Pro-Concepts, LLC v. Resh, No. 2:2012cv00573 - Document 30 (E.D. Va. 2013)

Court Description: OPINION AND ORDER denying 3 Plaintiff's motion seeking preliminary injunction. Signed by District Judge Mark S. Davis on 10/21/2013 and filed on 10/22/2013. Mailed to defendant.(rsim, )

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FILED UNITED STATES DISTRICT COURT OCT 2 2 2013 EASTERN DISTRICT OF VIRGINIA Norfolk Division PRO-CONCEPTS, CLERK, U.S. DISTRICT COURT NORFOLK, VA LLC, Plaintiff, v. Civil Action No. 2:12cv573 TIMOTHY MARK RESH, Defendant. OPINION AND ORDER This matter Preliminary Deny is Injunction," Preliminary Court will "Motions before filed by Injunction," address for the as Ruling" respective parties a on Court plaintiff, filed response both requesting on by in of "Motion and a defendant, opposition, these ruling a on "Motion to which the as motions for well from as their their pending motions. Plaintiff's written request for a preliminary injunction pending the outcome of this case is predicated on the alleged offending use of plaintiff's trademark through a through registration and use of plaintiff's "Defendant") plaintiff sale, in product breach of and defendant. "Plaintiff") Injunction software requests ordering distributing, that website, by the Timothy Resh to: marketing, the Court (1) cease LLC Resh ("Resh" contract selling, a or between ("Pro-Concepts" issue telemarketing, cybersquatting and conversion of Mark employment Pro-Concepts, that website, or Preliminary offering for advertising and/or placing advertising, and/or promoting a website or services that use any designs or marks confusingly similar to or which would dilute Pro-Concepts' transfer RISK ownership RADAR mark and www.riskradarenterprise.com all copies including of any electronic software copies data; software and belonging to and any of control to (4) cease other and materials, Pro-Concepts. (3) all Pro-Concepts, and use any related of Risk or electronic Following website return any and to Enterprise any immediately the belonging Radar (2) in Pro-Concepts; programs Risk ("Mark"); otherwise, notification Radar to Resh regarding the preliminary relief sought by plaintiff and receipt of Resh's responsive motion to deny preliminary injunction, Court conducted stated a below, hearing on plaintiff's their motions. motion For seeking the a the reasons preliminary injunction is DENIED, pending the outcome of this case. I. Defendant FACTUAL1 AND PROCEDURAL BACKGROUND Resh is Concepts, LLC. Concepts, Resh worked Prior in the development of a to former employee beginning for American his of Plaintiff employment Systems Corporation the Risk Radar software. and Risk Radar Enterprise are project management and licensed by Pro-Concepts to with governmental ProPro- ("ASC") Risk Radar2012 software sold and private 1 The facts reproduced here are merely preliminary facts and do not represent factual findings of the instant motion. for any purpose other than the resolution organizations. No. 4. Mem. Risk Radar2012 program designed to Risk Radar government analyze, in Supp. of Mot. is private track, a self-contained, Inj. 917, ECF browser-based facilitate proactive risk management. Enterprise and is for Prelim. a web-based sector mitigate, and software project control program managers potential to Id. used by identify, project risk. Id. During website at website"), Resh's issue, employment ASC, Resh of the Risk Radar product. "Tr. ASC Prelim. "). for the Inj. After acquired the (hereinafter www.riskradarenterprise.com independently (hereinafter, with "RRE purpose Tr. 17 acquiring & of 51, the protecting ECF No. website, 20 Resh requested reimbursement from ASC for the registration of the RRE website and ASC denied reimbursement and further that, due to ASC's their services, policy he was not of maintaining to link or to the official ASC website. Resh was hired as an Tr. one redirect instructed Resh website for all the RRE website 52-53. employee by Pro-Concepts to program the annual updates for the Risk Radar software in January 2012. Resh and Dennis transferring to Edwards, Pro-Concepts, another were ASC employee responsible for that was copying and bringing over the Risk Radar source code and associated files to the "development box" at Pro-Concepts. at Pro-Concepts, After Resh began working he set up a redirect on the RRE website to the Pro-Concepts' discussions to official website. There regarding the potential Pro-Concepts, is also transfer of but no agreement between evidence of the RRE website the parties was ever reached. Pro-Concepts asserting alleges seven causes filed the counts of against Resh. Pro-Concepts' action for Trademark Infringement False Designation II), Cybersquatting Unfair instant action on October of Origin under Competition under under 15 U.S.C. 15 U.S.C. Virginia § law § (Count (Count IV), same and Conversion day, (Count VII). Pro-Concepts injunction, Complaint, based on requiring promoting a website confusingly similar See, separately Counts Resh moved I, (1) to III, cease or services to Compl., III), Trademark or that VI, a and selling use dilutive ECF No. for (Count 1. That preliminary VII or of Risk the otherwise any designs of I), (Count Dilution under Virginia law (Count V) , Breach of Contract VI), 2012 Complaint 1125(A) 1125(d) (Count 19, or marks Radar; (2) immediately transfer ownership and control of the RRE website to Pro-Concepts; (3) return any and all copies of software programs belonging to Pro-Coneepts; and (4) cease any and all use of Risk Radar software or any other materials belonging to Pro-Concepts. See, Mot. for Prelim. Resh Answer, but, twice as Inj., moved neither ECF No. for an motion 3. extension sought an of time extension to file an of time to file a response injunction, However, to Resh Pro-Concepts' failed to motion timely respond for to preliminary that motion. Resh did file a separate motion to deny the injunction on January 15, 2013. As Resh is proceeding pro-se, required to construe his filings liberally.2 the Court is The Court will treat his motion to deny injunction as a response in opposition. The Court held a hearing on Pro-Concepts' injunction on Wednesday, January 16, motion for preliminary 2013 at 1:30 p.m. where each side presented testimony and offered argument in support of their respective positions. the Court directed took the At Pro-Concepts' parties to a the conclusion of motion under settlement the hearing, advisement conference and before a Magistrate Judge. On January 23, in which he including granted, 2013, 2013, asserted failure to Resh filed his Answer to the Complaint twenty-two state a claim and seven counterclaims. the parties Magistrate Judge attended Prince. (22) a affirmative upon which ECF No. 16. settlement defenses, relief can be On January 28, conference The case did not settle, before but as Pro- Concepts represented to the Court in their motion to stay filed 2 "As the Court complaint, unanimously held 'however inartfully in Haines pleaded,' v. must Kerner, be held a pro se to 'less stringent standards than formal pleadings drafted by lawyers' and can only be dismissed for failure to state a claim if it appears '"beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."'" Estelle v. Gamble, 429 U.S. 97, 106 (1976). (quoting Haines v. Kerner, 404 U.S. 519, 520-521 (1972))(internal citations omitted). on January 30, 2013, the parties agreed settlement discussions settlement conference. to continue the over the ten (10) days following the ECF No. 17. This Court granted the Agreed Order on Pro-Concepts' motion to stay on January 30, 2013 and stayed the case for ten (10) February 8, 2013, motion for described by days. ECF No. injunction, [Pro-Concepts] in its "[b]ecause Motion ... issues described therein remain unresolved." Inj. 510, On February However, on Pro-Concepts filed a motion for ruling on its preliminary Prelim. 18. ECF. No. 19, dismiss Resh's Federal Rule of Civil continue Mot. harms and the for Ruling on 19. 2013, counterclaims Pro-Concepts for failure Procedure 12(b) pursuant to Rule 12(f). the ECF No. filed to a state a motion to claim under and to strike such claims 21. The next day, Resh filed a motion for ruling on his motion to deny injunction. ECF No. 23. Then, based on on February 27, 2013, representations Pro-Concepts' settlement conference. ECF No. Resh filed a 24. Resh's motion to dismiss on March 7, a reply to this response. ECF No. motion to dismiss counsel Pro-Concepts made at the responded to 2013 and Resh has not filed 25. On March 21, 2013, Pro- Concepts requested a hearing on both pending motions to dismiss. ECF No. directing 26. the Subsequently, parties to the appear Court at issued a a second settlement order conference before a Magistrate Judge on April 1, 2013. The Court then held a parties telephonic status conference with the upon their request on May 7, 2013. Having oral try received argument, to such written and having given resolve their dispute filings, oral the parties in testimony, sufficient settlement and time conferences, to this matter is now ripe for decision. II. PRELIMINARY INJUNCTION STANDARD "A preliminary injunction is 'an extraordinary remedy that may only be awarded upon a clear showing that entitled to such relief.'" 