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Valador, Inc v. HTC Corp.

United States District Court, E.D. Virginia, Alexandria Division

March 15, 2017

VALADOR, INC., Plaintiff,
v.
HTC CORPORATION, et al., Defendants.

          MEMORANDUM OPINION

          T. S. ELLIS, ILL UNITED STATES DISTRICT JUDGE

         At issue in this trademark infringement and cybersquatting case is the parties' use of the term, "VIVE, " in connection with their respective products or services. Plaintiff, Valador, Inc., alleges that each defendant, HTC Corporation, HTC America, Inc., and Valve Corporation, has infringed on plaintiffs VIVE mark through defendants' alleged marketing, advertising, and selling of a headset, the "HTC Vive, " a hardware device capable of running software that renders three-dimensional images. Plaintiff further contends that HTC Corporation's use of website domain names containing the word, "VIVE, " constitutes unlawful cybersquatting. The parties have filed cross motions for summary judgment on the following remaining Counts[1]:

• Count I: Trademark infringement, in violation of 15 U.S.C. § 1114(1)(a), against all defendants.
• Count II: Unfair competition and false designation of origin, in violation of 15 U.S.C. § 1125(a), against all defendants.
• Count HI: Cybersquatting, in violation of the Anti-Cybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d), against defendant HTC Corporation.

         As the matter has been fully briefed and argued orally, it is now ripe for disposition.

         I.

         Listed below are the undisputed material facts derived from the parties' statements of undisputed facts submitted in support of their summary judgment motions, and additional undisputed facts gleaned from the summary judgment record.[2]

