United States District Court, D. Nebraska
IAN V. JACOBS, Plaintiff,
FAREPORTAL, INC., Defendant.
MEMORANDUM AND ORDER
R. ZWART UNITED STATES MAGISTRATE JUDGE
matter is before the court on Plaintiff's motion to
compel and for recovery of attorneys' fees, and
Defendant's response moving this court to stage liability
and damages discovery under Federal Rule of Civil Procedure
26's proportionality requirement. For the reasons stated
below, Plaintiff's motion at Filing No. 89 is
denied and Defendant's request to stage discovery will be
court is tasked with deciding whether Plaintiff's claim
that discovery of 100% of Fareportal's revenue and profit
data over the course of more than six years bears a
reasonable relationship to Plaintiff's claimed
violations, and the court must decide whether under the facts
presented, staging the liability and damages phases of
discovery will promote the goals enunciated in Rule 1 of the
Federal Rules of Civil Procedure. Rule 1 sets the overarching
standard applicable to all federal civil cases, stating the
federal rules-including the discovery rules--“should be
construed, administered, and employed by the court and the
parties to secure the just, speedy, and inexpensive
determination of every action and proceeding.”
Fed.R.Civ.P. 1 (emphasis added).
complaint is an action for trademark infringement under the
Lanham Act (15 U.S.C. §§ 1051 et seq.),
trademark infringement, unfair competition, and unjust
enrichment under Nebraska common law, unfair competition
under the Nebraska Consumer Protection Act (Neb. Rev. Stat.
§§ 59-1601 to 59-1622), and deceptive trade
practices under the Nebraska Uniform Deceptive Trade
Practices Act (Neb. Rev. Stat. §§ 87-301 to
87-306). (Filing No. 1, at CM/ECF p. 1).
alleges that Fareportal has infringed on Jacob's
trademark by incorporating Plaintiff's trademark into
Defendant's advertisements and redirecting customers to
Defendant's competing business. (Filing No. 1, at
CM/ECF p. 1). Specifically, Jacobs alleges that: (1)
Fareportal has used advertising that incorporates the phrase
“We Go Cheapo, ” to deflect customers to
Defendant's website and away from Plaintiff's; (2)
Fareportal has purchased sponsored links for Jacobs'
trademark on popular internet search engines; and (3)
Fareportal has “engineered its website to artificially
increase the unpaid ranking of that website” in
response to consumers' “CHEAPO” searches on
those search engines. (Filing No. 1, at CM/ECF p.
argues that Plaintiff is unlikely to prevail on liability,
which would obviate the need for damages discovery down the
road. Fareportal, therefore, argues that bifurcation of
liability and damages will further the purposes of judicial
economy, ensuring that party and judicial resources are
expended only if necessary. Specifically, Fareportal contends
that Plaintiff cannot show a likelihood of confusion between
the trademarks, the Lanham Act Claims are barred by laches,
Jacobs has not made consistent use of his claimed trademark,
plaintiff has abandoned his trademark by failing to enforce
his rights, and that bidding on or purchasing a trademark as
a keyword is not tantamount to trademark infringement where
the purportedly infringed mark does not appear in the
resulting advertisement. (Filing No. 97).
further contends that Plaintiff's discovery requests are
disproportionate because they seek information outside the
ambit of causation or relevance to the infringements alleged.
Specifically, Defendant argues Plaintiff should not be
entitled to the disputed information because it bears no
reasonable relationship to the “We Go Cheapo” ad
campaign or the keyword “Cheapo.” (Filing No.
97, at CM/ECF p. 16). Therein, Fareportal argues that
Plaintiff's requests lack proportionality; Jacobs has
failed to justify “[t]he enormous discrepancy between
the actual damages that plaintiff may be entitled to and the
profit-related information that is the subject of
Plaintiff's Motion.” (Filing No. 97, at CM/ECF
preliminary matter, Fareportal moves this Court to order
phased discovery, focusing the first stage solely on
liability. Fareportal alleges that Jacobs is unlikely to
prevail on liability, which would render the issue of damages
irrelevant, and therefore argues that judicial economy
militates for the bifurcation of liability and damages.
points to significant shortcomings in Plaintiff's claims,
each of which could forestall the need for damages discovery,
including the current requests and expert discovery. First,
Fareportal argues that Plaintiff cannot show a likelihood of
confusion between the respective trademarks. (Filing No.
97, at CM/ECF p. 9). The ultimate issue in infringement
claims is whether the contested mark resembles the registered
mark such that its use is “likely to cause confusion,
or to cause mistake, or to deceive.” SquirtCo. v.
Seven-Up Co., 628 F.2d 1086, 1090 (8th Cir. 1980)
(citing 15 U.S.C. §§ 1114(1), 1127). The Eighth
Circuit has recognized that “resolution of this issue
does not hinge on a single factor but requires a
consideration of numerous factors to determine whether under
all the circumstances there is a likelihood of
confusion.” Id. at 1091 (internal citations
omitted). These factors include: “(1) the strength of
the owner's mark; (2) the similarity between the
owner's mark and the alleged infringer's mark; (3)
the degree to which the products compete with each other; (4)
the alleged infringer's intent to ‘pass off its
goods as those of the trademark owner; (5) incidents of
actual confusion; and (6) the type of product, its costs and
conditions of purchase.” Lovely Skin, Inc. v.
Ishtar Skin Care Products, LLC, 745 F.3d 877 (8th Cir.
2018) (internal citations omitted).
contends that Plaintiff will be unable to show a likelihood
of confusion under the Eighth Circuit framework. First,
Fareportal argues that Jacob's trademark lacks conceptual
and commercial strength, stating that Plaintiff
“essentially abandoned the mark due to non-use, never
invested in it, and never enforced it.” (Filing No.
97, at CM/ECF p. 11). Therein, Defendant argues that
Plaintiff will be unable to “demonstrate
‘use' of the CHEAPO Mark during the relevant time
period.” (Filing No. 97, at CM/ECF p. 13).
Furthermore, Defendant states that Plaintiff's
“registration of the domain name
www.cheapo.com is not, by itself, a
‘commercial use' or ‘trademark
use.'” (Filing No. 97, at CM/ECF p. 14).
addition, Fareportal claims the parties' marks are not
confusingly similar and do not compete because
Fareportal's trademark is stylistically distinguishable.
Fareportal states it has invested extensive resources over
the course of many years to build and safeguard its
well-known brand name, whereas Plaintiff “offers no
goods or services” but rather a “one-page . . .
pass-through site that routes users to third-party travel
services.” (Filing No. 97, at CM/ECF p. 12).
Defendant thereby questions the merit of Plaintiff's
liability claim and alleges that Plaintiff is merely
“[p]osing as a legitimate competitor.”
(Filing No. 97, at CM/ECF p. 12).
further matter, Defendant argues that Plaintiff's Lanham
Act Claims are barred by laches. (Filing No. 97, at
CM/ECF p. 12-13). The equitable defense of laches
“applies when a claimant inexcusably delays in
asserting its claim and thereby unduly prejudices the party
against whom the claim ultimately is asserted. A defendant
must demonstrate the presence of three elements in order to
successfully assert laches as a defense: (1) a delay in
asserting a right or a claim; (2) that the delay was not
excusable; and (3) that there was undue prejudice to the