WALLS, Senior District Judge.
Defendants Optimum Networks, Inc. and Frank Aznar move to dismiss the complaint filed by plaintiff CSC Holdings, Inc., also known as Cablevision. Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the motion is decided without oral argument. The motion is denied.
Plaintiff is a Delaware limited liability company and a provider of telecommunications and entertainment services. (Compl. ¶¶ 1, 6.) In addition to the cable television and digital telephone services it provides, plaintiff is an internet service provider ("ISP") to its residential and business customers. (Compl. ¶ 9.) Defendant Optimum Networks, Inc. is a New Jersey corporation and an ISP to primarily commercial entities; defendant Frank Aznar is its founder. (Compl. ¶¶ 7-8; Def. Br. 3.)
Plaintiff alleges that, since the mid-1990s, it has been providing goods and services using the trademark "OPTIMUM®", including internet access, webhosting, and email. (Compl. ¶ 10.) Plaintiff asserts that it "owns incontestable U.S. Registration No. 2,609,003 for its OPTIMUM® mark based on first use in commerce in August 1994." (Compl. ¶ 15.) Plaintiff alleges that, "since its adoption in 1994, the OPTIMUM® mark has always been the `umbrella' mark for Cablevision's digital communications services." (Compl. ¶ 13). The marks under this "umbrella" include OPTIMUM BUSINESS®, OPTIMUM® LIGHTPATH, and OPTIMUM® TRIPLE PLAY (Compl. ¶¶ 11-12), as well as OPTIMUM® ONLINE, OPTIMUM® PREFERRED, OPTIMUM® VOICE, and OPTIMUM® REWARDS (Compl. ¶ 16). Plaintiff also alleges that, "since as early as 1994," it has "registered and used OPTIMUM®-inclusive Internet domain names ... in connection with websites promoting the various services offered under the OPTIMUM® marks." (Compl. ¶ 17.) These domain names include Optimum.com, Optimum.net, OptimumOnline.com, and OptimumRewards.com, among others. (Id.)
On March 2, 2010, plaintiff filed a complaint in this Court, alleging that "long after" it commenced use of the OPTIMUM® marks "in connection with ISP and related services," and "long after those marks became exclusively associated" with plaintiff, defendants began using Optimum ISP, Optimum Networks, Optimum Networks, Inc., and OptimumISP.com in connection with their products and services. (Compl. ¶¶ 18-19.) As alleged by Plaintiff, these "Infringing Designations" and "Infringing Domain Name" are unlawful because they "incorporate [plaintiff's] longstanding, federally registered OPTIMUM® mark in its entirety," and further associate themselves with plaintiff and its OPTIMUM® services through the inclusion of the terms "ISP" and "Networks." (Compl. ¶ 20.) Plaintiff asserts that defendants commenced use of the infringing designations and domain name despite actual knowledge and constructive notice of plaintiff's use of the OPTIMUM® marks and domain names, and that defendants refused to comply with plaintiff's pre-suit request to voluntarily discontinue use of the infringing designations and domain names. (Compl. ¶¶ 21-22.) Plaintiff contends that defendants' activities are likely to cause consumers to falsely believe that defendants' products and services are associated with plaintiff, and that defendants' actions were undertaken with "the calculated purpose of exploiting and deriving a commercial benefit from the extensive goodwill and recognition
Plaintiff's complaint states causes of action for trademark infringement, false designation of origin, and cybersquatting under the Lanham Act, 15 U.S.C. §§ 1051, et. seq., as well as unfair competition under New Jersey statutory and common law, N.J.S.A. 56:4-1. Plaintiff seeks (1) a permanent injunction restraining Defendants from using any designation or domain name that in any way incorporates or is similar to the OPTIMUM® marks; (2) monetary damages, including lost profits and treble damages; and (3) reasonable attorneys' fees and costs.
On May 3, 2010, defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted.
On a motion to dismiss for failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6), the court is required to "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306 (3d Cir.2007). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotation marks and citations omitted). A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949.
