24 Hour Fitness USA, Inc. v. 24/7 Tribeca Fitness, LLC
Plaintiff, a health-club chain with 300 locations across the United States but none in the New York City area, operated its health clubs under the federally registered trademark 24 HOUR FITNESS since 1996. Plaintiff’s website was located at the domain name “24hourfitness.com.” Defendant owned three health clubs in New York City and operated a website at “247fitnessclub.com,” which contained a number of links to pornographic websites. Plaintiff sued defendant for trademark infringement, dilution, and cybersquatting. The court denied plaintiff’s motion for preliminary injunction on its infringement and cybersquatting claims because plaintiff failed to demonstrate a sufficient likelihood of success on the merits of these claims. Specifically, plaintiff failed to establish a sufficient likelihood of confusion because: (1) although plaintiff’s mark was registered, it was weak because it was descriptive and plaintiff’s evidence of secondary meaning was “far from compelling,” (2) the marks were substantially similar but not identical, and the parties used different logos, (3) although both parties offered fitness services, their facilities were quite distinct, (4) there was no evidence that defendant adopted its mark in bad faith, and (5) New York City fitness customers were fairly sophisticated. Plaintiff argued that Internet users using a search engine to look for plaintiff’s site could receive defendant’s site in the search results. Users then connecting to defendant’s site would encounter the pornography links on the site, which could damage plaintiff if users mistook defendant’s site for plaintiff’s. According to the court, however, “any confusion or misdirection of a person using a general internet search engine to find Plaintiff’s site would arise principally from the fact that Plaintiff has chosen to construct its mark out of common descriptive terms rather than inherently distinctive terms. The risk of confusion on this account is not as to Plaintiff’s identity as the particular source of anyone’s health club or fitness product.”
After a bench trial, the court held that although the validity of plaintiff’s trademarks was incontestable due to its registration and five years of continual use, plaintiff had not established a likelihood of confusion between the two marks. Applying the Polaroid test, the court found that although plaintiff’s mark was strong in the markets in which it operated, and that the defendants’ mark was nearly identical to it, plaintiff could not show that there was actual or a likelihood of confusion in New York City where defendants operated. Despite their national advertising and website, because plaintiff’s nearest gyms were in Missouri and Tennessee and plaintiff did not market directly to New York City, the court found “there was insufficient evidence of strength in the relevant market.” Further, although plaintiff sufficiently demonstrated its intention to enter the market, its gyms were to be co-branded with the basketball star Magic Johnson, reducing the likelihood of confusion if they did. Also, the court found that defendants adopted their name in good faith since they chose a name that “clearly reflect[ed] a characteristic of the company’s services and showed no intent to exploit plaintiff’s mark,” and plaintiff quickly removed all third-party generated links on its website to pornographic websites. Finally, given the sales volumes of both parties, the isolated instances of actual confusion reported by plaintiff were “not particularly significant.” Plaintiff submitted a consumer survey purportedly showing a confusion level of 23-26%, but the court found the survey to be of little value due to numerous flaws including the control selected, the way the respondents’ responses included the control selected, the way the respondents’ responses were counted as “confusion,” the leading nature of the questions, and the problems with the universe. Thus, in balancing the Polaroid factors, the court held that, “24 hour’s mark is strong in the areas in which it is located and because it has received national attention, but the mark cannot escape its inherent descriptiveness in a market in which it is not physically present and has not specifically advertised or promoted.” However, the court acknowledged that it “would be faced with a different question” if plaintiff provided sufficient evidence that it was well-known by New York consumers, or that enough of its members sought fitness facilities in New York, or that it took clear steps to open a non-co-branded facility in New York. The court further denied plaintiff’s claim of cybersquatting because its mark did not gain more “distinctiveness in this context than in the infringement context because a website taps into a national consumer base rather than a local one,” defendants showed no bad-faith intent to profit from plaintiff’s marks on the Internet, and the addition of “club” to defendants’ domain name made it “less similar” to plaintiff’s name.