Case3:09-cv MHP Document287 Filed03/30/11 Page1 of 19 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

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1 Case3:-cv-3-MHP Docuent Filed3/3/ Page1 of 1 1 RICHARD C. WOLFE, Esq. (aditted pro hac vice) EHRENSTEIN CHARBONNEAU CALDERIN 2 51 Brickell Key Drive, Third Flr Miai, FL Tel: 35-- Fax: E-ail: rolfe@ecclegal.co - Ol "'" (]_<(...J...JO: (1) (f)'::<o (/)-'< <(}-: '"a >vuol ~ui u...u- LL.~'t =>o:>< ou..~ ~ I~ u. 1-- <o.. C\J "'" ~...: NI-Ol 1--3(1) U). _l!l...j\~ :J CD IJ.. 5 JULIA D. GREER (State Bar No. ) BRIAN J. SCHMIDT (State Bar No. 53) 6 COBLENTZ, PATCH, DUFFY & BASS LLP One Ferry Building, Suite 2 San Francisco, California Telephone: Facsiile: Eail: ef-jdg@cpdb.co, ef-bjs@cpdb.co 1 Attorneys for Defendants ARMANDO C. PEREZ, MR. 35, INC., SONY MUSIC ENTERTAINMENT DIGITAL, LLC, SONY MUSIC HOLDINGS INC., POLO GROUNDS MUSIC, INC., RCA RECORDS, INC. and SONY MUSIC ENTERTAINMENT UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 1 REBELUTION, LLC, a California Liited Case No. CV -3 MHP Liability Copany, 1 DEFENDANTS' BRIEF ON NETWORK Plaintiff, AUTOMATION, INC. v. ADVANCED 1 SYSTEMS CONCEPTS, INC. v. 2 Trial Date: April 5, 2 ARMANDO PEREZ, an individual, MR. 35, Courtr 15 INC., a Florida corporation, SONY MUSIC ENTERTAINMENT DIGITAL, LLC, a Delaare Liited Liability Copany, SONY MUSIC HOLDINGS, INC., a Delaare corporation, POLO GROUNDS MUSIC, INC., a Ne York Corporation, RCA RECORDS, INC., a Delaare corporation, SONY MUSIC ENTERTAINMENT, a Delaare General Partnership, and DOES 1 to 5, Defendants vl Case No. CV -3 MHP

2 Case3:-cv-3-MHP Docuent Filed3/3/ Page2 of 1 1 TABLE OF CONTENTS 2 ('f) (IJ ' ' - ' ()) n...:..j 1 _JO: ('1) (/)~({) U)..J({) <(<{- u. c.(l OJ U()) -LO (/). i.j..u- LL~'<t ::Jo:x OLL<{ LL 14 ~ I..:. u(j) <oro n. (IJ ' ~...: Nr- 1--3('1) 1 Z(J). - lo..j\?~ 1 ::J 1 2 LL INTRODUCTION... 1 I. NETWORKAUTOMATION... 2 II. III. A. The Factual Underpinnings Of The Netork Autoation Case....2 B. The District Court's Decision & The Ninth Circuit's Reversal C. Iplications of Netork Autoation APPLICATION OF NETWORK AUTOMATION TO THE PRESENT CASE... 6 A. Netork Autoation Is Directly On Point B. The Netork Autoation Factors Strongly Favor Defendants Here Plaintiffs Mark Is Not Strong There Is No Actual Confusion The Degree Of Care OfMusic Consuers Is High Defendants' Use OfThe Word "Rebelution" Has Alays Been In Contexts Clearly Labeled As Pitbull's, And No Consuer Confusion Could Result Other Factors Weight In Favor ofdefendants As Well a. Plaintiff Cannot Sho Willfulness b. There Is Little Proxiity of Gds C. Defendants Should Be Granted A Directed Verdict EFFECT OF NETWORK AUTOMATION ON THE NINTH CIRCUIT'S STANDARD JURY INSTRUCTIONS CONCLUSION vl i Case No. CV -3 MHP DEFENDANTS' BRIEF ON NETWORK AUTOMATION, INC v. ADVANCED SYSTEMS CONCEPTS, INC

3 Case3:-cv-3-MHP Docuent Filed3/3/ Page3 of 1 1 TABLE OF AUTHORITIES 2 Page(s) CASES 3 AMF Inc. v. Sleekcraft Boats, 4 5 F.2d 341 (th Cir. 1)... passi 5 Brkfield Coc'ns, Inc. v. West Coast Ent't Corp., 6 14 F.3d 6 (th Cir. 1)... 1, 3, 4 - 'f Ol a...:...j _JO: 1") (f)t;:(!) (f)..j(!) <(-:. '" co "VUQl ~ui IJ..U- IJ..~'f =>o:>< Qi.J...~ ~ J:<{. u(j).a <(a co a. (\j 'f ~ : N':: 1-:::J(f) Z(J).. lo...j(~ [DZ :::J OJ I.J... Netork Autoation, Inc. v. Advanced Systes Concepts, Inc., _F.3d _, 2 WL 156 (th Cir. Mar., 2) (Slip Opinion)... passi Playboy Enterprises, Inc. v. Netscape Counications Corp., 354 F.3d (th Cir. )... 1, 1 Strange Music, Inc. v. Strange Music, Inc., 1l 3 F.Supp.2d 41 (S.D.N.Y. )..., Sunenblick v. Harrell, 5 F.Supp. 6 (S.D.N.Y. 15)...,... TCPIP Holding Co., Inc. v. Haar Counications, Inc., 14 4 F.3d (2d Cir. ) Toyota Motor Sales U.S.A., Inc. v. Tabari, 61 F.3d 1 (th Cir. )... passi 1 OTHER AUTHORITIES 1 Bks: Nosepicking Contests, Tie, May 6, 6 [ !.1.3vl ii Case No. CV -3 MHP

