Brookfield Communications, Inc. v. West Coast Entertainment Corp.

O'SCANNLAIN, Circuit Judge.

We must venture into cyberspace to determine whether federal trademark and unfair competition laws prohibit a video rental store chain from using an entertainment-industry information provider's trademark in the domain name of its web site and in its web site's metatags.

I

Brookfield Communications, Inc. ("Brookfield") appeals the district court's denial of its motion for a preliminary injunction prohibiting West Coast Entertainment Corporation ("West Coast") from using in commerce terms confusingly similar to Brookfield's trademark, "MovieBuff." Brookfield gathers and sells information about the entertainment industry. Founded in 1987 for the purpose of creating and marketing software and services for professionals in the entertainment industry, Brookfield initially offered software applications featuring information such as recent film submissions, industry credits, professional contacts, and future projects. These offerings targeted major Hollywood film studios, independent production companies, agents, actors, directors, and producers.

Brookfield expanded into the broader consumer market with computer software featuring a searchable database containing entertainment-industry related information marketed under the "MovieBuff" mark around December 1993.
. . .

In October 1998, Brookfield learned that West Coast - one of the nation's largest video rental store chains with over 500 stores - intended to launch a web site at "moviebuff.com" containing, inter alia, a searchable entertainment database similar to "MovieBuff." West Coast had registered "moviebuff.com" with Network Solutions on February 6, 1996 and claims that it chose the domain name because the term "Movie Buff" is part of its service mark, "The Movie Buff's Movie Store," on which a federal registration issued in 1991 covering "retail store services featuring video cassettes and video game cartridges" and "rental of video cassettes and video game cartridges." . . .

The next day, West Coast issued a press release announcing the imminent launch of its web site full of "movie reviews, Hollywood news and gossip, provocative commentary, and coverage of the independent film scene and films in production." The press release declared that the site would feature "an extensive database, which aids consumers in making educated decisions about the rental and purchase of" movies and would also allow customers to purchase movies, accessories, and other entertainment-related merchandise on the web site.

Brookfield fired back immediately with a visit to the United States District Court for the Central District of California, and this lawsuit was born. In its first amended complaint filed on November 18, 1998, Brookfield alleged principally that West Coast's proposed offering of online services at "moviebuff.com" would constitute trademark infringement and unfair competition in violation of sections 32 and 43(a) of the Lanham Act, 15 U.S.C. Sec.s 1114, 1125(a). Soon thereafter, Brookfield applied ex parte for a temporary restraining order ("TRO") enjoining West Coast "from using . . . in any manner . . . the mark MOVIEBUFF, or any other term or terms likely to cause confusion therewith, including moviebuff.com, as West Coast's domain name, . . . as the name of West Coast's website service, in buried code or metatags on their home page or web pages, or in connection with the retrieval of data or information on other goods or services."

On November 27, West Coast filed an opposition brief in which it argued first that Brookfield could not prevent West Coast from using "moviebuff.com" in commerce because West Coast was the senior user.
. . .

IV

To resolve whether West Coast's use of "moviebuff.com" constitutes trademark infringement or unfair competition, we must first determine whether Brookfield has a valid, protectable trademark interest in the "MovieBuff" mark. Brookfield's registration of the mark on the Principal Register in the Patent and Trademark Office constitutes prima facie evidence of the validity of the registered mark and of Brookfield's exclusive right to use the mark on the goods and services specified in the registration. . . . Nevertheless, West Coast can rebut this presumption by showing that it used the mark in commerce first, since a fundamental tenet of trademark law is that ownership of an inherently distinctive mark such as "MovieBuff" is governed by priority of use. ... The first to use a mark is deemed the "senior" user and has the right to enjoin "junior" users from using confusingly similar marks in the same industry and market or within the senior user's natural zone of expansion. . . .

