North American Medical Corporation, Adagen Medical International, Inc. v. Axiom Worldwide Inc. (April 7, 2008)
URL's to Opinion:
http://www.ca11.uscourts.gov/opinions/ops/200711574.pdf
http://www.dailyreportonline.com/Editorial/News/singleEdit.asp?individual_SQL=4%2F16%2F2008%4022704
Court:
11th U.S. Circuit Court of Appeals
Overview:
Axiom Worldwide, Inc., defendants, appeal the district courts grant of a preliminary injunction in favor of the Plaintiffs, North American Medical Corporation. Axiom was enjoined from engaging in alleged action of trademark infringement and false advertising. The appeals court affirmed the district court’s order in part and vacated and remanded it in part.
Background and Description:
The North American Medical Corporation (NAM) designs and manufactures physiotherapeutic spinal devices (devices that help treat low back pain). Axiom Medical International, Inc. (Axiom) is a competitor of NAM and, relevant to this case, manufactures a physiotherapeutic spinal device called the DRX 9000. There are two major topics at issue in this appeal. The first is whether Axiom’s use of NAM’s trademarked terms in meta tags on its web site constitutes trademark infringement. The second is whether Axiom’s claim of affiliation with NASA is false advertisement. The district court issued a preliminary injunction prohibiting Axiom from doing both.
The appeals court must determine if the NAM established the following for each trademark infringement and false advertising: “(1) likelihood success on the merits of the underlying case; (2) NAM will suffer irreparable harm in absence of injunction; (3) harm suffered by NAM in the absence of an injunction will exceed harm suffered by Axiom if an injunction is issued; (4) and injunction would not disserve public interest.â€
Holding:
Likelihood of success on the merits of trademark infringement:
The appeals court finds no err in the district court’s finding that Axiom’s use of NAM’s trademarks constituted a “use in commerce†and that a likelihood of confusion existed.
Axiom first ague’s that, since the trademarks are never in plain view to the consumer’s, they are not liable under the definition of “use†under the Lanham Act. This argument is based on the ruling of the 1 800 Contacts case. In this case, the court emphasized that the trademark was never displayed to the user. The court concludes that, unlike the 1-800 Contacts case, Axiom did not use just the unprotected web site address and, therefore, this argument is misplaced.
When determining there is likelihood of confusion, the court turns to Brookfield Communications, Inc. v. West Coast Entertainment Corp. In response to this, Axiom argues that their use of the meta tags is analogous to “a store placing its own generic brand next to a brand name product on the store’s shelf.†Another important issue that was brought up in Brookfield was that as long as the trademark owners site was still brought up in the search results, the consumer could still choose to click on the link that would take them to the site in which they initially intended to reach. However, the court points out that in Axiom’s case, the trademark terms show up highlighted in Google’s search results, therefore creating a likelihood of confusion.
The court also considers the Playboy Enterprises, Inc. v. Netscape Communications Corp in determining initial interest confusion. The court says that source confusion is even more prevalent in NAM v. Axiom case because there is an “explicit representation of some relationship between Axiom and NAM.†Here, they are referring to the highlighted trademarked words in Google’s search results.
Likelihood of success on the merits of the false advertising claim:
The appeals court first considers the district court’s ruling on literal falsity. The first statement at issue was that Axiom and the DRX 9000 are somehow affiliated with NASA. The facts are that one engineer that was involved with the development of the DRX 9000 had NASA training and experience and that some parts of the DRX 9000 are also used by NASA. This court says that although these statements are more misleading than completely false, there is not enough to determine that the district court’s decision was clearly erroneous.
The second statement at issue was that the DRX 9000 was FDA “approved.†The court points out that the device is a Class II medical device that would only be eligible for a FDA “clearance†and, therefore, Axiom’s statements are literally false.
Next in considering the false advertising claim, the court looks at the issue of materiality to consumer’s purchasing decisions. The appeals court points out that in order to succeed on a claim of false advertising, the movant must “establish that ‘the defendant’s deception is likely to influence the purchasing decision.’†In regards to the Axiom’s claim of affiliation with NASA, the court concludes that such a claim would greatly influence a doctor’s decision to purchase the DRX 9000. Further, it is stated that some doctor’s that had purchased the device had sent letters to Axiom resenting their decision to purchase based on these claims. Here, the appeals court concludes that the district court did not err in its finding that these statements are material to consumer’s purchasing decisions.
Lastly, the appeals court considers presumption of irreparable harm. The court looks to determine if NAM has demonstrated that they will suffer irreparable harm in the absence of an injunction. The court examines irreparable harm in regards to trademark infringement and false advertising, separately. In regards to false advertising, the appeals court concludes that the district erred in its decision. The court notes that the false statement must be made “in the context of comparative advertising between the plaintiff’s and defendant’s products.†Here, Axiom’s advertising statements make no reference NAM. Therefore, irreparable harm cannot be assumed.
In regards to irreparable harm and trademark infringement, the appeals court decides whether establishing a likelihood of success on the merits of trademark infringement also constitutes irreparable harm. The court looks to eBay Inc. v. MercExchange, L.L.C. (2006). In this case, the Supreme Court emphasized that “neither court below correctly applied the traditional four-factor framework that governs the award of injunctive relief.†For this reason, this court vacated the preliminary injunction toward trademark infringement.
