JUNO ONLINE SERVICES, L.P.,
Plaintiff,
v.
JUNO LIGHTING, INC.,
Defendant.
Case No. 97 C 791
MEMORANDUM OPINION AND ORDER
Plaintiff Juno Online Service (“Juno Online”) sues defendant Juno Lighting, Inc. (“Juno Lighting”) seeking a declaration that it has not violated federal trademark law. In addition, in Counts II-IV, plaintiff seeks declaratory, injunctive and monetary relief for trademark misuse, as well as for violations of the Lanham Act and state unfair competition law. Defendant now moves to dismiss Counts II-IV for failure to state a cause of action and to strike all claims for monetary relief.
I. BACKGROUND
The following information is taken from plaintiff’s amended complaint. Juno Online, a Delaware limited partnership with its principle place of business in New York City, is an online provider with approximately 1.5 million subscribers. Juno Lighting, a Delaware corporation with its principal place of business in Des Plaines Illinois, is a manufacturer and retailer of recessed and track lighting. Juno Lighting has used the Juno name in its logo since 1976 and holds two federal trademarks for the name “Juno.”
The current dispute revolves around the Internet and the use of the domain name “juno.com”. The Internet is a network of computers that are linked together, allowing computer users to share information and data. See generally, Intermatic Inc. v. Toeppen, 947 F.Supp. 1227, 1230-32 (N.D. Ill. 1996). Each computer that is linked to the Internet contains a numeric address called an Internet protocol address, or IP address. The numeric IP address has four parts, each separated by a decimal point. An example of such an address would be 123.112. 101.1. Am. Compl. 8. However, since it is easier to use, each computer is given an alphanumeric address, called a domain name, that corresponds to the IP address. When an Internet user types in the domain name, the user’s computer reads the name as the numeric IP address and contacts the appropriate computer. An example of such a domain name is “juno.com”.[1]
To send electronic mail (“e-mail”), the user addresses the message to the domain name of the recipient’s e-mail provider. America Online, for instance, is an e-mail provider, whose domain name is “aol.com”. Each user of the America Online service is given a user name to use with the domain name (e.g., “harrysmith”).Therefore, if a person wants to contact Harry Smith, an America Online subscriber, the user would send an e-mail message to “harrysmith@aol.com”. The computer would read “aol.com”, translate this into the corresponding numeric IP address, and deliver the message to the American Online computer, which would then deliver the message to Harry Smith.
The domain name also functions as a “World WideWeb” address, if preceded by the letters www (i.e., www.aol.com). Web sites are pages of electronic information that a company, organization, or person wants to advertise to Internet users. Entities and people such as Sports Illustrated, Duke University, the National Basketball Association, and certain individual politicians have web sites that allow Internet users to look up information.
In December of 1994, Juno Online registered the domain name “juno.com” with Network Solutions, Inc. (“NSI”) and, subsequently, began providing free e-mail service to customers on April 22, 1996. Those who use Juno Online’s e-mail service are given their own user name to use together with Juno Online’s domain name (e.g., harrysmith@juno.com). According to Juno Online, its service has been quite popular, with 250,000 new accounts having been opened in January of 1997 alone. Juno Online currently services more than one out of every twenty United States e-mail addresses. Since July 5,1995, Juno Online has also been using the World WideWeb address “www.juno.com” and, currently, its web page is “visited” thousands of times a day. By virtue of a government contract with the National Science Foundation, NSI is the exclusive registrar of Internet domain names. Therefore, once Juno Online registered the domain name “juno.com” with NSI, no other business or person could obtain that address.
NSI’s general policy is to register a specific domain name to the first person or entity to apply for registration. However, in 1995, NSI instituted a “Domain Name Dispute Policy” that allows a third party to challenge a registrant’s domain name, despite the “first come, first serve” general rule. According to the policy, to challenge a domain name, the third party must notify the registrant that the use of the domain name violates the third party’s intellectual property rights. The third party must also file with NSI a certified copy of a trademark registration indicating that the third party owns a trademark that is the same as the contested domain name. If the domain name registrant cannot produce a similar trademark registration, NSI’s policy requires it to suspend the use of the domain name until the issue is resolved. However, if either the registrant or third party files suit against the other before the suspension takes effect, NSI allows the registrant to continue using the domain name and leaves it for the court to decide which party should be allowed to use the domain name.[2]
In July, 1995, D. E. Shaw & Co., L.P., an affiliate of Juno Online, began applying for federal service mark and trademark protection for the word “Juno”, as well as for various designs, slogans, and phone numbers related to “Juno”. Juno Lighting sent a letter to Juno Online in June of 1996 stating their opposition to the Juno Online trademark applications. Juno Lighting also sent a letter to NSI on August 28, 1996 requesting that NSI cancel Juno Online’s domain name “juno.com”.
