Savin Corp. v. Savin Group, 68 U.S.P.Q.2d (BNA) 1893 (S.D.N.Y. 2003), aff'd in part and rev'd in part, 391 F.3d 439, 73 U.S.P.Q.2d (BNA) 1273 (2d Cir. 2004) (full-text).
Factual Background Edit
Since 1959, plaintiff has sold and serviced business equipment including copiers, printers, and fax machines under the federally registered and incontestable trademark SAVIN. Plaintiff promotes its SAVIN products and services at its "savin.com" website. Plaintiff's founder named the company after his brother-in-law, Robert Savin.
Defendants provide professional civil engineering and consulting services specializing in waste management and construction safety and have used the name SAVIN in several of its business names since 1987 (e.g., The Savin Group, Savin Consultants). Defendants' founder, whose nickname since college had been "Nivas," chose the name SAVIN by spelling Nivas backwards. Defendants registered the domain names "thesavingroup.com" and "savinengineers.com," which since June 2001 connected to websites providing information about defendants' services.
Defendants never performed any trademark or domain name searches when determining what name to use for its business or in registering their domain names. Defendants learned of plaintiff's products a few years after adopting the SAVIN business name.
Plaintiff discovered defendant's domain name registrations in July 2002 and sent cease-and-desist letters to defendant. Defendant did not respond, and plaintiff sued for trademark infringement, federal and state dilution, and cybersquatting.
Trial Court Proceedings Edit
Plaintiff moved for partial summary judgment on its trademark infringement claim and defendants cross-moved for summary judgment on all of plaintiff's claims. The court denied plaintiff's motion but granted defendants' motion on all of plaintiff's claims. Regarding infringement, the court found that: (1) although plaintiff's mark was strong in the market of photocopiers, plaintiff submitted no evidence that it was strong in the field of professional engineering, (2) plaintiff's and defendants' products were neither competitive nor related and plaintiff failed to prove that it was likely to bridge the competitive gap between the parties' businesses, (3) one instance of nonpurchaser actual confusion was not sufficient to support a finding of actual confusion, (4) defendants acted in good faith in adopting the name SAVIN because it had no knowledge of plaintiff's use of SAVIN and, even if defendants had performed a trademark search, they had no reason to believe that its use of SAVIN would infringe plaintiff's marks due to the differences between professional engineering services and photocopiers, and (5) both parties offered expensive services that are not impulse purchases and that are typically purchased by experienced professionals, i.e., sophisticated purchasers.
The court rejected plaintiff's argument of initial interest confusion. It interpreted cases in the Second Circuit as requiring a showing of "intentional deception" by a defendant before initial interest confusion could be actionable. The fact that defendants' website received almost 50,000 hits one month was "too speculative" to create a genuine issue of material fact regarding consumer confusion. Nor did plaintiff submit any evidence in support of its argument that Internet advertising attracted unsophisticated consumers. Moreover, defendant did not act in bad faith even though it was aware of plaintiff's domain name before registering its own names. Defendants used SAVIN as a business name for nine years before registering the domain names without any reason to believe it infringed plaintiff's mark.
Turning to plaintiff's dilution claims, the court found that plaintiff created a material issue of fact concerning the distinctiveness and fame of the SAVIN mark based on plaintiff's extensive use and promotion of the mark and commercial success under the mark. Plaintiff's dilution claim failed, however, because it did not rebut defendants' allegation that plaintiff was unable to show actual dilution. Plaintiff argued that under the Supreme Court's decision in ‘‘Moseley,’’ it did not have to prove actual dilution because the parties' marks were identical. The court disagreed, however, interpreting the dicta in ‘‘Moseley’’ as a statement that circumstantial evidence of actual dilution may be sufficient when the marks alone are identical, not that identical marks alone are sufficient circumstantial evidence of actual dilution.
Finally, the court granted defendant’s summary judgment on the issue of cybersquatting, based on its earlier finding that defendants did not act in bad faith in adopting the name SAVIN or in registering its domain names and on a lack of evidence that defendants offered to sell the domain names to plaintiff.
Appellate Court Proceedings Edit
On appeal, plaintiff argued that the lower court erred when it found that: (1) plaintiff had to submit evidence of actual dilution even when the marks at issue were identical, (2) the standard of actual dilution under the FTDA also applied to the New York anti-dilution statute, and (3) that there was no genuine issue of material fact regarding a likelihood of confusion between the marks.
Regarding dilution, the Second Circuit first looked at the Supreme Court's statement in Moseley v. V Secret Catalogue that "direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proved through circumstantial evidence — the obvious case is one where the junior and senior marks are identical." Plaintiff argued that Moseley stood for the proposition that where the parties' marks were identical, that fact by itself was sufficient circumstantial evidence to show actual dilution. The district court, however, disagreed as noted above.
The Second Circuit agreed with plaintiff, and interpreted Moseley to "mean that where a plaintiff who owns a famous senior mark can show the commercial use of an identical junior mark, such a showing constitutes circumstantial evidence of the actual-dilution element of an FTDA claim." The appeals court cautioned, however, that the identity requirement should be strictly enforced to be consistent with the purpose of the FTDA to provide protection to a narrow class of marks. Accordingly, differences between two marks may be inconsequential in an infringement context but may be crucial in a dilution analysis.
But the court noted that the issue of identity "will be context- and/or media-specific and factually intensive in nature." For example, two marks may be textually identical but may be pronounced differently or may appear different when displayed in a stylized form (i.e., in terms of font, size, color, etc.) or as part of a corporate logo. The need for such a "careful and exacting analysis" on the issue of identity highlighted the Second Circuit's criticism of the district court for giving the famousness factor short shrift below.
In this case, the Second Circuit noted that "the marks at issue may be identical in some contexts but not in others. Where the senior and junior 'Savin' marks both are used in website addresses, the marks may be identical. On the other hand, where the 'Savin' marks at issue appear in stylized graphics on webpages, the competing marks may be found merely to be very similar." For example, the court noted that defendant's registration of the domain name "thesavingroup.com" instead of "savin.com" may be relevant.
The Second Circuit "emphasize[d], however, that it is the identity of the marks themselves that is germane in the dilution context, and the modifying of the mark — by adding one or more generic descriptors to the mark in a website address, for example — will not necessarily defeat a showing that the marks themselves are identical in specific contexts." Here, however, the district court's conclusion that the marks were identical, without analysis, was ambiguous. Therefore, the court vacated the lower court's dismissal of the FTDA claim and remanded the case to the district court.
The Second Circuit also vacated the lower court's dismissal of plaintiff's state-law dilution claim because plaintiff failed to prove actual dilution, noting that the New York statute required only a likelihood of dilution.
Reviewing the infringement claim de novo, the appeals court found no clear error with the lower court's findings and affirmed them in their entirety. Significantly, the court noted in a footnote that with respect to initial interest confusion, "[b]ecause consumers diverted on the Internet can more readily get back on track than those in actual space, thus minimizing the harm to the owner of the searched-for site from consumers becoming trapped in a competing site, Internet initial interest confusion requires a showing of intentional deception."
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