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IMON, INC. v. IMAGINON

March 23, 2000

IMON, INC., PLAINTIFFS
V.
IMAGINON, INC., DEFENDANTS



The opinion of the court was delivered by: Owen, District Judge.

MEMORANDUM AND ORDER

Plaintiff ImOn Inc. moves for a preliminary injunction against defendants ImaginOn, Inc. Both parties are suppliers of "services or products" on the Internet which, as I recognize and grapple with hereafter, is one of the most fluid, rapidly developing, and virtually daily changing areas of commerce that the law has had to focus upon and endeavor to apply established principles to. Plaintiff alleges that it has the sole right to use the "IMON" mark and defendant's use of the mark constitutes trademark infringement, unfair practices, and unfair competition. For the reasons below, I decline to grant the preliminary injunction.

Defendant ImaginOn has been using "IMON" in one form or another since January 1999. At that time, it adopted IMON as its NASDAQ stock "ticker" symbol. Each press release issued by ImaginOn after that date identified IMON as ImaginOn's NASDAQ symbol. In June 1999, ImaginOn acquired the www.imon.com domain name. On July 15, 1999, ImaginOn announced that it would be introducing a high-bandwidth "portal" product to be found at its www.imon.com Internet website. That high-bandwidth portal product eventually changed from being a portal into the IMON.COMTV software product hereafter described, and every press release since November 23, 1999, has described the software product IMON. COMTV as allowing the broadcast of Internet television and not as a portal.

ImaginOn's product, introduced in October of 1999, and called IMON.COMTV, is essentially a packaged Internet television delivery tool and is marketed as a "TV station in a box." IMON.COMTV is a "licensed turnkey [software] package that enables any website to present interactive television within a standard browser window on any suitably connected computer." IMON.COMTV packages a number of ImaginOn's propriety technology products in one place, and is meant to be customized only with an individual customer's "logo, colors, website links, and more" and with no reference to IMON.COMTV.

IMON.COMTV is not marketed to the average Internet user: startup costs begin at $31,000 (plus an additional $4000 or more for a host computer server), with additional "hosting" costs that begin at $7,600 per month. The IMON.COMTV product allows ImaginOn customers to create and broadcast in their own name alone their audio-video content over the Internet, and to enhance that content by allowing viewers to "click" on different areas of the video and immediately be connected to corresponding e-commerce pages. The customers control all the content displayed on their website through IMON.COMTV supplied software. Apparently, what is unique about this program is that the video may be viewed without actually being downloaded into the viewer's computer. The video at all times remains on the Internet. Also provided with the IMON. COMTV product are video authoring and automated web research tools. The video authoring tool helps ImaginOn customers convert existing video into interactive digital video for use with the IMON.COMTV product. The web research tool, ImaginOn's Webzinger, allows IMON.COMTV viewers to search the Internet while viewing digital video feeds. Defendant's "product" is a software package that would be customized to each purchaser. Through this software, the purchaser would be allowed to show videos on their website and would maintain links to ImaginOn's other products.

Turning to plaintiff, ImOn, Inc. was originally incorporated as Surf Fever, Inc. on May 6, 1999. Sometime in June plaintiff retained outside counsel to search for potential domain names registrable in the United States Patent and Trademark Office (USPTO). On or about June 23, 1999, plaintiff learned that IMON was a possible name. Plaintiff then targeted the domain names IMON and I AM ON. The next day on June 24, 1999, plaintiff requested Thomson & Thomson, an international trademark and copyright search firm, to provide a common law search on imon.com or iamon.com relating to an Internet service provider, retail sales over the Internet, search engine, and advertising services. Thomson & Thomson responded the same day faxing 31 pages to Ms. Ruthman, plaintiff's in-house counsel. On or about that day, Ms. Ruthman, visited the www.imon.com and noted that it was the website for the North American Cracid Taxonomic Advisory Group, featuring endangered birds. However, within a week, Ms. Ruthman learned that www.imon.com had been purchased by ImaginOn.

Apparently, someone from Surf Fever contacted Kristine Miller, a trademark attorney for the law firm Tucker Flyer located in Washington, D.C. on or before June 29, 1999, and requested her to assist Surf Fever in determining the ownership of www.imon.com and www.imon.net. In turn, Ms. Miller retained James Moy that same day to investigate the owners of these two domain names. Though Mr. Moy claims that he prepared a report and responded to Ms. Miller by June 30, 1999, the contents of that report concerns events occurring on July 7. Clearly Mr. Moy's report as exhibited could not have been forwarded to Ms. Miller until July 7, 1999, at the earliest. As part of Mr. Moy's investigation, he visited the site www. imon.net. The first page of which displayed the following: "Your high speed Internet service provider serving Southern Pennsylvania and coming soon to your neighborhood." There was also an advertisement for hair, nail, and skin care and links*fn1 to RollingStone.com and deja.com. Another page on that website indicated that there had been 91 visitors to the site. On June 30, 1999, Mr. Moy spoke with Mr. Rick Sundermier, the owner of www. imon.net, learned that Mr. Sundermier "did not have any services or products called `Imon,'" and asked Mr. Sundermier to consider selling the domain name to him. At this time, Mr. Moy knew only that he was negotiating for an undisclosed principal. Mr. Sundermier said he would think about the offer. Mr. Moy also learned that Mr. Sundermier had incorporated Imon.net, Inc. under the laws of Pennsylvania as recently as June 25, 1999. Presumably, Ms. Miller forwarded this information to Surf Fever.

