Designer Skin LLC v. S & L Vitamins, Inc., et al.
Savin Corporation v. The Savin Group, et al.
391 F.3d 439, 2004 U.S. App. Lexis 25479 (2d Cir., December 10, 2004)
Second Circuit Clarifies Showing Trademark Holder Must Make In Dilution Action Brought Under The Federal Trademark Dilution Act And New York State Law
Second Circuit affirms the dismissal of trademark infringement claims brought by Savin Corporation, a maker of photocopiers, printers, fax machines, and other office equipment, against the Savin Group, Savin Engineers and Savin Consultants arising out of defendants' use of plaintiff's "Savin" trademark in, among other things, web site domain names, to market their professional engineering companies. The Second Circuit held that consumers were unlikely to be confused by these competing uses of the "Savin" mark, in part because of the differing services and products the parties offer to the public.
The Second Circuit reversed so much of District Court's decision that dismissed claims plaintiff brought under the Federal Trademark Dilution Act ("FTDA") and its New York State counterpart, New York Gen. Bus. Law §360-1, and remanded those claims to the District Court for reconsideration. The Second Circuit held that the District Court had improperly concluded that the Supreme Court's decision in Moseley mandated, in the instant case, that plaintiff must provide evidence of actual dilution to proceed with claims under either statute. As to the FTDA, the Second Circuit held that such a showing is not necessary where the junior user used a mark identical to the famous mark owned by the senior user. As to New York law, the Second Circuit held that Moseley's pronouncement did not effect the showing necessary under New York State law. Under New York State law, a claim for dilution could proceed on a showing of a mere likelihood of dilution -- the submission of evidence of actual dilution mandated by the Supreme Court in Moseley was not required.
District Cout Dismissed Plaintiff's Dilution and Trademark Infringement Claims
Plaintiff Savin Corporation is engaged in the business of selling photocopiers, printers, fax machines and other office equipment. Since 1959, plaintiff has used the tradename "Savin" in connection with these marketing efforts. In 2002, plaintiff spent over $20 million advertising its products in many media, and had annual revenues of $675 million. Plaintiff operates a web site at "www.savin.com."
Plaintiff is the owner of the federal trademark in the mark "Savin." Plaintiff's marks are registered for use in connection with the sale of photocopiers, and ancillary maintenance, repair and support products for use in connection with photocopiers.
Defendants the Savin Group, Savin Engineers, Savin Consultants and JMOA Engineering are New York based professional engineering corporations that provide services in the areas of environmental waste management, and building inspection and maintenance. Defendants have been using the "Savin" name to promote these services since 1987. Defendants' President and sole shareholder is Dr. Rengachari Srinivasaragahavan, whose nickname is "Dr. Nivas." Defendants elected to use "Savin" for their name by reversing the spelling of Dr. Nivas' nickname. Defendants have, since 2001, operated web sites at the domains www.thesavingroup.com and www.savinengineers.com, at which they promote their professional engineering services.
In 2003, plaintiff commenced this suit, charging that defendants' use of the "Savin" mark infringed plaintiff's trademark in violation of the Lanham Act. Plaintiff also claimed that defendants' use diluted plaintiff's mark in violation of both the Federal Trademark Dilution Act ("FTDA") and its New York State counterpart, N.Y. Gen. Business Law §360-1. On defendants' motion of summary judgment, the District Court dismissed each of these claims.
On appeal, the Second Circuit reversed so much of the District Court's decision that dismissed plaintiff's dilution claims, and remanded those claims to the District Court for further consideration. The Second Circuit affirmed the dismissal of plaintiff's trademark infringement claim.
Second Circuit Allows Plaintiff's Federal Trademark Dilution Act Claims To Proceed
To establish a violation of the FTDA a plaintiff must show that:
The recent Supreme Court decision in Moseley v.V Secret Catalogue, 537 U.S. 418 (2003) modified the showing necessary to establish a FTDA claim. The Court there held that "an essential element a FTDA claim is 'actual dilution, rather than a likelihood of dilution.'" The District Court interpreted Moseley to require the plaintiff to submit evidence of actual dilution to prevail on its dilution claims - circumstantial evidence of dilution arising out of defendants' use of a mark identical to plaintiff's would not meet this burden.
The Second Circuit disagreed, and, accordingly, reversed the District Court's dismissal of plaintiff's FTDA claim. The Second Circuit held 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" sufficient to meet the showing of actual dilution required under Moseley.
The Second Circuit cautioned that its holding should not be read too broadly, as 'identical' does not mean 'closely similar.' Said the Second Circuit:
Moreover, "we caution that although the differences between the marks noted by the [district] court in the infringement context may be inconsequential in that context, such differences may indeed be relevant in the analysis of the dilution issue."
The Second Circuit accordingly remanded the FTDA claim to the District Court for a determination, inter alia, as to whether defendants used a mark identical to that of the plaintiff. Notably, the Court did not determine whether defendants' use of the "'Savin' mark in their "thesavinggroup.com" and "savinengineers.com" domain names was identical for FTDA purposes.
Second Circuit Allows Plaintiff's New York State Trademark Dilution Claims To Proceed
The Second Circuit also reversed the District Court's dismissal of plaintiff's New York State law dilution claims. The District Court based its dismissal on its determination that 'the standards for dilution under Section 360-1 are 'essentially the same as that under §43(a) of the Lanham Act.'" The Second Circuit disagreed, holding that Moseley did not modify the showing needed to establish a dilution claim under New York State law. As a result, under New York law, "a showing of a mere likelihood of dilution [is all that is required] to sustain a claim." Said the Court:
Because the District Court applied the wrong standard in this regard, its dismissal of the New York dilution claim has reversed and that claim remanded to the District Court for further consideration.
Second Circuit Affirms Dismissal Of Trademark Infringement Claims
The Second Circuit did affirm the District Court's dismissal of plaintiff's trademark infringement claim, upholding the District Court's decision that plaintiff failed to establish that consumers were likely to be confused by defendants' use of the "Savin" mark. In reaching this result, the Second Circuit held that 7 of the 8 Polaroid factors used in this Circuit to evaluate likelihood of consumer confusion favored defendants. The Court rested its result, in large part, on the differing fields of business in which the parties were engaged -- professional engineering related to environmental waste management and building inspection and maintenance, on the one hand, and office equipment on the other.
Thus, the Court found that while defendants used a mark similar to that of plaintiff, that mark was not strong in the market for professional engineering services, that the products and services the parties offered were different, and noncompetitive, that there was neither evidence of actual consumer confusion nor that plaintiff was going to use its mark to bridge the product gap and compete with defendants, and that defendants acted in good faith in selecting their mark, and not to take advantage of the goodwill associated with plaintiff's marks.