United States District Court, S.D. New York
October 13, 2005.
INFORMATION SUPERHIGHWAY, INC., Plaintiff,
TALK AMERICA, INC. and AMERICA ONLINE, INC., Defendants.
The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
Defendants Talk America, Inc. ("Talk") and America Online, Inc.
("AOL") (collectively the "Defendants") have moved under Rule 56,
Fed.R.Civ.P., to dismiss the amended complaint of plaintiff
Information Superhighway, Inc. ("ISI") alleging trademark
infringement and state law claims arising out of the use by the
Defendants of the domain name "Telsave.com." For the reasons set
forth below, the motion is granted, and the amended complaint is
The confused history of Telsave.com and its use by the
Defendants have given rise to this litigation. The failure of ISI
to establish injury and the elements of a trademark infringement
has resulted in the outcome described below.
This action was initiated by ISI on March 21, 2003. The amended
complaint was filed on May 16, 2003, alleging eight causes of
action: (1) violation of the Lanham Act, 15 U.S.C. § 1143, for
use of "the domain name and trade name `Telsave.com'", (2)
violation of the New York General Business Law § 360-1, (3)
injunctive relief, (4) unfair competition, (5) unjust enrichment,
(6) accounting for profits, (7) tortious interference with
business relations, and (8) conspiracy. The Defendants moved to dismiss the complaint on the basis of
the release between the parties dated April 6, 2000. By opinion
of July 30, 2003 (the "July 30 Opinion"), that motion was denied
based on the Court's conclusion that "the terms of the April 6,
2000 release [were] ambiguous and because ISI ha[d] not clearly
acquiesced in the use of its Telsave trademark and domain
name. . . ." See Info. Superhighway, Inc. v. Talk America,
Inc., 274 F. Supp. 2d 466, 472 (S.D.N.Y. 2003). The July 30
Opinion established that ISI's claim is based upon the
Defendants' actions after April 7, 2000.
Discovery has proceeded, and the instant motion was heard and
marked fully submitted on March 23, 2005.
The facts are derived from the Defendants' Rule 56.1 Statement
and the Plaintiff's Responsive Statement and are not in dispute
except as noted below.
Talk America, Inc. (formerly, Talk.com Holding Corp.) ("Talk")
was incorporated in Pennsylvania in 1989 under the name Tel-Save,
Inc. From 1989 to 1997, its main business was providing long
distance telephone service. Talk America Holdings, Inc. (formerly, Talk.com, Inc.) ("TAH")
was incorporated in Delaware in 1995 as Tel-Save Holdings, Inc.
ISI was incorporated in 1994 in New York. Its president is Ira
Todd Klein ("Klein").
AOL is the nation's largest Internet service provider with over
In or about January 1997, AOL, TAH, and Talk negotiated a
marketing agreement (the "Agreement"), which provided that Talk
would be the exclusive provider of telecommunication services
offered by AOL to AOL subscribers in areas of long distance,
wireless, and local services. The Agreement was executed on or
about February 22, 1997. On February 25, 1997, TAH announced
publicly that it had entered into the Agreement with AOL. Under
this agreement, Tel-Save, Inc. (Talk) would be the exclusive
provider of long distance telecommunications services to be
marketed by AOL to all of the subscribers to AOL's online network
under a distinctive brand name, AOL Long Distance, to be used
exclusively for Tel-Save Inc.'s services. At the signing of the
contract, Talk paid AOL $100,000,000.
According to the Defendants, on or about February 12, 1997, ISI
registered the domain name infosuperhighway.com. According to ISI, the registration was made by Network Solutions
in August 2005.
On or about March 11, 1997, shortly after the announcement of
the Agreement, ISI registered the domain name tele-save.com. On
or about March 14, 1997, ISI registered the following domain
names: tele-save.net, telsave.net, telsave.com, telsave.net.
According to ISI, the registrations were made at the
recommendation of the president of Network Solutions Gabriel
Batista ("Batista") who subsequently became president and CEO of
Klein, in a letter to Tel-Save.com, Inc. dated April 22, 1999,
rehearsing the dispute between the parties, stated that the
domain names (tele-save.net, telsave.net, telsave.com,
telsave.net) "were all generic."
ISI has registered domain names incorporating marks registered
to other parties with the United States Patent and Trademark
Office ("USPTO") or marks similar to those owned by other
parties, including: AOL-longdistance.com, AOLld.com, AOL-Id.com,
MCIsprintcom.com, Yahoolongdistance.com, Flowers-r-us.com,
Computers-r-us.com, 1800telsave.com, 1888telsave.com, AOLld.com,
AOL-ld.com, MCIsprintcom.com, and Beds-r-us.com. ISI used
Telsave.com for seven years in its business of reselling
telephone usage. Talk has also registered domain names without submitting
evidence as to their use. It has also filed state trademarks and
doing-business certificates with no further action.
