finding “the fact that plaintiff does not sell its clothing in any physical locations in the United States” when the defendant does “weighs heavily against finding a likelihood of confusion”Summary of this case from Juicy Couture, Inc. v. Bella Int'l Ltd.
11 Civ. 6433 (NRB)
Attorney for Plaintiff Jeffrey H. Greger, Esq. Lowe Hauptman Ham & Berner LLP 1700 Diagonal Road, Suite 300 Alexandra, VA 22314 Attorney for Defendant Louis S. Ederer, Esq. Matthew T. Salzman, Esq. Arnold & Porter LLP 399 Park Avenue New York, NY 10022-4690
MEMORANDUM AND ORDER
Plaintiff New Look Party Limited has moved for a preliminary injunction against defendants Louise Paris Ltd. ("LPL"), Sears Brands LLC ("Sears"), and unidentified individuals involved in selling clothing produced by LPL, enjoining them from selling clothing or accessories bearing the "NEW LOOK" standard character mark or the Image materials not available for display. design mark.
For the reasons stated below, plaintiff's motion is denied.
The relevant facts are not in dispute. Plaintiff is a fashion brand headquartered in England. Its first store opened in 1969, and it now has over 1000 outlets across Europe and Asia, though none in the United States. LPL also produces clothing, and at least one of its lines is distributed through Sears.
Plaintiff began using the "NEW LOOK" name in association with clothing sales in the United Kingdom in 1969. The stylized logo was developed in 2002, and its use in connection with plaintiff's clothing commenced in 2003.
LPL filed an intent-to-use application for the "NEW LOOK" standard character mark with the United States Patent and Trademark Office (the "USPTO") on May 22, 2009, and the USPTO granted the application on September 21, 2010. While the application was pending, LPL began using not just the standard character mark but also the design mark in connection with its clothing sales in U.S. commerce. LPL has submitted a sworn declaration to the USPTO identifying August 21, 2009 as the first date of such use. LPL's clothing bearing these marks is available for sale through Sears.
Plaintiff became aware of LPL's use of the marks and their sale through Sears on July 1, 2010. Prior to learning of the competing use, plaintiff had begun selling and shipping its merchandise directly to customers in the United States via its website in July of 2009, having previously sold its goods exclusively abroad. Americans' exposure to plaintiff's brand has thus been limited, though not entirely nonexistent. Over 1000 Americans purchased merchandise from plaintiff's international stores in each of 2007, 2008, and 2009, and plaintiff's website was viewed from U.S. IP addresses approximately 224,000 times in 2008 and 215,000 times from January to June of 2009.
On October 8, 2010, LPL filed for registration of the stylized mark, which was published for opposition on March 1, 2011 and has not yet been approved. Plaintiff has opposed that registration and moved to cancel LPL's registration of the "NEW LOOK" standard character mark. Plaintiff also filed its own application for registration of the design-mark on March 2, 2011, having not previously attempted to register either the standard character mark or the design mark.
Both of these administrative actions have been stayed at LPL's request pending a decision from this Court regarding ownership of the rights to the marks. See 15 U.S.C. § 1119 (permitting a court to "determine the right to registration, order the cancelation of registrations, . . . and otherwise rectify the register with respect to the registrations of any party to the action").
Plaintiff filed a complaint against LPL in the Eastern District of Virginia on June 21, 2011, alleging inter alia trademark and copyright infringement. Defendants moved to transfer venue to this Court on August 16, 2011, and plaintiff moved for a preliminary injunction on September 8, 2011. Defendants' motion was granted and the case was transferred to this Court on September 15, 2011. Plaintiff was directed to rebrief the motion under the now-applicable Second Circuit law. The motion was fully briefed on December 15, 2011, and the Court held oral argument on December 20, 2011. The parties were then given an additional opportunity to resolve their dispute. This decision follows their inability to reach an agreement.
I. Legal Standard
A party seeking a preliminary injunction must show (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm in the absence of the injunction; (3) a balance of hardships tipping in the movant's favor; and (4) the public interest is not disserved by the issuance of the injunction. Salinger v. Colting, 607 F.3d 68, 79-80 (2d Cir. 2010). The injury underlying an injunction "must be one requiring a remedy of more than mere money damages. A monetary loss will not suffice unless the movant provides evidence of damage that cannot be rectified by financial compensation." Tucker Anthony Realty Corp. v. Schlesinger, 888 F.2d 969, 975 (2d Cir. 1989). Despite long-held circuit precedent, such harm will no longer be presumed in copyright or trademark cases. See Salinger, 607 F.3d at 80; Tecnimed SRL v. Kidz-Med, Inc., 763 F. Supp. 2d 395, 402 (S.D.N.Y. 2011) (applying Salinger to a trademark claim).
The parties do not address the alternative requirement of "sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor," NXIVM Corp. v. Ross Inst., 364 F.3d 471, 476 (2d Cir. 2004), and neither do we.
