Summary
holding statements that product had clinically proven efficacy were literally false when no tests or documents existed to support claims
Summary of this case from MSP Corp. v. Westech Instruments, Inc.Opinion
00 CV 5304(SJ).
March 26, 2004
HALE AND DORR LLP, New York, NY, Nels T. Lippert, Dyan Finguerra-DuCharme, Attorneys for Plaintiff.
ADIEL BASSREY, ESQ., New York, NY, Attorney for Defendants.
MEMORANDUM AND ORDER
Pfizer, Inc. ("Plaintiff") brings this action against Y2K Shipping Trading, Inc. and Rajkumar Jaisinghani ("Jaisinghani") (collectively, "Defendants"), alleging infringement of its registered VIAGRA trademark and unfair competition in violation of the Lanham Trademark Act ("Lanham Act"), 15 U.S.C. § 1051-1127, and of trademark infringement, unfair competition, injury to business reputation, dilution and unfair trade practices under New York state law. Presently before the Court are Plaintiff's motions for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure and for sanctions against Defendants' attorney pursuant to Rules 11 and 56(g) of the Federal Rules of Civil Procedure. For the reasons stated herein, Plaintiff's motions are granted and a permanent injunction is issued against Defendants. A final determination with respect to Plaintiff's claims to monetary relief will be deferred until the Court receives written submissions from the parties with respect to damages, profits, attorney's fees, and costs.
BACKGROUND
The facts discussed herein are admitted unless otherwise stated.
Plaintiff, one of the world's leading pharmaceutical companies, develops and markets drugs which are sold under Pfizer brand names. (Affidavit of Janice Lipsky, September 15, 2000 ["Lipsky Aff. I"] ¶ 4.) It owns Trademark Registration Number 2,162,548 for its brand of sildenafil citrate known as VIAGRA. (Id. ¶ 8, Ex. 3.) Plaintiff has made substantial investments in advertising and promoting the VIAGRA product within the United States and abroad. (Id. ¶¶ 7, 9-10, Ex. 2.)
In 1998, Pfizer introduced VIAGRA, the first oral therapy approved by the Food and Drug Administration ("FDA") for erectile dysfunction. (Plaintiff's Statement of Uncontroverted Facts ["Pl.'s Statement"] ¶ 3.) On June 2, 1998, the Patent and Trademark Office registered the VIAGRA trademark on the Principal Register. (Id. ¶ 5.) Since it was first introduced in 1998, VIAGRA has received extensive media coverage. (Id. ¶¶ 6-7.) Pfizer has spent millions of dollars in advertising, promoting, and maintaining a website that offers information about VIAGRA. (Id. ¶¶ 8, 12-13.) VIAGRA has generated millions of dollars in sales revenue since its introduction. (Id. ¶ 10.)
In 1999, Defendant Jaisinghani created the TRIAGRA mark and formed the corporation Y2K Shipping and Trading to market the TRIAGRA product. (Id. ¶ 19.) Defendant Jaisinghani was influenced by the VIAGRA trademark when he created the mark TRIAGRA, and was well-aware of the notoriety associated with the VIAGRA mark. (Id. ¶¶ 18; 20.) Defendants began using the TRIAGRA mark in commerce in 2000, when they began to sell, promote, and advertise TRIAGRA as an effective treatment for erectile dysfunction in national newspapers, magazines, on the radio and on their website. (Id. ¶¶ 21-24.) Defendants' promotional materials stated that TRIAGRA was composed of "herbs for erectile dysfunction," and claimed "clinically proven efficacy" and a 100 percent success rate. (Id. ¶¶ 25-27.) Representations in the product literature and advertisements suggested that TRIAGRA was FDA approved. (Id. ¶ 30.) Defendants' total sales of TRIAGRA amounted to $57,485.11. (Id. ¶ 33.)
In an Affidavit, Defendant Jaisinghani stated that "[w]hen choosing a name for my herbal capsule, I was thinking about the group of users . . . of Viagra and the name came to me as `TRY HERBAL,' then I said, `TRY AGRARIAN' or `AGRICULTURAL: TRYAGRI' or `TRYAGRAN.' Then some of the group who were with me made it `TRIAGRA.' It was coincidental and in good faith." (Aff. Rajkumar Jaisinghani, Sept. 28, 2000 ["Jaisinghani Aff. I"] ¶ 4.) On July 18, 2002, Defendants filed a response to Plaintiff's motion for summary judgment claiming that "[s]ince the building of the Taj Mahal in Agra in 1641 . . . the saying in India was `come visit Agra' and see the biggest erections ever made by man for a woman. After the appearance of Viagra, Indian humor made the above saying come VIA-AGRA etc." ("Defs.' Answer to Pl.'s Mtn. for Summ. Judg. Defs.' Counter-Mtn. to Vacate the Prelim. Inj. and to Grant Defs. Dmgs. for Interruption of Defs.' Sales" ["Defs.' Opp. to Sum. Judg."] at 16.) On February 13, 2004, Defendants submitted a Motion to Dismiss, which this Court denied on February 27, 2004, claiming that they "coined the word TRIAGRA after the Indian city AGRA where the ayurvedic formula originated. The impact of the Triagra name on the strength of the Viagra was almost zero." (Def.'s Mtn. to Dismiss at 1.)
Local Civil Rule 56.1 provides, in relevant part:
(a) Upon any motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, there shall be annexed to the notice of motion a separate, short and concise statement of the material facts as to which the moving party contends there is no genuine issue to be tried. Failure to submit such a statement may constitute grounds for denial of the motion.
(b) The papers opposing a motion for summary judgment shall include a separate, short and concise statement of the material facts as to which it is contended that there exists a genuine issue to be tried.
(c) All material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by the statement required to be served by the opposing party.
(d) Each statement of material fact by a movant or opponent must be followed by citation to evidence which would be admissible, set forth as required by Federal Rule of Civil Procedure 56(e).
