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Smartling, Inc. v. Skawa Innovation Ltd.

United States District Court, D. Massachusetts

January 31, 2019

SMARTLING, INC., Plaintiff,
v.
SKAWA INNOVATION LTD., Defendant.

          MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

          ALLISON D. BURROUGHS U.S. DISTRICT JUDGE

         Plaintiff Smartling, Inc. (“Smartling”) and Defendant Skawa Innovation Ltd. (“Skawa”) are both translation technology companies that provide language translation services for mobile and internet-based clients.[1] On November 4, 2015, Smartling filed its First Amended Complaint asserting six causes of action against Skawa for alleged acts of trademark and trade dress infringement, unfair competition, and violations of Massachusetts General Laws Chapter 93A, §§ 2 and 11. [ECF No. 25] (the “Amended Complaint” or “Am. Compl.”). Skawa responded with a one-count counterclaim that accused Smartling of filing this lawsuit in bad faith and committing their own violations of Chapter 93A. [ECF No. 33] (the “Counterclaim”). Currently pending before the Court are Skawa's motion for summary judgment or judgment on the pleadings on all claims asserted in the Amended Complaint [ECF No. 77], and Smartling's motion for summary judgment on the Counterclaim. [ECF No. 74]. For the reasons stated herein, Skawa's motion is granted in part and denied in part, and Smartling's motion is granted.

         I. BACKGROUND

         Except as otherwise noted, the following facts are not in dispute. Smartling is a Delaware corporation with its principal place of business in New York. Am. Compl. ¶ 1. It was founded in 2009 as a provider of website internalization and localization services. [ECF No. 79 at ¶ 1] (“Skawa Facts”); [ECF No. 90 at ¶ 1] (“Smartling Response”). Generally speaking, Smartling's software platform connects users to computers or professionals that translate mobile applications, web pages, videogames, and other media into different languages. [ECF No. 25-1 at 2].

         Skawa is a Hungarian company with its principal place of business in Budapest, Hungary. Am. Compl. ¶ 2. Since late 2011 when it launched its website, Skawa has marketed a web-based translation tool under the name “Easyling” that directly competes with Smartling. [ECF No. 76 at ¶¶ 2, 6] (“Smartling Facts”); [ECF No. 87 at ¶¶ 2, 3, 6] (“Skawa Response”). Both parties worked directly with website owners to market and advertise their products through websites, magazine advertisements, conference program pages, and conference exhibits. Smartling Facts ¶¶ 7-8; Skawa Response ¶¶ 7-8. They both contracted with translation agencies or language service providers, including Lionbridge Technologies, Inc. (“Lionbridge”). Smartling Facts ¶ 10; Skawa Response ¶ 10. Lionbridge originally contracted with Smartling for its services but also entered into a contract to resell Smartling's product and services to other customers. Skawa Facts ¶ 36. At some point, Lionbridge, and several of Lionbridge's clients who had been using Smartling software, ended their relationship with Smartling. Id. Smartling's CEO, Jack Welde, believed that Lionbridge had begun contracting with Skawa as a new partner to replace Smartling. Id. Lionbridge, however, is not a party to this litigation, and there are no allegations in the Amended Complaint or in the summary judgment record that Lionbridge acted at the direction of Skawa or otherwise committed any wrongful conduct.

         On March 18, 2011, Skawa's CEO, Peter Farago, created an online account with Smartling's website. Smartling Facts ¶ 4. The next day, on March 19, 2011, Skawa registered the web domain name “easyling.com, ” and launched the Easyling website in September or November 2011. Smartling Facts ¶¶ 2, 6; Skawa Response ¶¶ 2, 3, 6; see also Skawa Facts ¶ 11; Smartling Response ¶¶ 9, 11. Skawa appears to have registered the Easyling mark with the United States Patent and Trademark Office sometime in 2014. [ECF No. 78 at 36].

