Inc. Pub. Corp. v. Manhattan Magazine, Inc.

• Decision Date: 02 August 1985
• Docket Number: No. 84 Civ. 6882-CSH.,84 Civ. 6882-CSH.
• Citation: 616 F. Supp. 370
• Parties: INC. PUBLISHING CORPORATION, Goldhirsh Group, Inc., and Bernard A. Goldhirsh, Plaintiffs, v. MANHATTAN MAGAZINE, INC., Metrocorp, and D. Herbert Lipson, Defendants.
• Court: U.S. District Court — Southern District of New York

616 F. Supp. 370

INC. PUBLISHING CORPORATION, Goldhirsh Group, Inc., and Bernard A. Goldhirsh, Plaintiffs, v. MANHATTAN MAGAZINE, INC., Metrocorp, and D. Herbert Lipson, Defendants.

No. 84 Civ. 6882-CSH.

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

August 2, 1985.

Berle, Kass & Case, New York City (Peter A.A. Berle, Michael B. Gerrard, New York City, of counsel), for plaintiffs.

Dechert Price & Rhoads, New York City, Dechert Price & Rhoads, Philadelphia, Pa. (Robert C. Heim, John M. Coleman and Judy L. Popper, Philadelphia, Pa., of counsel), for defendants.

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

Plaintiffs bring this action for statutory and common law trademark infringement arising from the use of allegedly similar magazine titles. They seek an injunction and an accounting. Subject matter jurisdiction is based on 28 U.S.C. §§ 1338 and 1332. Venue lies under § 1391(b). Plaintiff's motion for a preliminary injunction was consolidated with trial on the merits. Rule 65(a)(2), F.R.Civ.P. The Court denied a preliminary injunction.¹ The plenary bench trial of the action for permanent injunction and an accounting has been concluded. What follows constitutes the Court's findings of fact and conclusions of law. Rule 52(a).

I. Plaintiffs' Publications

Plaintiffs own and publish the magazine "Inc.," a monthly publication, distributed nationwide. Plaintiff Bernard A. Goldhirsh controls the corporate plaintiffs. Their main offices are in Boston. Offices are also maintained in Manhattan and elsewhere.

After a planning and formulation period in 1977-1978, "Inc." first appeared in April 1979, and monthly thereafter. Its logo consists of the word "Inc.," set in upper and lower case, hand-lettered Times Roman serif type, in the upper left-hand corner of the cover, accompanied by the descriptive phrase set in smaller type, all capitals:

"THE MAGAZINE FOR GROWING COMPANIES."

Plaintiffs furnished a further description of "Inc."'s editorial content in a trade publication called "Standard Rates & Data" ("SRD"). SRD groups magazines into various categories; and, as to each magazine, prints a "publisher's editorial profile" which the magazine's executives draft. The profile is intended to state succinctly what the magazine is about. SRD then prints circulation figures and advertising rates. Advertisers and their agencies use SRD as an important reference. "Inc." is listed under magazines dealing with "Business & Finance." The "publisher's editorial profile for "Inc." contained in the May 27, 1985 issue of SRD reads as follows:

"INC. is for executives who run small to midsized companies. Its purpose is to provide them with specific, practical answers to both their immediate and long-term management problems. Through in-depth studies, Inc. demonstrates how other entrepreneurs have dealt with major business decisions, and offers the reader guidelines for solving his own. Its departments stress the how-to aspects of Financial Management, Personnel Management, Marketing, Sales, Administration and Operations. Inc. also covers and analyzes news pertinent to smaller company management, including trends, economic forecasts and legislation that affect them."

"Inc." prospered. Certain of plaintiffs' witnesses almost went so far as to suggest that this is the greatest publishing success story since the invention of the printing press. Even allowing for partisan enthusiasm, it is clear that "Inc." has been highly successful. From a standing start in early 1979, in January 1985 the magazine had achieved a guaranteed paid circulation of 600,000. Goldhirsh testified, and I accept, that present paid circulation (including subscription and newsstand sales) is 640,000 to 650,000 copies. "Inc."'s total revenues for 1983 (the last year for which complete figures are available) were about $33,600,000. That represents a growth from 1982 to 1983 of 58 percent. An expert witness for plaintiffs, whose evidence I accept, estimated "Inc."'s total revenues for 1984 at about $50,000,000.

"Inc." is distributed nationwide. There is no regional difference in its editorial content. Advertisements differ, to some degree, on a regional basis.

On September 7, 1982 plaintiffs registered the trademark "Inc." with the United States Patent and Trademark Office, Reg. No. 1,207,153. The registration was issued for "business magazine, in Class 16 (U.S. Cl. 38)."

