Klumba.ua, LLC v. Klumba.com
Klumba.ua, LLC v. Klumba.com
Opinion of the Court
At issue on cross motions for summary judgment in this unusual Anti-cybersquatting Consumer Protection Act (ACPA)
The matter has been fully briefed and argued, and is now ripe for disposition.
I.
Of course, the entry of summary judgment is appropriate only where there are no genuine disputes of material fact. See Celotex Corp. v. Catrett ,
• Plaintiff, Klumba.ua, LLC, is a Ukrainian company that operates a Ukrainian website for the sale and exchange of children's clothing and goods. Plaintiff has four members: (i) Dmitry Dubyna, (ii) Natalia Zueva, (iii) Andrey Khorsev, and (iv) Aleksey Ivankin.
• The res at issue in this case, klumba.com, is a U.S. registered domain name currently registered to Klumba.com, LTD.
• In 2008, Dubyna and Zueva created a website using the name klumba.kiev.ua to serve as a platform for parents to sell and exchange children's clothing and goods for children.
• In June 2010, Zueva registered the trademark KLUMBA2 in the Ukraine *775and registered the domain name klumba.ua (the Ukrainian domain name), which was linked to the trademark.
• In July 2010, Dubyna and Zueva began placing advertisements on the klumba.ua website using Google's AdSense Program.3 Google sent the revenue generated from the advertisements to a Ukrainian address via paper check.
• In September 2010, Zueva and Dubyna joined with Khorsev and Ivankin to create Klumba.ua, LLC, the plaintiff in this case. As part of the new LLC venture, Zueva transferred ownership of the Ukrainian domain name, klumba.ua website, and the Klumba Mark in the Ukraine to plaintiff. The four members of plaintiff shared the profits from the website, including the profits generated via Google AdSense.
• In November 2012, Dubyna purchased the domain name klumba.com from a third party vendor for $2500.
• After purchasing the klumba.com domain name, Dubyna arranged to have traffic to the klumba.com domain name redirected to the klumba.ua website. Essentially, when users typed klumba.com into a browser, they were sent to klumba.ua where they could view the website's children's clothing and goods.
• In March 2013, Ivankin and Dubyna agreed to use a California corporation owned by Ivankin and Khorsev, 908, Inc., as a depository for proceeds from the Google AdSense Program.
• Pursuant to the agreement between Ivankin and Dubyna, Google's AdSense checks were deposited to 908, Inc.'s U.S. bank account, and then 50% of the monthly proceeds were to be paid to Dubyna in the Ukraine within five days of receipt.
• In spring 2013, a dispute arose among plaintiff's members over ownership in the Ukraine of plaintiff's intellectual property.
• In September 2013, Ivankin and Khorsev changed the passwords to all plaintiff's email and user accounts, and redirected traffic from the klumba.ua domain to klubok.com, a website under their sole control.
• Ivankin and Khorsev kept all revenue generated by the klubok.com website, and stopped paying profits to Zueva and Dubyna in October 2013.4
• Plaintiff has no registered trademark rights related to the Klumba mark in the United States.
• Plaintiff never marketed, promoted, nor planned to expand use of the Klumba mark in the United States. In 2012, Khorsev and Dubyna visited the United States to discuss starting a project similar to Klumba. The two met with some Americans and did some research to find out whether people knew or were familiar with the *776word Klumba. That research disclosed that the mark Klumba had no meaning to American consumers who were interviewed.
• The klumba.ua website has no English language content. All information on the website is in Russian or Ukrainian and goods and services advertised on the site are priced in the Ukrainian currency-Hryvnia.
• There are no U.S. customers registered in plaintiff's customer databases, and no goods hosted on plaintiff's klumba.ua have been sold to U.S. customers. There have been 1.5 million page views of the klumba.ua website in the United States, but there is no evidence that any of those page views came from U.S. citizens.
• Plaintiff's primary source of revenue was from Google's AdSense program. According to statistics from Google AdSense, plaintiff received less than 1% of its revenue from advertisement generated from users accessing the klumba.ua website in the United States. In 2013, this U.S. revenue amounted to $880, compared to $147,000 in revenue from users accessing the klumba.ua website in Ukraine. Google Trends Reports shows that almost 100% of searches for "klumba" originated in Ukraine.
II.
The summary judgment standard is undisputed and too well-settled to warrant extended discussion. In essence, summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Rule 56, Fed.R.Civ.P. And it is settled that "the burden on the moving party may be discharged by 'showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. ,
III.
Plaintiff argues that neither Dubyna nor Zueva has standing to appear or file answer on behalf of the res in this case because the res was registered to a company, Klumba.com, LTD, not Dubyna or Zueva. Because this suit proceeded under the in rem provisions of the ACPA,
IV.
The central and ultimately dispositive question in this case is whether plaintiff can demonstrate that it has common law trademark rights in use of the Klumba mark in the United States.
Importantly, unregistered or common law marks are entitled to protection under the ACPA. Lamparello v. Falwell ,
Plaintiff does not sell goods; instead it provides a service, namely the hosting of advertisements for children's clothing and goods. Therefore, plaintiff's mark is a servicemark under the Lanham Act. Section 1127 of the Lanham Act provides a specific definition of "use in commerce" as it relates to servicemarks:
The term "use in commerce" means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this chapter, a mark shall be deemed to be used in commerce -
....
(2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce , or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.
