Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_02-cv-01815/USCOURTS-azd-2_02-cv-01815-1/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Rhino Sports, Inc., an Arizona

corporation; and John E. Shaffer,

individually, 

Plaintiffs/Counterdefendants, 

v.

Sport Court, Inc., a Delaware

corporation, 

Defendant/Counterclaimant. 

Connor Sport Court International, Inc., a

California corporation,

Plaintiff,

vs.

Rhino Sports, Inc., an Arizona

Corporation, John E. Shaffer, individually,

Defendants. _________________________________

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CV-02-1815-PHX-JAT (Lead)

CV-06-3066-PHX-JAT (Cons)

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

Pending before the Court is Defendant/Counterclaimant Sport Court, Inc.'s Motion for

an Order to Show Cause Why Rhino Sports, Inc. and John E. Shaffer Should Not be Held in

Contempt of Court, to Enforce the Injunction, and for Sanctions (Doc. # 102). Also pending

is Rhino Sports, Inc., and John E. Shaffer's Motion to Modify Permanent Injunction (Doc.

Case 2:02-cv-01815-JAT Document 161 Filed 05/03/07 Page 1 of 16
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 1Rhino Sports, Inc., and John E. Shaffer filed an identical Motion to Modify

Permanent Injunction (Doc. # 9) in the consolidated matter, CV 06-3066-PHX-JAT. 

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# 106).1 The Court held a hearing on the Motions on April 17, 2007. Based on the parties'

briefs, the evidence and arguments presented at the hearing, and the record as a whole, the

Court now rules on the motions. 

I. Background and Procedural History

Connor Sport Court International, Inc., the successor-in-interest to Sport Court, Inc.

(hereinafter "Sport Court") and Rhino Sports, Inc. are involved in the recreational flooring

business. Both companies employ distributor/dealer networks to promote and sell products

directly to the consumer. Also, both companies promote their goods and services on the

Internet. 

On September 16, 2002, after receiving a cease and desist letter from Sport Court,

Rhino Sports and John E. Shaffer, president of Rhino Sports, Inc. (hereinafter collectively

referred to as "Rhino Sports"), filed a declaratory action in the District of Arizona seeking

a declaration that they did not violate any of Sport Court’s trademarks or other rights and that

the SPORT COURT mark is generic, and an order that all registrations for such mark be

canceled. Sport Court responded with a counterclaim for trademark infringement, dilution,

unfair competition, and related claims concerning Rhino Sport's use of the trademark SPORT

COURT and confusingly similar marks and terms. On December 3, 2002, Sport Court filed

a motion for a preliminary injunction against Rhino Sport. The Court granted the preliminary

injunction and the parties subsequently negotiated and consented to a Settlement Agreement

and Mutual Release of Claims. Pursuant to the Settlement Agreement, the parties submitted

to the Court a joint motion and stipulation to a permanent injunction, as well as a stipulation

of dismissal with prejudice. 

In relevant part, the Permanent Injunction Order provided that:

Rhino Sports, Inc., and John E. Shaffer, and their respective

agents, servants, employees, attorneys, and other persons in

Case 2:02-cv-01815-JAT Document 161 Filed 05/03/07 Page 2 of 16
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active concert or participation with them, are permanently

enjoined from directly or indirectly using in commerce the mark

SPORT COURT, or any words, marks, or phrases confusingly

similar thereto either alone or in combination with other words,

marks, or phrases, and including any plural forms, in any style,

form, or media whatsoever, including, but not limited to, on or

in connection with the Internet, such as in an Internet domain

name, as a sponsored link, in connection with an Internet web

page, or as HTML code for an Internet website in any manner,

such as the title or keyword portions of a metatag, or otherwise.

The current dispute focuses on Sport Court's allegation that Rhino Sports website,

www.rhinocourts.com, has appeared as a "sponsored link" in response to a search for the

term "sport court," without quotations, in the Google search engine. On December 21, 2006,

Sport Court filed a petition to reopen the case and filed a new Complaint based on alleged

violations of the permanent injunction. On January 18, 2007, Sport Court filed its Motion

for an Order to Show Cause Why Rhino Sports and Shaffer Should Not be Held in Contempt

of Court, to Enforce the Injunction, and for Sanctions. Sport Court seeks attorney's fees and

costs, disgorgement of profits, an added term in the injunction mandating a fine of $5,000

per day of noncompliance, and criminal sanctions.

