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Kelly Services, Inc. v. Creative Harbor, LLC

United States Court of Appeals, Sixth Circuit

January 23, 2017

Kelly Services, Inc.; Kelly Properties, LLC, Plaintiffs-Appellees,
v.
Creative Harbor, LLC, Defendant-Appellant.

          Argued: October 19, 2016

         Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:14-cv-11249-Matthew F. Leitman, District Judge.

         ARGUED:

          Peter D. Gordon, PETER D. GORDON AND ASSOCIATES, Los Angeles, California, for Appellant.

          David P. Utykanski, HARNESS, DICKEY & PIERCE, P.L.C., Troy, Michigan, for Appellees.

         ON BRIEF:

          Peter D. Gordon, PETER D. GORDON AND ASSOCIATES, Los Angeles, California, for Appellant.

          David P. Utykanski, Brent G. Seitz, HARNESS, DICKEY & PIERCE, P.L.C., Troy, Michigan, for Appellees.

          Before: KEITH, BATCHELDER, and CLAY, Circuit Judges.

          CLAY, J., delivered the opinion of the court in which KEITH, J., joined, and BATCHELDER, J., joined in part of the majority opinion. BATCHELDER, J. (pp. 27-30), delivered a separate opinion dissenting from part of the majority opinion and from the judgment.

          OPINION

          CLAY, Circuit Judge.

         Defendant Creative Harbor, LLC ("Creative Harbor") appeals the judgment entered by the district court on February 1, 2016, voiding Creative Harbor's trademark applications numbered 86198230 and 86198309, respectively. Creative Harbor challenges the district court's determinations that: (1) Creative Harbor lacked a bona fide intention to use its requested mark in commerce with respect to some of the goods and services identified in its trademark applications, in violation of § 1(b) of the Lanham Act, 15 U.S.C. § 1051(b); and (2) if Creative Harbor lacked such intent with respect to any of the goods and services, the applications must be voided in their entirety. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. For the reasons set forth below, we AFFIRM IN PART and VACATE IN PART the district court's judgment. We REMAND for further proceedings consistent with this opinion.

         BACKGROUND

         I. Factual History

         We present the facts in the light most favorable to Creative Harbor, against whom the district court entered summary judgment. See, e.g., Green v. Brennan, __U.S.__, 136 S.Ct. 1769, 1774 (2016).

         Defendant Creative Harbor is a California-based technology startup purportedly "engaged in the business of original content creation and concept development for all media, including but not limited to, internet, mobile, photography, film, and TV." (R. 11, Answer, PageID #121.) Creative Harbor was founded in 2014 by Christian Jurgensen ("Jurgensen"), who serves as Creative Harbor's owner, sole manager, and CEO.

         Plaintiff Kelly Services, Inc. is a Michigan-based company that is allegedly "one of the world's largest providers of personnel and managed business services - staffing 99% of Fortune 100 companies and 90% of Fortune 500 companies." (R. 1, Complaint, PageID #4.) Plaintiff Kelly Properties, LLC, is an affiliated entity of Kelly Services, Inc. Because Plaintiffs do not assert separate claims or arguments, and have identical interests for the purposes of this appeal, we refer to them collectively as "Kelly Services."

         In essence, the parties dispute which of them should have priority to the trademark WORKWIRE ("the Mark"), which both wish to use in connection with their competing employment-based software applications. In September 2013, Jurgensen allegedly developed an idea for a mobile application designed to connect employers with prospective employees. Jurgensen decided to call the application "WorkWire, " and formed Creative Harbor in February 2014 to develop the WorkWire application. In early 2014, Creative Harbor hired an intellectual property attorney to explore obtaining the WORKWIRE trademark. That attorney allegedly advised Creative Harbor that the Mark was available.

         However, in early 2013, Kelly Services allegedly began developing its own employment-based iPad application, which it intended to distribute through the Apple App Store. Kelly Services also decided to name its application "WorkWire." Kelly Services allegedly completed this iPad application on February 4, 2014, and submitted the application to Apple for its approval and eventual distribution. On February 17, 2014, Apple approved Kelly Services' application, but did not release it on the App Store immediately.

