Delaware Court Denies Sony Subsidiary Summary Judgment in Cinemavault Trademark Dispute

The U.S. District Court for the District of Delaware on Tuesday denied a motion for summary judgment in Cinemavault, Inc. v. Gameshow Network, LLC, allowing a trademark infringement and unfair competition lawsuit to proceed to trial. Judge Joel H. Slomsky rejected Gameshow Network, LLC’s arguments that Cinemavault, Inc. failed to continuously use its trademark, that Cinemavault, Inc. was judicially estopped from bringing a likelihood of confusion claim, and that the relevant Lapp factors precluded Cinemavault from establishing a likelihood of confusion between the two marks at issue.

The ruling originated from a complaint initiated by Cinemavault on January 12, 2023, alleging unfair competition under the Lanham Act and common law trademark infringement. Cinemavault, organized in 2014, acquires rights to feature films and delivers them to the public directly by “streaming content or indirectly through sub-distribution agreements.”

Gameshow Network, a subsidiary of Sony Pictures Television, began offering free ad-supported streaming television channels under the trademark “Cinevault” in February 2021. Cinemavault alleged that Gameshow Network’s Cinevault trademark infringed upon its own Cinemavault trademark.

Gameshow Network argued that Cinemavault could not establish senior trademark rights because Cinemavault “failed to make actual and continuous use of the Cinemavault mark prior to and after November 20, 2020,” which was the date Gameshow Network filed an intent-to-use application to register the Cinemavault trademark with the United States Patent and Trademark Office (USPTO). Gameshow Network noted that the Cinemavault.com registration lapsed in 2012 and that Cinemavault generated negligible revenue and failed to use the mark in advertisements in the United States since 2016.

The court disagreed with Gameshow Network’s assertion that summary judgment was warranted on the issue of continuous use. Judge Slomsky noted that “ownership of a trademark comes from use, not registration.” The court found a genuine dispute of material fact as to whether Cinemavault “achieved sufficient market penetration to constitute continuous use under the Lanham Act.” The opinion highlighted that Cinemavault’s revenue was $11,456.61 in 2021 and $9,914.26 in 2022, and that Cinemavault, Inc. continued to do business by receiving royalty payments from films in active distribution and transitioning to a streaming platform. The court concluded that “a reasonable jury could find that [Cinemavault] made sufficient continuous use of the Cinevault mark to establish ownership.”

Regarding judicial estoppel, Gameshow Network argued that Cinemavault, Inc. was barred from asserting a likelihood of confusion claim because a predecessor entity, Cinemavault.com, argued before the USPTO in 2000 that there was “‘no possibility of confusion’ between the Cinevault.com mark and Cinevault mark.” Gameshow Network contended that the prior statements regarding differences in sound, meaning, and channels of trade irreconcilably conflicted with Cinemavault, Inc.’s current position.

The court denied summary judgment, as Judge Slomsky found a genuine dispute of material fact regarding whether Cinemavault’s current position was irreconcilable with the prior assertions and whether the change in position was made in bad faith. The court explained that the nature of the “predecessor’s business twenty-five years ago appeared different from the nature of Cinemavault, Inc.’s business today.” The opinion noted that, given the exponential growth in technology, streaming services have replaced earlier mediums through which consumers view films. The court concluded that a reasonable jury could find that the evolution of Cinemavault’s business from a business-to-business entity to one that is consumer-facing reconciles the current position with the predecessor’s position.

Gameshow Network asserted that its mark is eminently distinguishable from Cinemavault’s mark and that the direct-to-consumer streaming channels bear no relevant similarities to Cinemavault, Inc.’s prior role as a sales agent. Cinemavault countered that the marks are similar and that both entities offer direct-to-consumer streaming services for feature films. The court found a genuine dispute of material fact regarding the similarity of the marks, noting that both marks use the word “vault” and have striking similarities in appearance, such as dark backgrounds with light lettering.

While the court acknowledged that the Cinemavault mark’s commercial strength does not appear to be the strongest, it determined that the strength factor is only one in a multifactor analysis and is not dispositive. Ultimately, the court also found genuine disputes of material fact regarding evidence of actual confusion and whether the marks move in the same channels of trade, concluding that a jury must resolve these issues.

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