Dudley v. Healthsource Chiropractic, Inc. et al
Filing
92
ORDER granting in part and denying in part 83 Motion for Summary Judgment; denying 84 Motion for Partial Summary Judgment. Signed by Hon. Michael A. Telesca on August 7, 2012. (MES)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
DONALD R. DUDLEY, D.C.
d/b/a HEALTHSOURCE CHIROPRACTIC,
07-CV-6631
Plaintiff,
DECISION AND ORDER
v.
HEALTHSOURCE CHIROPRACTIC, INC. and
STEPHEN T. DIVITO, D.C.,
Defendants.
_______________________________________
INTRODUCTION
Donald R. Dudley (“Dudley” or “Plaintiff”) brings this action
against HealthSource Chiropractic, Inc. (“HealthSource Inc.”) and
Stephen T. Divito (“Divito”) (collectively, “Defendants”) alleging
trademark infringement, cybersquatting, false designation of origin
and unfair competition, seeking monetary damages and a permanent
injunction.
(Docket
No.
1.)
Defendants
filed
an
answer
and
counterclaim, denying the allegations in the complaint and seeking
a
declaratory
judgment
of
non-infringement.
(Docket
No.
10.)
Plaintiff moved for a preliminary injunction on January 29, 2008,
which this Court denied in a Decision and Order dated September 30,
2008. (Docket No. 37.)
Now before the Court are the parties’ cross-motions for summary
judgment, filed on December 14, 2011.
Plaintiff moves for partial
summary judgment on liability and seeks leave to amend the complaint
to substitute DRD HealthSource Chiropractic PLLC as the Plaintiff
1
in this case. (Docket No. 84.) Defendant moves for summary judgment
seeking dismissal of Plaintiff’s claims and a declaration that they
did not infringe Plaintiff’s trademark. (Docket No. 83.)
For the reasons set forth below, this Court grants in part and
denies in part Defendants’ motion for summary judgment.
The Court
finds that material issues of fact remain as to the geographic
extent of the Plaintiff’s trademark rights.
Plaintiff’s motion for
partial summary judgment and for leave to amend the complaint is
denied.
BACKGROUND
The following facts are taken from the parties’ submissions
pursuant to Local Rule 56(a) and the entire record in this case.
This case arises from a dispute over the parties’ rights to use the
mark
“HealthSource
services.
Chiropractic”
in
relation
to
chiropractic
Plaintiff claims that he is the senior user of the mark,
having used the mark continuously since 2003 in connection with his
private chiropractic practice.
Plaintiff asserts trademark rights
to the exclusive use of the mark in the greater Rochester area and
on the internet.
Plaintiff established his practice in 2003 and obtained a d/b/a
certificate for HealthSource Chiropractic from the Monroe County
Clerk’s office on December 8, 2003.
Plaintiff contends that he has
invested significant time and resources to establish and promote his
practice. He has developed relationships with several local sports
2
teams, providing chiropractic services and some cash payments to the
teams in return for advertisement and promotional opportunities,
such as announcements during games, placement of his logo on the
field,
commercials
during
radio
advertisements in team magazines.
has
advertised
locally
and
broadcasts
of
games,
and
Plaintiff also asserts that he
regionally
in
the
Yellow
Pages,
magazines, newspapers, restaurants, and on local radio. He also
registered the domain name healthsourcechiropractic.com and created
a web site.
Plaintiff claims that his practice extends beyond the
City of Rochester to all of Monroe County and the five contiguous
counties and that he draws patients from those areas due to his
advertising efforts and the geographic location of his clientele.
Defendant HealthSource Inc. is an Ohio corporation founded in
2005 by Chris Tomshack, D.C., who continues as the corporation’s
CEO.
Dr. Tomshack states that after he retired from private
chiropractic practice in 2001 he established chiropractic offices
in the Ohio area under the name HealthQuest Chiropractic.
In 2005,
he established a chiropractic franchise, which he named HealthSource
Chiropractic, Inc.
Dr. Tomshack claims that he decided to use the
name HealthSource Chiropractic and the corporate name HealthSource
Chiropractic, Inc., because he knew of other chiropractic offices,
not related to his franchise, that were operating under the name
HealthQuest.
Before deciding on the name, Dr. Tomshack states that
his counsel conducted a trademark search with the United States
3
Patent and Trademark Office (“PTO”), the Ohio Secretary of State,
and
on
the
internet.
He
asserts
that
he
was
not
aware
of
Plaintiff’s practice in Rochester when he applied for registration
of the HealthSource Chiropractic mark.
Dr. Tomshack filed an intent-to-use application with the PTO
on November 25, 2005 for the HealthSource Chiropractic mark in
relation to chiropractic services, physical therapy, and related
medical and radiology services.
the
intent-to-use
On December 5, 2005, after filing
application,
he
filed
HealthSource Chiropractic, Inc. in Ohio.
for
incorporation
of
Dr. Tomshack then filed
another intent-to-use application for the HS HealthSource logo on
December 15, 2005 and filed an Allegation of Use for HS HealthSource
on January 8, 2007 and HealthSource Chiropractic on February 12,
2008.
HS HealthSource was registered by the PTO on July 10, 2007.
HealthSource Chiropractic was registered on May 20, 2008.
Both
marks were registered to Dr. Tomshack as an individual.
Dr.
Tomshack claims that he licensed the rights to use and sub-license
both marks to HealthSource Inc.
Dr. Tomshack registered the domain name healthsourcechiro.com
on March 16, 2006. He claims that he chose that domain name because
healthsourcechiropractic.com was already taken and there was also
less chance for people to misspell chiro than chiropractic.
Dr.
Tomshack claims that he was not aware of Plaintiff’s web site
because it was unavailable or down at the time he registered his
4
domain.
HealthSource Inc. launched its first franchise in April 2006.
It currently has 325 franchisees nationwide and claims to have
served 300,000 patients.
