Opinion
Civil Action No. 03-2448-KHV.
September 7, 2004
Cathy J. Dean (KS DIST CT #70143), Daniel R. Zmijewski (KS #21275), Kansas City, Missouri, and PATTISHALL, McAULIFFE, NEWBURY, HILLIARD GERALDSON, Raymond I. Geraldson, Jr., (Ill. Bar #0937649), Jonathan S. Jennings (Ill. Bar #6204474), Thad Chaloemtiarana (Ill. Bar #6236829), Chicago, IL, Counsel for Plaintiff, Bayer Healthcare LLC.
FINAL JUDGMENT
I. INTRODUCTION
Bayer HealthCare LLC ("Bayer HealthCare") brought this Action on September 5, 2003, against defendant, Nagrom, Inc. ("Nagrom") to prevent the unlawful sale of foreign manufactured flea control preparations bearing Bayer's ADVANTAGE mark and the unauthorized use of this mark on Nagrom's tjspetshop.com, 4fleacontrol.com, and fleadrops.com web sites. The parties stipulate to the following findings of fact and conclusions of law, and consent to entry of a permanent injunction as set forth below. Accordingly, the court enters the following:
II. FINDINGS OF FACT
Bayer HealthCare, a Delaware limited liability company with its animal health business located in this District, is a wholly-owned subsidiary of Bayer Corporation, an Indiana corporation. Bayer Corporation is a wholly-owned subsidiary of Bayer AG, an entity formed under the laws of, and based in, Germany. Bayer AG, Bayer Corporation and Bayer HealthCare are collectively referred to herein as "Bayer."
Bayer AG manufactures animal flea control preparations, among other goods, and markets these products outside the United States. Bayer HealthCare markets the animal flea control preparations it receives from Bayer AG solely within the United States. Bayer HealthCare has made continuous use of the trademark ADVANTAGE ("ADVANTAGE mark") in connection with the sale and advertising of animal flea control preparations ("ADVANTAGE products"). Bayer HealthCare also offers a variety of computer services in connection with the ADVANTAGE ADVISORY mark.
Bayer HealthCare owns a federal registration for its ADVANTAGE mark in the United States Patent and Trademark Office, namely, Registration No. 2,044,733 for ADVANTAGE for "flea control preparations for dogs and cats," as well as Registration No. 2,474,534, for ADVANTAGE ADVISORY for "computer services, namely, providing an electronic mail newsletter in the field of pet care, veterinary medicine and veterinary technology." Both registrations are valid and subsisting, and Registration No. 2,044,733 is incontestable in accordance with 15 U.S.C. § 1064.
Bayer HealthCare and its predecessors have sold tens of millions of dollars worth of animal flea control preparations under the ADVANTAGE mark throughout the United States and has expended tens of millions of dollars to advertise and promote these ADVANTAGE products and the ADVANTAGE mark. As a result of Bayer HealthCare's extensive sales, promotion and advertising, the ADVANTAGE mark has become famous, and represents an extraordinarily valuable goodwill owned by Bayer HealthCare.
Bayer AG tailors the manufacture of ADVANTAGE products to suit the requirements, laws and regulations of specific geographic regions or countries to reflect the differences among these areas in, among other things, environmental laws and regulations, language, climate, local addresses and telephone numbers. Bayer AG appoints distributors for specific geographic regions, including the United Kingdom and Ireland, and for specific countries, such as the United States, in order to maintain the quality associated with ADVANTAGE products within each particular region or country.
Bayer AG prohibits the sale of the ADVANTAGE products by such distributors or agents outside of their designated region or country. The ADVANTAGE products sold in the region incorporating the United Kingdom and Ireland are not authorized or intended for exportation out of these areas, or for importation into, or sale or distribution in, the United States.
In the United States, Bayer HealthCare sells the ADVANTAGE products only to authorized and licensed veterinarians for resale to their pet owner clients. Bayer HealthCare offers these authorized veterinarians information and training on the safe and appropriate use of the ADVANTAGE products.
Since 1996, Bayer HealthCare and its predecessors have advertised their ADVANTAGE products through, and provided useful dosage and safety information to pet owners on, an Internet web site located at www.nofleas.com, but Bayer does not sell the ADVANTAGE products through the Internet.
Nagrom has advertised and sold within the United States, and within this District, animal flea control preparations bearing the ADVANTAGE mark, which is manufactured by Bayer AG for sale and use exclusively outside of the United States, namely, in the United Kingdom and Ireland (the "U.K. Product"). As more thoroughly discussed below, the U.K. Product is not authorized for sale or use in the United States.
