Express Homebuyers USA, LLC v. WBH Mktg. Inc.
Express Homebuyers USA, LLC v. WBH Mktg. Inc.
Opinion of the Court
Plaintiff, a Virginia limited liability company engaged in the business of buying and selling houses, brings this action against defendant, a Texas corporation engaged in the same business, seeking cancellation of defendant's two trademarks, "We Buy Houses" and "Webuyhouses.com" ("the Marks"), on the grounds that both marks are generic and undeserving of trademark protection. In response, defendant has counter-claimed that plaintiff has infringed on the Marks and falsely designated the origin of plaintiff's services. Both parties have moved for summary judgment on plaintiff's claim and defendant's counterclaims. This memorandum opinion addresses whether the Marks are generic, and therefore ineligible for trademark protection.
I.
Given that summary judgment is appropriate only where there are no genuine disputes of material fact, Fed. R. Civ. P. 56, the first step in the analysis is to identify the record facts as to which no genuine dispute exists. In this regard, Local Rule 56(B) directs a movant for summary judgment to include in its submission a separately captioned section listing in numbered-paragraph form all material facts as to which the movant contends no genuine dispute exists. The nonmovant must then respond to each numbered paragraph, either admitting or contesting the putative undisputed fact and citing admissible record evidence to establish a genuine dispute of material fact. The nonmovant's failure to respond to a fact listed by the movant constitutes an admission that *787the fact is undisputed. R. 16(B) Scheduling Order ¶ 13. Where, as here, both parties have moved for summary judgment, each party submitted its own statement of material facts as to which that party contends there is no genuine dispute. In this case, both parties have complied with the order and local rule. Accordingly, the facts recited here are derived from the parties' lists of material facts and their respective responses.
• Plaintiff Express Homebuyers (EHB) is a limited liability company organized under Virginia law with its principal place of business in Springfield, VA. EHB has been in the house-buying industry since 2003, operating chiefly in the Washington, D.C. metropolitan area. Lawrence Bradford Chandler is EHB's CEO.
• Defendant We Buy Houses Inc. (WBH) is a Texas corporation with its principal place of business in Southlake, TX. WBH provides educational and instructional materials to home buyers and sellers and conducts its operations nationwide. Jeremy Brandt is a citizen of Texas and is WBH's founder and CEO.
• WBH owns the two registered marks at issue: "We Buy Houses" and "Webuyhouses.com."
• On July 11, 2001, Michael Payette filed an intent-to-use Application No. 78,073,479 (the '479 Application) with the U.S. Patent and Trademark Office (PTO) for the mark "WE BUY HOUSES" for real estate printed materials.
• In February 2003, while Payette's '479 Application was still pending, Webuyhouses.com, Corp., owned by Howard Gordon, filed Application No. 76,491,672 (the '672 Application) to register the mark "WEBUYHOUSES.COM."
• On May 26, 2004, Payette sold the '479 Application for the WE BUY HOUSES mark to Webuyhouses.com, Corp. The transaction was documented in a sale and assignment agreement, which was recorded with the PTO on June 14, 2004. On December 2, 2005, Webuyhouses.com, Corp. filed a Statement of Use for the '479 Application for WE BUY HOUSES, alleging first use as early as October 21, 2005.
• In March 2006, Webuyhouses.com, Corp. entered a license agreement with Martin Price, whereby Price operated, advertised, and marketed "webuyhouses.com" and "we buy houses" as Gordon's business partner.
• The '479 Application for WE BUY HOUSES became U.S.Registration No. 3,149,336 (the '336 Registration), and the '672 Application for WEBUYHOUSES.COM became U.S.Registration No. 3,235,523 (the '523 Registration) on September 26, 2006 and May 1, 2007, respectively.
