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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 21-cv-02163-KLM
DARKOWL, LLC,
Plaintiff,
v.
ARKOWL LLC,
Defendant.
______________________________________________________________________
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER
______________________________________________________________________
This matter came before the court on a bench trial on June 26, 2017 and June 27,
2023. The Court, having considered and reviewed the evidence presented at trial,
including the witnesses and exhibits, the trial transcripts [#92, #93], the parties’ Proposed
Findings of Fact and Conclusions of Law [#94, #95], the entire file, and the applicable
law, and being fully advised in the premises, hereby issues ifs Findings of Fact,
Conclusions of Law, and Order.
I. Findings of Fact
A.
Background
1.
DarkOwl commenced this declaratory judgment action on August 10, 2021.
Compl. [#2]. DarkOwl requests declarations (1) that its DARKOWL marks, Nos.
5525738 and 5793807, depicted below, do not infringe ArkOwl’s marks. See id.
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2.
ArkOwl, LLC (“ArkOwl”) asserts a counterclaim that DarkOwl, LLC’s brand
name and design mark are likely to cause confusion as to the affiliation, sponsorship, or
origin of the two companies, thus infringing on ArkOwl’s trademark rights. See Pretrial
Order [#89] at 5; Answer and Counterclaims [#17]. ArkOwl thus asserts that it adopted
the ArkOwl word mark and the following design marks.
Answer and Counterclaims [#17] ¶ 8. ArkOwl further asserts that it continuously and
exclusively offered its services under the design marks identified above since its formation
in 2012. Id. ¶ 9. ArkOwl seeks a permanent injunction to enforce the ArkOwl word mark
and the above design marks pursuant to the Lanham Act (Count I), and cancellation of
DarkOwl’s two federal trademark registrations (Count III) to remedy the trademark
infringement. Id. at 14-15); Final Pretrial Order [#78] at 5.1
3.
ArkOwl also has a registered mark, shown below
. This mark was not registered until 2020, after
DarkOwl’s marks. ArkOwl does not seek to enforce that design mark. See Counterclaims
[#17] at 14-15.
1 Counts II and IV of ArkOwl‘s Counterclaims [#17] , asserting cybersquatting in violation
of 15 U.S.C. §1125(D) and a violation of the Colorado Deceptive Trade Practices Act, were
previously dismissed with prejudice by a Stipulated Motion [#48]. See Minute Order [#50].
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B.
ArkOwl
4.
ArkOwl is a Minnesota limited liability company formed in 2012. Stipulated
Facts [#96], NO. 1. ArkOwl first adopted the ArkOwl word mark at least as early as 2012,
and the Court finds from the evidence that ArkOwl has continually used the word mark in
connection with its goods and services since 2012, operating as ArkOwl, LLC via the
website www.arkowl.com. See, e.g., Trial Transcript (“Tr. Trans.”) [#92] at 31:9-23,
155:2-4.
5.
Robert Daline is the Chief Executive Office and co-founder of ArkOwl.
Hearing Transcript (“Hr’g Trans.”) [#71] 22:2-7.
6.
ArkOwl does not maintain a physical office presence. All relevant
transactions and nearly all interactions between ArkOwl and its customers are virtual. Tr.
Trans. [#92] 38:2-18.
7.
ArkOwl was able to determine the location of its users using Google
Analytics, which tracks IP addresses. Through that tool, ArkOwl established that
individuals in each state used ArkOwl’s service prior to DarkOwl’s adoption of its mark in
September 2017, and before DarkOwl’s trademark registrations in 2018 and 2019.
Compare Trial Exhibits (“Tr. Ex.” or “Tr. Exs.”) 327, 423 with Tr. Exs. 131, 132. Mr. Daline
further testified that one or more of its corporate clients showed IP addresses originating
from Colorado, where DarkOwl is headquartered, prior to 2017. Tr. Trans. [#92] 43:23-
25.
ArkOwl’s Name and Trademarks
8.
When Mr. Daline named the company ArkOwl, the “Ark” portion of the name
was meant to show that the company put God first and to reference the biblical “Ark of
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the Covenant.” Tr. Trans. [#92] 29:24-30:7, 124:4-8. The “Owl” portion of the name is in
reference to an owl as a predator that can see in the darkness or at night, or “catching
something without necessarily seeing it[,”] which Mr. Daline testified worked well with the
idea of catching criminals or identifying legitimate customer identities. Id. at 29:18-23,
108:5-12. Mr. Daline also testified that his co-founder of ArkOwl wanted the name of the
company to be eight characters or less to fit into a dot.com, and for it to be a soundable
domain, i.e., “something that somebody could sound when talking about the website and
say, go to this website dot-com, and it's just really simple to say that.” Id. at 29:8-13.
9.
Mr. Daline testified that the “Owl” portion of the ARKOWL mark is
suggestive of the type of services that ArkOwl provides in terms of what ArkOwl’s data is
used for, i.e., to stop and prevent fraud. Tr. Trans. [#92] 108:5-23.
10.
ArkOwl did not seek to register its trademark until roughly seven years after
it adopted the mark. Tr. Trans. [#92] 109:5-12.
11.
Thus, on September 22, 2019, ArkOwl filed Application Serial No. 88626162
for the ARKOWL word mark with the USPTO, claiming first use in commerce as early as
October 11, 2012. See Tr. Ex. 28. ArkOwl obtained its federal registration for its word
mark on April 21, 2020. Id.
12.
ArkOwl classified its services in its federal trademark registration as
“Software as a service (SAAS) services, namely, hosting software for use by others for
use in verifying the credibility of data provided by e-commerce customers in an online
order.” See Tr. Exs. 28 and 29.
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13.
The USPTO reviewed the application and did not reject it based on any
prior third-party filings, including DarkOwl’s prior registrations. Tr. Trans. [#92] 123:18-
124:3.
14.
No third parties opposed ArkOwl’s Application Serial No. 88626162.
ArkOwl’s application was registered under Reg. No. 6036746 on April 21, 2020, and
covered the following services: “Computer and Software services and Scientific Services
being Software as a service (SAAS) services, namely, hosting software for use by others
for use in verifying the credibility of data provided by e-commerce customers in an online
order” in Class 42. See Tr. Ex. 28.
15.
Before 2019, ArkOwl used marks which Mr. Daline referred to as the angry-
owl marks:
Tr. Tran. [#92] 111:25-112:17. There is no evidence of registration of these marks;
however, ArkOwl presented evidence that these marks were used from the
commencement of the company until 2019, when it replaced the angry owl marks with a
new mark. Id. 31:6-32:11, 34:8-20, 100:23-101:8, 111:15-17, Tr. Ex. 303.
16.
Mr. Daline referred to the mark adopted by ArkOwl in 2019 as the soaring
mark, shown below. This mark is still being used today. Tr. Trans. [#92] 100:23-108:8,
111:15-17. On January 29, 2020, ArkOwl filed Application Serial No. 88777943 for the
soaring owl design mark:
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. See Tr. Ex. 29.
17
The USPTO reviewed the application and did not reject it based on any prior
third-party filings, including DarkOwl’s prior registrations. Tr. Trans. 123:18-124:3.
18.
No third parties opposed Application Serial No. 88777943. The application
was registered under Reg. No. 6285973 on March 9, 2021, as to the following services:
“Software as a service (SAAS) services, namely, hosting software for use by others for
use in verifying the credibility of data provided by e-commerce customers in an online
order. . . .” See Tr. Ex. 29.
ArkOwl’s Services
19.
ArkOwl’s business developed out of Mr. Daline’s experience as a fraud
prevention analyst with retail businesses. Hr’g. Trans. [#71] 2879-16.
20.
ArkOwl is fairly characterized as an identity and verification service provider,
and its main focus is Personally Identifiable Information (“PII”) verification and validation.
Hr’g. Trans. [#71] 22:10-15. ArkOwl helps its customers verify PII, including email
addresses, phone numbers, IP addresses, physical addresses, and personal name
matches. Id. 22:21-23:8. More generally, ArkOwl is in the cybersecurity industry. Tr.
Trans. [#92] 105:23-25.
21.
ArkOwl provides a platform that allows its users to input PII for individuals.
See, e.g., Tr. Trans. [#92] 24:23-25, 143:12-24, 145:19-25. ArkOwl’s users can interact
with its services via a user interface (UI), requiring a person to manually enter data. Id.
ArkOwl’s data output is used by customers to verify whether there is a fraud threat
connected to those individuals or entities. Tr. Trans. [#92] 99:25-100:1.
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22.
ArkOwl has access to real-time surface web and other datasets and
provides its customers over 80 data points designed to validate and verify identities.
Those data points include such things as email age, creation date, social media
information, webmail providers, domain name information, and “breach data” from a
company named “Have I Been Pwnded?” Tr. Trans. [#92] 143:4-145:18. ArkOwl’s
offerings as to its data have expanded since 2012. It now offers phone number, IP, and
postal data, and added an API, additional social checks, as well as breach data. Id. [#92]
142:23-143.11, 59:20-22; 47:24. 2
23.
Mr. Daline testified that he considers ArkOwl to be providing services in the
“payments” sector. Tr. Trans. [#92] 105:20-25.
24.
ArkOwl does not, and has never, accessed the dark web directly and does
not directly provide dark web data or services to its customers. Hr’g. Trans. [#71] 37:19-
38:18. ArkOwl does provide breach data from Have I Been Pwnded?, which will say
where the data was found, including the dark web. Id. Mr. Daline acknowledged,
however, that breach data and dark web data are not the same. Id. at 37:19-24.
25.
ArkOwl does not search the dark web, and ArkOwl’s marketing materials do
not promote any dark web specific services, other than the breach data from I Have Been
Pwnded?. Hr’g Trans. [#71] 37:19-21, 40:18-20.
26.
ArkOwl provides only raw data in connection with, for example, stopping the
threat of a fraudulent purchase online, and does not provide any analytical services or
2 An API (“Application Programming Interface”) allows ArkOwl’s data to be accessed by
other software (Trial Transcript [#92] 47:25-48:3), and is “machine-to-machine interrogation.” Tr.
Trans. [#93] 194:6-11.
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anything beyond the data if a fraud is discovered. Hr’g. Trans. [#71] 75:2-10. ArkOwl
also does not provide passwords as part of its data outputs. Tr. Trans. [#92[ 46:12:14.
27.
Other than ArkOwl’s archived database reflecting users’ search queries,
ArkOwl’s data is provided in real time. Tr. Trans. [#92]137:23-142:16.
28.
Mr. Daline testified that in addition to retailers, ArkOwl has banks,
cybersecurity customers, and law enforcement as customers. Tr. Trans. [#92] 30:6-15.
By 2022, more than 85% of ArkOwl’s revenue came from companies that were not retail
companies, including fraud prevention platforms. See Tr Ex. 385, tab Rev.; Hr’g Trans.
[#71] 51:12-14, 58:59:19. The fraud prevention platforms serve more than just retail
companies verifying online transactions. For example, Mr. Daline testified that Accertify
serves both retailers and banks. Hr’g Trans. [#71] 59:5-8. NICE Actimize serves banks
and tech companies. Id. 59:12-15. Nonetheless, Mr. Daline testified that he is not aware
of any customers in the United States using ArkOwl’s data for anything other than
supporting online purchase transactions. Hr’g Trans. [#71] 33:18-21; 71:10:21.3
29.
ArkOwl has a price-per-query pricing model, starting with 2,500 queries for
$99.00 a month. 50,000 queries costs $899.00 a month. ArkOwl also has a subscription
based pricing model based on month-to-month usage. Most of ArkOwl’s revenue comes
from the offer of 200,000 queries a month for $3,100. Tr. Trans. [#92] 131:1-132:17; see
also Tr. Exs. 30, 77.
