Being sued for trademark infringement, defending yourself, and winning!

Note: This decision came down more than one year ago but was just published. I thought it was pretty cool that it was published so I thought I'd share it with you. You've heard it before but here it is again -- Past performance is never a guarantee of future performance.

JUPITER HOSTING, INC. v. JUPITERMEDIA CORP.
US v. Them

JUPITER HOSTING, INC., a Delaware corporation, Plaintiff, v. JUPITERMEDIA
CORPORATION, a Delaware corporation, Defendant.

No. C 04-1820 CW

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA


2004 U.S. Dist. LEXIS 28669

September 11, 2004, Decided
September 11, 2004, Filed

COUNSEL: [*1] For Jupiter Hosting Inc, a Delaware Corporation, Plaintiff: Gregory Alan Rutchik, the arts and technology group , San Francisco, CA; Roy S. Gordet, Roy S. Gordet, Attorney at Law, San Francisco, CA.

For Jupitermedia Corporation, a Delaware corporation, Defendant: John C. Rawls, Sarah Anne Silbert, Fulbright & Jaworski L.L.P., Los Angeles, CA; Brandon Claus Fernald, Fulbright & Jaworski L.L.P., Los Angeles, CA; Mark N. Mutterperl, Fulbright & Jaworski L.L.P., New York, NY.

For Jupitermedia Corporation a Delaware corporation, Counter-claimant: Brandon Claus Fernald, Fulbright & Jaworski L.L.P., Los Angeles, CA; Sarah Anne Silbert, Fulbright & Jaworski L.L.P., Los Angeles, CA.

For Jupiter Hosting Inc a Delaware Corporation, Counter-defendant: Gregory Alan Rutchik, the arts and technology group, San Francisco, CA; Roy S. Gordet, Roy S. Gordet, Attorney at Law, San Francisco, CA.

JUDGES: CLAUDIA WILKEN, United States District Judge.

OPINIONBY: CLAUDIA WILKEN

OPINION: ORDER DENYING DEFENDANT'S MOTION FOR A PRELIMINARY INJUNCTION

Defendant Jupitermedia Corporation moves for a preliminary injunction against Plaintiff Jupiter Hosting, Inc. enjoining Plaintiff from making commercial use of its[*2] brand name, "Jupiter Hosting," including use in Plaintiff's domain name, "jupiterhosting.com." Plaintiff opposes the motion. The matter was heard on November 5, 2004. Having considered the parties' papers and oral argument on the motion, the Court DENIES Defendant's request for a preliminary injunction.

BACKGROUND

Plaintiff Jupiter Hosting, Inc. has contracts with approximately eighty-five web-hosting companies nationwide both to construct and to maintain websites and website infrastructure. Plaintiff registered its domain name, "jupiterhosting.com," in October, 2001 and thereafter installed a webpage at www.jupiterhosting.com, from which it conducts business with customers by way of its domain name servers: nsl.jupiterhosting.com and ns2.jupiterhosting.com.

Defendant Jupitermedia Corporation is an Internet company located in Darien, Connecticut that offers a variety of services to information technology specialists, website developers and Internet markets through its webpage at www.jupitermedia.com. Defendant registered its domain name, jupitermedia.com, on October 25, 2000. According to Defendant, its business is comprised primarily of four Internet divisions that provide (1) [*3] technology market research, (2) general information for website developers, (3) information on Internet conferences and trade shows, and (4) online subscriptions to resources from a variety of design-oriented websites. Defendant has registered the marks "JUPITER," "JUPITER RESEARCH," "JUPITERRESEARCH" and "JUPITEREVENTS" with the United States Patent and Trademark Office (PTO).

Plaintiff filed a complaint on May 7, 2004 seeking a declaratory judgment that it was not in violation of any of Defendant's trademark or intellectual property rights in connection with Plaintiff's commercial activities. On July 16, 2004, Defendant filed this motion for a preliminary injunction, alleging that Plaintiff's use of "Jupiter Hosting" to identify its products, services and domain name violates the Lanham Act, the Anticybersquatting Consumer Protection Act, and California's Unfair Competition Law.

