Court Opinion

ID: 37626
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:55:42+00
Date Added: 2024-06-11T17:15:44.653735
License: Public Domain

United States Court of Appeals
                                                                 Fifth Circuit
                                                              F I L E D
                IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT                 January 24, 2005

                                                          Charles R. Fulbruge III
                                                                  Clerk
                            No. 03-11069

MARCH MADNESS ATHLETIC ASSOCIATION LLC

          Plaintiff - Counter Defendant - Third Party Plaintiff -
          Appellee - Cross Appellant

versus

NETFIRE INC, a Texas Corporation, dba Sports Marketing
International Inc; SPORTS MARKETING INTERNATIONAL INC

          Defendants - Counter Claimants - Third Party Defendants
          - Appellants - Cross Appellees

MATTHEW JONES

          Third Party Defendant - Appellant - Cross Appellee

versus

ILLINOIS HIGH SCHOOL ASSOCIATION, an Illinois Assocation

          Counter Defendant - Appellee

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION

          Counter Defendant - Appellee - Cross Appellant

                       --------------------
          Appeals from the United States District Court
            for the Northern District of Texas, Dallas
                           3:00-CV-398-R
                       --------------------

Before REAVLEY, BENAVIDES, and PRADO, Circuit Judges.

                                  1
PER CURIAM:*

                           I.   INTRODUCTION

     This dispute centers on competing claims to the domain name

marchmadness.com.     The Appellants/Cross-Appellees in this case

are Netfire, Inc. (“Netfire”), Sports Marketing International,

Inc. (“SMI”) and Matthew Jones (“Jones”) (collectively the “SMI

Parties”).     The Appellees are the March Madness Athletic

Association (“MMAA”), the National Collegiate Athletic

Association (“NCAA”) and the Illinois High School Association

(“IHSA”).    MMAA and NCAA are also Cross-Appellants, while IHSA

has withdrawn its cross-appeals.

     In February 2000, IHSA sued Netfire for trademark

infringement, dilution and unfair competition under the Lanham

Act and Texas state law.     MMAA later replaced IHSA as the

plaintiff in the case, and amended its complaint to add a claim

for cybersquatting, in violation of 15 U.S.C. § 1125.

     SMI filed counterclaims for fraud, tortious interference

with contract and with business relations, and civil conspiracy.

Finally, the SMI Parties amended their counterclaims to add a

claim for conversion against IHSA and claims for fraud and civil

conspiracy against IHSA and NCAA.

     The district court, in orders on August 15, 2001 and June 4,

     *
          Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.

                                   2
2002, granted IHSA and NCAA’s motion for summary judgment on

SMI’s counterclaims.   The district court denied the remaining

motions for summary judgment filed by the parties, and the case

proceeded to a bench trial.

     On August 28, 2003, the district court issued its Findings

of Fact and Conclusions of Law in favor of MMAA on its

infringement and cybersquatting claims, and against MMAA on its

civil conspiracy claim.   The district court transferred ownership

of the domain name marchmadness.com to MMAA, and it required the

SMI Parties to pay the costs of the district court action.   The

district court did not, however, require the SMI Parties to pay

MMAA’s attorneys’ fees, nor did it find the SMI Parties liable

for any damages.

     The SMI Parties appeal the district court’s findings that

March Madness is a protectable mark and that a likelihood of

confusion exists between March Madness and marchmadness.com.     The

SMI Parties also appeal the district court’s grant of summary

judgment in favor of the NCAA and IHSA on SMI’s counterclaims.

     MMAA and NCAA appeal the following findings by the district

court: that March Madness was not an inherently distinctive mark,

that the SMI Parties did not engage in a civil conspiracy, that

SMI was not liable for the acts of Jones and Netfire, that MMAA

was not entitled to damages and that MMAA was not entitled to

attorneys’ fees.

     For the reasons below, we affirm in all respects.

