FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

AUGUST 28, 2001

THOMAS K. KAHN

CLERK

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 00-14368

________________________

D. C. Docket No. 00-02635-CV-DMM

DAVIDOFF & CIE, SA, a Swiss Corporation, and

LANCASTER GROUP US LLC, a Delaware 

Limited Liability Corporation,

Plaintiffs-Appellees,

versus

PLD INTERNATIONAL CORPORATION, a Florida 

Corporation, and PHILLIPE L. DRAY, 

an individual Florida resident,

Defendants-Appellants.

________________________

Appeal from the United States District Court

for the Southern District of Florida

_________________________

(August 28, 2001)

Before ANDERSON, Chief Judge, FAY and BRIGHT*, Circuit Judges.

ANDERSON, Chief Judge:

___________________

*Honorable Myron H. Bright, U.S. Circuit Judge for the Eighth Circuit, sitting by designation.
2

This case appears to be the first time that this circuit has addressed the

circumstances under which the resale of a genuine product with a registered

trademark can be considered infringement. We recognize the general rule that a

trademark owner’s authorized initial sale of its product exhausts the trademark

owner’s right to maintain control over who thereafter resells the product; 

subsequent sales of the product by others do not constitute infringement even

though such sales are not authorized by the trademark owner. However, we adopt

from our sister circuits their exception to this general rule–i.e., the unauthorized

resale of a materially different product constitutes infringement. Because we

conclude that the resold products in the instant case are materially different, we

affirm.

I. BACKGROUND

Davidoff & Cie, S.A., a Swiss corporation, is the manufacturer of

DAVIDOFF COOL WATER fragrance products and owns the U.S. trademark. 

Davidoff & Cie, S.A. exclusively licenses Lancaster Group US LLC (collectively

“Davidoff”) to distribute its products to retailers in the United States. Working

outside of this arrangement, PLD International Corporation (“PLD”) acquires

DAVIDOFF fragrances that are intended for overseas sale or that are sold in duty-
1

PLD and its principle, Phillipe L. Dray, were sued. We refer to them collectively as

“PLD.”

2

Section 32 of the Lanham Act provides:

 (1) Any person who shall, without 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; . . . 

3

free sales. PLD then distributes them to discount retail stores in the United States. 

At the time that PLD acquires the product, the original codes on the bottom

of the boxes are covered by white stickers, and batch codes on the bottles

themselves have been obliterated with an etching tool. The etching leaves a mark

on the bottle near its base on the side opposite the DAVIDOFF COOL WATER

printing. The mark is approximately one and one-eighth inches in length and oneeighth of an inch wide. The batch codes are removed, according to PLD, to

prevent Davidoff from discovering who sold the fragrances to PLD because

Davidoff would stop selling to those vendors. 

II. DISTRICT COURT PROCEEDINGS

Davidoff filed a complaint seeking, inter alia, a preliminary injunction

against PLD1

 for infringement of its trademark under the Lanham Trade-Mark Act,

15 U.S.C. § 1051 et seq.2

 Davidoff alleged that PLD’s distribution of the
shall be liable in a civil action by the registrant . . . .

15 U.S.C. § 1114(1). Similarly, section 43(a)(1) of the Lanham Act provides:

Any person who, on or in connection with any goods or services, or any

container for goods, uses in commerce, any word, term, name, symbol, or device,

or any combination thereof, or any false designation of origin, false or misleading

description of fact, or false or misleading representation of fact, which–

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the

affiliation, connection or association of such person with another person, or as to

the origin, sponsorship or approval of his or her goods, services, or commercial

activities by another person, . . . 

shall be liable in a civil action . . . .

15 U.S.C. § 1125(a)(1).

3

Record 3:63 (August 10, 2000, evidentiary hearing on the preliminary injunction).