15 U.S.C. § 1127 (emphasis added).
The Fourth Circuit has interpreted this definition to require a party to show that it (i) renders a service in commerce, and (ii) that a mark for the service so rendered is used or displayed in the sale or advertising *778of that service. Int'l Bancorp ,
These principles, applied here, point persuasively to the conclusion that plaintiff has failed to establish the existence of any common law trademark rights in the Klumba mark in the United States. To begin with, plaintiff provides a service to users of plaintiff's klumba.ua website; it allows users to access a platform for the sale and exchange of children's clothing and goods, similar to eBay or Craigslist. The record makes clear that plaintiff did not provide this service in the United States or to United States citizens abroad as required by Int'l Bancorp. ,
In sum, plaintiff has not identified a single U.S. citizen:
(i) who purchased anything using the plaintiff's website, klumba.ua,
(ii) who posted an advertisement for the sale or exchange of children's clothes or goods on the website, or
(iii) who otherwise used plaintiff's services.
To avoid this conclusion, plaintiff presents evidence of an alleged plan to expand to the U.S. market. This argument fails because expansion plans, without actual use in commerce, are insufficient to establish common law trademark rights. See, e.g. , United Am. Indus., Inc. v. Cumberland Packing Corp. ,
Because plaintiff has presented no evidence that U.S. citizens, either in the United States or abroad, accessed the klumba.ua website for the purpose of using Klumba's clothing sale and exchange services, there is no evidence that Klumba *779has used its mark in commerce as required to establish common law trademark rights. See Int'l Bancorp ,
Plaintiff next argues that its business relationship with Google via Google's AdSense program qualifies as use of the mark in commerce, and that plaintiff uses its Klumba mark in connection with plaintiff's business with Google. Google's AdSense "is an advertising program; Google pays participating merchants to host third-party ads on their websites." Perfect 10, Inc. v. Visa Intern. Serv. Ass'n ,
It is of course undisputed that plaintiff sold space to Google, but that alone is insufficient to establish that plaintiff used the Klumba mark in United States commerce for as the Fourth Circuit has made clear, the fact that plaintiff provided a service to a U.S. citizen is not enough to establish common law trademark rights in the United States; instead, plaintiff must also show that the "mark for that service [was] being used or displayed in the sale or advertising of that service." Int'l Bancorp ,
Just as in Int'l Bancorp , there is no evidence in this record showing that the Klumba mark was used in connection with the sale or even the advertising of plaintiff's "service" to Google. On this record, there is no evidence that Google knew of the Klumba mark, or that the mark was associated with the advertising space service Klumba provided. In fact, given that Google has a number of advertising partners whose websites vary widely in content there is no reason to believe that plaintiff's Klumba mark is in any way associated with the advertising space service provided to Google. The Klumba mark is not used to market plaintiff's services to Google; rather, plaintiff solicited Google for the code necessary to host Google's advertisements on its website as a means for plaintiff to monetize its user base. The Klumba mark is not used to brand plaintiff's advertising space services to Google because the mark is not used or displayed to Google in plaintiff's efforts to sell advertising space. There is simply no evidence in this record that the Klumba mark has any meaning for Google or that the Klumba mark was used as a means of attracting Google to purchase advertising space. And even if there were, a single transaction with a single U.S. company is not the kind of "deliberate and continuous" use of a mark necessary to establish common law trademark rights. Larsen v. Terk Technologies Corp. ,
In sum, plaintiff does not use the Klumba mark in U.S. commerce within the meaning of the Lanham Act. Therefore, plaintiff cannot establish common law trademark rights in the United States. Although the Klumba mark is undoubtedly used in connection with plaintiff's children's clothing services, there is no record evidence showing that U.S. citizens utilized these clothing services. And although plaintiff has established that it has business ties with Google, it has not established that it uses the Klumba mark to brand its advertising space services or to market to Google. Because plaintiff has failed to establish that it has any common law trademark rights in the Klumba mark in the United States, plaintiff's ACPA claim fails and summary judgment in favor of defendant must be granted.
V.
Defendant also argues that it should be awarded fees as the prevailing party. In trademark infringement cases, courts may award reasonable attorneys' fees in exceptional cases.
This case does not warrant the award of attorneys' fees. To begin with, given the contested status of the Klumba mark in Ukraine, it was not frivolous for plaintiff to believe it may hold common law trademark rights in the United States. This is particularly so given the open questions about the availability of common law trademark rights in the United States based on Internet commerce. Very few cases address the issue,
In sum, plaintiff cannot maintain an ACPA claim if it cannot establish common law trademark rights in the mark "Klumba" in the United States. Lamparello ,
An appropriate Order shall issue.
In English, the word "Klumba" translates to "flowerbed." The word "Klumba" is a transliteration of the actual trademark, which in Cyrillic appears as ?JYMEA.
When a company or individual uses Google AdSense, the company or individual receives a code which it may add to the company or individual's website. This code imports advertisements from Google, and then, when a user clicks on an advertisement, the company or individual hosting the code receives a portion of the advertising revenue.
The parties have engaged in extensive litigation in the Ukraine over the ownership of the Klumba mark in the Ukraine as well as a number of Klumba-related domain names. This dispute even reached the Ukrainian Supreme Court. That conflict has since spilled over into the United States because of the existence of the klumba.com domain name.
Defendant argues that the lack of common law trademark rights in the United States also deprives plaintiff of standing. Because this argument is the same as defendant's argument on the merits, both are addressed infra . Defendant also argues that plaintiff lacks the authority to bring the present case because a majority of the members did not approve of the lawsuit, but defendant cites no provision of Ukrainian law requiring majority approval for plaintiff to bring a claim. In any event, it is unnecessary to reach or decide the question whether plaintiff has the authority to bring this case because plaintiff cannot establish common law trademark rights in the United States.
See also Maruti.com v. Maruti Udyog Ltd. ,
See also Macia v. Microsoft Corp. ,
See Int'l Bancorp v. Societe des Bains de Mer ,
Reference
- Full Case Name
- KLUMBA.UA, LLC v. KLUMBA.COM, a res
- Status
- Published