Vail Ski Resort Loses Service Mark Case

The 10th Circuit affirmed the U.S. District Court ruling in favor of the defendants who own the vanity phone number 1-800-Ski-Vail after a bench trial by a 2-1 vote. The majority was quick to point out the weakness of the Vail Ski Resort service mark:

This service mark infringement case is about the use of a purely descriptive term, “Ski,” in conjunction with a geographically descriptive term, “Vail,” or more precisely, “Ski Vail.” Plaintiff Vail Associates (VA), owner of the Vail Ski Resort, has a registered incontestable service mark in the latter, but not the former term. . . .

[Footnote 2] VA also holds a symbol mark incorporating the name “Vail.” PTO, Reg. No. 848,623 (May 7, 1963). Importantly, that stylized logo, often used in combination with the “Vail” mark, is not at issue here.

The fact that a purely descriptive mark like "Vail Ski Resort" is entitled to any legal protection at all is itself disturbing, yet under current lax legal standards at the PTO and in the courts, these kinds of registrations are routine. Indeed, a fundamental flaw of our intellectual property system is that it does too little to discourage applications for weak trademarks and servicemarks, on the one hand, and too little to discourage marginal cease and desist letters on the other.

The cease and desist letters in this particular case were going out 13 years ago, at great cost to the party who ultimately prevailed.

Also devistating to the case of Vail Associates, in the eye of the majority, was the fact that it appeared that Vail Associates had coerced a key witness, who had early refused to testify as they desired her to, into changing her story. Vail Associates did so by cutting off business with her travel agency until she agreed to change her testimony. In the eye's of the majority, this questionable conduct by Vail Associate's lawyers justified the trial judge's decision to discredit the favorable testimony given by this witness about the existence of actual confusion over the marks, while crediting other testimony harmful to Vail Associates that she provided.

Indeed, the majority took the relatively unusual step of calling out Vail Associates lawyer Mark Manley by name, essentially accusing him with the evidence from the record of obstructing justice and suborning perjury, a charge he perfunctatorially denied in testimony in the case. The evidence cited below would have been more than sufficient to disbar Manley under the ethical standards for witness coaching that prevail in Europe, but merely crossed deeply into the dark gray by American standards for witness coaching.

Because Vacation Coordination booked a substantial number of reservations with VA and earned a substantial amount of commissions from those bookings, Newton inevitably became caught in the cross-fire. Mark Manley, VA’s Associate General Counsel, delivered to Newton, for her signature, an affidavit to be used in this litigation. The relevant portions of that proposed affidavit read:

"9. . . . . When Vacation Coordination originally began answering calls to the 1-800- SKI-VAIL telephone number many callers indicated that they thought they were calling the entity that operates the Vail Resort. Individuals would inquire regarding the purchase of ski season passes, ski lift tickets, ski instruction, or in numerous cases, the person asked if they had reached Vail Resorts.

10. . . . . Since December of 2001, several callers have still indicated that they were attempting to reach Vail Resorts or were confused that they had not reached Vail Resorts."

Appellees’ Supp. App. at 4, 74 (hereinafter Supp. App.).

Newton testified that upon receipt of the affidavit, she made certain additions and deletions, including striking the phrases “many callers,” “numerous cases,” and “several callers,” to more accurately reflect her views. The deletions (stricken) and additions (italicized) Newton made to paragraphs nine and ten are as follows:

"9. . . . . Individuals would inquire regarding the purchase of ski season passes, ski lift tickets, ski instruction, on occasion, however, with no reference to any specific company. In my opinion, most people can’t necessarily identify a specific company with the purchase of their ski vacation products. They are familiar with [a] place to ski, as a place, not a company."

Supp. App. at 7, 74 [Ed. Stikeouts omitted as it doesn't format correctly on blogger the way it does on pdf].

Newton subsequently told Manley to leave her alone and never delivered her changes to him. App. at 640.

Troubled by Newton’s unwillingness to cooperate, VA ceased doing business with Vacation Coordination. To restore her travel agency’s business relationship with VA, Newton promptly signed a revised affidavit:

"9. . . . . When Vacation Coordination originally began answering calls to the 1-800--SKI-VAIL telephone number some callers indicated that they were calling Vail Mountain or Vail the place to ski. Some individuals would inquire regarding the purchase of season ski passes, ski lift tickets, ski instruction at Vail Mountain or Vail the place to ski.

10. . . . . Since December of 2001, callers have occasionally indicated that they were attempting to reach Vail Mountain or Vail the place to ski"

Supp. App. at 74 (emphasis added).

Newton testified she “felt coerced” into signing the revised affidavit.

This is a case that was won in discovery, where these witness coachings and multiple affidavit versions came out. Vail Associates showed its colors, in its cease and desist notice and litigation approach, as a little more than a petulent bully.

Also harmful to Vail Associates is the fact that this case is one of the rare ones that go all the way to a trial that provided an opportunity for a trial judge to make findings of fact entitled to deferrence of review. Arguing that the no reasonable trier of fact could reach the trial judge's conclusion on an intimately mixed question of fact and law that affords considerable discretion to the trial judge is an inherently hard argument to make on appeal.

Certainly it is hard to argue that a case that splits a panel on the Court of Appeals is a frivilous one. This is the frustrating aspect of the current state of the law. Cases like this that should be dismissed out of hand, come down to the wire. But, this time, the 10th Circuit did get it right.