Opinion
No. 01-6695-CIV-MIDDLEBROOKS/BANDSTRA
May 18, 2001
PRELIMINARY INJUNCTION ORDER
THIS CAUSE came before the Court upon the Verified Complaint filed in this action, the Motion for a Preliminary Injunction, the memorandum of fact and law, with supporting declarations, affidavits, and the exhibits presented to the Court, and upon the proceedings held in this Court with due notice given to the Defendants, said proceedings having been held this date, May 18, 2001.
INTRODUCTION
The Plaintiffs Scan Design of Florida, Inc. and Scan Design of Ft. Lauderdale, Inc. ("Plaintiffs") are commonly owned Florida corporations with their respective places of business in Longwood and Lauderhill, Florida. Verified Complaint ¶ 2 ("Compl."). Defendant Scan Design Furniture, Inc. ("Scan Design Furniture") is a Florida corporation with its principal place of business in Lauderhill, Florida. Compl. ¶ 3. Defendant Jared Schwartz is the incorporator and principal of Defendant Scan Design Furniture. Compl. ¶ 3
Plaintiffs or their predecessors first adopted and used the name SCAN DESIGN in connection with the retail furniture business in Florida thirty-two (32) years ago, and since that time they and their related companies have continued and expanded their use of the SCAN DESIGN name throughout Florida. At present, Plaintiffs and their related companies operate SCAN DESIGN stores, offering high end furniture, rugs, accessories and giftware, in or near Orlando, Fort Lauderdale, Miami, Clearwater, Tampa and Jacksonville. Compl. ¶ 6. Plaintiffs have operated a SCAN DESIGN store in Broward County for ten years. The store is located at 5131 N. University Drive, Lauderhill, Florida 33351. Compl. ¶¶ 3, 6.
Plaintiffs conduct extensive advertising and promotion of the products and services they offer under the SCAN DESIGN name, including in newspapers, magazines and on television and the Internet, where they operate a website at www.scandesign.com. As a result of their use of this name for over three decades, as well as their successful advertising and promotional efforts reaching customers throughout the world, and their significant sales, Plaintiffs' mark SCAN DESIGN has come to represent to both the consuming public as well as to suppliers and wholesales the high quality service and merchandise associated with Plaintiffs. Compl. ¶¶ 7-9, Exhibits A and B.
Plaintiffs' SCAN DESIGN mark symbolizes to the public a certain predictable level of service wherever the mark appears, and that they can rely on SCAN DESIGN store for a consistent high level of quality. Over the years, Plaintiffs and their related companies have developed longstanding business relationships with wholesale suppliers of furniture and accessories throughout the world. Because of the excellent reputation Plaintiffs have established, and their lengthy experience in the business, these suppliers extend to Plaintiffs and their related companies substantial credit on their wholesale purchases of furniture. Companies without a similar credit history, developed over time, are generally not accorded the same favorable credit terms, and must usually prepay for their orders. Compl. ¶ 10.
Defendant Scan Design Furniture was incorporated in Florida on April 4, 2001. Compl. ¶ 3 and Exhibit C. Defendant Jared Schwartz is listed on the incorporation documents as the President, Secretary, Treasurer and Director of Scan Design Furniture. Compl. ¶ 3 and Exhibit C. The incorporation papers specify as both Defendants' addresses 7813 N. University Drive, Lauderhill, Florida 33322, but there is no such address. Compl. ¶ 12.
In April of 2001, the International Home Furnishings Market, a home furnishings trade show(the "Show"), was held in High Point, North Carolina. Plaintiffs and other furniture retailers, wholesalers, manufacturers and representatives attend this exhibition to purchase and sell merchandise. Ranne-Camacho Aff. ¶ 3.
Defendants' representatives attended the Show and placed orders with a number of wholesale vendors of furniture and accessories. Ranne-Camacho Aff. ¶¶ 3-5; Murphy Aff. ¶ 2. Shortly after the Show, Plaintiffs' employees began receiving telephone calls from vendors. The vendors called to verify orders they believed had been placed by Plaintiffs or their related companies. In fact, neither Plaintiffs nor any of their related companies had placed those orders. Instead, they had been placed by Defendants or Defendants' representatives. Id.,; Compl. ¶¶ 13, 16-18. While placing their orders, Defendants or Defendants' representatives identified their business as "Scan Design Furniture, Inc.," and gave a delivery address of 4504 N. University Drive, Lauderhill, Florida 33351. Spielberg Aff. ¶¶ 2, 3; Murphy Aff. ¶ 2; Ranne-Camacho Aff. ¶¶ 3-5, 8.
