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HALO MANAGEMENT, LLC v. INTERLAND

August 9, 2004.

HALO MANAGEMENT, LLC, Plaintiff,
v.
INTERLAND, INC., Defendant.



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.

BACKGROUND*fn1

  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.
Id.

  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.

  II. The Relevant Licence

  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.

  LEGAL STANDARD

  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 ...


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