Express Homebuyers USA, LLC v. WBH Mktg. Inc., Case No. 1:17-cv-736

323 F.Supp.3d 784

EXPRESS HOMEBUYERS USA, LLC, Plaintiff,

v.WBH MARKETING INC., Defendant.

Case No. 1:17-cv-736

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

Filed August 14, 2018

Joseph J. Aronica, Duane Morris LLP, Washington, DC, for Plaintiff.

Damon William Wright, Joshua Counts Cumby, Venable LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

T.S. Ellis, III, United States District Judge

Plaintiff, a Virginia limited liability company engaged in the business of buying and selling houses, brings this action against defendant, a Texas corporation engaged in the same business, seeking cancellation of defendant's two trademarks, "We Buy Houses" and "Webuyhouses.com" ("the Marks"), on the grounds that both marks are generic and undeserving of trademark protection. In response, defendant has counter-claimed that plaintiff has infringed on the Marks and falsely designated the origin of plaintiff's services. Both parties have moved for summary judgment on plaintiff's claim and defendant's counterclaims. This memorandum opinion addresses whether the Marks are generic, and therefore ineligible for trademark protection.¹ Because there are no disputed issues of material fact with respect to this question, plaintiff's motion for summary judgment must be granted in part and defendant's cross-motion for summary judgment must be denied in part.

I.

Given that summary judgment is appropriate only where there are no genuine disputes of material fact, Fed. R. Civ. P. 56, the first step in the analysis is to identify the record facts as to which no genuine dispute exists. In this regard, Local Rule 56(B) directs a movant for summary judgment to include in its submission a separately captioned section listing in numbered-paragraph form all material facts as to which the movant contends no genuine dispute exists. The nonmovant must then respond to each numbered paragraph, either admitting or contesting the putative undisputed fact and citing admissible record evidence to establish a genuine dispute of material fact. The nonmovant's failure to respond to a fact listed by the movant constitutes an admission that the fact is undisputed. R. 16(B) Scheduling Order ¶ 13. Where, as here, both parties have moved for summary judgment, each party submitted its own statement of material facts as to which that party contends there is no genuine dispute. In this case, both parties have complied with the order and local rule. Accordingly, the facts recited here are derived from the parties' lists of material facts and their respective responses.

• Plaintiff Express Homebuyers (EHB) is a limited liability company organized under Virginia law with its principal place of business in Springfield, VA. EHB has been in the house-buying industry since 2003, operating chiefly in the Washington, D.C. metropolitan area. Lawrence Bradford Chandler is EHB's CEO.

• Defendant We Buy Houses Inc. (WBH) is a Texas corporation with its principal place of business in Southlake, TX. WBH provides educational and instructional materials to home buyers and sellers and conducts its operations nationwide. Jeremy Brandt is a citizen of Texas and is WBH's founder and CEO.

• WBH owns the two registered marks at issue: "We Buy Houses" and "Webuyhouses.com."

• On July 11, 2001, Michael Payette filed an intent-to-use Application No. 78,073,479 (the '479 Application) with the U.S. Patent and Trademark Office (PTO) for the mark "WE BUY HOUSES" for real estate printed materials.

• In February 2003, while Payette's '479 Application was still pending, Webuyhouses.com, Corp., owned by Howard Gordon, filed Application No. 76,491,672 (the '672 Application) to register the mark "WEBUYHOUSES.COM."

• On May 26, 2004, Payette sold the '479 Application for the WE BUY HOUSES mark to Webuyhouses.com, Corp. The transaction was documented in a sale and assignment agreement, which was recorded with the PTO on June 14, 2004. On December 2, 2005, Webuyhouses.com, Corp. filed a Statement of Use for the '479 Application for WE BUY HOUSES, alleging first use as early as October 21, 2005.

• In March 2006, Webuyhouses.com, Corp. entered a license agreement with Martin Price, whereby Price operated, advertised, and marketed "webuyhouses.com" and "we buy houses" as Gordon's business partner.

• The '479 Application for WE BUY HOUSES became U.S. Registration No. 3,149,336 (the '336 Registration), and the '672 Application for WEBUYHOUSES.COM became U.S. Registration No. 3,235,523 (the '523 Registration) on September 26, 2006 and May 1, 2007, respectively.

