The opinion of the court was delivered by: I. LEO GLASSER, Senior District Judge
This motion arises out of an action for trademark infringement and
unfair competition brought by Plaintiff New Sensor Corporation ("New
Sensor" or "Plaintiff") against Defendant CE Distribution LLC ("CE" or
"Defendant") regarding CE's use of the word SVETLANA on its website,
http://www.cedist.com. Before the Court is the motion of CE to dismiss
with prejudice or, in the alternative, for summary judgment. For the
reasons that follow, CE's motion for summary judgment is granted.
Plaintiff and Defendant are competing U.S. distributors of electron or
vacuum tubes ("tubes" or "vacuum tubes") used in electronic equipment
such as guitar amplifiers. (Def. Mem. at 5; Matthew Decl. ¶ 12.)
J.S.C. Svetlana ("JSC") is a Russian corporation located in St.
Petersburg that manufactures electron devices, including vacuum tubes.
(Compl. at 6; Ferrari
Decl. Ex. G-A ¶ 7; hereinafter "Rafiee and Gray Decl.")*fn1
In 1992, JSC entered into a joint venture agreement with Svetlana
Electron Distributors ("SED"), an Alabama corporation "formed to bring
Russian power grid tube technology to the West." (Rafiee and Gray Decl.
¶ 9, Exs. A, B; Kozinets Decl. Ex. F.) Pursuant to this joint venture
agreement, JSC manufactured vacuum tubes while SED had the exclusive
right to distribute them in every country but those of the former Soviet
Union. (Rafiee and Gray Decl. ¶ 10.) In order to develop a market for
these tubes in the U.S., SED invested significant sums in research,
development, and marketing. (Rafiee and Gray Decl. ¶ 13.) The joint
venture adopted the name "SED-SPb" (Rafiee and Gray Decl. ¶ 9),
which, according to Defendant, stands for "Svetlana Electron Devices
St. Petersburg" (Def. Supp. Rule 56.1 Statement).
The tubes manufactured by the joint venture were marked with a stylized
"S" and the words SVETLANA ELECTRON DEVICES. (Compl. ¶ 7; Rafiee and
Gray Decl. Ex. F.) In 1997, SED registered these marks with the United
States Patent and Trademark Office. (Compl. ¶ 7; Rafiee and Gray
Decl. Ex. F.)
According to promotional materials distributed by SED, JSC was founded
in 1889 and became the largest power tube manufacturer in Russia.
(Kozinets Decl. Ex. F.) In 1913, when it began manufacturing light bulbs,
the factory adopted the name SVETLANA from the Russian word "Svet,"
meaning "light." (Kozinets Decl. Exs. D, F.) As SED's website explained,
"light bulb manufacturing naturally evolved into vacuum tube
manufacturing in 1929." (Kozinets Decl.
In 2000, when the joint venture between JSC and SED dissolved, JSC
entered into a agreement with PM of America, Inc. ("PMA") to distribute
its tubes in the United States. (Compl. ¶ 9; Def. Mem. at 6.) In July
2001, SED sold certain assets to New Sensor, including its trademark
rights and goodwill in the SVETLANA mark and the stylized "S." (Compl.
¶ 8; Matthews Decl. ¶ 3.) The tubes that New Sensor currently
distributes under the SVETLANA mark are manufactured at Xpo-pul, a
factory in Saratov, Russia. (Matthew Decl. ¶ 5.) New Sensor does not
sell tubes manufactured by JSC. (Matthews Decl. ¶ 5.) The tubes sold
by New Sensor and those manufactured by JSC have equivalent technical
specifications. (Ferrari Decl. Ex. I, Letter from Pavane to Cravener,
August 13, 2003 at 2.)
In 2001, JSC and PMA filed an infringement action against SED and New
Sensor in the United States District Court of Alabama claiming that New
Sensor did not have rights in the SVETLANA mark. In 2003, the parties
signed a settlement agreement ("Settlement Agreement") with the following
terms inter alia: (1) New Sensor has the exclusive right to use
the SVETLANA mark in the United States and Canada; (2) JSC has the
exclusive right to use the Winged-C logo; (3) New Sensor releases CE and
other customers of JSC and PMA from any claims arising out of the use of
the SVETLANA mark in connection with the sale of inventory manufactured
by JSC and purchased by CE and other customers before March 4, 2003.
(Matthews Decl. Ex. B.) Following this Settlement Agreement, PMA sent a
letter to its customers, approved by New Sensor, which informed them that
tubes formerly branded SVETLANA would now be sold under the Winged-C
PM of America, Inc. is announcing that the tubes it has been supplying
United States and Canada under the name "Svetlana"
will now be marketed under a new brand name, "SED
St. Petersburg, Russia" and will display the
following logo: [Winged-C].
In the early 1990s, J.S.C. Svetlana of St.
Petersburg, Russia, and R&G, Inc. of
Huntsville, Alabama, formed a joint venture
for the purpose of manufacturing and
distributing vacuum tubes, resulting in the
formation of two new companies. SED/SPb of St.
Petersburg, Russia, was formed to manufacture
the tubes, and it took over the factory and
certain other assets of J.S.C. Svetlana
related to vacuum tube production. SED
International, Inc., later renamed Svetlana
Electron Devices, Inc., of Hunstville, Alabama,
was formed to handle worldwide marketing, sales,
engineering support, and customer support for
In the year 2001, Svetlana Electron Devices, Inc.
transferred its assets, including the name and
trademark rights to the Svetlana name, to New
Sensor Corporation. J.S.C. Svetlana maintained
control of SED/SPb. Also that year, J.S.C.