While Plaintiff has served a properly supported statement of material facts as required by Rule 56.1(a), Defendants did not submit a statement of disputed material facts pursuant to Local Rule 56.1(b) with their Opposition to Plaintiff's Summary Judgment Motion.
A district court has broad discretion to determine whether to overlook a party's failure to comply with local court rules, and may opt to "conduct an assiduous review of the record" where one of the parties has failed to file a Rule 56.1 Statement. Holtz v. Rockefeller Co., Inc., 258 F.3d 62, 73 (2d Cir. 2001). This Court chooses not to exercise this discretion. Plaintiff's Rule 56.1 Statement is amply supported by evidence in the record that would be admissible under Fed.R.Civ.Proc. Rule 56(e), as required by Local Rule 56.1(d). Thus, Plaintiff's statement of material facts has not been properly controverted and is deemed admitted. Local Rule 56.1(c); see Gubitosi v. Kapica, 154 F.3d 30, 31 n. 1 (2d Cir. 1998); Dusanenko v. Maloney, 726 F.2d 82, 84 (2d Cir. 1984) (citing former Local Rule 3(g)). Defendants' dubious and contradictory assertions as to the origins of the "TRIAGRA" mark, set forth in their Opposition to Plaintiff's Summary Judgment Motion and their Motion to Dismiss, are hereby disregarded.
On September 1, 2000, Plaintiff filed this lawsuit against Defendants, alleging seven causes of action: trademark infringement under § 32 of the Lanham Act, 15 U.S.C. § 1114; unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); violations of §§ 349 and 360-1 of the New York General Business Law; and unfair competition and trademark infringement at common law. On September 5, 2000, the Court issued a Temporary Retraining Order enjoining Defendants from selling and promoting any product under the TRIAGRA name. On June 13, 2001, the Court issued a Preliminary Injunction against Defendants. On July 18, 2002, Plaintiff filed a motion for summary judgment on all of its claims, and on September 10, 2002, Plaintiff filed a motion for sanctions against Defendants.
Subject matter jurisdiction over the federal claims is proper under 15 U.S.C. § 1121(a) and 1125(a), and 28 U.S.C. § 1331 and 1338(a). The state causes of action are properly before the court under 28 U.S.C. § 1338(b) and 1367(a), and the doctrine of pendent jurisdiction. Venue is proper pursuant to 28 U.S.C. § 1391(b).
Plaintiff's original complaint listed a claim for federal dilution under § 43 of the Lanham Act, 15 U.S.C. § 1125. Plaintiff withdrew that claim from its summary judgment motion in light of Moseley v. V. Secret Catalogue, 537 U.S. 418 (2003). (See Pl.'s Feb. 9, 2004 Letter.)
DISCUSSION
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and answers on file, together with affidavits, if any, show that there is no issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Court need only determine if there is a genuine issue to be tried, rather than resolve disputed issues of fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
The party seeking summary judgment bears the burden of showing that no genuine factual dispute exists. See Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d Cir. 1995). The court must view all facts, inferences and ambiguities in the light most favorable to the non-movant. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "If reasonable minds could differ as to the import of the evidence," summary judgment is inappropriate. Anderson, 477 U.S. at 250.
Once the moving party meets its burden, the non-movant must respond with "significantly probative" supporting evidence demonstrating a material dispute of fact. Id. at 249. Summary judgment should be granted where the non-movant's evidence is merely colorable, conclusory, speculative, or not significantly probative. See Parker v. Chrysler Corp., 929 F. Supp. 162, 165 (S.D.N.Y. 1996).
I. Federal Trademark Infringement and Unfair Competition
The Lanham Act was enacted to provide "national protection of trademarks in order to secure to the owner of the mark the good will of his business and to protect the ability of consumers to distinguish among competing producers." Park 'N Fly, Inc. v. Dollar Park and Fly, 469 U.S. 189, 198 (1985).
Counts One and Two of the Complaint allege that Defendants' use of the TRIAGRA mark constitutes infringement under § 32 of the Lanham Act, 15 U.S.C. § 1114, and unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). To prevail on its trademark infringement and unfair competition claims, Plaintiff must prove (1) that it owns a protectable trademark, and (2) there is a likelihood of consumer confusion. Time, Inc. v. Petersen Publ'g Co., L.L.C., 173 F.3d 113, 117 (2d Cir. 1999) (citations omitted). The undisputed evidence shows that Plaintiff owns a protectable trademark as a matter of law. Plaintiff's ownership of a registered mark is prima facie evidence of the mark's validity, and of Plaintiff's exclusive right to use the mark in commerce in connection with the goods identified in the certificate of registration. 15 U.S.C. § 1057(b) (1997), 1115(a)(1998).
Plaintiff also satisfies the likelihood of consumer confusion prong for its trademark infringement and consumer confusion claims. To determine whether a likelihood of confusion exists, a court must determine whether an "ordinarily prudent purchaser" in the marketplace is likely to be confused as to the origin or sponsorship of the goods. Lois Sportswear, USA, Inc. v. Levi Strauss Co., 799 F.2d 867, 871 (2d Cir. 1986). The inquiry into likelihood of confusion is guided by the following factors: (1) the strength of the plaintiff's mark; (2) the degree of similarity between the two marks; (3) the proximity of the products; (4) the likelihood that the owner will bridge the gap; (5) evidence of actual confusion; (6) defendant's good faith in adopting the mark; (7) the quality of defendant's product; and (8) the sophistication of the consumers. See Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961). The first three factors are considered the most important; however, no one factor is determinative and the list is not exhaustive.See Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 256-58 (2d Cir. 1987). "Summary judgment is appropriate where the undisputed evidence would lead only to one conclusion under the Polaroid test." The Sports Auth., Inc. v. Prime Hospitality Corp., 89 F.3d 955, 960 (2d Cir. 1996). Strength of Plaintiff's Mark
"The strength of the mark refers to its distinctiveness, or its tendency to identify the goods as emanating from a particular source, even when the source is unknown to the consumer."Tri-Star Pictures, Inc. v. Unger, 14 F. Supp.2d 339, 354 (S.D.N.Y. 1998). Four categories of marks are used to gauge the extent to which a mark deserves protection. A generic mark, which includes "the common distinctive name of an article or substance," 15 U.S.C. § 1064(c), is never entitled to trademark protection. A descriptive mark, which describes a product's qualities, ingredients or characteristics, is entitled to protection only upon proof that it has acquired "secondary meaning" — and identity that consumers associate with a single source of goods or services. Gruner + Jahr, 991 F.2d 1072, 1076 (2d Cir. 1993). Suggestive marks "suggest . . . the product, though it may take imagination to grasp the nature of the product," and are eligible for protection without proof of secondary meaning. Id. Finally, arbitrary or fanciful marks "will almost always be seen as strong marks," Sports Auth., 89 F.3d at 961, and "bear little or no relationship to the kind of product represented." Gruner, 991 F.2d at 1075. They are protectable without proof of secondary meaning and "with ease of establishing infringement." W.W.W. Pharm. Co. v. Gillette Co., 984 F.2d 567, 572 (2d Cir. 1993) (quotation omitted).
