North American Medical Corp. v. Axiom Worldwide
| Decision Date | 07 April 2008 |
| Docket Number | No. 07-11574.,07-11574. |
| Citation | 522 F.3d 1211 |
| Parties | NORTH AMERICAN MEDICAL CORPORATION, Adagen Medical International, Inc., Georgia corporations, Plaintiffs-Appellees, v. AXIOM WORLDWIDE, INC., a Florida corporation, James Gibson, Jr., Nicholas Exarhos, residents of Florida, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
L. Joseph Shaheen, Jr., Gardner, Wilkes, Shaheen & Candelora, Tampa, FL, Jonathan R. Granade, George P. Shingler, Casey, Gilson, Leibel, P.C., W. Scott Mayfield, Duane Morris, LLP, Atlanta, GA, for Defendants-Appellants.
Stephen M. Dorvee, Andrew Blaine Flake, Jonathan T. Barr, Arnall, Golden & Gregory, LLP, Atlanta, GA, for Plaintiffs-Appellees.
Appeal from the United States District Court for the Northern District of Georgia.
Before ANDERSON, BLACK and HILL, Circuit Judges.
Defendants-Appellants Axiom Worldwide, Inc. ("Axiom"), James Gibson, Jr., and Nicholas Exarhos appeal the district court's grant of a preliminary injunction in favor of the Plaintiffs-Appellees, North American Medical Corporation ("NAM") and Adagen Medical International, Inc. ("Adagen").1 The district court enjoined the Defendants-Appellants from engaging in certain alleged acts of trademark infringement and false advertising. We now affirm the district court's order in part and vacate and remand it in part.
We will reverse a grant of a preliminary injunction only if the district court abused its discretion. Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1246 (11th Cir. 2002). We review the district court's findings of fact under a clearly erroneous standard, noting that a finding of fact is clearly erroneous only when "although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Id. (quoting Univ. of Ga. Athletic Ass'n v. Laite, 756 F.2d 1535, 1543 (11th Cir.1985)). We review the district court's conclusions of law de novo, "understanding that `[a]pplication of an improper legal standard ... is never within a district court's discretion.'" Id. (quoting Am. Bd. of Psychiatry & Neurology, Inc. v. Johnson-Powell, 129 F.3d 1, 2-3 (1st Cir.1997)).
NAM designs and manufacturers physiotherapeutic spinal devices, commonly known as traction devices, which are used, for example, to treat lower back pain. Adagen is an authorized distributor of NAM's devices. Axiom, a competitor of NAM's, manufacturers a physiotherapeutic device known generally as the DRX 9000. Gibson and Exharhos are, respectively, the president and vice president of Axiom. In the present lawsuit, NAM and Adagen allege that Axiom engaged in unfair competition by infringing NAM's trademarks and by issuing false advertising regarding the DRX 9000.
The trademark infringement claims stem from Axiom's use of two of NAM's registered trademarks: the terms "Accu-Spina" and "IDD Therapy." Axiom included these terms on its website within meta tags.2 Although Axiom's website never displayed NAM's trademarked terms to visitors and never mentioned NAM or NAM's products, Axiom nonetheless included the terms within its meta tags to influence Internet search engines. For instance, evidence in this case indicated that, before Axiom removed these meta tags from its website, if a computer user entered the trademarked terms into Google's Internet search engine, Google listed Axiom's website as the second most relevant search result. In addition, Google provided the searcher with a brief description of Axiom's website, and the description included these terms and highlighted them.3
The false advertising claims stem from certain statements that Axiom made about its product, the DRX 9000. In particular, two representations by Axiom are relevant to this appeal.4 First, Axiom represented in various ways that an affiliation exists between NASA and Axiom or between NASA and the DRX 9000. Second, Axiom asserted in advertisements that the DRX 9000 is FDA "approved."
The district court issued a preliminary injunction in favor of NAM and Adagen, prohibiting Axiom from using NAM's trademarks within meta tags and prohibiting Axiom from making the challenged statements about the DRX 9000. Among other things, the district court specifically found that Axiom's use of NAM's trademarks created a likelihood of confusion, and the court also found that Axiom's advertising statements are literally false and material to consumers' purchasing decisions.
