Summary
In Caterpillar, the defendants maintained an Internet website that included a searchable listing of subscribing dealers who sold, among other things, heavy equipment.
Summary of this case from Prosperity Bancshares, Inc. v. Town & Country Fin. Corp.Opinion
Civil Action No. 00-1111
February 13, 2002
FINAL JUDGMENT
I. INTRODUCTION
Plaintiff, Caterpillar, Inc. ("Caterpillar"), filed this action on March 21, 2000, against defendant, TeleScan Technologies, L.L.C. ("TeleScan") to prevent TeleScan's use of the CATERPILLAR and CAT word and design marks as trademarks and domain names in connection with heavy equipment and related services. TeleScan's counsel withdrew representation in this matter. Since a corporation cannot appear in court other than through its attorneys, Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1427 (7th Cir. 1985), the Court directed TeleScan to retain substitute counsel. TeleScan, however, has failed to do so. On January 16, 2001, the Court issued an entry of default. Pursuant to that entry of default, the Court enters the following:
II. FINDINGS OF FACT
Caterpillar has for many years been a globally known, multi-national manufacturer and distributor of large, earthmoving, mining and construction equipment ("heavy equipment") as well as a provider of repair and maintenance services for that equipment. Complaint, ¶ 4. Over a period of many years, Caterpillar has generated and maintained substantial valuable goodwill in its corporate operations and its trademarks. This goodwill has been generated and sustained through Caterpillar's many business operations. Complaint, ¶ 5.
Since long prior to the acts of TeleScan that form the subject of this suit, Caterpillar adopted and has continuously used the inherently distinctive marks CATERPILLAR and CAT, and the design marks CATERPILLAR and CAT (the "Caterpillar Marks") in connection with its heavy equipment goods and services. Complaint, ¶ 6. Caterpillar owns numerous federal registrations for the Caterpillar Marks, including the following:
Mark Goods/Services First Use in Reg. No. Registration Date Commerce Caterpillar Tractors, tractor engines, 9/00/04 277,417 11/11/30 track links, track shoes, grousers, grease guns, agricultural machinery tools and equipment, road construction and maintenance machinery tools and equipment, and the parts for all said goods. Caterpillar Tractors adapted to be 9/00/04 345,499 4/27/37 employed in farming operations, road building, mining, logging, earth moving, hauling and for other industrial and agricultural purposes. Caterpillar Dump wagons, wheel 00/00/41 506,258 2/1/49 tractor-sump-wagon combinations, and structural parts for such products. Caterpillar diesel engines for marine 1/00/39 531,626 10/10/50 purposes; cable-control units for controlling cable actuated equipment associated with tractors and the like Caterpillar Tires 9/30/70 955,141 3/13/73 Caterpillar Lift trucks and engines, 9/00/70 985,439 6/4/74 (Design) attachments, and parts. CAT Maintenance and repair 10/20/88 1,579,438 1/23/90 (Design) services in the field of internal combustion engines, vehicles and power equipment, namely, trucks, tractors, engines, earthmovmg equipment, material handling equipment, paving equipment, agricultural equipment, generators, and control units for the aforementioned Caterpillar Machinery for earth moving, 10/20/88 2,140,605 3/3/98 (Design) earth conditioning and material handling, namely, loaders and engines therefor, and parts for vehicle and internal combustion engines. CAT Machinery for earth moving, 10/20/88 2,140,606 3/3/98 (Design) earth conditioning and material handling namely, loaders and engines therefor, and parts for vehicle and internal combustion engines; vehicles for earth and material hauling and handling, namely, tractors and engines therefor These registrations are valid and subsisting, are owned by Caterpillar, and Registration numbers 277,417, 345,499, 506,258, 531,626, 955,141, 985,439, and 1,579, 438 have become incontestable pursuant to 15 U.S.C. § 1065 and 1115(b). Complaint, ¶ 8-9.Caterpillar has spent many millions of dollars advertising its heavy equipment goods and services under the Caterpillar Marks through a wide variety of channels of wade, including the Internet. Caterpillar has sold hundreds of millions of dollars worth of Caterpillar branded heavy equipment and services through a network of licensed, authorized dealers. These licensed dealers sell both used and new Caterpillar heavy equipment. Complaint, ¶ 10. Caterpillar's extensive advertising and sales have resulted in the Caterpillar Marks becoming some of the most recognized and famous of marks in the United States and represent extraordinarily valuable goodwill owned by Caterpillar. Complaint, ¶ 11; see Stephen P. Smith, America's Greatest Brands: An Insight Into 80 of America's Strongest Brands (2001).
