DIGITAL EQUIPMENT CORP. V. ALTAVISTA TECHNOLOGY, INC
Digital Equipment Corp. v. Altavista Technology, Inc.,
United States District Court for the District of Massachusetts
Decided March 12, 1997
MEMORANDUM AND ORDER
I. Introduction
This case involves a dispute between two corporations over rights and commercial interests on the Internet. (1) Both parties operate electronic services and distribute software over the Internet. The plaintiff, Digital Equipment Corporation (“Digital”), has brought suit against defendant AltaVista Technology, Incorporated (“ATI”), for breach of a trademark licensing agreement, trademark and servicemark infringement, unfair competition, and trademark dilution.
Digital owns an Internet and World Wide Web “search-engine” service known as AltaVista. (2) Digital purchased ATI’s rights in its trademark “AltaVista”; Digital then licensed back to ATI the right to use “AltaVista,” in certain defined ways, as part of both ATI’s corporate name and its Uniform Resource Locator (“url”), “http://www.altavista.com.” (3) The license precludes ATI from using AltaVista as “the name of a product or service offering.”
Digital seeks a preliminary injunction, claiming that ATI’s Web-site breaches its licensing agreement and infringes its trademark rights in “AltaVista.” ATI opposes Digital’s motion on the merits and moves to dismiss for lack of personal jurisdiction.
First, I find that this Court has jurisdiction over ATI, whose Web-site, in the context of the specific facts of this case, meets both the statutory and constitutional standards. Second, I find that Digital has met the requisite standards for a preliminary injunction.
ATI is hereby ENJOINED from using the trademark AltaVista in any way that does not comport with the specific terms of the licensing agreement, as set forth in the opinion below and the accompanying Order.
II. Background
In December, 1995, Digital, a Massachusetts corporation, launched an Internet search service using the service mark “AltaVista.” Since that time, Digital’s AltaVista Internet search service has become one of the leading search services on the Internet and, indeed, one of the most frequently visited sites on the World Wide Web (“Web”). Currently, Digital’s AltaVista Web-site receives millions of “hits” (or visits) per day. Digital also markets and sells computer software products and services related to the Internet under names such as AltaVista Directory, AltaVista Firewall, AltaVista Forum, AltaVista Mail, etc. Its marketing strategy, however, did not then include soliciting advertising revenues from advertisers on its Website.
At the same time, Digital claims two sources for its right to use the service and trademark “AltaVista”: its own use of the mark under common law, and its acquisition by assignment of ATI’s trademark rights in AltaVista.
ATI is a California corporation, formerly known as Tree Full of Owls, Inc.; it changed its name to AltaVista Technology, Inc., by amendment to its Articles of Incorporation, in May of 1994. In March of 1996, Digital paid for an assignment of ATI’s rights to the trademark AltaVista; it immediately licensed-back to ATI the right to use AltaVista both as part of ATI’s corporate name, AltaVista Technology, Inc., and as part of ATI’s Web-site address “www.altavista.com.” The license agreement, however, precludes ATI from using “AltaVista” as “the name of a product or service offering.”
The scope and meaning of this license are hotly contested by the parties. ATI contends that its agreement with Digital was formed with the specific intention of allowing it to benefit from the popularity of Digital’s AltaVista, and the strong brand identity the “AltaVista” search service had created. In contrast, Digital maintains that ATI’s licensing agreement strictly limited ATI’s ability to use “Altavista” — as part of its corporate name and its url — and not as “the name of a product or service offering.”
Consistent with its broad interpretation of the agreement, ATI dramatically changed the appearance of its Website, (4) moving it markedly closer to the appearance of Digital’s AltaVista Web-site. (5) By the time this lawsuit was brought by Digital, ATI’s Website looked like, and could effectively function as, Digital’s AltaVista search service.
As of May 22, 1996, less than two months after the Digital-ATI agreement, a visitor to “www.altavista.com,” ATI’s Web-site, would see the word “AltaVista” by itself at the top of the page, apparently not attached to ATI’s corporate name. One would see an offer of free ATI software. Using a link, (6) one could “click” (7) to receive “demo versions of AltaVista software.” (8) One would also have been offered a link to an unnamed “Search Engine” where one could “Search the Internet. . .” This link was to Digital’s AltaVista search service.
