Smartling, Inc. v. Skawa Innovation Ltd.
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Opinion
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 *135pages, 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 *136claims 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,
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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 *135pages, 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 *136claims 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,
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.,
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,
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.
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,
The First Circuit has interpreted "likely to cause consumer confusion" to mean "more than the theoretical possibility of confusion." Boston Duck Tours, LP,
(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.,
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.,
"[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,
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,
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.,
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.,
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.,
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.,
Here, Smartling and Easyling have existed together in the online translation services industry since 2011 without any alleged instances of actual confusion. Smartling does not address the absence of evidence of actual confusion but instead criticizes Skawa's arguments as "impermissibly myopic" with regard to the types of confusion that are actionable under the Lanham Act. [ECF No. 89 at 16]. Smartling notes that "the likelihood of confusion inquiry is not limited to actual or potential purchasers, but also includes others whose confusion threatens the trademark owner's commercial interest in its mark," and that "[t]he fact that the injury is to a company's reputation or goodwill, rather than directly to its sales, does not render the confusion any less actionable." Beacon Mut. Ins. Co.,
*142Smartling references a "reverse" confusion theory and claims that "downstream" confusion is actionable, where the "initial purchaser of goods or services knows perfectly well that they are buying a knock-off, but then resells that knock-off to an end user who may not have the same, complete information." [ECF No. 89 at 17]. "[U]nder a reverse confusion theory, customers purchase the senior user's goods under the 'misimpression that the junior user is the source of the senior user's goods .... [C]onsumers may consider [the senior user] the unauthorized infringer, and [the junior user's] use of the mark may in that way injure [the senior user's] reputation and impair its goodwill.' " Visible Sys. Corp. v. Unisys Corp.,
7. Intentional Copying
Smartling emphasizes "that when an alleged infringer intentionally copies a trademark, it may be presumed that [the alleged infringer] intended to cause confusion and profit thereby." Winship Green Nursing Ctr.,
*143As to ... the defendants' intent in adopting the mark: Here [defendant's officer] was aware of Headquarters Companies .... He knew the line of work they were in, and he knew that [his company] ... was going to get into precisely that line of work. On the other hand, the word "headquarters" and the phrase "headquarters company," ... are descriptive terms .... If these were arbitrary terms, whimsical terms, this Court would have little hesitancy on this record in concluding that [defendant's officer] adopted the title Executive Headquarters to copy Headquarters Companies.
8. Strength of the Mark
"Factors useful in determining a trademark's relative strength include the length of time a mark has been used and the plaintiff's relative renown in its field; the strength of the mark in plaintiff's field of business, especially by looking at the number of similar registered marks; and the plaintiff's actions in promoting its mark." Black Dog Tavern Co. v. Hall,
Skawa primarily contends that Smartling's mark is weak because it is merely descriptive, rather than suggestive or fanciful. "A mark is descriptive if it 'conveys an immediate idea of the ingredients, qualities or characteristics of the goods.' " Solmetex, LLC v. Dentalez, Inc.,
For the purposes of summary judgment, Skawa has not argued that Smartling's mark is not protectable, and taken in the light most favorable to Smartling, its mark is suggestive or descriptive and has a secondary meaning. Although "Smartling" is an invented term, and therefore would arguably be classified as a suggestive mark, it is essentially a simple combination of the word "smart" and the abbreviation for linguistics, "ling," which slides the mark toward descriptiveness.10 Linguistics is a broad concept that encompasses more than the professional language translation services for online companies provided by Smartling. See Attrezzi, LLC,
