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In Savin Corp. v. Savin Group. 2003 WL 22451731 (S.D.N.Y.), the court indicated that the foregoing sentence "is not easy to interpret."
Summary of this case from Lee Middleton Original Dolls, Inc. v. MannOpinion
02 Civ. 9377 (SAS)
October 24, 2003
David A. Einhorn, Esq., James M. Andriola, Esq., Daniel J. Healy, Esq., Anderson Kill Click New York, NY, for Plaintiff
David A. Beke, Esq., Alfred L. D'Isernia, Esq., Ford Marrin Esposito Witmeyer Gleser, L.L.P, New York, NY, for Defendants
OPINION AND ORDER
Savin Corporation ("Savin") brings this action against The Savin Group, Savin Engineers, P.C., Savin Consultants, Inc. /b/a Savin Engineers, P.C., and JMOA Engineering, P.C. ("Savin Engineers") alleging: (1) trademark infringement under the Lanham Act, 15 U.S.C. § 1114; (2) false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A); (3) dilution under the Federal Trademark Dilution Act ("FTDA"), 15 U.S.C. § 1125(c); (4) violation of the Anti-Cybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d); (5) dilution in violation of New York General Business Law ("N.Y. Gen. Bus. L.") § 360-1; (6) violation of the New York Unfair Businesses Act, N.Y. Gen. Bus. L. § 349; (7) violation of the New York False Advertising Act, N.Y. Gen. Bus. L. § 350; and (8) unfair competition. Plaintiff now moves for partial summary judgment on its claims for trademark infringement and false designation of origin under the Lanham Act, violations of N.Y. Gen. Bus. L. §§ 349, 350, and common law unfair competition.
Defendants cross-move for summary judgment, contending that plaintiff's claims all must fail because: (1) plaintiff cannot prove likelihood of confusion; (2) plaintiff's mark is neither famous nor distinctive, and plaintiff cannot prove actual dilution; (3) plaintiff cannot prove that defendants had a bad-faith intent to profit from using the name "Savin;" and (4) the standards under New York law for finding infringement: are analogous to those of the Lanham Act.
Jurisdiction is based on the Lanham Act, 15 U.S.C. § 1051 et seq., 28 U.S.C. § 1331 (federal question), 1332 (diversity of citizenship), 1338 (jurisdiction to adjudicate cases involving trademark infringement and accompanying claims of unfair competition), and 1367(a) (supplemental jurisdiction). For the reasons stated below, plaintiff's motion is denied and defendants' motion is granted in its entirety. I. BACKGROUND
Savin is a corporation organized under the laws of Delaware, with its principal place of business in Stamford, Connecticut. See 8/21/03 Declaration of Peter Heinsohn, Director of Business Development of Savin ("Heinsohn Decl.") ¶ 2. Savin was founded in 1959 and is engaged in the business of marketing, selling, and distributing state-of-the-art business equipment for commercial, business, and home office use. See id. ¶ 3. Savin's products include color and digital imaging technology for photocopying, printing, facsimile, and other multifunctional digital systems and personal computer compatible machines. See Plaintiff's Local Civil Rule 56.1 Statement of Undisputed Facts ("Pl. 56.1") ¶ 15. Through its Network Services Division, Savin also offers consulting and support services related to information technology and office management. See Form Letter Introducing Savin Network Servs. Div., Ex. 1 to Heinsohn Decl. ("Network Servs. Ltr."). Savin's products are sold through seventeen company-owned branches consisting of over sixty sales and service offices and over two hundred and fifty trained dealers throughout the United States.See Pl. 56.1 ¶ 6. Plaintiff realizes annual revenues of over $675 million from sales of its products and services in the United States. See id, ¶ 13.
Savin and its dealer network employ a wide array of consultants, pre-sale engineers, post-sale engineers, and certified technicians.See Letter Network Servs; Pl. 56.1 ¶ 17. Many of Savin's customers communicate with the corporation through its pre— and post-sale engineers. See Pl. 56.1 ¶ 18. Savin's largest class of customers is from the government, education, and military sectors. See id. ¶ 29.
Max Lowe, Savin's founder, named the corporation after his brother-in-law, Robert Savin. See 6/3/03 Deposition of Mark Pollack, Vice President of Marketing of Savin ("Pollack Dep."), Ex. F to 8/25/03 Declaration of Alfred D'Isernia, counsel for defendants ("D'Isernia Decl."), at 4, 79. Since 1959, plaintiff has used the trade name "Savin" in various forms in connection with various products and services. See Pl. 56.1 ¶ 1. Savin owns three incontestable marks: SAVIN for (i) developing liquid for office copiers and photocopy machines and copy paper for photocopy machines; (ii) photocopying machines and parts thereof; and (iii) maintenance and repair services for photocopiers and word processors. See id. ¶¶ 2, 3, 4. Plaintiff also owns the mark SAVIN for facsimile machines. See id. ¶ 5.
Considerable sums of money have been spent in advertising Savin's products and services over the years, including over $20 million during 2002. See id. ¶ 7. Plaintiff's products and services are regularly featured in print advertisements, trade magazines, and tradeshow promotions worldwide. See id. ¶ 10. Its advertisements have appeared in magazines such as Newsweek, Time, and Business Week. See id. ¶ 11. Plaintiff maintains an active website on the Internet located at www.savin.com through which it markets and promotes its products and services. See id. ¶ 8.
Defendants Savin Engineers, P.C. and JMOA Engineering are New York professional engineering corporations with offices in Pleasantville, Syracuse, and Hauppauge, New York. See Defendants' Local Civil Rule 56.1 Statement of Undisputed Facts ("Defs. 56.1") n.l; 5/1/03 Deposition of Rengachari Srinivasaragahavan, founder and sole shareholder of Savin Engineers ("Nivas Dep. 1"), Ex. 2 to 9/8/03 Opposition Declaration of David A. Einhorn, counsel for plaintiff ("Einhorn Opp'n Decl."), at 44, 99. These two corporations comprise The Savin Group, also a named defendant in this litigation. See Defs. 56.1 n.l. The defendant Savin Consultants, Inc. is a New Jersey corporation that was incorporated in 1987 and ceased to be actively engaged in business after Savin Engineers, P.C. was incorporated in 1988. See id. n.l, ¶ 1. Dr. Rengachari Srinivasaragahavan is the sole shareholder of each of the defendant corporations. See 5/1/03 Deposition of Rengachari Srinivasaragahavan, founder and sole shareholder of Savin Engineers ("Nivas Dep. 2"), Ex. B to D'Isernia Decl., at 23.
