Interstellar Starship Serv. v. Epix Incorp.

• Decision Date: 19 July 1999
• Docket Number: No. 98-35424,No. 98-35142,98-35142,98-35424
• Parties: (9th Cir. 1999) INTERSTELLAR STARSHIP SERVICES, LIMITED, Plaintiff-Counter Defendant-Appellee, v. EPIX INCORPORATED, an Illinois Corporation, Defendant-Counter Claimant-Appellant. INTERSTELLAR STARSHIP SERVICES, LIMITED, Plaintiff-Counterclaim-Defendant-Appellant, and MICHAEL R. TCHOU, Counterclaim-Defendant-Appellant, v. EPIX INCORPORATED, an Illinois Corporation, Defendant-Counter claimant Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1107

184 F.3d 1107 (9th Cir. 1999)

INTERSTELLAR STARSHIP SERVICES, LIMITED, Plaintiff-Counter Defendant-Appellee, v. EPIX INCORPORATED, an Illinois Corporation, Defendant-Counter Claimant-Appellant.

INTERSTELLAR STARSHIP SERVICES, LIMITED, Plaintiff-Counterclaim-Defendant-Appellant and MICHAEL R. TCHOU, Counterclaim-Defendant-Appellant v. EPIX INCORPORATED, an Illinois Corporation, Defendant-Counter claimant Appellee.

No. 98-35142 No. 98-35424

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted June 8, 1999

Filed July 19, 1999

Sheldon L. Epstein, Law Office of S.L. Epstein (Argued and On the Briefs), Wilmette, Illinois, for defendant-appellant Epix, Incorporated.

Peter E. Heuser, Kolisch, Hartwell, Dickinson, McCormack & Heuser (On the Briefs), Portland, Oregon, for defendant appellant Epix, Incorporated.

William S. Lovell, Aloha, Oregon, for appellees cross appellants Interstellar Starship Services, and Michael R. Tchou.

Savoy Rose Jade, Newport, Oregon, for appellees cross appellants Interstellar Starship Services, and Michael R. Tchou.

Appeals from the United States District Court for the District of Oregon Helen J. Frye, District Judge, Presiding. D.C. No. CV-97-00107-HJF.

Before: Dorothy W. Nelson, Stephen Reinhardt, and Stephen S. Trott, Circuit Judges.

OPINION

TROTT, Circuit Judge:

Epix, Inc. appeals a summary judgment for Interstellar Starship Services, Ltd. ("ISS"), and ISS cross-appeals the denial of its request for attorneys' fees. In a published opinion, 983 F. Supp. 1331 (D. Or. 1997), the district court held that ISS's maintenance of an internet web page at "epix.com" did not infringe Epix's registered trademark, "EPIX," and granted declaratory judgment to ISS. The district court then denied ISS's request for attorneys' fees. We have jurisdiction under 28 U.S.C. S 1291 (1994), and we reverse and remand the grant of summary judgment in favor of ISS. We affirm the denial of ISS's request for attorneys' fees.

I.

Epix manufactures and sells video imaging hardware and software and provides consulting services to customers with regard to its products. Epix registered "EPIX " with the United States Patent and Trademark Office ("PTO") in 1990, claiming a first-use date of November 1984. The tendered and accepted purpose of the "EPIX" trademark encompassed "printed circuit boards and computer programs for image acquisition, processing, display and transmission in class 9." The "EPIX" trademark acquired incontestable status in December, 1996. The registration does not relate to Epix's consulting services, although in an application filed April 1997 for registration of "EPIX" as a trade and service mark with regard to computer graphics designs and services for computer graphics designs, Epix claims to have used "EPIX" in commerce as a service mark as well. The PTO has not issued a decision on Epix's recent service mark application.

The record does not make crystal clear the precise nature of ISS's business or its use of the "epix.com " web page. On November 4, 1996, ISS applied for registration of "EPIX" as a trade and service mark for use on computer graphics design services and computer graphics, although ISS now contends this was an error on the part of its attorney, who should have applied to register not "EPIX," but "epix.com." The PTO denied the application, and ISS is currently appealing that denial to the Trademark Trial and Appeals Board. The district court concluded from the record that ISS's business included the offering of consulting services on " `design for test' circuit analysis." Interstellar, 983 F. Supp. at 1332.

Currently, pictures of a Portland, Oregon drama group, the "Clinton Street Cabaret," can be found at the "epix.com" web site. At one time, the web page included information about how the pictures were transferred to a computer and touched up for posting. This information has since been removed from the "epix.com" site. The site also included at one point a link which permitted visitors to read about ISS and its business.

II

Epix sought to have Network Services, Inc. ("NSI"), the registrar of domain names, cancel the "epix.com " registration. Under NSI's domain-name dispute policy, when Epix supplied NSI with a certified copy of its registration of the "EPIX" trademark, NSI informed ISS that it would lose its light to use "epix.com" unless it could present NSI with a declaratory judgment of non-infringement of Epix's trademark.

