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Safeway Transit LLC v. Discount Party Bus, Inc.

United States District Court, D. Minnesota

July 31, 2017

Safeway Transit LLC and Aleksey Silenko, Plaintiffs,
v.
Discount Party Bus, Inc., Party Bus MN LLC, and Adam Fernandez, Defendants.

          Chad A. Snyder and Michael H. Frasier, Rubric Legal LLC, 233 Park Avenue South, Suite 205, Minneapolis, MN 55415, for Safeway Transit LLC and Aleksey Silenko.

          Adam Edward Szymanski, Casey A. Kniser, and Eric H. Chadwick, Patterson Thuente Christensen Pedersen, PA, 80 South Eighth Street, Suite 4800, Minneapolis, MN 55402, for Discount Party Bus, Inc., Party Bus MN LLC, and Adam Fernandez.

          REPORT AND RECOMMENDATION

          HILDY BOWBEER UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court on Plaintiffs' Motion for Partial Summary Judgment [Doc. No. 79]. Specifically, Plaintiffs move for partial summary judgment against Defendants on Count III of the Second Amended Complaint (“SAC”) for trademark infringement under 15 U.S.C. § 1125(A), and on Count VII for restoration of their rights in the domain name rentmypartybus.com under 15 U.S.C. § 1114(2)(D)(v) [Doc. No. 8]. They also appear to seek a finding as a matter of law that as a result of the infringement, Plaintiffs are entitled to the entirety of Defendants' revenues for the period May 1, 2014-the date the complaint was filed on September 21, 2015. (Pls.' Mem. Supp. Mot. Summ. J. at 1-2 [Doc. No. 79].) The motion was referred to the undersigned for a Report and Recommendation under 28 U.S.C. § 636 and District of Minnesota Local Rule 72.1(a) [Doc. No. 89]. For the reasons set forth below, the Court recommends the motion be denied in its entirety.

         I. Background

         Plaintiffs and Defendants are fierce competitors in the business of providing “party buses” for hire. Plaintiffs' Second Amended Complaint (“SAC”) accuses Defendants of attempting to steal Plaintiffs' business by infringing Plaintiffs' trademarks “Rent My Party Bus, ” “952 LIMO BUS, ” and “Party Bus MN, ” and by fraudulently registering them as Defendants' own. (SAC ¶¶ 1, 59-65, 70-74 [Doc. No. 8].) Plaintiffs also allege Defendants attempted to steal the associated web domains. (Id. ¶¶ 85-92.) In addition to the counts for trademark infringement and domain “hijacking” that are the subject of the instant motion, the SAC alleges causes of action for fraudulent federal registration of trademarks, cancellation or assignment of federal registration, cancellation of state registration for trademarks, fraudulent state registration for trademarks, and violation of Minnesota Statute § 325D.44 [Doc. No. 8].

         A. Safeway Transit

         In 2008, Gennady Silenko formed the company Party Bus MN LLC. Plaintiff Aleksey Silenko was identified in the Articles of Organization as the company's contact. (Frasier Decl. Ex. A (2008 Articles of Organization for Party Bus MN LLC) [Doc. No. 81-1].) In October of that year, the name of the business was changed to Safeway Transit LLC. (Frasier Decl. Ex. B (Articles of Organization for Safeway Transit LLC) [Doc. No. 81-1].) Plaintiffs' business has grown over the years, starting with one bus in 2008 and currently running a fleet of sixteen buses. (Silenko Decl. ¶ 11 [Doc. No. 82].)[1]

         In 2008, Plaintiffs purchased the domains www.RentMyPartyBus.com and www.PartyBusMN.com. (Frasier Decl. Ex. C (Receipts from GoDaddy) [Doc. No. 81-1].) Plaintiffs used www.PartyBusMN.com as a landing page to direct users to www.RentMyPartyBus.com. (Silenko Decl. ¶ 4.) Plaintiffs also launched Facebook pages using both marks[2] that year, one at www.Facebook.com/RentMyPartyBus and the other at www.Facebook.com/PartyBusMN. (Silenko Decl. ¶ 6.) In 2015, Plaintiffs merged the latter page into the former page, and Silenko states in his declaration that the Facebook page currently has 28, 000 followers. (Id.) In addition, from 2008 to the present, “at least some of Safeway Transit's buses” have prominently displayed “Rent My Party Bus” on the side or back of the bus.[3] (Silenko Decl. ¶ 5.)

