EDGE GAMES, INC. v. ELECTRONIC ARTS, INC. (N.D.Cal. 10-1-2010)

agreements granted plaintiff the right to exercise quality control over the use of the "EDGE" marks. They were "naked" licenses.

Even after 2003, the evidence that plaintiff had been making bona fide use of the "EDGE" mark in commerce is suspect. For example, Dr. Langdell's declaration asserted that Edge Games has been selling the video game Mythora (supposedly bearing the "EDGE" mark) since 2004. Curiously, while the exterior packaging submitted by Dr. Langdell to the USPTO for the Mythora video game included a website address "www.mythora.com," this website wasn't even registered by Edge Games until October 2008 — nearly four years after the game's purported release (RJN Exhs. O, P). The USPTO relied upon this questionable video-game packaging when it renewed plaintiff's "EDGE" mark in 2009 ( id. at Exh. R).

B. Fraud and Abandonment Regarding "THE EDGE"

Compelling evidence of fraud on the USPTO has also been submitted by EA with respect to plaintiff's "THE EDGE" mark. For example, in March 1996, in his application to register the mark "THE EDGE" for use with various goods, including video-game software and comic books, Dr. Langdell submitted as evidence of supposed use of the mark a box cover of a game entitled "Snoopy: The Cool Computer Game" ( id. at Exh. E). The game, however, was already seven years old at the time of the application, rendering it doubtful that it was still being sold in 1996 (Klieger Decl. ¶ 4, Exh. C). Even more disturbing, it appears as though the specimen of the box cover for the video game submitted by plaintiff to the USPTO was doctored. The specimen submitted by Dr. Langdell (left) and the actual box cover for "Snoopy: The Cool Computer Game" (right) are shown below:

Graph

As shown, the "box cover" specimen submitted to the USPTO by Dr. Langdell and the actual box cover of the video game differ in two key respects. First, a "TM" has been added next to the logo for "THE EDGE" in the specimen submitted to the USPTO. Second, instead of a copyright disclaimer for the "PEANUTS characters," which appears on the bottom right of the genuine box, the specimen submitted to the USPTO contained an entirely different disclaimer that stated "The Edge is a trademark of The Edge Interactive Media, Inc."

Even more evidence of fraud is seen in the comic-book specimen submitted to the USPTO by Dr. Langdell in November 2005 for his application to register "THE EDGE" in connection with comic books (RJN Exh. F). In support of the application, Dr. Langdell submitted the cover of the "Edge" comic book — which, as stated, was last published a decade earlier by an unrelated company who was never a licensee of plaintiff — as a specimen. The specimen submitted to the USPTO (left) and the actual comic book (right) are shown below (Klieger Decl. ¶ 5, Exhs. D, E):

Exhibit

Once again playing "spot the differences," the specimen submitted to the USPTO appears to have been doctored in three material ways. First, and most egregious, the name of the comic book was changed from "Edge" to "The Edge" in the specimen. This was done apparently to show that "THE EDGE" mark was being used in commerce in connection with comic books. Second, a "TM" was added to the manipulated title (it is visible on the top right of the last "E" in "EDGE"). Third, a disclaimer was tacked on to the bottom of the specimen that stated "`The Edge' is the trademark of The Edge Interactive Media, Inc. All Rights Reserved." These "enhancements" were not present in the original comic-book cover. Nevertheless, the USPTO relied upon Dr. Langdell's application when it issued the registration for "THE EDGE" in 2009 (RJN Exh. G).

In light of these misrepresentations, EA argues that there are serious doubts over whether "THE EDGE" mark was actually being used on any products by Edge Games during the period between 1989 and 2003.

C. Fraud and Abandonment Regarding "GAMER'S EDGE"

Evidence of fraud infects plaintiff's registration for "GAMER'S EDGE" as well. In February 2006, Dr. Langdell submitted an application to the USPTO to register "GAMER'S EDGE" for various goods, including video-game software ( id. at Exh. H). As a specimen of his company's use of the mark in commerce, Dr. Langdell submitted the box cover of a video game entitled "Garfield: Winter's Tail," which had been released by Softek (a predecessor-in-interest to Edge Games) over seventeen years earlier in 1989. The specimen submitted to the USPTO (left) and what EA asserts as being the actual box cover for the video game (right) are shown below (Klieger Decl. ¶ 7, Exh. F):

Exhibit

One critical difference stands out: the "GAMER'S EDGE" mark that is visible on the specimen submitted to the USPTO is not present anywhere on the genuine box cover for the video game. Based upon this apparently doctored specimen submitted by Dr. Langdell, the "GAMER'S EDGE" mark was issued to plaintiff in February 2008 for use with video games (RJN Exh. J).

