Water Pik, Inc. v. Med–Sys., Inc.

• Decision Date: 25 January 2012
• Docket Number: Civil Action No. 10–cv–01221–PAB–CBS.
• Citation: 848 F.Supp.2d 1262
• Parties: WATER PIK, INC., a Delaware corporation, Plaintiff, v. MED–SYSTEMS, INC., a Washington corporation, Defendant.
• Court: U.S. District Court — District of Colorado

848 F.Supp.2d 1262

WATER PIK, INC., a Delaware corporation, Plaintiff,

v.MED–SYSTEMS, INC., a Washington corporation, Defendant.

Civil Action No. 10–cv–01221–PAB–CBS.

United States District Court, D. Colorado.

Jan. 25, 2012.

Lee Frederick Johnston Scott Pringle Sinor, Dorsey & Whitney, LLP, Denver, CO, for Plaintiff.

Daniel C. Cotman Cotman IP Law Group, PLC Pasadena, CA, Lisel Maria Ferguson, Procopio, Cory, Hargreaves & Savitch, San Diego, CA, for Defendant.

ORDER

PHILIP A. BRIMMER, District Judge.

This matter is before the Court on the Motion for Summary Judgment [Docket No. 63/65] filed by plaintiff Water Pik, Inc. and two Motions to Supplement the Record [Docket Nos. 126, 155] filed by defendant Med–Systems, Inc. As a threshold matter, the Court grants defendant's motions to supplement the record.

I. INTRODUCTION

On May 26, 2010, plaintiff Water Pik brought this declaratory judgment action against Med–Systems after Med–Systems opposed the registration of Water Pik's SinuSense ™ mark before the Trademark Trial and Appeals Board (“TTAB”). See Docket No. 1. Water Pik seeks: (1) a declaratory judgment of non-infringement of defendant's trademarks under 15 U.S.C. § 1114; (2) a declaratory judgment of non-infringement of defendant's alleged trade dress under 15 U.S.C. § 1125(a); (3) a declaratory judgment of no federal unfair competition under 15 U.S.C. § 1125(a); (4) a declaratory judgment of no trademark dilution under 15 U.S.C. § 1125(c); and (5) a declaratory judgment finding that Water Pik has the right to register and use the SinuSense ™ mark.

In response, Med–Systems alleges counterclaims against Water Pik for: (1) federal trademark infringement under 15 U.S.C. § 1114; (2) federal trade dress infringement under 15 U.S.C. § 1125(a); (3) unfair competition under 15 U.S.C. § 1125(a); (4) trademark dilution under 15 U.S.C. § 1125(c); and (5) injunctive relief under 15 U.S.C. § 1116.

In its motion for summary judgment, Water Pik claims that, because Med–Systems cannot establish a likelihood of confusion and there have been no instances of actual confusion, the Court should enter summary judgment with respect to Med–Systems' counterclaims for trademark infringement and unfair competition. Additionally, Water Pik contends that, because Med–Systems' trade dress is not inherently distinctive nor has it acquired secondary meaning, Med–Systems' counterclaim for trade dress infringement fails as a matter of law. Finally, Water Pik argues that the Court should enter summary judgment with respect to Med–Systems' trademark dilution claim because Med–Systems cannot establish that Sinu Cleanse® is a famous mark. Water Pik also asserts that, if summary judgment is granted with respect to all of Med–Systems' counterclaims, then the Court should enter a final judgment in favor of Water Pik for all relief sought in the complaint.

II. BACKGROUND¹A. The SinuCleanse® Mark

Med–Systems was formed in 1997 by David Gallo and Dr. Diane Heatly. Med–Systems sells sinus irrigation products utilized by customers to open and irrigate nasal passages. Med–Systems markets its products under the Sinu Cleanse® mark, which was registered on November 24, 1998. Docket No. 95–15 at 1. Dr. Heatly and Mr. Gallo independently created the Sinu Cleanse® mark and settled on the mark because it best described the purpose of their product: cleansing sinuses. Docket No. 57–1 at 3 (Heatly Dep. 12:16–21).

Between 1997 and 2007, Med–Systems' trade dress for Sinu Cleanse® products depicted wavy lines and incorporated a red and blue color scheme. Docket No. 95–2 at 18 (Gallo Dep. 186:7–10); Docket No. 57–2 at 25. The Sinu Cleanse® mark was a prominent feature on the trade dress as the “sinu” portion of the mark was highlighted in standard block red font, Docket No. 57–2 at 8 (Gallo Dep. 185:21–22), while “Cleanse” was italicized in blue font. Id. at 9 (Gallo Dep. 186:22–25).

Med–Systems initially focused its business on the sale of neti pots ²; however, it now offers other sinus irrigation products such as saline refills and squeeze bottles. Med–Systems' products are available on the internet and in pharmaceutical departments nationwide. Potential consumers usually encounter the Sinu Cleanse® mark in its stylized form (i.e. with color theme and italics), but may also find the non-stylized Sinu Cleanse® mark (i.e. without a color theme or italics) on Med–Systems' website or other forms of advertising.