Defendants provide professional engineering consulting services to the public. See Defs. 56.1 ¶ 10(b). In particular, they provide civil engineering consulting services to entities concerned with environmental waste management. See id. Defendants also offer professional engineering services in checking the "validity" of buildings and providing building maintenance plans. See Defendants' Response to Pl. 56.1 ("Defs. 56.1 Resp.") ¶ 32.
Dr. Rengachari Srinivasaragahavan, whose nickname since college has been "Nivas," chose the name "Savin" by spelling "Nivas" backwards.See Defs. 56.1 ¶ 2; Nivas Dep. 2, at 65. Since 1987, defendants have continually used the name "Savin" in commerce. See id. ¶ 5. Defendants did not perform a search or investigation prior to adopting and launching their trade names. See id. ¶ 38. Defendants became aware of plaintiff's products and services about ten years ago.See Pl. 56.1 ¶ 37.
Defendants have registered the domain names www.thesavingroup.com and www.savinengineers.com. See Defs. 56.1 ¶ 6. These websites, which became accessible over the Internet after June 2001, provide information about the defendants' engineering services. See id. ¶¶ 7, 23. Defendants did not perform a search or investigation prior to adopting and launching their websites utilizing the term "Savin."See id. ¶ 38. Defendants were aware, however, of plaintiff's www.savin.com domain prior to registering their domains.See id. ¶ 39. Other than their websites, defendants have not advertised their services in any general interest media. See id. ¶ 24.
In July 2002, plaintiff discovered defendants' domain name registrations. See 8/25/03 Plaintiff's Memorandum of Law in Support of Summary Judgment ("Pl. Mem.") at 6. Plaintiff proceeded to send cease and desist letters to defendants on July 12, 2002 and again on August 29, 2002. See Plaintiff's Cease and Desist Letters, Ex. 5 to 8/25/03 Declaration of David Einhorn, counsel for plaintiff ("Einhorn Decl."). Defendants failed to take any action in response to plaintiff's cease and desist letters.
In May 2003, someone who had previously "sold an exhibit" to defendants approached one of plaintiff's executives at a Chamber of Commerce meeting in Stamford, Connecticut and asked if she was associated with Savin Engineers. See 6/5/03 Deposition of Louise Stix, Vice-President of Savin ("Stix Dep."), Ex. 14 to Einhorn Decl., at 35-36. The executive was wearing a name tag that displayed the name "Savin."
II. LEGAL STANDARD FOR SUMMARY JUDGMENT
Summary judgment is permissible "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "An issue of fact is genuine `if the evidence is such that a jury could return a verdict for the nonmoving party.'" Gayle v. Gonyea, 313 F.3d 677, 682 (2d Cir. 2002) (quoting Anderson v. Liberty Lobby. 477 U.S. 242, 248 (1986)). A fact is material when "it `might affect the outcome of the suit under the governing law.'"Id. (quoting Anderson, 477 U.S. at 248). The party seeking summary judgment has the burden of demonstrating that no genuine issue of material fact exists. See Marvel Characters. Inc. v. Simon. 310 F.3d 280, 286 (2d Cir. 2002) (citingAdickes v. S.H. Kress Co., 398 U.S. 144, 157 (197O)). In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact. To do so, it "`must do more than simply show that there is some metaphysical doubt as to the material facts,'" Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp. . 475 U.S. 574, 586 (1986)), and it "may not rely on conclusory allegations or unsubstantiated speculation.'" Funitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 428 (2d Cir. 2002) (quoting Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998)). See also Gayle, 313 F.3d at 682. Rather, the non-moving party must produce admissible evidence that supports its pleadings. See First Nat"l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289-90 (1968). In this regard, "[t]he `mere existence of a scintilla of evidence' supporting the non-movant's case is also insufficient to defeat summary judgment." Niagara Mohawk Power Corp. v. Jones Chem. Inc., 315 F.3d 171, 175 (2d Cir. 2003) (quoting Anderson. 477 U.S. at 252). In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all inferences in that party's favor. See Niagara Mohawk, 315 F.3d at 175. Accordingly, the court's task is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial."Anderson, 477 U.S. at 249. Summary judgment is therefore inappropriate "if there is any evidence in the record that could reasonably support a jury's verdict for the non-moving party."Marvel, 310 F.3d at 286 (citing Pinto v. Allstate Inc. Co., 221 F.3d 394, 398 (2d Cir. 2000)).
III. DISCUSSION
A. Lanham Act Claims of Trademark Infringement and False Designation of Origin
The Lanham Act protects the first user of a trademark by barring a later user from employing a similar mark that can confuse purchasers and besmirch the reputation of the first user. See Streetwise Maps, Inc. v. Vandam, Inc., 159 F.3d 739, 742 (2d Cir. 1998). In order to prevail on the Lanham Act claims of trademark infringement and false designation of origin, plaintiff must show (1) that it has a valid mark that is entitled to protection and (2) that defendants' actions are likely to cause confusion between plaintiff's and defendants' services. See Virgin Enters. Ltd. v. Nawab, 335 F.3d 141, 146 (2d Cir. 2003) (citing Gruner + Jahr USA Publ'q v. Meredith Corp., 991 F.2d 1072, 1074 (2d Cir. 1993)).