In sum, the Pignons analysis presents a close call: the marks are similar, the products compete directly, the companies use the same channels of commerce and forms of advertising to target the same prospective customer base, there is some evidence of intentional copying, and the mark could be deemed suggestive. Importantly however, there is not a single instance of actual confusion over the many years the parties have been in the marketplace together. Skawa Facts ¶ 28. Even given that the other factors favor Smartling, the absence of actual confusion weighs strongly against the likelihood of confusion, which is critical to the claims asserted. Although the Court remains *145skeptical that Smartling can rebut this evidence of little likelihood of confusion, and there remains serious doubt as to whether Smartling can prove any damages related to its trademark infringement and unfair competition claims, the Court will deny summary judgment and allow the case to proceed to trial. "Because the likelihood of confusion analysis is a particularly fact-intensive one, resolving this issue on summary judgment is disfavored." Dorpan, S.L. v. Hotel Melia, Inc.,
B. Count II: Trade Dress Infringement
Smartling asserts in Count II that Skawa committed trade dress infringement by copying aspects of Smartling's website when Skawa launched the Easyling website in late 2011. "The Lanham Act extends protection not only to words and symbols, but also to 'trade dress,' defined as 'the design and appearance of a product together with the elements making up the overall image that serves to identify the product presented to the consumer.' " Yankee Candle Co. v. Bridgewater Candle Co., LLC,
Although the First Circuit has not addressed whether the appearance of a website may constitute protectable trade dress, Skawa does not contend that Smartling's website is inherently incapable of protection. Other courts have concluded that "the 'look and feel' of a web site can constitute a trade dress protected by the *146Lanham Act." Ingrid & Isabel, LLC v. Baby Be Mine, LLC,
"In order for trade dress to be protected under § 43(a), a plaintiff must prove that the dress is: (i) used in commerce; (ii) non-functional; and (iii) distinctive." Yankee Candle Co.,
1. The Trade Dress At Issue
As an initial matter, "the burden to clearly identify the trade dress at issue is on the plaintiff." Yankee Candle Co.,
Without such a precise expression of the character and scope of the claimed trade dress, litigation will be difficult, as courts will be unable to evaluate how unique and unexpected the design elements are in the relevant market. Courts will also be unable to shape narrowly-tailored relief if they do not know what distinctive combination of ingredients deserves protection. Moreover, a plaintiff's inability to explain to a court exactly which aspects of its product design(s) merit protection may indicate that its claim is pitched at an improper level of generality, i.e., the claimant seeks protection for an unprotectable style, theme or idea.
Landscape Forms,
Here, Smartling has adequately identified a set of elements for which it claims trade dress protection. Smartling's trade dress infringement claim relies on the "design elements discussed in paragraphs 22 to 26" of the Amended Complaint, which reference a depiction of the late 2011 version of Smartling's website and provide a detailed description of infringed elements from that version of the website. Am. Comp. ¶ 41. Those paragraphs claim that the following trade dress elements were infringed:
a. In 2011, Smartling's website contained an orange and light blue color schematic.... The trim of the website and the "buttons" were in orange and the website featured a light blue strip in the center of the website ....
b. In the left-hand side of the light blue strip on Smartling's website, Smartling announced to prospective customers, "Translate your website." ....
c. On the upper right-hand corner of Smartling's June 2011 website, the company provided links labeled "HOW IT WORKS" and "PRICING"....
Am. Compl. ¶ 24. In addition, Smartling's website included "a promotional video that customers could watch directly on the website by clicking a 'play' button," and it used a white, lower-case letter, sans-serif font to display the Smartling mark, along with a speech bubble adjacent to the word "Smartling." Am. Compl. ¶¶ 23, 25-26.
2. Used in Commerce
Skawa contends that Smartling's trade dress has not been used in commerce since 2011 and has therefore been abandoned. A mark is used in commerce "when it is used or displayed in the sale or advertising of services and the services are rendered in commerce."
