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September 16, 2004.

DC COMICS, Plaintiff,

The opinion of the court was delivered by: RICHARD OWEN, Senior District Judge


DC Comics, the publisher of comic books and magazines featuring Superman, filed the instant action in 2000 against Kryptonite Corporation ("KC"), the manufacturer of bicycle locks and accessories, alleging breach of contract, trademark infringement, unfair competition, trademark dilution, and related state law claims. KC, in turn, alleges as counter-claims: rescission, a declaration that DC Comics has no trademark rights in kryptonite, breach of contract, cancellation of DC Comics' trademark registration, and enjoining DC Comics from using and registering kryptonite for certain uses.

KC moves this Court for summary judgment on all the claims in DC Comics' complaint. DC Comics cross-moves for partial summary judgment on KC's counter-claims.

  For the reasons set forth below, KC's motion for summary judgment is denied and DC Comics' motion for partial summary judgment is granted in part and denied in part. Background

  "Bullets! . . . Fire! . . . Bombs! . . . Acid! I'm immune to them all! But kryptonite is my Achilles heel . . . the only substance in the world that can harm me!" Levitz Decl. ¶ 30.

  The story of Superman is well known: While still an infant, Superman was sent by his parents to Earth aboard a space ship from his home planet Krypton. On Earth, Superman is secretly possessed of extraordinary physical abilities, including superhuman strength and speed, x-ray vision, the ability to fly, and the ability to withstand bullets. Superman's sole weakness is his vulnerability to several forms of Kryptonite, an element from Superman's home planet. The most well known form of Kryptonite is Green Kryptonite, which weakens and can kill Superman. DC Comics has also featured a variety of other forms of Kryptonite, including Gold Kryptonite, Blue Kryptonite, and Anti-Kryptonite. Compl. ¶ 9-22.

  DC Comics invented Kryptonite in connection with the radio program The Adventures of Superman in 1943 and Kryptonite first appeared in movies in 1948 and in comic books in 1949. Writers at DC Comics have referred to Kryptonite as "the one substance that . . . can overpower the Man of Steel," "Superman's one fatal flaw," and "the ghastly green substance" that is "the only thing the Man of Steel has to fear in the entire universe." Levitz Decl. ¶ 30.

  Kryptonite Corporation ("KC") is a manufacturer of bicycle and motorcycle locks and accessories. KC's predecessor, KBL Corporation (which was short for Kryptonite Bike Lock, hereinafter "KBL") began using the "kryptonite" trademark on a limited basis in 1972 in connection with its security devices (principally bike locks) without the permission of DC Comics. Compl. ¶ 29.

  DC Comics first discovered KBL was using the "kryptonite" trademark in 1976 when KBL applied to register "kryptonite bike locks" with the U.S. Patent and Trademark Office. Thereafter, DC Comics and KBL engaged in a series of correspondence concerning use of the "kryptonite" mark. This correspondence concluded with the execution of an agreement in early 1983 ("the Agreement").

  The Agreement limited KBL's use (and by extension KC's use) to the following three marks: "Kryptonite," "Kryptonite and Design," and "Krypto Grip" (collectively "KBL's Marks"). The Agreement limited the use of the KBL Marks to the following products: "(1) security devices and accessories therefore, without limitation, such as mechanical and electronic locking means and accessories therefore, and (2) accessories primarily for two wheeled vehicles, such as handle bar grips ("KBL's products")." See Agreement, at 1.

  KBL also agreed it would not expand its use of the KBL Marks to products other than the KBL Products and that KBL would "neither use nor apply for the registration of any Krypt formative marks other than KBL's Marks for KBL's Products." Id. at 2.

  In addition, the parties agreed that KBL would not associate KBL Products with the "Superman, Superboy, Supergirl, Superkids, Super Jr., and Krytpo the Ungderdog character, word mark and device mark . . . and shall not use either the word `super' or a super formative word in the advertising, promotion, packaging or labeling of the KBL Products." Id. at 2. DC Comics, in turn, agreed (1) it would not use DC's Marks*fn1 on KBL's Products and (2) it would not use DC's Marks in any manner to indicate that DC's Products*fn2 are sponsored by or affiliated with KBL or in any manner associate its products with KBL's Products. Id.

  DC Comics contends that KC breached the Agreement when, in the late 1990's, KC filed trademark applications indicating an intention to use the "Kryptonite" trademark with products that were well beyond locks and handle bar grips. For example, according to DC Comics, KC had applied to use KBL's Marks in connection with items including tote bags, briefcases, helmets, pants, jerseys, polishing agents, and computer hardware and software. Compl. ¶ 37.

  Additionally, DC argues that KC is using and has applied for and/or registered "Krypto" stem words in violation of the Agreement, including "Kryptonium," "Kryptoflex," "Kryptovault," and "Kryptokoil." Compl. ¶ 36.

  Finally, DC Comics contends that KC used the word "super" in "advertising, promotion, packaging or labeling of KBL Products" which is expressly prohibited by the Agreement.

  DC Comics also brings claims for infringement, unfair competition and dilution of DC Comics' kryptonite trademark under the Lanham Act, and for related state law claims based upon KC's impermissible use of kryptonite and of other confusingly similar krypto-formative marks and conduct designed to suggest a connection between KC's goods and the Superman legend and to unfairly capitalize on them. KC filed counter-claims. KC's first counterclaim is for rescission of the Agreement based, among other things, on their claim that the purposes of the Agreement have been "substantially frustrated." KC's second counterclaim is for a declaration that DC Comics owns no trademark rights in kryptonite on the grounds that DC Comics has not used the words kryptonite or krypt in connection with the sale of goods or services in commerce. KC's third counterclaim is that DC Comics breached the Agreement by, among other things, licensing the use of elements from the Superman Story for use on security devices and accessories for two-wheeled vehicles. KC's fourth counterclaim is for cancellation of DC Comics's trademark registrations of Kryptonite based on alleged non-use. KC's fifth counterclaim is to enjoin DC Comics from using and registering the Kryptonite mark in connection with two-wheeled vehicles.

  Summary Judgment Standard

  Summary judgment is proper under Fed.R.Civ.P. Rule 56(c) where there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The party moving for summary judgment meets its burden by establishing an absence of evidence to support the opposing party's allegations. Id. at 325. The burden then shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.Pr. 56(e).

  In contract cases, "where contract language is ambiguous, the differing interpretations of the contract present a triable issue of fact" and thus summary judgment is not appropriate. Consolidated Edison, Inc. v. Northeast Utilities, 249 F.Supp. 2d 387, 411 (S.D.N.Y.,2003) (citations omitted). Contract language is ambiguous if it is "`capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement. . . .'" Sayers v. Rochester Telephone Corp. Supplemental Management Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (citations omitted).

  "[C]ontract language is not ambiguous if it has a definite and precise meaning, unattended by danger of misconception in the purport of the [contract] itself, and concerning which there is no reasonable basis for a difference of opinion." Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989).

  I. Kryptonite Corporation's Motion for Summary Judgment

  A. Breach of Contract

  KC has moved for summary judgment on the breach of contract claim arguing that there is an absence of evidence to support the DC ...

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