Swarovski Aktiengesellschaft v. Building 19, Inc. , 704 F.3d 44 ( 2013 )

United States Court of Appeals
For the First Circuit
No. 12-1659
SWAROVSKI AKTIENGESELLSCHAFT;
SWAROVSKI NORTH AMERICA LIMITED,
Plaintiffs, Appellees,
v.
BUILDING #19, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Mary M. Lisi, U.S. District Judge]
Before
Lynch, Chief Judge,
Boudin,* Circuit Judge,
and Woodlock,** District Judge.
Michael C. Gilleran with whom Michael D. Riseberg, Jeffrey K.
Techentin, Rory Z. Fazendeiro and Adler Pollock & Sheehan P.C. were
on brief for appellant.
Robert K. Taylor with whom Partridge Snow & Hahn LLP was on
brief for appellees.
January 9, 2013
*
Judge Boudin heard oral argument in this matter, and
participated in the semble, but he did not participate in the
issuance of the panel's opinion in this case. The remaining two
panelists therefore issued the opinion pursuant to 28 U.S.C.
§ 46(d).
**
Of the District of Massachusetts, sitting by designation.
Per Curiam. Defendant-appellant Building #19, Inc.
appeals from the entry of a preliminary injunction restricting its
use of the word "Swarovski" in newspaper advertising to a certain
font size. The case is ongoing in the district court, with
requests for permanent injunctive relief pending. The dispute
began when Building #19 obtained a number of Swarovski crystal
figurines that it hoped to resell, and in order to promote the sale
designed a newspaper advertisement emblazoned with the name
"Swarovski" in large print font. Alerted to the proposed
advertisement, Swarovski Aktiengesellschaft and Swarovski North
America Limited (collectively, "Swarovski") sought a preliminary
injunction barring Building #19 from using the Swarovski name or
mark in its advertising. After a hearing, the district court
issued an oral opinion that granted the preliminary injunction in
part by limiting Building #19's use of the Swarovski name to a much
smaller font size.
Building #19 is an off-price retail store that acquires
products through secondary, non-traditional channels and then
resells them at discounted prices in its 11 stores located
throughout New Hampshire, Massachusetts and Rhode Island. The
business is known by its motto, "Good Stuff Cheap," and aside from
Swarovski crystal figurines, Building #19 has previously acquired
and resold brand-name collectible merchandise made by companies
such as Thomas Kinkade and M.I. Hummel. Building #19 spends
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millions of dollars on newspaper advertising in New England to
market itself as a vendor of salvage, overstock and discontinued
merchandise--these ads often feature descriptions of the advertised
goods alongside humorous cartoons.
Swarovski is a world-famous manufacturer and distributor
of crystal, jewelry and other luxury products. It holds several
registered federal trademarks for the mark "Swarovski," which it
has used in the United States since at least 1969. Swarovski
monitors and polices the use of its mark through a dedicated anti-
infringement unit. It sells its crystal products online, in
Swarovski retail stores (including stores in New Hampshire,
Massachusetts and Rhode Island), in small independent retailers and
in authorized national retailers such as Macy's, Bloomingdale's and
Nordstrom. Swarovski merchandise may also be purchased through
secondary channel re-sellers, eBay and other discount retailers.
In December 2011, Building #19 acquired a number of
Swarovski crystal figurines, with a total retail value of
approximately $500,000, from an insurer's salvage sale after a
severe storm damaged the warehouse where they had been stored by
their prior owner. The figurines were apparently unaltered and
free from damage, and came boxed in their original packaging with
the Swarovski Certificate of Authenticity. Although industry
practice varies, in this case the salvor placed no restrictions on
Building #19's ability to use the "Swarovski" name or product
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label. Swarovski itself never directly authorized Building #19 to
use its trademark or name.
That same month, Building #19 conducted two, one-day-only
sales of its Swarovski merchandise. It promoted the events through
newspaper advertisements, one of which was headlined with the word
"SWAROVSKI" in extra-large, capitalized, bold, and distinctive
lettering. The bodies of the ads included cartoons of a tornado
wrecking a warehouse, several pictures of crystal figurines, a list
of the available items along with their prices and other text
describing the details of the sale. The name "Building #19" also
appeared at the bottom of the advertisements in extra-large,
capitalized, bold and distinctive lettering. At the events
themselves, Building #19 set up a separate, roped-off display and
sales area for the crystal along with various decorations featuring
the word "Swarovski."
