The opinion of the court was delivered by: Chin, District Judge.
In 1997, defendant Lawrence Storey registered the Internet
domain name "cello.com." Plaintiffs Cello Holdings, L.L.C. and
Cello Music & Film Systems, Inc. and their predecessors
(collectively, "Cello") have been selling "high end" audio
equipment under the "Cello" name since 1985, and Cello registered
the trademark "Cello" for use in the audio equipment business in
1995. Cello commenced this lawsuit, contending that Storey's
actions in registering and trying to sell the domain name
"cello.com" were diluting its trademark "Cello."
Before the Court are the parties' cross-motions for summary
judgment. Cello contends that Storey is a "cybersquatter" who had
no "productive use" in mind for the domain name when he
registered it. Rather, Cello contends that Storey registered the
name solely for the purpose of "blackmail[ing]" someone into
buying it. Storey, on the other hand, contends that Cello has
failed to demonstrate that the "Cello" mark is distinctive or
famous, and argues that "cello" is a common noun used in the
names of dozens of businesses. Storey, a California resident,
also contends that the Court lacks personal jurisdiction over
Cello has been promoting and selling audio equipment for the
"hi-end" market and for professional recording studio work under
the "Cello" name since 1985. (Adams Decl. ¶ 7). Cello sells its
audio equipment both directly through stores in New York, Los
Angeles, Houston, Dallas, and Seattle, and through authorized
distributors in six states and fourteen foreign countries. (Beck
Decl. ¶¶ 4-5).
Cello music systems are "high-end" systems; they sell for a
minimum of $20,000 and for as much as $150,000 to $500,000 or
more. (Adams Decl., Ex. I). In the past decade, Cello has sold
more than $42 million of equipment in the U.S. and abroad.
(DiSalvo Decl. ¶¶ 3-4). Cello's equipment has been reviewed in a
number of magazines, including Audio/Video Interiors, Hi-Fi News
& Record Review, High Performance Review, Stereophile, Suono, The
Absolute Sound, The Home Theater Authority, Video Magazine, and
Vive La Vie. (Adams Decl. ¶ 14, Exs. C-P).
Storey is a former musician who runs a small business out of
his home in California selling "vintage audio equipment and
accessories" under the name Audio Online. (Storey Decl. ¶ 2). He
has sold "mid-fi or hi-fi" audio equipment over the Internet
under his own name since about April 1997 and under the business
name, Audio Online, since early 1998. (Storey Tr. at 28-29,
51-56, 58, 104-05, 227-28, 324-33; Mason Decl., Ex. X). Storey
has sought to conduct "a vintage clothing business," as well as
other interests, under the name "Lawrence-Dahl Companies," but he
contends that this business "never got off the ground" and that
therefore defendant Lawrence-Dahl Companies is not a separate
legal entity. (Storey Decl. ¶ 2).
Storey has registered numerous domain names with Network
Solutions, Inc. ("NSI"), an Internet domain name registry,
including "cello.com," "gotmilk.com," "stereo.com,"
"4nasdaq.com," and "thenyse.com." (Storey Tr. at 106, 111-13,
126-33, 167-68, 218, 255-56, 261, 264-66, 281-82; Mason Decl.,
Exs. M, Q, R, T). Using a website called "logicaldomain.com,"
Storey advertised a number of his registered domain names for
sale to the public, including "cello.com," "hosemonster.com," and
"goldmetal.com." He has sold two domain names, "hosemonster.com"
and "numerouno.com," for a total of approximately $1,100. (Storey
Tr. at 112, 134; see Mason Decl., Ex. M).
A "cello" is a musical instrument — "the bass member of the
violin family tuned an octave below the viola." Webster's New
Collegiate Dictionary 177 (1980).
