The opinion of the court was delivered by: Denise Cote, District Judge:
In this lawsuit, a book publisher alleges that the prominent technology company Apple Inc. ("Apple") has infringed its trademark and created a likelihood of reverse confusion, in that consumers will likely believe that its books are in fact published by or affiliated with Apple. The plaintiffs J.T. Colby & Company, Inc. d/b/a Brick Tower Press, J. Boylston & Company, Publishers LLC and iPicturebooks LLC, (collectively "J.T. Colby & Company") employ the unregistered trademark ibooks and bring this trademark infringement action against Apple in connection with Apple's use of the mark iBooks to designate Apple's e-reader software. Apple moves for summary judgment on all of the plaintiffs' claims. The defendant's motion is granted. The plaintiffs have failed to present sufficient evidence that their ibooks mark is entitled to trademark protection or that their mark is likely to suffer from reverse confusion with Apple's iBooks mark.
The following facts are either undisputed or taken in the light most favorable to the plaintiffs, unless otherwise indicated.
I. 1999: Launch of ibooks Imprint
Two publishing companies created by Byron Preiss ("Preiss")
-- ibooks, inc. and Byron Preiss Visual Publications ("BPVP") -- launched the ibooks imprint in 1999. As explained to the public, the imprint was intended to take advantage of opportunities in publishing provided by the Internet. In May 1999, Publishers Weekly ran an article describing the forthcoming imprint:
Byron Preiss Visual Publications will launch a new imprint in September that will focus on books with content appropriate for marketing on the Internet.
Free chapters of all the books appearing under the imprint will be available over the Internet at ibooksinc.com, and in some cases the complete book will be sold through the site. "We believe this is a good way to use the Internet to market books," BPVP president Byron Preiss said. . . . .
According to Preiss, the imprint is actively looking for authors' backlists as well as original works than [sic] can benefit from the relationship between print and the Internet. . . .
In August of 1999, Preiss put out a press release introducing the new imprint. In the press release, Preiss explained that ibooks is the first publishing imprint designed to take full advantage of the promotional and distribution potential of the [I]nternet through downloadable free chapters, virtual reading groups and message boards between authors and readers. It plans to make books available in traditional trade paperback and hardcover formats simultaneously with electronic text.
Preiss filed two applications with the United States Patent and
Trademark Office ("PTO") in 1999 (the "1999 Applications"). In one,
Preiss sought to register the mark IBOOKS in connection with the sale
of "Books" for trademark protection (the "IBOOKS Application"). In the
other application, Preiss sought to register the mark "IBOOKSINC.COM"
in connection with an "Internet website providing information and text
about printed publications and for purchasing printed publications."
The PTO no longer has complete records pertaining to the 1999
Applications. Based on the records that do exist, however, it appears
that the IBOOKS Application was initially rejected on two grounds: (1)
two other trademark registrants owned similar marks,*fn1
and (2) the mark was considered deceptively misdescriptive.
In 2002, Preiss submitted a response to the PTO's refusal to register
the IBOOKS mark. Preiss explained that "Applicant's mark is for
'books, namely, a series of fiction books; non-fiction books in the
field of science.'"
Preiss also argued that the IBOOKS mark was not "misdescriptive," denying that the mark would suggest a connection to the Internet. Preiss stated that "consumers, when seeing the mark on the books, will not think it is an electronic book found on the Internet."
The PTO also refused to register the IBOOKSINC.COM mark. The application was denied on three grounds: (1) two other trademark registrants owned similar marks; (2) the mark was merely descriptive; and (3) the mark was deceptively misdescriptive.*fn2 In his response to the PTO's Office Action, Preiss explained that "Applicant's mark is for 'Computerized online ordering service in the field of printed publications' and 'Providing a website on global computer networks featuring information in the field of printed publications.'" The response further stated that "Applicant's services are equivalent to an electronic retail store. [T]his is clearly different from books themselves and from creating books, which is, in essence, equivalent to publishing." Preiss also argued that the mark was not "misdescriptive," stating:
Applicant respectfully submits that the mark must be viewed in connection with its services/goods. In this case, consumers, seeing the mark in connection with the services, see a website dealing with books. They don't infer that it deals with electronic or printed publications -- just books.
The 1999 Applications were abandoned.
From 1999 to 2005, Preiss and his companies used the ibooks imprint in connection with the publication of works in the science-fiction, horror, and fantasy genres as well as graphic novels. According to the plaintiffs, and as illustrated by samples of physical books submitted in connection with this motion practice by the defendant, the ibooks mark appears on the spine of a book, the back cover, and on one or several of the first inside pages of a book. With respect to their ebooks, the owner of the plaintiffs, John Colby ("Colby") has explained that the ibooks mark appears on an inside page of ebooks since ebooks do not have spines and generally do not have a back cover.