Smarting argues that the infringed trade dress was in use at the time of the alleged infringement, and even if the copied version of its website was not still in use, there remains a "great deal of continuity between the websites that Smartling used before and after" the launch of the updated website. [ECF No. 89 at 22]. The Smartling word mark was generally shown in the same font and logo, and the orange and blue color scheme continued to be prominently featured as of 2011. Considering the disputes of fact over when Smartling updated its website and the extent of the continuity between the copied version of the website and subsequent versions, the issue of abandonment turns on triable questions of fact. See Electro Source, LLC v. Brandess-Kalt-Aetna Grp., Inc.,
3. Non-Functional
The non-functional requirement is intended "to protect advances in functional design from being monopolized." LeSportsac, Inc. v. K mart Corp.,
4. Distinctive
The Supreme Court has concluded that a product's design-based trade dress is "distinctive, and therefore protectable, only upon a showing of secondary meaning," but the Court has differentiated trade dress that appears on product packaging or, for example, in the design of a restaurant, which may be inherently distinctive. Wal-Mart,
Smartling claims that the "Smartling" mark was inherently distinctive. The Smartling mark may also have worked in combination with Smartling's website layout, color-scheme, chosen words for links, and its video to give the website an inherently distinctive look and feel. Although for the reasons discussed herein, it will be difficult for Smartling to show that consumers were likely to be confused as to the product's source, a reasonable jury could potentially reach that conclusion. See supra Section III.A.6; infra Section III.B.5; compare Two Pesos,
Smartling also argues that its website's look and feel had a secondary meaning. A trade dress "has developed 'secondary meaning' when 'in the minds of the public, the primary significance of [it] is to identify the source of the product rather than the product itself.' "
*149Bern Unlimited, Inc. v. Burton Corp.,
There is little direct evidence of secondary meaning here. Smartling has not introduced survey evidence that consumers associated its dress elements with Smartling. The only potential evidence from consumers that Smartling has identified are one email sent by an individual stating that "imitation is the sincerest form of flattery" with regards to a webinar titled "Your New Website Translation Solution -XTM with Easyling," and one email from Lionbridge stating that Easyling is "[r]ipping off your name and website look and feel." [ECF Nos. 89-8, 89-9]. Smartling has not identified the individual who sent the "imitation is the sincerest form of flattery" email as a consumer of its services, and Lionbridge's view is only minimally probative given that Lionbridge was Smartling's primary client and sold Smartling's product to other consumers. See Bern Unlimited,
Smartling may also, however, present indirect evidence of secondary meaning. Factors to be considered as indirect evidence of secondary meaning are:
1) the length and manner of the use of the trade dress; 2) the nature and extent of advertising and promotion; 3) the efforts to promote a conscious connection between the public, the trade dress, and the source; 4) the products' established place in the market (possibly through continuous use in the market); and 5) proof of intentional copying.
Genesis Strategies,
Smartling relies most heavily on the fifth factor-proof of intentional copying-to argue that it can prove secondary meaning through indirect evidence. [ECF No. 89 at 20-21]. Smartling emphasizes the fact that Skawa copied its terms and conditions, but provides no case law in support of its contention that usage of the same contractual language constitutes material proof of copying trade dress. There is, however, little doubt that Skawa copied other aspects of Smartling's alleged trade dress. Although it may be that Skawa copied Smartling's website out of mere laziness, it would not be unreasonable for a jury to conclude that Skawa copied features of Smarling's website because they viewed is as distinctive and attractive to consumers. Considering the evidence, Smartling has brought forth sufficient evidence to allow a jury to conclude that Smartling's website was distinctive, either inherently or through the use of the Smartling mark in combination with other design elements, or due to secondary meaning that consumers attached to the trade dress elements that Skawa infringed.
5. Likely to Cause Confusion Among Consumers as to the Product's Source
A reasonable jury could also find that consumers were likely to be confused as to the source of the product based on the Easyling site's similarity to the trade dress identified by Smartling. The parties dispute whether there was temporal overlap in their respective use of several of the trade dress elements at issue. Although Smartling updated its website in late 2011 such that there was no longer a light blue strip in the center of the website, orange buttons and trim, text in the center of the page saying "translate your website," links for "HOW IT WORKS" and "PRICING" in the upper right-hand corner, or the video described in the Amended Complaint, Easyling's late 2011 website mimicked those and other features of Smartling's website. Compare [ECF No. 78-5 at 5], with [ECF No. 25-1 at 11]. Additionally, some of the mimicked features, including the Smartling mark and the color scheme continued to be used by Smartling long after it replaced most of the features that Smartling copied. See [ECF No. 78-5]. As discussed above, supra part III.A.1, the Easyling mark viewed in isolation could have been confused with the Smartling mark, and a jury could reasonably conclude that the other features that Skawa copied made that confusion more likely. Skawa's motion to dismiss Smartling's trade dress claim will therefore be denied.
