Interstellar Starship Services v. Epix, Inc.

Citations: 125 F. Supp. 2d 1269; 2001 U.S. Dist. LEXIS 100; 2001 WL 10885Docket: CIV. 97-107-JO

Court: District Court, D. Oregon; January 3, 2001; Federal District Court

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Interstellar Starship Services, an Oregon corporation, filed suit against Epix, Inc., a Delaware corporation, seeking a declaration that its use of the domain name "epix.com" does not infringe on Epix's registered trademark. Epix counterclaimed for federal trademark infringement, unfair competition, Oregon trademark dilution, common law trademark infringement, and cybersquatting. A bench trial occurred over three days in December 2000.

The case originated on January 21, 1997, with both parties moving for summary judgment regarding the domain name's alleged infringement. The court initially ruled in favor of Interstellar Starship, finding no evidence of actual confusion or bad faith and determining that the domain name was not in the same category as Epix's trademark. However, this ruling was reversed by the Ninth Circuit, which remanded the case for trial.

Subsequently, Epix sought to add a claim under the Anti-cybersquatting and Consumer Protection Act, which was granted. Epix's Amended Answer included requests for injunctive relief, lost profits, attorney fees, $100,000 in statutory damages under the ACPA, $10,000 for Oregon trademark infringement, and treble damages for willful infringement. Following issues with the plaintiff's legal representation, the court ordered the transfer of the "epix.com" domain to Epix pending resolution of the case. The court confirmed its jurisdiction under various statutes and outlined that the burden of proof in infringement actions lies with the plaintiff.

The defendant bears the burden of proving which portion of its profits is not attributable to the alleged trademark infringement (Cook v. Robbins). Under the Lanham Act, attorneys' fees may be awarded to the prevailing party in "exceptional cases," typically characterized by malicious, fraudulent, deliberate, or willful infringement (Gracie v. Gracie). In cases of willful infringement, the court may award damages up to three times the plaintiff's damages or the defendant's profits, aligning with equitable principles.

A federal trademark infringement claim can be made against anyone using a registered mark without consent, where such use is likely to cause consumer confusion (15 U.S.C. 1114(1)(a)). The standards for unfair competition and Oregon trademark infringement mirror those for federal trademark infringement, focusing on the likelihood of consumer deception or confusion. The plaintiff does not dispute the defendant's ownership of the registered "EPIX" trademark, which was registered for specific goods and services in 1990 and in Oregon in 1997, nor does it dispute that the defendant did not permit plaintiff or Tchou to use this trademark.

To assess the likelihood of consumer confusion, the court will consider the eight "Sleekcraft factors." Tchou argues that "epix.com" is distinguishable from "EPIX," claiming the suffix changes its meaning and that he pronounces it differently. However, the court finds these distinctions insufficient, noting that they are not readily apparent to the average consumer, who would likely not differentiate based on pronunciation or the presence of ".com." Consequently, the court concludes that the trademarks are very similar.

Defendant specializes in a range of imaging products and services, primarily focusing on "frame grabbers"—circuit boards that facilitate image capture and processing from video sources. Its offerings include software, consulting, and imaging services, often sold as upgrades for personal computers, with some pre-packaged systems. In contrast, plaintiff's web presence, "epix.com," lacks clear commercial intent, displaying a mix of personal and business elements. The site featured images from the "Clinton Street Cabaret," a calendar of events, and promotional content related to badge-making by Tchou, who utilized proprietary software and detailed the production process on the site. While Tchou's activities suggest some image processing capabilities, the overall presentation of the website indicates it functions more as a personal showcase rather than a dedicated business platform.

An early version of the "epix.com" strike page included autobiographical content and highlighted Tchou's expertise in computer hardware, software, and graphics. It mentioned that this was the second USA corporation named ISS Limited, the first of which was based in New Hampshire and specialized in providing services to high-tech firms in the Boston area, particularly in developing hardware and software for the computer graphics industry. The original ISS Ltd had strong ties with Raster Technologies, known for its high-speed graphic controllers. Although Raster Technologies has ceased to exist independently, its technological advancements remain in use.

The "epix.com" web server primarily served as a temporary repository for various binary files generated by ISS Ltd engineers to meet customer specifications, including software, source code, and images. Tchou denies that this content was displayed on his website, asserting that he maintains a numbering system for his files and that the file "hb-000.htm" was an unpublished draft. He contends that the defendants accessed this file improperly.

However, defendant's representatives, including Mr. Sheldon Epstein and Dr. Dreizen, testified that they accessed the "hb-000.htm" page through a link on Tchou's strike page. The existence of a construction notice on this page suggests it was intended for public viewing, contradicting Tchou's claims. The court finds Tchou's assertions unpersuasive and concludes that the "hb-000.htm" file was indeed linked to the "epix.com" strike page during a specified period.

