We occasionally hear about trademark trolling, but Premier Pool Management Corp. v. Lusk takes it to a whole new level.
Plaintiff Premier Pool Management Corp. (“PPMC”) offers swimming pool and spa construction services through licensees doing business as Premier Pool & Spas. It first used the PREMIER POOL & SPAS mark in 1989 and was using it in interstate commerce at least by 2001. PPMC filed an application to register its trademark, but was refused registration because of a pre-existing registration for the mark Premier Pools Construction, Inc. owned by a company of that name (“PPCI”). PPCI’s registration claimed a first use date of 1993. PPMC tried to negotiate a consent to the registration of its application with PPCI, but was unsuccessful and abandoned its application. PPCI later filed another application, which matured to registration, and let the older one lapse (it looks like a chain of title problem).
In August or September 2011, PPMC hired defendants Dean and Jason Lusk, d/b/a SmartPro for SEO, to assist with search engine optimization (SEO).
At about the same time, PPCI contacted PPMC asking whether PPMC was still interested in the registration, offering to sell it. The reason given by the president of PPCI was that he wanted to wind down the business, was only doing a couple of pools a year, and only worked in central Florida. PPMC agreed to pay $5,000 for the registration and PPCI asked PPMC to draw up the paperwork, which PPMC did. PPMC then received a call from a lawyer for PPCI, claiming that there was a bidding war for the registration and asking PPMC to up its bid. PPMC declined, based on its belief that the two companies already had a deal for the registration. PPMC also told the lawyer that the registration was invalid because the mark had not been used in interstate commerce.
So who was on the other side of this bidding war? None other than the Lusks. In the course of their work for PPMC, they discovered the PPCI registration. They were aware of PPMC’s previous efforts to purchase the registration and figured that, with the registration, they could “turn the lights out” on, yes, their client, PPMC. A partner in crime named Hamilton Leonard proceeded to buy the registration from PPCI for something around $140,000 and had it assigned to Dean Lusk.
Dean Lusk and Hamilton then went to PPMC in furtherance of their scheme. They offered PPMC three options: (1) SmartPro would enforce the trademark against the PPMC licensees and demand $7,000 to $10,000 per year from them; (2) SmartPro would assign the registration to PPMC in exchange for PPMC’s enforcement of the trademark against unlicensed “Premier Pools” (as you can imagine, there were more than a few) and $6,000 to $10,000 per month; or (3) pay an “astronomical sum” to buy the trademark. PPMC declined the
Since it was unsuccessful with PPMC, Lusk proceeded to send a cease and desist letter (see Exhibit A) to Rackspace, PPMC’s hosting provider. PPMC tried to appease Rackspace, but ultimately PPMC had to find a new hosting provider. PPMC also found the Lusks advertising on YouTube for “Premier Pools & Spas,” PPMC’s mark. And so PPMC sued the Lusks for trademark infringement and for cancellation of the PPCI registration.
The Lusks defaulted, so the outcome is predictable. PPMC had standing because of the Lusks’ offering of pool services on YouTube under the same mark. The complaint stated a claim under Section 43(a) of the Lanham Act and therefore also for unfair business practices under California Business & Professional Code Section 17200. The PPCI registration is to be cancelled because PPCI had not used the mark in interstate commerce. Finally, there was intentional interference with contractual relations because of the shenanigans with Rackspace.
Certainly the most shocking part of this story is the outright perfidy of the Lusks,* but apparently the best that could be made of that was the interference with contract claim. PPMC lucked out, in a way, because PPCI wasn’t a party to the suit. PPCI may have been able to show that it had used the mark in interstate commerce, which would mean that the Lusks newly-discovered propensity for pool construction could tack to PPCI’s prior use. Indeed PPMC had an earlier first use date, but PPMC’s rights would be limited geographically under Section 33(b)(5) of the Lanham Act.** Luckily also for PPMC, the Lusks admitted that they knew about PPMC’s efforts to buy the registration from PPCI, so at least the Lusks didn’t have a bona fide purchaser in good faith defense. But you can see where, with a better registration, the scheme would have worked, with a measly interference with contract claim for leverage.
*There are two sides to every story and since it was a default, the Lusks side of the story wasn’t told. But they apparently didn’t have one good enough to make it worthwhile to respond.
**Quiz for advanced trademark practitioners – what is the relevant constructive use date for the PPCI mark under Section 33(b)(5)?
Premier Pool Management Corp. v. Lusk, No. CIV S-11-2896 GEB CKD (E.D. Calif. May 4, 2012). Premier Pool declarations here and here.
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