Whether it is a physical book or an ebook, in almost all instances, the ibooks mark appears as a component of a larger mark. The word ibooks appears underneath an image of a light bulb with the letter "i" inside it.*fn3 According to Colby, prior to 2011, plaintiffs' ibooks mark was "exclusively" depicted in all lowercase letters. The following image is the most common depiction of plaintiffs' mark:
On some physical books, the light bulb logo appears without the word ibooks.
Ibooks, inc. also owned two domain names that used the word "ibooks" as a component of web addresses: www.ibooksinc.com and www.ibooks.net. These domain names appeared on the copyright pages of at least some of the books published by ibooks, inc. between 1999 and 2006. Precisely how these websites were used or what content they hosted is undisclosed by the record. At some point in time before this action was filed both websites became inactive.
Preiss operated ibooks, inc. from 1999 through 2005. During this time, Colby had only limited contact with Preiss and his companies. In their only business transaction, Preiss purchased the rights to one of the titles published under Colby's Brick Tower imprint. On July 9, 2005, Preiss died in a car accident. His companies fell on hard times and on February 22, 2006, ibooks, inc. and BPVP filed for Chapter 7 bankruptcy liquidation.
II. 2006: Colby's Acquisition of the ibooks Imprint
The plaintiffs purchased the assets of ibooks, inc. and BPVP on December 13, 2006 for $125,000. The assets included all publishing rights, copyrights, trademarks, rights and licenses to software programs, computer hardware, manuscripts, and over 300,000 books. Through this transaction, the plaintiffs acquired the ibooks imprint. As Colby has explained, the $125,000 purchase price reflected his "estimate of the fair market value of the sales potential of the existing inventory in the next two years out."*fn4
Since acquiring Preiss' companies, the plaintiffs have continued to publish books under the ibooks imprint. The plaintiffs sell both physical books and ebooks. A spreadsheet that Colby compiled and produced in discovery indicates that 98.17% of the books sold under the ibooks and ipicturebooks imprints from 1999 through 2012 have been physical books, while 1.83% have been ebooks. In the years Colby has owned the ibooks imprint, the sales of products bearing the ibooks mark have been modest. During this time period, annual net sales were as high as $118,049, and as low as negative $28,876.
III. 2010: Apple adopts the iBooks Mark
Apple is a technology company offering computer hardware products, including the iPhone, iPad, and iPod, and computer software products such as iTunes and iBooks. By the end of 2009, Apple was developing an e-reader software program. By January 2010, Apple was actively considering "iBooks"*fn5 for the name of its new product. Apple employed counsel to conduct a trademark search in connection with Apple's clearance process for finalizing the selection of the iBooks mark. Apple's search, the adequacy of which is disputed by the plaintiffs, did not uncover plaintiffs' existence or any current use of ibooks by the plaintiffs.
Around this time, Apple was aware that the mark IBOOK was being used
by a company called Family Systems Ltd. ("Family Systems").*fn6
Family Systems owned a trademark registration for
"IBOOK" with a priority date of October 8, 1996, in connection with
"computer hardware and software used to support and create
interactive, user-modifiable electronic books." On January 13, 2010,
Apple contacted Family Systems to negotiate an assignment from Family
Systems to Apple of Family System's registration in the IBOOK
trademark. On January 27, Apple and Family Systems entered into an
Assignment Agreement that provided as follows:
Family [Systems] hereby irrevocably transfers and assigns to Apple all right, title and interest in and to the Registrations and the Domains, and any other rights or registrations that Family may have or may claim in the mark and trade name IBOOK in all jurisdictions throughout the world, including without limitation any common law rights, and all goodwill associated therewith (collectively, the "Trademark Rights").
Shortly after executing the assignment, Apple announced that it would be offering the iBooks e-reader software.
Two days after Apple's announcement, on January 29, 2010, Colby emailed a Public Relations Director at Apple (the "January 29 Email"). The email reads as follows:
I just left a message on your machine.
I'm trying to find the right person to talk with at Apple. We are book publishers and have used the imprint "ibooks" since the mid-1990s in the book trade. ibooks are distributed through National Book Network but had been distributed by Simon & Schuster for many years. S&S helped build the brand in the book trade taking over from Diamond Comics in the late 1990s.
We also license book product to Harper, S&S, Penguin, Macmillian, and Hachette among many others under our Byron Preiss Visual Publications (BPVP) imprint. Our ibooks titles are also in ebook format, sold through six different ebook distributors under our ipicturebooks entity. We have several thousand titles in the backlist.
I was hoping you could pass this along to the right person at Apple in order to discuss our ibooks brand and ebook titles for use on the new iPad.
John (Emphasis supplied.) Around February 1, Colby spoke with Glen Gunderson ("Gunderson") -- counsel for Apple -- by telephone. Colby recalled that during the conversation he asked Gunderson if Apple would be interested in "the exclusive use of [the plaintiffs'] books on the iPad." According to Colby, Gunderson indicated that he would put Colby in contact with someone at Apple, but Colby never received a follow-up call from anyone at Apple.
