SMC Promotions, Inc. v. SMC Promotions, 355 F.Supp.2d 1127 (C.D. Cal. 2005) (full-text).
Factual Background Edit
Plaintiff imports and sells approximately 3,000 different products through a network of over 100,000 independent distributors known as "members" and has used the SMC mark since 1955. Plaintiff creates a catalog of its items and makes it available only to its members at a secure portion of its "smcorp.com" website.
An affiliate of plaintiff, EMC, designs and builds websites to enable plaintiff's members to sell plaintiff's products over the Internet. Each of these websites links to plaintiff's home page and is preloaded with content from plaintiff's catalog.
Defendant OSB, which employed a former member of plaintiff, competed directly with EMC by advertising its own website-creation services at its websites at "smcpromotions.com," "sellsmc.com," and "smcforums.com." In response to plaintiff's objections, defendant's websites contained a "fine-print disclaimer" disclaiming any ownership or endorsement by plaintiff.
Trial Court Proceedings Edit
Plaintiff sued for cybersquatting, false designation of origin, and unfair competition, among other claims. The court granted plaintiff's motion for a preliminary injunction based on its false designation of origin and copyright infringement claims.
Regarding the false designation of origin claim (i.e., infringement of an unregistered trademark) the court found that plaintiff's mark SMC was strong due to its extensive advertising and promotion and expenditures and fifty years of use.
Defendant unsuccessfully argued that plaintiff had abandoned its mark, relying on searches conducted on the Yahoo! and Google search engines for the term "SMC" that produced hundreds of unrelated businesses that allegedly competed with plaintiff. The court noted, however, that the vast majority of those listings used SMC either in a completely different market or nominally to merely compare their goods or services with plaintiff's. Moreover, plaintiff was not required to take action against every infringement.
Regarding the likelihood of confusion, the court cited the Ninth Circuit's decision in Interstellar Starship Services, Ltd. v. Epix, Inc. for the proposition that "in the context of the Internet . . . three of the Sleekcraft factors, or the 'Internet trinity,' are most important in deciding likelihood of confusion . . . ." This "trinity" includes the similarity of the marks, the relatedness of the goods, and the parties' simultaneous use of the Internet as a marketing channel. Here, the court found that the "Internet trinity" favored a finding of infringement.
Defendants' domain names were confusingly similar to plaintiff's SMC mark because they all incorporated the SMC mark and the addition of the generic terms "sell," "forums," and "promotions" did not avoid this confusing similarity. Defendant's use of these domain names created an initial interest confusion regardless of defendant's disclaimer. Second, defendant conceded that it competed directly with plaintiff.
Finally, both parties used the Internet as a "major" marketing channel. Because plaintiff also demonstrated irreparable harm and that the public interest favored an injunction, the court granted plaintiff's motion for a preliminary injunction. However, the court refused to sign plaintiff's proposed injunction order because it was vague and exceeded the court's order. The court ordered the parties to submit a new proposed injunction consistent with the court's order.
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