District Court Erred in Limiting Trademark Injunction Because Likelihood of Confusion is Not Decisive in Determining Injunction's Geographic Scope: Second Circuit | Practical Law

District Court Erred in Limiting Trademark Injunction Because Likelihood of Confusion is Not Decisive in Determining Injunction's Geographic Scope: Second Circuit | Practical Law

In Guthrie Healthcare System, v. ContextMedia, Inc., the US Court of Appeals for the Second Circuit vacated the district court's geographic limitation of its injunction against the defendant trademark infringer's use of the plaintiff's trademark, expanded the geographic scope of the injunction, and remanded the case to determine whether the injunction could be tailored to allow the defendant some use of plaintiff's trademark outside the plaintiff's service area. In so doing, the Second Circuit ruled that the district court misapplied the likelihood of confusion standard, which controls liability for trademark infringement rather than the scope of any resulting injunction.

District Court Erred in Limiting Trademark Injunction Because Likelihood of Confusion is Not Decisive in Determining Injunction's Geographic Scope: Second Circuit

by Practical Law Intellectual Property & Technology
Published on 16 Jun 2016 • USA (National/Federal)
In Guthrie Healthcare System, v. ContextMedia, Inc., the US Court of Appeals for the Second Circuit vacated the district court's geographic limitation of its injunction against the defendant trademark infringer's use of the plaintiff's trademark, expanded the geographic scope of the injunction, and remanded the case to determine whether the injunction could be tailored to allow the defendant some use of plaintiff's trademark outside the plaintiff's service area. In so doing, the Second Circuit ruled that the district court misapplied the likelihood of confusion standard, which controls liability for trademark infringement rather than the scope of any resulting injunction.
On June 13, 2016, in Guthrie Healthcare System, v. ContextMedia, Inc., the US Court of Appeals for the Second Circuit affirmed the US District Court for the Southern District of New York's holding of trademark infringement but vacated, expanded, and remanded the district court's limited injunction for further proceedings ( (2d. Cir. June 13, 2016)). The Second Circuit held that the equities favored a broad geographic injunction that extended beyond the geographic area of the plaintiff's operations and the proper tailoring, on remand, to determine whether the injunction should be relaxed in any respect to allow the defendant some limited use of the plaintiff's trademark outside the plaintiff's service area.
Guthrie Healthcare System brought this case against ContextMedia, Inc., among other things, alleging trademark infringement in violation of the Lanham Act (15 U.S.C. § 1114). Guthrie is a nonprofit organization consisting of, among other things, medical facilities, home healthcare services, and hospice services primarily operating in the Twin Tiers region of New York and Pennsylvania. Guthrie recruits doctors and residents nationwide. ContextMedia has offices in Chicago and New York City, and delivers health-related content to physician practices in all 50 states.
Guthrie's suit involved a trademark with two elements—a logo and the Guthrie name. The litigation primarily concerned the logo. Like the Guthrie logo, ContextMedia's logo consists of a shield containing a stylized human figure composed of crescent moon segments, topped by a detached oval head.
After a bench trial, the district court:
  • Found that ContextMedia's marks were infringing.
  • Granted a limited injunction that:
    • prohibited ContextMedia from using its marks within Guthrie's geographic service area;
    • excluded two counties from the area where Guthrie maintained facilities because Guthrie had not presented evidence of these facilities' patients' exposure to the defendant's use of the plaintiff's marks that might result in a likelihood of confusion;
    • placed no restriction on ContextMedia's use of its marks on the internet or outside Guthrie's service area.
On appeal, Guthrie argued that the injunction was too limited because it misapplied the controlling legal principles and failed to give Guthrie adequate protection from ContextMedia's use of virtually identical marks. Specifically, Guthrie argued that the district court injunction:
  • Expressly allows ContextMedia to use what is essentially Guthrie's logo on the internet, despite the fact that these uses unquestionably enter the Guthrie service area, where they create a likelihood of confusion.
  • Failed to prohibit ContextMedia from making local use of the infringing marks in two counties where Guthrie operates facilities.
  • Leaves ContextMedia free to use what is essentially Guthrie's mark throughout the nation, beyond the counties where Guthrie operates facilities, despite Guthrie's showing of some likelihood of confusion beyond its service area.
The Second Circuit affirmed the injunction but agreed that it was too limited. The court held:
  • The injunction allowed ContextMedia to make substantial use of the marks within Guthrie's service area because ContextMedia was free to use the marks on the internet, even though ContextMedia's webpages are accessible in Guthrie's service area, where they are likely to cause confusion.
  • The district court's explanation for excluding certain counties within Guthrie's service area was not persuasive.
  • The cases cited by ContextMedia in opposition were distinguishable because:
    • in addition to proving that ContextMedia was infringing Guthrie's mark, Guthrie also showed that its activities and commercial relationships extended beyond its service area, rendering it vulnerable to plausibly foreseeable confusions and harms resulting from ContextMedia's broader geographic use of the marks;
    • these cases were decided on the accused infringer's meeting its burden of showing that there was no likelihood of confusion in the area carved out from the injunction, a showing that ContextMedia failed to make.
  • The limited injunction affects Guthrie's mark because Guthrie cannot expand beyond the counties where it currently maintains facilities without subjecting itself to a high risk of consumer confusion, and:
    • this might substantially impair Guthrie's opportunity for growth and its eligibility as a prospective merger partner with entities operating outside its service area, diminishing its value as a commercial entity; and
    • Guthrie has shown the necessary evidence of plausibly foreseeable confusion beyond its main area of injury to consider extending the injunction into such additional areas.
  • Although ContextMedia did not act with bad faith in the sense of deliberately sowing confusion, it could easily have avoided the problem that arose from its adoption of marks already reserved by another user.
  • By perpetuating a highly confusing circumstance, the district court's injunctive order harmed the public interest. The public interest would undoubtedly be better served by the elimination of potential confusion.
  • The equities in this case favored expanding the injunction to include the two additional counties in which Guthrie operated facilities and remanding to the district court the task of further tailoring the injunction to determine if ContextMedia could properly make any use of Guthrie's trademark outside this expanded area.