IP Law Daily Suit against Kentucky Downs for using track names in wagering system scratched
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Wednesday, April 20, 2016

Suit against Kentucky Downs for using track names in wagering system scratched

By Cheryl Beise, J.D.

Use of the names of well-known horse racing tracks in an electronic horse race wagering system installed at the Kentucky Downs racetrack did not constitute trademark infringement because the game’s display of rival race tracks’ names in simulated replays of historical horse races amounted to a non-trademark, descriptive use, the federal district court in Bowling Green, Kentucky, has ruled. The plaintiffs’ trademark infringement and unfair competition claims against Encore Gaming, LLC and Kentucky Downs, LLC, were dismissed (Oaklawn Jockey Club, Inc. v. Kentucky Downs, LLC, April 19 2016, Stivers, G.).

Last October, the plaintiffs—Oaklawn Jockey Club, Inc., Tampa Bay Downs, Inc., Churchill Downs Inc., New York Racing Association, Inc., and New Jersey Thoroughbred Horsemen’s Association, Inc.—filed suit against Kentucky Downs and Encore Gaming, asserting claims for trademark infringement, unfair competition, and false designation of origin under the Lanham Act, and claims for trademark infringement and unfair competition under Kentucky common law. The plaintiffs alleged that the Encore Gaming Instant Racing system, an electronic horse race wagering system, made unauthorized use of their marks. The plaintiffs sought a preliminary injunction and the defendants’ moved to dismiss for failure to state a claim.

The Encore Gaming Instant Racing system consisted of electronic game-playing terminals that offered pari-mutuel horse racing games, based on the results of previously run horse races. Pari-mutuel betting is a system in which all bets of a particular type are placed together in a pool, and payoff odds are calculated by sharing the pool among all winning bets. The Encore system displayed the plaintiffs’ marks in connection with "video replays" of historic races that were previously conducted at the plaintiffs’ racetracks.

Trademark use. All of the plaintiffs’ claims depended on showing that the defendants’ had used the plaintiffs’ trademarks in a manner likely to cause confusion among consumers regarding the origin of the goods offered by the parties. However, there can be no finding of trademark infringement where a defendant is using the challenged mark in a "non-trademark," or descriptive, sense, rather than to identify the source of goods or services.

The court determined that the plaintiffs in this case failed to plausibly establish the defendants’ use of their marks was anything but a non-trademark use. First, because the video terminal utilized by the customer was physically located at Kentucky Downs’ track in Franklin, Kentucky, "it is inconceivable that the customer may be confused regarding the site of his gambling activity," the court observed. Second, the game used the plaintiff’s marks in a purely descriptive manner, as part of textual information identifying the location of an historical race along with the date and race number. The descriptive term "Location:" preceded the name of the plaintiffs’ race courses on the screen image. "Defendants’ use of the marks is more akin to race results appearing in the sports section of the newspaper rather than any purported sponsorship or association from Plaintiffs," the court said.

The defendants also did not use the plaintiffs’ marks in any way that would suggest sponsorship or partnership, in the court’s view. No logo or stylized representation of the marks was depicted in any manner and the game’s "race" recreation was animated and did not feature any actual images of the plaintiffs’ tracks.

"Presenting the name of Plaintiffs’ tracks in plain words as the location of a race does not constitute trademark infringement," the court concluded. The court did not need to analyze the likelihood of confusion factors.

Fair use. Even if the plaintiffs had established that the defendants’ use of their marks was in fact a trademark use and was likely to cause confusion, their claim would still fail, according to the court, because the defendants were entitled to the statutory affirmative defense of fair use. To establish fair use under the Lanham Act, the defendants had to show that they used the plaintiffs’ mark: (1) in a descriptive sense, including describing geographic origin; and (2) in good faith. The Sixth Circuit has extended the fair use defense to trade names, the court noted.

The court found that the defendants used the plaintiffs’ marks in a geographically descriptive sense—i.e., as an indicator of where the depicted historical race was run. The plaintiffs suggested that the defendants did not have to state that a race occurred at "Churchill Downs," but instead could simply state the race happened in Louisville, Kentucky. However, the Sixth Circuit and other jurisdictions have rejected the notion that trademarks cannot be used descriptively simply because another phrase or word may suffice. "Defendants are protected by the fair use defense when describing where an event took place, even when the location described is most commonly conveyed using a registered trademark," the court said.

The court also found that the defendants did not use the plaintiffs’ marks in bad faith. Contrary to the plaintiffs’ assertion, mere knowledge of a plaintiff’s marks does not constitute bad faith. In addition, Kentucky’s pari-mutuel wagering regulations requires identification of historical races after a patron places a wager. Identifying the race would seem to necessitate providing the track name, date, and race number of the event, the court reasoned. Providing information mandated by regulation negated bad faith.

The plaintiffs’ claims were dismissed in their entirety.

The case is No. 1:15-cv-00118-GNS.

Attorneys: E. Kenly Ames (English, Lucas, Priest & Owsley LLP) and Jennifer E. Hoekel (Armstrong Teasdale, LLP) for Oaklawn Jockey Club, Inc., Tampa Bay Downs, Inc. and Churchill Downs Inc. Mary Elisabeth Naumann (Jackson Kelly, PLLC) for Kentucky Downs, LLC. Mark A. Thurmond (Crocker & Thurmond, Attorneys) and Spiro Bereveskos (Woodard, Ernhardt, Moriarty, Mcnett & Henry, LLP) for Encore Gaming, LLC.

Companies: Oaklawn Jockey Club, Inc.; Tampa Bay Downs, Inc.; Churchill Downs Inc.; Kentucky Downs, LLC; Encore Gaming, LLC

MainStory: TopStory Trademark KentuckyNews

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