         In 2009, Silenko purchased business cards for Safeway Transit “using the names Rent My Party Bus and Party Bus MN.” (Silenko Decl. ¶ 7.) He has continuously used those business cards since then. (Silenko Decl. ¶ 7.) The next year, he “created Twitter handles for Rent My Party Bus and Party Bus MN, ” and has used both Twitter accounts consistently since, although his declaration does not indicate how frequently he uses those accounts or how many followers they have. (Silenko Decl. ¶ 8.)

         In 2011, Safeway Transit acquired the phone number (952) 546-6287 (952 LIMO BUS). Silenko purchased the domain www.952LimoBus.com, built that website, and purchased business cards with that name.[4] (Silenko Decl. ¶ 9.) Safeway Transit “began placing decals with the names 952 LIMO BUS and Party Bus MN on the outside and interior of some of the buses” in 2011 or early 2012, and continues to do so today. (Silenko Decl. ¶ 10.) Safeway Transit expanded its marketing of all three marks in 2013 by purchasing advertising on the radio, in print publications like City Pages, All Over Media, and Lavender, and online at sites such as The Knot, Wedding Wire, Limos.com, White Sparks, and Yext. (Silenko Decl. ¶ 11.)

         Silenko's declaration does not provide any detail, however, as to how much money has been spent on that advertising, how frequently it appeared in which media, how many individuals were exposed to the advertising, or to what extent any particular mark was featured in the advertising. Moreover, Plaintiffs did not submit any examples or specimens of their own advertising or promotional materials depicting any of the asserted marks.

         Nothing in the record indicates that Plaintiffs have at any time attempted to register Rent My Party Bus, 952 LIMO BUS, or Party Bus MN as trademarks with the State of Minnesota or with the United States Patent and Trademark Office (USPTO).

         B. Discount Party Bus

         Adam Fernandez is the sole owner and officer of Discount Party Bus, Inc., and Party Bus MN LLC. (Frasier Decl. Ex. E at 86:7 (Fernandez Dep.) [Doc. No. 81-1].) He states he first started his party bus rental service in 2000 or 2001 under the name Discount Party Bus, which he operated initially as a sole proprietorship. He later converted it to an LLC and then to a corporation. (Frasier Decl. Ex. D ¶¶ 3-4 (2014 Fernandez Aff.)[5] [Doc. No. 81-1].) Fernandez testified in his deposition as the Rule 30(b)(6) representative for all Defendants in this case that he began using the name “Party Bus MN LLC” in connection with his business in 2000 (Frasier Decl. Ex. E at 53:22-25 (Fernandez Dep.)), and that today, Discount Party Bus and Party Bus MN LLC are separate active entities but operate as one company. (Id. at 10:1-12:9.)

         In sworn answers to interrogatories, Defendants state they have continuously used Party Bus MN in print and Internet advertising from 2000 or 2002 to the present; that they used Rent My Party Bus in print advertising from 2004 to 2008 or 2009; and that they used 952 LIMO BUS (and, it appears, 612 LIMO BUS, 763 LIMO BUS, and 651 LIMO BUS as well) in print and Internet advertising and in business cards, letters, and emails from 2006 to 2008 or 2009.[6] (Frasier Decl. Ex. G (Defendants' Responses to Plaintiffs' Interrogatories Nos. 1, 2, 4, 5, and 6) [Doc. No. 81-1].) Fernandez's testimony, while often vague and confusing, was, for the most part, consistent with the interrogatory responses as to the claimed dates of use in advertising. (Frasier Decl. Ex. E at 53:16-25, 57:6-16 (Fernandez Dep.) (used Party Bus MN as a business name from 2000-through the date of deposition, but stopped using Party Bus MN to advertise his business after Plaintiffs began using the website with the same domain name); id. at 60:10-22 (used Rent My Party Bus from 2004 through 2008 or 2009); id. at 61:2-25, 62:1-3 (used 952 LIMO BUS from at least 2004 through 2008 or 2009).)

