Fare Deals Ltd. v. World Choice Travel.Com, Inc.

• Decision Date: 20 November 2001
• Docket Number: No. CIV.A.S-01-1825.,CIV.A.S-01-1825.
• Citation: 180 F.Supp.2d 678
• Parties: FARE DEALS, LTD., Plaintiff, v. WORLD CHOICE TRAVEL.COM, INC., et al., Defendants.
• Court: U.S. District Court — District of Maryland

180 F.Supp.2d 678

FARE DEALS, LTD., Plaintiff, v. WORLD CHOICE TRAVEL.COM, INC., et al., Defendants.

No. CIV.A.S-01-1825.

United States District Court, D. Maryland. Northern Division.

November 20, 2001.

COPYRIGHT MATERIAL OMITTED

Richard William Winelander, Baltimore, MD, for Plaintiff.

Thomas S. Hood, Law Office, Towson, MD, Mark Andrew Goodin, Morgan Lewis and Bockius LLP, Washington, DC, Howard M. Neu, Law Office of Howard M. Neu PA, Pembroke Pines, FL, Mark A. Miller, Baker Botts LLP, Washington, DC, Van H. Beckwith, Tyler L. Murray, Baker Botts LLP, Dallas, TX, Defendants.

MEMORANDUM OPINION

SMALKIN, Chief Judge.

This matter comes before the Court on a motion to dismiss for failure to state a claim upon which relief can be granted, filed by the defendant Hotel Reservations Network, Inc. ("HRN"), and a motion to dismiss, or, in the alternative, for summary judgment, filed by the defendant Cimo, Inc., d/b/a Hotwire ("Hotwire"). Both defendants are incorporated under the laws of Delaware. The plaintiff, Fare Deals, Ltd. ("Fare Deals"), a Maryland corporation, is seeking relief for the misuse of its name via the internet web site , whose domain name is registered to another defendant, NetHoldings.com, Inc. ("NetHoldings"). The issues have been well briefed by the parties, and no oral hearing is necessary. Local Rule 105.6 (D.Md.).

BACKGROUND

Fare Deals has been providing travel services in Maryland since 1990, primarily by arranging transportation reservations and tours for its customers. From the beginning, it has used the "Fare Deals" mark in connection with its business. In September 1993, Fare Deals applied for federal registration of the service mark "Fare Deals Ltd." with the United States Patent and Trademark Office. That Office approved the mark on March 30, 2001, and the registration ultimately issued on July 17, 2001.

Some time in 1996, Fare Deals began to develop an interactive web site to promote its business but soon discovered that the domain name had already been registered to a C.K. Solutions, a Canadian company. Consequently, Fare Deals set up its web site at . At some point prior to April 2000, defendant Ricardo Barnes ("Mr. Barnes") became the registered owner of the domain name . In April 2000, Mr. Barnes in turn transferred the registration to BSB Trade and Technology Ltd., a corporation with offices in Beijing, China. Somewhat later, Mr. Barnes entered into an agreement with defendant Harvey Kaplan ("Mr.Kaplan") to use the domain name to sell on-line travel services through a new entity, defendant NetHoldings. The domain name was transferred to NetHoldings and, in April 2001, Fare Deals alleges that Messrs. Barnes and Kaplan, NetHoldings, and Hotwire developed and launched the web site . Via a Hotwire banner ad posted on the site and linked to Hotwire's web site, customers could make airline reservations and purchase airline tickets from Hotwire.

Learning from a confused customer about the site, on May 2, 2001, Fare Deals sent a letter to Hotwire under the mistaken impression that Hotwire was the registered owner of the domain name and demanded that Hotwire discontinue use of the site. Upon receipt of Fare Deals' letter, counsel to Hotwire contacted Fare Deals' attorney by telephone, asserted that Hotwire was not the registered owner of the domain name, and asked whether the posting of a disclaimer would settle Fare Deals' complaints. Soon thereafter, a disclaimer appeared on the web site, clarifying the site's lack of connection with Fare Deals. Hotwire, however, never required the owners or operators of the site to post such a disclaimer. By letter dated May 9, 2001, Fare Deals demanded that Hotwire cease and desist use of the "Fare Deals" mark.

Several days later, NetHoldings and Messrs. Barnes and Kaplan launched a new version of the web site. This expanded site allowed customers to link not only to Hotwire, but also to HRN's web site, where customers could book hotel reservations. On June 13, 2001, after discovering the new site and its links, Fare Deals sent a cease and desist letter, similar to the letter it had sent Hotwire, to HRN. In response, HRN, by letter dated June 18, 2001, denied that it was using Fare Deals' mark, indicated that it neither owned nor controlled the web site, but promised to forward Fare Deals' complaint to the operators of the allegedly infringing site.

