Full opinion text
OPINION AND ORDER SCHEINDLIN, District Judge. I. INTRODUCTION Plaintiffs Dan-Foam A/S and Tempur-Pedic, Inc. (collectively, “Tempur-Pedic”), manufacturers and distributors of premium mattresses, pillows, and other foam-based products, bring this action against defendant Brand Name Beds, LLC d/b/a brandnamebedsforless (“BNB”), alleging: (1) trademark infringement in violation of section 32 of the Lanham Act (“the Act”); (2) “palming off’ in violation of section 43 of the Act; (3) trademark dilution in violation of section 43 of the Act; (4) trademark dilution in violation of New York General Business Law section 360-1; (5) unfair competition in violation of New York General Business Law sections 349 and 350; and (6) tortious interference with existing contractual relations. BNB brings counter-claims seeking a declaratory judgment that it is not engaging in trademark infringement, palming off, tar-nishment, or unfair competition, and alleging: (1) a per se violation of section 1 of the Sherman Act; (2) a rule of reason violation of Section 1 of the Sherman Act; and (3) common law unfair competition. BNB now moves for summary judgment on all of Tempur-Pedic’s claims. The issues to be decided on this motion are (1) whether Tempur-Pedic’s product warranty is available to consumers who purchase TEMPUR-PEDIC® mattresses from BNB; and (2) what effect the availability of a warranty (or lack thereof) for the TEMPUR-PEDIC® mattresses sold by BNB has on Tempur-Pedic’s claims for trademark infringement and dilution. For the reasons stated below, BNB’s motion is denied. II. BACKGROUND A. The Parties Dan-Foam is a Danish corporation that manufactures premium foam-based mattresses, pillows, cushions and “other comfort products” sold under the TEMPUR-PEDIC® trademark. Tempur-Pedic is a Kentucky corporation that manufactures, markets, licenses and distributes the above products, and is a licensee of the TEM-PUR-PEDIC® trademark. BNB is a Louisiana limited liability company that sells viscoelastic foam bedding products, including TEMPUR-PEDIC® mattresses, over the internet. B. Tempur-Pedic’s Business and Products 1. The TEMPUR-PEDIC® Trademark, TEMPUR Material and TEMPUR-PEDIC® Mattresses The TEMPUR-PEDIC® trademark was registered on the Principal Register of the United States Patent and Trademark Office as United States Trademark Registration No. 1,853,088 on September 6, 1994. The trademark is used in connection with Tempur-Pedic’s mattresses, pillows, cushions and other comfort and bedding products. Tempur-Pedic claims that “[o]ver the last three years, Dan-Foam and Tempur-Pedic have spent in excess of $250 million in connection with their advertisement and promotion of products bearing the TEMPUR-PEDIC® trademark in order to establish this trademark in the minds of consumers as a source of high-quality bedding products.” TEMPUR-PEDIC® products are made from TEMPUR Material, a type of viscoe-lastic foam that is proprietary to Tempur-Pedic. TEMPUR Material conforms to each user’s personal body shape, weight and temperature .... [and] consists of microscopic cells that literally shift position and reorganize themselves to conform to the exact contours, weight and temperature of a user’s body. As a person lies down on a Tempur-Pedic mattress, the heavier parts of the body, typically the hips, sink in further than the lighter parts, such as the feet. As the hips sink in, the material consisting of these cells then rises to meet the upper thighs and lower back, and eventually fills any gaps along the contour of the back of the body .... ... As the material molds to the shape of the user’s body, the body as a whole becomes supported in an anatomically correct position with the neck and spine in perfect alignment. Thus, the pressure that a body normally applies to the back and neck muscles when lying down on a conventional mattress is evenly distributed throughout the body. Consequently, neck and back ailments can be considerably relieved. Tempur-Pedic currently sells the following mattress models, all of which carry the TEMPUR-PEDIC® trademark, and which are comprised of variously layered TEMPUR Material: The OriginalBed, The ClassicBed, The DeluxeBed, The RhapsodyBed, The CelebrityBed, and The GrandBed. Tempur-Pedic also sells foundations for its mattresses, as well as mattress toppers, pillows, and cushions made from TEMPUR Material. TEM-PUR-PEDIC® mattresses “can last much longer than conventional products if properly handled from the moment of manufacture, through delivery to and proper usage by the customer.” 2. Tempur-Pedic’s Warranty Tempur-Pedic provides a twenty-year warranty that is “valid only to the original purchaser of the product.” A critical dispute at the crux of this motion for summary judgment is the meaning of “original purchaser.” The parties are in disagreement as to whether consumers who have purchased TEMPUR-PEDIC® mattresses from BNB hold “valid” warranties. BNB asserts that “[t]he Limited Warranty covering Plaintiffs Tempur-Pedic branded goods extends to consumers of these products regardless of whether the product was purchased directly from Tempur-Pedic, from an authorized dealer of Tempur-Pedic products, or from an unauthorized dealer.” Tempur-Pedic, on the other hand, asserts that “[o]nly TEMPUR-PEDIC® Products sold directly by Tempur-Pedic or its authorized retailers are accompanied by a Limited Warranty. Any warranty claim must be accompanied by proof of purchase from an authorized retailer or Tempur-Pedic itself. The warranty is void for products that were obtained outside of the authorized network.” The Warranty states that if the purchaser “did not purchase the mattress directly from Tempur-Pedic International Inc.,” the purchaser “must provide proof of purchase for any warranty claim.” According to Tempur-Pedic, the Warranty accompanying its authorized products is unique. For the first ten years of the warranty period, “Tempur-Pedic provides a complete warranty, followed by a declining pro rata recovery of the cost of a new mattress over the course of the next ten years.” Specifically, during the first ten years of the warranty, “your Tempur-Pedic Swedish MattressTM will be replaced or repaired at our option, without cost to you, should it be deemed defective because of faulty workmanship or structural defects.” During the final ten years of the warranty, Tempur-Pedic will “at our option, repair the mattress at a handling cost to you, or replace the mattress at a prorated charge to you;” this charge is fifty percent of the original purchase price during the first year of the pro-rated period, and increases by five percent each subsequent year until the expiration of the warranty period. According to the Warranty, its coverage is voided if “inappropriate manufacturers’ foundations or box springs” are substituted for the “firm, wood, completely flat, non-spring foundations” that TEMPUR-PEDIC® mattresses have been “designed to work with,” or if “the mattress, foundation, or cover has been physically abused, damaged, burned, cut or torn.” Tempur-Pedic argues that “there are few, if any, other mattress and home product manufacturers that provide such extensive warranty protection for their products.” As such, “[b]y providing a lengthy warranty period, Tempur-Pedic is communicating that its product is of extremely high quality,” thus “enhancing the TEMPUR-PEDIC® brand itself.” 