4

The district court also based its finding of infringement on the fact that the removal of

the batch code interfered with DAVIDOFF’s quality control system. Although the lack of

quality control can rise to the level of a material difference from the trademark owner’s product

and create a likelihood of confusion, see Warner-Lambert Co. v. Northside Dev. Corp., 86 F.3d

3, 7 (2d Cir. 1996), we need not address the district court’s findings in this regard because we

4

fragrances with the batch codes removed and obliterated constituted infringement. 

The district court held that PLD’s distribution of DAVIDOFF fragrances

constituted infringement by creating a likelihood of consumer confusion. In

reaching this conclusion, the district court found that the product distributed by

PLD differed from the genuine DAVIDOFF product because the removal of the

batch code from the bottle by etching the glass “constitutes alteration of a

product,”3

 which would create a likelihood of consumer confusion. A consumer

might believe that a product had been harmed or tampered with.4

 Based on the
conclude that the physical differences in PLD’s product create a likelihood of consumer

confusion and support the district court’s infringement finding. See infra Part VI.

5

infringement finding, the district court granted a preliminary injunction,

prohibiting PLD from selling, repackaging or altering any product with the name

“DAVIDOFF” and/or “COOL WATER” with an obliterated batch code. This

appeal followed.

III. CONTENTIONS

PLD argues that it is selling genuine DAVIDOFF fragrances and that as a

result no consumer can be confused. Therefore, it claims that it cannot be

considered an infringer under the Lanham Act. PLD asserts that “[w]ith or without

a manufacturer or batch code on its packaging, the product is absolutely the same.” 

PLD states that the district court incorrectly relied on cases where the product itself

and not just the packaging was altered. 

Davidoff urges us to adopt a material difference test whereby a material

difference between goods sold under the same trademark warrants a finding of

consumer confusion. Davidoff argues that the obliteration of batch codes by PLD

transforms the appearance of its product into a materially different, infringing

product, which is likely to confuse consumers. 
6

IV. PRELIMINARY INJUNCTION POSTURE

We review a district court’s order granting or denying a preliminary

injunction for abuse of discretion. McDonald’s Corp. v. Robertson, 147 F.3d

1301, 1306 (11th Cir. 1998). A party seeking a preliminary injunction for

trademark infringement must establish four elements: (1) substantial likelihood of

success on the merits; (2) that it would be irreparably harmed if injunctive relief

were denied; (3) that the threatened injury to the trademark owner outweighs the

whatever damage the injunction may cause to the alleged infringer; (4) that the

injunction, if issued, would not be adverse to the public interest. See id. It is well

established in this circuit that “[a] preliminary injunction is an extraordinary and

drastic remedy not to be granted unless the movant clearly established the ‘burden

of persuasion’” as to all four elements. Siegel v. LePore, 234 F.3d 1163, 1176

(11th Cir. 2000) (en banc) (internal citation omitted). The issues raised by PLD in

this case primarily address the first element: substantial likelihood of success on

the merits. 

V. TRADEMARK INFRINGEMENT: LAW

In order to succeed on the merits of a trademark infringement claim, a

plaintiff must show that the defendant used the mark in commerce without its

consent and “that the unauthorized use was likely to deceive, cause confusion, or
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result in mistake.” McDonald’s Corp., 147 F.3d at 1307. Generally speaking, the

determination boils down to the existence vel non of “likelihood of confusion.” 

AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1538 (11th Cir. 1986). 

