The opinion of the court was delivered by: HAROLD BAER JR., District Judge
OPINION, ORDER, & JUDGMENT
On January 11, 2005, Ronit Menashe ("Menashe") and Audrey Quock
("Quock") (together "Plaintiffs"), filed this declaratory
judgment action for non-infringement of the trademark "SEXY
LITTLE THINGS" (the "Mark") under the Lanham Act,
15 U.S.C. § 1051 et. seq., and at common law against Defendants V Secret
Catalogue, Inc., Victoria's Secret Stores, Inc., Intimate Beauty
Corporation, and Victoria's Secret Direct, LLC (collectively
"Victoria's Secret"). Plaintiffs also sought a declaratory
judgment of non-cybersquatting under the Anticybersquatting
Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d), a judgment
of tortious/fraudulent misrepresentation, punitive damages, and
reasonable attorney's fees.
On July 7, 2005, this Court denied Victoria's Secret's motion
to dismiss the Complaint pursuant to Rule 12(b)(1) and 12(b)(6)
of the Federal Rules of Civil Procedure, or in the alternative
for summary judgment. Menashe v. V Secret Catalogue, Inc., No.
05 Civ. 239, 2005 WL 1580799 (S.D.N.Y. July 7, 2005). Trial was
held on December 13-14, 2005.
A. Plaintiffs' Adoption of the Mark
On or about June 1, 2004, Menashe, a publicist, and Quock, a
fashion model and actress, embarked on a joint business venture
to produce and launch a line of women's underwear. Trial
Declaration of Ronit Menashe ("Menashe Decl.") (undated) ¶¶ 4, 6;
Trial Declaration of Audrey Quock ("Quock Decl.") (undated) ¶¶ 3, 5. Sometime in July 2004,
they decided to name their line "SEXY LITTLE THINGS." Menashe
Decl. ¶ 7; Quock Decl. ¶ 11. Also in July 2004, Quock purchased
400 sample pieces of plain stock underwear from a manufacturer in
China and in late July or early August 2004, heat pressed her
designs consisting of words and logos onto the stock underwear.
Quock Decl. ¶¶ 7, 13. She also heat pressed the Mark onto the
back of the underwear where a label would normally be attached.
In late July or early August 2004, Menashe and Quock came up
with the phrase "SEXY LITTLE THING, SEXY LITTLE THINGS," a
variation of their chosen name that they believed yielded many
creative possibilities for design and advertising. Menashe Decl.
¶ 8; Quock Decl. ¶ 12. On August 31, 2004, Quock registered the
domain name www.sexylittlethings.com in preparation for
building a website to sell the underwear line over the Internet.
Quock Decl. ¶ 18. Subsequently, on September 13, 2004, after
searching the website of the United States Patent and Trademark
Office ("USPTO") and finding that the Mark was available, Menashe
and Quock filed an intent-to-use ("ITU") application with the
USPTO for "SEXY LITTLE THING, SEXY LITTLE THINGS" for lingerie.
Menashe Decl. ¶ 9-10; Quock Decl. ¶ 20. About ten days later,
Quock hired a website designer to create the
www.sexylittlethings.com site. Quock Decl. ¶ 21.
By early September 2004, Quock initiated negotiations with her
manufacturer in China to silkscreen print her designs on bulk
shipments of underwear. Id. ¶ 24. In October 2004, she sent the
manufacturer eight designs to make prototype prints, and started
negotiations for an order of 6,000 pieces of underwear. Id. ¶
24, 26. The manufacturer sent Quock the eight prototypes on
November 13, 2004. Id. ¶ 28. By then, she had also sent the
manufacturer diagrams for the production of labels carrying the
mark "SEXY LITTLE THINGS." Id.
Meanwhile, Plaintiffs had also set about publicizing their
line. Sometime in September or October 2004, Quock did an
interview with www.ediets.com, and an article that mentioned the
name of Plaintiffs' line and the www.sexylittlethings.com
website appeared online at the ediets.com website in the week of
November 19, 2004. Id. ¶ 34. On August 19, 2004, Quock did a
photo shoot for Stuff Magazine in which she modeled a pair of
"SEXY LITTLE THINGS" underwear. Id. ¶ 31. The photographs were
published in Stuff Magazine in March of 2005 with an accompanying
article that featured Quock's venture into women's lingerie, but
did not mention the name of the line. Id. ¶¶ 32, 47. In late
September or early October 2004, Quock did an interview with
Beyond Fitness magazine in which she promoted her underwear line,
but was unaware whether the article was ever published. Id. ¶ 38;
12/13/2005 Trial Transcript ("Tr.") at 48-49. In mid-November,
she flew to Milan for a photo shoot featuring "SEXY LITTLE
THINGS" underwear. Quock Decl. ¶ 40. The photographs were never
published. Tr. at 51-53.