In 2000, ISI and Talk's parent settled previously pending
litigation, which gave rise to the release described in the July
30 Opinion. Pursuant to an amendment to the Agreement dated
September 19, 2001, terminating the Agreement between AOL and
TAH, when the keywords "telsave" or "telsave.com" were entered as
keywords in the AOL browser, a user would be directed to the Talk
website and not to ISI's website. Pursuant to the amendment, the
aforementioned keywords were to expire on February 28, 2003.
Prior to the termination of the Agreement, counsel to ISI
forwarded litigation papers to the Defendants.
From August to November 2002, AOL recorded 42 hits for the
keyword telsave and 6 hits for the keyword telsave.com. During
the period from December 2002 to the end of February 2003,
according to counsel for the Defendants, there were 36 hits for
telsave and 122 hits for telsave.com. The AOL record for key
words because of its size was created on a rolling 13 month basis
so that material earlier in time than 13 months from the date of
any inquiry was deleted as a matter of corporate practice.
In 2003 Talk had over 557,000 billed bundled lines and
approximately 251,000 billed stand-alone long distance
subscribers. Over 90% of Talk's local and long distance lines were for
From at least March 10, 2003, and continuing to the present,
"telsave" and "telsave.com" are no longer AOL keywords. On
January 4, 2004, use of telsave on AOL browser produced a
matching search page which led to the ISI website.
Talk has no present intention of using the keywords telsave
and/or telsave.com to link to Talk's website. According to ISI,
Talk remains a competitor.
In or about December 2002, Klein, who is a subscriber to AOL,
discovered that typing the above telsave keywords took him to
Talk's website arrangement.
ISI has between 50 and 60 customer companies which purchase
telephone service for companies and employees. ISI operates out
of a home office and has a separate office space for which it
does not pay rent; no documents are stored in the office space.
Its files are kept in boxes in closets, and it maintains no
ISI is chiefly involved in selling long distance telephone
services, but it contends that it competes directly with Talk as
to certain employees of its corporate clients. From 1993 to the date of his deposition, Klein was employed by
ISI. ISI's other employee, who is Klein's wife, maintains the
ISI is not aware of any person who has entered telsave or
telsave.com as an AOL keyword. It has conducted no studies
regarding consumer perceptions or attitudes with respect to the
word telsave or studies showing how many people, if any,
associated ISI with telsave or telsave.com between January 1,
2002 and the present. ISI has presented no evidence, documentary
or otherwise, as to the number of people who associate telsave or
telsave.com with it between January 1, 2002 and the present.
ISI has no written or oral agreements with any web browser
companies such as Yahoo with respect to the keywords telsave or
telsave.com. It has not engaged in any print, television, or
radio advertising, except for possibly an advertisement in Phone
Plus, a trade magazine, sometime in 2000 and "some banner ads" on
the internet in either 2000 or 2001; it has not produced copies
of any of the aforementioned advertisements.
ISI has alleged that it has advertised in e-mail, flyers, and
faxes at various times, but it has no records or documentation to
support this allegation, other than one document, which does not
contain or refer to either telsave or telsave.com. The only
instance of unsolicited media coverage of ISI is an article from January 7, 1999, in which an online news service, thestreet.com,
reported looking for Talk's website, Telsave.com, and mistakenly
accessing ISI's telsave.com website. ISI has alleged without
contradiction that Yahoo, Google, and Microsoft Network search
engines contain its domain name, Telsave.com. No evidence has
been submitted as to the results of this practice.
ISI's Telsave.com is a composite mark combining the dictionary
abbreviation "Tel" meaning "telephone" and the word "save"
meaning "to economize or to avoid waste or expense." The
www.telsave.com website maintained by ISI states that its
services save people money on "Local, long distance,
conferencing, DSL, and other telecom services," promising "Lower
Monthly Bills," "Dollars and Sense Savings," and urging visitors
to "Become a TelSaver today!".
ISI has no evidence of consumer confusion between Talk and ISI
and has not identified any customer who learned of its services
through accessing its website at www.telsave.com. According to
ISI, it also has sold Talk's services as a result of an ISI
contract with Cognigen, and a Cognigen report indicates that
customers had been referred to the Talk website by the
Defendants' conduct. ISI is aware of numerous companies who used Telsave in one form
or another, but according to ISI these companies are not
No evidence has been submitted to show that the Defendants
intended to deceive the public and to pass off their services as
those of ISI, nor evidence of any ISI customer accessing Talk by
an AOL keyword.
