Opinion
Case No. 02-CV-2136
July 12, 2002
ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION
Plaintiff Heartland Corporation (Heartland), the owner of a carpet stain remover product called SPOT SHOT ®, moved for a preliminary injunction against Don S. Sifers and his wholly owned corporation, D.S. Sifers Corporation, the owner of a carpet stain remover product called SPOT STOP for trademark and trade dress infringement. Heartland seeks an order preliminarily enjoining the defendants from: (1) using the trademark SPOT STOP ® or any other substantially similar trademark for carpet cleaning or carpet stain removal products; (2) using the SPOT STOP ® trade dress or any substantially similar trade dress, in connection with carpet stain removal or similar products; and (3) using or disclosing the formula to the Plaintiffs SPOT SHOT ® product in any fashion.
Heartland brought this action against the defendants for trademark and trade dress infringement, as well as trademark dilution and unfair competition under the Lanham Act, 15 U.S.C. § 1051 through 1128, and for unfair competition and misappropriation of trade secrets under Kansas law. Heartland has abandoned its trade secret count, having determined that Sifers' product formula is not substantially similar to Heartland's formula.
Because the Court concludes that Heartland has established a substantial likelihood of prevailing on the merits of its claims for trademark and trade dress infringement, and will be irreparably injured by the inevitable confusion consumers will have over SPOT SHOT ® and the quality control plagued product SPOT STOP ®, to a degree greater than the damage to defendants from an injunction, and that it is in the public interest to issue this injunction, the Court concludes that the preliminary injunction should issue.
FINDINGS OF FACT
SPOT SHOT ® is a chemical carpet stain remover product developed by Sifers Chemicals, Inc. (SCI) in the early 1960s and first sold in 1965. Defendant Don Sifers (Sifers), and his brother Earl, were equal owners of SCI. Earl was a passive investor in SCI; Sifers was the president of SCI, managing and operating its manufacturing plant and warehouse in Iola, Kansas. In fact, it was Sifers who developed the formula for SPOT SHOT ®, in the early 1960s. Although Sifers claimed in certain pleadings (as well as in a 1980 lawsuit that was later dismissed) that he had an ownership interest in SPOT SHOT ®, at trial he testified that SCI owned the formula, not he.
Sifers testified that when he developed the formula in approximately 1964, he wanted to name the product Spot Stop;, but he could not because Essex Chemical had a trademark for a similar product with that name. So, Sifers chose the name Spot Shot instead. As president of SCI, Sifers applied for a registered trademark for Spot Shot. On January 10, 1967, the United States Patent and Trademark Office approved the application, issuing U.S. Registration No. 822, 118 for the mark SPOT SHOT ®.
In 1979, Sifers left SCI, in the wake of financial problems and poor management by Earl Sifer's son Tuck. In 1981, Scott Hilkene, began working for SCI. In 1983, Hilkene, then Earl Sifer's son-in-law, formed his own company, Spot Shot Chemicals, Inc., which then purchased the SPOT SHOT ® formula and trademark as well as the goodwill of SCI for $55,000. Hilkene filed the requisite documents to register the trademark on behalf of Spot Shot Chemicals, Inc. and its successor companies, Spot Shot Products, Inc. and Heartland Corporation. The trademark was renewed on January 10, 1987, its twentieth anniversary. Hilkene, on behalf of his company, also applied for, and on June 2, 1992 received, a registered trademark, U.S. Registration No. 1,689,756, for the design (trade dress) of the can that SPOT SHOT ® was packaged in.
Hilkene's company grew the SPOT SHOT ® product line from annual sales of $250,000 in 1983 to $1,000,000 in 1984 and $36 million by 2001. Most of the revenue comes from sales of its main product, the SPOT SHOT ® carpet stain remover, but there are four other products in the product line: a product for large carpet areas, a shower solution, an upholstery cleaner and stain towelettes. On May 31, 2002, Hilkene sold all of the stock of Heartland Corporation to WD-40 Corporation for $47 million.
SPOT SHOT ® is considered the leader in its industry. James Sinko, a Director of Sales and Marketing for a business unit of Sherwin-Williams that manufactures aerosol cleaning products, as well as fills cans for other such manufacturers, testified that he considered SPOT SHOT ® a well known trademark in the carpet stain remover field. Brock Manner, an aerosol can valve salesman testified that SPOT SHOT is the leader in its industry. Paul Fleischut, a patent and trademark attorney opined that $30 million in sales, 37 years of use of a mark, and the sale of a mark for $47 million are all indications that the trademark has acquired strength and has a lot of "secondary meaning."
