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96 CV 4503 (JG)

May 22, 1997


POLLAK, United States Magistrate Judge:

On September 12,1996, plaintiffs Travel Impressions Ltd. (“Travel Impressions’) and Empress Travel, L.P. (“Empress”) brought this action against defendants Stephen Kaufman (“Kaufman”), Traveler’s Choice, Inc. (collectively, `Travelers”) and network Solutions, Inc. (“NSI”), alleging violations of the Lanham Act, as amended, 15 U.S.C.     1114 et. seq., in connection with Travelers’s use of plaintiffs’ registered trademarks “TRAVELIMPRESSIONS.COM” and “EMPRESSTRAVEL.COM,” and in a toll-free telephone number, 1-800-367-7377 (1-800-EMPRESS). [1]

On December 9, 1996, plaintiffs moved for a preliminary injunction barring defendants from using the domain names and the toll-free telephone number, and on December 16, 1996, defendant NSI moved to dismiss plaintiffs’ complaint as to NSI. By order dated December 31, 1996, the Honorable John Gleeson, United States District Judge, referred both motions to the undersigned for Report and Recommendation.

Following oral argument held on February 7, 1997, and based on a review of all the parties’ submissions, this Court respectifully recommends that: 1) plaintiffs’ motion for preliminary injunction as to the Internet registration of EMPRESSTRAVEL.COM be denied; 2) plaintiff’s motion for a preliminary injunction as to the use of the toll-free telephone number, 1-800-367-7377, be denied; and 3) NSI’s motion to dismiss be granted in its entirety, contingent on NSI’s stated intention to deposit into the Registry of the Court the original domain name declaration for EMPRESSTRAVEL.COM.


Empress is in the business of developing retail travel agency franchises and Travel Impressions is a travel wholesaler that assembles tour packages. Empress owns United States Trademark No. 837,303 for use of the mark “EMPRESS” in connection with its travel services. Travel Impressions owns United States Trademark Registration No. 1,362,504 for use of the mark “TRAVEL IMPRESSIONS.” in connection with its travel services. [2]

On October 5, 1989, defendant Kaufman, as principal of defendant Travelers, entered into a franchise agreement (“Franchise Agreement”) with Empress Travel Franchise Corp., the predecessor of plaintiff Empress. Pursuant to the Franchise Agreement, Travelers was authorized to furnish retail travel agency services at one location in Bedminister, New Jersey, using the Empress trademark and the name Empress Travel. The Franchise Agreement provides that Travelers “shall operate its retail travel agency and advertise only under the name Empress” (Franchise Agreement,    II.C.11) and that the “(f)ranchisee’s retail travel agency shall be exclusively identified by and use Empress’ name and proprietary marks.” (Franchise Agreement,    V.B.2). The Franchise Agreement further states that “Franchise shall use exclusively the proprietary marks, logos, trade styles, color combinations, designs, signs, symbols and slogans of Empress and only in the manner and to the extent specifically permitted by this Agreement. Franchisee shall not use any confusingly similar proprietary marks in connection with its franchise … ” (Franchise Agreement,    II.C.5). However, the Franchise Agreement makes clear that Travelers is authorized to use the mark “solely at the [Bedminister] Location,” (Franchise Agreement,    II.C.2), a geographic limitation imposed by the franchisor in order to protect the rights and interests of each of its approximately 88 franchisees.

1. The Toll-Free Telephone Number

According to the declaration of defendant Kaufman, Travelers has, pursuant to the 1989 Franchise Agreement, used the EMPRESS mark and the Empress Travel name in various forms of advertising, including window signs and handouts, as well as advertising in publications distributed in New Jersey and direct mailings of promotional material. Since 1989, Travelers has also used a toll-free telephone number, 1-800-367-7377, the last seven digits of which correspond to the spelling of “Empress.” According to the Kaufman declaration, another franchisee of Empress Travel Franchise Corp. located in Washington, D.C. had previously used this toll-free number until its franchise was terminated. Thereafter, the telephone number became available to any entity who might wish to apply for it, such as the Empress Travel agency in Budd Lake, New Jersey or the Empress riverboat casino located in St. Louis. [3] Accordingly, Travelers acquired the newly available telephone number from the telephone company in 1989, but since then has only used its numeric form, not its vanity form.

In approximately 1993, plaintiff Empress succeeded Empress Travel Franchise Corp. as franchisor under the agreement with Travelers. At that time, plaintiff issued a certificate to Travelers providing that “Traveler’s … is licensed to use the name of Empress Travel by the owner of the trademark, Empress Travel L.P. … ” (December 13, 1997 Declaration of Stephen Kaufman,    4 and Exh. A). According to the Kaufman declaration, Empress and Travelers began to negotiate in August 1993 for the acquisition of the toll-free number from Travelers, but they failed to reach an agreement. Nonetheless, it is undisputed that until the filing of this lawsuit over three years later, plaintiffs never took steps to object to Travelers’ use of this toll-free number. Indeed, during oral argument, plaintiffs’ counsel conceded that “we did not want to go through the expense to burden everyone, including the Court, with a litigation over that number, when we felt that at that point we could deal with the damages.” (Transcript of Feb. 7, 1997 oral argument (“Tr.”), at p. 62).

