2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 5-2-2005 

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y v . S imp son P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 04-3690

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y v . S imps on" (2005). 2005 D e cisio n s . P ape r 1258. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2005/1258NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N o. 04- 3690 T HE BO AR D OF DI RE CT OR S OF S AP P HI RE BA Y

CO N D O M I N I U M S W EST

v. G E O R G E R . SI M PSO N , I ndi vi dual l y , and

d /b /a NOR T H AMER I CA N AL L I ANC E F OR CO RP OR AT E M ANAGE M E NT G eor ge R . Si m ps on, A ppel l ant A p p ea l from the D istri ct C o u rt of the V i r gi n I s l ands ( D i s t r i ctC our tC i vi l N o. 04- cv- 00062) D istri ct C o u rtJu d g e: H o n o rab le T h o m as K . M o o re Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

A pr i l 20, 2005 B efore: N Y G A A R D , R E N D E L L and S M ITH , C i rcui tJudg es.

( Fi l ed: M ay2, 2005) OPI NI ON O F THE COURT2

R E N D E L L , C i r cui tJ udge. A p p ell ee , the B o ard o f D ir ec tors o f S ap p h ir e B ayC o n d o m inium s W est (“B o ard ”), br oughtt hi s s ui tagai ns tA ppel l antG eor ge R . Si m ps on, an ow nerof a uni ti n t he compl ex m anage d byt he B oar d, as s er t i ng L anham A ctvi ol at i ons and a numberof comm on l aw t r ademar k- r el at ed cl ai m s ar i s i ng fr om Si m ps on’ s unauthor i zed us e of the B oar d’ s tr ade name and s ervi ce mar k “Sapphi r e B ayC ondom i ni um s W es t . ” The B oar d al l eged thatdue t o i t s ow ner s hi p and mai nt enanc e of thi s name as a mar k, Si m ps on had no r i ghtt o r egi s t er th e d o m a in n a m e < sa p p h ire b a y c o n d o s.c o m > o r o p e ra te a W e b site a t th a t d o m a in
c laim in g to b e th e “ o f

f icia l” W e b site o f

S a p p h ire B a yC o n d o m in iu m s W e st. A ft era hea r i ng, t he D i s t r i ctC our tgr ant ed a pr el i m i naryi nj unct i on i n favorof the B oar d, or der i ng Si m ps on, i ndi vi dual l yand doi ng bus i nes s as the N or t h A m er i can A l l i ance forC orpor at e M anage m ent , t o canc el hi s r egi s t r at i on of the domai n name and
re f ra in f ro m u sin g th e n a m e , o r a n yd e riv a tiv e th e re o f , fo r a n yW e b site u n d e r h is
ow nershi p o r s ub st anti al con t rol . T he inj un ct i on al so ordered S i m pson t o cease an d d esi st f ro m u s in g a n d re p re s e n tin g th a t h e is th e o w n e r o f th e n a m e s “ S a p p h ir e B a yW e s t,” “Sapphi r e B ayC ondos W es t , ” “Sapphi r e B ayW es tC ondos , ” “Sapphi r e B ay C o n d o m in iu m s W e s t,” “ S a p p h ir e B e a c h C o n d o m in iu m s W e s t,” “ S a p p h ir e B e a c h W e s t,” oranyder i vat i ves t her eof. O n appea l , Si m ps on r ai s es a numberof i s s ues r egar di ng the D istri ct C o u rt ’s ord er. T he D i s t r i ctC our thad j ur i s di ct i on under28 U . S. C . § 1331, as the B oar d as s er t ed3

fe d era l trad em ark claim s, an d w e h av e jurisdicti o n to rev iew the g ran t of a p reli m inary i n j u n c t i o n u n d e r2 8 U. S . C. § 1 2 9 2 ( a ) . W e wi l l a f f i r m. I. B e c a u se w e w rite s o lelyf o r th e p a rties , an d th e f