A preliminary injunction is an "extraordinary remedy that should not be routinely granted." Procter & Gamble Co. v. Ultreo, Inc., 574 F. Supp. 2d 339, 344 (S.D.N.Y. 2008) (internal quotation marks omitted). Indeed, when the movant seeks a mandatory injunction -- one that will alter the status quo -- it must show a "clear" or "substantial" likelihood of success on the merits. See Mastrovincenzo v. City of New York, 435 F.3d 78, 89-90 (2d Cir. 2006); Jolly v. Coughlin, 76 F.3d 468, 473 (2d Cir. 1996).
II. Plaintiff's Entitlement to Injunctive Relief
A. Likelihood of Success on the Merits
Plaintiff seeks to enjoin defendants' sale of clothing branded with the "NEW LOOK" word and design marks under theories of both trademark and copyright infringement. Each is addressed in turn.
1. Trademark Infringement
Plaintiff alleges trademark infringement pursuant to 15 U.S.C. § 1125(a)(1)(A), which creates liability when the use of a mark "is likely to cause confusion . . . as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods." To succeed on a claim for infringement of an unregistered trademark, plaintiff must show that "(1) it has a valid mark that is entitled to protection under the Lanham Act; and that (2) the defendant used the mark, (3) in commerce, (4) in connection with the sale or advertising of goods or services, (5) without the plaintiff's consent," and (6) defendants' use of the mark is likely to cause confusion as to the connection between defendants' goods and plaintiff. 1-800 Contacts, Inc. v. WhenU.com, 414 F.3d 400, 407 (2d Cir. 2005) (internal quotation marks, alteration, and citation omitted).
The parties do not contest that defendants have sold clothing in U.S. commerce bearing the "NEW LOOK" word and design marks without having received plaintiff's consent. The only issues before the Court are therefore whether plaintiff has valid marks deserving of protection under the Lanham Act and whether defendants' use of their marks is likely to cause confusion in the marketplace.
a. Whether Plaintiff Has a Valid Standard Character Mark
LPL's completed registration of the standard character mark is prima facie evidence that the mark is valid, that LPL owns the mark, and that LPL has the exclusive right to use the mark in commerce. See Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337, 345 (2d Cir. 1999). These rights, however, are not incontestable, see 15 U.S.C. § 1064, and, if challenged within five years of becoming effective, the registration may be canceled based on any ground "that would have prevented registration in the first place." Cunningham v. Laser Golf Corp., 222 F.3d 943, 945-46 (Fed. Cir. 2000); see also 15 U.S.C. § 1115(a). Plaintiff must show that LPL's registration should be canceled before it can establish its own claim to the standard character mark.
A party can seek cancellation of a mark only if it has standing to do so. See Omnicron Capital, LLC v. Omnicron Capital, LLC, 433 F. Supp. 2d 382, 394 (S.D.N.Y. 2006). Defendants do not here challenge plaintiff's standing, of which the Court is, at any rate, convinced. See 15 U.S.C. § 1064 (standing is held by "any person who believes that he is or will be damaged . . . by the registration of a mark").
Plaintiff asserts that its use of the mark prior to LPL's registration is a ground upon which to base cancellation. Typically, prior use is demonstrated by a showing that the senior user has made use of the mark -- in U.S. commerce -- prior to the junior user. As plaintiff concedes, however, plaintiff's use of the mark in U.S. commerce after defendant had filed for registration, but prior to defendant's use and before defendant's certificate of registration was issued, is insufficient for cancellation because, upon perfection of the registration, the earlier registration filing "constitute[s] constructive use of the mark, conferring a right of priority" as against all others except, among others not relevant here, those who have used the mark "prior to such filing." 15 U.S.C. § 1057(c); see also De Beers LV Trademark Ltd. v. DeBeers Diamond Syndicate, Inc., 440 F. Supp. 2d 249, 266 (S.D.N.Y. 2006). Plaintiff must therefore demonstrate use before LPL applied for registration.
Acknowledging that it did not use the "NEW LOOK" standard character mark in U.S. commerce -- as would be required for plaintiff to actually register the mark -- before LPL filed its intent-to-use application, plaintiff argues that the use it did make of the mark prior to May 2009 is sufficient for cancellation, even if not for registration. Compare 15 U.S.C. § 1051(a)(1) ("The owner of a trademark used in commerce may request registration of its trademark . . . ." (emphasis added)), with id. § 1052(d) (permitting denial of registration for marks "previously used in the United States by another and not abandoned"); see also Patsy's Italian Rest., Inc. v. Banas, 658 F.3d 254, 267 (2d Cir. 2011) (when discussing prior use, holding that "[a] party need not meet the statutory requirement of use in interstate commerce to oppose, or seek cancellation of, a registration based on confusion"); First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Grp., Inc., 476 F.3d 867, 870-71 (Fed. Cir. 2007) (permitting a foreign user to oppose a trademark application based solely on use, as opposed to use in commerce, of a mark in the United States).
