Audi Ag v. D'Amato, 04-70665.

Citation381 F.Supp.2d 644
Decision Date04 August 2005
Docket NumberNo. 04-70665.,04-70665.
PartiesAUDI AG and Volkswagen of America, Inc. Plaintiffs, v. Bob D'AMATO d/b/a Quatro Enthusiasts Defendant.
CourtU.S. District Court — Eastern District of Michigan

Edward C. Cutlip, Jr., Kerr, Russell, Detroit, MI, Gregory D. Phillips, Scott R. Ryther, Howard, Phillips, Salt Lake City, UT, for Plaintiffs.

Damian G. Wasserbauer, Intellectual Property Advisors, Canton, CT, for Defendant.

OPINION AND ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

BORMAN, District Judge.

BACKGROUND:

Audi AG and Volkswagen of America, Inc. ("Plaintiffs") have filed suit against Bob D'Amato, an individual d/b/a as Quattro Enthusiasts ("Defendant") based on the alleged infringement of its trademark registrations. Plaintiffs' Complaint contains the following counts:

Count I — Trademark and Trade Dress Dilution under 15 U.S.C. § 1125(a);

Count II — Trademark Infringement under 15 U.S.C. § 1114;

Count III — False Designation of Origin or Sponsorship, False Advertising, and Trade Dress Infringement under 15 U.S.C. § 1125(a);

Count IV — Cyberpiracy

Count V — Common Law Trademark Infringement.

Plaintiff seeks a preliminary and permanent injunction, compensatory damages, treble damages, attorneys's fees and costs. On May 5, 2004, Defendant filed its answer and also asserted the following Counterclaims:

Count I — Declaratory Judgment of Non-Violation of Trademark and Trade Dress Dilution under 15 U.S.C. § 1125(c);

Count II — Declaratory Judgment of Non-Violation of Trademark Infringement under 15 U.S.C. § 1114;

Count III — Declaratory Judgment of Non-Violation of False Designation of Origin or Sponsorship, False Advertising, and Trade Dress Infringement under 15 U.S.C. § 1125(a);

Count IV — Declaratory Judgment of Non-Violation of Cyberpiracy under 15 U.S.C. § 1125(a);

Count V — Declaratory Judgment of No Common Law or State Law Trademark Infringement;

Count VI — Declaratory Judgment of No Unfair Competition;

Count VII — Declaratory Judgment of No Unjust Enrichment;

Count VIII — Defamation;

Count IX — Quiet Title.

On October 19, 2004, the Court issued an Opinion and Order denying Defendant's Motion to Dismiss for lack of personal jurisdiction, and improper venue and also granted Plaintiffs' Motion to Dismiss Count VIII of Defendant's Counterclaim for Defamation.

This lawsuit is based upon Bob D'Amato's website www.audisport.com. Defendant registered the domain name www.audisport.com. (Answer ¶ 21). Plaintiffs claim that Defendant infringes and dilutes its world famous trademarks "AUDI", the "AUDI FOUR RING LOGO", and `QUATTRO" and the distinctive trade dress of Audi automobiles (the "Audi Trademarks")1. (Scipione Dec. ¶ 4, Plaintiffs' Motion Ex. 1). Defendant contends his website targets Audi enthusiasts. During 2002, Defendant redesigned the website to display the four ring Audi logo. (Id. Exhs. 17 for website as in 2002). In late March 2003, Defendant offered to sell shirts and hats bearing the mark AUDI SPORT on his website. (Id. Ex. 3). At this same time, Plaintiffs on www.audi.com offered to sell shirts and hats bearing the mark AUDI SPORT. (Scipione Dec. ¶ 7, Plaintiffs' Motion Ex. 1). Defendant commissioned a graphic designer, Thompson Smith to create two logos incorporating the AUDI RING LOGO which Defendant displayed on his website. (Defendant's Motion, Exhs. 17-21). On May 21, 2002, Smith sent the following email to Defendant pertaining to his services on www.audisport.com:

Last week I spent some time surfing and found the following information helpful for us. Looked at http://www.audi.com and noticed a few things that need to be clarified first we/I dive into this.

1. Audi already HAS a "Collection" site that is really well done with "some very limited" Audi Sport goodies. Are we taking over management, production of this and it will then become "audisport.com"?

2. Are you sure that we have the licensing rights to reproduce "Audi", "Audi Sport", quattro, etc. logos? If we do, lets please see this in writing for working with vendors, etc. I will need a copy of this.

3. Will the new company be incorporated, and we are employees/partners or are we going to be sub-contractors for AoA?

4. If incorporated or LLC as www.audisport.com, do we have a corporate lawyer?

(D'Amato Dep. Ex. 3).