A. Purpose 

To understand what type of consumer confusion is actionable under the

Lanham Trade-Mark Act, it is useful to review Congress’ purposes for enacting

trademark legislation. Congress sought to protect two groups: consumers and

registered trademark owners. See S. Rep. No. 1333, 19th Cong. 2d Sess., reprinted

in 1946 U.S. Code Cong. Serv. 1274. In protecting these groups lawmakers

recognized that “[e]very product is composed of a bundle of special

characteristics.” Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d

633, 636 (1st Cir. 1992) (“Nestle”). Consumers who purchase a particular product

expect to receive the same special characteristics every time. See id. The Lanham

Act protects these expectations by excluding others from using a particular mark

and making consumers confident that they can purchase brands without being

confused or misled. See 15 U.S.C. § 1114(1); S. Rep. No. 100-515, at 4 (1988),

reprinted in 1988 U.S.C.C.A.N. 5577, 5580. Thus trademark law ensures

consistency for the benefit of consumers. See Nestle, 982 F.2d at 636; Original
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Appalachian Artworks, Inc. v. Granada Electronics, Inc., 816 F.2d 68, 75 (2d Cir.

1987) (Cardamone, J., concurring).

The Lanham Act also protects trademark owners. See S. Rep. No. 100-515

at 4. A trademark owner has spent time, energy and money in presenting a product

to the public and building a reputation for that product. See Mishawaka Rubber &

Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 205, 62 S.Ct. 1022, 1024

(1942); S. Rep. No. 1333, reprinted in 1946 U.S. Code Cong. Serv. 1274. The Act

prevents another vendor from acquiring a product that has a different set of

characteristics and passing it off as the trademark owner’s product. See Two

Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 778, 112 S. Ct. 2753, 2762 (1992)

(Stevens, J., concurring) (noting that passing off is a form of infringement

prohibited by the Lanham Act). This would potentially confuse consumers about

the quality and nature of the trademarked product and erode consumer goodwill. 

See Iberia Foods Corp. v. Romeo, 150 F.3d 298, 303 (3d Cir. 1998); Nestle, 982

F.2d at 638.

B. Resale of a Genuine Trademarked Product and the Material

Difference Exception

The resale of genuine trademarked goods generally does not constitute

infringement. See, e.g., Matrix Essentials, Inc. v. Emporium Drug Mart, Inc., 988
9

F.2d 587, 590 (5th Cir. 1993); NEC Electronics v. CAL Circuit Abco, 810 F.2d

1506, 1509 (9th Cir. 1987). This is for the simple reason that consumers are not

confused as to the origin of the goods: the origin has not changed as a result of the

resale. See Enesco Corp v. Price/Costco Inc., 146 F.3d 1083, 1085 (9th Cir. 1998)

(quoting NEC, 810 F.2d at 1509). Under what has been sometime been called the

“first sale” or “exhaustion” doctrine, the trademark protections of the Lanham Act

are exhausted after the trademark owner’s first authorized sale of that product. See

Iberia Foods, 150 F.3d at 301 n.4; Enesco, 146 F.3d at 1085; Allison v. Vintage

Sports Plaques, 136 F.3d 1443, 1447-48 (11th Cir. 1998). Therefore, even though

a subsequent sale is without a trademark owner’s consent, the resale of a genuine

good does not violate the Act. 

This doctrine does not hold true, however, when an alleged infringer sells

trademarked goods that are materially different than those sold by the trademark

owner. Our sister circuits have held that a materially different product is not

genuine and therefore its unauthorized sale constitutes trademark infringement. 

See Nestle, 982 F.2d at 644 (1st Cir.); Original Appalachian Artworks, 816 F.2d at

73 (2d Cir.); Iberia Foods, 150 F.3d at 302-3 (3d Cir.); Martin’s Herend Imports,

Inc. v. Diamond & Gem Trading USA, Co., 112 F.3d 1296, 1302 (5th Cir. 1997);

cf. Enesco, 146 F.3d at 1087 (9th Cir.) (quoting Warner-Lambert Co. v. Northside
5

PLD argues that the material difference test only applies to so-called gray-market goods:

foreign made goods bearing a trademark and intended for sale in a foreign country, but that are

subsequently imported into the United States without the consent of the U.S. trademark owner. 

