See Plaintiff's Trial Memorandum of Law at 13-14. An analysis of the Polaroid factors indicates that this is true.
17. First, ASM has a strong mark. The "strength" of a trademark refers to a mark's "'tendency to identify the goods sold under the mark as emanating from a particular, although possibly anonymous, source.'" Arrow Fastener, 59 F.3d at 391 (quoting McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126, 1131 (2d Cir. 1979)). In the hierarchy of generic, descriptive, suggestive, arbitrary, and fanciful marks, the mark in this case appears to be descriptive. A descriptive mark receives protection only if its holder can demonstrate it has acquired secondary meaning. See Bernard v. Commerce Drug Co., 964 F.2d 1338, 1340 (2d Cir. 1992). A descriptive term acquires secondary meaning when "the consuming public associates the term with a particular source." Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1040 (2d Cir. 1992). The registration of the mark under 15 U.S.C. § 1052(f) creates a rebuttable presumption that the mark enjoys a secondary meaning. Arrow Fasteners, 59 F.3d at 392 & n.6. Tap has not only failed to rebut the presumption, it affirmatively asserts the strength of the mark. In any event, the mark in this case appears to have obtained significant secondary meaning as associated with the business directories affiliated with ASM. The mark appears on ASM's directories throughout the country, and testimony at trial established that the mark is widely known and associated with ASM publications.
18. The marks used by Tap and ASM are similar as well. Although Tap and ASM use the Chinese characters pronounced "Hua Shang Nien Chien" in different sizes and styles, both parties use the identical four Chinese characters on the covers of their respective publications, which are both Chinese-language business directories.
19. The competitive proximity of the products produced by ASM and Tap and the likelihood that ASM will enter the metropolitan New York market also point in ASM's favor. Both ASM and Tap are involved in the publication and distribution of substantially similar products. Although direct competition is not required to prove the likelihood of success, Arrow Fastener, 59 F.3d at 396, the parties in this case are in fact direct competitors. ASM is not only likely to break into Tap's market, but it has already attempted to do so. "Bridging the gap" refers to ASM's "'interest in preserving avenues of expansion and entering into related fields.'" Hormel Foods, 73 F.3d at 504 (quoting C.L.A.S.S. Promotions, Inc. v. D.S. Magazines, Inc., 753 F.2d 14, 18 (2d Cir. 1985)). ASM's first attempt to enter the market in the New York metropolitan area occurred in 1985 when it contracted with Key to produce a Chinese directory bearing the mark in the New York area; its most recent attempt occurred in 1995 when it contracted with CYPNY. ASM, which already produces Chinese directories bearing its mark in most major cities in the United States, stated at trial that it still intends to enter the New York area market and that it brought its counterclaims with that goal in mind.
20. Neither ASM nor Tap presented persuasive evidence that there was actual confusion between ASM's and Tap's publications. Tap had received only a few phone calls from advertisers who expressed some concern that there were now two directories using the name Hua Shang Nien Chien. In addition, one advertiser called Tap when it was clear that advertiser had actually placed an ad with ASM. (See Redirect of Wang.) This evidence falls short of proving actual confusion. Proof of actual confusion is not necessary, however, to prove the likelihood of confusion, especially given the relatively short period of time both CYPNY and Tap were publishing directories with the mark in New York. See Arrow Fastener, 59 F.3d at 397.
21. ASM has also failed to prove that Tap acted in bad faith. The Polaroid factor of "good faith" involves considering "'whether the defendant adopted its mark with the intention of capitalizing on plaintiff's reputation and goodwill and any confusion between his and the senior user's product.'" Arrow Fastener, 59 F.3d at 397 (quoting Lang v. Retirement Living Publishing Co., Inc., 949 F.2d 576, 583 (2d Cir. 1991)). Tap was clearly aware that the Hua Shang Nien Chien mark was ASM's registered trademark; indeed, Tap claims that it used the mark pursuant to the 1986 settlement agreement that gave Key, Tap's alleged predecessor, the right to use this mark in the New York area. Although Tap received a cease-and-desist letter from ASM in 1992, it cannot be said that Tap acted in bad faith by continuing to use the mark after receiving this letter. Indeed, Tap immediately informed ASM that it was using the mark pursuant to the 1986 settlement agreement, and ASM did not take any action to protect its mark until almost three years later. If anything, the evidence indicates that Tap used the mark in good faith in reliance on ASM's failure to act.
22. The quality of Tap's product is relatively similar to that of ASM's product. When the quality of a junior user's product is similar to that of the senior user, there may be a likelihood of confusion of the source of the products. Hormel Foods, 73 F.3d at 505.
