Sporty's Farm L.L.C. v. Sportsman's Market, Inc.

202 F.3d 489 (2nd Cir. 2000)

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Nature of the Case

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Facts

Sportsman's (D) is a mail-order catalog company well-known among pilots and aviation enthusiasts for selling products tailored to their needs. D has expanded its catalog business well beyond the aviation market into that for tools and home accessories. D distributes approximately 18 million catalogs nationwide and has yearly revenues of about $50 million. Non-aviation sales comprise about 40%. In 1985, D registered the trademark sporty's. Sporty's appears on the cover of all Sportsman's catalogs; Sportsman's international toll-free number is 1-800-4sportys; and one of Sportsman's domestic toll-free phone numbers is 1-800-Sportys. Sportsman's spends about $ 10 million per year advertising its sporty's logo. In 1995, Arthur and Betty Hollander decided to enter the aviation catalog business. It was called Pilot's Depot, LLC. They registered the domain name sportys.com with NSI. Arthur was a pilot who received D's catalogs and thus was aware of the sporty's trademark. Nine months later they formed another wholly-owned subsidiary called Sporty's Farm and sold it the rights to sportys.com for $16,200. Sporty's Farm grows and sells Christmas trees. In March 1996, D discovered sportys.com as a domain name. P brought this declaratory action seeking the right to continue its use of sportys.com. D counterclaimed and also sued P for (1) trademark infringement, (2) trademark dilution pursuant to the FTDA, and (3) unfair competition under state law. D used 'sportys-catalogs.com' as its primary domain name. The court rejected D's trademark infringement claim since 'the parties operate wholly unrelated businesses and therefore, confusion in the marketplace is not likely to develop.' On trademark dilution, the district court found for D. The court concluded (1) that sporty's was a famous mark entitled to protection under the FTDA since 'the 'Sporty's' mark enjoys general name recognition in the consuming public,' and (2) that D had diluted sporty's because 'registration of the 'sportys.com' domain name effectively compromises D's ability to identify and distinguish its goods on the Internet. The court held that D's conduct did not constitute a violation of CUTPA because P had failed to show that D's 'conduct was immoral, unethical, oppressive, or unscrupulous,' and (2) that D 'suffered a substantial injury sufficient to establish a CUTPA claim.' Both parties appealed. While this appeal was pending, Congress passed the ACPA. That law was passed 'to protect consumers and American businesses, to promote the growth of online commerce, and to provide clarity in the law for trademark owners by prohibiting the bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks -- a practice commonly referred to as 'cybersquatting'.'