Nagrom has used Internet web sites located at the domain names tjspetshop.com, 4fleacontrol.com, and fleadrops.com to advertise and sell the U.K. Product in the United States. Nagrom, without authorization from Bayer, has made prominent use of the ADVANTAGE mark on the tjspetshop.com, 4fleacontrol.com, and fleadrops.com web sites, including the unauthorized use of ADVANTAGE as part of the titles of the web site and the unauthorized portrayal of the distinctive packaging of the ADVANTAGE products. Nagrom also used, without Bayer's permission, Bayer HealthCare's ADVANTAGE mark in the computer code for its tjspetshop.com, 4fleacontrol.com, and fleadrops.com web sites to obtain a high placement in Internet search results when consumers conduct Internet searches for, among other things, purchasing or safety information about the ADVANTAGE products using the keywords or search terms "ADVANTAGE FLEA" or "ADVANTAGE FLEA CONTROL."
Nagrom has without Bayer HealthCare's authorization, paid at least one Internet search engine to secure highly prominent placement for its fleadrops.com web site in search results when consumers conduct Internet searches for, among other things, purchasing or safety information about the ADVANTAGE products, and using the keywords or search terms "ADVANTAGE FLEA" or "ADVANTAGE FLEA CONTROL." As a consequence, Nagrom's fleadrops.com web site has appeared as a higher and more relevant search result than Bayer HealthCare's nofleas.com web site.
Nagrom does not employ licensed veterinarians, and the U.K. Product is sold directly to consumers without offering a consultation with a veterinarian concerning the consumers' safe use of these products on the dog or cat in question.
The U.K. Product also has the following material differences from the ADVANTAGE product authorized by Bayer for sale in the United States:
(1) the U.K. Product has not been registered with the United States Environmental Protection Agency ("EPA"), and, therefore, it constitutes an unregistered pesticide in violation of the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA") sections 12(a)(1)(A), 7 U.S.C. § 136j(a)(1)(A) and the Kansas Agricultural Chemical Act, KSA 2-2204;
(2) the U.K. Product lacks the required warning and precaution statements and includes EPA registration numbers for ADVANTAGE products being marketed by Bayer in the United States, and therefore, it constitutes an adulterated or misbranded pesticide in violation of FIFRA section 12(a)(1)(E), 7 U.S.C. § 136j(a)(1)(E) and the Kansas Agricultural Chemical Act, KSA 2-2203;
(3) Defendant's sale of the U.K. Product constitutes an unlawful production of a pesticide at an unregistered establishment in violation of FIFRA section 12(a)(2)(L), 7 U.S.C. § 136j(a)(2)(L);
(4) Defendant's unauthorized sale of the U.K. Product harms consumers by undermining the EPA's ability, through FIFRA's requirements, to provide consumers with appropriate health and safety guidelines for the use of pesticides sold in the United States;
(5) the U.K. Product is sold through the Internet "over-the-counter" which does not permit veterinarians the opportunity to correctly prescribe dosages based on a personal evaluation of the dog or cat and may lead to a potential health risk to the pets;
(6) the U.K. Product does not identify any emergency or customer service telephone numbers;
(7) there are different instructional pamphlets enclosed in the U.K. Product that, among other things, contain different statements from those in the authorized product sold in the United States about the efficacy of each product after shampooing or washing the animals;
(8) the U.K. Product includes information on the application of the product to pet rabbits, but Bayer HealthCare does not market, nor has it tested, its products for use on rabbits in the United States;
(9) the U.K. Product sold by Defendant does not inform consumers of, or allow them to participate in, Bayer HealthCare's promotions meant for authorized ADVANTAGE products sold in the United States;
(10) the U.K. Product is not subject to Bayer HealthCare's quality control procedures for shipment and storage of the ADVANTAGE products and therefore are subject to damage;
(11) the U.K. Product uses metric measurements ( e.g. kilograms), for dosage instructions, pet weight and other matters of consumer usage and pet safety as opposed to the United States system of measurement ( e.g. pounds);
(12) Defendant's marketing of the U.K. Product conflicts with Bayer HealthCare's return policy for the ADVANTAGE products;
(13) the U.K. Product is not subject to the labeling, marketing or advertising plans and procedures followed by Bayer HealthCare in the United States;
(14) the U.K. Product has removable, unauthorized labels affixed to its packaging;
(15) the U.K. Product identifies a foreign office location for Bayer AG instead of Bayer HealthCare's location in Shawnee, Kansas;
(16) the U.K. Product bears different spellings for certain words based on regional language differences ( e.g. "Poisons Information Centre" vs. "Poison Control Center"); and,
(17) the U.K. Product is not sold pursuant to the same limitations of liability and warranty provisions as ADVANTAGE products legitimately sold in the United States.
