United States District Court, W.D. Texas, Austin Division
SPARKS UNITED STATES DISTRICT JUDGE
REMEMBERED on this day the Court reviewed the file in the
above-styled cause, and specifically Plaintiff Wickfire,
LLC's Motion for Entry of Final Judgment [#363],
Defendants TriMax Media, LLC, WREI, Inc., Josh West, and
Laura Woodruffs Response [#367] in opposition, and
Wickfire's Reply [#369] in support, as well as
Defendants' Motion for Judgment as a Matter of Law
[#364], Wickfire's Response [#368] in opposition, and
Defendants' Reply [#370] in support. Having reviewed
the documents, the governing law, and the file as a whole,
the Court now enters the following opinion and orders.
Wickfire and Defendant TriMax are both advertisers competing
in the pay-for-performance search engine marketing business.
As recounted in the Court's Order of March 25, 2016,
merchants in the search engine marketing business partner
with advertisers like Wickfire and TriMax, often through
agencies (known as affiliate networks) who manage the
merchants' advertising needs. See Order of Mar.
25, 2016 [#198]. Those advertisers then generate ad campaigns
and pay search engines a fee to place their ads alongside
certain search terms. The advertisers earn money only to the
extent their ads are effective in driving customer traffic.
Google AdWords auction is the platform through which an
advertiser pays Google to place their ads alongside search
terms. Advertisers like Wickfire and TriMax bid on keywords
associated with search terms, so when a customer enters the
search terms, the advertiser's ad appears. A new auction
is conducted instantly each time a search query is entered.
Each advertiser must specify the highest cost-per-click price
it is willing to pay, and Google considers that price ceiling
in determining which ad will be the winning ad. In addition
to specifying the maximum cost-per-click it is willing to
pay, an advertiser must submit a "budget"
identifying the maximum amount it is willing to pay Google to
display an ad. When this budget is exhausted, the
advertiser's ad campaign is "paused, " meaning
the ad no longer appears alongside the selected search terms.
case, each party claims the other fraudulently interfered
with its business. Wickfire has sued TriMax Media, LLC, Laura
Woodruff, TriMax's owner and CEO, WREI, Inc., and Josh
West, TriMax's Director of Business Development and
WREI's CEO (collectively, Defendants), alleging
Defendants (1) placed fraudulent advertisements on Google
AdWords that falsely designated Wickfire as their origin in
violation of the Lanham Act, and (2) engaged in "click
fraud" and placed fraudulent advertisements to
intentionally interfere with Wickfire's current and
prospective contractual and business relationships, and they
did so as part of a conspiracy to harm Wickfire. Wickfire
contends these fraudulent ads misidentified Wickfire as the
source of the ad by (1) including a tracking identifier
uniquely assigned to Wickfire and directly linking to a
merchant's website, or (2) linking to Wickfire's
website TheCoupon.co, which contains individual webpages for
each merchant. Such fraudulent advertisements, Wickfire
argues, violated trademark laws and therefore breached the
terms of its contracts with merchants and affiliate networks.
for its part, has counterclaimed against Wickfire and brought
third-party claims against Chet Hall and Jon Brown,
co-founders of Wickfire (collectively, Counter-Defendants),
alleging Counter-Defendants employed a computer program
called WebCrawler to manipulate the Google AdWords auction.
According to TriMax, this forced TriMax to pay higher costs
for a winning ad and prevented TriMax from promoting its
merchants, all in violation of Texas laws prohibiting
intentional interference with existing and prospective
business relationships. TriMax also alleges Counter-Defendants
engaged in "click fraud" and disparaged TriMax
throughout the industry. Both TriMax and Woodruff sued
Counter-Defendants for defamation.
trial was held from January 30, 2017, to February 2, 2017.