4 Case3:-cv-3-MHP Docuent Filed3/3/ Page4 of (') {\J ' - ' ' a_<( 1 _j _J!l: OC') u.. t(jo<o u (/)~(!) (/)-'(!) <(<(- Ul. -LO u..u- I.L.~' ::Jo:x 14 OLL<( J:<(. 15 Ul u.o 1-- <Coco a.. {\J ' ~ ~...: 1 N':: 1--:JC') Ul.. lo -l<!l;:j: 1 1 :::) OJ 2!l:!l: INTRODUCTION On March, 2, Court asked the parties to address Netork Autoation, Inc. v. Advanced Systes Concepts, Inc., _F.3d_, 2 WL 156 (th Cir. Mar., 2) (Slip Opinion), its iplications in the present case, and ho it ill affect the parties' jury instructions. In Netork Autoation, the Ninth Circuit changed the ay courts ill apply the Sleekcraft likelihd of consuer confusion factors to certain tradeark infringeent cases involving the Internet. Netork Autoation signals the end ofthe dogatic application ofthe consuer confusion analysis set forth in Brkfield Coc'ns, Inc. v. West Coast Ent't Corp., 14 F.3d 6, 154 (th Cir. 1), hich considered three specific factors, the so-called Internet "troika" or "trinity," to be of greater iportance than other factors in tradeark cases involving the Internet. In its place, the Ninth Circuit adopted a ore flexible analytical approach to consuer confusion and identified four ore relevant factors to be analyed in keyord search cases, none of hich are "troika" factors. Of particular note, the Court announced a ne "labeling, appearance, and context" factor that ill draatically affect detenninations of tradeark infringeent in keyord/search engine-related disputes such as PlaintiffRebelution's case here. Indeed, Plaintiffs case- hich rests copletely on an "initial interest confusion" theory- is seriously undern1ined by the Court's observation that it is not initial interest confusion "hen a consuer is never confused as to source or affiliation, but instead knos, or should kno, fro the outset that a product or eb link is not related to that of the tradeark holder because the list produced by the search engine so infors hi." (!d. at * (quoting Playboy Enterprises, Inc. v. Netscape Counications Corp., 354 F.3d, 4-35 (th Cir. ).) More broadly, the Netork Autoation decision cautions against the rigid application of old tradeark la to rapidly evolving technologies such as the Internet. The Ninth Circuit explained that unlike its perception of the situation in 1, it is no longer true "that Internet users on the hole exercise a lo degree of care." The Court observed that as the novelty of the Internet has evaporated in the decade since Brkfield, and online coerce has becoe ore coonplace, consuers have becoe ore sophisticated and exercise a greater degree of care in their online decision-aking. The Ninth Circuit's opinion akes clear that it ill expect district vl 1 Case No. CV -3 MHP

5 Case3:-cv-3-MHP Docuent Filed3/3/ Page5 of 1 1 courts to carefully consider all the Sleekcraft factors in any Internet tradeark suit, not just the 2 Brkfield troika, and eigh the iportance of the various factors according to the nature of the 3 infringeent and the type of Internet case involved. 4 I. NETWORKAUTOMATION 5 A. The Factual Underpinnings Of The Netork Autoation Case. 6 The factual background ofthenetorkautoation case is as follos: Netork C'l ru 'It ' 'It Ol o...:...j...jo:: OC') (/)~(!) (/)-'(!) <(..:_ u.. I(Jo<O UOl UJ. -l!l IJ..U- IJ..~'It ::Jo::x ou...: ~ I..;. U) u. <o<o D.. ru 'It ~...: Nr 1-:JrJ U)..l!l...J(!J~ QO ::J ro : : Autoation, Inc. ("Netork") and Advanced Systes Concepts, Inc. ("ASC") are direct copetitors selling job scheduling and anageent softare. Netork sells its product under the tradeark "AutoMate," hile ASC sells its softare using the registered tradeark "ActiveBatch." As part of its online advertising strategy, Netork bought the keyord "ActiveBatch" fro Ggle and Microsoft's Bing search engines. 1 (Netork Autoation at * 1-2.) 1 Most ell-knon search engines offer advertisers the opportunity to purchase "keyords," hich enable a copany to display an advertiseent on the search results page hen a user types in one of those "keyords." The ost proinent exaple of this is Ggle Ad Words, in hich Ggle displays the links generated by its on algorith in the ain part of the page, along ith the advertiseents in a separate "sponsored links" section next to or above the objective results. Multiple advertisers can purchase the sae keyord. Ggle charges the sponsors based on the nuber of ties users click on an ad to ove fro the search results page to the advertiser's on ebsite. (!d. at *2.) In this case, Defendant Sony Music Entertainent ("Sony Music") bought a nuber ofkeyords fro Ggle as part of its online advertising strategy for Pitbull's albu entitled "Pitbull Starring in Rebelution," including- aong any, any others- the keyord "rebelution." (Wolfe Decl., Ex. B.) Iportantly, the evidence shos that Plaintiff and Pitbull are not direct copetitors in the usic industry, and Sony Music did not purchase the keyord "rebelution" ith the intent of trading off of Plaintiffs gdill. Rather, the unrebutted evidence is that Sony Music purchased the ord siply to reference the title ofpitbull's albu, and Pitbull and Sony Music had never heard of the Plaintiff prior to the filing of the lasuit. This is in contrast to the Netork Autoation case, in hich the parties ere direct copetitors, and Netork undeniably purchased the keyord "ActiveBatch" to in soe ay "trade off' of its direct copetitor's success, thus rendering the question of illful infringeent a closer one. (!d. at * (alleged infringer's intent relevant in the sense of hether use of its copetitor's ark as intended to deceive public).) The Netork Autoation Court nevertheless overturned the district court's grant of a preliinary injunction, finding that, absent an intent to deceive, Netork's use of its copetitor's ark- although intentional - as not necessarily infringing. Given that here, Defendants' use of another's tradeark as not even intentional, it is difficult to see ho Plaintiff could argue that Defendant had an intent to deceive vl 2 Case No. CV -3 MHP

