Applied Information Sciences Corp. v. Ebay, Inc.

• Decision Date: 28 December 2007
• Docket Number: No. 05-56549.,No. 05-56123.,05-56123.,05-56549.
• Parties: APPLIED INFORMATION SCIENCES CORP., a California corporation, Plaintiff-Appellant, v. EBAY, INC., a Delaware corporation, Defendant-Appellee. Applied Information Sciences Corp., a California corporation, Plaintiff-Appellee, v. eBay, Inc., a Delaware corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

511 F.3d 966

APPLIED INFORMATION SCIENCES CORP., a California corporation, Plaintiff-Appellant, v. EBAY, INC., a Delaware corporation, Defendant-Appellee.

Applied Information Sciences Corp., a California corporation, Plaintiff-Appellee, v. eBay, Inc., a Delaware corporation, Defendant-Appellant.

No. 05-56123.

No. 05-56549.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 17, 2007.

Filed December 28, 2007.

Joanna M. Esty, Angela C. Agrusa (argued), Wendy E. Lane, Liner Yankelevitz Sunshine & Regenstreif LLP, Los Angeles, CA, for appellant/cross-appellee.

Michael T. Zeller (argued), Daniel H. Bromberg, Patrick C. McGannon, Elizabeth B. Wydra, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, CA, for appellee/cross-appellant.

Appeal from the United States District Court for the Central District of California; Dickran M. Tevrizian, District Judge, Presiding. D.C. No. CV-04-00274-DT.

Before: RAYMOND C. FISHER and RICHARD R. CLIFTON, Circuit Judges, and JEREMY D. FOGEL, District Judge.^*

FISHER, Circuit Judge:

This appeal requires us to clarify what an owner of a federally registered trademark needs to establish in order to mount an infringement action against a user of the trademarked name on goods or services that are not the same as those specified in the owner's trademark registration. Applied Information Sciences Corp. (AIS) owns the trademark "SmartSearch" for certain computer related search functions, and claims that eBay, Inc. (eBay) uses the name "Smart Search" for its Internet auction website, which AIS contends will be confused with its "SmartSearch" product. The district court rejected the claim, granting summary judgment to eBay, and AIS now appeals. eBay cross-appeals the district court's order denying attorney's fees to eBay as the prevailing party. We affirm both the district court's grant of summary judgment and the denial of attorney's fees.

I. Background

AIS is a vendor of specialized software. In 1994, AIS applied to register a trademark, "SmartSearch," and in 1998, the United States Patent and Trademark Office issued AIS a registration for use of the mark on "computer software and instruction manuals sold together which allow the user to retrieve information from on-line services via phone line in the fields of agriculture and nutrition, books, chemistry, computers and electronics, education, law, medicine and bio-sciences, news, science and technology, social sciences and humanities." AIS asserts that it marketed SmartSearch products from 1995 to 2004.

AIS alleges that in 2000, eBay began using the SmartSearch mark without AIS's consent in violation of federal trademark and California unfair competition laws. eBay — a commercial website providing online auction services to Internet users — displayed the words "Smart Search" as a link on its homepage; clicking this link would take a user to a separate page with advanced search options. Late in 2001, AIS contacted eBay, requesting that it either pay a license fee or stop using the mark. eBay refused, and AIS filed the instant suit in the district court in 2004.

After both parties moved for summary judgment, the district court granted eBay's motion on the ground that AIS does not have a valid, protected interest in the mark.¹ The district court later awarded costs of $8,971.31 against AIS, but denied eBay's motion for attorney's fees after concluding that the case was not exceptional. AIS appeals the grant of summary judgment, and eBay appeals the denial of attorney's fees.

II. Summary Judgment in Favor of eBay

Reviewing de novo the district court's grant of summary judgment and viewing the evidence in the light most favorable to AIS, see Talking Rain Beverage Co., Inc. v. South Beach Beverage Co., 349 F.3d 601, 602 (9th Cir.2003), we conclude that AIS discharged its burden of establishing that it had a valid, protectable interest in its SmartSearch mark, but failed to produce any admissible evidence tending to show a likelihood of confusion. For this reason, we affirm the district court's grant of summary judgment in favor of eBay.

