ComPsych Corporation v. Health Champion LLC
Filing
55
ORDER denying 27 Motion for Preliminary Injunction. See attached memorandum of decision. Signed by Judge Vanessa L. Bryant on 12/13/2012. (Fernandez, Melissa)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
COMPSYCH CORPORATION
PLAINTIFF,
v.
HEALTH CHAMPION LLC,
DEFENDANT.
:
:
: CIVIL ACTION NO. 3:12cv692(VLB)
:
: DECEMBER 13, 2012
:
:
:
MEMORANDUM OF DECISION DENYING DEFENDANT’S [DKT. #27] MOTION FOR
PRELIMINARY INJUNCTION
The Plaintiff ComPsych Corporation (“ComPsych”) brings claims of
trademark infringement pursuant to Section 43(a) of the Lanham Act, 15 U.S.C.
1125(a), violation of the Connecticut Unfair Trade Practices Act Conn. Gen. Stat.
§52-110b (“CUTPA”), and common law unfair competition and trademark
infringement against Defendant Health Champion LLC (“Champion”). ComPsych
alleges that Champion infringed on its right, title and interest to the single-word
service mark “HEALTHCHAMPION” that it has been using continuously since
2006. Champion has brought counterclaims of trademark infringement pursuant
to Section 43(a) of the Lanham Act, counterfeiting in violation of Section 32 of the
Lanham Act, violation of CUTPA, and common law unfair competition and
trademark infringement against ComPsych. Champion alleges that ComPsych is
infringing on its two-word registered mark “HEALTH CHAMPION.” Champion
has moved for a preliminary injunction seeking to enjoin ComPsych from using
the “HEALTHCHAMPION” mark or any mark confusingly similar to Champion’s
mark.
1
Background
ComPsych alleges that it is a leading provider of fully integrated employee
assistance programs, behavioral programs, work-life support services, wellness
programs, and outsourced human resource administrative services. [Dkt. #1,
Compl., ¶9].
It provides services to more than 15,000 organizations covering
more than 40 million individuals throughout the United States and over 100
countries. Id. ComPsych alleges that it has been using the
“HEALTHCHAMPION” mark continuously since early 2006. Id. at ¶11.
In November 2006, ComPsych applied for federal registration of the
“HEALTHCHAMPION” Mark with the United States Patent and Trademark Office
(“PTO”). [Dkt. # 27, Ex. L]. On December 5, 2008, the PTO Examiner issued a
final rejection of ComPsych’s application. [Dkt. #27, Ex. M]. The Examiner stated
that registration was refused because “the mark for which registration is sought
so resembles the mark shown in U.S. Registration No.2080943 [CHAMPION
HEALTH] as to be likely, when used on the identified services to cause confusion,
or to cause mistake, or to deceive.” Id. at 4. The Examiner further explained
these “marks are similar because they are transpositions of reverse
combinations of the same terms and convey the same meaning” and that
“[c]onfusion is likely between two marks consisting of reverse combinations of
the same elements if they convey the same meaning or created substantially
similar commercial impression.” Id. The Examiner also concluded that
2
respective services are related because the registrant Champion Health also
provided health care information in the nature of chiropractic care services. Id. at
5. In June 2009, ComPsych filed a notice of appeal with the Trademark Trial and
Appeal Board (“TTAB”). [Dkt. #27, Ex. N]. ComPsych failed to file an appeal brief
with the TTAB resulting in dismissal of the appeal in September 2009. [Dkt.# 27,
Ex. Q].
ComPsych asserts that despite the rejection of its application to register
the mark and the reasons for the rejection, it uses the mark as follows: “Our
HealthChampion program is designed to help employees effectively navigate
their medical plan and benefits, guide them through health care options, connect
them with the right resources and advocate for timely and fair resolution of
issues. ComPsych HealthChampion specialists partner with the employee to
walk him or her through all aspects of their issue and, using a completely
inhouse, integrated mode, ensure that the employee is fully supported with
employee assistance program and/or work life services.” [Dkt. #36, Grenolds
Decl., ¶6].