During the ordering process, Defendants or their representatives provided the vendors with a list of credit references to substantiate their orders. However, many, if not most, of these references had never had any dealings with the Defendants, but were instead longstanding suppliers of Plaintiffs', with whom Plaintiffs enjoyed an established long-term credit relationship. Compl. ¶ 10; Spielberg Aff. ¶ 3; Ranne-Camacho Aff. ¶¶ 2-6. A number of vendors who received furniture orders from Defendants mistakenly believed the order had been given by Plaintiffs. Defendants did nothing to clarify this confusion, rather, Defendants fostered this confusion by lying or misleading the vendors about who they were and their relationship to Plaintiffs. See, e.g. Spielberg Aff. ¶ 6; Murphy Aff. ¶¶ 2-3; Ranne-Camacho Aff. ¶¶ 3-6.
For example, one vendor called Defendants to ask why the shipping address given on their order, 4504 N. University Drive, was different from the address of Plaintiffs' SCAN DESIGN store at 5131 N. University Drive. Defendants' representative replied that they were affiliated with Plaintiffs, and that the 4505 N. University address on the order was a special warehouse where the furniture should be shipped, whereas the 5131 N. University address was the address of the store. Spielberg Aff. ¶ 6. While placing one order at the Show, Defendants told another vendor at the that they Defendants) might buy merchandise for their nine other "Scan Design" stores. When that same vendor described a visit he had recently made to Plaintiffs' Lauderhill SCAN DESIGN store, Defendants did not correct his mistaken impression that the store was Defendants'. Murphy Aff. ¶ 3.
The record indicates that there were other reported instances of actual confusion. One such instance was when UPS delivered an order addressed to Defendant Scan Design Furniture, at the 4504 N. University address, to Plaintiffs' SCAN DESIGN store at 5131 N. University. At least one vendor, believing his internal account information to be incorrect, mistakenly changed his company files to reflect Defendants' address as the correct shipping address for Plaintiffs. Ranne-Camacho Aff. ¶ 5.; M. Prel. Inj. at Exhibit ___. One supplier spoke by telephone to Defendants or Defendants' representative when a man called to check on an order placed by Scan Design Furniture. The unknown caller expressly told the supplier that his company was affiliated with Plaintiffs.
The 4504 N. University address given by Defendants for shipment of their orders is an empty storefront. Recently, a note scrawled on notebook paper and stuck on the front door of that address identified the premises as the "Home of Scan Design Furniture, Inc." Ranne-Camacho Aff. ¶ 8; M. Prel. Inj. at Exhibit ___. After Plaintiffs became aware of Defendants' activities, Plaintiffs' counsel sent written notice to Defendants, demanding that their infringing activities be terminated. Compl. ¶ 19 and Exhibit G. Plaintiffs served the complaint and motion for preliminary injunction on Defendant Scan Design Furniture's Registered Agent on April 27, 2001, and Plaintiffs' counsel wrote to the Registered Agent on May 4, 2001. Allen Aff. ¶¶ 2-5. Defendants and their counsel have ignored all attempts at communication and have failed to respond to any correspondence or pleadings. Allen Aff. ¶ 6.
LEGAL STANDARD
In the Eleventh Circuit, a party moving for a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure must establish:
(1) A substantial likelihood of success on the merits;
(2) A substantial threat of irreparable injury
(3) that the plaintiffs injury outweighs the harm that the injunction might cause to the defendant; and
(4) that the injunction serves the public interest
McDonald's Corporation v. Robertson, 147 F.3d 1301, 1306(11th Cir. 1998Tally-Ho, Inc. v. Coast Community College District, 889 F.2d 1018, 1022(11th Cir. 1989).
LEGAL ANALYSIS
A. Plaintiffs Have a Substantial Likelihood of Prevailing at Trial on the Merits of the Claims in its Verified Complaint that Use of the Mark SCAN DESIGN by Defendants Constitutes Unfair Competition and Trademark Infringement
A claim for trademark infringement arises under the Lanham Trademark Act, 15 U.S.C. § 1051 et seq where "[a]ny person. . . without the consent of the registrant. . . use[s] in commerce any. . . registered mark in connection with the sale. . . of any goods. . . [and] such use is likely to cause confusion. . . or to deceive. . . ." 15 U.S.C. § 1114(1)(a). Trademark infringement is established by showing that a plaintiff owns a valid mark, that the mark was used without its consent, and that such unauthorized use is likely to cause confusion, mistake or deception. See 15 U.S.C. § 1114, 1125; Home Box Office, Inc. v. Showtime/The Movie Channel, Inc., 832 F.2d 1311, 1314 (11th Cir. 1987); Burger King Corp. v. Mason, 710 F.2d 1480, 1491 (11th Cir. 1983), cert. denied, 465 U.S. 1102(1984).
