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Black v. Irving Materials, Inc.

United States District Court, N.D. California, San Jose Division

January 6, 2020

JEFFERY DEAN BLACK, Plaintiff,
v.
IRVING MATERIALS, INC., Defendant.

          ORDER DENYING JEFFERY DEAN BLACK'S MOTION FOR ATTORNEY'S FEES RE: DKT. NO. 201

          LUCY H. KOH United States District Judge.

         Plaintiff and Counterdefendant Jeffery Dean Black (“Black”) filed the instant lawsuit against Defendant and Counterclaimant Irving Materials, Inc. (“Irving”). Black asserted a reverse domain name hijacking claim and a declaratory relief claim to the effect that Black's use of the imi.com domain name was not unlawful, and to prevent the transfer of that domain name from Black to Irving. Irving asserted counterclaims for cybersquatting and for declaratory relief seeking to transfer the imi.com domain name from Black to Irving. Before the Court is Black's motion for attorney's fees. Having considered the parties' briefing, the relevant law, and the record in this case, the Court DENIES Black's motion for attorney's fees.

         I. BACKGROUND

         A. Factual Background

         1. Black Registers imi.com and Incorporates Internet Marketing Inc.

         Since at least the mid-1990s, Black has invested significant time and money developing various internet entities, projects, and businesses. ECF No. 210 at 178-82. Black is also one of the first people to register domain names: “I was again one of the main speakers in the world going around talking about the internet is coming to get people to go online. My job was kind of, let me help convince all of the people in the world that this new thing, going from what we called the ARPAnet at the time, which only colleges used, and let's get people to go on to the internet. Something you take for granted today, back then it was all dial up. No. one was doing it. My job was to make awareness to everybody in the world why they should do that.” Id. at 182:20-183:4.

         In March of 1994, Black acquired and registered for free the domain name at issue in this case, imi.com. Id. at 183:15-184:5, 191:19-23. Black associated his home address, his home phone number, his cell phone number, and his pager with the imi.com domain name from 1994 to 2019, and all of this information was listed on WHOIS. Id.; ECF No. 211 at 281:11-14.

         On April 6, 1994, Black also incorporated an entity named Internet Marketing Inc., which was the first company Black ever created. ECF No. 210 at 197:12-18, 236:20-22; BX-2 (Certificate of Incorporation of Internet Marketing Inc.). At the time Black created Internet Marketing Inc., Black was not aware of any other “IMI” business. ECF No. 210 at 191:10-14. When Black registered imi.com, Black was not aware of Irving Materials, Inc. (“Irving”): “I had no idea who Irving Materials was. I had never been out in Indiana. I've never seen any of their trucks driving here in California. I had no intent at all to profit off of their site.” ECF No. 211 at 303:12-304:10.

         Black testified that the first thing he did with Internet Marketing Inc. and the imi.com domain name after he registered it was that he started building some directories and spiders, which Black explained were “some software that [he] would write that would say, ‘I want you to go out to every, every machine on the internet, and on your way, keep track of every little machine you bounce to, or routers.'” ECF No. 210 at 184:13-185:1, 201:9-14. Black further explained: “then I reversed that backwards and turned that into the first internet service provider listing in the world that would show how many people were behind each ISP at the time. An ISP is an internet service provider.” Id. at 184:13-185:1.

         In 1994, Black used imi.com to create a website that displayed “Internet Marketing, Inc.” across the top of the page. Id. at 185:2-6; JX-5 (copy of imi.com from 1998). The Internet Archive Wayback Machine, available at archive.org, was not created until 1996 and did not start collecting websites until mid to late 1997, so the Wayback Machine did not have a copy of imi.com from 1994 to 1996. ECF No. 210 at 188:3-14. Black explained that in 1994, 1995, and maybe part of 1996, imi.com described Internet Marketing Inc. as a “data aggregator.” Id. at 230:14-232:5.

         Black used imi.com and Internet Marketing, Inc. to hold the data of his clients, and to create internet directories. Id. at 188:16-189:16. Black displayed the IMI mark on his website, documents, around 30 or more non-disclosure agreements, business plans for corporations, presentations and pitch decks. Id. at 189:23-190:8, 203:3-17. Black shared his IMI mark with companies, including Oracle, Microsoft, Yahoo, Digital Equipment, American Business Information, N.W. Ayer Incorporated, Excelsior, and Digex. ECF No. 210 at 215:1-8, 216:8- 221:14. Black does not have many records left from Internet Marketing Inc. because Black sold the company to AltaVista for $25 million, and the records then became AltaVista's property. Id. at 203:17-25.