SPOT SHOT ® is marketed nationally. In 2001, Heartland spent almost $4.5 million advertising SPOT SHOT ® on national television ads, magazines and radio programs, a number of Sunday newspapers, grocery store flyers, coupons, and as many as 20,000 in-store demonstrations and video ads. SPOT SHOT ® is endorsed by, among others, Linda Cobb, author of several best selling books on home cleaning, aka the "Queen of Clean." Cobb names SPOT SHOT ® as one of five cleaning products no home should be without.
SPOT SHOT ® holds a 14 to 16% share of the national market, competing with such brands as Resolve and Power Spot. SPOT SHOT ® is sold in a number of channels of trade, including: mass merchandisers such as Kmart and Wal-Mart; warehouse stores such as Sams and Costco; hardware stores; "Do it Yourself" stores such as Home Depot or Lowes; and every major grocery chain.
After Sifers left SCI in 1979 for other pursuits, he thought about developing his own carpet stain removal product. He denies taking the SPOT SHOT ® formula with him when he left, but testified that he could recall some of the components of the formula. With this recollection, in 1997, through trial and error, Sifers began experimenting and mixing formulas. He testified that he decided to name the product his original choice of a product name, Spot Stop.
Sifers retained an attorney to research whether the trademark Spot Stop was in use by Essex Chemical or anyone else. He specifically asked the attorney to search for use of the exact name "Spot Stop," or alternatively "The Real McCoy;" and to search under the name of "Essex," the company he knew to have a registered trademark for "Spot Stop" back in the 1960s. The attorney determined that no one was using the mark "Spot Stop." Sifers did not ask the attorney to search for marks similar to "Spot Stop" or "The Real McCoy," although James Sinko had expressed concern to Sifers, that in his experience, "Spot Stop" might be too similar to the name
Although Exhibit 403 reflects a great number of products whose mark includes the word SPOT, many of these products are not even closely related to carpet cleaning or carpet stain removal products.
SPOT SHOT ®.
Having determined that there was no registered mark for "Spot Stop," on behalf of his company, Sifers applied for, and on August 21, 2001, received a registered trademark, U.S. Trademark Registration No. 2,480,591, for SPOT STOP ®. The application was approved by the U.S. Patent and Trademark Office, after an examining attorney determined that SPOT STOP ® was not a trademark registered to another. A patent and trademark attorney, Paul Fleischut, who testified as an expert witness, recreated the search logic performed by the attorney who examined the SPOT STOP trademark application, and determined that the examining attorney's search did not identify the SPOT SHOT ® trademark. To obtain the registered SPOT STOP ® trademark, Sifers filed a requisite declaration of the date, April 4, 2001, that the trademark had first been used in commerce.
The trade dress, or packaging of the two products, compares as follows. SPOT SHOT ® is packaged in a navy blue can with a bright orange cap. The label includes white and yellow lettering. On the back of the label are a number of instructions, product information, warnings, a website address and a toll free customer service number that is staffed 24 hours a day. Reading the front of the label from top down, the following appears:
• "Works Great on Pet Stains" (white and yellow lettering);
• In white angled lettering "SPOT" and below that "SHOT," which are superimposed on a bright orange circle (sometimes with a white halo);
• "America's #1 on tough stains." (white and yellow lettering);
• "Instant Carpet Stain Remover." (white, orange, and white halo lettering).
Although the trade dress has been periodically and slightly altered over the years, and although the product is sold in varying sizes of cans, for over 30 years the product has consistently been dressed in a navy can and orange cap, with yellow, white and orange lettering and Spot Shot superimposed on an orange circle.
SPOT STOP ® is packaged in an 18 ounce orange can with an orange cap. The label is orange and includes white, navy and yellow lettering. These are the same four colors on the SPOT SHOT ® can and the colors are the same intensity and hue, and may be identical. On the back of the label are a number of instructions, product information, warnings, an address for a website that is not yet constructed, and a toll free customer service number that is either answered by Sifers personally, or an answering machine. Reading the front of the label from top down, the following appears:
• "Free 25% More" (navy lettering on a yellow banner);
• "Dollar General $2" (black lettering in a small yellow box);
• "New!" (white angled lettering)
• In navy halo lettering "SPOT" and below that in white lettering "STOP ®," which are superimposed on a bright orange octagon with a white halo;
• "Our Original `One Step'" (white and navy lettering);
• "Carpet Stain Remover." (navy lettering);
• "Great for Pet Stains" (white angled lettering).
