January 03, 2012
I'm Not a Fan of this Craptastic Trademark Lawsuit--Fancaster v. Comcast
By Eric Goldman
Fancaster, Inc. v. Comcast Corp., 2011 WL 6426292 (D.N.J. Dec. 22, 2011).
We've seen some pathetic trademark lawsuits this year (SUE MOAR KALE, anyone?), but I'll nominate this long-running litigation money-sink (going over 3.5 years) as the saddest trademark case of 2011.
Fancaster registered its mark in 1989 for broadcasting services, and over the years it's been used in connection with a range of services, "including selling Fancaster branded radios, charging customers to watch closedcircuit boxing matches, producing karaoke shows, transmitting sponsored news messages to wireless pagers and cell phones, and conducting live demonstrations of FANCASTER broadcast services" (cites omitted).
In 2006, it launched Fancaster.com to broadcast short sport-related video clips. It hopes to cover such must-see events "as La Tomatina in Spain, Ostrich racing in Arizona, the Westminster Kennel Club Dog Show and the annual Nathan's Hot Dog Eating Contest." Rather than advertise the website on the Internet (you know, where people who enjoy content online might already be), instead they are seeking out untapped Internet enthusiasts by "marketing the website at sporting events, bars, on local television channels in Sioux Falls, South Dakota and Sioux City, Iowa, on radio stations in Charleston, South Carolina, and via flyers and handbills."
Meanwhile, in 2008 Comcast rolled out a service called fancast.com "that allowed users to watch full-length premium mainstream media over the Internet." The service was a debacle, losing $80M in less that 2 years due to “the unexpectedly high cost of distributing video content on the internet.” (Even though Comcast acquired bandwidth at wholesale rather than retail costs...how much it would have cost non-carriers to launch competitive services?). In March 2011, Comcast shut down the Fancast service and rolled the domain name over to XfinityTV.
With the overlap between the Fancaster and Fancast names, one possibility is that Comcast blatantly ripped off the name of a small startup who wouldn't want to tangle with a giant, thereby creating "reverse confusion" where everyone thinks first-mover Fancaster infringes second-comer Comcast. But another story equally fits this facts: Fancaster is doing a little trademark trolling, seeking to increase Comcast's $80M of losses by grabbing some gravy for itself. (Some gravy indeed: Fancaster's damages expert thought it would take $73M of corrective advertising to fix Comcast's damage to a brand that has no market awareness outside of Sioux City.)
It's a sad commentary on our milieu when we can't tell which litigant is bullying the other. Maybe *both* parties are equally imbibing the bullying elixir. Fancast initially unleashed the litigation hounds, but Comcast responded with a hailstorm of countermoves, including an ACPA counterclaim for a slew of "fancast" domain names Fancaster registered after learning about Comcast's upcoming launch. A lot of lawyers appear to have satisfied their billable hour goals using this case. Yay for free-spending deep-pocketed clients!
The court resoundingly thumps Fancaster's core argument about consumer confusion, miraculously finding a way to twist all of the factors to Comcast's favor. The judge may have cut some analytical corners, but that says the judge simply didn't accept Fancaster's narrative.
The court specifically rejected the possibility of initial interest confusion, citing 3rd Circuit precedent that basically limited IIC to competitors, and the parties didn't directly compete. The court also dismisses Fancaster's efforts to show overlaps in search engine results, saying "the confusion one encounters on an Internet search engine is a twenty-first century version of that experienced when searching the phone book." I am going to be doing some work this quarter to show that the initial interest confusion doctrine almost never succeeds in court any more, and therefore it imposes costs on both litigants for no gain. This case is just one example of that.
The court also scoffed at Fancaster's request for $73M for corrective advertising:
There is not a shred of evidence of any damage to the fancaster mark caused by Comcast. The only loss to Fancaster that Mr. Krueger could testify to was that resulting from pursuing the instant litigation against Comcast.
Comcast had survey expert Hal Poret do two surveys. The court tosses the first one because it didn't adequately replicate market conditions by not presenting consumers with a navigable website:
use of a printout and static screenshots, instead of live websites, provide ample grounds on which to exclude the March 2009 survey. For one, it is difficult to fathom how presenting a respondent with a paper printout of the FANCAST homepage in anyway replicates how an Internet user would encounter and perceive the FANCAST website in the marketplace. Websites, particularly those that offer video content, are meant to be viewed on a computer and allow consumers to browse and interact with them via hyperlinks. The FANCAST printout offered none of these aspects. Similarly, although viewed on a computer, the static screenshots of the fancaster and control website homepages did not allow respondents to interact with them as they ordinarily would in the marketplace.
I haven't researched this issue, but this ruling may tell us something important about the requirements for consumer surveys when websites are involved.
JUST FOR LAW PROFESSOR READERS: Our colleague Greg Lastowka (a longtime friend) gets toasted by the judge for his expert report, which the judge repeatedly called "totally inappropriate" and says "wanders far from the proper scope of an expert's opinion." For example, Greg's report says the judge can award between $1k-$100k for an ACPA violation (a true statement of the law), to which the judge sarcastically responds "Lastowka's generosity gives the Court at least a modest role." Later, the judge blasts Greg for narrating the requirements of an ACPA claim, saying "A jury should not be receiving instructions on the law from two sources, and however erudite and accurate they may be, Mr. Lastowka's instructions will not be allowed to compete with the Court's instructions." The judge also tosses Greg's report on why Fancaster engaged in ACPA bad faith, saying "the expert assumes the role of the fact finder and is therefore not performing the role of an expert." This is a good reminder that when we're called for potential expert gigs, we have to clarify exactly what we're being asked to opine upon and whether it's appropriate for expert testimony. This judge clearly didn't respond well to any line-blurring about expert testimony.
For what it's worth, the court similarly shreds Gary Krugman's expert report for Comcast about PTO practices (part of Comcast's counterclaim for fraud on the PTO), part of which the judge says "inappropriately usurps the role of the fact finder."
This ruling eviscerated Fancaster's case, making it a strong win for Comcast, but it left a few residual legal issues open. Yet, the legal battle has been mooted by the passage of time. Comcast already stopped using Fancast as a brand, and Fancaster still hasn't shown a lot of movement towards developing a real business or even a revenue model. Are the parties really going to spend more money on a pointless lawsuit? We all know what the answer should be; let's see what they actually answer.
For more on the case, see Rebecca's post.
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