                                 3
                        II. STATEMENT OF FACTS

      A. History of marchmadness.com

      Dirk and Phil Brinkerhoff (“Dirk” and “Phil”) are brothers

who together formed SMI.    Matthew Jones is Phil’s son-in-law and

the founder of Netfire.1    In December 1995 or January 1996, Dirk

and Jones discussed obtaining the domain name marchmadness.com so

that SMI could use it to develop a website focused on the NCAA

Division I Men’s Basketball Championship (the “NCAA Tournament”).

Jones told Dirk that the domain name was available, so Dirk

instructed Jones to acquire it.

      In fact, an individual named Adam Stein (“Stein”) had

registered marchmadness.com in late 1995 before Jones could do

so.   As an alternative, Jones registered the domain name march-

madness.com.

      Jones, acting on behalf of Netfire, and without the

knowledge of the Brinkerhoffs or SMI, contacted Stein in early

1996.     Jones told Stein that Netfire was affiliated with the NCAA

and that Netfire was the rightful owner of marchmadness.com,

neither of which was true.    On February 7, 1996, Jones and Stein

executed an agreement transferring marchmadness.com to Netfire in

exchange for a $25,000 advertising credit on Netfire websites,

the rights to the domain name march-madness.com and a link from

      1
      Jones is an experienced cybersquatter. He registered for
many other domain names including stairmaster.com, gucci.com and
windows98.com.

                                   4
marchmadness.com to march-madness.com.

     The SMI Parties immediately began to develop content for

marchmadness.com.    All of the content related to the NCAA

Tournament.2

     The NCAA sent SMI a cease and desist letter on February 5,

1996 asserting its trademark rights.     The letter stated: “The

name of the project [marchmadness.com], in the context in which

your client is using it, infringes on the NCAA’s common law mark

‘March Madness.’”    In response, SMI decided not to operate the

website for the March 1996 NCAA Tournament.

     IHSA sent a cease and desist letter to SMI on October 14,

1996.    The letter stated that IHSA was the “owner of all rights

to the trademark March Madness, including Federal Trademark

Registration No. 1,571,340.”

     Despite the letters from the NCAA and IHSA, SMI decided to

continue development of the site.     The website was operational

from sometime in 1997 until July 1999.3

     In 1998, IHSA requested that Network Solutions, Inc.

(“NSI”), the entity that controls the domain registration

process, place marchmadness.com on hold, which would pull the

     2
      Dirk Brinkerhoff testified that marchmadness.com was not
intended to be a commercial site and that SMI had a long-term
plan for it to cover a wide range of sports, as opposed to only
covering the NCAA Tournament. However, the district court found
his testimony “unpersuasive” and “entirely without credibility.”
     3
      Due to a server malfunction, the site was not available
for a few months in 1998.

                                  5
domain name out of circulation.   NSI did so in late June 1999.

However, in January 2000, NSI notified IHSA that it had changed

its hold policy, and that IHSA would have to submit court

documents related to SMI by February 23, 2000 in order to

preserve the hold.   Accordingly, IHSA filed this suit on February

22, 2000.

     B. History of “March Madness”

     IHSA has organized an annual boys’ high school basketball

tournament in Illinois since 1908.    Since the 1940s, IHSA has

used the term “March Madness” to refer to the IHSA Tournament.

     IHSA first attempted to register March Madness in 1990.      At

that time it discovered that an entity called Intersport had

registered the phrase on December 12, 1989.    Intersport’s

registration was for “entertainment services, namely,

presentation of athletic and entertainment personalities in a

panel forum” regarding the NCAA Tournament.    IHSA and Intersport

eventually came to an agreement, on July 24, 1995, whereby

Intersport assigned its registered service mark to IHSA in return

for a perpetual license to use March Madness for its sports

programming and a share of royalty payments received by IHSA.

