LORILLARD TOBACCO COMPANY, Plaintiff-Appellant, v. AMOURI‘S GRAND FOODS, INC., Defendant-Appellee.
No. 05-1642
United States Court of Appeals for the Sixth Circuit
Argued: April 19, 2006. Decided and Filed: June 30, 2006.
453 F.3d 377
Before: MOORE and GIBBONS, Circuit Judges; SHADUR, District Judge.
RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206. File Name: 06a0220p.06. Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 05-71007—Bernard A. Friedman, Chief District Judge.
COUNSEL
OPINION
MILTON I. SHADUR, District Judge. Lorillard Tobacco Co. (“Lorillard“) brought this action against Amouri‘s Grand Foods, Inc. (“Grand Foods“), asserting a variety of trademark, unfair competition and consumer protection violations under federal law and Michigan state law. Lorillard accompanied its Complaint with a motion for preliminary injunction, which the district court denied. Lorillard now appeals that denial. We REVERSE the denial and REMAND this case to the district court for the reasons and on the terms stated in this opinion.*
Background
Lorillard manufactures and sells cigarettes under a variety of brand names (J.A. 55).1 One of its most popular brands is “Newport,” which Lorillard has sold since 1956 (id.). Lorillard and its affiliated entities have registered a number of marks related to the brand, including NEWPORT, NEWPORT (stylized), LORILLARD, Spinnaker Design and NEWPORT and Design, and they have committed considerable resources to promoting and marketing the brand (id.). Grand Foods is a retail convenience store that sells (among other items) Lorillard cigarettes, including Newports.
On or about March 8, 2005,2 while conducting a review of the freshness of Grand
After confirming that the packages were counterfeit, Lorillard filed its Complaint (J.A. 5-17), simultaneously moving for an ex parte seizure order under
Two weeks later, on April 5, the district court held a hearing as to the remaining portion of Lorillard‘s motion, its request for a preliminary injunction (J.A. 145-69). While Lorillard had submitted both evidence and a supporting brief that argued it had satisfied all four factors required for preliminary injunctive relief (id. 22-65), Grand Foods submitted neither. During the hearing Grand Foods offered to agree not to sell counterfeit Newport packages knowingly (id. 161-63), but Lorillard refused that offer.5 After hearing from both parties’ counsel, the district judge said “the equities...tend to be...in favor of [Grand Foods]” (id. 163) and “I don‘t think” that “equity dictates issuing a preliminary injunction” (id. 167).
On April 7 the district court entered an order denying an injunction “[f]or the reasons stated on the record” during the April 5 hearing (id. 66). At no point during the hearing, however, had the district court clearly indicated which “equities” it was “weighing” in coming to its conclusion, nor had it discussed the four preliminary injunction factors Lorillard had addressed in its brief (J.A. 145-69). Lorillard now appeals the denial of its motion for preliminary injunction.
Standard of Review and Governing Principles
We review a district court‘s decision to grant or deny a preliminary injunction for abuse of discretion (United States v. Any & All Radio Station Transmission Equip., 204 F.3d 658, 665 (6th Cir. 2000)). Such an abuse exists when the district court “relied upon clearly erroneous findings of fact,
Preliminary Injunctive Relief Vel Non
Lorillard first contends that in denying the injunction the district court failed to apply the appropriate four-factor test. Lorillard further urges that it has adequately demonstrated that each of the factors supports preliminary injunctive relief, so that we should direct the district court to grant the requested injunction. We agree on both counts.
As already indicated, the record makes it abundantly clear that the district court did not look to the prescribed factors in reaching its decision. Neither the court‘s oral statement during the April 5 hearing nor its April 7 written order makes any findings, specific or otherwise, as to the likelihood of Lorillard‘s success on the merits, the risk of Lorillard suffering irreparable harm if the injunction were not issued, the particular harms to others that an injunction would cause or the impact of an injunction on the public interest. Instead the announced predicate for the district court‘s ruling was a generalized statement as to the “equities” of the case and as to which party they “tend[ed]” to favor. We find those omissions to be an abuse of discretion.
Normally when we encounter such a situation, we simply vacate or reverse the improper denial of a preliminary injunction and remand for further consideration under the proper standards (Hamad v. Woodcrest Condo. Ass‘n, 328 F.3d 224, 234 (6th Cir. 2003)). But on the less frequent occasion when (as here) the record unequivocally calls for an injunction, an appellate court may simply instruct the district court to grant the requested relief (Patton v. Dole, 806 F.2d 24, 31 (2d Cir. 1986)). Here the ensuing discussion shows that Lorillard has unquestionably satisfied each of the requisite criteria.
