Florida Virtual School v. K12, Inc.

District Court, M.D. Florida·Decided December 1, 2023·No. 6:20-cv-02354·Unknown

Opinion

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

FLORIDA VIRTUAL SCHOOL,

Plaintiff,

v. Case No: 6:20-cv-2354-GAP-EJK

K12, INC. and K12 FLORIDA, LLC,

Defendants

MEMORANDUM OPINION This cause came before the Court following a bifurcated bench trial conducted October 16-19, 2023. In Phase 1, the parties presented their cases on Defendants’ Counterclaim for Cancellation of Plaintiff’s federally registered trademarks for fraud on the U.S. Patent and Trademark Office. I. Background Plaintiff Florida Virtual School (“Plaintiff”) is an agency of the State of Florida which provides online educational services to kindergarten, elementary, middle, and high school students in Florida and around the world. Doc. 1, ¶ 2. Defendants K12, Inc. and K12 Florida, LLC (“Defendants”) are for-profit companies similarly engaged in the business of providing online educational services to kindergarten through twelfth grade students in Florida and globally. Id., ¶¶ 3-4. Plaintiff filed suit on December 22, 2020, alleging trademark infringement, false advertising, unfair competition, and breach of the parties’ agreement resolving related prior litigation1 (the “Settlement Agreement”). Id., ¶¶ 74-143. After discovery yielded several factual revelations, and with leave of the Court, Defendants amended their

Answer on March 13, 2023, to include a Counterclaim for Cancellation of Plaintiff’s trademarks on the basis of fraud on the U.S. Patent & Trademark Office (“PTO”). Doc. 155, ¶¶ 54-75; see also Docs. 133, 151, 153. Defendants allege that Plaintiff was

not active in the primary education market in 2002, despite stating so in its applications to the PTO. Doc. 155, ¶¶ 69-70, 74-75. On cross motions for summary judgment, the Court determined that Defendants’ Counterclaim was precluded as to Plaintiff’s two 2010 trademark

registrations2 by release clauses in the Settlement Agreement. Doc. 289 at 6-12. The Court additionally found that there was no basis for Defendants’ allegations as applied to two of Plaintiff’s other trademark registrations.3 Id. at 14-15. The Court

concluded there were disputed questions of material fact as to the issues of falsity,

1 Plaintiff previously sued Defendants for trademark infringement in Case No. 6:11-cv- 831-ORL-31-KRS. Doc. 302 at 16. 2 See also Doc. 1-1 at 2, 4 (Plaintiff’s 2010 trademarks are Registrations No. 3,830,765 and No. 3,873,393). 3 See also Doc. 1-1 at 12, 18 (Plaintiff’s applications did not claim these trademarks— Registrations No. 5,113,241 and No. 5,113,259—were used in commerce until 2016). knowledge, and intent regarding Plaintiff’s three remaining trademark registrations (the “Marks”) and set the matter for a bench trial. See id. at 15-18. II. Findings of Fact4 The parties agree that Plaintiff is a public agency that began developing and

delivering online and distance learning programs in 1997. Doc. 302 at 15. Plaintiff was initially named Florida Online High School before it was renamed Florida Virtual School in 2001. Id. Defendants operate several distinct online schools in

Florida, including the Digital Academy of Florida and the Florida Cyber Charter Academy. Id. at 16. Both parties presently offer kindergarten through twelfth grade (K-12) online educational services. Id. at 16. Plaintiff’s three federally registered trademarks in dispute were issued by the PTO on January 3, 2017: Registrations No.

