Appeals Court Rules on Skydive Arizona’s Multimillion-Dollar Award Against Skyride
The United States Circuit Court of Appeals for the Ninth Circuit rejected the lower court’s attempt to double parts of the $6.6 million in damages the jury awarded against Skyride, a national advertising company that markets sky-diving services and sells certificates for people to redeem at sky-diving drop zones. The appeals court ruled the increase to over $10 million was aimed at punishing Skyride for false advertising, trademark infringement, and cybersquatting, which is not the purpose of enhancing damages.
Skydive Arizona, Inc., one of the world’s most well-known skydiving centers in Arizona, sued Skyride in 2005 and a district court ruled on the claims in 2009. Skydive Arizona has been operating under the mark, SKYDIVE ARIZONA since 1986. Skydive Arizona has not advertised with or accepted certificates from Skyride.
Skydive Arizona sued Skyride for owning and operating numerous websites specifically referencing Arizona and skydiving, such as PhoniexSkydiving and ScottsdaleSkydiving, even though it did not have operations in Arizona. Skyride also registered numerous domain names referencing and even using Skydive Arizona’s mark, such as skydivearizona.net and arizonaskydive.com. The district court stated Skyride’s actions led customers to believe that Skyride had operations in Arizona and that Skydive Arizona would accept Skyride certificates. Reports existed of Skyride customers buying certificates thinking they could be redeemed at Skydive Arizona. The district court stated that this was “a strategic business decision to represent ownership because they thought it would attract more customers.”
During the 2009 trial, the jury awarded damages of $1 million for false advertising, $2.5 million for trademark infringement, and $600,000 for cybersquatting. It also awarded Skydive Arizona $2.5 million in lost profits. The appeals court upheld these amounts, along with a permanent injunction against Skyride; only rejecting the district court judge’s doubling of the award. The appeals court noted when reversing the actual damage enhancement that “although the District Court may have considered a secondary deterrent rationale when it briefly discussed Skyride’s knowing refusal to cease its infringing acts, we hold that such possible considerations do not overcome the District Court’s apparent intent to punish.”
Was the appeals court correct in reinstating the original damages awarded by the jury?