Lucent Information Manage. v. Lucent Technologies

• Decision Date: 05 November 1997
• Docket Number: No. CIV.A.96-450-RRM.,CIV.A.96-450-RRM.
• Citation: 986 F.Supp. 253
• Parties: LUCENT INFORMATION MANAGEMENT, INC., Plaintiff, v. LUCENT TECHNOLOGIES, INC., Defendant.
• Court: U.S. District Court — District of Delaware

986 F.Supp. 253

LUCENT INFORMATION MANAGEMENT, INC., Plaintiff, v. LUCENT TECHNOLOGIES, INC., Defendant.

No. CIV.A.96-450-RRM.

United States District Court, D. Delaware.

November 5, 1997.

N. Richard Powers, Harold Pezzner, Connolly, Bove, Lodge & Hutz, Wilmington, DE, Richard I. Samuel, Jill C. Greenwald, Cobrin Gittes & Samuel, New York, NY, for plaintiff.

Donald F. Parsons, Jr., Karen L. Pascale, Morris, Nichols, Arsht & Tunnell, Wilmington, DE, Robert M. Newbury, Mark V.B. Partridge, Bradley L. Cohn, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, Mari M. Gursky Shaw, Lauren S. Kellner, Akin, Gump, Strauss, Hauer & Feld, L.L.P., Philadelphia, PA, for defendant.

MEMORANDUM OPINION

McKELVIE, District Judge.

This is a trademark case. Plaintiff Lucent Information Management, Inc. ("LIM") is a Pennsylvania corporation specializing in computer document management systems. Defendant Lucent Technologies, Inc. ("LTI") is a Delaware corporation that provides goods and services in telecommunication and information systems.

LIM filed a complaint on September 12, 1996, alleging that LTI is engaging in trademark infringement in violation of federal law, 15 U.S.C. § 1125(a), through its use of the mark LUCENT. LIM also alleges that LTI is engaging in service mark infringement, tradename infringement, and unfair competition under Delaware common law. Finally, LIM alleges that LTI is violating the Delaware Uniform Deceptive Trade Practices Act, Del. code ann. tit. 6, § 2532 (1974). On October 3, 1996, LTI filed an answer to LIM's complaint, in which it denies the allegations and raises several affirmative defenses.

On July 3, 1997 LTI moved for summary judgment as to Counts I through V, the claims listed in LIM's September 12, 1996 complaint. LTI argues that its use of the LUCENT mark is not infringement because LIM can not establish use prior to LTI's registration of an intent-to-use application with the Patent and Trademark Office.

On July 1, 1997, LIM moved for partial summary judgment that its claims are not barred by the first three affirmative defenses raised in LTI's answer. These defenses each relate to correspondence that LIM exchanged with LTI. LTI claims that this correspondence constitutes an agreement between the parties that bars LIM's suit, or alternatively that the correspondence is an admission by LIM that LTI is not infringing the mark. This is the court's decision on these summary judgment motions.

I. FACTUAL AND PROCEDURAL BACKGROUND

Both parties submitted briefs in support of their positions on the summary judgment motions. The parties also submitted excerpts from the transcripts of several depositions taken during discovery, as well as selected documents produced during discovery. The court draws the following facts from the parties' pleadings, the parties' briefs, and the evidentiary submissions.

A. LIM's Adoption and Use of Mark

LIM was formed in 1995 by four individuals: Norman Feinstein, Samuel Weinberg, Edward Eisen, and Cliff Armstrong. They formed the company in order to offer services for document imaging and management. On August 22, 1995, the company filed Articles of Incorporation in the Commonwealth of Pennsylvania under the name "Lucent Systems Corporation." On September 22, 1995, the company changed its name to Lucent Information Management.

LIM's office was set up using space within the building owned by Mr. Feinstein's other business, Corporate Consultants, Inc. LIM is still located there today. Two Corporate Consultants employees do all of LIM's clerical work and bookkeeping. These two employees do not receive payment from LIM.

On September 5, 1995, Mr. Feinstein sent out a letter on Corporate Consultants letterhead to approximately 50 people, announcing the formation of LIM and the goals of the company. Around this same time, LIM hired a graphics designer to develop a design for such things as a logo, letterhead, message pads, labels, and brochures.

On October 5, 1995, Mr. Armstrong installed a modem at the Israel Bonds office in Philadelphia. The request for the modem was made by Harriet Potashnick, who Mr. Armstrong knew personally, through Mr. Feinstein. Mr. Armstrong indicated in his deposition, taken in connection with this case, that he did not provide any written materials on LIM to Ms. Potashnick at the time of the sale. He did not have any written correspondence about the transaction with her, and does not recall from whom he obtained the modem. Ms. Potashnick has since produced an invoice for the transaction from the Israel Bonds office files. The invoice has the name and address of LIM at the top, is dated October 15, 1995, and requests that the check be made payable to Cliff Armstrong. Ms. Potashnick has also produced a copy of a check from an Israel Bonds bank account dated October 31, 1995, signed by Ms. Potashnick, payable to Cliff Armstrong for $323.50.