In April 2007, Dr. Divito opened a
HealthSource Inc. franchise in Rochester.
Dr. Divito informed Dr.
Tomshack that Dr. Dudley was already using the mark HealthSource
Chiropractic in Rochester.
Dr. Tomshack and Dr. Divito agreed that
the Rochester location would operate under the name HealthQuest
Chiropractic because Dr. Tomshack’s Ohio clinics previously operated
under that name.
Plaintiff asserts that Defendants’ use of the HealthQuest
Chiropractic mark in the greater Rochester area causes confusion
with his own mark.
Defendants contend that the use of HealthQuest
Chiropractic in the Rochester area is not likely to cause confusion
with Plaintiff’s mark.
Beyond renaming their Rochester franchise
location, Defendants assert that they have taken additional steps
to minimize confusion with Dr. Dudley’s practice. HealthSource Inc.
has removed Dr. Divito’s practice from its web site, although the
change was reverted for approximately one month in 2010 due to a
technical
error.
Dr.
Divito
uses
the
rochesterspinalcare.com, to promote his practice.
Divito
receives
advertising
templates
that
web
site,
Although Dr.
contain
the
term
HealthSource from HealthSource, Inc., he replaces references to
HealthSource
with
HealthQuest
before
5
the
advertisements
are
published.
There have been instances of a few advertisements
retaining the mark HealthSource. However, Defendants claim they are
unaware of any instances of patients contacting or visiting Dr.
Divito’s practice when actually looking for Dr. Dudley’s practice.
Plaintiff
also
argues
that
as
the
senior
user
of
the
HealthSource Chiropractic mark he has exclusive common law rights
within the City of Rochester, Monroe County, and the five contiguous
counties as well as on the internet. The Plaintiff asserts that the
use of the mark HealthQuest Chiropractic for Dr. Divito’s practice
and the use of HealthSource Chiropractic on the internet intrudes
on his common law trademark rights and causes confusion in the
marketplace.
Plaintiff states, for example:
(1) a search on Google for HealthSource Chiropractic
brings up Defendant’s web site first;
(2)
third-party
web
sites
such
as
The-Franchise-
Investigator, Franchise Buyers Network, Franchise Mall,
and BusinessMart.com list HealthSource Inc.’s franchise
alongside Plaintiff’s logo;
(3) HealthSource Inc.’s logo is next to Plaintiff’s
listing in the America Online (“AOL”) Yellow Pages;
(4)
Plaintiff
has
received
emails
directed
to
HealthSource Inc. from third-party web sites such as The
Franchise
Mall,
AOL
yellow
Reputation Repair Services;
6
pages,
Diet1Doc,
and
(5) Plaintiff has received telephone calls inquiring
about the HealthSource franchise system or offering to
provide services to the franchise; and
(6)
the
Rochester
Razorsharks
accidently
linked
to
HealthSource Inc.’s web site instead of Plaintiff’s web
site.
Defendants respond that the Plaintiff does not have priority
to use the mark on the internet; and even if he did, it would be
unfair to preclude the federal registrant from using its mark on the
internet. They further contend that the area within which Plaintiff
seeks exclusive rights to use the HealthSource mark is unreasonably
large.
DISCUSSION
I. Standard of Review.
Federal Rule of Civil Procedure 56 (“Rule 56") provides that
summary judgment shall be granted if the pleadings and evidence show
that “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
The moving
party has the initial burden to demonstrate the absence of any
genuine issue of material fact or to show that the non-moving party
“has failed to make a sufficient showing on an essential element”
of its claim.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
The burden then shifts to the non-moving party to show the existence
of a disputed issue of material fact, Boyce v. Bank of New York, 226
7
F. App'x 17, 18 (2d Cir. 2006), or to make a showing sufficient “to
establish the essential elements [] on which it bears the burden of
proof at trial,” Liles v. New York City Dept. of Educ., 516 F. Supp.
2d 297, 307 (S.D.N.Y. 2007).
In considering the motion, all
evidentiary inferences and ambiguities must be resolved in favor of
the party against whom summary judgment is sought.
Gallo v.
Prudential Residential Services, 22 F.3d 1219, 1223 (2d Cir. 1994).
II. HealthSource Inc.’s federal registration.
Plaintiff opposes Defendants’ motion for summary judgment,
arguing
for
the
first
time
that
HealthSource
Inc.’s
registration of the HealthSource mark is invalid.
federal
Defendants
respond that it is improper for the Plaintiff to raise this argument
for the first time in opposition to a motion for summary judgment.
Federal procedural rules require that the parties’ claims and
defenses be contained within the pleadings in order to give both
parties and the court notice of the issues raised in the case. Fed.
R. Civ. P. 8.
If a party wishes to add a claim or defense, then
that party may move to amend the pleadings; or “if summary judgment
has been granted to their opponents, [the party may] raise the issue
in a motion for reconsideration.”
Greenidge v. Allstate Ins. Co.,
446 F.3d 356, 361 (2d Cir. 2006).
A party may not, however, raise
an issue for the first time in an opposition to a motion for summary
judgment and expect the court to grant leave to amend the pleadings
sua sponte.
Id. (declining to consider an argument raised for the
8
first time in opposition to summary judgment).
Here, the Plaintiff never questioned the validity of the
Defendants’ federal registration either in his Complaint or in his
Answer to the Defendants’ counterclaim.
Raising the issue for the
first time in opposition to Defendants’ motion for summary judgment
is improper and untimely, and therefore the Court declines to
consider the issue in this motion.
III. Trademark infringement under the Lanham Act.
Plaintiff alleges trademark infringement in violation of the
Lanham Act, 15 U.S.C. § 1125(a),
for the Defendants’ use of
HealthQuest Chiropractic in the Rochester Area and the use of
HealthSource Chiropractic on the internet.
