No. 4:96CV01340 ERW
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION
947 F. Supp. 1328
August 19, 1996, Decided
OPINION BY:
E. Richard Webber
This matter is before the Court on the motion of defendant
to dismiss for lack of personal jurisdiction and
improper venue [document # 18], on the motion of defendant
to dismiss for failure to state a claim and lack of
subject matter jurisdiction [document # 23], and on the
motion of defendant to stay the proceedings
[document # 24].
Plaintiff Maritz, Inc., has brought this [**2]
action alleging that defendant Cybergold, Inc., is violating
Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),
in connection with Cybergold's internet activities.
Plaintiff seeks a preliminary injunction to enjoin Cybergold's
alleged trademark infringement and unfair
competition. Plaintiff also seeks an expedited hearing
on the preliminary injunction hearing. Because of
plaintiff's requests for an expedited hearing on plaintiff's
motion for a preliminary injunction, the Court ordered
expedited briefing on defendant's motions to dismiss and
to stay, in order to resolve threshold jurisdictional
questions in this action. See Falkirk Mining Co. v. Japan
Steel Works, Ltd. 906 F.2d 369, 372 (8th Cir.
1990) (court must determine threshold matter of whether
it possesses personal jurisdiction over defendant
before it can reach merits of dispute and enter legally
binding orders).
I. Personal Jurisdiction and Venue
Defendant has moved to dismiss pursuant to Federal Rule
of Civil Procedure 12(b)(2), asserting that this Court
cannot exercise personal jurisdiction over it. Defendant
argues that plaintiff's first amended complaint fails to
allege any facts on which personal [**3] jurisdiction
over defendant can be based.
Whether the Court can exercise personal jurisdiction over
defendant requires a two-part inquiry. The Court
first examines whether personal jurisdiction exists under
Missouri's long-arm statute. n1 Next, the Court must
determine whether the exercise of personal jurisdiction
is consistent with due process. Bell Paper Box, Inc.
v. U.S. Kids, Inc., 22 F.3d 816, 818-19 (8th Cir. 1994);
CPC-Rexcell, Inc., v. La Corona Foods, Inc., 912
F.2d 241, 243 (8th Cir. 1990).
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n1 Under Federal Rule of Civil Procedure 4(e)(1) and (h),
"unless otherwise provided by federal law," service of
process may be effected upon defendant "pursuant to the
law of the state in which the district court is
located." As the Lanham Act does not contain any provisions
providing for service of process, the Court looks
to the Missouri statutes providing for service of process.
See 4 Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 1075 at 480-81 (2d ed. 1987).
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In considering a motion under Rule 12(b)(2), the Court
views the facts in a light most favorable to plaintiff, the
party opposing the motion. Aaron Ferer & Sons Co.
v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th
Cir. 1977). However, the burden remains on plaintiff to
establish that jurisdiction exists. Bell Paper Box,
Inc., 22 F.3d at 818; Taylor v. Uniden Corp. of Am., 622
F. Supp. 1011, 1012 (E.D. Mo. 1985). Because
the Court is ruling on the submissions of the parties,
and is not conducting an evidentiary hearing on the
matter, plaintiff is required to [*1330] make
a prima facie showing of personal jurisdiction over the
defendant at this time. See Dakota Indus. v. Dakota Sportswear,
946 F.2d 1384, 1387 (8th Cir. 1991)
(citing CutCo Indus. Inc. v. Naughton, 806 F.2d 361, 365
(2d Cir. 1986)).
Viewed in the light most favorable to plaintiff, defendant's
contacts with Missouri are as follows. CyberGold
maintains an internet site on the World Wide Web. The
server for the website is presumably in Berkeley,
California. The website is at present continually accessible
to every internet-connected computer in Missouri
and the world. CyberGold's [**5] website can
be accessed at "www.cybergold.com" by any internet user.
It is estimated that there are 20 to 30 million users of
the internet. Inset Systems, Inc. v. Instruction Set,
Inc., 937 F. Supp. 161, 1996 U.S. Dist. LEXIS 7160 *3
(D. Conn. 1996). Today, there are around 9,400,000
computers that have present capability to access the internet.