Sifers chose the colors for the SPOT STOP ® packaging. He drew some designs with these four colors; and later consulted with a graphic designer who prepared more designs with these same colors. Initially, the can was going to be navy, but on or about February 21, 2002, Sifers told ITW Dymon, that the can would not be navy.
SPOT SHOT ® is sold nationally. SPOT STOP ® is currently being sold in all of Dollar General's stores, in 27 states. Dollar General has contracted to purchase a minimum of 36,000 twelve-can cases of SPOT STOP ® this year. Dollar General is a discount merchandiser that sells a great number of brand cleaning products, as well as some private label products. Dollar General's target customer is the female head of households with annual income below $35,000. Dollar General competes with Wal-Mart, one place where SPOT SHOT ® is sold. Dollar General's customers shop at Wal-Mart. SPOT SHOT ® is not, and has never been sold in Dollar General stores, the only store that sells SPOT STOP®.
Hilkene testified that he would never sell SPOT SHOT ® to Dollar General, which he characterizes as a "brand depreciating, secondary market." To do so, according to Hilkene, he would be risking the company's relationship with high volume wholesale customers like Wal-Mart.
Jerry Vick of Dollar General testified that Dollar General was interested in SPOT STOP ® because Sifers, who had a history with SPOT SHOT ®, represented that it was better than SPOT SHOT ®, which Vickers considered "about the only brand out there now." Sifers similarly represented to Jim Sinko of Sherwin Williams, that he had developed SPOT SHOT ® and that SPOT STOP ® was new, improved and better than SPOT SHOT ®. Vickers denied that Dollar General would not have been initially interested in the product had it been called something other than SPOT STOP ®; but Vickers admitted that Dollar General would be reluctant to stock this product with a changed name, at least in this year, because Dollar General would not want to
mislead or confuse its customers.
Hilkene disclaimed any concern about SPOT SHOT ® having to compete with SPOT STOP ® but expressed concern that consumers, who typically spend only 2 seconds looking at a product label when selecting this type of product from among several displayed, would be confused by the very similar names, packaging colors, and product descriptions on the label. Hilkene was not aware of any actual confusion, yet.
Hilkene is concerned that the confusion may harm the reputation of SPOT SHOT ® because of quality assurance problems with SPOT STOP ®. These problems first arose during production, which at Sifer's insistence, was done on an accelerated schedule. ITW Dymon, a "filler" company that Sifers contracted with to procure the packaging, fill and ship the cans of SPOT STOP ®, had grave concerns about the stability of the formula in the can. During the preproduction phase, some batches of the formula had hardened in drums. The formula separated in the cans. There were indications that the formula caused corrosion in the can. These problems caused some cans to leave a bright red stain on carpet, as illustrated by an in-court demonstration. The fact that some of the cans were defective and leaked, compounded the problems with the formula.
Typically, ITW Dymon would be supplied with the formula (and sign a confidentiality agreement) for a product it was filling for another. But Sifers refused to supply the formula to ITW Dymon. Sifers made a concentrate, which he supplied to ITW Dymon along with instructions on mixing it with other ingredients. Sifers provided three different formulas and at times modified the mixing instructions. Sifers also continued to change the product instructions on the label. ITW Dymon was concerned about having liability or responsibility for filling aerosol cans with a formula that it did not know or test. So, before ITW Dymon shipped any of the product, it required Sifers to assume full responsibility for the stability of this chemical product, by signing a statement that the concentrate had been "approved for use." Jim Sinko of Sherwin Williams testified that his company decided not to fill Sifer's product because they are reluctant to fill aerosol cans unless they know the formula.
