Nordstrom, Inc. et al v. NoMoreRack Retail Group Inc. et al

Filing 68

ORDER denying pltfs' 10 Motion for Preliminary Injunction by Judge Ricardo S Martinez.(RS)

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 11 NORDSTROM, INC., a Washington corporation; and NIHC, INC., a Colorado corporation, 12 13 14 15 Plaintiffs, CASE NO. C12-1853-RSM ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION v. NOMORERACK RETAIL GROUP, INC., a Canadian corporation; and NOMORERACK.COM, INC., a Delaware corporation, 16 Defendants. 17 18 I. INTRODUCTION 19 This matter comes before the Court on Plaintiffs’ motion for a preliminary injunction. 20 Dkt. # 10. On February 13, 2013, the Court held a hearing on the matter. Having reviewed the 21 parties’ briefs, oral argument and evidentiary record, Plaintiffs’ motion is DENIED. 22 23 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 1 1 2 II. BACKGROUND Since the 1980s, Nordstrom, Inc. and NIHC, Inc. (together, “Nordstrom”) has operated 3 the retail concept of Nordstrom Rack. Nordstrom owns three federally registered trademarks in 4 conjunction with this business (collectively, the “Rack marks”): 5 1. RACK®: Registration No. 3866811, issued by the U.S. Patent and Trademark Office (“USPTO”) on October 26, 2010. 6 7 8 2. THE RACK®: Registration No. 3962979, issued by the USPTO on May 17, 2011. 3. NORDSTROM RACK®: Registration No. 1409938, issued by the USPTO on September 16, 1986. 9 Nordstrom Rack first opened as a brick and mortar fashion retailer, selling slow moving 10 merchandise from flagship Nordstrom stores at clearance prices. Dkt. # 10, p. 8. Nordstrom 11 Rack’s business has grown significantly, and now offers a variety of products including beauty, 12 home and electronic goods. The brand is characterized by high quality goods and services, in 13 large part through its affiliation with Nordstrom. Id. at 9-10. Customers can also shop 14 Nordstrom Rack online as an extension to its brick and mortar business. It operates in 15 conjunction with Nordstrom’s home website, in which the URL “nordstromrack.com” redirects 16 the user to the Nordstrom Rack section of the site, “http://shop.nordstrom.com/c/nordstrom17 rack.” Thomas Dec. ¶ 10. 18 In 2010, Defendants NoMoreRack Retail Group, Inc. and NoMoreRack.com, Inc. 19 (together, “NoMoreRack”) began operating a members-only shopping website that offers steep 20 discounts on clothing, accessories, fragrances, home products, appliances, electronics, software 21 and toys. Dkt. # 30, p. 8. NoMoreRack is exclusively an online retail business, which operates 22 under the URL “nomorerack.com.” Ash Dec. ¶ 4. With a hybrid “flash sale” type business 23 model, customers shop the daily “events” listed on the site, which are deals that last for a limited 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 2 1 time. Id. at ¶¶ 3, 8-10. In addition, NoMoreRack runs a member referral program on its site 2 called “FriendRack.” Since its inception in Vancouver, British Columbia, NoMoreRack’s 3 business has grown significantly through its U.S. customer base. See id. at ¶ 23. 4 Nordstrom became aware of NoMoreRack’s reach to U.S. customers, and on February 1, 5 2012, it issued NoMoreRack a notice to cease using the Rack marks. Ferron Dec. ¶ 3. After 6 failed negotiations, Nordstrom brought Lanham Act claims against NoMoreRack including 7 trademark infringement, unfair competition, dilution, false designation and cybersquatting. In 8 this action, Nordstrom seeks a preliminary injunction to enjoin NoMoreRack from using its 9 NOMORERACK and FRIENDRACK marks pending the resolution of this case. Specifically, 10 Nordstrom argues it will likely prevail on the merits of the trademark infringement and dilution 11 by tarnishment claims to its NORDSTROM RACK mark. 12 13 III. THE MARKS NORDSTROM NOMORERACK 14 15 16 17 18 19 IV. DISCUSSION 20 A. Preliminary Injunction Standard 21 22 23 “A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 9 (2008). Courts must balance the competing claims of injury and consider the effect on each party in granting or denying the injunction. Id. 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 3 1 The party seeking a preliminary injunction must establish a likelihood of success on the merits, a 2 likelihood of irreparable harm in the absence of preliminary relief, that the balance of equities 3 tips in its favor, and that an injunction is in the public interest. Id. at 20 (citing Munaf v. Geren, 4 553 U.S. 674, 689-90 (2008)). Courts also employ a “sliding scale” approach with respect to the 5 first and third factors. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131-35 (9th Cir. 6 2011). Under the continuum, a weaker showing on the merits combined with a stronger 7 demonstration on the balance of equities may warrant preliminary injunctive relief. The party 8 seeking the injunction need only raise “serious questions going to the merits” but the balance of 9 hardships must tip “sharply” in its favor, assuming the other two factors are met. Id. at 1132. 10 The Court must consider both approaches. 11 B. Likelihood of Success on the Merits 12 13 1. Trademark Infringement To prevail on a claim of trademark infringement under the Lanham Act, 15 U.S.C. § 14 1114, a plaintiff must prove: (1) it has a protectable ownership interest in the mark, and (2) 15 defendant’s use of the mark is likely to cause consumer confusion. Network Automation, Inc. v. 16 Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1144 (9th Cir. 2011) (citing Dep’t of Parks & 17 Recreation v. Bazaar Del Mundo, Inc., 448 F.3d 1118, 1124 (9th Cir. 2006)). 18 As to the first requirement, NoMoreRack does not dispute Nordstrom’s ownership in the 19 Rack marks, as registration raises a rebuttable presumption they are valid and owned by 20 Nordstrom. Dkt. # 30 at 13 (citing Safeworks, LLC v. Teupen Am., LLC, 717 F.Supp.2d 1181, 21 1189 (W.D. Wash. 2010)). Next, Nordstrom must show that use of the NOMORERACK and 22 FRIENDRACK marks is likely to cause consumer confusion. Courts look to eight relevant 23 factors as an adaptable proxy: “(1) strength of the mark; (2) proximity of the goods, (3) similarity 24 of the marks, (4) evidence of actual confusion, (5) marketing channels used, (6) type of goods ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 4 1 and the degree of care likely to be exercised by the purchaser, (7) defendant’s intent in selecting 2 the mark, and (8) likelihood of expansion of the product lines.” AMF, Inc. v. Sleekcraft Boats, 3 599 F.2d 341, 348-49 (9th Cir. 1979). In certain contexts involving domain names or URLs, 4 courts have used the “Internet troika” approach, in which more emphasis is placed on three of the 5 Sleekcraft factors: (i) similarity of the marks, (ii) relatedness of the goods and services, and (iii) 6 simultaneous use of the Internet as a marketing channel. Network Automation, 638 F.3d at 1146. 