3. Tempur-Pedic’s Authorized Network, Quality Control Practices, and Retailer Agreement Tempur-Pedic maintains an “authorized network” of sellers for its TEMPUR-PEDIC® products. This network includes Tempur-Pedic itself, physicians and other health care professionals, general bedding retailers, and other retailers such as Brookstone. To ensure quality control throughout this network, Tempur-Pedic monitors these retailers and trains their staff on the proper use and care of Tem-pur-Pedic’s products; the retailers are instructed to pass this information on to consumers. Territory Sales Managers visit authorized retailers’ stores after initial retail training in order to “ensure that retailers in each sales territory incorporate the Tempur-Pedic training and are actually providing correct information to consumers.” Authorized Tempur-Pedic retailers and shippers are also trained in the proper delivery and handling of TEMPUR-PEDIC® mattresses, as the TEMPUR Material is sensitive to heat and cold and can be damaged if not handled properly. Specifically, “the proper method for storing and delivering a Tempur-Pedic mattress is to lay it flat in its original product packaging.” Because the TEMPUR material stiffens in temperatures below fifty degrees Fahrenheit, if Tempur-Pedic’s mattresses are folded during cold-weather delivery or installation, and then forced flat while still in the stiffened state, the TEM-PUR Material becomes “permanently damaged” such that the mattress can no longer “be expected to function as intended for the life of the warranty.” In order to prevent this permanent damage from occurring, “[ajuthorized delivery personnel know upon arriving to a customer’s home, where the mattress needs to be folded in order to fit around a corner or up a staircase, that they should wait a few hours before finishing the delivery so that the mattress can soften and can thus be briefly folded with the top side of the mattress inwards.” During winter deliveries in the Northern United States and Canada, authorized delivery personnel for Tempur-Pedic will first place a new, packaged mattress in the consumer’s home for a few hours so that it softens, then “continue making their rounds delivering other mattresses,” and will finally “make a second stop at each home to finish installing the mattress in a bedroom” once the mattress has warmed. Between 2004 and 2006, only some of Tempur-Pedic’s authorized retailers had signed agreements with Tempur-Pedic. Beginning in 2006, Tempur-Pedic “implemented a program to transition all of its authorized retailers to execute new written agreements” that include a provision requiring the retailers to agree “not to resell Products to any other dealer or to resell Products to anyone other than end-users of Products.” To date, not all of the retailers in Tempur-Pedic’s authorized network have entered into this new Retailer Agreement. C. Brand Name Beds’s Business and Alleged Trademark Infringement and Dilution BNB is not an authorized TEMPUR-PEDIC® retailer. Nevertheless, BNB sold TEMPUR-PEDIC® mattresses and pillows, non-TEMPUR-PEDIC® viscoelastic foam bedding products, and related bedding products including mattress foundations on the Ebay auction website under the vendor name “Brandnamebeds.” The TEMPUR-PEDIC® mattresses that BNB sold were accompanied by warranty cards that contained the text of Tempur-Pedic’s Warranty. BNB also maintains a website at www. brandnamebeds41ess.com (“brandna-mebeds41ess.com”). This website now states that it is “Currently Under NEW Construction.” Additionally, the site provides a link to BNB’s Ebay store and lists BNB’s telephone number and email address. Before this lawsuit was filed, BNB’s website and Ebay store both displayed images of the TEMPUR-PEDIC® design mark and trademark “with the text ‘BrandNameBeds4Less’ in bold lettering emblazoned across it, and ‘BRANDNA-MEBEDS4LESS’ placed between the logo and the Tempur-Pedic instruction to store the mattress ‘flat.’ ” As of January 17, 2007, the above-described images on BNB’s Ebay store had been replaced by “large block text reading ‘LOOK HERE’ or ‘SAVE BIG.’ ” BNB purchases the TEMPUR-PEDIC® products that it sells from retailers who are part of Tempur-Pedic’s authorized network. Although BNB has not yet disclosed the identity of the dealers from whom it purchases its TEMPUR-PEDIC® products, it asserts that it “purchases Tempur-Pedic branded goods from dealers who have not entered into an agreement with Plaintiffs which prohibits them from selling Tempur-Pedic branded goods to other dealers,” and therefore “[t]he dealers who sell Tempur-Pedic branded goods to Brand Name Beds are not in breach of any contract with either of the Plaintiffs.” As a means of reducing shipping costs, BNB ships TEMPUR-PEDIC® mattresses in shipping crates or cardboard boxes that are smaller than the boxes in which Tempur-Pedic ships its mattresses and in which the mattresses are first delivered to BNB. For example, BNB- has shipped queen-sized TEMPUR-PEDIC® mattresses in cardboard boxes that measure “approximately 20"(h) x 24"(w) x 34"(1), or 18"(h) x 25"(w) x 32"(1), i.e. the size of a bed chest.” In order to fit the mattresses into boxes of this size, BNB folds the mattresses in halves or quarters, or rolls them, and then ties the mattresses up using heavy duty straps or cords. According to Tempur-Pedic, when the mattresses are “squeezed and folded” for shipping in this way, “the TEMPUR Material is improperly stretched for prolonged periods ... causing stress on the cells.” Further, because BNB uses carriers other than those used by Tempur-Pedic to deliver the mattresses, and because these carriers drop BNB’s boxes off at customers’ front doors without assisting the customers in setting up the mattresses, the delivery procedures that Tempur-Pedic designed as a means of preventing the “potentially devastating impact that improper packaging or delivery can have on the mattress” are never implemented. BNB’s delivery method also raises the possibility that customers who receive TEM-PUR-PEDIC® mattresses shipped. by BNB in temperatures lower than fifty degrees Fahrenheit will attempt prematurely to flatten the stiffened mattresses, “thus causing cracking, splitting and other damage to the cells contained within the TEM-PUR Material.” III. LEGAL STANDARD Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” An issue of fact is genuine “ ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ ” A fact is material when it “ ‘might affect the outcome of the suit under the governing law.’ ” “It is the movant’s burden to show that no genuine factual dispute exists.” In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact. To do so, it must do more than show that there is “ ‘some metaphysical doubt as to the material facts,’ ” and it “ ‘may not rely on conclusory allegations or unsubstantiated speculation.’ ” However, “ ‘all that is required [from a nonmoving party] is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial.’ ” In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in that party’s favor. However, “[i]t is a settled rule that ‘[e]redibility assessments, choices between conflicting versions of the events, and the weighing of evidence are matters for the jury, not for the court on a motion for summary judgment.’” Summary judgment is therefore inappropriate “if there is any evidence in the record that could reasonably support a jury’s verdict for the non-moving party.” Further, the Second Circuit has noted that “[disputes between parties as to trade-mark validity and infringement can rarely be determined satisfactorily on a motion for summary judgment.” IV. APPLICABLE LAW A. Trademark Infringement Under the Lanham Act Section 32(1) of the Lanham Act governs claims for infringement of a registered trademark, prohibiting the use in commerce of “any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” Section 43(a) of the Act governs claims for infringement of an unregistered trademark and also acts as “a broad federal unfair competition provision.” Accordingly, “[wjhere there is a claim of consumer confusion [as] to the association of a product or service with another person’s trademark, the central inquiry is whether it is likely that ‘an appreciable number of ordinarily prudent purchasers’ will be misled as to the source or sponsorship of the product or service in question.” “A claim of trademark infringement, whether brought under [section 32(1) or 43(a) of the Act], is analyzed under the familiar two-prong test .... The test looks first to whether the plaintiffs mark is entitled to protection, and second to whether defendant’s use of the mark is likely to cause consumers confusion as to the origin or sponsorship of the defendant’s goods.” A certificate of registration of plaintiffs trademark on the principal register is prima facie evidence that plaintiffs mark satisfies the first prong of the test. In order to determine whether a defendant’s use of a mark is likely to cause consumer confusion, courts in the Second Circuit typically engage in a weighing analysis using the eight Polaroid factors set out by Judge Henry Friendly, which are: (1) the strength of plaintiffs mark; (2) the similarity of plaintiffs and defendant’s marks; (3) the proximity of the products; (4) the likelihood that plaintiff will “bridge the gap;” (5) actual confusion between products; (6) defendant’s good or bad faith in adopting the mark; (7) the quality of defendant’s product; and (8) the sophistication of the buyers. However, “[n]o single factor is dispositive, nor is a court limited to consideration of only these factors.” “Further, ‘each factor must be evaluated in the context of how it bears on the ultimate question of likelihood of confusion as to the source of the product.’ ” B. Trademark Dilution Under the Lanham Act 1. Dilution under the Trademark Dilution Revision Act of 2006 (“TDRA”) a. Likelihood of Dilution Under the TDRA, “the owner of a famous mark ... shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.” The TDRA’s establishment of a “likelihood of dilution” standard rejects the “actual dilution” standard set out by the Supreme Court in Moseley v. v. Secret Catalogue, Inc. b. Fame For a trademark owner to establish the fame requirement of a dilution claim, the mark must be “widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” The TDRA sets out four factors that courts may use in “determining whether a mark possesses the requisite degree of recognition” to be considered “famous.” These factors are: “[l][t]he duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties; [2][t]he amount, volume, and geographic extent of sales of goods or services offered under the mark; [3][t]he extent of actual recognition of the mark; [4][w]heth-er the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.” c. Tarnishment “The sine qua non of tarnishment is a finding that plaintiffs mark will suffer negative associations through defendant’s use.” Although case law suggests that a mark is tarnished where “its likeness is placed in the context of sexual activity, obscenity, or illegal activity,” this list of categories is not exhaustive. The Second Circuit has expressly held that “tarnishment is not limited to seamy conduct.” Thus, the law in this Circuit takes a “broad view of tarnishment” which does not appear to have been narrowed by the TDRA. 2. Actual Dilution under the FTDA Because the TDRA’s relaxed likelihood of dilution standard applies only to pre-October 6, 2006 claims seeking prospective relief, actual dilution under Moseley still applies when a pre-October 6, 2006 claimant seeks monetary relief. Under Moseley, the actual dilution requirement “does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved.” While the Court did not give further guidance as to what would be required in order to prove actual dilution, the Court did note that “[i]t may well be ... that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proved through circumstantial evidence — the obvious case is one where the junior and senior marks are identical.” The Second Circuit has interpreted this to mean that “where a plaintiff who owns a famous senior mark can show the commercial use of an identical junior mark, such a showing constitutes circumstantial evidence of the actual-dilution element of an FTDA claim.” Thus, true identity between marks “establishes] per se evidence of actual dilution.” C. Likelihood of Confusion and Dilution by Tarnishment in “Gray Goods” Cases The term “grey market goods” “refers to a fact pattern in which someone other than the designated exclusive United States importer buys genuine trademarked goods outside the U.S. and imports them for sale in the U.S. in competition with the exclusive U.S. importer.” Much of the body of trademark law that has developed around “gray goods” cases can be applied by analogy to sales by unauthorized United States retailers of goods bearing genuine trademarks that have been created by a trademark owner for the United States market. In a typical gray goods trademark case, a cause of action for trademark infringement or dilution arises when (1) “material differences” exist between the goods sold by the trademark holder and its authorized or licensed dealers and those sold by the unauthorized dealer, and (2) the unauthorized dealer sells the materially different trademarked goods in a manner that would be likely to cause consumer confusion, and/or dilute the strength of the trademark owner’s mark. The purpose of allowing Lanham Act claims based on material differences between products that are and are not authorized for sale in the United States, is to uphold “ ‘the two fundamental policies of trademark law; to protect the consumer and to safeguard the goodwill of the producer.’ ” Gray goods cases, however, do not fit easily into the Lanham Act’s specified causes of action for infringement. As such, courts have developed various doctrines, including the “material differences” standard and the “quality control” theory of infringement, as a means of shoe-horn-ing trademark owners’ complaints in these cases into the existing Lanham Act provisions. Further, although courts have typically addressed gray goods cases under the umbrella of likelihood of confusion, because such cases generally involve elements of both consumer confusion and dilution of a trademark’s strength and goodwill, courts must engage in the separate analyses called for by these two distinct causes of action. 