Fusco Group v. Loss Consultants Intern.

• Decision Date: 29 September 2006
• Docket Number: No. 1:05 CV 1208 LEK/DRH.,1:05 CV 1208 LEK/DRH.
• Parties: The FUSCO GROUP, INC. and M.A.F., Inc., Plaintiffs, v. LOSS CONSULTANTS INTERNATIONAL, INC. Defendant.
• Court: U.S. District Court — Northern District of New York

462 F.Supp.2d 321

The FUSCO GROUP, INC. and M.A.F., Inc., Plaintiffs, v. LOSS CONSULTANTS INTERNATIONAL, INC. Defendant.

No. 1:05 CV 1208 LEK/DRH.

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

September 29, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Joseph J. Christian, Paul C. Rapp, Hoffman, Warnick Law Firm, Albany, NY, for Plaintiffs and Counter Defendants.

Lee A. Palmateer, Nicholas Mesiti, Heslin, Rothenberg Law Firm, Albany, NY, for Defendant.

MEMORANDUM-DECISION AND ORDER

KAHN, District Judge.

Presently before the Court are motions by both plaintiffs The Fusco Group, Inc. ("Fusco Group") and M.A.:F., Inc. ("MAF") (collectively "Plaintiffs") and defendant Loss Consultants International, Ltd. ("Defendant" or "Loss Consultants") seeking preliminary injunctive relief. Pl. Motion (Dkt. No. 6), Def. Motion (Dkt. No. 17). For the following reasons, the Court denies Plaintiffs' motion and grants Defendant's motion.

I. BACKGROUND

This action involves a dispute over rights to the mark INTERCLAIM. Defendant is a corporation organized under the laws of Delaware which provides public adjuster services. Public adjusters negotiate with insurance companies to settle property insurance claims on behalf of insured parties. Andrew M. Fusco ("Andrew Fusco") is the President and sole owner of Loss Consultants. Andrew Fusco Aff. (Dkt. No. 10) at ¶ 1. Defendant began using the mark INTERCLAIM in 1993 to promote its services. Id. at ¶ 7. Loss Consultants applied for federal registration of the INTERCLAIM mark on November 29, 1993 and obtained a federal registration, U.S. Registration No. 1,905,133, on July 11, 1995 for use in connection with the advertisement, sale, and performance of public adjuster services. Id. at ¶ 7 & Ex. A.

Prior to 1997, Michael Fusco and Andrew J. Fusco ("A.J.Fusco") were associated with Loss Consultants, a relationship Andrew Fusco describes as an employment relationship and that Michael and A.J. Fusco describe as joint ownership. Andrew Fusco Aff. (Dkt. No. 10) at ¶ 14; A.J. Fusco Aff. (Dkt. No. 14) at ¶ 8; Michael Fusco Aff. (Dkt. No. 14) at ¶ 6. In 1997 and 1998, A.J. Fusco formed Plaintiff Fusco Group, a corporation organized under the laws of New York with its principal place of business is Niskayuna, New York, and Michael Fusco formed Plaintiff MAF, a corporation organized under the laws of Georgia with a principal place of business in Atlanta, Georgia. A.J. Fusco Aff. (Dkt. No. 6) at ¶ 1, Michael Fusco Aff. (Dkt. No. 6) at ¶ 1. From 1997 to 2005, Plaintiffs and Defendant worked cooperatively and promoted themselves as a single organization, all using the INTERCLAIM mark. Andrew Fusco Aff, (Dkt. No. 10) at ¶¶ 18, 21; A.J. Fusco Aff. (Dkt. No. 6) at ¶ 6 & Ex. D; Anthony Fusco Aff (Dkt. No. 11) at ¶ 7. The parties established regional markets with the Fusco Group operating in the northeast¹, MAF operating in numerous southern states², and Defendant operating in Florida. Andrew Fusco asserts that Plaintiffs were granted an oral, nonexclusive license to use the INTERCLAIM mark in connection with Plaintiffs' respective businesses. Andrew Fusco Aff. (Dkt. No. 10) at ¶ 16. Plaintiffs contend that Defendant simply allowed the mark to be used by them in their respective markets and exercised no control over their use of the mark. A.J. Fusco Aff. (Dkt. No. 6) at ¶¶ 7, 9; Michael Fusco (Dkt. No. 6) at ¶¶ 6, 8.

In 2002, Loss Consultants failed to file a Statement of Use under Section 8 of the Trademark Act and as a result, the registration was cancelled as of July 20, 2002. Loss Consultants filed an application to reregister the mark on December 12, 2003, and obtained the federal registration, U.S. Registration No. 2,908,090, on December 7, 2004. Andrew Fusco Aff. (Dkt. No. 10) at ¶ 12 & Ex. B.

In 2005, various disagreements began to form between the parties. As a result, by letter dated July 30, 2005, Defendant requested that both Plaintiffs' execute written License Agreements. Id. at ¶ 27 & Ex. F. Michael and A.J. Fusco, on behalf of Plaintiffs, refused to sign a written license. By letter dated August 31, 2005, Loss Consultants demanded Plaintiffs cease and desist from any further use of the INTERCLAIM mark. Id. at ¶ 28 & Ex. H. Loss Consultants then sent letters to Plaintiffs purporting to terminate Plaintiffs' oral licenses to use the INTERCLAIM mark. Id. at ¶¶ 28, 29. Plaintiffs have continued to use the INTERCLAIM mark in territories they deem they exclusively operated in and claim to possess a superior right to Defendant. A.J. Fusco Aff. (Dkt. No. 6) at ¶¶ 6, 8; Michael Fusco Aff. (Dkt. No. 6) at ¶¶ 5, 7.

