Classified Ventures, LLC v. Softcell Marketing, 109 F. Supp. 2d 898 (N.D. Ill. 2000)

Kevin T. Conroy, Kathryn E. Ross and Janet A. Marvel of Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, for Classified Ventures.

Gary Fernandez of Gary J. Fernandez & Assocs., Glen Ellyn, IL, for defendant.

NOLAN, United States Magistrate Judge.

Plaintiff, Classified Ventures, L.L.C. ("Classified Ventures"), filed this action on November 24, 1998, alleging that defendants Softcell Marketing, Inc. ("Softcell"), and Gary Gould ("Gould"), used the mark CARS.COM in connection with spam e-mail advertisements. The parties stipulate to the following findings of fact and conclusions of law, and consent to entry of a permanent injunction as set forth below. Accordingly, the Court enters the following:

Classified Ventures provides classified advertising over the Internet for a wide variety of products and services. Classified Ventures hosts a web site located at www.cars.com (the "Cars.com Site"). The Cars.com Site includes classified advertising for new and used automobiles for sale, as well as editorial reviews, interest rates, price reports, and other information relating to automobiles.

Classified Ventures acquired the domain name cars.com in September, 1997, and began to use it as a service mark in the fall of 1997. The domain name functions as both a location of the Cars.com Site and as a service mark identifying Classified Ventures' Internet automobile search and information services. On December 19, 1997, Classified Ventures applied to register its CARS.COM service mark as well as its CARS.COM and Design mark ("CARS. COM Service Marks") on the Principal Register of the Patent and Trademark Office.

Classified Ventures has expended large amounts of money, time and effort to promoting its CARS.COM Service Marks and developing the goodwill associated with those marks. Classified Ventures markets its services through various national and worldwide media, including the Internet and national newspapers. Classified Ventures has spent millions of dollars to advertise the Cars.com Site and attendant CARS.COM Service Marks. The Cars.com Site is one of the most heavily trafficked auto-related web sites on the Internet. As a result of this extensive promotion, advertising, and Internet exposure, the CARS.COM Service Marks have become famous and have acquired a strong secondary meaning and a selling power signifying Classified Ventures and its Cars.com Site. Consequently, Classified Ventures has built up and now owns a substantial and valuable goodwill which is symbolized by the CARS.COM Service Marks. Classified Ventures acquired this goodwill and fame long prior to the acts complained of herein.

Defendant Softcell provides Internet promotion services, and specializes in "spam" e-mail. In Internet parlance, this means mass, unsolicited electronic mail. Softcell advertises the benefits of spam e-mail on two web sites it maintains, located at www.softinc.net and www.softcell.net.

Softcell has also been engaged in the for-profit Internet pornography business. Among the domain names it owns are comenow.com, quickcheapsex.com, mailsexey.com, planetlovejoy.com, and planetlovetoy.com. Softcell has operated for-profit pornographic web sites using at least three of these domain names.

On November 18, 1998, Softcell perpetrated a massive and intricately designed spam e-mail scheme whereby it sent at least a hundred thousand e-mail messages addressed to subscribers of the Internet service provider America Online ("AOL"), located throughout the United States. Each e-mail bore the same return address: stione@cars.com. These messages were "spam" e-mail. All messages bore the return address stione@cars.com and contained an advertisement for Internet pornography services available at www.freeyellow.com /members5/ hotweb. The messages varied only by their subject lines, which included such messages as "Hi," "Do it for free," "don'y fay [sic] for Video," "not kidding!.... Really Free," "free this time," and "Got your note." Classified Ventures did not create or maintain the e-mail address stione@cars.com. Classified Ventures did not authorize the use of its domain name cars.com in connection with the address designation stione. However, consumers who received Softcell's spam e-mails believed they were sent by Classified Ventures *900 because the return address designated "cars.com" as the sender. Consumers were harmed by receiving unsolicited spam e-mail messages advertising Internet pornography. They received the unsolicited spam e-mail but had no way of knowing that the return e-mail address, stione@cars.com, was a false address. The spam e-mails sent a false message that Classified Ventures participates in spam e-mail campaigns and sells pornography services under its CARS.COM Service Marks.

Classified Ventures' extensive and exclusive use of the CARS.COM Service Marks in connection with the Cars.com Site establishes Classified Ventures' exclusive right to use the CARS.COM Service Marks for the services provided through the Cars.com Site. Zip Dee, Inc. v. Dometic Corp., 931 F. Supp. 602, 606 (N.D.Ill. 1996). This exclusive right empowers Classified Ventures to prevent any third party from using any name or mark that is likely to cause confusion with or dilute the CARS.COM Service Marks.

Softcell's use of "cars.com" in its spam e-mail messages was identical to Classified Ventures' CARS.COM Service Marks and domain name. Consumers receiving Softcell's spam e-mail were likely to believe that Classified Ventures is the source of Softcell's Internet pornography services. Further, Classified Ventures and Softcell both offer Internet services. These services are "related" for purposes of a likelihood of confusion analysis. Homeowners Group, Inc. v. Home Marketing Specialists, Inc., 931 F.2d 1100, 1109 (6th Cir. 1991) (services "are `related' if the services are marketed and consumed such that buyers are likely to believe that the services, similarly marked, come from the same source ...").

