Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 1 of 21 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE US Uncut, LLC, Plaintiff and Counterclaim Defendant, v. Ryan Clayton and John Does Nos. 1 through 10, Defendants and Counterclaim Plaintiff, v. Carl Gibson and Mark Provost Third Party Defendants. ) ) ) ) ) ) ) ) ) Civil Action No. 1:16-CV-368-PB ) ) ) ) ) ) ) ) MEMORANDUM OF LAW IN SUPPORT OF OBJECTION TO PLAINTIFF’S MOTION FOR PRELIMINARY INUNCTION AND IN SUPPORT OF COUNTERCLAIM PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION Defendant and Counterclaim Plaintiff Ryan Clayton (“Clayton”) respectfully submits this memorandum of law in support of his Objection to Plaintiff’s Motion for Preliminary Injunction and in support of Counterclaim Plaintiff’s Motion for Preliminary Injunction. Preliminary Statement The principle issue in this case is ownership of the mark “US UNCUT” and a Facebook site that Clayton started. Plaintiff US Uncut, LLC (the “LLC”) claims ownership of the US UNCUT mark and Clayton’s Facebook site by virtue of the LLC’s use of them post-2014. The LLC’s claims are without factual or legal merit and, frankly, are an attempt at revisionist history. The first use in commerce of the US UNCUT mark occurred on February 3, 2011, when Clayton started a Facebook site called “US Uncut”. From that day to present, US Uncut has always engaged in two activities: (1) coordinating US Uncut protests and other actions around 1 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 2 of 21 the nation and publishing news and information about those protests and actions, and (2) distributing news and information about a variety of progressive social and political issues, including about American corporations that are egregious tax avoiders and the unfortunate “cuts” in public spending that have resulted from it.1 Clayton’s postings on his Facebook site immediately drew supporters for US Uncut from all around the country, who posted comments and started “following” his site. Id. ¶ 13. By midFebruary 2011, he had organically developed a group of nearly 1,000 followers of his Facebook site, which is a relatively large number for a brand new Facebook site. Id. In the weeks that followed, his Facebook site continued to expand rapidly by adding, on average, more than 1,000 followers per day, reaching 8,000 by February 25, 2011 and surpassing 11,000 by March 1, 2011. Id. That was extremely rapid growth for a social media site, especially at that time. Id. All of those followers of Clayton’s Facebook site would have identified the US UNCUT mark with the services that Clayton was providing in the site and otherwise. Id. Third Party Defendant Carl Gibson (“Gibson”) viewed Clayton’s Facebook site and posted a comment on it on February 4, 2011, stating that he was “starting a movement here in Jackson, Mississippi.” Id. ¶ 16. He then started a Twitter page for “Citizens In the Voluntary Insistence of Laws,” or “CIVIL,” using the Twitter account “@civilusa.” Id. After learning in mid-February 2011 that Gibson was organizing protests in the name of US Uncut, Clayton and the second individual involved in US Uncut, Joanne Gifford (“Gifford”), invited Gibson to join their US Uncut national efforts. Id. ¶ 17. By his own admission, Gibson had “zero experience” with political operations, national media relations, or nonviolent direct 1 See Declaration of Ryan Clayton in Support of Objection to Plaintiff’s Motion for Preliminary Injunction and In Support of Counterclaim Plaintiff’s Motion for Preliminary Injunction (“Clayton Dec.”), ¶¶ 8-10 and 12. 2 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 3 of 21 action protests, although he did seem to have a passion for this cause. Thus, Clayton and Gifford invited Gibson to join their US Uncut national efforts, and Gibson agreed. Id. Clayton has now learned that, on or about February 14, 2011 – after Gibson had become familiar with Clayton’s US UNCUT mark and Facebook site, and after Gibson had started his own movement called CIVIL – Gibson acquired the administrator credentials for the Twitter account “@usuncut” and the domain “www.usuncut.org” (the “.org domain”). Id. ¶ 18. Since Clayton’s Facebook site had already developed a large group of followers, the three agreed to continue to use his Facebook site for US Uncut. Id. ¶ 19. Since the @usuncut Twitter account had develop a following, and since that account and the .org domain were identical to the US Uncut name, they agreed to use them for US Uncut, rather than the @uncutus Twitter account and the www.uncutus.org domain that Clayton had previously obtained. Id. As a result, Clayton added Gibson as an administrator of his Facebook site, and Gibson added Clayton and Gifford to the @usuncut Twitter account and .org domain. Id. In that way, Clayton acquired control over the @usuncut Twitter account and .org domain, and ensured that Gibson would not use the US UNCUT name or mark for himself. Id. Through coordinated communications on Clayton’s Facebook site, US Uncut’s national day of action on February 26, 2011 was a resounding success: simultaneous protests in more than 50 cities, with thousands of individuals protesting under banners featuring the US UNCUT name and mark. Id. ¶ 21. The actions attracted the attention of mainstream national media as well as online and other progressive media. Id. The most prominent coverage was an interview of Clayton on MSNBC’s news show “The Young Turks.” Id. and www.youtube.com/watch?v=I1cxIbRe40. Clayton’s Facebook site and the successful US Uncut protests also had attracted the attention of documentary film producers in early February 2011. Id. ¶ 23. That culminated in the production of a film called “We’re Not Broke,” which prominently featured Clayton, Gifford 3 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 4 of 21 and Gibson as