To prove infringement
of common law trademark rights under the Lanham Act, the Plaintiff
must establish that: (1) the mark is valid and legally protectable,
(2) the Plaintiff has a right to exclusive use of the mark, and (3)
the defendant’s use of the mark was likely to create confusion
regarding
the
source
of
the
goods
or
services.
Marshak
v.
Treadwell, 240 F.3d 184, 198 (3d Cir. 2001).
A. Plaintiff’s mark is legally protectable.
In its Decision and Order denying Plaintiff’s motion for a
preliminary injunction, this Court made a preliminary finding that
the HealthSource Chiropractic was “at most descriptive,” but was
entitled to protection because it had likely acquired secondary
meaning within the Rochester area.
9
See Dudley v. HealthSource
Chiropractic, Inc., 585 F. Supp. 2d 433, 438-440 (W.D.N.Y. 2008);
(Docket No. 37.)
The Plaintiff contends, as he did in his motion
for a preliminary injunction, that the mark is suggestive and
legally protectable without having to show secondary meaning.
The
Defendants argue that this Court’s previous categorization of the
mark was correct, but they contend that the Plaintiff has not shown
secondary meaning prior to the constructive use date, November 25,
2005.
Determinations of law and fact made by a court when granting
or denying a preliminary injunction are not binding on summary
judgment.
See Univ. of Texas v. Camenisch, 451 U.S. 390, 395, 101
S. Ct. 1830, 1834, 68 L. Ed. 2d 175 (1981).
Based on the complete
record, the Court has reviewed its findings and now finds that the
mark is suggestive.
Marks are classified into four levels of distinctiveness:
generic, descriptive, suggestive, and arbitrary or fanciful.
Star
Indus. v. Bacardi & Co., 412 F.3d 373, 384-385 (2d Cir. 2005).
Generic marks consist of words which are commonly used to identify
the products or services and are not protectable under the trademark
laws.
Id. at 385.
Descriptive marks describe the product or
service by identifying its qualities.
Id.
Descriptive marks are
not considered inherently distinctive but may become protectable if
they have acquired secondary meaning within the minds of the
consuming public.
Id.
Suggestive marks do not directly describe
10
the qualities of the product or service but
may
suggest its
qualities through the use of “imagination, thought, or perception.”
Id.
Arbitrary or fanciful marks communicate no information about
the product or service. Id. Suggestive marks and arbitrary or
fanciful marks are considered inherently distinctive and do not
require a showing of secondary meaning to be legally protected. Id.
The classification of a mark is generally a question of fact.
Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337,
344 (2d Cir. 1999) (stating that the factual question is how the
purchasing public views the mark).
A mark’s categorization follows
from its inherent distinctiveness and should be determined by
considering the mark compared to the product or service it describes
from the viewpoint of the purchasing public. See TCPIP Holding Co.,
Inc. v. Haar Communications, Inc., 244 F.3d 88, 97 (2d Cir. 2001).
At summary judgment, a party disputing the classification of a mark
must present evidence beyond the mark itself and the nature of the
product or service to raise a material issue of fact for a jury.
Lane Capital Mgmt., 192 F.3d at 346.
The evidence presented must
allow the trier of fact to resolve the issue without resorting to
“surmise, speculation, and conjecture.”
Id.
When the facts
relating to classification are not in dispute, however, the issue
may be decided as a matter of law. See e.g., Black & Decker Corp.
v. Dunsford, 944 F. Supp. 220, 225-226 (S.D.N.Y. 1996).
After reviewing the entire record, this Court finds that there
11
are no issues of fact with respect to classification of the mark and
that Plaintiff’s mark is suggestive.
A suggestive mark can be
distinguished from a descriptive mark by considering (1) whether
imagination is necessary to connect the mark to some characteristic
of the product, (2) whether competitors use the term as a trademark
or use the term to describe their product or service, and (3)
whether the use of the term would deprive competitors of a way to
describe their goods.
Menashe v. V Secret Catalogue, Inc., 409 F.
Supp. 2d 412, 423 (S.D.N.Y. 2006).
First, HealthSource Chiropractic does not directly describe
chiropractic
services
but
requires
imagination
to
make
the
connection. The consumer must use their imagination to understand
that chiropractic services are a health benefit and that the
provider of those services is, therefore, a source of health
benefits.
Second,
the
Defendant,
as
a
competitor,
is
using
HealthSource as a service mark and business name, not as a term that
describes chiropractic services.
Lastly, neither party suggests
that the term HealthSource describes a quality of chiropractic
services. Allowing the term HealthSource to be used as a servicemark
will in no way remove from the language a way of describing
chiropractic services. Dr. Tomshack specifically stated that he
choose the term HealthSource because other chiropractors were not
using that term. Tomshack Decl. ¶ 7. Accordingly, this Court finds
that the mark HealthSource is suggestive, inherently distinctive,
12
and entitled to protection without a showing of secondary meaning.
B. The Plaintiff is a senior user of the HealthSource
Chiropractic mark.
Federal registration of a mark grants nationwide priority as
of the filing date of either an application for registration or an
intent-to-use application.
See 15 U.S.C. § 1057(c).
Federal
registration, however, does not give priority over persons who had
used and had not abandoned the mark prior to filing.
1057(c)(1).
15 U.S.C. §
A senior user retains common law rights to exclusively
use the mark within its territory of prior use. Allard Enterprises,
Inc. v. Advanced Programming Res., Inc., 249 F.3d 564, 573 (6th Cir.
2001).
the
A senior user can accrue rights even if the initial uses of
mark
are
recognition.
not
extensive
and
do
not
result
in
widespread
See Allard Enterprises, Inc. v. Advanced Programming
Res., Inc., 146 F.3d 350, 358 (6th Cir. 1998).
Plaintiff has presented uncontroverted evidence that he used
the HealthSource Chiropractic mark in commerce prior to HealthSource
Inc.’s constructive use date.
on December 8, 2003.
Dr. Dudley filed a d/b/a certificate
Dudley Aff., January 21, 2008, Ex. 1.