"[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 546, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted). Thus, "a district court weighing a motion to dismiss asks `not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'" Twombly, 550 U.S. at 563 n. 8, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).
Plaintiff's complaint states four causes of action: trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114(1); false designation of origin under Section 43 of the Lanham Act, 15 U.S.C. § 1125(a); violation of the Anticybersquatting
"Congress enacted the Lanham Act in 1946 in order to provide national protection for trademarks used in interstate and foreign commerce." Park'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 193, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985). The Lanham Act, 15 U.S.C. §§ 1051, et. seq., "was intended to make `actionable the deceptive and misleading use of marks' and `to protect persons engaged in ... commerce against unfair competition.'" Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767-68, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992) (quoting 15 U.S.C. § 1127). "A trademark is defined in 15 U.S.C. § 1127 as including `any word, name, symbol, or device or any combination thereof' used by any person `to identify and distinguish his or her goods, including a unique product from those manufactured or sold by others and to indicate the sources of the goods, even if that source is unknown.'" Two Pesos, Inc., 505 U.S. at 768, 112 S.Ct. 2753 (quoting 15 U.S.C. § 1127). The Lanham Act "broadly prohibits uses of trademarks, trade names, and trade dress that are likely to cause confusion about the source of a product or service. Infringement law protects consumers from being misled by the use of infringing marks and also protects producers from unfair practices by an `imitating competitor.'" Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 428, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003) (citations omitted).
Section 32 of the Lanham Act provides:
15 U.S.C. § 1114(1)(a).
Section 43(a) of the Lanham Act provides:
15 U.S.C. § 1125(a)(1)(A)-(B)
The Third Circuit has stated that it "measure[s] federal trademark infringement [under Section 32], 15 U.S.C. § 1114, and federal unfair competition [under Section 43], 15 U.S.C. § 1125(a)(1)(A), by identical standards." A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir.2000). To prove either trademark infringement under Section 32 or unfair competition under Section 43(a), a plaintiff must establish that: (1) the mark is valid and legally protectable;
The first two elements required to prove infringement and unfair competition under the Lanham Act—validity and ownership of the mark—are satisfied by a showing that the plaintiff's mark is registered upon the Principal Register of the U.S. Patent and Trademark Office, particularly if the mark has become incontestable.
The third element required to prove infringement or unfair competition— likelihood of confusion—is a question of fact. See Checkpoint Sys., Inc., 269 F.3d at 301. "To prove likelihood of confusion plaintiffs must show that customers viewing the mark would probably assume the product or service it represents is associated with the source of a different product or service identified by a similar mark." Checkpoint Sys., Inc., 269 F.3d at 301.
In Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir.1983), the Third Circuit adopted a non-exhaustive list of factors, known as the "Lapp factors," to be considered in evaluating the likelihood of confusion between a plaintiff's mark and a defendant's mark. Although the Lapp factors were traditionally applied only in cases of non-competing goods, the Third Circuit has held that the Lapp factors should also be applied in cases involving directly competing goods. Checkpoint Sys., Inc., 269 F.3d at 280 n.8; A & H Sportswear, Inc., 237 F.3d at 207, 213-215 (3d Cir.2000).
The ten Lapp factors are:
Kos Pharms. v. Andrx Corp., 369 F.3d 700, 709 (3d Cir.2004) (citation omitted); A &
Plaintiff alleges that it has been using the OPTIMUM® mark in commerce since 1994 and that the mark has become incontestable. (Compl. ¶ 15.) Plaintiff also alleges that many of the other OPTIMUM®-inclusive marks are registered with the USPTO and that some of these marks have become incontestable. (Compl. ¶¶ 15-16 (providing several USPTO registration numbers).) Plaintiff further alleges that defendants' use of the term "optimum" is likely to cause confusion between plaintiff and defendants' marks, citing several factors that are considered in the Lapp test. Specifically, plaintiff alleges that the parties' marks are similar because they are highly similar in sight, sound, and meaning (Lapp factor 1) (Compl. ¶ 20), that there is actual confusion among consumers with respect to the parties' marks (Lapp factors 4 and 6) (Compl. ¶ 24), and that defendants intended to copy plaintiffs' mark (Lapp factor 5) (Compl. ¶¶ 25-26). In addition, although plaintiff does not explicitly state as much, its allegation that the OPTIMUM® mark is a registered and incontestable mark (Compl. ¶¶ 15-16) implicates the strength of the owner's mark (Lapp factor 2). Moreover, its allegations that the parties are both ISPs providing high speed internet access, website hosting, and email service to customers in New Jersey (Compl. ¶¶ 9, 18) implicate other Lapp factors, including the extent to which the targets of the parties' sales efforts are the same (Lapp factor 8), the relationship of the goods in the minds of the consumers (Lapp factor 9), and other facts suggesting that the consuming public might expect the prior owner to manufacture both products (Lapp factor 10).