On December 7, 2011, Swarovski sent Building #19 a cease
and desist letter objecting to the ads, and a week later, on
December 14, Swarovski filed a complaint against Building #19 in
the United States District Court for the District of Rhode Island.
It alleged various claims for trademark infringement and unfair
competition under the Lanham Act and Rhode Island statutory and
common law. In response, Building #19 agreed to voluntarily
refrain from further advertising or sale of the Swarovski crystal
in its possession.
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All was well until April 5, 2012, when Building #19
provided Swarovski with a copy of a proposed newspaper
advertisement that it intended to run to promote a Mother's Day
sale of its remaining Swarovski crystal, and invited Swarovski to
suggest any further steps it could take to avoid consumer
confusion. The advertisement came crowned with a headline that
read "ONE DAY EVENT 11AM to 8PM, Tornado Hits Warehouse containing
GENUINE SWAROVSKI(R) CRYSTAL Collectibles." The word "Swarovski"
appeared in extra-large, capitalized, bold and distinctive font.
Like the previous ads, the body of the advertisement contained
several images and text giving details on the sale. The name
"Building #19" ran at the bottom of the add in extra-large,
capitalized, bold and distinctive font. A disclaimer, in much
smaller, unbolded font, also appeared near the bottom of the ad,
reading: "Disclaimer: Building #19 is selling GENUINE SWAROVSKI(R)
CRYSTAL products BUT Building #19 is NOT an authorized dealer, has
no affiliation, connection or association with SWAROVSKI(R) and the
standard SWAROVSKI(R) limited warranty is not available to our
customers. (The lawyers told us we should add that big
'but'....)."
In response, Swarovski filed a motion for a preliminary
injunction to forbid Building #19 from: (1) using the Swarovski
trademark or name or any other marks or names or logos confusingly
similar thereto in advertisements, in-store promotions, customer
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cards or signage of any kind, and (2) doing any act likely to
induce the mistaken belief that Swarovski products or services are
in any way affiliated, connected or associated with or sponsored by
Building #19, including creating display areas tending to imply a
"store within a store" event.
On May 1, 2012, the district court held an evidentiary
hearing on Swarovski's motion, during which it heard arguments from
counsel as well as witness testimony from several Building #19
employees and two Swarovski employees who attended the first
crystal sale. After a brief recess, the district court
acknowledged the need for an expedited determination, due to
Building #19's wish to advertise before Mother's Day on May 13, and
so the court departed from its usual practice of issuing a written
decision and instead engaged "in a little more rough justice by
providing an oral decision today." Ultimately, the court granted
Swarovski's motion only to the extent that the capitalized word
"Swarovski" at the top of the proposed advertisement could be no
larger than the font used for the name "Swarovski" in the
disclaimer at the bottom of the proposed advertisement. Neither
party raised any objection to this decision at the time.
Building #19 now appeals the district court's order,
arguing that it failed to include the necessary findings (1) that
its use of the "Swarovski" mark was likely to confuse consumers and
(2) that Swarovski would suffer irreparable harm as a result of its
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use of the mark. We agree, and therefore reverse the grant of the
injunction and remand so that the district court may make further
findings on these points.
A district court faced with a motion for a preliminary
injunction must weigh four factors: “(1) the plaintiff's likelihood
of success on the merits; (2) the potential for irreparable harm in
the absence of an injunction; (3) whether issuing an injunction
will burden the defendants less than denying an injunction would
burden the plaintiffs; and (4) the effect, if any, on the public
interest.” United States v. Weikert, 504 F.3d 1, 5 (1st Cir.
2007). We review a district court's grant of a preliminary
injunction for abuse of discretion. See Peoples Fed. Sav. Bank v.
People's United Bank, 672 F.3d 1, 9 (1st Cir. 2012). Within that
framework, we review fact findings for clear error and issues of
law de novo. Bos. Duck Tours, LP v. Super Duck Tours, LLC, 531
F.3d 1, 11 (1st Cir. 2008).
We begin with the district court's approach to the first
prong of the preliminary injunction analysis, Swarovski's
likelihood of success on its infringement claim against Building
#19, because while each of the four factors is important, "the
cynosure of this four-part test is more often than not the movant's
likelihood of success on the merits." Borinquen Biscuit Corp. v.
M.V. Trading Corp., 443 F.3d 112, 115 (1st Cir. 2006). This is so
especially in a trademark infringement case, since "the resolution
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of the other three factors will depend in large part on whether the
movant is likely to succeed in establishing infringement." Id.