Champion contends that ComPsych first used the term
“HEALTHCHAMPION” on its website in 2006 and then removed the term from its
website in 2007. [Dkt. #27, p.4]. Champion further contends that the term did not
reappear on ComPsych’s website until sometime after July 29, 2011. Id.
Champion argues that ComPsych therefore abandoned use of the mark for over
three years. Champion points to archived screenshots from http://archive.org to
support this contention which ComPsych contends is inadmissible hearsay.
3
However, ComPsych admits that it’s “promotion of the HEALTHCHAMPION Mark
on the internet was not continuous.” [Dkt. #36, Grenolds Decl., ¶24]. ComPsych
explains that to keep its web page from becoming cluttered it only displays a
representative sample of its overall service offerings and several of its offerings,
including some of which are federally registered, do not appear on the website
but are active and offered to clients. Id. at ¶¶27-27.
ComPsych avers that it “has extensively promoted its HEALTHCHAMPION
program via client presentation and client proposals” which prominently use the
HEALTHCHAMPION mark. Id. at ¶¶9-10. These presentations and proposals “are
multi-faceted promotional activities, and often involve the distribution of written
overview sheets, customized slide show presentations, and verbal discussions.”
Id. at ¶10. ComPsych attests that these materials have been circulated to a wide
range of ComPsych clients and prospects across multiple industries, in every
region of the country.” Id. at ¶11. ComPsych has presented to the Court
representative samples of these materials which were distributed in each year
from 2006 through 2012. Id. at ¶¶13-19. ComPsych represents that these
materials were distributed to on average ten companies per year. Approximately
sixty different companies received these materials which prominently displayed
the “HEALTHCHAMPION” mark from 2006 through 2012. [Dkt.# 36, p.5-11].
Champion alleges that it “consists of a group of health care professionals
that specialize in helping patients navigate the health care delivery system on
behalf of individuals and families and empowers its clients to receive the best
medical treatment available.” [Dkt. #27, Mem., p. 2]. Champion’s services include
4
personal health care concierge services, health care guidance and support, elder
care services, Medicare assistance, help with choosing the right health insurance
plan and understanding health insurance plans, claims assistance and appeals,
and spending and reimbursement accounts. Id. Champion avers that it has been
using the “HEALTH CHAMPION” mark in interstate commerce as its company
name, logo and brand name since at least early 2008. Id. On November 10, 2010,
Champion “applied for federal registration of the mark for services generally
related to insurance issues, healthcare benefits, and case management services.
Id. at 3. The mark was registered on November 29, 2011. Id. Champion points
out that ComPsych did not contest or oppose its 2010 application.
Legal Standard
Historically, a “party seeking a preliminary injunction must demonstrate (1)
irreparable harm in the absence of the injunction, and (2) either (a) a likelihood of
success on the merits or (b) 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.” MyWebGrocer, LLC v. Hometown Info., Inc., 375
F.3d 190, 192 (2d Cir.2004) (internal quotation marks and citation omitted).
Contrastly, the Second Circuit held that in the context of copyright
infringement actions the traditional standard for injunctive relief had been
abrogated by the Supreme Court’s decision in eBay, Inc. v. MercExchange, L.L.C.,
547 U.S. 388 (2006). Salinger v. Colting, 607 F.3d 68, 74-75 (2d Cir. 2010). The
Second Circuit held that a preliminary injunction should issue where the plaintiff
5
has shown a likelihood of success on the merits and that (1) “he is likely to suffer
irreparable injury in the absence of an injunction”; (2) “remedies at law, such as
monetary damages, are inadequate to compensate for that injury”; (3) the balance
of hardships tips in his favor; and (4) “the ‘public interest would not be disserved’
by the issuance of a preliminary injunction.” Salinger, 607 F.3d at 80 (citing eBay,
547 U.S. at 391).
The Second Circuit in Salinger “emphasize[d] that courts should be
particularly cognizant of the difficulty of predicting the merits of a copyright claim
at a preliminary injunction hearing.” Id.