         Plaintiffs dispute Defendants' claim that Defendants began using any of the marks as actual trademarks, or even as business names, before Plaintiffs began to do so, but point out that, in any event, Fernandez testified he stopped using Rent My Party Bus and 952 LIMO BUS to advertise party bus services in 2008 or 2009. (Frasier Decl. Ex. E at 60:10-22, 61:2-25, 62:1-3 (Fernandez Dep.).) Fernandez further testified that he stopped using 952 LIMO BUS in his advertising because he saw that Plaintiffs had begun to use it. (Id. at 65:4-11.) He testified he stopped using Party Bus MN in advertising when Plaintiffs launched a website with the same name, but has continuously used Party Bus MN as a business name from 2002 to the present. However, he did not actually form a limited liability corporation named Party Bus MN LLC until May 1, 2014. (Frasier Decl. Ex. F (2014 Articles of Organization for Party Bus MN LLC); Frasier Decl. Ex. E at 15:17-17:3 (Fernandez Dep.); see also Kniser Decl. Ex. E at 4 (Certificate of Business Organization) [Doc. No. 86-5]; Frasier Decl. Ex. E at 54:20-55:3 (Fernandez Dep.); Frasier Decl. Ex. F (2014 Articles of Organization for Party Bus MN LLC).)

         Defendants also point to several documents they contend evidence their use of these marks prior to Plaintiffs' use:

• Two documents bearing October 2004 dates, one a letter addressed to the attention of Adam Fernandez at “Party Bus MN LLC” from an entity offering to provide drug and alcohol testing services, and the other a contract for those services signed by Fernandez “For Party Bus MN LLC.” (Kniser Decl. Ex. B [Doc. No. 86-2].)[7]
• An advertisement displaying “Rent My Party Bus” with Fernandez's telephone number, identified by Fernandez at his deposition as a print advertisement or flyer created in “late 2000 sometime, . . . '08, '09, '10, in that area.” (Kniser Decl. Ex. C (Fernandez Dep. Ex. 19) [Doc. No. 86-3]; Kniser Decl. Ex. F at 164-68 (Fernandez Dep.) (referring to Ex. 19).)

         (Image Omitted)

         (Frasier Decl. Ex. W at 187 [Doc. No. 81-1].)

• Fernandez testified this advertisement ran in print publications, and was handed out in large numbers to bars and restaurants where they were hung up “in like a bathroom stall.” (Id.) Fernandez further testified that although he did not create new advertisements using that mark after that time, he still sees the old flyers posted in bathroom stalls. (Id. at 166:16-21; 167:1-15.)
• An advertisement prominently displaying “952 limo bus” along with Fernandez's telephone number, with three “Online Listing Insertion Orders” for twincitiesfun.com dated October 4, 2004, November 7, 2004, and January 3, 2007. (Kniser Decl. Ex. H [Doc. No. 86-8].)[8]

         (Image Omitted)

(Id.)

         C. Discount Party Bus's 2014 Lawsuit Against Safeway Transit

         This case was not the first trademark dispute between the parties. In a 2014 lawsuit filed in Hennepin County District Court, Discount Party Bus alleged that Silenko and Safeway Transit were infringing the former's rights in the Discount Party Bus mark. (Frasier Decl. Ex. D (2014 Fernandez Aff.).) Specifically, Fernandez and Discount Party Bus alleged that Silenko and Safeway Transit acquired the domain name discountpartybus.com, and that at various times during the period 2009-2011, they redirected visitors from discountpartybus.com, initially to Safeway Transit's own website rentmypartybus.com and, in early 2014, to Safeway Transit's website 952limobus.com. (Id. at ¶¶ 9, 15, 18; Frasier Decl. Ex. H (Leighton Aff. Exs. A-C (Letters to Silenko and Safeway Transit)) [Doc. No. 81-1].)

