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Componentone, L.L.C. v. Componentart

December 6, 2007

COMPONENTONE, L.L.C., PLAINTIFF,
v.
COMPONENTART, INC., STEVE G. ROLUFS, MILJAN BRATICEVIC, DUSAN BRATICEVIC, AND CYBERAKT, INC., DEFENDANTS.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM OPINION AND ORDER OF COURT

Presently pending before the Court is the MOTION FOR PARTIAL SUMMARY JUDGMENT, with brief in support, filed by Defendants ComponentArt, Inc., Steve G. Rolufs, Miljan Braticevic, and Dusan Braticevic (Document Nos. 141 and 142, respectively) and the brief and response in opposition filed by Plaintiff, ComponentOne, L.L.C. (Document Nos. 150 and 151, respectively).

On October 6, 2006, Congress enacted the Trademark Dilution Revision Act of 2006 ("TDRA"), which struck in its entirety the Federal Trademark Dilution Act of 1996 ("FTDA"), the existing federal dilution statute. Six days later, on October 12, 2006, Plaintiff filed its Amended Complaint in which it alleged, inter alia, claims for trademark dilution in violation of federal law, 15 U.S.C. § 1125(c), and Pennsylvania state common law, 54 Pa. C.S.A. § 1124 (Counts Three and Nine of the Amended Complaint, respectively).

Defendants have moved for summary judgment on Plaintiff's dilution claims on the grounds that under the TDRA Plaintiff cannot prove ownership of a distinctive and famous mark. For the reasons stated herein, the Motion for Partial Summary Judgment will be granted.

Standard of Review

Summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Thus, the Court's task is not to resolve disputed issues of fact, but to determine whether there exist any factual issues to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-49 (1986). The non-moving party must raise "more than a mere scintilla of evidence in its favor" in order to overcome a summary judgment motion. Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1989) (citing Liberty Lobby, 477 U.S. at 249). Further, the non-moving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). Distilled to its essence, the summary judgment standard requires the non-moving party to create a "sufficient disagreement to require submission [of the evidence] to a jury." Liberty Lobby, 477 U.S. at 251-52.

Discussion

A. Federal Dilution Claim(Count Three)

The TDRA became effective on October 6, 2006 and replaced the FTDA. Specific changes to federal dilution law under the TDRA include, inter alia, a reconfiguration of the factors used to determine if a mark is famous for dilution purposes, including a rejection of the dilution claims based on "niche" fame. See Dan-Foam A/S v. Brand Named Beds, LLC, 500 F. Supp. 2d 296 (S.D. N.Y. 2007). Under the TDRA, to be famous a mark must be "widely recognized by the general consuming public of the United States . . ." 15 U.S.C. § 1125(c)(2) (emphasis added). Prior to the amendment, the statute contained no language defining fame so specifically or narrowly. The House Report which discusses the TDRA states that the legislation expands the threshold of "fame" and thereby denies protection for marks that are famous only in "niche" markets.*fn1 Century 21 Real Estate LLC v. Century Ins. Group, 2007 WL 484555, *14 (D. Ariz. Feb. 9, 2007) (citing House Report on Trademark Dilution Act of 2006, H.R. Rep. 109-23 at 8, 25).

Furthermore, district courts which have addressed the issue of whether the TDRA precludes "niche market fame" have held that the concept of "niche market fame" has been eliminated by the TDRA. See Milbank Tweed Hadley & McCloy LLP v. Milbank Holding Corp., 82 U.S.P.Q.2d 1583, 1588 (C.D. Cal. Feb. 23, 2007) (stating that the amended language under the TDRA precludes a finding of niche market fame); Dan-Foam A/S v. Brand Named Beds, L.L.C., No. 06 CIV 6350, 2007 WL 1346609, at *6 n. 90 (S.D. N.Y. May 4, 2007) (stating that the inclusion of the phrase "widely recognized by the general consuming public in the United States" in the TDRA was intended to reject dilution claims based on niche market factors.)

Additionally, courts have held that the application of the TDRA is immediate and retroactive. See Dan-Foam, A/S, at *6 n. 87 (holding that the TDRA applied to plaintiff's dilution claim even though the claim was filed before the statute was amended); Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 477 F.3d 765, 766 (2d Cir. 2007) (same).

Defendants contend, and the Plaintiff does not disagree, that Plaintiff's federal dilution claim is supported only on the theory of "niche market fame." In fact, all of Plaintiff's witnesses that testified on the issue at deposition agreed that the "ComponentOne" mark is well known only in its niche market - a specific segment of the computer information technology industry, namely, developers on the Windows, Borland, and Visual Studio platforms. See excerpts from the deposition transcripts of Gustavo Eydeslsteyn (Exhibit 1); Geoffrey Lusty (Exhibit 2); John Charles Juback (Exhibit 3); Richard F. Williamson (Exhibit 5); Rich Little (Exhibit 6); and Kenneth L. Spencer (Exhibit 7).

Accordingly, Defendants argue that Plaintiff's federal dilution claim fails as a matter of law because it depends entirely on the existence of niche market fame, a concept no longer recognized under federal law. Plaintiff responds that equity principles dictate that the TDRA should not be given retroactive effect because it is "ostensibly prejudicial to eliminate causes of action during the pendency of litigation." Br. at 4.

The Court finds that Plaintiff's argument is not persuasive. The TDRA made a substantial change in the law which effectively eliminated the only theory upon which Plaintiff claims to have been able to establish its dilution claim. Plaintiff has never claimed to have evidence that its mark enjoys any fame outside of the niche market in which it operates. ...


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