a c ts a re k n o w n to th e m , w e w ill d iscu ss o n lytho se f

ac ts pe rt inen t t o this ap p ea l. T h e B o ard h as u sed the n am e “ S ap p h ir e B ayC ondom i ni um s W es t ” as a tr ade na m e and s ervi ce mar k s i nce de cl ar at i ons of a pl an t o es t abl i s h t he condomi ni um s w er e fi l ed w i t h t he O ffi ce of R ecor derof D eeds on D ecem ber 16, 1969 . S i m pson pu rchased U nitC -4 of S app hir e B ayC on do m i nium s W est i n J ul y2003, and he c ur r ent l yr es i des ther e. A ft ers om e di s agr eementbetw een Si m ps on and the condomi ni um ’ s m anage m entr egar di ng hi s des i r e t o m odi fyhi s uni t ’ s w al l s and
w i ndow s , Si m ps on began a campai gn of t el ephone c al l s and corr es pondence agai ns tt he B oar d, i ndi vi dual B oar d m ember s , and the B oar d’ s at t orney . B yA pr i l 2004, Si m ps on had
r egi s t er ed, underhi s ow n name, t he I nt ernetdom ai n name < s apphi r ebay condos . com> and oper at ed a W eb s i t e att hatdom ai n name, pr ocl ai m i ng i tt o be “The O ffi ci al W ebs i t e of Sapphi r e B ayC ondom i ni um s W es t- St . T hom as , V . I . , ” i n w hi ch he publ i s hed cr i t i cal ( and, as al l eged i n a s epar at e l aw s ui tagai ns tSi m ps on, defa m at ory ) s t at ement s aboutt he B o a rd , it s m e m b e rs, a n d its a tto rn e y . A f ter th e B o a rd se n t a c e a se a n d d e sis t lette r to Si m ps on r egar di ng hi s us e of i t s m ark i n hi s dom ai n name and on hi s W eb s i t e, Si m ps on c h a n g e d th e slo g a n to “ T h e O w n e rs O f f icia l W e b site F o r th e E lim in a tio n o f D ish o n e sty o n t h e Bo a r d o f

Di r e c t o r s o f

S a p p h i r e Ba yCo n d o mi n i u ms We s t , S tT h o ma s , VI . ” OnT he r ecor d i ncl udes a l et t er , dat ed J ul y20, 2004, fr om G i l ber tJ . D e B ot t on, V i ce 1 Pr es i dent , B ay s i de R es or t , I nc. , t o Fr ank B err y , G ener al M anage r , Sapphi r e B ay C ondom i ni um W es t , gr ant i ng perm i s s i on t o t he B oar d t o us e and r egi s t erw i t h t he O ffi ce of the Li eut enantG overnort he names “Sapphi r e B ayW es t ” and “ Sapphi r e B ayC ondos W e s t.” 4 J une 2, 2004, t he B oar d i ni t i at ed the i ns t antact i on, al l egi ng w i l l ful L anham A ct vi ol at i ons and comm on l aw unfai rcompet i t i on, ant i
- di l ut i on, t or t i ous i nt er fer ence , t radem ark i nfri ng em ent, decep t i ve tr ade p ract i ce, and m i sapprop ri at i on cl ai m s. A lso in e a rlyJu n e 2 0 0 4 , S im p so n a ss ig n e d th e re g istra tio n o f th e d o m a in n a m e to a b u sin e ss e n tityb yth e n a m e o f N o rth A m e ric a n A lli a n c e f o r H o n e st C o rp o ra te M a n a g e m e n t. O n J u n e 1 8 , 2 0 0 4 , S im p s o n s o u g h t to re g is te r, u n d e r h is o w n n a m e , a num berof s i m i l art r ade na m es w i t h t he C orpor at i ons and Tra demar ks D i vi s i on of the O f f ic e o f th e L ie u te n a n t G o v e rn o r o f th e V ir g in Is la n d s , in c lu d in g “ S a p p h ir e B a yW e s t,” “Sapphi r e B ayC ondos W es t , ” “Sapphi r e B ayW es tC ondos , ” “Sapphi r e B ay C ondom i ni um s W es t , ” “Sapphi r e B eac h C ondom i ni um s W es t , ” and “ Sapphi r e B eac h W es t . ” The r egi s t r at i ons w er e i ni t i al l ygr ant ed, buts ubs equent l yr evoked w hen i tw as l earned thatt he names w er e al r eadyr egi s t er ed t o B ay s i de R es or t , I nc. 1 O n Ju n e 2 8 , 2 0 0 4 , S im p so n f iled a m o tio n to d ism iss f o r f a ilu re to sta te a c laim
u p o n w h ich re li ef