C. Count V: Chapter 93A
Skawa next seeks summary judgement on Smartling's Chapter 93A claim on the grounds that the alleged unfair or deceptive acts or practices did not *151occur within the Commonwealth. To bring a Chapter 93A claim, the "unfair method of competition or the unfair or deceptive act or practice" must have "occurred primarily and substantially within the commonwealth." Mass. Gen. Laws ch. 93A, § 11. The statute further specifies that "the burden of proof shall be upon the person claiming that such transactions and actions did not occur primarily and substantially within the commonwealth." Id. The statute "suggests an approach in which a judge should, after making findings of fact, and after considering those findings in the context of the entire § 11 claim, determine whether the center of gravity of the circumstances that give rise to the claim is primarily and substantially within the Commonwealth." Kuwaiti Danish Comput. Co. v. Dig. Equip. Corp.,
In Yankee Candle Co. v. Bridgewater Candle Co., the district court focused on three factors to determine whether deceptive practices related to trademark and trade dress infringement occurred primarily and substantially in Massachusetts: "(i) where the defendant committed the [alleged] deception; (ii) where plaintiff was deceived and acted upon the deception; and (iii) the situs of plaintiff's losses due to the deception."
As to the first factor, it is undisputed that Skawa is based in Hungary and operates Easyling out of Hungary. Smartling Response ¶ 49; Skawa Response ¶ 2. Smartling primarily relies on the fact that its largest client, Lionbridge, is based in Massachusetts to establish that the misconduct primarily and substantially occurred in Massachusetts. [ECF No. 89 at 26]. At most, the evidence shows that Skawa traveled to Massachusetts on one occasion in 2014 to meet with Lionbridge. [ECF No. 78-17]. To the extent that Skawa otherwise communicated with Lionbridge from outside of Massachusetts, the record is clear that Lionbridge was aware that *152Smartling and Easyling were separate, unrelated companies. [ECF No. 78-2 at 139]. Given that the only Massachusetts-based client with whom Skawa communicated was not confused about Smartling and Easyling's relationship, this factor weighs in favor of Skawa.
The second factor, which has been characterized as "the locus of the recipient of the deception at the time of the reliance," also supports Skawa. Yankee Candle Co.,
Here, there is no evidence that Lionbridge, an experienced, professional purchaser of translation services, with substantial relationships with both Smartling and Skawa, ever confused or is likely to confuse the two companies. In fact, it was Lionbridge that pointed out to Smartling in a 2012 email that Skawa was "[r]ipping off [Smartling's] name and website look and feel." [ECF No. 89-8]. Skawa has shown that all of the other allegedly harmed clients of Smartling were located outside of Massachusetts and across the country with no counter allegations from Smartling. Smartling Response ¶ 50; see Fishman Transducers, Inc. v. Paul,
*153Finally, the third factor, where the loss occurred, weighs slightly, if at all, in favor of Skawa. "[W]hatever financial loss occurred was undoubtedly felt most acutely at [Smartling's] headquarters" in New York, thereby supporting Skawa. Yankee Candle Co.,
In sum, Skawa has met its burden in showing that the alleged misconduct did not occur primarily and substantially in the Commonwealth of Massachusetts. Neither of the parties are Massachusetts companies or have a principal place of business in Massachusetts. The only Smartling client in Massachusetts was Lionbridge, which is the one client that the parties agree was not confused about Smartling and Skawa's brands and products.12 Accordingly, summary judgment is granted on Count V in favor of Skawa.
D. Laches
Skawa asserts the affirmative defense of laches to bar Smartling's lawsuit, because Smartling allegedly became aware of the Easyling mark in 2011, but took no legal action until 2014. [ECF No. 78 at 38-39]. Skawa claims that Smartling's inaction caused prejudice because Skawa relied on it when "entering and expanding commerce in the United States, hiring employees, and otherwise expanding the Easyling business project." Id."Defendants have the burden of proving laches." Copy Cop,
*154ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy P.C.,
Here, Skawa's own theory of the case is that between November 2011 and approximately July 2013, Smartling did not view Skawa as a serious competitor. [ECF No. 78 at 5]. That Smartling waited until there was some significant impact on its business before filing its lawsuit may be excusable delay. See Copy Cop,
IV. SMARTLING'S MOTION FOR SUMMARY JUDGEMENT
Smartling also moves for summary judgment on Skawa's Counterclaim which asserts that Smartling violated Chapter 93A. Skawa alleges in its Counterclaim that this lawsuit is objectively meritless and that, upon information and belief, Smartling has "repeatedly claimed to potential clients of ... Skawa and others at exhibitions and elsewhere that ... Skawa would be driven into bankruptcy by this litigation." Counterclaim ¶ 27. Skawa further claims that those representations "inherently and falsely suggest" that Skawa was in a precarious financial position and are indicative of Smartling's ulterior motives in filing this lawsuit. Id. ¶ 28.
