Connor Sport Court International, Inc. v. Rhino Sports, Inc., et al Doc.

1 FENNEMORE CRAIG, P.C.

John D. Everroad (No. 002484)
2 Ray K. Harris (No. 007408)
Jamie A. Brown (No. 022830)
3 3003 North Central Avenue
Suite 2600
4 Phoenix, Arizona 85012-2913
Telephone: (602) 916-5000
5 Email: jeverroa@fclaw.com
Email: rharris@fclaw.com
6 Email: jbrown@fclaw.com
7 Attorneys for Plaintiffs
Rhino Sports, Inc. and John E. Shaffer
8
9 UNITED STATES DISTRICT COURT
10 DISTRICT OF ARIZONA
11 Rhino Sports, Inc., an Arizona No. CV-02-1815-PHX- JAT
corporation; and John E. Shaffer,
12 individually, MOTION TO MODIFY PERMANENT
INJUNCTION
13 Plaintiffs/Counterdefendants,
14 v.
15 Sport Court, Inc. a Delaware
corporation,
16
Defendant/Counterclaimant.
17
18 Rhino Sports, Inc. moves to dissolve or modify the Permanent Injunction entered

19 on March 23, 2004 pursuant to Fed. R. Civ. P. 60(b). The parties’ Settlement Agreement

20 contemplated both entry of the permanent injunction and the right to use SPORT COURT

21 if it is generic and used by other competitors. Settlement Agreement ¶ 2 (Contempt

22 Motion, Ex. B). Due to changes in the applicable law and the pertinent facts, the scope of

23 the injunction is no longer equitable.

24 Background

25 Connor Sport Court is successor-in-interest to Sport Court, Inc. Connor Sport

26 Court (“Sport Court”) and Rhino Sports, Inc. (“Rhino”) are competitors in the sale of
FENNEMORE CRAIG , P.C.
P HOENIX

Case 2:06-cv-03066-JAT Document 9 Filed 02/05/2007 Page 1 of 6

Dockets.Justia.com
 1 recreational athletic surfaces for residential users. Both Rhino and Sport Court sell
2 surfaces for basketball, volleyball, sport courts and tennis courts.
3 Pursuant to a March 2004 Settlement Agreement, this Court entered a permanent
4 injunction prohibiting Rhino from using the mark “SPORT COURT” as a sponsored link.
5 I. Legal Analysis
6 A. Sport Court has unclean hands
7 The Court has the power to modify an injunction due to changed conditions. See,
8 e.g., Coca-Cola Co. v. Standard Bottling Co., 138 F.2d 788, 789 (10th Cir. 1943). A party
9 can obtain relief from a final judgment “if it is no longer equitable that the judgment
10 should have perspective application.” Fed. R. Civ. P. 60(b). Attached as Exhibit 1 is a
11 Google search for “rhinosports” which shows as a sponsored link www.sportcrt.com in
12 Northern California. Sport Court asserts Rhino and its distributors are using SPORT
13 COURT as Ad Words. However, Sport Court or its distributor is engaged in the same
14 type of conduct to which it objects in this Court.
15 B. Google Ad Words do not cause confusion
16 In additional to search results generated by user entry of search terms, the Google
17 search engine presents a separate list of websites in a sponsored links section. Sponsored
18 links are generated by key word triggered advertising called the Ad Words Program.
19 Participants pay Google for the right to have links to their websites displayed when a user
20 searches for certain key words. Since the permanent injunction was entered, the United
21 States District Court for the Eastern District of Pennsylvania has held:
22 Assuming that defendant did in fact use plaintiff’s marks
through Google’s Ad Word Program or in the key word
23 metatags for its website – as a matter of law defendant’s
actions do not result in any actionable likelihood of confusion
24 under the Lanham Act.
25 ***
26
FENNEMORE CRAIG , P.C.
P HOENIX

Case 2:06-cv-03066-JAT Document 9 - 2 Filed

- 02/05/2007 Page 2 of 6
 1 Due to the separate and distinct nature of the links created on
any of the search results pages in question, potential
2 consumers have no opportunity to confuse defendant’s
services, goods, advertisements, links or websites for those of
3 plaintiff.
4 J.G. Wentworth, S.S.C. Limited Partnership v. Settlement Funding LLC, 2007 WL 30115

5 (E.D.Pa. January 4, 2007).

6 C. Ad Words are not used as trademarks

7 Other courts have found that internal use as an advertising key word does not

8 constitute trademark use as a matter of law. In RescueCom Corp. v. Google, Inc., 456 F.

9 Supp. 2d 393 (N.D.N.Y. 2006) the court held:

10 Defendant’s internal use of plaintiff’s trademark to trigger

11 sponsored links is not a use of a trademark within the meaning
of the Lanham Act, either, because there is no allegation that
12 defendant places plaintiff’s trademark on any goods,
containers, displays or advertisements, or that its internal use
13
is visible to the public.
14
15 456 F. Supp. at 403; See also Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 431

16 F. Supp. 2d 425, 427 (S.D.N.Y. 2006) (“This internal use of the mark ‘Zocor’ as a key

17 word to trigger the display of sponsored links is not the use of the mark in a trademark

18 sense; rather, this use is more akin to the product placement marketing strategy employed

19 in retail stores, where, for example, a drug store places its generic products alongside

20 similar national brand products to capitalize on the latter’s name recognition.”)