On October 14, 2004, Quock e-mailed Menashe an outline of a
business plan for the underwear line and indicated that they were
ready to seek buyers. Quock Decl. ¶ 37; 10/14/2004 e-mail from
Quock to Menashe, Plaintiffs Trial Exhibit ("Pls. Ex.") 14.
Sometime in November 2004, Quock contacted a friend who was a
buyer for Fred Segal stores about selling the underwear line in
boutiques in Los Angeles, California. Quock Decl. ¶ 39; Tr. at
44. As noted below, this effort too was never consummated.
On November 16, 2004, Menashe received a letter from Victoria's
Secret's outside counsel informing her that Victoria's Secret had
been using "SEXY LITTLE THINGS" as a trademark for lingerie since
prior to the filing date of Plaintiffs' ITU application. Menashe
Decl. ¶ 12; see 11/15/2004 Cease and Desist Letter, Ex. A to
03/14/2005 Am. Compl., at 1. The letter warned that "SEXY LITTLE
THING, SEXY LITTLE THINGS," the subject of Plaintiffs' ITU
application, was confusingly similar to Victoria's Secret's mark
and, if used, would constitute trademark infringement. See id.
at 2. Further, the letter demanded that Plaintiffs cease and
desist all plans to use "SEXY LITTLE THING, SEXY LITTLE THINGS,"
abandon their ITU application, and transfer the domain name
www.sexylittlethings.com to Victoria's Secret. See id.
Finally, the letter requested a response by November 19, 2004.
Victoria's Secret's letter caused Plaintiffs to halt production
of their underwear project, instruct Stuff Magazine not to
mention the name of their underwear line, discontinue other
publicity efforts, stop development of their website, and cease
their attempts to find retail outlets for their product. Quock
Decl. ¶¶ 44, 46, 50. Plaintiffs also ordered two trademark
investigations into Victoria's Secret's claims to the Mark. Id.
¶ 52. They were informed that no one had used the Mark prior to
the filing of their ITU application. Id. One investigation
reported that Victoria's Secret's Resort 2005 catalogue, which
had been sent with the cease and desist letter as proof of
Victoria's Secret's use of the Mark, was not mailed out until
December 28, 2004. Id. ¶ 53. At trial while it stretches
credulity Menashe testified that since the time she received
the cease and desist letter, she has not been in a Victoria's
Secret store or looked at a Victoria's Secret catalogue to see
whether Victoria's Secret was selling merchandise under the name
"SEXY LITTLE THINGS." Tr. at 64-65. Quock testified that she did
not visit a Victoria's Secret store nor look at a Victoria's Secret catalogue
until some time after receipt of the cease and desist letter,
when she walked into a Victoria's Secret store and saw a display
for "SEXY LITTLE THINGS." Tr. at 54-55.
B. Victoria's Secret's Adoption and Use of the Mark
As early as Fall 2002, Victoria's Secret began to develop the
concept and marketing for a panty collection. Tr. at 207.
Victoria's Secret's decision to expand its panty business stemmed
from a desire to capitalize on a major fashion trend that
appeared to herald "decorated bottoms" seen in the popularity
of low rise pants and the vogue among young women for wearing
lingerie style items as outerwear. Tr. at 206. Sometime between
March 30 and June 1, 2004, Victoria's Secret's marketing
department settled on the name "SEXY LITTLE THINGS" for its panty
collection. Tr. at 181, 185. The collection, characterized as
"fun, flirty, and playfully sexy," was designed to appeal to
women in their twenties and early thirties, and was comprised of
over eighty items that included panties, camisoles, and other
underwear. Tr. at 184, 196; Sexy Little Things Brand Strategy,
Defendants Trial Exhibit ("Defs. Ex.") K. Some of these items
were already being sold in Victoria Secret stores as general
merchandise prior to the introduction of the "SEXY LITTLE THINGS"
collection (the "Collection"), but the majority of the items were
placed in stores for the first time when the Collection was
rolled out in July 2004. Tr. at 186-87.
