ORDER GRANTING PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION (Docket No. 25)
Plaintiffs SunEarth, Inc. and The Solaray Corporation seek a preliminary injunction enjoining Defendants Sun-Earth Solar Power Co., Ltd. and NBSolar USA, Inc. from using the “Sun Earth” name and mark within the United States during the pendency of this action. Defendants oppose Plaintiffs’ motion. Having considered the papers submitted by both parties and their oral arguments, the Court GRANTS Plaintiffs’ motion.
BACKGROUND
Plaintiff SunEarth, Inc. was created and incorporated in the state of California in 1978. Reed Decl. ¶ 3. Plaintiff The Solaray Corporation acquired SunEarth, Inc. on July 1, 1992, and has independently operated SunEarth, Inc. as a subsidiary under its original name since that date. Id. at ¶¶ 4-6. Through the SunEarth, Inc. name, Plaintiffs manufacture and sell solar thermal collectors and related components. Id. at ¶¶ 55, 57. Plaintiffs registered and began using the domain name www. sunearthinc.com in 1990. Id. at ¶ 11.
Solar thermal collectors are a type of solar energy technology, which collect the heat of the sun and transfer that heat to a liquid. Id. at ¶ 55. The most common use of solar collectors is to heat water for home or industrial use. Id. at ¶ 56. They can also be used to heat swimming pools or for space heating, and are sometimes used to boil water used for larger-scale power production. Id.
Another type of solar energy technology is photovoltaic, in which photovoltaic cells covert energy from the sun directly into electricity. Reed Decl. ¶ 58; Xie Decl. ¶ 3. Photovoltaics are more expensive than solar collectors, but have a wider variety of uses. Reed Decl. ¶58. Consumers can sell excess electricity that they obtain from photovoltaics to a utility company. Xie Decl. ¶ 7.
Solar technology consumers generally choose to use either a solar thermal collector, a photovoltaic system or some combination of the two. Reed Decl. ¶ 61. Some of Plaintiffs’ advertisements contain a comparison of the efficiency and cost of their solar collectors to that of photovoltaic systems. Id. at ¶¶ 59-60.
While Plaintiffs do not currently manufacture photovoltaic cells or modules, Plaintiffs have developed a hybrid product that combines both technologies into a single unit. Id. at ¶ 61; Mot. at 14. This
Plaintiffs continue to enjoy success and recognition in their field. Plaintiffs have submitted a declaration by the company president, Richard Reed, stating that, under the trade name SunEarth, they have sold more than $80 million worth of solar collectors and related products since 2000 in forty-nine states, including California and Texas, about $14 million of which was in California alone. Reed Decl. ¶ 5; Reed Reply Decl. ¶ 8. About $6.8 million of the sales in California took place between 2000 and 2007 (about $5 million between 2000 and 2006), and sales figures have been increasing since 2000. Reed Reply Decl. ¶ 9 (containing sales figures by year). Plaintiffs have also provided a 2008 magazine article recognizing that they sold thirty-nine percent of all solar thermal collectors sold in the United States during 2007, a figure corroborated by Reed. Reed Reply at ¶ 10, Ex. 40. The company was profiled in the Winter 2010 issue of Energy Leaders Today. Reed Decl. ¶ 78, Ex. 11. Plaintiffs’ website receives over 3,400 visitors per month and they spend approximately $66,000 per year in advertising and marketing costs. Reed Decl. ¶ 64.
Defendant Sun-Earth Solar Power Co., Ltd. (SESP) was first established in 1966 as Ningbo Solar Electric Company, a state-owned company in Ningbo, China. Xie Depo. 61:4-19. In 1978, the company began selling solar products to the public in China under the brand name Sun Earth. Id. at 61:22-63:2. The company was known as Ningbo Solar Electric Power Co., Ltd. from 1999 through 2010, when its name was changed to SESP. Answer ¶ 26; Reed Decl. ¶ 77, Ex. 10. In January 2010, Defendant NBSolar USA, Inc. was formed as a California corporation affiliated with SESP. Answer ¶ 4; Xie Decl. ¶ 16.
On October 14, 1996, Ningbo Solar obtained a trademark in China for the following mark:
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Xie Depo. 63:6-64:18. The Chinese characters translate “verbatim into English” as “the sun and the earth.” Id.
