American Exp. v. AMERICAN EXP. LIMOUSINE SERVICE, CV 91-1117.

• Decision Date: 03 September 1991
• Docket Number: No. CV 91-1117.,CV 91-1117.
• Citation: 21 USPQ 2d 1009,772 F. Supp. 729
• Parties: AMERICAN EXPRESS COMPANY, Plaintiff, v. AMERICAN EXPRESS LIMOUSINE SERVICE LTD., a/k/a American Express Town Car Service, a/k/a American Express Lincoln Town Car Service, Donald Barfield and Ralph Cantone, Defendants.
• Court: U.S. District Court — Eastern District of New York

772 F. Supp. 729

21 USPQ 2d 1009

AMERICAN EXPRESS COMPANY, Plaintiff, v. AMERICAN EXPRESS LIMOUSINE SERVICE LTD., a/k/a American Express Town Car Service, a/k/a American Express Lincoln Town Car Service, Donald Barfield and Ralph Cantone, Defendants.

No. CV 91-1117.

United States District Court, E.D. New York.

September 3, 1991.

Weiss, Dawid, Fross, Zelnick & Lehrman, P.C. by Richard Lehv, New York City, for plaintiff.

Edward M. Rosensteel, New York City, for defendants.

MEMORANDUM AND ORDER

WEXLER, District Judge.

Plaintiff American Express Company ("American Express" or "plaintiff") brings the above-referenced action against defendants American Express Limousine Service, Ltd. and its owners ("AELS" or "defendants") alleging trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a), as well as trademark dilution and deceptive trade practices under New York law. N.Y.Gen.Bus.Law § 368-d (McKinney 1984). Defendants counterclaim for breach of a license agreement and bad faith and deception. Currently before the Court is plaintiff's motion for a preliminary injunction and summary judgment, pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, as to the trademark infringement and dilution claims. In addition, plaintiff seeks dismissal of defendants' counterclaims, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated below, plaintiff's motions are granted.

BACKGROUND

The following facts are undisputed. American Express, a diversified company involved in financial and travel-related services, as well as other services, owns its trade and service mark AMERICAN EXPRESS. It has used the mark since 1850 in connection with a diverse variety of services. Plaintiff has offered qualified consumers a charge card which prominently displays the AMERICAN EXPRESS service mark. At the end of 1990 there were over thirty-six million cards being accepted at over three million establishments worldwide. Plaintiff spends millions of dollars annually to promote its trade and service marks, particularly the AMERICAN EXPRESS Card, and thus asserts that it has acquired considerable recognition and good will.

Each year hundreds of thousands of vendors apply to become service establishments authorized to honor the AMERICAN EXPRESS card. For a business to become a service establishment it must enter into a service contract with American Express Travel Related Services Company, Inc., a wholly-owned subsidiary of plaintiff. By the contract, the service establishment agrees to prominently display both card application materials for customers and American Express identification, such as signs and decals. The contract additionally requires businesses which cease participating to remove such identification immediately.

On October 26, 1989, the defendant business was formed as a New York corporation under the name "American Express Limousine Service, Ltd." ALES is a business limited to providing car service in the tri-state area, primarily on Long Island. On November 15, 1989 plaintiff and defendants entered into a service contract which became effective December 7, 1989.

On March 8, 1991 an attorney for plaintiff sent a cease and desist letter asking defendants to cease using the term "American Express," or any derivation thereof. Plaintiff thereafter instituted this action on March 27, 1991. As noted above, defendants counterclaim for breach of a license agreement, and bad faith and deception. On April 19, 1991 plaintiff cancelled its service contract with defendant. Subsequently, plaintiff made the current motions.

DISCUSSION

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, a party is entitled to summary judgment when it is shown that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The Second Circuit reiterated the summary judgment standards in Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54 (2d Cir.1987). There, the Court stated that "the burden falls on the moving party to establish that no relevant facts are in dispute." 834 F.2d at 57 (citations omitted). Moreover, the court restated its well-established position that in deciding whether or not a genuine issue has been raised, the district court "must resolve all ambiguities and draw all reasonable inferences against the moving party." 834 F.2d at 57 (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980)). With these principles in mind, the Court turns to address the motion at bar.

