The Second Circuit’s Jaw Drops…

When a court observes that “the logos employed in Plaintiff’s and Defendant’s marks are jaw-droppingly similar—nearly identical not only in conception but also… in the great majority of the fine details of execution,” you don’t want to be the Defendant referred to.

Granted, by the time that the United States Court of the Appeals for the Second Circuit commented on the logos at issue in Guthrie Healthcare Systems v. ContextMedia, Inc., defendant ContextMedia (CMI) had already lost after trial in the Southern District of New York. On appeal, the Second Circuit upheld the finding that CMI’s mark infringed upon Guthrie’s mark, and then found that the limited permanent injunctive relief granted by the trial court was too limited—“based on an incorrect standard and [not sufficient] to give the Plaintiff and the public adequate protection from likely confusion.”

Likewise, as the defendant, you don’t want to read this in that same opinion: “[W]hile Defendant is not a ‘bad faith’ infringer, nor is it an entirely innocent infringer.” That’s just salt in the wound.

There’s not much, if anything, that’s novel about the matter of Guthrie v. ContextMedia, decided June 13, 2016. The opinion of the appellate court is mostly an appropriately detailed application of the Polaroid factors (to conclude that the trial court properly found infringement) followed by a review of the scope of an injunction as relief… which review leads to the conclusion that the trial court was in error in limiting the injunction to those geographic locations in the real world (that is, not online) where the plaintiff maintains a physical “service area.” But among the expected analyses and citations to the usual precedents, the opinion does offer up some gems of commentary, some subtle, some not so much.

Guthrie Healthcare System is a Pennsylvania non-profit corporation composed of three separate entities that operate primarily in the “Twin Tiers” region of New York and Pennsylvania—a region this commentator had never heard of before reading the opinion and of the existence of which he is still not convinced. In any event, Guthrie has “32 medical facilities, including three hospitals and 29 clinics, as well as a number of specialized heathcare facilities such as a cardiac center and a cancer center.” It also has a “multi-disciplinary medical group practice that includes more than 280 physicians and 130 mid-level providers.” Significantly, Guthrie “refuses to endorse third-party products or services or to host advertisements, in order to accommodate research funders’ sensitivities, preserve its eligibility for clinical trials, and avoid the fact or appearance of conflict of interest, bias, or partiality.” In short, Guthrie is an impressive organization, seemingly admired by the appellate court.

CMI was “founded in 2006, has offices in Chicago and New York City, and employs 42 people.” It serves approximately 2,600 physician practices, operating in all 50 states. Its business is to “deliver health-related content to physician practices… install[ing] digital screens in waiting areas, examination rooms, and infusion rooms… which play short videos and clips about health and wellness to patients.” In a perfect world, this plaintiff and this defendant could easily live harmoniously.

Alas. Guthrie launched a new brand identity in 2001, which included a graphical mark “developed by Monigle Associates, a consulting firm that works in corporate branding and identity.” Soon after September 2001, “every aspect of Plaintiff’s business bore the Guthrie Trademark.” Guthrie applied to register its new mark with the USPTO in 2006, and the mark became a registered trademark in January 2008.

In late 2007, CMI hired Anthony Bonilla, a graphic designer, to develop a logo. At this point, I will pause to let you draw your own conclusion.

CMI uses its logo in eight different marks. CMI (somehow) persuaded the PTO to register seven of those eight marks between 2009 and 2013, even after the PTO originally refused to register three of them because of a finding that they were likely to be confused with Guthrie’s mark. (CMI then filed an Intent to Use Trademark Application for the eighth in August 2013, ten months after the District Court litigation had begun). Guthrie had not heard of CMI before December 2011, when someone at Guthrie received a holiday card from CMI that displayed one of its marks with the CMI logo. (Ho! Ho! D’oh!)

On appeal, the Second Circuit in due course applied the Polaroid factors, the first of which is “similarity of the marks.” This is where the “jaw-droppingly similar” comment is to be found in the opinion. “[W]hile Defendant’s logo does not exactly coincide with Plaintiff’s, as they would in a tracing, they are very nearly identical in most instances. The differences are small and lie primarily in minor, relatively insignificant details, rather than in the overall visual impression the marks create upon casual inspection.” The District Court, noted the Second Circuit, had found a “high degree of similarity” between the marks. Indeed.

Later in the opinion, discussing “Defendant’s Intent”—one of the “Remaining Factors” that “have little bearing on the ultimate conclusion” on the particular facts of this case—the Second Circuit notes the following:

• Bad faith is not an essential element of a claim of infringement
• Bad faith bears on the appropriate remedy for infringement
• Guthrie did not contend that CMI had adopted it marks with the hope of deceiving consumers about a relationship between the parties
• “While reasonable minds might question the likelihood that the person who designed [CMI]’s marks could have produced a design so nearly identical to [Guthrie]’s without ever having seen it, the designer of [CMI]’s logo denied having seen it… [and Guthrie] has not pressed for a contrary conclusion

Thus, the District Court found no bad faith, and “it appears the issue is of no pertinence to this appeal.”

And yet… one gets the feeling that the Second Circuit might doubt the reasonableness of those minds who would not question whether the defendant’s designer hadn’t maybe, possibly seen the plaintiff’s logo, and maybe possibly copied it… just a little. Or a lot. Because it seems like the Second Circuit really wants to take CMI to task for something. Fortunately, an opportunity arises in the second analysis, and—wouldn’t you know it?—the Second Circuit is able to implicate the defendant’s designer anyway. Tangentially, at least.

In discussing the proper scope of the injunction that is the proper relief to be awarded Guthrie, the Second Circuit again considered the “faith” of CMI. “Although Defendant did not act with bad faith in the sense of deliberately sowing confusion between its marks and Plaintiff’s,” the court wrote…

Defendant could easily have avoided the problem that arose from its adoption of marks already reserved by another user. Precisely for the purpose of giving notice of its mark to the world, Plaintiff had registered its mark with the PTO. Had Defendant exercised the precaution of running a trademark search before launching its marks, it would have learned that they were unavailable and would surely have had the good sense not to proceed with a logo so nearly identical to one for which trademark rights were already established.

(CMI had not conducted a search until it sought to register its marks, which is when the PTO notified CMI that its marks were “strikingly similar” to Guthrie’s registered mark.) In other words, perhaps, even if you trust your freelance designer not to have copied another company’s logo, do your due diligence.

To recap: Don’t be a defendant whose trademark is “jaw-droppingly” similar to a plaintiff’s. Don’t be a defendant who didn’t take advantage of the PTO’s public trademark database.

Maybe… well, maybe just don’t be a defendant at all, if you can help it.