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February 23, 2004.


The opinion of the court was delivered by: DENISE COTE, District Judge


These related actions arise from the claim of First National Bank of Omaha ("FNBO") that its SMART ONE mark*fn1 is infringed by the ONESMART mark used by MasterCard International Incorporated ("MasterCard") in connection with MasterCard's smart card services. A smart card is typically a plastic card containing a computer chip that enables the holder to purchase goods and services, to access financial or other records, and to perform other operations requiring data stored on the chip.

  On April 10, 2002, FNBO sent a letter demanding that MasterCard cease and desist in its use of the ONESMART mark and abandon its ONESMART trademark applications. On May 15, 2002, MasterCard filed a complaint ("Complaint") seeking a declaratory judgment that its use of ONESMART, ONESMART MASTERCARD, or variants thereof in connection with smart card products does not infringe FNBO's trademark rights in the term SMART ONE pursuant to Section 32(a), 15 U.S.C. § 1114(1), or Section 43(a), 15 U.S.C. § 1125(a), of the Trademark Act of 1946 ("Lanham Act"), 15 U.S.C. § 1051 et seq., or unfairly compete with SMART ONE under state or federal law. On July 30, 2002, FNBO filed an action in the District of Nebraska seeking an injunction and damages on the ground that MasterCard's use of the ONESMART mark infringed on FNBO's SMART ONE mark. On November 13, 2002, the Court denied Page 3 FNBO's motion to dismiss this declaratory judgment action in favor of the later-filed action by FNBO in the District of Nebraska or, in the alternative, to transfer this action to Nebraska. MasterCard Int'l Inc. v. First Nat'l Bank of Omaha, Inc., No. 02 Civ. 3691 (DLC), 2002 WL 31521091 (S.D.N.Y. Nov. 13, 2002).

  FNBO answered the Complaint on November 27, 2002, and filed a counterclaim alleging trademark infringement by MasterCard pursuant to 15 U.S.C. § 1125(a). The counterclaim seeks to enjoin MasterCard from using ONESMART in conjunction with its provision of credit card services and to recover monetary damages resulting from MasterCard's infringement. On April 30, 2003, FNBO filed an amended answer and counterclaim, which included a claim for contributory infringement pursuant to 15 U.S.C. § 1125(a).

  On January 29, 2003, the case against MasterCard originally filed by FNBO in the District of Nebraska was transferred to the Southern District of New York. On August 20, 2003, FNBO's motion to return this matter to the District of Nebraska was denied. The transferred action, 03 Civ. 707, is treated as a related case. Discovery has been concluded in both actions.

  This Opinion addresses FNBO's motion for partial summary judgment, FNBO's motion in limine to exclude the expert testimony of Dr. John Hauser, MasterCard's motion in limine to exclude the expert survey and testimony of Dr. Alexander Simonson, and MasterCard's motion for summary judgment on FNBO's claims for monetary relief. Three remaining motions filed by FNBO will be Page 4 resolved by the Court at a later date.*fn2 Relevant facts, as shown by the parties in connection with their submissions on the motions described above, are summarized as follows.



  FNBO is a national bank that conducts credit card processing and provides smart cards and smart card services to FNBO customers, customers of FNBO "affiliates,"*fn3 and to "agent banks"*fn4 in at least seven states. The agent banks distribute to consumers solicitations marketing the smart cards, which use the term SMART ONE and the agent bank's own name. FNBO represents that it entered the smart card market because it was looking for a product with future potential and with the ability to develop a household name.

  On November 24, 2000, FNBO applied to the United States Patent and Trademark Office ("PTO") to trademark the mark SMART ONE for banking services, credit card services, and smart card services. On August 14, 2002, the PTO issued a Notice of Publication stating that SMART ONE "appeared entitled to registration," and that the application would be published for opposition. FNBO filed a Statement of Use on April 29, 2003, requesting registration based on FNBO's use of the mark in Page 5 commerce, and declaring that the mark was first used by FNBO on November 27, 2001.