American Civil Liberties Union v. Janet
Reno, 1996 U.S. Dist. LEXIS *23 (E.D. Pa. June 11, 1996)
(to be reported at 929 F. Supp. 824). The "internet"
is essentially a term that describes the interconnection
of all of these computers to each other. It is also
referred to as "the information superhighway." The connections
of these computers are completed through the
use of telephone lines, which electronically transmit
information from one computer to another. The internet
has created a tremendous global means of rapid exchange
of information by the government, academic
institutions, and commercial entities. Id. at **22-42
(describing the nature of the internet). There are at least
12,000 persons in Missouri who have internet access, although
the number may be much higher. (Pl. Mem. in
Opp'n to Def. Mot. to Dismiss at [**6] Pl.
Ex. A.) Any internet user can access any website, of which there
are presumably hundreds of thousands, by entering into
the computer the internet address they are seeking.
Internet users can also perform searches on the internet
to find websites within targeted areas of interest. Via
telephone lines, the user is connected to the website,
and the user can obtain any information that has been
posted at the website for the user. The user can also
interact with and send messages to that website. Upon
connecting to a website, the information is transmitted
electronically to the user's computer and quickly
appears on the users screen. This transmitted information
can easily be downloaded to a disk or sent to a
printer.
CyberGold's website, located at "www.cybergold.com," is
operational. The website provides information about
CyberGold's new upcoming service. The website explains
that the forthcoming service will maintain a mailing
list of internet users, presumably including many residents
of Missouri. An internet user who wants to be on
CyberGold's mailing list provides CyberGold with his or
her particular areas of interest. CyberGold will then
provide the user with a personal electronic [**7]
mailbox and will forward to the user advertisements that
match the users selected interests. n2 CyberGold plans
to provide users incentives for reading the
advertisements. CyberGold plans to charge advertisers
for access to the internet users on its mailing list.
CyberGold's actual service is not yet in operation.
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n2 CyberGold's website does not suggest that its service
will not be available to anyone who wants to
subscribe to the service. Rather, the service appears
to be available to any internet user.
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Plaintiff asserts that this website acts as a state-wide
advertisement for CyberGold's forthcoming internet
service. Plaintiff asserts that the website "invites Missourians
to put their names on CyberGold's mailing list and
get up-to-date information about the company and its forthcoming
Internet service." (Pl. Mem. in Opp'n to
Def. Mot. to Dismiss at 4.) Plaintiff also asserts that
through this website "CyberGold is also actively soliciting
advertising customers" from Missouri. (Id.)
Since CyberGold [**8] has set up its website,
the website has been accessed through internet users located
in Missouri at least 311 times, although 180 of the 311
times were by Maritz and its employees. CyberGold
attests that, other than maintaining the website "www.cybergold.com,"
it has no other contacts with the
state of Missouri.
Missouri's long-arm statute allows the exercise of jurisdiction
over non-residents to the extent permissible
under the due process [*1331] clause. See
Federal Deposit Ins. Corp. v. Malmo, 939 F.2d 535, 537
(8th Cir. 1991); State ex rel. Metal Serv. Ctr. v. Gaertner,
677 S.W.2d 325, 327 (Mo. banc 1984). The
Missouri long-arm statute, Mo. Rev. Stat. § 506.500,
provides, in relevant part:
Any person or firm, whether
or not a citizen or resident of this state, or any corporation, who in
person or through an agent
does any of the acts enumerated in this section, thereby submits such
person, firm, or corporation,
and, if an individual, his personal representative, to the jurisdiction
of
the courts of this state
as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this state . . .
(3) The commission of [**9] a tortious act within this state . . .
Id.
Plaintiff asserts first that defendant meets the "transaction
of any business" within the state test. Plaintiff
compares defendant's activities with those of the defendant
in Danforth v. Reader's Digest Ass'n, Inc., 527
S.W.2d 355 (Mo. banc 1975). In Danforth, the Missouri
supreme court held that the "transaction of any
business" requirement was satisfied where defendant conducted
promotional activities directed towards
recipients located in Missouri. Id. at 358. The defendant
in Danforth had mailed into Missouri, on two
occasions, thousands of solicitations for magazine subscriptions.
Id. at 356-57 n.2.
