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Optionsxpress, Inc. v. Optionsxpress Inc.

United States District Court, S.D. New York

July 28, 2014

OPTIONSXPRESS, INC. and OPTIONSXPRESS HOLDINGS, INC., Plaintiffs,
v.
OPTIONSXPRESS INC., RONG NIE, and YILING WANG, Defendants.

MEMORANDUM AND ORDER

P. KEVIN CASTEL, District Judge.

Plaintiffs operate an online retail brokerage firm and own the federally-registered service mark "OPTIONSXPRESS." Plaintiffs allege that defendants, a New York corporation called optionsXpress Inc. and two individual officers of the corporation, have infringed their mark by fraudulently registering a corporation and two domain names confusingly similar to the mark, then using these domain names to deceive consumers into turning over their personal and financial information in the mistaken belief that they were submitting such information to plaintiffs. Defendants have failed to answer plaintiffs' complaint or to enter an appearance in this case, and plaintiffs now move for entry of a default judgment. For the reasons set fmth below, plaintiffs' motion is GRANTED.

I. Background

Plaintiff optionsXpress, Inc. is a Chicago-based corporation operating an on line retail brokerage firm. (Compl. ¶ 1, Dkt. No. 2) Plaintiff optionsXpress Holdings, Inc. is the parent company of optionsXpress, Inc., and owns the federally registered service mark "OPTIONSXPRESS." (Id. ¶ 9) Plaintiffs' mark applies to "securities trading and investing services via the internet"; the mark has been granted incontestable status, and has further been registered in "a number of countries around the world." (Id. ¶ 10)

Plaintiffs filed this action on February 14, 2014, alleging that defendants violated the Lanham Act, the Anticybersquatting Consumer Protection Act ("ACPA"), and several provisions of New York's business laws by fraudulently using plaintiffs' mark for their own economic gain. Specifically, plaintiffs allege that defendants used plaintiffs' mark to register a fraudulent corporate entity in the state of New York, and again by registering the domain names optionsxpressforex.com and oxpxfx.us. (Id. ¶ 17) Plaintiffs further allege that defendants used their fraudulent websites to deceive unwitting consumers into divulging personal and financial information under the belief that the information was being provided to plaintiffs. (Id. ¶¶ 17-24) Defendants then used this information for their own economic gain. (Id. ¶ 23) At least twice, defendants were mistaken as an agent of plaintiffs' for the purpose of service of legal process. (Id. ¶ 27)

Plaintiffs served defendant optionsXpress inc., a New York corporation, on February 20, 2014 by serving the summons and complaint on the New York Secretary of State. (Dkt. No. 5) With respect to defendants Rong Nie and Yiling Wang, this Court granted plaintiffs' motion for service by publication. (Dkt. No. 12) Plaintiffs effected service by publication in the New York Times and Los Angeles Times. (Dkt. Nos. 15, 16)

Defendants have not answered the complaint and the time to answer the complaint has expired. A Clerk's Certificate of Default was issued on July 1, 2014. (Dkt. No. 17) Plaintiffs now move for an order granting a default judgment against defendants pursuant to Rule 55, Fed.R.Civ.P. As plaintiffs have complied with Rule 55 and Local Rules 55.1 and 55.2, as well as this Court's Individual Default Judgment Procedures, the motion for default judgments against defendants is GRANTED.

II. Jurisdiction

This Court has subject matter jurisdiction over plaintiffs' federal claims under the Lanham Act and ACPA. 28 U.S.C. §§ 1331, 1338. This Court also has supplemental jurisdiction over plaintiffs' claims under New York law, as these claims "are so related to" the federal claims "that they form part of the same case or controversy." 28 U.S.C. § 1367(a).

This Court's exercise of personal jurisdiction over the defendants is appropriate under Rule 4(k)(1)(A), Fed. R. Civ. P., and New York C.P.L.R. §§ 301 and 302. Defendant optionsXpress Inc. is a New York corporation with an office in New York City, and individual defendants Nie and Wang are named officers of the corporation. The complaint alleges that the defendants registered a fraudulent New York corporation, transacted business in New York through the corporation's registered agent, Rong Nie, and registered two domain names from their New York headquarters. (Compl. ¶¶ 14, 16, 17)

III. Adequacy of Pleadings

Plaintiffs' complaint sets forth eight claims against defendants. The complaint sets forth three counts under federal law: (1) trademark infringement in violation of 15 U.S.C. § 1114, (2) false designation of origin and false descriptions in violation of 15 U.S.C. § 1125(a), and (3) cybersquatting in violation of 15 U.S.C. § 1125(d); three counts under the New York General Business Law ("GBL"): (4) use of a trade name with intent to deceive in violation of GBL § 133, (5) trademark infringement in violation of GBL § 360-k, and (6) injury to business reputation and dilution under GBL § 360-1; (7) one count of misappropriation under the New York common law of unfair competition; and (8) a claim for judicial dissolution of the corporate defendant under the New York Business Corporations Law ("BCL"), section 1101.

The complaint adequately pleads each of the counts, save for count eight seeking judicial dissolution. With respect to plaintiffs' Lanham Act claims for trademark infringement and false designation of origin, plaintiffs have demonstrated the validity and incontestable status of their service mark, and that defendants' use of the mark was not only likely to cause consumer confusion, but was intended to deceive consumers into divulging personal and financial information. See Savin Corp. v. Savin Grp. , 391 F.3d 439, 456 (2d Cir. 2004). Because the analysis for trademark infringement under New York common law is the same as federal trademark analysis, the foregoing establishes liability under GBL § 360-k. See Koon Chun Hing Kee Soy & Sauce Factory, Ltd. v. Star Mark Mgmt., Inc., 04-cv-2293 (JFB) (SMG), 2007 WL 74304, at *8 n.13 (E.D.N.Y. Jan. 8, 2007).

To establish liability under GBL § 133, a plaintiff must demonstrate (1) intent to deceive the public, and (2) the assumption, adoption, or use of a corporate, assumed, or trade name of another. See Specialty Box & Packaging Co. v. Tobin Howe Specialty Co. , 399 N.Y.S.2d 298, 299 (3d Dep't 1977). Plaintiffs have adequately established both of these elements. By registering a corporation with a near-identical name, as well as two web sites with confusingly similar names for the purpose of deceptively ...


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