6 Case3:-cv-3-MHP Docuent Filed3/3/ Page6 of 1 1 As a result, consuers lking for business softare by entering the ter "ActiveBatch" as 2 a search ter ould locate objective results ith links to ASC's on ebsite and various articles 3 about the product. Hoever, in the "Sponsored Links" or "Sponsored Sites" section of the page, 4 above or to the right of the objective results, consuers ould see Netork's advertiseent, either 5 alone or alongside ASC's on sponsored link. (Id. at *2.) The district court granted a preliinary 6 injunction in favor of ASC, holding that that Netork's keyord use created a likelihd of.. '.. ru a...:..j _JO: Of') (/)~(j) (/)-'(j) c(~-: rn. dl OJ -vu ~ui lj... u- IJ...~"'" :Jo:x o..~ ~ :::c«= UUl.o t- c(oro a.. ru 'I" ~...: Nr- t-;f') U).l!l...1<!1~ :J lj.. confusion. Netork appealed this decision to the Ninth Circuit. (Id. at *2-3.) B. The District Court's Decision & The Ninth Circuit's Reversal. The district court applied the eight-factor Sleekcraft test and placed particular ephasis on 1 the troika factors, hich Brkfield and its progeny vieed as the ost iportant factors for cases involving the Internet. The district court concluded that all three troika factors favored ASC because Netork used the identical ark to sell a directly copeting product, and both copanies advertised on the Internet. 14 The Ninth Circuit reversed the district court's grant of preliinary injunction, concluding 15 that the district court had failed to eigh the Sleekcraft factors flexibly to atch the facts of the case before it. (Id. at *.) Although the Court acknoledged that the Internet troika factors ay 1 continue to be iportant in the context of a tradeark doain nae dispute, it found that the 1 trinity fails to discern a likelihd of confusion in a keyord search case. 2 (Id. at *-*.) Put 1 ore broadly, the Court concluded that the troika factors should not be the controlling factors for 2 all cases of tradeark infringeent that involve the Internet. "Depending on the facts of each specific case arising on the Internet, other factors ay eerge as ore illuinating on the question of consuer confusion." (Id. at *.) The Court adonished the district court for blind adherence to Brkfield, reasoning that it "akes no sense to prioritie the sae three factors for every type of potential online coercial activity," given the ultifaceted nature of the Internet 2 There has never been an allegation that this is a doain nae dispute. None of the Defendants ons a doain nae containing the ter "rebelution." Pitbull's ebsite is "planetpit.co" and Sony Music's is "pitbullusic.co." vl 3 Case No. CV -3 MHP

7 Case3:-cv-3-MHP Docuent Filed3/3/ Page of 1 1 and the ever-expanding ays in hich e all use the technology. (!d. at *.) The Court further 2 found that the trinity as a particularly pr fit here the potential infringeent arises fro "the 3 risk that hile using [ ASC's] ark to search for inforation about its product, a consuer ight 4 be confused by a results page that shos a copetitor's advertiseent on the sae screen, hen 5 that advertiseent does not clearly identify the source or its product." (!d.) Thus the Court 6 realied that this situation required a different analysis to reach "the sine qua non of tradeark infringeent" - consuer confusion. (I d.) (IJ '<t ' '<t (j) [l_<.:..j..jo: (1) (/)~(!) (/)-'(!) <(..:- u oi '" < "VU<Jl ~ui I.J..U- LL.~'<t :>a:>< ~ ~ :c~ u.o 1-- <(oro a.. (IJ '<t ~ _: N': 1--::>(1) Ul..L!l..J(~ co ' ::> In narroing the reach of Brkfield, the Ninth Circuit cautioned, "[]e ust be acutely aare of excessive rigidity in applying the la in the Internet context; eerging technologies 1 require a flexible approach." (Id. at *1 (quoting Brkfield at 154).) The Court deonstrated this flexible approach in applying- and odifying- its traditional eight-factor Sleekcraft test. 3 (See AMF Inc. v. Sleekcraft Boats, 5 F.2d 341 (th Cir. 1).) Perhaps ost illuinating, the Court discounted the iportance of each of the troika factors in its analysis of the facts: 14 Proxiity [or relatedness] of gds- Although the Ninth Circuit acknoledged that the parties' products ere "virtually interchangeable," it found that the district 15 court had erred by eighing this factor in isolation ithout considering the labeling and appearance of the advertiseents, the degree of care exercised by consuers of the ActiveBatch softare, and hether the parties' status as direct copetitors ould actually lead to a likelihd of confusion. (Netork Autoation at *.) 1 Siilarity of the arks -The Court found that there is no real distinction beteen 1 a tradeark as it appears on a product and as it is entered into a search engine, but noted that "depending on the labeling and appearance of the advertiseent, 1 including hether it identifies Netork's on ark and the degree of care and sophistication of the consuer," the siilarity "could be helpful in deterining 2 initial interest confusion" in the keyord context. (Id. at *-*1.) Marketing channels -The Netork Autoation Court departed fro previous cases that have found that hen the plaintiff a:nd defendant advertise their respective products siultaneously on the World Wide Web, this factor eighs in favor of a likelihd of confusion. "Today, it ould be the rare coercial retailer that did not advertise on online, and the shared use of a ubiquitous arketing channel" such as online advertising "does not shed uch light on the likelihd of consuer confusion." (Id. at *.) On that basis the Court found that the "district 3 The eight Sleekcraft factors include: [1] strength ofthe ark; [2] proxiity of the gds; [3] siilarity of the arks; [ 4] evidence of actual confusion; [ 5]. arketing channels used; [ 6] type of gds and the degree of care likely to be exercised by the purchaser; [] defendant's intent in selecting the ark; and [] likelihd of expansion of the product lines vl 4 Case No. CV -3 MHP

