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INFORMATION SUPERHIGHWAY, INC. v. TALK AMERICA

October 13, 2005.

INFORMATION SUPERHIGHWAY, INC., Plaintiff,
v.
TALK AMERICA, INC. and AMERICA ONLINE, INC., Defendants.



The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION

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 dismissed.

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.

  Prior Proceedings

  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

  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 30,000,000 subscribers.

  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 Talk.

  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 residential customers.

  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 filing cabinets.

  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 company's records.

  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 ...


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