On February 5, 2007, Rhino Sports filed a motion to modify the permanent injunction

on the grounds that the law and/or facts with regard to purchase of trademarked terms in

sponsored advertising services has changed or is changing such that the Injunction should

be modified. Rhino Sports seeks a modification that will permit the purchase of the words

"Sport Court" (i.e., next to each other) as keywords in Google's AdWords program and other

similar services. 

II. Findings of Facts

The Court finds that the following facts have been established in regard to the motions

pending before the Court:

1. A Google Search of the terms "sport" and "court" (next to each other and not in

quotes), performed on December 20, 2006, resulted in the display of a sponsored link for

Rhino Courts which contained the following text:

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Rhino Courts Flooring.

www.RhinoCourts.com Custom design the backyard court

today for the name you can trust!

The text of the resulting link did not contain any use of the SPORT COURT mark

whatsoever. 

2. Rhino Sport has employed Cybermark International, Inc. ("Cybermark"), located

in Scottsdale, Arizona, as its web and search engine optimization company. Cybermark

helps companies rank high on Internet search engines, such as Google, for certain keywords,

so that their prospective customers can find them on the web. Cybermark's web marketing

and optimization services sometimes include the purchase of certain keywords. Cybermark

made purchases of, at least, the keywords "courts" and "basketball courts" in the Google

AdWords program. 

3. Upon entry of the Injunction, Rhino Sports advised its employees, distributor

network, and other third parties, including Cybermark, of the permanent injunction;

instructed them not to use the SPORT COURT mark or variations thereof; and that, to the

extent any such uses occurred, they were contrary to Rhino Sports' instructions. Rhino

Sports also, at various times, reiterated to Cybermark the need to comply with the permanent

injunction. Cybermark was aware of the permanent injunction and its terms. Additionally,

upon learning of any such prohibited uses, Rhino Sports took reasonable steps in each

instance to instruct the violating parties to cease such use. 

 4. Upon receipt of Sport Court's December 2006 complaint, Rhino Sports inquired

of Cybermark as to whether it was targeting the SPORT COURT mark or variations thereof

as a keyword, and reasserted that such use should not be made. On January 2, 2007,

Cybermark advised Rhino Sports that it was not doing so. At that time, Cybermark

acknowledged purchasing the word "courts" as a keyword.

5. Google operates an Internet search engine, which allows Internet users to locate

Web sites that match the "keywords" they enter. In response to a search, Google provides

a list of links to relevant Web sites ("organic results"). In addition, Google offers a keywordCase 2:02-cv-01815-JAT Document 161 Filed 05/03/07 Page 4 of 16
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triggered advertising program called "AdWords." AdWords enables advertisers to purchase

or bid on certain keywords. When an Internet user enters those keywords in Google's search

engine, the program search will yield both "Sponsored" and organic results. The

"Sponsored" results appear at the top and on the margins of Google's search-results pages in

areas clearly labeled as "Sponsored Links." Keyword matching services, such as AdWords,

allow a purchaser some control as to how precise a user's search must be to trigger its ad

within the sponsored results. Google's AdWords program provides a variety of matching

options that can apply to keywords that are purchased. These options include Broad

Matching, Phrase Matching, Exact Matching, Negative Matching, and Embedded Matching.

Broad Matching is the default setting for keywords that are purchased through the AdWords

program. When a keyword uses the broad match service, it may trigger the purchaser's ad

to be displayed as a sponsored link when that keyword or terms similar to the keyword

appear in a user's query. For example, if the keyword purchased is "courts," and the keyword

is broad matched, the purchaser's ad could appear when users enter "basketball court,"

"federal court," "court flooring," or even "sport court" (with or without quotation marks). 

