Court Opinion

ID: 2708743
Source: CourtListenerOpinion
Date Created: 2014-08-05 15:04:52.608902+00
Date Added: 2024-06-11T13:23:36.260785
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
No. 11-3317

ERICH SPECHT, ET AL.,
                                               Plaintiffs-Appellants,

                                 v.

GOOGLE INC.,
                                                Defendant-Appellee.

        Appeal from the United States District Court for the
          Northern District of Illinois, Eastern Division.
         No. 09 C 2572 — Harry D. Leinenweber, Judge.

       ARGUED APRIL 2, 2012— DECIDED APRIL 4, 2014

   Before ROVNER, SYKES, and TINDER, Circuit Judges.

    ROVNER, Circuit Judge. During the dot-com boom of the
1990s, Erich Specht founded Android Data Corporation, and
registered the “Android Data” trademark. The company
ceased principal operations in 2002, but the Android Data
mark remained registered to it. Five years later, Google Inc.
rolled out its new Android operating system for mobile
phones. Specht responded with this suit against Google,
2                                                  No. 11-3317

alleging primarily that, by releasing the Android operating
system, Google had infringed on his Android Data mark.
Google counterclaimed that Specht had abandoned the mark
after 2002, forfeiting his ability to assert any rights to it.
Because we agree with the district court that the undisputed
evidence in the record establishes that Specht abandoned the
mark, we affirm the district court’s grant of summary judg-
ment to Google.
                         Background
    Inspired by the recent success of a number of technology
start-ups, Erich Specht decided in 1998 to enter the business
world himself. He designed a suite of e-commerce software
and formed Android Data Corporation (ADC), through which
he intended to license the software to clients. ADC also
performed a number of other web-based services to clients,
including website hosting and design, and computer consult-
ing services. Two years later, Specht applied to register the
trademark “Android Data” with the United States Patent and
Trademark Office. The application was approved in 2002.
    Despite the trademark’s approval, by the end of 2002 ADC
stopped major operations. That year, the company lost five
clients, prompting Specht to lay off his only employee, cancel
ADC’s internet service contract, and move the business into his
home. Signifying the end of ADC’s life, he transferred all of
ADC’s assets, including its software and the registered
“Android Data” mark, to another of his wholly-owned
companies, The Android’s Dungeon, Incorporated (ADI).
Specht spent all of the next year unsuccessfully seeking a buyer
No. 11-3317                                                    3

for ADC’s assets. As ADC was idle, he also shut off its phone
line that year.
    After 2002, Specht’s business activities were limited. He
continued to host ADC’s website a while longer and conducted
some hosting services for others. But he let the registration for
the company’s URL (androiddata.com) lapse in 2005, at which
time he could no longer be reached at his associated email
address. Specht passed out business cards in 2005 bearing the
Android Data mark, but the record does not disclose how
many, to whom, or why.
    In 2007, about five years after he first began to wind down
ADC’s operations, Specht attempted to revive the use of the
Android Data mark. First, to promote his software suite to
catalog companies, Specht sent out a mass mailing in Decem-
ber 2007 with the Android Data mark. These mailings garnered
no sales. Second, two months later, Specht attempted to license
his software to a healthcare consulting firm, also to no avail.
He made no other use of “Android Data” in 2007 or the next
year. In April 2009, he used the mark once again when he
resurrected his website, albeit with a slightly different URL
(android-data.com) because his previous URL had by then
been registered by a third party. He also assigned the Android
Data mark to ADI, retroactive to the December 2002 asset
transfer.
   Meanwhile, during the years that Specht struggled with his
shrinking business, another technology start-up calling itself
“Android, Incorporated” began developing what would
become known as the Android operating system for smart
phones. Google purchased Android, Inc., in 2005. Two years
4                                                  No. 11-3317

after the purchase, Google released to the public a beta version
of its Android software. This release, in November 2007,
occurred about a month before Specht had attempted to revive
his use of the Android Data mark in his mail mailing that
December.
    Google’s beta release of Android in November 2007
allowed software developers to populate the marketplace for
Android applications before the finished product appeared on
a mobile phone. About a year after Android’s beta release,
under a license from Google, T-Mobile US, Inc., released the
first publicly-available smartphone to run Android. Ever since
Android’s beta release, Google has continuously been using
the Android mark. Google tried in November 2007 to register
“Android” as its own trademark, but the Patent and Trade-
mark Office denied that application and Google’s subsequent
appeal, citing the likelihood of confusion with Specht’s
Android Data mark.
    Specht, ADC, and ADI sued Google, the founders of
Android, Inc., and the Open Handset Alliance (an industry
consortium created to foster innovation in mobile phone
technology) over the use of the Android mark. The plaintiffs
(whom we will, except where necessary, refer to simply as
“Specht”) raise two claims under the Lanham Act: one for
trademark infringement, see 15 U.S.C. § 1114(1), and one for
unfair competition, see id. § 1125(a). They also advance a claim
for a violation of Illinois’s Deceptive Trade Practices Act, see
815 ILCS 510/2, and two claims for common-law trademark
violations.
No. 11-3317                                                      5