         The Hennepin County lawsuit was settled in April 2014 when Silenko and Safeway Transit agreed to transfer discountpartybus.com and related domains to Discount Party Bus. (Snyder Decl. Ex. 2 (Settlement Agreement) [Doc. No. 37].) But although there is no dispute that Fernandez knew at the time that Safeway Transit and Silenko were using Rent My Party Bus, Party Bus MN, and 952 LIMO BUS in their advertising, the settlement, and the cease-and-desist letters from counsel for Discount Party Bus that preceded the lawsuit, did not challenge Plaintiffs' use of those marks. On the contrary, the cease-and-desist letters focused only on Discount Party Bus's rights in the Discount Party Bus mark, and acknowledged without apparent concern that Safeway Transit was using the domains www.RentMyPartyBus.com, www.PartyBusMN.com, and www.952limobus.com. (Frasier Decl. Ex. H (Leighton Aff. Exs. A-C (Letters to Silenko and Safeway Transit)).)

         D. Defendants' Post-Lawsuit Actions Regarding the Disputed Trademarks

         1. Assumed Names and Trademark Registrations

         Shortly after settling the 2014 lawsuit, Fernandez filed documents establishing Party Bus MN LLC with the Minnesota Secretary of State.[9] The same day, Party Bus MN LLC identified “952 Limo Bus” and “Rent My Party Bus” as “assumed names” for the business. (Frasier Decl. Exs. I, J [Doc. No. 81-1].) On November 11, 2014, Party Bus MN LLC applied for and was granted two trademark registrations in Minnesota. One was for the word mark 952 LIMO BUS, along with a logo comprising that mark. The application, which was signed by Fernandez, states that the business first used the mark in commerce on June 20, 2006. (Frasier Decl. Ex. K [Doc. No. 81-1].) Fernandez admitted in his deposition, however, that the 952 LIMO BUS logo he sought to register was one he had never used. (Frasier Decl. Ex. E at 74:6-77:21 (Fernandez Dep.).)[10]

         The second Minnesota trademark registration was for Party Bus MN. Fernandez claimed in that application that the business had first used that mark on October 10, 2002. (Frasier Decl. Ex. L [Doc. No. 81-1].)

         On November 25, 2014, counsel on behalf of Party Bus MN LLC filed an application with the USPTO to obtain federal registration of the mark “RENT MY PARTY BUS.” (Frasier Decl. Ex. M [Doc. No. 81-1].) The application claimed the business had used the mark in commerce “at least as early as” December 31, 2002, and that it had “become distinctive of the goods/services through the applicant's substantially exclusive and continuous use in commerce . . . for at least the five years immediately before the date [of the application].” The application also included a specimen purportedly taken from Defendants' website. (Id.) The registration issued on July 28, 2015. (Frasier Decl. Ex. U (ICANN Decision) [Doc. No. 81-1].) However, in their Complaint in this action, Plaintiffs alleged that the specimen was in fact a screenshot of the Safeway Transit website. (Complaint at ¶ 34 [Doc. No. 1].) A month later, on October 21, 2015, Defendants' trademark counsel filed an Application for Correction of Registrant's Mistake in Registration, stating that the specimen was submitted in error and did not actually relate to Defendants' business. A new specimen was submitted, consisting of the flyer that became Exhibit 19 to Fernandez's deposition. (Frasier Decl. Ex. W [Doc. No. 81-1]; Kniser Decl. Ex. C (discussed above at p. 8).)

         On December 30, 2014, counsel for Party Bus MN LLC filed another application with the USPTO, this one to register the mark “952 LIMO BUS.” (Frasier Decl. Ex. N [Doc. No. 81-1].) The original application asserted only an “Intent to Use, ” but a subsequent “Amendment to Allege Use” filed on March 18, 2015, stated that the mark had first been used in commerce by the applicant “as least as early as” December 31, 2004, and “is now in use in such commerce.” (Frasier Decl. Ex. O [Doc. No. 81-1].) The subsequent filing included an undated specimen that appears to be identical to the flyer produced by Defendants in this case with the 2004 and 2007 “Online Listing Insertion Orders” for twincitiesfun.com, discussed above at page 10. (Kniser Decl. Ex. H [Doc. No. 86-8].) The application was granted and the trademark registered on June 2, 2015. (Frasier Decl. Ex. T (ICANN Decision) [Doc. No. 81-1].)