Such "use analogous to trademark use" is sufficient to stand in the stead of actual trademark use only if it is "of such a nature and extent that the mark has become popularized in the public mind so that the relevant segment of the public identifies the marked goods with the mark's adopter." Am. Express Co. v. Goetz, 515 F.3d 156, 161-62 (2d Cir. 2008) (internal quotation marks omitted); see also AB Electrolux v. Bermil Indus. Corp., 481 F. Supp. 2d 325, 330 (S.D.N.Y. 2007) (considering "use in advertising or other marketing materials [that] establish[es] the identification of the mark with the user and put[s] others on notice of the user's potential rights"); cf. Buti v. Impressa Perosa S.R.L., 139 F.3d 98, 104-05 (2d Cir. 1998) (holding that "the mere advertising or promotion of a mark in the United States is insufficient to constitute 'use' of the mark 'in commerce'"). Cases that have found use analogous to trademark use adequate to establish priority have generally involved an active attempt to target the relevant market, see, e.g., Diarama Trading Co. v. J. Walter Thompson U.S.A., Inc., No. 01 Civ. 2950, 2005 U.S. Dist. LEXIS 19496, at *22-25 (S.D.N.Y. Sept. 6, 2005) (plaintiff had placed its mark on its shipping packaging and been mentioned in numerous trade publications and print advertisements); Fabrique Cosmetique, Inc. v. Honeybee Gardens, Inc., Cancellation No. 92043570, 2007 TTAB LEXIS 111, at *18-20 (T.T.A.B. Mar. 8, 2007) (finding that "'[p]rominent use of a mark in pre-sales publicity directed at potential customers . . . suffice[s] to create a priority date'" when petitioner had advertised directly to potential resalers (quoting 2 McCarthy on Trademarks and Unfair Competition § 16:12 (4th ed. 2006))), but even such purposeful marketing may be insufficient if not of significant breadth and penetration. See, e.g., Int'l Healthcare Exch., Inc. v. Global Healthcare Exch., LLC, 470 F. Supp. 2d 365, 371-72 (S.D.N.Y. 2007) (finding presentations, seminars, lectures, mention in an industry periodical, and holiday cards sent to relevant consumers insufficient to establish analogous use).
Plaintiff claims that it had made use analogous to trademark use of the "NEW LOOK" standard character mark in the United States prior to LPL's registration in May 2009 in a variety of ways: (1) selling products to American customers in its international stores, (2) operating a website that had been viewed by internet users in the United States, (3) selling its shares to U.S. hedge funds, and (4) selling its debts to U.S. investors. These uses are insufficient to establish plaintiff's priority.
Plaintiff also submitted evidence with its reply papers that two issues of British magazines carrying advertisements for its clothing had received limited circulation in the United States in July and August of 2008. We are disinclined to consider the evidence in our decision because it was not submitted in response to any new issues raised by defendants in their opposition brief, cf. Bayway Ref. Co. v. Oxygenated Mktg. & Trading A.G., 215 F.3d 219, 226-27 (2d Cir. 2000) (considering evidence raised for the first time on reply because plaintiff's "reply submission was . . . its first opportunity to rebut [defendant's] argument with [the] evidence"); rather, it goes to the heart of plaintiff's contention and should have been submitted with its opening brief in order to give defendants an appropriate opportunity to respond. Regardless, the de minimis nature of the circulation precludes the evidence from carrying significant weight in our analysis. Cf. T.A.B. Sys. v. PacTel Teletrac, 77 F.3d 1372, 1375 (Fed. Cir. 1990) (requiring evidence that "a substantial share of the consuming public" had been exposed to the mark, not simply "a negligible portion of the relevant market").
Plaintiff's reliance on sales abroad can be summarily dismissed. Under the "territoriality principle," "foreign use . . . cannot form the basis for a holding that [plaintiff] has priority here. The concept of territoriality is basic to trademark law; trademark rights exist in each country solely according to that country's statutory scheme." Person's Co. v. Christman, 900 F.2d 1565, 1568-69 (Fed. Cir. 1990); see also Almacenes Exito S.A. v. El Gallo Meat Mkt., Inc., 381 F. Supp. 2d 324, 326 (S.D.N.Y. 2005). Such sales may have some bearing on U.S. consumers' ultimate familiarity with plaintiff's brand, but they cannot constitute "use" of any kind in the United States.
Similarly, the "famous marks" doctrine plaintiff argues grants trademark rights based on extraterritorial use has been rejected in this circuit as inconsonant with the territoriality principle. See ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 160-65 (2d Cir. 2007).
Likewise, plaintiff's sale of its shares and debt is irrelevant to this analysis. Our inquiry must focus on the effect plaintiff's activities have had on the relevant segment of the purchasing public -- namely, retail consumers of fashion, not hedge funds or commercial investors. Plaintiff's sale of stock and debt would have gone unnoticed by this class of consumers.
First Niagara, 476 F.3d at 868, which plaintiff contends supports its position, involved a foreign trademark owner who had domestic brokers to act as middlemen in selling its products in the United States, a situation vastly different from plaintiff's prior to June 2009.
