The Coryn Group Ii LLC v. O.C. Seacrets Inc

Decision Date10 March 2011
Docket NumberCIVIL NO.: WDQ-08-2764
PartiesTHE CORYN GROUP II, LLC, Plaintiff, v. O.C. SEACRETS, INC., Defendant.
CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)
MEMORANDUM OPINION

The Coryn Group II, LLC appealed the Trademark Trial and Appeal Board's ("TTAB's") cancellation of its registered mark "SECRETS" for "resort hotel" services and denial of partial cancellation of O.C. Seacrets's ("O.C.") prior registration of its "SEACRETS" mark for "restaurant and bar" services. O.C. cross-appealed and sued Coryn II, the Coryn Group, Inc. and AMResorts, LLC (collectively "Coryn") for trademark infringement and unfair competition under the Lanham Act and Maryland common law. Pending are various pretrial motions. For the following reasons, Coryn's motions to exclude evidence of the TTAB decision and the testimony of Michael Noah will be granted. Coryn's motions to exclude the testimony of Robert Reitter and Leighton Moore will be denied, and decisions on its motions toexclude internet statistics and evidence of non-party revenues will be deferred until trial. O.C.'s motions will be denied.

I. Background

O.C., a Maryland corporation, owns and operates "Seacrets, " a Jamaican-themed "entertainment complex" in Ocean City, Maryland. Leighton Moore Dep. 83:10-98:8, Oct. 2, 2006. Seacrets advertises on local television and radio stations, its website, and "Irie Radio, " an Internet radio station that broadcasts from the complex. Leighton Moore Dep. 375:6-21; 381:6-471:19 Oct. 4, 2006. O.C.'s federally-registered trademark "SEACRETS" for restaurant and bar services was issued in October 1997. ECF No. 94, Ex. 3. O.C. has applied to register SEACRETS for motel services; the application has been suspended pending the outcome of this case. Id., Ex. 4. O.C. also owns the web domain name "seacrets.com." Id., Ex. 1.

Coryn owns and licenses trademarks for resort hotel services. Jeffery Mullen Dep. ¶ 72:10-12, June 21, 2005. AMResorts, LLC is one of many related entities owned by members of the Mullen family ("the AMR-Related Companies"). AMResorts, LLC manages the sales, marketing and administration of several resort hotels in Mexico and the Caribbean. Kevin Wojciehowski Decl. ¶ 4. The resorts operate under different brands, including "Secrets, " "Dreams, " "Zoetry, " and "Sunscape, " andtarget travelers from the United States, Canada, and Europe. Kevin Wojciehowski Dep. 55:17-56:2, 125:14-24, Sept. 30, 2009.

On June 22, 2000, Coryn filed an Intent-to-Use application with the U.S. Patent and Trademark Office ("PTO") for the mark "SECRETS" for "resort hotel" services. Mot. Summ. J., Ex. 17. On June 29, 2000, Coryn secured the web domain name "secretsresorts.com." ECF No. 94, Ex. 22. On March 21, 2001, the PTO issued a Notice of Publication of the SECRETS mark, and the mark was published for opposition on April 3, 2001. ECF No. 81, Ex. 18. The application was not opposed, and the PTO issued the registration to Coryn on October 7, 2003. Id., Ex. 20.

In 2002 or 2003, Leighton Moore, O.C.'s owner and president, had conversations with two patrons who mistakenly believed O.C. had opened a Seacrets in Mexico. Moore Oct. 2 Dep. 44:14-19; Leighton Moore Dep. 16:14-17:20, Sept. 17, 2009. Moore immediately called O.C.'s counsel, Barth X. deRosa, Esq., and instructed him to investigate the possibility of infringement. See Moore Sept. 17 Dep. 17:6-7.

On January 23, 2004, O.C. petitioned the TTAB for cancellation of the SECRETS mark, alleging that the parties' services were "closely related, if not identical" and that the use of the SECRETS mark injured Seacrets "since it ha[d] no control over the nature and quality of the services beingoffered in connection with [the] confusingly similar... mark [SECRETS]." Compl., Ex. A. Coryn counterclaimed for partial cancellation and restriction of the SEACRETS mark. Id.

On August 20, 2008, the TTAB granted O.C.'s cancellation petition, and denied Coryn's counterclaims for partial cancellation and restriction. Id. On October 20, 2008, Coryn II appealed the TTAB's decision. ECF No. 1. On December 12, 2008, O.C. cross-appealed, counterclaimed against Coryn II—and filed a third-party complaint against the Coryn Group and AMResorts, LLC—for trademark infringement and unfair competition under the Lanham Act and Maryland common law. ECF No. 18.