The embedded match service is a sophisticated form of keyword matching that allows

a keyword purchaser to prevent their ad from appearing in relation to a certain phrase or

other exact matches. For example, if the keyword "courts" were purchased, the purchaser

could utilize the broad match service and embedded match service together. This would

allow the purchaser the benefits of the broad match program while also allowing the

purchaser to prevent its ad from appearing when a user queries a specified exact phrase or

term. For example, if the purchaser of "courts" excludes "SPORT COURT" (with or without

quotation marks) in its Google AdWords profile, a query for "SPORT COURT" (with or

without quotation marks) will not result in the purchasers ad appearing as a sponsored link.

6. By default, Google only returns pages, in its organic search results, that include all

of a user's entered search terms. There is no need to include an "and" between terms. If a

user searches for "sport court" (without quotation marks), then Google does a search for

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websites containing the terms "sport" and "court." However, if a user seeks to only search

for websites with a specific phrase such as "sport court" (with quotation marks), then

quotation marks can be used to exclude Web sites that do not have those terms together. 

7. A current Google search of the term "sport court" (next to each other, with or

without quotes) could yield Rhino Sports' sponsored ad or the "www.RhinoCourts.com" web

site address as a sponsored link result even if Rhino Sports is not purchasing the mark

SPORT COURT or variations thereof. There are a number of reasons why the sponsored ad

or its web site address might appear as a sponsored link for the term "sport court" even

though Rhino Sports may not be currently purchasing any forms of this term in the Google

Adwords program, including any plural variation thereof. The reasons are attributable to the

nature of Google's broad match service and algorithms, over which Rhino Sports has limited

control.

 8. According to Google, the term "sport court" is a relevant variation of the keyword

"basketball court." As confirmed by Google, the fact that a party purchases a keyword does

not guarantee that it will appear as a sponsored link when searching that keyword.

Conversely, the fact that a party does not purchase a keyword does not guarantee that it will

not appear as a sponsored link for a search containing that word. Whether a party appears

as a sponsor depends upon a variety of factors, including the frequency with which the search

term is used by consumers, the amount paid for and type of sponsorship, and the results of

Google's expanded broad match search. Because these factors may change, a party can

appear as a sponsor link one day and not appear the next day, or even appear for terms that

were never purchased. 

9. In April 2004, following the Court's entry of the permanent injunction, Google

informed its customers of internal policy changes to the use and sale of keywords in its

AdWords program. Specifically, Google began to allow U.S. and Canadian advertisers to

bid on any keyword, including trademarked terms. Previously, Google had granted requests

from advertisers to bar competitors from bidding on their trademarks. Google's policy shift

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indicates that it will only review trademark complaints that relate to text appearing in

sponsored listings on its Web site and those of its partners. Accordingly, Google's trademark

complaint policy now provides:

When we receive a complaint from a trademark owner, we only

investigate the use of the trademark in ad text. If the advertiser

is using the trademark in ad text, we will require the advertiser

to remove the trademark and prevent them from using it in ad

text in the future. Please note that we will not disable keywords

in response to a trademark complaint.

10. Recent Google searches performed for "Sport Court," "Sports Courts," "Sport

Courts," and "Sports Court" (all next to each other and not in quotes) have resulted in the

display of sponsored links for Versa Court, Snap Sports, Game Courts, LewisSurface.com,

CentaurFloors.com and BasketballHoopsUnlimited.com, all of which are competitors of

Rhino Sports and Sport Court. However, there is no evidence to indicate that any of the

competitors sponsored ad appearances were the result of keyword purchases of the mark

SPORT COURT or confusingly similar variations.

III. Conclusions of Law and Analysis

A. Contempt

1. Legal Standard 

In the present context, civil contempt refers to a "party's disobedience to a specific and

definite order by failure to take all reasonable steps within the party's power to comply." In

re Dual-Deck Video Cassette Recorder Antitrust Litigation, 10 F.3d 693, 695 (9th Cir. 1993).

