FRAGRANCENET. COM, INC. v. FRAGRANCEX. COM, INC.
| Decision Date | 14 January 2010 |
| Docket Number | No. 06-CV-2225(JFB)(AKT).,06-CV-2225(JFB)(AKT). |
| Citation | 679 F. Supp.2d 312 |
| Parties | FRAGRANCENET.COM, INC., Plaintiff, v. FRAGRANCEX.COM, INC., Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Robert L. Sherman and Bradford E. Young of Paul, Hastings, Janofsky, & Walker, LLP, New York, NY, for plaintiff.
John W. Dozier, Jr. and Cameron W. Gilbert of Dozier Internet Law, P.C., Glen Allen, VA, for defendant.
Plaintiff FragranceNet.com, Inc. (hereinafter "plaintiff" or "FragranceNet") brings this action against defendant FragranceX.com, Inc. (hereinafter "defendant" or "FragranceX") alleging that defendant's use of plaintiff's photographs and trademarks constitutes copyright infringement, trademark infringement, trademark dilution, violation of New York General Business Law § 133, state law dilution, injury to business reputation, common law unfair competition and misappropriation, passing off, and unjust enrichment.
Presently before the Court is defendant's motion to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Specifically, defendant contends (1) that FragranceNet cannot bring a claim for copyright infringement against defendant because the photographic images of products on FragranceNet's website are not entitled to copyright protection, and (2) FragranceNet cannot bring trademark-related claims against defendant because FragranceNet does not have enforceable rights to the trademarks "FRAGRANCENET" and "FRAGRANCENET.COM." For the reasons set forth below, the Court concludes that plaintiff has asserted plausible claims under the copyright and trademark laws that survive a motion to dismiss. Accordingly, defendant's motion is denied in its entirety.
For purposes of this motion to dismiss, the Court has taken the facts described below from the plaintiff's third amended complaint ("Compl."). These facts are not findings of fact by the Court but rather are assumed to be true for the purpose of deciding this motion and are construed in a light most favorable to plaintiffs, the nonmoving parties. See LaFaro v. N.Y. Cardiothoracic Group, 570 F.3d 471, 475 (2d Cir.2009).
Plaintiff FragranceNet is a Delaware corporation with its principal place of business in Hauppauge, New York. (Compl. ¶ 6.) Since January 1997, plaintiff has owned and operated an online retail store that sells perfume and related products at www.fragrancenet.com. (Id. ¶¶ 2, 11.) Defendant FragranceX is a New York corporation with its principal place of business in Long Island City, New York. (Id. ¶ 7.) Defendant sells perfume online at its website, www.fragranceX.com. (Id. ¶ 16.) The instant action arises out of defendant's alleged misappropriation and use of more than nine-hundred copyrighted images from plaintiff's website and defendant's alleged use of plaintiff's trademarks in defendant's website's metatags and in connection with Google's AdWords program. (Id. ¶ 2.) Plaintiff seeks preliminary and permanent injunctive relief, as well as compensatory and punitive damages based on defendant's actions. (Id. ¶ 4.)
According to the complaint, plaintiff has created hundreds of images of the products that it offers for sale, which are displayed on its website so that consumers can see visual images of the products. (Id. ¶¶ 12, 13.) The "background, arrangement, lighting, use of shadow, angle, and selection of products within each line to be included within the images are among the original elements contributing to the images." (Id.) FragranceNet owns and has owned the copyrights to these images at all relevant times. (Id. ¶¶ 14-15.) The complaint alleges that defendant copied more than nine hundred of these copyrighted images from FragranceNet's website, and posted them on its own website. (Id. ¶ 16.) Plaintiff attaches to its complaint screenshots depicting its own images side-by-side with copies of defendant's allegedly infringing images. (Compl. Ex. B.) According to the complaint, FragranceNet informed defendant that defendant's actions were infringing FragranceNet's copyrights, and FragranceNet sent several cease-and-desist letters to defendant, but defendant did not discontinue its use of the images. (Compl.¶¶ 17, 18.) Accordingly, plaintiff's complaint contains a cause of action for copyright infringement.
Plaintiff also owns the registrations for the trademarks FRAGRANCENET and FRAGRANCENET.COM, and plaintiff has used those marks in connection with its sale and marketing of perfume and related products online since January 27, 1997. (Id. ¶¶ 31, 34.) The marks were first registered by Telescents, Inc., a subsidiary of FragranceNet. These marks were assigned to plaintiff on May 28, 2009. (Def.'s Brief Ex. H.) The assignment included the "right to commence an action for past or future infringements." (Id.)