The sole remaining activity potentially relevant to plaintiff's use of the "NEW LOOK" standard character mark in the United States is its operation of a website bearing the mark. Though having been viewed by several hundred thousand U.S. IP addresses prior to May 2009, customers living in the United States were unable to purchase and have goods shipped to them until July 2009, after LPL had filed its trademark registration. Additionally, plaintiff here has provided no evidence that its website was in any way intended to function as marketing toward American fashion consumers, a proposition which seems doubtful because plaintiff did not ship its products to U.S. locales prior to LPL's registration filing. Even plaintiff's complaint notes only that plaintiff's website "has been accessible" to U.S. customers (Compl. ¶ 22), not that it was aimed at priming them to purchase plaintiff's goods. Moreover, plaintiff has not furnished information pertaining to whether the various IP addresses visiting its website reflected unique or repeat visitors, how long each visitor spent browsing its website, or any other information that would be relevant to determining whether the website may have had "a substantial impact on the purchasing public." Herbko Int'l, Inc. v. Kappa Books, Inc., 308 F.3d 1156, 1162 (Fed. Cir. 2002). We do not believe that the evidence presented, standing on its own or in conjunction with plaintiff's other activities, demonstrates plaintiff's analogous use of the "NEW LOOK" standard character mark in the United States sufficient to popularize the mark in the public's mind.
Given plaintiff's substantial burden in moving for a mandatory injunction, see Mastrovincenzo, 435 F.3d at 89-90, we cannot find that it is likely to adequately demonstrate prior use of the standard character "NEW LOOK" mark in the United States sufficient to cancel LPL's registration.
Plaintiff has also moved to cancel LPL's registration on the grounds that fraud was used to procure the registration. See 15 U.S.C. § 1064(3). Plaintiff "bears a heavy burden of proof" in establishing fraud in connection with LPL's registration application, In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009), which requires it to "identify a deliberate attempt by the registrant to mislead the [USPTO]." Quality Serv. Grp. v. LJMJR Corp., No. 10 Civ. 9090, 2011 U.S. Dist. LEXIS 132147, at *9 (S.D.N.Y. Nov. 16, 2011). While attempting to register a mark that is identical to a mark in use by another for the same type of goods and not disclosing that circumstance can support a finding of fraud, see Tuccillo v. Geisha NYC, LLC, 635 F. Supp. 2d 227, 242 (E.D.N.Y. 2009), plaintiff has presented no evidence that LPL knew that plaintiff was intending to move into the U.S. market when it filed its registration. Cf. Orient Express Trading Co. v. Federated Dep't Stores, Inc., 842 F.2d 650, 653 (2d Cir. 1988) (requiring clear and convincing evidence of fraud to cancel a registration). Rather, plaintiff has done no more than offer the assertion that LPL knew that it was not "the owner of the [design] mark and entitled to use the mark as applied" (Compl. ¶ 35) -- a claim which, at any rate, pertains only to LPL's second registration application, not its registration of the standard character mark. Even if LPL may some day be found to have committed fraud with respect to the registration of the design mark, that fraud could not by itself invalidate the wholly separate registration of the standard character mark.
We are, nevertheless, dubious as to whether the "NEW LOOK" standard character mark should have been granted trademark protection in the context of fashion at all. A mark is not registrable when used in connection with goods of which it is "merely descriptive," 15 U.S.C. § 1052(e)(1), and the prevalence of the phrase "new look" on the fashion pages of mainstream publications, see, e.g., Jessica Michault, For Her New Look, Beyoncé Goes Under the Radar, N.Y. Times, July 21, 2011, at E2; Eric Wilson, L.L. Bean Tries on a New Look, N.Y. Times, Aug. 20, 2009, at E4; Tammy la Gorce, For Future Teachers, a New Look on the Runway, N.Y. Times, Oct. 14, 2007, http://www.nytimes.com/2007/10/14/nyregion/nyregionspecial2/14model.html, and Christian Dior's use of the words in connection with a 1947 collection, suggests that it is just that. Cf. Best Buy Warehouse v. Best Buy Co., 920 F.2d 536, 537 (8th Cir. 1990) (affirming decision that "best buy" is a generic term). Plaintiff, however, has for obvious reasons not asked us to cancel LPL's registration on this ground, and the parties have not provided us with sufficient information to make a determination as to LPL's acquisition of secondary meaning with respect to the "NEW LOOK" standard character mark. We therefore do not analyze the issue further.
b. Whether Plaintiff Has a Valid Design Mark
As an initial matter, irrespective of who owns the U.S. rights to the design mark, we find that the mark is protectable under Section 43(a) of the Lanham Act because of its inherent distinctiveness. See Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108, 116 (2d Cir. 2006) (requiring that a mark "be sufficiently distinctive to distinguish the registrant's goods from those of others," which it is if the mark is "intrinsically capable of identifying its source" (internal quotation marks omitted)). The mark at issue consists of two oblong halves, one facing upward and the other downward, on either side of a nearly complete oblong with a line drawn laterally through it -- giving the impression of the word "new" -- atop a lowercase sans serif rendition of the word "look." "[S]tylized letters or shapes . . . are protectable when original within the relevant market," Star Indus. v. Bacardi & Co., 412 F.3d 373, 383 (2d Cir. 2005), and this mark is original in the clothing industry.