In addition to this evidence assaulting the validity of plaintiff's "GAMER'S EDGE" registration, EA has also submitted evidence calling into question whether plaintiff made bona fide use of the "GAMER'S EDGE" mark over the past two decades. In particular, EA has submitted evidence demonstrating that Dr. Langdell's claimed sales of video games supposedly bearing the "GAMER'S EDGE" mark are highly suspect (Opp. 13). For example, when counsel for EA attempted to purchase various video games that Dr. Langdell represented in his declaration as being currently sold by Edge Games, they only received error messages stating that "[t]he resource requested . . . cannot be found" (Langdell Decl. Exhs. K, N, O, R; Klieger Decl. Exhs. G-R). Additionally, it is unclear from Dr. Langdell's exhibits whether certain games were being sold in the United States rather than the United Kingdom (Langdell Decl. Exh. T). In any event, given disturbing evidence that the "GAMER'S EDGE" mark may have been grafted retroactively onto product packaging by plaintiff, the record is tainted as to whether the mark has actually been used continuously by Edge Games or has been abandoned.

While counsel for plaintiff attempted to explain these error messages at the hearing, the suspect legitimacy of plaintiff's current sales activities — including plaintiff's misleading representation that its products were sold on Amazon.com rather than Amazon.com Marketplace — cannot be ignored.

Finally, while Dr. Langdell claimed in his declaration that both "EDGE" and "GAMER'S EDGE" were used in connection with the sale of personal computers since 1998, EA has presented evidence that the vendor of these computers — Velocity Micro — did not even become a licensee of plaintiff until 2008, when plaintiff sued Velocity Micro for trademark infringement ( id. at ¶ 23; RJN Exh. D). In sum, there is no clear evidence — at least on this record — that plaintiff or its licensees made any bona fide use of the "GAMER'S EDGE" mark prior to 2008.

D. Fraud and Abandonment Regarding "CUTTING EDGE"

Fraud is also alleged by EA surrounding plaintiff's registration of the "CUTTING EDGE" mark. In April 1995, Marvel filed an application with the USPTO to register "CUTTING EDGE" for use as the title of a comic book (Bard Decl. ¶ 3). A single issue of "Cutting Edge" was then published in December 1995. No other "Cutting Edge" comic book has ever been published by Marvel since that single issue ( id. at ¶ 3). In November 2006, Dr. Langdell filed a Notice of Opposition to Marvel's registration of "CUTTING EDGE," claiming that his companies had made "extensive use" of the mark since October 1984 (RJN Exh. U). Marvel responded by assigning its rights in the mark, including the pending application, to plaintiff in September 1997. The registration issued in June 1999 ( id. at Exh. V).

Fast-forward six years to November 2005. Despite the fact that only one issue of the "Cutting Edge" comic was ever published by Marvel in 1995, Dr. Langdell filed a "Combined Declaration of Use and Incontestability under Sections 8 15" wherein he certified that the "CUTTING EDGE" mark had been in continuous use in commerce for at least five years after the June 1999 registration date. To support this contention, he attached as a specimen what he described as: "Cover of currently on sale comic book sold via our licensee bearing the mark" ( id. at Exh. W) (emphasis added). The specimen submitted to the USPTO, however, was the cover of the same single-issue "Cutting Edge" comic published by Marvel in 1995. In other words, the specimen was most certainly not the cover of a comic book "currently on sale" in November 2005. Additionally, the comic book was not, and had never been, "sold via [plaintiff's] licensee." As stated, Marvel was never a licensee of any of Dr. Langdell's companies.

7. EVIDENCE OF DELAY IN FILING SUIT

By his own admission, Dr. Langdell knew about the release of "Mirror's Edge" shortly after it was announced in July 2007. Indeed, he claims to have mailed a cease-and-desist letter to EA (which was attached to his declaration) two days after "Mirror's Edge" was publicly announced (Langdell Decl. ¶ 25, Exh. DD). EA's legal department has no record of this July 2007 letter and Dr. Langdell did not receive a reply to it ( id. at ¶ 25; Schatz Decl. ¶ 3). According to his declaration, Dr. Langdell then purportedly sent numerous letters to EA's legal department in January, March, May, July, and September 2008, and left voice mails with the department in February, April, June, and August of that year (Langdell Decl. ¶ 26). Despite these assertions, EA claims that it received no voice mails from Dr. Langdell during this time period and that the