3 The only exception to this are ArkOwl’s law enforcement customers outside of the United
States, who Mr. Daline testified are using ArkOwl’s data to find sex traffickers. This case,
however, concerns only alleged infringement in the United States.
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ArkOwl’s Customers
30.
ArkOwl’s customers are often fraud solution providers, and the users of the
services are fraud analysts who have experience in fraud detection as to online sales
transactions. Tr. Trans. 133:13-134:11.
31.
ArkOwl’s customers tend to have higher education degrees and are
discerning, and ArkOwl’s users are also discerning. Tr. Trans. [#92] 134:12-135:9.
32.
As of August 2017, nearly 90,000 unique users had interacted with ArkOwl’s
service and were exposed to ArkOwl’s mark. See Tr. Ex. 423, p. 3. By 2022, ArkOwl’s
users engaged in more than 20,000 manual review searches each day. See Tr. Ex. 424,
tab “arkowl-useage-stats-all” at line v3.
ArkOwl’s Marketing Strategies
33.
ArkOwl markets its services through its publicly available website,
www.arkowl.com, which prominently features the statement “Verify Email addresses and
Phone Numbers in Real-Time” at the top of the home page. See Tr. Ex. 56.
34.
ArkOwl has participated in the Merchant Risk Council as a member and has
attended its trade show conferences. It has not attended other trade shows. The
Merchant Risk Council brings together fraud and payment professionals as well as
solution providers. Tr. Trans. [#92] 127:22-128:15, 33:5-11. ArkOwl has also given a
handful of other presentations to industry groups. See id. 62:23-64:4; Tr. Exs. 331, 353,
and 354).
35.
ArkOwl relies primarily on word-of-mouth advertising. Tr. Trans. [#92] 62:4-
10, 82:11-12, 126:18-21. Mr. Daline testified that ArkOwl’s “goal is to have companies
using us, talking about how amazing ArkOwl is to other companies.” Id. 72:7-10. ArkOwl
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presented evidence that it has been successful in acquiring customers around the world
through these referrals. See, e.g. Tr. Ex. 314 (Frys.com finding ArkOwl via referral); Tr.
Ex. 316 (RailEurope.com finding ArkOwl through referral from CyberSource); Tr. Ex. 317
(Staples.com finding ArkOwl from a Merchant Risk Council meeting); Tr. Ex. 322
(Sephora finding ArkOwl through referral).
36.
Third-party
publications,
such
as
Tech
News,
Bloomberg,
and
Benzinga.com, have written about ArkOwl. Tr. Exs. 337, 338, 339, 340, 341, 343, 349.
Individuals have listed “ArkOwl” as a software tool when identifying their skills on
LinkedIn.com. Tr. Exs. 355-374. An industry organization promoted ArkOwl to its
members. Tr. Ex. 304. ArkOwl’s service is listed as an acronym in CyberSource/Visa’s
manual review desk. Tr. Ex. 334.
37.
Over the last three years, ArkOwl has spent limited amounts annually on
advertising ($10,000-$15,000), with the majority of that going toward attendance at the
Merchant Risk Council trade show. Tr. Trans. [#92] 129:5-16, 82:8:14.
ArkOwl’s Discovery of DarkOwl
38.
ArkOwl first learned of DarkOwl in 2019, and Mr. Daline did not believe at
that time that DarkOwl was a competitor or in the same industry as ArkOwl. Hr’g Tran.
[#71] at 64:14-65:6.
39.
ArkOwl did not contact DarkOwl regarding its trademarks until April 2021,
when it sent a cease and desist letter through counsel. See Hr’g. Trans. [#71] 64:14-17,
99:18-20.
40.
ArkOwl is not aware of any instances where ArkOwl has lost business to
DarkOwl. Hr’g Trans. [#71] at 43:6-8. ArkOwl is also not aware of any instance where
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customers were using DarkOwl’s services for any kind of PII verification, or any customer
deciding between ArkOwl and the services of a dark web provider. Id. 43:20-44:11.
Further, ArkOwl is not aware of any instance where a customer was trying to decide
between DarkOwl’s and ArkOwl’s services. Id., 44:8-11.
41.
Mr. Daline has never run into DarkOwl at any industry events ArkOwl
attended. Tr. Trans. [#92] 128:13-19.
C.
DarkOwl
42.
DarkOwl, LLC is a Colorado limited liability company formed in 2015.
Stipulated Facts [#96], No. 2.
43.
Mark Turnage is the Chief Executive Officer and co-founder of DarkOwl.
Stipulated Facts [#96], No. 8.
44.
Russell Cohen is the President and Chief Financial Officer and co-founder
of DarkOwl. Stipulated Facts [#96], No. 9.
DarkOwl’s Trademarks
45.
In 2017, DarkOwl adopted the DARKOWL trademark and changed its
company name to DarkOwl. Stipulated Facts [#96], No. 10.
46.
On March 24, 2017, DarkOwl filed U.S. Trademark Application Serial No.
87384235 with the U.S. Patent and Trademark Office (“USPTO”) for the
mark. Stipulated Facts [#96] No. 11.
47.
The USPTO reviewed the application and did not find a likelihood of
confusion with any prior third-party filings. Stipulated Facts [#96], No. 12.
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48.
No third parties opposed Application Serial No. 87384235. DarkOwl’s
Application was registered under Reg. No. 5525738 on July 24, 2018 for the following
services:
Providing a database featuring information about internet security and
computer security from the deep web and the darknet; computer security
consultancy regarding data and information collected and obtained from the
deep web and the darknet; software as a service (SaaS) services featuring
software for retrieving from, adding to, and editing a database featuring
information and data obtained from the deep web and the darknet; computer
software consulting services in the field of cybersecurity utilizing deepweb
and darknet information; electronic monitoring of information and data
obtained from the deep web and the darknet for the purpose of internet and
computer security by detecting compromised data; computer information
security consulting services in the field of maintaining the security and
integrity of computer information and data using information and data
obtained from the deep web and the darknet; providing computer and
internet security analysis of information obtained from the deep web and the
darknet; providing cybersecurity threat analysis for protecting data using
information obtained from the deep web and the darknet; cybersecurity
services, namely, monitoring of computer systems for data security
purposes utilizing deep web and darknet information. . . .”
Stipulated Facts [#96], No. 13.
49.
DarkOwl filed U.S. Trademark Application Serial No. 88216005 with the
USPTO on December 4, 2018 for the
mark .
Stipulated Facts [#96], No. 14. This is DarkOwl’s main design or logo that it uses for
the company. Tr. Tran. [#93] 236:7-12; see also Tr. Ex. 132.
50.
The USPTO reviewed the application and did not find a likelihood of
confusion with any prior third-party filings. Stipulated Facts [#96], No. 15.
51.
No third parties opposed Application Serial No. 88216005, and the
application was registered under Reg. No. 5793807 on July 2, 2019 for DarkOwl’s
Registered Services. Stipulated Facts [#93], No. 16.
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52.
According to Mr. Turnage, the DARKOWL mark is intended to convey to
customers an insight into what the company does. Tr. Trans. 237:9-16. “Dark” is meant
to reference DarkOwl’s darknet services, and “Owl” refers to DarkOwl’s ability to “see
into the darknet.” Id. at 237:11-12. The word “Owl” also harkens back to DarkOwl’s
founders’ purchase in 2016 of a company out of bankruptcy called One World Labs,
which went by the monikor “OWL”. Both the words/terms “One World Labs” and “OWL”
were part of the purchase. Id. at 234:8-14, 237:12-14. The figurative Owl that forms the
O in the DarkOwl mark was designed by someone at the company that was purchased
in 2016, and was part of the bankruptcy estate. Id. 234:5:19.
53. The word “dark” was DarkOwl’s major focus in adopting the DARKOWL mark.
Tr. Trans. [#93] 237:15-16. Mr. Turnage testified that there was no aspect of the
DARKOWL mark that was intended to reference the word or concept “Ark.” Id. at 237:7-
9.
54.
At the time DarkOwl adopted its DARKOWL mark, it was aware that “owl”
was commonly used in the cyber industry. Tr. Trans. [#93] 234:23-235:5. DarkOwl did a
trademark search with its attorneys and came across many companies in the
cybersecurity industry that were using the “owl” term, including in marks like REDOWL
and OWL CYBER DEFENSE. Tr. Trans. [#93] 235:2-5.
DarkOwl’s Services
55.
DarkOwl has been providing dark web data since the company began in
2015.. Tr. Trans. [#92] 181:21:24. DarkOwl focused its business at the outset on
providing dark web data to its customers, and it has stayed committed to that focus ever
since. Id. 181:21-182:9.
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56.
DarkOwl’s business model is to provide the largest database of dark web
data in the world. Tr. Trans. [#92] 181:21-182:10.
57.
DarkOwl monitors the dark web for emerging threats and has built a
platform for its customers to access this dark web data. Hr’g. Trans. [#71] 77:14-18; Tr.
Trans. [#93] 239:3-11.
58.
DarkOwl tries to create a mirror image of what is going on in the dark net to
provide its customers with that information outside of the dark net. Tr. Trans. [#93] 239:3-
11.
59.
DarkOwl offers a large available database of information continuously
collected from the dark web, which data can be indexed and made available to its clients.
Tr. Trans. [#93] 239:3-11. The data DarkOwl collects include such things as email
addresses, IP addresses, cryptocurrency, and credit cards. See Tr. Ex. 2, p. 14. This
database is a feed available as an API to customers who want that specific type of data,
and was created so that its customers could minimize the noise involved in a broader
search so they could get the relevant information they are looking for. Tr. Trans. [#93]
193:12-195:2.
60.
Thus, like ArkOwl, DarkOwl is a data company, with software as a service
(“SAS”). Hr’g Trans. [#71] at 107:23. DarkOwl’s products allow its customers to search
the database that DarkOwl has collected. Id. 108:2-6. Its products can be accessed by
user interface (“UI”) or by API, as with ArkOwl. Tr. Trans. [#93] 200:21-201:3; Tr. Ex. 2,
p. 16.
61.
DarkOwl’s business consists primarily of: (1) threat intelligence services
that look for emerging threats to organizations; (2) assessment of third-party risk, which
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is the risk assessment of vendors or contractors of large companies; (3) supplying data
to cyber-insured tech companies for risk assessment related to underwriting; (4) digital
identity protection and the assessment of whether the digital identity is risk-related; (5)
fraud protection for cybersecurity companies that service financial institutions, primarily
related to bank account or other financial information that is bought and sold on the dark
web; (6) services to intelligence agencies or governments related to threats on the dark
web to critical infrastructure (e.g., power plants, water treatment plants); (7) services
related to threats to national security in the dark web; and (8) monitoring the use of
cryptocurrency in the dark web. Hr’g. Trans. [#71] 83:12-96:20. In other words, DarkOwl
has seven use cases for its services, consisting of threat intelligence, third-party risk,
cybersecurity underwriting, digital ID protection, fraud protection, critical infrastructure,
and national security. Tr. Trans. [#93] 239:12-19; see Tr. Exs 83, 91-97.
62.
As to fraud protection, DarkOwl guards against types of fraud that emerge
on the darknet. Tr. Trans. [#93] 256:7-10. DarkOwl does not have any customers in the
payment space. Id. 256:20-22.
63.
DarkOwl anticipates that its use cases will continue to evolve, as it is trying
to describe who could use DarkOwl’s data in different ways. DarkOwl’s enterprise
customers have used DarkOwl’s data for many purposes, and in new ways not anticipated
by DarkOwl. Tr. Tran. [#92] 166:8-17, 168:19-169:7.
64.
The nature of the data DarkOwl provides is highly sensitive and complex.