The Salinger court also altered the
irreparable harm inquiry. Formerly, “when a copyright plaintiff makes out a prima
facie showing of infringement, irreparable harm may be presumed”
ABKCO
Music, Inc. v. Stellar Records, Inc., 96 F.3d 60, 64 (2d Cir. 1996) (citations omitted).
This same presumption also applied in trademark infringement actions.
See
Weight Watchers Int’l, Inc. v. Luigino’s, Inc., 423 F.3d 137, 144 (2d Cir. 2005) (“A
plaintiff who establishes that an infringer's use of its trademark creates a
likelihood of consumer confusion generally is entitled to a presumption of
irreparable injury” when seeking injunctive relief, a presumption that can be
overcome if the party seeking the injunction has delayed in seeking the
injunction); New Kayak Pool Corp. v. R & P Pools, Inc., 246 F.3d 183, 185 (2d Cir.
2001) (“In Lanham Act cases such as this one, where the plaintiff has a protected
mark, a showing of likelihood of confusion establishes both a likelihood of
success on the merits and irreparable harm.”) (internal quotation marks and
citation omitted). In Salinger, the Second Circuit warned that courts “must not
6
adopt a ‘categorical’ or ‘general’ rule or presume that the plaintiff will suffer
irreparable harm … The court must actually consider the injury the plaintiff will
suffer if he or she loses on the preliminary injunction but ultimately prevails on
the merits, paying particular attention to whether the remedies available at law,
such as monetary damages, are inadequate to compensate for that injury.”
Salinger, 607 F.2d at 80. Thus “courts must not simply presume irreparable harm
... [instead, a plaintiff must show that] the failure to issue a[ ] [preliminary]
injunction would actually cause irreparable harm.” Id. at 82 (citing eBay, 547 U.S.
at 393).
While the Second Circuit, in Salinger, stated that its holding applied to
“preliminary injunctions in the context of copyright cases” the court also
observed that it saw “no reason that eBay would not apply with equal force to an
injunction in any type of case.” Salinger, 607 F.3d at 78 n. 7 (emphasis in
original).
Although the Second Circuit “has not yet spoken on this issue in the
context of trademark infringement actions, Salinger suggest that these cases
should be analyzed under the standards for injunctive relief articulated by the
Supreme Court in eBay.” U.S. Polo Ass’n, Inc. v. PRL USA Holdings, Inc., 800
F.Supp.2d 515, 539-40 (S.D.N.Y. 2011).
“Prior to Salinger, there was a split
among districts about the applicability of the eBay standard to trademark cases”
but it appears most courts have applied eBay’s standard to trademark actions
post Salinger.
Id. (collecting cases).
However this Court need not address
whether the Second Circuit’s opinion in Salinger extends to disputes outside the
copyright context as Champion has failed to demonstrate a likelihood of success
7
on the merits or sufficiently serious questions going to the merits and a balance
of hardships tipping decidedly in the movant's favor to meet either standard as
explained below.
Analysis
“[R]egistration of a federal mark confers upon the owner of the mark a
presumption that the owner has the exclusive right to use the mark nationwide.”
Patsy’s Italian Restaurant, Inc. v. Banas, 658 F.3d 254, 266 (2d Cir. 2011) (citing 15
U.S.C. § 1115(a)).
“In order to prevail on a trademark infringement claim for
registered trademarks, pursuant to 15 U.S.C. § 1114, or unregistered trademarks,
pursuant to 15 U.S.C. § 1125(a)(1), a plaintiff must establish 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,’ 15 U.S.C. § 1114(1)(a), (5), without the plaintiff's
consent.” 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 406-07 (2d Cir.
2005) (citations omitted). “In addition, the plaintiff must show that defendant's
use of that mark ‘is likely to cause confusion ... as to the affiliation, connection, or
association of [defendant] with [plaintiff], or as to the origin, sponsorship, or
approval of [the defendant's] goods, services, or commercial activities by
[plaintiff].’” Id. (quoting 15 U.S.C. § 1125(a)(1)(A)).