first letter it received from him was on September 24, 2008 (Schatz Decl. ¶ 3). In response to the September 2008 letter, EA — through outside counsel — sent a letter in reply to Dr. Langdell explaining EA why its "Mirror's Edge" video game did not infringe. EA's reply letter also requested additional documentation regarding the ownership and use of the asserted "EDGE" marks ( id. at ¶ 4, Exh. B). A back-and-forth between EA's outside counsel, EA DICE, and Dr. Langdell continued through December 2008, with Dr. Langdell threatening to seek a preliminary injunction against EA in a letter dated November 10, 2008, and representing to EA that his companies had recently prevailed in a similar trademark action against a third party "with judgments in our favor" and "on the merits" ( id. at ¶¶ 5-12, Exhs. C-J). Numerous purported "final warnings" were given by Dr. Langdell to EA in these communications. Meanwhile, sales of "Mirror's Edge" began in earnest on November 11, 2008, with a PC version released shortly thereafter on January 16, 2009 (Hershberger Decl. ¶ 13).

Dr. Langdell did not attach to his declaration any copies of these "numerous letters" that were supposedly sent to EA in January, March, May, July, and September 2008.

In fact, that separate action, in which Velocity Micro filed suit against Dr. Langdell's companies in the United States District Court for the Eastern District of Virginia, ended pursuant to a confidential settlement agreement.

Instead of immediately seeking a preliminary injunction to halt these sales, Dr. Langdell waited until June 2009 to re-attempt negotiations with EA ( id. at ¶ 13; Langdell Decl. ¶ 28). In these negotiations, EA reiterated its position to Edge Games that there was no likelihood of confusion between "Mirror's Edge" and the "EDGE" marks purportedly owned by Dr. Langdell. The talks ended in July 2009 without an agreement (Schatz Decl. ¶ 13). EA did not receive another communication from Dr. Langdell until March 2010, shortly after EA had announced the release of "Mirror's Edge" for the Apple iPad and iPhone. In this communication, Dr. Langdell once again called upon EA to cease using the "Mirror's Edge" name. EA did not respond to the email, and had no further interactions with Dr. Langdell until this action was filed three months later ( id. at ¶¶ 14-15).

* * *

Edge Games filed this action on June 15, 2010 (Dkt. No. 1). Nearly two months passed without any motions being filed. Finally, on August 20, over 21 months after EA first began selling the "Mirror's Edge" video game to the public, the instant preliminary injunction motion was filed (Dkt. No. 16). This order follows a hearing held on September 30.

ANALYSIS

A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest. Winter v. Natural Resources Defense Council, ___ U.S. ___, ___, 129 S.Ct. 365, 374 (2008). As explained below, plaintiff Edge Games has failed to establish — based upon the preliminary injunction record detailed herein — that any of these factors weigh in its favor.

1. LIKELIHOOD OF SUCCESS ON THE MERITS

To prevail on its claim of trademark infringement, Edge Games "must demonstrate that it owns a valid mark, and thus a protectable interest." Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1197 (9th Cir. 2009) (citation omitted). If ownership of such a mark is established, Edge Games must then show that EA's "use of the mark `is likely to cause confusion, or to cause mistake, or to deceive.'" KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 602 (9th Cir. 2005) (quoting 15 U.S.C. 1114(1)(a)-(b)).

A. Trademark Validity

On the issue of whether plaintiff has sufficiently demonstrated that it owns a protectable interest in the asserted "EDGE" marks, the preliminary injunction record speaks for itself. As detailed above, the record contains numerous items of evidence that plaintiff wilfully committed fraud against the USPTO in obtaining and/or maintaining registrations for many of the asserted "EDGE" marks, possibly warranting criminal penalties if the misrepresentations prove true. If EA's evidence is credited, such fraud could (and likely would) strip these registered marks of their "presumption of validity." See Tie Tech, Inc. v. Kinedyne Corp., 296 F.3d 778, 783 (9th Cir. 2002). These misrepresentations also support EA's argument that many (if not all) of plaintiff's marks have been abandoned, which would also render them invalid.

Additionally, EA has put forth substantial evidence calling into severe question many of the representations made by Dr. Langdell in his declaration submitted to the Court. Indeed, the declarations provided by EA from two of plaintiff's supposed "licensees" — Marvel Entertainment and Future Publishing — revealed that many of Dr. Langdell's assertions in his declaration were materially misleading or downright false. These falsehoods infect all of Dr. Langdell's assertions regarding the bona fide and continuous use of the asserted marks in commerce and the purported "sales" of his company's video-game products. In other words, all of his representations have become highly suspect in light of the evidence presented by EA. They cannot be credited to justify the extraordinary relief requested herein.