To prevail on its trademark infringement claim, AIS must show that: (1) it has a valid, protectable trademark, and (2) that eBay's use of the mark is likely to cause confusion. See Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1047, 1053 (9th Cir.1999). "The threshold issue in any action for trademark infringement is whether the words used by a manufacturer in connection with his product are entitled to protection." Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1014 (9th Cir.1985). There are three ways in which AIS could have established it had a protectable interest: (1) it has a federally registered mark in goods or services; (2) its mark is descriptive but has acquired a secondary meaning in the market; or (3) it has a suggestive mark, which is inherently distinctive and protectable. AIS argues that on the basis of its federal registration alone, it established its rights in the "SmartSearch" mark. We agree.

Registration of a mark "on the Principal Register in the Patent and Trademark Office constitutes prima facie evidence of the validity of the registered mark and of [the registrant's] exclusive right to use the mark on the goods and services specified in the registration." Brookfield Commc'ns, 174 F.3d at 1047; see also 4 J. Thomas McCarthy on Trademarks and Unfair Competition § 16.19 (4th ed. 1992) ("A trademark registration on the federal Principal Register is at least prima facie evidence of the registrant's ownership of the mark.") (hereinafter "McCarthy"). Without registration, a plaintiff "would have to establish his right to exclusive use in a common law infringement action," Vuitton Et Fils S.A. v. J. Young Enterprises, Inc., 644 F.2d 769, 775 (9th Cir.1981), such as by proving that the mark is not generic, see Filipino Yellow Pages, Inc. v. Asian Journal Publications, Inc., 198 F.3d 1143, 1151 (9th Cir.1999), and that no one else had first used it in commerce, see Brookfield Communications, 174 F.3d at 1047. Registration, however, "discharges the plaintiff's original common law burden of proving validity in an infringement action." Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, Inc., 419 F.3d 925, 928 (9th Cir. 2005) (quoting Tie Tech, Inc. v. Kinedyne Corp., 296 F.3d 778, 783 (9th Cir.2002)). Thus, by demonstrating that it held a federal registration, AIS made a prima facie showing that it held a valid, protectable interest in the use of the SmartSearch mark in connection with the goods listed in its registration.²

A registered trademark holder's protectable interest is limited to those goods or services described in its registration. See 15 U.S.C. § 1057(b) ("A certificate of registration of a mark ... shall be prima facie evidence of ... the registrant's exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the certificate, subject to any conditions or limitations stated in the certificate."); 15 U.S.C. § 1115(a) ("Any registration issued ... shall be prima facie evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the registration subject to any conditions or limitations stated therein...."); see also McCarthy § 19:48 (stating that "the prima facie and incontestable provisions of the Lanham Act apply only to the goods or services specified in the registration").

However, the scope of validity and the scope of relief for infringement are not coextensive. Although the validity of a registered mark extends only to the listed goods or services, an owner's remedies against confusion with its valid mark are not so circumscribed. The language of the infringement statute, 15 U.S.C. § 1114, does not limit remedies for allegedly infringing uses to those goods within the ambit of registration:

Any person who shall, without the consent of the registrant ... (a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive ... shall be liable in a civil action by the registrant for the remedies hereinafter provided.

15 U.S.C. § 1114(1) (emphasis added). Thus a trademark owner may seek redress if another's use of the mark on different goods or services is likely to cause confusion with the owner's use of the mark in connection with its registered goods:

[O]n the issue of validity, the recitation of goods and services in the registration limits the scope of presumptions of validity, but on the separate issue of infringement, the registered mark is infringed when used by another with any goods or services which creates a likelihood of confusion.

McCarthy § 24:65; see also Gilson on Trademarks, § 4.03[3][a] (2007) ("[W]hen a plaintiff does base the action on use of his mark on the goods or services identified in the [incontestable] registration, the scope of relief will extend beyond those goods or services to an infringing mark used on any goods or services where confusion is likely to result.") (emphasis in original).

In Interstellar Starship Services, Ltd. v. Epix Inc., 184 F.3d 1107 (9th Cir.1999), we emphasized that a markholder's rights to protect its interest in a registered mark were not limited to infringement actions against those using the mark in connection with the specified goods or services, expressly rejecting an argument that the plaintiff was required to show that the scope of its valid interest extended to the defendant's use of the mark:

[The defendant] does contend that the Epix...