Opinion
05 Civ. 4429 (RMB) (RLE).
January 25, 2006
DECISION AND ORDER
I. Background
On or about May 5, 2005, VS Vin Sprit Aktielolag (publ) ("Plaintiff") filed a complaint ("Complaint") against Absolute Publishing USA Inc. ("Defendant") alleging trademark infringement, trademark dilution and unfair competition under the Lanham Act and New York law, "arising out of [Defendant's] misappropriation and unauthorized use of [Plaintiff's] federally registered trademark ABSOLUT." (Complaint at 1-2 (citations omitted).) Plaintiff claims that "Defendant has intended to lead U.S. customers to believe that Defendant's Magazine [entitled "Absolute"] is connected or affiliated with [Plaintiff], and [Plaintiff's] enormously popular and successful product, ABSOLUT vodka." (Complaint at 8.)
On or about May 19, 2005, Plaintiff filed a motion for a preliminary injunction. (Notice of Motion, dated May 5, 2005; Plaintiff's Memorandum of Law in Support of its Motion for Preliminary Injunction, dated May 5, 2005 ("P. Mem."); Declaration of Joanne Ludovici-Lint in Support of Plaintiff's Motion for Preliminary Injunction, dated May 4, 2005 ("Ludovici-Lint Decl."); Declaration of Eva Kempe-Forsberg in Support of Plaintiff's Motion for Preliminary Injunction, dated May 4, 2005.) Plaintiff argues that "as Defendant apparently intended, Defendant's audience for its `Absolute' magazine became confused about whether the makers of the famous ABSOLUT vodka were affiliated with Defendant's magazine." (P. Mem. at 1-2.) Plaintiff states that it "has satisfied all eight factors of the Second Circuit's Polaroid test for trademark infringement." (P. Mem. at 3.)
"Plaintiff owns extraordinarily strong trademark rights . . ., the parties' trademarks are virtually identical, the parties' goods and marketing channels overlap, Defendant has acted with intent to cause confusion with ABSOLUT, Defendant's goods are impulse purchases, and — perhaps most importantly — actual consumer confusion is already occurring." (P. Mem. at 3.) Plaintiff asserts that "it is likely that consumers would believe . . . that Defendant's lifestyle magazine emanates from or is sponsored by ABSOLUT" and that "the goodwill that [Plaintiff] has built under the mark ABSOLUT at great effort and cost cannot be placed at the mercy of a magazine over which [Plaintiff] has no control." (P. Mem. at 17, 21.)
Plaintiff also claims to offer its own magazine, "Absolut Reflextions," which "[o]ver the past 15 years . . . has become a publication that appeals to and is available to all consumers of ABSOLUT." (P. Mem. at 16.)
On or about September 21, 2005, Defendant filed an opposition. (Defendant's Memorandum of Law in Opposition to Plaintiff's Motion for a Preliminary Injunction, dated September 21, 2005 ("Def. Mem.").) Defendant argues that "Plaintiff has shown no evidence of the use of its mark on general interest magazines, much less evidence of likelihood of confusion," and that "[t]he common English word ABSOLUTE is used by an extraordinary number of companies as part of a company name and for a vast number of products and services including numerous uses on Publications." (Def. Mem. at 2.) Defendant also argues, inter alia, that "Defendant's magazine's script typography . . . is so dissimilar from . . . Plaintiff's mark that no visual confusion is likely," that "there is absolutely no competitive proximity between advertising and sale of vodka and a general interest magazine," and that "Defendant's selection of the name NEW YORK ABSOLUTE for a high quality general interest magazine not related to vodka sales is a reasonable good faith decision in view of the commonness of the English word ABSOLUTE in other product trademarks and business names and even in publications by third parties not related to vodka." (Def. Mem. at 9, 10, 14.)
On November 28, 2005, United States Magistrate Judge Ronald L. Ellis, to whom this matter had been referred, issued a thorough report and recommendation ("Report") recommending that Plaintiff's motion for a preliminary injunction be denied because Plaintiff "has not met its burden of establishing a likelihood of success on the merits, therefore failing to demonstrate the necessary irreparable harm for a preliminary injunction." (Report at 20-21.)
On or about December 8, 2005, Plaintiff filed objections to the Report. (Plaintiff VS's Objections to the Report and Recommendation of Magistrate Judge Ellis Dated November 22, 2005, dated December 7, 2005 ("Objections").) Defendants filed a response on or about December 19, 2005. (Defendant's Response to Plaintiff VS's Objection to the Report and Recommendation of Magistrate Judge Ellis Dated November 22, 2005, dated December 19, 2005 ("Obj. Resp.").)
