Darkowl, LLC v. Arkowl LLC
| Docket Number | Civil Action 21-cv-02163-KLM |
| Decision Date | 01 August 2023 |
| Parties | DARKOWL, LLC, Plaintiff, v. ARKOWL LLC, Defendant. |
| Court | United States District Courts. 10th Circuit. United States District Court of Colorado |
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER
This matter came before the court on a bench trial on June 26 2017 and June 27, 2023. The Court, having considered and reviewed the evidence presented at trial, including the witnesses and exhibits, the trial transcripts [#92, #93], the parties' Proposed Findings of Fact and Conclusions of Law [#94, #95], the entire file, and the applicable law, and being fully advised in the premises, hereby issues ifs Findings of Fact, Conclusions of Law, and Order.
1. DarkOwl commenced this declaratory judgment action on August 10, 2021. Compl. [#2]. DarkOwl requests declarations (1) that its DARKOWL marks, Nos. 5525738 and 5793807, depicted below, do not infringe ArkOwl's marks. See id.
(Image Omitted) 2. ArkOwl, LLC (“ArkOwl”) asserts a counterclaim that DarkOwl, LLC's brand name and design mark are likely to cause confusion as to the affiliation, sponsorship, or origin of the two companies, thus infringing on ArkOwl's trademark rights. See Pretrial Order [#89] at 5; Answer and Counterclaims [#17]. ArkOwl thus asserts that it adopted the ArkOwl word mark and the following design marks.
(Image Omitted)
Answer and Counterclaims [#17] ¶ 8. ArkOwl further asserts that it continuously and exclusively offered its services under the design marks identified above since its formation in 2012. Id. ¶ 9. ArkOwl seeks a permanent injunction to enforce the ArkOwl word mark and the above design marks pursuant to the Lanham Act (Count I), and cancellation of DarkOwl's two federal trademark registrations (Count III) to remedy the trademark infringement. Id. at 14-15); Final Pretrial Order [#78] at 5.[1]
3. ArkOwl also has a registered mark, shown below
(Image Omitted) This mark was not registered until 2020, after DarkOwl's marks. ArkOwl does not seek to enforce that design mark. See Counterclaims [#17] at 14-15.
4. ArkOwl is a Minnesota limited liability company formed in 2012. Stipulated Facts [#96], NO. 1. ArkOwl first adopted the ArkOwl word mark at least as early as 2012, and the Court finds from the evidence that ArkOwl has continually used the word mark in connection with its goods and services since 2012, operating as ArkOwl, LLC via the website www.arkowl.com. See, e.g., Trial Transcript (“Tr. Trans.”) [#92] at 31:9-23, 155:2-4.
5. Robert Daline is the Chief Executive Office and co-founder of ArkOwl. Hearing Transcript (“Hr'g Trans.”) [#71] 22:2-7.
6. ArkOwl does not maintain a physical office presence. All relevant transactions and nearly all interactions between ArkOwl and its customers are virtual. Tr. Trans. [#92] 38:2-18.
7. ArkOwl was able to determine the location of its users using Google Analytics, which tracks IP addresses. Through that tool, ArkOwl established that individuals in each state used ArkOwl's service prior to DarkOwl's adoption of its mark in September 2017, and before DarkOwl's trademark registrations in 2018 and 2019. Compare Trial Exhibits (“Tr. Ex.” or “Tr. Exs.”) 327, 423 with Tr. Exs. 131, 132. Mr. Daline further testified that one or more of its corporate clients showed IP addresses originating from Colorado, where DarkOwl is headquartered, prior to 2017. Tr. Trans. [#92] 43:2325.
8. When Mr. Daline named the company ArkOwl, the “Ark” portion of the name was meant to show that the company put God first and to reference the biblical “Ark of the Covenant.” Tr. Trans. [#92] 29:24-30:7, 124:4-8. The “Owl” portion of the name is in reference to an owl as a predator that can see in the darkness or at night, or “catching something without necessarily seeing it[,”] which Mr. Daline testified worked well with the idea of catching criminals or identifying legitimate customer identities. Id. at 29:18-23, 108:5-12. Mr. Daline also testified that his co-founder of ArkOwl wanted the name of the company to be eight characters or less to fit into a dot.com, and for it to be a soundable domain, i.e., “something that somebody could sound when talking about the website and say, go to this website dot-com, and it's just really simple to say that.” Id. at 29:8-13.
9. Mr. Daline testified that the “Owl” portion of the ARKOWL mark is suggestive of the type of services that ArkOwl provides in terms of what ArkOwl's data is used for, i.e., to stop and prevent fraud. Tr. Trans. [#92] 108:5-23.
10. ArkOwl did not seek to register its trademark until roughly seven years after it adopted the mark. Tr. Trans. [#92] 109:5-12.