It is uncontested that Brookfield began selling "MovieBuff" software in 1993 and that West Coast did not use "moviebuff.com" until 1996. According to West Coast, however, the fact that it has used "The Movie Buff's Movie Store" as a trademark since 1986 makes it the first user for purposes of trademark priority. In the alternative, West Coast claims priority on the basis that it used "moviebuff.com" in commerce before Brookfield began offering its "MovieBuff" searchable database on the Internet. We analyze these contentions in turn.

A

Conceding that the first time that it actually used "moviebuff.com" was in 1996, West Coast argues that its earlier use of "The Movie Buff's Movie Store" constitutes use of "moviebuff.com." West Coast has not provided any Ninth Circuit precedent approving of this constructive use theory, but neither has Brookfield pointed us to any case law rejecting it. We are not without guidance, however, as our sister circuits have explicitly recognized the ability of a trademark owner to claim priority in a mark based on the first use date of a similar, but technically distinct, mark - but only in the exceptionally narrow instance where "the previously used mark is 'the legal equivalent of the mark in question or indistinguishable therefrom' such that consumers 'consider both as the same mark.'"

This constructive use theory is known as "tacking," as the trademark holder essentially seeks to "tack" his first use date in the earlier mark onto the subsequent mark. . . .

We agree that tacking should be allowed if two marks are so similar that consumers generally would regard them as essentially the same. Where such is the case, the new mark serves the same identificatory function as the old mark. Giving the trademark owner the same rights in the new mark as he has in the old helps to protect source-identifying trademarks from appropriation by competitors and thus furthers the trademark law's objective of reducing the costs that customers incur in shopping and making purchasing decisions. . . .

Without tacking, a trademark owner's priority in his mark would be reduced each time he made the slightest alteration to the mark, which would discourage him from altering the mark in response to changing consumer preferences, evolving aesthetic developments, or new advertising and marketing styles. In Hess's of Allentown, Inc. v. National Bellas Hess, Inc., for example, a department store ("Allentown") with trademark rights in the terms "Hess Brothers" and "Hess" dating from 1899 began promoting itself in 1952 instead as "Hess's," largely because customers and employees commonly referred to the store as "Hess's" rather than "Hess Brothers" or "Hess." ... Another department store ("Bellas") first used "Hess" in its mark around 1932. In light of the fact that Allentown first used "Hess's" after Bellas commenced using "Hess," Bellas would have priority on the basis of the actual first use dates of those two marks. Even though Allentown had acquired over a half-century's worth of goodwill in the essentially identical marks "Hess" and "Hess Brothers," Allentown no longer had trademark rights in those terms because it had ceased using those marks when it adopted "Hess's." Nevertheless, the Trademark Board allowed the owner of "Hess's" to tack his first use date of "Hess Brothers" and "Hess" onto "Hess's" since those terms were viewed as identical by the public. . . .

The standard for "tacking," however, is exceedingly strict: "The marks must create the same, continuing commercial impression, and the later mark should not materially differ from or alter the character of the mark attempted to be tacked." ... In other words, "the previously used mark must be the legal equivalent of the mark in question or indistinguishable therefrom, and the consumer should consider both as the same mark." This standard is considerably higher than the standard for "likelihood of confusion," which we discuss infra.

The Federal Circuit, for example, concluded that priority in "CLOTHES THAT WORK. FOR THE WORK YOU DO" could not be tacked onto "CLOTHES THAT WORK." . . . The Sixth Circuit held that "DCI" and "dci" were too dissimilar to support tacking. … And the Trademark Board has rejected tacking in a case involving "American Mobilphone" with a star and stripe design and "American Mobilphone Paging" with the identical design.

In contrast to cases such as Van Dyne-Crotty and American Paging, which were close questions, the present case is clear cut: "The Movie Buff's Movie Store" and "moviebuff.com" are very different, in that the latter contains three fewer words, drops the possessive, omits a space, and adds ".com" to the end. Because West Coast failed to make the slightest showing that consumers view these terms as identical, we must conclude that West Coast cannot tack its priority in "The Movie Buff's Movie Store" onto "moviebuff.com." As the Federal Circuit explained, "it would be clearly contrary to well-established principles of trademark law to sanction the tacking of a mark with a narrow commercial impression onto one with a broader commercial impression."