Sifers testified that these quality problems have been cured. He demonstrated in court, that spraying a nondefective can of SPOT STOP ® on the red stain caused by a defective can, immediately removed the stain. There remain, however, an undetermined number of defective cans in the stream of commerce. From April 17, the date of the first shipment to Dollar General's warehouse, and June 24, the date of the hearing, Sifers had received 12 consumer complaints. There are currently about 226,000 cans that have been or are ready for shipment and another 200,000 filled and unfilled cans in inventory. The product label neither warns nor advises consumers how to remove stains caused by a defective can. Sifers testified that the product should be shaken before use, but the label fails to give that instruction. Since the label is of the lithograph variety rather than the stick-on flexigraph type, Sifers testified that this error will be corrected prospectively, by changing the printing plate for the label. At trial, Sifers testified that there are misrepresentations on the SPOT STOP ® label, that he will change if the court so directs. One such misrepresentation on the back of the label is that the product "was developed in 1964 for the carpet industry." But, SPOT SHOT ® was developed in 1964; SPOT STOP ® was developed in 1997. Sifers did not explain how or why he allowed this misrepresentation to be on the label.
ANALYSIS AND CONCLUSIONS OF LAW
The main purpose of a preliminary injunction is to preserve the status quo pending final resolution of the matter during the pendency of an action. A party seeking a preliminary injunction must establish: (1) a substantial likelihood that it will eventually succeed on the merits; (2) that the movant will suffer irreparable injury unless the injunction issues; (3) that the threatened injury to the movant outweighs whatever damage the proposed injunction may cause to the opposing party; and (4) that the injunction, if issued, would not be adverse to the public interests. A preliminary injunction is an extraordinary remedy that is the exception rather than the rule. Because of its extraordinary nature, the right to relief must be clear and unequivocal. A decision to deny injunctive relief is within the sound discretion of the trial court. The Tenth Circuit has adopted a modified interpretation of the "likelihood of success" requirement. If the first three requirements for a preliminary injunction are satisfied, then the movant can establish the fourth requirement by merely showing questions going to the merits so serious, substantial, difficult and doubtful, as to make the issues fair ground for litigation and deserving of more deliberate investigation.
Maximus, Inc. v. Thompson, 78 F. Supp.2d 1182, 1188 (D. Kan. 1999).
Packerware Corp. v. Corning Consumer Prods. Co., 895 F. Supp. 1438, 1446 (D. Kan. 1995) (citations omitted).
(1) Likelihood of Success on the Merits
Heartland sues Sifers for infringement of its trademark and trade dress, as well as trademark dilution and unfair competition under the Lanham Act, 15 U.S.C. § § 1051 through 1128. At the outset, the Court notes that the issuance of a registered trademark for SPOT STOP ® is not a defense to Heartland's claim of infringement because the trademark for SPOT STOP ® is contestable.
Before approving a trademark, an examining attorney at the U.S. Trademark and Patent Office searches its database of registered trademarks to determine whether the applicant's mark is sufficiently distinctive from other registered trademarks. If satisfied that the mark is distinctive, a notice is issued, and after an objection period expires with no objections, the office approves and issues to the applicant a registered trademark. Once registered, the trademark is contestable for the first five years of its continuous use; there is a rebuttable presumption that the trademark is distinctive. During the five year period of contestability, the trademark registration can be cancelled on the ground that it is likely to be confused with a prior registration or even with an unregistered and unfound mark. After the five years, the trademark becomes incontestable, meaning there is conclusive evidence of its distinctiveness. The SPOT SHOT ® trademark is incontestable; and its trademark for design is also incontestable. The SPOT STOP ® trademark is contestable.
The legal standard for determining trademark infringement and trade dress infringement is the same. A likelihood of confusion of the public is the essence of both trademark or trade dress infringement and unfair competition. In analyzing whether there is a likelihood of confusion, the following factors are considered: (1) the degree of similarity between the marks, including the marks' appearance, pronunciation, suggestion, and manner of display; (2) the strength or weakness of the plaintiffs mark; (3) the intent of the alleged infringer in adopting his mark; (4) similarities and differences between the parties' goods, services and marketing strategies; (5) the degree of care likely to be exercised by the purchasers of the goods or services involved; and (6) evidence of actual confusion, if any. These factors are applied on a case by case basis; some factors may be more relevant and demand greater consideration than others, depending upon the totality of the circumstances.
Universal Motor Oils Co., Inc. v. Amoco Oil Co., 809 F. Supp. 816, 820 (D. Kan. 1992) (citation omitted).
Heartsprings, Inc. v. Heartspring, Inc., 143 F.3d 550, 554 (10th Cir. 1998).
