Promatek Industries, Ltd. v. Equitrac Corp.

• Decision Date: 13 August 2002
• Docket Number: No. 00-4276.,00-4276.
• Citation: 300 F.3d 808
• Parties: PROMATEK INDUSTRIES, LTD., Plaintiff-Appellee, v. EQUITRAC CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

300 F.3d 808

PROMATEK INDUSTRIES, LTD., Plaintiff-Appellee, v. EQUITRAC CORPORATION, Defendant-Appellant.

No. 00-4276.

United States Court of Appeals, Seventh Circuit.

Argued May 22, 2002.

Decided August 13, 2002.

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James K. Borcia (argued), Tressler, Soderstrom, Maloney & Priess, Chicago, IL, for Plaintiff-Appellee.

George N. Vurdelja, Jr., Vurdelja & Heaphy, Chicago, IL, for Defendant-Appellant.

Before POSNER, KANNE, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

This appeal concerns the propriety of a preliminary injunction in which one competitor, Promatek, prevailed against another, Equitrac. The preliminary injunction was issued without a hearing and Equitrac had to place language on its web page to remedy violations of the Lanham Act. Equitrac now appeals that order and because the district court did not abuse its discretion, we affirm.

I. BACKGROUND

Promatek and Equitrac are competitors in selling cost-recovery equipment. Equitrac's marketing department advised its web designer that certain words and phrases should be used as metatags for Equitrac's website.¹ In response, the web designer placed the term "Copitrack" in the contents of Equitrac's website as a metatag. Equitrac used the term as a metatag because it provides maintenance and service on Copitrak equipment, a product used in the cost-recovery business.² Promatek holds the trademark for Copitrak, and once it learned of Equitrac's use of the term Copitrack in the metatag, it brought suit. After learning of Promatek's suit, Equitrac contacted all of the search engines known to it and requested that they remove any link between the term Copitrack and Equitrac's website. Equitrac also removed the Copitrack metatag from its website.

Not satisfied with Equitrac's remedial measures, Promatek sought a preliminary injunction preventing Equitrac from using the term Copitrack in its website. After receiving materials submitted by both parties, the district court granted Promatek's motion for preliminary injunction. Under the terms of the injunction, Equitrac was directed to place language on its web page informing consumers that any link between its website and Copitrack was in error:

If you were directed to this site through the term "Copitrack," 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.

(Equitrac Ex. 1, Prelim. Inj. Order at 5).

Equitrac appeals the issuance of the injunction, arguing that the ordered language will not only inform consumers of its competitor, Promatek, but will encourage people to go to Promatek's website. Promatek counters that without this language, Equitrac will continue to benefit, to Promatek's detriment, from consumer internet searches containing the word Copitrack. We conclude that the district court was correct in finding Promatek would suffer a greater harm than Equitrac if corrective measures were not taken, and we affirm the grant of the preliminary injunction.

II. ANALYSIS

A party seeking a preliminary injunction is required to demonstrate a likelihood of success on the merits, that it has no adequate remedy at law, and that it will suffer irreparable harm if the relief is not granted. Ty, Inc. v. Jones Group, 237 F.3d 891, 895 (7th Cir.2001) (citing Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 11 (7th Cir.1992)). If the moving party can satisfy these conditions, the court must then consider any irreparable harm an injunction would cause the non-moving party. Ty, 237 F.3d at 895. Finally, the court must consider any consequences to the public from denying or granting the injunction. Id. Sitting as a court of equity, the court then weighs all these factors employing a sliding-scale approach. Abbott Labs., 971 F.2d at 12. That is, the more likely the plaintiff's chance of success on the merits, the less the balance of harms need weigh in its favor. Id. We review the grant of a preliminary injunction for an abuse of discretion, giving great deference to the district court's weighing of the factors and will reverse only when the district court commits a clear error of fact or law. Ty, 237 F.3d at 896.