Moreover, it is likely that plaintiff owns the rights to the design mark in the United States. Plaintiff began permitting U.S. customers to order its goods from its website and shipping those goods -- bearing the stylized mark -- to the United States in July 2009, the month prior to LPL's professed first use of the mark and over a year before LPL filed its still-pending application for registration of the mark. Defendants do not dispute this rough timeline, which suggests that plaintiff will be able to establish priority with respect to the design mark. See Menashe v. V Secret Catalogue, Inc., 409 F. Supp. 2d 412, 424 (S.D.N.Y. 2006) (finding that "[a] single use suffices to prove priority if the proponent demonstrates that his subsequent use was 'deliberate and continuous,'" and finding this requirement satisfied by "point of sale" website displays).
It is not necessary, however, to finally decide this issue, in light of the remainder of our discussion. Assuming that plaintiff does own a valid mark, we turn to the likelihood that defendant's use of the mark will cause confusion in the market.
c. Likelihood of Confusion
In order to assess the likelihood that consumers will be confused by plaintiff's and LPL's use of the design mark, we look to the factors enumerated in Polaroid Corporation v. Polarad Electronics Corporation, 287 F.2d 492, 495 (2d Cir. 1961): (1) the strength of plaintiff's mark, (2) the similarity of the marks, (3) the competitive proximity of the products, (4) the likelihood that the senior user will "bridge the gap" by moving into the alleged infringer's product market, (5) evidence of actual confusion, (6) the junior user's bad faith in adopting the mark, (7) the respective quality of the products, and (8) the sophistication of the consumers in the relevant market. We do not find that these factors sufficiently suggest a likelihood of confusion to support a preliminary injunction.
The strength of the mark. As discussed above, the design mark is inherently distinctive. Even though the underlying standard character mark does not strike the Court as particularly deserving of protection, "the law of trademark accords stronger protection to the stylized version of certain words used as trademarks than to those words themselves." Time, Inc. v. Petersen Publ'g Co., 173 F.3d 113, 118 (2d Cir. 1999).
The strength of a mark, however, depends on more than just its inherent distinctiveness; we must also look to its distinctiveness in the relevant marketplace, see Gameologist Grp., LLC v. Scientific Games Int'l, Inc., No. 09 Civ. 6261, 2011 U.S. Dist. LEXIS 123150, at *33-34 (S.D.N.Y. Oct. 25, 2011), as determined by the secondary meaning factors expounded in Centaur Communications, Ltd. v. A/S/M Communications, Inc., 830 F.2d 1217, 1222 (2d Cir. 1987). Those factors are: "(1) advertising expenditures, (2) consumer studies linking the mark to a source, (3) unsolicited media coverage of the product, (4) sales success, (5) attempts to plagiarize the mark, and (6) length and exclusivity of the mark's use." Id. Plaintiff has presented us with no evidence relevant to the first four factors. And although plaintiff has used the design mark since 2003 internationally, its use domestically dates only to July 2009, and LPL has been using the same mark for most of that period. While we acknowledge that LPL has appropriated plaintiff's mark for its own use, that single fact is insufficient to support a finding that the mark has acquired any degree of distinctiveness in the U.S. marketplace.
On balance, we find the strength of the design mark to weigh minimally in defendants' favor.
The similarity of the marks. When considering the similarity between marks, we must confront two questions: "(1) whether the similarity between the two marks is likely to cause confusion and (2) what effect the similarity has upon prospective purchasers." Sports Auth., Inc. v. Prime Hospitality Corp., 89 F.3d 955, 962 (2d Cir. 1996). We must look not simply to the similarity of the graphic representations of the marks themselves, but also to "how they are presented in the marketplace." Id.
In this case, the marks used by plaintiff and LPL are, for all practical purposes, identical. Typical representations of plaintiff's mark are predominantly black, with magenta used to accent the word "look" and the dot inside the right oblong half, while LPL has colored the entire stylized word mark magenta and placed it on a black background. These differences, however, are negligible. Furthermore, both companies place the marks on clothing labels and hangtags. The clear similarity weighs in favor of a finding of likelihood of confusion.
The competitive proximity of the products. The third Polaroid factor asks us to "consider whether the two products compete with each other." W.W.W. Pharm. Co. v. Gillette Co., 984 F.2d 567, 573 (2d Cir. 1993). Our concern here is consumers' confusion as to the source of the goods, not as between the goods themselves. See McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1134 (2d Cir. 1979).
While plaintiff and LPL both produce women's and children's clothing, we are aware of several ways in which they do not compete directly with one another: plaintiff also makes accessories and men's clothing; plaintiff charges more for a given article of clothing than LPL charges for an analogous item, though both parties' goods are relatively inexpensive; and plaintiff's goods are available in the United States only through its website, while LPL distributes its clothing through Sears, both online and in brick-and-mortar outlets.