co-founders of US Uncut and which prominently features the US UNCUT mark. Id. The documentary received national and international acclaim, including earning an “official selection” at the Sundance Film Festival in 2012. Id. ¶ 15 and 24. The film is available for viewing on Netflix and online at www.snagfilms.com/films/title/were_not_broke. Id. In late 2011, Occupy Wall Street and similar “occupy” movements became the focus of progressive grassroots movements. Id. ¶ 31. Thus, US Uncut expanded its mission from principally opposing American corporate tax avoidance to distributing news and information about progressive issues generally. Id. The publicity of the occupy movements, along with US Uncut’s existing notoriety and broader focus, bolstered US Uncut’s national reputation and expanded the already significant number of followers of Clayton’s Facebook site. By mid-2014, Clayton’s Facebook site had nearly a half a million followers. Id. From February 2011 to June 2014, Clayton was integrally involved in all aspects of US Uncut, including organizing and participating in many protests, making numerous media appearances, creating and posting a significant amount of content to his Facebook site, and organizing and leading the management of US Uncut. Id. ¶¶ 32-33. In fact, the posts created by Clayton were some of the most successful ever posted on his Facebook site, including posts that “went viral” with multi-millions of social media viewers nationally and worldwide. For example, one post created by Clayton and published on June 6, 2014 (just 10 days before Gibson summarily ejected Clayton from his own Facebook site) was shared over 50,000 times, garnering more than 8,300 “likes,” and reaching over 2.2 million people. Id. ¶¶ 28-29. In the first half of 2014, Gibson and another individual who had become involved in US Uncut, Mark Provost (“Provost”), hatched a scheme to wrongfully take control of US Uncut for themselves, including Clayton’s Facebook site. Id. ¶ 35. Their plan was to start a new website different from US Uncut’s .org domain, post content to their new website, capitalize on the 4 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 5 of 21 extensive group of followers of Clayton’s Facebook site to sell advertising on their new website, and exclude Clayton and all of the other people involved in US Uncut nationally to retain the profits of this endeavor for themselves. Id. Clayton discovered this plan for the first time years later, in 2016, from a third party that Provost had approached about participating in it. Id. In June 2014, Gibson and Provost concocted a false dispute over a post Clayton made to his Facebook site, and used it as an excuse to remove Clayton as an administrator of his own site. Id. ¶ 36. Shortly thereafter, they did the same thing to all of the other people involved in Braintrust, including the other co-founder, Gifford. Id. ¶ 37. Clayton attempted to regain control of his Facebook site. Id. ¶ 38. However, according to Facebook’s terms of use, the only way to do so was to secure agreement from a current administrator of the site, and Gibson and Provost refused to even talk to Clayton. Id. From June 2014 to early August 2016, Gibson and Provost ran US Uncut nationally by capitalizing on the goodwill of Clayton’s US UNCUT mark and the significant following of his Facebook site. Id. ¶ 39. They formed the LLC in September 2014, transferred the .org domain’s email list-serve, and started creating content and selling advertisements on the LLC’s new domain, www.usuncut.com (“.com domain”) in 2015. Id. By doing so on the LLC’s .com domain, and then distributing it broadly to the extensive list of followers of Clayton’s Facebook site, Gibson and Provost wrongfully secured US Uncut and significant profits for themselves. Id. In the summer of 2016, Clayton learned for the first time of a process through Facebook to regain administrator status of his Facebook site. Id. ¶ 40. As a result, in July 2016, he filed an official request with Facebook to return his site to him. Id. He provided evidence to Facebook that he had created the Facebook site for US Uncut, that the site was an extension of his personal Facebook account and email account, and that he was the initial and primary administrator of the site. Id. ¶ 41. Facebook agreed and, in early August 2016, restored Clayton as an administrator 5 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 6 of 21 of his Facebook site, granting him explicit permission to “assign Page roles to the members of [his] team.” Id. Clayton removed Gibson as an administrator of his Facebook site, revoked the credentials of Provost to post content to his site, and removed the additional Facebook accounts that Gibson had assigned page roles to since June 2014. Id. At about the same time, Clayton filed an application for federal registration in the United States of the US UNCUT mark. Id. ¶ 42. He seeks a federal registration in International Class 41 for “News reporting services, namely, providing news in the nature of current event reporting; providing news, information, and commentary through a website, electronic newsletter, and social media in the nature of current events relating to politics, the economy, and human rights; providing an interactive, online web journal in the nature of current events relating to politics, the economy, and human rights.” Id. Since August 2016, Clayton has operated US Uncut again, retaining its mission, message and activities. Id. ¶ 44. Though a new website was started for this purpose, www.usuncut.news (the “.news domain”), Clayton continues to distribute content for US Uncut to the followers of his Facebook site. Id. Gibson and Provost are simultaneously continuing to operate the LLC and infringing on Clayton’s US UNCUT mark. Id. ¶ 45. Specifically, they are creating and posting content to the