## Facts

- TrafficSchool.com, Inc. and Drivers Ed Direct, LLC sold online traffic school and driver’s education courses and competed for online customers and referrals.
- Edriver, Inc. and related entities operated DMV.org, a for-profit website offering driver-related information and monetizing traffic through sponsored links and referral fees.
- Plaintiffs alleged DMV.org’s domain name, site presentation, and marketing created a misleading impression that the site was an official state DMV site or endorsed by state DMVs.
- Evidence included consumer confusion and marketing practices that drew users in before they encountered disclaimers.
- The district court found a Lanham Act § 43(a) false advertising violation, issued a permanent injunction requiring a mandatory “splash screen” disclaimer, denied damages and profits for lack of proof of past injury and causation, denied attorney’s fees as not “exceptional,” and declined to hold defendants in contempt for technical injunction violations.

## Issues

1. Whether plaintiffs had Article III standing and Lanham Act standing to sue as competitors alleging customer diversion from misleading representations.
2. Whether DMV.org’s overall presentation and marketing constituted false advertising under Lanham Act § 43(a) by implying governmental affiliation or endorsement.
3. Whether a mandatory splash-screen disclaimer injunction was appropriately tailored, including in light of First Amendment limits on compelled speech and noncommercial content.
4. Whether plaintiffs were entitled to damages or disgorgement of profits despite limited proof of quantifiable past injury and causation.
5. Whether the case was “exceptional” under 15 U.S.C. § 1117(a), requiring reconsideration of attorney’s fees.
6. Whether joint and several liability findings and denial of contempt were erroneous.

## Decision

- Affirmed that plaintiffs had Article III standing and satisfied Ninth Circuit Lanham Act standing requirements.
- Affirmed liability under Lanham Act § 43(a) because the site’s net impression was likely to mislead consumers into believing DMV.org was government-affiliated.
- Upheld injunctive relief requiring a prominent disclaimer in principle, but remanded for reconsideration of the splash screen’s duration and specific terms based on current practices and dissipation of past deception.
- Affirmed denial of damages and profits because plaintiffs failed to prove compensable past injury and causation with sufficient certainty.
- Reversed the denial of attorney’s fees as an abuse of discretion and remanded for reconsideration under the “exceptional case” standard.
- Affirmed joint and several liability findings and affirmed the refusal to hold defendants in contempt for technical injunction violations.

## Legal Principles

- Competitors may establish Article III injury and Lanham Act standing by plausibly alleging consumer diversion and harm to commercial interests, when proximately caused by misleading advertising.
- Under Lanham Act § 43(a), liability may rest on the overall net impression of a message; literally true statements can still be actionable when combined with context and presentation that mislead consumers.
- Courts may order corrective disclaimers to remedy misleading commercial speech, but injunctive relief must be narrowly tailored to the deception and may require adjustment as circumstances change and confusion dissipates.
- Monetary relief for false advertising requires non-speculative proof of past injury and a causal connection sufficient to permit a compensatory calculation.
- Attorney’s fees under 15 U.S.C. § 1117(a) require application of the “exceptional case” standard; sustained deceptive conduct may justify fees even if damages are not awarded.
- Joint and several liability may be imposed where affiliated entities and individuals jointly control, operate, or benefit from the unlawful conduct; contempt is discretionary and may be denied for minor or reasonably disputed compliance issues.

## Conclusion

The Ninth Circuit held that a commercial website can violate the Lanham Act by creating a misleading impression of government affiliation through domain name, design, and marketing, affirmed injunctive relief and the denial of damages for lack of proof, but required reconsideration of the injunction’s scope over time and remanded for reassessment of attorney’s fees under the exceptional-case standard.


TrafficSchool.com, Inc. v. Edriver, Inc., 653 F.3d 820 (9th Cir. 2011)