Likelihood of Success on the Merits
At trial Lorillard will have to establish several elements to prevail on its claims (see, e.g., Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1105 (6th Cir. 1991)), but at this preliminary stage Grand Foods challenges only one: Lorillard‘s ability to demonstrate a “likelihood of confusion” among consumers due to Grand Foods’ use of the Newport mark.6 To that end we have in the past identified eight such elements, not all of which may be relevant in every case: (1) strength of the mark, (2) relatedness of the goods, (3) similarity of the marks, (4) evidence of actual confusion, (5) marketing
We are not at all persuaded by Grand Foods’ arguments in rebuttal. Rather than replying to Lorillard factor by factor, Grand Foods instead contends that the fact that it did not intend to sell counterfeit items and that it did not create, manufacture or package such items precludes Lorillard from succeeding on its claim. But we have repeatedly held that a showing of intent is not required to demonstrate the likelihood of confusion (see, e.g., Autozone, Inc. v. Tandy Corp., 373 F.3d 786, 799 (6th Cir. 2004)). While a “defendant‘s intent” is one of the eight factors noted above, it is considered only in the sense that its existence can “strengthen[ ] the likelihood of confusion” (Champions Golf Club, Inc. v. Champions Golf Club, Inc., 78 F.3d 1111, 1121 (6th Cir. 1996)). Its absence, on the other hand, does not preclude such likelihood (id.). After all, if “potential purchasers are confused, no amount of good faith can make them less so” (Fuji Photo Film Co. v. Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 596 (5th Cir. 1985)).7 Nor, given the clear rejection of an intent requirement in this context, do we see any justification for importing an intent requirement from other provisions of the civil and criminal trademark codes, as Grand Foods invites us to do.
We also find, and Grand Foods offers, no reason to restrict liability to those who actually create, manufacture or package the infringing items. Contrary to Grand Foods’ position, while a showing of “likelihood of confusion” does require that consumers mistakenly believe that the infringing goods were “sponsored or otherwise approved” by the plaintiff (Wynn Oil Co. v. Am. Way Serv. Corp., 943 F.2d 595, 599 (6th Cir. 1991)), there is no further requirement that those goods must have been produced by the defendant. Indeed, all the statutes demand is that the defendant have “used” the goods “in commerce” (
Irreparable Harm
As to irreparable harm, our Circuit requires no particular finding of its likelihood
In light of Lorillard‘s submission of sworn declarations that the packages were counterfeit and Grand Foods’ failure to offer any evidence to the contrary,8 there is no doubt on that score: Goods are being offered for sale that purport, via their use of Lorillard‘s marks, to have been produced by Lorillard, but that were not. Hence we see no reason why the conclusion as to irreparable harm should not operate in this case, and we therefore find Lorillard to have established the second element of its request for a preliminary injunction.
Harm to Others
Our next factor to consider in assessing whether an injunction should be granted is whether it will cause harm to others--in this instance to Grand Foods, for the “others” in more generic terms, the consuming public, are dealt with in the next section of this opinion. As Lorillard observes, the only “harm” that the contemplated injunction would visit upon Grand Foods is hardly a legally cognizable one: It would be prohibited from selling counterfeit products, an illegal act to begin with. Grand Foods understandably does not argue otherwise. Instead its challenge focuses not on the harm it would suffer by complying with such an injunction, but rather on the harm it would suffer if it were to violate the injunction.
Harm stemming from a violation of an injunction is generally not the kind of “harm to others” that this third factor contemplates. After all, every injunction carries with it the prospect that a violating party can be penalized for contempt of court. One obvious answer is that such a prospect is a necessary consequence of the structure that Congress and the caselaw have created, given the combination of a close resemblance between counterfeit and authentic packages and the absence of any need to show an intent to infringe. In allocation-of-risk terms, the law favors the innocent producer of legitimate goods over a party that may be an innocent marketer of counterfeit goods.9 If courts were to accept the Grand Foods proposal that it be enjoined only from not “knowingly to sell counterfeit cigarettes,” that half-way measure would provide Lorillard with less protection (and Grand Foods with more
We appreciate, of course, that the law can create real-world difficulties for an infringer in Grand Foods’ position, for the more expert and sophisticated a counterfeiting operation may be, the more difficult it becomes to avoid infringement. But there is more than one answer to that concern. For one thing, the entry of an injunction properly places the burden of due care on the right shoulders: Retailers can police their purchases of goods, whether by watching for differences that mark the counterfeit goods (in this case the known differences in foil color, alignment of the cellophane tear tab and clarity of printing) or by switching to new wholesalers or by pressuring its present wholesalers to check their own sources more rigorously or by regarding any material cost savings with suspicion as possible indicia of a counterfeit knockoff. And for another, even though a lack of wilfulness does not insulate against a finding of violation of an injunction, “the contemnor‘s state of mind, such as his good faith..., is relevant to mitigation of any penalty” that might be imposed (Rogers v. Webster, 776 F.2d 607, 612 (6th Cir. 1985)).
Public Interest
As for the final preliminary injunction factor, the effect on the public interest, it too points strongly in favor of granting injunctive relief. Such an injunction against the sale of counterfeit cigarette packages would advance two fundamental purposes of trademark law: preventing consumer confusion and deception in the marketplace and protecting the trademark holder‘s property interest in the mark (Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 964 (6th Cir. 1987)). In that respect Grand Foods merely renews its contentions as to the compliance difficulties it may have with such an injunction and as to the elimination of such difficulties if we were to accept its alternative promise not to sell counterfeit cigarettes knowingly. But here such arguments speak not to the public‘s interest but to that of Grand Foods, which we have already dealt with and rejected.
Conclusion
We therefore REVERSE the district court‘s denial of Lorillard‘s motion for preliminary injunction and REMAND the case to the district court with the direction to enter a preliminary injunction consistent with this opinion.