To establish infringement successfully, a trademark
plaintiff must demonstrate that the defendant used an imitation of
its protected mark in commerce in a way that is "likely to cause
confusion, or to cause mistake, or to deceive." 15 U.S.C. §
1114(1)(a) (2006).1 Historically, the subject of trademark
"confusion" has been the source of the good or service to which the
mark is attached. See New Kids on the Block v. News Am. Publ'g,
Inc., 971 F.2d 302, 305 (9th Cir. 1992). For instance, a shoddy
crystal manufacturer might label its goods "Swarovski" or something
similar in order to fool consumers into thinking they were buying
the luxury product. "The typical situation in a trademark case
involves the defendant's having passed off another's mark as its
own or having used a similar name, confusing the public as to
precisely whose goods are being sold." Century 21 Real Estate
Corp. v. LendingTree, Inc., 425 F.3d 211, 217 (3rd Cir. 2005). In
this circuit, we evaluate the likelihood of such confusion through
1
A successful infringement action requires the plaintiff to
prove both (1) that its mark merits protection and (2) that the
allegedly infringing use of its mark is likely to result in
consumer confusion. Borinquen Biscuit Corp., 443 F.3d at 116.
Because both parties apparently agree that the "Swarovski" mark
merits protection, we focus only on the question of whether
Building #19's use of that mark was likely to confuse consumers.
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the eight-factor analysis laid out in Pignons S.A. de Mecanique de
Precision v. Polaroid Corp., 657 F.2d 482 (1st Cir. 1982).2
But the "confusion" at issue in this case is of a
different kind. Building #19 has not labeled its own products with
the "Swarovski" mark, but instead wants to use the "Swarovski" mark
to describe actual Swarovski crystal. Because some trademarked
products are so well-known and so unique, "many goods and services
are effectively identifiable only by their trademarks." New Kids
on the Block, 971 F.2d at 306. As the district court found,
Swarovski crystal is among them. Unlike typical trademark
infringement, where the defendant uses the plaintiff's mark to
refer to the defendant's product, this so-called "nominative use"
involves Building #19's use of Swarovski's mark to refer to
Swarovski's own product.3 Id. at 308.
2
The eight factors are: (1) the similarity of the marks, (2)
the similarity of the goods, (3) the relationship between the
parties' channels of trade, (4) the relationship between the
parties' advertising, (5) the classes of prospective purchasers,
(6) the evidence of actual confusion, (7) the defendant's intent in
adopting the mark and (8) the strength of the plaintiff's mark.
Pignons, 657 F.2d at 487-91.
3
"Nominative use" may also include situations where the
defendant ultimately describes his own product, so long as his use
of the mark is in reference to the plaintiff's product. For
instance, a car mechanic who specializes in Volkswagens might put
the word "Volkswagen" in an advertisement; he makes nominative use
of the word in reference to another's product, but he does so in
order to describe his own service. See Century 21 Real Estate
Corp., 425 F.3d at 214, 218 (citing Volkswagenwerk
Aktiengesellschaft v. Church, 411 F.2d 350 (9th Cir. 1969)).
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The potential for confusion in a nominative use case is
not one of source--here, the crystal really was manufactured by
Swarovski--but rather one of endorsement or affiliation. The fear
is that a consumer glancing at Building #19's proposed
advertisement might mistakenly believe that Swarovski had some
official association with the sale; perhaps that Swarovski
sponsored the sale and so stood behind the goods as a direct
seller, or that it had partnered with Building #19 in a way that
might detract from its luxury status. See Century 21 Real Estate
Corp., 425 F.3d at 221; New Kids on the Block, 971 F.2d at 308.
Because this kind of confusion does not implicate the
traditional "source-identification function" of a trademark, id.,
other circuits, most notably the Ninth and the Third, have
developed a distinct "nominative fair use" analysis to identify
unlawful infringement in cases like this one.4 Although these
courts differ on the precise articulation of the doctrine and on
whether it should replace the standard likelihood-of-confusion
analysis or should serve as an affirmative defense, they generally
evaluate the lawfulness of a defendant's nominative use of a mark
through the lens of three factors: (1) whether the plaintiff's
product was identifiable without use of the mark; (2) whether the
4
See, e.g., Century 21 Real Estate Corp., 425 F.3d at 220; New
Kids on the Block, 971 F.2d at 308; see also Bd. of Supervisors for
La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d
465, 489 (5th Cir. 2008), cert. denied, 556 U.S. 1268 (2009).