649 F.3d 287, 290 Res. Def. Council, (4th Dewhurst v. Cir. Inc., 2011) 555 U.S. Winter Telecommunications & Information Admin., 2d 317 Breakthrough (E.D. 2006) Corp. , Med. Va. 952 (quoting F.2d (recognizing that "[a] extraordinary remedy involving reaching power, circumstances which which Direx 802, 811 preliminary is to be the Natural 505 F. Israel, (4th exercise of only Cir. it'"). In v. 1992)) is 'an very a in Supp. Ltd. injunction applied clearly demand v. (2008)); see Peterson v. National 313, is Century Aluminum Co., (quoting 7, 22 the plaintiff far- the order to limited obtain the extraordinary remedy of a preliminary injunction, the moving party must establish: (1) "that he is merits"; is likely to suffer the (2) absence "that he of preliminary relief"; likely to (3) succeed on the irreparable harm in "that the balance of equities tips in his favor"; and the public quotation interest." marks and (4) Dewhurst, citations "that an injunction is in 649 F.3d omitted). setting forth the above four-part test, of Appeals for the Fourth Circuit at In 290 (internal Dewhurst, after the United States Court ("Fourth Circuit") separately highlighted the fact that controlling precedent from the Supreme Court of the plaintiff States "clearly show" merits. Id. see Direx party United that Israel, bears the Supreme standard she (quoting Winter, 952 burden of Court's which 'possibility' is likely 812 requires to at 22) succeed on a the (emphasis added); (indicating demonstrating that the that the moving propriety of a The Fourth Circuit has also reiterated rejection "allowed of Court") 555 U.S. F.2d at preliminary injunction). the ("Supreme the of a preliminary plaintiff irreparable harm" as to injunction demonstrate "'inconsistent only with a our characterization of injunctive relief as an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled Fed. to Election such relief.'" Com'n, 575 vacated on other grounds, 555 U.S. The F.3d Truth About 342, 559 U.S. 346-47 1089 Obama, (4th (2010) Cir. Inc. v. 2009), (quoting Winters at 22). demanding exacting when mandates Real a action, standard plaintiff as outlined seeks contrasted 8 a above becomes preliminary with the even more injunction that typical form of preliminary injunction pending trial. F.3d 808, F.2d (4th Cir. 286 preliminary merely preserves the status quo See East Tennessee Natural Gas Co. v. Sage, 361 828 283, that (4th 2004) Cir. injunctions do (quoting Wetzel 1980)) not (noting preserve v. Edwards, that the 635 "'mandatory status quo and normally should be granted only in those circumstances when the exigencies of the situation demand such relief"). As recently explained by the Fourth Circuit: Ordinarily, preliminary injunctions are issued to "protect the status quo and to prevent irreparable harm during the pendency of a lawsuit ultimately to preserve the court's ability to render a meaningful judgment on the merits." In re Microsoft Corp. Antitrust Litig., 333 F.3d 517, 525 (4th Cir. 2003). Movant, however, seeks to alter the status quo by having a federal court order the Board to include his name on a primary election ballot. But such "[m]andatory preliminary injunctive relief in any circumstance is disfavored, and warranted only in the most extraordinary circumstances." Id. (citation omitted). Consequently, our "application of th[e] exacting standard of review [for preliminary injunctions] is even more searching when" the relief requested "is mandatory rather than prohibitory in nature." Perry v. Judd, "Therefore, necessary merits of I:12cvl77, 471 'a both deteriorating preserve Id. the Fed. Appx. mandatory to court's the same 2012 WL 223-224 preliminary protect circumstance 219, against created ability to kind.'" W. 966028 at (4th injunction irreparable by enter the ultimate (E.D. Va. 2012). must harm defendant in be a and to on the Lessard, No. relief Indus. -N. , LLC v. *1 Cir. Mar. 21, 2012) reconsideration denied, (quoting Microsoft, 2012 WL 2046502 On October 19, claims of VII of 2012, and Resh conversion, website or to 5, 2012) (1) services DISCUSSION Pro-Concepts filed a motion seeking a based infringement, the Complaint. require June injunction, preliminary trademark contract, Va. 333 F. 3d at 526). III. "mandatory" (E.D. Pro-Concepts' cybersquatting, respectively Counts I, breach III, VI, of and The preliminary injunction sought would cease that similar to or dilutive of ownership and control on of selling use or otherwise any designs Risk Radar; the RRE (2) website or promoting marks a confusingly immediately transfer to Pro-Concepts; (3) return any and all copies of software programs belonging to ProConcepts; and (4) cease any and all use of Risk Radar software or any other materials belonging to Pro-Concepts. Prelim. Inj., As the ECF No. party See, Mot. for 3. seeking preliminary injunctive relief, Pro- Concepts bears the burden of clearly establishing that the four- prong test is satisfied.3 The Court begins such analysis by 3 Pro-Concepts has suggested at various places in its brief that the Court may presume irreparable injury or likelihood of success on the merits. Although such presumptions were previously available in this Circuit, the Supreme Court's ruling in Winter that the moving party must clearly show that it is entitled to preliminary injunctive relief did away with such presumptions. See Real Truth About Obama, Inc. v. Fed. Election Com'n, other grounds, 575 F.3d 342, 559 U.S. 1089 346-47 (2010). 10 (4th Cir. 2009), vacated on carefully considering demonstrated a whether likelihood of Pro-Concepts success on the has clearly merits of such claims, as required by the controlling precedent cited above. A. The first Likelihood of Success hurdle that Pro-Concepts must overcome in order to obtain a preliminary injunction is demonstrating a likelihood of success Dewhurst, on 649 the merits F.3d at 290. of plaintiff's "In general, asserted claims. where multiple causes of action are alleged, a plaintiff need only show likelihood of success to on one Indus.-North, *2 (E.D. claim LLC v. justify Lessard, Va. Inc., 21, 2012) F. Supp. 198, 201 919 where Mar. No. the request for injunctive I:12cvl77, (citing injunction to maintain the status quo relief, as here, the two requests 1995)). relief Western 2012 WL 966028, McNeil-PPC (E.D.N.C. preliminary relief." v. at Granutec, But, "in encompasses cases both an and to provide mandatory must be viewed separately, with the request for mandatory relief being subjected to a more exacting standard of review." 99 F. Supp. 2d 695, In this case, with its claim 703 Id. (E.D. Va. (quoting Cornwell v. Sachs, 2000)). the relief Pro-Concepts seeks in conjunction of trademark infringement, request (1) , is prohibitive in nature as it would prevent Resh from continuing to use relief the Risk sought Radar based or any on confusingly Pro-concepts' 11 similar marks. claim of The conversion, request (4), is also prohibitive in nature as it would prevent Resh from continuing to use the Risk Radar software or any other materials belonging requested, requests of and (4) is and and are and breach of in requests the relief from mandatory subject the more exacting standard of conversion Thus, claims respectively, for and nature. separately to remaining contract associated with conversion the The (3), which are based on the claims clearly mandatory which infringement Pro-Concepts. (2) cybersquatting, respectively, (1) to of must requests trademark be relief, viewed which are showing extraordinary circumstances in which denial of a preliminary injunction would not only result in irreparable harm but prevent the ultimately being able to order relief on the merits. However, court from id. at *1. Pro-Concepts must still clearly show that it is likely to succeed on the merits as to all four of the underlying claims in order to obtain the relief sought in its entirety. 1. Count I Trademark Infringement To prevail Lanham Act, protectable colorable on a trademark Pro-Concepts trademark, imitation must and of (2) the infringement show "that (1) the trademark that claim it had under a valid, defendant's use is to likely the of a cause confusion among consumers." Synergistic Intern., LLC v. Korman, 470 F.3d 162, 171 2006) (4th Cir. 12 (quoting Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 930 (4th Cir. 1995)) . (i) Valid, "A facie certificate evidence of the 1057(b); see § Publ'g, 364 F.3d 535, attached to for Risk registration of a validity of U.S.C. Protectable Mark the registered also 542 Retail (4th Cir. the Complaint both Radar and the of the assignment mark Servs., 2004). ... which v. 15 Freebies Pro-Concepts has Certificate by prima mark." Inc. As [is] of it Registration obtained sole rights to Risk Radar as well as an affidavit from its president swearing that the trademark is subsisting and unrevoked, Concepts has shown that it has a valid mark. O'Rourke Aff. 5 7. valid trademark, Compl. Ex. Pro- 1 & 2; Having established that Pro-Concepts has a the Court next examines whether that mark is protected. The protection afforded a trademark is directly related to the mark's distinctiveness. [the (4th mark] is Cir. U.S. "[t]o ascertain whether a mark is protected, whether 523 v. Accordingly, determine 517, LLC Inc., must F.3d Search, Search.com, Court] 300 U.S. 1) 2002). [the generic, 2) descriptive, 3) suggestive or 4) arbitrary or fanciful." A generic mark product or is one service" that serves and is as "the common name subsequently id. for a ineligible for protection because "the public has an inherent right to call a 13 product or service by its generic name." id. However, a certificate of registration from the PTO is prima facie evidence that the mark is not generic in the eyes of the relevant public. Retail Servs., Inc., Pro-Concepts 364 F.3d at 542. does or arbitrary mark,4 Risk Radar is a not argue that Risk Radar suggestive "words mark uses some or characteristic marks "suggest[] Suggestive a fanciful thus the Court need only consider whether suggestive mark quality is that or descriptive connote, of a a a rather product or characteristic mark. A than describe service." of a Id. product, permitting a consumer to infer something about the product from the mark." Inc. , 240 arbitrary and Hunt F.3d 251, marks, thus Masters, 254 Inc. (4th suggestive receive v. Cir. marks the Landry's Seafood Restaurant, 2001) . "are Like fanciful inherently greatest and distinctive, protection against