URL's to Opinion:
http://www.ca11.uscourts.gov/opinions/ops/200711574.pdf
http://www.dailyreportonline.com/Editorial/News/singleEdit.asp?individual_SQL=4%2F16%2F2008%4022704
Court:
11th U.S. Circuit Court of Appeals
Overview:
Axiom Worldwide, Inc., defendants, appeal the district courts grant of a preliminary injunction in favor of the Plaintiffs, North American Medical Corporation. Axiom was enjoined from engaging in alleged action of trademark infringement and false advertising. The appeals court affirmed the district court’s order in part and vacated and remanded it in part.
Background and Description:
The North American Medical Corporation (NAM) designs and manufactures physiotherapeutic spinal devices (devices that help treat low back pain). Axiom Medical International, Inc. (Axiom) is a competitor of NAM and, relevant to this case, manufactures a physiotherapeutic spinal device called the DRX 9000. There are two major topics at issue in this appeal. The first is whether Axiom’s use of NAM’s trademarked terms in meta tags on its web site constitutes trademark infringement. The second is whether Axiom’s claim of affiliation with NASA is false advertisement. The district court issued a preliminary injunction prohibiting Axiom from doing both.
The appeals court must determine if the NAM established the following for each trademark infringement and false advertising: “(1) likelihood success on the merits of the underlying case; (2) NAM will suffer irreparable harm in absence of injunction; (3) harm suffered by NAM in the absence of an injunction will exceed harm suffered by Axiom if an injunction is issued; (4) and injunction would not disserve public interest.â€
Holding:
Likelihood of success on the merits of trademark infringement:
The appeals court finds no err in the district court’s finding that Axiom’s use of NAM’s trademarks constituted a “use in commerce†and that a likelihood of confusion existed.
Axiom first ague’s that, since the trademarks are never in plain view to the consumer’s, they are not liable under the definition of “use†under the Lanham Act. This argument is based on the ruling of the 1 800 Contacts case. In this case, the court emphasized that the trademark was never displayed to the user. The court concludes that, unlike the 1-800 Contacts case, Axiom did not use just the unprotected web site address and, therefore, this argument is misplaced.
When determining there is likelihood of confusion, the court turns to Brookfield Communications, Inc. v. West Coast Entertainment Corp. In response to this, Axiom argues that their use of the meta tags is analogous to “a store placing its own generic brand next to a brand name product on the store’s shelf.†Another important issue that was brought up in Brookfield was that as long as the trademark owners site was still brought up in the search results, the consumer could still choose to click on the link that would take them to the site in which they initially intended to reach. However, the court points out that in Axiom’s case, the trademark terms show up highlighted in Google’s search results, therefore creating a likelihood of confusion.
The court also considers the Playboy Enterprises, Inc. v. Netscape Communications Corp in determining initial interest confusion. The court says that source confusion is even more prevalent in NAM v. Axiom case because there is an “explicit representation of some relationship between Axiom and NAM.†Here, they are referring to the highlighted trademarked words in Google’s search results.
Likelihood of success on the merits of the false advertising claim:
The appeals court first considers the district court’s ruling on literal falsity. The first statement at issue was that Axiom and the DRX 9000 are somehow affiliated with NASA. The facts are that one engineer that was involved with the development of the DRX 9000 had NASA training and experience and that some parts of the DRX 9000 are also used by NASA. This court says that although these statements are more misleading than completely false, there is not enough to determine that the district court’s decision was clearly erroneous.
The second statement at issue was that the DRX 9000 was FDA “approved.†The court points out that the device is a Class II medical device that would only be eligible for a FDA “clearance†and, therefore, Axiom’s statements are literally false.
Next in considering the false advertising claim, the court looks at the issue of materiality to consumer’s purchasing decisions. The appeals court points out that in order to succeed on a claim of false advertising, the movant must “establish that ‘the defendant’s deception is likely to influence the purchasing decision.’†In regards to the Axiom’s claim of affiliation with NASA, the court concludes that such a claim would greatly influence a doctor’s decision to purchase the DRX 9000. Further, it is stated that some doctor’s that had purchased the device had sent letters to Axiom resenting their decision to purchase based on these claims. Here, the appeals court concludes that the district court did not err in its finding that these statements are material to consumer’s purchasing decisions.
Lastly, the appeals court considers presumption of irreparable harm. The court looks to determine if NAM has demonstrated that they will suffer irreparable harm in the absence of an injunction. The court examines irreparable harm in regards to trademark infringement and false advertising, separately. In regards to false advertising, the appeals court concludes that the district erred in its decision. The court notes that the false statement must be made “in the context of comparative advertising between the plaintiff’s and defendant’s products.†Here, Axiom’s advertising statements make no reference NAM. Therefore, irreparable harm cannot be assumed.
In regards to irreparable harm and trademark infringement, the appeals court decides whether establishing a likelihood of success on the merits of trademark infringement also constitutes irreparable harm. The court looks to eBay Inc. v. MercExchange, L.L.C. (2006). In this case, the Supreme Court emphasized that “neither court below correctly applied the traditional four-factor framework that governs the award of injunctive relief.†For this reason, this court vacated the preliminary injunction toward trademark infringement.