The standard for finding a party in civil contempt in the Ninth Circuit is well established:

"[t]he moving party has the burden of showing by clear and convincing evidence that the

contemnors violated a specific and definite order of the court. The burden then shifts to the

contemnors to demonstrate why they were unable to comply." FTC v. Affordable Media,

LLC., 179 F.3d 1228, 1239 (9th Cir. 1999) (citations omitted). "[A] person should not be

held in contempt if his action appears to be based on a good faith and reasonable

interpretation of the [court’s order]." In re Dual-Deck Video Cassette Recorder Antitrust

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 2Hypertext Markup Language ("HTML") is the code used to create web page

content. See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174

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Litigation, 10 F.3d at 695 (quotations omitted; brackets in orig.). Additionally, "[s]ubstantial

compliance with the court order is a defense to civil contempt, and is not vitiated by a few

technical violations where every reasonable effort has been made to comply." Id. (quotations

omitted). 

The basic issue is whether Rhino Sports violated the permanent injunction beyond

substantial compliance when Rhino Sports broad matched keywords using Google's

AdWords program that led to its sponsored link appearing when the term "Sport Court"

(without quotations marks) was queried. At issue is not whether Rhino Sports' current

activities infringe Sport Court's trademark, but whether Rhino Sports substantially violated

the permanent injunction. Although, Sport Court is not required to muster all of the evidence

it would need to make out an original case of infringement in order to prove contempt, it is

required to muster clear and convincing evidence to indicate that Rhino Sports violated the

permanent injunction beyond substantial compliance, and that the violation was not based

on a good faith and reasonable interpretation of the order. See, e.g., Wolfard Glass Blowing

Co. v. Vanbragt, 118 F.3d 1320, 1322 (9th Cir. 1997). 

2. Sport Court Has Failed to Show by Clear and Convincing Evidence

that Rhino Sports Substantially Violated the Permanent Injunction

The permanent injunction enjoined Rhino Sports from using the mark "SPORT

COURT" or any confusingly similar words, marks or phrases "on or in connection with the

Internet, such as in an Internet domain name, as a sponsored link, in connection with an

Internet web page, or as HTML code for an Internet website in any manner, such as the title

or keyword portions of a metatag, or otherwise." Sport Court has presented no evidence that

Rhino Sports has used SPORT COURT or any variation thereof in any Internet advertising

text, as an Internet domain name, on its web site, or on any of its web pages as HTML code

or as a metatag.2

 Based upon the lack of evidence of these types of violations, the Court is

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F.3d 1036, 1044 (9th Cir. 1999). Metatags are HTML code not visible to web users, but

used by search engines in determining which sites correspond to the search keywords

entered by a web user. Id. at 1061 n. 23.

 3

Use, as set forth in the Lanham Act, is the same use that is at issue in the

permanent injunction. A proper understanding of "use in commerce" as defined by the

Lanham Act will assist in a proper interpretation of the permanent injunction. 

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left to decide the motion for contempt based upon the narrow issue of sponsored link

prohibitions within the permanent injunction. 

With regard to keyword purchasing, the permanent injunction serves as no bar to

Rhino Sports' use of any generic terms such as "courts" or "basketball court." Sport Court

cites no legal authority establishing that a consumer's use of certain search terms in a Google

or other web search, that generates a sponsored ad link which reflects no use of the mark at

issue in terms of keyword use, metatag use or ad text use, constitutes use of a mark under the

Lanham Act.3

 Indeed, the case law cited by Sport Court involves some actual use of the

mark at issue, either as a keyword, in a metatag, or in the ad text itself—something that has

not been established here. To establish trademark infringement under the Lanham Act, the

plaintiff must establish a defendant’s "use in commerce" of the mark. 15 U.S.C. § 1114(1).

The Lanham Act provides definitions of "use in commerce" applicable to goods and services,

to wit: 

a mark shall be deemed to be in use in commerce (1) on goods when (A) it is

placed in any manner on the goods or their containers or the displays

associated therewith or on the tags or labels affixed thereto, or if the nature of

the goods makes such placement impracticable, then on documents associated

with the goods or their sale, and (B) the goods are sold or transported in

commerce, and (2) on services when it is used or displayed in the sale or

advertising of services and the services are rendered in commerce . . . 