Talk has no knowledge of any ISI customer accessing Talk by an
AOL keyword. ISI has no documentary evidence of any consumer who
tried to reach ISI but was unable to do so because of the AOL key
word arrangement with Talk.
ISI has no knowledge or information as to how many of its
customers were Talk customers or customers of other carriers by
way of Cognigen, other than the Cognigen report of commissions
reflecting customers and the services they signed up for.
ISI has no information as to how many of its customers used
Talk's telecommunication services either before or after 2003.
ISI has noted a drop in its gross revenues from $400,000 to
$260,000 during the period in question. However, no evidence has
been adduced to determine the cause of this diminution. Thereafter ISI sought to sell its Telsave mark to Talk, but no
terms were agreed upon. The docket and the July 30 Opinion
establish that the parties resolved their differences up to and
including the date of the release of April 6, 2000. The
Defendants ceased using the keywords telsave and telsave.com by
March 10, 2003.
The Summary Judgment Standard
Summary judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).
Summary judgment is appropriate where plaintiff is unable to
establish the existence of each and every element upon which it
will bear the burden of proof at trial. Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). A non-moving party cannot
overcome a motion for summary judgment with mere assertions, but
instead must present "sufficient evidence favoring the nonmoving
party for a jury to return a verdict for that party." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505
(1985). "A dispute is not `genuine' unless the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party." Id. at 248. Summary judgment may be granted in trademark matters where
there is no protectable trademark interest and no likelihood of
confusion. Nabisco, Inc. v. Warner-Lambert Company, 220 F.3d 43
(2d Cir. 2000) (citing Sports Auth., Inc. v. Prime Hospitality
Corp., 89 F.3d 955, 960 (2d Cir. 1996)); Cosmetically Sealed
Industries, Inc. v. Chesebrough-Ponds USA Co., 125 F.3d 28 (2d
Cir. 1997); see also Thompson Medical Co. v. Pfizer, Inc.,
753 F.2d 208, 215 (2d Cir. 1985) (noting § 43(a) of Lanham Act's
goal of preventing consumer confusion regarding the source of
goods or services produced).
While all reasonable ambiguities and inferences should be
resolved against the moving party, those inferences must be
supported by affirmative facts and based on relevant admissible
evidence. See Fed.R.Civ.P. 56. A party seeking to defeat a
summary judgment motion cannot "rely on mere speculation or
conjecture as to the true nature of facts to overcome the
motion." Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir. 1995)
The Lanham Act Claim Is Dismissed
To establish a claim for trademark infringement under Section
43(a) of the Lanham Act (the "Act"), 15 U.S.C. § 1125(a), a
plaintiff must demonstrate that it has a valid trademark entitled
to protection and that the defendant's use of it is likely to
cause confusion of an appreciable number of ordinarily prudent
purchasers as to the source of goods or services in question.
Gruner Jahn USA Publ'g v. Meredith Corp., 991 F.2d 1072, 1075
(2d Cir. 1993); see also Time, Inc. v. Petersen Publ'g Co.
L.L.C., 173 F.3d 113, 117 (2d Cir. 1999) (noting that Gruner
test is applicable to claims brought under § 1114(1) and §
1125(a)); accord Virgin Enterprises Ltd. v. Nawab,
335 F.3d 141, 146 (2d Cir. 2003).
The Act only protects marks that are inherently distinctive,
arbitrary, suggestive, or that have acquired "secondary meaning."
See, e.g., Abercrombie & Fitch Co. v. Hunting World, Inc.,
537 F.2d 4 (2d Cir. 1976). The Federal Circuit recently rejected
the notion that domain names are inherently distinctive: "The
simple fact that domain names can only be owned by one entity
does not of itself make them distinctive." In Re Oppedahl &
Larson, LLP, 373 F.3d 1171, 1176-77 (Fed. Cir. 2004).
Telsave is not inherently distinctive, but rather simply is
descriptive of the qualities, ingredients, or characteristics of
the goods or services related to the mark, i.e., that of saving
money on telephone bills. See Estate of P.D. Beckwith, Inc. v.
