Am. Diabetes Ass'n v. Friskney Family Trust, LLC

• Decision Date: 06 April 2016
• Docket Number: CIVIL ACTION No. 13-3720
• Citation: 177 F.Supp.3d 855
• Parties: American Diabetes Association, Plaintiff, v. The Friskney Family Trust, LLC, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

177 F.Supp.3d 855

American Diabetes Association, Plaintiff,

v.The Friskney Family Trust, LLC, et al., Defendants.

CIVIL ACTION No. 13-3720

United States District Court, E.D. Pennsylvania.

Signed April 6, 2016

Salvatore R. Guerriero, Manny D. Pokotilow, Caesar Rivise Bernstein Cohen & Pokotilow Ltd., Philadelphia, PA, for Plaintiff.

William M. Mullineaux, Astor Weiss Kaplan & Mandel, Philadelphia, PA, for Defendants.

MEMORANDUM OPINION

Goldberg, District Judge

This case involves the second trademark infringement lawsuit between the parties. In the current suit, Plaintiff, American Diabetes Association (“ADA”), has filed various Lanham Act claims against Defendants, Robert L. Friskney (“Friskney”), the Friskney Family Trust (“FFT”), and Medvantage Plus, LLC (“Medvantage”). Plaintiff also brings a breach of contract claim against Friskney and FFT stemming from a settlement agreement entered into by the parties in their first lawsuit, Am. Diabetes Ass'n v. ADS Med. Servs., Inc., et al., Dkt. No. 12–cv–3354.

In that case, Plaintiff sued Friskney and FFT's predecessors-in-interest, ADS Medical Services, Inc. and American Diabetes Services, Inc. (collectively, “ADS”) for alleged violations of the Lanham Act (“ADS litigation”). Plaintiff had accused ADS of infringing upon the “American Diabetes Association ” trademark registered with the United States Patent and Trademark Office by using the “confusingly similar” marks “American Diabetes,” “American Diabetes Services,” and similar website domain names, such as “americandiabetes.com.” That case was resolved by the parties through a comprehensive written settlement agreement, which included both Friskney and FFT.¹

In the current dispute, Plaintiff alleges that Friskney and FFT violated the settlement agreement, giving rise to a breach of contract claim (Count I) against both Defendants (Medvantage, a defendant here, was not a party to the previous litigation or Settlement Agreement, and therefore, Plaintiff has not included a breach of contract claim against Medvantage). Plaintiff has also renewed its Lanham Act claims against all three Defendants, alleging: trademark infringement under § 32(1), 15 U.S.C. 1114(1) (Count II), false designation of origin under § 43(a), 15 U.S.C. 1125(a) (Count III), and cyberpiracy² under § 43(d), 15 U.S.C. 1125(d) (Count IV). Plaintiff has included a claim for unfair competition under Pennsylvania common law against the same three Defendants (Count V). (Compl. ¶¶ 44–77.)³ Defendants have filed counterclaims for breach of contract (Count I) and reverse domain name hijacking (Count II). (Friskney 3d Am. Answer ¶¶ 83–93; FFT and Medvantage 3d Am. Answer ¶¶ 83–93.)

Before me are (1) Plaintiff's motion for summary judgment on Defendants' counterclaims; (2) Friskney and FFT's motion for summary judgment on liability as to all of Plaintiff's claims; and (3) Medvantage's motion for summary judgment on Plaintiff's Lanham Act and unfair competition claims. For the reasons that follow, I will grant Plaintiff's motion; grant in part and deny in part Friskney and FFT's motion; and, grant in part and deny in part Medvantage's motion.

I. FACTUAL AND PROCEDURAL BACKGROUND⁴

The parties resolved their first lawsuit on March 12, 2013 by entering into a Settlement Agreement (the “Agreement”). Friskney and FFT's obligations were outlined in Paragraph 5 of the Agreement, the relevant portions of which state:

Friskney and FFT each agree that they will immediately cease and refrain from forever using AMERICAN DIABETES ... or any confusingly similar designation, alone or [in] combination with other words, phrases, symbols, or designs, as a ... domain name component[.] (Agreement, p. 5 ¶ 5.)

By April 15, 2013, FFT and/or Friskney shall undertake all appropriate measures to cancel, delete, terminate and otherwise remove all reference to their use of AMERICAN DIABETES ... on all social media channels, including without limitation Twitter™ (“@AmDiabetes”), [and] Facebook™ (http://www.facebook.com/AmericanDiabetes)[.] (Id. at p. 6 ¶ 5(c).)

No later than January 15, 2014, Friskney shall transfer all title and interest in and to the registration for the AMERICANDIABETES.COM domain name to [Plaintiff], and fully cooperate with [Plaintiff] to facilitate the filing and processing of any and all forms and other formalities necessary to complete the transfer[.] (Id. at p. 6 ¶ 5(e).)