Hr’g. Trans. [#71] 97:22-98-11; Tr. Trans. [#93] 259:2-6.
65.
Mr. Turnage testified that DarkOwl’s business has no relation to ArkOwl’s
services, namely, approving a commercial transaction in real time or providing PII. Hr’g.
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Trans. [#71] 85:18-20, 87:5-11, 89:23-90:21, 91:7-95:21; see also Tr. Trans. [#93] 238:9-
11, 245:22-25 (Mr. Turnage testifying that he was not aware of any instance in which
somebody expressed interest in purchasing PII (email, phone, or IP) verification services
from DarkOwl). While DarkOwl scrapes and indexes a voluminous amount of websites
every day, and some of this is scraped in real-time (Trial Transcript [#93] 195:5-25), Mr.
Turnage explained that DarkOwl cannot give data as to use cases such as digital identity
protection (which involves PII data and 8 billion email addresses) in real time. Hr’g Trans.
[#71] at 89:17-91:10.
66.
DarkOwl’s customers do not, and have not, requested or suggested that
they intend to use DarkOwl’s services in connection with PII verification. Hr’g. Trans.
[#71] 100:21-24, 101:6-8; see also Tr. Trans. [#93] 245:22-25.
67.
Mr. Turnage further testified that DarkOwl’s platform and dark web database
are not set up to provide PII verification services. Hr’g. Tran. [#71] 91:7-10, 92:20-224,
100:102-18. Moreover, Mr. Turnage testified that not a single data point about which Mr.
Daline of ArkOwl testified is supplied by DarkOwl; DarkOwl does not have that information
and does not supply it. Tr. Trans. [#93] 246:16-247:16. According to Mr. Turnage, a
search on Google, for example, would return information about an email address input
and would likely contain more information about an email address than DarkOwl
possesses. Id. 244:14-17.
68.
The term “PII” is a commonly used “umbrella” term in the cybersecurity
industry, and the term would be commonly seen on any number of cybersecurity
websites. Tr. Trans. [#93] 242:7-15.
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69.
PII verification services is not a growth area for DarkOwl. Mr. Turnage
testified that it is a commoditized industry, and that the price point for DarkOwl’s platform
would make it uncompetitive in that area. Tr. Trans. [#93] 246:1-7.
70.
DarkOwl’s digital identity protection use case involves monitoring the
darknet for the existence of PII. Tr. Trans. [#93] 242:20-244:13. While, for example,
customers can search an email address on the darknet through DarkOwl, they would not
get an indication as to whether the address resides on the darknet. Mr. Turnage testified
that DarkOwl’s customers are not interested in the presence or absence of an email on
the darknet; instead, they are interested in knowing what is around that email address,
e.g., is there a password associated with it, or is it personal information such as that of
an FBI agent. Id.
71.
DarkOwl does not provide as part of its services the following data outputs:
(i) social media accounts associated with specific email addresses or phone numbers, (ii)
“Who is” information associated with specific email addresses or phone numbers, (iii)
caller ID information associated with specific phone numbers, (iv) carrier information
associated with specific phone numbers, (iv) the date of creation of an email address, or
(v) data reflecting customer search queries. Tr. Trans. [#93] 244:18-245:21.
72.
DarkOwl’s largest growth sector is in services provided to government
customers, including intelligence agencies. Tr. Trans. [#93] 204:2-10, 246:8-15.
DarkOwl’s Customers
73.
DarkOwl’s customers are typically very sophisticated cybersecurity
professionals who are dealing with cyber risks to their companies or organizations. Hr’g.
Trans. [#71] 97:1-12.
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74.
DarkOwl’s market strategy prior to 2017 was to sell to banks, retail
companies, healthcare companies, tech companies, and other companies that had
potential exposure in the dark net. Tr. Trans. [#93] 203:3-6. In 2017, when a
cybersecurity company approached DarkOwl, it pivoted its marketing strategy to focus on
the cybersecurity industry as its primary customer base. Id. at 203:16-204:10. DarkOwl
is still selling to cybersecurity companies, id., and more specifically to either cybersecurity
platforms or data platforms. Tr. Trans. [#92] 173-16. However, about 40-45% of
DarkOwl’s customers are now government intelligence agencies or cybersecurity
companies whose customers are governments. Tr. Trans. [#93] 203:16-204:10, 210:9-
21.
75.
DarkOwl's most profitable market is large, sophisticated companies with
large budgets. DarkOwl's broadest market, however, is small and medium-sized
businesses. Tr. Trans. [#92] 10-20. While Mr. Turnage testified that DarkOwl’s market
is small and focused (Hearing Transcript [#71] 131:8-12), Mr. Cohen testified that its
market is large (in the thousands) and could be categorized as large companies that are
willing to spend $100,000 for darknet information to help protect themselves. Tr. Trans.
[#92] 171:24-173:4.
76.
Because of the complexity of DarkOwl’s data, its customers must
necessarily be sophisticated to understand and utilize DarkOwl’s offerings. Hr’g. Trans.
[#71] 97:1-21, 98:7-99:17; see also Tr. Trans. [#93] 203:16-24, 210:9-18.
77.
DarkOwl can monitor how its customers use its data to a certain extent
through a user interface to see whether they are abusing the end-user licensing
agreement (“EULA”) that each customer must sign. Tr. Trans. [#93] 200:14-23.
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DarkOwl’s customers’ use of DarkOwl’s services are thus restricted by the EULA. Id.
201:10-18. Further, while DarkOwl can monitor the volume of searches and which API
end point a customer is using the search for, it does not have the capability of monitoring
what specific searches are run through the API. Id. at 200:24-201:3.
78.
Given the sensitive nature of DarkOwl’s data offerings, DarkOwl conducts
an extensive vetting process for its customers, which includes in-person meetings with
high-level executives and decision-makers, multiple conversations with potential
customers, and entering into comprehensive legal agreements that prevent the misuse
of any data provided. Hr’g. Trans. [#71] 98:19-99:17; Tr. Trans. [#93] 200:14-20, 257:17-
260:9.
79.
The vetting process takes, on average, 90 to 180 days, and in some cases,
can take longer. Tr. Trans. [#93] 259:20-22, 261:1-5
80.
DarkOwl frequently turns away potential customers because of something
that happens during the vetting process. Tr. Trans. [#93] 260:7-9; see also Hr’g. Trans.
[#71] 99:3-17.
81.
The entry point for DarkOwl’s services starts at about $30,000 and goes up
to about $500,000 a year. The average cost of DarkOwl’s dark web data services is about
$55,000-$60,000 per year. Tr. Trans. [#93] 247:11-12, 260:10-25, 263:7-11.
82.
Accordingly, the purchasing decision-maker at DarkOwl’s customers is
generally from the “C Suite” of a company – the chief executive officer, chief financial
officer, chief technology or information security officer – or high-ranking officials at
national intelligence agencies. Hr’g. Trans. [#71] 97:22-98:6; Tr. Trans. [#93] 257:17-
258:10.
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DarkOwl’s Marketing Strategies
83.
Given the sophisticated nature of DarkOwl’s services and customers,
DarkOwl primarily engages in direct, outbound marketing to a focused group of target
customers. Hr’g. Trans. [#71] 130:12-18; Tr. Trans. [#93] 247:21-24. DarkOwl was,
however, engaging in both inbound and outbound marketing, switched primarily to
inbound in 2021 (meaning that it focused its sales efforts on posting content and driving
people to DarkOwl’s website), and then switched to the outbound method in February
2023 when the inbound method wasn’t working. Hr’g Trans. [#71] 130:112-
84.
DarkOwl also markets its services through its publicly available website,
www.darkowl.com. Stipulated Facts [#96], No. 17.
85.
DarkOwl’s primary marketing focus is through industry trade shows. Tr.
Trans. [#93] 248:13-22; see also 212:16-21.
86.
DarkOwl attends specific trade shows and conferences for its niche area of
the cybersecurity industry, including Black Hat, Milipol Paris, Global Security Exchange,
DoDIIS, GISEC, WICYS, RSA, OSMOSIS Con, and ISS World Asia. Tr. Trans. [#93]
248:23-253:9; see also Tr. Ex. 82. DarkOwl’s CEO was also asked to present on the use
of cryptocurrency in the darknet at the 2023 G20 conference in New Delhi. Id. 252:22-
253:9.
87.
DarkOwl spends over a million dollars a year on marketing, with the majority
of that going toward industry trade shows. Tr. Trans. [#93] 256:23-257:8.
88.
DarkOwl, through its head of marketing with approval from Mr. Turnage,
hired and used a third-party marketing company, Cience, for about 14 months or so
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beginning in around 2020 to send blast emails (the outbound marketing discussed
previously). Hr’g Trans. [#71] 103:14-20; Tr. Trans. [#93] 212:22-214:3, 215:16-19.
Cience sent out thousands of emails on DarkOwl’s behalf in an attempt to broker meetings
between potential customers and DarkOwl’s sales team. Tr. Trans. [#93] 214:16-215:8.
The emails Cience sent were set up as @bd.darkowl.com, so that the outside world would
believe the solicitations came from DarkOwl. Id. at 214:4-11. DarkOwl gave Cience
broad general messaging information, which Cience would sometimes change. Id.
215:12-15.
89.
DarkOwl did not monitor where the emails were sent or approve the list of
businesses that Cience sent mails to. Mr. Turnage testified, however, that Cience was
hired to do targeted outbound marketing to specific sectors within the cybersecurity
industry. Tr. Trans. [#93] at 216:13. Mr. Turnage further testified that it became obvious
over time that Cience was casting a net that was far too broad, beyond the specific
information DarkOwl had provided about the types of companies for which DarkOwl had
established use cases. Tr. Trans. [#93] 216:5-16; Hr’g Trans. [#71] at 103:21-24.
Instead, the email blasts did not generate business for DarkOwl (at most one or two
clients), so DarkOwl terminated Cience’s services. Hr’g. Trans. 105:17-19, 215:20-22.
90.
ArkOwl learned that one of its prominent clients, Apruvd, received an email
blast from DarkOwl (through Cience). Apruvd emailed ArkOwl asking if the email from
DarkOwl was in relation to a project from ArkOwl. Tr. Trans. [#92] 90:22-91:10; see Tr.
Ex. 380. Specifically, the email (from Corwin Cole of Apruvd to Mr. Daline of ArkOwl)
stated, “Just wanted to give you a heads-up, though you are probably already aware, that
DarkOwl exists and seems to be a pretty blatant ripoff of your style and name. We have
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received standard sales cycle emails from them, and they seem like a real company, at
least. Any chance it's another project from you guys?" Tr. Ex. 380. ArkOwl also later
discovered that DarkOwl, via CIENCE, solicited another of its clients, Signifyd. See Tr.
Ex. 387.
91.
Cience thus sent an email to Apruvd and Signified, which are clients of
ArkOwl. Tr. Trans. [#93] 216:25-218:3; Hr’g Trans. [#71] 104:14-105:12. Mr. Turnage
testified that he did not know enough about either of these companies to know if they
would be targeted customers of DarkOwl, Hr’g Trans. [#71] 105:7-12, or if they would
have been approved or rejected as customers if they had wanted to meet with DarkOwl.
Tr. Trans. [#93] 217:8-215
92.
DarkOwl hired an Executive Vice President of Sales, Mr. Williamson, in
March or April of 2021. Tr. Trans. [#93] 210:25-211-10. Mr. Williamson had experience
in sales. Id. 223:10-12. Mr. Williamson wanted to change DarkOwl’s strategy from
outbound to largely inbound marketing. Id. 220:19-22. He remained in the position until
approximately February of 2023. Id. at 220:2-11.
93.
