Simon Property Group, L.P., a Delaware Limited Partnership v. Mysimon, Inc., a California Corporation

Citations: 282 F.3d 986; 62 U.S.P.Q. 2d (BNA) 1046; 2002 U.S. App. LEXIS 3875; 2002 WL 385662Docket: 01-1444

Court: Court of Appeals for the Seventh Circuit; March 13, 2002; Federal Appellate Court

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Simon Property Group, L.P. (SPG), a Delaware limited partnership and the largest retail real estate investment trust in the U.S., is appealing a district court decision that effectively stays the issuance of an injunction pending a final judgment. mySimon, Inc., a California corporation founded by Michael Yang and others in 1998 to provide Internet comparison shopping, argues that the appellate court lacks jurisdiction since the district court's ruling is not an injunction as defined under 28 U.S.C. 1292(a)(1).

SPG, which manages shopping malls in 36 states, originally operated under various names before going public in 1993 and merging with DeBartolo Realty Corporation in 1996. In contrast, mySimon was named to suggest a personalized shopping experience, derived from Yang's childhood game "Simon Says" and his initials (M.Y.). After discovering that the domain name 'simon.com' was owned by SPG, Yang opted for 'mySimon' when he found 'mysimon.com' available.

Despite SPG's initial interest in a potential partnership with mySimon, discussions did not materialize. SPG executives, including Andrew Halliday, advised Yang to avoid the 'Simon' name. mySimon launched its website and an extensive national advertising campaign in October 1998, achieving significant recognition by the summer of 1999 after substantial advertising expenditures.

In March 1999, SPG initiated a branding campaign to increase consumer awareness of its ownership of shopping malls, a move unprecedented among American property management companies. Prior surveys revealed that only 3% of shoppers recognized the 'Simon' name, prompting SPG to invest $90 million in advertising that year, ultimately raising brand awareness to 50%. In June 1999, SPG demanded that mySimon cease using its name, leading to a lawsuit under the Lanham Act for alleged trademark infringement. SPG sought a temporary restraining order, which the district court denied, and subsequently withdrew its motion for a preliminary injunction.

During the trial, SPG secured a verdict despite presenting weak evidence of its 'Simon' name having attained secondary meaning or consumer confusion. Most of SPG's witnesses were professionals rather than average consumers, leading the district court to describe their testimony as minimal. The commonality of the name 'Simon' further complicated SPG's argument. Conversely, mySimon provided substantial survey evidence indicating no likelihood of confusion, with under 2% of respondents showing relevant confusion after viewing mySimon advertisements. SPG did not offer any survey evidence on consumer confusion.

SPG's jury award included $11.5 million in mySimon's profits, despite mySimon not having earned any, $5.3 million in non-existent corrective advertising, and $10 million in punitive damages. Following the verdict, SPG sought a permanent injunction to prevent mySimon from using the name 'Simon.' The district court issued an injunction prohibiting mySimon from using the names 'Simon' and 'mySimon,' the domain www.mysimon.com, and its 'Simon' mascot, allowing a one-year transition period where mySimon could only inform visitors about its new name before transferring the domain to SPG.

mySimon subsequently moved for judgment as a matter of law and for a new trial, which the district court partially granted. Judge Hamilton expressed skepticism about SPG's evidence but upheld the jury's liability verdict. He overturned the $11.5 million damages award, reasoning that mySimon changing its name sufficiently addressed SPG's claims. The $5.3 million for corrective advertising was deemed arbitrary, leading to a new trial ordered for that issue, conditional on SPG accepting a remittitur to nominal damages of $10. The punitive damages were reduced to $50,000 due to Indiana law constraints.

SPG rejected the remittitur and did not seek reconsideration. Consequently, a final judgment is delayed pending the new trial, and the injunction has yet to be issued. SPG filed an appeal for immediate issuance of the injunction and to shorten the transition period from one year to 30 days, arguing that the district court's delay effectively denied injunctive relief, which is appealable under 28 U.S.C. 1292(a)(1). The distinction is made between postponing relief and outright denial, where a party appealing must demonstrate both a definitive denial and potential for irreparable harm due to the delay.

Donovan cites the Supreme Court's ruling in *Carson v. American Brands*, which established that a district court's refusal to enter a proposed consent decree is immediately appealable due to its potential to cause irreparable harm. However, the Court emphasized that 28 U.S.C. § 1292(a)(1) should be interpreted narrowly, applying only to limited exceptions of the final-judgment rule. The Court referenced earlier cases, noting that interlocutory orders were not appealable when the petitioners did not seek a preliminary injunction, which negated claims of irreparable harm. 

In the current case, SPG's abandonment of its request for a preliminary injunction after the denial of its temporary restraining order (TRO) significantly weakens its assertion that a delay in issuing a permanent injunction will result in irreparable harm. SPG argues that its inability to control the nature and quality of services offered by mySimon represents severe harm due to trademark infringement. However, the court found SPG's evidence of potential confusion between the two entities insufficient, especially given mySimon’s survey evidence indicating a negligible risk of confusion.

Additionally, the court notes that the district court's ruling was not a final decision regarding injunctive relief, as the judge retains the authority to revise his ruling before final judgment. Consequently, SPG's inability to demonstrate that the district court's decision caused irreparable harm leads to a lack of jurisdiction over the appeal, resulting in its dismissal. Furthermore, the court clarified that, contrary to SPG's argument referencing *Holmes v. Fisher*, irreparable harm must be shown since the district court's order was not a clear denial of an injunction.