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Courtenay Communications Corp. v. Hall

July 9, 2007

COURTENAY COMMUNICATIONS CORP., PLAINTIFF,
v.
PATRICIA M. HALL AND HALLMARK CAPITAL CORP., DEFENDANTS.



The opinion of the court was delivered by: McKENNA, D.J.

MEMORANDUM AND ORDER

Before the Court are cross-motions for summary judgment submitted by Plaintiff Courtenay Communications Corporation ("Plaintiff" or "Courtenay") and Defendants Patricia M. Hall and Hallmark Capital Corporation ("Defendants" or "Hallmark"). For the following reasons, Plaintiff's motion for summary judgment is DENIED and Defendants' motion for summary judgment is GRANTED IN PART and DENIED IN PART.

I. Background

A. Factual Background

In 1998, Plaintiff Courtenay, a publisher and seller of trade newspapers, entered into an arrangement with Defendant Hallmark Capital Corporation, of which Defendant Patricia M. Hall is the "sole Managing Director, President, Secretary, and shareholder," under which Hallmark would provide "financial consulting, investment banking, and other services to Plaintiff in exchange for certain fees." (Defs.' Statement of Undisputed Facts ("Defs.' Statement") ¶¶ 1-2, 4-5.) This arrangement was governed by two written agreements dated February 9, 1998, and April 29, 1998. (Joint Appendix*fn1 ("J.A.") 59-50; 68.) During the course of 1998, Plaintiff provided Defendant Hallmark with copies of various internal documents, and, as the relationship between the parties deteriorated, Defendant Hallmark made certain tape recordings of Plaintiff and its employees in order to, in Hall's words, "document what was happening." (J.A. 183.) The parties terminated their arrangement in late 1998. While the reasons for the termination are disputed and are not relevant to this litigation, the nature of the subsequent relationship between the two parties has been undisputedly acrimonious.

In 1999, Plaintiff Courtenay launched a publication entitled "iMarketing News," a product which Hallmark had played a role in developing during the course of its relationship with Plaintiff in 1998. (Defs.' Statement ¶ 9.) The "iMarketing News" publication includes what Plaintiff alleges to be a protected trademark: the words "iMarketing News" where the letter "i" is red and lowercase and the remaining "Marketing News" is black and in the Times New Roman small caps font; in addition, a yellow circle is superimposed over the red "i" and part of the "M" (the "Alleged Mark"). (J.A. 70.) Plaintiff has not registered or attempted to register the Alleged Mark. (Defs.' Statement ¶ 12.)

In October 1999, Defendant Hallmark began displaying Plaintiff's Alleged Mark on its website, www.hallmarkcapital.com, under the website's "What's New" heading. According to Defendants, the purpose of displaying the Alleged Mark was to "give notice of the project as an example of its work for potential clients." (Defs.' Statement ¶ 13.) Immediately to the right of the Alleged Mark on the "What's New" page was text stating that Hallmark had acted as the "exclusive financial advisor in connection with the launch of iMarketing News" on behalf of its "trade newspaper publishing parent." (J.A. 264.) This text included a hyperlink on the words "smartest strategic move" that, if followed, connected the viewer to another page on Hallmark's website entitled "Success Stories." The Success Stories page consisted of seven blocks of text with quotations from unidentified executives of unnamed companies and brief descriptions of the services provided by Hallmark to those companies.

One of these seven text blocks featured a quotation attributed to the "President/Owner" of an unidentified company stating that "Hallmark Capital gave us the No. 2 executive we had been looking for for years and could never find. Thanks for making this a better place -- and us better managers." The accompanying description of the services provided by Hallmark read:

A $15 million privately held direct marketing media company was poorly managed, unfocused and unprepared to take advantage of strategic opportunities.

Hallmark Capital provided interim COO services for eight months, overhauling a weak and ineffective corporate infrastructure and creating a strong, dynamic operating environment. (J.A. 279.) Defendant Hallmark has admitted under oath in a deposition unrelated to the instant litigation that this text (the "Alleged Disparaging Remarks") referred to Plaintiff, but Plaintiff is never identified by name on the website and the Alleged Mark is not directly linked to the Alleged Disparaging Remarks.

At some point between 2001 and 2004, Defendant Hallmark removed the Alleged Mark from its website.

(Defs.' Statement ¶ 26; Pl.'s Mem. in Supp. 10.) Defendant Hallmark represents that it removed the Alleged Mark because it "no longer considered the iMarketing News transaction to be newsworthy." (Defs.' Statement ¶ 26.)

The Alleged Disparaging Remarks remain on Defendant Hallmark's website on the "Success Stories" webpage.

B. Procedural History

In February 2001, Plaintiff filed the complaint in this action alleging false endorsement under Section 43(a) of the Lanham Act and various violations of New York state law, including unfair competition, breach of fiduciary duty, libel per se, and conversion. This Court denied Plaintiff's motion for a preliminary injunction and temporary restraining order and granted Defendant Hallmark's motion to dismiss Plaintiff's claims. See Courtenay Communications Corp. v. Hallmark Capital Corp., No. 01 Civ. 2228 (LMM), 2001 WL 669258 (S.D.N.Y. June 14, 2001) (the "June 2001 Decision"). In the June 2001 Decision, this Court found that the Alleged Mark was generic and therefore not entitled to Lanham Act protection and, accordingly, dismissed Plaintiff's Lanham Act claim.

In addition, this Court declined to exercise supplemental jurisdiction over Plaintiff's state law claims.

The Court of Appeals reversed this Court's June 2001 Decision, holding that the Alleged Mark should be treated as a composite mark and that whether a composite mark "is generic presents an issue of fact that cannot be resolved on the pleadings." Courtenay Communications Corp. v. Hallmark Capital Corp., 334 F.3d 210, 215 (2d Cir. 2003) (the "Second Circuit Decision"). The Court of Appeals instructed that even generic words can constitute legally protected marks when combined "with distinctive lettering, coloring, or other design elements." Id. at 216 (citations omitted). In remanding the case, it also noted that "[b]ecause [Courtenay's] mark is unregistered, . . . 'the burden is on the plaintiff to prove that the mark is valid . . .' and to show that the composite mark is not generic." Id. at 217 (internal citation omitted).

C. The Instant Motion

Plaintiff now moves for summary judgment, seeking a finding that Defendants are liable for damages for violation of Section 43(a) of the Lanham Act, 15 U.S.C. ยง 1125(a), because of their unauthorized use of Plaintiff's Alleged Mark and the false endorsement and false statements concerning Plaintiff on Defendants' website (the "Lanham Act Claim"). (Pl.'s Mem. in Supp. 1.) Plaintiff further seeks "attorneys' fees, costs, disbursements and other damages in this action due to defendants' willful violation" of the Lanham Act; a permanent injunction requiring Defendants to remove the false endorsement and false statements from their website; a permanent injunction prohibiting Defendants from disclosing or otherwise using Plaintiff's confidential information and requiring that the information be returned; and fees and ...


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