1. Validity of the Marks
The Lanham Act provides that a mark registered by its owner becomes incontestable if it has been in continuous use for five consecutive years subsequent to its registration and it is still in use. See 15 U.S.C. § 1065; Gruner + Jahr, 991 F.2d at 1076. If a mark becomes incontestable, its registration shall be "conclusive evidence of the registrant's exclusive right to use the registered mark," subject to a limited number of defenses. 15 U.S.C. § 1115(b); Park `N Fly, Inc. v. Dollar Park and Fly. Inc., 469 U.S. 189, 196 (1985).
Defendants admit that three of plaintiff's marks are incontestable. Defs. 56.1 Resp. ¶¶ 2, 3, 4. Further, defendants have not raised any defenses to the incontestable status of plaintiff's marks. Because plaintiff's marks are valid and entitled to protection, I will only address the second prong of the trademark infringement test. 2. Likelihood of Confusion
Likelihood of confusion is a "key element" that plaintiff must prove in order to prevail in a trademark infringement suit. Gruner + Jahr, 991 F.2d at 1077. Plaintiff must show that "numerous ordinary prudent purchasers are likely to be misled or confused as to the source of the product in question because of the entrance in the marketplace of defendant's mark." Id. The possibility of confusion is insufficient: to meet this standard; rather, consumer confusion must be probable. See Estee Lauder Inc. v. The Gap, Inc., 108 F.3d 1503, 1510 (2d Cir. 1997) (quoting 3 J. McCarthy, McCarthy on Trademarks and Unfair Competition § 23:2, at 23-10 to —11 (1996)).
The Second Circuit routinely weighs eight nonexclusive factors, also known as the Polaroid factors, to determine likelihood of confusion. Virgin Enters., 335 F.3d at 147. These factors are: (1) the strength of the plaintiff's mark; (2) the similarity of the defendant's mark to plaintiff's; (3) the proximity of the products sold under defendant's mark to plaintiff's products; (4) where the products are different, the likelihood that plaintiff will "bridge the gap" by selling products being sold by defendant; (5) the existences of actual confusion among consumers; (6) whether defendant acted in bad faith in adopting the mark; (7) the quality of the defendant's products; and (8) the sophistication of the consumers. See Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961).
In determining an infringement suit, the court must consider all eight factors, bearing in mind that no single factor is dominant. See Thompson Medical Co., Inc. v. Pfizer Inc., 753 F.2d 208, 214 (2d Cir. 1985). The factors are designed to help the court weigh the significant elements in a likelihood of confusion analysis, and "the ultimate conclusion as to whether a likelihood of confusion exists is not to be determined in accordance with some rigid formula."Bristol-Myers Squibb Co. v. McNeil-P.P.C Inc., 973 F.2d 1033, 1038 (2d Cir. 1992) (quoting Lois Sportwear, U.S.A., Inc. v. Levi Strauss Co., 799 F.2d 867, 872 (2d Cir. 1986)) (citations and quotations omitted).
a. Strength of the Mark
There are two measures of a mark's strength: First, its "inherent distinctiveness" and second, "the degree to which it indicates the source or origin of the product:." Streetwise Maps. 159 F.3d at 744; Bristol-Myers, 973 F.2d at 1044 (citing McGreqor-Doniqer Inc. v. Drizzle Inc., 599 F.2d 1126, 1133 (2d Cir. 1979)). A mark's inherent distinctiveness is evaluated according to its classification into four categories which, listed from least to most distinctive, are: (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful.See Abercrombie Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9-11 (2d Cir. 1976); Arrow Fastener Co., Inc. v. Stanley Works. 59 F.3d 384, 391 (2d Cir. 1995). Generic marks are never protected under the Lanham Act, while arbitrary or fanciful marks are accorded the highest degree of protection. See Sports Authority, Inc., v. Prime Hospitality Corp., 89 F.3d 955, 961 (2d Cir. 1996).
The second measure of strength, the mark's source-indicating capacity, is assessed by "the extent to which prominent use of the mark in commerce has resulted in a high degree of consumer recognition." Virgin Enters., 335 F.3d at 147. A mark that commands a high degree of consumer recognition is said to have acquired distinctiveness or to possess secondary meaning. See id. at 148; Sports Authority. 89 F.3d at 961.
Marks that have achieved incontestable status are deemed to have acquired distinctiveness as a matter of law and are presumed strong for the purposes of the Polaroid analysis on a summary judgment motion. See Times Mirror Magazines, Inc. v. Field Stream Licenses Co., 294 F.3d 383, 391 (2d Cir. 2002); Sports Authority, 89 F.3d at 961. This presumption, however, "applies only when the trademark is used on the products specified in the registration." Paco Sport, Ltd. v. Paco Rabanne Parfums, 86 F. Supp.2d 305, 312 (S.D.N.Y. 2000) (citing 15 U.S.C. § 1115(a), (b); Mushroom Makers, Inc. v. R.G. Barry Corp., 850 F.2d 44, 48 (2d Cir. 1978); Avon Shoe Co. v. David Crystal, Inc., 279 F.2d 607, 613 n. 7 (2d Cir. I960)).
Three of plaintiff's marks are incontestable and hence are presumptively strong as applied to the goods and services listed on the registrations, namely: Liquid and paper for photocopiers; photocopiers and parts thereof; and maintenance and repair services for photocopiers and word processors. See Pl. 56.1 ¶¶ 2, 3, 4. Plaintiff is also able to show that its marks possess secondary meaning in the market for high quality business machinery and related services. Plaintiff has submitted evidence that it sells it products through seventeen branches and over two hundred and fifty trained dealers throughout the United States; spent; over $20 million in advertising in 2002; and realized annual revenues of over $675 million. See Pl. 56.1 ¶¶ 6, lf 13. Such evidence is sufficient to establish that plaintiff's marks possess secondary meaning in plaintiff's market. Cf. TCPIP Holding Co. v. Haar Communications. Inc., 244 F.3d 88, 96 (2d Cir. 2001) (expressing confidence that plaintiff could show secondary meaning on evidence that it operated two hundred and thirty retail stores in twenty-seven states; sold $280 million worth of goods in 1998; and expended tens of millions of dollars in advertising in the last decade).