Mr. Williamson felt that there was a broader universe of potential customers
for DarkOwl beyond those that DarkOwl was reaching out to. Tr. Trans. [#93] 221:4-6.
Mr. Williamson created a marketing document entitled “Strategic Positioning Kickoff”
(Trial Exhibit 4) dated July of 2021. Tr. Trans. [#93] 223:4-14. This included a list of
potential customers Mr. Williamson believed DarkOwl should be marketing to by use
case. Id. 224:2-17. According to Mr. Turnage, the list created by Mr. Williamson was a
point of contention because he missed DarkOwl’s largest market – cybersecurity service
providers and law enforcement. Id. 224:6-225:10. Mr. Williamson’s recommendation was
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to move primarily to five other use cases (cyber insurtech underwriting, third-party risk
management, digital identity protection, fraud detection and darknet qualification, and
threat intelligence feeds), which recommendation was ultimately rejected by DarkOwl. Id.
225:6-10; see Tr. Ex. 4 at 16.
94.
The marketing document created by Mr. Williamson (Trial Exhibit 4)
contained a slide, called “Vertical Use Case: Targets (Addressable Market)[,]”, which
comprised target companies he believed DarkOwl could sell to. Mr. Williamson identified
as targets some existing DarkOwl customers on the list. Tr. Trans. [#93] 226:20-227:11;
Tr. Ex. 4 at 18. Mr. Turnage testified that this was another major source of contention,
because the inclusion of DarkOwl’s customers was “nonsense” and Mr. Williamson had
not done his homework in assigning these customers as targets. Tr. Trans. [#93] 226:20-
227:11.
95.
Mr. Williamson created another document (Trial Exhibit 5), although the
time frame of creation of the document is unknown. Mr. Turnage acknowledged that it
could have been created several months after Trial Exhibit 4, although he was not sure
about this. Tr. Trans. [#93] 227:15-228:25. This document was used in part to inform
DarkOwl’s website rebuild. Id. 229:7-12.
96.
Tab 5 of Trial Exhibit 5, entitled “Big Data Targets[,]” included some of
ArkOwl’s competitors and customers. The list indicated that one of DarkOwl’s sales reps
was engaged in conversations with PIPL, a competitor of ArkOwl. See id. E82. PIPL is
identified as a “PII Verification” company. See Tr. Ex. 347. 4 Other competitors of ArkOwl
on the list included IPQualityScore (Trial Exhibit 5, Tab 5, line F109), Ekata (id., line F66),
4 PIPL appears in the “PII Verification” category alongside ArkOwl in About-Fraud’s 2021
infographic. Id.
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emailage (id., line F67), SEON (id., line F157), Riskified (id. E89) and Sift (id. F160).
Many of these companies appear alongside ArkOwl in About-Fraud’s 2020 and 2021
infographics. See Tr. Exs. 346, 347. Customers or potential customers of ArkOwl on the
list included Socure (id., E101), Accertify (id. line F107), Ravelin (id., line E88), Fraugster
(id., line F98), and ID Insight (id., line E55).
97.
Mr. Turnage testified that he does not know whether DarkOwl’s
salespeople actually reached out to the companies on Mr. Williamson’s list (Hearing
Transcript [#71] 139:10:13), but admitted that some of the targets subsequently became
DarkOwl customers. Id. 137:13-19.
98. Mr. Williams’ tenure with DarkOwl, and suggested marketing strategy, was,
according to Mr. Turnage, an abject failure. Tr Trans. [#93] 222:11-20.
99.
DarkOwl has never encountered ArkOwl at any industry conference. Tr.
Trans. [#93] 253:25-254:6.
100. ArkOwl has never encountered DarkOwl at any industry conference. Tr.
Trans. [#92] 128:13-23.
101. ArkOwl has never attended the Black Hat, Milipol Paris, Global Security
Exchange, DoDIIS, GISEC, WICYS, RSA, OSMOSIS Con, and ISS World Asia
conferences that DarkOwl attends. ArkOwl has attended only one conference, the
Merchant Risk Council conference, on four separate occasions over its 11 years in
business. Tr. Trans. [#92] 127:22-128:23.
102. Mr. Daline acknowledged that he is not aware of any industry publication
that references both ArkOwl and DarkOwl. Tr. Trans. [#92] 107:19-21.
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DarkOwl’s Knowledge of ArkOwl and Intent
103. Mr. Turnage testified that DarkOwl was not aware of ArkOwl when it was
creating and adopting its DARKOWL trademark and company name. Tr. Trans. [#93]
234:20-22, 236:21-237:1. This testimony is unrefuted. See Tr. Trans. [#92] 146:19-21
(Mr. Daline’s testimony was that he is not aware of any evidence that DarkOwl had
knowledge of ArkOwl at the time it adopted the DarkOwl mark).
104. When DarkOwl adopted and registered its mark, DarkOwl did not intend to
copy ArkOwl’s marks in any way. Tr. Trans. [#93] 237:4-6.
105. DarkOwl first learned of ArkOwl when DarkOwl received ArkOwl’s April 2,
2021 letter demanding that it stop using the DARKOWL marks. Hr’g Trans. [#71] 99:18-
20; Tr. Trans. [#93] 266:14-18.
106. Prior to receiving the letter, DarkOwl had never come across ArkOwl or its
ARKOWL trademarks. Hr’g. Trans. [#71] 99:18-20, 100:21-101:5; Tr. Trans. [#93]
266:14-18.
107. To Mr. Turnage’s knowledge, no customer has ever mentioned ArkOwl or
its ARKOWL trademarks to DarkOwl. Hr’g Trans. [#71] 100:21-101:2.
D.
Additional Facts Relevant to Likelihood of Confusion
108. The cybersecurity industry is very broad and encompasses a wide variety
of businesses (between 10,000 and 14,000) with an immense diversity of services and
technologies. Not all services and technologies under the cybersecurity umbrella are
competitive or related. Hr’g Trans. [#71] 81:18-82:13; Tr. Trans. [#93] 199:21-25; 254:7-
14.
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109. “Fraud prevention” and “fraud protection” are also broad terms that can
mean very different things depending on the context. Tr. Trans. [#93] 255:10--256:6.
110. DarkOwl is not included in the compilation of companies provided by About-
Fraud.com, an organization that seeks to consult on fraud prevention matters. The
organization provides a report that compiles vendors or solution providers, and Mr. Daline
testified that a number of companies listed on the report could be deemed competitors of
ArkOwl or provide similar services. Tr. Trans. [#92] 106:7-107:18; see Trial Exs. 346,
347. ArkOwl is included in the vendor lists in that report. ArkOwl also appears in the
Paladin Vendor Report alongside 45 other companies in the fraud and payments industry.
Tr. Trans. [#92] 35:20-37:13; Ex. 305. Additionally, SEON, a competitor of ArkOwl,
published a list of ten companies offering the “best fraud detection softwares” and
included ArkOwl. Ex. 349. Many of the companies listed in these reports are ArkOwl’s
competitors, potential customers, or potential partners. See Tr. Trans. [#92] 107:1-13.
Mr. Daline testified that it is not unusual for reports to list companies that are both
competitors and potential customers. Hr’g Trans. [#71] 63:3-16. DarkOwl was not on
those lists. See Tr Exs.345, 347, 349.
111. Other companies in the cybersecurity industry (or potentially in it) include
the word “Owl” as part of their trademarks or company names, including Owl Cyber
Defense, SECUREOWL, OWLCHECK, REDOWL, STREET OWL, and OWL SCAN. Tr.
Trans. [#92] 112:22-123:1; Trial Exs. 103, 105, 106, 107, 109, 113, 115, 117, 120, 128,
130. ArkOwl does not claim exclusive rights to the word “owl.” Tr. Trans. [#92] at 123:9-
11. Third-party marks containing the term “Owl” on the Principal Register of the United
States Patent and Trademark Office (“USPTO”) for cybersecurity-related and/or fraud
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detection services include, for example, OWL CYBER DEFENSE (Reg. No. 5409019),
SECUREOWL & Owl Design (Reg. No. 5894589), OWLCHECK (Reg. No. 6442218), and
OWLPAY (Reg. No. 6903087). Tr. Exs. 103, 105, 110, 111, 113, 127, 128, 130.
112. ArkOwl did not run a trademark search to see what other owl marks may
exist on the register before filing its first trademark registration. Tr. Trans. [#92] 112:18-
21.
113
DarkOwl’s business is a small niche in the cybersecurity industry. Hr’g.
Trans. [#71] 98:12-19; Tr. Trans. [#93] 266:2-11.
114. Only a handful of other companies provide similar darknet data services as
DarkOwl and compete with DarkOwl. Hr’g Trans. [#71] 98:15-17. DarkOwl’s primary
competitors are Cybersixgill and Webbs in Israel, Searchlight Cyber based out of the
United Kingdom, and Bluestone Analytics in the United States. Id. 101:16-23.
115. None of DarkOwl’s competitors provide PII services. DarkOwl’s competitors
provide similar dark net data intelligence services to similar clients as DarkOwl. Hr’g
Trans. [#71] 101:24-102:6.
116. DarkOwl does not operate in the “payments” space. Tr. Trans. [#93]
256:20-22.
117. ArkOwl competes with other companies that provide PII verification
services, i.e, those companies that are providing inputs and outputs for email addresses.
Hr’g Trans. [#71] 41:21-42:5.
118. ArkOwl’s main competitors are Ekata, PIPL, LexisNexis, SEON, and Email
Hippo, which provide PII verification services. Hr’g Trans. [#71] 41:6-42:23.
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119. Mr. Turnage testified that he does not consider ArkOwl to be a direct
competitor of DarkOwl. Hr’g Trans. [#71] 102:6-9.5 This is because not a single DarkOwl
customer could get from ArkOwl what it gets from DarkOwl, and not a single customer of
ArkOwl could get from DarkOwl what it gets from ArkOwl. Id. [#71] 102:11-103:3 In
other words, DarkOwl and ArkOwl’s offerings cannot be substituted for each other. Id.
120. ArkOwl received a solicitation from a website vendor who suggested a
“partnership for one of our clients with your website darkowl.com.” See Tr. Ex. 25.
121. Mr. Daline also described an interaction at the Merchant Risk Council
conference with an individual who he said was with the U.S. Postal Service (“USPS”). Tr.
Trans. [#92] 92:18-21. The individual claimed to be using ArkOwl’s service 3,000-5,000
times each day. Id. Eventually, after some discussion, the individual asked “You guys
are DarkOwl, right?” Id. 93:4-11. The USPS is not an ArkOwl client, but Mr. Daline
testified that he believed it could be a prospective client. Id. On cross-examination, Mr.
Daline testified that the person was actually an employee of the United States Postal
Inspection Service (“USPIS”), that he did not know the difference between the USPS and
the USPIS, and that the USPIS is not a customer of ArkOwl. Id. 148:18-149:1. ArkOwl
does not have any documentation of this encounter. Id. 149:15-17.
II. Conclusions of Law
A.
Jurisdiction and Venue
1.
The Court has personal jurisdiction over the parties.
2.
Subject matter jurisdiction lies with this Court pursuant to 28 U.S.C. §§1331,
1332, and 1338(a) & (b) and 15 U.S.C. §§1119 and 1121.
5 While the transcript refers to “correct” competitor”, the Court construes from the context
that the question and related testimony is referring to a “direct” competitor.
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3.
Venue is appropriate in this Court under 28 U.S.C. § 1391(a), (b), and (d).
B.
Trademark Infringement Generally
4.
To prevail on its claim of trademark infringement, ArkOwl must prove (1)
ownership of a valid and protectable trademark, and (2) that DarkOwl’s use of its
trademarks is likely to cause confusion or mistake. 15 U.S.C. §§ 1114(1)(a); 1125(a).