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defendant used more of the mark than necessary; and (3) whether the
defendant accurately portrayed the relationship between itself and
the plaintiff. See Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610
F.3d 1171, 1175-76 (9th Cir. 2010); Century 21 Real Estate Corp.,
425 F.3d at 222. In the First Circuit, we have recognized the
"underlying principle" of nominative fair use, but like several
other circuits, we have never endorsed any particular version of
the doctrine. See Universal Commc'n Sys., Inc. v. Lycos, Inc., 478
F.3d 413, 424 (1st Cir. 2007); see also Rosetta Stone Ltd. v.
Google, Inc., 676 F.3d 144, 154-55 (4th Cir. 2012); Tiffany (NJ)
Inc. v. eBay Inc., 600 F.3d 93, 102-03 (2d Cir.), cert. denied, 131
S. Ct. 647 (2010); Paccar v. Telescan Techs., L.L.C., 319 F.3d 243,
256-57 (6th Cir. 2003).
Given the uncertainty in this area of the law, the
district court made an admirable attempt to evaluate the likelihood
that Swarovski would succeed on its infringement claim against
Building #19. Ultimately, however, the district court's opinion,
perhaps because it was delivered to provide an expedited resolution
of the interlocutory motion contemporaneously with the hearing, did
not include a finding on whether Building #19's use of the
"Swarovski" mark in its proposed advertisement was likely to
confuse consumers in order to support the issuance of the
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preliminary injunction.5 Nor are we able to infer such a finding
from the court's reasoning.
There is a need for greater clarity on the matter of
likely confusion in this case. A trademark holder's claim over his
mark extends to uses of the mark "likely to cause confusion, or to
cause mistake, or to deceive." 15 U.S.C. § 1114(1)(a); see also 4
McCarthy on Trademarks and Unfair Competition § 23:1 (4th ed. 2012)
(describing likelihood of confusion as the "[k]eystone" of
trademark infringement). Swarovski may not charge infringement
against all unauthorized uses of the "Swarovski" name, but only
those uses likely to cause consumer confusion, mistake or
deception. The Supreme Court has made clear that a trademark
infringement action "requires a showing that the defendant's actual
practice is likely to produce confusion in the minds of consumers,"
with the burden placed firmly on the plaintiff. KP Permanent Make-
Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 117-18
(2004). Without such a showing, no trademark infringement has
occurred and so the trademark holder has no cause of action.
In this case, there is no indication from the record that
the district court found a likelihood of confusion either under the
traditional eight-factor Pignons test or under the nominative fair
5
The determination of likely confusion is a question of fact,
Bos. Beer Co. Ltd. P'ship v. Slesar Bros. Brewing Co., Inc., 9 F.3d
175, 183 (1st Cir. 1993), which on appeal we ordinarily review for
clear error, Bos. Duck Tours, 531 F.3d at 15.
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use test. The court first stated that Swarovski had tried to
"shoehorn" this case into the analysis laid out in Pignons, but
that Pignons "was a very different case from this." The court then
applied the Pignons analysis, as it felt it was required to do by
our precedent. It found that only the first, second and eighth
factors weighed in Swarovski's favor,6 while the third, fourth,
fifth, sixth and seventh factors either benefitted Building #19 or
did not help either party.7 The court ultimately concluded that it
was "not so sure that Plaintiff met its burden under the Pignons
test." While this statement may not be a negative finding on the
matter, it certainly does not indicate a positive finding that
Swarovski had met its burden under the traditional Pignons
confusion test.
6
For the first two factors, the court observed that Building
#19 was clearly using the "Swarovski" name (although not its logo)
and selling authentic Swarovski goods. For the eighth factor, the
court noted that the Swarovski mark was strong and prevalent.
7
The court found that the third and fourth factors weighed in
favor of Building #19, since Swarovski sells only online or through
high-end retail stores, while Building #19 is an off-price
discounter brick-and-mortar store that advertises in the local
press. It found that the fifth factor, the classes of prospective
purchasers, was a "wash," since Building #19 admitted to targeting
high-end buyers. For the sixth factor, the evidence of actual
confusion, the court noted that there was only one piece of
disputed, arguably hearsay, evidence, and that it "questioned
whether it was accurately recounted here." And in regard to the
seventh factor, Building #19's intent in adopting the mark, the
court observed that Building #19 had not adopted the mark, but
instead was utilizing the name "Swarovski" simply to describe the
items that it was selling.
