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Erich Specht, et al v. Google Inc

December 17, 2010

ERICH SPECHT, ET AL., PLAINTIFFS,
v.
GOOGLE INC., DEFENDANT.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant Google Inc.'s ("Google") Motion for Summary Judgment for Counts I--V of Plaintiffs' Second Amended Complaint, and for Counts I and III of its Counterclaim. For the reasons stated below, Google's Motion is granted.

I. INTRODUCTION

Trying to take part in the Internet boom of the 1990's, Erich Specht ("Specht") developed the Android Data Software Suite, an e-commerce platform designed for small business owners. In 1998, he incorporated Android Data Corporation ("ADC"), which through 2002 generated approximately $600,000 from licensing software and providing computer-related services. Specht also applied for and received a federal registration for the trademark ANDROID DATA. By mid-2002, however, ADC's revenue stream had dried up, and Specht decided to sell the company. He also formed another corporation, The Android's Dungeon, Inc. ("ADI"), and on December 26, 2002, with no clients licensing his software, Specht transferred all of ADC's assets to ADI.

On September 4, 1998, only a few months prior to when Specht incorporated ADC, Google filed its California papers of incorporation. Google is now a Delaware corporation. Its business trajectory took a substantially different route than ADC's. Today, besides operating the world's largest and most popular search engine, Google has developed and acquired an array of products and services that make it seemingly ubiquitous for Internet users, and which generate tens of billions of dollars in annual revenue.

Despite their divergent business fortunes, Google and Specht's paths do intersect. In November 2007, Google announced Android, an open development platform for mobile devices. Google launched Android in cooperation with the Open Handset Alliance ("OHA"), a coalition of mobile device hardware and software developers. Shortly before the Android announcement, Google filed a trademark application for the mark ANDROID. The United States Patent and Trademark Office (the "USPTO") rejected this application, finding that it would create a likelihood of confusion with the ANDROID DATA mark. Despite this refusal, Google continued to use the ANDROID mark in commerce.

This use by Google provided the grounds by which Specht, ADC, and ADI (collectively, the "Plaintiffs") filed the five-count Complaint before this Court. Google filed a seven-count Counterclaim, one count of which asks for a declaratory judgment pursuant to 28 U.S.C. § 2201 that Plaintiffs abandoned ANDROID DATA and other associated marks. Google has moved for Summary Judgment on all Counts of Plaintiffs' Complaint and Counts I and III of its Counterclaim based on this abandonment. Before ruling on this motion, however, a more thorough examination is necessary of how the parties reached this stage of the litigation.

A. Factual Background

1. Plaintiffs' Development and Use of ANDROID DATA from 1998--2005 Specht is the sole shareholder of ADC, which he incorporated in Illinois on December 30, 1998. The Palatine, Ill., resident wrote and developed the Android Data Software Suite, which allows for the remote administration of e-commerce content. Three modules comprise the software: the Caching Server, Content Manager, and Administrator's Toolkit. From 1998 through 2002, ADC licensed the Android Data software to three clients: Artistry In Printing, Design Toscano, and Basil Street Gallery of London. From 1998 through December 2002, ADC also provided custom database and e-commerce application development; website hosting, design, and registration services; and computer consulting services to various clients, including Edge Consulting, Bonaparte Corporation, HuTech Resources, Eide & Eide CPA, NCR Customer Education, Summit Recruiting, and Village Investments.

On October 28, 1998, Specht registered the domain name www.androidtdata.com to use as a platform for his business, and launched a website on this domain in 1999. The site allegedly featured information about the Android Data Software Suite, as well as contact information for ADC. On June 4, 2000, ADC filed an application for the Trademark ANDROID DATA with the USPTO. On October 22, 2002, the USPTO granted ADC a registration for the ANDROID DATA mark on the principal register in International Class 9 for "[c]omputer e-commerce software to allow users to perform electronic business transactions via a global computer network." ANDROID DATA, Registration No. 2,639,556.

