2005 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-2-2005

Bd Dir Sapphire Bay v. Simpson

Precedential or Non-Precedential: Non-Precedential

Docket No. 04-3690

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 04-3690

 

THE BOARD OF DIRECTORS OF SAPPHIRE BAY

CONDOMINIUMS WEST

v.

GEORGE R. SIMPSON, Individually, and

d/b/a

NORTH AMERICAN ALLIANCE FOR

CORPORATE MANAGEMENT

 George R. Simpson,

 Appellant

 

Appeal from the District Court

of the Virgin Islands

(District Court Civil No. 04-cv-00062)

District Court Judge: Honorable Thomas K. Moore

 

Submitted Under Third Circuit LAR 34.1(a)

April 20, 2005

Before: NYGAARD, RENDELL and SMITH, Circuit Judges.

(Filed: May 2, 2005)

 

OPINION OF THE COURT

 
2

RENDELL, Circuit Judge.

Appellee, the Board of Directors of Sapphire Bay Condominiums West (“Board”),

brought this suit against Appellant George R. Simpson, an owner of a unit in the complex

managed by the Board, asserting Lanham Act violations and a number of common law

trademark-related claims arising from Simpson’s unauthorized use of the Board’s trade

name and service mark “Sapphire Bay Condominiums West.” The Board alleged that due

to its ownership and maintenance of this name as a mark, Simpson had no right to register

the domain name <sapphirebaycondos.com> or operate a Web site at that domain

claiming to be the “official” Web site of Sapphire Bay Condominiums West.

After a hearing, the District Court granted a preliminary injunction in favor of the

Board, ordering Simpson, individually and doing business as the North American

Alliance for Corporate Management, to cancel his registration of the domain name and

refrain from using the name, or any derivative thereof, for any Web site under his

ownership or substantial control. The injunction also ordered Simpson to cease and desist

from using and representing that he is the owner of the names “Sapphire Bay West,”

“Sapphire Bay Condos West,” “Sapphire Bay West Condos,” “Sapphire Bay

Condominiums West,” “Sapphire Beach Condominiums West,” “Sapphire Beach West,”

or any derivatives thereof. On appeal, Simpson raises a number of issues regarding the

District Court’s order.

The District Court had jurisdiction under 28 U.S.C. § 1331, as the Board asserted
3

federal trademark claims, and we have jurisdiction to review the grant of a preliminary

injunction under 28 U.S.C. § 1292(a). We will affirm.

I.

Because we write solely for the parties, and the facts are known to them, we will

discuss only those facts pertinent to this appeal. The Board has used the name “Sapphire

Bay Condominiums West” as a trade name and service mark since declarations of a plan

to establish the condominiums were filed with the Office of Recorder of Deeds on

December 16, 1969. Simpson purchased Unit C-4 of Sapphire Bay Condominiums West

in July 2003, and he currently resides there. After some disagreement between Simpson

and the condominium’s management regarding his desire to modify his unit’s walls and

windows, Simpson began a campaign of telephone calls and correspondence against the

Board, individual Board members, and the Board’s attorney. By April 2004, Simpson had

registered, under his own name, the Internet domain name <sapphirebaycondos.com> and

operated a Web site at that domain name, proclaiming it to be “The Official Website of

Sapphire Bay Condominiums West - St. Thomas, V.I.,” in which he published critical

(and, as alleged in a separate law suit against Simpson, defamatory) statements about the

Board, its members, and its attorney. After the Board sent a cease and desist letter to

Simpson regarding his use of its mark in his domain name and on his Web site, Simpson

changed the slogan to “The Owners Official Website For the Elimination of Dishonesty

on the Board of Directors of Sapphire Bay Condominiums West, St Thomas, VI.” On
 The record includes a letter, dated July 20, 2004, from Gilbert J. De Botton, Vice 1

President, Bayside Resort, Inc., to Frank Berry, General Manager, Sapphire Bay

Condominium West, granting permission to the Board to use and register with the Office

of the Lieutenant Governor the names “Sapphire Bay West” and “Sapphire Bay Condos

West.”

4

June 2, 2004, the Board initiated the instant action, alleging willful Lanham Act

violations and common law unfair competition, anti-dilution, tortious interference,

trademark infringement, deceptive trade practice, and misappropriation claims.

Also in early June 2004, Simpson assigned the registration of the domain name to

a business entity by the name of North American Alliance for Honest Corporate

Management. On June 18, 2004, Simpson sought to register, under his own name, a

number of similar trade names with the Corporations and Trademarks Division of the

Office of the Lieutenant Governor of the Virgin Islands, including “Sapphire Bay West,”

“Sapphire Bay Condos West,” “Sapphire Bay West Condos,” “Sapphire Bay

Condominiums West,” “Sapphire Beach Condominiums West,” and “Sapphire Beach

West.” The registrations were initially granted, but subsequently revoked when it was

learned that the names were already registered to Bayside Resort, Inc.1

On June 28, 2004, Simpson filed a motion to dismiss for failure to state a claim

upon which relief can be granted. In response, the Board filed a motion for a temporary

restraining order and a preliminary injunction. The District Court conducted a hearing

and, in a ruling from the bench, granted the Board’s motion.