Since tacking does not apply, we must therefore conclude that Brookfield is the senior user because it marketed "MovieBuff" products well before West Coast began using "moviebuff.com" in commerce: West Coast's use of "The Movie Buff's Movie Store" is simply irrelevant. Our priority determination is consistent with the decisions of our sister circuits in Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., and J. Wiss & Sons Co. v. W. E. Bassett Co. Like the present case, J. Wiss & Sons is a three-competing-trademark situation in which one company owned a single mark with a first use date in between the first use dates of the two marks owned by the other company. In that case, the intervening mark ("Trim") was found to be confusingly similar with the later mark ("Trim-Line"), but not with the earlier mark ("Quick-Trim"); similarly here, the intervening mark ("MovieBuff") is purported to be confusingly similar with the later mark "moviebuff.com," but is not confusingly similar with the earlier used mark "The Movie Buff's Movie Store." The Court of Customs and Patent Appeals (now the Court of Appeals for the Federal Circuit) concluded that priority depended upon which of the two confusingly similar marks was used first - disregarding the first use date of the earlier used mark since it was not confusingly similar with the others. It thus awarded priority to the holder of the intervening mark, as we do similarly here. . . .

West Coast makes a half-hearted claim that "MovieBuff" is confusingly similar to its earlier used mark "The Movie Buff's Movie Store." If this were so, West Coast would undoubtedly be the senior use. "Of course, if the symbol or device is already in general use, employed in such a manner that its adoption as an index of source or origin would only produce confusion and mislead the public, it is not susceptible of adoption as a trademark." West Coast, however, essentially conceded that "MovieBuff" and "The Movie Buff's Movie Store" are not confusingly similar when it stated in its pre-argument papers that it does not allege actual confusion between "MovieBuff" and West Coast's federally registered mark. We cannot think of more persuasive evidence that there is no likelihood of confusion between these two marks than the fact that they have been simultaneously used for five years without causing any consumers to be confused as to who makes what. ... The failure to prove instances of actual confusion is not dispositive against a trademark plaintiff, because actual confusion is hard to prove; difficulties in gathering evidence of actual confusion make its absence generally unnoteworthy. ... West Coast, however, did not state that it could not prove actual confusion; rather, it conceded that there has been none. This is a crucial difference. Although there may be the rare case in which a likelihood of future confusion is possible even where it is conceded that two marks have been used simultaneously for years with no resulting confusion, West Coast has not shown this to be such a case.

Our conclusion comports with the position of the PTO, which effectively announced its finding of no likelihood of confusion between "The Movie Buff's Movie Store" and "MovieBuff" when it placed the latter on the principal register despite West Coast's prior registration of "The Movie Buff's Movie Store." Priority is accordingly to be determined on the basis of whether Brookfield used "MovieBuff" or West Coast used "moviebuff.com" first.

B

West Coast argues that we are mixing apples and oranges when we compare its first use date of "moviebuff.com" with the first sale date of "MovieBuff" software. West Coast reminds us that Brookfield uses the "MovieBuff" mark with both computer software and the provision of an Internet database; according to West Coast, its use of "moviebuff.com" can cause confusion only with respect to the latter. West Coast asserts that we should accordingly determine seniority by comparing West Coast's first use date of "moviebuff.com" not with when Brookfield first sold software, but with when it first offered its database online.

As an initial matter, we note that West Coast's argument is premised on the assumption that its use of "moviebuff.com" does not cause confusion between its web site and Brookfield's "MovieBuff" software products. Even though Brookfield's computer software and West Coast's offerings on its web site are not identical products, likelihood of confusion can still result where, for example, there is a likelihood of expansion in product lines. As the leading trademark commentator explains: "When a senior user of a mark on product line A expands later into product line B and finds an intervening user, priority in product line B is determined by whether the expansion is 'natural' in that customers would have been confused as to source or affiliation at the time of the intervening user's appearance." We need not, however, decide whether the Web was within Brookfield's natural zone of expansion, because we conclude that Brookfield's use of "MovieBuff" as a service mark preceded West Coast's use.