This third difference in the channels of trade -- the fact that plaintiff does not sell its clothing in any physical locations in the United States -- weighs heavily against a finding of likelihood of confusion. An entire segment of the consuming public -- those who do not purchase their clothing from internet retailers, whether from a lack of internet access, a desire to try an article on before consummating a sale, or any other reason -- will not experience confusion between the parties' products. Although some consumers shop both in retail stores and through websites, there is a significant difference between a domestic purchase made in a physical store with no practical impediments to returning goods and a purchase made over the internet from an overseas corporation where a return requires payment of additional shipping fees. This factor weighs against a finding of likelihood of confusion.
Whether plaintiff will "bridge the gap." This factor asks us to consider whether plaintiff will one day operate within the same channels of trade as defendant. Plaintiff asserts that it intends to expand its retail outlets to the United States, but we have no evidence that the expansion, or even any preparation for the expansion, is likely to occur before a final disposition in this case. The factor weighs in defendants' favor.
Actual confusion. Plaintiff has presented the Court with no evidence of actual confusion. Nevertheless, "actual confusion need not be shown to prevail under the Lanham Act, since actual confusion is very difficult to prove and the Act requires only a likelihood of confusion as to source." Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 875 (2d Cir. 1986).
Defendants point to a line of cases standing for the proposition that the absence of evidence showing actual confusion when the allegedly infringing product has been on the market for an extended period of time weighs against likelihood of confusion. See, e.g., Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F. Supp. 2d 410, 419 (S.D.N.Y. 2002) (seven years between introduction of allegedly infringing product and the court's decision). Such an inference, however, is unwarranted when sales of plaintiff's products have been minimal -- as they likely have been here, because Americans have been able to purchase plaintiff's products exclusively through the internet and for just over two years -- and "there has been little chance for actual confusion as yet." Lois Sportswear, 799 F.2d at 875. The lack of actual confusion does, however, still weigh against a finding of likelihood of confusion, even if only minimally.
The junior user's bad faith. We cannot find that LPL adopted the stylized mark in bad faith. "Bad faith generally refers to an attempt by a junior user of a mark to exploit the good will and reputation of a senior user by adopting the mark with the intent to sow confusion between the two companies' products." Bacardi, 412 F.3d at 388. Even though bad faith has been found when prior knowledge of a senior user's mark "is accompanied by similarities so strong that it seems plain that deliberate copying has occurred," Paddington Corp. v. Attiki Imps. & Distribs., Inc., 996 F.2d 577, 587 (2d Cir. 1993), direct copying does not necessitate such a finding. See Bacardi, 412 F.3d at 388 ("[I]n some cases [where the junior user knew of the senior user's mark], in the absence of additional evidence indicating an intent to promote confusion or exploit good will or reputation, this Court has found the junior user to be in good faith."); Person's, 900 F.2d at 1569-70 ("Knowledge of a foreign use does not preclude good faith adoption and use in the United States.").
Plaintiff has offered no evidence that LPL intended to produce confusion between their products or otherwise trade on plaintiff's goodwill in the United States. At oral argument, LPL professed to have adopted the mark simply because it liked the design. Although this reason is not particularly compelling, given the territorial nature of trademarks, we cannot say that LPL acted in bad faith in the absence of evidence that LPL knew that plaintiff had begun using the design mark in the United States. This factor weakly favors defendants.
The quality of the products. There is little evidence before us on the seventh Polaroid factor. Although plaintiff compares the price of a product it sells to an analogous product offered by defendants and notes that the latter is significantly cheaper, price alone does not speak to quality. See Bacardi, 412 F.3d at 389. The bald assertion offered by plaintiff's paralegal, who was previously "employed in the woman's [sic] retail clothing field," that a single article of clothing sold by defendants "is made with extremely poor quality" is not persuasive. (Pl.'s Br., Ex. D ¶¶ 3, 6.) This factor weighs against a finding of likelihood of confusion.
Consumers' sophistication. A determination of likelihood of confusion hinges on "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., 984 F.2d at 575 (internal alteration omitted). There does not, however, appear to be any general consensus on whether consumers of clothing are sophisticated. Compare, e.g., Lois Sportswear, 799 F.2d at 875 (consumers of designer jeans are sophisticated), with Kookai, S.A. v. Shabo, 950 F. Supp. 605, 609 (S.D.N.Y. 1997) (fashion consumers are sophisticated but "are not professional clothing purchasers and cannot be expected to have the same level of knowledge as professionals"), with Phillips-Van Heusen Corp. v. Calvin Clothing Corp., 444 F. Supp. 2d 250, 257 (S.D.N.Y. 2006) ("[T]he average clothing customer is not particularly sophisticated . . . .").