For the reasons set forth below, the Court adopts the Report and denies Plaintiff's motion for a preliminary injunction.
II. Legal Standard
The court may adopt those portions of a magistrate's report to which no objections have been made and which are not facially erroneous. Thomas v. Arn, 474 U.S. 140, 149 (1985); see also Santana v. Kuhlman, 232 F. Supp. 2d 154, 157-58 (S.D.N.Y. 2002). The Court "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." 28 U.S.C. § 636(b)(1)(C); see also Fed.R.Civ.P. 72(b); Grassia v. Scully, 892 F.2d 16, 19 (2d Cir. 1989); DeLuca v. Lord, 858 F. Supp. 1330, 1345 (S.D.N.Y. 1994).
"To obtain a preliminary injunction, a plaintiff must establish: `(1) the likelihood of irreparable injury in the absence of such an injunction, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation plus a balance of hardships tipping decidedly' in its favor. In trademark disputes, `a showing of likelihood of confusion establishes both a likelihood of success on the merits and irreparable harm.'" Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 537 (2d Cir. 2005) (internal citations omitted).
III. Analysis
The facts as set forth in the Report are incorporated herein by reference unless otherwise noted. The Court has conducted a de novo review of, among other things, Plaintiff's Complaint, Plaintiff's Motion and Memorandum of Law, Defendant's Opposition, the Report, Plaintiff's Objections, Defendant's Response, the record, and applicable legal authorities, and concludes that the recommendation made by Magistrate Judge Ellis is supported by the record and the law. See Pizarro v. Bartlett, 776 F. Supp. 815, 817 (S.D.N.Y. 1991). Plaintiff's Objections do not constitute a basis for departing from the Report's principal recommendation.
As to any portion of the Report to which no objections have been made, the Court concludes that the Report is not clearly erroneous. See Pizarro, 776 F. Supp. at 817. Any of Plaintiff's Objections not specifically addressed in this Order have been considered de novo and rejected.
Magistrate Judge Ellis was correct to employ the "`multi-factor test,' as established in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961), to evaluate the likelihood of confusion in trademark infringement cases where the parties produce different products." (Report at 5); see Virgin Enters. Ltd. v. Nawab, 335 F.3d 141, 150 (2d Cir. 2003) ("Polaroid was specially designed for a case like this one, in which the secondary user is not in direct competition with the prior user, but is selling a somewhat different product or service."). Magistrate Judge Ellis also correctly found that, in balancing the Polaroid factors, Plaintiff "has not demonstrated a likelihood of confusion." (Report at 19.)
The gravamen of the Complaint is alleged confusion "as to affiliation, sponsorship, or connection." See Star Indus., Inc. v. Bacardi Co. Ltd., 412 F.3d 373, 384 (2d Cir. 2005). "[T]he point of an affiliation confusion claim [is that] if [Plaintiff's] design is . . . inherently distinctive and therefore a unique and recognizable identifier of [Plaintiff's] product, then the inclusion of a similar design on another company's product may lead consumers to infer a relationship between the new product and [Plaintiff's]." Id.
Magistrate Judge Ellis also found, "[t]here is some question about [Defendant's] intent because of allusions to the Absolut Vodka advertising campaign in advertisements." (Report at 18.) He stated that while Plaintiff's "evidence of actual confusion . . . is insufficient to support an inference of a likelihood of confusion" at this time, the fact that "in the first issue of [Defendant's] magazine . . . the editor mentioned that callers had been asking if the magazine is related to the vodka" leaves open the possibility that Plaintiff will be able to produce additional similar evidence in the future. (Report at 14.)
A. Strength of Plaintiff's mark
"The strength of a mark refers to its distinctiveness, that is to say, the mark's ability to identify goods sold under it as coming from one particular source. To gauge a mark's strength, we consider two factors: its inherent distinctiveness, and its distinctiveness in the marketplace." Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739, 743-44 (2d Cir. 1998) (internal citations omitted). Magistrate Judge Ellis found that "Absolut is inherently distinctive," but that "the second aspect of the test for strength, distinctiveness in the marketplace, does not weigh in favor of [Plaintiff]." (Report at 7-8.)