         On February 19, 2014, Creative Harbor filed two trademark applications seeking rights to the Mark with the United States Patent and Trademark Office at 6:28 p.m. and 7:56 p.m. Eastern Standard Time, respectively ("the Applications"). The Applications sought the right to use the Mark in connection with thirty-six individually identified goods and services. Creative Harbor affirmed under penalty of perjury that it possessed a bona fide intention to use the Mark in commerce on or in connection with each of the goods and services listed in the Applications. On the same day, at approximately 8:11 p.m. Eastern Standard Time, Kelly Services' iPad application became available on the Apple App Store. A customer first downloaded the Kelly Services application on February 20, 2014.

         On March 10, 2014, Creative Harbor sent Kelly Services a cease and desist letter asserting its right to use the Mark, and demanding that Kelly Services cease using the WORKWIRE name in connection with Kelly Services' Apple App Store iPad application. Sixteen days later, Kelly Services responded to that letter by bringing suit against Creative Harbor in the United States District Court for the Eastern District of Michigan. In its complaint, Kelly Services sought a declaratory judgment, inter alia, that: (1) it possessed superior rights to the Mark; (2) it had not infringed on Creative Harbor's rights to the Mark; and (3) Creative Harbor's rights to the Mark were invalid.

         On May 2, 2014, Creative Harbor answered the complaint and filed counterclaims against Kelly Services. Relevant to this appeal, Creative Harbor sought a declaratory judgment that it had priority rights to the Mark over Kelly Services because it filed the Applications before Kelly Services began using the Mark in commerce.

         In roughly mid-August 2014, when the Patent and Trademark Office published the Applications for opposition, Kelly Services promptly opposed the applications, notified the Trademark Trial and Appeal Board ("TTAB") of the pending action before the district court, and moved to stay the TTAB proceedings pending resolution of the instant suit. The TTAB consolidated the oppositions and stayed the proceedings.

         II. Procedural History

         Kelly Services sought discovery related to various issues in the case, including Creative Harbor's intent to use the Mark in commerce with respect to each of the goods and services listed in the Applications. In response to Kelly Services' document requests, Creative Harbor produced a PowerPoint presentation that included mock-up "wireframes" (a concept map outlining the elements of a software application) for a potential iPhone application.

         Kelly Services also deposed Jurgensen as Creative Harbor's representative pursuant to Federal Rule of Civil Procedure 30(b)(6). During the deposition, Kelly Services asked Jurgensen a number of questions related to Creative Harbor's plans to use the Mark in connection with the thirty-six goods and services identified in the Applications. In response to these questions, Jurgensen testified that Creative Harbor's outside attorney, David Sharifi, prepared the Applications under Jurgensen's instructions to "protect the mark" as to different products and services for which the Mark "could" eventually be used "in case the brand got bigger." (R. 56-1, Jurgensen Dep. Vol I, PageID #1477-78.) Accordingly, Jurgensen testified that he was not personally aware of the particular reasons why Sharifi included particular goods and services in the Applications. Jurgensen elaborated that "some of these services might be of future importance. Some of these terms might protect my endeavors in the future that I have . . . with the brand . . . . We can go through every single [item], but I can also say to some of them this would have been a future use." (Id.)

         Additionally, Jurgensen made several statements concerning the goods and services identified in the Applications. The court below summarized those statements as follows:

. Mr. Jurgensen said that the services and goods listed on the [Applications] 'were defined with the idea of protecting my present and future exploration of this name-of this brand.' (Id. PageID #1486);
. Mr. Jurgensen conceded that at the time his attorney drafted the [Applications] he (Jurgensen) 'had clear ideas for some of them, and some of them were meant for future exploration.' (Id. PageID #1481);
. Mr. Jurgensen acknowledged that some of the listed 'services might be of future importance' and that they 'might protect my endeavors in the future that I have . . . .' (Id. PageID # 1477);
. In the [Applications], Creative Harbor stated that it intended to use the Mark with 'computer game software, ' but Mr. Jurgensen testified that Creative Harbor did 'not' intend to use the Mark 'with a game.' (R. 56-2, Jurgensen Dep. Vol. II, PageID #1507);
. In the [Applications], Creative Harbor said that it intended to use the Mark in connection with 'professional credentialing verification services behalf of others, ' but Mr. Jurgensen acknowledged that he simply 'wanted to keep the option open to at some point do that.' (Id. PageID #1508-09);
. In the [Applications], Creative Harbor said that it intended to use the Mark in connection with 'employee relations information services, ' but when asked about that listing, Mr. Jurgensen did not know what it 'refers to.' (Id. PageID #1512);
. In the [Applications], Creative Harbor said that it intended to use the Mark in connection with 'employment staffing consultation services, ' and Mr. Jurgensen explained that Creative Harbor included this service because 'maybe at some point [the WorkWire application] would have consulting in there, maybe some kind of career advisor, something like this.' (Id.);
. In the [Applications], Creative Harbor said that it intended to use the Mark in connection with 'business consulting' services, but Mr. Jurgensen conceded that he 'wanted to make sure [that] was there included [sic]' because the company 'could' perhaps perform those services 'at some point' in the future. (Id. PageID #1509.)