ISS sued for declaratory judgment of its right to maintain the "epix.com" web site. Epix counterclaimed, alleging federal trademark infringement, federal unfair competition, Oregon common-law trademark infringement, and Oregon law trademark dilution. ISS moved for summary judgment on its claim for declaratory relief, and Epix moved for summary judgment of the validity, enforceability, and infringement of its trademark. The district court granted summary judgment to ISS and denied summary judgment to Epix. 983 F. Supp. at 1336-37.

III

We review the district court's grant of summary judgment de novo. Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998). Viewing the evidence in the light most favorable to Epix, we must reverse summary judgment if genuine issues of material fact remain such that ISS is not entitled to judgment as a matter of law. See id. Because of the intensely factual nature of trademark disputes, summary judgment is generally disfavored in the trademark arena. Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1356 n.5 (9th Cir. 1985).

The district court correctly recognized that a word used as a second-level domain name in a web-site address can present a cause of action for trademark infringement. See Brookfield Comms., Inc. v. West Coast Ent. Corp., 174 F.3d 1036, 1045-47 (9th Cir. Apr. 22, 1999). Under federal trademark infringement law, 15 U.S.C. S 1114 (1994), federal unfair competition law, 15 U.S.C. S 1125(a) (1994), and Oregon common law of trademark infringement, Epix can defeat summary judgment by placing evidence on the record tending to "establish that [ISS] is using a mark confusingly similar to a valid protectable trademark of [Epix]'s." Brookfield, 174 F.3d at 1046 see Classic Instruments, Inc. v. VDO-ARGO Instruments, 73 Or.App. 732,700 P.2d 677, 684(1985)(applying cases interpreting federal law to an Oregon-law cause of action for trademark infringement).

The district court concluded that Epix has a valid and protectable trademark in "EPIX," a conclusion which ISS does not dispute.¹ Whether a likelihood of confusion exists requires us to consider the eight "Sleekcraft factors," which we recently revisited in Brookfield:

similarity of the conflicting designations; [2] relatedness or proximity of the two companies' products or services; [3] strength of [Epix]'s mark; [4] marketing channels used; [5] degree of care likely to be exercised by purchasers in selecting goods; [6] [ISS]'s intent in selecting its mark; [7] evidence of actual confusion; and [8] likelihood of expansion in product lines.

174 F.3d at 1053-54 (citing AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979)). We recognize a brand of confusion called "initial interest " confusion, which permits a finding of a likelihood of confusion although the consumer quickly becomes aware of the source's actual identity and no purchase is made as a result of the confusion. Brookfield, 174 F.3dat 1061-64 (citing Dr. Seuss Enters. v. Penguin Books USA, 109 F.3d 1394, 1405 (9th Cir. 1997), and Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 257-58 (2d Cir. 1987)).

A

The district court correctly concluded that two Sleekcraft factors support Epix's claim of a likelihood of confusion. Applying Brookfield, "epix.com " is, "for all intents and purposes, identical in terms of sight, sound, ² and meaning" to "EPIX," 147 F.3d at 1055 (citing the district court's disposition in this case, 983 F. Supp. at 1335, as an example of an appropriate comparison between a domain name combination and a trademark), and because both ISS and Epix market on the internet, the marketing channels are identical, see id. at *17. One Sleekcraft factor supports ISS's claim that no likelihood of confusion exists: the degree of care likely to be exercised by customers. Epix's customers are sophisticated industry and university researchers, and Epix's goods cost in the range of several thousand to tens of thousand dollars. See Sleekcraft, 599 F.2d at 353 (holding that expensive goods and sophisticated purchasers cut against a likelihood of confusion). Sophisticated purchasers of expensive goods should eventually be able to find exactly what they are searching for.

B

The five remaining Sleekcraft factors require the weighing of conflicting evidence. Because a court should not weigh evidence on a summary judgment motion, Abdul-Jabbar v. General Motors Corp., 85 F.3d 407, 410 (9th Cir. 1996), we remand for trial.

Similarity of products and services: ISS argues that "epix.com" is used only as a repository for photographs, such that ISS does not compete with Epix's video imaging business. Although ISS correctly points out that its use of the "epix.com" web site, rather than the entirety of the business transacted under the ISS name, is the relevant criterion, the disputed site previously included a discussion of ISS's business. Moreover, evidence indicates that the web site explained how photographs of the Clinton Street Cabaret were altered and displayed on the internet. This evidence supports an inference that ISS markets video imaging services on the "epix.com" site. When we consider the doctrine of initial interest confusion, this evidence becomes even more compelling. An Epix customer might read about ISS on the "epix.com" site and decide to give ISS's services a try, permitting ISS to capitalize on the goodwill Epix developed in its trademark -even if the customer is never confused about Epix's lack of connection to "epi...