    The district court dismissed all of the defendants except
Google. No claim could be stated against Android, Inc.’s
founders, the court explained, because as corporate officers
they were not liable for Google’s actions. The Open Handset
Alliance was dismissed because it does not exist as a distinct
legal entity. The district court also dismissed Specht and ADC
as plaintiffs from the infringement claim; since Specht and
ADC no longer owned the Android Data mark, the court ruled
that only ADI had standing to assert infringement. Google
answered the surviving allegations, raising two counterclaims
relevant to this appeal. First, it sought a declaration that Specht
had abandoned the mark, depriving him and his companies of
any rights to it. (This claim also functions as an affirmative
defense to Specht’s Lanham Act claims.) Second, Google asked
the district court to cancel the plaintiff’s mark.
    After Google moved for summary judgment, the parties
locked horns over what evidence was properly before the
court. Google challenged the admissibility of a slew of Specht’s
evidence. Relevant to this appeal, Google challenged Specht’s
attempts to submit screenshots from webpages of Specht’s
former clients from 2005, bearing the Android Data mark. The
contested screenshots were from an internet archive service.
The district court excluded these screenshots because, without
an affidavit describing the reliability of the archive service,
they were not properly authenticated. See FED. R. EVID. 901.
Specht also brought evidentiary objections of his own. As
relevant here, he objected to Google’s screenshots of Specht’s
own website from August 2010 and to two of Google’s press
releases from November 2007 about the Android operating
system. But the district court overruled both objections because
6                                                     No. 11-3317

Specht had submitted an identical screenshot and had alleged
in his complaint the information from the press releases.
    Evidentiary issues resolved, the district court addressed the
merits. It found that Specht had abandoned the mark in 2002;
the few times Specht used the Android Data mark after 2002
did not demonstrate continued use or intent to resume use of
the mark. Because Specht therefore had forfeited any rights he
might have to the mark, the district court ruled that all of
Specht’s claims failed as a matter of law. The district court also
issued Google’s requested declaration, and canceled Specht’s
registration.
                            Analysis
     Before we proceed we must address appellate jurisdiction.
Google filed a number of cross-claims that it later dismissed
without prejudice, permitting it to reinstate those claims at
some later point. Because these claims might be renewed, we
ordinarily would dismiss this appeal for lack of finality as the
litigation on those dismissed claims has not come to a conclu-
sion in the district court. But at oral argument Google repre-
sented that it was willing to dismiss those claims with preju-
dice. Under authority such as JTC Petroleum Co. v. Piasa Motor
Fuels, Inc., 190 F.3d 775, 776–77 (7th Cir. 1999), and First Health
Group Corp. v. BCE Emergis Corp., 269 F.3d 800, 801–02 (7th Cir.
2001), Google’s representation suffices to make the district
court’s entry of judgment appealable under 28 U.S.C. § 1291.
Assured of our authority to resolve this appeal, we turn to the
merits, first addressing two procedural rulings that preceded
the decision on summary judgment.
No. 11-3317                                                      7

    Specht first attacks the district court’s dismissal of him and
ADC as plaintiffs in the trademark infringement claim, but the
ruling was correct. The Lanham Act grants standing to
trademark registrants, defining that term to include registrants
and their “legal representatives, predecessors, successors, and
assigns.” 15 U.S.C. § 1127. Specht argues that, because the
definition of “registrant” in the Lanham Act is conjunctive,
both the registrants (Specht and ADC) and the assignee (ADI)
have standing to sue. But the Lanham Act transfers standing to
assignees, even if that party is not the registrant, to ensure that
only the current owner of the mark can claim infringement.
See Gaia Techs, Inc. v. Reconversion Techs., Inc., 93 F.3d 774, 780
(Fed. Cir. 1996); Gillette Co. v. Kempel, 254 F.2d 402, 404
(C.C.P.A. 1958) (“the assignee of a registration stands in the
place of the registrant in all respects”). Since that party is now
ADI, only ADI has standing to claim that the Android Data
mark has been infringed.
    Specht’s second procedural challenge concerns evidentiary
rulings that the district court made before ruling on Google’s
summary judgment motion. He contests the exclusion of the
screenshots of certain client websites as they supposedly
appeared in 2005, bearing the Android Data mark. He argues
that the screenshots are admissible because the creators of the
sites asserted from memory that the screenshots reflected how
those sites appeared in 2005. But the district court reasonably
required more than memory, which is fallible; it required
authentication by someone with personal knowledge of
reliability of the archive service from which the screenshots
were retrieved. See United States v. Bansal, 663 F.3d 634, 667–68
(3d Cir. 2011) (screenshots from internet archive authenticated
8                                                     No. 11-3317

