The opinion of the court was delivered by: MARILYN PATEL, Chief Judge, District
MEMORANDUM AND ORDER Motion for Summary Judgment
In March 2003, plaintiff Halo Management, LLC ("HM") brought
this civil action against defendant Interland, Inc., seeking
monetary and injunctive relief for alleged violations of federal
trademark law, see 15 U.S.C. § 1114, 1125, and of California's
Business and Professional Code. See Cal. Bus. & Prof. Code §
17203. On October 17, 2004, the court denied HM's motion for a
preliminary injunction. Now before the court is Interland's
motion for summary adjudication. The court has considered fully
the parties' arguments, and for the reasons set forth below, the
court rules as follows.
I. Background Facts and the Parties' Relationship
Founded as a sole proprietorship, HM is a small, privately-held
limited liability corporation based in Los Altos, California.
Focusing on internet-related services, HM offers email,
web-search functions, and web-hosting to its list of subscribers
and customers.*fn2 In late 1999, HM filed a United States
trademark application for the word mark "HALO."*fn3 By June
25, 2002, HM had registered the "HALO" mark,*fn4 see Ashby
Dec., Exh. 3, identifying two classes of relevant goods and
services: CLASS 038 Electronic communication and commerce
services, namely, electronic transmission of voice,
video, and data via computer terminals, electronic
mail services, providing on-line chat rooms for
transmission of messages among computer users in the
field of business, legal, and intellectual asset
management, and providing multi-user access to a
global computer network.
CLASS 042 Providing a search engine for online
searching and retrieving of information on a global
computer network; hosting the web sites of others on
a computer server for a global computer network;
on-line, non-downloadable electronic newsletters in
the field of business, legal, and intellectual asset
management; and intellectual property consultation.
Interland, Inc. is a publicly-traded corporation, attracting
customers through, inter alia, its listing on the NASDAQ stock
exchange. Like HM, Interland offers an array of internet-based
services to its subscribers and customers. As a part of its
business practices, Interland employs the web address
"bluehalo.com," often redirecting visitors to the "bluehalo.com"
site to Interland's corporate homepage ("interlandcom").
Interland also displays the symbol "blueHALO" prominently
throughout its corporate, sales, and marketing materials, often
if not uniformly casting the mark in the color blue.
After HM filed its 1999 trademark application for
"HALO,"*fn5 Interland filed an intent-to-use*fn6
trademark application for the mark "blueHALO Architecture." See
Ashby Dec., Exh. 5 (dated June 13, 2002).*fn7 Interland's
trademark application identified web-hosting as the service
targeted by the mark. The Patent & Trademark Office ("PTO")
rejected Interland's "blueHALO Architecture" application on March
7, 2003. See Ashby Dec., Exh. 6 (citing 15 U.S.C. § 1052
(d) of the Lanham Act in finding Interland's proposed mark
too likely to cause confusion, too likely to cause mistake, or
too likely to deceive). Interland filed a second trademark
application a short time later. In this second application,
Interland substituted the phrase "and Design" for "Architecture,"
seeking to register the mark "blueHALO and Design." See Ashby
Dec., Exh. 7 (noting that the mark was "lined" for the color
blue). The PTO refused Interland's second application, once again
noting the likelihood of confusion and the close affinity between
the goods and services offered by the parties. See Ashby Dec.,
Exh. 8. Interland continued to employ the "blueHALO" moniker in its
business ventures. HM learned of Interland's ongoing use in
January 2003, and it promptly asked Interland to alter the mark
used in Interland's web-hosting services. Interland confirmed
receipt of HM's initial query, but Interland did not otherwise
respond. Not until HM reiterated its request, in fact, did
Interland formally refuse HM's demand See Ashby Dec., Exh. 11.
During this time, Interland continued to use the "blueHALO"
moniker in its press releases, denoting the term with a
superscript "SM." See, e.g., Ashby Dec., Exh. 12. Interland
also used the mark in combination with "shared" or
"Architecture," rerouting all visitors to the "bluehalo.com"
website directly to Interland's corporate homepage. See Ashby
Dec. ¶ 9.
On July 1, 2002, HM entered a "License, Consent to Use and
Registration Agreement" with Planet Halo, Inc., a California
corporation. See Wargo Decl., Exh. B.*fn8 Through this
agreement, HM granted Planet Halo a license to use HM's mark
and "any eventual registrations based thereon" and invested
Planet Halo with the right to "worldwide use and registration."
Id. When it entered this license agreement, Planet Halo agreed
only "to employ reasonable commercial efforts to maintain the
positive business value of the HALO mark." Id. No explication
of this provision is provided in the agreement, and no express
right to inspect or to supervise Planet Halo's "efforts" is
provided. Id. (permitting either party to "assign th[e license]
Agreement so long as any such assignee agrees to the terms and
conditions [t]herein"). In fact, the licensing agreement invests
HM with no express contractual right to inspect or to monitor
Planet Halo's use of the "HALO" mark. See, e.g., Wargo Decl.,
Exh. A & B.
III. The Instant Litigation
HM filed this action on March 14, 2003. See Compl. at 1. On
October 17, 2004, the court denied HM's motion for a preliminary
injunctive relief, finding that HM had failed to satisfy either
portion of the relevant "sliding scale." See Southwest Voter
Registration Education Project v. Shelley, 344 F.3d 914, 917
(9th Cir. 2003) (en banc; per curiam) (discussing the court's responsibility to consider the moving party's "likelihood of
success on the merits," "the possibility of irreparable injury,"
and the seriousness of "the questions" raised, and "the balance
of hardships"). Interland has now moved for summary judgment,
arguing that HM abandoned its rights in the relevant mark and, in
so doing, forfeited all of the claims federal and state it
attempts to bring here.
Under Federal Rule of Civil Procedure 56, summary judgment
shall be granted "against a party who fails to make a showing
sufficient to establish the existence of an element essential to
that party's case, and on which that party will bear the burden
of proof at trial . . . since a complete failure of proof
concerning an essential element of the nonmoving party's case
necessarily renders all other facts immaterial." Celotex Corp.
v. Catrett, 477 U.S. 317, 322-23 (1986); Fed.R.Civ.P. 56(c).
When making a summary judgment motion, the moving party bears the
initial burden of identifying those portions of the record that
demonstrate the absence of a genuine issue of material fact. To
discharge this burden, the moving party must show that the
nonmoving party has failed to disclose the existence of any
"significant probative evidence tending to support the
complaint." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253,
290 (1968). If the moving party satisfies this initial hurdle,
the burden then shifts to the nonmoving party ...