He
registered the healthsourcechiropractic.com domain name on January
20, 2004.
Dudley Opp. Aff. Ex. 4.
The evidence establishing use
in commerce includes: letters to and from health insurance companies
and medicare, a contract and advertisements with the Rochester
Americans, an advertisement in the Yellow Pages, and newspaper
articles.
See Dudley Reply Aff. Ex. 2; Dudley Opp. Aff. Ex. 1-33;
13
O’Brien Opp. Decl. Ex 2.
Accordingly, this Court finds that
Plaintiff
genuine
has
established
use
in
commerce
of
the
HealthSource mark prior to HealthSource Inc.’s constructive use
date. The Plaintiff is therefore the senior user of the mark, while
the Defendant is the junior user and federal registrant.
1. Plaintiff’s “zone of exclusivity” was fixed on
July 10, 2007.
For the Plaintiff to assert a trademark infringement claim
based on common law rights as the senior user, he must first
demonstrate the territorial extent of his rights.
Enterprises,
249
F.3d
at
572.
Federal
See Allard
registration
confers
nationwide territorial rights whether or not the registrant actually
uses the mark nationwide or only in a limited territory. Dawn Donut
Co. v. Hart’s Food Stores, Inc., 267 F.2d 358, 362 (2d Cir. 1959).
Those rights are subject to any superior common law rights acquired
by another party through actual use of the mark prior to federal
registration.
Allard Enterprises, 249 F.3d at 572.
A party that
has used the mark retains exclusive rights within its zone of prior
use, its “zone of exclusivity.”
Id. at 573.
Federal law allows an applicant to establish a constructive use
date by filing an intent-to-use application before actual use of the
mark in commerce.
When the senior user of the mark is the federal
registrant, its nationwide priority is fixed on the constructive use
date.
Id. at 572.
However, when the junior user is the federal
registrant, the senior user’s territorial rights are not frozen
14
until the date of actual registration of the mark by the junior
user. Id.
In this case, Plaintiff is the senior user of the mark.
Dr. Tomshack’s federal registration of the HealthSource logo was
issued on July 10, 2007.
Jacquinot Decl. Ex. G.
Plaintiff,
therefore, has territorial rights to the geographic area in which
he established common law trademark rights prior to July 10, 2007.
2. Plaintiff’s “zone of exclusivity”.
The parties dispute the extent of the geographic area in which
Plaintiff would have exclusive rights to use the mark.
The
Plaintiff contends that his practice is regional and includes Monroe
County and the five contiguous counties.
The Defendants concede
that Plaintiff has priority in at least some parts of Monroe County,
but
they
argue
that
the
area
demanded
by
the
Plaintiff
is
unreasonably large. The Defendants contend that a chiropractic
practice normally includes patients within a radius of just three
to five miles and pulls from a population of roughly 50,000 people.
Defendants argue that the Plaintiff is claiming an area with a
population 22 times that size.
In support of the extent of his practice, the Plaintiff has
presented a breakdown of his client list by postal code.
Reply Aff. March 19, 2008, ¶ 11, Ex. 5.
Dudley
While the majority of
clients are within Monroe County, the list shows clients outside of
the county as well. However, the client list does not show when the
Plaintiff
rendered
services
to
15
each
client.
Without
that
information, the list does not establish which locations were
serviced by the Plaintiff prior to July 10, 2007.
The Plaintiff
also presents evidence that he works with local sports teams and
advertises on radio stations that broadcast throughout the Greater
Rochester Area.
Dudley Aff. ¶ 20; Dudley Opp. Aff. ¶ 12.
The
Plaintiff claims he has spent almost $74,000 in advertising and
traded
an
additional
advertising exposure.
significant
amount
of
his
services
for
Dudley Opp. Aff. ¶ 6; Jacquinot Decl. Ex. Z.
However, it is unclear from this record the actual geographic reach
of
his
advertising
and
what
regional
advertising
was
used,
consistently, prior to July 10, 2007.
Courts have found several factors relevant to determining the
geographical extent of market penetration.
For example, (1) volume
of sales; (2) growth trends; (3) number of buyers in ratio to
potential customers; and (4) amount of advertising. See Natural
Footwear Ltd. v. Hart, Schaffner & Marx, 760 F.2d 1383, 1398-1399
(3rd Cir. 1985) (citing cases).
Further, to establish use primarily
through advertising (and not actual sales), the advertising must be
open and notorious and “‘of such a nature and extent’ that the mark
has become ‘popularized in the public mind’” to associate the mark
with the product or service’s provider.
Am. Express Co. v. Goetz,
515 F.3d 156, 161-2 (2d Cir. 2008) (citation omitted).
Other than
his advertising efforts, Plaintiff has not presented evidence on any
of these factors relative to the date when his territory was frozen,
16
July 10, 2007.
Plaintiff has also not presented evidence of the
exact territories reached by his advertising efforts nor has he
presented anything more than speculation that his mark became
“popularized in the public mind” by July 10, 2007.
See National
Footwear,
15
760
F.2d
at
1397-1398(quoting
U.S.C.
§1115(b)(5)(“defense of prior use applies ‘only for the area in
which ... continuous prior use is proved.’”)) (last emphasis added).
While there is evidence that Plaintiff’s advertising efforts have,
at some point, reached customers outside of the city of Rochester
and Monroe County, and that he has had some clients from outside
those areas, it is unclear whether he established trademark rights
in those areas before July 10, 2007, and if so, which areas were
reached.
Based on the current state of the record, the Court finds that
there are questions remaining regarding the extent of Plaintiff’s
“zone
of
exclusivity.”
Accordingly,
Plaintiff’s
request
for
injunctive relief covering the inclusive area of Monroe County and
the five contiguous counties is denied as the proof submitted is
insufficient at this time.