In November 2007, Med–Systems hired Masterson Marketing, Inc. (“Masterson”) to design and develop a new trade dress for Sinu Cleanse® products. Med–Systems desired a new “look and feel” for the Sinu Cleanse® product line. Docket No. 57–5 at 40. The partnership between Med–Systems and Masterson lasted until October 2010, when it was terminated because of licensing disagreements. Docket No. 57–2 at 23 (Gallo Dep. 222:14–16). Med–Systems and Masterson are currently involved in litigation, Med–Systems, Inc. v. Masterson Marketing, Inc., 11–cv–0695–JLS–BLM (S.D.Cal.2011), regarding ownership of the copyrights for certain Sinu Cleanse® packaging. See Docket No. 95–16.

Between November 2007 and October 2010, Med–Systems' Sinu Cleanse® trade dress underwent several changes. In 2008, Med–Systems modified the trade dress because the company launched its own private label brand and, as a result, had two versions of its sinus irrigation products for sale in stores. The new version of the Sinu Cleanse® trade dress had the prefix “Sinu” altered from the red font to a blue font. Docket No. 57–2 at 15 (Gallo Dep. 194:11–13).

In 2009, Med–Systems' packaging again underwent significant changes. Masterson provided Med–Systems with several package designs; however, some of these models were never utilized and never appeared on store shelves. Id. at 12 (Gallo Dep. 191:18–20); Docket No. 57–4 at 3–6.

Notwithstanding the alterations made to its packaging, Med–Systems asserts that, from 2007 until early 2011, its trade dress was consistent and unique, incorporating a light blue and white theme of the sky, clouds, and a stream of water flowing through its packaging design. Med–Systems alleges that its mark is not only unique, but that it is famous and has acquired secondary meaning. Med–Systems claims that every year since 1997 it has spent 30% or more of its total sales on marketing and advertising, Docket No. 95–2 at 21 (Gallo Dep. 205:10–25), has advertised Sinu Cleanse® through channels such as television, radio, newspapers, and tradeshows, see generally Docket No. 95–10, and, most notably, Sinu Cleanse® had a feature on the Oprah Winfrey show with Dr. Mehmet Oz in December 2007. Id. at 4. Med–Systems states that, after the Oprah Winfrey show, it saw a sharp increase in its reputation and goodwill as evidenced by the rising sales of its neti pot. Id. at 22.

Water Pik argues that Med–Systems' trade dress is not famous and has not acquired secondary meaning because a white and blue theme, which includes water is generic within the nasal products industry. Moreover, Water Pik alleges that not only was Med–Systems' trade dress inconsistent, at times it was virtually identical to NeilMed's ³ trade dress.

B. The SinuSense ™ Mark

Water Pik specializes in providing oral hygiene and consumer health products. In 2008, Water Pik decided to expand its business into the sinus irrigation market. At first, Water Pik sought to purchase Med–Systems in order to acquire Med–Systems' Sinu Cleanse® sinus irrigation product line. During the negotiations, Water Pik and Med–Systems signed a confidentiality and non-disclosure agreement. Med–Systems thereafter supplied Water Pik with financial, marketing, sales, and product information. However, the parties failed to reach an agreement and negotiations ended on December 10, 2008.

After the breakdown in negotiations, Water Pik elected to create its own brand of sinus irrigation products. To achieve this goal, Water Pik retained the services of the Sterling Rice Group and Blue Sky Strategies, who conducted consumer surveys to test product packaging, potential trademarks, and the overall product design. The Lynx Report, Water Pik's model for its marketing strategy, is the result of Water Pik's collaboration with these third party vendors. The Lynx Report is based on a two-tiered survey process designed to identify consumer segments most receptive to new nasal wash products. See Docket No. 58–3 at 7 n.8. The first stage of the process administered an omnibus survey with a nationally representative sample based on U.S. Census data, and the second stage created a sampling plan for a national, in-depth online survey (“A & U Survey”). Id. Based on this market research, Water Pik created a line of sinus irrigation products sold under the SinuSense ™ mark.

In May 2009, Water Pik filed for federal registration of the SinuSense ™ mark with the United States Patent and Trademark Office (“USPTO”). Water Pik's mark was published in the Trademark Official Gazette on October 13, 2009.⁴ Following the publication, Med–Systems filed an opposition to Water Pik's registration before the TTAB.⁵ Despite Med–Systems' opposition, Water Pik made its SinuSense ™ products available to consumers in July 2010. The SinuSense ™ products are sold nationally at Army and Air Force Exchange Service, Ahold, Albertsons, Amazon, CVS.com, Drugstore.com, Hyvee, Walgreens, Walmart, and Zellers.

III. STANDARD OF REVIEW

Summary Judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A disputed fact is “material” if under the relevant substantive law it is essential to the proper disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231–32 (10th Cir.2001). Only disputes over material facts can...