Thus, a party claiming trademark infringement must establish it owns a mark and that the
junior user’s use of a similar mark is likely to generate consumer confusion in the
marketplace. 1-800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1238 (10th Cir.
2013).
5.
Here, ArkOwl has a valid and protectible trademark. It owns the rights to
the word mark ArkOwl, for which it has a federal trademark registration, Reg. No.
6036746. Even though ArkOwl registered its word mark after DarkOwl’s registration of
its marks, ArkOwl acquired the rights to enforce its mark as well as the ArkOwl angry owl
design marks by continuous use of the marks in commerce beginning in 2012. Hana Fin.,
Inc. v. Hana Bank, 135 S. Ct. 907, 909 (2015) (“Rights in a trademark are determined by
the date of the mark's first use in commerce. The party who first uses a mark in commerce
is said to have priority over other users.”). Those rights extend to all areas in which the
mark was first used. Okla. Bev. Co. v. Pepper Love Bottling Co., 565 F.2d 629, 633 (10th
Cir. 1977).
6.
By September 20, 2017, when DarkOwl adopted its mark, ArkOwl had
established a market presence online that effectively reached the entire the United States.
Its services are provided entirely virtually, and it had clients using its online products from
every state.
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7.
The parties acknowledge that all of the parties’ claims, including DarkOwl’s
claims for a declaratory judgment of noninfringement and the validity of DarkOwl’s marks
and ArkOwl’s infringement and cancellation counterclaims, turn on the “likelihood of
confusion” analysis. “Likelihood of confusion forms the gravamen for a trademark
infringement action.” King of the Mountain Sports, Inc. v. Chrysler Corp., 185 F.3d 1084,
1089 (10th Cir. 1999) (citing 15 U.S.C. §§ 1114(1), 1125(a)). The Supreme Court has
held that district courts should apply the same standards for likelihood of confusion in the
contexts of infringement and cancellation, stating, “[t]here is no reason to think that the
same district judge in the same case should apply two separate standards of likelihood
of confusion.” B & B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138, 154 (2015).
8.
The Tenth Circuit applies the following six non-exhaustive factors that
courts balance to determine whether there is a likelihood that consumers will be confused
by the use of a trademark: (1) the degree of similarity between the marks; (2) the strength
or weakness of the marks; (3) the intent of the alleged infringer in adopting its mark; (4)
evidence of actual confusion; (5) similarity of products and manner of marketing; and (6)
the degree of care likely to be exercised by purchasers. King of the Mountain, 185 F.3d
at 1089-90.
9.
“No one factor is dispositive, and the final determination of likelihood of
confusion must be based on consideration of all relevant factors.” Heartsprings, Inc. v.
Heartspring, Inc., 143 F.3d 550, 554 (10th Cir. 1998) (internal citation omitted).
10.
The factors are not to be applied mechanically; courts can and should
consider other facts that might be probative of the likelihood of confusion in the context
of the dispute. 1-800 Contacts, Inc., 722 F.3d at 1243-44. “[T]he weight of any given
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factor can depend very much on context,” and “when certain facts are more probative
than others . . . those facts may dominate the analysis.” Id. at 1243 (citing cases).
11.
“What is required for a claim of trademark infringement under the Lanham
Act is a likelihood of confusion, not merely the possibility of confusion.” Water Pik, Inc. v.
Med-Systems, Inc., 726 F.3d 1136, 1150-51 (10th Cir. 2013). In every case, “the key
inquiry is whether the consumer is ‘likely to be deceived or confused by the similarity of
the marks.’” Heartsprings, 143 F. 3d at 554 (quoting Two Pesos, Inc. v. Taco Cabana,
Inc., 505 U.S. 763, 780 (1992)).
12.
It is ArkOwl’s burden to show a likelihood of confusion. See, e.g., Vail
Assocs., Inc. v. Vend-Tel-Co., Ltd., 516 F.3d 853, 872 (10th Cir. 2008); Universal Money
Centers, Inc. v. Am. Tel. & Tel. Co., 22 F.3d 1527, 1530 (10th Cir. 1994) (“party alleging
infringement has the burden of proving likelihood of confusion”) Nutraceutical Corp. v.
Affordable Naturals, LLC, 2017 WL 45647 39, *5 (D. Utah October 11, 2017) (same for
party seeking trademark cancellation).
13.
Consumer confusion can arise prior to sale (in initial interest), at the point-
of-sale, or in post-sale contexts. Affliction Holdings, LLC v. Utah Vape or Smoke, LLC,
935 F.3d 1112, 1114 (10th. Cir. 2009).
14.
Initial interest confusion “results when a consumer seeks a particular
trademark holder's product and instead is lured to the product of a competitor by the
competitor's use of the same or a similar mark. 1-800 Contacts, Inc., 722 F.3d 1229,
1239 (10th Cir. 2013) (citing Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1238 (10th
Cir. 2006)). “Courts are most likely to apply the doctrine of initial interest confusion
doctrine in circumstances involving directly competing products. Epic Sys. Corp. v.
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YourCareUniverse, Inc., 244 F. Supp. 3d 878, 902 (W.D. Wis. 2017) (citing cases); see
also Bd. Of Regents of Univ. of Houston v. Houston College of Law, Inc., 214 F. Supp.
3d 573, 601 n. 157 (“[c]ourts have repeatedly found direct competition between the parties
to be particularly relevant to claims of initial interest confusion”) (citing cases). Post-sale
confusion is generally designed for cases involving knock-off products-that is, replica
goods of inferior quality. See Big Dog Motorcycles, L.L.C. v. Big Dog Holdings, Inc., 402
F. Supp. 2d 1312, 1334-35 (D. Kan. 2005).
15.
The same six factors regarding likelihood of confusion apply regardless of
the type of confusion. Cf. King of the Mountain, 185 F.3d at 1090; Australian Gold, Inc;.,
436 F.3d at 1239-40.
C.
Likelihood of Confusion Analysis
1. The Degree of Similarity Between the Marks6
16.
The degree of similarity between the marks rests on “sight, sound, and
meaning.” King of the Mountain, 185 F. 3d at 1039. As the Tenth Circuit more fully
described the analysis, courts should consider the “degree of similarity” in the marks’ “(i)
appearance; (ii) pronunciation of the words used; (iii) verbal translation of the pictures or
designs involved; (iv) suggestion.” Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d
934, 940 (10th Cir. 1983) (“Beer Nuts I”). Similarities between marks “are to be weighed
6 This factor is relevant to the word marks ArkOwl and Darkowl because the Court found
that ArkOwl owns the mark and has been using it since 2012. As to the design marks at issue,
ArkOwl asserts that DarkOwl chose a design mark nearly identical to the angry owl marks used
by ArkOwl before 2019 (Proposed Findings of Fact and Conclusions of Law [#94] ¶ 39; see also
Counterclaims [#17] ¶ 35), as shown below
These are the design marks that ArkOwl is claiming were infringed.
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more heavily than differences.” Beer Nuts, Inc. v. Clover Club Foods Co., 805 F.2d 920,
925 (10th Cir. 1986) (Beer Nuts II”).
17.
These factors must be examined “in context of the marks as a whole as they
are encountered by the consumers in the marketplace.” King of the Mountain, 185 F.3d
at 1039 (citing Beer Nuts II, 805 F.2d at 925). “[T]he court is not free to give dispositive
weight to any one component of the marks, such as a shared syllable.” Hornady Mfg.
Co., Inc. v. Doubletap, Inc., 746 F.3d 995, 1002 (10th Cir. 2014).
18.
Thus, in determining the degree of similarity, the marks must be considered
“in their entireties,” including “design features, visual appearance to the consumer,
meanings of the marks, and how the marks sound.” See 3 McCarthy on Trademarks and
Unfair Competition § 23:43 (5th ed. 2023); Hornady, 746 F.3d at 1002 (stating that the
court should “consider the effect of marketplace presentation, including lettering styles,
logos, and coloring schemes”).
19.
The Court now turns to the similarity between the DarkOwl and ArkOwl word
marks. DarkOwl’s word mark is nearly identical in appearance to ArkOwl’s word mark.
Both marks include the word “Owl”, which is capitalized, and the term “arkOwl.” The only
difference between the words is the letter “D” at the beginning of DarkOwl; otherwise,
they are identical in terms of the letters used as well as the capitalized “O” in the middle
of each word. See, e.g., Altira Grp. Ltd. Liab. Co. v. Philip Morris Cos., 207 F. Supp. 2d
1193, 1198 (D. Colo. 2002) (finding “Altira” and “ALTRIA” are visually similar); E.I. Dupont
de Nemours & Co. v. Yoshida Intern., Inc., 393 F. Supp. 502 (D.C.N.Y. 1975) (stating that
“there can be no doubt that EFLON, formed by elimination of the first letter of TEFLON,
leaves the two words very similar in sound and appearance.”)
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20.
The word marks differ, however, in that DarkOwl’s mark begins with the
word “Dark” whereas ArkOwl’s mark begins with the word “Ark.” The marks thus do not
appear as darkowl/arkowl or darkOwl/arkOwl. The word “dark” is also unrelated to “ark,”
other than that they rhyme. Nonetheless, neither ArkOwl nor DarkOwl markets its
services using only a portion of the mark, such as “Dark,” “Ark,” or “Owl.” The Court
finds, when viewing the word marks in their entirety, that the similarities outweigh the
differences and that the marks are very similar in appearance.
21.
There is also a similarity in sound. While the Court finds that the “duh”
sound of the D at the beginning of the mark DarkOwl is distinctive from the “ah” sound at
the beginning of the mark ArkOwl, particularly when the words are spoken at a moderate
rate of speed and clearly enunciated, the Court also recognizes that when the words are
spoken in a faster conversation where enunciation may not be as clear, the “duh” sound
at the beginning of “DarkOwl” could be lost in a conversation, eliminating any aural
difference between the words. See Altira, 207 F. Supp. 2d at 1199 (“One can easily
imagine that these names [Altira and ALTRIA] would be uttered in business transactions
or discussions conducted over the telephone. Clearly, the similarity of their sound would
make them very difficult to distinguish in that context.”)
22.
Finally, as to their meaning, Arkowl asserts that when considered in their
entirety, both marks are made-up, fanciful words with no particular meaning or
suggestion, and “meaningless words are more easily confused.” Altira, 207 F.Supp.2d at
1199. “[W]ith coined words which are meaningless so far as the English language is
concerned, slight variations in spelling or arrangement of letters are often insufficient to
direct the buyer's attention to the distinction between marks.” Id. at 1198.
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23.
The Court does not necessarily agree with DarkOwl that the marks are
meaningless. While there is no space between the words Dark/Ark and Owl in the word
marks, the Court nonetheless finds that a reasonable person could attribute meaning to
the marks. Both marks have reference to an owl, and the beginning of the word mark
could be read to describe a characteristic of the owl. “DarkOwl” could thus be conceived
as a reference to a dark-feathered owl in nature. While less clear, the ArkOwl mark still
obviously has reference to an owl, and when combined with the “ark” portion of the mark,
it could mean an owl that affords protection and safety. See https://www.merriam-
webster.com/dictionary/ark (defining “ark” to include something that affords safety and
protection); see also https://www.merriam-webster.com/dictionary/arc (defining an arc as
a curved path, e.g., to follow an arc-shaped course, or in the ArkOwl context, an owl that
follows a curved path).
24.
Even though the Court disagrees with DarkOwl as to the meaning
component, the Court finds based on the sight and sound of the word marks that the first
factor, similarity of the word marks, favors ArkOwl.
25.
The parties also ask the Court to analyze the similarity between DarkOwl’s
design mark
and ArkOwl’s angry owl marks used before 2019:
26.