8 Case3:-cv-3-MHP Docuent Filed3/3/ Page of 1 (') (1j <:t - ' <:t Ol.<...J...JO:: Of') (/)~(!) (/)..J(!) <(< u. rn t(j a en UOl U) - I.J..U- LL.~<:t =>o::x OLL<( ~ I<. (j) (). <Co en a. (1j <:t ~ : N!:: 1-:::J(') ZU).. lo...~~; u::! ::J : : court's deterination that because both parties advertise on the Internet this factor eighed in favor of Systes as incorrect." (!d. (eph. added).) The Court ephasied four iportant factors for deterining the likelihd of consuer confusion in disputes over keyord advertising, including a ne factor, hich the Court recognied based on the nature of alleged keyord search infringeent: Strength of ark- The Ninth Circuit observed that strength of the ark is probative in the keyord context because "a consuer searching for a generic ter is ore likely to be searching for a product category," and thus "ore likely to expect to encounter links and advertiseents fro a variety of sources." (!d. at *- *.) This ay not be the end of the inquiry about this factor, as the sophistication of the consuers of the product ay also play a role "if ordinary consuers [of the product] are sophisticated and knoledgeable such that they are aare [of] the source... " and ill thus not be confused at all. (!d.) Evidence of actual confusion - Because the appeal arose out of a preliinary injunction order, neither side had provided evidence of actual confusion, and the Ninth Circuit acknoledged that, "hile this is a relevant factor for deterining the likelihd of confusion in keyord advertising cases, its iportance is diinished at the preliinary injunction stage of the proceedings." (!d. at *1.) Type of gds and degree of care- The Ninth Circuit as particularly concerned ith this factor, finding it "highly relevant" in the keyord advertising context. (!d. at *.) The panel tk exception ith the district court's conclusion that "there is generally a lo degree of care exercised by Internet consuers," ephasiing that the degree of care analysis cannot begin and end ith the arketing channel, but ust consider the nature and cost of the gds and "hether the products being sold are arketed priarily to expert buyers." (!d.) The Court further observed that "the default degree of consuer care is becoing ore heightened as the novelty of the Internet evaporates and online coerce becoes coonplace." (!d.) Labeling, Appearance, and Context- The Coi added a ne factor to the test that it vieed as especially iportant. Although the Court agreed ith the district court's conclusion that the ads did not clearly identify their source, it noted that, in the keyord advertising context, "the appearance of the advertiseents and their surrounding context on the user's screen" is particularly iportant. (!d. at * (eph. added).) The Court ephasied the iportance of considering the broader context of the search results pages as a hole and noted that the search engines had "partitioned their search results pages so that the advertiseents appear in separately labeled sections for 'sponsored' links," suggesting that this could have itigated any consuer confusion. (!d.) C. Iplications of Netork Autoation. The Court andated a ore flexible analysis of the Sleekcraft factors and recognied the need to expand upon the, depending on the context in hich the alleged infringeent takes place. In Netork Autoation, for exaple, the actual appearance of the search results page, hich clearly arked and separated the advertiser's sponsored links fro the objective search 1433!.1.3vl 5 Case No. CV -3 MHP

9 Case3:-cv-3-MHP Docuent Filed3/3/ Page of 1 1 results, as iportant to the Court's conclusion that consuers are not likely to be confused. 2 Netork Autoation expressly rejects Brkfield's outdated assuption that Internet 3 consuers (in general) exercise a lo degree of care, deonstrating the Court's increasing 4 confidence in eb users and their ability to avoid confusion in an era here Internet coerce 5 has becoe coonplace. (Id. at *.) The Court quoted at length, ith approval, fro Judge 6 Koinski's opinion in Toyota Motor Sales U.S.A., Inc. v. Tabari, 61 F.3d 1 (th Cir. ): ru ""' "" []_<(..J _Jlr C'J (/)~(() (/)-'(() <(~-: CD. dt co ovu ~ui u_u LL~V" =>a:>< L:': ~ I<(. UUl. <oco.. ru "" ~ : N!- 1-:iC'J U). _l!l...jl~ CD~ ' ::J ro > a: a: [R]easonable, prudent and experienced internet consuers are accustoed to such exploration by trial and error. They skip fro site to site, ready to hit the back button henever they're not satisfied ith a site's contents. They fully expect to find soe sites that aren't hat they iagine based on a glance at the doain nae or search engine suary..'.. [C) onsuers don't for any fir expectations about the sponsorship of a ebsite until they've seen the landing page- if then. (Id. at * (quoting Toyota Motor Sales at (eph. added).) "This is sensible agnosticis, not consuer confusion." (Toyota Motor Sales at.) Netork Autoation reinforced the Ninth Circuit's coitent to this coon sense approach to Internet confusion analysis. "The oner of the ark ust deonstrate likely confusion, not ere diversion." (Id. at * (eph. added).) II. APPLICATION OF NETWORK AUTOMATION TO THE PRESENT CASE. A. Netork Autoation Is Directly On Point Like the tradeark holder's coplaint in Netork Autoation, the keystone of Plaintiff's case here - if not the sole allegation- is that search engines return (aong other results) ebsites associated ith Pitbull hen the user searches using ords such as "rebelution," "rebelution tour" or "rebelution albu." In pleadings, pretrial filings and otions in liine, in docuents produced in discovery, and in arguent at the Pretrial Conference, Plaintiff's counsel has ephasied repeatedly that using the ord "rebelution" in search engines coonly provides search engine results that refer to both Plaintiff and Pitbull, and that this fors the basis for Plaintiff's clais. (See Transcript ofproceedings, March,2, at 6:2-6; -; 15:2-1; :-; 34:-; 35:1-15; 3:-1; 41:-45:6; 4:15-4:; 61:14-62:1.) Like the accused infringer in Netork Autoation, Defendants here have never denied use of the ter "rebelution"; Defendants siply deny that they use it as a source identifier, and deny vl 6 Case No. CV -3 MHP

10 Case3:-cv-3-MHP Docuent Filed3/3/ Page1 of 1 1 that their use of "rebelution" constitutes tradeark infringeent. Like Netork Autoation, [t]his 2 case, therefore, turns on hether [Defendants] use of [Plaintiffs] tradeark is likely to cause 3 consuer confusion. (Netork Autoation at *4.) 4 Plaintiffs sole evidence in support of its clai of consuer confusion is the testiony of 5 Jesse Stricchiola, a search engine optiiation expert ho opines only upon the effect of siple 6 search engine results and offers no opinion about the "landing pages" or the effect of context on f'1 (\J 'it ' 'it (j) a...:: _j..jo: f'1 (/)::( (/)...J(O <Cj-:. '" "UU()l <XJ ~ui l.j...u- LL.~'il" ::Jo:x ~ ~ :r:~ u. <Co a.. (\J 'it ~ - Nr I- :if'] U)..l!l..Jl~ rn :J ll) potential consuer confusion. (Docket No. -1.) (Indeed, as this Court ruled in response to Defendants' otion in liine, Ms. Stricchiola is not copetent to opine on such subjects.) Netork Autoation, in conjunction ith Toyota Motor Sales, no dees this evidence to be 1 irrelevant in the context of Sleekcraft because the issue of consuer confusion is not to be based solely upon ra search results, but only after considering the surrounding context of the results and hat the eb surfer sees after clicking onto a landing page (in this case either "planetpit.co" or "Pitbullusic.co"). Links to other sites are "ere diversion," not "likely confusion." 14 (Netork Autoation at *.) Plaintiff has presented no evidence (hich ould norally be 15 presented in the for of a consuer survey) shoing that consuers are likely to be confused after they reach a Pitbull-sponsored landing page (or indeed, on search results pages that clearly 1 label Pitbull's results as Pitbull's): B. The Netork Autoation Factors Strongly Favor Defendants Here. 1. Plaintifrs Mark Is Not Strong. 2 Netork Autoation recognies to relevant easures of ark strength: conceptual strength and coercial strength. (Netork Autoation at *.) Plaintiffs ark is relatively eak by either easure. While "rebelution" is not found in Webster's dictionary, it is an obvious 4 While the accused infringer in Netork Autoation defended itself, in part, ith the arguent that its use of the ark as "legitiate coparative advertising" and therefore noinative fair use (a defense that Defendants here cannot clai, since they had never heard of Plaintiff prior to release ofthe albu), this as not the basis for the Ninth Circuit's reversal of the district court's injunction. Rather, the basis for reversal as the district court's failure to properly apply the Sleekcraft factors in a ay that ould properly. deterine likelihd of confusion (or lack thereof). (!d. at *.) vl Case No. CV -3 MHP