Friskney relies heavily on Paragraph 7 of the Agreement, which states:

Subject to Paragraph 5 and for a period of two (2) years, commencing on the Effective Date [March 12, 2013] and ending on January 15, 2015, the FFT will be entitled to the benefits as an authorized sponsor of [Plaintiff's] 'stop Diabetes® Movement' program, subject to the terms and conditions set forth in the Sponsorship Agreement, which is annexed as Exhibit C and is made part hereof. (Id. at p. 7 ¶ 7.)

Additionally—and critical to my analysis regarding the parties' respective breach of contract claims—the Agreement contained the following integration clause:

This Agreement constitutes the entire agreement between the parties pertaining to the subject matter contained herein and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No supplement, modification, or amendment of this Agreement will be binding unless executed in writing by all the parties. (Id. at pp. 10–11 ¶ 20.)

With these provisions in mind, I turn to the undisputed facts of record. The following events occurred chronologically, following execution of the Agreement on March 12, 2013.

On March 14, 2013, just two days after signing the Agreement, Friskney threatened via email to sell the “americandiabetes.com” domain name to a third party for $38,000. Friskney made this statement after Dexter Cummings, Managing Director of Legal Affairs for Plaintiff, asked to execute a brief amendment to the Agreement because of a date inconsistency. (Pl.'s Ex. B, Doc. No. 53.) This fact will become important in evaluating Friskney's “good faith and fair dealing,” discussed infra .

Thereafter, between March 19, 2013 and April 3, 2013, Odette Brown, Associate Director of Client Services for Plaintiff, contacted Friskney via telephone and email multiple times in an attempt to coordinate the Sponsorship outlined in Paragraph 7. (Pl.'s Ex. A-1, Doc. No. 70; Brown Decl. ¶¶ 17–27.) On at least one occasion, Friskney asked to reschedule the pair's conference call, and on other occasions, Friskney did not answer or otherwise return Brown's phone calls. (Brown Decl. ¶¶ 17–27; Defs.' Ex. D, Doc. No. 62.)⁵

The purpose of these attempted contacts was for Brown to gather preliminary information from Friskney (as a new sponsor) so that her team could list FFT on Plaintiff's website. Brown explained that it was necessary to discuss several items with new sponsors to coordinate their being placed on Plaintiff's website, including: confirmation of the brand to be promoted, including a brief summary and overview of the company; the logo of the sponsor to be featured on Plaintiff's “diabetes.org/stopdiabetes.com” website; the sponsor's URL to which the Plaintiff's website would link; and, confirmation of certain dates and milestones for the sponsorship. (Brown Decl. ¶¶ 10–12.) Brown explained that once she obtains this information from a sponsor, it typically takes approximately two (2) weeks to actually place the sponsor on Plaintiff's website. (Id. at ¶ 14.)

On April 23, 2013, having not heard back from Friskney, Brown again contacted him via email inquiring as to whether he would be available to speak on April 26, 2013. (Pl.'s Ex. A-1, Doc. No. 70.) Friskney responded to Brown's email the following day on April 24, 2013 asking whether new sponsors receive a “welcome package,” and reiterating that he wanted to receive the same treatment as any other sponsor notwithstanding the fact that this was a “forced” relationship. (Defs.' Ex. I, p. 13, Doc. No. 62.) That same day, Brown stated that she would prepare the sponsorship timeline and send it to Friskney, and a follow-up conversation would occur once he had an opportunity to review the document. (Id.)

On May 5, 2013, less than two months after executing the Agreement wherein he was obligated to immediately cease using “American Diabetes,” or “any confusingly similar designation,” Friskney registered the website domain name “americandiabetesupplies.com” with GoDaddy, an internet domain name registrar. (Friskney Dep. 55:20–22; 56:1–3.) Friskney does not dispute that he registered “americandiabetesupplies.com” in connection with his online diabetic supplies business.⁶ Rather, he explains that he did so only after seeking permission from Dexter Cummings. At his deposition, Friskney testified that Cummings verbally consented to his registering of “americandiabetesupplies.com” during a telephone conversation prior to the execution of the Settlement Agreement (March 12, 2013).⁷ (Friskney Dep. 55:20–22; 56:1–13.) Friskney claims that he needed to set up this temporary commerce site which would later be turned over with “americandiabetes.com” pursuant to Paragraph 5(e) of the Agreement. (Defs.' Resp. 13, Doc. No. 60.)

On May 29, 2013, May 30, 2013, June 3, 2013, June 4, 2013, and June 5, 2013—approximately six weeks after the Agreement's April 15th deadline by which Friskney and FFT were required to remove all references to “American Diabetes” from their social media accounts—Friskney and FFT's Facebook account contained several new postings with references to “American Diabetes.” (Pl.'s Ex. F, pp. 13–14, Doc. No. 53.) Friskney acknowledged during his deposition that employees within his organization made these posts. (Friskney Dep. 91:20–22; 92:1–5.)⁸ Additionally, the original posts that were required to be removed by the April 15th deadline also remained beyond that date. (Pl.'s Ex. F, pp. 14–24, Doc. No. 53.)

On June 6, 2013, Odette Brown emailed Friskney the timeline that they had previously discussed on April 23...