III. CONCLUSIONS OF LAW
Bayer HealthCare's incontestable federal trademark registration for the ADVANTAGE mark conclusively establishes its ownership of, the validity of, and its exclusive right to use this mark in connection with flea control preparations for dogs and cats in the United States. 15 U.S.C. §§ 1065 and 1115(b); Park `N Fly v. Dollar Park and Fly Inc., 469 U.S. 189, 194 (1985). The United States service mark registration for the ADVANTAGE ADVISORY mark constitutes prima facie evidence of Bayer HealthCare's ownership of, the validity of, and its exclusive right to this mark for the computer services covered by this registration in the United States. 15 U.S.C. § 1057(b).The sale of gray market goods such as the U.K. Product violates the Lanham Act, as well as the laws of Kansas, because it is likely to cause consumer confusion as to the source, nature, or approval of these products. 15 U.S.C. §§ 1114(1)(a), 1125(a);Bayer Corporation v. Custom School Frames, LLC, 67 U.S.P.Q. 2d 1185 (E.D. La. 2003). See also Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F. 2d 633, 638 (1st Cir. 1992); PepsiCo, Inc. v. Longmont Packing, Inc., 1999 U.S. Dist. LEXIS 12811, *5-6 (D. Colo., August 2, 1999). The sale of gray market products under the same trademarks used in connection with authorized domestic products is likely to confuse customers if these gray market products differ materially from the authorized products. Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F. 2d at 638 ("the unauthorized importation and sale of materially different merchandise violates Lanham Trade-Mark Act section 32 because a difference in products bearing the same name confuses consumers and impinges on the local trademark holder's goodwill"); See also, Martin's Herend Imports v. Diamond Gem Trading, 112 F.3d 1296, 1302 (5th Cir. 1997).
The threshold for determining whether gray market products differ materially from the authorized domestic product "is always quite low." Societe Des Produits Nestle, S.A., 982 F. 2d at 641 ("[t]hus, when dealing with the importation of gray goods, a reviewing court must necessarily be concerned with subtle differences, for it is by subtle differences that consumers are most easily confused"); Martin's Herend, 112 F. 3d at 1301-2 (citing Societe Des Produits Nestle, S.A. with approval). "[T]he existence of any difference between registrant's product and the allegedly infringing gray good that consumers would likely consider to be relevant when purchasing a product creates a presumption of consumer confusion sufficient to support a Lanham Trade Mark Act claim." Societe Des Produits Nestle, 982 F. 2d at 641. See Grupo Gamesa S.A. v. Dulceria El Molino Inc., 39 U.S.P.Q. 2d 1531, 1533 (C.D. Cal. 1996).
In the present action, there are many material differences between domestic ADVANTAGE products and the U.K. Product. For example, the U.K. Product has not been registered with the EPA, and therefore constitutes an unregistered pesticide in violation of FIFRA and the Kansas Agricultural Chemical Act. See Bayer Corporation v. Custom School Frames, LLC, 67 U.S.P.Q. 2d 1185 (E.D. La. 2003). The failure to comply with such federal and state laws and regulations constitutes a material difference. See Helene Curtis, Inc. v. National Wholesale Liquidators, Inc., 890 F. Supp. 152, 159 (E.D.N.Y. 1995) (granting preliminary injunction against importation of unauthorized products because, among other reasons, the goods failed to comply with FDA and New York labeling requirements);Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 753 F. Supp. 1240, 1244 (D.N.J.), aff'd, 19 U.S.P.Q. 2d 1468 (3d Cir. 1991) (unauthorized product differed materially because, among other things, it failed to meet FDA labeling requirements); Grupo Gamesa S.A., 39 U.S.P.Q. 2d at 1533 (failure to comply with the regulations of United States Customs, the State of California and the FDA).
The U.K. Product also is not distributed through veterinarians which is an important quality control measure that constitutes a material difference. See Bayer Corporation v. Custom School Frames, LLC, 67 U.S.P.Q. 2d 1185 (E.D. La. 2003) (prohibition on sale of products through veterinarians constitutes a material difference); Philip Morris Inc. v. Allen Distributors, Inc., 48 F. Supp. 2d 844, 853 (S.D. Ind. 1999) (quality control provisions are a material difference). Even the use of British English spellings on the U.K. Product instead of American English spellings is a material difference. Ferrero U.S.A., Inc., 753 F.Supp. at 1244, 1247 (D.N.J. 1991).