We reject this argument and join the Third Circuit in noting that infringement by materially

different products “is not limited to gray goods cases . . . . The same theory has been used to

enjoin the sale of domestic products in conditions materially different from those offered by the

trademark owner.” Iberia Foods Corp. v. Romeo, 150 F.3d 298, 302 (3d Cir. 1998). Indeed,

several courts have held that the purchase and resale of goods solely within the United States

may constitute infringement when differences exist in quality control or the products themselves. 

See Enesco Corp. v. Price/Costco Inc., 146 F.3d 1083 (9th Cir. 1998); Warner-Lambert Co. v.

Northside Dev. Corp., 86 F.3d 3 (2d Cir. 1996); Matrix Essentials, Inc. v. Emporium Drug Mart,

Inc., 988 F.2d 587 (5th Cir. 1993); Shell Oil Co. v. Commercial Petroleum Inc., 928 F.2d 104

(4th Cir. 1991).

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Dev. Corp., 86 F.3d 3, 6 (2d Cir. 1996)) (noting that a non-conforming product is

not genuine and “its distribution constitutes trademark infringement”). We follow

our sister circuits and hold that the resale of a trademarked product that is

materially different can constitute a trademark infringement.5

 This rule is

consistent with the purposes behind the Lanham Act, because materially different

products that have the same trademark may confuse consumers and erode

consumer goodwill toward the mark. See Iberia Foods, 150 F.3d at 303; Nestle,

982 F.2d at 638.

Not just any difference will cause consumer confusion. A material

difference is one that consumers consider relevant to a decision about whether to

purchase a product. See Martin’s Herend Imports, 112 F.3d at 1302; Nestle, 982

F.2d at 641. Because a myriad of considerations may influence consumer

preferences, the threshold of materiality must be kept low to include even subtle
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differences between products. See Iberia Foods, 150 F.3d at 304; Nestle, 982 F.2d

at 641. 

The caselaw supports the proposition that the resale of a trademarked

product that has been altered, resulting in physical differences in the product, can

create a likelihood of consumer confusion. Such alteration satisfies the material

difference exception and gives rise to a trademark infringement claim. Nestle, 982

F.2d at 643-44 (applying the material difference exception, e.g., differences in the

composition, presentation and shape of premium chocolates); Original

Appalachian Artworks, 816 F.2d at 73 (applying the material difference exception

where the infringing Cabbage Patch Kids dolls had Spanish language adoption

papers and birth certificates, rather than English).

VI. APPLICATION OF THE EXCEPTION IN THIS CASE

The district court found that etching the glass to remove the batch code

degrades the appearance of the product and creates a likelihood of confusion. In

addition, the court credited testimony of the marketing vice-president that the

etching may make a consumer think that the product had been harmed or tampered

with. We defer to the district court’s finding that the etching degrades the

appearance of the bottle. This finding is not clearly erroneous in light of the
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stylized nature of the fragrance bottle, which has an otherwise unblemished

surface. Indeed, based on our own examination and comparison of the genuine

fragrance bottle and the bottle sold by PLD, we agree with the district court that a

consumer could very likely believe that the bottle had been tampered with. We

agree with the district court that this alteration of the product could adversely affect

Davidoff’s goodwill, creates a likelihood of consumer confusion, satisfies the

material difference exception to the first sale doctrine, and thus constitutes a

trademark infringement. We believe that the material difference in this case is

comparable to, or more pronounced than, the product differences in Nestle and

Original Appalachian Artworks where the First and Second Circuits applied the

material difference exception and found trademark infringement. 

PLD directs us to two cases, Graham Webb International Ltd. Partnership v.

Emporium Drug Mart, Inc., 916 F. Supp. 909 (E.D. Ark. 1995), and John Paul

Mitchell Systems v. Randalls Food Markets, Inc., 17 S.W.3d 721 (Tex. App.