On August 24, 2004, the PTO denied Plaintiff's request to register the mark "JUPITER HOSTING," concluding that Plaintiff's mark would likely be confused with Defendant's "JUPITER" mark because the marks were highly similar in sound, meaning and appearance. The PTO allowed Plaintiff the option of responding[*4] to the denial, and Plaintiff contends that its PTO application is still pending.

LEGAL STANDARD

"The function of a preliminary injunction is to maintain the status quo ante litem pending determination of the action on the merits." Wash. Capitols Basketball Club v. Barry, 419 F.2d 472, 476 (9th Cir. 1969). The moving party is entitled to a preliminary injunction if it establishes either: (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) that serious questions regarding the merits exist and the balance of hardships tips sharply in the moving party's favor. Clear Channel Outdoor, Inc. v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir. 2003); Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987); see also Wm. Inglis & Sons Baking Co. v. ITT Cont'l Baking Co., 526 F.2d 86, 88 (9th Cir. 1975); County of Alameda v. Weinberger, 520 F.2d 344, 349 (9th Cir. 1975).

The test is a "continuum in which the required showing of harm varies inversely with the required showing of meritoriousness." Rodeo Collection, 812 F.2d at 1217[*5] (quoting San Diego Comm. Against Registration & the Draft v. Governing Bd. of Grossmont Union High Sch. Dist., 790 F.2d 1471, 1473 n.3 (9th Cir. 1986)). To overcome a weak showing of merit, a plaintiff seeking a preliminary injunction must make a very strong showing that the balance of hardships is in its favor. Rodeo Collection, 812 F.2d at 1217. In appropriate cases, the Court should also consider whether injunctive relief would serve the public interest. Int'l Jensen, Inc. v. Metrosound U.S.A., Inc., 4 F.3d 819, 822 (9th Cir. 1993).

DISCUSSION

Defendant argues that it is entitled to a preliminary injunction against Plaintiff because there is a high probability that Defendant will succeed on its claims, and that Defendant stands to suffer irreparable harm if the preliminary injunction is not granted. Defendant also argues that the balance of hardships tips sharply in its favor.

I. Lanham Act
The Lanham Act, in pertinent part, imposes civil liability on those who (1) "use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark" where such use (2) "is likely to cause confusion, or to cause[*6] mistake, or to deceive." 15 U.S.C. § 1114. The Ninth Circuit has identified eight factors that are relevant to whether consumers are likely to confuse related goods: (1) strength of the mark, (2) proximity of the goods, (3) similarity of the marks, (4) evidence of actual confusion, (5) marketing channels used, (6) degree of care likely to be exercised by the purchaser, (7) evidence of bad faith intent in selecting the mark, and (8) likelihood of expansion and overlap of the products. AMF, Inc. v. Sleekcraft, 599 F.2d 341, 348-49 (9th Cir. 1979). In the context of the Internet, three of these Sleekcraft factors retain particular importance: (1) similarity of the marks, (2) relatedness [proximity] of the goods and services, and (3) the use of the Internet as a marketing channel. GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000).

A. Probability of Success on the Merits

1. Similarity of the Marks

The Ninth Circuit considers the "similarity of the marks" factor to be a "critical question" in the likelihood of confusion analysis. Id. In assessing the similarity between marks, the court looks at the[*7] relevant marks as they appear in full in the marketplace, Filipino Yellow Pages, Inc. v. Asian Journal Publ'ns, Inc., 198 F.3d 1143, 1147-50 (9th Cir. 1999), in order to compare their appearance, meaning and sound. Dreamwerks Prod. Group, Inc. v. SKG Studio, 142 F.3d 1127, 1131 (9th Cir. 1998).

Defendant argues that the parties' marks are highly similar in appearance, meaning and sound, principally because they both contain the same central feature -- the word "Jupiter." That contention is supported by the PTO findings which reached that exact conclusion. Plaintiff argues that the marks are not substantially similar because, as displayed on their respective Internet websites, the marks have different fonts, color schemes and layouts. Plaintiff further argues that its mark is written on two separate lines of text while "Jupitermedia" is written as one word on a single line of text.

These relatively trivial differences do not diminish the substantial similarities that the marks share. The term "hosting" does little more than describe a feature of Plaintiff's services, potentially leading to confusion with other services associated with the mark "Jupiter, [*8] " the names of which Defendant has registered with the PTO (e.g. "JUPITER RESEARCH"). The substantial similarities between the marks support Defendant's claim that a likelihood of confusion may very well exist in this case.