To sell and promote its heavy equipment, Caterpillar owns many domain names and has active web sites at the domain names www.cat.com and www.caterpillar.com ("Caterpillar web sites"). The Caterpillar web sites represent a considerable investment by Caterpillar and form an important part of its marketing strategy. They provide information regarding Caterpillar's goods and services, including new and used equipment sales and rentals. The sites also include a Dealer Locator, which allows consumers to search for a dealership located in a certain area and to search for dealers in their area who stock a specific piece of Caterpillar equipment. Complaint, Exhibit F.
Caterpillar selected, registered, and uses the domain names www.cat.com and www.caterpillar.com because of the fame and goodwill associated with its Caterpillar Marks and the assumptions that internet users make about domain names in searching for particular branded goods, setvices or web sites. Internet users generally will assume that a domain name that consists of a famous mark is associated with or sponsored by the owner of that mark. Ty, Inc. v. Agnes M., 2001 U.S. Dist. Lexis 18852 at *20-21 (N.D. Ill. Nov. 13, 2001); Ford Motor Co. v. Ford Financial Solutions, 103 F. Supp.2d 1126, 1128 (N.D. Iowa 2000); Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1055 (9th Cir. 1999). Based upon this assumption, some internet users will begin their search for a web site by typing in a famous trademark or company name followed by a top-level domain, like ".com." internet users also may type in famous trademarks or company names plus some descriptive variant like "products" or "equipment," and then followed by a top-level domain. Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1045 (9th Cir. 1999). For example, users seeking the web site for Ford Motor Company may type in the domain name www.Ford.com or www.Fordtrucks.com. Consumers will use this method to find web sites because they believe that the owner of ford.com or fordtrucks.com is associated with Ford Motor Company, the original equipment manufacturer.
Caterpillar claims that several domain names registered by TeleScan infringe upon Caterpillar's rights in the Caterpillar Marks. TeleScan has registered over 50 domain names that contain famous marks of various companies like John Deere, General Motors, Toyota, and Peterbilt. Complaint, ¶ 20. Among those registrations are six domain names that are comprised of the Caterpillar Marks: catusedequipment.comn; catnewequipment.com caterpillarusedequip.com; caterpillarnewequip.com caterpillarequipment.com caterpillardealers.com (collectively, the "disputed domain names"). Complaint, ¶ 12. TeleScan registered the disputed domain names without Caterpillars consent and with full knowledge of Caterpillar's long prior use and ownership of the Caterpillar Marks. Complaint, ¶ 15 and 18. Four of these disputed domain names resolved to web pages that welcomed visitors to the "Caterpillar Used Equipment Website," the "Caterpillar New Equipment Website," the "Caterpillar Equipment Website," and the "Caterpillar Dealers Website" ("disputed web sites"). Each of these pages also purported to be "A Listing Service for Caterpillar Equipment." Complaint, ¶ 13.
TeleScan intends to use the disputed domain names to promote its services and direct traffic to its web site at www.heavyscan.com web site that will contain a listing of the heavy equipment inventories of subscribing dealers. Complaint, ¶ 12. In a manner similar to Caterpillar's online Dealer Locator, consumers could search the listings by dealer. Consumers also could search the listings by company to locate dealers who sell new and used equipment manufactured by that desired company. Complaint, ¶ 12-13. By using the Caterpillar Marks in this way, TeleScan is trading upon Caterpillar's goodwill and reputation and giving the disputed web sites a notoriety and salability they might not otherwise obtain.
Telescan already maintains a web site at truckscan.com that has a searchable listing of new and used trucks. As in the current matter, Telescan linked a number of domain names that contained famous third party trademarks to the truckscan.com web site. This practice was challenged in PACCAR, Inc. v. TeleScan Technologies, L.L.C., 115 F. Supp.2d 772, 780 (E.D. Mich. 2000), and the court found that TeleScan's use of Paccar's domain names that contained famous marks to direct traffic to the truckscan.com web site constituted trademark infringement.
III. CONCLUSIONS OF LAW
Pursuant to 15 U.S.C. § 1065 and 1115, Caterpillar's registrations and use of its Caterpillar Marks confirm the validity of Caterpillar's exclusive right to use the Caterpillar Marks in connection with the goods and services specified in those registrations. This exclusive right empowers Caterpillar to enjoin any third party use of a mark that is likely to cause confusion with the Caterpillar Marks. 15 U.S.C. § 1114 and 1116.