• Plaintiff, Valador, Inc., is a small, services business built on the use of technology.
• On December 25, 2007, the U.S. Patent and Trademark Office ("PTO") granted plaintiffs application for a registered trademark and service mark in the standard character mark "VIVE" in International Classes 009 and 035.
• Plaintiffs registered mark is an acronym for "Valador Immersive Visual Environment."[3]
• Plaintiffs "VIVE" mark falls within International Class 009 as "computer software applications for three dimensional (3D) presentation of information and event simulation." Plaintiffs mark also falls within International Class 035 for "[b]usiness consulting services in the fields of information management and analysis through three dimensional (3D) computer modeling techniques."
• Defendant HTC Corporation is a Taiwanese company that designed, manufactures, and sells a product-a headset-labeled "HTC Vive." The HTC Vive headset is available for purchase by the general public worldwide through physical retail outlets and online.
• The HTC Vive headset is a hardware device that includes hand controls and is capable of running virtual reality games and entertainment software.
• Defendant HTC America is responsible for advertising, marketing, and promoting the HTC Vive headset in the U.S.
• Defendant Valve is a software company that does not sell the HTC Vive headset, but instead provides free software that can be downloaded to an HTC Vive headset and other similar hardware.
• Plaintiff has four main lines of business: (1) modeling and simulation, (2) information assurance. (3) management consulting, and (4) software engineering.
• Plaintiff provides these services pursuant to government contracts as either a prime contractor or a sub-contractor. In fact, Plaintiffs Chief Financial Officer, Philip Hamilton, stated that plaintiff performs 100% of its work through these means.
• Plaintiff derives its annual revenue almost exclusively from government contracts with two federal agencies: NASA and the Department of Veteran's Affairs. Approximately 99% of plaintiff s work is for government clients.[4]
• Plaintiffs government agency clients are sophisticated entities that make purchasing decisions based upon detailed proposals that are subject to competitive bidding.
• Plaintiffs 2016 revenue was approximately [XXXXX] roughly [XXXXX] in profit.
• Notably, the undisputed factual record discloses that plaintiffs "VIVE"-i.e., the Valador Immersive Visual Environment-is not itself a physical product, game, service. or stand-alone software. Rather, plaintiffs "VIVE" is a "development environment used by Valador to develop applications." Mabie Depo. at 97. In other words, plaintiffs VIVE "is a means for developing solutions to a problem" and "a theory for doing collaboration, " which includes some software. McHenry Depo. at 178-79.[5]
• According to plaintiffs CEO, plaintiffs "VIVE" includes "custom applications that [plaintiff] developed, open source documents, [and] open source applications that [plaintiff has] strung together into a development environment that [plaintiff] use[s]" to develop further applications. Mabie Depo. at 75:10-15.
• Plaintiff does not sell its VIVE process or environment "separately from the application or the end product" it delivers to clients. Mabie Depo. at 79:6-16. Rather, the end products plaintiff delivers to its clients-namely, NASA and the Department of Veterans Affairs-are software programs that render three-dimensional simulation results, which plaintiffs customers may then use.
• None of plaintiff s deliverables is labeled or branded with plaintiffs "VIVE" mark.
• None of the applications plaintiff constructs using its VIVE process is called "VIVE" or labeled "VIVE."
• Plaintiff occasionally used its "VIVE" mark in contracts with government agencies to connote that plaintiff would use its VIVE process or environment in performing the contract.
• The contract prices for which plaintiff alleges to have used its VIVE process range from $99, 550 into the tens of millions of dollars.
• Plaintiff has no registered trademark rights related to any hardware.
• Plaintiff has not received any awards related specifically to its VIVE process, and plaintiffs VIVE has not received press coverage beyond plaintiffs own press releases and a single third-party blog post.
• In 2010, plaintiff, pursuant to a contract with defendant Valve, used Valve's software tools to create two maps, labeled "Moundsville Slammer, " for a video game, "Left4Dead" and its sequel, "Left4Dead2." These maps have been downloaded approximately 43, 000 times over the past six years.
• These two video game maps are not standalone products, and they are not branded or labeled with plaintiffs "VIVE" mark.
• Plaintiff did not intend to sell its "Moundsville Slammer" maps. In fact, plaintiffs contract with Valve prohibited plaintiff from using those maps for any commercial purpose.
• According to plaintiffs CFO, plaintiff does not have a video game division within the company.
• Plaintiffs senior software engineer, Mr. Stroh, confirmed that plamtiff is not currently working on any projects regarding video games, campaigns, or maps. [XXXXX] the company [XXXXX]
• Although plaintiff, on October 27, 2015, investigated engaging in further video game work and generated an internal proposal concerning a room-capture application, this proposal was considered for only 10 days and then abandoned. Plaintiff did not revisit that proposal.
• Plaintiff maintains a website at "www.valador.com." Before this litigation, that website did not display the word "VIVE" on its main page.
• After plaintiff filed its lawsuit, plaintiff altered its website to feature prominently the unstylized, hyperlinked word "VIVE" on the main page. When clicked, the hyperlink redirects to a subpage about plaintiffs VIVE development environment.
• Plaintiff does not maintain a webstore where potential consumers can purchase any goods or services.
• Plaintiff does not sell any goods or services through third party retailers.
• Plaintiff has not incurred any cost in creating its "VIVE" mark.
• Over the last three years, plaintiff has spent [XXXXX] in advertising, marketing, and promotional spend for all of its services.
• Plaintiff contends that it marketed its VIVE environment or process at trade shows. Yet, plaintiff produced ten photos from such trade shows, none of which displays plaintiffs VIVE environment or process.
• Moreover, plaintiffs promotional materials for its VIVE environment comprise dense textual descriptions directed to government agencies in need of consulting services.
• In January 2015, HTC Corporation selected the "VIVE" name for its headset, the HTC Vive.
• HTC Corporation selected the "VIVE" name independently and without any knowledge of plaintiff.
• HTC Corporation originally conceived the name of its product as "Re Vive" before changing it to "HTC Vive."
• On March 1, 2015, HTC introduced the HTC Vive headset. The event was covered by mainstream and web-based media in the U.S. and around the world.
• On April 9, 2015, HTC Corporation filed trademark applications with the PTO for "Vive, " "HTC Vive." and "HTC Re Vive" for, inter alia, software.
• Subsequently, plaintiff filed of a letter of protest with the PTO.
• After plaintiff filed its letter of protest, HTC Corporation narrowed the description of goods contained in its trademark application to hardware.
• HTC Corporation, through outside trademark counsel, also contacted plaintiffs counsel regarding a short co-existence agreement. In those communications, [6] defendants' counsel emphasized that the parties' products and services were distinguishable.
• Thereafter, on January 18, 2017, the PTO determined that HTC Corporation's applications related to virtual reality hardware did not pose a likelihood of confusion with any existing registered trademarks and cleared the applications by February 28, 2017.
• In this respect, the PTO provisionally granted HTC Corporation's trademark applications for hardware in the same classes as plaintiffs "VIVE" mark.
• HTC Corporation followed its standard corporate practice in performing a trademark search with the assistance of outside counsel after selecting, but before ...

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