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SPARKNET COMMUNICATIONS v. BONNEVILLE INTERNATIONAL CORP.

September 9, 2005.

SPARKNET COMMUNICATIONS, L.P., a Nevada limited partnership, and SPARKNET HOLDINGS, INC., a Nevada corporation, Plaintiffs,
v.
BONNEVILLE INTERNATIONAL CORPORATION, a Utah Corporation, Defendant. BONNEVILLE INTERNATIONAL CORPORATION, a Utah Corporation, Counterclaimant, v. SPARKNET HOLDINGS, INC., A Nevada Corporation, Counterdefendant.



The opinion of the court was delivered by: MORTON DENLOW, Magistrate Judge

MEMORANDUM OPINION AND ORDER

The music radio industry is highly competitive and radio stations seek to differentiate themselves in a variety of ways. This case involves a claim for trademark infringement and related state law claims in which the Plaintiffs claim that their "PLAYING WHAT WE WANT®" trademark has been infringed by the Defendant. The Defendant denies that there is a likelihood of confusion in their use of the "70's, 80's . . . WHATEVER WE WANT!", "70's, 80's . . . WHATEVER WE FEEL LIKE!" and "TODAY'S NEW MUSIC . . . and WHATEVER WE WANT" slogans, and denies that it is unfairly competing with Plaintiff.

  The Court conducted a bench trial on the papers and heard oral argument on July 25, 2005. The Court has carefully considered the numerous declarations filed by the parties,*fn1 the exhibits introduced into evidence, the briefs and closing arguments of counsel. The following constitute the Court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

  I. BACKGROUND

  A. THE PARTIES.

  1. The Plaintiffs are SparkNet Communications, L.P. ("SparkNet"), a Nevada limited partnership, and SparkNet Holdings, Inc. ("Holdings), a Nevada corporation, (collectively referred to as "Plaintiffs").

  2. The Defendant is Bonneville International Corporation ("Bonneville" or "Defendant"), a Utah corporation. It has been in the radio business since the mid-1920's. Horowitz Dec. ¶ 20. Bonneville owns and operates 38 radio stations including WTMX in Chicago (also known as "101.9 THE MIX"), KKLT in Phoenix (also known as "98.7 THE PEAK"), WSSM in St. Louis (also known as "106.5 THE ARCH"), and KZBR in San Francisco (also known as "95.7 MAX FM"). Id. ¶ 6.

  B. JURISDICTION AND VENUE.

  3. This is an action brought by Plaintiffs for trademark infringement under § 32 of the Lanham Act, 15 U.S.C. § 1114, unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), dilution under § 43(c) of the Lanham Act, 15 U.S.C. § 1125(c), common law unfair competition, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/10a. Bonneville filed a counterclaim for service mark cancellation that has not as yet been tried and is not the subject of this opinion.

  4. This Court has jurisdiction over the subject matter of this action under 28 U.S.C. § 1331, 15 U.S.C. § 1121, 28 U.S.C. §§ 1338(a) and (b), and pursuant to principles of supplemental jurisdiction under 28 U.S.C. § 1367. The parties have consented to a Magistrate Judge's jurisdiction pursuant to 28 U.S.C. § 636(c)(1).

  5. Venue is proper in this district pursuant to 28 U.S.C. § 1391 because Bonneville is doing business in this district.

  C. THE MARK.

  6. Robert Perry ("Perry") originally owned the Registered Mark, PLAYING WHAT WE WANT® (U.S. Trademark Registration No. 2,884,476) (the "Mark") for use in connection with internet streaming. Perry Dec. ¶ 2, Ex. A. Perry first used the Mark on May 1, 2001 and he registered it with the U.S. Patent and Trademark Office ("PTO") on September 14, 2004. Id. ¶ 3, Ex. A.

  7. On June 16, 2005, Perry assigned to Holdings his entire right, title and interest to the Mark. Holdings recorded the assignment with the PTO on June 22, 2005. Accordingly, Holdings owns the Mark and all rights therein. Perry Dec. ¶¶ 5-6; Comp. ¶ 14. The Mark is used in connection with the JACK FM programming package. Perry Dec. ¶ 4.