Again, there is a similarity of the marks in that they both can be read to
include the term “ARKOWL” in capitalized letters and both have the picture of an eye of
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a bird in the mark. At first glance and without closer inspection, a reasonable person
might believe that they are similar and are meant to represent the same company.
However, there are differences that mitigate this. The pictorial reference to an owl in the
DarkOwl mark consists of just the outlined head of an owl with one eye, and replaces the
O in that mark, unlike in the ArkOwl marks. ArkOwl’s symbol of an owl features more of
the face of the owl, and does not focus as much on the eye itself. Both marks, however,
have one eye, although they are different in their appearance. As to the first ArkOwl
design pictured at the left in Paragraph 25, the image of the owl is at the beginning of the
mark, whereas the image of the owl eye in the DarkOwl mark is in the middle of the word.
As to the ArkOwl mark with the owl image in the middle of the mark, it is very light in color
whereas the image of the owl eye in the DarkOwl mark is in bold and a much more
prominent feature of the mark. The design marks of the parties are also in a different
font, and the “Owl” portion of the ArkOwl mark is in bold unlike the DarkOwl mark.
27.
Nonetheless, the Court does “not engage in a ‘‘side-by-side’ comparison”
because consumers typically do not engage in such a comparison. King of the Mountain,
185 F.3d at 1090 (quoting Universal Money Centers, Inc., 22 F.3d at 1531); Heartsprings,
Inc., 143 F.3d at 554-55. “Rather, the court must determine whether the alleged infringing
mark will be confusing to the public when singly presented. King of the Mountain, 185
F.3d at 1090. The Court must give the similarities of the marks more weight than the
differences. Id. Given the fact that both parties’ design marks reference an owl or bird
and both have the term “arkowl” as part of the mark, the Court finds that the design marks
would likely stimulate the same mental reaction in a consumer. Id. (citing King of the
Mountain Sports, Inc. v. Chrysler Corp., 968 F. Supp. 68, 973 (D. Colo. 1997)).
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Accordingly, the Court finds that a reasonable consumer could find that the design marks
are similar.
28.
The first factor thus weighs in favor of ArkOwl and a likelihood of confusion.
The factors, are, however, interrelated, and the importance of any factor can depend on
the impact of another. Elevate Fed. Credit Union v. Elevations Credit Union, 67 F.4th
1058, 1079 (10th Cir. 2023). Accordingly, the Court turns to the remaining factors.
2. The Strength or Weakness of ArkOwl’s Mark
29.
Under the strength factor, a stronger mark warrants broader protection. Big
O Tires, Inc. v. Bigfoot 4x4, Inc., 167 F.Supp.2d 1216, 1226 (D. Colo. 2001); Affliction
Holdings, 935 F.3d at 1115. In assessing the strength of a trademark, both conceptual
and commercial strength should be considered. King of the Mountain, 185 F.3d at 1093.
30.
Conceptual strength refers to how distinctive a mark is. King of the
Mountain, 185 F.3d at 1093. “Under the conceptual strength prong, the categories, in
descending order of strength, are” fanciful; arbitrary; suggestive; descriptive; and
generic.” Big O Tires, Inc., 167 F. Supp. 2d at 1226. “’Fanciful’ marks consist of ‘coined’
words that have been invented or selected for the sole purpose of functioning as a
trademark.” King of the Mountain Sports, Inc., 185 F.3d at 1093. “Arbitrary marks
comprise those words, symbols, pictures, etc., that are in common linguistic use but
which, when used with the goods or services in issue, neither suggest nor describe any
ingredient, quality or characteristic of those goods or services.” Big O Tires, 167 F. Supp.
at 1226. “Suggestive marks are those that suggest some quality or ingredient of the
goods.” Id.
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31.
ArkOwl asserts that its mark is either fanciful or arbitrary and is thus strong
conceptually. See Proposed Findings of Fact and Conclusions of Law [#94] ¶ 29. The
Court agrees that the ArkOwl mark is quite strong conceptually, although the Court finds
from the evidence that the mark is arbitrary rather than fanciful. 7 Both the words “ark”
and “owl” are in common linguistic use and the symbol in the angry-owl marks is readily
recognizable as an owl. However, the Court finds that when used with the goods or
services at issue, the words in the “ArkOwl” mark do not suggest or describe any
ingredient, quality, or characteristic of ArkOwl’s services.8 Accordingly, the Court finds
that the ArkOwl mark is conceptually strong.
32.
The Court now turns to the commercial strength of the ArkOwl mark.
Commercial strength refers to the mark’s level of recognition in the marketplace. Water
Pik, Inc. v. Med-Systems, Inc., 726 F.3d 1136, 1151 (10th Cir. 2013); King of the
Mountain, 185 F.3d at 1093. “Evidence of a mark's commercial strength can make up for
7 While ArkOwl states that DarkOwl’s counsel conceded at trial that the ArkOwl mark is
fanciful, that is not entirely accurate. Counsel for DarkOwl was asked by the Court whether
DarkOwl agreed with ArkOwl’s counsel that the mark was fanciful. DarkOwl’s counsel responded
that the mark was made up of two independent terms, one of which was suggestive and the other
arbitrary, and that he was not sure whether the entire term would be considered fanciful. Tr.
Trans. [#93] 320:5-112 (emphasis added). DarkOwl’s counsel also stated, however, that he did
not have any authority at that time to dispute that the mark was fanciful. Id. In any event, ArkOwl
now concedes that its mark could be either fanciful or arbitrary, as stated in its Findings of Fact
and Conclusions of Law [#94].
8 The Court notes that despite this finding, there is evidence to suggest that both the
DarkOwl mark and the ArkOwl mark could be deemed suggestive rather than arbitrary, although
this does not change the result of this Order. As discussed in the Findings of Facts, supra, Mr.
Daline testified that the term “owl” in the ArkOwl mark was suggestive of the type of services that
ArkOwl provides in terms of what ArkOwl’s data is used for, i.e., to stop and prevent fraud. Tr.
Trans. [#92] 108:5-23. Similarly, Mr. Turnage testified that the DARKOWL mark is intended to
convey to customers an insight into what the company does. “Dark” is meant to reference
DarkOwl’s darknet services, and “Owl” refers to DarkOwl’s ability to “see into the darknet.” Tr.
Trans. [#93] at 237:11-12. In further support of this, there is evidence that the word “owl” is used
in a number of cybersecurity companies. The Tenth Circuit has indicated that the line between
arbitrary and suggestive may be difficult to distinguish. King of the Mountain, 185 F.3d at 1093.
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conceptual weakness because a conceptually weak mark may become strong by virtue
of acquired consumer awareness.” Water Pik, Inc., 723 F.3d at 1153. “By the same
token, a mark with conceptual strength may ultimately be weak if its commercial strength
is negligible.” Id.
33.
The Tenth Circuit has identified “direct evidence, such as consumer surveys
or testimony from consumers,” as helpful in evaluating commercial strength. Water Pik,
726 F.3d at 1154. The consumer survey that ArkOwl sought to introduce was excluded
by the Court. See Order on Motion to Exclude Evidence and Testimony [#73].
Accordingly, no direct evidence of commercial strength (or actual confusion) through a
survey was presented in this case. In the absence of such evidence as to commercial
strength, courts consider the mark holder’s efforts to advertise the mark, including
evidence tying such advertisements to an effort to promote the mark in the public’s mind.
Id. Evidence that the senior user’s products have millions of users and that the products
were sold through well-known retailers does not inform a court whether the sales were
stimulated by the mark and are thus not generally sufficient evidence to show commercial
strength of a mark. Water Pik, Inc., 726 F.3d at 1154-55.
34.
The evidence (through, for example, the Google Analytics reports) showing
thousands of users accessing the ArkOwl website prior to August 2017, and that
consumers are interacting with ArkOwl’s service (and mark) thousands, or even tens of
thousands, of times each day, demonstrates some commercial strength of the word mark,
but is not sufficient alone to establish that the ArkOwl marks are commercially strong.
Water Pik, Inc., 726 F.3d at 1154-55; see also Bose Corp. v. QSC Audio Products, Inc.,
293 F.3d 1367, 1375 (Fed. Cir. 2002) (“[r]aw numbers of product sales and advertising
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expenses may have sufficed in the past to prove fame of a mark, but raw numbers alone
in today's world may be misleading. . . . the sales and advertising numbers for ACOUSTIC
WAVE and WAVE have to be seen both in the context of how the products are presented
in the advertising and sales material”).
35.
Here, the evidence showed that ArkOwl promotes primarily through word of
mouth, and spends very little money on advertising (about $10,000 to $15,000 a year).
Further, ArkOwl’s revenue is modest. Tr. Trans. [#92] 129:17-130:13. These facts
mitigate against the commercial strength of the mark, as does the fact that there a number
of third-party marks containing the word “owl” in the cybersecurity industry and on the
Principal Registry of the USPTO for cybersecurity-related and/or fraud detection services.
Third-party registrations are “relevant to prove that some segment of the composite marks
which both contesting parties use has a normally understood and well-recognized
descriptive or suggestive meaning, leading to the conclusion that that segment is
relatively weak.” First Sav. Bank, F.S.B. v. First Bank Sys., Inc., 101 F.3d 645, 654 (10th
Cir. 1996) (emphasis added) (quoting 1 McCarthy, McCarthy on Trademarks and Unfair
Competition § 11.27[2][b] (3d ed. 1995)). The Court finds from the foregoing that the
commercial strength of the ArkOwl mark is not very strong.
36.
In conclusion, the conceptual strength of ArkOwl’s mark is strong, which
weighs in favor of ArkOwl and a likelihood of confusion. This is mitigated by the fact that
the commercial strength of ArkOwl’s marks is more limited. Balancing the strong
conceptual strength of the ArkOwl word mark with the limited commercial strength, the
Court finds that this factor, at most, weighs only slightly in favor of ArkOwl and a likelihood
of confusion.
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d. The Intent of DarkOwl In Adopting Its Mark
37.
The proper focus under the intent factor “is whether [DarkOwl] had the intent
to derive benefit from the reputation or goodwill of [ArkOwl].” King of the Mountain, 185
F.3d at 1091. Proof that the alleged infringer chose a mark with the intent of copying the
plaintiff’s mark may, standing alone, justify an inference of likelihood of confusion. Sally
Beauty Co., Inc. v. Beautyco, Inc., 304 F.3d 964, 972 (10th Cir. 2002). “The alleged
infringer’s intent is measured at the time it ‘chose’ or ‘adopted’ its mark.” Hornady, 746
F.3d at 1004 (emphasis added). “In analyzing intent, we look to evidence of ‘the process
of choosing’ a mark, not evidence of events subsequent to its adoption.” Id. (emphasis
added) (citing Water Pik, Inc., 726 F.3d at 1159).
38.
Here, ArkOwl concedes that it has no direct evidence that DarkOwl intended
to infringe. Proposed Findings of Fact and Conclusions of Law [#94] at 33, ¶ 35. The
Court agrees, finding no evidence that DarkOwl intended to derive benefit from the
reputation or goodwill of ArkOwl, or that it chose to copy ArkOwl’s marks. The evidence
presented at trial shows that DarkOwl did not know of ArkOwl when it designed its marks,
and there is no evidence that it ever saw ArkOwl’s marks when it designed its own marks.
39.
ArkOwl argues, however, that evidence of the commercial strength of
ArkOwl’s mark and the similarity between the parties’ marks at the time DarkOwl’s marks
were adopted suggest that DarkOwl was or should have been aware of ArkOwl when it
adopted its marks. Proposed Findings of Fact and Conclusions of Law [#94] at 33, ¶ 34.
