Dspt International, Inc. v. Nahum

624 F.3d 1213 (9th Cir. 2010)

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Nature of the Case

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Facts

P founded and owned by Paolo Dorigo. P designs, manufactures, and imports men's clothing. The company sells clothes to between 500 and 700 retailers. Its brand name since 1988 had been Equilibrio. It created the EQ brand name in 1999. Dorigo brought his friend D into the business. Dorigo lived in Los Angeles, D in Rochester, New York. They decided to set up a site on what was then the fledgling internet, and D's brother, a hairdresser, was doing part-time website design, so P had D arrange to have his brother prepare the site. The website, 'www.eq-Italy.com' (eq for the brand, Italy for Dorigo's and the style's origin), was created solely for P for the purpose of showing P's clothes. D's brother designed the website in consultation with Dorigo, though D registered the site to himself. This seemed trivial at the time since D was working exclusively for P and registration cost only $25. Dorigo was unaware that the registration was in D's name. By 2005, the website served as P's catalog. Customers accessed it 24 hours a day, chose designs from it, and sent in orders through it. The friendship between Dorigo and D soured. D informed Dorigo by e-mail that he was not renewing his contract. At the beginning of October, P's website disappeared. All customers saw was a screen saying 'All fashion-related questions to be referred to Lucky Nahum at: lnahum@yahoo.com.' D claimed he did this because P allegedly owed him money. P's Sales plummeted and inventory was left over in the spring from the very bad fall. The last quarter of 2005, and all of 2006, were disastrous. A lot of inventory had to be sold below cost. P spent $31,572.72, plus a great deal of time, writing to customers to explain the situation and replacing its website and the stationery that referred customers to 'eq-Italy.com.' P sued D for 'cybersquatting' and trademark infringement in violation of the Lanham Act. D counterclaimed for $14,936.86 in additional commissions he claimed he was owed. The jury found that 'EQ' and 'Equilibrio' were valid trademarks owned by D; that 'D registered, trafficked in, or used the www.eq-Italy.com domain name'; that the name was identical or confusingly similar to P's distinctive trademark; and that 'D committed the acts with a bad faith intent to profit.' P's damages were $152,000. The jury found that P did not breach its contract with D and owed him nothing. D appealed.