Comm'r of Patents, 252 U.S. 538, 543 (1920); see also
Trademark Manual of Examining Procedure ("TMEP"), § 1209.03(m)
(TLDs [such as ".com" or ".net"] generally serve no
source-indicating function, [and] their addition to an otherwise
unregistrable mark typically cannot render it registrable). The
combination of "telsave" and "com" in the URL telsave.com does not change the essentially
descriptive character of telsave.com. The use of telsave with the
capital T in Tel and the capital S in Save/r indicates an
understanding of the mark as the combination of the abbreviation
"Tel" for telephone and "Save" for savings.
Indeed, the dictionary definitions of the parts of the
composite TelSave mark indicate the public's understanding of the
mark. Murphy Door Bed Co. v. Interior Sleep Sys., Inc.,
874 F.2d 95, 101 (2d Cir. 1989) (dictionary definitions, while not
conclusive proof of mark's generic value, reflect the general
public's perception of a mark's meaning and implication); In re
Oppedahl & Larson LLP, 373 F.3d at 1176 (dictionary definitions
show the relevant purchasing public's understanding of contested
tele or tel . . . 1. distant: at a distance: over a
distance telegram . . . c: telecommunication
Merriam-Webster's Collegiate Dictionary, Eleven Addition, p.
ISI has cited West & Co. v. Arica Institute, Inc.,
557 F.2d 338 (2d Cir. 1977). There, the Second Circuit concluded that
"psychocalisthenics" was an "odd and unusual term" and does not
merely describe "`a combination of various yoga systems, dance
and calisthenics' which require continual motion and are designed
to produce specific mental, emotional and spiritual results."
Id. at 342-43. The term was held to be suggestive because it requires
imagination, thought, and perception to reach a conclusion as to
the nature of the services. Here, the Telsave mark describes the
purpose of ISI's services, saving customers money on telephone
services. There is no "odd" or "unusual" term, but only "tel" and
"save," and the combination of the terms does not require
imagination as to what ISI's services include.
In McSpadden v. Caron, 2004 WL 2108394 at *13 (W.D.N.Y.),
cited by ISI (Opp. Mem. at 9), the court found "that the
usamedicine.com trademark is merely descriptive, and not
suggestive," reasoning as follows:
Here, the mark "usamedicine.com" is used in
connection with a website selling prescription drugs,
or medicine, primarily to persons in the United
States of America, also known as the U.S.A. In this
context, it requires little imagination, thought, or
perception to reach a conclusion regarding the nature
of the goods being sold. In fact, it appears highly
likely that in choosing the name usamedicine.com
plaintiffs wanted consumers to be able to immediately
conclude from the website's name that they could
purchase medications on the website, and that the
website was somehow associated with the United
Marks formed from combinations of well-known words or
abbreviations have been found to be descriptive: THE SPORTS
AUTHORITY (descriptive of a sporting goods store) (The Sports
Authority, Inc. v. Prime Hospitality Corp., 89 F.3d 955, 961 (2d Cir. 1996)); TRAVEL CARE (for pressing irons) (Remington Prods.,
Inc. v. North Am. Phillips Corp., 892 F.2d 1576, 1580-82 (Fed.
Cir. 1990)); POWERCHECK (for a product which checks power in a
battery) (Ideal World Marketing, Inc. v. Duracell, Inc.,
15 F. Supp. 2d 239, 244 (E.D.N.Y. 1998)); SNAKELIGHT (descriptive of a
flashlight with a flexible neck) (Black & Decker Corp. v.
Dunsford, 944 F. Supp. 220, 225 (S.D.N.Y. 1996)); ARTHRITICARE
(describes the general use (treatment for the care of arthritics)
to which the product or service is put) (Bernard v. Commerce
Drug Co., 774 F. Supp. 103, 107-08 (E.D.N.Y. 1991)); SPORTSCREME
(for topical heat analgesic (Thompson Medical,
753 F.2d at 216-17); FAST TRACK (for athletic wear) (Karmiken Corp. v. May
Dep't Stores Co., 658 F. Supp. 1361, 1370 (S.D.N.Y. 1987));
CLASSROOM (magazine directed at teachers and students)
(Scholastic, Inc. v. Macmillian, Inc., 650 F. Supp. 866, 871
(S.D.N.Y. 1987)). Similarly, the combination of tel and save to
form Telsave or Telsave.com used in connection with the offering
of telecommunication services is merely descriptive of its
services. Accord Bristol-Myers Squibb Co. v. McNeil-P.P.C.,
Inc., 973 F.2d 1033, 1041 (2d Cir. 1992), where the Second
Circuit stated with respect to the PM mark:
Given that context, the conclusion that "PM"
describes rather than suggests a nighttime product
was not clearly erroneous. Once the consumer arrives
at an awareness that the product is useful at
nighttime, the "purpose or utility" of the product
has been conveyed, even though the consumer is not
aware of why the product is useful at night.
