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Here’s What Happened:
Air travel can be very expensive. Sometimes ticket pricing makes sense. Sometimes it doesn’t. For instance, it could be less expensive to fly with a stop or two than to fly directly to your destination. So you’d book a flight with your true destination in the middle and just get off the plane without completing the journey.
Skiplagged, Inc. developed a website that helps travelers with hidden-city ticketing. They even give advice on what to tell gate agents if you are questioned and how to handle your luggage. The Skiplagged website sported the American Airlines’ flight symbol without permission.
Skiplagged’s business model may have helped travelers but the airline and travel industry was not going to stand by. American Airlines sued Skiplagged for breach of contract, copyright infringement, trademark infringement and unfair competition.
The district court entered summary judgment for American Airlines on the copyright claim.
Skiplagged had a few defenses. First, it disputed whether the symbol was copyrighted because American Airlines failed to produce the deposit of the work with the Copyright Office. When someone files an application to register a copyright, they must deposit a copy of the work with the Copyright Office. The court didn’t seem to think the deposit issue was a problem. The court noted that the symbol was described in the application. The court took judicial notice that Skiplagged used an exact copy of American Airlines’ copyrighted flight symbol. Second, Skiplagged argued that use of the symbol was fair use because it was used for comparative advertising. The court didn’t give that defense much time either. Skiplagged was reselling American Airline tickets which the court described as “patently not fair use”.
After entry of summary judgment the issue of copyright damages went to trial. The jury returned a verdict awarding American Airlines a total of $9.4 million for actual damages and disgorgement of profits on the copyright claim. There are other phases of the trial that have to occur before final judgment is entered.
WHY YOU SHOULD KNOW THIS: Although skiplagging is technically legal, the travel industry is aware of it and has been considering ways to combat it. In a way, this case is more than a copyright case. It's really a case about building a business model on an industry loophole. Those who build a business on an industry loophole should proceed with great caution.