The use of the ADVANTAGE mark on the tjspetshop.com, 4fleacontrol.com, and fleadrops.com web sites also creates likelihood of confusion under federal and state law. Bernina of America v. Fashion Fabrics International, 57 U.S.P.Q. 2d 1881, 1882-84 (N.D. Ill. 2001) (enjoining prominent use of marks on web site by independent dealer). Similarly, the use of the ADVANTAGE mark in the metatags for Defendants' website creates initial interest confusion. Brookfield Communications v. West Coast Entertainment, 174 F. 3d 1036, 1062 (9th Cir. 1999); Promatek Industries v. Equitrac Corp., 300 F.3d 808, 812-13 (7th Cir. 2002). InBrookfield, the court ordered the district court to enjoin the defendant's use of the mark MOVIE-BUFF, which was similar to plaintiff's MOVIEBUFF mark, in its metatags because such use would result in initial interest confusion amongst consumers. The court found that this confusion existed "even where people realize, immediately upon accessing `movie-buff.com', that they have reached a site operated" by defendant and not plaintiff. Id. at 1057. This is because the defendant "will still have gained a customer by appropriating the goodwill" that plaintiff has developed in the mark. Id.
Here, the use of the mark ADVANTAGE in the metatags for the tjspetshop.com, 4fleacontrol.com, and fleadrops.com web sites also constitutes an appropriation of goodwill and creates initial interest confusion. See also Bernina of America, 57 U.S.P.Q. 2d at 1883-84, (N.D. Ill. 2001) (use of mark in code enjoined). The registration of the mark as a search term and code with Internet search engines also leads to confusion. See Bernina of America, 57 U.S.P.Q. 2d at 1882-1884 (court ordered defendant to re-register web site with all known Internet search engines);DeVry/Becker Educational Development Corp. v. Totaltape, Inc., 2002 WL 99743 at *2-3 (N.D. Ill.) (defendant enjoined from use of mark "in connection with the retrieval of data or information (including the use of such terms as a keyword or keywords in pay-for-placement or pay-for-rank search engines), or in connection with the advertising or promotion of [defendant's] goods, services, or websites").
As a matter of law, therefore, the sale of the U.K. Product in the United States without Bayer HealthCare's consent constitutes trademark infringement and unfair competition. The use of ADVANTAGE in connection with the tjspetshop.com, 4fleacontrol.com, and fleadrops.com web sites also constitutes trademark infringement and unfair competition as a matter of law. Trademark infringement and unfair competition by their very nature result in irreparable injury since the attendant loss of goodwill, reputation and business cannot adequately be quantified and the trademark owner cannot adequately be compensated. Heartland Corp. v. Sifers, 2002 U.S. Dist. LEXIS 13581, *28 (D. Kan., July 12, 2002) ("Because a trademark represents intangible assets, such as reputation and goodwill, irreparable injury will be presumed upon a showing of trademark infringement."); See also Marker Intern. v. deBruler, 635 F.Supp. 986, 1002-3 (D. Utah 1986), aff'd 844 F.2d 763 (10th Cir. 1986).
The importation and sale of the U.K. Product and the use of the ADVANTAGE mark on the tjspetshop.com, 4fleacontrol.com, and fleadrops.com web sites are violations of the Lanham Act and the laws of the State of Kansas, and cause irreparable injury to the goodwill symbolized by the famous ADVANTAGE mark as well as to the business reputation of Bayer HealthCare. For the above reasons, Bayer HealthCare is entitled to permanent injunctive relief.
IV. ORDER
It is ORDERED, ADJUDGED and DECREED that:1. This Court has jurisdiction over the parties and subject matter of this action and shall retain jurisdiction over this Final Judgment to ensure compliance with its terms;
2. Nagrom, its officers, agents, servants, employees, and attorneys and all others in active concert or participation with them, including without limitation Ty Hildebrand, President and sole owner of Nagrom, are permanently enjoined and restrained from: (a) using the ADVANTAGE mark, any mark similar thereto, or any other mark owned by Bayer HealthCare, in connection with the importation, sale, distribution, advertising or promotion of any products or services; (b) selling ADVANTAGE products through any and all channels of trade including but not limited to the Internet; (c) using the ADVANTAGE mark, any mark similar thereto, or any other mark owned by Bayer HealthCare, on or in connection with or as part of any web site, metatags, keywords in pay-for-placement or pay-for-rank search engines, computer code or otherwise in connection with the retrieval of data or information through the Internet or in connection with the advertising or promotion of any goods, services or web sites; and (d) reproducing or otherwise using any of Bayer Healthcare's graphics, images or other material.
3. Within thirty (30) days of this order, Nagrom shall request the removal of the ADVANTAGE mark and any search terms and keywords associated therewith, with all Internet search engines previously identified and agreed upon in writing by the parties.
SO ORDERED AND ADJUDGED.