Internet Library of Law
and Court Decisions

A.B.C. Carpet Co., Inc., et al. v Mehdi Naeini

Court denies plaintiffs' motion for summary judgment, seeking to hold defendant liable for trademark infringement, as well as for violations of the Federal Trademark Dilution Act and the Anticybersquatting Consumer Protection Act ("ACPA"), as a result of defendant's use of plaintiffs' trademark "ABC Carpet and Home" in a domain name. Court holds that issues of fact preclude it from determining whether defendant acted in bad faith in selecting this domain name, given that he had been doing business under the name "American Basic Craft Carpet and Home Restoration" since 1980, and claimed to have adopted the domain name at issue, "ABcarpetandhome.net", because it was an abbreviation of his business name. This issue of fact precluded the court from granting summary judgment on plaintiffs' ACPA claim, which requires, among other things, a finding that defendant used the mark at issue in bad faith. This issue of fact also led the Court to deny summary judgment on plaintiffs' infringement claim. The court denied plaintiffs' motion with respect to their dilution claim on the ground that issues of fact existed as to whether plaintiffs' mark was famous.

Plaintiffs have used the marks "ABC" and "ABC Carpet" in connection with their operation of retail stores offering carpets, rugs and other merchandise since 1961. Plaintiffs have used the mark "ABC Carpet and Home" since 1992, and registered the marks "ABC" and "ABC Carpet and Home" in 1998.

Defendant Mehdi Naeini has operated a business under the name "American Basic Craft Carpet and Home Restoration" since 1980. This business offers carpets and carpet cleaning services to the public. In 1998, Naeini registered the domain name "ABCcarpetandhome.net" for use in connection with this business. At the time he registered this domain name, he was aware of plaintiffs' prior use of the marks in question.

Plaintiffs commenced this suit, charging that defendant's conduct infringed plaintiffs' trademarks in violations of the Lanham Act and diluted their marks in violation of the Federal Trademark Dilution Act. Plaintiffs also claimed that defendant had registered the domain name at issue in bad faith in violation of the Anticybersquatting Consumer Protection Act ("ACPA").

The Court denied plaintiffs' motion for summary judgment, holding that issues of fact precluded it from resolving the parties' disputes at this time. To prevail on a trademark infringement claim, a plaintiff must show that its mark is protectable, and that defendant's use of this mark is likely to cause consumer confusion. In analyzing whether use of a mark will cause such confusion, courts in the Second Circuit examine the following eight factors:

(1) the strength of plaintiff's marks;
(2) the similarity of the parties' marks;
(3) the proximity of the parties' products or services in the marketplace;
(4) the likelihood that the plaintiff will bridge the gap between the products or services;
(5) actual confusion;
(6) the defendant's intent in adopting the mark;
(7) the quality of the defendant's product; and
(8) the sophistication of the relevant consumer group.

The court found that each of the first four factors enumerated above favored the plaintiffs. Thus, the court found that ABC's mark was arbitrary, and hence strong, that defendant had used a mark identical to plaintiffs', and that plaintiffs and defendant were competitors offering carpet-related sales and services. Nonetheless, the court denied plaintiffs' motion, finding that issues of fact precluded it from determining whether defendant had acted in good faith when selecting the domain name at issue. At this stage in the proceedings, the court was unwilling to find that defendant had acted in bad faith, given his claim that he had adopted the domain name at issue, "abccarpetandhome.net", as an abbreviation of the name under which he had been doing business since 1980 "American Basic Craft Carpet and Home Restoration." The court's decision is silent as to whether defendant had ever previously used this abbreviation in his business. It is also silent as to why defendant elected to use a "net" top level domain in lieu of a "com" top level domain.

For similar reasons, the court denied plaintiffs' motion for summary judgment on its ACPA claim. To establish an ACPA claim, the plaintiff must establish that defendant acted in bad faith, a finding the court was not prepared to make at this stage of the proceedings.

Lastly, the court denied plaintiffs summary judgment on their Federal Trademark Dilution Claim. To establish such a claim, the trademark holder must establish that its mark is famous, a burden the court held that plaintiffs failed to meet on the evidence before it. Said the court:

The Second Circuit has held that under the FTDA marks qualify as "famous" only if they carry "a substantial degree of fame," approaching the level of fame enjoyed by "household" names such as "Dupont, Buick, or Kodak . . . ." TCPIP, 244 F.3d at 99. Here the Court concludes that ABC's submissions fail to establish that there is no material fact as to whether its marks are "famous" under the FTDA. ABC has not established the type of national, "household" name recognition required by the FTDA, and its sales and advertising expenditures are lower than those of other companies whose marks were found insufficiently famous.

Importantly, the court reached this conclusion despite the plaintiffs' claims that they had spent $15 million advertising their marks between 1993 and 1998, during which period they sold over $550 million dollars worth of goods and services.