After NSI received Juno Lighting’s letter, pursuant to its dispute policy, NSI sent Juno Online a letter dated September 19, 1996, stating that, unless Juno Online transferred the domain name “juno. com” to Juno Lighting or filed a declaratory judgment action in federal court by October 26, 1996, NSI would suspend the operation of the domain name “juno.com”. In response, Juno Online filed this action in the Eastern District of Virginia, naming Juno Lighting and NSI as defendants. However, after NSI agreed not to suspend the use of “juno.com” until the case has been resolved, Juno Online agreed voluntarily to dismiss NSI from the suit and the case was transferred to the Northern District of Illinois. Subsequently, Juno Lighting obtained, by registering with NSI, the domain name “juno-online.com”. According to Juno Lighting, this was done in order to prevent other’s from obtaining the name, thus allowing Juno Lighting to transfer the domain name to Juno Online to help resolve this dispute.
In Count I of the amended complaint, plaintiff seeks a declaration that its use of the domain name “juno.com” does not infringe or dilute Juno Lighting’s trademark. In Count II, labeled “trademark misuse,” Juno Online seeks a declaration that defendant misused the Juno Lighting trademarks, as well as injunctive relief, monetary damages, and cancellation of Juno Lighting’s trademark registration. Count III alleges a Lanham Act violation arising from Juno Lighting’s registration of the domain name “juno-online.com”. Count IV speaks in state unfair competition and deceptive trade practices law. Defendant has counterclaimed for trademark infringement and dilution, unfair competition, and violations of Illinois state law. Juno Lighting now moves to dismiss Counts II, III, and IV of plaintiff’s amended complaint and to strike all claims for monetary relief. For the following reasons, the court grants defendant’s motion.
II. STANDARD
In ruling on a motion to dismiss pursuant to Federal Rule of Civil Procedure 12 (b) (6), the court must accept “the well-pleaded allegations in the complaint as true and draw[ ] all reasonable inferences in favor of the plaintiff.” Porter v. DiBlasio, 93 F.3d 301, 305 (7th Cir. 1996) (citing Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1429 (7th Cir. 1996)). Dismissal is only appropriate if there is no set of facts that, if proven true, would entitle plaintiff to relief. Id. (citing Travel All Over, 73 F.3d at 1429-30). Where the court considers evidence outside the pleadings, as the court has in deciding the motion to dismiss Count II, the motion is treated as a motion for summary judgment. FED.R.CIV.P. 12(b). Summary judgment will be granted only if, viewing the facts and inferences in the light most favorable to the non-moving party, the party moving for summary judgment proves the absence of a genuine issue of material fact and establishes its right to judgment as a matter of law. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986).
III. TRADEMARK MISUSE
In Court II, plaintiff has asserted a claim for trademark misuse, arguing that Juno Lighting misused its trademark by attempting to put Juno Online out of business. Pl.’s Mem. in Opposition at 6-7. According to plaintiff, Juno Lighting not only tried to have NSI cancel Juno Online’s domain name, but it also tried to confuse the public and “extract concessions” from plaintiff by obtaining the domain name “juno-online.com”. Defendant, however, has pointed out that trademark misuse is not a recognized affirmative claim. In the past, it has been confined to being asserted as a defense to a suit for trademark infringement or as an element of a separate tort action.
In light of the novel issues presented by this claim, the court heard oral arguments from both parties on August 12, 1997. The court limited the arguments to the issue of whether this court should recognize an affirmative claim for trademark misuse. After hearing the arguments and considering the briefs and evidence filed, the court finds that, if, as plaintiff claims, in light of new technology and novel issues surrounding the Internet, an affirmative claim for trademark misuse should be recognized, this is not the proper case in which to do so.
A. Background History of the Misuse Defense
In 1942, the Supreme Court recognized the defense of patent misuses in Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402 (1942). In that case, the plaintiff sued arguing that the defendant’s salt depositing machine infringed the plaintiff’s patent. However, the Court found that the plaintiff was leasing its own salt depositing machines to canners on the condition that the licensees use a certain unpatented salt tablet produced by the plaintiff’s subsidiary, id. at 491, 62 S.Ct. at 404, and that this typing arrangement was an attempt on the plaintiff’s part to use the government granted monopoly to acquire another monopoly in an unpatented product. Id. The Court decided that, if it allowed the plaintiff to invoke successfully its patent in the infringement suit, it would be assisting the plaintiff in acquiring a second monopoly and, thus, hurting competition and the public. Id. at 493, 62 S.Ct. at 405. Therefore, invoking the “clean hands” doctrine, the Court held that the patentee was not allowed to invoke the protection of the law through an infringement suit, at least until it stopped the offending practice. Id. Although courts have continued to apply the patent misuse defense, see, e.g., Senza-Gel Corp. v. Seiffhart, 803 F.2d 661 (Fed. Cir. 1966); Transitron Elec. Corp. v. Hughes Aircraft Co., 487 F.Supp. 885, 892-93, 904-05 (D. Mass. 1980), aff’d, 649 F.2d 871 (1st Cir. 1981), in 1988, Congress limited the reach of this defense. See The Patent Misuse Reform Act of 1988, Pub. L. No. 100-703, 102 Stat. 4676 (1988) (codified at 35 U.S.C. 271(d)(4) & (5)) (conditioning, in part, the misuse defense on a showing of market power in the relevant market).