7 However, this Court has also found that Internet consumers apply different levels of scrutiny 8 depending on the circumstances, so this approach sheds little light when the inquiry goes beyond 9 domain names and keyword searches. Nordstrom, Inc. v. 7525419 Canada, Inc. (dba Beyond the 10 Rack), No. C12-1387-TSZ, at *13 (W.D. Wash. Dec. 27, 2012) (rejecting the Internet troika 11 approach in a similar case, evaluating Nordstrom’s preliminary injunction motion for trademark 12 infringement against a “flash sale” website called Beyond the Rack). Thus, the Court will not 13 restrict its analysis and will consider all the Sleekcraft factors. 14 a. Strength of the Mark 15 The stronger the mark, the greater the protection accorded by trademark laws. See 16 Sleekcraft, 599 F.2d at 349. On the continuum, arbitrary or fanciful marks are the strongest and 17 receive the greatest protection. Id. Suggestive marks subtly connote something about the 18 product, and while not as strong, may receive protection without acquiring a secondary meaning. 19 Id. Descriptive marks, which tell something about a product, do not receive protection unless a 20 secondary meaning is acquired. Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 632 (9th 21 Cir. 2005). Generic marks, which describe the product in its entirety, are not entitled to 22 trademark protection. Id. 23 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 5 1 In the retail industry, RACK and THE RACK are suggestive marks that are commercially 2 weak, because they occupy a crowded field of similar marks. 1 Beyond the Rack, No. C12-13873 TSZ at *18. Combined with NORDSTROM, however, the name NORDSTROM RACK is a 4 strong mark that is arbitrary and fanciful in character. “Nordstrom” is not a common word found 5 in the dictionary. See, e.g. Nordstrom Definition, Dictionary.com, 6 http://dictionary.reference.com/browse/nordstrom (last visited March 1, 2013). It is rather a 7 Swedish ornamental name composed of the elements nord, meaning “north” and strӧm, meaning 8 “river." E.g. Nordstrom Name Meaning, Ancestry.co.uk, http://www.ancestry.co.uk/name9 origin?surname=nordstrom (last visited March 1, 2013). The literal translation and meaning of 10 "Nordstrom" or “north river” has no apparent connection to fashion or retail. Even when 11 combined with “Rack,” NORDSTROM RACK retains its arbitrary and fanciful character, with 12 “Nordstrom” being the proper noun and dominant part of the mark. NORDSTROM RACK's 13 commercial strength is further evidenced by its registration on the USPTO principal register 14 since 1986. This factor weighs in favor of likelihood of confusion. 15 b. Proximity of Goods 16 “[T]he more closely related the goods are, the more likely consumers will be confused by 17 similar marks.” Entrepreneur Media v. Smith, 279 F.3d 1135, 1147 (9th Cir. 2002). Thus, the 18 19 20 21 22 23 24 1 The Beyond the Rack Court denied Nordstrom’s preliminary injunction motion, focusing on RACK and THE RACK marks standing alone. In this motion, Nordstrom argues that Beyond the Rack misapplied the “crowded field doctrine” to understate the strength of both marks. Dkt. # 37, p. 7. The Court, however, agrees with the analysis in Beyond the Rack. For the reasons Nordstrom’s claim to RACK and THE RACK failed there, the same conclusion would result here. See Beyond the Rack, No. C12-1387-TSZ at *13-29. Nordstrom offers little evidence in this case that RACK or THE RACK is commercially used in isolation without referencing the NORDSTROM house mark. Its examples include phrases in storefronts and advertisements that colloquially reference Nordstrom Rack as “the Rack.” See Olsson Dec. ¶¶ 2-15. However, these materials plainly display the NORDSTROM RACK logo as well. Thus, only the claim to the NORDSTROM RACK mark will be discussed here. ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 6 1 more likely consumers are to make such an association, less similarity is required in finding 2 likelihood of confusion. Sleekcraft, 599 F.2d at 350. It is not necessary that the products be 3 similar or even competitive if the respective products are related in some manner that could give 4 rise to the mistaken belief they emanate from the same source. 7-Eleven Inc. v. Wechsler, 83 5 U.S.P.Q.2d 1715, 1724 (T.T.A.B. 2007). Thus, this factor requires a flexible approach to the 6 notion of competition, as parties are not required to be direct competitors in order to show 7 likelihood of confusion. Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1212 (9th 8 Cir. 2012). 9 Nordstrom Rack and NoMoreRack are both retailers that offer brand name products at 10 discounted prices. However, NoMoreRack argues that the goods are not close in proximity, 11 because NoMoreRack sells a wider range of products. Dkt. # 30 at 19. It further differentiates 12 Nordstrom Rack customers as high-end shoppers seeking a "department store experience" 13 whereas NoMoreRack's customers expect less from buying online. See Ash Dec. ¶¶ 5-7. 14 NoMoreRack does concede that the two companies at times may offer the same designer 15 clothing brands. Dkt. # 30 at 19-20. Aside from the nuances of each business, NoMoreRack 16 fails to explain how its consumer base actually differs, considering Nordstrom Rack also offers 17 its retail services online. Today, most brick and mortar retailers operate websites as an extension 18 of their business and there is increasingly less differentiation between customers who purchase at 19 a physical store versus those who purchase online. Further, much of the product categories 20 between the two businesses overlap. The class of consumers who generally seek these brand 21 name items are likely the same, whether the shopping experience is at a physical store, a standard 22 retail website, or a hybrid flash sale website. The two businesses do not merely coexist in the 23 same broad industry, but are competitors that offer discounted prices on similar and sometimes 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 7 1 identical products. See Beyond the Rack, No. C12-1387-TSZ at *19 (finding that the goods and 2 services of Nordstrom Rack and a “flash sale” website were closely related, because both parties 3 were retailers offering similar products to similar demographics). Accordingly, this factor 4 weighs in favor of likelihood of confusion, and a “diminished standard of similarity” will be 5 applied in comparing the marks. See Sleekcraft, 599 F.2d at 350. 