In the trademark context, a party seeking a preliminary injunction must meet the requirements of the same test which controls the granting of preliminary injunctions in other contexts within the Second Circuit. See Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76, 78-9 (2d Cir.1981). That is, there must be a showing of "(A) irreparable harm and (B) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Id. (citing Jackson Dairy, Inc. v. H.P. Hood & Sons, 596 F.2d 70 (2d Cir.1979)). With regard to the case at bar, plaintiff's Lanham Act claims of trademark infringement, pursuant to 15 U.S.C. § 1114(1), and unfair competition, pursuant to 15 U.S.C. § 1125, both apply the same test to determine whether there has been a violation of the Act. "If the ordinary purchaser is `likely to be confused' as to the source of the goods by the acts of the infringing party, these Lanham Act sections have been abridged." Invicta Plastics (USA) Ltd. v. Mego Corp., 523 F.Supp. 619, 622 (S.D.N.Y.1981); see also Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 871 (2d Cir. 1986).

Plaintiff has satisfied the requirements of section 15 of the Lanham Act, 15 U.S.C. § 1065, thus ensuring that plaintiff's exclusive right to use its marks is incontestable in relation to "travel services," which among others includes transportation reservation services, as noted in its service mark registration. See Complaint at exhibit A; 15 U.S.C. § 1065. This constitutes conclusive evidence as to the "validity of the registered mark, ... and of the registrant's exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(b). Thus, plaintiff herein maintains an exclusive right to the use of its mark in connection with the specified services. Furthermore, incontestability bars any defenses against that registration other than those set forth in 15 U.S.C. § 1115(b)(1)-(8), see Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194-96, 105 S.Ct. 658, 661-62, 83 L.Ed.2d 582 (1985), only one of which, laches, is asserted by defendants herein.

Because plaintiff's exclusive right to its mark is incontestable, it will prevail if it can establish a "`likelihood that the consuming public will be confused as to the source of the allegedly infringing product.'" Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 631 F.Supp. 735, 740 (S.D.N.Y.1985), aff'd, 799 F.2d 867 (2d Cir. 1986) (quoting American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 664 (2d Cir.1979), cert. denied, 445 U.S. 951, 100 S.Ct. 1601, 63 L.Ed.2d 787 (1980)).

The Second Circuit noted the factors to be considered in making a determination as to the likelihood of confusion in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 82 S.Ct. 36, 7 L.Ed.2d 25 (1961). These factors include: (1) the strength of the mark, (2) the degree of similarity between the two marks, (3) the proximity of the products, (4) likelihood that the prior owner will bridge the gap, (5) actual confusion, (6) the good faith intent of the defendant in adapting the mark, (7) the quality of defendant's product, and (8) the sophistication of its buyers. Id. at 495. See also Centaur Communications, Ltd. v. A/S/M Communications, Inc., 830 F.2d 1217, 1225 (2d Cir.1987). It is to be noted that no single factor is determinative; all must be considered together "according to the degree to which each is implicated." Lois Sportswear, 631 F.Supp. at 741 (citing Lambda Electronics Corp. v. Lambda Tech., Inc., 515 F.Supp. 915, 925 (S.D.N.Y.1981)).

Although there may be issues of fact which arise with respect to the individual Polaroid factors, the application of these factors to the likelihood of confusion analysis often presents legal issues which are appropriately decided by the court upon a motion for summary judgment. See Lois Sportswear, 799 F.2d at 876. Accordingly, the Court turns to consider the likelihood of confusion in the case at bar in light of the Polaroid factors.

POLAROID FACTORS

Strength of Mark

Plaintiffs contend that the strength of the AMERICAN EXPRESS mark cannot be questioned, and defendants do not appear to challenge the strength of plaintiff's mark. Consequently, the Court accepts the recognition and goodwill claimed by plaintiff. Plaintiff, in addition to providing evidence as to the breadth of its activities, has shown itself to be extensively involved with the promotion of its mark. In addition to the recognition of its mark based on thirty-six million AMERICAN EXPRESS Cardholders charging billions of dollars worth of goods and services at over three million establishments world-wide in 1990 alone, plaintiff has spent millions of dollars annually to advertise and promote its mark, as well as the AMERICAN EXPRESS Card. These advertisements appear on radio, television, magazines, newspapers, in-store displays, direct mail, and statement inserts.

It is to be noted that ...