via testimony of witness with personal knowledge of how
internet archive works). Specht also argues that the district
court improperly took judicial notice of news articles reflecting
Google’s assertion that it first used “Android” in commerce in
November 2007. But the fact that Google first released a
version of the Android software in November 2007 was alleged
in Specht’s complaint. That allegation is binding on Specht at
summary judgment. See Crest Hill Land Development, LLC v.
City of Joliet, 396 F.3d 801, 805 (7th Cir. 2005); Keller v. United
States, 58 F.3d 1194, 1199 n.8 (7th Cir. 1995).
    With the procedural issues resolved, we finally reach the
central issue of this appeal—whether the undisputed evidence
shows that the “Android Data” trademark was abandoned
after 2002. If Specht abandoned and never resumed use of the
mark, then Google could not have infringed on Specht’s
intellectual property when it later released the Android
operating system in 2007. See 15 U.S.C. § 1127; Central Mfg., Inc.
v. Brett, 492 F.3d 876, 881 (7th Cir. 2007). A trademark is
abandoned if its “use in commerce” has been discontinued
with no intent to resume use. 15 U.S.C. § 1127; Rust Env’t &
Infrastructure, Inc. v. Teunissen, 131 F.3d 1210, 1214 (7th Cir.
1997). Under the Lanham Act, “[n]onuse for 3 consecutive
years shall be prima facie evidence of abandonment,” 15 U.S.C.
§ 1127. A prima facie showing of abandonment may be
rebutted with evidence excusing the nonuse or demonstrating
an intent to resume use. See Sands, Taylor & Wood Co. v. Quaker
Oats Co., 978 F.2d 947, 955 (7th Cir. 1992). But the intent to
resume use in commerce must be formulated within the three
years of nonuse. ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 149 n.9
(2d Cir. 2007); Imperial Tobacco Ltd., Assignee of Imperial Group
No. 11-3317                                                      9

PLC v. Philip Morris, Inc., 899 F.2d 1575, 1581 (Fed. Cir. 1990).
Furthermore, the use must pertain to the sale of goods or
provision of services. See 15 U.S.C. § 1127; United Drug Co. v.
Theodore Rectanus Co., 248 U.S. 90, 97 (1918); Rearden LLC v.
Rearden Commerce, Inc., 683 F.3d 1190, 1204 (9th Cir. 2012); Int’l
Bancorp, LLC v. Societe des Bains de Mer et du Cercle des Estrang-
ers a Manaco, 329 F.3d 359, 364 (4th Cir. 2003).
   Under these principles, this appeal turns on three dates: the
date (if any) that Specht discontinued using the Android Data
mark, the date Google began using the Android mark in
commerce and acquired rights to it, and the date (if any) that
Specht intended to resume use of the mark. We discuss each in
turn.
   With respect to Specht’s discontinued use of the mark, the
evidence is conclusive that Specht ceased using the Android
Data mark at the end of 2002. That is the year that ADC
essentially shut down after losing five clients, laying off its one
employee, and transferring its assets to ADI. Specht cites to
four activities that he believes show his continued use of the
Android Data mark after 2002, but they are insufficient.
    First Specht notes that he attempted to sell his business’s
assets in 2003 and 2004. But an effort to sell the assets of a
business is different from trading on the goodwill of a trade-
mark to sell a business’s goods or services and therefore does
not constitute a use of the mark in commerce. See Electro Source,
LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 938 n.5 (9th
Cir. 2006). Second, Specht observes that ADC’s phone service
was not canceled until 2003. But Specht included any phone
10                                                   No. 11-3317

expenses from 2003 on ADC’s 2002 balance sheet precisely
because, in his view, ADC did not operate in 2003.
    The remaining two activities are also insufficient to show a
resumption of use. Specht points out that ADC’s website was
operating until 2005, and a website that bears a trademark may
constitute a bona fide use in commerce. See generally N. Am.
Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211 (11th Cir.
2008). But Specht did not identify any goods or services ADC
could have provided through or in connection with the website
after 2002. Cf. Rescuecom Corp. v. Google Inc., 562 F.3d 123,
129–30 (2d Cir. 2009); N. Am. Med. Corp., 522 F.3d at 1218–19.
As such, the website was not a use in commerce. Specht’s reply
that the site averaged 2,925 monthly visitors (actually the
record shows only 808 monthly visits), goes nowhere because
he furnished no evidence of any commercial interest associated
with the visits. Finally, Specht maintains that his two sales
efforts in 2007 (the mass mailing and his failed bid to license
software to a healthcare firm) are evidence of commercial use
of the mark. But these two efforts were isolated and not
sustained; sporadic attempts to solicit business are not a “use
in commerce” meriting the protection of the Lanham Act.
See Zazu Designs v. L’Oreal, S.A., 979 F.2d 499, 503 (7th Cir.
1992); Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525
F.3d 8, 20 (D.C. Cir. 2008). The district court, therefore, cor-
rectly determined that Specht had abandoned the mark at the
end of 2002.
   That brings us to the question of when Google first used the
word “Android” in commerce, and the evidence is undisputed
that it did so in November 2007. Specht concedes the point, but
argues that Google never acquired any lasting right to the
No. 11-3317                                                         11