The jury returned a unanimous verdict in favor of Wickfire,
finding Defendants TriMax, Laura Woodruff, WREI, and Josh
West (1) misrepresented Wickfire as the source of
advertisements by placing advertisements containing
identifying information distinctive of Wickfire in a manner
that was likely to cause confusion; (2) intentionally
interfered with Wickfire's existing contracts; (3)
tortiously interfered with Wickfire's prospective
business relationships; (4) were part of a conspiracy that
damaged Wickfire; and (5) acted with malice or gross
negligence. The jury awarded Wickfire $2, 318, 000.00 in
compensatory damages as a result of Defendants'
intentional interference with Wickfire's existing
contracts and prospective business relationships. The jury
attributed 95% of the responsibility to Laura Woodruff and 5%
of the responsibility to Josh West.
jury also found Counter-Defendants intentionally interfered
with TriMax and Laura Woodruffs existing contracts, but
concluded they had a colorable right to do so. The jury
further found Counter-Defendants were not liable for
TriMax's remaining counterclaims of intentional
interference with prospective business relationships,
business disparagement, and defamation. As a result, the jury
unanimously found TriMax and Laura Woodruff should take
nothing on their counterclaims and third-party claims.
promptly filed their renewed motion for judgment as a matter
of law under Federal Rule of Civil Procedure 50(b) or, in the
alternative, a new trial under Federal Rule of Civil
Procedure 59, arguing the evidence presented at trial was
legally insufficient to support the jury's verdict.
See Renewed Mot. J. Matter Law [#364]. Wickfire
cross-moved for entry of judgment. See Mot. Entry J.
[#363]. These motions have been fully briefed and are now
ripe for the Court's consideration.
Renewed Rule 50(b) Motion
ruling on a Rule 50(b) motion for judgment as a matter of
law, "[a] jury verdict must stand unless there is a lack
of substantial evidence, in the light most favorable to the
successful party, to support the verdict." Am. Home
Assurance Co. v. United Space All., LLC, 378 F.3d 482,
487 (5th Cir. 2004). Accordingly, the question for this Court
"is whether the state of proof is such that reasonable
and impartial minds could reach the conclusion the jury
expressed in its verdict." Id. (internal
quotation marks omitted); see also Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 151 (2000)
("Thus, although the court should review the record as a
whole, it must disregard all evidence favorable to the moving
party that the jury is not required to believe.").
a renewed Rule 50(b) motion is filed after a judgment is
entered. See Fed. R. Civ. P. 50(b). However, the
motion is still timely even if it is filed before the
judgment is entered, because Rule 50(b) sets only the outer
filing limits. See Gaia Technologies Inc. v. Recycled
Prods. Corp., 175 F.3d 365, 374 (5th Cir. 1999)
("Although Rule 50(b) permits a party to renew its
motion as late as ten days after the judgment is entered, it
does not proscribe filing a renewed motion before judgment is
argue they are entitled to judgment as a matter of law on
Wickfire's claims of intentional interference with
existing contracts, tortious interference with prospective
business relationships, civil conspiracy, and false
designation in violation of the Lanham Act. As explained
below, the Court denies Defendants' renewed motion for
judgment as a matter of law on each ground.
Intentional Interference with Wickfire's Existing
prove a claim for intentional interference with existing
contracts under Texas law, a plaintiff must establish (1) the
existence of a contract; (2) intentional interference; (3)
the interference was a proximate cause of the plaintiffs
damages; and (4) actual damages. See Powell Indus. Inc.
v. Allen, 985 S.W.2d 455, 456 (Tex. 1998). Defendants
contend the evidence presented at trial was insufficient to
support the jury's finding of the existence of a contract
and its award of damages.
Defendants' challenge to the existence of a contract, the
Court finds Wickfire offered evidence regarding its merchant
and affiliate network contracts and their corresponding terms
and conditions. Afternoon of Jan. 30, 2017 Tr. at
45:25-46:24; Pl's Exs. [#361-6] Ex. 122 (Commission
Junction Contract); id. [#361-7] Ex. 126 (Rakuten
Marketing LLC Contract) at 15-53; id. [#361-8] Ex.
127 (Sharesale.com, Inc. Contract) at 1-6. Each affiliate
contract contains a specific provision which prohibited
advertisers from infringing on merchant trademarks. For
instance, Section 8.7 of Wickfire's Rakuten Marketing LLC
contract provides, "You may not use any name, trademark,
service mark, domain name, or other Intellectual Property
Rights of any third party ... in any way or for any purpose
that infringes or violates any Intellectual Property Rights
or other rights of such third party[.]" Rakuten
Marketing LLC Contract at 28. Wickfire's contracts with
other major affiliate networks include similar provisions.