However, unless the parties can agree
on a consent decree regarding the geographic area of the Plaintiff’s
exclusive rights to use the HealthSource mark, in the interest of
judicial economy, Plaintiff may have until November 5, 2012 to
submit additional proof on this issue. Plaintiff may have additional
discovery as needed.
17
3. Likelihood of confusion of HealthSource
Chiropractic and HealthQuest Chiropractic.
Having established that Plaintiff is entitled to superior
common law rights at least within some area of Monroe County, the
Court must determine whether the Defendants’ use of HealthQuest
Chiropractic in that area creates a likelihood of confusion.
Eight
non-exclusive factors are used to assess likelihood of consumer
confusion.
Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d
254, 256 (2d Cir. 1987) (citing Polaroid Corp. v. Polarad Elecs.
Corp., 287 F.2d 492, 495 (2d Cir. 1961)).
No one factor is
dispositive, and each factor must be considered in light of the
ultimate question.
Lois Sportswear, U.S.A., Inc. v. Levi Strauss
& Co., 799 F.2d 867, 872 (2d Cir. 1986).
The question is not one
of possibility of confusion but probability of confusion among
ordinarily prudent consumers.
Estee Lauder Inc. v. The Gap, Inc.,
108 F.3d 1503, 1511 (2d Cir. 1997).
When the underlying facts are
not in dispute, the balancing of the factors is a matter of law.
See Nabisco, Inc. v. Warner-Lambert Co., 220 F.3d 43, 46 (2d Cir.
2000).
Here, both parties agree that the material facts with
respect to this issue are not in dispute.
Pl. Br. at 10; Def. Resp.
at 15.
i. The strength of the mark.
The
strength
of
a
mark
encompasses
both
its
inherent
distinctiveness and its acquired distinctiveness. Playtex Products,
Inc. v. Georgia-Pac. Corp., 390 F.3d 158, 163 (2d Cir. 2004).
18
Plaintiff’s mark is a suggestive mark with some degree of inherent
distinctiveness.
See supra at 11-12.
Accordingly, this factor
favors the Plaintiff.
ii. Similarity between the two marks.
To determine the degree of similarity, the court must look to
the overall impression the mark makes on a consumer.
See Malletier
v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 537 (2d
Cir. 2005). The court should look not only to the words of the mark
but also how the mark is displayed in the marketplace.
See The
Sports Authority, Inc. v. Prime Hospitality Corp., 89 F.3d 955, 962
(2d Cir. 1997).
HealthSource and HealthQuest differ by only a single word;
however, that word gives a substantially different impression and
has a substantially different meaning.
Quest means to seek or
search out, and HealthQuest gives the impression of seeking health.
See Webster’s Third New International Dictionary, unabridged 1863
(2002).
2177.
Comparatively, source means a point of origin.
See id. at
HealthSource gives the impression of the place where health
can be obtained. The words source and quest also have significantly
different aural tones.
The HealthSource and HealthQuest logos used by the Plaintiff
and Defendant Divito are also distinctive. HealthSource Chiropractic
is displayed in an italicized font on top of a textured blue
background that gives the impression of water ripples.
19
HealthQuest
Chiropractic is in bold block letters on a white background.
A
distinctive HQ also proceeds the word HealthQuest.
Accordingly,
this
Court
finds
that
the
marks
are
not
substantially similar and that this factor does not weigh in favor
of the Plaintiff.
iii. The competitive proximity.
Both the Plaintiff and Dr. Divito offer chiropractic services
in the Rochester area.
This factor favors the Plaintiff.
iv. Actual confusion.
Trademark
infringement
“protects
only
against
purchasing decisions and not against confusion generally.”
mistaken
Lang v.
Ret. Living Pub. Co., Inc., 949 F.2d 576, 583 (2d Cir. 1991).
Actual confusion can be shown by evidence of “‘diversion of sales,
damage to goodwill, or loss of control over reputation.’”
Sports Auth., 89 F.3d at 963) (citing Lang, 949 F.2d at 583).
The
A few
instances of customer confusion is insufficient to show actual
confusion, but those instances may weigh in favor of a likelihood
of confusion.
Dudley, 585 F. Supp. 2d at 445.
Plaintiff has not presented consumer surveys or other empirical
evidence that shows that Dr. Divito’s mark causes confusion with
Plaintiff’s mark. Instead, to establish actual confusion, Plaintiff
states that he has received phone calls and emails directed to the
Defendants.
He specifically cites to an incident where a third-
party insurance vendor contacted his office claiming that he worked
20
with other HealthSource companies. Dudley Decl. ¶ 68, Ex. C. These
types of inquires do not relate to purchasing decisions by those
seeking Plaintiff’s services; thus, they are not the type of
confusion protected by the trademark laws. Comparatively, Defendant
Divito stated that he asks clients to specify on their intake forms
how they were referred to his practice, and he is unaware of any
instance of confusion between his practice and that of Dr. Dudley’s
practice. Def. Statement of Undisputed Facts ¶¶ 76-78. Accordingly,
this Court finds that there is no evidence of actual confusion, and
this factor weighs in favor of the Defendants.
v. The likelihood that the plaintiff will
bridge the gap between the two markets.
This factor favors the Plaintiff because Dr. Dudley and Dr.
Divito compete in the same market, thus there is “no gap to bridge.”
See Kookai, S.A. v. Shabo, 950 F. Supp. 605, 608 (S.D.N.Y. 1997).
vi. The defendant’s good faith in adopting
its mark.
This factor looks at whether the defendant “adopted its mark
with the intention of capitalizing on plaintiff’s reputation and
goodwill.”
See Lang, 949 F.2d at 583.
When Dr. Divito purchased
a franchise from HealthSource Inc., he agreed to use the name
HealthQuest Chiropractic because Dr. Dudley was already using
HealthSource Chiropractic in the Rochester area.
21; Divito Decl. ¶ 7.
Tomshack Decl. ¶
The name HealthQuest Chiropractic was chosen
because Dr. Tomshack previously operated offices using that name.