Bristol-Myers, 973 F.2d at 1041. Furthermore, there is no evidence in the record that Telsave
has acquired secondary meaning. No evidence has been submitted
with respect to any significant advertising expenditures
promoting Telsave, consumer studies or expert witnesses linking
Telsave to a single source, sales related to Telsave and
telsave.com., or a lengthy and exclusive use of Telsave. See
id., 973 F.2d at 1041 (enumerating the above factors);
Thompson Medical, 753 F.2d at 217 (same); Gemmy Indus. Corp.
v. Chrisha Creations Ltd., 2004 U.S. Dist. LEXIS 11468, at *21
(S.D.N.Y. June 23, 2004). In the absence of such evidence, ISI
has not shown that Telsave has acquired secondary meaning.
Even if it is assumed that Telsave is suggestive, ISI must
establish a likelihood of confusion in accordance with the eight
factors set forth in Polaroid Corp. v. Polarad Elecs. Corp.,
287 F.2d 492, 495 (2d Cir. 1961), cert. denied, 368 U.S. 820
(1961). These factors include: (1) the strength of the mark; (2)
the degree of similarity between the two marks; (3) the proximity
of the products; (4) the likelihood that the prior owner will
"bridge the gap"; (5) actual confusion; (6) the defendant's good
faith in adopting its mark; (7) the quality of the defendant's
product, and (8) the sophistication of the buyers. Id.,
287 F.2d at 495. This "list of Polaroid factors is not exclusive
and the analysis of the factors is `not a mechanical process.'"
Merriam-Webster, Inc. v. Random House, Inc., 35 F.3d 65, 70 (2d
Cir. 1994), (quoting Paddington Corp. v. Attiki Importers &
Distribs., Inc., 996 F.2d 577, 584 (2d Cir. 1993)) cert. denied,
115 S.Ct. 1252 (1995).
1. The Strength Of The Mark
The strength of a trademark encompasses both the mark's
inherent distinctiveness, or its arbitrariness in relation to the
product for which it is used, and its "acquired distinctiveness,"
or "the extent to which prominent use of the mark in commerce has
resulted in a high degree of consumer recognition." Virgin
Enterprises Ltd., 335 F.3d at 147.
No evidence has been presented that potential purchasers
identify the words telsave and/or telsave.com with ISI rather
than Talk, which has been using Tel-Save and variations thereof
since 1989 in connection with its telecommunication services. The
discussion of the descriptive nature of the mark, set forth
above, indicates the lack of distinction for the ISI mark. This
factor weighs in favor of the Defendants.
2. The Degree Of Similarity Between The Two Marks
Here, the marks are identical and the goods are identical.
Since Talk is the senior user of the mark, this factor weighs in
its favor. 3. The Proximity Of The Products
When two products compete with each other, the likelihood
increases that the use of similar marks will cause consumer
confusion. Lang v. Retirement Living Pub. Co., Inc.,
949 F.2d 576, 582 (2d Cir. 1991). There is a dispute here as to whether
the goods compete. According to Talk, it primarily provides
telephone services to individuals, while ISI's "50 to 60
customers" are almost exclusively businesses. According to ISI,
there is a possibility but not a quantification of competition
arising out of services provided for the employees of its
corporate clients. This factor is neutral in view of the lack of
4. The Likelihood That The Prior Owner Will "Bridge The
This factor weighs in favor of Talk as ISI's marketing efforts
and sales have been minimal.
5. Actual Confusion
There has been no evidence of any confusion between the
products and services or that any of the entries of AOL keywords
telsave and telsave.com were the result of confusion. It is
equally possible that existing Talk customers, acquired through
Talk's marketing agreement with AOL, continued to access their
accounts by going to AOL's keyword telsave as it is that, as ISI contends, consumers were seeking its website. The extent of any
such confusion, however, is entirely speculative. Under these
circumstances this factor favors the Defendants.
6. The Defendants' Good Faith In Adopting Its Mark
The sixth Polaroid factor considers "whether the defendant
adopted its mark with the intention of capitalizing on
plaintiff's reputation and goodwill and any confusion between his
and the senior user's product." Arrow Fastener Co. v. Stanley
Works, 59 F.3d 384, 397 (2d Cir. 1995) (citations and internal
quotations omitted). The Second Circuit has stated that in
determining a defendant's intent, "actual or constructive
knowledge" of the prior user's mark or trade dress may indicate
bad faith. Mobil Oil Corp. v. Pegasus Petroleum Corp.,
818 F.2d 254, 259 (2d Cir. 1987).
Here, the Defendants publicly announced their agreement on
February 25, 1997 that Talk (formerly Tel-Save Inc.) would be the
exclusive long distance services provider for AOL subscribers,
and that Talk had paid $100,000,000 to AOL for that privilege.