"An arbitrary term is one that has a dictionary meaning — though not describing the product — like IVORY for soap. A fanciful mark is a name that is made-up to identify the trademark owner's product like EXXON for oil products and KODAK for photography products." Id. at 1075-76 (citing J. Thomas McCarthy, Trademarks and Unfair Competition, §§ 11:2, 11:3, 11:4A (2d ed. 1984)).
This Court may consider the incontestability of Plaintiff's trademark as an indicator of its strength. See Gruner, 991 F.2d at 1078. Plaintiff has widely used the VIAGRA mark in commerce to sell its drug, and the mark has received extensive national and international media coverage, even prior to receiving FDA approval in 1998. "VIAGRA" is not a generic name for a drug for erectile dysfunction, nor does it describe or suggest such a drug. Although Defendants contest that the term is fanciful, their assertions are unsupported, and Defendants have not submitted a "Rule 56.1 Statement" to controvert Plaintiff's assertion that the term VIAGRA is fanciful. Accordingly, the uncontroverted evidence establishes that the VIAGRA mark is strong and is therefore entitled to the greatest degree of protection under the Lanham Act.
Similarity
To determine the similarity between two marks, courts analyze the similarity in pronunciation and appearance of each and the manner in which they are presented to consumers. See Am. Auto. Ass'n v. AAA Auto. Club of Queens, Inc., No. 97 CV 1180 SJ, 1999 WL 97918, at *5 (E.D.N.Y. Feb. 8, 1999); Consol. Cigar Corp. v. Monte Cristi de Tabacos, 58 F. Supp.2d 188, 198 (S.D.N.Y. 1999). "The question is not merely how many points of similarity the marks share, but whether they create the same general overall impression." Id.; Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1046 (2d Cir. 1992). Even if the marks contain a slight distinction — a difference between one or two letters, for example — consumers will likely believe that the products emanate from the same source or are somehow affiliated. Consol. Cigar, 58 F. Supp.2d at 198.
The two marks at issue in this case, VIAGRA and TRIAGRA, are quite similar. The two terms differ only in the substitution of "TR" for the "V" in VIAGRA. Both marks feature the sounds "I" and "AGRA." Visually, the dominant features in both marks are the "I-A-G-R-A" letters. Consumers have come to identify the name VIAGRA with Plaintiff's brand of sildenafil citrate. The similarity in sound and spelling of "TRIAGRA" is likely to lead consumers to believe that Defendants' product is affiliated with that of Plaintiff. See Lois Sportswear, USA, Inc. v. Levi Strauss Co., 799 F.2d 867, 873-74 (2d Cir. 1986); Consol. Cigar, 58 F. Supp.2d at 198.
Proximity of the Products and Bridging the Gap
Under the proximity factor, the Court must consider whether the products compete with each other. "`To the extent goods (or trade names) serve the same purpose, fall within the same general class, or are used together, the use of similar designations is more likely to cause confusion.' Thus the court may consider whether the products differ in content, geographic distribution, market position, and audience appeal." W.W.W. Pharm., 984 F.2d at 573 (citations omitted); Am. Auto. Ass'n, 1999 WL 97918, at *6. However, Plaintiff need not prove that the parties' marks are in direct competition in order to establish likelihood of confusion. See Mobil Oil, 812 F.2d at 257; Spring Mills, Inc. v. Ultracashmere House, Ltd., 689 F.2d 1127, 1134 (2d Cir. 1982) (finding that a court must determine likelihood of confusion "as to the source of the products, rather than as to the products themselves") (citation omitted). In addition, "competitive proximity must be measured with reference to the first two Polaroid factors." Mobil Oil, 812 F.2d at 258.
Defendants used the phrase "erectile dysfunction" in their advertisements and promotional materials in order to compete directly with the strong mark VIAGRA. Here, as in Mobil Oil, Plaintiff's "ubiquitous presence throughout the . . . industry . . . increases the likelihood that a consumer will confuse" the sources of the products offered. The identical therapeutic claim of Defendants' and Plaintiff's products demonstrates that the products are closely related. Furthermore, TRIAGRA and VIAGRA also overlap in geographic distribution area, as both products are advertised, distributed, and used in the United States. (Defs.' Opp. to Sum. Judg. at 3-5.) Defendants thus fail to offer adequate evidence to support a finding that the parties' services are not in close proximity.
The Court must also consider "the likelihood . . . or the average customer's perception of the likelihood" that Plaintiff will `bridge the gap' by entering the Defendant's market."Sports Auth., 89 F.3d at 963; Tri-Star, 14 F. Supp.2d at 356. Defendants argue that the markets are different because Defendants offer an herbal formulation, whereas Plaintiff offers a chemical formulation. As discussed above, however, the evidence demonstrates that Plaintiff and Defendants compete in the same market and target the same consumers, since both parties offer products that purportedly treat erectile dysfunction in men. Where the products are competitive, "there is no gap to bridge and the likelihood of confusion is greater." Id.; see also Am. Auto. Ass'n, 1999 WL 97918, at *6. In the absence of any other evidence establishing a difference in the parties' intended markets, the Court finds that both the third and fourth factors weigh in Plaintiff's favor.