         Exhibits showing the Smartling and Easyling marks on the parties' respective websites have been submitted into the record. Smartling has produced nine representative samples showing the different versions of its website between January 2010 and late 2015. [ECF No. 78-4 at 4-5]; [ECF No. 78-5]. The February 2011 version of its website, see [ECF No. 25-1 at 6]; [ECF No. 78-5 at 5], was active for approximately eight months until it launched a new iteration of its website in October 2011. Easyling Facts ¶ 9; Smartling Response ¶ 9.[2] Smartling asserts that Skawa copied its February 2011 website when it created the original Easyling website, which launched in September or November 2011 and remained in use until at least mid-2012. Smartling Facts ¶ 3; Skawa Facts ¶ 11; Smartling Response ¶¶ 9, 11.[3] As discussed further below, Smartling claims that the Easyling website mimicked the orange and blue color scheme used for Smartling's website, displayed the Easyling mark in the same color and similar font as Smartling's mark, and used a speech bubble as part of the Easyling logo which was also part of Smartling's logo. Smartling Facts ¶ 11-12. Moreover, Smartling asserts that Skawa displayed buttons on the Easyling website in a layout similar to that used by Smartling, copied aspects of Smartling's promotional video which was displayed on its website, and copied verbatim the terms and conditions language from Smartling's website. Id.

         II. LEGAL STANDARD

         Summary judgment is appropriate where the moving party can show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[A]n issue is ‘genuine' if it ‘may reasonably be resolved in favor of either party.'” Robinson v. Cook, 863 F.Supp.2d 49, 60 (D. Mass. 2012) (quoting Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008)). “A fact is material if its resolution might affect the outcome of the case under the controlling law.” Cochran v. Quest Software, Inc., 328 F.3d 1, 6 (1st Cir. 2003) (citation omitted). Thus, “[a] genuine issue exists as to such a fact if there is evidence from which a reasonable trier could decide the fact either way.” Id. (citation omitted). By invoking summary judgment, “the moving party in effect declares that the evidence is insufficient to support the nonmoving party's case.” United States v. One Parcel of Real Prop. (Great Harbor Neck, New Shoreham, R.I.), 960 F.2d 200, 204 (1st Cir. 1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). “To succeed in showing that there is no genuine dispute of material fact, ” the moving party must “‘affirmatively produce evidence that negates an essential element of the non-moving party's claim,' or, using ‘evidentiary materials already on file . . . demonstrate that the non-moving party will be unable to carry its burden of persuasion at trial.'” Ocasio-Hernández v. Fortuño-Burset, 777 F.3d 1, 4-5 (1st Cir. 2015) (quoting Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000)).

         Conversely, “[t]o defeat a properly supported motion for summary judgment, the nonmoving party must establish a trial-worthy issue by presenting enough competent evidence to enable a finding favorable to the nonmoving party.” ATC Realty, LLC v. Town of Kingston, N.H., 303 F.3d 91, 94 (1st Cir. 2002) (internal quotations and citation omitted). That is, the nonmoving party must set forth specific, material facts showing that there is a genuine disagreement as to some material fact. One Parcel of Real Prop., 960 F.2d at 204 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986)).

         In reviewing the record, the Court “must take the evidence in the light most flattering to the party opposing summary judgment, indulging all reasonable inferences in that party's favor.” Cochran, 328 F.3d at 6 (citation omitted). The First Circuit has noted that this review “is favorable to the nonmoving party, but it does not give him a free pass to trial.” Hannon v. Beard, 645 F.3d 45, 48 (1st Cir. 2011). “The factual conflicts upon which he relies must be both genuine and material[, ]” Gomez v. Stop & Shop Supermarket Co., 670 F.3d 395, 396-97 (1st Cir. 2012), and the Court may discount “conclusory allegations, improbable inferences, and unsupported speculation.” Cochran, 328 F.3d at 6 (quoting Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)).[4]

         III. SKAWA'S MOTION FOR SUMMARY JUDGMENT

         Skawa moves for summary judgment on all counts asserted in the Amended Complaint including: “Federal Unfair Competition, False Designation of Origin and Passing Off” (Count I); “Trade Dress Infringement” (Count II); “Infringement of the Smartling Mark” (Count III); “Cancellation of the Easyling Mark” (Count IV); “Violation of [Chapter 93A]” (Count V); and “Common Law Unfair Competition” (Count VI).