2. Relatedness of Goods and Services

The Ninth Circuit has ruled that, in the Internet context, "even services that are not identical are capable of confusing the public." GoTo.com, 202 F.3d at 1206. The court in GoTo.com ruled that, because the Internet is a unique medium in which companies routinely offer a variety of services under a single banner or mark, it introduces problems into the standard analysis of relatedness: "Whereas in the world of bricks and mortar, one may be able to distinguish easily between an expensive restaurant in New York and a mediocre one in Los Angeles, the Web is a very different world." Id. (internal cites omitted).

Plaintiff argues that it is not a direct competitor of Defendant; its services are not complementary to those sold by Defendant and do not serve the same business function. Plaintiff installs computer hardware and maintains websites, while Defendant offers primarily research and other informational[*9] services over the Internet. However, given the Ninth Circuit's statements regarding how the Internet clouds distinctions between services, Plaintiff's argument that it offers different Internet-related services than does Defendant is not persuasive. Both parties agree that the relevant test is whether the public is likely to make an association between related producers and products. Dreamwerks, 142 F.3d at 1127-28. There is a likelihood that Defendant could demonstrate such an association in this instance.

3. Same Marketing Channel

The court in GoTo.com ruled that the Web, as a marketing channel, is "particularly susceptible to a likelihood for confusion," in large part because it allows for competing marks to be displayed at the same time on the same screen. 202 F.3d at 1207.

There is no real dispute that the parties share the same marketing channel: the Internet. Plaintiff argues that it also advertises at a trade show called Internext, but Internext markets only to representatives of adult content Internet websites. Plaintiff also argues that it advertises in different Internet locations than does Defendant, but the Ninth Circuit has previously[*10] held that the Web itself is a marketing channel for purposes of likelihood of confusion analysis. Id.

4. Strength of Mark

While the three factors just addressed constitute the "controlling troika" of Sleekcraft factors when assessing the likelihood of confusion in Internet trademark infringement cases, id. at 1205, and while those factors tilt generally in Defendant's favor, that initial inference of potential or probable confusion is not determinative. See Halo Mgmt. LLC v. Interland, Inc., 308 F. Supp. 2d 1019, 1036 (N.D. Cal. 2003). That is the case because, according to the Ninth Circuit, where the market is inundated by products using the particular trademarked word, there is a corresponding likelihood that consumers "will not likely be confused by any two in the crowd." Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1144 (9th Cir. 2002). "The popularity of a particular mark-related term may impact the strength of marks using that term"; where the market is "crowded" with a particular mark term, thereby "weakening" said term, "any individual user of the [] term thus lacks significant ability to prevent the use of [the[*11] term] by others in the field." Halo, 308 F. Supp. at 1034. Here, Plaintiff has provided evidence that the mark "Jupiter" is used by several dozen companies in California (where Plaintiff's principal place of business is located) and several dozen more in New York, many of which advertise on and/or provide services relating to the Internet. Pinkney Decl., Exs. 1-29. The term "Jupiter" is the identifiable mark for "www.jupitertele.com," "www.jupiter.com," "www.jupitertech.com," "www.jupiterprod.com," and "www.jupiterns.com," among others. Id., Ex. 2, 3, 8, 9, 24. Defendant argues that some of the companies identified by Plaintiff provide dissimilar products and services. This is true, although many plainly do provide computer, technology and Internet-related products on or through the Web. While the companies may not offer services identical to Defendant's vast array of Internet services, Defendant cannot argue on the one hand that the Internet broadens and blurs categories for purposes of likelihood of confusion analysis (e.g. relatedness of goods and services) and, on the other hand, that companies operating on the Internet are not comparable for purposes of[*12] crowded market analysis because they do not offer services identical to Defendant's.

