Virgin Enterprises Ltd. v. Nawab
335 F.3d 141 (2003)
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Rule of Law:
A strong, arbitrary, and famous trademark is entitled to a broad scope of protection that extends beyond the specific goods it is registered for to prevent consumer confusion from its use on reasonably proximate or related goods.
Facts:
- Plaintiff Virgin Enterprises Limited (VEL) owns incontestable U.S. trademark registrations for the 'VIRGIN' mark for 'retail store services in the fields of ... computers and electronic apparatus.'
- VEL and its affiliates operate numerous businesses under the 'VIRGIN' name, including Virgin Megastores, which sell various electronic items like portable CD players and video game systems.
- In 1999, defendants' company, Cel-Net, began developing a brand of wireless products and asked its law firm to research the availability of the 'VIRGIN' mark.
- Defendants, through various corporate entities, subsequently filed intent-to-use trademark applications for 'VIRGIN WIRELESS' and 'VIRGIN MOBILE' in the telecommunications field.
- In June 2000, defendants began operating retail kiosks and stores under the name 'Virgin Wireless' to resell wireless telephones, accessories, and services.
- Around the same time, a VEL affiliate had begun offering 'VIRGIN' branded wireless services in the United Kingdom, and VEL had plans to enter the U.S. wireless market.
- A former employee of defendant Cel-Net provided an affidavit stating that customers at a 'Virgin Wireless' kiosk would ask if it was affiliated with the plaintiff's Virgin stores.
Procedural Posture:
- Plaintiff Virgin Enterprises Limited (VEL) sued defendants in the U.S. District Court for the Eastern District of New York for trademark infringement.
- VEL moved for a preliminary injunction to stop defendants from using the 'VIRGIN WIRELESS' trade name.
- The district court denied VEL's motion for a preliminary injunction, finding plaintiff had not shown a likelihood of success on the merits.
- Plaintiff VEL (appellant) appealed the denial of the preliminary injunction to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does a defendant's use of the trade name 'VIRGIN WIRELESS' for retail stores selling wireless telephones and services create a likelihood of consumer confusion with a plaintiff's incontestable registered 'VIRGIN' trademark for retail stores selling 'computers and electronic apparatus,' thereby constituting trademark infringement?
Opinions:
Majority - Leval, Circuit Judge
Yes, the defendants' use of the 'VIRGIN WIRELESS' name is likely to cause consumer confusion and infringe upon the plaintiff's trademark. A strong, arbitrary, and famous mark like VIRGIN is entitled to a broad scope of protection. Applying the Polaroid factors, the court found an overwhelming likelihood of confusion. The plaintiff's mark is extremely strong, both in its inherent distinctiveness (being arbitrary in relation to electronics) and its acquired distinctiveness (fame). The marks are nearly identical, as both use the dominant word 'VIRGIN,' with differences in typeface being trivial. The products are in close proximity, as wireless phones are a type of consumer electronic gadget that would be expected to be sold alongside the items in plaintiff's stores. Furthermore, the plaintiff demonstrated a high likelihood of 'bridging the gap' into the wireless phone market, and there was even evidence of actual consumer confusion. Therefore, the plaintiff demonstrated a likelihood of success on the merits and was entitled to a preliminary injunction.
Analysis:
This decision reinforces the principle that the scope of protection for a trademark is directly related to its strength. It clarifies that for a famous and arbitrary mark, the 'proximity of goods' analysis is broad and does not require the parties to be direct competitors. The ruling gives significant weight to the 'bridging the gap' doctrine, protecting a famous mark holder's natural path of expansion into related product categories. This case serves as a strong precedent for famous brand owners seeking to prevent others from trading on their goodwill in adjacent markets, even before the famous brand has entered that specific market.
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