The disputed domain names are likely to cause consumer confusion especially considering that they contain some of the most famous marks in America — the Caterpillar marks — and that TeleScan intends to use them to sell actual Caterpillar equipment. See Trans Union LLC v. Credit Research, Inc., 142 F. Supp.2d 1029, 1042 (N.D. Ill. 2001); Paccar, 115 F. Supp.2d at 778. This situation is aggravated by how people use the Internet. Many people may assume that the disputed domain names are sponsored by or associated with Caterpillar because they contain the Caterpillar Marks. Ty, Inc. v. Agnes M., 2001 U.S. Dist. Lexis 18852 at *20-21 (N.D. Ill. Nov. 13, 2001); Ford Motor Co. v. Ford Financial Solutions, 103 F. Supp.2d 1126, 1128 (N.D. Iowa 2000); Brookfield Communications, Inc. v. West Coast Entertainment Corp, 174 F.3d 1036, 1055 (9th Cir. 1999). The fact that the domain names also contain a term that describes the types of products Caterpillar sells will not change this assumption. TeleScan exploits this incorrect assumption and has increased the likelihood that consumers will believe the web sites are associated with Caterpillar by welcoming visitors to the web sites with phrases such as "Caterpillar Used Equipment Website" and by purporting to be "A Listing Service for Caterpillar."
In sum, visitors looking at the disputed web sites may mistakenly believe that the web sites are affiliated with Caterpillar when they see the Caterpillar Marks in the domain names and on the sites and also see a listing of Caterpillar products. By using the Caterpillar Marks in this way, TeleScan is trading upon the goodwill and fame associated with the Caterpillar Marks for its own profit. This constitutes trademark infringement. At least one court has already ruled that TeleScan's use of third party marks in domain names constitutes trademark infringement. In Paccar v. TeleScan, Inc., the Eastern District of Michigan ruled that TeleScan's use of Paccar's marks in several different domain names for web sites that sell Paccar products constituted trademark infringement. 115 F. Supp.2d 772 (E.D. Mich. 2000). Furthermore, the purpose for which TeleScan registered the disputed domain names and the manner in which TeleScan intends to use the disputed domain names and the Caterpillar Marks also constitutes bad faith. Due to this finding of bad faith which makes this an exceptional case under the Lanham Act, Caterpillar is entitled to its attorney fees related to this action. Sanderson v. Spectrum Labs, Inc., 248 F.3d 1159 (7th Cir. 2000); BASF Corp. v. Old World Trading Co., 41 F.3d 1081, 1099 (7th Cir. 1994).
The fact that TeleScan has placed disclaimers on the web sites does not alleviate the likelihood that consumers will believe that the web sites are associated with Caterpillar. First, disclaimers normally are ineffective. Simon Prop. Group, L.P. v. MySimon, Inc., 2001 U.S. Dist. LEXIS 852 at *63-64 (N.D. Ill. Jan. 24, 2001). Second, even if the disclaimers are effective, they will not cure the problem of initial interest confusion. Id. Internet based initial interest confusion "occurs when customers seeking a particular web site are diverted by allegedly infringing domain names and metatags to a competing web site and then realize that the site they have accessed is not the one they were looking for, but nevertheless decide to use the offerings of the infringing site." Trans Union, 142 F. Supp. 2d at 1043-44. Thus, if a consumer logs onto the disputed web sites, he or she may eventually realize that the site is not sponsored by Caterpillar, and yet still purchase Caterpillar heavy equipment through the unauthorized dealers listed at the heavyscan.com web site. This type of initial interest confusion is a violation of Caterpillar's rights in the Caterpillar Marks. Paccar v. TeleScan, 115 F. Supp.2d 772, 778 (E.D. Mich. 2000) ("A disclaimer that purports to disavow association with the trademark owner after the consumer has reached the site comes too late; the customer has already been misdirected. This problem, denoted as `initial interest confusion' . . . is a form of confusion protected by the Lanham Act.")