Defendants dispute plaintiff's factual allegations, arguing that defendant Optimum Networks, Inc. was "the first user of the optimum networks phrase" because it was in business before plaintiff registered the mark "optimum network." (Def. Br. 3.) Defendants assert that defendant Optimum Networks, Inc. was "organized in 2000 as a provider of network installation and services," whereas plaintiff's "registration for the phrase the optimum network indicates that the company first used this phrase in sales or commerce on April 7, 2007." (Def. Br. 3.) Defendants argue that, because defendant Optimum Networks, Inc. is actually "the first user of the optimum networks phrase," plaintiff cannot sustain a trademark infringement claim against defendants. (Def. Br. 4.) Defendants also argue that plaintiff has failed to state a cause of action because the word "optimum" is "a commonly used descriptive term" that is not entitled to trademark protection. (Def. Br. 6.) In support of this argument, defendants note that numerous businesses in several industries use the term "optimal or optimum," and that plaintiff has apparently not brought suit against them for unfair competition. (Def. Br. 1-2.)
On a motion to dismiss for failure to state a claim, this Court must accept all of plaintiff's allegations as true and construe disputed facts in favor of plaintiff. In so doing, the Court accepts plaintiff's allegations that it has been using the OPTIMUM® mark for longer than defendants, and rejects defendants' contention that it was the first user of the term "optimum networks." The Court also accepts plaintiff's allegation that the OPTIMUM®
Accepting plaintiff's allegations as true, plaintiff has established that it owns the OPTIMUM® mark, that the OPTIMUM® mark is a valid and legally protectable mark, and that defendants' use of the term "optimum" in connection with their goods and services is likely to cause confusion. Plaintiff has pled sufficient facts to allow the Court draw a reasonable inference that the defendant is liable for trademark infringement and unfair competition. The Court finds that plaintiff has stated a plausible claim for relief under Section 32 and Section 43(a) of the Lanham Act.
Section 43(d) of the Lanham Act, entitled "cyberpiracy prevention," provides:
15 U.S.C. § 1125(d)(1)(A).
The Third Circuit has explained that, "[i]n general, cybersquatting is the act of registering, in bad faith and to garner profit, on the internet a domain name so similar to a distinctive mark that it is confusing." Green v. Fornario, 486 F.3d 100, 103 n.5 (3d Cir.2007). In deciding whether a defendant has committed a cybersquatting violation under Section 43(d), a district court must first determine whether plaintiff's mark is "a `distinctive' or `famous' mark and, therefore, is entitled to protection under the Act." Shields v. Zuccarini, 254 F.3d 476, 482 (3d Cir.2001). If the mark in question is entitled to protection, "the next inquiry is whether [defendant's]