Missouri courts have not addressed the issue of whether
internet transmissions involving advertising meet the
"transaction of any business" test. Plaintiff's comparison
of the maintenance of a website to the active
solicitation through mass mailings is to some extent unsatisfactory
in resolving the question of whether
defendant's internet activities amount to the "transaction
of any business." As discussed below, there are
considerable differences in the two mediums of communication
[**10] and information exchange. Because
the Missouri courts construe the Missouri long-arm statute
to confer jurisdiction to the extent allowed by the
Due Process Clause, this Court will resolve the long-arm
statute question in the context of the due process
clause. See State ex rel. Metal Serv. Ctr., 677 S.W.2d
at 372.
It is unnecessary to decide whether defendant's activities
satisfy the "transaction of any business" test
because the Court concludes that defendant is amenable
to service under the "commission of a tortious act"
provision in Missouri's long-arm statute. Mo. Rev. Stat.
§ 506.500.1(3). Plaintiff argues that CyberGold is
infringing on Maritz's trademark in violation of the Lanham
Act, 15 U.S.C. § 1125(a), and that this infringement
is causing economic harm and injury to Maritz. Plaintiff
asserts that the injury from infringement is occurring in
Missouri, as Maritz is located in Missouri.
A violation of the Lanham Act is tortious in nature. See
Dakota Indus., 946 F.2d at 1388. In Peabody
Holding Co. Inc., v. Costain Group PL, 808 F. Supp. 1425
at 1433-34 (J. Limbaugh), and in May Dep't
Stores Co. v. Wilansky, 900 F. Supp. 1154 at 1159-60 (J.
[**11] Shaw), the courts determined that the
"commission of a tortious act" provision of Missouri's
long-arm statute permitted jurisdiction over a defendant
corporation where the sole basis for jurisdiction was
an extraterritorial act of tortious interference with a
contract which produced an effect in the State of Missouri.
Based on these decisions, the Court concludes
that Missouri's long-arm statute reaches the defendants,
even assuming CyberGold's allegedly infringing
activities were wholly outside of Missouri, because the
allegedly infringing activities have produced an effect in
Missouri as they have allegedly caused Maritz economic
injury.
Both Peabody Holding Co. Inc., 808 F. Supp. at 1436-38,
and May Dep't Stores Co., 900 F. Supp. at
1161, relied upon by plaintiffs, however, concluded that,
while Missouri's long-arm statute extended to the
defendants, exercising jurisdiction over the defendant
corporations would violate due process. In both cases,
the plaintiffs could point to no contacts other than the
impact of the defendants' alleged tortious activity
upon plaintiffs in the form of economic damages. Peabody
Holding Co., 808 F. Supp. at 1437; [**12]
[*1332] May Dep't Stores, 900 F. Supp. at
1161. Such limited contact alone, was "so attenuated that the
maintenance of a suit would offend traditional notions
of fair play and substantial justice." May Dep't Stores,
900 F. Supp. at 1161 (quoting Peabody Holding Co., 808
F. Supp. at 1437-38).
Thus, the Court must turn to the issue of whether the Court's
exercise of personal jurisdiction over defendant
CyberGold under the facts of this case would violate due
process. n3 Due process requires that there be
"minimum contacts" between the nonresident defendant and
the forum state before a court can exercise
personal jurisdiction over the defendant. See World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286,
291, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980). The Eighth
Circuit has articulated that
Sufficient contacts exist
when the defendant's conduct and connection with the forum state are
such that he should reasonably
anticipate being haled into court there, and when the maintenance
of the suit does not offend
traditional notions of fair play and substantial justice. In assessing
the
defendant's "reasonable
anticipation," there must be some act by which [**13] the defendant
purposefully avails itself
of the privilege of conducting activities within the forum State, thus
invoking the benefits of
its laws.
Soo Line R.R. Co. v. Hawker Siddeley Canada, Inc., 950
F.2d 526, 528-29 (8th Cir. 1991) (citations and
internal quotation marks omitted). The Eighth Circuit
has set forth a five-part test for measuring minimum
contacts:
(1) the nature and quality
of the contacts with the forum state;
(2) the quantity of those
contacts:
(3) the relation of the
cause of action to the contacts;
(4) the interest of the
forum state in providing a forum for its residents;
(5) the convenience of the
parties.