11 Case3:-cv-3-MHP Docuent Filed3/3/ Page of (Y) ru <:t - <:t Ol a..< 1..J..JO: O(Y) U)~(J) U)-'(J) <(<rn u oi I.(J c)ro u U) -l!l I.J...U- I.J...~<:t ::Jo:x 14 ~ ~ I< 15 (f) u.o <oro a.. ru <:t ~...: N': 1 1-::>(Y) Zl!l..l!l 1...J(.?~ 1 ::> r:n 2 cobination of"revolution," "rebel," and perhaps "evolution." Such descriptive slang is coon in popular culture. For exaple, "Californication" is the title of a huge hit song by the band Red Hot Chili Peppers, and of an uelated Shotie television series, but the ord predated both in the popular lexicon - on buper stickers, in nes articles, and elsehere - by ore than tenty years. (E.g., Bks: Nosepicking Contests, Tie, May 6, 6 [ againe/article/,11,1,.htl?internalid=atb1] (last vieed March, 2).) And hile the ord has been used in different contexts. for different purposes, its overall eaning is not difficult to discern, even ithout the help of a foral dictionary definition. Like "rebelution," one does not have to ake a ental leap to understand its point. "Rebel uti on" is siilarly coon in the lexicon of popular usic culture. At trial Defendants ill sho evidence of other uses in the usic industry by other artists - including reggae artists Yai Bolo, Peter Tosh, and seven other reggae bands naed "Rebelution" - as ell as on the Internet in the titles of ore than 1 separate eb sites, on ore than titles of albus or songs, including 56 uses by others in the usic industry in particular. These are probative evidence that the ord "rebelution" as not invented by the Plaintiff, that it has acquired cultural eaning separate and apart fro the Plaintiffs ark and that Plaintiff is not entitled to strong protection of its ark. (E.g., Docket No. at,, - & Exs. E-F.) Nor is Plaintiffs ark particularly strong coercially. Plaintiffs daages expert clais -ith no actual support- that Plaintiff spent $1.6 illion "building its brand." But Plaintiffs general ledger shos that Plaintiff spent only $,2.3 and $,2. in prootion and advertising in and 2 respectively, and $36,3. in. Moreover, even "[a] large expenditure of oney does not in itself create legally protectable rights." (Toyota Motor Sales, 61 F.3d at - (quotations oitted).) While Plaintiffs band has gron in popularity in the past to years, its "actual arketplace recognition," the benchark of coercial strength noted by Netork Autoation, is still not strong. (Netork Autoation at * l 5 Even ere Plaintiffs ark strong, this factor ould not eigh heavily in the analysis. Indeed, the Netork Autoation Court found that the district court had properly deeed the (ftnote continued) f vl Case No. CV -3 MHP

12 Case3:-cv-3-MHP Docuent Filed3/3/ Page of 1 f') C\J 't - ' 't Ol [L<..J..JO: f') U)~({) U)-'(!) <(<u. ~ ) UOl {f) -tn LL.U- LL~V" ::Jo:x QLL< LL ~ :~:< U) u. 1-- <oro [l_ C\J 't ~ Nl-) I- :if') U).. lo...j(~?: ::J dj LL There Is No Actual Confusion. Plaintiff can sho no evidence of actual confusion, for gd reason: no one ould confuse hip-hop artist Pitbull ith the reggae band, Rebelution. Indeed, the evidence shos that there is likely very little overlap in the deographics of their respective fan bases. Defendants' expert Allen Jacobi- a usic industry attorney and recognied expert, record copany President, Executive Producer, and Founder ofthe Billboard Channel, ho has hiself arketed both reggae and rap/hip hop artists- ill testify to this, consistent ith his Report and deposition. (E.g., Wolfe Decl., Ex. cf Rebelution's usic is in the "Cali-reggae" gee, hose typical audience ebers are hite, ore often feale than ale, ith a decidedly "hippie" earthy bent, and usic ith ello rhyths and thees stressing peace, love, and political and ecological concerns. Pitbull's fan base is starkly different: young, urban, predoinantly ales of color. The driving, high-energy hip-hop thees that doinate his usic tend to be sexually charged ith an ephasis on hedonistic pleasures, aterial ealth and faily relationships. His stage shos are elaborately produced, ith lots of "bling." Pitbull hiself is alays dressed sharply and presents a sophisticated, orldly iage. Pitbull and Rebelution do not copete for a fan base, nor is there any possibility that they could be confused ith one another. (Wolfe Decl., Ex. D at 1:1-1.) Plaintiffhas failed to sho any actual consuer confusion, or likelihd thereof. It therefore has relied heavily throughout this case on "initial interest confusion": that individuals "ActiveBatch" ark strong and inherently distinctive. (Id. at *.) Nevertheless, given the other factors, the Ninth Circuit overturned the district court's grant of a preliinary injunction. 6 Note that Defendants are not attepting, ith this brief, to subit all or even ost of the evidence they are prepared to present at trial; Defendants siply supply such inforation to clarify various points. For exaple, Mr. Jacobi testified at length at deposition on the points set forth in his Report, and ill do so again at trial. Plaintiff argues that Pitbull's usic is "reggaeton" or Reggae infused, and Rebelution's is "reggae," iplying an overlap that siply is not there. First, Pitbull's usic is not "reggaeton" or reggae. (Wolfe Decl., Ex. D at :4-:1.) Reggaeton is a distinct Latin gee originating in Panaa and Puerto Rico (Mr. Pere' origins are Cuban); it is nearly alays Spanish language and it has a unique rhyth that is neither hip-hop nor reggae. (E.g., second, even ifpitbull did play reggaeton, reggaeton is not reggae, despite having a siilar-sounding nae. (!d.) vl Case No. CV -3 MHP