Nevertheless, consumers of goods that are not particularly expensive are generally deemed to be unsophisticated. See McGregor-Doniger, 599 F.2d at 1137 ("The greater the value of an article the more careful the typical consumer can be expected to be . . . ."); see also THOIP v. Walt Disney Co., 736 F. Supp. 2d 689, 714-15 (S.D.N.Y. 2010) ("[T]he relatively inexpensive T- shirts here do not call for any degree of sophistication . . . ."). The goods at issue here are not so expensive as to suggest any degree of sophistication with respect to their consumers. The identity of the marks would thus create obvious confusion because the consumers would have no other metric by which to differentiate the products. On the whole, we believe this factor weighs in favor of plaintiff.
Conclusion. Balancing all of the factors -- only two of which tip in favor of plaintiff, while the remainder favor defendants -- we cannot find that plaintiff has adequately demonstrated a likelihood of confusion to satisfy the demanding mandatory injunction standard. Cf. Mastrovincenzo, 435 F.3d at 89-90.
2. Copyright Infringement
Plaintiff is likely to succeed on its claim of copyright infringement under 17 U.S.C. § 501(a) if it can show "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Kwan v. Schlein, 634 F.3d 224, 229 (2d Cir. 2011) (quoting Feist Publ'ns, Inc. v. Rural Telephone Serv. Co., 499 U.S. 340, 361 (1991)). It is beyond peradventure that LPL has copied the "NEW LOOK" design in its entirety, coloration excluded. The only question for the Court, then, is whether plaintiff owns a valid copyright in the logo.
Defendants contend that plaintiff has not shown that it owns the "NEW LOOK" logo. Plaintiff has submitted a 2002 contract between itself and Tandem Design ("Tandem"), a design firm, assigning "all vested contingent and future rights of copyright and all other rights in the nature of copyright" to logos created in connection with the contract to plaintiff. (Decl. of Alastair Miller, Ex. A, ¶ 1.) While it is true that the contract does not reference the precise design at issue here, or indeed any specific design, plaintiff has also provided a letter describing the design mark as commissioned by plaintiff and created by Tandem, and signed by the same signator as signed the contract. This evidence is more than sufficient for the purposes of this motion.
The Court is also satisfied that there exists a valid copyright in the "NEW LOOK" logo. The Copyright Act protects all pictorial or graphic works, see 17 U.S.C. § 102(a)(5), which can include logos, see Twentieth Century Fox Corp. v. Marvel Enters., 220 F. Supp. 2d 289, 298 (S.D.N.Y. 2002) (upholding the copyright registration of logos). But our inquiry must not be whether U.S. law would afford copyright protection to plaintiff's logo, but rather whether the law of the United Kingdom, where the work was created, would protect it. See Itar-Tass Russian News Agency v. Russian Kurier, 153 F.3d 82, 90-91 (2d Cir. 1998).
We find the view offered by plaintiff's expert, that U.K. law would protect the logo, to be persuasive. Section 1 of the U.K. Copyright, Designs and Patents Act 1988 provides copyright in "original artistic works," which Section 4 clarifies include "graphic work[s] . . . irrespective of artistic quality." The parties' experts agree that the appropriate test is whether "substantial skill and labor" was involved in the creation of the work.
It is obvious upon viewing the logo that it meets this standard. The words "NEW LOOK" were not simply typed out in a standard font, but rather geometric shapes were arranged in a somewhat fanciful manner to create the impression of the word "new." Defendants' expert agrees that, if shapes had to be played with in order to create the word, the logo would be entitled to copyright protection. The evidence before us, and the logo itself, satisfies us that the authors of the logo invested non-negligible work in its creation. We find that plaintiff is likely to succeed on its claim of copyright infringement.
B. Irreparable Harm
Because we can no longer "adopt a categorical or general rule or presume that the plaintiff will suffer irreparable harm" in copyright and trademark cases, Salinger, 607 F.3d at 80 (internal quotation marks omitted), plaintiff must make an independent showing of such harm. Although plaintiff has not presented direct evidence of loss of sales, it need not do so to sustain its burden.
The much-ballyhooed report by plaintiff's expert Thomas Maronick, (Pl.'s Br., Ex. G (the "Maronick Report")), is given no weight to the extent it purports to evidence lost sales. Under Federal Rule of Evidence 702, we do not believe that those conclusions of his report are "based on sufficient facts or data" or that they "will help the trier of fact to understand the evidence or to determine a fact in issue." (See Decl. of Louis S. Ederer, Ex. A, Dep. of Thomas J. Maronick 79:20-81:16 (testifying that he had no evidence of lost sales, had not tried to calculate lost sales through sales trend data, and based his conclusion on "[j]ust logic" that if a person buys a product, she probably will not buy that same product from another source).)
Although "[p]rospective loss of . . . goodwill alone is sufficient to support a finding of irreparable harm," N.Y.C. Triathlon, LLC v. NYC Triathlon Club, Inc., 704 F. Supp. 2d 305, 343 (S.D.N.Y. 2010), plaintiff has yet to accrue significant goodwill in the United States. Plaintiff has only recently begun shipping its products here, and it has presented no evidence of brand loyalty or even recognition. At this time, we are unable to find that plaintiff will suffer irreparable injury in the absence of a preliminary injunction.
We recognize that plaintiff's sales to Americans abroad in the years prior to its initiating shipping to the United States may have contributed to whatever goodwill it has.