Ningbo Solar (now, SESP), still based in China, currently sells photovoltaic systems only. Xie Decl. ¶ 4; Answer ¶ 3. Plaintiffs’ CompRail product can be used to mount Defendants’ photovoltaic modules. Reed Decl. ¶ 8. Defendants began marketing their photovoltaic panels outside of China in 2004. Xie Depo. 64:19-23. Currently, the vast majority of Defendants’ business comes from international utility markets, with about 80% of their business in Europe, about 15% in China and about 1% in the United States. Xie Decl. ¶ 12.
Starting in 2004, Ningbo Solar applied for, and obtained, trademark protection in several countries, including Germany, Australia, and China, for a mark that consisted of a circle above a horizontal line above the words “Sun-Earth” (hereinafter, Defendants’ mark), as follows:
Rutt Decl. ¶¶ 5-6, Exs. D-F; Xie Decl. ¶¶ 14-15.
Ningbo Solar entered the United States photovoltaics market in 2004. Xie Decl. ¶ 14. In their supplemental reply, Defendants argue for the first time that Ningbo Solar began making sales in the United States as early as 2007. Defs.’ Suppl. Brief 7. Defendants provide four invoices from 2007 showing shipments to buyers within the United States from the company’s address in Ningbo, China; the earliest such invoice has a date of April 27, 2007. Foster Decl. ¶¶ P, Exs. S-V. The invoices contain Defendants’ Sun-Earth mark. Id.
On July 5, 2006, Ningbo Solar filed an application with the United States Patent and Trademark Office (USPTO) to trademark its Sun-Earth mark. Reed Decl., Ex. 12 at 1. On October 2, 2007, the USP-TO issued a letter regarding the application, warning, “You filed the trademark application identified below based upon a bona fide intention to use the mark in commerce. You must use the mark in commerce and file a State of Use ... before the USPTO will register the mark.” Id. at 7. USPTO deemed the application abandoned on April 3, 2008, after Ningbo Solar failed to file a statement of use. Id. at 5.
In September 2007, Plaintiffs and Defendants attended a trade show in Long Beach, California. Defendants were listed in the official program as “Ningbo Solar Electric Power.” Reed Third Decl. ¶4, Ex. 42, at 47. Plaintiffs were listed as “SunEarth, Inc.” Id. at 53. A Ningbo representative noticed that Plaintiffs’ company name was the same as the name on Ningbo’s mark and visited Plaintiffs’ booth, where he exchanged business cards with Plaintiffs. Xie Depo. 75:19-76:7. Defendants were a “Megawatt” sponsor of the show and their “nbsolar” mark, depicted below, appeared in the official printed program that was distributed at the show:
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Reed Third Decl. ¶ 4, Ex. 42, at 18.
On December 12, 2008, Ningbo Solar filed a second application to trademark the Sun-Earth mark with the USPTO, alleging as its filing basis that it had a bona fide intention of using the mark in commerce pursuant to 15 U.S.C. § 1051(b). Reed Decl. ¶ 80, Ex. 13 at 3, 53. This application was assigned Serial No. 77632347. Id. at 3. In August 2010, Ningbo Solar filed a declaration attesting that the Sun-Earth mark was first used in commerce in the United States “at least as early as 07/02/2010.” Answer ¶ 25; Reed Decl. ¶ 80, Ex. 13 at 17-20. On December 7, 2010, the USPTO granted Ningbo Solar’s application and issued it Trademark Registration No. 3,886,941 for the Sun-Earth mark. Id.
In January 2010, Defendant NBSolar USA Inc. was formed as a California corporation. Answer ¶ 4; Xie Decl. ¶ 16. Defendants describe NBSolar as affiliated with SESP but deny that NBSolar is a wholly-owned subsidiary of SESP. Answer ¶ 4; Xie Decl. ¶ 17-18. The President of the North American Sales Unit for SESP also serves as the President of NBSolar and worked at SESP prior to the incorporation of NBSolar. Xie Decl. ¶¶ 1-2.
Defendants own several domain names containing SunEarth. Defendants registered the domain name sun-earth.com in 2004. Xie Decl. ¶ 15; Answer ¶ 29. In 2010, Defendants registered the domain names SunEarthPower.com and SunEarthPower.net. Answer ¶ 29. At some point, Defendants also registered the domain name SunEarth.us. Compl. ¶ 29; Answer ¶ 29. Defendants’ website indicates that “Sun-Earth’ is known as Nbsolar’ in the United States. Both [bjrands are belonged [sic] to the same company Sun Earth Solar Power Co., Ltd. (formerly Ningbo Solar Electric Co., Ltd.) with headquarter [sic] located in Ningbo.” Urbalejo Decl. ¶ 6; Reed Decl. ¶ 77, Ex. 10.