• Gordon acquired the Marks to prevent others from barring his companies' use of the phrase "we buy houses." Price had the same view. Between 1997 and November 2012, neither Gordon nor Price enforced the Marks even though both were aware of the widespread use of the phrase "we buy houses" in the real estate industry. Gordon and Price actively encouraged other house-buying companies-many of which had names containing the phrase "We Buy Houses"-to use the phrase "we buy houses," believing that increased use of the phrase would create more traffic to the WEBUYHOUSES.COM website. CD, Ex. 17, 79; Price Dep. at 169, 174-75, 187-88; Gordon Dep. at 253.
*788• Between 1997 and November 2012, Gordon and Price advertised and marketed the Marks in a non-source-identifying manner, saying that "we buy houses" "doesn't signify who you are. It signifies what you do." Price Dep. at 18:5-8; see also Gordon Dep. at 218-19 ("I call [WE BUY HOUSES] 'the three magic words,' which is why we patented and then trademarked them, because they are recognized by everybody as what we do."). Price understood that the phrase "We Buy Houses" was being used on 10-50 million websites, and he leveraged the widespread use of "we buy houses" to make money by selling leads from the WEBUYHOUSES.COM website to house-buyers. Price marketed the website WEBUYHOUSES.COM to other house-buyers whose companies had "We Buy Houses" in their name or whose companies were otherwise in the house-buying business.
• In November 2012, Webuyhouses.com, Corp. assigned the '336 Registration and the '523 Registration to X5, a company owned by Brandt that did business in the house-buying industry. X5 was aware at that time that other house-buying companies were using the phrase "we buy houses."
• X5 subsequently assigned the rights in both Marks to We Buy Houses Inc., effective September 10, 2013.
• The prior and current owners of the WBH Marks have used "we buy houses" to indicate the nature or class of services offered, namely that they buy houses from consumers looking to sell their homes. Prior to purchasing the WBH mark in 2012, Brandt's previous companies X5 and Cash Offer Corporation (COC) used the phrase "we buy houses" to indicate the nature or class of service they offered.
• Real estate investors who buy houses are commonly referred to in the industry as "we buy houses companies," and consumers share that understanding due to the ubiquity of "we buy houses" road signs. EHB's competitors also use the "we buy houses" phrase to signal to customers that they are involved in the home-buying market.
• Real estate professionals have used "we buy houses" in newspaper advertising since 1898. CD, Ex. 124; Appx. 3; Arnold Decl. ¶ 3.2 A May 2016 search on www.newspapers.com of "WE BUY HOUSES" produces 52,295,853 results. CD Ex. 19. A Google search of "we buy houses" yields hundreds of thousands of pages of results.3 Numerous real estate *789professionals use "we buy houses" in online marketing and advertising. Appx. 1. Numerous Trademark applications and registrations include the phrase "We Buy Houses," and several books include the phrase in the title or otherwise to discuss the house-buying business. CD Ex. 18; Arnold Decl.
• EBH uses the phrase "we buy houses" in marketing and advertising, but it has never used the phrase "webuyhouses.com." Between 2003 and 2016, EHB received no complaints that its use of "we buy houses" was inappropriate, infringed on intellectual property, or otherwise confused customers.
• WBH directed real estate investors to remove the words "we buy houses" from Facebook, websites, blogs, Twitter, YouTube, and other marketing. CD, Ex. 122. WBH requested that YouTube remove EHB's marketing and advertising videos featuring the words "we buy houses." WBH told real estate investors that by using "we buy houses," they were attempting to confuse consumers and imitate WBH.Id. WBH told real estate investors that use of "we buy houses" in marketing content was trademark infringement. Brandt told WBH executive Dev Horn, "That's how we roll. Facebook page - GONE."Id. Ex 120. Horn further stated that WBH needed to "scare the sh*t" out of investors using "we buy houses" and that WBH should "GET THOSE MOTHER F*****S."
• Real estate investors informed WBH of the time and money it would take to remove "we buy houses" from their marketing, and that WBH's actions disrupted businesses.
II.
The summary judgment standard, which the parties do not dispute, is too well-settled to merit extended discussion. As Rule 56, Fed. R. Civ. P., makes clear, 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." 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. v. Catrett ,
III.