  8. SparkNet is the exclusive licensee of the Mark in the United States. Pursuant to its license, SparkNet has the exclusive right to sublicense the Mark to broadcasters that make radio programming available throughout the United States. Wall Dec. ¶ 8.

  9. Before SparkNet became the exclusive licensee of the Mark, Perry granted Bohn and Associates ("Bohn") the exclusive right to use the Mark in the United States. Perry Dec. ¶ 5. Perry's agreement with Bohn (the "Agreement") allowed Bohn to sublicense the Mark. Id. Bohn subsequently assigned all rights in the agreement to SparkNet, and Perry consented to that assignment. Id. ¶ 6.

  10. JACK FM is a radio format that was developed by SparkNet and its predecessors. THE JACK FM branded radio product contains a broader and more eclectic music playlist than the typical music radio stations. Burns Dec. ¶ 7. The playlists of stations offering the JACK FM product typically contains 1200 or more songs and the song selections defy easy categorization. Id. Traditional broadcast models include playlists of only 300-400 songs. Johnson Dec. ¶ 6.

  11. THE JACK FM format has strong commercial appeal to companies such as Infinity Broadcasting Company and has been described as "fresh, irreverent, and unique." Barnett Dec. ¶ 5; Strassell Dec. ¶ 5. As a result, Bohn was able to sublicense the JACK FM product to Infinity Broadcasting Corporation for use in Dallas, Los Angeles, Seattle, Minneapolis, Baltimore, Buffalo, New York City, and Chicago. Id. ¶ 7. Infinity has not launched the JACK FM format in San Francisco because Bonneville started up a MAX FM station in San Francisco on or about May 12, 2005 which uses the slogan "70's, 80's . . . WHATEVER WE FEEL LIKE." Id. ¶ 8. Infinity did launch the JACK FM format in Chicago on June 3, 2005, after Bonneville started up its new format and slogan in March, 2005. Solk Dec. ¶ 13; Strassel Dec. ¶ 8.

  12. Those stations that have licensed the JACK FM format consider the PLAYING WHAT WE WANT mark to be an integral part of the JACK FM product. Strassel Dec. ¶ 6.

  13. SparkNet and its predecessor have licensed the JACK FM format and the related PLAYING WHAT WE WANT trademark for use in at least 15 cities in the United States and expects to add many new stations. Wall Dec. ¶ 13. SparkNet and its licensees have spent and expect to spend millions of dollars to promote the JACK FM concept and the associated PLAYING WHAT WE WANT Mark. Id. ¶ 14-15.

  14. SparkNet fears that it will suffer irreparable harm unless Bonneville is enjoined from using similar slogans. Id. at ¶¶ 37-42. Plaintiffs believe that Bonneville's radio products are inferior to their JACK FM branded product. Wall Dec. ¶ 41. Bonneville feels that its radio stations are better than Plaintiffs. Hevner Dec. ¶¶ 19-25; Kijowski Dec. ¶¶ 141-8; Solk Dec. ¶¶ 11-17.

  D. BONNEVILLE'S USE OF SLOGANS.

  15. Bonneville has been in the radio industry since the mid-1920's. Horowitz Dec. ¶ 6. Bonneville presently operates 38 stations in the United States. Id. Bonneville's primary competitors include Clear Channel Communications, Infinity Broadcasting, Emmis Communications, Entercom Communications, Cox Radio, Citadel Broadcasting, and Susquehanna Radio. Id. ¶ 7.

  16. In each city in which Bonneville operates a station, the program director has discretion to tailor the station and its slogan to the geographic market. Id. ¶ 8.

