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Joseph Maxwell says he knew it wasn’t the smartest move in the world when he decided to defend himself in a complicated trademark infringement case in federal court last year. Making matters worse, the 57-year-old software engineer from Spring faced an experienced intellectual property litigator in front of an unsympathetic trial judge during the bench trial. But, Maxwell’s pro se case was simple: He didn’t do anything wrong when he created a Web site that complained about an alleged soured deal he had with a homebuilder. And he was confident he hadn’t violated any trademark laws. His suspicions about the perils of representing himself were borne out when U.S. District Court Judge Kenneth Hoyt in Houston hammered Maxwell in the January trial, ordering him to pay $80,000 in damages to TMI Inc., the parent company of TrendMaker Homes. Hoyt ruled that Maxwell had violated state and federal trademark laws when appropriating the company’s name in a Web site Maxwell created, trendmakerhome.info. It was a ruling that Maxwell says would have bankrupted him. But Maxwell had the last laugh on April 21 when the 5th U.S. Circuit Court of Appeals reversed and rendered the judgment against him in TMI Inc v. Joseph Maxwell . A three-member panel of the 5th Circuit ruled unanimously that Maxwell had not harmed TMI according to the language of various trademark statutes under which he was sued, including the Lanham Act, the Anti-Cybersquatting Consumer Protection Act and the Texas Anti-Dilution Statute. Maxwell says he had better luck at the appellate level because he had the help of a pro bono consumer rights lawyer whom he persuaded to represent him. The lawyer, Paul Levy, staff counsel for Washington, D.C.’s Public Citizen, represents litigants like Maxwell all across the country. But Maxwell says his unorthodox ride to appellate victory was one that he wouldn’t recommend to other nonlawyers. “I was scared to death,” Maxwell says of his federal court experience. “But I’m not going to back down. Just like I said, I’m stupid. It’s not bravery; it’s stupidity.” The decision that Maxwell eventually won in TMI will go a long way in protecting other consumers who create so-called “gripe sites” against trademark infringement suits filed by corporations, Levy says. “It’s a significant opinion,” say Levy, who plans to cite the opinion regularly while defending other consumers accused of Internet trademark infringement. Tim Headley, a partner in the Houston office of Gardere Wynne Sewell who represents TMI, the company that builds houses under the name TrendMaker Homes, says he disagrees with the 5th Circuit’s ruling. “It was a close question of law,” says Headley, who represented TMI at trial and in the 5th Circuit. TMI didn’t have a problem with Maxwell’s desire to have a Web site that complained about their business, Headley says. They did have a problem with the confusion they allege Maxwell’s Web site created, Headley says. “Our concern was people typing trendmakerhome.com [a domain name that Maxwell also had owned] thinking they’ll get us and they get him,” Headley says. And TMI also was concerned that Maxwell could have eventually profited from his Web site at the company’s expense by charging for advertising on the site, Headley says. That potential would have made his site commercial, a violation of various trademark laws, Headley says. Maxwell’s Web site contained text of the dispute he had with a TMI salesman about the availability of a particular model of home. It also included some family photos and a disclaimer at the top of the home page, indicating that it was not TMI’s site. But the Web page also contained what Maxwell called the “Treasure Chest,” which Maxwell says he envisioned as a place where visitors to the site could submit or obtain information about contractors and trades people who had done good work. The Treasure Chest only listed the name of one contractor at the time Maxwell took the site off the Web. Maxwell never charged for listing the contractor on his site and therefore made no money from the site � a point the 5th Circuit recognized. Regardless, the site was something from which Maxwell could have eventually reaped a profit, which is what TMI alleged made his Web site a commercial venture that violated trademark laws. “He wanted to both gripe, and he wanted to have something going on that wasn’t purely griping,” Headley alleges. Maxwell denies that and says he just wanted to inform people about his experience with the company. No Settlement Maxwell didn’t walk into Hoyt’s federal courtroom without any legal consultation. He had talked to an attorney long before the 2003 trial, an attorney who had urged Maxwell to settle. “He told me to settle, not because I was wrong, but because it would cost me $10,000 to $15,000 to fight it,” Maxwell says. Maxwell says he couldn’t afford the attorney fees on his $75,000-a-year salary. “And I looked at the law, and everything I read told me what I did was right,” he says. Headley said TMI offered to settle with Maxwell, agreeing to drop the suit if Maxwell dropped the domain name. Maxwell agreed to and then rescinded the settlement offer shortly before the trial, Headley says. And the reason he did that, Maxwell says, is because he’d rather have a trial without a lawyer representing him than to be pushed into a settlement by a company that had more money than he did. Maxwell’s reluctance to settle seemed to aggravate Hoyt, Maxwell and Headley say. “Poor guy just got fried by Judge Hoyt,” Headley says. “Judge Hoyt really got after him for quite some time, because we already had a settlement agreement.” Hoyt did not return two telephone calls seeking comment before presstime on May 6. And after Hoyt’s adverse judgment, Levy advised Maxwell to settle. Maxwell was willing to drop the domain name in exchange for the company dropping the damages. But by that time, the company wasn’t willing to settle, Levy says. “I said, “Look, we really don’t want to get into this,’ ” Levy says of his failed settlement talks with TMI. “ Either the owner of the company thought he could get blood from a stone . . . or he . . . wanted to send a “don’t-mess-with-me’ message.” “Number one, we weren’t interested in the money,” Headley says. “We thought we were in the right on the use of our name. And that’s what we didn’t like.” So Levy took the case to the 5th Circuit � something he initially didn’t want to do, he says, because Maxwell had done little to preserve the record through objections during his pro se appearance at trial. “I was concerned that the record was pretty bare bones,” Levy says. “[And] there was an adverse precedent,” Levy says. The adverse precedent was E & J Gallo Winery v. Spider Webs Ltd. In that 2002 5th Circuit decision, the court upheld an injunction that prohibited Spider Webs from using the domain name ernestandjuliogallo.com because the defendant had obtained the site name in “bad faith,” the judges ruled. Spider Web maintained that they never tried to sell the domain name and there was no threat to Gallo. [ See "Cybersquatting Suit Bears Fruit For Winery," Texas Lawyer, Feb. 12, 2003, page 1.] But the 5th Circuit distinguished Maxwell from Gallo by finding there was no evidence that Maxwell set up his Web site in bad faith or that he intended to profit from his site. “We are convinced that TMI failed to establish that Maxwell had a bad-faith intent to profit from TMI’s mark and that the district court’s conclusion to the contrary was clearly erroneous,” Judge Edward Prado wrote in an opinion joined by Judges Eugene Davis and Rhesa Barksdale. “We particularly note that Maxwell’s conduct is not the kind of harm that ACPA was designed to prevent,” Prado wrote. Appellate victories for the little guys such as Maxwell are just beginning, says Phillip Page, a professor at South Texas College of Law in Houston who teaches courses in trademark and unfair competition. Early rulings on Web-domain cases tended to favor monied corporations that were protective of their trade names, but not any longer, Page says. “It’s the guys like our defendant here who are beginning to emerge increasingly victorious,” Page says of Maxwell. “I think the courts are beginning to realize that there are two sides to this story. They’re deciding them on whether or not this constitutes bad faith.” And even Headley, TMI’s lawyer, says he had to hand it to his pro se trial opponent. “He’s persistent,” Headley says. “I don’t fault the guy. He succeeded in the long run.”

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