Burgess v. Gilman

As a result of criminal proceedings conducted against a company called A.G.E. and its former owner, the federal government seized a brothel that A.G.E. had operated under the service marks Mustang Ranch, World Famous Mustang Ranch, and World Famous Mustang Ranch Brothel (collectively, the Mustang Ranch marks). David and Ingrid Burgess and Sherwin M. Fellen (collectively, Burgess) (plaintiffs) were the first users of the Mustang Ranch marks after A.G.E. went out of business, and they operated their own brothel under those marks. The federal government then conducted an eBay auction of A.G.E.’s buildings and of the Mustang Ranch marks. L. Lance Gilman (defendant) purchased those asserts through the eBay auction and reopened the brothel under the Mustang Ranch marks. Burgess sued Gilman for trademark infringement, challenging the validity of the federal government’s assignment of the Mustang Ranch marks to Gilman. Gilman counterclaimed against Burgess for trademark infringement and moved for a permanent injunction, requesting that the court permanently enjoin Burgess from using the Mustang Ranch marks. In the district court, Gilman introduced evidence indicating that the buildings that he had purchased through the eBay auction (the Mustang Ranch buildings) represented the heart of Gilman’s services. For example, the court received witness testimony that the parlor, bar, and hot tubs all comprised important elements of the atmosphere associated with the Mustang Ranch marks.