The Plaintiff, or in this case
the counterclaim Plaintiff Champion, must show priority of right over ComPsych
in order to be entitled to relief as “United States trademark rights are acquired
by, and dependent upon, priority of use.” ITC Ltd. v. Punchgini, Inc., 482 F.3d 135,
155 (2d Cir. 2007).
8
Champion argues that after 2006 ComPsych abandoned its use of the mark
and cannot now revive its rights to the mark. Champion further argues that there
is prima facie evidence of abandonment under the Lanham Act because
ComPsych failed to use the mark for over three consecutive years resulting in a
rebuttable
presumption
of
abandonment.
ComPsych
contends
it
never
abandoned its use of the mark without intent to resume use as demonstrated by
its distribution of client presentations and proposals which prominently featured
the mark from 2006 through 2012. ComPsych implies that Champion abandoned
the mark because Campion failed to protect the mark by objecting to its
application to register the mark. Finally, ComPsych argues that it has priority
rights to the mark through its prior continuous use.
In the typical abandonment scenario, the owner of a mark registered with
the PTO will bring a civil action against a person alleged to have used the mark
without the owner's consent under section 32(1)(a) of the Lanham Act. ITC Ltd. v.
Punchgini, Inc., 482 F.3d 135, 145-46 (2d Cir. 2007) (citing 15 U.S.C. § 1114(1)(a)).
In such a scenario “[e]ven if a plaintiff makes the showing required by federal …
the alleged infringer may nevertheless prevail if it can establish the owner's prior
abandonment of the mark.”
Id. (citing 15 U.S.C. § 1115(b)(2)).1
“Indeed,
1
The Court also notes that “[u]nder the Lanham Act, district courts are authorized to cancel
registrations, but only ‘[i]n any action involving a registered mark.’” Nike, Inc. v. Already, LLC, 663
F.3d 89, 98 (2d Cir. 2011) (quoting 15 U.S.C. § 1119). Section 1119 provides “[i]n any action
involving a registered mark the court may determine the right to registration, order the
cancelation of registrations, in whole or in part, restore canceled registrations, and otherwise
rectify the register with respect to the registrations of any party to the action. Decrees and orders
shall be certified by the court to the Director, who shall make appropriate entry upon the records
of the Patent and Trademark Office, and shall be controlled thereby.” 15 U.S.C. §1119.
9
abandonment is not only an affirmative defense to an infringement action; it is a
ground for cancelling a federally registered mark.” Id. (citing 15 U.S.C. § 1064(3)).
The present case departs from the typical scenario in that the owner of the
registered mark, Champion, is defending the validity of its mark by claiming that
the infringer, ComPsych, abandoned its prior use of the mark which would have
given it priority rights to the use of the mark over Champion.
In order to
determine whether Champion has demonstrated a likelihood of success on the
merits, the Court must examine whether ComPsych has abandoned its use of the
mark. If ComPsych did not abandon the mark, then it would possess a priority
right to use the mark over Champion and there would be grounds to cancel
Champion’s registered mark. There would therefore be no likelihood of success
on the merits or sufficiently serious questions going to the merits if ComPsych
had never abandoned its use of the mark.
“The abandonment doctrine derives from the well-established principle that
trademark rights are acquired and maintained through use of a particular mark.”
ITC, 482 F.3d at 146. “‘There is no such thing as property in a trade-mark except
as a right appurtenant to an established business or trade in connection with
which the mark is employed.’” Pirone v. MacMillan, Inc., 894 F.2d 579, 581 (2d
Cir.1990) (quoting United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97,
(1918)). “This is true even of marks that have been registered with the Patent and
Trademark Office.” ITC, 482 F.3d at 146 (citing Basile, S.p.A. v. Basile, 899 F.2d
35, 37 n. 1 (D.C.Cir.1990) (“Although [a mark's] registration is a predicate to its
protection under [section 32(1)(a) of] the Lanham Act, the underlying right
10
depends not on registration but rather on use.”)).
“Indeed, one of the
fundamental premises underlying the registration provisions in the Lanham Act is
that trademark rights flow from priority and that priority is acquired through use.”