6 c. Similarity of the Marks 7 There are three relevant factors in comparing the marks for similarity: (1) the marks 8 must be considered in their entirety as they appear in the marketplace; (2) similarity is tested in 9 terms of appearance, sound, and meaning; (3) the similarities are weighed more heavily than 10 differences. GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1206 (9th Cir. 2000). The 11 proper test is not a side-by-side comparison of the marks, but “whether the marks are sufficiently 12 similar in terms of their commercial impression” such that those who encounter the marks would 13 likely assume a connection. Coach Services, Inc. v. Triumph Learning LLC, 668 F.3d 1356, 14 1368 (Fed.Cir. 2012) (citing Leading Jewelers Guild, Inc. v. LJOW Holdings, LLC, 82 15 U.S.P.Q.2d 1901, 1905 (T.T.A.B. 2007)). Applying a diminished standard of similarity, the 16 marks are tested for similarity based on appearance, sound and meaning as they appear in the 17 marketplace. 18 First, NORDSTROM RACK and NOMORERACK are compared in terms of appearance. 19 NORDSTROM RACK is tiered on two rows of text, with “NORDSTROM” in all capital letters 20 displayed above “RACK” in all lowercase letters. The text of both words is displayed in a dark 21 grey color. NOMORERACK is all one word, lowercased, with “NO” and “RACK” colored in 22 dark grey, and “MORE” colored in green. NOMORERACK also displays a tagline beneath the 23 mark, “Everything you love, for less.” In both cases, “RACK” is all lowercased, using a nearly 24 identical grey font. This similar characteristic must be considered in light of the marks’ overall ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 8 1 appearance. In some instances, one feature of a mark may be more significant than another and 2 the dominant feature may be given more weight. Leading Jewelers Guild, 82 U.S.P.Q.2d at 3 1905. However, the “RACK” portion of the mark will not be given greater weight in this case. 4 With NORDSTROM RACK, it is apparent that the housemark “NORDSTROM” is the brand 5 identifier and dominant feature, despite the fact that RACK is displayed in a larger font. Since 6 Nordstrom provides no evidence that “RACK” is commercially used in isolation without 7 “NORDSTROM,” there is no evidence to suggest that the RACK is indeed the dominant feature. 8 On the other hand, NOMORERACK’s dominant feature is “MORE,” which is visually 9 emphasized in a green color. Thus, even if the similarities in “RACK” are given more weight, 10 the noticeable differences in the dominant portion of each mark are still apparent. Taken in its 11 entirety, the marks are found to be dissimilar in appearance. See Coach Services, 668 F.3d at 12 1368 (citing In re Shell Oil Co., 992 F.2d 1204, 1206 (Fed.Cir. 1993)). 13 As to the similarity in sound between NORDSTROM RACK and NOMORERACK, 14 Nordstrom argues there is phonetic similarity given that both marks contain three syllables, begin 15 with “NO,” and is pronounced with emphasis on the first syllable. Dkt. # 37 at 6. NoMoreRack 16 argues that its name is pronounced with emphasis on the second syllable. Dkt. # 62 at 9. As 17 Nordstrom contends, there is some degree of phonetic similarity present. However, the overall 18 pronunciation and spoken sound of “NORDSTROM” and “NOMORE” is fairly different due to 19 the articulation of distinct consonants in “NORDSTROM.” 20 Even where the marks at issue are identical or nearly identical, differences in connotation 21 and commercial impressions can outweigh visual and phonetic similarities. Coach Services, 668 22 F.3d at 1368. Nordstrom suggests that the “NO” in NOMORERACK can be construed as an 23 abbreviation of “NORDSTROM,” leading to the false impression that NOMORERACK is a 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 9 1 new, online implementation of its existing retail concept. Dkt. # 37 at 6. On the other hand, 2 NoMoreRack contends it chose the name to signify that a customer would not need to sift 3 through a large inventory or “rack” to purchase an item, hence “no more rack.” Dkt. # 30 at 9. 4 The Court agrees with NoMoreRack, in that the plain meaning of NOMORERACK suggests it is 5 “not” Nordstrom Rack, and rather a retailer without a physical “rack” to browse on. 6 Nordstrom’s interpretation is less convincing, because if indeed “NO” was an abbreviation for 7 “NORDSTROM,” it may well be an abbreviation for any retailer beginning with the letters 8 “NO” in conjunction with “RACK.” When “NOMORERACK” is intuitively read as a single 9 phrase, the emphasis is placed on the negative qualifier “NO more rack.” Nordstrom’s 10 interpretation uses “MORE” as the qualifier to place emphasis on the alleged Nordstrom’s 11 MORE RACK deals. This association, however, is less intuitive and speaks little to the 12 similarity in meaning between NOMORERACK and NORDSTROM RACK. The notable 13 distinctions in overall appearance, sound and meaning of the marks outweigh the slight similar 14 characteristics they share. 15 The comparison of NORDSTROM RACK and FRIENDRACK leads to the same result. 16 As to appearance, the marks share one similarity, which is the font and lowercasing of the word 17 “RACK.” However, FRIENDRACK is all one word, in which “FRIEND” is visually 18 emphasized in a red font. There is no phonetic or sound similarity between the marks. As to 19 meaning, Nordstrom argues that consumers are likely to mistake FRIENDRACK as being a 20 referral rewards program for Nordstrom Rack. Dkt. # 10 at 15. However, FRIENDRACK is 21 used exclusively in conjunction with NOMORERACK on its website and there is no evidence to 22 suggest that FRIENDRACK is used commercially without reference to NOMORERACK. Any 23 confusion as to whether FRIENDRACK is a referral program for NORDSTROM RACK is a 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 10 1 step removed and inevitably depends on finding likelihood of confusion between NORDSTROM 2 RACK and NOMORERACK. Thus, NORDSTROM RACK and FRIENDRACK have distinct 3 commercial impressions. The notable differences in appearance, sound and meaning offset the 4 slight similarity shared in the “RACK” font. As to both marks, this weighs against finding a 5 likelihood of confusion. 