Despite being aware of Sundermier's corporation and website offering high speed Internet service, on July 13, 1999, two weeks after plaintiff learned that ImaginOn had purchased www.imon.com and two days before ImaginOn announced its intention to launch a high bandwidth portal on www.imon.com and 4 weeks before Moy bought www.imon.net, Surf Fever filed an application to register in the United States Patent and Trademark Office (USPTO) the mark IMON with regard to Internet services, indicating on the application that it intended to use the mark in commerce. I observe, and of this more later, that the application requires the applicant to sign a declaration which states that

he/she believes the applicant to be entitled to use such mark in commerce; to the best of his/her knowledge and belief no other person, firm, corporation, or association has the right to use the above identified mark in commerce, either in the identical form thereof or in such near resemblance thereto as to be likely, when used on or in connection with the goods/services of such other person, to cause confusion, or to cause mistake, or to deceive.

Also following that application, on July 22, 1999, Surf Fever requested Thomson & Thomson to provide a state corporate name search for the mark IMON. On July 28, 1999, Thomson & Thomson responded and indicated that Imon.net, Inc. was a Pennsylvania corporation.

Sometime between June 30, 1999 and July 28, 1999, Mr. Moy received instructions from Ms. Miller to buy the domain name www.imon.net from Mr. Sundermier. Mr. Moy negotiated with Mr. Sundermier in early August and on August 11, 1999, contracted for the assignment and sale of rights, title, and interest in the www.imon.net domain name. Mr. Sundermier also assigned to Mr. Moy the right to sue for past infringement of the name. Two days before this sale, on August 9, 1999, Surf Fever amended its certificate of incorporation to change its name to ImOn, Inc. Apparently through oversight, Mr. Moy never transferred the rights in the name to ImOn, Inc. until December 21, 1999, when Mr. Moy and ImOn, Inc. executed a contract stating that the effective date of the transfer is August 11, 1999. Thus, the www.imon.net site appeared to the world to be Mr. Moy's until December 21, 1999, since it was registered to him.

Plaintiff ImOn, Inc. has a business strategy of being a business-to-business marketer of Internet access and portal services. As Mr. Farber, Imon's acting president, extensively testified, they market to two levels of customers. The first level customer is big business corporations. ImOn offers that customer the "product" of Internet access. Its marketing plan is to allow big business corporations the ability to offer to its customers free Internet access through ImOn. ImOn's plan is to become affiliated with these big corporations and tie into their marketing stream. Such corporations would offer to its customers free Internet access as an added benefit, for example, after purchasing $50.00 worth of goods or visiting the store a certain number of times or whatever. ImOn might offer its access software through the big corporation's mailings or by handing it out in a store. ImOn's second level of customers are that big corporation's customers. Once that corporation's customers logon to the Internet through ImOn, they would be brought to an opening page which would exhibit the logos of both ImOn and the name of that large business. That opening page would also include some that big corporation's advertisements. In addition, that page would also be a portal page containing a search engine, news, advertising, and e-commerce. ImOn would not charge a fee to the large business or its customers, but ImOn's plans are to earn revenue through the banner advertisements displayed at the bottom ImOn's cobranded portal screen and the e-commerce trade generated. E-commerce trade refers to business generated when a customer purchases a product from a website after obtaining access to that site by a direct link from another site, and the portal that created the access to the company from which an individual made a purchase is compensated with a commission. So ImOn would make money through commissions and after a certain number of people had viewed the banner advertisements. Aside from the customers gained through ImOn's affiliation with large businesses, ImOn expects to have visitors to their website solely for purposes of using ImOn's portal services. Through these visitors, ImOn also expects to earn money through e-commerce commissions or because they viewed a banner advertisement. Plaintiff's "product" is basically a service agreement or contract with a partner to give Internet access and portal services to that partner's customers.

Against this factual background, plaintiff asserts that its and defendant's marks are identical, both plaintiff's and defendant's services are competitive, and the services are delivered through similar channels, namely, the Internet. Plaintiff therefore argues that consumers are likely to be confused, and that plaintiff is entitled to a preliminary injunction.

The purpose of a preliminary injunction is "to keep the parties while the suit is goes on, as far as possible in the respective positions they occupied when the suit began" and to preserve the court's ability to render a meaningful decision after a trial on the merits. WarnerVision Entertainment v. Empire of Carolina, Inc., 101 F.3d 259, 261-62 (2d Cir. 1996). A preliminary injunction is an extraordinary and drastic measure that should not be routinely granted, Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997), because it is "one of the most drastic tools in the arsenal of judicial remedies." Hanson Trust PLC v. SCM Corp., 774 F.2d 47, 60 (2d Cir. 1985). The granting of a preliminary injunction ...


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