TeleScan's use of the Caterpillar Marks also runs afoul of the Anticybersquatting Consumer Protection Act, which imposes liability upon a person who (1) uses a domain name that is identical or confusingly similar to a famous or distinctive mark and (2) uses that domain name a bad faith intent to profit 15 U.S.C. § 1125(1)(A). TeleScan fulfills both prongs of this test. First, the Caterpillar Marks are among the most famous marks currently used in United States commerce, and the disputed domain names are confusingly similar to the Caterpillar Marks. Second, TeleScan did have a bad faith intent to profit from its use of the Caterpillar marks. Pursuant to 15 U.S.C. § 1125(d)(1)(B)(i)(VIII), this finding of bad faith can be inferred from the fact that TeleScan has no trademark rights to the Caterpillar Marks and that the disputed domain names were intended to divert traffic to TeleScan's www.heavyscan.com web site. Even more telling is the fact that TeleScan not only had registered multiple domain names which contain famous marks, but that at least one court had already found TeleScan's registration of domain names containing famous marks violated that Lanham Act. Paccar it TeleScan, 115 F. Supp. 772 (E.D. Mich. 2000); see Nav-Aids Ltd. v. Nav-Aids USA, Inc., 2001 U.S. Dist. LEXIS 17619 at *25-25 (N.D. Ill. October 24, 2001) (finding that the registration of a domain name similar to plaintiff's mark was attempt to divert traffic and thus an indication of bad faith intent); 15 U.S.C. § 1125(d)(1)(B)(i)(VIII) (listing registration of multiple domain names which the person knows are confusingly similar to other's marks as a factor favoring a finding of bad faith); Shields v. Zuccarini, 254 F.3d 476, 485 (4th Cir. 2001). Therefore, TeleScan's registration and use of the disputed domain names violates the Anticybersquatting Consumer Protection Act.
TeleScan's use of the Caterpillar Marks also dilutes the distinctive quality of the Caterpillar Marks. Dilution is "the lessening of the capacity of a famous mark to identify and distinguish goods or services." 15 U.S.C. § 1125; See Agnes M., 2001 U.S. Dist. LEXIS at *45 Dilution occurs in cyberspace when a defendant's use "lessens the capacity of [the plaintiff to identify and distinguish its goods and services by means of the Internet." Ty, Inc. v. Perryman, 2001 U.S. Dist. LEXIS 10303, 2001 WL 826893, at *13. In the Seventh Circuit, it is unnecessary for the plaintiff to demonstrate actual economic harm, only a "likelihood of dilution based on the renown of its trademarks and the similarity between those marks and the allegedly diluting uses" of the defendant. Agnes M. Ltd., 2001 U.S. Dist. LEXIS at *45. A defendant's use of plaintiff's marks as a domain name dilutes those marks because they diminish plaintiff's capacity to "identify and distinguish its goods by means of the Internet." Id. at *46; Paccar v. TeleScan, 115 F. Supp.2d 772, 779-80 (E.D. Mich. 2000) (holding that TeleScan's use of trademarks in domain names "`dilutes' the trademark by placing the trademark owner `at the mercy' of the web site operator"). In this case, TeleScan's use of the Caterpillar Marks in the disputed domain names lessens Caterpillar's ability to identify its goods and services via the Internet.
The fair use doctrine, which renders lawful the merely descriptive use of others' marks, does not insulate TeleScan from liability. Just as an automobile repair shop may, without first obtaining authorization, advertise that it "repairs [plaintiff's] cars, [it] may not do so in a manner which is likely to suggest to his prospective customers that his is part of [plaintiff's] organization of franchised dealers and repairmen." Volkswagenwerk Aktiengesellschaft v. Church, 411 F.2d 350, 352 (9th Cir. 1969). Here, TeleScan's use of the Caterpillar Marks in the disputed domain names as well as on its associated web pages creates an impression that TeleScan is related to or sponsored by Caterpillar, and thus confuses the public about the source or sponsorship of TeleScan's goods and services. Paccar v. TeleScan, 115 F. Supp.2d 772, 779 (E.D. Mich. 2000). This is the very type of confusion the Lanham Act is meant to prevent, and the very type of use that lies outside the umbrella of the fair use doctrine.
Nor is the first-sale doctrine a valid defense. The first-sale doctrine protects a trademarked-product reseller from infringement liability when use of the trademark is only "incidental to permissible resale and accompanying advertisement of trademarked products," but the doctrine is not available to uses that "create confusion beyond mere resale . . ." Enesco Corp. v. K's Merchandise Mart Inc., 56 U.S.P.Q.2d 1583 (N.D. Ill. 2000); see Sebastian Int'l v. Longs Drug Stores Corp., 53 F.3d 1073, 1076 (9th Cir. 1995) ("When a purchaser resells a trademark article under the producer's trademark, and nothing more, there is no actionable misrepresentation under the statute," but finding that use actionable when in "telephone directory advertising", and "promotional literature"). Any conduct "beyond mere resale" triggers liability. For example, "active or purposeful deception, false suggestion, or misrepresentation on the part of a reseller, designed or likely to cause confusion about whether or not the reseller is an authorized dealer." Enesco, 56 U.S.P.Q. at 1593. Indeed, the first sale doctrine flounders where the plaintiff manufacturer has an established network of authorized dealers and defendant's activity misleads consumers into thinking that defendant is part of that network. Bernina of America, Inc. v. Fashion Fabrics Int'l, Inc., 2001 U.S. Dist. LEXIS 1211 at *5-6; 2001 WL 128164 (N.D. Ill. Feb. 9, 2001). Here, TeleScan's use of the Caterpillar Marks in the disputed domain names and the claims that the disputed web sites were "A Listing Service of Caterpillar Equipment" is likely to cause confusion beyond mere resale.