Ultimately, the court determines that Tchou used the "epix.com" site to promote services in video image processing and software/hardware design, which overlap with those offered by the defendant. The reference to "bit twiddling using proprietary epix.com software" implies that "epix.com" sells image processing services. Nonetheless, the court acknowledges that the primary offerings associated with "epix.com" consist of unrelated products, including actor biographies and a calendar of theater-related activities.

The strength of the "EPIX" mark is evaluated, noting that strong marks receive broad protection, while weak marks only receive protection if they are "quite similar" and closely related to the goods. Fanciful, arbitrary, or fanciful terms are considered strong marks, while suggestive or descriptive marks are generally weak unless they gain marketplace recognition through advertising. The parties disagree on "EPIX" mark strength, with Dr. Dreizen asserting it is fanciful and unique, while Tchou claims it is widely used descriptively for "electronic pictures." A trademark search revealed at least eight other valid registrations for "EPIX" or similar terms, indicating a diminished likelihood of strong consumer association with the defendant's mark. Internet searches show numerous descriptive uses, reinforcing this view, including services from The Canadian Press and J C Penney. Although the defendant has taken action against potential infringers, the prevalence of similar marks suggests "EPIX" is a relatively weak mark.

Regarding marketing channels, the likelihood of confusion is linked to the overlap in how both parties market their goods. The defendant actively advertises in trade journals and at trade shows, while the plaintiff has not engaged in active promotion beyond a logo on identification badges. Tchou's site has some links from unrelated sites, but no active marketing efforts have been made. Consequently, the court finds minimal overlap in the marketing strategies of both parties, suggesting that potential consumers are unlikely to encounter both marks simultaneously.

The law assumes that purchasers of expensive goods exercise greater care and are less likely to be confused by similar trademarks compared to those buying inexpensive items. This principle applies to the defendant, who exclusively markets high-priced goods, with products ranging from $395 to over $15,000, primarily targeting expert buyers. Testimony from Dr. Dreizen indicates that the company advertises in specialized trade journals and has previously published a newsletter aimed at a sophisticated audience, reinforcing the expectation that customers will be discerning.

Regarding Tchou's registration of the domain name "epix.com," circumstantial evidence suggests he may have been aware of the defendant's trademark. Tchou, an electrical engineer with relevant experience, had likely encountered the defendant's products. However, factors such as the defendant's limited market presence, the specialty nature of its products, and the existence of multiple competitors in the circuit board industry suggest that it is plausible Tchou was unaware of the trademark when he registered the domain. Tchou intended to use "epix" as a descriptive term for his envisioned web portal focused on electronic images. His failure to successfully develop the site does not indicate bad faith in the registration of the domain.

Tchou's significant investment of time and resources into the "epix.com" domain, along with its descriptive value for his purposes, supports his claim of good faith use. Although Tchou acknowledged awareness of others' interest in the domain, this awareness does not negate his right to use it legitimately. The defendant's assertion that Tchou acted in bad faith by continuing to use "epix.com" after receiving notice of potential confusion is based on speculative evidence, including Tchou's past employment with Intel, which is deemed insufficient to prove any malicious intent against the defendant. The court finds no evidence linking Tchou’s domain use to an intention to harm the defendant's competitive position.

Regarding actual confusion, the defendant presented server log comparisons indicating overlap in user traffic between "epixinc.com" and "epix.com." However, the analysis conducted by Dr. Dreizen did not demonstrate genuine confusion about the affiliation of the marks. Misleading listings in advertisements and users guessing the domain do not constitute proof of infringement. The presence of initial confusion due to similar domain names may be actionable under the Lanham Act, as established in the Ninth Circuit, but requires evidence of bad faith, which was not present in Tchou's case. Other cases cited illustrate that mere accidental traffic does not warrant legal action without clear indicators of intentional deception.

Plaintiff's registration of the "epix.com" domain was done without knowledge of the defendant's trademark, indicating no intent to act in bad faith. The defendant did not demonstrate actual confusion or initial interest confusion necessary for a claim under the Lanham Act. The court noted that while the plaintiff expressed a desire to develop "epix.com" into an Internet portal for specialty pictures, the defendant had no plans to expand into related fields, making it unlikely that either party would infringe on the other's market. Other factors, aside from the similarity of marks, favored the plaintiff, including the lack of connection between their respective consumer bases and the defendant's consumers exercising high purchasing care. The "EPIX" mark was deemed neither particularly strong nor famous, and the plaintiff was unaware of the defendant's mark upon registration. 

Although certain aspects of the plaintiff’s website, such as specific page content and logo usage, created a risk of consumer confusion, the court found no evidence of financial gain for the plaintiff or loss for the defendant due to infringement. The court will determine the remedy for unintentional infringement later. Under Oregon law, the defendant's claim of trademark dilution also failed, as the defendant did not provide evidence of the distinctiveness or recognition of the "EPIX" mark among Oregon consumers, nor did it demonstrate any marketing efforts directed at that demographic. Therefore, the dilution claim was deemed unsubstantiated.