infringing .com domain and @usuncut Twitter account. Id. They are also distributing content through two Facebook sites, The Other 98% and Occupy Democrats. Id. As a result, the number of visitors to the LLC’s .com domain has returned to its historical levels (or more), and Provost, Gibson and the LLC continue to profit from their misuse of Clayton’s mark. Id. In fact, the LLC’s .com website received more website traffic in September than it had in most months of the 2016 calendar year, and therefore is generating a similar or much greater level of advertising revenues on a monthly basis. Id. 6 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 7 of 21 Factual Background Rather than restating all the facts in the Clayton Dec. and his Counterclaims, Clayton has provided a summary of those facts in the Preliminary Statement, incorporates all of those facts herein, and will reference those facts to the extent they are pertinent to his Argument below. In addition, the parties have agreed to seek expedited discovery prior to any preliminary injunction hearing, and a briefing schedule prior to the hearing. As a result, it would be premature for Clayton to submit a highly detailed factual background at this point in time, since the parties intend to significantly supplement the factual record before and at the hearing. Argument When addressing a motion for preliminary injunction, a federal District Court considers (1) likelihood of success on the merits, (2) irreparable harm to the parties, and (3) the public’s interest. Naser Jewelers, Inc. v. City of Concord, 513 F.3d 27, 32 (1st Cir. 2008). In this Circuit, the “sine qua non of this … inquiry is likelihood of success on the merits.” New Communication Wireless Servs. v. SprintCom, Inc., 287 F.3d 1, 8 (1st Cir. 2002). “This is particularly true where the movant seeks a preliminary injunction on the basis of a trademark claim, since irreparable harm generally follows from infringement, and ‘as a matter of public policy, trademarks should be protected.’” Ligotti v. Garofalo, 562 F. Supp. 2d 204, 207 (D.N.H. 2008). In the present case, the parties agree that infringing use of the US UNCUT mark entails irreparable harm to the non-infringing party and that the entry of a preliminary injunction with respect to the trademark and cybersquatting claims would serve the public’s interest. However, the LLC cannot show that it will sustain irreparable harm if the Court declines to enter a preliminary injunction with respect to Clayton’s Facebook site, although Clayton would sustain irreparable harm if the Court does enter a preliminary injunction in the LLC’s favor on that matter. Thus, the disputes between the parties at this stage concern likelihood of success on the 7 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 8 of 21 claims with respect to the US UNCUT mark and Clayton’s Facebook site, and irreparable harm with respect to a preliminary injunction concerning his Facebook site. A. Clayton Is Likely to Succeed on His Trademark and Cybersquatting Claims, and the LLC Is Unlikely to Succeed on Its Trademark and Cybersquatting Claims, Because Clayton Owns the US UNCUT Mark To show likelihood of success on a trademark claim, a party must prove (1) it owns a protectable mark, (2) the other party is using the same or a similar mark, and (3) the other party’s use of that mark is likely to confuse the public. Star Financial Servs., Inc. v. Aastar Mortgage Corp., 89 F.3d 5, 9 (1st Cir. 1996). To show likelihood of success on a cybersquatting claim, a party much show (1) it owns a mark entitled to protection, (2) its mark is distinctive or famous, (3) the offending domain name is identical or confusingly similar to or dilutives the mark, and (4) the other party used, registered, or trafficked in the domain name with a bad faith intent to profit from it. PC Connection, Inc. v. Crabtree, 754 F. Supp. 3d 317, 328 (D.N.H. 2010). In the present case, the parties agree that US UNCUT is an inherently distinctive and protectable mark, that they are both using the same US UNCUT mark, that their competing uses are likely to confuse the public, and that they are each using a domain that incorporates the mark. Thus, the primary dispute between the parties at this stage with respect to the trademark and cybersquatting claims concerns who owns the US UNCUT mark. Ownership of a mark can depend on the mark’s level of distinctiveness. “The Supreme Court has divided marks into five categories of distinctiveness: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful.” Colt Defense, LLC v. Bushmaster Firearms, Inc., 486 F.3d 701, 705 (1st Cir. 2007), citing, Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). “Marks classified as suggestive … are all considered inherently distinctive … upon first use,” and therefore are subject to immediate protection. Boston Duck Tours, LP v. Super Duck Tours, LLC, 531 F.3d 1, 12-13 (1st Cir. 2008) (emphasis added). Accord McCarthy, Thomas J., 8 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 9 of 21 McCarthy on Trademarks and Unfair Competition (“McCarthy”) § 11:4 (“Inherently distinctive designations are given legal protection immediately upon first use as a mark.”) By contrast, a descriptive phrase does not acquire the distinctiveness needed to become a protectable mark until it has secondary meaning. Id. at 13. “When a descriptive phrase becomes associated with a single commercial source, the phrase is said to have ‘acquired distinctiveness’ or ‘secondary meaning,’ and therefore functions as a trademark.” Id. (emphasis added). In the present case, the parties agree that the US UNCUT mark is inherently distinctive.2 A mark “is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature” of services associated with the mark. Equine Techs., Inc. v. Equitechnology, Inc., 68 F.3d 542, 544 (1st Cir. 1995). The US UNCUT