TeleScan's verbatim incorporation of the Caterpillar Marks in the disputed domain names and use of the Caterpillar Marks on the disputed web sites conveys an overall commercial impression that will confuse consumers into believing that the sites and services to be provided to them are approved, authorized, or otherwise endorsed by Caterpillar. TeleScan's use of the Caterpillar Marks in connection with heavy equipment and motor vehicle sales, advertising, or listing services and TeleScan's use of the Caterpillar Marks within the disputed domain names constitutes trademark infringement, unfair competition, dilution, and cybersquatting. Furthermore, TeleScan's registration of the disputed domain names and intent to use the domain names to direct traffic to its www.heavyscan.com web site constitutes bad faith and entitles Caterpillar to its attorney fees related to this action. For the above reasons, it is hereby ordered:
I. TeleScan, its assigns, agents, servants, affiliates, employees, attorneys, and representatives, and all those in privity with or acting through or in connection with TeleScan, including but not limited to Ron Thomas, are permanently enjoined from:
A. registering or maintaining registration of the disputed domain names, or any other domain names, trademarks, designations or symbols containing the Caterpillar Marks, in whole or in part, or that are confusingly similar to, or dilutive of, the Caterpillar Marks;
B. using the disputed domain names or any other domain names containing the Caterpillar Marks, in whole or in part, or that are confusingly similar to, or dilutive of, the Caterpillar Marks;
C. using any trademarks, designations or symbols containing the Caterpillar Marks, in whole or in part, or that are confusingly similar to, or dilutive of, the Caterpillar Marks on any of TeleScan's web sites or other promotional materials in a manner that is likely to give consumers the impression that TeleScan, TeleScan's goods or services, the disputed web sites or any other web sites owned by TeleScan are owned, associated with, or sponsored by Caterpillar;
D. claiming ownership of the disputed domain names or any other domain names, trademarks, designations or symbols containing the Caterpillar Marks, in whole of in part, or that are confusingly similar to, or dilutive of, the Caterpillar Marks
E. offering for sale the disputed domain names or any other domain names, trademarks, designations or symbols containing the Caterpillar Marks, in whole or in part, or that are confusingly similar to, or dilutive of, the Caterpillar Marks;
F. transferring, to any person or entity, other than Caterpillar, the infringing domain names or any other domain names, trademarks, designations or symbols containing the Caterpillar Marks in whole or in part, or that are confusingly similar to, or dilutive of, the Caterpillar Marks;
G. doing any other act or thing likely to induce the belief that TeleScan's business or service is in any way legitimately connected with, sponsored by or approved by Caterpillar;
H. doing any other act or thing likely to induce the belief that any web sites owned or registered by TeleScan are in any way legitimately connected with, sponsored by or approved by Caterpillar; and
I. doing any act or thing likely to dilute the distinctiveness of the Caterpillar Marks or likely to tarnish the goodwill associated with them.
II. TeleScan is directed to:
A. disclose to the Court and Caterpillar all other domain name registrations of domain names that contain in whole or part the Caterpillar Marks that are owned by TeleScan through any domain name registry, in order to permit the Court and Caterpillar to consider whether any such other registrations should be subject to relief in this matter.
B. transfer to Caterpillar the registrations in the disputed domain names and any other registrations as may be determined by this Court as appropriate for relief and with TeleScan to bear any costs associated with such transfer of ownership;
C. provide an accounting of all profits derived by TeleScan from its unlawful acts for the Court and Caterpillar to consider whether these profits should be paid to Caterpillar;
D. pay to Caterpillar all of the costs of this action;
E. pay to Caterpillar the $7,5000 that the Court ordered TeleScan to pay to Caterpillar in its July 26, 2001 order;
F. pay to Caterpillar all of the attorney's fees expended in this action;
G. deliver up for destruction all labels, signs, brochures, prints, advertisements, and any other material of an infringing, diluting tarnishing or unfair nature in TeleScan's possession or control as well as all means of making the same; and file with this Court and serve on Caterpillar within thirty (30) days after the entry of judgment a written report under oath setting forth in detail the manner and form of TeleScan's compliance with the terms of this Court's order.