21 D. No court has found liability for Ad Words

22 These cases recognize that the case law is developing as applied to Ad Words and

23 other courts have declined to dismiss claims until the facts are further developed. See,

24 e.g., Buying for the Home, LLC v. Humble Abode, LLC, 2006 WL 3000459 (D.N.J. Oct.

25 20, 2006) (denying summary judgment); Rescuecom Corp. v. Computer Troubleshooters

26 USA, Inc., 2005 WL 4908692 (N.D.Ga. Sept. 16, 2005) (denying motion to dismiss);

FENNEMORE CRAIG , P.C.

P HOENIX

Case 2:06-cv-03066-JAT Document 9 - 3 Filed

- 02/05/2007 Page 3 of 6
 1 Google, Inc. v. Am. Blind & Wallpaper Factory, Inc., 2005 WL 832398 (N.D. Cal. March
2 30, 2005) (denying motion to dismiss); Edina Realty, Inc. v. TheMLSOnline.com, 2006
3 WL 737064 (D. Minn. March 20, 2006) (denying motion for summary judgment). In
4 GEICO v. Google, Inc., the trademark claim was dismissed at trial on judgment as a
5 matter of law due to lack of confusion. 330 F. Supp. 2d 700 (E.D.Va. 2004) and 2005
6 WL 1903128 (E.D.Va. Aug. 8, 2005). No case dealing with Google Ad Words appears to
7 have found trademark liability.
8 E. Other Competitors Use Sport Court as Ad Words
9 Attached as Exhibits 2-5 are recent Google Ad Word searches for “Sport Court,”
10 “Sports Courts,” “Sport Courts,” and “Sports Court.” Rhino does not appear on any of the
11 four searches. Sport Court International appears as the first unsponsored result on each
12 search and as the first sponsored link for “SPORTS COURT.” Sport Court of California,
13 a Sport Court distributor, appears as a sponsored link on two of the searches. Versa
14 Court, a competitor, appears as a sponsored link on two of the searches. Snap Sports,
15 another competitor, appears as a sponsored link on three of the searches. Game Courts,
16 yet another competitor, appears as a sponsored link on two of the searches. Other
17 competitors, including LewisSurface.com, CentaurFloors.com and
18 BasketballHoopsUnlimited.com appear as a sponsored link in one of the searches. The
19 effect of the injunction, as interpreted by Movant, is to prevent only Rhino from using the
20 words Sport and Court as Ad Words on Google. This results in an unfair disadvantage to
21 Rhino that did not exist at the time the injunction was entered.
22 The parties contemplated that the obligations under the Settlement Agreement
23 would be measured by the use permitted by other competitors.
24 If at some future point in time any Sport Court mark is found
to be generic, and all appeals are exhausted or waived, Rhino
25 Sports shall have the right to use such mark in the marketplace
consistent with the use permitted by other competitors.
26
FENNEMORE CRAIG , P.C.
P HOENIX

Case 2:06-cv-03066-JAT Document 9 - 4 Filed

- 02/05/2007 Page 4 of 6
 1 Settlement Agreement ¶ 2 (Motion for Order to Show Cause Ex. 3). Although no formal
2 adjudication has occurred, Connor Sports Court has permitted competitors to use Sport
3 Court as Ad Words and the case law has developed to reflect that such use does not
4 infringe the rights of Connor Sport Court.
5 CONCLUSION
6 Based on the changes in the underlying facts (Sport Court distributors are using the
7 RHINOSPORTS marks as ad words) and law (district courts have held use of ad words is
8 not a trademark use and does not lead to confusion as a matter of law), the Court should
9 modify the injunction to eliminate the prohibition on use of the words “SPORT COURT”
10 as Google ad words.
11 RESPECTFULLY SUBMITTED this 5th day of February, 2007.
12 FENNEMORE CRAIG, P.C.
13
14 By /s/Jamie A. Brown
Ray K. Harris
15 John D. Everroad
Jamie A. Brown
16 Attorneys for Plaintiffs
Rhino Sports, Inc. and John E. Shaffer
17
18
19
20
21
22
23
24
25
26
FENNEMORE CRAIG , P.C.
P HOENIX

Case 2:06-cv-03066-JAT Document 9 - 5 Filed

- 02/05/2007 Page 5 of 6
 1 CERTIFICATE OF SERVICE
2 I hereby certify that on February 5th , 2007, I electronically transmitted the
attached document to the Clerk Office using the CM/ECF System for filing and
3 transmittal of a Notice of Electronic Filing to the following CM/EMF registrants:
4 Douglas F Behm: dbehm@jsslaw.com, dchristiansen@jsslaw.com
5
I hereby certify that on February 6th , 2007, a true and correct copy of the attached
6 document was sent via U.S. Mail, postage paid thereon, to the following parties, at the
addresses listed:
7
Mark M Bettilyon
8 Ray Quinney & Nebeker
PO Box 45385
9 Salt Lake City, UT 84145-0385

10 Gordon K Hill
Thorpe North & Western LLP
11 8180 S 700 E
Ste 350
12 Sandy, UT 84070

13 Samuel C Straight
Ray Quinney & Nebeker PC
14 36 S State St
Ste 1400
15 Salt Lake City, UT 84145-0385

16 Peter M de Jonge
Thorpe North & Western LLP
17 PO Box 1219
Sandy, UT 84091-1219
18
19
20 /s/Michele A. Maul
PHX/1877637.3
21
22
23
24
25
26
FENNEMORE CRAIG , P.C.
P HOENIX

Case 2:06-cv-03066-JAT Document 9 - 6 Filed

- 02/05/2007 Page 6 of 6