     IHSA claimed exclusive rights to March Madness, and it

licensed the phrase for any use, even uses that did not relate to

the IHSA Tournament.   Its commercial licensees included Wilson

Sporting Goods, Pepsi and the Chicago Tribune.    IHSA also

                                  6
licensed March Madness to other state high school associations

for the nominal fee of $10.

     The NCAA’s first use of the phrase “March Madness” is

generally traced to 1982, when CBS broadcaster Brent Musberger

used the phrase to describe the NCAA Tournament.4   The NCAA began

licensing March Madness in 1988 as one of a set of marks relating

to NCAA championships.

     C. Trademark Dispute Between IHSA and NCAA

     In the early 1990s, both IHSA and NCAA were claiming

exclusive rights to all commercial uses of March Madness.    In

1996, IHSA sued an NCAA licensee, GTE Vantage, that created a

basketball video game that made use of the phrase March Madness.

In December 1996, the Seventh Circuit, in Illinois High School

Ass’n v. GTE Vantage, rejected IHSA’s claim to rights over March

Madness in the context of the NCAA Tournament.    99 F.3d 244, 247-

48 (7th Cir. 1996).

     Following the Seventh Circuit decision in GTE Vantage, IHSA

and NCAA decided to work together to protect their rights in

March Madness.   After several years of negotiation, IHSA and NCAA

formed MMAA on February 29, 2000, one week after the instant case

was filed by IHSA.    IHSA and NCAA each transferred all rights it

held in March Madness to MMAA, and in return each received a

     4
      CBS was the licensed television broadcaster for the NCAA
Tournament at the time.

                                  7
license to use the term in relation to its basketball tournament.

     As of August 2003, MMAA held seven registered service marks

or trademarks for March Madness, an additional five for America’s

Original March Madness and another for March Madness Experience.

                           III. Discussion

     After considering the record and the parties’ arguments in

their briefs and at oral argument, we affirm the district court

for the following reasons:

     With respect to the district court’s finding that “March

Madness” is a descriptive mark which has acquired secondary

meaning - a question of fact that we review for clear error - we

find no clear error.    See, e.g., Am. Heritage Life Ins. Co. v.

Heritage Life Ins. Co., 494 F.2d 3, 11, 13 (5th Cir. 1974).

     With respect to the district court’s finding that

marchmadness.com created a likelihood of confusion with “March

Madness” - a question of fact that we review for clear error - we

find no clear error.    See, e.g., Elvis Presley Enters. v. Capece,

141 F.3d 188, 196 (5th Cir. 1998).

     With respect to the district court’s determination that the

registration and use of marchmadness.com by SMI, Netfire and

Jones violated the Anti-Cybersquatting Consumer Protection Act

(“ACPA”),5 we find no error.    Whether they profited or not, SMI,

Netfire and Jones acted with the bad faith intent to profit as

     5
         15 U.S.C. § 1125(d).

                                  8
required by 15 U.S.C. § 1125(d)(1)(A)(i), and the domain name

marchmadness.com is identical or confusingly similar to the term

March Madness as required by § 1125(d)(1)(A)(ii).

     With respect to the district court’s determination that MMAA

was not entitled to damages under the ACPA as a result of the

violation by SMI, Netfire and Jones, we find no error because

damages under the ACPA are not available for domain registration

and/or use that occurred prior to the ACPA’s enactment on

November 29, 1999, and the registration and use of

marchmadness.com by the SMI Parties occurred before that date.

E. & J. Gallo Winery v. Spider Webs Ltd., 286 F.3d 270, 277 (5th

Cir. 2002); 1999 Acts, P.L. 106-113, § 3010, 113 Stat. 1536.

     With respect to the district court’s grant of MMAA’s motion

for summary judgment on the SMI Parties’ counterclaims, we find

no error.   We note that we may affirm the district court if

summary judgment “is sustainable on any legal ground in the

record” and that summary judgment “may be affirmed on grounds

rejected or not stated by the district court.”   S&W Enters.,

L.L.C. v. SouthTrust Bank of Ala., NA, 315 F.3d 533, 537-38 (5th

Cir. 2003)(internal citations omitted).   Because we have affirmed

the district court’s determination that March Madness is a

protectable trademark, all of the SMI Parties’ counterclaims

necessarily fail because they all depend on a finding that March

Madness is a generic term.

