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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Nissan Motor Co., Ltd. v. Nissan Computer Corporation

89 F. Supp. 2d 1154 (C.D.Cal. 2000) aff'd. without opinion, 246 F.3rd 675 (9th Cir. 2000)

Court holds that plaintiffs Nissan Motor Co. and its licensee are likely to prevail on their trademark infringement claims against defendant Nissan Computer Corporation arising out of defendant's display on its nissan.com and nissan.net websites of third party advertisements for automobiles. The court accordingly issued a preliminary injunction, enjoining defendant from displaying automotive-related advertising and links on the web sites in question. The court further directed defendant to place a prominent disclaimer on the site, informing visitors that it is not affiliated with plaintiffs, and providing users with plaintiffs' web site address. The court permitted defendant to continue to operate web sites at nissan.com and nissan.net at which it advertised its computer business and non-automotive products, in part because Nissan is the surname of defendant's principal, and in part because plaintiffs are not in the computer business. The court also denied defendant's motion to dismiss the case for want of personal jurisdiction, both because the effects of its infringing activities were felt in California, where one of the plaintiffs was headquartered, and because defendant had contracted with a number of California concerns to obtain the automobile advertising at issue.

Plaintiff Nissan Motor Co. Ltd. is a large Japanese automaker. Its subsidiary, plaintiff Nissan North America, Inc. markets and distributes Nissan vehicles in the United States. Nissan Motor owns, and Nissan North America is the exclusive licensee of, a number of trademarks containing the word "Nissan" which relate to automobiles. The first such mark was registered in 1959. Nissan operates a web site at www.nissan-usa.com.

Defendant Nissan Computer Corporation is a North Carolina company in the business of providing computer sales and services. Nissan Computer was incorporated in 1991 by Uzi Nissan, its current president. Mr. Nissan has used his surname in connection with various businesses since 1980.

Defendant registered the domain names "nissan.com" and "nissan.net" in May 1994 and March 1996 respectively. For the next several years, defendant operated websites at these urls that provided computer related information and services. In 1995 defendant registered a trademark for its Nissan computer logo with the State of North Carolina.

In August 1999, defendant altered the content of its "nissan.com" web site. At that time, defendant placed a "Nissan Computer" logo on the site that is allegedly confusingly similar to plaintiffs' logo. More importantly, defendant caused a number of banner advertisements and links for automobile merchandisers to be displayed on the site.

As a result, plaintiffs commenced this suit, charging defendant with trademark infringement and dilution, domain name piracy, false designation of origin, and state law unfair competition. Plaintiffs moved for a preliminary injunction. Defendant responded with a motion to dismiss for want of personal jurisdiction.

The court granted plaintiffs' motion for a preliminary injunction and denied defendant's motion to dismiss. To prevail on a motion for a preliminary injunction, plaintiffs "must show either (1) a combination of probable success on the merits and the possibility of irreparable injury without the injunction; or (2) that serious questions are raised and the balance of the hardships tips sharply in favor of the moving party."

The court held that plaintiffs had shown a likelihood of success on their claim that defendant's actions were infringing their trademark.

As explained by the court "the central issue in a trademark infringement suit is the likelihood of consumer confusion." The court found a likelihood of consumer confusion arising out of defendant's conduct. Of particular interest was the Court's determination that defendant was using its marks to promote products similar to those sold by plaintiffs. As discussed above, defendant sells computers, not automobiles. The court nonetheless concluded that the marks were being used to promote products similar to those offered by plaintiffs because of the third party automobile advertisements present on defendant's site. By placing such advertising on it site, defendant was using plaintiffs' mark to promote automobiles, a product plaintiffs offered for sale under the mark. Said the court:

The defendant argues that the parties' principal lines of business are different. The defendant contends that it principally sells computers and Internet services, while the plaintiffs principally sell cars an other vehicles. However, this case is not suited to a traditional proximity-of-goods analysis. Starting in August 1999, the defendant's nissan.com website primarily promoted automobile-related products and services, through third-party advertisements and web links, rather than the defendant's own computer products. More than 90% of the defendant's website advertising revenue is automobile-related. Whether or not a visitor to the defendant's website ultimately makes an automobile purchase from an advertiser, the defendant profits from the visitor's initial interest confusion. By posting automobile-related links and advertisements, the defendant derives advertising revenue due to the diversion of a consumer's initial interest in Nissan vehicles. As in Brookfield, the defendant is improperly appropriating the plaintiff's goodwill. Thus, in regards to its Internet-related activity, the defendant's "product" is the exploitation of customer confusion. Accordingly, this factor weighs in favor of the plaintiffs.

In reaching its determination that consumers were likely to be confused by defendant's use of the mark, the court also relied on the fact that a) plaintiffs had a strong mark which had developed considerable secondary meaning with the public, b) the mark defendant used (nissan.com) was identical to plaintiffs' mark, c) plaintiffs and defendant both used the internet to promote their products, and d) there was evidence of both actual consumer confusion and initial interest confusion arising out of defendant's use of plaintiffs' mark.

Because "irreparable injury is presumed" when a plaintiff "demonstrate[s] a likelihood of success on [its] trademark infringement claim," the court issued a preliminary injunction which prohibited defendant from displaying any automobile advertising or links on its site. The injunction also directed defendant to post a disclaimer on its site, stating that the site was not affiliated with plaintiffs, and to set forth the url (without a link) of plaintiffs' website.

The court did permit defendant to continued to operate a web site at its "nissan" urls, on which it was permitted to have non-automobile related advertising. Such result was reached, in part, because "an injunction limiting the use of an infringing personal name should be 'carefully tailored to balance the interest in using one's name against the interest in avoiding public confusion.'" (citation omitted).

The court also denied defendant's motion to dismiss this case for want of personal jurisdiction. Defendant was a North Carolina based concern which predominantly sold its products to those residing on the East Coast. While defendant did operate the web site at issue, defendant did not directly sell goods to consumers on its websites.

The court nonetheless found that defendant had purposely directed its activities toward California by entering in contracts with five California based concerns to supply some of the advertisements at issue, and from which defendant derived revenues. These contracts were governed by California law, and were each confirmed by an e-mail sent from California to defendant. The court reached this result despite defendant's claim that it entered into these contracts by utilizing the website of a Massachusetts-based company, on which the California advertisers posted their potential advertising agreements.

The court found that the effect defendant's conduct had on plaintiffs, whose North America operations were headquartered in California, served as an independent basis for its exercise of personal jurisdiction. Said the court:

[T]he evidence supports a finding that the defendant intentionally changed the content of its website in August 1999 to exploit the plaintiffs' goodwill by profiting from consumer confusion. The brunt of the harm was suffered in the forum state because Nissan North America, Inc., the exclusive licensee of the Nissan trademarks, is based in Gardena, California.

The court accordingly held that it had jurisdiction over the defendant, and denied defendant's motion to dismiss.

The full text of the court's decision can be found on a web site maintained by the United States District Court for the Central District of California.

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