Junior User's Bad Faith
The Court also considers "whether the defendant adopted the mark with the intention of capitalizing on plaintiff's reputation and goodwill and any confusion between his and the senior user's product." Sports Auth., 89 F.3d at 964. Good faith may be found where the defendant "has selected a mark which reflects the product's characteristics, has requested a trademark search or has relied on the advice of counsel." W.W.W. Pharm., 984 F.2d at 575. Bad faith, on the other hand, is established where there is evidence of actual knowledge of the senior user's mark and the marks are so similar "that it seems clear that deliberate copying has occurred." Paddington Corp. v. Attiki Imps. Distrib., Inc., 996 F.2d 577, 586 (2d Cir. 1993); Am. Auto. Ass'n, 1999 WL 97918, at *7. Once the plaintiff shows awareness and similarity, the burden shifts to the defendant to show that adoption of the junior mark was done in good faith. Id.
Not only is Defendant's mark confusingly similar to that of Plaintiff, but its chosen name mirrors that of Plaintiff's product in both spelling and sound. Defendant Jaisinghani admitted that he was aware of the notoriety associated with VIAGRA before he created TRIAGRA. (Jaisinghani Aff. ¶ 4.) Indeed, the idea that Jaisinghani would have chosen the name "TRIAGRA" for a product purported to treat erectile dysfunction if VIAGRA did not exist is implausible.
Defendants fail to rebut the presumption of bad faith through a showing of good faith. The TRIAGRA mark does not reflect the product's characteristics, and Defendants produced no evidence of a trademark search report or an opinion of counsel. Thus, the uncontroverted evidence supports the finding that Defendant acted with the intent to capitalize on the reputation of Plaintiff's mark.
Actual Confusion
Evidence of actual confusion, while not necessary to demonstrate a likelihood of confusion for the purpose of obtaining injunctive relief, is a prerequisite to the recovery of damages. See Am. Auto. Ass'n, 1999 WL 97918, at *7 (citingArrow Fastener Co., 59 F.3d 384, 397 (2d Cir. 1995)). Because "actual consumer confusion is not easily established through direct evidence or even through use of consumer surveys or market research," the court may draw a "powerful inference" of actual confusion from the fact that Defendants intentionally engaged in a deceptive commercial practice. Id.; see also Resource Dev., Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134, 140 (2d Cir. 1991); Getty Petroleum Corp. v. Island Transp. Corp., 878 F.2d 650, 656 (2d Cir. 1989); PPX Enters., Inc. v. Audiofidelity Enters., Inc., 818 F.2d 266, 272-73 (2d Cir. 1987). A deceptive commercial practice can be inferred from a competitor's expenditure of "substantial funds in an effort to deceive customers and influence their purchasing decisions."Resource Dev., Inc., 926 F.2d at 140. Upon a proper showing that a defendant has engaged in deliberate conduct of an "egregious nature," the burden shifts to that defendant to demonstrate the absence of consumer confusion. Id.; Johnson Johnson Merck Consumer Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 298 (2d Cir. 1992).
This Court finds that Plaintiff has adequately demonstrated that Defendants have engaged in deliberate conduct of an egregious nature, and that Defendants have failed to satisfy their burden of demonstrating an absence of consumer confusion. Although Defendants' advertisements and promotional materials presented TRIAGRA as an herbal remedy for erectile dysfunction, they failed to sufficiently contrast their product with VIAGRA. In fact, Plaintiff's evidence demonstrates that Defendants set out to intentionally deceive purchasers by representing, through the purportedly similar nature of TRIAGRA and VIAGRA, that their product was affiliated with Plaintiff and its VIAGRA product. Furthermore, Defendants submitted no evidence that they conducted well-founded tests and scientific analyses of their product, or that they conducted a comprehensive consumer survey that might have satisfied their burden of demonstrating lack of actual consumer confusion. See L F Prods., A Div. of Sterling Winthrop, Inc. v. Proctor Gamble Co., 845 F. Supp. 984, 1003 (S.D.N.Y. 1994).
Defendants misrepresent the affidavit submitted by Arthur A. Silverstein ("Silverstein"), Senior Corporate Trademark Counsel for Plaintiff, in which he states that "Pfizer has no record of any customer complaints relating to confusion between the VIAGRA® mark and TRIAGRA mark." (Defs.' Opp. to Sum. Judg. at 2.) Silverstein's affidavit is not an admission that confusion is unlikely; rather, it simply states that Plaintiff received no consumer complaints of confusion between the VIAGRA and TRIAGRA marks. As Plaintiff highlights, this statement is hardly surprising, since Defendants were enjoined by this Court from marketing TRIAGRA within months of its introduction. (Pl.'s Reply Mem. of L. ["Pl.'s Reply"] at 3.) Additionally, the affidavits of Min Chien Chang, Mike Carmi, and Edward J. Silvestry, Jr. — even if deemed admissible or accorded significant evidentiary weight — are insufficient to overcome Defendants' burden to demonstrate the absence of consumer confusion. (See Defs.' Opp. to Sum. Judg. at 3-5.) This Court finds Chang's affidavit to be inadmissible under Kuhmo Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999); Carni's and Silvestri's affidavits are accorded little evidentiary weight, since both were familiar with VIAGRA before taking TRIAGRA.
Quality of Defendants' Product
The Court must consider whether the senior user's reputation could be jeopardized or tarnished by virtue of the fact that the junior user's product is of inferior quality. See Arrow, 59 F.3d at 398; Am. Auto. Ass'n, 1999 WL 97918, at *8; Trustees of Columbia Univ. v. Columbia/HCA Healthcare Corp., 964 F. Supp. 733, 748 (S.D.N.Y. 1997). Even if the junior user's product is of high quality, a senior user may sue to protect its reputation.Mobil Oil, 818 F.2d at 259-60.
