304 F.3d 936 (9th Cir. 2002), 01-35155, Interstellar Starship Services, LTD. v. Epix, Inc.

Docket Nº:01-35155.
Citation:304 F.3d 936
Party Name:INTERSTELLAR STARSHIP SERVICES, LIMITED, Plaintiff-counter-defendant-Appellee, Michael R. TCHOU, Counter-Claimant-Appellee, and United States of America, Intervenor, v. EPIX, INCORPORATED, an Illinois corporation, Defendant-counter-claimant Appellant.
Case Date:September 20, 2002
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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304 F.3d 936 (9th Cir. 2002)

INTERSTELLAR STARSHIP SERVICES, LIMITED, Plaintiff-counter-defendant-Appellee,

Michael R. TCHOU, Counter-Claimant-Appellee,

and

United States of America, Intervenor,

v.

EPIX, INCORPORATED, an Illinois corporation, Defendant-counter-claimant Appellant.

No. 01-35155.

United States Court of Appeals, Ninth Circuit

September 20, 2002

Argued and Submitted May 8, 2002.

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[Copyrighted Material Omitted]

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Sheldon L. Epstein, Law Office of S.L. Epstein, Wilmette, IL, for the defendant-counter-claimant-appellant.

Peter E. Heuser, Kolisch, Hartwell, Dickinson, McCormack & Heuser, Portland, OR, for the defendant-counter-claimant-appellant.

Lainie F. Block, Portland, OR, for the defendant-counter-claimant-appellant.

Michael M. Ratoza and Laura Caldera Taylor, Ratoza Long, P.C., Portland, OR, for the plaintiff-counter-defendant-appellee and counter-claimant-appellee.

Before: TROTT, T.G. NELSON, Circuit Judges, and SHADUR,[*] District Judge.

TROTT, Circuit Judge.

Epix, Inc. ("Epix") sued Interstellar Starship Services ("ISS") and its president Michael Tchou ("Tchou") in district court alleging that their use of the www.epix.com domain name infringed Epix's registered EPIX trademark. The district court enjoined ISS and Tchou from future infringing uses of www.epix.com but allowed ISS to retain ownership of the domain name. Epix appeals, contesting the district court's failure to find that: (1) ISS's use of epix.com caused initial interest confusion; (2) ISS cybersquatted on epix.com; and (3) ISS diluted the EPIX trademark. Epix appeals also the scope of the injunction imposed by the district court. In the main, Epix argues that the epix.com domain name should be transferred from ISS to Epix or that the injunction

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should be broadened to include ISS's future successors and assigns of www.epix.com. We have jurisdiction pursuant to 28 U.S.C. § 1291 and affirm the district court's decision in all respects.

BACKGROUND

Epix manufactures and sells a wide variety of electronic imaging hardware and software products and provides consulting services associated with these products. Epix markets its products to sophisticated consumers, mainly universities, research laboratories, and photography enthusiasts. It advertises in a variety of trade magazines and sells its products through distributors and on the Internet at www.epixinc.com. Its products retail for $395 to $2000.

Epix first used the trademark EPIX in 1984, and registered that mark in 1990 with the Patent and Trademark Office ("PTO") for use with "printed circuit boards and computer programs for image acquisition, processing, display, and transmission." The EPIX trademark acquired incontestable status in December 1996.1 Epix registered its EPIX mark with the State of Oregon on June 17, 1997.

Tchou is an electrical engineer, with a background in electronic imaging, who has worked for Lattice Corporation and more recently, Intel. Tchou is also the sole founder, officer, director, shareholder and employee of ISS. In 1995, as president of ISS, Tchou registered the domain name www.epix.com with Network Solutions.2 Tchou testified that he registered the domain name epix.com because the catchy name connoted electronic ("e") pictures ("pix").3

We have remarked before that "[t]he record does not make crystal clear the precise nature of ISS's business or its use of the 'epix.com' webpage." Interstellar Starship Serv. v. Epix, Inc., 184 F.3d 1107, 1109 (9th Cir.1999) (Interstellar I). As the district court once described: "The site has some characteristics of a serious business venture and some characteristics of a personal scrapbook." Interstellar Starship Servs. v. Epix, Inc., 125 F.Supp.2d 1269, 1274 (D.Or.2001). Tchou testified at trial that he hopes to develop the epix.com website into a multimillion dollar Internet portal, like Yahoo, featuring a variety of electronic pictures.