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The court next analyzed the advertisement through the
three nominative fair use factors, as Building #19 urged it to do
in its opposition motion to Swarovski's motion for a preliminary
injunction, and which the court believed were more appropriate to
the facts of this case. Yet the court never explained if it was
using those factors to measure the likelihood of consumer
confusion. The court described the three nominative fair use
factors as: (1) whether "the product [was] readily identifiable
without use of the mark," (2) whether the defendant "utilize[d]
more of the mark than [was] necessary," and (3) whether the
defendant "falsely suggested that [it] was sponsored or endorsed by
the trademark holder." It found that the first and third factors
weighed in favor of Building #19: Swarovski crystal was not readily
identifiable without use of the "Swarovski" name, and the proposed
ad made clear the product's origin, how it came into the hands of
Building #19 and that the sale was not sponsored by Swarovski.
Presumably, then, these factors did not suggest a likelihood of
confusion to the district court.
In its application of the second factor, on which its
decision against Building #19 must have turned, the district court
stated that in the headline of the proposed advertisement, "the
name Swarovski is larger than any other font in that ad. It's
larger than the name Building #19. It's larger than the words
'one-day event.' It is clearly, I think, more use of the mark than
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is necessary to make the point." Nevertheless, the court
apparently believed that the font and size of the word "Swarovski"
as it appeared in the advertisement's disclaimer was sufficient to
attract the attention of anyone reading the advertisement. The
court concluded that "Defendant has some issues with its burden
under the nominative fair use test because I think that they are
wanting to use more of the mark than is necessary to describe the
product."
This analysis does not mention consumer confusion, but
merely decided that Building #19 used "more of the mark than
necessary" to effectively communicate its message. But as we have
explained, a trademark holder has no right to police "unnecessary"
use of its mark. Whether necessary or not, a defendant's use of a
mark must be confusing in the relevant statutory sense for a
plaintiff to raise a viable infringement claim. See Prestonettes,
Inc. v. Coty, 264 U.S. 359, 368 (1924) (Holmes, J.) ("When the mark
is used in a way that does not deceive the public we see no such
sanctity in the word as to prevent its being used to tell the
truth. It is not taboo."); Dow Jones & Co., Inc. v. Int'l Sec.
Exch., Inc., 451 F.3d 295, 308 (2d Cir. 2006) ("While a trademark
conveys an exclusive right to the use of a mark in commerce in the
area reserved, that right generally does not prevent one who trades
a branded product from accurately describing it by its brand name,
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so long as the trader does not create confusion by implying an
affiliation with the owner of the product.").
The word "Swarovski" in the headline of Building #19's
proposed advertisement might, in theory, have created confusion in
a number of ways: it might have made the ad look like one from
Swarovski rather than Building #19; it might have lead viewers to
believe that Swarovski endorsed or sponsored the sale; or it might
have suggested some official affiliation between Swarovski and
Building #19. But the district court referenced none of these
possibilities in its analysis; instead, it simply applied the
second nominative fair use factor in order to restrict Building
#19's use of the word "Swarovski" to the minimum font size
necessary to convey its message.8
Part of the difficulty may have stemmed from the fact
that different circuits use the doctrine to measure different
concepts.9 In the Ninth Circuit, the three factors are applied to
8
The district court did make brief references to the
likelihood of confusion in its questioning of counsel and when
introducing the nominative fair use test ("But what evidence is
there of confusion?"; "[U]nder this test, the likelihood of
confusion is evaluated by determining three factors . . . "), but
they do not support Swarovski's contention that the district court
made a finding on confusion.
9
The district court did suggest that it was following the lead
of Tiffany (NJ), Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010) in
applying the nominative fair use analysis, but Tiffany did "not
address the viability of the [nominative fair use] doctrine" and
instead applied existing Second Circuit precedent to resolve the
case. Id. at 102.
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determine confusion; they "replace[]" the traditional likelihood of
confusion analysis "as the proper test for likely consumer
confusion whenever defendant asserts to have referred to the
trademarked good itself." Toyota Motor Sales, 610 F.3d at 1182
(internal quotation marks omitted). But in the Third Circuit, the
three factors "demonstrate fairness"; once the plaintiff has proven
likely confusion through the traditional analysis, the defendant
may invoke the nominative fair use factors to show that its use of
the mark was fair. Century 21 Real Estate Corp., 425 F.3d at 222
(emphasis added).