infringement." Id. (citing Sara Lee Corp. v. Kayser-Roth Corp., 81 464 (4th F.3d 455, descriptive Corp. , 81 describe[s] purpose of "paradigm" mark F.3d a "is at not of a 1996)). On the other inherently descriptive hand, distinctive." Rather, 464. function, the Cir. use, product." descriptive a characteristic, Id. (citing mark). A size, Sara a Lee mark "merely or intended Coca-Cola the mark descriptive as is 4 A fanciful mark consists of "made-up words expressly coined to serve as trade or service marks." U.S. Search, 300 F.3d at 523. arbitrary mark is one using "common words in unfamiliar ways." 14 An Id. eligible for meaning' in the minds of 523. A protection mark substantial understand business the to Entm't six Ltd., the public." of to a 575 factors U.S. or a court in particular customers or Inc., with a business 915 F.2d 121, LLC v. Imagination (setting forth to consider when assessing Generally courts the mark imparts it stands for an the imagination to connect it is suggestive." v. If the speaking, "[I]f descriptive. (quoting Pizzeria Uno Corp. (4th Cir. person "a 2009) idea which requires some operation of 394 if (4th Cir. following distinction: is meaning" 394 have drawn the it 300 F.3d at connection Perini Const., secondary meaning). information directly, 'secondary prospective used acquisition of it with the goods, Search, see also George & Co. F.3d 383, for acquired a "secondary when Perini Corp. v. 1990); a present designation refer (4th Cir. it has acquired number enterprise." 125 has "only if George & Co, Temple, 747 575 F.3d at F.2d 1522, 1528 1984)). A certificate of registration from the PTO provides prima facie evidence that a mark "at a minimum is descriptive and has obtained secondary meaning." Thus, Pro-Concepts' descriptive mark. the Servs., Risk Radar mark is, Pro-Concepts least a suggestive mark, describe Retail services argues 15 and F.3d at 542. at least, a protectable that because the mark, provided 364 Risk Radar Risk Radar, because the PTO is at does not allowed registration of Risk Radar without a claim of secondary meaning. See Pizzaria Uno, 747 F.2d at 1528-29 (noting that if a mark's registration is refused because it is descriptive, the applicant can secure registration by asserting and proving that the mark has acquired a secondary meaning but that if "the Patent and Trademark Office finds registration the mark suggestive requiring George & Co., See also, without 575 F.3d at 934) ("If proof F.3d at of 395 . . ., it will grant secondary meaning."). (citing Lone Star, the USPTO believes a mark is descriptive, 43 the registrant must provide evidence of secondary meaning before the USPTO will has not Servs. grant registration.") provided 364 F.3d evidence at 542 ("The from trademark registration requiring the party mark is of against this Defendant presumption. presumption of validity Resh Retail flowing . . . has a burden-shifting effect, a registered mark to produce establish that the mark is generic by a evidence.") suggestive protection rebut challenging sufficient evidence to preponderance to Additionally, and as Thus, such infringement." Pro-Concepts' "receive [s] Hunt Masters, Risk the Radar greatest 240 F.3d at 254. (ii) To show that it Likelihood of Confusion is trademark infringement, "use of a colorable entitled to relief based on its claim of Pro-Concepts must imitation of 16 the also show that Resh's trademark is likely to cause confusion among consumers." at 171. Synergistic Intern., 470 F.3d The Fourth Circuit has set forth nine factors governing this inquiry: (1) the strength or distinctiveness of the plaintiff's mark as actually used in the marketplace; (2) the similarity of the two marks to consumers; (3) the similarity of the goods or services that the marks identify; (4) the similarity of the facilities used by the markholders; (5) the similarity of advertising used by the markholders; (6) the defendant's intent; (7) actual confusion; (8) the quality of the defendant's product; and (9) the sophistication of the consuming public. George & Co. , 575 F.3d at 393. These judicially created factors are not exhaustive or mandatory. Inc. , 676 F.3d factors are of 144, 154 equal (4th Rosetta Stone Ltd. v. Google, Cir. importance, 2012) . 'nor are "Not & Co. , 575 F.3d Anheuser-Busch, L (4th Cir. 1992)). v. L & "Rather, Wings, Inc., the confusion of these they always relevant in any given case.'" George Inc. all at 393 962 F.2d (quoting 316, 320 'factors are only a guide - a catalog of various considerations that may be relevant in determining the ultimate statutory question of likelihood of confusion.'" Busch, Rosetta Stone, 676 F.3d at 154 (quoting Anheuser- 962 F.2d at 320)). In consumer some cases, confusion. there is a Such presumption presumption of likelihood "arises from of the 'intentional copying' of plaintiff's trade dress or trademark by a defendant." Id. at 160 n.5. 17 The presumption applies "only when the copier intends already registered Silstar Corp. another's services where mark as mark manner, an this (quoting to pass the Id. Radar" mark However nor presumption 239 the does off owner, RRE not as (4th Cir. copies its Resh to Co. 1997)). or own v. adopts goods or presumption the website apply created by an Shakespeare intentionally effort of the good will 110 F.3d 234, party applied. "Risk Id. Inc., one those appropriately the in exploit mark." of Am., Accordingly, to is is in using neither any the commercial instant case. The Court thus considers the relevant factors enumerated above. (1) "Generally, the Strength of the Mark stronger the mark, the greater the likelihood that consumers will be confused by competing uses of the mark." George & Co. , 575 F.3d at strength of a plaintiff's mark, conceptual strength and 393. In evaluating the a court should consider both the the commercial strength. id. Conceptual strength is determined, in part, by which category of distinctiveness the mark falls into. Id. As discussed above, Risk Radar is a suggestive mark and thus, a conceptually strong mark. However, likelihood degree to of the strength confusion which the of inquiry designation a is Id. at 396. 18 for "ultimately purchasers with a particular source," is the dispositive factor. mark associated thus, purposes depends on of a the by prospective commercial strength Commercial strength is "a concept similar to the 'secondary meaning' inquiry considered in evaluating the mark's validity." Id. at 395. Secondary commercial-strength meaning inquiry and, . by . . looks v. First Care, at CareFirst of Maryland, Inc. 269 Cir. "Secondary meaning (4th substantial understand business number the to enterprise." 125 2006) . to Perini Corp. v. 817 when a (4th Cir. U.S. present designation refer Grocery Corp., 371 of 1990) or extension, the P.C., 434 F.3d 263, exists if in in particular person Perini Const., Inc., F.2d (1962)). 156, 160-61 The Court is required or a with a business 915 F.2d 121, Inc. (4th Cir.), fact customers connection (quoting Food Fair Stores, 301 marketplace." prospective used "[t]he v. cert. to Lakeland denied, consider six factors in assessing the acquisition of secondary meaning in a commercial strength analysis: expenditures; (3) the media "(1) the plaintiff's advertising (2) consumer studies linking the mark to a source; plaintiff's coverage of record of success; the plaintiff's business; plagiarize the mark; and (6) plaintiff's use of sales (4) (5) unsolicited attempts to the length and exclusivity of the the mark." George & Co. , 575 F.3d at 395 (citing Perini, 915 F.2d at 125). Pro-Concepts has argued only the conceptual strength of its Risk Radar mark. Although it appears to have a conceptually strong mark (in that a suggestive mark is generally entitled to 19 the greatest protection from infringement) , there is no evidence before the Court concerning the commercial strength of the mark. A mark's lack of commercial strength "renders the mark weak for purposes of [the] strength of the mark analysis." George & Co., 575 F.3d at 396 (noting that even a suggestive mark may be weak for purposes of the likelihood of confusion factor if commercial strength is lacking). strength of argument, Despite evidence the Risk Radar mark, regarding of the lack of commercial strength the conceptual evidence, means or even the overall strength of the mark is weak. (2) Similarity of the Marks In assessing factor, the similarity of Restaurants, so doing, 43 rather (E.D. Va. 2003). In the Court should "focus on the dominant portions of F.3d Specifically, at George & Co., 575 F.3d at 396. 396; confusion." "Risk use Pizzeria Uno, 747 F.2d at See, Lone 1534-35. the Court is to "focus on whether there exists a similarity in sight, Resh's the second Sweetwater Brewing Co. v. Great Am. Inc., 266 F. Supp. 2d 457, 462 the parties' marks." that under the Court should consider the marks as a whole, than their component parts. Star, the marks sound, and meaning which would result in George & Co., 575 F.3d at 396. Radar" of is the the mark dominant in part "Risk Pro-Concepts argues of Radar its mark and Enterprises" sufficiently similar for purposes of the Court's inquiry. 20 that is ECF No. 4 at 15 (citing Sweetwater Brewing Co. , 266 F. Supp. 2d at 463 for the proposition that when a single unitary word is in contention, similar to "any prominent use of the tradedress.") ) . "risk radar trademark, The RRE enterprise," the word will necessarily be regardless website which and of its the URL predominantly surrounding use the consists phrase of the trademark "Risk Radar" and thus looks and sounds very similar to the mark. The phrase prominently as well, the website. website "risk radar enterprise" is used appearing in large lettering at the top of Based on the prominent use of the mark in the RRE (attached as Ex. 7 to the Compl.) and its URL, Pro- Concepts has shown the requisite similarity of the marks. (3) Similarity of Good or Services To satisfy this prong, the goods or services offered by the parties "need not each other." be George & identical Co., or in direct 575 F.3d at 397. competition with It is sufficient if "the products or services provided by the two companies serve the same purpose." Concepts argues Pizzeria Uno Corp., 747 F.2d at 1535. Pro- that both parties are using the Risk Radar mark in the area of software services, but Pro-Concepts acknowledges that Resh's website does not contain any information regarding project management services or related software.5 Instead, Pro- 5 Although the heading of Resh's website is "Risk Radar Enterprise Software." 