15 U.S.C. § 1127. 

Sport Court has not established by clear and convincing evidence any use by Rhino

Sports of the SPORT COURT mark, or variations thereof, as contemplated by the permanent

injunction when Rhino Sports purchased the terms "courts" and "basketball court." The

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Court concludes that a contrary interpretation of the permanent injunction would not be

reasonable because it would preclude Rhino Sports from using these generic terms as

keywords. See America Online, Inc. v. AT & T Corp., 243 F.3d 812, 823 (4th Cir 2001)

("functional use of words within the heartland of their ordinary meaning cannot give rise to

a trademark").

With regard to the purchase of the SPORT COURT mark or variations thereof, the

Court holds that Sport Court has not carried its burden of proving by clear and convincing

evidence that Rhino Sports or Cybermark purchased the SPORT COURT mark or any

variations thereof, including plurals. Given this holding, the issue of whether Cybermark is

an agent of Rhino Sports need not be addressed by the Court. 

Finally, Rhino Sports has shown that it made reasonable efforts to ensure compliance

with the permanent injunction. Rhino Sports instructed Cybermark and other third parties

not to use or target the SPORT COURT mark or any variations thereof upon the entry of the

permanent injunction. Considering the foregoing, the Court concludes that Sport Court has

failed to meet its burden of showing by clear and convincing evidence that Rhino Sports

violated the permanent injunction beyond substantial compliance or that the violation was

not based on a good faith and reasonable interpretation of the order. Wolfard Glass Blowing

Co., 118 F.3d at 1322. Therefore, it is the holding of the Court that Rhino Sports is not in

contempt of court.

B. Modification of the Injunction

1. Legal Standard

Rhino Sports moves the Court to modify the permanent injunction by eliminating the

prohibition on use of the words "SPORT COURT" or variations thereof as Google AdWords.

According the Federal Rules of Civil Procedure "on motion and upon such terms as are just,

the court may relieve a party or a party's legal representative from a final judgment, order,

or proceeding . . . if it is no longer equitable that the judgment should have prospective

application." Fed. R. Civ. P. 60(b)(5). In order to obtain modification of the permanent

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injunction under Rule 60(b)(5), Rhino Sports:

must satisfy the initial burden of showing a significant change

either in factual conditions or in the law warranting modification

of the decree. The district court must then determine whether

the proposed modification is suitably tailored to resolve the

problems created by the changed factual or legal conditions. . .

. [Movant] must additionally show that the changed conditions

make compliance with the consent decree more onerous,

unworkable, or detrimental to the public interest. A court

should not ordinarily modify a decree, however, where a party

relies upon events that actually were anticipated at the time it

entered into a decree. 

United States v. Asarco, 430 F.3d 972, 979 (9th Cir. 2005) (citing Rufo v. Inmates of Suffolk

County Jail, 502 U.S. 367, 384-85, 391 (1992)) (other citations and quotations omitted); see

also Bellevue Manor Assocs. v. U.S., 165 F.3d 1249, 1252-53 (9th Cir. 1999) (discussing

standard and noting applicability of standard to judgment concerning copyright and

trademark rights). Acting in equity, the district court is vested with broad discretionary

power, and "must take all the circumstances into account in determining whether to modify

or vacate a prior injunction or consent decree." Bellevue Manor Assoc. v. United States, 165

F.3d 1249, 1256 (9th Cir. 1999). 

Here, the parties stipulated to the permanent injunction; therefore, even less basis

exists to disrupt such an order to which all parties agreed. See Bellevue, 165 F.3d at 1253

n.4. Moreover, the issue of sponsored link advertising was actually anticipated at the time

the permanent injunction issued, which also weighs against modification.

2. There Has Been No Significant Change in Law to Warrant 

Modification

Rhino Sports argues that the law has changed concerning Google AdWords

advertising because: (1) AdWords do not cause consumer confusion; (2) AdWords are not

a trademark use; and (3) no court has found trademark infringement liability for use of

AdWords.

Elaborating, Rhino Sports argues that since entry of the permanent injunction, a

number of courts have addressed the issue of trademark keyword purchase and initial interest

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 4J.G. Wentworth, S.S.C. Limited Partnership v. Settlement Funding LLC, 2007

WL 30115, Civ. No. 06-0597 at *7-8 (E.D.Pa. January 4, 2007); GEICO v. Google, Inc.,

2005 WL 1903128, Civ. No. 1:04CV507 *7, 77 U.S.P.Q.2d 1841 (E.D. Va. August 8,

2005).

