Cello Holdings, L.L.C. v. Lawrence-Dahl Companies

• Decision Date: 06 March 2000
• Docket Number: No. 97 Civ. 7677 (DC).,97 Civ. 7677 (DC).
• Citation: 89 F.Supp.2d 464
• Parties: CELLO HOLDINGS, L.L.C. and CELLO MUSIC & FILM SYSTEMS, INC., Plaintiffs, v. LAWRENCE-DAHL COMPANIES and Lawrence Storey, Defendants.
• Court: U.S. District Court — Southern District of New York

89 F.Supp.2d 464

CELLO HOLDINGS, L.L.C. and CELLO MUSIC & FILM SYSTEMS, INC., Plaintiffs, v. LAWRENCE-DAHL COMPANIES and Lawrence Storey, Defendants.

No. 97 Civ. 7677 (DC).

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

March 6, 2000.

COPYRIGHT MATERIAL OMITTED

Hunton & Williams, by Christopher M. Mason, Jeffrey W. Gutchess, Elisabeth Stewart Bradley, New York City, for Plaintiffs.

Engel & McCarney, by James G. McCarney, Thomas E. Engel, New York City, for Defendants.

MEMORANDUM DECISION

CHIN, District Judge.

In 1997, defendant Lawrence Storey registered the Internet domain name "cello.com." Plaintiffs Cello Holdings, L.L.C. and Cello Music & Film Systems, Inc. and their predecessors (collectively, "Cello") have been selling "high end" audio equipment under the "Cello" name since 1985, and Cello registered the trademark "Cello" for use in the audio equipment business in 1995. Cello commenced this lawsuit, contending that Storey's actions in registering and trying to sell the domain name "cello.com" were diluting its trademark "Cello."

Before the Court are the parties' cross-motions for summary judgment. Cello contends that Storey is a "cybersquatter" who had no "productive use" in mind for the domain name when he registered it. Rather, Cello contends that Storey registered the name solely for the purpose of "blackmail[ing]" someone into buying it. Storey, on the other hand, contends that Cello has failed to demonstrate that the "Cello" mark is distinctive or famous, and argues that "cello" is a common noun used in the names of dozens of businesses. Storey, a California resident, also contends that the Court lacks personal jurisdiction over him.

Because there remain genuine issues of material fact as to the merits, the parties' cross-motions for summary judgment are denied. In addition, Storey's assertion that this Court lacks personal jurisdiction over him is rejected.

BACKGROUND

A. The Facts

1. Plaintiff

Cello has been promoting and selling audio equipment for the "hi-end" market and for professional recording studio work under the "Cello" name since 1985. (Adams Decl. ¶ 7). Cello sells its audio equipment both directly through stores in New York, Los Angeles, Houston, Dallas, and Seattle, and through authorized distributors in six states and fourteen foreign countries. (Beck Decl. ¶¶ 4-5).

Cello music systems are "high-end" systems; they sell for a minimum of $20,000 and for as much as $150,000 to $500,000 or more. (Adams Decl., Ex. I). In the past decade, Cello has sold more than $42 million of equipment in the U.S. and abroad. (DiSalvo Decl. ¶¶ 3-4). Cello's equipment has been reviewed in a number of magazines, including Audio/Video Interiors, Hi-Fi News & Record Review, High Performance Review, Stereophile, Suono, The Absolute Sound, The Home Theater Authority, Video Magazine, and Vive La Vie. (Adams Decl. ¶ 14, Exs. C-P).

2. Defendants

Storey is a former musician who runs a small business out of his home in California selling "vintage audio equipment and accessories" under the name Audio Online. (Storey Decl. ¶ 2). He has sold "mid-fi or hi-fi" audio equipment over the Internet under his own name since about April 1997 and under the business name, Audio On-line, since early 1998. (Storey Tr. at 28-29, 51-56, 58, 104-05, 227-28, 324-33; Mason Decl., Ex. X). Storey has sought to conduct "a vintage clothing business," as well as other interests, under the name "Lawrence-Dahl Companies," but he contends that this business "never got off the ground" and that therefore defendant Lawrence-Dahl Companies is not a separate legal entity. (Storey Decl. ¶ 2).

Storey has registered numerous domain names with Network Solutions, Inc. ("NSI"), an Internet domain name registry, including "cello.com," "gotmilk.com," "stereo.com," "4nasdaq.com," and "thenyse.com." (Storey Tr. at 106, 111-13, 126-33, 167-68, 218, 255-56, 261, 264-66, 281-82; Mason Decl., Exs. M, Q, R, T). Using a website called "logicaldomain.com," Storey advertised a number of his registered domain names for sale to the public, including "cello.com," "hosemonster.com," and "goldmetal.com." He has sold two domain names, "hosemonster.com" and "numerouno.com," for a total of approximately $1,100. (Storey Tr. at 112, 134; see Mason Decl., Ex. M).

3. The "Cello" Mark

A "cello" is a musical instrument—"the bass member of the violin family tuned an octave below the viola." Webster's New Collegiate Dictionary 177 (1980).