Defendants dispute plaintiff's statement about its advertising expenditure as a conclusory statement without factual support.See Defs. 56.1 Resp. ¶ 7. Because it is a sworn statement by plaintiff's Director of Business Development, however, plaintiff may rely on it to support its showing of secondary meaning.
Plaintiff, however, does not seek to enjoin defendants' use of the name "Savin" as applied to photocopiers and related parts and services, but rather as applied to defendants' business of professional engineering. Therefore, the relevant inquiry is whether plaintiff can show that its marks are strong in the market for professional engineering. The presumption of strength accorded to plaintiff's incontestable marks does not extend so far. Cf. Paco Sport, 86 F. Supp.2d at 312 (holding that plaintiff's mark was not presumptively distinctive for clothing when registration was for fragrances and cosmetics). Similarly, plaintiff has submitted no evidence that its marks possess secondary meaning in the market for professional engineering. Therefore, this factor weighs in defendants' favor.
b. Similarity of the Marks
In applying this factor, the court examines whether the "overall impression" created by the marks in relation to the "context in which they are found" is likely to confuse potential customers. Gruner + Jahr, 991 F.2d at 1079. Differences in typeface and color are minor when marks use the same name, because consumers encounter the marks in ways that do not transmit these features, such as over the radio or by word-of-mouth. See Virgin Enters., 335 F.3d at 149.
Here, plaintiff and defendants both use the name "Savin," and their logos display similar block letter fonts, with one arm of the letter "V" slanted at a greater angle than the other. See Parties' Logos, Ex. 9 to Einhorn Decl. The only apparent difference in the marks is that defendants' logo incorporates four squares, one slightly tilted, to the left of the name. See id. Given that both marks feature the same name, such a difference is inconsequential.See Virgin Enters., 335 F.3d at 149 (concluding that "Virgin" and "Virgin Wireless" are "sufficiently similar . . . to increase the likelihood of confusion" because both marks use the same name). This factor weighs in favor of plaintiff.
c. Proximity of the Products
Under this factor, the court focuses on "whether and to what extent the two products compete with each other" and "the nature of the products themselves and the structure of the relevant market." Morninqside Group Ltd. v. Morninqside Capital Group, L.L.C., 182 F.3d 133, 140 (2d Cir. 1999) (quoting Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 480 (2d Cir. 1996)). The relevant inquiry is whether customers are likely to be confused about the source of the products, rather than about the products themselves. See Arrow Fastener. 59 F.3d at 396. A showing of direct competition is not required. See id. As a general rule, however, customers are more likely to be confused as to the source of goods when the secondary user's goods are similar to the prior user's and the two users operate in similar areas of commerce. See Virgin Enters., 335 F.3d at 150.
Plaintiff asserts that there is a substantial overlap between the services offered by the two parties and the areas of commerce in which they operate. Specifically, plaintiff points out that both parties serve customers primarily in the government, education, and military sectors and both offer a wide array of consulting and engineering services including facilities management services. See Pl. Mem. at 13-15.
Plaintiff overstates the similarities. Plaintiff employs certified NetWare engineers whose expertise lies in information technology.See Plaintiff Employee Resumes, Ex. 5 to 9/15/03 Reply Declaration of James M. Andriola, counsel for plaintiff ("Andriola Decl."). In contrast, defendants employ professional engineers licensed by the State of New York to perform engineering services in connection with ensuring the soundness and safety of construction and waste management projects. See N.Y. Educ. Law §§ 7201, 7206 (McKinney 2001) (defining practice of professional engineering and listing requirements for license as professional engineer); Defs. Mem. at 1. Plaintiff uses the term "facilities management" to refer to back office operations such as photocopying, mail room management, and document management. See 5/30/03 Deposition of Thomas Salierno, President and Chief Operating Officer of Savin ("Salierno Dep. I"), Ex. C to 9/8/03 Opposition Declaration of David A. Beke, counsel for defendants ("Beke Opp'n Decl."), at 4, 110-12. Defendants, however, use the term to mean a professional engineering service of checking the "validity" of a building and providing building maintenance plans. See Defs. 56.1 Resp. ¶ 32.
Plaintiff cites thirty-two cases in which courts found likelihood of confusion when the competitive distance between the goods and services of the parties appeared at least as great as, if not greater than, that between the parties in this case. See 9/8/03 Plaintiff's Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment ("Pl. Opp'n Mem.") at 9-12. Although only a handful of those cases have precedential value, I have nonetheless considered all of them and conclude that the instant case is distinguishable because one or more of the following circumstances that prompted the findings of confusion in those cases are absent in this case: First, the goods were sold in the same channels of trade, and were often used together as complementary products, such as wine and cheese, or beer and deli products. See, e.g., Frank; Brunckhorst Co. v. G. Heileman Brewing Co., 875 F. Supp. 966 (E.D.N.Y. 1994); E. J. Gallo Winery v. Gallo Cattle Co., 12 U.S.P.Q.2d 1657 (E.D. Cal. 1989); In re Opus One Inc., 60 U.S.P.Q.2d 1812 (T.T.A.B. 2001). Second, the goods were closely related in industry practice, such as designer fashions and fragrance. See, e.g., Scarves by Vera, Inc. v. Todo Imports Ltd., 544 F.2d 1167 (2d Cir. 1976); Tiffany Co. v. Classic Motor Carriages Inc., 10 U.S.P.Q.2d 1835 (T.T.A.B. 1989). Third, the goods were impulse items sold in the same channels of trade to the same consumers, such as soft drinks and cigarettes. See, e.g., Turner Entm't Co. v. Nelson. 38 U.S.P.Q.2d 1942 (T.T.A.B. 1996); Helene Curtis Indus. Inc. v. Suave Shoe Corp., 13 U.S.P.Q.2d 1618 (T.T.A.B. 1989); The Coca-Cola Co. v. Consol. Cigar Corp., 177 U.S.P.Q. 607 (T.T.A.B. 1973). Fourth, the senior user had already expanded into the junior user's market. See, e.g., Jaguar Cars Ltd. v. Skandrani. 18 U.S.P.Q.2d 1626 (S.D. Fla. 1991); Wells Fargo Co. v. Wells Fargo Constr. Co., 619 F. Supp/710 (D. Ariz. 1985); Allstate Ins. Co. v. DeLibro. 6 U.S.P.Q.2d 1220 (T.T.A.B. 1988).Fifth, plaintiff promoted the type of goods defendant sold, or both parties were associated through sponsorship of the same events. See. e.g., Vogue Co. v. Thompson-Hudson Co., 300 F.509 (6th Cir. 1924); K2 Corp. v. Philip Morris Inc., 192 U.S.P.Q. 174 (T.T.A.B. 1976). Sixth, defendant adopted plaintiff's name with the intent of benefiting from plaintiff's reputation in the marketplace.See, e.g., HMH Publ'q Co. v. Brincat, 504 F.2d 713 (9th Cir. 1974); Hallmark Cards. Inc. v. Hallmark Dodge, Inc., 634 F. Supp. 990 (W.D. Mo. 1986); Tonka Corp. v. Tonka Phone Inc., 229 U.S.P.Q. 747 (D. Minn. 1985).