1. The “Material Differences” Standard Material differences between authorized and unauthorized goods created by the same trademark owner exist when the differences between the goods “create[ ] ... confusion over the source of the product and result]] in a loss of [the trademark owner’s] good will.” In these cases, even though the trademark owner’s genuine trademark is attached to the materially different goods, these goods are not considered “genuine” because they are “confusingly different.” It follows that an action for trademark infringement arises when an unauthorized seller’s actions create a likelihood that consumer confusion, mistake, or deception will result from the seller’s use of a trademark owner’s mark “in connection with the sale, offering for sale, distribution, or advertising of any goods.” If consumers are likely to believe that they are purchasing “genuine” goods created or endorsed by a particular trademark owner, and the goods they receive are not genuine as a result of material differences between those goods and authorized goods, then a likelihood of confusion exists, and trademark infringement has occurred. Because “the unauthorized sale of a trademarked article does not, without more, constitute a Lanham Act violation,” the material differences standard operates to ensure that trademark infringement is only found in gray goods cases where the “unauthorized sale of a trademarked article” is likely to cause consumer confusion. Courts have found both physical and non-physical material differences to cause consumer confusion and/or loss of goodwill in gray goods cases. In Original Appalachian Artworks, Inc. v. Granada Electronics, Inc., for example, the Second Circuit found that a material difference existed between the trademarked “Cabbage Patch Kids” dolls that were authorized for sale in the United States and those that were unauthorized because the imported dolls came with Spanish language “adoption papers” and “birth certificates” that the American “fulfillment houses” would not process. As a result, the imported dolls’ “adoption” processes could not be completed, and consumers who had purchased them did not receive birthday cards on their dolls’ first birthdays. The district court held, and the Second Circuit agreed, that because “this adoption process is an ‘important element of the mystique of the [Cabbage Patch Kids] dolls, which has substantially contributed to their enormous popularity and commercial success,’ ” the lack of English-language adoption papers was a material difference likely to cause consumer confusion and loss of goodwill to the trademark holder, even though the dolls themselves were otherwise physically identical. In gray goods cases generally, the material differences standard has been used by courts “as a proxy for the likelihood of confusion test traditionally used in trademark infringement cases, permitting gray market goods to be sold unless the goods are ‘materially different’ from those sold through authorized distribution channels.” However, because it is “well settled” in this Circuit “that in cases involving a claim under the Lanham Act the trier of fact must consider and balance the factors set forth in Polaroid,” I see no reason not to consider the material differences standard in conjunction with the applicable Polaroid factors. a.Likelihood of Confusion: Applicable Polaroid Factors In gray market cases, the trademark at issue is always plaintiffs actual mark. Therefore, neither the strength of plaintiffs mark nor the similarity between the marks in question (the first two factors) are at issue because the marks are the same. Factor three — proximity of the products — is relevant to the issue of consumer confusion resulting from material differences in gray goods cases, but factor four — the likelihood that plaintiff will “bridge the gap” — is not, because plaintiff and defendant are selling the same products to the same market. With respect to Polaroid factors five through eight — actual confusion between products, defendant’s good or bad faith in adopting the mark, the quality of defendant’s product, and the sophistication of the buyers — each is still highly relevant to the inquiry into likelihood of confusion resulting from material differences in gray goods cases. In fact, the seventh factor — the quality of defendant’s product — should be given more weight in gray goods cases because the crux of the consumer confusion question in these cases revolves around whether consumers are likely to be confused by differences between products (often not initially detectable to the consumer eye) that they presume, understandably, to be of identical quality because they all bear identical genuine trademarks and are almost the same product. b. Dilution by Tarnishment Similarly, dilution by tarnishment can be shown within the rubric of the material differences standard. When material differences exist between authorized and unauthorized goods such that “the public is likely to become confused or deceived as to which characteristics are properly associated with the trademark,” it follows that a likely result of that confusion will be “possible] erofsion of] the goodwill of the trademark holder in the United States.” If that erosion of goodwill amounts to an “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark,” then a court may find dilution by tarnishment under the Act. c. Material Differences Threshold The materiality threshold for establishing material differences in gray goods cases is low. In the Federal Circuit, for instance, the materiality threshold requir[es] no more than showing that consumers would be likely to consider the differences between the foreign and domestic products to be significant when purchasing the product, for such differences would suffice to erode the goodwill of the domestic source. Indeed, there need only be one material difference between a domestic and a foreign product in order to determine that the latter is a gray market good eligible for exclusion. The First Circuit has offered the following explanation for this low threshold of materiality: The probability of confusion is great ... when the same mark is displayed on goods that are not identical but that nonetheless bear strong similarities in appearance or function: Gray goods often fall within this category. Thus, when dealing with the importation of gray goods, a reviewing court must necessarily be concerned with subtle differences, for it is by subtle differences that consumers are most easily confused. For that reason, the threshold of materiality must be kept low enough to take account of potentially confusing differences — differences that are not blatant enough to make it obvious to the average consumer that the origin of the product differs from his or her expectations. When applying this low materiality threshold, however, courts must be wary of trademark owners who attempt to “overemphasize differences to obtain a protection from gray market goods that Congress has not yet been willing to extend.” The Federal Circuit guards against overreaching application of its low materiality threshold by requiring a