Legal Geek No. 101: "Down the Stretch They Come" in TM Infringement

Welcome back to Legal Geek!  This week, we celebrate the upcoming horse racing season in my neck of the woods, with a look at an April Appeals Court decision that was a loss for Churchill Downs, the track where next week's Kentucky Derby is held.

https://archive.org/details/LegalGeekEp101

Several racing track owners including the Churchill Downs owner filed suit in late 2015 against another racing venue Kentucky Downs and video-based gambling system software developer Exacta Systems.  The claim was for trademark infringement in the use of the trademarked names of these other tracks within the gambling system made by Exacta and used at Kentucky Downs to allow for betting on races taking place at other venues.  So down the stretch they come to the courthouse!

According to the lower court and Appeals court decisions, the gambling system works by showing a computer-generated simulation of a horse race as it happens.  On the screen is an identifier of the location of the race, AKA the name of the track in a field behind the word Location. 

The track owners asserting infringement argued that this was unauthorized use of their trademarks because consumers of the gambling services would incorrectly assume that the venues themselves are the source of the computer-generated recreations of the horse races.  In short, these other track owners wanted to cut off gambling profits happening at rival tracks based on their own races.

The Sixth Circuit Court of Appeals summarily disagreed with this argument.  The Court noted that these computer generated recreations are sufficiently different from the product sold by the other track owners, which is live horse racing.  It appears that if live video of actual footage from the other tracks were used, that would have been more problematic, but that was not the case here opined the Court.  Essentially, the Appeals Court agreed that this use of the trademark names was a non-TM use more akin to a factual recounting of race results in a newspaper, which cannot be stopped by trademark owners.

The Court also noted that the consumer confusion argument was not persuasive because if the gambling system showed an inaccurate result, the person using it would likely take up complaints to Kentucky Downs and Exacta, where they are located rather than the other tracks.  Without potential consumer confusion, trademark infringement cannot exist. 

The Bottom Line is, although trademark rights are important for businesses to have, they do have some clear limits in scope.  This lawsuit was exposed as something of a cash-grab between competing horse racing tracks because the trademark infringement claim was too expansive for the limits of trademarks. But as horse racing season rounds the bend and heads for home, I'm sure there will be plenty of profits to be made for all these gambling tracks and sites.

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