DIRECT Niche, LLC v. Via Varejo S/A
898 F.3d 1144
11th Cir.2018Background
- Via Varejo, a Brazilian parent company of the Casas Bahia retail chain, operates the Casas Bahia website (casasbahia.com.br) and has extensive international trademark filings; it markets goods and sells advertising on that site, including to U.S. companies.
- Via Varejo does not have U.S. brick-and-mortar stores and does not ship to U.S. customers, but millions of U.S. IP addresses visit its website annually.
- Direct Niche, a Minnesota domain-investment company, bought the domain casasbahia.com at auction in 2015 for $22,850 and monetized it by parking advertisements, generating significant traffic and revenue.
- Via Varejo obtained a WIPO UDRP decision ordering transfer of the domain; Direct Niche then sued under 15 U.S.C. §1114(2)(D)(v) seeking a declaration that its registration/use did not violate the ACPA (15 U.S.C. §1125(d)(1)(A)).
- After a four-day bench trial the district court found for Via Varejo: Casas Bahia had common-law ownership in the U.S. based on use in commerce (advertising services on its website), the mark was distinctive, the domain was confusingly similar, Direct Niche registered in bad faith, and no safe harbor applied.
- On appeal Direct Niche contested only the finding that Via Varejo had used the Casas Bahia mark in U.S. commerce sufficient to establish ownership; the Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Via Varejo established common-law ownership by use in U.S. commerce | Direct Niche: Bulova’s "substantial effects" test must apply; Via Varejo’s foreign use lacked substantial U.S. effects | Via Varejo: Planetary Motion test governs ownership; its website advertising and U.S. ad contracts show public use in commerce in the U.S. | Court: Bulova’s "substantial effects" test is a jurisdictional standard for extraterritorial claims; Planetary Motion test applies. Finding of U.S. use in commerce affirmed. |
| Whether website-based advertising to/for U.S. companies constitutes use in commerce | Direct Niche: Website sales and advertising do not amount to prior U.S. commercial use sufficient for ownership | Via Varejo: Preferred product placement, banner ads, and U.S. ad revenues show commercial use tied to the mark | Held: Advertising services on the Casas Bahia site and evidence of U.S. visits/supporting contracts suffice to show public use in commerce. |
| Whether evidence of U.S. web traffic was admissible and sufficient | Direct Niche: Trial court should have struck certain testimony about U.S. traffic | Via Varejo: Witness had personal knowledge; testimony admissible and cumulative even if error | Held: Court did not abuse discretion; even if any error existed it was harmless. |
| Whether later U.S. service-mark registration alters analysis | Direct Niche: (implied challenge) | Via Varejo: Registration obtained after trial; district court did not rely on it | Held: Appellate court did not consider the post-trial registration; outcome stands based on prior use evidence. |
Key Cases Cited
- Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188 (11th Cir. 2001) (sets two-part test for common-law ownership: adoption and public use sufficient to identify mark)
- Crystal Entm’t & Filmworks, Inc. v. Jurado, 643 F.3d 1313 (11th Cir. 2011) (bench-trial factual findings reviewed for clear error)
- FN Herstal SA v. Clyde Armory Inc., 838 F.3d 1071 (11th Cir. 2016) (advertising/publicity can constitute use in commerce absent sales)
- Steele v. Bulova Watch Co., 344 U.S. 280 (1952) (establishes extraterritorial "substantial effects" test under the Lanham Act)
- Int’l Café, S.A.L. v. Hard Rock Café Int’l (U.S.A.), Inc., 252 F.3d 1274 (11th Cir. 2001) (applies Bulova test to exercise of U.S. jurisdiction over foreign trademark activity)
- Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018 (11th Cir. 1989) (use in commerce required for common-law trademark ownership)
- New England Duplicating Co., Inc. v. Mendes, 190 F.2d 415 (1st Cir. 1951) (adoption plus public use can establish ownership even without sales)
- Proudfoot Consulting Co. v. Gordon, 576 F.3d 1223 (11th Cir. 2009) (standard of review for mixed bench-trial appeals)
- HGI Assocs., Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005) (clarifies clear-error standard for factual findings)