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CSC Holdings, LLC v. Optimum Networks

August 17, 2010

CSC HOLDINGS, LLC, PLAINTIFF,
v.
OPTIMUM NETWORKS, INC. AND FRANK AZNAR, DEFENDANTS.



The opinion of the court was delivered by: Walls, Senior District Judge

FOR PUBLICATION

OPINION

Defendants Optimum Networks, Inc. and Frank Aznar move to dismiss the complaint filed by plaintiff CSC Holdings, Inc., also known as Cablevision. Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the motion is decided without oral argument. The motion is denied.

FACTS AND PROCEDURAL BACKGROUND

Plaintiff is a Delaware limited liability company and a provider of telecommunications and entertainment services. (Compl. ¶¶ 1, 6.) In addition to the cable television and digital telephone services it provides, plaintiff is an internet service provider ("ISP") to its residential and business customers. (Compl. ¶ 9.) Defendant Optimum Networks, Inc. is a New Jersey corporation and an ISP to primarily commercial entities; defendant Frank Aznar is its founder. (Compl. ¶¶ 7-8; Def. Br. 3.)

Plaintiff alleges that, since the mid-1990s, it has been providing goods and services using the trademark "OPTIMUM®", including internet access, webhosting, and email. (Compl. ¶ 10.) Plaintiff asserts that it "owns incontestable U.S. Registration No. 2,609,003 for its OPTIMUM® mark based on first use in commerce in August 1994." (Compl. ¶ 15.) Plaintiff alleges that, "since its adoption in 1994, the OPTIMUM® mark has always been the 'umbrella' mark for Cablevision's digital communications services." (Compl. ¶ 13). The marks under this "umbrella" include OPTIMUM BUSINESS®, OPTIMUM® LIGHTPATH, and OPTIMUM® TRIPLE PLAY (Compl. ¶¶ 11-12), as well as OPTIMUM® ONLINE, OPTIMUM® PREFERRED, OPTIMUM® VOICE, and OPTIMUM® REWARDS (Compl. ¶ 16). Plaintiff also alleges that, "since as early as 1994," it has "registered and used OPTIMUM®-inclusive Internet domain names . . . in connection with websites promoting the various services offered under the OPTIMUM® marks." (Compl. ¶ 17.) These domain names include Optimum.com, Optimum.net, OptimumOnline.com, and OptimumRewards.com, among others. (Id.)

On March 2, 2010, plaintiff filed a complaint in this Court, alleging that "long after" it commenced use of the OPTIMUM® marks "in connection with ISP and related services," and "long after those marks became exclusively associated" with plaintiff, defendants began using Optimum ISP, Optimum Networks, Optimum Networks, Inc., and OptimumISP.com in connection with their products and services. (Compl. ¶¶ 18-19.) As alleged by Plaintiff, these "Infringing Designations" and "Infringing Domain Name" are unlawful because they "incorporate [plaintiff's] longstanding, federally registered OPTIMUM® mark in its entirety," and further associate themselves with plaintiff and its OPTIMUM® services through the inclusion of the terms "ISP" and "Networks." (Compl. ¶ 20.) Plaintiff asserts that defendants commenced use of the infringing designations and domain name despite actual knowledge and constructive notice of plaintiff's use of the OPTIMUM® marks and domain names, and that defendants refused to comply with plaintiff's pre-suit request to voluntarily discontinue use of the infringing designations and domain names. (Compl. ¶¶ 21-22.) Plaintiff contends that defendants' activities are likely to cause consumers to falsely believe that defendants' products and services are associated with plaintiff, and that defendants' actions were undertaken with "the calculated purpose of exploiting and deriving a commercial benefit from the extensive goodwill and recognition built up in Plaintiff's OPTIMUM® mark[s]." (Compl. ¶¶ 24-26.)