The complaint alleges that plaintiff has marketed and promoted its services under these marks in national magazines, newspaper inserts, direct mailings, and other advertising venues. (Compl. ¶¶ 32, 35.) Plaintiff has sold millions of dollars of merchandise through its website, which accepts orders directly from customers. (Id. ¶ 33.) Over the past twelve years of operation, plaintiff has established a reputation for high-quality retail sales and customer services under its marks. (Id. ¶ 37.) There is customer recognition of these marks, and the marks have acquired a substantial level of goodwill. (Id.)
The complaint alleges that defendant inserted plaintiff's trademarks, "FRAGRANCENET" and "FRAGRANCENET.COM" into the metatags on defendant's website. (Id. ¶ 21.) This action causes defendant's website to appear as a search result when a user searches plaintiff's trademarks in an internet search engine. (Id.) The complaint also alleges that defendant has bid on, purchased, and used certain keywords, including plaintiff's trademarks, in Google's AdWords program, with the knowledge that doing so would result in defendant's links appearing as "Sponsored Links" when a consumer types "FRAGRANCENET," "FRAGRANCENET.COM" or other variations of FragranceNet's mark into an internet keyword search on Google. (Id. ¶ 22.) The AdWords Program by Google allows advertisers to bid on particular keywords that apply to their websites. (Id.) Advertisers may specify whether keywords should be applied as a "broad match," "phrase match," "exact match," or "negative match." When an advertiser bids on a "broad match," its link will appear when a search is conducted for that keyword, any of its plural forms, synonyms, or phrases similar to the word. (Id. ¶ 24.) When an advertiser bids on a "phrase match," its link will appear when a user searches for a particular phrase, even if that phrase is used in combination with other words. (Id. ¶ 25.) An "exact match" will display the advertiser's link only when the exact phrase bid on is searched on Google. (Id. ¶ 26.) A "negative match" bid allows an advertiser to ensure that its link does not appear when certain terms are searched. (Id. ¶ 27.) Sponsored Links appear on the top and right side of the search results screen. (Id. ¶ 22.)
According to the complaint, defendant bid on certain keywords, including plaintiff's trademarks, to cause its links to appear as "Sponsored Links" on Google when a search for "FRAGRANCENET" or other variations of plaintiff's mark are performed. (Id. ¶¶ 22, 28.) As a result, defendant's links appear on the top and right side of the search results screen when searches for plaintiff's trademarks are performed. (Id.)
The complaint alleges that plaintiff demanded that defendant discontinue all further use of its marks and asked that defendant bid on plaintiff's mark as a "negative match" to prevent defendant's links from appearing as results when plaintiff's marks were searched on Google. (Id. ¶ 29.) According to the complaint, defendant knew that its use of plaintiff's trademarks in the AdWords program would result in consumers being "misdirected" to defendant's website instead of plaintiff's website, but defendant continued to use plaintiff's trademarks without permission. (Id. ¶ 39.) The complaint further alleges that defendant reasonably expected to receive revenue from interstate or international commerce from this use of plaintiff's trademarks. (Id. ¶ 40.) The complaint claims that this practice has caused confusion among consumers and has deprived FragranceNet of opportunities to expand its goodwill; the complaint alleges that plaintiff has suffered irreparable harm as a result of defendant's use of its trademarks. (Id. ¶¶ 41-46.)
On July 31, 2009, plaintiff filed its third amended complaint against defendant in this action. By letter dated August 11, 2009, defendant indicated its intention to move for dismissal of the complaint for failure to state a cause of action upon which relief can be granted. A pre-motion conference was held on August 20, 2009. On September 21, 2009, defendant filed its motion. Plaintiff filed opposition papers on October 21, 2009, and defendant filed its reply on November 9, 2009. Oral argument was heard on December 11, 2009. Defendant submitted a supplemental letter brief on December 23, 2009. Plaintiff responded on January 11, 2010. The Court has fully considered the submissions of the parties.
In reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff. See Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir.2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir.2005). The plaintiff must satisfy "a flexible `plausibility standard.'" Iqbal v. Hasty, 490 F.3d 143, 157 (2d Cir.2007), rev'd on other grounds sub nom. Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "Once a claim has been stated...
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