Id. See, e.g., 15 U.S.C. § 1057(c) (stating that registration of mark “shall constitute
constructive use of the mark, conferring a right of priority, nationwide in effect ...
against any other person except for a person whose mark has not been
abandoned and who, prior to such filing[,] ... has used the mark”). “Thus, so long
as a person is the first to use a particular mark to identify his goods or services in
a given market, and so long as that owner continues to make use of the mark, he
is entitled to prevent others from using the mark to describe their own goods in
that market.” ITC, 482 F.3d at 147 (internal quotation marks and citation omitted).
“If, however, an owner ceases to use a mark without an intent to resume
use in the reasonably foreseeable future, the mark is said to have been
‘abandoned.’” Id.; see 3 J. Thomas McCarthy, McCarthy on Trademarks and
Unfair Competition, § 17:5, at 17–8 (4th ed.2002) (observing that “abandonment”
refers to situations involving the “non-use of a mark, coupled with an express or
implied intention to abandon or not to resume use”).
“Once abandoned, a mark
returns to the public domain and may, in principle, be appropriated for use by
other actors in the marketplace, in accordance with the basic rules of trademark
priority.” ITC, 482 F.3d at 147 (citations omitted).
“The party asserting abandonment bears the burden of persuasion with
respect to two facts: (1) non-use of the mark by the legal owner, and (2) lack of
intent by that owner to resume use of the mark in the reasonably foreseeable
11
future.” Id.
“‘Use’ of a mark means the bona fide use of such mark made in the
ordinary course of trade, and not made merely to reserve a right in a mark.” MAK
Marketing, Inc. v. Kalapos, 620 F.Supp. 2d 295, 304 (D. Conn. 2009). “The Lanham
Act expressly states that ‘[n]onuse’ of a mark ‘for 3 consecutive years shall be
prima facie evidence of abandonment.’” ITC, 482 F.3d at 147 (quoting 15 U.S.C. §
1127). The Second Circuit has explained “that the term ‘prima facie evidence” in
this context means ‘a rebuttable presumption of abandonment.’” Id. at 148
(quoting Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir.1980)).
The “statutory presumption of abandonment requires that one fact, i.e.,
abandonment, be inferred from another fact, i.e., non-use of the mark for three
years or more. The significance of a presumption of abandonment is to shift the
burden of production to the mark owner to come forward with evidence indicating
that, despite three years of non-use, it intended to resume use of the mark within
a reasonably foreseeable time.” Id.
The Second Circuit has explained that “intent is always a subjective matter
of inference.” Saratoga Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1044 (2d
Cir. 1980).
“Thus, courts have generally held that a trademark owner cannot
rebut a presumption of abandonment merely by asserting a subjective intent to
resume use of the mark at some later date.” ITC, 482 F.3d at 150. “Rather, to
rebut a presumption of abandonment … the mark owner must come forward with
evidence with respect to ... what outside events occurred from which an intent to
resume use during the nonuse period may reasonably be inferred.” Id. (internal
quotation marks and citations omitted). In addition, some courts have held that
12
abandonment or an intent to abandon can be found where a trademark owner
fails “during a long period to assert or enforce its rights against descriptive use
by others such that the mark no longer indicates origin in one seller.” J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition §§ 17:17
(4th
ed.1999); see also McKesson & Robbins, Inc. v. Charles H. Phillips Chemical Co.,
53 F.2d 342, 345 (2d Cir. 1931), modified, 53 F.2d 1011 (2d Cir. 1931), cert. denied,
285 U.S. 552, 76 L. Ed. 942, 52 S. Ct. 407 (1932).
Here, Champion fails to satisfy its burden of persuasion to demonstrate
that ComPsych ceased to use the “HEALTHCHAMPION” mark and did not intend
to resume use of the mark. Although ComPsych’s right to continue to use the
mark
was
subject
to
question
in
view
of
the
PTO’s
ruling
that
“HEALTHCHAMPION” so resembled a prior registrant’s mark as to likely cause
confusion, ComPsych has submitted evidence that it did continue to use the
mark in client presentations and proposals which prominently featured the mark
consistently from 2006 through 2012. These presentations were distributed to on
average ten companies each year and approximately sixty different companies
received the materials during this time period. The only evidence that Champion
has presented of non-use is the fact that the mark was removed from
ComPsych’s website after 2006. However this fact is not conclusive evidence of
non-use without intent to resume where ComPsych consistently used the mark in
materials and presentations which it distributed to numerous companies
beginning in 2006, despite the PTO’s admonition.