Ordinarily, a plaintiff will show that it has registered its mark in order to prove ownership of the exclusive rights to use the mark. Plaintiffs, however, have not registered their Mark, but such fact does not preclude a finding that their Mark is still subject to trademark protection under the Lanham Act. See e.g. G-Force Entertainment. Inc. and Michael M. Garcia v. G-Force Partners, Inc., et.al., 2000 LEXIS 13651 (M.D. Fla. 2000). In an action under the Lanham Act, a Trademark violation is established by proving the unauthorized use of a trademark in the sale of goods which is likely to cause confusion or deceive purchasers as to the source of the origin of a product. When the mark is registered, the primary issue which must be proven is whether the public is likely to be deceived or confused. See Dieter v. B H Indusustries of Southwest Florida, 880 F.2d 322, 326(11th Cir. 1989).
In the case of a mark that is unregistered, it is also necessary to establish that the plaintiff has "trademark rights on the mark or name at issue distinctive enough to deserve protection." G-Force Ent., 2000 LEXIS 13651 (M.D. Fla. 2000); Glen Reven Mills, Inc. v. Ramada Int'l., Inc., 852 F. Supp. 1544, 1547-48(M.D. Fla. 1994). See also Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 120 L.Ed.2d 615, 112 S.Ct. 2753, 2761, 23 USPQ2d 1081, 1087 (1992), reh'g denied, 505 U.S. 1244 (1992).
The more distinctive a given mark, the higher level of trademark protection it warrants. Id. There are four categories of distinctiveness recognized in unregistered trademark claims. They are, in descending order of distinctiveness: (1) arbitrary or fanciful; (2) suggestive; (3) descriptive; and (4) generic. Ice Cold Auto Air, 828 F. Supp. 925, 930-31 (M.D. Fla. 1993). When a mark bears little or no relation to the product or service it has come to represent, a court assessing its distinctiveness ordinarily will find it to fall within the category of "arbitrary or fanciful" because in such a situation, it is the extrinsic nature of the mark that "serves to identify a particular source of a product." Two Pesos, Inc., 23 USPQ2d at 1083 (citing Abercrombie Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976). An Arbitrary mark has been defined as a mark which comprises words, symbols and pictures that are in common use, but which, when used with the goods or services at issue, neither suggest nor describe any particular ingredient, quality or characteristic of those goods or services. See Tisch Hotels. Inc. v. Americana Inn, Inc., 350 F.2d 609(7th Cir. 1965).
Applying this analysis, In the instant matter, it is clear that Plaintiffs' Mark SCAN DESIGN is arbitrary and fanciful. The mark bears little or no relation to Plaintiffs' goods or services. The words taken together neither suggest or describe any particular ingredient, quality or characteristic of Plaintiffs' goods or services. Defendants' have presented no evidence to the contrary. Accordingly, Plaintiffs' Mark is a valid trademark subject to protection. This being the case, this Court must next determine whether Defendants' use of SCAN DESIGN FURNITURE, INC. is likely to cause confusion.
In the present case, Defendants' use of the name SCAN DESIGN has created actual confusion, and is likely to continue to create such confusion unless enjoined. In the Eleventh Circuit, there are seven primary factors for a court to consider in determining whether there is a likelihood of confusion. These are:
1. The type or strength of the trademark at issue'
2. The degree of similarity of the trademarks;
3. The similarity of the products or services;
4. The similarity of retail outlets and customers;
5. The similarity of the advertising media used;
6. The defendant's intent in adopting the mark; and
7. Evidence of actual confusion.
Lone Star Steakhouse and Saloon v. Longhorn Steaks Inc., 122 F.3d 1379, 1382(11th Cir. 1997); Jellibeans, Inc. v. Skating Clubs of Georgia, Inc., 716 F.2d 833, 840(11th Cir. 1983).
An analysis of these factors is not based merely on whether a majority of the factors are present, but rather, the court must evaluate the weight to be accorded each factor in making its ultimate decision.Ambrit. Inc. v. Kraft. Inc., 805 F.2d 974, 981 (11th Cir. 1986). No single factor is absolutely necessary. Jellibeans, 716 F.2d at 840.