The mark "cello," alone or in combination with other words, has also been registered with the United States Patent and Trademark Office (the "PTO") for use with different products or services by many businesses that are not a party to this lawsuit. These include, for example: Cello Chemical Company for floor waxes and furniture polish ("Cello" and "Cello Brate"); Arthur Schuman Inc. for cheese ("Cello" and "Cello" with a design); General Mills, Inc. for stainless flatware ("Cello"); Cellocoup, S.A. for packing and wrapping materials ("Cello"); Goldmine Internet Services N.V. for telecommunications, computer programming services, and scientific, electric, and teaching materials ("Cello"); Teknion Furniture Systems for office furniture ("Cello"); Ava Care for juice of the Aloe Vera Plant ("Cello-Gel"); Aloe Development Corp. for perfumes and skin care products ("Cello by Annette"); Perfect Plus, Inc. for hair care services ("Cello-Gloss"); Chase Bag Company for paper bags ("Cello-Ply"); Grissom, Pinkney O'Shaughnessy for musical entertainment services ("Cajun Cello"); Virus Reference Laboratory, Inc. for media used in medical packaging ("Cello-Gel"); Les Emballages Du Reins for paper and clear plastic wrap dispensing machines ("CelloCoup"); Sebastian International, Inc. for shampoo ("Cello-Shampoo"); Bognar and Company, Inc. for lightweight dry insulating composition ("Cello-Crete"); and John Reed for sound recordings ("CelloSex"). (Hans Decl. ¶ 2 & Ex. 1).

Defendants' counsel's Internet searches also reveal that numerous businesses other than plaintiffs use the word "cello" as part of their name, including, for example: Cello Printers Inc., Club Cello, Cello Development Corporation, Cello Pack Corporation Buffalo, Cello Group Inc., Cello Antiques, Cello-Foil Products Inc., Cello Bag Inc., Cello Vision Plant, and Cello Audio Plus. (Hans Decl. ¶ 3 & Ex. 2).

"Cello" also is the name of a multipurpose Internet browser developed by the Legal Information Institute at Cornell Law School. (Hans Decl. ¶ 4 & Ex. 3).

In August 1995, Cello obtained a federal trademark registration for "Cello" from the PTO. The PTO issued a trademark registration to Cello for the use of the mark "Cello" in connection with "amplifiers, preamplifiers, tone controls, speakers, switch boxes, power supplies, and associated accessories." (Adams Decl., Ex. B).

In June, 1997, Storey registered the domain name "cello.com" with NSI. (Storey Tr. 255-56; Mason Decl., Ex. U). He did so as part of his effort to register the single noun names of at least twenty musical instruments, including, among others, "guitar.com," "drums.com," and "violin.com." He found, however, that with the exception of "cello.com" the names were already registered. (Storey Decl. ¶ 5; Storey Tr. at 343). At the time, he was aware that "Cello" was a brand name for audio equipment. (Storey Tr. at 92-93, 96).

4. Storey's "Presence" in New York

Storey is a citizen and resident of California. He has never resided in or been a citizen of New York. He has never owned any real property or maintained any offices, bank accounts, or telephone listings in New York. He has not personally visited New York in almost thirty years. (Storey Decl. ¶¶ 2, 4).

Although Storey's business, Audio On-line, "does not specifically target New York customers," it "seeks to promote sales internationally through the internet." (Storey Decl. ¶ 3). After the filing of this lawsuit, Storey had "a few isolated sales [of equipment] totaling approximately $1,000" to customers in New York. (Storey Decl. ¶ 3; see also Storey Tr. at 228). He believes that he did not have any such sales to customers in New York prior to the lawsuit. (Storey Decl. ¶ 3).

In 1997, within days after he registered the domain name "cello.com," Storey sent electronic mail messages over the Internet to at least nine individuals or companies he had targeted, offering to sell "cello.com" for $4,800. (Storey Tr. at 149-56; Mason Decl., Exs. B-J). Storey also telephoned a Cello store in Los Angeles and was referred to Cello in New York. He then telephoned Cello's then-president, Mark Levinson, in New York in an effort to sell "cello.com" to Cello for approximately $5,000 or in exchange for some equipment. Storey telephoned Levinson a second time, again offering Cello the opportunity to buy "cello.com." (Storey Tr. at 81-88, 97, 99, 147, 170). Storey also contacted someone at Cornell University in Ithaca, New York, who he thought might be interested in purchasing the domain name. (Mason Decl., Ex. J).

In addition to attempting to sell "cello.com" via electronic mail and over the telephone, Storey offered it for sale (together with other domain names he had registered) on a website entitled "logicaldomain.com." (Storey Tr. at 106, 111, 168; Mason Decl., Ex. M). The "logicaldomain.com" site was open to everyone in the world and was viewable by New York residents. (Storey Tr. at 144-45).

B. Prior Proceedings

Cello commenced this action on October 16, 1997, asserting claims under the Federal Trademark Dilution Act (the "FTDA"), 15 U.S.C. § 1125(c), and § 360-1 of the New York General Business Law. N.Y. Gen. Bus. L. § 360-1 (McKinney Supp. 1999). After discovery, these motions followed.

In November 1999, while the cross-motions for summary judgment were pending, the Anticybersquatting Consumer Protection Act (the "ACPA") was signed into law. Pub.L. No. 106-113, 113 Stat. 1501 (1999) (to be codified at 15 U.S.C. § 1125(d)). On February 2, 2000, the Second...