plaintiff to “establish that all or substantially all of its sales are accompanied by the asserted material difference in order to show that its goods are materially different.” This is because “if it cannot be said that substantially all of a trademark owner’s goods are accompanied by the asserted [materially different] characteristic, then it may properly be concluded that, in effect, there exists no material difference between the trademark owner’s goods and the allegedly infringing goods.” Further, according to the Federal Circuit, “[t]o permit recovery by a trademark owner when less than ‘substantially all’ of its goods bear the material difference from the gray goods thus would allow the owner itself to contribute to the confusion by consumers that it accuses gray market importers of creating.” d. Examples of Material Differences i. Differences in Packaging Differences in product packaging have been found to constitute material differences in a variety of gray goods cases. In Davidoff & CIE, S.A. v. PLD International Corp., for instance, the Eleventh Circuit found that the defendant was selling materially different bottles of Davidoff s COOL WATER fragrance where defendant used an etching tool to remove batch codes from COOL WATER fragrance bottles. The etching left “a mark on the bottle near its base on the side opposite the DAVIDOFF COOL WATER printing ....” In Societe Des Produits Nestle, the First Circuit found material differences between PERUGINA chocolates manufactured in Italy and PERUGINA chocolates manufactured in Venezuela based on the differences between the chocolates’ “boxes, wrappers, and trays.” The Italian boxes were found to “possess a glossy finish” and were colored “either silver, brown, or gold.” By contrast, “[t]he Venezuelan boxes lack[ed] the shiny finish,” and “[we]re either blue, red, or yellow in col- or.” Further, the court found, “[w]hile the Italian sweets [sat] in gold or silver trays, their Venezuelan counterparts rest[ed] on white or transparent trays.” The court also found material differences in the pictures and the language of the descriptions printed on the chocolate boxes. In Lever Bros. Co. v. United States, the D.C. Circuit found — among other material differences — that differences in the packaging of SUNLIGHT dishwashing liquid meant to be distributed in the United States and SUNLIGHT dishwashing liquid meant to be distributed in the United Kingdom, were material. The U.S. SUNLIGHT bottles were shaped like an “hourglass,” while the U.K. SUNLIGHT bottles were shaped like a “cylindrical drum.” The U.K. SUNLIGHT label displayed different text and graphics than the U.S. SUNLIGHT label, as the former included a “royal emblem, along with the legend ‘By Appointment to Her Majesty the Queen.’ ” ii. Differences in Warranty Protection Courts have also found that gray goods’ lack of warranty protection may constitute a material difference where a trademark owner’s authorized goods include warranty protection. In Fender Musical Instruments Corp. v. Unlimited Music Center, Inc., for example, the defendants — unauthorized FENDER guitar dealers — imported and sold Japanese-made guitars bearing genuine FENDER trademarks. Among other product differences, the guitars that defendant sold were not accompanied by the FENDER warranty. As a result, the court held that, “[b]ecause the Japanese-made products retain Fender’s recognized trademarks, consumers would likely be confused that they were buying not just Fender guitars, but also the services and guarantees that usually accompany such a sale. Thus, the defendants, by selling these Japanese-made guitars, have violated the Lanham Act.” In Swatch S.A. v. New City, Inc., the court found that although the same warranty accompanied both authorized and unauthorized sales of SWATCH watches, the warranty was void as to the watches sold by the defendant because the warranty expressly stated that it “only comes into force if the warranty certificate is dated, fully and correctly completed and stamped by an official Swatch dealer.” The court held this lack of a warranty, in itself, could constitute a material difference between the goods, and noted that “whether this intangible difference [in warranty coverage] is material to a consumer’s decision to purchase the watch [ie. is a material difference]” is an issue “of material fact for a jury to decide.” In Bose Corp. v. Silonsonnic Corp., the court found that a triable issue of fact existed as to whether the warranty that accompanied Bose LIFESTYLE home entertainment sound systems applied to LIFESTYLE systems that defendants— non-authorized Bose dealers — sold through the Ebay auction website. The Bose court “[a]ssum[ed] without deciding that the lack of an enforceable warranty standing alone is sufficient to render a product inferior for trademark infringement analysis purposes” and therefore could be a material difference. iii. Differences in Quality Control Procedures The Second Circuit has developed its own body of trademark infringement law based on a trademark owner’s right to control the quality of its goods separate and apart from the material differences theory of infringement used in gray goods cases. However, the two theories work in tandem, because when a trademark owner’s product is distributed without the authorization of the trademark owner, differences in quality control procedures may cause consumer confusion between the authorized and unauthorized products. In El Greco Leather Products Co., Inc. v. Shoe World, Inc., the court held that Shoe World had infringed El Greco’s trademark in the CANDIES shoe brand when it sold shoes bearing the genuine CANDIES trademark, because those particular shoes had not received “certificates of inspection” from El Greco. The court concluded that because El Greco’s inspection procedure was “an integral part of appellant’s effort at quality control,” the goods were not “genuine” for trademark purposes, and would therefore lead to consumer confusion. The El Greco court emphasized that “[o]ne of the most valuable and important protections afforded by the Lanham Act is the right to control the quality of the goods manufactured and sold under the holder’s trademark” and that “[f]or this purpose the actual quality of the goods is irrelevant; it is the control of quality that a trademark holder is entitled to maintain.” In order to succeed in an action for trademark infringement or dilution based on this quality control theory, however, a trademark owner must be able to show that it actually follows the quality control procedures it alleges. In Polymer Technology Corp. v. Mimran, the court found that the plaintiff itself did not always follow the quality control procedures for labeling and tamper-evident seals that it alleged were violated by defendant, who was an unauthorized seller of BOSTON contact lens solution. The court concluded that, “[bjecause Polymer essentially admitted] that it did not carefully police any procedures it may have had in place to ensure that the necessary information appeared on Polymer’s packaging, we do not find Mimran’s retail distribution ... even if violative of FDA regulations, a violation of Polymer’s own quality control standards.” Further, the court held that “because