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CLASSIFIED VENTURES, L.L.C. v. SOFTCELL MARKETING

May 31, 2000

CLASSIFIED VENTURES, L.L.C., PLAINTIFF,
V.
SOFTCELL MARKETING, INC. AND GARY GOULD, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Nolan, United States Magistrate Judge.

FINAL JUDGMENT

Plaintiff, Classified Ventures, L.L.C. ("Classified Ventures"), filed this action on November 24, 1998, alleging that defendants Softcell Marketing, Inc. ("Softcell"), and Gary Gould ("Gould"), used the mark CARS.COM in connection with spam e-mail advertisements. The parties stipulate to the following findings of fact and conclusions of law, and consent to entry of a permanent injunction as set forth below. Accordingly, the Court enters the following:

A. Classified Ventures and the Cars.com Name and Mark

Classified Ventures provides classified advertising over the Internet for a wide variety of products and services. Classified Ventures hosts a web site located at www.cars.com (the "Cars.com Site"). The Cars.com Site includes classified advertising for new and used automobiles for sale, as well as editorial reviews, interest rates, price reports, and other information relating to automobiles.

Classified Ventures acquired the domain name cars.com in September, 1997, and began to use it as a service mark in the fall of 1997. The domain name functions as both a location of the Cars.com Site and as a service mark identifying Classified Ventures' Internet automobile search and information services. On December 19, 1997, Classified Ventures applied to register its CARS.COM service mark as well as its CARS.COM and Design mark ("CARS.COM Service Marks") on the Principal Register of the Patent and Trademark Office.

Classified Ventures has expended large amounts of money, time and effort to promoting its CARS.COM Service Marks and developing the goodwill associated with those marks. Classified Ventures markets its services through various national and worldwide media, including the Internet and national newspapers. Classified Ventures has spent millions of dollars to advertise the Cars.com Site and attendant CARS.COM Service Marks. The Cars.com Site is one of the most heavily trafficked auto-related web sites on the Internet. As a result of this extensive promotion, advertising, and Internet exposure, the CARS.COM Service Marks have become famous and have acquired a strong secondary meaning and a selling power signifying Classified Ventures and its Cars.com Site. Consequently, Classified Ventures has built up and now owns a substantial and valuable goodwill which is symbolized by the CARS.COM Service Marks. Classified Ventures acquired this goodwill and fame long prior to the acts complained of herein.

B. Defendant Softcell and Its Services

Defendant Softcell provides Internet promotion services, and specializes in "spam" e-mail. In Internet parlance, this means mass, unsolicited electronic mail. Softcell advertises the benefits of spam email on two web sites it maintains, located at www.soflinc.net and www.softcell.net.

Softcell has also been engaged in the for-profit Internet pornography business. Among the domain names it owns are comenow.com, quickcheapsex.com, mailsexey.com, planetlovejoy.com, and planetlovetoy.com. Softcell has operated for-profit pornographic web sites using at least three of these domain names.

C. The November 18, 1998 Incident

On November 18, 1998, Softcell perpetrated a massive and intricately designed spam e-mail scheme whereby it sent at least a hundred thousand e-mail messages addressed to subscribers of the Internet service provider America Online ("AOL"), located throughout the United States. Each e-mail bore the same return address: stione@cars.com. These messages were "spam" e-mail. All messages bore the return address stione@cars.com and contained an advertisement for Internet pornography services available at www.freeyellow.com/members5/hotweb. The messages varied only by their subject lines, which included such messages as "Hi," "Do it for free," "don'y fay [sic] for Video," "not kidding!. . . . Really Free," "free this time," and "Got your note." Classified Ventures did not create or maintain the e-mail address stione@cars.com. Classified Ventures did not authorize the use of its domain name cars.com in connection with the address designation stione. However, consumers who received Softcell's spam e-mails believed they were sent by Classified Ventures because the return address designated "cars.com" as the sender. Consumers were harmed by receiving unsolicited spam e-mail messages advertising Internet pornography. They received the unsolicited spam e-mail but had no way of knowing that the return e-mail address, stione@cars.com. was a false address. The spam e-mails sent a false message that Classified Ventures participates in spam e-mail campaigns and sells pornography services under its CARS.COM Service Marks.

D. Findings of Law

Classified Ventures' extensive and exclusive use of the CARS.COM Service Marks in connection with the Cars.com Site establishes Classified Ventures' exclusive right to use the CARS.COM Service Marks for the services provided through the Cars.com Site. Zip Dee, Inc. v. Dometic Corp., 931 F. Supp. 602, 606 (N.D.Ill. 1996). This exclusive right empowers Classified Ventures to prevent any third party from using any name or mark that is likely to cause confusion with or dilute the CARS.COM Service Marks.

Softcell's use of "cars.com" in its spam e-mail messages was identical to Classified Ventures' CARS.COM Service Marks and domain name. Consumers receiving Softcell's spam e-mail were likely to believe that Classified Ventures is the source of Softcell's Internet pornography services. Further, Classified Ventures and Softcell both offer Internet services. These services are "related" for purposes of a likelihood of confusion analysis. Homeowners Group, Inc. v. Home Marketing Specialists, Inc., 931 F.2d 1100, 1109 (6th Cir. 1991) (services "are `related' if the ...


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