill. Nov. 8, 2001) (denying defendant’s motion for summary judgment regarding damages); 2003 U.S. Dist. LEXIS 11803 (N.D. Ill. July 9, 2003) (denying cross-motions for summary judgment regarding damages); 325 F. Supp. 2d 879 (N.D. Ill. 2004) (full-text) (holding defendant in contempt).
Factual Background Edit
Plaintiff used the marks STAR REGISTRY and INTERNATIONAL STAR REGISTRY in its business of selling “star registrations” as a novelty gift, i.e., it provided customers with a certificate and the telescopic coordinates of a star for a certain fee via its website at “starregistry.com.” Defendant used the marks STAR GIFT REGISTRY, STAR REGISTRY, and INTERNATIONAL STAR REGISTRY on websites and in printed publications for the same products. Defendant also registered the domain name “star-gift-registry.com” and used “star registry” in metatags associated with its websites.
Trial Court Proceedings Edit
In 1998, plaintiff sued defendant for trademark infringement and unfair competition. Before trial, plaintiff accepted defendant’s offer of judgment in which plaintiff was awarded $100 and defendant was permanently enjoined from using the allegedly infringing marks and names beginning six months from the date of entry. Judgment was entered on September 16, 1999.
The injunction, however, did not state what defendant could or could not do during the six months before it became effective (“the disputed period”). Plaintiff filed a second action seeking damages for defendant’s continued use of the STAR REGISTRY marks and names during the disputed period. Defendant moved for summary judgment, contending that the judgment impliedly permitted it to phase out its use of the allegedly infringing marks and names during the disputed period. However, construing any ambiguity in the judgment against defendant because it made the offer of judgment, the court held that the judgment contained no express or implied provision permitting defendant to phase out its use of the marks during the disputed period.
Defendant also contended that res judicata barred any claim for damages during the disputed period because it could have been pursued in the prior lawsuit. But the court held that plaintiff could not have pursued future damages in the initial lawsuit because of the speculative nature of future damages. In short, any claim for damages during the disputed period following judgment could not have been resolved in the prior judgment. Accordingly, the court denied defendant’s motion for summary judgment.
In 2003, the court denied the parties’ cross-motions for summary judgment. Plaintiff moved for summary judgment on the issue of liability and for damages of $90,700 representing defendant’s gross revenues for the disputed period. Plaintiff argued that the prior judgment, along with the court’s earlier dismissal of defendant’s counterclaim for res judicata, established that defendant’s use of its marks during the disputed period was wrongful. The court denied plaintiff’s motion on the issue of liability, holding that collateral estoppel did not apply because defendant’s offer of judgment did not contain a provision stating that the judgment would have collateral estoppel effect and res judicata did not apply because the prior judgment did not resolve the claims for the disputed period. The court denied defendant’s motion regarding damages due to questions of fact regarding whether defendant’s conduct had an effect on its sales.
In April 2004, the parties entered into a settlement agreement and consent injunction enjoining defendant from further use of plaintiff’s trademarks STAR REGISTRY and INTERNATIONAL STAR REGISTRY, and from using the mark INTERNATIONAL STAR COUNCIL. Plaintiff alleged that defendant violated the injunction by using plaintiff’s marks in Internet advertising. For example, the domain name “internationalstarcouncil.com” linked to defendant’s new website, thus linking its website to the enjoined terms. Moreover, searches on Internet search engines turned up a link to “internationalstarcouncil.com” that in turn went to defendant’s website, as well as a “Sponsored Link” under the heading “Star Registry” that connected to defendant’s website.
Defendant argued that it had attempted to comply, but its efforts were frustrated by technological difficulties removing all mentions of its infringing content. The court rejected that argument, however, because defendant “had not been reasonably diligent and energetic in attempting to fulfill its obligations under the consent injunction” and that its ongoing failure was in fact willful. Two months were more than enough time to eliminate defendant’s “so-called inadvertent errors,” according to the court.
Defendant also willfully violated the injunction by linking its old domain name “internationalstarcouncil.com” to its new website. Furthermore, despite plaintiff’s notifying defendant about violations before several major holidays, defendant did not correct the advertisements until after the holidays passed to take advantage of plaintiff’s reputation during these important selling seasons. The court thus found defendant in contempt, and it ordered defendant to pay plaintiff reasonable attorney's fees connected to the motion for contempt. Finally, plaintiff also claimed that defendant’s use of banner advertising and “paid per inclusion” violated the consent injunction. Because the injunction did not specifically bar these activities, however, the court could not find defendant in contempt. It did note that unlabeled banner advertisements could cause initial interest confusion and suggested that plaintiff bring a second motion for rule to show cause explaining how these actions violated the injunction.
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