mark is suggestive because the word “uncut” does not describe the services that Clayton provides with respect to organizing a progressive movement related to American companies that are egregious tax avoiders or distributing news and information about that and other progressive causes. See Clayton Dec., ¶ 11. Rather, that word is suggestive, somewhat, of one cause, namely, that governments could “uncut” spending cuts for valuable social programs if corporations stopped engaging in egregious tax avoidance. Id. As a result, US UNCUT is inherently distinctive as a suggestive mark because imagination and thought are required to reach a conclusion as to the nature of services provided based on Clayton’s use of the mark US UNCUT.3 2 See Memorandum of Law in Support of Plaintiff’s Motion for Preliminary Injunction, p. 10 n. 1 (“US UNCUT is an inherently distinctive mark when used in connection with a news reporting service”); Answer to Complaint, Affirmative Defenses, Counterclaims and Third Party Complaint, p. 19 ¶ 40 (“US Uncut mark in the field of news reporting services is suggestive in nature, and therefore is an inherently distinctive mark entitled to protection.”) 3 See Atrezzi, LLC v. Maytag Corp., 436 F.3d 32, 38 (1st Cir. 2006) (ATREZZI was suggestive to identify a service selling kitchen utensils because, although the term means “tools” in Italian, it could “easily be viewed as suggesting a similarity, not an identity, between ordinary workman’s tools and appliances or the like used by a chef.”); Equine Techs., 68 F.3d at 545 (EQUINE TECHNOLOGIES was suggestive to identify specialized hoof pads for horses, because it “clearly requires the consumer to exercise imagination in order to draw a conclusion as to the nature of goods and services”); Boston Duck Tours, 531 F.3d at 13 (“COPPERTONE was suggestive of suntan lotion because it hints at the nature of the connected product.”) Accord Malarkey-Taylor Assocs. v. Cellular Telecomm. Indus. Ass’n, 929 F. Supp. 473 (D.D.C. 1996) (WIRELESS NOW! suggestive for on-line information services); Dial-A- 9 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 10 of 21 Because the US UNCUT mark is inherently distinctive, its ownership is “determined by the date of the mark’s first use in commerce. The party who first use[d] [the] mark in commerce [has] priority” over all other users of the mark. Hana Financial, Inc. v. Hana Bank, _ U.S. _,135 S.Ct. 907, 910 (2015). See Volkswagenwerk Aktiengesellschaft v. Wheeler, 814 F.2d, 812, 815 (1st Cir. 1987) (“The right to trademark and service mark rights is based on prior use, or the one who first uses the marks in connection with a peculiar line of business.”); Blanchard Importing & Distrib. Co. v. Charles Gilman & Son, Inc., 353 F.2d 400, 401 (1st Cir. 1965) (“As between conflicting claimants, it is well settled that the right to use the same mark is based on priority of appropriation.”); New England Duplicating Co. v. Mendes, 190 F.2d 415, 417 (1st Cir. 1951) (“It has long been the rule [t]hat the exclusive right to the use of the mark or device claimed as a trademark is founded on priority of appropriation”); McCarthy, § 16:1 (“For inherently distinctive marks, ownership goes to the first entity to use the designation as a mark.”) Use of a mark for purposes of ownership of it does not require the user to seek or make any sale of services or generate any revenue from services. Rather, “use in a way sufficiently public to identify or distinguish the marked [services] in an appropriate segment of the public mind as those of the adopter of the mark, is competent to establish ownership, even without evidence of actual sales.” New England Duplicating, 190 F.2d at 418 (finding first use of a mark in commerce through publicizing a product with the mark in a trade periodical). Accord Gen. Healthcare Ltd. v. Qashat, 363 F.3d 332, 335 (1st Cir. 2004) (“sales of goods … not necessary to establish trademark ownership”), citing, New England Duplicating, 190 F.2d at 418; Boathouse Mattress Operating Corp. v. Mattress Madness, 841 F. Supp. 1339 (E.D.N.Y. 1994) (DIAL-A-MATTRESS suggestive for mattress sales); Public Service Co. of New Mexico v. Nexus Energy Software, Inc., 36 F. Supp. 2d 436 (D. Mass. 1999) (ENERGY PLACE suggestive for a website giving information on energy resources); Synergistic Intern’l Inc. v. Windshield Doctor Inc., 66 U.S.P.Q.2d 1936 (C.D. Cal. 2003) (GLASS DOCTOR suggestive for glass repair services); Scientific Applications, Inc. v. Energy Conservation Corp., 436 F. Supp. 354 (N.D. Ga. 1977) (HOMEFOAMERS suggestive for home insulation installation services); In re Hunt, 132 U.S.P.Q. 564 (T.T.A.B. 1962) (MARRIAGE PROPONENTS suggestive for prospective marriage partner services). 10 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 11 of 21 Group, Inc. v. TigerLogic Corp., 2777 F. Supp. 2d 243, 249 (D. Mass. 2011) (“party may show ‘use’ by providing evidence demonstrating: 1) adoption and 2) use in a way ‘sufficiently public’ to identify or distinguish the marked good in an appropriate segment of the public mind as those of the adopter of the mark.”), citing, New England Duplicating, 190 F.2d at 418.4 In the present case, there can be no real dispute that Clayton was the first to use the US UNCUT mark in commerce in connection with the services he provides, when he created his Facebook site on February 3, 2011. At that time, and in the days that followed, Clayton used the US UNCUT mark on his Facebook site to coordinate US Uncut protests around the nation, and to distribute news and information about a variety of progressive issues, including American corporate tax avoidance and the cuts in public spending that have resulted from it. Both courts and the Trademark Trial and Appeal Board have found that such online use is sufficient use in commerce for ownership of the mark. See CCBN.com