In this case, the unknown quality and effectiveness of Defendants' product could jeopardize VIAGRA's reputation. Defendants promote TRIAGRA as having "clinically proven efficacy," and they advertise their product as FDA-approved. (Jaisinghani Dep. I, Ex. 5.) However, Defendants submitted no evidence to support these claims. The evidence supports this Court's finding at the preliminary injunction stage: "confusion will likely result in the denial of effective medical treatment to many people suffering from erectile dysfunction and cause irreparable harm to Pfizer's reputation." (Prelim. Inj. Tr. at 4:3-6.) Because the quality and efficacy of TRIAGRA are unknown, Plaintiff's reputation as a well-known pharmaceutical company and the VIAGRA mark are jeopardized by consumers' potential association of VIAGRA with TRIAGRA.
Sophistication of Customers
In determining whether there is a likelihood of confusion, courts consider "the general impression of the ordinary purchaser, buying under the normally prevalent conditions of the market and giving the attention such purchasers usually give in buying that class of goods." W.W.W. Pharm. Co., 984 F.2d at 575. In this case, the purchasers of both TRIAGRA and VIAGRA are presumably men suffering from erectile dysfunction. However, there is a significant difference between the two products: whereas VIAGRA is only available by a doctor's prescription, TRIAGRA requires no prescription and is sold over the internet directly by Defendants.
The Court estimates that physicians have sufficient expertise to differentiate between the two products. Therefore, because an individual can acquire VIAGRA only through a doctor's prescription, the "ordinary purchaser" standard does not apply to an analysis of VIAGRA purchasers' sophistication. See Am. Auto. Ass'n, 1999 WL 97918, at *8. On the other hand, the "ordinary purchaser" standard would apply to an analysis of the sophistication of TRIAGRA purchasers, since they may lack expertise in the medical field and are likely to rely on a mark indicating a reliable source, instead of conducting background research. Thus, the Court finds that this factor weighs partially in favor of Plaintiff.
Combining the Factors
Considering all of the Polaroid factors, as applied to the uncontroverted facts, the Court concludes that a reasonable trier of fact would find that there is a likelihood of confusion. Seven of the eight criteria weigh strongly in Plaintiff's favor, and this overwhelmingly supports Plaintiff's motion for summary judgment on its federal trademark infringement and unfair competition claims.
II. New York Common Law Trademark Infringement and Unfair Competition
The same analysis is used for common law trademark infringement and unfair competition cases as is used under federal law. See Safeway Stores, Inc. v. Safeway Props., Inc., 307 F.2d 495, 498 n. 1 (2d Cir. 1962); McDonald's Corp. v. McBagels, Inc., 649 F. Supp. 1268, 1279-80 (S.D.N.Y. 1986). Since Plaintiff has established infringement and unfair competition claims under the Lanham Act, it has necessarily also done so under common law.See Baker v. Parris, 777 F. Supp. 299, 304 (S.D.N.Y. 1991);Jeffrey Milstein, Inc. v. Greger, Lawlor, Roth, Inc., 58 F.3d 27, 34 (2d Cir. 1995).
III. False Advertising
Section 43(a) of the Lanham Act prohibits false or misleading representation of fact in commercial advertising that misrepresents "the nature, characteristics, qualities, or geographic origin of his or her or another person's goods." 15 U.S.C. § 1125(a)(1)(B). To establish a false advertising claim under § 43(a), a plaintiff must show that "an advertisement is either literally false or that the advertisement, though literally true, is likely to mislead and confuse customers."McNeil-P.C.C., Inc. v. Bristol-Myers Squibb Co., 938 F.2d 1544, 1549 (2d Cir. 1991); Nat'l Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir. 1997). In addition to proving falsity, "the plaintiff must also show that the defendants misrepresented an `inherent quality or characteristic' of the product." Id.;S.C. Johnson Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir. 2001) (internal quotations and citations omitted).
To prove that an advertising claim is literally false, a plaintiff must show not only that the tests supporting the challenged claim are unpersuasive, but also that such tests are "not sufficiently reliable to permit one to conclude with reasonable certainty that they established" the claim made.McNeil-P.C.C., Inc. v. Bristol-Myers Squibb, Co., 938 F.2d 1544, 1549 (2d Cir. 1991); Procter Gamble Co. v. Chesebrough-Pond's Inc., 747 F.2d 114, 119 (2d Cir. 1984). Where the plaintiff shows the advertising claim to be literally false, "the court may enjoin the use of the claim `without reference to the advertisement's impact on the buying public.'" Alpo Petfoods, Inc. v. Ralston Purina Co., 720 F. Supp. 194, 213 (D.D.C. 1989), aff'd in part, rev'd in part on other grounds, 286 U.S.App.D.C. 192, 913 F.2d 958 (D.C. Cir. 1990) (citations omitted). Additionally, the plaintiff must demonstrate that it will suffer irreparable harm absent the injunction. S.C. Johnson, 241 F.3d at 238.
In this case, Plaintiff has demonstrated that Defendants' commercial advertisements and promotional materials contain literally false statements concerning an inherent quality or characteristic of their TRIAGRA product. Defendants admit that they have no evidence to support their representations in product literature and advertisements suggesting that TRIAGRA is FDA-approved. Additionally, Defendants' advertising and promotional materials contain other literally false misrepresentations. For instance, their product literature and website claim that TRIAGRA has passed clinical trials and has "clinically proven efficacy." (See Jaisinghani Dep. I, Ex. 5.) Yet the record is void of any evidence substantiating this claim. In fact, Defendants responded to Plaintiff's request for all documents "concerning clinical trials involving Defendants' Triagra product or its efficacy in overcoming erectile difficulties" by stating that they "are not in possession of any responsive documents and are of the opinion that no such documents exist." (Finguerra Aff., Ex. I, J) Since Defendants admit that no tests or documents exist to support their claims, their statements are literally false as a matter of law. As such, Plaintiff is entitled to summary judgment on its false advertising claim.
