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Dalkita, Inc. v. Distilling Craft, LLC

United States District Court, D. Colorado

December 19, 2018

DALKITA, INC., d/b/a Dalkita Construction, Plaintiff,
v.
DISTILLING CRAFT, LLC, and DEVIN MILLS, Defendants.

          ORDER

          PHILIP A. BRIMMER, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff's Motion for Preliminary Injunction [Docket No. 9] and Defendants' Verified Cross-Motion for Preliminary Injunction Against Dalkita, Inc. and Colleen Moore [Docket No. 19]. The Court has jurisdiction over this lawsuit pursuant to 28 U.S.C. §§ 1331 and 1367.

         I. BACKGROUND

         Plaintiff Dalkita, Inc. (“Dalkita”) filed this action on June 6, 2018 asserting the following claims for relief: (1) trademark infringement and false designation of origin under § 43(a) of the Lanham Act, 15, U.S.C. § 1125(a); (2) cybersquatting under § 43(d) of the Lanham Act, 15 U.S.C. § 1125(d); (3) deceptive trade practices under the Colorado Consumer Protection Act, Colo. Rev. Stat. § 6-1-101 et seq.; (4) trademark infringement under Colorado common law; (5) unfair competition under Colorado law; (6) intentional interference with contractual relations under Colorado law; and (7) misappropriation of trade secrets under the Colorado Uniform Trade Secrets Act, Colo. Rev. Stat. § 7-74-102 et seq. Docket No. 1. On July 30, 2018, plaintiff moved for a preliminary injunction on its federal trademark infringement and cybersquatting claims. Docket No. 9.[1] On August 24, 2018, defendants filed a cross-motion for a preliminary injunction based on their counterclaims for trademark infringement under § 43(a) of the Lanham Act and unfair competition under Colorado law. Docket No. 19. The Court held an evidentiary hearing on both preliminary injunction motions on October 9, 2018. Docket No. 36.

         II. FINDINGS OF FACT

         The Court makes the following findings of fact based on the parties' filings and the evidence presented at the October 9, 2018 evidentiary hearing:

         1. Dalkita is a full service architecture and construction firm based in Littleton, Colorado. Dalkita's primary focus is designing distilled spirits plants. Docket No. 1 at 2, ¶¶ 7-8. Colleen and Scott Moore are the co-owners of Dalkita.

         2. In October 2016, Dalkita hired defendant Devin Mills as a part-time distillery engineer. When hired, Mr. Mills owned his own company, Devin Mills Consulting, which he had started in 2012. Mr. Mills' job duties at Dalkita included helping to design and build distilleries. He also engaged in limited marketing activities, such as talking with prospective clients and attending the American Distillery Institute (“ADI”) conference. See Exhibit 9 at 3-4.

         3. On April 18, 2017, Mr. Mills signed Dalkita's employment manual, which provides that “[i]ncidental and occasional personal use of company computers, phones, or electronic mail and voice mail systems is permitted, but information and messages stored in these systems will be treated no differently from other business-related information and messages.” Exhibit 1 at 14. The first page of the manual states that “[t]he content of a manual does not constitute nor should it be construed as a promise of employment or as a contract between Dalkita Construction, Inc. dba Dalkita Architecture & Construction, and any of its employees.” Id.

         4. In January 2017, Mr. Mills began developing the idea for a podcast aimed at helping distillers “get better at their jobs.” No. one at Dalkita instructed Mr. Mills to create a podcast or authorized him to develop the podcast during work hours. Between January 2017 and March 2017, Mr. Mills independently registered the domain name distillingcraft.com, created a landing page for the website, hired an artist to design a “Distilling Craft” logo, and developed a basic structure for the podcast. See Exhibits A, B, C. The landing page of the distillingcraft.com website stated “Podcast Coming Soon - May 2017.” The website was publicly accessible, but only six people signed up to be notified of the podcast via the website before July 18, 2017. Those individuals consisted of Mr. Mills, his wife, two of his wife's co-workers, Mr. Mills' friend Michelle, and one “random guy.” Mr. Mills does not know how many people saw the landing page of the distillingcraft.com website between the date of its initial publication and July 18, 2017.

         5. On April 1, 2017, Mr. Mills and the Moores flew to Baltimore, Maryland for the ADI conference. Dalkita paid for Mr. Mills' trip to Baltimore. Mr. Mills told the Moores about the podcast and distillingcraft.com during the flight to Baltimore. Mr. Mills testified that he informed the Moores of the podcast at that time because he felt that it would be unethical to solicit sponsors for the podcast at the conference without talking to Dalkita first. This testimony is corroborated by Ms. Moore's statement that Mr. Mills told her about the podcast in the “first quarter of 2017” and that the Moores informed Mr. Mills in April 2017 that they would reimburse him for any expenses associated with the podcast. Additionally, the first podcast-related entry in Mr. Mills' time records at Dalkita was on April 11, 2017. See Exhibit 9 at 4-5.