Three weeks later, ISI registered a number of domain names,
including variants of "Telsave." There is no basis on which to
conclude that the Defendants intended to capitalize on ISI's
mark. ISI's registration of the domain name telsave.com directly
counters any supposition that Talk acted in bad faith. Registration of multiple domain names known to be identical or
confusingly similar to the marks raises an inference of bad
faith. International Bancorp, L.L.C. v. Societe des Bains de Mer
et du Cercle des Etrangers a Monaco, 192 F. Supp. 2d 467, 487
(D. Va. 2002). ISI's claim regarding the Defendants' last
purported offer to purchase the telsave.com domain name (Opp.
Mem. at 11) does not indicate that Talk recognized ISI's rights
to the domain name telsave.com. The offer, according to ISI,
occurred in January 1999, ten months prior to passage of the
Anticybersquatting Consumer Protection Act ("ACPA") on November
29, 1999. 1999 Acts, P.L. 106-113, § 3010, 113 Stat. 1536 (The
bill was introduced on June 21, 1999: 1999 S. 1255, see 145
Cong. Rec. S 7325).
ISI has contended that "an unauthorized website link, like the
one that brought on this lawsuit, evidenced likelihood of
confusion in and of itself, without more" (Opp. Mem. at 12),
relying upon Flow Control Indus. v. AMHI Inc.,
278 F. Supp. 2d 1193 (W.D. Wash. 2003). Here the challenge is to the use of a
keyword in a proprietary search engine belonging to AOL, not a
link from one website to another and not a URL. ISI has submitted
no evidence to establish that if an AOL user typed the complete
URL www.telsave.com with the intention of going to the ISI
website, that user was "hijacked" to Talk's website and not
Also, in Flow Control the undisputed evidence showed that the
defendant deliberately registered the domain name skoflo.com, where SKOFLO was a (subsequently registered) trademark of
plaintiff. Id. at 1195. Here, in contrast, Tel-Save had been
Talk's corporate name since 1989.
The Flow Control court found that the facts related to
determining "likelihood of confusion" were undisputed and all
favored plaintiff in that: (1) the marks were identical; (2) the
SKOFLO mark was distinctive and indicative of the source of
plaintiff's products; (3) defendants used plaintiff's mark to
sell a competing line of products; (4) there was evidence of
actual confusion; (5) defendants intentionally used plaintiff's
mark to generate interest in their own product; and (6) both
companies used the world-wide web and suppliers to market their
products to a limited customer base. Id. at 1199. The court
found that "defendants used plaintiff's mark in such a way as to
divert people looking for SKOFLO products to the A&H website,
thereby improperly benefiting from the goodwill that plaintiff
developed in its mark." Id. at 1200 (citing Brookfield
Communs., Inc. v. West Coast Enter. Corp., 174 F.3d 1036, 1062
(9th Cir. 1999) (holding use of plaintiff's registered
"inherently distinctive" mark MOVIEBUFF in defendant's domain
name moviebuff.com violated the Lanham Act)). Here, there is no
evidence that the public associates the Telsave mark with ISI
rather than Talk. As noted, Telsave and variations thereof were
never the corporate name of ISI; nor is there any evidence of
actual confusion. ISI has also contended that for "a period of at least three
years the defendants blocked off access for defendant AOL's 33
million subscribers to plaintiff's web site." (Opp. Mem. at 14).
There is no evidence that anyone became a Talk customer through
this keyword. (Defendants' Rule 56.1 Statement, ¶ 43). There is
no evidence that anyone who sought to become an ISI customer was
sent to Talk's website, much less became a Talk customer, id.
¶¶ 45, 47, or that Defendants set out intentionally to cause
confusion or mistake, or to deceive the public as to the source
of their services. There is also no evidence that Defendants
spent substantial funds in an effort to deceive customers and
influence their purchasing decisions, i.e., to purposely palm
off their services or goods as those of plaintiffs. Mattel, Inc.
v. Robarb's Inc., 139 F. Supp. 2d 487, 492 (S.D.N.Y. 2001)
(quoting Carl Zeiss Stiftung v. VEB Carl Zeiss Jena,
433 F.2d 686, 706-07 (2d Cir. 1970), cert. denied, 403 U.S. 905
(1971)). The element of good faith favors the Defendants.