         2. Black Changes the Corporate Form of Internet Marketing Inc.

         Black rolled Internet Marketing Inc. into two other entities. Id. at 232:11-25. Specifically, Internet Marketing Inc. started as an S Corp that was tied to Black's social security number, but because venture capitalists would not fund S Corps, Black had to change the corporate form. Id. at 232:11-25, 236:13-22. Thus, Internet Marketing Inc. was rolled into a company called iChannel in 1996, which was then later rolled into iAtlas in 1998. Id. at 236:15-16; ECF No. 211 at 277:12-16, 312:16-314:4. Black worked with the law firm of Hale & Dorr to make sure that all of Internet Marketing Inc.'s records moved with the new companies. ECF No. 210 at 232:11-25.

         3. Acquisition by AltaVista

         Black then entered into negotiations to sell iAtlas to AltaVista. Around October 1998, AltaVista specifically asked Black to take the imi.com website down to avoid any confusion about the company's name. ECF No. 210 at 241:21-25, 249:24-250:16; ECF No. 211 at 279:20-280:9. Black thus took imi.com down in October 1998. ECF No. 210 at 241:21-25, 249:24-250:16; ECF No. 211 at 279:20-280:9.

         In 1999, Black sold iAtlas to AltaVista for $25 million. ECF No. 210 at 237:24-238:15; ECF No. 211 at 277:12-22, 314:5-10; BX-13.[1] This transaction included all of the assets from Internet Marking Inc. going back to 1994, with the exception of the imi.com domain name, which AltaVista allowed Black to keep. ECF No. 211 at 277:12-278:21. Black then went to work for AltaVista. Id. at 314:6-9.

         4. Black's Other Domain Names

         In 1994, Black also registered other domain names, including “hiking, biking, scuba, tennis, recreation, hotels.com, [and] resorts.com. Obviously, IMI was the first one I did. There might be a couple others that I did, ” perhaps “ten, fifteen, something like that. They're all generic terms.” ECF No. 210 at 191:24-192:25. Black's plan for hotels.com and resorts.com was to build the first online booking reservation system in the world. Id. For hotels.com, Black built a booking reservation system complete with maps, and hand coded over 40, 000 hotels into the database. Id. at 193:18-194:15. Black ultimately sold resorts.com in 1999 for $950, 000 and hotels.com in 2001 for $11 million. Id. at 195:8-21. Black gave away the hiking, biking, scuba, tennis, and recreation domain names for free. Id. at 195:22-197:11.

         5. Irving Materials, Inc.

         Defendant and Counterclaimant Irving is an Indiana concrete and construction materials supplier that does business in Indiana, Kentucky, Tennessee, Illinois, Ohio, Michigan, and Alabama. ECF No. 212 at 652:9-11.

         At trial, the jury heard evidence about Irving's use of its IMI trademark. Jason Richmond, Irving's Director of Marketing and Business Development, testified that between 1965 to the present, Irving used the IMI trademark on fleet vehicles, ready mix concrete trucks, uniforms, building signage, billboards, business cards, price sheets, marketing materials, and promotional items. Id. at 635:13-636:7; D Ex.1. In 1962, Irving built the corporate office in Greenfield, Indiana and displayed the IMI trademark on the front of that office. ECF No. 212 at 643:1-9; D Ex.1 at 85-86. Irving introduced into evidence a brochure from the 1962 original open house when Irving moved into the new corporate headquarters that displayed the IMI trademark. 6/14/19 Transcript at 647:19-24; D Ex.1 at 45-49. In 1968, Irving displayed the IMI trademark on the company letterhead. 6/11/19 Transcript at 645:22-646:5; D Ex.1 at 266-67. In 1981, Irving displayed the IMI trademark and the goods that Irving provides--“concrete, gravel, stone, and sand”--on a brochure that Irving handed out to customers. 6/14/19 Transcript at 648:6-18; D Ex.1 at 2-5. Irving has displayed the IMI trademark on Irving's website, irvmat.com, since 1996. 6/14/19 Transcript at 636:21-23.