Chapter 93A prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Mass. Gen. Laws ch. 93A, § 2(a). "It is well established that 'a practice or act [is] unfair under G.L. c. 93A, § 2, if it is (1) within the penumbra of a common law, statutory, or other established concept of unfairness; (2) immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to competitors or other business people.' " Milliken & Co. v. Duro Textiles, LLC,
*155Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co.,
Here, Skawa primarily proceeds on an "abuse of process" theory of Chapter 93A liability, but also alleges that Smartling made statements to damage Skawa's potential business relationships. "The elements of an abuse of process claim are 'that "process" was used, for an ulterior or illegitimate purpose, resulting in damage.' " Psy-Ed Corp. v. Klein,
With regard to Skawa's allegation that Smartling used this lawsuit as a tool to interfere with Skawa's prospective business relationships, at the motion to dismiss stage, this Court held that "[a]lthough the facts alleged in the Counterclaim are not particularly robust, they [were] sufficient, for purposes of a motion to dismiss, to nudge Skawa's Chapter 93 claim 'across the line from conceivable to plausible.' " Smartling, Inc. v. Easyling LLC, No. 14-cv-13106-ADB,
Skawa further suggests that Smartling made statements outside of litigation to interfere with Skawa's prospective business relationships. Although the Counterclaim alleges that Smartling "repeatedly claimed to potential clients of ... Skawa and others at exhibitions and elsewhere that ... Skawa would be driven into bankruptcy by this litigation," [ECF No. 33 ¶ 27], the evidence in the record amounts to a single affidavit describing Smartling's statements at one industry conference. [ECF No. 86-1]. The affiant, Mr. Jose Palomares, attests that he attended the American Translator Association's conference from November 5 through November 8, 2014, where he "spoke directly with sales representatives of Smartling," and "heard those representatives speaking with conference attendees that were potential customers of Smartling and Easyling." Id. ¶¶ 8-9. Moreover, Mr. Palomares "observed the Smartling representatives telling multiple attendees that Easyling might not be the best choice because they were having financial difficulties, including due to an ongoing lawsuit with Smartling, and that they might go out of business in the short term." Id. ¶ 10.
Skawa presents no additional information regarding the significance of the American Translator Association's annual conference with regard to Skawa's business relationships. The affidavit does not identify any of the relevant conference attendees, their names or affiliated companies, or their role at their respective companies, nor does it describe how Mr. Palomares knew that these attendees were "potential" customers of both parties. There is no evidence showing the impact of these statements on the conference attendees or suggesting that Mr. Palomares himself was in any way affected by them. There is likewise no evidence concerning the damages that Skawa purportedly incurred as a result of these statements. Even accepting the statements in the affidavit as true, they show at most that during one out-of-state industry conference that took place after *157the filing of this lawsuit, one attendee overheard unidentified Smartling representatives stating to other unidentified attendees that Skawa "might" not be the "best" choice "at the time" because of the financial difficulties associated with Smartling's lawsuit, and "might" go out of business soon. Id. ¶ 10. Such equivocal and speculative statements, made solely to a limited number of conference attendees, are not sufficiently immoral or oppressive conduct to constitute the sort of "extreme or egregious" business practice necessary to sustain a 93A claim. Although Skawa's allegations were sufficient to survive the pleadings stage, the evidence is plainly insufficient to create a genuine issue of material fact. Summary judgment is therefore granted in Smartling's favor on the Counterclaim in its entirety.
V. CONCLUSION
For the reasons stated, (1) Easyling LLC is dismissed as a party in this case; (2) Skawa's motion for summary judgment [ECF No. 77] is granted on Count V (Chapter 93A) of the Amended Complaint and denied on the remaining counts; and (3) Smartling's motion for summary judgment [ECF No. 74] is granted on Skawa's 93A Counterclaim.
SO ORDERED.
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Cite This Page — Counsel Stack
358 F. Supp. 3d 124, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smartling-inc-v-skawa-innovation-ltd-dcd-2019.