Even the suggestion that
ComPsych did not object to Champion’s application to register its mark evinces
13
abandonment is unavailing as it was reasonable for ComPsych to assume that
Champion’s application would be rejected for the same reason its application to
register its mark was rejected and thus there was no need to object. Moreover,
“an owner of a mark is not required to police every conceivably related use … in
order to protect a definable area of primary importance.” Playboy Enterprises,
Inc. v. Chuckleberry Publishing, Inc., 486 F. Supp. 414, 422-23 (S.D.N.Y. 1980).
Consequently, Champion has failed to demonstrate a likelihood of success on the
merits or sufficiently serious questions going to the merits based on its theory
that ComPsych abandoned the mark.
In its reply brief, Champion raises three new arguments for the first time in
support of its motion for preliminary injunction. First, Champion argues that
ComPsych’s use of the mark fails to establish priority because it failed to render
any services under the mark in 2008 when Champion started using its mark.
Second, Champion argues, in view of the fact that ComPsych failed to render any
services, its analogous use of the mark would not be an alternative basis to
establish priority because it was not sufficiently widespread. Lastly, Champion
contends that ComPsych’s use of the mark was so minimal it could not constitute
the kind of bona fide use intended to afford a basis for trademark protection.
While these arguments are not replies to ComPsych’s response, the Court will
address them in the interest of judicial efficiency.
The provision of services is not necessary to validate the use of a
servicemak; instead, the owner of the mark need only use the mark to advertise
services which actually exist and which it is actually offering for sale. “It is firmly
14
established that the right to exclusive use of a trademark derives from its
appropriation and subsequent use in the marketplace. Thus, there can be no
trademark absent goods sold and no service mark without services rendered.”
American Express Co. v. Goetz, 515 F.3d 156, 161 (2d Cir. 2008) (internal
quotation marks and citations omitted). “[I]t cannot be said that a service mark is
actually used if it is displayed in an advertisement for services that are nonexistent or will only hypothetically be available at some point in the future.” Id.
“The exclusive right to a distinctive trademark “belongs to the one who first uses
it in connection with a particular line of business. Pre-sale analogous use of the
mark, such as publicity in advertising brochures, catalogs, newspaper ads, and
articles in newspapers and trade publications, or the placement of a sign ... on
the construction site may be adequate to establish prior use in commerce.”
Housing & Serv., Inc. v. Minton, No.97CIV2725(SHS), 1997 WL 349949, at *3
(S.D.N.Y. June 24, 1997) (internal quotation marks and citation marks omitted).
“Such analogous use of a mark has consistently been held sufficient ... to
establish priority rights as against subsequent users of the same or similar
marks, as long as the use is open and notorious or is of such a nature and extent
that the [mark] has become popularized in the public mind.” Id. (internal
quotation marks and citations omitted).
“The ‘talismanic’ test is whether the
mark was used ‘in a way sufficiently public to identify or distinguish the marked
goods in an appropriate segment of the public mind as those of the adopter of the
mark.’” Id. (quoting Windows User, Inc. v. Reed Business Pub. Ltd., 795 F.Supp.
103, 108 (S.D.N.Y. 1992)).
15
Use of the mark must penetrate a significant portion of the relevant market.
