Planetary Motion, Inc. v. Techsplosion, Inc.

RESTANI, Judge.

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Facts

I. Development and Distribution of the "Coolmail" Software

In late 1994, Byron Darrah ("Darrah") developed a UNIX-based program (the "Software") that provides e-mail users with notice of new e-mail and serves as a gateway to the users' e-mail application. On December 31, 1994, Darrah distributed the Software over the Internet by posting it on a UNIX user site called "Sunsite," from which it could be downloaded for free. Darrah had named the Software "Coolmail" and this designation appeared on the announcement sent to the end-users on Sunsite as well as on the Software user-manual, both of which accompanied the release.

The Software was distributed without charge to users pursuant to a GNU General Public License that also accompanied the release. A GNU General Public License allows users to copy, distribute and/or modify the Software under certain restrictions, e.g., users modifying licensed files must carry "prominent notices" stating that the user changed the files and the date of any change. After the release of the Software, Darrah received correspondence from users referencing the "Coolmail" mark and in some cases suggesting improvements. In 1995, Darrah released two subsequent versions of the Software under the same mark and also pursuant to the GNU General Public License.

In early 1995, a German company named S.u.S.E. GmbH sought permission from Darrah to include the Software in a CD-ROM package sold as a compilation of Unix-based programs. Darrah consented and, pursuant to the GNU licensing agreement, S.u.S.E. distributed the Software in its compilation product and in subsequent versions thereof. S.u.S.E. sold and continues to sell the software compilation in stores in the United States and abroad, as well as over the Internet.

II. Launch of Techsplosion's "CoolMail" E-mail Service

In 1998, Appellant Carson formed Techsplosion, for the purpose of operating a business based on an e-mail service that he had developed. On April 16, 1998, Techsplosion began offering the e-mail service on the Internet under the mark "CoolMail." Two days later, Techsplosion activated the domain name "coolmail.to" Techsplosion delivered an e-mail solicitation under the "CoolMail" mark to approximately 11,000 members of the Paramount Banner Network, an Internet advertising network, also created and operated by Carson. Techsplosion charged no fee to subscribe to the service and generated revenues through the sale of banner advertisements on its web site.

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On April 22, 1999, Planetary Motion filed a complaint against Techsplosion. In the complaint, Planetary Motion alleged infringement of the alleged mark "Coolmail" for use in connection with e-mail services. Planetary alleged federal trademark infringement and unfair competition under Section 43(a) of the Lanham Act, as well as injury to business reputation and dilution under Florida Statute Sec. 495.151. . . .

Discussion

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I. Prior Use in Commerce

Under common law, trademark ownership rights are "appropriated only through actual prior use in commerce." Under the Lanham Act, 5 the term "use in commerce" is defined in relevant part as follows:

the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. . . . A mark shall be deemed to be in use in commerce . . . 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 . . .

The district court found that because the statute is written in the disjunctive (i.e., "sale or transport"), Darrah's wide distribution of the Coolmail software over the Internet, even absent any sales thereof, was sufficient to establish ownership rights in the "CoolMail" mark. Appellants contend that "transport in commerce" alone -- here, Darrah's free distribution of software over the Internet "with no existing business, no intent to form a business, and no sale under the mark" -- is insufficient to create trademark rights. Appellants' argument lacks merit.

Nevertheless, the use of a mark in commerce also must be sufficient to establish ownership rights for a plaintiff to recover against subsequent users under section 43(a). . . . The court in Mendes set forth a two part test to determine whether a party has established "prior use" of a mark sufficient to establish ownership:

Evidence showing, first, adoption, and, second, use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark, is competent to establish ownership, even without evidence of actual sales.

Courts generally must inquire into the activities surrounding the prior use of the mark to determine whether such an association or notice is present. . . . Under the "totality of circumstances" analysis, a party may establish "use in commerce" even in the absence of sales. "Although evidence of sales is highly persuasive, the question of use adequate to establish appropriation remains one to be decided on the facts of each case . . ." The court in New West recognized that "mere advertising by itself may not establish priority of use," but found that promotional mailings coupled with advertiser and distributor solicitations met the Mendes "public identification" ownership requirement. Thus, contrary to Appellants' assertions, the existence of sales or lack thereof does not by itself determine whether a user of a mark has established ownership rights therein. . . .

We find that, under these principles, Darrah's activities under the "Coolmail" mark constitute a "use in commerce" sufficiently public to create ownership rights in the mark. First, the distribution was widespread, and there is evidence that members of the targeted public actually associated the mark Coolmail with the Software to which it was affixed. Darrah made the software available not merely to a discrete or select group (such as friends and acquaintances, or at a trade show with limited attendance), but to numerous end-users via the Internet. The Software was posted under a filename bearing the "Coolmail" mark on a site accessible to anyone who had access to the Internet. End-users communicated with Darrah regarding the Software by referencing the "Coolmail" mark in their e-mails. Appellants argue that only technically-skilled UNIX-users made use of the Software, but there is no evidence that they were so few in number to warrant a finding of de minimis use.

Third, the mark served to identify the source of the Software. The "Coolmail" mark appeared in the subject field and in the text of the announcement accompanying each release of the Software, thereby distinguishing the Software from other programs that might perform similar functions available on the Internet or sold in software compilations. The announcements also apparently indicated that Darrah was the "Author/Maintainer of Coolmail" and included his e-mail address. The user manual also indicated that the Software was named "Coolmail." The German company S.u.S.E. was able to locate Darrah in order to request permission to use his Software in its product under the mark "Coolmail." Appellants do not assert that S.u.S.E. was unaware that the Software was called "Coolmail" when it contacted Darrah.

Fourth, other potential users of the mark had notice that the mark was in use in connection with Darrah's Software. In investigating whether the mark Coolmail existed before submitting its trademark registration application for its e-mail service, Planetary Motion was able to discover that Darrah was using the mark to designate his Software product.

Fifth, the Software was incorporated into several versions of a product that was in fact sold worldwide and specifically attributed ownership of the Software to Darrah under the "Coolmail" mark. Any individual using the S.u.S.E. product, or competitor of S.u.S.E., that wanted to know the source of the program that performed the e-mail notification function, could do so by referring to the user manual accompanying the product. There is no support for the argument that for a trademark in software to be valid, the mark must appear on the box containing the product incorporating it, that the mark must be displayed on the screen when the program is running, or that the software bearing the mark be a selling point for the product into which it is incorporated. There is no requirement that the public come to associate a mark with a product in any particular way or that the public be passive viewers of a mark for a sufficient public association to arise.

Sixth, software is commonly distributed without charge under a GNU General Public License. The sufficiency of use should be determined according to the customary practices of a particular industry. . . .That the Software had been distributed pursuant to a GNU General Public License does not defeat trademark ownership, nor does this in any way compel a finding that Darrah abandoned his rights in trademark. Appellants misconstrue the function of a GNU General Public License. Software distributed pursuant to such a license is not necessarily ceded to the public domain and the licensor purports to retain ownership rights, which may or may not include rights to a mark. . . .