         McPherson testified about Irving's registration of its IMI trademark. Irving filed its trademark registration application on September 19, 1994, and Irving's IMI trademark was registered on September 19, 1995. ECF No. 211 at 519:5-18; D Ex.11. The specific goods covered by the registration were “concrete and construction aggregates, including sand, gravel, stone, and concrete in Class 19.” Id. at 519:13-19; D Ex.11. In its registration, Irving stated that Irving first used IMI on January 1, 1965, and that it first used IMI in commerce on March 1, 1991. ECF No. 211 at 519:20, 525:11-17; D Ex.11. The United States Patent and Trademark Office registered the IMI trademark without requiring any proof of secondary meaning. ECF No. 199 at 7:1-7; ECF No. 211 at 519:5-18.

         6. Irving Offers to Buy imi.com from Black

         Jerry Howard, Irving's Vice President of IT and former Director of IT, testified that Irving's website is irvmat.com. Id. at 397:14-20. Irving first put up its website in 1996. ECF No. 212 at 636:21-23. Howard first learned of the imi.com domain name in 1998. Id. at 402:22-24. Howard explained that from a search on WHOIS, Howard learned that Black was the owner of imi.com and that Black had registered imi.com in 1994. Id. at 405:1-11.

         In the summer or fall of 1998, Howard approached Black to buy the imi.com domain name for Irving. ECF No. 210 at 240:22-241:8; ECF No. 211 at 415:9-25. Howard had between two to five calls with Black regarding purchasing imi.com. Id. at 415:24-416:16.

         Black explained that at the time Howard approached Black in 1998, Black was not looking to sell imi.com. ECF No. 210 at 240:22-241:8. According to Black, Irving offered Black $500 for his imi.com domain name, which Black rejected. Id. at 242:2-15. Black testified at trial: “I said, I'm sorry. Hold on. Let me explain something here. My business is called Internet Marketing, Inc. It's still running. I'm the biggest spider in the world for what I do. I track more data than anybody else in the world as a data aggregator. $500 isn't going to cut it.” Id. Black testified that he calculated what it would cost him to convert everything over, including his DNS servers, his web content, software, and contracts, and that in light of these calculations, Black would not consider any offers below $135, 000. Id. at 242:16-243:7.

         According to Howard, Howard never offered to purchase imi.com for $500. ECF No. 211 at 416:4-13. Instead, Howard offered to purchase imi.com for $5, 000 then $10, 000. Id.; ECF No. 212 at 609:25-610:8. Howard testified that Black rejected the $5, 000 and $10, 000 offers; that Black said that those offers were too low; and that Black said he had turned down offers of more than $100, 000. Id. at 609:25-610:8; ECF No. 211 at 416:11-417:13. Howard testified that he does not recall Black mentioning the $135, 000 figure. Id.

         According to Black, Irving refused his $135, 000 figure, repeated the $500 figure, and threatened to sue Black for trademark infringement. In fact, on October 2, 1998, Irving emailed Black a draft complaint suing Black for trademark infringement in the United States District Court for the Southern District of Indiana, in Indianapolis. ECF No. 210 at 243:4-25, 248:1-249:7.

         As explained above, around that same time, in October 1998, Black had taken the imi.com website down at the request of AltaVista. Id. at 241:21-25, 249:24-250:16; ECF No. 211 at 279:20-280:9. Black testified that on October 7, 1998, Black emailed Irving to tell Irving that Black took the imi.com website down and that there could be no infringement. ECF No. 210 at 247:22-250:9.

         To handle Irving's threats to sue for trademark infringement, Black hired litigation attorneys to represent him. ECF No. 210 at 243:19-248:7. Black testified that his attorneys handled the situation with Irving and told Black that he would not hear from Irving again. Id. at 243:19-244:11, 250:11-16. Indeed, Irving never filed the suit for trademark infringement in the United States District Court for the Southern District of Indiana. Id. at 251:22-25; ECF No. 212 at 610:22-24.

         Jerry Howard, Irving's current Vice President of IT and former Director of IT, testified that Black had stated that he had taken the imi.com website down. ECF No. 211 at 424:22-426:21. Howard explained that Irving ultimately did not sue Black “because he responded to our lawyers indicating-or acknowledging the trademark infringement and indicated that he was taking the website down. ECF No. 212 at 610:22-611:3. Howard confirmed that imi.com was down as of October 1998. ECF No. 211 at 424:22-426:21.