On or around July 28, 2004, the Collection was scheduled to
make its first appearance in five Victoria's Secret stores in
Ohio, Michigan, and California. 12/01/2005 Trial Declaration of
Pamela K. Rice, Director of Merchandising for Sexy Little Things
for Victoria's Secret Stores, Inc. ("Rice Decl.") ¶ 7. On that
date, the mark "SEXY LITTLE THINGS" was displayed with the
Collection in four of the five stores in the form of hangtags,
store signage, permanent fixtures, or in window exposures. Id.
¶ 8. For example, in one of the Ohio stores, denominated Easton
#1300, the Mark appeared as a large illuminated sign on a "focal
wall," a specially constructed vertical unit of nine
compartments, each compartment containing a plastic "buttock" on
which a pair of panties was displayed. See Defs. Ex. D, VS 732.
In that store, the Mark also appeared prominently on hangtags
attached to hangers that displayed panties, on labels adhered to
pull-out compartments of something called a "panty bar" a
horizontal case that displayed merchandise in each compartment
and with window displays of the same merchandise. Id., VS
728-29, 738, 745-46, 749-50. Further, on July 28, 2004, the
testimony recites that the "selling environments" for "SEXY LITTLE THINGS" merchandise, comprising
the various described displays, opened to consumers in the Ohio
roll-out stores. Rice Decl. ¶ 9; 11/30/2005 Trial Declaration of
Polly Jean Sinesi, Director of Prototype Design for Limited Store
Planning, Inc. ("Sinesi Decl.") ¶ 13.
The roll-out at the Briarwood, Michigan store was delayed owing
to technical difficulties related to signage. Tr. at 177-78.
Maria Thurston, a co-manager of the Briarwood store from October
2001 until November 27, 2004, testified that while construction
for a "panty boutique" was completed on July 28, 2004, no "SEXY
LITTLE THINGS" signs appeared in the store until the second week
of September 2004. Trial Declaration of Maria E. Thurston, Former
Co-Manager of Victoria's Secret Briarwood Store #105 ("Thurston
Decl.") (undated), ¶¶ 6-9. Ms. Thurston also testified that
through September 2004, she never received brand guides from
corporate headquarters with instructions for displaying "SEXY
LITTLE THINGS" merchandise in the store. Tr. at 80-81.
The "SEXY LITTLE THINGS" collection was rolled out to more
Victoria's Secret stores in September and October 2004, and by
October 19, 2004, the Collection was available to consumers in
all nine hundred and twenty-three Victoria's Secret retail
lingerie stores nationwide. Rice Decl. ¶¶ 11-13. In each of the
stores, there was some form of focal wall or table signage that
displayed the "SEXY LITTLE THINGS" mark together with garments
from the Collection. Tr. at 178, 196. No labels displaying the
Mark were sewn on the merchandise, however, until June 2005. Tr.
at 195-96, 199. Moreover, when the Collection was rolled out,
store receipts did not indicate that the consumer had bought a
"SEXY LITTLE THINGS" item. Tr. at 211.
The Collection was also available to consumers through
catalogues and online. The Collection, according to the
uncontradicted testimony and exhibits, first appeared in the
Major Fall 2 edition of the Victoria's Secret catalogue that was
mailed out to approximately 2.9 million consumers nationwide
between September 4, 2004 and September 9, 2004. 11/30/2005 Trial
Declaration of James J. Pozy, Controller of Victoria's Secret
Direct, LLC ("Pozy Decl.") ¶¶ 6, 9. Because Victoria's Secret
Direct simultaneously makes most of its catalogues available
online through its website, the Major Fall 2 catalogue became
available online on or about September 9, 2004. Id. ¶ 7.
Beginning with the Major Fall 2 edition, the Collection has
appeared in approximately twenty-two editions of the Victoria's
Secret catalogue. Id. ¶ 14. Typically, the catalogues contained several pages dedicated to
the display of "SEXY LITTLE THINGS" merchandise. Copies from
Victoria's Secret Catalogues, Defs. Ex. BB. The Mark was
prominently displayed on these pages together with "SEXY LITTLE
THINGS" items. Occasionally, together with "SEXY LITTLE THINGS"
merchandise, these pages also displayed a few items from
Victoria's Secret's other trademarked collections, sub-brands
such as Angels by Victoria, Body by Victoria, and Very Sexy, so
as to suggest to the consumer various looks that could be created
using pieces from different collections. Tr. at 242-43, 245-46,
248, 250. When this ...