The facts in Halo are analogous. In Halo, the plaintiff sought preliminary injunctive relief enjoining the defendant from using its Internet website "www.bluehalo.com"; the plaintiff held a registered trademark for the mark "HALO." 308 F. Supp. 2d at 1024. The Halo court noted that, while the "controlling troika" of factors clearly favored the plaintiff, the fact that the relevant trademark field was crowded cut against the plaintiff's likelihood of confusion claim. Id. at 1036. In denying the plaintiff's motion for a preliminary injunction, the court reasoned, "Dozens of companies utilize some variant of the halo' term, and many of these companies do so in the Internet and computer context without distinguishing their marks from [plaintiff's]. . . . Consumers confronted with marks ranging from halosec.com' to haloelectrics.com' to bluehalo.com' will, as the Ninth Circuit has suggested, not be confused by the use of the relevant trademarked term." Id. at 1036-37 (internal citations omitted) (emphasis in original).

Where a plaintiff's[*13] mark resides in a crowded field, "hemmed in on all sides by similar marks on similar goods," that mark is weak as a matter of law. PostX Corp. v. docSpace Co., Inc., 80 F. Supp. 2d 1056, 1061 (N.D. Cal. 1999). Plaintiff has provided substantial evidence that Defendant's trademark is positioned in a crowded field.

5. Remaining Sleekcraft Factors

The remaining Sleekcraft factors are relatively unimportant to the likelihood of confusion analysis in Internet-related cases. GoTo.com, 202 F.3d at 1205.

Defendant has provided no real evidence of actual confusion on the part of consumers other than several telephone calls to Defendant inquiring about services similar to those offered by Plaintiff. There is no evidence that those callers intended to call Plaintiff or were confused or misled in their inquiries by Plaintiff's advertising of its products or services. However, the Ninth Circuit has ruled that a showing of actual confusion is not necessary at the preliminary injunction stage, GoTo.com, 202 F.3d at 1208, and it is not necessary that Defendant make such a showing here. The parties argue over the degree of care exercised[*14] by consumers seeking Internet-related services over the Web. The Ninth Circuit is clear on this issue: "Navigating amongst websites involves practically no effort whatsoever, and arguments that Web users exercise a great deal of care [] are unconvincing." Id. at 1209. Thus, Plaintiff's argument that consumers are likely to exercise a high degree of care because its services are relatively expensive is not persuasive.

Neither party has made a clear showing regarding Plaintiff's intent in choosing its mark. The issue is not important in this analysis, and a showing of malicious intent is not required at the preliminary injunction stage. Halo, 308 F. Supp. 2d at 1038.

The evidence on the question of whether Plaintiff intends or is likely to expand into Defendant's primary field of services is ambiguous. Plaintiff argues that there is little likelihood that the parties' services would overlap because they occupy very different Internet-related fields. Again, Plaintiff installs computer hardware and maintains websites, while Defendant offers primarily research and other informational services. Furthermore, Plaintiff asserts that it does not directly[*15] compete for advertising space with Defendant. However, in some sense, the parties' services already overlap because they are both Internet and computer-related services that are offered exclusively over the Web through the parties' websites. This factor does not weigh heavily for either side.

The remaining Sleekcraft factors thus add little to the Court's analysis. The "controlling troika" of Sleekcraft factors favor Defendant's argument for a preliminary injunction. However, Plaintiff has provided substantial evidence suggesting that Defendant's mark has been rendered weak by a crowded field, thus diminishing the likelihood of confusion among consumers. Defendant therefore has not shown probable success on the merits of its claim under the Lanham Act.

B. Balancing of Hardships

Because Defendant has not shown a probability of success on the merits, the Court must now determine whether Defendant has raised serious questions on the merits of its claim and, if so, whether the balance of hardships tips sharply in Defendant's favor.

Defendant has raised serious questions as to the merits of its Lanham Act claim that are addressed in the previous sections of this order. However, [*16] Defendant has not shown that the balance of hardships tips sharply in its favor. The parties dispute how injurious a preliminary injunction would be to Plaintiff. According to Plaintiff, forfeiture of its domain name would cause its customers' domain servers to cease functioning, thus shutting the company down and putting it at risk of insolvency and legal liability to its customers. Plaintiff also contends that its customers are contractually entitled to compensation if its servers go down, and thus inactivating the servers for any length of time puts Plaintiff at risk of bankruptcy.