II. Analysis
A. Coryn's Motions
1. Coryn's Motion to Exclude the TTAB Decision

Coryn has moved to exclude the TTAB decision from evidence which may be presented to the jury because it is irrelevant and unfairly prejudicial. ECF No. 149. O.C. contends that because the TTAB "examined the likelihood of confusion issue thoroughly, " its "record and conclusions of fact will be of great assistance to the jury in deciding the question of infringement." ECF No. 151 at 5.

a. Rules 401 & 403

Relevant evidence is "evidence having any tendency to make the existence of any fact that is of consequence to determination of the action more probable or less probable than it would be without the evidence." Fed. R. Evid. 401. Evidence that is not relevant is not admissible. Fed. R. Evid. 402.

Relevant evidence "may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury." Fed. R. Evid. 403. Unfair prejudice is that which has an "undue tendency to suggest decision on an improper basis, commonly, though not necessarily, an emotional one." United States v. Queen, 132 F.3d 991, 994 (4th Cir. 1997). "A district court has wide discretion in admitting or excluding evidence under Rule 403." United States v. Kelly, 510 F.3d 433, 437 n.3 (4th Cir. 2007)(internal quotation marks omitted).

b. The TTAB Decision

The TTAB decision is relevant to several issues in this case. But, its relevance is limited because "the standards governing likelihood of confusion in registration, cancellation, or opposition proceedings before the TTAB... can be different than the likelihood of confusion standard applicable in trademark infringement actions in a district court." Levy v.Kosher Overseers Ass'n, 104 F.3d 38, 41 (2d Cir. 1997). Here, the TTAB did not apply all likelihood of confusion factors used by the Fourth Circuit.1

Further, introduction of the TTAB decision is likely to confuse the jury and encourage a decision on an improper basis. Admitting evidence of the decision will likely cause the jury "to deliberate on the correctness of the previous fact finding, rather than retaining the open-minded, first impression approach to the issues our system prefers." Rambus, Inc. v. InfineonTechs. AG, 222 F.R.D. 101, 110 (E.D. Va. 2004). The jury is likely to give undue weight to the TTAB's findings, undermining its ability to reach its own determinations of the issues.2 The decision's probative value is "substantially outweighed" by the danger of unfair prejudice and confusion. Coryn's motion to exclude evidence of the TTAB decision will be granted.

2. Coryn's Motion to Exclude Internet Statistics

Coryn has moved to exclude certain internet statistics ("Web Stats") from evidence. ECF No. 174. Coryn argues that the Web Stats are not proper evidence of actual confusion, and should be excluded as irrelevant. Id. at 5. Alternatively, Coryn argues that the Web Stats are hearsay. Id.

a. Relevance of the Web Stats

One element of a trademark infringement claim requires the plaintiff to show "that the defendant used the mark in a manner likely to confuse consumers." People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, (4th Cir. 2001)(guoting 15 U.S.C. §§ 1114, 1125(a). The likelihood of confusion is analyzed under a multi-factor test, the seventh factor of which "asks whether there has been actual confusion, that is, reported instances of individuals who have actually become confused about the source of the services because of the similarities between the parties' trademarks."3 Misspellings may show actual confusion when their context demonstrates that "the source or sponsorship of the two marks is confused."4

The Web Stats state that about five percent of web users locate O.C.'s website by searching for "Secrets" or "Secrets Ocean City" instead of "Seacrets." ECF No. 174, Ex. 2. As Gary Figgs, O.C.'s chief financial officer, admitted in his deposition, O.C. has no knowledge of whether these users "had ever heard of the SECRETS Resorts located in Mexico or the Caribbean." Gary Figgs Dep. 28:14-20, Sept. 9, 2009. The Web Stats do not evidence actual confusion about the source or sponsorship of the parties' goods; rather, the Web Stats onlyshow that some web users are confused about how to spell O.C.'s name.

Alternatively, O.C. argues that the Web Stats are relevant to the similarity of the marks.5 Evidence that a different spelling does not "significantly change the meaning, pronunciation, [or] appearance" of a mark is relevant to this factor. In re Cooper Crouse-Hings GmbH, 2009 WL 1741921, at *3 (TTAB June 12, 2009). The Web Stats tend to show that the terms "Secrets" and "Seacrets" are not dissimilar to some consumers, which is relevant to the overall similarity between the parties' marks and the potential for confusion. See id. ("NEXT" and "NEXXT" were not dissimilar because "[m]any, if not most consumers, would pronounce NEXT and NEXXT identically and they would likewise believe that the words would have the same meaning"). The Web Stats will not be excluded as irrelevant.

b. Hearsay

Coryn argues that if relevant, the Web Stats are hearsay, and are not within an exception to the hearsay rule. O.C. doesnot contest that the Web Stats are hearsay, but contends that they are admissible under Rule 803(6).

Generally, "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted" is inadmissible as hearsay. Fed. R. Evid. 801(c). There are numerous exceptions.

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