21 Concepts asks the Court to infer similarity of services based on the following facts: (2) Resh is an (1) software design is Resh's profession, expert in that field; operated his own software company, possession contact of Pro-Concepts' its sole Inc., officer and a of "transacting commerce Management, any Pro-Concepts' with is (5) the connected that lists that in to Resh he has to Risk Radar, Risk or any services which conflict with [Pro-Concepts]." hearing that he was not using the preliminary injunction the website or the mark "Risk for any commercial purposes and that Whisper Technology, is a former company. Tr. Pro-Concepts to bears succeed 50-51, the burden on its Evidence of Resh's profession, not and contends regards Resh also testified at likely previously software and that he is not 12. Inc. website Resh ECF No. Radar" software, technology company director. purged all copies Resh Resh is allegedly proprietary information provided on Resh's Whisper Technology, as (4) (3) establish that 54, to 60. clearly show that infringement expertise, and prior company do Enterprise Software is offering a good or is that he in possession of does not is trademark he allegation it suffice service, claims. and the a copy of Risk to show that Radar Resh is offering software and technology services or products under the Risk Radar name, especially given Resh's sworn testimony that he is not using the mark commercially 22 in any way. Thus, Pro- Concepts has not met its burden to show that the parties are offering similar services. (4) Similarity of Facilities Pro-Concepts does not argue this factor and there is limited evidence before the Court concerning the facilities used by either party. To the extent the Court regarding this factor, that there an individual residing evidence before it appears the Pro-Concepts has its principle offices in Virginia Beach, is is in Virginia Virginia and that Resh Beach, Virginia and is currently seeking employment and thus does not have a separate professional parties office. maintain a Pro-Concepts web presence does that represent refers to that Risk both Radar Enterprise, however web advertising is addressed under the fifth factor, similarity in advertising. Additionally, if the product is for the most part sold via internet or phone transaction, similarity of facilities would be irrelevant. Thus, there does not appear to be any similarity of physical facilities and the extent to which non-physical facilities may resemble each other is adequately addressed by the fifth factor. (5) Similarity in Advertising In considering similarity of advertising, the Court should look to both the advertising media used and the areas in which the parties advertise. Concepts argues that Pizzeria Uno, both parties 23 747 F.2d at 1535. are advertising on Pro- the internet Exhibit and 4 attaches to copies their brief. of their Resh's website utilizes in its domain name and website heading, "RiskRadar" as a product "Risk Radar Enterprise" on its respective as "Risk Radar" while Pro-Concepts lists website. and, large number both. widespread of See id. plaintiff availability consumers will of appears to parties are using the same advertising media (the Internet) the it refer both on Thus, Both sites that based software. websites the encounter internet, that advertisements a for (finding geographic overlap unlikely where the advertised nationally and the defendant advertised locally in a locality not expressly targeted in the plaintiff's national campaign). Therefore, Pro-Concepts has shown sufficient similarity in advertising. (6) Evidence of the Defendant's Intent defendant's intent is prevail on a trademark infringement claim. Co., 266 F. Supp. 2d defendant's intent can, the Court's "[i]f public, is this since there strong one 463. George is & intent evidence intending evidence of the be a "major" factor for Co. , 575 to F.3d confuse establishing to to Sweetwater Brewing However, in some cases, consideration. Specifically, confusion, at not required profit at the buying likelihood from 397. of another's reputation generally attempts to make his signs, advertisements, etc., to resemble the other's 24 so as to deliberately induce confusion." Id. (quoting Pizzeria Uno, 747 F.2d at 1535). However, "[t]he intent of a junior user is relevant only if the junior user intended to capitalize on the good will associated with the senior user's F.3d at 273. mark." Pro-Concepts argues intent because Resh knew of Pro-Concepts, Concepts' two the from the purpose Furthermore, of issue termination, he O'Rourke, the Risk employment at away from Pro- and has since received cease Radar President of 434 Resh had the requisite at that Inc. using the mark. that he originally obtained the website protecting Mr. website Pro-Concepts testified that of Maryland, the mark through his website after his demands Resh has redirected CareFirst product Tr. Pro-Concepts, 51, for 53. testified that this was Resh's intent in registering the RRE website. Tr. 17, the 19-20. Resh also website to Pro-Concepts asserts several that he offered to sell times and that such offers were rejected. This does not appear to be a case in which was unaware of the mark when he began using it. Brewing Co. , 266 F. Supp. 2d at 463. However, the defendant See Sweetwater neither is this a case where intent to confuse or intent to profit from another's reputation is shown. Resh is not using the RRE website or "Risk Radar" mark for commercial purposes. is not trying to establish recognition, Tr. association, will of his own product through use of the mark. 25 50-51, See, 54. or the Resh good CareFirst of Maryland, F. Supp. Inc. 434 at 463. 2d demonstrate a F.3d at 273; Sweetwater Brewing Co., Therefore likelihood of Pro-Concepts success on the has merits 266 failed under to this factor. (7) Actual Confusion The seventh factor is & Co. , 575 F.3d at 398. both anecdotal Equip. 654, Co. 661 v. and (4th Cir. George "Actual confusion can be demonstrated by survey champ the "most important factor." evidence." Frame Id. Straightening 1996)). (citing Tools Equip., Confusion can be as F.3d to the source, connection, F.3d at 157. In weighing the evidence of actual confusion: of the sponsorship. 87 affiliation, [E]vidence or Inc., USA & number of Rosetta instances Stone, of 676 actual confusion must be placed against the background of the number of opportunities for confusion before one can make an informed decision as to the weight to be given the evidence. If there is a very large volume of contacts or transactions which could give rise to confusion and there is only a handful of instances of actual confusion, the evidence of actual confusion may receive relatively little weight. George & Co., such cases, 575 F.3d at "[e]vidence of 398. (citing McCarthy only a § 23:14). small number of instances actual confusion may be dismissed as de minimis." Petro Stopping, of actual of (citing 130 F.3d at 95). Pro-Concepts cases Id. In represents that it has confusion by customers 26 documented over sixty or potential customers. ECF No. 4. However, Pro-Concepts' and 10 to support this attached the to that another case present in clients, but this case. it appears brief. was failed this references Exhibits 9 claim and there are only four exhibits Pro-Concepts' hearing brief an to Pro-Concepts argument address Given from whether that acknowledged at a prior actual Pro-Concepts brief in confusion is has to be a fairly small company, only 120 in which case a small number of instances of actual confusion would likely not be de minimis. instances sold of 500,000 See George & Co. , 575 F.3d at 399 actual games confusion per de year). minimis (finding four where However, as the plaintiff Pro-Concepts has failed to provide the Court with any evidence in support of this factor, it has failed to establish that defendant has caused actual confusion. (8) Quality of Defendant's Product This production factor of is cheap trademark-protected relevant copies goods." (quoting Sara Lee Corp., that this factor using the RRE or & Furthermore, or the 27 has involving a 575 the competitor's F.3d at 399 Pro-Concepts concedes and there or services Resh of Co., 81 F.3d at 467). goods website "situations knockoffs George is not relevant Resh has priced any Pro-Concepts. in is no evidence that below those offered by testified trademark at that issue he is not for any commercial purpose. Tr. 50-51, 54. Therefore, the Court finds this factor irrelevant in the instant case. (9) Sophistication of the Consuming Public The ninth factor is only relevant "when the relevant market is not the public at-large." George & Co., 575 F.3d at 400. "If the typical consumer in the relevant market is sophisticated in the use of or possesses product, such determining F.3d at sophistication the sophisticated, or likelihood of 467. considering an expertise regarding a particular Where this the expertise may be confusion." the consuming Sara Lee market factor may even trump all likelihood of pertinent confusion is a 81 extremely other as Corp., in factors in sophisticated consumer is unlikely to confuse one company for another based on the name alone. Perini, 