TCPIP Holding Co. v. Haar Communications Inc.

• Decision Date: 19 January 2000
• Docket Number: Docket No. 99-7744
• Citation: 244 F.3d 88,2001 WL 197939
• Parties: (2nd Cir. 2001) TCPIP HOLDING COMPANY, INC., Plaintiff-Appellee, v. HAAR COMMUNICATIONS INC., and RICHARD S. HAAR, Defendants-Appellants, Argued:
• Court: U.S. Court of Appeals — Second Circuit

Page 88

244 F.3d 88 (2nd Cir. 2001)

TCPIP HOLDING COMPANY, INC., Plaintiff-Appellee, v. HAAR COMMUNICATIONS INC., and RICHARD S. HAAR, Defendants-Appellants,

Docket No. 99-7744

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: Jan. 19, 2000

Decided: Feb. 28, 2001

The defendants appealed from a preliminary injunction imposed on them by the United States District Court for the Southern District of New York (Richard Conway Casey, District Judge), barring them from using 81 registered internet domain names, on a finding that these names would be likely to dilute and infringe the plaintiff's trademark and service mark. The Court of Appeals (Leval, J.) holds: (1) insofar as the injunction was based on the Federal Trademark Anti-Dilution Act, it is vacated because plaintiff failed to show that its mark, "The Children's Place," for stores selling children's merchandise, had either sufficient inherent distinctiveness or sufficient fame to qualify for the protection of the Act; and (2) insofar as the injunction was based on infringement under the Lanham Act, it is affirmed in part and reversed in part. Certain of the defendants' domain names are so nearly identical to plaintiff's mark that their use in a related field of commerce will surely cause confusion. On the other hand, considering the inherently weak, descriptive nature of the plaintiff's mark, some of the defendants' marks are not sufficiently similar to cause likelihood of confusion or give rise to liability.

Affirmed in part and reversed in part.

KEITH E. SHARKIN, New York, N.Y. (Thomas H. Curtin and Robert M. Wasnofski Nims, Howes, Collison, Hansen & Lackert, On the Brief), for Plaintiff-Appellee.

AMY I. DON, New York, N.Y. (Wincig & Wincig), for Defendants-Appellants.

Before: LEVAL, PARKER, and KATZMANN, Circuit Judges.

LEVAL, Circuit Judge:

Defendants Haar Communications Inc. and Richard Haar appeal from the order of the United States District Court for the Southern District of New York (Richard Conway Casey, District Judge), preliminarily enjoining them from using 81 internet domain names consisting of variations of the words "The Children's Place." The district court held that these names were likely to dilute plaintiff TCPIP Holding Company's trademark and service mark, "The Children's Place," in violation of the Federal Trademark Anti-Dilution Act ("Dilution Act" or "FTDA"), 15 U.S.C. § 1125(c), and to infringe plaintiff's mark in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).

To the extent the court's ruling was on the basis of the Dilution Act, it is vacated. Because plaintiff's mark, "The Children's Place," for a store selling children's clothes, is descriptive and lacks inherent distinctiveness, it does not qualify for the protection of the Act; in addition, plaintiff failed to show that its mark is "famous," as required by the Act. To the extent the injunction was granted under the Lanham Act on the basis of likelihood of confusion, we affirm as to a number of the defendants' domain names that are confusingly similar to plaintiff's mark. However, some of the defendants' domain names are sufficiently different from plaintiff's mark, especially given its weak, descriptive character, that no infringement is properly found.

BACKGROUND

1. Facts

Plaintiff, TCPIP Holding Company, Inc. ("TCPIP"), operates a chain of stores, primarily in the eastern half of the United States, selling children's clothing and accessories. Plaintiff's stores operate under the registered mark, "The Children's Place." The articles sold in the stores are also labeled "The Children's Place."¹ Plaintiff has conducted this activity under its mark for about thirty years. Its has grown from 87 stores in 1994 to 228 in 1998, and its sales volume has increased during this same period from approximately $100 million to $280 million.

In August 1996, TCPIP registered two internet domain names, "tcpkids.com" and "childrensplace.com," which can be used to gain access to its web site, though which it sells goods bearing the mark, "The Children's Place."

Defendants, Haar Communications Inc., a New York corporation, and Richard Haar, its president and sole employee (collectively "Haar" or "defendant"), offer consulting and networking services in the area of telecommunications. Haar Communications was incorporated on April 24, 1998 and is located in a Manhattan apartment. Around the fall of 1998, Richard Haar developed the idea of creating a "portal" on the internet for children. This portal would be a webpage that would facilitate "surfing" the web for materials concerning children by providing links to a broad array of child-related products, services and information.