v. c-call.com, Inc., 73 F. Supp. 2d 106, 110 (D. Mass. 1999) (“In the emerging world of the Internet, … ‘use in commerce’ … include[s] establishing a ‘typical home page on the Internet, for access to all users.’”), citing, Planned Parenthood Federation of Am., Inc. v. Bucci, 42 U.S.P.Q.2d 1430, 1434 (S.D.N.Y. 1997); Boathouse Group, 77 F. Supp. at 249 (introducing a mark on a Twitter site, publication of a branded product on Twitter and various websites, and a launch of a trial phase of a product on a website “was ‘sufficiently public’ to establish ‘use’ in the trademark sense.”); Institute for Justice v. Media Grp. of Am., LLC, 2015 WL 7758845 *1-3 (E.D. Va. Nov. 4 Numerous other courts have adopted the rule set forth in New England Duplicating that use in a way sufficiently public to identify the mark in an appropriate segment establishes ownership, even without evidence of actual sales. See e.g. FN Herstal SA v. Clyde Armory Inc., _ F.3d _, 2016 WL 5390341 * 5 (11th Cir. Nov. 15, 2016), citing, Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1195 (11th Cir. 2001); Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1105 (9th Cir. 2012), citing, New West Corp. v. NYM Co. of Cal., 595 F.2d 1194, 1200 (9th Cir. 1979); ITT Indus., Inc. v. Wastecorp. Inc., 87 Fed. Appx. 287, 296 n. 12 (3d Cir. 2004); Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1266 (5th Cir. 1975). See also NetJets Inc. v. IntelliJet Group, LLC, 2013 WL 6799426 * 10 (S.D. Ohio Dec. 19, 2013); Modern Group v. Tiger Environmental & Rental Services, LLC, 640 F. Supp. 2d 820, 825 (W.D. La. 2009); Burns v. Realnetworks, Inc., 359 F. Supp. 2d 1187, 1193 (W.D. Okla. 2004); Johnny Blastoff Inc. v. Los Angeles Rams Football Co., 1998 WL 766703 * 16 (W.D. Wis. Jun. 24, 1998); Marvel Comics Ltd. v. Defiant, a Div. of Enlightened Entertainment Ltd., 837 F. Supp. 546, 548 (S.D.N.Y. 1993). 11 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 12 of 21 30, 2015) (maintaining a website, spending money on branded merchandise and advertisements, and maintaining “a Facebook page, YouTube channel and Twitter handle” were sufficient); In re Florists’ Transworld Delivery, Inc., Serial No. 85164876 (T.T.A.B. May 11, 2016) (“Service mark specimens consisting of advertising, promotional or informational material, such as website or Twitter pages, are routinely submitted as advertising … [and] acceptable when they show the mark in advertising the service(s) identified in the application, and create the required direct association by containing a reference to the specified service(s) and source thereof.”); PNC Financial Services Group, Inc. v. Keith Alexander Ashe, Opposition No. 9207409 (T.T.A.B. October 15, 2013) (use of a mark on social media is trademark use if “sufficient to create an association in the minds of the purchasing public between the mark and the goods.”) Clayton’s use of the US UNCUT mark and postings on his Facebook site immediately drew many supporters from the progressive social and political community around the country, who posted comments and started following his Facebook site. See Clayton Dec., ¶ 13. By midFebruary 2011, Clayton’s site had nearly 1,000 followers, and then grew by more than 1,000 followers a day, surpassing 8,000 by February 25, 2011 and 11,000 by March 1, 2011. Id. All of the followers would have identified the US UNCUT mark with services Clayton was providing on his Facebook site and otherwise, which is further use in commerce. See Brookfield Comm., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1051 (9th Cir. 1999) (use occurred from a “widespread and public announcement about the imminent launch of its web site.”) In addition to growing the profile of the US UNCUT mark in the general progressive social and political community, Clayton also used the mark in early and mid-February 2011 with a group of influential individuals, called the “Uncut Braintrust” (“Braintrust”), that he formed at that time to help him operate and manage US Uncut and his Facebook site. Id. ¶¶ 26-28. Members of the Braintrust included veteran political organizers, media relations experts, online 12 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 13 of 21 organizers, and experienced political activists. Id. Clayton also used the US UNCUT Mark when engaging three professional consultants from three progressive media relations companies, Agit-Pop Communications, KNP Communications, and Fitzgibbon Media, to help develop US Uncut’s media narrative and push it out to online and progressive news outlets and mainstream media. Id. ¶ 21. Such activity constitutes further use in commerce by Clayton of the US UNCUT mark. See Lunatrex, LLC v. Cafasso, 674 F. Supp. 2d 1060, 1072 (S.D. Ind. 2009) (mark’s use for “entry in the Google Lunar X Prize competition” sufficient use for trademark purposes because such use was “sufficiently prominent to seize the attention of the small relevant market of participants in the competition and those following it,” and therefore “was sufficient to alert interested persons that the mark had a definite referent….”) In addition to committing significant time and effort to US Uncut, Clayton helped secure critical financing for US Uncut through significant grants, including a grant from the ARCA Foundation to the Institute for Policy Studies specifically for the activities of US Uncut, which funds were integral to support and sustain US Uncut’s national operations. Id. ¶ 33. He also used a significant amount of his own personal resources to fund US Uncut, and helped US Uncut raise additional funds through contributions from private donors, as well as sales of US Uncut merchandise on the .org domain and otherwise. Such activities constitute additional use in commerce by Clayton of the US UNCUT mark. See Gemmer v. Surrey Servs. for Seniors, Inc., 2010 WL 5129241, at *15 (E.D. Pa. Dec. 