A. The District Court Was Correct in Granting the Injunction

1. Likelihood of success on the merits

Equitrac argues that because there was no likelihood of success on the merits of Promatek's Lanham Act claim, the district court erred in granting the preliminary injunction. In order to prevail under the Lanham Act, 15 U.S.C. § 1125(a), Promatek must establish that Copitrak is a protectable trademark and that Equitrac's use of the term is likely to cause confusion among consumers. See Ty, 237 F.3d at 897. Preregistration of Promatek's Copitrak trademark is prima facie evidence of the mark's validity, see Publications Int'l, Ltd. v. Landoll, Inc., 164 F.3d 337, 340 (7th Cir.1998), which Equitrac does not dispute. Therefore, we turn to the issue of whether consumers would be confused by Equitrac's use of Copitrak as a metatag.

In assessing the likelihood of consumer confusion, we consider: (1) the similarity between the marks in appearance and suggestion, (2) the similarity of the products, (3) the area and manner of concurrent use of the products, (4) the degree of care likely to be exercised by consumers, (5) the strength of the plaintiff's marks, (6) any evidence of actual confusion, and (7) the defendant's intent to palm off its goods as those of the plaintiff's. Ty, 237 F.3d at 897-98. None of these factors are dispositive and the proper weight given to each will vary in each case. Id. However, the similarity of the marks, the defendant's intent, and evidence of actual confusion are of particular importance. Id.

Given these factors, it is clear that Promatek has a fair likelihood of succeeding on the merits of its Lanham Act claim. Although Promatek has not provided us with evidence regarding the strength of its Copitrak mark or evidence of any actual consumer confusion, the other factors weigh in its favor. First, not only are the marks Copitrack and Copitrak similar, Equitrac admits that it meant to use the correct spelling of Copitrak in its metatag. Second, Equitrac's use of Copitrack refers to Promatek's registered trademark, Copitrak. Additionally, Equitrac and Promatek are direct competitors in the cost-recovery and cost-control equipment and services market. Most importantly, for purposes of this case, however, is the degree of care to be exercised by consumers.

Although Equitrac claims that it did not intend to mislead consumers with respect to Copitrak, the fact remains that there is a strong likelihood of consumer confusion as a result of its use of the Copitrack metatag. The degree of care exercised by consumers could lead to initial interest confusion. 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. Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382 (7th Cir.1996).

The Ninth Circuit has dealt with initial interest confusion for websites and metatags and held that placing a competitor's trademark in a metatag creates a likelihood of confusion. In Brookfield Communications, the court found that although consumers are not confused when they reach a competitor's website, there is nevertheless initial interest confusion. 174 F.3d at 1062. This is true in this case, because by Equitrac's placing the term Copitrack in its metatag, consumers are diverted to its website and Equitrac reaps the goodwill Promatek developed in the Copitrak mark. Id. That consumers who are misled to Equitrac's website are only briefly confused is of little or no consequence. In fact, "that confusion as to the source of a product or service is eventually dispelled does not eliminate the trademark infringement which has already occurred." Forum Corp. of N. Am. v. Forum, Ltd., 903 F.2d 434, 442 n. 2 (7th Cir.1990). What is important is not the duration of the confusion, it is the misappropriation of Promatek's goodwill. Equitrac cannot unring the bell. As the court in Brookfield explained, "[u]sing another's trademark in one's metatags is much like posting a sign with another's trademark in front of one's store." Brookfield, 174 F.3d at 1064. Customers believing they are entering the first store rather than the second are still likely to mill around before they leave. The same theory is true for websites. Consumers who are directed to Equitrac's webpage are likely to learn more about Equitrac and its products before beginning a new search for Promatek and Copitrak. Therefore, given the likelihood of initial consumer confusion, the district court was correct in finding Promatek could succeed on the merits.

2. No adequate remedy at law

A plaintiff seeking a preliminary injunction must also prove that it has no adequate remedy at law and as a result, will suffer irreparable harm if the injunction is not issued. Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 386 (7th Cir.1984). Furthermore, it is well settled that injuries arising from Lanham Act violations are presumed to be irreparable, even if the plaintiff fails to demonstrate a business loss. Abbott Labs., 971 F.2d at 16.

As has been discussed, Promatek has suffered injury to its consumer goodwill through Equitrac's use of Copitrack as a metatag and would have continued to suffer in the absence of an injunction. This damage would have constituted irreparable harm for which Promatek had no adequate remedy. See Meridian Mut. Ins. Co. v. Meridian Ins. Group, Inc., 128 F.3d 1111, 1120 (7th Cir.1997)....