21
Tomshack Decl. ¶ 4.
There is no evidence in the record that the
name was chosen in bad faith.
Accordingly, this factor favors the
Defendants.
vii. The quality of the defendant’s product.
The question addressed by this factor is whether the senior
user’s reputation could be jeopardized by being associated with a
junior user’s product of inferior quality. Arrow Fastener Co., Inc.
v. Stanley Works, 59 F.3d 384, 398 (2d Cir. 1995).
Plaintiff does
not argue that the Defendants’ services are inferior to his own.
Plaintiff instead argues that any confusion linking his practice
with Dr. Divito’s may damage his reputation because Dr. Divito was
allegedly involved in a fatal car accident and charged with a DWI
that garnered some local publicity. While protecting his reputation
is
a
valid
concern,
under
these
circumstances,
it
is
merely
speculative. The Plaintiff has presented no evidence that Dr.
Divito’s accident has tarnished, or is likely to tarnish, the
reputation of his practice. Accordingly, because there are no
material issues of fact as to the quality of Dr. Divito’s services
or his reputation as a chiropractor (notwithstanding his recent,
unrelated legal problem), the Court finds that this factor favors
the Defendants.
viii. The sophistication of the purchasers.
The more sophisticated the consumer of the service, the less
likely he or she will be confused by similar marks.
22
Savin Corp. v.
Savin Group, 391 F.3d 439, 461 (2d Cir. 2004).
Plaintiff does not
address this factor, but previously conceded that consumers of
chiropractic services could be expected to exercise great care in
making a selection of their service provider.
Because chiropractic
services are an individualized, professional service, a consumer is
less
likely
to
be
confused
as
to
source
of
the
service.
Accordingly, this factor weighs against finding a likelihood of
confusion.
ix. Weighing the factors.
Taking all the factors together, the parties offer the same
services in the same geographic area.
Plaintiff has demonstrated
he has a strong mark entitled to some protection.
However,
Plaintiff has not shown that the Defendants’ mark is sufficiently
similar to warrant a finding of likelihood of confusion.
similar, they are distinguishable.
Although
There is no evidence in the
record of actual confusion, and the sophistication of a chiropractic
patient and the individualized nature of the service reduces the
possibility of confusion.
Lastly, Dr. Divito adopted his mark,
different from his franchisor, in good faith specifically to avoid
intruding on Plaintiff’s practice.
Accordingly, this Court finds
that there is not a likelihood of confusion between the HealthSource
Chiropractic
and
HealthQuest
Chiropractic
marks.
Plaintiff’s
trademark infringement claim under 15 U.S.C. § 1125(a) with respect
to Defendants’ use of HealthQuest Chiropractic in the Rochester area
23
is dismissed.
D. Defendants’ use of HealthSource Chiropractic on the
internet.
The Plaintiff contends that he is the senior user of the
HealthSource Chiropractic mark not only in the greater Rochester
area but also on the internet.
He argues that the Defendants’ use
of the mark infringes upon his right to priority on the internet and
intrudes on his territorial exclusivity within the greater Rochester
area.
The Defendants respond the Plaintiff does not have priority
on the internet; and if internet exclusivity were granted to a
common
law
user,
it
would
undermine
the
purpose
of
federal
registration.
The purpose of the trademark laws is to avoid using a mark in
a way that causes confusion, deception, or mistake as to the origin
of a product or service. 15 U.S.C.A. § 1127(a)(1)(A). Geographical
zones of exclusivity developed to protect the rights of concurrent,
innocent adopters who used the same mark in different geographic
areas.
See United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90,
100, 39 S. Ct. 48, 51-52, 63 L. Ed. 141 (1918).
There is little
likelihood of confusion, deception, or mistake when a mark is used
by different businesses in distinct regions of the country.
Id.
Federal registration is required to secure nationwide priority
in a mark.
See 15 U.S.C. § 1057(c).
Common law trademark rights
only extend to the territories in which the mark’s adopter sells its
products, renders its services, establishes recognition of its mark,
24
or draws its trade.
Tana v. Dantanna's, 611 F.3d 767, 780 (11th
Cir. 2010). A user of a mark who does not seek federal registration
risks the possibility that another user will independently adopt the
same mark and establish exclusive rights to use the mark in a remote
area.
United Drug Co., 248 U.S. at 103, 39 S. Ct. at 53.
The
trademark laws allow concurrent use of the same mark by multiple
adopters so long as each adopter’s use of the mark does not
unreasonably
intrude
on
another
exclusivity.
See Harrods Ltd. v. Sixty Internet Domain Names, 302
F.3d 214, 233 (4th Cir. 2002).
user’s
geographic
zone
of
By allowing concurrent use of a
mark, the trademark laws tolerate a certain amount of confusion.
Geographic zones of exclusivity are not inviolate but must
accommodate reasonable intrusion when it becomes impracticable to
exclude another lawful user.
For example, courts have held that an
almost-national user of a mark should not be precluded from engaging
in
national
advertising
activities
geographically restricted.
that
cannot
reasonably
be
See Tree Tavern Products, Inc. v.
Conagra, Inc., 640 F. Supp. 1263, 1273 (D. Del. 1986) (enjoining
sales within the plaintiff’s geographic area but allowing national
advertising); V&V Food Products, Inc. v. Cacique Cheese Co., Inc.,
86 C 8695, 2003 WL 255235 (N.D. Ill. Feb. 4, 2003) (allowing
national advertising on a Spanish speaking network and dismissing
as impractical methods that could avoid intruding on another user’s
territory).
25
By claiming exclusivity to the HealthSource Chiropractic mark
on the internet, the Plaintiff assumes that the internet is a
territory in which he can establish exclusive rights.
The internet
is not, however, a geographic territory to be subdivided; instead,
it is a global communication medium that is accessible from anywhere
on the planet.