ca n b e g ran ted. In res p o n se, th e B o ard fil ed a m o ti o n fo r a tem p o rary r es t r ai ni ng or derand a pr el i m i naryi nj unct i on. T he D i s t r i ctC our tconduct ed a he ar i ng and, i n a rul i ng fr om t he benc h, gr ant ed the B oar d’ s m ot i on. I n i t s rul i ng, t he D i s t r i ctC our tconcl uded thatthe B oar d ow ned the tr ade na m e and5

s ervi ce mar k “Sapphi r e B ayC ondom i ni um s W es t , ” w i t hi n t he meani ng of the Lanham A ctand atcomm on l aw , s i nce D ece m ber17, 1969, and the B oar d had a r i ghtt o br i ng t he
s ui tt o pr eventSi m ps on fr om i nt er fer i ng w i t h i t s r i ght s t o t he name. T he C our tal s o found t hatw hi l e N or t h A m er i can A l l i ance forH ones tC orpor at e M anage m entw as the nomi nal
ow nerof the domai n name ati s s ue, Si m ps on r et ai ned s uffi ci entcontr ol overi tand the W eb s i t e t o m ake hi m s ubj ectt o t he i nj unct i on. In it s an aly sis, the C o u rtco n side red the f ac tors n ec essa ryto g ran t a pre li m inary i nj unct i on: ( 1) l i kel i hood of s ucce s s on t he mer i t s ; ( 2) i r r epar abl e harm t o pl ai nt i ff a bs ent t he i nj unct i on; ( 3) harm t o t he pl ai nt i ff a bs entthe i nj unct i on out w ei ghs the harm t o t he defe ndantof gr ant i ng i t ; and ( 4) t he publ i c i nt er es t . R egar di ng the fi r s tfac t or , l i kel i hood of s ucce s s on t he mer i t s , t he C our tcons i der ed the fol l ow i ng el ement s i n eval uat i ng the fi r s tcountof the B oar d’ s C om pl ai nt , a § 43 Lanham A ctcl ai m : ( a) the val i di t yand l egal p ro te c ta b ility o f

th e m a rk ; ( b ) o w n e rs h ip o f th e m a rk ; a n d (c ) l ik e lih o o d o f c o n f u s io n . R egar di ng t he fi r s tt w o el ement s , t he C our tdet erm i ned thatthe B oar d had es t abl i s hed
r i ght s t o t he s ervi ce mar k byus i ng i ti n connec t i on w i t h s ervi ces offe r ed; the name w as notm er el ygener i c and, t her efor e, w as ent i t l ed t o pr ot ect i on underthe Lanham A ct ; and the B o ard h ad m ad e a clea r sho w ing o f e n ti tl em en t t o the u se o f th e m ark . T h e C o u rt t hen found both a l i kel i hood of conf us i on and ac tual confus i on bas ed on: the s i m i l ar i tyof Si m ps on’ s dom ai n name w i t h t he B oar d’ s m ark, the s t r ength of the B oar d’ s m ark as
ev iden ce d b yit s ag e a n d w o rl d w ide re p u tat ion , the c o n fu sion o f m an yo f th e B o ard ’s6

r ent er s w ho t houghtt hatSi m ps on’ s W eb s i t e w as oper at ed bythe B oar d, the nea ri ns t ant confus i on among re nt er s begi nni ng verys oon aft erSi m ps on began ope r at i on of the s i t e, and Si m ps on’ s i nt entt o us e hi s s i t e t o di s par age the B oar d. R egar di ng t he l i kel i hood of s ucce s s on the B oar d’ s fede r al di l ut i on cl ai m , the C our tfi r s tdet erm i ned thatt he B oar d’ s m ark w as famous bas ed on a de gr ee of i nher ent di s t i nct i venes s among re nt er s and the l ong- s t andi ng fi l i ng of the mar k w i t h t he R ecor der of D eeds , t he gr eat ert han 30- y earus e of the mar k i n connec t i on w i t h s ervi ces offe r ed, t he dur at i on and ext entof adve r t i s i ng and publ i ci t yof the mar k, the w or l dw i de geogr aphi cal t r adi ng ar ea i n w hi ch the mar k w as us ed, the us e of the mar k i n var i ous channe l s of tr ade, i ncl udi ng l et t erhead, bi l l s , and s i gns , and the degr ee of r ecogni t i on of the mar k i n t he
r el evantt r adi ng ar eas and cha nnel s us ed bythe B oar d. T he C our tthen det erm i ned that Si m ps on’ s us e of the mar k i n l ur i ng i ndi vi dual s t o hi s s i t e t o di s par age the B oar d caus ed d il u ti o n b ylessen ing the c ap ac ityo f th e m ark to ide n ti fyan d d ist ing u ish the B o ard ’s s ervi ces . L as t l y , t he C our tconcl uded thatSi m ps on’ s us e of the mar k, i ns ofaras i tw as i nt ended t o harm t he B oar d fi nanci al l y , w as comm er ci al s peec h and, ther efor e, not exempt ed fr om t he di l ut i on l aw . I n s um , the C our tdet erm i ned thatthe B oar d had a l i k e l i h o o d o f