11. Thus, on September 22, 2019, ArkOwl filed Application Serial No. 88626162 for the ARKOWL word mark with the USPTO, claiming first use in commerce as early as October 11, 2012. See Tr. Ex. 28. ArkOwl obtained its federal registration for its word mark on April 21, 2020. Id.
12. ArkOwl classified its services in its federal trademark registration as “Software as a service (SAAS) services, namely, hosting software for use by others for use in verifying the credibility of data provided by e-commerce customers in an online order.” See Tr. Exs. 28 and 29.
13. The USPTO reviewed the application and did not reject it based on any prior third-party filings, including DarkOwl's prior registrations. Tr. Trans. [#92] 123:18124:3.
14. No third parties opposed ArkOwl's Application Serial No. 88626162. ArkOwl's application was registered under Reg. No. 6036746 on April 21, 2020, and covered the following services: “Computer and Software services and Scientific Services being Software as a service (SAAS) services, namely, hosting software for use by others for use in verifying the credibility of data provided by e-commerce customers in an online order” in Class 42. See Tr. Ex. 28.
15. Before 2019, ArkOwl used marks which Mr. Daline referred to as the angry-owl marks:
(Image Omitted)
Tr. Tran. [#92] 111:25-112:17. There is no evidence of registration of these marks; however, ArkOwl presented evidence that these marks were used from the commencement of the company until 2019, when it replaced the angry owl marks with a new mark. Id. 31:6-32:11, 34:8-20, 100:23-101:8, 111:15-17, Tr. Ex. 303.
16. Mr. Daline referred to the mark adopted by ArkOwl in 2019 as the soaring mark, shown below. This mark is still being used today. Tr. Trans. [#92] 100:23-108:8, 111:15-17. On January 29, 2020, ArkOwl filed Application Serial No. 88777943 for the soaring owl design mark:
(Image Omitted) See Tr. Ex. 29.
17 The USPTO reviewed the application and did not reject it based on any prior third-party filings, including DarkOwl's prior registrations. Tr. Trans. 123:18-124:3.
18. No third parties opposed Application Serial No. 88777943. The application was registered under Reg. No. 6285973 on March 9, 2021, as to the following services: “Software as a service (SAAS) services, namely, hosting software for use by others for use in verifying the credibility of data provided by e-commerce customers in an online order....” See Tr. Ex. 29.
19. ArkOwl's business developed out of Mr. Daline's experience as a fraud prevention analyst with retail businesses. Hr'g. Trans. [#71] 2879-16.
20. ArkOwl is fairly characterized as an identity and verification service provider, and its main focus is Personally Identifiable Information (“PII”) verification and validation. Hr'g. Trans. [#71] 22:10-15. ArkOwl helps its customers verify PII, including email addresses, phone numbers, IP addresses, physical addresses, and personal name matches. Id. 22:21-23:8. More generally, ArkOwl is in the cybersecurity industry. Tr. Trans. [#92] 105:23-25.
21. ArkOwl provides a platform that allows its users to input PII for individuals. See, e.g., Tr. Trans. [#92] 24:23-25, 143:12-24, 145:19-25. ArkOwl's users can interact with its services via a user interface (UI) requiring a person to manually enter data. Id. ArkOwl's data output is used by customers to verify whether there is a fraud threat connected to those individuals or entities. Tr. Trans. [#92] 99:25-100:1. 22. ArkOwl has access to real-time surface web and other datasets and provides its customers over 80 data points designed to validate and verify identities. Those data points include such things as email age, creation date, social media information, webmail providers, domain name information, and “breach data” from a company named “Have I Been Pwnded?” Tr. Trans. [#92] 143:4-145:18. ArkOwl's offerings as to its data have expanded since 2012. It now offers phone number, IP, and postal data, and added an API, additional social checks, as well as breach data. Id. [#92] 142:23-143.11, 59:20-22; 47:24.[2]
23. Mr. Daline testified that he considers ArkOwl to be providing services in the “payments” sector. Tr. Trans. [#92] 105:20-25.
24. ArkOwl does not, and has never, accessed the dark web directly and does not directly provide dark web data or services to its customers. Hr'g. Trans. [#71] 37:1938:18. ArkOwl does provide breach data from Have I Been Pwnded?, which will say where the data was found, including the dark web. Id. Mr. Daline acknowledged, however, that breach data and dark web data are not the same. Id. at 37:19-24.
25. ArkOwl does not search the dark web, and ArkOwl's marketing materials do not promote any dark web specific services, other than the breach data from I Have Been Pwnded?. Hr'g Trans. [#71] 37:19-21, 40:18-20.
26. ArkOwl provides only raw data in connection with, for example, stopping the threat of a fraudulent purchase online and does not provide any analytical services or anything beyond the data if a fraud is...
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