Plaintiff's complaint states causes of action for trademark infringement, false designation of origin, and cybersquatting under the Lanham Act, 15 U.S.C. §§ 1051, et. seq., as well as unfair competition under New Jersey statutory and common law, N.J.S.A. 56:4-1. Plaintiff seeks (1) a permanent injunction restraining Defendants from using any designation or domain name that in any way incorporates or is similar to the OPTIMUM® marks; (2) monetary damages, including lost profits and treble damages; and (3) reasonable attorneys' fees and costs.

On May 3, 2010, defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted.*fn1 Fed. R. Civ. P. 12(b)(6). Defendants assert that defendant Optimum Networks, Inc. was actually "the first user of the optimum networks phrase," and that, as a result, plaintiff cannot sustain a trademark infringement claim against defendants. (Def. Br. 4.) Defendants also argue that plaintiff has failed to state a cause of action because the word "optimum" is "a commonly used descriptive term" that is not entitled to trademark protection. (Def. Br. 6.) Defendants urge this Court to dismiss plaintiff's complaint.

STANDARD OF REVIEW

On a motion to dismiss for failure to state a claim upon which relief can be granted, Fed. R. Civ. P. 12(b)(6), the court is required to "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306 (3d Cir. 2007). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (internal quotation marks and citations omitted). A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949.

"[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 546 (2007) (citations omitted). Thus, "a district court weighing a motion to dismiss asks 'not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'" Twombly, 550 U.S. at 563 n.8 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

DISCUSSION

Plaintiff's complaint states four causes of action: trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114(1); false designation of origin under Section 43 of the Lanham Act, 15 U.S.C. § 1125(a); violation of the Anticybersquatting Consumer Protection Act under Section 43 of the Lanham Act, 15 U.S.C. § 1125(d); and unfair competition under New Jersey statutory and common law, N.J.S.A. 56:4-1. The Court considers whether each cause of action states a claim upon which relief can be granted.

A. Trademark Infringement and False Designation of Origin under the Lanham Act

"Congress enacted the Lanham Act in 1946 in order to provide national protection for trademarks used in interstate and foreign commerce." Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 193 (1985). The Lanham Act, 15 U.S.C. §§ 1051, et. seq., "was intended to make 'actionable the deceptive and misleading use of marks' and 'to protect persons engaged in . . . commerce against unfair competition.'" Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767-68 (1992) (quoting 15 U.S.C. § 1127). "A trademark is defined in 15 U.S.C. § 1127 as including 'any word, name, symbol, or device or any combination thereof' used by any person 'to identify and distinguish his or her goods, including a unique product from those manufactured or sold by others and to indicate the sources of the goods, even if that source is unknown.'" Two Pesos, Inc., 505 U.S. at 768 (quoting 15 U.S.C. § 1127). The Lanham Act "broadly prohibits uses of trademarks, trade names, and trade dress that are likely to cause confusion about the source of a product or service. Infringement law protects consumers from being misled by the use of infringing marks and also protects producers from unfair practices by an 'imitating competitor.'" Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 428 (2003) (citations omitted).

1. Standard of Review

Section 32 of the Lanham Act provides:

Any person who shall, without the consent of the registrant[,] use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive . . . shall be liable in a civil action by the registrant.

15 U.S.C. § 1114(1)(a).

Section 43(a) of the Lanham Act provides:

Any person who, on or in connection with any goods or services . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association . . . or as to the origin, sponsorship, or approval of . . . goods, services, or commercial activities . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a)(1)(A)-(B)

The Third Circuit has stated that it "measure[s] federal trademark infringement [under Section 32], 15 U.S.C. § 1114, and federal unfair competition [under Section 43], 15 U.S.C. § 1125(a)(1)(A), by identical standards." A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000). To prove either trademark infringement under Section 32 or unfair competition under Section 43(a), a plaintiff must establish that: (1) the mark is valid and legally protectable; (2) the mark is owned by the plaintiff; and (3) the defendant's use of the mark to identify goods or services is likely to create confusion concerning the origin of the goods or ...


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