Bell Paper Box, Inc., 22 F.3d at 819 (citing Land-O-Nod
Co. v. Bassett Furniture Indus., Inc., 708 F.2d
1338, 1340 (8th Cir. 1983). The first three factors are
the most important. Id.
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n3 Even though plaintiff's claims are brought under a federal
statute and on non-diversity grounds, the Court
employs the minimum contacts analysis under the due process
clause, albeit under the fifth amendment
instead of the fourteenth amendment. See Dakota Indus.,
946 F.2d at 1389 n.2.
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Whether maintaining a website, such as the one maintained
by CyberGold, which can be accessed by any
internet user, and which appears to be maintained for
the purpose of, and in anticipation of, being accessed
and used by any and all internet users, including those
residing in Missouri, amounts to promotional activities
or active solicitations such as to provide the minimum
contacts necessary for exercising personal jurisdiction
over a non-resident corporation, presents an issue of
first impression to this Court. The internet, a new and
rapidly developing means of mass communication and information
exchange, raises difficult questions regarding
the scope of court's personal jurisdiction in the context
of due process jurisprudence
Because the internet is an entirely new means of information
exchange, analogies to cases involving the use of
mail and telephone are less than satisfactory in determining
whether defendant has "purposefully availed" itself
to this forum. Unlike use of the mail, the internet, with
its electronic mail, is a tremendously more efficient,
quicker, and vast means of reaching a global audience.
By simply setting up, and posting information at, a
website in the [**15] form of an advertisement
or solicitation, one has done everything necessary to reach
the global internet audience.
A company's establishment of a telephone number, such as
an 800 number, is not as efficient, quick, or easy
way to reach the global audience that the internet has
the capability of reaching. While the internet does
operate via telephone communications, and requires users
to place a "call" to a website via the user's
computer, a telephone number still requires a print media
to advertise that telephone number. Such media
would likely require the employment of phone books, newspapers,
magazines, and television. Even then, an
800 number provides [*1333] a less rapid and
more limited means of information exchange than a computer
with information downloading and printing capabilities.
With a website, one need only post information at the
website. Any internet user can perform a search for selected
terms or words and obtain a list of website
addresses that contain such terms or words. The user can
then access any of those websites.
In analyzing the first factor articulated by the Eighth
Circuit--the Court finds that the nature and quality of
contacts provided by the maintenance of [**16]
a website on the internet are clearly of a different nature
and quality than other means of contact with a forum such
as the mass mailing of solicitations into a forum,
see, e.g., Danforth, 527 S.W.2d at 358, or that of advertising
an 800 number in a national publication, see,
e.g., Dart Int'l, Inc., v. Interactive Target Sys., Inc.,
877 F. Supp. 541, 543-45 (D. Colo. 1995);
Composite Marine Propellers, Inc., v. Vanderwoude, 741
F. Supp. 873, 877-78 (D.Kan. 1990).
CyberGold's posting of information about its new, up-coming
service through a website seeks to develop a
mailing list of internet users, as such users are essential
to the success of its service. Clearly, CyberGold has
obtained the website for the purpose of, and in anticipation
that, internet users, searching the internet for
websites, will access CyberGold's website and eventually
sign up on CyberGold's mailing list. Although
CyberGold characterizes its activity as merely maintaining
a "passive website," its intent is to reach all internet
users, regardless of geographic location. Defendant's
characterization of its activity as passive is not
completely accurate. By analogy, if a Missouri [**17]
resident would mail a letter to CyberGold in California
requesting information from CyberGold regarding its service,
CyberGold would have the option as to whether to
mail information to the Missouri resident and would have
to take some active measures to respond to the mail.
With CyberGold's website, CyberGold automatically and
indiscriminately responds to each and every internet
user who accesses its website. Through its website, CyberGold
has consciously decided to transmit advertising
information to all internet users, knowing that such information
will be transmitted globally. Thus, CyberGold's
contacts are of such a quality and nature, albeit a very
new quality and nature for personal jurisdiction
jurisprudence, that they favor the exercise of personal
jurisdiction over defendant.
As to the second factor--the quantity of contacts--the
Court finds that defendant has transmitted
information into Missouri regarding its services approximately
131 times. n4 The information transmitted is
clearly intended as a promotion of CyberGold's upcoming
service and a solicitation for internet users,
CyberGold's potential customers. This factor suggests
that defendant is purposefully availing [**18] itself to
the privilege of conducting activities in Missouri.