This circuit has found no confusion when the goods at issue were in much closer proximity than the goods described in several of the cases cited by plaintiff. In Arrow Fastener, this circuit held that customers were not likely to be confused when both parties sold staplers in the same stores, but one party sold a pneumatic stapler and the other a lightweight small stapler. See 59 F.3d at 396 (explaining that there was a significant difference in price between the two staplers, and that they served different purposes and types of customers). In the instant case, the difference in price between plaintiff's back office facilities management services and defendants' professional engineering services is at least as great as, if not greater than, that between the two types of staplers in Arrow Fastener. Similarly, the expertise of plaintiff's engineers in information technology and that of defendants' engineers in construction and waste management projects serve very different needs within the sectors from which both parties draw their customers.
In Arrow Fastener, the court cautioned that competitive proximity should be assessed in relation to the first twoPolaroid factors. See id. at 396. The Arrow Fastener court had found that the prior user's mark was weak and the marks were not confusingly similar, thus the prior user was not entitled to trademark protection over a broad range of related goods, and consumers were unlikely to be confused as to source. See id.
Here, plaintiff's marks are weak as applied to professional engineering services, and are not entitled to protection in that field. Even though plaintiff's marks may be strong in the market for sophisticated business equipment and services, professional engineering services do not reasonably fall within the broadly defined market of potentially related services. Although the marks are very similar, consumers are unlikely to be confused as to source because the competitive distance between the parties' services is greater than in Arrow Fastener. This conclusion is supported by New York's stringent requirements restricting defendants' field of operations to state licensed professional engineers. See infra Part III.A.2.d. Therefore, this factor weighs in favor of defendants.
d. Bridging the Gap
This factor asks whether the plaintiff is likely to bridge the competitive gap between the two parties' operations by entering defendant's market. See Morninqside, 182 F.3d at 141. This inquiry "recognizes `the senior user's interest in preserving avenues of expansion and entering into related fields.'" Id. (quotingHormel Foods Corp. v. Jim Henson Productions, Inc., 73 F.3d 497, 504 (2d Cir. 1996)).
Defendants emphasize that New York's professional engineering licensing laws stringently limit the class of persons who may enter defendants' market. See N.Y. Educ. Law § 7202, 7206 (McKinney 2001) (restricting practice of professional engineering to individuals who meet requirements for license). Plaintiff claims that it intends to expand its involvement in the area of facilities management, see Pl. 56.1 ¶ 19, but the only evidence plaintiff presents to support this allegation is a statement that plaintiff intends to "work in an office environment and expand [into] whatever the customer needs." 5/30/03 Deposition of Thomas Salierno, President and Chief Operating Officer of Savin ("Salierno Dep. 2") Ex. 1 to Einhorn Decl., at 68. This statement fails to support any inference that plaintiff intends to enter defendants' market. Plaintiff further argues that New York's professional engineering laws are irrelevant because it objects to defendants' use of "Savin" in all fifty states. Even drawing all inferences in plaintiff's favor, this bare assertion fails to raise a genuine issue of material fact that any differences in the laws of other states would increase the likelihood of plaintiff entering defendants' market. This factor weighs in defendants' favor.
e. Actual Confusion
In assessing this factor, the court may consider evidence of actual consumer confusion about the source, sponsorship, or affiliation of plaintiff's goods and services. See Morninqside, 182 F.3d at 141; Sports Authority. 89 F.3d at 963. Such evidence must be more than de minimis. See Nora Beverages, Inc. v. Perrier Group of America. Inc., 269 F.3d 114, 124 (2d Cir. 2001).
Plaintiff submits as evidence of actual confusion the Chamber of Commerce incident in which someone who had previously sold an exhibit to defendants mistakenly concluded that one of plaintiff's executives was associated with defendants. See Pl. Mem. at 17-18. This single instance of non-purchaser confusion is insufficient to support a finding that a reasonable trier of fact could find actual confusion. See id. (affirming that "two anecdotes of confusion . . . constituted de minimis evidence insufficient to raise triable issues");Trustees of Columbia University v. Columbia/HCA Healthcare Corp., 964 F. Supp. 733, 746 (S.D.N.Y. 1997) (holding that momentary confusion of a small number of non-purchasers constituted de minimis showing of actual confusion). This factor weighs in favor of defendants.
f. Good Faith
This factor focuses on "whether the defendant adopted its mark with the intention of capitalizing on plaintiff's reputation and goodwill" or of benefiting from consumer confusion between its product and that of the first user. Arrow Fastener, 59 F.3d at 397 (quoting Lang v. Ret. Living Publ'q Co., 949 F.2d 576, 583 (2d Cir. 1991)). This circuit has indicated that the failure to conduct a proper trademark search may be significant evidence of bad faith. See Int'l Star Class Yacht Racing Ass'n v. Tommy Hilfiger, U.S.A. Inc., 80 F.3d 749, 753-54 (2d Cir. 1996). A showing of such failure does not, however, constitute bad faith as a matter of law on a summary judgment motion. See Jeri-Jo Knitwear, Inc. v. Club Italia. Inc., No. 98 Civ. 4270, 1999 WL 500146, at M (S.D.N.Y. July 15, 1999).