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confusion4 and held that as a matter of law "use [of] plaintiff's marks through Google’s Ad

Word Program or in the key word metatags for its website . . . . do[es] not result in any

actionable likelihood of confusion under the Lanham Act." J.G. Wentworth, S.S.C. Limited

Partnership v. Settlement Funding LLC, 2007 WL 30115, Civ. No. 06-0597 at *6 (E.D.Pa.

January 4, 2007). In finding no actionable confusion—initial interest or otherwise—the J.G.

Wentworth court reasoned that "[d]ue to the separate and distinct nature of the links created

on any of the search results pages in question, potential consumers have no opportunity to

confuse defendant's services, goods, advertisements, links or websites for those of plaintiff."

Id. at *8. 

 However, the most relevant Ninth Circuit decisions of Brookfield Communications

Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir. 1999) and Playboy

Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir.2004) indicate

that, within the Ninth Circuit, there has not been a significant change in the law with respect

to initial interest confusion. In Playboy Enterprises, the most recent case on point, the

defendants used various lists of terms to which they keyed advertiser's banner ads. "Playboy"

and "playmate" were among the terms to which the banner ads were keyed. 354 F.3d at

1023. Notably, the banner ads to which the terms were keyed were unlabeled with any

source-indicia. The court noted that "we are not addressing a situation in which a banner

advertisement clearly identifies its source with its sponsor's name," which, in the Ninth

Circuit's view, "might eliminate the likelihood of initial interest confusion . . .." Id. at 1030,

n. 43. In light of this precedent, the Court notes that there remains the possibility that initial

interest confusion still may result in this type of case. The Playboy holding does not indicate

that the Ninth Circuit has concurred with the ruling of other courts concluding that initial

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 5RescueCom Corp. v. Google, Inc., 456 F. Supp. 2d 393, 401-403 (N.D.N.Y.

2006); Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 431 F. Supp. 2d 425, 427

(S.D.N.Y. 2006); see also 1-800 Contacts v. WhenU.Com, Inc., 414 F.3d 400, 409 (2d

Cir.2005).

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interest confusion is never present is these types of cases. Playboy only advances the

proposition that sponsored links that clearly identify their sources to consumers might avoid

a finding of likelihood of initial interest confusion. 

The Court has given careful consideration to the arguments and authorities presented

by Rhino Sports, as well as to the current precedent in the Ninth Circuit. In light of the

uncertain state of the law, and the fact that, within the Ninth Circuit, there has not been a

significant change, the Court does not find Rhino Sport's arguments sufficient to warrant a

finding of a significant change in the law. While there has been some indication of a possible

change within the Ninth Circuit, a finding of a significant change by this Court would be

premature and ill-advised. Additionally, when two competitors both rely on a distributor

network composed of multiple distributors with various names and various websites, it is the

opinion of this Court that a finding of initial interest confusion may still be possible. 

Rhino Sports also argues that since entry of the permanent injunction, a number of

courts have addressed the issue of trademark use5

 and have held, or can be read to suggest,

that a defendant is not engaged in the requisite "use" of a trademark or other mark unless the

defendant uses the mark to identify the source of its own goods or services. The Court notes

that while other courts have ruled that keyword use of a trademark does not constitute "use"

in commerce under the Lanham Act, the Ninth Circuit has not squarely addressed this issue.

See Rescuecom Corp. v. Google, Inc., 456 F.Supp.2d at 402 n.5 (noting that "none of [the

Ninth Circuit and other] cases address whether the defendant's use of the trademark at issue

is, in the first place, a trademark use"). For example, in Playboy Enterprises, the court

focused on the likelihood of confusion prong of the analysis, as there was "[n]o dispute" as

to whether there was "use in commerce" by the defendant. 354 F.3d at 1024. The Court

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concludes that, unless the Ninth Circuit expressly analyzes and holds that keyword use of a

trademark does not constitute "use in commerce," then, regardless of whether or not such use

is a "use in commerce" under the Lanham Act, there has been no change in the Ninth Circuit

on this matter since the permanent injunction was ordered. 