In sum, based upon the evidence in the record, this order finds that plaintiff has not demonstrated a likelihood of success in proving that the asserted marks are valid. See Tie Tech, 296 F.3d at 783; see also 15 U.S.C. 1127 ("Nonuse [of a mark] for 3 consecutive years shall be prima facie evidence of abandonment. `Use' of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark."). Since a valid trademark is a prerequisite to a finding of infringement, Edge Games has failed to establish that it is likely to succeed on the merits.

B. Likelihood of Confusion

Even if the asserted marks were presumed valid and protectable, the preliminary injunction record does not support a likelihood of confusion between the asserted and accused marks. As such, Edge Games has not established that it is likely to succeed on the merits.

To determine whether a "likelihood of confusion" exists, this order must examine the eight factors set forth in AMF Inc. v. Sleekcraft Boats: (1) strength of the mark, (2) proximity of the goods, (3) similarity of the marks, (4) evidence of actual confusion, (5) marketing channels used, (6) type of goods and the degree of care likely to be exercised by the purchaser, (7) defendant's intent in selecting the mark, and (8) likelihood of expansion of the product lines. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979); One Industries, LLC v. Jim O'Neal Distributing, Inc., 578 F.3d 1154, 1162 (9th Cir. 2009)

The preliminary injunction record and the Sleekcraft factors do not support a finding that a "reasonably prudent consumer" in the marketplace is likely to be confused as to the origin, endorsement, or approval of the competing products herein. Indeed, the majority of plaintiff's arguments on this issue are tainted by the suspect evidence set forth in Dr. Langdell's declaration. For example, according to Dr. Langdell, Edge Games is currently selling (or plans to sell) numerous "EDGE"-branded video games for modern gaming consoles through the exact same retail channels used by EA to distribute "Mirror's Edge." The evidence to support this assertion — beyond Dr. Langdell's bare statements in his suspect declaration — is paper thin. Indeed, Dr. Langdell never states exactly how much capital he has invested in developing, marketing, and selling his company's current and future video-game products. Given that "Mirror's Edge" was marketed with significant monetary investments through sophisticated, high-profile channels, including pre-announcements and demonstrations at major industry events, and was sold by major retailers, plaintiff has not established that the marketing channels used or the proximity of the goods in the marketplace support its claims of infringement. Indeed, EA has produced compelling evidence that plaintiff's video-game products may not even be available for sale to consumers at all.

Additionally, there is no evidence in the record that EA chose to call it's product "Mirror's Edge" for any reason but to describe the visual and thematic aspects of the video game. This conclusion is bolstered by the fact that the word "edge" in "Mirror's Edge" is used to modify the word "Mirror." In this connection, the "strength" of plaintiff's asserted marks is also highly susceptible to attack. Even if the "EDGE" marks were deemed "arbitrary," as plaintiff argues, there is no evidence of actual confusion (despite over 21 months of "Mirror's Edge" being sold to the public). Moreover, plaintiff has failed to show that each of the asserted marks is confusingly similar to the "Mirror's Edge" mark or that purchasers of "Mirror's Edge" would exercise such a low degree of care as to be confused as to the publisher or developer of the competing products. Similarly, under plaintiff's "reverse confusion" theory of infringement, the record does not support plaintiff's claim that purchasers of its various "EDGE"-branded products (to the extent that any exist) would believe that they were associated with EA, EA DICE, or the "Mirror's Edge" franchise.

The fact that the various asserted marks are not even visually similar to each other and that the EA and EA DICE marks are prominently displayed on "Mirror's Edge" advertising and packaging further reduces the likelihood of confusion (Opp. 22).

Reverse confusion occurs when a junior user engages in such extensive promotion of goods under a mark that the market is swamped, resulting in a likelihood that consumers will mistakenly believe the senior user's goods are associated with the junior user. "In a reverse confusion situation, rather than trying to profit from the senior user's mark, the junior user saturates the market and `overwhelms the senior user.'" 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 23:10 (2006).

Yet another failed argument is plaintiff's assertion that the various "EDGE" marks constitute a "family of marks" where confusion can be analyzed based upon a common element shared between them. On this issue, there is no evidence in the record showing that the purchasing public recognizes that the term "edge" in the asserted marks is indicative of a common origin of goods. By contrast, EA has produced evidence that the term "edge" is found in many registered trademarks and product names within the video gaming industry that are not owned or licensed by Edge Games (Opp. 20-21). Given this crowded field, the scope of protection (if any) that can be afforded to the asserted marks is limited. Finally, with respect to plaintiff's "EDGE" logo, EA has put forth convincing evidence that the logo itself was first used in commerce by another entity, Future Publishing, and that its appearance was recently altered to make it appear more "similar" to EA's "Mirror's Edge" logo (specifically, it was changed from blue to red).