6 d. Evidence of Actual Confusion 7 “Trademark infringement protects only against mistaken purchasing decisions and not 8 against confusion generally.” Bosley Med. Inst., Inc. v. Kremer, 403 F.3d 672, 677 (9th Cir. 9 2005) (emphasis omitted). Consistent with this principle, “[e]vidence of actual confusion by 10 consumers is strong evidence of likelihood of confusion.” Surfvivor, 406 F.3d at 633. Non11 consumer confusion may also be relevant to the inquiry in three circumstances: “(1) potential 12 consumers; (2) non-consumers whose confusion could create an inference that consumers are 13 likely to be confused; and (3) non-consumers whose confusion could influence consumers.” 14 Rearden, 683 F.3d at 1214. Proving actual confusion is difficult, and while it is a relevant factor 15 for likelihood of confusion purposes, “its importance is diminished at the preliminary injunction 16 stage of the proceedings.” Network Automation, 638 F.3d at 1151. 17 Nordstrom argues that shoppers have confused Nordstrom Rack as being the source of 18 NoMoreRack’s services. Dkt. # 10 at 25. To support this claim, Nordstrom provides six 19 instances of actual confusion: 20 1) A shopper “Katie” contacted Nordstrom’s live chat representative with a sizing question for a dress found on NoMoreRack. Marx Dec., Ex. A. 21 22 2) A shopper “Stacey” contacted Nordstrom’s live chat representative after receiving a wrong order, which was actually purchased from NoMoreRack. Marx Dec., Ex. B. 23 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 11 1 2 3 3) An anonymous post on “The Nest” website, where a user was confused on whether a post about NoMoreRack was referring to Nordstrom Rack. Silbert Dec., Ex. A. 4) An anonymous post on the “Babycenter” website, where a user was confused whether NoMoreRack referred to Nordstrom Rack. Silbert Dec., Ex. B. 4 5 6 5) A Twitter post where a user tweeted, “Sign up for Nordstrom’s online discount Rack store. . . http://nomorerack.com.” Silbert Dec., Ex. C. 7 6) An anonymous poster on “NW Bargains” website wrote, “There is yet another daily deal site called, NoMoreRack, -[I] guess as in no more Nordstrom Rack!” Silbert Dec., Ex. D. 8 NoMoreRack contends that the examples are “ambiguous, unreliable, minimal and not 9 truly demonstrative of actual confusion.” Dkt. # 30 at 22. They are rather examples of 10 “misdirected communications” resulting from carelessness and inadvertence, which are not 11 probative of actual consumer confusion. Id. at 23. The Court agrees that the isolated instances 12 of confusion, particularly those cloaked by anonymity on the Internet, do not rise to the level of 13 actual confusion on a purchasing decision. 14 In the first two instances, the shoppers contacted Nordstrom's customer service to inquire 15 about items on NoMoreRack's site. “Katie” simply inquired about dress sizing, which is not 16 indicative of a purchasing decision. “Stacey” spoke to a representative concerning a wrong order 17 purchased through NoMoreRack. It is not clear whether “Stacey” initially bought the item 18 believing it was Nordstrom Rack’s, or whether she simply contacted the wrong customer service 19 line. As to the remaining examples, statements made in a public Internet forum may be relevant 20 in proliferating confusion among potential customers and to some extent, influencing actual 21 22 23 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 12 1 customers. However, it is unlikely that any serious consumer would be influenced to purchase 2 on NoMoreRack, believing it is Nordstrom Rack, based on an anonymous post. 2 3 Nonetheless, Nordstrom also provides two examples where direct witnesses were 4 confused about NoMoreRack’s affiliation with Nordstrom Rack: 5 6 7 8 9 10 11 12 13 1) Ms. Meister received an email from NoMoreRack, with a picture of a designer purse she had seen at Nordstrom Rack stores. She does not recall ever signing up for NoMoreRack’s email subscription because she only purchases from a handful of well-known companies online. Believing the email was from Nordstrom Rack, she clicked on the attached link to enter her billing information for the purse. However, the website did not allow her to complete the purchase. She contacted her daughter, who is Nordstrom Rack’s Vice President of Marketing, to inquire about the situation. She was informed that NoMoreRack had no affiliation with Nordstrom Rack. Meister Dec. ¶¶ 1-10. 2) Mr. Dallman was logging out of his Facebook account when an advertisement for NoMoreRack came up on his browser. He believed it was for Nordstrom Rack because “nomorerack” appeared to combine “Nordstrom” and “Rack.” He had to inspect the advertisement several times before determining it was not for Nordstrom Rack. He then contacted his sister, who is part of the Nordstrom Merchandising Group, to inform her about the misleading nature of NoMoreRack’s material. Dallman Dec. ¶¶ 1-4. 14 Mr. Dallman’s experience is not telling of actual confusion, because he came to his own 15 realization that NoMoreRack is a different entity from Nordstrom Rack. As to Ms. Meister’s 16 experience, she believed the email was from Nordstrom Rack, because she did not have any 17 reason to think it was another company. To some extent, this shows a possibility that other users 18 who unknowingly receive emails from NoMoreRack may be under the same impression. The 19 problem lies in determining whether customers would buy the item because it is from 20 “Nordstrom Rack,” or simply because they want the item itself, regardless of the source. While 21 2 Internet use is commonplace and the public is generally aware that materials circulating online are not reliable unless there is a credible source. See, e.g. Barbara Ortutay, Many people 23 don’t trust online information, report finds, NBC News, Dec. 14, 2011, www.nbcnews.com/ id/45670764/ns/technology_and_science-tech_and_gadgets/t/many-people-dont-trust-online24 information-report-finds/. 22 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 13 1 this evidence of this potential customer confusion is relevant, the Court finds that Nordstrom has 2 not sufficiently demonstrated actual confusion in this case. For the little weight this factor bears 3 in the overall analysis, it weighs against a likelihood of confusion. 4 e. Marketing Channels Used 5 Generally, “[c]onvergent marketing channels increase the likelihood of confusion.” 