• Gordon acquired the Marks to prevent others from barring his companies' use of the phrase "we buy houses." Price had the same view. Between 1997 and November 2012, neither Gordon nor Price enforced the Marks even though both were aware of the widespread use of the phrase "we buy houses" in the real estate industry. Gordon and Price actively encouraged other house-buying companies—many of which had names containing the phrase "We Buy Houses"—to use the phrase "we buy houses," believing that increased use of the phrase would create more traffic to the WEBUYHOUSES.COM website. CD, Ex. 17, 79; Price Dep. at 169, 174-75, 187-88; Gordon Dep. at 253.

• Between 1997 and November 2012, Gordon and Price advertised and marketed the Marks in a non-source-identifying manner, saying that "we buy houses" "doesn't signify who you are. It signifies what you do." Price Dep. at 18:5-8; see also Gordon Dep. at 218-19 ("I call [WE BUY HOUSES] ‘the three magic words,’ which is why we patented and then trademarked them, because they are recognized by everybody as what we do."). Price understood that the phrase "We Buy Houses" was being used on 10-50 million websites, and he leveraged the widespread use of "we buy houses" to make money by selling leads from the WEBUYHOUSES.COM website to house-buyers. Price marketed the website WEBUYHOUSES.COM to other house-buyers whose companies had "We Buy Houses" in their name or whose companies were otherwise in the house-buying business.

• In November 2012, Webuyhouses.com, Corp. assigned the '336 Registration and the '523 Registration to X5, a company owned by Brandt that did business in the house-buying industry. X5 was aware at that time that other house-buying companies were using the phrase "we buy houses."

• X5 subsequently assigned the rights in both Marks to We Buy Houses Inc., effective September 10, 2013.

• The prior and current owners of the WBH Marks have used "we buy houses" to indicate the nature or class of services offered, namely that they buy houses from consumers looking to sell their homes. Prior to purchasing the WBH mark in 2012, Brandt's previous companies X5 and Cash Offer Corporation (COC) used the phrase "we buy houses" to indicate the nature or class of service they offered.

• Real estate investors who buy houses are commonly referred to in the industry as "we buy houses companies," and consumers share that understanding due to the ubiquity of "we buy houses" road signs. EHB's competitors also use the "we buy houses" phrase to signal to customers that they are involved in the home-buying market.

• Real estate professionals have used "we buy houses" in newspaper advertising since 1898. CD, Ex. 124; Appx. 3; Arnold Decl. ¶ 3.² A May 2016 search on www.newspapers.com of "WE BUY HOUSES" produces 52,295,853 results. CD Ex. 19. A Google search of "we buy houses" yields hundreds of thousands of pages of results.³ Numerous real estate professionals use "we buy houses" in online marketing and advertising. Appx. 1. Numerous Trademark applications and registrations include the phrase "We Buy Houses," and several books include the phrase in the title or otherwise to discuss the house-buying business. CD Ex. 18; Arnold Decl.

• EBH uses the phrase "we buy houses" in marketing and advertising, but it has never used the phrase "webuyhouses.com." Between 2003 and 2016, EHB received no complaints that its use of "we buy houses" was inappropriate, infringed on intellectual property, or otherwise confused customers.

• WBH directed real estate investors to remove the words "we buy houses" from Facebook, websites, blogs, Twitter, YouTube, and other marketing. CD, Ex. 122. WBH requested that YouTube remove EHB's marketing and advertising videos featuring the words "we buy houses." WBH told real estate investors that by using "we buy houses," they were attempting to confuse consumers and imitate WBH. Id. WBH told real estate investors that use of "we buy houses" in marketing content was trademark infringement. Brandt told WBH executive Dev Horn, "That's how we roll. Facebook page – GONE." Id. Ex 120. Horn further stated that WBH needed to "scare the sh*t" out of investors using "we buy houses" and that WBH should "GET THOSE MOTHER F*****S."

• Real estate investors informed WBH of the time and money it would take to remove "we buy houses" from their marketing, and that WBH's actions disrupted businesses.

II.

The summary judgment standard, which the parties do not dispute, is too well-settled to merit extended discussion. As Rule 56, Fed. R. Civ. P., makes clear, summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." And it is settled that "the burden on the moving party may be discharged by ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On the other hand, if the record reflects a genuine factual dispute, summary judgment is precluded. A genuine factual dispute exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). But importantly, the party opposing summary judgment may not rest upon mere allegations and...