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n4 The Court does not consider, for purposes of establishing
personal jurisdiction, the 180 times that plaintiff
accessed defendant's website. If such contacts were to
be considered, a plaintiff could always try to create
personal jurisdiction. Further, in the context of this
case, plaintiff could not argue that it is in any way being
damaged by CyberGold's sending of an advertisement or
solicitation of its allegedly infringing service to Maritz.
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As to the third factor articulated by the Eighth Circuit,
the litigation in this action against CyberGold results
from alleged injuries that, at least in part, arise out
of or relate to CyberGold's website and the information
posted at the website. See Burger King Corp. v. Rudzewicz,
471 U.S. 462, 472-73, 85 L. Ed. 2d 528, 105
S. Ct. 2174 (1985) (discussing requirements for specific
jurisdiction). The website invites internet users to
use CyberGold's new service when it becomes operational.
This [**19] service and the promotional efforts
that CyberGold is employing by posting the information
its website are allegedly infringing on plaintiff's alleged
trademark. While CyberGold has not yet set up its service
of sending advertisements to internet users on its
mailing list, CyberGold's acts of developing a mailing
list through its acceptance of addresses on its website are
also part of the allegedly infringing activity about which
plaintiff complains.
Whether sufficient minimum contacts to obtain personal
jurisdiction over a defendant can be established solely
through the use of [*1334] computers and electronic
communications is a new issue under due process
jurisprudence. Courts addressing the issue have recognized
that such communications via computer are of a
different nature. In California Software Inc. v. Reliability
Research, Inc., 631 F. Supp. 1356, 1363 (C.D.
Cal. 1986), the court, in addressing whether a defendant's
communication by posting allegedly false
statements about plaintiff on an interstate computer network
could create personal jurisdiction, stated:
Not only did defendants
act intentionally but, by communicating through the [computer] network,
they made [**20]
their messages available to an audience wider than those requesting the
information . . . Through
the use of computers, corporations can now transact business and
communicate with individuals
in several states simultaneously. Unlike communication by mail or
telephone, message sent
through computers are available to the recipient and anyone else who
may be watching. Thus, while
modern technology has made nationwide commercial transactions
simpler and more feasible,
even for small businesses, it must broaden correspondingly the
permissible scope of jurisdiction
exercisable by the courts.
Id. Similarly, in Inset Systems, Inc., 937 F. Supp. 161,
1996 U.S. Dist. LEXIS 7160 *11, the district court
found that personal jurisdiction existed over a defendant
corporation that made its toll-free 800 number
available over the internet to the residents of the forum
state. In addressing the issue of "purposeful
availment," the Court stated:
[Defendant] has directed
its advertising activities via the Internet and its toll-free number toward
not only the state of Connecticut,
but to all states. The Internet as well as toll-free numbers are
designed to communicate
with people and [**21] their businesses in every state. Advertisement
on the Internet can reach
as many as 10,000 Internet users within Connecticut alone. Further,
once posted on the Internet,
unlike television and radio advertising, the advertisement is available
continuously to any Internet
user. [Defendant] therefore, purposefully availed itself of the privilege
of doing business within
Connecticut.
Id.; see also Compuserve, Inc. v. Patterson, 89 F.3d 1257,
1996 WL 405356 *4 (6th Cir. July 22, 1996)
(suggesting that the effect of the internet on commerce,
modern transportation, and communication requires
a reconsideration of the scope of the personal jurisdictional
reach of courts) Similarly, the Court concludes
that defendant CyberGold, through its internet activities,
has purposefully availed itself of the privilege of
doing business with this forum such that it could reasonably
anticipate the possibility of being haled into court
here.
The Court also concludes that traditional notions of "fair
play and substantial justice" do not dictate against
exercising personal jurisdiction over defendant in Missouri.
See Burger King Corp., 471 U.S. at 476-78.
Considerations include [**22] the burden on
defendant, the interest in the forum state in adjudicating type
dispute, the plaintiff's interest in obtaining convenient
and effective relief, the interstate judicial system's
interest in obtaining the most efficient resolution of
controversies, and the shared interest of the several
States in furthering fundamental substantive social policies."
