March Madness Athletic Ass'n, L.L.C. v. Netfire

• Decision Date: 28 August 2003
• Docket Number: No. Civ.A. 3:00-CV-398-R.,Civ.A. 3:00-CV-398-R.
• Parties: MARCH MADNESS ATHLETIC ASSOCIATION, L.L.C., Plaintiff, v. NETFIRE, INC., and Sports Marketing International, Inc., Defendants, v. National Collegiate Athletic Association, and Illinois High Association, Counter-Defendants. v. Matthew Jones, Third Party Defendant.
• Court: U.S. District Court — Northern District of Texas

Page 786

310 F.Supp.2d 786

MARCH MADNESS ATHLETIC ASSOCIATION, L.L.C., Plaintiff, v. NETFIRE, INC., and Sports Marketing International, Inc., Defendants, v. National Collegiate Athletic Association, and Illinois High Association, Counter-Defendants. v. Matthew Jones, Third Party Defendant.

No. Civ.A. 3:00-CV-398-R.

United States District Court, N.D. Texas, Dallas Division.

August 28, 2003.

COPYRIGHT MATERIAL OMITTED

Douglas N. Masters, Bradley L. Cohn, Mark P. McKenna, Ram Padmanabhan, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Wayne F. Plaza, Rooks, Pitts & Poust, Chicago, IL, Theodore Stevenson, III, McKool Smith, J. Todd Key, Sullivan, Parker & Cook, Scott M. Kline, Hughes & Luce, Dallas, TX, for Plaintiff/Counter Defendant/Third Party Plaintiff.

R. Brent Cooper, Cooper & Scully, Adam Alexander, David, Goodman & Madole, Dallas, TX, for Defendant/Counter Claimant.

Jeffrey C. Mateer, Randal C. Shaffer, Mateer & Shaffer, Dallas, TX, for Counter Defendant.

R. Brent Cooper, Cooper & Scully, Adam Alexander, David, Goodman & Madole, Dallas, TX, for Third Party Defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

BUCHMEYER, District Judge.

This case concerns the trademark rights to the term 'march madness' and to the internet domain name 'www.marchmadness.com.' ("marchmadness.com") Plaintiff March Madness Athletic Association, L.L.C. ("MMAA") brings suit against Sports Marketing International, Inc. ("SMI"), Netfire, Inc. ("Netfire") and Matthew Jones (collectively, "Defendants") alleging cybersquatting, false representation, trademark infringement and unfair competition under the Lanham Act and state law, as well as civil conspiracy under state law. Defendants contend that march madness is a generic term, and that their acquisition and use of www.marchmadness.com was lawful.

This case was originally filed on February 22, 2000 by the Illinois High School Association ("IHSA"), which later amended its Complaint to add MMAA as a Plaintiff. Subsequently, IHSA withdrew from the case, leaving MMAA as the sole Plaintiff of record. On December 11, 2000, this Court denied a motion to dismiss SMI's counterclaims. On August 15, 2001, this Court denied motions for partial summary judgment on the genericness of march madness and on the cybersquatting claim, and granted summary judgment in favor of MMAA on Defendants' conversion counterclaim. March Madness Athletic Ass'n, L.L.C. v. Netfire, 162 F.Supp.2d 560 (N.D.Tex.2001). On June 4, 2002, this Court granted summary judgment in favor of MMAA on Defendants' remaining counterclaims of fraud, tortious interference, and civil conspiracy.¹

On October 7-15, 2002, this Court held a bench trial in this case.² At the trial, MMAA presented the claims of trademark infringement, and the National Collegiate Athletic Association ("NCAA") presented the claims of misrepresentation and conspiracy. Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, this Court now makes the following findings of fact and conclusions of law.

I. FINDINGS OF FACT

A. ACQUISITION OF MARCHMADNESS.COM

1. Dirk Brinkerhoff ("Dirk") and his brother Phil Brinkerhoff ("Phil") are businessmen who together had formed Sports Marketing International as well as a related entity, Inspark (collectively "SMI"). SMI's only current client is the Dallas Cowboys football team, for whom SMI sells television and radio advertising.

2. Matthew Jones ("Jones") is Phil's son-in-law. Jones had founded Netfire, an internet service provider and consulting firm. Netfire was originally a Utah corporation, but became a sole proprietorship when Jones moved to Dallas in late 1999 or early 2000. At all times relevant to this action, the actions of Netfire were controlled by Jones.

3. Sometime in late December 1995 (or early January 1996), Dirk met with Matthew Jones ("Jones") and discussed acquiring the domain name marchmadness.com as SMI was interested in developing a website focused on the NCAA Division I Men's Basketball Championship (the "NCAA Tournament"). Jones informed Dirk that the domain name was available. Dirk requested that Jones acquire marchmadness.com, and Jones agreed to do so.