In its ruling, the District Court concluded that the Board owned the trade name and
5

service mark “Sapphire Bay Condominiums West,” within the meaning of the Lanham

Act and at common law, since December 17, 1969, and the Board had a right to bring the

suit to prevent Simpson from interfering with its rights to the name. The Court also found

that while North American Alliance for Honest Corporate Management was the nominal

owner of the domain name at issue, Simpson retained sufficient control over it and the

Web site to make him subject to the injunction.

In its analysis, the Court considered the factors necessary to grant a preliminary

injunction: (1) likelihood of success on the merits; (2) irreparable harm to plaintiff absent

the injunction; (3) harm to the plaintiff absent the injunction outweighs the harm to the

defendant of granting it; and (4) the public interest. Regarding the first factor, likelihood

of success on the merits, the Court considered the following elements in evaluating the

first count of the Board’s Complaint, a § 43 Lanham Act claim: (a) the validity and legal

protectability of the mark; (b) ownership of the mark; and (c) likelihood of confusion. 

Regarding the first two elements, the Court determined that the Board had established

rights to the service mark by using it in connection with services offered; the name was

not merely generic and, therefore, was entitled to protection under the Lanham Act; and

the Board had made a clear showing of entitlement to the use of the mark. The Court

then found both a likelihood of confusion and actual confusion based on: the similarity of

Simpson’s domain name with the Board’s mark, the strength of the Board’s mark as

evidenced by its age and worldwide reputation, the confusion of many of the Board’s
6

renters who thought that Simpson’s Web site was operated by the Board, the near instant

confusion among renters beginning very soon after Simpson began operation of the site,

and Simpson’s intent to use his site to disparage the Board.

Regarding the likelihood of success on the Board’s federal dilution claim, the

Court first determined that the Board’s mark was famous based on a degree of inherent

distinctiveness among renters and the long-standing filing of the mark with the Recorder

of Deeds, the greater than 30-year use of the mark in connection with services offered, the

duration and extent of advertising and publicity of the mark, the worldwide geographical

trading area in which the mark was used, the use of the mark in various channels of trade,

including letterhead, bills, and signs, and the degree of recognition of the mark in the

relevant trading areas and channels used by the Board. The Court then determined that

Simpson’s use of the mark in luring individuals to his site to disparage the Board caused

dilution by lessening the capacity of the mark to identify and distinguish the Board’s

services. Lastly, the Court concluded that Simpson’s use of the mark, insofar as it was

intended to harm the Board financially, was commercial speech and, therefore, not

exempted from the dilution law. In sum, the Court determined that the Board had a

likelihood of success on the merits on both the § 43 claim and the dilution claim.

Regarding the second and third elements for the preliminary injunction, the Court

concluded that Simpson’s use of the mark caused irreparable harm to the Board as a

matter of law, and Simpson did not in any way establish that he would suffer any harm if
7

the injunction were issued as he would be able to continue his campaign under a different

domain name. Lastly, the Court concluded that the public interest would be served by

issuing an injunction as it would eliminate confusion as to the party operating the Web

site. The Court memorialized the grant of the preliminary injunction, with the posting of

a $1,000 bond, in an order dated August 10, 2004. It is from this order that Simpson now

appeals.

II.

We review the issuance of a preliminary injunction, including the weighing of

factors in that determination, for abuse of discretion; we review factual determinations for

clear error and legal conclusions are reviewed de novo. Acierno v. New Castle County,

40 F.3d 645, 652 (3d Cir. 1994). “Our scope of review is narrow because ‘the grant or

denial of a preliminary injunction is almost always based on an abbreviated set of facts,

requiring a delicate balancing . . . [that] is the responsibility of the district judge . . . .’” 

Frank’s GMC Truck Ctr., Inc. v. Gen. Motors Corp., 847 F.2d 100, 101-02 (3d Cir. 1988)

(citing United States Steel Corp. v. Fraternal Ass’n of Steelhaulers, 431 F.2d 1046, 1048

(3d Cir. 1970)).

III.

Simpson, in his pro se appeal, sets forth a number of challenges, many of them

facially meritless or irrelevant, to the District Court’s grant of the preliminary injunction. 

That notwithstanding and given our narrow scope of review, we conclude, based on a
8

careful reading of the record and a fair evaluation of the District Court’s analysis, that the

Court did not abuse its discretion in balancing the factors and issuing the preliminary

injunction.

IV.

Accordingly, we will AFFIRM the District Court’s grant of the preliminary

injunction.