                                 9
     With respect to the district court’s determination that

Jones and Netfire made false representations in violation of 15

U.S.C. § 1125(a), we find no error.   Section 1125(a) prohibits,

inter alia, the use of any false or misleading representation of

fact that is likely to cause confusion or to deceive as to the

affiliation, connection or association of a person with another

person.   Jones falsely represented to Adam Stein, the original

owner of the domain name marchmadness.com, that he was affiliated

with the NCAA.

     With respect to the district court’s determination that the

SMI Parties were not liable for civil conspiracy, we find no

error.    Under Texas law, a civil conspiracy requires: “(1) two or

more persons; (2) an object to be accomplished; (3) a meeting of

minds on the object or course of action; (4) one or more

unlawful, overt acts; and (5) damages as the proximate result.”

Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983).      The

district court determined that MMAA failed to prove, by a

preponderance of the evidence, that the SMI Parties had a shared

intent to harm Stein.   There was no meeting of the minds because

there was no evidence that Jones told anyone that he was going to

obtain the domain name from Stein, rather than from NSI.    We

agree.

     With respect to the district court’s determination that SMI

was not vicariously liable for Jones’s misrepresentations to

                                 10
Stein regarding an affiliation with the NCAA, we find no error.

Furthermore, even if we did find error it would be harmless error

because a finding that SMI was vicariously liable for Jones’s

misrepresentations would not in any way alter the damage award in

this case.

     With respect to the district court’s determination that MMAA

was not entitled to attorneys’ fees, we find no clear error.

Pursuant to 15 U.S.C. § 1117(a), a court may award attorneys’

fees to the prevailing party in “exceptional cases.”      An

“exceptional case” under the Lanham Act is one “where the

violative acts can be characterized as malicious, fraudulent,

deliberate, or willful.”       Pebble Beach Co. v. Tour 18 I Ltd., 155
F.3d 526, 555 (5th Cir. 1998)(quoting Seven-Up Co. v. Coca-Cola

Co., 86 F.3d 1379, 1390 (5th Cir. 1996)).      The prevailing party

must demonstrate the exceptional nature of a case by clear and

convincing evidence.     Id.   Lack of damages is an important factor

in determining whether a case is exceptional.      Id. (citing Texas

Pig Stands, Inc. v. Hard Rock Café Int’l, Inc., 951 F.2d 684, 697

n.23 (5th Cir. 1992)).    “We review the district court's findings

as to whether a case is exceptional for clear error and its

decision on whether to award attorneys' fees for an abuse of

discretion.”   Id.

     We agree with the district court that the question of

whether to award attorneys’ fees in the instant case is a close

                                    11
call.   Given the district court’s reasons for not awarding

attorneys’ fees, including the fact that as of early 1996, when

the SMI Parties acquired marchmadness.com, the trademark rights

of IHSA and NCAA were not readily apparent and the fact that MMAA

did not prove any damages, as well as the requirement that MMAA

establish the exceptional nature of this case by clear and

convincing evidence, we find that the district court did not

abuse its discretion by declining to award attorneys’ fees to

MMAA.

     With respect to the district court’s determination that MMAA

was not entitled to damages as a result of the SMI Parties’

violations of 15 U.S.C. §§ 1125(a) and (d) for false

representations and trademark infringement, we find no error.

The SMI Parties never profited from the operation of

marchmadness.com, nor did MMAA present sufficient evidence that

it sustained damages as a result of the SMI Parties operating

marchmadness.com.

                          IV.   Conclusion

     For the foregoing reasons, the judgment of the district

court is AFFIRMED.

                                 12