The Court agrees that "[Plaintiff] has not demonstrated the strength of [its mark] in relation to the field of general interest magazines." (Report at 8); see Brennan's, Inc. v. Brennan's Rest., L.L.C., 360 F.3d 125, 132 (2d Cir. 2004) ("[T]o achieve the status of a strong mark, plaintiff must demonstrate distinctiveness in therelevant market for if the mark is not recognized by the relevant consumer group, a similar mark will not deceive those consumers.") (emphasis in original); Morningside Group, Ltd. v. Morningside Capital Group, L.L.C., 182 F.3d 133, 139 (2d Cir. 1999) ("Importantly, a mark's strength is examined principally in the market in which the mark is used."). Defendant has pointed to numerous other publications using the common English word "absolute" in their title; this also weighs against the strength of Plaintiff's mark in the relevant market. (Def. Mem. at 4-6.);see Streetwise, 159 F.3d at 744 ("`Streetwise' is not particularly distinctive in the marketplace. Other map manufacturers have used the word `street' in their product's names . . . Such third party use of the words `street' and `wise' weakens the strength of Streetwise's mark . . . Hence, although plaintiff's product is ranked as suggestive for its inherent distinctiveness, it is not strong in the marketplace for maps.").
B. Similarity of the marks
"Of salient importance among the Polaroid factors is the `similarity of the marks' test, which attempts to discern `whether the similarity of the marks is likely to cause confusion among potential customers.' To apply this factor, courts must analyze the mark's overall impression on a consumer, considering the context in which the marks are displayed and `the totality of factors that could cause confusion among prospective purchasers.'" Malletier, 426 F.3d at 537 (internal citations omitted); see also Virgin, 335 F.3d at 149 ("When the secondary user's mark is not identical but merely similar to the plaintiff's mark, it is important to assess the degree of similarity between them in assessing the likelihood that consumers will be confused."). Significantly, "the Lanham Act requires a court to analyze the similarity of the products in light of the way in which the marks are actually displayed in their purchasing context." Malletier, 426 F.3d at 538. "Whether simultaneous viewing by consumers is likely to result in confusion is not relevant when it is serial viewing that is at issue given the market context or the type of confusion claimed. In such a case, a district court must ask not whether differences are easily discernable on simultaneous viewing, but whether they are likely to be memorable enough to dispel confusion on serial viewing."Id.
Here, as in Malletier, consumers are unlikely to see the marks side-by-side, and the differences between the marks "are likely to be memorable enough to dispel confusion on serial viewing." Id. Because Plaintiff's ABSOLUT trademark — without an "e" and in heavy block lettering — as it appears on their vodka bottles and in their print advertisements, is so visually distinctive, consumers are unlikely to confuse it with Defendant's "Absolute" mark, which uses the conventional spelling and a different font, when they see it on the cover of a magazine. See Brennan's, 360 F.3d at 133 ("When evaluating the similarity of marks, courts consider the overall impression created by a mark."); see also Star Indus., 412 F.3d at 386 ("[W]hile the two . . . marks appear very similar when viewed in isolation, this similarity is tempered by the fact that the respective packaging is very different.").
In its filings, Defendant refers to its magazine as "New York Absolute." (Def. Mem., at, e.g., 1, 8, 9, 10.) The cover of Defendant's magazine may create the impression that its title is "Absolute." See Playtex Prods., Inc. v. Georgia-Pacific Corp., 390 F.3d 158, 164 (2d Cir. 2004) ("Photographs of the product's packaging confirm that defendants include the `Quilted Northern' name in the mark. Moreover, plaintiff acknowledged at oral argument that it was not aware of any public use of the mark `Moist-Ones' without `Quilted Northern.' We therefore agree with the district court's conclusion that defendants' mark is `Quilted Northern Moist-Ones' and not `Moist-Ones' alone.").
Plaintiff argues that the marks "look virtually identical," and cites cases where a one-letter difference between marks and/or differences in typestyle have been held insubstantial. (Objections at 2-3.) But, Plaintiff's ABSOLUT mark is distinctive and recognizable because of its unique spelling and its appearance in a bold typeface, and the differences that Plaintiff argues are minor are, in fact, significant. See Citygroup Inc. v. City Holding Co., 171 F. Supp. 2d 333, 348 (S.D.N.Y. 2001) ("In appearance the marks are significantly different.")
Plaintiff further argues (unpersuasively) that "the bottom of each numbered page of text in Defendant's magazine contains `ABSOLUTE' in the distinctive typestyle of ABSOLUT." (Objections at 3-4.) Plaintiff also points out that "the parties' marks undeniably sound identical." (Objections at 4-5.)
C. Competitive proximity of the products
Magistrate Judge Ellis correctly found that Plaintiff "cannot show competitive proximity between its trade publication, or its vodka, and Absolute's Magazine." (Report at 13.) "When two users of a mark are operating in completely different areas of commerce, consumers are less likely to assume that their similarly branded products come from the same source. In contrast, the closer the secondary user's goods are to those the consumer has seen marketed under the prior user's brand, the more likely that the consumer will mistakenly assume a common source."Virgin, 335 F.3d at 149-50; see also Savin Corp. v. Savin Group, 391 F.3d 439, 459 (2d Cir. 2004) ("[C]onsumers are unlikely to be confused as to source because [of] the competitive distance between the parties' services.").