  17. There are three Bonneville slogans at issue. They are used in four cities. In Phoenix and St. Louis, Bonneville's stations use the slogan "70's", 80's. . . . . WHATEVER WE WANT." Hevner Dec. ¶ 8; Kijowski Dec. ¶ 10. In Chicago, Bonneville uses the slogan "TODAY'S NEW MUSIC . . . AND WHATEVER WE WANT." Solk Dec. ¶ 14. Bonneville's San Francisco station uses the slogan "70's, 80's. . . . WHATEVER WE FEEL LIKE!" Tweedle Dec. ¶ 22. Bonneville has spent in excess of $1,500,000 to promote, publicize and market these three slogans. Horowiz Dec. ¶ 23. The slogans were developed without an intention to copy Plaintiffs' Mark. Solk Dec. ¶ 11.

  18. Bonneville's slogans in Chicago, Phoenix, San Francisco and St. Louis never appear without the relevant stations' name and frequency. Horowitz. Dec. ¶ 18.

  19. Bonneville has not received any communications from any of its listerners that have either confused Bonneville's slogans with Plaintiffs' slogans or associated Bonneville's slogans with Plaintiffs' stations. Id. ¶ 20.

  1. Phoenix — 98.7 THE PEAK.

  20. Larry Hevner ("Hevner") is the Program Director of 98.7 THE PEAK, KPKX-FM in Phoenix, Arizona. He was initially hired in August, 2000 by Emmis Communications, to be the Program Director for KKLT-FM, which was an Adult Contemporary Radio station. Hevner Dec. ¶ 4. 21. Hevner is responsible for all programming for 98.7 THE PEAK. Id. In addition, he consults with 106.5 THE ARCH in St. Louis, Missouri, and 95.7 MAX-FM in San Francisco, California. Id. ¶ 5.

  22. Bonneville acquired 98.7 THE PEAK on December 1, 2004, from Emmis Communications. At the time of the acquisition, THE PEAK was already using its current format and slogan "70's, 80's . . . WHATEVER WE WANT." Id. ¶ 8.

  23. When Bonneville acquired THE PEAK on December 1, 2004, Bonneville believed that its slogan "70's, 80's . . . Whatever We Want" had significant value and the reason the acquisition was made was because of the brand recognition, the ratings and cash flow of THE PEAK. Solk ¶ 7.

  24. The predecessor of THE PEAK was KKLT-FM. KKLT-FM had operated as an adult contemporary station since the late 1980's. After Hevner joined the station in August, 2000, he made changes to the format, broadened the playlist, added personalities to the station, and spent thousands of dollars in marketing. Despite these changes, KKLT found itself in a head-to-head battle with KESZ, another adult contemporary radio station. Id. ¶ 9.

  25. In January, 2004, Emmis hired Coleman Research to conduct a research project for the Phoenix radio market. The research revealed an opportunity for a format playing music from the 1970s through today. Coleman Research conducted a music test. Based on the Coleman research study and Hevner's own experience, Emmis made the format change and launched THE PEAK on May 28, 2004. The station adopted the following name and slogan at that time: "98.7 THE PEAK, 70's, 80's . . . WHATEVER WE WANT." Id. ¶ 10. THE PEAK's format was created specifically for the Phoenix market after research uncovered listerner demand for more 70's classic hits music. Hevner Supp. Dec. ¶ 21 and Ex. F.

  26. At the time, Hevner was monitoring the development of the "Bob" and "Jack" formats in Canada. Paul Ski at the Chum Group was using the slogan "80's, 90's and WHATEVER" at his "Bob" station in Winnepeg. Emmis obtained permission from Ski to use the "70's, 80's . . . WHATEVER WE WANT" slogan. Id. ¶ 13. The slogan was developed by Emmis Communications and was first used on May 28, 2004. Id. ¶ 8. At the time, there was only one JACK FM station in the United States located in Denver, Colorado. Hevner Supp. Dec. ¶ 20. The "Bob FM" concept and the "80's, 90's and WHATEVER" slogan was first used on CFWM in Winnepeg, Canada on March 4, 2002. Wall Dec. Ex. E.

  27. THE PEAK is currently rated by Arbitron as the number one radio station in Phoenix for adults betwen the ages of 25-54. Hevner Supp. Dec. ¶ 16.

  28. Only a small percentage of THE PEAK's total audience of approximately 275,000 listens via the internet. Id. ¶ 29. The overwhelming majority of THE PEAK's listeners ...


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