5,113,225, No. 5,113,235, and No. 5,113,248. Id. at 16-17; see also Doc. 1-1 at 6-10, 15- 16. Founded in 1997 as an online high school, Plaintiff had few, if any,

competitors at the time of its inception. Doc. 334 at 8:10-13. It did not operate in the kindergarten through fifth grade (K-5) market and did not have an interest in doing so at that time. Id. at 8:19-21, 9:22-24. However, during its early years, Plaintiff was

4 The evidence introduced in Phase 1 revolved primarily around establishing a timeline for Plaintiff’s foundational years and growth into various educational markets. regularly running pilot programs and developing courses and curriculum for middle school-aged students (grades 6-8). See id. at 34:15-35:8; see also Doc. 352-7. Indeed, Plaintiff developed and launched its first middle school courses in 2002. Doc. 334 at 85:12-21. Then, in 2004, the Florida Legislature required Plaintiff to

create a full suite of middle school courses, which were ultimately available for the 2004-2005 school year.5 Doc. 351-20 at 31; Doc. 351-34; Doc. 352-51 at 2; see also id.; Doc. 334 at 105:7-18.

After seeing the rapid growth of its middle school (grades 6-8) program, Plaintiff began expanding into elementary (K-5) education services with the hiring of Sarah Sprinkel (“Sprinkel”) in 2008. See Doc. 334 at 37:6-10, 85:18-21; Doc. 331 at 109:4-8. Sprinkel began working with smaller groups of students to initially build

out “specials” program areas like art, music, and physical education. Doc. 331 at 109:4-110:5; see also Doc. 334 at 47:3-6. One of the first such pilots was the Captain Cardio physical education program that Sprinkel piloted in 2009.6 Doc. 331 at

5 Plaintiff’s corporate representative, John Schultz (“Schultz”), credibly testified that there would have been approximately 100,000 semester completions in the middle school grades (6-8) between 2002-2010. Doc. 334 at 99:1-5. Schultz estimated that since 2010 there have likely been roughly one million semester completions in grades K-8. Id. at 99:6-13; see also Doc. 352-37, Doc. 352-38. 6 Sprinkel testified that the Captain Cardio program was run, at least in part, in conjunction with existing schools like Audubon Park in Winter Park, Florida. Doc. 331 at 110:17- 22. 109:22-24. After the “specials” were developed, Sprinkel’s team moved on to the core subjects of reading, math, science, and social studies. Id. at 110:25-111:2. On July 31, 2008, Plaintiff inked a partnership with Connections Academy, another online education services company, to provide it with a full online

education program for kindergarten through eighth grades (K-8). Doc. 334 at 97:12- 18; see also Doc. 350-4. While Connections Academy provided much of the day-to- day instructional and operational oversight during this period, the students were

enrolled with Plaintiff’s school and were considered by the state to be Plaintiff’s students. Doc. 334 at 96:5-98:10. During this partnership, Plaintiff deployed its Marks alongside Connections Academy’s to co-brand their K-8 educational program. Id. at 33:25-34:8, 102:18-104:4; see also, e.g., Doc. 351-33. Beginning in 2015,

Plaintiff tasked Clark Berry (“Berry”) and others to build off of Sprinkel’s work to develop its own full suite of elementary programs in order to bring all of its K-8 services in-house. Doc. 330 at 36:19-37:7; see also Doc. 352-23. Plaintiff ceased its

partnership with Connections Academy following the 2017-2018 school year, after which it provided K-12 services fully in-house. Doc. 334 at 114:4-6; see also Doc. 302 at 16. On April 27, 2016, Plaintiff filed applications to register the Marks at issue in

this litigation. See Docs. 352-1, 352-2, 352-3. Each application listed Allison R. Imber (“Imber”) as the corresponding attorney and each was signed by Melissa Wurzel (“Wurzel”), Plaintiff’s Senior Director of Marketing and Communications at the time. See id.; see also Doc. 327-9 at 30:22-31:7. In the description of services section, Plaintiff stated that it provided online educational services, conducted distance learning instruction, and developed curriculum—all at the primary and secondary

level. See Doc. 350-1 at 1, Doc. 350-2 at 1, Doc. 350-3 at 2-3. The applications for Registrations No. 5,113,225 and No. 5,113,235 stated that the trademarks were first used in commerce “[a]t least as early as 00/00/2002,” and the application for

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