On December 24, 2009, Plaintiffs filed an application with the USPTO seeking to trademark SUNEARTH. USPTO Serial No. 77900886, File Entry No. 3.
Defendants used the nbsolar mark within the United States until late 2010. Xie Decl. ¶ 16. Sometime in 2010, Ningbo Solar changed its name to Sun Earth Solar Power Co., Ltd., (SESP) and subsequently assigned the U.S. trademark for the Sun-Earth mark to SESP. Answer ¶ 26. Start
On January 18, 2011, an organizer for a solar power trade show in Colorado sent Plaintiffs • an email' asking what logo they wanted used for SunEarth in the conference program, suggesting Plaintiffs’ logo or Defendants’ Sun-Earth mark. Id. at ¶ 87, Ex. 20; Bliss Decl. ¶ 4. On July 6, 2011, a trade show organizer asked Plaintiffs’ employee, “which SunEarth are you?” Id. at ¶ 66.
Defendants registered for the Intersolar North America Conference held in San Francisco, California in July 2011 as “Sun Earth Solar Power/Nbsolar USA.” Answer ¶ 30; Reed Decl. ¶ 16. At Defendants’ booth, the Sun-Earth mark was prominently displayed in a number of places in large print. Id. at ¶ 88, Ex. 21. At this conference, at least seven actual or potential customers “indicated confusion ... in words or substance” to Plaintiffs’ company president, Richard Reed, regarding whether Plaintiffs were affiliated with Defendants’ company. Id. at ¶ 66. Several current or potential customers also expressed similar sentiments to another of Plaintiffs’ employees, with one stating, “I thought you guys had changed your logo.” Bliss Decl. ¶ 6.
Defendants registered for the Solar Power International conference in Dallas, Texas in October 2011 under the Sun-Earth mark. Answer ¶ 31; Reed Decl. ¶ 17; Urbalejo Decl. ¶ 4, Ex. 33. At the Dallas conference, this symbol was displayed prominently at Defendants’ booth. Reed Decl. ¶ 94, Ex. 27.
On April 1, 2011, Plaintiffs filed a Petition with the USPTO’s Trademark Trial and Appeal Board (TTAJB), seeking cancellation of the registration of Defendants’ trademark of the Sun-Earth mark. Reed Decl. ¶ 14; Sunearth, Inc. v. Sun Earth Solar Power Co., Ltd., Proceeding No. 92053829 (T.T.A.B.), Docket No. 1.
On June 13, 2011, Plaintiffs sent Defendants a demand letter asking them immediately to cease using the Sun-Earth mark in their business operations within the United States. Mosier Decl. ¶ 3, Ex. 28. The parties subsequently entered into a litigation standstill agreement covering both the pending case before the TTAB and potential civil litigation for the time period between June 13, 2011 through October 10, 2011, in order to allow for settlement negotiations to take place. Mosier Decl. ¶¶ 4, 6, Exs. 29, 31. Among other items, the agreement provided that, in connection with any subsequent motion for a preliminary or permanent injunction by Plaintiffs, Defendants would not assert or rely upon that time period to argue that delay or prejudice had occurred. Id. In their case management statement, submitted to this Court on January 26, 2012, the parties state that they “agree that the time period of the standstill agreement, from June 13, 2011 to October 10, 2011 should not count towards any period of delay.” Docket No. 55, at 7.
The parties did not reach an agreement during their litigation standstill and Plaintiffs initiated this trade name and trademark infringement action on October 11, 2011, the day after the expiration of the standstill agreement. Docket No. 1; Mosier Decl. ¶ 6, Ex. 31. Plaintiffs allege that Defendants have misappropriated and infringed upon Plaintiffs’ “Sun Earth” trademark, service mark and trade name. They bring claims against Defendants for trade name infringement, unfair competi
LEGAL STANDARD
“A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc.,
Alternatively, “a preliminary injunction could issue where the likelihood of success is such that serious questions going to the merits were raised and the balance of hardships tips sharply in plaintiffs favor,” so long as the plaintiff demonstrates irreparable harm and shows that the injunction is in the public interest. Alliance for the Wild Rockies v. Cottrell,
A court employs a sliding scale when considering a plaintiffs showing as to the likelihood of success on the merits and the likelihood of irreparable harm. Id. “Under this approach, the elements of the preliminary injunction test are balanced, so that a stronger showing of one element may offset a weaker showing of another.” Id.