By August 8, 1996, ATI’s page changed again. Again, the visitor would see the word “AltaVista” at the top of the page, again not as part of ATI’s corporate name. Below that there was a banner ad (9) selling an unrelated party’s products. This time, however, directly beneath the “Search Engine” line were the words “Digital’s Alta Vista,” rather than merely “Search the Internet. . .”
On the same date as these changes were implemented, Digital’s trademark counsel, Lawrence Robins (“Robins”) sent ATI’s president, Jack Marshall, a letter claiming that the appearance of ATI’s Web-site constituted a breach of Clause 1.1 of their license agreement. The letter states: Use of the ‘AltaVista’ logo, without the additional language ‘Technologies, Inc.’ is a violation of Paragraph 1.1 of the Agreement. The sole license granted therein is to use “AltaVista” as part of the corporate name ‘AltaVista Technologies, Inc.’ and as part of the url ‘http://www.altavista.com.’ Robins claimed that any use by ATI of “Altavista,” including using it as the name of a product or service on ATI’s Web-site, and apart from its use as part of ATI’s corporate name and as the url of ATI’s Web-site, constituted a breach of Clause 1.1.
Clause 1.1 of the license agreement says: Digital hereby grants to ATI a nonexclusive, nontransferable license to use the trademark ‘ALTAVISTA’ (the “Mark”) as part of the corporate name ‘Altavista Technologies, Inc.’ and as part of the url ‘http://www.altavista.com, and in accordance with and subject to the terms and conditions of this Agreement, provided that nothing in this agreement shall prohibit Digital or any of its direct or indirect majority-owned subsidiaries from using the Mark or from offering products or services under such Mark to third parties. This License does not grant ATI the right to use the Mark as the name of a product or service offering.
At the same time, Robins put ATI on notice of the possible termination of their license agreement pursuant to Clause 3.1. Clause 3.1 of the licensing agreement deals with quality control: “all products sold and services rendered while using the Mark shall be. . .of such style, appearance and quality as to protect and enhance the Mark and the goodwill associated therewith.” (10)
A month later, on September 5, 1996, a visitor to ATI’s Website would have been greeted by “AltaVista” in large, bold letters at the top of the page, with “Technology” immediately under it in smaller, plain type; beneath this was a banner ad and link through which one could “Search the Net with AltaVista” (again, presumably, but not explicitly, Digital’s search service) by “Clicking here.” (11) In addition, the site retained a second, clearly designated link to Digital’s AltaVista search site, as well as ATI’s AltaVista logo by itself in bold near the bottom of the page.
By October 28, 1996, three days before Digital brought its present motion for preliminary injunction, ATI’s Web-site had been altered again: beneath the AltaVista logo in big, bold letters (with a small, plain “Technology” placed immediately below it) sat a “banner ad” for an unrelated product; beneath the banner ad is a solicitation encouraging one to “Click here for advertising information-reach millions every month!” Immediately below that sits an almost identical graphical representation of Digital’s AltaVista search engine interface (i.e. the appearance of Digital’s AltaVista Web-site, including the logo, etc.). Below that is a statement informing users that they can “Search with Digital’s AltaVista” (using Digital’s AltaVista search engine while still, to all appearances, being at the ATI Web-site). In short, a visitor to ATI’s site could easily have the impression that they were actually at Digital’s AltaVista site. (12)
By October 28, 1996, ATI’s Web-site was designed to look, feel, and function very much like Digital’s AltaVista Web-site. At the same time, ATI derived revenues from the site and its ties to Digital’s Altavista. It displayed banner ads and solicited other advertisers, who could get information about how they, too, could reach millions of users everyday by advertising on ATI’s Web-site. Digital expressly eschewed providing advertising space to others for its Web-site at that time.
Digital claims that ATI’s Web-site is now a service that provides both a search engine, and advertising space. ATI thus breaches the license agreement by attaching the word “AltaVista” to both of these services. Digital further contends that ATI’s Web-site infringes Digital’s trademark rights in AltaVista, and that the ATI site constitutes unfair competition both under the Lanham Act § 43(a) and at common law. ATI argues its usage of AltaVista is permitted by its license with Digital. It also contends this Court lacks personal jurisdiction over it.
III. Personal Jurisdiction