Plaintiff points to Int'l Star Class Yacht in asserting that defendants acted in bad faith by adopting their mark without having first performed a trademark search. See Pl. Mem. at 20. The facts in that case, however, are quite different from those in the instant litigation. The defendant in Int'l Star Class Yacht had copied "authentic details . . . from the sport of competitive sailing." 80 F.3d at 753. This court reasoned that defendant's awareness that it was copying put it on notice that it might be infringing another's mark.Id. Under those circumstances, the court held that defendant's failure to follow its counsel's advice to conduct a thorough trademark search before adopting its mark must "factor into an assessment of [its] bad faith." Id. at 754. In the instant case, defendants had no reason to believe that they might be infringing another's marks because they were not copying the mark from another entity. In fact, defendants' founder was not even aware of plaintiff's existence at the time he adopted his mark, and arrived at the name "Savin" independently by reversing the spelling of his nickname "Nivas."
Even if defendants had conducted a trademark search, they would have discovered only that plaintiff had registered "Savin" for photocopiers and related goods and services, and would have had no reason to believe that their use of the same name for professional engineering services would infringe on plaintiff's marks. See Arrow Fastener. 59 F.3d at 397 (holding that "[p]rior knowledge of a senior user's trademark . . . may be consistent with good faith" particularly when "the presumption of an exclusive right to use a registered mark extends only to the goods and services noted in a registration certification").
Plaintiff further contends that defendants acted in bad faith by continuing to use the name "Savin" after they had become aware of plaintiff's products and services ten years ago. See Pl. Mem. at 20. This argument is without merit. Knowledge that plaintiff used the mark "Savin" in relation to sophisticated business equipment would not have given defendants reason to believe that their use of the same name in the field of professional engineering was infringing. The fact that plaintiff did not give defendants any notice of infringement until July of 2002 would have reinforced defendants' reasonable belief that their use of "Savin" was non-infringing.
Neither of plaintiff's arguments shows a genuine issue of material fact that defendants acted with a bad faith intent to profit from plaintiff's reputation and good will. This factor weighs in favor of defendants. g. Quality
This factor is primarily concerned with whether the inferior quality of a junior user's goods could jeopardize the senior user's reputation.See Arrow Fastener. 59 F.3d at 398. However, "[p]roducts of equal quality may [also] create confusion as to source'."Morninqside, 182 F.3d at 142. Equality of quality tends to cause consumer confusion when the products or services are closely similar. See Arrow Fastener. 59 F.3d at 398 (holding that the equal quality of pneumatic and hand held staplers is not likely to cause consumer confusion, whereas the equal quality of stitching on the back pockets of jeans is likely to create confusion as to source); Morninqside, 182 F.3d at 136 (finding confusion when plaintiff and defendant both offered financial services of comparable quality to U.S. companies in relation to their acquisition of assets).
Plaintiff alleges that the equal quality of defendants' services is likely to cause customers to assume that defendants are affiliated with plaintiff. See 9/15/03 Plaintiff's Reply Memorandum of Law in Further Support of Plaintiff's Motion for Summary Judgment ("Pl. Reply Mem.") at 9-10. As defendants' services are not closely similar to those provided by plaintiff, however, see supra Part III.A.2.c, equivalent quality between their products is unlikely to cause confusion. This factor weighs in defendants' favor.
h. Sophistication of Consumers
The expense of the products, the manner and market conditions in which the products are purchased, and whether purchasers may be subject to impulse are relevant in determining the sophistication of the buyers.See Gruner + Jahr, 991 F.2d at 1079; Streetwise Maps, 159 F.3d at 746; Sports Authority. 89 F.3d at 955. Generally, purchasers who are "highly trained professionals . . . know the market and are less likely than untrained consumers to be misled or confused by the similarity of different marks." Virgin Enters., 335 F.3d at 151.
Both plaintiff and defendants offer highly priced services that do not usually invite impulse buying and are ordinarily purchased by experienced professionals in the course of business. The decision to invest in new business equipment or to engage professional engineers is often the result of careful deliberation by more than one individual in the purchasing organization. The likelihood that such sophisticated consumers will be confused as to the source of the services is remote. This factor weighs in favor of defendants.
i. Initial Interest Confusion
Plaintiff raises the issue of initial interest confusion on the Internet in relation to actual confusion and consumer sophistication. As initial interest confusion does not fall neatly under any of thePolaroid factors, and as the law regarding this issue is the same as applied to either of the contexts in which plaintiff has raised it, I treat it as a separate factor here.
Internet initial interest confusion arises when a consumer who searches for plaintiff's website with the aid of a search engine is directed instead to defendants' site because of a similarity in the parties' web addresses. See Bigstar Entm't, Inc. v. Next Big Star, Inc., 105 F. Supp.2d 185, 207 (S.D.N.Y. 2000). The first court to address initial interest confusion on the Internet found that the defendant had infringed the plaintiff's trademark by using marks confusingly similar to plaintiff's in its metatags.See Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1062 (9th Cir. 1999). Metatags are a "buried code" that companies create in the process of registering their domain names to characterize the contents of and directions to their websites. See Bigstar, 105 F. Supp.2d at 208. When someone types in a keyword during an Internet search, domain name search engines use the metatags to display a list of websites that correspond to the keyword. See id. Through a strategic use of metatags, a company is able to divert Internet traffic to its site. See id. Harm occurs when potential customers assume that a competitor's website is associated with the website for which they were originally looking and cease to search for the original site. See Bihari v. Gross. 119 F. Supp.2d 309, 319 (S.D.N.Y. 2000).