DISCUSSION
I. Chance of Success on the Merits
To prevail on a claim of trademark or trade name infringement under the Lanham Act or common law, a plaintiff “must prove: (1) that it has a protectible ownership interest in the mark; and (2) that the defendant’s use of the mark is likely to cause consumer confusion.” Network Automation, Inc. v. Advanced Sys. Concepts,
While “[trademarks and trade names are technically distinct,”
Both registered and unregistered trade names and trademarks are protected under the Lanham Act. Halicki Films, LLC v. Sanderson Sales and Mktg., 547 F.3d 1213, 1225-26 (9th Cir.2008); see also GoTo.com, Inc. v. Walt Disney Co.,
“It is axiomatic in trademark law that the standard test of ownership is priority of use.” Sengoku Works v. RMC Int’l,
However, “the non-registrant can rebut this presumption by showing that ... he used the mark in commerce first.” Sengoku Works,
Defendants concede that Plaintiffs have shown they used SunEarth as a trade name, see Opp. at 12, but do not address whether Plaintiffs used it as a service mark and dispute whether Plaintiffs used it as a trademark. Given that Plaintiffs have asserted causes of action based on infringement of all three, Defendants’ explicit concession supports at least one basis of liability. Further, this concession could support cancellation of Defendants’ trademark. See 15 U.S.C. § 1052(d) (providing authority to reject trademark registrations that “[c]onsist[] of or comprisef] mark[s] which so resemble[ ] ... a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive”) (emphasis added).
Plaintiffs argue that they in fact used SunEarth as both a trade name, referring to the company, and a trademark, referring to particular products, prior to 2007. See Accuride,
Although Defendants argue that Plaintiffs’ use of SunEarth alongside other product marks means that SunEarth is only a trade name, “it is well established that a product can bear more than one trademark, that each trademark may perform a different function for consumers and recipients of the product.” Amica Mutual Insurance Company v. R.H. Cosmetics Corp.,
The determination of whether a trade name is also used as a service mark or trademark “is frequently not easy to make” and “is highly fact specific.” J. McCarthy, Trademarks and Unfair Competition § 9:14-15. It “is determined from the manner in which the name is used and the probable impact thereof upon purchasers and prospective customers.” In re Univar Corp.,
Plaintiffs have demonstrated that they are likely to succeed in establishing that they used SunEarth as a protected house mark prior to 2007, based on their specification brochure for the SunEarth CopperHeart series dating to June 2002. Reed Decl. ¶ 74, Ex. 7. One of the three uses of SunEarth in the brochure appears to simply identify the company in its corporate form as the creator of the product; in that instance, “SunEarth, Inc.” immediately follows the words “Manufactured by” and is followed by the company’s address and other contact information. See id. at 2. However, the other two instances are not accompanied by such information, and appear to be used to do “more than merely convey information about a corporate relationship.” In re Univar Corp.,
Defendants also challenge whether Plaintiffs will be able to prove that they have legally sufficient market penetration to assert rights over their trade name and mark. “Generally, the senior user of a mark is entitled to assert trademark rights in all areas in which it has legally sufficient market penetration. This is determined by examining the trademark user’s volume of sales and growth trends, the number of persons buying the trademarked product in relation to the number of potential purchasers, and the amount of advertising.” Glow Indus. v. Lopez,
Plaintiffs are likely to be able to establish legally sufficient market penetration over their trade name and mark prior to 2007. Unlike in Glow Industries, the case upon which Defendants rely, Plaintiffs have provided sufficiently specific information to “assist the court in quantifying market penetration, sales levels, growth trends, or the number of people who purchased the company’s products in relation to the number of potential customers,” Glow Indus.,
Accordingly, the Court finds that Plaintiffs are likely to be able to prove a protectible ownership interest in the trade name and mark that is senior to that of Defendants.