Id. at 477 (citing World-Wide Volkswagen
Corp., 444 U.S. at 292. The State of Missouri has an interest
in resolving this case and determining whether
a Missouri corporation's trademark is being infringed
in violation of a federal statute. Plaintiff likewise has a
strong interest in adjudicating this action in Missouri.
Defendant, who has availed itself to this forum has not
shown that it is so burdened by defending itself in this
forum that traditional notions of fair play and
substantial justice are implicated.
Defendant's argument that venue is improper must also be
denied. Because the Court has concluded it has
personal jurisdiction over defendant, venue is proper
in this judicial district. See 28 U.S.C. § 1391(c).
II. Subject Matter Jurisdiction
Defendant has moved to dismiss plaintiff's [**23]
Lanham Act claim for lack of subject matter jurisdiction.
Defendant points to allegations in plaintiff's first amended
complaint that CyberGold's advertising services are
not yet [*1335] available or operational.
Defendant also states that the complaint does not allege that
CyberGold has begun rendering any internet advertising
services regarding its new service, or that CyberGold
has received any payment from prospective advertisers.
Defendant argues that because CyberGold has not
yet actually rendered, sold, or transported its goods
or services in commerce, plaintiff's Lanham Act claim must
be dismissed. Defendant also argues that plaintiff's service,
under the name of GoldMail, is not yet operational,
but is only in the process of soliciting and enrolling
customers to its service. Defendant essentially asserts that
plaintiff's Lanham Act claim is premature, as it cannot
meet the "use in commerce" test required under the
Lanham Act, and that, therefore, it must be dismissed
for lack of subject matter jurisdiction.
The Lanham Act provides:
Any person who, in connection
with any goods or services . . . uses in commerce any word, term,
name, symbol, or device,
or any combination [**24] thereof, or any false designation
of origin,
false or misleading description
of fact, or false or misleading representation of fact, which--
(A) is likely to cause confusion, or to cause mistake, or to deceive as
to the affiliation,
connection, or association of such person with another person, or as to
the origin,
sponsorship, or approval of his or her goods, services, or commercial activities
by
another person . . .
shall be liable in a civil
action by any person who believes that he or she is or is likely to be
damaged by such act.
15 U.S.C. § 1125(a)(1). Defendant argues that because
in has not "used in commerce" any of the acts
enumerated in the statute, no claim arises under the Lanham
Act and thus, the Court is without jurisdiction.
Defendant cites to Lang v. Pacific Marine and Supply Co.,
Ltd., 895 F.2d 761, 765-66 (Fed. Cir. 1990), in
which the court held that because defendant's ship, which
contained an allegedly infringing name, was still
under construction in drydock and would not be ready for
nine months, the ship had not entered into
commerce and thus, no Lanham Act claim was present. Similarly,
in Cognitest Corp. v. The Riverside
[**25] Publishing Co., 1995 U.S. Dist. LEXIS
8721, 36 U.S.P.Q.2D (BNA) 1363, 1366 (N.D. Ill. 1995),
no Lanham Act claim could be sustained where plaintiff
made only conclusory allegations that defendant had
presented its infringing program to the public at a meeting,
because the plaintiff never alleged that "the
defendant's product was never used in commerce." Id.
Although defendant's internet service is not operational
yet, plaintiff's Lanham Act claim is not necessarily
premature. A Lanham Act claim can exist even before a
defendant actually opens the business, so long as the
acts of defendant are imminent and impending. See Essie
Cosmetics, Ltd. v. Dae Do Int'l, Ltd., 808 F.
Supp. 952, 957 (E.D.N.Y. 1992) (citing J. Thomas McCarthy,
2 Trademarks and Unfair Competition, §
30.5 at 470 (2d ed. 1984). In Bertolli USA, Inc. v. Filippo
Bertolli Fine Foods, Ltd., 662 F. Supp. 203, 205
(S.D.N.Y. 1987), the court held that plaintiff's Lanham
Act claim was not premature where defendant had
printed infringing labels and had shipped one bottle to
a potential distributor.
Here, defendant clearly has not actually commenced its
service of sending advertisements [**26] over the
internet to internet users on its mailing list. However,
defendant does, as discussed above, maintain a website
from which it sends out information regarding its upcoming
services. The information is an advertisement of its
services and solicits names and addresses of internet
users who are potential users on its mailing list.