6 Sleekcraft, 599 F.2d at 353. This factor becomes less important when the marketing channel is 7 less obscure. Network Automation, 638 F.3d at 1151. Thus, the shared use of a “ubiquitous 8 marketing channel” like the Internet does not shed much light on likelihood of consumer 9 confusion. Id. Nordstrom, however, argues that it heavily advertises NORDSTROM RACK 10 products in the “niche marketplace” of social media. Both Nordstrom and NoMoreRack 11 advertise on their respective Facebook pages, regularly use Twitter to advertise deals, and 12 operate YouTube Channels. Silbert Dec., Ex. G-L. It is clear that in the Internet marketing 13 space, both Nordstrom and NoMoreRack operate in the same social media outlets. However, the 14 Court declines to further define social media as a "niche marketplace" within the broader context 3 15 of Internet advertising. This factor is accordingly neutral. 16 f. Type of Goods and the Degree of Purchaser Care 17 “It is assumed that buyers will exercise greater care in the purchases of expensive goods.” 18 Official Airlines Guides, Inc. v. Goss, 6 F.3d 1385, 1393 (9th Cir. 1993). However, the Court 19 cannot focus solely on the price of the items alone. Today, consumers who use the Internet for 20 shopping are generally sophisticated. See Network Automation, 638 F.3d at 1152-53 21 3 Social media has significantly grown in popularity and is used as a routine vehicle for most Internet marketing strategies today. See David Mielach, Social Media Marketing Expecting 23 a Slowdown, Business News Daily, Aug. 17, 2012, http://www.businessnewsdaily.com/3019social-marketing-slowdown.html (“As it currently stands, 88 percent of companies with at least 24 100 employees will use social media and social networks for marketing”). 22 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 14 1 (acknowledging that the default degree of consumer care is heightened as online commerce 2 becomes commonplace). Particularly when there is a prerequisite to a transaction, such as 3 signing up as a member, a reasonably prudent consumer would exercise a higher degree of care. 4 Beyond the Rack, No. C12-1387-TSZ at *26. NoMoreRack requires all customers to sign up 5 with an email and password prior to making a purchase. Further, while Nordstrom Rack and 6 NoMoreRack's prices are relatively inexpensive, the products themselves are brand name goods 7 typically found at higher prices. The retailers are not selling inexpensive goods, but rather 8 quality goods at discounted prices. Thus, a reasonably prudent consumer would exercise a 9 higher degree of care here and this factor weighs against likelihood of confusion. 10 g. Defendant’s Intent in Selecting the Mark 11 While intent to deceive consumers is not required, it is strong evidence of a likelihood of 12 confusion. Entrepreneur Media, 279 F.3d at 1148 (internal citations omitted). When the alleged 13 infringer knowingly adopts a mark similar to another’s, the presumption is that the defendant can 14 accomplish the purpose of deceiving the public. Sleekcraft, 599 F.2d at 354. Nordstrom 15 contends that NoMoreRack adopted its marks with knowledge of their similarity to the Rack 16 marks. Dkt. # 10 at 25. Citing Discovery Communications, Inc. v. Animal Planet, Inc., 17 Nordstrom argues that NoMoreRack acted in bad faith because it was on constructive and actual 18 notice of Nordstrom’s rights to the Rack marks. 172 F.Supp.2d 1282, 1290 (C.D. Cal. 2001) 19 (finding there was willful intent to infringe where the defendant increased usage of the disputed 20 mark despite plaintiff’s notice of unauthorized use and defendant’s assurances it would cease 21 using the marks). Despite receiving Nordstrom’s cease and desist letters, NoMoreRack 22 continued to use its marks. Ferron Dec. ¶ 5. 23 Absent further evidence, the Court declines to find that NoMoreRack intended to deceive 24 the public when selecting its mark. First, the Court has determined RACK and THE RACK ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 15 1 occupy a crowded field of similar marks in the retail industry, so there is no indication that 2 NoMoreRack chose to incorporate “Rack” into its name in bad faith. Second, it continued to use 3 NOMORERACK believing the marks did not infringe on Nordstrom’s Rack marks. See 4 Schneider Dec. ¶¶ 6-7. The facts are distinguished from Discovery Communications, because 5 there the defendant acknowledged the unauthorized use of the infringing marks, but continued to 6 use them anyway, clearly evidencing bad faith. There is nothing to suggest that NoMoreRack 7 acted in bad faith here. This factor does not weigh in favor of likelihood of confusion. 8 h. Likelihood of Expansion of Product Lines 9 A “strong possibility” that either party may expand its business to compete with the other 10 weighs in favor of likelihood of confusion. Sleekcraft, 599 F.2d at 354. “When goods are 11 closely related, any expansion is likely to result in direct competition.” Id. NoMoreRack does 12 not plan to go into a brick and mortar business, which would be in direct competition with 13 Nordstrom Rack. Dkt. # 30 at 20. At oral argument, Nordstrom indicated a possibility of 14 entering a hybrid flash sales business similar to NoMoreRack’s model. However, Nordstrom 15 provides no other evidence that it will take any significant steps to implement this business 16 within the course of this litigation. Either way, this factor lends little weight to the overall 17 analysis, given that the parties are already competitors in the retail industry. 18 i. Overall Analysis of the Sleekcraft Factors 19 In sum, only two of the eight Sleekcraft factors weigh in favor of finding a likelihood of 20 confusion: the strength of the NORDSTROM RACK mark and the proximity of the goods and 21 services offered by both parties. After balancing the remaining factors, the Court finds there is 22 no likelihood of confusion present. Thus, with the current evidence on record, Nordstrom likely 23 cannot prevail on the merits of its trademark infringement claim. 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 16 1 2 2. Dilution by Tarnishment To prevail on a trademark dilution claim under the Trademark Dilution Revision Act 3 (“TDRA”) of 2006, 15 U.S.C. § 1125(c), “a plaintiff must show that: (1) the mark is famous and 4 distinctive; (2) the defendant is making use of the mark in commerce; (3) the defendant’s use 5 began after the mark became famous; and (4) the defendant’s use of the mark is likely to cause 6 dilution by blurring or dilution by tarnishment.” Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 7 634 (9th Cir. 2008). Likelihood of dilution may be found regardless of the presence of actual or 8 likely confusion, competition or actual economic injury. 15 U.S.C. § 1125(c)(1); Louis Vuitton 9 Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 264 (4th Cir. 2007). Nordstrom does 10 not argue a blurring claim, so only dilution by tarnishment will be discussed. 