Court Opinion

ID: 2995792
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:22:29.87352+00
Date Added: 2024-06-11T15:03:11.978323
License: Public Domain

In the
 United States Court of Appeals
                  For the Seventh Circuit
                          ____________

No. 00-4276
PROMATEK INDUSTRIES, LTD.,
                                                 Plaintiff-Appellee,
                                 v.

EQUITRAC CORPORATION,
                                            Defendant-Appellant.
                          ____________
            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
             No. 00 C 4999—Milton I. Shadur, Judge.
                          ____________
     ARGUED MAY 22, 2002—DECIDED AUGUST 13, 2002
                     ____________

 Before POSNER, KANNE, and WILLIAMS, Circuit Judges.
  WILLIAMS, Circuit Judge. This appeal concerns the
propriety of a preliminary injunction in which one com-
petitor, 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 ad-
2                                                   No. 00-4276

vised its web designer that certain words and phrases
should be used as metatags for Equitrac’s website.1 In re-
sponse, 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 learn-
ing 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

1
      Metatags are HTML [HyperText Markup Language]
      code intended to describe the contents of the web
      site. There are different types of metatags, but those
      of principal concern to us are the “description” and
      “keyword” metatags. The description metatags are
      intended to describe the web site; the keyword
      metatags, at least in theory, contain keywords
      relating to the contents of the web site. The more
      often a term appears in the metatags and in the text
      of the web page, the more likely it is that the web
      page will be “hit” in a search for that keyword and
      the higher on the list of “hits” the web page will
      appear.
Brookfield Communications, Inc. v. West Coast Entm’t Corp., 174
F.3d 1036, 1045 (9th Cir. 1999).
2
  The parties agree that Equitrac meant to use the term
“Copitrak” as its metatag rather than “Copitrack.”
No. 00-4276                                                 3

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 affilia-
    tion between Equitrac and that term. The mark
    “Copitrak” is a registered trademark of Proma-
    tek 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, argu-
ing that the ordered language will not only inform consum-
ers of its competitor, Promatek, but will encourage people
to go to Promatek’s website. Promatek counters that with-
out this language, Equitrac will continue to benefit, to
Promatek’s detriment, from consumer internet searches
containing the word Copitrack. We conclude that the dis-
trict 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 suf-
fer irreparable harm if the relief is not granted. Ty, Inc.
v. Jones Group, 237 F.3d 891, 895 (7th Cir. 2001) (cit-
ing 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 nonmoving party.
4                                               No. 00-4276

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 prelimi-
nary 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 dis-
pute. Therefore, we turn to the issue of whether consum-
ers 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 appear-
ance 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,
No. 00-4276                                               5

(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 in-
tent, 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 evi-
dence 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. Addition-
ally, Equitrac and Promatek are direct competitors in the
cost-recovery and cost-control equipment and services
market. Most importantly, for purposes of this case, how-
ever, is the degree of care to be exercised by consumers.
  Although Equitrac claims that it did not intend to mis-
lead 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 inter-
est confusion. Initial interest confusion, which is action-
able 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 confus-
ion for websites and metatags and held that placing
6                                               No. 00-4276

a competitor’s trademark in a metatag creates a likeli-
hood 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 de-
veloped in the Copitrak mark. Id. That consumers who
are misled to Equitrac’s website are only briefly con-
fused is of little or no consequence. In fact, “that confu-
sion as to the source of a product or service is eventually
dispelled does not eliminate the trademark infringe-
ment 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 ex-
plained, “[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 rath-
er than the second are still likely to mill around before
they leave. The same theory is true for websites. Consum-
ers 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. There-
fore, given the likelihood of initial consumer confusion, the
district court was correct in finding Promatek could suc-
ceed 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
No. 00-4276                                               7

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 consti-
tuted irreparable harm for which Promatek had no ade-
quate remedy. See Meridian Mut. Ins. Co. v. Meridian Ins.
Group, Inc., 128 F.3d 1111, 1120 (7th Cir. 1997). Because
of the difficulty in assessing the damages associated with
a loss of goodwill, the district court was correct in find-
ing that Promatek lacked an adequate remedy at law.

  3. Balancing of the harms
  The final factor we must consider is the balance of
harms—the irreparable harm Equitrac will suffer if the
injunction is enforced weighed against the irreparable
harm Promatek will suffer if it is not. See Meridian, 128
F.3d at 1121-22. We must also consider the effect the
injunction will have on the public. Roland, 749 F.2d at 388.
We review a district court’s balancing of the harms for
an abuse of discretion. Ty, 237 F.3d at 902.
  In finding that the harm to Promatek as a result of
denying the injunction outweighed the harm to Equitrac
in granting it, the district court found, and we agree, that
without the injunction, Equitrac would continue to attract
consumers browsing the web by using Promatek’s trade-
mark, thereby acquiring goodwill that belongs to Promatek.
In response, Equitrac points out that even though it of-
fers products for sale on its website, it has yet to consum-
mate a sale by this means. (Equitrac Ex. 2 ¶8). Further-
more, Equitrac claims that “consumers of products and
8                                              No. 00-4276

services provided by Equitrac and Promatek are sophisti-
cated business people who are not likely to be confused
between Equitrac and Copitrak and are not likely to
buy based on a visit to a website.” (Id. at ¶6).
  Although Equitrac claims that the language on its web-
site is harmful because it alerts consumers to Promatek’s
website, it has not provided any evidence of customers
it has lost as a result of the remedial language. Indeed
the remedial language on the website is more informa-
tive than it is harmful. Equitrac’s speculative argument
that Promatek may gain a competitive advantage by
inclusion of the remedial language is rejected. As to the
public interest, because the injunction prevents consumer
confusion in the marketplace, the public interest will be
served as well. Accordingly, the strong likelihood of con-
sumer confusion weighs strongly in favor of issuing the
injunction, and the district court did not abuse its discre-
tion in finding this to be the case.

B. No evidentiary hearing was needed.
  Finally, it was not necessary for the district court to
hold a hearing before ruling on the motion for prelimi-
nary injunction. An evidentiary hearing is required if
the nonmoving party raises genuine issues of material
fact in response to a motion for a preliminary injunction.
Ty, Inc. v. GMA Accessories, Inc., 132 F.3d 1167, 1171 (7th
Cir. 1997). However, the party seeking the evidentiary
hearing must demonstrate that it has “and intends to
introduce evidence that if believed will so weaken the
moving party’s case as to affect the judge’s decision on
whether to issue the injunction.” Id.
  Equitrac claims that the court should not have issued
the preliminary injunction without a hearing. Specifically,
Equitrac argues that because the court failed to find, and
did not receive evidence to contradict, Equitrac’s position
No. 00-4276                                              9

that it was entitled to advertise that it was capable of
servicing Copitrak equipment, Promatek’s motion for a
preliminary injunction should have been denied. Equitrac’s
argument misses the point. What is relevant to the pre-
liminary injunction is not that Equitrac may advertise
that it is capable of servicing Copitrak. Equitrac is free
to do so; it is also free to place comparison claims on its
website, or include press releases involving the litigation
between Equitrac and Promatek. See Brookfield, 174 F.3d
at 1065-66. It is Equitrac’s use of the term Copitrack in
its metatag that is a prohibited practice because of its
potential for customer confusion. See Brookfield, 174 F.3d
at 1066. Because Equitrac failed to demonstrate that its
evidence would weaken Promatek’s case, an evidentiary
hearing was not necessary.

                   III. CONCLUSION
  The district court did not abuse its discretion in issu-
ing the preliminary injunction. We therefore AFFIRM.

A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit

                   USCA-97-C-006—8-13-02