ArkOwl further asserts that DarkOwl’s two founders are experienced in business and took
care in their business decision. The founders testified they searched for other conflicting
marks, but ArkOwl asserts that the details of those searches were not disclosed. Id. The
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Court rejects ArkOwl’s argument, finding that the evidence does not suggest that DarkOwl
was or should have been aware of ArkOwl when it designed its marks. The evidence, in
fact, suggests the opposite.
40.
As discussed in the Findings of Fact, supra, the word “owl” and the pictorial
image of the owl eye in the DarkOwl design mark were part of the bankruptcy estate of
a company that DarkOwl’s founders purchased in 2016 which went by the acronym
“OWL”, which Darkowl incorporated into its mark. DarkOwl thus did not design the
figurative owl or owl eye that forms the O in the DarkOwl mark; it was designed by
someone at the company that DarkOwl purchased. Tr. Trans. [#93] 234:5:19.
41,
DarkOwl also presented evidence that its mark is intended to convey to
customers an insight into what the company does. “Dark” is meant to reference
DarkOwl’s darknet services, and “Owl” refers to DarkOwl’s ability to “see into the darknet.”
Tr. Trans. [#92] 237:11-12. The word “dark” was DarkOwl’s major focus in adopting its
mark. Mr. Turnage testified that there was no aspect of the DarkOwl mark that was
intended to reference the word or concept “Ark.” Id. at 237:7-9. Moreover, given the fact
that ArkOwl was not very strong commercially, and the parties are in different markets as
discussed in the next section, there is no reason to believe that DarkOwl would have been
familiar with ArkOwl or its marks.
42.
As to DarkOwl’s search in connection with the mark, DarkOwl testified that
it searched the word “dark” and the word “owl.” The Court finds that since the focus was
on the word “dark,” it was reasonable for DarkOwl to not search for the word “ark” or the
term “arkowl.” In contrast, ArkOwl did not even search for the term “ark” before it
registered its marks. Moreover, even if DarkOwl had conducted a search for “ark” or
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“arkowl” through the Registry of the USPTO, it would not have located these marks
because ArkOwl had not yet registered its mark. The Court finds from this that DarkOwl
came up with its name and mark on its own, and there is no evidence to the contrary.
43.
The Court thus rejects any inference suggested by ArkOwl that DarkOwl
was attempting to copy ArkOwl’s marks when DarkOwl adopted its name and marks.
44.
Based on the foregoing, the Court finds that this factor favors DarkOwl and
weighs against a likelihood of confusion.
e. Evidence of Actual Confusion
45.
“Although a plaintiff need not set forth evidence of actual confusion to
prevail in a trademark infringement action, . . . ‘[a]ctual confusion in the marketplace is
often considered the best evidence of a likelihood of confusion.’” King of the Mountain,
185 F.3d at 1092 (quotation omitted). The standard for actual confusion is not “merely
the possibility of confusion” but “likelihood of confusion.” Id. (citing 4 McCarthy on
Trademarks and Unfair Competition § 23:43 (4th ed. 2013) (emphasis in original)).
46.
Here, ArkOwl presented evidence of a few instances of confusion. ArkOwl’s
customer Apruvd received a solicitation from Cience on behalf of DarkOwl and asked
whether it was related to ArkOwl. ArkOwl also presented evidence that it was
approached by a purported DarkOwl customer, USPIS, at a trade show, believing that
ArkOwl was DarkOwl. Finally, ArkOwl received a solicitation intended for DarkOwl. The
Court finds that these three instances of actual confusion are de minimis. See Hornady
Mfg. Co, Inc., 746 F.3d at 1144 (finding that three instances of evidence cited to show
actual confusion were de minimis); Water Pik, Inc., 726 F.3d at 1151 (finding that four
instances of consumer confusion were de minimis); King of the Mountain, 185 F.3d at
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1092 (finding that seven examples of actual confusion, amounting to only a “handful of
anecdotal evidence” were de minimis).
47.
Moreover, inquiries about the relationship between an owner of a mark and
an alleged infringer is entitled to little weight as to actual confusion. Jordache Enterprises,
Inc. v. Hogg Wyld, Ltd.; 828 F.2d 1482, 1487 (10th Cir. 1987); see also Reply All Corp. v.
Gimlet Media, LLC, 843 F. App'x 392, 398 (2d Cir. 2021). Here, the instances of confusion
DarkOwl references, and more particularly the encounter with the USPIS employee and
the solicitation to ArkOwl, do not appear to relate to a consumer purchase or inquiry where
a consumer is confused between the two companies. See Heartsprings, 143 F.3d at 557
(“[t]o be relevant . . . evidence should demonstrate actual confusion among consumers
within the marketplace”).
48.
The Court finds from the foregoing that this factor weighs in favor of
DarkOwl and against a finding of likelihood of confusion.
5. Similarity of Products and Manner of Marketing
49.
Generally, “’[t]he greater the similarity between the products and services,
the greater the likelihood of confusion.’” Heartsprings, Inc., 143 F.3d at 556-57 (quotation
omitted). Additionally, “the greater the degree of overlap in the marketing approaches of
the two entities, the greater the likelihood of confusion.” Id.
50.
Where there is not much overlap in the marketing approaches of the two
parties, the likelihood of confusion is lower. Heartsprings, 143 F.3d at 556. “The
marketing practices of the parties are particularly relevant in a trademark infringement
case because these practices directly impact the way in which consumers experience the
parties’ respective marks.” Id.
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51.
The Court adopts its holding from the Order on Motion to Exclude Evidence
and Testimony [#73] that ArkOwl has not established that the parties are direct
competitors, meaning that they do not compete for the same business. See Order [#73]
at 22-25 and the evidence cited therein. Direct competition is not, however “‘sine qua
non for this factor because trademark rights extend to ‘non-competing but related’
goods.’” HealthONE of Denver, Inc. v. UnitedHealth Group, Inc., 872 F. Supp. 2d 1154,
1162 (D. Colo. 2012) (quoting Team Tires Plus, Ltd. v. Tires Plus, Inc., 394 F.3d 831,
833-34 (10th Cir. 2005) (internal quotation marks omitted)). “Under the related goods
doctrine, the appropriate inquiry is whether the goods and services of the parties are
related in the minds of consumers, not whether the goods and services are directly
competitive.” Id. “This issue ‘is not limited as to confusion of consumers as to the source
of goods, but also includes confusion as to sponsorship or affiliation.’” Id. (quoting id. at
835). Thus, confusion can exist if consumers believe that an affiliation or sponsorship
exists between the parties. Id. (citing Brookfield Commc’ns, Inc. v. West Coast Entm’t
Corp., 174 F.3d 1036, 1056 (9th Cir. 1999) (“[T]he focus is on whether the consuming
public is likely somehow to associate [the infringer's] products with [the senior user's
products].”)).
52.
As the Federal Circuit stated, similarity of the marks and relatedness of the
goods and services are often interdependent. Nautilus Group, Inc. v. ICON Health and
Fitness, Inc., 372 F.3d 1330, 1345 (Fed. Cir. 2045). “For example, if a consumer
encounters two related goods or services within the same market, less similarity between
the marks would be required for confusion of that consumer to be likely.” Id. “On the
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other hand, even if two marks are identical, if they are encountered in different contexts,
the consumer can often easily distinguish between the two products.” Id.
53.
Here, the Court acknowledges that the parties may compete in the broader
sense of the word, and that there is some competitive proximity between the parties. Both
DarkOwl and ArkOwl are in the field of cybersecurity and offer SAS data, including PII
data, that is indexed and can be searched by its customers. DarkOwl’s structured
database, as with ArkOwl’s database, is set up to return near instantaneous results that
would include data pertaining to email addresses and domain, including data associating
those inputs with names, phone numbers, and social media accounts. Further, both
companies primarily sell to cybersecurity service providers and fraud prevention
platforms.
54.
ArkOwl also offered evidence, as discussed in the Findings of Fact, supra,
that DarkOwl (through a third-party, Cience) sent email blasts to two of its customers, and
that DarkOwl’s marketing documents created by Mr. Williamson included as targets
ArkOwl customers and/or competitors who do PII verification. Further, ArkOwl offered
evidence that DarkOwl is constantly searching for new use cases to accommodate market
changes.
55.
Despite the evidence offered by ArkOwl, the Court finds that the consuming
public would not be likely to associate DarkOwl’s products with ArkOwl’s products
because the services are different and would generally not be encountered within the
same marketplace.
56.
Thus, ArkOwl is fairly characterized as an identity and verification service
provider, and its main focus is PII verification and validation. ArkOwl helps its customers
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verify PII, including email addresses, phone numbers, IP addresses, physical addresses,
and personal name matches. In fact, ArkOwl’s website, www.arkowl.com, prominently
features the statement “Verify Email addresses and Phone Numbers in Real-Time” at the
top of the home page. ArkOwl provides services in the purchasing sector, and Mr. Daline
of ArkOwl testified that he is not aware of any customers in the United States using
ArkOwl’s data for anything other than supporting online purchase transactions.
Additionally, ArkOwl does not, and has never, accessed the dark web directly and does
not directly provide dark web data or services to its customers. While it does provide
breach data through another company, which will say where the data was found, including
the dark web, breach data and dark web data are not the same. Further, the breach data
is not further investigated by ArkOwl for risk assessment, as DarkOwl does. ArkOwl’s
marketing materials also do not promote any dark web specific services, other than the
breach data discussed previously. ArkOwl provides only raw data in connection with, for
example, stopping the threat of a fraudulent purchase online, and does not provide any
analytical services or anything beyond the data if a fraud is discovered. ArkOwl also does
not provide passwords as part of its data outputs.
57.
In contrast, DarkOwl provides dark web data to its customers. DarkOwl
monitors the dark web for emerging threats and has built a platform for its customers to
access this dark web data. DarkOwl’s services include threat intelligence, third-party risk,
cybersecurity underwriting, digital ID protection, fraud protection, critical infrastructure,
and national security, and these services do not include PII verification. The nature of the
data DarkOwl provides is highly sensitive and complex. DarkOwl’s business is a small
niche in the cybersecurity industry, and only a handful of other companies provide similar
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darknet data services and compete with DarkOwl. Mr. Turnage testified that DarkOwl’s
business has no relationship to approving a commercial transaction in real time or
providing PII verification, and it does not provide services in the payment sector. Mr.
Turnage also testified that he was not aware of any instance in which somebody
expressed interest in purchasing PII verification services from DarkOwl, and Darkowl
would not be able to provide this data.
58.
Further, according to Mr. Turnage, DarkOwl’s platform and dark web
database are not set up to provide PII verification services. Not a single data point that
is supplied by ArkOwl is supplied by DarkOwl – it does not have that information and
DarkOwl’s clients are not interested in that data. While, for example, customers can
search an email address on the darknet through DarkOwl, Mr. Turnage testified that its
customers would not get an indication as to whether the address resides on the darknet
and, even if they did, they are not interested in that data. Instead, DarkOwl’s customers
are interested in knowing what is around that email address, e.g., is there a password
associated with it or does it contain personal information that a customer would not want
revealed, such as of an FBI agent.
59.
While ArkOwl asserts that the parties are both in the cybersecurity industry
and advertise fraud protection relevant to PII, the Court finds persuasive the testimony
from Mr. Turnage that the cybersecurity industry is very broad, and encompasses a wide
variety of businesses (between 10,000 and 14,000) with an immense diversity of services
and technologies. Not all services and technologies under the cybersecurity umbrella are
competitive or related. Further, the terms “fraud prevention, “fraud protection, and “PII”
are also broad terms that can mean very different things depending on the context. The
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fact that DarkOwl’s services include a reference to PII data does not mean that DarkOwl
provides the type of PII verification that ArkOwl does; instead, the evidence credibly
demonstrates that DarkOwl does not and cannot provide such data.