On October 16, 1995, LIM met with Corporate Consultants to discuss products and services that could be used by Corporate Consultants. Corporate Consultants' records indicate they were using File Magic Plus, a system that LIM sells and offers services for, as early as November 12, 1995.

In November 1995, LIM made sales presentations to ARAMARK in Philadelphia, to NBC in New York City, and to Nixon Uniform in Delaware. Between December 1, 1995, and February 5, 1996, LIM made approximately 12 additional sales presentations, to a total of about 50 people. On February 16, 1996, LIM entered into a support agreement for document management software with a local bank.

LIM has continued to try and build its business. Through 1996 LIM had made sales with total gross revenues of approximately $138,000.00.

B. LTI's Adoption and Use of Mark

In 1995, AT & T began the process of creating a spinoff company, which would focus on telecommunication systems and technology. That fall, AT & T hired an outside firm to generate possible names for the new company. One of the suggested names was "Lucent." AT & T's trademark counsel, Frank L. Politano, coordinated efforts to find a name for the spinoff company.

In November, 1995, AT & T obtained two full trademark reports and a trade name search for LUCENT. One of these reports, prepared by Thompson & Thompson, lists LIM. The report is 82 pages longs and lists all the company names that were produced by a series of computer database searches. The searches looked for such things as the word "Lucent," or the combination of letters "LUC" in a company name. Searches were performed in a database of PTO references, in a state trademark database, and in common law libraries and databases. In one on-line search, LIM is listed as a Pennsylvania corporation, along with 65 other companies.

On November 30, 1995, AT&T filed an intent-to-use ("ITU") application with the PTO for the mark LUCENT for classes 9, 37 and 42. These classes cover a wide range of goods and services, including telecommunications products, designs for telecommunications systems, and telecommunications computer programs and networks. The application was allowed by the PTO on June 10, 1997. LTI has since filed statements of use. The registration has not yet been issued.

On January 30, 1996, LTI purchased the rights to the mark LUCENT SYSTEMS and the Internet domain name LUCENT.COM from a California corporation called Lucent Systems, Inc. Lucent Systems was a computer consulting company that had used the LUCENT name and mark from 1987 through 1996. After the sale of the name, Lucent Systems changed its name to Denken Systems, Inc. and continued to do computer consulting work.

On February 5, 1996, AT & T announced that its spinoff company would be named "Lucent Technologies, Inc." Major newspapers all across the country reported this announcement. LTI mailed out announcements to over 1.2 million people.

C. Dealings Between LIM and LTI

On March 15, 1996, LIM's trademark attorney, John Caldwell sent a letter to LTI objecting to LTI's use of the name LUCENT, and claiming that LIM had already adopted and used this name on a nationwide basis.

On April 12, 1996, LTI's trademark counsel, R.A. Ryan, responded to the March 15 letter from LIM. Ms. Ryan stated that she did not agree that LTI's use of the name Lucent Technologies creates a likelihood of confusion. She explained that in her opinion the two companies' markets do not overlap, and their products and services are not confusingly similar.

On April 29, 1996, LIM filed an application with the United States Patent and Trademark Office (" the PTO") to register the mark "Lucent" for computer and office-related services. The application claimed that LIM first used the mark on March 6, 1996.

Mr. Caldwell responded to LTI's letter with a proposed agreement ("the Agreement"), in which each party would agree to refrain from opposing the other's registration of the mark LUCENT, and to use trade dress, advertising, and marketing in a way that would avoid significant likelihood of confusion. The Agreement was never signed by the parties.

On June 25, 1996, Richard Samuel wrote a letter to Ms. Ryan indicating that he was taking over representation of LIM in the matter, and that any previous offers of settlement by LIM were withdrawn.

On September 12, 1996, LIM filed suit against LTI. The complaint alleges that LTI infringes LIM's trademark in violation of federal trademark law, 15 U.S.C. § 1125(a). It also alleges that LTI is violating the common law of the State of Delaware as it relates to service marks, tradename infringement, and unfair competition. Finally, it alleges that LTI is violating the Delaware Uniform Deceptive Trade Practices Act. See Del. code ann. tit. 6, § 2532 (1974).

On October 3, 1996, LTI filed an answer to LIM's complaint. In the answer, LTI denies the allegations and raises several affirmative defenses. Three of these defenses are based on the correspondence and proposed agreement between the parties. LTI argues that these...