915 F.2d at 127-128. Pro-Concepts argues that this factor is not relevant to the Court's analysis. However, because Pro-Concepts offers software for sale and has a limited number of clients, rule out this assertion alone. Pro-Concepts factor's Mr. acquires relevancy O'Rourke two or the Court does not based on testified at three clients Pro-Concepts' the hearing a month that and that advertising for their Risk Radar products has been done through the Risk Management limited client pool, Risk Management Buyer's Guide. along with Buyer's Guide, 28 Tr. 25. their advertising which describes Pro-Concepts' through itself as the a database that dedicated the "Risk to risk Radar" sophisticated market of software is consumers. targeted The a fairly sophistication of its O'Rourke testified to range from at least $7,800, unlikely that software program names, The a purchase, consumer would up to paying suffer the at which Mr. product by indicates is initial supported professionals, consumers an further management cost of $32,000. Tr. thousands confusion the of from software, 25. It dollars a for is for a similarity in especially where only one is offering a product for sale. sophistication thus likely trumps of Risk Radar software's typical consumer the two factors which Pro-Concepts has shown to support a likelihood of confusion. (iii) Summary Pro-Concepts protectable mark demonstrate that confusion among has in established "Risk Resh's the Radar." RRE website consuming or adopt Pro-Concepts' it has creates there is a it However, public. Concepts has a weak mark because mark's commercial strength. that has a valid and failed to likelihood of Specifically, no evidence as Proto the Defendant lacked the intent to copy Risk Radar mark in an effort to pass his own goods or services off under that mark as Resh is not using the mark in a commercial manner and is not offering a good or service. Although Resh is employing a similar mark via functionally and geographically similar methods of advertising, 29 these are the only factors which support Pro-Concepts' assertion of a likelihood of confusion and they are likely trumped by the sophistication of the consuming public. presently the before Court, it is likely consumer of the Risk Radar software is of or possesses software at expertise issue. Additionally, actual an confusion Pro-Concepts has among thus that evidence the typical "sophisticated in the use regarding "the particular Sara Pro-Concepts Based on the Lee has Corp., failed customers 81 to and F.3d show any potential failed to establish that type at of 467. cases of customers. it is likely to succeed on the merits of its trademark infringement claim. 2. Count Ill-Cybersquatting The Court success on turns Pro-Concepts' Pro-Concepts prevent now states Resh that to consideration cybersquatting it seeks from maintaining of the claim. likelihood of In its brief, a preliminary injunction a website using to the Risk Radar mark as part of the domain name by either "redirecting the site to send any visitors to Plaintiff's website or by shutting down the site." ECF No. 4 at 7. Pro-Concepts' motion, however, asks the Court to "[iImmediately transfer ownership and control in the website www.riskradarenterprise.com to Pro-Concepts." No. 3. Thus, Pro-Concepts requests mandatory injunctive relief in its motion (transfer of ownership) mandatory ECF injunctive relief in its 30 but argues for different brief (redirection back to Pro-Concepts' website or shutting down the website) . The Court asked for clarification as to which form of relief was sought at the hearing and Pro-Concepts stated that the mandatory relief, either through a transfer of the ownership of the RRE website or establishing a redirect to the Pro-Concepts' website, was indeed sought, but that it would settle for the prohibitive relief of preventing the website from appearing in searches and removing it temporarily from the public domain. the standard of review minimum standard which review must be for prohibitive applies, satisfied Tr. 70. injunctions the more before the As such, while is the exacting standard of mandatory relief will be granted. Cybersquatting is "the practice of registering 'well-known brand names as Internet domain names' in order to force the rightful owners of the mark 'to pay for the right to engage in electronic commerce under their own brand name.'" Virtual Works, Inc. v. 2001). Volkswagen Am. Inc. 238 F.3d as cybersquatting. 267 (4th Cir. 2005). To from the mark owner's site may also qualify Lamparello v. Falwell, prevail on a 420 F.d 309, 318 cybersquatting Anticybersquatting Consumer Protection Act must demonstrate to 264, Counterfeit activities and the misuse of the domain name to divert customers Cir. of profit" that from (1) ("ACPA"), the defendant had a plaintiff's mark; 31 and claim under (4th the a plaintiff "bad faith intent (2) the defendant registered, trafficked in, or used a domain name that "is identical or confusingly similar to, or dilutive of" plaintiff's distinctive mark. 2005); that see also Resh's 7. As Enterprise," 15 U.S.C. website identical terms" at Lamparello v. as Resh's § domain Falwell, 1125(d)(1)(A). name Pro-Concepts' RRE website which includes 420 F.3d 309 and (4th Cir. Pro-Concepts verbiage "use the mark "Risk Radar." uses the phrase the term argues exact, ECF No. "Risk "Risk Radar," 4 Radar the second prong of the ACPA's test is met in this case. In determining whether Resh acted with a bad faith intent to profit nine from statutory Specifically, Pro-Concepts' factors. with mark, See respect Court U.S.C. to cybersquatting on another's mark, such as, 15 the the should § consider 1125(d)(1)(B). person allegedly "a court may consider factors but not limited to " (I) the trademark or other intellectual property rights of the person, if any, in the domain name; (II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person; (III) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; (IV) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name; (V) the person's intent to divert mark owner's online location to consumers from the a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by 32 creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; (VI) the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct; (VII) the person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure information, or to maintain accurate contact the person's prior conduct indicating a pattern of such conduct; (VIII) the person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and (IX) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous within the meaning of subsection (c) of this section. 15 U.S.C. § 1125(d) (1) (B) (i) . The Court may not find the requisite bad faith if "the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful." 15 U.S.C. § statutory 1125(d) (1) (B) (ii) . factors them are permissive, all. Lamparello, Additionally, because the Court is not 420 at F.3d 319. the required to consider The factors serve merely as a guide, and the Court should still carefully consider whether the conduct at issue was motivated by a bad faith intent to profit. Id. at 319-20. 33 Regarding the first factor, Resh acknowledged at the hearing that he has no trademark or intellectual property rights in the domain itself. Tr. name name or first two name his Nor does 58. beyond the readily statutory used to factors ownership of the domain domain name consist identify appear Resh. to of a name legal Therefore, weigh in favor the of a finding of bad faith. Resh owned the domain name before Pro-Concepts acquired its interest show in that the Resh mark did and, not Concepts' predecessor acquired exclusive further, acquire in the interest interest the in domain and the facts before on although there is prior use, for of the benefit offering of goods the all behalf that, when Risk Radar redirected the website at issue to Pro-Concepts' and not or services by Resh and as of Court Pro- Pro-Concepts mark, website. such use appears mark-holder the Resh Thus, to have been any bona fide such factor three weighs against a finding of bad faith. Resh denies that he acquired the RRE website on behalf Pro-Concepts' predecessor in interest, hearing that he acquired the RRE ASC, and testified at the website to Radar product which he was helping develop. stated interest that after he in the website acquired the RRE of protect Tr. 51. website, and prohibited Resh the Risk Resh also ASC had no from setting up a redirect or putting company information on the RRE website under 34 ASC's policies which prohibited setting up a website outside the main company website. Tr. 53. Thus, while there are no facts suggesting that Resh has ever made a bona fide noncommercial or fair use of the Risk Radar mark using the site accessible under the domain name at issue, factor four only weakly weighs in favor of a finding of bad faith. The fifth factor faith in this case. on behalf of beginning also does not support Pro-Concepts' predecessor at in Pro-Concepts, redirected the domain name to Pro-Concepts' Resh disabled the redirect. domain name and the finding of bad The domain name at issue was not purchased employment termination, a timing of Resh's interest. Resh After voluntarily site and, after his The prior use of redirection of the the domain name do not suggest with certainty whether Resh did or did not intend own. to divert However, Radar" in its customers from Pro-Concepts' while the RRE website does domain name and as website to his use the phrase "Risk the header, it does not list any information related to Pro-Concepts nor indicate any product or services beyond the name "Risk Radar Enterprise," and Resh is not using the RRE website in a commercial manner. the fifth factor bears a significant Furthermore, similarity to the likelihood of confusion factor addressed above in the trademark infringement show a claim analysis, on which Pro-Concepts likelihood of success on the merits. 