         6. Mr. Mills testified that he told “probably a couple hundred people” at the ADI conference to visit the distillingcraft.com website and “check out what we were doing.” 7. Mr. Mills testified that, after explaining his podcast idea to the Moores on the flight to Baltimore, he and the Moores entered into a sponsorship contract whereby Dalkita agreed to pay Mr. Mills his regular hourly rate for time spent on the podcast in exchange for Dalkita being the sole sponsor of the podcast. Mr. Mills testified that he initially asked Dalkita for $450-$500 per episode in exchange for sponsorship, but Mr. Moore suggested that Dalkita pay Mr. Mills on an hourly basis in order to avoid Dalkita having to fill out additional paperwork. Mr. Mills testified that producing one episode would require approximately ten hours of work. At the evidentiary hearing, the Moores denied the existence of any sponsorship agreement. Ms. Moore testified that Dalkita offered to pay for the costs of the podcast because the podcast belonged to Dalkita, not because of any sponsorship agreement. Likewise, Mr. Moore testified that there were no written or oral agreements concerning sponsorship.

         8. The morning after the April 1, 2017 flight to Baltimore, Ms. Moore changed the colors of the Distilling Craft logo from red to orange to reflect Dalkita's branding. Mr. Mills testified that he agreed to the change.

         9. Mr. Mills' time records reflect that, beginning on April 11, 2017, Mr. Mills logged an average of ten hours of work for each podcast episode. See generally Exhibit 9. However, Mr. Mills' podcast-related time entries do not always reference the podcast specifically, see, e.g., Exhibit 9 at 5 (April 21, 2017 time entry: “Emailed initial 4 desired interviewees then talked to James young and Sean smiley about when the scheduling would work best.”), or give any indication that the time Mr. Mills spent on the podcast was governed by a separate sponsorship agreement. See generally Exhibit 9.

         10. Ms. Moore was heavily involved in various aspects of the podcast's production, including the recruitment of guests, the development of questions for the interview segments, and marketing. See Exhibits 10, 11.

         11. In July 2017, Dalkita hired a third-party audio editing firm to produce the finished audio files for the podcast. See Exhibit 12.

         12. Updates on the podcast were incorporated into Dalkita's internal team meetings as early as May 2017. See Exhibit 15.

         13. In certain emails with prospective podcast guests, some of which were copied to Mr. Mills, the Moores referred to the podcasts as Dalkita's podcasts. See, e.g., Exhibit 10 at 1 (January 9, 2018 email from Colleen Moore asking if distiller would “like to be on our podcast”), 6 (August 15, 2017 email from Colleen Moore asking if distillers would like to be guests on “our new podcast”), 12 (August 23, 2017 email from Colleen Moore to distiller Scott Hanson characterizing podcast as Dalkita's “little side project”). In other emails, Ms. Moore referred to Dalkita as a sponsor. See, e.g., Exhibit 10 at 3 (July 18, 2017 email from Colleen Moore stating that Dalkita was “sponsoring/producing” the Distilling Craft podcast), 9 (August 23, 2017 email from Colleen Moore stating that Dalkita was “sponsoring a podcast hosted by Devin Mills”).

         14. There is no evidence that Mr. Mills attempted to correct the Moores when they told third parties that the podcast was “our podcast.” Mr. Mills admits that he did not attempt to correct that impression or talk to Ms. Moore privately about it.

         15. The first episode of the podcast was published on July 18, 2017. The podcast consists of three segments: (1) an engineering talk; (2) an interview; and (3) commercials.

         16. Mr. Mills was the host of the podcast. He was responsible for conducting interviews, recording the “technical talk” portion of the show, and posting the updated metadata for the podcast to Blubrry. Blubrry is a podcast hosting platform. The final audio files from the podcast were uploaded onto the Blubrry platform where they were served out to other websites, such as iTunes, Google, and dalkita.com. Dalkita paid for the Blubrry account from the inception of the account until approximately one month after Mr. Mills' termination.

         17. Dalkita paid for all expenses related to the podcast, except for the registration of the distillingcraft.com domain name. When Ms. Moore asked Mr. Mills to put the annual registration fee for the distillingcraft.com domain name on Dalkita's company credit card, Mr. Mills responded that he had already paid for the first year ...


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