Wednesday, August 26, 2015

Fifth Circuit upholds mandatory self-abnegating disclosure to correct competitor's harassment

Test Masters Educational Services, Inc. v. Robin Singh Educational Services, Inc., No. 13-20250 (5th Cir. Aug. 21, 2015)
The parties, test prep companies, have competing claims to TESTMASTERS as a trademark, and have been litigating for over a decade.  Plaintiff TES operates under the name Testmasters; it was founded in 1991, initially concentrating on engineering licensing exams but expanding to others, including the LSAT. Until 2002, TES offered live courses only in Texas, primarily in Houston; it has since expanded outside Texas.  Singh started offering test preparation courses under the name “TestMasters” in 1991. Singh initially offered only LSAT courses in California, but has since expanded to offer courses nationwide for a variety of exams.
Singh applied for registration in 1995; the PTO first denied the application on the basis of other similar marks, but approved the application “after determining that none of the three marks were still in use.” At that point, Singh discovered that TES already owned the domain name “” and sent TES a demand letter.  Litigation ensued, and continued.  In 2002, the Fifth Circuit held that TESTMASTERS was descriptive, that TES’s rights to the mark were limited to Texas, and that Singh had failed to prove that the mark had acquired secondary meaning.  After the second lawsuit, in 2005, Singh was enjoined from interfering with TES’s use of the mark in Texas, and Singh was permitted to challenge TES’s claim to the mark outside of Texas.
Also, TES applied for nationwide registration in 2001; Singh opposed.  In 2011, after a lot of stuff I’m sure everyone involved wishes they could’ve skipped too, the TTAB denied the applications, holding that the mark was descriptive and that TES had failed to demonstrate “substantially exclusive use” of the descriptive mark. In April 2013, the district court affirmed the TTAB’s decision, granted Singh summary judgment on TES’s infringement claims, and dismissed Singh’s infringement counterclaims based on collateral estoppel.  There was also a contempt issue, of which more below.
On appeal, TES argued that Singh lacked standing to oppose the registration, because he’d previously lost on the secondary meaning issue.  But he’d only been enjoined from pursuing registration, not from claiming trademark rights, so he had standing.  TES further argued that it had presented enough evidence of secondary meaning in “unrestricted geographic and subject matter areas” to survive summary judgment.  It had not.  The evidence showed that both parties had used the mark for a while, and that Singh’s company was larger and did significantly more business outside Texas.  Both parties advertised extensively, TES mostly to engineering students and Singh primarily to LSAT takers.  TES’s survey was flawed because, though it asked engineering exam-takers whether they associated “Testmasters” with one company, it didn’t determine which one that was for the 50.7% who said yes.  Plus, the survey was directed only at people taking engineering exams and half of those polled were from Texas. As for direct consumer evidence, the court of appeals agreed with the district court that “[e]ach party’s evidence shows that, in its strongest subject matter area, it is well-known and there may be some consumer confusion.”
What TES needed to show to prove its case was that the mark had “secondary meaning on a nationwide basis for all test preparation courses.” At most, it showed that the mark has acquired a secondary meaning for professional engineering examinations, not any other test preparation services.
Singh argued that the district court erred in finding him collaterally estopped from claiming secondary meaning.  It didn’t.  Singh claimed that the passage of 13 years changed things enough to justify giving him another bite at the apple: among other things, his annual revenues increased from just over $3 million in 2001 to an average of $14 million between 2008 and 2010. But “[e]vidence of increased business success alone is insufficient to show a significant intervening change” to justify rejecting collateral estoppel.
The court of appeals vacated a contempt order against Singh’s lawyer, Daniel Sheehan, but not against Singh.  In 2003 and 2004, the district court enjoined Singh from registering the mark, interfering with TES’s attempt to register the mark, and using the mark in Texas/directing the mark at Texas; then added an order barring Singh from “threatening, or harassing [TES], its employees, its staff, or TES’s counsel, counsel’s employees, or counsel’s staff.” (A bar on direct communication was reversed by the court of appeals; the threat/harassment prohibitions were upheld.)
According to TES, Singh continued to advertise in Texas, instructed employees to post negative comments about TES on various websites, and aided in the posting of defamatory videos online. One posting referenced a state-court paternity suit involving TES’s founder, calling him a “deadbeat dad” and mentioning the minor child involved in the suit by name.  At the contempt hearing, the court ordered Singh’s lawyer incarcerated to get Singh to remove the postings, which Singh took steps to do; the court also ordered Singh to remove the harassing posts. 
TES then requested additional contempt sanctions, which were granted in part, and the district court ordered Singh to publish a “remedial posting” on “” in response to the “deadbeat dad” post he had previously made, requiring him to post: “Robin Singh and Robin Singh Educational Services previously posted on March 25, 2010, a Complaint Review of Dr. Haku Israni and his website Singh and Dr. Israni were involved in litigation at that time and Singh would now like to retract his prior complaint. No credence should be paid to that complaint or any of its contents.”
Singh argued that the contempt sanctions and remedial order violated the First Amendment. The court of appeals disagreed.  Harassment isn’t protected by the First Amendment, even when the harassment is published on the internet and not directly communicated to the target.
Singh also argued that the remedial statement violated his First Amendment right not to speak, and that he was forced to say things that were simply untrue, because he didn’t “wish” to retract his complaint and believed that credence should be given to his claims.  Singh’s statements were commercial speech.  Though the post focused on TES’s founder’s personal life, “Singh must have made it with the economic interest of harming TES.”  A required disclosure related to commercial speech need only be “reasonably related to the [government’s] interest in preventing deception of consumers.” Because the original posting was deceptive, the district court’s order was reasonably related to its interest in preventing consumer deception by correcting the misleading information.  Singh’s objection to the language indicating he’d like to retract the statements didn’t identify a “relevant” falsehood.  “Whether Singh enjoyed taking this medicine is an insignificant question of phrasing.”
[Note that under the panel opinion in the NAM v. SEC case, this result couldn’t occur.  The Ripoff Report complaint isn’t “advertising” even if it is commercial speech, and the like/credence wording would seem to trigger the controversiality/not purely factual limit as interpreted therein.]

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