According to Defendant, Plaintiff would merely have to change the domain names of its servers and the transition costs would therefore be minimal. Defendant argues that, when customers of Plaintiff's predecessor migrated to Plaintiff's servers, the cost was only several thousand dollars. This dispute need not be resolved at this time because Defendant has not shown that it will suffer irreparable harm or be substantially injured if the preliminary injunction is not granted. Defendant's claim of irreparable harm derives solely from its contention that once a plaintiff has demonstrated a likelihood of[*17] confusion under the Lanham Act, it is presumed that the plaintiff will suffer irreparable harm if injunctive relief is not granted. That contention is true, Metro Publ'g, Ltd. v. San Jose Mercury News, 987 F.2d 637, 640 (9th Cir. 1993), but because Defendant has not shown a likelihood of confusion, irreparable injury cannot be inferred.

Moreover, Defendant's own moving papers suggest that it has not been injured by Plaintiff's use of the mark "Jupiter Hosting." Both parties agree that Plaintiff registered its domain name in October, 2001. According to Defendant, from 1999 to 2003, its annual revenues rose nearly three hundred percent, to almost $ 48 million. In the first quarter of 2004, its revenues were $ 14.4 million, an increase of almost seventy-five percent over the corresponding period in 2003. DeMilt Decl. P 14. Not only has Defendant failed to show irreparable injury by inference, it appears from its moving papers that it has flourished during the time that Plaintiff has utilized the mark "Jupiter Hosting," and Defendant makes no attempt to show that this trend will change if a preliminary injunction is not granted. Defendant has not demonstrated that the[*18] balance of hardships tips sharply in its favor, and a preliminary injunction is therefore not appropriate.

II. Anticybersquatting Consumer Protection Act

The ACPA holds a person civilly liable who (1) has a "bad faith intent to profit from" a registered mark, and (2) registers or uses a domain name that is either identical or confusingly similar to the registered mark. 15 U.S.C. § 1125(d) (1) (A).

Defendant's argument as to how the "confusingly similar" prong of ACPA section 1125(d) is satisfied relies solely on its "likelihood of confusion" argument under the Lanham Act. In its reply papers, Defendant offers a single sentence asserting that the "confusingly similar" prong offers broader protection to trademark holders than does the "likelihood of confusion" test, but offers no further analysis on the topic. Because the Court has ruled that Defendant has not exhibited a probability of success of its argument that there is a likelihood of confusion between the parties' marks under the Lanham Act, it similarly rejects Defendant's contention that there is a likelihood that the marks will be found confusingly similar under the ACPA test.

Because the Court[*19] rules that Defendant is not likely to satisfy the second prong of section 1125(d)(1)(A) of the ACPA for the purpose of a preliminary injunction, analysis of the first prong's bad faith intent requirement is unnecessary. Moreover, even if Defendant could raise serious questions on the merits of its ACPA claim, it has not demonstrated that the balance of hardships tips sharply in its favor.
III. Unfair Competition Law

Defendant also argues that it is likely to prevail on the merits of its claim under California's Unfair Competition Law. However, Defendant offers no analysis relating to its Unfair Competition Law claim and does nothing more than refer to it in passing several times in its papers. The Court nevertheless addresses Defendant's probability of success on the merits of its Unfair Competition Law claim.

Under California Business and Professions Code section 17200, "unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice." The unfair competition law "embraces anything that can properly be called a business practice and that at the same time is forbidden by law." Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1135 (2003).[*20] In other words, section 17200 "borrows" violations from other laws and makes them independently actionable as unfair business practices. Id.

Defendant must therefore demonstrate a probability of success on its claim that Plaintiff has violated a law independent of the Unfair Competition Law before the State law claim will be triggered. Here, the Court has ruled that Defendant has not shown a probability that it will succeed on either its Lanham Act claim or its ACPA claim. Thus, Defendant has not demonstrated that it is likely it will prevail on its Unfair Competition Law claim. Furthermore, while Defendant has raised serious questions on the merits of at least its underlying Lanham Act claim, it has not shown that the balance of hardships tips sharply in its favor. A preliminary injunction is not appropriate based on this claim.

CONCLUSION

For the foregoing reasons, Defendant's motion for a preliminary injunction is DENIED.

IT IS SO ORDERED.

Dated: 11/9/04

CLAUDIA WILKEN

United States District Judge