B. Likelihood of confusion
In determining whether there is a likelihood of confusion, a court is to weigh the following factors: 1) the strength of the mark; 2) proximity of the goods; 3) similarity of the marks; 4) evidence of actual confusion; 5) marketing channels used; 6) type of goods and the degree of care likely to be exercised by the purchaser; 7) the defendant’s intent in selecting the mark; and 8) likelihood of expansion of the product lines. See AMF Inc. v. Sleekcraft Boats,
Many of Defendants’ arguments in their briefs are aimed at dispelling a notion of a possibility of product confusion, that is, that a potential buyer would mistakenly purchase Defendants’ product, believing it to be made by Plaintiffs. However, “product confusion is not the kind of confusion that is at issue in the usual trademark case,” especially where, as here, the products manufactured by the parties are alleged to be in related, though not identical, product areas. J. McCarthy, Trademarks and Unfair Competition § 23:5, at 42-43. Instead, the relevant inquiry is into source confusion. Id. See also Fleischmann Distilling Corp. v. Maier Brewing Co.,
Upon consideration of the Sleek-craft factors, the Court finds that Plaintiffs have demonstrated that they are likely to be able establish a likelihood of confusion. See Brookfield Communs.,
This factor concerns the proximity or relatedness of the good or services represented by the potentially infringing marks. “For related goods, the danger presented is that the public will mistakenly assume there is an association between the producers of the related goods, though no such association exists.” Sleekcraft,
Defendants argue that, because they sell photovoltaic products, which collect electricity that can be sold to the grid, and Plaintiffs do not sell photovoltaic products and instead sell solar collectors, the parties’ products are dissimilar, precluding a finding of confusion. However, Defendants focus on exact identity of products, taking too narrow a view of relatedness. Palantir Techs. Inc. v. Palantir.net, Inc.,
Plaintiffs have offered evidence that at least one of their products, the SunEarth CompRail, may be used directly in conjunction with Defendants’ products, as a mounting system for the latter. Reed Decl. ¶¶ 8, 89, Ex. 22. The SunEarth Solaray water heating system is available with a pump that may be used with an AC current source or with a photovoltaic-powered pump. Id. at ¶ 54. Further, some customers may choose between the two types of products to lower their energy bills with solar technology or may choose to use both types of products. Reed Deck ¶¶ 54-62. Both create products that are installed in commercial, industrial and home settings; though Defendants do not target home consumers themselves and their primary customers are utility companies, they sell products to installation companies that do and they advertise on their website that their products are used in home systems. Xie Decl. ¶ 13; Reed Decl. ¶ 57, 77, Ex. 10 at 2. Within California, both types of products are installed by the same contractors. See Cal.Code Regs. tit. 16, § 832.46 (defining, for licensing purposes, a “solar contractor” as one who “installs, modifies, maintains, and repairs thermal and photovoltaic solar energy systems”). Plaintiffs have also submitted evidence from the USPTO online trademark database that there are at least fifty-one currently registered marks used to brand both solar panels used to generate heat, like Plaintiffs’ solar collectors, and solar panels used to generate electricity, like Defendants’ products. Ballard Decl. ¶ 3, Ex. 2.
Accordingly, this factor weighs in favor of Plaintiffs.
2. Similarity of the marks
The greater the similarity between the two marks at issue, the greater the likelihood of confusion. Entrepreneur Media, Inc. v. Smith,
This factor also favors Plaintiffs. Plaintiffs have accused Defendants’ Sun-Earth trademark, a combination of a picture design and words, of infringing upon Plaintiffs’ trade name (SunEarth, Inc.) and trademark and service mark (SunEarth), which consists of words. “[I]t is well settled that if a mark comprises both a word and a design, then the word is normally accorded greater weight, because
3. Strength of the mark
“The strength of the trademark is evaluated in terms of its conceptual strength and commercial strength.” Mortgage Elec. Registration Sys. v. Brosnan,
In terms of conceptual strength, “[m]arks are often classified in one of five categories of increasing distinctiveness: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful.” Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery,
Plaintiffs’ mark is at least suggestive and is therefore inherently distinctive. See Brookfield Communs.,
Further, Plaintiffs’ trade name and mark have been used for over thirty years to identify their business, and under that name and mark, Plaintiffs have gained national recognition as leaders in their field, which has led to, among other things, their products being installed on the White House. Thus, Plaintiffs’ trade name and mark are fairly strong. See Accuride,
Defendants’ argument that the solar market is crowded with names that include the word “Sun” is unavailing and relies on a distorted depiction of the meaning of a crowded market in this context. As Plaintiffs point out, in all of the cases that Defendants cite, the parties have names that share one word or phrase in common and are otherwise different. In those cases, where that shared word is a common one in the industry, the plaintiff is not permitted to claim right to all variants on it. That is factually distinct from the present case, where the disputed words are identical. Defendants make no argument or showing that the field is crowded with many “SunEarths.” If Defendants were
4. Evidence of actual confusion
“Evidence that use of a mark or name has already caused actual confusion as to the source of a product or service is ‘persuasive proof that future confusion is likely.’ ” Rearden LLC v. Rearden Commerce, Inc.,
Plaintiffs argue that actual confusion has already occurred. “The critical determination for finding a likelihood of confusion is whether prospective purchasers are likely to be deceived, regardless of the experiences of vendors, industry insiders, and job-seekers.” Rearden,
5. Marketing channels used
“ ‘Convergent marketing channels increase the likelihood of confusion.’ ” Official Airline Guides, Inc. v. Goss,
Here, Plaintiffs present evidence that the parties sell their products in niche marketplaces including solar products shows, specialty retailers and trade magazines, and that the parties have recently attended several of the same trade conventions. Mot. at 18. Defendants do not dispute this. Accordingly, this factor favors Plaintiffs.