15 U.S.C. § 1125(d)(1)(B). As the Third Circuit has noted, this list is non-exhaustive. Zuccarini, 254 F.3d at 484.
Plaintiff alleges that it has been using the OPTIMUM® mark and other OPTIMUM®-inclusive marks in commerce since 1994, that many of these marks are registered with the USPTO, and that several of them have become incontestable. (Compl. ¶¶ 15-16.) Plaintiff represents that, through extensive promotion and use, its OPTIMUM®-related marks "have become uniquely identified with the services of [plaintiff] and its predecessor" and "have come to represent enormous goodwill of [plaintiff]." (Compl. ¶ 14.) Plaintiff alleges that, since 1994, it has been using "OPTIMUM®-inclusive Internet domain names" in connection with its OPTIMUM®-branded products and services, and that these domain names include Optimum.com, OptimumRewards.com, OptimumAutos.com, and OptimumLightpath.com. (Compl. ¶ 17.) Plaintiff further alleges
Defendants apparently respond to these allegations by arguing that defendants were in fact the "first user[s]" the term "optimum" (Def. Br. 3-4), noting that "Plaintiff fails to detail when it first used optimum online or optim ISP [sic], and when it alleges defendant did." (Def Br. 9.) In this vein, defendants also assert that "[p]art of the complaint alleges consumer fraud and fraud both of which must be pled with particularity." (Def Br. 9 (citing Harper v. LG Electronics USA, 595 F.Supp.2d 486 (D.N.J.2009)).)
Defendants are correct in stating that plaintiff did not allege an exact date on which defendants commenced their alleged infringing uses, stating only that these infringing uses commenced "long after" OPTIMUM®-related marks and domain names became exclusively associated with plaintiff. (Compl. ¶¶ 18-19.) However, there is no requirement that a senior user specify the exact date when an allegedly infringing junior user commenced use of an identical or similar mark, 15 U.S.C. § 1125(d)(1)(A), and plaintiff did allege that it began using OPTIMUM®-related domain names in 1994. (Compl. ¶ 17.) As discussed, the Court accepts as true plaintiff's allegations that it has been using OPTIMUM®-branded marks for longer than defendants. Moreover, defendants' discussion of "fraud" and "consumer fraud" is misplaced. While allegations of fraud must be pled with particularity under Rule 9(b) of the Federal Rules of Civil Procedure, this case does not involve allegations of fraud as contemplated by Rule 9(b), but instead involves alleged cybersquatting violations. The case cited by defendants, Harper v. LG Electronics USA, 595 F.Supp.2d 486 (D.N.J.2009), is inapposite, as its discussion of the Rule 9(b) pleading requirement centered around statutory fraud claims under the New Jersey Consumer Fraud Act and the comparable statutes of other states. Harper, 595 F.Supp.2d at 491. No such claims are present here and Rule 9(b) is not implicated. Finally, though defendants do not dispute this point, the Court finds that plaintiff's allegations of defendants' bad faith are sufficient to allow a reasonable inference that defendant's conduct satisfies the bad faith factors listed in 15 U.S.C. § 1125(d)(1)(B).
Accepting plaintiff's allegations as true, plaintiff has established that the OPTIMUM® mark is a distinctive or famous mark that is legally protectable; that the defendants' domain names are identical or confusingly similar to plaintiff's; and that defendant acted with a bad faith intent to profit from using plaintiff's distinctive and famous OPTIMUM® mark. Plaintiff has pled sufficient facts to allow the Court to draw a reasonable inference that the defendant is liable for anticybersquatting violations. The Court finds that plaintiff's allegations state a plausible claim for relief under Section 43(d) of the Lanham Act.
New Jersey's statutory unfair competition law provides: "No merchant,
Because, as discussed, plaintiff has stated a claim for unfair competition under Section 43(a) of the Lanham Act, the Court finds that plaintiff also has stated a claim for unfair competition under New Jersey statutory and common law.
Plaintiff has stated a claim upon which relief can be granted. The Court denies defendants' motion to dismiss.
It is on this 17th day of August, 2010:
ORDERED that Defendants' Motion to Dismiss is DENIED.
The Court need not reach these issues on a motion to dismiss because it accepts as true plaintiff's allegation that the OPTIMUM® mark is registered and incontestable. In so doing, the Court finds that the mark is valid and legally protectable and that the mark is presumed to be a strong one under Lapp factor 2. Commerce Nat'l Ins. Serv., Inc., 214 F.3d at 438; Two Pesos, Inc., 505 U.S. at 769, 112 S.Ct. 2753; Park `N Fly, Inc., 469 U.S. at 194, 105 S.Ct. 658.
