Promatek Redux: Software Consultant Enjoined from Metatag Usage and Other TM References–Deltek v. Iuvo

By Eric Goldman

Deltek, Inc. v. Iuvo Systems, Inc., 2009 WL 1073196 (E.D. Va. April 20, 2009). The Justia page.

Every year in Cyberlaw, I teach Promatek v. Equitrac, a Seventh Circuit metatags case from 2002 noteworthy for its multiple litigant and judicial errors typical of a cyberspace freakout case. Among the many mysteries of the case is how the court treats the fact that Equitrac advertised that it provided servicing of Promatek’s equipment. The court says that Equitrac was free to say that, but it couldn’t say it in the metatags…for reasons that I still don’t understand.

Today’s case raises similar issues to the Promatek case, and the resolution isn’t much clearer. Deltek sells complex cost-accounting software. Iuvo includes three former Deltek employees who started a business providing consulting about Deltek software and other Deltek software-related services. Iuvo’s websites advertise the fact that it provides servicing for Deltek software, but Deltek apparently doesn’t like that or, apparently, the competition (not surprising because Iuvo was allegedly undercutting Deltek’s price). Thus, Deltek launches a multi-prong attack on Iuvo, including claims that the site infringes its trademarks, the former employees misappropriated Deltek trade secrets, and the former employees violated their non-compete agreements.

With respect to the trademark claims, the defendants assert “fair use” (more precisely, nominative use). The court isn’t convinced, in part because of the implied affiliation from Iuvo’s references to Deltek’s trademarks, even though the websites had an appropriate disclaimer of any relationship. Citing the doctrinally confused Axiom case, the court relies on the same implied-affiliation grounds for the metatags, saying “This use of Deltek’s trademarks as metatags may cause a consumer to believe that Iuvo is affiliated or related to Deltek and may therefore constitute an improper attempt to trade on the commercial value associated with the marks.” However, no one who understands metatags believes this statement is in the least bit credible.

Ultimately, the court crafts a split-the-baby injunction, restricting Iuvo:

from using in the “www.iuvosystems.com” website the phrases “Deltek Upgrade”, “We Provide Deltek Solutions” and “Technology Consultants With Deltek Experience”; from using as metatags for any website associated with the Defendants’ business activities any Deltek trademarks or trade names including, but not limited to, “Deltek Costpoint,” “Deltek Time Collection,” “Deltek Install,” “Deltek Hosting” and “Deltek Consulting” and from using the web domain names “www.installdeltek.com” and “www.installdeltek.net.”

Although the injunction is relatively narrow, it is still obviously problematic. First, the blanket restriction on including Deltek in the metatags makes no sense. See the Welles case. Second, I don’t immediately see anything wrong with the phrase “installdeltek” in the domain name if Iuvo acts as a systems integrator and, in fact, installs Deltek software (a point I believe Deltek contested). Finally, I’m struggling to see what’s wrong with the phrase “Technology Consultants with Deltek Experience,” which seems completely accurate in describing both the former Deltek employees’ experience as well as the company’s accumulated experience.

Three observations about the case:

1) I hate metatag cases!

2) This is yet another example that the nominative use defense isn’t very robust.

3) It’s interesting that the court declined to issue an injunction based on the trade secret and non-compete claims, so Deltek’s only victory came from its trademark claims. This is a good example of trademark’s power to restrict competition, even when other anti-competition legal doctrines fail, and even when the competition may be in the consumers’ best interest.