Internet Trademark Case Summaries
Philip Morris USA, Inc. v. Veles Ltd.
2007 WL 725412 (S.D.N.Y. Mar. 12, 2007)
Plaintiff sold cigarettes under the marks MARLBORO, PARLIAMENT, and VIRGINIA SLIMS. Defendants operated online cigarette stores using the domain names “ez-smoke.net,” “discount-cigarettes-store.com” and “simplysmoke.com, and sold gray-market versions of plaintiff’s ciagrettes.” Defendants were foreign corporations of unknown citizenship and addresses that conducted their business almost exclusively through the Internet. Plaintiff sued for inter alia trademark infringement, false designation of origin, and dilution. After plaintiff was unable to serve defendants by traditional means, the court granted plaintiff’s motion for substitute service of process through fax and email pursuant to Fed. R. Cir. p. 4(f)(3). The court rejected defendant’s Due Process arguments and held that “federal courts have approved email service of process as an appropriate means under Rule 4 in proper circumstances.” It held that plaintiff showed the inadequacy of traditional service and the likelihood of success through service by fax and email. The court found convincing the facts that (1) defendants conducted the vast majority of their business over the Internet, (2) defendants “corresponded regularly with customers via email,” and (3) defendants did not disclose their geographic addresses. The court thus held that the alternative service was “reasonably calculated to apprise defendants of the pendency of [the] action.” Defendants moved to dismiss the case because they were selling actual Phillip Morris cigarettes and disclosed all relevant information through disclaimers on their websites. These disclaimers stated that the cigarettes were “intended for sale outside the United States,” that defendants were unaffiliated with plaintiff, and that defendants did not participate in any Philip Morris marketing programs. Plaintiff argued however that the cigarettes it sold internationally were “materially different” from those it sold domestically, and that defendants’ use of plaintiff’s trademarks on their websites could mislead users into believing that the websites were operated by or affiliated with plaintiff. The court held, however, that defendants’ disclaimers did not provide an adequate basis for a consumer to know that the quality control standards for plaintiff’s foreign and domestic cigarettes were different. In fact, one of defendants’ websites specifically claimed that “there is no difference in quality of American and European [Marlboro] cigarettes.” Plaintiff alleged that domestic cigarettes were subject to stricter quality-control requirements than international products. Accordingly, the court held that plaintiff successfully pleaded a claim upon which relief could be granted and denied defendants’ motion to dismiss.