7. The Quality Of The Defendant's Product Or Services
This factor is neutral.
8. The Sophistication Of The Buyers
In Merriam-Webster, Inc. v. Random House, Inc., 35 F.3d 65,
72 (2d Cir. 1994), the court stated: "In assessing this factor, one must look to `the general impression of the ordinary
purchaser, buying under the normally prevalent conditions of the
market and giving the attention such purchasers usually give in
buying that class of goods.'" This factor is "based upon a notion
that unsophisticated buyers increase the likelihood of
confusion." Centaur Communications, Ltd. v. A/S/M
Communications, Inc., 830 F.2d 1217, 1228 (2d Cir. 1987). There
is no evidence concerning the sophistication of potential
purchasers, or lack thereof, so this factor is neutral.
Balancing the Polaroid factors, it is not likely that
consumers were confused as to the source of the Defendants'
Finally, the Second Circuit held long ago that "[t]o recover
damages or profits, whether for infringement of a trademark or
for unfair competition, it is necessary to show that buyers, who
wished to buy the plaintiff's goods, have been actually misled
into buying the defendant's." G.H. Mumm Champagne v. Eastern
Wine Corp., 142 F.2d 499, 501 (2d Cir. 1944). More recently, it
reaffirmed this position:
Our case law "is well settled that in order for a
Lanham Act plaintiff to receive an award of damages
the plaintiff must prove either actual consumer
confusion or deception resulting from the violation,
. . . or that the defendant's actions were
intentionally deceptive thus giving rise to a
rebuttable presumption of consumer confusion." Boosey & Hawkes Music Publishers, Ltd. v. Walt
Disney Co., 145 F.3d 481, 493 (2d Cir. 1998)
(quoting George Basch Co. v. Blue Coral Inc.,
968 F.2d 1532, 1537 (2d Cir. 1992)).
In affirming the lower court's dismissal of an action brought
under 43(a) of the Act, 15 U.S.C. § 1125(a), our Circuit has held
that it was the burden of plaintiff to introduce evidence of
actual consumer confusion, and that in the absence of such
evidence, the claim must be dismissed, absent proof of intent to
deceive. PPX Enterprises, Inc. v. Audiofidelity Enterprises,
Inc., 818 F.2d 266
, 271-72 (2d Cir. 1987). Similarly in George
Basch, the Second Circuit held that a finding of willful
deceptiveness is "a prerequisite for awarding profits," and that
a plaintiff is not entitled to money damages if it is unable to
establish that "were it not for defendant's infringement, the
defendant's sales would otherwise have gone to plaintiff."
George Basch, 968 F.2d at 1537-38.
Here, there is no evidence of actual confusion, money damages,
or willful deception. As to the entries of the keywords Telsave
or Telsave.com, there is no evidence that any of them intended to
go to ISI's website, a website that does not appear on ISI's sole
marketing material. In the absence of such evidence, ISI's
request for monetary damages pursuant to 15 U.S.C. § 1125(a) is
dismissed. The State Unfair Competition Claim Is Dismissed
ISI has urged the exercise of supplemental jurisdiction by the
Court. (Pltf. Memo in Opp., p. 17). Such an exercise is
appropriate under the principles set down in Briarpatch Limited
L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 308 (2d Cir.
The elements necessary to prevail on common law causes of
action for trademark infringement and unfair competition mirror
Lanham Act claims. TCPIP Holding Co. v. Haar Communications,
No. 99 Civ. 1825 (RCC), 2004 U.S. Dist. LEXIS 13543, at *18
(S.D.N.Y. July 19, 2004); see also, Fed Express Corp. v. Fed
Expresso Inc., 201 F.3d 168, 174-75 (2d Cir. 2000) (finding
analysis under section 360-1 generally similar to analysis under
Section 43(c) of Lanham Act); Bristol-Myers, 973 F.2d at 1049
(noting New York's antidilution statute protects only "extremely
strong" marks); Standard & Poor's Corp. v. Commodity Exch.,
Inc., 683 F.2d 704, 708 (2d Cir. 1982) ("The heart of a
successful claim based upon . . . the Lanham Act . . . and common
law trademark infringement is the showing of likelihood of
confusion as to the source or sponsorship of defendant's
products"). In addition, to succeed on the merits of a "common
law claim of unfair competition, [a plaintiff] must couple its
evidence supporting liability under the Lanham Act with
additional evidence demonstrating [the defendant's] bad faith."