Polymer itself has no procedures in place to prevent its non-sealed kits from reaching the retail public, it cannot now claim that its trademark was violated because Mimran allowed such product to reach that market.” In Warner-Lambert Co. v. Northside Development Corp., the Second Circuit further clarified the contours of a trademark action based on a trademark owner’s right to control the quality of its goods by setting out a three-pronged test that a trademark holder must satisfy in order to succeed under this theory of infringement. “[T]o be entitled to relief’ for trademark infringement, the Warner-Lambert court emphasized, “a trademark holder is not required to adopt the most stringent quality control procedures available.” Rather, “[t]he trademark holder must demonstrate only that: (i) it has established legitimate, substantial, and nonpretextual quality control procedures, (ii) it abides by these procedures, and (iii) the non-conforming sales will diminish the value of the mark.” This test refines the Polymer II standard by recognizing that “[ejven if some non-conforming products survive a mark holder’s quality control procedures and enter the marketplace, the sale of additional non-conforming products [by an unauthorized dealer] could further devalue the trademark,” thus still giving rise to a Lanham Act claim. The Second Circuit has not revisited the Warner-Lambert test for infringement based on a trademark owner’s right to control the quality of goods associated with its mark. When Warner-Lambert was decided, the first federal anti-dilution act had just been passed by Congress. Since then, Congress has passed the TDRA, which further clarifies the elements of a trademark dilution claim. In light of these changes to federal dilution law, the third prong of the Warner-Lambert test casts trademark actions predicated on differences in quality control as dilution-based, rather than infringement-based. The third prong requires a plaintiff to show that unauthorized sales of goods that do not conform to the plaintiffs quality control standards or procedures “will diminish the value of [plaintiffs] mark.” Protecting the value of a trademark owner’s mark from “negative [consumer] impressions about a mark,” in contrast with protecting against consumer confusion as to source or sponsorship, is the precise basis of an action for dilution by tarnishment under federal dilution law. D. The “First Sale” or “Exhaustion” Defense to Trademark Infringement or Dilution The “first sale” or “exhaustion” doctrine, as applied in the trademark context, “provides that a distributor ... has the ‘right to resell a branded item in an unchanged state.’ ” “The rationale underlying this doctrine is that trademark rights are exhausted once the trademarked goods have been duly placed into the market.” However, “it is well-recognized that the exhaustion doctrine does not apply to genuine goods which have been altered.” When trademarked goods are materially different from the goods that the trademark is known to represent, the exhaustion doctrine cannot be used as a defense to infringement or dilution. When unauthorized, down-stream sales of a trademarked item cause consumer confusion or dilution of a trademark, the purposes of trademark law have been frustrated, and the trademark owner is therefore entitled to relief. Of course, when the re-sale of a trademarked item does not cause consumer confusion or dilution of a trademark — even if that re-sale is unauthorized — an action for trademark infringement will not lie. As Justice Oliver Wendell Holmes cautioned in Prestonettes, Inc. v. Coty, an early gray goods case, “[w]hen the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth. It is not taboo.” In Prestonettes, the defendant rebottled and resold COTY perfume in smaller bottles. The defendant also took COTY cosmetic powder, pressurized it, and “add[ed] a binder to give it coherence and s[old] the compact in a metal case.” However, pursuant to a district court decree, the defendant had also placed the following label on the re-bottled perfume: “Prestonettes, Inc., not connected with Coty, states that the contents are Coty’s ... independently rebottled in New York,” and the following label on the cosmetic powder mixture compacts: “Pres-tonettes, Inc., not connected with Coty, states that the compact of face powder herein was independently compounded by it from Coty’s ... loose powder and its own binder ....” Also pursuant to the district court decree, “every word [on the labels was] to be in letters of the same size, color, type and general distinctiveness” so as to use plaintiffs trademark only in a descriptive sense, and not in an infringing sense. Justice Holmes held that because the labels were accurate and descriptive, they did not use plaintiffs actual mark in an infringing way, and thus defendant’s rebottling of plaintiffs perfume and cosmetic powder did not constitute trademark infringement. In Champion Spark Plug Co. v. Sanders, the Court reaffirmed its holding, emphasizing that under Prestonettes, even though “the second-hand dealer gets some advantage from the trade mark,” that advantage is “wholly permissible” and does not constitute trademark infringement “so long as the manufacturer is not identified with the inferior qualities of the product resulting from wear and tear or the reconditioning by the dealer. Full disclosure gives the manufacturer all the protection to which he is entitled.” In order to avoid infringing the CHAMPION mark, the court required the defendant to include the following information on all containers, advertising material, and any other papers relating to its refurbished CHAMPION spark plugs: “the original make and type numbers provided it is made clear that any plug referred to therein is used and reconditioned by the defendants, and that such material contains the name and address of defendants.” These words of the Second Circuit in Champion, affirmed by the Supreme Court, are instructive as regards the trademark first sale doctrine and its limitations. “It is well settled by the authorities that the defendants have a right to sell an article manufactured by the plaintiff and to say that it has been so manufactured by retaining the latter’s trade-mark ... to indicate the origin of the goods---They have only to tell the truth, and the ivhole truth, and to tell it plainly. ” But where a defendant resells a trademarked product under the manufacturer’s trademark and does not tell the whole truth so as “to cause confusion, or to cause mistake, or to deceive” as to the source or sponsorship of the product, or “to cause dilution by blurring or dilution by tarnishment of the famous mark,” defendant cannot hide behind the first sale doctrine. Y. DISCUSSION BNB has not satisfied its burden to show that no genuine factual dispute exists regarding the issues to be decided on this motion for summary judgment. The record demonstrates that genuine factual disputes exist with respect to: (1) the availability of Tempur-Pedic’s product warranty to consumers who purchase TEMPUR-PEDIC® mattresses from BNB; and (2) the effect of the availability of a product warranty on Tempur-Pedic’s claims for trademark infringement and dilution. In other words, Tempur-Pedic has satisfied