The Lanham Act permits a party to file a petition to cancel the registration of a mark at any time if, inter alia , "the registered mark becomes the generic name for the goods or services, or a portion thereof, for which it is registered."
Here, plaintiff seeks invalidation of defendant's Marks because the Marks are or have become generic. The Fourth Circuit has explained that a mark "cannot acquire trademark protections unless the mark is distinctive, that is, unless it serves the traditional functions of 'distinguishing the applicant's goods from those of others' and identifying the source of the goods." Retail Servs., Inc. v. Freebies Publishing ,
Where, as here, a mark has been registered by the PTO, the fact of registration is prima facie evidence that the registered mark is not generic. See
To rebut the presumption that WBH's Marks are not generic, EHB must offer proof that "the primary significance of the mark [is] its indication of the nature or class of the product or service, rather than an indication of source." Glover ,
With these principles in mind, analysis now turns to the Marks in question-"we buy houses" and "webuyhouses.com." The parties do not dispute that the relevant consuming public in this case is home-selling consumers and house-buying professionals or investors. Therefore, the question is whether the phrase "We Buy Houses" is generic or distinctive from the viewpoint of this relevant public.
The use of the Marks on other websites and in newspapers by third parties to describe the services offered and not the source of the services is compelling evidence that the phrase "we buy houses" is generic.
Significantly, the Fourth Circuit has held in similar cases that such extensive third-party use of a phrase or term is *792persuasive evidence that a phrase or word is generic, rather than distinctive. See Retail Servs. ,
Defendant argues that in spite of the substantial evidence that the relevant consuming public uses the phrase generically, the Marks should be protected because they have become distinctive through secondary meaning. To acquire secondary meaning, "in the minds of the public, the primary significance" of the otherwise generic term must be "to identify the source of the product rather than the product itself." Sara Lee Corp. v. Kayser-Roth Corp. ,
The Fourth Circuit has also made clear that "evidence of the owner's generic use, in particular, 'is strong evidence of genericness.' " Retail Servs., Inc. ,
Finally, the record contains evidence from competitors on their generic use of the phrase "we buy houses." Nor is there doubt that this is relevant evidence. See Retail Servs., Inc. ,
In sum, this undisputed record evidence more than rebuts the presumption stemming from the PTO's determination that the Marks are not generic. See Retail Servs., Inc.
Seeking to avoid this conclusion, WBH argues that even if the phrase "we buy houses" is generic, defendants are not using the phrase generically with respect to their business, which Brandt describes as "provid[ing] educational and instructional materials to home buyers and sellers." Brandt Decl. ¶ 13. In essence, defendants argue that the fact that they connect their network of real estate investors to sellers to purchase homes and do not themselves buy homes transforms the use of "We Buy Houses" from generic to descriptive.
The Fourth Circuit considered and rejected a similar argument in Retail Services. There, the defendants contended that their use of the term "freebies" was descriptive because they provided "information about no-cost or low cost promotional offers" as opposed to the generic use of the term which connoted the giving away of products for free. Retail Servs. , at 547. The Fourth Circuit concluded that this "razor-thin distinction" was "not significant" because "[e]ven though defendants do not directly distribute free products or 'freebies,' their business nonetheless revolves around 'freebies' in the generic sense of the word."
In sum, the undisputed record confirms that the Marks at issue describe defendant's services but do not identify the source of the services. As such, the Marks are generic.
IV.
EHB also seeks summary judgment with respect to WBH's counterclaims. This memorandum opinion addresses only the counterclaims that implicate the validity of the Marks and turn on the determination that the Marks are generic. Specifically, WBH has counterclaimed that EHB is liable for trademark infringement, in violation of the Lanham Act,
Under the Lanham Act, both trademark infringement and false designation of origin claims require a trademark holder to prove (1) that it possesses a valid, protectable mark; (2) that the opposing party used the mark; (3) that the opposing party's use of the mark occurred in commerce; (4) that the opposing party used the mark in connection with the sale, offering for sale, distribution, or advertising of goods or services; and (5) that the opposing party used the mark in a manner likely to confuse consumers. Lamparello v. Falwell ,
*795Swatch AG v. Beehive Wholesale, LLC ,
Here, defendant's Marks are generic and thus neither valid nor protectable.