23. Finally, consumers of Chinese directories like those published by Tap and ASM are likely to be confused as to the source of the publications. Although the mark appears in a different color and configuration on Tap's publication than on ASM's publications, knowledgeable consumers would have reason to question whether ASM had licensed its mark to or was otherwise connected with Tap.
24. Although all of the Polaroid factors do not favor ASM, an analysis of the factors as a whole indicates that there is likelihood of confusion between ASM's directories and Tap's directories bearing ASM's mark.
25. ASM's first claim against Tap is for trademark infringement pursuant to 15 U.S.C. § 1114(1) (a). To prevail on a claim under 15 U.S.C. § 1114(1) (a), a plaintiff must prove that the defendant (1) without consent, (2) used in commerce, (3) a reproduction, copy or colorable imitation of plaintiff's registered mark, as part of the sale or distribution of goods or services, and (4) that such a use is likely to cause confusion. 15 U.S.C. § 1114(1) (a); see Arrow Fastener, 59 F.3d at 390; Gruner Jahr USA Publishing v. Meredith Corp., 991 F.2d 1072, 1075 (2d Cir. 1993). ASM is entitled to prevail on this claim because it has proved all of the required elements: Tap has been using the mark without ASM's consent in commerce, and this use is likely to cause confusion for the reasons stated above.
26. ASM is also entitled to recover against Tap under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), which provides a provide right of action for injunctive relief and damages against
any person who shall . . . use in connection with any goods or services . . . a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce . . . .
15 U.S.C. § 1125 (a) (1) (A); see L. & J.G. Stickley, Inc. v. Canal Dover Furniture Co., Inc., 79 F.3d 258, 262 (2d Cir. 1996). ASM has demonstrated that Tap used its mark on Tap's publications and that the use of this mark tended to cause a likelihood of confusion.
27. ASM's state statutory claim for dilution of its mark pursuant to N.Y.Gen.Bus.L. § 368-d provides an independent basis upon which to award ASM injunctive relief. ASM possesses a mark that has acquired secondary meaning; accordingly, the only issue is whether Tap's use of the mark is likely to dilute the mark. The likelihood of dilution may be shown by evidence of blurring or tarnishment of the mark. Hormel Foods, 73 F.3d at 506. Dilution by blurring may occur where a party uses or modifies another's mark to identity its goods and services, "'raising the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff's product.'" Id. (quoting Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir. 1994)). As explained above, ASM and Tap both have argued that the use of the mark by two Chinese-language directories in the New York area is likely to confuse customers and thereby weaken the strength of the mark. Accordingly, ASM is entitled to injunctive relief pursuant to N.Y.Gen.Bus.L. § 368-d for trademark dilution.
28. ASM also claims that Tap is liable for tortious interference with ASM's contractual relations with CYPNY. To establish a claim for tortious interference with contractual relations under New York law, ASM must establish (1) a valid contract between ASM and a licensee; (2) Tap's knowledge of the contract and inducement of a breach; and (3) resulting damage to ASM. Universal City Studios, Inc. v. Nintendo Co., Ltd., 797 F.2d 70, 75 (2d Cir.), cert denied, 479 U.S. 987, 93 L. Ed. 2d 581, 107 S. Ct. 578 (1986). Here, ASM and CYPNY entered into a contract which permitted CYPNY to use the mark on a Chinese-language business directory in the New York metropolitan area. In May 1995, CYPNY received a letter from Tap stating that Tap still had the right to use the mark pursuant to the 1986 settlement agreement. Upon realizing that Tap and ASM had a dispute over the rights to use the mark in New York, CYPNY stopped using the mark in its promotion efforts and notified ASM that it would no longer use the mark.
29. Litigation or the threat of litigation can give rise to a claim for tortious interference with contractual relations if the litigation or threat of litigation is "wrongful." Id. at 74. A lawsuit or threat of a lawsuit is considered wrongful "if the actor has no belief in the merit of the litigation" or if the actor has some belief in the merits of the litigation but "nevertheless institutes or threatens to institute the litigation in bad faith." Id. (citing Restatement (Second) of Torts § 767, cmt. c.). There is no indication that Tap wrote the cease-and-desist letter to CYPNY and brought this lawsuit in bad faith or without a genuine belief in the merits of the suit. Accordingly, ASM is not entitled to relief on its claim for tortious interference with contract.