(1) The Strength of the Trademark
In the Eleventh Circuit, the inquiry is how distinctive the mark is, and whether consumers strongly identify plaintiff's mark with its services. Jellibeans, 716 F.2d at 840. As the court in Jellibeans noted, "the more distinctive the plaintiff's mark, the stronger it is considered and the more protection it is accorded from confusingly similar marks." Id. See also Glen Raven Mills, 852 F. Supp at 1548 (quoting Freedom Savings and Loan Assoc. v. Way, 757 F.2d 1176, 1182(11th Cir.)), cert. denied, 474 U.S. 845 (1985). As discussed above, Plaintiffs' SCAN DESIGN mark is arbitrary and fanciful. As such, it is strong, valid and protectable.
(2) The Similarity of the Marks
In assessing the similarity of the marks involved, the pertinent inquiry is the overall impression created by each of the marks. E. Remy Martin Co. v. Shaw-Ross Intern, Imports, 756 F.2d 1525, 1530, reh'g denied, 765 F.2d 154 (11th Cir. 1985). In this case, the marks are virtually identical.
(3) The Similarity of the Products or Services
This factor addresses whether, because of the similarity between competitive products or services in the marketplace, consumers may be confused as to their source. The Eleventh Circuit has noted that the greater the similarity between the products and services, the greater the likelihood of confusion for purposes of finding trademark infringement.E. Remy Martin Co., 756 F.2d at 1530 (citing Exxon Corp. v. Texas Motor Exch., 628 F.2d 500, 505(5th Cir. 1980)); see also Jellibeans, 716 F.2d at 840. In a case such as this one, where both Plaintiffs and Defendants deal in identical furniture products purchased from the same vendors, this factor supports a finding of likelihood confusion.
(4) The Similarity of Retail Outlets and Customers
Since the parties are both engaged or preparing to be engaged in retail store services in close geographical proximity to one another, their respective customers are similar if not identical. Both Scan Design of Ft. Lauderdale, Inc. and Scan Design Furniture have addresses on the same street in Lauderhill, in Broward County. In all likelihood, the prospective purchasers of the parties' goods and services are identical. This factor, then, also favors the Plaintiffs.
(5) The Similarity of Advertising
Defendants' representatives distributed business cards carrying the "Scan Design" name, and their storefront bears at least a temporary sign with the name. However, there was no evidence of any other advertising by Defendants. Thus this factor is inconclusive as to confusion.
(6) The Defendants' Intent in Adopting the Mark
It is not difficult to choose a mark which would not be confused with that of another. Accordingly, courts look with "suspicion" upon one who "approaches so near to his successful rival that the public may fail to distinguish between them." Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 704(5th Cir. 1981) (quoting Florence Mfg. Co. v. J.C. Dowd Co., 178 F. 73, 75 (2nd Cir. 1910)). Here, it would be difficult to imagine that the Defendants could establish a business located minutes from Plaintiffs' store, where Plaintiffs have been doing business for ten years, and which displays a large sign featuring Plaintiffs' SCAN DESIGN trademark, without knowing of that trademark. It is a reasonable inference then that, by adopting a mark identical to Plaintiffs' mark, Defendants intended to benefit from confusion with Plaintiffs. Further in support of this finding is the fact that the uncontroverted evidence established that, even after vendors confronted Defendants with Plaintiffs' warning about them, the Defendants continued to assert that they had a legitimate connection to Plaintiffs. They passed off Plaintiffs' credit references as their own, and claimed Plaintiffs' stores as theirs.
(7) Evidence of Actual Confusion
Evidence of actual confusion between trademarks is not necessary to a finding of likelihood of confusion, but it has been said that it is the best such evidence. E. Remy Martin, 756 F.2d at 1532; Glen Raven Mills. Inc., 31 USPQ2d at 1740. Actual confusion by a few is evidence of likelihood of confusion by many. Freedom Savings and Loan Ass'n, 757 F.2d at 1185. Thus, "a Plaintiff usually will not have to prove more than a few incidents of actual confusion." Glen Raven Mills, 31 USPQ2d at 1740.
In this case, there is no doubt that there has been actual confusion. The evidence showed that at least one, if not more, of Plaintiffs' wholesale furniture suppliers believed they had been dealing with Plaintiffs when they took orders from Defendants. A few of them became suspicious and fortunately called Plaintiffs' offices to verify the orders prior to shipping. Others actually shipped orders believing they were shipping to Plaintiffs. One order addressed to Defendants address was even mistakenly delivered to Plaintiffs' store. With such evidence of actual confusion, the "likelihood of confusion" prong of this analysis is satisfied. While it is not necessary to find that Plaintiffs have prevailed in all of the above factors (see Ambrit, Inc., 805 F.2d at 981), a careful review of these factors shows that all either favor a finding for the Plaintiffs, or do not favor Defendants.