11 a. Famous and distinctive mark 12 Under the TDRA, “a mark is famous if it is widely recognized by the general consuming 13 public of the United States as a designation of source of the goods or services of the marks 14 owner.” 15 U.S.C. § 1125(c)(2)(A). To determine the requisite degree of fame, the court may 15 consider all relevant factors including: (i) the duration, extent, and geographic reach of 16 advertising and publicity of the mark, whether advertised or publicized by the owner or third 17 parties; (ii) the amount, volume and geographic extent of sales or goods; (iii) the extent of the 18 mark’s actual recognition; (iv) whether the mark is registered. Id. 19 Nordstrom Rack argues that its mark is famous and distinctive, because it is one of the 20 leading fashion retailers in the U.S. Since first opening in 1973, Nordstrom now operates 119 21 Nordstrom Rack stores in 27 states and the District of Columbia, grossing more than $2 billion in 22 annual revenue. Dkt. # 10 at 8-9. In 1986, NORDSTROM RACK was registered on the 23 USPTO’s principal register where it continuously remains to this day. Id. at 10. For decades, 24 public awareness of Nordstrom Rack has been fostered through paid and unpaid advertising ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 17 1 channels, including “direct mail, local newspaper ads, radio spots, billboards, and print articles” 2 as well as the recent shift to online advertising, email and social media. Id. NoMoreRack does 3 not dispute that NORDSTROM RACK is famous, and instead argues that RACK or THE RACK 4 standing alone is not famous “absent the NORDSTROM house mark.” Dkt. # 30 at 25; Dkt. # 5 62 at 14. NoMoreRack in effect concedes to NORDSTROM RACK meeting the fame 6 requirement. With this finding, combined with consideration of all the relevant factors, 7 Nordstrom has sufficiently demonstrated that NORDSTROM RACK meets the fame 8 requirement. See Nike, Inc. v. Nikepal Intern., Inc., No. 05-1468, 2007 WL 2782030, at *5-6 9 (E.D. Cal. Sept. 18, 2007) (finding NIKE famous because it “had spent in excess of a billion 10 dollars for promotion” in the U.S., it grossed least $1 billion in sales per year, it was recognized 11 for success by various publications, and registered on the principal register). 12 b. Defendant using mark in commerce 13 To determine this prong, the Court must evaluate whether NoMoreRack’s marks fall 14 within the definition of the statute. The TDRA defines dilution by tarnishment as an “association 15 arising from the similarity between a mark or trade name and a famous mark that harms the 16 reputation of the famous mark.” 15 U.S.C. § 1125(c)(2)(C). Thus the inquiry is twofold, 17 whether there is similarity between the marks at issue, and whether there is harm to the famous 18 mark’s reputation. 19 As to “similarity” of the marks, courts formerly employed an “identical or nearly 4 20 identical” standard under the Federal Trademark Dilution Act (“FTDA”) of 1995. E.g. Playboy 21 4 According to the FTDA: “The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against 23 another person’s commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark. . . .” 15 24 U.S.C. § 1125(c)(1) (2005). 22 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 18 1 Enterprises, Inc. v. Welles, 279 F.3d 796, 806 (9th Cir. 2002) (establishing that in order for a 2 dilution claim to succeed, the mark used by the alleged diluter must be identical or nearly 3 identical to the protected mark). However, when Congress enacted the TDRA, it replaced the 4 FTDA with a more detailed statute, notably providing relief for “likely” and not “actual” 5 dilution, as well as explicitly defining “blurring” and “tarnishment.” Levi Strauss & Co. v. 6 Abercrombie & Fitch Trading Co., 633 F.3d 1158, 1165-66 (9th Cir. 2011). Under the new 7 “likelihood of dilution” standard, the Ninth Circuit ruled that in the blurring context, the plain 8 meaning of the TDRA no longer requires a plaintiff to “establish that the junior mark is identical, 9 nearly identical or substantially similar to the senior mark.” Id. at 1172. The Court explained 10 that Congress specifically used the word “similarity” without joining adjectives that would 11 suggest a higher standard. Id. at 1171. Further, the blurring provision enumerates a non12 exhaustive list of factors to consider, in which “degree of similarity” is a listed factor. 5 Id. As 13 such, the Court reasoned that similarity between the marks is not a “necessarily controlling 14 factor” in the inquiry. Id. at 1172. 15 Presumptively, the same standard applies in evaluating tarnishment claims. Following 16 the Ninth Circuit’s reasoning, the Court turns to the plain meaning of the statute. See U.S. 17 Aviation Underwriters, Inc. v. Nabtesco Corp., 697 F.3d 1092, 1096 (9th Cir. 2012) (finding 18 courts not only examine “the specific provision at issue, but also the structure of the statute as a 19 whole, including its object and policy”). In the broad sense, blurring and tarnishment are simply 20 5 The dilution by blurring provision provides that the court may consider all relevant factors, including: (i) the degree of similarity between the mark or trade name and famous mark; 22 (ii) the degree of inherent or acquired distinctiveness of the famous mark; (iii) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; (iv) 23 the degree of recognition of the famous mark; (v) whether the user of the mark or trade name intended to create an association with the famous mark; (vi) any actual association between the 24 mark or trade name and the famous mark. 15 U.S.C. § 1125(c)(2)(B). 21 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 19 1 two types of dilution, which are found under the same, overarching “likelihood of dilution” 2 standard. The language construction of “similarity” is identical in both provisions. Compare § 3 1125(c)(2)(B) (dilution by blurring is an “association arising from the similarity between a mark 4 or trade name and a famous mark. . .”), with § 1125(c)(2)(C) (dilution by tarnishment is an 5 “association arising from the similarity between a mark or trade name and a famous mark. . .”). 6 Absent other words or indications in the statute to suggest a different standard for tarnishment, 7 the Court is convinced that the degree of similarity required is the same as blurring. 8 This leaves the issue of the enumerated factors found in blurring, but not tarnishment. 