FriendFinder Close to Settlement in FacebookOfSex Case

Nov 8, 2011 4:15 PM PST

OAKLAND, Calif. — FriendFinder Networks Inc. is close to a settlement deal with giant social networking site Facebook over infringement claims arising from the operation of FacebookOfSex.com.

In the seven-month-old suit, Facebook claims the name of FriendFinder's Traffic Cat site, FacebookOfSex.com, is too similar to its own trademarked name.

But today a judge green-lighted an indefinite stay in the case for continued settlement discussions under the supervision of a magistrate judge.

In addition, nearly all deadlines in the case — including deadlines to amend the complaint as well as discovery deadlines for the parties and subpoenas to third parties — have been vacated.

Both sides participated Friday in a full-day settlement conference that continued into the evening, and where "significant progress was made to resolve all disputes."

"While meaningful progress toward settlement was made, several issues require further discussion," according to a brief prepared by FriendFinder attorney Kristin Holland and Facebook counsel Jeffrey Norberg. "The parties believe that continued discussions between the parties will likely lead to a settlement."

If settlement talks break down, U.S. Judge Saundra Brown Armstrong ordered that a Jan. 12 case management conference proceed.

In its original suit filed in April at U.S. District Court in San Francisco, Facebook says FacebookOfSex.com "is a blatant attempt ... to hijack Facebook's fame for illicit financial gain."

Facebook in the suit claims that FacebookOfSex.com provides nearly identical user services as its social network. It also complains in the suit that the launch of the site was a "calculated scheme to capitalize on the fame of Facebook's marks," particularly because they spread affiliate advertising material, including banner ads that drive traffic to FriendFinder sites.

Facebook wants the court to declare its rights in connection with its use of the words "friend finder," or deem those words have not  "acquired secondary meaning in the marketplace."

But FriendFinder claims that it has problems with Facebook's use of the term "friend finder," which it also has trademarks for.

The suit, which includes trademark dilution and cybersquatting claims among 11 claims, seeks injunctive relief, revenue from the site and actual and punitive damages.

Attorneys Holland and Rhodes were not immediately available for comment to XBIZ.

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