The internet has become vital for local, regional,
national, and international communication.
advertising,
and
marketing
products
It is used for selling,
and
communicating with clients and customers.
services
as
well
as
An internet presence has
become crucial for businesses of all sizes, whether they operate
locally or nationally.
The rights of concurrent users would be substantially harmed
if one user were able to monopolize the internet to the exclusion
of other lawful users of the same mark.
If, as the Plaintiff
suggests, a senior common law user could claim exclusive use on the
internet, then it would undermine the benefits and security provided
by federal registration.
A federal registrant could never be
certain that its rights extended to the internet and that a senior
user would not come forward claiming priority and exclusivity to the
internet.
Similarly, allowing a federal registrant exclusive use
of the mark on the internet would undermine the territorial rights
of a senior user.
Unlike national advertising which would often be
cost-prohibitive for a local or regional user, the internet is an
almost-necessary tool for a user to develop its business and remain
26
competitive within its exclusive territory.
Restricting internet
use to the federal registrant would therefore equally undermine the
territorial rights of a senior common law user.
Court
Consequently, this
concludes that neither party can claim exclusive rights to
the internet. See Allard Enterprises, 249 F.3d at 575 (stating that
some form of concurrent use of the internet by multiple users of a
mark seems necessary).
Even though concurrent, lawful users of a mark should be
allowed to use their marks on the internet, use on the internet
cannot be manipulated to intrude on another’s territory in bad
faith.
See Harrods, 302 F.3d at 234 (stating that a domain name is
registered in bad faith if done “with the intent of expanding its
use of the shared mark beyond its geographically restricted area”).
For instance, it would be improper for a user to target internet
advertisements
to
consumers
within
another
user’s
exclusive
territory or to advertise on locally focused web sites that target
that market.
See Thrifty Rent-A-Car System, Inc. v. Thrift Cars,
Inc., 639 F. Supp. 750, 2 U.S.P.Q.2d 1172 (D. Mass. 1986), aff'd,
831 F.2d 1177, 4 U.S.P.Q.2d 1709 (1st Cir. 1987) (allowing state and
national advertising but restricting advertisements directed at the
local
markets
encompassed
within
the
other
user’s
zone
of
exclusivity).
In this case, the Defendants have taken reasonable measures to
ensure that they are not using the HealthSource Chiropractic mark
27
on the internet to intrude into the Plaintiff’s territory.
The
Defendants have removed Dr. Divito’s practice completely from
HealthSource Inc.’s web site.
Dr. Divito maintains his own web
site, rochesterspinalcare.com, for his Rochester practice and only
uses the HealthQuest mark on his web site.
The Plaintiff has
presented no evidence that indicates the Defendants have used the
HealthSource
mark
on
the
internet
to
specifically
target
the
Rochester market.
The Plaintiff additionally asserts that HealthSource Inc.’s use
of the HealthSource Chiropractic mark on the internet creates so
much confusion that he will be forced to rebrand.
Plaintiff
complains that a Google search for “HealthSource Chiropractic”
brings up HealthSource Inc.’s web site as the first result and
Plaintiff’s
web
site
as
the
second.
Also,
a
search
for
“HealthSource” and “Divito” brings up Dr. Divito’s Facebook profile
which
has
activities,
the
and
HealthSource
interests
keyword
pages.
in
Dr.
Plaintiff
Divito’s
friends,
further
presents
evidence of what he claims is actual confusion showing that the
Rochester Razorsharks mistakenly linked to the Defendants’ web site
instead of his own, that third-party web sites listed Defendants’
franchise but Plaintiff’s logo, and that Plaintiff has received
calls and emails directed to the HealthSource Inc.
However, this
is not the type of confusion that the trademark laws are designed
to prevent.
See Lang, 949 F.2d at 583 (stating that the confusion
28
relevant for trademark infringement is mistaken purchasing decisions
not confusion generally). The Plaintiff admits that he is not aware
of any patient or potential patient that was directed away from his
practice as a result of the Defendants’ use of the HealthSource mark
on the internet.
Jacquinot Decl. Ex. Y.
A trademark owner cannot reasonably expect to have exclusive
use of a term on the internet.
Defendants presented evidence that
as of 2008 there were 754 registered domain names with that included
the term “healthsource.”
Jacquinot Decl. Ex. L.
Users of a mark
must develop ways to distinguish themselves on the internet beyond
resorting to the trademark laws.
See Lockheed Martin Corp. v.
Network Solutions, Inc., 985 F. Supp. 949, 968 (C.D. Cal. 1997)
aff'd, 194 F.3d 980 (9th Cir. 1999) (stating that the solution to
difficulties
faced
innovation).
Accordingly, because he cannot establish exclusive
rights
on
the
infringement
Defendants’
by
trademark
internet,
under
use
of
15
the
the
U.S.C.
owners
on
Plaintiff's
§
1125(a)
HealthSource
the
claim
with
internet
for
trademark
respect
Chiropractic
is
mark
to
the
on
the
internet is dismissed.
IV. Plaintiff’s cybersquatting claim.
The Plaintiff alleges that HealthSource Inc.’s use of the
domain
name,
healthsourcechiro.com,
is
a
violation
of
the
Anticybersquatting Consumer Protection Act (“ACPA”), 15 U.S.C. §
1125(d).
An ACPA claim requires that (1) the plaintiff’s mark is
29
either distinctive or famous, (2) the defendant’s domain name is
either identical or confusingly similar to the plaintiff’s mark, and
(3) the defendant had a bad faith intent to profit from the use of
the plaintiff’s mark. See Sporty's Farm L.L.C. v. Sportsman's Mkt.,
Inc., 202 F.3d 489, 497-99 (2d Cir. 2000).