13 Case3:-cv-3-MHP Docuent Filed3/3/ Page of 1 1 surfing the Internet ho obtain search results that point to both the Pitbull Albu and Plaintiffs 2 ork ill be confused if they inadvertently click on the rong link. In fact, the entirety of the 3 opinions ofplaintiffs "search engine optiiation" expert, Ms. Stricchiola, rest on this theory. 4 This is precisely the theory relied upon by ASC in the Netork Autoation case: 5 "accusing [Netork] of isleading consuers by hijacking their attention ith intentionally 6 unclear advertiseents." This caused the district court to find that "consuers ight be confused into unittingly visiting Netork's ebsite, alloing the copany to 'iperissibly capitalie[] on [Systes'] gdill."' (Id. at *3.) "'" (l_<(...j...jlr 1") (.1)~( (J)..J(O <C(j-: c)ro c.(ju ~ui I.J...U- I.J...~<;j" =>o:x OLLt1 ~ I<(. u(j). <Coro a. C\J"'"... _:_ N~ 1-=>1") Z(J).. lo...j(!)~ ajz => ([) > lr lr LL This expansive vie of initial interest confusion, hoever, as rejected by the Netork 1 Autoation Court, hich cited ith approval Judge Beron's concurrence in the Playboy case cautioning "that a broad reading of Brkfield's etatags holding could result in a finding of initial interest confusion 'hen a consuer is never confused as to source or affiliation, but instead knos, or should kno, fro the outset that a product or eb link is not related to that of the 14 tradeark holder because the list produced by the search engine so infors hi.'" (Netork 15 Autoation at * (quoting Playboy, 354 F.3d at 4-35.) Indeed, the core of Netork Autoation's finding as precisely this: that searches using the ark, that present results that 1 include entities other than the ark holder, are "ere diversion," not actual or likely confusion. 1 (Netork Autoation at *.) The Court further noted ith approval Judge Beron's concurrence 1 in the Playboy case that analogied the experience of brosing clearly labeled keyord 2 advertiseents to shopping at Macy's, explaining that if a shopper en route to the Calvin Klein section is diverted by a proinently displayed Charter Club (Macy's on brand) collection and never reaches the Calvin Klein collection, it could not be said that Macy's had infringed on Calvin Klein's tradeark by diverting the custoer to it ith a clearly labeled, but ore proinent display. (Netork Autoation at * (citing Playboy at 5.).) Note that the Court recognied that this as not tradeark infringeent even though the custoer as specifically seeking Calvin Klein and as diverted by a larger, ore proinent sign, "designed to appeal to the sae people attracted by the style of Calvin Klein's latest line of clothes." (Playboy, 354 F.3d at 5.) This, of course, directly addresses Plaintiffs counsel's arguent at the Pretrial Conference that 1433l.OOI.l63vl 1 Case No. CV -3 MHP

14 Case3:-cv-3-MHP Docuent Filed3/3/ Page14 of 1 1 Defendants are using Plaintiffs ark in the ay of a "store sign" to dra in custoers, ho they 2 then "divert" to their on ebsite. (Transcript of Proceedings, March, 2, at ) 3 Indeed, Netork Autoation rejects that arguent, holding that, absent evidence that the practice 4 is "isleading and deceptive" (Netork Autoation at *), this is not actionable infringeent. In 5 other ords, unless the "store sign" deceptively clais that the tradeark-holder endorsed the site, 6 or that the gds sold on the site are those of the ark-holder hen they are not (i.e., "passing off' ru "' ' ()) "'..<...J...Jil: OC') UJt:: U)-'(l) <(-: rn. '" <XJ "VU(J) ~ui u.u- LL~'<t ::Jo:>< ou..~ ~ I~ u.o <(o.. ru '<t ~ : N~Ol 1-:JC') Z(f)..lO _J(~ ::= ' :J (I) ll: u.. or piracy), such use is siply not infringing. Siilarly, Plaintiff argues strenuously that a search for "rebelution" on Aaon. co yields results for both Plaintiffs albus, and the "Pitbull Starring in Rebelution" albu. (Transcript of 1 Proceedings at 44:1-.) While true, nothing about this is deceptive or isleading: although the Aaon result refers to the Pitbull albu by the shortened oniker "Rebelution by Pitbull" it clearly references Pitbull, and shos a photo ofthe albu cover, hich has Pitbull proinently displayed on it. (Wolfe Decl., Ex. E.) No one ould be confused by such search results The Degree Of Care Of Music Consuers Is High. 15 "The ore sophisticated the consuers, the less likely they are to be isled by siilarity in arks." (TCPIP Holding Co., Inc. v. Haar Counications, Inc., 4 F.3d, (2d Cir. 1 ).) Netork Autoation discusses levels of consuer discernent in various contexts, for 1 exaple, in Playboy, the adult-oriented aterial as likely highly fungible; thus, hile consuers 1 ight initially be seeking the tradeark-holder's product, they ould be "easily distracted" and 2 ould not spend a great deal of tie and effort to discern the actual source of the photos or videos. (Netork Autoation at * (citing Playboy at ).) In this case, both parties agree that the ordinary purchasers are purchasers of usic, in retail stores and on the internet. Music consuers are relatively sophisticated, as this Court deterined in the suary Judgent Order in this case (Docket Entry 1), and this fact has been Note that this is a "reasonably prudent" consuer standard, hich in the Internet context is "a reasonably prudent consuer accustoed to shopping online... Unreasonable, iprudent and inexperienced eb-shoppers are not relevant." (Toyota Motor Sales, U.S.A., 61 F. 3d at 6.) vl Case No. CV -3 MHP