Loss Consultants has begun granting license to utilize the trademark INTERCLAIM to parties other than Plaintiffs. On August 30, 2005, Loss Consultants entered into a Trademark License Agreement with Global Loss Consultants, Inc., which is owned by Anthony J. Fusco, under which, Global Loss Consultants is granted an exclusive license to use the mark INTERCLAIM in the states of North Carolina and South Carolina. Andrew Fusco Aff. (Dkt. No. 10) at ¶ 20 & Ex. C; Anthony Fusco Decl. (Dkt. No. 20) at ¶ 13.

In their September 28, 2005 complaint, Plaintiffs seek declaratory judgment that their use of the mark does not infringe on any rights of Defendant nor constitute unfair competition. Am. Complaint (Dkt. No. 4). Plaintiffs presently seek preliminary injunctive relief to enjoin Defendant from offering or licensing to third parties the right to offer public adjuster services under the trademark INTERCLAIM in territories in which Plaintiffs have allegedly exclusively used the mark for such services. Pl. Memo. of Law (Dkt. No. 6) at 3. Defendant has filed numerous counterclaims for trademark infringement and unfair competition and seek injunctive relief to prevent Plaintiffs from utilizing the INTERCLAIM mark. Answer (Dkt. No. 27); Def. Motion for Injunctive Relief (Dkt. No. 17); Def. Memo. of Law (Dkt. No. 22).

II. DISCUSSION

a. Preliminary Injunction Standard

"The purpose of a preliminary injunction is to prevent irreparable injury and preserve a court's ability to render a meaningful decision on the merits." Tactica v. Atl. Horizon Int'l, 154 F.Supp.2d 586, 597 (S.D.N.Y.2001) (citing WarmerVision Entm't v. Empire of Carolina, Inc., 101 F.3d 259, 261-62 (2d Cir. 1996)). "Because it is `one of the most drastic tools in the arsenal of judicial remedies', ... a preliminary injunction is an extraordinary measure that should not be routinely granted." Id. at 597 (quoting Hanson Trust PLC v. SCM Corp., 774 F.2d 47, 60 (2d Cir.1985)).

Pursuant to 15 U.S.C. § 1116³, this Court may grant injunctive relief. In order for the Court to grant preliminary injunctive relief, the party seeking such relief must demonstrate: 1) a likelihood of irreparable harm if the injunction is not granted; and 2) either a likelihood of success on the merits of its claims, or that there exists sufficiently serious questions going to the merits of the case to make them fair ground for litigation plus a balancing of the hardships that tips decidedly in the favor of the moving party. See SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharms., Inc., 211 F.3d 21, 24 (2d Cir.2000); Genesee Brewing Co., Inc. v. Stroh Brewing Co., 124 F.3d 137, 142 (2d Cir.1997); Coca-Cola v. Tropicana Products, Inc., 690 F.2d 312, 315-16 (2d Cir.1982). These requirements apply in a case involving trademark infringement. Hasbro, Inc. v. Lanard Toys, Ltd., 858 F.2d 70, 73 (2d Cir.1988); BeechNut, Inc. v. Warner-Lambert Co., 480 F.2d 801, 803 (2d Cir.1973).

b. Likelihood of Success on Merits

In order to sustain a claim for trademark infringement or unfair competition under either 15 U.S.C. § 1114 or 15 U.S.C. § 1125, the moving party must establish that: 1) the moving party has a valid mark entitled to protection under the Lanham Act; and 2) that the non-moving party's actions are likely to cause confusion in the marketplace as to the source of the services. Virgin Enters. v. Nawab, 335 F.3d 141, 146 (2d Cir.2003); Sports Auth. v. Prime Hospitality Corp., 89 F.3d 955, 960 (2d Cir.1996) (citing 15 U.S.C. §§ 1114, 1125); Council of Better Bus. Bureaus, Inc. v. Better Bus. Bureau, Inc., 99-CV-282, 1999 WL 288669, 04, 1999 U.S. Dist. LEXIS 6511, at "12 (N.D.N.Y. March 30, 1999) (Munson, DJ.); Major League Baseball Properties, Inc. v. Opening Day Productions, Inc., 385 F.Supp.2d 256, 265 (S.D.N.Y.2005).

i. Registration and Ownership of the Mark

The primary dispute in the present case concerns ownership of the mark INTERCLAIM. Defendant contends that its use of INTERCLAIM in interstate commerce since 1994 and federal registration of the mark in 1995 and reregistration in 2003 demonstrate its status as the owner and senior user of the mark. Def. Memo. of Law (Dkt. No. 22) at 8. Plaintiffs argue that Defendant's registration was fraudulent or alternatively, Plaintiffs are prior users as a result of their use of the mark before Defendant's reregistration in 2003.⁴ Pl. Memo. of Law (Dkt. No. 6) at 6-7. Plaintiffs also assert the equitable defenses of abandonment, laches and estoppel in opposition to Defendant's claim for preliminary relief. Pl. Response Memo. of Law (Dkt. No. 29) at 9-10.

Federal registration is important evidence of ownership of a mark. A trademark registration is prima fade evidence of the mark's validity, and of the registrant's ownership and exclusive right to use the mark in commerce in the United States. 15 U.S.C. § 1115(a); Gruner + Jahr USA Publ'g v. Meredith Corp., 991 F.2d 1072, 1075 (2d Cir.1993). However, a trademark is not acquired by registration. Ownership of a trademark stems from prior appropriation and use. See Time, Inc. v. Petersen Publ'g Co., 173 F.3d 113, 118 (2d Cir.1999); La Societe Anonyme des Parfums Le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1270 n. 5 (2d Cir.1974) (stating that registration "does not create the trademark right; it only recognizes the right acquired through...