Victoria's Secret Stores v. Artco Equipment Co., No. C-2-01-198.
| Decision Date | 27 March 2002 |
| Docket Number | No. C-2-01-198. |
| Citation | 194 F.Supp.2d 704 |
| Parties | VICTORIA'S SECRET STORES, et al., Plaintiffs, v. ARTCO EQUIPMENT COMPANY, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
John L Landolfi, Vorys Sater Seymour & Pease—2, Columbus, OH, Melise R Blakeslee, Robert W Zelnick, Carrie A Shufflebarger, Lisa Dunner, McDermott Will & Emery—2, Washington, DC, for Victoria's Secret Stores, Inc., V Secret Catalogue Inc, Victoria's Secret Direct LLC, Intimate Beauty Corporation dba Victoria's Secret Beauty, plaintiffs.
Laurence Edward Sturtz, Carlile Patchen & Murphy—2, Columbus, OH, for Artco Equipment Company Inc, Holt Industries LLC, Howard Goldberg, defendants.
Howard Goldberg, Westwood, NJ, pro se.
Plaintiffs Victoria's Secret Stores, Inc., V Secret Catalogue, Inc., Victoria's Secret Direct, LLC, and Intimate Beauty Corp. (collectively "Victoria's Secret") bring this action under The Lanham Act, 15 U.S.C. § 1051, et seq., against defendants Artco Equipment Company, Inc. ("Artco"), Holt Industries, LLC ("Holt"), and Howard Goldberg ("Defendant Goldberg").
Plaintiffs assert trademark infringement, unfair competition, false designation of origin, trademark dilution, cybersquatting, and other related state law claims against defendants for defendants' unauthorized use of plaintiffs' VICTORIA'S SECRET mark in their domain name, website text, hyperlinks, and metatags.
This matter is before the Court to review defendants' objections to the magistrate judge's Report and Recommendation (doc. 29) ("R & R"). The R & R considers defendants' August 29, 2001 motion to set aside the Clerk of Court's May 10, 2001 entry of default (doc. 23) and plaintiffs' June 13, 2001 motion for default judgment (doc. 10). The magistrate judge recommended the Court deny defendants' motion to set aside the entry of default and grant plaintiffs' motion for default judgment.
For the following reasons, the Court overrules defendants' objections, adopts the R & R except for the modifications noted below, denies defendants' motion to set aside the entry of default, and grants plaintiffs' motion for default judgment. Further, the Court denies defendants' August 29, 2001 motion to strike notice (doc. 21) and September 7, 2001 motion to vacate the preliminary injunction (doc. 26) as moot.
Plaintiff V Secret Catalogue, Inc., is the record owner of the VICTORIA'S SECRET trademark, which has been registered in the United States Patent and Trademark Office since January 20, 1981. (Compl.Ex. 5.) V Secret Catalogue, Inc. licenses Victoria's Secret Stores, Inc., Victoria's Secret Catalogue, LLC, and Intimate Beauty Corp. to use the Victoria's Secret trademark. Victoria's Secret sells women's lingerie, clothing, beauty products, and accessories. Victoria's Secret operates the website "www.victoriassecret.com" from which it promotes and sells its products. (Compl. ¶¶ 6, 31-34.)
As alleged in the complaint and not disputed by defendants, defendant Howard Goldberg is president of defendant Artco and an officer of defendant Holt. Goldberg is a resident of New Jersey and his companies have their principal places of business in New Jersey. (Compl.¶¶ 10-12.) Defendants operate the following websites from which they promote and sell women's lingerie, adult sex toys, and other adult-oriented merchandise: www.houseoflovetoys.com, www.bodyshack.com, and www.heartsarewild.com. (Compl.¶¶ 13-14.)
In their complaint, plaintiffs seek damages for defendants' unauthorized use of variations of the VICTORIA'S SECRET mark in their Internet domain name, website text, hyperlinks, and metatags. Specifically, plaintiffs assert claims for trademark infringement, trademark dilution, unfair competition, cybersquatting, false advertising, and violations of Ohio's statutory and common law. (Compl.¶¶ 1-5.)
Plaintiffs allege the following facts to support their claims. First, plaintiffs contend defendants registered a domain name containing the VICTORIA'S SECRET mark on June 30, 1999. (Compl.¶ 39, Ex. 7.) Specifically, they claim defendants registered the domain name www.victoriassecrets.net in an attempt to divert consumers to defendants' own websites for commercial gain. (Compl.¶ 39.) The parties arbitrated this claim pursuant to the Internet Corporation for Assigned Names and Numbers ("ICANN") Uniform Domain Name Dispute Resolution Policy.1 The arbitration panel transferred ownership of the victoriassecrets.net domain name to plaintiffs. (Compl.Ex. 8.) Plaintiffs now seek damages for defendants' use of the VICTORIA'S SECRET mark in their domain name, claiming trademark infringement, 15 U.S.C. § 1114, trademark dilution, 15 U.S.C. § 1125(c), and violations of the Anticybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d).