         Finally, on July 2, 2015, Party Bus MN LLC, again through counsel, filed an application with the USPTO to register the mark “PARTYBUSMN.” (Frasier Decl. Ex. P [Doc. No. 81-1].) The application stated the applicant had used the mark in commerce “at least as early as” July 1, 2015, and included a specimen of use that appears to be an undated screenshot of a portion of a page from the Discount Party Bus website which prominently display at the bottom the banner “partybusmn, com.” Nothing in the application indicates when that screenshot was created or during what period of time that banner was included on Defendants' website.[11] The record before the Court does not indicate whether the mark was eventually registered.

         Defendants' Answer to the SAC initially asserted counterclaims against Plaintiffs seeking, inter alia, an order declaring their registrations for the three disputed marks to be valid and enforceable, that the Defendants were the senior users of those marks, and that Defendants were entitled to the domain names rentmypartybus.com and 952limobus.com. (Amended Answer [Doc. No. 28].) Defendants subsequently dismissed their counterclaims without prejudice [Doc. No. 47].

         Plaintiffs assert in their memorandum that Defendants subsequently cancelled the state and federal trademark registrations. (Pls.' Mem. Supp. Mot. Summ. J. at 19, 20.) Although Plaintiffs did not cite any support for that assertion, Defendants' responsive memorandum did not dispute it.

         2. Defendants' Allegedly Infringing Use of the Disputed Marks in Internet Advertising

         In addition to Defendants' efforts to secure both Minnesota and federal registrations of the disputed marks, Defendants also made use of 952 LIMO BUS and Rent My Party Bus in their Internet presence and advertising after they settled the 2014 lawsuit with Plaintiffs. As the sole owner and officer of Discount Party Bus and Party Bus MN LLC, Fernandez testified he has always been in charge of the advertising decisions of his companies. (Frasier Decl. Ex. E at 86:7-12 (Fernandez Dep.).) To assist in his advertising efforts, he hired a freelancer named “Edward, ” whose last name he could not recall, to set up social media and to build the business's website. (Id. at 91:12-14.) Fernandez delegated to Edward the authority to purchase advertising spots and perform work without getting feedback in advance. (Frasier Decl. Ex. BB at 198:4- 199:12 (Fernandez Dep.) [Doc. No. 81-1].) Edward in turn hired a California company named Internet Local Listings to build the website. (Frasier Decl. Ex. E at 109:6-110-6 (Fernandez Dep.).) The contract with Internet Local Listings, which Fernandez signed, specified that the website was to utilize ten “keywords, ”[12] among which were “Rent My Party Bus” and “952 Limo Bus.” (Frasier Decl. Ex. X at 14 [Doc. No. 81-1].) The contract called for the website to be launched in 2014, but the record before the Court does not clearly indicate when it was actually launched.

         Consistent with the requirements of the contract, Defendants' new website, at www.discountpartybussaintpaulmn.com, used the term “952 Limo Bus” in connection with the advertising of Defendants' buses and services. (Frasier Decl. Ex. Y (Screenshots of www.discountpartybussaintpaulmn.com) [Doc. No. 81-1].) For example, one page, headed “Party Busses, ” stated “hiring a 952 Limo Bus in St. Paul is the best solution, ” “Small 952 Limo Bus in Saint Paul would be ideal for professional and business needs, ” and “952 Limo Bus in Saint Paul are not just one type.”

         (Image Omitted)

(Id. at 23, 24.)

         The website also had a page with the words “Rent My Party Bus” displayed in large font:

         (Image Omitted)

(Id. at 28.)

         The same terms found their way into Defendants' social media posts. For example, on September 21, 2015, Discount Party Bus posted the following to its Facebook page:

         (Image Omitted)

         (Frasier Decl. Ex. Z at 32 [Doc. No. 81-2].) Several days later, ...


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