During Jaisinghani's deposition, Defendants contended that two unauthenticated "certificates" from a "licensing authority" in India supported their claims. (Jaisinghani Dep. II, Exs. 30, 31.) Neither document, however, substantiates Defendants' claim that "in a study conducted on 250 patients, TRIAGRA's success rate was 100 percent." (Jaisinghani Dep. I, Exs. 8, 14.) Neither document discusses any clinical studies, and Defendants acknowledge that Exhibits 30 and 31 are the only documents in their possession concerning clinical trials. (Jaisinghani Dep. II at 33:21 to 34:11.)
In opposition to Plaintiff's motion for summary judgment, Defendants conceded "that they exaggerated [in TRIAGRA advertisements], but this was done to built [sic] up confidence for therapeutic purposes . . ." (Defs.' Opp. to Sum. Judg. at 16.) "Exaggerating" claims in commercial advertising, especially concerning clinical trials and product effectiveness, is prohibited by the Lanham Act. Defendants' statements do not constitute a valid defense of puffery, because they are not expressions of opinion, but rather specific statements of fact upon which a consumer would rely. See, e.g., Ferrer v. Maychick, 69 F. Supp.2d 495, 502 (S.D.N.Y. 1999); Radio Today, Inc. v. Westwood One, Inc., 684 F. Supp. 68, 74 (S.D.N.Y. 1988).
IV. Dilution under N.Y. Gen. Bus. Laws §§ 349 360-1
Defendants contend that in light of Moseley v. V. Secret Catalogue, 537 U.S. 418 (2003), Plaintiff's motion for summary judgment on its federal and state law claims should be denied. (Defs.' Response to the Supp. Briefing by Pfizer Dated February 9, 2004 Following the U.S. Supreme Court's Moseley Decision of March 2003 ["Defs.' Response to Feb. 9 Letter"] at A); (Defs'. Mtn. to Dismiss at B); (Reply to Plaintiff's Response to "Motion to Dismiss.") The Supreme Court held in Moseley that a trademark holder must show actual dilution to prevail on a dilution claim under the Federal Trademark Dilution Act, 35 U.S.C. § 43(c).
As Plaintiffs indicate, summary judgment remains appropriate on Plaintiff's state dilution claim under N.Y. Gen. Bus. Law § 360-1 (McKinney 1996 Supp. 2004). (Pl.'s Feb. 9, 2004 Letter at 1.) Since the Moseley decision in March 2003, the majority of New York federal district courts reviewing N.Y. Gen. Bus. Law § 360-1 have ruled that Moseley has not changed the prevailing state test for dilution, which focuses on the "likelihood" of dilution rather than "actual" dilution. See, e.g., Katz v. Modiri, 283 F. Supp.2d 883, 900 (S.D.N.Y. 2003); Mastercard Int'l Inc. v. Nader 2000 Primary Comm., Inc., et. al, 00 Civ. 6068 (GBD), 2004 U.S. Dist. LEXIS 3644 (S.D.N.Y., March 8, 2004); Cartier, Inc. v. Four Star Jewelry Creations, Inc., 01 Civ. 11295, 2003 WL 21056809, at *13-14 (S.D.N.Y. May 8, 2003); Brennan's Inc. v. Brennan's Rest., LLC, 02 Civ. 9858 (RLC), 2003 WL 1338681, at *6-7 (S.D.N.Y. March 18, 2003). This Court agrees with this analysis, and finds that, since Plaintiff has withdrawn its federal dilution claim from its motion for summary judgment,Moseley is irrelevant with respect to state claims at this juncture.
Plaintiff also brings a claim under New York's anti-dilution statute, Section 360-1 of the General Business Law, which provides that:
Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark or trade name shall be a ground for injunctive relief in cases of infringement of a mark registered or not registered or in cases of unfair competition, notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.
N.Y.G.B.L. § 360-1 (McKinney 2003).
To establish a dilution claim under New York law, Plaintiff must establish: (1) ownership of a distinctive mark, and (2) likelihood of dilution. See Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497, 506 (2d Cir. 1996); Katz, 283 F. Supp.2d at 900; Mastercard, 2004 U.S. Dist. LEXIS 3644. Likelihood of confusion is not necessary to prevail on a state law dilution claim. Fed. Express Corp. v. Fed. Espresso, Inc., 201 F.3d 168, 175 (2d Cir. 2000). This Court has already determined that the VIAGRA mark is distinctive. The Court must now decide whether there is a likelihood of dilution.
"Dilution under New York law can involve either blurring or tarnishment." N.Y. Stock Exch. v. N.Y., N.Y. Hotel, LLC, 293 F.3d 550, 557-58 (2d Cir. 2002) (citations omitted). Here, Plaintiff asserts the likelihood of dilution by blurring. (Pl.'s Feb. 9, 2004 Letter at 2.) Blurring occurs "where the defendant uses or modifies the plaintiff's trademark to identify the defendant's goods and services, raising the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff's product." Deere Co. v. MTD Prod., Inc., 41 F.3d 39, 43 (2d Cir. 1994) (emphasis omitted). The likelihood of blurring is generally assessed by a six-factor test: (1) similarity of the marks, (2) similarity of the products covered, (3) sophistication of the consumers, (4) predatory intent, (5) renown of the senior mark, and (6) renown of the junior mark. Deere, 41 F.3d at 43-44, n. 8; accord Sports Auth., 89 F.3d at 966.
The Court has already discussed these six factors in relation to the federal trademark infringement and unfair competition claims. Based on the foregoing analysis, the Court finds that Defendants' TRIAGRA mark is likely to blur Plaintiff's famous VIAGRA mark, and that Plaintiff is therefore entitled to summary judgment on its state dilution claim.
V. Defendants' Affirmative Defenses
Defendants also raise the affirmative defenses of estoppel, the doctrine of laches and free speech under the First Amendment. (Defs.' Opp. to Sum. Judg. at 6.) However, Defendants make no arguments in support of these claims. Thus, the Court will not consider these claims.