As this court explained in Bihari, consumers diverted on the Internet can more readily get back on track than those in actual space, and thus the harm from consumers becoming trapped in a competing site is easily avoided. See id. at 320 n. 15 (explaining that resuming one's search for the original website is comparatively easy, involving only one click of the mouse and a few seconds' delay). As a result, the few decisions in this circuit that have addressed Internet initial interest confusion require a showing of intentional deception on the part of the defendant before imposing liability. Compare Bigstar, 105 F. Supp.2d at 211 and Bihari, 119 F. Supp.2d at 321 (declining to find initial interest confusion when there was no evidence that defendants used plaintiffs' marks in their metatags in bad faith) with N.Y. State Soc'y of Certified Pub. Accountants v. Eric Louis Assocs., Inc., 79 F. Supp.2d 331, 341 (S.D.N.Y. 2000) and OBH, Inc. v. Spotlight Magazine, Inc., 86 F. Supp.2d 176, 190 n. 9 (W.D.N.Y. 2000) (finding initial interest confusion when defendants intentionally copied and used plaintiffs' marks in metatags and domain names).
Plaintiff offers the following evidence:
(1) because defendants' website received 48,949 hits in March 2003 there is circumstantial evidence of actual confusion as this is a "disproportionately high" number for a small engineering firm, see Pl. Reply Mem. at 18; and (2) Internet website advertising attracts unsophisticated as well as sophisticated consumers, demonstrating that many of the consumers in this case are unsophisticated, see Pl. Mem. at 20. Plaintiff also claims that defendants acted in bad faith by registering their domain names even though they were aware of plaintiff's savin.com domain. See id. at 20.
The relevant enquiry in likelihood of confusion analysis is whether "numerous ordinary prudent purchasers" are likely to be misled.Gruner + Jahr, 991 F.2d at 1077. Neither of plaintiff's contentions supports this proposition. Plaintiff's first argument is based on a lone statistic of a single month's hits. This figure, standing alone, is too speculative to raise a material issue of fact: as to consumer confusion. Plaintiff's second claim is equally immaterial. Plaintiff has offered no evidence that visitors to its website form a significant part of its ordinary, prudent customer base. Finally, the fact that defendants were aware of plaintiff's domain name before they registered their own domain names is insufficient to raise a genuine issue of fact that defendants acted in bad faith. Defendants' domain names reflect the marks defendants had been using for about nine years without any reason to believe that their use infringed plaintiff's mark. See supra Part III.A.2.f. This factor weighs in defendants' favor.
j. Balancing the Factors
In sum, one of the Polaroid factors weighs in plaintiff's favor and the other seven weigh in favor of defendants. The Internet initial interest confusion factor also weighs in defendants' favor. In light of the overwhelming number of factors favoring defendants, defendants are entitled to summary judgment. Accordingly, defendants' motion to dismiss plaintiff's trademark infringement and false designation of origin claims is granted.
B. Lanham Act Dilution Claim
The FTDA provides that "[t]he owner of a famous mark shall be entitled . . . to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark." 15 U.S.C. § 1125(c)(1). This circuit reads the Act's requirement of distinctiveness to mean that the mar*k must possess a "significant degree of [inherent] distinctiveness."TCPIP Holding Co., 244 F.3d at 95, 97. To qualify as famous, a mark must also demonstrate a high degree of acquired distinctiveness.See id. at 97.
Next, a plaintiff suing under the FTDA must show "actual dilution, rather than a likelihood of dilution." Moseley v. V Secret Catalogue, Inc., 123 S.Ct. 1115, 1124 (2003). The FTDA defines dilution as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception." 15 U.S.C. § 1127. Actual dilution may be shown through circumstantial evidence, particularly when the marks in question are identical. See Moseley, 123 S.Ct. at 1125.
Plaintiff has created a material issue of fact as to the distinctiveness and fame of its marks. Plaintiff correctly claims that its incontestable marks are presumed to possess the requisite degree of inherent distinctiveness. See Sporty's Farm L.L.C. v. Sportsman's Market. Inc., 202 F.3d 489, 497 (2d Cir. 2000). Plaintiff has also produced enough evidence to raise a genuine issue of material fact with regard to the fame of its marks. It spent over $20 million on advertising in 2002 and has achieved annual revenues of $675 million. See Pl. 56.1 ¶¶ 7, 13. Further, plaintiff's products and services are regularly featured in print advertisements, trade magazines and tradeshow promotions. See id. ¶ 10. Plaintiff's advertisements have appeared in well known magazines such as Newsweek, Time, and Business Week. See id. ¶ 11. Finally, plaintiff has produced evidence that an adversary in a previous federal litigation and an arbitrator with the National Arbitration Forum have acknowledged that "Savin" is a famous mark. See Savin Corp. v. Rayne, 00-CV-11728-PBS, 2001 U.S. Dist. LEXIS 20581, at *11 (D. Mass. Mar. 26, 2001); Savin Corp. v. Copier Dealers. Inc., (Case No. FA 0304000155903, National Arbitration Forum, July 9, 2003). While not sufficient to conclusively establish fame, plaintiff's evidence certainly represents more than a mere scintilla of evidence. Cf. Nabisco, Inc. v. PF Brands, Inc., 50 F. Supp.2d 188, 202 (S.D.N.Y. 1999), aff'd, 191 F.3d 208 (2d Cir. 1999) (finding top ranking sales dollars and advertising expenses of more than $120 million in a three year period to be significant indicators of fame). Plaintiff fails, however, to rebut defendants' allegation that plaintiff is unable to show actual dilution.See Defs. Mem. at 20-21. Plaintiff maintains that underMoseley, there is no need to prove actual dilution when the marks at issue are identical. Plaintiff bases this statement on a single sentence in the Moseley opinion which is clearly dicta. InMoseley, the Court responded to an argument that it would be difficult for plaintiffs to provide evidence of an actual diminution in the capacity of a famous mark to identify goods and services. The Court wrote:
Defendants dispute this statement as conclusory and unsupported by fact. See Defs. 56.1 Resp. ¶ 11. Because this is a sworn statement by plaintiff's Director of Business Development, however, plaintiff may rely on it to show fame.
It may be, however, that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proven through circumstantial evidence — the obvious case is one where the junior and senior marks are identical.Moseley, 123 S.Ct. at 1125.