Android mark because Google released its operating system
without retaining control over how developers or mobile-
phone companies like T-Mobile could use the software, giving
them a so-called “naked license.”
     We see a number of flaws with Specht’s “naked license”
argument. First, he raises it for the first time on appeal, and so
it is waived. See Frey Corp. v. City of Peoria, Ill., 735 F.3d 505, 509
(7th Cir. 2013); Perry v. Sullivan, 207 F.3d 379, 383 (7th Cir.
2000). Second, because a naked licensor abandons an already-
owned mark, see Eva’s Bridal Ltd. v. Halanick Enters., Inc., 639
F.3d 788, 790 (7th Cir. 2011); Doebler’s Pennsylvania Hybrids, Inc.
v. Doebler, 442 F.3d 812, 823–24 (3d Cir. 2006), Specht’s argu-
ment presupposes that Google had an enforceable right to the
Android mark, a position that undercuts Specht’s claim to be
the holder of that right. Third, an argument about naked
licensing is an argument about Google’s rights against licens-
ees, and licensees are not an issue in this case.
   Even if we put these flaws aside, Specht’s argument does
not address the district court’s sound conclusion that Google
became the senior user of the Android mark when it used the
mark in commerce in November 2007. By then, the Android
mark lay abandoned. Once a mark is abandoned, it returns to
the public domain, and may be appropriated anew. See
Indianapolis Colts, Inc. v. Metro. Baltimore Football Club Ltd.
P’Ship, 34 F.3d 410, 412 (7th Cir. 1994); ITC Ltd., 482 F.3d at 147.
By adopting the abandoned mark first, Google became the
senior user, entitled to assert rights to the Android mark
against the world. Its use since November 2007 has been
uninterrupted and continuous. That is enough to warrant
trademark protection. See Zazu Designs, 979 F.2d at 503; Blue
12                                                  No. 11-3317

Bell, Inc. v. Farah Mfg. Co., Inc., 508 F.2d 1260, 1265 (5th Cir.
1975) (“even a single use in trade may sustain trademark rights
if followed by continuous commercial utilization”); see also
Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188,
1194–95 (11th Cir. 2001) (release of software to end users is use
in commerce even though no sale was made).
    Specht replies that, even if he had abandoned the mark
after 2002, he either resumed using or developed an intent to
resume using the Android Data mark by December 2007, again
citing his mass mailing. But by then it was too late. Specht had
abandoned the mark by the end of 2002, and more than three
years had passed before Google publicized its release of the
Android operating system in November 2007. With the mark
permanently abandoned by November 2007, Specht could not
reclaim it the following month. The district court therefore
correctly granted summary judgment on all of Specht’s claims.
See TMT N. Amer. v. Magic Touch GmbH, 124 F.3d 876, 885 (7th
Cir. 1997) (“abandonment … result[s] in the loss of trademark
rights against the world”).
    Two final matters remain. First, Specht argues that the
district court canceled his mark without the authority to do so.
Although 15 U.S.C. § 1119 grants courts the authority to cancel
a trademark’s registration, the district court here cited 15
U.S.C. § 1064, which authorizes similar action by the Patent
and Trademark Office. The district court’s citation to the
incorrect statutory provision does not invalidate its authority
to cancel the mark. And cancellation in this case was proper.
“Where, as here, a registrant’s asserted rights to a mark are
shown to be invalid, cancellation is not merely appropriate, it
is the best course.” Central Mfg., 492 F.3d at 883.
No. 11-3317                                                         13

    Finally, Specht argues that the district court improperly
awarded costs because the judgment was silent about whether
the losing party was to bear the costs of the litigation. This
argument is frivolous. A judgment silent about costs is a
judgment allowing costs to the prevailing party. Congregation
of the Passion, Holy Cross Province v. Touche, Ross & Co., 854 F.2d
219, 221 (7th Cir. 1988). Specht’s argument that Google is not
the prevailing party lacks any merit. Google is the only party
to the suit who succeeded on a significant legal issue in the
suit. See King v. Ill. State Bd. of Elections, 410 F.3d 404, 414 & n.10
(7th Cir. 2005). Indeed, Google was awarded all the relief for
which it asked. The order granting costs to Google was proper.
                                                        AFFIRMED.