We are especially wary here because the court's
conclusion that Building #19 "has some issues with its burden under
the nominative fair use test" suggests that it had the Third
Circuit's "affirmative defense" iteration of the doctrine in mind.
See id. As we explained above, the Third Circuit applies the
nominative fair use factors to measure fairness, not confusion, and
a defendant's failure to meet its burden under that version of the
test means nothing if the plaintiff has not first demonstrated a
likelihood of confusion through the traditional analysis. See id.
("Once plaintiff has met its burden of proving that confusion is
likely, the burden then shifts to defendant to show that its
nominative use of plaintiff's mark is fair.").
Without at this time endorsing any particular approach to
the nominative fair use doctrine, it is enough to observe that
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whether the factors serve as the plaintiff's case-in-chief (as
appears to be true in the Ninth Circuit)10 or as an affirmative
defense (as in the Third)11 a trademark defendant has no burden to
prove anything until the plaintiff has first met its responsibility
to show infringement by demonstrating that the defendant's use of
its mark is likely to confuse consumers. Cf. KP Permanent Make-Up,
Inc., 543 U.S. at 120 ("[I]t is only when a plaintiff has shown
likely confusion by a preponderance of the evidence that a
defendant could have any need of an affirmative defense.").12 The
district court erred by granting Swarovski's request for a
preliminary injunction without first finding that Building #19's
use of its mark in the proposed advertisement was likely to cause
confusion.
10
Toyota Motor Sales, 610 F.3d at 1182-83.
11
Century 21 Real Estate Corp., 425 F.3d at 220-22.
12
Swarovski offers a final reason for affirming the district
court on this point, suggesting that because Building #19 proposed
to the district court that it apply the nominative fair use test,
Building #19 either is estopped from challenging it on appeal or
has waived its right to do so. See Perry v. Blum, 629 F.3d 1, 8
(1st Cir. 2010) (judicial estoppel); Windsor Mount Joy Mut. Ins.
Co. v. Giragosian, 57 F.3d 50, 56 n.7 (1st Cir. 1995) (waiver).
But this argument misapprehends Building #19's challenge to the
district court's order; Building #19 does not contend that the
court should have applied an analysis other than the nominative
fair use test, but rather that the court applied the test
incorrectly. On appeal, it is not estopped from arguing, nor has
it waived its right to argue, that the district court misapplied
the nominative fair use doctrine.
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This problem is related to the second ground for Building
#19's appeal: the absence of an irreparable injury finding. Even
though likelihood of success is "the cynosure" of the preliminary
injunction test, Borinquen Biscuit Corp., 443 F.3d at 115,
irreparable harm is still one of the four required elements for a
preliminary injunction. See Weikert, 504 F.3d at 5.
Swarovski suggests that the court did consider the
likelihood of irreparable harm, since it noted at the beginning of
its decision that "because this is Plaintiffs' motion, Plaintiff
bears the burden of demonstrating the four elements of a
preliminary injunction." Swarovski also highlights evidence
presented in the hearing that its luxury brand reputation would
suffer as a result of its association with Building #19. But,
there was no formal finding of irreparable harm, and that is
consonant with the lack of any finding of confusion. Without an
explanation by the district court, there is no indication in the
record that the court concluded that Swarovski would suffer
irreparable harm if it allowed the advertisement to run as
proposed.
Swarovski also emphasizes that in the First Circuit, a
trademark plaintiff seeking a preliminary injunction who
demonstrates likely confusion creates a presumption of irreparable
harm. See Am. Bd. of Psychiatry & Neurology, Inc. v. Johnson-
Powell, 129 F.3d 1, 3 (1st Cir. 1997) (citing Societe Des Produits
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Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir.
1992); Keds Corp. v. Renee Int'l Trading Corp., 888 F.2d 215, 220
(1st Cir. 1989); Camel Hair & Cashmere Inst. of Am., Inc. v.
Associated Dry Goods Corp., 799 F.2d 6, 14-15 (1st Cir. 1986)). In
the past, we have applied this presumption because "[b]y its very
nature, trademark infringement results in irreparable harm because
the attendant loss of profits, goodwill, and reputation cannot be
satisfactorily quantified and, thus, the trademark owner cannot
adequately be compensated. Hence, irreparable harm flows from an
unlawful trademark infringement as a matter of law." Societe Des
Produits Nestle, S.A., 982 F.2d at 640. But the recent Supreme
Court decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388,
393-94 (2006) has threatened the continuing viability of this
presumption. We briefly discuss the argument, although it does not
apply in the absence of a finding of confusion.