During its corporate existence, ADC generated approximately $600,000 in gross revenue. In 2002, however, ADC lost Design Toscano and Basil Street Gallery as clients, and three of its remaining clients - O/S Services, MagnaMedia Training Solutions, and Summit Recruiting - went out of business. ADC laid off its only employee, Rick Moore, on August 28, 2002. On December 1, 2002, Specht cancelled the co-location Internet service contract he had with Genuity, and moved his server hardware to his home. In a February 23, 2003, e-mail sent to his accountant, Roger Eide, regarding the final bill for the Genuity contract, Specht wrote that he wanted the bill to be an expense for 2002, "since there's not Android Data in 2003." Specht filed a final tax return for ADC in late 2002. Effective December 26, 2002, Specht transferred all of ADC's assets, including the ANDROID DATA mark, to ADI. He did this to avoid paying annual Illinois corporation registration fees, as well as tax preparation and filing fees, for ADC. From December 26, 2002, until the filing of this lawsuit, Plaintiffs did not issue any invoices that bore the ANDROID DATA mark. Rather, invoices to Picket Fence Realty, to whom Plaintiffs provided website hosting, maintenance, and development services, and to David Finn, to whom Plaintiffs provided computer maintenance services, came from The Android's Dungeon, Inc.

In the second half of 2002, having failed to secure new clients and not generating enough money to maintain the business as a viable entity, Specht decided to sell ADC and all its assets, including the Android Data Software Suite, the androiddata.com domain name, and the ANDROID DATA trademark. Starting in August 2002, Specht advertised the sale of ADC in the Chicago Tribune, The New York Times, BizBuySell, and usbx.com. He sent a promotional brochure and multimedia CD-ROM describing the Android Data software to parties who responded to his advertisements. He claims to have sought full-time employment in connection with the ADC sale.

Specht responded to inquiries to sell the business in late 2002 and throughout 2003. He almost sold the business to Quadra Networks in 2003. The sales contract between ADI (which controlled ADC's assets) and Quadra, dated May 27, 2003, stated that ADI agreed to "abandon the U.S. trademark in 'ANDROID DATA' and to cease it's [sic] use," and that it would assist in transferring the mark to Quadra. Specht terminated the negotiations with Quadra on June 5, 2003, after he traveled to British Columbia, Canada, to finalize the contract.

Specht alleges that he negotiated with Chris Curie to purchase ADC until April 2004. The only documents that Plaintiffs produced concerning these negotiations with Curie are dated November 11 and November 12, 2003.

In December 2003, Specht started a full-time position with the magazine publishing company Reed Business Information. He worked at Reed until being laid off in April 2010.

Even though he had dissolved ADC, Specht maintained the e-mail address erich@androiddata.com, which he used until April 2005. Additionally, he hosted androiddata.com and websites for clients Picket Fence Realty (www.picketfencerealty.com), Jonathan Sazonoff (www.saztv.com), Wendy Murphy (www.wendymurphy.com), and Village Investments (www.villageinvestments.com) on a server he maintained at his home. These websites used mail.androiddata.com as their e-mail server, dns.androiddata.com as their name server, and could access monthly website activity statistical reports at stats.androiddata.com. Specht ceased hosting these websites in April 2005 when it became cost prohibitive. He allowed his registration for the androiddata.com domain name to expire on October 15, 2005.

2. Google's November 2007 Android Announcement

Google announced the Android mobile device open platform and the OHA on November 5, 2007. Thirty-four companies from around the world comprised the OHA at its inception, including T-Mobile, HTC, Qualcomm, and Motorola. On November 12, 2007, Google released the Android software development kit, which allowed software developers to create Android applications. On the same day, Google announced the $10 Million Android Developer Challenge, and other OHA members introduced products, such as Ascender Corporation's Droid font collection and Synaptics's Touch Interface Driver for the software development kit. On October 22, 2008, T-Mobile released the first Android-powered phone, the G1.

Shortly before the Android announcement, Google filed a trademark application with the USPTO for the mark ANDROID. On February 14, 2008, the USPTO rejected Google's application pursuant to 15 U.S.C. § 1052(d), ruling that the proposed mark would create a likelihood of confusion with Plaintiffs' ANDROID DATA mark. Google responded to the rejection on August 14, 2008, but on August 20, 2008, the USPTO again rejected the proposed mark on a likelihood of confusion ground, and made the determination final. Despite this refusal, Google has continued to use ANDROID in commerce.