         Howard would randomly check to confirm imi.com was still down from October 1998 on, but he stopped after a year and a half or two because “it didn't seem like there was any need to check anymore, ” the website “had been down for a longer period of time, ” and “based on what I saw in the [October 7, 1998] email, I never thought it would come back up.” Id.

         7. Black Receives Other Offers to Buy imi.com Between 2000-2002

         Black left AltaVista during the end of 2000 or the beginning of 2001. Id. at 280:1-25. Between 2000-2002, Black received offers from seven or more companies for the imi.com domain name. Id. at 284:19-285:16, 286:22-289:8. One of these offers included an offer from a company called Piezotronics for $2 million. Id. at 286:22-289:8. Black also testified that he was in discussions with Israeli Military Industries and that Black believes that their offer was upwards of $2 million. Id. at 374:1-16.

         In response to these offers, Black eventually raised the price to $4 million. Id. at 376:4- 16. Black testified that Black “overpriced” the domain name, and that the price increase drove the potential purchasers away. Id. at 376:17-19.

         8. Black Puts imi.com Back Up in 2002

         Black testified that in 2002, Black put imi.com back up. Specifically, Black put up a free directory on imi.com for companies that used an “IMI” acronym. Id. at 281:9-282:2; JX-7 (screenshot of imi.com from 2002 showing directory of companies with IMI name). Black created the directory using the names of companies that had reached out to Black to purchase the imi.com domain name, including Irving. ECF No. 211 at 282:11-284:7. Black explained that Black was not trying to profit from these companies, but rather was redirecting to these companies' websites any traffic that came to imi.com but was intended for these companies. Id. However, Black testified that the directory consisted primarily of companies that had contacted Black to purchase the domain name. See, e.g., id. at 283:3-5 (“The majority of these are companies that actually came to me saying, when I was down, basically saying, ‘Hey, you want to sell it? Do you want to sell it?'”). One company requested to be removed from the directory, and one company requested to be added. Id. at 282:11-284:7. Black complied with both requests. Id.

         On the imi.com website, Black also advertised that the imi.com domain name was for sale, but that he would not sell it for less than $2 million. Id. at 285:6-25. Black testified that his attorneys approved of his actions and that Black had no reason to believe that what Black was doing was illegal. Id. at 286:11-23. Ultimately, Black did not sell the imi.com domain name, and Black kept the directory on the website through 2018. Id. at 293:1-294:18.

         9. Black Forms International Monetary Investments LLC

         In 2016, Black incorporated a new company, International Monetary Investments LLC. Id. at 252:15-23, 294:19-296:24. In December 2016, Black decided to license his imi.com domain name to his International Monetary Investments LLC company. Id. at 296:25.

         International Monetary Investments LLC entered into 300 contracts with clients, and a majority of the agreements were signed in 2016. Id. at 298:15-301:15. Because International Monetary Investments involved financial services, Black had to track every one of his contracts and register the contracts with the United States Treasury Department. Id. at 298:4-25. Black testified that because the United States Treasury Department scrutinized International Monetary Investments LLC, Black was “not going to do anything wrong.” Id. at 306:15-20. Black was required to notarize his International Monetary Investments LLC contracts and to have the other contracting party “run though” the Department of Homeland Security or Interpol to “make sure they're good people.” Id. at 310:14-19.

         10. Irving Hires the Heavyweights and Changes Their Marketing Strategy

         Jason Richmond, Irving's Director of Marketing and Business Development, testified that in 2014, Irving developed a new marketing and branding strategy to shift Irving's investments to digital and online advertising. ECF No. 212 at 650:6-651:12. In 2015, Irving hired an advertising firm known as the Heavyweights. Id. at 652:17-653:9. In June through October of 2016, Irving and the Heavyweights interviewed employees and customers and learned that Irving is “known as IMI everywhere but online.” Id. at 653:6-655:7. Thus, Irving sought to build its online presence.

         Jeffrey McPherson, Irving's Vice President of Sales and Marketing, testified similarly. In 2014, after McPherson obtained his position as the Vice President of Sales and Marketing at Irving, Irving began conducting consumer research on Irving's marketing. ECF No. 211 at 497:17- 503:9. Irving then hired the Heavyweights, an advertising firm, to look into how Irving was branding. Id. McPherson testified that: “it was suggested to us, ” that “it would be good not to confuse the marketplace and we should go after imi.com.” Id. at 503:10-15.