13, 2010) (“Defendants provides ample evidence that they are likely to succeed on the merits in proving that Defendants first used the mark in commerce … in donor appeals, which were sent out on Surrey stationery, and through offers made to prospective dealer/clients of The Main Line Antiques Show.”) Clayton led US Uncut’s national day of action, including by coordinating it through use of the US UNCUT mark on his Facebook site and otherwise. It was a huge success. Thousands 13 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 14 of 21 of individuals protested on February 26, 2011 in more than 50 cities under banners featuring the US UNCUT mark. The action attracted significant attention from mainstream national media as well as online and other progressive media, with the most prominent news coverage at that time coming from Clayton’s MSNBC interview on February 28, 2011. Clearly, by that time – if not well before that – Clayton had used the US UNCUT mark in ways “sufficiently public to identify” the services “in an appropriate segment of the public mind” for purposes of trademark use. New England Duplicating, 190 F.2d at 418. See Johnny Blastoff, Inc. v. L.A. Rams Football Co., 188 F.3d 427, 433–34 (7th Cir. 1999) (court may rely on mark’s use in “articles in newspapers and trade publications, as well as in media outlets such as television and radio.”); Specht v. Google Inc., 758 F. Supp. 2d 570, 587 (N.D. Ill. 2010) (“media reports … generated by” Google’s “press release [and] subsequent release of the Android development kit and announcement of the $10 Million Android Developer Challenge … constitute[d] use in commerce” giving Google trademark rights to ANDROID.”) The Plaintiff’s claim of ownership of the US UNCUT lacks any factual or legal merit. The LLC did not even exist until September 2014, so it could not have used the US UNCUT mark in commerce before Clayton’s use of the mark in 2011. Clayton anticipates that the LLC may amend its Complaint to add Gibson as a plaintiff, and that Gibson may claim that he first used the US UNCUT mark in commerce. However, that claim also would lack merit. Gibson learned of Clayton’s use of the US UNCUT mark when he viewed Clayton’s Facebook site on February 4, 2011. Gibson posted a comment on the site stating that he was starting a movement in Jackson, Mississippi, and he immediately thereafter started a Twitter page for an organization that he called Citizens In the Voluntary Insistence of Laws using the Twitter account “@civilusa.” It was not until at least February 14, 2011 – after Gibson had become familiar with Clayton’s US UNCUT mark and Facebook site and started his 14 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 15 of 21 own CIVIL movement – that he acquired the @usuncut Twitter account and www.usuncut.org domain. Thus, Gibson’s use of the US UNCUT mark clearly came after Clayton’s first use of the mark in commerce on February 3, 2011, and Clayton’s continued use of the US UNCUT mark on his Facebook site and otherwise in the days and weeks that followed.5 Moreover, after learning in mid-February 2011 that Gibson was organizing protests in the name of US Uncut, Clayton and Gifford invited Gibson to join their US Uncut national effort. Though Clayton had previously secured a “@uncutus” Twitter account and www.uncutus.org domain, the three decided to use the @usuncut Twitter account and www.usuncut.org domain instead, because that Twitter account had developed a following, and because that account and the domain were identical to the US Uncut name. See Clayton Dec., ¶¶ 9 and 19. In that way, Clayton acquired control over the @usuncut Twitter account and .org domain, and ensured that Gibson would not use the US UNCUT name or mark for himself. Id. ¶ 19. B. The LLC Is Unlikely to Succeed on It Conversion Claim Because Clayton Owns His Facebook Site Under New Hampshire law, “‘[a]n action for conversion is based on the defendant’s exercise of dominion or control over goods which is inconsistent with the rights of the person entitled to immediate possession.’” Marcucci v. Hardy, 65 F.3d 986, 991 (1st Cir. 1995). In the present case, the parties agree that, from mid-June 2014 to early August 2016, Gibson, Provost and the LLC had dominion and control over Clayton’s Facebook site for US Uncut, and that Clayton has had dominion and control over his Facebook site since early August 2016. Thus, the 5 Gibson cannot claim prior use of the US UNCUT mark simply because he acquired the @usuncut Twitter account and the .org domain, which someone else had reserved previously. The @usuncut Twitter account and the .org domain were simply reserved, and there had been no public use of them. It is well settled that reserving a social media site or domain without using it publicly is insufficient for trademark use. See Brookfield, 174 F.3d at 1051 (9th Cir. 1999) (“Registration [of domain name] … does not in itself constitute ‘use’ for purposes of acquiring trademark priority.”); Callmann on Unfair Comp., Trademarks & Monopolies § 20:5 (4th Ed. 2016) (“Registration of a domain name with an internet registrar does not, in itself, constitute mark use of the domain name.”) Moreover, Gibson did not acquire the @usuncut Twitter account or the .org domain until at least February 14, 2011, so any use he made of them at that time certainly came after Clayton first use in commerce on February 3, 2011. 