3. Plaintiffs Resume Use of the ANDROID DATA Mark

In December 2007, Specht claims that he sent two mailings of a one-page brochure promoting the Android Data Software Suite to more than 100 catalog companies. He claims that he created the brochures on December 8, 2007, and that they prominently featured the ANDROID DATA mark. He did not generate any business from this mailing. On February 6, 2008, Specht sent a written proposal for an Android Data Content Management System - on letterhead that featured the ANDROID DATA mark - to Jordan May of HuTech Resources. April 20, 2009, emerges as an important date in regard to the ANDROID DATA mark. Specht received a phone call from Kenneth Robblee ("Robblee"), who inquired about purchasing the ANDROID DATA mark, as well as the company that owned the mark. Robblee told Specht about Google's use of the ANDROID mark, and also informed him that the ANDROID DATA mark would expire if ADC did not file a Declaration of Continued Use or Excusable Nonuse Under Section 8 with the USPTO by April 22, 2009. ADC filed this declaration of use on April 21, 2009; Specht's wife, Megan Specht, signed the declaration. On this date, ADC also assigned ANDROID DATA to ADI, with an April 28, 2004, execution date. ADC filed a corrective assignment on August 5, 2009, making the execution date December 26, 2002.

Specht claims that after speaking with Robblee, he conducted some Internet research and learned for the first time about Google's application for the ANDROID mark and of its intentions to use the ANDROID mark in commerce. On April 20, 2009, Specht registered the domain name www.android-data.com and launched a website at the domain with content similar to that which allegedly existed at androiddata.com. On April 23, 2009, Specht signed annual reports for ADC for the years 2003 through 2008, which, in effect, resurrected the corporation for those six years.

Plaintiffs identify numerous other recent uses of the ANDROID DATA mark in commerce. For example, on April 26, 2009, ADI sent a proposal to Warren Crum of Northwest Recovery to create a database application using the Android Data software. The proposal's cover page included the sentence "Android Data® is a registered trademark of The Android's Dungeon Incorporated." An invoice to the company dated May 19, 2009, features the ANDROID DATA mark. Other uses include a May 19, 2009, invoice to Picket Fence for website maintenance; a May 27, 2009, e-mail to Dennis Ignacek to redesign a website using Android Data software; a June 9, 2009, proposal for a website redesign to Picket Fence on Android Data letterhead; an October 3, 2009, e-mail to Design Toscano offering a license to use the Android Data software; and a July 23, 2010, proposal to Steve Rourke at CFE Media for an Android Data Content Syndication Service.

B. Procedural History and Issues

On April 28, 2009, Plaintiffs filed their Complaint. In addition to Google, the initial Complaint named the OHA; Google's wholly owned subsidiary Android, Inc.; former or current Google employees Andy Rubin, Nick Sears, Rich Miner, and Chris White; and 46 other corporate defendants that comprised the OHA. The Court dismissed all of the parties other than Google from the lawsuit on August 3, 2009. Specht v. Google Inc., 660 F.Supp.2d 858, 864--65 (N.D. Ill. 2009). Plaintiffs filed their Second Amended Complaint on October 6, 2009. ECF No. 134. The Court denied Plaintiffs' Motion to File a Third Amended Complaint on July 27, 2010, ECF No. 235, and subsequently denied Plaintiffs' Motion for Reconsideration to File a Third Amended Complaint. ECF No. 279.

In their Second Amended Complaint, Plaintiffs claim that Google infringed the registered ANDROID DATA mark pursuant to 15 U.S.C. 1114(1)(a) of the Lanham Act. They also claim that in regard to the registered mark and the unregistered ANDROID DATA service mark and ANDROID SERVER and ANDROID DATA WEB EDITOR marks (combined, the "Asserted Marks"), Google violated the Illinois Deceptive Trade Practices Act, 815 ILCS 510/2, and is liable for unfair competition under the Lanham Act (15 U.S.C. § 1125(a)), common law trademark infringement, and contributory trademark infringement.

