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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

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Promatek Industries, Ltd. v. Equitrac Corporation

300 F.3d 808, No. 00-4276 (7th Cir., August 13, 2002)

The Seventh Circuit Court of Appeals holds that defendant is not allowed to use the trademark of its competitor in the meta tags of its web site, notwithstanding the fact that defendant services the product described by that mark.  The Seventh Circuit accordingly affirms the decision of the court below, which both enjoined defendant's continued use of the mark in meta tags, and required defendant to post on its web site the URL of plaintiff Promatek's web site, as well as the following language: "If you were directed to this site through the term "Copitrak," that is in error as there is no affiliation between Equitrac and that term.  The mark "Copitrak" is a registered trademark of Promatek Industries, Ltd., which can be found at www.promatek.com or www.copitrak.com."

Plaintiff Promatek Industries Ltd. ("Promatek") and defendant Equitrac Corporation ("Equitrac") are competitors in the cost recovery business, assisting their customers in such things as collecting the costs of document reproduction from their clients.  Promatek has a cost recovery product it markets under the trademark "Copitrak".  At the request of its customers, Equitrac services and maintains "Copitrak" equipment.

Equitrac instructed its web designer to use the mark "Copitrak" in the meta tags of its web site.  The web developer, by mistake, used the term "Copitrack" instead.  When plaintiff objected to this practice, Equitrac removed the mark from the meta tags of its web site, and requested search engines to cancel any links on their sites that linked "Copitrak" and Equitrac's site.

Plaintiff thereafter commenced this lawsuit, and sought and obtained a preliminary injunction, which both enjoined defendant from using the "Copitrak" mark in the meta tags of its site, and required defendant to post the language noted above on its web site.  On this appeal, the Seventh Circuit affirmed.

Relying principally on the initial interest confusion doctrine, the Seventh Circuit found that plaintiff was likely to prevail on its claims that defendant infringed its trademark in violation of the Lanham Act.  These claims require plaintiff to establish both that it has a protectible trademark (which was not contested) and that defendant's use of that mark is likely to cause consumer confusion.  Said the court:

Initial interest confusion, which is actionable under the Lanham Act, occurs when a customer is lured to a product by the similarity of the mark, even if the customer realizes the true source of the goods before the sale is consummated.  (citation omitted).  The Ninth Circuit has dealt with initial interest confusion for web sites and meta tags and held that placing a competitor's trademark in a meta tag creates a likelihood of confusion. … This is true in this case, because by Equitrac's placing the term Copitrack in its meta tags, consumers are diverted to its web site and Equitrac reaps the goodwill Promatek developed in the Copitrak mark.  That consumers who are misled to Equitrac's web site are only briefly confused is of little or no consequence. …  What is important is not the duration of the confusion, it is the misappropriation of Promatek's goodwill.

Finding that plaintiff was likely to prevail on the merits of its Lanham Act claim, the court held it was entitled to a preliminary injunction.  In the Seventh Circuit, to be entitled to such relief, a party must demonstrate a likelihood of success on the merits, that it has no adequate remedy at law, and that it will suffer irreparable harm if relief is not granted.  The court must also consider the respective hardships the parties face if the requested relief is or is not granted, and how such relief will effect the public interest.

As noted above, the Court found that Promatek was likely to succeed on the merits of its Lanham Act claims against Equitrac.  Injuries caused by the Lanham Act are presumed to be irreparable, because they injure the mark holder's goodwill, for which injury damages are difficult to measure.  The balance of the hardships favored plaintiff, because its good will would be injured by defendant's use of the mark, whereas defendant had not shown that it lost any business as a result of having to post the remedial language directed by the court on its site.  Lastly, the Court found that the public interest favored the issuance of the requested injunctive relief, because it prevents consumer confusion in the market place.  The Seventh Circuit accordingly affirmed the district court's grant of injunctive relief.

In reaching this result, the Court rejected defendant's argument that its right to use plaintiff's mark to describe its abilities to service and maintain plaintiff's "Copitrak" product allowed it to use that mark in the meta tags of its web site.  Said the Court:

What is relevant to the preliminary injunction is not that Equitrac may advertise that it is capable of servicing Copitrak.  Equitrac is free to do so; it is also free to place comparison claims on its web site, or include press releases involving the litigation between Equitrac and Promatek. (citation omitted).  It is Equitrac's use of the term Copitrack in its meta tag that is a prohibited practice because of its potential for customer confusion.

The Court also rejected defendant's argument that injunctive relief was unwarranted given the sophistication of the customers purchasing the parties' respective products, and that defendant had not, as yet, consummated a transaction through its web site.

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