At the outset, we note that a district court may grant a preliminary injunction only if the movant establishes the following: "(1) a substantial likelihood of success on the merits of the underlying case, (2) the movant will suffer irreparable harm in the absence of an injunction, (3) the harm suffered by the movant in the absence of an injunction would exceed the harm suffered by the opposing party if the injunction issued, and (4) an injunction would not disserve the public interest." Johnson & Johnson, 299 F.3d at 1246-47. Axiom challenges the district court's order on multiple grounds. First, Axiom argues that NAM and Adagen failed to establish a substantial likelihood of success on the merits of their trademark infringement claims. Specifically, Axiom urges that its use of NAM's trademarks in invisible meta tags is not a "use in commerce" and does not create a likelihood of confusion. Second, Axiom argues that NAM and Adagen also failed to establish a substantial likelihood of success on the merits of their false advertising claims. Specifically, Axiom asserts that its advertising statements are not literally false and are not material to consumers' purchasing decisions. Third and finally, Axiom argues that, even assuming NAM and Adagen are likely to succeed on the merits of these unfair competition claims, the district court erred by categorically presuming that any plaintiff with a viable unfair competition claim will always suffer irreparable harm in the absence of a preliminary injunction. We address each point in turn.
Because Axiom's use of NAM's trademarks constitutes a "use in commerce" in connection with the advertisement of goods, and because the district court did not clearly err in its factual finding that a likelihood of confusion exists, NAM and Adagen demonstrated a likelihood of success on the merits of their trademark infringement claims. Regarding trademark infringement, the Lanham Act provides, in relevant part, as follows:
(1) Any person who shall, without the consent of the registrant —
(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive ...
shall be liable in a civil action by the registrant for the remedies hereinafter provided.
15 U.S.C. § 1114(1)(a) (2006). To prevail on a claim of trademark infringement in this case, plaintiffs must establish: (1) that they possess a valid mark, (2) that the defendants used the mark, (3) that the defendants' use of the mark occurred "in commerce," (4) that the defendants used the mark "in connection with the sale ... or advertising of any goods," and (5) that the defendants used the mark in a manner likely to confuse consumers. See 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 406-07 (2d Cir.2005); People for Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 364 (4th Cir.2001).
Axiom does not challenge the validity of NAM's marks, nor does Axiom dispute that its use of NAM's trademarks affects interstate commerce.5 Thus, although Axiom purports to challenge whether its placing of NAM's trademarks in its meta tags is a "use in commerce" and whether such use is likely to confuse consumers, Axiom's arguments actually focus only on the second, fourth, and fifth elements. Moreover, because Axiom separates its "use" challenge from its "likelihood of confusion" challenge, we first address the second and fourth elements together (i.e., whether there was a "use ... in connection with the sale ... or advertising of any goods"), and we then address the fifth element (i.e., whether such use was in a manner "likely to confuse consumers").
Axiom briefly argues that placing a competitor's trademarks within meta tags, which consumers never view, does not constitute a "use" as required to find trademark infringement under the Lanham Act. However, we readily conclude that the facts of the instant case do involve a "use" as contemplated in the Lanham Act — that is, a use in connection with the sale or advertisement of goods. In deciding whether Axiom has made an infringing "use," we focus on the plain language of § 1114(1)(a), which, as noted above, requires a "use in commerce ... of a registered mark in connection with the sale or advertising of any goods." 15 U.S.C. § 1114(1)(a). The facts of the instant case are absolutely clear that Axiom used NAM's two trademarks as meta tags as part of its effort to promote and advertise its products on the Internet. Under the plain meaning of the language of the statute, such use constitutes a use in commerce in connection with the advertising of any goods. Accordingly, we readily conclude that plaintiffs in this case have satisfied that (1) they possessed a valid mark, (2) that the defendant used the mark, (3) that the defendant's use of the mark occurred "in commerce," and (4) that the defendant used the mark "in connection with the sale ... or advertising of any goods."
In an effort to avoid the foregoing plain meaning of the statutory language, Axiom places its sole reliance on the Second...
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