American Airlines, Inc. V. Skiplagged, Inc.

Case Background

On August 17, 2023, Plaintiff American Airlines filed a Copyright Infringement lawsuit in the United States District Court, Texas Northern(Case number: 4:23cv860). Judge Mark Pittman presided over the case.

Cause

American Airlines, a major U.S. airline, filed a lawsuit against Skiplagged, Inc., a ticket booking website, for engaging in unauthorized and deceptive ticketing practices. Skiplagged was not an authorized agent of American Airlines but positioned itself as a middleman between American and consumers. Without permission, Skiplagged accessed American’s website, AA.com, to obtain real-time fare, schedule, and inventory information. It then displayed this proprietary data and sold American Airlines tickets on its own website, Skiplagged.com.

Skiplagged heavily advertised “hidden city” fares, a practice where passengers booked flights with layovers but intentionally ended their journey at the layover city. This practice violated American’s contract of carriage. Skiplagged not only promoted these fares but also provided detailed instructions to customers on how to conceal this practice from the airline.

Skiplagged frequently misrepresented fares, claiming to offer lower prices than American’s direct bookings. However, in many cases, Skiplagged charged consumers more than they would have paid by booking directly with American, due to added fees or redirecting customers to third-party sites with higher prices. This bait-and-switch tactic deceived consumers and violated Department of Transportation regulations on fare advertising.

Furthermore, Skiplagged extensively used American’s trademarks and copyrighted material, including the American Airlines logo and flight symbol, without authorization. This unauthorized use appeared on Skiplagged’s website, in customer communications, and in marketing materials. Skiplagged also created hyperlinks to AA.com, violating the site’s terms of use.

Injuries

American Airlines suffered significant reputational damage and erosion of customer trust due to Skiplagged’s actions. When issues arose with tickets booked through Skiplagged, such as invalidated reservations or complications with connecting flights, customers often blamed American Airlines. This misplaced blame damaged American’s reputation for customer service and reliability. The airline lost revenue when it had to assist customers with problems created by Skiplagged’s practices, including rebooking flights or honoring fares that were incorrectly advertised by Skiplagged. These customer service issues diverted American’s resources and personnel from other important tasks.

The unauthorized use of American’s intellectual property and protected content by Skiplagged threatened the airline’s brand value, which had been carefully built over decades. By using American’s trademarks without permission, Skiplagged created a false association between the two companies, potentially confusing consumers about the source and quality of the services offered. Skiplagged’s activities also posed potential safety and security risks to American’s operations. By encouraging hidden city ticketing and other prohibited booking practices, Skiplagged disrupted American’s ability to accurately forecast passenger loads, potentially affecting flight planning and safety procedures.

Damages

American Airlines incurred substantial financial losses from Skiplagged’s unauthorized ticket sales and misuse of its content. The airline lost potential revenue from customers who might have booked directly with American at higher fares if not for Skiplagged’s deceptive advertising. American suffered damages when it had to honor fares that were incorrectly advertised by Skiplagged. It also incurred costs by assisting customers with issues arising from hidden city ticketing.

The company spent significant employee time and resources investigating and addressing problems caused by Skiplagged’s practices. This included technical efforts to detect and prevent unauthorized access to AA.com. Additionally, it involved customer service resources dedicated to resolving issues with Skiplagged-booked tickets. American suffered damages related to corrective costs to rectify misleading information spread by Skiplagged. This included expenses for marketing and communication efforts to clarify American’s policies and disassociate itself from Skiplagged’s practices.

The airline also experienced lost profits due to Skiplagged’s interference with its customer relationships and contracts. By encouraging customers to violate American’s contract of carriage and misrepresenting American’s fares and policies, Skiplagged disrupted American’s ability to maintain direct relationships with its customers.

Key Arguments and Proceedings

Legal representation

  • Plaintiff(s): American Airlines Inc.
    • Counsel for Plaintiff: Dee J. Kelly, Jr.| Bina B. Palnitkar | Cameron Nelson | Austin Franklin | Julia Grace Wisenberg | Lars L. Berg | Nathan James Muyskens | R. Paul Yetter | Tyler P. Young
  • Defendant(s):Skiplagged, Inc.
    • Counsel for Defendants: William L. Kirkman| Aaron Z. Tobin | Abigail R.S. Campbell | Darin M. Klemchuk | Kendal B. Reed | Preston Sawyer

Claims

American Airlines brought several legal claims against Skiplagged for its alleged misconduct in a Copyright Infringement lawsuit:

Breach of Contract:

American claimed Skiplagged violated the AA.com Use Agreement by accessing the site for commercial purposes, copying and republishing American’s content, and violating other terms of use.

Tortious Interference:

The airline alleged Skiplagged knowingly induced customers to breach American’s Conditions of Carriage by promoting hidden city ticketing and other prohibited practices.

Trademark Infringement:

American asserted that Skiplagged infringed on its registered trademarks by using the American Airlines name and logo without authorization, likely causing confusion among consumers about Skiplagged’s relationship with American.

False Designation of Origin:

The complaint alleged that Skiplagged’s use of American’s marks falsely suggested an affiliation or endorsement by American Airlines.

Unfair Competition:

American claimed Skiplagged engaged in unfair competition under the Lanham Act by misrepresenting its services and relationship with American.

Copyright Infringement:

The airline asserted that Skiplagged infringed on American’s copyrighted material, including its Flight Symbol design, by reproducing and displaying it without permission.

American Airlines sought injunctive relief to stop Skiplagged’s practices, as well as monetary damages including disgorgement of profits, statutory damages, and compensation for actual damages incurred. The airline also requested attorneys’ fees and costs.

Defense

Skiplagged denied American Airlines’ allegations and asserted several affirmative defenses in its response to the lawsuit. The company claimed that the court lacked personal jurisdiction over Skiplagged and that American’s claims were barred by the applicable statutes of limitations. Skiplagged argued that American’s claims were also barred by doctrines such as equitable estoppel, laches, and unclean hands, stating that American had been aware of and accepted Skiplagged’s practices for years without objection.

Regarding the breach of contract claims, Skiplagged contended that there was a failure of consideration, lack of privity, and no mutual assent to the purported Use Agreement or Conditions of Carriage. The company also argued that these contracts were void as against public policy and illegal under the Sherman Act due to American’s alleged monopolistic and predatory pricing practices.

For the trademark and copyright claims, Skiplagged asserted fair use defenses. The company denied causing any compensable damages to American and claimed that any damages were the result of third-party actions beyond Skiplagged’s control. Additionally, Skiplagged argued that some of American’s claims were preempted by the Aviation Deregulation Act. The company demanded a jury trial and asked the court to dismiss American’s claims with prejudice.

Jury Verdict

On October 15, 2024, the jury ruled that American Airlines was entitled to recover a total of $23,700,000.00 in damages from Skiplagged in a copyright infringement lawsuit. This amount included $19,000,000.00 in actual damages and $4,700,000.00 in profits from Skiplagged. However, the jury also determined that Skiplagged failed to mitigate its actual damages. This led to a finding that American Airlines did not mitigate $14,300,000.00 in damages through reasonable diligence.

Court Documents:

Available Upon Request