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S INDUS. v. DIAMOND MULTIMEDIA SYS.

January 20, 1998

S INDUSTRIES, INC., a Delaware Corporation, Plaintiff,
v.
DIAMOND MULTIMEDIA SYSTEMS, INC., d/b/a/ DIAMOND COMPUTER SYSTEMS, INC., MICRON ELECTRONIC, INC., ZEOS, COMPUTER CITY, INC., COMP USA, ELEK-TEK, CIRCUIT CITY, BEST BUY, and EGGHEAD SOFTWARE, Defendants.



The opinion of the court was delivered by: ANDERSEN

 Plaintiff, S Industries, claims the right to use the mark STEALTH in connection with computers and computer related goods. S Industries contends that defendants are infringing this trademark by using the STEALTH mark for computer video and graphics boards. Defendants move for summary judgment on all counts of plaintiff's second amended complaint. Plaintiff also moves for summary judgment on Counts I - III and V - VI of its second amended complaint. For the following reasons, defendants' motion is granted and plaintiff's motion is denied.

 BACKGROUND

 The following facts are undisputed unless otherwise noted.

 I. The Parties

 A. S Industries

 Since 1981, S Industries, its predecessors in interest, and related companies have used the mark STEALTH in connection with various consumer goods. Leo Stoller is the current president, CEO and sole shareholder of S Industries, Sentra Industries, Inc. and Stealth Industries, and the sole owner and sole proprietor of Sentra Sporting U.S.A. Co. and Rent-A-Mark. (Stoller Aff., P1). S Industries owns or is the exclusive licensee for the following federal trademark registrations: Mark Registration No. Goods STEALTH 2,025,156 metal alloys for use in sporting goods, transportation, and window locks THE STEALTH 2,024,889 lawn sprinklers STEALTH SQUAD 2,007,348 comic books STEALTH 1,867,087 pool cues, pool tables, darts, billiard balls; cue cases; cue rack and billiard gloves STEALTH 1,717,010 microwave absorbing automobile paint STEALTH 1,766,806 fishing tackle floats STEALTH 1,434,642 bicycles, motorcycles and boats STEALTH 1,332,378 sporting goods, specifically, tennis rackets, golf clubs, tennis balls, basketballs, baseballs, soccer balls, golf balls, cross bows, tennis racket strings and shuttlecocks.

 On November 13, 1995, S Industries again applied to register the mark STEALTH for "computers; dot matrix printers; computer disc drives, fax modem cards; computer monitors, computer keyboards, computer diskette storage containers, computer software for computer setup and data base files, blank video films and video tapes; safety goggles, radios, photographic and video cameras; [and] compressed air cylinders for use with breathing apparatus." The application listed January 1985 as the date of first use. On March 18, 1996, the PTO refused to register the mark. The office action stated that a likelihood of confusion existed with prior applications for the mark STEALTH used in connection with computers and computer related goods and listed various technical problems with the application. One of the prior applications cited by the PTO was filed by defendant Diamond Computer Systems, Inc. ("Diamond").

 Currently, S Industries owns no federal trademark registration for the mark STEALTH in connection with computers or computer related goods. S Industries, however, claims to have acquired common law rights in the mark based on its alleged prior and continuous use of the mark since 1985.

 B. Defendants

 Since at least 1991, defendant Diamond has manufactured and sold a line of video and graphics computer boards bearing the STEALTH mark. The boards are printed circuit boards that are physically installed in a personal computer, enabling the user to display video and graphics. Diamond has sold "millions" of its STEALTH boards and has earned over $ 800 million in revenues from these sales. Defendants Micron Electronic, Inc., Zeos, Computer City, Inc., COMPUSA, Elek-Tek, Circuit City, Best Buy and Egghead Software sell and advertise Diamond's STEALTH video and graphics computer boards across the United States.

 On October 18, 1993, Diamond applied to register its STEALTH mark for "accessory circuit boards of personal computers to display video graphics" based on its actual use of the mark beginning in October 1990. In 1994, Stealth Industries, Inc., Leo Stoller d/b/a Stealth, Leo Stoller d/b/a Sentra Sporting Goods and S Industries filed an opposition with the PTO challenging Diamond's right to register the STEALTH mark. In 1995, Leo Stoller, on behalf of Stealth Industries, filed an amended opposition against Diamond's application. The PTO's Trial and Trademark Appeal Board stayed S Industries' opposition, and thus the disposition of Diamond's application, pending the resolution of this lawsuit.

 II. The Lawsuit

 On June 5, 1996, plaintiff filed suit against Diamond, Micron Electronic, Inc., Zeos, Computer City, Inc., COMPUSA, Elek-Tek, Circuit City, Best Buy and Egghead Software (collectively the "defendants"). Defendant Zeos has not been served because plaintiff discovered that it is a division of defendant Micron. (Pl. Resp. and Cross Mo. for S.J., p. 1).

 Plaintiff filed its second amended complaint on March 26, 1997, bringing claims under the Lanham Act for infringement of a registered mark (Count I), false designation of origin (Count II), unfair competition (Count III) and dilution (Count IV). Additionally, plaintiff alleges state law claims under the Illinois Consumer Fraud and Deceptive Trade Practices Act and the Illinois Uniform Deceptive Trade Practices Act (Count V) and the Illinois Counterfeit Trademark Act (Count VI).

