In the case of Thanh Nguyen and Luong Nguyen v. Barry Biondo and Tipsy Spa and Salon, Inc., (“Biondo”) Case No: 12-13776, the 11th Circuit Court of Appeals affirmed the decision of the United States District Court for the Southern District of Florida finding that Biondo infringed on Nguyen’s federally registered trademark, “Tipsy.” The District Court granted the Nguyens’ motion for summary judgment on their claims of false designation of origin and trademark infringement in violation of the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), cyberpiracy in violation of the AntiCybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), trademark infringement in violation of Florida Law, as well as breach of contract.
The case involved the continued use of the Nguyen’s “Tipsy” trademark by a former business partner after the expiration of a licensing agreement, continued use of the domain name after the expiration of the agreed period, and failure to pay the agreed upon price for the business. Throughout the course of the litigation, Biondo violated several discovery orders and was sanctioned by the District Court. Importantly, Biondo’s affidavit in support of his Motion for Summary Judgment was stricken by the Judge as a “sham” affidavit, a ruling which was later upheld by the United States District Court for the Eleventh Circuit. Examples of this, and other Orders regarding Biondo’s discovery violations may be found here and here.
The Court awarded the Nguyens a total of $850,000 in statutory damages for Biondo’s unlawful conduct: $800,000 in statutory damages for trademark infringement ($400,000.00 per infringement) and $50,000 in statutory damages for cybersquatting. Additionally, the Nguyens prevailed on their breach of contract claims and were awarded their full attorney’s fees under both the contract and due to the willful infringement of Mr. Nguyen’s “Tipsy” Mark.
Biondo immediately appealed the District Court’s decision, alleging that their affirmative defenses were not addressed by the Nguyens, material issues of fact existed precluding summary judgment and that striking Barry Biondo’s affidavit in support of Defendants’ Motion for Summary Judgment and in opposition to Plaintiffs’ Motion, was improper. Instead, the 11th Circuit affirmed on all counts, giving a sound explanation in the opinion, even upholding the District Court’s decision to strike Biondo’s affidavit, a severe sanction.
The District Court’s Omnibus Order detailing the Court’s reasoning as well as the 11th Circuit’s Opinion affirming the decision of the District Court can be found here.
Throughout the litigation, the Nguyens were forced to defend claims of naked licensing and abandonment of the “Tipsy” trademark. These claims are becoming prevalent in defense against trademark infringement actions. The expansion of internet marketing and competitive websites used to promote products and services is likely partially to blame. The barrier to entry is low in using another’s trademark and the risk and expense of bringing a claim to stop it is often a hard decision for trademark owners. However, once use of a valid trademark comes to the attention of the trademark owner and that owner begins to notice a drop in sales and customer confusion, the time to act is now in order to defend against these claims.
If you believe that a competitor may be using your trademark unlawfully, or if you have been sued claiming you are using another’s trademark unlawfully, do not hesitate to contact our office. Remember, registration of a trademark does not grant you rights in the trademark, it is only formalizing the rights you already have from use of that trademark in commerce to the exclusion of others. Call us today to learn more.