35 failed to With respect while Resh's sell the to the sixth representations RRE website factor, that to both he the Court notes offered several ASC and that times Pro-Concepts to would generally weigh in favor of a finding of bad faith, in this case the finding is more ambiguous as there is evidence that Resh did so, not for financial gain, as presented to evidence, attempted to equal to the cost cases where to transfer owner, owner had a the the site for Court, to reimbursement. indicates the markholder acquiring and maintaining the domain name the mark name of but the bad owner courts faith tries have to that Resh for an amount the domain. sell In the domain name generally found to profit, intent The yet the domain in most of those cases the domain name owner had no legitimate use for the domain name to begin with and they asked a price not based on compensation but on how much they felt they could get the mark owner to pay. F. App'x 108, See, Domain Names Clearing Co v. F.C.F. 111 (4th Cir. 2001) (where Inc., 16 the domain name owner did not use the domain or have plans to use the domain name, but it tried to sell it to the mark owner based on the price of a high exposure advertisement); People of Animals v. Doughney, 263 F.3d 359, for the Ethical Treatment 369 (4th Cir. 2001) (where defendant had no right to the PETA name or mark and encouraged the mark owner to "'settle' and 'make him an offer'"); Works, 267 Inc. , 238 F.3d at 36 (where the domain Virtual name owner threatened to sell the domain mark owner bought the rights Mr. to the highest bidder unless to the domain name). O'Rourke denied any discussions purchase of the RRE website. Tr. with Resh 24. Mr. only initial discussions on the potential website took place. Tr. the time, Court at this 22. Thus, the the Furthermore, over a potential O'Rourke stated that "transfer" of the RRE based on the evidence before sixth factor weighs against a finding of bad faith intent to profit. Regarding attempted to the hide suspected alias, the his Pro-Concepts continued on ownership alleges Resh using by the registration for a home ECF No. 4 at 9. renewed factor, "the Timothy Alston as the domain registrant and by using an address father." seventh domain Pro-Concepts has provided a copy of registration, continue to be the case. owned by his which ECF No. 29, shows that Ex. A. these However, hearing Resh clarified that the name used to register website, Timothy Alston, at the the RRE was actually a name he had previously used and that his name changed in high school. stated reason using for facts this prior name Tr. 59. to register His the RRE website was that, at the time, Yahoo! did not have the security in place to protect registrant's information and Resh wanted to avoid being spammed. lack of a pattern Tr. or 59. history Nevertheless, of such prior despite Resh's conduct, he did provide "material and misleading false contact information when 37 applying for the "fail[ed] to maintain accurate contact information." 15 U.S.C. 1125 (d) (1) (B) (i) . registration Thus, the of the seventh domain factor name" tends to and has weigh § in favor of a finding of bad faith. The bad eighth faith. factor, however, Specifically, registered multiple issue in this case. domain does there is names. not no Only See Lamparello, support a evidence one finding of that Resh domain name 420 F.3d at 320-21 has is at (finding no bad faith where the defendant registered only one domain as a "gripe" site). It is unclear what weight, ninth factor, if any, should be given to the which requires the Court to consider the extent to which the mark incorporated in the domain name is distinctive or famous under the ACPA. A mark is is "widely recognized by "distinctive and famous" if it the general consuming public of the United States as a designation of [sic] source of the goods or services of the mark's owner." 15 U.S.C. § 1125(c)(2)(A). Pro- Concepts has not argued that its Risk Radar mark is "distinctive and famous" under the ACPA. Accordingly, there is nothing currently before the Court that would enable it to determine how the ninth factor applies, in this case. if at all, to the bad faith analysis However, the balance of the preceding factors and a careful consideration of the facts in this case do not support a finding of bad faith in and of themselves and it is unlikely 38 that evidence as to the ninth factor would be sufficient to require a finding of bad faith. Specifically, the evidence before the absence of any bad faith intent to profit. any commercial use of for the thus, well. benefit for the of shows an Resh is not making the mark and he obtained the RRE website the overall Furthermore, Court product associated with benefit Resh's of the testimony original shows some the mark and, markholder basis as for a reasonable belief that he could use the RRE website based on his pre-existing ownership at ASC and failure to domain after acquiring and Mr. O'Rourke's follow up refusal regarding the the Risk Radar mark to reimburse transfer of the for Pro-Concepts. There is no likelihood of confusion, no registration of multiple domain names, and no attempt to sell the domain for profit. See, Lamparello at 321. While there are a few factors that weigh in favor of Pro- Concepts, these factors alone are not sufficient to support a finding of bad faith intent to profit. As to factor one, Resh has no trademark or intellectual property rights in the domain name beyond his ownership of the domain name itself. Nor does the domain name consist of a legal name or name readily used to identify Resh, factor two. Factor four weakly weighs in favor of a finding of bad faith due the Resh's lack of prior bona fide noncommercial or fair use of the RRE website. 39 Additionally, Resh's provision of false contact the domain name case, factor also supports seven. a information when registering finding of bad these the However, are faith in only this factors weighing in favor of a finding of bad faith and the inference of bad faith from these factors should not be relied upon based on the total absence maintenance of of the bad RRE faith website in as the acquisition established by and Resh's testimony at the hearing. Pro-Concepts will succeed on Pro-Concepts has failed to make a clear showing that the merits of its claim of cybersquatting. has failed to show a likelihood of success on it As the merits that would support a prohibitive preliminary injunction, it has necessarily also failed to show likelihood of success on the merits that would satisfy the more exacting standard that applies to requests for mandatory injunctive relief. 3. The Court must success on Count VI. his employment requiring him immediately. Count VI Breach of Contract also Pro-Concepts' Pro-Concepts claims agreement to consider return supports a Risk Based on the fact that such action (i.e., the return of the software), 40 of that Resh's breach of preliminary Pro-Concepts' the more exacting standard to Count VI. likelihood Radar injunction software injunction mandates the Court will apply To state a show: claim for breach of contract, "(1) a legally enforceable obligation of a defendant to a plaintiff; (2) the obligation; and (3) injury or damage to defendant's the breach of obligation." (Va. Pro-Concepts must violation or breach of that the plaintiff caused by Filak v. George, 594 S.E.2d 610, 614 2004). (i) Legally Enforceable Obligation Pro-Concepts argues that its employment agreement with Resh created in Concepts. entered Resh a legally Specifically, into a valid, enforceable Pro-Concepts binding, and obligation claims that to Pro- the parties unambiguous employment agreement in which Resh affirmed that all work performed by him for Pro-Concepts belongs solely to Pro-Concepts or its clients and that Resh had no ownership or licensing rights to that work. ECF No. 4 at 27. Under Virginia law an employment agreement may constitute a legally enforceable obligation, however, when such an agreement contains restrictive covenants, it is the province of the Court enforceable. Resh's to determine whether the restrictive covenant is Simmons v. Miller, 544 S.E.2d 666, 678 (Va. 2001). contract contains restrictive covenants (including a confidentiality clause and a non-compete clause), however, these covenants do not appear to be at issue in this case. Rather, Pro-Concepts seeks to enforce its work products clause, 3 10 and termination clause, 1 13. Mot. for Prelim. Inj. Memo, Ex. 2 at 41 4-5, ECF No. 4. The work products clause states that "all work performed for Pro-Concepts belongs Clients." Id. at The allegedly breached portion of 4, SI 10. the termination clause states to Pro-Concepts or its that: Upon termination of employment, [Resh] agree[s] to return to Pro-Concepts all Company or Client property in my possession, including but not limited to any computers, . . . and other tangible manifestations of Confidential Information (and all copies and reproductions thereof) Id. this 9[ at 5, 91 13(b). Resh suggested contract upon termination, 13(c), specifically states that however that he was the released termination clause, termination does not Resh from the obligations set forth in the agreement. Thus, as the employment enforceable obligation, agreement did from create release Id. at 5. a legally we next turn to whether that obligation was breached. (ii) Breach of Obligation Pro-Concepts argues that Resh breached his employment agreement by retaining the Risk Radar Enterprise software after his termination. appears company Specifically, to violate 91 or termination. client retention 13 (b) , which requires property in his of the software Resh to return all possession upon his Because 91 10 of the employment agreement states that any work