See, e.g., Commission Junction Contract at 6;
Pl's Exs. [#361-7] Ex. 125 (eBay Enterprise, Inc.
Contract) at 1-14; Sharesale.com, Inc. Contract at 5.
Wickfire identified dozens of merchants covered by its major
affiliate contracts. Pl's Exs. [#361-4] Ex. 104 (Merchant
Violation Notices) at 587-91. Moreover, Hall testified that
an affiliate contract may cover hundreds or thousands of
individual merchant relationships. Afternoon of Jan. 30, 2017
Tr. at 46:21-24. Notwithstanding Defendants' assertions
to the contrary, Wickfire presented evidence of the specific
contracts and particular provisions that support an inference
Defendants intentionally interfered with existing contracts.
there is sufficient evidence in the record to support the
jury's finding that Defendants' conduct proximately
caused Wickfire damage in the amount of $1, 984,
000.00. Wickfire based its lost profits analysis
on its inability to produce direct advertising campaigns as
it had historically done under its existing contractual
relationships with affiliate networks. At trial, Hall
testified its affiliate contracts serve as "the
lifeblood" of Wickfire's advertising business.
Afternoon of Jan. 30, 2017 Tr. at 46:24. Jared Jordan,
Wickfire's damages expert, testified, "there's
no doubt based on the historical information and what's
happening in the market that [but for the impersonating ads]
Wickfire's ... net advertising campaigns would have
continued to grow" in accordance with the damages
claimed. Afternoon of Jan. 31, 2017 Tr. at 91:3-6. The jury
heard evidence that the only reason it was unable to generate
this established trajectory of businesses was because of the
time and resources Wickfire had to redirect toward combatting
Defendants' impersonating ads. According to Hall, had
Wickfire not focused on defending against the impersonating
ads, it risked losing "a third of [its] business
overnight" from just one of its affiliate networks.
Afternoon of Jan. 30, 2017 Tr. at 46:21-23. Jordan further
testified that once the impersonating ads began, Wickfire
"started losing campaigns at a rate of average of about
seven per month." Afternoon of Jan. 31, 2017 Tr. at
to Defendants' representation, Wickfire was not required
to enumerate its lost profits for each individual merchant
contract. See Homoki v. Conversion Servs., Inc., 717
F.3d 388, 399-400 (5th Cir. 2013). In Homoki, a
credit card processing software company sued its competitor
for intentional interference with existing contracts.
Id. at 394. The software company did not sell its
products to merchants directly, but rather contracted with
intermediary companies that connected the software company to
merchants. Id. at 393-94. The Fifth Circuit
concluded the software company produced sufficient evidence
to support its lost profits analysis, which was based
entirely on the business the software company would have
generated from the underlying merchants via its contract with
an intermediary company. Id. at 399-400. Notably,
the Fifth Circuit did not require the software company to
breakdown its lost profits analysis for each individual
merchant contract. See id.
the software company in Homoki, Wickfire's
intentional interference claim is premised on a company's
interference with its intermediate, or affiliate, contracts.
As in Homoki, Wickfire could establish its damages
by basing its lost profits analysis on the business it would
have generated from the underlying merchants. It was not
required to enumerate its lost profits for each individual
Wickfire's proposed damages were not conjured from thin
air, but based on "objective facts, figures, [and] data
from which the amount of lost profits can be
ascertained." ERI Consulting Eng'rs, Inc. v.
Swinnea,318 S.W.3d 867, 876 (Tex. 2010). In
establishing Wickfire's damages, Jordan relied on the
same factors the founder of the software company in
Homoki considered in calculating his damages: the
company history, duration of merchant contracts in the
industry, and the rate of increase in sales based on
historical growth trends. 717 F.3d at 399-400. Wickfire was
not required to produce tax records or other financial
records to establish its lost profits. Swinnea, 318
S.W.3d at 876 (quoting Holt Atherton Indus., Inc. v.
Heine,935 S.W.2d ...