its minimal burden of producing sufficient evidence to raise material issues of fact that must be resolved at trial. A. Availability of Tempur-Pedic’s Warranty to BNB’s Customers BNB cannot establish, as a matter of law, that Tempur-Pedic’s Warranty applies to BNB’s customers for two reasons. First, there are questions of material fact regarding whether BNB’s repackaging and shipping procedures void Tempur-Pedic’s Warranty. The Warranty itself provides that “[a]ll warranties contained herein shall not apply if the mattress ... has been physically abused, damaged, burned, cut or torn.” A question of material fact exists as to whether BNB’s repackaging of at least some of Tempur-Pedic’s mattresses amounts to “physical abuse” under the Warranty. An additional question of material fact exists as to whether the “squeezing] and folding]” of the mattresses during shipping, as well as the unwitting attempts by BNB customers to flatten stiffened Tempur-Pedic mattresses that were shipped in cold weather, cause the mattresses to be “damaged” under the terms of the Warranty. Second, Tempur-Pedic contends that, by its terms, the Warranty does not apply to BNB’s customers because the Warranty “is valid only to the original purchaser of the product,” and “[i]f the original purchaser sells the product, the subsequent purchaser takes the product ‘as is’ and ‘with all faults.’ ” According to Tempur-Pedic, the term “original purchaser” refers to “those purchasers who are able to provide proof of purchase from authorized retailers or Tempur-Pedic itself,” and BNB’s consumers are not “original purchasers” by that definition. BNB, in turn, contends that the term “original purchaser” refers to “the original ‘consumer’ purchaser and does not apply to retailers who purchase Tempur-Pedic Swedish Sleep Systems from Plaintiff for resale to consumers.” According to BNB, because the language of the Warranty does not explicitly state that the “original purchaser” is someone who has purchased her mattress from an authorized Tempur-Pedic dealer, Tempur-Pedic’s argument for its interpretation of its own Warranty is “frivolous.” However, BNB has offered no evidence to support its claim that Tempur-Pedic does not enforce its Warranty in the manner that Tempur-Pedic claims. Andrew Tarter, Tempur-Pedic’s Call Center Director for Direct Sales, who has “been in charge of assessing claims made under Tempur-Pedic’s warranty,” has declared under penalty of perjury that “[t]o the extent that a Tempur-Pedic product is accompanied by a warranty card, but is not purchased through an authorized retailer or Tempur-Pedic directly ... no warranty protection is available to the user of the product. Any warranty claim must be accompanied by proof of purchase from an authorized retailer or Tempur-Pedic itself.” At the very least, this conflict over the interpretation of “original purchaser” raises an issue of material fact precluding summary judgment. B. Trademark Infringement A reasonable juror could find that there are material differences between the TEMPUR-PEDIC® mattresses sold by Tempur-Pedic and its authorized dealers and those sold by BNB that present a likelihood of consumer confusion. In addition to the validity of the warranty accompanying BNB’s mattresses — which is questionable — a reasonable jury could find that material differences exist in light of the damage that occurs to at least some TEM-PUR-PEDIC® mattresses as a result of BNB’s repackaging and shipping procedures, which in turn affects the availability of warranty protection. A jury could further find that these material differences are likely to cause consumer confusion under a Polaroid factors analysis. 1. The Third Polaroid Factor: Proximity of the Products BNB sells TEMPUR-PEDIC® mattresses on Ebay, and has perhaps sold TEMPUR-PEDIC® mattresses from its own website — brandnamebeds41ess.com. Both of these websites displayed images of Tempur-Pedic’s logo along with images of TEMPUR-PEDIC® products. Consumers searching the internet for authorized Tempur-Pedic dealers might type the search terms “Tempur-Pedic,” “mattress,” and “genuine,” into an online search engine and find BNB’s website or Ebay store among the websites returned as a list by the search engine. Therefore, a trier of fact could find that “proximity of the products” tips toward consumer confusion. 2. The Fifth Polaroid Factor: Actual Confusion Between the Products This factor is neutral thus far, as neither party has presented evidence of actual consumer confusion. 3. The Sixth Polaroid Factor: Defendant’s Good or Bad Faith in Adopting the Mark The listings for TEMPUR-PEDIC® products sold from BNB’s Ebay store included the phrases “Brand New,” “Never Been Opened,” “Authentic,” and “Not a Second.” The listings also included images of the TEMPUR-PEDIC® design mark and trademark “with the text ‘BrandNameBeds4Less’ in bold lettering emblazoned across it, and ‘BRANDNA-MEBEDS4LESS’ placed between the logo and the Tempur-Pedic instruction to store the mattress ‘flat.’ ” To the extent that these images and phrases may have been intended by BNB to mislead consumers into believing that a connection or sponsorship existed between BNB and Tempur-Pedic, a trier of fact could reasonably find that this factor tips in favor of Tempur-Pedic. 4.The Seventh Polaroid Factor: The Quality of Defendant’s Product A trier of fact could reasonably conclude that the damage that occurs to TEMPUR-PEDIC® mattresses as a result of BNB’s re-packaging and shipping procedures reduces the quality of those mattresses, both in the short and long term. Tempur-Pedic asserts that when a TEMPUR-PEDIC® mattress is subjected to the sort of packaging and shipping procedures used by BNB, “it cannot be expected to function as intended for the life of the warranty.” The terms of the Warranty clearly state that “[a]ll warranties contained herein shall not apply if the mattress ... has been physically abused [or] damaged.” A trier of fact could reasonably conclude that not only is the product itself, as repackaged and shipped by BNB, inferior to the product packaged and shipped by Tempur-Pedic, but that the product has also lost a valuable intangible component— the twenty year Warranty — the absence of which lessens the product’s quality as well. Further, a reasonable juror could find that — as Tempur-Pedic asserts — its warranty does not apply to any mattress purchased through an unauthorized retailer such as BNB. In that case, every TEM-PUR-PEDIC® mattress sold by BNB— regardless of whether it was damaged during shipping — could reasonably be found to be of inferior quality as compared with the TEMPUR-PEDIC® mattresses sold by Tempur-Pedic and its authorized dealers. Therefore, a jury could reasonably conclude that this factor weighs heavily in favor of Tempur-Pedic. 