B. There is a Substantial Threat of Irreparable Injury to Plaintiffs if Injunctive Relief is Denied
Irreparable injury is presumed for trademark infringement. E. Remy Martin Co., S. A. v. International Imports, Inc., 756 F.2d 1525, 1530 (11th Cir. 1985). The Court finds that due to the loss of quality control over the products at issue bearing its trademark, Plaintiffs have satisfied the second element of the preliminary injunction analysis. See Shell Oil, 928 F.2d at 107.
C. The Injury to the Plaintiffs Outweighs the Harm the Injunction May Cause to the Defendants
Plaintiffs will suffer a significant hardship if the requested preliminary injunction is not granted for the reasons previously stated. Defendants, on the other hand, remain fully able to sell whatever goods they so desire without use of Plaintiffs long-established credit history and well-earned business reputation. The Court finds that Plaintiffs have established a substantial risk of irreparable harm to its trademark which outweighs the threat of injury to Defendants. Plaintiffs have therefore satisfied the third element of the preliminary injunction analysis.
D. The Preliminary Injunction Is Not Adverse to the Public Interest
Public policy strongly favors allowing the courts to "fashion remedies which will take all the economic incentive out of trademark infringement." Playboy Enterprises v. Baccarat Clothing Co., 692 F.2d 1272, 1275 (9th Cir. 1982). The public is entitled to be free from deception and confusion. "In a trademark infringement or unfair competition case, a third party, the consuming public, is present and its interests are paramount."BellSouth Advertising Publishing Corp. v. Real Color Pages, Inc., 792 F. Supp. 775, 780 (M.D. Fla. 1991).
CONCLUSION
For the reasons stated herein, this Court finds that the Plaintiffs having shown a likelihood of success at trial, irreparable injury, a balancing of the equities favoring the Plaintiffs, and a public interest that needs to be served to avoid further infringement, confusion, and because of the lack of an adequate remedy at law, it is hereby ORDERED and ADJUDGED that:
A. The Defendants Scan Design Furniture, Inc. and Jared Schwartz ("Defendants"), their respective officers, directors, agents, employees, and attorneys, and any other persons in active concert or participation with them including but not limited to any and all other Defendants' entities involved in the subject activities, who receive actual notice of this
Order by personal service or otherwise shall hereby be enjoined and restrained:
1. from any and all use of the name or mark SCAN DESIGN, SCAN DESIGN FURNITURE, SCAN DESIGN, INC., or any confusingly similar name or mark (however spelled, whether capitalized, abbreviated or stylized, whether one word or two, used alone in combination with any word or words or symbols, and whether used in caption, text or otherwise), as a trade or business name, trademark or service mark, or internet domain address or name, on or in connection with the promotion and/or sale of any goods or services offered for sale;
2. from any and all use of any word, term, name, symbol, device, or combination thereof which causes confusion, deception or mistake as to the affiliation, endorsement or relationship of Defendants (either or both) or their goods or services with Plaintiffs, or their affiliated companies, or Plaintiffs' products or services, or as to the origin of Defendants' goods or services, or any false designation of origin, false or misleading description or representation of fact;
3. from further diluting or infringing the rights of Plaintiffs in and to any SCAN DESIGN mark or name, or otherwise damaging Plaintiffs' goodwill or business reputation;
4. from otherwise competing unfairly with Plaintiffs in any manner;
5. from continuing to perform in any manner whatsoever any of the acts and activities complained of by the Plaintiffs in their verified complaint; and
6. from taking any action that may defeat, or may have the effect of defeating, Plaintiffs' ability to recover and recoup their damages and attorney's fees from Defendants, including but not limited to prohibiting Defendants from transferring any moneys from their current bank accounts to other accounts in order to secrete assets, and prohibiting Defendants fro disposing of any assets in order to reduce the ability to satisfy any eventual monetary award, until such time as any judgment for damages against Defendants has been satisfied.
It is FURTHER ORDERED and ADJUDGED that Defendants shall file with this Court and serve on counsel for Plaintiffs, within thirty (30) days after issuance of this Order, a report in writing and under oath, setting forth in detail the manner and form in which Defendants have complied with this Order.
B. The Plaintiffs shall post with the Clerk of this Court a bond in the amount of $1,000 as security against the Defendants in the event of any impropriety in the issuance of this Order, or other damages found by this Court to have been occasioned by the Defendants based upon preliminary injunction.