6. Type of goods and the degree of care likely to be exercised by the purchaser
“Low consumer care ... increases the likelihood of confusion.” Playboy Enterprises, Inc. v. Netscape Communs. Corp.,
Plaintiffs acknowledge that both parties sell to “wholesalers, contractors,
7. Defendants’ intent in selecting the mark
“This factor favors the plaintiff where the alleged infringer adopted his mark with knowledge, actual or constructive, that it was another’s trademark.” Brookfield Communs.,
In their opposition, Defendants argue that Plaintiffs are unable to establish that Defendants intended to deceive when selecting the Sun-Earth mark because Plaintiffs are “unable to offer any evidence that [Defendants] knew of [Plaintiffs] or its use of the SUNEARTH mark or name at the time the mark was selected for international use in 2004.” Opp. at 21. In their supplemental brief, Defendants further argue that they had used the trademark Sun-Earth since 1978 in China, had registered the Chinese version of the mark in China in 1996 and had used the Sun-Earth mark on several invoices sent to customers within the United States in 2007. Defs. Suppl. Brief at 7.
However, the appropriate inquiry is not what Defendants knew at the time that they selected the mark for use in China or internationally in countries other than the United States. See J. McCarthy, Trademarks and Unfair Competition, § 26:5, n. 1. When Defendants entered the United States market, they consciously and deliberately chose to establish a separate mark using the word nbsolar within the United States, instead of the mark that they were using elsewhere in the world, and abandoning any sporadic and isolated use of the mark in which they had engaged in 2007. Indeed, they continue to state on their webpage that “Sun Earth’ is known as NB Solar’ in the USA.”
Instead, the appropriate inquiry is into Defendants’ intent in switching from the use of the nbsolar mark to the use of the Sun-Earth mark, which their representative admits happened in 2010. Xie Decl. ¶ 17. Before they did so, Defendants had actual knowledge of Plaintiffs’ existence and their use of the Sun Earth mark and name, as demonstrated by Defendants’ testimony of their observations and interaction at the 2007 trade show.
Accordingly, this factor favors Plaintiffs.
8. Likelihood of expansion of the product lines
“Inasmuch as a trademark owner is afforded greater protection against competing goods, a strong possibility’ that either party may expand his business to compete with the other will weigh in favor of finding that the present use is infringing.” Sleekcraft,
Here, Plaintiffs have submitted evidence that they have engaged in some expansion into the photovoltaic market. While they are not currently selling photovoltaics, Plaintiffs have developed a hybrid photovoltaic thermal array that combines both technologies into the same unit. Reed Decl. ¶ 61. See also id. at ¶ 84, Ex. 17 (article in Popular Science magazine describing the development and discussing the advantages of Plaintiffs’ hybrid unit).
Defendants have not directly addressed this factor, though they do state that there is virtually no overlap in the skills, methods or materials used to manufacture the
Accordingly, this factor favors Plaintiffs.
