Virgin Enterprises Ltd. v. Nawab

335 F.3d 141 (2nd Cir. 2003)

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Nature of the Case

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Facts

P operates an airline, an internet service, and retail stores for music and electronics. P owns three registered marks for each of those areas all using the name “Virgin.” Blitz and Daniel Gazal (Ds) are the sole shareholders of Cel-Net Communications, Inc. They formed Cel-Net in 1993 to sell retail wireless telephones and services in the New York area. Later, they formed CNCG to sell wireless phones and services on the wholesale level. CNCG now sells wireless phones and services to more than 400 independent wireless retailers. In 1998, Cel-Net received permission from New York State regulators to resell telephone services within the state. Ds researched the use of the name Virgin for telecommunications and alleged they were told it was available. Ds retained Corporate Solutions, LLC and its principals Nathan Erlich and Tahir Nawab (D) as joint venture partners to help raise capital to launch Cel-Net's wireless telephone service. Ds filed an intent to use VIRGIN WIRELESS, VIRGIN MOBILE, VIRGIN COMMUNICATIONS, and VIRGIN NET in the field of telecommunications services. Corporate Solutions incorporated Virgin Wireless, Inc. and licensed to VWI the right to use the marks VIRGIN WIRELESS and VIRGIN MOBILE. One of P's affiliates had begun to offer wireless telecommunication services bearing the VIRGIN mark in the United Kingdom. VWI had two retail stores and four additional retail kiosks in malls in the New York area and in Pennsylvania. All of these stores have been run by VWI under the trade name VIRGIN WIRELESS. In August 2000, P licensed Virgin Mobile USA, LLC, to use the VIRGIN mark for wireless telecommunications services in the United States. The PTO suspended the application. P filed another intent-to-use application for the mark VIRGIN MOBILE to brand telecommunications services. The PTO issued a non-final action stating that D's pending applications for similar marks in the same class could give rise to 'a likelihood of confusion. VWI filed suits against P in the federal district courts in Arizona and Delaware, alleging that P was using VWI's mark. P sued seeking to enjoin Ds from selling mobile phones in VIRGIN-branded retail stores. The court noted that Ds were the first to use the VIRGIN mark in telecommunications and the first to attempt to register VIRGIN for telecommunications and retail telephone sales. It held that the dissimilarity in appearance of the logos and the differences between P's huge Virgin Megastores and Ds' small retail outlets in malls diminished likelihood of consumer confusion. The court denied P's application for preliminary injunction. P appealed.