Second, plaintiffs contend defendants used the VICTORIA'S SECRET mark as hyperlinks in the text of two of their websites to divert Internet traffic to defendants' other commercial websites. (Compl.¶¶ 45-53.) They allege this conduct constitutes trademark infringement and trademark dilution.
The First Accused Website2—as plaintiffs call it—features the phrase "Victorias Secret or victoria's secret" above the image of a scantily-clad lingerie model relaxing on top of a piano. (Compl.Ex. 10.) The webpage designer superimposed the Internet address "www.heartsarewild.com" across the legs of the piano bench. (Id.) The webpage contains the following text and hyperlinks3 beneath the image:
Enter
If you are looking for any of the following valentines day gifts:
• victorias secrets
• victoria's secrets gifts
• victorias secrets catalogs
• victorias secrets models
Look no further. FREE SHIPPING! NO SALES TAX! You'll find it at victorias secrets!
(Compl.Ex. 10.) Rather than linking to plaintiffs' victoriassecret.com website, however, plaintiffs allege the hyperlinks transported Internet users to defendants' bodyshack.com website, which contains links to defendants' houseoflovetoys.com and heartsarewild.com websites. (Compl.¶ 47-48, Ex. 2.)
Plaintiffs allege the Second Accused Website4 contains similar language. The top of the website features "Victorias Secret" in a large, bold font. (Compl.Ex. 12.) It also contains the following text:
If you are looking for any of the following topics:
• victorias secret
• victoria's secret fashion show
• victorias secret lingerie
• victoria secret
Look no further. You'll find it at Hearts Are Wild!
Interested in Victoria's Secret? We offer free shipping and you pay no sales tax! For the best women's lingerie, you've come to the right place.
At Hearts Are Wild, you'll discover an easy to use, information packed web site. www.heartsarewild.com.
(Compl.Ex. 12.) When an individual accesses this site, plaintiffs allege a new browser opens to defendants' heartsarewild.com, which sells defendants' lingerie products. (Compl.¶ 51, Ex. 13.)
Finally, plaintiffs allege defendants placed variations of the VICTORIA'S SECRET mark as metatags in the source code of defendants' "accused" websites, so that an Internet search for "Victoria's Secret" would feature defendants' websites as a high-ranking result. (Compl.¶¶ 49-50.) They contend the use of the VICTORIA'S SECRET mark in metatags constitutes trademark infringement and trademark dilution. As evidence of this claim, inter alia, plaintiffs state a February 16, 2001 Internet search on Lycos.com for "victorias secret" produced defendants' secure100.local.net/~htoy/victoria.html website as its second-ranked result. (Compl.¶ 44, Ex. 9.)
Plaintiffs filed this lawsuit on March 2, 2001. Plaintiffs served Defendant Goldberg on March 9, 2001 in his personal capacity. (Summons (doc.5).) According to plaintiffs, Defendant Goldberg refused to accept service on behalf of the two corporate defendants. He allegedly told the process server that one of the corporate defendants had moved and he had never heard of the other. (Farrington Aff. ¶¶ 5-6.) On March 16, 2001, the process server returned with filings from the New Jersey Secretary of State's office showing Defendant Goldberg as a registered agent for the two corporate defendants. At that point, Defendant Goldberg accepted service. (Summons (doc. 6), Farrington Aff. ¶¶ 6-7.)
In the weeks following service, defendants did not file an answer or other responsive pleading. Therefore, plaintiffs requested an entry of default (doc. 7) on May 10, 2001. Later that day, the Clerk of Court made an entry of default (doc. 8) against defendants for failure to plead or otherwise appear. On June 13, 2001, plaintiffs filed a motion for default judgment (doc. 10).
The Court never heard from defendants until June 26, 2001. In a letter dated June 22, 2001 (doc. 11), Defendant Goldberg expressed his "wish to defend and plead" and stated that he was "currently seeking counsel." He also stated he telephoned Victoria's Secret "to discuss a possible settlement, but it seems that it is not an option." According to Defendant Goldberg, he had met with several lawyers, but was having difficulty finding counsel. Therefore, he requested additional time to retain counsel. (Goldberg June 26, 2001 Letter to Court.)
At that point, this Court referred plaintiffs' motion for default judgment to the magistrate judge for a hearing and report and recommendation. (July 12, 2001 Order (doc. 13).) The magistrate judge held a hearing on August 15, 2001, during which plaintiffs and defendants argued whether the Court should grant default judgment or vacate the entry of default. (Tr. of August 15, 2001 Hearing (doc. 17).) On October 2, 2001, the magistrate judge filed his R & R, which recommended that the Court deny defendants' motion to set aside the default and grant plaintiffs' motion for default judgment. De...
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