Plaintiff is in the business of selling and marketing vodka, and Defendant produces a general interest magazine. Plaintiff argues that "[l]ike Defendant, Plaintiff offers a general interest magazine focusing on the arts, design, fashion, food and drink, and music." (Objections at 15.) Plaintiff's publication, "Absolut Reflexions," is essentially an advertisement for its products, "distributed for free to professionals in the alcoholic beverage industry." (Report at 11.) While Plaintiff asserts that "several articles in the Spring 2005 issue of ABSOLUT REFLEXIONS . . . do not even mention ABSOLUT or vodka," (Objections at 17), "Absolut Reflexions," from cover to content, seems more like an advertisement for Plaintiff's product, and not a general interest magazine. (Report at 13 ("While [Plaintiff] emphasizes that Absolut Reflexions contains a wide range of articles, the publication is clearly intended to promote Absolut Vodka.").)
D. Confusion
Plaintiff argues that "Defendant has already admitted that the public is confused about the relationship between its `Absolute' Magazine and ABSOLUT vodka. In the inaugural issue of `Absolut' Magazine, the Magazine's editor acknowledges that since the initial announcement of the Magazine, consumers have contacted Defendant to ask, `Are you related to the vodka?' That supposition of a relationship is precisely the kind of harm that the Lanham Act addresses." (P. Mem. at 19 (citations omitted));see Morningside, 182 F.3d at 141 ("[E]vidence of actual confusion regarding affiliation or sponsorship is also entirely relevant to the ultimate likelihood-of-confusion inquiry."); see also Virgin, 335 F.3d at 151 ("Plaintiff submitted to the district court an affidavit of a former employee of defendant Cel-Net, who worked at a mall kiosk branded as Virgin Wireless, which stated that individuals used to ask him if the kiosk was affiliated with plaintiff's VIRGIN stores. The district court correctly concluded that this evidence weighed in plaintiff's favor.").
The evidence of confusion as to the affiliation or sponsorship of Defendant's magazine is not especially strong. (Report at 15);see Star Indus., 412 F.3d at 387-88 ("[E]vidence of actual confusion consist[ing] entirely of testimony by several interested witnesses recounting a handful of anecdotes, including a number of hearsay statements by unidentified and unidentifiable declarants" held not to weigh strongly in favor of Plaintiff, particularly in light of Plaintiff's "failure to present its own consumer survey.").
E. Likelihood that the senior user will bridge the gap
"`Bridging the gap' refers to the likelihood that the senior user will enter the junior user's market in the future, or that consumers will perceive the senior user as likely to do so."Star Indus., 412 F.3d at 387. Magistrate Judge Ellis found that Plaintiff "has not presented any evidence of an intention to expand into [Defendant's] market by publishing a general interest magazine." (Report at 13.) Plaintiff argues that "at bare minimum, it must be said that a general interest magazine is at least in the reasonable zone of expansion for the ABSOLUT trademark." (Objections at 17.) Without further support for Plaintiff's assertion, there appears to be no basis to disturb Magistrate Judge Ellis' finding. (Report at 13); see Savin, 391 F.3d at 459-60 ("Plaintiff claims that it intends to expand its involvement in the area of facilities management, but . . . even drawing all inferences in Plaintiff's favor, this bare assertion fails to raise a genuine issue of material fact that Plaintiff is likely to enter Defendants' corner of the marketplace.").
F. Defendant's intent in adopting its mark
"Bad faith generally refers to an attempt by a junior user of a mark to exploit the good will and reputation of a senior user by adopting the mark with the intent to sow confusion between the two companies' products." Star Indus., 412 F.3d at 388-89. Plaintiff argues that "Defendant picked a name virtually identical to ABSOLUT and then played on the similarity with `cute' allusions during its launch campaign. For instance, a mailer for the magazine said, `Look for your first taste of Absolute to arrive soon' and `We hope your appetite has been whet.' Any lingering doubt about Defendant's intent was removed when it placed a full-page ad in Impact, a trade publication exclusively for alcohol industry executives. Defendant's ad inImpact was the only ad in that publication that was not for an alcohol beverage or alcohol company." (Objections at 14-15.) Defendant argues that, "Defendant's `founding affiliate' used the mark ABSOLUTE MARBELLA in Spain for many years as a general interest magazine." (Obj. Resp. at 2.) Defendant also argues that "Absolute is a common word in the English language used by thousands of businesses for the sale of an extensive variety of goods and services including magazine publication." (Obj. Resp. at 3-4). Defendant provides an extensive list of businesses, including publications, that use the common English word "Absolute" in their name. (Def. Mem. at 4-6.)