performed for Pro-Concepts belongs solely to Pro- Concepts or its clients and that 42 Resh has no ownership or licensing rights in such work product, Radar software after beginning Resh's work on the Risk employment with Pro-Concepts (including the updates retained on his personal laptop) appears to constitute work product that Resh was required to return upon his termination. Resh testified at the hearing that he has purged all Risk Radar software from his personal computer except the files which were taken from ASC at of Risk Thus, Radar between ASC and the time of Pro-Concepts. while Resh may have been in violation of agreement when he left Pro-Concepts in the transfer Tr. 60, 65-66. the employment possession of the software code, as Resh has since that time purged all copies of the work Concepts' performed Cease for and Pro-Concepts, Desist letter as of instructed August 10, by 2012, Prothe mandatory relief requested is no longer possible with regards to those copies of the software and the question is moot purposes of a preliminary injunction. No. Compl. , Ex. for the 5 at 2, ECF 1. However, Resh software version servers. Thus, testified that he still had a copy of the and files which were copied from the ASC whether Resh is in breach of the employment agreement hinges on Pro-Concepts' version of the Risk Radar software. property rights in the ASC This is a factual dispute on which Pro-Concepts has offered testimony and the affidavit of Mr. O'Rourke, which states that "Risk Radar Enterprise and Risk 43 Radar 2012 are the property of Pro-Concepts, owns and controls all proprietary rights No. 4, Ex. 1 violation of they have 91 5. Pro-Concepts bears and in the software." the burden the obligation and they have done shown that Resh was and is Pro-Concepts still so, in to ECF show a inasmuch as possession of software in which Pro-Concepts has proprietary rights. (iii) Damages To breach show of suffered that it contract injury obligation. is likely claim, or to succeed on Pro-Concepts damage must because of Filak, 594 S.E.2d at 614. essential element" and the merits establish Resh's of that breach a it of "Proof of damages is an Pro-Concepts "bears 'the burden of proving with reasonable certainty the amount of damages and the cause from which they resulted; speculation cannot form the basis of recovery.'" Ass'n, Inc. v. Batt, Shepherd v. Davis, this burden, and circumstances least an intelligent 739 (Va. required, (Va. 2012) to and permit the probable there "Proof must with be at 44 fact-finder estimate Hall, mathematical least of (quoting To satisfy "furnish evidence of (quoting Dillingham v. 1988)). but 699 574 S.E.2d 514, 524 (Va. 2003)). Pro-Concepts must Id. conjecture Manchester Oaks Homeowners 732 S.E.2d 690, facts sustained." and sufficient to the make at damages 365 S.E.2d 738, precision sufficient is not evidence to permit an damage." intelligent and probable estimate of the amount of Id. Pro-Concepts has argued that, as a result of Resh's retention of all software updates performed during the course of his employment, semi-annual Pro-Concepts client software Concepts] has been attempt to recreate Additionally, [to] no longer expires." support this forced use to one been update. spend the least ECF No. president, that, at has has [Pro-Concepts'] 4 at 27-28. argument is a "As The only after Resh's termination, its result, [Pro- of dollars in an announced services ECF No. complete programmed once by its [Resh]. intention its contract evidence offered sworn affidavit Shawn T. O'Rourke. to a thousands changes client unable to from Pro-Concepts' 4 Ex. 1, 9[ 22 (noting Pro-Concepts discovered that the versions of Risk Radar Enterprise and Risk Radar 2012 remaining with the company were nonfunctional and lacked months of work, requiring Pro-Concepts to hire a replicate hearing, new Mr. programmer O'Rourke to Resh's "spend thousands of dollars" testified that Resh's it work). had taken to At the a new developer from August 1st to the middle of September to "make a build of the software" and that new issues with old versions of the software, cropped up. for which they don't have the original code, have Tr. 27-28. However, Pro-Concepts failed to provide evidence as to the actual cost or as to the developer's salary. 45 Although Pro-Concepts' argument and O'Rourke's affidavit provide some basis upon which the Court could estimate damages, the evidence permit an suffered that currently "intelligent to the date. true before and is Court probable Further, damage the is estimate" Pro-Concepts' not software after his termination, insufficient from Resh's left. codes Tr. and 56. Mr. that those O'Rourke of were confirmed likelihood contract claim, of success on still that the merits the Resh testified at he brief walk-through of the file storage with Resh. show a of lack of copies the source code, files damages indicate retention but Pro-Concepts' the hearing that he saved copies the arguments of the software build code and updates to it. and build of to of runtimes, there when he remembered Tr. 36. a To their breach of Pro-Concepts must show "injury or damage to the plaintiff caused S.E.2d at 614. by the breach (emphasis added) of As obligation." the Filak, 594 files must have been present for the file storage demonstration to have taken place and Resh has testified that he did not remove them, Pro-Concepts has failed to show at this stage of the litigation that its lack of software build codes and source codes is due to Resh's breach of the obligation. (iv) Summary While the Court finds that Resh's employment agreement with Pro-Concepts created a legally 46 enforceable obligation, Pro- Concepts did not adequately flesh out the amount of damages they suffered and has Resh's actions, updates' failed failed to show especially as that Resh source code at Pro-Concepts' to clearly show that the it is damages purged his request. likely were copy due of to the Pro-Concepts has to succeed on the merits of Count VI under the more exacting inquiry applicable to requests for mandatory injunctive relief. 4. Pro-Concepts Count VII in Concepts Count VII Conversion must order claims to also show a likelihood succeed on its that Resh's of success injunction motion. conversion of on Pro- Pro-Concepts' proprietary software supports a preliminary injunction requiring him to immediately return Pro-Concepts' Risk Radar software. with Pro-Concepts' breach of contract argument, that, because return of the the relief sought software), the mandates Court it would appear action should As (i.e., apply the the more exacting standard to Count VII. Under Virginia law, a person is liable for conversion for "the wrongful exercise or assumption of authority over another's goods, depriving the owner of their possession, or any act of dominion wrongfully exerted over property inconsistent with, the owner's rights." S.E.2d at 679. Concepts] Thus, in denial of, Simmons v. Miller, 544 "to assert a claim for conversion, must prove by a preponderance of 47 or the evidence [Pro- (1) the ownership or right to possession of the property at the time of conversion and (2) by [Resh] over the wrongful exercise of dominion or control [Pro-Concepts'] Concepts] of Pishvaian, property, Airlines possession." 155 F. Supp. 2d 659, Pro-Concepts argues thus Reporting 664 that, (E.D. since possessed sole and complete rights to Va. depriving [Pro- Corp. v. 2001). its inception, it has the Risk Radar Software. Although Pro-Concepts has provided the Court with the trademark registration and assignment, Pro-Concepts has submitted physical evidence concerning the Risk Radar software. the only evidence currently before testimony at the hearing and his the Court is As above, Mr. sworn affidavit, little O'Rourke's which states that "Risk Radar Enterprise and Risk Radar 2012 are the property of Pro-Concepts, and Pro-Concepts controls all 4, Ex. 1 91 5. The affidavit goes on to state that Resh was hired on March 30, 2009 proprietary rights in the software." owns and ECF No. to work on the Risk Radar Enterprise software. on these representations, a property right in the Resh's employment began, Id. 91 10. Based it would appear that Pro-Concepts had Risk Radar Enterprise software before a right that has allegedly continued to the present time. The prong of analysis Court the in should apply conversion Count VI. the inquiry same that Specifically, 48 analysis it applied the to the to the breach employment second agreement states work that Resh performed return all has for such copies personal computer of that he control left Resh no or (91 his Radar his licensing 10) and Enterprise over Resh Pro-Concepts' did over property because working any him software however, with in to (9(13 (b) ) . conduct, its rights requires termination termination, control Pro-Concepts proprietary software, Furthermore, Risk or Resh's of upon after exercised dominion Concepts ownership Pro-Concepts work retaining software). no on his wrongfully property (the deprive Pro- not Resh copies including the build codes, In testified of their runtimes, etc. as the Court finds from Resh's sworn testimony that longer has possession of such software, beyond the original code from ASC,6 it need not consider the mandatory injunctive relief under Counts VI and VII with regard to any software beyond while the code still in his possession. Therefore, the Court is satisfied as to Pro-Concepts' ownership or possessory rights in show that wrongful Concepts Resh's of the possession. clearly shown that software, exercise Pro-Concepts has of deprived Accordingly, dominion Pro-Concepts failed has to Pronot they are likely to succeed on the merits of 6 Resh testified that he no longer has possession of any other version of the Risk Radar software as all other versions in his possession were purged from his computer as instructed by Pro-Concepts' Cease and Desist letter of August 10, 2012. Tr. 65-66. However, Resh testified that he still had a copy of the software version and files which were copied from the ASC servers. Tr. 60, 65-66. 