C. Defendants’ Laches Defense
Defendants bear the burden of showing that an affirmative defense is likely to succeed. See Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co.,
“Laches is an equitable defense to Lanham Act claims.” Internet Specialties West, Inc. v. Milon-Digiorgio Enters.,
“The test for laches is twofold: first, was the plaintiff’s delay in bringing suit unreasonable? Second, was the defendant prejudiced by the delay?” Id. at 990 (citing Jarrow Formulas, Inc. v. Nutrition Now, Inc.,
Because “[t]he Lanham Act contains no explicit statute of limitations,” a court borrows the statute of limitations from an analogous state law. Jarrow,
Because the standstill agreement began on June 13, 2011, the first question is whether Plaintiffs had reason to know of Defendants’ use of their name and mark prior to June 13, 2007, giving rise to a presumption of laches. Here, the only argument that Defendants make is that Plaintiffs had notice because Defendants registered the domain name sun-earth, com. However, it is currently uncontested that Defendants legitimately engage in business outside of the United States under the Sun-Earth mark. Accordingly, mere registration of a domain name that can be used for international business does not provide Plaintiffs with clear notice that Defendants are illegitimately infringing on their mark or name within the United States. Further, there is evidence in the
Further, “[a]ll courts are very reluctant to deny injunctive relief because of plaintiffs delay when it appears that defendant knowingly and deliberately adopted the mark charged as an infringement.” J. McCarthy, Trademarks and Unfair Competition § 31:9. See also Danjaq LLC v. Sony Corp.,
II. Likelihood of Irreparable Harm
While Defendants argue that Plaintiffs have not proven that they will suffer economic harm or harm to their reputation, Defendants cite only cases in which the plaintiffs had not established a likelihood of success on the merits, or to non-trademark infringement cases. See, e.g., Rodan & Fields, LLC v. Estee Lauder Companies, Inc.,
Defendants argue that, in light of the Supreme Court’s decision in Winter v. Natural Res. Def. Council, Inc.,
Previously, a plaintiff in a trademark case was entitled to a presumption of irreparable harm upon showing a probable success on the merits. See GoTo.com,
Regardless of whether they are also entitled to a presumption of irreparable harm, Plaintiffs have made an affirmative showing that they are likely to suffer irreparable harm in the absence of an injunction. Plaintiffs have introduced evidence that customers and others have evidenced actual confusion between the marks and names of the two companies. Further, Defendants admit that Plaintiffs have no control over Defendants’ products and the quality thereof. “The Ninth Circuit has recognized that the potential loss of good will or the loss of the ability to control one’s reputation may constitute irreparable harm for purposes of preliminary injunctive relief.” Mortgage Elec. Registration Sys. v. Brosnan,
Defendants argue that, because Plaintiffs were willing to engage in settlement negotiations with them and to discuss the possibility of a monetary settlement, money damages would be adequate to compensate them for any harm. However, the fact that Plaintiffs were willing to discuss settlement to avoid litigation does not by itself demonstrate the adequacy of monetary damages.
Defendants also argue that Plaintiffs delayed unreasonably in bringing this action and in filing a motion for a preliminary injunction after initiating the action. The earliest time that the record suggests Plaintiffs learned of Defendants’ claim to the Sun-Earth mark was the date of the letter sent by the USPTO on March 23, 2010. The record also supports that Plaintiffs initiated cancellation procedures in the USPTO on April 1, 2011 and sent Defendants a letter demanding that they cease using the Sun-Earth mark on June 13, 2011.
As previously stated, unreasonable delay in a trademark infringement case is measured from when the plaintiff knew or should have known about its potential cause of action. See also Cellularm, Inc. v. Bay Alarm Co.,
Defendants argue that Plaintiffs delayed unreasonably by not filing suit after they were notified by the USPTO about Defendants’ pending application in March 2010. However, as Plaintiffs state, Defendants
The period of delay does not appear unreasonable. On April 1, 2011, Plaintiffs initiated the USPTO cancellation proceedings and shortly after sent a cease-and-desist letter to Defendants, in an attempt to avoid resort to judicial intervention. The parties entered into a stop-litigation agreement shortly thereafter. Especially in light of the intervening settlement negotiations, this amount of time is not sufficiently unreasonable to preclude a preliminary injunction, especially given Defendants’ knowing infringement of Plaintiffs’ mark.
III. Balance of Equities
Balancing of the equities in this case favors Plaintiffs.
Defendants knowingly used the mark in the United States only after learning of Plaintiffs’ prior use. See Cadence Design Sys. v. Avant! Corp.,
Defendants speculate that an injunction would make it difficult for them to develop future business in the United States with utilities companies; however, they admit that they do not already have these relationships. As Plaintiffs point out, the status quo that a preliminary injunction in a trademark infringement case seeks to protect is “the last uncontested status which preceded the pending controversy,” which in this case was before Defendants began using their allegedly infringing trademark. GoTo.com,
Defendants also argue that Plaintiffs should not be allowed to enjoin their participation in upcoming international trade show conferences, because “[a]ny large player in the international market needs to exhibit [at these conferences], or else it risks substantial harm to its business.” Defs.’ Suppl. Brief, at 8. However, Defendants mischaracterize Plaintiffs’ motion. Plaintiffs do not seek to prevent them from exhibiting at any conference within this country. Instead, as stated above, Plaintiffs seek to prevent them from doing so under Plaintiffs’ name and mark.
IV. Public Interest
Plaintiffs argue that a preliminary injunction would protect the public interest by preventing confusion of customers through the use of a confusingly similar mark. See TrafficSchool.com v. Edriver Inc.,
At the hearing, Defendants acknowledged that preventing customer confusion
V. Bond
Plaintiffs propose a bond" of $5,000, which Defendants do not oppose. Accordingly, the Court finds a bond of this amount to be sufficient and appropriate.