VI. Entitlement to Equitable and Monetary Relief
A. Permanent Injunction
This Court denies Defendants' motion to vacate the preliminary injunction and denies Defendants' request for damages to compensate them for interruption of their sales for the same reasons that it grants summary judgment in Plaintiff's favor. (Defs.' Opp. to Sum. Judg. at 24.) Moreover, this Court finds that the uncontroverted material facts support the entry of a permanent injunction pursuant to 15 U.S.C. § 1116(a). Plaintiff will be irreparably harmed, and the reputation associated with its VIAGRA product will be irreparably damaged, if Defendants are allowed to market, promote, and sell a product under the TRIAGRA designation.
B. Relief Under the Lanham Act
1. Damages
Under Section 35(a) of the Lanham Act, a Plaintiff may be awarded damages to compensate for: "(1) lost sales or revenue; (2) sales at lower prices; (3) harm to market reputation; or (4) expenditures to prevent, correct, or mitigate consumer confusion." Restatement (Third) of Unfair Competition § 36(2) (2004); Int'l Star Class Yacht Racing Ass'n (ISCYRA) v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 753 (2d Cir. 1996). However, recovery of damages requires proof that some customers were actually confused or deceived, or "that the defendant's actions were intentionally deceptive thus giving rise to a rebuttable presumption of consumer confusion." Boosey Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 46 U.S.P.Q.2d 1577 (2d Cir. 1998); Resource Developers, Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134 (2d Cir. 1991); W.W.W., 984 F.2d at 567, n. 6; ISCYRA, 80 F.3d 749.
The Court finds that Defendants' conduct fails to give rise to a presumption of actual confusion or deception, and that Defendants' actions were not sufficiently intentionally deceptive as to warrant compensatory damages. Furthermore, Plaintiff has not proven actual confusion or deception through circumstantial evidence, and has failed to demonstrate that Defendants' actions are so intentionally deceptive as to give rise to a rebuttable presumption of consumer confusion.
Cf. Getty Petroleum Corp. v. Island Trans. Corp., 878 F.2d 650 (2d Cir. 1989), in which the Second Circuit found that where defendant sold non-GETTY gasoline from pumps marked "GETTY," the product could not be meaningfully inspected by the consumer and the jury could use its common sense to determine that consumers "were certainly deceived by and unaware of the substitution."
2. Profits
Section 35(a) of the Lanham Act also provides for a plaintiff's recovery of defendant's profits. "While damages directly measure the plaintiff's loss, defendant's profits measure the defendant's gain." George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1540 (2d Cir.) (emphasis in original), cert. denied, 506 U.S. 991 (1992). Profits may be awarded in cases of trademark infringement or unfair competition: (1) as a measure of plaintiff's damages; (2) if the defendant has been unjustly enriched; or (3) if necessary to deter a willful infringer from doing so again. Id. at 1537. A finding of defendant's "willful deceptiveness is a prerequisite for awarding profits" under any of these three grounds. George Basch Co., 968 F.2d at 1539-40;see also ISCYRA, 80 F.3d at 753. The Court holds that an accounting of profits is warranted, based on the strong and uncontroverted evidence of Defendant's willful deception and the likelihood that Defendant benefitted from its association with the VIAGRA mark. See Am. Auto. Ass'n, 1999 WL 97918, at *10.
Plaintiff mistakenly argues that it is entitled to $57,485.11, which represents the total amount of sales — not profits — for the TRIAGRA product. (Pl.'s Mtn. for Sum. Judg. at 22.; see Finguerra Aff. Ex. K.) Defendant, in a written submission, must now document all profits earned. 15 U.S.C. § 1117(a); Monsanto Co. v. Haskel Trading, Inc., 13 F. Supp.2d 349, 362 (E.D.N.Y. 1998). The Court refers this issue to the Magistrate for a calculation of Plaintiff's profits award.
C. Relief Under Common Law
1. Punitive Damages
Under New York law, a plaintiff may obtain punitive damages where the defendant's conduct constitutes "`gross, wanton, or willful fraud or other morally culpable conduct' to an extreme degree." Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363, 371 (2d Cir. 1988) (quoting Borkowski v. Borkowski, 355 N.E.2d 287, 287 (N.Y. 1976)). Contributory infringement that is "done knowingly, intentionally and with a callous disregard for the rights of [a plaintiff] in its trademark" satisfies the standard for the requisite degree of moral culpability. Getty, 878 F.2d at 657.
Some New York cases, however, have stated that in certain circumstances there must be fraud aimed at the public before punitive damages may be awarded. See, e.g., James v. Powell, 225 N.E.2d 741, 747 (N.Y. 1967); Walker v. Sheldon, 179 N.E.2d 497, 488-99 (N.Y. 1961). But see Borkowski, 355 N.E.2d at 287 (finding that fraud on public not always essential, so long as conduct at issue was sufficiently "gross, wanton, or willful . . . or . . . morally culpable"). Thus, Defendants may have committed a wrongful act but their conduct may not have been so "gross and wanton" as to bring it into the class of malfeasances for which punitive damages may be afforded. James, 225 N.E.2d at 747.
The Court does not have sufficient information to make a determination with respect to Plaintiff's entitlement to punitive damages at this time. This issue is referred to the Magistrate (1) to determine whether Plaintiff is entitled to punitive damages, and (2) if so, to calculate the appropriate damage award.
2. Attorney's Fees and Costs
Plaintiff contends that attorney's fees and costs are also appropriate under New York law. (Pl.'s Mtn. for Sum. Judg. at 23.) If attorney's fees are awarded in connection with a New York punitive damage recovery, Plaintiff should receive fees reasonable for the time spent proving only its state law punitive damages claim. See Getty Petroleum Corp. v. Island Transp. Corp., 862 F.2d 10, 17 (2d Cir. 1988). "In determining the amount of time reasonably spent by [Plaintiff] to prove state law punitive damages, the Court may include that portion of time spent proving [Plaintiff's] federal law punitive damages claim that would have had to be spent proving its state law punitive damages claim, i.e., the time saved in proving the state law claim because of the proof on the federal law claim." Id.