Id.
Similarity of marks
The marks are considered as they are encountered in the marketplace and are viewed as a whole based upon their sight, sound and meaning. A "side-by-side" comparison is not the test, but rather the determination is whether the mark will be confusing to the public when singly presented.
Id.
Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934, 941 (10th Cir. 1983).
Needless to say, the word trademarks are very similar in appearance, SPOT SHOT ® vs. SPOT STOP ®, sound (both consist of the word "spot" followed by a one syllable four letter word beginning with an "S" and including a short "o" sound), and meaning on the whole (taking care of carpet stains). And, the trade dress is similar in appearance. Both are sold in a metal aerosol can with an orange lid; the words SPOT SHOT and SPOT STOP both appear in all caps in block letters with SPOT directly above SHOT or STOP. Both have the product name superimposed on an orange background, either a circle or an octagon, that are quite similar in shape to a quickly discerning eye. The terms "carpet stain remover" are printed vertically below each mark in the same general location in similarly sized print. Both use orange, navy, yellow and white on their labels. Both labels say the product works great on/for pet stains.
Sifers points to the different meaning behind the word "shot" and "stop," and the fact that the SPOT STOP ® can says it is "New!" Heartland counters that customers see the word "New" as indicating a new formula, not a new brand. This is certainly the impression that Sifers tried to give Dollar General and potential fillers, that it was a new and improved formula, by someone long associated with the SPOT SHOT ® brand.
Strength
Heartland's trademark has been in continuous use for 37 years, on a product that witnesses have described as the "leader in the industry," one that commands a 14-16% market share. Its trade dress has been in use in substantially the same form for at least fifteen years.
Marks are classified in categories of generally increasing distinctiveness, which are: 1) generic; 2) descriptive; 3) suggestive; 4) arbitrary; or 5) fanciful. The latter three categories are deemed inherently distinctive because their intrinsic nature serves to identify a particular source of the product, and are accordingly entitled to protection. Generic marks — those that refer to the genus of which the particular product is a species — are not registerable as trademarks. Descriptive marks do not inherently identify a particular source and are not protected unless they acquire distinctiveness (called "secondary meaning").
Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992), reh'g denied 505 U.S. 1244 (1992). See also Beer Nuts, 711 F.2d at 939 n. 5 (suggestive trademarks subtly connote something about the products . . . a term is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature of the goods. A term is descriptive if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods . . . trademarks are fanciful or arbitrary if they bear no relationship to the product or service with which they are associated and are therefore inherently distinctive.)
Heartland argues that its marks are arbitrary or suggestive, as opposed to descriptive, a distinction that enhances their strength. Sifers argues that the marks are merely descriptive of shooting a spot, such that Heartland must show secondary meaning to gain protection. Sifers further argues that because "spot" is used in many household product names, such extensive third-party use of the disputed term indicates that the term itself deserves only weak protection.
Two Pesos, 505 U.S. at 768.
First Sav. Bank, 101 F.3d at 654.
Secondary meaning indicates that a trademark or trade dress has come to be uniquely associated with a specific source through use. To establish secondary meaning, plaintiff must show that, in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself.
Id. at 766.
Because Heartland's marks are incontestable, they are conclusively presumed to be non-descriptive or to have acquired secondary meaning. Furthermore, as expert Paul Fleischut opined, a product with $30 million in annual sales, 37 years of use of a mark, and the sale of a mark for $47 million are all indications that the trademark has acquired strength and has a lot of "secondary meaning."
Citing Park `N Fly, Inc. v. Dollar Park and Fly, 469 U.S. 189 (1985).
Intent of the alleged infringer
The inference of intent is especially strong when the parties have had a prior relationship. Such relationship provides evidence of the alleged infringer's intent to trade on the plaintiff's goodwill. The label information (developed in 1964 and is our original one step carpet stain remover), which Sifers admitted was false, is strong evidence of an intent to associate SPOT STOP ® with the historical development of SPOT SHOT ®. Sifers certainly emphasized his connection with SPOT SHOT ® in marketing the product to Dollar General and to potential fillers. Although Sifers disclaims his involvement in the design of the can, the fact that Sifers chose the same four colors that are on the SPOT SHOT ® can is more evidence of his intent. The Court is not persuaded that Sifers lacked intent simply because he hired an attorney to determine whether Spot Stop was available for a trademark. Nor is the fact that SCI obtained a trademark for SPOT SHOT ® at a time when SPOT STOP ® was a trademark owned by Essex Chemical, evidence that the two are distinctive marks with respect to these two carpet stain removers. Nothing in the record suggests that the trademark registered to Essex Chemical was for an identical product in the same channels of trade.