“It is clear that the test … is directed at the actual perception of the potential
consumers of the service, not some hypothetical person or the intent of the
marketer… it is actual public perception that is required.” T.A.B. Sys. v. Pactel
Teletrac, 77 F.3d 1372, 1376 (Fed. Cir. 1996). The Federal Circuit has explained
that “purchaser perception must involve more than an insubstantial number of
potential customers. For example, if the potential market for a given service were
10,000 persons, then advertising shown to have reached only 20 or 30 people as a
matter of law could not suffice. However close the linkage between the mark and
the future service, analogous use could not be shown on such facts because the
actual number of potential customers reached, not the strength of the linkage for
some reasonable potential customer, is the focal point of the analogous use
inquiry.” Id. “[I]t simply requires more than a negligible portion of the relevant
market. In other words, advertising of sufficient clarity and repetition to create
the required identification must have reached a substantial portion of the public
that might be expected to purchase the service. Thus, the user must prove that
the necessary association was created among more than an insubstantial number
of potential customers. Otherwise, he cannot show significant impact on the
purchasing public.” Id. (internal quotation marks omitted).
Champion’s only support for its contention that ComPsych failed to render
any services under the mark is based on the fact that the evidence that
ComPsych submitted in its opposition brief as to abandonment did not indicate
that it actually sold its HealthChampion service in 2008 or after.
In the absence
16
of any affirmative evidence that ComPsych failed to sell its HealthChampion
service, this Court cannot credit Champion’s contention. The Court is mindful
that “a preliminary injunction is an extraordinary remedy that should not be
granted as a routine matter.” JSG Trading Corp. v. Tray–Wrap, Inc., 917 F.2d 75,
80 (2d Cir. 1990). “Motions for preliminary injunctions are ‘frequently denied if
the affidavits [in support of the motion] are too vague or conclusory to
demonstrate a clear right to relief under Rule 65.’” Shenk v. Social Sec. Admin.,
No.12-cv-4370(SLT), 2012 WL 5196783, at *8 (E.D.N.Y. Oct. 19, 2012) (quoting 11A
C.Wright & A. Miller, Fed. Practice & Proc, § 2949 (2004)).
Champion’s bald
contention that ComPsych did not render any services under the mark during this
time period is insufficient to demonstrate a clear right to the extraordinary relief it
is seeking. Moreover, ComPsych, in its sur-reply brief, has submitted a contract
for its HEALTHCHAMPION service dated October 20, 2006, which was effective
for a five year period as representative evidence of services rendered. [Dkt. #36,
Grenolds Decl., ¶5].
In order to obtain such extraordinary relief, Champion has
to do more than simply assert that its conclusory belief is substantiated by
ComPsych’s failure to produce sufficient evidence contradicting that belief. This
line of argument is better reserved and more appropriate for summary judgment
after discovery has been completed and where the non-movant has the burden to
demonstrate a genuine dispute of material fact.
Champion further fails to demonstrate the insufficiency of ComPsych’s
advertising at this stage of the litigation.
Champion mischaracterizes
ComPsych’s evidence to argue that ComPsych only distributed proposals to 18
17
or 19 potential purchasers out of thousands. However, ComPsych has indicated
that from 2006 through 2012 it made presentations to approximately sixty
different companies.
Neither party provides evidence as to the size of the
relevant market for ComPsych’s HealthChampion service.
Although ComPsych
does admit that it provides services to more than 15,000 organizations, it is not
clear what percentage of those 15,000 organizations would be in the market for its
HealthChampion service particularly considering the diverse array of services
that ComPsych markets and provides. Without further factual development, this
Court cannot conclude on the basis of the evidence before it that ComPsych’s
advertising reached an insubstantial number of potential customers or merely a
negligible portion of the relevant market. Consequently, Champion’s argument
that ComPsych’s advertising and marketing did not constitute analogous use
sufficient to establish priority is unpersuasive at this stage of the litigation and it
has therefore failed to establish a likelihood of success on the merits on this
theory.
Lastly, Champion argues that the sales of ComPsych’s service cannot
afford a basis for trademark protection because they are de-minimis.