The misuse defense has also been extended to other forms of intellectual property. For instance, while courts are split on whether a copyright misuse defense exists, in 1990, the Fourth Circuit recognized the defense in Lasercomb America, Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990). The court reasoned that, since patent and copyright have similar origins and purposes, and since the Supreme Court had recognized a patent misuse defense in Morton Salt, a misuse defense should also be recognized in copyright law. Id. at 976. Summing up the defense, the court stated that “[t]he question is not whether the copyright is being used in a manner violative of antitrust law … but whether the copyright is being used in a manner violative of the public policy embodied in the grant of a copyright.” Id. at 978.
The misuse defense has also enjoyed a substantial history in the field of trademarks. However, courts have taken different approaches in applying the defense in this field. See generally Stephen J. Davidson and Nicole A. Engisch, Trademark Misuse in Domain Name Disputes, The Computer Lawyer, Aug. 1996, at 13. Some courts have applied trademark misuse in situations where the mark is being used to violate the antitrust laws. See, e.g., Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 298 F.Supp. 1309, 1315 (S.D.N.Y. 1969) (“An essential element of the antitrust misuse defense in a trademark case is proof that the mark itself has been the basic and fundamental vehicle required and used to accomplish the violation.”). For example, In Phi Delta Theta Fraternity v. J.A. Buchroeder & Co., 251 F.Supp. 968, 975-80 (W.D. Mo. 1966), the court held that, if the defendant could prove that a group of fraternities had conspired with certain companies to restrain trade by (1) scheming to obtain trademarks that allowed the fraternal organizations to control the sale of insignia goods, and (2) granting only a few companies licenses to sell insignia goods, defendant would have shown a valid misuse defense to infringement. In ruling, the court relied significantly on 15 U.S.C. 1115(b)(7), which explicitly states that a defense to the presumption granted to incontestable marks is “[t]hat the mark has been or is being used to violate the antitrust laws of the United States.” Phi Delta Theta, 251 F.Supp. at 978-80.
Other courts have relied on the “clean hands” doctrine and found misuse even where there was no antitrust violation. Plaintiff, for instance, points to Clinton E. Worden & Co. v. California Fig Syrup Co., 187 U.S. 516, 539-40, 23 S.Ct. 161, 168 (1903), in which the Supreme Court held that the maker of a certain laxative could not enforce its trademark in “Syrup of Figs”, since the laxative did not actually contain fig juice. According to the Court, such deception deprived the trademark holder of the right to enforce the trademark in a court of equity.
Over the years, in applying the copyright misuse defense, courts have also differed on whether the defendant must show a relationship or nexus between the alleged misuse and the acquisition or use of the trademark. See generally Stephen J. Davidson and Nicole A. Engisch, Trademark Misuse in Domain Name Disputes, The Computer Lawyer, Aug. 1996, at 13 (discussing relevant cases). Some courts have required such a nexus, see, e.g., Tveter v. AB Turn-O-Matic, 633 F.2d 831, 839 (9th Cir. 1980), cert. denied, 451 U.S. 11, 10 1 S.Ct. 1983 (1981) (“What is material is not that plaintiff’s hands are dirty, but that he dirtied them in acquiring the rights he now asserts, or that the manner of dirtying renders inequitable the assertion of such rights against the defendant.”) (quoting Republic Molding Corp. v. B.W. Photo Utilities, 319 F.2d 347, 349 (9th Cir. 1963)), while others have found misuse despite the fact that the misconduct is unrelated to the mark. See, e.g., United States Jaycees v. Cedar Rapids Jaycees, 794 F.2d 379 (8th Cir. 1986) (refusing to enjoin local Jaycees affiliate from using the trademark “Jaycees” since the national organization was seeking the injunction for an improper reason, even though the improper reason, that the local chapter admitted woman, had nothing to do with the acquisition or use of the trademark).
B. Misuse As An Affirmative Claim