Beer Nuts, Inc. v. Clover Club Foods Co., 805 F.2d 920, 927 (10th Cir. 1986).
Similarities/Differences between the products and marketing strategies
The greater the similarity between the products, the greater the likelihood of confusion. These products are identical, carpet stain removers, that, incidentally work great on "pet stains."
Heartsprings, 143 F.3d at 556.
But, the products are marketed differently. SPOT STOP ® is sold only at Dollar General; SPOT SHOT ® is sold in many channels of trade, but not at Dollar General. SPOT SHOT ® retails for about $4 or more; SPOT STOP ® retails for $2.
Despite the differences in marketing, the identical use of the products and their very similar trade dress suggests a strong likelihood of confusion. Although Dollar General's customers may encounter SPOT SHOT ® at Wal-Mart and other places they shop, they won't be making a side by side comparison of these two products, and thus may not become aware that they are different. Heartland and Sifers argue whether this separation of products increases or decreases confusion. Because Dollar General customers are accustomed to seeing many brand name labels, private labels and labels produced for Dollar General, they may be conditioned to disregard differences as to packaging as long as the marks are somewhat similar.
Likely Degree of care Exercised by Purchasers
A low degree of consumer care in selecting a product increases the likelihood that similar marks will produce confusion in the relevant marketplace. There may be a low degree of care because of the inexpensive nature of the products. These products retail for $2 to $4. Scott Hilkene testified that with this type of product, consumers spend no more than two seconds scanning the product selection before choosing their carpet cleaning product.
Heartsprings, 143 F.3d at 557.
Actual Confusion
There is no evidence of actual confusion, yet. But SPOT STOP ® has only been in the market for three months. And, the absence of such evidence, especially when the products are inexpensive, does not necessarily support a finding that the likelihood of confusion is absent. With inexpensive products, customers may not report with any frequency, their confusion between two products. Of course, in this instance, at least twelve customers have reported complaints and it is possible that reports of confusion may follow.
Beer Nuts, 805 F.2d at 928.
Certainly there is anecdotal evidence that suggests confusion, particularly because of the great similarity in the sight and sound of the product names. An email message from ITW Dymon to Sifers mistakenly refers to SPOT STOP ® as SPOT SHOT ®. Although ITW Dymon is not a customer, it is an agent of Defendants.
The trade dress is so similar. Although one can is navy and the other orange, both cans have orange, yellow, navy and white in virtually identical intensity and hues of color. And, the blatant misrepresentation on the label of SPOT STOP ® that it was developed in 1964 not only contributes to, but encourages product confusion.
Sifers presented demonstrative evidence, other navy blue cans containing common household products such as laundry starch, glass and oven cleaners and pesticides, presumably to illustrate that many products bear somewhat similar trade dress. But, these different products would not be displayed with carpet stain removers. For the same reason, Exhibit 403, which purports to show how many household products have the word "spot" in their name, is irrelevant. It includes products other than carpet cleaners.
Moreover, it is not just the trade dress, it is the close similarity in names that creates confusion. The names are so close, that a split second scan by a consumer might not discern the difference in the words Spot Shot and Spot Stop. The names sound very much alike. Both names are difficult to articulate, and are fodder for tongue twisters.
(2) Irreparable Harm
Because a trademark represents intangible assets, such as reputation and goodwill, irreparable injury will be presumed upon a showing of trademark infringement. If the plaintiff fails to demonstrate a likelihood of consumer confusion, the irreparable injury cannot be presumed.
Packerware Corp. v. Corning Consumer Prods. Co., 895 F. Supp. 1438, 1452 (D. Kan. 1995) (citing Amoco Oil v. Rainbow Snow, 809 F.2d 656, 663-64 (10th Cir. 1987)).
Id.
The harm from confusion between SPOT SHOT ® and SPOT STOP ® is real, although it is too soon to have evidence of actual confusion. SPOT STOP ® was first shipped to Dollar General in April, and in two months had generated twelve consumer complaints. More consumer complaints may be registered when more defective cans, already in the stream of commerce, are purchased and used by consumers. Defendants can neither identify nor stop these defective cans from entering the stream of commerce.
