Information Superhighway v. Talk America

Citation: Information Superhighway, Inc. v. Talk America, Inc., 274 F.Supp.2d 466 (S.D.N.Y. 2003)(full-text) (defendant’s motion to dismiss), 2003 U.S. Dist. LEXIS 20571 (S.D.N.Y. Nov. 17, 2003) (defendant’s motion for reconsideration).

Factual Background
Plaintiff, a reseller of long-distance telephone services, owned the registered mark TELSAVE and the domain name “telsave.com,” which it used to promote and render its services. Defendant Talk America, which was majority owned by defendant AOL, competed with plaintiff as a reseller of long-distance services. When AOL users typed in the domain name “telesave.com” or the keyword “Telesave,” they were diverted to Talk America’s website. Plaintiff sued defendants for trademark infringement in November 1999, and the case settled in April 2000 with plaintiff granting defendants a release against “any and all claims. . . [that were] asserted or [that] could have been asserted. . . relating to any use of. . . Telsave. . . or confusingly similar [terms]. . . .”

Trial Court Proceedings
Plaintiff filed this second action in March 2003, and defendants moved to dismiss based on the April 2000 release. Plaintiff later amended its Complaint to seek relief based only on use of the TELESAVE domain name and mark after the April 2000 release. The court denied defendants’ motion to dismiss.

Defendants first argued that the release prevented plaintiff from suing them regardless of when the conduct took place. Plaintiff argued that the release prevented only suits that “have their origin in pre-release conduct” and that its complaint sought relief only for post-release conduct. The court ruled that the release was ambiguous because both interpretations were plausible. Because a release is a contract under New York law, this ambiguity could not be resolved in a motion to dismiss.

Defendants also argued that the release precluded plaintiff’s suit by the defense of estoppel by acquiescence. The court rejected this argument, however, stating that plaintiff’s silence regarding the TELSAVE mark in the release did not indicate that it consented to defendant’s use of the mark. Because plaintiff did not clearly acquiesce to defendant’s use of the TELSAVE mark, and because the release was ambiguous, the release did not bar plaintiff from bringing this second action against post-release conduct.

Defendant moved for reconsideration arguing that the court did not consider defendant’s request for injunctive relief in its 1999 complaint, the April 2000 consent injunction, or the release. The court denied defendant’s motion, finding that it did not overlook any of these facts or any controlling law.

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