In eBay, the Court reviewed a request for a permanent
injunction in a patent infringement dispute, and held that "the
decision whether to grant or deny injunctive relief rests within
the equitable discretion of the district courts, and . . . such
discretion must be exercised consistent with traditional principles
of equity, in patent disputes no less than in other cases governed
by such standards." Id. at 394. The Court therefore rejected the
general rule applied by the Court of Appeals that an injunction
should issue once patent infringement has been established, and
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warned lower courts away from applying "broad classifications" or
"categorical rule[s]" that would pervert the traditional four-
factor test. Id. at 393-94. However, two concurrences
respectively by Chief Justice Roberts and Justice Kennedy,
separately joined by a total of seven justices, suggested that such
rules could survive as "lesson[s] of . . . historical practice"
that might inform the district courts' equitable discretion "when
the circumstances of a case bear substantial parallels to
litigation the courts have confronted before." Id. at 395-97
(Kennedy, J., concurring); see also id. at 394-95 (Roberts, C.J.,
concurring).
Since then, we have said that there is "no principled
reason why [eBay] should not apply" to a request for a preliminary
injunction to halt trademark infringement, despite the difference
in context. Voice of the Arab World, Inc. v. MDTV Med. News Now,
Inc., 645 F.3d 26, 33 (1st Cir. 2011). However, we have so far
declined to address whether eBay's bar on "general" or
"categorical" rules includes the presumption of irreparable harm in
trademark disputes. See id. at 34. Building #19 urges us to
address the issue now, and to hold, as other circuits have done in
patent and copyright infringement cases,13 that for preliminary
injunctions in trademark infringement suits, eBay prohibits a
13
No circuit court has yet decided whether eBay abolishes the
presumption of irreparable harm in trademark infringement cases.
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presumption of irreparable harm based on a showing of likely
success on the merits. See Robert Bosch LLC v. Pylon Manuf. Corp.,
659 F.3d 1142, 1149 (Fed. Cir. 2011) (patent infringement); Perfect
10, Inc. v. Google, Inc., 653 F.3d 976, 981 (9th Cir. 2011), cert.
denied, 132 S. Ct. 1713 (2012) (copyright infringement); Salinger
v. Colting, 607 F.3d 68, 76-78 (2d Cir. 2010) (copyright
infringement).
But we need not decide that question to decide this case.
Whether or not the presumption of irreparable harm remains viable
in this context, it is difficult to see how irreparable harm could
be established without a finding of confusion, and so the district
court's decision did not include adequate findings to support its
grant of the injunction against Building #19. Cf. Am. Bd. of
Psychiatry and Neurology, 129 F.3d at 3 ("[A] trademark plaintiff
who demonstrates a likelihood of success on the merits creates a
presumption of irreparable harm.") (emphasis added).
In further proceedings on the claims for permanent
injunctive relief, the district court might conclude, as Swarovski
suggests in its brief, that Swarovski has presented sufficient
evidence to establish irreparable harm to its luxury reputation
without the benefit of the presumption, or that the facts of this
case are so similar to past cases "that a presumption of
irreparable injury is an appropriate exercise of its discretion in
light of the historical traditions." N. Am. Med. Corp. v. Axiom
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Worldwide, Inc., 522 F.3d 1211, 1228 (11th Cir. 2008) (citing eBay,
547 U.S. at 394-97 (concurring opinions of Chief Justice Roberts
and Justice Kennedy)).
"Where the district court . . . has not addressed a
relevant and required issue," we may "remand the case to the
district court for further consideration." Bos. Duck Tours, LP,
531 F.3d at 15. In this case, the district court did not include
the necessary findings, first, on whether Swarovski was likely to
succeed in its infringement claim against Building #19 by
establishing that the proposed advertisement was likely to confuse
consumers, and second, on whether Swarovski would suffer
irreparable harm as a result of the ad. Because affirmative
findings on both questions are required for a district court to
issue a preliminary injunction, see Weikert, 504 F.3d at 5, we
reverse the preliminary injunction against Building #19 and remand
the case to the district court for further proceedings on the
remaining claims for relief consistent with this opinion.
It is so ordered.
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