49 Count VII under the more exacting inquiry applicable to requests for mandatory injunctive relief. 5. Based Court, to on the Conclusion evidence and argument currently before the Pro-Concepts has failed to clearly show that it is likely succeed on Therefore, the the mandatory merits Court injunctive as will relief failed to meet this standard, to Counts not I, grant sought. III, the VI, and VII. prohibitive Pro-Concepts Since and has even if it satisfied the remaining factors, the Court cannot grant the injunctive relief requested. However, in address the interest these factors of clarity, the Court will briefly as well. B. Likelihood of Irreparable Harm (Absent Preliminary Injunction Relief) In addition to showing likelihood of success on the merits, a showing of the likelihood of irreparable injunctive relief is also required. mere possibility of irreparable harm is irreparable harm must be prong of Corp., the inquiry. 952 plaintiff F.2d can that not 555 U.S. enough. "actual and imminent" Direx Israel, 802, show Winter, 812 (4th Ltd. Cir. "irreparable injury v. at 22. Id. A The to satisfy this Breakthrough Med. 1991). injury absent Generally, is suffered a when monetary damages are difficult to ascertain or are inadequate." Multi-Channel TV Cable Co. v. 50 Charlottesville Quality Cable Operating Co., 22 Danielson v. Local Additionally, F.3d the Winters) that creates the 546, 275, 479 Fourth "when 551 F.2d failure of Cir. 1994) 1037 has (quoting (2d Cir. 1033, 1973)). stated Circuit the possibility (4th to permanent loss before preliminary grant (albeit relief of customers to a competitor or the loss of goodwill, the irreparable injury prong is satisfied."7 often Id. require potential Courts considering this prong post-Winter specific loss of customers irreparable injury. v. See, Landow Aviation Va. Jan. 14, requirement Ltd. a e.g., This not to specific say losses, but goodwill 2009 WL approach plaintiff that the actual before or finding Signature Flight Support Corp. show likely and not merely possible. is concerning or P'ship, 2009) . that evidence 111603, is 555 U.S. is rather Pro-Concepts (E.D. with irreparable Pro-Concepts that *2-5 consistent that Winter, at harm at 22. required to the is This establish must present sufficient evidence for the Court to find that it is likely that such losses have occurred or will occur absent preliminary injunctive relief. Pro-Concepts argues that this Court may presume irreparable injury because Resh is seeking to confuse and mislead Pro- 7 The Court notes that this case predates Winters and therefore, it is must find not customers or good will, but conduct alleged in this case. likely that the Court that such 51 only a losses possibility are likely of given lost the Concepts' customers and, under Fourth Circuit law, a presumption of irreparable injury applies in trademark infringement actions where the Court finds a likelihood of confusion. 17 (citing Scotts Co. v. United Indus. Corp., (4th Cir. 2002)). As a threshold matter, ECF No. 4 at 315 F.3d 264, 273 it is unlikely that the presumption alleged in the context of trademark infringement remains viable Specifically, after the Supreme the Supreme Court Court's decision held that in Winter. the plaintiff bears the burden to clearly show entitlement to preliminary injunctive relief and that, to satisfy this burden, a irreparable likelihood of 555 U.S. at 22. presumption of Resh's Thus, evidence Concepts' ability Concepts' good will, Having to presented obtain determinations requirement possibility. should and not the to retain of these and his the the facts in of the on effect, customers should on and Pro- on Pro- the website, then purging at Risk Radar context of software. the above regarding likelihood of success on the merits various claims, of being a confuse the Court retention, copies rely likely to Instead, as Winter, likelihood that of both Resh's maintenance of request, considered Pro-Concepts' Court customers. www.riskradarenterprise.com, Pro-Concepts' a intentional or not are or mislead Pro-Concepts' the the not irreparable injury based on actions whether consider harm, the plaintiff must show of the harms alleged do not meet the "actual and 52 imminent" and irreparable absent the Furthermore, requested as preliminary injunctive relief. Resh has voluntarily taken the RRE website down pending the outcome of this case (at the request of the Court) , there is no opportunity for confusion among potential customers.8 Additionally, except not as Resh is no longer in possession of any software the version which was shown that the Pro-Concepts has requested relief copied from ASC, remedy would the harm alleged with regard to the software. C. The third prong Balance of Equities of the preliminary injunction analysis requires Pro-Concepts to establish that the balance of equities tips in its favor. equities between Winter, the competing claims of 555 U.S. at 20. parties, the Court 480 U.S. 24 (quoting Amoco Prod. 531, 542 "must balance the injury and must consider the effect on each party of the granting or withholding of Id. at In considering the Co. the relief requested." v. Village of Gambell, AK, (1987)) . Pro-Concepts has alleged several injuries, including damage to its goodwill and the reputation of its Risk Radar mark based on Resh's maintenance Additionally, of his own website using the mark. Pro-Concepts has alleged that Resh's retention of 8 While the Court acknowledges Mr. Byers' submitted declaration, ECF No. 29, regarding Resh's renewal of his registration of the RRE website, the fact remains that Resh has voluntarily taken down the RRE website and the RRE website remains inaccessible. 53 the only working copy of Risk Radar Enterprise software has left Pro-Concepts software unable update thousands work. However, copies of comply obligations expend have to of with and dollars in has an Radar current required attempt testimony from Resh any Risk its to indicates software beyond and that when he was terminated, contractual Pro-Concepts recreate Resh's that he does the ASC to not version he left working copies at Pro- Concepts . On the other hand, there is no evidence before the Court concerning any injury Resh might suffer if the Court grants the relief sought. Resh apparently has no rights in the Risk Radar mark, the nor in agreement). than Radar software allegedly wrongful (not the Risk Radar software) claim Pro-Concepts (per his employment Resh does not assert any injury in his motion other Pro-Concepts' property Resh's Risk is thus seeks. apparently Therefore, retention certain after Resh's termination. unrelated on of the to facts the relief that currently before the Court, the relief sought would require Resh to cease using Pro-Concepts' proprietary appear to be mark and software to still injuries that balance of the equities. in Pro-Concepts' return in all his copies possession. of Pro-Concepts' These do not the Court should countenance in its Therefore, favor. 54 this prong at least weighs D. The Supreme requirement, Court stating discretion, courts Public has Interest emphasized that, equity of "[i]n should the public exercising pay interest their particular sound regard for the public consequences of employing the extraordinary remedy of injunction." notes, Winter, the purpose 555 of at 24. As trademark is Pro-Concepts to protect correctly the public from confusion "as to the identity of the enterprise from which goods and services (4th Cir. are purchased." 1976) . violation of A the preliminary Lanham Act preventing future Steakhouse, 43 F.3d at 939. when an 401, 404 public customers injunction deceptively. an Cir. facts 2005) in evidence from F.2d currently before down for before the the public 1185 further interest misled." Lone by Star The public interest is also served trademarks from (unpublished). the enforcement being used 145 Fed. App'x Additionally, of at *16. the Court, valid contracts. However, the public the based on interest does favor as Resh has willingly taken the duration Court 1181, preventing "the being 2012 WL 966028, not weigh in Pro-Concepts' website 540 injunction serves prevents interest Western Indus.-North, the Foy, Bowe Bell & Howell Co. v. Harris, (4th has AMP v. of of this actual case or and there potential is no confusion. While the public interest in the enforcement of valid contracts does weigh in Pro-Concepts' favor, 55 this is somewhat moot as the relief they request is, Resh's compliance with Particularly in view for the most their of the own part, unavailable due cease-and-desist countervailing Resh's conduct with regard to the RRE website, the public interest does not weigh in favor to letter. explanation for it appears that of a preliminary injunction. IV. This record, findings instant Court's and the for analysis facts any motion. CONCLUSION is constrained discussed above purpose other Similarly, the than by do not the Court's the preliminary represent resolution ruling is factual of not the a predictor as to the likelihood that either party will ultimately prevail in this case, dictate the final as further factual development will likely resolution. standard not having been met, The preliminary injunction the Court finds that an injunction should not issue at this early stage of the proceedings. Based on the detailed analysis above, the Plaintiff's motion seeking preliminary injunction. 56 Court DENIES The Clerk is REQUESTED to send a copy of this Opinion and Order to all counsel of record. It is SO ORDERED. /./ ¢ffll&feMark S. UNITED Norfolk, Virginia October 3l\ , 2013 57 Davis STATES DISTRICT JUDGE

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