In sum, under the Sleekcraft factors, plaintiff has not sufficiently shown that consumers are likely to be confused as to the origin, endorsement, or approval of any of the products at issue in this litigation. For these reasons, Edge Games has failed to establish that it is likely to succeed on the merits.

This order is not bound by, and declines to defer to, determinations by the USPTO as to whether the asserted and accused marks are confusingly similar.

2. IRREPARABLE HARM

Following the Supreme Court's decision in Winter, irreparable harm cannot be presumed — even for trademark actions. Rather, it is the plaintiff's burden to prove that "he is likely to suffer irreparable harm in the absence of preliminary relief." Winter, 129 S.Ct. at 374. In the context of preliminary injunctive relief, irreparable harm is established when a plaintiff is unlikely to be made whole by an award of monetary damages or some other legal remedy at a later date, in the ordinary course of litigation. See California Pharmacists Ass'n v. Maxwell-Jolly, 563 F.3d 847, 851-52 (9th Cir. 2009). As explained below, plaintiff has failed to meet this burden.

First, as stated in the prior section, the preliminary injunction record contains compelling evidence that the asserted marks were fraudulently registered and/or have been abandoned by plaintiff. While a jury may ultimately find otherwise, this thunderstorm over the validity of plaintiff's asserted marks tempers the likelihood of irreparable harm. Indeed, without valid and protectable marks, Edge Games cannot suffer any harm to its property rights due to EA's continued use of the "Mirror's Edge" name.

Second, given the suspect nature of Dr. Langdell's representations to both the USPTO and the Court concerning plaintiff's current and future sales and business activities, it is an open question whether plaintiff's business activities legitimately extend beyond trolling various gaming-related industries for licensing opportunities. In this connection, plaintiff has not adequately shown that the potential harm to the "EDGE" marks during the interim period between the filing and resolution of this action could not be adequately remedied by legal damages.

Third, and most telling, it is undisputed that Edge Games waited over three years since "Mirror's Edge" was first announced and 21 months since "Mirror's Edge" was first offered for sale to the public before seeking a preliminary injunction. Due to this unreasonable delay, the bulk of the alleged "irreparable harm" to the asserted marks purportedly caused by the "Mirror's Edge" franchise has already been done. Edge Games has not shown why issuing a preliminary injunction now would prevent any irreparable harm to its marks beyond the "harm" that has already occurred. The undisputed fact that plaintiff did not timely act to prevent the "Mirror's Edge" franchise from inundating the market is alone sufficient to deny the instant motion.

For these reasons, this order finds — based upon the record presented — that Edge Games has not demonstrated that it is likely to suffer irreparable harm absent preliminary relief.

3. BALANCING THE EQUITIES AND THE PUBLIC INTEREST

Finally, the two remaining factors weigh heavily against granting the relief sought by plaintiff. First, for all the reasons already discussed in this order, Edge Games has not established that the balance of equities tips in its favor. All of its representations regarding the validity and use of the asserted marks are infected by evidence of deceit. Moreover, there is scant evidence that Edge Games has invested any amount of funds into the development of recent products and services bearing the asserted marks.

By contrast, EA has shown that it has invested millions of dollars into building and promoting the "Mirror's Edge" franchise. It now has millions of customers. While Edge Games could have sought a preliminary injunction prior to (or shortly after) sales of the original "Mirror's Edge" video game began in earnest, it did not. Instead, plaintiff waited 21 months to allow the "Mirror's Edge" franchise to develop and expand. During this delay, EA continued to create and release products carrying the "Mirror's Edge" name, including newly released versions of the video game for the Apple iPad and iPhone. Given this record, allowing Edge Games to obtain a preliminary injunction after allowing EA to invest in and develop the "Mirror's Edge" franchise over such a long period of time would be plainly inequitable and highly prejudicial to defendant. See E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983).

Second, Edge Games has not shown that the public interest typically associated with trademark infringement actions — avoiding confusion to consumers — would favor a preliminary injunction. Rather, as stated, plaintiff has not sufficiently established that consumers are likely to be confused or deceived by the products at issue.

* * *

For the foregoing reasons, this order finds that plaintiff has failed to establish that it is likely to succeed on the merits, that it is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in its favor, or that an injunction is in the public interest. As such, a preliminary injunction is not warranted under the factors set forth in Winter.

CONCLUSION

Based upon the findings and conclusions set forth herein, plaintiff's motion for a preliminary injunction is DENIED.

IT IS SO ORDERED.