         A. Trademark Infringement, Cancellation, and Unfair Competition

          Counts I and III of the Amended Complaint are based on the following language in the Lanham Act:

Any person who, on or in connection with any goods or services . . . uses in commerce any word, term, name, symbol, or device . . . which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a)(1)(A).[5] This section of the Lanham Act, “prong (A), ” prohibits “[f]alse designations of origin.” Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO v. Winship Green Nursing Ctr., 103 F.3d 196, 208 (1st Cir. 1996). “Typical claims under prong (A) would involve a new trademark that was confusingly similar to an already established one, or an attempt by a defendant to ‘palm-off its goods as those of a competitor by use of the competitor's mark.” Id (citing 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 27.02 [4] (3d ed. 1996) (describing these claims as “trademark infringement”)).

         Here, where Counts I and III arise solely under prong (A), each count has “likelihood of confusion” as an essential element. “To succeed on a claim of trademark infringement, a plaintiff must establish . . . that the allegedly infringing use is likely to cause consumer confusion.”[6]Boston Duck Tours, LP v. Super Duck Tours, LLC, 531 F.3d 1, 12 (1st Cir. 2008). “The same likelihood of confusion standard applies to the unfair competition and false designation of origin claims.” Santander Consumer USA Inc. v. Walsh, 762 F.Supp.2d 217, 225 (D. Mass. 2010); see Venture Tape Corp. v. McGills Glass Warehouse, 540 F.3d 56, 61 n. 6 (1st Cir. 2008) (“Venture's unfair competition claim (Count 2) and false designation claim (Count 3) are subject to the same legal standard-namely, ‘likelihood of confusion'-as its Count 1 infringement claim”).[7]

         The First Circuit has interpreted “likely to cause consumer confusion” to mean “more than the theoretical possibility of confusion.” Boston Duck Tours, LP, 531 F.3d at 12 (quoting Winship Green Nursing Ctr., 103 F.3d at 200); see Peoples Fed. Sav. Bank v. People's United Bank, 672 F.3d 1, 9-10 (1st Cir. 2012) (same). “In other words, allegedly infringing conduct must create ‘a likelihood of confounding an appreciable number of reasonably prudent purchasers exercising ordinary care.'” Boston Duck Tours, LP, 531 F.3d at 12 (quoting Winship Green Nursing Ctr., 103 F.3d at 201). The reasonably prudent purchaser is not limited to the actual or potential buyer of the product, but also includes “persons in a position to influence the purchasing decision or persons whose confusion presents a significant risk to the sales, goodwill, or reputation of the trademark owner.” Beacon Mut. Ins. Co. v. OneBeacon Ins. Grp., 376 F.3d 8, 10, 16 (1st Cir. 2004) (“[L]ikelihood of confusion inquiry . . . includes others whose confusion threatens the trademark owner's commercial interest in its mark.”). Courts in this circuit consider the following non-exhaustive list of factors, known as the “Pignons” factors, when assessing the likelihood of confusion:

(1) the similarity of the marks; (2) the similarity of the goods (or, in a service mark case, the services); (3) the relationship between the parties' channels of trade; (4) the juxtaposition of their advertising; (5) the classes of prospective purchasers; (6) the evidence of actual confusion; (7) the defendant's intent in adopting its allegedly infringing mark; and (8) the strength of the plaintiff's mark.