15 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 16 of 21 only dispute at this stage with respect to LLC’s likelihood of success on its conversion claim concerns which party is entitled to possession of the Facebook site – i.e., ownership.6 The LLC has made no attempt to offer an argument in support of its request for injunctive relief with respect to its conversion claim or its request to take possession of Clayton’s Facebook site. The LLC simply assumes without any proof that it owns his Facebook site. The LLC has failed to make any argument in support of its claim and request for possession of Clayton’s Facebook site, probably because such a claim and request have no merit.7 Courts in New Hampshire have not addressed property rights with respect to a Facebook or other social media account or site. The closest that courts in this state have come to this topic is addressing intangible ideas. In both cases, the federal District Court found that the ideas were intellectual property subject to protection through a conversion claim. See Anderson v. Century Products Co., 943 F. Supp. 137, 153 (D.N.H. 1996) (finding that the intangible idea for a baby carriage was a property interest subject to a conversion claim); Curtis Mfg. Co., Inc. v. PlastiClip Corp., 933 F. Supp. 107, 112-13 (D.N.H. 1995) (“find[ing] the doctrine of conversion applicable to the intangible ideas expressed in a patent.”) Decisions from other courts concerning the ownership of Facebook and other social media sites and accounts are very sparse as well. Two federal bankruptcy courts have held that social media accounts are property interests. See In re CTLI, LLC, 528 B.R. 359, 366 (Bkrtcy. S.D. Tex. 2015); In re Borders Group, Inc., 2011 WL 5520261 *13 (Bkrtcy. S.D.N.Y. Sept. 27, 6 Because Clayton does not need preliminary injunctive relief with respect to possession of his Facebook site, he is not required to show that he is likely to succeed on his conversion claim, although Clayton believes that the facts and law set forth in this memorandum establish that he is likely to succeed on that claim, and therefore that the LLC is unlikely to succeed on its claim for conversion with respect to Clayton’s Facebook site. 7 The LLC’s trademark and cybersquatting claims, even if they had any merit, still would not entitled the LLC to possession of Clayton’s Facebook site. See Ligotti, 562 F. Supp. 2d at 228 (denying request for preliminary injunction with respect to conversion claim seeking possession of defendant’s website, even though court granted preliminary injunction with respect to plaintiff’s trademark claim and enjoined defendant’s use of the domain name, because the defendant “ nevertheless continues to own the domain name”) (emphasis in original). 16 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 17 of 21 2011). One court reasoned that social media accounts are protectable property because, “like subscriber lists, business social media accounts provide valuable access to customers and potential customers” and “many courts, applying the law of their respective states, have … held that subscriber or customer lists are property interests.” In re CTLI, LLC, 528 B.R. at 366-67, citing, In re Alert Holdings, Inc., 148 B.R. 194, 203 (Bkrtcy. S.D.N.Y. 1992). Other courts likewise have held that domains and websites, which are analogous online forums to social media accounts, are property that can be the subject of a conversion claim. See Kremen v. Cohen, 337 F.3d 1024, 1030 (9th Cir. 2003). The Ninth Circuit has explained the reasoning for protecting domains and websites as follows: Like a share of corporate stock or a plot of land, a domain name is a well-defined interest. Someone who registers a domain name decides where on the Internet those who invoke that particular name – whether by typing it into their web browsers, by following a hyperlink, or by other means – are sent. Ownership is exclusive in that the registrant alone makes that decision. Moreover, like other forms of property, domain names are valued, bought and sold, often for millions of dollars. *** [Domain] registrants have a legitimate claim to exclusivity. Registering a domain name is like staking a claim to a plot of land at the title office. It informs others that the domain name is the registrant’s and no one else’s. Many registrants also invest substantial time and money to develop and promote websites that depend on their domain names. Ensuring that they reap the benefits of their investments reduces uncertainty and thus encourages investment in the first place, promoting the growth of the Internet overall. Id. See CRS, Inc. v. Laxton, 600 F.3d 1138, 1142 (9th Cir. 2010) (“Like the majority of states to have addressed the issue, California law recognizes a property interest in domain names.”); In re Paige, 413 B.R. 882, 918 (Bkrtcy. D. Utah 2009) (“like web pages …, [a] [d]omain [n]ame … is a type of tangible property that is capable of conversion.”), citing, Margae, Inc. v. Clear Link Technologies, LLC, 620 F. Supp. 2d 1284, 1287 (D. Utah 2009); Astroworks, Inc. v. Astroexhibit, Inc., 257 F. Supp. 2d 609, 618 (S.D.N.Y. 2003) (a website is property subject to conversion); 17 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 18 of 21 Eysoldt v. ProScan Imaging, 957 N.E.2d 780, 785 (Ohio App. 2011) (“domain names and e-mail accounts … are intangible property subject to conversion.”) As the use of social media has become ubiquitous, social media sites like Facebook have come to be operated just like websites, and serve the same or similar purposes on the Internet as websites. “Like a … a plot of land [or] a domain name, [a Facebook site,] is a well-defined interest.” Kremen, 337 F.3d at 1030. That was certainly the case with Clayton’s Facebook site, which had a defined name, mission and message from the start. When he created his Facebook site, he “decide[d] where on the Internet those who invoke [his site] – whether by typing it into their web browsers, by following a hyperlink, or by other means – are sent,” id., what content would be posted on the site, and the experience visitors to that site would have. “Ownership is exclusive in that [the social media developer] alone makes [those] decision[s],” id., and those decisions are not meaningfully different than the decisions a retail