Since its launch, however, ISS's website has not grown to epic proportions. Instead, it has been used mainly to promote the Clinton Street Cabaret, a Portland theater troupe that performs The Rocky Horror Picture Show. The website contains numerous digital pictures of the actors and the playhouse, as well as information related to the performance and history of Rocky Horror. Several webpages display identification badges that ISS made for members of the Clinton Street Cabaret

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and a splinter acting group, Sibling Rivalry. A question and answer page provides peculiar information touting Tchou's badge-making abilities.

Initially, the website included uncommonly detailed information about how Tchou transferred the digital pictures onto the Internet and how he touched them up before posting. This information suggested that Tchou prepared the photographs using "proprietary epix.com pixel manipulation (bitt-widdling) tools." In addition, a beta version of the website allegedly hyperlinked to a webpage containing autobiographical information about Tchou. That page purportedly bally-hooed Tchou's technical experience with computer hardware, software, and graphics and also permitted visitors to read about ISS and its consulting services.

The present dispute first erupted when Epix unsuccessfully attempted to register the www.epix.com domain name that ISS was already using. Epix demanded that Network Solutions cancel ISS's epix.com registration. When informed by Network Solutions of Epix's demand, ISS filed for a declaratory judgment of non-infringement. Epix counterclaimed, alleging federal unfair competition and trademark infringement, as well as Oregon trademark infringement and dilution. Once Epix counterclaimed, or at some point thereabouts, ISS stripped its site of everything except the Clinton Street Cabaret information.

In the first go-round of this contest, the district court granted summary judgment in favor of ISS, finding no likelihood of confusion between ISS's use of epix.com to support the Clinton Street Cabaret and Epix's business use of the mark EPIX. Interstellar Starship Servs. v. Epix Inc., 983 F.Supp. 1331, 1336-37 (D.Or.1997). Epix appealed. We held that although the district court "undertook a well-reasoned analysis of the appropriate law," there remained contested issues of material fact concerning whether ISS and Tchou infringed Epix's registration of the EPIX mark by using the epix.com website. Interstellar I, 184 F.3d at 1111.

On remand, Epix amended its complaint to include a claim of cyber-squatting pursuant to the newly enacted Anticyber-squatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d) (1999). A bench trial ensued, wherein the district court resolved numerous contested factual matters. In the end, the district court held that ISS's past use of epix.com to promote Tchou's digital image processing software and computer consulting services did infringe Epix's trademark. The district court determined, however, that ISS's present use of epix.com to display electronic pictures and other information related to The Rocky Horror Picture Show did not infringe Epix's trademark. The district court found no cybersquatting violation under the ACPA and no trademark dilution under Oregon law. To remedy ISS's past infringement, the district court enjoined ISS from further infringing uses of the EPIX mark, including promotion of Tchou's technical services and digital image processing, the use of gray wallpaper, and the use of the EPIX.COM logo without an appropriate annotation disclaiming any affiliation with Epix. Nevertheless, the district court allowed ISS to retain ownership of epix.com.

Epix appeals the district court's refusal to transfer to it the epix.com domain name after finding past infringement by ISS. Epix appeals also the district court's determinations that ISS's use of epix.com did not result in initial interest confusion, that ISS did not cybersquat on epix.com, and that ISS did not dilute the EPIX mark. Finally, Epix prays that we broaden the district court's injunction to encompass

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ISS's successors and assigns of the epix.com domain name.

STANDARD OF REVIEW

We review for clear error the district court's legal and factual determination of likelihood of confusion under the trademark laws. GoTo.Com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1204 (9th Cir. 2000). If the district court's account of the evidence is plausible in light of the record viewed in its entirety, we may not reverse even though convinced that had we been sitting as the trier of fact, we would have weighed the evidence differently. Anderson v. Bessemer City, 470 U.S. 564, 573-74, 105 S.Ct. 1504, 84 L.Ed, 2d 518 (1985). The district court's injunctive relief is reviewed for an abuse of discretion. Brookfield Communications, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1045 (9th Cir. 1999). The grant of a permanent injunction will be reversed only when the district court based its decision on an erroneous legal standard or on clearly erroneous findings of fact. GoTo.Com, 202 F.3d at 1204.

DISCUSSION

I INITIAL INTEREST CONFUSION

The core element of trademark infringement is whether the similarity of the marks is likely to confuse customers about the source of the products. In this case, Epix argues that ISS's and Tchou's use of epix.com causes a likelihood of initial interest confusion among consumers. See Brookfield, 174 F.3d at 1062 (applying initial interest confusion to a domain name case); Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 260 (2d Cir. 1987) (recognizing the possibility of initial interest confusion). Initial interest confusion occurs when the defendant uses the plaintiff's trademark "in a manner calculated 'to capture initial consumer...

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