On November 9, 1998, Haar registered the domain name, "thechildrensplace.com," with the domain name registrar, Network Solutions, Inc. ("NSI"). After obtaining this domain name, Haar posted the following on the domain's website:

"THIS IS THE FUTURE HOME OF THE CHILDRENS PLACE THE PLACE FOR YOUR CHILDREN

For more information write haarcom@yahoo.com"

In late January 1999, TCPIP discovered that Haar had registered the domain name, "thechildrensplace.com." Counsel for TCPIP sent a letter demanding that Haar cease and desist from using plaintiff's mark and that Haar transfer to it the domain name registration for "thechildrensplace.com."

Haar then purchased and registered at least 66 more domain names containing variations of the words "children" and "place" in combination, at the price of $119 per name.² Approximately half of the names are identical to the other half, but for the fact that half end with the top-level domain³ of ".com," while half end with ".net"-as in "thechildrensplaces.com" and "thechildrensplaces.net," or "thechildplace.com" and "thechildplace.net." They also vary in that they employ combinations of the singular and plural forms of "child" and "place," as well as of the possessive form of "child/children." In some cases, the word "the" is either omitted or is replaced by "a," "your," or "our." Examples include "childplaces.com/.net," "achildplaces.com/.net," and "ourchildsplace.com/.net."

By letter dated February 10, 1999, Haar refused to cease using the domain name "thechildrensplace.com." Around this time, Richard Haar contacted Ezrah Dabah, the Chief Executive Officer of TCPIP, and requested a meeting to discuss the possibility of a joint venture. Dabah agreed to meet because TCPIP wished to acquire the domain name, "thechildrensplace.com."

Haar and Dabah met on February 22, 1999. At this meeting, Haar presented to Dabah a "business plan" for creating a portal on the internet and invited Dabah to enter into a joint venture to that end. Dabah declined this offer and, instead, asked Haar to name a price for "thechildrensplace.com."

By letter dated March 3, 1999, Haar offered to sell TCPIP a "Domain Matrix Package," including "thechildrensplace.com" and 35 of the other domain names, for $570,000. By letter of March 8, 1999, Haar offered another package of 44 names, for $697,000.

Dabah rejected the offers and proposed to purchase "thechildrensplace.com" alone for $30,000. Haar responded by offering to sell a package of sixteen domain names, including "thechildrensplace.com" and "thechildrensplace.net" at the price of $30,000 per name, or $480,000, plus TCPIP's transfer of its registration for "childrensplace.com" to Haar. Dabah refused, and TCPIP filed suit.

2. Proceedings Below

TCPIP's complaint alleged, inter alia, that Haar was liable for trademark infringement, unfair competition and dilution, and sought declaratory judgment, injunction, and punitive damages. The complaint listed 44 of Haar's registered domain names.⁴

On May 21, 1999, the district court heard oral argument on TCPIP's motion for preliminary injunction and granted the motion. Finding a "high degree of similarity" between TCPIP's mark and Haar's domain names, the court ruled that TCPIP was likely to succeed on the merits of its claims under the Dilution Act and for infringement under the Lanham Act. The court directed TCPIP to submit a proposed order listing the domain names to be enjoined.

TCPIP submitted a proposed order listing 67 domain names to be enjoined, consisting of the 44 names listed in footnote 4, plus an additional 23 similar names that begin with "your" or "our," rather than "the" or "a."⁵ Haar argued that "the domain names... which commence with the word 'your', or 'our', or 'a', or 'child', or 'the child', or 'children' are not confusingly similar or likely to cause dilution of the mark The Children's Place, and defendants should not be enjoined from use of the same." Haar proposed a counter-order that would enjoin only eight names.

On May 27, 1999, the court signed TCPIP's proposed order, preliminarily enjoining Haar from "using, as part of a domain name or otherwise" TCPIP's mark, "The Children's Place," or any "colorable imitation thereof," including the 67 names proposed by TCPIP.

On December 9, 1999, the district court granted TCPIP's motion to expand the scope of the injunction by adding an additional fourteen domain names Haar had registered at some point that year,⁶ bringing the total number of enjoined domain names to 81.

DISCUSSION

To obtain a preliminary injunction, TCPIP must establish: "(1) the likelihood of irreparable injury in the absence of such an injunction, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation plus a balance of hardships tipping decidedly" in its favor. Federal Express Corp. v. Federal Espresso, Inc., 201 F.3d 168, 173 (2d Cir. 2000). The standard of appellate review of a grant or denial of a preliminary injunction is said to be abuse of discretion. See, e.g., North Atl. Instruments, Inc. v. Haber, 188 F.3d 38, 43 (2d Cir. 1999); Otokoyama Co. v. Wine of Japan Import, Inc., 175 F.3d 266, 270 (2d Cir. 1999). However, that...