V.
For the reasons discussed above, plaintiff's motion for summary judgment must be granted in part, and defendant's motion for summary judgment must be denied in part. Specifically, plaintiff's motion for summary judgment must be granted as to Counts I and II of the First Amended Complaint, which seek a judgment declaring that the Marks must be canceled because they are generic. Defendant's motion for summary judgment must be denied insofar as it seeks dismissal of those Counts. Plaintiff's motion for summary judgment must also be granted as to Counts I, II and IV of defendant's First Amended Counterclaims, as those Counts depend on the validity of the Marks. Defendant's motion for summary judgment must be denied insofar as it seeks judgment in its favor on Counts I, II and IV.
An appropriate order will issue.
The parties' cross-motions for summary judgment and plaintiff's pending motion to dismiss address defendant's remaining counterclaims, which do not implicate the question whether the Marks are generic. Those will be addressed and resolved by a separate order.
WBH argues that this evidence from newspapers is unauthenticated and hence not properly admissible here. This argument fails. Rule 902(b)(6), Fed. R. Evid., provides that such newspaper evidence is self-authenticating and therefore admissible. See Bailey v. Black Entm't Televisions ,
WBH argues that evidence from the Internet, including Google search results and other evidence relating to the use of "we buy houses" is unauthenticated and inadmissible. This argument also fails as Rule 901(b)(4), Fed. R. Evid., permits authentication by circumstantial evidence including "[t]he appearance, contents, substance, internal patterns, or other distinctive characteristics of the item, taken together with all the circumstances." And courts have recognized that this rule allows for authentication of the contents of websites. See Lorraine v. Markel Am. Ins. Co. ,
Finally, with respect to the hearsay objection to the Internet evidence, WBH's argument is misplaced. The Internet evidence is not being offered for the truth of the matter asserted, namely that the companies advertising home-buying services in fact buy houses. Rather, the evidence is submitted to establish that many third parties currently use and have used the "we buy houses" phrase for decades to describe their house-buying services, not to identify a source of the services. See SMS Audio LLC v. Belson ,
WBH argues that this evidence is problematic because EHB has unclean hands. Specifically, WBH argues that because EHB has encouraged residential real estate investors to use the term in their advertising, it has caused this third-party use. But much of the evidence EHB submitted occurred far before EHB began its advertising campaign. Indeed, newspaper articles referring to "we buy houses" span as far back as 1898.
Elsewhere in the record, Brandt also asserts, without corroboration, that "Multiple times a week potential home sellers have contacted WBH and expressed confusion because they had been in contact or had a negative experience with another company (possibly EHB) that called itself 'We Buy Houses' and believed that this company was WBH. WBH's licensees have also reported similar confusion ...." This statement need not be considered because "[e]vidence establishing a likelihood of confusion simply 'do[es] not bear upon the question of whether [a] trademark ... [is] generic.' " Retail Servs., Inc. v. Freebies Publ'g ,
Defendant also argues that the addition of ".com" to one of its Marks gives it Internet-related distinctiveness. However, the mere addition of ".com" to an otherwise generic mark does not give it source-signifying distinctiveness, especially where, as here, the mark is used in the website addresses of other retailers that provide the same service as the mark owner. See In re 1800Mattresses.com ,
EHB also argues that the Marks at issue in this case were abandoned by WBH or otherwise improperly assigned. Because the Marks are generic, that issue need not be addressed or decided here.
Reference
- Full Case Name
- EXPRESS HOMEBUYERS USA, LLC v. WBH MARKETING INC.
- Status
- Published