9 The Ninth Circuit reasoned that since “degree of similarity” is specifically enumerated in the 10 blurring provision, it lends further justification for the less stringent similarity standard. The 11 factors listed are those relevant in determining whether the junior mark “impairs the 12 distinctiveness of the famous mark” as proscribed in the blurring definition. 15 U.S.C. § 13 1125(c)(2)(B). This suggests that the factors, while relevant to the consideration of similarity, 14 are grounded in what is likely to cause blurring. In other words, what makes the marks “similar” 15 for purposes of blurring is tied to evaluating a junior mark’s likelihood of impairing a senior 16 mark based on those factors. There are no similar factors listed for tarnishment, because what 17 “harms the reputation of the famous mark” is an entirely different inquiry. Thus, the same 18 requirement of similarity applies for both blurring and tarnishment claims. 19 Here, the parties do not explicitly address the issue of similarity, rather relying on the 20 arguments made in the infringement context. Nordstrom argues that the marks are similar in 21 sight, sound and meaning, therefore satisfying this low threshold requirement. Dkt. # 37 at 11. 22 NoMoreRack relies on a conclusory assertion that mere association between the marks is not 23 enough to show similarity. Dkt. # 62 at 14-15. The considerations for determining similarity for 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 20 1 dilution have not been clearly defined. However, the Court is persuaded that the factors of 2 appearance, sound and meaning, which are relevant in evaluating infringement, are also relevant 3 here. The Court has already determined that taken in their entirety, NORDSTROM RACK and 4 NOMORERACK are not similar, because the shared characteristics in sound and stylization of 5 the “Rack” portions do not overcome the significant differences in overall appearance and 6 meaning. Thus, NORDSTROM RACK and NOMORERACK are not sufficiently similar to 7 trigger protection under the dilution statute. However, even assuming that Nordstrom satisfies 8 this element, the tarnishment argument would also fail in the harm requirement discussed below. 9 10 c. Use of mark after it is famous Absent a showing of similarity between the marks, this factor is no longer a necessary 11 inquiry to the analysis. However, since NoMoreRack does not address whether it used its marks 12 after NORDSTROM RACK achieved fame, it has effectively conceded this point. 13 d. Likely to cause dilution by tarnishment 14 This last prong focuses on whether the use of the junior mark “harms the reputation of the 15 famous mark.” 15 U.S.C. § 1125(c)(2)(C). Courts have found that harm “generally arises when 16 the plaintiff’s trademark is linked to products of shoddy quality, or is portrayed in an 17 unwholesome or unsavory context likely to evoke unflattering thoughts about the owner’s 18 product.” Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 111 (2d Cir. 2010) (quoting Deere & Co. 19 v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir. 1994)). For example, there is some consensus 20 among courts across jurisdictions that a famous mark is tarnished when it is semantically 21 associated with a new mark used to sell sex-related products. See V Secret Catalogue, Inc. v. 22 Moseley, 605 F.3d 382, 388 (6th Cir. 2010). A trademark may also be diluted by tarnishment if 23 the mark loses its ability to serve as a “wholesome identifier” of the plaintiff’s product. 24 Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97, 110 (2d Cir. 2009) (citing Hormel ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 21 1 Foods Corp. v. Jim Henson Prods., Inc., 73 F.3d 497, 507 (2d Cir. 1996)). The Second Circuit 2 found that the relevant inquiry is how the junior mark’s product affects the positive impressions 3 about the famous mark’s product, and not whether a consumer simply associates a negative4 sounding junior mark with the famous mark. Starbucks, 588 F.3d at 110. 5 In the present case, the Court must determine whether allegations of NoMoreRack’s 6 negative reputation, rises to the level of harm to Nordstrom Rack’s reputation. Nordstrom 7 submits the following evidence of NoMoreRack’s reputation: 8 9 1) Better Business Bureau (“BBB”) business review shows NoMoreRack’s Vancouver office received 304 complaints beginning October 12, 2010, and NoMoreRack’s New York business received 19 complaints beginning August 29, 2012. Furey Dec. ¶¶ 6-7 (Dkt. # 21). 10 11 2) Scambook.com lists 257 complaints about NoMoreRack from August 31, 2011 to November 19, 2012, with an estimated $120,228.84 in reported monetary damages. Id. at ¶ 10. 12 13 3) Sitejabber.com lists 240 reviews on NoMoreRack from December 15, 2010 to November 19, 2012, listing the company as “Not Recommended” with a rating of 1.5 stars. Id. at ¶ 12. 14 15 16 17 18 19 20 4) Complaintsboard.com lists 317 complaints against NoMoreRack as of November 19, 2012. Id. at ¶ 14. 5) The Daily Goodie Bag, an online blog, captured over 50 negative comments that were initially posted on NoMoreRack’s Facebook page, which were subsequently deleted from Facebook. Furey Supp. Dec. ¶¶ 4-5. 6) Third party Facebook pages devoted to providing a forum for NoMoreRack complaints, including “Nomorerack Consumer Complaints and Hate Page.” Id. at ¶ 6-8. 7) Since November 2012, the number of BBB complaints against NoMoreRack’s Vancouver, New York and Delaware offices exceeds 1,500. Id. at ¶ 10. 21 Nordstrom alleges that NoMoreRack’s “shoddy service” is in the form of fraudulent credit card 22 charges, undelivered goods, damaged goods and unfulfilled refunds. Dkt. # 10 at 12-13. Other 23 complaints include email spam and counterfeit merchandise. Furey Supp. Dec. ¶ 17. It alleges 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 22 1 that NoMoreRack’s reputation is further damaged through its affiliation with BidRack.com, a 2 website that gained notoriety as a penny auction scam. Dkt. # 37 at 5. 3 NoMoreRack admits that in February 2011, it displayed an offer from BidRack on its 4 site, but denies any affiliation with the business. Since April 2011, NoMoreRack has severed all 5 ties with BidRack. Ash Dec. ¶¶ 27-29. To counter Nordstrom’s allegations of “shoddy service,” 6 NoMoreRack submits evidence of complaints lodged against Nordstrom on similar complaint 7 forums, arguing that websites specifically designed to perpetuate complaints have little value or 8 effect on the overall determination of a company’s reputation. See Cobb Dec. ¶¶ 5-13 (Dkt. # 9 31). NoMoreRack further maintains that it has built a reputation for excellent customer service 10 and that about 80 percent of NoMoreRack customers are repeat buyers and referrals. Dkt. # 30 11 at 9; see Ash Dec. ¶¶ 19-25. NoMoreRack submits evidence of its “positive” reputation through 12 articles, customer reviews and social media examples. See Winstead Dec. ¶¶ 3-7; Ash Dec. ¶ 26. 