II. Defendants' Publication

Defendants own and publish the magazine "Manhattan, Inc.," a monthly publication, distributed in the tri-state, greater New York metropolitan area. Defendant D. Herbert Lipson controls the corporate defendants, whose main offices are in Manhattan.

Lipson is the sole shareholder of defendant Metrocorp, which in turn owns three magazines: "Philadelphia Magazine," "Boston Magazine," and (most recently) "Manhattan, inc." "Philadelphia Magazine" was started in 1908. Lipson became its publisher in 1961. He acquired "Boston Magazine" from the Boston Chamber of Commerce in 1971. These two publications are known to the trade as "city magazines." They are distributed regionally, and cover a broad range of general interest subjects in their particular urban areas: politics, fashion, restaurant and theater reviews, and the like.

In early 1983, Lipson and his colleagues focused on a magazine for the New York City market. A "typical city magazine" was rejected because of the successful presence of New York Magazine. Finally Lipson decided on "a business magazine," but "somewhat different"; they developed "the concept of a hybrid magazine which is a cross between People and Forbes, a little bit of Ms. ... We wouldn't write articles about companies. We would just focus on the people and personalities, the players in this arena of Manhattan"; the concept narrowed down "just to cover the people who worked on this island."²

The first issue of "Manhattan, inc." appeared in September 1984. The magazine's logo is set in hand-lettered Caslon serif type. The words "Manhattan, inc." (the "i" in "inc." is lower case) appear in a colored and bordered box at the top of the cover which runs its full width. Above the title there appears in smaller type, upper and lower case:

"The Business of New York."

The "publisher's editorial profile" in SRD describes the magazine as follows:

"MANHATTAN, INC. is a feature business magazine for and about the people who dominate the world's most competitive marketplace. It is about economic, political, social and cultural power. The editorial concentrates on Manhattan-based businesses, with features on Wall Street deals, lucrative real estate transactions, advertising, publishing, law, banking, retailing and entertainment. The magazine also includes advice on the high points of working and winning in Manhattan, such as office essentials, discreet business lunch spots and the top cultural events."

"Manhattan, inc." is off to a good start. The present circulation is about 50,000. An increasing number of impressive ads appear. No detailed financial figures are in evidence, and it may well be that the magazine is not yet showing a profit. But it is clear that, in the high risk, low survival world of magazine publishing, the launching of "Manhattan, inc." gives considerable promise.

III. Pre-Litigation Dialogue Between the Parties

I will now consider certain transactions and communications between the parties during the period prior to filing of suit.

One marketing stratagem used in starting a new magazine is direct, pre-publication mailings to prospective subscribers. This occurs when the magazine has not yet seen the light of day. It is only a gleam in its publisher's eye, reinforced by dummy layouts and other tentative projections. The early mailings seek to attract "charter subscribers" — individuals who can be persuaded by promotional material to subscribe, usually at discount rates.

To cull from the metropolitan area's teeming millions a likely group of addressees for this purpose, magazine publishers employ the services of list brokers. Every magazine has a list of its current subscribers. Publishers rent or sell their lists to other publishers, and rent or buy others' lists. The list brokers stand at the middle of such transactions. They also act as "list managers" of their publisher-clients' lists. The practice is rampant, although the general public may not be aware of it. It explains, for example, why, if you subscribe to one investment advisory service, you begin to hear from 34 other services.

Publishers exercise control over their lists. Generally, they do not want them to be used by direct competitors. The more fastidious publishers do not wish tasteless mailings sent to their subscribers. Accordingly industry custom and practice require a list broker to send the proposed mailing to the list owner and obtain the latter's approval before selling or renting all or part of the owner's list to another publisher.

To ensure compliance with these restrictions, publishers commonly "salt" or "seed" their lists. This involves sprinkling through the subscription list names and addresses of the publisher's executives, employees, or surrogates. The purpose is to run a check on the entities to whom the broker is distributing the list. As the case at bar shows, this safety system works.

Plaintiffs' list broker is American List Council. Plaintiffs dealt with its president, Liza Price. Defendants' list broker is the Kleid Company. The account executive in charge of defendants' account is Maryann Mallardi.

In late 1983, the staff at "Manhattan, inc." was engaged in preparing a direct mailing to solicit charter subscribers. They rented lists or portions of lists from a number of magazine publishers. One of these was "Inc." In early December 1983, Mallardi forwarded an order to Price for 5,000 names from the "Inc." mailing list. At that time, the tentative name for the new venture was not "Manhattan, inc." but rather "Manhattan Magazine." Price...