Both parties have used CARS.COM as a domain name to advertise services to consumers. Classified Ventures directs its marketing to Internet users age 16 and above the class of people able to drive a car. Softcell directed its marketing to random individuals all with e-mail accounts through AOL. These classes of consumers significantly overlap, supporting the conclusion that consumers will attribute Classified Ventures' CARS.COM Service Marks and Softcell's use of stione@cars.com to a single source. Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va. Inc., 43 F.3d 922, 937-38 (4th Cir. 1995); Accurate Leather & Novelty Co. v. LTD Commodities, 18 U.S.P.Q.2d 1327, 1330 (N.D.Ill.1990).

Likelihood of confusion is the "keystone" of trademark infringement. TV Land, L.P. v. Viacom Int'l, Inc., 908 F. Supp. 543, 550 (N.D.Ill.1995). Consumers who have received Softcell's offending e-mails would logically believe that the messages emanated from the owner of the Cars.com Site. See America Online, Inc. v. LCGM, Inc., 46 F. Supp. 2d 444, 449 (E.D.Va.1998) ("[A]ny e-mail recipient could logically conclude that a message containing the initials `aol.com' in the header would originate from America Online's registered Internet domain name.")

Moreover, strong and famous marks are entitled to a broad scope of protection. Nike, Inc. v. "Just Did It" Enters., 6 F.3d 1225 (7th Cir.1993). Classified Ventures has developed the CARS.COM Service Marks into strong and famous marks. Classified Ventures has spent millions of dollars advertising and promoting its services under the CARS.COM Service Marks. Given the nature of communication, particularly over the Internet, even marks advertised but a year can develop strength and fame sufficient to render confusion more likely. L.A. Gear, Inc. v. Thom McAn Shoe Co., 12 U.S.P.Q.2d 1001, 1989 WL 282850 (S.D.N.Y.1989) ("In this day of modern communication it is frequently the case that a particular product or name becomes familiar to many consumers overnight"); accord Howw Mfg. Inc. v. Formac, Inc., 213 U.S.P.Q. 793, 795 (N.D.Ill.1981) and Intermatic, Inc. v. Toeppen, *901 947 F. Supp. 1227, 1236 (N.D.Ill.1996). Such "overnight" strength and fame is evident by the activity on the Cars.com Site, which is one of the most heavily trafficked auto-related web sites on the Internet.

That consumers were confused by Softcell's unauthorized use of the CARS.COM Service Marks in its spam e-mails is supported by actual confusion evidence. Classified Ventures received several e-mails from consumers complaining about the spam e-mail sent by stione@cars.com. Those consumers were actually confused as to the source of Softcell's spam e-mail. Because consumers are likely to have been, and actually have been, confused by Softcell's spam e-mail messages, its actions violate the Lanham Act and prohibitions under Illinois law against unfair competition and deceptive trade and business practices. 15 U.S.C. § 1125(a); 815 ILCS §§ 505/1-2; 510 ILCS § 510/1.

Softcell's actions also dilute the distinctive quality and fame of the CARS. COM Service Marks in violation of federal and Illinois anti-dilution laws. Dilution is the "lessening of the capacity of a famous mark to identify and distinguish goods or services." 15 U.S.C. §§ 1125 and 1127; See Intermatic Inc. v. Toeppen, 947 F. Supp. 1227, 1240 (N.D.Ill.1996). When consumers associate a famous mark that has traditionally identified the mark holder's goods and services with a new and different source, dilution occurs and the mark loses its value. Intermatic, 947 F. Supp. at 1240-41 (both the federal and Illinois anti-dilution statutes protect against use of a mark that lessens the distinctiveness of a famous mark); Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Celozzi-Ettelson Chevrolet Inc., 855 F.2d 480 (7th Cir.1988). In this case, consumers are likely to associate Softcell and its pornographic spam e-mails with Classified Ventures and its famous CARS.COM Service Marks, lessening the distinctive value of the CARS.COM Service Marks.

Softcell's unauthorized use of the CARS. COM name and mark in connection with its spam e-mail messages constitutes service mark infringement, dilution and unfair competition under both federal and Illinois law. For the above reasons, Softcell is entitled to the permanent injunctive relief set forth below.

WHEREFORE, IT IS HEREBY ORDERED THAT:

1. Defendant Softcell Marketing, Inc., its agents, officers, servants, employees, representatives and all others in active concert or participation therewith are permanently enjoined from:

(a) sending or causing to be sent any e-mail that contains Classified Ventures' name, domain name, or IP address, in whole or in part;

(b) doing any act likely to dilute the distinctiveness of Classified Ventures' CARS.COM Service Marks, or likely to tarnish the goodwill associated with the CARS.COM Service Marks, or likely to blur the distinctiveness of the CARS.COM Marks; and

(c) doing any act likely to cause confusion and deception as to the affiliation, connection, or association of Softcell's web site, business, or products with Classified Ventures and its Cars.com Site.

2. Defendant Softcell is ordered to file with this Court and serve on Classified Ventures an affidavit setting forth in detail the manner and form of its compliance with the terms of this Court's injunction.