store owner makes when purchasing a store, fitting it up, and deciding how to operate it, or the decisions a homeowner makes when purchasing a home, landscaping the yard, and decorating the interior. A Facebook site is essentially a virtual “plot of land” on the Internet, and starting such an account is just “like staking a [virtual] claim to a plot of [the Internet].” Id. Similarly, like land and websites, social media site operators often “invest substantial time and money to develop and promote” their sites. Clayton certainly invested a substantial amount of his time and resources into his Facebook site. Consequently, social media sites “are valued, bought and sold,” often for substantial amounts, id., or (as occurred here) are used to generate substantial revenues through advertisements, sales, or other means. As a result, Clayton’s Facebook site deserves the same property protections as a website. Just like the owner of land is the person who has title to it and the owner of a website is the person who registers it, the owner of a Facebook site is the person who starts it, unless any 18 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 19 of 21 the owner has sold or otherwise conveyed the asset to another. In the present case, Facebook determined that Clayton had the right to administer his Facebook site. Facebook made that determination based on the fact that Clayton created the Facebook site, the site was an extension of his personal Facebook account and personal email account, and he was the initial and primary administrator of the site. As a result, Facebook restored Clayton as an administrator of his Facebook site in August 2016, granting him explicit permission to “assign Page roles to the members of [his] team.” Such evidence and decision by Facebook are determinative of Clayton’s ownership of his Facebook site. C. The Balance of the Harms Favors Denying Injunctive Relieve in Favor of the LLC with Respect to Its Conversion Claim Sometime in late August 2016, Gibson, Provost and the LLC began distributing content from the LLC’s .com domain through the Facebook sites, The Other 98% and Occupy Democrats. Those two Facebook sites have large followings – at least as large and probably larger that the following of Clayton’s Facebook site. Moreover, the followers of The Other 98% and Occupy Democrats Facebook sites consist of many of the same types of people (if not actually many of the same people) who follow Clayton’s Facebook site. As a result, by September 2016, the number of visitors to the LLC’s .com domain had returned to historical levels. In fact, the LLC's .com domain received more website traffic in September than it had in most months of the 2016 calendar year, and therefore is generating a similar or much greater level of advertising revenues on a monthly basis. The LLC therefore faces no threat of irreparable harm if the Court declines to enter an injunction. By contrast, the primary means for Clayton to sustain his US Uncut work and to distribute news and information from the .news domain is to the followers of his Facebook site. Without use of his Facebook site, Clayton’s US Uncut efforts and .news domain would halt 19 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 20 of 21 altogether, resulting in the followers of his Facebook site likely ceasing to follow his site or, worse, exclusively following the LLC’s .com domain from the LLC’s distribution through The Other 98% and Occupy Democrats Facebook sites. That would cause irreparable harm to Clayton. Thus, the balance of the harms favors denying injunctive relief with respect to the LLC’s request to take possession of Clayton’s Facebook site. Preliminary Injunction Bond Clayton requests that the Court not require him to post a bond under Fed.R.Civ.P. 65(c) or that the Court set the bond at a nominal amount. When considering the propriety and amount of a preliminary injunction bond, the court should balance (1) the likelihood of success on the merits where the likelihood is extraordinarily high, (2) the likelihood and amount of potential harm to the enjoined party, (3) the hardship of the bond requirement, and (4) the comparative positions of the parties. Crowley v. Local No. 82 Furniture and Piano, 679 F.2d 978, 999-100 and n. 25 (1st Cir. 1982). In the present case, Clayton has demonstrated an extraordinarily high likelihood of success on the merits, and a lack of irreparable harm with respect to the LLC’s conversion claim with respect to Clayton’s Facebook site. He therefore requests that the Court either not require him to post a bond or set the bond at a nominal amount. Conclusion For all of these reasons, Clayton respectfully requests that the Court deny Plaintiff’s Motion for Preliminary Injunction, grant Counterclaim Plaintiff’s Motion for Preliminary Injunction, and issue any other or further relief that the Court deems appropriate. 20 Case 1:16-cv-00368-PB Document 17-1 Filed 10/04/16 Page 21 of 21 Respectfully submitted, Ryan Clayton By his Attorneys, McLane Middleton, Professional Association Dated: October 4, 2016 By: /s/ Cameron G. Shilling Cameron G. Shilling, N.H. Bar No. 11363 Nicholas F. Casolaro, N.H. Bar No. 20612 900 Elm Street, P.O. Box 326 Manchester, NH 03105-0326 Telephone: (603) 625-6464 Facsimile: (603) 625-5650 cameron.shilling@mclane.com nicholas.casolaro@mclane.com CERTIFICATE OF SERVICE I hereby certify that this document was filed by the ECF system and served on all counsel of record electronically as a result thereof on October 4, 2016, and was served via email and first class mail, postage prepaid, on counsel for the Third Party Defendants, Nicholas K. Holmes and Jonathan M. Shirley, Devine, Millimet & Branch, P.A., 111 Amherst Street, Manchester, NH 03101, nholmes@devinemillimet.com and jshirley@devinemillimet.com. /s/ Cameron G. Shilling Cameron G. Shilling 21