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Postal Service Domain Name Dispute


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Opinion and Order - United States Trademark Law


FILED
2001 April 16

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

CV 99-1290-MA
OPINION AND ORDER

ZIPEE CORP., a Washington corporation, and ZIPEE.COM, INC., an Oregon
corporation,

Plaintiffs,

v.

UNITED STATES POSTAL SERVICE,

Defendant.

Kristine Olson
United States Attorney
District of Oregon
William W. Youngman
Assistant United States Attorney
1000 S.W. Third Ave., Suite 600
Portland, OR 97204-2902

Patricia K. Norris
Keith Beauchamp
Jennifer Van Kirk
Lewis and Roca LLP
40 North Central Ave.
Phoenix, AZ 85004

Attorneys for Defendant


MARSH, Judge.

Plaintiffs originally filed this action seeking declaratory and
injunctive relief; defendant filed an answer asserting counterclaims
for federal trademark infringement under the Lanham Act, 15 U.S.C.
1114, unfair competiton under the Lanham Act, 15 U.S.C. 1125(a),
federal and state statutory dilution, 15 U.S.C. 1125(c) and Wash. Rev.
Code 19.77.160 and common law trade name infringement and unfair
competition. On December 12, 2000, I granted defendant's motion for
summary judgment on the issues of infringement and cybersquatting and
denied plaintiffs' cross-motion for summary judgment. Thereafter,
defendant requested dismissal of its remaining counter-claims. On
January 29, 2001, I entered a judgment permanently enjoining
plaintiffs and any of their associates from using the postal services'
marks and I awarded defendant its taxable costs. After entry of
judgment, I granted plaintiffs' attorneys' motion to withdraw. There
has been no substitution of counsel for plaintiffs.

Defendant now moves for attorney fees and non-taxable costs totaling
$1,183,403.22 under the Lanham Act, 15 U.S.C. 1117(a). Plaintiffs have
filed no opposition. The Lanham Act provides that a court may award
reasonable attorney fees in "exceptional cases." Although the Act
fails to define what constitutes an "exceptional" case, the Ninth
Circuit has held that a trademark case is exceptional if the
infringement is "malicious, fraudulent, deliberate or willful." Gracie
v. Gracie, 217 F.3d 1060, 1068 (9th Cir. 2000). Awards are "never
automatic." Rolex Watch, USA, Inc. v. Michel Co., 179 F.3d 704, 711
(9th Cir. 1999).

The secision to award fees rests within the sound discretion of the
trial judge. Gracie, 217 F.3d at 1068. A finding of willful
infringement will support a fee award. See Id. Fees may be denied
where the legality of the activity is "unsettled," see e.g. Securacomm
Consulting, Inc. v. Securacom, Inc., 224 F.3d 273, 279 (3rd Cir.
2000), or where the claims are "not unfounded" or brought for puposes
of harassment. See e.g. National Ass'n of Professional Baseball
Leagues, Inc. v. Very Minor Leagues, Inc., 223 F.3d 1143, 1149-50
(10th Cir. 2000).

The prevailing party bears the burden of demonstrating the exceptional
nature of the case by "clear and convincing evidence." Seven-Up Co. v.
Coca-Cola Co., 86 F.3d 1379, 1390 (5th Cir. 1996); Leatherman Tool
Group, Inc. v. Cooper Industries, Inc., 1998 WL 349554, 47 U.S.P.Q. 2d
1049, 1050 (D. Or. 1998).

Defendant contends that it is entitled to fees because plaintiffs'
infringement was willful and based upon evidence relied upon in
support of the cybersquatting counterclaim relative to plaintiffs'
registration of other internet domain names that are confusingly
similar to other businesses.

While I found infringement and cybersquatting established in this
case, there was a genuine, good faith dispute as to whether or not the
term "postal service," was entitled to trademark protection at all.
Defendant has no registration for the phrase "postal service," but
instead relied upon related registrations for U.S. Postal Service
marks. Whether "postal service" was generic and unprotectable or
descriptive and protectable because it had acquired secondary meaning
was not a groundless or unreasonable issue. I find that the
plaintiffs' internet domain name registration for
http://postal-service.info and related marks presented a question of
unsettled legality. Thus, I cannot say that this represents and
"exceptional" case to justify a fee award.

Based upon the foregoing, I decline to exercise my discretion to award
attorney fees in this action. Accordingly, defendant's motion for fees
(#150) is DENIED.

IT IS SO ORDERED.

DATED this 13 day of April, 2001.

Signed
Malcolm F. Marsh
United States District Judge

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Additional articles on the 'Postal Service Domain Name Dispute' can be
found @ http://www.ord.uscourts.gov/news/vi9.pdf

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