According to Fare Deals' complaint, HRN, Hotwire, NetHoldings, and Messrs. Barnes and Kaplan, pursuant to an agreement, would divide up the proceeds of sales made at the HRN and Hotwire web sites. The agreement to which Fare Deals refers is the standard affiliate agreement of HRN and Hotwire, whose relevant terms will be examined in due course.

Both HRN and Hotwire market the travel services that they sell on their web sites by making advertisements, in the form of banner ads or links, available to owners of independent internet web sites, who may post them on their own sites after accepting the terms of HRN's or Hotwire's affiliate agreements. Under both HRN's and Hotwire's agreements, participating affiliates are paid a commission every time customers at affiliate web sites follow the posted links from the affiliate sites to HRN's or Hotwire's site and complete a purchase transaction with HRN or Hotwire. In order both to enable affiliates to create the links and to track sales originating from individual affiliates, HRN and Hotwire provide each of their affiliates with a unique universal resource locater ("URL"). By reviewing usage of the unique URLs, HRN and Hotwire can then calculate the commissions due each affiliate.

Indeed, in January 2001, Mr. Kaplan, on behalf of NetHoldings, submitted an on-line application with respect to the web site to become an affiliate of HRN. HRN approved the application and assigned a unique URL to , which became an HRN affiliate the same month. Although HRN denies that Mr. Kaplan or NetHoldings ever submitted an application for the site, the Court will nevertheless assume, as it must for purposes of HRN's instant motion to dismiss, that a valid affiliate agreement existed between HRN and . Also in early 2001, Mr. Kaplan submitted an affiliate application to Hotwire with respect to the web site . Hotwire approved the application and provided with a unique URL; in March 2001, became a Hotwire affiliate. However, neither Mr. Kaplan nor NetHoldings ever submitted an application to Hotwire with respect to the web site. Accordingly, Hotwire maintains no agreement of any sort with the site. Nevertheless, inasmuch as was in fact linked to Hotwire, it would appear that Mr. Kaplan (or someone else) copied the unique URL assigned to to create a link from the site to Hotwire.

On June 22, 2001, Fare Deals filed the present nine-count action against Messrs. Barnes and Kaplan, NetHoldings, Hotwire, and others, alleging federal and state-law claims for relief, to wit: Count I-cyberpiracy under the federal Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d); Count II-federal false designation of origin under 15 U.S.C. § 1125(a); Count III-federal trademark dilution by blurring under 15 U.S.C. § 1125(c); Count IV-federal trademark dilution by tarnishment under 15 U.S.C. § 1125(c); Count V-common-law unfair competition; Count VI-common-law trade disparagement; Count VII-tortious interference with economic relationships; Count VIII-civil conspiracy; and Count IX-deceptive trade practices under the Maryland Consumer Protection Act, Md.Code Ann., Com. Law II § 13-408(a).¹ On June 29, 2001, this Court granted Fare Deals a temporary restraining order shutting down the web site. On July 9, 2001, Fare Deals filed an amended complaint adding HRN as a defendant.

I. DEFENDANT HRN

STANDARD FOR MOTION TO DISMISS

Under Federal Rule of Civil Procedure 12(b)(6), dismissal of a complaint for failure to state a claim is not appropriate "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). When ruling on a motion to dismiss under Rule 12(b)(6), a court must accept the allegations contained in the complaint as true. See DeBauche v. Trani, 191 F.3d 499, 505 (4th Cir.1999) (citing Conley, 355 U.S. at 47-48, 78 S.Ct. 99). The court, however, is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). Otherwise, "Rule 12(b)(6) would serve no function, for its purpose is to provide a defendant with a mechanism for testing the legal sufficiency of the complaint." Dist. 28, United Mine Workers of Am., Inc. v. Wellmore Coal Corp., 609 F.2d 1083, 1086 (4th Cir.1979); see also Randall v. United States, 30 F.3d 518, 522 (4th Cir.1994) (reiterating that a plaintiff's legal conclusions merit no deference in deciding a motion to dismiss).

In addition to the factual allegations, the court may also consider any documents referred to in the complaint and relied upon to justify a cause of action-even if the documents are not attached as exhibits to the complaint. See Fed.R.Civ.P. 10(c); New Beckley Mining Corp. v. Int'l Union, United Mine Workers of Am., 18 F.3d 1161, 1164 (4th Cir.1994) (citing Cortec Indus. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir.1991) (deeming a complaint "to include ... any statements or documents incorporated in it by reference" and permitting a defendant to produce such materials when attacking the complaint)). When the bare allegations of the complaint conflict with any exhibits or other documents, whether attached or adopted by reference, the exhibits or documents prevail. Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir.1991).

In bringing its action, Fare Deals has referred to and relied upon its correspondence with HRN and the affiliate agreement (the ...