 The parties initiated the first round of discovery in January 1997. Defendants sought to discover plaintiff's proof supporting its claim of prior, continuous use of the STEALTH mark on computers and computer related products. At the February 11, 1997 status conference, plaintiff agreed to provide the requested documents. The responsive documents produced the instant cross motions for summary judgment.

 DISCUSSION

 I. Standard of Review

 Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P.56(c); Salima v. Scherwood South, Inc., 38 F.3d 929, 932 (7th Cir. 1994). The moving party bears the burden of demonstrating an absence of evidence to support the position of the nonmoving party, Doe v. R.R. Donnelley & Sons Co., 42 F.3d 439, 442-43 (7th Cir. 1994), and all reasonable inferences are drawn in favor of the party opposing the motion. Associated Milk Producers, Inc. v. Meadow Gold Dairies, 27 F.3d 268, 270 (7th Cir. 1994). The Court, however, is "not required to draw every conceivable inference from the record [in favor of the non-movant]--only those inferences that are reasonable." Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir. 1991). To avert summary judgment the plaintiff must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The non-movant cannot rely solely on its pleadings and must come forth with evidence showing that a genuine issue of material fact exists for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 In making its determination, the court's sole function is to determine "whether there is any material dispute of fact that requires a trial." Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Credibility determinations and weighing evidence are jury functions, not those of a judge when deciding a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 Even though the parties have filed cross motions for summary judgement, it does not mean that summary judgment must be entered for one side. Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir. 1983), cert. denied, 464 U.S. 805, 78 L. Ed. 2d 72, 104 S. Ct. 53 (1983); Intermatic Inc. v. Toeppen, 947 F. Supp. 1227, 1232 (N.D. Ill. 1996). The court must still assess whether a material fact questions exists. Id.

 The parties do not dispute that Diamond uses STEALTH as a brand name for its video and graphics computer boards or that the other defendants sell Diamond's STEALTH boards. Rather, plaintiff argues that "it is clear beyond reasonable dispute" that plaintiff has continuously used the STEALTH mark for computers and computer related products since 1985. (Pl. Resp. and Cross Mo. for S.J., p. 7). Thus, plaintiff claims that "it is clear beyond reasonable dispute that [defendants'] concurrent uses [of the STEALTH mark] are likely to cause confusion, or to cause mistake or to deceive." (Id.) Defendants claim that plaintiff's evidence fails, as a matter of law, to establish that plaintiff has prior common law or federal trademark rights to the STEALTH mark in connection with computers and computer related goods.

 II. Count I: Infringement of a Registered Mark Under The Lanham Act

 In Count I, plaintiff claims that defendants' use of the STEALTH mark infringes its federal trademark registrations for STEALTH. Defendants argue that the plaintiff's registrations do not cover computers and computer related goods. We agree with defendants.

 Plaintiff does not own a trademark registration for the mark STEALTH in connection with computers or any kind of electronic technology. However, "modern trademark law prohibits use of a senior user's mark not only on products that are in direct competition with those of the senior user but also on products that are considered to be 'closely related' to the senior user's." Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 958 (7th Cir. 1992), cert. denied, 507 U.S. 1042, 123 L. Ed. 2d 497, 113 S. Ct. 1879 (1993). "A 'closely related' product is one 'which would reasonably be thought by the buying public to come from the same source, or thought to be affiliated with, connected with, or sponsored by, the trademark owner.'" Id. (citations omitted). A senior user is protected against the use of confusingly similar marks on closely related goods so that the senior user may enter markets in which it does not now trade, but into which it might reasonably be expected to expand in the future. Id. For example, the use of the mark THIRST-AID on an isotonic beverage infringed the mark THIRST-AID registered for soft drinks, syrups, and toppings and sauces used in making ice cream. 978 F.2d at 958-959. See also International Kennel Club v. Mighty Star Inc., 846 F.2d 1079, 1089-1090 (7th Cir. 1988) (use of INTERNATIONAL KENNEL CLUB mark on toy dogs likely to cause confusion as to source with International Kennel Club of Chicago's rights to the mark for sponsoring dog shows); James Burrough Ltd. v. Sign of the Beefeater, Inc., 540 F.2d 266, 273 (7th Cir. 1976) (SIGN OF THE BEEFEATER restaurants creates likelihood of confusion with BEEFEATER registered for gin).

 That said, trademark registrations do not grant rights in a vacuum. Zeocrystal Indus., Inc. v. Fox Broad. Co., 923 F. Supp. 132, 133 (N.D. Ill. 1996). The goods registered by plaintiff such as metal alloys, sporting equipment, paint, comic books, motorcycles, bicycles, boats and lawn sprinklers are not even remotely related to computers or computer related goods. Plaintiff has offered no support for its claim that confusion will occur, and we do not believe that consumers will reasonably be confused between STEALTH lawn sprinklers and STEALTH video and graphics computer boards. Accordingly, we find as a matter of law that the goods in plaintiff's registrations are so unrelated to Diamond's computer ...


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