         McPherson further testified that the advertising firm helped him look into the imi.com domain name and “it appeared that [Black] wasn't offering any goods or services through the web, and that's when [the advertising firm] informed me that [Irving] could hire an attorney” and file a Uniform Domain Name Dispute Resolution Policy (“UDRP”) complaint. ECF No. 212 at 582:24- 583:2. McPherson looked up the imi.com website and saw that the website stated that imi.com was for sale and that “offers less than 2 million dollars will not be considered.” Id. at 583:17- 84:6. McPherson thought that was a ridiculous offer. Id. at 584:4-9.

         When asked “between 1998 and 2017, why did Irving not say a word to Black about his registration and use of the [imi.com] domain name?, ” McPherson responded: “different strategy we have right now after going through the research and things of that nature that we've gone through. And also the way the website, social media apps and everything interact[s] with one another, it's my job to make sure our brand is consistent throughout our footprint, consistent throughout the country, consistent everywhere we operate.” ECF No. 211 at 503:24-504:6.

         Jerry Howard, Irving's Vice President of IT and former Director of IT, testified similarly. Specifically, Howard explained that he was prompted to look at Black's imi.com website sometime in 2017 after the advertising firm began its digital advertising efforts, and it was at that time that Howard learned of Black's relaunch of imi.com. ECF No. 212 at 614:13-616:10. Black never contacted Irving to tell Irving Black was planning on relaunching the website. Id. at 617:7- 618:5. Howard testified that Irving did not approach Black in 2017 to buy the imi.com domain name because “from [1998] until 2018, the website had changed very little. There's--it didn't look like there was any more bona fide business in 2017 than there was in 1998, and in 2017, the price went from in excess [of] $100, 000 to in excess of [$]2 million. And it seemed to be outrageous back then and unreasonable, and then it only got more unreasonable in 2017.” Id.

         11. Irving Files the UDRP Complaint Against Black in 2017

         In October 2017, with the help of the Heavyweights advertising firm, Irving filed the UDRP complaint against Black. Id. at 584:9-11; ECF No. 211 at 301:14-21, 503:16-19.; ECF No. 210 at 252:7-19. Specifically, Irving alleged that Black was cybersquatting on the imi.com domain name, and Irving sought to transfer imi.com to Irving. Id.

         12. Black files the Instant Suit

         On November 21, 2017, Black filed the instant lawsuit, which seeks to enjoin Irving's efforts to force Black to transfer the imi.com domain name to Irving. ECF No. 1. On March 22, 2018, Black filed his first amended complaint. ECF No. 11.

         At trial, Black testified that March 2018--four months after he filed the instant lawsuit-- was the first time he could make changes to the imi.com website because that was when the UDRP suspension on imi.com was lifted. ECF No. 211 at 354:10-355:4. Jason Richmond, Irving's Director of Marketing and Business Development, testified as to Irving's allegations of Black's bad faith. For instance, Richmond confirmed that he saw a “for sale” page that “prominently advertised imi.com” and “clearly stated, please contact us, but not with offers less than $2 million” only shortly after Black filed the instant lawsuit. ECF No. 212 at 655:8-656:12. Richmond testified that while the instant lawsuit has been pending, the imi.com website has been blank. Id. at 656:13-19. However, Richmond testified that Black changed the imi.com website and that, as of June 14, 2019, the day of Richmond's testimony, the imi.com website said, “coming soon.” Id. at 656:16-20.

         B. Procedural History

         1. Black's Claims

         In October 2017, Irving initiated a UDRP proceeding against Black for the imi.com domain name. On November 21, 2017 Black initiated the instant suit against Irving. ECF No. 1.

         On March 22, 2018, Black filed his first amended complaint (“FAC”) and asserted two claims: (1) declaratory relief for a finding that Black lacked bad faith intent and thus did not violate the Anti-Cybersquatting Consumer Protection Act (“ACPA”) pursuant to 15 U.S.C. § 1114(2)(D)(v) (“Count 1” or “subsection (v) declaratory relief claim”); and (2) reverse domain name hijacking by Irving in violation of 15 U.S.C. § 1114(2)(D)(iv) (“Count 2” or “subsection (iv) claim”). ECF No. 11 (“FAC”).

         Black labeled Count 1, his subsection (v) declaratory relief claim, as “Declaratory Relief --No Bad Faith Intent/Cyberpiracy (15 U.S.C. §§ 1114(2)(D)(v), ...


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