2000), where courts have held that the removal of batch codes on hair care

products does not constitute infringement. They are both distinguishable from the

instant case. Neither court found that the removal affected the overall appearance

of the product to the extent that it might be material to a consumer decision to

purchase the product. In Graham Webb, the court noted that the removal of batch
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codes resulted in “almost imperceptible scratches” that were not likely to confuse

consumers. 916 F. Supp. at 916. And in Randalls Food Markets, the court stated

that “there was no evidence that removal of the batch codes defaced the bottles.”

17 S.W.3d at 736. In the instant case, the etching on the fragrance bottle is more

than almost imperceptible scratches. Indeed, the district court credited testimony

that consumers may regard the bottles as harmed or tampered with. We agree with

the district court that the physical difference created by the obliteration of the batch

code on PLD’s product constitutes a material difference. See John Paul Mitchell

Systems v. Pete-N-Larry’s Inc., 862 F. Supp. 1020, 1027 (W.D.N.Y. 1994)

(concluding that removal of batch codes from bottles of hair care products, leaving

noticeable scars on the bottles and erasing some of the information printed,

constitutes a material difference).

PLD also attempts to cast the effect of the etching as minimal. PLD argues

that the etching is on the back side of the bottle beneath several lines of printing

that identifies the manufacturer and distributor, country of origin and volume,

while the front side contains the trademarks in gold and black script letters. This

may be true, but the etching is clearly noticeable to a consumer who examines the

bottle. At oral argument, PLD argued that only the packaging but not the product

itself–i.e., the liquid fragrance inside the bottle–had been altered by the etching. In
14

marketing a fragrance, however, a vendor is not only selling the product inside the

bottle, it is also selling the “commercial magnetism” of the trademark that is

affixed to the bottle. Mishawaka Rubber, 316 U.S. at 205, 62 S. Ct. at 1024. The

appearance of the product, which is associated with the trademark, is important to

establishing this image. This makes the appearance of the bottle material to the

consumer decision to purchase it. Because the etching degrades the appearance of

the bottles, the DAVIDOFF fragrance that PLD distributes is materially different

from that originally sold by Davidoff. Therefore, we agree with the district court

that PLD’s sale of this materially different product creates a likelihood of

confusion, and satisfies Davidoff’s burden of establishing a likelihood of success

on the merits. 

VII. OTHER ELEMENTS OF A PRELIMINARY INJUNCTION

Next, we examine the remaining three elements required for a preliminary

injunction. On the irreparable injury element, we note that our circuit has stated

that “‘a sufficiently strong showing of likelihood of confusion [caused by

trademark infringement] may by itself constitute a showing of . . . [a] substantial

threat of irreparable harm.’” McDonald’s Corp., 147 F.3d at 1310 (quoting E.

Remy Martin & Co. v. Shaw-Ross Int’l Imports, 756 F.2d 1525, 1530 (11th Cir.
15

1985)). PLD’s only argument against a finding of irreparable injury is that

Davidoff cannot show a likelihood of confusion. Because we found a likelihood of

consumer confusion and thus reject PLD’s only argument against a finding of

irreparable harm, and because the likelihood of confusion is substantial, we will

not overturn the district court’s finding of irreparable injury. 

Regarding the balancing of potential harms, we agree with the district court

that the probable loss of consumer goodwill for Davidoff outweighs the costs of

delay that PLD will incur in not being able to sell DAVIDOFF fragrances without

the batch codes until a decision on the merits. As the district court found, PLD is

able to continue selling other products and Davidoff products where the batch

codes have not been removed. Lastly, the injunction is not adverse to the public

interest, because the public interest is served by preventing consumer confusion in

the marketplace. See SunAmerica Corp. v. Sun Life Assurance Co. of Canada, 77

F.3d 1325, 1334 (11th Cir. 1996).

VIII. CONCLUSION

The district court correctly decided that Davidoff demonstrated a substantial

likelihood of success on the merits by showing a likelihood of consumer confusion. 

Davidoff has also met the other three elements necessary for a preliminary
16

injunction. Accordingly, the district court’s order granting a preliminary

injunction is 

AFFIRMED.