Here, there is no direct evidence that Defendant intended to `copy' Plaintiff's mark by using the traditional spelling of a common English word, but the actions of Defendant in promoting its magazine may suggest that Defendant intended to confuse consumers as to affiliation between Plaintiff's company and Defendant's new publication. As Magistrate Judge Ellis found, Defendant also "did not present evidence of pursuing a trademark search or seeking the advice of counsel." (Report at 16.) "This factor weighs in plaintiff's favor." (Report at 16.)
G. The quality of Defendant's product
"[T]he quality factor of Polaroid is primarily concerned with whether the senior user's reputation could be jeopardized by virtue of the fact that the junior user's product is of inferior quality." Star Indus., 412 F.3d at 389. Plaintiff argues that "[b]ecause Defendant's Magazine has just launched, it is too early to assess the quality of the Magazine," but admits that "both users' goods are of premium quality." (P. Mem. at 21 (referring also to "the glossy, premium nature of the `Absolute' Magazine.").) Defendant states that its magazine "is a high end quality magazine distributed to wealthy and discerning individuals." (Def. Mem. at 15.) Plaintiff's concern about Defendant's magazine's future quality is speculative. See Robot Wars LLC v. Roski, 51 F. Supp. 2d 491, 495 ("[A]s to the quality of defendants' product, plaintiff has, once again, offered nothing more than rank speculation in support of its assertion.").
H. The sophistication of purchasers
Magistrate Judge Ellis concluded that "[t]he buyers of Absolut Vodka and [Defendant's] magazine are probably equally discerning." (Report at 17.) "As the theory goes, the more sophisticated the purchaser, the less likely he or she will be confused by the presence of similar marks in the marketplace."Savin, 391 F.3d at 461.
Plaintiff argues that "the law considers both vodka and magazines as `impulse purchases,' because of the relatively low cost of the goods at issue," and that although target consumers may be "wealthy individuals," "[i]f anything, wealthier consumers would be expected to exercise even less care between the nearly identical names ABSOLUT and ABSOLUTE, because the small expense of the goods is even less significant to them." (Objections at 20.) Defendant states that its magazine "is directed to highly sophisticated individuals with a high income" and that consumers of both parties' products "are likely to exercise great care in their purchasing decisions." (Def. Mem. at 15-16.)
Plaintiff "has spent hundreds of millions of dollars promoting and advertising ABSOLUT vodka and the ABSOLUT advertising campaign" in an effort to ensure that consumers recognize the ABSOLUT trademark. (P. Mem. at 6.) "[T]he Court concludes that the relevant consumers in the present case are sophisticated, and that their sophistication militates against the finding of likelihood of confusion because consumers knowledgeable of both brands would conclude that the products are so different from one another that they do not emanate from the same source." See Paco Sport, Ltd. v. Paco Rabanne Parfums, 86 F. Supp. 2d 305, 327 (S.D.N.Y. 2000).
I. Balancing the Polaroid factors
"When balancing the factors, district courts generally should not treat any single factor as dispositive; nor should a court treat the inquiry as a mechanical process by which the party with the greatest number of factors wins. Instead, the court `should focus on the ultimate question of whether consumers are likely to be confused.'" Playtex, 390 F.3d at 162.
Magistrate Judge Ellis concluded correctly that, balancing all of the Polaroid factors, confusion was not likely. (Report at 18.) The record is insufficient to tip the overall balance ofPolaroid factors in Plaintiff's favor. See The Deal, LLC v. Korangy Publ'g, Inc., 309 F. Supp. 2d 512, 530 (S.D.N.Y. 2004) ("[W]hile [Plaintiff] may ultimately prevail on its claims, it has failed to demonstrate that a preliminary injunction should issue because it has not provided sufficient evidence that a significant number of consumers are likely to be misled as to the true source of [Defendant's magazine].").
IV. Conclusion and Order
The Court adopts the conclusion of Magistrate Judge Ellis' Report, and for the reasons stated herein and therein, denies Plaintiff's motion for a preliminary injunction.
The parties and counsel are directed to appear at a status/settlement conference with the Court on February 23, 2006, at 3:00 p.m., in Courtroom 706 of the Thurgood Marshall Courthouse, 40 Centre Street, New York, New York 10007. The Court directs the parties to engage in good faith settlement negotiations prior to the conference.