60.
ArkOwl also suggests that DarkOwl’s marketing efforts are always evolving
and that it may venture into the PII verification business in connection with the dark web
and compete with ArkOwl (if it does not already do that). The Court finds that the evidence
does not support this contention. Mr. Turnage testified that PII verification services is not
a growth area for DarkOwl because it is a commoditized industry and the price point for
DarkOwl’s platform would make it uncompetitive in that area. Further, Mr. Turnage
testified that DarkOwl’s customers have never requested or suggested that they want to
use DarkOwl’s services for PII verification. The Court finds this testimony credible and
persuasive.
61.
Based on the foregoing, the Court finds that the parties' services and their
target customers are quite distinct, and the parties do not compete for the same business.
62.
The parties also have different marketing styles. ArkOwl relies primarily on
word-of-mouth advertising. ArkOwl has participated in only a single trade show, of the
Merchant Risk Council, and has given a handful of presentations to industry groups.
ArkOwl has never run into DarkOwl at that trade show or its presentations. Over the last
three years, ArkOwl has spent limited amounts annually on advertising ($10,000-
$15,000), with the majority of that going toward attendance at the Merchant Risk Council
trade show.
63.
By contrast, DarkOwl’s primary method of marketing is through industry
trade shows (none of which ArkOwl has participated in). DarkOwl spends over a million
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dollars a year on marketing. Mr. Cohen testified that DarkOwl’s market could be
categorized as large companies that are willing to spend $100,000 for darknet information
to help protect themselves. Further, given the sophisticated nature of DarkOwl’s services
and customers, DarkOwl primarily engages in direct, outbound marketing to a focused
group of target customers.
64.
As further evidence that the parties do not compete in the same market, the
entry point for DarkOwl’s services starts at about $30,000 and goes up to about $500,000
a year. The average cost of DarkOwl’s dark web data services is about $55,000-$60,000
per year. In contrast, ArkOwl’s price-per-query pricing model starts at $99.00 a month,
and most of ArkOwl’s revenue comes from its offer of 200,000 queries a month for $3,100.
65. Additionally, Mr. Daline of ArkOwl was not aware of any instances where
ArkOwl has lost business to DarkOwl. Mr. Daline was also not aware of any instance
where customers were using DarkOwl’s services for any kind of PII verification, or where
a customer was deciding between ArkOwl and DarkOwl’s services or between ArkOwl
and the services of a dark web provider in general.
66.
The Court acknowledges as to marketing that ArkOwl presented evidence
that DarkOwl (through Cience) sent emails to two of ArkOwl’s customers, and that it listed
as targets in its marketing materials customers, potential customers, or competitors of
ArkOwl. Nonetheless, the Court finds persuasive DarkOwl’s testimony that the emails
sent to Cience did not comply with guidelines that DarkOwl had provided Cience as to the
types of customers it was targeting through its use cases. Further, as to the marketing
materials that listed some ArkOwl customers or competitors as targets, DarkOwl testified
that the person in charge of those materials, Mr. Williamson, was not at DarkOwl very
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long and his list of potential clients was “nonsense” because it included DarkOwl’s actual
clients. Tr. Trans. [#93] 226:20-227:11. Mr. Turnage also testified that Mr. Williamson
was ultimately fired because his marketing materials did not target the correct use cases,
and the outbound style of marketing implemented by Mr. Williamson was an “abject
failure.” Tr. Trans. [#93] 222:11-20. Accordingly, Mr. Turnage explained that DarkOwl
has now switched back to outbound marketing consistent with its earlier practice which
targets specific clients relevant to DarkOwl’s use cases. There is also no evidence that
DarkOwl’s sales marketing team ever reached out to the customers or competitors of
ArkOwl.9 The Court thus finds that any emails sent to customers or competitors of ArkOwl
by DarkOwl or listing of customers or competitors of ArkOwl as targets in DarkOwl’s
marketing materials were not based on an intent to solicit ArkOwl’s customers or to obtain
customers for the services provided by ArkOwl – PII verification.
67.
Based on the foregoing, the Court finds that while there is some competitive
proximity between the parties’ services, the markets they serve and the services provided
are not similar and are, in fact, very different. Further, the parties engage in different
marketing styles. Accordingly, the Court finds that this factor favors DarkOwl and weighs
against a finding of a likelihood of confusion.
6. The Degree of Care Likely to Be Exercised by Purchasers
68.
If consumers are more likely to exercise a high degree of care in deciding
to purchase a product, the likelihood of confusion is reduced. Heartsprings, 143 F.3d at
9 Moreover, evidence was presented that even if two organizations happen to share a
customer or a target customer, that does not necessarily make the organizations competitors,
since a large organization uses all kinds of different services. See Hr’g Tr. [#71] 164:1-12.
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557. “The level of care often turns on whether consumers choose a product based on
impulse or careful study.” Elevate Fed. Credit Union, 67 F.4th at 1072.
69.
A consumer’s care generally intensifies with the importance of the product.
See Elevate Fed. Credit Union, 67 F.4th at 1072 (citing Versa Prods. Co. v. Bifold Co.
(Mfg.), 50 F.3d 189, 204 (3d Cir. 1995) (“The more important the use of a product, the
more care that must be exercised in its selection.”). The relevant inquiry focuses on the
consumer’s degree of care exercised at the time of purchase. Sally Beauty Co., 304 F.3d
at 975.
70.
Here, the evidence is unrefuted that DarkOwl provides its data to
sophisticated cybersecurity professionals, including national intelligence and law
enforcement agencies, who go through a stringent vetting and review process. The
vetting process takes, on average, 90 to 180 days, and in some cases, can take longer,
and DarkOwl frequently turns away potential customers because of something that
happens during the vetting process. There is no evidence that ArkOwl has any such
vetting process.
71.
Because of the complexity of DarkOwl’s data, its customers must
necessarily be sophisticated to understand and utilize DarkOwl’s offerings. Accordingly,
the decision-maker as to DarkOwl’s services is generally from the company’s “C Suite” –
the chief executive officer, chief financial officer, chief technology or information security
officer – or high-ranking officials at national intelligence agencies. Further, DarkOwl’s
largest growth sector is in services provided to government customers, including
intelligence agencies.
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72.
The Court finds from the foregoing that DarkOwl’s customers use great care
in selecting its services, particularly when the cost of DarkOwl’s services is factored in.
“When consumers exercise great care when choosing a product, they're less likely to
experience confusion.” Elevate Fed. Credit Union, 67 F.4th at 1072.
73.
Similarly, as to ArkOwl, Mr. Daline testified that both ArkOwl’s customers
and users are discerning, and that its customers normally have a higher degree of
education. ArkOwl has not presented any evidence to suggest that its customers or those
of DarkOwl “commonly succumb to impulses and [the parties’ products] carelessly.”
Hornady Mfg. Co., Inc., 746 F.3d at 1007.
74.
Based on the foregoing, the Court finds that this factor weighs in favor of
DarkOwl and against a likelihood of confusion.
7. The Weighing of the Factors
75.
While the Court has found that the first factor weighs in favor of ArkOwl,
similarity of the marks cannot, alone, cannot support a finding of likelihood of confusion.
Moreover, while the second factor, strength of the mark, weighs in favor of ArkOwl, the
Court found that this factor weighs only slightly in favor of a finding of likelihood of
confusion. All the other factors weigh in favor of DarkOwl, and against a finding of a
likelihood of confusion.
76.
The Court finds that the similarities of the marks, even combined with the
conceptual strength of the mark, do not weigh very strongly in this case given the strength
of the factors that weigh against a likelihood of confusion. Importantly, the evidence
shows that DarkOwl had no knowledge of ArkOwl or its marks when DarkOwl developed
its marks. Instead, DarkOwl created its marks on its own, using the word “owl” and the
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pictorial image of the owl eye which were part of the bankruptcy estate of a company
which was purchased in 2016. There is thus no evidence of intent to infringe or intent to
derive benefit from the reputation or goodwill of ArkOwl. The evidence also shows that
consumers exercise great care in choosing DarkOwl’s services given the sensitive and
complicated dark web services DarkOwl provides, and would not even be able to make a
purchase without an extensive vetting process. Similarly, the evidence shows that
ArkOwl’s clients are discerning and educated, and would likely take care in choosing to
select ArkOwl’s services. The parties’ services are not similar, the services are not
competitors in the same market, and the services are marketed in different manners to
customers with different needs.
77.
The Court finds from the foregoing that there is not a likelihood of confusion
between the parties’ marks. See M. Welles & Assocs., Inc. v. Edwell, Inc., 69 F.3d 723,
730-36 (10th Cir.2023) (finding no clear error in district court’s finding of no likelihood of
confusion between EDWEL, used in connection with providing classes, seminars, and
certification workshops in the project management professional space, and EDWELL,
used to promote a nonprofit organization dedicated to improving schoolwide mental
health and wellbeing, when only two of the factors – the “nearly identical” marks between
the company demonstrating a similarity and the strength of the mark – weighed in favor
of a finding of confusion); Elevate Fed. Credit Union, 67 F.4th at 1083 (affirming finding
on summary judgment that no reasonable jury could find a likelihood of confusion
between the marks of Elevate Federal Credit Union and Elevations Credit Union, even
though the marks were similar and the services were the same since both parties were
credit unions, “based on the careful attention from the customers, the weakness of
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Elevations’ marks [in terms of commercial strength], the lack of Elevate’s intent to benefit
from Elevations’ reputation, the marketing differences, and the de minimis examples of
actual confusion”); Heartsprings, Inc., 143 F.3d at 558 (affirming grant of summary
judgment finding no likelihood of confusion between HEARTSPRINGS, used in
connection with books, pamphlets, and educational materials to teach children to resolve
conflicts nonviolently, and HEARTSPRING, used in connection with teaching physically-
disabled children certain skills like bathing, dressing, and eating; while there was a virtual
identity between the parties' trade names and the strength of plaintiff's suggestive name
which would indicate a likelihood of confusion, these two factors were found insufficient
to indicate a likelihood of confusion when the other relevant factors were considered).
78. Because there is not a likelihood of confusion between the parties’ marks, the
Court must grant DarkOwl’s request for declaratory judgment and find it did not infringe
ArkOwl’s trademark rights and that its federal trademark registrations are valid. The Court
must also deny ArkOwl’s trademark infringement and cancellation claims. See Elevate
Fed. Credit Union, 67 F.4th at 1083 (affirming district court’s grant of declaratory judgment
of non-infringement based on finding of no likelihood of confusion); Water Pik, 726 F. 3d
at 1160 (affirming summary judgment for alleged infringer when no genuine factual issue
existed regarding likelihood of confusion); Groupion, LLC v. Groupon, Inc., 859 F. Supp.
2d 1067, 1081 (N.D. Cal. 2012) (summary judgment granted against cancellation claim
because there was no likelihood of confusion between the parties’ marks).
III. Conclusion and Order
Based on the Court’s Findings of Fact and Conclusions of Law, finding that there
is not a likelihood of confusion between the parties’ marks.,
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IT IS HEREBY ORDERED that the Court finds in favor of DarkOwl on its
declaratory judgment claims that DarkOwl has not infringed ArkOwl’s trademark rights,
and that its federal trademark registrations are valid.
IT IS FURTHER ORDERED that the Court finds against ArkOwl as to its
counterclaims of infringement by DarkOwl and for cancellation of DarkOwl’s trademarks.
IT IS FURTHER ORDERED that judgment shall enter in favor of DarkOwl on its
claims and against ArkOwl. Judgment shall also enter in favor of DarkOwl on ArkOwl’s
counterclaims and against ArkOwl.
Dated: August 1, 2023
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