30. ASM's claim against Tap for common law unfair competition must fail as well for similar reasons. As explained above, ASM can prevail on this claim only if it proves that Tap used the mark in bad faith. ASM has failed to prove that Tap acted in bad faith, and therefore it is not entitled to prevail on its unfair competition claim.
31. ASM is also not entitled to relief pursuant to N.Y.Gen.Bus.L. § 133 for the use of a trade name with the intent to deceive or mislead the public. ASM has failed to prove that Tap used the mark with the intent to deceive the public. See Mullahey v. Waterford Citizen's Party, Inc., 136 Misc. 2d 784, 785-86, 519 N.Y.S.2d 333, 334 (Sup. Ct. Sar. Co. 1987) (dismissing section 133 claim where there was no evidence of intent to deceive); Charles F. Ryan & Son, Inc. v. Lancaster Homes, Inc., 19 A.D.2d 14, 240 N.Y.S.2d 183 (4th Dep't 1963) (actual fraudulent intent is the essence of Penal Law § 964 [now § 133]).
32. ASM seeks injunctive relief, money damages, an accounting for profits, the turnover of profits, and the destruction of all infringing publications from Tap. Tap claims that the doctrine of laches bars all of ASM's claims for relief.
33. The Lanham Act provides injunctive relief as a remedy for violations of 15 U.S.C. §§ 1114 and 1125. See 15 U.S.C. § 1116(a). Injunctive relief is also available under N.Y.Gen.Bus.L. § 368-d. The Lanham Act also permits an award of damages if there is evidence of actual confusion and an accounting if there is a showing that the infringer acted in bad faith. See Int'l Star Class Yacht Racing Ass'n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 752 (2d Cir. 1996)
34. Injunctive relief is the only relief available to ASM in this case. ASM is not entitled to an award of damages because ASM has offered no evidence of actual confusion; in fact, ASM presented no evidence of any pecuniary loss. Similarly, ASM is not entitled to an award of Tap's profits because it has not demonstrated that Tap acted in bad faith. Id.
35. Tap argues that ASM is not entitled to an injunction or any other relief because ASM is guilty of laches. In order to prevail on its laches defense, Tap must demonstrate (1) ASM had knowledge of the infringing activities; (2) ASM inexcusably delayed in taking action; and (3) Tap would be prejudiced if ASM belatedly asserted its rights to the mark. Tri-Star Pictures, Inc. v. Leisure Time Prods., B.V., 17 F.3d 38, 44 (2d Cir.), cert. denied, 130 L. Ed. 2d 396, 115 S. Ct. 484 (1994); King v. Innovation Books, 976 F.2d 824, 832 (2d Cir. 1992); Ediciones Quiroga, S.L. v. Fall River Music, Inc., 1995 U.S. Dist. LEXIS 2641, No. 93 Civ. 3914, 1995 WL 103842, at *5 (S.D.N.Y. March 7, 1995) (Patterson, J.); Mussington v. St. Luke's-Roosevelt Hosp. Ctr., 824 F. Supp. 427, 433 (S.D.N.Y. 1993), aff'd, 18 F.3d 1033 (2d Cir. 1994). The laches defense has been used to bar both federal trademark claims as well as state statutory and common law claims. See, e.g., Saratoga Vichy Spring, Co., Inc. v. Lehman, 625 F.2d 1037, 1040-41 (2d Cir. 1980); Dial-A-Mattress Operating Corp. v. Mattress Madness, Inc., 841 F. Supp. 1339, 1355 (E.D.N.Y. 1994) (Platt, C.J.); Byron v. Chevrolet Motor Div. of Gen. Motors Corp., 1995 U.S. Dist. LEXIS 11115, No. 93 Civ. 1116, 1995 WL 465130, at *6 (S.D.N.Y. Aug. 7, 1995) (Peck, M.J.) (listing cases). Furthermore, laches may bar both injunctive and monetary relief. See Tri-Star Pictures, 17 F.3d at 44 (laches bars injunctive relief); Cuban Cigar Brands N.V. v. Upmann Int'l, Inc., 457 F. Supp. 1090, 1096 (S.D.N.Y. 1978), aff'd without op., 607 F.2d 995 (2d Cir. 1979) (laches bars both kinds of relief). Judge Weinfeld summarized the defense of estoppel by laches as follows:
Defendant's proof in its laches defense must show that plaintiff had knowledge of defendant's use of its marks, that plaintiff inexcusably delayed in taking action with respect thereto, and that defendant will be prejudiced by permitting plaintiff inequitably to assert its rights at this time. Obviously, whether the claim is sufficient to bar relief, depends upon a consideration of the circumstances of each particular case and a balancing of the interests and equities of the parties.