s u c c e s s o n t h e me r i t s o n b o t h th e § 4 3 c l a i m a n d th e d i l u t i o n c l a i m. R eg ard ing the s ec o n d an d thir d elem en ts fo r th e p reli m inaryinjun cti o n , the C o u rt con cl ud ed thatS i m pson ’s use of t he m ark caused irrepar able harm t o the B oard as a
m a tter o f law , an d S im p so n d id n o t in a n yw a ye sta b lish th a t h e w o u ld su f f e r a n yh a rm if7

t he i nj unct i on w er e i s s ued as he w oul d be abl e t o cont i nue hi s campai gn undera di ffe r ent dom ai n name. L as t l y , t he C our tconcl uded thatthe publ i c i nt er es tw oul d be s erved by i s s ui ng an i nj unct i on as i tw oul d el i m i nat e conf us i on as t o t he part yoper at i ng the W eb
s i t e. T he C our tm emori al i zed the gr antof the pr el i m i naryi nj unct i on, w i t h t he pos t i ng of a $1, 000 bond, i n an or derdat ed A ugus t10, 2004. I ti s fr om thi s or derthatSi m ps on now app eal s. II. W e r evi ew t he i s s uance of a pr el i m i naryi nj unct i on, i ncl udi ng the w ei ghi ng of fac t or s i n t hatdet erm i nat i on, forabus e of di s cr et i on; w e r evi ew fac tual det erm i nat i ons for
c l e a re r r o ra n d l e g a l c o n c l u s i o n s a r e r e v i e w e d d e n o v o . A c i e r n o v . N e w C a s t l e C o u n ty, 40 F. 3d 645, 652 ( 3d C i r . 1994) . “O urs cope of r evi ew i s narr ow beca us e ‘ t he gr antor den i al of a p rel i m i naryi njunct i on i s al m ostal w ay s based o n an abb revi at ed setof f act s, r equi r i ng a del i cat e bal anci ng . . . [that ] i s the r es pons i bi l i t yof the di s tr i ctj udge . . . . ’ ” Fr ank’ s G M C T ruck C t r . , I nc. v. G en. M ot or s C orp. , 847 F. 2d 100, 101- 02 ( 3d C i r . 1988) ( ci t i ng U ni t ed St at es St eel C orp. v. Fr at ernal A s s ’ n of St eel haul er s , 431 F. 2d 1046, 1048 (3d C ir . 1 9 7 0 )). III . Si m ps on, i n hi s pr o s e appe al , s et s for t h a numberof cha l l enges , m anyof them f a c ia lly m e ri tle s s o r i rr e le v a n t, to th e D is tr ic t C o u rt ’s g ra n t o f th e p re lim in a ry in

ju n c tio n . T hatnot w i t hs t andi ng and gi ven ournarr ow s cope of r evi ew , w e conc l ude, bas ed on a8

car eful r eadi ng of the r ecor d and a f ai reval uat i on of the D i s t r i ctC our t ’ s anal y s i s , thatt he C o u rtd id n o t abu se it s d iscreti o n in b alan cing the f ac tors an d issuing the p reli m inary i nj unct i on. I V. A cc o rdin g ly , w e w il l A F F IR M the D istri ct C o u rt ’s gra n t of the p reli m inary i nj unct i on.