Thursday, March 27, 2008

Hidden Wolf not hidden enough

, LLC v. Integra Investments, LLC, 2008 WL 746919 (D. Nev.)

Plaintiff owns the Wolf Creek Golf Club in Nevada, which is highly ranked as a public golf course. It has four trademark registrations incorporating Wolf Creek, for golf-related services, vacation-related services, and restaurant-related services. Defendant Integra owns 33 acres adjacent to Wolf Creek. The land’s previous owners tried to develop a residential community named Wolf Creek Estates, but stopped when they got sued. Integra is now developing its own residential community, named Hidden Wolf. Integra's ads prominently display photos of the Wolf Creek Golf Course and focus on the development’s proximity to the club. For example: “WORLD-CLASS GOLFING ... in your own backyard. If you've had the chance to play golf at the Wolf Creek Golf Club in Mesquite, you certainly understand why it’s consistently rated as one of the best and most challenging golf courses in America. Wouldn’t you love to play this amazing course everyday--just by stepping outside your door? Well now you can. Hidden Wolf is an exclusive residential community at the peak of the golf course ….” As the pictures here show, the ads also show a stylized wolf head, which is similar to Wolf Creek’s logo.

Wolf Creek sued for false advertising and trademark infringement. Integra argued that Wolf Creek lacked standing to bring false advertising claims. Not engaging with the recent expansion of the Conte Bros. test, the court applied the Ninth Circuit’s “competitive injury” test – was the conduct at issue harmful to the plaintiff’s ability to compete with the defendant. Most false advertising cases hold that mere projected or planned competition is insufficient to create competitive standing, but the court here accepted allegations that (1) Integra’s ads would interfere with Wolf Creek’s ability to develop its own residential real estate community (or “partner with,” i.e., license, someone else to do so); and (2) Wolf Creek had discussed partnerships with other home builders, or could even build homes within the golf club itself. The fact that this is out of line with standard false advertising cases is not necessarily surprising; this is really a trademark case, whether styled as false advertising or not. But it provides grist for those arguing that § 43(a)(1)(B) protects those who hope to enter a market as well as those who already have.

Integra argued that its statements about proximity and relatedness to Wolf Creek were mere puffery. The court rejected this, because the ads “specifically attempt to create an association” with Wolf Creek. In context, the ads might be misleading by suggesting that Hidden Wolf residents willl have special access to Wolf Creek, even though their purchase doesn’t give them access privileges to Wolf Creek. This is material because of Integra’s target market. And plaintiff suffers harm because other residential developers will be less likely to partner with it because of “a perceived loss of exclusivity rights,” and because disappointed Hidden Wolf residents might get mad at Wolf Creek.

Before turning to the trademark claims, the court rejected Integra’s unclean hands defense. Though Integra presented its ads to plaintiff before litigation began and plaintiff didn’t object, its actual advertising was quite different from the proposed ads. The proposed ad did use the Hidden Wolf mark, but there was only one identifiable picture of Wolf Creek, taking up less than 1/8th of a page. And the ad spent a lot more time on other desirable features of the development, including proximity to seven other golf courses, listed by name. In the actual ad, however, 80% of the space was taken up with a picture of Wolf Creek.

The infringement analysis proceeded well for plaintiff, mainly in the big three: strength, proximity, similarity. The court deemed Wolf Creek arbitrary (there’s apparently no geographic feature of that name nearby; that really makes it deceptively geographically misdescriptive, except for the fact that California Innovations emptied out that category—I’d say protectability requires secondary meaning, but it doesn’t matter in this case) and, though not “particularly strong,” had national rankings indicating goodwill and secondary meaning. Proximity of the goods usually means proximity in type; here the court found actual physical proximity, increasing the likelihood that consumers would perceive an association, whereas a development named Hidden Wolf in a different city would be less likely to be confusing.

The court found that the Hidden Wolf and Wolf Creek marks would be sufficiently different to avoid confusion if they weren’t in such close geographical proximity. “But they are.” Though the logos are different in the appearance of the stylized wolf, the font, and the typesetting, that was not enough to overwhelm the proximity factor. (Making this case an outlier compared to Barton Beebe’s set of cases—similarity is usually crucial.)

Other factors of note: Building lots are expensive, so consumers can be expected to exercise a great deal of care. But the court found a “high likelihood of initial interest and shorter-term confusion.” The use of the Wolf Creek marks and images “appear calculated to lure potential customers to its Hidden Wolf development based on the strength and the good will of Paradise Canyon’s Marks.” Sigh. Another unwarranted extension of initial interest confusion, offering no principled distinction between what Integra did and standard comparative advertising or nominative fair use. (Which is not to say that Integra should have won—but this rationale does not explain why one party could ever use another’s mark to signal what it has to sell.) Anyway, Integra’s disclaimer was tiny and overwhelmed by the focus on Wolf Creek in the ads.

Thus, Integra was enjoined from using a mark containing the word “wolf” or an image of a wolf in connection with its development, and from using pictures of Wolf Creek larger than 1/16th of total page size in their promotional materials. However, Integra was specifically allowed to establish the location of its site, including language such as “next door to” or “within walking distance of” Wolf Creek.

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