Once again, the Court has given careful consideration to the arguments and authorities

presented by Rhino Sports. However, in light of the uncertain state of the law, the Court

does not find Rhino Sport's arguments sufficient to warrant a finding of a significant change

in the law in regard to keywords and trademark use. 

Finally, Rhino Sports argues that because no court has found trademark infringement

liability for use of AdWords, there has been a significant change in the law. However, if no

court has indeed found liability, how can this evidence a significant change in the law when

this was the exact state of the law at the time the permanent injunction was handed down?

Additionally, even if no liability has been found in any case, this does not indicate that the

law will not impose liability in these situations, only that no situation may have been

presented in which liability can be imposed. 

In light of all of the above, the Court concludes that Rhino Sports has failed to meet

its burden of establishing a significant change in the law that would warrant modification of

the permanent injunction. 

3. There Has Been No Change in Facts to Warrant Modification

 Rhino Sports argues that Sport Court's competitors are allowed to use its marks as

AdWords, while Rhino Sports cannot, which is unfair to Rhino Sports and reflects a change

in circumstances that would warrant modifying the permanent injunction. However,

competitors engaged in conduct that would violate the permanent injunction, if engaged in

by Rhino Sports, does not relieve Rhino Sports of its obligations under the permanent

injunction. Rhino Sports consented to the terms of the permanent injunction while other

competitors did not. Clearly Rhino Sports contemplated, at the time of the permanent

injunction, that it may be competitively disadvantaged as a result of the terms of the

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permanent injunction. The Court is not persuaded that mere competitive disadvantage

signifies a significant change in the facts as to warrant a modification of the permanent

injunction. Additionally, Rhino Sports points out that a distributor of Sport Court is engaged

in the same conduct vis a vis Rhino Sports that Sport Court seeks to forbid to Rhino Sports.

Again, neither Sport Court, nor its distributors, are bound to the restrictions placed on Rhino

Sports in the permanent injunction. The fact that other parties are not bound to the terms of

the permanent injunction does not indicate that enforcement would be unfair to the

consenting restricted party. 

Additionally, Rhino Sports argues that Google's policy change which now permits

companies to purchase trademarks as keywords is a significant change in the facts warranting

modification of the permanent injunction. While it has not been established that Rhino

Sports is currently making any such purchase of the mark SPORT COURT, it appears as

though its competitors may be, or at least that they may do so given Google's new policies.

It is the opinion of the Court that the policy change implemented by Google is merely

Google's perception of the current state of the law. Simply because Google has taken a

position in this uncertain area does not support the conclusion that no actions can be taken

by trademark owners against competitors that purchase their trademarks as AdWords. The

Court holds that this is not a significant factual change that warrants modification of the

permanent injunction.

Accordingly, there is no significant change in law or facts warranting a modification

of the Permanent Injunction Order. The Court concludes that the permanent injunction should

not be modified to permit Rhino Sports to use the SPORT COURT mark or any variation

thereof as a keyword. 

IV. Conclusion

IT IS ORDERED that Sport Court, Inc.'s Motion for an Order to Show Cause Why

Rhino Sports, Inc. and John E. Shaffer Should Not be Held in Contempt of Court, to Enforce

the Injunction, and for Sanctions (Doc. # 102) is DENIED;

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IT IS FURTHER ORDERED that Rhino Sports, Inc., and John E. Shaffer's Motion

to Modify Permanent Injunction (Doc. # 106) in CV 02-1815-PHX-JAT and Rhino Sports,

Inc., and John E. Shaffer's Motion to Modify Permanent Injunction (Doc. # 9) in CV 06-

3066-PHX-JAT are DENIED;

IT IS FURTHER ORDERED that there exists no just reason for delay and, under

Fed. R. Civ. P. 54(b), final judgment on the matter of contempt is entered in favor of Rhino

Sports, Inc., and John E. Shaffer.

DATED this 2nd day of May, 2007.

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