Defendant is using the internet to develop an indispensable
part of its advertising service--its mailing list.
Thus, because of these activities, the Court concludes
that the "uses in commerce" test has been satisfied.
See Lobo Enters. v. Tunnel, Inc., 822 F.2d 331, 333 (2d
Cir. 1987) ("in commerce" requirement satisfied
where "service mark has been advertised significantly
in travel guides or publications having interstate
circulation"); see also Jerome Gilson, 1 Trademark Protection
and Practice § 5.11[2] at 5-234 (1996)
("Because Internet communications transmit instantaneously
on a worldwide basis, there is little question that
the 'in commerce' requirement would be met in a typical
Internet [*1336] message, be it trademark
infringement or false advertising"). The Court also concludes
that it is imminent and impending that [**27]
defendant will be fully operating its internet advertising
service in the near future. Both developing a mailing
list and obtaining advertisers are integral to defendant's
business. Plaintiff need not wait until both are fully
established before it can maintain an action for violation
of the Lanham Act.
III. Defendant's Motion to Stay
CyberGold has moved to stay the proceedings. As grounds
for a stay, CyberGold states that, on October 1,
1995, CyberGold filed an intent-to-use trademark application
for use of the mark "CYBERGOLD" with the United
States Patent and Trademark Office (the PTO) pursuant
to 15 U.S.C. § 1051(b) of the Lanham Act and that,
on August 5, 1996, CyberGold's pending federal trademark
was accepted for registration and approved for
publication in the Official Gazette for opposition purposes
by the PTO pursuant to 15 U.S.C. § 1062(a). n5
CyberGold asserts that because it filed its intent-to-use
application prior to any alleged activities of plaintiff
and its use of its GOLDMAIL mark, there is a high likelihood
that the opposition to CyberGold's pending federal
trademark will be unsuccessful and that CyberGold's CYBERGOLD
mark will be approved for [**28]
registration by the PTO under 15 U.S.C. § 1063.
- - - - - - - - - - - - - - - - - -Footnotes- - - - -
- - - - - - - - - - - - -
n5 CyberGold has apparently filed an amendment to its application
for registration of its CYBERGOLD mark.
(See Def. Mem. in Support of Mot. to Stay Ex. A.) Upon
the filing of an amendment to an application for
registration, the application for registration of the
mark is subject to a reexamination and possible republication
in the Official Gazette for opposition purposes. See 15
U.S.C. § 1062(a)-(b).
- - - - - - - - - - - - - - - - -End Footnotes- - - -
- - - - - - - - - - - - -
If CyberGold's mark is eventually registered upon the principal
register, CyberGold will be issued a certificate of
registration. 15 U.S.C. § 1057(a). Such certificate
will "be prima facie evidence of the validity of the registered
mark . . . and of the registrant's exclusive right to
use the registered mark in commerce on or in connection
with the goods or services specified in the certificate.
15 U.S.C. § 1057(b). If a registration certificate is
issued on the principal register, the person holding the
registration certificate for the [**29] mark has a
nationwide right of priority in using such mark, dating
back to the date the person filed its application to
register the mark. 15 U.S.C. § 1057(c). Such right
of priority exists as to all persons except those who, prior
to the date such person filed the application to register,
have used the mark or have filed an application to
register the mark which is pending or has been registered.
Id.
Because of the pending registration of its CYBERGOLD trademark,
CyberGold argues that this Court should stay
its proceedings and await the outcome of any opposition
proceedings regarding its recently published mark.
CyberGold argues that the outcome of the PTO proceedings
will determine, at least through prima facie
evidence, whether CyberGold has priority in the use of
its CYBERGOLD mark, and that the outcome of the PTO
proceedings will affect whether plaintiff will be able
to succeed in its Lanham Act claim against CyberGold.
Under the doctrine of primary jurisdiction, a court can
stay a proceeding to allow an administrative agency to
first make a determination as to an issue important to
the court proceeding. The doctrine "is concerned with
promoting the proper relationships [**30]
between the courts and administrative agencies charged with
regulatory duties." U.S. v. Western Pac. R.R. Co., 352
U.S. 59, 63, 1 L. Ed. 2d 126, 77 S. Ct. 161 (1956).