Svetlana appointed a new exclusive worldwide
distributor, PM Components, Ltd., of the United
Kingdom, which in turn appointed PM of America,
Inc. as its exclusive distributor in the United
States and Canada. Litigation subsequently ensued
between New Sensor, J.S.C. Svetlana, PM
Components, and PM of America as to the rights to
the Svetlana name. That litigation has recently
been settled and resolves the issues between the
parties in the United States and Canada.
PM of America will continue to sell vacuum tubes
manufactured by SED/SPb of St. Petersburg, which
produced the tubes PM of America previously
marketed as "Svetlana" and which is still
controlled by J.S.C. Svetlana. These tubes will be
marked in the United States and Canada with the
logo shown above [Winged-C logo].
(Matthews Decl. Ex. C.)
CE maintains a website, http://www.cedist.com, which sets forth a menu
of products sold by CE. including vacuum tubes. (See Ferrari
Decl. Ex. H; Def. Mem. at 7.) By selecting "tubes" from the list of
products, the user is brought to a page that lists several brands of
tubes, including SVETLANA and Winged-C. Choosing SVETLANA brings the user
to a list of tubes manufactured by JSC that were purchased by CE before
January 15, 2003. (Cravener Reply
Decl. ¶ 3; Magee Decl. ¶ 2.) Clicking on "Winged-C tubes"
brings the user to a list of Winged-C brand tubes for purchase, as well
as the following text, interspersed with the Winged-C logo:
How can you be sure you are getting the tubes made
in JSC Svetlana's St. Petersburg's [sic] factory?
Look for the "Winged-C" logo.
As the tube world gets more and more complicated,
it is important to make sure that you know what
you are buying and how to identify the tubes you
want to buy. Here's the story:
JSC Svetlana is a Russian company that owns and
operates the Svetlana factory in St. Petersburg,
Russia, which has been making vacuum tubes for
almost a century. These tubes have been known in
the United States as Svetlana brand tubes and have
had the "S" logo and/or the [Winged-C] logo (a
Cyrillic S) on them.
Because of a change in ownership of the former
American distributor, JSC Svetlana recently lost
its ability to sell vacuum tubes bearing the
"Svetlana" name, while maintaining the ability to
sell the tubes bearing the [Winged-C] logo in the
United States and Canada.
The Xpo-pul factory, otherwise known as Reflector,
in Saratov, Russia is an entirely different
Russian company that makes vacuum tubes for an
American corporation that controls the Sovtek and
Electro-Harmonix brand names. This same American
corporation now also owns and controls the
Svetlana brand name in the United States and
Canada and recently introduced (last Fall) a new
line of Svetlana branded vacuum tubes produced in
the Xpo-pul factory. The Xpo-pul factory
"Svetlana" tubes are not the same
Svetlana tubes that you have been accustomed to
over the years!
Rest assured that the Svetlana factory in St.
Petersburg, Russia is still producing vacuum tubes
and has no plans to stop. These tubes are
available to you through CE Distribution under the
"Winged C" name.
All current production St. Petersburg
factory tubes and only those
tubes do bear the [Winged-C] mark,
while in the past some did not.
In today's world if you want the tubes that you've
come to know in the past as "Svetlana", the only
way to be sure you're getting that tube is to look
for the [Winged-C] mark.
(Ferrari Decl. Ex. H) (emphasis in original). According to the
website, because CE is a
wholesale company, only dealers and distributors may purchase tubes
from the website. See http://www.cedist.com. To ensure this
restriction, a customer must enter a customer code and password in order
to make a purchase.
In August 2003, New Sensor filed this lawsuit against CE for trademark
infringement and unfair competition under the Lanham Act,
15 U.S.C. § 1051 et seq., and N.Y. Gen. Bus. Law §§ 360-k, 360-1, based
on CE's use of SVETLANA on its website. CE now moves to dismiss with
prejudice, or in the alternative, for summary judgment. Because both
parties have submitted affidavits and other evidence outside the
pleadings, pursuant to Fed.R.Civ.P. 12(b) the Court will treat the
motion as one for summary judgment. Kopec v. Coughlin, 922 F.2d 152,
154-55 (2d Cir. 1991) (where materials outside the pleadings were
presented, Rule 12(b) requires the court to treat the motion to dismiss
as one for summary judgment). Although Rule 12(b) requires that parties
be given an opportunity to provide supporting material when the court
converts a motion to dismiss to one for summary judgment, the Plaintiff
here had sufficient notice and opportunity because the original motion
sought summary judgment as an alternate form of relief. Groden v.
Random House, Inc., 61 F.3d 1045, 1053 (2d Cir. 1995).
I. Summary Judgement Standard
Summary Judgment under Fed.R.Civ.P. 56(c) is proper "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 a
judgment as a matter of law," Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986). "Only
disputes over facts that might affect the outcome of the suit under
the governing law" will preclude summary judgment. Anderson v.
Liberty Lobby. Inc., 477 U.S. 242, 248 (1986).
When evaluating a motion for summary judgment, "the court must view the
evidence in the light most favorable to the party against whom summary
judgment is sought and must draw all reasonable inferences in his favor."
L.B. Foster Co. v. Am. Piles, Inc., 138 F.3d 81, 87 (2d
Cir. 1998) (citing Matsushita Elec. Indus. Co., Ltd, v. Zenith Radio
Corp., 475 U.S. 574 (1986)). The party opposing summary judgment
"may not rely on conclusory allegations or unsubstantiated speculation."
Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Instead,
the opposing party "must designate specific facts showing that there is a
genuine issue for trial." Celotex, 477 U.S. at ...