Sometime in 2011, the plaintiffs began using a slightly different version of the ibooks imprint on some of the books they publish. In particular, the plaintiffs began capitalizing the letter "B" in their imprint, so that the imprint appears as "iBooks."*fn7
On June 15, 2011, the plaintiffs filed this law suit against Apple. The complaint asserts a claim for false designation of origin in violation of Section 43(a)(i)(A) of the Lanham Act, 15 U.S.C. § 1125(a)(i)(A), as well as state law claims of infringement of common law trademark and unfair competition, wrongful misappropriation, unjust enrichment and conversion. Following the close of discovery,*fn8 the parties served cross-motions for summary judgment on December 21, 2012. The plaintiffs move for partial summary judgment on the ground that the assignment of Family System's IBOOK trademark registration to Apple is an invalid assignment in gross.*fn9 The defendant moves for summary judgment with respect to all of the plaintiffs' claims. The parties' motions were fully submitted on February 5, 2013.
Summary judgment may not be granted unless the submissions of the parties taken together "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of demonstrating the absence of a material fact question, and in making this determination the court must view all facts in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has asserted facts showing that the non-movant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on mere "allegations or denial" of the movant's pleadings. Fed.R.Civ.P. 56(e); Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010). Nor can a non-movant "rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Id.
I. Trademark Infringement
Plaintiffs assert rights in the unregistered mark ibooks when used as an imprint for books that they publish.*fn10
They claim that Apple infringed plaintiffs' mark when it adopted the iBooks mark in connection with e-reader software.
Pursuant to Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),
[a]ny person who . . . uses in commerce any word, term, name, symbol, or device . . . which . . . is likely to cause confusion, or to cause mistake or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
Section 43(a) protects both registered and unregistered trademarks from infringement. "[T]he general principles qualifying a mark for registration under §2 of the Lanham Act are for the most part applicable in determining whether an unregistered mark is entitled to protection under §43(a)." Two Pesps, Inc v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). In order to prevail on a claim of trademark infringement, the plaintiff most prove ownership of a protectable trademark and likelihood that an appreciable number of ordinary prudent purchasers will be confused by the similarity of the plaintiff and defendant's marks. See Savin Corp. v. Savin Group, 391 F.3d 439, 456 (2d Cir. 2004).
A. Classification of the Mark
In order to be protectable, a mark must be "'distinctive' and not 'generic'" Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F.3d 206, 216 (2d Cir. 2012), such that the mark is "capable of distinguishing the products it marks from those of others." Lane Capital Mgm't, Inc. v. Lane Capital Mgm't, Inc., 192 F.3d 337, 344 (2d Cir. 1999). Along the spectrum of distinctiveness, marks fall into one of roughly four categories. The categories of trademarks, listed in order of the unprotectable to most protectable, are (1) a generic mark; (2) a descriptive mark; (3) a suggestive mark; and (4) an arbitrary or fanciful mark. See Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976).
When a mark is unregistered, the party claiming trademark infringement has the burden of proving that the mark is protectable. See Courtenay Commc'ns Corp. v. Hall, 334 F.3d 210, 217 (2d Cir. 2003). The classification of a mark is a factual question that focuses on "how the purchasing public views the mark." Lane Capital Mgm't, 192 F.3d at 344; see also Star Indus., Inc. v. Bacardi & Co. Ltd., 412 F.3d 373, 382 (2d Cir. 2005); Courtney Commc'ns Corp., 334 F.3d at 215 (noting that for classification of mark "critical fact" is "how the purchasing public views" the mark). It is important to recognize that [the] fact-finder is not the designated representative of the purchasing public, and the fact-finder's own perception of the mark is not the object of the inquiry. Rather, the fact-finder's function is to determine, based on the evidence before it, what the perception of the purchasing public is.
Lane Capital Mgm't, 192 F.3d at 344.
In some cases the distinctiveness or non-distinctiveness of a mark may be self-evident from the examination of the mark and the product on which it appears. Id. at 348. In other cases, a party may seek to demonstrate the public's understanding of a term through other evidence, including "purchaser testimony, consumer surveys, dictionary definitions, trade journals, newspapers, and other publications." In re Reed Elsevier Prop. Inc., 482 F.3d 1376, 1378 (Fed. Cir. 2007); see also Borinquen Biscuit Corp. v. M.V. Trading Corp., 443 F.3d 112, 118 & n.4 (1st Cir. 2006). When the only evidence of the mark's appropriate classification is the mark and the product itself, the party bearing the burden will only be able to prevail "if the purchasing public could have only one view, or if one competing view is dominant enough to permit a reasonable conclusion by the preponderance standard." Lane Capital Mgm't, 192 F.3d at 348. In other words, "[t]he party bearing the burden of proof . . . has no right to take the case to jury if a favorable verdict could only be the product of surmise, speculation, and conjecture." Id. at 346 (citation omitted).
Classifying a mark is a delicate task, and one that carries great significance in a suit for trademark infringement. The importance of the determination stems from the varying degrees of protection and of required proof that accompany each category. A generic mark, for instance, is entitled to no trademark protection at all. A mark is generic if it "refers, or has come to be understood as ...