15 Case3:-cv-3-MHP Docuent Filed3/3/ Page15 of 1 1 recognied by other courts as ell: "[B]uyers of usical recordings are relatively sophisticated 2 consuers hose purchasing decisions are driven by a recognition of and search for a particular 3 artist or coposition..." (Sunenblick v. Harrell, 5 F.Supp. 6, 634 (S.D.N.Y. 15) (eph. 4 added) (quoted ith approval in Strange Music, Inc. v. Strange Music, Inc., 3 F.Supp.2d 41, 5 45 (S.D.N.Y. ).) Moreover, ("!) ru..:t - '..:t ) a...: -' _J O:: Or') U)~<O U)--'<O <(<{- u.. c.(joco u ) U) -LO u...u- U...~'<t ::Jo::x ou...~ ~ J:<{. (f) u.o <Coco... ru..:t ~...: N!: 1-::>("1) Z(J). lo..j(~ :J OJ : : i.j._ Shoppers on the Internet, ho seek to purchase either party's products, are relatively sophisticated and ill not suffer confusion hen they search for these products on the eb. The consuer is not searching for a fungible gd [such as] 6-inch round, laser discs. Typically, he or she is searching for an artist's coposition or perforance. (Strange Music, 3 F. Supp. 2d at 45 (eph. added); see also Wolfe Decl. Ex. C). Music lovers do not search for Pitbull hen they ant ello, relaxing beach usic, and they do not lk for Plaintiff hen they ant hard-driving, sexualied urban dance flr hip-hop. Pitbull's and Plaintiffs usic are not fungible, and even individuals ho are fans of both ould never istake one for the other. This factor eighs heavily in Defendants' favor. 4. Defendants' Use Of The Word "Rebelution" Has Alays Been In Contexts Clearly Labeled As Pitbull's, And No Consuer Confusion Could Result. Netork Autoation recognied that hile it is iportant to lk at the text of purportedly isleading advertiseents to ascertain hether they properly identify their source, it is equally iportant to lk at the surrounding context to deterine hether the ads are, in fact, likely to confuse. (Netork Autoation at *.) Indeed, the Ninth Circuit found the district court's failure to take context into account as error. (Id.) The Court observed that, even though Netork had not clearly identified itself in the text of all of its ads, the fact that the ads appeared in the "sponsored links" section of the page as sufficient to clarify their source and purpose to consuers. (!d.) This factor eighs strongly in Defendants' favor here. Defendants' use of the ord "rebelution" has alays been in contexts clearly labeled as Pitbull's. While Plaintiff successfully Of course, Defendants have no control over third parties' use of the ter. l ll63vl Case No. CV -3 MHP

16 Case3:-cv-3-MHP Docuent Filed3/3/ Page of 1 1 convinced the Court otherise at the suary judgent stage - going so far as to falsely accuse 2 Defendants' counsel of aking isrepresentations to the Court in that regard - Plaintiffs 3 purported "evidence" on that point as profoundly isleading. Plaintiff selectively pulled banner 4 ads fro surrounding eb pages and shoed only portions of concert arquees to give the 5 ipression that Defendants used "rebelution" at ties ithout referring to Pitbull. As Defendants 6 ill deonstrate at trial, this ipression as false. C') C\J ' - ' ' (J) (L<C...J _J 1: (1) (/)~( (/)-'( <(<(- oi!.(j co u (J) (/). -LO IJ..U- LL.~'<t :Jn:>< OLL<C ~ :c<c {f) u.o t- <(oco a.. C\J ' ~ : N~ 1--:::>(1) Z<n.. lo...j<d~ :::> CD n: n: For exaple, on suary judgent Plaintiff subitted a still screenshot of a banner advertiseent for Pitbull's albu that said "rebelution" (aong other things) ithout shoing Pitbull's nae (although it did sho his photo). (Docket No. -1 at Exhibit 1.) Reoving the banner ad fro its context as isleading: the banner ad had been excised by Plaintiff fro Pitbull's MySpace page, (Id.) Not surprisingly, the page on hich the banner ad resided as covered ith references to, photos of, videos of, intervies ith, and blog-posts regarding Pitbull. In other ords, it asn't siply labeled "Pitbull;" the banner as literally surrounded by iages and references to Pitbull. There could be no chance of confusion. (E.g., Wolfe Decl., Ex. F.) Siilarly, Plaintiff points to Defendants' purported use of the slogan "join the rebelution" as a use of its ark ithout reference to Pitbull. But the only place that slogan as used as, again, on the Pitbull ebsite. No one could istakenly believe that this as a reference to Plaintiff (or anyone else besides Pitbull). Plaintiff also provided the Court on suary judgent ith a still screenshot of a purported arquee fro a Pitbull concert, that said "AT&T Presents The Rebelution Concert," that Plaintiff tk fro a video on Y outube. 1 (Docket No. -1 at Ex. 2.) Plaintiff uses this, and an agreeent beteen Sony Music and AT&T peritting AT&T to use the albu title in its arketing ofthe concert, to argue that Defendants "licensed" the "ark" rebelution to AT&T. 1 Plaintiff does not clai the video itself is an infringeent; rather, it siply uses the video to sho the allegedly infringing concert arquee, hich is displayed ithin it. It ould be difficult for Plaintiff to coplain that the video is confusing: its title on YouTube is "AT&T Presents the Rebelution Concert ft Pitbull," and the video is nearly entirely intervies and concert ftage of Pitbull. (Wolfe Decl., ~ & Ex. G.) vl Case No. CV -3 MHP