The Shell Co. (Puerto Rico) Ltd. v. Los Frailes Service Station, Inc., 605 F.3d 10, 22 & n.9 (1st Cir. 2010) (quoting Int'l Ass'n of Machinists, 103 F.3d at 201); see Pignons S. A. de Mecanique v. Polaroid Corp., 657 F.2d 482 (1st Cir. 1981) (same). The inquiry is “highly fact-intensive.” The Shell Co., 605 F.3d at 22.

         1. Similarity of the Marks

         “The degree of similarity between the marks is the ‘single most important factor in determining likelihood of confusion.'” Solmetex, LLC v. Dentalez, Inc., 150 F.Supp.3d 100, 111-12 (D. Mass. 2015) (quoting McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, 511 F.3d 350, 367 (3d Cir. 2007)). “[T]he similarity of the marks takes prominence when, as is the situation here, the goods are direct competitors in the marketplace.” Id. (citing Boston Duck Tours, LP, 531 F.3d at 30). “[W]hen the goods or services are virtually identical, the marks need not be as similar for there to be a likelihood of confusion.” Veve v. Corporan, 977 F.Supp.2d 93, 101 (D.P.R. 2013) (citing Bridgestone Am. Tire Operations, LLC v. Fed. Corp., 673 F.3d 1330, 1337 (Fed. Cir. 2012) (likelihood of confusion between “Potenza” and “Turanza” marks was greater because both referred to tires)).

         “[S]imilarity is determined on the basis of the total effect of the designation, rather than a comparison of individual features.” Boston Duck Tours, LP, 531 F.3d at 29 (quoting Pignons, 657 F.2d at 487); see Copy Cop, Inc. v. Task Printing, Inc., 908 F.Supp. 37, 44 (D. Mass. 1995) (“[T]he relevant standard is the ‘total effect' of the mark, considering sight, sound, and meaning.” (citing Volkswagenwerk Aktiengesellschaft v. Wheeler, 814 F.2d 812, 817 (1st Cir. 1987))). “Marks should not be simply compared side-by-side, but ‘in light of what occurs in the marketplace, taking into account the circumstances surrounding the purchase of the goods . . . .'” Anheuser-Busch, Inc. v. Caught-on-Bleu, Inc., 288 F.Supp.2d 105, 114-15 (D.N.H. 2003), aff'd, 105 Fed. App'x 285 (1st Cir. 2004) (quoting Copy Cop, 908 F.Supp. 37, 44 (D. Mass. 1995)).

         Here, although the marks contain different words (“smart” vs. “easy”) and a different number of syllables, both marks are one-word, invented terms composed of an adjective preceding the “ling” at the end of the mark. The manner in which these marks are displayed on each company's respective website also share similarities. Using Smartling's February 2011 website as the relevant point of reference, both marks are shown at the top left-hand corner of the webpage. Both marks are written in white, sans-serif font and in all lower-case lettering. The word Easyling is displayed inside of a blue speech bubble; Smartling's website displays a speech bubble that reads “Hi” next to the word mark. Moreover, although not identical, both websites use a similar orange and blue color scheme against which the marks are shown. Compare [ECF No. 78-5 at 5], with [ECF No. 25-1 at 11]; see Veve v. Corporan, 977 F.Supp.2d 93, 100-01 (D.P.R. 2013) (“Batey” and “Atabey” marks were similar where both companies' websites had “similar dark-colored backgrounds and are covered with pictures of groups of tourists on various stages of hikes through forested areas and caves” so that “[t]he websites, when taken as a whole, create the same general overall impression.”). Although the marks are not identical, considering the manner in which they are displayed, and the fact that Smartling and Skawa market the same services in direct competition with one another, this factor weighs in favor of Smartling at this stage.