The mark "cello," alone or in combination with other words, has
also been registered with the United States Patent and Trademark
Office (the "PTO") for use with different products or services by
many businesses that are not a party to this lawsuit. These
include, for example: Cello Chemical Company for floor waxes and
furniture polish ("Cello" and "Cello Brate"); Arthur Schuman Inc.
for cheese ("Cello" and "Cello" with a design); General Mills,
Inc. for stainless flatware ("Cello"); Cellocoup, S.A. for
packing and wrapping materials ("Cello"); Goldmine Internet
Services N.V. for telecommunications, computer programming
services, and scientific, electric, and teaching materials
("Cello"); Teknion Furniture Systems for office furniture
("Cello"); Ava Care for juice of the Aloe Vera Plant
("Cello-Gel"); Aloe Development Corp. for perfumes and skin care
products ("Cello by Annette"); Perfect Plus, Inc. for hair
care services ("Cello-Gloss"); Chase Bag Company for paper bags
("Cello-Ply"); Grissom, Pinkney O'Shaughnessy for musical
entertainment services ("Cajun Cello"); Virus Reference
Laboratory, Inc. for media used in medical packaging
("Cello-Gel"); Les Emballages Du Reins for paper and clear
plastic wrap dispensing machines ("CelloCoup"); Sebastian
International, Inc. for shampoo ("Cello-Shampoo"); Bognar and
Company, Inc. for lightweight dry insulating composition
("Cello-Crete"); and John Reed for sound recordings ("CelloSex").
(Hans Decl. ¶ 2 & Ex. 1).
Defendants' counsel's Internet searches also reveal that
numerous businesses other than plaintiffs use the word "cello" as
part of their name, including, for example: Cello Printers Inc.,
Club Cello, Cello Development Corporation, Cello Pack Corporation
Buffalo, Cello Group Inc., Cello Antiques, Cello-Foil Products
Inc., Cello Bag Inc., Cello Vision Plant, and Cello Audio Plus.
(Hans Decl. ¶ 3 & Ex. 2).
"Cello" also is the name of a multipurpose Internet browser
developed by the Legal Information Institute at Cornell Law
School. (Hans Decl. ¶ 4 & Ex. 3).
In August 1995, Cello obtained a federal trademark registration
for "Cello" from the PTO. The PTO issued a trademark registration
to Cello for the use of the mark "Cello" in connection with
"amplifiers, preamplifiers, tone controls, speakers, switch
boxes, power supplies, and associated accessories." (Adams Decl.,
In June, 1997, Storey registered the domain name "cello.com"
with NSI. (Storey Tr. 255-56; Mason Decl., Ex. U). He did so as
part of his effort to register the single noun names of at least
twenty musical instruments, including, among others,
"guitar.com," "drums.com," and "violin.com." He found, however,
that with the exception of "cello.com" the names were already
registered. (Storey Decl. ¶ 5; Storey Tr. at 343). At the time,
he was aware that "Cello" was a brand name for audio equipment.
(Storey Tr. at 92-93, 96).
4. Storey's "Presence" in New York
Storey is a citizen and resident of California. He has never
resided in or been a citizen of New York. He has never owned any
real property or maintained any offices, bank accounts, or
telephone listings in New York. He has not personally visited New
York in almost thirty years. (Storey Decl. ¶¶ 2, 4).
Although Storey's business, Audio Online, "does not
specifically target New York customers," it "seeks to promote
sales internationally through the internet." (Storey Decl. ¶ 3).
After the filing of this lawsuit, Storey had "a few isolated
sales [of equipment] totaling approximately $1,000" to customers
in New York. (Storey Decl. ¶ 3; see also Storey Tr. at 228). He
believes that he did not have any such sales to customers in New
York prior to the lawsuit. (Storey Decl. ¶ 3).
In 1997, within days after he registered the domain name
"cello.com," Storey sent electronic mail messages over the
Internet to at least nine individuals or companies he had
targeted, offering to sell "cello.com" for $4,800. (Storey Tr. at
149-56; Mason Decl., Exs. B-J). Storey also telephoned a Cello
store in Los Angeles and was referred to Cello in New York. He
then telephoned Cello's then-president, Mark Levinson, in New
York in an effort to sell "cello.com" to Cello for approximately
$5,000 or in exchange for some equipment. Storey telephoned
Levinson a second time, again offering Cello the opportunity to
buy "cello.com." (Storey Tr. at 81-88, 97, 99, 147, 170). Storey
also contacted someone at Cornell University in Ithaca, New York,
who he thought might be interested in purchasing the domain name.
(Mason Decl., Ex. J).
Cello commenced this action on October 16, 1997, asserting
claims under the Federal Trademark Dilution Act (the "FTDA"),
15 U.S.C. § 1125(c), and § 360-1 of the New York General Business
Law. N.Y. Gen. Bus. L. § 360-1 ...