This sentence is not easy to interpret, as is apparent from the differing interpretations of lower courts Is the Court saying, as plaintiff maintains, that when the junior and senior marks are identical, that in itself is
sufficient circumstantial evidence to prove actual dilution?See Nike Inc. v. Variety Wholesalers, 274 F. Supp.2d 1352, 1372 (S.D. Ga. 2003) (basing finding of dilution on identity of the marks). Or, is the Court saying that circumstantial evidence of actual dilution, as opposed to direct evidence, is sufficient when the marks are identical? See Pinehurst, Inc. v. Wick, 256 F. Supp.2d 424, 431-32 (M.D.N.C. 2003) (holding that defendant's use of plaintiff's marks in its domain names constituted circumstantial evidence sufficient to support finding of dilution because defendant's use hindered plaintiff from engaging in electronic commerce under those domain names, hence "reduc[ing] the selling power of plaintiff's marks"). The latter interpretation seems more likely because, in the sentence following its statement that actual dilution may be proven through circumstantial evidence, the Moseley Court says:
The Nike court cited Pinehurst in support of its view that identical marks in themselves constitute sufficient circumstantial evidence to prove actual dilution. The analysis inPinehurst, however, demonstrates that the court in that case read Moseley to mean that when marks are identical, circumstantial evidence, rather than direct * evidence, may be used to prove actual dilution.
Whatever difficulties of proof may be entailed, they are not an acceptable reason for dispensing with proof of an essential element of a statutory violation.123 S.Ct. at 1125. Indeed, in Moseley, where the marks were not identical, the Court concluded that there was no proof of actual dilution. In the instant case, plaintiff offers no circumstantial evidence of any kind tending to show actual dilution other than the fact that the marks are identical. This is not sufficient. Hence, plaintiffs have failed to raise a material issue of fact with regard to an essential prong of the dilution test.
Drawing all inferences in favor of the plaintiff, the non-moving party, there is no material issue of fact with respect to actual dilution. Accordingly, defendants' motion for summary judgment dismissing plaintiff's dilution claim under the FTDA is granted.
C. ACPA
ACPA prohibits cybersquatting, defined as the "bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks."Sporty's Farm, 202 F.3d at 495 (quoting S. Rep. No. 106-140, at 4). The Act imposes civil liability in favor of a mark's owner on anyone who: (1) has a bad faith intent to profit from a protected mark; and (2) registers, traffics in, or uses a domain name that is identical or confusingly similar to a distinctive" mark; or is identical, confusingly similar to, or dilutive of a famous mark. See 15 U.S.C. § 1125(d)(1)(A).
This court has already found that defendants did not act in bad faith in adopting the name "Savin" nor in registering its domain names.See supra Parts III.A.2. f, III.A.2.i. Further, defendants assert that they have never offered to sell, transfer, or assign their domain names to plaintiff. See Defs. Mem. at 23. Plaintiff has produced no evidence to the contrary. Therefore, there is no genuine issue of material fact regarding plaintiff's ACPA claim. Defendants' motion for summary judgement dismissing the ACPA claim is granted.
D. New York General Business Law Claims 1. Sections 349 and 350
Section 349 prohibits "deceptive acts and practices" and Section 350 proscribes false advertising in commerce. A successful claim under either statute must prove "consumer injury or harm to the public interest."Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264 (2d Cir. 1995). To demonstrate such harm, a practice must be the "sort of offense to the public interest which would trigger FTC intervention under 15 U.S.C.A. § 45." Horn's, Inc. v. Sanofi Beaute, Inc., 963 F. Supp. 318, 328 (S.D.N'Y. 1997) (quoting R. Givens, Practice Commentaries on N.Y. Gen. Bus. Law § 349, at 567-68 (McKinney 1988)). Concerns with public health and safety would trigger such intervention. See Securitron Magnalock Corp., 65 F.3d at 264 (holding that false information about security equipment given to regulatory agency responsible for public safety affected public interest); Weight Watchers lnt'l Inc. v. Stouffer Corp., 744 F. Supp. 1259, 1285 (S.D.N.Y. 1990) (holding that false advertising in food products would pose harm to public if proved).
Plaintiff alleges that defendants' use of "Savin" in its trade and domain names has misled, confused, and deceived consumers as to the source of defendants' services, and established irreparable harm to plaintiff. See Pl. Mem. at 22. Harm to a business from a competitor, however, does not constitute the kind of detriment to the public interest required by the statutes. See Fashion Boutique of Short Hills. Inc. v. Fendi USA, Inc., No. 91 Civ. 4544, 1992 WL 170559 at M (S.D.N.Y. July 2, 1992) (dismissing Section 349 claim because alleged harm to plaintiff's business outweighed any incidental harm to the public). Accordingly, as plaintiff has failed to produce evidence of harm to the public interest, defendants' motion for summary judgment on the Sections 349 and 350 claims is granted. 2. Section 360-1
The standards for dilution under Section 360-1 are "essentially the same as that under § 43(a) of the Lanham Act." Winner Int'l LLC v. Omori Enters., Inc., 60 F. Supp.2d 62, 73 (E.D.N.Y. 1999) (citing Safeway Stores, Inc. v. Safeway Props., Inc., 307 F.2d 495, 498 n.l (2d Cir. 1962)). As plaintiff failed to produce sufficient evidence to create a triable issue under the FTDA, it follows that the Section 360-1 claim also fails. Therefore, defendants' motion for summary judgment dismissing the Section 360-1 claim is granted.
E. New York Common Law Claims
Unfair competition under New York common law requires a showing of bad faith. See Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 149 (2d Cir. 1998). As discussed in Parts III.A.2.f and III.A.2.i supra, there is no showing that defendants acted in bad faith. Accordingly, defendants' motion for summary judgment dismissing plaintiff's New York common law claims is granted. IV. CONCLUSION
For the reasons set forth above, plaintiff's motion for partial summary judgment is denied, and defendants' cross-motion for summary judgment is granted in its entirety. The Clerk is directed to close this motion and this case.
SO ORDERED