Google filed its Answer to the Second Amended Complaint, Affirmative Defenses and Counterclaim on October 23, 2009. ECF No. 136. In Count III of the Counterclaim, Google argues that Plaintiffs abandoned the Asserted Marks, and therefore have no rights in them. If Plaintiffs abandoned the Asserted Marks, Google would not be liable for any direct or contributory trademark infringement, unfair competition, or deceptive trade practices for using the ANDROID mark in commerce. Therefore, Google moves for Summary Judgment on all five counts of Plaintiffs' Second Amended Complaint on the ground that Plaintiffs abandoned the Asserted Marks. In addition, pursuant to Count I of its Counterclaim, if this Court finds that Plaintiffs abandoned ANDROID DATA, Google asks the Court to order the USPTO to cancel the mark's registration.

II. LEGAL STANDARD

Summary judgment is proper if "the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A fact is material if it could affect the outcome of the suit under the governing law, and a dispute is genuine where the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court should not consider disputes over irrelevant or unnecessary facts. Id.

In ruling on summary judgment, the Court does not weigh the evidence or determine the truth of the matter, but determines whether a genuine issue of material fact exists that warrants trial. Id. at 249. In making this determination, the Court must view all the evidence and draw any reasonable inferences therefrom in the light most favorable to the nonmoving party. Miller v. Am. Family Mut. Ins. Co., 203 F.3d 997, 1003 (7th Cir. 2000). The moving party bears the burden of establishing the basis for its motion, together with evidence demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met this burden, the nonmoving party may not rest on mere allegations, but must present specific facts showing that a genuine issue exists for trial.

Big O Tire Dealers, Inc. v. Big O Warehouse, 741 F.2d 160, 163 (7th Cir. 1984). To support their positions that a genuine issue of material fact does or does not exist, the parties may cite to materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, and interrogatory answers, or show that the materials in the record do or do not establish a genuine dispute. FED. R. CIV. P. 56(c).

III. DISCUSSION

A. Evidentiary and Procedural Motions

The Court will first rule on three pending evidentiary and procedural motions prior to analyzing Google's Motion for Summary Judgment, as the disposition of both impact the summary judgment analysis.

1. Plaintiffs' Motion to File a Response to Google's Reply to Plaintiffs' Response to Google's Statement of Material Facts

On November 2, 2010, Google filed a Reply to Plaintiffs' Response to Google's Local Rule 56.1 Statement of Material Facts. ECF No. 289. Rule 56.1 allows a party moving for summary judgment to file a reply if the party opposing summary judgment submits additional facts in its response to the moving party's Rule 56.1 Statement. N.D. Ill. R. 56.1(a)(3)(B). Google contends that Plaintiffs submitted additional facts in their Response, and therefore Rule 56.1 afforded it the opportunity to file its Reply. Plaintiffs contend that the Rule does not allow them to file this Reply, and that the Reply contains impermissible legal arguments. They have moved to have the Court either strike this Reply or allow them to file, instanter, a Brief in Response to Google's Reply. ECF No. 292.

Rather than sift through Google's eighty-page Reply and strike the contested legal arguments and determine in which paragraphs Rule 56.1 allows Google to file its Reply, the Court grants Plaintiffs' Motion and allows it to file its Response brief. The Court will consider this Response in ruling on the summary judgment and evidentiary motions.

2. Google's Motion to Exclude

The Court will first address Google's Motion to Exclude Due to Plaintiffs' Untimely Document Production and Interrogatory Responses. ECF No. 261. Written fact discovery in this case closed on March 31, 2010, and oral discovery closed on July 30, 2010. On July 21, 2010, Google conducted Specht's deposition. At the deposition, Specht indicated that Plaintiffs planned to produce some supplementary discovery. Specht Dep. 328:17--24, July 21, 2010. Following the deposition, Plaintiffs produced 3,285 additional pages of documents, and on July 30 - at the close of discovery - produced their Fourth Supplemental Answers to Google's interrogatories.

On September 28, 2010, Google filed its Motion to Exclude. The Court continued Google's Motion, giving Plaintiffs an opportunity to present an argument as to why the Court should admit and consider the disputed discovery. The Court's Order set forth a specific procedure by which Plaintiffs could present the disputed discovery in its brief:

If Plaintiffs, in their response brief to Google's Motion for Summary Judgment, rely upon or use any of the discovery to which Google moved to exclude, Plaintiffs are ordered to include this material in severable, clearly identified sections in their brief. In addition, if Plaintiffs include this material in the brief, Plaintiffs are ordered to offer an argument in a supplement to the summary ...


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