Defendant also displayed on the text of the homepage of the website: "Who are we? We are a cooperative with Audi of America, and will be providing the latest products for your Audi's and information on Audisport North America." (Plaintiffs' Motion, Exhs. 17-21). Defendant has testified that he never received written permission from anyone to display the Audi Trademarks. (D'Amato Dep. at 56-57, 85, 91-93). Defendant now contends in his supplemental brief that he received legally binding permission from Plaintiffs through emails sent by Devin Carlson and Melissa Grunnah.

Regarding Melissa Grunnah, Defendant sets forth the following in his supplemental affidavit:

Since the spring of 2003 to the present, I received email, oral and written communications from Melissa Grunnah, Audi AG, currently Audi AG's Press Officer. Devin Carlson initially directed me to Melissa Grunnah, who sends me news and press releases by e-mail about Audi racing events. She has on more than one occasion given me permission to post news, content, images and racing information at audisport.com as well as emailed to other multiple parties including audiworld.com. She sends copies of this content by email to multiple people, of which I am one of, on the email distribution list.

(D'Amato Decl. ¶ 19).

Defendant testified that he received verbal authorization to display Audi Trademarks from Devin Carlson, an Audi salesperson employed by Champion Audi, an Audi dealer located in Pompano, Florida. Defendant testified that he asked Carlson if it was okay to display the Audi logos on his website, and Carlson told him it had been authorized by Bob Skal. (D'Amato Dep. 50-56, 146). Defendant testified that he had asked Bob Skal for written authorization "many, many, many times." (Id. at 56). Defendant further testified:

You know, he had — I wish I wrote down some of the excuses that he gave me because I'd be using them, you know, at work all the time. His wife was sick; he didn't get to it. He was sick; he didn't get to it. His computer crashed; he couldn't get to it. AOL was down; he wasn't able to find it. He was on vacation; he wasn't able to get to it. I mean these are, you know, actual things. I asked for a name [of the person employed by Audi who provided Mr. Skal with the written authorization], and he couldn't provide the name.

(Id. at 56-7). Defendant stated that he was still asking Skal and Carlson to produce written authorization around the time Defendant was served with this lawsuit. (Id. at 56-7, 85, 91-3). Plaintiffs provide evidence that Bob Skal is not affiliated with Audi in any way. (Scipione Dec. ¶ 14, Plaintiffs' Motion Ex. 1).

Champion Audi entered into an Audi Dealer Agreement with Plaintiffs, which provided:

This agreement does not grant Dealer [Champion Audi] any license or permission to use Authorized Trademarks except as mentioned herein, and Dealer has no right to grant any such permission or interest.

(Id. Ex. 4).

In 2002, Defendant testified that he entered into an agreement with Devin Carlson in which Defendant offered goods and services for sale on the website with an "Audi Sport" logo in exchange for a percentage of the sales revenue. (D'Amato Dep. at 84, 89-90). Defendant further testified:

The good part of it was that there was potential that I would get reimbursed for my services. You know, I bought the server, I put a lot of time into it, I pay for the electricity, I pay for the broadband connection, the software that's running on it ... So it was nice to know that, you know, potentially there would be some, you know, reimbursement for my time and expenses.

(Id. at 66-67).

Pursuant to that agreement, Defendant displayed an "Audisport Boutique and Services" webpage where he offered to sell hats, shirts bearing the AUDI SPORT logo. Defendant also implemented an email subscription service offering "audisport.com" email addresses (e.x.yourname@audisport.com). (Id. at 114-118). Defendant also currently offers to sell advertising space on the website. In connection with its offer to sell advertising space on the website, the website provided:

Thank you for your interest in advertising with AudiSport.com. We are a rapidly growing Audi enthusiast web site with monthly hit rates in excess of 300,000. While we are not an official part of Audi of America, we have a signed agreement allowing usage of Audi-owned tradenames. Advertisers at Audisport.com have the opportunity to reach a highly focused online community and typically experience click-through rates between 1.5-3.5%.

(Plaintiff's Motion, Exh. 21). The website also includes a disclaimer stating "this page is not associated with Audi AG or Audi USA in any way." (Id. Exh. 17).

On May 19, 2003, Devin Carlson sent the following email to Defendant:

We are in the process of pulling the plug on Audisportline. We are finding that the internet market is something that needs to be massaged over time, and we don't have the ability to commit to it. If you are interested in purchasing that end of the business from us, we have everything in place including a relationship with the merchandise distributor with the logo already digitized. If we had the ability to dedicate the appropriate time and marketing, I am sure it would eventually go somewhere. As of right now we stand at 0 sales and a couple of thousand in costs. I will let you know when the actual date will be so you can remove the link. You are free to move on with whatever you decide, and you can keep this email copy as a contract termination confirmation. We will keep in touch for any future possibilities....

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