Bloomberg BNA’s Patent Trademark & Copyright Law Daily™is the IP industry’s premier news service, offering objective, timely,and reliable daily news coverage and commentary from leading IP law...
• Case Summary:T-Mobile gets summary judgment against a defendant who sold modified T-Mobile phones and SIM cards that allowed consumers to piggy back on the company's wireless network without paying service fees.
• Key Takeaway:Defendant violated both the Lanham Act and the Computer Fraud Abuse Act by selling modified cell phones and related products.
The fraudulent acquisition and resale of T-Mobile phones, modified SIM cards, and proprietary codes violated the Lanham Act and the Computer Fraud Abuse Act, the U.S. District Court for the Western District of Washington ruled April 23 (T-Mobile USA Inc. v. Terry, W.D. Wash., No. 3:11-cv-05655-RBL, 4/23/12).
After finding that the defendant was engaged in an illegal conspiracy to defraud T-Mobile, the court issued a permanent injunction barring the defendant from purchasing and reselling T-Mobile equipment. The court also found willful trademark infringement, and thus trebled the damages to nearly $350,000, with an additional $182,221.34 awarded in attorneys' fees.
T-Mobile USA Inc. is a subsidiary of the German telecommunications firm Deutsche Telekom AG. T-Mobile has rights in various T-Mobile marks, which it uses to identify mobile phones and other equipment in connection with its telecommunications services.
In April 2010, T-Mobile filed a lawsuit alleging that Sherman Terry and others were willfully infringing T-Mobile's marks.
According to the complaint, the defendants were fraudulently purchasing and reselling T-Mobile Subscriber Identify Module (SIM) cards. T-Mobile also claimed that the defendants were later activating the SIM cards, which fraudulently allowed the unlocked phones containing those SIM cards to operate on T-Mobile's FlexPay service. In this way, the defendants were able to sell mobile devices that operated on T-Mobile's services without paying T-Mobile any service fees.
The defendants falsely claimed that they were authorized T-Mobile dealers, the complaint alleged, and thus the consumers who purchased the products believed that they were entering into a relationship with T-Mobile. The consumers would not learn of the fraud until T-Mobile suspended service to the cell phones in question, usually a month after the phones were activated.
T-Mobile's complaint contained 13 counts, including claims for federal trademark infringement and false advertising, violations of the Computer Fraud and Abuse Act, theft of computer data, and civil conspiracy. T-Mobile moved for summary judgment and for a permanent injunction against one of the defendants, George Collett.
Looking to the AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 204 USPQ 808 (9th Cir. 1979), likelihood of confusion factors, the court ruled that the defendant engaged in unlawful trademark infringement in violation of the Lanham Act, 15 U.S.C. §1114(a).
Specifically, Judge Ronald B. Leighton said that the “trinity factors favor confusion.” Those factors, the first three identified in Sleekcraft, require a court to determine the similarity of the marks, the relatedness of the goods and services, and the marketing channels used by both parties.
“The undisputed evidence demonstrates that T-Mobile and Defendant sell identical looking, directly-competing products and services to the same purchasers--individuals looking for affordable, high quality T-Mobile wireless telephones and service--through the same channels of trade, utilizing the same advertising vehicles,” the court said. Accordingly, it said that summary judgment was appropriate on T-Mobile's trademark infringement claim.
The court also granted summary judgment on T-Mobile's Lanham Act false advertising claim.
In order to succeed on that claim, which was brought under Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. §1125(a)(1)(B), T-Mobile needed to demonstrate either than an advertisement was literally false, or that it was likely to deceive.
The court said T-Mobile met that burden by demonstrating that the defendant falsely advertised that he was an authorized T-Mobile dealer.
The court said that these deceptive practices “continue to cause irreparable harm to T-Mobile including, but not limited to, direct diversion of sales from T-Mobile to Defendant and by lessening the goodwill associated with T-Mobile's products and services.”
The court said that because T-Mobile established its Lanham Act claims, it was also due summary judgment on its Georgia state law deceptive trade practices and unfair competition claims.
Moreover, the court granted T-Mobile summary judgment on its CFAA claim under 18 U.S.C. §1030(a)(4). T-Mobile met its burden on that claim by demonstrating that the defendant improperly obtained confidential activation codes for T-Mobile's SIM cards. After activating the cards, the defendant was able to gain unauthorized access to T-Mobile's network, the court said, and therefore the defendant “stole mobile airtime and services from T-Mobile.”
Turning to damages, the court found that T-Mobile demonstrated that it suffered $116,493.88 in actual damages. The court said that the infringement was willful, and therefore it trebled the damages pursuant to 15 U.S.C. §1117(a). In total, the court levied a damage award of $349,481.64.
The court also issued a permanent injunction prohibiting the defendant from, among other things, “purchasing, selling, unlocking, reflashing, altering, advertising, soliciting, using, and/or shipping, directly or indirectly, any T-Mobile products or services.”
T-Mobile was represented by Gail Podolsky of Carlton Fields, Atlanta. George Collett, proceeded pro se.
Opinion at http://pub.bna.com/ptcj/1105655April2312.pdf
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)