The Court does not have sufficient information to make a determination with respect to Plaintiff's entitlement to attorney's fees and costs at this time. This issue is referred to the Magistrate (1) to determine whether Plaintiff is entitled to attorney's fees and costs under New York law, and (2) if so, to calculate the appropriate fees and costs.
VIII. Plaintiff's Motion for Rule 11(c) sanctions
In a separate motion, Plaintiff contends that sanctions against Defendants are appropriate because Defendants' counsel submitted on two separate occasions the false affidavit of Ana-Maria Santi, M.D. ("Santi"), without making the required factual determination that would have disclosed that Santi was not a licensed physician. (Pl.'s Mem. of L. in Supp. of Pfizer's Mtn. for Sanctions ["Pl.'s Mtn. for Sanctions"], Sept. 10, 2002.) The Santi Affidavit, dated October 23, 2000, purports to describe certain observations of an operating room attending physician over a two year period. (Defs.' Opp. to Sum. Judg. at 15.) However, Santi's medical license was suspended for a portion of the two year period and revoked for the remainder of that period. Thus, Santi could not have been an attending physician in an operating room. (See Pl.'s Mtn. for Sanctions.)
Defendants responded to Plaintiff's motion by claiming that "[n]either the Defendants nor their attorneys knew about Dr. Santi's license suspension and her affidavit has been submitted in good faith." (Defs.' Comments on Pl.'s Mtn. of Sept. 10, 2002, `An Answer' ["Defs.' Opp to Pl.'s Mtn. for Sanctions"], Oct. 23, 2002 at 1.) However, in a letter to the Court dated October 22, 2002, Defendants continued to rely on the Santi Affidavit. (Id. at 6.)
The Court hereby sanctions Defendants' counsel pursuant to Fed.R.Civ.Proc. 11(c) for submitting the Santi Affidavit. A basic inquiry into the status of Santi's license would have revealed that the facts alleged in her Affidavit were false. Additionally, Defendants' counsel failed to take advantage of the "safe harbor" provision of Rule 11(c)(1)(A) by withdrawing the Santi Affidavit after notification by Plaintiff that it was false. See In re Pennie Edmonds LLP, 323 F.3d 86, 89 (2d Cir. 2003).
Rule 11(b) provides, in pertinent part, that:
By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney . . . is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, — (3) the allegations and other factual contentions have evidentiary support . . .
Additionally, the Model Rules of Professional Conduct provide that an attorney must not "offer evidence that the lawyer knows to be false." Model Rules of Prof'l Conduct R. 3.3(a)(4), cited in Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 2002 WL 59434, at *6 (S.D.N.Y. Jan. 16, 2002). Regardless of whether or not Defendants' counsel actually knew that the Santi Affidavit was false, he violated his obligation under these rules to investigate the Affidavit's validity. See, Margo v. Weiss, 213 F.3d 55, 64-65 (2d Cir. 2000).
Plaintiff also argues that Defendants' submission of the Santi Affidavit — which focuses on VIAGRA's safety — violated the Court's November 9, 2001 order, which decisively ruled that VIAGRA's "safety" is not an issue in this case. (Pfizer's Reply in Support of Mtn. for Sanctions Pursuant to Rule 11 and 56(g) of the Fed.R.Civ.Proc. ["Pl.'s Reply in Support of Sanctions"], Nov. 1, 2002 at 1; Ex. A at 4:9-13.) This is yet another example of Defendants' counsel's disregard for this Court and the Rules of Professional Conduct. This Court hereby strikes the Santi Affidavit as irrelevant to any claims pending in this action.
A Rule 11 sanction "shall be limited to what is sufficient to deter repetition of such conduct. . . ." Fed.R.Civ.P. 11(c)(2). This Court finds that an adequate sanction for violation of Rule 11 consists of notification of the Disciplinary Committee of the New York State Bar Association of Defendants' counsel's misconduct.
CONCLUSION
For the foregoing reasons, Plaintiff's motions for summary judgment and Rule 11 sanctions are GRANTED.With respect to the permanent injunction, IT IS HEREBY ORDERED:
A. That Defendants and their agents, officers, employees, representatives, and all other persons acting in concert or in participation with any of them, and any licensees, successors or assigns be PERMANENTLY ENJOINED AND RESTRAINED from engaging in any of the following acts:
(i) Using on or in connection with the production, manufacture, advertising, promotion, displaying for sale, offering for sale, sale, or distribution (all including on the Internet) of any article of merchandise, or for any purpose whatsoever, the VIAGRA mark, or any colorable imitation thereof, or any mark confusingly similar to or dilutive of the VIAGRA mark, including but not limited to the name TRIAGRA;
(ii) Representing by any means whatsoever, directly or indirectly, or doing any other acts or things calculated or likely to cause confusion, mistake, or to deceive purchasers into believing that any of Defendants' products originated with or are the products of Pfizer or that there is any affiliation or connection between Pfizer and its products and Defendants or their products, and from otherwise competing unfairly with Pfizer;
(iii) Making any false and misleading representations of material fact in advertising and promotional material;
(iv) Using any mark or designation in a manner so as to cause the dilution of the distinctive quality of the Pfizer VIAGRA trademark, including, but not limited to, by using the designation TRIAGRA;
(v) Applying for registration of any mark that incorporates the VIAGRA trademark owned by Pfizer, or any colorable imitation thereof; and
(vi) Aiding, assisting or abetting any party in doing any act under Subparagraphs (i) through (v) above;
B. That Defendants deliver to Plaintiff for destruction all the products and marketing, promotional and advertising materials related to TRIAGRA, and that Defendants be ordered to deactivate all websites that bear any corporate mark or design with TRIAGRA or any mark confusingly similar to or dilutive of the VIAGRA trademark;
C. That Defendants be ordered to file with the Court and to serve on counsel for Plaintiff within thirty (30) days an Affidavit setting forth in detail the manner and form in which Defendants have complied with this order.
SO ORDERED.