Designer Skin LLC v. S & L Vitamins, Inc., et al.
The Cit Group, Inc. v. Citicorp
20 F. Supp. 2d 775 (D. N.J., Sept. 25,1998)
Plaintiff Cit Group, Inc. is the owner of a number of federally registered trademarks, including the mark "The Cit Group." Since in or about 1908 plaintiff and its predecessors have offered various financial services to its customers. As of 1998, these services included equipment financing, factoring, commercial financing, venture capital, home equity financing and sales financing. Services were offered both to consumers and businesses. As of 1997, the company managed assets worth $22.3 billion and had net income of $2.1 billion.
Plaintiff has operated under the name "The Cit Group" continuously since 1986. Over the period 1988 to 1998 Cit Group has expended over $50 million dollars in advertising, including between $6.5 and $7 million dollars during the twelve months preceding August 1998. These advertisements have appeared in many mediums, including national publications, trade journals and television. The Cit Group operates a website at http://www.citgroup.com.
On April 6, 1998, defendant Citicorp and Travelers Group announced plans to merge. Shortly prior, Citicorp's Board discussed what they should name the surviving entity. Insistent that the name include the word "Citi", and desirous of showing that Travelers was an equal partner in the merger, the Citicorp Board decided to use the name "Citigroup" for the surviving entity. Travelers acquiesced.
Citicorp also offers its customers a wide arrange of financial services. It owns various federally registered trademarks which include the "Citi" mark. These marks do not, however, include the mark "Citigroup." Defendant Citicorp has expended enormous sums advertising its marks. In 1997 alone, it expended an estimated $1.5 billion dollars in such efforts. Citicorp is apparently in litigation over the use of the "citigroup" domain name. It had not, at the time the court rendered its decision, decided to use "citigroup.com" as the domain name of its website.
When plaintiff learned that defendant intended to name the surviving entity "Citigroup" it immediately informed defendant of its concerns. When defendant indicated it would nonetheless proceed with its plans, plaintiff commenced suit, charging that defendant's use of the Citigroup mark would constitute a violation of the Federal Trademark Dilution Act, as well as trademark infringement and unfair competition in violation of the Lanham Act.
More particularly, plaintiff argued that defendant's use of the "Citigroup" mark, combined with the vast amount of advertising it could anticipate emanating from defendant, would result in "reverse confusion" among the public. "Reverse confusion occurs when a larger, more powerful company uses the trademark of a smaller, less powerful senior owner and thereby causes likely confusion as to the source of the senior owner's goods or services. ... the public comes to assume the senior user's products are really the junior user's ...".
With the exception of Internet uses, the court rejected plaintiff's claims, and dismissed the action. The court found that plaintiff and defendant directly competed in a number of arenas, including equipment financing, commercial finance, venture capital, and home equity lending fields. Defendant's proposed name, Citigroup, appeared to be virtually identical to that of plaintiff's mark, "the Cit Group." Nonetheless, the court found that consumers were not likely to be confused by defendant's use of the mark in mediums other than the Internet, and accordingly, that such use constituted neither trademark infringement nor unfair competition.
In reaching this conclusion, the court relied upon a number of factors. Chief among them was the fact that the parties predominantly engaged in extremely large transactions with sophisticated clients who would exercise great care in ascertaining the identity of the company from whom they were obtaining services. The court also seemed to focus on the fact that the respective logos of the two parties emphasized the differences between their names. Said the court:
Given the lack of consumer confusion, plaintiff's infringement and unfair competition claims must fail, concluded the court.
The court also dismissed plaintiff's claim that defendant's activities violated the Federal Anti-Dilution Act. The court found that plaintiff's "the CIT Group" mark was not famous despite the fact that plaintiff had expended over $50 million in advertising its mark over a ten year period, had net income in 1997 of in excess of $2 billion, and that "in certain markets the CIT Group mark has achieved a degree of success, particularly in the fields of equipment financing and leasing and commercial financing." Said the court:
The court went on to hold that defendant's activities would also not dilute plaintiff's mark, because the public is not likely to associate plaintiff's and defendant's marks.
The court did not decide the question of whether defendant's use of the domain name "citigroup.com" would infringe plaintiff's mark. It did hold that "by virtue of the constraints and technical requirements of the Internet system there is a likelihood of confusion on the Internet if Citicorp adopted the domain name www.citigroup.com." This, according to the court, arose predominantly from the fact that in this medium, both names appeared in block capital letters. Indeed, there was evidence in the record of actual confusion arising on the Internet. Accordingly, the court granted plaintiff permission to renew its claim should defendant adopt "citigroup.com" as its domain name.