Brookfield first used "MovieBuff" on its Internet-based products and services in August 1997, so West Coast can prevail only if it establishes first use earlier than that. In the literal sense of the word, West Coast "used" the term "moviebuff.com" when it registered that domain address in February 1996. Registration with Network Solutions, however, does not in itself constitute "use" for purposes of acquiring trademark priority. The Lanham Act grants trademark protection only to marks that are used to identify and to distinguish goods or services in commerce - which typically occurs when a mark is used in conjunction with the actual sale of goods or services. The purpose of a trademark is to help consumers identify the source, but a mark cannot serve a source-identifying function if the public has never seen the mark and thus is not meritorious of trademark protection until it is used in public in a manner that creates an association among consumers between the mark and the mark's owner.

Such use requirement is firmly established in the case law, and, moreover, is embodied in the Lanham Act itself. . . . In fact, Congress amended the Lanham Act in 1988 to strengthen this "use in commerce" requirement, making clear that trademark rights can be conveyed only through "the bona fide use of a mark in the ordinary course of trade, and not [use] made merely to reserve a mark." Congress provided more specifically:
For purposes of this chapter, a mark shall be deemed to be in use in commerce -
(1) on goods when -
(A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and
(B) the goods are sold or transported in commerce, and
(2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.

The district court, while recognizing that mere registration of a domain name was not sufficient to constitute commercial use for purposes of the Lanham Act, nevertheless held that registration of a domain name with the intent to use it commercially was sufficient to convey trademark rights. This analysis, however, contradicts both the express statutory language and the case law which firmly establishes that trademark rights are not conveyed through mere intent to use a mark commercially, nor through mere preparation to use a term as a trademark.

West Coast no longer disputes that its use - for purposes of the Lanham Act - of "moviebuff.com" did not commence until after February 1996. It instead relies on the alternate argument that its rights vested when it began using "moviebuff.com" in e-mail correspondence with lawyers and customers sometime in mid-1996. West Coast's argument is not without support in our case law - we have indeed held that trademark rights can vest even before any goods or services are actually sold if "the totality of [one's] prior actions, taken together, [can] establish a right to use the trademark." Under New West, however, West Coast must establish that its e-mail correspondence constituted "'use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.'"

West Coast fails to meet this standard. Its purported "use" is akin to putting one's mark "on a business office door sign, letterheads, architectural drawings, etc." or on a prototype displayed to a potential buyer, both of which have been held to be insufficient to establish trademark rights. … Although widespread publicity of a company's mark, such as Marvel Comics's announcement to 13 million comic book readers that "Plasma" would be the title of a new comic book, or the mailing of 430,000 solicitation letters with one's mark to potential subscribers of a magazine, may be sufficient to create an association among the public between the mark and West Coast, mere use in limited e-mail correspondence with lawyers and a few customers is not.

West Coast first announced its web site at "moviebuff.com" in a public and widespread manner in a press release of November 11, 1998, and thus it is not until at least that date that it first used the "moviebuff.com" mark for purposes of the Lanham Act. Accordingly, West Coast's argument that it has seniority because it used "moviebuff.com" before Brookfield used "MovieBuff" as a service mark fails on its own terms. West Coast's first use date was neither February 1996 when it registered its domain name with Network Solutions as the district court had concluded, nor April 1996 when it first used "moviebuff.com" in e-mail communications, but rather November 1998 when it first made a widespread and public announcement about the imminent launch of its web site. Thus, West Coast's first use of "moviebuff.com" was preceded by Brookfield's first use of "MovieBuff" in conjunction with its online database, making Brookfield the senior user.

For the foregoing reasons, we conclude that the district court erred in concluding that Brookfield failed to establish a likelihood of success on its claim of being the senior user.