Philip Morris USA Inc. v. Felizardo, No. 03 Civ. 5891 (HB),
2004 U.S. Dist. LEXIS 11154 (S.D.N.Y. June 18, 2004). Since the Lanham Act claim will be dismissed, and since ISI is
unable to show any bad faith on the part of the Defendants, ISI's
common law claims must also be dismissed.
The New York Gen. Bus Law § 360-1 Claim Is Dismissed.
N.Y. Gen. Bus. Law § 360-1 states in relevant part that:
Likelihood of injury to business reputation or of
dilution of the distinctive quality of a mark . . .
shall be a ground for injunctive relief in cases of
infringement of a mark registered or not registered
or in cases of unfair competition, notwithstanding
the absence of competition between the parties or the
absence of confusion as to the source of goods or
See N.Y. Gen. Bus. Law § 360-1 (McKinney Supp. 2004).
As set forth in U-Neek, Inc. v. Wal-Mart Stores, Inc.,
147 F. Supp. 2d 158, 175 (S.D.N.Y. 2001): "To state a claim under §
360-1 a plaintiff must show: (1) that the plaintiff's mark is
truly distinctive or has acquired secondary meaning, and (2) a
likelihood of dilution either as a result of `blurring' or
`tarnishment.'" A claim for dilution rests on the allegation that
a defendant is attempting to "feed upon the business reputation
of an established distinctive trade-mark or name." Allied
Maintenance Corp. v. Allied Mechanical Trades, Inc.,
42 N.Y.2d 538, 544, 399 N.Y.S.2d 628, 632, 369 N.E.2d 1162, 1165 (1977)
(referring to Gen. Bus. Law § 368-d, the prior version of N.Y. Gen. Bus. Law
ISI's Telsave mark is weak, has little commercial recognition,
lacks distinctive qualities, and has little or no conceptual
strength. Therefore, the mark cannot qualify as a truly
distinctive mark under the statute. In addition, ISI has failed
to come forward with any proof that Telsave has obtained
secondary meaning. It, therefore, cannot maintain a dilution
claim pursuant to N.Y. Gen. Bus. Law § 360-1. See, e.g.,
Christopher D. Smithers Found. v. St. Luke's Roosevelt Hosp.
Center, No. 00 Civ. 5502 (WHP), 2003 U.S. Dist. LEXIS 373, 2003
WL 115234, at *5-*6 (S.D.N.Y. Jan. 13, 2003); Greenpoint Fin.
Corp. v. Sperry & Hutchinson Co., Inc., 116 F. Supp. 2d 405, 413
The Accounting And Unjust Enrichment Claims Are Dismissed
An accounting for profits is normally available "only if the
`defendant is unjustly enriched, if the plaintiff sustained
damages from the infringement, or if the accounting is necessary
to deter a willful infringer from doing so again.'" Burndy Corp.
v. Teledyne Industries, Inc., 748 F.2d 767, 772 (2d Cir. 1984)
(quoting W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 664
(2d Cir. 1970)). A finding of willfulness is an integral element
of these causes of action: "In other words, a defendant becomes
accountable for its profits when the plaintiff can show that,
were it not for defendant's infringement, the defendant's sales would
otherwise have gone to the plaintiff." George Basch,
968 F.2d at 1538 (citing Burndy Corp., 435 F.2d at 772).
Even a finding of willfulness may not be sufficient predicate
for an accounting, since a court must also consider "such
familiar concerns as: (1) the degree of certainty that the
defendant benefitted from the unlawful conduct; (2) availability
and adequacy of other remedies; (3) the role of a particular
defendant in effectuating the infringement; (4) plaintiff's
laches; and (5) plaintiff's unclean hands." George Basch,
968 F.2d at 1540.
Since ISI has presented no evidence of any injury resulting
from the Defendants' actions and has not shown any willful
infringement on the part of the Defendants, it is not entitled to
any damages on any theory whether it be unjust enrichment,
diversion, or otherwise.
The Tortious Interference Claim Is Dismissed
The elements of a state tortious interference claim are: (a)
that a valid contract exists; (b) that a third party had
knowledge of the contract; (c) that the third party intentionally
and improperly procured the breach of the contract; and (d) that
the breach resulted in damage to the plaintiff. U-Neek, Inc.,
147 F. Supp. 2d at 177 (quoting Albert v. Loksen, 239 F.3d 256, 274
(2d Cir. 2001)).
ISI has not shown any knowledge on the part of the Defendants
of its contractual relations or that any contracts were breached
as a result of Defendants' actions. This claim is dismissed.
For the foregoing reasons, Defendants are entitled to summary
judgment dismissing the claims set forth in the amended
It is so ordered.
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