Defendant alleges that plaintiff violated the Anti-cybersquatting Consumer Protection Act (ACPA) by registering the "epix.cc" domain name with bad faith intent to profit from it. The ACPA, effective November 29, 1999, establishes that a person can be liable if they register, traffic in, or use a domain name that is identical or confusingly similar to a distinctive mark, provided there is bad faith intent. Nine factors may be considered to determine bad faith, but damages cannot be awarded for actions occurring before the ACPA took effect. 

In this case, the plaintiff denies having registered "epix.cc," while Dr. Dreizen's testimony indicates that a "whois" search in December 1999 showed the plaintiff as the registrant. However, eNIC Corporation's Director of Operations testified that there were no records of such a registration. Regardless of the registration status, the court will not award damages for ownership after the ACPA's effective date. Furthermore, Dr. Dreizen acknowledged that Tchou, the plaintiff, did not offer to sell "epix.cc," suggesting the intent to profit was abandoned after the ACPA took effect. As the defendant registered the name in January 2000, the need for injunctive relief is moot, leading to the denial of the defendant's cybersquatting claim.

The court concluded that plaintiff's current use of "epix.com" to showcase content related to the Rocky Horror Picture Show does not infringe on the defendant's "EPIX" trademark. However, past use for promoting Tchou's services infringed on the trademark, resulting in an injunction against such uses and specific limitations on logo display unless accompanied by an annotation clarifying non-affiliation with the defendant. Claims for trademark dilution and cybersquatting were denied, with each party bearing its own costs and attorney fees. The court rejected the plaintiff's argument against the applicability of the Lanham Act, affirming that the use of the "EPIX.COM" logo and the website for promotional purposes constitutes commercial use under the Act.

Plaintiff contended that the court should not evaluate the Sleekcraft factors due to the lack of relatedness between the products of the plaintiff and defendant, which they argued would preclude confusion. However, evidence indicated sufficient similarities in the services offered by both parties to justify the application of the Sleekcraft factors. The court noted that internet browsers treat upper- and lowercase letters in domain names as equivalent, and thus will refer to domain names in lowercase. 

The court highlighted similarities between the "epix.com" web address and the "EPIX" mark, including the use of grey wallpaper on both parties' web pages, with some pages on "epix.com" prominently displaying the plaintiff's logo. The Clinton Street Cabaret was described as a venue for live Rocky Horror Picture Show performances, engaging audiences in participation and celebrating over 22 years of screenings.

Technical terms related to web design were explained, including "pixel manipulation" and "strike page," which refers to the first page accessed on a website. The process of how web pages are displayed and linked was also clarified, noting that users can access non-linked pages through direct input of the URL.

The court expressed doubts regarding the credibility of Tchou, citing inconsistencies in his testimony about his knowledge of defendant's trademark and his application for the "EPIX" trademark. Tchou falsely claimed ignorance about potential confusion with his mark while being aware of the defendant's trademark challenge prior to his application. Furthermore, he misrepresented the purpose of his website, which he had intended to leverage for profit, contradicting his claims of charitable use. The court noted Tchou's acknowledgment that "bit twiddling" falls under the broader industry definition of "image processing."

Trademark registrations for "EPIX" were listed, including various classes such as services related to advertising and business, as well as products like games and clothing.

EPIX is a registered trademark associated with various categories, including dental and medical appliances, furniture, and advertising services. The name has multiple uses across different sectors, such as EPIX Medical for medical imaging equipment, Epix Records as a recording label, and a Norwegian website for 3D graphics. An internet search for "EPIX" yielded between 70,000 to 166,000 results, indicating its prevalence online. Tchou, who registered "epix.com," noted that the name's brevity and association with the Internet enhance its value. Actual confusion was evidenced by a customer who mistakenly accessed the plaintiff's website, leading to a search that revealed connections to the defendant's site. Despite some trade magazines incorrectly listing the defendant's address, the majority were accurate.

The defendant has potential liability if it expands its market, stemming from a 1989 settlement with Epic Data, Inc., which restricted the use of the "EPIX" mark to specific products. The court cannot determine if Tchou's future use of "epix" could confuse consumers but suggests that a disclaimer could mitigate confusion. Oregon's antidilution statute permits injunctive relief for potential harm to a mark's reputation, regardless of competition or confusion. The defendant failed to demonstrate the fame of the "EPIX" mark in any market. Additionally, eNIC Corporation offers "cc" domain names for situations where a ".com" name is unavailable, and the plaintiff registered "epix.cc" in 1999. Evidence of Tchou's offer to sell the "epix.com" name differs from any offer regarding "epix.cc." The terms of injunctive relief will be detailed in a separate order.