5. The Eighth Polaroid Factor: The Sophistication of the Buyers TEMPUR-PEDIC® mattresses sometimes cost over $6,000. It would therefore be reasonable for a trier of fact to conclude that most consumers considering a purchase of a TEMPUR-PEDIC® mattress are sophisticated in that they would not make the decision to buy such an expensive mattress lightly. These consumers might also be expected to do a considerable amount of research into the product that they are buying. It might be expected that such consumers would recognize that a TEMPUR-PEDIC® mattress sold at the discount BNB provides may not be up to Tempur-Pedic’s standards. However, in the world of online auction sites and counterfeit sellers, it is difficult for even the most savvy consumer to avoid the sort of confusion presented by an Ebay store that declares in bold lettering that its products are “Brand New,” “Never Been Opened,” and “Authentic.” Even a sophisticated consumer of luxury mattresses might be confused, and would certainly feel deceived, when receiving a TEMPUR-PEDIC® mattress in the mail that — contrary to the statement on BNB’s Ebay store — had been opened and repackaged. A trier of fact could therefore reasonably conclude that this factor also tips in favor of likelihood of confusion. In conclusion, BNB’s motion for summary judgment is denied as to Tempur-Pedic’s trademark infringement claim. There are differences — in large part attributable to the likely lack of warranty protection for mattresses sold by BNB —between the TEMPUR-PEDIC® mattresses sold by Tempur-Pedic and the TEMPUR-PEDIC® mattresses sold by BNB that a reasonable juror could find material. C. Trademark Dilution Because a reasonable juror could find actual dilution, and — it follows — likelihood of dilution, resulting from BNB’s unauthorized sales of TEMPUR-PEDIC® mattresses, BNB’s motion for summary judgment on Tempur-Pedic’s dilution claim is also denied. 1. Actual Dilution BNB sells TEMPUR-PEDIC® mattresses under the identical TEMPUR-PEDIC® mark used by Tempur-Pedic. This “identity of marks creates a presumption of actual dilution.” 2. Fame Drawing all inferences in favor of Tem-pur-Pedic, a reasonable juror could find that the TEMPUR-PEDIC® mark is “widely recognized by the general consuming public of the United States as a designation of source of the goods ... of the mark’s owner.” A consideration of the factors suggested by the TDRA could reasonably support a finding of famousness. The TEMPUR-PEDIC® trademark has been registered on the Principal Register of the United States Patent and Trademark Office since 1994. Since then, “the duration, extent, and geographic reach of advertising and publicity of the mark” has been considerable. Tempur-Pedic advertises through newspaper and magazine ads, mailings, television commercials, infomercials, and on the internet. Tem-pur-Pedic “actively” and “continuously” advertises and promotes its products “on a national level.” As a result, “[t]he brand is a highly regarded, distinctive, and widely known identifier of high quality, therapeutic mattresses, pillows, pads, cushions, slippers and other similar products.” The parties have not presented much evidence regarding “[t]he amount, volume, and geographic extent of sales of goods ... offered” under the TEMPUR-PEDIC® mark. Nonetheless, Tempur-Pedic alleges that “the goodwill associated with the TEMPUR-PEDIC® trademark has translated into tens of millions of dollars in sales over the years,” and that “[i]n the past three years alone, sales of goods bearing the TEMPUR-PEDIC® trademark have exceeded $2 billion.” Further, in addition to general consumer sales, “[ap-jproximately 15,000 Tempur-Pedic mattresses are in use nationally at Veteran’s Administration facilities, general hospitals, rehab/long-term care facilities, sleep centers and labs and other similar locations for patient use.” Good Housekeeping magazine has “recognized” Tempur-Pedic’s mattresses, and Tempur-Pedic has “received awards from Consumers Digest and the Arthritis Foundation.” Even though the parties have not yet offered consumer surveys relating to the “extent of actual recognition of the mark,” based on the evidence currently in the record, a reasonable juror could find that the mark “possesses] the requisite degree of recognition” necessary to maintain an action for trademark dilution BNB has certainly not met its burden to prove that no genuine factual dispute exists as to the issue of famousness. 3. Tarnishment A question of material fact remains as to whether BNB’s actions in selling mattresses bearing the TEMPUR-PEDIC® mark have created- an “association” between the mattresses that it sells bearing the TEM-PUR-PEDIC® mark and those sold by Tempur-Pedic so as to “harm[ ] the reputation” of the TEMPUR-PEDIC® trademark. As described earlier, BNB’s repackaging and shipping procedures, as well as the likely unavailability of the Tem-pur-Pedic Warranty to BNB consumers— either because of those procedures or because BNB is not an authorized Tempur-Pedic dealer — could support a finding of material differences between the mattresses sold by BNB and those sold by Tem-pur-Pedic and its authorized dealers. A trier of fact could reasonably find that BNB’s “non-conforming sales” of TEM-PUR-PEDIC® mattresses “dimmish the value of’ the TEMPUR-PEDIC® mark, thereby causing harm to Tempur-Pedic’s reputation resulting in dilution by famishment. First, a jury could reasonably find that Tempur-Pedic has “established legitimate, substantial” quality control procedures. Tempur-Pedic maintains an authorized network of retailers to sell its products in order to ensure that consumers are instructed in the proper use and care of TEMPUR-PEDIC® mattresses. Authorized Tempur-Pedic shippers are trained in the proper delivery and handling of TEMPUR-PEDIC® mattresses. Tempur-Pedic’s authorized shippers know that “the proper method for storing and delivering a Temper-Pedic mattress is to lay it flat in its original product packaging” in order to prevent “permanent ] damage” to the mattress. These measures are taken to ensure that the mattresses continue to perform throughout the duration of the twenty year Warranty. Whether these procedures are “nonpre-textual” raises a question of material fact. BNB argues that Tempur-Pedic’s quality control procedures are pretextual because the “Use & Care Instructions” included with TEMPUR-PEDIC® mattresses state that “‘[i]f your mattress is delivered folded during the very cold weather (below 50°F), do not try to force it to lay flat.’” According to BNB, this shows that Tempur-Pedic’s “own sales literature” takes a view contrary to that set forth in Tempur-Pedic’s Opposition Memorandum, namely that Tempur-Pedic does, in fact, allow its mattresses to be folded during the delivery process. However, Tempur-Pedic offers a believable explanation of this inconsistency by stating that its mattresses may be folded during delivery only “briefly, to fit a mattress around a corner or up a staircase,” and that the reason why it is so important that only authorized delivery personnel make these deliveries is to prevent customers from “trying to pry [the mattresses] flat” if they have been folded during the course of a cold weather delivery. Second, a jury could reasonably find that Tempur-Pedic “abides by” its quality control procedures. The only evidence— aside from the Use & Care Instructions— that BNB presents in support of its contention that Tempur-Pedic does not itself follow its purported quality control procedures is that “plaintiffs display, sell and deliver mattress covers formed of the same ‘Tempur’ material as their mattresses in a rolled and/or folded manner.” BNB asserts that this fact “belie[s]” Tempur-P