Further weighing against a finding of irreparable harm is plaintiff's delay between the time it discovered LPL's use of the design mark -- July 1, 2010 -- and when it moved for a preliminary injunction -- September 8, 2011. The intervening fourteen months "suggests that the plaintiff may have acquiesced in the infringing activity or that any harm suffered is not so severe as to be 'irreparable.'" Richard Feiner & Co. v. Turner Entm't Co., 98 F.3d 33, 34 (2d Cir. 1996), abrogated in part by Salinger, 607 F.3d 68.
In trademark and copyright cases, this principle had previously been used simply to rebut the former presumption of irreparable injury upon a showing of likelihood of success. See, e.g., Weight Watchers Int'l, Inc. v. Luigino's, Inc., 423 F.3d 137, 144 (2d Cir. 2005) ("This presumption may be defeated . . . when a party has delayed in seeking injunctive relief."); Tough Traveler, Ltd. v. Outbound Prods., 60 F.3d 964, 968 (2d Cir. 1995) ("[A]ny such presumption of irreparable harm is inoperative if the plaintiff has delayed either in bringing suit or in moving for preliminary injunctive relief."). Because no such presumption is permissible after Salinger, the role of delay in our analysis, too, must change. It is now simply one factor to be considered in determining whether a plaintiff will, in fact, suffer irreparable harm in the absence of a preliminary injunction. See generally Marks Org. v. Joles, 784 F. Supp. 2d 322, 332-36 (S.D.N.Y. 2011) (granting preliminary injunction despite nearly sixteen-month delay between learning of infringing conduct and seeking injunctive relief); see also Profitness Physical Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy P.C., 314 F.3d 62, 68 (2d Cir. 2002) ("[A] plaintiff's apparent acquiescence or delay in bringing suit does not necessarily bar relief . . . if [the court] determines that the likelihood of confusion is so great that it outweighs the effect of plaintiff's delay in bringing suit.").
In this case, fourteen months elapsed between plaintiff learning of LPL's use of the stylized mark and moving for a preliminary injunction. Factual investigation and engaging in settlement discussions -- which plaintiff spent some of this period involved in -- may, in some cases, be excused. See Tough Traveler, 60 F.3d at 968 (excusing "the plaintiff's making good faith efforts to investigate the alleged infringement"); Marcy Playground, Inc. v. Capitol Records, Inc., 6 F. Supp. 2d 277, 281 (S.D.N.Y. 1998) (assuming "that the diligent pursuit of settlement negotiations is a legally sufficient excuse for delay"); see also CJ Prods. LLC v. Snuggly Plushez LLC, No. 11 Civ. 715, 2011 U.S. Dist. LEXIS 94811, at *68 (S.D.N.Y. Aug. 22, 2011) ("[D]elay due to a good faith investigation . . . does not defeat equitable relief."). However, the time period between the breakdown of settlement talks on July 26, 2011 and plaintiff's eventual motion for a preliminary injunction on September 8, 2011 is wholly unaccounted for, as is the approximately three-month period spanning late 2010 to January 21, 2011 when plaintiff first contacted LPL regarding the infringement. These lapses further counsel against a finding of irreparable injury.
Plaintiff argues that it should be given credit for time spent under the belief that it could not enforce its trademark against defendants. While lack of knowledge of enforceable rights may excuse delay in certain circumstances, see Tough Traveler, 60 F.3d at 968; CJ Prods., 2011 U.S. Dist. LEXIS 94811, at *68, plaintiff's argument is not compelling because its belief was the product of its own delinquency with respect to registering its marks. Had it filed intent-to-use applications when in the planning stages of developing its business in the United States, it could have readily demonstrated priority over defendant. Moreover, doubts related to plaintiff's trademark claim are irrelevant to its copyright claim, which was viable from the moment plaintiff learned of LPL's use of the logo.
We also note that plaintiff included the Maronick Report in its briefing only after we asked to have this motion rebriefed under Second Circuit law. Upon defendant's request for targeted discovery related to that new evidence, we gave plaintiff the option of withdrawing the Maronick Report or proceeding with the discovery. Plaintiff chose the latter option, forestalling resolution of this motion for three additional weeks. --------
As plaintiff continues to build its brand in the United States, it may have greater success in demonstrating harm to its reputation and goodwill. At this point, however, it has failed to adequately make any such showing.
In light of the absence of irreparable harm, we decline to consider the balance of hardships and the public interest in having the injunction issued.
For the foregoing reasons, the motion (docket no. 36) is denied. Dated: New York, New York
January 11, 2012
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE Copies of the foregoing Order have been mailed on this date to the following: Attorney for Plaintiff
Jeffrey H. Greger, Esq.
Lowe Hauptman Ham & Berner LLP
1700 Diagonal Road, Suite 300
Alexandra, VA 22314 Attorney for Defendant
Louis S. Ederer, Esq.
Matthew T. Salzman, Esq.
Arnold & Porter LLP
399 Park Avenue
New York, NY 10022-4690