The doctrine "comes into play whenever enforcement of
[a] claim requires the resolution of issues which,
under a regulatory scheme, have been placed within the
special competence of an administrative body; in
such a case, the judicial process is suspended pending
referral of such issues to the administrative body for its
views." Id. at 64. Several considerations drive the doctrine
of primary jurisdiction and whether a court should
stay its proceedings and defer to an administrative agency:
(1) whether the relevant administrative agency
has exclusive primary jurisdiction; (2) whether awaiting
the decision of issues by the administrative agency will
be of importance in resolving [*1337] issues
in the litigation before the district court; (3) whether the
administrative agency has specialized expertise and experience
and the issues in dispute are not within the
conventional experience of judges; and (4) whether deferring
to an administrative agency is likely to prolong
the dispute rather than lead to a judicially [**31]
economical disposition. See American Bakeries Co. v.
Pan-O-Gold Baking Co., 650 F. Supp. 563, 565-68 (D. Minn.
1986); The Driving Force, Inc. v.
Manpower, Inc., 498 F. Supp. 21, 24-26 (E.D. Pa. 1980);
see also Southwestern Bell Tel. Co. v. Allnet
Communications, Serv., 789 F. Supp. 302, 304-05 (E.D.
Mo. 1992).
Consideration of these factors leads to the conclusion
that this action should not be stayed for initial
resolution of issues by the PTO. First, this is an action
for under 28 U.S.C. § 1125(a) of the Lanham Act for
infringement and unfair competition. The PTO does not
have exclusive jurisdiction over such claims and
whether to stay this action is discretionary. See American
Bakeries Co., 650 F. Supp. at 568. A PTO
decision as to whether to issue a registered trademark
to CyberGold would not be determinative of any issues
in this Court's proceeding. While a PTO decision to issue
a registered trademark would be prima facie evidence
of CyberGold's right of priority to use the CYBERGOLD
mark, it would not be conclusive evidence. Id. at 567
n.3. While such a determination would be "a material aid
in ultimately deciding the issues [**32] presented
before the court" C-Cure Chem. Co., Inc., v. Secure Adhesives
Corp., 571 F. Supp. 808, 823 (W.D.N.Y.
1983), it would not be dispositive of plaintiff's infringement
and unfair competition claim brought under 28
U.S.C. § 1125(a).
While the PTO clearly has specialized expertise and experience
in the area of registration of trademarks, the
ultimate issue which this Court must decide is whether
a violation of 28 U.S.C. § 1125(a) has occurred. The
PTO cannot resolve such issues. Rather, the district courts
are vested with jurisdiction to hear such claims
and the issues involved in such claims are within "the
conventional competence of courts." Nader v.
Allegheny Airlines Inc., 426 U.S. 290, 305-06, 48 L. Ed.
2d 643, 96 S. Ct. 1978 (1976).
Finally, considerations of judicial economy suggest that
stay is inappropriate at the present time. While
plaintiff has indicated that it expects to file opposition
to CyberGold's pending registration in the PTO, such
proceedings have not yet commenced, as CyberGold's pending
federal trademark was only recently accepted
for registration and approved for publication in the Official
Gazette for opposition purposes. Also, [**33]
because it appears that CyberGold is amending its application
for its federal trademark, it appears likely that a
considerable amount of time may pass before any determination
is made by the PTO whether to issue a
trademark registration to CyberGold. Thus, a stay to allow
the PTO to make its determinations would cause
considerable delay in these proceedings, yet would not
resolve the pending dispute between the parties. See
Goya Foods, Inc., v. Tropicana Prods., Inc., 846 F.2d
848, 851-54 (2d Cir. 1988). The Court will deny
defendant's motion to stay.
Accordingly,
IT IS HEREBY ORDERED that the motion of defendant to dismiss
for lack of personal jurisdiction and improper
venue [document # 18] is DENIED.
IT IS FURTHER ORDERED that the motion of defendant to dismiss
for failure to state a claim and lack of
subject matter jurisdiction [document # 23] is DENIED.
IT IS FURTHER ORDERED that the motion of defendant to stay the proceedings [document # 24] is DENIED.
Dated this 19 day of August, 1996.
E. Richard Webber
UNITED STATES DISTRICT JUDGE