The
Second Circuit has explained that “[t]o prove bona fide usage, the proponent of
the trademark must demonstrate that his use of the mark has been deliberate and
continuous, not sporadic, casual or transitory.” LaSociete Anonyme des Parfums
le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1271-72 (2d Cir. 1974). There must be
“a trade in the goods sold under the mark or at least an active and public attempt
to establish such a trade. Absent these elements, no trademark can be created or
18
exist.” Id. at 1274. The Second Circuit explained that trademark rights could be
upheld “in spite of model sales programs” where the limited trademark usage
“was part of an ongoing program to exploit the mark commercially.” Id. at 127172. In contrast, “where no present intent has been found to market the
trademarked product, minimal sales have been held insufficient to establish
trademark rights.”
Id.
Even if ComPsych’s marketing of its HealthChampion
service was less than substantial and resulted in modest sales, Champion has
failed to demonstrate that such marketing was not part of an ongoing program to
exploit the mark commercially or that ComPsych did not have intent to market its
service in view of the fact that ComPsych consistently distributed its marketing
materials to various companies each year since 2006 and even after its
application for registration has been denied by the PTO. At this preliminary stage
in the litigation, Champion has failed to demonstrate that ComPsych’s use of the
mark was not deliberate and continuous but sporadic, causal or transitory.
Again, Champion has failed to satisfy its burden to demonstrate a likelihood of
success on the merits on its theory that ComPsych’s de-minimis commercial use
of the mark was insufficient to create rights of priority to the mark over
Champion.
At this preliminary stage the record is far too replete with factual issues as
to the nature and extent of ComPsych’s prior use of the mark for this Court to
determine if either party has a likelihood of success on the merits. The Court is
disinclined to issue “an extraordinary remedy that should not be granted as a
routine matter” where there are so many unresolved questions of fact and where
19
the movant has failed to proffer any substantial affirmative evidence in support of
its position. JSG Trading, 917 F.2d at 80. Champion has only proffered those
archived screenshots of ComPsych’s website and its argument that ComPsych’s
evidence submitted in opposition is deficient in support of its request for
injunctive relief.
It is clear that Champion has failed to demonstrate a likelihood of success
on the merits.
However considering the unresolved questions of fact as to
ComPsych’s de minimis or analogous use, there are sufficiently serious
questions going to the merits to make them a fair ground for litigation under the
earlier standard for injunctions. However, Champion has failed to demonstrate
that the balance of hardships tips decidedly in its favor to be entitled to injunctive
relief under that standard. It appears that both Champion and ComPsych have
endured hardships from each other’s use of a nearly identical mark for similar
services. However, there is no evidence that Champion is enduring more severe
hardships than ComPsych. Champion asserts an entirely circular argument as to
the balance of hardships.
It argues that ComPsych will suffer no hardship
because it does not own any rights to the mark and therefore could not suffer any
hardship in being enjoined from use of a mark in which it has no rights.
As
discussed above, there are significant questions of fact that preclude this Court
from finding that Champion has demonstrated a likelihood of success on its
claim that ComPsych holds no rights to the mark. If the Court were to conclude
that ComPsych does have a priority of right to the mark, then it would undeniably
suffer hardship. Consequently, the balance of hardships does not tip decidedly
20
in either direction. In sum, Champion has failed to satisfy its burden under either
the traditional preliminary injunction standard or the more recent Salinger
standard to warrant injunctive relief.
Notably, although this Court has concluded that Champion has failed to
demonstrate a likelihood of success in light of preliminary evidence that
ComPsych has been continuously using the mark before Champion, ComPsych
would not be entitled to preliminary injunctive relief in light of Champion’s
registration of the mark and the attendant presumption that the registered owner
of the mark has the exclusive right to use the mark nationwide. Patsy’s Italian
Restaurant, 658 F.3d 254 at 266. The issues presented by this case involve a fact
intensive inquiry which must be borne out by discovery and therefore preclude
this Court from finding that preliminary injunctive relief is appropriate for either
party.
Accordingly, neither party is able to make the requisite showing of
entitlement to injunctive relief on the record before the court.
Conclusion
Based upon the above reasoning, Champion’s [Dkt. #27] motion for
preliminary injunction is DENIED.
IT IS SO ORDERED.
_______/s/_ ________
Hon. Vanessa L. Bryant
United States District Judge
21
Dated at Hartford, Connecticut: December 13, 2012
22
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?