  MasterCard's reply to FNBO's answer and amended counterclaims asserted that FNBO committed fraud on the PTO by failing to disclose the existence of prior third party users of the SMART ONE mark. On September 30, 2003, MasterCard sent a letter of protest to the PTO, requesting that FNBO's SMARTONE application be suspended pending a final judgment in this case. The letter of protest alleges that FNBO's Statement of Use falsely claimed that FNBO was the owner of the SMART ONE trademark, despite knowledge of the mark's prior use by third party Bank of Ann Arbor. MasterCard also alleged that the date of first use claimed by FNBO did not describe bona fide use in the ordinary course of trade, and that FNBO was not using the mark in connection with all of the services claimed in the Statement of Use. FNBO's SMART ONE mark has not been registered with the PTO.

 MasterCard and ONESMART

  MasterCard oversees a network of member banks that issue bank cards under the MasterCard brand. MasterCard argues that its competitors are Visa, American Express, and other international card networks. MasterCard itself does not issue bank cards.

  On June 4, 2001, MasterCard filed an application to register the ONESMART mark for smart cards ("Smart Card Application"), among other uses. On September 5, 2001, the PTO issued an Office Action refusing registration of the Smart Card Application on the ground that the mark was likely to cause confusion with four Page 6 previously registered marks and two pending applications for the SMART ONE mark, one by FNBO and the other by Capital One Financial Corporation.

  On October 3, 2001, MasterCard's in-house trademark counsel, Colm Dobbyn ("Dobbyn"), advised MasterCard management of FNBO's prior application for registration of the SMART ONE mark, Capital One's subsequent application for the same mark, two other applications for the SMART ONE mark in the financial services class, and six applications outside of the financial services class. Dobbyn stated via e-mail:
As a result of the numerous prior filings and uses of "Smart One" and "One Smart" terminology, it is our opinion that it would be difficult to obtain exclusive trademark rights over the term ONE SMART in the United States. . . . [W]e would 6be prepared to argue to the Trademarks Office that ONE SMART is sufficiently different from SMART ONE that the two terms can coexist. We have already filed applications for both ONE SMART MASTERCARD and ONE SMART alone, with the understanding that it may be necessary to abandon attempts to register ONE SMART itself. We would recommend the term be used as a composite form — ONE SMART MASTERCARD. We cannot rule out the possibility of an opposition proceeding or other legal action being taken by First National Bank of Omaha or by any other third party, however.
(Emphasis supplied.)

  MasterCard submitted a Response on March 5, 2002, to the PTO's Office Action refusing registration for the Smart Card Application. In the Response, MasterCard argued against the likelihood of confusion between the ONESMART and SMART ONE marks.*fn5 Page 7

  MasterCard began advertising its smart card services to its member banks in April 2002. The advertising included a website, trade show presentations, advertisements in trade journals, and brochures, which were distributed to some of MasterCard's member banks. MasterCard has provided two brochures that it identifies as ONESMART promotional materials. The brochures use the term "OneSmart Mastercard," as well as the term "OneSmart" followed by nouns such as "card," "choice," and "move." The brochures also depict bank cards that bear the name "OneSmart MasterCard." The materials describe the smart card services MasterCard can provide to banks seeking to offer a smart card to their customers. To date, MasterCard has not used ONESMART in any consumer advertising. On June 7, 2002, MasterCard's Smart Card Application was suspended pending disposition of FNBO's SMART ONE application.

  In total, MasterCard filed seven trademark applications utilizing the term ONESMART, including applications for ONESMART alone, for ONESMART MASTERCARD and for "ONESMART CARD. MORE SMART CHOICES." An application for a styled version of the ONESMART mark for use with smart cards, presented as "oneSMART" ("Stylized Application"), was filed with the PTO on April 24, 2002, and was sent to a different examiner than MasterCard's prior Smart Card Application. The Stylized Application was registered on February 18, 2003. FNBO filed a petition to cancel this mark on May 20, 2003. None of the other trademarks submitted to the PTO by MasterCard have been registered. Page 8


  FNBO's Motion for Partial ...

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