2. The Internet Registration

The nominal defendant in this action, NSI, provides registration of Internet domain names, which are alphanumeric names that identify each entity on the Internet and essentially serve as “addresses” on the Internet for that entity. [4] By accessing a domain name, an individual can use the Internet to obtain information or even purchase goods and services from the entity registered under that domain name.

According to the affidavit of David M. Graves, Internet Business Manager for NSI, “[d]omain names are arranged in a hierarchial structure in which .COM is a top-level domain. Network Solutions is the world-wide registrar of second-level domain `.COM.'” [ 5] (Dec. 13, 1996 Aff. of David M. Graves.    7-8). NSI assigns second-level domain names on a first-come, first-served basis, but requires its applicants to certify, among other things, that the applicant has the right to use the domain name and that its registration does not interfere with or infringe the rights of any third party’s trademark, service name, company name or other intellectual property right.

According to the Kaufman declaration, in approximately October 1995, Kaufman urged plaintiffs to establish a site on the Internet to promote the travel agency services provided by Empress franchisees. Although plaintiffs indicated that they would be doing so shortly, by March 1996, plaintiffs still had not obtained a web site nor had they registered the name EMPRESSTRAVEL.COM as their domain name. Concerned that the domain name might be acquired by another franchisee or an entity unrelated to the Empress franchise system, travelers acquired and registered the name through NSI for its own website on March 4, 1996.

According to the affidavit of Bradley J. Tolkin, the President of Empress and Co-President and Chief Executive Officer of Travel Impressions, plaintiff Empress sought to register EMPRESSTRAVEL.COM with NSI in the summer of 1996 but was advised that the domain name had already been registered as an exclusive domain name by Travelers. Plaintiffs claim that by registering the name EMPRESSTRAVEL.COM, Travelers has prevented Empress from registering this name as its domain name and thus has violated those sections of the Franchise Agreement which provides that plaintiff is the “sole and executive owner” of the service mark “Empress” (Franchise Agreement, Preamble, at 1), and which authorize Travelers to use the Empress mark “solely at the [Bedminister] Location.” (Id. at    II.C.2). Moreover, plaintiffs alleges that in order for Travelers to have registered the domain name EMRESSTRAVEL.COM with NSI, Travelers had to make material misrepresentations to NSI regarding Traveler’s authority to use the Empress mark on the Internet.

Plaintiff’s seek a preliminary injunction against Travelers, claiming that they will suffer irreparable injury if Travelers is permitted to use the Empress mark on the Internet and in connection with the toll-free telephone number, based both on the impact on the public’s perception as to the ownership of the mark and on plaintiffs’ inability to comply with its obligations to its other franchisees.


1. Standard for Preliminary Injunction

In the Second Circuit, it is well-settled that in order to obtain a preliminary injunction, “a party must demonstrate (1) that it will suffer irreparable harm if the preliminary injunction is not issued, and (2) that it is likely to succeed on the merits of its claims or, in the alternative, has demonstrated sufficiently serious questions regarding the merits of the claims and the balance of hardships tips decidedly in its favor.” L. & J.G. Stickley, Inc, v. Canal Dover co., Inc., 79 F.3d 258, 261-62 (2d Cir. 1996); see also Jackson Dairy, Inc. v. H. P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979) (per curiam). It is eqully well-established that a preliminary injunction is “an extraordinary remedy” that “should issue not upon a plaintiff’s imaginative, worst case scenario of the consequences flowing the defendant’s alleged wrong but upon a concrete showing of imminent irreparable injury.” USA Network v. Jones Intercable, Inc., 704 F.Supp. 488, 491 (S.D.N.Y. 1989).

A showing of probable irreparable harm is “the single most important prerequisite” to the granting of preliminary injunctive relief; thus, the moving party must first demonstrate that irreparable harm is likely to occur in the absence of injunctive relief. Reuters Ltd. v. United Press Int’l. Inc., 903 F.2d 904, 907 (2d Cir. 1990). The mere possibility of irreparable harm is insufficient. Borey v. National Union Fire Ins. Co., 934 F.2d 30, 34 (2d Cir. 1991). The claimant must show that the alleged injury is likely and imminent, not remote or speculative, and that it cannot be fully remedied by monetary damages. Reuters Ltd. v. United Press Int’l. Inc., 903 F.2d at 907; see also Borey v. National Union Fire Ins. Co., 934 F.2d at 34 (observing that “when a party can be fully compensated for financial loss by money judgment, there is simply no compelling reason why the extraordinary equitable remedy of a preliminary injunction should be granted”).

2. The Lanham Act

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