17 Case3:-cv-3-MHP Docuent Filed3/3/ Page1 of C') ru '>!" - ' '>!" Ol a..<( 1..J _JO: OC') (f)!::<.o (f)..j<.o <(<(- u. rn. t(joro UOl UJ -lfl LL.U- LL.~'>t ::Ja:x 14 QLL~ ~ 15 ::r:<( UUl. <Coro a.. ru '>~" ~ : 1 N~Ol 1-:JC') U). _lfl 1..JCJ~ 1 :J CD 2 a: a: LL. Plaintiffs isleading use of this screenshot is appalling, and its counsel's false stateents to the Court are sanctionable. A revie of the actual video deonstrates that the arquee as not static. Rather, it dissolved back and forth, reading, in its entirety, "AT&T Presents the Rebelution Concert featuring PITBULL and Special Guests," ith by far the ost proinent ord being "PITBULL" in assive letters across the arquee. (Wolfe Decl., Ex. G.) Plaintiff also argues that Defendants' use of "rebelution" as a etatag on Pitbull's ebsite constituted tradeark infringeent. This is rong for to reasons. First "rebelution" as only used as a etatag for a short tie, prior to release of the albu, on hat as called a "splash page." (Wolfe Decl., Ex. H at 41:1-45:6.) This as essentially a placeholder prior to loading of the full ebsite, and no sales of the albu could be ade fro that page. (!d.) Second, the Netork Autoation Court recognied that use of a copetitor's ark as a etatag, just as in the keyord context, is not isleading or infringing so long as the results are not isleading- in other ords, so long as the results theselves, or their context, ake clear to the searchers here they have landed. (Netork Autoation at *5.) There could be no question that a searcher ho landed on the Pitbull splash page ould iediately recognie it as a Pitbull site. Finally, as the Court acknoledged, "Mode search engines such as Ggle no longer use etatags. Instead they relyon their on algoriths to find ebsites." (!d. at n.3.) Defendants' arketing of the Pitbull albu as alays clearly labeled as Pitbull's. 5. Other Factors Weight In Favor of Defendants As Well. a. Plaintiff Cannot Sho Willfulness. Although Plaintiff clais that Defendants' choice to continue sales of the albu subsequent to its cease and desist letters indicates bad faith and a illful intent to trade off of Plaintiffs gd ill, a nearly identical arguent as rejected by the Netork Autoation Court. Indeed, ASC sent to cease and desist letters to Netork, deanding that Netork cease using its ActiveBatch ark in its advertising. Netork nevertheless continued to use the ark, and the Ninth Circuit iplicitly acknoledged that Netork's gd faith belief that use ofthe ord ActiveBatch in keyord advertising as not infringing as a reasonable one. The sae is true here: as Defendants have ade clear, they reasonably relied on counsel for their gd faith belief vl 14 Case No. CV -3 MHP

18 Case3:-cv-3-MHP Docuent Filed3/3/ Page1 of 1 1 that their use of the ord "rebelution" is not an infringeent of Plaintiffs tradeark. 2 b. There Is Little Proxiity of Gds. 3 In Sleekcraft, the court noted that- although both the "Sleekcraft" and "Slickcraft" boats at 4 issue ere designed for toing ater skiers, "because 'Slickcraft' boats appealed to consuers 5 desiring faily recreation and 'Sleekcraft' boats appealed to the 'highly skilled enthusiast' requiring 6 Sleekcraft's higher speeds, the oners ere not direct copetitors." (Netork Autoation at * 1.) ru '<!". '<!" (j)..<...j...jo: (') <.nt:: tn...j <(~~ Ill. (j) '" co "VU(j) ~ui l.j..u- U..~'<t :;)o:x OLL~ ~ :c~ u.o t- <(a co.. ru '<!" ~ : N':: 1-:::>(') U)..lO _)(?~ ::J The sae is true here. While Pitbull and Plaintiff are both usical artists, they appeal to far different audiences (and like the Sleekcraft boat, one oves at higher speeds.) In contrast, the Netork Autoation Court found that the products in that case ere "virtually interchangeable." 1 (Id. at *.) Nevertheless, it found "the proxiity of the gds ould becoe less iportant if advertiseents are clearly labeled or consuers exercise a high degree of care, because rather than being isled, the consuer ould erely be confronted ith choices aong siilar products. (Id. (citing ith approval Playboy at 5 (Beron, J. concurring) ("[S]uch choices do not 14 constitute tradeark infringeent off the internet, and I cannot understand hy they ould be on 15 the internet.").) Here, although both parties produce usic, they are no ore interchangeable than Moart and Megadeath. This factor eighs in Defendants' favor. 1 c. Defendants Should Be Granted A Directed Verdict. 1 In applying the flexible analysis set forth by the Ninth Circuit in Netork Autoation to 1 the case at hand, it becoes clear that no reasonable jury could find likelihd of confusion in this 2 case. Defendants should be granted a directed verdict. III. EFFECT OF NETWORK AUTOMATION ON THE NINTH CIRCUIT'S STANDARD JURY INSTRUCTIONS At a iniu, Netork Autoation requires odification ofthe Ninth Circuit's odel jury instruction 15.-the instruction involving the Sleekcraft "Likelihd of Confusion" factors. As noted above, this case is directly analogous to that of Netork Autoation, and the sae factors that the Ninth Circuit found copelling in that case are equally iportant here. Defendants respectfully suggest changes to Ninth Circuit Model Jury Instruction as set forth in italics in Exhibit A attached to the Declaration ofrichard Wolfe vl 15 Case No. CV -3 MHP

19 Case3:-cv-3-MHP Docuent Filed3/3/ Page1 of 1 1 CONCLUSION 2 Netork Autoation fundaentally changes the landscape of tradeark cases, and 3 seriously undercuts Plaintiffs ability to eet its burden to prove liability in this case. Indeed, 4 Plaintiff ill be unable to sho likelihd of confusion, and Defendants should be granted a 5 directed verdict. 6 DATED: March 3,2 EHRENSTEIN CHARBONNEAU CALDERIN - 'i".-<..j _JO: (1) UJ:: U)...l(l) <(~-:.,,. aj "UUffi ~lli LL..U- LL..~'i" :::Jo:x OLL.~ ~ I~' u.o <oro a. C\J 'i" ~...: N~ 1-::J<') Z(J). W LO...ICJ~ oa ::J il.. 1 By: IS/ Richard C. Wolfe " RICHARD C. WOLFE, ESQ. Attorneys for Defendants ARMANDO C. PEREZ, MR. 35, INC., SONY MUSIC ENTERTAINMENT DIGITAL, LLC, SONY MUSIC HOLDINGS INC., POLO GROUNDS MUSIC, INC., RCA RECORDS, INC. and SONY MUSIC ENTERTAINMENT 14 I hereby attest that I have on file all holograph signatures for any signatures indicated by a 15 "confored" signature (IS/) ithin this e-filed docuent. DATED: March 3, COBLENTZ, PATCH, DUFFY & BASS LLP By: IS! Julia D. Greer Julia D. Greer Attorneys for Defendants ARMANDO C. PEREZ, MR. 35, INC. SONY MUSIC ENTERTAINMENT DIGITAL, LLC, SONY MUSIC HOLDINGS INC., POLO GROUNDS MUSIC, INC., RCA RECORDS, INC. and SONY MUSIC ENTERTAINMENT! vl Case No. CV -3 MHP