Kelly Servs., Inc. v. Creative Harbor, LLC, 140 F.Supp.3d 611, 617-18 (E.D. Mich. 2015) (Kelly Servs. II) (emphasis in original) (record citations altered).

         On May 14, 2015, Creative Harbor moved for partial summary judgment seeking a declaration that it had priority to the Mark based on the Applications. Kelly Services opposed Creative Harbor's motion on the ground that the Applications were invalid because Creative Harbor lacked bona fide intent to use the Mark on some of the goods and services listed in the Applications, as required by § 1(b) of the Lanham Act. The district court construed Kelly Services' opposition as a cross-motion for summary judgment on the priority issue.

         On August 21, 2015, the district court denied Creative Harbor's summary judgment motion. Kelly Servs., Inc. v. Creative Harbor, LLC, 124 F.Supp.3d 768, 777-78 (E.D. Mich. 2015). The district court determined that the Applications themselves did not establish Creative Harbor's priority to the Mark; rather, the district court concluded, Creative Harbor needed to complete its registration by using the Mark in commerce before its priority rights would vest. Id. The district court thus acknowledged that "while Creative Harbor may establish its priority at some point in the future, it is not now entitled to the declaration that it seeks here." Id. at 778. Because the district court reasoned that Creative Harbor's remaining claims were dependent on the success of Creative Harbor's priority claim, the district court dismissed the balance of Creative Harbor's counter-claims. Id.

         The district court delayed ruling on Kelly Services' cross-motion. Instead, the district court ordered supplemental briefing as to whether it "should (1) decide the validity of the [Applications] or (2) leave that issue to the TTAB and stay this action pending the TTAB's action on Kelly [Services'] Notices of Opposition." Id. at 779. Thereafter, the parties conferred and stipulated that the district court should determine the Applications' validity. The parties then filed supplemental briefing.

         On October 16, 2015, the district court granted Kelly Services' cross-motion for summary judgment, voiding the Applications in their entirety. Kelly Servs. II, 140 F.Supp.3d at 623. The district court concluded that there was no genuine issue of material fact that Creative Harbor lacked a bona fide intent to use the Mark as to some of the goods and services listed in its Applications. Id. at 618-19. After surveying TTAB precedent, the district court concluded that Creative Harbor's lack of bona fide intent as to some of the goods and services necessitated voiding the Applications in their entirety. Id. at 622.

         Having won priority as to the Mark, Kelly Services voluntarily dismissed its remaining claims without prejudice. The district court thereafter entered a final judgment declaring, inter alia, that: (1) "Creative Harbor's trademark applications nos. 86198230 and 86198309 are invalid and void;" (2) "Kelly [Services] possesses priority to the trademark WORKWIRE that is superior to Creative Harbor;" and (3) "Creative Harbor has no valid or enforceable rights to the trademark WORKWIRE as against Kelly" Services. Kelly Servs., Inc. v. Creative Harbor, LLC, No. 14-cv-11249, 2016 WL 374102, at *1-3 (E.D. Mich. Feb. 1, 2016). On February 17, 2016, Creative Harbor filed a timely notice of appeal.

         DISCUSSION

         On appeal, Creative Harbor argues that: (1) the district court erred in concluding that it lacked a bona fide intent to use the Mark in commerce with respect to some of the goods and services listed in the Applications at the time the Applications were filed; and (2) even if Creative Harbor did lack bona fide intent as to certain goods and services, the Applications should not have been voided in their entirety. We address each of these arguments in turn.

         I. Bon ...


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