263 F.3d 1297 (11th Cir. 2001), 00-14368, Davidoff & CIE v PLD Int'l Corp.

Docket Nº:00-14368
Citation:263 F.3d 1297
Party Name:DAVIDOFF & CIE, SA, a Swiss Corporation, and LANCASTER GROUP US LLC, a Delaware Limited Liability Corporation, Plaintiffs-Appellees, v. PLD INTERNATIONAL CORPORATION, a Florida Corporation, and PHILLIPE L. DRAY, an individual Florida resident, Defendants-Appellants.
Case Date:August 28, 2001
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 1297

263 F.3d 1297 (11th Cir. 2001)

DAVIDOFF & CIE, SA, a Swiss Corporation, and LANCASTER GROUP US LLC, a Delaware Limited Liability Corporation, Plaintiffs-Appellees,

v.

PLD INTERNATIONAL CORPORATION, a Florida Corporation, and PHILLIPE L. DRAY, an individual Florida resident, Defendants-Appellants.

No. 00-14368

IN THE UNITED STATES COURT OF Appeals, FOR THE ELEVENTH CIRCUIT

August 28, 2001

Page 1298

Appeal from the United States District Court for the Southern District of Florida. D. C. Docket No. 00-02635-CV-DMM

Before ANDERSON, Chief Judge, FAY and BRIGHT[*], Circuit Judges.

ANDERSON, Chief Judge:

This case appears to be the first time that this circuit has addressed the circumstances under which the resale of a genuine product with a registered trademark can be considered infringement. We recognize the general rule that a trademark owner's authorized initial sale of its product exhausts the trademark owner's right to maintain control over who thereafter

Page 1299

resells the product; subsequent sales of the product by others do not constitute infringement even though such sales are not authorized by the trademark owner. However, we adopt from our sister circuits their exception to this general rule-i.e., the unauthorized resale of a materially different product constitutes infringement. Because we conclude that the resold products in the instant case are materially different, we affirm.

I. BACKGROUND

Davidoff & Cie, S.A., a Swiss corporation, is the manufacturer of DAVIDOFF COOL WATER fragrance products and owns the U.S. trademark. Davidoff & Cie, S.A. exclusively licenses Lancaster Group US LLC (collectively "Davidoff") to distribute its products to retailers in the United States. Working outside of this arrangement, PLD International Corporation ("PLD") acquires DAVIDOFF fragrances that are intended for overseas sale or that are sold in duty-free sales. PLD then distributes them to discount retail stores in the United States.

At the time that PLD acquires the product, the original codes on the bottom of the boxes are covered by white stickers, and batch codes on the bottles themselves have been obliterated with an etching tool. The etching leaves a mark on the bottle near its base on the side opposite the DAVIDOFF COOL WATER printing. The mark is approximately one and one-eighth inches in length and one-eighth of an inch wide. The batch codes are removed, according to PLD, to prevent Davidoff from discovering who sold the fragrances to PLD because Davidoff would stop selling to those vendors.

II. DISTRICT COURT PROCEEDINGS

Davidoff filed a complaint seeking, inter alia, a preliminary injunction against PLD1 for infringement of its trademark under the Lanham Trade-Mark Act, 15 U.S.C. § 1051 et seq.2 Davidoff alleged that PLD's distribution of the fragrances with the batch codes removed and obliterated constituted infringement. The district court held that PLD's distribution of DAVIDOFF fragrances constituted infringement by creating a likelihood of consumer confusion. In reaching this conclusion, the district court found that the

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product distributed by PLD differed from the genuine DAVIDOFF product because the removal of the batch code from the bottle by etching the glass "constitutes alteration of a product,"3 which would create a likelihood of consumer confusion. A consumer might believe that a product had been harmed or tampered with.4 Based on the infringement finding, the district court granted a preliminary injunction, prohibiting PLD from selling, repackaging or altering any product with the name "DAVIDOFF" and/or "COOL WATER" with an obliterated batch code. This appeal followed.

III. CONTENTIONS

PLD argues that it is selling genuine DAVIDOFF fragrances and that as a result no consumer can be confused. Therefore, it claims that it cannot be considered an infringer under the Lanham Act. PLD asserts that "[w]ith or without a manufacturer or batch code on its packaging, the product is absolutely the same." PLD states that the district court incorrectly relied on cases where the product itself and not just the packaging was altered.

Davidoff urges us to adopt a material difference test whereby a material difference between goods sold under the same trademark warrants a finding of consumer confusion. Davidoff argues that the obliteration of batch codes by PLD transforms the appearance of its product into a materially different, infringing product, which is likely to confuse consumers.

IV. PRELIMINARY INJUNCTION POSTURE

We review a district court's order granting or denying a preliminary injunction for abuse of discretion. McDonald's Corp. v. Robertson, 147 F.3d 1301, 1306 (11th Cir. 1998). A party seeking a preliminary injunction for trademark infringement must establish four elements: (1) substantial likelihood of success on the merits; (2) that it would be irreparably harmed if injunctive relief were denied; (3) that the threatened injury to the trademark owner outweighs the whatever damage the injunction may cause to the alleged infringer; (4) that the injunction, if issued, would not be adverse to the public interest. See id. It is well established in this circuit that "[a] preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant clearly established the `burden of persuasion'" as to all four elements. Siegel v. LePore, 234 F.3d 1163, 1176 (11th Cir. 2000) (en banc) (internal citation omitted). The issues raised by PLD in this case primarily address the first element: substantial likelihood of success on the...

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