4. Jones was experienced in the acquisition of domain names, having registered "hundreds" of them on behalf of his Netfire clients. When registering domain names, Jones did not inquire regarding any possible trademark concerns relating to a particular domain name. Instead, his practice was to simply check availability of the domain name. If a client sought a name and it was available from the domain name registrar, Jones registered it. As he testified, he would have registered mcdonalds.com, if a client had asked him to do so. The Court finds Jones' testimony regarding his practice of obtaining registrations without trademark investigation to be credible.

5. In early 1996 when Jones attempted to register Marchmadness.com on behalf of SMI, he learned that it was no longer available, having been registered by another party. Due to the unavailability of marchmadness.com, Netfire registered march-madness.com with the registrar, Network Solutions, Inc. ("NSI"). Jones then sought to acquire marchmadness.com from its registrant, Adam Stein ("Stein").

6. Stein was a recent college graduate who was running his own computer company, Insanely Great Software ("IGS"), of which he was the only employee. In late 1995, Stein had registered the domain name marchmadness.com, although at the time he did not have any particular plans for its use.

7. In early 1996, Netfire contacted Stein, and subsequently, on February 7, 1996, Netfire and IGS entered into an agreement transferring marchmadness.com to Netfire (the "Transfer Agreement").³ The Transfer Agreement provided for the transfer of marchmadness.com by IGS to Netfire in exchange for (1) a $25,000 advertising credit on Netfire websites, (2) the transfer of march-madness.com to IGS, and (3) a web link from marchmadness.com to march-madness.com.

8. Unfortunately, the record is rather scarce with respect to Netfire's contacts with Stein prior to the Transfer Agreement. Indeed, it was only in 2001, during his second deposition that Jones, when confronted with a copy of the Transfer Agreement, "remembered" that he had not registered marchmadness.com directly from NSI.⁴ At trial, Jones testified that he remembers nothing regarding Stein, other than that he entered into the Transfer Agreement with him, and that Jones was certain that it was either Jones or another employee of Netfire, Steve Jenkins ("Jenkins"), who had contacted Stein. Jones also testified that he never informed SMI that he had been unable to register marchmadness.com directly with NSI, or that he had subsequently purchased marchmadness.com from Stein. Dirk similarly testified that he was not informed of Jones' purchase from Stein. Jenkins did not testify and the parties have stipulated that he "does not recall speaking with or corresponding with Adam Stein and/or anyone with Insanely Great Software."⁵ The Court finds Jones' testimony regarding failure to inform Dirk to be credible; the Court also finds Dirk's denial of knowledge of the purchase by Jones to be credible, albeit less so.

9. Although Stein did not testify, excerpts from his deposition were read at trial. In his deposition, he stated that he entered into the Transfer Agreement, in part, because he was given the impression, based on at least one conversation with someone from Netfire, that Netfire was "definitely working together in some way" with the NCAA, and, therefore, had the legal right to the marchmadness.com domain.⁶ He stated that he "had no other information" than what he was told by Netfire, and that the offer from Netfire:

was somewhat of a carrot and stick. [Netfire was] willing to give a consideration to me, but at the same time they were the rightful owners, and it wasn't like I could say no, and it would be done with, that kind of thing.⁷

Thus, Stein was motivated to transfer marchmadness.com to Netfire, at least in part, by a belief, based on statements made by Netfire, that Netfire was affiliated with the NCAA.

10. Netfire has never been affiliated with the NCAA, and thus, any statements averring such a relationship were false.

11. There is no evidence contradicting Stein's recollection, as no one else admits to any recollection of the events in question. Accordingly, this Court concludes, by a preponderance of the evidence, that Netfire made false representations to Stein regarding an alleged relationship with the NCAA in order to obtain the marchmadness.com domain name. To the extent that Jones denied that he had ever represented himself as affiliated with the NCAA, this Court finds such denials to be without credibility.

12. Within a month after Stein had transferred marchmadness.com to Netfire, he was contacted by counsel for the NCAA regarding the domain name.⁸

B. USE OF MARCHMADNESS.COM

13. After the acquisition of marchmadness.com, Netfire began developing the content of the website. In developing the website content, Jones took directions primarily from Don Hall ("Hall"). Hall was the Vice-President for Sales of Inspark, and Inspark's only employee other than Dirk (who spent only about a quarter of his time working at Inspark). Hall managed the day to day administration of the site. Although Hall did not testify at trial, the parties have submitted his deposition transcript to this Court.

14. Hall carefully managed the day to day administration of the site, and gave detailed instructions to Jones on its content. For example, in a memo dated January 10, 1996, Hall provided a time line for the roll-out of features on the marchmadness.com website.⁹ The proposed time line precisely corresponded to events in the NCAA Tournament and covered the period from February 14 to May 15, 1996. Thus, for example, March 14-17 were the "1st & 2nd Rounds," March 21-24 were the "Regional Finals," and March 30-April 1 were the "Final Four." For...