So, for some undetermined period of time, and with respect to some undetermined number of cans of SPOT STOP ®, consumers may find that the can leaks, or that the product leaves a red stain on their carpet. Imagine the horror of spraying a so-called stain remover on light colored carpet, only to have a bright red stain appear. That would immediately harm the reputation of the product and any product it is confused with.
It does not matter that SPOT STOP ® is sold in a store where SPOT SHOT ® is not sold. Consumer confusion is still quite possible, because consumers who shop at Dollar General, also shop at Wal-Mart and undoubtedly other stores (groceries, mass merchandisers, hardware) where SPOT SHOT ® is carried. Moreover, although SPOT STOP ® is sold only at Dollar General, that is numerous outlets in 27 states.
Sifers further argues that Heartland delayed in bringing an action. Heartland had knowledge of the alleged infringement in February, 2002, but waited until March 21, 2002, near the eve of final production and shipment, to seek an exparte restraining order in state court. When a movant shows no specific harm other than the harm that is presumed to result from a likelihood of confusion, the movant's delay in bringing suit is an important factor in determining irreparable harm. But here, Heartland has shown harm beyond that confusion. Heartland has shown that defects in SPOT STOP ® may result in more than lost sales because of product confusion. Heartland may lose sales, and harm to its reputation and goodwill because of the serious defects in some SPOT STOP ® cans in commerce.
Id. (citing GTE Corp. v. Williams, 731 F.2d 676, 679 (10th Cir. 1984)).
(3) Balance of Harms
As of June 24, the date of the preliminary injunction hearing, Sifers expected that out of the total order of 36,000 cases (432,000 cans), a total of 18,696 cases (224,352 cans) would have been shipped to Dollar General, leaving a balance on the initial order of 17,304 cases (207,648 cans). Defendants are contractually obligated to sell the entire 36,000 cases, with delivery dates determined by Dollar General. If Defendants don't comply, they will still owe the filler, ITW Dymon, $324,000 (75 cents per can), and may lose their only customer, Dollar General.
The harm to Heartland is not as easily quantified, but potentially much greater. SPOT SHOT ® enjoys a 37 year history of sales growth and goodwill in the industry, and a 14-16% market share, now threatened by a product that has begun generating consumer complaints for causing rather than removing stains. This is not a minor defect in the product. Consumers who purchase a product in order to remove stains from carpet undoubtedly would be quite alarmed to discover the product gives them a new, bright red stain on their carpet. Even if the defect has been cured, an undetermined number of defective cans are in the stream of commerce, so the potential injury continues. Although SPOT STOP ® is a small, upstart product, it is being distributed in 27 states in Dollar General stores, to consumers who shop at Wal-Mart, one of SPOT SHOT's ® significant channels of trade. And, even if the defect has been prospectively cured, consumers who have or will buy cans already in the stream of commerce are not on notice of the potential problem, nor how to fix it. On balance, the likely harm to Heartland far exceeds the harm to Defendants from an injunction, and the harm to Defendants is more readily quantifiable for purposes of liquidating damages, than is the harm to Heartland.
(4) Adverse to Public Interest
The public interest favors freedom of competition and the availability of choice to consumers. Sifers argues that SPOT STOP ® is a less expensive product made available in a channel of trade not used by SPOT SHOT ®, benefitting the lower income customers who shop at Dollar General, and thus benefitting the public interest. But, the public has the right to receive accurate product information and not be deceived by sellers' misrepresentations. The label on the SPOT STOP ® misrepresents its genesis. It was not developed in 1964, but was only developed in 1997. This misrepresentation may well lead to consumer confusion of SPOT STOP ® for SPOT SHOT ®. That is adverse to the public interest, particularly if SPOT STOP ® is an inferior product that causes rather than removes stains.
For all of these reasons, the Court concludes that Heartland has carried its burden, and a preliminary injunction should issue.
IT IS THEREFORE ORDERED, that the DEFENDANTS ARE PRELIMINARILY ENJOINED from using the SPOT STOP ® trademark or trade dress, or any other substantially similar trademark or trade dress for carpet cleaning or carpet stain removal products.
IT IS SO ORDERED.