VI. Additional Terms for the Preliminary Injunction
The parties are directed to attempt to reach an agreement regarding: (1) reasonable terms for an exception to the current preliminary injunction to allow Defendants to explain within the United States, including at trade shows and conferences, their affiliation with their Sun-Earth name and mark used outside of the United States, without creating confusion; and (2) reasonable terms to add to the current preliminary injunction to provide referrals for users from the Sun-earth.com, SunEarthpower.com, and SunEarthpower.net domain names to Defendants’ non-infringing websites, without creating confusion.
Within two weeks of the date of this order, the parties shall file a stipulation setting forth the agreed-upon terms to be added to the preliminary injunction. If the parties are unable to agree upon reasonable terms, the Court will entertain a single motion by Defendants proposing language to modify the current injunction to accomplish this.
Any motion Defendants make for this purpose shall be filed within three weeks of the date of this order, shall be limited to ten pages or less, and may not contain proposed modifications beyond those specified above. If Defendants file such a motion, Plaintiffs may file an opposition and alternatives to Defendants’ proposed modifications within a week thereafter; any such opposition shall be limited to ten pages or less. Defendants may file a reply to Plaintiffs’ opposition, if any, within three days thereafter; any such reply shall be limited to three pages or less.
CONCLUSION
For the reasons set forth above, the Court GRANTS Plaintiffs’ motion for a preliminary injunction (Docket No. 25). A preliminary injunction has been entered as a separate document. See Docket No. 60.
IT IS SO ORDERED.
Notes
. Defendants also submit new evidence that they state shows that Ningbo Solar's sales in the United States were $1.5 million in 2007, $7.4 million in 2008, $2.8 million in 2009, $12.6 million in 2010, and $8.3 million in 2011. Defs.’ Suppl. Brief 7. However, the documents to which they cite are not authenticated and consist of lists of years and amounts of money, with no explanation. Further, there is no evidence provided that these purported sales were done in conjunction with the Sun-Earth mark.
. Defendants assert in their supplemental brief that their Sun-Earth mark appeared in the official program for the 2007 show and that Plaintiffs’ witness, Richard Reed, had admitted this during the deposition. Defs.’ Suppl. Brief 1-2. However, the deposition testimony to which they cite does not support that Reed made such an admission.
Defendants offer Exhibit N, which they claim is the official program of the show. Plaintiffs object to this evidence. Defendants have not authenticated this exhibit in any way. Further, Plaintiffs also offer evidence that Exhibit N is in fact not the official program and is instead a print-out of an early version of the sponsor list from the show’s website and that Defendants’ symbol was changed to the nbsolar mark by May 2007, four months before the show. Plaintiffs also submit a copy of the official printed program from the 2007, authenticated by Reed who received it at the show. This program con
Accordingly, the Court SUSTAINS Plaintiffs’ objection to Defendants’ Exhibit N.
. Plaintiffs request that the Court take judicial notice of certain documents from the USP-TO’s files related to this application. Because Defendants do not oppose Plaintiffs’ request and the existence of this application and documents are "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned,” the Court GRANTS Plaintiffs’ request.
. Because the application and documents filed in USPTO Application Serial Nos. 77900886 are "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned,” the Court takes judicial notice of them.
. On November 10, 2011, the TTAB, with consent of the parties, suspended the proceedings before it pending the final disposition of dle case before this Court. See Sunearth, Inc. v. Sun Earth Solar Power Co., Ltd., Proceeding No. 92053829 (T.T.A.B.), Docket No. 13.
. Under the Lanham Act, trademarks refer to the words or symbols used to identify and distinguish particular goods; service marks refer to those used for services; and trade names refer to those used for a business or enterprise. See 15 U.S.C. § 1127.
. Defendants state that they "first applied for” registration of the trademark "in 2006.” Opp. at 4. However, while they filed their first application on July 5, 2006, they abandoned that application, Reed Deck, Ex. 12, and are not entitled to a presumption of ownership dating to the date of filing of that application.
Further, though Defendants repeatedly point to 2003 as the earliest time that they used the Sun-Earth mark outside of the United States, see, e.g., Opp. at 3, this is irrelevant to their ownership interest in the mark within the United States. See J. McCarthy, Trademark and Unfair Competition, § 26:5 n. 1 (stating that "first use outside the United States does not count,” and explaining, “The concept of territoriality is basic to trademark law. Rights accrue in each nation only by use or fame of the mark in that nation.”).