The ACPA lists nine non-exclusive factors to determine whether
a person has a bad faith intent to profit from the use of another’s
mark: (1) whether the defendant has trademark rights in its domain
name; (2) whether the domain name consists of the defendant’s legal
name; (3) whether the defendant previously used the domain name in
connection with the sale of goods or services; (4) whether the web
site is of a commercial or non-commercial nature; (5) whether the
defendant had an intention to divert customers away from the
plaintiff’s web site; (6) whether the defendant has offered to
transfer, sell, or assign the domain name for commercial gain; (7)
whether the defendant provided misleading or incorrect contact
information when registering the domain name; (8) whether the
defendant registered multiple identical or confusingly similar
domain names; and (9) the extent to which the defendant’s domain
name
is
not
distinctive
or
famous.
See
15
U.S.C.
§
1125(d)(1)(B)(I).
The Plaintiff has failed to show bad faith on the part of the
Defendants.
HealthSource Inc.’s domain name is an abbreviation of
its federally registered trademark.
30
Jacquinot Decl. Ex. G, H.
The
domain name is also the legal name of the corporation.
Decl. Ex. F.
Jacquinot
Although the Defendants did not use the HealthSource
Chiropractic mark prior to registering their domain name, Dr.
Tomshack
used
the
similar
HealthQuest
Chiropractic
name
and
explained that he decided to register HealthSource Chiropractic
instead
to
avoid
competition
Tomshack Decl. ¶¶ 4, 6.
with
other
HealthQuest
clinics.
There is no indication that the Defendant
sought to divert Plaintiff’s customers, as Dr. Tomshack initially
used the mark in Ohio, not New York.
Id.
The Defendant has used
its domain name in relation to its own business and has not sought
to transfer or sell the domain name for financial gain. There is no
evidence that the Defendant did not provide the correct contact
information when it registered its domain name.
Lastly, the domain
name healthsourcechiro.com is distinctive like the HealthSource mark
itself.
See supra at 13.
The only factor favoring the Plaintiff
is that the Defendant attempted to register multiple derivations of
its domain name. Tomshack Decl. ¶ 13. The Court, however, does not
find
that
this
factor
alone
is
indicative
of
bad
faith.
Accordingly, the Court finds that the Plaintiff has not met its
burden to establish bad faith, and the Plaintiff’s ACPA claim is
dismissed.
V. Plaintiff’s state and common law claims.
Plaintiff
also
alleges
trade
name
infringement,
unfair
competition, and injury to business reputation under New York
31
General Business Law §§ 360-k, 360-l, and 360-m, as well as common
law trade name infringement and unfair competition. Claims of
violations of New York General Business Law sections 360-k and 360-m
require that the Plaintiff’s mark is registered with New York State.
The
Plaintiff
has
not
shown
that
his
mark
is
registered.
Accordingly, Plaintiff’s claims for violations of sections 360-k and
360-m are dismissed.
Plaintiff’s claim under New York General Business Law section
360-l requires that the marks used by the Plaintiff and Defendant
be substantially similar.
Fed. Exp. Corp. v. Fed. Espresso, Inc.,
201 F.3d 168, 177 (2d Cir. 2000). This Court has already found that
the HealthSource Chiropractic and HealthQuest Chiropractic are not
substantially similar. See supra at 18-19. Accordingly, Plaintiff’s
claim under section 360-l is dismissed.
Plaintiff’s common law claim for unfair competition requires
(1) either actual confusion or likelihood of confusion and (2) bad
faith on the part of the defendant. Jeffrey Milstein, Inc. v.
Greger, Lawlor, Roth, Inc., 58 F.3d 27, 35 (2d Cir. 1995).
Plaintiff
has
not
shown
actual
confusion
or
a
likelihood
The
of
confusion for the Defendants’ use of the HealthQuest Chiropractic
mark in the Rochester area, nor has the Plaintiff shown bad faith
for
the
Defendants’
use
of
HealthSource
Chiropractic
on
the
internet. See supra at 19, 22, 29. Accordingly, Plaintiff’s common
law claim for unfair competition is dismissed.
32
Finally, the test for common law trademark infringement is
essentially the same as that for trademark infringement under
federal law.
Black & Decker, 944 F. Supp. at 228.
Because the
Plaintiff failed to make out a valid federal trademark infringement
claim, Plaintiff’s common law claim must fail as well.
VI. The Plaintiff’s motion to amend the complaint.
The Plaintiff seeks leave to amend the complaint to add DRD
HealthSource Chiropractic, PLLC as the real party in interest.
The
Defendants object arguing undue delay and lack of documentation
showing the transfer of the assigned claim and chain of title to the
Plaintiff’s mark. Rule 15 of the Federal Rules of Civil Procedure
states that a court should freely grant leave to amend the pleadings
when justice so requires.
delay.
Leave can properly be denied for undue
Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L.
Ed. 2d 222 (1962).
June 5, 2009.
The Plaintiff filed his PLLC registration on
In its Revised Scheduling Order, this Court set a
deadline of August 23, 2010 for motions to amend the pleadings. The
instant motion was not filed until December 14, 2011.
This Court
finds that Plaintiff’s delay in requesting amendment is undue and
therefore denies the request.
CONCLUSION
For the reasons set forth above, this Court grants in part and
denies in part the Defendants’ motion for summary judgment and
dismisses Plaintiff’s federal, state, and common law claims.
33
This
Court finds that Defendants are not infringing Plaintiff’s mark by
using the HealthSource Chiropractic mark on the internet or using
the HealthQuest Chiropractic mark in the Rochester area.
of
fact
remains
with
respect
to
the
territorial
Questions
extent
of
Plaintiff’s exclusive rights to use the HealthSource mark in the
Rochester area market, and Plaintiff may have until November 5, 2012
to submit additional proof on this issue. Plaintiff’s motion for
partial summary judgment on the issue of liability and leave to
amend his complaint are denied.
ALL OF THE ABOVE IS SO ORDERED.
S/ MICHAEL A. TELESCA
HON. MICHAEL A. TELESCA
United States District Judge
Dated:
Rochester, New York
August 7, 2012
34
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