         2. Similarity of the Goods

         Skawa does not dispute that both parties sell the same type of product-a translation proxy software application. Accordingly, this factor favors Smartling. See Solmetex, LLC v. Dentalez, Inc., 150 F.Supp.3d 100, 113 (D. Mass. 2015) (“The parties do not dispute that [their respective products] are substantially similar pieces of equipment. Both are amalgam separators used to filter dental wastewater streams . . . . This factor weighs in favor of Plaintiff.”); Dorpan, S.L. v. Hotel Melia, Inc., 728 F.3d 55, 66 (1st Cir. 2013) (finding similarity of goods where “there is substantial overlap in the core services offered by each hotel”).

         3-5. Relationship between the Parties Advertising, Channels of Trade, and Classes of Prospective Purchasers

         “Factors three (channels of trade), four (advertising), and five (classes of prospective purchasers) are often considered together because they tend to be interrelated.” Beacon Mut. Ins. Co., 376 F.3d at 19; see Peoples Fed. Sav. Bank, 672 F.3d at 14 (describing these factors as “interrelated”). Skawa does not dispute that the parties use the same trade channels and forms of advertising. They both market their products online through their websites, have advertised in the same publications, and attend the same trade shows. Smartling Facts ¶ 7; see Dorpan, 728 F.3d at 66-67 (finding that parties advertised and solicited customers in substantially similar manners where parties were both hotels that “attend trade shows, develop relationships with travel agents, advertise directly to consumers, and accept reservations through Internet booking sites”).

         Skawa also does not dispute that the parties compete for the same customer base but argues that the likelihood of confusion is minimal given that the prospective purchasers of online translation services are sophisticated, professional buyers. See Pub. Impact, LLC v. Bos. Consulting Grp., Inc., 169 F.Supp.3d 278, 294 (D. Mass. 2016) (“The likelihood of confusion may be substantially reduced when the relevant buyer class is composed of sophisticated professional or commercial purchasers of goods and services.”); Astra Pharm. Prod., Inc. v. Beckman Instruments, Inc., 718 F.2d 1201, 1206 (1st Cir. 1983) (“And there is always less likelihood of confusion where goods are expensive and purchased after careful consideration.”). Skawa's evidence that the “reasonable prudent purchaser is the professional buyer of translation services for websites and other content, ” however, is apparently contained in an affidavit that does not appear to be in the summary judgment record. See [ECF No. 78 at 30].[8] Thus, when the parties use the same channels of trade and forms of advertising, directed toward the same class of purchasers, and given that Skawa has failed to provide sufficient evidence regarding the level of sophistication of internet translation purchasers as a class, the Court finds that, at this stage, this set of factors favors Smartling.

         6. Actual Confusion

         Smartling has not attempted to present any evidence of actual confusion. “[E]vidence of actual confusion is oftentimes ‘considered the most persuasive evidence of likelihood of confusion because past confusion is frequently a strong indicator of future confusion.'” Santander Consumer USA Inc., 762 F.Supp.2d at 227 (quoting Beacon Mut. Ins. Co., 376 F.3d at 18). Nonetheless, “[a]ctual confusion is not a prerequisite to a finding of likelihood of confusion.” Visible Systems Corp. v. Unisys Corp., 551 F.3d 65, 74 (1st Cir. 2008). “[A] trademark holder's burden is to show likelihood of confusion, not actual confusion.” BorinquenBiscuit Corp. v. M.V. Trading Corp., 443 F.3d 112, 120 (1st Cir. 2006) (citations omitted). “Historically, [the First Circuit has] attached substantial weight to a trademark holder's failure to prove actual confusion only in instances in which the relevant products have coexisted on the market for a long period of time.” Id. at 121. “[A]bsent evidence of actual confusion, when the marks have been in the same market, side by side, for a substantial period of time, there is a strong presumption that there is little likelihood of confusion.” Oriental Fin. Grp., Inc. v. Cooperativa de Ahorro y Crédito Oriental, 832 F.3d 15, 30-31 (1st Cir. 2016) (quoting Pignons, 657 F.2d at 490). “Applying this principle, the First Circuit has found that little or no evidence of actual ...


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