13 The Court is cognizant that there is no steadfast rule on whether an association resulting 14 from a company’s “negative” reputation results in the type of “harm” embodied in the statute. A 15 finding of harm is a fact-specific inquiry, and it is possible that the junior mark’s overall negative 16 reputation could place the famous mark’s product or service in a bad light. See Playmakers, LLC 17 v. ESPN, Inc., 297 F.Supp.2d 1277, 1285 (W.D. Wash. 2003) (“‘Tarnishment’ is a form of 18 dilution in which the junior user places the famous mark in a bad light, generally one that 19 involves sexual activity, obscenity, or illegal activity.”). The issue is whether the facts support a 20 threshold finding that NoMoreRack’s reputation for “shoddy service” places Nordstrom Rack in 21 a bad light. The Court finds that it does not. 22 Considerations such as complaints, reduction in sales, loss of customers, and negative 23 press are all relevant to the overall determination. In this case, Nordstrom only provides 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 23 1 evidence of complaints against NoMoreRack to demonstrate its negative reputation. The 2 majority of complaints are from anonymous Internet users that have posted on various blogs and 3 forums online. Sites such as Sitejabber, Complaintsboard and Scambook are designed to 4 facilitate negative feedback from disgruntled customers or even competitors, who can write 5 multiple reviews across multiple forums. The evidence is not persuasive because there is no 6 discerning whether the number of complaints actually correlates with the business’ overall 7 reputation. BBB complaints, while a little more credible, must be evaluated in light of all other 8 considerations. NoMoreRack, on the other hand, provides evidence of positive reviews, 9 increased growth and sales figures, and positive articles to rebut Nordstrom’s argument. Upon 10 balancing the evidence of both negative and positive associations, the facts are insufficient to 11 show that NoMoreRack has a shoddy reputation. Thus, the use of NOMORERACK is not likely 12 to cause dilution by tarnishment to NORDSTROM RACK. 13 C. Irreparable Harm 14 In light of Nordstrom’s improbability of success on the merits of both the infringement 15 and dilution by tarnishment claims, the Court need not address the remaining prerequisites, but 16 will do so to discuss separate bases for denial of the injunction. Trademark infringement 17 constitutes an intangible injury in the form of loss of control of a business’ reputation, a loss of 18 trade, and loss of goodwill. See Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 19 195 (3rd Cir.1990). See also Apple Computer, Inc. v. Formula Int'l Inc., 725 F.2d 521, 526 (9th 20 Cir.1984). The presumption of irreparable harm in the trademark context appears to survive, 21 because where a plaintiff is likely to succeed on the merits of a trademark infringement claim, he 22 necessarily is likely to suffer irreparable harm. See Marlyn Nutraceuticals, Inc. v. Mucos 23 Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir.2009) (upholding the district court’s 24 application of the presumption of irreparable harm in a trademark infringement case following ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 24 1 Winter). Further, a finding of likely dilution by tarnishment is a separate basis for injunctive 2 relief proscribed in the statute. See 15 U.S.C. § 1125(c)(1). Nordstrom, having assumed that the 3 Court would reach the opposite conclusion offers little proof on the irreparable harm it would 4 suffer absent the injunction. Nordstrom simply argues that proof of actual confusion and 5 tarnishment of its Rack marks is sufficient to warrant a finding of irreparable harm. Dkt. # 37 at 6 15. Having concluded that Nordstrom did not make a substantial showing in either case, the 7 argument fails. 8 D. Balance of Hardships 9 While Nordstrom likely cannot prevail on either claim, it has not raised serious questions 10 going to the merits either. Even so, the balance of hardships must tip “sharply” in its favor. 11 Nordstrom argues there is little hardship to NoMoreRack, because it only needs to discontinue 12 the use of its marks pending trial, resulting in no harm. Dkt. # 10 at 29. NoMoreRack alleges it 13 would incur “substantial losses in revenue, inconvenience its customers and potential customers, 14 and lose half of its workforce” if the injunction issues. Dkt. # 30 at 28. It would also disrupt 15 relations with its suppliers and incur significant costs in re-branding, resulting in roughly $20 16 million in losses per month. Ash Dec. ¶¶ 30-31. Given the substantial losses NoMoreRack will 17 likely incur, the balance of hardships does not tip sharply in Nordstrom’s favor. 18 E. Public Interest 19 Enforcement of trademark rights typically serves the public interest. See State of Idaho 20 Potato Comm’n v. G&T Terminal Packaging, Inc., 425 F.3d 708, 715 (9th Cir. 2005) 21 (“Trademarks protect the public from confusion by accurately indicating the source of the 22 product. They preserve a producer’s good will in order that the purchasing public may not be 23 enticed into buying A’s product when it wants B’s product.”) (internal citations omitted). Thus, 24 the public interest factor weighs in favor of Nordstrom. ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 25 1 F. Overall Analysis 2 For the reasons stated above, Nordstrom likely cannot prevail on the merits of either the 3 trademark infringement or dilution by tarnishment claims. Further, even if Nordstrom had raised 4 serious questions going to the merits, it fails to demonstrate a likelihood of both irreparable harm 5 and that the balance of equities tips sharply in its favor. Accordingly, the Court declines to grant 6 the extraordinary remedy of a preliminary injunction at this time and DENIES Nordstrom’s 7 motion. 8 9 10 11 IV. CONCLUSION Having reviewed the relevant pleadings, the declarations and exhibits attached thereto, oral arguments, and the remainder of the record, the Court hereby finds and ORDERS that Plaintiffs’ Motion for Preliminary Injunction (Dkt. # 10) is DENIED. 12 13 14 Dated this 25 day of March 2013. 15 A 16 RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE 17 18 19 20 21 22 23 24 ORDER DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION - 26